Summary of Significant Accounting Policies (Notes)

12 Months Ended

Jan. 02, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)Basis of Presentation

The consolidated financial statements include the accounts of the company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses as well as related disclosures. Significant items that are subject to such estimates and judgments include allowances for doubtful accounts, reserves for excess and obsolete inventories, long-lived and intangible assets, warranty reserves, insurance reserves, income tax reserves and post-retirement obligations. On an ongoing basis, the company evaluates its estimates and assumptions based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The company's fiscal year ends on the Saturday nearest December 31. Fiscal years 2020, 2019, and 2018 ended on January 2, 2021, December 28, 2019 and December 29, 2018, respectively, and included 53, 52 and 52 weeks, respectively.

(b)Cash and Cash Equivalents

The company considers all short-term investments with original maturities of three months or less when acquired to be cash equivalents. The company’s policy is to invest its excess cash in interest-bearing deposits with major banks that are subject to minimal credit and market risk.

(c)Accounts Receivable

Accounts receivable, as shown in the consolidated balance sheets, are net of allowances for doubtful accounts of $19.2 million and $14.9 million at January 2, 2021 and December 28, 2019, respectively. At January 2, 2021, all accounts receivable are expected to be collected within one year.

(d)    Inventories

Inventories are composed of material, labor and overhead and are stated at the lower of cost or net realizable value. Costs for inventory have been determined using the first-in, first-out ("FIFO") method. The company estimates reserves for inventory obsolescence and shrinkage based on its judgment of future realization. Inventories at January 2, 2021 and December 28, 2019 are as follows (in thousands):

	2020		2019
Raw materials and parts	$	263,200	$	277,394
Work in process	55,104		58,663
Finished goods	221,894		249,642
	$	540,198	$	585,699

(e)Property, Plant and Equipment

Property, plant and equipment are carried at cost as follows (in thousands):

	2020		2019
Land	$	40,707	$	43,467
Building and improvements	245,435		229,025
Furniture and fixtures	68,063		67,992
Machinery and equipment	220,148		209,290
	574,353		549,774
Less accumulated depreciation	(229,871)		(197,629)
	$	344,482	$	352,145

Property, plant and equipment are depreciated or amortized on a straight-line basis over their useful lives based on management's estimates of the period over which the assets will be utilized to benefit the operations of the company. The useful lives are estimated based on historical experience with similar assets, taking into account anticipated technological or other changes. The company periodically reviews these lives relative to physical factors, economic factors and industry trends. If there are changes in the planned use of property and equipment or if technological changes were to occur more rapidly than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of increased depreciation and amortization expense in future periods.

Following is a summary of the estimated useful lives:

Description	Life
Building and improvements	20 to 40 years
Furniture and fixtures	3 to 7 years
Machinery and equipment	3 to 10 years

Depreciation expense amounted to $39.1 million, $37.9 million and $35.8 million in fiscal 2020, 2019 and 2018, respectively.

Expenditures which significantly extend useful lives are capitalized. Maintenance and repairs are charged to expense as incurred. Asset impairments are recorded whenever events or changes in circumstances indicate that the recorded value of an asset is greater than the sum of its expected future undiscounted cash flows. 

(f)Goodwill and Other Intangibles

The company’s business acquisitions result in the recognition of goodwill and other intangible assets, which are a significant portion of the company’s total assets. Goodwill represents the excess of acquisition costs over the fair value of the net tangible assets and identifiable intangible assets acquired in a business combination. Identifiable intangible assets are recognized separately from goodwill and include trademarks and trade names, technology, customer relationships and other specifically identifiable assets. Trademarks and trade names are deemed to be indefinite-lived. Goodwill and indefinite-lived intangible assets are not amortized, but are subject to impairment testing.

The company performs the annual impairment assessment for goodwill and indefinite-lived intangible assets as of first day of the fourth quarter and more frequently if indicators of impairment exist. The goodwill impairment test is performed at the reporting unit level. The company initially performs a qualitative analysis to determine if it is more likely than not that the goodwill balance or indefinite-life intangible asset is impaired. In conducting a qualitative assessment, the company analyzes a variety of events or factors that may influence the fair value of the reporting unit or indefinite-life intangible, including, but not limited to: macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, share price and other relevant factors.

If an indicator of impairment is determined from the qualitative analysis, then the company will perform a quantitative analysis. The fair value of each reporting unit is compared to its carrying value. If the fair value of the reporting unit is less than its carrying value, the resulting difference will be a charge to impairment of goodwill in the Consolidated Statements of Earnings in the period in which the determination is made. Fair value is determined using a combination of present value techniques and market prices of comparable businesses.

