SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

Johnson Outdoors Inc. (the “Company”) is an integrated, global outdoor recreation products company engaged in the design, manufacture and marketing of brand name outdoor equipment, diving, watercraft and marine electronics products.

Principles of Consolidation

The consolidated financial statements include the accounts of Johnson Outdoors Inc. and all majority owned subsidiaries and are stated in conformity with U.S. generally accepted accounting principles. Intercompany accounts and transactions have been eliminated upon consolidation.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities and operating results and the disclosure of commitments and contingent liabilities. Actual results could differ significantly from those estimates.

Fiscal Year

The Company’s fiscal year ends on the Friday nearest September 30. The fiscal years ended September 29, 2017 (hereinafter 2017), September 30, 2016 (hereinafter 2016) and October 2, 2015 (hereinafter 2015) all comprised 52 weeks.

Cash, Cash Equivalents and Short-term Investments

The Company considers all short-term investments in interest-bearing bank accounts, and all securities and other instruments with an original maturity of three months or less, to be equivalent to cash. Cash equivalents are stated at cost which approximates market value.

The Company maintains cash in bank accounts in excess of insured limits. The Company has not experienced any losses and does not believe that significant credit risk exists as a result of this practice.

Short-term investments consist of certificates of deposit with original maturities greater than three months but less than one year.

Accounts Receivable

Accounts receivable are recorded at face value less an allowance for doubtful accounts. The allowance for doubtful accounts is based on a combination of factors. In circumstances where specific collection concerns exist, a reserve is established to reduce the amount recorded to an amount the Company believes will be collected. For all other customers, the Company recognizes allowances for doubtful accounts based on historical experience of bad debts as a percent of outstanding accounts receivable for each business unit. Uncollectible accounts are written off against the allowance for doubtful accounts after collection efforts have been exhausted. The Company typically does not require collateral on its accounts receivable.

Inventories

The Company values inventory at the lower of cost (determined using the first-in first-out method) or market. Management’s judgment is required to determine the reserve for obsolete or excess inventory. Inventory on hand may exceed future demand either because the product is outdated or because the amount on hand is more than will be used to meet future needs. Inventory reserves are estimated by the individual operating companies using standard quantitative measures based on criteria established by the Company. The Company also considers current forecast plans, as well as market and industry conditions in establishing reserve levels. Though the Company considers these reserve balances to be adequate, changes in economic conditions, customer inventory levels or competitive conditions could have a favorable or unfavorable effect on required reserve balances.

Inventories at the end of the respective fiscal years consisted of the following:



	September 29 2017		September 30 2016
Raw materials	$	32,826	$	26,379
Work in process	48		34
Finished goods	46,274		41,984
	$	79,148	$	68,397

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation of property, plant and equipment is determined by straight-line methods over the following estimated useful lives:



Property improvements	5-20 years
Buildings and improvements	20-40 years
Furniture and fixtures, equipment and computer software	3-10 years

Upon retirement or disposition of any of the foregoing types of assets, cost and the related accumulated depreciation are removed from the applicable account and any resulting gain or loss is recognized in the statements of operations.

Property, plant and equipment at the end of the respective years consisted of the following:



	2017		2016
Property improvements	$	590	$	590
Buildings and improvements	21,770		21,631
Furniture and fixtures, equipment and computer software	159,145		150,698
	181,505		172,919
Less accumulated depreciation	132,567		123,921
	$	48,938	$	48,998

Goodwill

The Company applies a fair value-based impairment test to the carrying value of goodwill on an annual basis as of the last day of the eleventh month of the Company’s fiscal year and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. The Company implemented Accounting Standards Update ("ASU") No. 2017-04 in 2017 and accordingly, performed its analysis in a single step model. The results of the impairment tests performed in 2017 indicated no impairment to the Company’s goodwill.

