Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Accounting policy

On January 1, 2018, the Company adopted the new U.S. GAAP revenue standard using the modified retrospective transition method applied to contracts which were not completed as of January 1, 2018. The new revenue standard requires revenue to be recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services.

In accordance with the new revenue standard, revenue is measured based on the consideration specified in a contract with a customer and excludes any sales incentives or rebates. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. This occurs with shipment or delivery, depending on the underlying terms with the customer. The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. At the time of sale, the Company estimates provisions for different forms of variable consideration (discounts and rebates) based on historical experience, current conditions and contractual obligations, as applicable. Payment terms with customers vary by region and customer, but are generally 30-90 days. The Company does not have significant financing components or significant payment terms. Incidental items that are immaterial in the context of the contract are expensed as incurred.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Shipping and handling costs associated with outbound freight after control of a product has transferred to a customer are accounted for as a fulfillment cost and not as a separate performance obligation. Therefore, such items are accrued upon recognition of revenue.

Nature of goods and services

The following is a description of principal activities, separated by reportable segments, from which the Company generates its revenue. See Note 14 - Business Segments for additional details on the Company's reportable segments.

The Company’s reportable segments have the following revenue characteristics:


•	Americas Tire Operations - The Americas Tire Operations segment manufactures and markets passenger car and light truck tires. The segment also markets and distributes wheels and racing, motorcycle and TBR tires.


•	International Tire Operations - The International Tire Operations segment manufactures and markets passenger car, light truck, motorcycle, racing and TBR tires and tire retread material for global markets.

Disaggregation of revenue

In the following tables, revenue is disaggregated by major market channel for the three and nine months ended September 30, 2019 and 2018, respectively:



	Three Months Ended September 30, 2019
	Americas		International		Eliminations			Total
Light Vehicle ⁽¹⁾	$	537,711	$	103,275	$	(16,651	)	$	624,335
Truck and bus radial	51,187		17,973		(13,442		)	55,718
Other ⁽²⁾	13,059		11,022		—			24,081
Net sales	$	601,957	$	132,270	$	(30,093	)	$	704,134

	Nine Months Ended September 30, 2019
	Americas		International		Eliminations			Total
Light Vehicle ⁽¹⁾	$	1,508,374	$	308,860	$	(57,594	)	$	1,759,640
Truck and bus radial	151,045		65,561		(53,748		)	162,858
Other ⁽²⁾	39,782		40,148		—			79,930
Net sales	$	1,699,201	$	414,569	$	(111,342	)	$	2,002,428



	Three Months Ended September 30, 2018
	Americas		International		Eliminations			Total
Light Vehicle ⁽¹⁾	$	556,253	$	126,161	$	(34,252	)	$	648,162
Truck and bus radial	56,459		22,833		(19,182		)	60,110
Other ⁽²⁾	15,992		13,407		—			29,399
Net sales	$	628,704	$	162,401	$	(53,434	)	$	737,671

	Nine Months Ended September 30, 2018
	Americas		International		Eliminations			Total
Light Vehicle ⁽¹⁾	$	1,516,921	$	370,374	$	(90,624	)	$	1,796,671
Truck and bus radial	$	141,492	$	75,949	$	(61,792	)	155,649
Other ⁽²⁾	$	40,094	$	45,161	$	—		85,255
Net sales	$	1,698,507	$	491,484	$	(152,416	)	$	2,037,575


⁽¹⁾	Light vehicle includes passenger car and light truck tires


⁽²⁾	Other includes motorcycle and racing tires, wheels, tire retread material, and other items

Contract balances

Contract liabilities relate to customer payments received in advance of shipment. As the Company does not generally have rights to consideration for work completed but not billed at the reporting date, the Company does not have any contract assets. Accounts receivable are not considered contract assets under the new revenue standard as contract assets are conditioned upon

the Company's future satisfaction of a performance obligation. Accounts receivable, in contrast, are unconditional rights to consideration.

Significant changes in the contract liabilities balance during the nine months ended September 30, 2019 are as follows:



	Contract Liabilities
Contract liabilities at beginning of year	$	947
Increases to deferred revenue for cash received in advance from customers	13,288
Decreases due to recognition of deferred revenue	(10,516		)
Contract liabilities at September 30, 2019	$	3,719

Transaction price allocated to remaining performance obligations

For the three and nine months ended September 30, 2019 and 2018, respectively, revenue recognized from performance obligations related to prior periods was not material.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, is not material.

The Company applies the practical expedient in ASC 606 "Revenue from Contracts with Customers" and does not disclose information about remaining performance obligations that have original expected durations of one year or less.