GEOY » Topics » Revenue Recognition

These excerpts taken from the GEOY 10-K filed Apr 2, 2009.
Revenue Recognition
 
Our principal sources of revenue are from imaging services, the sale of satellite imagery directly to end users or value-added resellers and the provision of direct access to our satellites and associated ground processing technology upgrades and operations and maintenance services. We also derive significant revenue from value-added production services where we combine our images with data and imagery from our own and other sources to create sophisticated information products. We enter into fixed price, unit-price and time and materials contracts with our customers. For revenue recognition, we follow the guidance in Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104), Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts, as issued by the American Institute of Certified Public Accountants (SOP 81-1), and Emerging Issues Task Force Issue 00-21, Revenue Arrangements with Multiple Deliverables, (EITF 00-21):
 
  •  We consider the nature of our contracts, and the types of products and services provided, when we determine the proper accounting for a particular contract.
 
  •  Significant contract interpretation is sometimes required to determine the appropriate accounting for certain sales transactions that involve multiple element arrangements.
 
  •  We record revenues from the sale of satellite imagery directly to end users or value-added resellers based on the delivery of the imagery.
 
  •  We recognize revenues for the provision of direct access to our satellites on a straight-line basis over the delivery term of the contract.
 
  •  We recognize revenues for the sale of ground processing technology upgrades and support services based on the delivery of these products and services. If the satellite access service is combined with the sale of ground processing technology upgrades and operations and maintenance services and the requirements for separate revenue recognition are not met, we recognize revenues on a straight line basis over the combined delivery term of the services.
 
Revenue is recognized on contracts to provide value-added production services using the percentage-of-completion method whereby revenue is recognized on each production contract based either on the contract price of units of production delivered during a period or upon costs to date plus an estimate of gross profit to date. Anticipated contract losses are recognized as they become known.
 
  •  Under the units-of-delivery method, revenue on a contract is recorded as the units are delivered and accepted during the period at an amount equal to the contractual selling price of those units. Contract costs are


42


 

  recognized as incurred, with costs to date of unfinished production for which revenue has not been recognized being capitalized.
 
  •  Under the cost plus gross profit earned method, progress toward completion is measured against all measurable deliverables based on either resources applied or cost incurred compared to total resources or cost projected for the project. We recognize costs as incurred. Profit is determined based on our estimated profit on the contract multiplied by our progress toward completion. Revenue represents the sum of our costs and profit on the contract for the period.
 
Contract estimates involve various assumptions and projections relative to the outcome of future events over a period of several years, including future labor productivity and availability, the nature and complexity of the work to be performed, the cost and availability of materials, the impact of delayed performance, the availability and timing of funding from the customer and the timing of product deliveries. These estimates are based on the company’s best judgment. A significant change in one or more of these estimates could affect the profitability of one or more of the company’s contracts. We review our contract estimates on a continual basis to assess revisions in contract values and estimated costs at completion.
 
At times we may receive payments from some customers in advance of providing services. Amounts received from customers pursuant to satellite access prepayment options are recorded in the consolidated financial statements as deferred revenue. Theses deferred amounts are recognized as revenue on a straight-line basis over the agreement terms.
 
In addition, our revenue recognition policy requires an assessment as to whether the collection is reasonably assured, which requires us, among other things, to evaluate the creditworthiness of our customers. Changes in judgments in these assumptions and estimates could materially impact the timing and/or amount of revenue recognition.
 
Revenue
Recognition



 



Our principal sources of revenue are from imaging services, the
sale of satellite imagery directly to end users or value-added
resellers and the provision of direct access to our satellites
and associated ground processing technology upgrades and
operations and maintenance services. We also derive significant
revenue from value-added production services where we combine
our images with data and imagery from our own and other sources
to create sophisticated information products. We enter into
fixed price, unit-price and time and materials contracts with
our customers. For revenue recognition, we follow the guidance
in Staff Accounting Bulletin No. 104, Revenue
Recognition
(SAB 104), Statement of Position
81-1,
Accounting for Performance of Construction-Type and Certain
Production-Type Contracts
, as issued by the American
Institute of Certified Public Accountants
(SOP 81-1),
and Emerging Issues Task Force Issue
00-21,
Revenue Arrangements with Multiple Deliverables,
(EITF 00-21):


 
























































  • 

We consider the nature of our contracts, and the types of
products and services provided, when we determine the proper
accounting for a particular contract.
 