During the third quarter of fiscal 2016, the Company recognized an impairment charge of $6,197 in the Diving reporting unit. Revised projections for the unit based on lower than anticipated results due to a sustained decline in sales and unfavorable operating margins were considered an indicator of potential goodwill impairment, and accordingly, the Company performed an impairment analysis on the goodwill of the Diving reporting unit following the previous guidance which required a two step approach

In conducting its analysis, the Company uses the income approach to compare the reporting unit’s carrying value to its indicated fair value. Fair value is determined primarily by using a discounted cash flow methodology that requires considerable management judgment and long-term assumptions and is considered a Level 3 (unobservable) fair value determination in the fair value hierarchy (see Note 4 below).

The Company’s analysis indicated the carrying value of the Diving reporting unit exceeded its indicated fair value as of the measurement date of June 3, 2016 resulting in performing a step 2 hypothetical business combination analysis, which determined that the carrying amount of goodwill exceeded its implied fair value. As a result, the Company recognized an impairment charge in the third quarter of fiscal 2016 of $6,197 in “Goodwill and other intangible assets impairment” in the accompanying Condensed Consolidated Statements of Operations in the Diving segment, thereby reducing its carrying value to $0.

The Company’s impairment analysis is based on management’s estimates. Due to the uncertainty of future events, the Company cannot assure that growth rates will not be lower than expected, that discount rates will not increase or that projected cash flows of the individual reporting units will not decline, all of which factors could impact the carrying value of any remaining goodwill (or portion thereof) in future periods, and accordingly, whether any impairment losses need to be recorded in future periods.

The changes in the carrying amount and the composition of goodwill for fiscal 2017 and 2016 were as follows:



		Fishing			Camping			Watercraft			Diving			Total
Balance at October 2, 2015
	Goodwill	$	16,596		$	7,038		$	6,242		$	30,806		$	60,682
	Accumulated impairment losses	(6,229		)	(7,038		)	(6,242		)	(26,881		)	(46,390		)
		10,367			—			—			3,925			14,292
	Currency translation	2			—			—			53			55
	Acquisitions	827			—			—			2,219			3,046
	Impairment loss	—			—			—			(6,197		)	(6,197		)
Balance at September 30, 2016
	Goodwill	17,425			7,038			6,242			33,078			63,783
	Accumulated impairment losses	(6,229		)	(7,038		)	(6,242		)	(33,078		)	(52,587		)
		11,196			—			—			—			11,196
	Currency translation	42			—			—			—			42
Balance at September 29, 2017
	Goodwill	17,467			7,038			6,242			33,078			63,825
	Accumulated impairment losses	(6,229		)	(7,038		)	(6,242		)	(33,078		)	(52,587		)
		$	11,238		$	—		$	—		$	—		$	11,238

Other Intangible Assets

Indefinite-lived intangible assets are also tested for impairment annually and, if certain events or circumstances indicate that an impairment loss may have been incurred, on an interim basis. There were no impairment losses recognized in fiscal 2017 or 2016.

Intangible assets with definite lives are stated at cost less accumulated amortization. Amortization is computed using the straight-line method over periods ranging from 4 to 15 years. Amortization of patents and other intangible assets with definite lives was $1,276, $1,179 and $856 for 2017, 2016 and 2015, respectively. Amortization of these definite-lived intangible assets is expected to be approximately $1,098, $1,080, $1,014, $821 and $689 for fiscal years 2018, 2019, 2020, 2021 and 2022, respectively.

Intangible assets at the end of the last two years consisted of the following:



	2017							2016
	Gross Intangible		Accumulated Amortization			Net		Gross Intangible		Accumulated Amortization			Net
Amortized other intangible assets:
Patents and trademarks	$	4,213	$	(4,144	)	$	69	$	4,155	$	(4,026	)	$	129
Other amortizable intangibles	11,131		(4,749		)	6,382		10,804		(3,496		)	7,308
Non-amortized trademarks	7,025		—			7,025		7,025		—			7,025
	$	22,369	$	(8,893	)	$	13,476	$	21,984	$	(7,522	)	$	14,462

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in business circumstances such as unplanned negative cash flow indicate that the carrying amount of these assets may not be fully recoverable. In such an event, the carrying amount of the asset group is compared to the future undiscounted cash flows expected to be generated by the asset group to determine if impairment exists on these assets. If impairment is determined to exist, any related impairment loss is calculated based on the difference between the fair value and the carrying value on these assets. The Company performed an impairment analysis on the long-lived assets in its Diving segment during the third quarter of fiscal 2016. No impairment was indicated.

