Quarterly report pursuant to Section 13 or 15(d)

Significant Accounting Policies (Policies)

v3.8.0.1
Significant Accounting Policies (Policies)
9 Months Ended
Dec. 31, 2017
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]
Basis of Presentation
:
The accompanying unaudited consolidated financial statements include the accounts of Crown Crafts, Inc. (the “Company”) and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) applicable to interim financial information as promulgated by the Financial Accounting Standards Board (“FASB”). Accordingly, they do
not
include all of the information and disclosures required by GAAP for complete financial statements. References herein to GAAP are to topics within the FASB Accounting Standards Codification (the “FASB ASC”), which has been established by the FASB as the authoritative source for GAAP to be applied by nongovernmental entities.
 
In the opinion of management,
the interim unaudited consolidated financial statements contained herein include all adjustments necessary to present fairly the financial position of the Company as of
December 31, 2017
and the results of its operations and cash flows for the periods presented. Such adjustments include normal, recurring accruals, as well as the elimination of all significant intercompany balances and transactions. Operating results for the
three
and
nine
-month periods ended
December 31, 2017
are
not
necessarily indicative of the results that
may
be expected by the Company for its fiscal year ending
April 1, 2018.
For further information, refer to the Company’s consolidated financial statements and notes thereto included in the Company’s annual report on Form
10
-K for the fiscal year ended
April 2, 2017.
Fiscal Period, Policy [Policy Text Block]
Fiscal Year:
The Company’s fiscal year ends on the Sunday that is nearest to or on
March 31.
References herein to “fiscal year
2018”
or
“2018”
represent the
52
-week period ending
April 1, 2018
and references herein to “fiscal year
2017”
or
“2017”
represent the
52
-week period ended
April 2, 2017.
Use of Estimates, Policy [Policy Text Block]
Use of Estimates
:
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the accompanying condensed consolidated balance sheets and the reported amounts of revenues and expenses during the periods presented on the accompanying unaudited consolidated statements of income and cash flows. Significant estimates are made with respect to the allowances related to accounts receivable for customer deductions for returns, allowances and disputes. The Company also has a certain amount of discontinued finished products which necessitates the establishment of inventory reserves and allocates indirect costs to inventory based on an estimated percentage of the supplier purchase price, each of which is highly subjective. The Company has also established estimated reserves in connection with the uncertainty concerning the amount of income tax recognized. Actual results could differ from those estimates.
Cash and Cash Equivalents, Policy [Policy Text Block]
Cash and Cash Equivalents:
The Company considers highly-liquid investments, if any, purchased with original maturities of
three
months or less to be cash equivalents.
 
The Company’s credit facility consists of a revolving line of credit under a financing agreement with The CIT Group/Commercial Services, Inc. (“CIT”), a subsidiary of CIT Group, Inc. The Company classifies a negative balance outstanding under this revolving line of credit as cash, as these amounts are legally owed to the Company and are immediately available to be drawn upon by the Company. There are
no
compensating balance requirements or other restrictions on the transfer of amounts associated with the Company’s depository accounts.
Fair Value of Financial Instruments, Policy [Policy Text Block]
Financial Instruments
:
For short-term instruments such as cash and cash equivalents, accounts receivable and accounts payable, the Company uses carrying value as a reasonable estimate of the fair value.
Advertising Costs, Policy [Policy Text Block]
Advertising Cost
s
:
The Company’s advertising costs are primarily associated with cooperative advertising arrangements with certain of the Company’s customers and are recognized using the straight-line method based upon aggregate annual estimated amounts for those customers, with periodic adjustments to the actual amounts of authorized agreements. Costs associated with advertising on websites such as Facebook and Google and which are related to the Company’s online business are recorded as incurred. Advertising expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income and amounted to
$534,000
and
$168,000
for the
three
-month periods ended
December 31, 2017
and
January 1, 2017,
respectively, and amounted to
$1.1
million and
$666,000
for the
nine
-month periods ended
December 31, 2017
and
January 1, 2017,
respectively.
Segment Reporting, Policy [Policy Text Block]
Segment and Related Information:
The Company operates primarily in
one
principal segment, infant, toddler and juvenile products. These products consist of infant and toddler bedding, bibs, soft bath products, disposable products and accessories. Net sales of bedding, blankets and accessories and net sales of bibs, bath and disposable products for the
three
and
nine
-month periods ended
December 31, 2017
and
January 1, 2017
are as follows (in thousands):
 