  • 

Significant contract interpretation is sometimes required to
determine the appropriate accounting for certain sales
transactions that involve multiple element arrangements.
 
  • 

We record revenues from the sale of satellite imagery directly
to end users or value-added resellers based on the delivery of
the imagery.
 
  • 

We recognize revenues for the provision of direct access to our
satellites on a straight-line basis over the delivery term of
the contract.
 
  • 

We recognize revenues for the sale of ground processing
technology upgrades and support services based on the delivery
of these products and services. If the satellite access service
is combined with the sale of ground processing technology
upgrades and operations and maintenance services and the
requirements for separate revenue recognition are not met, we
recognize revenues on a straight line basis over the combined
delivery term of the services.


 



Revenue is recognized on contracts to provide value-added
production services using the percentage-of-completion method
whereby revenue is recognized on each production contract based
either on the contract price of units of production delivered
during a period or upon costs to date plus an estimate of gross
profit to date. Anticipated contract losses are recognized as
they become known.


 
















  • 

Under the units-of-delivery method, revenue on a contract is
recorded as the units are delivered and accepted during the
period at an amount equal to the contractual selling price of
those units. Contract costs are





42





 



















 

recognized as incurred, with costs to date of unfinished
production for which revenue has not been recognized being
capitalized.


 
















  • 

Under the cost plus gross profit earned method, progress toward
completion is measured against all measurable deliverables based
on either resources applied or cost incurred compared to total
resources or cost projected for the project. We recognize costs
as incurred. Profit is determined based on our estimated profit
on the contract multiplied by our progress toward completion.
Revenue represents the sum of our costs and profit on the
contract for the period.


 



Contract estimates involve various assumptions and projections
relative to the outcome of future events over a period of
several years, including future labor productivity and
availability, the nature and complexity of the work to be
performed, the cost and availability of materials, the impact of
delayed performance, the availability and timing of funding from
the customer and the timing of product deliveries. These
estimates are based on the company’s best judgment. A
significant change in one or more of these estimates could
affect the profitability of one or more of the company’s
contracts. We review our contract estimates on a continual basis
to assess revisions in contract values and estimated costs at
completion.


 



At times we may receive payments from some customers in advance
of providing services. Amounts received from customers pursuant
to satellite access prepayment options are recorded in the
consolidated financial statements as deferred revenue. Theses
deferred amounts are recognized as revenue on a straight-line
basis over the agreement terms.


 



In addition, our revenue recognition policy requires an
assessment as to whether the collection is reasonably assured,
which requires us, among other things, to evaluate the
creditworthiness of our customers. Changes in judgments in these
assumptions and estimates could materially impact the timing
and/or
amount of revenue recognition.


 




Revenue
Recognition



 



Our principal sources of revenue are from imaging services, the
sale of satellite imagery directly to end users or value-added
resellers and the provision of direct access to our satellites
and associated ground processing technology upgrades and
operations and maintenance services. We also derive significant
revenue from value-added production services where we combine
our images with data and imagery from our own and other sources
to create sophisticated information products. We enter into
fixed price, unit-price and time and materials contracts with
our customers. For revenue recognition, we follow the guidance
in Staff Accounting Bulletin No. 104, Revenue
Recognition
(SAB 104), Statement of Position
81-1,
Accounting for Performance of Construction-Type and Certain
Production-Type Contracts
, as issued by the American
Institute of Certified Public Accountants
(SOP 81-1),
and Emerging Issues Task Force Issue
00-21,
Revenue Arrangements with Multiple Deliverables,
(EITF 00-21):


 
























































  • 

We consider the nature of our contracts, and the types of
products and services provided, when we determine the proper
accounting for a particular contract.
 
