sab 74 disclosure analysis for lease …...required under operating leases as disclosed in note 28...

SAB 74 DISCLOSURE ANALYSIS FOR LEASE ACCOUNTINGTop 100 US Public CompaniesRanked By Leasing Obligations

ASC 842 LEASE ACCOUNTING STANDARDS

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SAB 74 Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Key Findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Detailed Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Balance Sheet Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cash Flow Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Early Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Transition Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Practical Expedients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Implementation Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Project Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Software Evaluation And Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Policies & Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Lease Accounting Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

SAB 74 Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Additional References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Top 100 Us Companies Ranked By Leasing Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

© 2010-2018 LeaseAccelerator, Inc . All rights reserved . This document is the copyrighted work of LeaseAccelerator, Inc .

TABLE OF CONTENTS

TOP 100 US PUBLIC COMPANIES RANKED BY LEASING OBLIGATIONS 3

EXECUTIVE SUMMARY

SAB 74 DISCLOSURESAs the implementation deadlines for ASC 842 grow closer, public filers will be required to include a discussion of the potential future impacts to their financial statements from the new lease accounting standards . SEC Staff Accounting Bulletin Topic 11 .M (SAB 74) requires SEC filers to disclose the effects of accounting standards that have been announced but not yet adopted . The guidance from the bulletin encourages registrants to consider disclosing:

• A brief description of the new standard, the date that adoption is required, and the date that the registrant plans to adopt, if earlier.

• A discussion of the methods of adoption allowed by the standard and the method expected to be utilized by the registrant, if determined.

• A discussion of the impact that adoption of the standard is expected to have on the financial statements of the registrant, unless not known or reasonably estimable. In that case, a statement to that effect may be made.

Disclosure of the potential impact of other significant matters that the registrant believes might result from the adoption of the standard (such as technical violations of debt covenant agreements, planned or intended changes in business practices, etc.) is encouraged.

In an effort to assist the industry with accelerated adoption of the new lease accounting standards, LeaseAccelerator compiled 100 examples of SAB 74 disclosures from SEC registrants over the past year . We focused on the top 100 US public companies as ranked by the total leasing obligations tabularized in the footnotes of annual filings . The source of the data was 10-Q and 10-K filings submitted between June 30, 2017 and May 31, 2018 . .

4 SAB 74 DISCLOSURE ANALYSIS FOR LEASE ACCOUNTING (ASC 842)

KEY FINDINGS

Early Adoption

With the revenue recognition standard (ASC 606) a number of companies including Alphabet, Microsoft, General Dynamics, Ford, and Raytheon were early adopters . Only two of the 100 companies analyzed, Microsoft and Target, adopted the standards early . No other companies stated their intention to early adopt .

Transition Approach

At the time these disclosures were analyzed, the only available transition approach for lessees was the modified retrospective approach, so companies either said they would elect that approach or did not comment on the approach . However, a new transition approach was proposed in November 2017 and tentatively approved in March 2018 . We expect companies to state their selection of transition method in their next disclosures .

Material Impacts to Balance Sheets

As expected, the new right-of-use assets and liabilities being added to balance sheets is expected to be the most material impact to financial statements . 81% of the Top 100 reported that there will be a material impact resulting from the transfer of most right-of-use assets and liabilities on to corporate balance sheets . Another 15% are still analyzing the potential impacts of the new standard .

Quantitative Impacts

Companies are still in the process of estimating the definitive size of their leasing portfolios under ASC 842 . Only 16% provided quantitative estimates of the material impact to the balance sheet, which ranged from $1 .3 billion to $13 billion .

Limited Impacts to Income Statement and Cash Flow Statements

29% of the Top 100 reported that there would not be a material impact to their income statement from ASC 842 . Another 67% are still analyzing the impacts . 23% of the Top 100 reported there would be no impact to their cash flow statements and 70% are still analyzing the impact .

Implementation Progress

The level of information disclosed about the progress of implementation efforts is still relatively limited by most filers . Of the companies we analyzed, only 27% stated they are evaluating, developing, or implementing new policies and controls to support the standard . Similarly, amongst the filers we reviewed, only 25% stated they are implementing, developing, or have selected a lease accounting software application . Only 15% indicated that a project team had been formed to address the new standard .


DETAILED ANALYSIS

BALANCE SHEET IMPACTS

Balance Sheet Impacts will be Material

As expected, the most material impact to financial statements cited by most filers is the new right-of-use assets and liabilities being added to the balance sheets . 81% of the Top 100 reported that there will be a material impact resulting from the transfer of most right-of-use assets and lease liabilities onto corporate balance sheets . Another 15% are still analyzing the potential impacts of the new standard .

Bank of America and UnitedHealth Group were the only two companies in our sample set that indicated that the impact would not be material . While no other health care insurance companies were analyzed in this study, other financial institutions, such as JPMorgan ($10B) and Citigroup ($5B), did indicate that the balance sheet impact would be material, so there does not appear to be an industry-wide trend for commercial banks .

Companies are still in the process of estimating the definitive size of their leasing portfolios under ASC 842 . Only 16% provided quantitative estimates of the material impact to the balance sheet, which ranged from $1 .3 billion to $13 billion .

BALANCE SHEET IMPACTS

Still Evaluating15%

Not Stated2%

Not Material2%

Material Impact81%


EXAMPLES OF DISCLOSURE COMMENTS RELATED TO BALANCE SHEETS

SEC REGISTRANT EXCERPT OF DISCLOSUREApple While the Company is currently evaluating the timing and impact of adopting ASU 2016-

02, currently the Company anticipates recording lease assets and liabilities in excess of $9 .6 billion on its Condensed Consolidated Balance Sheets, with no material impact to its Condensed Consolidated Statements of Operations . However, the ultimate impact of adopting ASU 2016-02 will depend on the Company’s lease portfolio as of the adoption date .

JPMorgan Chase & Co .

The Firm expects to recognize lease liabilities and corresponding right-of-use assets (at their present value) related to predominantly all of the $10 billion of future minimum payments required under operating leases as disclosed in Note 28 of JPMorgan Chase’s 2017 Annual Report . However, the population of contracts subject to balance sheet recognition and their initial measurement remains under evaluation .

Bank of America Corp .

The Corporation is in the process of reviewing its existing lease portfolios, including certain service contracts for embedded leases, to evaluate the impact of the standard on the consolidated financial statements, as well as the impact to regulatory capital and risk-weighted assets . The effect of the adoption will depend on the lease portfolio at the time of transition and the transition options ultimately available; however, the Corporation does not expect the new accounting standard to have a material impact on its consolidated financial position, results of operations or disclosures in the Notes to the Consolidated Financial Statements .

Exxon Mobil The Corporation is gathering and evaluating data and recently acquired a system to facilitate implementation . We are progressing an assessment of the magnitude of the effect on the Corporation’s financial statements .

INCOME STATEMENTUnder ASC 842, there is expected to be little impact to the income statement . Operating leases will be presented on the same line-item on the income statement, the same as under the current standard, ASC 840 . For finance leases, which replace capital leases under ASC 840, the interest and amortization will still be presented separately . As a result, we expect few of the remaining 67% still evaluating and the 4% that did not comment on the income statement impacts to find a material impact to the income statement .

CASH FLOW STATEMENT70% of companies are still evaluating the impact to the cash flow statement and 23% have stated that there will be no impact to the cash flow statement . Only one company, Hertz Global Holdings, stated that they were expecting an impact to cash flow statements, and that is due to changes in the presentation of the company’s operating activities .


EARLY ADOPTIONWith the revenue recognition standard (ASC 606) a number of companies including Alphabet, Microsoft, General Dynamics, Ford, and Raytheon were early adopters . The lease accounting standard has very few early adopters thus far . Only two of the 100 companies analyzed, Microsoft and Target, have early adopted .

TRANSITION METHODWith other recent accounting changes, such as revenue recognition, much of the focus for SAB 74 disclosures was on the transition approach being adopted . However, until recently, only a modified retrospective approach was allowed under ASC 842 . The modified retrospective method would have required companies to not only transition at the date of adoption, but also provide reports of their lease data under ASC 842 from the earliest comparative period to the effective date . For example, companies who will adopt on January 1, 2019 would have been required to report their lease data from January 1, 2017 to January 1, 2019 under both ASC 840 and ASC 842 .

However, on March 7, 2018 FASB voted to tentatively approve a simpler transition method that eliminates the need for comparative reporting . We expect that many companies will choose this approach as it reduces the implementation burden for corporate accounting organizations . Several companies, including Macy’s and the Walt Disney Company, referred to the proposal in their disclosures, though did not state whether they would elect the option if approved . We anticipate that once the proposal has been finalized, many SEC files will state which transition approach they will use in their next disclosures .

PRACTICAL EXPEDIENTSAmongst our sample set, only eight companies indicated an intention to elect the practical expedients available under ASC 842 . Another 11companies indicated that they were investigating the practical expedients . However, most did not provide any commentary .


EXAMPLES OF DISCLOSURE COMMENTS RELATED TO PRACTICAL EXPEDIENTS

SEC REGISTRANT EXCERPT OF DISCLOSURETarget The modified retrospective approach provides a method for recording existing leases at adoption

and in comparative periods that approximates the results of a full retrospective approach . In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification . We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements . In addition, we elected the hindsight practical expedient to determine the lease term for existing leases . Our election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements . In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term .

