2017 Q2 Form 10-Q Financial Statement

#000080770717000025 Filed on July 10, 2017

View on sec.gov

Income Statement

Concept 2017 Q2 2016 Q2
Revenue $114.8M $113.9M
YoY Change 0.81% -30.71%
Cost Of Revenue $84.68M $109.4M
YoY Change -22.57% -6.0%
Gross Profit $30.14M $31.97M
YoY Change -5.72% -33.45%
Gross Profit Margin 26.25% 28.07%
Selling, General & Admin $32.61M $39.74M
YoY Change -17.94% -2.44%
% of Gross Profit 108.17% 124.28%
Research & Development $7.810M $10.26M
YoY Change -23.85% 106.28%
% of Gross Profit 25.91% 32.08%
Depreciation & Amortization $3.039M $4.549M
YoY Change -33.19% 30.08%
% of Gross Profit 10.08% 14.23%
Operating Expenses $39.26M $53.21M
YoY Change -26.22% 9.03%
Operating Profit -$9.116M -$7.113M
YoY Change 28.16% 829.8%
Interest Expense $15.00K $25.00K
YoY Change -40.0% -28.57%
% of Operating Profit
Other Income/Expense, Net -$1.007M -$512.0K
YoY Change 96.68% -285.51%
Pretax Income -$10.11M -$7.512M
YoY Change 34.61% 1615.07%
Income Tax -$7.428M -$1.392M
% Of Pretax Income
Net Earnings -$3.031M -$4.308M
YoY Change -29.64% 503.36%
Net Earnings / Revenue -2.64% -3.78%
Basic Earnings Per Share -$0.13 -$0.18
Diluted Earnings Per Share -$0.13 -$0.18
COMMON SHARES
Basic Shares Outstanding 24.16M shares 24.16M shares
Diluted Shares Outstanding 24.16M shares 24.16M shares

Balance Sheet

Concept 2017 Q2 2016 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $8.100M $8.600M
YoY Change -5.81% 21.13%
Cash & Equivalents $8.060M $8.558M
Short-Term Investments
Other Short-Term Assets $29.20M $16.40M
YoY Change 78.05% -38.11%
Inventory $165.4M $150.6M
Prepaid Expenses
Receivables $89.89M $78.89M
Other Receivables $2.500M $3.500M
Total Short-Term Assets $295.1M $258.0M
YoY Change 14.35% -9.32%
LONG-TERM ASSETS
Property, Plant & Equipment $85.18M $79.93M
YoY Change 6.57% 11.23%
Goodwill $880.0K $105.7M
YoY Change -99.17% 0.79%
Intangibles $175.7M $184.0M
YoY Change -4.5% 17.67%
Long-Term Investments $21.22M $22.22M
YoY Change -4.52% 0.86%
Other Assets $1.624M $2.197M
YoY Change -26.08% -66.33%
Total Long-Term Assets $399.3M $404.2M
YoY Change -1.2% 7.96%
TOTAL ASSETS
Total Short-Term Assets $295.1M $258.0M
Total Long-Term Assets $399.3M $404.2M
Total Assets $694.4M $662.2M
YoY Change 4.86% 0.5%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $71.67M $57.85M
YoY Change 23.89% -3.85%
Accrued Expenses $66.30M $55.90M
YoY Change 18.6% -5.09%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $10.40M $11.00M
YoY Change -5.45% 4.76%
Total Short-Term Liabilities $150.5M $126.7M
YoY Change 18.73% -4.99%
LONG-TERM LIABILITIES
Long-Term Debt $105.6M $95.99M
YoY Change 9.98% 22.97%
Other Long-Term Liabilities $10.95M $10.44M
YoY Change 4.84% 10.78%
Total Long-Term Liabilities $116.5M $106.4M
YoY Change 9.47% 21.65%
TOTAL LIABILITIES
Total Short-Term Liabilities $150.5M $126.7M
Total Long-Term Liabilities $116.5M $106.4M
Total Liabilities $301.4M $268.4M
YoY Change 12.31% 0.72%
SHAREHOLDERS EQUITY
Retained Earnings $156.3M $150.6M
YoY Change 3.78% -4.0%
Common Stock
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost) $21.18M $21.18M
YoY Change 0.0% 1.04%
Treasury Stock Shares 2.168M shares 2.168M shares
Shareholders Equity $393.5M $393.9M
YoY Change
Total Liabilities & Shareholders Equity $694.4M $662.2M
YoY Change 4.86% 0.5%

