NOTE

– REVENUE

Adoption of ASU

2014

09,

Revenue from Contracts with Customers (Topic

606

)

January 1, 2018,

the Company adopted ASU

2014

using the modified retrospective method applied to those contracts which were

not

completed as of

December 31, 2017.

Results for reporting periods beginning after

January 1, 2018

are presented under Accounting Standards Codification (“ASC”) Topic

606,

while prior period amounts are

not

adjusted and continue to be reported in accordance with historic accounting guidance under ASC Topic

605.

After assessment of the cumulative impact of adopting ASU

2014

09,

it was determined that the cumulative effect adjustment required under the new guidance was immaterial and therefore the Company did

not

record a retrospective adjustment to the opening balance of retained earnings at

January 1, 2018.

Disaggregation of Revenue

The following tables disaggregate total net sales by major product category and geographic location:

	Product Category
	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Pumps and pump systems	$	89,835	$	79,946	$	268,485	$	241,357
Repair parts for pumps and pump systems and other		13,058		14,030		42,839		43,094
Total net sales	$	102,893	$	93,976	$	311,324	$	284,451

	Geographic Location
	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
United States	$	65,285	$	58,819	$	201,237	$	181,447
Foreign countries		37,608		35,157		110,087		103,004
Total net sales	$	102,893	$	93,976	$	311,324	$	284,451

International sales represented approximately

37%

of total net sales for both the

third

quarter of

2018

and

2017

and were made to customers in many different countries around the world.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to a customer, and is the unit of account in ASC Topic

606.

The transaction price for a customer contract is allocated to each distinct performance obligation and recognized as revenue when, or as, the Company’s performance obligation is satisfied. Substantially all of our customer contracts are fixed-price contracts and the majority of our customer contracts have a single performance obligation, as the promise to transfer the individual goods or services is

not

separately identifiable from other promises in the contract. For customer contracts with multiple performance obligations, the Company allocates revenue to each performance obligation based on its relative standalone selling price, which is generally determined based on standalone selling prices charged to customers or using expected cost plus margin.

All of the Company's performance obligations, and associated revenue, are generally transferred to customers at a point in time, with the exception of certain highly customized pump products, which are transferred to the customer over time. Revenue from performance obligations transferred to the customer over time and recognized in the

third

quarter and

first

nine

months of

2018

was

$0.4

million and

$1.0

million, respectively, greater than what would have been recorded prior to the adoption of ASU

2014

09.

September 30, 2018,

the Company had

$122.4

million of remaining performance obligations, also referred to as backlog. The Company expects to recognize as revenue substantially all of its remaining performance obligations within

one

year.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) on the consolidated balance sheets. For certain highly customized pump products, revenue is recognized over time before the customer is invoiced, resulting in contract assets. Sometimes the Company receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities. These contract assets and liabilities are reported on the consolidated balance sheets as a component of Other Assets and Deferred Revenue and customer deposits, respectively, on a contract-by-contract basis at the end of each reporting period.

The beginning and ending balances of the Company’s contract assets and liabilities as of

September 30, 2018

are as follows:

	Beginning balances at December 31, 2017		Ending balances at September 30, 2018
Contract assets	$	-	$	962
Contract liabilities	$	4,098	$	3,887

Revenue recognized for the

nine

months ended

September 30, 2018

that was included in the contract liability balance at

December 31, 2017

was

$3.4

million.