| Revenue Recognition | Note 4. Revenue Recognition Our accounting policies and estimates as a result of adopting ASU 2014-09, Revenue from Contracts with Customers (Topic 606) are as follows: Net sales are reported net of estimated sales returns and discounts, include compensation from customers for shipping and handling, and exclude sales taxes. We often contract some or all equipment and services to our customers under the terms of a bundled (performance obligation(s)) sales arrangement. Delivery of these performance obligations can be transferred over time or at a single point in time. At contract inception, we evaluate for material distinct goods and services using professional judgment. We conclude we have separate performance obligations for items capable of being distinct in the eyes of the customer and if the item is distinct within the context of the contract. For those warranties that extend beyond typical terms and include other services ("service-type warranty"), we account for them as a separate performance obligation. When separate performance obligations are identified, we allocate the consideration to the individual performance obligation based on the best evidence and method we judge as faithfully depicting the value of the performance obligation. We primarily use the cost plus a margin approach to allocate the consideration. We estimate the arrangement's consideration to be the value we expect to be entitled to as a result of transferring the performance obligation to the customer. The sales price may include variable consideration and amounts related to subcontracted deliverables (i.e., we integrate the materials, labor and equipment into the deliverables promised to the customer). When we have a contract that has variable consideration, including discounts, claims, unpriced change orders, and liquidated damages, we estimate the amount of revenue using the expected value (i.e., the sum of the probability-weighted amount) or the most likely amount method, whichever is expected to better predict revenue. Factors considered in determining revenue associated with variable consideration include the following: (a) the contract or other evidence providing legal basis, (b) additional costs caused by unforeseen circumstances, (c) evidence supporting the claim, and (d) historical evidence and patterns of customers. Our material performance obligation types include: Unique configuration contracts : audio-visual communication systems uniquely configured (custom) or integrated for a customer's particular location and system configuration may include all or a combination of the following: engineering services, project management services, video display(s), control solution(s), installation and integration services, scoring and messaging equipment, training, other on-site services, spare parts, software licenses, and assurance-type warranties. We account for these types of contracts as a combined single performance obligation with no segmentation between types of products and services. A single performance obligation is most appropriate in our judgment when the substantial part of our promise to customers is to integrate and incorporate individual goods and services into a combined output or system; often times the system is customized or significantly modified to the customers' desired configurations and location, and the interrelated goods and services provide utility to the customers as a package. Revenue for uniquely configured (custom) or integrated systems are recognized over time as performance obligations are satisfied due to the continuous transfer of control to the customer. This transfer of control is evidenced either by the customer directing the work in process as demonstrated by contractual termination clauses or by our right to payment for work performed to date that does not have an alternative use to us. Sales and profits are recognized over time following the cost-to-cost input method (percentage-of-completion) measured by the percentage of costs incurred to date as compared to estimated total costs for each contract. The cost-to-cost input method is the most faithful depiction of our performance because it measures the value of the contract transferred to the customer. Costs to perform include direct and indirect costs for contract design, production, integration, installation, and assurance-type warranty reserve. Direct costs include material and components; manufacturing, project management, and engineering labor; and subcontracting expenses. Indirect costs include allocated charges for such items as facilities and equipment depreciation and general overhead. Provisions of estimated losses on uncompleted contracts are made in the period when such losses are capable of being estimated. Pre-contract costs are expensed as incurred unless they are expected to be recovered. We receive payments from customers based on a billing schedule as established in our contracts. Billing schedules include down payments and progress billings over time or set milestone payments specific to the project. Variability in contract assets and contract liabilities ("Net over/under billings") relates to the timing of billings and revenue recognition, which can vary significantly depending on contractual payment terms and build and installation schedules. Balances are also impacted by the seasonality of the sports markets. Contract modifications to existing contracts with customers are evaluated in accordance with the five-step revenue model. We treat contract modifications as a separate contract and new performance obligations when the additional goods or services are distinct and do not add to the unique configuration or are outside the integrated system and when the consideration reflects standalone selling prices. If the additional goods or services offered under the modification enhance the uniquely configured or integrated systems, revenue is allocated to the existing contracts' performance obligation. Modifications may cause changes in the timing of revenue recognition depending on the allocation to various performance obligations. The time between contract order and project completion is typically less than 12 months but may extend longer depending on the amount of custom work and customers’ delivery needs. Limited configuration (standard systems) and after-sale parts contracts : Revenue for limited configured (standard systems) or after-sale parts contracts with limited or no configuration or integration are recognized as individual performance obligations. Revenue is recognized at a point in time when title or control passes, or services are performed. Customers can purchase standard display systems