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Contract Assets, Contract Costs and Contract Liabilities
 6 Months Ended
Jun. 28, 2019
Revenue from Contract with Customer [Abstract]  
Contract Assets, Contract Costs and Contract Liabilities 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.


7. 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:
 
 
June 28,
2019
 
December 31, 2018
 
$ Change
 
% Change
In thousands
 
 
 
 
 
 
 
 
Contract assets(1)
 
$
118,774

 
$
99,261

 
$
19,513

 
19.7
 %
 
 
 
 
 
 
 
 
 
Contract costs, current portion
 
$
5,114

 
$
5,993

 
$
(879
)
 
(14.7
)%
Contract costs, noncurrent portion
 
$
9,187

 
$
10,666

 
$
(1,479
)
 
(13.9
)%
 
 
 
 
 
 
 
 
 
Contract liabilities, current portion(1)
 
$
30,707

 
$
28,865

 
$
1,842

 
6.4
 %
Contract liabilities, noncurrent portion(1)
 
$
72,081

 
$
78,562

 
$
(6,481
)
 
(8.2
)%

(1) Contract assets and contract liabilities of the Distribution segment were included in assets held for sale and liabilities held for sale, respectively, on the Company's Condensed Consolidated Balance Sheets. See Note 4, Discontinued Operations, for further information on the Company's agreement to sell the Distribution segment.

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 six-month fiscal period ended June 28, 2019. This increase was primarily related to work performed and not yet billed on the JPF program with the USG, and certain metallic structures programs, 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 and six-month fiscal periods ended June 28, 2019 and June 29, 2018.

Contract assets includes amounts for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs. These amounts are as follows:
 
 
June 28,
2019
 
December 31,
2018
In thousands
 
 
 
 
Contract changes, negotiated settlements and claims for unanticipated contract costs
 
$
3,574

 
$
2,909



Contract Costs

At June 28, 2019, costs to fulfill a contract and costs to obtain a contract were $6.3 million and $8.0 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 June 28, 2019 and December 31, 2018.

The decrease in contract costs, current portion was primarily attributable to the amortization of contract costs, partially offset by 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. For the three-month and six-month fiscal periods ended June 28, 2019, amortization of contract costs was $2.0 million and $3.0 million, respectively. For the three-month and six-month fiscal periods ended June 29, 2018, amortization of contract costs was $1.0 million and $1.7 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.


7. 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 and an advance payment received on the K-MAX® program, partially offset by revenue recognized on the K-MAX® program and a JPF DCS contract. For the three-month and six-month fiscal periods ended June 28, 2019, revenue recognized related to contract liabilities, current portion was $6.0 million and $14.0 million, respectively. For the three-month and six-month fiscal periods ended June 29, 2018, revenue recognized related to contract liabilities, current portion was $1.4 million and $6.4 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 and six-month fiscal periods ended June 28, 2019 and June 29, 2018, the Company did not recognize revenue against contract liabilities, noncurrent portion.