Revenue

3 Months Ended

Mar. 28, 2020

Revenue from Contract with Customer [Abstract]

The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 28, 2020 and March 30, 2019 along with the reportable segment for each category.

Major Products and Service Lines


TFE	Three Months Ended March 28, 2020								Three Months Ended March 30, 2019
	(In thousands)
	HDD		DCP		PV		Total		HDD		DCP		PV		Total
Systems, upgrades and spare parts	$	6,361	$	—	$	208	$	6,569	$	11,050	$	—	$	6,373	$	17,423
Field service		1,393		—		—		1,393		1,522		—		—		1,522

Total TFE net revenues	$	7,754	$	—	$	208	$	7,962	$	12,572	$	—	$	6,373	$	18,945


	Three Months Ended
Photonics	March 28, 2020		March 30, 2019
	(In thousands)
Products:
Military products	$	5,365	$	1,813
Commercial products		79		318
Repair and other services		430		561

Total Photonics product net revenues		5,874		2,692
Technology development:
Firm Fixed Price (“FFP”)		4,430		1,692
Cost Plus Fixed Fee (“CPFF”)		574		1,496
Time and materials		—		2

Total technology development net revenues		5,004		3,190

Total Photonics net revenues	$	10,878	$	5,882

Primary Geographical Markets


	Three Months Ended
	March 28, 2020						March 30, 2019
	(In thousands)
	TFE		Photonics		Total		TFE		Photonics		Total
United States	$	519	$	10,856	$	11,375	$	161	$	5,716	$	5,877
Asia		7,443		—		7,443		18,784		—		18,784
Europe		—		22		22		—		166		166

Total net revenues	$	7,962	$	10,878	$	18,840	$	18,945	$	5,882	$	24,827

Timing of Revenue Recognition


	Three Months Ended
	March 28, 2020						March 30, 2019
	(In thousands)
	TFE		Photonics		Total		TFE		Photonics		Total
Products transferred at a point in time	$	7,962	$	430	$	8,392	$	18,945	$	561	$	19,506
Products and services transferred over time		—		10,448		10,448		—		5,321		5,321

	$	7,962	$	10,878	$	18,840	$	18,945	$	5,882	$	24,827

The following table reflects the changes in our contract assets, which we classify as accounts receivable, unbilled or retainage, and our contract liabilities, which we classify as deferred revenue and customer advances, for the three months ended March 28 2020.


	March 28, 2020		December 28, 2019		Three Months Change
	(In thousands)
TFE:
Contract assets:
Accounts receivable, unbilled	$	—	$	760	$	(760	)

Contract liabilities:
Deferred revenue	$	486	$	320	$	166
Customer advances		4,696		4,007		689

	$	5,182	$	4,327	$	855

Photonics:
Contract assets:
Accounts receivable, unbilled	$	6,187	$	3,210	$	2,977
Retainage		103		99		4

	$	6,290	$	3,309	$	2,981

Accounts receivable, unbilled in our TFE segment represents a contract asset for revenue that has been recognized in advance of billing the customer. For our system and certain upgrade sales, our TFE customers generally pay in three installments, with a portion of the system price billed upon receipt of an order, a portion of the price billed upon shipment, and the balance of the price due upon completion of installation and acceptance of the system at the customer’s factory. Accounts receivable, unbilled in our TFE segment generally represents the balance of the system price that is due upon completion of installation and acceptance less, the amount that has been deferred as revenue for the performance of the installation tasks. During the three months ended March 28, 2020, contract assets in our TFE segment decreased by $760,000 primarily due to the recognition of revenue for the installation portion of revenue for two systems that completed installation and acceptance during the quarter.

Customer advances in our TFE segment generally represent a contract liability for amounts billed to the customer prior to transferring goods. The Company has elected to use the practical expedient to disregard the effect of the time value of money in a significant financing component when its payment terms are less than one year. These contract advances are liquidated when revenue is recognized. Deferred revenue in our TFE segment generally represents a contract liability for amounts billed to a customer for completed systems at the customer site that are undergoing installation and acceptance testing where transfer of control has not yet occurred as Intevac does not yet have a demonstrated history of meeting the acceptance criteria upon the customer’s receipt of product. During the three months ended March 28, 2020, we recognized revenue in our TFE segment of $155,000 and $21,000 that was included in customer advances and deferred revenue, respectively, at the beginning of the period.

Accounts receivable, unbilled in our Photonics segment represents a contract asset for revenue that has been recognized in advance of billing the customer, which is common for contracts in the defense industry. In our Photonics segment, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly) or upon achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. Our contracts with the U.S. government may also contain retainage provisions. Retainage represents a contract asset for the portion of the contract price earned by us for work performed, but held for payment by the U.S. government as a form of security until satisfactory completion of the contract. The retainage is billable upon completion of the contract performance and approval of final indirect expense rates by the government. During the three months ended March 28, 2020, contract assets in our Photonics segment increased by $3.0 million primarily due to the accrual of revenue for incurred costs under FFP and CPFF contracts.

On March 28, 2020 we had $87.2 million of remaining performance obligations, which we also refer to as total backlog. Backlog at March 28, 2020 consisted of $22.4 million of TFE backlog and $64.8 million of Photonics backlog. We expect to recognize approximately 59% of our remaining performance obligations as revenue in 2020, 21% in 2021, 13% in 2022 and 7% in 2023.