individually or in large quantities. For purchases made in large quantities, we account for each piece of equipment separately as a distinct performance obligation from which a customer derives benefit. For systems with bundled standard products and services, much of the promised work for the customer is performed at the same time; therefore, allocation of the transaction price does not impact revenue timing. We account for these types of contracts as a combined single performance obligation with no segmentation between types of products and services. For those agreements we perform over reporting periods, we separate material performance obligations and allocate expected consideration. Immaterial goods or services in the context of the contract are included with the display system performance obligation. Standard systems and equipment with limited configurations or integrations may include all or a combination (when immaterial) of the following performance obligations: engineering services, project management services, video display(s), control solution(s), installation and integration services, scoring, messaging and audio equipment, training, spare parts, software licenses, assurance-type warranties, and after-sale parts. When fulfilling a limited configuration order, we are typically able to redirect the video displays or scoring, messaging, or audio equipment to another customer without incurring significant economic losses. Therefore, control is transferred to the customer at a point in time. For service-type or other performance obligations, we recognize revenue over time, which is the most faithful depiction of the customer obtaining control and benefits from the work performed. Services and other : Services sold on a stand-alone basis or after the initial system sale include performance obligations such as event support, control room design, on-site training, equipment service, service-type warranties, technical support, software sold as a service, and other immaterial revenue streams. Services and other are recognized as net sales when the services are performed and control is transferred to the customer at a point in time or over time for time-based "stand ready to perform" type obligations. If we have the right to consideration from a customer that directly corresponds with the value of our performance (where we bill a fixed amount for each hour of service provided), we recognize revenue related to the work completed. Software: Revenues from software license fees on sales, other than uniquely configured type contracts, are recognized when delivery of the product has occurred. Subscription-based licenses include the right for a customer to use our licenses and receive related support for a specified term and revenue is recognized pro-rata over the term of the engagement. Shipping and handling costs : Shipping and handling costs collected from our customers in connection with our sales are recorded as revenue. We record shipping and handling costs as a component of cost of sales at the time the product is shipped. Warranty : Our warranty offerings are described in " Note 11. Commitments and Contingencies ." Disaggregation of revenue In accordance with ASC 606-10-50, we disaggregate revenue from contracts with customers by the type of performance obligation and the timing of revenue recognition. We determine that disaggregating revenue in these categories achieves the disclosure objective to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors and to enable users of financial statements to understand the relationship to each reportable segment. As noted in the segment information footnote, we are organized in five business segments: Commercial, Live Events, High School Park and Recreation, Transportation, and International. The following table presents our disaggregation of revenue by segments: Commercial Live Events High School Park and Recreation Transportation International Total Type of performance obligation Unique configuration $ 3,049 $ 38,921 $ 8,943 $ 9,618 $ 16,216 $ 76,747 Limited configuration 23,867 5,818 18,547 7,083 10,778 66,093 Service and other 3,653 4,733 630 456 1,876 11,348 $ 30,569 $ 49,472 $ 28,120 $ 17,157 $ 28,870 $ 154,188 Timing of revenue recognition Goods/services transferred at a point in time $ 24,583 $ 6,802 $ 16,998 $ 7,232 $ 11,536 $ 67,151 Goods/services transferred over time 5,986 42,670 11,122 9,925 17,334 87,037 $ 30,569 $ 49,472 $ 28,120 $ 17,157 $ 28,870 $ 154,188 See " Note 5. Segment Reporting " for a disaggregation of revenue by geography. Contract Balances Contract assets represent revenue recognized in excess of amounts billed and include unbilled receivables. Unbilled receivables, which represent an unconditional right to payment subject only to the passage of time, are reclassified to accounts receivable when they are billed under the contract terms. Contract liabilities represent amounts billed to the clients in excess of revenue recognized to date. We adjust the contract price for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer goods and services to a customer will exceed one year from the time the customer pays. See " Note 10. Receivables " for amounts recorded in long-term receivables. The following table reflects the changes in our contract assets and liabilities: July 28, 2018 April 28, 2018 Dollar Change Percent Change Contract assets $ 41,283 $ 30,968 $ 10,315 33.3 % Contract liabilities - current 50,629 39,379 11,250 28.6 Contract liabilities - noncurrent 8,073 7,475 598 8.0 The increase in our contract assets and contract liabilities from April 28, 2018 to July 28, 2018 was due to the timing of billing schedules and revenue recognition, which can vary significantly depending on the contractual payment terms and the seasonality of the sports markets. During the three months ended July 28, 2018 , we recognized revenue of $23,805 related to our contract liabilities as of April 28, 2018 . Remaining performance obligations As of July 28, 2018 , the aggregate amount of the transaction price allocated to the remaining performance obligations, which we also refer to as backlog, was $223,751 . We expect approximately $190,219 of our remaining performance obligations to be recognized over the next 12 months with the remainder recognized thereafter. Remaining performance obligations related to product and service agreements are $176,819 and $46,932 , respectively. Although remaining performance obligations reflects business that is considered to be legally binding, cancellations, deferrals or scope adjustments may occur. Any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations and project deferrals are reflected in the balance as appropriate. |