   
Three-Month Periods Ended
   
Nine-Month Periods Ended
 
   
December 31, 2017
   
January 1, 2017
   
December 31, 2017
   
January 1, 2017
 
Bedding, blankets and accessories
  $
11,558
    $
11,445
    $
30,414
    $
31,847
 
Bibs, bath and disposable products
   
5,918
     
5,817
     
17,170
     
16,823
 
Total net sales
  $
17,476
    $
17,262
    $
47,584
    $
48,670
 
Revenue Recognition, Policy [Policy Text Block]
Revenue Recognition:
Sales made directly to consumers are recorded when shipped products have been received by customers. Sales made to retailers are recorded when products are shipped to customers and are reported net of allowances for estimated returns and allowances in the accompanying unaudited condensed consolidated statements of income. Allowances for returns are estimated based on historical rates. Allowances for returns, cooperative advertising allowances, warehouse allowances, placement fees, volume rebates, coupons and discounts are recorded commensurate with sales activity or using the straight-line method, as appropriate, and the cost of such allowances is netted against sales in reporting the results of operations. Shipping and handling costs, net of amounts reimbursed by customers, are
not
material and are included in net sales.
Receivables, Policy [Policy Text Block]
Allowances Against Accounts Receivable
: The Company’s allowances against accounts receivable are primarily contractually agreed-upon deductions for items such as cooperative advertising and warehouse allowances, placement fees and volume rebates. These deductions are recorded throughout the year commensurate with sales activity or using the straight-line method, as appropriate. Funding of the majority of the Company’s allowances occurs on a per-invoice basis. The allowances for customer deductions, which are netted against accounts receivable in the condensed consolidated balance sheets, consist of agreed upon advertising support, placement fees, markdowns and warehouse and other allowances. All such allowances are recorded as direct offsets to sales, and such costs are accrued commensurate with sales activities or as a straight-line amortization charge of an agreed-upon fixed amount, as appropriate to the circumstances for each such arrangement. When a customer requests deductions, the allowances are reduced to reflect such payments or credits issued against the customer’s account balance. The Company analyzes the components of the allowances for customer deductions monthly and adjusts the allowances to the appropriate levels. The timing of funding requests for advertising support can cause the net balance in the allowance account to fluctuate from period to period. The timing of such funding requests should have
no
impact on the consolidated statements of income since such costs are accrued commensurate with sales activity or using the straight-line method, as appropriate.
 
To reduce the exposure to credit losses and to enhance the predictability of its cash flows, t
he Company assigns the majority of its trade accounts receivable under factoring agreements with CIT. In the event a factored receivable becomes uncollectible due to creditworthiness, CIT bears the risk of loss. The Company’s management must make estimates of the uncollectibility of its non-factored accounts receivable to evaluate the adequacy of the Company’s allowance for doubtful accounts, which is accomplished by specifically analyzing accounts receivable, historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in its customers’ payment terms. The Company’s bad debt expense is included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income. The Company did
not
recognize a charge for bad debt expense during fiscal year
2017
and recorded
$25,000
for the
nine
-month period ended
December 31, 2017.
 
