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Organization and Basis of Presentation | 12 Months Ended
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Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] |
1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION American Axle & Manufacturing Holdings, Inc. (Holdings) and its subsidiaries (collectively, we, our, us or AAM) is a Tier I supplier to the automotive industry. We manufacture, engineer, design and validate driveline and drivetrain systems and related components and chassis modules for light trucks, sport utility vehicles (SUVs), passenger cars, crossover vehicles and commercial vehicles. Driveline and drivetrain systems include components that transfer power from the transmission and deliver it to the drive wheels. Our driveline, drivetrain and related products include axles, chassis modules, driveshafts, power transfer units, transfer cases, chassis and steering components, driveheads, transmission parts, electric drive systems and metal-formed products. In addition to locations in the United States (U.S.) (Michigan, Ohio and Indiana), we also have offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, Scotland, South Korea, Sweden and Thailand. PRINCIPLES OF CONSOLIDATION We include the accounts of Holdings and its subsidiaries in our consolidated financial statements. We eliminate the effects of all intercompany transactions, balances and profits in our consolidation. REVENUE RECOGNITION We recognize revenue when products are shipped to our customers and title transfers under standard commercial terms or when realizable in accordance with our commercial agreements. If we are uncertain as to whether we will be successful collecting a balance in accordance with our understanding of a commercial agreement, we do not recognize the revenue or cost recovery until such time as the uncertainty is removed. In 2014, we reached an agreement with General Motors Company (GM) to increase installed capacity and adjust product mix for our largest vehicle program. As a result of this agreement, we received $32.8 million in 2014 and recorded the payments as deferred revenue. This deferred revenue is being recognized into sales over the life of the program on a straight line basis over approximately 5 years, which is the period we expect GM to benefit from this capacity and mix change. We recognized $6.9 million and $5.4 million of revenue related to this agreement in 2015 and 2014, respectively. As of December 31, 2015, we have $6.9 million of deferred revenue that is classified as a current liability and $13.6 million of deferred revenue that is recorded as a noncurrent liability on our Consolidated Balance Sheet. Also in 2014, we reached an agreement with GM to recover certain costs related to the delay of another major product program. We received $9.3 million in 2014 related to this agreement which was recorded as deferred revenue. This deferred revenue is being recognized into sales over the life of the program on a straight-line basis over approximately 8 years, which is the period we expect GM to benefit from this agreement. We recognized $1.1 million and $0.5 million of revenue related to this agreement in 2015 and 2014, respectively. As of December 31, 2015, we have remaining deferred revenue of $7.7 million, $1.1 million of which is classified as a current liability and $6.6 million which is recorded as a noncurrent liability on our Consolidated Balance Sheet. In 2009, we entered into a settlement and commercial agreement (2009 Settlement and Commercial Agreement) with GM. As part of this agreement, we received $110.0 million from GM, of which we recorded $79.7 million as deferred revenue. As of December 31, 2015, our remaining deferred revenue related to the 2009 Settlement and Commercial Agreement is $29.5 million, $8.0 million of which is classified as a current liability and $21.5 million of which is recorded as a noncurrent liability on our Consolidated Balance Sheet. We recognize this deferred revenue into revenue on a straight-line basis over 120 months, which ends September 2019 and is the period that we expect GM to benefit under the 2009 Settlement and Commercial Agreement. We recognized revenue of $8.0 million, in 2015, 2014 and 2013 related to this agreement. As of December 31, 2015, the majority of the remaining deferred revenue primarily relates to customer payments to implement capacity programs, which is generally recognized into revenue over the life of these programs. We recognized $7.4 million, $7.5 million and $10.5 million of revenue for these programs in 2015, 2014 and 2013, respectively. RESEARCH AND DEVELOPMENT (R&D) COSTS We expense R&D, as incurred, in selling, general and administrative expenses on our Consolidated Statement of Income. R&D spending, net of engineering, design and development recoveries, was $113.9 million, $103.9 million and $103.4 million in 2015, 2014 and 2013, respectively. CASH AND CASH EQUIVALENTS Cash and cash equivalents inclu de all cash balances, savings accounts, sweep accounts, and highly liquid investments in money market funds and certificates of deposit with maturities of 90 days or less at the time of purchase. ACCOUNTS RECEIVABLE The majority of our accounts receivable are due from original equipment manufacturers (OEMs) in the automotive industry and are past due when payment is not received within the stated terms. Trade accounts receivable for our largest customer, GM, are generally due within approximately 50 days from the date of receipt. Amounts due from customers are stated net of allowances for