| Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The Condensed Consolidated Financial Statements and Notes contained in this report are unaudited but reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results for the interim periods of the fiscal year ending February 2, 2019 ("Fiscal 2019") and of the fiscal year ended February 3, 2018 ("Fiscal 2018"). The results of operations for any interim period are not necessarily indicative of results for the full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") have been condensed or omitted. The Condensed Consolidated Balance Sheet as of February 3, 2018 has been derived from the audited financial statements at that date. These Condensed Consolidated Financial Statements should be read in conjunction with the Company's Consolidated Financial Statements and notes thereto for Fiscal 2018, which are contained in the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission ("SEC") on April 4, 2018. Nature of Operations Genesco Inc. and its subsidiaries (collectively, the "Company") business includes the sourcing and design, marketing and distribution of footwear and accessories through retail stores in the U.S., Puerto Rico and Canada primarily under the Journeys, Journeys Kidz, Little Burgundy and Johnston & Murphy banners and under the Schuh banner in the United Kingdom, the Republic of Ireland and Germany; through catalogs and e-commerce websites including the following: journeys.com, journeyskidz.com, journeys.ca, schuh.co.uk, littleburgundyshoes.com, johnstonmurphy.com and trask.com, and at wholesale, primarily under the Company's Johnston & Murphy brand, the Trask brand, the licensed Dockers brand and other brands that the Company licenses for footwear. The Company's business also includes Lids Sports Group, which operates headwear and accessory stores in the U.S., Puerto Rico and Canada primarily under the Lids banner; the Lids Locker Room and Lids Clubhouse businesses, consisting of sports-oriented fan shops featuring a broad array of licensed merchandise such as apparel, hats and accessories, sports decor and novelty products, operating under various trade names; licensed team merchandise departments in Macy's department stores operated under the name Locker Room by Lids and on macys.com, under a license agreement with Macy's; certain e-commerce operations including lids.com, lids.ca, lidslockerroom.com and lidsclubhouse.com. Including both the footwear businesses and the Lids Sports Group business, at November 3, 2018, the Company operated 2,653 retail stores and leased departments in the U.S., Puerto Rico, Canada, the United Kingdom, the Republic of Ireland and Germany. During the nine months ended November 3, 2018 and October 28, 2017, the Company operated five reportable business segments (not including corporate): (i) Journeys Group, comprised of the Journeys, Journeys Kidz and Little Burgundy retail footwear chains, e-commerce and catalog operations; (ii) Schuh Group, comprised of the Schuh retail footwear chain and e-commerce operations; (iii) Lids Sports Group, comprised as described in the preceding paragraph; (iv) Johnston & Murphy Group, comprised of Johnston & Murphy retail operations, e-commerce and catalog operations and wholesale distribution of products under the Johnston & Murphy ® and H.S. Trask ® brands; and (v) Licensed Brands, comprised of Dockers ® Footwear, sourced and marketed under a license from Levi Strauss & Company; G.H. Bass Footwear operated under a license from G-III Apparel Group, Ltd., which was terminated in January 2018; and other brands. Note 1 Summary of Significant Accounting Policies, Continued Principles of Consolidation All subsidiaries are consolidated in the Condensed Consolidated Financial Statements. All significant intercompany transactions and accounts have been eliminated. Revenue Recognition On February 4, 2018, the Company adopted Accounting Standards Update 2014-09, “Revenue from Contracts with Customers (Topic 606)” ("ASC 606") using the modified retrospective approach for all contracts not completed as of the adoption date. Financial results for reporting periods beginning after February 3, 2018 are presented in accordance with ASC 606, while prior periods will continue to be reported in accordance with the Company's pre-adoption accounting policies and therefore have not been adjusted to conform to ASC 606. The primary impact of adopting Topic 606 relates to the timing of revenue recognition for gift card breakage and the timing of recognizing expense for direct-mail advertising costs. Gift card breakage prior to adoption was recognized at the point gift card redemption was deemed remote. Upon adoption, the Company now recognizes gift card breakage over time in proportion to the pattern of rights exercised by the customer. Prior to adopting ASC 606, the Company capitalized direct-response advertising costs and expensed them over the period of benefit. Under ASC 606, the