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Revenue (Notes) | 12 Months Ended
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Sep. 26, 2020
Revenue from Contract with Customer [Abstract] |
Revenue | Revenue In May 2014, the FASB issued ASC 606. The Company adopted the standard, which superseded ASC Topic 605, Revenue Recognition (ASC 605), as of September 30, 2018 using the modified retrospective method for contracts that were not complete as of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 than under ASC 605 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 the legacy GAAP requirements of ASC 605. As the adoption of this standard did not have a material impact on the Company’s revenue recorded for the years ended September 28, 2019 and September 29, 2018, 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, diagnostic tests and assays and surgical disposable products, and related services, which are primarily support and maintenance services on its medical imaging systems, and to a lesser extent installation, training and repairs. Prior to the Cynosure divestiture, the Company also generated revenue from the sale and service of medical aesthetic treatment systems. 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:
|  | Years Ended
|  | September 26, 2020 |  | September 28, 2019 |  | September 29, 2018
Business (in millions) | United States | Intl. | Total |  | United States | Intl. | Total |  | United States | Intl. | Total
Diagnostics: |  |  |  |  |  |  |  |  |  |  |
| Cytology & Perinatal | $ | 266.3 |  | $ | 143.8 |  | $ | 410.1 |  |  | $ | 312.9 |  | $ | 159.1 |  | $ | 472.0 |  |  | $ | 322.9 |  | $ | 157.4 |  | $ | 480.3 |
| Molecular Diagnostics | 1,272.5 |  | 375.9 |  | 1,648.4 |  |  | 549.9 |  | 125.1 |  | 675.0 |  |  | 503.4 |  | 108.4 |  | 611.8 |
| Blood Screening | 43.6 |  | — |  | 43.6 |  |  | 58.5 |  | — |  | 58.5 |  |  | 55.3 |  | — |  | 55.3 |
Total | 1,582.4 |  | 519.7 |  | 2,102.1 |  |  | 921.3 |  | 284.2 |  | 1,205.5 |  |  | 881.6 |  | 265.8 |  | 1,147.4 |
Breast Health: |  |  |  |  |  |  |  |  |  |  |
| Breast Imaging | 722.0 |  | 231.6 |  | 953.6 |  |  | 853.1 |  | 241.5 |  | 1,094.6 |  |  | 782.0 |  | 234.5 |  | 1,016.5 |
| Interventional Breast Solutions | 166.6 |  | 31.7 |  | 198.3 |  |  | 184.8 |  | 34.8 |  | 219.6 |  |  | 169.4 |  | 32.3 |  | 201.7 |
Total | 888.6 |  | 263.3 |  | 1,151.9 |  |  | 1,037.9 |  | 276.3 |  | 1,314.2 |  |  | 951.4 |  | 266.8 |  | 1,218.2 |
GYN Surgical | 310.1 |  | 66.0 |  | 376.1 |  |  | 362.8 |  | 74.4 |  | 437.2 |  |  | 352.8 |  | 69.2 |  | 422.0 |
Skeletal Health | 51.2 |  | 29.8 |  | 81.0 |  |  | 58.6 |  | 36.2 |  | 94.8 |  |  | 59.4 |  | 31.8 |  | 91.2 |
Medical Aesthetics | 30.9 |  | 34.4 |  | 65.3 |  |  | 155.4 |  | 160.2 |  | 315.6 |  |  | 172.4 |  | 166.7 |  | 339.1 |
Total | $ | 2,863.2 |  | $ | 913.2 |  | $ | 3,776.4 |  |  | $ | 2,536.0 |  | $ | 831.3 |  | $ | 3,367.3 |  |  | $ | 2,417.6 |  | $ | 800.3 |  | $ | 3,217.9 |
|  |  |  | Years Ended
Geographic Regions (in millions) |  |  |  |  | September 26, 2020 | September 28, 2019 | September 29, 2018
United States |  |  |  |  | $ | 2,863.2 |  | $ | 2,536.0 |  | $ | 2,417.6 |
Europe |  |  |  |  | 569.8 |  | 396.0 |  | 377.5 |
Asia-Pacific |  |  |  |  | 226.8 |  | 286.0 |  | 275.6 |
Rest of World |  |  |  |  | 116.6 |  | 149.3 |  | 147.2 |
|  |  |  |  | $ | 3,776.4 |  | $ | 3,367.3 |  | $ | 3,217.9 |
The following table provides revenue recognized by source:
|  |  |  | Years Ended
Revenue by type (in millions) |  |  |  |  | September 26, 2020 | September 28, 2019 | September 29, 2018
Disposables |  |  |  |  | $ | 2,561.1 |  | $ | 1,786.4 |  | $ | 1,666.7 |
Capital equipment, components and software |  |  |  |  | 665.9 |  | 984.9 |  | 977.2 |
Service |  |  |  |  | 516.6 |  | 568.3 |  | 551.8 |
Other |  |  |  |  | 32.8 |  | 27.7 |  | 22.2 |
|  |  |  |  | $ | 3,776.4 |  | $ | 3,367.3 |  | $ | 3,217.9 |
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 which represents the point in time when the customer obtains the use of and substantially all of the remaining benefit of the product. As such, 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 repairs is recognized over time based on the period contracted or as the services are performed as these methods represent a faithful depiction of the transfer of goods and services. The Company recognizes a receivable when it has an unconditional right to payment, which represents the amount the Company expects to collect in a transaction and is most often equal to the transaction price in the contract. 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 also places instruments (or equipment) at customer sites but retains title to 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 lease, which is generally an 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 standalone 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 the right to return product. In general, estimates of variable consideration and constraints are not material to the Company's financial statements. Remaining Performance Obligations As of September 26, 2020, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was approximately $635.6 million. These remaining performance obligations primarily relate 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 39% of this amount as revenue in 2021, 28% in 2022, 19% in 2023, 10% in 2024, and 4% 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 receivable 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 and Skeletal Health reportable segments and, until December 30, 2019, the divested Medical Aesthetics segment. Contract liabilities are classified as other current liabilities and other long-term liabilities on the Consolidated Balance Sheets. The Company recognized revenue of $106.2 million and $158.9 million in the years ended September 26, 2020 and September 28, 2019, respectively, that was included in the contract liability balance at September 28, 2019 and September 29, 2018, respectively. 