doubtful accounts. We determine our allowances by considering factors such as the length of time accounts are past due, our previous loss history, the customer's ability to pay its obligation to us, and the condition of the general economy and the industry as a whole. The allowance for doubtful accounts was $4.3 million and $4.6 million as of December 31, 2015 and 2014, respectively. We write-off accounts receivable when they become uncollectible. CUSTOMER TOOLING AND PRE-PRODUCTION COSTS RELATED TO LONG-TERM SUPPLY AGREEMENTS Engineering, R&D, and other pre-production design and development costs for products sold on long-term supply arrangements are expensed as incurred unless we have a contractual guarantee for reimbursement from the customer. Costs for tooling used to make products sold on long-term supply arrangements for which we have either title to the assets or the noncancelable right to use the assets during the term of the supply arrangement are capitalized in property, plant and equipment. Capitalized items and customer receipts in excess of tooling costs specifically related to a supply arrangement are amortized over the shorter of the term of the arrangement or over the estimated useful lives of the related assets. INVENTORIES We state our inventories at the lower of cost or market. The cost of our inventories is determined using the FIFO method. When we determine that our gross inventories exceed usage requirements, or if inventories become obsolete or otherwise not saleable, we record a provision for such loss as a component of our inventory accounts. Inventories consist of the following:
| December 31,
| 2015 |  | 2014
| (in millions)
Raw materials and work-in-progress | $ | 228.7 |  |  | $ | 243.8 |
Finished goods | 31.1 |  |  | 32.9 |
Gross inventories | 259.8 |  |  | 276.7 |
Inventory valuation reserves | (29.3 | ) |  | (27.9 | )
Inventories, net | $ | 230.5 |  |  | $ | 248.8 |
PROPERTY, PLANT AND EQUIPMENT We state property, plant and equipment, including amortizable tooling, at historical cost, as adjusted for impairments. Construction in progress includes costs incurred for the construction of buildings and building improvements, and machinery and equipment in process. Repair and maintenance costs that do not extend the useful life or otherwise improve the utility of the asset beyond its existing useful state are expensed in the period incurred. We record depreciation and tooling amortization on the straight-line method over the estimated useful lives of the depreciable assets. Depreciation and tooling amortization amounted to $163.6 million, $166.5 million and $151.8 million in 2015, 2014 and 2013, respectively. Property, plant and equipment consists of the following:
| Estimated |  | December 31,
| Useful Lives |  | 2015 |  | 2014
| (years) |  | (in millions)
Land | Indefinite |  | $ | 24.9 |  |  | $ | 26.2 |
Land improvements | 10-15 |  | 18.8 |  |  | 19.0 |
Buildings and building improvements | 15-40 |  | 315.5 |  |  | 314.3 |
Machinery and equipment | 3-12 |  | 1,853.1 |  |  | 1,770.7 |
Construction in progress |  |  | 88.4 |  |  | 91.4 |
|  |  | 2,300.7 |  |  | 2,221.6 |
Accumulated depreciation and amortization |  |  | (1,254.5 | ) |  | (1,160.5 | )
Property, plant and equipment, net |  |  | $ | 1,046.2 |  |  | $ | 1,061.1 |
As of December 31, 2015, 2014 and 2013, we had unpaid purchases of plant and equipment in our Accounts Payable of $43.6 million, $31.4 million and $46.2 million, respectively. IMPAIRMENT OF LONG-LIVED ASSETS When impairment indicators exist, we evaluate the carrying value of long-lived assets for potential impairment. We consider projected future undiscounted cash flows, trends and other circumstances in making such estimates and evaluations. If impairment is deemed to exist, the carrying amount of the asset is adjusted based on its fair value. Recoverability of assets “held for use” is determined by comparing the forecasted undiscounted cash flows of the operations to which the assets relate to their carrying amount. When the carrying value of an asset group exceeds its fair value and is therefore nonrecoverable, those assets are written down to fair value. Fair value is determined based on market prices, when available, or a discounted cash flow analysis performed using management estimates. GOODWILL We record goodwill when the purchase price of acquired businesses exceeds the value of their identifiable net tangible and intangible assets acquired. We test our goodwill annually, or more frequently if necessary, for impairment in accordance with the accounting guidance for goodwill and other indefinite-lived intangibles. We completed impairment tests in 2015 and 2014 and concluded that there was no impairment of our goodwill. The following table provides a reconciliation of changes in goodwill:
| December 31,
| 2015 |  | 2014
| (in millions)
Beginning balance | $ | 155.0 |  |  | $ | 156.4 |
Foreign currency translation | (0.6 | ) |  | (1.4 | )
Ending balance | $ | 154.4 |  |  | $ | 155.0 |
INTANGIBLE ASSETS During 2015, we launched global enterprise resource planning (ERP) systems at certain key locations to upgrade many of our existing operating and financial systems. In connection with the development of these ERP systems we have recorded an intangible asset on our Consolidated Balance Sheet. The intangible asset is related to costs incurred to obtain software licenses from a third party, as well as costs to design and develop this internal-use software. This intangible asset is classified as other assets and deferred charges on our Consolidated Balance Sheet and will be amortized over the estimated useful life of our ERP systems. We recorded $3.2 million and $0.4 million of expense for the amortization of these intangible assets in 2015 and 2014, respectively. The following table provides the gross intangible asset balance and related amortization recorded on our Consolidated Balance Sheet as of December 31, 2015 and December 31, 2014:
