NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Financial Position

We operate a diversified fleet of U.S. and International flag vessels that provide international and domestic maritime transportation services. For additional information on our business, see Item 1 of Part I of this report.

Since 2014, we have suffered substantial losses and encountered significant challenges related to complying with our debt covenants and meeting our minimum liquidity requirements to operate. Between late 2014 and mid-2015, we sold various assets to raise cash and improve our financial position. We also took various other steps to improve our liquidity, including eliminating our common stock dividend, laying up vessels and reducing our costs. In addition, in June of 2015, we initiated efforts to refinance all of our debt and operating leases by September 30, 2015, and thereafter sought to raise funds by either selling debt securities or borrowing funds from financial institutions. We also requested limited debt covenant waivers as of September 30, 2015 from all of our lenders and lessors in case our attempts to refinance our debt and leases were unsuccessful. By early October 2015, we withdrew our efforts to refinance our debt, began negotiations with all of our lenders and lessors to receive additional limited waivers and began to formulate a new strategy designed to improve our liquidity and financial position.

On October 21, 2015, our Board of Directors approved a plan (“Strategic Plan”) to restructure the Company by focusing on our three core segments - the Jones Act, PCTC and Rail-Ferry segments. Since that date, we have modified that plan in response to new developments, including our efforts to sell assets and discussions with our lenders, lessors, directors and others. Throughout this Form 10-K, we use the term “Strategic Plan” specifically to refer to the Board approved plan to restructure the Company. The Strategic Plan, as originally approved by the Board, contemplated that we would, among other things (i) divest of one international-flagged PCTC vessel, one inactive Jones Act tug/barge unit and certain businesses and contracts during the fourth quarter of 2015, (ii) divest all of our vessels, minority investments and contracts included in our Dry Bulk Carriers, Specialty Contracts and Other segments, as well as sell or enter into a sale leaseback of our office building being constructed in New Orleans by March 31, 2016, (iii) divest of certain brokerage contracts by June 30, 2016, (iv) apply substantially all of the net proceeds from these divestitures to discharge indebtedness and (v) reduce our operating and administrative costs. We presented the Strategic Plan to all of our lenders and lessors, and on or about November 16, 2015, we were successful in obtaining an additional set of limited debt covenant waivers through March 31, 2016 and received relief from testing compliance of most of these covenants until June 30, 2016. These waivers are temporary one-time waivers, and the lenders and lessors have no obligation, express or implied, to waive any other defaults or grant any other extensions. The waivers are contingent upon our continued performance with the terms of the credit facilities, as amended, including newly-imposed requirements to timely implement the Strategic Plan and to apply substantially all of the net proceeds from the asset sales contemplated by such plan to retire debt owed under such facilities. Refer to Note F – Debt Obligations for more detail regarding these and subsequent amendments. As our financial position continually changes as a result of our execution of the Strategic Plan, we may seek to sell other assets, either on our own initiative or at the request of our creditors.

If we are unsuccessful in disposing of certain non-core assets by the milestones and at specified amounts agreed to with our lenders and lessors, we would be in default under one or more of our credit facilities and all of our creditors would have the right to accelerate our debt. As a result of the matters described herein, including the uncertainty regarding our ability to fully execute the Strategic Plan and our lenders’ abilities to demand payment under our debt agreements, there is substantial doubt about our ability to continue as a going concern.

Because of the uncertainties associated with our ability to implement the Strategic Plan within the required time constraints, since September 30, 2015, we have classified all of our debt obligations (net of deferred debt issuance costs), which was approximately $156.8 million at December 31, 2015, as current, which has caused our current liabilities to far exceed our current assets since such date.

As discussed above, on or about November 16, 2015, we obtained various debt covenant waivers that, while providing us time to execute the Strategic Plan and improve our liquidity, required us to divest of certain assets by certain milestone dates at certain specified prices. By the end of 2015, we were successful in completing the sales of our international-flagged PCTC vessel, the supramax bulk carrier included in our Dry Bulk Carriers segment, and the barge from the Jones Act tug/barge unit.

