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LONG-TERM CONTRACTS - Note 4 | 12 Months Ended
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Dec. 31, 2018
Contract with Customer, Liability, Current, Change |
Long-term contracts - Note 4 | 4. LONG-TERM CONTRACTS In May 2018, we signed a five-year license agreement with a customer granting them exclusive license to our LBS technology for display-only applications. As part of the agreement, we received a first payment of $5.0 million in June 2018 and the second payment of $5.0 million in October 2018. The contract includes requirements that must be met in order to maintain exclusivity. If this customer acquires a customer, we expect orders for component sales. We may also receive payments for non-recurring engineering expenses associated with process and product transfer and qualification milestones. During the year ended December 31, 2018 we completed the performance obligations required by the contract. As a result, we recognized $10.0 million in license and royalty revenue during the year ended December 31, 2018. In April 2017, we signed a contract with a major technology company to develop an LBS display system. Under this agreement, we are working to develop a new generation of MEMS, ASICs and related firmware for a high resolution, LBS-based product that the technology company is planning to produce. Under the agreement, we received an upfront payment of $10.0 million in 2017 and may receive up to $14.6 million in fees for development work that is expected to span into the second quarter of 2019. Our receipt of the development fees is contingent on completion of milestones in 2017, 2018, and into the second quarter of 2019. As of December 31, 2018, we have received $10.7 million in fees for development work and recognized $12.1 million in revenue. Upon successful completion of the development program, if the major technology company decides to manufacture the product with the MicroVision display components, the $10.0 million upfront payment would be applied as a discount to future component purchases from us. If the contract is terminated by the technology company for our failure to meet milestones, the $10.0 million upfront payment is subject to repayment. We are recognizing revenue on the $14.6 million in development fees over time based on the proportion of total cost expended (under Topic 606, the "input method") to the total cost expected to complete the contract performance obligation. For the year ended December 31, 2018, we have recognized $7.4 million of contract revenue from development fees on this agreement. We have an amount equal to the $10.0 million upfront payment classified as an other current liability on the balance sheet. The following table summarizes the costs incurred on our revenue contracts (in thousands):
|  |  | December 31,
|  |  | 2018 |  |  | 2017
Costs and estimated earnings incurred on uncompleted contracts |  | $ | 12,087 |  | $ | 4,680
Billings on uncompleted contracts |  |  | (11,100) |  |  | (4,005)
|  | $ | 987 |  | $ | 675
Included in consolidated balance sheets under the following captions: |  |  |  |  |  |
Costs and estimated earnings incurred on uncompleted contracts |  | $ | 987 |  | $ | 680
Billings on uncompleted contracts in excess of related costs |  |  | - |  |  | (5)
|  | $ | 987 |  | $ | 675

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- Definition The entire disclosure for long-term contracts or programs. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 912 -URI http://asc.fasb.org/topic&trid=2145070 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -URI http://asc.fasb.org/topic&trid=2122208 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 605 -SubTopic 35 -URI http://asc.fasb.org/subtopic&trid=2197326 + Details
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