On January 1, 2018, the Company adopted changes, with subsequent amendments, issued by the Financial Accounting Standards Board ("FASB") related to the recognition of revenue from contracts with customers. The changes clarify the principles for recognizing revenue and develop a common revenue standard. The core principle of the changes is that an entity should recognize revenue 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. The adoption of these changes resulted in the following modifications to the Company's revenue recognition process:



(In thousands)	Balance at December 31, 2017			Impact of Adoption			Balance at January 1, 2018
ASSETS
Current assets:
Trade accounts receivable, net	$	288,034		$	532		$	288,566
Inventories	178,293			(59,793		)	118,500
Current portion of contract assets	—			18,248			18,248
Other current assets	39,332			179			39,511
Total current assets	592,092			(40,834		)	551,258
Contract assets	—			3,566			3,566
Other assets	15,263			1,337			16,600
Total assets	1,578,685			(35,931		)	1,542,754
LIABILITIES
Current liabilities:
Current portion of advances on contracts	117,958			(78,507		)	39,451
Other current liabilities	133,368			13,995			147,363
Total current liabilities	474,128			(64,512		)	409,616
Advances on contracts	—			24,564			24,564
Other liabilities	40,846			1,580			42,426
Total liabilities	1,363,520			(38,368		)	1,325,152
HARSCO CORPORATION STOCKHOLDERS' EQUITY
Accumulated other comprehensive loss	(546,582		)	(1,520		)	(548,102		)
Retained earnings	1,157,801			3,957			1,161,758
Total Harsco Corporation stockholders' equity	170,451			2,437			172,888
Total equity	215,165			2,437			217,602
Total liabilities and equity	1,578,685			(35,931		)	1,542,754



	September 30, 2018
(In thousands)	As Reported		Impact of Adoption			As Reported - Less Impact of Adoption
ASSETS
Current assets:
Trade accounts receivable, net	$	304,165	$	(535	)	$	303,630
Inventories	137,768		91,285			229,053
Current portion of contract assets	27,870		(27,870		)	—
Other current assets	42,068		(157		)	41,911
Total current assets	631,578		62,723			694,301
Contract assets	3,566		(3,566		)	—
Deferred income tax assets	39,824		1,874			41,698
Other assets	21,002		(1,040		)	19,962
Total assets	1,660,417		59,991			1,720,408



	September 30, 2018
(In thousands)	As Reported		Impact of Adoption		As Reported - Less Impact of Adoption
LIABILITIES
Current liabilities:
Current portion of advances on contracts	43,682		83,121		126,803
Other current liabilities	121,887		(8,608	)	113,279
Total current liabilities	431,074		74,513		505,587
Advances on contracts	10,322		(10,322	)	—
Other liabilities	54,273		(216	)	54,057
Total liabilities	1,356,026		63,975		1,420,001
HARSCO CORPORATION STOCKHOLDERS' EQUITY
Accumulated other comprehensive loss	(555,291	)	1,679		(553,612	)
Retained earnings	1,252,840		(5,671	)	1,247,169
Total Harsco Corporation stockholders' equity	261,551		(3,992	)	257,559
Noncontrolling interests	42,840		8		42,848
Total equity	304,391		(3,984	)	300,407
Total liabilities and equity	1,660,417		59,991		1,720,408

The impact of modifying the Company's Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018 are as follows:



