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Impact of change in accounting policies | 6 Months Ended
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Jun. 30, 2018
Revenue from Contract with Customer [Abstract] |
Impact fo change in accounting policy | Impact of change in accounting policies The Company adopted ASC 606, ‘Revenue from Contracts with Customers’, with a date of initial application of January 1, 2018. The revenue recognition accounting policy applied in preparation of the results for the three and six months ended June 30, 2018 therefore reflect application of ASC 606. ICON has elected to adopt the standard using the cumulative effect transition method. Under this transition method, ICON has applied the new standard as at the date of initial application (i.e. January 1, 2018), without restatement of comparative amounts. The cumulative effect of initially applying the new standard (to revenue, costs and tax) is recorded as an adjustment to the opening balance of equity at the date of initial application. The comparative information has not been adjusted and therefore continues to be reported under ASC 605, ‘Revenue Recognition’. The new standard requires application of five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligation in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies the performance obligation. The most significant impact of application of the standard relates to our assessment of performance and percentage of completion in respect of our clinical trial service revenue. Prior to application of ASC 606, the revenue attributable to performance was determined based on both input and output methods of measurement. We have concluded that under the new standard, a clinical trial service is a single performance obligation satisfied over time i.e. the full full service obligation in respect of a clinical trial (including those services performed by investigators and other parties) is considered a single performance obligation. Promises offered to the customer are not distinct within the context of the contract. We have concluded that ICON is the contract principal in respect of both direct services and in the use of third parties (principally investigator services) that support the clinical research project. The transaction price is determined by reference to the contract or change order value (total service revenue and pass-through/ reimbursable expenses) adjusted to reflect a realizable contract value. Revenue is recognized as the single performance obligation is satisfied. The progress towards completion for clinical service contracts is measured therefore based on on an input measure being total project costs (inclusive of third party costs) at each reporting period. The tables on the pages following summarize the impact of adopting ASC 606 on the consolidated financial statements for the three and six months ended June 30, 2018. ICON plc CONDENSED CONSOLIDATED BALANCE SHEETS AS AT JUNE 30, 2018 (UNAUDITED)
| June 30, 2018
| As reported | Adjustments | Balance without adoption of Topic 606
ASSETS | (in thousands)
Current Assets: |  |  |
Cash and cash equivalents | $ | 289,219 |  | $ | — |  | $ | 289,219 |
Short term investments - available for sale | 83,777 |  | — |  | 83,777 |
Accounts receivable, net | 404,572 |  | — |  | 404,572 |
Unbilled revenue | 274,501 |  | 44,829 |  | 319,330 |
Other receivables | 48,068 |  | (12,330 | ) | 35,738 |
Prepayments and other current assets | 24,038 |  | — |  | 24,038 |
Income taxes receivable | 24,475 |  | — |  | 24,475 |
Total current assets | 1,148,650 |  | 32,499 |  | 1,181,149 |
Other Assets: |  |  |  |  |  |
Property, plant and equipment, net | 155,020 |  | — |  | 155,020 |
Goodwill | 759,137 |  | — |  | 759,137 |
Other non-current assets | 15,715 |  | — |  | 15,715 |
Non-current income taxes receivable | 18,180 |  | — |  | 18,180 |
Non-current deferred tax asset | 17,420 |  | (6,276 | ) | 11,144 |
Intangible assets | 60,374 |  | — |  | 60,374 |
Total Assets | $ | 2,174,496 |  | $ | 26,223 |  | $ | 2,200,719 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |
Current Liabilities: |  |  |  |  |  |
Accounts payable | $ | 15,123 |  | $ | — |  | $ | 15,123 |
Payments on account | 326,741 |  | (25,100 | ) | 301,641 |
Other liabilities | 192,339 |  | — |  | 192,339 |
Income taxes payable | 14,049 |  | 885 |  | 14,934 |
