Note 3 - Contracts in Progress

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

Note

3

–

Contracts in Progress

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

December 31, 2018

and

December 31, 2017:

(In thousands)	2018		2017
Category
Aerospace	$	8,115	$	26,787
Industrial		7,043		6,629
Research		4,114		2,617
Point in time		5,062		5,095
Net revenue	$	24,334	$	41,128

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.

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 years ended

December 31, 2018

and

December 31, 2017

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.

(In thousands)	2018			2017
Increase in revenue from net changes in transaction prices	$	254		$	148
Decrease in revenue from net changes in input cost estimates		(268	)		(126	)
Net (decrease) increase in revenue from net changes in estimates	$	(14	)	$	22
Number of projects		10			2
Net change in estimate as a percentage of aggregate revenue for associated projects		(0.08	%)		0.06	%

For the years ended

December 31, 2018

and

December 31, 2017,

revenue (decreased) increased by (

$14,000

) and

$22,000

respectively, from net changes in transaction prices, input cost estimates, 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.

For the year ended

December 31, 2018,

the decrease in contract assets of approximately

$7

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

December 31, 2018,

the increase in contract liabilities of

$70,000

was primarily due to invoicing for those projects.

Contract assets and contract liabilities on input method type contracts in progress are summarized as follows:

	2018			2017
Costs incurred on contracts in progress	$	24,913,254		$	22,079,680
Estimated earnings		26,040,219			16,499,697
		50,953,473			38,579,377
Billings to date		(50,132,200	)		(30,648,666	)
	$	821,273		$	(7,930,711	)
Included in accompanying balance sheets
Under the following captions:
Contract assets	$	1,357,797		$	8,397,024
Contract liabilities	$	(536,524	)	$	(466,313	)