Since November 16, 2015, we have requested various types of relief from our lenders to address certain covenant defaults and to authorize changes to our divestiture plans. We may need additional relief in the future. For a further discussion of these issues, including certain waivers and amendments received by us since November 16, 2015, see Note F – Debt Obligations and Note Y – Subsequent Events.

As our financial position continues to change and as new or different divestiture opportunities arise, we may continue to seek to sell assets other than those originally identified by the Strategic Plan. Additionally, although we believe that the successful implementation of these initiatives would better position us to discharge our obligations, given the unpredictability of our ongoing negotiations with our lenders, lessors and potential vessel purchasers, we cannot be certain at this time which operations will remain. If we successfully implement our Strategic Plan, the number of vessels operated by us will continue to decrease, our operations will be further reconfigured and our fleet will be less diversified.

As a result of our divestiture plans, as of December 31, 2015, we classified the following assets as held for sale: (i) the assets in our Dry Bulk Carriers segment, (ii) the inactive tug included in our Jones Act segment, (iii) our minority interests in mini-bulkers in our Dry Bulk Carriers segment, (iv) our minority interests in chemical and asphalt tankers in our Specialty Contracts segment, (v) our New Orleans office building, and (vi) a small, non-strategic portion of our operations that owns and operates a certified rail-car repair facility near the port of Mobile, Alabama.

By the end of February 2016, we completed the sale of the remaining assets in our Dry Bulk Carriers segment (consisting of two handysize vessels and one capesize vessel) and our 30% investment in two chemical and two asphalt tankers. Additionally, we exchanged our equity share in mini-bulkers for a 2008 mini-bulk carrier that we intend to use to service the contract in our Indonesian operations. Total proceeds from our Strategic Plan initiatives to date are approximately $98.6 million, of which we used approximately $81.9 million to pay down outstanding debt, which was in addition to our regularly scheduled debt payments. As of the date of this report, the divestitures we have made thus far have been limited to assets within our non-core segments as previously disclosed under the Strategic Plan. However, as we continue our efforts to improve our liquidity and leverage levels, we may consider divestiture of assets within our core segments – Jones Act, Rail-Ferry, and PCTC. If we were to identify any potential opportunity to sell our core assets on terms favorable to the Company and its shareholders, we would explore such opportunities. For more information, please refer to Note Y – Subsequent Events.

Significant Accounting Policies

Organization and Basis of Presentation – We operate a diversified fleet of U.S. and international-flagged vessels that provide domestic and international maritime transportation services to commercial customers and agencies of the United States government primarily under medium to long-term charters or contracts of affreightment. At December 31, 2015, our fleet consisted of forty-seven ocean-going vessels and related shoreside facilities. As a result of our Strategic Plan, we included twenty-three of these vessels in assets held for sale as of December 31, 2015 – refer to Note E – Assets Held for Sale. Our core business strategy consists of identifying growth opportunities in niche markets as market needs change, utilizing our extensive experience to meet those needs, and continuing to maintain a diverse portfolio of medium to long-term contracts, as well as protect our long-standing customer base by providing quality transportation services. From time to time, we augment our core business strategy with opportunistic transactions involving short term spot market contracts. Although the implementation of our Strategic Plan has reduced the number of our vessels and operating segments, we do not believe that the plan has significantly changed our business strategy or our historical practices. We will continue to focus on the acquisition and divestiture of vessels in an effort to maintain a diverse fleet of attractive vessels that operate in niche markets.

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Certain previously reported amounts have been reclassified to conform to the 2015 presentation. Specifically, we reclassified approximately $3.0 million and $2.9 million at December 31, 2015 and 2014, respectively, of our deferred loan costs from deferred charges, net of accumulated amortization to offset against long-term debt in accordance with ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which the Company adopted in 2015. Additionally, we reclassified approximately $0.2 million of loss on extinguishment of debt from interest expense to conform to the current year presentation.

