FARM » Topics » Revenue Recognition

These excerpts taken from the FARM 8-K filed May 8, 2009.
Revenue Recognition  DSD’s revenue arrangements with customers involve multiple elements consisting of the sale of products and the right to use brew equipment at customer locations.   Because DSD retains ownership of brew equipment provided to customers, the guidance provided in Emerging Issues Task Force (“EITF”) Issue No. 01-8, Determining Whether an Arrangement Contains a Lease, was applied to determine that the right to use brew equipment at customer locations constitutes a lease within the scope of Statement of Financial Accounting Standards (“SFAS”) No. 13, Accounting for Leases.  SFAS No. 13 requires consideration for an arrangement be separated between the lease and other elements on a relative fair value basis consistent

 

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Sara Lee DSD

(An integrated operation within Sara Lee Corporation)

 

Notes to Financial Statements (unaudited)

(Dollars in thousands)

 

with the guidance in EITF Issue No. 00-21, Revenue Arrangements with Multiple Deliverables.  Total consideration received or receivable in DSD’s arrangement with customers includes the sale of products and the right to use brew equipment.  Accordingly, total consideration has been allocated on a relative fair value basis using management’s best estimate of fair value as prescribed in EITF No. 00-21 between product sales and equipment rentals.   Management’s estimate of fair value was based on available information for Sara Lee pricing for these elements when sold separately to Sara Lee customers.

 

Product sales — Sales are recognized when title and risk of loss pass to customer.  Sales are recognized as the net amount to be received after deducting estimated amounts for sales incentives and product returns.  DSD estimates product returns based on historical results taking into consideration the customer, transaction and specifics of each arrangement.  DSD offers certain customers volume-based incentives.  These incentives typically involve rebates or refunds of a specified amount of cash only if the customer reaches a specified level of sales. Under incentive programs of this nature, DSD estimates the incentive and allocates a portion of the incentive to reduce each underlying sales transaction with the customer.

 

Equipment rentals - The brew equipment rental leases are classified as operating leases in accordance with SFAS No. 13.  Equipment rentals revenue is contingent upon the delivery of products to customers therefore the terms of rental agreements with customers range from week-to-week to month-to-month.  Equipment rental revenue is recognized when earned, provided that collection is reasonably assured.

 

Revenue Recognition  DSD’s revenue arrangements with customers involve multiple elements consisting of the sale of products and the right to use brew equipment at customer locations.   Because DSD retains ownership of brew equipment provided to customers, the guidance provided in Emerging Issues Task Force (“EITF”) Issue No. 01-8, Determining Whether an Arrangement Contains a Lease, was applied to determine that the right to use brew equipment at customer locations constitutes a lease within the scope of Statement of Financial Accounting Standards (“SFAS”) No. 13, Accounting for Leases.  SFAS No. 13 requires consideration for an arrangement be separated between the lease and other elements on a relative fair value basis consistent with the guidance in EITF Issue No. 00-21, Revenue Arrangements with Multiple

 

8



 

Sara Lee DSD

(An integrated operation within Sara Lee Corporation)

 

Notes to Financial Statements (unaudited)

(Dollars in thousands)

 

Deliverables.  Total consideration received or receivable in DSD’s arrangement with customers includes the sale of products and the right to use brew equipment.  Accordingly, total consideration has been allocated on a relative fair value basis using management’s best estimate of fair value as prescribed in EITF No. 00-21 between product sales and equipment rentals.   Management’s estimate of fair value was based on available information for Sara Lee pricing for these elements when sold separately to Sara Lee customers.

 

Product sales — Sales are recognized when title and risk of loss pass to customer.  Sales are recognized as the net amount to be received after deducting estimated amounts for sales incentives and product returns.  DSD estimates product returns based on historical results taking into consideration the customer, transaction and specifics of each arrangement.  DSD offers certain customers volume-based incentives.  These incentives typically involve rebates or refunds of a specified amount of cash only if the customer reaches a specified level of sales. Under incentive programs of this nature, DSD estimates the incentive and allocates a portion of the incentive to reduce each underlying sales transaction with the customer.

 

Equipment rentals - The brew equipment rental leases are classified as operating leases in accordance with SFAS No. 13.  Equipment rentals revenue is contingent upon the delivery of products to customers therefore the terms of rental agreements with customers range from week-to-week to month-to-month.  Equipment rental revenue is recognized when earned, provided that collection is reasonably assured.

 

These excerpts taken from the FARM 10-K filed Sep 15, 2008.

Revenue Recognition

        Products are sold and delivered to the Company's customers at their places of business by the Company's route sales employees. Revenue is recognized at the time the Company's sales representatives physically deliver products to customers and title passes or when it is accepted by the customer when shipped by third party delivery.

Revenue Recognition



        Products are sold and delivered to the Company's customers at their places of business by the Company's route sales employees. Revenue
is recognized at the time the Company's sales representatives physically deliver products to customers and title passes or when it is accepted by the customer when shipped by third party delivery.




This excerpt taken from the FARM 10-K filed Sep 13, 2007.

Revenue Recognition

Products are sold and delivered to the Company’s customers at their places of business by the Company’s route sales employees. Revenue is recognized at the time the Company’s sales representatives physically deliver products to customers and title passes or when products are accepted by the customer when shipped by third party delivery.

This excerpt taken from the FARM 10-K filed Sep 13, 2006.

Revenue Recognition

Products are sold and delivered to the Company’s customers at their places of business by the Company’s route sales employees. Revenue is recognized at the time the Company’s sales representatives physically deliver products to customers and title passes.

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