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Recently Issued Accounting Pronouncements | 3 Months Ended
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Sep. 29, 2018
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] |
Recently Issued Accounting Pronouncements | Note 2. Recently Issued Accounting Pronouncements Recent Accounting Pronouncements Adopted In November 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update (“ASU”) that requires a statement of cash flows to present the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. In the three months ended September 29, 2018, we adopted this ASU using a retrospective transition method. Accordingly, our consolidated statement of cash flows for the three months ended September 30, 2017, as presented herein, has been restated to comply with the new requirements. In May 2014, the FASB issued new authoritative guidance related to revenue recognition from contracts with customers, ASC 606 - Revenue from Contracts with Customers (the “revenue standard”). The new guidance provides a unified model to determine when and how revenue is recognized. The core principle of the new guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. The Company adopted the new standard effective in the first quarter of fiscal 2019 using the retrospective transition method, which requires the Company to recast each prior period presented consistent with the new guidance. Refer to “Note 3. Revenue” of the Consolidated Financial Statements for a summary of significant policies related to the new accounting standards. As part of the adoption, certain prior period amounts have been adjusted or reclassified within the consolidated financial statements. The following table presents the impact of the revenue standard adoption to select line items of our Consolidated Balance Sheet as of June 30, 2018, (in millions) as follows:
| June 30, 2018
| As Reported |  | Adjustment |  | As Adjusted
ASSETS |  |  |  |  |
Accounts receivable, net | $ | 217.5 |  |  | $ | 1.1 |  |  | $ | 218.6 |
Prepayments and other assets | 54.8 |  |  | 1.5 |  |  | 56.3 |
Deferred income taxes | 114.5 |  |  | (0.2 | ) |  | 114.3 |
Other non-current assets | 13.6 |  |  | 1.8 |  |  | 15.4 |
Total assets | $ | 2,022.6 |  |  | $ | 4.2 |  |  | $ | 2,026.8 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |  |  |  |  |
Deferred revenue | 71.9 |  |  | (11.3 | ) |  | 60.6 |
Accrued payroll and related expenses | 51.4 |  |  | 1.4 |  |  | 52.8 |
Other current liabilities | 77.0 |  |  | 1.9 |  |  | 78.9 |
Other non-current liabilities | 182.8 |  |  | (2.0 | ) |  | 180.8 |
Total stockholders’ equity | 720.7 |  |  | 14.2 |  |  | 734.9 |
Total liabilities and stockholders’ equity | $ | 2,022.6 |  |  | $ | 4.2 |  |  | $ | 2,026.8 |
The primary impacts to the previously issued amounts are as follows: Accounts receivable, net: Adoption of the new revenue standard resulted in an increase to accounts receivable, net primarily due to two items: 1) The return rights provision, which represents a liability for expected customer returns, was previously presented as a reduction to accounts receivable and is now presented in other current liabilities; and 2) Contract assets which are recorded when a conditional right to consideration exists and transfer of control has occurred in advance of the Company’s right to invoice. Upon adoption of ASC 606, contract assets, which were previously presented as a component of accounts receivable, net, are now presented as a component of prepayments and other current assets. Prepayments and other current assets: As noted above, contract assets, which are recognized when a conditional right to consideration exists and transfer of control has occurred in advance of the Company’s right to invoice, were previously presented as a component of accounts receivable, net. Upon adoption of ASC 606, contract assets are presented as a component of prepayments and other current assets. Other non-current assets: The costs of obtaining contracts where the amortization period for recognition of the expense is beyond a year are capitalized and recognized over the revenue recognition period of the original contract. These costs are now classified as other non-current assets. Short-term and long-term deferred revenue: Adoption of the new revenue standard resulted in a decrease of deferred revenue primarily due to the net change in timing of software related revenue. Under the previous standard revenue for software license sales bundled with post-contract support and/or services where vendor-specific objective evidence of fair value had not been established was recognized ratably over the support period. Upon adoption of ASC 606 the revenue related