RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

Intangibles - Goodwill and Other (Topic 350) - In January 2017, the FASB issued ASU No. 2017-04, “Simplifying the Test for Goodwill Impairment.” This ASU simplifies the testing for goodwill impairments by eliminating "Step 2" from the goodwill impairment test. Under the new guidance, goodwill impairment losses are calculated based on the "Step 1" computation with the impairment loss being equal to the amount by which a reporting unit's carrying amount exceeds its implied fair value, limited to the amount of goodwill allocated to the reporting unit. The guidance is effective prospectively as of January 1, 2020, with early adoption permitted. The Company elected to early adopt this guidance in connection with its 2017 annual impairment test. See Note 8, Goodwill and Intangible Assets, for more information.

Recently Issued Accounting Pronouncements Not Yet Adopted

Revenue from Contracts with Customers (Topic 606) - In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers," as a new Topic, ASC Topic 606. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new guidance requires expanded disclosure of qualitative and quantitative information about the Company's revenues from contracts with customers.

The Company assembled a project implementation team to assess the impact of the guidance by reviewing its current accounting policies and practices to identify potential differences that would result from applying the new requirements to its revenue contracts, including evaluating its performance obligations, principal versus agent considerations, contract costs, and variable consideration. The Company has completed its contract reviews and evaluation of impact and has concluded this guidance will not have a material impact on its financial statements upon adoption since the timing and pattern of revenue recognition will predominantly continue to be recognized as the Company’s performance obligation to ship or deliver its products is completed and the transfer of control has passed to the customer in accordance with the new standard. The Company will adopt the new guidance effective January 1, 2018 using the modified retrospective method.

Statement of Cash Flows (Topic 230) - In August 2016, the FASB issued ASU No. 2016-15, "Classification of Certain Cash Receipts and Cash Payments." This ASU, which will be retrospectively adopted by the Company as of January 1, 2018, was issued to reduce diversity in practice for how certain cash receipts and cash payments are classified and presented in the statement of cash flows. Upon adoption of the new guidance, the Company will retrospectively report its 2017 and 2016 Consolidated Statements of Cash Flows for the following items:

•

Arrangements whereby the Company sells trade receivables to third parties without recourse and receives beneficial interests for a portion of these receivables, the proceeds of which are currently included in “Operating Activities” in the Condensed Consolidated Statements of Cash Flows. Under the new guidance, approximately $69.0 million and $3.9 million of beneficial interests will be disclosed as a non-cash activity, with cash receipts of approximately $44.3 million and $3.4 million classified as cash inflows from "Investing Activities" in the Consolidated Statements of Cash Flows for 2017 and 2016, respectively.


•	Cash payments for debt prepayments and debt extinguishment costs of approximately $8.8 million and $8.4 million will be reclassified from "Operating Activities" to "Financing Activities" in the Consolidated Statements of Cash Flows for 2017 and 2016, respectively.

Income Taxes (Topic 740) - In October 2016, the FASB issued ASU No. 2016-16, "Intra-Entity Transfers of Assets Other than Inventory." This ASU requires the recognition of income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs and removes the exception to postpone recognition until the asset has been sold to an outside party. The guidance is effective on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of January 1, 2018. The Company does not expect this ASU to have a material impact on its financial statements.

Leases (Topic 842) - In February 2016, the FASB issued ASU No. 2016-02, “Leases.” This ASU requires lessees to recognize most leases in their balance sheets, but record expenses on their income statements in a manner similar to current accounting. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The guidance is effective on a modified retrospective basis as of January 1, 2019, with early adoption permitted. The Company continues to evaluate the impact of this ASU. See Note 17, Operating Lease Commitments, to the Consolidated Financial Statements.

Derivatives and Hedging (Topic 815) - In August 2017, the FASB issued ASU No. 2017-12, “Targeted Improvements to Accounting for Hedging Activities.” This ASU improves the financial reporting of hedge relationships by updating hedging designation and measurement guidance. The update also simplifies the application of existing hedge accounting guidance related to assessing hedge effectiveness. The guidance is effective prospectively as of January 1, 2019, and is applied to contracts in existence at the date of adoption, with the effects of which reflected as of January 1 of the year of adoption. Early adoption is permitted. The Company is evaluating the impact of this ASU.