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Note 2 - Revenue Recognition | 12 Months Ended
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Dec. 31, 2018
Notes to Financial Statements |
Revenue from Contract with Customer [Text Block] |
| ( 2 ) | Revenue Recognition
On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers , using the modified retrospective transition method. Under this method, the Company applied ASC 606 to contracts under which all performance obligations were not completed as of January 1, 2018 and recognized the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings. Results for reporting periods beginning after January 1, 2018 are presented in accordance with ASC 606. Prior period amounts are not adjusted and are reported in accordance with requirements in ASC 605, Revenue Recognition , which is also referred to herein as “legacy GAAP”. The cumulative effect of the adoption on our condensed consolidated balance sheet, by applying the modified retrospective method as of January 1, 2018, is as follows (in thousands):
|  | As Reported |  |  |  | As Adjusted
|  | December 31, 2017 |  | Cumulative Adjustments |  | January 1, 2018
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Property, plant and equipment |  | $ | 106,716 |  |  | $ | 1,027 |  |  | $ | 107,743 |
Accumulated depreciation and amortization |  |  | (53,064 | ) |  |  | (548 | ) |  |  | (53,612 | )
Net property, plant and equipment |  |  | 53,652 |  |  |  | 479 |  |  |  | 54,131 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Deferred revenue |  |  | 297 |  |  |  | 574 |  |  |  | 871 |
Deferred income taxes |  |  | 2,440 |  |  |  | (25 | ) |  |  | 2,415 |
Stockholders' equity: |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  |  | 97,562 |  |  |  | (70 | ) |  |  | 97,492 |
The following reflects the Company’s condensed consolidated balance sheet and condensed consolidated statement of income on an as-reported basis and as if we had continued to recognize revenue under legacy GAAP (in thousands):
|  | December 31, 2018
|  | As Reported |  | Balances without adoption of ASC 606 |  | Difference
Assets: |  |  |  |  |  |
Property, plant and equipment |  | $ | 111,779 |  |  | $ | 110,372 |  |  | $ | 1,407 |
Accumulated depreciation and amortization |  |  | (54,112 | ) |  |  | (53,110 | ) |  |  | (1,002 | )
Net property, plant and equipment |  |  | 57,667 |  |  |  | 57,262 |  |  |  | 405 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Deferred revenue |  |  | 2,507 |  |  |  | 2,129 |  |  |  | 378 |
Deferred income taxes |  |  | 4,129 |  |  |  | 4,154 |  |  |  | (25 | )
Stockholders' equity: |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  |  | 111,802 |  |  |  | 111,750 |  |  |  | 52 |
|  | For the Year Ended December 31, 2018
|  | As Reported |  | Balances without adoption of ASC 606 |  | Difference
Net sales |  | $ | 190,455 |  |  | $ | 190,259 |  |  | $ | 196 |
Cost of sales |  |  | 142,147 |  |  |  | 142,073 |  |  |  | 74 |
Gross profit |  |  | 48,308 |  |  |  | 48,186 |  |  |  | 122 |
The following summarizes the significant changes under ASC 606 as compared to legacy GAAP:
| · | Under legacy GAAP, the Company recognized revenue for certain customer tooling at the time the tooling was complete and accepted by the customer. Under ASC 606, as “control” of this tooling does not transfer to the customer, the related purchase orders do not qualify as an “accounting contract” and as a result the consideration received is recorded as deferred revenue and recognized over the estimated time for which parts are produced on each respective tool (approximately two years). The related costs to produce the tooling are capitalized and depreciated over the estimated useful life of the tool (approximately two years).
| · | Under legacy GAAP, the Company recognized revenue on certain long-term agreements with variable pricing at the selling price that was in effect for the current period at the time of shipment. Under ASC 606, the Company will recognize revenue for these contracts at the weighted average selling price for each part over the term of the agreement for any agreements where the Company estimates that we will not be able to achieve the corresponding cost changes necessary to maintain a consistent margin over the term of the agreement. The Company has a small number of long-term agreements with variable pricing.
The Company recognizes revenue when a customer obtains control of a promised good or service. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to in exchange for promised goods or services. The Company recognizes revenue in accordance with the core principles of ASC 606 which include ( 1 ) identifying the contract with a customer, ( 2 ) identifying separate performance obligations within the contract, ( 3 ) determining the transaction price, ( 4 ) allocating the transaction price to the performance obligations, and ( 5 ) recognizing revenue. The Company recognizes all but an immaterial portion of its product sales upon shipment. The Company recognizes revenue from the sale of tooling and machinery primarily upon customer acceptance, with the exception of certain tooling where control does not transfer to the customer, which results in revenue being recognized over the estimated time for which parts are produced with the use of each respective tool. The Company recognizes revenue from engineering services as the services are performed. Although only applicable to an insignificant number of transactions, the Company has elected to exclude sales taxes from the transaction price. The Company has elected to account for shipping and handling activities for which the Company is responsible under the terms and conditions of the sale not as performance obligations but rather as fulfillment costs. These activities are required to fulfill the Company’s promise to transfer the good and are expensed when revenue is recognized. Disaggregated Revenue The following table presents the Company’s revenue disaggregated by the major types of goods and services sold to our customers (in thousands) (See Note 9 for further information regarding net sales by market):
|  | Years Ended December 31,
|  | 2018 |  | 2017 |  | 2016
Net sales of: |  |  |  |
Products |  | $ | 183,186 |  |  | $ | 146,275 |  |  | $ | 144,210 |
Tooling and Machinery |  |  | 4,302 |  |  |  | 1,181 |  |  |  | 1,633 |
Engineering services |  |  | 2,967 |  |  |  | 387 |  |  |  | 289 |
Total net sales |  | $ | 190,455 |  |  | $ | 147,843 |  |  | $ | 146,132 |
Contract balances The timing of revenue recognition may differ from the timing of invoicing to customers. When invoicing occurs prior to revenue recognition, the Company has deferred revenue (contract liabilities), included within “deferred revenue” on the condensed consolidated balance sheets. The following table presents opening and closing balances of contract liabilities for the year ended December 31, 2018 ( in thousands):
|  | Contract Liabilities
Deferred revenue - January 1, 2018 |  | $ | 871 |
Acquired in Dielectrics business combination |  |  | 2,175 |
Increases due to consideration received from customers |  |  | 4,188 |
Revenue recognized |  |  | (4,727 | )
Deferred revenue - December 31, 2018 |  | $ | 2,507 |
Revenue recognized during the year ended December 31, 2018 from amounts included in deferred revenue at the beginning of the period was approximately $615,000. When invoicing occurs after revenue recognition, the Company has unbilled receivables (contract assets) included within “receivables” on the condensed consolidated balance sheet. Unbilled receivables were approximately $65,000 at December 31, 2018 and was generated as a result of revenue recognized during the year ended December 31, 2018 that had not yet been billed.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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