DTSI » Topics » Revenue Recognition

These excerpts taken from the DTSI 10-K filed Mar 6, 2009.

Revenue Recognition

        The Company recognizes revenue when persuasive evidence of a sales arrangement exists, delivery has occurred or services have been rendered, the buyer's price is fixed or determinable and collection is reasonably assured.

        Revenue from licensing audio technology, trademarks and know-how is generated from licensing agreements with consumer electronics product manufacturers that pay a per-unit license fee for products manufactured under those license agreements. Licensees generally report manufacturing information within 30 to 60 days after the end of the quarter in which such activity takes place. Consequently, the Company recognizes revenue from these licensing agreements on a three-month lag basis, generally in the quarter following the quarter of manufacture, provided amounts are fixed or determinable and collection is reasonably assured, since the Company cannot reliably estimate the amount of revenue earned prior to the receipt of such reports. Use of this lag method allows for the receipt of licensee royalty reports prior to the recognition of revenue. Differences between amounts initially recognized and amounts subsequently audited or reported as an adjustment to those amounts due from licensees, will be recognized by the Company in the period such adjustment is determined or contracted, as appropriate.

        Revenue from the sale of multi-channel audio content is recorded upon delivery to retail accounts or end customers, assuming title and risk of loss has transferred to the customer, prices are fixed or determinable, no significant Company obligations remain and collection of the related receivable is reasonably assured. The Company's shipping terms are customarily FOB shipping point with title transfer and risk of loss transferring to the customer upon shipment.

        Management provides for returns on product sales based on historical experience and adjusts such reserves as considered necessary.

        In accordance with the aforementioned revenue recognition policies and Accounting Principles Board No. 21, "Interest on Receivables and Payables", the Company recognizes revenue net of unamortized discounts based on imputed interest for the time value of money when the payment terms extend beyond one year. The related accounts receivable, net of unamortized discount, is classified as short or long-term, as appropriate, and the unamortized discount is recognized as interest income at a constant rate over the duration of the payment terms.

        Licensing revenue is recognized gross of withholding taxes that are remitted by the Company's licensees directly to their local tax authorities. For the years ended December 31, 2006, 2007 and 2008, withholding taxes were $3,711, $2,061 and $3,491, respectively.

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DTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except per share data)

Note 2—Significant Accounting Policies (Continued)

Revenue Recognition

        The Company recognizes revenue when persuasive evidence of a sales arrangement exists, delivery has occurred or services have been rendered, the buyer's price is fixed or determinable and collection is reasonably assured.

        Revenue from licensing audio technology, trademarks and know-how is generated from licensing agreements with consumer electronics product manufacturers that pay a per-unit license fee for products manufactured under those license agreements. Licensees generally report manufacturing information within 30 to 60 days after the end of the quarter in which such activity takes place. Consequently, the Company recognizes revenue from these licensing agreements on a three-month lag basis, generally in the quarter following the quarter of manufacture, provided amounts are fixed or determinable and collection is reasonably assured, since the Company cannot reliably estimate the amount of revenue earned prior to the receipt of such reports. Use of this lag method allows for the receipt of licensee royalty reports prior to the recognition of revenue. Differences between amounts initially recognized and amounts subsequently audited or reported as an adjustment to those amounts due from licensees, will be recognized by the Company in the period such adjustment is determined or contracted, as appropriate.

        Revenue from the sale of multi-channel audio content is recorded upon delivery to retail accounts or end customers, assuming title and risk of loss has transferred to the customer, prices are fixed or determinable, no significant Company obligations remain and collection of the related receivable is reasonably assured. The Company's shipping terms are customarily FOB shipping point with title transfer and risk of loss transferring to the customer upon shipment.

        Management provides for returns on product sales based on historical experience and adjusts such reserves as considered necessary.

        In accordance with the aforementioned revenue recognition policies and Accounting Principles Board No. 21, "Interest on Receivables and Payables", the Company recognizes revenue net of unamortized discounts based on imputed interest for the time value of money when the payment terms extend beyond one year. The related accounts receivable, net of unamortized discount, is classified as short or long-term, as appropriate, and the unamortized discount is recognized as interest income at a constant rate over the duration of the payment terms.

        Licensing revenue is recognized gross of withholding taxes that are remitted by the Company's licensees directly to their local tax authorities. For the years ended December 31, 2006, 2007 and 2008, withholding taxes were $3,711, $2,061 and $3,491, respectively.

