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REVENUE RECOGNITION | 12 Months Ended
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Dec. 31, 2019
Revenue From Contract With Customer [Abstract] |
REVENUE RECOGNITION |
19. | REVENUE RECOGNITION:
Effective on January 1, 2018, the Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (Topic 606). The standard establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows from a contract with a customer. During the year ended December 31, 2019, the Company entered into a transaction with one of its customers for emitters involving elements of variable consideration. Due to the escalation in trade policy tension between the governments of China and the United States, the customer required a larger than normal shipment of emitters having a right to return them through March 15, 2020 in order to accommodate their uncertain production needs. Per Topic 606, the Company was constrained to recognizing revenue on this unique shipment to the extent that it was probable that a significant revenue reversal would not occur and deferred recognition of the remainder until after the inherent uncertainties of the transaction were resolved. These uncertainties include factors that are outside of the Company’s influence, including the customer’s production needs and complexities associated with the current international health and trade issues in China. For the years ended December 31, 2019, 2018 and 2017, the Company recorded 97%, 95% and 97%, respectively, of its revenue from sales of material and 3%, 5% and 3%, respectively, from the providing of services through Adesis. Contract Balances The following table provides information about assets and liabilities associated with our contracts from customers (in thousands):
|  | As of December 31, 2019 |
Accounts receivable |  | $ | 60,452 |
Short-term unbilled receivables |  |  | 1,362 |
Long-term unbilled receivables |  |  | — |
Short-term deferred revenue |  |  | 97,333 |
Long-term deferred revenue |  |  | 47,529 |
Short-term and long-term unbilled receivables are classified as other current assets and other assets, respectively, on the Consolidated Balance Sheets. The deferred revenue balance at December 31, 2019 will be recognized as materials are shipped to customers over the remaining contract periods. The significant customer contracts (individually representing greater than 10% of revenue) expire in 2022. As of December 31, 2019, the Company had $6.5 million of backlog associated with committed purchase orders from its customers for phosphorescent emitter material. These orders are anticipated to be fulfilled within the next 90 days. Significant changes in the unbilled receivables and deferred liabilities balances for the years ended December 31, 2019 and 2018, are as follows (in thousands):
|  | Year Ended December 31, 2019 |
|  | Unbilled Receivables Increase (Decrease) |  |  | Deferred Revenue (Increase) Decrease |
Balance at December 31, 2018 |  | $ | 1,020 |  |  | $ | (122,567 | )
Revenue recognized that was previously included in deferred revenue |  |  | — |  |  |  | 133,394 |
Increases due to cash received |  |  | — |  |  |  | (157,321 | )
Cumulative catch-up adjustment arising from changes in estimates of transaction price |  |  | — |  |  |  | 1,632 |
Unbilled receivables recognized |  |  | 1,834 |  |  |  | — |
Transferred to receivables from unbilled receivables |  |  | (1,492 | ) |  |  | — |
Net change |  |  | 342 |  |  |  | (22,295 | )
Balance at December 31, 2019 |  | $ | 1,362 |  |  | $ | (144,862 | )
|  | Year Ended December 31, 2018 |
|  | Unbilled Receivables Increase (Decrease) |  |  | Deferred Revenue (Increase) Decrease |
Balance at December 31, 2017 |  | $ | 70 |  |  | $ | (38,883 | )
Adoption of Topic 606 on January 1, 2018 |  |  | 307 |  |  |  | (21,307 | )
Adjusted balance on January 1, 2018 |  |  | 377 |  |  |  | (60,190 | )
Revenue recognized that was previously included in deferred revenue |  |  | — |  |  |  | 64,562 |
Increases due to cash received |  |  | — |  |  |  | (130,639 | )
Cumulative catch-up adjustment arising from changes in estimates of transaction price |  |  | — |  |  |  | 3,700 |
Unbilled receivables recognized |  |  | 2,024 |  |  |  | — |
Transferred to receivables from unbilled receivables |  |  | (1,381 | ) |  |  | — |
