Annual report pursuant to Section 13 and 15(d)

Note 2 - Summary of Significant Accounting Policies

v3.8.0.1
Note 2 - Summary of Significant Accounting Policies
12 Months Ended
Apr. 01, 2018
Notes to Financial Statements  
Significant Accounting Policies [Text Block]
Note
2
- Summary of Significant Accounting Policies
 
Basis of Presentation:
The accompanying consolidated financial statements include the accounts of the Company and have been prepared pursuant to accounting principles generally accepted in the U.S. (“GAAP”) as promulgated by the Financial Accounting Standards Board (“FASB”). References herein to GAAP are to topics within the FASB Accounting Standards Codification (the “FASB ASC”), which the FASB periodically revises through the issuance of an Accounting Standards Update (“ASU”) and which has been established by the FASB as the authoritative source for GAAP recognized by the FASB to be applied by nongovernmental entities.
 
Reclassifications:
  The Company has classified certain prior year information to conform to the amounts presented in the current year. 
None
of the changes impact the Company's previously reported financial position or results of operations.
 
Fiscal Year:
The Company's fiscal year ends on the Sunday nearest to or on
March 31.
References herein to “fiscal year
2018”
or
“2018”
represent the
52
-week period ended
April 1, 2018,
references to “fiscal year
2017”
or
“2017”
represent the
52
-week period ended
April 2, 2017
and references to “fiscal year
2016”
or
“2016”
represent the
53
-week period ended
April 3, 2016.
 
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 disclosure of contingent assets and liabilities as of the date of the consolidated balance sheets and the reported amounts of revenues and expenses during the periods presented on the 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 goods which necessitates the establishment of inventory reserves that are highly subjective. Actual results could differ materially from those estimates.
 
Cash and Cash Equivalents:
The Company considers all highly-liquid investments 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.
 
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 fair value.
 
Segments and Related Information:
The Company operates primarily in
one
principal segment, infant and toddler 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 fiscal years
2018,
2017
and
2016
are as follows (in thousands):
 
   
2018
   
2017
   
2016
 
Bedding, blankets and accessories
  $
43,486
    $
42,381
    $
59,020
 
Bibs, bath, developmental toy, feeding, baby care and disposable products
   
26,784
     
23,597
     
25,322
 
Total net sales
  $
70,270
    $
65,978
    $
84,342
 
 
Other Accrued Liabilities: 
An amount of
$540,000
was recorded as other accrued liabilities as of
April 1, 2018.
Of this amount,
$292,000
reflected unearned revenue recorded for payments from customers that were received before products were shipped. Other accrued liabilities as of
April 1, 2018
also includes a reserve for customer returns of
$8,000
and unredeemed store credits and gift certificates totaling
$22,000.
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.
 
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 anticipated returns, which are estimated based on historical rates, and other allowances in the accompanying consolidated statements of income. Reserves for returns and other allowances, including cooperative advertising allowances, warehouse allowances, placement fees and volume rebates, 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 costs are included in cost of products sold.
 
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 accompanying consolidated balance sheets, consist of agreed-upon cooperative 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 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 the 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 a minimal 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 its exposure to credit losses, the 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 uncollectiblity of its non-factored accounts receivable, which it accomplishes by specifically analyzing accounts receivable, historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in its customers’ payment terms. On
September 18, 2017,
Toys “R” Us, Inc. (“TRU”) filed a voluntary petition for relief under Chapter
11
of Title
11
of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division (the “Court”). On
March 14, 2018,
TRU filed a motion with the Court seeking authority to close its remaining stores and distribution centers in the U.S., and to otherwise discontinue, liquidate and wind-down all U.S. operations.
 
As described below in Note
3
– Financing Arrangements, the Company entered into a series of agreements with JPMorgan Chase Bank, N.A. (“Chase”) wherein the Company had the right to sell, and Chase had the obligation to purchase, certain claims that could arise if accounts receivable amounts owed by an affiliate company of TRU to the Company became uncollectible (subject to certain specified limits). As a result of the TRU bankruptcy and liquidation, the Company during fiscal year
2018
exercised its rights under these agreements and simultaneously recorded and charged off provisions for doubtful accounts for a portion of the amounts owed that were in excess of the limits covered by the agreements that the Company estimated to be uncollectible in the amount of
$218,000.
The Company did
not
record a provision for doubtful accounts for either of fiscal years
2017
or
2016.
 
The Company’s accounts receivable at
April 1, 2018
amounted to
$18.5
million, net of allowances of
$565,000.
Of this amount,
$15.4
million was due from CIT under the factoring agreements, which amount represents the maximum loss that the Company could incur if CIT failed completely to perform its obligations under the factoring agreements.
 
