Revenue from Contracts with Customers

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customers [Abstract]

Revenue from Contract with Customer [Text Block]

15. REVENUE FROM CONTRACTS WITH CUSTOMERS

The guidance in ASC 606 Revenue from Contracts with Customers 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 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 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 front and rear axles, driveshafts, differential assemblies, clutch modules, balance shaft systems, disconnecting driveline technology, and electric and hybrid driveline products and systems for light trucks, sport utility vehicles (SUVs), crossover vehicles, passenger cars and commercial vehicles;

• Metal Forming products consist primarily of axle and transmission shafts, ring and pinion gears, differential gears and assemblies, connecting rods and variable valve timing products for Original Equipment Manufacturers and Tier 1 automotive suppliers; and

• Prior to the sale of the U.S. operations, the Casting segment produced both thin wall castings and high strength ductile iron castings, as well as transmission pump bodies, steering knuckles, control arms, brake anchors and calipers, and ball joint housings for the global light vehicle, commercial and industrial markets.

Our contracts with customers, which are comprised of purchase orders and delivery releases issued by our 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 13 - Commitments and Contingencies for further information on our product warranties.

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 years ended December 31, 2019, December 31, 2018 and December 31, 2017. Net sales are attributed to regions based on the location of production. Intersegment sales have been excluded from the table.

In the first quarter of 2019, we reorganized our business to disaggregate our former Powertrain segment, with a portion moving to our Driveline segment and a portion moving to our Metal Forming segment. As a result, the Powertrain amounts previously reported for the years ended December 31, 2018 and December 31, 2017 have been reclassified to Driveline and Metal Forming.

Additionally, in the fourth quarter of 2019, we finalized the Casting Sale. The Casting Sale did not include the entities that conduct AAM's casting operations in El Carmen, Mexico, which are now included in our Driveline segment. The amounts previously reported in our Casting segment for the retained operations in El Carmen, Mexico have been reclassified to our Driveline segment for the years presented.

	Twelve Months Ended December 31, 2019
	Driveline		Metal Forming		Casting		Total
North America	$	3,466.3	$	1,153.1	$	627.7	$	5,247.1
Asia	533.6		37.6		—		571.2
Europe	351.0		256.3		—		607.3
South America	98.8		6.5		—		105.3
Total	$	4,449.7	$	1,453.5	$	627.7	$	6,530.9
	Twelve Months Ended December 31, 2018
	Driveline		Metal Forming		Casting		Total
North America	$	3,823.1	$	1,275.9	$	741.3	$	5,840.3
Asia	634.4		43.9		—		678.3
Europe	329.0		293.1		—		622.1
South America	124.9		4.8		—		129.7
Total	$	4,911.4	$	1,617.7	$	741.3	$	7,270.4
	Twelve Months Ended December 31, 2017
	Driveline		Metal Forming		Casting		Total
North America	$	3,676.1	$	975.8	$	546.9	$	5,198.8
Asia	472.5		40.0		—		512.5
Europe	220.6		200.9		—		421.5
South America	132.7		0.5		—		133.2
Total	$	4,501.9	$	1,217.2	$	546.9	$	6,266.0

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, 2018	$	966.5		$	44.3		$	77.6
December 31, 2019	815.4			18.9			83.7
Increase/(decrease)	$	(151.1	)	$	(25.4	)	$	6.1

Contract liabilities relate to deferred revenue associated with various settlements and commercial agreements for which we have future performance obligations 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.

During the twelve months ended December 31, 2019 and December 31, 2018 we amortized $48.6 million and $47.9 million, respectively, 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.