XML 34 R20.htm IDEA: XBRL DOCUMENT v3.22.4
Revenue from Contracts with Customers
 3 Months Ended
Dec. 31, 2022
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers Revenue from Contracts with Customers
Revenue is recognized over time for arrangements with customers for which: (i) the Company's performance does not create an asset with an alternative use to the Company, and (ii) the Company has an enforceable right to payment, including reasonable profit margin, for performance completed to date. Revenue recognized over time is estimated based on costs incurred to date plus a reasonable profit margin. If either of the two conditions noted above are not met to recognize revenue over time, revenue is recognized following the transfer of control of such products to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying arrangement.
The Company recognizes revenue when a contract exists and when, or as, it satisfies a performance obligation by transferring control of a product or service to a customer. Contracts are accounted for when they have approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer.
The Company generally enters into a master services arrangement that establishes the framework under which business will be conducted. These arrangements represent the master terms and conditions of the Company's services that apply to individual orders, but they do not commit the customer to work with, or to continue to work with, the Company nor do they obligate the customer to any specific volume or pricing of purchases. Moreover, these terms can be amended in appropriate situations.
Customer purchase orders are received for specific quantities with predominantly fixed pricing and delivery requirements. Thus, for the majority of our contracts, there is no guarantee of any revenue to the Company until a customer submits a purchase order. As a result, the Company generally considers its arrangement with a customer to be the combination of the master services arrangement and the purchase order. Most of the Company's arrangements with customers create a single performance obligation as the promise to transfer the individual manufactured product or service is capable of being distinct.
The Company’s performance obligations are satisfied over time as work progresses or at a point in time. A performance obligation is satisfied over time if the Company has an enforceable right to payment, including a reasonable profit margin. Determining if an enforceable right to payment includes a reasonable profit margin requires judgment and is assessed on a contract by contract basis.
Generally, there are no subjective customer acceptance requirements or further obligations related to goods or services provided; if such requirements or obligations exist, then a sale is recognized at the time when such requirements are completed and such obligations are fulfilled.
The Company does not allow for a general right of return. Net sales include amounts billed to customers for shipping and handling and out-of-pocket expenses. The corresponding shipping and handling costs and out-of-pocket expenses are included in cost of sales. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from net sales.
Contract Costs
For contracts requiring over time revenue recognition, the selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The Company uses a cost-based input measurement of progress because it best depicts the transfer of assets to the customer, which occurs as costs are incurred during the manufacturing process or as services are rendered. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the costs incurred to date.
There were no other costs to obtain or fulfill customer contracts.
Disaggregated Revenue
The table below includes the Company’s revenue for the three months ended December 31, 2022 and January 1, 2022 indicated disaggregated by geographic reportable segment and market sector (in thousands):
Three Months Ended
December 31, 2022
Reportable Segment:
AMERAPACEMEATotal
Market Sector:
Industrial$103,027 $350,584 $18,471 $472,082 
Healthcare/Life Sciences215,381 223,290 49,196 487,867 
Aerospace/Defense68,022 45,654 20,300 133,976 
     External revenue386,430 619,528 87,967 1,093,925 
Inter-segment sales3,232 22,376 1,406 27,014 
    Segment revenue$389,662 $641,904 $89,373 $1,120,939 

Three Months Ended
January 1, 2022
Reportable Segment:
AMERAPACEMEATotal
Market Sector:
Industrial$83,245 $265,275 $15,307 $363,827 
Healthcare/Life Sciences135,962 169,237 39,266 344,465 
Aerospace/Defense55,750 35,743 17,671 109,164 
     External revenue274,957 470,255 72,244 817,456 
Inter-segment sales2,389 21,417 619 24,425 
    Segment revenue$277,346 $491,672 $72,863 $841,881 

For each of the three months ended December 31, 2022 and January 1, 2022, approximately 81% and 87% of the Company's revenue, respectively, was recognized as products and services were transferred over time.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets and deferred revenue on the Company’s accompanying Condensed Consolidated Balance Sheets.
Contract Assets: For performance obligations satisfied at a point in time, billing occurs subsequent to revenue recognition, at which point the customer has been billed and the resulting asset is recorded within accounts receivable. For performance obligations satisfied over time as work progresses, the Company has an unconditional right to payment, which results in the recognition of contract assets. The following table summarizes the activity in the Company's contract assets during the three months ended December 31, 2022 and January 1, 2022 (in thousands):
Three Months Ended
December 31, 2022January 1, 2022
Contract assets, beginning of period$138,540 $115,283 
Revenue recognized during the period884,099 709,723 
Amounts collected or invoiced during the period(903,623)(719,556)
Contract assets, end of period$119,016 $105,450 
Deferred Revenue: Deferred revenue is recorded when consideration is received from a customer prior to transferring goods or services to the customer under the terms of the contract, which is included in other accrued liabilities on Condensed
Consolidated Balance Sheets. As of December 31, 2022 and October 1, 2022 the balance of advance payments from customers was $247.1 million and $298.8 million, respectively. The advance payment is not considered a significant financing component because it is used to meet working capital demands that can be higher in the early stages of a contract and to protect the company from the other party failing to adequately complete some or all of its obligations under the contract. Deferred revenue is recognized into revenue when all revenue recognition criteria are met. For performance obligations satisfied over time, recognition will occur as work progresses; otherwise deferred revenue will be recognized based upon shipping terms.