The Company
’s accounts receivable as of
December 31, 2017
was
$12.8
million, net of allowances of
$657,000.
Of this amount,
$9.9
million was due from CIT under the factoring agreements, which represents the maximum loss that the Company could incur if CIT failed completely to perform its obligations thereunder.
Other Accrued Liabilities [Policy Text Block]
Other Accrued Liabilities
An amount of
$459,000
was recorded as other accrued liabilities as of
December 31, 2017.
Of this amount,
$199,000
reflected unearned revenue recorded for payments from customers that were received before products were shipped. Other accrued liabilities as of
December 31, 2017
also includes a reserve for customer returns of
$13,000
and unredeemed store credits and gift certificates totaling
$27,000.
The Company reduces its liabilities for store credits and gift certificates, and recognizes the associated revenue, at the earlier of their redemption by customers, their expiration or when their likelihood of redemption becomes remote, generally
two
years from the date of issuance.
Depreciation, Depletion, and Amortization [Policy Text Block]
Depreciation and Amortization:
The accompanying condensed consolidated balance sheets reflect property, plant and equipment, and certain intangible assets at cost less accumulated depreciation or amortization. The Company capitalizes additions and improvements and expenses maintenance and repairs as incurred. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, which are
three
to
eight
years for property, plant and equipment, and
five
to
twenty
years for amortizable intangible assets. The Company amortizes improvements to its leased facilities over the term of the lease or the estimated useful life of the asset, whichever is shorter.
Goodwill and Intangible Assets, Policy [Policy Text Block]
Valuation of Long-Lived Assets
and
Identifiable Intangible Assets:
In addition to the depreciation and amortization procedures set forth above, the Company reviews for impairment long-lived assets and certain identifiable intangible assets whenever events or changes in circumstances indicate that the carrying amount of any asset
may
not
be recoverable. In the event of impairment, the asset is written down to its fair market value. The Company incurs certain legal and associated costs in connection with applications for patents, which are classified within other finite-lived intangible assets in the accompanying condensed consolidated balance sheets. The Company capitalizes such costs to be amortized over the expected life of the patent to the extent that an economic benefit is anticipated from the resulting patent or an alternative future use for the underlying product is available to the Company. The Company also capitalizes legal and other costs incurred in the protection or defense of the Company’s patents to the extent that it is believed that the future economic benefit of the patent will be maintained or increased and a successful outcome of the litigation is probable. Capitalized patent protection or defense costs are amortized over the remaining expected life of the related patent. The Company’s assessment of the future economic benefit of its patents involves considerable management judgment, and a different conclusion could result in a material impairment charge up to the carrying value of these assets.
Inventory, Policy [Policy Text Block]
Inventory Valuation:
The preparation of the Company's financial statements requires careful determination of the appropriate value of the Company's inventory balances. Such amounts are presented as a current asset in the accompanying condensed consolidated balance sheets and are a direct determinant of cost of products sold in the accompanying consolidated statements of income and, therefore, have a significant impact on the amount of net income in the accounting periods reported. The basis of accounting for inventories is cost, which for products that have been contracted to be manufactured includes the direct supplier acquisition cost, duties, taxes and freight, and the indirect costs incurred to design, develop, source and store the products until they are sold. A portion of the Company’s products are manufactured by a wholly-owned subsidiary of the Company. Because most of these products are made to order and are shipped immediately after production has been completed, the Company’s aggregate inventory cost for this subsidiary is primarily related to raw materials. Once cost has been determined, the Company’s inventory is then stated at the lower of cost or net realizable value, with cost determined under the assumption that inventory quantities are sold in the order in which they are acquired (the
first
-in,
first
-out ("FIFO") method).
 
The indirect costs allocated to inventory are done so as a percentage of projected annual supplier purchases and can impact the Company’s results of operations as purchase volumes fluctuate from quarter to quarter and year to year. The difference between indirect costs incurred and the indirect costs allocated to inventory creates a burden variance, which is generally favorable when actual inventory purchases exceed planned inventory purchases, and is generally unfavorable when actual inventory purchases are lower than planned inventory purchases. The determination of the indirect charges and their allocation to the Company's finished products inventories is complex and requires significant management judgment and estimates. If management made different judgments or utilized different estimates, then differences would result in the valuation of the Company's inventories, the amount and timing of the Company's cost of products sold and the resulting net income for any accounting period.
 