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DTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except per share data)

Note 2—Significant Accounting Policies (Continued)

Revenue Recognition





        The Company recognizes revenue when persuasive evidence of a sales arrangement exists, delivery has occurred or services have been
rendered, the buyer's price is fixed or determinable and collection is reasonably assured.




        Revenue
from licensing audio technology, trademarks and know-how is generated from licensing agreements with consumer electronics product manufacturers that pay a
per-unit license fee for products manufactured under those license agreements. Licensees generally report manufacturing information within 30 to 60 days after the end of the quarter
in which such activity takes place. Consequently, the Company recognizes revenue from these licensing agreements on a three-month lag basis, generally in the quarter following the quarter of
manufacture, provided amounts are fixed or determinable and collection is reasonably assured, since the Company cannot reliably estimate the amount of revenue earned prior to the receipt of such
reports. Use of this lag method allows for the receipt of licensee royalty reports prior to the recognition of revenue. Differences between amounts initially recognized and amounts subsequently
audited or reported as an adjustment to those amounts due from licensees, will be recognized by the Company in the period such adjustment is determined or contracted, as appropriate.



        Revenue
from the sale of multi-channel audio content is recorded upon delivery to retail accounts or end customers, assuming title and risk of loss has transferred to the customer,
prices are fixed or determinable, no significant Company obligations remain and collection of the related receivable is reasonably assured. The Company's shipping terms are customarily FOB shipping
point with title transfer and risk of loss transferring to the customer upon shipment.



        Management
provides for returns on product sales based on historical experience and adjusts such reserves as considered necessary.




        In
accordance with the aforementioned revenue recognition policies and Accounting Principles Board No. 21, "Interest on Receivables and Payables", the Company recognizes revenue
net of unamortized discounts based on imputed interest for the time value of money when the payment terms extend beyond one year. The related accounts receivable, net of unamortized discount, is
classified as short or long-term, as appropriate, and the unamortized discount is recognized as interest income at a constant rate over the duration of the payment terms.



        Licensing
revenue is recognized gross of withholding taxes that are remitted by the Company's licensees directly to their local tax authorities. For the years ended December 31,
2006, 2007 and 2008, withholding taxes were $3,711, $2,061 and $3,491, respectively.



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DTS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



(Amounts in thousands, except per share data)



Note 2—Significant Accounting Policies (Continued)





Revenue Recognition





        The Company recognizes revenue when persuasive evidence of a sales arrangement exists, delivery has occurred or services have been
rendered, the buyer's price is fixed or determinable and collection is reasonably assured.




        Revenue
from licensing audio technology, trademarks and know-how is generated from licensing agreements with consumer electronics product manufacturers that pay a
per-unit license fee for products manufactured under those license agreements. Licensees generally report manufacturing information within 30 to 60 days after the end of the quarter
in which such activity takes place. Consequently, the Company recognizes revenue from these licensing agreements on a three-month lag basis, generally in the quarter following the quarter of
manufacture, provided amounts are fixed or determinable and collection is reasonably assured, since the Company cannot reliably estimate the amount of revenue earned prior to the receipt of such
reports. Use of this lag method allows for the receipt of licensee royalty reports prior to the recognition of revenue. Differences between amounts initially recognized and amounts subsequently
audited or reported as an adjustment to those amounts due from licensees, will be recognized by the Company in the period such adjustment is determined or contracted, as appropriate.



        Revenue
from the sale of multi-channel audio content is recorded upon delivery to retail accounts or end customers, assuming title and risk of loss has transferred to the customer,
prices are fixed or determinable, no significant Company obligations remain and collection of the related receivable is reasonably assured. The Company's shipping terms are customarily FOB shipping
point with title transfer and risk of loss transferring to the customer upon shipment.



        Management
provides for returns on product sales based on historical experience and adjusts such reserves as considered necessary.




        In
accordance with the aforementioned revenue recognition policies and Accounting Principles Board No. 21, "Interest on Receivables and Payables", the Company recognizes revenue
net of unamortized discounts based on imputed interest for the time value of money when the payment terms extend beyond one year. The related accounts receivable, net of unamortized discount, is
classified as short or long-term, as appropriate, and the unamortized discount is recognized as interest income at a constant rate over the duration of the payment terms.



        Licensing
revenue is recognized gross of withholding taxes that are remitted by the Company's licensees directly to their local tax authorities. For the years ended December 31,
2006, 2007 and 2008, withholding taxes were $3,711, $2,061 and $3,491, respectively.



