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Table of Contents
Recent Accounting Pronouncements
Public companies in the United States are subject tothe accounting and reporting requirements of various authorities, including the Financial Accounting
StandardsBoard(“FASB”)andtheSecuritiesandExchangeCommission(“SEC”).Theseauthoritiesissuenumerouspronouncements,mostofwhicharenot
applicabletotheCompany’scurrentorreasonablyforeseeableoperatingstructure.Belowarethenewauthoritativepronouncementsthatmanagementbelieves
arerelevanttoCompany’scurrentoperations.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with
Customers (Topic 606), to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by
reportingcompaniesunderGAAP.Underthenewmodel,recognitionofrevenueoccurswhenacustomerobtainscontrolofpromisedgoodsorservicesinan
amountthatreflects the consideration towhich the entityexpects tobe entitledinexchangeforthose goods or services. In addition, therevisedguidance
requiresthatreportingcompaniesdisclosethenature,amount,timing,anduncertaintyofrevenueandcashflowsarisingfromcontractswithcustomers.The
revisedguidanceiseffectivefortheCompanybeginninginthequarterendingMarch31,2018;earlyadoptionisallowed.Therevisedguidanceisrequiredto
beappliedretrospectivelytoeachpriorreportingperiodpresentedorretrospectivelywiththecumulativeeffectofinitiallyapplyingitrecognizedatthedateof
initialapplication.TheCompanyiscurrentlyevaluatingthetransitionmethodthatwillbeelectedandthepotentialeffecttherevisedguidancewillhaveonthe
Company’sconsolidatedfinancialstatements.
InSeptember2015,theFASBissuedASU2015-16,Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments (Topic805).
ASU2015-16requiresthatanacquirerrecognizeadjustmentstoprovisionalamountsthatareidentifiedduringthemeasurementperiodinthereportingperiod
inwhich the adjustment amountsaredetermined.ASU2015-16is effective for interim andannualperiodsbeginningafterDecember15,2015, with early
adoption permitted, and is to be applied on a prospective basis. The Company is currently in the process of evaluating the impact of the adoption of this
standardontheCompany’sconsolidatedfinancialstatements.
InNovember2015,theFASBissuedASU2015-17,Income Taxes (Topic740):Balance Sheet Classification of Deferred Taxes .ASU2015-17simplifiesthe
presentation of deferred income taxes by eliminating the separate classification of deferred income tax liabilities and assets into current and noncurrent
amountsintheconsolidatedbalancesheet.Theamendmentsintheupdaterequirethatalldeferredtaxliabilitiesandassetsbeclassifiedasnoncurrentinthe
consolidatedbalancesheet.TheamendmentsinthisupdateareeffectiveforannualperiodsbeginningafterDecember15,2016,andinterimperiodstherein
andmaybeappliedeitherprospectivelyorretrospectivelytoallperiodspresented.Earlyadoptionispermitted.TheCompanyhasearlyadoptedthisstandard
in the fourth quarter of 2015 on a retrospective basis. Prior periods have been retrospectively adjusted. As a result of the adoption of ASU 2015-17, the
Companyreclassified$1.7millionofnetcurrentdeferredtaxassetsand$1.9millionofnoncurrentdeferredtaxliabilitiesinthe2014balancesheet.
InFebruary2016,theFASBissuedASU2016-02,Leases ,whichrequiresalessee,inmostleases,toinitiallyrecognizealeaseliabilityfortheobligationto
makeleasepaymentsandaright-of-useassetfortherighttousetheunderlyingassetfortheleaseterm.Theguidanceiseffectiveforfiscalyearsbeginning
after December 15, 2018, and interim periods within those years. Early adoption is permitted. The Company is evaluating the effect of adopting this
pronouncement.
2. DISPOSITION
InMarch2015theCompanyannouncedarestructuringofitsNATGbusinessandclosed31retailstoresandawarehouseduringthesecondquarteroffiscal
2015.TheCompanyassessedthedisposalgroupunderASU2014-08andconcludedtheclosureofthedisposalgrouptobea"strategicshift".However,this
strategic shift was not determined to be a "major" strategic shift based on the portion of our consolidated business that the disposal group represented.
Accordinglythisdisposalgroupisnotpresentedintheaccompanyingfinancialstatementsasdiscontinuedoperationsandremainsincontinuingoperationsfor
thetwelvemonthsendedDecember31,2015andpriorperiods.
OnNovember17,2015theCompanyandPCMenteredintoanassetpurchaseagreementunderwhichPCMacquiredcertainbusinesstobusinessassetsof
NATG,includingtheTigerDirectbrand,for$14millionincashandtheassumptionofcertainliabilities.Theproceedsfromthesalearerecordedinspecial
charges,netwithin NATG discontinued operations loss. PCMdidnotacquirecash,accountsreceivable,inventoryorassumetrade payables in connection
withthetransaction. ThistransactionclosedonDecember 1,2015andonthatdate,thepartiesenteredintoatransitionservicesagreementtofacilitate an
orderlytransitionofthepurchasedassetsandfortheprovisionofvariousITandbackofficesupportservices.TheCompanyannouncedthatafterthesaleand
certaintransitionservicesagreementswithPCMwerecompleted,theCompanywouldcompletelyexittheremainingNATGoperationsduringearly2016.
This exit plan included the closing of the three remaining retail stores and management operations, the closing of its NATG distribution center, and
implementingageneralworkforcereductionrepresentingamajorstrategicshift,and,asaresulttheB2BandEcommercebusinessandthethreeremaining
retailstoresinoperationatthetimeofthesalearepresentedasdiscontinuedoperations.
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