XML 20 R10.htm IDEA: XBRL DOCUMENT v3.22.2
REVENUE FROM CONTRACTS WITH CUSTOMERS
 6 Months Ended
Jun. 25, 2022
Revenue from Contract with Customer [Abstract]  
REVENUE FROM CONTRACTS WITH CUSTOMERS REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following table disaggregates the Company’s revenue by major business line and timing of transfer of products or services:
Three Months EndedSix Months Ended
June 25, 2022June 26, 2021June 25, 2022June 26, 2021
(in thousands)
Timing of Revenue Recognition:
RMS
Services and products transferred over time$85,803 $66,334 $155,727 $131,230 
Services and products transferred at a point in time100,607 110,360 207,225 222,374 
Total RMS revenue186,410 176,694 362,952 353,604 
DSA
Services and products transferred over time589,371 539,790 1,131,707 1,040,258 
Services and products transferred at a point in time2,546 304 4,469 1,014 
Total DSA revenue591,917 540,094 1,136,176 1,041,272 
Manufacturing
Services and products transferred over time92,811 95,974 187,820 146,542 
Services and products transferred at a point in time101,993 101,845 200,112 197,755 
Total Manufacturing revenue194,804 197,819 387,932 344,297 
Total revenue$973,131 $914,607 $1,887,060 $1,739,173 
RMS
The RMS business generates revenue through the commercial production and sale of research models, research and GMP-compliant cells (cell supply), 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 cell supply 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 DSA 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. DSA 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 Solutions (Biologics), which performs specialized testing of biologics (Biologics Testing Solutions) as well as contract development and manufacturing products and services (CDMO); 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 June 25, 2022. Excluded from the disclosure is the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less (ii) contracts for which revenue is recognized at the amount to which the Company has the right to invoice for services performed and (iii) service revenue recognized in accordance with ASC 842, “Leases” (see additional disclosure for Other Performance Obligations).
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 June 25, 2022:
Revenue Expected to be Recognized in Future Periods
Less than 1 Year1 to 3 Years4 to 5 YearsBeyond 5 YearsTotal
(in thousands)
DSA$499,945 $429,944 $52,543 $3,083 $985,515 
Manufacturing1,621 — — — 1,621 
Total$501,566 $429,944 $52,543 $3,083 $987,136 
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:
June 25, 2022December 25, 2021
(in thousands)
Balances from contracts with customers:
Client receivables$564,719 $489,452 
Contract assets (unbilled revenue)190,814 160,609 
Contract liabilities (current and long-term deferred revenue)262,850 240,281 
Contract liabilities (customer contract deposits)77,038 59,512 
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 $49 million and $36 million of unpaid advanced client billings from both client receivables and deferred revenue in the accompanying unaudited condensed consolidated balance sheets as of June 25, 2022 and December 25, 2021, respectively. Advanced client payments of approximately $77 million and $60 million have been presented as customer contract deposits within other current liabilities in the accompanying unaudited condensed consolidated balance sheets as of June 25, 2022 and December 25, 2021, respectively.
Other changes in the contract asset and the contract liability balances during the six months ended June 25, 2022 and June 26, 2021 were as follows:
(i) Changes due to acquisitions and divestitures:
See Note 2 “Acquisitions and Divestitures” for the Company’s recent 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 six months ended June 25, 2022 and June 26, 2021, immaterial cumulative catch-up adjustments to revenue were 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 75% of unbilled revenue as of December 25, 2021, which was $161 million, was billed during the six months ended June 25, 2022. Approximately 80% of unbilled revenue as of December 26, 2020, which was $135 million, was billed during the six months ended June 26, 2021.
(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 75% of contract liabilities as of December 25, 2021, which was $240 million, were recognized as revenue during the six months ended June 25, 2022. Approximately 75% of contract liabilities as of December 26, 2020, which was $227 million, were recognized as revenue during the six months ended June 26, 2021.
Other Performance Obligations
As part of the Company’s service offerings, primarily in the Manufacturing and RMS segments, the Company has identified performance obligations related to leasing Company owned assets. In certain arrangements, customers obtain substantially all of the economic benefits of the identified assets, which may include manufacturing suites and related equipment, and have the right to direct the assets’ use over the term of the contract. The associated revenue is recognized on a straight-line basis over the term of the lease, which is generally less than one year. For the three months ended June 25, 2022 and June 26, 2021, the Company recognized lease revenue of $13.9 million and $6.3 million, which is recorded within service revenue, which is transferred over time, within the unaudited condensed consolidated statements of income. For the six months ended June 25, 2022 and June 26, 2021, the Company recognized lease revenue of $21.8 million and $6.3 million within the unaudited condensed consolidated statements of income. Due to the nature of these arrangements and timing of the contractual lease term, the remaining revenue to be recognized related to these lease performance obligations is not material to the unaudited condensed consolidated financial statements.