Revenue from Contracts with Customers

As discussed in Note 1, the Company adopted ASC 606 on April 1, 2018. Our revenue recognition practices under ASC 606 do not differ materially from prior practices. Under ASC 606, revenues are recognized when a good or service is transferred to a customer. A good or service is transferred when, or as, the customer obtains control of that good or service. Revenues are based on the consideration expected to be received in connection with our promises to deliver goods and services to our customers.

Site Improvements on Retail Sales. Under previous guidance, the Company recorded sales of subcontracted ancillary services, such as preparation of the home site or other exterior enhancements, net of associated costs. Such services are provided as a convenience to the customer. As the Company is involved in the selection of subcontractors, under ASC 606, we have concluded that it is appropriate to recognize the sale of these ancillary services on a gross basis. The revenues associated with these programs for fiscal years 2019, 2018 and 2017 were $24.9 million, $21.2 million and $18.8 million, respectively.

Additional Items. Expected consideration, and therefore revenue, reflects reductions for returns, allowances, and other incentives, some of which may be contingent on future events. Additionally, the Company's volume rebates are accrued at the time of sale and are recorded as a reduction of Net revenue.

In customer contracts for retail sales of manufactured homes, consideration includes certain state and local excise taxes billed to customers when those taxes are levied directly upon us by the taxing authorities. Expected consideration excludes sales and other taxes collected on behalf of taxing authorities. The Company elects to treat consideration for freight performed as a fulfillment activity. Therefore, Net revenue includes consideration for freight and other fulfillment activities performed prior to the customer obtaining control of the goods.

Practical Expedients and Exemptions. The Company generally expenses sales commissions when incurred because the amortization period would be one year or less. These costs are recorded within Selling, general and administrative expenses. In addition, the Company does not disclose the value of unsatisfied performance obligations for contracts with an expected length of one year or less.

Disaggregation of Revenue. The following table summarizes customer contract revenues disaggregated by reportable segment and the source of the revenue. All revenue from customers is recognized at a point in time, either when the customer takes delivery or when a third-party insurance contract is executed, as more fully discussed above. Other items included in our consolidated revenues are primarily related to financial services, including manufactured housing consumer finance and insurance, which are not within the scope of ASC 606.



	Fiscal year ended March 30, 2019
Factory-built housing
U.S. Housing and Urban Development code homes	$	727,950
Modular homes	90,636
Park model RVs	38,057
Other (1)	49,083
Net revenue from factory-built housing	905,726
Financial services
Insurance agency commissions received from third-party insurance companies	3,065
Other	53,955
Net revenue from financial services	57,020
Total Net revenue	$	962,746


(1)	Other factory-built housing revenue from ancillary products and services including used homes, freight and other services.

Impacts on Consolidated Financial Statements. The impacts to our Consolidated Financial Statements as a result of ASC 606 implementation are as follows (in thousands):



	March 30, 2019
Consolidated Balance Sheet	As Reported		Adjustments			Balance without ASC 606 Adoption
Accrued liabilities	$	125,181	$	1,750		$	126,931
Total current liabilities	174,008		1,750			175,758
Deferred income taxes	7,002		(461		)	6,541
Retained earnings	280,078		(1,289		)	278,789
Total stockholders' equity	529,588		(1,289		)	528,299



	Fiscal year ended March 30, 2019
Consolidated Statement of Comprehensive Income	As Reported			Adjustments			Balance without ASC 606 Adoption
Net revenue	$	962,746		$	(32,420	)	$	930,326
Cost of sales	757,040			(31,047		)	725,993
Gross profit	205,706			(1,373		)	204,333
Selling, general and administrative expenses	121,568			(289		)	121,279
Income from operations	84,138			(1,084		)	83,054
Income before income taxes	86,676			(1,084		)	85,592
Income tax expense	(18,054		)	250			(17,804		)
Net income	68,622			(834		)	67,788