Revenue

On December 31, 2017, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective basis. Results for reporting periods beginning December 31, 2017 are presented under Topic 606, while prior periods are not adjusted and continue to be reported in accordance with the Company's historic accounting under Topic 605. The adoption did not change the timing of revenue recognition as the Company's revenues have been determined to be recognized at a point in time and not over time. The Company elected not to capitalize contract fulfillment costs as the recovery of such costs are for a period of less than one year's time and are not material to the Company. At March 31, 2018, there were no contract assets recorded on the Consolidated Balance sheets. Also, the Company elected to treat shipping and handling as fulfillment costs under Topic 606, which will result in billed freight recorded in cost of sales and netted against freight costs. Sales, value-add, and other taxes collected concurrently with revenue-producing activities are excluded from revenue and booked on a net basis.

The Company extends payment terms to its customers based on commercially acceptable practices. The term between invoicing and payment due date is not significant. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring finished products or performing services, which is generally based on executed agreement or purchase order.

Most of the Company's products are shipped based on the customer specifications. Customer returns are infrequent and not material to the Company. Adjustments to net sales for sales deductions are generally recognized in the same period as the sale or when known. Customers in certain industries or countries may be required to prepay prior to shipment in order to maintain payment protection. These represent short-term prepayment from customers and are not material to the Company.

The following table summarizes the impact of adopting Topic 606 on the Company's consolidated financial statements for the three months ended March 31, 2018 (in thousands):



	Impact of changes in accounting policies
	As reported		Adjustments	Balances without adoption of Topic 606

Net sales	$	875,374	46,187	$	921,561

Cost of sales and operating expenses	$	678,099	46,187	$	724,286

The following table presents the Company revenues disaggregated by geographic area and major product types by reportable segment for the three months ended March 31, 2018 and April 1, 2017 (in thousands):



	Three Months Ended March 31, 2018
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area
North America	$	390,376	$	44,277	$	21,540	$	456,193
Europe	87,790		183,639		62,516		333,945
China	5,678		43,912		—		49,590
South America	—		14,344		—		14,344
Other	1,954		19,348		—		21,302
Net sales	$	485,798	$	305,520	$	84,056	$	875,374

Major product types
Fats	$	143,552	$	44,819	$	—	$	188,371
Used cooking oil	36,608		—		—		36,608
Proteins	203,395		—		—		203,395
Bakery	46,751		—		—		46,751
Other rendering	31,362		—		—		31,362
Food ingredients	—		233,923		—		233,923
Bioenergy	—		—		62,516		62,516
Biofuels	—		—		21,540		21,540
Other	24,130		26,778		—		50,908
Net sales	$	485,798	$	305,520	$	84,056	$	875,374



	Three Months Ended April 1, 2017 (a)
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area Revenues
North America	$	422,935	$	45,725	$	8,083	$	476,743
Europe	122,927		149,701		51,577		324,205
China	4,734		41,660		—		46,394
South America	—		12,974		—		12,974
Other	2,028		16,166		—		18,194
Net sales	$	552,624	$	266,226	$	59,660	$	878,510

Major product types
Fats	$	158,005	$	40,893	$	—	$	198,898
Used cooking oil	44,046		—		—		44,046
Proteins	198,151		—		—		198,151
Bakery	56,097		—		—		56,097
Other rendering	73,600		—		—		73,600
Food ingredients	—		206,279		—		206,279
Bioenergy	—		—		51,577		51,577
Biofuels	—		—		8,083		8,083
Other	22,725		19,054		—		41,779
Net sales	$	552,624	$	266,226	$	59,660	$	878,510

(a) As noted above prior year amounts have not been adjusted under the modified retrospective method for billed freight of approximately $38.2 million that is included in net sales in the three months ended April 1, 2017.

Revenue from Contracts with Customers

The Company has two primary revenue streams. Finished product revenues are recognized when control of the promised finished product is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the finished product. Service revenues are recognized in the fiscal month the service occurs.

Fats and Proteins. Fats and Proteins include the Company's global activities related to the collection and processing of beef, poultry and pork animal by-products into finished products of non-food grade oils, food grade fats and protein meal. Fats and proteins net sales are recognized when the Company ships the finished product to the customer and control has been transferred.

Used Cooking Oil. Used cooking oil includes collection and processing of used cooking oil into finished products of non-food grade fats. Used cooking oil net sales are recognized when the Company ships the finished product to the customer and control has been transferred.

Bakery. Bakery includes collection and processing of bakery residuals into finished product including Cookie Meal®, an animal feed ingredient primarily used in poultry and swine rations. Bakery net sales are recognized when the Company ships the finished product to the customer and control has been transferred.

Other Rendering. Other rendering include hides, pet food products, and service charges. Hides and pet food net sales are recognized when the Company ships the finished product to the customer and control has been transferred. Service revenues are recognized when the service has occurred.

Food Ingredients. Food ingredients includes collection and processing of pigskin, hide, bone and fish into finished product. Also includes harvesting, sorting and selling of hog and sheep casings as well as harvesting, purchasing and processing of hog, sheep and beef meat for pet food industry. Gelatin and CTH meat and casings net sales are recognized when the Company ships the finished product to the customer and control has been transferred.

Bioenergy. Bioenergy includes Ecoson, which converts organic sludge and food waste into biogas and Rendac, which collects fallen stock and animal waste for a fee and processes these materials into fats and meals that can only be used as low grade energy or fuel for boilers and cement kilns. Net sales are recognized when the finished product is shipped to the customer and control has been transferred. Service revenues are recognized in net sales when the service has occurred.

Biofuels. Biofuels includes the North American processing of rendered animal fats, recycled cooking oils and third party additives to produce diesel fuel. Biofuel net sales are recognized when the finished product is shipped to the customer and control has been transferred.

Other. Other includes grease trap collection and environmental services to food processors in the Feed Ingredients segment and Sonac Bone and Sonac Heparin in the Food Ingredients segment. Net sales are recognized when the Company ships the finished product to the customer. Service revenues are recognized when the service has occurred.