Total current liabilities | 548,252 |  | (24,215 | ) | 524,037 |
Other Liabilities: |  |  |  |  |  |
Non-current bank credit lines and loan facilities | 349,074 |  | — |  | 349,074 |
Non-current other liabilities | 16,179 |  | — |  | 16,179 |
Non-current government grants | 908 |  | — |  | 908 |
Non-current income taxes payable | 13,622 |  | — |  | 13,622 |
Non-current deferred tax liability | 7,713 |  | — |  | 7,713 |
Commitments and contingencies | — |  | — |  | — |
Total Liabilities | 935,748 |  | (24,215 | ) | 911,533 |
Shareholders' Equity: |  |  |  |  |  |
Ordinary shares, par value 6 euro cents per share; 100,000,000 shares authorized, |  |  |  |  |  |
54,327,869 shares issued and outstanding at June 30, 2018 and |  |  |  |  |  |
54,081,601 shares issued and outstanding at December 31, 2017 | 4,684 |  | — |  | 4,684 |
Additional paid‑in capital | 508,195 |  | — |  | 508,195 |
Other undenominated capital | 945 |  | — |  | 945 |
Accumulated other comprehensive income | (65,522 | ) | — |  | (65,522 | )
Retained earnings | 790,446 |  | 50,438 |  | 840,884 |
Total Shareholders' Equity | 1,238,748 |  | 50,438 |  | 1,289,186 |
Total Liabilities and Shareholders' Equity | $ | 2,174,496 |  | $ | 26,223 |  | $ | 2,200,719 |
ICON plc CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2018 UNAUDITED)
| Three Months Ended |  | Six Months Ended
| June 30, 2018 |  | June 30, 2018 |  | June 30, 2018 |  | June 30, 2018 |  | June 30, 2018 |  | June 30, 2018
| As reported |  | Adjustments |  | Balance without adoption of Topic 606 |  | As reported |  | Adjustments |  | Balance without adoption of Topic 606
| (in thousands except share and per share data) |  | (in thousands except share and per share data)
Revenue: |  |  |  |  |  |  |  |  |  |  |
Revenue | $ | 641,610 |  |  | $ | 1,614 |  |  | $ | 643,224 |  |  | $ | 1,261,735 |  |  | $ | 2,845 |  |  | $ | 1,264,580 |
Reimbursable expenses | — |  |  | (169,313 | ) |  | $ | (169,313 | ) |  | — |  |  | (328,066 | ) |  | $ | (328,066 | )
|  |  |  | (167,699 | ) |  | 473,911 |  |  |  |  |  | (325,221 | ) |  | 936,514 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Direct costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
- Reimbursable expenses | 169,313 |  |  | (169,313 | ) |  | — |  |  | 328,066 |  |  | (328,066 | ) |  | — |
- Other direct costs | 279,913 |  |  | — |  |  | 279,913 |  |  | 551,752 |  |  | — |  |  | 551,752 |
Selling, general and administrative expense | 80,936 |  |  | 62 |  |  | 80,998 |  |  | 161,851 |  |  | 222 |  |  | 162,073 |
Depreciation and amortization | 17,046 |  |  | — |  |  | 17,046 |  |  | 33,944 |  |  | — |  |  | 33,944 |
Restructuring | 12,490 |  |  | — |  |  | 12,490 |  |  | 12,490 |  |  | — |  |  | 12,490 |
Total costs and expenses | 559,698 |  |  | (169,251 | ) |  | 390,447 |  |  | 1,088,103 |  |  | (327,844 | ) |  | 760,259 |
Income from operations | 81,912 |  |  | 1,552 |  |  | 83,464 |  |  | 173,632 |  |  | 2,623 |  |  | 176,255 |
Interest income | 1,017 |  |  | — |  |  | 1,017 |  |  | 1,840 |  |  | — |  |  | 1,840 |
Interest expense | (3,302 | ) |  | — |  |  | (3,302 | ) |  | (7,097 | ) |  | — |  |  | (7,097 | )
Income before provision for income taxes | 79,627 |  |  | 1,552 |  |  | 81,179 |  |  | 168,375 |  |  | 2,623 |  |  | 170,998 |
Provision for income taxes | (7,759 | ) |  | (155 | ) |  | (7,914 | ) |  | (18,409 | ) |  | (289 | ) |  | (18,698 | )
Net income | $ | 71,868 |  |  | $ | 1,397 |  |  | $ | 73,265 |  |  | $ | 149,966 |  |  | $ | 2,334 |  |  | $ | 152,300 |
ICON plc CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2018 (UNAUDITED)
| Six Months Ended
| June 30, 2018
| As Reported | Adjustments | Balance without adoption of Topic 606
| (in thousands)
Cash flows from operating activities: |
Net income | $ | 149,966 |  | $ | 2,334 |  | $ | 152,300 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |
Loss on disposal of property, plant and equipment | 2 |  | — |  | 2 |
Depreciation expense | 23,779 |  | — |  | 23,779 |
Amortization of intangibles | 10,165 |  | — |  | 10,165 |
Amortization of government grants | (24 | ) | — |  | (24 | )
Interest on short term investments | (712 | ) | — |  | (712 | )
Stock compensation expense | 16,430 |  | — |  | 16,430 |
Amortization of gain on interest rate hedge | (463 | ) | — |  | (463 | )
Amortization of financing costs | 530 |  | — |  | 530 |
Deferred taxes | (2,745 | ) | 6,276 |  | 3,531 |
