Annual report pursuant to Section 13 and 15(d)

Note 4 - Revenue Recognition

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Note 4 - Revenue Recognition
12 Months Ended
Jun. 30, 2019
Notes to Financial Statements  
Revenue from Contract with Customer [Text Block]
(
4
)
Revenue Recognition
 
We adopted ASC
606
using the cumulative effect approach, which required us to apply the new guidance retrospectively to revenue transactions completed on or after
July 1, 2018.
 
Upon adoption of ASC
606,
we have elected the following accounting policies and practical expedients:
 
 
We recognize shipping and handling expense 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. Accordingly, we record the expenses for shipping and handling activities at the same time we recognize net sales.
 
 
We 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).
 
 
We do
not
adjust net sales for the effects of financing components if the contract has a duration of
one
year or less, as we believe that we will receive payment from the customer within
one
year of when we transfer control of the related goods.
 
Our reported revenue (net sales) consist substantially of product sales. We report product sales net of discounts and recognize them at the point in time when control transfers to the customer. For sales to our customers in our wholesale segment, control typically transfers when the product is shipped. For sales in our retail segment, control generally transfers upon delivery to the customer.
 
Estimated refunds for returns and allowances are recorded using our historical return patterns. Under ASC
606,
we record estimated refunds for sales returns on a gross basis rather than on a net basis and have recorded an asset for product we expect to receive back from customers in
Prepaid expenses and other current assets
and a corresponding refund liability in
Accounts
p
ayable and
a
ccrued
e
xpenses
on our consolidated balance sheets. At
June 30, 2019
and
2018,
these amounts were immaterial.
 
In many cases we receive deposits from customers before we have transferred control of our product to our customers, resulting in contract liabilities. These contract liabilities are reported as a current liability in
Customer Deposits
on our consolidated balance sheets. At
June 30, 2018
we had customer deposits of
$61.2
million, which were subsequently recognized as net sales upon delivery to the customer during fiscal
2019.
Customer deposits totaled
$56.7
million at
June 30, 2019.
 
The following table disaggregates our net sales by product category by segment for the fiscal year ended
June 30, 2019:
 
(Amounts in thousands)
 
Wholesale
   
Retail
   
Total
 
Upholstery furniture
  $
216,460
    $
263,744
    $
480,204
 
Case goods furniture
   
151,999
     
172,293
     
324,292
 
Home accents
   
77,978
     
130,325
     
208,303
 
Other
   
(4,886
)    
23,467
     
18,581
 
Total before intercompany eliminations
  $
441,551
    $
589,829
     
1,031,380
 
Eliminations
   
 
     
 
     
(284,696
)
Consolidated Net Sales
   
 
     
 
    $
746,684
 
 
 
 
Upholstery furniture includes fabric-covered items such as sleepers, recliners and other motion furniture, chairs, ottomans, custom pillows, sofas, loveseats, cut fabrics and leather.
 
 
Case goods furniture includes items such as beds, dressers, armoires, tables, chairs, buffets, entertainment units, home office furniture, and wooden accents.
 
 
Home accents includes items such as window treatments and drapery hardware, wall décor, florals, lighting, clocks, mattresses, bedspreads, throws, pillows, decorative accents, area rugs, wall coverings and home and garden furnishings.
 
 
Other includes net sales for product delivery, the Ethan Allen Hotel room rentals and banquets, our net share of
third
-party furniture protection plans, non-inventoried parts, and consulting and other fees, net of discounts, allowances and other sales incentives.