Company is recognizing these costs as expense when incurred. Additionally, the adoption of ASC 606 resulted in the Company presenting the asset for the carrying amount of product to be returned within prepaids and other current assets on the Condensed Consolidated Balance Sheets. Prior to adopting ASC 606, the value of product expected to be returned was presented as a component of inventories on the Condensed Consolidated Balance Sheets. The cumulative effect of the changes made to the Company's Condensed Consolidated Balance Sheets as of February 4, 2018 for the adoption of ASC 606 were as follows (in thousands): Balance at Adjustments Balance at February 3, 2018 due to ASC 606 February 4, 2018 Assets Current assets: Prepaids and other current assets $ 67,234 $ 2,537 $ 69,771 Inventories 542,625 (4,788 ) 537,837 Deferred income taxes 25,077 (1,568 ) 23,509 Liabilities and Equity Current liabilities: Other accrued liabilities 72,220 (8,232 ) 63,988 Equity Retained Earnings 603,902 4,413 608,315 Note 1 Summary of Significant Accounting Policies, Continued In accordance with the requirements of ASC 606, the disclosure of the impact of adoption on the Company's Condensed Consolidated Statements of Operations for the three and nine months ended November 3, 2018 and Condensed Consolidated Balance Sheets as of November 3, 2018 was as follows (in thousands, except per share data): November 3, 2018 As Reported Balances without the adoption of ASC 606 Effect of Change Higher/(Lower) Inventories $ 666,166 $ 669,794 $ (3,628 ) Prepaids and other current assets 75,149 77,209 (2,060 ) Total current assets 843,102 848,790 (5,688 ) Deferred income taxes 25,015 25,812 (797 ) Total Assets 1,430,713 1,437,198 (6,485 ) Other accrued liabilities 56,931 65,407 (8,476 ) Total current liabilities 372,292 380,768 (8,476 ) Total liabilities 588,952 597,428 (8,476 ) Retained earnings 617,923 615,908 2,015 Accumulated other comprehensive loss (43,054 ) (43,030 ) (24 ) Total equity 841,761 839,770 1,991 Total Liabilities and Equity 1,430,713 1,437,198 (6,485 ) Three Months Ended November 3, 2018 As Reported Balances without the adoption of ASC 606 Effect of Change Higher/(Lower) Net sales $ 713,069 $ 712,848 $ 221 Selling and administrative expenses 327,099 325,246 1,853 Earnings from operations 19,471 21,103 (1,632 ) Earnings from continuing operations before income taxes 18,636 20,268 (1,632 ) Income tax expense 4,117 4,507 (390 ) Earnings from continuing operations 14,519 15,761 (1,242 ) Net earnings 14,387 15,629 (1,242 ) Diluted earnings per share from continuing operations $ 0.74 $ 0.80 $ (0.06 ) Note 1 Summary of Significant Accounting Policies, Continued Nine Months Ended November 3, 2018 As Reported Balances without the adoption of ASC 606 Effect of Change Higher/(Lower) Net sales $ 2,011,920 $ 2,011,650 $ 270 Selling and administrative expenses 968,265 964,826 3,439 Earnings from operations 18,984 22,153 (3,169 ) Earnings from continuing operations before income taxes 15,999 19,168 (3,169 ) Income tax expense 3,621 4,392 (771 ) Earnings from continuing operations 12,378 14,776 (2,398 ) Net earnings 12,041 14,439 (2,398 ) Diluted earnings per share from continuing operations $ 0.63 $ 0.74 $ (0.11 ) In accordance with ASC 606, revenue shall be recognized upon satisfaction of all contractual performance obligations and transfer of control to the customer. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for corresponding goods. The majority of the Company's sales are single performance obligation arrangements for retail sale transactions for which the transaction price is equivalent to the stated price of the product, net of any stated discounts applicable at a point in time. Each sales transaction results in an implicit contract with the customer to deliver a product at the point of sale. Revenue from retail sales is recognized at the point of sale, is net of estimated returns, and excludes sales and value added taxes. Revenue from catalog and internet sales is recognized at estimated time of delivery to the customer, is net of estimated returns, and excludes sales and value added taxes. Wholesale revenue is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when the related goods have been shipped and legal title has passed to the customer. Actual amounts of markdowns have not differed materially from estimates. Shipping and handling costs charged to customers are included in net sales. The Company elected the practical expedient within ASC 606 related to taxes that are assessed by a governmental authority, which allows for the exclusion of sales and value added tax from transaction price. A provision for estimated returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded. Estimated returns are based on historical returns and claims. Actual returns and claims in any future period may differ from historical experience. Revenue from gift cards is deferred and recognized upon the redemption of the