CenturyLink The modified retrospective approach includes a number of optional practical expedients that we may elect to apply . On January 25, 2018, the FASB issued ASU 2018-01, “Leases: Land Easement Practical Expedient for Transition to ASU 2016-02 . ASU 2018-01 permits reporting companies to elect to forego reassessments of land easements that exist or expire before the entity’s adoption of ASU 2016-02 and that were not previously accounted for as leases .

International Business Machines

The company is currently planning on electing the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and is evaluating the other practical expedients available under the guidance .

IMPLEMENTATION PROGRESS

The level of information disclosed about the progress of implementation efforts is still relatively limited by most filers . A significant work effort will be required to comply with the new lease accounting standards by most companies with portfolios in excess of $100M . Changes will be required to accounting systems, business processes, and financial controls . A cross-functional project team will need to be formed consisting of stakeholders that use the leased assets such as Real Estate, IT, and Operations as well as corporate functions that administer the leases such as Procurement, Corporate Treasury, and Accounts Payable .

The project team will need to devise a strategy for identifying all of the leasing contracts across the enterprise, including categories such as real estate, IT, fleet, material handling, and other industry-specific assets . Once the population of leases is identified, the contracts for each will need to be identified in order to abstract the data necessary for accounting . Most companies will implement a new software application designed to perform the specialized lease accounting required for ASC 842 . Once selected, the software application will need to be tested for functionality, integrated with other financial systems, and rolled out with training to end users .


EXAMPLES OF DISCLOSURE COMMENTS RELATED TO IMPLEMENTATION

SEC REGISTRANT EXCERPT OF DISCLOSUREAutoZone The Company established a cross-functional implementation team to evaluate and identify the

impact of ASU 2016-02 on the Company’s financial position, results of operations and cash flows . Based on the preliminary work completed, the Company has concluded its assessment on its leasing arrangements, evaluated the impact of applying the practical expedients and accounting policy elections and is currently working on implementing software to meet the reporting requirements of this standard . The Company is also in the process of identifying changes to its business processes and controls to support adoption of the new standard . The team is continuing to understand the full analysis of the adoption, but is unable to quantify the impact at this time . The Company anticipates the adoption of this new standard to result in a significant increase in lease-related assets and liabilities on the Company’s consolidated balance sheets . The impact on the Company’s consolidated statements of income is currently being evaluated . As the impact of this standard is non-cash in nature, the Company does not anticipate its adoption to have an impact on the Company’s consolidated statement of cash flows .

O’Reilly Automotive

The Company has established a task force, composed of multiple functional groups inside of the Company, which is currently in the process of evaluating critical components of this new guidance and the potential impact of the guidance on the Company’s financial position, results of operations and cash flows . Based on the preliminary work completed, the Company is considering the potential implications of the new standard on determining the discount rate to be used in valuing new and existing leases, the treatment of existing favorable and unfavorable lease agreements acquired in connection with previous acquisitions, procedural and operational changes that may be necessary to comply with the provisions of the guidance and all applicable financial statement disclosures required by the new guidance, all of which are areas that could potentially be impacted by adoption of the guidance . At this time, the task force has not completed its full evaluation; however, the Company believes the adoption of the new guidance will have a material impact on the total assets and total liabilities reported on the Company’s consolidated balance sheets .

Kroger The adoption of this ASU will result in a significant increase to our Consolidated Balance Sheets for lease liabilities and right-of-use assets, and we are currently evaluating the other effects of adoption of this ASU on our Consolidated Financial Statements . This evaluation process includes reviewing all forms of leases, performing a completeness assessment over the lease population, analyzing the practical expedients and assessing opportunities to make certain changes to our lease accounting information technology system in order to determine the best implementation strategy . We believe our current off-balance sheet leasing commitments are reflected in our investment grade debt rating .

Ulta Beauty The Company will adopt the new standard in fiscal 2019 . The Company’s ability to adopt depends on system readiness, including software procured from third-party providers, and completing an analysis of information necessary to quantify the financial statement impact . The Company formed a project team to review the current accounting policies and practices and assess the effect of the standard on the consolidated financial statements . The team completed a preliminary assessment of the potential impact of adopting ASU 2016-02 on the consolidated financial statements . The adoption of ASU 2016-02 will have a material impact on the Company’s consolidated financial position, but the Company is not able to quantify the difference at this time . The Company does not believe adoption of this standard will have a material impact on the Company’s consolidated results of operations or cash flows .


PROJECT TEAMAmongst our sample set, only 15% indicated that a project team had been formed to address the new standard . Leadership of the lease accounting project typically sits within the finance or accounting team . However, unlike many other accounting change projects, there is a need for a cross-functional enterprise team to address the leasing standards .

A significant amount of business process transformation and data collection will be required from both the users of leased assets and the corporate functions that support the leasing program . The users of leased assets span almost every function in the business, including Corporate IT, Real Estate, Fleet, and Operations . The organizations that touch leases throughout their lifecycle include Legal and Procurement, Treasury and Tax, and Accounts Payable and Receivables .

EXAMPLES OF DISCLOSURE COMMENTS RELATED TO PROJECT TEAMS

SEC REGISTRANT EXCERPT OF DISCLOSUREDollar General The Company formed a project team to assess and implement the standard, which has

completed its evaluation of existing contractual arrangements for embedded leases . The project team is also testing computations in the Company’s lease administration system, integrating interfaces between the lease administration system and the enterprise resource planning systems, and comparing the Company’s current accounting policies to the new standard . As a result of the efforts of this project team, the Company has identified its store leases as the area in which it would most likely be affected by the new guidance .

DaVita The Company has assembled an internal lease task force that meets regularly to discuss and evaluate the overall impact of this guidance on its consolidated financial statements and related disclosures, as well as the expected timing of adoption .

J .C . Penney We have developed a project team to analyze the impacts of the new standard on our current accounting policies and internal controls and the changes required to be made by our leasing software provider .


SOFTWARE EVALUATION AND SELECTIONSimilarly, amongst the filers we reviewed only 24% are implementing or have selected a lease accounting software application . Historically, most companies have performed lease accounting and financial reporting under the current standards using a collection of spreadsheets . Although ASC 842 does not require the use of any specific software application, we believe that most companies with leasing portfolios in excess of $50M will elect to purchase new technology .

Since the introduction of ASC 842, a number of commercial, off-the-shelf software packages have been released to the market specifically designed to support the new lease accounting requirements . These applications feature dedicated leasing subledgers that track all the necessary journal entries, accounting engines to perform multiple set-of-book reporting, and algorithms to automatically classify contracts as operating or finance leases .

EXAMPLES OF DISCLOSURE COMMENTS RELATED TO SOFTWARE IMPLEMENTATION

SEC REGISTRANT EXCERPT OF DISCLOSUREFedEx Additionally, we are implementing an enterprise-wide lease management system to assist in

the accounting and are evaluating additional changes to our processes and internal controls to ensure we meet the standard’s reporting and disclosure requirements .

Ascena Retail Group

The Company is also in the process of implementing a new lease administration system and identifying changes to its business processes and controls to support adoption of the new standard in Fiscal 2020 .

Dollar Tree Additionally, the Company is implementing lease accounting software to assist in the quantification of the expected impact on the consolidated balance sheets and to facilitate the calculations of the related accounting entries and disclosures .

Verizon We have established a cross-functional coordinated team to implement the standard update . We are in the process of determining the scope of impact, data gathering and assessment, and designing a new system solution .


POLICIES AND CONTROLSOf the companies we analyzed, only 27% are evaluating or implementing new policies and controls to support the standard . With leases representing a significant set of assets and liabilities on the balance sheet, many companies may adopt additional best practices to ensure that leasing portfolios are being optimized .

Accounting organizations will need to ensure that they maintain complete, accurate, and up-to-date records of all leases across the business not only at commencement of the contract, but also throughout the term of the agreement . New business processes will need to be put in place to ensure all the necessary data required for accounting is collected at the start of the lease . Controls will be required to ensure that any contractual updates or business plan changes resulting in a modification or reassessment are relayed to the accounting organization .

EXAMPLES OF DISCLOSURE COMMENTS RELATED TO POLICIES AND CONTROLS

SEC REGISTRANT EXCERPT OF DISCLOSUREChipotle We are assessing the impact to our accounting policies, processes, disclosures, and internal

control over financial reporting . EOG Resources EOG is continuing its assessment of ASU 2016-02 by implementing its project plan,

evaluating certain operational and corporate policies and processes, further defining its population of leases, reviewing certain contracts and considering the election of practical expedients .

Dow DuPont The Company has a team in place to evaluate the new guidance, is in the process of implementing software solutions and is facilitating the development of business processes and controls around leases to meet the new accounting and disclosure requirements upon adoption in the first quarter of 2019 .


