FY2021 10-K Document - FINAL 11 15 21 - Flipbook - Page 49
Table of Contents
Financial Instruments: Our financial instruments consist primarily of cash and cash equivalents, receivables, notes
payable, accounts payable, long-term debt, interest rate swaps and foreign currency contracts. The carrying values for
our financial instruments approximate fair value with the exception at times of long-term debt. We do not hold or issue
financial instruments for trading purposes.
We carry derivative instruments on the Consolidated Balance Sheets at fair value, determined by reference to quoted
market prices. The accounting for changes in the fair value of a derivative instrument depends on whether it has been
designated and qualifies as part of a hedging relationship and, if so, the reason for holding it. Our use of derivative
instruments is generally limited to cash flow hedges of certain interest rate risks and minimizing foreign currency
exposure on foreign currency transactions, which are typically designated in hedging relationships, and intercompany
balances, which are not designated as hedging instruments. Cash flows resulting from forward contracts are
accounted for as hedges of identifiable transactions or events and classified in the same category as the cash flows
from the items being hedged.
Refer to the following table for a summary of ASUs we adopted during 2021 and the related financial statement
impact.
Recent Accounting Pronouncements:
Recent Accounting Pronouncements Adopted
Standard
ASU no. 2016-13
Measurement of Credit
Losses on Financial
Instruments
Description
The standard replaces the incurred loss model
with the current expected credit loss ("CECL")
model to estimate credit losses for financial
assets measured at amortized cost and
certain off-balance sheet credit exposures.
The CECL model requires a Company to
estimate credit losses expected over the life of
the financial assets based on historical
experience, current conditions and reasonable
and supportable forecasts. The provisions of
the standard are effective for fiscal years
beginning after December 15, 2019 and
interim periods within those fiscal years. Early
adoption is permitted. The amendment
requires a modified retrospective approach by
recording a cumulative-effect adjustment to
retained earnings as of the beginning of the
period of adoption.
Financial Statement Effect or Other Significant
Matters
We adopted this standard using a modified
retrospective approach. Based on immateriality,
there was no cumulative-effect adjustment to
retained earnings as of the beginning of period of
adoption. Upon adoption, we now calculate
current expected credits losses for financial assets
measured at amortized cost. We utilize factors
such as historical experience, credit quality, age of
accounts receivable, current economic conditions
and reasonable forecasted financial information in
order to determine expected credit losses for
these assets. We are not subject to material
receivable credit risk given a significant portion of
our sales are generated from contracts with the
U.S. Government, prime contractors to the U.S.
Government and reputable Fortune 500
companies. The impact of this standard was
immaterial to financial statements, related
disclosures and internal controls.
Date adopted:
Q1 2021
Recent Accounting Pronouncements Not Yet Adopted
We consider the applicability and impact of all Accounting Standard Updates ("ASU"). ASUs not listed were assessed
and determined to be either not applicable, or had or are expected to have an immaterial impact on our financial
statements and related disclosures.
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