  • 

Significant contract interpretation is sometimes required to
determine the appropriate accounting for certain sales
transactions that involve multiple element arrangements.
 
  • 

We record revenues from the sale of satellite imagery directly
to end users or value-added resellers based on the delivery of
the imagery.
 
  • 

We recognize revenues for the provision of direct access to our
satellites on a straight-line basis over the delivery term of
the contract.
 
  • 

We recognize revenues for the sale of ground processing
technology upgrades and support services based on the delivery
of these products and services. If the satellite access service
is combined with the sale of ground processing technology
upgrades and operations and maintenance services and the
requirements for separate revenue recognition are not met, we
recognize revenues on a straight line basis over the combined
delivery term of the services.


 



Revenue is recognized on contracts to provide value-added
production services using the percentage-of-completion method
whereby revenue is recognized on each production contract based
either on the contract price of units of production delivered
during a period or upon costs to date plus an estimate of gross
profit to date. Anticipated contract losses are recognized as
they become known.


 
















  • 

Under the units-of-delivery method, revenue on a contract is
recorded as the units are delivered and accepted during the
period at an amount equal to the contractual selling price of
those units. Contract costs are





42





 



















 

recognized as incurred, with costs to date of unfinished
production for which revenue has not been recognized being
capitalized.


 
















  • 

Under the cost plus gross profit earned method, progress toward
completion is measured against all measurable deliverables based
on either resources applied or cost incurred compared to total
resources or cost projected for the project. We recognize costs
as incurred. Profit is determined based on our estimated profit
on the contract multiplied by our progress toward completion.
Revenue represents the sum of our costs and profit on the
contract for the period.


 



Contract estimates involve various assumptions and projections
relative to the outcome of future events over a period of
several years, including future labor productivity and
availability, the nature and complexity of the work to be
performed, the cost and availability of materials, the impact of
delayed performance, the availability and timing of funding from
the customer and the timing of product deliveries. These
estimates are based on the company’s best judgment. A
significant change in one or more of these estimates could
affect the profitability of one or more of the company’s
contracts. We review our contract estimates on a continual basis
to assess revisions in contract values and estimated costs at
completion.


 



At times we may receive payments from some customers in advance
of providing services. Amounts received from customers pursuant
to satellite access prepayment options are recorded in the
consolidated financial statements as deferred revenue. Theses
deferred amounts are recognized as revenue on a straight-line
basis over the agreement terms.


 



In addition, our revenue recognition policy requires an
assessment as to whether the collection is reasonably assured,
which requires us, among other things, to evaluate the
creditworthiness of our customers. Changes in judgments in these
assumptions and estimates could materially impact the timing
and/or
amount of revenue recognition.


 




Revenue
Recognition



 



Our principal sources of revenue are from imaging services, the
sale of satellite imagery directly to end users or value-added
resellers and the provision of direct access to our satellites
and associated ground processing technology upgrades and
operations and maintenance services. We also derive significant
revenue from value-added production services where we combine
our images with data and imagery from our own and other sources
to create sophisticated information products. We enter into
fixed price, unit-price and time and materials contracts with
our customers. For revenue recognition, we follow the guidance
in Staff Accounting Bulletin No. 104, Revenue
Recognition
(SAB 104), Statement of Position
81-1,
Accounting for Performance of Construction-Type and Certain
Production-Type Contracts
, as issued by the American
Institute of Certified Public Accountants
(SOP 81-1),
and Emerging Issues Task Force Issue
00-21,
Revenue Arrangements with Multiple Deliverables,
(EITF 00-21):


 
























































  • 

We consider the nature of our contracts, and the types of
products and services provided, when we determine the proper
accounting for a particular contract.
 
  • 

Significant contract interpretation is sometimes required to
determine the appropriate accounting for certain sales
transactions that involve multiple element arrangements.
 
  • 

We record revenues from the sale of satellite imagery directly
to end users or value-added resellers based on the delivery of
the imagery.
 
  • 

We recognize revenues for the provision of direct access to our
satellites on a straight-line basis over the delivery term of
the contract.
 
