{"id":1987,"date":"2021-04-28T12:08:08","date_gmt":"2021-04-28T16:08:08","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=1987"},"modified":"2021-04-28T12:08:08","modified_gmt":"2021-04-28T16:08:08","slug":"sec-revenue-recognition-disclosure-comments","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/sec-revenue-recognition-disclosure-comments\/","title":{"rendered":"SEC Revenue Recognition Disclosure Comments"},"content":{"rendered":"

Revenue recognition is always at or near the top of frequent SEC comment areas.\u00a0 This comment letter<\/a>\u00a0provides two great examples.\u00a0 The first asks for deeper analysis in MD&A and the second probes the company\u2019s ASC 606 disaggregated revenue disclosures.<\/p>\n

MD&A <\/strong><\/p>\n

This MD&A comment asks the company to disclose quantified reasons for changes in international revenues.\u00a0The comment raises an interesting inconsistency in how the company discussed and analyzed changes in domestic versus international revenues.<\/p>\n

    \n
  1. Your discussion of changes in international wholesale segment sales attributes the decrease in sales to pandemic related store closures, which does not appear to provide enough context for the changes in revenue during the periods presented. Similar to your discussion of revenue changes in domestic wholesale sales, please revise to disclose sales volume, changes in average selling price, and\/or other underlying drivers for the change in international wholesale segment sales.<\/li>\n<\/ol>\n

    The company responded<\/a> that it would provide incremental disclosure in future filings and provided the SEC this example disclosure:<\/p>\n

    Our international wholesale segment sales decreased $164.4\u00a0million, or 29.9%, to $385.2\u00a0million for the three months ended June\u00a030, 2020 compared to sales of $549.6\u00a0million for the three months ended June\u00a030, 2019. Our international wholesale sales consist of direct sales by our foreign subsidiaries, including our joint ventures, that we make to department stores and specialty retailers and to our distributors, who in turn sell to retailers in various international regions where we do not sell directly. Direct sales by our foreign subsidiaries, including our joint ventures, was $341.7\u00a0million, a decrease of $104.0\u00a0million, or 23.3%, and our distributor sales was $43.5\u00a0million, a decrease of $60.3\u00a0million or 58.1%.<\/p>\n

    The $164.4\u00a0million decrease in segment sales was due to the effects of the pandemic and related store closures impacting our wholesale and distributor customers. Substantially all of the decrease was due to a volume reduction of 29.1% in the number of units sold. The average selling price decreased 1.3%.<\/p>\n

    ASC 606 Disaggregated Revenue Disclosures<\/strong><\/p>\n

    This second comment focuses on ASC 606 disaggregated revenue disclosures.\u00a0 The staff noted that, from their perspective, the company did not address a key revenue driver.<\/p>\n

      \n
    1. We note your disclosures of sales related to e-commerce channels in your MD&A discussion and on your quarterly earnings calls. We also note that sales from your e-commerce channels increased by 428.2% and were a key driver to the quarter ended June 30, 2020. Please tell us your consideration for disclosure of disaggregated revenues for your Direct-to-consumer segment by sales channel (i.e., e-commerce channel and in-store sales) pursuant to ASC 606-10-55-89 through 91. In your response, tell us the amount of e-commerce sales recognized during the periods presented and also for fiscal 2019.<\/li>\n<\/ol>\n

      In their response<\/a>, the company provided a detailed analysis of the decision-making considerations in their disaggregated revenue disclosures.\u00a0 While they agreed to continue to monitor this area, they did not believe that any disclosure changes were necessary.\u00a0 The staff\u2019s next letter was the closing letter.<\/p>\n

      As always, your thoughts and comments are welcome!<\/p>\n","protected":false},"excerpt":{"rendered":"

      Revenue recognition is always at or near the top of frequent SEC comment areas.\u00a0 This comment letter\u00a0provides two great examples.\u00a0 The first asks for deeper analysis in MD&A and the second probes the company\u2019s ASC 606 disaggregated revenue disclosures. MD&A This MD&A comment asks the company to disclose quantified reasons for changes in international revenues.\u00a0The … Continue reading SEC Revenue Recognition Disclosure Comments<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"{title}\n\n{excerpt}\n\n{url}","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false,"jetpack_post_was_ever_published":false},"categories":[17,242],"tags":[],"coauthors":[154],"class_list":["post-1987","post","type-post","status-publish","format-standard","hentry","category-commentoftheweek","category-reporting"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/1987","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/comments?post=1987"}],"version-history":[{"count":0,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/1987\/revisions"}],"wp:attachment":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/media?parent=1987"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/categories?post=1987"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/tags?post=1987"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/coauthors?post=1987"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}