Revenue Recognition

12 Months Ended

Jul. 31, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

We adopted ASC 606, effective August 1, 2018, using the modified retrospective method applied to those contracts which were not completed as of August 1, 2018. Results for reporting beginning after August 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and will continue to be reported in accordance with our historic accounting under ASC 605.

Due to the cumulative impact of adopting ASC 606, we recorded a net increase of $865 to opening retained earnings, net of tax, as of August 1, 2018. The impact is primarily related to the timing of revenue recognition for the shipment of products in both our Medical and Life Sciences segments where risk of loss provisions are present (“synthetic FOB destination”). The standard does not require us to defer revenue for these products and allows us to recognize revenue at the time of shipment. The cumulative adjustment to retained earnings also includes the impact of the change in timing of revenue recognition associated with software licensing arrangements in our Medical segment. Additionally, revenue related to software renewals was historically recognized on a ratable basis over the license period. Under ASC 606, the license is considered functional intellectual property, and is considered to be transferred to the customer at a point in time, specifically, at the start of each annual renewal period. As a result, revenue related to our annual software license renewals has been accelerated. Contract liabilities primarily relate to payments received from customers in advance of performance under the contract.

As part of the cost to obtain a contract, we may pay incremental commissions to sales employees upon entering into a sales contract. Under ASC 606, we have elected to expense these costs as incurred when the period of benefit is less than one year. For certain multi-period contracts, we capitalize these amounts as contract costs, and amortize them based on the contract duration to which the assets relate, which ranges from two to five years. The amounts at July 31, 2020 and 2019, were not material. For certain international contracts with distributors, we recognize a receivable at the point in time in which we have an unconditional right to payment. Most customers are required to pay a portion of the transaction price in advance and the remaining balance within 30 days of receiving the related products. Accordingly, we have elected to use the practical expedient which allows us to ignore the possible existence of a significant financing component within these contracts.

The following table gives information as to the net sales disaggregated by geography and product line:

	Year Ended July 31,
Net sales by geography	2020		2019		2018(1)
United States	$	742,410	$	665,661	$	643,744
Europe/Africa/Middle East	167,360		148,334		131,130
Asia/Pacific	73,517		66,228		57,108
Canada	27,417		32,152		33,524
Latin America/South America	5,344		5,780		6,416
Total	$	1,016,048	$	918,155	$	871,922
Net sales by product line
Capital equipment	$	213,723	$	221,668	$	240,153
Consumables	570,710		569,412		523,073
Product service	123,771		122,752		106,764
Instrument	104,440		—		—
All other(2)	3,404		4,323		1,932
Total	$	1,016,048	$	918,155	$	871,922

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(1)As noted above, fiscal year 2018 amounts have not been adjusted under the modified retrospective method.

(2)Primarily includes software licensing revenues.

Remaining Performance Obligations

As of July 31, 2020, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) was approximately $78,487, primarily within the Medical segment. We expect to recognize revenue on approximately 75% of these remaining performance obligations in fiscal 2021. These performance obligations primarily reflect the future product service revenues for multi-period service arrangements.

Contract Liabilities

A summary of contract liabilities activity for the year ended July 31, 2020 follows:

	Contract Liabilities
Balance, August 1, 2018	$	29,015
Revenue deferred in current year	61,996
Deferred revenue recognized	(61,913)
Foreign currency translation	(863)
Balance, July 31, 2019	28,235
Revenue deferred in current year	58,221
Deferred revenue recognized	(60,229)
Foreign currency translation	293
Balance, July 31, 2020	26,520
Contract liabilities included in Other long-term liabilities	(297)
Deferred revenue	$	26,223

Our contract liabilities arise primarily in the Medical and Life Sciences segments when payment is received upfront for various multi-period extended service arrangements. We expect to recognize substantially all of this revenue over the next twelve months.