  • 

We recognize revenues for the sale of ground processing
technology upgrades and support services based on the delivery
of these products and services. If the satellite access service
is combined with the sale of ground processing technology
upgrades and operations and maintenance services and the
requirements for separate revenue recognition are not met, we
recognize revenues on a straight line basis over the combined
delivery term of the services.


 



Revenue is recognized on contracts to provide value-added
production services using the percentage-of-completion method
whereby revenue is recognized on each production contract based
either on the contract price of units of production delivered
during a period or upon costs to date plus an estimate of gross
profit to date. Anticipated contract losses are recognized as
they become known.


 
















  • 

Under the units-of-delivery method, revenue on a contract is
recorded as the units are delivered and accepted during the
period at an amount equal to the contractual selling price of
those units. Contract costs are





42





 



















 

recognized as incurred, with costs to date of unfinished
production for which revenue has not been recognized being
capitalized.


 
















  • 

Under the cost plus gross profit earned method, progress toward
completion is measured against all measurable deliverables based
on either resources applied or cost incurred compared to total
resources or cost projected for the project. We recognize costs
as incurred. Profit is determined based on our estimated profit
on the contract multiplied by our progress toward completion.
Revenue represents the sum of our costs and profit on the
contract for the period.


 



Contract estimates involve various assumptions and projections
relative to the outcome of future events over a period of
several years, including future labor productivity and
availability, the nature and complexity of the work to be
performed, the cost and availability of materials, the impact of
delayed performance, the availability and timing of funding from
the customer and the timing of product deliveries. These
estimates are based on the company’s best judgment. A
significant change in one or more of these estimates could
affect the profitability of one or more of the company’s
contracts. We review our contract estimates on a continual basis
to assess revisions in contract values and estimated costs at
completion.


 



At times we may receive payments from some customers in advance
of providing services. Amounts received from customers pursuant
to satellite access prepayment options are recorded in the
consolidated financial statements as deferred revenue. Theses
deferred amounts are recognized as revenue on a straight-line
basis over the agreement terms.


 



In addition, our revenue recognition policy requires an
assessment as to whether the collection is reasonably assured,
which requires us, among other things, to evaluate the
creditworthiness of our customers. Changes in judgments in these
assumptions and estimates could materially impact the timing
and/or
amount of revenue recognition.


 




Revenue Recognition
 
Our principal sources of revenue are from imaging services, the sale of satellite imagery directly to end users or value-added resellers, the provision of direct access to our satellites, and associated ground processing technology upgrades and operations and maintenance services. We also derive significant revenue from value-added production services where we combine our images with data and imagery from our own and other sources to create sophisticated information products.
 
We record revenues from the sale of satellite imagery directly to end users or value-added resellers based on the delivery of the imagery.
 
Sales of direct access to our satellites ordinarily require us to provide access over the term of multi-year sales contracts under subscription-based arrangements whereby customers pay for access time regardless of usage. Accordingly, we recognize revenues on such imagery contracts on a straight-line basis over the delivery term of the contract. In addition to the sale of direct satellite access, we may separately sell ground processing technology upgrades and operations and maintenance services to a customer. To determine revenue recognition for multiple element arrangements, we consider whether individual customer arrangement elements have value to the customer on a standalone basis, whether there is objective and reliable evidence of fair value of undelivered item(s) and, if the arrangement includes a general right of return relative to the delivered item(s), and delivery performance of the undelivered item(s) is considered probable and substantially in the Company’s control. If the satellite access service is combined with the sale of ground processing technology upgrades and operations and maintenance services and the requirements for separate revenue recognition are not met, we recognize revenues on a straight line basis over the combined delivery term of the services.
 
Deferred revenue represents receipts in advance of the delivery of imagery or services. Revenue for other services is recognized as services are performed.
 
