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 June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Office Segment
Office Systems	$	104,124	$	94,479	$	207,478	$	194,707
Seating	33,471		27,193		63,428		52,855
Files and Storage	21,214		20,598		43,292		39,133
Ancillary	20,761		11,593		39,906		19,664
Other	11,177		8,736		18,261		14,238
Total Office Segment	$	190,747	$	162,599	$	372,365	$	320,597
Lifestyle Segment
Studio	104,807		78,482		192,374		149,389
Coverings	27,797		27,613		55,171		55,528
Total Lifestyle Segment	$	132,604	$	106,095	$	247,545	$	204,917
Total Net Sales	$	323,351	$	268,694	$	619,910	$	525,514

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.

When the Company receives deposits, the recognition of revenue is deferred and results in the recognition of a contract liability (Customer deposits) presented as a component of Other Current Liabilities in the Condensed Consolidated Balance Sheets. Subsequent recognition of revenue and the satisfaction of the contract liability is typically less than one year as the Company’s standard contract is less than one year with a standard payment term of 30 days. Changes in the Customer deposits balances during the six months ended June 30, 2018 are as follows:



Balance, January 1, 2018	$	30,484
Revenue recognized that included the contract liability balance at the beginning of the period ended June 30, 2018	(56,039		)
Increase due to cash received during the period ended June 30, 2018	64,118
Increase due to business combinations during the period ended June 30, 2018	1,500
Balance, June 30, 2018	$	40,063

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 the Company expects to receive in exchange for transferring goods or providing services.

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 tax, value added tax, 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 by 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.