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 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 reported in the accounting periods. The basis of accounting for inventories is cost, which includes the direct supplier acquisition cost, duties, taxes and freight, and the indirect costs to design, develop, source and store the product until it is sold. Once cost has been determined, the Company’s inventory is then stated at the lower of cost or net realizable value, with cost determined using the
first
-in,
first
-out ("FIFO") method, which assumes that inventory quantities are sold in the order in which they are acquired, and the average cost method for a portion of the Company’s inventory.
 
The determination of the indirect charges and their allocation to the Company's finished goods 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 and in the amount and timing of the Company's cost of products sold and the resulting net income for the reporting period.
 
On a periodic basis, management reviews its 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 Company’s normal operating cycle. 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 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.
 
Depreciation and Amortization
:
The accompanying 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 intangible assets other than goodwill. 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.
 
Valuation of Long-Lived Assets
and
Identifiable Intangible
A
s
sets
:
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.
 
Patent Costs:
The Company incurs certain legal and related costs in connection with patent applications. 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 is available to the Company. The Company also capitalizes legal and other costs incurred in the protection or defense of the Company’s patents when it is believed that the future economic benefit of the patent will be maintained or increased and a successful defense is probable. Capitalized patent defense costs are amortized over the remaining expected life of the related patent. The Company’s assessment of 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.
 
Purchase Price Allocations and the Resulting Goodwill:
The Company's strategy includes, when appropriate, entering into transactions accounted for as business combinations.  In connection with a business combination, the Company prepares an allocation of the cost of the acquisition to the identifiable assets acquired and liabilities assumed, based on estimated fair values as of the acquisition date. The excess of the purchase price over the estimated fair value of the identifiable net assets acquired is recorded as goodwill.
 
The amount of goodwill recorded in a business combination can vary significantly depending upon the values attributed to the assets acquired and liabilities assumed. Although goodwill has
no
useful life and is
not
subject to a systematic annual amortization against earnings, the Company performs a measurement for impairment of the carrying value of its goodwill annually on the
first
day of the Company’s fiscal year. An additional impairment test is performed during the year whenever an event or change in circumstances suggest that the fair value of the goodwill of either of the reporting units of the Company has more likely than
not
fallen below its carrying value. The annual or interim measurement for impairment of goodwill is performed at the reporting unit level. A reporting unit is either an operating segment or
one
level below an operating segment. In its annual or interim measurement for impairment of goodwill, the Company conducts a qualitative assessment by examining relevant events and circumstances which could have a negative impact on the Company’s goodwill, which includes macroeconomic conditions, industry and market conditions, commodity prices, cost factors, overall financial performance, reporting unit dispositions and acquisitions, the market capitalization of the Company and other relevant events specific to the Company.
 
If, after assessing the totality of events or circumstances described above, the Company determines that it is more likely than
not
that the fair value of either of the Company's reporting units is less than its carrying amount, the
two
-step goodwill test is performed. The
two
-step goodwill impairment test is also performed whenever events or changes in circumstances indicate that the carrying value
may
not
be recoverable. If, after performing the
two
-step goodwill test, it is determined that the carrying value of goodwill is impaired, the amount of goodwill is reduced and a corresponding charge is made to earnings in the period in which the goodwill is determined to be impaired.
 
Advertising Costs:
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 these 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 associated with the Company’s online business are recorded as incurred. Advertising expense is included in other marketing and administrative expenses in the consolidated statements of income and amounted to
$1.3
million,
$742,000
and
$931,000
for fiscal years
2018,
2017
and
2016,
respectively.
 
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 files income tax returns in the many jurisdictions in which it operates, including the U.S., several U.S. states and the People’s Republic of China. The statute of limitations varies by jurisdiction; tax years open to federal or state audit or other adjustment as of
April 1, 2018
were the tax years ended
April 1, 2018,
April 2, 2017,
April 3, 2016,
March 29, 2015,
March 30, 2014,
March 31, 2013,
April 1, 2012
and
April 3, 2011.
 
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.
Because the Company’s fiscal year
2018
ended on
April 1, 2018,
the lower corporate income tax rate was 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 recognized 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 estimated to reverse at a composite rate of approximately
24.5%,
the Company was required to revalue its net deferred income tax assets. This revaluation resulted in a discrete charge to income tax expense of
$377,000
during fiscal year
2018.
 
