Revenue

Adoption of ASC 606, “Revenue from Contracts with Customers (Topic 606)”

On January 1, 2018, the Company adopted ASC 606 using the modified retrospective method in which the cumulative effect of initially applying the new standard was applied to contracts not completed as of that date. The adoption of Topic 606 did not have a material effect on the Company’s financial position or results of operations.

Revenue from the sale of products is recognized when the earnings process is complete and when the title and risk and rewards of ownership have passed to the customer, which is primarily at the time of shipment. Revenue recognized other than at the time of shipment represented less than 2% of the Company’s consolidated net sales in the three and nine months ended September 30, 2018 (Successor), in the period September 1, 2017 through September 30, 2017 (Successor), in the period July 1, 2017 through August 31, 2017 (Predecessor), and in the period January 1, 2017 through August 31, 2017 (Predecessor), respectively. Customer payment terms are established prior to the time of shipment. Provisions for allowances related to sales discounts and rebates are recorded based on terms of the sale in the period that the sale is recorded. The Company utilizes historical information and the current sales trends of the business to estimate such provisions. The provisions related to discounts and rebates due to customers are recorded as a reduction within net sales in the Company’s Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

Revenue from shipping and handling charges is recorded in net sales. Costs incurred in connection with shipping and handling the Company’s products, which are related to third-party carriers or performed by Company personnel, are included in warehouse, processing and delivery expenses. In the three and nine months ended September 30, 2018 (Successor), shipping and handling costs included in warehouse, processing and delivery expenses were $6,662 and $20,267, respectively. In the period September 1, 2017 through September 30, 2017 (Successor), in the period July 1, 2017 through August 31, 2017 (Predecessor), and in the period January 1, 2017 through August 31, 2017 (Predecessor), shipping and handling costs included in warehouse, processing and delivery expenses were $1,962, $4,432, and $16,292, respectively. As a practical expedient under ASC 606, the Company has elected to account for shipping and handling activities as fulfillment costs and not a promised good or service. As a result, there is no change to the Company's accounting for revenue from shipping and handling charges under ASC 606.

The Company maintains an allowance for doubtful accounts related to the potential inability of customers to make required payments. The allowance for doubtful accounts is maintained at a level considered appropriate based on historical experience and specific identification of customer receivable balances for which collection is unlikely. The provision for doubtful accounts is recorded in sales, general and administrative expense in the Company’s Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. Estimates of doubtful accounts are based on historical write-off experience as a percentage of net sales and judgments about the probable effects of economic conditions on certain customers.

The Company also maintains an allowance for credit memos for estimated credit memos to be issued against current sales. Estimates of allowance for credit memos are based upon the application of a historical issuance lag period to the average credit memos issued each month.

Accounts receivable allowance for doubtful accounts and credit memos activity is presented in the tables below:



	Successor						Predecessor
	Three Months Ended September 30, 2018			September 1, 2017 Through September 30, 2017			July 1, 2017 Through August 31, 2017
	Three Months Ended September 30, 2018			September 1, 2017 Through September 30, 2017			July 1, 2017 Through August 31, 2017
Balance, beginning of period	$	1,678		$	—		$	1,766
Add Provision charged to expense^(a)	(139		)	493			(46		)
Recoveries	10			12			—
Less Charges against allowance	(449		)	(83		)	(32		)
Fresh-start accounting adjustment	—			—			(1,688		)
Balance, end of period	$	1,100		$	422		$	—

^(a) Includes the net amount of credit memos reserved and issued.



	Successor						Predecessor
	Nine Months Ended September 30, 2018			September 1, 2017 Through September 30, 2017			January 1, 2017 Through August 31, 2017
	Nine Months Ended September 30, 2018			September 1, 2017 Through September 30, 2017			January 1, 2017 Through August 31, 2017
Balance, beginning of period	$	1,586		$	—		$	1,945
Add Provision charged to expense^(a)	34			493			34
Recoveries	36			12			25
Less Charges against allowance	(556		)	(83		)	(316		)
Fresh-start accounting adjustment	—			—			(1,688		)
Balance, end of period	$	1,100		$	422		$	—

^(a) Includes the net amount of credit memos reserved and issued.

The Company operates primarily in North America. Net sales are attributed to countries based on the location of the Company’s subsidiary that is selling direct to the customer and exclude assessed taxes such as sales and excise tax. Company-wide geographic data is as follows:



	Successor				Predecessor
	Three Months Ended September 30, 2018		September 1, 2017 Through September 30, 2017		July 1, 2017 Through August 31, 2017
	Three Months Ended September 30, 2018		September 1, 2017 Through September 30, 2017		July 1, 2017 Through August 31, 2017
Net sales
United States	$	97,679	$	26,646	$	54,641
Canada	11,402		3,100		6,248
Mexico	16,767		5,212		8,659
France	11,944		3,763		5,439
All other countries	10,317		3,004		6,531
Total	$	148,109	$	41,725	$	81,518



	Successor				Predecessor
	Nine Months Ended September 30, 2018		September 1, 2017 Through September 30, 2017		January 1, 2017 Through August 31, 2017
	Nine Months Ended September 30, 2018		September 1, 2017 Through September 30, 2017		January 1, 2017 Through August 31, 2017
Net sales
United States	$	289,178	$	26,646	$	222,186
Canada	35,677		3,100		26,897
Mexico	48,305		5,212		37,418
France	38,981		3,763		25,216
All other countries	32,255		3,004		42,209
Total	$	444,396	$	41,725	$	353,926

The Company does not incur significant incremental costs when obtaining customer contracts and any costs that are incurred are generally not recoverable from its customers. Substantially all of the Company's customer contracts are for a duration of less than one year. As a practical expedient under ASC 606, the Company has elected to continue to recognize incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset would have been one year or less. The Company does not have any costs to obtain a contract that are capitalized under ASC 606.