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. Revenue Recognition under ASC 605 (prior to the adoption of ASC 606, which applies to fiscal 2018) Under ASC 605, the Company recognized product revenue upon shipment provided that there was persuasive evidence of an arrangement, there were no uncertainties regarding acceptance, the sales price was fixed or determinable, and collection of the resulting receivable was reasonably assured. Generally, the Company’s product arrangements for capital equipment sales, primarily in its Breast Health, Medical Aesthetics and Skeletal Health reporting segments, were multiple-element arrangements, including services, such as installation, training and support and maintenance, and multiple products. Based on the terms and conditions of the product arrangements, the Company believed that these services and undelivered products could be accounted for separately from the delivered product element as the Company’s delivered products have value to its customers on a stand-alone basis. Accordingly, revenue for services not yet performed at the time of product delivery were deferred and recognized as such services were performed. The relative selling price of any undelivered products was also deferred at the time of shipment and recognized as revenue when these products were delivered. There was no customer right of return in the Company’s sales agreements for its capital equipment. Service revenues primarily consist of amounts recorded under service and maintenance contracts and repairs not covered under warranty, installation and training, and shipping and handling costs billed to customers. Service and maintenance contract revenues were recognized ratably over the term of the contract. Other service revenues were recognized as the services were completed using the specific performance method. Service and other revenue also included royalties which were recognized in the period the payments were due to the Company. For revenue arrangements with multiple deliverables, the Company recorded revenue as separate units of accounting if the delivered items had value to the customer on a stand-alone basis and the delivery or performance of the undelivered items was considered probable and substantially within the Company’s control. Some of the Company’s products have both software and non-software components that function together to deliver the product’s essential functionality. The Company determined that except for its computer-aided detection (“CAD”) products and C-View and Intelligent 2D products, the software element in its other products was not within the scope of the software revenue recognition rules, ASC 985-605, Software—Revenue Recognition. The Company determined that given the significance of the software component’s functionality to its CAD, C-View and Intelligent 2D components, which are sold by its Breast Health segment, these products were within the scope of the software revenue recognition rules. The Company evaluated the appropriate revenue recognition treatment of it hardware products, including its Dimensions digital mammography systems, which had both software and non-software components that function together to deliver the products’ essential functionality (i.e., it is a tangible product), and determined they were not within the scope of ASC 985-605. The Company was required to allocate revenue to its multiple element arrangements based on the relative fair value of each element’s selling price. The Company typically determined the selling price of its products based on its best estimate of selling prices (“ESP”) and services based on vendor-specific objective evidence of selling price (“VSOE”). The Company determined VSOE based on its normal pricing and discounting practices for the specific product or service when sold on a stand-alone basis. In determining VSOE, the Company’s policy was to require a substantial majority of selling prices for a product or service to be within a reasonably narrow range. The Company also considered the class of customer, method of distribution, and the geographies into which its products and services were sold when determining VSOE. If VSOE could not be established, which could occur in instances when a product or service had not been sold separately, stand-alone sales were too infrequent, or product pricing was not within a relatively narrow range, the Company would generally establish the selling price using ESP to allocate arrangement consideration. The objective of ESP was to determine the price at which the Company would typically transact a stand-alone sale of the product or service. ESP was determined by considering a number of factors including Company pricing policies, internal costs and gross margin objectives, method of distribution, information gathered from experience in customer negotiations, market research and information, recent technological trends, competitive landscape and geographies. For those arrangements accounted for under the software revenue recognition rules, ASC 985-605 generally required revenue earned on software arrangements involving multiple elements to be allocated to each element based on their relative VSOE of fair value. If VSOE did not exist for a delivered element, the residual method was applied in which the arrangement consideration was allocated to the undelivered elements based on their VSOE with the remaining consideration recognized as revenue for the delivered elements. For multiple-element software arrangements where VSOE of fair value of Post-Contract Customer Support (“PCS”) had been established, the Company recognized revenue using the residual method at the time all other revenue recognition criteria were met. While the majority of its instruments are placed at customer sites, in certain instances the Company sold instruments to its clinical diagnostics customers and recorded sales of these instruments upon shipment or delivery, depending on the terms of the arrangement. Within its Diagnostics business, and to a lesser extent, its GYN Surgical business, the Company provided its instrumentation (for example, the ThinPrep Processor, ThinPrep Imaging System, and the Panther and Tigris systems) and certain other hardware to customers without requiring them to purchase the equipment or enter into a lease. The Company installed the instrumentation or equipment at the customer’s site and recovered the cost of providing the instrumentation or equipment in the amount it charged for its diagnostic tests, assays and other disposables. Customers entered into a customer usage agreement and typically committed to purchasing minimum quantities of disposable products at a stated price over a defined contract term, which was typically between three and five years. Revenue was recognized over the term of the customer usage agreement as tests, assays and other disposable products are shipped or delivered, depending on the customer's arrangement.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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