NOTE

REVENUE FROM CONTRACTS WITH CUSTOMERS

The following table represents a disaggregation of revenue from contracts for the

three

and

nine

months ended

September 30, 2018

and

September 30, 2017:

(In thousands)	Three Months Ended				Nine Months Ended
Category	September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Aerospace		429		6,410		6,508		20,346
Industrial		755		1,653		5,963		5,035
Research		503		526		2,378		1,988
Point in time		2,341		2,243		4,768		3,943
Net revenue		4,028		10,832		19,617		31,312

Judgment is required to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.

Changes in estimates for sales of systems occur for a variety of reasons, including but

not

limited to (i) build accelerations or delays, (ii) product cost forecast changes, (iii) cost related change orders or add-ons, or (iv) changes in other information used to estimate costs. Changes in estimates

may

have a material effect on the Company’s consolidated statements of operations. The table below outlines the impact on revenue of net changes in estimated transaction prices and input costs for systems related sales contracts (both increases and decreases) for the

three

and

nine

months ended

September 30, 2018

as well as the number of projects that comprise such changes. Also included in the table is the net change in estimate as a percentage of the aggregate revenue for such projects.

	Three Months Ended			Nine Months Ended
(In thousands)	September 30, 2018			September 30, 2018
Increase in revenue from net changes in transaction prices	$	71			146
(Decrease) in revenue from net changes in input cost estimates		(1,170	)		(1,740	)
Net (decrease) in revenue from net changes in estimates		(1,099	)		(1,594	)

Number of projects		15			15

Net change in estimate as a percentage of aggregate revenue for associated projects		(2.4	%)		(3.4	%)

For the

three

and

nine

months ended

September 30, 2018,

revenue decreased by

$1,099,000

and

$1,594,000,

respectively, from net changes in transaction prices, input cost estimates, product cost overruns and product cost forecast changes related to redesign of certain systems.

Contract Assets and Liabilities

Contract assets consist of (i) retainage which represent the earned, but unbilled, portion for which payment is deferred by the customer until certain contractual milestones are met; and (ii) unbilled receivables which represent revenue that has been recognized in advance of billing the customer, which is common for long-term contracts. Contract liabilities consist of customer advances and billings in excess of revenue recognized.

Contract Assets and Liabilities

During the

nine

months ended

September 30, 2018,

the decrease in contract assets of approximately

$5.8

million was primarily driven by additional billed receivables during the period, for those projects that certain milestones had been reached. During the

nine

months ended

September 30, 2018,

the decrease in contract liabilities of

$237,000

was primarily due to invoicing for those projects.