LEASE ACCOUNTING CHANGE

EXAMPLES OF STANDARD DISCLOSURE COMMENTS ON ASC 842

SEC REGISTRANT EXCERPT OF DISCLOSURECapital One Financial

This guidance is effective for us on January 1, 2019, with early adoption permitted, using the modified retrospective method of adoption . We plan to adopt the standard on the effective date . We are currently in the process of reviewing lease contracts, implementing a new lease accounting and administration software solution, establishing new processes and internal controls and evaluating the impact of various accounting policy elections . Upon adoption, we expect to record a right of use asset and a corresponding lease liability for our operating leases where we are the lessee . The potential impact on our consolidated financial statements is largely based on the present value of future minimum lease payments, the amount of which will depend upon the population of leases in effect at the date of adoption . Future minimum lease payments totaled $2 .7 billion as of December 31, 2017, as disclosed in “Note 8—Premises, Equipment and Lease Commitments” of our 2017 Form 10-K . We do not expect material changes to the recognition of operating lease expense in our consolidated statements of income

Live Nation Entertainment

To assess the impact of the standard, the Company has dedicated certain of its personnel to lead the implementation effort . These personnel reviewed the amended guidance and subsequent clarifications and attended multiple training sessions in order to understand the potential impact the new standard could have on the Company’s financial position and results of operations . The Company has formed a cross-functional steering committee including members from its major divisions . The Company is in the process of implementing third-party lease accounting software to record, analyze and calculate the financial statement and disclosure impacts . The Company will finalize its conclusions in 2018 and ensure that it can produce the data necessary for the required disclosures along with assessing changes to internal controls and processes that may be required to comply with the new lease accounting and disclosure requirements . The Company will adopt this standard on January 1, 2019 and is currently evaluating the impact that this guidance will have on its financial position and results of operations .

Hertz Global Holdings

The Company intends to adopt this guidance, in accordance with the effective date, on January 1, 2019 . A modified retrospective transition approach is required for both lessees and lessors for existing leases at, or entered into after, the beginning of the earliest comparative period presented in the financial statements . The Company is still in the process of evaluating whether to avail itself of allowable practicable expedients during transition . The Company is evaluating the Proposed Accounting Standards Update, Leases (Topic 842) Targeted Improvements that were tentatively affirmed by the FASB at its March 2018 meetings . The update provides a transition method that would allow the Company to only apply the new lease standard in the year of adoption . Additionally, it provides a practical expedient for lessors to combine non-lease components with the related lease components if certain conditions are met . This could allow the Company to account for all revenue earned from the operations of rental vehicles and from other forms of rental related activities under the new lease guidance . Lessee: Adoption of Topic 842 will result in a material increase in the Company’s lease-related assets and liabilities on its balance sheet, primarily for leases of rental locations and other assets . Additionally, adoption of this guidance will impact the statement of cash flows with respect to the presentation of the Company’s operating activities, but is not expected to impact its presentation of investing or financing activities . Adoption of Topic 842 is not expected to have a material impact on the Company’s results of operations . The Company has reached conclusions on key accounting assessments related to its leases and is performing an analysis of its lease portfolio to ensure proper application of the new guidance including implementation of internal controls over financial reporting .


EXCERPT FROM TOPIC 11: MISCELLANEOUS DISCLOSUREhttps://www .sec .gov/interps/account/sabcodet11 .htm#M

M . Disclosure Of The Impact That Recently Issued Accounting Standards Will Have On The Financial Statements Of The Registrant When Adopted In A Future Period

Facts: An accounting standard has been issued5 that does not require adoption until some future date . A registrant is required to include financial statements in filings with the Commission after the issuance of the standard but before it is adopted by the registrant .

Question 2: Does the staff have a view on the types of disclosure that would be meaningful and appropriate when a new accounting standard has been issued but not yet adopted by the registrant?

Interpretive Response: The staff believes that the registrant should evaluate each new accounting standard to determine the appropriate disclosure and recognizes that the level of information available to the registrant will differ with respect to various standards and from one registrant to another . The objectives of the disclosure should be to (1) notify the reader of the disclosure documents that a standard has been issued which the registrant will be required to adopt in the future and (2) assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted . The staff understands that the registrant will only be able to disclose information that is known .

The following disclosures should generally be considered by the registrant:

• A brief description of the new standard, the date that adoption is required and the date that the registrant plans to adopt, if earlier .

• A discussion of the methods of adoption allowed by the standard and the method expected to be utilized by the registrant, if determined .

• A discussion of the impact that adoption of the standard is expected to have on the financial statements of the registrant, unless not known or reasonably estimable . In that case, a statement to that effect may be made .

Disclosure of the potential impact of other significant matters that the registrant believes might result from the adoption of the standard (such as technical violations of debt covenant agreements, planned or intended changes in business practices, etc .) is encouraged .

SAB 74 DISCLOSURES


SAB 74 DISCLOSURES - GENERALMFA, “Reminder: SEC SAB 74 Disclosures and Controls for New Accounting Standards,” http://www .mfa cpa .com/en/Our%20Insights/2017/07/Reminder%20SEC%20SAB%2074%20Disclosures%20and%20Controls%20for%20New%20Accounting%20Standards .aspx

PwC, “Recently issued accounting standards Governance considerations,” https://www .pwc .com/us/en/cfodirect/assets/pdf/in-the-loop/sab-74-new-accounting-standards .pdf

SAB 74 DISCLOSURES FOR LEASE ACCOUNTINGKPMG, “ASC 842, Leases – Transition Disclosures,” https://frv .kpmg .us/reference-library/2017/02/asc-842-leases-transition-disclosures .html

RSM, “SAB 74 disclosures for new standard on lease accounting,” http://rsmus .com/our-insights/newsletters/financial-reporting-insights/sab-74-disclosures-for-new-standard-on-lease-accounting .html

FASB – Updated Guidance on ASC 842FASB, “Proposed Accounting Standards Update,” http://www .fasb .org/jsp/FASB/Document_C/DocumentPage?cid=1176169751791&acceptedDisclaimer=true

Thomson Reuters, “Easier Method for Completing Transition to Lease Standard Moves Forward,” https://tax .thomsonreuters .com/media-resources/news-media-resources/checkpoint-news/daily-newsstand/easier-method-for-completing-transition-to-lease-standard-moves-forward/

ADDITIONAL REFERENCES


RANK COMPANY SELECTED DISCLOSURE EXCERPTS1 Walgreens

Boots AllianceThe Company will adopt this ASU on September 1, 2019 (fiscal 2020) . The Company has begun evaluating and planning for adoption and implementation of this ASU, including selecting a new lease accounting system, evaluating practical expedient and accounting policy elections, and assessing the overall financial statement impact . This ASU will have a material impact on the Company’s financial position . The impact on the Company’s results of operations is being evaluated . The impact of this ASU is non-cash in nature and will not affect the Company’s cash flows .

2 CVS Health The Company believes that the new standard will have a material impact on its consolidated balance sheet . The Company is currently evaluating the effect that implementation of this standard will have on the Company’s consolidated results of operations, cash flows, financial position and related disclosures .

3 AT&T Upon initial evaluation, we believe the key change upon adoption will be the balance sheet recognition . At adoption, we will recognize a right-to-use asset and corresponding lease liability on our consolidated balance sheets . The income statement recognition of lease expense appears similar to our current methodology . We are continuing to evaluate the magnitude and other potential impacts to our financial statements .

4 Amazon .com We plan to adopt this ASU beginning in Q1 2019 . We are continuing to evaluate the impact and expect the ASU will have a material impact on our consolidated financial statements, primarily to the consolidated balance sheets and related disclosures .

5 Verizon Communications

Verizon’s current operating lease portfolio is primarily comprised of network, real estate, and equipment leases . Upon adoption of this standard, we expect to recognize a right of use asset and liability related to substantially all operating lease arrangements . We have established a cross-functional coordinated team to implement the standard update . We are in the process of determining the scope of impact, data gathering and assessment, and designing a new system solution . We are also evaluating our processes and internal controls to meet the standard update’s accounting, reporting and disclosure requirements . Although we have not yet completed our evaluation of the standard update’s impact, we expect its adoption to have a significant impact on our condensed consolidated balance sheet .

6 FedEx Based on our lease portfolio, we currently anticipate recognizing a lease liability and related right-of-use asset on our balance sheet in excess of $13 billion, with an immaterial impact on our income statement compared to the current lease accounting model . However, the ultimate impact of the standard will depend on the company’s lease portfolio as of the adoption date . We are currently in the process of evaluating our existing lease portfolio, including accumulating all of the necessary information required to properly account for the leases under the new standard . Additionally, we are implementing an enterprise-wide lease management system to assist in the accounting and are evaluating additional changes to our processes and internal controls to ensure we meet the standard’s reporting and disclosure requirements . These changes will be effective June 1, 2019 (fiscal 2020) .

TOP 100 US COMPANIES RANKED BY LEASING OBLIGATIONS


RANK COMPANY SELECTED DISCLOSURE EXCERPTS

7 United Continental Holdings

We have not completed our evaluation of the impact but believe this standard will have a significant impact on our consolidated balance sheets but is not expected to have a material impact on the Company’s results of operations or cash flows . The primary effect of adopting the new standard will be to record assets and obligations for its operating leases .