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 a tax position that reflects 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 during fiscal years
2018
and
2017
reserves for unrecognized tax benefits of
$113,000
and
$134,000,
respectively, in the accompanying consolidated financial statements. During fiscal year
2016,
the Company recorded a gross reserve for unrecognized tax benefits of
$773,000,
less an offset of
$573,000
to reflect state income tax overpayments net of the federal income tax impact, for a net reserve for unrecognized tax benefits of
$200,000.
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 resulted in a net discrete charge to income tax expense of
$120,000
during fiscal year
2018.
 
The Company’s policy is to accrue interest expense and penalties as appropriate on any estimated unrecognized tax benefits as a charge to interest expense in the Company’s consolidated statements of income. During fiscal years
2018,
2017
and
2016,
the Company accrued
$96,000,
$65,000
and
$11,000,
respectively, for interest expense and penalties on the portion of the unrecognized tax benefit that has been refunded to the Company but for which the relevant statute of limitations remained unexpired.
No
interest expense or penalties are accrued with respect to estimated unrecognized tax benefits that are associated with state income tax overpayments that remain receivable.
 
In
December 2016,
the Company received notification from the State of California of its intention to examine the Company’s consolidated income tax returns for the fiscal years ended
March 30, 2014,
March 31, 2013,
April 1, 2012
and
April 3, 2011.
The ultimate resolution of the examination could include administrative or legal proceedings. Although management believes that the calculations and positions taken on these and all other filed income tax returns are reasonable and justifiable, the outcome of this or any other examination could result in an adjustment to the position that the Company took on such income tax returns. Such adjustment could also lead to adjustments to
one
or more other state income tax returns, or to income tax returns for subsequent fiscal years, or both. To the extent that the Company’s reserve for unrecognized tax benefits is
not
adequate to support the cumulative effect of such adjustments, the Company could experience a material adverse impact on its future results of operations. Conversely, to the extent that the calculations and positions taken by the Company on the filed income tax returns under examination are sustained, the reversal of all or a portion of the Company’s reserve for unrecognized tax benefits could result in a favorable impact on its future results of operations.
 
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 and amounted to
$7.2
million,
$7.0
million and
$9.0
million for fiscal years
2018,
2017
and
2016,
respectively.
 
Earnings
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 exercisable options, which are added to basic shares to arrive at diluted shares.
 
Recently
Issued Accounting Standards:
  
On
May 28, 2014,
the FASB issued ASU
No.
2014
-
09,
Revenue from Contracts wit
h
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, ASU
No.
2014
-
09
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 Contracts with Customers (Topic
606
): Deferral of the Effective Date
, which provided for a
one
-year deferral of ASU
No.
2014
-
09.
Early adoption was originally
not
permitted in ASU
No.
2014
-
09,
but ASU
No.
2015
-
14
permits early adoption in the
first
interim period of the fiscal year beginning after
December 15, 2016.
 
ASU
No.
2014
-
09
will require revenue to be recognized by an entity when a customer obtains control of promised products in an amount that reflects the consideration the entity expects to receive in exchange for those products and permits the use of either the retrospective or modified retrospective method. The Company expects to adopt ASU
No.
2014
-
09
on
April 2, 2018
on a modified retrospective basis. The Company has evaluated the guidance of ASU
No.
2014
-
09
against its existing accounting policies and practices related to revenue recognition, including a review of customer purchase orders, invoices, shipping terms and other contractual agreements with customers. Based upon this evaluation, the Company does
not
expect that the adoption of ASU
No.
2014
-
09
will have a material impact on the Company’s financial position or the amount or timing of its recognition of revenue. The Company anticipates that the disclosures related to its accounting policies and practices associated with revenue recognition will be enhanced.
 
On
July 22, 2015,
the FASB issued ASU
No.
2015
-
11,
Inventory (Topic
330
): Simplifying the Measurement of Inventory
, which will clarify 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 will become effective for the
first
interim period of the fiscal year beginning after
December 15, 2016.
The ASU should be applied prospectively, and early adoption is permitted. 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 is currently evaluating the effect that the adoption of ASU
No.
2016
-
02
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” threshold, 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
determined the full impact of the adoption of ASU
No.
2016
-
13,
because the Company assigns the majority of its trade accounts receivable under factoring agreements with CIT, the Company does
not
believe that the adoption of ASU
No.
2016
-
13
will have a significant impact on the Company’s financial position, results of operations and related disclosures.
 
On
January 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
was to simplify the process of measuring goodwill for impairment 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 ASU
No.
2017
-
04
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 ASU’s issued which had become effective as of
May 10, 2018,
or which will become effective at some future date, are
not
expected to have a material impact on the Company’s consolidated financial statements.