| REVENUE | NOTE 2 – REVENUE At contract inception, we assess the goods and services promised in our contracts with customers and identify a performance obligation for each promise to transfer a good or service (or bundle of goods or services) that is distinct. To identify the performance obligations, we consider all the goods or services promised in the contract, whether explicitly stated or implied based on customary business practices. For a contract that has more than one performance obligation, we allocate the total contract consideration to each distinct performance obligation on a relative standalone selling price basis. Revenue is recognized when (or as) the performance obligations are satisfied (i.e., when the customer obtains control of the good or service). The majority of our revenues are derived from product and tooling sales; however, we also receive revenues from service, license, exclusivity and royalty arrangements, which collectively are not material to the quarterly and year-to-date results. Revenue by segment and geography for the three and nine months ended September 30, 2019 and 2018 is as follows: For the Three Months Ended September 30, 2019 Latin Segment Europe Domestic America Asia Total Beauty + Home $ 188,542 $ 75,931 $ 40,261 $ 23,448 $ 328,182 Pharma 174,252 78,259 6,366 10,374 269,251 Food + Beverage 28,718 57,307 8,058 9,762 103,845 Total $ 391,512 $ 211,497 $ 54,685 $ 43,584 $ 701,278 For the Three Months Ended September 30, 2018 Latin Segment Europe Domestic America Asia Total Beauty + Home $ 190,267 $ 83,353 $ 44,653 $ 23,487 $ 341,760 Pharma 161,733 50,126 6,165 9,491 227,515 Food + Beverage 29,472 47,870 7,476 11,682 96,500 Total $ 381,472 $ 181,349 $ 58,294 $ 44,660 $ 665,775 For the Nine Months Ended September 30, 2019 Latin Segment Europe Domestic America Asia Total Beauty + Home $ 607,316 $ 236,883 $ 124,352 $ 69,370 $ 1,037,921 Pharma 549,080 226,073 21,100 27,638 823,891 Food + Beverage 92,015 177,587 25,153 31,832 326,587 Total $ 1,248,411 $ 640,543 $ 170,605 $ 128,840 $ 2,188,399 For the Nine Months Ended September 30, 2018 Latin Segment Europe Domestic America Asia Total Beauty + Home $ 622,184 $ 252,709 $ 140,238 $ 73,338 $ 1,088,469 Pharma 520,574 132,496 19,229 26,552 698,851 Food + Beverage 90,185 143,005 23,343 35,880 292,413 Total $ 1,232,943 $ 528,210 $ 182,810 $ 135,770 $ 2,079,733 We perform our obligations under a contract with a customer by transferring goods and/or services in exchange for consideration from the customer. The timing of performance will sometimes differ from the timing of the receipt of the associated consideration from the customer, thus resulting in the recognition of a contract asset or a contract liability. We recognize a contract asset when we transfer control of goods or services to a customer prior to invoicing for the related performance obligation. The contract asset is transferred to accounts receivable when the product is shipped and invoiced to the customer. We recognize a contract liability if the customer's payment of consideration precedes the entity's performance. The opening and closing balances of our contract asset and contract liabilities are as follows: Balance as of Balance as of Increase/ December 31, 2018 September 30, 2019 (Decrease) Contract asset (current) $ 15,858 $ 19,044 $ 3,186 Contract asset (long-term) $ — $ — $ — Contract liability (current) $ 68,134 $ 59,500 $ (8,634) Contract liability (long-term) $ 11,261 $ 12,705 $ 1,444 The differences in the opening and closing balances of our contract asset and contract liabilities are primarily the result of timing differences between our performance and the customer’s payment. The total amount of revenue recognized during the current year against contract liabilities is $40.9 million, including $22.6 million relating to contract liabilities at the beginning of the year. Determining the Transaction Price In most cases, the transaction price for each performance obligation is stated in the contract. In determining the variable amounts of consideration within the transaction price (such as volume-based customer rebates), we include an estimate of the expected amount of consideration as revenue. We apply the expected value method based on all of the information (historical, current, and forecast) that is reasonably available and identify reasonable estimates based on this information. We apply the method consistently throughout the contract when estimating the effect of an uncertainty on the amount of variable consideration to which we will be entitled. Product Sales We primarily manufacture and sell dispensing, sealing and active packaging solutions. The amount of consideration is typically fixed for such customers. At the time of delivery, the customer is invoiced the agreed-upon price. Revenue from product sales is typically recognized upon manufacture or shipment, when control of the goods transfers to the customer. To determine when the control transfers, we typically assess, among other things, the shipping terms of the contract, shipping being one of the indicators of transfer of control. A majority of product sales are sold free on board (“FOB”) shipping point. For FOB shipping point shipments, control of the goods transfers to the customer at the time of shipment of the goods. Therefore, our performance obligation is satisfied at the time of shipment. We have elected to account for shipping and handling costs that occur after the customer has obtained control of a good as fulfillment costs rather than as a promised service. We do not have any material significant payment terms as payment is typically received shortly after the point of sale. There also exist instances where we manufacture highly customized products that have no alternative use to us and for which we have an enforceable right to payment for performance completed to date. For these products, we transfer control and recognize revenue over time by measuring progress towards completion using the Output Method based on the number of products produced. As we normally make our products to a customer’s order, the time between production and shipment of our products is typically within a few weeks. As a part of our customary business practice, we offer a standard warranty that the products will materially comply with the technical specifications and will be free from material defects. Because such warranties are not sold separately, do not provide for any service beyond a guarantee of a product’s initial specifications, and are not required by law, there is no revenue deferral for these types of warranties. Tooling Sales We also build or contract to build molds and other tools (collectively defined as “tooling”) necessary to produce our products. As with product sales, we recognize revenue when control of the tool transfers to the customer. If the tooling is highly customized with no alternative use to us and we have an enforceable right to payment for performance completed to date, we transfer control and recognize revenue over time by measuring progress towards completion using the Input Method based on costs incurred relative to total estimated costs to completion. Otherwise, revenue for the tooling is recognized at the point in time when the customer approves the tool. We do not have any material significant payment terms as payment is typically either received during the mold-build process or shortly after completion. In certain instances, we offer extended warranties on tools sold to our customers above and beyond the normal standard warranties. We normally receive payment at the inception of the contract and recognize revenue over the term of the contract. At December 31, 2018, $758 thousand of unearned revenue associated with outstanding contracts was reported in Accounts Payable and Other Liabilities. At September 30, 2019, the unearned amount was $504 thousand. We expect to recognize approximately $49 thousand of the unearned amount during the remainder of 2019, $260 thousand in 2020, and $195 thousand thereafter. |