Revenue is recognized on contracts to provide value-added production services using the percentage-of-completion method. Revenue is recognized under different acceptable alternatives of the percentage-of-completion method depending on the terms of the underlying contract, which include input measures based on costs and efforts expended or output measures based on units of delivery or completion of contractual milestones. Costs associated with products not yet delivered at year end are recorded as work in progress. Costs of $0.7 million were recorded to

58


 

 
GEOEYE, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
work in progress at December 31, 2008. Revenues recognized in advance of becoming billable are recorded as unbilled receivables. Such amounts generally do not become billable until after the products have been completed and delivered. Total unbilled accounts receivable were $1.1 million and $16.4 million at December 31, 2008 and 2007, respectively. To the extent that estimated costs of completion are adjusted, revenue and profit recognized from a particular contract will be effected in the period of the adjustment. Anticipated contract losses are recognized as they become known. No such losses were recognized during 2008.
 
Much of the Company’s revenues are generated through contracts with the U.S. Government. U.S. Government agencies may terminate or suspend their contracts at any time, with or without cause, or may change their policies, priorities or funding levels by reducing agency or program budgets or by imposing budgetary constraints. If a U.S. Government agency terminates or suspends any of its contracts with the Company, or changes its policies, priorities, or funding levels, these actions could have a material adverse effect on the business, financial condition and results of operations. Imagery contracts with international customers generally are not cancelable pursuant to the terms of such contracts.
 
Allowances for doubtful accounts receivable balances are recorded when circumstances indicate that collection is doubtful for particular accounts receivable or for all probable losses of accounts receivable not specifically identified. Management estimates such allowances based on historical evidence such as amounts that are subject to risk. Accounts receivable are written off if reasonable collection efforts are not successful. The changes in our allowance for doubtful accounts are as follows (in thousands):
 
                                         
    Balance at
                      Balance at
 
    Beginning of
    Charged to
                End of
 
Allowances for Doubtful Accounts
  Period     Operations     Write-Offs     Acquisitions     Period  
 
Year ended December 31, 2006
  $ 143       15       (308 )     760     $ 610  
                                         
Year ended December 31, 2007
  $ 610       233       (105 )         $ 738  
                                         
Year ended December 31, 2008
  $ 738       183       (183 )         $ 738  
                                         
 
This excerpt taken from the GEOY 10-Q filed Nov 18, 2008.
Revenue Recognition
 
The Company’s principal source of revenue is the sale of satellite and aerial imagery and imagery-related products and solutions to customers, value-added resellers and distributors. We record revenues based on the delivery of imagery products to our customer. The Company also has sales that requires it to provide imagery over the term of multi-year sales contracts under “take-or-pay” arrangements whereby customers pay for access time regardless of usage. Accordingly, the Company recognizes revenues on such imagery contracts on a straight-line basis over the delivery term of the contract or as utilized. Deferred revenue represents either receipts in advance of


6


Table of Contents

 
GEOEYE, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
the delivery of imagery, imagery-related products and solutions or receipts for milestones achieved for the construction of GeoEye-1 under the NextView contract (described in Note 3 — NextView Contract), and is generally recognized as a current liability. The deferred revenue associated with the NextView contract will be recognized on a straight-line basis over the expected life of the contract with the National Geospatial Intelligence Agency (“NGA”), which we expect to be the expected life of the satellite, and is appropriately included in both current and deferred revenues. We also derive revenues from maintenance of certain ground stations for our customers, which we account for under the straight-line method. Revenues for other services are recognized as services are performed.
 
Revenue is recognized on contracts to provide imagery processing services using the units-of-delivery method, a modification of the percentage of completion method whereby revenue is recognized based on the contract price of units of a basic production product delivered during a period. Such amounts generally do not become billable until after the products have been completed and delivered. To the extent that estimated costs of completion are adjusted, revenue and profit recognized from a particular contract will be affected in the period of the adjustment. Anticipated contract losses are recognized as they become known.
 
A significant portion of the Company’s revenues are generated through contracts with the U.S. Government. U.S. Government agencies may terminate or suspend their contracts at any time, with or without cause, or may change their policies, priorities or funding levels by reducing agency or program budgets or by imposing budgetary constraints. If a U.S. Government agency terminates or suspends any of its contracts with the Company or changes its policies, priorities, or funding levels, these actions would have a material adverse effect on the Company’s business, liquidity, financial condition and results of operations. Imagery contracts with international customers generally are not cancelable.
 
