NOTE

REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue from contracts for the

three

and

six

months ended

June 30, 2018

and

June 30, 2017:

(In thousands)	Six Months Ended				Three Months Ended
Category	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Aerospace		6,079		13,936		2,205		7,177
Industrial		5,208		3,382		1,962		2,408
Research		1,875		1,462		1,014		383
Point in time		2,427		1,700		1,254		862
Net revenue		15,589		20,480		6,435		10,830

Judgment is required to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize. If estimated total costs on any contract are greater than the net contract revenues, the Company recognizes the entire estimated loss in the period the loss becomes known.

Changes in estimates for sales of systems occur for a variety of reasons, including but

not

limited to (i) build accelerations or delays, (ii) product cost forecast changes, (iii) cost related change orders or add-ons, or (iv) changes in other information used to estimate costs. Changes in estimates

may

have a material effect on the Company’s consolidated statements of operations. The table below outlines the impact on revenue of net changes in estimated transaction prices and input costs for systems related sales contracts (both increases and decreases) for the

three

and

six

months ended

June 30, 2018

as well as the number of projects that comprise such changes. Also included in the table is the net change in estimate as a percentage of the aggregate revenue for such projects.

	Three Months Ended			Six Months Ended
(In thousands)	June 30, 2018			June 30, 2018
Increase in revenue from net changes in transaction prices	$	34			75
(Decrease) in revenue from net changes in input cost estimates		(479	)		(570	)
Net (decrease) in revenue from net changes in estimates		(445	)		(495	)

Number of projects		15			10

Net change in estimate as a percentage of aggregate revenue for associated projects		(9.2	%)		(8.8	%)

For the

three

and

six

months ended

June 30, 2018,

revenue decrease by

$445,000

and

$495,000,

respectively, from net changes in transaction prices and input cost estimates. The changes were primarily due to product cost overruns and product cost forecast changes related to redesign of certain systems.

Contract Assets and Liabilities

Contract assets consist of (i) retainage which represent the earned, but unbilled, portion for which payment is deferred by the customer until certain contractual milestones are met; and (ii) unbilled receivables which represent revenue that has been recognized in advance of billing the customer, which is common for long-term contracts. Contract liabilities consist of customer advances and billings in excess of revenue recognized.

During the

six

months ended

June 30, 2018,

the decrease in contract assets of approximately

$3.1

million was primarily driven by additional billed receivables during the period, for those projects that certain milestones had been reached. During the

six

months ended

June 30, 2018,

the decrease in contract liabilities of

$187,000

was primarily due to the attainment of milestones billings for various projects.