cards. These cards have no expiration date. Income from unredeemed cards is recognized on the Condensed Consolidated Statements of Operations within net sales in proportion to the pattern of rights exercised by the customer in future periods. The Company performs an evaluation of historical redemption patterns from the date of original issuance to estimate future period redemption activity. The Condensed Consolidated Balance Sheets include an accrued liability for gift cards of $6.9 million , $18.1 million and $14.9 million at November 3, 2018, February 3, 2018 and October 28, Note 1 Summary of Significant Accounting Policies, Continued 2017, respectively. Gift card breakage recognized as revenue was $0.5 million for each of the third quarters of Fiscal 2019 and Fiscal 2018, and $1.1 million and $0.9 million for the first nine months of Fiscal 2019 and 2018, respectively. During the nine months ended November 3, 2018, the Company recognized $4.8 million of gift card redemptions and gift card breakage revenue that were included in the gift card liability as of February 3, 2018. Cash and Cash Equivalents The Company had total available cash and cash equivalents of $53.4 million , $39.9 million and $50.7 million as of November 3, 2018, February 3, 2018 and October 28, 2017, respectively, of which approximately $11.3 million , $21.2 million and $4.4 million was held by the Company's foreign subsidiaries as of November 3, 2018, February 3, 2018 and October 28, 2017, respectively. The Company's strategic plan does not require the repatriation of foreign cash in order to fund its operations in the U.S., and it is the Company's current intention to indefinitely reinvest its foreign cash and cash equivalents outside of the U.S. If the Company were to repatriate foreign cash to the U.S., it would be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation. There were $17.0 million in cash equivalents at November 3, 2018 and no cash equivalents included in cash and cash equivalents at February 3, 2018 and October 28, 2017. Cash equivalents are highly-liquid financial instruments having an original maturity of three months or less and are classified as Level 1. At November 3, 2018, substantially all of the Company’s domestic cash was invested in deposit accounts at FDIC-insured banks. The majority of payments due from banks for domestic customer credit card transactions process within 24 - 48 hours and are accordingly classified as cash and cash equivalents in the Condensed Consolidated Balance Sheets. At November 3, 2018, February 3, 2018 and October 28, 2017, outstanding checks drawn on zero-balance accounts at certain domestic banks exceeded book cash balances at those banks by approximately $22.5 million , $14.2 million and $34.7 million , respectively. These amounts are included in accounts payable in the Condensed Consolidated Balance Sheets. Concentration of Credit Risk and Allowances on Accounts Receivable The Company’s footwear wholesale businesses sell primarily to department stores and independent retailers across the United States. Receivables arising from these sales are not collateralized. Customer credit risk is affected by conditions or occurrences within the economy and the retail industry as well as by customer specific factors. In the footwear wholesale businesses, one customer accounted for 19% , one customer accounted for 8% and one customer accounted for 7% of the Company’s total trade receivables balance, while no other customer accounted for more than 6% of the Company’s total trade receivables balance as of November 3, 2018. Leases The Company occasionally receives reimbursements from landlords to be used towards construction of a store the Company intends to lease. Leasehold improvements are recorded at their gross costs including items reimbursed by landlords. The reimbursements are amortized as a reduction of rent Note 1 Summary of Significant Accounting Policies, Continued expense over the initial lease term. Tenant allowances of $28.2 million , $29.0 million and $28.6 million at November 3, 2018, February 3, 2018 and October 28, 2017, respectively, and deferred rent of $60.8 million , $59.3 million and $57.0 million , at November 3, 2018, February 3, 2018 and October 28, 2017, respectively, are included in deferred rent and other long-term liabilities on the Condensed Consolidated Balance Sheets. The Condensed Consolidated Balance Sheets include asset retirement obligations related to leases of $12.4 million , $11.5 million and $10.9 million as of November 3, 2018, February 3, 2018 and October 28, 2017, respectively. Fair Value of Financial Instruments The carrying amounts and fair values of the Company’s financial instruments at November 3, 2018 and February 3, 2018 are as follows: Fair Values In thousands November 3, 2018 February 3, 2018 Carrying Amount Fair Value Carrying Amount Fair Value U.S. Credit Facility Borrowings $ 57,836 $ 58,489 $ 69,372 $ 69,421 UK Term Loans 