Revenue from Contract with Customer [Text Block] | 2. On January 1, 2018, 606, not January 1, 2018. 2018 606 not The Company also considered the impact of subtopic ASC 340 40. 606, 340 40, The most significant impacts of the adoption of Topic 606 ● At the adoption date, the Company recorded a net decrease of $4.4 606 605, January 1, 2018 $0.8 $1.9 $2.5 $0.5 ● For fiscal 2018, 606 605. 605 2018 first second 2018 not The adoption of Topic 606 may 605 606 605. In addition, under the Company’s previous accounting practices, revenue was recognized from Gainshare performance incentive agreements in the period of receipt of related Gainshare acknowledgement reports, generally one 606, not Under Topic 605, 606, The following table summarizes the effects of adopting Topic 606 June 30, 2018: As reported under Topic 606 Adjustments Balances under Topic 605 (In thousands) Accounts receivable, net of allowance $ 53,919 $ 621 $ 54,540 Prepaid expenses and other current assets 8,660 (3,546 ) 5,114 Deferred tax assets 17,747 316 18,063 Other non-current assets 8,943 (78 ) 8,865 Deferred revenues – current portion 9,369 1,858 11,227 Long-term income taxes payable 4,652 (1,032 ) 3,620 Other non-current liabilities 994 785 1,779 Accumulated deficit (25,256 ) (4,298 ) (29,554 ) The impact of adopting Topic 606 three six June 30, 2018 not no The Company’s net cash provided by operating activities for the three six June 30, 2018 not 606. 606 six June 30, 2018: As reported under Topic 606 Adjustments Balances under Topic 605 (In thousands) Net income $ (2,520 ) $ 55 $ (2,465 ) Changes in operating assets and liabilities: Accounts receivable, net of allowance 4,479 (1,413 ) 3,066 Prepaid expenses and other current assets (1,204 ) 1,154 (50 ) Other non-current assets 1,597 79 1,676 Deferred revenue 2,745 125 2,870 The Company derives revenue from two Revenue is recognized when control of products or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those promised products or services. The Company determines revenue recognition through the following five ● Identification of the contract, or contracts, 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 ● Recognition of revenue when, or as, performance obligations are satisfied The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation, generally on a relative basis using its standalone selling price. Nature of Products and Services Design-to-silicon-yield solutions — The Company recognizes revenue for each element of Design-to-silicon-yield solutions as follows: The Company generates a significant portion of its Design-to-silicon-yield solutions revenue from fixed-price solution implementation service contracts delivered over a specific period of time. Revenue under project–based contracts for solution implementation services is recognized as services are performed using a percentage of completion method based on costs or labor-hours inputs, whichever is the most appropriate measure of the progress towards completion of the contract. Due to the nature of the work performed in these arrangements, the estimation of costs or hours at completion is complex, subject to many variables and requires significant judgment. Key factors reviewed by the Company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may On occasion, the Company includes its products as a component of its fixed-price service contracts. In such instances, the Company determines whether the services performed and products included, are distinct. In most cases, the arrangement is a single performance obligation and therefore follows the pattern of transfer as the service is provided. The Company applies a measure of progress (typically hours-to-hours or cost-to-cost) to any fixed consideration. As a result, revenue is generally recognized over the period the services are performed using percentage of completion method. This results in revenue recognition that corresponds with the value to the client of the services transferred to date relative to the remaining services promised. The Company also licenses our Design-for-Inspection ("DFI") system as a separate component of fixed-price service contracts. The Company allocates revenue to all deliverables based on their standalone selling prices, or SSP. In such instances, the Company applies judgment to estimate the range of SSPs for each performance obligation. The Company licenses some of its software products separately from solution implementations, primarily its Exensio big data platform and related products. The majority of these products are delivered as on premise software licenses, while others can be delivered entirely or partially through Software-as-a-Service (SaaS) or cloud delivery models. Revenue from perpetual ( one Gainshare Performance Incentives — When the Company enters into a contract to provide yield improvement services, the contract usually includes two 1 2 The following table summarizes the effects of adopting Topic 606 three June 30, 2018: As reported under Topic 606 Adjustments Balances under Topic 605 (In thousands) Design-to-silicon-yield solutions $ 15,266 $ 12 $ 15,278 Total revenue 21,119 12 21,131 Gross margin 10,202 12 10,214 Selling, general and administrative 