2.	Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries; Columbia Laboratories Bermuda Ltd., Juniper Pharmaceuticals France SARL, Juniper Pharmaceuticals UK Ltd., and Juniper Pharma Services Ltd. All significant intercompany balances and transactions have been eliminated in consolidation.

Segment information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Juniper’s Chief Executive Officer has been identified as its CODM and evaluates the company’s performance and allocates resources based upon revenue and gross profit. The Company has concluded, based upon financial information regularly provided and reviewed, that there are two operating and reporting segments; product and services. Juniper’s CODM does not review its assets, operating expenses or non-operating income and expenses by business segment.

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures at the date of the financial statements during the reporting period. Significant estimates are used for, but are not limited to revenue recognition, sales return reserves, allowance for doubtful accounts, inventory reserves, impairment analysis of goodwill and intangibles including their useful lives, research and development accruals, deferred tax assets, liabilities and valuation allowances, and fair value of stock options. On an ongoing basis, management evaluates its estimates. Actual results could differ from those estimates.

Foreign Currency

The assets and liabilities of the Company’s subsidiaries in the United Kingdom and France are translated into U.S. dollars at current exchange rates at the end of the period and revenue and expense items are translated at average rates of exchange prevailing during the period. The functional currency of these subsidiaries is considered to be the local currency for each entity and, accordingly, translation adjustments for these subsidiaries are included in accumulated other comprehensive income (loss) within stockholders’ equity. Certain intercompany and third-party foreign currency-denominated transactions generated foreign currency remeasurement losses of approximately $0.6 million, $0.2 million and $70,000 during the years ended December 31, 2017, 2016 and 2015, respectively, which are included in other expense, net in the consolidated statements of operations.

Cash Equivalents

The Company considers all investments purchased with an original maturity of three months or less to be cash equivalents.

Fair Value of Financial Instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported values. Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurement and Disclosures, (ASC 820) establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

Level 1: Quoted prices in active markets for identical assets and liabilities.

Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair value of cash and cash equivalents are classified as Level 1 at December 31, 2017 and 2016.

Some of the estimates and assumptions in the Company's goodwill impairment assessment include: the amount and timing of the projected net cash flows, the discount rate, and the tax rate.

The fair value of accounts receivable and accounts payable approximate their carrying amount. The Company’s long-term debt is carried at amortized cost, which approximates fair value based on current market pricing of similar debt instruments and is categorized as a Level 2 measurement.

The Company did not have transfers of financial assets between Level 1 and Level 2.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market, determined on a first-in, first-out method. We monitor standard costs on a monthly basis and update them annually as necessary to reflect change in raw material costs and labor and overhead rates. Components of inventory cost include materials, labor and manufacturing overhead. Inventories consist of the following (in thousands):

	December 31,
	2017		2016
Raw materials	$	1,921	$	856
Work in process		3,299		3,806
Finished goods		1,106		959
Total	$	6,326	$	5,621

We provide inventory allowances when conditions indicate that the selling price could be less than cost due to physical deterioration, usage, obsolescence, reductions in estimated future demand and reductions in selling prices. We balance the need to maintain strategic inventory levels with the risk of obsolescence due to changing technology and customer demand levels. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact our gross margins. Reserves for excess and obsolete inventory were $0.5 million and $45,000 at December 31, 2017 and 2016, respectively. During the fiscal year ended December 31, 2017, the Company recorded charges in the condensed consolidated statements of operations for excess and obsolete inventory of $0.4 million. No charges were recorded for the fiscal year ended December 31, 2016. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact the Company’s gross margins.

Accounts Receivable, net of allowances

Accounts receivable are reported at their outstanding unpaid principal balances reduced by allowances for doubtful accounts. The Company estimates doubtful accounts based on its historical collection experience, factors related to specific customers’ ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectable.

Accounts receivable allowance activity consisted of the following for the years ended December 31 (in thousands):

	2017		2016			2015
Balance at beginning of year	$	37	$	263		$	358
Additions		78		—			—
Deductions		—		(226	)		(95	)
Balance at end of year	$	115	$	37		$	263

Juniper’s accounts receivable balance, net of allowance for doubtful accounts, was $4.7 million as of December 31, 2017, and $6.6 million as of December 31, 2016. Included in the accounts receivable balance at December 31, 2017 and 2016 were $3.0 million and $1.3 million of unbilled accounts receivable, respectively. Juniper’s unbilled accounts receivable is derived from services performed that have not been billed as of the balance sheet date.