In connection with the preparation of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, we included certain non-cash transactions in the change of both cash proceeds from sale of assets (investing) and principal payments on long term debt (financing) when preparing our Consolidated Statement of Cash Flow. Accordingly, we prepared our Consolidated Statement of Cash Flows for the six and nine months ended June 30, 2015 and September 30, 2015, respectively, on that basis. We subsequently concluded that including those transactions within the cash provided by investing activities and cash used in financing activities was an error. Accordingly, we prepared our Consolidated Statement of Cash Flow for the year ended December 31, 2015 to exclude the non-cash transactions, thereby reducing cash proceeds from sale of assets and reducing principal payments on long term debt by approximately $13.5 million and disclosed these non-cash transactions within Note B – Supplemental Cash Flow Information. The revisions did not impact net cash provided by operating activities. Pursuant to the guidance of Staff Accounting Bulletin No. 99, “Materiality”, the Company evaluated the materiality of these amounts quantitatively and qualitatively and has concluded that the amounts described above were not material to any of its quarterly financial statements or trends of financial results. We will revise our Consolidated Statement of Cash Flow to exclude these non-cash transactions of approximately $13.5 million for the three, six, and nine months ended March 31, 2015, June 30, 2015, and September 30, 2015, respectively, the next time they are filed.

Consolidation - The accompanying financial statements include the accounts of International Shipholding Corporation and its majority owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Our policy is to consolidate all subsidiaries in which we hold a greater than 50% voting interest or otherwise control its operating and financial activities. We use the equity method to account for investments in entities in which we hold a 20% to 50% voting interest and have the ability to exercise significant influence over their operating and financial activities.

Financial Statement Preparation - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue and Expense Recognition - Revenue for our Jones Act, Rail-Ferry, and Specialty Contracts segments’ voyages is recorded over the duration of the voyage. Our voyage expenses are estimated at the beginning of the voyages based on historical actual costs or from industry sources familiar with those types of charges. As the voyage progresses, these estimated costs are revised with actual charges and timely adjustments made. The expenses are ratably expensed over the voyage based on the number of days in progress at the end of the period. Based on our experience, we believe there is not a material difference between recording estimated expenses ratably over the voyage versus recording expenses as incurred. Revenues and expenses relating to our other segment’s voyages, which require limited estimates or assumptions, are recorded when earned or incurred during the reporting period.

We recognize MSP revenue on a monthly basis over the duration of the qualifying contracts. The carrying amount approximates fair value for these instruments. During both 2015 and 2014, we had eight vessels that qualified under the MSP program. The MSP revenue was approximately $22.9 million and $24.5 million for the years ending December 31, 2015 and 2014, respectively. These revenues are included in our PCTC and Specialty Contracts segments. In 2015, we sold one of these PCTC vessels and redelivered two of the container vessels due to the expiration of that contract.

Income Taxes - Income taxes are accounted for in accordance with ASC Topic 740. Provisions for income taxes include deferred income taxes for temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Deferred income taxes are computed using enacted tax rates that are expected to be in effect when the temporary differences reverse. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion or the entire deferred tax asset will not be realized. The Company records uncertain tax positions within income tax expense and classifies interest and penalties related to income taxes as income tax expense.

Certain foreign operations are not subject to income taxation under pertinent provisions of the laws of the country of incorporation or operation. However, pursuant to existing U.S. tax laws, earnings from certain of our foreign operations are subject to U.S. income taxes when those earnings are repatriated to the U.S. We changed our previously asserted position that we planned to indefinitely re-invest foreign earnings of our controlled foreign corporations during the quarter ending September 30, 2015. The principal reason for changing our position is our current plan to divest foreign business use assets and repatriate excess foreign cash to pay down U.S. debt of domestic affiliates (See Note L – Income Taxes).