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DTS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



(Amounts in thousands, except per share data)



Note 2—Significant Accounting Policies (Continued)





These excerpts taken from the DTSI 10-K filed Mar 3, 2008.

Revenue Recognition

        Revenue from the sale of cinema hardware products is recorded upon delivery, assuming all other revenue recognition criteria are met. The licensing, encoding and duplication of motion picture soundtracks for use in the audio playback systems manufactured by the Company is undertaken under arrangements with major film producers and distributors. Revenue arising from the licensing and duplication of soundtracks is recognized upon delivery, assuming all other revenue recognition criteria are met.

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DTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Amounts in thousands, except per share data)

Note 11—Discontinued Operations (Continued)

        Revenues from multiple-element arrangements involving license fees, up-front payments and milestone payments, which are received and/or billable by the Company in connection with other rights and services that represent continuing obligations of the Company, are deferred until all of the elements have been delivered or until the Company has established objective and verifiable evidence of the fair value of the undelivered elements. Deferred revenues arise from payments received in advance of the culmination of the earnings process. Deferred revenues expected to be recognized within the next twelve months are classified within current liabilities. Deferred revenues will be recognized as revenue in future periods when the applicable revenue recognition criteria, as described above, are met.

        Service revenues from digital image enhancement, restoration and repair were recognized when completed titles or film reels subject to a customer order or contract were delivered and accepted by the customer and no significant obligations remained assuming all other revenue recognition criteria were met. Prices are established in advance of the work performed and are generally fixed in nature. Revenue related to time and materials contracts is recognized as services are rendered at contract labor rates plus material and other direct costs incurred. If losses are anticipated on a contract, such losses are recognized immediately.

Revenue Recognition





        Revenue from the sale of cinema hardware products is recorded upon delivery, assuming all other revenue recognition criteria are met. The licensing, encoding and
duplication of motion picture soundtracks for use in the audio playback systems manufactured by the Company is undertaken under arrangements with major film producers and distributors. Revenue arising
from the licensing and duplication of soundtracks is recognized upon delivery, assuming all other revenue recognition criteria are met.



75








DTS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



(Amounts in thousands, except per share data)



Note 11—Discontinued Operations (Continued)




        Revenues
from multiple-element arrangements involving license fees, up-front payments and milestone payments, which are received and/or billable by the Company in connection
with other rights and services that represent continuing obligations of the Company, are deferred until all of the elements have been delivered or until the Company has established objective and
verifiable evidence of the fair value of the undelivered elements. Deferred revenues arise from payments received in advance of the culmination of the earnings process. Deferred revenues expected to
be recognized within the next twelve months are classified within current liabilities. Deferred revenues will be recognized as revenue in future periods when the applicable revenue recognition
criteria, as described above, are met.



        Service
revenues from digital image enhancement, restoration and repair were recognized when completed titles or film reels subject to a customer order or contract were delivered and
accepted by the customer and no significant obligations remained assuming all other revenue recognition criteria were met. Prices are established in advance of the work performed and are generally
fixed in nature. Revenue related to time and materials contracts is recognized as services are rendered at contract labor rates plus material and other direct costs incurred. If losses are anticipated
on a contract, such losses are recognized immediately.





This excerpt taken from the DTSI 10-K filed Mar 16, 2007.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of a sales arrangement exists, delivery has occurred or services have been rendered, the buyer’s price is fixed or determinable and collection is reasonably assured.

Revenues from multiple-element arrangements involving license fees, up-front payments and milestone payments, which are received and/or billable by the Company in connection with other rights and services that represent continuing obligations of the Company, are deferred until all of the elements have been delivered or until the Company has established objective and verifiable evidence of the fair

74




DTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Amounts in thousands, except per share data)

value of the undelivered elements. Deferred revenues arise from payments received in advance of the culmination of the earnings process. Deferred revenues expected to be recognized within the next twelve months are classified within current liabilities. Deferred revenues will be recognized as revenue in future periods when the applicable revenue recognition criteria, as described above, are met.

Revenue from the sale of cinema hardware products is recorded upon delivery, assuming all other revenue recognition criteria are met. The licensing, encoding and duplication of motion picture soundtracks for use in the audio playback systems manufactured by the Company is undertaken under arrangements with major film producers and distributors. Revenue arising from the licensing and duplication of soundtracks is recognized upon delivery, assuming all other revenue recognition criteria are met.

