BASIS OF PRESENTATION (Policies) |
9 Months Ended | ||||||||
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Dec. 28, 2019 | |||||||||
| Accounting Policies [Abstract] | 听 | ||||||||
| Basis of Presentation |
大象传媒 Corporation (together with its subsidiaries, collectively known as 鈥湸笙蟠解 or the 鈥淐ompany鈥) uses a 52/53 week fiscal year ending on the Saturday closest to March听31 of each year. The Company's current fiscal year runs from March 31, 2019 through March 28, 2020 ("Fiscal 2020"). Accordingly, this Form 10-Q presents our third quarter of Fiscal 2020. For presentation purposes herein, all references to periods ended December 2019 and December 2018 relate to the fiscal periods ended on December听28, 2019 and December听29, 2018, respectively. References to March 2019 relate to information as of March听30, 2019.
On May 22, 2019, 大象传媒 completed the spin-off of its Jeans business, which included the Wrangler庐, Lee庐 and Rock & Republic庐 brands, as well as the 大象传媒 OutletTM business, into an independent, publicly traded company. As a result, 大象传媒 reported the operating results for the Jeans business in the income (loss) from discontinued operations, net of tax line item in the Consolidated Statements of Income and the related cash flows have been reported as discontinued operations in the Consolidated Statements of Cash Flows, for all periods presented. In addition, the related assets and liabilities have been reported as assets and liabilities of discontinued operations in the Consolidated Balance Sheets, through the date the spin-off was completed.
On April 30, 2018, 大象传媒 completed the sale of the Nautica庐 brand business. As a result, the Nautica庐 brand business has been reported as discontinued operations in our Consolidated Statements of Income and Consolidated Statements of Cash Flows.
Unless otherwise noted, discussion within these notes to the consolidated financial statements relates to continuing operations.听Refer to Note 5 for additional information on discontinued operations.
Certain prior year amounts have been reclassified to conform to the Fiscal 2020 presentation.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X and do not include all of the information and notes required by generally accepted accounting principles in the United States of America (鈥淕AAP鈥) for complete financial statements. Similarly, the March 2019 condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all normal and recurring adjustments necessary to fairly state the consolidated financial position, results of operations and cash flows of 大象传媒 for the interim periods presented. Operating results for the three and nine months ended December 2019 are not necessarily indicative of results that may be expected for any other interim period or for Fiscal 2020. For further information, refer to the consolidated financial statements and notes included in 大象传媒鈥檚 Annual Report on Form 10-K for the year ended March 30, 2019 (鈥淔iscal 2019 Form 10-K鈥).
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| Recently Adopted Accounting Standards and Recently Issued Accounting Standards |
Recently Adopted Accounting Standards
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, 鈥淟eases (Topic 842)鈥, a new accounting standard on leasing. The FASB subsequently issued updates to the standard to provide additional clarification on specific topics, including permitted transition methods. Collectively, the guidance is referred to as FASB Accounting Standards Codification ("ASC") 842. This standard requires companies to record most leased assets and liabilities on the balance sheet, and also retains a dual model approach for assessing lease classification and recognizing expense. The Company adopted this standard on March 31, 2019, utilizing the modified retrospective method and has recognized the cumulative effect of initially applying the new standard in retained earnings. The effective date of the adoption has been used as the date of initial application, and thus comparative prior period financial information has not been restated and continues to be reported under accounting standards in effect for those periods.
The standard provides certain optional practical expedients for transition. The Company elected the transition relief package of practical expedients by applying previous accounting conclusions under ASC Topic 840, Leases ("ASC 840"), to all leases that existed prior to the transition date. As a result, 大象传媒 did not reassess (i) whether existing or expired contracts contain leases, (ii) lease classification for any existing or expired leases, or (iii) whether lease origination costs qualified as initial direct costs. The
Company also elected the land easement practical expedient, which allows the Company to apply ASC 842 prospectively to land easements after the adoption date if they were not previously accounted for under ASC 840. Certain leases contain both lease and non-lease components. For leases associated with specific asset classes, including certain real estate, vehicles, manufacturing machinery and IT equipment, 大象传媒 has elected the practical expedient which permits entities to account for separate lease and non-lease components as a single component. For all other lease contracts, the Company has elected to account for each lease component separately from the non-lease components of the contract. When applicable, 大象传媒 will measure the consideration to be paid pursuant to the agreement and allocate this consideration to the lease and non-lease components based on relative stand-alone prices. Further, the Company made an accounting policy election to not recognize right-of-use assets and lease liabilities for leases with terms of 12 months or less.