Cashflow Statement

Concept 2017 Q2 2016 Q2
OPERATING ACTIVITIES
Net Income -$3.031M -$4.308M
YoY Change -29.64% 503.36%
Depreciation, Depletion And Amortization $3.039M $4.549M
YoY Change -33.19% 30.08%
Cash From Operating Activities $427.0K -$6.544M
YoY Change -106.53% -1440.98%
INVESTING ACTIVITIES
Capital Expenditures $2.816M $2.297M
YoY Change 22.59% -48.44%
Acquisitions $1.814M $0.00
YoY Change
Other Investing Activities -$1.800M $0.00
YoY Change -100.0%
Cash From Investing Activities -$4.620M -$2.292M
YoY Change 101.57% -57.48%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities $3.890M $4.903M
YoY Change -20.66% 45.92%
NET CHANGE
Cash From Operating Activities $427.0K -$6.544M
Cash From Investing Activities -$4.620M -$2.292M
Cash From Financing Activities $3.890M $4.903M
Net Change In Cash -$303.0K -$3.933M
YoY Change -92.3% 154.89%
FREE CASH FLOW
Cash From Operating Activities $427.0K -$6.544M
Capital Expenditures $2.816M $2.297M
Free Cash Flow -$2.389M -$8.841M
YoY Change -72.98% 122.86%

