REVENUE (Policies) |
6 Months Ended |
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May 04, 2025 | |
| REVENUE [Abstract] | |
| Revenue |
The Company recognizes revenue when, or as, control of a good or service transfers to a customer, in an amount that reflects the consideration to which
the Company expects to be entitled in exchange for transferring those goods or services. The Company accounts for an arrangement as a revenue contract when each party
has approved and is committed to perform under the contract, the rights of the contracting parties regarding the goods or services to be transferred and the payment terms are identifiable, the arrangement has commercial substance, and collection of
consideration is probable. Substantially all of the Company’s revenue comes from the sales of photomasks. The Company typically contracts with the Company’s customers to sell sets of photomasks, which are comprised of multiple layers, the
predominance of which the Company invoices as they ship to customers. As the photomasks are manufactured to customer specifications, they have no alternative use to the Company and, as the Company’s contracts generally provide the Company with the right to payment for work completed to date, the Company recognizes revenue as the Company performs, or “over time,” on most of the Company’s contracts. The Company measures the Company’s performance to date
using an input method, which is based on the Company’s estimated costs to complete the various manufacturing phases of a photomask. At the end of a
reporting period, there are a number of uncompleted revenue contracts on which the Company has performed; for any such contracts under which the Company is entitled to be compensated for the Company’s costs incurred plus a reasonable profit, the Company recognizes revenue and a corresponding contract
asset for such performance. The Company accounts for shipping and handling activities that the Company performs after a customer obtains control of a good
as being activities to fulfill the Company’s promise to transfer the good to the customer, rather than as promised services, or performance obligations, under the contract. The Company reports the Company’s revenue net of any sales or similar taxes the Company collects on behalf of governmental entities.
As stated above, photomasks are manufactured to customer specifications in accordance with their proprietary designs; thus, they are
individually unique. Due to their uniqueness and other factors, their transaction prices are individually established through negotiations with customers; consequently, the Company’s photomasks do not have standard or
“list” prices. The transaction prices of the vast majority of the Company’s revenue contracts include only fixed amounts of consideration. In certain instances, such as when the Company
offers a customer an early payment discount, an estimate of variable consideration would be included in the transaction price, but only to the extent that a significant reversal of revenue would not occur when the uncertainty related to the
variability was resolved.
Contract Assets, Contract Liabilities, and Accounts Receivable
The Company recognizes a contract asset when its performance under a contract precedes the Company’s receipt of consideration from a customer, or before payment is due, and the right to receive
consideration is conditional upon factors other than the passage of time. Contract assets reflect the Company’s transfer of control to customers of photomasks that are in process or completed but not yet shipped to customers. A receivable is recognized when the Company has an unconditional right to payment,
which generally occurs upon the shipment of the photomasks. The Company’s contract assets primarily consist of in-process production orders and fully manufactured photomasks which have not yet shipped, for which the Company has an enforceable right
to consideration (including a reasonable profit) in the event the in-process orders are cancelled by customers. On an individual contract basis, the Company nets contract assets with contract liabilities (deferred revenue) for financial reporting
purposes. The Company did not identify impairment indicators for any outstanding contract assets during the three-month or six-month periods ended May 4,
2025, or April 28, 2024.
The Company generally records accounts receivable at their billed amounts. All outstanding past due customer invoices are reviewed for collectability during, and at the end of, every reporting
period. To the extent the Company believes a loss on the collection of a customer invoice is probable, the Company would record the loss and credit an allowance for credit losses. In the event that an amount is determined to be uncollectible, the
Company charges the allowance for credit losses and derecognizes the related receivable. The Company did not incur any credit losses on the Company’s accounts
receivable during the three-month
or six-month periods ended May 4, 2025, or April 28, 2024.
The Company’s invoice terms generally range from net to ninety days, depending on both the geographic market in which the
transaction occurs and the Company’s payment agreements with specific customers. In the event that the Company’s evaluation of a customer’s business prospects, and financial condition indicate that the customer presents a collectability risk, the
Company will modify terms of sale, which may require payment in advance of performance. At the time of adoption, the Company elected the practical expedient allowed under ASC Topic 606 “Revenue from Contracts with Customers” (“Topic 606”) that
permits the Company not to adjust a contract’s promised amount of consideration to reflect a financing component when the period between when the Company transfers control of goods or services to customers and when the Company is paid is one year or
less.
In instances when the Company is paid in advance of the Company’s performance, the Company records a contract liability and, as
allowed under the practical expedient in Topic 606, recognizes interest expense only if the period between when the Company receives payment from the customer and the date when the Company expects to be entitled to the payment is greater than one
year. Historically, advance payments the Company has received from customers have generally not preceded the completion of the Company’s performance obligations by more than one year.
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