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Revenue Recognition
 9 Months Ended
Oct. 28, 2023
Revenue from Contract with Customer [Abstract]  
Revenue Recognition

Note 4 – 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 and networking hardware 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

 

 

Nine Months Ended

 

(In thousands)

 

October 28, 2023

 

 

October 29, 2022*

 

 

October 28, 2023

 

 

October 29, 2022*

 

United States

 

$

20,953

 

 

$

22,473

 

 

$

61,773

 

 

$

61,168

 

Europe

 

 

11,292

 

 

 

11,447

 

 

 

31,088

 

 

 

26,748

 

Canada

 

 

2,311

 

 

 

2,392

 

 

 

6,480

 

 

 

6,472

 

Asia

 

 

1,670

 

 

 

1,480

 

 

 

4,920

 

 

 

4,206

 

Central and South America

 

 

995

 

 

 

1,311

 

 

 

3,220

 

 

 

3,222

 

Other

 

 

328

 

 

 

302

 

 

 

1,012

 

 

 

858

 

Total Revenue

 

$

37,549

 

 

$

39,405

 

 

$

108,493

 

 

$

102,674

 

 

*Certain amounts have been reclassified to conform to the current year's presentation.

Major product types

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

October 28, 2023

 

 

October 29, 2022

 

 

October 28, 2023

 

 

October 29, 2022

 

Hardware

 

$

12,865

 

 

$

11,947

 

 

$

35,800

 

 

$

29,885

 

Supplies

 

 

19,973

 

 

 

22,945

 

 

 

58,744

 

 

 

60,055

 

Service and Other

 

 

4,711

 

 

 

4,513

 

 

 

13,949

 

 

 

12,734

 

Total Revenue

 

$

37,549

 

 

$

39,405

 

 

$

108,493

 

 

$

102,674

 

 

In December 2022, we entered into an amended contract with one of our T&M customers that provided for a total payment of $3.25 million to us as a result of our claims allowable under French law relating to additional component costs we have incurred and will continue to incur in order to supply aerospace printers under the contract for the period beginning in April 2022 and continuing through 2025. Revenue from this arrangement will be recognized in proportion to the total estimated shipments through the end of the contract period. As of January 31, 2023, we have recognized $1.1 million in revenue and the $2.15 million balance was recorded as deferred revenue. During the three and nine months ended October 28, 2023, we recognized an additional $0.4 million and $1.0 million, respectively, which is included in revenue in the condensed consolidated statement of income for the respective periods presented, and there is a balance of $1.1 million in the deferred revenue at October 28, 2023. The remaining revenue to be recognized will be based on our shipments of the printers during the remainder of fiscal year 2024 and during fiscal year 2025.

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 $304,000 and $412,000 at October 28, 2023 and January 31, 2023, respectively, and are recorded as deferred revenue in the accompanying condensed consolidated balance sheet. The decrease in the deferred revenue balance during the nine months ended October 28, 2023 is due to revenue recognized during the current period, including $521,000 of revenue recognized that was included in the deferred revenue balance at January 31, 2023. The amount of revenue recognized for the period was partially offset by cash payments received in advance of satisfying performance obligations.

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. These costs are deferred and amortized over the remaining useful life of these contracts, which we currently estimate to be approximately 18 years as of October 28, 2023. The balance of these contract assets at January 31, 2023 was $1.4 million. During the three and nine months ended October 28, 2023, we amortized contract costs of $19,000 and $56,000, respectively. The balance of deferred incremental direct costs net of accumulated amortization at October 28, 2023 was $1.3 million, 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.