SEC Company Response from MAXIMUS, INC. (MMS) (CIK 0001032220) (MMS) — Mar 12, 2020
MAXIMUS, INC. (MMS) (CIK 0001032220)
Date: March 12, 2020 · CIK: 0001032220 · Accession: 0001032220-20-000022
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-12997
Letter
Division of Corporation Finance Office of Trade & Services United States Securities and Exchange Commission Form 10-K for the Fiscal Year Ended September 30, 2019 Filed November 26, 2019 File No. 001-12997
Re: MAXIMUS, Inc.
Dear Ms. Brillant
MAXIMUS, Inc. (the "Company", "we" or "us") received your letter of March 3, 2020 containing comments on the filing referenced above.
Form 10-K for the fiscal year ended September 30, 2019
Notes to the Consolidated Financial Statements
Note 4: Revenue Recognition, page 56
1.
We note that certain contracts include retainage balances whereby revenue is earned, but cash payments are held back by the customer for a period of time, typically to allow for the customer to evaluate the quality of the performance. Please explain your analysis under ASC 606-10-25-30(e) and ASC 606-10-55-85 through 88 in determining that recognizing revenue for these sales prior to customer acceptance is appropriate.
More than 95% of our revenue is from contracts that have performance obligations that are satisfied over time. These performance obligations are promises to transfer a series of distinct services to our customer that are substantially the same and which have the same pattern of service (ASC 606-10-25-14(b)). Accordingly, we recognize revenue over time as we perform these services. Where we have variable fees, including penalties, we allocate that revenue to the distinct periods of service to which they relate (ASC 606-10-32-40).
At September 30, 2019, the retainage balance within accounts receivable - unbilled was $11.5 million. Of this amount only one arrangement, with a retainage balance of $80,000, was related to a performance obligation satisfied at a point-in-time.
The contractual terms of our contracts include objective criteria for the assessment of penalties, whether the performance obligations are satisfied over time or at a point in time. As noted, some contracts include retainage balances whereby a specified amount of cash payments are withheld by the customer for a period, to allow the customer to confirm the objective criteria specified by the contract have been met.
We measure the objective criteria around penalties at period end. For performance obligations satisfied over time, we take these measurements into account in evaluating variable fees. For performance obligations satisfied at a point in time, we take these measurements into account in determining whether we have achieved the performance necessary to ensure customer acceptance. In addition, we have enough history for our contracts to accurately identify that the objective criteria have been met.
To facilitate a better understanding of the terms of our contracts, in future filings, we will clarify our language over retainage to explain that the arrangements are in place to allow the customer to confirm the objective criteria laid out by the contract have been met.
If you have any additional questions or require more information, please contact me at 1891 Metro Center Drive, Reston VA 20190, or at 703-251-8500.
Sincerely,
/s/ Richard J. Nadeau
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CORRESP 1 filename1.htm Document March 12, 2020 Theresa Brillant Division of Corporation Finance Office of Trade & Services United States Securities and Exchange Commission Washington, DC 20549 Re: MAXIMUS, Inc. Form 10-K for the Fiscal Year Ended September 30, 2019 Filed November 26, 2019 File No. 001-12997 Dear Ms. Brillant MAXIMUS, Inc. (the "Company", "we" or "us") received your letter of March 3, 2020 containing comments on the filing referenced above. Form 10-K for the fiscal year ended September 30, 2019 Notes to the Consolidated Financial Statements Note 4: Revenue Recognition, page 56 1. We note that certain contracts include retainage balances whereby revenue is earned, but cash payments are held back by the customer for a period of time, typically to allow for the customer to evaluate the quality of the performance. Please explain your analysis under ASC 606-10-25-30(e) and ASC 606-10-55-85 through 88 in determining that recognizing revenue for these sales prior to customer acceptance is appropriate. More than 95% of our revenue is from contracts that have performance obligations that are satisfied over time. These performance obligations are promises to transfer a series of distinct services to our customer that are substantially the same and which have the same pattern of service (ASC 606-10-25-14(b)). Accordingly, we recognize revenue over time as we perform these services. Where we have variable fees, including penalties, we allocate that revenue to the distinct periods of service to which they relate (ASC 606-10-32-40). At September 30, 2019, the retainage balance within accounts receivable - unbilled was $11.5 million. Of this amount only one arrangement, with a retainage balance of $80,000, was related to a performance obligation satisfied at a point-in-time. The contractual terms of our contracts include objective criteria for the assessment of penalties, whether the performance obligations are satisfied over time or at a point in time. As noted, some contracts include retainage balances whereby a specified amount of cash payments are withheld by the customer for a period, to allow the customer to confirm the objective criteria specified by the contract have been met. We measure the objective criteria around penalties at period end. For performance obligations satisfied over time, we take these measurements into account in evaluating variable fees. For performance obligations satisfied at a point in time, we take these measurements into account in determining whether we have achieved the performance necessary to ensure customer acceptance. In addition, we have enough history for our contracts to accurately identify that the objective criteria have been met. To facilitate a better understanding of the terms of our contracts, in future filings, we will clarify our language over retainage to explain that the arrangements are in place to allow the customer to confirm the objective criteria laid out by the contract have been met. If you have any additional questions or require more information, please contact me at 1891 Metro Center Drive, Reston VA 20190, or at 703-251-8500. Sincerely, /s/ Richard J. Nadeau Richard J. Nadeau Chief Financial Officer and Treasurer