8 Delta Air Lines We will adopt this standard effective January 1, 2019 . We have not completed our assessment, but the adoption of this standard will have a significant impact on our Consolidated Balance Sheets . However, we do not expect the adoption to have a significant impact on the recognition, measurement or presentation of lease expenses within the Condensed Consolidated Statements of Operations and Comprehensive Income (“income statement”) or the Condensed Consolidated Statements of Cash Flows (“cash flows statement”) . Information about our undiscounted future lease payments and the timing of those payments is in Note 7, “Lease Obligations,” in our Form 10-K .

9 Wal-Mart Stores .

The Company will adopt this ASU on February 1, 2019 and is implementing new lease systems in connection with the adoption . Management is progressing with implementation and continuing to evaluate the effect to the Company’s Condensed Consolidated Financial Statements and disclosures . Management expects a material impact to the Company’s Condensed Consolidated Balance Sheet .

10 Bank of America Corp .

The Corporation is in the process of reviewing its existing lease portfolios, including certain service contracts for embedded leases, to evaluate the impact of the standard on the consolidated financial statements, as well as the impact to regulatory capital and risk-weighted assets . The effect of the adoption will depend on the lease portfolio at the time of transition and the transition options ultimately available; however, the Corporation does not expect the new accounting standard to have a material impact on its consolidated financial position, results of operations or disclosures in the Notes to the Consolidated Financial Statements .

11 McDonald’s The Company will adopt the new standard effective January 1, 2019 . At transition, the Company will recognize and measure leases using the required modified retrospective approach . The Company anticipates ASU 2016-02 will have a material impact to the consolidated balance sheet due to the significance of the Company’s operating lease portfolio . The Company will elect an optional practical expedient to retain the current classification of leases, and, therefore, anticipates a minimal initial impact on the consolidated statement of income . The impact of ASU 2016-02 is non-cash in nature; therefore, it will not affect the Company’s cash flows .

12 American Airlines Group

We will adopt the New Lease Standard effective January 1, 2019 . We are currently evaluating how the adoption of the New Lease Standard will impact our consolidated financial statements . Interpretations are on-going and could have a material impact on our implementation . Currently, we expect that the adoption of the New Lease Standard will have a material impact on our consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities principally for certain leases currently accounted for as operating leases .



13 Crown Castle International .

This guidance is effective for the Company as of January 1, 2019 and is required to be applied using a modified retrospective approach for all leases existing at, or entered into after, the beginning of the earliest comparative period presented . Although early adoption is permitted, the Company does not expect to early adopt the new guidance prior to January 1, 2019 . With regard to the application of this guidance to the Towers segment, the Company expects that (1) its Towers lessee arrangements will continue to be classified as operating leases under the new guidance; (2) this guidance will have a material impact on its condensed consolidated balance sheet due to the addition of right-of-use assets and lease liabilities for all lessee arrangements with a term greater than 12 months; and (3) there will not be a material impact to its condensed consolidated statement of operations and condensed consolidated statement of cash flows . With regard to the application of this guidance to the Fiber segment, the Company (1) has established and is progressing through the various steps of a cross-functional project plan to assess the impact of the standard; (2) expects this guidance to have a material impact on its condensed consolidated balance sheet due to the addition of right-of-use assets and lease liabilities for all lessee arrangements with a term greater than 12 months; and (3) continues to assess additional impacts to its condensed consolidated financial statements, including the condensed consolidated statement of operations and the condensed consolidated statement of cash flows .

14 American Tower The Company (i) has established a multidisciplinary team to assess and implement the new guidance, (ii) expects the guidance to have a material impact on its consolidated balance sheets due to the recording of right of use assets and lease liabilities for leases in which it is a lessee and which it currently treats as operating leases and (iii) continues to evaluate the impact of the new guidance .

15 JPMorgan Chase & Co .

The Firm is in the process of its implementation which includes an evaluation of its leasing activities and certain contracts for embedded leases . As a lessee, the Firm is developing its methodology to estimate the right-of-use assets and lease liabilities, which is based on the present value of lease payments . The Firm expects to recognize lease liabilities and corresponding right-of-use assets (at their present value) related to predominantly all of the $10 billion of future minimum payments required under operating leases as disclosed in Note 28 of JPMorgan Chase’s 2017 Annual Report . However, the population of contracts subject to balance sheet recognition and their initial measurement remains under evaluation . The Firm does not expect material changes to the recognition of operating lease expense in its Consolidated statements of income . The Firm plans to adopt the new guidance on January 1, 2019 .

16 Apple The Company will adopt ASU 2016-02 in its first quarter of 2020 utilizing the modified retrospective transition method . While the Company is currently evaluating the impact of adopting ASU 2016-02, based on the lease portfolio as of March 31, 2018, the Company anticipates recording lease assets and liabilities of approximately $9 .0 billion on its Condensed Consolidated Balance Sheets, with no material impact to its Condensed Consolidated Statements of Operations . However, the ultimate impact of adopting ASU 2016-02 will depend on the Company’s lease portfolio as of the adoption date .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS17 TJX We plan to adopt this standard in the first quarter of the fiscal year ending February

1, 2020 . The Company is in the process of implementing a new lease accounting system and has established a cross-functional team to implement the updated lease guidance . This team is in the process of evaluating our lease portfolio to assess the impact this standard will have on our Consolidated Financial Statements and Notes thereto . The Company expects this standard to have a material impact on its statement of financial condition as it will record a significant asset and liability associated with its more than 4,100 leased locations . We plan to implement the transition package of three practical expedients permitted within the standard, which among other things, allows for the carryforward of historical lease classifications . We expect to make an accounting policy election that will keep leases with a term of 12 months or less off the balance sheet and result in recognizing those lease payments on a straight-line basis over the lease term . As our leases do not provide an implicit rate, we plan to use our incremental borrowing rate based on information available at commencement date to determine the present value of future payments . The Company has determined that the initial lease term will not differ under the new standard versus current accounting practice, and therefore the income statement impact of the new standard is not expected to be material .

18 Dollar General The Company formed a project team to assess and implement the standard, which has completed its evaluation of existing contractual arrangements for embedded leases . The project team is also testing computations in the Company’s lease administration system, integrating interfaces between the lease administration system and the enterprise resource planning systems, and comparing the Company’s current accounting policies to the new standard . As a result of the efforts of this project team, the Company has identified its store leases as the area in which it would most likely be affected by the new guidance . The Company’s assessment of the impact that adoption of this guidance will have on its consolidated financial statements is ongoing, and the Company anticipates a material impact because it is party to a significant number of lease contracts for its stores .

19 Alphabet Based on our current portfolio of leases, approximately $8 billion of lease assets and liabilities would be recognized on our balance sheet, primarily relating to real estate . We are in the process of implementing changes to our systems and processes in conjunction with our review of lease agreements . We will adopt Topic 842 effective January 1, 2019 and expect to elect certain available transitional practical expedients .

20 Starbucks The guidance will require modified retrospective application at the beginning of our first quarter of fiscal 2020, with optional practical expedients, but permits adoption in an earlier period . We are currently evaluating the impact this guidance will have on our consolidated financial statements . We expect this adoption will result in a material increase in the assets and liabilities on our consolidated balance sheets but will likely have an insignificant impact on our consolidated statements of earnings . In preparation for the adoption of the guidance, we are in the process of implementing controls and key system changes to enable the preparation of financial information .

21 Berkshire Hathaway

We are currently evaluating the effect this standard will have on our Consolidated Financial Statements .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS22 Microsoft We elected to early adopt the standard effective July 1, 2017 concurrent with

our adoption of the new standard related to revenue recognition . We elected the available practical expedients and implemented internal controls and key system functionality to enable the preparation of financial information on adoption . The standard had a material impact on our consolidated balance sheets, but did not have an impact on our consolidated income statements . The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while our accounting for finance leases remained substantially unchanged . Adoption of the standard required us to restate certain previously reported results, including the recognition of additional ROU assets and lease liabilities for operating leases . Refer to Impacts to Previously Reported Results below for the impact of adoption of the standard on our consolidated financial statements .

23 Kroger This guidance will be effective for us in the first quarter of fiscal year ending February 1, 2020 . Early adoption is permitted . The adoption of this ASU will result in a significant increase to our Consolidated Balance Sheets for lease liabilities and right-of-use assets, and we are currently evaluating the other effects of adoption of this ASU on our Consolidated Financial Statements . This evaluation process includes reviewing all forms of leases, performing a completeness assessment over the lease population, analyzing the practical expedients and assessing opportunities to make certain changes to our lease accounting information technology system in order to determine the best implementation strategy . We believe our current off-balance sheet leasing commitments are reflected in our investment grade debt rating .

24 Dollar Tree The Company will adopt the standard in the first quarter of fiscal 2019 . The Company has engaged a third party to assist in its preparation for implementation and its evaluation of the impact of the new pronouncement on its consolidated financial statements . The Company continues to assess the effect the implementation will have on its existing accounting policies and the consolidated financial statements and expects the adoption of this pronouncement to result in a material increase in the assets and liabilities on its consolidated balance sheets, with an immaterial impact on its consolidated income statements and consolidated statements of cash flows . Additionally, the Company is implementing lease accounting software to assist in the quantification of the expected impact on the consolidated balance sheets and to facilitate the calculations of the related accounting entries and disclosures . The Company is also evaluating additional changes to its processes and internal controls to ensure it is compliant with the reporting and disclosure requirements of the standard . As of February 3, 2018, the Company had $7 .4 billion in undiscounted future minimum operating lease commitments .

