Contract Assets, Contract Costs and Contract Liabilities

6 Months Ended

Jun. 30, 2023

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:

	June 30, 2023		December 31, 2022		$ Change		% Change
In thousands
Contract assets	$	106,381	$	113,182	$	(6,801)	(6.0)	%
Contract costs, current portion(1)	$	481	$	695	$	(214)	(30.8)	%
Contract costs, noncurrent portion(2)	$	643	$	673	$	(30)	(4.5)	%
Contract liabilities, current portion	$	7,826	$	4,081	$	3,745	91.8	%
Contract liabilities, noncurrent portion	$	19,624	$	20,515	$	(891)	(4.3)	%

(1) Contract costs, current portion are included within other current assets on the Company's Condensed Consolidated Balance Sheets.

(2) Contract costs, noncurrent portion are included within other assets on the Company's Condensed Consolidated Balance Sheets.

Contract Assets

The decrease in contract assets was primarily due to amounts billed in the current period on the JPF program and higher unliquidated progress payments on our legacy fuzing contracts, partially offset by the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations for work performed and not yet billed on certain legacy fuzing contracts, the SH-2G program and a KARGO contract. There were no significant impairment losses related to the Company's contract assets during the three-month and six-month fiscal periods ended June 30, 2023 and July 1, 2022.

There were no amounts included in contract assets for matters such as contract changes, negotiated settlements and claims for unanticipated contract costs at June 30, 2023 and December 31, 2022.

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

Contract Costs

At June 30, 2023 and December 31, 2022, costs to fulfill a contract were $1.1 million and $1.4 million, respectively. These amounts were included in other current assets and other assets on the Company's Condensed Consolidated Balance Sheets at June 30, 2023 and December 31, 2022. There were no costs to obtain a contract at June 30, 2023 and December 31, 2022.

Contract costs, current portion at June 30, 2023 decreased compared to the balance at December 31, 2022. This was primarily attributable to the amortization of contract costs. For the three-month and six-month fiscal periods ended June 30, 2023, amortization of contract costs was $0.1 million and $0.2 million, respectively. For the three-month and six-month fiscal periods ended July 1, 2022, amortization of contract costs was $0.2 million and $0.3 million, respectively.

Contract costs, noncurrent portion at June 30, 2023 remained relatively flat when compared to the balance at December 31, 2022.

Contract Liabilities

Contract liabilities, current portion at June 30, 2023 increased compared to the balance at December 31, 2022, primarily driven by the FireburstTM enhanced fuzing capability program and SH-2G program. Revenue recognized related to contract liabilities, current portion was $0.1 million and $0.6 million in the three-month and six-month fiscal periods ended June 30, 2023, respectively. Revenue recognized related to contract liabilities, current portion was $0.7 million and $1.2 million in the three-month and six-month fiscal periods ended July 1, 2022, respectively.

Contract liabilities, noncurrent portion at June 30, 2023 decreased compared to the balance at December 31, 2022 due to the reclassification of liabilities on the FireBurstTM enhanced fuzing capability program to contract liabilities, current portion. For the three-month and six-month fiscal periods ended June 30, 2023 and July 1, 2022, the Company did not recognize revenue against contract liabilities, noncurrent portion. Refer to Note 14, Commitments and Contingencies, for further information on the Company's offset agreements.