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Revenue Recognition | 6 Months Ended
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Jun. 30, 2018
Revenue from Contract with Customer [Abstract] |
Revenue Recognition | Revenue Recognition Revenue from Contracts with Customers On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method. The largest impacts as a result of the new standard are the new required qualitative and quantitative disclosures. Other presentation and disclosure changes include the classification of royalty income to net sales and changes in the balance sheet classification and measurement for accrued sales returns and accrued warranty expenses. The Company recognized the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of retained earnings for approximately $3.0 million, net of tax. Additionally, as a result of the new standard and effective January 1, 2018, the Company classifies royalty income within net sales. The comparative information has not been restated and continues to be reported under the accounting standards in effect for each period presented. The Company evaluated the impact of the adoption on the classification of cooperative advertising programs and other promotional programs with the Company's customers. The impact of adoption to these promotional programs did not result in material changes in the Company's recognition or presentation of costs within the Company's Condensed Consolidated Statements of Income. The following tables summarize the impact of adopting Topic 606 on the Company’s Condensed Consolidated Financial Statements as of and for the periods ended June 30, 2018:
| Three Months Ended June 30, 2018 |  | Six Months Ended June 30, 2018
(in millions) | As Reported |  | Balances Without Adoption of Topic 606 |  | Effect of Change Higher/(Lower) |  | As Reported |  | Balances Without Adoption of Topic 606 |  | Effect of Change Higher/(Lower)
Statement of Income |  |  |  |  |  |  |  |  |  |  |
Net sales | $ | 669.7 |  |  | $ | 664.2 |  |  | $ | 5.5 |  |  | $ | 1,317.7 |  |  | $ | 1,306.9 |  |  | $ | 10.8 |
Royalty income, net of royalty expense | — |  |  | 5.5 |  |  | (5.5 | ) |  | — |  |  | 10.8 |  |  | (10.8 | )
| June 30, 2018
(in millions) | As Reported |  | Balances Without Adoption of Topic 606 |  | Effect of Change Higher/(Lower)
Balance Sheet |  |  |  |  |
Assets |  |  |  |  |
Prepaid expenses and other current assets | $ | 69.8 |  |  | $ | 68.6 |  |  | $ | 1.2 |
Deferred income taxes | 23.6 |  |  | 22.7 |  |  | 0.9 |
Other non-current assets | 236.2 |  |  | 235.3 |  |  | 0.9 |
Liabilities |  |  |  |  |
Accrued expenses and other current liabilities | $ | 227.2 |  |  | $ | 224.7 |  |  | $ | 2.5 |
Other non-current liabilities | 209.0 |  |  | 206.2 |  |  | 2.8 |
Stockholders' Equity |  |  |  |  |
Total stockholders' equity | $ | 158.0 |  |  | $ | 160.3 |  |  | $ | (2.3 | )
Disaggregation of Revenue The following table presents the Company's disaggregated revenue by channel, product and geographical region, including a reconciliation of disaggregated revenue by segment, for the three and six months ended June 30, 2018:
| Three Months Ended June 30, 2018 |  | Six Months Ended June 30, 2018
(in millions) | North America |  | International |  | Consolidated |  | North America |  | International |  | Consolidated
Channel |  |  |  |  |  |  |  |  |  |  |
Wholesale | $ | 494.3 |  |  | $ | 108.5 |  |  | $ | 602.8 |  |  | $ | 948.3 |  |  | $ | 242.7 |  |  | $ | 1,191.0 |
Direct | 33.5 |  |  | 33.4 |  |  | 66.9 |  |  | 64.5 |  |  | 62.2 |  |  | 126.7 |
Net sales | $ | 527.8 |  |  | $ | 141.9 |  |  | $ | 669.7 |  |  | $ | 1,012.8 |  |  | $ | 304.9 |  |  | $ | 1,317.7 |
| North America |  | International |  | Consolidated |  | North America |  | International |  | Consolidated
Product |  |  |  |  |  |  |  |  |  |  |
Bedding products | $ | 497.4 |  |  | $ | 112.8 |  |  | $ | 610.2 |  |  | $ | 949.7 |  |  | $ | 246.0 |  |  | $ | 1,195.7 |
Other products | 30.4 |  |  | 29.1 |  |  | 59.5 |  |  | 63.1 |  |  | 58.9 |  |  | 122.0 |
Net sales | $ | 527.8 |  |  | $ | 141.9 |  |  | $ | 669.7 |  |  | $ | 1,012.8 |  |  | $ | 304.9 |  |  | $ | 1,317.7 |
| North America |  | International |  | Consolidated |  | North America |  | International |  | Consolidated
Geographical region |  |  |  |  |  |  |  |  |  |  |