Property and Equipment, net

Property and equipment is stated at cost less accumulated depreciation. Leasehold improvements are amortized over the lesser of the useful life or the term of the leases. Depreciation is computed on the straight-line basis over the estimated useful lives of the respective assets, as follows:

		Years
Machinery and equipment		3-10
Furniture and fixtures		3-5
Computer equipment and software		3-5
Buildings		Up to 39
Land		Indefinite

Costs of major additions and improvements are capitalized and expenditures for maintenance and repairs that do not extend the life of the assets are expensed. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation are eliminated from the accounts and any resultant gain or loss is credited or charged to operations.

Juniper continually evaluates whether events or circumstances have occurred that indicate that the remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may be impaired. Juniper evaluates the realizability of its long-lived assets based on profitability and cash flow expectations for the related asset. Any write-downs are treated as permanent reductions in the carrying amount of the assets. Based on this evaluation, Juniper believes, as of each balance sheet date presented, none of Juniper’s long-lived assets were impaired.

Concentration of Risk

As of December 31, 2017, the Company has one major customer. See Note 11 of the Company’s consolidated financial statements for customer and product concentrations.

The Company depends on one supplier for a key excipient (ingredient) used in its products and one supplier for one of the active pharmaceutical ingredients.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination. The Company does not amortize its goodwill, but instead tests for impairment annually in the fourth quarter and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than its carrying value of the asset.

In September 2017, the Company announced a corporate reprioritization to allow it to focus its resources on the core businesses of Crinone progesterone gel and Juniper Pharma Services. The Company considered the announcement to be a triggering event requiring a test for impairment under ASC 350, Goodwill and Other Intangibles (“ASC 350”).

In accordance with ASC 350, the Company uses the two-step approach for each reporting unit. The first step compares the carrying amount of the reporting unit to its estimated fair value (Step 1) utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated using a risk-adjusted discount rate. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed, wherein the reporting unit’s carrying value is compared to the implied fair value (Step 2). To the extent that the carrying value of goodwill exceeds the implied fair value of goodwill, impairment exists and must be recognized. The Company has concluded that its business represents two reporting units for goodwill impairment testing, which are product and service.

The Company’s goodwill is assigned to its service reporting unit. The Company has performed tests for impairment as of September 18, 2017, the date of the triggering event, and October 1, 2017, the date of the annual test, and has determined that goodwill is not impaired as of either date. Furthermore, the Company also concluded that no triggering events have occurred subsequent to the most recent Step 1 goodwill impairment test.

Intangible Assets

The Company capitalizes and includes in intangible assets the costs of trademark, developed technology and customer relationships. Intangible assets are recorded at fair value at the time of their acquisition and stated net of accumulated amortization. The Company amortizes its intangible assets that have finite lives using either the straight-line or accelerated method, based on the useful life of the asset over which it is expected to be consumed utilizing expected undiscounted future cash flows. Amortization is recorded over the estimated useful lives ranging from 3 to 7 years. The Company evaluates the realizability of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, the Company uses market participant assumptions pursuant to ASC 820, Fair Value Measurements. If the estimate of an intangible asset’s revised useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised useful life.

Income Taxes

Deferred tax assets or liabilities are determined based on timing differences between when income and expense items are recognized for financial statement purposes versus when they are recognized for tax purposes, as measured by enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be settled. A valuation allowance is provided against deferred tax assets in circumstances where management believes it is more likely than not that all or a portion of the assets will not be realized. The Company has provided a full valuation allowance in the amount of $39.1 million and $59.0 million against its net domestic and foreign deferred tax assets as of December 31, 2017 and 2016, respectively.

Accumulated Other Comprehensive Loss

Changes to accumulated other comprehensive loss during the year ended December 31, 2017 were as follows (in thousands):

	Translation Adjustment
Balance – December 31, 2016	$	(5,028	)
Current period other comprehensive income		(1,871	)
Balance – December 31, 2017	$	(3,157	)

No reclassification from accumulated other comprehensive loss to net (loss) income occurred during the year ended December 31, 2017.

