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Recent Accounting Pronouncements
 12 Months Ended
Dec. 31, 2018
Accounting Changes and Error Corrections [Abstract]  
Recent Accounting Pronouncements Recent Accounting Pronouncements
Accounting for Hedging Activities
In August 2017, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2017-12, Derivatives and Hedging (Topic 815), intending to improve the transparency of information included in the financial statements by aligning cash flow and fair value hedge accounting with its risk management activities. The ASU eliminates the requirement to separately measure and report hedge ineffectiveness for cash flow hedges and net investment hedges, and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The ASU also simplifies certain documentation and assessment requirements and will incorporate new disclosure requirements and amendments to existing disclosures. The Company elected to early adopt this standard during the fourth quarter of 2018. The adoption of this ASU did not have an impact on the Company's Consolidated Financial Statements.
Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require considerations of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the assumptions, models and methods for estimating expected credit losses. This ASU is effective for the Company beginning in the first quarter of 2020 and allows for early adoption beginning in the first quarter of 2019. The Company is currently evaluating the impact the ASU will have on its Consolidated Financial Statements.
Accounting for Leases
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which, together with amendments issued during 2018, requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. This ASU is effective for the Company beginning in the first quarter of 2019 and allows for early adoption. Entities are required to use the modified retrospective approach, with the option of applying the requirements of the standard either (1) retrospectively to each prior comparative reporting period presented or (2) retrospectively at the beginning of the period of adoption.
The Company established a cross-functional implementation team to analyze the effect of the ASU. The Company utilized a combination of a bottom-up and top-down approach to identify and analyze its lease portfolio. The analysis included reviewing all forms of leases, performing a completeness assessment over the lease population, assessing the policy elections offered by the standard and evaluating its business processes and internal controls to meet the ASU's accounting, reporting and disclosure requirements. The Company adopted the standard on January 1, 2019 and applied it at the beginning of the period of adoption. Therefore, upon adoption, financial information and disclosures are not updated for comparative reporting periods under the new standard. Additionally, the Company has elected the transition package of practical expedients upon adoption which, among other things, allows an entity to not reassess the historical lease classification.
The adoption of the standard impacts the Company's Consolidated Balance Sheet. The adoption of the standard results in the recognition of right-of-use assets and additional lease liabilities of approximately $81 million as of January 1, 2019, mainly related to operating leases for the Company's real estate portfolio. Along with the recognition of right-of-use assets and lease liabilities, the Company will be providing new disclosures for its leasing activities. The Company does not expect the adoption of the standard to impact the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows. In addition, the standard will not have an impact on the Company's liquidity or debt covenant compliance under its current agreements.
Revenue Recognition
On January 1, 2018, the Company adopted Topic 606 and utilized the full retrospective method.
The adoption of Topic 606 impacted the Company's results as follows:
 
 
December 31, 2017(1)
 
December 31, 2016(1)
(in millions)
(except per share amounts)
 
As Reported
 
New Revenue Standard Adjustment
 
As Adjusted
 
As Reported
 
New Revenue Standard Adjustment
 
As Adjusted
Net sales
 
$
15,191.5

 
$
(358.6
)
 
$
14,832.9

 
$
13,981.9

 
$
(309.2
)
 
$
13,672.7

Gross profit
 
2,449.9

 
0.3

 
$
2,450.2

 
2,327.2

 
1.1

 
$
2,328.3

Gross margin
 
16.1
%
 
40 bps

 
16.5
%
 
16.6
%
 
40 bps

 
17.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
 
866.1

 
0.4

 
866.5

 
819.2

 
0.8

 
820.0

Income tax expense
 
(137.3
)
 
(0.3
)
 
(137.6
)
 
(248.0
)
 
(0.1
)
 
(248.1
)
Net income
 
$
523.0

 
$
0.1

 
$
523.1

 
$
424.4

 
$
0.7

 
$
425.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
3.37

 
$
—

 
$
3.37

 
$
2.59

 
$
0.01

 
$
2.60

Diluted
 
$
3.31

 
$
—

 
$
3.31

 
$
2.56

 
$
—

 
$
2.56

(1)
Amounts may not foot or cross-foot due to rounding.
The adoption of Topic 606 impacted the Company's Consolidated Balance Sheet as follows:
 
 
December 31, 2017(1)
 
December 31, 2016(1)
(in millions)
 
As Reported
 
New Revenue Standard Adjustment
 
As Adjusted
 
As Reported
 
New Revenue Standard Adjustment
 
As Adjusted
Accounts receivable
 
$
2,320.5

 
$
8.8

 
$
2,329.3

 
$
2,168.6

 
$
0.3

 
$
2,168.9

Merchandise inventory
 
449.5

 
(38.0
)
 
411.5

 
452.0

 
(28.1
)
 
423.9

Miscellaneous receivables
 
336.5

 
6.5

 
343.0

 
234.9

 
2.6

 
237.5

Prepaid expenses and other
 
127.4

 
40.9

 
168.3

 
118.9

 
35.3

 
154.2

Total current assets
 
3,378.1

 
18.2

 
3,396.3

 
3,238.1

 
10.1

 
3,248.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Other assets
 
40.8

 
(8.1
)
 
32.7

 
36.0

 
(0.1
)
 
35.9

Total assets
 
6,956.6

 
10.1

 
6,966.7

 
6,948.4

 
10.0

 
6,958.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred revenue
 
194.0

 
(35.2
)
 
158.8

 
172.6

 
(29.1
)
 
143.5

Other accrued expenses
 
180.2

 
41.6

 
221.8

 
147.2

 
36.0

 
183.2

Income tax payable
 
15.1

 
1.1

 
16.2

 
2.6

 
0.7

 
3.3

Total current liabilities
 
2,514.6

 
7.5

 
2,522.1

 
2,280.7

 
7.6

 
2,288.3

 
 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities
 
5,973.7

 
7.5

 
5,981.1

 
5,902.9

 
7.6

 
5,910.5

Total stockholders' equity
 
$
982.9

 
$
2.7

 
$
985.6

 
$
1,045.5

 
$
2.4

 
$
1,047.9

(1)
Amounts may not foot or cross-foot due to rounding.