NOTE

—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, services have been rendered, the contract price is fixed or determinable, and collectability is reasonably assured. The Company enters into

three

types of contracts: time-and-materials, cost-based, and fixed-price.

•

Time-and-Materials Contracts.

Revenue for time-and-materials contracts is recorded on the basis of allowable labor hours worked multiplied by the contract-defined billing rates, plus the costs of other items used in the performance of the contract. Profits and losses on time-and-materials contracts result from the difference between the cost of services performed and the contract-defined billing rates for these services.

•

Cost-Based Contracts

Revenue under cost-based contracts is recognized as costs are incurred. Applicable estimated profit, if any, is included in earnings in the proportion that incurred costs bear to total estimated costs. Incentives, award fees, or penalties related to performance are also considered in estimating revenue and profit rates based on actual and anticipated awards, taking into consideration factors such as the Company’s prior award experience and communications with the customer regarding performance.

•

Fixed-Price Contracts

Revenue for fixed-price contracts is recognized when earned, generally as work is performed. Services performed vary from contract to contract and are not always uniformly performed over the term of the arrangement. Fixed-price contracts

may

contain multiple elements that must be evaluated to determine if they represent separate units of accounting that have stand-alone value. If the assessment is made that there is more than

one

unit of accounting, the contract value is then allocated to each unit based upon management’s best estimate of selling price and the appropriate revenue recognition method is applied to each unit. The Company recognizes revenue in a number of different ways on fixed-price contracts based upon the nature of the services to be provided and an assessment of what best mirrors the pattern of performance for the deliverable/contract, including:

•

Proportional Performance:

Revenue on certain fixed-price contracts is recognized based on proportional performance when the provision of services extends beyond an accounting period with more than

one

discrete performance act, and

progress towards completion can be measured based on a reliable output or input. Under this method, revenue is recorded each period based upon certain contract performance input measures incurred (labor hours, labor costs, or total costs) or output measures completed, expressed as a proportion of a total project estimate. Progress on a contract is monitored regularly to ensure that revenue recognized reflects project status. When hours or costs incurred are used as the basis for revenue recognition, the hours or costs incurred represent a reasonable surrogate for output measures of contract performance, including the presentation of deliverables to the client. Clients are obligated to pay as services are performed, and in the event that a client cancels the contract, payment for services performed through the date of cancellation is typically negotiated with the client.

•

Specific Performance

hen the services to be performed consist of a single act, revenue is recognized at the time the act is performed or at the completion of the single service.

•

Straight-Line

: When services are performed or are expected to be performed consistently throughout an arrangement, or when the Company is compensated on a retainer or fixed-fee basis, revenue is recognized ratably over the period benefited.

•

Completed Contract

: Revenue and costs on certain fixed-price contracts are recognized at completion if the final act is so significant to the arrangement that value is deemed to be transferred only at completion.

Revenue recognition requires

the Company to use judgment relative to assessing risks, estimating contract revenue and costs or other variables, and making assumptions for scheduling and technical issues. Due to the size and nature of many of the Company’s contracts, the estimation of revenue and estimates at completion can be complicated and are subject to many variables. Contract costs include labor, subcontractor costs, and other direct costs, as well as an allocation of indirect costs. At times, the Company must also make assumptions regarding the length of time to complete the contract because costs include expected increases in wages, prices for subcontractors, and other direct costs. From time to time, facts develop that require the Company to revise its estimated total costs or hours and thus the associated revenue on a contract. To the extent that a revised estimate affects contract profit or revenue previously recognized, the Company records the cumulative effect of the revision in the period in which the facts requiring the revision become known. A provision for the full amount of an anticipated loss on any type of contract is recognized in the period in which it becomes probable and can be reasonably estimated. As a result, operating results could be affected by revisions to prior accounting estimates.

ontractual arrangements are evaluated to assess whether revenue should be recognized on a gross versus net basis. Management’s assessment when determining gross versus net revenue recognition is based on several factors, such as whether the Company serves as the primary service provider, has autonomy in selecting subcontractors, or has credit risk, all of which are primary indicators that the Company serves as the principal to the transaction. In such cases, revenue is recognized on a gross basis. When such indicators are not present and the Company is primarily functioning as an agent under an arrangement, revenue is recognized on a net basis.