Warranties

The Company provides for warranties of certain products as they are sold. Warranty reserves are estimated using standard quantitative measures based on criteria established by the Company. Estimates of costs to service its warranty obligations are based on historical experience, expectation of future conditions and known product issues. The following table summarizes the warranty activity for the three years in the period ended September 29, 2017.



Balance at October 3, 2014	$	4,078
Expense accruals for warranties issued during the period	5,631
Less current period warranty claims paid	5,408
Balance at October 2, 2015	$	4,301
Expense accruals for warranties issued during the period	4,699
Less current period warranty claims paid	4,674
Balance at September 30, 2016	$	4,326
Expense accruals for warranties issued during the period	7,452
Less current period warranty claims paid	5,385
Balance at September 29, 2017	$	6,393

Accumulated Other Comprehensive Income

The components of Accumulated other comprehensive income ("AOCI") on the accompanying Consolidated Balance Sheets as of the end of fiscal year 2017, 2016 and 2015 were as follows:



	2017								2016								2015
	Pre-Tax Amount			Tax Effect		Net of Tax Effect			Pre-Tax Amount			Tax Effect		Net of Tax Effect			Pre-Tax Amount			Tax Effect		Net of Tax Effect
Foreign currency translation adjustment	$	11,179		$	—	$	11,179		$	10,525		$	—	$	10,525		$	10,253		$	—	$	10,253
Unamortized loss on pension plans	(7,799		)	1,613		(6,186		)	(10,999		)	2,828		(8,171		)	(8,492		)	1,876		(6,616		)
Accumulated other comprehensive income	$	3,380		$	1,613	$	4,993		$	(474	)	$	2,828	$	2,354		$	1,761		$	1,876	$	3,637

The reclassifications out of AOCI for the year ended September 29, 2017 were as follows:



				Statement of Operations Presentation
Unamortized loss on defined benefit pension plans
Amortization of loss	$	731		Cost of sales / Operating expense
Tax effects	(278		)	Income tax expense
Foreign currency translation adjustments
Write off of currency translation amounts	64			Other income and expense
Total reclassifications for the period	$	517

The reclassifications out of AOCI for the year ended September 30, 2016 were as follows:



				Statement of Operations Presentation
Unamortized loss on defined benefit pension plans:
Amortization of loss	$	566		Cost of sales / Operating expense
Tax effects	(215		)	Income tax expense
Foreign currency translation adjustments:
Write off of currency translation amounts	(249		)	Other income and expense
Total reclassifications for the period	$	102

The reclassifications out of AOCI for the year ended October 2, 2015 were as follows:



				Statement of Operations Presentation
Unamortized loss on defined benefit pension plans:
Amortization of loss	$	622		Cost of sales / Operating expense
Tax effects	(237		)	Income tax expense
Foreign currency translation adjustments
Write off of currency translation amounts	177			Other income and expense
Total reclassifications for the period	$	562

The changes in AOCI by component, net of tax, for the year ended September 29, 2017 were as follows:



	Foreign Currency Translation Adjustment		Unamortized Loss on Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Balance at September 30, 2016	$	10,525	$	(8,171	)	$	2,354
Other comprehensive income before reclassifications	590		2,470			3,060
Amounts reclassified from accumulated other comprehensive income	64		731			795
Tax effects	—		(1,216		)	(1,216		)
Balance at September 29, 2017	$	11,179	$	(6,186	)	$	4,993

The changes in AOCI by component, net of tax, for the year ended September 30, 2016 were as follows:



	Foreign Currency Translation Adjustment			Unamortized Loss on Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Balance at October 2, 2015	$	10,253		$	(6,616	)	$	3,637
Other comprehensive income (loss) before reclassifications	521			(3,073		)	(2,552		)
Amounts reclassified from accumulated other comprehensive income	(249		)	566			317
Tax effects	—			952			952
Balance at September 30, 2016	$	10,525		$	(8,171	)	$	2,354

Earnings per Share (“EPS”)

Net income or loss per share of Class A common stock and Class B common stock is computed using the two-class method. Grants of restricted stock (whether vested or unvested) which receive non-forfeitable dividends are required to be included as part of the basic weighted average share calculation under the two-class method.

