Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 10, 2020 | Jun. 28, 2019 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity File Number | 001-35456 | ||
Entity Registrant Name | ALLISON TRANSMISSION HOLDINGS, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 26-0414014 | ||
Entity Address, Address Line One | One Allison Way | ||
Entity Address, City or Town | Indianapolis | ||
Entity Address, State or Province | IN | ||
Entity Address, Postal Zip Code | 46222 | ||
City Area Code | 317 | ||
Local Phone Number | 242-5000 | ||
Title of 12(b) Security | Common Stock, $0.01 par value | ||
Trading Symbol | ALSN | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Voluntary Filers | No | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 117,760,996 | ||
Entity Public Float | $ 5,506 | ||
Entity Central Index Key | 0001411207 | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Documents Incorporated by Reference | Portions of the Registrant’s definitive Proxy Statement for its 2020 annual meeting of stockholders will be incorporated by reference in Part III of this Annual Report on Form 10-K. |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash and cash equivalents | $ 192 | $ 231 |
Accounts receivable - net of allowance for doubtful accounts of $1 and $1, respectively | 253 | 279 |
Inventories | 199 | 170 |
Other current assets | 42 | 45 |
Total Current Assets | 686 | 725 |
Property, plant and equipment, net | 616 | 466 |
Intangible assets, net | 1,042 | 1,066 |
Goodwill | 2,041 | 1,941 |
Other non-current assets | 65 | 39 |
TOTAL ASSETS | 4,450 | 4,237 |
Current Liabilities | ||
Accounts payable | 150 | 169 |
Product warranty liability | 24 | 26 |
Current portion of long-term debt | 6 | 0 |
Deferred revenue | 35 | 34 |
Other current liabilities | 202 | 197 |
Total Current Liabilities | 417 | 426 |
Product warranty liability | 28 | 40 |
Deferred revenue | 104 | 88 |
Long-term debt | 2,512 | 2,523 |
Deferred income taxes | 387 | 329 |
Other non-current liabilities | 221 | 172 |
TOTAL LIABILITIES | 3,669 | 3,578 |
Commitments and Contingencies (see NOTE 18) | 0 | 0 |
STOCKHOLDERS’ EQUITY | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding | 0 | 0 |
Paid in capital | 1,802 | 1,788 |
Accumulated deficit | (970) | (1,100) |
Accumulated other comprehensive loss, net of tax | (52) | (30) |
TOTAL STOCKHOLDERS’ EQUITY | 781 | 659 |
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | 4,450 | 4,237 |
Voting Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | 1 | 1 |
TOTAL STOCKHOLDERS’ EQUITY | 1 | 1 |
Non-voting Common Stock | ||
STOCKHOLDERS’ EQUITY | ||
Common stock | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Allowances for doubtful accounts receivables | $ 1 | $ 1 |
Preferred stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Voting Common Stock | ||
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,880,000,000 | 1,880,000,000 |
Common stock, shares issued (in shares) | 118,199,782 | 126,251,266 |
Common stock, shares outstanding (in shares) | 118,199,782 | 126,251,266 |
Non-voting Common Stock | ||
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 0 | 0 |
Common stock, shares outstanding (in shares) | 0 | 0 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net sales | $ 2,698 | $ 2,713 | $ 2,262 |
Cost of sales | 1,304 | 1,291 | 1,131 |
Gross profit | 1,394 | 1,422 | 1,131 |
Selling, general and administrative | 354 | 364 | 342 |
Engineering — research and development | 154 | 131 | 105 |
Environmental remediation | (8) | 0 | 0 |
Loss associated with impairment of long-lived assets | 2 | 4 | 32 |
Operating income | 892 | 923 | 652 |
Interest expense, net | (134) | (121) | (103) |
Other income (expense), net | 10 | 3 | (22) |
Income before income taxes | 768 | 805 | 527 |
Income tax expense | (164) | (166) | (23) |
Net income | $ 604 | $ 639 | $ 504 |
Basic earnings per share attributable to common stockholders (USD per share) | $ 4.95 | $ 4.81 | $ 3.38 |
Diluted earnings per share attributable to common stockholders (USD per share) | $ 4.91 | $ 4.78 | $ 3.36 |
Other comprehensive (loss) income, net of tax: | |||
Foreign currency translation | $ (3) | $ (9) | $ 15 |
Pension and OPEB liability adjustment | 0 | 1 | 26 |
Available-for-sale securities and interest rate swaps | (19) | (7) | 7 |
Total other comprehensive (loss) income, net of tax | (22) | (15) | 48 |
Comprehensive income | $ 582 | $ 624 | $ 552 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 604 | $ 639 | $ 504 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Amortization of intangible assets | 86 | 87 | 90 |
Depreciation of property, plant and equipment | 81 | 77 | 80 |
Deferred income taxes | 65 | 52 | (50) |
Stock-based compensation | 13 | 13 | 12 |
Amortization of deferred financing costs | 5 | 6 | 6 |
Expenses related to long-term debt refinancing | 5 | 0 | 0 |
Loss associated with impairment of long-lived assets | 2 | 4 | 32 |
Impairment loss on investments in technology-related initiatives | 0 | 3 | 16 |
Unrealized gain on derivatives | 0 | 0 | (29) |
Other | 1 | 4 | 0 |
Changes in assets and liabilities: | |||
Accounts receivable | 37 | (61) | (19) |
Inventories | (11) | (18) | (25) |
Accounts payable | (25) | 9 | 30 |
Other assets and liabilities | (16) | 22 | 11 |
Net cash provided by operating activities | 847 | 837 | 658 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Acquisitions | (232) | 0 | 0 |
Additions of long-lived assets | (172) | (100) | (91) |
Investments in technology-related initiatives | (1) | (3) | (3) |
Net cash used for investing activities | (405) | (103) | (94) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Payments on long-term debt | (1,151) | (28) | (12) |
Issuance of long-term debt | 1,148 | 0 | 400 |
Repurchases of common stock | (393) | (609) | (885) |
Borrowings on revolving credit facility | 90 | 0 | 415 |
Repayments on revolving credit facility | (90) | 0 | (415) |
Dividend payments | (73) | (80) | (89) |
Debt financing fees | (12) | (1) | (6) |
Proceeds from exercise of stock options | 5 | 22 | 19 |
Taxes paid related to net share settlement of equity awards | (4) | (4) | (1) |
Net cash used for financing activities | (480) | (700) | (574) |
Effect of exchange rate changes on cash | (1) | (2) | 4 |
Net (decrease) increase in cash and cash equivalents | (39) | 32 | (6) |
Cash and cash equivalents at beginning of period | 231 | 199 | 205 |
Cash and cash equivalents at end of period | 192 | 231 | 199 |
Supplemental disclosures: | |||
Interest paid | 125 | 115 | 124 |
Income taxes paid | $ 89 | $ 101 | $ 96 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions | Total | Voting Common Stock | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss, net of tax |
Balance at Dec. 31, 2016 | $ 1,081 | $ 2 | $ 1,728 | $ (586) | $ (63) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 12 | 12 | |||
Pension and OPEB liability adjustment | 26 | 26 | |||
Foreign currency translation adjustment | 15 | 15 | |||
Available-for-sale securities and interest rate swaps | 7 | 7 | |||
Issuance of common stock | 18 | 18 | |||
Repurchase of common stock | (885) | (1) | (884) | ||
Dividends on common stock | (89) | (89) | |||
Net income | 504 | 504 | |||
Balance at Dec. 31, 2017 | 689 | 1 | 1,758 | (1,055) | (15) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 13 | 13 | |||
Pension and OPEB liability adjustment | 1 | 1 | |||
Foreign currency translation adjustment | (9) | (9) | |||
Available-for-sale securities and interest rate swaps | (7) | (7) | |||
Issuance of common stock | 17 | 17 | |||
Repurchase of common stock | (609) | (609) | |||
Dividends on common stock | (80) | (80) | |||
Impact of adopting accounting standards | 5 | 5 | |||
Net income | 639 | 639 | |||
Balance at Dec. 31, 2018 | 659 | 1 | 1,788 | (1,100) | (30) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 13 | 13 | |||
Pension and OPEB liability adjustment | 0 | ||||
Foreign currency translation adjustment | (3) | (3) | |||
Available-for-sale securities and interest rate swaps | (19) | (19) | |||
Issuance of common stock | 1 | 1 | |||
Repurchase of common stock | (393) | (393) | |||
Dividends on common stock | (73) | (73) | |||
Impact of adopting accounting standards | (8) | (8) | |||
Net income | 604 | 604 | |||
Balance at Dec. 31, 2019 | $ 781 | $ 1 | $ 1,802 | $ (970) | $ (52) |
Overview
Overview | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Overview | NOTE 1. OVERVIEW Overview Allison Transmission Holdings, Inc. and its subsidiaries (“Allison,” or the “Company”) design and manufacture vehicle propulsion solutions, including commercial-duty on-highway, off-highway and defense fully-automatic transmissions and electric-hybrid and fully-electric systems. The business was founded in 1915 and has been headquartered in Indianapolis, Indiana since inception. Allison was an operating unit of General Motors Corporation from 1929 until 2007, when Allison once again became a stand-alone company. In March 2012, Allison began trading on the New York Stock Exchange under the symbol, “ALSN”. The Company has approximately 3,700 employees. Although approximately 77% of revenues were generated in North America in 2019, the Company has a global presence by serving customers in Europe, Asia, South America and Africa. The Company serves customers through an independent network of approximately 1,500 independent distributor and dealer locations worldwide. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the periods presented. The consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. These consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of equity. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Estimates include, but are not limited to, sales allowances, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite life intangibles, definite life intangibles, long-lived asset impairment tests, useful lives for depreciation and amortization, warranty liabilities, environmental liabilities, determination of discount and other assumptions for pension and other post-retirement benefit expense, determination of discount rate and period for leases, income taxes and deferred tax valuation allowances, derivative valuation, assumptions for business combinations and contingencies. The Company’s accounting policies involve the application of judgments and assumptions made by management that include inherent risks and uncertainties. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. Segment Reporting In accordance with the Financial Accounting Standards Board’s (“FASB”) authoritative accounting guidance on segment reporting, the Company has one operating segment and reportable segment. The Company is in one line of business, which is the manufacture and distribution of vehicle propulsion solutions. Business Combinations The Company uses the acquisition method to account for business combinations. The assets acquired and liabilities assumed are recorded at their respective estimated fair value at the date of acquisition. Any excess purchase price over the fair values of the acquired net assets is recorded as goodwill. Determining the fair values of assets acquired and liabilities assumed requires management's judgment and includes the use of estimates with respect to timing and amount of future cash flows, market rate assumptions, actuarial assumptions, appropriate discount rates and other relevant factors. Cash and Cash Equivalents Cash equivalents are defined as short-term, highly-liquid investments with original maturities of 90 days or less. Under the Company’s cash management system, checks issued but not presented to banks may result in book overdraft balances for accounting purposes and are classified within Accounts payable in the Consolidated Balance Sheets. The change in book overdrafts is reported as a component of operating cash flows for Accounts payable. Marketable Securities The Company determines the appropriate classification of all marketable securities as “held-to-maturity,” “available-for-sale” or “trading” at the time of purchase, and re-evaluates such classifications as of each balance sheet date. As of December 31, 2019, and 2018, the Company’s marketable securities were classified as trading. Trading securities are carried at fair value with the unrealized gain or loss recognized in Other income (expense), net. The fair value of the Company’s investment securities is determined by currently available market prices. See NOTE 7 “Fair Value of Financial Instruments” for more details. Inventories Inventories are stated at the lower of cost and net realizable value. The Company determines cost using the first-in, first-out method. The Company analyzes inventory on a quarterly basis to determine whether it is excess or obsolete inventory. Any decline in carrying value of estimated excess or obsolete inventory is recorded as a reduction of inventory and as an expense included in Cost of sales in the period it is identified. Property, Plant and Equipment Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation expense is recorded using the straight-line method over the following estimated lives: Range in Years Land improvements 5 – 30 Buildings and building improvements 10 – 40 Machinery and equipment 2 – 20 Software 2 – 5 Special tooling 2 – 10 Software represents the costs of software developed or obtained for internal use. Software costs are amortized on a straight-line basis over their estimated useful lives. Software assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. Upgrades and enhancements are capitalized if they result in added functionality, which enables the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion and business process reengineering costs are expensed in the period in which they are incurred. Special tooling represents the costs to design and develop tools, dies, jigs and other items owned by the Company and used in the manufacture of components by suppliers under long-term supply agreements. Special tooling is depreciated over the tool’s expected life. Special tooling used in the development of new technology is expensed as incurred. Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred. Impairment of Long-Lived Assets The carrying value of long-lived assets is evaluated whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. Events or circumstances that would result in an impairment review primarily include a significant change in the use of an asset or the planned sale or disposal of an asset. The asset would be considered impaired when there is no future use planned for the asset or the future net undiscounted cash flows generated by the asset or asset group are less than its carrying value. An impairment loss would be recognized based on the amount by which the carrying value exceeds fair value. Assumptions and estimates used to determine cash flows in the evaluation of impairment and the fair values used to determine the impairment are subject to a degree of judgment and complexity. Any changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets and could result in an impairment charge. As a result of events and circumstances related to weak demand conditions for the TC10 product in the fourth quarter of 2017 and the decision to cease production of the TC10 product in the fourth quarter of 2018, the Company recorded a $2 million, $4 million and $32 million impairment loss associated with the production of TC10 for the years ended December 31, 2019, 2018 and 2017, respectively. Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price paid over the fair value of net assets acquired. In accordance with the FASB’s authoritative accounting guidance on goodwill, the Company does not amortize goodwill but rather evaluates it for impairment on an annual basis, or more often if events or circumstances change that could cause goodwill to become impaired. Goodwill is tested for impairment at the reporting unit level, which is the same as the Company’s one operating and reportable segment. The Company does not aggregate any components into its reporting unit. The Company has elected to perform its annual goodwill impairment test on October 31 of every year using a multi-step impairment test. In Step 0, the Company has the option to evaluate various qualitative factors to determine the likelihood of impairment. If determined that the fair value is more likely than not less than the carrying value, then the Company is required to perform Step 1. If the Company does not elect to perform Step 0, it can voluntarily proceed directly to Step 1. In Step 1, the Company performs a quantitative analysis to compare the fair value of its reporting unit to its carrying value including goodwill. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired, and the Company is not required to perform further testing. If the carrying value of a reporting unit’s goodwill exceeds its carrying value of net assets, then the Company would record an impairment loss equal to the difference. Goodwill impairment testing for 2019 was performed using the Step 0 analysis of certain trends and factors. The Company’s qualitative assessment included an assessment of business changes, economic outlook, financial trends and forecasts, growth rates, credit ratings, equity ratings, discount rates, industry data and other relevant qualitative factors. Events or circumstances that could unfavorably impact the key assumptions include lower net sales driven by market conditions, Allison’s inability to execute on marketing programs and/or growth initiatives, lower gross margins as a result of market conditions or failure to obtain forecasted cost reductions, or a higher discount rate as a result of market conditions. While unpredictable and inherently uncertain, the Company believes the forecast estimates were reasonable and incorporate assumptions that similar market participants would use in their estimates of fair value. These trends and factors were compared to, and based on, the assumptions used in prior years. After reviewing various qualitative factors, the Company’s 2019 annual goodwill impairment test indicated that the fair value of the reporting unit more likely than not exceeded its carrying value, indicating no impairment. Refer to NOTE 6, “Goodwill and Other Intangible Assets” for further information. Other intangible assets have both indefinite and finite useful lives. Intangible assets with indefinite useful lives, such as the Allison Transmission trade name and in-process research and development, are not amortized but are tested annually for impairment. The Company has elected to perform its annual indefinite lived intangible assets impairment test on October 31 of every year and follow a similar multi-step impairment test to that performed on goodwill. Events or circumstances that could unfavorably impact the key assumptions include lower net sales driven by market conditions, the Company's inability to execute on marketing programs and/or delay in introduction of new products, and higher discount rate as a result of market conditions. While unpredictable and inherently uncertain, the Company believes the forecast estimates are reasonable and incorporate those assumptions that similar market participants would use in their estimates of fair value. After reviewing various qualitative factors, the Company’s annual 2019 indefinite lived intangible assets impairment test indicated that the fair value of the Company’s indefinite lived intangible assets more likely than not exceeded their carrying value, indicating no impairment. Refer to NOTE 6, “Goodwill and Other Intangible Assets” for further information. Intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment when circumstances change that would create a triggering event. Customer relationships are amortized over the life in which expected benefits are to be consumed. The other remaining finite life intangibles are amortized on a straight-line basis over their useful lives. The Company evaluates the remaining useful life of the other intangible assets on a periodic basis to determine whether events or circumstances warrant a revision to the remaining useful life. Assumptions and estimates about future values and remaining useful lives of the Company’s intangible and other long-lived assets are complex and subjective. Such assumptions and estimates can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors, such as changes in the Company’s business strategy and internal forecasts. Although management believes the historical assumptions and estimates are reasonable and appropriate, different assumptions and estimates could materially impact the Company’s reported financial results. Refer to NOTE 6 “Goodwill and Other Intangible Assets” for further information. Deferred Financing Costs The debt issuance costs related to line-of-credit arrangements is presented as a component of other non-current assets. The debt issuance costs related to other types of debt instruments such as notes and loans are presented as a component of long-term debt. Deferred financing costs continue to be amortized over the life of the related debt using the effective interest method. Amortization of deferred financing costs is recorded as part of interest expense and totaled $5 million, $6 million and $6 million for the years ended December 31, 2019, 2018 and 2017, respectively. Financial Instruments The Company’s cash equivalents are invested in U.S. government backed securities and recorded at fair value in the Consolidated Balance Sheets. The carrying values of accounts receivable and accounts payable approximate fair value due to their short-term nature. The Company’s financial derivative instruments, including interest rate swaps, are carried at fair value on the Consolidated Balance Sheets. Refer to NOTE 7, “Fair Value of Financial Instruments” for more detail. The Company’s long-term debt obligations are carried at historical amounts with the Company providing fair value disclosure in NOTE 8, “Debt”. Insurable Liabilities The