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Revenue Recognition
 3 Months Ended
Apr. 27, 2024
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 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

 

(In thousands)

 

April 27, 2024

 

 

April 29, 2023*

 

United States

 

$

18,106

 

 

$

20,696

 

Europe

 

 

10,429

 

 

 

9,864

 

Canada

 

 

1,759

 

 

 

1,879

 

Central and South America

 

 

1,198

 

 

 

1,200

 

Asia

 

 

1,185

 

 

 

1,471

 

Other

 

 

284

 

 

 

309

 

Total Revenue

 

$

32,961

 

 

$

35,419

 

 

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

Major product types

 

 

Three Months Ended

 

(In thousands)

 

April 27, 2024

 

 

April 29, 2023

 

Hardware

 

$

8,875

 

 

$

11,667

 

Supplies

 

 

18,633

 

 

 

19,070

 

Service and Other

 

 

5,453

 

 

 

4,682

 

Total Revenue

 

$

32,961

 

 

$

35,419

 

 

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 fiscal 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, 2024, we recognized $2.4 million in revenue and the $0.8 million balance was recorded as deferred revenue. During the three months ended April 27, 2024, we recognized an additional $0.2 million which is included in revenue in the condensed consolidated statement of income for the respective period presented, and there is a balance of $0.6 million in deferred revenue at April 27, 2024. The remaining revenue to be recognized will be based on our shipments of the printers during the remainder of 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 $534,000 and $530,000 at April 27, 2024 and January 31, 2024, respectively, and are recorded as deferred revenue in the accompanying condensed consolidated balance sheet. The increase in the deferred revenue balance during the three months ended April 27, 2024 is due to cash payments received in advance of satisfying performance obligations partially offset by revenue recognized during the current period, including $136,000 of revenue recognized that was included in the deferred revenue balance at January 31, 2024.

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 17 years as of April 27, 2024. The balance of these contract assets at January 31, 2024 was $1.3 million. During the three months ended April 27, 2024, we amortized contract costs of $19,000. The balance of deferred incremental direct costs net of accumulated amortization at April 27, 2024 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.