2016 Q4 Form 10-K Financial Statement

#000091538917000014 Filed on February 27, 2017

View on sec.gov

Income Statement

Concept 2016 Q4 2015 Q4 2015 Q3
Revenue $2.188B $2.225B $2.447B
YoY Change -1.66% -5.28% 1.41%
Cost Of Revenue $1.698B $1.716B $1.752B
YoY Change -1.05% -14.88% -1.41%
Gross Profit $490.0M $509.0M $695.0M
YoY Change -3.73% 52.85% 9.28%
Gross Profit Margin 22.39% 22.88% 28.4%
Selling, General & Admin $165.0M $219.0M $183.0M
YoY Change -24.66% -10.25% 7.02%
% of Gross Profit 33.67% 43.03% 26.33%
Research & Development $56.00M $65.00M $59.00M
YoY Change -13.85% 4.84% 5.36%
% of Gross Profit 11.43% 12.77% 8.49%
Depreciation & Amortization $144.0M $142.0M $142.0M
YoY Change 1.41% 16.39% 27.93%
% of Gross Profit 29.39% 27.9% 20.43%
Operating Expenses $221.0M $284.0M $242.0M
YoY Change -22.18% -7.19% 6.61%
Operating Profit $269.0M $225.0M $432.0M
YoY Change 19.56% 733.33% 27.81%
Interest Expense -$67.00M -$65.00M -$54.00M
YoY Change 3.08% 35.42% 45.95%
% of Operating Profit -24.91% -28.89% -12.5%
Other Income/Expense, Net $4.000M $10.00M -$13.00M
YoY Change -60.0% -225.0% -360.0%
Pretax Income $113.0M $117.0M $353.0M
YoY Change -3.42% -503.45% 18.46%
Income Tax -$5.000M -$8.000M $95.00M
% Of Pretax Income -4.42% -6.84% 26.91%
Net Earnings $116.0M $124.0M $256.0M
YoY Change -6.45% 675.0% 21.9%
Net Earnings / Revenue 5.3% 5.57% 10.46%
Basic Earnings Per Share $0.79 $0.83 $1.73
Diluted Earnings Per Share $0.79 $0.83 $1.71
COMMON SHARES
Basic Shares Outstanding 146.5M shares 147.8M shares 148.6M shares
Diluted Shares Outstanding 149.8M shares

Balance Sheet

Concept 2016 Q4 2015 Q4 2015 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $181.0M $293.0M $309.0M
YoY Change -38.23% 36.92% 45.75%
Cash & Equivalents $181.0M $293.0M $309.0M
Short-Term Investments
Other Short-Term Assets $70.00M $68.00M $269.0M
YoY Change 2.94% -72.8% 38.66%
Inventory $1.404B $1.479B $1.484B
Prepaid Expenses
Receivables $812.0M $792.0M $968.0M
Other Receivables $399.0M $246.0M $152.0M
Total Short-Term Assets $2.866B $2.878B $3.182B
YoY Change -0.42% -9.3% 10.1%
LONG-TERM ASSETS
Property, Plant & Equipment $5.276B $5.130B $5.045B
YoY Change 2.85% 0.85% 15.92%
Goodwill $4.461B $4.518B $4.482B
YoY Change -1.26% 0.71% 65.02%
Intangibles $2.479B $2.650B $2.718B
YoY Change -6.45% -8.78% 50.33%
Long-Term Investments $18.00M
YoY Change
Other Assets $375.0M $404.0M $453.0M
YoY Change -7.18% -4.04% 22.76%
Total Long-Term Assets $12.59B $12.70B $12.70B
YoY Change -0.87% -1.53% 37.35%
TOTAL ASSETS
Total Short-Term Assets $2.866B $2.878B $3.182B
Total Long-Term Assets $12.59B $12.70B $12.70B
Total Assets $15.46B $15.58B $15.88B
YoY Change -0.79% -3.06% 30.86%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $704.0M $699.0M $685.0M
YoY Change 0.72% -15.48% -6.8%
Accrued Expenses $196.0M $227.0M $180.0M
YoY Change -13.66% 18.85% -9.55%
Deferred Revenue
YoY Change
Short-Term Debt $283.0M $431.0M $251.0M
YoY Change -34.34% 43.19%
Long-Term Debt Due $283.0M $431.0M $251.0M
YoY Change -34.34% 43.19%
Total Short-Term Liabilities $1.795B $2.056B $1.800B
YoY Change -12.69% 1.68% 28.76%
LONG-TERM LIABILITIES
Long-Term Debt $6.311B $6.577B $7.029B
YoY Change -4.04% -9.26% 54.04%
Other Long-Term Liabilities $519.0M $701.0M $711.0M
YoY Change -25.96% -8.72% 87.11%
Total Long-Term Liabilities $6.830B $7.278B $7.740B
YoY Change -6.16% -9.21% 56.59%
TOTAL LIABILITIES
Total Short-Term Liabilities $1.795B $2.056B $1.800B
Total Long-Term Liabilities $6.830B $7.278B $7.740B
Total Liabilities $10.85B $11.56B $11.92B
YoY Change -6.14% -7.39% 46.2%
SHAREHOLDERS EQUITY
Retained Earnings $5.721B $5.146B $5.090B
YoY Change 11.17% 13.22% 10.94%
Common Stock $2.000M $2.000M $2.000M
YoY Change 0.0% 0.0% 0.0%
Preferred Stock
YoY Change
Treasury Stock (at cost) $2.825B $2.680B $2.625B
YoY Change 5.41% 4.0% 1.86%
Treasury Stock Shares 71.27M shares 69.14M shares 68.32M shares
Shareholders Equity $4.532B $3.941B $3.877B
YoY Change
Total Liabilities & Shareholders Equity $15.46B $15.58B $15.88B
YoY Change -0.79% -3.06% 30.86%