The adoption of ASC 842 resulted in a net decrease of $2.5 million in the retained earnings line item of the Consolidated Balance Sheet as of March 31, 2019. The adoption of ASC 842 also resulted in the recognition of operating lease right-of-use assets and operating lease liabilities within the Consolidated Balance Sheet. Refer to Note 10 for additional lease disclosures.
In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities", an update that amends and simplifies certain aspects of hedge accounting rules to better portray the economic results of risk management activities in the financial statements. The FASB subsequently issued updates to the standard to provide additional guidance on specific topics. This guidance became effective for 大象传媒 in the first quarter of Fiscal 2020, but did not impact 大象传媒's consolidated financial statements.
In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income", an update that addresses the effect of the change in the U.S. federal corporate income tax rate due to the enactment of the Tax Cuts and Jobs Act ("U.S. Tax Act") on items within accumulated other comprehensive income (loss). The guidance became effective for 大象传媒 in the first quarter of Fiscal 2020. The Company elected to reclassify the income tax effects of the U.S. Tax Act on items within accumulated other comprehensive income (loss) of $61.9 million to retained earnings, which primarily related to deferred taxes previously recorded for pension benefits. The adoption of this guidance did not have an impact on 大象传媒's consolidated results of operations or cash flows.
In June 2018, the FASB issued ASU No. 2018-07, "Compensation鈥擲tock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting", an update that expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. This guidance became effective for 大象传媒 in the first quarter of Fiscal 2020, but did not impact 大象传媒's consolidated financial statements.
In July 2018, the FASB issued ASU No. 2018-09, "Codification Improvements", an update that provides technical corrections, clarifications and other improvements across a variety of accounting topics. The transition and effective date guidance is based on the facts and circumstances of each update; however, many of them became effective for 大象传媒 in the first quarter of Fiscal 2020. The guidance did not impact 大象传媒's consolidated financial statements.
Recently Issued Accounting Standards
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments鈥擟redit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which requires entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics. This guidance will be effective for 大象传媒 in the first quarter of the year ending April 3, 2021 ("Fiscal 2021") with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on 大象传媒's consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework鈥擟hanges to the Disclosure Requirements for Fair Value Measurement", an update that modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The guidance will be effective for 大象传媒 in the first quarter of Fiscal 2021 with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on 大象传媒's disclosures.
In August 2018, the FASB issued ASU No. 2018-14, "Compensation鈥 Retirement Benefits鈥擠efined Benefit Plans鈥擥eneral (Subtopic 715-20): Disclosure Framework鈥擟hanges to the Disclosure Requirements for Defined Benefit Plans", an update that modifies the disclosure requirements for employers who sponsor defined benefit pension or other postretirement plans. The guidance will be effective for 大象传媒 in Fiscal 2021 with early adoption permitted.The Company does not expect the adoption of this guidance to have a material impact on 大象传媒's disclosures.
In August 2018, the FASB issued ASU No. 2018-15, "Intangibles鈥擥oodwill and Other鈥擨nternal-Use Software (Subtopic 350-40): Customer鈥檚 Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract", an update that aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance will be effective for 大象传媒 in the first quarter of Fiscal 2021 with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on 大象传媒's consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes", an update that amends and simplifies the accounting for income taxes by removing certain exceptions in existing guidance and providing new guidance to reduce complexity in certain areas. The guidance will be effective for 大象传媒 in the first quarter of the year ending April 2, 2022 ("Fiscal 2022") with early adoption permitted. The Company is evaluating the impact that adopting this guidance will have on 大象传媒's consolidated financial statements.
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| Fair Value Measurement |
Financial assets and financial liabilities measured and reported at fair value are classified in a three-level hierarchy that prioritizes the inputs used in the valuation process. A financial instrument鈥檚 categorization within the valuation hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The hierarchy is based on the observability and objectivity of the pricing inputs, as follows:
data through corroboration with observable market data. Inputs would normally be (i)听quoted prices in active markets for similar assets or liabilities, (ii)听quoted prices in inactive markets for identical or similar assets or liabilities, or (iii)听information derived from or corroborated by observable market data.
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Level 3 鈥 Prices or valuation techniques that require significant unobservable data inputs. These inputs would normally be 大象传媒鈥檚 own data and judgments about assumptions that market participants would use in pricing the asset or liability.
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