Deferred Revenue and Other Contract Liabilities Deferred Revenue and Other Contract Liabilities

12 Months Ended

Dec. 28, 2019

Revenue Recognition and Deferred Revenue [Abstract]

Deferred Revenue and Other Contract Liabilities

13. Deferred Revenue and Other Contract Liabilities

Deferred revenue and other contract liabilities consist of the following (in thousands):



	December 28, 2019			December 29, 2018
Deferred revenue⁽¹⁾	$	13,998		$	10,328
Accrued rebates and allowances	8,436			7,269
Accrued customer reimbursements⁽²⁾	5,739			16,194
Total deferred revenue and other contract liabilities	28,173			33,791
Less: Non-current portion of deferred revenue	(2,234		)	(1,737		)
Deferred revenue and other contract liabilities - current	$	25,939		$	32,054

______________

⁽¹⁾

In connection with its adoption of ASC 842 on December 30, 2018, the Company recorded a reduction to deferred revenue of approximately $1.1 million due to the acceleration of revenue as a result of the reclassification of certain embedded leases within the Company’s deferred equipment agreements with its customers from operating to sales-type leases. See “Recently Adopted Accounting Pronouncements” in Note 2 to these consolidated financial statements for additional information related to the Company’s adoption of ASC 842.

⁽²⁾

In connection with its adoption of ASC 842 on December 30, 2018, the Company recorded a reduction to accrued customer reimbursements of approximately $12.3 million related to the derecognition of liabilities and leased equipment assets for certain OEM equipment reimbursements. See “Recently Adopted Accounting Pronouncements” in Note 2 to these consolidated financial statements for additional information related to the Company’s adoption of ASC 842.

Deferred revenue relates to contracted amounts that have been invoiced to customers for which remaining performance obligations must be completed before the Company can recognize the revenue. These amounts primarily relate to undelivered equipment, sensors and services under deferred equipment agreements and extended warranty agreements.

Changes in deferred revenue for the year ended December 28, 2019 were as follows:



	Amount
Deferred revenue, beginning of the period	$	10,328
Revenue deferred during the period	11,261
Recognition of revenue deferred in prior periods	(7,591		)
Deferred revenue, end of the period	$	13,998

Expected revenue from remaining contractual performance obligations (Unrecognized Contract Revenue) includes deferred revenue, as well as other amounts that will be invoiced and recognized as revenue in future periods when the Company completes its performance obligations. While Unrecognized Contract Revenue is similar in concept to backlog, Unrecognized Contract Revenue excludes revenue allocable to monitoring-related equipment that is effectively leased to customers under deferred equipment agreements and other contractual obligations for which neither party has performed.

The following table summarizes the Company’s estimated Unrecognized Contract Revenue as of December 28, 2019 and the future periods within which the Company expects to recognize such revenue.



	Expected Future Revenue By Period (in thousands)
	Less than 1 Year		Between 1-3 Years		Between 3-5 Years		More than 5 Years		Total
Unrecognized contract revenue	$	201,874	$	319,513	$	150,928	$	39,515	$	711,830

The estimated timing of this revenue is based, in part, on management’s estimates and assumptions about when its performance obligations will be completed. As a result, the actual timing of this revenue in future periods may vary, possibly materially, from those reflected in this table.