Payments to the Company on cost-based contracts with the

federal government are provisional payments subject to adjustment upon audit by the government. Such audits have been finalized through

December

31,

2007,

and any adjustments have been immaterial. Contract revenue for subsequent periods has been recorded in amounts that are expected to be realized upon final audit and settlement of costs in those years.

The Company generates invoices to clients in accordance with the terms of the applicable contract, which

may

not be directly related to the performance of services. Unbilled receivables are invoiced based upon the achievement of specific events as defined by each contract, including deliverables, timetables, and incurrence of certain costs. Unbilled receivables are classified as a current asset. Advanced billings to clients in excess of revenue earned are recorded as deferred revenue until the revenue recognition criteria are met. Reimbursements of out-of-pocket expenses are included in revenue with corresponding costs incurred by

the Company included in the cost of revenue. The Company records revenue net of taxes collected from customers to be remitted to governmental authorities.

The Company

may

proceed with work based upon client direction prior to the completion and signing of formal contract

documents. It has a review process for approving any such work. Revenue associated with such work is recognized only when it can be reliably estimated and realization is probable. The Company bases its estimates on a variety of factors, including previous experiences with the client, communications with the client regarding funding status, and its knowledge of available funding for the contract.

Cash and Cash Equivalents

The Company considers cash on deposit and all highly liquid investments with original maturities of

three

months or less

when purchased to be cash and cash equivalents.

Restricted Cash

The Company has restricted cash representing amounts held in escrow accounts and/or not readily available due to contractual restrictions.

Allowance for Doubtful Accounts

The Company considers a number of factors in its estimate of allowance for doubtful accounts, including the customer

’s financial condition, historical collection experience, and other factors that

may

bear on collectability of the receivables. The Company writes off contract receivables when such amounts are determined to be uncollectible. Losses have historically been within management’s expectations.

Property and Equipment

Property and equipment are carried at cost and are depreciated using the straight-line method over their estimated useful lives, which range from

two

seven

years. Leasehold improvements are amortized on a straight-line basis over the shorter of the economic life of the improvement or the related lease term. Assets acquired in acquisitions are recorded at fair value.

Goodwill and Other Intangible Assets

The purchase price of an acquired business is allocated to the tangible assets and separately identifiable intangible assets acquired

, less liabilities assumed, based upon their respective fair values, with the excess recorded as goodwill. Goodwill represents the excess of costs over the fair value of net assets of businesses acquired. Goodwill and intangible assets acquired in a business combination and determined to have an indefinite useful life are not amortized, but instead are reviewed for impairment annually, or more frequently if impairment indicators arise. Intangible assets with estimable useful lives are amortized over such lives and reviewed for impairment if impairment indicators arise.

Impairment

The Company

performs its annual goodwill impairment review as of

September

of each year. For the purposes of performing this review, the Company has

one

reporting unit. For the annual impairment review as of

September

30,

2016,

the Company opted to perform a qualitative assessment of whether it is more likely than not that its reporting unit's fair value is less than its carrying amount. If, after completing its qualitative assessment, the Company determines that it is more likely than not that the estimated fair value of the reporting unit exceeded its carrying amount, it

may

conclude that no impairment exists. If the Company concludes otherwise, a

two

-step goodwill impairment test must be performed, which includes a comparison of the fair value of the reporting unit to the carrying value.

The Company

’s qualitative analysis as of

September

30,

2016,

included macroeconomic and industry and market specific considerations, financial performance indicators and measurements, and other factors. Based on the Company’s qualitative assessment, it determined that it is more likely than not that the fair value of its

one

reporting unit exceeded its carrying amount, and thus the

two

-step impairment test was not required to be performed for

2016.

Therefore, based upon management’s review,

goodwill impairment charge was required as of

September

30,

2016.

Historically, the Company has recorded

goodwill impairment charges.

The Company

is required to review long-lived assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less cost to sell.

