SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2017

SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Principles of Consolidation:  The Consolidated Financial Statements include the accounts of Matson, Inc. and all wholly-owned subsidiaries, after elimination of significant intercompany amounts and transactions.  Significant investments in businesses, partnerships, and limited liability companies in which the Company does not have a controlling financial interest, but has the ability to exercise significant influence, are accounted for under the equity method.  A controlling financial interest is one in which the Company has a majority voting interest or one in which the Company is the primary beneficiary of a variable interest entity.  The Company accounts for its investment in the Terminal Joint Venture using the equity method of accounting (see Note 4).  The Consolidated Financial Statements include the accounts and activities of Horizon from acquisition date on May 29, 2015, and Span Alaska from acquisition date on August 4, 2016 (see Note 18).

Fiscal Year

Fiscal Year:  The period end for Matson, Inc. is December 31.  The period end for MatNav occurred on the last Friday in December, except for Matson Logistics Warehousing, Inc. whose period closed on December 31.  Included in these Consolidated Financial Statements are 52 weeks in the 2017 and 2015 fiscal years, and 53 weeks in the 2016 fiscal year, for MatNav.

Foreign Currency Transactions

Foreign Currency Transactions:  The United States (U.S.) dollar is the functional currency for substantially all of the financial statements of the Company’s foreign subsidiaries.  Foreign currency denominated assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates existing at the respective balance sheet dates.  Translation adjustments resulting from fluctuations in exchange rates are recorded as a component of accumulated other comprehensive loss (gain) within shareholders’ equity.  The Company translates the result of operations of its foreign subsidiaries at the average exchange rate during the respective periods.  Gains and losses resulting from foreign currency transactions are included in selling, general and administrative costs in the Consolidated Statements of Income and Comprehensive Income.

Use of Estimates

Use of Estimates:  The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported.  Estimates and assumptions are used for, but not limited to: impairment of investments, long-lived vessel and equipment impairment, capitalized interest, allowance for doubtful accounts, goodwill and other finite-lived intangible assets impairment, legal contingencies, uninsured liabilities, accrual estimates, pension and post-retirement estimates, multi-employer withdrawal liabilities, and income taxes.  Future results could be materially affected if actual results differ from these estimates and assumptions.

Immaterial Correction of an Error in Previously Issued Financial Statements

Immaterial Correction of an Error in Previously Issued Financial Statements:  Subsequent to the filing of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2017, the Company identified an error related to its post-retirement benefit plan liabilities.  The Company did not account for the transfer of certain participants belonging to three stevedore union groups in Hawaii out of the Company’s post-retirement benefit plan and into a multi-employer Stevedore Industry Committee Welfare Benefit Plan (“SIC Plan”), that was approved by the Board of the SIC Plan in August 2016 (the “Transfer”).  The SIC Plan assumed the existing unfunded obligation related to the transferred participants who continue to receive substantially the same post-retirement benefits that they previously received under the Company’s post-retirement benefit plan.  The Company determined that the Transfer should have been accounted for in August 2016 when the Transfer was approved by the SIC Board as a negative plan amendment in accordance with Accounting Standards Codification (“ASC”) 715-60, Defined Benefit Plans – Other Postretirements since the Company retains significant risks related to the obligation for the transferred participants’ benefits, and will continue to participate in the funding of the transferred benefit obligation through ongoing and increased contributions to the SIC Plan.

Accordingly, the Company corrected this error by recording a decrease of $36.8 million in employee benefit plan liabilities and $1.6 million in accruals and other liabilities, with a corresponding net gain in prior service costs of $22.5 million in accumulated other comprehensive income (loss), net of $15.0 million of deferred income taxes, and a $0.9 million increase in retained earnings as of December 31, 2016.  The net gain in prior service costs included in accumulated other comprehensive income (loss) will be amortized over a period of approximately 10 years.    The correction resulted in an increase in Ocean Transportation segment operating income of $1.4 million, and income tax expense of $0.5 million in the Company’s Consolidated Statements of Income and Comprehensive Income for the year ended December 31, 2016.  The Company’s disclosures in the Consolidated Financial Statements for the year ended December 31, 2016, including the Consolidated Statements of Income and Comprehensive Income, Consolidated Balance Sheets, Note 11 Pensions and Post-Retirement Plans, and Note 13 Accumulated Other Comprehensive Income (Loss) have been adjusted to reflect the correction of this error.  The Company believes the correction of this error is immaterial to previously issued Consolidated Financial Statements for prior periods.  The misstatement had no impact on the Company’s Condensed Consolidated Statements of Cash Flows.