Changes in assets and liabilities: |  |  |  |  |
Increase in accounts receivable | (26,685 | ) | — |  | (26,685 | )
Increase in unbilled revenue | (51,052 | ) | 3,275 |  | (47,777 | )
(Increase)/decrease in other receivables | (5,082 | ) | 12,330 |  | 7,248 |
Decrease in prepayments and other current assets | 9,777 |  | — |  | 9,777 |
Increase in other non-current assets | (338 | ) | — |  | (338 | )
Increase in payments on account | 2,616 |  | (25,100 | ) | (22,484 | )
Decrease in other current liabilities | (38,547 | ) | — |  | (38,547 | )
Decrease in other non-current liabilities | (1,083 | ) | — |  | (1,083 | )
Decrease in income taxes payable | (3,622 | ) | 885 |  | (2,737 | )
Decrease in accounts payable | (3,241 | ) | — |  | (3,241 | )
Net cash provided by operating activities | 79,671 |  | — |  | 79,671 |
Cash flows from investing activities: |  |  |  |  |  |
Purchase of property, plant and equipment | (17,219 | ) | — |  | (17,219 | )
Purchase of subsidiary undertakings | (1,645 | ) | — |  | (1,645 | )
Purchase of short term investments | (55,608 | ) | — |  | (55,608 | )
Sale of short term investments | 49,708 |  | — |  | 49,708 |
Net cash used in investing activities | (24,764 | ) | — |  | (24,764 | )
Cash flows from financing activities: |  |  |  |  |  |
Financing costs | (823 | ) | — |  | (823 | )
Proceeds from exercise of equity compensation | 10,334 |  | — |  | 10,334 |
Share issue costs | (9 | ) | — |  | (9 | )
Repurchase of ordinary shares | (54,172 | ) | — |  | (54,172 | )
Share repurchase costs | (44 | ) | — |  | (44 | )
Net cash used in financing activities | (44,714 | ) | — |  | (44,714 | )
Effect of exchange rate movements on cash | (3,833 | ) |  |  | (3,833 | )
Net increase in cash and cash equivalents | 6,360 |  | — |  | 6,360 |
Cash and cash equivalents at beginning of period | 282,859 |  |  |  | 282,859 |
Cash and cash equivalents at end of period | $ | 289,219 |  | $ | — |  | $ | 289,219 |
ICON plc CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME (UNAUDITED)
| Shares |  |  | Amount |  |  | Additional Paid-in Capital |  | Other Undenominated Capital |  | Accumulated Other Comprehensive Income |  | Retained Earnings |  | Total |
| (dollars in thousands, except share data)
Balance at December 31, 2017 | 54,081,601 |  |  | $ | 4,664 |  |  | $ | 481,337 |  | $ | 912 |  | $ | (38,713 | ) | $ | 742,800 |  | $ | 1,191,000 |
Comprehensive income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income (as reported) | — |  |  | — |  |  | — |  | — |  | — |  | 149,966 |  | 149,966 |
Impact of change in accounting policy | — |  |  | — |  |  | — |  | — |  | — |  | 2,334 |  | 2,334 |
Currency translation adjustment | — |  |  | — |  |  | — |  | — |  | (20,813 | ) |  |  | (20,813 | )
Currency impact of long term funding | — |  |  | — |  |  | — |  | — |  | (3,055 | ) | — |  | (3,055 | )
Tax on currency impact of long term funding | — |  |  | — |  |  | — |  | — |  | — |  | — |  | — |
Unrealized capital gain – investments | — |  |  | — |  |  | — |  | — |  | (423 | ) | — |  | (423 | )
Amortization of interest rate hedge | — |  |  | — |  |  | — |  | — |  | (463 | ) | — |  | (463 | )
Fair value of cash flow hedge | — |  |  | — |  |  | — |  | — |  | (2,055 | ) | — |  | (2,055 | )
Total comprehensive income | — |  |  | — |  |  | — |  | — |  | (26,809 | ) | 152,300 |  | 125,491 |
Exercise of share options | 226,888 |  |  | 17 |  |  | 10,284 |  | — |  | — |  | — |  | 10,301 |
Issue of restricted share units | 483,435 |  |  | 36 |  |  | — |  | — |  | — |  | — |  | 36 |
Non-cash stock compensation expense | — |  |  | — |  |  | 16,583 |  | — |  | — |  | — |  | 16,583 |
Share issuance costs | — |  |  | — |  |  | (9 | ) | — |  | — |  | — |  | (9 | )
Share repurchase program | (464,055 | ) |  | (33 | ) |  | — |  | 33 |  | — |  | (54,172 | ) | (54,172 | )
Share repurchase costs | — |  |  | — |  |  | — |  | — |  | — |  | (44 | ) | (44 | )
Balance at June 30, 2018 (without the adoption of ASC 606) | 54,327,869 |  |  | $ | 4,684 |  |  | $ | 508,195 |  | $ | 945 |  | $ | (65,522 | ) | $ | 840,884 |  | $ | 1,289,186 |

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- Definition The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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- References No definition available. + Details
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