	Three Months Ended
	September 30, 2018
(In thousands, except per share amounts)	As Reported			Impact of Adoption			As Reported - Less Impact of Adoption
Revenues from continuing operations:
Services revenues	$	250,890		$	512		$	251,402
Product revenues	194,585			(15,411		)	179,174
Total revenues	445,475			(14,899		)	430,576
Costs and expenses from continuing operations:
Costs of services sold	194,459			1,273			195,732
Costs of products sold	132,262			(11,979		)	120,283
Selling, general and administrative costs	59,297			66			59,363
Total costs and expenses	388,366			(10,640		)	377,726
Operating income from continuing operations	57,109			(4,259		)	52,850
Interest expense	(9,665		)	550			(9,115		)
Income from continuing operations before income taxes	48,821			(3,709		)	45,112
Income tax (expense) benefit	(13,833		)	932			(12,901		)
Income from continuing operations	34,988			(2,777		)	32,211
Net income	34,651			(2,777		)	31,874
Less: Net income attributable to noncontrolling interests	(1,804		)	(10		)	(1,814		)
Net income attributable to Harsco Corporation	32,847			(2,787		)	30,060
Amounts attributable to Harsco Corporation common stockholders:
Income from continuing operations, net of tax	33,184			(2,787		)	30,397
Net income attributable to Harsco Corporation common stockholders	32,847			(2,787		)	30,060
Basic earnings per share attributable to Harsco Corporation common stockholders:
Continuing operations	0.41			(0.03		)	0.38
Basic earnings per share attributable to Harsco Corporation common stockholders	0.41			(0.03		)	0.37
Diluted earnings per share attributable to Harsco Corporation common stockholders:
Continuing operations	0.40			(0.03		)	0.36
Diluted earnings per share attributable to Harsco Corporation common stockholders	0.39			(0.03		)	0.36



	Nine Months Ended
	September 30, 2018
(In thousands, except per share amounts)	As Reported			Impact of Adoption			As Reported - Less Impact of Adoption
Revenues from continuing operations:
Services revenues	$	763,815		$	4,182		$	767,997
Product revenues	521,670			(34,269		)	487,401
Total revenues	1,285,485			(30,087		)	1,255,398
Costs and expenses from continuing operations:
Costs of services sold	589,738			3,980			593,718
Costs of products sold	367,218			(30,091		)	337,127
Selling, general and administrative costs	175,307			103			175,410
Total costs and expenses	1,138,210			(26,008		)	1,112,202
Operating income from continuing operations	147,275			(4,079		)	143,196
Interest expense	(29,241		)	1,453			(27,788		)
Income from continuing operations before income taxes	121,195			(2,626		)	118,569
Income tax (expense) benefit	(24,043		)	919			(23,124		)
Income from continuing operations	97,152			(1,707		)	95,445
Net income	96,939			(1,707		)	95,232
Less: Net income attributable to noncontrolling interests	(5,795		)	(8		)	(5,803		)
Net income attributable to Harsco Corporation	91,144			(1,715		)	89,429
Amounts attributable to Harsco Corporation common stockholders:
Income from continuing operations, net of tax	91,357			(1,715		)	89,642
Net income attributable to Harsco Corporation common stockholders	91,144			(1,715		)	89,429
Basic earnings per share attributable to Harsco Corporation common stockholders:
Continuing operations	1.13			(0.02		)	1.11
Basic earnings per share attributable to Harsco Corporation common stockholders	1.13			(0.02		)	1.11
Diluted earnings per share attributable to Harsco Corporation common stockholders:
Continuing operations	1.09			(0.02		)	1.07
Diluted earnings per share attributable to Harsco Corporation common stockholders	1.09			(0.02		)	1.07

The impact of modifying the Company's Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 is as follows:



	Nine Months Ended
	September 30, 2018
(In thousands)	As Reported			Impact of Adoption			As Reported - Less Impact of Adoption
Cash flows from operating activities:
Net income	$	96,939		$	(1,707	)	$	95,232
Adjustments to reconcile net income to net cash used by operating activities:
Deferred income tax expense (benefit)	1,996			(919		)	1,077
Changes in assets and liabilities:
Accounts receivable	(29,022		)	8			(29,014		)
Inventories	(18,852		)	(34,923		)	(53,775		)
Contract assets	(10,427		)	10,427			—
Advances on contracts	(12,339		)	21,794			9,455
Other assets and liabilities	(14,164		)	5,320			(8,844		)
Net cash used by operating activities	95,014			—			95,014

