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Revenue from Contracts with Customers Revenue from Contracts with Customers (Notes) | 3 Months Ended
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Mar. 31, 2018
Revenue from Contract with Customer [Abstract] |
Revenue from Contract with Customer [Text Block] |
2. | REVENUE FROM CONTRACTS WITH CUSTOMERS
On January 1, 2018, we adopted new accounting guidance under Accounting Standards Codification Topic 606 (ASC 606) Revenue from Contracts with Customers. ASC 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most existing revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We have elected to adopt this guidance utilizing the modified retrospective transition method, which requires a one-time adjustment to opening retained earnings for the cumulative impact of adopting the new guidance. No adjustment to retained earnings was required as of January 1, 2018 as there was no impact to previously reported revenue or expenses associated with adopting ASC 606. We are obligated under our contracts with customers to manufacture and supply products for use in our customers’ operations. We satisfy these performance obligations at the point in time that the customer obtains control of the products, which is the point in time that the customer is able to direct the use of, and obtain substantially all of the remaining benefits from, the products. This typically occurs upon shipment to the customer in accordance with purchase orders and delivery releases issued by our customers. There is significant judgment involved in determining when the customer obtains control of the products and we have utilized the following indicators of control in our assessment: •We have the present right to payment for the asset; •The customer has legal title to the asset; •We have transferred physical possession of the asset; •The customer has the significant risks and rewards of ownership of the asset; and •The customer has accepted the asset. Our product offerings by segment are as follows:
• | Driveline products consist primarily of axles, driveshafts, power transfer units, rear drive modules, transfer cases, and electric and hybrid driveline products and systems for light trucks, SUVs, crossover vehicles, passenger cars and commercial vehicles;
• | Metal Forming products consist primarily of axle and transmission shafts, ring and pinion gears, differential gears, transmission gears, and suspension components for Original Equipment Manufacturers and Tier 1 automotive suppliers;
• | The Powertrain segment products consist primarily of transmission module and differential assemblies, transmission valve bodies, connecting rod forging and assemblies, torsional vibration dampers, and variable valve timing products for Original Equipment Manufacturers and Tier I automotive suppliers; and
• | The Casting segment produces both thin wall castings and high strength ductile iron castings, as well as differential cases, steering knuckles, control arms, brackets, and turbo charger housings for the global light vehicle, commercial and industrial markets.
Our contracts with customers generally state the terms of the sale, including the quantity and price of each product purchased. Trade accounts receivable from our customers are generally due approximately 50 days from the date our customers receive our product. Our contracts typically do not contain variable consideration as the contracts include stated prices. We provide our customers with assurance type warranties, which are not separate performance obligations and are outside the scope of ASC 606. Refer to Note 11 - Product Warranties for further information. Disaggregation of Net Sales Net sales recognized from contracts with customers, disaggregated by segment and geographical location, are presented in the following table for the three months ended March 31, 2018 and 2017. Net sales are attributed to regions based on the location of production. Intersegment sales have been excluded from the table.
|  | Three Months Ended March 31, 2018
|  | Driveline |  | Metal Forming |  | Powertrain |  | Casting |  | Total
North America |  | $ | 885.3 |  |  | $ | 216.3 |  |  | $ | 199.2 |  |  | $ | 209.8 |  |  | $ | 1,510.6 |
Asia |  | 122.8 |  |  | 1.4 |  |  | 31.1 |  |  | — |  |  | 155.3 |
Europe |  | 29.0 |  |  | 73.4 |  |  | 55.9 |  |  | — |  |  | 158.3 |
South America |  | 33.3 |  |  | — |  |  | 0.9 |  |  | — |  |  | 34.2 |
Total |  | $ | 1,070.4 |  |  | $ | 291.1 |  |  | $ | 287.1 |  |  | $ | 209.8 |  |  | $ | 1,858.4 |
|  | Three Months Ended March 31, 2017
|  | Driveline |  | Metal Forming |  | Powertrain |  | Casting |  | Total
North America |  | $ | 865.2 |  |  | $ | 51.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 916.3 |
Asia |  | 85.5 |  |  | — |  |  | — |  |  | — |  |  | 85.5 |
Europe |  | 20.7 |  |  | — |  |  | — |  |  | — |  |  | 20.7 |
South America |  | 27.4 |  |  | — |  |  | — |  |  | — |  |  | 27.4 |
Total |  | $ | 998.8 |  |  | $ | 51.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,049.9 |
Contract Assets and Liabilities The following table summarizes our beginning and ending balances for accounts receivable and contract liabilities associated with our contracts with customers:
| Accounts Receivable, Net | Contract Liabilities (Current) | Contract Liabilities (Long-term)
December 31, 2017 | $ | 1,035.9 |  | $ | 34.1 |  | $ | 78.8 |
March 31, 2018 | 1,238.2 |  | 34.0 |  | 77.6 |
Increase/(decrease) | $ | 202.3 |  | $ | (0.1 | ) | $ | (1.2 | )
Contract liabilities relate to deferred revenue associated with cash receipts from our customers for various settlements and commercial agreements for which we have a future performance obligation to the customer. We recognize this deferred revenue into revenue over the life of the associated program as we satisfy our performance obligations to the customer. We do not have contract assets as defined in ASC 606. For the three months ended March 31, 2018, we recognized contract liabilities of $6.7 million, all of which have been recorded in our Condensed Consolidated Balance Sheet as long-term deferred revenue. During this period, we also amortized $8.0 million of previously recorded contract liabilities into revenue as we satisfied performance obligations with our customers. Sales and Other Taxes ASC 606 provides a practical expedient that allows companies to exclude from the transaction price any amounts collected from customers for all sales (and other similar) taxes. We do not include sales and other taxes in our transaction price and thus do not recognize these amounts as revenue.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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