Randy, on Deferred Rev: Here is my take of it:
Suppose you are Lockheed. And you need 1000 copies of the RATL suite (let's simplify here) for $1000 each. But you do not need all those 1000 tomorrow, but spread out as 250 copies each quarter, starting immediately with the delivery of the first 250 lot.
What RATL does, I assume, is to recognize the $250K as revenue for the quarter and recognize $750 as Deferred Rev in this quarter's balance sheet (Aside: for example CA usually would book the whole $1m immediately. That's why they are a mess now).
What I would think is that when the next 250 lot is shipped, RATL will recognize $250K in revenue (reduce Def Rev by $250K) and pay (book in the Income Statement) the associated direct Cost of Sales. I would think there should be no further SG&A costs or any other overhead costs associated with the 2nd and all further deliveries anymore, as the contract for the 1000 copies has been fully closed already.
Interest costs are booked separately anyway, so I only see the direct Cost of Sales coming into play when drawing down Deferred Rev., like printing the CD's, packaging, wrapping, shipping, printing the manuals (?), etc.
So I asssume - but cannot confirm - that one should apply the gross margin and tax rate to arrive at "future earnings" from the Def Rev.
I don't know if this helps... All, please comment. Maybe we can contact RATL investor relations and ask for how they acually do it.
greetings,
Thomas |
