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Revenue Recognition
 9 Months Ended
Nov. 02, 2024
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)

 

November 2, 2024

 

 

October 28, 2023

 

 

November 2, 2024

 

 

October 28, 2023

 

United States

 

$

23,493

 

 

$

20,953

 

 

$

66,834

 

 

$

61,773

 

Europe

 

 

10,330

 

 

 

11,292

 

 

 

29,522

 

 

 

31,088

 

Canada

 

 

2,118

 

 

 

2,311

 

 

 

6,617

 

 

 

6,480

 

Asia

 

 

2,601

 

 

 

1,670

 

 

 

5,867

 

 

 

4,920

 

Central and South America

 

 

1,454

 

 

 

995

 

 

 

3,988

 

 

 

3,220

 

Other

 

 

426

 

 

 

328

 

 

 

1,094

 

 

 

1,012

 

Total Revenue

 

$

40,422

 

 

$

37,549

 

 

$

113,922

 

 

$

108,493

 

Major product types:

 

 

Three Months Ended

 

 

Nine Months Ended

 

(In thousands)

 

November 2, 2024

 

 

October 28, 2023

 

 

November 2, 2024

 

 

October 28, 2023

 

Hardware

 

$

11,622

 

 

$

12,865

 

 

$

32,856

 

 

$

35,800

 

Supplies

 

 

20,908

 

 

 

19,973

 

 

 

61,885

 

 

 

58,744

 

Service and Other

 

 

7,892

 

 

 

4,711

 

 

 

19,181

 

 

 

13,949

 

Total Revenue

 

$

40,422

 

 

$

37,549

 

 

$

113,922

 

 

$

108,493

 

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 nine months ended November 2, 2024, we recognized an additional $0.8 million which is included in revenue in the condensed consolidated statement of income for the respective period presented, and there is no balance in deferred revenue at November 2, 2024.

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 $378,000 and $530,000 at November 2, 2024 and January 31, 2024, 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 November 2, 2024 is due to revenue recognized during the current period, including $266,000 of revenue recognized that was included in the deferred revenue balance at January 31, 2024, 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 17 years as of November 2, 2024. The balance of these contract assets at January 31, 2024 was $1.3 million. We also recognize an asset for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered. In fiscal 2025, we incurred $0.3 million of costs to fulfill a contract which will be amortized over approximately 17 years. During the three and nine months ended November 2, 2024, we amortized contract costs of $23,000 and $65,000, respectively. The balance of deferred incremental direct costs net of accumulated amortization at November 2, 2024 was $1.5 million, of which $0.1 million is reported in other current assets, and $1.4 million is reported in other assets in the accompanying condensed consolidated balance sheet.