25 Home Depot We are evaluating and planning for the adoption and implementation of ASU No . 2016-02 . We believe that ASU No . 2016-02 will have a material impact on our financial position, as a result of the requirement to recognize right-of-use assets and lease liabilities on our consolidated balance sheets . The impact to our results of operations is being evaluated, and we do not believe there will be a material impact to our cash flows upon adoption of ASU No . 2016-02 .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS26 Albertsons Cos . The Company plans to adopt this guidance in the first quarter of fiscal 2019 . The

adoption of this ASU will result in the recognition of significant right-of-use assets and lease liabilities in the Company’s Consolidated Balance Sheets . The Company’s assessment is ongoing, including the assessment of other potential impacts of this pronouncement on the Consolidated Financial Statements and disclosures .

27 Wells Fargo We expect to adopt the guidance in first quarter 2019 using the modified retrospective method and practical expedients for transition . The practical expedients allow us to largely account for our existing leases consistent with current guidance except for the incremental balance sheet recognition for lessees . We have started our implementation of the Update which has included an initial evaluation of our leasing contracts and activities . As a lessee we are developing our methodology to estimate the right-of use assets and lease liabilities, which is based on the present value of lease payments (the December 31, 2017 future minimum lease payments were $6 .6 billion) . We do not expect a material change to the timing of expense recognition . Given the limited changes to lessor accounting, we do not expect material changes to recognition or measurement, but we are early in the implementation process and will continue to evaluate the impact . We are evaluating our existing disclosures and may need to provide additional information as a result of adoption of the Update .

28 International Business Machines

The company will adopt the guidance as of the effective date . A cross-functional implementation team has been established which is evaluating the lease portfolio, system, process and policy change requirements . The company has made progress in gathering the necessary data elements for the lease population and a system provider has been selected, with system configuration and implementation underway . The company is currently evaluating the impact of the new guidance on its consolidated financial results and expects it will have a material impact on the Consolidated Statement of Financial Position . The company is currently planning on electing the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs and is evaluating the other practical expedients available under the guidance . The company’s operating lease commitments were $6 .6 billion at December 31, 2017 . In 2017, the use of third-party residual value guarantee insurance resulted in the company recognizing $452 million of sales-type lease revenue that would otherwise have been recognized over the lease period as operating lease revenue . The company continues to assess the potential impacts of the guidance, including normal ongoing business dynamics or potential changes in contracting terms .

29 Gap We are still assessing the impact of this ASU on our Consolidated Financial Statements, but it will result in a material increase in our long-term assets and liabilities . We will adopt the ASU beginning in the first quarter of fiscal 2019 .

30 Citigroup The Company does not plan to early adopt the ASU . The Company estimates that upon adoption, its Consolidated Balance Sheet will have an approximate $5 billion increase in assets and liabilities . Additionally, the Company estimates an approximate $200 million increase in retained earnings due to the cumulative effect of recognizing previously deferred gains on sale/leaseback transactions .

31 Lowe’s The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements but expects the ASU to have a material impact on its consolidated balance sheets, as a result of the requirement to recognize right-of-use assets and lease liabilities .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS32 EOG Resources EOG is continuing its assessment of ASU 2016-02 by implementing its project plan,

evaluating certain operational and corporate policies and processes, further defining its population of leases, reviewing certain contracts and considering the election of practical expedients .

33 Morgan Stanley This accounting update requires lessees to recognize in the balance sheet all leases with terms exceeding one year, which results in the recognition of a right of use asset and corresponding lease liability, including for those leases that we currently classify as operating leases . The accounting for leases where we are the lessor is largely unchanged . The right of use asset and lease liability will initially be measured using the present value of the remaining rental payments . This change to the accounting for leases where we are lessee requires modifications to our lease accounting systems and determining the present value of the remaining rental payments . Key aspects of the latter include concluding upon the discount rate and determining whether to include non-lease components in rental payments . This update is effective as of January 1, 2019 with early adoption permitted .

34 L Brands The Company is currently evaluating the impacts that this standard will have on its Consolidated Statements of Income and Comprehensive Income, Balance Sheets and Statements of Cash Flows . The Company currently expects that most of its operating lease commitments will be recognized as operating lease liabilities and right-of-use assets upon adoption of the standard . Thus, the Company expects adoption will result in a material increase to the assets and liabilities on the Consolidated Balance Sheet . The Company will adopt the standard in the first quarter of fiscal 2019 .

35 Kohl’s Approximately 5% of our store leases and all of our land leases are not currently recorded on our balance sheet . Recording right-of-use assets and lease liabilities for these and other non-store leases is expected to have a material impact on our balance sheet . We are also evaluating the impact that recording right-of-use assets and lease liabilities will have on our income statement and the financial statement impact that the standard will have on leases, which are currently recorded on our balance sheet .

36 Penske Automotive Group

We intend to adopt this ASU on January 1, 2019 . The amendments from this update are to be applied using a modified retrospective approach . The adoption of this ASU will result in a significant increase to our consolidated balance sheets for lease liabilities and right-of-use assets . We believe our current off-balance sheet leasing commitments are reflected in our credit rating . We are currently evaluating the other impacts the adoption of this accounting standard update will have on our consolidated financial statements . We are also in the process of evaluating and documenting any changes in controls and procedures that may be necessary as part of the adoption .

37 Foot Locker The Company does not expect to adopt this ASU until required and is evaluating the effect of this guidance . The Company has historically presented a non-GAAP measure to adjust its balance sheet to present operating leases as if they were capital leases . Based upon that analysis and preliminary evaluation of the standard, we estimate the adoption will result in the addition of $3 billion to $4 billion of assets and liabilities to our consolidated balance sheet, with no significant change to our consolidated statements of operations or cash flows .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS38 Facebook We will adopt the new standard effective January 1, 2019 . We have selected a

lease accounting system . Our implementation of the system remains on schedule and our evaluation of the use of optional practical expedients is ongoing . While we continue to evaluate the effect of adopting this guidance on our consolidated financial statements and related disclosures, we expect our operating leases, as disclosed in Note 8 — Commitments and Contingencies, will be subject to the new standard . We will recognize right-of-use assets and operating lease liabilities on our consolidated balance sheets upon adoption, which will increase our total assets and liabilities .

39 CenturyLink Upon adoption of ASU 2016-02, we are required to recognize and measure leases at the beginning of the earliest period presented in our consolidated financial statements using a modified retrospective approach . The modified retrospective approach includes a number of optional practical expedients that we may elect to apply . On January 25, 2018, the FASB issued ASU 2018-01, “Leases: Land Easement Practical Expedient for Transition to ASU 2016-02 . ASU 2018-01 permits reporting companies to elect to forego reassessments of land easements that exist or expire before the entity’s adoption of ASU 2016-02 and that were not previously accounted for as leases . We plan to adopt ASU 2018-01 at the same time we adopt ASU 2016-02 . We are in the process of implementing a new lease administration and accounting system . We plan to adopt ASU 2016-02 and ASU 2018-01 effective January 1, 2019 . The adoption of ASU 2016-02 will result in our recognition of right of use assets and lease liabilities that we have not previously recorded . Although we believe it is premature as of the date of this report to provide any estimate of the impact of adopting ASU 2016-02, we do expect that it will have a material impact on our consolidated financial statements . Additionally, upon implementing ASU 2016-02, accounting for the failed-sale-leaseback transaction described in Note 3—Sale of Data Centers and Colocation Business will no longer be applicable based on our facts and circumstances, and the real estate assets and corresponding financing obligation described therein will be derecognized from our consolidated balance sheet .

40 Rite Aid The Company believes that the new standard will have a material impact on its financial position . The Company is currently evaluating the impact this standard implementation will have on its results of operations and cash flows .

41 Exxon Mobil Effective January 1, 2019, ExxonMobil will adopt the Financial Accounting Standards Board’s standard, Leases (Topic 842), as amended . The standard requires all leases with an initial term greater than one year be recorded on the balance sheet as an asset and a lease liability . The Corporation is gathering and evaluating data and recently acquired a system to facilitate implementation . We are progressing an assessment of the magnitude of the effect on the Corporation’s financial statements .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS42 Target We adopted ASU No . 2016-02, Leases (Topic 842), as of February 4, 2018,

using the modified retrospective approach . The modified retrospective approach provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach . In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification . We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements . In addition, we elected the hindsight practical expedient to determine the lease term for existing leases . Our election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements . In our application of hindsight, we evaluated the performance of the leased stores and the associated markets in relation to our overall real estate strategies, which resulted in the determination that most renewal options would not be reasonably certain in determining the expected lease term . Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $1 .3 billion and $1 .4 billion, respectively, as of February 4, 2018 . The difference between the additional lease assets and lease liabilities, net of the deferred tax impact, was recorded as an adjustment to retained earnings . The standard did not materially impact our consolidated net earnings and had no impact on cash flows .