The company completed its annual impairment test for goodwill as of September 27, 2020. The company performed a qualitative assessment to evaluate goodwill for all reporting units. As a result of the financial performance indicators for the Commercial Foodservice reporting unit, the company completed a quantitative analysis. The fair value of the reporting unit exceeded its carrying value by more than 100% and no impairment of goodwill was recognized. Based on the qualitative assessment for all other reporting units it was determined there was no impairment of goodwill. The company has not recognized any goodwill impairments and therefore there are no accumulated impairment losses.

Goodwill is allocated to the business segments as follows (in thousands):

	Commercial Foodservice		Food Processing		Residential Kitchen		Total
Balance as of December 29, 2018	$	1,102,067	$	219,054	$	422,054	$	1,743,175
Goodwill acquired during the year	81,339		43,613		9,503		134,455
Measurement period adjustments to goodwill acquired in prior year	(27,929)		(3,722)		—		(31,651)
Exchange effect	(1,925)		(1,266)		6,959		3,768
Balance as of December 28, 2019	$	1,153,552	$	257,679	$	438,516	$	1,849,747
Goodwill acquired during the year	56,773		—		—		56,773
Measurement period adjustments to goodwill acquired in prior year	(56)		(8,732)		1,770		(7,018)
Exchange effect	18,167		6,851		9,741		34,759
Balance as of January 2, 2021	$	1,228,436	$	255,798	$	450,027	$	1,934,261

Intangible assets consist of the following (in thousands):

	January 2, 2021					December 28, 2019
	Estimated Weighted Avg Remaining Life	Gross Carrying Amount		Accumulated Amortization		Estimated Weighted Avg Remaining Life	Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer relationships	8.5	$	735,264	$	(347,029)	9.2	$	717,397	$	(283,846)
Backlog	0.3	34,729		(31,924)		1.3	29,426		(28,283)
Developed technology	10.0	56,931		(24,394)		5.2	32,999		(21,378)
		$	826,924	$	(403,347)		$	779,822	$	(333,507)
Indefinite-lived assets:
Trademarks and tradenames		$	1,026,804				$	997,066

The company completed its annual impairment for other intangibles as of September 27, 2020. We identified indicators of impairment associated with certain tradenames within all three of our business segments based on the qualitative assessment, which required the completion of a quantitative impairment assessment. The primary indicators of impairment were lower than expected revenue performance in the current year, forecasted revenues for future periods and market conditions. Based on the results of the quantitative assessment, the company recorded impairment charges of $11.6 million associated with several tradenames, none of which were individually material. The company recorded charges of $5.3 million associated with trademarks within the Commercial Foodservice Equipment Group, $5.4 million for the Food Processing Equipment Group and $0.9 million for the Residential Kitchen Equipment Group. The gross value of the trademarks tested was approximately $90.0 million and the fair values of the other trademarks tested with no impairment per the analyses, exceeded their carrying values by more than 20%.

In performing the quantitative assessment of indefinite-life intangible assets, primarily tradenames, the company estimated the fair value using the relief-from-royalty method which requires assumptions related to projected revenues; assumed royalty rates that could be payable if we did not own the brand; and a market participant discount rate based on a weighted-average cost of capital.

The company elected to perform a qualitative assessment on the other indefinite-life intangible assets noting no events that indicated that the fair value was less than carrying value that would require a quantitative impairment assessment.

The estimates of future cash flows used in determining the fair value of goodwill and intangible assets involve significant management judgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions and cost of capital. Inherent in estimating the future cash flows are uncertainties beyond our control, such as changes in capital markets. The actual cash flows could differ materially from management's estimates due to changes in business conditions, operating performance and economic conditions.

The company continues to monitor the global outbreak of the COVID-19 pandemic to assess the outlook for demand of its products and the impact on its business and financial performance. The potential impact of the COVID-19 pandemic on demand, production levels, and operating results in the short-term is uncertain, but the company remains committed to the strategic actions necessary to realize long-term revenue and cash flow growth. The potential negative demand effect on revenues is also uncertain given the volatile environment, but demand and production levels are anticipated to continue to recover.