Revenue Recognition

Revenues include product revenues, which primarily consist of sales of Crinone to Merck KGaA, royalty revenues, which primarily consisted of royalty revenues from Allergan on sales of Crinone until the November 2016 monetization agreement, and service revenues, which primarily consist of analytical and consulting services, pharmaceutical development and clinical trial manufacturing services and other revenues.

Product Revenue

Revenues from the sale of products are recognized when all of the following criteria are met: persuasive evidence of a sales arrangement exists; delivery has occurred or services have been rendered; the price is fixed or determinable; and collectability is reasonably assured. Selling prices to Merck KGaA for Crinone (progesterone gel) are determined on an annual and country-by-country basis and are the greater of (i) a percentage of Merck KGaA’s net estimated selling price, or (ii) Juniper’s direct manufacturing cost plus 20% and are invoiced to Merck KGaA upon shipment. Juniper records revenue at the minimum selling price, which is Juniper’s direct manufacturing cost plus 20% at the time of shipment to Merck KGaA as that amount is considered fixed or determinable. The Company records deferred revenue related to amounts invoiced above the minimum selling price. Upon receiving sell through information from Merck KGaA on a quarterly and country-by-country basis, the Company records an adjustment to increase revenue to reflect the difference between Merck KGaA’s actual net selling price and the minimum price recorded at the time of shipment. Any difference between the amounts invoiced at Merck KGaA’s estimated net selling price and Merck KGaA’s actual net selling price are billed or credited to Merck KGaA in the quarter the product is sold through by Merck KGaA. Accordingly, product revenue in each period includes both an amount for product shipped to Merck KGaA in the current period recognized at the minimum purchase price as well as an amount for product shipped by Merck KGaA to its customers in the current period equal to the difference between Merck KGaA’s actual net selling price and the minimum purchase price. Merck KGaA is also entitled to a volume discount based on annual purchases. The Company records reserves against revenue on a quarterly basis to reflect the volume discount expected to be earned by Merck KGaA during the year.

In April 2013, Juniper’s license and supply agreement with Merck KGaA for the sale of Crinone outside the United States was renewed for an additional five-year term, extending the expiration date to May 19, 2020. In January 2018, the Company announced the extension of the supply agreement for an additional 4.5-years through at least December 31, 2024.

Royalty revenues, based on sales by licensees, are recorded as revenues when those sales are made by the licensees. In November 2016, the Company received a one-time payment of $11.0 million in exchange for which Allergan will no longer be required to make future royalty payments due to Juniper.

Service Revenue

The professional service contracts that Juniper enters into and operates under specify whether the engagement will be billed on a time-and-materials or a fixed-price basis. These engagements generally last three to six months, although some of Juniper’s engagements can be longer in duration.

Juniper recognizes substantially all of the Company’s professional services revenues under written contracts when the fee is fixed or determinable, as the services are provided, and only in those situations where collection from the client is reasonably assured. In certain cases, Juniper bills clients prior to work being performed, which requires Juniper to defer revenue in accordance with U.S. GAAP.

Revenues from time-and-materials service contracts are recognized as the services are performed based upon hours worked and contractually agreed-upon hourly rates, as well as indirect fees based upon hours worked.

Service revenues from a majority of Juniper’s fixed-price engagements are recognized on a proportional performance method based on the ratio of costs incurred, substantially all of which are labor-related, to the total estimated project costs. Project costs are classified in costs of services and are based on the direct salary of the employees on the engagement plus all direct expenses incurred to complete the engagement, including any amounts billed to Juniper by its vendors. The proportional performance method is used for fixed-price contracts because reasonably dependable estimates of the revenues and costs applicable to various stages of a contract can be made, based on historical experience and the terms set forth in the contract, and are indicative of the level of benefit provided to Juniper’s clients. In the event of a termination, fixed-price contracts generally provide for payment for services rendered up to the termination date. Service revenues also include reimbursements, which include reimbursement for travel and other out-of-pocket expenses, outside consultants, and other reimbursable expenses.

The Company maintains accounts receivable allowances for estimated losses resulting from disputed amounts or the inability of Juniper’s customers to make required payments. Juniper identifies specific collection issues and establishes an accounts receivable allowance based on its historical collection experience, review of client accounts, current trends, and credit policy. If the financial condition of Juniper’s customers were to deteriorate or disputes were to arise regarding the services provided, resulting in an impairment of their ability or intent to make payment, additional allowances may be required. A failure to estimate accurately the accounts receivable allowances and ensure that payments are received on a timely basis could have a material adverse effect on Juniper’s business, financial condition, and results of operations.

Juniper collects value added tax from its customers for revenues generated out of the United Kingdom for which the customer is not tax exempt and remits such taxes to the appropriate governmental authorities. Juniper presents its value added tax on a net basis; therefore, these taxes are excluded from revenues.

Deferred Revenue

The Company’s deferred revenue balance consists of the following at December 31, 2017 and 2016 (in thousands):

	As of December 31,
	2017		2016
Product revenues	$	5,888	$	4,647
Service revenues		253		385
Regional Growth Fund		—		592
Total	$	6,141	$	5,624

Amounts invoiced but not yet earned on product revenues are recorded as deferred revenue until the Company receives sell through information from Merck KGaA indicating the product has been sold through or otherwise disposed of. Amounts invoiced but not yet earned on service revenue are deferred until such time as performance is rendered or the obligation to perform the service is completed for service revenues.

As part of the acquisition of Juniper Pharma Services, Juniper assumed a $2.5 million obligation under a grant arrangement with the Regional Growth Fund on behalf of the Secretary of State for Business, Innovation, and Skills in the United Kingdom. Juniper Pharma Services used this grant to fund the building of its second facility, which includes analytical labs, office space, and a manufacturing facility. As a part of the arrangement, Juniper Pharma Services was required to create and maintain certain full-time equivalent personnel levels through October 2017. The obligation ended in October 1, 2017 and the Company met all compliance requirements thru that date.

Research and Development Costs

Research and development consist of consultants, material costs, salaries and other personnel related expenses including stock-based compensation of employees and non-employees primarily engaged in research and development activities and materials used and other overhead expenses incurred. All research and development costs are expensed as incurred. Research and development costs that are paid in advance of performance are capitalized as prepaid expenses until incurred.

Clinical trial expenses include expenses associated with clinical research organizations. The invoicing from clinical research organizations for services rendered can lag several months. Juniper accrues the cost of services rendered in connection with clinical research organizations activities based on its estimate of costs incurred. Juniper maintains regular communication with its clinical research organizations to assess the reasonableness of its estimates.

In March 2015, the Company entered into an exclusive patent license agreement with The General Hospital Corporation, d/b/a Massachusetts General Hospital, pursuant to which Juniper has licensed the exclusive worldwide rights to Massachusetts General Hospital patent rights in a novel IVR technology for delivery of one or more pharmaceutical dosages and release rates in a single segmented ring. The Company is leveraging the technology to advance its IVR product candidates: JNP-0101, JNP-0201 and JNP-0301.

In August 2016, the Company announced that the Phase 2b clinical trial evaluating COL-1077, 10% lidocaine bioadhesive vaginal gel, for the reduction of pain intensity in women undergoing an endometrial biopsy with tenaculum placement did not achieve its primary and secondary endpoints. The safety and pharmacokinetic (PK) profiles of COL-1077 were consistent with what has been observed in prior clinical trials of the lidocaine bioadhesive vaginal gel. Based on this study outcome the Company discontinued further development of COL-1077, with resources reallocated to its preclinical programs.

In September 2017, the Company announced a reduction of approximately 8% of our workforce, primarily in the areas of new product research and development, in order to focus its resources on its core businesses. In addition, as part of its more focused research and development strategy, the Company completed its in vivo preclinical studies and expects to finalize the results of these studies for its IVR programs, which consist of JNP-0101, JNP-0201 and JNP-0301 (the “IVR program”) in early 2018. At the completion of the in vivo preclinical studies and based on the preliminary assessment of the relative clinical data and development funding requirements of its three IVR product candidates, the Company may decide to further advance JNP-0201, a combination of Estradiol plus natural progesterone IVR for hormone replacement therapy (“HRT”) to address symptoms of menopause, or it may decide to seek a partner for JNP-0201 on a stand-alone basis or in combination with one or more partners for one or more of its other IVR product candidates.

