2. Recent Accounting Pronouncements

In February 2018, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). In December 2017, the Tax Cuts and Jobs Act (the "U.S. Tax Act") was signed into law. Prior to ASU 2018-02, GAAP required deferred tax assets and deferred tax liabilities to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period including the enactment date. The U.S. Tax Act reduces the historical U.S corporate tax rate and the effect of that change is required to be included in income from continuing operations, even if the original tax effects were recorded in Accumulated Other Comprehensive Income ("AOCI"). This could cause some tax effects to become stranded in AOCI as they are not updated to reflect the new tax rate. This new standard allows a company to elect to reclass the stranded tax effects resulting from the U.S. Tax Act from AOCI to retained earnings. The adoption of the new standard may be applied in the period of adoption or retrospectively to each period(s) effected by the change in the corporate tax rate. The Company is currently in the process of evaluating the impact of adoption of ASU 2018-02 on the Company’s consolidated financial statements. ASU 2018-02 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption of the standard is permitted including adoption in any interim period for which financial statements have not been issued.

In August 2017, the FASB issued ASU No. 2017-12, Derivative and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. The new standard improves certain aspects of the hedge accounting model, including making more risk management strategies eligible for hedge accounting and simplifying the assessment of hedge effectiveness. The Company is currently in the process of assessing the impact of adoption of ASU 2017-12 on the Company's consolidated financial statements. The Company will adopt ASU 2017-12 effective with its 2019 fiscal year.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU amends the existing accounting standard for leases. The amendments are intended to increase transparency and comparability among organizations by requiring recognition of lease assets and lease liabilities on the balance sheet and disclosure of key information about leasing arrangements. The new standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period, and early application is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements and disclosures, but expects the impact to the Company’s Consolidated Balance Sheets to be significant. At this time, the Company does not expect adoption of ASU 2016-02 to have a material impact on its Consolidated Statements of Income as the majority of its leases will remain operating in nature. The Company is in the process of analyzing existing leases, practical expedients, and deploying its implementation strategy. The Company will adopt ASU 2016-02 at the beginning of its 2019 fiscal year.

Other than the items mentioned above, there are no other recently issued accounting standards that are expected to have a material effect on the Company’s financial condition, results of operations or cash flow.

Recently Adopted Accounting Standards

On January 1, 2018, we adopted the accounting standard ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new standard requires presentation of all components of net periodic pension and postretirement benefit costs, other than service costs, in an income statement line item outside of a subtotal of income from operations. The service cost component will continue to be presented in the same line item as other employee compensation costs. The Company used the practical expedient which permits an employer to use the amounts disclosed in its pension disclosures as the basis for applying the retrospective presentation requirements. On this basis, the Company restated its operating income which was reduced by $8.5 million for the year ended December 31, 2017 and $2.1 million for the three months ended March 31, 2017.

On January 1, 2018, we adopted the accounting standard ASU 2014-09, Revenue from Contracts with Customers and all the related amendments (Topic 606) and applied it to contracts which were not completed as of January 1, 2018 using the modified retrospective method. A completed contract is one where all (or substantially all) of the revenue was recognized in accordance with the revenue guidance that was in effect before the date of initial application of ASU 2014-09. We recognized the cumulative effect of $1.6 million, net of tax, upon adopting ASU 2014-09 as an addition to opening retained earnings as of January 1, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

The majority of our revenue is recognized at a point in time, when control is transferred to our customer, which is usually when products are shipped or delivered based upon the specific terms contained within the agreement. Our general payment terms are usually within 30-90 days. We do not have any significant financing components.

The cumulative effect of the changes on our January 1, 2018 opening Condensed Consolidated Balance Sheet due to the adoption of ASU 2014-09 were as follows:



(in millions of dollars)	Balance at December 31, 2017			Adjustments due to ASU 2014-09			Balance at January 1, 2018
Assets:
Inventories	$	254.2		$	(3.5	)	$	250.7
Other current assets	29.2			6.9			36.1

Liabilities and stockholders' equity:
Accrued customer program liabilities	141.1			1.1			142.2
Other current liabilities	113.8			0.1			113.9
Deferred income taxes	177.1			0.6			177.7
Accumulated deficit	(739.2		)	1.6			(737.6		)

The impact of the adoption of ASU 2014-09 on our Consolidated Statements of Income and Condensed Consolidated Balance Sheet for the three-month period ended March 31, 2018 was as follows:



	Three Months Ended March 31, 2018
(in millions of dollars)	As Reported			Balances without adoption of ASU 2014-09			Effect of Change Higher/(Lower)
Consolidated Statements of Income:
Net sales	$	405.8		$	405.7		$	0.1
Cost of products sold	278.3			278.4			(0.1		)
Net income	10.4			10.2			0.2

Condensed Consolidated Balance Sheet:
Assets:
Accounts receivable, net	316.1			313.8			2.3
Inventories	294.5			297.3			(2.8		)
Other current assets	51.5			44.4			7.1

Liabilities and stockholders' equity:
Accrued customer program liabilities	98.5			97.9			0.6
Other current liabilities	112.1			108.5			3.6
Deferred income taxes	174.8			174.2			0.6
Accumulated deficit	(733.9		)	(735.7		)	1.8

See "Note 5. Revenue Recognition" for the required disclosures related to ASU 2014-09.