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Revenue Recognition | 6 Months Ended
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Mar. 31, 2019
Revenue From Contract With Customer [Abstract] |
Revenue Recognition | 3) Revenue Recognition Effective October 1, 2018 we adopted the requirements of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The adoption was not material to the financial statements presented. In accordance with the new revenue standard requirements, our condensed consolidated statement of operations and the consolidated balance sheet were impacted due to: i) the deferment of commissions provided to Company employees that were previously expensed as incurred, ii) the deferment of certain upfront credits provided to customers upon entering into a new annual product or service contract as contra-revenue that were previously expensed as incurred and recorded as delivery and branch expense, and iii) the allocation of transaction price of certain combination of contracts that were previously accounted for as separate contracts that impacts the classification of revenue and timing of revenue recognition. The impact of adoption on our condensed consolidated statement of operations and balance sheet, as of and for the three and six months ended March 31, 2019 was as follows (in thousands):
| For the Three Months Ended March 31, 2019 |  |  | For the Six Months Ended March 31, 2019 |
Statement of Operations | As Reported |  |  | Balances without Adoption of ASC 606 |  |  | Effect of Change Higher/(Lower) |  |  | As Reported |  |  | Balances without Adoption of ASC 606 |  |  | Effect of Change Higher/(Lower) |
Sales: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Product | $ | 637,400 |  |  | $ | 643,407 |  |  | $ | (6,007 | ) |  | $ | 1,096,107 |  |  | $ | 1,105,560 |  |  | $ | (9,453 | )
Installations and services |  | 62,182 |  |  |  | 60,475 |  |  |  | 1,707 |  |  |  | 138,502 |  |  |  | 135,269 |  |  |  | 3,233 |
Total Sales |  | 699,582 |  |  |  | 703,882 |  |  |  | (4,300 | ) |  |  | 1,234,609 |  |  |  | 1,240,829 |  |  |  | (6,220 | )
Cost and Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Delivery and branch expenses |  | 110,684 |  |  |  | 111,163 |  |  |  | (479 | ) |  |  | 213,357 |  |  |  | 216,372 |  |  |  | (3,015 | )
Operating income |  | 105,002 |  |  |  | 108,823 |  |  |  | (3,821 | ) |  |  | 111,065 |  |  |  | 114,270 |  |  |  | (3,205 | )
Income before income taxes |  | 101,564 |  |  |  | 105,385 |  |  |  | (3,821 | ) |  |  | 104,852 |  |  |  | 108,057 |  |  |  | (3,205 | )
Income tax expense |  | 29,239 |  |  |  | 30,344 |  |  |  | (1,105 | ) |  |  | 30,212 |  |  |  | 31,135 |  |  |  | (923 | )
Net income | $ | 72,325 |  |  | $ | 75,041 |  |  | $ | (2,716 | ) |  | $ | 74,640 |  |  | $ | 76,922 |  |  | $ | (2,282 | )
General Partner's interest in net income |  | 454 |  |  |  | 470 |  |  |  | (16 | ) |  |  | 469 |  |  |  | 483 |  |  |  | (14 | )
Limited Partner's interest in net income | $ | 71,871 |  |  | $ | 74,571 |  |  | $ | (2,700 | ) |  | $ | 74,171 |  |  | $ | 76,439 |  |  | $ | (2,268 | )
Basic and diluted income per Limited Partner Unit | $ | 1.15 |  |  | $ | 1.19 |  |  | $ | (0.04 | ) |  | $ | 1.19 |  |  | $ | 1.22 |  |  | $ | (0.03 | )
| March 31, 2019 |
Balance Sheet | As Reported |  |  | Balances without Adoption of ASC 606 |  |  | Effect of Change Higher/(Lower) |
Assets |  |  |  |  |  |  |  |  |  |  |
Prepaid expenses and other current assets | $ | 32,288 |  |  | $ | 27,701 |  |  | $ | 4,587 |
Deferred charges and other assets, net | $ | 18,539 |  |  | $ | 11,962 |  |  | $ | 6,577 |
Liabilities |  |  |  |  |  |  |  |  |  |  |
Accrued expenses and other current liabilities | $ | 157,524 |  |  | $ | 158,447 |  |  | $ | (923 | )
Unearned service contract revenue | $ | 63,718 |  |  | $ | 62,341 |  |  | $ | 1,377 |
Deferred tax liabilities, net | $ | 15,872 |  |  | $ | 12,104 |  |  | $ | 3,768 |
Partners' capital |  |  |  |  |  |  |  |  |  |  |
Common unitholders | $ | 373,748 |  |  | $ | 366,852 |  |  | $ | 6,896 |
General partner | $ | (1,146 | ) |  | $ | (1,192 | ) |  | $ | 46 |
The following disaggregates our revenue by major sources for the three and six months ended March 31, 2019 and March 31, 2018:
| Three Months Ended March 31, |  |  | Six Months Ended March 31, |
(in thousands) | 2019 |  |  | 2018 |  |  | 2019 |  |  | 2018 |
Petroleum Products: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Home heating oil and propane | $ | 554,364 |  |  | $ | 554,782 |  |  | $ | 918,566 |  |  | $ | 856,250 |
Other petroleum products |  | 83,036 |  |  |  | 68,180 |  |  |  | 177,541 |  |  |  | 133,446 |
Total petroleum products |  | 637,400 |  |  |  | 622,962 |  |  |  | 1,096,107 |  |  |  | 989,696 |
Installations and Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equipment installations |  | 20,384 |  |  |  | 19,697 |  |  |  | 50,367 |  |  |  | 47,041 |
Equipment maintenance service contracts |  | 26,678 |  |  |  | 25,504 |  |  |  | 54,997 |  |  |  | 50,901 |
Billable call services |  | 15,120 |  |  |  | 15,868 |  |  |  | 33,138 |  |  |  | 33,227 |
Total installations and services |  | 62,182 |  |  |  | 61,069 |  |  |  | 138,502 |  |  |  | 131,169 |
Total Sales | $ | 699,582 |  |  | $ | 684,031 |  |  | $ | 1,234,609 |  |  | $ | 1,120,865 |
