XML 27 R12.htm IDEA: XBRL DOCUMENT
v3.8.0.1

REVENUE RECOGNITION | 3 Months Ended
--- | ---
Mar. 31, 2018
REVENUE RECOGNITION |
REVENUE RECOGNITION | 3. Revenue Recognition The Company’s significant accounting policies are detailed in “Note 2 – Summary of Significant Accounting Policies” within Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2017. The Company’s accounting policies are updated as a result of adopting Revenue Recognition - ASC 606 – Revenue from Contracts with Customers (‘ASC 606’) on January 1, 2018. The adoption of ASC 606 impacted the accounting for contract acquisition costs, multiyear retail wireless contracts with promotional discounts, and deferral of certain activation fees as further described below. Revenue Recognition – The Company earns revenue from its telecommunication and renewable energy operations. The Company recognizes revenue through the following steps:
| - |  | Identification of the contract with a customer
| - |  | Identification of the performance obligations in the contract
| - |  | Determination of the transaction price
| - |  | Allocation of the transaction price to the performance obligations in the contract
| - |  | Recognize revenue when, or as, we satisfy performance obligations
Revenue Recognition- Telecommunications Wireless revenue consists of wholesale and retail revenue. Wholesale revenue is generated from providing mobile voice and data services to the customers of other wireless carriers, the provision of network switching services and certain transport services using the Company’s wireless networks. The transaction price of some wholesale revenue contracts includes variable consideration in the form of volume discounts. Management uses its judgment based on projected transaction volumes to estimate the transaction price and to allocate the transaction price to the performance obligations in the contract. Revenue is recognized over time as the service is rendered to the customer. Retail revenue is generated from providing mobile voice and data services to subscribers as well as roaming services provided to other carriers’ customers roaming into our retail markets. This revenue is recognized over time as the service is rendered. Lastly, wireless revenue includes revenues from equipment sold to customers which is recognized when the equipment is delivered to the customer. Management considers transactions where customers purchase subsidized or discounted equipment and mobile voice or data services to be a single contract. For these contracts, the transaction price is allocated to the equipment and mobile service based on their standalone selling prices. The standalone selling price is based on the amount the Company charges for the equipment and service to similar customers. Equipment revenue is recognized when the equipment is delivered to customers and service revenue is recognized as service is rendered. Wireline revenue is generated from access and usage fees for internet, voice and video services charged to subscribers as well as wholesale long-distance voice services provided to telecommunication carriers at contracted rates. Revenue from these contracts is recognized over time as the service is rendered to the customer. The Company’s wireless and wireline contracts occasionally include promotional discounts such as free service periods or discounted products. If a contract contains a substantive termination penalty, the transaction price is allocated to the performance obligations based on standalone selling price resulting in accelerated revenue recognition and the establishment of a contract asset that will be recognized over the life of the contract. If a contract includes a promotional discount but no substantive termination penalty the discount is recorded in the promotional period and no contract asset it established. The Company’s customers have the option to purchase additional telecommunication services. Generally, these options are not performance obligations and are excluded from the transaction price because they do not provide the customers with a material right. The Company may charge upfront fees for activation and installation of some of its products and services. These fees are reviewed to determine if they represent a separate performance obligation. If they are not a separate performance obligation, the contract price associated with them is allocated to the contract’s performance obligations based on relative standalone selling price and is recognized when and as those performance obligations are satisfied. If the fees represent a performance obligation they are recognized when delivered to the customer based on standalone selling price. Sales and use and state excise taxes collected from customers that are remitted to the governmental authorities