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CY2017Q2 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%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;text-decoration:underline;">New Accounting Pronouncements</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, "Revenues from Contracts with Customers (Topic 606)," which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard requires entities to 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. The new guidance also includes a cohesive set of disclosure requirements intended to provide users of financial statements comprehensive information about the nature, amounts, timing and uncertainty of revenue and cash flows arising from a company's contracts with customers. ASU 2014-09 defines a five-step process to achieve this core principle and in doing so, it is possible that more judgment and estimates may be required within the revenue recognition process than are required under existing guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to separate performance obligations, among others. </font></div><div style="line-height:120%;text-align:justify;padding-left:96px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Retrospective or modified retrospective application of the accounting standard is required. In August 2015, the FASB issued ASU 2015-14, &#8220;Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,&#8221; an amendment deferring the effective date of ASU 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016. The FASB issued additional amendments to the initial guidance in March 2016, April 2016, May 2016, December 2016 and February 2017 within ASU 2016-08, ASU 2016-10, ASU 2016-11 ASU 2016-12, ASU 2016-20 and ASU 2017-05. We expect to adopt the provisions of ASU 2014-09 effective March 1, 2018.</font></div><div style="line-height:120%;text-align:justify;padding-left:96px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Preliminarily, the Company expects to use the modified retrospective method upon adoption of the standard. The Company has reviewed selected customer contracts representing certain of our revenue streams for the current fiscal year. The assessment of the impact on revenue and expenses based on these reviews to determine the impact to the Company's results of operations, financial position and cash flows as a result of this guidance is ongoing. The Company will continue to review customer contracts during Fiscal 2018. Any preliminary assessments are subject to change.</font></div><div style="line-height:120%;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory.&#8221; The new standard amends the guidelines for the measurement of inventory from lower of cost or market to the lower of cost and net realizable value (NRV). NRV is defined as the estimated selling prices in the ordinary course of business less reasonably predictable costs of completion, disposal, and transportation. Under existing standards, inventory is measured at lower of cost or market, which requires the consideration of replacement cost, NRV and NRV less an amount that approximates a normal profit margin. This ASU eliminates the requirement to determine and consider replacement cost or NRV less an approximately normal profit margin for inventory measurement. This standard was effective for the quarter ended May 31, 2017 and did not have a material impact on the Company's consolidated financial statements.</font><font style="font-family:Arial;font-size:10pt;"> </font></div><div style="line-height:120%;text-align:justify;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In January 2016, the FASB issued ASU 2016-01&#160;"Recognition and Measurement of Financial Assets and Financial Liabilities," which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under equity method of accounting or those that result in consolidation of the investee).&#160; This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.&#160;&#160;The Company is currently evaluating the impact, if any, the adoption of ASU 2016-01 will have on its consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;padding-left:96px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In February 2016, the FASB issued ASU 2016-02,&#160;"Leases (Topic 842)." ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. This amendment will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. The Company has not yet determined the effect of the adoption of this standard on the Company&#8217;s consolidated financial position and results of operations.</font></div><div style="line-height:120%;text-align:justify;padding-left:96px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;padding-bottom:13px;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2016, the FASB issued ASU 2016-05, "Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships (a consensus of the Emerging Issues Task Force)." ASU 2016-05 clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815 does not, in and of itself, require de-designation of that hedging relationship provided that all other hedge accounting criteria continue to be met. ASU 2016-05 was effective for the quarter ended May 31, 2017 and did not have a material impact on the consolidated financial statements. </font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2016, the FASB issued ASU No. 2016-07, "Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting," which eliminates the retroactive adjustments to an investment upon it qualifying for the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence by the investor. ASU 2016-07 requires that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor&#8217;s previously held interest and adopt the equity method of accounting as of the date the investment qualifies for equity method accounting. ASU 2016-07 was effective for the quarter ended May 31, 2017 and did not have a material effect on the Company's consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In June 2016, the FASB issued ASU 2016-13, &#8220;Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.&#8221; The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren&#8217;t measured at fair value through net income. The standard will replace today&#8217;s &#8220;incurred loss&#8221; approach with an &#8220;expected loss&#8221; model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. The amendment will affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.</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:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic&#160;230) - Classification of Certain Cash Receipts and Cash Payments," which addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows.&#160;The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted.&#160;The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In October 2016, the FASB issued ASU No. 2016-16, &#8220;Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,&#8221; which is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This update removes the current exception in GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. The amendments in this update are effective for public entities for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently assessing the impact of the future adoption of this standard on its consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:9pt;"><font style="font-family:inherit;font-size:9pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In October 2016, the FASB issued ASU No. 2016-17, &#8220;Consolidation (Topic 810): Interests Held Through Related Parties That are Under Common Control.&#8221; This update amends the consolidation guidance on how a reporting entity that is the single decision maker of a variable interest entity (&#8220;VIE&#8221;) should treat indirect interests in the entity held through related parties that are under common control with the reporting entity when determining whether it is the primary beneficiary of that VIE. The primary beneficiary of a VIE is the reporting entity that has a controlling financial interest in a VIE and, therefore, consolidates the VIE. A reporting entity has an indirect interest in a VIE if it has a direct interest in a related party that, in turn, has a direct interest in the VIE. The amendments in this ASU were effective for the quarter ended May 31, 2017 and did not have a material impact on the consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In November 2016, the FASB issued</font><font style="font-family:Arial;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;">ASU No. 2016-18</font><font style="font-family:inherit;font-size:10pt;font-style:italic;">, </font><font style="font-family:inherit;font-size:10pt;">"Statement of Cash Flows (Topic 230)"</font><font style="font-family:Arial;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;">to reduce</font><font style="font-family:Arial;font-size:10pt;"> </font><font style="font-family:inherit;font-size:10pt;">diversity in practice related to the classification and presentation of changes in restricted cash on the statement of cash flows under Topic 230, Statement of Cash Flows. The revised guidance requires that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance will be applied on a retrospective basis beginning with the earliest period presented. The amendments in this ASU are effective for annual and interim periods beginning after December&#160;15, 2017. Early adoption is permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805) - Clarifying the Definition of a Business," with the objective to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets versus businesses. The amendments in ASU 2017-01 provide a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen is expected to reduce the number of transactions that need to be further evaluated. If the screen is not met, the amendments in ASU 2017-01 (i) require that to be considered a business, a set of assets and liabilities acquired must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output; and (ii) remove the evaluation of whether a market participant could replace missing elements. The amendments in this ASU are effective for annual and interim periods beginning after December&#160;15, 2017 and should be applied prospectively. Early adoption is permitted for transactions for which the acquisition date occurs before the issuance date of ASU 2017-01, only when the transaction has not been reported in financial statements that have been issued or made available for issuance. The Company is currently assessing the impact of the adoption of this pronouncement on its consolidated financial statements. </font></div><div style="line-height:120%;text-align:justify;padding-left:96px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." Under the new guidance, if a reporting unit's carrying value amount exceeds its fair value, an entity will record an impairment charge based on that difference. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standard eliminates today's requirement to calculate goodwill impairment using Step 2, which calculates an impairment charge by comparing the implied fair value of goodwill with its carrying amount. The standard does not change the guidance on completing Step 1 of the goodwill impairment test. The amendments in this ASU are effective for annual or any interim goodwill impairments tests in fiscal years beginning after December&#160;15, 2019 and should be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of the new standard on our consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2017, the FASB issued ASU No. 2017-07, "Compensation-Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost." The new standard requires that an employer disaggregate the service cost component of net benefit cost. Also, these amendments provide guidance on how to present the service cost component and the other components of net benefit costs in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. The guidance is effective for fiscal years beginning after December&#160;15, 2017. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.</font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In March 2017, the FASB issued ASU 2017-08, &#8220;Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20)-Premium Amortization on Purchased Callable Debt Securities.&#8221; ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The guidance is effective for fiscal years beginning after December 15, 2018 and is not expected to have a significant impact on our financial statements.</font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;"><br clear="none"/></font></div><div style="line-height:120%;text-align:justify;padding-left:48px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In May 2017, the FASB issued ASU No. 2017-09, &#8220;Compensation-Stock Compensation (Topic 718) - Scope of Modification Accounting," which amends the scope of modification accounting for share-based payment arrangements. The standard provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. The new standard is effective for annual periods beginning after December 15, 2017 and interim periods within those years. Early adoption is permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.</font></div></div>

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