Revenue

6 Months Ended

May 01, 2020

Revenue from Contract with Customer [Abstract]

Revenue

4 Revenue

The company enters into contracts with its customers for the sale of products or rendering of services in the ordinary course of business. A contract with commercial substance exists at the time the company receives and accepts a purchase order under a sales contract with a customer. The company recognizes revenue when, or as, performance obligations under the terms of a contract with its customer are satisfied, which occurs with the transfer of control of product or services. Control is typically transferred to the customer at the time a product is shipped, or in the case of certain agreements, when a product is delivered or as services are rendered. Revenue is recognized based on the transaction price, which is measured as the amount of consideration the company expects to receive in exchange for transferring product or rendering services pursuant to the terms of the contract with a customer. The amount of consideration the company receives and the revenue the company recognizes varies with changes in sales promotions and incentives offered to customers, as well as anticipated product returns. A provision is made at the time revenue is recognized as a reduction of the transaction price for expected product returns, rebates, floor plan costs, and other sales promotion and incentive expenses. If a contract contains more than one performance obligation, the transaction price is allocated to each performance obligation based on the relative standalone selling price of the respective promised good or service. The company does not recognize revenue in situations where collectability from the customer is not probable, and defers the recognition of revenue until collection is probable or payment is received and performance obligations are satisfied.

Freight and shipping revenue billed to customers concurrent with revenue producing activities is included within revenue and the cost for freight and shipping is recognized as an expense within cost of sales when control has transferred to the customer. Shipping and handling activities that occur after control of the related products is transferred are treated as a fulfillment activity rather than a promised service, and therefore, are not considered a performance obligation. Sales, use, value-added, and other excise taxes the company collects concurrent with revenue producing activities are excluded from revenue. Incremental costs of obtaining a contract for which the performance obligations will be satisfied within the next twelve months are expensed as incurred. Incidental items, including goods or services, that are immaterial in the context of the contract are recognized as expense when incurred. Additionally, the company has elected not to disclose the balance of unfulfilled performance obligations for contracts with a contractual term of twelve months or less.

The following tables disaggregate the company's reportable segment net sales by major product type and geographic market (in thousands):

Three Months Ended May 1, 2020	Professional		Residential		Other		Total
Revenue by product type:
Equipment	$	569,143	$	257,400	$	3,835	$	830,378
Irrigation	91,944		4,598		2,478		99,020
Total net sales	$	661,087	$	261,998	$	6,313	$	929,398
Revenue by geographic market:
United States	$	509,277	$	231,764	$	6,313	$	747,354
Foreign Countries	151,810		30,234		—		182,044
Total net sales	$	661,087	$	261,998	$	6,313	$	929,398

Six Months Ended May 1, 2020	Professional		Residential		Other		Total
Revenue by product type:
Equipment	$	1,093,052	$	409,858	$	9,360	$	1,512,270
Irrigation	162,756		17,988		3,867		184,611
Total net sales	$	1,255,808	$	427,846	$	13,227	$	1,696,881
Revenue by geographic market:
United States	$	963,565	$	362,102	$	13,227	$	1,338,894
Foreign Countries	292,243		65,744		—		357,987
Total net sales	$	1,255,808	$	427,846	$	13,227	$	1,696,881

Three Months Ended May 3, 2019	Professional		Residential		Other		Total
Revenue by product type:
Equipment	$	618,099	$	225,456	$	2,661	$	846,216
Irrigation	105,407		6,691		3,722		115,820
Total net sales	$	723,506	$	232,147	$	6,383	$	962,036
Revenue by geographic market:
United States	$	546,413	$	190,163	$	6,383	$	742,959
Foreign Countries	177,093		41,984		—		219,077
Total net sales	$	723,506	$	232,147	$	6,383	$	962,036

Six Months Ended May 3, 2019	Professional		Residential		Other		Total
Revenue by product type:
Equipment	$	1,005,649	$	358,966	$	4,630	$	1,369,245
Irrigation	172,863		18,339		4,545		195,747
Total net sales	$	1,178,512	$	377,305	$	9,175	$	1,564,992
Revenue by geographic market:
United States	$	894,517	$	300,678	$	9,175	$	1,204,370
Foreign Countries	283,995		76,627		—		360,622
Total net sales	$	1,178,512	$	377,305	$	9,175	$	1,564,992

Contract Liabilities

Contract liabilities relate to deferred revenue recognized for cash consideration received at contract inception in advance of the company's performance under the respective contract and generally relate to the sale of separately priced extended warranty contracts, service contracts, and non-refundable customer deposits. The company recognizes revenue over the term of the contract in proportion to the costs expected to be incurred in satisfying the performance obligations under the separately priced extended warranty and service contracts. For non-refundable customer deposits, the company recognizes revenue as of the point in time in which the performance obligation has been satisfied under the contract with the customer, which typically occurs upon change in

control at the time a product is shipped. As of May 1, 2020 and October 31, 2019, $21.6 million and $22.0 million, respectively, of deferred revenue associated with outstanding separately priced extended warranty contracts, service contracts, and non-refundable customer deposits was reported within accrued liabilities and other long-term liabilities in the Condensed Consolidated Balance Sheets. For the three and six months ended May 1, 2020, the company recognized $2.9 million and $6.4 million, respectively, of the October 31, 2019 deferred revenue balance within net sales in the Condensed Consolidated Statements of Earnings. The company expects to recognize approximately $4.2 million of the October 31, 2019 deferred revenue amount within net sales throughout the remainder of fiscal 2020, $6.4 million in fiscal 2021, and $5.0 million thereafter.