Cashflow Statement

Concept 2016 Q4 2015 Q4 2015 Q3
OPERATING ACTIVITIES
Net Income $116.0M $124.0M $256.0M
YoY Change -6.45% 675.0% 21.9%
Depreciation, Depletion And Amortization $144.0M $142.0M $142.0M
YoY Change 1.41% 16.39% 27.93%
Cash From Operating Activities $390.0M $574.0M $368.0M
YoY Change -32.06% 18.6% -34.29%
INVESTING ACTIVITIES
Capital Expenditures -$251.0M -$224.0M -$161.0M
YoY Change 12.05% 21.08% 5.23%
Acquisitions
YoY Change
Other Investing Activities -$45.00M -$2.000M -$41.00M
YoY Change 2150.0% -99.94% 0.0%
Cash From Investing Activities -$296.0M -$226.0M -$202.0M
YoY Change 30.97% -93.3% 4.12%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -117.0M -363.0M -122.0M
YoY Change -67.77% -112.56% -62.11%
NET CHANGE
Cash From Operating Activities 390.0M 574.0M 368.0M
Cash From Investing Activities -296.0M -226.0M -202.0M
Cash From Financing Activities -117.0M -363.0M -122.0M
Net Change In Cash -23.00M -15.00M 44.00M
YoY Change 53.33% -1600.0% 0.0%
FREE CASH FLOW
Cash From Operating Activities $390.0M $574.0M $368.0M
Capital Expenditures -$251.0M -$224.0M -$161.0M
Free Cash Flow $641.0M $798.0M $529.0M
YoY Change -19.67% 19.28% -25.81%

