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New Accounting Standards Implemented | 9 Months Ended
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Sep. 30, 2018
Accounting Changes and Error Corrections [Abstract] |
New Accounting Standards Implemented | Note 3. New Accounting Standards Implemented In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, as amended (commonly referred to as ASC 606), which replaces numerous requirements in U.S. GAAP, including industry-specific requirements, and provides companies with a single revenue recognition model for recognizing revenue from contracts with customers and significantly expanded the disclosure requirements for revenue arrangements. The new standard, as amended, was effective for the Company for interim and annual reporting periods beginning on January 1, 2018. As discussed in Note 2, the Company adopted ASC 606 using the modified retrospective transition method. Results for reporting periods beginning after December 31, 2017 are presented under ASC 606, while prior period comparative information has not been restated and continues to be reported in accordance with ASC 605, Revenue Recognition, the accounting standard in effect for periods ending prior to January 1, 2018. With the adoption of ASC 606, the Company recognizes sales over time by using the percentage of completion method on all of its fixed-type contracts and measures the extent of progress toward completion using the cost-to-cost method after adjusting inventory for uninstalled materials and that the risk of ownership has not been passed to the customer. Previously, under ASC 605, the Company recognized sales over time by using the percentage of completion method on all of its fixed-type contracts and measured the extent of progress toward completion using the cost-to-cost method but adjusted inventory for uninstalled materials only for those projects were this method was not appropriately reflecting the progress on the contracts. Accordingly, the adoption of ASC 606 impacted all contracts that had uninstalled materials were the risk of ownership has not been passed to the customer regardless of the extent of progress toward completion. Based on the analysis performed of the uninstalled materials at January 1, 2018, the Company recorded, upon adoption of ASC 606, a net decrease to retained earnings of $187, as shown on the table below. The adjustment to retained earnings primarily relates to contracts that had uninstalled material that were not previously included in inventory since the cost-to-cost method was appropriately reflecting the progress of these contracts. The Company made certain presentation changes to its consolidated balance sheet on January 1, 2018 to comply with ASC 606. The components of contracts in process as reported under ASC 605, which included unbilled contract receivables and inventoried contract costs, have been reclassified as contract assets and inventories, respectively, after certain adjustments described below under ASC 606. The remainder of inventoried contract costs, primarily related to inventories not controlled by the Company’s customers, were reclassified to inventories. The Company expenses costs to obtain a contract and costs to fulfill a contract as incurred. Other revenues not related to fixed-type contracts did not result in any changes under ASC 606 and the revenues are still been recognized when the risk of ownership is transfered to the customer based on the sales terms. The table below presents the cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet due to the adoption of ASC 606.
|  | December 31, 2017 As Reported Under ASC 605 |  |  | Adjustments Due to ASC 606 |  |  | January 1, 2018 As Adjusted Under ASC 606 |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Trade accounts receivable, net |  | $ | 110,464 |  |  | $ | (30,223 | ) |  | $ | 80,241 |
Inventories |  |  | 71,656 |  |  |  | 1,975 |  |  |  | 73,631 |
Unbilled receivables on uncompleted contracts |  |  | 9,996 |  |  |  | (9,996 | ) |  |  | - |
Contract assets |  |  | - |  |  |  | 45,468 |  |  |  | 45,468 |
Other Assets |  |  | 275,884 |  |  |  | - |  |  |  | 275,884 |
Total Assets |  | $ | 468,000 |  |  | $ | 7,224 |  |  | $ | 475,224 |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Contract liabilities - current |  |  | - |  |  |  | 18,945 |  |  |  | 18,945 |
Current portion of customer advances on uncompleted contracts |  |  | 11,429 |  |  |  | (11,429 | ) |  |  | - |
Other current liabilities |  |  | 13,626 |  |  |  | (105 | ) |  |  | 13,521 |
Current portion of customer advances on uncompleted contracts |  |  | 1,571 |  |  |  | (1,571 | ) |  |  | - |
Contract liabilities - current |  |  | - |  |  |  | 1,571 |  |  |  | 1,571 |
Other Liabilities |  |  | 319,709 |  |  |  | - |  |  |  | 319,709 |
Total liabilities |  | $ | 346,335 |  |  | $ | 7,411 |  |  | $ | 353,746 |
SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  |  | 22,212 |  |  |  | (187 | ) |  |  | 22,025 |
Total shareholders’ equity |  | $ | 121,665 |  |  | $ | (187 | ) |  | $ | 121,478 |
The adjustment of trade accounts receivable upon adoption of ASC 606 is related to the reclassification of retainage receivables to contract assets. See breakdown of contract assets further below. The table below presents the impact of the adoption of ASC 606 on the Company’s statement of operations.
