XML 29 R16.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Derivatives | 3 Months Ended
--- | ---
Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments and Hedging Activities Disclosure [Text Block] |
9. | DERIVATIVES
Our business and financial results are affected by fluctuations in world financial markets, including interest rates and currency exchange rates. Our hedging policy has been developed to manage these risks to an acceptable level based on management’s judgment of the appropriate trade-off between risk, opportunity and cost. We do not hold financial instruments for trading or speculative purposes. On January 1, 2018, we early adopted new accounting guidance under Accounting Standards Update (ASU) 2017-12 - Targeted Improvements for Hedging Activities (Topic 815). ASU 2017-12 is intended to better align the risk management activities of a company with the company's financial reporting for hedging relationships. This guidance expands and refines several aspects of hedge accounting. The most applicable changes to AAM as a result of the new guidance are as follows: 1) the concept of risk component hedging is introduced in ASU 2017-12, which could allow us to hedge contractually specified components in a contract; 2) the guidance now allows entities to utilize a 31-day period in assessing whether the critical terms of a forecasted transaction match the maturity of the hedging derivative, which could allow for expanded use of hedging instruments for certain sales and purchases; and 3) we may now qualitatively assess hedge effectiveness on a quarterly basis when the facts and circumstances related to the hedging relationship have not changed significantly. The early adoption of this guidance did not have any impact on the measurement of our existing hedging relationships. Currency derivative contracts From time to time, we use foreign currency forward and option contracts to reduce the effects of fluctuations in exchange rates relating to the Mexican Peso, Euro, Brazilian Real, British Pound Sterling, Thai Baht, Swedish Krona, Chinese Yuan, Polish Zloty and Indian Rupee. As of March 31, 2018, we have currency forward and option contracts outstanding with a notional amount of $192.1 million that hedge our exposure to changes in foreign currency exchange rates for certain payroll expenses into the fourth quarter of 2020 and other items into the fourth quarter of 2018. Variable-to-fixed interest rate swap In the second quarter of 2017, we entered into a variable-to-fixed interest rate swap to reduce the variability of cash flows associated with interest payments on our variable rate debt. We have the following notional amounts hedged in relation to our variable-to-fixed interest rate swap: $750.0 million through May 2018, $600.0 million through May 2019, $450.0 million through May 2020 and $200.0 million through May 2021. The following table summarizes the reclassification of derivative gains and losses into net income from accumulated other comprehensive income (loss) for those derivative instruments designated as cash flow hedges under ASC 815 - Derivatives and Hedging:
|  | Location |  | Gain (Loss) Reclassified |  | Total of Financial |  | Gain Expected
|  | of Gain (Loss) |  | During Three Months Ended |  | Statement |  | to be Reclassified
|  | Reclassified into |  | March 31, |  | Line Item |  | During the
|  | Net Income |  | 2018 |  | 2017 |  | 2018 |  | Next 12 Months
|  |  |  | (in millions)
Currency forward contracts |  | Cost of Goods Sold |  | $ | (2.0 | ) |  | $ | (2.8 | ) |  | $ | 1,542.1 |  |  | $ | 1.6 |
Variable-to-fixed interest rate swap |  | Interest Expense |  | 0.4 |  |  | — |  |  | 53.2 |  |  | 2.3 |
See Note 14 - Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (AOCI) for amounts recognized in other comprehensive income (loss) during the three months ended March 31, 2018 and 2017. The following table summarizes the amount and location of gains recognized in the Condensed Consolidated Statements of Income for those derivative instruments not designated as hedging instruments under ASC 815:
|  |  |  | Gain Recognized During |  | Total of Financial
|  | Location of Gain |  | Three Months Ended |  | Statement Line
|  | Recognized in |  | March 31, |  | Item
|  | Net Income |  | 2018 |  | 2017 |  | 2018
|  |  |  | (in millions)
Currency forward contracts |  | Cost of Goods Sold |  | $ | 4.0 |  |  | $ | 3.5 |  |  | $ | 1,542.1 |

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration