14.

Revenue Recognition

We adopted ASU

2014

09,

Revenue - Revenue from Contracts with Customers (ASC Topic

606

or "ASC

606"

) effective as of

November 25, 2018,

the beginning of our

2019

fiscal year. ASC

606

requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. For our wholesale and retail segments, revenue is recognized when the risks and rewards of ownership and title to the product have transferred to the buyer.

At wholesale, transfer occurs and revenue is recognized upon the shipment of goods to independent dealers and licensee-owned BHF stores. We offer payment terms varying from

days for wholesale customers. Estimates for returns and allowances have been recorded as a reduction of revenue based on our historical return patterns. The contracts with our licensee store owners do

not

provide for any royalty or license fee to be paid to us.

At retail, transfer occurs and revenue is recognized upon delivery of goods to the customer. We typically collect a significant portion of the purchase price as a customer deposit upon order, with the balance typically collected upon delivery. These deposits are carried on our balance sheet as a current liability until delivery is fulfilled and amounted to

$24,416

and

$27,157

as of

March 2, 2019

and

November 24, 2018,

respectively. Substantially all of the customer deposits held at

November 24, 2018

related to performance obligations satisfied during the current period and have therefore been recognized in revenue for the quarter ended

March 2, 2019.

Estimates for returns and allowances have been recorded as a reduction of revenue based on our historical return patterns. We also sell furniture protection plans to our retail customers on behalf of a

third

party which is responsible for the performance obligations under the plans. Revenue from the sale of these plans is recognized upon delivery of the goods net of amounts payable to the

third

party service provider.

For our logistical services segment, line-haul freight revenue is recognized as services are performed and are billed to the customer upon the completion of delivery to the destination. Because the customer receives the benefits of these services as the freight is in transit from point of origin to destination, we recognize revenue using a percentage of completion method based on our estimate the amount of time freight has been in transit as of the reporting date compared with our estimate total required time for the deliveries. We recognize an asset for the amount of line-haul revenue earned but

not

yet billed which is included in other current assets. The balance of this asset was

$528

March 2, 2019

and

$512

at the beginning of the

first

quarter of fiscal

2019.

Warehousing services revenue is based upon warehouse space occupied by a customer’s goods and inventory movements in and out of a warehouse and is recognized as such services are provided and billed to the customer concurrently in the same period. All invoices for logistical services are due

days from invoice date.

Sales commissions are expensed as part of selling, general and administrative expenses at the time revenue is recognized because the amortization period would have been

one

year or less. Sales commissions at wholesale are accrued upon the shipment of goods. Sales commissions at retail are accrued at the time a sale is written (e.i. – when the customer’s order is placed) and are carried as prepaid commissions in other current assets until the goods are delivered and revenue is recognized. At

March 2, 2019

and

November 24, 2018,

our balance of prepaid commissions included in other current assets was

$2,453

and

$2,739,

respectively. We do

not

incur sales commissions in our logistical services segment.

We adopted ASC

606

using the modified retrospective method and applied the standard only to contracts that were

not

completed as of initial application. Results for reporting periods beginning after

November 24, 2018

are presented under the new standard, while prior period amounts are

not

adjusted and continue to be reported in accordance with our historic accounting. Our adoption of ASC

606

did

not

have a material impact on our consolidated financial statements except for our enhanced presentation and disclosures. We also expect the impact of the adoption of ASC

606

to be immaterial to our net income and financial position on an ongoing basis.

Upon adoption of ASC

606,

we have adopted the following policy elections and practical expedients:

●

We exclude from revenue amounts collected from customers for sales tax, which is consistent with our policy prior to the adoption of ASC

606.

●

We do

not

adjust the promised amount of consideration for the effects of a significant financing component since the period of time between transfer of our goods or services and the collection of consideration from the customer is less than

one

year.

●

We do

not

disclose the value of unsatisfied performance obligations because the transfer or goods or services is made within

one

year of the placement of customer orders.

See Note

13,

Segments, for disaggregated revenue information.