Performance Obligations Petroleum product revenues primarily consist of home heating oil and propane as well as diesel fuel and gasoline. Revenue from petroleum products are recognized at the time of delivery to the customer when control is passed from the Company to the customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring control of the petroleum products. Approximately 95% of our full service residential and commercial home heating oil customers automatically receive deliveries based on prevailing weather conditions. We offer several pricing alternatives to our residential home heating oil customers, including a variable price (market based) option and a price-protected option, the latter of which either sets the maximum price or a fixed price that a customer will pay. Equipment maintenance service contracts primarily cover heating, air conditioning, and natural gas equipment. We generally do not sell equipment maintenance service contracts to heating oil customers that do not take delivery of product from us. The service contract period of our equipment maintenance service contracts is generally one year or less. Revenues from equipment maintenance service contracts are recognized into income over the terms of the respective service contracts, on a straight-line basis. Our obligation to perform service is consistent through the duration of the contracts, and the straight-line basis of recognition is a faithful depiction of the transfer of our services. To the extent that the Company anticipates that future costs for fulfilling its contractual obligations under its equipment service contracts will exceed the amount of deferred revenue currently attributable to these contracts, the Company recognizes a loss in current period earnings equal to the amount that anticipated future costs exceed related deferred revenues. Revenue from billable call services (repairs, maintenance and other services including plumbing) and equipment installations (heating, air conditioning, and natural gas equipment) are recognized at the time that the work is performed. Our standard payment terms are generally 30 days. In addition, approximately 33% of our residential customers take advantage of our “smart pay” budget payment plan under which their estimated annual oil and propane deliveries and service contract billings are paid for in a series of equal monthly installments. Sales reported for product, installations and services exclude taxes assessed by various governmental authorities. Contract Costs We have elected to recognize incremental costs of obtaining a contract, other than new residential product and equipment maintenance service contracts, as an expense when incurred when the amortization period of the asset that we otherwise would have recognized is one year or less. We recognize an asset for incremental commission expenses paid to sales personnel in conjunction with obtaining new residential customer product and equipment maintenance service contracts. We only defer these costs when we have determined the commissions are, in fact, incremental and would not have been incurred absent the customer contract. Costs to obtain a contract are amortized and recorded ratably as delivery and branch expenses over the period representing the transfer of goods or services to which the assets relate. Costs to obtain new residential product and equipment maintenance service contracts are amortized as expense over the estimated customer relationship period, or five years. Deferred contract costs are classified as current or non-current within “Prepaid expenses and other current assets” and “Deferred charges and other assets, net,” respectively. At March 31, 2019 the amount of deferred contract costs included in Prepaid expenses and other current assets and Deferred charges and other assets, net was $3.6 million and $6.6 million, respectively. We recognize an impairment charge to the extent the carrying amount of a deferred cost exceeds the remaining amount of consideration we expect to receive in exchange for the petroleum products and services related to the cost, less the expected costs related directly to providing those petroleum products and services that have not yet been recognized as expenses. There have been no impairment charges recognized for the six months ended March 31, 2019. Significant Judgments – Allocation of Transaction Price to Separate Performance Obligations Our contracts with customers often include distinct performance obligations to transfer products and perform equipment maintenance services to a customer that should be accounted for separately. Judgment is required to determine the stand-alone selling price for each distinct performance obligation. We determine the stand-alone selling price using information that may include market conditions and other observable inputs and typically have more than one stand-alone selling price for petroleum products and equipment maintenance services due to the stratification of those products and services by geography and customer characteristics. Contract Liability Balances The Company has contract liabilities for advanced payments received from customers for future oil deliveries (primarily amounts received from customers on “smart pay” budget payment plans in advance of oil deliveries) and obligations to service customers with equipment maintenance service contracts. Our “smart pay” budget payment plans are annual and generally begin outside of the heating season. We generally have received advanced amounts from customers on “smart pay” budget payment plans prior to the heating season, which are reduced as oil deliveries are made. For customers that are not on “smart pay” budget payment plans, we generally receive the full contract amount for equipment service contracts with customers at the outset of the contracts. Contract liabilities are recognized straight-line over the service contract period, generally one-year or less. As of March 31, 2019 and September 30, 2018 the Company had contract liabilities of $82.5 million and $118.6 million, respectively. During the six months ended March 31, 2019 the Company recognized $90.3 million of revenue that was included in the September 30, 2018 contract liability balance.

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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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