Company records liabilities for its medical, workers’ compensation, long-term disability, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated based upon historical claims experience. Revenue Recognition The Company records sales as each distinct performance obligation within a contract is satisfied. The Company sells extended transmission coverage (“ETC”) for which sales are deferred. ETC sales are recognized ratably over the period of coverage, which typically ranges from two to five years after initial sale. Costs associated with ETC programs are recorded as incurred during the extended period. Distributor and customer sales incentives, consisting of allowances and other rebates, are recorded as a reduction to Net sales when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. Incentive programs are generally product specific or region specific. Some factors used in estimating when an adjustment is not likely to reverse are the number of transmissions that will be affected by the incentive program and rate of acceptance of any incentive program. Sales under U.S. government production contracts are recognized at the point in time when control passes to the customer, or when the U.S. government accepts the transmission and is able to direct its use in certain bill-and-hold arrangements. Deferred revenue arises from cash received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met. Under the terms of previous U.S. government contracts, there were certain price reduction clauses and provisions for potential price reductions which were estimated at the time of sale based upon the Company’s history and experience and were recorded as a reduction to Net sales. Potential reductions may be attributed to a change in projected sales volumes or plant efficiencies which impact overall costs. The Company had $56 million recorded in the price reduction reserve account as of each of December 31, 2019 and 2018. The Company engages in licensing agreements with certain third parties for the use of the Company’s intellectual property. Deferred revenue arises from cash received in advance of the period of use of the intellectual property. Revenue is recognized over the license period as it is earned. The Company classifies shipping and handling billed to customers in Net sales and shipping and handling costs in Cost of sales, in accordance with authoritative accounting guidance. The Company contracts with various third parties to provide engineering services. These services are recorded as Net sales in accordance with the terms of the contract. The saleable engineering recorded was $11 million, $3 million and $3 million for the years ended December 31, 2019, 2018 and 2017, respectively. The associated costs are recorded in Cost of sales. Warranty Provisions for estimated expenses related to product warranties are made at the time products are sold. Warranty claims arise when a transmission or propulsion solution manufactured by us fails while in service during the relevant warranty period. The warranty reserve is adjusted in Selling, general and administrative expense based on the Company’s current and historical warranty claims paid and associated repair costs. These estimates are established using historical information including the nature, frequency, and average cost of warranty claims and are adjusted as actual information becomes available. From time to time, the Company may initiate a specific field action program. As a result of the uncertainty surrounding the nature and frequency of specific field action programs, the liability for such programs is recorded when the Company commits to an action. The Company reviews and assesses the liability for these programs on a quarterly basis. The Company also assesses its ability to recover certain costs from its suppliers and records a receivable from the supplier when it believes a recovery is probable. Warranty costs may differ from those estimated if actual claim rates are higher or lower than the Company's historical rates. Research and Development The Company incurs costs in connection with research and development programs that are expected to contribute to future earnings. Such costs are charged to Engineering — research and development as incurred. Environmental The Company accrues costs related to environmental matters when it is probable that the Company has incurred a liability related to a contaminated site and the costs can be reasonably estimated. For additional information, see NOTE 18, “Commitments and Contingencies”. Foreign Currency Translation Most of the Company’s subsidiaries outside the United States prepare financial statements in currencies other than the U.S. Dollar. The functional currency for all of these subsidiaries is the local currency, except for the Company’s Hong Kong and Middle East subsidiaries which currently use the U.S. Dollar as their functional currency. Balances are translated at period-end exchange rates for assets and liabilities and monthly weighted-average exchange rates for revenues and expenses. The translation gains and losses are stated as a component of Accumulated Other Comprehensive Loss (“AOCL”) as disclosed in NOTE 17, “Accumulated Other Comprehensive Loss”. Derivative Instruments In the normal course of business, the Company is exposed to fluctuations in interest rates, foreign currency exchange rates, and commodity prices. The risk is managed through the use of financial derivative instruments, when appropriate. The Company has qualified for and elected hedge accounting treatment on interest rate swap contracts. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk. NOTE 9, “Derivatives” provides further information on the accounting treatment of the Company’s derivative instruments. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The future tax benefits associated with operating loss and tax credit carryforwards are recognized as deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. When releasing income tax effects from accum ulated other comprehensive loss the Company utilizes the portfolio securities approach. The need to establish a valuation allowance against the deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold, in accordance with the FASB’s authoritative accounting guidance on income taxes. Appropriate consideration is given to all positive and negative evidence related to that realization. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, and experience with tax attributes expiring unused and tax planning alternatives. The weight given to these considerations depends upon the degree to which they can be objectively verified. Stock-Based Compensation In March 2015, the Company’s Board of Directors adopted and, in May 2015, the Company’s stockholders approved the Allison Transmission Holdings, Inc. 2015 Equity Incentive Award Plan (“2015 Plan”), which became effective on May 14, 2015. Under the 2015 Plan, certain employees (including executive officers), consultants and directors are eligible to receive equity-based compensation, including non-qualified stock options, incentive stock options, restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), performance awards, stock appreciation rights and other equity-based awards, or any combination thereof. The 2015 Plan limits the aggregate number of shares of common stock available for issue to 15.3 million and will expire on, and no option or other equity award may be granted pursuant to the 2015 Plan after, the tenth anniversary of the date the 2015 Plan was approved by the Board of Directors. Prior to the adoption of the 2015 Plan, the Company’s equity-based awards were granted under the Allison Transmission Holdings, Inc. 2011 Equity Incentive Award Plan (“2011 Plan”) and the Equity Incentive Plan of Allison Transmission Holdings, Inc. (“Equity Plan” and, together with the 2011 Plan, the “Prior Plans”). As of the effective date of the 2015 Plan, no new awards will be granted under the Prior Plans, but the Prior Plans will continue to govern the equity awards issued under the Prior Plans. RSU grants are recorded at fair market value at the date of grant and vest upon continued performance of services by the RSU holders over one to three years. Performance unit grants are recorded at fair value based on a Monte-Carlo pricing model and the restrictions lapse on the date the Compensation Committee of the Board of Directors determines the number of shares that shall vest based on the related performance or market condition achievement. Non-qualified stock option grants are recorded at fair value using a Black-Scholes option pricing model and vest upon the continued performance of services by the option holder on the third anniversary of the grant date for awards under the 2015 Plan. The Company has made a policy election under applicable accounting guidance to account for forfeitures as a reduction of stock-based compensation expense when the forfeiture actually occurs. RSUs were granted to certain employees and directors at fair market value on the date of grant. The restrictions lapse upon continued performance by the RSU holder on the vest date which generally occurs over one, two or three years. RSU incentive compensation expense recorded was $5 million, $5 million and $7 million for the years ended December 31, 2019, 2018 and 2017, respectively. Performance-based awards, including performance units, were granted to certain employees at fair value at the date of grant. The Company records the fair value of each performance-based award based on a Monte-Carlo pricing model. Performance-based award incentive compensation expense recorded was $6 million, $6 million and $3 million for the years ended December 31, 2019, 2018 and 2017, respectively. Stock options were granted to certain employees at fair value on the date of grant using a Black-Scholes option pricing model. Stock option incentive compensation expense recorded was $2 million for each of the years ended December 31, 2019, 2018 and 2017. Pension and Post-retirement Benefit Plans For pension and other post-retirement benefits (“OPEB”) plans in which employees participate, costs are determined within the FASB’s authoritative accounting guidance set forth in employers’ defined benefit pensions including accounting for settlements and curtailments of defined benefit pension plans, termination of benefits and accounting for post-retirement benefits other than pensions. In accordance with the authoritative accounting guidance, the Company recognizes the funded status of its defined benefit pension plans and OPEB plan in its Consolidated Balance Sheets with a corresponding adjustment to AOCL, net of tax. Post-retirement benefit costs consist of service cost and interest cost on accrued obligations. Actuarial gains and losses on liabilities, together with any prior service costs, are charged (or credited) to income over the average remaining service lives of employees. The benefit cost components shown in the Consolidated Statements of Comprehensive Income are based upon various actuarial assumptions and methodologies as prescribed by authoritative accounting guidance. These assumptions include discount rates, expected return on plan assets, health care cost trend rates, inflation, rate of compensation increases, population demographics, mortality rates and other factors. The Company reviews all actuarial assumptions on an annual basis. Changes in key economic indicators can change these assumptions. These assumptions, along with the actual value of assets at the measurement date, will impact the calculation of pension expenses for the year. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued authoritative accounting guidance on lease accounting, which guidance was subsequently amended. The guidance requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases not considered short-term leases. Short-term leases are leases with a lease term of 12 months or less as long as the leases do not include options to purchase the underlying assets that the lessee is reasonably certain to exercise. The guidance also introduces new disclosure requirements for leasing arrangements. In July 2018, the FASB issued additional authoritative guidance on this topic giving lessees an optional adoption approach under which the impact of the adoption of the guidance would be shown as of the date of adoption. Management elected to adopt the guidance using this optional alternative method. The Company adopted this guidance effective January 1, 2019. Upon adoption, the Company recorded non-financial right-of-use ("ROU") assets of $14 million, including $1 million of assets transferred from the balance recorded as prepaid lease expense under the prior guidance, and current and non-current lease liabilities of $4 million and $9 million, respectively. The adoption of this guidance did not have a material impact on the Company's opening retained earnings. See Note 12, "Leases" for further details. In June 2016, the FASB issued authoritative accounting guidance on the presentation of financial assets at the net amount expected to be collected. The guidance also requires the disclosure of financing receivables disaggregated by the year of origination. The guidance has been subsequently amended. The Company adopted this guidance using a modified retrospective approach effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In February 2018, the FASB issued authoritative accounting guidance on transfers of stranded balances in AOCL to retained earnings. The passage of the U.S. Tax Cuts and Jobs Act by the U.S. federal government in December 2017, in conjunction with existing GAAP requirements to adjust deferred tax assets and liabilities for changes in tax laws or rates created stranded balances in AOCL on deferred tax assets and liabilities previously recorded as a component to AOCL. The guidance applies to companies affected by these stranded balances and allows a reclassification of these balances to retained earnings. The Company adopted this guidance effective January 1, 2019 on a prospective basis. As a result of the adoption of this guidance, the Company recorded an adjustment that reclassified $8 million of AOCL to retained earnings as of January 1, 2019. In June 2018, the FASB issued authoritative accounting guidance on accounting for nonemployee awards for goods or services received by a company. The Company adopted this guidance effective January 1, 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued authoritative accounting guidance amending disclosure requirements for certain assets subject to fair value measurement. The guidance allows the Company to reduce the amount of disclosure on transfers between Level 1 and Level 2 assets. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued authoritative accounting guidance on accounting for implementation costs in hosting arrangements to align these costs with existing guidance for internally developed software. The stage of implementation must be assessed to determine if costs should be capitalized or expensed, and capitalized costs should be expensed during the noncancellable term of the agreement. The Company adopted this guidance on a prospective basis effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements In August 2018, the FASB issued authoritative accounting guidance amending disclosure requirements for the Company's defined benefit pension plans and other postretirement benefit plan. The guidance will be effective for the Company in fiscal year 2021, and the Company does not plan to early adopt. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements and notes thereto. In December 2019, the FASB issued authoritative accounting guidance to simplify the accounting for income taxes. The guidance identifies specific exceptions to be removed from the calculation and reporting of income taxes. The guidance will be effective for the Company in fiscal year 2021, though early adoption is permitted in any prior interim reporting period. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements and notes thereto. |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2019 | |
Revenue From Contract With Customer [Abstract] | |
REVENUE | NOTE 3. REVENUE Revenue is recognized as each distinct performance obligation within a contract is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company enters into long-term agreements (“LTAs”) and distributor agreements with certain customers. The LTAs and distributor agreements do not include committed volumes until underlying purchase orders are issued; therefore, the Company determined that purchase orders are the contract with a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied, as there is no right of return. Some of the Company's contracts include multiple performance obligations, most commonly the sale of both a transmission and ETC. The Company allocates the contract’s transaction price to each performance obligation based on the standalone selling price of each distinct good or service in the contract. The Company may also use volume based discounts and rebates as marketing incentives in the sales of both vehicle propulsion solutions and service parts, which are accounted for as variable consideration. The Company records the impact of the incentives as a reduction to revenue when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. The Company estimates the impact of all other incentives based on the related sales and market conditions in the end market vocation. The Company recorded no adjustments based on variable consideration during the years ended December 31, 2019 and 2018. Net sales are made on credit terms, generally 30 days, based on an assessment of the customer’s creditworthiness. For certain goods or services, the Company receives consideration prior to satisfying the related performance obligation. Such consideration is recorded as a contract liability in current and non-current deferred revenue as of December 31, 2019 and December 31, 201 8 . See NOTE 11, “Deferred Revenue” for more information including the amount of revenue earned during the year ended December 31, 201 9 that had been previously deferred. The Company had no contract assets as of December 31, 2019 and 2018 . The Company has one operating segment and reportable segment. The Company is in one line of business, which is the manufacture and distribution of vehicle propulsion solutions. The following presents disaggregated revenue by categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (dollars in millions): Year ended December 31, 2019 Year ended December 31, 2018 North America On-Highway $ 1,474 $ 1,317 North America Off-Highway 30 93 Defense 151 158 Outside North America On-Highway 390 383 Outside North America Off-Highway 109 129 Service Parts, Support Equipment and Other 544 633 Total Net Sales $ 2,698 $ 2,713 Disaggregated revenue by end market is further described as follows: North America On-Highway Revenue from the North America On-Highway end market is driven by the sale of transmissions to Original Equipment Manufacturers (“OEMs”), distributors and dealers that install the product into Class 4-5, Class 6-7 and Class 8 straight trucks, conventional transit, shuttle and coach buses, school buses and motorhome applications. Revenue from the North America On-Highway end market also includes the sale of electric-hybrid and fully-electric propulsion solutions. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. North America Off-Highway Revenue from the North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors that serve end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Defense Revenue from the Defense end market is driven by sales of transmissions to the U.S. Government or its contractors and sales to certain government contractors outside of the U.S. for use in both wheeled and tracked defense vehicle applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Periodically, the Company and the U.S. Government will enter into a bill-and-hold arrangement where a completed transmission physically remains at the Company’s facility at the request of the U.S. Government. Revenue is recognized at the point in time when it is determined that the U.S. Government accepts the transmission and is able to direct its use. Outside North America On-Highway Revenue from the Outside North America On-Highway end market is driven by the sale of transmissions and propulsion solutions to OEMs and distributors that produce vehicles for commercial users in medium and heavy duty applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Outside North America Off-Highway Revenue from the Outside North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors serving end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Service Parts, Support Equipment and Other Revenue from the Service Parts, Support Equipment and Other end market is primarily derived from the sale of transmission parts and fluid purchased for the normal maintenance and repair needs of products in service, the sale of aluminum die cast components purchased as original parts and the sale of ETC contracts which extend the warranty coverages of transmissions beyond the standard warranty period. Revenue is recognized on sales of service parts and support equipment at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Revenue from the sale of ETC contracts is recognized ratably over the time period that corresponds with the period of coverage, as the Company has determined this method best depicts the progress towards satisfaction of its performance obligation. ETC contracts are sold in one to five year durations within the North America On-Highway, Outside North America On-Highway, North America Off-Highway and Outside North America Off-Highway end markets. The ETC contract period begins when the standard warranty coverage period ends. All consideration allocated to an ETC performance obligation is initially deferred until the coverage period begins. NOTE 11. DEFERRED REVENUE As of December 31, 2019, the current and non-current deferred revenue were $35 million and $104 million, respectively. As of December 31, 2018, the current and non-current deferred revenue were $34 million and $88 million, respectively. Deferred revenue activity consists of the following (dollars in millions): Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Beginning balance $ 122 $ 110 $ 93 Increases 55 52 52 Revenue earned (38 ) (40 ) (29 ) Ending balance $ 139 $ 122 $ 116 New authoritative accounting guidance for revenue was adopted by the Company effective January 1, 2018. The Company recorded a one-time adjustment related to sales of ETC contracts open as of the date of adoption, which decreased deferred revenue by $6 million as of January 1, 2018. See NOTE 3, "Revenue" for information regarding the impact of the adoption of this guidance. Deferred revenue recorded in current and non-current liabilities related to ETC as of December 31, 2019 were $29 million and $84 million, respectively. Deferred revenue recorded in current and non-current liabilities related to ETC as of December 31, 2018 were $30 million and $73 million, respectively. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 4. INVENTORIES Inventories consisted of the following components (dollars in millions): December 31, 2019 December 31, 2018 Purchased parts and raw materials $ 91 $ 82 Work in progress 17 8 Service parts 60 48 Finished goods 31 32 Total inventories $ 199 $ 170 Inventory components shipped to third parties, primarily cores, parts to re-manufacturers, and parts to contract manufacturers, which the Company has an obligation to buy back, are included in purchased parts and raw materials, with an offsetting liability in other current liabilities. See NOTE 14, “Other Current Liabilities” for more information. |
Property, Plant and Equipment
Property, Plant and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment | NOTE 5. PROPERTY, PLANT AND EQUIPMENT The cost and accumulated depreciation of property, plant and equipment are as follows (dollars in millions): December 31, 2019 December 31, 2018 Land and land improvements $ 25 $ 24 Buildings and building improvements 342 336 Machinery and equipment 722 643 Software 163 143 Special tooling 202 201 Construction in progress 141 52 Total property, plant and equipment 1,595 1,399 Accumulated depreciation (979 ) (933 ) Property, plant and equipment, net $ 616 $ 466 Depreciation of property, plant and equipment was $81 million, $77 million and $80 million for the years ended December 31, 2019, 2018 and 2017, respectively. As a result of events and circumstances related to weak demand conditions for the TC10 product in the fourth quarter of 2017 and the decision to cease production of the TC10 product in the fourth quarter of 2018, the Company reviewed certain of its long-lived assets related to the production of the TC10 product, resulting in losses of $1 million and $32 million for the years ended December 31, 2018 and 2017. See NOTE 2 “Summary of Significant Accounting Policies”, Impairment of Long-Lived Assets for more information. During 2019, the Company completed three acquisitions resulting in additional property, plant and equipment. See NOTE 25 “Acquisitions” for further information on the impact of the three acquisitions to the Company’s consolidated financial statements. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS As of December 31, 2019 and 2018, the carrying amount of the Company’s Goodwill was $2,041 million and $1,941 million, respectively. The following presents a summary of other intangible assets (dollars in millions): December 31, 2019 December 31, 2018 Intangible assets, gross Accumulated amortization Intangible assets, net Intangible assets, gross Accumulated amortization Intangible assets, net Other intangible assets: Trade name $ 791 $ — $ 791 $ 790 $ — $ 790 In process research and development 50 — 50 — — — Customer relationships – commercial 839 (664 ) 175 832 (619 ) 213 Proprietary technology 481 (473 ) 8 476 (434 ) 42 Customer relationships – defense 62 (44 ) 18 62 (41 ) 21 Total $ 2,223 $ (1,181 ) $ 1,042 $ 2,160 $ (1,094 ) $ 1,066 Amortization of intangible assets was $86 million, $87 million and $90 million for the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019 and 2018, the net carrying value of the Company’s Goodwill and Other intangible assets, net was $3,083 million and $3,007 million, respectively. The Company’s 2019 annual goodwill impairment test indicated that the fair value of the reporting unit more likely than not exceeded its carrying value, indicating no impairment. The Company's 2019 annual indefinite lived intangible assets impairment test indicated that the fair value of the Company’s indefinite lived intangible assets more likely than not exceeded their carrying value, indicating no impairment. Amortization expense related to other intangible assets for the next five years is expected to be (dollars in millions): 2020 2021 2022 2023 2024 Amortization expense $ 51 $ 46 $ 45 $ 43 $ 8 During 2019, the Company completed three acquisitions resulting in additional goodwill and other intangible assets. The following presents a summary of the impact of these acquisitions on the goodwill of the Company’s single operating and reporting segment (dollars in millions): Allison Transmission, Inc. Balance at December 31, 2017 $ 1,941 Changes affecting goodwill — Net current period impact to goodwill $ — Balance at December 31, 2018 $ 1,941 Acquisitions $ 100 Net current period impact to goodwill $ 100 Balance at December 31, 2019 $ 2,041 See NOTE 25 “Acquisitions” for more information on the impact of the three acquisitions to the Company’s consolidated financial statements. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with the FASB’s authoritative accounting guidance on fair value measurements, fair value is the price (exit price) that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company primarily applies the market approach for recurring fair value measurements and utilizes the best available information that maximizes the use of observable inputs and minimizes the use of unobservable inputs. The Company is able to classify fair value balances based on the observability of those inputs. The accounting guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy defined by the relevant guidance are as follows: Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and publicly traded bonds. Level 2 — Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes financial instruments that are valued using quoted prices in markets that are not active and those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Level 3 — Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At each balance sheet date, the Company performs an analysis of all instruments subject to authoritative accounting guidance and includes, in Level 3, all of those whose fair value is based on significant unobservable inputs. As of December 31, 201 9 and December 31, 201 8 , the Company did no t have any Level 3 financial assets or liabilities. The Company’s assets and liabilities that are measured at fair value include cash equivalents, derivative instruments, assets held in a rabbi trust and a deferred compensation obligation. The Company’s cash equivalents consist of short-term U.S. government backed securities. The Company’s derivative instruments consist of interest rate swaps. The Company’s assets held in the rabbi trust consist principally of publicly available mutual funds and target date retirement funds. The Company’s deferred compensation obligation is directly related to the fair value of assets held in the rabbi trust. The Company’s valuation techniques used to calculate the fair value of cash and cash equivalents, assets held in the rabbi trust and the deferred compensation obligation represent a market approach in active markets for identical assets that qualify as Level 1 in the fair value hierarchy. The Company’s valuation techniques used to calculate the fair value of derivative instruments represent a market approach with observable inputs that qualify as Level 2 in the fair value hierarchy. The Company uses valuations from the issuing financial institutions for the fair value measurement of interest rate swaps. The floating-to-fixed interest rate swaps are based on the London Interbank Offered Rate (“LIBOR”) which is observable at commonly quoted intervals. The fair values are included in other current and non-current assets and liabilities in the Consolidated Balance Sheets. The following table summarizes the fair value of the Company’s financial assets and (liabilities) as of December 31, 2019 and 2018 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) TOTAL 2019 2018 2019 2018 2019 2018 Cash equivalents $ 70 $ 111 $ — $ — $ 70 $ 111 Derivative liabilities, net — — (34 ) (9 ) (34 ) (9 ) Rabbi trust assets 12 9 — — 12 9 Deferred compensation obligation (12 ) (9 ) — — (12 ) (9 ) Total $ 70 $ 111 $ (34 ) $ (9 ) $ 36 $ 102 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 8. DEBT Long-term debt and maturities are as follows (dollars in millions): December 31, 2019 December 31, 2018 Long-term debt: Senior Secured Credit Facility Term B-3 Loan, variable, due 2022 $ — $ 1,148 Senior Notes, fixed 5.0%, due 2024 1,000 1,000 Senior Secured Credit Facility Term Loan, variable, due 2026 644 — Senior Notes, fixed 4.75%, due 2027 400 400 Senior Notes, fixed 5.875%, due 2029 500 — Total long-term debt $ 2,544 $ 2,548 Less: current maturities of long-term debt 6 — deferred financing costs, net (see NOTE 2) 26 25 Total long-term debt, net $ 2,512 $ 2,523 Principal payments required on long-term debt during the next five years are as follows: (dollars in millions) 2020 2021 2022 2023 2024 Payments $ 6 $ 6 $ 6 $ 6 $ 1,006 As of December 31, 2019, the Company had $2,544 million of indebtedness associated with Allison Transmission, Inc.’s (“ATI”), the Company’s wholly-owned subsidiary, 5.0% Senior Notes due September 2024 (“5.0% Senior Notes”), ATI’s 4.75% Senior Notes due October 2027 (“4.75% Senior Notes”), ATI’s 5.875% Senior Notes due June 2029 (“5.875% Senior Notes,” and, together with the 5.0% Senior Notes and 4.75% Senior Notes, the “Senior Notes”) and the Second Amended and Restated Credit Agreement dated as of March 29, 2019 (the “Credit Agreement”), governing ATI’s new term loan facility in the amount of $644 million due March 2026 (“New Term Loan”) and ATI’s new revolving credit facility with commitments in the amount of $600 million due September 2024 (“New Revolving Credit Facility” and, together with the New Term Loan, the “New Senior Secured Credit Facility”). The fair value of the Company’s long-term debt obligations as of December 31, 2019 was $2,636 million. The fair value is based on quoted Level 2 market prices of the Company’s debt as of December 31, 2019. It is not expected that the Company would be able to repurchase a significant amount of its debt at these levels. The difference between the fair value and carrying value of the long-term debt is driven primarily by trends in the financial markets. New Senior Secured Credit Facility In March 2018, ATI entered into an amendment to lower the applicable margins on the prior term loan due 2022 (“Prior Term Loan”) by 0.25%. The March 2018 amendment was treated as a modification to the prior senior secured credit facility (defined as the Prior Term Loan and the prior $550 million revolving credit facility due 2021, or the “Prior Revolving Credit Facility”) under GAAP, and thus the Company recorded $1 million as new deferred financing fees in the first quarter of 2018. In March 2019, the Company and ATI entered into the Credit Agreement to reduce the commitments under the Prior Term Loan by $500 million and increase the commitments under Prior Revolving Credit Facility by $50 million. The New Senior Secured Credit Facility also extended the maturity of the Prior Term Loan from 2022 to 2026 and extended the Prior Revolving Credit Facility termination date from 2021 to 2024. The New Senior Secured Credit Facility replaced the Prior Senior Secured Credit Facility, including the Prior Term Loan and Prior Revolving Credit Facility, on March 29, 2019. The Credit Agreement was treated as a modification to the Prior Senior Secured Credit Facility under GAAP, and thus the Company expensed $5 million of prior deferred financing fees and $1 million of related third party fees in the Consolidated Statement of Comprehensive Income for the year ended December 31, 2019 and recorded $5 million as new deferred financing fees in the Condensed Consolidated Balance Sheet in the first quarter of 2019. In October 2019, ATI entered into an amendment to the Credit Agreement with the New Term Loan lenders under its New Senior Secured Credit Facility to lower the applicable margins on the New Term Loan by 0.25%. The October 2019 amendment was treated as a modification to the New Senior Secured Credit Facility under GAAP. The borrowings under the New Senior Secured Credit Facility are collateralized by a lien on substantially all assets of the Company, ATI and each of the existing and future U.S. subsidiary guarantors, with certain exceptions set forth in the Credit Agreement, and ATI’s capital stock and all of the capital stock or other equity interests held by the Company, ATI and each of ATI’s existing and future U.S. subsidiary guarantors (subject to certain limitations for equity interest of foreign subsidiaries and other exceptions set forth in the Credit Agreement). Interest on the New Term Loan, as of December 31, 2019, is either (a) 1.75% over a LIBOR rate on deposits in U.S. dollars for one-, two-, three- or six-month periods (or twelve-month or shorter periods if, at the time of the borrowing, available from all relevant lenders) (the "LIBOR Rate"), or (b) 0.75% over the greater of the prime lending rate as quoted by the administrative agent, the LIBOR Rate for an interest period of one month plus 1.00% and the federal funds effective rate published by the Federal Reserve Bank of New York plus 0.50 %, subject to a 1.00 % floor (the "Base Rate"). As of December 3 1 , 2019, the Company elected to pay the lowest all-in rate of LIBOR plus the applicable margin, or 3.54 %, on the New Term Loan. The Credit Agreement requires minimum quarterly principal payments on the New Term Loan starting with the fiscal quarter which end ed September 30, 2019, as well as prepayments from certain net cash proceeds of non-ordinary course asset sales and casualty and condemnation events, the incurrence of certain debt and from a percentage of excess cash flow, if applicable. The minimum required quarterly principal payment on the New Term Loan through its maturity date of March 2026 is $ 2 million. As of December 3 1 , 2019, there had been no payments required for certain net cash proceeds of non-ordinary course asset sales and casualty and condemnation events. The remaining principal balance is due upon maturity. The New Senior Secured Credit Facility also provides a New Revolving Credit Facility, net of an allowance for up to $75 million in outstanding letters of credit commitments. Throughout the year ended December 31, 2019, the Company made periodic withdrawals and payments on the New Revolving Credit Facility as part of the Company's debt management plans. The maximum amount outstanding at any time during the year ended December 31, 2019 was $90 million. As of December 31, 2019, the Company had $595 million available under the New Revolving Credit Facility, net of $5 million in letters of credit. Borrowings under the New Revolving Credit Facility bear interest at a variable base rate plus an applicable margin based on the Company’s first lien net leverage ratio. When the Company’s first lien net leverage ratio is above 4.00x, interest on the New Revolving Credit Facility is (a) 0.75% over the Base Rate or (b) 1.75% over the LIBOR Rate; when the Company’s first lien net leverage ratio is equal to or less than 4.00x and above 3.50x, interest on the New Revolving Credit Facility is (i) 0.50% over the Base Rate or (ii) 1.50% over the LIBOR Rate; and when the Company’s first lien net leverage ratio is equal to or below 3.50x, interest on the New Revolving Credit Facility is (y) 0.25% over the Base Rate or (z) 1.25% over the LIBOR Rate. As of December 31, 2019, the applicable margin for the New Revolving Credit Facility was 1.25%. In addition, there is an annual commitment fee, based on the Company’s first lien net leverage ratio, on the average unused revolving credit borrowings available under the New Revolving Credit Facility. As of December 31, 2019, the commitment fee is 0.25%. Borrowings under the New Revolving Credit Facility are payable at the option of the Company throughout the term of the New Senior Secured Credit Facility with the balance due in September 2024. The New Senior Secured Credit Facility requires the Company to maintain a specified maximum first lien net leverage ratio of 5.50x when revolving loan commitments remain outstanding on the New Revolving Credit Facility at the end of a fiscal quarter. As of December 31, 2019, the Company had no amounts outstanding under the New Revolving Credit Facility; however, the Company would have been in compliance with the maximum first lien net leverage ratio, achieving a 0.42x ratio. Additionally, within the terms of the New Senior Secured Credit Facility, a first lien net leverage ratio at or below 4.00x results in the elimination of excess cash flow payments on the New Senior Secured Credit Facility for the applicable year. In addition, the Credit Agreement, among other things, includes customary restrictions (subject to certain exceptions) on the Company’s ability to incur certain indebtedness, grant certain liens, make certain investments, engage in acquisitions, consolidations and mergers, declare or pay certain dividends or repurchase shares of the Company’s common stock. As of December 31, 2019, the Company was in compliance with all covenants under the Credit Agreement. 5.0% Senior Notes ATI may from time to time seek to retire the 5.0% Senior Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, contractual redemptions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. ATI may redeem some or all of the 5.0% Senior Notes at specified redemption prices in the governing indenture. The 5.0 % Senior Notes are unsecured and are guaranteed by each of ATI’s domestic subsidiaries that is a borrower under or guarantees the New Senior Secured Credit Facility and are unconditionally guaranteed, jointly and severally, by any of ATI’s future domestic subsidiaries that are borrowers under or guarantee the New Senior Secured Credit Facility. None of ATI’s domestic subsidiaries currently guarantee its obligations under the New Senior Secured Credit Facility, and therefore none of ATI’s domestic subsidiaries currently guarantee the 5.0% Senior Notes. The indenture governing the 5.0% Senior Notes contains negative covenants restricting or limiting the Company’s ability to, among other things: incur or guarantee additional indebtedness, incur liens, pay dividends on, redeem or repurchase the Company’s capital stock, make certain investments, permit payment or dividend restrictions on certain of the Company’s subsidiaries, sell assets, engage in certain transactions with affiliates, and consolidate or merge or sell all or substantially all of the Company’s assets. As of December 3 1 , 2019, the Company was in compliance with all covenants under the indenture governing the 5.0% Senior Notes. 4.75% Senior Notes ATI may from time to time seek to retire the 4.75% Senior Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, contractual redemptions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Prior to October 1, 2020, ATI may redeem up to 40% of the 4.75% Senior Notes by paying a price equal to 104.75% of the principal amount being redeemed. Prior to October 1, 2022, ATI may redeem some or all of the 4.75% Senior Notes by paying a price equal to 100.00% of the principal amount being redeemed, plus an “applicable premium”. At any time on or after October 1, 2022, ATI may redeem some or all of the 4.75% Senior Notes at specified redemption prices in the governing indenture. The 4.75% Senior Notes are unsecured and are guaranteed by each of ATI’s domestic subsidiaries that is a borrower under or guarantees the New Senior Secured Credit Facility and are unconditionally guaranteed, jointly and severally, by any of ATI’s future domestic subsidiaries that are borrowers under or guarantee the New Senior Secured Credit Facility. None of ATI’s domestic subsidiaries currently guarantee its obligations under the New Senior Secured Credit Facility, and therefore none of ATI’s domestic subsidiaries currently guarantee the 4.75% Senior Notes. The indenture governing the 4.75% Senior Notes contains negative covenants restricting or limiting the Company’s ability to, among other things: incur or guarantee additional indebtedness, incur liens, pay dividends on, redeem or repurchase the Company’s capital stock, make certain investments, permit payment or dividend restrictions on certain of the Company’s subsidiaries, sell assets, engage in certain transactions with affiliates, and consolidate or merge or sell all or substantially all of the Company’s assets. As of December 31, 2019, the Company was in compliance with all covenants under the indenture governing the 4.75% Senior Notes. 5.875% Senior Notes In March 2019, ATI completed an offering of $500 million of the 5.875% Senior Notes. The 5.875% Senior Notes were offered in a private placement exempt from registration under the Securities Act of 1933, as amended. The net proceeds from the offering, together with borrowings under the New Senior Secured Credit Facility and cash on hand, were used to repay all of the outstanding borrowings under the Prior Term Loan plus accrued and unpaid interest and related transaction expenses. As a result of the offering, the Company recorded $6 million as deferred financing fees in the Condensed Consolidated Balance Sheet in the first quarter of 2019. ATI may from time to time seek to retire the 5.875% Senior Notes through cash purchase and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, contractual redemptions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Prior to June 1, 2022, ATI may redeem up to 40% of the 5.875% Senior Notes by paying a price equal to 105.875% of the principal amount being redeemed. Prior to June 1, 2024, ATI may redeem some of all of the 5.875% Senior Notes by paying a price equal to 100.00% of the principal amount being redeemed, plus an “applicable premium”. At any time on or after June 1, 2024, ATI may redeem some of all of the 5.875% Senior Notes at specified redemption prices in the governing indenture. The 5.875% Senior Notes are unsecured and are guaranteed by each of ATI’s domestic subsidiaries that is a borrower under or guarantees the New Senior Secured Credit Facility and are unconditionally guaranteed, jointly and severally, by any of ATI’s future domestic subsidiaries that are borrowers under or guarantee the New Senior Secured Credit Facility. None of ATI’s domestic subsidiaries currently guarantee its obligations under the New Senior Secured Credit Facility, and therefore none of ATI’s domestic subsidiaries currently guarantee the 5.875% Senior Notes. The indenture governing the 5.875% Senior Notes contains negative covenants restricting or limiting the Company’s ability to, among other things: incur or guarantee additional indebtedness, incur liens, pay dividends on, redeem or repurchase the Company’s capital stock, make certain investments, permit payment or dividend restrictions on certain of the Company’s subsidiaries, sell assets, engage in certain transactions with affiliates, and consolidate or merge or sell all or substantially all of the Company’s assets. As of December 31, 2019, the Company was in compliance with all covenants under the indenture governing the 5.875% Senior Notes. |