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990000000 USD
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1049000000 USD
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990000000 USD
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1129000000 USD
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1049000000 USD
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755000000 USD
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854000000 USD
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859000000 USD
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5.01
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5.71
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5.80
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4.95
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5.66
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2000000 USD
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0 USD
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0.02
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0.00
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0.00
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0.02
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0.00
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63000000 USD
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126000000 USD
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235000000 USD
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275000000 USD
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190000000 USD
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85000000 USD
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338000000 USD
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316000000 USD
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16000000 USD
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6000000 USD
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12000000 USD
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7000000 USD
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-93000000 USD
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345000000 USD
CY2015 us-gaap Income Tax Reconciliation Income Tax Expense Benefit At Federal Statutory Income Tax Rate
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393000000 USD
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20000000 USD
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28000000 USD
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30000000 USD
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110000000 USD
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11000000 USD
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150000000 USD
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21000000 USD
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105000000 USD
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30000000 USD
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246000000 USD
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399000000 USD
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2000000 USD
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44000000 USD
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410000000 USD
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103000000 USD
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145000000 USD
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29000000 USD
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42000000 USD
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48000000 USD
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210000000 USD
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238000000 USD
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272000000 USD
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9000000 USD
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6000000 USD
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8000000 USD
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3509000000 USD
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45000000 USD
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26000000 USD
CY2014 us-gaap Payments To Acquire Property Plant And Equipment
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593000000 USD
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652000000 USD
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626000000 USD
CY2015Q4 us-gaap Pension And Other Postretirement And Postemployment Benefit Plans Liabilities Current
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120000000 USD
CY2016Q4 us-gaap Pension And Other Postretirement And Postemployment Benefit Plans Liabilities Current
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CY2016 us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">RECENTLY ISSUED ACCOUNTING STANDARDS</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2014, the FASB and International Accounting Standards Board jointly issued new principles-based accounting guidance for revenue recognition that will supersede virtually all existing revenue guidance. The core principle of this guidance is that 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 and services. To achieve the core principle, the guidance establishes the following five steps: 1) identify the contract(s) with a customer, 2) identify the performance obligation in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance also details the accounting treatment for costs to obtain or fulfill a contract. Lastly, disclosure requirements have been enhanced to provide sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued new guidance to delay the effective date of the new revenue standard by one year. The deferral results in the new revenue standard being effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early application is permitted under the original effective date of fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. In April 2016, the FASB issued clarifying guidance to the 2014 revenue standard in regards to the identification of performance obligations and licensing. In May 2016, the FASB issued narrow-scope improvements and practical expedients to the new revenue standard that include clarification of the collectability criterion, specification for the measurement of noncash considerations, clarifies a completed contract for transition purposes and clarification in regards to the retrospective application, as well as, policy elections, and practical expedients. In December 2016, the FASB issued additional corrections and improvements that affect various narrow aspects of the guidance. The effective date for all amendments is the same as that of the revenue standard stated above. Management does not expect that changes in its accounting required by this new guidance will materially impact the Company's financial position or results of operations and related disclosures. Management plans are to adopt the new guidance when effective and anticipates adopting retrospectively to each prior reporting period presented with the election of applicable practical expedients. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In January 2016, the FASB issued targeted improvements in regards to the recognition and measurement of financial assets and financial liabilities. The changes are as follows: requires equity investments (except equity method and consolidated investments) to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, when a qualitative assessment indicates that impairment exists, an entity is required to measure the investment at fair value; eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; and requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and early adoption is permitted but limited. The new guidance is to be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption and for equity securities without readily determinable fair values, applied prospectively to equity investments that exist as of the date of adoption. Management has concluded that changes in its accounting required by this new guidance will not materially impact the Company's financial position or results of operations and related disclosures.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In February 2016, the FASB issued guidance on lease accounting. The new guidance establishes two types of leases for lessees: finance or operating. The guidance for lessors is largely unchanged. Under the guidance, a lessee is to recognize a right-of-use asset and lease liability that arises from a lease. A lessee can make a policy election, by asset class, to not recognize lease assets or liabilities for leases with a term of 12 months or less. Both finance and operating leases will have associated right-of-use assets and liabilities initially measured at the present value of the lease payments. Current and noncurrent balance sheet classification will apply. Finance leases will have another reported element for interest associated with the principal lease liability. The component concept from the 2014 revenue recognition standard has been included in the new lease standard which will guide identification of individual assets and non-lease components. As with current GAAP, the guidance does not apply to the following leases: intangible assets to explore for or use minerals, oil, natural gas, and similar nonregenerative resources, biological assets (includes timber), inventory, or assets under construction. