REVENUE FROM CONTRACTS WITH CUSTOMERS

Impact of New Revenue Guidance on Financial Statement Line Items

The following tables compare the reported condensed consolidated balance sheet and statement of operations as of and for the three months ended March 31, 2018, to the pro-forma amounts had ASC 605 been in effect:



	As Reported (ASC 606)			As Adjusted (ASC 605)
	(in thousands)
Assets:
Unbilled receivables	$	72,809		$	71,583
Inventories, net	20,186			21,121
Prepaid expenses	1,424			1,498
Liabilities:
Accrued expenses	$	20,007		$	20,040
Deferred revenue	7,474			6,981
Deferred tax liability, net	18,222			18,351
Equity:
Accumulated deficit	$	(116,062	)	$	(115,948	)



	As Reported (ASC 606)			As Adjusted (ASC 605)
	(in thousands, except per share amounts)
Revenue	$	125,742		$	124,432
Cost of revenue, excluding amortization	93,774			93,542
Operating income (loss)	1,003			(75		)
Loss before income taxes	(3,820		)	(4,898		)
Income tax benefit, net	(693		)	(889		)
Net loss	(3,127		)	(4,009		)

Loss per share
Basic	$	(0.06	)	$	(0.08	)
Diluted	$	(0.06	)	$	(0.08	)

The primary impact related to certain contracts (or contract components) that were previously recognized on a separate basis which are now combined under ASC 606 into a single performance obligation, as they are not capable of being distinct under the new guidance.

Revenue by Category

The Company disaggregates its revenue from contracts with customers by contract-type and customer-type, as we believe that they best depict how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors. The following table summarizes revenue from contracts with customers by contract-type and customer-type for the three months ended March 31, 2018:



Revenue by Customer Type and Contract Type	Three months ended March 31, 2018
	(in thousands)
Department of Defense
Cost Reimbursement	$	42,828
Time & Materials and Fixed-Price-Level-of-Effort	26,145
Firm-Fixed-Price	25,228
Total Department of Defense	94,201

Non-Department of Defense U.S. Government
Cost Reimbursement	1,778
Time & Materials and Fixed-Price-Level-of-Effort	18,900
Firm-Fixed-Price	2,781
Total Non-Department of Defense U.S. Government	23,459

Commercial and other
Cost Reimbursement	—
Time & Materials and Fixed-Price-Level-of-Effort	1,382
Firm-Fixed-Price	6,700
Total Commercial and other	8,082

Total Revenues	$	125,742

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm orders for which revenue has not yet been recognized, excluding unexercised contract options and potential orders under ordering-type contracts (e.g., indefinite-delivery, indefinite-quantity (IDIQ)). As of March 31, 2018, the aggregate amount of transaction price allocated to remaining performance obligations was $342 million. The Company expects to recognize a majority of the remaining performance obligations over the next 12 months.

Contract Assets and Contract Liabilities

The timing of revenue recognition, billings, and cash collections result in billed accounts receivable, unbilled receivables, and customer advances and deposits. Contract assets (unbilled receivables) result from timing differences between revenue recognition and billing in accordance with agreed-upon contractual terms, which typically occurs subsequent to revenue being recognized. Contract liabilities (deferred revenue) consist of advance payments and billings in excess of revenue recognized. Our contract assets and liabilities are reported in a net position on a contract by contract basis.

The increase in contract assets (unbilled receivables) for the three months ended March 31, 2018, was primarily due to billable receivables now being classified as contract assets and to the timing of billings and revenue recognized on certain contracts. The increase in contract liabilities (deferred revenue) for the three months ended March 31, 2018, was primarily due to an impact on one of our contracts from adopting ASC 606.

During the three months ended March 31, 2018, the Company recognized revenue $3.2 million related to contract liabilities which existed at January 1, 2018. There were no impairment losses recognized on receivable and contract assets in the first quarter of 2018.