Derivatives
Derivatives | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivatives | NOTE 9. DERIVATIVES The Company is subject to interest rate risk related to the New Senior Secured Credit Facility and enters into interest rate swaps that are based on LIBOR to manage a portion of this exposure. The interest rate swaps are designated as cash flow hedges that qualify for hedge accounting under the hypothetical derivative method. Fair value adjustments are recorded as a component of AOCL in the Consolidated Balance Sheets. Balances in AOCL are reclassified to earnings when transactions related to the underlying risk are settled. During the first quarter of 2019, the Company entered into $250 million of interest rate swaps and designated them as cash flow hedges under the hypothetical derivative method. As of December 31, 2019, the Company held interest rate swaps effective from (i) September 2019 to September 2022 with notional values totaling $250 million and a weighted average LIBOR fixed rate of 3.01%, (ii) from September 2019 to September 2025 with notional values totaling $250 million and a weighted average LIBOR fixed rate of 3.04% and (iii) September 2022 to September 2025 with notional values totaling $250 million and a weighted average LIBOR fixed rate of 2.82%. See NOTE 7 “Fair Value of Financial Instruments” for information regarding the fair value of the Company’s interest rate swaps. The following tabular disclosures further describe the Company’s interest rate derivatives qualifying and designated for hedge accounting and their impact on the financial condition of the Company (dollars in millions): December 31, 2019 December 31, 2018 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps Other current liabilities $ (7 ) Other current liabilities $ (1 ) Other non-current liabilities (27 ) Other non-current liabilities (8 ) Total derivatives designated as hedging instruments $ (34 ) $ (9 ) The balance of derivative losses recorded in AOCL as of December 31, 201 9 and 201 8 was $ 34 million and $ 9 million , respectively. During the year ended December 31, 2019, the Company reclassified $ 1 million from AOCL to earnings, which was recorded as Interest expense, net on the Consolidated Statements of Comprehensive Income. The Company had $ 6 million of derivative losses recorded in AOCL expected to be reclassified to earnings within the next twelv e months as of December 31, 2019 . See NOTE 17 “Accumulated Other Comprehensive Loss” for information regarding activity recorded as a component of AOCL during the year ended December 31, 2019. |
Product Warranty Liabilities
Product Warranty Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Guarantees And Product Warranties [Abstract] | |
Product Warranty Liabilities | NOTE 10. PRODUCT WARRANTY LIABILITIES As of December 31, 2019, the current and non-current product warranty liabilities were $24 million and $28 million, respectively. As of December 31, 2018, the current and non-current product warranty liabilities were $26 million and $40 million, respectively. Product warranty liability activities consist of the following (dollars in millions): Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Beginning balance $ 66 $ 55 $ 63 Payments (26 ) (32 ) (30 ) Increase in liability (warranty issued during period) 21 38 18 Net adjustments to liability (9 ) 5 4 Ending balance $ 52 $ 66 $ 55 The adjustments to the total liability in 2019, 2018 and 2017 were the result of general changes in estimates for various products and specific field action programs as additional claims data and field information became available. |
Deferred Revenue
Deferred Revenue | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition And Deferred Revenue [Abstract] | |
REVENUE | NOTE 3. REVENUE Revenue is recognized as each distinct performance obligation within a contract is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company enters into long-term agreements (“LTAs”) and distributor agreements with certain customers. The LTAs and distributor agreements do not include committed volumes until underlying purchase orders are issued; therefore, the Company determined that purchase orders are the contract with a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied, as there is no right of return. Some of the Company's contracts include multiple performance obligations, most commonly the sale of both a transmission and ETC. The Company allocates the contract’s transaction price to each performance obligation based on the standalone selling price of each distinct good or service in the contract. The Company may also use volume based discounts and rebates as marketing incentives in the sales of both vehicle propulsion solutions and service parts, which are accounted for as variable consideration. The Company records the impact of the incentives as a reduction to revenue when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. The Company estimates the impact of all other incentives based on the related sales and market conditions in the end market vocation. The Company recorded no adjustments based on variable consideration during the years ended December 31, 2019 and 2018. Net sales are made on credit terms, generally 30 days, based on an assessment of the customer’s creditworthiness. For certain goods or services, the Company receives consideration prior to satisfying the related performance obligation. Such consideration is recorded as a contract liability in current and non-current deferred revenue as of December 31, 2019 and December 31, 201 8 . See NOTE 11, “Deferred Revenue” for more information including the amount of revenue earned during the year ended December 31, 201 9 that had been previously deferred. The Company had no contract assets as of December 31, 2019 and 2018 . The Company has one operating segment and reportable segment. The Company is in one line of business, which is the manufacture and distribution of vehicle propulsion solutions. The following presents disaggregated revenue by categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (dollars in millions): Year ended December 31, 2019 Year ended December 31, 2018 North America On-Highway $ 1,474 $ 1,317 North America Off-Highway 30 93 Defense 151 158 Outside North America On-Highway 390 383 Outside North America Off-Highway 109 129 Service Parts, Support Equipment and Other 544 633 Total Net Sales $ 2,698 $ 2,713 Disaggregated revenue by end market is further described as follows: North America On-Highway Revenue from the North America On-Highway end market is driven by the sale of transmissions to Original Equipment Manufacturers (“OEMs”), distributors and dealers that install the product into Class 4-5, Class 6-7 and Class 8 straight trucks, conventional transit, shuttle and coach buses, school buses and motorhome applications. Revenue from the North America On-Highway end market also includes the sale of electric-hybrid and fully-electric propulsion solutions. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. North America Off-Highway Revenue from the North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors that serve end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Defense Revenue from the Defense end market is driven by sales of transmissions to the U.S. Government or its contractors and sales to certain government contractors outside of the U.S. for use in both wheeled and tracked defense vehicle applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Periodically, the Company and the U.S. Government will enter into a bill-and-hold arrangement where a completed transmission physically remains at the Company’s facility at the request of the U.S. Government. Revenue is recognized at the point in time when it is determined that the U.S. Government accepts the transmission and is able to direct its use. Outside North America On-Highway Revenue from the Outside North America On-Highway end market is driven by the sale of transmissions and propulsion solutions to OEMs and distributors that produce vehicles for commercial users in medium and heavy duty applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Outside North America Off-Highway Revenue from the Outside North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors serving end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Service Parts, Support Equipment and Other Revenue from the Service Parts, Support Equipment and Other end market is primarily derived from the sale of transmission parts and fluid purchased for the normal maintenance and repair needs of products in service, the sale of aluminum die cast components purchased as original parts and the sale of ETC contracts which extend the warranty coverages of transmissions beyond the standard warranty period. Revenue is recognized on sales of service parts and support equipment at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company. Revenue from the sale of ETC contracts is recognized ratably over the time period that corresponds with the period of coverage, as the Company has determined this method best depicts the progress towards satisfaction of its performance obligation. ETC contracts are sold in one to five year durations within the North America On-Highway, Outside North America On-Highway, North America Off-Highway and Outside North America Off-Highway end markets. The ETC contract period begins when the standard warranty coverage period ends. All consideration allocated to an ETC performance obligation is initially deferred until the coverage period begins. NOTE 11. DEFERRED REVENUE As of December 31, 2019, the current and non-current deferred revenue were $35 million and $104 million, respectively. As of December 31, 2018, the current and non-current deferred revenue were $34 million and $88 million, respectively. Deferred revenue activity consists of the following (dollars in millions): Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Beginning balance $ 122 $ 110 $ 93 Increases 55 52 52 Revenue earned (38 ) (40 ) (29 ) Ending balance $ 139 $ 122 $ 116 New authoritative accounting guidance for revenue was adopted by the Company effective January 1, 2018. The Company recorded a one-time adjustment related to sales of ETC contracts open as of the date of adoption, which decreased deferred revenue by $6 million as of January 1, 2018. See NOTE 3, "Revenue" for information regarding the impact of the adoption of this guidance. Deferred revenue recorded in current and non-current liabilities related to ETC as of December 31, 2019 were $29 million and $84 million, respectively. Deferred revenue recorded in current and non-current liabilities related to ETC as of December 31, 2018 were $30 million and $73 million, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Leases | NOTE 12. LEASES Adoption of New Lease Guidance New authoritative guidance for leases was adopted by the Company effective January 1, 2019 using the optional transition method. Balances as of December 31, 2019 and results for the year ended December 31, 2019 are presented in conformity with the new authoritative accounting guidance, while prior period balances and results are presented in conformity with prior accounting guidance for leases. The Company recognized ROU assets for operating leases of $14 million and current and non-current operating lease liabilities of $4 million and $9 million, respectively, as of January 1, 2019. At the time of adoption, the Company was not party to any finance leases. The Company elected to employ practical expedients allowed by this guidance which included not reassessing existing or expired contracts for leases, not reassessing existing or expired leases for classification, not reassessing indirect costs for any existing leases and using hindsight when determining lease terms. Lessee Accounting Contracts are assessed by the Company to determine if the contract conveys the right to control an identified asset in exchange for consideration during a period of time. The Company classifies all identified leases as either operating or finance leases. As of December 31, 2019, the Company was not a party to any finance leases. Contracts that contain leases are assessed to determine if the consideration in the contract is related to a lease component, non-lease component or other components not related to the lease. Lease components are recorded as ROU assets and lease liabilities while any non-lease component is expensed as incurred. The consideration in the contract related to other components not related to the lease is allocated among the lease component and the non-lease component, as applicable, based on the stand-alone selling price of the lease and non-lease components. Certain lease agreements may contain an option to extend or terminate the lease. The Company considers the economic impact of extension and termination options for each lease agreement. If the Company concludes it is reasonably certain an option will be exercised, that option is included in the lease term and impacts the amount recorded as an ROU asset and lease liability upon inception of the contract. The Company's lease liability is determined by discounting the future cash flows over the lease period. The Company determines its discount rates by utilizing current secured financing rates based on the length of the lease period plus the Company's margin over LIBOR on the New Term Loan. The Company believes this rate effectively represents a borrowing rate the Company could obtain on a debt instrument possessing similar terms as the lease. Any lease liability is classified between current and non-current liabilities based on the terms of the underlying leases. The weighted average discount rate on operating leases as of December 31, 2019 was 4.36%. As of December 31, 2018, future undiscounted payments under operating leases (as defined by prior guidance) were expected to be as follows for the next five annual periods and thereafter following December 31, 2018: December 31, 2018 2019 $ 4 2020 3 2021 2 2022 1 2023 1 Thereafter — Ending balance $ 11 As of December 31, 2019, the Company recorded current and non-current operating lease liabilities of $5 million and $18 million, respectively. The following table reconciles total operating lease liabilities as of December 31, 2019 to future undiscounted cash flows for operating leases: December 31, 2019 2020 $ 6 2021 4 2022 3 2023 3 2024 2 Thereafter 9 Total lease payments $ 27 Less: Interest 4 Present value of lease liabilities $ 23 ROU assets are calculated as the related lease liability adjusted for lease incentives, prepayments and the effect of escalating lease payments on period expense. The below table depicts the ROU assets held by the Company based on the underlying asset: December 31, 2019 Buildings $ 21 Land 1 Vehicles 1 Equipment 1 Total right-of-use assets $ 24 The weighted average remaining lease term as of December 31, 2019 was 7.70 years. Operating lease expense was $5 million for the year ended December 31, 2019, and was recorded within Selling, general and administrative expense and Engineering - research and development on the Company's Consolidated Statements of Comprehensive Income. There was no short-term operating lease expense for the year ended December 31, 2019. Rent expense under prior accounting guidance for non-cancelable operating leases was $5 million for each of the years ended December 31, 2018 and 2017. The calculation of the Company's ROU assets and lease liabilities did not include cash consideration as of December 31, 2019. During the year ended December 31, 2019, the Company recorded $14 million of new ROU assets obtained through non-cash transactions. |
Other Income (Expense), Net
Other Income (Expense), Net | 12 Months Ended |
Dec. 31, 2019 | |
Other Income And Expenses [Abstract] | |
Other Income (Expense), Net | NOTE 13. OTHER INCOME (EXPENSE), NET Other income (expense), net consists of the following (dollars in millions): Years ended December 31, 2019 2018 2017 Post-retirement benefit plan amendment credits $ 11 $ 12 $ — Vendor settlements — (4 ) (5 ) Technology-related investment expense — (3 ) (16 ) Other (1 ) (2 ) (1 ) Total $ 10 $ 3 $ (22 ) |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | NOTE 14. OTHER CURRENT LIABILITIES Other current liabilities consist of the following (dollars in millions): As of December 31, 2019 As of December 31, 2018 Payroll and related costs $ 87 $ 81 Sales allowances 32 39 Accrued interest payable 21 19 Vendor buyback obligation 16 15 Taxes payable 12 10 Derivative liabilities 7 1 Lease liability 5 — Vendor liability 3 5 Non-trade payables 2 3 Defense price reduction reserve — 9 Other accruals 17 15 Total $ 202 $ 197 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2019 | |
Compensation And Retirement Disclosure [Abstract] | |
