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Revenue Recognition
 6 Months Ended
Jul. 31, 2021
Revenue from Contract with Customer [Abstract]  
Revenue Recognition
Note 3 – Revenue Recognition
We derive revenue from the sale of (i) hardware, including digital color label printers and specialty OEM printing systems, portable data acquisition systems and airborne printers used in the flight deck and cabin of military, commercial and business aircraft, (ii) related supplies required in the operation of the hardware, (iii) repairs and maintenance of hardware and (iv) service agreements.
Revenues disaggregated by primary geographic markets and major product types are as follows:
Primary geographical markets:
 
    
Three Months Ended
     
Six Months Ended
  
(In thousands)   
July 31,
2021
     
August 
1
,
20
20
     
July 31,
2021
     
August 1,
2020
  
United States
    $ 17,181      $ 17,866      $ 33,874      $ 37,655  
Europe
      7,826        6,314        16,425        13,764  
Canada
      1,491        1,452        3,037        2,880  
Asia
      1,964        831        3,049        1,841  
Central and South America
      995        914        1,756        1,868  
Other
      388        281        782        570  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total Revenue
    $ 29,845      $ 27,658      $ 58,923      $ 58,578  
    
 
 
     
 
 
     
 
 
     
 
 
  
Major product types:
 
    
Three Months Ended
     
Six Months Ended
  
(In thousands)   
July 31,
2021
     
August 1,
2020
     
July 31,
2021
     
August 1,
2020
  
Hardware
    $ 7,878      $ 8,439      $ 15,525      $ 17,354  
Supplies
      18,678        17,140        36,888        36,258  
Service and Other
      3,289        2,079        6,510        4,966  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total Revenue
    $ 29,845      $ 27,658      $ 58,923      $ 58,578  
    
 
 
     
 
 
     
 
 
     
 
 
  
Contract Assets and Liabilities
We normally do not have contract assets, which are primarily unbilled accounts receivable that are conditional on something other than the passage of time. Our contract liabilities, which represent billings in excess of revenue recognized, are related to advanced billings for purchased service agreements and extended warranties. Contract liabilities were $324,000 and $285,000 at July 31, 2021 and January 31, 202
1
, respectively, and are recorded as deferred revenue in the accompanying condensed consolidated balance sheet. The decrease in the deferred revenue balance during the six months ended July 31, 2021 is primarily due to cash payments received in advance of satisfying performance obligations in the current period, offset by $202,000 of revenue recognized during the period that was included in the deferred revenue balance at January 31, 2021.
Contract Costs
We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain costs related to obtaining sales contracts for our aerospace printer products meet the requirement to be capitalized. In the second quarter of the current year, we extended the remaining useful life of these deferred costs from 6 years to 20 years and changed the amortization method from units sold to the straight-line method.
We believe these changes, based on the life of the aircraft under the applicable sales contracts, appropriately reflects a more systematic and rational approach. This change is being treated as a change in accounting estimate that is effected by a change in accounting principle. The impact on net income was immaterial for the six month period ended July 31, 2021. The balance of these contract assets at January 31, 2021 was
$0.8
million and
 in the second quarter of the current year, we incurred an additional $0.4
million in contract costs which will be amortized over
 20 years. We amortized $26,000 of direct costs for the six months ended July 31, 2021, and the balance of deferred incremental direct costs net of accumulated amortization at July 31, 2021 was $1.3
milli
on
 
of which $0.1
million is reported in other current assets and $
1.2
million is reported in other assets in the accompanying condensed consolidated balance sheet.