Direct costs associated with deferred revenue are deferred and included in other assets. Included in the balance sheet are $2,630 and $1,734 of deferred revenue and costs, respectively, at December 31, 2005. Included in the balance sheet are $94 and $44 of deferred revenue and costs, respectively, at December 31, 2006.

Revenue from licensing audio technology, trademarks and know-how is generated from licensing agreements with consumer electronics product manufacturers that pay a per-unit license fee for products manufactured under those license agreements. Licensees generally report manufacturing information within 30 to 60 days after the end of the quarter in which such activity takes place. Consequently, the Company recognizes revenue from these licensing agreements on a three-month lag basis, generally in the quarter following the quarter of manufacture, provided amounts are fixed or determinable and collection is reasonably assured, since the Company cannot reliably estimate the amount of revenue earned prior to the receipt of such reports. Use of this lag method allows for the receipt of licensee royalty reports prior to the recognition of revenue.

Revenue from the sale of multi-channel audio content is recorded upon delivery to retail accounts or end customers, assuming title and risk of loss has transferred to the customer, prices are fixed or determinable, no significant Company obligations remain and collection of the related receivable is reasonably assured. The Company’s shipping terms are customarily FOB shipping point with title transfer and risk of loss transferring to the customer upon shipment.

Management provides for returns on product sales based on historical experience and adjusts such reserves as considered necessary.

Service revenues of $0, $5,328 and $8,015 and cost of sales of $0, $6,277 and $8,243 for the years ended December 31, 2004, 2005 and 2006, respectively, from digital image enhancement, restoration and repair were recognized when completed titles or film reels subject to a customer order or contract were delivered and accepted by the customer and no significant obligations remained assuming all other revenue recognition criteria were met. Prices are established in advance of the work performed and are generally fixed in nature. Revenue related to time and materials contracts is recognized as services are rendered at contract labor rates plus material and other direct costs incurred. If losses are anticipated on a contract, such losses are recognized immediately.

This excerpt taken from the DTSI 10-K filed Mar 16, 2006.

Revenue Recognition

The Company recognizes revenue when it has persuasive evidence of an arrangement, the price is fixed and determinable, collection is reasonably assured and delivery has occurred.

Revenues from multiple-element arrangements involving license fees, up-front payments and milestone payments, which are received and/or billable by us in connection with other rights and services that represent continuing obligations of ours, are deferred until all of the elements have been delivered or until we have established objective and verifiable evidence of the fair value of the undelivered elements. Deferred revenues arise from payments received in advance of the culmination of the earnings process.

72




DTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Amounts in thousands, except share and per share data)

Note 3—Significant Accounting Policies (Continued)

Deferred revenues expected to be recognized within the next twelve months are classified within current liabilities. Deferred revenues will be recognized as revenue in future periods when the applicable revenue recognition criteria, as described above, are met.

Revenue from the sale of cinema hardware products is recorded upon delivery assuming all other revenue recognition criteria are met. The licensing, encoding and duplication of motion picture soundtracks for use in the audio playback systems manufactured by the Company is undertaken under arrangements with major film producers and distributors. Revenue arising from the licensing and duplication of soundtracks is recognized upon delivery assuming all other revenue recognition criteria are met.

Direct costs associated with deferred revenue are deferred and included in other assets. Included in the balance sheet are $2,630 and $1,734 of deferred revenue and costs, respectively, at December 31, 2005.

Revenue from licensing audio technology, trademarks and know-how is generated from licensing agreements with consumer electronics product manufacturers that pay a per-unit license fee for products manufactured under those license agreements. Licensees generally report manufacturing information within 30 to 60 days after the end of the quarter in which such activity takes place. Consequently, the Company recognizes revenue from these licensing agreements on a three-month lag basis, generally in the quarter following the quarter of manufacture, provided amounts are fixed or determinable and collection is reasonably assured, since the Company cannot reliably estimate the amount of revenue earned prior to the receipt of such reports. Use of this lag method allows for the receipt of licensee royalty reports prior to the recognition of revenue.

Revenue from the sale of multi-channel audio content is recorded upon delivery to retail accounts or end customers, assuming: title and risk of loss has transferred to the customer; prices are fixed or determinable; no significant Company obligations remain; and collection of the related receivable is reasonably assured. The Company’s shipping terms are customarily FOB shipping point with title transfer and risk of loss transferring to the customer upon shipment.

Management provides for returns on product sales based on historical experience and adjusts such reserves as considered necessary.