Capitalized Software

The Company capitalizes eligible

costs to develop enhancements and upgrades to internal-use software that are incurred subsequent to the preliminary project stage. Amortization expense is recorded on a straight-line basis over the expected economic life, typically

three

five

years. During the years ended

December

31,

2016,

2015,

and

2014,

the costs capitalized for the development of internal-use software were not material to the Company’s consolidated financial statements.

Deferred Rent

The Company recognizes rent expense on a straight-line basis

over the non-cancellable term of each lease, including renewal option periods when renewal is reasonably assured or executed. Lease incentives or abatements received at or near the inception of leases are accrued and amortized ratably over the life of the lease.

Stock-based

Compensation

The Company recognizes stock-based compensation expense related to share-based payments to employees, including grants of employee stock options, restricted stock awards, restricted stock units (“RSUs”)

, and cash-settled restricted stock units (“CSRSUs”) on a straight-line basis over the requisite service period, which is generally the vesting period. The Company recognizes expense for performance-based share awards (“PSAs”), which have a performance condition and a market condition, on a straight-line basis over the performance period. Non-employee director awards do not include vesting conditions and therefore are expensed when issued.

Stock-based c

ompensation expense is based on the estimated fair value of these instruments and the estimated number of shares the Company ultimately expects will vest. The Company estimates the rate of future forfeitures based on factors such as historical experience and employee class. In addition, the estimation of PSAs that will ultimately vest requires judgment based on performance conditions. Changes to these estimates are recorded as a cumulative adjustment in the period estimates are revised.

The fair value of stock options, restricted stock awards, RSUs

, PSAs, and non-employee director awards is estimated based on the fair value of a share of common stock at the grant date. The Company has elected to use the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The fair value of PSAs is estimated using a Monte Carlo simulation model.

CSRSUs are settled only in cash payments. The cash payment is based on the fair value of the Company

’s stock price at the vesting date, calculated by multiplying the number of CSRSUs vested by the Company’s closing stock price on the vesting date, subject to a maximum payment cap and a minimum payment floor. The Company treats these awards as liability-classified awards, and therefore accounts for them at fair value estimated based on the closing price of the Company’s stock at the reporting date.

Other Comprehensive

(Loss) Income

Other comprehensive

(loss) income represents foreign currency translation adjustments arising from the use of differing exchange rates from period to period and the gain on the sale of an interest rate hedge agreement. The financial positions and results of operations of the Company’s foreign subsidiaries are based on the local currency as the functional currency and are translated to U.S. dollars for financial reporting purposes. Assets and liabilities of the subsidiaries are translated at the exchange rate in effect at each period-end. Income statement accounts are translated at the average rate of exchange prevailing during the period. Translation adjustments are included in accumulated other comprehensive (loss) income in stockholders’ equity in the Company’s consolidated balance sheets. The activity included in other comprehensive (loss) income in the Company’s consolidated statements of comprehensive income for each period reported is summarized below.

	Year ended December 31,
	2016			2015			2014
Foreign currency translation adjustments , net of tax (1)	$	(4,321	)	$	(5,676	)	$	(2,017	)
Foreign currency r ealized (loss) gain reclassified into earnings, net of tax ( 2 )		(3	)		666			526
Gain on sale of interest rate hedging agreement, net of tax ( 3 )		2,175			—			—
Other comprehensive loss , net of tax ( 4 )	$	(2,149	)	$	(5,010	)	$	(1.491	)

(1)

In the

third

quarter of

2015,

the Company recorded an adjustment to its foreign currency translation totaling approximately

million, primarily related to goodwill, intangible assets, and fixed assets for certain acquired international subsidiaries.

(2)

Represents the reclassification of foreign currency translation adjustment from accumulated other comprehensive loss into earnings as a result of closing international offices. Amounts are included in the other expense line item in the Consolidated Statements of Comprehensive Income.

(3)

December

2016,

the Company sold the interest rate

hedge agreement. The fair value of the interest rate hedge was recorded in other comprehensive (loss) income and reclassified to earnings when earnings are impacted by the cash flows of the hedged items, the interest payments on the Credit Facility or its replacement from

January

31,

2018

January

31,

2023.

