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Revenue Revenue | 3 Months Ended
--- | ---
Dec. 29, 2018
Revenue from Contract with Customer [Abstract] |
Revenue | Revenue In May 2014, the FASB issued ASC 606. The Company adopted the standard, which amends the existing accounting standard for revenue recognition, as of September 30, 2018 using the modified retrospective method for contracts that were not complete as of September 30, 2018. Under this method, the Company recognized the cumulative effect of initially applying the standard to its open contracts and recorded an adjustment to decrease the opening balance of accumulated deficit within stockholders' equity by $6.4 million, which is net of taxes of $2.4 million, as of September 30, 2018, the first day of fiscal 2019. The cumulative effect adjustment was primarily due to the Company applying the principles of ASC 606 to contracts for which the Company had deferred revenue as of September 29, 2018 for collectability uncertainty and providing extended payment terms resulting in the fee not being fixed or determinable under ASC 605. Under ASC 606 revenue from certain arrangements may be recognized earlier as a result of the ability to apply additional judgment in evaluating collectability and the elimination of the requirement to assess whether a fee is fixed or determinable, specifically as it relates to providing customers with extended payment terms. Results for reporting periods beginning September 30, 2018 and after are presented in accordance with ASC 606. Prior period results were not adjusted and will continue to be reported in accordance with legacy GAAP requirements in ASC Topic 605, Revenue Recognition. As the adoption of this standard did not have a material impact on the Company’s revenue recorded in the first quarter of fiscal 2019, transitional disclosures have not been presented. The Company generates revenue from the sale of its products, primarily medical imaging systems and related components and software, medical aesthetic treatment systems, diagnostic tests/assays and surgical disposable products, and related services, which are primarily support and maintenance services on its medical imaging systems and aesthetic treatment systems, and to a lesser extent installation, training and repairs. The Company's products are sold primarily through a direct sales force, and within international markets, there is more reliance on distributors and resellers. Revenue is recorded net of sales tax. The following table provides revenue from contracts with customers by business and geographic region on a disaggregated basis:
|  | Three Months Ended December 29, 2018 |  | Three Months Ended December 30, 2017
Business (in millions) | United States | International | Total |  | United States | International | Total
Diagnostics: |  |  |  |  |  |  |
| Cytology & Perinatal | $ | 79.2 |  | $ | 38.9 |  | $ | 118.1 |  |  | $ | 84.7 |  | $ | 38.7 |  | $ | 123.4 |
| Molecular Diagnostics | 134.1 |  | 30.2 |  | 164.3 |  |  | 123.9 |  | 24.7 |  | 148.6 |
| Blood Screening | 14.2 |  | — |  | 14.2 |  |  | 12.6 |  | — |  | 12.6 |
Total | $ | 227.5 |  | $ | 69.1 |  | $ | 296.6 |  |  | $ | 221.2 |  | $ | 63.4 |  | $ | 284.6 |
Breast Health: |  |  |  |  |  |  |
| Breast Imaging | $ | 206.5 |  | $ | 63.2 |  | $ | 269.7 |  |  | $ | 179.8 |  | $ | 56.1 |  | $ | 235.9 |
| Interventional Breast Solutions | 46.1 |  | 8.9 |  | 55.0 |  |  | 44.6 |  | 7.5 |  | 52.1 |
Total | $ | 252.6 |  | $ | 72.1 |  | $ | 324.7 |  |  | $ | 224.4 |  | $ | 63.6 |  | $ | 288.0 |
Medical Aesthetics | $ | 37.3 |  | $ | 42.5 |  | $ | 79.8 |  |  | $ | 46.5 |  | $ | 44.8 |  | $ | 91.3 |
GYN Surgical | $ | 91.1 |  | $ | 17.3 |  | $ | 108.4 |  |  | $ | 91.5 |  | $ | 16.0 |  | $ | 107.5 |
Skeletal Health | $ | 13.3 |  | $ | 7.9 |  | $ | 21.2 |  |  | $ | 13.6 |  | $ | 6.1 |  | $ | 19.7 |
|  | $ | 621.8 |  | $ | 208.9 |  | $ | 830.7 |  |  | $ | 597.2 |  | $ | 193.9 |  | $ | 791.1 |
|  | Three Months Ended | Three Months Ended
Geographic Regions (in millions) |  | December 29, 2018 | December 30, 2017
United States |  | $ | 621.8 |  | $ | 597.2 |
Europe |  | 101.1 |  | 91.3 |
Asia-Pacific |  | 69.6 |  | 68.4 |
Rest of World |  | 38.2 |  | 34.2 |
|  | $ | 830.7 |  | $ | 791.1 |
The following table provides revenue recognized by source:
|  | Three Months Ended | Three Months Ended
Revenue by type (in millions) |  | December 29, 2018 | December 30, 2017
Capital equipment, components and software |  | $ | 248.3 |  | $ | 206.5 |
Consumables |  | 434.8 |  | 444.2 |
Service |  | 141.8 |  | 135.4 |
Other |  | 5.8 |  | 5.0 |
|  | $ | 830.7 |  | $ | 791.1 |
The Company considers revenue to be earned when all of the following criteria are met: the Company has a contract with a customer that creates enforceable rights and obligations; promised products or services are identified; the transaction price, or the amount the Company expects to receive, including an estimate of uncertain amounts subject to a constraint to ensure revenue is not recognized in an amount that would result in a significant reversal upon resolution of the uncertainty, is determinable; and the Company has transferred control of the promised items to the customer. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the contract. The transaction price for the contract is measured as the amount of consideration the Company expects to receive in exchange for the goods and services expected to be transferred. