3. Long-term contracts
In March 2013, we entered into a $4.6 million collaborative research and development agreement with a prominent electronics company to incorporate our PicoP® display technology into a display engine that could enable a variety of new products. Based on the terms of this agreement, we recognize development revenue as work progresses on the agreement and as our customer accepts the deliverables using a proportional method based on the lesser of the cumulative proportion of total planned costs to be incurred under the agreement versus the cash payments received plus outstanding billings for work accepted by the customer. During the twelve months ended December 31, 2013, $2.9 million of revenue was recognized on this agreement.
Historically, our contracts with the U.S. government were primarily cost-plus-fixed-fee type contracts. Under the terms of a cost-plus-fixed-fee contract, the U.S. government reimbursed us for negotiated actual direct and indirect cost incurred in performing the contracted services. We were not obligated to spend more than the contract value to complete the contracted services. The period of performance was generally one year. As of December 31, 2013, we were not performing services on any U.S. government contracts.
The following table summarizes the costs incurred on our collaborative research and development agreements and revenue contracts (in thousands):
| December 31, | |||||||||
| 2013 | 2012 | ||||||||
| Costs and estimated earnings incurred on uncompleted contracts | $ | 2,909 | $ | 1,977 | |||||
| Billings on uncompleted contracts | (3,589) | (2,063) | |||||||
| $ | (680) | $ | (86) | ||||||
| Included in accompanying consolidated balance sheets under the following captions: | |||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts | $ | - | $ | 12 | |||||
| Billings in excess of costs and estimated earnings on uncompleted | |||||||||
| contracts | (680) | (98) | |||||||
| $ | (680) | $ | (86) | ||||||