Note L – Revenue from Contracts with Customers

Revenue Recognition – Effective December 31, 2017, we adopted ASC 606. The adoption of this standard did not impact the timing of revenue recognition for customer sales. Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our goods at a point in time based on shipping terms and transfer of title. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. Sales, value add, and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. Shipping and handling fees charged to customers are reported within revenue.

Gross-to-net sales adjustments – We recognize revenue net of various sales adjustments to arrive at net sales as reported on the statement of operations. These adjustments are referred to as gross-to-net sales adjustments and primarily fall into one of three categories; returns, warranties and customer allowances.

Returns – The Company records an accrued liability and reduction in sales for estimated product returns based upon historical experience. An accrued liability and reduction in sales is also recorded for approved return authorizations that have been communicated by the customer.

Warranties – Limited warranties are provided on certain products for varying periods. We record an accrued liability and reduction in sales for estimated future warranty claims based upon historical experience and management’s estimate of the level of future claims. Changes in the estimated amounts recognized in prior years are recorded as an adjustment to the accrued liability and sales in the current year.

Customer Allowances – Customer allowances are common practice in the industries in which the Company operates. These agreements are typically in the form of advertising subsidies, volume rebates and catalog allowances and are accounted for as a reduction to gross sales. The Company reviews such allowances on an ongoing basis and accruals are adjusted, if necessary, as additional information becomes available.

Disaggregation of Revenue – We generate revenue from the sale of widely recognized sporting goods brands in basketball goals, archery, indoor and outdoor game recreation and fitness products. These products are sold through multiple sales channels that include; mass merchants, specialty dealers, key on-line retailers (“E-commerce”) and international. The following table depicts the disaggregation of revenue according to sales channel:


	Three Months Ended				Six Months Ended
	July 13,		July 14,		July 13,		July 14,
All Amounts in Thousands	2019		2018		2019		2018

Gross Sales by Channel:
Mass Merchants	$	18,838	$	19,493	$	30,268	$	32,582
Specialty Dealers		16,163		19,110		29,764		31,761
E-commerce		24,806		12,988		34,740		20,346
International		2,174		2,487		3,348		4,802
Other		740		348		1,442		536
Total Gross Sales		62,721		54,426		99,562		90,027

Less: Gross-to-Net Sales Adjustments
Returns		1,705		1,272		2,880		2,198
Warranties		359		494		732		801
Customer Allowances		5,018		3,976		8,209		6,195
Total Gross-to-Net Sales Adjustments		7,082		5,742		11,821		9,194
Total Net Sales	$	55,639	$	48,684	$	87,741	$	80,833

Contract Balances – The following table provides information on changes in our contract liability balances during the three and six month periods ending July 13, 2019 and July 14, 2018. The contract liability recorded during the quarter ending July 14, 2018 is related to a lump sum payment received for consulting services to be provided over the next year. The contract liability will be amortized, and revenues recognized, evenly over the year. As of July 13, 2019, the contract liability was fully amortized.


	Three Months Ended				Six Months Ended
	July 13,		July 14,		July 13,		July 14,
All Amounts in Thousands	2019		2018		2019		2018

Increase due to cash received, excluding amounts recognized as revenue during the period	$	—	$	930	$	—	$	930
Revenue recognized that was included in the contract liability balance at the beginning of the period		154		—		413		—
Increase (decrease) in contract liability during the period	$	(154)	$	930	$	(413)	$	930