Employee Benefit Plans | NOTE 15. EMPLOYEE BENEFIT PLANS The Company’s hourly defined benefit pension plan generally provides benefits of negotiated, stated amounts for each year of service as well as significant supplemental benefits for employees who were hired on or before May 18, 2008 and retire with 30 years of service before normal retirement age. Any difference between actual and expected returns on assets during a year and actuarial gains and losses on liabilities together with any prior service costs are charged (or credited) to income over the average remaining service lives of employees. The benefit cost components shown in the Consolidated Statements of Comprehensive Income are based upon certain data specific to the Company, actuarial assumptions that were used for accounting disclosures, and certain allocation methodologies such as population demographics. The Company’s salaried defined benefit plan covering salaried employees with a service date prior to January 1, 2001 is generally based on years of service and compensation history. Any difference between actual and expected returns on assets during a year and actuarial gains and losses on liabilities together with any prior service costs are charged (or credited) to income over the average remaining service lives of employees. The benefit cost components shown in the Consolidated Statements of Comprehensive Income are based upon certain data specific to the Company, actuarial assumptions that were used for accounting disclosures, and certain allocation methodologies such as population demographics. The Company sponsors defined contribution retirement savings plans for eligible employees, based on employee location and status. The Company’s salaried defined contribution retirement savings plans provide for a Company match of employee contributions up to certain limits based upon eligible base salary. As a result of the business acquisitions in 2019, the number of employees eligible to participate in the plans has increased from prior years. The charge to expense for the Company’s defined contribution retirement savings plans was $11 million, $9 million and $8 million for the years ended December 31, 2019, 2018 and 2017, respectively. The Company is also responsible for OPEB costs (medical, dental, vision, and life insurance) for hourly employees hired prior to May 19, 2008, excluding those employees eligible to retire at the time of the sale of the Company. Post-retirement benefit costs consist of service cost and interest cost on accrued obligations. Actuarial gains and losses on liabilities and any prior service costs are charged (or credited) to income over the average remaining service lives of employees. The benefit cost components shown in the Consolidated Statements of Comprehensive Income are based upon certain data specific to the Company, actuarial assumptions that were used for OPEB accounting disclosures, and certain allocation methodologies such as population demographics. The plan is unfunded and any future payments will be funded by the Company’s operating cash flows. As of December 31, 201 9 and 201 8 , the Company had an estimated OPEB liability for hourly employees hired prior to May 19, 2008, excluding those employees eligible to retire at the time of the sale of the Company, of $ million and $ 93 million, respectively. As part of the Affordable Care Act enacted in 2010, the Company has evaluated the impact on “High-cost Health Plans” in which employers offering health plan coverage exceeding certain thresholds must pay an excise tax equal to 40% of the value of the plan that exceeds the threshold amount. As a result of the excise tax, the Company recorded $2 million in its OPEB liability as of December 31, 2018 with a corresponding adjustment to AOCL, net of tax. In December 2019, the Further Consolidated Appropriations Act of 2020, fully repealed the aforementioned section of the Affordable Care Act and therefore the amount recorded by the Company as of December 31, 2019 was zero. The Company provides contributions to certain international benefit plans; however, these contributions are not material for the periods presented. For all pension and OPEB plans in which employees participate, costs are determined within the FASB’s authoritative accounting guidance set forth on employers’ defined benefit pensions including accounting for settlements and curtailments of defined benefit pension plans, termination of benefits and accounting for post-retirement benefits other than pensions. In accordance with the authoritative accounting guidance, the Company recognizes the funded status of its defined benefit pension plans and OPEB plan in its Consolidated Balance Sheets with a corresponding adjustment to AOCL, net of tax. Information about the net periodic benefit cost (credit) and other changes recognized in AOCL for the pension and post-retirement benefit plans is as follows (dollars in millions): Pension Plans Post-retirement Benefits Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Net Periodic Benefit Cost (Credit): Service cost $ 10 $ 12 $ 12 $ 1 $ 1 $ 2 Interest cost 7 6 6 4 4 6 Expected return on assets (9 ) (8 ) (7 ) — — — Prior service credit — — — (13 ) (13 ) (4 ) Net Periodic Benefit Cost (Credit) $ 8 $ 10 $ 11 $ (8 ) $ (8 ) $ 4 Other changes recognized in other comprehensive income: Prior service cost (credit) $ — $ — $ 1 $ — $ — $ (73 ) Net (gain) loss (2 ) (2 ) 8 (1 ) (12 ) 24 Amortizations — — — 13 13 4 Total recognized – other comprehensive income $ (2 ) $ (2 ) $ 9 $ 12 $ 1 $ (45 ) The components of net periodic benefit costs other than the service cost component are included in Other income (expense), net in the Consolidated Statements of Comprehensive Income. The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost (credit). Pension Plans Post-retirement Benefits Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Discount rate 4.20 % 3.50 % 4.10 % 4.20 % 3.60 % 4.30 % Rate of compensation increase (salaried) 3.00 % 3.00 % 3.00 % N/A N/A N/A Expected return on assets 4.50 % 4.50 % 4.70 % N/A N/A N/A The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of the Company’s plans. Pension Plans Post-retirement Benefits As of December 31, 2019 2018 2019 2018 Discount rate 3.20 % 4.20 % 3.20 % 4.20 % Rate of compensation increase (salaried) 3.00 % 3.00 % N/A N/A The Company’s pension and OPEB costs are calculated using various actuarial assumptions and methodologies as prescribed by authoritative accounting guidance. These assumptions include discount rates, expected return on plan assets, health care cost trend rates, inflation, rate of compensation increases, mortality rates and other factors. The Company reviews all actuarial assumptions on an annual basis. The discount rate is used to determine the present value of the Company’s benefit obligations. The Company’s discount rate is determined by matching the plans’ projected cash flows to a yield curve based on long-term, fixed income debt instruments available as of the measurement date of December 31, 2019. The overall expected rate of return on plan assets is based upon historical and expected future returns consistent with the expected benefit duration of the plan for each asset group adjusted for investment and administrative fees. Health care cost trends are used to project future post-retirement benefits payable from the Company’s plans. For the Company’s December 31, 2019 obligations, future post-retirement medical care costs and prescription drug costs were forecasted assuming an initial annual increase of 5.20%, decreasing to 4.50% by the year 2036. As health care costs trends have a significant effect on the amounts reported, an increase and decrease of one-percentage-point would have had the following effects in the year ended December 31, 2019 (dollars in millions): 1% Increase 1% Decrease Effect on total of service and interest cost $ 1 $ (1 ) Effect on post-retirement benefit obligation $ 13 $ (11 ) The following table provides a reconciliation of the changes in the net benefit obligations and fair value of plan assets for the years ended December 31, 2019, 2018 and 2017 (dollars in millions): Pension Plans Post-retirement Benefits Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Benefit Obligations: Net benefit obligation at beginning of year $ 177 $ 181 $ 155 $ 93 $ 102 $ 144 Service cost 10 12 12 1 1 2 Interest cost 7 6 6 4 4 6 Plan Amendments — — 1 — — (73 ) Benefits paid (9 ) (6 ) (7 ) (2 ) (2 ) (2 ) Actuarial loss (gain) 19 (16 ) 14 (2 ) (12 ) 25 Net benefit obligation at end of year $ 204 $ 177 $ 181 $ 94 $ 93 $ 102 Fair Value of Plan Assets: Fair value of plan assets at beginning of year $ 196 $ 188 $ 150 $ — $ — $ — Actual return on plan assets 30 (6 ) 14 — — — Employer contributions — 20 31 2 2 2 Benefits paid (9 ) (6 ) (7 ) (2 ) (2 ) (2 ) Fair value of plan assets at end of year $ 217 $ 196 $ 188 $ — $ — $ — Net Funded Status $ 13 $ 19 $ 7 $ (94 ) $ (93 ) $ (102 ) The Company’s OPEB plan was amended to reflect certain limitations on participants’ annual benefits that were included in the new collective bargaining agreement ratified by International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) Local 933 in December 2017. The Company’s pension plan assets mostly consist of diversified equity securities and diversified debt securities. The fair values of plan assets for the Company’s pension plans as of December 31, 2019 and 2018 are as follows (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) TOTAL 2019 2018 2019 2018 2019 2018 Diversified debt securities $ 13 $ 9 $ 164 $ 156 $ 177 $ 165 Diversified equity securities 24 20 10 8 34 28 Cash equivalents 6 3 — — 6 3 Total $ 43 $ 32 $ 174 $ 164 $ 217 $ 196 The Company’s investment strategy with respect to pension plan assets is to invest the assets in accordance with laws and regulations. The long-term primary objectives for the Company’s pension assets are to provide results that meet or exceed the plans’ actuarially assumed long-term rate of return without subjecting the funds to undue risk. To achieve these objectives the Company has established the following targets: Target Asset Category Hourly Salary Cash equivalents 2 % 2 % Diversified equity securities 15 15 Diversified debt securities 83 83 Total 100 % 100 % Through 201 9 , the Company’s investment committee has continued to evaluate the investments and take steps toward the established targets. The following table discloses the amounts recognized in the balance sheet and in AOCL at December 31, 2019 and 2018, on a pre-tax basis (dollars in millions): Pension Plans Post-retirement Benefits As of December 31, 2019 2018 2019 2018 Amounts Recognized in Balance Sheet: Noncurrent assets $ 13 $ 19 $ — $ — Current liabilities — — (3 ) (3 ) Noncurrent liabilities — — (91 ) (90 ) Total asset (liability) $ 13 $ 19 $ (94 ) $ (93 ) Accumulated Other Comprehensive Loss: Prior service credit $ 3 $ 3 $ 57 $ 71 Actuarial (loss) gain (6 ) (8 ) 4 2 Total $ (3 ) $ (5 ) $ 61 $ 73 The amounts in AOCL expected to be amortized and recognized as a component of net periodic benefit cost in 2020 are as follows (dollars in millions): 2020 Pension Plans Post-retirement Benefits Prior service credit $ — $ 13 Actuarial loss — — Total $ — $ 13 The accumulated benefit obligation for the Company’s pension plans as of December 31, 2019 and 2018 was $199 million and $173 million, respectively. As of December 31, 2019 and 2018, the hourly defined benefit pension plan had plan assets greater than the projected benefit obligation and the accumulated benefit obligation. As of December 31, 2019 and 2018, the salary defined benefit pension plan had plan assets greater than the projected benefit obligation and accumulated benefit obligation. Information about expected cash flows for the Company’s pension and post-retirement benefit plans is as follows (dollars in millions): Pension Plans Post-retirement Benefits Employer Contributions: 2020 expected contributions $ — $ 3 Expected Benefit Payments: 2020 10 3 2021 11 3 2022 12 4 2023 13 4 2024 13 4 2025-2029 67 22 Expected benefit payments for pension and post-retirement benefits will be paid from plan trusts or corporate assets. The Company’s funding policy is to contribute amounts annually that are at least equal to the amounts required by applicable laws and regulations or to directly fund payments to plan participants. Additional discretionary contributions will be made when deemed appropriate to meet the Company’s long-term obligation to the plans. The Company maintains a non-qualified deferred compensation plan (“Deferred Compensation Plan”) for a select group of management. Under the terms of the plan, the Company has utilized a rabbi trust to accumulate assets to fund its promise to pay benefits under the Deferred Compensation Plan. The rabbi trust is an irrevocable trust, which restricts any use of funds (operational or otherwise) by the Company other than to pay benefits under the Deferred Compensation Plan, and prevents immediate taxation of contributed amounts. Funds are accumulated through both employee deferrals and a Company match. Funds can be invested by the employee into a diversified group of investment options, which have been selected by the Company’s investment committee, that are all categorized as Level 1 in the fair value hierarchy. The Company match resulted in no charge to the Consolidated Statements of Comprehensive Income for any of the years ended December 31, 2019, 2018 and 2017, and the fair value of the rabbi trust plan assets and deferred compensation obligation was $12 million and $9 million as of December 31, 2019 and 2018, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 16. INCOME TAXES Income before income taxes included the following (dollars in millions): Years ended December 31, 2019 2018 2017 U.S. income $ 712 $ 755 $ 491 Foreign income 56 50 36 Total $ 768 $ 805 $ 527 The provision for income tax expense was estimated as follows (dollars in millions): Years ended December 31, 2019 2018 2017 Estimated current income taxes: U.S. federal $ 75 $ 94 $ 61 Foreign 13 9 7 U.S. state and local 11 11 5 Total Current 99 114 73 Deferred income tax expense (credit), net: U.S. federal 58 45 (44 ) Foreign — — 1 U.S. state and local 7 7 (7 ) Total Deferred 65 52 (50 ) Total income tax expense $ 164 $ 166 $ 23 On December 22, 2017, the U.S. Tax Cuts and Jobs Act was enacted into law. The U.S. Tax Cuts and Jobs Act made broad and complex changes to the U.S. tax code that impact the Company, most notably a reduction of the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017. It also included a one-time deemed repatriation tax on undistributed foreign earnings and profits. On December 22, 2017, the United States Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provided guidance on accounting for the tax effects of the U.S. Tax Cuts and Jobs Act. The Company recognized the income tax effects of the U.S. Tax Cuts and Jobs Act for the year ended December 31, 2017, the reporting period in which it was signed into law, in accordance with SAB 118. As of December 31, 2018, the Company has completed its accounting for the tax effects of the U.S. Tax Cuts and Jobs Act. In accordance with SAB 118, the Company recorded a deferred tax benefit of $157 million related to the re-measurement of certain deferred tax assets and liabilities and $5 million of tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings and profits for the year ended December 31, 2017. The total net benefit of $152 million was deemed a reasonable estimate of the impact of the U.S. Tax Cuts and Jobs Act for the Company as of December 31, 2017. During the year ended December 31, 2018, the Company finalized its accounting for the enactment of the U.S. Tax Cuts and Jobs Act which resulted in a deferred tax benefit of $160 million related to the re-measurement of certain deferred tax assets and liabilities and $6 million of tax expense in connection with the transition tax on the mandatory deemed repatriation of foreign earnings and profits for a total net benefit of $154 million. The change in total net benefit of $2 million was incorporated into the Company’s income tax expense for the year ended December 31, 2018. The Company concluded that no material adjustments were required from the previous reasonable estimate related to the U.S. Tax Cuts and Jobs Act. A reconciliation of the provision for income tax expense compared with the amounts at the U.S. federal statutory rate is as follows (dollars in millions): Years ended December 31, 2019 2018 2017 Tax at U.S. statutory income tax rate $ 161 $ 169 $ 185 State tax expense 14 15 10 Non-deductible expenses (7 ) (9 ) 7 Tax credits (4 ) (3 ) (21 ) Effect of tax rate changes (2 ) (4 ) — Valuation allowance 1 2 3 Foreign rate differential (1 ) (4 ) (5 ) Impact related to U.S. Tax Cuts and Jobs Act — — (155 ) Other adjustments 2 — (1 ) Total income tax expense $ 164 $ 166 $ 23 The effective tax rate for both the years ended December 31, 2019 and 2018 was 21%. The decrease in income tax expense was principally driven by decreased taxable income. Deferred income tax assets and liabilities as of December 31, 2019 and 2018 reflect the effect of temporary differences between amounts of assets, liabilities and equity for financial reporting purposes and the bases of such assets, liabilities and equity as measured by tax laws, as well as tax loss and tax credit carry forwards. Net deferred tax assets and liabilities are classified as non-current in the Consolidated Balance Sheets. As described above, the deferred tax assets and liabilities are measured based on the enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. The Company has not recognized any deferred tax liabilities associated with earnings in foreign subsidiaries, except for its subsidiary located in China, as they are intended to be permanently reinvested and used to support foreign operations or have no associated tax requirements. As of December 31, 2019, the Company has recorded a deferred tax liability of $3 million for the tax liability associated with the remittance of previously taxed income and unremitted earnings for its subsidiary located in China. The U.S. Tax Cuts and Jobs Act requirement of a one-time repatriation tax on foreign earnings and profits resulted in the Company recording a $6 million liability for the deemed repatriation to be paid to the U.S. Government. In the future, the U.S. Tax Cuts and Jobs Act provides for tax free repatriations of earnings and profits generated by foreign subsidiaries through a 100% dividends received deduction. The remaining deferred tax liabilities, if recorded, related to unremitted earnings that are indefinitely reinvested are not material. Temporary differences and carryforwards that gave rise to deferred tax assets and liabilities included the following (dollars in millions): As of December 31 2019 As of December 31 2018 Deferred tax assets: Deferred revenue $ 28 $ 24 Intangibles 23 29 Other accrued liabilities 23 20 Warranty accrual 11 14 Operating loss carryforwards 8 10 Interest rate hedges 8 2 Stock-based compensation 7 5 Sales allowances and rebates 6 8 Inventories 6 4 Technology-related investments 5 5 Other 7 8 Total Deferred tax assets 132 129 Valuation allowances (10 ) (10 ) Deferred tax liabilities: Goodwill (337 ) (311 ) Trade name (132 ) (114 ) Property, plant and equipment (28 ) (10 ) Post-retirement (6 ) (9 ) Other (2 ) (2 ) Total Deferred tax liabilities (505 ) (446 ) Net Deferred tax liability $ (383 ) $ (327 ) The estimated net operating loss carryforwards as of December 31, 2019 relate solely to U.S. state net operating loss carryforwards. Substantially all state operating loss carryforwards will not expire until 2028-2031. Management has determined, based on an evaluation of available objective and subjective evidence, that it is more likely than not that certain foreign deferred tax assets and an anticipated capital loss carryforward will not be realized; therefore these deferred tax assets are offset with a valuation allowance of $10 million as of December 31, 2019 and 2018. In accordance with the FASB’s authoritative accounting guidance on accounting for income taxes, the Company records uncertain tax positions on the basis of a two-step process whereby (1) it is determined whether it is more likely than not that the tax position will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. Based upon this process, the Company has recognized a liability for uncertain tax benefits as of December 31, 2019 and 2018. Management does not anticipate any material changes in the balance in 2020. The change in the liability for unrecognized tax benefits are as follows (dollars in millions): December 31, 2017 $ 2 Increases in unrecognized tax benefits as a result of current year activity — December 31, 2018 $ 2 Increases in unrecognized tax benefits as a result of current year activity 1 December 31, 2019 $ 3 For the years ended December 31, 2019, 2018 and 2017, the Company recognized no interest and penalties in the Consolidated Statements of Comprehensive Income because either no uncertain tax positions were identified or the penalties and interest anticipated were not material in all the periods presented. The Company follows a policy of recording any interest or penalties in Income tax expense. Management does not anticipate any significant changes in unrecognized tax benefits in 2020. There was $3 million and $2 million as of December 31, 2019 and 2018, respectively, of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. All of the Company's tax returns, once filed, will remain subject to examination by the various taxing authorities for the duration of the applicable statute of limitations (generally three years from the earlier of the date of filing or the due date of the return). |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | NOTE 17. ACCUMULATED OTHER COMPREHENSIVE LOSS The changes in components of AOCL consisted of the following (dollars in millions): Before Tax Tax (Expense) Benefit Reclassification of stranded tax effects After Tax Balance at December 31, 2016 $ (20 ) $ (43 ) $ — $ (63 ) Foreign currency translation 15 — — 15 Pension and OPEB liability adjustment 34 (8 ) — 26 Available-for-sale securities 11 (4 ) — 7 Net current period other comprehensive income (loss) $ 60 $ (12 ) $ — $ 48 Balance at December 31, 2017 $ 40 $ (55 ) $ — $ (15 ) Foreign currency translation (9 ) — — (9 ) Pension and OPEB liability adjustment 1 — — 1 Available-for-sale securities (9 ) 2 — (7 ) Net current period other comprehensive (loss) income $ (17 ) $ 2 $ — $ (15 ) Balance at December 31, 2018 $ 23 $ (53 ) $ — $ (30 ) Foreign currency translation (3 ) — — (3 ) Pension and OPEB liability adjustment (11 ) 2 9 — Available-for-sale securities and interest rate swaps (24 ) 6 (1 ) (19 ) Net current period other comprehensive (loss) income $ (38 ) $ 8 $ 8 $ (22 ) Balance at December 31, 2019 $ (15 ) $ (45 ) $ 8 $ (52 ) The following table shows the location in the Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (dollars in millions): For the year ended December 31, 2017 AOCL Components Amount reclassified from AOCL Affected line item in the consolidated statements of comprehensive income Amortization of OPEB items: Prior service credit $ 3 Other income (expense), net Actuarial gain 1 Other income (expense), net Total reclassifications, before tax 4 Income before income taxes Income tax expense (1 ) Income tax expense Total reclassifications $ 3 Net of tax For the year ended December 31, 2018 AOCL Components Amount reclassified from AOCL Affected line item in the consolidated statements of comprehensive income Amortization of OPEB items: Prior service credit $ 13 Other income (expense), net Total reclassifications, before tax 13 Income before income taxes Income tax expense (3 ) Income tax expense Total reclassifications $ 10 Net of tax For the year ended December 31, 2019 AOCL Components Amount reclassified from AOCL Affected line item in the consolidated statements of comprehensive income Amortization of OPEB items: Prior service credit $ 13 Other income (expense), net Total reclassifications, before tax 13 Income before income taxes Income tax expense (3 ) Income tax expense Total reclassifications $ 10 Net of tax Prior service cost and actuarial loss are included in the computation of the Company’s net periodic benefit cost. Please see NOTE 15 “Employee Benefit Plans” for additional details. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 18. COMMITMENTS AND CONTINGENCIES Environmental Matters The Company has an agreement with the Environmental Protection Agency to perform remedial activities at the Company’s Indianapolis, Indiana manufacturing facilities related to historical soil and groundwater contamination. In the fourth quarter of 2019, the EPA accepted a proposal to reduce the Company’s ongoing responsibilities for operating, monitoring and maintaining the ongoing activities resulting in the Company reducing its associated undiscounted liability to $3 million to complete the future operating, monitoring and maintenance activities over the next 30 years. Claims, Disputes, and Litigation The Company is party to various legal actions and administrative proceedings and subject to various claims arising in the ordinary course of business. These proceedings primarily involve commercial claims, product liability claims, personal injury claims and workers’ compensation claims. The Company believes that the ultimate liability, if any, in excess of amounts already provided for in the consolidated financial statements or covered by insurance on the disposition of these matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company. |