Allowances for doubtful accounts receivable balances are recorded when circumstances indicate that collection is doubtful for particular accounts receivable or as a general reserve for all estimated doubtful accounts receivable. Management estimates such allowances based on historical evidence such as amounts that are subject to risk. Accounts receivable are written off when reasonable collection efforts are not successful.
 
These excerpts taken from the GEOY 10-K filed Apr 2, 2008.
Revenue Recognition
 
The Company’s principal source of revenue is the sale of satellite imagery to customers, value-added resellers and distributors. Such sales often require us to provide imagery over the term of multi-year sales contracts under “take-or-pay” arrangements whereby customers pay for access time regardless of usage. Accordingly, we recognize revenues on such imagery contracts on a straight-line basis over the delivery term of the contract. Otherwise we record revenues based on the delivery of imagery to our customer. Deferred revenue represents receipts in advance of the delivery of imagery and are generally recognized as current liabilities. We also derive revenues for maintenance of certain ground stations for our customers, which we account for under the straight-line method. Revenue for other services is recognized as services are performed.
 
Revenue is recognized on contracts to provide image processing services using the units-of-delivery method, a modification of the percentage of completion method whereby revenue is recognized based on the contract price of units of a basic production product delivered during a period. Revenues recognized in advance of becoming billable are recorded as unbilled receivables. Such amounts generally do not become billable until after the products have been completed and delivered. Total unbilled accounts receivable were $16.4 million and $2.3 million at December 31, 2007 and 2006, respectively. To the extent that estimated costs


50


 

 
GEOEYE, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
of completion are adjusted, revenue and profit recognized from a particular contract will be affected in the period of the adjustment. Anticipated contract losses are recognized as they become known.
 
Much of the Company’s revenues are generated through contracts with the U.S. Government. U.S. Government agencies may terminate or suspend their contracts at any time, with or without cause, or may change their policies, priorities or funding levels by reducing agency or program budgets or by imposing budgetary constraints. If a U.S. Government agency terminates or suspends any of its contracts with the Company, or changes its policies, priorities, or funding levels, these actions would have a material adverse effect on the business, financial condition and results of operations. Imagery contracts with international customers generally are not cancelable.
 
For contracts consisting of multiple elements, the Company identifies these elements and considers whether the delivered item(s) has value to the customer on a standalone basis, whether there is objective and reliable evidence of the fair value of the undelivered item(s) and, if the arrangement includes a general right of return relative to the delivered item(s), delivery of performance of the undelivered item(s) considered probable and substantially in the Company’s control.
 
Allowances for doubtful accounts receivable balances are recorded when circumstances indicate that collection is doubtful for particular accounts receivable or as a general reserve for all accounts receivable. Management estimates such allowances based on historical evidence such as amounts that are subject to risk. Accounts receivable are written off if reasonable collection efforts are not successful.
 
Revenue
Recognition



 



The Company’s principal source of revenue is the sale of
satellite imagery to customers, value-added resellers and
distributors. Such sales often require us to provide imagery
over the term of multi-year sales contracts under
“take-or-pay”
arrangements whereby customers pay for access time regardless of
usage. Accordingly, we recognize revenues on such imagery
contracts on a straight-line basis over the delivery term of the
contract. Otherwise we record revenues based on the delivery of
imagery to our customer. Deferred revenue represents receipts in
advance of the delivery of imagery and are generally recognized
as current liabilities. We also derive revenues for maintenance
of certain ground stations for our customers, which we account
for under the straight-line method. Revenue for other services
is recognized as services are performed.


 



Revenue is recognized on contracts to provide image processing
services using the
units-of-delivery
method, a modification of the percentage of completion method
whereby revenue is recognized based on the contract price of
units of a basic production product delivered during a period.
Revenues recognized in advance of becoming billable are recorded
as unbilled receivables. Such amounts generally do not become
billable until after the products have been completed and
delivered. Total unbilled accounts receivable were
$16.4 million and $2.3 million at December 31,
2007 and 2006, respectively. To the extent that estimated costs





50





 





 




GEOEYE,
INC.




