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



	December 31, 2018
(In thousands)	As Reported		Impact of Adoption			As Reported - Less Impact of Adoption
ASSETS
Current assets:
Trade accounts receivable, net	$	291,213	$	12,767		$	303,980
Inventories	133,111		44,510			177,621
Current portion of contract assets	24,254		(24,254		)	—
Other current assets	35,128		(620		)	34,508
Total current assets	605,034		32,403			637,437
Deferred income tax assets	49,114		2,401			51,515
Other assets	17,442		(1,681		)	15,761
Total assets	1,632,867		33,123			1,665,990



	December 31, 2018
(In thousands)	As Reported		Impact of Adoption		As Reported - Less Impact of Adoption
LIABILITIES
Current liabilities:
Current portion of advances on contracts	31,317		86,011		117,328
Other current liabilities	118,708		(9,449	)	109,259
Total current liabilities	416,996		76,562		493,558
Advances on contracts	37,675		(37,675	)	—
Other liabilities	46,005		(253	)	45,752
Total liabilities	1,319,491		38,634		1,358,125
HARSCO CORPORATION STOCKHOLDERS' EQUITY
Accumulated other comprehensive loss	(567,107	)	1,104		(566,003	)
Retained earnings	1,298,752		(6,636	)	1,292,116
Total Harsco Corporation stockholders' equity	268,263		(5,532	)	262,731
Noncontrolling interests	45,113		21		45,134
Total equity	313,376		(5,511	)	307,865
Total liabilities and equity	1,632,867		33,123		1,665,990



	Twelve Months Ended
	December 31, 2018
(In thousands, except per share amounts)	As Reported			Impact of Adoption			As Reported - Less Impact of Adoption
Revenues from continuing operations:
Services revenues	$	1,007,239		$	4,921		$	1,012,160
Product revenues	715,141			6,084			721,225
Total revenues	1,722,380			11,005			1,733,385
Costs and expenses from continuing operations:
Costs of services sold	780,930			5,300			786,230
Costs of products sold	507,807			11,642			519,449
Selling, general and administrative costs	238,690			117			238,807
Total costs and expenses	1,531,453			17,059			1,548,512
Operating income from continuing operations	190,927			(6,054		)	184,873
Interest expense	(38,148		)	1,929			(36,219		)
Income from continuing operations before income taxes	157,254			(4,125		)	153,129
Income tax expense	(12,899		)	1,446			(11,453		)
Income from continuing operations	144,739			(2,679		)	142,060
Net income	145,013			(2,679		)	142,334
Less: Net income attributable to noncontrolling interests	(7,956		)	(21		)	(7,977		)
Net income attributable to Harsco Corporation	137,057			(2,700		)	134,357
Amounts attributable to Harsco Corporation common stockholders:
Income from continuing operations, net of tax	136,783			(2,700		)	134,083
Net income attributable to Harsco Corporation common stockholders	137,057			(2,700		)	134,357
Basic earnings per share attributable to Harsco Corporation common stockholders (a):
Continuing operations	1.69			(0.03		)	$	1.66
Basic earnings per share attributable to Harsco Corporation common stockholders	1.70			(0.03		)	$	1.66
Diluted earnings per share attributable to Harsco Corporation common stockholders (a):
Continuing operations	1.64			(0.03		)	$	1.60
Diluted earnings per share attributable to Harsco Corporation common stockholders	1.64			(0.03		)	$	1.61

The impact of modifying the Company's Consolidated Statements of Cash Flows for the twelve months ended December 31, 2018 is as follows:



	Twelve Months Ended
	December 31, 2018
(In thousands)	As Reported			Impact of Adoption			As Reported - Less Impact of Adoption
Cash flows from operating activities:
Net income	$	145,013		$	(2,679	)	$	142,334
Adjustments to reconcile net income to net cash used by operating activities:
Deferred income tax benefit	(6,522		)	(1,446		)	(7,968		)
Changes in assets and liabilities:
Accounts receivable	(16,881		)	(13,143		)	(30,024		)
Inventories	(14,706		)	10,330			(4,376		)
Contract assets	(3,312		)	3,312			—
Advances on contracts	3,057			(1,378		)	1,679
Other assets and liabilities	(33,527		)	5,004			(28,523		)
Net cash used by operating activities	192,022			—			192,022

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 $2.6 million and $1.4 million of NPPC expense for the year ended December 31, 2017 and December 31, 2016, 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 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 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 October 2018, the Company adopted changes issued by FASB that require entities that are customers in cloud computing arrangements to defer implementation costs if they would be capitalized by the entity in software licensing arrangements under the internal-use software guidance. The adoption of these changes did not have an impact on the Company's consolidated financial statements.

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 changes allow for a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial application. Entities may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statement as the date of initial application. The Company has elected to apply the transition requirements at the January 1, 2019 effective date

rather than at the beginning of the earliest comparative period presented, which allows for a cumulative effect adjustment in the period of adoption. Prior periods will not be restated. In addition, the Company has also elected to utilize certain practical expedients upon adoption. The Company is in the process of finalizing changes to current business processes and internal controls to support the reporting and disclosure requirements of the new standard. The Company has completed an assessment of existing leasing agreements and is in the process of finalizing the quantification of the impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued changes which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The changes become effective for the Company on January 1, 2020, with early adoption permitted. Management has not yet completed the assessment of the impact of the new standard on the Company’s Consolidated Financial Statements.

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 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 has determined that these changes will not have a material impact on the Company's consolidated financial statements.

In February 2018, the FASB issued changes which allow entities to reclassify stranded income tax effects resulting from the Tax Cuts and Jobs Act (the “Tax Act”) from accumulated other comprehensive income to retained earnings in their consolidated financial statements. Under the Tax Act, deferred taxes were adjusted to reflect the reduction of the historical corporate income

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 both December 31, 2017 and 2018 resulting from the Tax 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 consolidated financial statements.