Holders of Class A common stock are entitled to cash dividends equal to 110% of all dividends declared and paid on each share of Class B common stock. The Company grants shares of unvested restricted stock in the form of Class A shares, which carry the same distribution rights as the Class A common stock described above. As such, the undistributed earnings for each period are allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive.

Basic EPS

Basic net income or loss per share is computed by dividing net income or loss allocated to Class A common stock and Class B common stock by the weighted-average number of shares of Class A common stock and Class B common stock outstanding, respectively. In periods with cumulative year to date net income and undistributed income, the undistributed income for each period is allocated to each class of common stock based on the proportionate share of the amount of cash dividends that each such class is entitled to receive. In periods where there is a cumulative year to date net loss or no undistributed income because distributions through dividends exceed net income, Class B shares are treated as anti-dilutive and, therefore, net losses are allocated equally on a per share basis among all participating securities.

For the years ended September 29, 2017, September 30, 2016 and October 2, 2015, basic income per share for Class A and Class B shares has been presented using the two class method as described above.

Diluted EPS

Diluted net income per share is computed by dividing allocated net income by the weighted-average number of common shares outstanding, adjusted for the effect of dilutive stock options, restricted stock units and non-vested restricted stock. Anti-dilutive stock options, restricted stock units and non-vested stock are excluded from the calculation of diluted EPS. The computation of diluted net income per share of Class A common stock assumes that Class B common stock is converted into Class A common stock. Therefore, diluted net income per share is the same for both Class A and Class B common shares. In periods where the Company reports a net loss, the effect of anti-dilutive stock options, restricted stock units and non-vested stock is excluded and diluted loss per share is equal to basic loss per share.

For the years ended September 29, 2017, September 30, 2016 and October 2, 2015, diluted net income per share reflects the effect of dilutive stock options and restricted stock units and assumes the conversion of Class B common stock into Class A common stock.

There were no stock options that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive for the years ended September 29, 2017, September 30, 2016 and October 2, 2015. Non-vested stock that could potentially dilute earnings per share in the future which were not included in the fully diluted computation because they would have been anti-dilutive totaled 95,068, 162,472 and 214,027 shares for the years ended September 29, 2017, September 30, 2016 and October 2, 2015, respectively.

The following table sets forth a reconciliation of net income to dilutive earnings used in the diluted earnings per common share calculations and the computation of basic and diluted earnings per common share:



	2017			2016			2015
Net income	$	35,157		$	13,501		$	10,616
Less: Undistributed earnings reallocated to non-vested shareholders	(375		)	(258		)	(191		)
Dilutive earnings	$	34,782		$	13,243		$	10,425
Weighted average common shares – Basic:
Class A	8,675			8,627			8,515
Class B	1,212			1,212			1,212
Dilutive stock options and restricted stock units	33			16			—
Weighted average common shares - Dilutive	9,920			9,855			9,727
Net income per common share – Basic:
Class A	$	3.56		$	1.36		$	1.08
Class B	$	3.23		$	1.24		$	0.98
Net income per common share – Diluted:
Class A	$	3.51		$	1.34		$	1.06
Class B	$	3.51		$	1.34		$	1.06

Stock-Based Compensation

Stock-based compensation cost is recorded for all option grants and awards of non-vested stock and restricted stock units based on their grant-date fair value. Stock-based compensation expense is recognized on a straight-line basis over the vesting period of each award. No stock options were granted in 2017, 2016 or 2015. See Note 10 of these Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plans, including stock options, non-vested stock, and employee stock purchase plans.

Income Taxes

The Company provides for income taxes currently payable and deferred income taxes resulting from temporary differences between financial statement income/loss and taxable income/loss. Accrued interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. Deferred income tax assets and liabilities are determined based on the difference between the amounts reported in the financial statements and the tax basis of assets and liabilities, using enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred income tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. A valuation allowance is established if it is more likely than not that some portion or all of a deferred income tax asset will not be realized. See Note 6 of these Notes to Consolidated Financial Statements for further discussion.

