SEC Filings

10-Q
CRAY INC filed this Form 10-Q on 10/30/2018
Entire Document
 


The following table provides information about contract receivables, contract assets, and contract liabilities from contracts with customers (in thousands) and includes both short-term and long-term portions:
 
 
September 30,
2018
 
December 31, 2017
 
Change
Contract receivables
 
$
70,927

 
$
167,346

 
$
(96,419
)
Contract assets
 
3,801

 
9,321

 
(5,520
)
Contract liabilities
 
88,951

 
118,741

 
(29,790
)
Contract receivables consist of amounts billed to customers and include the Company's investment in a sales type lease, a portion of which is due beyond one year. Generally, billing occurs subsequent to product revenue recognition and payment is expected within 30 days. Contract assets primarily relate to the Company's rights to consideration for work completed but not billed where right to payment is not just subject to the passage of time. Contract assets become contract receivables when the rights become unconditional. The Company sometimes receives advances or deposits from customers before revenue is recognized, resulting in customer contract liabilities (formerly deferred revenue). These assets and liabilities are reported on the Condensed Consolidated Balance Sheet on a contract-by-contract basis at the end of each reporting period. The Company’s payment terms vary from contract to contract. Contracts may require payment before, at or after the Company’s performance obligations have been satisfied. The decrease in the Company's contract asset balance for the nine months ended September 30, 2018 is primarily due to the transfer from contract assets to contract receivables that were included in the contract asset balance at the beginning of the period, partially offset by the addition of new contract assets.
For the nine month period ended September 30, 2018, the Company recognized $64.1 million in revenues from the contract liability balance at the beginning of the period.
The Company’s incremental direct costs of obtaining a contract come primarily from sales commissions, a portion of which are paid upon contract signing. These commissions are generally capitalized upon payment and expensed at the time of revenue recognition. These deferred commissions are included in prepaid expenses in the Condensed Consolidated Balance Sheet. As of September 30, 2018 and December 31, 2017, the Company had $2.5 million and $1.3 million, respectively, of deferred commissions. For the three and nine months ended September 30, 2018, the Company recognized $1.1 million and $3.7 million, respectively, in commissions expense. For the three and nine months ended September 30, 2017, the Company recognized $0.6 million and $2.2 million, respectively, in commissions expense.

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