Revenue Recognition

12 Months Ended

Jun. 30, 2019

Revenue from Contract with Customer [Abstract]

In accordance with ASC 606, the Company follows a five-step approach defined by the new standard for recognizing revenue, consisting of the following: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.

Contract liabilities primarily include various rights of return and customer deposits, as well as deferred revenue, price protection guarantees and the Company's liability under the LED Supply Agreement. Contract liabilities were $80.4 million as of June 30, 2019 and $47.1 million as of June 25, 2018, the date the Company adopted ASC 606. The increase was primarily due to increased customer deposits and the related contract liability from the LED Supply Agreement. Contract liabilities are recorded within accrued contract liabilities and other long-term liabilities on the balance sheet. Before the adoption of ASC 606, liabilities relating

to various rights of return were recorded as a deduction to accounts receivable. The adjustments do not impact net cash provided by operating activities; however, they do impact the changes in operating assets and liabilities for the related accounts within the disclosure of operating activities on the statement of cash flows.

Practical Expedients and Exemptions

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

Incidental contract costs that are not material in context of the delivery of products are expensed as incurred. Sales commissions are expensed when the amortization period is less than one year. Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. The majority of the Company’s fulfillment costs as a manufacturer consist of inventory, fixed assets, and intangible assets, all of which are accounted for under the respective guidance for those asset types.

The Company’s accounts receivable balance represents the Company’s unconditional right to receive consideration from its customers with contracts. Payments are typically due within 30 days of the completion of the performance obligation and invoicing, and therefore do not contain significant financing components.

Sales tax, value-added tax, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue, and shipping and handling costs are treated as fulfillment activities and are included in cost of revenue in the Company’s consolidated statements of operations.

Disaggregated revenue by geography is presented in Note 17, "Reportable Segments". For the fiscal year ended June 30, 2019, the Company recognized revenue of $5.0 million that was included in contract liabilities as of June 25, 2018. The amount recognized primarily related to deferred revenue and the recognition of contingent liabilities related to the LED Supply Agreement. Revenue recognized related to performance obligations that were satisfied or partially satisfied in previous periods was not material for the fiscal year ended June 30, 2019.

Opening Balance Adjustments

The impacts of adopting the new revenue standard on the Company's unaudited consolidated balance sheet are as follows:



(in millions of U.S. Dollars)	Previous Balance at June 24, 2018			Adjustments			Opening Balance at June 25, 2018
Assets:⁽¹⁾
Accounts receivable, net		$86.4			$42.7			$129.1
Other current assets	12.9			0.7			13.6
Current assets related to discontinued operations⁽²⁾	223.4			12.9			236.3
Liabilities:⁽¹⁾
Other current liabilities⁽³⁾	19.3			(4.4		)	14.9
Accrued contract liabilities	—			47.1			47.1
Current liabilities related to discontinued operations⁽²⁾	80.8			5.8			86.6
Long-term liabilities related to discontinued operations⁽²⁾	21.5			(2.5		)	19.0
Shareholders' Equity:⁽¹⁾
Accumulated deficit	(482.7		)	10.3			(472.4		)

⁽¹⁾ Adjustments are shown in debit/(credit) format for assets and (debit)/credit format for liabilities and shareholders' equity to match consolidated balance sheet presentation.

⁽²⁾ Adjusted amounts related to current assets were previously adjusted in accounts receivable, net, amounts related to current liabilities were previously adjusted in accrued contract liabilities and short-term deferred revenue, and amounts related to long-term liabilities were previously adjusted in long-term deferred revenue. Amounts have been classified as discontinued operations due to the sale of the Lighting Products business unit subsequent to the adoption of ASC 606.

⁽³⁾ As a result of ASC 606 adoption, deferred revenue was reclassified from other current liabilities to accrued contract liabilities in the consolidated balance sheets.