REVENUE

Disaggregation of Revenue

The majority of the Company’s revenue presented as “Sales” in the Condensed Consolidated Statements of Operations and Comprehensive Income is the result of contracts with customers for the sale of the Company’s products. All other sources of revenue are not material to the Company's results of operations. The other sources of revenue include installation revenue and royalty revenue.

The Company’s net sales by product category were as follows (in thousands):



	Three Months Ended March 31,
	2018		2017
Office Segment
Office Systems	$	103,354	$	100,228
Seating	29,957		25,662
Files and Storage	22,078		18,535
Ancillary	19,145		8,071
Other	7,084		5,502
Total Office Segment	$	181,618	$	157,998
Lifestyle Segment
Studio	87,567		70,907
Coverings	27,374		27,915
Total Lifestyle Segment	$	114,941	$	98,822
Total Sales	$	296,559	$	256,820

Contract Balances

The Company has contract assets consisting of Customer Receivables in the Condensed Consolidated Balance Sheets which represent the amount of consideration the Company expects to be entitled to in exchange for the goods or services rendered to its customers.

The Company generally receives deposits from customers before revenue is recognized, thus resulting in the recognition of a contract liability (Customer deposits) presented as a component of Other Current Liabilities in the Condensed Consolidated Balance Sheets. Significant changes in the Customer deposits balances during the three months ended March 31, 2018 are as follows:



Balance as of January 1, 2018		Revenue recognized that was included in the contract liability balance at the beginning of the period ended March 31, 2018			Increases due to cash received, excluding amounts recognized as revenue during the period ended March 31, 2018		Balance as of March 31, 2018
$	30,484	$	(6,485	)	$	10,256	$	34,255

Increases to customer deposits as a result of business combinations during the three months ended March 31, 2018 balance were $1.5 million.

Performance Obligations

The Company recognizes revenue when performance obligations under the terms of a contract with its customer are satisfied. This occurs when the control of the goods and services have been transferred to the customer. Accordingly, revenue for sale of goods is generally recognized upon shipment or delivery depending on the shipping terms of the underlying contract. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The Company does not disclose the value of unsatisfied (or potentially unsatisfied) performance obligations for contracts with an original length of one year or less.

Amounts billed to customers for shipping and handling activities to fulfill the Company’s promise to transfer the goods are included in Sales, and costs incurred by the Company for the delivery of goods are classified as Cost of sales in the Condensed Consolidated Statements of Operations and Comprehensive Income. Sales, value add, and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. The Company generally offers assurance-type warranties for its products. The specific terms and conditions of those warranties vary depending upon the product. The Company estimates the costs that may be incurred under its warranties and records a liability in the amount of such costs at the time product revenue is recognized. Factors that affect the warranty liability include historical product-failure experience and estimated repair costs for identified matters. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Practical Expedients Elected

Incremental Costs of Obtaining a Contract - The Company has elected the practical expedient permitted in ASC 340-40-25-4, which permits an entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year.

Significant Financing Component - The Company has elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to not adjust the promised amount of consideration for the effects of a significant financing component if a contract has a duration of one year or less. As the Company’s contracts are typically less than one year in length, consideration will not be adjusted. The Company’s contracts include a standard payment term of 30 days, consequently there is no significant financing component within contracts.