9,295 9,302 11,419 11,602 UK Revolver Borrowings 14,649 14,730 7,594 7,671 Debt fair values were estimated using a discounted cash flow analysis based on current market interest rates for similar types of financial instruments and would be classified in Level 2 as defined in Note 5. Carrying amounts reported on the Condensed Consolidated Balance Sheets for cash, cash equivalents, receivables and accounts payable approximate fair value due to the short-term maturity of these instruments. Selling and Administrative Expenses Selling and administrative expenses include all operating costs of the Company excluding (i) those related to the transportation of products from the supplier to the warehouse, (ii) for its retail operations, those related to the transportation of products from the warehouse to the store and from the warehouse to the customer and (iii) costs of its distribution facilities which are allocated to its retail operations. Wholesale costs of distribution are included in selling and administrative expenses on the Condensed Consolidated Statements of Operations in the amount of $1.4 million for each of the third quarters of Fiscal 2019 and Fiscal 2018, respectively, and $4.2 million for each of the first nine months of Fiscal 2019 and Fiscal 2018. Buying, Merchandising and Occupancy Costs The Company records buying, merchandising and occupancy costs in selling and administrative expense on the Condensed Consolidated Statements of Operations. Because the Company does Note 1 Summary of Significant Accounting Policies, Continued not include these costs in cost of sales, the Company’s gross margin may not be comparable to other retailers that include these costs in the calculation of gross margin. Retail store occupancy costs recorded in selling and administrative expense were $114.3 million and $115.7 million for the third quarters of Fiscal 2019 and Fiscal 2018, respectively, and $341.9 million and $343.1 million for the first nine months of Fiscal 2019 and Fiscal 2018, respectively. Advertising Costs Advertising costs are predominantly expensed as incurred. Advertising costs were $22.2 million and $20.3 million for the third quarters of Fiscal 2019 and Fiscal 2018, respectively, and $60.1 million and $56.8 million for the first nine months of Fiscal 2019 and Fiscal 2018, respectively. Prior to adopting ASC 606, the Company capitalized direct response advertising costs for catalogs and such costs were expensed over the period of benefit in accordance with the Other Assets and Deferred Costs Topic for Capitalized Advertising Costs of the Codification. For prior periods, the Condensed Consolidated Balance Sheets include prepaid assets for direct response advertising costs of $2.3 million and $5.1 million at February 3, 2018 and October 28, 2017, respectively. Cooperative Advertising Cooperative advertising costs recognized in selling and administrative expenses on the Condensed Consolidated Statements of Operations were $0.7 million and $1.0 million for the third quarters of Fiscal 2019 and Fiscal 2018, respectively, and $1.7 million and $2.8 million for the first nine months of Fiscal 2019 and Fiscal 2018, respectively. During the first nine months of Fiscal 2019 and Fiscal 2018, the Company’s cooperative advertising reimbursements paid did not exceed the fair value of the benefits received under those agreements. Vendor Allowances Vendor reimbursements of cooperative advertising costs recognized as a reduction of selling and administrative expenses were $3.1 million for each of the third quarters of Fiscal 2019 and Fiscal 2018, respectively, and $7.4 million and $7.5 million for the first nine months of Fiscal 2019 and Fiscal 2018, respectively. During the first nine months of Fiscal 2019 and Fiscal 2018, the Company’s cooperative advertising reimbursements received were not in excess of the costs incurred. Foreign Currency Translation The functional currency of the Company's foreign operations is the applicable local currency. The translation of the applicable foreign currency into U.S. dollars is performed for balance sheet accounts using current exchange rates in effect at the balance sheet date. Income and expense accounts are translated at monthly average exchange rates. The unearned gains and losses resulting from such translation are included as a separate component of accumulated other comprehensive loss within shareholders' equity. Gains and losses from certain foreign currency transactions are reported as an item of income and resulted in a net (gain) loss of $0.2 million and $(0.1) million for the third quarters of Fiscal 2019 and Fiscal 2018, respectively, and a net loss of $0.9 million and $0.4 million for the first nine months of Fiscal 2019 and Fiscal 2018, respectively. Note 1 Summary of Significant Accounting Policies, Continued Other Comprehensive Income ASC 220 requires, among other things, the Company’s pension liability adjustment, postretirement liability adjustment