Reclassifications

Reclassifications:  Certain amounts included within cash flows from operating activities of the Consolidated Statement of Cash Flow for the year ended December 31, 2016, have been reclassified to conform to the current period presentation.  There was no change in net cash provided by operating activities for the year ended December 31, 2016.

Cash and Cash Equivalents

Cash and Cash Equivalents:  Cash equivalents consist of highly liquid investments with an original maturity of three months or less at the date of purchase.  The Company carries these investments at cost, which approximates fair value.  Outstanding checks in excess of funds on deposit totaled $18.7 million and $21.3 million at December 31, 2017 and 2016, respectively, and are reflected as current liabilities in the Consolidated Balance Sheets.

Accounts Receivable, net

Accounts Receivable, net:  Accounts receivable represents amounts due from trade customers arising in the normal course of business.  Accounts receivable are shown net of allowance for doubtful accounts receivable in the Consolidated Balance Sheets.  At December 31, 2017, and 2016, the Company had assigned $134.8 million and $174.7 million of eligible accounts receivable, respectively, to the Capital Construction Fund (see Note 7).

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts:  Allowances for doubtful accounts receivable are established by management based on estimates of collectability.  Estimates of collectability are principally based on an evaluation of the current financial condition of the customer and the potential risks to collection, the customer’s payment history and other factors which are regularly monitored by the Company.  Changes in the allowance for doubtful accounts receivable for the three years ended December 31, 2017 were as follows:

	Balance at		Expense		Write-offs		Balance at
Year (in millions)	Beginning of Year		(Recovery) (1)		and Other		End of Year
2017	$	4.2	$	1.0	$	(0.6)	$	4.6
2016	$	6.6	$	(0.3)	$	(2.1)	$	4.2
2015	$	5.0	$	2.0	$	(0.4)	$	6.6

(1) Expense is shown net of amounts recovered from previously reserved doubtful accounts.

Prepaid expenses and Other Assets

Prepaid Expenses and Other Assets:  Prepaid expenses and other assets consist of the following at December 31, 2017 and 2016:

	As of December 31,
Prepaid Expenses and Other Assets (in millions)	2017		2016
Income tax receivables	$	2.6	$	23.4
Insurance related receivables		15.2		17.6
Prepaid fuel		14.4		11.5
Other		19.4		18.3
Total	$	51.6	$	70.8

Other Long-Term Assets

Other Long-Term Assets:    Other long-term assets consist of the following at December 31, 2017 and 2016:

	As of December 31,
Other Long-Term Assets (in millions)	2017		2016
Alternative minimum tax (AMT) receivable (1)	$	50.2	$	—
Deferred charges and other		20.7		17.7
Vessel and equipment spare parts		12.7		11.4
Capital construction fund - cash on deposit (See Note 7)		0.9		31.2
Total	$	84.5	$	60.3

Represents AMT tax credits refundable as a result of the Tax Act.

Impairment of Terminal Joint Venture Investment

Impairment of Terminal Joint Venture Investment:  The Company’s investment in its Terminal Joint Venture, a related party, is reviewed for impairment annually, or whenever there is evidence that fair value may be below carrying cost.  No impairment was identified for the years ended December 31, 2017, 2016, and 2015.

Property and Equipment

Property and Equipment:  Property and equipment are stated at cost.  Certain costs incurred in the development of internal-use software are capitalized.  Property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets.  The estimated useful lives of property and equipment range up to the following maximum life:

Classification	Life
Vessels	40 years
Machinery and equipment	30 years
Terminal facilities	35 years

Capitalized Interest

Capitalized Interest:  The Company entered into agreements with shipyards for the construction of four new vessels to be utilized within the Company’s operations (see Note 5).  The Company is funding the construction of these vessels through borrowings and cash flows generated by the Company.  The Company determined that the construction of these vessels are considered qualifying assets for the purposes of capitalizing interest on these assets.

