Revenue Recognition | Note 11: Revenue Recognition We implemented Accounting Standard Update No. 2014-09, Revenue from Contracts with Customers (Accounting Standards Codification Topic 606, “ASC 606”), in the first quarter of fiscal 2019 using the modified-retrospective approach, which required us to apply the new guidance retrospectively to revenue transactions completed on or after the effective date. Adopting this new standard did not have a material impact on our consolidated financial statements except for our enhanced presentation and disclosures. As of the beginning of our fiscal 2019, we had identified and implemented all changes required by the new standard, including those related to our accounting policies, controls, and disclosures. Our revenue consists substantially of product sales. We report product sales net of discounts and recognize them when control (rights and obligations associated with the product) passes to the customer. For sales to furniture retailers or distributors, control typically transfers when we ship product. In cases where we sell directly to the end consumer, control of the product is generally transferred upon delivery. For shipping and handling activities, we have elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities as fulfillment activities (rather than as a promised good or service) when the activities are performed even if those activities are performed after the control of the good has been transferred. We expense shipping and handling costs at the time we recognize revenue in accordance with this election. For sales tax, we elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows us to present revenue net of these certain types of taxes. The following table disaggregates our revenue by product category by segment for the quarter ended October 27, 2018: Corporate (Unaudited, amounts in thousands) Upholstery Casegoods Retail and Other Total Motion Upholstery Furniture $ 202,168 $ — $ 85,735 $ — $ 287,903 Stationary Upholstery Furniture 92,246 4,429 25,701 23,695 146,071 Bedroom Furniture — 8,234 1,450 2,460 12,144 Dining Room Furniture — 6,406 2,613 819 9,838 Occasional Furniture 418 13,723 5,067 490 19,698 Other (a) 22,261 (1,415) 19,120 (5,086) 34,880 Total $ 317,093 $ 31,377 $ 139,686 $ 22,378 510,534 Eliminations (71,201) Consolidated Net Sales $ 439,333 (a) The following table disaggregates our revenue by product category by segment for the six months ended October 27, 2018: Corporate (Unaudited, amounts in thousands) Upholstery Casegoods Retail and Other Total Motion Upholstery Furniture $ 389,827 $ — $ 160,692 $ — $ 550,519 Stationary Upholstery Furniture 177,536 8,371 48,865 23,695 258,467 Bedroom Furniture — 16,598 2,305 2,460 21,363 Dining Room Furniture — 12,335 4,196 819 17,350 Occasional Furniture 811 25,711 9,041 490 36,053 Other (b) 42,317 (3,252) 33,815 (1,221) 71,659 Total $ 610,491 $ 59,763 $ 258,914 $ 26,243 955,411 Eliminations (131,383) Consolidated Net Sales $ 824,028 (b) Motion Upholstery Furniture – Includes gross revenue for upholstered furniture, such as recliners, sofas, loveseats, chairs, sectionals and modulars that have a mechanism that allows the back of the product to recline or the product's footrest to extend. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), operators of La-Z-Boy Comfort Studio ® locations, England Custom Comfort Center locations, other major dealers, independent retailers, and the end consumer. Stationary Upholstery Furniture – Includes gross revenue for upholstered furniture, such as sofas, loveseats, chairs, sectionals, modulars, and ottomans that do not have a mechanism. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), operators of La-Z-Boy Comfort Studio ® locations, England Custom Comfort Center locations, other major dealers, independent retailers, and the end consumer. Bedroom Furniture – Includes gross revenue for casegoods furniture typically found in a bedroom, such as beds, chests, dressers, nightstands and benches. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), independent retailers, and the end consumer. Dining Room Furniture – Includes gross revenue for casegoods furniture typically found in a dining room, such as dining tables, dining chairs, storage units and stools. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), independent retailers, and the end consumer. Occasional Furniture – Includes gross revenue for casegoods furniture found throughout the home, such as cocktail tables, chairsides, sofa tables, end tables, and entertainment centers. This gross revenue includes sales to La-Z-Boy Furniture Galleries ® stores (including company-owned stores), independent retailers, and the end consumer. Our consolidated balance sheet includes current assets of $19.6 million that we reported as other receivables. These other receivables represent the remaining consideration to which we are entitled prior to fulfilling our performance obligation. At the beginning of fiscal 2019, we had $12.1 million of other receivables. We receive deposits from end consumers before we recognize revenue, resulting in customer deposits, and in some cases we have the unconditional right to collect the remaining portion of the order price before we fulfill our performance obligation, resulting in deferred revenue (collectively, the “contract liabilities”). At the beginning of fiscal 2019, we had $31.3 million of customer deposits and $12.1 million of deferred revenues. At October 27, 2018, we included $48.8 million of customer deposits and $19.6 million of deferred revenues in accrued expenses and other current liabilities on our consolidated balance sheet. During the quarter and six months ended October 27, 2018, we recognized $1.4 million and $41.5 million, respectively, of revenue that was recorded as a contract liability at the beginning of fiscal 2019. We have elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to recognize the promised amount of consideration without adjusting for the effects of a significant financing component if the contract has a duration of one year or less. As our contracts typically are less than one year in length and do not have significant financing components, we have not adjusted consideration. |