The aggregate intangible amortization expense was $69.0 million, $64.0 million and $60.0 million in 2020, 2019 and 2018, respectively. The estimated future amortization expense of intangible assets is as follows (in thousands):

2021	$	68,413
2022	62,050
2023	56,058
2024	44,587
2025	38,226
2026 and thereafter	154,243
	$	423,577

 (g)    Accrued Expenses

Accrued expenses consist of the following at January 2, 2021 and December 28, 2019, respectively (in thousands):

	2020		2019
Accrued payroll and related expenses	$	93,926	$	80,621
Contract liabilities	93,871		74,511
Accrued warranty	69,667		66,374
Accrued customer rebates	43,703		51,709
Accrued short-term leases	22,493		21,827
Accrued liabilities held for sale	22,313		—
Accrued sales and other tax	22,030		19,862
Accrued interest rate swaps	14,075		—
Accrued product liability and workers compensation	12,909		15,164
Accrued professional fees	12,133		13,368
Accrued agent commission	11,105		13,816
Accrued restructuring	2,686		1,121
Other accrued expenses	73,630		58,177
	$	494,541	$	416,550

(h)Litigation Matters

From time to time, the company is subject to proceedings, lawsuits and other claims related to products, suppliers, employees, customers and competitors. The company maintains insurance to partially cover product liability, workers compensation, property and casualty, and general liability matters. The company is required to assess the likelihood of any adverse judgments or outcomes to these matters as well as potential ranges of probable losses. A determination of the amount of accrual required, if any, for these contingencies is made after assessment of each matter and the related insurance coverage.  The required accrual may change in the future due to new developments or changes in approach such as a change in settlement strategy in dealing with these matters. The company does not believe that any such matter will have a material adverse effect on its financial condition, results of operations or cash flows of the company.

During 2019, we reached a settlement with respect to a lawsuit filed by the company arising from a prior acquisition included our Residential Kitchen Equipment Segment. The gain associated with this settlement, which is net of the release of funds in escrow, is reflected in the consolidated statement of earnings.

(i)Accumulated Other Comprehensive Income (Loss)

The following table summarizes the components of accumulated other comprehensive income (loss) as reported in the consolidated balance sheets (in thousands):

	2020		2019
Unrecognized pension benefit costs, net of tax of $(89,059) and $(48,633)	$	(400,919)	$	(228,336)
Unrealized gain on interest rate swap, net of tax of $(13,120) and $(5,973)	(37,548)		(16,892)
Currency translation adjustments	(49,961)		(105,705)
	$	(488,428)	$	(350,933)

Changes in accumulated other comprehensive income (loss) (1) were as follows (in thousands):

	Currency Translation Adjustment		Pension Benefit Costs		Unrealized Gain/(Loss) Interest Rate Swap		Total
Balance as of December 29, 2018	$	(112,771)	$	(170,938)	$	7,233	$	(276,476)
Adoption of ASU 2017-12 (2)	—		—		11		11
Other comprehensive income before reclassification	7,066		(59,238)		(22,880)		(75,052)
Amounts reclassified from accumulated other comprehensive income	—		1,840		(1,256)		584
Net current-period other comprehensive income	$	7,066	$	(57,398)	$	(24,125)	$	(74,457)
Balance as of December 28, 2019	$	(105,705)	$	(228,336)	$	(16,892)	$	(350,933)
Other comprehensive income before reclassification	55,744		(174,826)		(36,170)		(155,252)
Amounts reclassified from accumulated other comprehensive income	—		2,243		15,514		17,757
Net current-period other comprehensive income	$	55,744	$	(172,583)	$	(20,656)	$	(137,495)
Balance as of January 2, 2021	$	(49,961)	$	(400,919)	$	(37,548)	$	(488,428)

    (1) As of January 2, 2021 pension and interest rate swap amounts are net of tax of $(89.1) million and $(13.1) million, respectively. During the twelve months ended January 2, 2021, the adjustments to pension benefit costs and unrealized gain/(loss) interest rate swap were net of tax of $(40.4) million and $(7.1) million, respectively.

    (2) As of December 30, 2018, the company adopted ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" using the modified retrospective method. The adoption of this guidance resulted in the recognition of less than $(0.1) million as an adjustment to the opening balance of retained earnings.

(j)    Fair Value Measures

ASC 820 Fair Value Measurements and Disclosures defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into the following levels:

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly

Level 3 – Unobservable inputs based on our own assumptions

The company’s financial assets and liabilities that are measured at fair value are categorized using the fair value hierarchy at January 2, 2021 and December 28, 2019 are as follows (in thousands):

	Fair Value Level 1		Fair Value Level 2		Fair Value Level 3		Total
As of January 2, 2021
Financial Liabilities:
Interest rate swaps	$	—	$	51,093	$	—	$	51,093
Contingent consideration	$	—	$	—	$	25,558	$	25,558
Foreign exchange derivative contracts	$	—	$	2,191	$	—	$	2,191
As of December 28, 2019
Financial Assets:
Interest rate swaps	$	—	$	1,830	$	—	$	1,830
Financial Liabilities:
Interest rate swaps	$	—	$	25,120	$	—	$	25,120
Contingent consideration	$	—	$	—	$	6,697	$	6,697
Foreign exchange derivative contracts	$	—	$	901	$	—	$	901

The contingent consideration, as of January 2, 2021 and December 28, 2019, relates to the earnout provisions recorded in conjunction with various purchase agreements.

