Revenue Recognition

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

Disaggregation of Net Sales —The following table presents a disaggregation of our net sales by product type and revenue source. We believe these categories most appropriately depict the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with our customers.



	Twelve Months Ended
	December 31, 2019		December 31, 2018		December 31, 2017(1)
	(In thousands)
Fluid milk	$	4,580,538	$	4,756,360	$	5,315,731
Ice cream(2)	1,040,979		1,077,027		1,107,665
Fresh cream(3)	424,359		397,206		388,514
Extended shelf life and other dairy products(4)	171,003		189,860		196,374
Cultured	250,961		260,044		282,432
Other beverages(5)	256,935		278,838		290,970
Other(6)	96,112		123,062		114,898
Subtotal	6,820,887		7,082,397		7,696,584
Sales of excess raw materials(7)	380,295		515,162		—
Sales of other bulk commodities	127,481		157,724		98,441
Total net sales	$	7,328,663	$	7,755,283	$	7,795,025


(1)	Amounts in 2017 have not been restated as we elected to adopt ASC 606 in 2018 using the modified retrospective method. Sales of excess raw materials of $606.9 million for the twelve months ended December 31, 2017 were included as a reduction of cost of sales in our Consolidated Statements of Operations.


(2)	Includes ice cream, ice cream mix and ice cream novelties.


(3)	Includes half-and-half and whipping creams.


(4)	Includes creamers and other extended shelf life fluids.


(5)	Includes fruit juice, fruit flavored drinks, iced tea, water and flax-based beverages.


(6)	Includes items for resale such as butter, cheese, eggs and milkshakes.

(7)

Historically, we presented sales of excess raw materials as a reduction of cost of sales within our Consolidated Statements of Operations; however, upon further evaluation of these sales in connection with our implementation of ASC 606 in 2018, we determined that it was appropriate to present these sales as revenue. Therefore, on a prospective basis, effective January 1, 2018, we began reporting these sales within the net sales line of our Consolidated Statements of Operations.

The following table presents a disaggregation of our net product sales between sales of Company-branded products versus sales of private label products:



	Twelve Months Ended
	December 31, 2019		December 31, 2018		December 31, 2017(1)
	(In thousands)
Branded products	$	3,421,371	$	3,531,656	$	3,808,496
Private label products	3,399,516		3,550,741		3,888,088
Subtotal	6,820,887		7,082,397		7,696,584
Sales of excess raw materials	380,295		515,162		—
Sales of other bulk commodities	127,481		157,724		98,441
Total net sales	$	7,328,663	$	7,755,283	$	7,795,025


(1)	Amounts in 2017 have not been restated as we elected to adopt ASC 606 in 2018 using the modified retrospective method. Sales of excess raw materials of $606.9 million for the twelve months ended December 31, 2017 were included as a reduction of cost of sales in our Consolidated Statements of Operations.

Revenue Recognition and Nature of Products and Services —We manufacture, market and distribute a wide variety of branded and private label dairy and dairy case products, including fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy products to retailers, distributors, foodservice outlets, educational institutions and governmental entities across the United States. In all cases, we recognize revenue upon delivery to our customers as we have determined that this is the point at which our sole performance obligation is met and control is transferred, as the customer can direct the use and obtain substantially all of the remaining benefits from the asset at this point in time. Revenue is recognized in an amount that reflects the consideration we expect to ultimately receive in exchange for those promised goods or services. Revenue is recognized net of estimated allowances for product returns, trade promotions, prompt pay and other discounts.

The substantial majority of our revenue is derived from the sale of fluid milk, ice cream and other dairy products, which includes sales of both Company-branded products as well as private label products. In addition, we derive revenue from the sale of excess raw materials and the sale of other bulk commodities.

Our portfolio of products includes fluid milk, ice cream, cultured dairy products, creamers, ice cream mix and other dairy and dairy case products. We sell these products under national, regional and local proprietary or licensed brands, or under private labels. Our sales of excess raw materials consist primarily of bulk cream sales. As a result of the purchase of raw milk, we obtain more butterfat than is needed in our production process. Excess butterfat is sold, primarily in the form of bulk cream, to third parties. Additionally, in certain cases we may be required to externally purchase bulk cream in order to fulfill minimum supply requirements for our customers. In these cases, we purchase bulk cream from other processors or suppliers and resell it to our customers to fulfill our contractual requirements with them.

Contractual Arrangements with Customers —The majority of our sales are to retailers, warehouse clubs, distributors, foodservice outlets, educational institutions and governmental entities with whom we have contractual agreements. Our sales of excess raw materials and other bulk commodities are primarily to dairy cooperatives, dairy processors or other manufacturers for use as a raw ingredient in their respective manufacturing processes. Our customer contracts typically contain standard terms and conditions and a term sheet. In some cases, upon expiration, these arrangements may continue with the same terms and may not be formally renewed. Additionally, we have a number of informal sales arrangements with certain local and regional customers, which we consider to be contracts based on the criteria outlined in ASC 606. Payment terms and conditions vary by customer, but we generally provide credit terms to customers ranging up to 30 days; therefore, we have determined that our contracts do not include a significant financing component. We perform ongoing credit evaluations of our customers and maintain allowances for potential credit losses based on our historical experience.

We have determined that we satisfy our sole performance obligation related to our customer contracts at a point in time, as opposed to over time, and, accordingly, revenue is recognized at a point in time across all of our revenue streams. We continually evaluate whether our contractual arrangements with customers result in the recognition of contract assets or liabilities. No such assets or liabilities existed as of December 31, 2019 or December 31, 2018.

Sales Incentives and Other Promotional Programs —We routinely offer sales incentives and discounts through various regional and national programs to our customers and consumers. These programs include scan backs, product rebates, product returns, trade promotions and co-op advertising, product discounts, product coupons and amounts paid to customers for shelf space in retail stores. The costs associated with these programs are accounted for as reductions to the transaction price of our products and are therefore recorded as reductions to the gross sale, unless we receive a distinct good or service as defined under ASC 606. Specifically, a good or service is considered distinct when it is separately identifiable from other promises in the contract, we receive a benefit from the good or service, and the benefit is separable from the sale of our product to the customer.

Depending on the specific type of sales incentive and other promotional program, we use either the expected value or most likely amount method to determine the variable consideration. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience and expected levels of performance of the trade promotion or other program. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration. We maintain liabilities at the end of each period for the estimated incentive costs incurred but unpaid for these programs. See Note 8. Differences between estimated and actual incentive costs are historically not material and are recognized in earnings in the period such differences are determined.