Revenue | 2. Revenue The following tables represent a disaggregation of revenue from contracts with customers for the three and six months ended June 27, 2020 and June 29, 2019 along with the reportable segment for each category. Major Products and Service Lines TFE Three Months Ended June 27, 2020 Three Months Ended June 29, 2019 (In thousands) HDD DCP PV Total HDD DCP PV Total Systems, upgrades $ 15,226 $ — $ 61 $ 15,287 $ 12,423 $ — $ 18 $ 12,441 Field service 1,306 — 2 1,308 821 2 — 823 Total TFE net revenues $ 16,532 $ — $ 63 $ 16,595 $ 13,244 $ 2 $ 18 $ 13,264 Six Months Ended June 27, 2020 Six Months Ended June 29, 2019 (In thousands) HDD DCP PV Total HDD DCP PV Total Systems, upgrades and spare parts $ 21,587 $ — $ 269 $ 21,856 $ 23,473 $ — $ 6,391 $ 29,864 Field service 2,699 — 2 2,701 2,343 2 — 2,345 Total TFE net revenues $ 24,286 $ — $ 271 $ 24,557 $ 25,816 $ 2 $ 6,391 $ 32,209 Three Months Ended Six Months Ended Photonics June 27, 2020 June 29, 2019 June 27, 2020 June 29, 2019 (In thousands) Products: Military products $ 5,446 $ 2,981 $ 10,811 $ 4,794 Commercial products 39 182 118 500 Repair and other services 645 810 1,075 1,371 Total Photonics product net revenues 6,130 3,973 12,004 6,665 Technology development: Firm Fixed Price (“FFP”) 5,462 3,085 9,892 4,777 Cost Plus Fixed Fee (“CPFF”) 655 1,992 1,229 3,488 Time and materials — — — 2 Total technology development net revenues 6,117 5,077 11,121 8,267 Total Photonics net revenues $ 12,247 $ 9,050 $ 23,125 $ 14,932 Primary Geographical Markets Three Months Ended Three Months Ended June 27, 2020 June 29, 2019 (In thousands) TFE Photonics Total TFE Photonics Total United States $ 313 $ 12,125 $ 12,438 $ 356 $ 8,811 $ 9,167 Asia 16,282 — 16,282 12,908 — 12,908 Europe — 122 122 — 239 239 Total net revenues $ 16,595 $ 12,247 $ 28,842 $ 13,264 $ 9,050 $ 22,314 Six Months Ended Six Months Ended June 27, 2020 June 29, 2019 (In thousands) TFE Photonics Total TFE Photonics Total United States $ 832 $ 22,981 $ 23,813 $ 517 $ 14,527 $ 15,044 Asia 23,725 — 23,725 31,692 — 31,692 Europe — 144 144 — 405 405 Total net revenues $ 24,557 $ 23,125 $ 47,682 $ 32,209 $ 14,932 $ 47,141 Timing of Revenue Recognition Three Months Ended Three Months Ended June 27, 2020 June 29, 2019 (In thousands) TFE Photonics Total TFE Photonics Total Products transferred at a point in time $ 16,595 $ 645 $ 17,240 $ 13,264 $ 810 $ 14,074 Products and services transferred over time — 11,602 11,602 — 8,240 8,240 $ 16,595 $ 12,247 $ 28,842 $ 13,264 $ 9,050 $ 22,314 Six Months Ended Six Months Ended June 27, 2020 June 29, 2019 (In thousands) TFE Photonics Total TFE Photonics Total Products transferred at a point in time $ 24,557 $ 1,075 $ 25,632 $ 32,209 $ 1,371 $ 33,580 Products and services transferred over time — 22,050 22,050 — 13,561 13,561 $ 24,557 $ 23,125 $ 47,682 $ 32,209 $ 14,932 $ 47,141 The following table reflects the changes in our contract assets, which we classify as accounts receivable, unbilled or retainage, and our contract liabilities, which we classify as deferred revenue and customer advances, for the six months ended June 27, 2020: June 27, December 28, Six Months Change (In thousands) TFE: Contract assets: Accounts receivable, unbilled $ 560 $ 760 $ (200 ) Contract liabilities: Deferred revenue $ 464 $ 320 $ 144 Customer advances 433 4,007 (3,574 ) $ 897 $ 4,327 $ (3,430 ) Photonics: Contract assets: Accounts receivable, unbilled $ 574 $ 3,210 $ (2,636 ) Retainage 121 99 22 $ 695 $ 3,309 $ (2,614 ) Contract liabilities: Deferred revenue $ 1,259 $ — $ 1,259 Accounts receivable, unbilled in our TFE segment represents a contract asset for revenue that has been recognized in advance of billing the customer. For our system and certain upgrade sales, our TFE customers generally pay in three installments, with a portion of the system price billed upon receipt of an order, a portion of the price billed upon shipment, and the balance of the price due upon completion of installation and acceptance of the system at the customer’s factory. Accounts receivable, unbilled in our TFE segment generally represents the balance of the system price that is due upon completion of installation and acceptance, less the amount that has been deferred as revenue for the performance of the installation tasks. During the six months ended June 27, 2020, contract assets in our TFE segment decreased by $200,000 primarily due to the subsequent invoicing of certain unbilled spare parts revenue at December 28, 2019. Customer advances in our TFE segment generally represent a contract liability for amounts billed to the customer prior to transferring goods. The Company has elected to use the practical expedient to disregard the effect of the time value of money in a significant financing component when its payment terms are less than one year. These contract advances are liquidated when revenue is recognized. Deferred revenue in our TFE segment generally represents a contract liability for amounts billed to a customer for completed systems at the customer site that are undergoing installation and acceptance testing where transfer of control has not yet occurred, as Intevac does not yet have a demonstrated history of meeting the acceptance criteria upon the customer’s receipt of product. During the six months ended June 27, 2020, we recognized revenue in our TFE segment of $4.0 million and $55,000 that was included in customer advances and deferred revenue, respectively, at the beginning of the period. Accounts receivable, unbilled in our Photonics segment represents a contract asset for revenue that has been recognized in advance of billing the customer, which is common for contracts in the defense industry. In our Photonics segment, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. Our contracts with the U.S. government may also contain retainage provisions. Retainage represents a contract asset for the portion of the contract price earned by us for work performed, but held for payment by the U.S. government as a form of security until satisfactory completion of the contract. The retainage is billable upon completion of the contract performance and approval of final indirect expense rates by the government. During the six months ended June 27, 2020, contract assets in our Photonics segment decreased by $2.6 million primarily due to the billing of contractual milestones, offset in part by the accrual of revenue for incurred costs under FFP and CPFF contracts. Deferred revenue in our Photonics segment generally represents a contract liability for amounts billed to the customer upon achievement of contractual milestones. These amounts are liquidated when revenue is recognized. On June 27, 2020, we had $69.0 million of remaining performance obligations, which we also refer to as backlog. Backlog at June 27, 2020 consisted of $14.6 million of TFE backlog and $54.4 million of Photonics backlog. We expect to recognize approximately 49% of our remaining performance obligations as revenue in 2020, 26% in 2021, 17% in 2022 and 8% in 2023. |