43 iHeartMedia The new leasing standard presents significant changes to the balance sheets of lessees . Lessor accounting is updated to align with certain changes in the lessee model and the new revenue recognition standard which was issued in the third quarter of 2015 . The standard is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2018 . The Company is currently evaluating the impact of the provisions of this new standard on its consolidated financial statements .

44 Comcast We are currently in the process of determining the impact that the updated accounting guidance will have on our consolidated financial statements .

45 General Electric While we continue to evaluate the effect of the standard on our consolidated financial statements, we anticipate that the adoption of the ASU may materially affect our Statement of Financial Position .

46 Hewlett Packard Enterprise

The Company is required to adopt the guidance in the first quarter of fiscal 2020 using a modified retrospective approach . Early adoption is permitted . The Company is currently evaluating the timing and the impact of these amendments on its Condensed Consolidated Financial Statements .

47 Chipotle Mexican Grill

We expect to adopt the requirements of the new lease standard effective January 1, 2019 . We are evaluating the provisions of the new lease standard, including optional practical expedients, and implementing necessary upgrades to our existing lease system . We are assessing the impact to our accounting policies, processes, disclosures, and internal control over financial reporting . The adoption of ASU 2016-02 will have a significant impact on our consolidated balance sheet because we will record material assets and obligations for current operating leases . We are still assessing the expected impact on our consolidated statements of income and cash flows .



48 Nike The new guidance will require the Company to continue to classify leases as either operating or financing, with classification affecting the pattern of expense recognition in the income statement . The Company will adopt the standard on June 1, 2019 . The ASU is required to be applied using a modified retrospective approach at the beginning of the earliest period presented, with optional practical expedients . The Company continues to assess the effect the guidance will have on its existing accounting policies and the Consolidated Financial Statements and expects there will be an increase in assets and liabilities on the Consolidated Balance Sheets at adoption due to the recording of right-of-use assets and corresponding lease liabilities, which may be material . Refer to Note 15 — Commitments and Contingencies of the Annual Report on Form 10-K for the fiscal year ended May 31, 2017 for information about the Company’s lease obligations .

49 Dick’s Sporting Goods

The Company is currently evaluating the impact of the adoption of ASU 2016-02 on the Company’s Consolidated Financial Statements but anticipates that it will result in significant lease assets and related liabilities as all of the Company’s retail locations and the majority of our supply chain facilities are currently categorized as operating leases .

50 TravelCenters of America

To address implementation of ASU 2016-02 and evaluate its impact on our consolidated financial statements, we have developed a project plan to evaluate our leases, lease classifications and related internal controls . We believe the adoption of this update will have a material impact on our consolidated balance sheets due to the recognition of the lease rights and obligations as assets and liabilities . While the adoption of this standard will have no effect on the cash we pay under our lease agreements, we expect amounts within our statements of operations and comprehensive loss will change materially .

51 Ross Stores ASU 2016-02 is effective for the Company’s annual and interim reporting periods beginning in fiscal 2019 . The Company is currently working on the adoption, and evaluating the effect adoption of this new guidance will have on its consolidated financial statements . Due to the substantial number of leases that it has, the Company believes this ASU will increase assets and liabilities by a material amount on its consolidated balance sheet . The Company’s current undiscounted minimum commitments under noncancelable operating leases is approximately $3 .8 billion . The Company does not believe adoption of this ASU will have a significant impact to its consolidated statements of earnings, stockholders’ equity, and cash flows .

52 Publix Super Markets

While the Company is still evaluating the ASU, the Company expects the adoption of the ASU to have a material effect on the Company’s financial condition due to the recognition of approximately $3 billion of lease rights and obligations as assets and liabilities on the consolidated balance sheets . The Company does not expect the adoption of the ASU to have a material effect on the Company’s results of operations . The adoption of the ASU will have no effect on the Company’s cash flows .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS53 Macy’s The new standard is effective for the Company on February 3, 2019 . Currently, the

new standard is to be adopted utilizing a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available . However, the FASB has proposed another transition method, in addition to the existing requirements, to transition to the new lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption . The Company is awaiting finalization of the alternatives for transitioning to the new standard before deciding upon a method of adoption . The Company expects that the new lease standard will have a material impact on the Company's consolidated financial statements . While the Company is continuing to assess the effects of adoption, the Company currently believes the most significant changes relate to the recognition of new ROU assets and lease liabilities on the consolidated balance sheets for real property and personal property operating leases as well as changes to the timing of recognition of certain real estate asset sale gains in the consolidated statements of income due to application of the new sale-leaseback guidance and ASU No . 2017-05, Other Income - Gains and Losses from the Derecognition of NonFinancial Assets (Subtopic 610-20) . The Company expects that substantially all of its operating lease commitments will be subject to the new guidance and will be recognized as operating lease liabilities and ROU assets upon adoption . A significant change in leasing activity between the date of this report and adoption is not expected .

54 Walt Disney As of September 30, 2017, the Company had an estimated $3 .3 billion in undiscounted future minimum lease commitments . The Company is currently assessing the impact of the new guidance on its financial statements . The guidance is required to be adopted retrospectively and is effective at the beginning of the Company’s 2020 fiscal year (with early adoption permitted) . The FASB has recently proposed guidance that would allow adoption of the standard as of the effective date without restating prior periods .

55 Dow DuPont The Company has a team in place to evaluate the new guidance, is in the process of implementing software solutions and is facilitating the development of business processes and controls around leases to meet the new accounting and disclosure requirements upon adoption in the first quarter of 2019 .

56 salesforce .com The Company is in the process of implementing changes to its systems, processes and controls, in conjunction with its review of existing lease agreements, in order to adopt the new standard in its first quarter of fiscal 2020 . The Company expects its leases designated as operating leases in Note 14, “Commitments,” will be reported on the consolidated balance sheets upon adoption . The Company is currently evaluating the impact to its consolidated financial statements as it relates to other aspects of the business .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS57 DaVita The amendments in this ASU are effective for the Company beginning on January 1,

2019 and are to be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements . Early adoption is permitted . The Company has assembled an internal lease task force that meets regularly to discuss and evaluate the overall impact of this guidance on its consolidated financial statements and related disclosures, as well as the expected timing of adoption . The Company is currently gathering and evaluating information from its existing leases and believes that the new standard will have a material impact on its consolidated balance sheet but will not have a material impact on its results of operations or liquidity . The Company expects to adopt this ASU on January 1, 2019, and continues to evaluate the effect that the implementation of this ASU will have on its consolidated financial statements, related disclosures and controls .

58 Darden Restaurants

This update is effective for us in the first quarter of fiscal 2020, which is when we plan to adopt these provisions . This guidance requires us to use a modified retrospective approach upon adoption with certain practical expedients available . We expect our balance sheet presentation to be materially impacted upon adoption due to the recognition of right-of-use assets and lease liabilities for operating leases . However, we do not expect adoption to have a material impact on our consolidated statements of earnings . We do not expect our accounting for capital leases to substantially change . We are continuing to evaluate the effect this guidance will have on our consolidated financial statements and related disclosures .

59 Xcel Energy Xcel Energy has not yet fully determined the impacts of implementation . However, adoption is expected to occur on Jan . 1, 2019 utilizing the practical expedients provided by the standard and proposed in Targeted Improvements, Topic 842 (Proposed ASU 2018-200) . As such, agreements entered into prior to Jan . 1, 2019 that are currently considered leases are expected to be recognized on the consolidated balance sheet, including contracts for use of office space, equipment and natural gas storage assets, as well as certain purchased power agreements (PPAs) for natural gas-fueled generating facilities . Xcel Energy expects that similar agreements entered into after Dec . 31, 2018 will generally qualify as leases under the new standard .

60 Regal Entertainment Group

The Company is evaluating the impact that ASU 2016-02 will have on its consolidated financial statements and related disclosures and believes that the significance of its future minimum rental payments will result in a material increase in ROU assets and lease liabilities .

61 Yum China Holdings

We expect that this standard will have a material effect on our financial statements . While we are continuing to assess the effect of adoption, we currently believe the most significant changes relate to the recognition of right-of-use (“ROU”) assets and lease liabilities on our balance sheet for operating leases of the land and/or building of our restaurants and office space . At December 31, 2017, we operated more than 6,200 restaurants, leasing the underlying land and/or building, with our commitments expiring within 20 years from the inception of the lease . The amount of our future minimum lease payments under operating leases was approximately $3 billion as of December 31, 2017 . We anticipate continuing to add more restaurants and increase our leasing activity between now and adoption .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS62 Costco

WholesaleThe Company plans to adopt this guidance at the beginning of its first quarter of fiscal 2020 . While the Company continues to evaluate this standard and the effect on related disclosures, the primary effect of adoption will be to require recording right-of-use assets and corresponding lease obligations for current operating leases . The adoption is expected to have a material impact on the Company’s consolidated balance sheets, but not on the consolidated statements of income or consolidated statements of cash flows .

63 UnitedHealth Group

When adopted, ASU 2016-02 will not have a material impact on the Company’s balance sheet, results of operations, equity or cash flows .

64 Best Buy Based on the effective dates, we expect to adopt the new guidance in the first quarter of fiscal 2020 using the recently-proposed prospective method and have begun implementing required upgrades to our existing lease systems . While we expect adoption to lead to a material increase in the assets and liabilities recorded on our consolidated balance sheet and an increase to our footnote disclosures related to leases, we are still evaluating the impact on our consolidated statement of earnings . We also expect that adoption of the new standard will require changes to our internal controls over financial reporting .

65 Bed Bath & Beyond

The Company is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures, but expects that it will result in a significant increase in the assets and liabilities recorded on the consolidated balance sheet .

66 Burlington Stores While the Company is continuing to evaluate the impact of the adoption of this guidance on its consolidated financial statements or notes thereto, it does expect that this new guidance will result in a significant increase to the assets and liabilities presented on its consolidated balance sheets . Refer to Note 13 to the Company’s Consolidated Financial Statements included in the Fiscal 2017 10-K (entitled “Lease Commitments”) for further detail of the Company’s future minimum lease payments . This guidance is not expected, however, to have a material impact on the Company’s liquidity .

67 Advance Auto Parts

We have selected our leasing software solution and are in the process of identifying changes to our business processes, systems and controls to support adoption of the new standard in 2019 . We are evaluating the impact that the new standard will have on the condensed consolidated financial statements . While we are unable to quantify the impact at this time, we expect the adoption of the new standard to result in a material increase in the assets and liabilities in the condensed consolidated financial statements . At this time, we do not expect adoption of ASU 2016-02 to have a material impact on our condensed consolidated statements of operations as the majority of our leases will remain operating in nature . As such, the expense recognition will be similar to previously required straight-line expense treatment .

68 Chevron The company is evaluating the effect of the standard on its consolidated financial statements .

69 Sears Holdings We are currently evaluating the effect the update will have on our consolidated financial statements, and expect the update will have a material impact on our consolidated financial statements .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS70 Ascena Retail

GroupThe Company does not expect that the guidance will have a significant impact on its condensed consolidated statements of cash flows and is currently evaluating the guidance and its impact on its other condensed consolidated financial statements, but expects that it will result in a significant increase to its long-term assets and liabilities . The Company is also in the process of implementing a new lease administration system and identifying changes to its business processes and controls to support adoption of the new standard in Fiscal 2020 .

71 Avis Budget Group

The Company is currently evaluating and planning for the implementation of this ASU, including assessing its overall impact, and expects most of its operating lease commitments will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption, which will materially increase total assets and total liabilities relative to such amounts prior to adoption . The Company has determined portions of its vehicle rental contracts that convey the right to control the use of identified assets are within the scope of the accounting guidance contained in ASU 2016-02 . As discussed in Revenue from Contracts with Customers above, the Company’s rental related revenues are accounted for under the revenue accounting standard Topic 606, until the adoption of this accounting pronouncement on January 1, 2019 . The Company is monitoring the recently ratified ASU, “Leases (Topic 842) Targeted Improvements” that when issued will provide a transition method allowing the Company to only apply the new lease standard in the year of adoption . Additionally, it will provide a practical expedient for lessors to combine nonlease components with related lease components if certain conditions are met . This will allow the Company to account for these combined components of its vehicle rental contracts under Topic 842 .

72 Nordstrom We continue to monitor and evaluate the impact this guidance would have on our adoption methodology and anticipate that this standard will have a material impact on our Consolidated Financial Statements .

73 Global Partners The Partnership is assessing the impact this standard will have on its consolidated financial statements .

74 Tractor Supply The Company is currently assessing the impact that adoption of this guidance will have on its Consolidated Financial Statements and related disclosures .

75 Toys “R” Us Management is currently assessing the impact the adoption of ASU 2016-02 will have on our Condensed Consolidated Financial Statements .

76 Capital One Financial

This guidance is effective for us on January 1, 2019, with early adoption permitted, using the modified retrospective method of adoption . We plan to adopt the standard on the effective date . We are currently in the process of reviewing lease contracts, implementing a new lease accounting and administration software solution, establishing new processes and internal controls and evaluating the impact of various accounting policy elections . Upon adoption, we expect to record a right of use asset and a corresponding lease liability for our operating leases where we are the lessee . The potential impact on our consolidated financial statements is largely based on the present value of future minimum lease payments, the amount of which will depend upon the population of leases in effect at the date of adoption . Future minimum lease payments totaled $2 .7 billion as of December 31, 2017, as disclosed in “Note 8—Premises, Equipment and Lease Commitments” of our 2017 Form 10-K . We do not expect material changes to the recognition of operating lease expense in our consolidated statements of income .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS77 Union Pacific Management is currently evaluating the impact of this standard on our consolidated

financial position, results of operations, and cash flows, but expects that the adoption will result in an increase in the Company’s assets and liabilities of over $2 billion .

78 McKesson We plan to adopt the amended guidance on the effective date and expect that the adoption of the amended lease guidance will materially affect our consolidated balance sheet and will require certain changes to our systems and processes .

79 Alaska Air Group

At this time, the Company believes the most significant impact to the financial statements will relate to the recording of a right of use asset and related liability associated with leased aircraft . Other leases, including airports and real estate, equipment, software and other miscellaneous leases continue to be assessed for impact as it relates to the ASU . In March 2018, the FASB approved amendments to Topic 842 that would give companies an alternative transition method which would not require adjusting comparative period financial information . The ASU codification of this new transition method has not yet been issued, but the Company will consider the alternative in greater detail upon issuance . The new standard is effective for the Company on January 1, 2019 .

80 Iron Mountain ASU 2016-02 will be effective for us on January 1, 2019, with early adoption permitted . We are in the process of establishing a cross-functional project team responsible for the assessment and implementation of ASU 2016-02 . We are also in the process of identifying and evaluating the technology options available to update our lease accounting processes and systems in anticipation of our future adoption of ASU 2016-02 . We are currently evaluating the impact ASU 2016-02 will have on our consolidated financial statements .

81 PNC Financial Services Group

We plan to adopt the guidance in the first quarter of 2019 . Implementation efforts are ongoing, including the deployment of a lease accounting software solution . We are currently evaluating the impact of various accounting policy elections, the discount rate to present value the future minimum payments under operating leases, and the impact of new disclosure requirements . We are substantially complete with the evaluation of our initial lease population . We will continue to review service contracts through the effective date and may identify additional leases embedded within those arrangements that are within the scope of the ASU . We expect, at a minimum, to recognize lease liabilities and corresponding right-of-use assets commensurate with the present value of the future minimum payments . Future minimum lease payments under operating leases totaled $2 .6 billion as of December 31, 2017 as disclosed in Note 8 Premises, Equipment and Leasehold Improvements in our 2017 Form 10-K . We do not expect a material change to the timing of our expense recognition .

82 Brookdale Senior Living

For the three months ended March 31, 2018, the Company made cash lease payments of $89 .6 million for long-term community leases accounted for as operating leases under ASC 840 . The Company anticipates that the adoption of ASU 2016-02 will result in the recognition of material lease liabilities and right-of use assets on the condensed consolidated balance sheet for these community operating leases . The Company is monitoring recent accounting standard setting activities of the FASB and the Company continues to evaluate the impact that the adoption of ASU 2016-02 will have on its condensed consolidated financial statements and disclosures .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS83 PVH The guidance will be effective for the Company in the first quarter of 2019 with early

adoption permitted . The adoption will require a modified retrospective approach, which includes several optional practical expedients, for leases that exist or are entered into after the beginning of the earliest period presented . The Company formed a global, cross-functional project team to implement the new guidance and analyze its impacts . The Company has collected relevant data for the majority of its leases and is evaluating the changes needed to its processes and internal controls as a result of the new guidance . To facilitate the adoption of the new guidance and the related reporting requirements, the Company has also selected a global lease management and accounting software, which has been implemented in North America and is currently being tested internationally . While the Company’s assessment of the new guidance is still in process, it will result in a significant increase to the Company’s other assets and other liabilities, but is not expected to have a material impact on the Company’s results of operations . The Company intends to adopt the standard in the first quarter of 2019 .

84 J .C . Penney We have developed a project team to analyze the impacts of the new standard on our current accounting policies and internal controls and the changes required to be made by our leasing software provider . With almost 70% of our store locations involved in an operating lease, the new standard will have a significant impact on our financial statements due to the recognition of lease liabilities and right-of-use assets that are not required by the current accounting requirements for operating leases . Given the magnitude of the project to implement the new standard, we are still evaluating the effect that the new accounting guidance will have on our financial condition, results of operations and cash flows .

85 Tapestry The Company is currently performing a comprehensive evaluation of the impact of adopting this guidance on its consolidated financial statements and notes thereto . The Company expects the guidance will result in a significant increase to long-term assets and liabilities on its consolidated balance sheets and does not expect it to have a material impact on the consolidated statements of operations . This guidance is not expected to have a material impact on the Company’s liquidity .

