REVENUE

9 Months Ended

Jul. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

The Company recognizes revenue in connection with a contract in which the Company has agreed to sell, and a customer has agreed to purchase, specific quantities of product at agreed-upon prices and when the Company's performance obligation related to that contract has been satisfied. In the majority of its contracts with customers, the Company's performance obligation is satisfied when delivery of the product has occurred, either at the customer's facility or the Company's facility, depending on the terms of each contract. In a small number of contracts, ownership of the product passes from the Company to the customer at some point during transit, at which time the performance obligation is satisfied and revenue is recognized. Revenue and related receivables are recognized based on the transaction price within the contract and are reduced by estimated or known amounts for items such as rebates, discounts, cooperative advertising allowances and other various items.

The cost incurred for shipping and handling activities to deliver the product to the customer is recognized in cost of sales during the period in which the corresponding revenue is recognized. Where shipping and handling activities occur after the customer has obtained control of the product, the Company has elected to account for those expenses as fulfillment costs in cost of sales, rather than an additional promised service. This accounting treatment is the same as the accounting treatment prior to the Company's adoption of ASU 2014-09, Revenue from Contracts with Customers. The Company has, prior to the adoption of ASU 2014-09, accounted for freight one of two ways. First, when the Company's agreement with its customer did not authorize the Company to invoice the customer separately for freight, the Company attempted to negotiate a higher price, and paid freight costs associated with the sale. In these instances, that cost was booked as an expense in cost of sales. In some instances, the Company's agreements with its customers authorize the Company to invoice the customer for freight costs separately on its invoice to the customer. Under these arrangements, the Company has previously accounted for freight by recognizing revenue net of the freight costs. Subsequent to the adoption of ASU 2014-09, both arrangements are accounted for in the same manner. That is, in both instances, revenue is reported gross of any freight charge, and all freight costs are accounted for as cost of sales. Because we adopted ASU 2014-09 using the modified-retrospective transition method, we did not restate prior-period financial statements, and the separately-invoiced freight costs from periods prior to fiscal 2019 remain presented as a reduction to cost of sales. During the third quarter of fiscal 2019, we recognized revenue of approximately $5.9 million related to those freight charges, as compared to approximately $6.1 million recognized as a reduction to cost of sales during the third quarter of fiscal 2018. During the first nine months of fiscal 2019, we recognized revenue of approximately $19.2 million related to those freight charges, as compared to approximately $14.6 million recognized as a reduction to cost of sales during the first nine months of fiscal 2018.

Due to the nature of our contracts, commissions associated with such contracts provide only a short-term benefit (i.e. less than one year); therefore, with our adoption of ASU 2014-09, we recognize costs of commissions paid to third-party brokers as selling, general and administrative expenses effective as of November 1, 2018. Prior to our adoption of ASU 2014-09, those commissions were recognized as a reduction of revenue. Because we transitioned using the modified-retrospective method, we did not restate prior-period financial statements, and those commissions from periods prior to fiscal 2019 remain presented as a reduction to revenue. During the third quarter of fiscal 2019, we recognized approximately $2.9 million in commissions as selling, general and administrative expenses, as compared to approximately $2.9 million recognized as a reduction to revenue during the third quarter of fiscal 2018. During the first nine months of fiscal 2019, we recognized approximately $8.1 million in commissions as selling, general and administrative expenses, as compared to approximately $8.1 million recognized as a reduction to revenue during the first nine months of fiscal 2018.

Disaggregation of Revenue

The following table disaggregates our net sales by product category (in millions):



Product Category	Three Months Ended July 31, 2019		Nine Months Ended July 31, 2019
Fresh, vacuum-sealed chicken	$	365.4	$	956.2
Fresh, chill-packed chicken	301.8		839.6
Fresh, ice-packed chicken	146.2		378.6
Prepared chicken	67.8		187.2
Frozen chicken	58.1		150.8
Other	5.9		21.4
Total net sales	$	945.2	$	2,533.8