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Revenue from Contracts with Customers | 9 Months Ended
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Sep. 30, 2018
Revenue from Contract with Customer [Abstract] |
Revenue from Contract with Customer | Revenue from Contracts with Customers The Company adopted the new accounting standard ASC 606, Revenue from Contracts with Customers and all the related amendments to all contracts using the modified retrospective method effective January 1, 2018. The Company manufactures and sells products, primarily to OEMs of light vehicles, and to a lesser extent, to other OEMs of commercial vehicles, off-highway vehicles, certain Tier One vehicle systems suppliers and into the aftermarket. Although the Company may enter into long-term supply arrangements with its major customers, the prices and volumes are not fixed over the life of the arrangements, and a contract does not exist for purposes of applying ASC 606 until volumes are contractually known. Revenue is recognized when performance obligations under the terms of a contract are satisfied, which generally occurs with the transfer of control of our products. For most of our products, transfer of control occurs upon shipment or delivery, however, a limited number of our customer arrangements for our highly customized products with no alternative use provide us with the right to payment during the production process. As a result, for these limited arrangements, revenue is recognized as goods are produced and control transfers to the customer. The Company recorded a contract asset of $10.5 million and $9.4 million at September 30, 2018 and January 1, 2018 for these arrangements. These amounts are reflected in Prepayments and other current assets in our consolidated balance sheet. Revenue is measured at the amount of consideration we expect to receive in exchange for transferring the goods. The Company has a limited number of arrangements with customers where the price paid by the customer is dependent on the volume of product purchased over the term of the arrangement. In other limited arrangements, the Company will provide a rebate to customers based on the volume of products purchased during the course of the arrangement. The Company estimates the volumes to be sold over the term of the arrangement and recognizes revenue based on the estimated amount of consideration to be received from these arrangements. As a result of these arrangements, the Company recognized a liability of $5.0 million and $18.4 million at September 30, 2018 and December 31, 2017. These amounts are reflected in Accounts payable and accrued expenses in our consolidated balance sheet. The Company’s payment terms with customers are customary and vary by customer and geography but typically range from 30 to 90 days. We have evaluated the terms of our arrangements and determined that they do not contain significant financing components. The Company provides warranties on some of its products. Provisions for estimated expenses related to product warranty are made at the time products are sold. See the Product Warranty footnote to the Consolidated Financial Statements for more information on product warranties. Shipping and handling fees billed to customers are included in sales, while costs of shipping and handling are included in cost of sales. The Company has elected to apply the accounting policy election available under ASC 606 and accounts for shipping and handling activities as a fulfillment cost. In limited instances, certain customers have provided payments in advance of receiving related products, typically at the onset of an arrangement prior to the beginning of production. These contract liabilities are reflected as Accounts payable and accrued expenses and Other non-current liabilities in our consolidated balance sheet and were $12.6 million and $17.6 million at September 30, 2018 and $12.1 million and $21.9 million at December 31, 2017, respectively. These amounts are reflected as revenue over the term of the arrangement (typically 3 to 7 years) as the underlying products are shipped. The Company continually seeks business development opportunities and at times provides customer incentives for new program awards. The Company evaluates the underlying economics of each amount of consideration payable to a customer to determine the proper accounting by understanding the reasons for the payment, the rights and obligations resulting from the payment, the nature of the promise in the contract, and other relevant facts and circumstances. When the Company determines that the payments are incremental and incurred only if the new business is obtained and expects to recover these costs from the customer over the term of the new business arrangement, the Company capitalizes these costs. The Company recognizes a reduction to revenue as products that the upfront payments are related to are transferred to the customer based on the total amount of products expected to be sold over the term of the arrangement (generally 3 to 7 years). The Company evaluates the amounts capitalized each period end for recoverability and expenses any amounts that are no longer expected to be recovered over the term of the business arrangement. The Company had $26.8 million and $18.2 million recorded in Prepayments and other current assets, and $180.7 million and $180.4 million recorded in Other non-current assets in the consolidated balance sheet at September 30, 2018 and December 31, 2017. The following table represents a disaggregation of revenue from contracts with customers by segment and region:
|  | Three months ended September 30, 2018 |  | Three months ended September 30, 2017
(In millions) |  | Engine |  | Drivetrain |  | Total |  | Engine |  | Drivetrain |  | Total
North America |  | $ | 393.0 |  |  | $ | 451.7 |  |  | $ | 844.7 |  |  | $ | 362.5 |  |  | $ | 398.9 |  |  | $ | 761.4 |
Europe |  | 690.3 |  |  | 208.7 |  |  | 899.0 |  |  | 693.3 |  |  | 238.2 |  |  | 931.5 |
Asia |  | 386.3 |  |  | 307.8 |  |  | 694.1 |  |  | 410.2 |  |  | 276.2 |  |  | 686.4 |
Other |  | 32.1 |  |  | 8.6 |  |  | 40.7 |  |  | 28.5 |  |  | 8.4 |  |  | 36.9 |
Total |  | $ | 1,501.7 |  |  | $ | 976.8 |  |  | $ | 2,478.5 |  |  | $ | 1,494.5 |  |  | $ | 921.7 |  |  | $ | 2,416.2 |
|  | Nine months ended September 30, 2018 |  | Nine months ended September 30, 2017
(In millions) |  | Engine |  | Drivetrain |  | Total |  | Engine |  | Drivetrain |  | Total
North America |  | $ | 1,186.5 |  |  | $ | 1,341.1 |  |  | $ | 2,527.6 |  |  | $ | 1,145.1 |  |  | $ | 1,260.0 |  |  | $ | 2,405.1 |
Europe |  | 2,343.1 |  |  | 747.8 |  |  | 3,090.9 |  |  | 2,057.6 |  |  | 704.0 |  |  | 2,761.6 |
Asia |  | 1,238.4 |  |  | 981.6 |  |  | 2,220.0 |  |  | 1,167.2 |  |  | 781.2 |  |  | 1,948.4 |
Other |  | 94.8 |  |  | 23.5 |  |  | 118.3 |  |  | 75.3 |  |  | 22.5 |  |  | 97.8 |
Total |  | $ | 4,862.8 |  |  | $ | 3,094.0 |  |  | $ | 7,956.8 |  |  | $ | 4,445.2 |  |  | $ | 2,767.7 |  |  | $ | 7,212.9 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 + Details
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