RECENT ACCOUNTING PRONOUNCEMENTS

ASU No. 2015-02

In February 2015, the FASB issued ASU No. 2015-02, Consolidation - Amendments to the Consolidation Analysis, which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendments in the guidance: 1) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, 2) eliminate the presumption that a general partner should consolidate a limited partnership, 3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships, and 4) provide a scope exception from consolidation guidance for certain investment funds.

The Company adopted the amendment, effective January 1, 2016, through retrospective application on all existing agreements; however, there was no resulting change to amounts reported in prior periods. Refer to Note 1 for current principles of consolidation.

ASU No. 2015-05

In April 2015, the FASB issued new accounting guidance related to whether a cloud computing arrangement includes a software license (ASU No. 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement). If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract.

The Company adopted the amendment prospectively on all arrangements entered into or materially modified beginning January 1, 2016, on an individual arrangement basis. The impact to the Company’s consolidated financial statements was not material in the current quarter.

ASU No. 2016-02

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The most significant amendment to existing GAAP is the recognition of lease assets (i.e., right of use assets) and liabilities on the balance sheet for leases that are classified as operating leases by lessees. Lessees may also make a policy election to scope out all short-term leases, defined as leases with lease terms (including options to extend) that are less than 12 months. In general, the lessor model is similar to the current model. Amendments to lessor accounting largely align with certain changes to the lessee model and lease recognition criteria within ASC Topic 606 - Revenue from Contracts with Customers. Additional amendments include the elimination of leveraged leases; modification to the definition of a lease; clarification on separating lease components from non-lease components (including a practical expedient not to separate components, by class of assets); amendments on sale and leaseback guidance to include evaluating “sale” criteria in accordance with ASC Topic 606 - Revenue from Contracts with Customers; and disclosure of additional quantitative and qualitative information.

ASU 2016-02 will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Lessees and lessors are also required to disclose the other comparative amounts for each prior period presented in the financial statements as if the updated guidance had always been applied, including practical expedients (if elected) for lease determination, lease classification, initial direct costs, lease term (i.e., probability of lease extension), and impairment.

The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements, including whether to adopt any practical expedients or policy elections from this ASU.

ASU No. 2016-08 and ASU No. 2016-10

In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which is intended to improve implementation guidance on principal versus agency considerations within Topic 606. The amendments clarify the following:


•	how an entity could be both principal and agent in a contract with a customer that includes more than one specified good or service;


•	how an entity determines the nature of its promise (to provide each specified good or service);


•	how control over the good or service, prior to transfer to the customer, determines the assessment of principal or agency for each specified good or service in the contract;


•	how the indicators that an entity is the principal within the implementation guidance of Topic 606 support or assist in the assessment of control as one or more indicators may be more or less persuasive than others.

In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which is intended to improve implementation guidance on identifying performance obligations and licensing aspects of Topic 606. Only a few of the amendements may potentially impact the Company. These amendments are as follows:


•	When identifying performance obligations, whether it is necessary to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract.


•	Determining whether promised goods and services are separately identifiable (that is, distinct within the context of the contract).

The amendments in ASU No. 2016-08 and No. 2016-10 will be effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that annual reporting period. The amendments will be applied through the election of one of two retrospective methods.

The Company is currently assessing the effect, but does not expect the adoption will have a significant impact on the Company’s consolidated financial statements.

ASU No. 2016-09

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments will require recognition of excess tax benefits and deficiencies associated with awards which vest or settle within income tax expense or benefit in the statement of comprehensive income, with the tax effects treated as discrete items in the reporting period in which they occur. The update further requires entities to recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. In addition, excess tax benefits will be classified as an operating activity rather than as a financing activity in the statement of cash flows. This will eliminate the current APIC pool concept.

The amendments will allow an accounting policy election to account for forfeitures as they occur as opposed to estimating the forfeiture rate. Entities will also be permitted to withhold up to the maximum statutory tax rates in the applicable jurisdictions while still qualifying for equity classification and will subsequently classify all cash paid for withholding shares for tax-withholding purposes as a financing activity in the statement of cash flows.

ASU 2016-09 will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Amendments related to the timing of when excess tax benefits are recognized, minimum statutory withholding requirements, and forfeitures should be applied using a modified retrospective transition method. Amendments related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds shares to meet the minimum statutory withholding requirement should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement should be applied prospectively. An entity may elect to apply the amendments related to the presentation of excess tax benefits on the statement of cash flows using either a prospective transition method or a retrospective transition method.

The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.