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 September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Office Segment
Office Systems	$	111,239	$	109,195	$	318,717	$	303,902
Seating	29,694		33,056		93,122		85,911
Files and Storage	23,940		22,956		67,232		62,089
Ancillary	24,631		18,380		64,537		38,044
Other	8,178		8,721		26,439		22,959
Total Office Segment	$	197,682	$	192,308	$	570,047	$	512,905
Lifestyle Segment
Studio	101,374		72,046		293,748		221,435
Coverings	28,681		26,902		83,852		82,430
Total Lifestyle Segment	$	130,055	$	98,948	$	377,600	$	303,865
Total Sales	$	327,737	$	291,256	$	947,647	$	816,770

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. As of September 30, 2018 and December 31, 2017, the contract liability related to customer deposits was $40.6 million and $30.5 million, respectively. Revenues recognized during the third quarter and first nine months of 2018, that were included in the contract liability at the beginning of the current quarter and current year were $29.0 million and $85.0 million, respectively.

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 its contracts.