Note 12 – Recent Accounting Pronouncements
The following recent accounting pronouncements have been adopted in
the current fiscal year:
In March 2016, the FASB issued ASU No. 2016-09
“Compensation-Stock Compensation (Topic 718)”.
This ASU is part of the FASB’s simplification initiative. The
areas for simplification in this update involve several aspects of
the accounting for share-based payment transactions, including the
income tax consequences, forfeitures, classification of awards as
either equity or liabilities, statutory withholding requirements,
and classification on the statement of cash flows. The Company
early adopted this guidance during the first quarter of fiscal
2017. We now recognize forfeitures as they occur and excess tax
benefits or deficiencies as a component of income tax expense. The
cumulative adjustment for the impact of this change in accounting
principle was immaterial. Cash flows related to excess tax benefits
will prospectively be classified as operating activities in the
Consolidated Statements of Cash Flows. Prior periods have not been
adjusted. The Company anticipates increased volatility in income
tax expense, mainly in the second quarter of each fiscal year,
since historically most equity compensation granted in prior
periods vests during that quarter.
In April 2015, the FASB issued 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”. This update provides guidance to customers
about whether a cloud computing arrangement includes a software
license or service contract. This update became effective for the
Company beginning the first quarter of fiscal 2017. The adoption of
ASU 2015-05 did not have a material impact to the Consolidated
Financial Statements.
In April 2015, the FASB issued ASU No. 2015-03
“Interest-Imputation of Interest (Subtopic 835-30)
Simplifying the Presentation of Debt Issuance Costs”.
This update requires that debt issuance costs related to a
recognized debt liability be presented in the balance sheet as a
direct reduction from the carrying amount of that debt liability,
consistent with debt discounts. ASU 2015-03 was effective for the
Company beginning with the first quarter of fiscal 2017. The
adoption of this standard required restatement of our Consolidated
Balance Sheets. As a result, Other assets decreased approximately
$244 and $262 as of June 30, 2016 and March 24, 2016,
respectively, and these amounts were allocated within Current
maturities of long term debt and Long term debt. Adoption of ASU
2015-03 did not have an effect on the Company’s
stockholders’ equity, results of operations or cash
flows.
In February 2015, the FASB issued ASU No. 2015-02
“Consolidation (Topic 810): Amendments to the
Consolidation Analysis”. This update focuses on a
reporting company’s consolidation evaluation to determine
whether it should consolidate certain legal entities. The guidance
ASU 2015-02 became effective for the Company beginning with the
first quarter of fiscal 2017. The adoption of ASU 2015-02 did not
have any impact to the Consolidated Financial Statements.
In August 2014, the FASB issued ASU No. 2014-15
“Presentation of Financial Statements—Going Concern
(Topic 205-40)”. The guidance requires management to
perform interim and annual assessments of an entity’s ability
to continue as a going concern within one year of the date the
financial statements are issued. An entity must provide certain
disclosures if conditions or events raise substantial doubt about
the entity’s ability to continue as a going concern. ASU
2014-15 was effective for the Company beginning with the first
quarter of fiscal 2017. The adoption of this guidance had no impact
on our Consolidated Financial Statements.
The following recent accounting pronouncements have not yet been
adopted:
In March 2017, the FASB issued ASU No. 2017-07
“Compensation—Retirement Benefits (Topic 715):
Improving the Presentation of Net Periodic Pension Cost and Net
Periodic Postretirement Benefit Cost”. The amendments in
this update require the service cost component of pension expense
to be disaggregated from the other components of net periodic
benefit cost and be presented in the same line items as other
employee compensation costs. All other components of net periodic
benefit cost must be presented in the income statement separately
from the service cost component and outside a subtotal of income
from operations. This update is effective for public business
entities for annual periods beginning after December 15, 2017,
including interim periods within those annual periods. Early
adoption is permitted as long as it is early adopted in the first
interim period of an annual year and financial statements have not
been issued or made available for issuance prior to adoption. The
amendments in this update should be applied using a retrospective
transition method, however, a practical expedient is offered with
regard to the prior comparative periods. The Company plans to early
adopt this update beginning in fiscal 2018 and does not expect the
impact of this new guidance to have a significant impact on its
financial position, results of operations and disclosures.
In October 2016, the FASB issued ASU No. 2016-17
“Consolidation (Topic 810): Interests Held Through Related
Parties That Are Under Common Control”. This update is
amending ASU 2015-02 and affects reporting entities that are
required to evaluate whether they should consolidate a variable
interest entity in certain situations involving entities under
common control. ASU 2016-17 will be effective for the Company in
fiscal 2018 and will require retrospective application. The Company
does not expect ASU 2016-17 to have any impact to the Consolidated
Financial Statements.
In August 2016, the FASB issued ASU No. 2016-15
“Statement of Cash Flows (Topic 230): Classification of
Certain Cash Receipts and Cash Payments”. This update
addresses eight specific cash flow issues with the objective of
reducing the perceived diversity in practice. The amendments in
this update are effective for public business entities for fiscal
years beginning after December 15, 2017, and interim periods
within those fiscal years. Early adoption is permitted, including
adoption in an interim period. If an entity early adopts the
amendments in an interim period, any adjustments should be
reflected as of the beginning of the fiscal year that includes that
interim period. An entity that elects early adoption must adopt all
of the amendments in the same period. The amendments in this update
should be applied using a retrospective transition method to each
period presented. The Company does not expect a material impact to
our statement of cash flows once ASU 2016-15 is adopted in fiscal
2019.
In February 2016, the FASB issued ASU No. 2016-02
“Leases (Topic 842)”. The primary goal of this
update is to require the lessee to recognize all lease commitments,
both operating and finance, by initially recording a lease asset
and liability on the balance sheet at the lease commencement date.
Additionally, enhanced qualitative and quantitative disclosures
will be required. ASU 2016-02 is effective for public business
entities for annual periods, including interim periods within those
annual periods, beginning after December 15, 2018. This new
guidance will be effective for the Company beginning in fiscal year
2020 and we do not expect to early adopt. This guidance must be
adopted using a modified retrospective approach. The Company
expects this new guidance to have a significant impact on its total
assets and total liabilities, and lead to increased financial
statement disclosures.
In May 2014, the FASB issued ASU No. 2014-09 “Revenue
from Contracts with Customers (Topic 606)” and created a
new ASC Topic 606, Revenue from Contracts with Customers,
and added ASC Subtopic 340-40, Other Assets and Deferred Costs
— Contracts with Customers. The guidance in this update
supersedes the revenue recognition requirements in ASC Topic 605,
Revenue Recognition, and most industry-specific guidance
throughout the industry topics of the codification. Under the new
guidance, an entity should recognize revenue to depict the transfer
of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services. Several other
amendments have been subsequently released, each of which provide
additional narrow scope clarifications or improvements. In August
2015, the FASB issued ASU No. 2015-14 “Revenue from
Contracts with Customers, Deferral of the Effective Date”
which deferred the effective date of ASU 2014-09 for one year.
Consequently, this new revenue recognition guidance will be
effective for the Company beginning in fiscal year 2019, which is
our anticipated adoption date. We are currently evaluating the
method of adoption. We have completed our initial analysis of this
accounting standard update which included a review of all material
customer contracts and we currently do not believe this standard
will have a material impact to our recognition of revenue.