REVENUE

Initial adoption of new ASU

On January 1, 2018, we adopted ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) and all the related amendments using the modified retrospective method. We recognized the cumulative effect of initially applying the new revenue standard as a $2.3 reduction to the opening balance of "Retained earnings". The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. We expect the impact of the new standard to be immaterial to our sales, net earnings, balance sheet and cash flows on an ongoing basis.

Substantially all of our revenue continues to be recognized when products are shipped from our facilities or upon delivery to our customers' facilities. Topic 606 also provided clarity that resulted in reclassifications to or from "Net sales" and "Cost of goods sold".

The cumulative effect of applying Topic 606 to our Consolidated Condensed Balance Sheet was as follows:



	Balance at December 31, 2017 as Previously Reported			Topic 606 Adjustments			Balance at January 1, 2018
Current assets	$	1,766.5		$	—		$	1,766.5
Net property, plant and equipment	663.9			—			663.9
Other assets ¹	1,120.4			.7			1,121.1
Total assets	$	3,550.8		$	.7		$	3,551.5

Other current liabilities ²	$	88.7		$	3.0		$	91.7
All other current liabilities	887.5			—			887.5
Long-term liabilities	1,383.8			—			1,383.8
Retained earnings	2,511.3			(2.3		)	2,509.0
Other equity	(1,320.5		)	—			(1,320.5		)
Total liabilities and equity	$	3,550.8		$	.7		$	3,551.5

¹ This adjustment represents the deferred tax impact related to Topic 606.

² This adjustment is associated with constraint on the amount of variable consideration.

The effect of applying Topic 606 on our Consolidated Condensed Statement of Operations and Balance Sheet was as follows:



	For the nine months ended September 30, 2018								For the three months ended September 30, 2018
	Amounts as Reported			Topic 606 Adjustments		Amounts Without Adoption of Topic 606			Amounts as Reported		Topic 606 Adjustments		Amounts Without Adoption of Topic 606
Net sales ³	$	3,222.8		$	10.4	$	3,233.2		$	1,091.5	$	2.2	$	1,093.7
Cost of goods sold ³	2,547.3			10.0		2,557.3			864.4		2.2		866.6
Gross profit	675.5			.4		675.9			227.1		—		227.1
Selling and administrative expenses	313.2			—		313.2			100.7		—		100.7
All other	9.4			—		9.4			2.0		—		2.0
Earnings from continuing operations before interest and income taxes	352.9			.4		353.3			124.4		—		124.4
Net interest expense	36.7			—		36.7			11.1		—		11.1
Income taxes	63.2			.1		63.3			23.3		—		23.3
(Earnings) attributable to noncontrolling interest, net of tax	(.1		)	—		(.1		)	—		—		—
Net earnings	$	252.9		$	.3	$	253.2		$	90.0	$	—	$	90.0

³ Adjustments are primarily associated with a reclassification of customer reimbursements of tooling cost from "Net sales" to "Cost of goods sold" and adjustments for variable consideration.



	September 30, 2018
	Amounts as Reported			Topic 606 Adjustments			Amounts Without Adoption of Topic 606
Current assets	$	1,667.0		$	—		$	1,667.0
Net property, plant and equipment	723.0			—			723.0
Other assets	1,159.1			(.7		)	1,158.4
Total assets	$	3,549.1		$	(.7	)	$	3,548.4

Other current liabilities	$	83.1		$	(2.9	)	$	80.2
All other current liabilities	701.8			—			701.8
Long-term liabilities	1,598.2			—			1,598.2
Retained earnings	2,611.7			2.2			2,613.9
Other equity	(1,445.7		)	—			(1,445.7		)
Total liabilities and equity	$	3,549.1		$	(.7	)	$	3,548.4

Performance Obligations and Shipping and Handling Costs

We recognize revenue when performance obligations under the terms of a contract with our customers are satisfied. For the nine and three months ended September 30, 2018, substantially all of our revenue was recognized upon transfer of control of our products to our customers, which was generally upon shipment from our facilities or upon delivery to our customers' facilities and was dependent on the terms of the specific contract. This conclusion considers the point at which our customers have the ability to direct the use of and obtain substantially all of the remaining benefits of the products that were transferred. Substantially all of any unsatisfied performance obligations as of September 30, 2018, will be satisfied within one year or less. Shipping and handling costs are included as a component of "Cost of goods sold".

Sales, value added, and other taxes collected in connection with revenue-producing activities are excluded from revenue.

Sales Allowances and Returns

The amount of consideration we receive and revenue we recognize varies with changes in various sales allowances, discounts and rebates (variable consideration) that we offer to our customers. We reduce revenue by our estimates of variable consideration based on contract terms and historical experience. Changes in estimates of variable consideration for the nine and three months ended September 30, 2018 were not material.

Some of our products transferred to customers can be returned, and we recognize the following for this right:


•	An estimated refund liability and a corresponding reduction to revenue based on historical returns experience.


•	An asset and a corresponding reduction to cost of sales for our right to recover products from customers upon settling the refund liability. We reduce the carrying amount of these assets by estimates of costs associated with the recovery and any additional expected reduction in value.

Our refund liability and the corresponding asset associated with our right to recover products from our customers were immaterial at September 30, 2018.

Practical Expedients

We have elected to apply the following practical expedients.


•	The existence of a significant financing component—We expect that at contract inception, the time period between when we transfer a promised good to our customer and our receipt of payment from that customer for that good will be one year or less (our typical trade terms are 30 to 60 days for U.S. customers and up to 90 days for our international customers).


•	Costs of obtaining a contract—We generally expense costs of obtaining a contract because the amortization period would be one year or less.

Revenue by Category

We disaggregate revenue by customer group, which is the same as our product lines for each of our segments, as we believe this best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.



	Nine Months Ended September 30, 2018		Three Months Ended September 30, 2018
	Nine Months Ended September 30, 2018		Three Months Ended September 30, 2018
Residential Products
Bedding group	$	679.3	$	236.9
Fabric & Flooring Products group ⁴	555.2		194.2
Machinery group	48.9		15.4
	1,283.4		446.5
Industrial Products
Wire group	275.8		97.4
	275.8		97.4
Furniture Products
Home Furniture group	291.9		91.9
Work Furniture group	217.5		71.6
Consumer Products group	357.4		130.6
	866.8		294.1
Specialized Products
Automotive group	623.5		195.7
Aerospace Products group	112.6		35.8
Hydraulic Cylinders group	60.7		22.0
	796.8		253.5
	$	3,222.8	$	1,091.5

⁴ Name changed from Fabric & Carpet Cushion Group as of March 31, 2018