Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

4. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill The following table provides a reconciliation of changes in goodwill for the year ended December 31, 2017 and the year ended December 31, 2016:



	Driveline			Metal Forming		Powertrain		Casting		Consolidated
	(in millions)
Balance as of January 1, 2016	$	130.5		$	23.9	$	—	$	—	$	154.4
Foreign currency translation	(0.4		)	—		—		—		(0.4		)
Balance as of December 31, 2016	$	130.1		$	23.9	$	—	$	—	$	154.0
Acquisition of MPG	—			515.3		471.6		405.5		1,392.4
Acquisition of USM Mexico	80.4			—		—		—		80.4
Foreign currency translation	0.6			19.7		7.2		—		27.5
Balance as of December 31, 2017	$	211.1		$	558.9	$	478.8	$	405.5	$	1,654.3

Other Intangible Assets As a result of our acquisitions of MPG and USM Mexico, AAM identified and recognized certain intangible assets that are subject to amortization. These intangible assets will be amortized over a period ranging from five to 17 years and the weighted-average amortization period for all intangible assets recognized as a result of these acquisitions is 13.6 years. The intangible assets were valued using primarily the relief from royalty method or the multi-period excess earnings method, both of which utilize significant unobservable inputs. These inputs are defined in the fair value hierarchy as Level 3 inputs, which require management to make estimates and assumptions regarding certain financial measures using forecasted or projected information.

The following table provides a breakout of the major intangible assets acquired by class:



	Estimated	December 31,
	Useful Lives	2017
	(years)	(in millions)
MPG
Customer platforms	14	$	950.0
Customer relationships	16-17	151.8
Technology and other	5-13	121.3
Total MPG		$	1,223.1

USM Mexico
Technology	13	$	29.5
Customer platforms	13	2.2
Total USM Mexico		$	31.7

Total		$	1,254.8

In the third quarter of 2017, we made measurement period adjustments related to our acquisition of MPG to reflect changes to facts and circumstances that existed as of the acquisition date. These adjustments resulted in a decrease to customer platforms of $20.0 million and a decrease in customer relationships of $1.5 million as a result of changes to our third-party valuation and customary post-closing reviews. The impact to amortization expense in our Consolidated Statements of Income for the twelve months ended December 31, 2017 as a result of adjusting our intangible assets was immaterial.

During 2016, we completed the final stages of implementing upgrades to our global enterprise resource planning (ERP) systems. This implementation included upgrades to 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 will be amortized over the estimated useful life of our ERP systems.

The following table provides a reconciliation of the gross carrying amount and associated accumulated amortization for AAM's total intangible assets, which are all subject to amortization, as of December 31, 2017 and December 31, 2016:



	December 31,							December 31,
	2017							2016
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(in millions)
Capitalized computer software	$	35.6	$	(14.3	)	$	21.3	$	31.7	$	(8.5	)	$	23.2
Customer platforms	952.2		(52.9		)	899.3		—		—			—
Customer relationships	151.8		(7.3		)	144.5		—		—			—
Technology and other	150.8		(9.3		)	141.5		—		—			—
Total	$	1,290.4	$	(83.8	)	$	1,206.6	$	31.7	$	(8.5	)	$	23.2

Amortization expense for these intangible assets was $75.3 million for the year ended December 31, 2017 and $5.0 million for the year ended December 31, 2016. Estimated amortization expense is approximately $100 million per year for each of the years 2018 through 2022.

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 2018. 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.

The following table provides a reconciliation of changes in the carrying value of our in-process research and development intangible assets:



	December 31,
	2017		2016
	(in millions)
Beginning balance	$	5.3	$	5.7
Foreign currency translation	0.6		(0.4		)
Ending balance	$	5.9	$	5.3

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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