and foreign currency translation adjustment to be included in other comprehensive income net of tax. Accumulated other comprehensive loss at November 3, 2018 consisted of $5.7 million of cumulative pension liability adjustments, net of tax, a cumulative post-retirement liability adjustment of $2.2 million , net of tax, and a cumulative foreign currency translation adjustment of $35.1 million . The following table summarizes the components of accumulated other comprehensive loss ("AOCI") for the nine months ended November 3, 2018: Foreign Currency Translation Unrecognized Pension/Postretirement Benefit Costs Total Accumulated Other Comprehensive Income (Loss) (In thousands) Balance February 3, 2018 $ (20,808 ) $ (8,384 ) $ (29,192 ) Other comprehensive income (loss) before reclassifications: Foreign currency translation adjustment (12,836 ) — (12,836 ) Loss on intra-entity foreign currency transactions (long-term investment nature) (1,504 ) — (1,504 ) Amounts reclassified from AOCI: Amortization of net actuarial loss (1) — 645 645 Income tax expense — 167 167 Current period other comprehensive income (loss), net of tax (14,340 ) 478 (13,862 ) Balance November 3, 2018 $ (35,148 ) $ (7,906 ) $ (43,054 ) (1) Amount is included in other components of net periodic benefit cost on the Condensed Consolidated Statements of Operations. Income Taxes The Company recorded an effective income tax rate of 22.1% and (7.1)% in the third quarter of Fiscal 2019 and Fiscal 2018, respectively. The tax rate for the third quarter of Fiscal 2019 benefitted from the lower U.S. federal income tax rate following the passage of the Tax Cut and Jobs Act in December 2017 and a favorable return to provision adjustment of $0.3 million . The tax rate for the third quarter of Fiscal 2018 was impacted by the non-deductibility of $107.6 million of the $182.2 million of goodwill impairment charge in the third quarter of Fiscal 2018. The Company recorded an effective income tax rate of 22.6% and (7.8)% for the first nine months of Fiscal 2019 and Fiscal 2018, respectively. The tax rate for the first nine months of Fiscal 2019 was higher due to the non-deductibility of $107.6 million of the $182.2 million of goodwill impairment charge in Fiscal 2018 and the inability to recognize a tax benefit for certain overseas losses, partially offset by the lower U.S. federal income tax rate following the passage of the Tax Cut and Jobs Act in December 2017 and tax credits related to wages paid to employees impacted by the hurricanes in Fiscal 2018. Note 1 Summary of Significant Accounting Policies, Continued The tax rates for the first nine months of Fiscal 2019 and Fiscal 2018 were also impacted by $0.5 million and $2.2 million , respectively, of tax expense due to the impact of ASU 2016-09 related to the vesting of restricted stock grants. In addition, the tax rates for Fiscal 2019 and Fiscal 2018 were favorably impacted by a return to provision adjustment of $0.3 million and $0.5 million , respectively. New Accounting Pronouncements New Accounting Pronouncements Recently Adopted In March 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118.” The new guidance provides SEC Staff views on income tax accounting implications of the Act signed into law in December 2017. The guidance clarifies the measurement period timeframe, changes in subsequent reporting periods and reporting requirements as a result of the Act. The Company adopted this guidance in the first quarter of Fiscal 2019. The Company recorded a provisional impact of the Act in Fiscal 2018 and will recognize any changes to this provisional amount as the Company refines its estimates of its cumulative temporary differences and interpretations of guidance related to the application of the Act. The adoption of this guidance has not had, nor is expected to have, a material impact on the Company's Consolidated Financial Statements and related disclosures. In February 2018, the FASB issued ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASC 220"), which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Act. This guidance is effective for all entities for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. The amendments in ASC 220 should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. The Company adopted ASC 220 in the fourth quarter of Fiscal 2018 and reclassed $2.2 million to retained earnings for the impact of stranded tax effects resulting from the Act. In March 2017, the FASB issued ASU 2017-07, "Compensation - Retirement Benefits (Topic 715)" ("ASC 715"). The standard requires the sponsors of benefit plans to present service cost in the same line item or items as other current employee compensation costs, and present the remaining components of net benefit cost in one or more separate line items outside of income from operations, while also limiting the components of net benefit cost eligible to be capitalized to service cost. The standard will require the Company to present the non-service pension costs as a component of expense below operating income. The amendments to this standard allow a practical expedient that permits an employer to use the amounts disclosed in its employee benefits footnote for the prior comparative period as the estimation basis for applying the retrospective presentation. