Revenue

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Text Block]

RevenueOur revenue results from the sale of goods or services and reflects the consideration to which we expect to be entitled in exchange for those goods or services. We record revenue based on a five-step model, in accordance with ASC Topic 606. Following the identification of a contract with a customer, we identify the performance obligations (goods or services) in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and recognize the revenue when (or as) we satisfy the performance obligations by transferring the promised goods or services to our customers. A good or service is transferred when (or as) the customer obtains control of that good or service.

The following table presents the approximate percentage of our net sales by market group:


	Three Months Ended March 31,
	2020		2019
Biologics	28	%	26	%
Generics	19	%	20	%
Pharma	29	%	31	%
Contract-Manufactured Products	24	%	23	%
	100	%	100	%

The following table presents the approximate percentage of our net sales by product category:


	Three Months Ended March 31,
	2020		2019
High-Value Components	43	%	43	%
Standard Packaging	28	%	30	%
Delivery Devices	5	%	4	%
Contract-Manufactured Products	24	%	23	%
	100	%	100	%

The following table presents the approximate percentage of our net sales by geographic location:


	Three Months Ended March 31,
	2020		2019
Americas	48	%	46	%
Europe, Middle East, Africa	44	%	47	%
Asia Pacific	8	%	7	%
	100	%	100	%

Contract Assets and Liabilities

The following table summarizes our contract assets and liabilities, excluding contract assets included in accounts receivable, net:


	($ in millions)
Contract assets, December 31, 2019	$	9.8
Contract assets, March 31, 2020	16.4
Change in contract assets - increase (decrease)	$	6.6

Deferred income, December 31, 2019	$	(34.9)
Deferred income, March 31, 2020	(41.8)
Change in deferred income - decrease (increase)	$	(6.9)

During the three months ended March 31, 2020, $10.2 million of revenue was recognized that was included in deferred income at the beginning of the year.

The majority of the performance obligations within our contracts are satisfied within one year or less. Performance obligations satisfied beyond one year include those relating to a nonrefundable customer payment of $20.0 million received in June 2013 in return for the exclusive use of the SmartDose^® technology platform within a specific therapeutic area. As of March 31, 2020, there was $5.4 million of unearned income related to this payment, of which $0.9 million was included in other current liabilities and $4.5 million was included in other long-term liabilities. The unearned income is being recognized as income on a straight-line basis over the remaining term of the agreement. The agreement does not include a future minimum purchase commitment from the customer.

Supply Chain Financing

We have entered into supply chain financing agreements with certain banks, pursuant to which we offer for sale certain accounts receivable to such banks from time to time, subject to the terms of the applicable agreements. These transactions result in a reduction in accounts receivable, as the agreements transfer effective control over, and credit risk related to, the receivables to the banks. These agreements do not allow for recourse in the event of uncollectibility, and we do not retain any interest in the underlying accounts receivable once sold. As of March 31, 2020 and 2019, we derecognized accounts receivable of $3.3 million and $1.8 million, respectively, under these agreements. Discount fees related to the sale of such accounts receivable on our condensed consolidated income statements for the three months ended March 31, 2020 and 2019 were not material.

Voluntary Recall

On January 24, 2019, we issued a voluntary recall of our Vial2Bag^® product line due to reports of potential unpredictable or variable dosing under certain conditions. Our fourth quarter 2018 results included an $11.3 million provision for product returns, recorded as a reduction of sales, partially offset by a reduction in cost of goods sold, reflecting our inventory balance for these devices at December 31, 2018. During three months ended March 31, 2019, we recorded a provision of $4.5 million for inventory returns from our customers and related in-house inventory, partially offset by a reduction in our provision for product returns. We continue to work to get the product back on the market.