REVENUE RECOGNITION

12 Months Ended

Dec. 31, 2020

Revenue From Contract With Customer [Abstract]

REVENUE RECOGNITION

19. REVENUE RECOGNITION:

Effective on January 1, 2018, the Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (Topic 606). The standard establishes the principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows from a contract with a customer.

During the year ended December 31, 2019, the Company entered into a transaction with one of its customers for emitters involving elements of variable consideration. Due to the escalation in trade policy tension between the governments of China and the United States, the customer required a larger than normal shipment of emitters having a right to return them through March 15, 2020 in order to accommodate their uncertain production needs. Per Topic 606, the Company was constrained to recognizing revenue on this unique shipment to the extent that it was probable that a significant revenue reversal would not occur and deferred recognition of the remainder until after the inherent uncertainties of the transaction were resolved. These uncertainties included factors that were outside of the Company’s influence, including the customer’s production needs and complexities associated with the current international health and trade issues in China. On March 15, 2020, the inherent uncertainties of the transaction were resolved as the customer did not exercise their right of return provision. This event resulted in the recognition of the previously constrained revenue during the year ended December 31, 2020.

For the years ended December 31, 2020, 2019 and 2018, the Company recorded 97%, 97% and 95%, respectively, of its revenue from sales of material and 3%, 3% and 5%, respectively, from the providing of services through Adesis.

Contract Balances

The following table provides information about assets and liabilities associated with our contracts from customers (in thousands):

	As of December 31, 2020
Accounts receivable	$	82,261
Short-term unbilled receivables		6,659
Long-term unbilled receivables		3,770
Short-term deferred revenue		105,215
Long-term deferred revenue		57,086

Short-term and long-term unbilled receivables are classified as other current assets and other assets, respectively, on the Consolidated Balance Sheets. The deferred revenue balance at December 31, 2020 will be recognized as materials are shipped to customers over the remaining contract periods. The significant customer contracts (individually representing greater than 10% of revenue) expire in 2022. As of December 31, 2020, the Company had $23.9 million of backlog associated with committed purchase orders from its customers for phosphorescent emitter material. These orders are anticipated to be fulfilled within the next 90 days.

Significant changes in the unbilled receivables and deferred liabilities balances for the years ended December 31, 2020 and 2019, are as follows (in thousands):

	Year Ended December 31, 2020
	Unbilled Receivables			Deferred Revenue
Balance at December 31, 2019	$	1,362		$	(144,862	)
Revenue recognized that was previously included in deferred revenue		—			157,704
Increases due to cash received		—			(192,369	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price		—			17,226
Unbilled receivables recognized		9,067			—
Net change		9,067			(17,439	)
Balance at December 31, 2020	$	10,429		$	(162,301	)
	Year Ended December 31, 2019
	Unbilled Receivables			Deferred Revenue
Balance at December 31, 2018	$	1,020		$	(122,567	)
Revenue recognized that was previously included in deferred revenue		—			133,394
Increases due to cash received		—			(157,321	)
Cumulative catch-up adjustment arising from changes in estimates of    transaction price		—			1,632
Unbilled receivables recognized		1,834			—
Transferred to receivables from unbilled receivables		(1,492	)		—
Net change		342			(22,295	)
Balance at December 31, 2019	$	1,362		$	(144,862	)

The Company recorded a cumulative catch-up adjustment arising from changes in estimates of transaction price of $17.2 million for the year ended December 31, 2020 compared to $1.6 million for the year ended December 31, 2019.  

Adoption of Topic 606

The Company adopted Topic 606 beginning January 1, 2018 using the “modified retrospective” approach, meaning the standard was applied only to the most current period presented in the financial statements, with a cumulative adjustment to retained earnings. Under this transition method, the Company elected to apply Topic 606 only to contracts that were not complete at the initial adoption date. Adoption of the new standard resulted in a reduction of retained earnings of $17.1 million on January 1, 2018.

The new standard impacts how the Company recognizes revenue on its commercial license and material supply agreements with customers. Previously, the Company recognized license fees on a straight-line basis or as received from the customer, and royalty revenue one quarter in arrears based on sales information received from its customers typically received after disclosing that quarter’s results. Under the new standard, total contract consideration is estimated and recognized over the contract term based on material units

sold at its estimated per unit fee. Total contract consideration includes fixed amounts designated in contracts with customers as license fees as well as estimates of material fees and royalties to be earned.