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, control of the distinct good or service is transferred. Transfer of control for the Company's products is generally at shipment or delivery, depending on contractual terms, but occurs when title and risk of loss transfers to the customer. The Company recognizes a receivable when it has an unconditional right to payment, and payment terms are typically 30 days in the U.S. but may be longer in international markets. The Company treats shipping and handling costs performed after a customer obtains control of the good as a fulfillment cost and records these costs within costs of product revenue when the corresponding revenue is recognized. The Company's performance obligation related to product sales is satisfied at a point in time. Revenue from support and maintenance contracts, extended warranty and professional services for installation, training and repair is recognized over time based on the period contracted or as the services are performed. The Company also places instruments (or equipment) at customer sites but retains title of the instrument. The customer has the right to use the instrument for a period of time, and the Company recovers the cost of providing the instrument through the sales of disposables, namely tests and assays in Diagnostics and handpieces in GYN Surgical. These types of agreements include an embedded operating lease for the right to use an instrument and no instrument revenue is recognized at the time of instrument delivery. The Company recognizes a portion of the revenue allocated to the embedded lease concurrent with the sale of disposables over the term of the agreement. Some of the Company's contracts have multiple performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract. The Company determines its best estimate of stand-alone selling price using average selling prices over 3 to 12-month periods of data depending on the products or nature of the services coupled with current market considerations. If the product or service does not have a history of sales or if sales volume is not sufficient, the Company relies on prices set by its pricing committees or applicable marketing department adjusted for expected discounts. Variable Consideration The Company exercises judgment in estimating variable consideration, which includes volume discounts, sales rebates, product returns and other adjustments. These amounts are recorded as a reduction to revenue and classified as a current liability. The Company bases its estimates for volume discounts and sales rebates on historical information to the extent it is reasonable to be used as a predictive tool of expected future rebates. To the extent the transaction price includes variable consideration, the Company applies judgment in constraining the estimated variable consideration due to factors that may cause reversal of revenue recognized. The Company evaluates constraints based on its historical and projected experience with similar customer contracts. The Company's contracts typically do not provide for product returns. In general, estimates of variable consideration and constraints are not material to the Company's financial statements. Remaining Performance Obligations As of December 29, 2018, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was approximately $272.7 million. This remaining performance obligation primarily relates to extended warranty and support and maintenance obligations in the Company's Breast Health and Skeletal Health reportable segments. The Company expects to recognize approximately 29% of this amount as revenue in 2019, 27% in 2020, 20% in 2021, 15% in 2022, and 9% thereafter. The Company has applied the practical expedient to not include remaining performance obligations related to contracts with original expected durations of one year or less in the amounts above. Contract Assets and Liabilities The Company discloses accounts receivables separately in the Consolidated Balance Sheets at their net realizable value. Contract assets primarily relate to the Company's conditional right to consideration for work completed but not billed at the reporting date. Contract assets at the beginning and end of the period, as well as the changes in the balance, were immaterial. Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. The Company records a contract liability, or deferred revenue, when it has an obligation to provide service, and to a much lesser extent product, to the customer and payment is received or due in advance of performance. Deferred revenue primarily relates to support and maintenance contracts and extended warranty obligations within the Company's Breast Health, Medical Aesthetics and Skeletal Health reportable segments. Contract liabilities are classified as other current liabilities and other long-term liabilities on the Consolidated Balance Sheets. For the first quarter of fiscal 2019 the Company recognized $57.0 million in revenue that was included in the contract liability balance at September 29, 2018. Practical Expedients With the adoption of ASC 606, the Company elected to apply certain permitted practical expedients. In evaluating the cumulative-effect adjustment to retained earnings, the Company adopted the standard only for contracts that were not complete as of the date of adoption. For contracts that were modified prior to the adoption date, the Company elected to present the aggregate effect of all contract modifications in determining the transaction price and for the allocation to the satisfied and unsatisfied performance obligations. The Company applies a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs solely comprise sales commissions and typically the commissions are incurred at the time of shipment of product and upon billings for support and maintenance contracts.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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