Concentration of Risk
Concentration of Risk | 12 Months Ended |
Dec. 31, 2019 | |
Risks And Uncertainties [Abstract] | |
Concentration of Risk | NOTE 19. CONCENTRATION OF RISK As of December 31, 2019 and 2018, the Company employed approximately 3,700 and 2,900 employees, respectively, with 91% and 90%, respectively, of those employees in the U.S. Approximately 45% and 59% of the Company’s U.S. employees were represented by unions and subject to a collective bargaining agreement as of December 31, 2019 and 2018, respectively. In addition, many of the hourly employees outside the U.S. are represented by various unions. The Company is currently operating under a collective bargaining agreement with UAW Local 933 that expires in November 2023. Three customers accounted for greater than 10% of net sales within the last three years presented. Years ended December 31, % of net sales 2019 2018 2017 Daimler AG 20 % 18 % 20 % PACCAR Inc. 12 % 10 % 9 % Navistar International Corporation 11 % 8 % 8 % No other customers accounted for more than 10% of net sales of the Company during the years ended December 31, 2019, 2018 or 2017. Three customers accounted for greater than 10% of outstanding accounts receivable within the last two years presented. % of accounts receivable As of December 31, 2019 As of December 31, 2018 Daimler AG 19 % 18 % Navistar International Corporation 13 % 9 % Volvo Group 6 % 11 % No other customers accounted for more than 10% of the outstanding accounts receivable as of December 31, 2019 or December 31, 2018. No supplier accounted for greater than 10% of materials purchased during the years ended December 31, 2019, 2018 or 2017. |
Certain Relationships and Relat
Certain Relationships and Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions [Abstract] | |
Certain Relationships and Related Party Transactions | NOTE 20. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Repurchase of Common Stock held by Ashe Capital Management LP On May 7, 2019, the Company entered into a stock repurchase agreement with Ashe Capital Management, LP to repurchase 4,977,043 shares of the Company's common stock for approximately $232 million. William Harker, a member of the Company's Board of Directors until May 9, 2019, is the President and Co-Founder of Ashe Capital Management, LP. The shares were repurchased under the stock repurchase plan approved by the Board of Directors in November 2016 (“Repurchase Program”). The purchase was funded with cash on hand and borrowings under the New Revolving Credit Facility. The shares were subsequently retired. Repurchase of Common Stock held by ValueAct Capital Master Fund On February 3, 2017, the Company entered into a stock repurchase agreement with ValueAct Capital Master Fund, L.P., a related party, to repurchase 10,525,204 shares of the Company’s common stock for approximately $363 million. The shares were repurchased under the Repurchase Program. The purchase closed on February 8, 2017 and was funded with cash on hand and borrowings under the Prior Revolving Credit Facility. The shares were subsequently retired. |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Common Stock | NOTE 21. COMMON STOCK The Company’s Repurchase Program was announced on November 14, 2016 when the Board of Directors authorized the Company to repurchase up to $1,000 million of its common stock on the open market or through privately negotiated transactions. On November 8, 2017, July 30, 2018 and May 9, 2019 the Board of Directors authorized the Company to repurchase an additional $500 million, $500 million and $1,000 million of its common stock, bringing the total amount authorized under the Repurchase Program to $3,000 million. The Repurchase Program has no termination date. The timing and amount of stock purchases are subject to market conditions and corporate needs. The Repurchase Program may be modified, suspended or discontinued at any time at the Company’s discretion. During 201 9 , the Company repurchased approximately $ 393 million of its common stock under the Repurchase Program , leaving $ million of authorized repurchases remaining under the Repurchase Program as of December 31, 2019 . |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE 2 2 . EARNINGS PER SHARE The Company presents both basic and diluted earnings per share (“EPS”) amounts. Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted EPS is calculated by dividing net income by the weighted average number of common shares and common equivalent shares outstanding during the reporting period that are calculated using the treasury stock method for stock-based awards. The treasury stock method assumes that the Company uses the proceeds from the exercise of awards to repurchase common stock at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future and compensation cost for future service that the Company has not yet recognized. During the years ended December 31, 2019, 2018 and 2017, there were no outstanding stock options excluded from the diluted EPS calculation because they were anti-dilutive. Basic and diluted EPS for the full-year is calculated using the weighted average shares of common stock outstanding during the year while quarterly basic and diluted EPS is calculated using the weighted average shares of common stock outstanding during the quarter; therefore, the sum of the four quarters’ EPS may not equal full-year EPS. The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (in millions, except per share data): Years ended December 31, 2019 2018 2017 Net income $ 604 $ 639 $ 504 Weighted average shares of common stock outstanding 122 133 149 Dilutive effect stock-based awards 1 1 1 Diluted weighted average shares of common stock outstanding 123 134 150 Basic earnings per share attributable to common stockholders $ 4.95 $ 4.81 $ 3.38 Diluted earnings per share attributable to common stockholders $ 4.91 $ 4.78 $ 3.36 |
Geographic Information
Geographic Information | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Geographic Information | NOTE 23. The Company had the following net sales by country (dollars in millions): Years ended December 31, 2019 2018 2017 United States $ 1,915 $ 1,922 $ 1,614 China 136 127 62 Canada 104 104 125 Japan 79 101 75 Mexico 71 57 39 Germany 59 55 45 France 37 40 21 United Kingdom 35 55 36 Brazil 34 14 18 Turkey 27 24 24 Other 201 214 203 Total $ 2,698 $ 2,713 $ 2,262 The Company had the following net long-lived assets by country (dollars in millions): Years ended December 31, 2019 2018 2017 United States $ 583 $ 427 $ 400 India 17 24 32 Hungary 11 11 12 Other 5 4 4 Total $ 616 $ 466 $ 448 |
Quarterly Financial Information
Quarterly Financial Information | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Information | NOTE 24. QUARTERLY FINANCIAL INFORMATION The following is a summary of the unaudited quarterly results of operations. The Company believes that all adjustments considered necessary for a fair presentation in accordance with GAAP have been included (unaudited, in millions, except per share data). Quarters ended, March 31 June 30 September 30 December 31 2019 Net sales $ 675 $ 737 $ 669 $ 617 Gross profit 359 389 348 298 Operating income 244 259 224 165 Income before income taxes 211 229 194 134 Net income 167 181 149 107 Basic earnings per share $ 1.33 $ 1.47 $ 1.24 $ 0.90 Diluted earnings per share $ 1.32 $ 1.46 $ 1.23 $ 0.90 2018 Net sales $ 663 $ 711 $ 692 $ 647 Gross profit 342 374 368 338 Operating income 222 248 246 207 Income before income taxes 191 222 218 174 Net income 151 174 167 147 Basic earnings per share $ 1.09 $ 1.30 $ 1.28 $ 1.15 Diluted earnings per share $ 1.08 $ 1.29 $ 1.27 $ 1.14 |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | NOTE 25. ACQUISITIONS Walker Die Casting Acquisition On September 9, 2019, the Company acquired the assets of Walker Die Casting, Inc. (“Walker Die Casting”), an aluminum castings company, and C&R Tool and Engineering, Inc. (“C&R Tool and Engineering”), a supplier of metal-working tools, for approximately $103 million in cash, which included the effective settlement of pre-existing accounts payable of approximately $4 million. Walker Die Casting is an essential component supplier for the Company’s core on-highway transmission products. The Company has accounted for this acquisition in accordance with authoritative accounting guidance on business combinations. Control was obtained as of the purchase date through the purchase agreement. The acquired business was integrated into the Company's single operating segment. The preliminary purchase price of $99 million resulted in the recognition of property, plant and equipment, goodwill, inventory, intangible assets and other net assets of $53 million, $21 million, $18 million, $4 million and $3 million, respectively. The intangible assets were valued using an income approach, which included certain sensitive assumptions including discount rate and royalty rate. The intangible assets consist of customer relationships and tradename of $3 million and $1 million, respectively, and have weighted average remaining useful lives of approximately 7 years and 15 years, respectively. The amount allocated to goodwill is deductible for income tax purposes. Goodwill represents the excess of the consideration transferred over the preliminary estimate of fair values of the assets acquired and liabilities assumed and is primarily attributable to intangible assets, such as the assembled workforce, which are not separately recognizable. The carrying value of the goodwill associated with this business combination was $ 21 million at December 31, 2019. The Company has completed its initial accounting for the fair value of the acquired assets and liabilities, and any adjustments identified in the measurement period, such as wor king capital , not to exceed one year from the acquisition date, will be accounted for prospectively. For the fiscal year ended December 3 1 , 2019, the results of Walker Die Casting and C&R Tool and Engineering as of and after the date of acquisition have been included in the Company’s consolidated financial statements as of and for the year ended December 3 1 , 2019, and net sales have been included in the Company’s Service Parts, Support Equipment and Other end market. AxleTech Electric Vehicle Systems Division Acquisition On April 16, 2019, the Company acquired from AxleTech, a technology company that engineers, designs, manufactures, sells and services powertrain solutions for on-highway and off-highway heavy-duty vehicles, all of the assets related to its electric vehicle systems division, which designs and manufactures fully integrated electrified-axle propulsion solutions for medium- and heavy-duty trucks and transit buses, for approximately $124 million in cash. The acquisition aligns with the Company's strategy to advance its position in propulsion solutions. The Company has accounted for this acquisition in accordance with authoritative accounting guidance on business combinations. Control was obtained as of the purchase date through the purchase agreement. The acquired business was integrated into the Company's single operating segment. The preliminary purchase price allocation for this transaction resulted in the recognition of goodwill, intangible assets, and property, plant and equipment of $67 million, $56 million, and $1 million, respectively. The intangible assets were valued using an income approach, which included certain sensitive assumptions including discount rate, royalty rate, asset life and future cash flows. The intangible assets consist of in-process research and development, customer relationships and developed technology of $50 million, $3 million and $3 million, respectively. Customer relationships and developed technology have weighted average remaining useful lives of approximately 6 years and 14 years, respectively. The amount allocated to goodwill is deductible for income tax purposes. Goodwill represents the excess of the consideration transferred over the preliminary estimate of fair values of the assets acquired and liabilities assumed and is primarily attributable to intangible assets, such as the assembled workforce, which are not separately recognizable. The carrying value of the goodwill associated with this business combination was $67 million at December 31, 2019. The Company has completed its initial accounting for the fair value of the acquired assets and liabilities, and any adjustments identified in the measurement period, which will not exceed one year from the acquisition date, will be accounted for prospectively. For the fiscal year ended December 31, 2019, the results of electric vehicle systems division acquired from AxleTech as of and after the date of acquisition have been included in the Company’s consolidated financial statements as of and for the year ended December 31, 2019, and net sales have been included in the Company’s North America On-Highway end market. Vantage Power Limited Acquisition On April 12, 2019, the Company acquired all of the outstanding shares of Vantage Power Limited, a privately owned company based in the United Kingdom which designs and manufactures powertrain electrification and connectivity technologies applicable to a broad range of commercial vehicle end markets. The Company paid approximately $9 million in cash on April 12, 2019 and may pay up to an additional $8 million over the next three years based on specified conditions being met. The Company has accounted for this acquisition in accordance with authoritative accounting guidance on business combinations. The acquired business was integrated into the Company's single operating segment as a wholly-owned subsidiary. |
Schedule I-Parent Company Only
Schedule I-Parent Company Only Financial Statements | 12 Months Ended |
Dec. 31, 2019 | |
Condensed Financial Information Of Parent Company Only Disclosure [Abstract] | |
Schedule I-Parent Company Only Financial Statements | Allison Transmission Holdings, Inc. Schedule I—Parent Company only Balance Sheets (dollars in millions) December 31, 2019 December 31, 2018 ASSETS Current Assets: Cash $ — $ — Total Current Assets — — Investments in and advances to subsidiaries 781 659 TOTAL ASSETS $ 781 $ 659 LIABILITIES AND STOCKHOLDERS’ EQUITY Current Liabilities: Accounts payable $ — $ — Total Current Liabilities — — Capital stock 1 1 Paid in capital 1,802 1,788 Treasury stock — — Accumulated deficit (970 ) (1,100 ) Accumulated other comprehensive loss, net of tax (52 ) (30 ) TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 781 $ 659 The accompanying note is an integral part of the Parent Company only financial statements. Allison Transmission Holdings, Inc. Schedule I—Parent Company only Statements of Comprehensive Income (dollars in millions) Years ended December 31, 2019 2018 2017 Net sales $ — $ — $ — General and administrative fees — — — Total operating income — — — Other income: Equity earnings of consolidated subsidiary 604 639 504 Income before income taxes 604 639 504 Income tax expense — — — Net income $ 604 $ 639 $ 504 Comprehensive income $ 582 $ 624 $ 552 The accompanying note is an integral part of the Parent Company only financial statements. Allison Transmission Holdings, Inc. Schedule I—Parent Company only Statements of Cash Flows (dollars in millions) Years ended December 31, 2019 2018 2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 604 $ 639 $ 504 Deduct items included in net income not providing cash: Equity in earnings in consolidated subsidiary (604 ) (639 ) (504 ) Net cash provided by operating activities — — — CASH FLOWS FROM INVESTING ACTIVITIES: Investments in subsidiaries (5 ) (22 ) (19 ) Dividends 73 80 89 Net cash provided by investing activities 68 58 70 CASH FLOWS FROM FINANCING ACTIVITIES: Capital contributions 5 22 19 Dividends (73 ) (80 ) (89 ) Net cash used in financing activities (68 ) (58 ) (70 ) Net increase (decrease) during period — — — Cash and cash equivalents at beginning of period — — — Cash and cash equivalents at end of period $ — $ — $ — The accompanying note is an integral part of the Parent Company only financial statements. |
Schedule I-Parent Company Onl_2
Schedule I-Parent Company Only Financial Statements - BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2019 | |
Parent Company | |
Condensed Financial Statements Captions [Line Items] | |
Basis of Presentation | NOTE 1—BASIS OF PRESENTATION Allison Transmission Holdings, Inc. (the “Parent Company”) is a holding company that conducts all of its business operations through its subsidiaries. There are restrictions on the Parent Company’s ability to obtain funds from its subsidiaries through dividends (refer to NOTE 8 “Debt” of Notes to Consolidated Financial Statements). The entire amount of the Parent Company’s consolidated net assets was subject to restrictions on payment of dividends as of December 31, 2019, 2018 and 2017. Accordingly, these financial statements have been presented on a “parent-only” basis. Under a parent-only presentation, the Parent Company’s investments in its consolidated subsidiaries are presented under the equity method of accounting. These parent-only financial statements should be read in conjunction with Allison Transmission Holdings, Inc.’s audited Consolidated Financial Statements included elsewhere herein. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the periods presented. The consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. These consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of equity. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Estimates include, but are not limited to, sales allowances, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite life intangibles, definite life intangibles, long-lived asset impairment tests, useful lives for depreciation and amortization, warranty liabilities, environmental liabilities, determination of discount and other assumptions for pension and other post-retirement benefit expense, determination of discount rate and period for leases, income taxes and deferred tax valuation allowances, derivative valuation, assumptions for business combinations and contingencies. The Company’s accounting policies involve the application of judgments and assumptions made by management that include inherent risks and uncertainties. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. |
Segment Reporting | Segment Reporting In accordance with the Financial Accounting Standards Board’s (“FASB”) authoritative accounting guidance on segment reporting, the Company has one operating segment and reportable segment. The Company is in one line of business, which is the manufacture and distribution of vehicle propulsion solutions. |
Business Combinations | Business Combinations The Company uses the acquisition method to account for business combinations. The assets acquired and liabilities assumed are recorded at their respective estimated fair value at the date of acquisition. Any excess purchase price over the fair values of the acquired net assets is recorded as goodwill. Determining the fair values of assets acquired and liabilities assumed requires management's judgment and includes the use of estimates with respect to timing and amount of future cash flows, market rate assumptions, actuarial assumptions, appropriate discount rates and other relevant factors. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents are defined as short-term, highly-liquid investments with original maturities of 90 days or less. Under the Company’s cash management system, checks issued but not presented to banks may result in book overdraft balances for accounting purposes and are classified within Accounts payable in the Consolidated Balance Sheets. The change in book overdrafts is reported as a component of operating cash flows for Accounts payable. |
Marketable Securities | Marketable Securities The Company determines the appropriate classification of all marketable securities as “held-to-maturity,” “available-for-sale” or “trading” at the time of purchase, and re-evaluates such classifications as of each balance sheet date. As of December 31, 2019, and 2018, the Company’s marketable securities were classified as trading. Trading securities are carried at fair value with the unrealized gain or loss recognized in Other income (expense), net. The fair value of the Company’s investment securities is determined by currently available market prices. See NOTE 7 “Fair Value of Financial Instruments” for more details. |
