CONTRACT ASSETS, CONTRACT COSTS AND CONTRACT LIABILITIES

Contract assets consist of unbilled amounts typically resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract costs consist of costs to obtain and fulfill a contract. Costs to fulfill a contract primarily consist of nonrecurring engineering costs incurred at the start of a new program for which such costs are expected to be recovered under existing and future contracts. Such costs are amortized over the estimated revenue amount of the contract. Costs to obtain a contract consist of commissions and agent fees paid in connection with the award of a contract. Contract liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue.

6. CONTRACT ASSETS, CONTRACT COSTS AND CONTRACT LIABILITIES (CONTINUED)

Reconciliation of Contract Balances

Activity related to contract assets, contract costs and contract liabilities is as follows:



	March 29, 2019		December 31, 2018		$ Change			% Change
In thousands
Contract assets	$	121,621	$	108,861	$	12,760		11.7	%

Contract costs, current portion	$	6,158	$	5,993	$	165		2.8	%
Contract costs, noncurrent portion	$	9,503	$	10,666	$	(1,163	)	(10.9	)%

Contract liabilities, current portion	$	34,283	$	28,865	$	5,418		18.8	%
Contract liabilities, noncurrent portion	$	72,081	$	78,562	$	(6,481	)	(8.2	)%

Contract Assets

The increase in contract assets was primarily due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the three-month fiscal period ended March 29, 2019. This increase was primarily related to work performed and not yet billed on the JPF program with the USG, the AH-1Z program, the Sikorsky S70 program and the Sikorsky BLACK HAWK helicopter program, partially offset by amounts billed on the SH-2G program with Peru. There were no significant impairment losses related to the Company's contract assets during the three-month fiscal periods ended March 29, 2019 and March 30, 2018.

Contract assets includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows:



	March 29, 2019		December 31, 2018
In thousands
Contract changes, negotiated settlements and claims for unanticipated contract costs	$	3,631	$	2,909

Contract Costs

At March 29, 2019, costs to fulfill a contract and costs to obtain a contract were $8.5 million and $7.2 million, respectively. At December 31, 2018, costs to fulfill a contract and costs to obtain a contract were $8.9 million and $7.8 million, respectively. These amounts are included in contract costs, current portion and contract costs, noncurrent portion on the Company's Condensed Consolidated Balance Sheets at March 29, 2019 and December 31, 2018.

Contract costs, current portion remained relatively flat for the three-month fiscal period ended March 29, 2019 when compared to contract costs, current portion at December 31, 2018. This was a result of the reclassification of a portion of costs to obtain a JPF DCS contract and costs to fulfill certain metallic structures programs from contract costs, noncurrent portion, partially offset by amortization of contract costs. For the three-month fiscal periods ended March 29, 2019 and March 30, 2018, amortization of contract costs was $1.0 million and $0.7 million, respectively.

The decrease in contract costs, noncurrent portion was due to the reclassification of a portion of costs to obtain a JPF DCS contract and costs to fulfill certain metallic structures programs to contract costs, current portion.

6. CONTRACT ASSETS, CONTRACT COSTS AND CONTRACT LIABILITIES (CONTINUED)

Contract Liabilities

The increase in contract liabilities, current portion was primarily due to the reclassification of a portion of the advance payments received for a JPF DCS contract from contract liabilities, noncurrent portion. For the three-month fiscal periods ended March 29, 2019 and March 30, 2018, revenue recognized related to contract liabilities, current portion was $8.0 million and $5.0 million, respectively.

The decrease in contract liabilities, noncurrent portion was due to the reclassification of a portion of the advance payments received for a JPF DCS contract to contract liabilities, current portion. For the three-month fiscal periods ended March 29, 2019 and March 30, 2018, the Company did not recognize revenue against contract liabilities, noncurrent portion.