5,919 (73 ) 5,846 Total operating expenses 13,127 (73 ) 13,054 Income (loss) from operations (2,925 ) 85 (2,840 ) Income (loss) before taxes (2,535 ) 85 (2,450 ) Net income (loss) (2,096 ) 85 (2,011 ) The following table summarizes the effects of adopting Topic 606 six June 30, 2018: As reported under Topic 606 Adjustments Balances under Topic 605 (In thousands) Design-to-silicon-yield solutions $ 33,456 $ (18 ) $ 33,438 Total revenue 45,856 (18 ) 45,838 Gross margin 23,457 (18 ) 23,439 Selling, general and administrative 12,294 (73 ) 12,221 Total operating expenses 26,856 (73 ) 26,783 Income (loss) from operations (3,399 ) 55 (3,344 ) Income (loss) before taxes (3,340 ) 55 (3,285 ) Net income (loss) (2,520 ) 55 (2,465 ) Disaggregation of revenue In accordance with ASC 606 10 50, The following table shows the revenues from contracts with customers by the nature of transactions for the three six June 30, 2018: Three Months Ended Six Months Ended June 30, 2018 June 30, 2018 Product and licenses $ 6,828 $ 14,315 Support and Services 14,200 31,190 Other 90 351 Total $ 21,119 $ 45,856 Product and licenses include a portion of time-based software which is recognized in the period, perpetual software and Gainshare performance incentives. The remaining portions of revenue from these contracts correspond to services or other types of performance obligations reported as either services revenue or other revenue. Under Topic 606, 68% 32% three six June 30, 2018, 57% 58% three six June 30, 2018, 62% 57% three six June 30, 2017, 7. Significant Judgments More judgments and estimates are required under Topic 606 605. 606 may may In services arrangements, the Company typically satisfies the performance obligation and recognizes revenue over time. In Design-to-silicon-yield service arrangements, the performance obligation is satisfied over time either because the client controls the asset as it is created (e.g., when the asset is built at the customer site) or because the Company’s performance does not For revenue under project–based contracts for fixed-price solution implementation services, revenue is recognized as services are performed using a percentage-of-completion method based on costs or labor-hours input method, whichever is the most appropriate measure of the progress towards completion of the contract. Due to the nature of the work performed in these arrangements, the estimation of percentage of completion method is complex, subject to many variables and requires significant judgment. Key factors reviewed by the Company to estimate costs to complete each contract are future labor and product costs and expected productivity efficiencies. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may The Company’s contracts with customers often include promises to transfer products, licenses and services, including professional services, technical support services, and rights to unspecified updates to a customer. Determining whether products, licenses and services are distinct performance obligations that should be accounted for separately, or not not not may one may The Company is required to record Gainshare royalty revenue in the same period in which the usage occurs. Because the Company generally does not Contract Balances The Company performs its obligation under a contract with a customer by transferring products or services in exchange for consideration from the customer. The timing of the Company’s performance often differs from the timing of the customer’s payment, which results in the recognition of a receivable, a contract asset or a contract liability. The Company classifies the right to consideration in exchange for products or services transferred to a client as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional as compared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. The majority of the Company’s contract assets represent unbilled amounts related to fixed-price solution implementation service contracts when the costs or labor-hours input method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the client, and the right to consideration is subject to milestone completion or client acceptance. The contract assets are generally classified as current and are recorded on a net basis with deferred revenue (i.e., contract liabilities) at the contract level. The contract assets is included in prepaid expenses and other in the condensed consolidated balance sheets. At June 30, 2018 January 1, 2018, $3.2 $1.9 twelve $0.5 $0.9 June 30, 2018 January 1, 2018. During the three six June 30, 2018, $5.0 $7.6 606, 2018. At June 30, 2018, $45.3 2 5 not not one Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 90 not not The amount of revenue recognized in the three six June 30, 2018 $0.2 $0.3 Costs to obtain or fulfill a contract The Company capitalizes the incremental costs to obtain or fulfill a contract with a customer, including direct sales commissions and related fees, when it expects to recover those costs. As a result, these costs will need to be capitalized and amortized over an appropriate period, which may not not June 30, 2018 $0.5 $0.1 $0.2 three six June 30, 2018, no no no $0.4 $0.6 June 30, 2018 December 31, 2017, |