Stock-based compensation

Under the Company’s stock-based compensation program, the Company periodically grants stock options and restricted stock to employees, directors and nonemployee consultants. The fair value of all awards is recognized in the Company’s statement of operations over the requisite service period for each award. Juniper follows the fair value recognition provisions of ASC 718, Stock Compensation Topic (ASC 718) and ASC Subtopic 505-50, Equity – Equity Based Payments to Nonemployees.

Awards that vest as the recipient provides service are expensed on a straight-line basis over the requisite service period. Other awards, such as performance-based awards that vest upon the achievement of specified goals, are expensed if achievement of the specified goal is considered probable.

The Company uses the Black-Scholes option pricing model to value its stock option awards which requires the Company make certain assumptions regarding the expected volatility of its common stock price, the expected term of the option grants, the risk-free interest rate and the dividend yield with respect to its common stock. Due to the lack of the Company’s own historical data, the Company elected to use the simplified method for “plain vanilla” options to estimate the expected term of the Company’s stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option. The risk-free interest rate used for each grant is based on the U.S. Treasury yield curve in effect at the time of the grant for instruments with a similar expected life. The Company utilizes a dividend yield of zero based on the fact that the Company has no present intention to pay cash dividends. The Company did not consider any forfeiture rate assumption in its determination of stock-based compensation.

The fair value of equity-classified awards to employees and directors are measured at fair value on the grant on the date the awards are granted. Awards to nonemployee consults are recorded at the grant date fair values and are re-measured at each balance sheet date until the recipient’s services are complete.

During the years ended December 31, 2017, 2016 and 2015, the Company recorded the following stock-based compensation expense (in thousands):

	Years Ended December 31,
	2017		2016		2015
Cost of revenues	$	120	$	199	$	79
Sales and marketing		47		50		38
Research and development		16		73		1,126
General and administrative		1,286		879		507
Total stock-based compensation	$	1,469	$	1,201	$	1,750

Stock-based compensation expense is allocated based upon the department of the employee to whom each award was granted. Expenses recognized in connected with the modification of awards in connection with the Company’s strategic restructuring are allocated to restructuring expense. No related tax benefit of the stock-based compensation expense has been recognized.

As of December 31, 2017, total unamortized share-based compensation cost related to non-vested stock options and restricted stock was $2.5 million, which is expected to be recognized on a straight-line basis over a weighted average period of 2.7 years.

	Years Ended December 31,
	2017		2016		2015
Risk free interest rate	1.45%-1.59%		0.85%-1.45%		0.87%-1.20%
Expected term	4.5-4.75 years		4.75 years		4.56-4.75 years
Dividend yield		—		—		—
Expected volatility	53.15%-55.20%		55.23%-79.29%		76.86%-83.09%

Net (Loss) Income Per Common Share

The calculation of basic and diluted (loss) income per common and common equivalent share is as follows (in thousands except for per share data):

	Years Ended December 31,
	2017			2016			2015
Basic net (loss) income per common share
Net (loss) income	$	(2,060	)	$	5,951		$	(1,496	)
Add: Excess of carrying value of Series C Preferred Stock over redemption value		459			—			—
Less: Preferred stock dividends		(14	)		(28	)		(28	)
Net (loss) income applicable to common stockholders	$	(1,615	)	$	5,923		$	(1,524	)
Basic weighted average number of common shares outstanding		10,824			10,795			10,774
Basic net (loss) income per common share	$	(0.15	)	$	0.55		$	(0.14	)
Diluted net (loss) income per common share
Net (loss) income applicable to common stock	$	(1,615	)	$	5,923		$	(1,524	)
Add: Preferred stock dividends		—			28			—
Net (loss) income applicable to dilutive common stock	$	(1,615	)	$	5,951		$	(1,524	)
Basic weighted average number of common shares outstanding		10,824			10,795			10,774
Effect of dilutive securities
Dilutive preferred share conversions		—			83			—
Dilutive stock awards		—			13			—
		—			96			—
Diluted weighted average number of common shares outstanding		10,824			10,891			10,774
Diluted net (loss) income per common share	$	(0.15	)	$	0.55		$	(0.14	)

Basic net (loss) income per common share is computed by dividing the net (loss) income, less preferred dividends and adding the excess of carrying value of Series C Preferred Stock over redemption value recognized on the conversion of the Series C Preferred Stock, by the weighted-average number of shares of common stock outstanding during a period. The diluted net (loss) income per common share calculation gives effect to dilutive options, convertible preferred stock, and other potential dilutive common stock including selected restricted shares of common stock outstanding during the period. Diluted net (loss) income per common share is based on the treasury stock method and includes the effect from potential issuance of common stock, such as shares issuable pursuant to the exercise of stock options, assuming the exercise of all in-the-money stock options. Common share equivalents have been excluded where their inclusion would be anti-dilutive.

