| Contract with Customer, Asset and Liability |
Remaining performance obligations as of September 28, 2018 and December 31, 2017 are presented in the following table: | | | | | | | | | | | | September 28, | | December 31, | (In millions) | | 2018 | | 2017 | Performance Obligations | | $ | 774 |
| | $ | 719 |
|
Cumulative adjustments for the three and nine months ended September 28, 2018 and September 29, 2017 are presented in the following table: | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | | September 28, | | September 29, | | September 28, | | September 29, | (In thousands) | | 2018 | | 2017 | | 2018 | | 2017 | Favorable adjustments | | $ | 3,331 |
| | $ | 5,779 |
| | $ | 13,765 |
| | $ | 14,104 |
| Unfavorable adjustments | | (4,963 | ) | | (2,111 | ) | | (8,851 | ) | | (5,518 | ) | Net favorable adjustments | | $ | (1,632 | ) | | $ | 3,668 |
| | $ | 4,914 |
| | $ | 8,586 |
|
|
| Disaggregation of Revenue |
The following tables present our revenue disaggregated by different categories. Revenue by contract type for the three and nine months ended September 28, 2018 and September 29, 2017 is as follows: | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | | September 28, | | September 29, | | September 28, | | September 29, | (In thousands) | | 2018 | | 2017 | | 2018 | | 2017 | Cost-plus and cost-reimbursable ¹ | | $ | 240,338 |
| | $ | 194,982 |
| | $ | 713,289 |
| | $ | 609,323 |
| Firm-fixed-price | | 67,757 |
| | 74,643 |
| | 236,455 |
| | 209,682 |
| Total revenue | | $ | 308,095 |
| | $ | 269,625 |
| | $ | 949,744 |
| | $ | 819,005 |
| | | | | | | | | | ¹ Includes time and material contracts | | | | | | | | |
Revenue by geographic region in which the contract is performed for the three and nine months ended September 28, 2018 and September 29, 2017 is as follows: | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | | September 28, | | September 29, | | September 28, | | September 29, | (In thousands) | | 2018 | | 2017 | | 2018 | | 2017 | Middle East | | $ | 223,636 |
| | $ | 217,312 |
| | $ | 662,734 |
| | $ | 660,020 |
| United States | | 54,379 |
| | 36,499 |
| | 203,015 |
| | 112,833 |
| Europe | | 30,080 |
| | 15,814 |
| | 83,995 |
| | 46,152 |
| Total revenue | | $ | 308,095 |
| | $ | 269,625 |
| | $ | 949,744 |
| | $ | 819,005 |
|
Revenue by contract relationship for the three and nine months ended September 28, 2018 and September 29, 2017 is as follows: | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | | September 28, | | September 29, | | September 28, | | September 29, | (In thousands) | | 2018 | | 2017 | | 2018 | | 2017 | Prime contractor | | $ | 290,090 |
| | $ | 262,372 |
| | $ | 892,206 |
| | $ | 799,439 |
| Subcontractor | | 18,005 |
| | 7,253 |
| | 57,538 |
| | 19,566 |
| Total revenue | | $ | 308,095 |
| | $ | 269,625 |
| | $ | 949,744 |
| | $ | 819,005 |
|
Revenue by customer for the three and nine months ended September 28, 2018 and September 29, 2017 is as follows: | | | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | | September 28, | | September 29, | | September 28, | | September 29, | (In thousands) | | 2018 | | 2017 | | 2018 | | 2017 | Army | | $ | 224,038 |
| | $ | 214,152 |
| | $ | 700,265 |
| | $ | 682,891 |
| Air Force | | 64,278 |
| | 49,435 |
| | 189,954 |
| | 119,896 |
| Navy | | 8,567 |
| | 6,038 |
| | 26,912 |
| | 16,218 |
| Other | | 11,212 |
| | — |
| | 32,613 |
| | — |
| Total revenue | | $ | 308,095 |
| | $ | 269,625 |
| | $ | 949,744 |
| | $ | 819,005 |
|
|
| Schedule of Effect of New Accounting Principle |
The effects of the adoption of ASC Topic 606, using the modified retrospective method on January 1, 2018, are outlined in the following table: | | | | | | | | | | | | | | (In thousands) | | Year Ended December 31, 2017 | | Impact | | January 1, 2018 | Receivables (unbilled) | | $ | 121,601 |
| | $ | 10,457 |
| | $ | 132,058 |
| Costs incurred in excess of billings | | $ | 12,751 |
| | $ | (12,751 | ) | | $ | — |
| Billings in excess of costs | | $ | 3,766 |
| | $ | (3,766 | ) | | $ | — |
| Impact to contract liabilities | | $ | — |
| | $ | 1,621 |
| | $ | 1,621 |
| Retained earnings, net of tax | | $ | 117,415 |
| | $ | (77 | ) | | $ | 117,338 |
|
The following table reflects the balances of financial statement line items under the new ASC Topic 606 revenue recognition guidance compared to the former ASC Topic 605 revenue guidance for the nine months ended September 28, 2018: | | | | | | | | | | | | Nine Months Ended | | | September 28, 2018 | | | New Guidance | | Former Guidance | (In thousands) | | ASC Topic 606 | | ASC Topic 605 | Revenue | | $ | 949,744 |
| | $ | 943,788 |
| Cost of revenue | | $ | 865,078 |
| | $ | 856,286 |
| Selling, general and administrative expenses | | $ | 48,990 |
| | $ | 48,990 |
| Operating income | | $ | 35,676 |
| | $ | 38,512 |
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