A) Financial instruments
Under U.S. GAAP, investment securities consist of investments in marketable securities and investments in non-marketable equity securities. All of our investments in marketable securities are classified as available-for-sale securities and are reported at fair value. Investments in non-marketable equity securities in which we do not have the ability to exercise significant influence over the operating and financial policies of the investee are stated at cost.
Under IFRS, IFRS 9 Financial Instruments includes guidance on the classification and measurement of financial instruments, a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It is effective for annual reporting periods beginning on January 1, 2018. To better reflect the presentation of the consolidated statements of financial position as of March 31, 2018, we reclassified comparative period information as follows:
A-1)
As of December 31, 2017, we had $10,879 thousand reported as investment in marketable securities available-for-sale under U.S. GAAP, that were reclassified to financial assets at amortized cost and financial assets at fair value through profit or loss-current, at amounts of $10,358 thousand and $521 thousand, respectively, under IFRS.
As of March 31, 2017, we had $9,111 thousand reported as investments in marketable securities available-for-sale under U.S. GAAP, that were reclassified to financial assets at amortized cost and financial assets at fair value through profit or loss-current, at amounts of $5,220 thousand and $3,891 thousand, respectively, under IFRS.
A-2)
As of December 31, 2017, we had $3,122 thousand reported as investment in non-marketable equity securities under U.S. GAAP, that were reclassified to financial assets at fair value through profit or loss-noncurrent and financial assets at fair value through other comprehensive income at amounts of $1,600 thousand and $1,522 thousand, respectively, under IFRS.
As of March 31, 2017, we had $12,242 thousand reported as investment in non-marketable equity securities under U.S. GAAP, that were reclassified to financial assets at fair value through profit or loss-noncurrent and financial assets at fair value through other comprehensive income at amounts of $10,562 thousand and $1,680 thousand, respectively, under IFRS.
A-3)
Under U.S. GAAP, we recognized redeemable convertible preferred shares which were issued to a non-controlling shareholder by Himax Display Inc., a consolidated subsidiary, as temporary equity. The redeemable convertible preferred shares were presented as redeemable noncontrolling interest and recognized at fair value.
Under IFRS, we recognized the above-mentioned redeemable convertible preferred shares as financial liability at amortized cost using effective interest method.
As of December 31, 2017, we had $3,656 thousand reported as redeemable noncontrolling interest under U.S. GAAP, that were reclassified to financial liability at amortized cost-current and recognized interest expense (finance costs) using effective interest method which decreased the retained earnings by $1,181 thousand. After the above adjustments, we had $4,837 thousand reported as financial liability at amortized cost-current under IFRS.
For the twelve months and three months ended December 31, 2017, interest expense (finance costs) was adjusted for an increase of $313 thousand and $80 thousand, respectively.
As of March 31, 2017, we had $3,656 thousand reported as redeemable noncontrolling interest under U.S. GAAP, that were reclassified to financial liability at amortized cost-noncurrent and recognized interest expense (finance costs) using effective interest method which decreased the retained earnings by $945 thousand. After the above adjustments, we had $4,601 thousand reported as financial liability at amortized cost-noncurrent under IFRS.
For the three months ended March 31, 2017, interest expense (finance costs) was adjusted for an increase of $77 thousand.
B) Allowance of sales returns and discounts
Under U.S. GAAP, allowance for sales returns and discounts were recognized as a reduction in revenue in the year the related revenue is recognized based on historical experience. The corresponding allowance for sales returns and discounts was presented as a reduction in accounts receivable.
Under IFRS, the allowance for sales returns and discounts is a present obligation with uncertain timing and an amount that arises from past events and is therefore reclassified as provisions.
As of December 31, 2017 and March 31, 2017, the amounts reclassified from allowance for sales returns and discounts to provisions were $1,203 thousand and $1,412 thousand, respectively.
C) Property, plant and equipment, net
Under U.S. GAAP, property, plant, and equipment typically consist of long-lived tangible assets used to create and distribute an entity's products and including software.
Under IFRS, property, plant and equipment are tangible items. Certain software that is not an integral part of the related hardware and prepayment for equipment not shipped to the factory are reclassified out from property, plant and equipment as they do not meet the definition of property, plant and equipment.
As of December 31, 2017, property, plant and equipment, net of $2,098 thousand were reclassified to other intangible assets, net and other non-current assets at amounts of $720 thousand and $1,378 thousand, respectively.
As of March 31, 2017, property, plant and equipment, net of $1,221 thousand were reclassified to other intangible assets, net and other non-current assets at amounts of $539 thousand and $682 thousand, respectively.
D) Deferred tax assets and liabilities
Under U.S. GAAP, for a particular tax-paying component of an entity and within a particular tax jurisdiction, all current / non-current deferred tax liabilities and assets are offset and presented as a single amount.
Under IFRS, deferred tax liabilities and assets are offset only if the entity has a legally enforceable right to offset current tax liabilities and assets.
As of December 31, 2017 and March 31, 2017, the amounts reclassified from deferred tax assets to deferred tax liabilities were $79 thousand and $1,271 thousand, respectively.
E) Income taxes payable
Under U.S. GAAP, income taxes payable are classified as current if cash payment is expected within 12 months; if not, the amount is classified as noncurrent.
Under IFRS, income tax payables are classified as current unless an unconditional right to defer payment for a period greater than twelve months exists.
As of December 31, 2017 and March 31, 2017, the amounts reclassified from other liabilities to income tax payables were $487 thousand and $526 thousand, respectively.
F) Employee benefits
Under U.S. GAAP, actuarial gains and losses arising in the period are recognized immediately in OCI and amortized from accumulated OCI into the profit or loss over the employees’ remaining service period.
Under IFRS, remeasurements of the net defined benefit liability (asset) are recognized in OCI and are not reclassified to profit or loss in a subsequent period.
As of December 31, 2017, net defined benefit assets included in other assets, deferred tax assets and remeasurements of the net defined benefit liability or asset related to components of accumulated other comprehensive income were adjusted for a decrease of $90 thousand, $54 thousand and an increase of $984 thousand, respectively.
For the twelve months and three months ended December 31, 2017, operating expense for employee benefits was adjusted for a decrease of $108 thousand.
As of March 31, 2017, net defined benefit assets included in other assets, net defined benefit liabilities, deferred tax assets and remeasurements of the net defined benefit liability or asset related to components of accumulated other comprehensive income were adjusted for a decrease of $90 thousand, $17 thousand, $57 thousand and an increase of $1,021 thousand, respectively.
G) Share-Based Compensation
Under U.S. GAAP, we recognized compensation expense by straight-line method and recognized excess tax benefits from share-based payments.
Under IFRS, we recognized compensation expense by graded vesting and there is no requirement of recognizing excess tax benefits under IFRS.
For the twelve months and three months ended December 31, 2017, operating expense for share-based compensation was adjusted for a decrease of $101 thousand and $50 thousand, respectively.