(4)

Net of tax of

$2.2

million,

$1.0

million and

$0.4

million for the years ended

December

31,

2016,

2015,

and

2014,

respectively.

Fair Value of Financial Instruments

The Company's financial instruments, including cash and cash equivalents, contract receivables,

and accounts payable are carried at cost, which the Company believes approximates their fair values at

December

31,

2016

and

2015,

due to their short maturities. The Company believes the carrying value of other long-term liabilities related to capital expenditure obligations approximates their fair value at

December

31,

2016

and

2015

based on the current rates offered to the Company for similar instruments with comparable maturities. The Company believes the carrying value of its lines of credit payable at

December

31,

2016

and

2015

approximate the estimated fair value for debt with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings.

The Company applies the provisions of ASC

820,

Fair Value Measurements and Disclosures

(“ASC

820”)

to its assets and liabilities that are required to be measured at fair value pursuant to other accounting standards, including assets and liabilities resulting from the Company’s nonqualified deferred compensation plan and foreign currency forward contract agreements not eligible for hedge accounting. The fair value of assets and liabilities resulting from the Company’s nonqualified deferred compensation plan and foreign currency forward contract agreements at

December

31,

2016

and

2015

and the changes in fair value for the years ended

December

31,

2016,

2015,

and

2014

were immaterial.

Income Taxe

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company evaluates its ability to benefit from all deferred tax assets and establishes valuation allowances for amounts it believes are not more likely than not to be realizable. For uncertain tax positions, the Company uses a more-likely-than-not recognition threshold based on the technical merits of the income tax position taken. Income tax positions that meet the more-likely-than-not recognition threshold are measured in order to determine the tax benefit recognized in the financial statements.

Penalties, if probable and reasonably estimable, and interest expense related to uncertain tax positions are not recognized as a component of income tax expense but recorded separately in indirect expenses.

Derivative Instruments

Derivative instruments designated as cash flow hedges are recorded on the consolidated balance sheet at fair value

, at the reporting date, and the effective portion of the hedge is recorded in other comprehensive (loss) income on the consolidated statement of comprehensive income and reclassified to earnings in the period that the hedged instruments affect earnings. Management reviews the effectiveness of the hedges on a quarterly basis, and any ineffective portion is immediately reclassified to earnings.

Treasury Shares

Treasury shares are accounted for under the cost method.

Segment

, Customer and

Geographic

Information

The Company operates in

one

segment based upon the consolidated information used by its chief operating decision maker in evaluating the financial performance of its business and allocating resources. This single segment represents the Company

’s core business, which is professional services for government and commercial clients. Although the Company describes its

four

key market areas to provide a better understanding of the Company’s business operations, the Company does not manage its business or allocate resources based upon those service offerings or markets.

Approximately

$563

million,

$540

million, and

$532

million of the Company’s revenue for the years

2016,

2015,

and

2014,

respectively, was derived under prime contracts and subcontracts with agencies and departments of the federal government representing

48%,

and

51%

of total revenue, respectively. No other customer accounted for

10%

or more of the Company’s revenue during the years ended

December

31,

2016,

2015,

and

2014.

The Company

’s international operations offer services to both commercial and non-U.S. government customers. Revenue is attributed to location based on the geographic areas to which a contract is awarded. The Company’s revenue generated from international clients as a percentage of total revenue was approximately

10%,

11%,

and

12%

for the years

2016,

2015,

and

2014.

December

31,

2016

and

2015,

long-lived assets from international offices were not material as compared to the Company’s total long-lived assets.

Risks and Uncertainties

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and contract receivables. The majority of the Company

’s cash transactions are processed through

one

U.S. commercial bank. Cash held domestically in excess of daily requirements is used to reduce any amounts outstanding under the Company’s Credit Facility. As of

December

31,

2016

and

2015,

the Company held approximately

$5.4

million and

$6.7

million, respectively, of cash in foreign bank accounts. To date, the Company has not incurred losses related to cash and cash equivalents.

