Revenue from Contracts with Customers

The Company operates through two principal business segments, machine clothing and roll covers. The machine clothing segment performance obligations generally include the production of various types of industrial textiles used on paper-making machines and on other industrial applications. In the Company's roll covers segment, the performance obligations generally include the manufacturing of various types of roll covers, spreader rolls, refurbishment of previously installed roll covers, and providing mechanical services for the internal mechanisms of rolls used on paper-making machines. The contract and order economics and risks are determined to be at the segment level. Within each segment the contracts are similar. Total revenues by segment for the reporting periods on the Consolidated Statements of Operations and Comprehensive (Loss) Income are disclosed in Note 9.

Revenue from the Company's performance obligations to customers is recognized at the point in time when control is transferred to the customer. Control is generally transferred to the customer when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery including transfer of title has occurred and there is a reasonable assurance of collection of the sales proceeds. The Company generally obtains written purchase authorizations from customers for a specific product or service performance obligation at a specified price and considers delivery and transfer of title to have occurred in accordance with its shipping terms. Payment is generally due in accordance with customary payment terms once the transfer of control has occurred. Revenue is recorded net of applicable allowances, including estimated allowances for returns, rebates and other discounts. Allowances are generally estimated based upon customer trends. In the machine clothing segment, a small portion of the business has been conducted pursuant to consignment arrangements under which the Company does not recognize a sale of a product to a customer until the customer places the product into use, which typically occurs some period after the product is shipped to the customer or to a warehouse location near the customer’s facility. As part of the consignment agreement, the Company delivers the goods to a location designated by the customer. In many cases, the customer and the Company generally agree to a “sunset” date, which represents the date by which the customer must accept all risks and rewards of ownership of the product and payment terms begin. For consignment sales, revenue is generally recognized on the earlier of the actual product installation date or the “sunset” date.

The costs to fulfill the Company's performance obligations at a point in time are included in inventory. Refer to balances and further discussion in Note 1. Commissions are generally earned at the point in time the performance obligation is satisfied by the Company and are expensed as incurred. Commission expense for the three and six months ended June 30, 2018 and 2017 was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Commission expense ⁽¹⁾	$	2,574	$	3,564	$	5,832	$	7,098

⁽¹⁾ During the second quarter of 2018, the Company modified the commission structure for both the split between base pay and incentive compensation and the definition of commissionable sales in its North American operations. This resulted in a lower commission expense compared to the prior year.

The Company has net accounts receivable balances from customers of $81.6 million and $76.6 million as of June 30, 2018 and December 31, 2017, respectively. The Company does not have any contract receivable balance as of June 30, 2018 and December 31, 2017. The Company had minimal contract liability balances, which primarily relate to customer prepayments for certain products in its North American rolls business of $1.1 million and $0.5 million as of June 30, 2018 and December 31, 2017, respectively. The corresponding balances as of June 30, 2017 and December 31, 2016 were $0.4 million and $1.1 million, respectively. Minimal revenue was recognized on these contract liabilities during the three and six months ended June 30, 2018 and 2017.