On a periodic basis, management reviews the Company’s inventory quantities on hand for obsolescence, physical deterioration, changes in price levels and the existence of quantities on hand which
may
not
reasonably be expected to be sold within the normal operating cycle of the Company's operations. To the extent that any of these conditions is believed to exist or the market value of the inventory expected to be realized in the ordinary course of business is otherwise
no
longer as great as its carrying value, an allowance against the inventory value is established. To the extent that this allowance is established or increased during an accounting period, an expense is recorded in cost of products sold in the Company's consolidated statements of income. Only when inventory for which an allowance has been established is later sold or is otherwise disposed of is the allowance reduced accordingly. Significant management judgment is required in determining the amount and adequacy of this allowance. In the event that actual results differ from management's estimates or these estimates and judgments are revised in future periods, the Company
may
not
fully realize the carrying value of its inventory or
may
need to establish additional allowances, either of which could materially impact the Company's financial position and results of operations.
Revenue Recognition, Services, Royalty Fees [Policy Text Block]
Royalty Payments:
The Company has entered into agreements that provide for royalty payments based on a percentage of sales with certain minimum guaranteed amounts. These royalties are accrued based upon historical sales rates adjusted for current sales trends by customers. Royalty expense is included in cost of products sold in the accompanying unaudited condensed consolidated statements of income and amounted to
$1.8
million and
$1.9
million for the
three
-month periods ended
December 31, 2017
and
January 1, 2017,
respectively, and amounted to
$5.0
million and
$5.2
million for the
nine
-month periods ended
December 31, 2017
and
January 1, 2017,
respectively.
Income Tax, Policy [Policy Text Block]
Provision for Income Taxes:
The Company’s provision for income taxes includes all currently payable federal, state, local and foreign taxes and is based upon the Company’s estimated annual effective tax rate, which is based on the Company’s forecasted annual pre-tax income, as adjusted for certain expenses within the consolidated statements of income that will never be deductible on the Company’s tax returns and certain charges expected to be deducted on the Company’s tax returns that will never be deducted on the consolidated statements of income, multiplied by the statutory tax rates for the various jurisdictions in which the Company operates and reduced by certain anticipated tax credits.
The Company’s provision for income taxes for fiscal year
2018
is based upon an estimated annual effective tax rate (“ETR”) from continuing operations of
33.0%.
 
The Company
’s policy is to recognize the effect that a change in enacted tax rates would have on net deferred income tax assets and liabilities in the period in which the tax rates are changed. On
December 22, 2017,
the President of the United States signed into law comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “TCJA”), which includes a provision to lower the federal corporate income tax rate to
21%
effective as of
January 1, 2018.
As the Company’s fiscal
2018
will end on
April 1, 2018,
the lower corporate income tax rate will be phased in, resulting in a blended federal statutory rate of
30.75%
for fiscal
2018.
The Company’s policy is to provide for deferred income taxes based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates that will be in effect when the differences are expected to reverse. The Company has prepared an initial accounting to recognize the effect of the TCJA on the Company’s net deferred income tax assets, which as of
October 2, 2017
and
April 2, 2017
had been recorded based upon the pre-TCJA enacted composite federal, state and foreign income tax rate of approximately
37.5%
that would have been applied as the financial statement and tax differences began to reverse. Because most of these differences are now expected to reverse at a composite rate of approximately
23.5%,
the Company was required to revalue its net deferred income tax assets. This revaluation resulted in a provisional discrete charge to income tax expense of
$409,000
during the
three
and
nine
months ended
December 31, 2017.
The revaluation
required ma
nagement judgment with respect to estimates of the financial statement and tax differences that would be established or reversed during the
three
-month period ending
April 1, 2018,
upon which the ETR of
33.0%
is expected to be applied. To the extent that the a
ctual results
may
differ from those estimates, an additional discrete charge or benefit to income tax expense
may
be required in a future period to complete the
accounting to recognize the effect of the TCJA on the Company’s net deferred income tax assets.
 
Management evaluates items of income, deductions and credits reported on the Company
’s various federal and state income tax returns filed and recognizes the effect of positions taken on those income tax returns only if those positions are more likely than
not
to be sustained. The Company applies the provisions of FASB ASC Sub-topic
740
-
10
-
25,
which requires a minimum recognition threshold that a tax benefit must meet before being recognized in the financial statements. Recognized income tax positions are measured at the largest amount that has a greater than
50%
likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
 
During fiscal year
2016,
an
evaluation was made of the Company’s process regarding the calculation of the state portion of its income tax provision. This evaluation resulted in the Company taking a tax position that reflected opportunities for the application of more favorable state apportionment percentages for several prior fiscal years. After considering all relevant information, the Company believes that the technical merits of this tax position would more likely than
not
be sustained. However, the Company also believes that the ultimate resolution of the tax position will result in a tax benefit that is less than the full amount being sought. Therefore, the Company’s measurement regarding the tax impact of the revised state apportionment percentages resulted in the Company recording a reserve for unrecognized tax benefits during the
three
and
nine
-month periods ended
December 31, 2017
of
$31,000
and
$60,000,
respectively, and
$65,000
and
$115,000
for the
three
and
nine
-month periods ended
January 1, 2017,
respectively, in the accompanying unaudited condensed consolidated statements of income. Because the tax impact of the revised state apportionment percentages are measured net of federal income taxes, the provision in the TCJA that lowered the federal corporate income tax rate to
21%
required the Company to revalue its reserve for unrecognized tax benefits. This revaluation, which the Company believes is complete, resulted in a net discrete charge to income tax expense of
$132,000
during the
three
and
nine
-month periods ended
December 31, 2017.
 
