Revenue Recognition

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally, this occurs at a point in time when the transfer of risk and title to the product transfers to the customer. Our standard terms of delivery are included in our contracts of sale, order confirmation documents, and invoices. As such, all revenue is considered revenue recognized from contracts with customers and we do not have other sources of revenue. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Revenue is recognized net of sales tax, value-added taxes, and other taxes. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. We do not have any material significant payment terms as payment is received at or shortly after the point of sale. Certain customers may receive cash-based incentives (including rebates, price supports, and sales commission), which are accounted for as variable consideration. We estimate rebates and price supports based on the expected amount to be provided to customers and reduce revenues recognized once the performance obligation has been met. Sales commissions are recorded as an increase in cost of goods sold once the performance obligation has been met. We do not expect to have significant changes in our estimates for variable considerations.

We have deferred revenue of $13.3 million related to contractual commitments with customers for which the performance obligation will be satisfied over time, which will range from one to ten years. The revenue associated with these performance obligations is recognized as the obligation is satisfied, which occurs as a volume based metric over time when the transfer of risk and title of finished products transfer to the customer.

Occasionally, we enter into bill-and-hold contracts, where we invoice the customer for products even though we retain possession of the products until a point in time in the future when the products will be shipped to the customer. In these contracts, the primary performance obligation is satisfied at a point in time when the product is segregated from our general inventory, it is ready for shipment to customer, and we do not have the ability to use the product or direct it to another customer. Additionally, we have a secondary performance obligation related to custodial costs, including storage and freight, which is satisfied over time once the product has been delivered to the customer. During the three months ended March 31, 2019, we recognized $5.8 million of revenue related to these arrangements.

We disaggregate our revenue by segment product lines, which is how we market our products and review results of operations. The following tables disaggregate our segment revenue by major product lines:



	Three Months Ended March 31,
	2019		2018
	(In thousands)
Performance Products	$	138,092	$	145,730
Specialty Polymers	82,010		104,018
Cariflex	40,867		39,525
Other	86		(202		)
Polymer Product Line Revenue	$	261,055	$	289,071



	Three Months Ended March 31,
	2019		2018
	(In thousands)
Adhesives	$	65,576	$	73,148
Performance Chemicals	116,753		122,941
Tires	13,027		17,232
Chemical Product Line Revenue	$	195,356	$	213,321



	March 31, 2019		December 31, 2018
	(In thousands)
Contract receivables⁽¹⁾	$	259,015	$	197,739
Contract liabilities⁽²⁾	$	13,343	$	13,906

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(1)	Contract receivables are recorded within receivables, net of allowances on our Condensed Consolidated Balance Sheets.


(2)	Our contract liability decreased by $0.3 million, as a result of meeting the performance obligation, which was recognized in our Specialty Polymers product line revenue, and decreased approximately $0.2 million due to the change in currency exchange rates.