Employee Benefits

The Company and certain of its subsidiaries have various retirement and profit sharing plans. The Company does not have any significant foreign retirement plans. Pension obligations, which are generally based on compensation and years of service, are funded by payments to pension fund trustees. The Company’s policy is to annually fund the minimum amount required under the Employee Retirement Income Security Act of 1974 for plans subject thereto although the Company may choose to fund more than the minimum amount at its discretion. Other retirement costs are funded at least annually. See Note 7 of these Notes to Consolidated Financial Statements for additional discussion.

Foreign Operations and Related Derivative Financial Instruments

The functional currencies of the Company’s foreign operations are the local currencies. Accordingly, assets and liabilities of foreign operations are translated into U.S. dollars at the rate of exchange existing at the end of the year. Results of operations are translated at monthly average exchange rates. Adjustments resulting from the translation of foreign currency financial statements are classified as “Accumulated other comprehensive income (loss),” a separate component of Shareholders’ equity.

Currency gains and losses are recognized when assets and liabilities of foreign operations, denominated in other than their local currency, are converted into the local currency of the entity. Additionally, currency gains and losses are recognized through the settlement of transactions denominated in other than the local currency. The Company recognized currency gains from transactions of $903 and $277 in 2017 and 2016, respectively, and currency losses from transactions of $1,196 in 2015, all of which were included in Other (income) expense in the accompanying Consolidated Statements of Operations.

Because the Company operates internationally, it has exposure to market risk from movements in foreign currency exchange rates. Approximately 17% of the Company’s revenues for the year ended September 29, 2017 were denominated in currencies other than the U.S. dollar. Approximately 7% were denominated in euros and approximately 6% were denominated in Canadian dollars, with the remaining 4% denominated in various other foreign currencies. The Company may mitigate the impact on its operating results of a portion of the fluctuations in certain foreign currencies through the purchase of foreign currency swaps, forward contracts and options to hedge known commitments denominated in foreign currencies or borrowings in foreign currencies. The Company did not use foreign currency forward contracts in 2017, 2016 or 2015. The Company does not enter into foreign exchange contracts for trading or speculative purposes.

Revenue Recognition

The Company recognizes revenue when all of the following criteria have been met:


•	Persuasive evidence of an arrangement exists. Contracts, internet commerce agreements, and customer purchase orders are generally used to determine the existence of an arrangement.


•	All substantial risk of ownership transfers to the customer. Shipping documents and customer acceptance, when applicable, are used to verify delivery.


•	The fee is fixed or determinable. This is assessed based on the payment terms associated with the transaction and whether the sales price is subject to refund or adjustment.


•	Collectibility is reasonably assured. Collectibility is assessed based on the creditworthiness of the customer as determined by credit checks and analysis, as well as by the customer’s payment history.

Estimated costs of returns and allowances and discounts are accrued as a reduction to sales when revenue is recognized.

Advertising & Promotions

The Company expenses substantially all costs related to the production of advertising the first time the advertising takes place. Cooperative promotional arrangements are accrued as related revenue is earned.

Advertising and promotions expense in 2017, 2016 and 2015 totaled $24,349, $23,611 and $24,460, respectively. These charges are included in “Marketing and selling expenses.” Capitalized advertising costs, included in Other current assets, totaled $621 and $866 at September 29, 2017 and September 30, 2016, respectively, and primarily included catalogs and costs of advertising which have not yet run for the first time.

Shipping and Handling Costs

Shipping and handling fees billed to customers are included in “Net sales.” Shipping and handling costs are included in “Marketing and selling expenses” and totaled $10,844, $10,240 and $10,838 for 2017, 2016 and 2015, respectively.

Research and Development

The Company expenses research and development costs as incurred except for costs of software development for new electronic products which are capitalized once technological feasibility is established and are included in Furniture, Fixtures and Equipment. The gross amount capitalized related to software development was $34,528, less accumulated amortization of $18,040, at September 29, 2017 and $31,572, less accumulated amortization of $14,597, at September 30, 2016. These costs are amortized over the expected life of the software of three to seven years. Amortization expense related to capitalized software in 2017, 2016 and 2015 was $3,444, $2,738 and $2,535, respectively, and is included in depreciation expense on plant, property and equipment.