to such software license sales will now be recognized when control transfers, which is usually at the time of billing. The actual revenue recognition treatment required under the standard will depend on contract-specific terms and, in some instances, transfer of control and revenue recognition may differ from the time of billing. Long-term deferred revenue is presented under other non-current liabilities. Other current liabilities: The returns provision, which represents a liability for expected customer returns, was previously presented as a reduction of accounts receivable and is now presented as other current liabilities. Adoption of the revenue standard had no impact on net cash provided by or used in operating, investing or financing activities as presented on our Consolidated Statements of Cash Flows. The following table presents the impact of the revenue standard adoption to select line items of our previously reported Consolidated Statement of Operations for the three months ended September 30, 2017 (in millions, except per share data) as follows:
| Three Months Ended September 30, 2017
| As Reported |  | Adjustment |  | As Adjusted
Revenues: |  |  |  |  |
Product revenue | $ | 171.9 |  |  | $ | (6.8 | ) |  | $ | 165.1 |
Service revenue | 23.3 |  |  | 2.5 |  |  | 25.8 |
Total net revenue | 195.2 |  |  | (4.3 | ) |  | 190.9 |
Cost of revenues: |  |  |  |  |
Product cost of revenue | 63.5 |  |  | (0.9 | ) |  | 62.6 |
Service cost of revenue | 11.4 |  |  | 0.1 |  |  | 11.5 |
Amortization of acquired technologies | 4.1 |  |  | — |  |  | 4.1 |
Total cost of revenue | 79.0 |  |  | (0.8 | ) |  | 78.2 |
Gross profit | 116.2 |  |  | (3.5 | ) |  | 112.7 |
Income from operations | 10.0 |  |  | (3.3 | ) |  | 6.7 |
Loss before taxes | (2.3 | ) |  | (3.3 | ) |  | (5.6 | )
Provision for income taxes | 2.5 |  |  | (0.5 | ) |  | 2.0 |
Net loss | $ | (4.8 | ) |  | $ | (2.8 | ) |  | $ | (7.6 | )
Net loss per common share: |  |  |  |  |
Basic and diluted | $ | (0.02 | ) |  | $ | (0.01 | ) |  | $ | (0.03 | )
Shares used in per share calculations: |  |  |  |  |
Basic and diluted | 228.1 |  |  | — |  |  | 228.1 |
The impacts to the previously issued amounts are summarized, as follows: Net revenue: Adoption of the revenue standard resulted in a change in the timing of revenue recognized primarily due to the treatment of software license revenue. Under the prior standard, if vendor-specific objective evidence had not been established for the post contract support and/or the services, software license revenue would have been recognized ratably over the support period. Upon adoption of ASC 606, revenue related to such software license sales will now be recognized when control transfers which is usually at the time of billing. The decrease in revenue for the period presented above is primarily the result of the elimination of ratable software license revenue. Such license revenue was previously amortized; however it is now recognized upon recast, at a point in time under the new standard. Recent Accounting Pronouncements Not Yet Adopted In June 2016, FASB issued guidance that changes the accounting for recognizing impairments of financial assets. Under the new guidance, credit losses for certain types of financial instruments will be estimated based on expected losses. The new guidance also modifies the impairment models for available-for-sale debt securities and for purchased financial assets with credit deterioration since their origination. The guidance is effective for the Company in the first quarter of fiscal 2021 and earlier adoption is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its Consolidated Financial Statements. In February 2016, the FASB issued guidance regarding both operating and financing leases, requiring lessees to recognize on their balance sheets “right-of-use assets” and corresponding lease liabilities, measured on a discounted basis over the lease term. Virtually all leases will be subject to this treatment except leases that meet the definition of a “short-term lease.” The guidance requires a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The guidance is effective for the Company in the first quarter of fiscal 2020. While the Company is not yet in a position to assess the full impact of the application of the new guidance, the Company expects adoption of this guidance will materially increase the assets and liabilities recorded on its Consolidated Balance Sheets.

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- Definition The entire disclosure for a new accounting pronouncement that has been issued but not yet adopted. + 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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