The Company
’s policy is to accrue interest expense and penalties as appropriate on estimated unrecognized tax benefits as a charge to interest expense in the Company’s consolidated statements of income. Interest expense or penalties are
not
accrued with respect to estimated unrecognized tax benefits that are associated with claims for income tax refunds as long as the overpayments are receivable. The Company accrued interest and penalties associated with its reserve for unrecognized tax benefits during the
three
and
nine
-month periods ended
December 31, 2017
of
$16,000
and
$52,000,
respectively, and
$13,000
and
$53,000
for the
three
and
nine
-month periods ended
January 1, 2017,
respectively, in the accompanying unaudited condensed consolidated statements of income. The revaluation the Company’s reserve for unrecognized tax benefits set forth in the preceding paragraph resulted in an additional accrual for interest and penalties with respect to the revalued reserve for unrecognized tax benefits of
$25,000
during the
three
and
nine
-month periods ended
December 31, 2017.
 
The revaluation
s of the Company’s net deferred income tax assets and its reserve for unrecognized tax benefits was the primary factor in the increase in the overall provision for income taxes to
66.3%
and
49.7%
for the
three
and
nine
-month periods ended
December 31, 2017,
respectively.
 
The Company files
income tax returns in the many jurisdictions within which it operates, including the U.S., several U.S. states and the People’s Republic of China. The statute of limitations for the Company’s filed income tax returns varies by jurisdiction; tax years open to federal or state examination or other adjustment as of
December 31, 2017
were the fiscal years ended
April 2, 2017,
April 3, 2016,
March 29, 2015,
March 30, 2014,
March 31, 2013,
April 1, 2012
and
April 3, 2011.
Earnings Per Share, Policy [Policy Text Block]
E
arnings Per Share:
The Company calculates basic earnings per share by using a weighted average of the number of shares outstanding during the reporting periods. Diluted shares outstanding are calculated in accordance with the treasury stock method, which assumes that the proceeds from the exercise of all exercisable options would be used to repurchase shares at market value. The net number of shares issued after the exercise proceeds are exhausted represents the potentially dilutive effect of the options, which are added to basic shares to arrive at diluted shares.
New Accounting Pronouncements, Policy [Policy Text Block]
Recently-Issued Accounting Standards
:
In
2014,
the FASB issued Accounting Standards Update (“ASU”)
No.
2014
-
09,
Revenue from Contracts with Customers (Topic
606
)
, which will replace most existing GAAP guidance on revenue recognition, and which will require the use of more estimates and judgments, as well as additional disclosures. When issued, the ASU was to become effective in the fiscal year beginning after
December 15, 2016,
but on
August 12, 2015
the FASB issued ASU
No.
2015
-
14,
Revenue from Contrac
ts with Customers (Topic
606
):
Deferral of the Effective Date
, which provides for a
one
-year deferral of the effective date to apply the guidance of ASU
No.
2014
-
09.
Early adoption was originally
not
permitted in ASU
No.
2014
-
09,
but ASU
No.
2015
-
14
now permits early adoption in the
first
interim period of the fiscal year beginning after
December 15, 2016.
The Company is currently evaluating its existing revenue contract arrangements and expects its review to be complete before the end of fiscal year
2018.
At this time, the Company has
not
yet determined whether it will adopt the provisions of ASU
No.
2014
-
09
on a retrospective basis or through a cumulative adjustment to equity.
 
I
n
July 2015,
the FASB issued ASU
No.
2015
-
11,
Inventory (Topic
330
)
:
Simplifying the Measurement of Inventory
, which clarified that after an entity determines the cost of its inventory, the subsequent measurement and presentation of such inventory should be at the lower of cost or net realizable value. The ASU became effective for the
first
interim period of the fiscal year beginning after
December 15, 2016,
and was applied prospectively. The Company adopted ASU
No.
2015
-
11
on
April 3, 2017,
and has determined that the adoption of the ASU did
not
have a material effect on its financial position, results of operations and related disclosures.
 
