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Note 4 - Revenue Recognition | 6 Months Ended
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Dec. 31, 2021
Notes to Financial Statements |
Revenue from Contract with Customer [Text Block] |
(4) | Revenue Recognition
Our reported revenue (net sales) consists 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. The majority of our shipping agreements are freight-on-board shipping point and risk of loss transfers to our wholesale customer once the product is out of our control. Accordingly, revenue is recognized for product shipments on third-party carriers at the point in time that our product is loaded onto the third-party container or truck. For sales in our retail segment, control generally transfers upon delivery to the customer. As our contracts with customers are typically less than one year in length and do not have significant financing components, we do not adjust promised consideration. Shipping and Handling. Our practice has been to sell our products at the same delivered cost to all retailers and customers nationwide, regardless of shipping point. Costs incurred by the Company to deliver finished goods are expensed and recorded in selling, general and administrative expenses. 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. Sales Taxes. 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). Sales taxes collected are not recognized as revenue but are included in Accounts payable and accrued expenses on the consolidated balance sheets as it is ultimately remitted to governmental authorities. Returns and Allowances. Estimated refunds for returns and allowances are based on our historical return patterns. We record these estimated sales refunds 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 Other current liabilities on our consolidated balance sheets. At December 31, 2021 and June 30, 2021, these amounts were immaterial. Allowance for Doubtful Accounts. Accounts receivable arise from the sale of products on trade credit terms and is presented net of allowance for doubtful accounts. We maintain an allowance for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is based on a review of specifically identified accounts in addition to an overall aging analysis. Judgments are made with respect to the collectability of accounts receivable based on historical experience and current economic trends. On a monthly basis, we review all significant accounts as to their past due balances, as well as collectability of the outstanding trade accounts receivable for possible write-off. It is our policy to write-off the accounts receivable against the allowance account when we deem the receivable to be uncollectible. Additionally, we review orders from retailers that are significantly past due, and we ship product only when our ability to collect payment from our customer for the new order is probable. At December 31, 2021 and June 30, 2021, the allowance for doubtful accounts was immaterial. Commissions. We capitalize commission fees paid to our associates as contract assets within Prepaid expenses and other current assets on our consolidated balance sheets. These prepaid commissions are subsequently recognized as a selling expense upon delivery (when we have transferred control of our product to our customer). At December 31, 2021, we had prepaid commissions of $22.1 million, which we expect to recognize during the remainder of fiscal 2022 as Selling, general and administrative expenses within our consolidated statements of comprehensive income. Customer Deposits. In most cases we receive deposits from customers before we have transferred control of our product to our customers, resulting in contract liabilities. These customer deposits are reported as a current liability in Customer deposits and deferred revenue on our consolidated balance sheets. At June 30, 2021, we had customer deposits of $130.6 million, of which we recognized $44.3 million and $113.0 million as net sales upon delivery to the customer during the three and six months ended December 31, 2021. Customer deposits totaled $124.2 million at December 31, 2021. The following table disaggregates our net sales by product category by segment for the three months ended December 31, 2021 (in thousands):
|  | Wholesale |  |  | Retail |  |  | Eliminations(1) |  |  | Total |
Upholstery(2) |  | $ | 62,428 |  |  | $ | 91,195 |  |  | $ | (46,274 | ) |  | $ | 107,349 |
Case goods(3) |  |  | 35,082 |  |  |  | 46,876 |  |  |  | (24,475 | ) |  |  | 57,483 |
Accents(4) |  |  | 20,048 |  |  |  | 34,017 |  |  |  | (16,662 | ) |  |  | 37,403 |
Other(5) |  |  | (1,637 | ) |  |  | 7,495 |  |  |  | - |  |  |  | 5,858 |
Total |  | $ | 115,921 |  |  | $ | 179,583 |  |  | $ | (87,411 | ) |  | $ | 208,093 |
The following table disaggregates our net sales by product category by segment for the three months ended December 31, 2020 (in thousands):
|  | Wholesale |  |  | Retail |  |  | Eliminations(1) |  |  | Total |
Upholstery(2) |  | $ | 53,573 |  |  | $ | 74,087 |  |  | $ | (35,090 | ) |  | $ | 92,570 |
Case goods(3) |  |  | 30,984 |  |  |  | 38,743 |  |  |  | (18,268 | ) |  |  | 51,459 |
Accents(4) |  |  | 18,803 |  |  |  | 29,442 |  |  |  | (14,184 | ) |  |  | 34,061 |
Other(5) |  |  | (1,810 | ) |  |  | 2,546 |  |  |  | - |  |  |  | 736 |
Total |  | $ | 101,550 |  |  | $ | 144,818 |  |  | $ | (67,542 | ) |  | $ | 178,826 |
The following table disaggregates our net sales by product category by segment for the six months ended December 31, 2021 (in thousands):
|  | Wholesale |  |  | Retail |  |  | Eliminations(1) |  |  | Total |
Upholstery(2) |  | $ | 122,431 |  |  | $ | 167,489 |  |  | $ | (88,149 | ) |  | $ | 201,771 |
Case goods(3) |  |  | 68,601 |  |  |  | 88,331 |  |  |  | (47,465 | ) |  |  | 109,467 |
Accents(4) |  |  | 37,493 |  |  |  | 65,234 |  |  |  | (33,904 | ) |  |  | 68,823 |
Other(5) |  |  | (3,156 | ) |  |  | 13,515 |  |  |  | - |  |  |  | 10,359 |
Total |  | $ | 225,369 |  |  | $ | 334,569 |  |  | $ | (169,518 | ) |  | $ | 390,420 |
The following table disaggregates our net sales by product category by segment for the six months ended December 31, 2020 (in thousands):
|  | Wholesale |  |  | Retail |  |  | Eliminations(1) |  |  | Total |
Upholstery(2) |  | $ | 106,308 |  |  | $ | 131,772 |  |  | $ | (67,268 | ) |  | $ | 170,812 |
Case goods(3) |  |  | 59,723 |  |  |  | 71,661 |  |  |  | (36,932 | ) |  |  | 94,452 |
Accents(4) |  |  | 35,999 |  |  |  | 53,755 |  |  |  | (27,699 | ) |  |  | 62,055 |
Other(5) |  |  | (3,146 | ) |  |  | 5,711 |  |  |  | - |  |  |  | 2,565 |
Total |  | $ | 198,884 |  |  | $ | 262,899 |  |  | $ | (131,899 | ) |  | $ | 329,884 |
| (1) | The “Eliminations” column in the tables above represents the elimination of all intercompany wholesale segment sales to the retail segment in each period presented.
| (2) | Upholstery includes fabric-covered items such as sleepers, recliners and other motion furniture, chairs, ottomans, custom pillows, sofas, loveseats, cut fabrics and leather.
| (3) | Case goods includes items such as beds, dressers, armoires, tables, chairs, buffets, entertainment units, home office furniture and wooden accents.
| (4) | 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.
| (5) | Other includes product delivery sales, the Ethan Allen Hotel revenues, sales of third-party furniture protection plans, membership revenue (in the prior fiscal year only) and other miscellaneous product sales less prompt payment discounts, sales allowances and other incentives.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045 + Details
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