Restructuring and Acquisition-Related Costs

12 Months Ended

Dec. 31, 2020

Restructuring and Related Activities [Abstract]

Business Acquisition, Integration, Restructuring and Other Related Costs [Text Block]

2. RESTRUCTURING AND ACQUISITION-RELATED COSTS

In 2016, AAM initiated actions under a global restructuring program (the 2016 Program) focused on creating a more streamlined organization in addition to reducing our cost structure and preparing for acquisition and integration activities. From inception of the 2016 Program, we incurred severance charges totaling $2.8 million and implementation costs totaling $29.6 million. The 2016 Program has concluded and we do not expect to incur any additional charges under this program. In addition to costs incurred under the 2016 program, we initiated actions in 2018 to exit operations at manufacturing facilities in our Driveline, Metal Forming and former Powertrain segments.

In 2019, we initiated a global restructuring program (the 2019 Program). The primary objectives of the 2019 Program were to further the integration of Metaldyne Performance Group, Inc. (MPG), align AAM's product and process technologies, and to achieve efficiencies within our corporate and business unit support teams to reduce cost in our business.

In the first quarter of 2020, we initiated a new global restructuring program (the 2020 Program) that supersedes the 2019 Program. The primary objectives of the 2020 Program are to achieve efficiencies within our corporate and business unit support teams to reduce cost in our business, and to structurally adjust our operations to a new level of market demand based on the impact of COVID-19. We expect to incur costs under the 2020 Program into 2022.

A summary of our restructuring activity for the years 2020, 2019 and 2018 is shown below:


	Severance Charges		Implementation Costs		Asset Impairment Charges		Total
	(in millions)
Accrual at January 1, 2018	$	0.3	$	—	$	—	$	0.3
Charges	2.5		11.7		30.0		44.2
Cash utilization	(0.4)		(10.1)		—		(10.5)
Non-cash utilization	—		—		(30.0)		(30.0)
Accrual at December 31, 2018	2.4		1.6		—		4.0
Charges	19.4		20.4		—		39.8
Cash utilization	(17.0)		(14.6)		—		(31.6)
Non-cash utilization	—		—		—		—

Accrual at December 31, 2019	4.8		7.4		—		12.2
Charges	22.3		36.1		—		58.4
Cash utilization	(25.4)		(33.7)		—		(59.1)
Non-cash utilization	—		—		—		—

Accrual at December 31, 2020	$	1.7	$	9.8	$	—	$	11.5

As part of our total restructuring actions during 2020, we incurred severance charges of approximately $22.3 million, as well as implementation costs, consisting primarily of plant exit costs and professional fees, of approximately $36.1 million. Approximately $47.8 million of the restructuring costs incurred in 2020 were under the 2020 Program. Approximately $19.3 million and $16.0 million of our total restructuring costs in 2020 related to our Driveline and Metal Forming segments, respectively, while the remainder were corporate costs.

In 2019, we incurred severance charges of approximately $19.4 million, as well as implementation costs, consisting primarily of plant exit costs, of approximately $20.4 million. Approximately $6.4 million, $21.5 million and $0.7 million of our total restructuring costs in 2019 related to our Driveline, Metal Forming and former Casting segments, respectively, while the remainder were corporate costs.

In 2018, we incurred severance charges of approximately $2.5 million, as well as implementation costs, consisting primarily of plant exit costs and professional fees, of approximately $11.7 million and long-lived asset impairment charges of $30.0 million. Approximately $3.4 million, $37.6 million and $0.1 million of our total restructuring costs in 2018 related to our Driveline, Metal Forming and former Casting segments, respectively, while the remainder were corporate costs.

We expect to incur approximately $50 million to $65 million of total restructuring charges in 2021, substantially all of which are under the 2020 Program.

In 2019, we completed our acquisition of certain operations of Mitec Automotive AG, and in 2017, we completed our acquisitions of MPG and USM Mexico. The following table represents a summary of charges incurred in 2020, 2019 and 2018 associated with acquisition and integration costs:


	Acquisition-Related Costs		Severance Charges		Integration Expenses		Total

2020 Charges	$	—	$	—	$	8.8	$	8.8
2019 Charges	1.8		—		16.2		18.0
2018 Charges	1.2		0.5		33.0		34.7

Acquisition-related costs primarily consist of advisory, legal, accounting, valuation and certain other professional or consulting fees incurred. Integration expenses primarily reflect costs incurred for information technology infrastructure and enterprise resource planning systems, and consulting fees incurred in conjunction with the acquisitions.

Total restructuring charges and acquisition-related charges of $67.2 million, $57.8 million and $78.9 million are shown on a separate line item titled "Restructuring and Acquisition-Related Costs" in our Consolidated Statements of Operations for 2020, 2019 and 2018, respectively.