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Revenue Recognition

3 Months Ended

Jul. 27, 2019

Revenue Recognition

Revenue Recognition

Note 12: Revenue Recognition

Our revenue is primarily derived from 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 or unit for the quarter ended July 27, 2019:


											Corporate
(Unaudited, amounts in thousands)		Upholstery			Casegoods			Retail			and Other			Total
Motion Upholstery Furniture		$	179,522		$	—		$	85,184		$	—		$	264,706
Stationary Upholstery Furniture			87,509			4,144			29,153			22,952			143,758
Bedroom Furniture			—			8,193			1,447			1,182			10,822
Dining Room Furniture			—			5,405			2,599			394			8,398
Occasional Furniture			312			10,823			5,125			361			16,621
Other (1)			26,073			(1,430)			19,488			(4,337)			39,794
Total		$	293,416		$	27,135		$	142,996		$	20,552			484,099

						Eliminations									(70,466)
						Consolidated Net Sales								$	413,633

(1)

Primarily includes revenue for delivery, advertising, royalties, parts, accessories, after-treatment products, tariff surcharges, discounts & allowances, rebates and other sales incentives.

The following table disaggregates our revenue by product category by segment for the quarter ended July 28, 2018:



(Unaudited, amounts in thousands)		Upholstery			Casegoods			Retail			Total
Motion Upholstery Furniture		$	187,659		$	—		$	74,957		$	262,616
Stationary Upholstery Furniture			85,290			3,942			23,164			112,396
Bedroom Furniture			—			8,364			855			9,219
Dining Room Furniture			—			5,929			1,583			7,512
Occasional Furniture			393			11,988			3,974			16,355
Other (1)			20,056			(1,837)			14,695			32,914
Total		$	293,398		$	28,386		$	119,228			441,012

						Corporate and Other (2)						3,865
						Eliminations						(60,182)
						Consolidated Net Sales					$	384,695

(1)

Primarily includes revenue for delivery, advertising, royalties, parts, accessories, after-treatment products, discounts & allowances, rebates and other sales incentives

(2)

Primarily includes revenue for royalties and intercompany commissions

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 $18.9 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 2020, we had $17.0 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 July 27, 2019, we included $48.8 million of customer deposits and $18.9 million of deferred revenues in accrued expenses and other current liabilities on our consolidated balance sheet. At the beginning of fiscal 2020, we had $42.8 million of customer deposits and $17.0 million of deferred revenues. During the quarter ended July 27, 2019, we recognized revenue of $52.4 million related to our contract liabilities.

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.