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and early adoption is permitted. The new guidance is to be applied under a modified retrospective approach wherein practical expedients have been allowed that will not require reassessment of current leases at the effective date. Management is currently evaluating the impact on the Company's financial position and results of operations and related disclosures.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2016, the FASB issued guidance for derivatives and hedging given lack of specific guidance and diversity in practice. The guidance clarifies that a change in the counterparty to a derivative instrument does not, in and of itself, require dedesignation of that hedge accounting relationship provided all other hedge accounting criteria continue to be met (specifically points to counterparty credit worthiness). This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early adoption is permitted, including adoption in an interim period. The new guidance is to be applied under the prospective method or modified retrospective approach. Management has concluded that changes in its accounting required by this new guidance will not materially impact the Company's financial position or results of operations and related disclosures.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2016, the FASB issued guidance for stock compensation as a part of the simplification initiative that covers related tax accounting, cash flow presentation, and forfeitures. The two tax accounting related amendments are as follows: all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized within income tax expense or benefit in the income statement, the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur, an entity also should recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period; and the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates in the applicable jurisdictions. The cash flow presentation items sets forth that excess tax benefits should be classified along with other income tax cash flows as an operating activity and cash paid by an employer when directly withholding shares for tax withholding purposes should be classified as a financing activity. For forfeitures, an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur. This guidance is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period and early adoption is permitted, including adoption in an interim period. The new guidance application is mixed among the various elements that include retrospective, prospective, and modified retrospective transition methods. Management elected to early adopt this standard for annual reporting periods beginning after December 15, 2015 and adopted using the modified retrospective transition method for the tax accounting and forfeiture related aspects of the guidance which did not materially impact the Company's financial position or results of operations and related disclosures. Management adopted the cash flow classification related provisions of the guidance on a retrospective basis, which resulted in the reclassification of cash flows from financing activities to operating activities of </font><font style="font-family:inherit;font-size:10pt;">$12 million</font><font style="font-family:inherit;font-size:10pt;"> and </font><font style="font-family:inherit;font-size:10pt;">$25 million</font><font style="font-family:inherit;font-size:10pt;"> in 2015 and 2014, respectively, as reported in the Consolidated Statements of Cash Flows. </font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In June 2016, the FASB issued guidance relating to credit losses. The amendments require a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected through the use of allowances for credit losses valuation account. The income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. This guidance is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period and early adoption is permitted, including adoption in an interim period, beginning after December 15, 2018. The new guidance application is mixed among the various elements that include modified retrospective and prospective transition methods. Management is currently evaluating the impact on the Company's financial position and results of operations and related disclosures.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In August 2016, the FASB issued guidance to reduce existing diversity in practice in regards to how cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance specifically addresses the following items: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies; distributions received from equity method investees; beneficial interest in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period and early adoption is permitted, including adoption in an interim period. The new guidance is to be applied retrospectively to each period presented at the date of adoption. Management elected to early adopt this standard for annual reporting periods beginning after December 15, 2015 and adopted retrospectively which did not result in changes to related disclosures or classifications.</font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In October 2016, the FASB issued guidance as a part of the Simplification Initiative in regards to income tax of intra-entity asset transfers. The release requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, the amendments eliminate the exception for an intra-entity transfer of an asset other than inventory that prohibited recognizing current and deferred income tax consequences for an intra-entity asset transfer until the asset or assets have been sold to an outside party. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods and early adoption is permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. The new guidance is to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Management is currently evaluating the impact on the Company's related disclosures.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In December 2016, the FASB issued guidance as a result of diversity in practice for the classification and presentation of changes in restricted cash on the statement of cash flows. This Update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years and early adoption is permitted, including adoption in an interim period. The new guidance is to be applied using a retrospective transition method to each period presented. Management has concluded that changes in its accounting required by this new guidance will not materially impact the Company's financial position or results of operations and related disclosures.</font></div></div>
CY2016 us-gaap Revenue Recognition Accounting Policy Gross And Net Revenue Disclosure
RevenueRecognitionAccountingPolicyGrossAndNetRevenueDisclosure
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Revenue Recognition and Customer Incentives</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the customer is fixed or determinable, and collectability is reasonably assured.&#160;Revenue for products is recognized when title and risk of loss transfer to the customer.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:left;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The Company records estimated obligations for customer programs and incentive offerings, which consist primarily of revenue or volume-based amounts that a customer must achieve over a specified period of time, as a reduction of revenue from each underlying revenue transaction as the customer progresses toward goals specified in incentive agreements.&#160;These estimates are based on a combination of forecasts of customer sales and actual sales volume and revenues against established goals, the customer's current level of purchases, Eastman's knowledge of customer purchasing habits, and industry pricing practice.&#160;The incentive payment rate may be variable, based upon the customer reaching higher sales volume or revenue levels over a specified period of time in order to receive an agreed upon incentive payment.</font></div><div style="line-height:120%;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div></div>

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