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CONTRACT ASSETS AND LIABILITIES
 9 Months Ended
Sep. 30, 2023
Contract Assets And Liabilities  
CONTRACT ASSETS AND LIABILITIES

11. CONTRACT ASSETS AND LIABILITIES

 

Contract assets include unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized from customer arrangements, including licensing, exceeds the amount billed to the customer, and right to payment is not just subject to the passage of time. Amounts may not exceed their net realizable value. Contract assets are generally classified as current. The Company classifies the noncurrent portion of contract assets under other assets in its condensed consolidated balance sheets.

 

Contract liabilities consist of advance payments and billings in excess of cost incurred and deferred revenue.

 

Net contract assets (liabilities) consisted of the following:

   

   September 30, 2023   December 31, 2022   $ Change   % Change 
Contract assets —current  $5,882,340   $4,068,364   $1,813,976    45%
Contract liabilities—current   (668,046)   (930,500)   262,454    (28)%
Contract liabilities—noncurrent   (23,431)   (6,190)   (17,241)   279%
Net contract assets  $5,190,863   $3,131,674   $2,059,189    66%

 

The $2.0 million increase in the Company’s net contract assets at September 30, 2023 as compared to December 31, 2022 was primarily due to a change in its fixed price contracts with the U.S. government that resulted in revenue recognized in excess of amounts billed and product revenue recognized over time for defense programs.

 

In the three and nine months ended September 30, 2023, the Company recognized revenue of less than $0.1 million and approximately $0.7 million, respectively, related to our contract liabilities at December 31, 2022. In the three and nine months ended September 24, 2022, the Company recognized revenue of $0.5 million and $3.6 million, respectively, related to our contract liabilities at December 25, 2021.

 

The Company did not recognize impairment losses on our contract assets in the three or nine months ended September 30, 2023 or September 24, 2022.

 

Performance Obligations

 

The Company’s revenue recognition related to performance obligations that were satisfied at a point in time and over time were as follows:

  

   Three months ended   Three months ended   Nine months ended   Nine months ended 
   September 30, 2023   September 24, 2022   September 30, 2023   September 24, 2022 
Point in time   24%   29%   27%   23%
Over time   76%   71%   73%   77%

 

Remaining performance obligations represent the transaction price of orders for which work has not been performed and excludes unexercised contract options, potential orders under ordering-type contracts (e.g., indefinite-delivery, indefinite-quantity (“IDIQ”)) and purchase orders that we have historically allowed customers to cancel or reschedule. As of September 30, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $14.2 million which the Company expects to recognize over the next 12 months. The remaining performance obligations represent amounts to be earned under government contracts, which are subject to cancellation.