NOTE

– Net Sales:

January

2018,

the Company adopted ASU

2014

Revenue from Contracts with Customers

and all subsequent amendments to the ASU (collectively “ASC

606”

) using the modified retrospective method to all contracts

not

completed as of

January 1, 2018.

The Company recorded a net increase to retained earnings of

$11.2

million as of

January 1, 2018

due to the cumulative impact of adopting ASC

606.

Results for reporting periods beginning after

January 1, 2018

are presented under ASC

606,

while amounts for periods prior to

January 1, 2018

have

not

been adjusted and continue to be reported under the accounting standards in effect for such periods.

For our Uniforms and Related Products and Promotional Products segments, revenue is primarily generated from the sale of finished products to customers. Revenue for our Uniforms and Related Products and Promotional Products segments is recognized when the performance obligations under the contract terms are satisfied. For certain contracts with customers in which the Company has an enforceable right to payment for goods with

alternative use, revenue is recognized over time upon receipt of finished goods into inventory. Revenue for goods that do have an alternative use or that the customer is

not

obligated to purchase under the terms of a contract is generally recognized when the goods are transferred to the customer. The Company includes shipping and handling fees billable to customers in net sales. Shipping and handling activities that occur after the transfer of promised goods are accrued as control is transferred to the customer rather than being treated as a separate performance obligation.

For our Remote Staffing segment, revenue is generated from providing our customers with staffing solution services. Revenue for our Remote Staffing segment is recognized as services are delivered.

Revenue is measured as the amount of consideration we expect to receive in exchange for the goods or services. Variable consideration for estimated returns and allowances is recorded based upon historical experience and current allowance programs. Contract termination terms

may

involve variable consideration clauses such as sales discounts and customer rebates, and revenue is adjusted accordingly for these provisions. The promised amount of consideration in a contract is

not

adjusted for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised good or service to a customer and when the customer pays for that product or service will be

one

year or less. Sales taxes are excluded from the measurement of a performance obligation’s transaction price. Sales commissions are expensed as incurred when we expect that the amortization period of such costs will be

one

year or less.

Refer to

Note

for the disaggregation of revenues by operating segment.

Contract Assets

The following table provides information about accounts receivables - trade, contract assets and contract liabilities from contracts with customers (in thousands):

	December 31,
	2019		2018
Accounts receivable - trade	$	79,746	$	64,017
Current contract assets		38,533		49,236
Current contract liabilities		1,821		437

Contract assets relate to goods produced without an alternative use for which the Company has an enforceable right to payment but which have

not

yet been invoiced to the customer. The decrease in contract assets during the year ended

December 31, 2019

was primarily related to the timing of shipments to customers and receipts from suppliers for finished goods with

alternative use within the Uniforms and Related Products segment. The majority of the amounts included in contract assets on

December 31, 2018

were transferred to accounts receivable during the year ended

December 31, 2019

. Contract liabilities relate to payments received in advance of the Company completing its performance under a contract. Contract liabilities are included in other current liabilities in our balances sheets.