Inventories | Inventories Inventories are stated at the lower of cost and net realizable value. The Company determines cost using the first-in, first-out method. The Company analyzes inventory on a quarterly basis to determine whether it is excess or obsolete inventory. Any decline in carrying value of estimated excess or obsolete inventory is recorded as a reduction of inventory and as an expense included in Cost of sales in the period it is identified. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation expense is recorded using the straight-line method over the following estimated lives: Range in Years Land improvements 5 – 30 Buildings and building improvements 10 – 40 Machinery and equipment 2 – 20 Software 2 – 5 Special tooling 2 – 10 Software represents the costs of software developed or obtained for internal use. Software costs are amortized on a straight-line basis over their estimated useful lives. Software assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. Upgrades and enhancements are capitalized if they result in added functionality, which enables the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion and business process reengineering costs are expensed in the period in which they are incurred. Special tooling represents the costs to design and develop tools, dies, jigs and other items owned by the Company and used in the manufacture of components by suppliers under long-term supply agreements. Special tooling is depreciated over the tool’s expected life. Special tooling used in the development of new technology is expensed as incurred. Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The carrying value of long-lived assets is evaluated whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. Events or circumstances that would result in an impairment review primarily include a significant change in the use of an asset or the planned sale or disposal of an asset. The asset would be considered impaired when there is no future use planned for the asset or the future net undiscounted cash flows generated by the asset or asset group are less than its carrying value. An impairment loss would be recognized based on the amount by which the carrying value exceeds fair value. Assumptions and estimates used to determine cash flows in the evaluation of impairment and the fair values used to determine the impairment are subject to a degree of judgment and complexity. Any changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets and could result in an impairment charge. As a result of events and circumstances related to weak demand conditions for the TC10 product in the fourth quarter of 2017 and the decision to cease production of the TC10 product in the fourth quarter of 2018, the Company recorded a $2 million, $4 million and $32 million impairment loss associated with the production of TC10 for the years ended December 31, 2019, 2018 and 2017, respectively. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price paid over the fair value of net assets acquired. In accordance with the FASB’s authoritative accounting guidance on goodwill, the Company does not amortize goodwill but rather evaluates it for impairment on an annual basis, or more often if events or circumstances change that could cause goodwill to become impaired. Goodwill is tested for impairment at the reporting unit level, which is the same as the Company’s one operating and reportable segment. The Company does not aggregate any components into its reporting unit. The Company has elected to perform its annual goodwill impairment test on October 31 of every year using a multi-step impairment test. In Step 0, the Company has the option to evaluate various qualitative factors to determine the likelihood of impairment. If determined that the fair value is more likely than not less than the carrying value, then the Company is required to perform Step 1. If the Company does not elect to perform Step 0, it can voluntarily proceed directly to Step 1. In Step 1, the Company performs a quantitative analysis to compare the fair value of its reporting unit to its carrying value including goodwill. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired, and the Company is not required to perform further testing. If the carrying value of a reporting unit’s goodwill exceeds its carrying value of net assets, then the Company would record an impairment loss equal to the difference. Goodwill impairment testing for 2019 was performed using the Step 0 analysis of certain trends and factors. The Company’s qualitative assessment included an assessment of business changes, economic outlook, financial trends and forecasts, growth rates, credit ratings, equity ratings, discount rates, industry data and other relevant qualitative factors. Events or circumstances that could unfavorably impact the key assumptions include lower net sales driven by market conditions, Allison’s inability to execute on marketing programs and/or growth initiatives, lower gross margins as a result of market conditions or failure to obtain forecasted cost reductions, or a higher discount rate as a result of market conditions. While unpredictable and inherently uncertain, the Company believes the forecast estimates were reasonable and incorporate assumptions that similar market participants would use in their estimates of fair value. These trends and factors were compared to, and based on, the assumptions used in prior years. After reviewing various qualitative factors, the Company’s 2019 annual goodwill impairment test indicated that the fair value of the reporting unit more likely than not exceeded its carrying value, indicating no impairment. Refer to NOTE 6, “Goodwill and Other Intangible Assets” for further information. Other intangible assets have both indefinite and finite useful lives. Intangible assets with indefinite useful lives, such as the Allison Transmission trade name and in-process research and development, are not amortized but are tested annually for impairment. The Company has elected to perform its annual indefinite lived intangible assets impairment test on October 31 of every year and follow a similar multi-step impairment test to that performed on goodwill. Events or circumstances that could unfavorably impact the key assumptions include lower net sales driven by market conditions, the Company's inability to execute on marketing programs and/or delay in introduction of new products, and higher discount rate as a result of market conditions. While unpredictable and inherently uncertain, the Company believes the forecast estimates are reasonable and incorporate those assumptions that similar market participants would use in their estimates of fair value. After reviewing various qualitative factors, the Company’s annual 2019 indefinite lived intangible assets impairment test indicated that the fair value of the Company’s indefinite lived intangible assets more likely than not exceeded their carrying value, indicating no impairment. Refer to NOTE 6, “Goodwill and Other Intangible Assets” for further information. Intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment when circumstances change that would create a triggering event. Customer relationships are amortized over the life in which expected benefits are to be consumed. The other remaining finite life intangibles are amortized on a straight-line basis over their useful lives. The Company evaluates the remaining useful life of the other intangible assets on a periodic basis to determine whether events or circumstances warrant a revision to the remaining useful life. Assumptions and estimates about future values and remaining useful lives of the Company’s intangible and other long-lived assets are complex and subjective. Such assumptions and estimates can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors, such as changes in the Company’s business strategy and internal forecasts. Although management believes the historical assumptions and estimates are reasonable and appropriate, different assumptions and estimates could materially impact the Company’s reported financial results. Refer to NOTE 6 “Goodwill and Other Intangible Assets” for further information. |
Deferred Financing Costs | Deferred Financing Costs The debt issuance costs related to line-of-credit arrangements is presented as a component of other non-current assets. The debt issuance costs related to other types of debt instruments such as notes and loans are presented as a component of long-term debt. Deferred financing costs continue to be amortized over the life of the related debt using the effective interest method. Amortization of deferred financing costs is recorded as part of interest expense and totaled $5 million, $6 million and $6 million for the years ended December 31, 2019, 2018 and 2017, respectively. |
Financial Instruments | Financial Instruments The Company’s cash equivalents are invested in U.S. government backed securities and recorded at fair value in the Consolidated Balance Sheets. The carrying values of accounts receivable and accounts payable approximate fair value due to their short-term nature. The Company’s financial derivative instruments, including interest rate swaps, are carried at fair value on the Consolidated Balance Sheets. Refer to NOTE 7, “Fair Value of Financial Instruments” for more detail. The Company’s long-term debt obligations are carried at historical amounts with the Company providing fair value disclosure in NOTE 8, “Debt”. |
Insurable Liabilities | Insurable Liabilities The Company records liabilities for its medical, workers’ compensation, long-term disability, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated based upon historical claims experience. |
Revenue Recognition | Revenue Recognition The Company records sales as each distinct performance obligation within a contract is satisfied. The Company sells extended transmission coverage (“ETC”) for which sales are deferred. ETC sales are recognized ratably over the period of coverage, which typically ranges from two to five years after initial sale. Costs associated with ETC programs are recorded as incurred during the extended period. Distributor and customer sales incentives, consisting of allowances and other rebates, are recorded as a reduction to Net sales when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. Incentive programs are generally product specific or region specific. Some factors used in estimating when an adjustment is not likely to reverse are the number of transmissions that will be affected by the incentive program and rate of acceptance of any incentive program. Sales under U.S. government production contracts are recognized at the point in time when control passes to the customer, or when the U.S. government accepts the transmission and is able to direct its use in certain bill-and-hold arrangements. Deferred revenue arises from cash received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met. Under the terms of previous U.S. government contracts, there were certain price reduction clauses and provisions for potential price reductions which were estimated at the time of sale based upon the Company’s history and experience and were recorded as a reduction to Net sales. Potential reductions may be attributed to a change in projected sales volumes or plant efficiencies which impact overall costs. The Company had $56 million recorded in the price reduction reserve account as of each of December 31, 2019 and 2018. The Company engages in licensing agreements with certain third parties for the use of the Company’s intellectual property. Deferred revenue arises from cash received in advance of the period of use of the intellectual property. Revenue is recognized over the license period as it is earned. The Company classifies shipping and handling billed to customers in Net sales and shipping and handling costs in Cost of sales, in accordance with authoritative accounting guidance. The Company contracts with various third parties to provide engineering services. These services are recorded as Net sales in accordance with the terms of the contract. The saleable engineering recorded was $11 million, $3 million and $3 million for the years ended December 31, 2019, 2018 and 2017, respectively. The associated costs are recorded in Cost of sales. |
Warranty | Warranty Provisions for estimated expenses related to product warranties are made at the time products are sold. Warranty claims arise when a transmission or propulsion solution manufactured by us fails while in service during the relevant warranty period. The warranty reserve is adjusted in Selling, general and administrative expense based on the Company’s current and historical warranty claims paid and associated repair costs. These estimates are established using historical information including the nature, frequency, and average cost of warranty claims and are adjusted as actual information becomes available. From time to time, the Company may initiate a specific field action program. As a result of the uncertainty surrounding the nature and frequency of specific field action programs, the liability for such programs is recorded when the Company commits to an action. The Company reviews and assesses the liability for these programs on a quarterly basis. The Company also assesses its ability to recover certain costs from its suppliers and records a receivable from the supplier when it believes a recovery is probable. Warranty costs may differ from those estimated if actual claim rates are higher or lower than the Company's historical rates. |
Research and Development | Research and Development The Company incurs costs in connection with research and development programs that are expected to contribute to future earnings. Such costs are charged to Engineering — research and development as incurred. |
Environmental | Environmental The Company accrues costs related to environmental matters when it is probable that the Company has incurred a liability related to a contaminated site and the costs can be reasonably estimated. For additional information, see NOTE 18, “Commitments and Contingencies”. |
Foreign Currency Translation | Foreign Currency Translation Most of the Company’s subsidiaries outside the United States prepare financial statements in currencies other than the U.S. Dollar. The functional currency for all of these subsidiaries is the local currency, except for the Company’s Hong Kong and Middle East subsidiaries which currently use the U.S. Dollar as their functional currency. Balances are translated at period-end exchange rates for assets and liabilities and monthly weighted-average exchange rates for revenues and expenses. The translation gains and losses are stated as a component of Accumulated Other Comprehensive Loss (“AOCL”) as disclosed in NOTE 17, “Accumulated Other Comprehensive Loss”. |
Derivative Instruments | Derivative Instruments In the normal course of business, the Company is exposed to fluctuations in interest rates, foreign currency exchange rates, and commodity prices. The risk is managed through the use of financial derivative instruments, when appropriate. The Company has qualified for and elected hedge accounting treatment on interest rate swap contracts. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk. NOTE 9, “Derivatives” provides further information on the accounting treatment of the Company’s derivative instruments. The Company is subject to interest rate risk related to the New Senior Secured Credit Facility and enters into interest rate swaps that are based on LIBOR to manage a portion of this exposure. The interest rate swaps are designated as cash flow hedges that qualify for hedge accounting under the hypothetical derivative method. Fair value adjustments are recorded as a component of AOCL in the Consolidated Balance Sheets. Balances in AOCL are reclassified to earnings when transactions related to the underlying risk are settled. During the first quarter of 2019, the Company entered into $250 million of interest rate swaps and designated them as cash flow hedges under the hypothetical derivative method. As of December 31, 2019, the Company held interest rate swaps effective from (i) September 2019 to September 2022 with notional values totaling $250 million and a weighted average LIBOR fixed rate of 3.01%, (ii) from September 2019 to September 2025 with notional values totaling $250 million and a weighted average LIBOR fixed rate of 3.04% and (iii) September 2022 to September 2025 with notional values totaling $250 million and a weighted average LIBOR fixed rate of 2.82%. See NOTE 7 “Fair Value of Financial Instruments” for information regarding the fair value of the Company’s interest rate swaps. |
Income Taxes | Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The future tax benefits associated with operating loss and tax credit carryforwards are recognized as deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. When releasing income tax effects from accum ulated other comprehensive loss the Company utilizes the portfolio securities approach. The need to establish a valuation allowance against the deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold, in accordance with the FASB’s authoritative accounting guidance on income taxes. Appropriate consideration is given to all positive and negative evidence related to that realization. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, and experience with tax attributes expiring unused and tax planning alternatives. The weight given to these considerations depends upon the degree to which they can be objectively verified. |
Stock-Based Compensation | Stock-Based Compensation In March 2015, the Company’s Board of Directors adopted and, in May 2015, the Company’s stockholders approved the Allison Transmission Holdings, Inc. 2015 Equity Incentive Award Plan (“2015 Plan”), which became effective on May 14, 2015. Under the 2015 Plan, certain employees (including executive officers), consultants and directors are eligible to receive equity-based compensation, including non-qualified stock options, incentive stock options, restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), performance awards, stock appreciation rights and other equity-based awards, or any combination thereof. The 2015 Plan limits the aggregate number of shares of common stock available for issue to 15.3 million and will expire on, and no option or other equity award may be granted pursuant to the 2015 Plan after, the tenth anniversary of the date the 2015 Plan was approved by the Board of Directors. Prior to the adoption of the 2015 Plan, the Company’s equity-based awards were granted under the Allison Transmission Holdings, Inc. 2011 Equity Incentive Award Plan (“2011 Plan”) and the Equity Incentive Plan of Allison Transmission Holdings, Inc. (“Equity Plan” and, together with the 2011 Plan, the “Prior Plans”). As of the effective date of the 2015 Plan, no new awards will be granted under the Prior Plans, but the Prior Plans will continue to govern the equity awards issued under the Prior Plans. RSU grants are recorded at fair market value at the date of grant and vest upon continued performance of services by the RSU holders over one to three years. Performance unit grants are recorded at fair value based on a Monte-Carlo pricing model and the restrictions lapse on the date the Compensation Committee of the Board of Directors determines the number of shares that shall vest based on the related performance or market condition achievement. Non-qualified stock option grants are recorded at fair value using a Black-Scholes option pricing model and vest upon the continued performance of services by the option holder on the third anniversary of the grant date for awards under the 2015 Plan. The Company has made a policy election under applicable accounting guidance to account for forfeitures as a reduction of stock-based compensation expense when the forfeiture actually occurs. RSUs were granted to certain employees and directors at fair market value on the date of grant. The restrictions lapse upon continued performance by the RSU holder on the vest date which generally occurs over one, two or three years. RSU incentive compensation expense recorded was $5 million, $5 million and $7 million for the years ended December 31, 2019, 2018 and 2017, respectively. Performance-based awards, including performance units, were granted to certain employees at fair value at the date of grant. The Company records the fair value of each performance-based award based on a Monte-Carlo pricing model. Performance-based award incentive compensation expense recorded was $6 million, $6 million and $3 million for the years ended December 31, 2019, 2018 and 2017, respectively. Stock options were granted to certain employees at fair value on the date of grant using a Black-Scholes option pricing model. Stock option incentive compensation expense recorded was $2 million for each of the years ended December 31, 2019, 2018 and 2017. |
