Revenue

12 Months Ended

Dec. 28, 2019

Revenue from Contract with Customer [Abstract]

2. Revenue

The following tables represent a disaggregation of revenue from contracts with customers for fiscal 2019 and 2018 along with the reportable segment for each category.

Major Products and Service Lines


TFE	2019								2018
	(in thousands)
	HDD		DCP		PV		Total		HDD		DCP		PV		Total
Systems, upgrades and spare parts	$	52,759	$	—	$	15,653	$	68,412	$	55,793	$	1	$	5,253	$	61,047
Field service		5,210		2		54		5,266		8,255		—		46		8,301

Total TFE net revenues	$	57,969	$	2	$	15,707	$	73,678	$	64,048	$	1	$	5,299	$	69,348


Photonics	2019		2018
	(in thousands)
Products:
Military products	$	12,480	$	13,828
Commercial products		640		335
Repair and other services		2,430		1,809

Total Photonics product net revenues		15,550		15,972
Technology development:
FFP		12,521		2,463
CPFF		7,134		7,258
Time and materials		2		73

Total technology development net revenues		19,657		9,794

Total Photonics net revenues	$	35,207	$	25,766

Primary Geography Markets


	2019						2018
	(in thousands)
	TFE		Photonics		Total		TFE		Photonics		Total
United States	$	1,306	$	34,664	$	35,970	$	4,050	$	23,862	$	27,912
Asia		72,372		—		72,372		65,298		31		65,329
Europe		—		543		543		—		1,648		1,648
Rest of World		—		—		—		—		225		225

Total net revenues	$	73,678	$	35,207	$	108,885	$	69,348	$	25,766	$	95,114

Timing of Revenue Recognition


	2019						2018
	(in thousands)
	TFE		Photonics		Total		TFE		Photonics		Total
Products transferred at a point in time	$	73,678	$	2,430	$	76,108	$	69,348	$	1,809	$	71,157
Products and services transferred over time		—		32,777		32,777		—		23,957		23,957

Total net revenues	$	73,678	$	35,207	$	108,885	$	69,348	$	25,766	$	95,114

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 fiscal 2019:


	December 28, 2019		December 29, 2018		Change
	(In thousands)
TFE:
Contract assets:
Accounts receivable, unbilled	$	760	$	514	$	246

Contract liabilities:
Deferred revenue	$	320	$	633	$	(313	)
Customer advances		4,007		14,314		(10,307	)

	$	4,327	$	14,947	$	(10,620	)

Photonics:
Contract assets:
Accounts receivable, unbilled	$	3,210	$	1,493	$	1,717
Retainage		99		157		(58	)

	$	3,309	$	1,650	$	1,659

Contract liabilities:
Deferred revenue	$	—	$	1,101	$	(1,101	)

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 fiscal 2019, contract assets in our TFE segment increased by $246,000 primarily due to the accrual of revenue under a vendor managed inventory arrangement.

Customer advances in our TFE segment generally represent amounts billed to the customer prior to transferring goods which represents a contract liability. 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 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 and represents a contract liability. During fiscal 2019, we recognized revenue in our TFE segment of $14.3 million and $527,000 that was included in customer advances and deferred revenue, respectively, at the beginning of the period. Customer advances included in accounts receivable were $201,000 at December 28, 2019.

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 fiscal 2019, contract assets in our Photonics segment increased by $1.7 million primarily due to the revenue recognized on FFP contracts in advance of billing and the accrual of revenue incurred costs under CPFF contracts, offset in part by the completion of certain CPFF contracts and the final settlement of retainage amounts under certain CPFF contracts.

Customer advances in our Photonics segment generally represent deposits from customers upon contract execution and upon achievement of contractual milestones which represents a contract liability. These deposits are liquidated when revenue is recognized. Deferred revenue in our Photonics segment included amounts deferred for the impact of the allocation and the timing of the recognition of revenues for a military product agreement with a tiered pricing structure. During fiscal 2019, we recognized revenue in our Photonics segment of $1.1 million related to the above mentioned military product agreement that was included in deferred revenue at the beginning of the period.

On December 28, 2019 we had $92.4 million of remaining performance obligations, which we also refer to as total backlog. Backlog at December 28, 2019 consisted of $21.4 million of TFE backlog and $71.0 million of Photonics backlog. We expect to recognize approximately 62% of our remaining performance obligations as revenue in 2020, 20% in 2021, 13% in 2022 and 5% in 2023.