DISTRIBUTION AGREEMENTS

3 Months Ended

Mar. 31, 2018

DISTRIBUTION AGREEMENTS

DISTRIBUTION AGREEMENTS

10.DISTRIBUTION AGREEMENTS

In accordance with ASC No. 420 “Exit or Disposal Cost Obligations”, the Company expenses distributor termination costs in the period in which the written notification of termination occurs. The Company incurred termination costs of $7.0 million and $19.9 million for the three-months ended March 31, 2018 and 2017, respectively. Such termination costs have been expensed in full and are included in operating expenses for the three-months ended March 31, 2018 and 2017.

In the normal course of business, amounts received pursuant to new and/or amended distribution agreements entered into with certain distributors, relating to the costs associated with terminating agreements with the Company’s prior distributors, are accounted for as deferred revenue and are recognized as revenue ratably over the anticipated life of the respective distribution agreement, generally 20 years. Revenue recognized was $11.2 million and $10.0 million for the three-months ended March 31, 2018 and 2017, respectively.