|  | Three months ended September 30, 2018 |
|  | Under ASC 605 |  |  | Effect of ASC 606 |  |  | As Reported Under ASC 606 |
Operating Revenues |  | $ | 96,512 |  |  | $ | 480 |  |  | $ | 96,992 |
Cost of Sales |  |  | 61,888 |  |  |  | 411 |  |  |  | 62,299 |
Gross Profit |  |  | 34,624 |  |  |  | 69 |  |  |  | 34,693 |
Operating Expenses |  |  | (19,426 | ) |  |  | - |  |  |  | (19,426 | )
Other Income and Expenses |  |  | (6,854 | ) |  |  | - |  |  |  | (6,854 | )
Income Before Tax |  |  | 8,344 |  |  |  | 69 |  |  |  | 8,413 |
Income Tax Benefit (Provision) |  |  | (2,243 | ) |  |  | (18 | ) |  |  | (2,261 | )
Net Income |  |  | 6,101 |  |  |  | 51 |  |  |  | 6,152 |
Net Income Attributable to Parent |  | $ | 6,246 |  |  | $ | 51 |  |  | $ | 6,297 |
Basic earnings per share |  | $ | 0.16 |  |  | $ | - |  |  | $ | 0.16 |
Diluted earnings per share |  | $ | 0.16 |  |  | $ | - |  |  | $ | 0.16 |
|  | Nine months ended September 30, 2018 |
|  | Under ASC 605 |  |  | Effect of ASC 606 |  |  | As Reported Under ASC 606 |
Operating Revenues |  | $ | 274,472 |  |  | $ | (1,351 | ) |  | $ | 273,121 |
Cost of Sales |  |  | 188,276 |  |  |  | (1,238 | ) |  |  | 187,038 |
Gross Profit |  |  | 86,196 |  |  |  | (113 | ) |  |  | 86,083 |
Operating Expenses |  |  | (53,204 | ) |  |  | - |  |  |  | (53,204 | )
Other Income and Expenses |  |  | (13,791 | ) |  |  | - |  |  |  | (13,791 | )
Income Before Tax |  |  | 19,201 |  |  |  | (113 | ) |  |  | 19,088 |
Income Tax Provision |  |  | (6,216 | ) |  |  | 29 |  |  |  | (6,187 | )
Net Income |  |  | 12,985 |  |  |  | (84 | ) |  |  | 12,901 |
Net Income Attributable to Parent |  | $ | 13,414 |  |  | $ | (84 | ) |  | $ | 13,330 |
Basic earnings per share |  | $ | 0.35 |  |  | $ | - |  |  | $ | 0.35 |
Diluted earnings per share |  | $ | 0.35 |  |  | $ | - |  |  | $ | 0.35 |
The table below presents the impact of the adoption of ASC 606 on the Company’s balance sheet.
|  | September 30, 2018 |
|  | Under ASC 605 |  |  | Effect of ASC 606 |  |  | As Reported Under ASC 606 |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Trade accounts receivable, net |  | $ | 122,411 |  |  | $ | (30,559 | ) |  | $ | 91,852 |
Inventories |  |  | 87,214 |  |  |  | 1,238 |  |  |  | 88,452 |
Unbilled receivables on uncompleted contracts |  |  | 17,071 |  |  |  | 17,071 |  |  |  | - |
Contract assets - current portion |  |  | - |  |  |  | 45,836 |  |  |  | 45,836 |
Other Assets |  |  | 259,217 |  |  |  | (314 | ) |  |  | 258,903 |
Contract assets - Non-current |  |  | - |  |  |  | 5,531 |  |  |  | 5,531 |
Total Assets |  | $ | 485,913 |  |  | $ | 4,661 |  |  | $ | 490,574 |
LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Contract liabilities - current |  |  | - |  |  |  | 17,915 |  |  |  | 17,915 |
Current portion of customer advances on uncompleted contracts |  |  | 12,828 |  |  |  | (12,828 | ) |  |  | - |
Other current liabilities |  |  | 92,317 |  |  |  | - |  |  |  | 92,317 |
Customer advances on uncompleted contracts - non-current |  |  | 1,750 |  |  |  | (1,750 | ) |  |  | - |
Contract liabilities - non-current |  |  | - |  |  |  | 1,750 |  |  |  | 1,750 |
Other Liabilities |  |  | 231,672 |  |  |  | (342 | ) |  |  | 231,330 |
Total liabilities |  | $ | 338,567 |  |  | $ | 4,745 |  |  | $ | 343,312 |
SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  |  | 20,155 |  |  |  | (84 | ) |  |  | 20,071 |
Total shareholders’ equity |  | $ | 147,346 |  |  | $ | (84 | ) |  | $ | 147,262 |
Disaggregation of Total Net Sales The Company disaggregates its sales with customers by revenue recognition method for its only segment, as the Company believes these factors affect the nature, amount, timing, and uncertainty of the Company’s revenue and cash flows.