The Company

’s contract receivables consist principally of contract receivables from agencies and departments of, as well as from prime contractors to, the federal government, other governments, and commercial organizations. The Company believes that

this

credit risk with

respect to

contract receivables, is limited due to the credit worthiness of the U.S. government. Contract receivable credit risk is also limited due to a large number of customers in differing agencies of the U.S. government. The Company extends credit in the normal course of operations and does not require collateral from its clients.

The Company has historically been, and continues to be, heavily dependent upon contracts with the

federal government and is subject to audit by agencies of the federal government. Such audits determine, among other things, whether an adjustment of invoices rendered to the government is appropriate under the underlying terms of the contracts. Management does not expect any significant adjustments as a result of government audits that will adversely affect the Company’s financial position.

Use of Estimates

The preparation of financial statements in conformity with

U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

During the

first

quarter of

fiscal year

2016,

the Company elected to early-adopt ASU

2015

17,

Balance Sheet Classification of Deferred Taxes

(Topic

740)

on a retrospective basis

As required by ASU

2015

17,

all deferred tax assets and liabilities are classified as non-current within the consolidated balance sheets. As a result of the adoption of ASU

2015

17,

the Company reclassified

$8.0

million in current deferred tax liabilities to long-term liabilities within the consolidated balance sheet at

December

31,

2015.

March

2016,

the

Financial Accounting Standards Board (“FASB”) issued ASU

2016

09,

Improvements to Employee Share-Based Payment Accounting (Topic

718).

ASU

2016

requires excess tax benefits and deficiencies from shares vested or settled to be recognized in the provision for income taxes in the statement of comprehensive income instead of additional paid-in-capital. In addition, the classification of cash flows from excess tax benefits and deficiencies changed from a financing activity to an operating activity and cash flows from the repurchase of shares for employees’ tax withholdings are required to be a financing activity. The standard also requires the election of a company-wide policy to account for forfeitures as an estimate or as they occur in recognizing stock-based compensation expense.

During the

second

quarter of

2016,

the Company elected to early adopt ASU

2016

09.

As a result of the adoption, effective

January

2016,

adjustments made to record excess tax benefits from shares vested or settled are recognized in the statement of comprehensive income instead of within

additional paid-in-capital. The Company elected to implement the required change related to the classification of cash flows from excess tax benefits as an operating activity on a prospective basis. With regard to the classification of employee tax withholdings, the adoption had no impact on the Company’s statements of cash flows as such activities have historically been presented as a financing activity. Finally, the Company elected to continue its policy to account for forfeitures as an estimate in recognizing stock-based compensation expense.

The adoption of ASU

2016

resulted in the recognition of excess tax benefits in the Company

’s provision for income taxes rather than additional paid-in-capital of

$0.7

million for the

2016

fiscal year. In addition, the Company’s net cash provided by operating activities increased

$0.7

million with a corresponding decrease to net cash provided by financing activities for the

2016

fiscal year.

Recent Accounting Pronouncements Not Yet Adopted

May

2014,

the FASB issued ASU

2014

09,

Revenue from Contracts with Customers (Topic

606).

ASU

2014

provides a single comprehensive revenue recognition framework and supersedes almost all existing revenue recognition guidance including industry-specific revenue guidance. Included in the new principles-based revenue recognition model are changes to the basis for de

termining the timing for revenue recognition. In addition, the standard expands and improves revenue disclosures. In

August

2015,

the FASB issued ASU

2015

14,

Revenue from Contracts with Customers (Topic

606):

Deferral of Effective Date, to amend ASU

2014

to defer the effective date of the new revenue recognition standard. In accordance with this update, the Company has elected to adopt the requirements of the new standard effective

January

2018.

The guidance permits the Company to either apply the requirements retrospectively to all prior periods presented (full retrospective), or apply the requirements in the year of adoption, through a cumulative adjustment (modified retrospective). Under the full retrospective approach, the

2016,

2017

and

2018

financial statements would be adjusted to reflect the effects of adopting the new standard. Under the modified retrospective approach, the new standard would apply for the period beginning

January

2018,

to new contracts and to those contracts that were not completed as of

January

2018.

For those contracts not completed as of

January

2018,

this would result in a cumulative catch-up adjustment to retained earnings.

