Quarterly report pursuant to Section 13 or 15(d)

Note 1 - Basis of Presentation and Principles of Consolidation

v3.19.1
Note 1 - Basis of Presentation and Principles of Consolidation
3 Months Ended
Mar. 31, 2019
Notes to Financial Statements  
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]
1.
Basis of Presentation and Principles of Consolidation
 
Global Brass and Copper Holdings, Inc. (“Holdings,” “GBC,” the “Company,” “we,” “us,” or “our”) is operated and managed through
three
reportable segments: Olin Brass, Chase Brass, and A.J. Oster.
 
These unaudited consolidated financial statements include the accounts of the Company, our wholly-owned subsidiaries, and our majority-owned subsidiaries in which we have a controlling interest. All intercompany accounts and transactions are eliminated in consolidation.
 
The accompanying unaudited, interim consolidated financial statements include all normal recurring adjustments that are, in the opinion of management, necessary to fairly state the results for the interim periods presented. The 
December 31, 2018
consolidated balance sheet data was derived from audited financial statements, but does
not
include all disclosures required by accounting principles generally accepted in the United States of America (“US GAAP”). Certain information and disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted.
 
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. In addition, it requires management to make estimates and assumptions that affect the reported amount of net sales and expenses during the reporting periods. Actual amounts could differ from those estimates.
 
Results of operations for the interim periods presented are
not
necessarily indicative of results which
may
be expected for any other interim period or for the year as a whole. On
January 1, 2019,
we changed how we recognize operating leases as a result of the adoption of Accounting Standards Codification (“ASC”) Topic
842,
Leases
. See 
Note
2,
"Leases,"
 for further detail. These interim, unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form
10
-K for the year ended
December 31, 2018
.
 
Recently Issued and Recently Adopted Accounting Pronouncements
 
In
August 2018,
the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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
. ASU
2018
-
15
provides guidance on capitalizing hosting arrangement implementation costs and recognizing and presenting the expense and payments related to capitalized implementation costs for hosting arrangements in our financial statements. The provisions of ASU
2018
-
15
are effective for fiscal years, and interim reporting periods within those fiscal years, beginning after
December 15, 2019.
Early adoption is permitted and the provisions are to be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. We are in the process of evaluating the impact of adoption on our consolidated financial statements.
 
In
June 2016,
the FASB issued ASU
2016
-
13,
Financial Instruments - Credit Losses (Topic
326
): Measurement of Credit Losses on Financial Instruments
, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This
may
result in the earlier recognition of allowances for losses. The provisions of ASU
2016
-
13
are effective for fiscal years, and interim reporting periods within those fiscal years, beginning after
December 15, 2019,
with early adoption permitted. We are in the process of assessing the impact of the new standard on our consolidated financial statements.
 
In
February 2016,
the FASB issued ASU
2016
-
02,
 
Leases (Topic
842
)
, to increase transparency and comparability among organizations by requiring lessees to recognize right-of-use assets and lease liabilities on the balance sheet for all leases with a term of greater than
12
months.
 
We adopted the guidance in Topic
842
as of
January 1, 2019,
using the modified retrospective approach. Under this approach, the guidance is applied to existing leases as of the adoption date with a cumulative-effect adjustment at adoption and
no
adjustment to prior comparative periods. We elected the package of transition provisions available for expired or existing contracts, which allowed us to carry forward our historical assessments of (
1
) whether contracts are or contain leases, (
2
) lease classification, and (
3
) initial direct costs. Additionally, we implemented new processes and policies to ensure proper preparation of financial information upon adoption. The adoption of Topic
842
impacted our consolidated balance sheets, but did
not
impact our consolidated statements of operations or cash flows. The most significant change was the recognition of right-of-use assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged. Upon adoption, we recorded
$7.1
million of right-of-use assets and
$7.4
million of lease liabilities for operating leases. We did
not
have any cumulative-effect adjustments to record upon adoption.