Revenue Recognition

3 Months Ended

Mar. 29, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition:

As disclosed within the unaudited condensed consolidated statements of operations and comprehensive income, revenues are generated from sales of (1) admission to our amusement parks and water parks, (2) food, merchandise and games both inside and outside the parks, and (3) accommodations, extra-charge products, and other revenue sources. Admission revenues include amounts paid to gain admission into our parks, including parking fees. Revenues related to extra-charge products, including premium benefit offerings such as front-of-line products, and online transaction fees charged to customers are included in "Accommodations, extra-charge products and other".

The following table presents net revenues disaggregated by revenues generated within the parks and revenues generated from out-of-park operations less amounts remitted to outside parties under concessionaire arrangements for the periods presented:



	Three months ended
(In thousands)	March 29, 2020			March 31, 2019
In-park revenues	$	43,027		$	54,213
Out-of-park revenues	12,091			14,761
Concessionaire remittance	(1,483		)	(1,997		)
Net revenues	$	53,635		$	66,977

Due to our highly seasonal operations, a substantial portion of our revenues are generated during an approximate 130- to 140-day operating season. Most revenues are recognized on a daily basis based on actual guest spend at our properties. Revenues from multi-use products, including season-long products for admission, dining, beverage and other products, are recognized over the estimated number of uses expected for each type of product. The estimated number of uses is reviewed and may be updated periodically during the operating season prior to the ticket or product expiration, which generally occurs no later than the close of the operating season. The number of uses is estimated based on historical usage adjusted for expected usage. For any bundled products that include multiple performance obligations, revenue is allocated using the retail price of each distinct performance obligation and any inherent discounts are allocated based on the gross margin and expected redemption of each performance obligation. We do not typically provide for refunds or returns.

In some instances, we arrange with outside parties ("concessionaires") to provide goods to guests, typically food and merchandise, and we act as an agent, resulting in net revenues recorded within the condensed consolidated statements of operations and comprehensive income. Concessionaire arrangement revenues are recognized over the operating season and are variable. Sponsorship revenues and marina revenues, which are classified as "Accommodations, extra-charge products and other," are recognized over the park operating season which represents the period in which the performance obligations are satisfied. Sponsorship revenues are typically fixed. However, some sponsorship revenues are variable based on achievement of specified operating metrics. We estimate variable revenues and perform a constraint analysis using both historical information and current trends to determine the amount of revenue that is not probable of a significant reversal.

Many products, including season-long products, are sold to customers in advance, resulting in a contract liability ("deferred revenue"). Deferred revenue is at its highest immediately prior to the peak summer season, and at its lowest at the beginning of the calendar year following the close of our parks' operating seasons, as well as at the end of the third quarter after the peak summer season and at the beginning of the selling season for the next year's products. Season-long products represent most of the deferred revenue balance in any given period.

Of the $151.4 million of deferred revenue recorded as of January 1, 2020, 91% was related to season-long products. The remainder was related to deferred online transaction fees charged to customers, advanced ticket sales, marina deposits, advanced resort reservations, and other deferred revenue. During the three months ended March 29, 2020, approximately $6.3 million of the deferred revenue balance as of January 1, 2020 was recognized.

Due to the COVID-19 pandemic, we have estimated that some or all of our parks may remain closed throughout 2020. We have announced our intention to extend the validity of our season pass products through the 2021 operating season to compensate for lost days in 2020. As a result, we have classified a portion of our deferred revenue as non-current as of March 29, 2020. The following table discloses when we expect to recognize our outstanding deferred revenue:



(In thousands)	March 29, 2020		Balance Sheet Location
Estimated to be recognized in 2020	$	30,381	Deferred revenue

Estimated to be recognized in 2021	155,435		Other Non-Current Deferred Revenue
Estimated to be recognized from 2022 through 2039 (1)	8,702		Other Non-Current Deferred Revenue
	164,137

Total Deferred Revenue	$	194,518


(1)	We lease a portion of the California's Great America parking lot to the Santa Clara Stadium Authority during Levi's Stadium events. The lease is effective through the life of the stadium, or approximately 25 years, from the opening of the stadium through 2039. The lease payments were prepaid, and the corresponding revenue is being recognized over the life of the stadium.

Payment is due immediately on the transaction date for most products. Our receivable balance includes outstanding amounts on installment purchase plans which are offered for season-long products (and other select products for specific time periods), and includes sales to retailers, group sales and catering activities which are billed. Installment purchase plans vary in length from three monthly installments to 12 monthly installments. Payment terms for billings are typically net 30 days. Receivables are highest in the peak summer months and the lowest in the winter months. We are not exposed to a significant concentration of customer credit risk. As of March 29, 2020, December 31, 2019 and March 31, 2019, we recorded a $6.0 million, $3.4 million and $3.9 million allowance for doubtful accounts, respectively, representing estimated defaults on installment purchase plans. The default estimate is calculated using the historical default rate adjusted for current period trends, including an adjustment for the impact of COVID-19 on our customers' ability to pay based on March 2020 collection rates. The allowance for doubtful accounts is recorded as a reduction of deferred revenue to the extent revenue has not been recognized on the corresponding season-long products.

As mentioned above, due to the COVID-19 pandemic, we have estimated that some or all of our parks may remain closed throughout 2020. We have announced a suspension of collections on our installment purchase plans until our parks re-open. As a result, we have classified $24.0 million of our installment purchase plan receivables as non-current as of March 29, 2020.