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Fixed price contracts |  | $ | 39,703 |  |  | $ | 46,256 |  |  | $ | 119,733 |  |  | $ | 108,796 |
Product sales |  |  | 57,289 |  |  |  | 37,128 |  |  |  | 153,388 |  |  |  | 121,381 |
Total Revenues |  | $ | 96,992 |  |  | $ | 83,384 |  |  | $ | 273,121 |  |  | $ | 230,177 |
The following table presents geographical information about revenues.
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Colombia |  | $ | 12,138 |  |  | $ | 13,339 |  |  | $ | 49,519 |  |  | $ | 45,292 |
United States |  |  | 82,223 |  |  |  | 68,117 |  |  |  | 215,068 |  |  |  | 174,767 |
Panama |  |  | 1,253 |  |  |  | 1,095 |  |  |  | 3,110 |  |  |  | 3,187 |
Other |  |  | 1,378 |  |  |  | 833 |  |  |  | 5,424 |  |  |  | 6,931 |
Total Revenues |  | $ | 96,992 |  |  | $ | 83,384 |  |  | $ | 273,121 |  |  | $ | 230,177 |
Contract Assets and Contract Liabilities Contract assets represent accumulated incurred costs and earned profits on contracts with customers that have been recorded as sales but have not been billed to customers and are classified as current. Contract liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue, and represent amounts received in excess of sales recognized on contracts. The Company classifies advance payments and billings in excess of costs incurred as current, and deferred revenue as current or non-current based on the expected timing of sales recognition. Contract assets and contract liabilities are determined on a contract by contract basis at the end of each reporting period. The non-current portion of contract liabilities is included in other liabilities in the Company’s consolidated balance sheets. The table below presents the components of net contract assets (liabilities).
|  | September 30, 2018 |  |  | January 1 2018 |
Contract assets — current |  | $ | 45,836 |  |  | $ | 45,468 |
Contract assets — non-current |  |  | 5,531 |  |  |  | - |
Contract liabilities — current |  |  | (17,915 | ) |  |  | (18,945 | )
Contract liabilities — non-current |  |  | (1,750 | ) |  |  | (1,571 | )
Net contract assets (liabilities) |  | $ | 31,702 |  |  | $ | 24,952 |
The components of contract assets are presented in the table below.
|  | September 30, 2018 |  |  | January 1 2018 |
Unbilled contract receivables, gross |  | $ | 20,808 |  |  | $ | 15,245 |
Retainage |  |  | 30,559 |  |  |  | 30,223 |
Total contract assets |  |  | 51,367 |  |  |  | 45,468 |
Less: current portion |  |  | 45,836 |  |  |  | 45,468 |
Contract Assets – non-current |  | $ | 5,531 |  |  | $ | - |
The components of contract liabilities are presented in the table below.
|  | September 30, 2018 |  |  | January 1 2018 |
Billings in excess of costs |  | $ | 5,087 |  |  | $ | 7,516 |
Advances from customers on uncompleted contracts |  |  | 14,578 |  |  |  | 13,000 |
Total contract liabilties |  |  | 19,665 |  |  |  | 20,516 |
Less: current portion |  |  | 17,915 |  |  |  | 18,945 |
Contract liabilities – non-current |  | $ | 1,750 |  |  | $ | 1,571 |
For the six months ended September 30, 2018, the Company recognized $6,381 of sales related to its contract liabilities at January 1, 2018.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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