Net change |  |  | 643 |  |  |  | (62,377 | )
Balance at December 31, 2018 |  | $ | 1,020 |  |  | $ | (122,567 | )
Adoption of Topic 606 The Company adopted Topic 606 beginning January 1, 2018 using the “modified retrospective” approach, meaning the standard was applied only to the most current period presented in the financial statements, with a cumulative adjustment to retained earnings. Under this transition method, the Company elected to apply Topic 606 only to contracts that were not complete at the initial adoption date. Adoption of the new standard resulted in a reduction of retained earnings of $17.1 million on January 1, 2018. The new standard impacts how the Company recognizes revenue on its commercial license and material supply agreements with customers. Previously, the Company recognized license fees on a straight-line basis or as received from the customer, and royalty revenue one quarter in arrears based on sales information received from its customers typically received after disclosing that quarter’s results. Under the new standard, total contract consideration is estimated and recognized over the contract term based on material units sold at its estimated per unit fee. Total contract consideration includes fixed amounts designated in contracts with customers as license fees as well as estimates of material fees and royalties to be earned. Prior to the adoption of Topic 606 on January 1, 2018, the Company recognized revenue in accordance with ASC Topic 605, Revenue Recognition (Topic 605). The impact of Topic 606 on revenue for the years ended December 31, 2018, was a decrease of $78.9 million, respectively, from the amount that would have been reported under Topic 605. The following tables summarize the impacts of adopting Topic 606 on the Company’s Consolidated Financial Statements for the year ended December 31, 2018 (in thousands) Consolidated Balance Sheet
|  | Impact of Changes in Accounting Policies |
December 31, 2018 |  | As Reported |  |  | Adjustment |  |  | Balances Without Adoption of Topic 606 |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Other assets (current and non-current) |  | $ | 70,892 |  |  | $ | — |  |  | $ | 70,892 |
Deferred income taxes |  |  | 24,377 |  |  |  | (11,153 | ) |  |  | 13,224 |
TOTAL ASSETS |  |  | 933,424 |  |  |  | (11,153 | ) |  |  | 922,271 |
LIABILITIES AND SHAREHOLDERS' EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Deferred revenue (current and non-current) |  |  | 122,567 |  |  |  | (99,885 | ) |  |  | 22,682 |
Retained earnings |  |  | 129,552 |  |  |  | 88,732 |  |  |  | 218,284 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |  |  | 933,424 |  |  |  | (11,153 | ) |  |  | 922,271 |
Consolidated Statement of Income
|  | Impact of Changes in Accounting Policies |
Year Ended December 31, 2018 |  | As Reported |  |  | Adjustment |  |  | Balances Without Adoption of Topic 606 |
REVENUE |  | $ | 247,414 |  |  | $ | 78,885 |  |  | $ | 326,299 |
Gross margin |  |  | 193,873 |  |  |  | 78,885 |  |  |  | 272,758 |
OPERATING INCOME |  |  | 56,735 |  |  |  | 78,885 |  |  |  | 135,620 |
INCOME BEFORE INCOME TAXES |  |  | 64,311 |  |  |  | 78,885 |  |  |  | 143,196 |
INCOME TAX EXPENSE |  |  | (5,471 | ) |  |  | (7,252 | ) |  |  | (12,723 | )
NET INCOME |  |  | 58,840 |  |  |  | 71,633 |  |  |  | 130,473 |
Consolidated Statement of Cash Flows
|  | Impact of Changes in Accounting Policies |
Year Ended December 31, 2018 |  | As Reported |  |  | Adjustment |  |  | Balances Without Adoption of Topic 606 |
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 58,840 |  |  | $ | 71,633 |  |  | $ | 130,473 |
Amortization of deferred revenue and recognition of unbilled receivables |  |  | (68,905 | ) |  |  | (81,991 | ) |  |  | (150,896 | )
Deferred income tax (benefit) expense |  |  | (12,814 | ) |  |  | 10,358 |  |  |  | (2,456 | )
Other assets (current and non-current) |  |  | (59,062 | ) |  |  | — |  |  |  | (59,062 | )
Net cash provided by operating activities |  |  | 121,796 |  |  |  | — |  |  |  | 121,796 |

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- References No definition available. + Details
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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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