REVENUE

3 Months Ended

Mar. 31, 2018

Revenue Recognition and Deferred Revenue [Abstract]

NOTE 11 – REVENUE

The Company’s revenues for the three months ended March 31, 2018, disaggregated by segment and timing of revenue recognition is as follows (in thousands):

		Three Months Ended March 31, 2018
	Trigger for recognition	Core Consumer		Enterprise		Intercompany			Consolidated

Revenues recognized at a point in time
Sale of magicJack devices,
hardware portion	Transfer of control	$	711	$	-	$	-		$	711
Shipping and handling	Transfer of control		161		-		-			161
magicJack-related products	Transfer of control		1,096		-		-			1,096
UCaaS equipment	Transfer of control		-		127		-			127
Other	Various		140		-		-			140

Revenues recognized over time
Sale of magicJack devices,
service portion	Service period		1,201		-		-			1,201
Access right renewals	Service period		12,348		-		-			12,348
Prepaid minutes	Usage		958		-		-			958
Access and wholesale charges	Usage		780		-		-			780
UCaaS service	Service period		-		2,433		(13	)		2,420
UCaaS usage	Usage		-		73		-			73

		$	17,395	$	2,633	$	(13	)	$	20,015

The following tables summarize the impacts of adopting Topic 606 on the Company’s consolidated financial statements for the three months ended March 31, 2018:

	As reported		Adjustments			Balances without adoption of ASC 606
ASSETS
Current assets:
Deferred costs, current portion	$	-	$	1,988		$	1,988
Contract costs, current portion		258		(258	)		-
Prepaid income taxes		1,328		(77	)		1,251
Other current assets		59,796		-			59,796
Total current assets		61,382		1,653			63,035

Deferred tax assets		31,496					31,496
Deferred costs, net of current portion		-		89			89
Contract costs, net of current portion		523		(523	)		-
Other non-current assets		45,021		-			45,021
Total assets	$	138,422	$	1,219		$	139,641

LIABILITIES AND CAPITAL EQUITY
Current liabilities:
Deferred revenue, current portion		-		42,216			42,216
Contract liabilities, current portion		39,957		(39,957	)		-
Other current liabilities		6,148		-			6,148
Total current liabilities		46,105		2,259			48,364

Deferred revenue, net of current portion		-		37,915			37,915
Contract liabilities, net of current portion		37,915		(37,915	)		-
Other non-current liabilities		14,164					14,164
Total liabilities		98,184		2,259			100,443

Capital equity
Retained earnings		31,458		(1,040	)		30,418
Other capital equity		8,780		-			8,780
Total capital equity		40,238		(1,040	)		39,198
Total liabilities and capital equity	$	138,422	$	1,219		$	139,641

	As reported		Adjustments		Balances without adoption of ASC 606

Net revenues	$	20,015	$	462	$	20,477
Cost of revenues		7,163		125		7,288
Gross profit		12,852		337		13,189

Operating expenses		10,282		-		10,282
Operating income		2,570		337		2,907

Total other income		91		-		91
Income before income taxes		2,661		337		2,998
Income tax expense		695		77		772
Net income	$	1,966	$	260	$	2,226

	As reported			Adjustments			Balances without adoption of ASC 606

Cash flows from operating activities:
Net income	$	1,966		$	260		$	2,226
Adjustments to reconcile net income to net cash
provided by operating activities:
Non-cash adjustments		2,375			-			2,375
Change in operating assets and liabilities
Deferred costs/Contract costs		(95	)		(19	)		(114	)
Prepaid Income taxes		465			77			542
Deferred revenue/Contract liabilities		(618	)		(375	)		(993	)
Other changes		(2,814	)		57			(2,757	)
Net cash provided by operating activities		1,279			-			1,279
Net cash used in investing activities		(14	)		-			(14	)
Net cash used in financing activities		(53	)		-			(53	)
Net increase in cash and cash equivalents		1,212			-			1,212
Cash and cash equivalents, beginning of period		52,638						52,638
Cash and cash equivalents, end of period	$	53,850					$	53,850

The Company uses the practical expedient that allows them to recognize revenue for access and wholesale charges and certain usage charges billed in arears at the amount to which it has the right to invoice in the future. Therefore, we do not disclose the estimated revenues that were unsatisfied (or partially unsatisfied) at the end of the reporting period. Estimated revenues expected to be recognized in the future for other revenue streams related to performance obligations that were unsatisfied (or partially unsatisfied) at the end of the reporting period are discussed in Note 8, “Deferred Costs and Revenues/Contract Assets and Liabilities”.

MAGICJACK VOCALTEC LTD 10-Q