The Company continues to evaluate and track the impact of adopting ASU

2014

on the nature and timing of revenues and expanded disclosure requirements. As of

December

2016,

the Company completed its preliminary assessment. As part of that assessment, the Company evaluated significant revenue streams and key contracts within those revenue streams to identify potential revenue recognition differences and to consider if these differences could have a material impact as a result of applying the new guidance. Based upon our assessment, the Company anticipates that the new standard

may

likely result in a change in the timing of our revenue recognition for performance incentives received from clients. Performance incentives are currently recognized as revenue when specific quantitative goals are achieved; however, under the new standard, the Company will be required to estimate the amount of the incentive that will be earned at the inception of the contract and recognize the incentive over the term of the contract. Based on our analysis, this difference will not result in a material change to our annual revenue recognized but

may

accelerate the revenue recognized on a quarterly basis. As a large percentage

of the Company’s revenue is transaction based (cost-based and time-and-materials), we do not expect the new standard to impact these revenue streams. In some of our arrangements, particularly media purchases within our digital space, we recognize revenue on a net versus gross basis. We are evaluating the impact of the new guidance on our gross versus net assessment.

At this time, the Company has not selected an adoption method (full retrospective or modified retrospective) and continues to evaluate and track the impact the new guidance and method of the adoption will have on its consolidated financial statements. Adoption of the new ASU will not only involve a final assessment of the impacts on our revenue, costs and related disclosures, but also on our existing policies, processes and controls as they relate to revenue recognition. Therefore, our evaluation of the ASU will continue throughout

2017.

As part of our implementation efforts, the Company is and will continue to review and modify existing policies, processes and controls that will need to change as a result of implementing the new guidance. In addition, to ensure an effective rollout, we are incorporating a detailed training and communication plan to key stakeholders within the scope of the overall project.

February

2016,

the FASB issued ASU

2016

02,

Leases (Topic

842).

This update revises an entity

’s accounting for operating leases and requires lessees to recognize a right-of-use asset and lease liability for all leases with terms of more than

months. This update also requires certain qualitative and specific quantitative disclosures. ASU

2016

does not significantly change the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee. This update is effective for the

first

interim and annual periods beginning after

December

15,

2018,

with early adoption permitted. The guidance requires that lessees recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than

months. The new guidance also requires disclosures designed to give financial statement users information on the amount, timing, and cash flows arising from leases. These disclosures include qualitative and quantitative information. The Company continues to evaluate the impact of adopting ASU

2016

02,

the elections to be made at adoption in a modified retrospective approach, and the timing of adoption and its impact on any debt refinancing.

August

2016,

the FASB issued ASU

2016

, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (Topic

230).

This update addresses

eight

specific cash flow issues with the objective of reducing the existing diversity in practice. This update is effective for the Company for its fiscal year

2018,

with early adoption permitted. The Company is currently evaluating the impact of adopting ASU

2016

15.

The statement is not expected to have a material impact on the Company’s consolidated financial statements.

November

2016,

the FASB issued ASU No.

2016

18,

Statement of Cash Flows: Restricted Cash (Topic

230),

which requires entities to show the changes in the total of cash, cash equivalents, restricted cash, and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. ASU

2016

becomes effective for fiscal years beginning after

December

15,

2017,

and interim periods within those fiscal years. Any adjustments will be applied retrospectively. Early adoption is permitted. The Company is evaluating the impact on its consolidated financial statements resulting from the future adoption of the standard. Restricted cash is currently included within operating cash flows within the consolidated statement of cash flows for all periods presented.

January

2017,

the FASB issued ASU

2017

04,

Intangibles-

Goodwill and Other (Topic

350)

that simplifies the subsequent measurement of goodwill by eliminating Step

from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU

2017

does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the

two

step impairment test is required. Under the current accounting standards, the impairment loss to recognize under Step

of the impairment test requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit's assets and liabilities as if the reporting unit has been acquired in a business combination, and subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtracting it from its carrying amount. ASU

2017

is effective for the Company for fiscal years after

December

15,

2019,

and early adoption is permitted. ASU

2017

is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption. The Company is currently evaluating the impact of the adoption of ASU

2017

on the consolidated financial statements