The earnout provisions associated with these acquisitions are based upon performance measurements related to sales and earnings, as defined in the respective purchase agreements. On a quarterly basis, the company assesses the projected results for each of the acquisitions in comparison to the earnout targets and adjusts the liability accordingly. During fiscal 2020 the increase in contingent consideration was associated with 2020 acquisitions and there were no material performance assumption adjustments.

(k)Foreign Currency

The income statements of the company’s foreign operations are translated at the monthly average rates. Assets and liabilities of the company’s foreign operations are translated at exchange rates at the balance sheet date. These translation adjustments are not included in determining net income for the period but are disclosed and accumulated in a separate component of stockholders’ equity. Exchange gains and losses on foreign currency transactions are included in determining net income for the period in which they occur. These transactions amounted to a loss of $2.9 million, gain of $0.9 million and a loss of $2.6 million in 2020, 2019 and 2018, respectively, and are included in other expense on the statements of earnings.

(l)Shipping and Handling Costs

Fees billed to the customer for shipping and handling are classified as a component of net revenues. Shipping and handling costs are included in cost of products sold.

(m)Warranty Costs

In the normal course of business, the company issues product warranties for specific product lines and provides for the estimated future warranty cost in the period in which the sale is recorded. The estimate of warranty cost is based on contract terms and historical warranty loss experience that is periodically adjusted for recent actual experience. Because warranty estimates are forecasts that are based on the best available information, claims costs may differ from amounts provided. Adjustments to initial obligations for warranties are made as changes in the obligations become reasonably estimable.

A rollforward of the warranty reserve for the fiscal years 2020 and 2019 are as follows (in thousands):

	2020		2019
Beginning balance	$	66,374	$	59,451
Warranty reserve related to acquisitions	1,485		7,353
Warranty expense	58,047		68,842
Warranty claims paid	(56,239)		(69,272)
Ending balance	$	69,667	$	66,374

(n)Research and Development Costs

Research and development costs, included in cost of sales in the consolidated statements of earnings, are charged to expense when incurred. These costs were $35.3 million, $41.2 million and $35.3 million in fiscal 2020, 2019 and 2018, respectively.

(o)Non-Cash Share-Based Compensation

The company estimates the fair value of restricted share grants and stock options at the time of grant and recognizes compensation costs over the vesting period of the awards and options. Non-cash share-based compensation expense of $19.6 million, $8.1 million and $2.5 million was recognized for fiscal 2020, 2019 and 2018, respectively, associated with restricted share grants. The company recorded a related tax benefit of $2.7 million, $0.5 million and less than $0.1 million in fiscal 2020, 2019 and 2018, respectively.

As of January 2, 2021, there was $44.3 million of total unrecognized compensation cost related to nonvested restricted share grant compensation arrangements, if all performance conditions are fully achieved. The remaining weighted average life is 1.24 years.

Share grant awards not subject to market conditions for vesting are valued at the closing share price of the company’s stock as of the date of the grant. The company issued 389,993 and 537,059 restricted share grant awards in 2020 and 2019, respectively, with a fair value of $22.5 million and $60.8 million, respectively. Share grant awards issued in 2020 and 2019 are generally performance based and were not subject to market conditions. The weighted average fair value of $57.74 and $113.26 per share for the awards for 2020 and 2019, respectively, represent the closing share price of the company’s stock as of the date of grant.

On December 31, 2020, the company issued restricted stock units, which entitle the holder to shares of common stock subject to time vesting and the achievement of certain market and performance goals. Compensation expense is recognized over the performance measurement period of the units in accordance with ASC 718 Stock Compensation for awards with market and performance vesting conditions. The fair value of restricted stock units granted during 2020 was $135.31 and no restricted stock units have vested.

As of January 2, 2021, there was $10.7 million of total unrecognized compensation cost related to nonvested restricted stock unit compensation arrangements, if all performance conditions are fully achieved. The remaining weighted average life is 2.18 years.

(p)Earnings Per Share

“Basic earnings per share” is calculated based upon the weighted average number of common shares actually outstanding, and “diluted earnings per share” is calculated based upon the weighted average number of common shares outstanding and other dilutive securities.

