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Note 2 - Revenue Recognition
 6 Months Ended
Jun. 30, 2021
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]
 

(2)

Revenue Recognition

 

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, resulting 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, which are primarily product development services, as the services are performed or as otherwise determined based on the substance of the agreement. The Company recognizes revenue from bill and hold transactions at the time the specified goods are complete and available to the customer. In the ordinary course of business, the Company accepts sales returns from customers for defective goods, such amounts being immaterial. 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 the Company’s customers (in thousands):

 

  

Three Months Ended

  

Six Months Ended

 
  

June 30,

  

June 30,

 

Net sales of:

 

2021

  

2020

  

2021

  

2020

 

Products

 $49,466  $40,753  $96,789  $87,782 

Tooling and Machinery

  332   646   744   1,323 

Engineering services

  857   1,245   1,721   1,816 

Total net sales

 $50,655  $42,644  $99,254  $90,921 

 

Contract balances

 

Timing of revenue recognition may differ from the timing of invoicing to customers. When invoicing occurs prior to revenue recognition, the Company has contract liabilities included within “deferred revenue” on the condensed consolidated balance sheet.

 

The following table presents a roll-forward of contract liabilities activity for six-month periods ended June 30, 2021 and 2020 (in thousands):

 

  

Contract Liabilities

 
  

Six Months Ended
June 30,

 
  

2021

  

2020

 

Deferred revenue - beginning of period

 $1,887  $2,574 

Increases due to consideration received from customers

  560   1,668 

Revenue recognized

  (544)  (1,594)

Deferred revenue - end of period

 $1,903  $2,648 

 

Revenue recognized during the six-month periods ended June 30, 2021 and 2020 from amounts included in deferred revenue at the beginning of the period were approximately $446 thousand and $771 thousand, respectively.

 

When invoicing occurs after revenue recognition, the Company has contract assets, included within “receivables” on the condensed consolidated balance sheet.

 

The following table presents a roll-forward of contract assets activity for the six-month periods ended June 30, 2021 and 2020 (in thousands):

 

 

  

Contract Assets

 
  

Six Months Ended
June 30,

 
  

2021

  

2020

 

Unbilled receivables - beginning of period

 $271  $72 

Increases due to revenue recognized, not invoiced to customers

  935   1,488 

Decreases due to customer invoicing

  (1,008)  (1,149)

Unbilled receivables - end of period

 $198  $411