On January 1, 2018, the Company adopted changes issued by the FASB related to how employers that sponsor defined benefit pension plans and other postretirement plans present the net periodic pension cost ("NPPC") in the statement of operations. Employers are required to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. Other components of NPPC are required to be presented in the statement of operations separately from the service cost component and outside of the subtotal of income from operations. The changes also allow only the service cost component to be eligible for capitalization. The adoption of these changes resulted in the Company reclassifying $0.7 million and $2.1 million of NPPC expense for the three and nine months ended September 30, 2017, respectively, from the captions Cost of services sold; Cost of products sold; and Selling, general and administrative expenses to the new caption, Defined benefit pension income (expense) in the Company's Condensed Consolidated Statements of Operations.

On January 1, 2018, the Company adopted changes issued by the FASB clarifying when revisions to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The changes require modification accounting only in circumstances when the terms or conditions result in changes to the fair value, vesting conditions or classification of the award as an equity instrument or a liability. The adoption of these changes did not have an impact on the Company's condensed consolidated financial statements.

On January 1, 2018, the Company adopted changes issued by FASB which eliminate the requirement to defer the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. Under the new guidance, an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The changes resulted in an adjustment to opening retained earnings of less than

In February 2016, the FASB issued changes, with subsequent amendments, in accounting for leases, which become effective for the Company on January 1, 2019. The changes introduce a lessee model that brings most leases onto the balance sheet, which will result in an increase in lease-related assets and liabilities. The changes also align many of the underlying principles of the new lessor model with those in the FASB’s new revenue recognition standard. Furthermore, the changes address other concerns related to the current lease model such as eliminating the requirement in current guidance for an entity to use bright-line tests in determining lease classification. The changes also require lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. The Company has completed an assessment of existing leasing agreements and is in the process of quantifying the impact on the Company’s consolidated financial statements. The Company has elected to adopt these changes on a modified retrospective basis and the practical expedients allowing for adoption on a prospective basis. In addition, the Company is in the process of identifying changes to current business processes and internal controls to support the reporting and disclosure requirements of the new standard.

In January 2017, the FASB issued changes that remove the second step of the annual goodwill impairment test, which requires a hypothetical purchase price allocation. The changes provide that the amount of goodwill impairment will be equal to the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance remains largely unchanged. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The changes become effective for the Company on January 1, 2020. Management has determined that these changes will not have a material impact on the Company's condensed consolidated financial statements. However, should the Company be required to record a goodwill impairment charge in future periods, the amount recorded may differ compared to any amounts that might be recorded under current practice.

In August 2017, the FASB issued changes which expand and refine hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedged items in the financial statements and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. The amendments in this update should be applied to hedging relationships existing on the date of adoption, which includes a cumulative-effect adjustment to eliminate any ineffectiveness recorded to accumulated other comprehensive income or loss with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year in which adoption occurred. Presentation and disclosure amendments are required to be applied prospectively. The changes become effective for the Company on January 1, 2019. Management is currently evaluating the impact of these changes on its condensed consolidated financial statements.

tax rate to the newly enacted corporate income tax rate, which left the tax effects on items within accumulated other comprehensive income stranded at historical tax rates. The changes become effective for the Company on January 1, 2019. The Company had approximately $21 million of stranded income tax effects in accumulated other comprehensive income at December 31, 2017 resulting from the Act which the Company plans to reclassify upon initial adoption of these changes.

In August 2018, the FASB issued changes which modify the disclosure requirements for fair value measurements. The amendments in this update remove the requirement to disclose the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level 3 fair value measurements. The changes require disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The changes become effective for the Company on January 1, 2020. Management is currently evaluating the impact of these changes on its condensed consolidated financial statements.

In August 2018, the FASB issued changes which modify the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The changes remove the requirements to disclose: amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount and timing of plan assets expected to be returned to the employer; and the effects of a one-percentage point change in assumed health care cost trend rates. The update also requires disclosure of an explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period. The changes become effective for the Company on January 1, 2021. Management is currently evaluating the impact of these changes on its condensed consolidated financial statements.