Shares to be issued upon the exercise of the outstanding options, convertible preferred stock and selected restricted shares of common stock excluded from the income per share calculation amounted to 1,981,934, 1,658,234 and 1,087,308 for the years ended December 31, 2017, 2016 and 2015, respectively, because the awards were anti-dilutive.

Recent Accounting Pronouncements

Adopted

In March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted the standard as of January 1, 2017. The adoption did not have a material impact on the Company’s financial position.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. ASU 2015-17 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The standard may be applied either retrospectively or on a prospective basis to all deferred tax assets and liabilities. The Company adopted the standard as of January 1, 2017. The adoption did not have a material impact on the Company’s financial position.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. This ASU simplifies the measurement of inventory by requiring certain inventory to be measured at the lower of cost or net realizable value. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016 and for interim periods therein. The Company adopted the standard as of January 1, 2017. The adoption did not have a material impact on the Company’s financial position.

To be adopted

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. The standard simplifies the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. The ASU is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of this standard will not have an impact on our consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU No. 2016-16, Classification of Certain Cash Receipts and Cash Payments, (“ASU 2016-16”), which amends the guidance of ASC No. 230 on the classification of certain items in the statement of cash flows. The primary purpose of ASU 2016-15 is to reduce the diversity in practice by making amendments that add or clarify the guidance on eight specific cash flow issues. ASU 2016-15 is effective for all fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. ASU 2016-15 should be applied retrospectively to all periods presented, but may be applied prospectively from the earliest practicable if retrospective application would be impracticable. The adoption of this standard will not have an impact on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the method and impact that the adoption will have on its consolidated financial statements and related disclosures.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities, which provides new guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The standard becomes effective for Juniper beginning in the first quarter of 2018 and early adoption is permitted. The adoption of this standard will not have an impact on our consolidated financial statements and related disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the effective date of ASU 2014-09 by one year, but permits companies to adopt one year earlier if they choose (i.e. the original effective date). As such, ASU 2014- 09 will be effective for annual and interim reporting periods beginning after December 15, 2017. In March and April 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Consideration (Reporting Revenue Gross versus Net) and ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, respectively, which clarify the guidance on reporting revenue as a principal versus agent, identifying performance obligations and accounting for intellectual property licenses. In addition, in May 2016 and December 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers, both of which amend certain narrow aspects of Topic 606. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. The Company undertook a process of reviewing its historical contracts and evaluating the impact of ASU 2014-09 on its accounting policies, processes and system requirements. During the fourth quarter of 2017, the Company finalized its assessment over the impact that the new standard will have on its consolidated results of operations, financial position and disclosures. The Company has identified a change to the pattern of revenue recognition for its arrangements with Merck, where revenue is recorded earlier than under current guidance. Under current guidance, the Company recognized only the contractual minimum invoice price which is fixed or determinable upon delivery, with any amount earned in excess of the minimum when that amount is fixed or determinable, which is not until Merck sells the product onto its customers. Under the new proposed guidance, the amount in excess of the contractual minimum which the Company will account for as variable consideration, with an estimate of the variable consideration recorded upon delivery. The guidance is effective for the Company beginning January 1, 2018 and the Company adopted the standard using the modified retrospective approach. The Company will record a cumulative adjustment to decrease retained earnings as of January 1, 2018 of approximately $5.7 million to reflect the impact of the new guidance. The Company has also evaluated its service revenue arrangements to assess changes in performance obligation, inclusion of variable consideration in the transaction price, allocation of the transaction price based on relative standalone selling prices, timing of recognition, accounting for contract acquisition costs, among other areas, as well as the related financial statement disclosures. The Company did not identify any significant differences in its service revenue contracts under the new guidance. The Company will finalize these assessments in the first quarter of 2018 and identify and implement the necessary changes to its business processes, systems and controls to support revenue recognition and disclosures under the new standard. However, the assessment is ongoing and further analysis may identify future impacts.