The company’s potentially dilutive securities consist of shares issuable on exercise of outstanding options and vesting of restricted stock grants computed using the treasury method and amounted to 43,000, 9,000, and 28,000 for fiscal 2020, 2019 and 2018, respectively. During fiscal 2020, the average market price of the company's common stock has not exceeded the exercise price of the Convertible Notes and there have been no conversions to date, and as a result there is no impact to the diluted earnings per share. See Note 5, Financing Arrangements, in these Notes to the Consolidated Financial Statements for further details on the Convertible Notes. There were no anti-dilutive equity awards excluded from common stock equivalents for 2020, 2019 or 2018.

(q)Consolidated Statements of Cash Flows

Cash paid for interest was $65.6 million, $80.9 million and $55.3 million in fiscal 2020, 2019 and 2018, respectively. Cash payments totaling $41.2 million, $91.5 million, and $79.0 million were made for income taxes during fiscal 2020, 2019 and 2018, respectively.

(r)New Accounting Pronouncements

Accounting Pronouncements - Recently Adopted

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, and has since modified the standard with several ASUs (collectively, the “new credit loss standard”). The new credit loss standard requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. The company adopted the new standard as of December 29, 2019 (first day of fiscal year 2020) using the modified retrospective approach. As a result of the company's assessment process on its receivables and contract assets portfolio, which is the only financial instrument in scope of this standard, the adoption of this guidance did not have a material impact on the company's Consolidated Financial Statements.  

In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". The amendments in ASU-04 simplify the subsequent measurement of goodwill, by removing the second step of the goodwill impairment test. An entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The company adopted this guidance on December 29, 2019 on a prospective basis. The adoption of this guidance did not have an impact on the company's Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement". The amendments in ASU-13 remove, modify and add various disclosure requirements around fair value measurement in order to clarify and improve the cost-benefit nature of disclosures. The company adopted this guidance on December 29, 2019 on a prospective basis. The adoption of this guidance did not have an impact on the company's Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20)". The amendments in ASU-14 remove, modify and add various disclosure requirements around the topic in order to clarify and improve the cost-benefit nature of disclosures. The company adopted this guidance on December 29, 2019 on a retrospective basis for all periods presented. The adoption of this guidance did not have an impact on the company's Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)". The amendments in ASU-15 align the requirements for capitalizing implementation costs in a service contract hosting arrangement with those of developing or obtaining internal-use software. The company adopted this guidance on December 29, 2019 on a prospective basis. The adoption of this guidance did not have an impact on the company's Consolidated Financial Statements.

Accounting Pronouncements - To be adopted

In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)", which removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also clarifies and simplifies other areas of ASC 740. This guidance is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2020 with early adoption permitted. Certain amendments in this update must be applied on a prospective basis, certain amendments must be applied on a retrospective basis, and certain amendments must be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings in the period of adoption. The company intends to adopt this guidance on January 3, 2021, and does not expect a material impact on the company's Consolidated Financial Statements upon adoption.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting". Subject to meeting certain criteria, ASU 2020-04 provides optional expedients and exceptions to applying contract modification accounting under existing generally accepted accounting principles, for contracts that are modified to address the expected phase out of the London Inter-bank Offered Rate (“LIBOR”) by the end of 2021. Some of the Company’s contracts with respect to its borrowings and interest rate swap contracts already contain comparable alternative reference rates that would automatically take effect upon the phasing out of LIBOR, while for others, the company anticipates negotiating comparable replacement rates with its counterparties.  In January 2021, the FASB issued ASU 2021-01 to provide supplemental guidance and to further clarify the scope. This guidance is effective for all entities from the beginning of an interim period that includes the issuance date of the ASU. An entity may elect to apply the amendments prospectively through December 31, 2022. The company is currently evaluating the impacts the adoption of this guidance will have on its Consolidated Financial Statements.

In August 2020, the FASB issued ASU No. 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. By removing the separation model, a convertible debt instrument will be reported as a single liability instrument with no separate accounting for embedded conversion features. This new standard also removes certain settlement conditions that are required for contracts to qualify for equity classification and simplifies the diluted earnings per share calculations by requiring that an entity use the if-converted method and that the effect of potential share settlement be included in diluted earnings per share calculations. This guidance is effective for annual reporting periods, and interim periods within those reporting periods, beginning after December 15, 2021 with early adoption permitted. The amendments are required to be adopted on either a modified retrospective method or a fully retrospective method. Upon adoption, the Company expects a decrease to additional paid in capital, an increase in the carrying value of the Convertible Notes and an increase to retained earnings. After adoption, the Company expects a reduction in its reported interest expense. The company is anticipating early adoption and will continue to evaluate the impact this guidance will have on its Consolidated Financial Statements.