| December 31,
| 2015 |  | 2014
| (in millions)
Capitalized computer software intangible asset | $ | 28.7 |  |  | $ | 19.7 |
Accumulated amortization | (3.7 | ) |  | (0.5 | )
Capitalized computer software intangible asset, net | $ | 25.0 |  |  | $ | 19.2 |
In connection with our e-AAM subsidiary, we have in-process research and development intangible assets which represent the technology that will be utilized in products to be launched in 2017. Accordingly, we will begin amortizing this asset on a straight-line basis at the start of production through the expected life cycle of the related products, which is expected to be approximately 5-7 years. These intangible assets are classified as other assets and deferred charges on our Consolidated Balance Sheet. The following table provides a reconciliation of changes in the carrying value of our in-process research and development intangible assets:
| December 31,
| 2015 |  | 2014
| (in millions)
Beginning balance | $ | 6.2 |  |  | $ | 7.4 |
Foreign currency translation | (0.5 | ) |  | (1.2 | )
Ending balance | $ | 5.7 |  |  | $ | 6.2 |
DEBT ISSUANCE COSTS The costs related to the issuance or modification of long-term debt are deferred and amortized into interest expense over the life of each debt issue. Based on the early adoption of ASU 2015-03 - Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, our debt issuance costs associated with our term facility and senior unsecured notes have been retrospectively reclassified as a reduction to the related debt liability rather than a deferred asset as previously recorded. As of December 31, 2015 and December 31, 2014, our unamortized debt issuance costs were $22.5 million and $29.5 million, respectively. Debt issuance costs of $7.9 million and $10.7 million related to our revolving credit facility, for which there is no outstanding debt liability, remain classified as Other Assets and Deferred Charges on our Consolidated Balance Sheets as of December 31, 2015 and December 31, 2014, respectively. Deferred amounts associated with the extinguishment of debt are expensed and classified as debt refinancing and redemption costs on our Consolidated Statement of Income. DERIVATIVES We recognize all derivatives on the balance sheet at fair value and we are not subject to master netting agreements. If a derivative qualifies under the accounting guidance as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of the hedged asset, liability or firm commitment through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value, and changes in the fair value of derivatives that do not qualify as hedges, are immediately recognized in earnings. See Note 3 - Derivatives and Risk Management, for more detail on our derivatives. CURRENCY TRANSLATION AND REMEASUREMENT We translate the assets and liabilities of our foreign subsidiaries to U.S. dollars at end-of-period exchange rates. We translate the income statement elements of our foreign subsidiaries to U.S. dollars at average-period exchange rates. We report the effect of translation for our foreign subsidiaries that use the local currency as their functional currency as a separate component of stockholders' equity. Gains and losses resulting from the remeasurement of assets and liabilities in a currency other than the functional currency of a subsidiary are reported in current period income. We also report any gains and losses arising from transactions denominated in a currency other than the functional currency of a subsidiary in current period income. These foreign currency gains and losses resulted in a gain of $9.5 million and $6.4 million and a loss of $4.2 million, for the years ended 2015, 2014 and 2013, respectively, in Other Income (Expense). PENSION AND OTHER POSTRETIREMENT DEFINED BENEFIT PLANS Net pension and postretirement benefit expenses and the related liabilities are determined on an actuarial basis. These plan expenses and obligations are dependent on management's assumptions developed in consultation with our actuaries. We review these actuarial assumptions at least annually and make modifications when appropriate. See Note 5 - Employee Benefit Plans, for more detail on our pension and other postretirement defined benefit plans. STOCK-BASED COMPENSATION We have stock-based compensation in the form of stock options, restricted stock units (RSUs), performance shares, and performance awards. For non-performance based awards, the grant date fair value is measured as the stock price at the date of grant. For performance based awards, fair value is estimated using valuation techniques that require management to use estimates and assumptions. Certain awards require that management's estimates and assumptions be evaluated at each reporting date to determine if compensation expense related to the award should be adjusted, both on a catch-up and go-forward basis. Compensation expense is recognized over the period during which the requisite service is provided, referred to as the vesting period. See Note 6 - Stock-Based Compensation for more detail on our accounting for stock-based compensation. DEFERRED INCOME TAX ASSETS AND LIABILITIES AND VALUATION ALLOWANCES Our deferred income tax assets and liabilities reflect the impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured by tax laws. In accordance with the accounting guidance for income taxes, we estimate whether recoverability of our deferred tax assets is “more likely than not,” based on forecasts of taxable income in the related tax jurisdictions. In this estimate, we use historical results, projected future operating results based upon approved business plans, eligible carryforward periods, tax planning opportunities and other relevant considerations. This includes the consideration of tax law changes, prior profitability performance and the uncertainty of future projected profitability. We record a valuation allowance to reduce our deferred tax assets to the amount that is "more likely than not," to be realized. We record uncertain tax positions on the basis of a two-step process whereby: (1) we determine whether it is "more likely than not" that the tax positions will be sustained based on the technical merits of the position: and (2) for those positions that meet the "more likely than not" recognition threshold, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on uncertain tax positions in income tax expense (benefit). See Note 7 - Income Taxes, for more detail on our accounting for income taxes. PRODUCT WARRANTY See Note 9 - Commitments and Contingencies, for more detail on our accounting for product warranties. USE OF ESTIMATES In order to prepare consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), we are required to make estimates and assumptions that affect the reported amounts and disclosures in our consolidated financial statements. Actual results could differ from those estimates. EFFECT OF NEW ACCOUNTING STANDARDS On November 20, 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-17 - Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which simplifies the accounting for deferred tax assets (DTAs) and deferred tax liabilities (DTLs). Under the new guidance, entities would be required to classify all DTAs and DTLs as noncurrent in the balance sheet, as opposed to the current US GAAP standard, which requires entities to split their DTAs and DTLs between current and noncurrent in the balance sheet based on the classification of the related asset or liability. The new standard will still require entities to net DTAs and DTLs within each tax jurisdiction and prohibit netting of DTAs and DTLs between different tax jurisdictions. The guidance becomes effective for AAM at the beginning of our 2017 fiscal year, however as permitted, AAM elected to early adopt this standard using the prospective method in the fourth quarter of 2015. Prior periods were not retrospectively adjusted. The effect of implementing this ASU on our consolidated financial statements was a reduction to our current deferred income tax assets of $39.2 million, a reduction to our current deferred income tax liabilities of $0.1 million, an increase to our noncurrent deferred income tax assets of $36.7 million, and a decrease to our noncurrent deferred income tax liabilities of $2.4 million at December 31, 2015. On May 1, 2015 the FASB issued ASU 2015-07 - Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), which changes the disclosure requirements for investments in certain entities that calculate net asset value (NAV) per share. Under current accounting standards entities are permitted to estimate the fair value of certain investments using the investment's NAV as a practical expedient. The current disclosure guidance also permits entities to disclose the investment at NAV in the fair value hierarchy table as either Level 2 or Level 3, based upon certain criteria. The measurement basis utilizing NAV is different than the measurement criteria of all other investments which utilize inputs to calculate fair value. Due to this inconsistency, the FASB issued this ASU which requires entities to remove investments measured at NAV from the fair value hierarchy table. The guidance becomes effective for AAM at the beginning of our 2016 fiscal year. Other than the change in presentation, the adoption of this new guidance will not have an impact on our consolidated financial statements. On April 7, 2015, the FASB issued ASU 2015-03 - Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. Under the ASU, entities would present such costs in the balance sheet as a direct deduction of the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. This ASU becomes effective for AAM at the beginning of our 2016 fiscal year, however as permitted, AAM elected to early adopt this standard as of December 31, 2015. The effect of implementing this ASU on our consolidated financial statements was a reduction to both our other assets and deferred charges and long-term debt of $14.6 million at December 31, 2015 and $18.8 million at December 31, 2014. In 2014, the FASB issued ASU 2014-09 - Revenue from Contracts with Customers (Topic 606), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current 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. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. On August 12, 2015, the FASB issued ASU 2015-14 - Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, to formally defer the initial standard's effective date by one-year, making this guidance effective for AAM at the beginning of our 2018 fiscal year. We are currently assessing the impact that this standard will have on our consolidated financial statements.

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- Definition The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=51801978&loc=d3e6003-108592 + Details
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