United States | $ | 477.7 |  |  | $ | — |  |  | $ | 477.7 |  |  | $ | 917.9 |  |  | $ | — |  |  | $ | 917.9 |
Canada | 50.1 |  |  | — |  |  | 50.1 |  |  | 94.9 |  |  | — |  |  | 94.9 |
International | — |  |  | 141.9 |  |  | 141.9 |  |  | — |  |  | 304.9 |  |  | 304.9 |
Net sales | $ | 527.8 |  |  | $ | 141.9 |  |  | $ | 669.7 |  |  | $ | 1,012.8 |  |  | $ | 304.9 |  |  | $ | 1,317.7 |
The North America and International segments sell product through two channels: Wholesale and Direct. The Wholesale channel includes all product sales to third party retailers, including third party distribution, hospitality and healthcare. The Direct channel includes product sales to company-owned stores, e-commerce and call centers. The North America and International segments classify products into two major categories: Bedding and Other. Bedding products include mattresses, foundations and adjustable foundations. Other products include pillows, mattress covers, sheets, cushions and various other comfort products. The Wholesale channel also includes income from royalties derived by licensing Sealy® and Stearns & Foster® brands, technology and trademarks to other manufacturers. The licenses include rights for the licensees to use trademarks as well as current proprietary or patented technology that the Company utilizes. The Company also provides its licensees with product specifications, research and development, statistical services and marketing programs. The Company recognizes royalty income based on the occurrence of sales of Sealy® and Stearns & Foster® branded products by various licensees. For product sales in each of the Company's channels, the Company recognizes a sale when the obligations under the terms of the contract with the customer is satisfied, which is generally when control of the product has transferred to the customer. Transferring control of each product sold is considered a separate performance obligation. The Company transfers control and recognizes a sale when it ships the product to a customer or when the customer receives the product based upon agreed shipping terms. Each unit sold is considered an independent, unbundled performance obligation. The Company does not have any additional performance obligations other than product sales that are material in the context of the contract. The Company also offers assurance type warranties on certain of its products. A warranty is considered an assurance type warranty if it provides the consumer with assurance that the product will function as intended. Assurance type warranties are not accounted for as separate performance obligations under the revenue model. The transaction price is measured as the amount of consideration the Company expects to receive in exchange for transferring goods. The amount of consideration the Company receives, and correspondingly, the revenue that is recognized, varies due to sales incentives and returns the Company offers to its wholesale and retail channel customers. Specifically, the Company extends volume discounts, as well as promotional allowances, floor sample discounts, commissions paid to retail associates and slotting fees to its Wholesale channel customers and reflects these amounts as a reduction of sales at the time revenue is recognized based on historical experience. The Company allows returns following a sale, depending on the channel and promotion. The Company reduces revenue and cost of sales for its estimate of the expected returns, which is primarily based on the level of historical sales returns. The Company does not offer extended payment terms beyond one year to customers. As such, the Company does not adjust its consideration for financing arrangements. The Company is subject to certain non-income taxes in certain jurisdictions including, but not limited to, sales tax, value added tax, excise tax and other taxes. These taxes are excluded from the transaction price, and therefore, excluded from revenue. The Company has elected to account for shipping and handling activities as a fulfillment cost as permitted by Topic 606. Accordingly, the Company reflects all amounts billed to customers for shipping and handling in revenue and the costs of fulfillment in cost of sales.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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