Revenue Recognition

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

REVENUE RECOGNITION

Revenue Recognition Policies

On January 1, 2018, the Company adopted Topic 606 applying the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the FASB Accounting Standard Codification Topic 605 (“Topic 605”) in effect for the prior periods and are, therefore, not comparative.

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, is 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 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 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 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 Company applies the optional exemption in paragraph 606-10-50-14A of Topic 606, and does not disclose the amount of the transaction price allocated to the remaining performance obligations for the Real Estate development marketing business because the transaction prices in these contracts are comprised entirely of variable consideration based on the ultimate selling price of each unit in the subject property. 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. The Company applies the optional exemption in paragraph 606-10-50-14 of Topic 606, and does not disclose the amount of the transaction price allocated to the remaining performance obligations for the Real Estate property management business because the contracts to provide property management services are typically annual contracts and provide cancellation rights to customers.

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.

Disaggregation of Revenue

In the following table, revenue is disaggregated by major product line for the Tobacco segment:

	Year Ended
	December 31,
	2019		2018		2017
Tobacco Segment Revenues:
Core Discount Brands - EAGLE 20’s, PYRAMID, GRAND PRIX, LIGGETT SELECT and EVE	$	1,008,050	$	1,005,071	$	969,796
Other Brands	106,790		106,023		111,154
Total tobacco revenues	$	1,114,840	$	1,111,094	$	1,080,950

In the following table, revenue is disaggregated by major services line and primary geographical market for the Real Estate segment:

	Year Ended December 31, 2019
	Total		New York City		Northeast		Southeast		West
Real Estate Segment Revenues:
Commission brokerage income	$	669,489	$	293,009	$	164,724	$	106,587	$	105,169
Development marketing	72,925		48,850		—		19,594		4,481
Property management revenue	35,461		34,741		720		—		—
Title fees	6,233		—		6,233		—		—
Total Douglas Elliman revenue	784,108		376,600		171,677		126,181		109,650
Other real estate revenues	4,763		—		—		—		4,763
Total real estate revenues	$	788,871	$	376,600	$	171,677	$	126,181	$	114,413

	Year Ended December 31, 2018
	Total		New York City		Northeast		Southeast		West
Real Estate Segment Revenues:
Commission brokerage income	$	651,171	$	285,325	$	166,100	$	99,720	$	100,026
Development marketing	64,287		48,072		252		15,068		895
Property management revenue	33,350		32,635		715		—		—
Title fees	5,281		—		5,281		—		—
Total Douglas Elliman revenue	754,089		366,032		172,348		114,788		100,921
Other real estate revenues	5,079		—		—		—		5,079
Total real estate revenues	$	759,168	$	366,032	$	172,348	$	114,788	$	106,000

	Year Ended December 31, 2017
	Total		New York City		Northeast		Southeast		West
Real Estate Segment Revenues:
Commission brokerage income	$	633,093	$	332,319	$	168,834	$	79,547	$	52,393
Development marketing	52,061		37,761		402		11,211		2,687
Property management revenue	31,924		31,224		700		—		—
Title fees	5,265		—		5,265		—		—
Total Douglas Elliman revenue	722,343		401,304		175,201		90,758		55,080
Other real estate revenues	5,021		—		—		—		5,021
Total real estate revenues	$	727,364	$	401,304	$	175,201	$	90,758	$	60,101

Contract Balances

The following table provides information about contract assets and contract liabilities from development marketing and commercial leasing contracts with customers:

	December 31, 2019		December 31, 2018
Receivables, which are included in accounts receivable - trade, net	$	2,129	$	2,050
Contract assets, net, which are included in other current assets	8,766		9,264
Payables, which are included in other current liabilities	1,663		1,082
Contract liabilities, which are included in other current liabilities	9,358		7,071
Contract assets, net, which are included in other assets	18,443		15,794
Contract liabilities, which are included in other liabilities	29,045		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 increased $79 for the twelve-month period ended December 31, 2019 primarily due to revenue accrued as performance obligations are satisfied of $3,522, offset by cash collections. Correspondingly, payables increased $581 primarily due to additional expense accruals as performance obligations are satisfied of $2,570, offset by cash payments.

Contract assets increased by $2,151 during the year ended December 31, 2019 due to $18,213 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 December 31, 2019, the Company estimates approximately $9,358 of contract liabilities will be recognized as revenue within the next twelve months.

Contract liabilities increased by $887 during the year ended December 31, 2019 due to $21,102 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 year. Revenue recognized during the current reporting period that was included in the contract liabilities balance at December 31, 2018 was $14,973.

Topic 606 requires an entity to disclose the revenue recognized in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods (for example, due to changes in transaction price). For the year ended December 31, 2019, there was no revenue recognized relating to performance obligations satisfied or partially satisfied in prior periods.