The Jobs Creation Act, which first applied to us on January 1, 2005, changed the U.S. tax treatment of the foreign operations of our U.S. flag vessels and our International Flag shipping operations. We made an election under the Jobs Creation Act to have our qualifying U.S. Flag operations taxed under the “tonnage tax” regime rather than under the usual U.S. corporate income tax regime (See Note L – Income Taxes).

It is our policy to recognize interest and penalties associated with underpayment of income taxes as interest expense and general and administrative expenses, respectively. If recognized, substantially all of our unrecognized tax benefits would impact our effective rate. During the quarter ending December 31, 2015, we calculated and recognized an adjustment to increase our Federal net operating loss by $0.7 million and recorded a deferred tax asset of $0.3 million to incorporate the unrecognized tax benefits related to our restricted stock units previously provided for in the disclosure of uncertain tax benefits. (See Note L – Income Taxes).

Cash and Cash Equivalents - We consider highly liquid debt instruments and money market funds with an original maturity of three months or less to be cash equivalents.

Accounts Receivable - We provide an allowance for doubtful accounts for accounts receivable balances estimated to be non-collectible. These provisions are maintained based on identified specific accounts, past experiences, and current trends, and require management’s estimates with respect to the amounts that are non-collectible. Accounts receivable balances are written off against our allowance for doubtful accounts when deemed non-collectible. Our allowance for doubtful accounts was $587,000 and $78,000 as of December 31, 2015 and 2014, respectively.

Inventories - We value spare parts and warehouse inventories at the lower of cost or market, using the first-in, first-out (FIFO) method of accounting. Fuel inventory is based on the average inventory method of accounting. As of December 31, 2015 and 2014, our inventory balances were approximately $7.0 million and $9.8 million, respectively. Our inventory consists of three major classes, the break out of which is included in the following table as of December 31, 2015 and 2014:



(All Amounts in Thousands)
Inventory Classes		2015		2014
Spare Parts Inventory	$	1,930	$	3,253
Fuel Inventory		2,854		3,967
Warehouse Inventory		2,251		2,540
Total	$	7,035	$	9,760

Vessels, Property and Other Equipment – We record vessels, property, and other equipment at cost, except assets acquired using purchase accounting, which are recorded at fair value as of the date of acquisition. We compute depreciation using the straight line method over the estimated useful lives of the related assets as follows:



Jones Act		Years
1 Coal Carrier		15
2 Bulk Carriers		25
1 Harbor Tug		20
2 ATB Barge and Tug Units		9-30
1 ITB Barge and Tug Unit		9-30

Pure Car Truck Carriers
3 Pure Car Truck Carriers		20-25

Rail-Ferry
2 Special Purpose Vessels		25

Dry Bulk Carriers
3 Bulk Carriers		25

Specialty Contracts
1 Special Purpose Vessel		25

Other
Leasehold Improvements		10-20
Other Equipment		3-12
Furniture and Equipment		3-10

Costs of all major property additions and betterments are capitalized. Ordinary maintenance and repair costs are expensed as incurred. Interest and finance costs relating to vessels and other equipment under construction are capitalized to properly reflect the cost of assets acquired. Capitalized interest totaled $54,000 and $120,000 for the years ended December 31, 2015 and 2014, respectively. Capitalized interest was calculated based on our weighted-average interest rate on our outstanding debt.

During 2015, we accelerated depreciation expense by approximately $0.9 million on the leasehold improvements related to our Mobile, Alabama office lease to reflect the anticipated early termination of the lease.

We monitor our fixed assets for impairment and perform an impairment analysis in accordance with Accounting Standards Codification (“ASC”) Topic 360 when triggering events or circumstances indicate a fixed asset or asset group may be impaired. Such events or circumstances may include a decrease in the market price of the long-lived asset or asset group or a significant change in the way the asset is being used. Once a triggering event or circumstance is identified, an analysis is done which shows the net book value of the asset as compared to the estimated undiscounted future cash flows the asset will generate over its remaining useful life. It is possible that our asset impairment review would include a determination of the asset’s fair value based on a third-party evaluation or appraisal. An impairment loss is measured as the amount by which the carrying amount of a long-lived asset or asset group exceeds its fair value. As of December 31, 2015, we recorded an impairment charge of $22.7 million to write down the carrying value of our UOS vessels to fair value, which we calculated using the discounted cash flow model. We reviewed our remaining segments and recorded an impairment of $10.5 million related to our ice strengthened multi-purpose vessel included in our Specialty Contracts segment. There were no further impairments related to our remaining segments. Refer to Note I – Vessels, Property, and Other Equipment for further discussion surrounding this impairment.