Fair Values

The carrying amounts of cash, cash equivalents, short-term investments, accounts receivable, and accounts payable approximated fair value at September 29, 2017 and September 30, 2016 due to the short maturities of these instruments. During 2017, 2016 and 2015, the Company held investments in equity and debt securities that were carried at fair value related to its deferred compensation liability which was also carried at the same fair value. When indicators of impairment are present, the Company may be required to value certain long-lived assets such as property, plant, and equipment, and other intangibles at fair value.

Valuation Techniques

Rabbi Trust Assets

Rabbi trust assets, used to fund amounts the Company owes to certain officers and other employees under the Company’s non-qualified deferred compensation plan, are included in “Other assets,” and are classified as trading securities. These assets are comprised of marketable debt and equity securities that are marked to fair value based on unadjusted quoted prices in active markets.

Goodwill and Other Intangible Assets

In assessing the recoverability of the Company’s goodwill and other intangible assets, the Company estimates the future discounted cash flows of the business segments to which the goodwill relates. When estimated future discounted cash flows are less than the carrying value of the net assets and related goodwill, an impairment test is performed to measure and recognize the amount of the impairment loss, if any. In determining estimated future cash flows, the Company makes assumptions regarding anticipated financial position, future earnings and other factors to determine the fair value of the respective assets.

See Note 2 of these Notes to Consolidated Financial Statements for disclosures regarding the fair value of long-term debt and Note 4 of these Notes to Consolidated Financial Statements for disclosures regarding fair value measurements.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers, which supersedes existing revenue recognition requirements and provides a new comprehensive revenue recognition model. The underlying principle of the new standard requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects to receive in exchange for those goods or services. The Company has developed a project plan for the implementation of the new standard including a review of all revenue streams in each business segment to identify potential differences in the performance obligations, timing, measurement or presentation that would result from applying the new standard from the Company's current accounting policies and practices. The Company is still in the process of determining the impact on the timing of revenue recognition and the allocation of revenue to the Company's goods and services across each of the revenue streams and business segments. The provisions are effective for the Company in the first quarter of fiscal 2019 and permit adoption under either the full retrospective approach (recognizing effects of the amended guidance in each prior reporting period presented) or the modified retrospective approach (recognizing the cumulative effect of adoption as an adjustment to retrained earnings at the date of initial application). The Company is still evaluating its method of adoption and the impact of this standard on its consolidated results of operations and financial position.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The amendments in this update will increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This amendment is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of this standard on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. Excess tax benefits for share-based payments will be recorded as a reduction of income taxes and reflected in operating cash flows upon the adoption of this ASU. Excess tax benefits are recorded in equity and as financing activity under the current rules. The guidance will be effective for annual reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The Company elected to adopt this accounting standard on a prospective basis at the beginning of the first quarter of fiscal 2017. See Note 10 of these Notes to Consolidated Financial Statements for information regarding the effect of this new accounting pronouncement.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The ASU includes provisions intended to simplify the measurement of inventory and to more clearly articulate the requirements for the measurement and disclosure of inventory. Under such provisions, an entity should measure inventory within the scope of this amendment at the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The standard will be effective for the first quarter of fiscal 2018. The Company does not anticipate that the adoption of this standard will have a significant impact on its consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The ASU includes, among other provisions, one that will require presentation of the service cost component of net benefit cost in the same line item(s) as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations. This amendment is effective for annual periods beginning after December 15, 2017 and the interim periods within those annual periods. The Company has elected to adopt this accounting standard at the beginning of the first quarter of fiscal 2018. The adoption of this standard is expected to result in a reduction of an annual operating expense of approximately $500 and an increase in other expense of approximately $500. The Company does not expect the adoption of this standard to have an effect on its consolidated balance sheets or consolidated statements of cash flows.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The Company elected to adopt this ASU in the fourth quarter of fiscal 2017 in conjunction with its annual impairment test. There was no impact on its consolidated financial statements.