The Company’s policy is to capitalize interest costs during the period the qualified assets are being readied for their intended use.  The amount of capitalized interest is calculated based on the amount of payments incurred related to the construction of these vessels using a weighted average interest rate.  The weighted average interest rate is determined using the Company’s average borrowings outstanding during the period.  Capitalized interest is included in vessel construction in progress in property and equipment in the Company’s Consolidated Balance Sheets (see Note 5).  During the three years ended December 31, 2017, 2016 and 2015, the Company capitalized $7.5 million, $2.1 million and $0.4 million of interest related to the construction of new vessels.

Deferred Dry-docking Costs

Deferred Dry-docking Costs:    U.S. flagged vessels must meet specified seaworthiness standards established by U.S. Coast Guard rules and classification society rules.  These standards require U.S. flagged vessels to undergo two dry-docking inspections within a five-year period, with a maximum of 36 months between them.  However, U.S. flagged vessels that are enrolled in the U.S. Coast Guard’s Underwater Survey in Lieu of Dry-docking (“UWILD”) program, are allowed to have their Intermediate Survey dry-docking requirement met with a less costly underwater inspection.  Non-U.S. flag vessels are required to meet applicable classification society rules and their own Port State standards for seaworthiness, which also mandate vessels to undergo two dry-docking inspections every five years. 

The Company is responsible for maintaining its vessels in compliance with U.S. and international standards.  As costs associated with dry-docking inspections provide future economic benefits to the Company through continued operation of the vessels, the costs are deferred and amortized until the next regulatory scheduled dry-docking, which is usually over a two to five-year period.  Routine vessel maintenance and repairs that do not improve or extend asset lives are charged to expense as incurred.  Amortized amounts are charged to operating expenses of the Ocean Transportation segment in the Consolidated Statements of Income and Comprehensive Income.

As costs associated with dry-docking inspections provide future economic benefits to the Company through continued operation of the vessels, the costs are deferred and amortized until the next regulatory scheduled dry-docking, which is usually over a two to five-year period.  Routine vessel maintenance and repairs that do not improve or extend asset lives are charged to expense as incurred.  Deferred dry-docking amortization amounts are charged to operating expenses of the Ocean Transportation segment in the Consolidated Statements of Income and Comprehensive Income.

Goodwill and Intangible Assets

Goodwill and Intangible Assets:  Goodwill and intangible assets arise as a result of acquisitions made by the Company (see Notes 6 and 18).  Intangible assets consisted of customer relationships which are being amortized using the straight-line method over the expected useful lives ranging from 3 to 21 years, and a trade name that has an indefinite life.

Impairment of Long-Lived Assets, Intangible Assets and Goodwill

Impairment of Long-Lived Assets, Intangible Assets and Goodwill:  The Company evaluates its long-lived assets, including intangible assets and goodwill for possible impairment in the fourth quarter, or whenever events or changes in circumstances indicate that it is more likely than not that the fair value is less than its carrying amount.  The Company has reporting units within the Ocean Transportation and Logistics reportable segments.  Long-lived assets and finite-lived intangible assets are grouped at the lowest level for which identifiable cash flows are available.

Long-lived Assets and Finite-lived Intangible Assets:  In evaluating impairment, the estimated future undiscounted cash flows generated by each of these asset groups is compared with the amount recorded for each asset group to determine if its carrying value is not recoverable.  If this review determines that the amount recorded will not be recovered, the amount recorded for the asset group is reduced to its estimated fair value.  No impairment charges of long-lived assets were recorded for the years ended December 31, 2016, and 2014 as a result of this evaluation.  During the year ended December 31, 2015, the Company recorded an impairment charge of $2.1 million related to the write-down of inactive vessels from its recorded net book value to its estimated fair value of zero.  The impairment expense is included in Ocean Transportation operating costs on the Consolidated Statements of Income and Comprehensive Income.  No impairment charges of finite-lived intangible assets was recorded for the years ended December 31, 2017, 2016 and 2015.