On
February 25, 2016,
the FASB issued ASU
No.
2016
-
02,
Leases (Topic
842
)
, which will increase transparency and comparability by requiring an entity to recognize lease assets and lease liabilities on its balance sheet and by requiring the disclosure of key information about leasing arrangements. Under the provisions of ASU
No.
2016
-
02,
the Company will be required to capitalize most of its current operating lease obligations as right-of-use assets with corresponding liabilities based upon the present value of the future cash outflows associated with such operating lease obligations. The ASU will become effective for the
first
interim period of the fiscal year beginning after
December 15, 2018.
The ASU is to be applied using a modified retrospective approach, and early adoption is permitted. The Company has
not
yet decided if it will early-adopt the ASU and is currently evaluating the effect that the adoption of the ASU will have on its financial position, results of operations and related disclosures.
 
On
June 16, 2016,
the FASB issued ASU
No.
2016
-
13,
Financial Instruments – Credit Losses (Topic
326
): Measurement of Credit Losses on Financial Instruments
, the objective of which is to provide financial statement users with more information about the expected credit losses on financial instruments and other commitments to extend credit held by an entity. Current GAAP requires an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable that a loss has been incurred. Because this methodology restricted the recognition of credit losses that are expected, but did
not
yet meet the “probable” threshhold, ASU
No.
2016
-
13
was issued to require the consideration of a broader range of reasonable and supportable information when determining estimates of credit losses. The ASU will become effective for the
first
interim period of the fiscal year beginning after
December 15, 2019.
The ASU is to be applied using a modified retrospective approach, and the ASU
may
be early-adopted as of the
first
interim period of the fiscal year beginning after
December 15, 2018.
 
Although the Company has
not
yet decided
whether to adopt ASU
No.
2016
-
13
early or determined the full impact of the adoption of the ASU, because the Company assigns the majority of its trade accounts receivable under factoring agreements with CIT, the Company does
not
believe that its adoption of ASU
No.
2016
-
13
will have a significant impact on the Company’s financial position, results of operations and related disclosures.
 
On J
anuary
26,
2017,
the FASB issued ASU
No.
2017
-
04,
Intangibles –
Goodwill and Other (Topic
350
): Simplifying the Test for Goodwill Impairment
. Under previous GAAP, the test for the impairment of goodwill was performed by
first
assessing qualitative factors to determine whether it was more likely than
not
that the fair value of a reporting unit was less than its carrying amount. If such qualitative factors so indicated, then the impairment test was continued
in a
two
-step approach. The
first
step was the estimation of the fair value of each reporting unit to ensure that its fair value exceeded its carrying value. If step
one
indicated that a potential impairment existed, then the
second
step was performed to measure the amount of an impairment charge, if any. In the
second
step, these estimated fair values were used as the hypothetical purchase price for the reporting units, and an allocation of such hypothetical purchase price was made to the identifiable tangible and intangible assets and assigned liabilities of the reporting units. The impairment charge was calculated as the amount, if any, by which the carrying value of the goodwill exceeded the implied amount of goodwill that resulted from this hypothetical purchase price allocation.
 
The intent of ASU
No.
2017
-
04
wa
s to simplify this process by eliminating the
second
step from the goodwill impairment test. Instead, an entity should perform its annual or interim measurement of goodwill for impairment by comparing the estimated fair value of each reporting unit of the entity with its carrying value. If the carrying value of a reporting unit of an entity exceeds its estimated fair value, then an impairment charge is calculated as the difference between the carrying value of the reporting unit and its estimated fair value,
not
to exceed the goodwill of the reporting unit.
 
The ASU
is to be applied on a prospective basis and was to have become effective for the
first
interim period of the fiscal year beginning after
December 15, 2019,
but it could have been early-adopted as of the date of the
first
interim or annual measurement of goodwill for impairment performed on or after
January 1, 2017.
The Company elected to early-adopt the ASU effective as of
April 3, 2017,
which did
not
have an impact on its financial position or results of operations.
 
The Company has determined that all other ASUs which had become effective as of
December 31, 2017,
or which will become effective at some future date, are
not
expected to have a material impact on the Company’s consolidated financial statements.