Assets Held for Sale – Since 2014, we have encountered certain challenges related to complying with our debt covenants and overall liquidity restraints. In an attempt to strengthen our financial position, on October 21, 2015, our Board of Directors approved the Strategic Plan to restructure the Company, which calls for the disposal of certain non-core assets by specified milestone dates and at specified prices. The assets are required to be classified as held for sale in the period in which they meet the criteria under Accounting Standards Codification (“ASC”) Topic 360. Additionally, assets to be disposed of are reported at the lower of the carrying value or the fair value less costs to sell. We recorded impairment charges of approximately $94.3 million as a result of classifying certain of our assets, including goodwill and intangibles related to FSI, as held for sale as of December 31, 2015 – refer to Note E – Assets Held for Sale for additional information.

Drydocking Costs - We defer certain costs related to the drydocking of our vessels. Deferred drydocking costs are capitalized as incurred and amortized on a straight-line basis over the period between drydockings (generally two to five years). Because drydocking charges can be material in any one period, we believe that the capitalization and amortization of these costs over the drydocking period provides a better matching with the future revenue generated by our vessels. We capitalize only those costs that are incurred to meet regulatory requirements. Normal repairs, whether incurred as part of the drydocking or not, are expensed as incurred – refer to Note J – Goodwill, Other Intangible Assets, and Deferred Charges.

Goodwill - Under FASB ASC 350, “Intangibles – Goodwill and Other”, goodwill and indefinite-lived intangible assets are reviewed at least annually for impairment. Goodwill is calculated as the excess of the consideration transferred over the net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill is monitored for impairment, and we perform an annual impairment analysis on December 1st or whenever events or circumstances indicate that interim impairment testing is necessary. As a result of lower operating results from our UOS services, failure to meet projected results and a significant decline in our market capitalization, we tested our goodwill for impairment as of September 30, 2015 using the income approach, which estimates the fair value of the reporting unit using various cash flow and earnings projections discounted at a rate estimated to approximate the reporting unit’s weighted average cost of capital. As a result, we determined that the implied fair value of our goodwill was less than its carrying value. As such, we recorded an impairment loss of approximately $1.9 million, which related to the entire goodwill balance generated from the UOS acquisition that is reported in the Jones Act segment. See Note D – Impairment Loss for additional information. Additionally, during the fourth quarter of 2015, we wrote off our remaining goodwill balance, which related to our FSI acquisition, of approximately $0.8 million as a result of the reclassification to assets held for sale as of December 31, 2015 - refer to Note E - Assets Held for Sale. As a result of these write offs, we had no goodwill as of December 31, 2015.

Intangible Assets - Intangible assets with definite lives are amortized using the straight line method over their individual useful lives. We review these assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. As a result of the continuing decline in our UOS services during the fourth quarter of 2015, we wrote off all of the intangible assets associated with this acquisition, which was approximately $22.1 million. Additionally, assets to be disposed of are reported at the lower of the carrying amount of fair value less estimated costs to sell. See Note D – Impairment Loss for additional information. The net carrying value of assets not fully recoverable is reduced to fair value. We wrote off approximately $0.4 million of our unamortized definite-life intangibles related to FSI that we included in assets held for sale as of December 31, 2015 – refer to Note E – Assets Held for Sale. As a result of these write offs, we had no intangible assets as of December 31, 2015.

