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These excerpts taken from the HBI 10-K filed Feb 19, 2008. Sales
Recognition and Incentives
We recognize revenue when (i) there is persuasive evidence
of an arrangement, (ii) the sales price is fixed or
determinable, (iii) title and the risks of ownership have
been transferred to the customer and (iv) collection of the
receivable is reasonably assured, which occurs primarily upon
shipment. We record provisions for any uncollectible amounts
based upon our historical collection statistics and current
customer information. Our management reviews these estimates
each quarter and makes adjustments based upon actual experience.
Note 2(d), titled “Summary of Significant Accounting
Policies — Sales Recognition and Incentives,” to
our Consolidated Financial Statements describes a variety of
sales incentives that we offer to resellers and consumers of our
products. Measuring the cost of these incentives requires, in
many cases, estimating future customer utilization and
redemption rates. We use historical data for similar
transactions to estimate the cost of current incentive programs.
Our management reviews these estimates each quarter and makes
adjustments based upon actual experience and other available
information. For the year ended December 29, 2007, we
changed the manner in which we accounted for cooperative
advertising that resulted in a change in the classification from
media, advertising and promotion expenses to a reduction of
sales. This change in
Table of Contents
classification was made in accordance with
EITF 01-9,
Accounting for Consideration Given by a Vendor to a Customer
(Including a Reseller of the Vendor’s Products),
because the estimated fair value of the identifiable benefit was
no longer obtained beginning in 2007.
Sales Recognition and Incentives We recognize revenue when (i) there is persuasive evidence of an arrangement, (ii) the sales price is fixed or determinable, (iii) title and the risks of ownership have been transferred to the customer and (iv) collection of the receivable is reasonably assured, which occurs primarily upon shipment. We record provisions for any uncollectible amounts based upon our historical collection statistics and current customer information. Our management reviews these estimates each quarter and makes adjustments based upon actual experience. Note 2(d), titled “Summary of Significant Accounting Policies — Sales Recognition and Incentives,” to our Consolidated Financial Statements describes a variety of sales incentives that we offer to resellers and consumers of our products. Measuring the cost of these incentives requires, in many cases, estimating future customer utilization and redemption rates. We use historical data for similar transactions to estimate the cost of current incentive programs. Our management reviews these estimates each quarter and makes adjustments based upon actual experience and other available information. For the year ended December 29, 2007, we changed the manner in which we accounted for cooperative advertising that resulted in a change in the classification from media, advertising and promotion expenses to a reduction of sales. This change in
Table of Contentsclassification was made in accordance with EITF 01-9, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products), because the estimated fair value of the identifiable benefit was no longer obtained beginning in 2007. This excerpt taken from the HBI 8-K filed Nov 29, 2006. Sales
Recognition and Incentives
We recognize sales when title and risk of loss passes to the
customer. We record provisions for any uncollectible amounts
based upon our historical collection statistics and current
customer information. Our management reviews these estimates
each quarter and makes adjustments based upon actual experience.
Note 3(d), titled “Summary of Significant Accounting
Policies—Sales Recognition and Incentives,” to our
Combined and Consolidated Financial Statements describes a
variety of sales incentives that we offer to resellers and
consumers of our products. Measuring the cost of these
incentives requires, in many cases, estimating future customer
utilization and redemption rates. We use historical data for
similar transactions to estimate the cost of current incentive
programs. Our management reviews these estimates each quarter
and makes adjustments based upon actual experience and other
available information.
This excerpt taken from the HBI 10-K filed Sep 28, 2006. Sales
Recognition and Incentives
We recognize sales when title and risk of loss passes to the
customer. We record provisions for any uncollectible amounts
based upon our historical collection statistics and current
customer information. Our management reviews these estimates
each quarter and makes adjustments based upon actual experience.
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Note 3(d), titled “Summary of Significant Accounting
Policies—Sales Recognition and Incentives,” to our
Combined and Consolidated Financial Statements describes a
variety of sales incentives that we offer to resellers and
consumers of our products. Measuring the cost of these
incentives requires, in many cases, estimating future customer
utilization and redemption rates. We use historical data for
similar transactions to estimate the cost of current incentive
programs. Our management reviews these estimates each quarter
and makes adjustments based upon actual experience and other
available information.
This excerpt taken from the HBI 8-K filed Sep 5, 2006. (d) Sales Recognition and Incentives The Company recognizes sales when title and risk of loss passes to the customer. The Company records a reduction for returns and allowances based upon historical return experience. The Company earns royalty revenues through license agreements with manufacturers of other consumer products that incorporate the Company’s brands. These amounts were $22,463 in 2003, $27,725 in 2004 and $28,532 in 2005. The Company accrues revenue earned under these contracts based upon reported sales from the licensee. The Company offers a
F-9
Table of ContentsHANESBRANDS Notes to Combined and Consolidated Financial Statements—(Continued) (dollars in thousands, except per share data)
variety of sales incentives to resellers and consumers of its products, and the policies regarding the recognition and display of these incentives within the Combined and Consolidated Statements of Income are as follows: Discounts, Coupons and Rebates The Company recognizes the cost of these incentives at the later of the date at which the related sale is recognized or the date at which the incentive is offered. The cost of these incentives is estimated using a number of factors, including historical utilization and redemption rates. Substantially all cash incentives of this type are included in the determination of net sales. The Company generally includes incentives offered in the form of free products in the determination of cost of sales. Volume-Based Incentives These incentives typically involve rebates or refunds of cash that are redeemable only if the reseller completes a specified number of sales transactions. Under these incentive programs, the Company estimates the anticipated rebate to be paid and allocates a portion of the estimated cost of the rebate to each underlying sales transaction with the customer. The Company generally includes these amounts in the determination of net sales. Cooperative Advertising Under these arrangements, the Company agrees to reimburse the reseller for a portion of the costs incurred by the reseller to advertise and promote certain of the Company’s products. The Company recognizes the cost of cooperative advertising programs in the period in which the advertising and promotional activity first takes place. The Company generally includes the costs of these incentives in the determination of net sales. Fixtures and Racks Store fixtures and racks are periodically provided to resellers to display Company products. The Company expenses the cost of these fixtures and racks in the period in which they are delivered to the resellers. The Company generally includes the costs of these amounts in the determination of net sales. | EXCERPTS ON THIS PAGE:
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