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 and six months ended June 30, 2018, to the pro-forma amounts had ASC 605 been in effect:



	June 30, 2018
	As Reported (ASC 606)			As Adjusted (ASC 605)
	(in thousands)
Assets:
Unbilled receivables	$	65,326		$	64,371
Inventories, net	25,606			26,273
Liabilities:
Accrued expenses	$	18,469		$	18,426
Deferred revenue	5,516			5,613
Deferred tax liability, net	16,290			16,327
Equity:
Accumulated deficit	$	(131,221	)	$	(131,600	)



	Three months ended June 30, 2018						Six months ended June 30, 2018
	As Reported (ASC 606)			As Adjusted (ASC 605)			As Reported (ASC 606)			As Adjusted (ASC 605)
	(in thousands, except per share amounts)
Revenue	$	128,140		$	127,821		$	253,882		$	252,253
Cost of revenue, excluding amortization	95,825			96,091			190,041			190,075
Operating income	3,688			3,103			4,355			2,692
Loss before income taxes	(13,521		)	(14,106		)	(17,676		)	(19,339		)
Income tax benefit, net	(2,127		)	(2,219		)	(2,884		)	(3,172		)
Net loss	(11,394		)	(11,887		)	(14,792		)	(16,167		)

Loss per share
Basic	$	(0.23	)	$	(0.24	)	$	(0.30	)	$	(0.32	)
Diluted	$	(0.23	)	$	(0.24	)	$	(0.30	)	$	(0.32	)

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 and six months ended June 30, 2018:



Revenue by Customer Type and Contract Type	Three months ended June 30, 2018		Six months ended June 30, 2018
			(in thousands)
Department of Defense
Cost Reimbursement	$	44,733	$	87,561
Time & Materials and Fixed-Price-Level-of-Effort	25,524		51,669
Firm-Fixed-Price	28,809		54,037
Total Department of Defense	99,066		193,267

Non-Department of Defense U.S. Government
Cost Reimbursement	2,096		3,874
Time & Materials and Fixed-Price-Level-of-Effort	19,993		38,893
Firm-Fixed-Price	2,606		5,387
Total Non-Department of Defense U.S. Government	24,695		48,154

Commercial and other
Cost Reimbursement	—		—
Time & Materials and Fixed-Price-Level-of-Effort	446		1,828
Firm-Fixed-Price	3,933		10,633
Total Commercial and other	4,379		12,461

Total Revenues	$	128,140	$	253,882

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 June 30, 2018, the aggregate amount of transaction price allocated to remaining performance obligations was $323.2 million, which the Company expects to recognize 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) during the six months ended June 30, 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 decrease in contract liabilities (deferred revenue) during the six months ended June 30, 2018, was primarily due to timing of cash collection and subsequent recognition of revenue on the related programs.

During the three months ended June 30, 2018, the Company recognized revenue of $1.1 million related to contract liabilities which existed at January 1, 2018. During the six months ended June 30, 2018, the Company recognized revenue of $4.2 million related to contract liabilities which existed at January 1, 2018. There were no material impairment losses recognized on contract assets for the six months ended June 30, 2018.