Indefinite-life Intangible Assets and Goodwill:  In estimating the fair value of a reporting unit, the Company uses a combination of a discounted cash flow model and fair value based on market multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”).  Based upon the Company’s evaluation of its indefinite-life intangible assets and goodwill for impairment, the Company determined that the fair value of each reporting unit exceeds book value.  Therefore, no impairment charges of goodwill were recorded for the years ended December 31, 2017, 2016 and 2015, respectively.

Accruals and Other Liabilities

Accruals and other liabilities:  Accruals and other liabilities consist of the following at December 31, 2017 and 2016:

	As of December 31,
Accruals and Other Liabilities (in millions)	2017		2016
Payroll and vacation related accruals	$	24.7	$	23.3
Uninsured claims and related liabilities - short term		15.4		18.4
Employee incentives and other related accruals		17.4		8.7
Interest on debt		5.4		5.8
Multi-employer withdrawal liability - short term (see Note 12)		4.1		4.1
Deferred revenues		5.0		2.9
Pension and post-retirement liabilities - short term (see Note 11)		3.0		2.1
Other liabilities		5.4		10.0
Total	$	80.4	$	75.3

Other Long-term Liabilities

Other long-term liabilities:    Other long-term liabilities consist of the following at December 31, 2017 and 2016:

	As of December 31,
Other Long-term Liabilities (in millions)	2017		2016
Pension and post-retirement liabilities (see Note 11)	$	75.1	$	75.0
Multi-employer withdrawal liability (see Note 12)		58.4		60.1
Uninsured claims and related liabilities		29.5		27.4
Other long-term liabilities		8.5		9.6
Total	$	171.5	$	172.1

Pension and Post-Retirement Plans

Pension and Post-Retirement Plans:  Certain Ocean Transportation subsidiaries are members of the Pacific Maritime Association (“PMA”) and the Hawaii Stevedoring Industry Committee, which negotiate multi-employer pension plans covering certain shoreside bargaining unit personnel.  The Company directly negotiates multi-employer pension plans covering other bargaining unit personnel.  Pension costs are accrued in accordance with contribution rates established by the PMA, the parties to a plan or the trustees of a plan.  Several trusteed, non-contributory, single-employer defined benefit plans and defined contribution plans cover substantially all other employees.

The estimation of the Company’s pension and post-retirement benefit expenses and liabilities requires that the Company make various assumptions.  These assumptions include factors such as discount rates, expected long-term rate of return on pension plan assets, salary growth, health care cost trend rates, inflation, retirement rates, mortality rates, and expected contributions.  Actual results that differ from the assumptions made could materially affect the Company’s financial condition or its future operating results.  Additional information about the Company’s pension and post-retirement plans is included in Note 11.

Uninsured Claims and Related Liabilities

Uninsured Claims and Related Liabilities: The Company is uninsured for certain claims including, but not limited to, employee health, workers’ compensation, general liability, real and personal property.  Where feasible, the Company obtains third-party excess insurance coverage to limit its exposure to these claims.  When estimating its uninsured claims and related liabilities, the Company considers a number of factors, including historical claims experience, demographic factors, current trends, and analyses provided by independent third-parties.  Periodically, management reviews its assumptions and the analyses provided by independent third-parties to determine the adequacy of the Company’s uninsured claims and related liabilities.

Recognition of Revenues and Expenses

Recognition of Revenues and Expenses:    Revenue in the Company’s Consolidated Financial Statements is presented net of elimination of intercompany transactions.  The following is a description of the Company’s principal revenue generating activities by segment, and the Company’s revenue recognition policy for each activity:

	Year Ended December 31,
Ocean Transportation (in millions) (1)	2017		2016		2015
Ocean transportation services	$	1,531.8	$	1,504.5	$	1,472.0
Terminal and other related services		23.5		22.9		15.9
Fuel sales		9.9		7.5		10.1
Ship management services		6.6		6.2		—
Total	$	1,571.8	$	1,541.1	$	1,498.0

(1) Ocean transportation revenue transactions are primarily denominated in U.S. dollars except for approximately 3 percent of ocean transportation revenues and fuel sales which are denominated in foreign currencies. 