Deferred Financing Charges - We amortize our deferred financing charges over the terms of the related financing agreements and contracts using the effective interest method. These costs, which were previously included in deferred charges, net of accumulated amortization, are now included as an offset to long-term debt - see Note J – Goodwill, Other Intangible Assets, and Deferred Charges.

Self-Retention Insurance - We maintain provisions for estimated losses under our self-retention insurance program based on estimates of the eventual claims settlement costs. The measurement of our exposure for self-insurance liability requires management to make estimates and assumptions that affect the amount of loss provisions recorded during the reporting period. Actual results could differ materially from those estimates - see Note Q – Self-Retention Insurance.

Foreign Currency Transactions - Certain of our revenues and expenses are converted into or denominated in foreign currencies, primarily the Singapore Dollar, Indonesian Rupiah, Euro, British Pound, Mexican Peso, Australian Dollar, and Japanese Yen. All exchange adjustments are charged or credited to income in the period incurred. We recognized an exchange loss of approximately $0.8 million and $0.7 million for the years ended December 31, 2015 and 2014, respectively.

In addition to the operational transactions discussed above, we also maintained a Yen-denominated credit facility, which we refinanced to a USD-based facility in 2015. We recognized a non-cash foreign exchange loss of $0.1 million and $0.2 million in 2015 and 2014, respectively, in our Consolidated Statements of Operations to reflect the periodic re-measurement of the credit facility to U.S. Dollars.

Dividends - The payment of common and preferred dividends is at the discretion of our Board of Directors. When and if declared by our Board of Directors, dividends are paid quarterly on our Series A and Series B Preferred Shares. On October 19, 2015 and January 19, 2016, we announced that our Board of Directors elected not to make the cumulative dividend payments scheduled for October 30, 2015 and January 30, 2016, respectively, with respect to our Series A and Series B Preferred Stock. Since we did not pay our preferred stock dividends for two periods, the per annum rate increased, effective January 31, 2016, by an additional 2.00% per $100.00 stated liquidation preference, or $2.00 per annum, and will continue to increase in connection with any additional future non-payments, up to a maximum annual dividend rate of twice the original interest rate. The dividend rate will reset to the original dividend rate if we pay all accrued and unpaid dividends for three consecutive quarters. Additionally, since our preferred shares rank senior to our common shares, and carry accrued but unpaid dividends, we are currently precluded from paying cash dividends on our common stock. Moreover, our November 2015 credit facility amendments place further restrictions on our ability to pay dividends on our common and preferred stock until certain conditions are met (see Note T – Capital Stock).

Earnings Per Share - Basic earnings per share is computed based on the weighted average number of common shares issued and outstanding during the relevant periods. Diluted earnings per share also reflect the effect of dilutive potential common shares, including shares issuable under restricted stock units using the treasury stock method (see Note U – Loss Per Share).

Derivative Instruments and Hedging Activities - Under ASC Topic 815, in order to consider a derivative instrument as a hedge, (i) we must designate the instrument as a hedge of future transactions, and (ii) the instrument must reduce our exposure to the applicable risk. If the above criteria are not met, we record the fair market value of the instrument at the end of each period and recognize the related gain or loss through earnings. If the instrument qualifies as a hedge, net settlements under the agreement are recognized as an adjustment to earnings, while changes in the fair value of the hedge are recorded through stockholders’ equity in other comprehensive income (loss). We currently employ, or have employed in the recent past, embedded derivatives, interest rate swap agreements and foreign currency contracts (see Note O – Derivative Instruments).

Stock-Based Compensation - In accordance with authoritative guidance related to stock compensation, we record compensation costs relating to share-based payment transactions and include such costs in administrative and general expenses in the Consolidated Statement of Operations. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award). Excess tax benefits of awards that are recognized in equity related to restricted stock vesting are reflected as financing cash flows (see Note S – Stock-Based Compensation).