are reported on a net basis and excluded from the revenues and sales. Revenue Recognition-Renewable Energy Revenue from the Company’s Renewable Energy segment is generated from the sale of electricity through power purchase agreements (“PPA’s”) with various customers that generally range from 10 to 25 years. The Company recognizes revenue at contractual PPA rates over time as electricity is generated simultaneously consumed by the customer. The Company’s Renewable Energy segment also generates revenue from the sale of Solar Renewable Energy Credits (“SRECs”). Revenue is recognized over time as SRECs are sold through long-term purchase agreements at the contractual rate specified in the agreement. Disaggregation The Company's revenue is presented on a disaggregated basis in Note 12 based on an evaluation of disclosures outside the financial statements, information regularly reviewed by the chief operating decision maker for evaluating the financial performance of operating segments and other information that is used for performance evaluation and resource allocations. This includes revenue from wireline, wireless and renewable energy, as well as domestic versus international wireline and wireless services. This disaggregation of revenue depicts how the nature, amount, timing and uncertain of revenue and cash flows are affected by economic factors. Contract Assets and Liabilities The Company recognizes contract assets and liabilities on its balance sheet. Contract assets represent unbilled amounts typically resulting from retail wireless contracts with both a multiyear service period and a promotional discount. In these contracts the revenue recognized exceeds the amount billed to the customer. The current portion of the contract asset is recorded in prepayments and other current asset and the noncurrent portion is included in other assets on our balance sheets. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Retail revenue for postpaid customers is generally billed one month in advance and recognized over the period that the corresponding service is rendered to customers. To the extent the service is not provided by the reporting date the amount is recognized as a contract liability. Prepaid service, including mobile voice and data services, sold to customers is recorded as deferred revenue prior to the commencement of services. Contract liabilities are recorded in advanced payments and deposits on our balance sheets. Contracts asset and liabilities consisted of the following (amounts in thousands):
|  | March 31, 2018 |  | January 1, 2018 |  | $ Change |  | % Change
Contract asset – current | $ | 1,309 | $ | 1,176 | $ | 133 |  | 11%
Contract asset – noncurrent |  | 498 |  | 453 |  | 45 |  | 10%
Contract liabilities |  | (9,827) |  | (9,912) |  | 85 |  | -1%
Net contract liability | $ | (8,020) | $ | (8,283) | $ | 263 |  | -3%
The contract asset-current is included in prepayments and other current assets, the contract asset – noncurrent is included in other assets, and the contract liabilities are included in advance payments and deposits on the Company’s balance sheet. The increase in our net contract liability was due to the timing of customer prepayments and contract billings. In the first quarter of 2018, we recognized revenue of $9.6 million related to our January 1, 2018 contract liability and amortized $0.3 million of the January 1, 2018 contract asset into revenue. There was no revenue recognized in the period related to performance obligations that were satisfied or partially satisfied in previous periods. Contract Acquisition Costs The Company pays sales commissions to its employees and agents for obtaining customer contracts. These costs are incremental because they would not have been incurred if the contract was not obtained. The Company recognizes an asset for these costs and subsequently amortizes the asset on a systematic basis consistent with the pattern of the transfer of the services to the customer. The amortization period, which is between 2 and 6 years, considers both the original contract period as well as anticipated contract renewals as appropriate. The amortization period includes renewal commissions when those commissions are not commensurate with new commissions. The Company estimates anticipated contract renewals based on its actual renewals in recent periods. When the expected amortization period is one year or less the Company utilizes the practical expedient and expenses the costs as incurred. Our March 31, 2018 balance sheet includes current contract acquisition costs of $1.1 million in prepayments and other current assets and long term contract acquisition costs of $0.8 million in other assets. The Company amortized $0.3 million of contract acquisition cost during the three months ended March 31, 2018. Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear retail wireless contracts that include a promotional discount. The transaction price allocated to unsatisfied performance obligations was $10.3 million at March 31, 2018. The Company expects to satisfy the remaining performance obligations and recognize the transaction price within 24 months. The Company has certain retail, wholesale, and renewable energy contracts where transaction price is allocated to remaining performance obligations however the company omits these contracts from the disclosure by applying the right to invoice, one year or less, and wholly unsatisfied performance obligation practical expedients. Impacts of adoption in the current period The Company adopted ASC 606 on January 1, 2018 using the modified retrospective method. The Company elected the practical expedient to apply the new guidance only to contracts that were not substantially complete at the adoption date. The cumulative effect of adopting ASC 606 resulted in a contract asset of $1.6 million of which $1.2 million was recorded in prepayments and other current assets and $0.4 million was recorded in other assets, contract liability of $0.2 million recorded in advance payments and deposits, contract acquisition costs of $1.5 million of which $0.9 million was recorded in prepayments and other current assets and $0.6 million was recorded in other assets, and a deferred tax liability of $0.3 with the offset of $1.5 million recorded to retained earnings and $1.1 million recorded to minority interest. The tables below identify changes to the Company’s financial statements as of March 31, 2018 and for the three months then ended as a result of the adoption of ASC 606 as compared to previous revenue guidance (amounts in thousands):
Balance Sheet - March 31, 2018
|  | Reported |  | Change |  | Under previous guidance
Prepayments and other current assets | $ | 33,450 | $ | (2,426) | $ | 31,024
Total current assets | $ | 303,355 | $ | (2,426) | $ | 300,929
Other assets | $ | 37,060 | $ | (1,298) | $ | 35,762
Total Assets | $ | 1,196,818 | $ | (3,724) | $ | 1,193,094
Advance payments and deposits | $ | 26,750 | $ | (277) | $ | 26,473
Accrued taxes |  | 12,067 |  | (93) |  | 11,974
Total current liabilities | $ | 168,891 | $ | (370) | $ | 168,521
Deferred income taxes | $ | 30,945 | $ | (301) | $ | 30,644
Total Liabilities | $ | 382,803 | $ | (671) | $ | 382,132
Retained Earnings | $ | 546,368 | $ | (1,725) | $ | 544,643
Minority Interest | $ | 133,408 | $ | (1,328) | $ | 132,080
Total Equity | $ | 814,015 | $ | (3,053) | $ | 810,962
Total Liabilities and Equity | $ | 1,196,818 | $ | (3,724) | $ | 1,193,094
Statement of Operations - Three months ended March 31, 2018
|  | Reported |  | Change |  | Under previous guidance
Wireless Revenue | $ | 50,548 | $ | (133) | $ | 50,415
Total Revenue | $ | 104,475 | $ | (133) | $ | 104,342
Sales, marketing and customer service | $ | 8,562 | $ | 378 | $ | 8,940
Total Expenses | $ | 100,266 | $ | 378 | $ | 100,644
Income from operations | $ | 4,209 | $ | (511) | $ | 3,698
Income before taxes |  | 1,618 |  | (511) |  | 1,107
Income tax provision |  | 3,921 |  | (93) |  | 3,828
Net loss | $ | (2,303) | $ | (418) | $ | (2,721)
Net income attributable to non-controlling interests |  | (3,252) |  | 181 |  | (3,071)
Net loss attributable to ATN International, Inc. stockholders | $ | (5,555) | $ | (237) | $ | (5,792)
Statement of Comprehensive Loss- Three months ended March 31, 2018
|  | Reported |  | Change |  | Under previous guidance
Net Loss | $ | (2,303) | $ | (418) | $ | (2,721)
Other comprehensive loss, net of tax |  | (893) |  | — |  | (893)
Comprehensive loss |  | (3,196) |  | (418) |  | (3,614)
Less: Comprehensive income attributable to non-controlling interests |  | (3,252) |  | 181 |  | (3,071)
Comprehensive loss attributable to ATN International, Inc. | $ | (6,448) | $ | (237) | $ | (6,685)
Statement of Cash Flows - Three months ended March 31, 2018
|  | Reported |  | Change (1) |  | Under previous guidance
Net income (loss) | $ | (2,303) | $ | (418) | $ | (2,721)
Materials and supplies, prepayments and other current assets | $ | 3,991 | $ | 350 | $ | 4,341
Accrued taxes |  | 3,292 |  | (93) |  | 3,199
Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities |  | (2,306) |  | (46) |  | (2,352)
Other assets | $ | (581) | $ | 207 | $ | (374)
| (1) |  | The adoption of ASC 606 had no impact on operating cash flows, investing cash flows, financing cash flows and net change in total cash.

X
- References No definition available. + Details
Name: | us-gaap_RevenueFromContractWithCustomerAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
Name: | us-gaap_RevenueFromContractWithCustomerTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration