| Significant Accounting Policies | 2. Significant Accounting Policies A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2018 Annual Report on Form 10-K and should be referred to for a description of the Company’s current significant accounting policies, with the exception of Revenue Recognition and Fair Value Measurements, which are set forth below. Revenue Recognition – Adoption of New Standard On October 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers Upon adoption, we recorded a reduction of $116 to the opening balance of retained earnings as of October 1, 2018. This adjustment is related to writing off the book value of clinical diagnostic testing instruments located at customers for which there is no contractual arrangement for the instrument to be returned to the Company. Instruments placed with customers under an agreement to return the instrument to the Company were reclassified to machinery and equipment. Prior to adoption of the new guidance, all instruments placed with customers were capitalized and amortized over an estimated three The following table summarizes the impact of the new revenue standard on our opening balance sheet:
Balance at New Revenue Balance at
PROPERTY, PLAN AND EQUIPMENT
Machinery, equipment and furniture $ 50,606 $ 8,696 $ 59,302
Accumulated depreciation and amortization (55,846 ) (7,611 ) (63,457 )
OTHER ASSETS
Deferred instrument costs, net 1,239 (1,239 ) —
NON-CURRENT LIABILITIES
Deferred income taxes (3,769 ) 38 (3,731 )
SHAREHOLDERS’ EQUITY
Retained earnings (49,602 ) 116 (49,486 ) The adoption of this new standard had an immaterial impact on our reported total revenues and operating income, as compared to what would have been reported under the prior standard. Our accounting policies under the new standard were applied prospectively and are noted below following the discussion of Revenue Disaggregation. Revenue Disaggregation The following tables present our revenues disaggregated by major geographic region, major product platform and disease state (Diagnostics only): Revenue by Reportable Segment & Geographic Region
Three Months Ended June 30, Nine Months Ended June 30,
2019 2018 Inc (Dec) 2019 2018 Inc (Dec)
Diagnostics-
Americas $ 27,356 $ 30,585 (11 )% $ 85,782 $ 95,511 (10 )%
EMEA 5,076 5,144 (1 )% 15,695 16,469 (5 )%
ROW 686 639 7 % 1,806 1,660 9 %
Total Diagnostics 33,118 36,368 (9 )% 103,283 113,640 (9 )%
Life Science-
Americas 4,369 5,500 (21 )% 14,347 15,875 (10 )%
EMEA 6,389 5,756 11 % 21,608 18,307 18 %
ROW 4,564 4,113 11 % 10,930 12,649 (14 )%
Total Life Science 15,322 15,369 — % 46,885 46,831 — %
Consolidated $ 48,440 $ 51,737 (6 )% $ 150,168 $ 160,471 (6 )% Revenue by Product Platform/Type
Three Months Ended June 30, Nine Months Ended June 30,
2019 2018 Inc (Dec) 2019 2018 Inc (Dec)
Diagnostics-
Molecular assays $ 5,937 $ 7,509 (21 )% $ 20,371 $ 26,200 (22 )%
Immunoassays & blood chemistry assays 27,181 28,859 (6 )% 82,912 87,440 (5 )%
Total Diagnostics $ 33,118 $ 36,368 (9 )% $ 103,283 $ 113,640 (9 )%
Life Science-
Molecular reagents $ 5,495 $ 6,049 (9 )% $ 17,495 $ 17,882 (2 )%
Immunological reagents 9,827 9,320 5 % 29,390 28,949 2 %
Total Life Science $ 15,322 $ 15,369 — % $ 46,885 $ 46,831 — % Revenue by Disease State (Diagnostics only)
Three Months Ended June 30, Nine Months Ended June 30,
2019 2018 Inc (Dec) 2019 2018 Inc (Dec)
Diagnostics-
Gastrointestinal assays $ 17,232 $ 20,212 (15 )% $ 52,024 $ 59,631 (13 )%
Respiratory illness assays 5,708 5,749 (1 )% 21,242 22,779 (7 )%
Blood chemistry assays 4,750 5,005 (5 )% 13,510 13,528 — %
Other 5,428 5,402 — % 16,507 17,702 (7 )%
Total Diagnostics $ 33,118 $ 36,368 (9 )% $ 103,283 $ 113,640 (9 )% Revenue Policies Product Sales Revenue from contracts with customers is recognized in an amount that reflects the consideration we expect to receive in exchange for products when obligations under such contracts are satisfied. Revenue is generally recognized at a point-in-time Revenue is reduced in the period of sale for fees paid to distributors, which are inseparable from the distributor’s purchase of our product and for which we receive no goods or services in return. Revenue for the Diagnostics segment is reduced at the date of sale for product price adjustments due to certain distributors under local contracts. Management estimates accruals for distributor price adjustments based on local contract terms, sales data provided by distributors, historical statistics, current trends, and other factors. Changes to the accruals are recorded in the period that they become known. Such accruals are netted against accounts receivable. Shipping and handling costs incurred after control of the product is transferred to our customers are treated as fulfillment costs and not a separate performance obligation. Our payment terms differ by jurisdiction and customer but payment is generally required in a term ranging from 30 to 90 days from the date of shipment or satisfaction of the performance obligation. Trade accounts receivable are recorded in the accompanying Consolidated Balance Sheets at invoiced amounts less provisions for distributor price adjustments under local contracts and doubtful accounts. The allowance for doubtful accounts represents our estimate of probable credit losses and is based on historical write-off non-payment. Practical Expedients and Exemptions Revenue is recognized net of any taxes collected from customers (sales tax, value added tax, etc.), which are subsequently remitted to government authorities. Our products are generally not subject to a customer right of return except for product recall events under the rules and regulations of the Food and Drug Administration or equivalent agencies outside the United States. In this circumstance, the costs to replace affected products would be accrued at the time a loss was probable and estimable. We expense as incurred the costs to obtain contracts, as the amortization period would be one year Reagent Rental Arrangements Our revogene ™ ™ Leases For the portion of the transaction price allocated to the non-lease point-in-time Revenue allocated to the lease elements of these Reagent Rental arrangements represent less than 1% of total revenue and are included as part of net revenues in our Condensed Consolidated Statements of Income. Fair Value Measurements – Assets and liabilities are recorded at fair value in accordance with Accounting Standards Codification (“ASC”) 820-10, Fair Value Measurements and Disclosures Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories based on inputs: Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities Level 2 Quoted prices in markets that are not active and financial instruments for which all significant inputs are observable, either directly or indirectly Level 3 Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable As indicated in Note 3, we have recently acquired the business of GenePOC Inc. The fair value of the acquired accounts receivable and other current assets and the fair value of the assumed accounts payable and accrued expenses approximated their carrying value at the acquisition date. Inventories, property, plant and equipment, intangible assets and contingent consideration were valued using Level 3 inputs. Recent Accounting Pronouncements – In February 2016, the FASB issued ASU 2016-02, Leases In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income certain of the recent U.S. federal income tax legislation’s impact on Accumulated Other Comprehensive Income (“AOCI”). The guidance specifically provides the option of reclassifying “stranded tax effects” related to the tax legislation from AOCI to retained earnings. Adoption and implementation of the optional guidance is not effective for the Company until the beginning of fiscal 2020, although early adoption is permitted. The Company elected to adopt this guidance in the third quarter of fiscal 2019. An election was made to reclassify the income tax effects of the Tax Cuts and Jobs Act from AOCI to retained earnings, and an entry was made to increase AOCI and decrease retained earnings by $ 148 Reclassifications – Certain reclassifications have been made to the prior year financial statements to conform to the current year presentation. Such reclassifications had no impact on net earnings or shareholders’ equity. |
