Revenue is measured based on a consideration specified in a contract with a customer less any sales incentives. Revenue is recognized when (a) an enforceable contract with a customer exists, that has commercial substance, and collection of substantially all consideration for services is probable; and (b) the performance obligations to the customer are satisfied either over time or at a point in time.

Tobacco sales: Revenue from cigarette sales, which include federal excise taxes billed to customers, are recognized upon shipment of cigarettes when control has passed to the customer. Average collection terms for Tobacco sales range between three and twelve days from the time that the cigarettes are shipped to the customer. The Company records a liability for goods estimated to be returned in other current liabilities and the associated receivable for anticipated federal excise tax refunds in other current assets on the condensed consolidated balance sheet. The liability for returned goods is based principally on sales volumes and historical return rates. The estimated costs of sales incentives, including customer incentives and trade promotion activities, are based principally on historical experience and are accounted for as reductions in Tobacco revenue. Expected payments for sales incentives are included in other current liabilities on the Company’s condensed consolidated balance sheet. The Company accounts for shipping and handling costs as fulfillment costs as part of cost of sales.

Real estate sales: Real estate commissions and other payments earned by the Company’s real estate brokerage businesses are recognized as revenue when the real estate sale is completed or lease agreement is executed, which is the point in time that the performance obligation is satisfied. Any commission and other payments received in advance are deferred until the satisfaction of the performance obligation. Corresponding agent commission expenses, including any advance commission or other direct expense payments, are deferred and recognized as cost of sales concurrently with related revenues.

The Company’s Real Estate revenue contracts with customers do not have multiple material performance obligations to customers under Topic 606, except for contracts in the Company’s development marketing business. Contracts in the development marketing business provide the Company with the exclusive right to sell units in a subject property for a commission fee per unit sold calculated as a percentage of the sales price of each unit. Accordingly, a performance obligation exists for each unit in the development marketing property under contract, and a portion of the total contract transaction price is allocated to and recognized at the time each unit is sold.

The total contract transaction price is allocated to each unit in the subject property and recognized when the performance obligation, i.e. the sale of each unit, is satisfied. Accordingly, the transaction price allocated to the remaining performance obligations for the development marketing business represents variable consideration allocated entirely to wholly unsatisfied performance obligations.

Under development marketing service arrangements, dedicated staff are required for a subject property and these costs are typically reimbursed from the customer through advance payments that are recoupable from future commission earnings. Advance payments received and associated direct costs paid are deferred, allocated to each unit in the subject property, and recognized at the time of the completed sale of each unit.

Development marketing service arrangements also include direct fulfillment costs incurred in advance of the satisfaction of the performance obligation. The Company capitalizes costs incurred in fulfilling a contract with a customer if the fulfillment costs 1) relate directly to an existing contract or anticipated contract, 2) generate or enhance resources that will be used to satisfy performance obligations in the future, and 3) are expected to be recovered. These costs are amortized over the estimated customer relationship period which is the contract term. The Company uses an amortization method that is consistent with the pattern of transfer of goods or services to its customers by allocating these costs to each unit in the subject property and expensing these costs as each unit sold is closed over the contract.

Commission revenue is recognized at the time the performance obligation is met for commercial leasing contracts, which is when the lease agreement is executed, as there are no further performance obligations, including any amounts of future payments under extended payment terms.

Property management revenue arrangements consist of providing operational and administrative services to manage a subject property. Fees for these services are typically billed and collected monthly. Property management service fees are recognized as revenue over time using the output method as the performance obligations under the customer arrangement are satisfied each month.

Title insurance commission fee revenue is earned when the sale of the title insurance policy is completed, which corresponds to the point in time when the underlying real estate sale is completed, which is when the performance obligation is satisfied.



	Three Months Ended
	March 31,
	2019		2018
Tobacco Segment Revenues:
Core Discount Brands - PYRAMID, GRAND PRIX, LIGGETT SELECT, EVE and EAGLE 20’s	$	233,106	$	241,531
Other Brands	23,650		25,585
Total tobacco revenues	$	256,756	$	267,116



	Three Months Ended March 31, 2019
	New York City		Northeast		Southeast		West		Total
Real Estate Segment Revenues:
Commission brokerage income	$	65,679	$	31,111	$	22,971	$	18,529	$	138,290
Development marketing	11,386		—		2,630		7		14,023
Property management revenue	8,167		184		—		—		8,351
Title fees	—		1,233		—		—		1,233
Total Douglas Elliman Realty revenue	85,232		32,528		25,601		18,536		161,897
Other real estate revenues	—		—		—		2,271		2,271
Total real estate revenues	$	85,232	$	32,528	$	25,601	$	20,807	$	164,168



	Three Months Ended March 31, 2018
	New York City		Northeast		Southeast		West		Total
Real Estate Segment Revenues:
Commission brokerage income	$	60,408	$	32,678	$	24,398	$	21,412	$	138,896
Development marketing	10,610		123		293		194		11,220
Property management revenue	8,138		200		—		—		8,338
Title fees	—		989		—		—		989
Total Douglas Elliman Realty revenue	79,156		33,990		24,691		21,606		159,443
Other real estate revenues	—		—		—		2,407		2,407
Total real estate revenues	$	79,156	$	33,990	$	24,691	$	24,013	$	161,850




	March 31, 2019		January 1, 2019
Receivables, which are included in accounts receivable - trade, net	$	3,175	$	2,050
Contract assets, net, which are included in other current assets	9,329		9,264
Payables, which are included in other current liabilities	1,921		1,082
Contract liabilities, which are included in other current liabilities	7,824		7,071
Contract assets, net, which are included in other assets	18,024		15,794
Contract liabilities, which are included in other liabilities	32,376		30,445

Receivables and payables relate to commission receivables and commissions payable from the Real Estate commercial leasing contracts for which the performance obligation has been satisfied, have extended payment terms and are expected to be received and paid in the next twelve months. Receivables decreased $1,125 for the three-month period ended March 31, 2019 primarily due to revenue accrued as performance obligations are satisfied of $1,551, offset by cash collections. Correspondingly, payables increased $839 primarily due to additional expense accruals as performance obligations are satisfied of $1,119, offset by cash payments.

Contract assets increased by $2,295 during the three months ended March 31, 2019 due to $3,794 of payments made for direct fulfillment costs incurred in advance of the satisfaction of the performance obligations for Real Estate development marketing contracts, offset by costs recognized for units closed during the quarter.

Contract liabilities relate to payments received in advance of the performance obligations being satisfied under the contract for the Real Estate development marketing and are recognized as revenue at the points in time when the Company performs under the contract. Performance obligations related to the Real Estate development marketing contracts are considered satisfied when each unit is closed. Development marketing projects tend to span 4 to 6 years from the time the Company enters into the contract with the developer to the time that all of the sales of the units in a subject property are closed. The timing for sales closings are dependent upon several external factors outside the Company’s control, including but not limited to, economic factors, seller and buyer actions, construction timing and other real estate market factors. Accordingly, all contract liabilities and contract costs associated with development marketing are considered long-term until closing dates for unit sales are scheduled. As of March 31, 2019, the Company estimates approximately $7,824 of contract liabilities will be recognized as revenue within the next twelve months.

Contract liabilities increased by $2,684 during the three months ended March 31, 2019 due to $5,219 of advance payments received from customer prior to the satisfaction of performance obligations for Real Estate development marketing contracts,

offset by revenue recognized for units sold during the quarter. The Company recognized revenue of $1,514 and $951 for the three months ended March 31, 2019 and 2018, respectively, that were included in the contract liabilities balances at January 1, 2019 and January 1, 2018, respectively.