 




NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS — (Continued)


 



of completion are adjusted, revenue and profit recognized from a
particular contract will be affected in the period of the
adjustment. Anticipated contract losses are recognized as they
become known.


 



Much of the Company’s revenues are generated through
contracts with the U.S. Government. U.S. Government
agencies may terminate or suspend their contracts at any time,
with or without cause, or may change their policies, priorities
or funding levels by reducing agency or program budgets or by
imposing budgetary constraints. If a U.S. Government agency
terminates or suspends any of its contracts with the Company, or
changes its policies, priorities, or funding levels, these
actions would have a material adverse effect on the business,
financial condition and results of operations. Imagery contracts
with international customers generally are not cancelable.


 



For contracts consisting of multiple elements, the Company
identifies these elements and considers whether the delivered
item(s) has value to the customer on a standalone basis, whether
there is objective and reliable evidence of the fair value of
the undelivered item(s) and, if the arrangement includes a
general right of return relative to the delivered item(s),
delivery of performance of the undelivered item(s) considered
probable and substantially in the Company’s control.


 



Allowances for doubtful accounts receivable balances are
recorded when circumstances indicate that collection is doubtful
for particular accounts receivable or as a general reserve for
all accounts receivable. Management estimates such allowances
based on historical evidence such as amounts that are subject to
risk. Accounts receivable are written off if reasonable
collection efforts are not successful.


 




This excerpt taken from the GEOY 10-K filed Mar 15, 2007.
Revenue Recognition
 
The Company’s principal source of revenue is the sale of satellite imagery to customers, value-added resellers and distributors. Such sales often require us to provide imagery over the term of multi-year sales contracts under “take-or-pay” arrangements whereby customers pay for access time regardless of usage. Accordingly, we recognize revenues on such imagery contracts on a straight-line basis over the delivery term of the contract. Otherwise we record revenues based on the delivery of imagery to our customer. Deferred revenue represents receipts in advance of the delivery of imagery and are generally recognized as current liabilities. We also derive revenues for maintenance of certain ground stations for our customers, which we account for under the straight-line method. Revenue for other services is recognized as services are performed.
 
Revenue is recognized on contracts to provide image processing services using the units-of-delivery method, a modification of the percentage of completion method whereby revenue is recognized based on the contract price of units of a basic production product delivered during a period. Revenues recognized in advance of becoming billable are recorded as unbilled receivables. Such amounts generally do not become billable until after the products have been completed and delivered. Total unbilled accounts receivable were $2.3 million and $1.8 million at December 31, 2006 and 2005, respectively. To the extent that estimated costs of completion are adjusted, revenue and profit recognized from a particular contract will be affected in the period of the adjustment. Anticipated contract losses are recognized as they become known.
 
Much of the Company’s revenues are generated through contracts with the U.S. Government. U.S. Government agencies may terminate or suspend their contracts at any time, with or without cause, or may change their policies, priorities or funding levels by reducing agency or program budgets or by imposing budgetary constraints. If a U.S. Government agency terminates or suspends any of its contracts with the Company, or changes its policies, priorities, or funding levels, these actions would have a material adverse effect on the business, financial condition and results of operations. Imagery contracts with international customers generally are not cancelable.
 
For contracts consisting of multiple elements, the Company identifies these elements and considers whether the delivered item(s) has value to the customer on a standalone basis, whether there is objective and reliable evidence of the fair value of the undelivered item(s) and, if the arrangement includes a general right of return relative to the delivered item(s), delivery of performance of the undelivered item(s) considered probable and substantially in the Company’s control.
 
Allowances for doubtful accounts receivable balances are recorded when circumstances indicate that collection is doubtful for particular accounts receivable or as a general reserve for all accounts receivable. Management estimates such allowances based on historical evidence such as amounts that are subject to risk. Accounts receivable are written off if reasonable collection efforts are not successful.


45


 

 
GEOEYE, INC.
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

 
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki