New Accounting Standards

Recently Adopted Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which was subsequently amended and clarified. The standard is based on the principle that revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers, including significant judgments and changes in judgments. The standard permits the use of either full retrospective or modified retrospective methods of adoption.

Effective January 1, 2018, we adopted the requirements of Topic 606 using the full retrospective transition method. The new standard resulted in a change to the timing of revenue recognition, whereby revenue is recognized "over time" as services are performed rather than at a "point in time", generally upon shipment. The new standard also resulted in an increase in accounts receivables, net and a related decrease in inventories and deferred revenues. In accordance with Topic 606, we applied the following principles in connection with the adoption of the new standard:


•	We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.


•	We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.


•	We exclude sales, use, value-added and similar taxes from the transaction price, without performing a jurisdiction-by-jurisdiction assessment.

The adoption of the standard impacted our previously reported results as follows:



	For the Three Months Ended March 31, 2017
	As Previously Reported			New Accounting Pronouncement Adjustment			As Adjusted
	(In thousands, except per share data)
Income Statement:
Net sales	$	913,600		$	(14,316	)	$	899,284
Cost of sales	770,694			(7,644		)	763,050
Gross profit	142,906			(6,672		)	136,234
Income tax expense (benefit)	439			(1,764		)	(1,325		)
Net loss	(9,144		)	(4,824		)	(13,968		)
Net loss attributable to Amkor	(10,006		)	(4,780		)	(14,786		)
Net loss attributable to Amkor per common share - diluted	(0.04		)	(0.02		)	(0.06		)



	December 31, 2017
	As Previously Reported			New Accounting Pronouncement Adjustment			As Adjusted
	(In thousands)
Balance Sheet:
Accounts receivable, net	$	692,287		$	105,977		$	798,264
Inventories	326,492			(112,843		)	213,649
Other assets	146,051			(6,255		)	139,796
Accrued expenses	374,598			(43,730		)	330,868
Other non-current liabilities	46,144			1,679			47,823
Accumulated deficit⁽¹⁾	(42,851		)	28,948			(13,903		)


(1)	The adjustment to accumulated deficit includes the 2017 and 2016 net income impact for the adoption of Topic 606 of $2.8 million and $11.3 million, respectively. The adjustment also includes the cumulative impact to our 2016 beginning accumulated deficit of $14.8 million.

The adoption of the standard had no impact on cash provided by or used in operating, investing, or financing activities on our consolidated cash flow statements.

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 requires that the service cost component of net periodic pension costs be presented in the same line item as other compensation costs and all other components of net periodic pension costs be presented in the statement of income as nonoperating expenses. ASU 2017-07 is effective for reporting periods beginning after December 15, 2017 and applied retrospectively. We adopted ASU 2017-07 on January 1, 2018 and estimated the impact on the prior comparative period information presented in the consolidated financial statements applying the principles permitted by the standard. The retrospective application resulted in a $0.3 million reclassification of pension costs from operating income to other (income) expense, net in the Consolidated Statements of Income for the comparative period. Refer to Note 14 for additional information.

Recently Issued Standards

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which was subsequently amended and clarified. ASU 2016-02 requires a dual approach for lease accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases the lessee would recognize a straight-line lease expense. ASU 2016-02 is effective for reporting periods beginning after December 15, 2018 using a modified retrospective approach. Early adoption is permitted. We are currently evaluating the impact that this guidance may have on our financial statements and disclosure.