Revenue

Revenue Recognition

The Company designs, markets and sells products primarily as commercial, off-the-shelf products. Certain customers request different system configurations, based on standard options or accessories that the Company offers. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company regularly enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In such situations, contract values are allocated to each performance obligation based on its relative estimated standalone selling price. The vast majority of the Company's revenues are recognized at a point in time when goods are transferred to a customer. However, for certain contracts that include highly customized components, if performance does not create an asset with an alternative use and termination for convenience clauses provide an enforceable right to payment for performance completed to date, revenue is recognized over time as the performance obligation is satisfied.

The following table presents the Company’s revenues disaggregated by geographical region and operating segment for the three-month periods ended March 31, 2018 and 2017 (in thousands).



	Three Months Ended March 31, 2018
	Industrial		Government and Defense		Commercial		Total
United States	$	86,296	$	95,133	$	44,015	$	225,444
Europe	35,543		17,203		44,777		97,523
Asia	34,057		18,351		8,965		61,373
Middle East/Africa	3,665		27,183		5,559		36,407
Canada/Latin America	11,097		1,461		6,313		18,871
	$	170,658	$	159,331	$	109,629	$	439,618



	Three Months Ended March 31, 2017
	Industrial		Government and Defense		Commercial		Total
United States	$	76,974	$	91,233	$	53,625	$	221,832
Europe	33,258		12,082		37,931		83,271
Asia	33,225		12,021		8,678		53,924
Middle East/Africa	2,332		18,225		4,585		25,142
Canada/Latin America	8,996		4,619		9,030		22,645
	$	154,785	$	138,180	$	113,849	$	406,814

Revenue includes certain shipping and handling costs and is stated net of third party agency fees. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are in included in cost of goods sold. Revenue is recognized net of allowances for returns and net of taxes collected from customers which are subsequently remitted to governmental authorities.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables and deferred revenue and advance payments from customers on the Consolidated Balance Sheets. Contract assets and liabilities are reported on a contract-by-contract basis. The Company had no material deferred contract costs recorded on the Consolidated Balance Sheet as of March 31, 2018.


Note 2.	Revenue - (Continued)

Contract Balances - (Continued)

Contract assets: The Company recognizes unbilled receivables as contract assets when the Company has rights to consideration for work completed but has not yet billed at the reporting date. Unbilled receivables are included within accounts receivable, net on the Consolidated Balance Sheets. The balance of unbilled receivables as of March 31, 2018 and at the date of adoption of were $8.4 million and $14.5 million, respectively.

Contract Liabilities: The Company records contract liabilities when cash payments are received or due in advance of the Company's performance. Contract liabilities include deferred revenue and advance payments from customers. Contract liabilities are classified as either current or long-term in the Consolidated Balance Sheets based on the timing of when the Company expects to recognize revenue. As of March 31, 2018 and at the date of the adoption of ASC 606, contract liability balances classified as long-term totaled $13.5 million and $13.8 million, respectively, and are included within pension and other long-term liabilities in the accompanying Consolidated Balance Sheets. Approximately $28.4 million of revenue recognized during the three month period ended March 31, 2018 was included in the combined contract liability balances at the date of adoption.

Remaining Performance Obligations

Remaining performance obligations related to ASC 606 represent the aggregate transaction price allocated to performance obligations with an original contract term greater than one year which are fully or partially unsatisfied at the end of the period. While the remaining performance obligation disclosure is similar in concept to backlog, the definition of remaining performance obligations excludes contracts that provide the customer with the right to cancel or terminate for convenience with no substantial penalty, even if historical experience indicates the likelihood of cancellation or termination is remote. The Company has elected to exclude contracts with customers with an original term of one year or less from remaining performance obligations while these contracts are included within backlog.

As of March 31, 2018, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $50.3 million. The Company expects to recognize revenue on approximately 53 percent of the remaining performance obligations over the next 12 months, and the remainder recognized thereafter.