Revenue Recognition

The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle:


•	Identify the contract(s) with a customer


•	Identify the performance obligations


•	Determine the transaction price


•	Allocate the transaction price


•	Recognize revenue when the performance obligations are met

We recognize revenue when the performance obligations specified in our contracts have been satisfied, after considering the impact of variable consideration and other factors that may affect the transaction price. Our contracts normally contain a single performance obligation that is fulfilled on the date of delivery based on shipping terms stipulated in the contract. We usually expect payment within 30 to 90 days from the shipping date, depending on our terms with the customer. None of our contracts as of September 30, 2018, contained a significant financing component. Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities. Contract assets will be reviewed for impairment when events or circumstances indicate that they may not be recoverable.

To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method based on an analysis of historical experience and current facts and circumstances, which requires significant judgment. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

Contract Assets and Liabilities

Contract assets and liabilities included in our Condensed Consolidated Balance Sheets are as follows:



	As of
	September 30,			December 31,
	2018			2017
Contract Assets
Prepaid rebates included in Other current assets	$	64		$	52
Prepaid rebates included in Other assets	468			465
Total Contract Assets	$	532		$	517

Contract Liabilities
Customer discounts and price concessions included in Accrued liabilities	$	(2,482	)	$	(1,133	)
Customer rights of return included in Accrued liabilities	(328		)	(462		)
Total Contract Liabilities	$	(2,810	)	$	(1,595	)

During the three and nine months ended September 30, 2018, we recognized a decrease of revenues of $18 and an increase of $68, respectively, that were included in contract liabilities at the beginning of the period.

The increase in contract liabilities as of September 30, 2018 is primarily due to net increases in estimated future discounts and price concessions, offset by net settlements of products sold with rights of return.

Disaggregated Revenue

The following table presents revenues disaggregated by the major markets we serve:



	Three Months Ended				Nine Months Ended
	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Aero & Defense	$	5,692	$	4,503	$	16,819	$	13,835
Industrial	22,675		18,742		65,804		55,068
Medical	10,259		10,502		29,293		24,790
Telecom & IT	5,049		3,925		15,099		14,705
Transportation	75,184		68,571		223,395		203,685
Total	$	118,859	$	106,243	$	350,410	$	312,083