Revenues from digital image enhancement, restoration and repair are recognized when titles subject to a customer order or contract are delivered and accepted by the customer and no significant obligations remain assuming all other revenue recognition criteria are met. Prices are established in advance of the work performed and are generally fixed in nature. Revenue related to time and materials contracts is recognized as services are rendered at contract labor rates plus material and other direct costs incurred. If losses are anticipated on a contract, such losses are recognized immediately.

This excerpt taken from the DTSI 10-Q filed Nov 9, 2005.

Revenue Recognition

In January 2005, the Company acquired Lowry Digital Images, Inc. (“LDI”). The Company recognizes revenue when titles subject to a customer order or contract are delivered and accepted by the customer and no significant obligations remain after customer acceptance. In certain instances the Company bills in advance of services. Prices are established in advance of the work performed and are generally fixed in nature. Revenue related to time and materials contracts is recognized as services are rendered at contract labor rates plus material and other direct costs incurred. If losses are anticipated on a contract, such losses are recognized immediately.

This excerpt taken from the DTSI 10-Q filed Aug 5, 2005.

Revenue Recognition

In January 2005, the Company acquired Lowry Digital Images, Inc. (“LDI”). The Company recognizes revenue when titles subject to a customer order or contract are delivered and accepted by the customer and no significant obligations remain after customer acceptance. In certain instances the Company bills in advance of services. Prices are established in advance of the work performed and are generally fixed in nature. Revenue related to time and materials contracts is recognized as services are rendered at contract labor rates plus material and other direct costs incurred. If losses are anticipated on a contract, such losses are recognized immediately.

This excerpt taken from the DTSI 10-Q filed May 10, 2005.

Revenue Recognition

In January 2005, the Company acquired Lowry Digital Images, Inc. (“LDI”). The Company recognizes revenue when all titles subject to a customer order or contract are delivered and accepted by the customer and no significant obligations remain after customer acceptance. The Company typically bills in advance of services. Prices are established in advance of the work performed and are generally fixed in nature. If losses are anticipated on a contract, such losses are recognized immediately.

This excerpt taken from the DTSI 8-K filed Mar 21, 2005.

Revenue Recognition

 

The Company recognizes revenue when all of the following criteria are met: 1) persuasive evidence of an arrangement exists, 2) delivery of goods or completion of services has occurred, 3) the sales price is fixed or determinable, and 4) collectibility of related receivable is reasonably assured.

 

This excerpt taken from the DTSI 10-K filed Mar 16, 2005.

Revenue Recognition

The Company recognizes revenue in accordance with the guidelines of the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements,” as amended by SAB No. 104. Revenue from the sale of cinema hardware products is recorded upon shipment assuming: title and risk of loss has transferred to the customer; no significant Company obligations remain; prices are fixed or determinable; and collection of the related receivable is reasonably assured. The licensing, encoding and duplication of motion picture soundtracks for use in the audio playback systems manufactured by the Company is undertaken under arrangements with major film producers and distributors. Revenue arising from the licensing and duplication of soundtracks is recognized upon completion assuming: prices are fixed or determinable; no significant Company obligations remain; and collection of the related receivable is reasonably assured. Direct costs associated with deferred revenue are deferred and included in other assets. Included in the balance sheet are $519 and $296 of deferred revenue and costs, respectively, at December 31, 2004.

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DIGITAL THEATER SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Amounts in thousands, except share and per share data)

Note 2—Significant Accounting Policies (Continued)

Revenue from licensing audio technology, trademarks and know-how is generated from licensing agreements with consumer electronics product manufacturers that pay a per-unit license fee for products manufactured under those license agreements. Licensees generally report manufacturing information within 30 to 60 days after the end of the quarter in which such activity takes place. Consequently, the Company recognizes revenue from these licensing agreements on a three-month lag basis, generally in the quarter following the quarter of manufacture, provided amounts are fixed or determinable and collection is reasonably assured. Use of this lag method allows for the receipt of licensee royalty reports prior to the recognition of revenue.

Revenue from the sale of multi-channel audio content is recorded upon shipment to retail accounts or end customers, assuming: title and risk of loss has transferred to the customer; prices are fixed or determinable; no significant Company obligations remain; and collection of the related receivable is reasonably assured. The Company’s shipping terms are customarily FOB shipping point with title transfer and risk of loss transferring to the customer upon shipment.

Management provides for returns on product sales based on historical experience and adjusts such reserves as considered necessary.

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