Contract Assets, Contract Costs and Contract Liabilities

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Contract Assets, Contract Costs and Contract Liabilities

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

	September 30, 2022		December 31, 2021		$ Change		% Change
In thousands
Contract assets	$	117,828	$	112,354	$	5,474	4.9	%
Contract costs, current portion	$	822	$	850	$	(28)	(3.3)	%
Contract costs, noncurrent portion	$	9,865	$	10,249	$	(384)	(3.7)	%
Contract liabilities, current portion	$	3,932	$	2,945	$	987	33.5	%
Contract liabilities, noncurrent portion	$	20,477	$	16,528	$	3,949	23.9	%

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 for work performed and not yet billed on the A-10 program and the Sikorsky Combat Rescue Helicopter program compared to lower amounts billed in the current period on the JPF program, KAflex® products and the AH-1Z program. There were no significant impairment losses related to the Company's contract assets during the three-month and nine-month fiscal periods ended September 30, 2022 and October 1, 2021.

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

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

	September 30, 2022		December 31, 2021
In thousands
Contract changes, negotiated settlements and claims for unanticipated contract costs	$	—	$	682

Contract Costs

At September 30, 2022 and December 31, 2021, costs to fulfill a contract were $10.7 million and $11.1 million, respectively. These amounts were included in contract costs, current portion and contract costs, noncurrent portion on the Company's Condensed Consolidated Balance Sheets at September 30, 2022 and December 31, 2021. There were no costs to obtain a contract at September 30, 2022 and December 31, 2021.

Contract costs, current portion at September 30, 2022 remained relatively flat compared to the balance at December 31, 2021. This was primarily attributable to the reclassification of a portion of costs to fulfill certain structures programs from contract costs, noncurrent portion, mostly offset by the amortization of contract costs. For the three-month and nine-month fiscal periods ended September 30, 2022, amortization of contract costs was $0.2 million and $0.5 million, respectively. For the three-month and nine-month fiscal periods ended October 1, 2021, amortization of contract costs was $1.7 million and $6.9 million, respectively.

Contract costs, noncurrent portion at September 30, 2022 decreased when compared to the balance at December 31, 2021 due to the reclassification of costs on certain structures programs to contract costs, current portion.

Contract Liabilities

Contract liabilities, current portion at September 30, 2022 increased compared to the balance at December 31, 2021. This was primarily due to advances received for the JPF program and the FireBurstTM enhanced fuzing capability program and the addition of contract liabilities from the Aircraft Wheel and Brake acquisition, partially offset by a reduction in contract liabilities as a result of the disposal of the Company's Mexico operations. Revenue recognized related to contract liabilities, current portion was $0.2 million and $1.4 million in the three-month and nine-month fiscal periods ended September 30, 2022, respectively. Revenue recognized related to contract liabilities, current portion was $18.3 million and $38.8 million in the three-month and nine-month fiscal periods ended October 1, 2021, respectively.

Contract liabilities, noncurrent portion at September 30, 2022 increased compared to the balance at December 31, 2021 due to advances received for the JPF program and the FireBurstTM enhanced fuzing capability program. For the three-month and nine-month fiscal periods ended September 30, 2022 and October 1, 2021, the Company did not recognize revenue against contract liabilities, noncurrent portion. Refer to Note 15, Commitments and Contingencies, for further information on the Company's offset agreements.