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Note 1 Summary of Significant Accounting Policies, Continued The Company adopted ASC 715 in the first quarter of Fiscal 2019 and utilized the practical expedient to estimate the impact on the prior comparative period information presented in the Condensed Consolidated Statements of Operations. As required by the amendments in this update, the presentation of the service cost component and other components of net periodic benefit cost in the Condensed Consolidated Statements of Operations were applied retrospectively on and after the effective date. Upon adoption of this standard update, the Company reclassified the other components of net periodic benefit cost from selling and administrative expenses to other components of net periodic benefit cost on the Condensed Consolidated Statements of Operations. The retrospective adoption of this standard update resulted in an increase to earnings from operations of less than $0.1 million for the three months and nine months ended October 28, 2017 which was fully offset by the same amount on the other components of net periodic benefit cost line on the Condensed Consolidated Statements of Operations. As such, there was no impact to consolidated net earnings for the three months and nine months ended October 28, 2017. The Company adopted ASC 606 in the first quarter of Fiscal 2019 using the modified retrospective method by recognizing the cumulative effect of $4.4 million as an adjustment to the opening balance of retained earnings at February 4, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. While the adoption of this standard did not have a material impact on the Company's Consolidated Financial Statements and related disclosures, it did impact the timing of revenue recognition for gift card breakage and the timing of recognizing expense for direct-mail advertising costs as presented in the Condensed Consolidated Statements of Operations for Fiscal 2019. New Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, "Leases". The standard's core principle is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information. In July 2018, ASU 2018-10, "Codification Improvements to Topic 842, Leases," was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. Furthermore, in July 2018, the FASB issued ASU 2018-11, "Leases (Topic 842): Targeted Improvements," which provides an optional transition method in addition to the existing modified retrospective transition method by allowing a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. The standard also provides for certain practical expedients. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Company intends to adopt this guidance in the first quarter of Fiscal 2020 using the optional transition method provided by ASU 2018-11. Additionally, the Company intends to elect the “package of practical expedients”, which permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company also intends to elect the short-term lease exemption and intends to elect to not separate lease and non-lease components for its store leases. Note 1 Summary of Significant Accounting Policies, Continued The Company is implementing new processes and updating internal controls to ensure compliance with the new standard. The Company continues to assess the impact the adoption of ASU 2016-02 will have on its Condensed Consolidated Financial Statements, related disclosures and internal controls and is expecting a material impact on its Condensed Consolidated Balance Sheets because the Company is party to a significant number of lease contracts. In August 2018, the FASB issued ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans", to improve the effectiveness of disclosures in the notes to financial statements for employers that sponsor defined benefit pension plans. ASU 2018-14 is effective for financial statements issued for fiscal years ending after December 15, 2020, and early adoption is permitted. The Company is currently assessing the impact of this update on its notes to Consolidated Financial Statements. In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” ASU 2018-15 requires that issuers follow the internal-use software guidance in ASC 350-40 to determine which costs to capitalize as assets or expense as incurred. The ASC 350-40 guidance requires that certain costs incurred during the application development stage be capitalized and other costs incurred during the preliminary project and post-implementation stages be expensed as they are incurred. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of ASU 2018-15. |