Pension and Postretirement Benefits - Our pension and postretirement benefit costs are calculated using various actuarial assumptions and methodologies. These assumptions include discount rates, health care cost trend rates, inflation, rate of compensation increases, expected return on plan assets, mortality rates, and other factors. We believe that the assumptions utilized in recording the obligations under our plans are reasonable based on input from our outside actuary and information as to historical experience and performance. Differences in actual experience or changes in assumptions may affect our pension and postretirement obligations and future expense.

We account for our pension and postretirement benefit plans in accordance with ASC Topic 715. This statement requires balance sheet recognition of the overfunded or underfunded status of pension and postretirement benefit plans. Under ASC Topic 715, actuarial gains and losses, prior service costs or credits, and any remaining transition assets or obligations that have not been recognized under previous accounting standards must be recognized in other comprehensive income (loss), until they are amortized as a component of net periodic benefit cost. In addition, the measurement date, the date at which the plan assets and the benefit obligation are measured, is required to be the Company’s fiscal year end. This standard does not change the determination of net periodic benefit cost included in net income or the measurement issues associated with benefit plan accounting.

For the period ended December 31, 2015, the effect of the adjustment to our status was a decrease in the liability of $1.8 million and a decrease in other comprehensive loss of $0.9 million. As of December 31, 2015, our pension plan was underfunded by approximately $1.4 million and our postretirement benefits plan was underfunded by approximately $9.9 million (see Note N – Employee Benefit Plans).

Recent Accounting Pronouncements – In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in GAAP. The guidance in this update requires an entity to recognize the amount of revenue that it expects to be entitled for the transfer of promised goods or services to customers. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of this standard. The new standard will apply to us on January 1, 2018, with earlier adoption permitted only as of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. Management is currently evaluating the effect that ASU 2014-09 will have on our consolidated financial statements and related disclosures and, therefore, has not determined the effect of the accounting guidance on our ongoing financial reporting.

In August 2014, the FASB issued ASU 2014 – 15, “Presentation of Financial Statements – Going Concern”, to give explicit guidance on management’s requirement to analyze whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued, when applicable). ASU 2014 – 15 is effective for the annual period ending after December 15, 2016, and for the annual periods and interim periods thereafter. Early adoption is permitted. The Company elected to early adopt ASU 2015 – 15 in 2015.

In February 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-02, Amendments to the Consolidation Analysis. The amendments in ASU 2015-02 affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015, with early adoption permitted. We do not expect the adoption of ASU 2015-02 will have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. ASU 2015-03 will be effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted. During the second quarter of 2015, we adopted ASU 2015-03 and, as a result, reclassified approximately $2.9 million of deferred debt issuance costs from deferred charges, net of accumulated amortization to offset against long-term debt on our Consolidated Balance Sheet as of December 31, 2014. As of December 31, 2015, the amount of deferred debt issuance costs was $3.0 million and is included as an offset to current maturities of long-term debt on our Consolidated Balance Sheet.

In April 2015, the FASB issued ASU 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement, which provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the arrangement does not include a software license, the customer should account for a cloud computing arrangement as a service contract. The amendment is effective for annual periods beginning after December 15, 2015. Early adoption is permitted. The amendment may be adopted either prospectively to all arrangements entered into or materially modified after the effective date or retrospectively. We do not expect the adoption of ASU 2015-05 will have a material impact on our consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory – Simplifying the Measurement of Inventory, which applies to inventory measured using first-in, first-out or average cost. The guidance in this update states that inventory within scope shall be measured at the lower of cost or net realizable value, and when the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings. The new standard is effective for the Company beginning on January 1, 2017 and should be applied on a prospective basis. The Company is evaluating the effect that ASU 2015-11 will have on its consolidated financial statements and related disclosures.

In November 2015, the FASB issued ASU 2015-17, Income Taxes – Balance Sheet Classification of Deferred Taxes, which requires that deferred tax liabilities and assets be classified as noncurrent on an entity’s statement of financial position. This standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted, and the amendments in this update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. We do not expect the adoption of ASU 2015-17 will have a material impact on our consolidated financial statements.