86 Andeavor Early adoption is permitted and in the original guidance the modified retrospective application was required, however, in March 2018 the FASB approved another transition method in which the effective date would be the date of initial application of transition . Under this optional transition method, we would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption . We expect to elect the optional transition method and will not early adopt the standard . We are progressing through our implementation plan and continue to evaluate the impact of the standard on our business processes, accounting systems, controls and financial statement disclosures . In addition, we continue to assess the impact in certain areas where industry consensus continues to be formed . While we are still working through our implementation plan, we do expect that the recognition of right-of-use assets and lease liabilities not currently reflected in our balance sheet will have a material impact on total assets and liabilities . However, we do not expect adoption of the standard to have a material impact on our statements of consolidated operations or liquidity . At this time, we are unable to estimate the full impact of the standard until we progress further through our plan and the industry reaches a consensus on certain industry specific issues .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS87 Estée Lauder The Company currently has an implementation team in place that is performing a

comprehensive evaluation of the impact of the adoption of this guidance . While the Company has not completed its evaluation, it believes the adoption of this standard will have a significant impact on its consolidated balance sheets . As disclosed in Note 15 — Commitments and Contingencies in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017, the Company had $2,427 million in future minimum lease commitments as of June 30, 2017 . Upon adoption, the Company’s lease liability will generally be based on the present value of such payments, and the related right-of-use asset will generally be based on the lease liability, adjusted for initial direct costs .

88 Edison International

Edison International’s operating leases will result in straight-line expense while finance leases will result in a higher initial expense pattern due to the interest component . SCE, as a regulated entity, is permitted to continue to recognize expense using the timing that conforms to the regulatory rate treatment . Lessees can elect to exclude from the balance sheet short-term contracts of one year or less . This standard requires retrospective application to previously issued financial statements for 2018 and 2017 . Although permitted, Edison International and SCE has elected not to adopt this standard prior to January 1, 2019 . The standard will provide entities with an optional transition method to apply the new requirements in the period of adoption without retrospective application to previous periods . Edison International and SCE are evaluating whether to elect this optional transition method . The adoption of this standard will increase right-of-use assets and lease liabilities in Edison International’s and SCE’s consolidated balance sheets . Edison International and SCE are currently implementing a new lease accounting system and are evaluating the impact this standard will have on the consolidated balance sheets and lease disclosures .

89 O’Reilly Automotive

The Company will adopt this guidance beginning with its first quarter ending March 31, 2019 . The Company has established a task force, composed of multiple functional groups inside of the Company, which is currently in the process of evaluating critical components of this new guidance and the potential impact of the guidance on the Company’s financial position, results of operations and cash flows . Based on the preliminary work completed, the Company is considering the potential implications of the new standard on determining the discount rate to be used in valuing new and existing leases, the treatment of existing favorable and unfavorable lease agreements acquired in connection with previous acquisitions, procedural and operational changes that may be necessary to comply with the provisions of the guidance and all applicable financial statement disclosures required by the new guidance, all of which are areas that could potentially be impacted by adoption of the guidance . At this time, the task force has not completed its full evaluation; however, the Company believes the adoption of the new guidance will have a material impact on the total assets and total liabilities reported on the Company’s consolidated balance sheets .

90 Marriott International

The standard is effective for us beginning in our 2019 first quarter and requires the use of a modified retrospective transition method . We are still assessing the potential impact that ASU 2016-02 will have on our financial statements and disclosures, but we expect that it will have a material effect on our Balance Sheets .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS91 HCA Healthcare We are continuing to evaluate the provisions of ASU 2016-02 (and related

developments) to determine how our financial statements will be affected, and we believe the primary effect of adopting the new standard will be to record right-of-use assets and obligations for our leases currently classified as operating leases .

92 Hertz Global Holdings

The Company intends to adopt this guidance, in accordance with the effective date, on January 1, 2019 . A modified retrospective transition approach is required for both lessees and lessors for existing leases at, or entered into after, the beginning of the earliest comparative period presented in the financial statements . The Company is still in the process of evaluating whether to avail itself of allowable practicable expedients during transition . The Company is evaluating the Proposed Accounting Standards Update, Leases (Topic 842) Targeted Improvements that were tentatively affirmed by the FASB at its March 2018 meetings . The update provides a transition method that would allow the Company to only apply the new lease standard in the year of adoption . Additionally, it provides a practical expedient for lessors to combine non-lease components with the related lease components if certain conditions are met . This could allow the Company to account for all revenue earned from the operations of rental vehicles and from other forms of rental related activities under the new lease guidance . Lessee: Adoption of Topic 842 will result in a material increase in the Company’s lease-related assets and liabilities on its balance sheet, primarily for leases of rental locations and other assets . Additionally, adoption of this guidance will impact the statement of cash flows with respect to the presentation of the Company’s operating activities, but is not expected to impact its presentation of investing or financing activities . Adoption of Topic 842 is not expected to have a material impact on the Company’s results of operations . The Company has reached conclusions on key accounting assessments related to its leases and is performing an analysis of its lease portfolio to ensure proper application of the new guidance including implementation of internal controls over financial reporting .

93 MetLife The Company’s implementation efforts are primarily focused on the review of its existing lease contracts, identification of other contracts that may fall under the scope of the new guidance, and performing a gap analysis on the current state of lease-related activities compared with the future state of lease-related activities . The Company is currently evaluating the impact of the new guidance on its consolidated financial statements .

94 United Technologies

We expect that upon adoption we will recognize ROU assets and lease liabilities and that the amounts could be material . We do not expect the ASU to have a material impact on our cash flows or results of operations .

95 Ulta Beauty The Company will adopt the new standard in fiscal 2019 . The Company’s ability to adopt depends on system readiness, including software procured from third-party providers, and completing an analysis of information necessary to quantify the financial statement impact . The Company formed a project team to review the current accounting policies and practices and assess the effect of the standard on the consolidated financial statements . The team completed a preliminary assessment of the potential impact of adopting ASU 2016 02 on the consolidated financial statements . The adoption of ASU 2016 02 will have a material impact on the Company’s consolidated financial position, but the Company is not able to quantify the difference at this time . The Company does not believe adoption of this standard will have a material impact on the Company’s consolidated results of operations or cash flows .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS96 Michaels Cos . We are currently evaluating the impact that ASU 2016-02 will have on the

consolidated financial statements and related disclosures . We believe the most significant impact relates to our accounting for real estate leases, which will be recorded as right-of-use assets and lease liabilities on our balance sheet upon adoption .

97 Blackrock The Company expects to record assets and liabilities for its current operating leases upon adoption of ASU 2016-02 and does not expect the adoption to have a material impact on its results of operations or cash flows . ASU 2016-02 is effective for the Company on January 1, 2019, and the Company intends to apply the practical expedients allowed by the standard upon transition . See Note 13 of the 2017 Form 10-K for information on the Company’s operating lease commitments .

98 Live Nation Entertainment

To assess the impact of the standard, the Company has dedicated certain of its personnel to lead the implementation effort . These personnel reviewed the amended guidance and subsequent clarifications and attended multiple training sessions in order to understand the potential impact the new standard could have on the Company’s financial position and results of operations . The Company has formed a cross-functional steering committee including members from its major divisions . The Company is in the process of implementing third-party lease accounting software to record, analyze and calculate the financial statement and disclosure impacts . The Company will finalize its conclusions in 2018 and ensure that it can produce the data necessary for the required disclosures along with assessing changes to internal controls and processes that may be required to comply with the new lease accounting and disclosure requirements . The Company will adopt this standard on January 1, 2019 and is currently evaluating the impact that this guidance will have on its financial position and results of operations .

99 AutoZone The Company will adopt this standard using the required modified retrospective approach . This update will be effective for the Company at the beginning of its fiscal 2020 year . The Company established a cross-functional implementation team to evaluate and identify the impact of ASU 2016-02 on the Company’s financial position, results of operations and cash flows . Based on the preliminary work completed, the Company has concluded its assessment on its leasing arrangements, evaluated the impact of applying the practical expedients and accounting policy elections and is currently working on implementing software to meet the reporting requirements of this standard . The Company is also in the process of identifying changes to its business processes and controls to support adoption of the new standard . The team is continuing to understand the full analysis of the adoption, but is unable to quantify the impact at this time . The Company anticipates the adoption of this new standard to result in a significant increase in lease-related assets and liabilities on the Company’s consolidated balance sheets . The impact on the Company’s consolidated statements of income is currently being evaluated . As the impact of this standard is non-cash in nature, the Company does not anticipate its adoption to have an impact on the Company’s consolidated statement of cash flows .


RANK COMPANY SELECTED DISCLOSURE EXCERPTS100 Twenty-First

Century FoxThe amendments in ASU 2016-02 require recognition of lease assets and liabilities on the balance sheet and disclosure of key information about leasing arrangements . ASU 2016-02 will be effective for the Company for annual and interim reporting periods beginning July 1, 2019 . The Company is currently evaluating the impact ASU 2016-02 will have on its consolidated financial statements . Since the Company has a significant amount of minimum lease commitments (See Note 15 – Commitments and Contingencies), the Company expects that the impact of recognizing lease assets and liabilities will be significant to the Company’s Consolidated Balance Sheet .

Country Financial was omitted from this report because their SAB 74 disclosure could not be located. They are normally rankednumber 67 in the top 100 of lease obligations. As a result, all rankings following Country Financial were moved up by one.

LeaseAccelerator Inc .

10700 Parkridge Blvd Suite P50

Reston, VA 20191

United States

1-866-446-0980

https://www .leaseaccelerator .com

sab 74 disclosure analysis for lease …...required under operating leases as disclosed in note 28...

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