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 nine months ended September 30, 2018, to the pro-forma amounts had ASC 605 been in effect:



	September 30, 2018
	As Reported (ASC 606)			As Adjusted (ASC 605)
	(in thousands)
Assets:
Unbilled receivables	$	55,490		$	55,188
Inventories, net	26,342			26,610
Liabilities:
Accrued expenses	$	16,190		$	15,737
Deferred revenue	3,465			3,016
Deferred tax liability, net	15,735			16,085
Equity:
Accumulated deficit	$	(133,208	)	$	(132,690	)



	Three months ended September 30, 2018						Nine months ended September 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	$	126,690		$	127,889		$	380,572		$	380,142
Cost of revenue, excluding amortization	91,771			91,761			281,813			281,836
Operating income	3,743			4,953			8,098			7,645
Loss before income taxes	(2,672		)	(1,462		)	(20,348		)	(20,801		)
Income tax benefit, net	(686		)	(371		)	(3,569		)	(3,544		)
Net loss	(1,986		)	(1,091		)	(16,779		)	(17,257		)

Loss per share
Basic	$	(0.04	)	$	(0.02	)	$	(0.34	)	$	(0.35	)
Diluted	$	(0.04	)	$	(0.02	)	$	(0.34	)	$	(0.35	)

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 nine months ended September 30, 2018:



Revenue by Customer Type and Contract Type	Three months ended September 30, 2018		Nine months ended September 30, 2018
			(in thousands)
Department of Defense
Cost Reimbursement	$	44,080	$	131,641
Time & Materials and Fixed-Price-Level-of-Effort	23,174		74,842
Firm-Fixed-Price	29,655		83,692
Total Department of Defense	96,909		290,175

Non-Department of Defense U.S. Government
Cost Reimbursement	2,219		6,093
Time & Materials and Fixed-Price-Level-of-Effort	19,062		57,956
Firm-Fixed-Price	2,464		7,851
Total Non-Department of Defense U.S. Government	23,745		71,900

Commercial and other
Cost Reimbursement	—		—
Time & Materials and Fixed-Price-Level-of-Effort	1,078		2,906
Firm-Fixed-Price	4,958		15,591
Total Commercial and other	6,036		18,497

Total Revenues	$	126,690	$	380,572

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 September 30, 2018, the aggregate amount of transaction price allocated to remaining performance obligations was $390.9 million, which the Company expects to recognize the majority of 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 nine months ended September 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 nine months ended September 30, 2018, was primarily due to timing of cash collection and subsequent recognition of revenue on the related programs.

During the three months ended September 30, 2018, the Company recognized revenue of $1.6 million related to contract liabilities which existed at January 1, 2018. During the nine months ended September 30, 2018, the Company recognized revenue of $5.8 million related to contract liabilities which existed at January 1, 2018. There were no material impairment losses recognized on contract assets for the nine months ended September 30, 2018.