§ Ocean transportation services revenue is recognized ratably over the duration of a voyage based on the relative transit time completed in each reporting period.  Vessel operating costs and other ocean transportation operating costs, such as terminal operating overhead and general and administrative expenses, are charged to operating costs as incurred. 

§ Terminal and other related service revenues to third parties are recognized as the services are performed.

§ Ship management services revenue and related cost are recognized in proportion to the services completed.

§ Fuel sale revenue is recognized when the Company has completed delivery of the product to the customer in accordance with the terms and conditions of the contract.

	Year Ended December 31,
Logistics (in millions) (1)	2017		2016		2015
Transportation brokerage and freight forwarding services	$	445.1	$	373.7	$	360.7
Warehouse and distribution services		17.5		19.7		19.8
Supply chain management and other services		12.5		7.1		6.4
Total	$	475.1	$	400.5	$	386.9

(1) Logistics revenue transactions are primarily dominated in U.S. dollars except for approximately 3 percent of transportation brokerage and freight forwarding services revenue, and supply chain management and other services revenue categories are denominated in foreign currencies.

§ Logistics transportation brokerage and freight forwarding services revenue consists of amounts billed to customers for services provided.  The primary costs include third-party purchased transportation services, and labor costs.  Revenue and the related purchased third-party transportation costs are recognized over the duration of a delivery based upon the relative transit time completed in each reporting period.  Labor costs are expensed as incurred.  The Company reports revenue on a gross basis as the Company serves as the principal in these transactions because it is responsible for the contractual relationship with the customer and has latitude in establishing prices.

§ Logistics warehousing and distribution services revenue consist of amounts billed to customers for storage, handling, and value-added packaging of customer merchandise.  For customer dedicated warehouses, storage revenue is recognized as earned over the life of the contract.  For customers in other warehouses, storage revenue is recognized in the month the service is provided to the customer.  Storage expenses are recognized as incurred.  Other warehousing and distribution services revenue and expense are recognized in proportion to the services performed. 

§ Supply chain management and other services revenue and related costs are recognized in proportion to the services performed.

The Company generally invoices its customers at the commencement of the voyage or the transportation service being provided, or as other services are being performed.  Revenue is deferred when services are paid in advance by the customer or when the voyage or transportation services have not commenced as of the end of the fiscal period.  The Company’s receivables are classified as short-term as collection terms are for periods of less than one year. 

The Company expenses sales commissions and contract acquisition costs as incurred because the amounts are generally immaterial.  These expenses are included in selling, general and administration expenses in the Consolidated Statements of Income and Comprehensive Income.

Dividends

Dividends: The Company recognizes dividends as a liability when approved by the Board of Directors.

Share-Based Compensation

Share-Based Compensation:  The Company records compensation expense for all share-based awards made to employees and directors.  The Company’s various stock-based compensation plans are more fully described in Note 15.

Income Taxes

Income Taxes:  Deferred income taxes are provided for the tax effect of temporary differences between the tax basis of assets and liabilities and their reported amounts in the Consolidated Financial Statements in accordance with ASC 740, Income Taxes (“ASC 740”).  Deferred tax assets and deferred tax liabilities are adjusted to the extent necessary to reflect tax rates expected to be in effect when the temporary differences reverse.  On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law.  The Tax Act includes numerous changes in existing tax law, including a reduction in the federal corporate income tax rate from 35% to 21%.  The rate reduction and other changes take effect on January 1, 2018.  Other changes such as remeasurement of deferred tax assets and liabilities are effective as of the fourth quarter of 2017. 

Also, on December 22, 2017, the Securities Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act.  SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740.  In connection with the Company’s analysis of the impact of the Tax Act, the Company recorded a net tax benefit of $155.0 million related to the remeasurement and other discrete adjustments to the Company’s deferred tax assets and liabilities during the year ended December 31, 2017.  The net tax benefit is based on information and interpretations of the Tax Act that are currently available.  However, such amounts may be subject to revision pending further clarification and interpretations of the Tax Act.  The Company will continue to assess the impact of the Tax Act and any related interpretations, when issued, on the Company’s income tax estimates.  These and other factors could materially affect the Company’s financial condition or its future operating results.  The Company’s income taxes are more fully described in Note 10. 

