XML 24 R10.htm IDEA: XBRL DOCUMENT v3.20.2
REVENUE FROM CONTRACTS WITH CUSTOMERS
 9 Months Ended
Sep. 26, 2020
Revenue from Contract with Customer [Abstract]  
REVENUE FROM CONTRACTS WITH CUSTOMERS REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following tables disaggregate the Company’s revenue by major business line and timing of transfer of products or services:
Three Months EndedNine Months Ended
September 26, 2020September 28, 2019September 26, 2020September 28, 2019
(in thousands)
Major Products/Service Lines:
RMS$151,910 $132,546 $414,455 $405,772 
DSA461,177 420,079 1,342,424 1,179,793 
Manufacturing130,213 115,326 376,064 344,523 
Total revenue$743,300 $667,951 $2,132,943 $1,930,088 
Three Months EndedNine Months Ended
September 26, 2020September 28, 2019September 26, 2020September 28, 2019
(in thousands)
Timing of Revenue Recognition:
RMS
Services and products transferred over time$60,225 $56,243 $177,623 $168,377 
Services and products transferred at a point in time91,685 76,303 236,832 237,395 
DSA
Services and products transferred over time460,821 419,445 1,341,832 1,178,874 
Services and products transferred at a point in time356 634 592 919 
Manufacturing
Services and products transferred over time47,457 36,308 126,088 102,674 
Services and products transferred at a point in time82,756 79,018 249,976 241,849 
Total revenue$743,300 $667,951 $2,132,943 $1,930,088 
RMS
The RMS business generates revenue through the commercial production and sale of research models, research products, and the provision of services related to the maintenance and monitoring of research models and management of clients’ research operations. Revenue from the sale of research models and products is recognized at a point in time when the customer obtains control of the product, which may be upon shipment or upon delivery based on the shipping terms of a contract. Revenue generated from research models services is recognized over time and is typically based on a right-to-invoice measure of progress (output method) as invoiced amounts correspond directly to the value of the Company’s performance to date.
DSA
The Discovery and Safety Assessment business provides a full suite of integrated drug discovery services directed at the identification, screening and selection of a lead compound for drug development and offers a full range of safety assessment services including bioanalysis, drug metabolism, pharmacokinetics, toxicology and pathology. Discovery and Safety Assessment services revenue is generally recognized over time using the cost-to-cost or right to invoice measures of progress, primarily representing fixed fee service contracts and per unit service contracts, respectively.
Manufacturing
The Manufacturing business includes Microbial Solutions, which provides in vitro (non-animal) lot-release testing products, microbial detection products, and species identification services; Biologics Testing Services (Biologics), which performs specialized testing of biologics; and Avian Vaccine Services (Avian), which supplies specific-pathogen-free chicken eggs and chickens. Species identification service revenue is generally recognized at a point in time as identifications are completed by the Company. Biologics service revenue is generally recognized over time using the cost-to-cost measure of progress. Microbial Solutions and Avian product sales are generally recognized at a point in time when the customer obtains control of the product, which may be upon shipment or upon delivery based on the contractual shipping terms of a contract.
Transaction Price Allocated to Future Performance Obligations
The Company discloses the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of September 26, 2020. Excluded from the disclosure is the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed. The Company has assessed future performance obligations with respect to the COVID-19 pandemic uncertainties and believes there is an insignificant impact on the ability to meet future performance obligations and the amount of revenue to be recognized.
The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) as of September 26, 2020:
Revenue Expected to be Recognized in Future Periods
Less than 1 Year1 to 3 Years4 to 5 YearsBeyond 5 YearsTotal
(in thousands)
DSA$250,855 $106,704 $4,265 $15 $361,839 
Manufacturing8,044 8,121 53 40 16,258 
Total$258,899 $114,825 $4,318 $55 $378,097 
Contract Balances from Contracts with Customers
The timing of revenue recognition, billings and cash collections results in billed receivables (client receivables), contract assets (unbilled revenue), and contract liabilities (current and long-term deferred revenue and customer contract deposits) on the unaudited condensed consolidated balance sheets. The Company’s payment terms are generally 30 days in the United States and consistent with prevailing practice in international markets. A contract asset is recorded when a right to consideration in exchange for goods or services transferred to a customer is conditioned other than the passage of time. Client receivables are recorded separately from contract assets since only the passage of time is required before consideration is due. A contract liability is recorded when consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met. The following table provides information about client receivables, contract assets, and contract liabilities from contracts with customers:
September 26, 2020December 28, 2019
(in thousands)
Balances from contracts with customers:
Client receivables$429,935 $395,740 
Contract assets (unbilled revenue)148,034 121,957 
Contract liabilities (current and long-term deferred revenue)191,459 192,788 
Contract liabilities (customer contract deposits)42,990 33,080 
When the Company does not have the unconditional right to advanced billings, both advanced client payments and unpaid advanced client billings are excluded from deferred revenue, with the advanced billings also being excluded from client receivables. The Company excluded approximately $13 million and $27 million of unpaid advanced client billings from both client receivables and deferred revenue in the accompanying unaudited condensed consolidated balance sheets as of September 26, 2020 and December 28, 2019, respectively. Advanced client payments of approximately $43 million and $33 million have been presented as customer contract deposits within other current liabilities in the accompanying unaudited condensed consolidated balance sheets as of September 26, 2020 and December 28, 2019, respectively.
Other changes in the contract asset and the contract liability balances during the nine months ended September 26, 2020 were as follows:
(i) Changes due to business combinations:
See Note 2. “Business Combinations” for client receivables that were acquired as part of the HemaCare acquisition on January 3, 2020 and Cellero acquisition on August 6, 2020. No significant contract assets or contract liabilities were acquired as part of these acquisitions.
(ii) Cumulative catch-up adjustments to revenue that affect the corresponding contract asset or contract liability, including adjustments arising from a change in the measure of progress, a change in an estimate of the transaction price (including any changes in the assessment of whether an estimate of variable consideration is constrained), or a contract modification:
During the nine months ended September 26, 2020, an immaterial cumulative catch-up adjustment to revenue was recorded.
(iii) A change in the time frame for a right to consideration to become unconditional (that is, for a contract asset to be recorded as a client receivable):
Approximately 85% of unbilled revenue as of December 28, 2019 was billed during the nine months ended September 26, 2020.
(iv) A change in the time frame for a performance obligation to be satisfied (that is, for the recognition of revenue arising from a contract liability):
Approximately 80% of contract liabilities as of December 28, 2019 were recognized as revenue during the nine months ended September 26, 2020.