The Company also makes certain estimates and judgments in determining income tax expense for Consolidated Financial Statement purposes.  These estimates and judgments are applied in the calculation of tax credits, tax benefits and deductions, and in the calculation of certain deferred tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and Consolidated Financial Statement purposes. 

In addition, judgment is required in determining if, based on the weight of available evidence, management believes that it is more likely than not that some portion or all of a recorded deferred tax asset would not be realized in future periods.  A valuation allowance would be established if, based on the weight of available evidence, management believes that it is more likely than not that some portion or all of a recorded deferred tax asset would not be realized in future periods (see Note 10).  Significant changes to these estimates may result in an increase or decrease to the Company’s tax provision in a subsequent period.

Rounding

Rounding:  Amounts in the Consolidated Financial Statements and Notes to the Consolidated Financial Statements are rounded to millions, except for per-share calculations and percentages which were determined based on amounts before rounding.  Accordingly, a recalculation of some per-share amounts and percentages, if based on the reported data, may be slightly different.

New Accounting Pronouncements

New Accounting Pronouncements:  Revenue from Contracts with Customers: In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”).  Recognition of Revenues and Expenses:    The new standard is effective for interim and annual reporting periods beginning after December 15, 2017.  The Company plans to adopt ASU 2014-09 commencing the first quarter of 2018 using the modified retrospective method.  This method allows the Company to recognize the cumulative effect of initially applying ASU 2014-09 as an adjustment to retained earnings as of December 31, 2017.  Prior to adopting ASU 2014-09, the Company performed a review of its revenue contracts and evaluated the Company’s current accounting policies and procedures for recognizing revenue in the Company’s Consolidated Financial Statements, and compared these to the new requirements of ASU 2014-09.  In addition, the Company identified the performance obligations and consideration applicable under each contract. 

Based upon this evaluation, the Company determined that the impact of adopting ASU 2014-09 was immaterial because ASU 2014-09 supports the recognition of revenue over time as a service is performed, which is consistent with the Company’s current revenue recognition policy.  The majority of the Company’s contracts require the Company to provide ocean and logistics transportation services to its customers.  Such services are provided by the Company over a period of time, generally, when cargo is being delivered from a source to a destination point, or as the service is being performed.  Therefore, performance obligations are completed during a short period of time due to the nature of the services being provided by the Company.  Under the new standard, revenues from the Company’s contracts will continue to be recognized over time as the customer simultaneously receives and consumes the benefit of these services as described in ASU 2014-09.  In addition, the identification of performance obligations and the related consideration under the new standard is not different from the Company’s current accounting treatment.

In February 2018, the FASB issued ASU 2018-02  “Income Statement- Reporting Comprehensive Income (Topic 220)” (“ASU 2018-02”).  ASU 2018-02 allows a reclassification from accumulated other comprehensive loss (“AOCL”) to retained earnings for stranded tax effects resulting from the Tax Act.  ASU 2018-02 is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted, and is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the federal corporate income tax rate in the Tax Act is recognized.  ASU 2018-02 provides the Company with an option to elect an accounting policy to reclassify the effect of remeasuring deferred tax liabilities and assets related to items within AOCL using the newly enacted federal corporate income tax rate.  The Company is in the process of evaluating the impact of this guidance.

Leases:  In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which requires lessees to record most leases in their balance sheets but recognize the expenses in their income statements in a manner similar to current practice.  ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments, and a right-of-use asset for the underlying leased asset for the period of the lease term.  The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted.  The Company is in the process of evaluating this guidance.

Net Periodic Pension Cost and Benefit Cost: In March 2017, the FASB issued ASU 2017-07.  “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Benefit Cost (“ASU 2017-07”).  ASU 2017-07 requires employees that sponsor defined benefit pension and other post-retirement plans to present the service cost component of net benefit cost in the same income statement line item as other employee compensation costs arising from services rendered, and that only the service cost component will be eligible for capitalization.  The other components of the net periodic benefit cost must be presented separately from the line item that includes the service cost component and outside of the income from operations subtotal.  ASU 2017-07 is effective for interim and annual periods beginning after December 15, 2017.  The Company does not expect the adoption of ASU 2017-07 to have a significant impact on the Company’s Consolidated Financial Statements.