Pension and Post-retirement Benefit Plans | Pension and Post-retirement Benefit Plans For pension and other post-retirement benefits (“OPEB”) plans in which employees participate, costs are determined within the FASB’s authoritative accounting guidance set forth in employers’ defined benefit pensions including accounting for settlements and curtailments of defined benefit pension plans, termination of benefits and accounting for post-retirement benefits other than pensions. In accordance with the authoritative accounting guidance, the Company recognizes the funded status of its defined benefit pension plans and OPEB plan in its Consolidated Balance Sheets with a corresponding adjustment to AOCL, net of tax. Post-retirement benefit costs consist of service cost and interest cost on accrued obligations. Actuarial gains and losses on liabilities, together with any prior service costs, are charged (or credited) to income over the average remaining service lives of employees. The benefit cost components shown in the Consolidated Statements of Comprehensive Income are based upon various actuarial assumptions and methodologies as prescribed by authoritative accounting guidance. These assumptions include discount rates, expected return on plan assets, health care cost trend rates, inflation, rate of compensation increases, population demographics, mortality rates and other factors. The Company reviews all actuarial assumptions on an annual basis. Changes in key economic indicators can change these assumptions. These assumptions, along with the actual value of assets at the measurement date, will impact the calculation of pension expenses for the year. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued authoritative accounting guidance on lease accounting, which guidance was subsequently amended. The guidance requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases not considered short-term leases. Short-term leases are leases with a lease term of 12 months or less as long as the leases do not include options to purchase the underlying assets that the lessee is reasonably certain to exercise. The guidance also introduces new disclosure requirements for leasing arrangements. In July 2018, the FASB issued additional authoritative guidance on this topic giving lessees an optional adoption approach under which the impact of the adoption of the guidance would be shown as of the date of adoption. Management elected to adopt the guidance using this optional alternative method. The Company adopted this guidance effective January 1, 2019. Upon adoption, the Company recorded non-financial right-of-use ("ROU") assets of $14 million, including $1 million of assets transferred from the balance recorded as prepaid lease expense under the prior guidance, and current and non-current lease liabilities of $4 million and $9 million, respectively. The adoption of this guidance did not have a material impact on the Company's opening retained earnings. See Note 12, "Leases" for further details. In June 2016, the FASB issued authoritative accounting guidance on the presentation of financial assets at the net amount expected to be collected. The guidance also requires the disclosure of financing receivables disaggregated by the year of origination. The guidance has been subsequently amended. The Company adopted this guidance using a modified retrospective approach effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In February 2018, the FASB issued authoritative accounting guidance on transfers of stranded balances in AOCL to retained earnings. The passage of the U.S. Tax Cuts and Jobs Act by the U.S. federal government in December 2017, in conjunction with existing GAAP requirements to adjust deferred tax assets and liabilities for changes in tax laws or rates created stranded balances in AOCL on deferred tax assets and liabilities previously recorded as a component to AOCL. The guidance applies to companies affected by these stranded balances and allows a reclassification of these balances to retained earnings. The Company adopted this guidance effective January 1, 2019 on a prospective basis. As a result of the adoption of this guidance, the Company recorded an adjustment that reclassified $8 million of AOCL to retained earnings as of January 1, 2019. In June 2018, the FASB issued authoritative accounting guidance on accounting for nonemployee awards for goods or services received by a company. The Company adopted this guidance effective January 1, 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued authoritative accounting guidance amending disclosure requirements for certain assets subject to fair value measurement. The guidance allows the Company to reduce the amount of disclosure on transfers between Level 1 and Level 2 assets. The Company adopted this guidance effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued authoritative accounting guidance on accounting for implementation costs in hosting arrangements to align these costs with existing guidance for internally developed software. The stage of implementation must be assessed to determine if costs should be capitalized or expensed, and capitalized costs should be expensed during the noncancellable term of the agreement. The Company adopted this guidance on a prospective basis effective January 1, 2020. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements In August 2018, the FASB issued authoritative accounting guidance amending disclosure requirements for the Company's defined benefit pension plans and other postretirement benefit plan. The guidance will be effective for the Company in fiscal year 2021, and the Company does not plan to early adopt. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements and notes thereto. In December 2019, the FASB issued authoritative accounting guidance to simplify the accounting for income taxes. The guidance identifies specific exceptions to be removed from the calculation and reporting of income taxes. The guidance will be effective for the Company in fiscal year 2021, though early adoption is permitted in any prior interim reporting period. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements and notes thereto. |
Fair Value of Financial Instruments | In accordance with the FASB’s authoritative accounting guidance on fair value measurements, fair value is the price (exit price) that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company primarily applies the market approach for recurring fair value measurements and utilizes the best available information that maximizes the use of observable inputs and minimizes the use of unobservable inputs. The Company is able to classify fair value balances based on the observability of those inputs. The accounting guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy defined by the relevant guidance are as follows: Level 1 — Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and publicly traded bonds. Level 2 — Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes financial instruments that are valued using quoted prices in markets that are not active and those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Level 3 — Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. At each balance sheet date, the Company performs an analysis of all instruments subject to authoritative accounting guidance and includes, in Level 3, all of those whose fair value is based on significant unobservable inputs. As of December 31, 201 9 and December 31, 201 8 , the Company did no t have any Level 3 financial assets or liabilities. |
Lessee Accounting | Contracts are assessed by the Company to determine if the contract conveys the right to control an identified asset in exchange for consideration during a period of time. The Company classifies all identified leases as either operating or finance leases. As of December 31, 2019, the Company was not a party to any finance leases. Contracts that contain leases are assessed to determine if the consideration in the contract is related to a lease component, non-lease component or other components not related to the lease. Lease components are recorded as ROU assets and lease liabilities while any non-lease component is expensed as incurred. The consideration in the contract related to other components not related to the lease is allocated among the lease component and the non-lease component, as applicable, based on the stand-alone selling price of the lease and non-lease components. |
ASU 2016-02 | |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements | New authoritative guidance for leases was adopted by the Company effective January 1, 2019 using the optional transition method. Balances as of December 31, 2019 and results for the year ended December 31, 2019 are presented in conformity with the new authoritative accounting guidance, while prior period balances and results are presented in conformity with prior accounting guidance for leases. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Property And Equipment Estimated Useful Lives | Depreciation expense is recorded using the straight-line method over the following estimated lives: Range in Years Land improvements 5 – 30 Buildings and building improvements 10 – 40 Machinery and equipment 2 – 20 Software 2 – 5 Special tooling 2 – 10 The cost and accumulated depreciation of property, plant and equipment are as follows (dollars in millions): December 31, 2019 December 31, 2018 Land and land improvements $ 25 $ 24 Buildings and building improvements 342 336 Machinery and equipment 722 643 Software 163 143 Special tooling 202 201 Construction in progress 141 52 Total property, plant and equipment 1,595 1,399 Accumulated depreciation (979 ) (933 ) Property, plant and equipment, net $ 616 $ 466 |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Disaggregated Revenue by Categories | The following presents disaggregated revenue by categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (dollars in millions) Year ended December 31, 2019 Year ended December 31, 2018 North America On-Highway $ 1,474 $ 1,317 North America Off-Highway 30 93 Defense 151 158 Outside North America On-Highway 390 383 Outside North America Off-Highway 109 129 Service Parts, Support Equipment and Other 544 633 Total Net Sales $ 2,698 $ 2,713 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Components of Inventories | Inventories consisted of the following components (dollars in millions): December 31, 2019 December 31, 2018 Purchased parts and raw materials $ 91 $ 82 Work in progress 17 8 Service parts 60 48 Finished goods 31 32 Total inventories $ 199 $ 170 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Property And Equipment Estimated Useful Lives | Depreciation expense is recorded using the straight-line method over the following estimated lives: Range in Years Land improvements 5 – 30 Buildings and building improvements 10 – 40 Machinery and equipment 2 – 20 Software 2 – 5 Special tooling 2 – 10 The cost and accumulated depreciation of property, plant and equipment are as follows (dollars in millions): December 31, 2019 December 31, 2018 Land and land improvements $ 25 $ 24 Buildings and building improvements 342 336 Machinery and equipment 722 643 Software 163 143 Special tooling 202 201 Construction in progress 141 52 Total property, plant and equipment 1,595 1,399 Accumulated depreciation (979 ) (933 ) Property, plant and equipment, net $ 616 $ 466 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Other Intangible Assets | The following presents a summary of other intangible assets (dollars in millions): December 31, 2019 December 31, 2018 Intangible assets, gross Accumulated amortization Intangible assets, net Intangible assets, gross Accumulated amortization Intangible assets, net Other intangible assets: Trade name $ 791 $ — $ 791 $ 790 $ — $ 790 In process research and development 50 — 50 — — — Customer relationships – commercial 839 (664 ) 175 832 (619 ) 213 Proprietary technology 481 (473 ) 8 476 (434 ) 42 Customer relationships – defense 62 (44 ) 18 62 (41 ) 21 Total $ 2,223 $ (1,181 ) $ 1,042 $ 2,160 $ (1,094 ) $ 1,066 |
Schedule of Amortization Expense Related to Other Intangible Assets for Next Five Fiscal Years | Amortization expense related to other intangible assets for the next five years is expected to be (dollars in millions): 2020 2021 2022 2023 2024 Amortization expense $ 51 $ 46 $ 45 $ 43 $ 8 |
Schedule of Impact of Acquisition on the Goodwill of Operating and Reporting Segment | The following presents a summary of the impact of these acquisitions on the goodwill of the Company’s single operating and reporting segment (dollars in millions): Allison Transmission, Inc. Balance at December 31, 2017 $ 1,941 Changes affecting goodwill — Net current period impact to goodwill $ — Balance at December 31, 2018 $ 1,941 Acquisitions $ 100 Net current period impact to goodwill $ 100 Balance at December 31, 2019 $ 2,041 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Disclosures [Abstract] | |
Summary of Fair Value of Financial Assets and (Liabilities) | The following table summarizes the fair value of the Company’s financial assets and (liabilities) as of December 31, 2019 and 2018 (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) TOTAL 2019 2018 2019 2018 2019 2018 Cash equivalents $ 70 $ 111 $ — $ — $ 70 $ 111 Derivative liabilities, net — — (34 ) (9 ) (34 ) (9 ) Rabbi trust assets 12 9 — — 12 9 Deferred compensation obligation (12 ) (9 ) — — (12 ) (9 ) Total $ 70 $ 111 $ (34 ) $ (9 ) $ 36 $ 102 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt and Maturities | Long-term debt and maturities are as follows (dollars in millions): December 31, 2019 December 31, 2018 Long-term debt: Senior Secured Credit Facility Term B-3 Loan, variable, due 2022 $ — $ 1,148 Senior Notes, fixed 5.0%, due 2024 1,000 1,000 Senior Secured Credit Facility Term Loan, variable, due 2026 644 — Senior Notes, fixed 4.75%, due 2027 400 400 Senior Notes, fixed 5.875%, due 2029 500 — Total long-term debt $ 2,544 $ 2,548 Less: current maturities of long-term debt 6 — deferred financing costs, net (see NOTE 2) 26 25 Total long-term debt, net $ 2,512 $ 2,523 |
Principal Payments Required on Long Term Debt | Principal payments required on long-term debt during the next five years are as follows: (dollars in millions) 2020 2021 2022 2023 2024 Payments $ 6 $ 6 $ 6 $ 6 $ 1,006 |
Derivatives (Tables)
Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and their Impact on Financial Condition | The following tabular disclosures further describe the Company’s interest rate derivatives qualifying and designated for hedge accounting and their impact on the financial condition of the Company (dollars in millions): December 31, 2019 December 31, 2018 Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps Other current liabilities $ (7 ) Other current liabilities $ (1 ) Other non-current liabilities (27 ) Other non-current liabilities (8 ) Total derivatives designated as hedging instruments $ (34 ) $ (9 ) |
Product Warranty Liabilities (T
Product Warranty Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Guarantees And Product Warranties [Abstract] | |
Product Warranty Liability Activities | Product warranty liability activities consist of the following (dollars in millions): Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Beginning balance $ 66 $ 55 $ 63 Payments (26 ) (32 ) (30 ) Increase in liability (warranty issued during period) 21 38 18 Net adjustments to liability (9 ) 5 4 Ending balance $ 52 $ 66 $ 55 |
Deferred Revenue (Tables)
Deferred Revenue (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Revenue Recognition And Deferred Revenue [Abstract] | |
Summary of Deferred Revenue Activity | Deferred revenue activity consists of the following (dollars in millions): Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Beginning balance $ 122 $ 110 $ 93 Increases 55 52 52 Revenue earned (38 ) (40 ) (29 ) Ending balance $ 139 $ 122 $ 116 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Lease Maturity, Prior Guidance | As of December 31, 2018, future undiscounted payments under operating leases (as defined by prior guidance) were expected to be as follows for the next five annual periods and thereafter following December 31, 2018: December 31, 2018 2019 $ 4 2020 3 2021 2 2022 1 2023 1 Thereafter — Ending balance $ 11 |
Schedule of Lease Maturity, Current Guidance | The following table reconciles total operating lease liabilities as of December 31, 2019 to future undiscounted cash flows for operating leases: December 31, 2019 2020 $ 6 2021 4 2022 3 2023 3 2024 2 Thereafter 9 Total lease payments $ 27 Less: Interest 4 Present value of lease liabilities $ 23 |
Schedule of Right of Use Assets | The below table depicts the ROU assets held by the Company based on the underlying asset: December 31, 2019 Buildings $ 21 Land 1 Vehicles 1 Equipment 1 Total right-of-use assets $ 24 |
Other Income (Expense), Net (Ta
Other Income (Expense), Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Income And Expenses [Abstract] | |
Computation of Other (Expense) Income, Net | Other income (expense), net consists of the following (dollars in millions): Years ended December 31, 2019 2018 2017 Post-retirement benefit plan amendment credits $ 11 $ 12 $ — Vendor settlements — (4 ) (5 ) Technology-related investment expense — (3 ) (16 ) Other (1 ) (2 ) (1 ) Total $ 10 $ 3 $ (22 ) |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Other Current Liabilities | Other current liabilities consist of the following (dollars in millions): As of December 31, 2019 As of December 31, 2018 Payroll and related costs $ 87 $ 81 Sales allowances 32 39 Accrued interest payable 21 19 Vendor buyback obligation 16 15 Taxes payable 12 10 Derivative liabilities 7 1 Lease liability 5 — Vendor liability 3 5 Non-trade payables 2 3 Defense price reduction reserve — 9 Other accruals 17 15 Total $ 202 $ 197 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Compensation And Retirement Disclosure [Abstract] | |
Net Periodic Benefit Costs | Information about the net periodic benefit cost (credit) and other changes recognized in AOCL for the pension and post-retirement benefit plans is as follows (dollars in millions): Pension Plans Post-retirement Benefits Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Net Periodic Benefit Cost (Credit): Service cost $ 10 $ 12 $ 12 $ 1 $ 1 $ 2 Interest cost 7 6 6 4 4 6 Expected return on assets (9 ) (8 ) (7 ) — — — Prior service credit — — — (13 ) (13 ) (4 ) Net Periodic Benefit Cost (Credit) $ 8 $ 10 $ 11 $ (8 ) $ (8 ) $ 4 Other changes recognized in other comprehensive income: Prior service cost (credit) $ — $ — $ 1 $ — $ — $ (73 ) Net (gain) loss (2 ) (2 ) 8 (1 ) (12 ) 24 Amortizations — — — 13 13 4 Total recognized – other comprehensive income $ (2 ) $ (2 ) $ 9 $ 12 $ 1 $ (45 ) |
Weighted-Average Actuarial Assumptions | The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost (credit). Pension Plans Post-retirement Benefits Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Discount rate 4.20 % 3.50 % 4.10 % 4.20 % 3.60 % 4.30 % Rate of compensation increase (salaried) 3.00 % 3.00 % 3.00 % N/A N/A N/A Expected return on assets 4.50 % 4.50 % 4.70 % N/A N/A N/A The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of the Company’s plans. Pension Plans Post-retirement Benefits As of December 31, 2019 2018 2019 2018 Discount rate 3.20 % 4.20 % 3.20 % 4.20 % Rate of compensation increase (salaried) 3.00 % 3.00 % N/A N/A |
Health Care Costs Trends | As health care costs trends have a significant effect on the amounts reported, an increase and decrease of one-percentage-point would have had the following effects in the year ended December 31, 2019 (dollars in millions): 1% Increase 1% Decrease Effect on total of service and interest cost $ 1 $ (1 ) Effect on post-retirement benefit obligation $ 13 $ (11 ) |
Reconciliation of Changes in Net Benefit Obligations and Fair Value of Plan Assets | The following table provides a reconciliation of the changes in the net benefit obligations and fair value of plan assets for the years ended December 31, 2019, 2018 and 2017 (dollars in millions): Pension Plans Post-retirement Benefits Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Year ended December 31, 2019 Year ended December 31, 2018 Year ended December 31, 2017 Benefit Obligations: Net benefit obligation at beginning of year $ 177 $ 181 $ 155 $ 93 $ 102 $ 144 Service cost 10 12 12 1 1 2 Interest cost 7 6 6 4 4 6 Plan Amendments — — 1 — — (73 ) Benefits paid (9 ) (6 ) (7 ) (2 ) (2 ) (2 ) Actuarial loss (gain) 19 (16 ) 14 (2 ) (12 ) 25 Net benefit obligation at end of year $ 204 $ 177 $ 181 $ 94 $ 93 $ 102 Fair Value of Plan Assets: Fair value of plan assets at beginning of year $ 196 $ 188 $ 150 $ — $ — $ — Actual return on plan assets 30 (6 ) 14 — — — Employer contributions — 20 31 2 2 2 Benefits paid (9 ) (6 ) (7 ) (2 ) (2 ) (2 ) Fair value of plan assets at end of year $ 217 $ 196 $ 188 $ — $ — $ — Net Funded Status $ 13 $ 19 $ 7 $ (94 ) $ (93 ) $ (102 ) |
Fair Value of Plan Assets | The fair values of plan assets for the Company’s pension plans as of December 31, 2019 and 2018 are as follows (dollars in millions): Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) TOTAL 2019 2018 2019 2018 2019 2018 Diversified debt securities $ 13 $ 9 $ 164 $ 156 $ 177 $ 165 Diversified equity securities 24 20 10 8 34 28 Cash equivalents 6 3 — — 6 3 Total $ 43 $ 32 $ 174 $ 164 $ 217 $ 196 |
Schedule of Allocation of Plan Assets | To achieve these objectives the Company has established the following targets: Target Asset Category Hourly Salary Cash equivalents 2 % 2 % Diversified equity securities 15 15 Diversified debt securities 83 83 Total 100 % 100 % |
Amounts Recognized in Balance Sheet and in Accumulated Other Comprehensive Income AOCI | The following table discloses the amounts recognized in the balance sheet and in AOCL at December 31, 2019 and 2018, on a pre-tax basis (dollars in millions): Pension Plans Post-retirement Benefits As of December 31, 2019 2018 2019 2018 Amounts Recognized in Balance Sheet: Noncurrent assets $ 13 $ 19 $ — $ — Current liabilities — — (3 ) (3 ) Noncurrent liabilities — — (91 ) (90 ) Total asset (liability) $ 13 $ 19 $ (94 ) $ (93 ) Accumulated Other Comprehensive Loss: Prior service credit $ 3 $ 3 $ 57 $ 71 Actuarial (loss) gain (6 ) (8 ) 4 2 Total $ (3 ) $ (5 ) $ 61 $ 73 |
Amounts in Accumulated Other Comprehensive Loss AOCL Expected to be Amortized and Recognized as Component of Net Periodic Benefit Cost in 2017 | The amounts in AOCL expected to be amortized and recognized as a component of net periodic benefit cost in 2020 are as follows (dollars in millions): 2020 Pension Plans Post-retirement Benefits Prior service credit $ — $ 13 Actuarial loss — — Total $ — $ 13 |
Expected Cash Flows for Pension and Post-Retirement Benefit Plans | Information about expected cash flows for the Company’s pension and post-retirement benefit plans is as follows (dollars in millions): Pension Plans Post-retirement Benefits Employer Contributions: 2020 expected contributions $ — $ 3 Expected Benefit Payments: 2020 10 3 2021 11 3 2022 12 4 2023 13 4 2024 13 4 2025-2029 67 22 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Loss Before Income Taxes | Income before income taxes included the following (dollars in millions): Years ended December 31, 2019 2018 2017 U.S. income $ 712 $ 755 $ 491 Foreign income 56 50 36 Total $ 768 $ 805 $ 527 |
Provision for Income Tax Expense | The provision for income tax expense was estimated as follows (dollars in millions): Years ended December 31, 2019 2018 2017 Estimated current income taxes: U.S. federal $ 75 $ 94 $ 61 Foreign 13 9 7 U.S. state and local 11 11 5 Total Current 99 114 73 Deferred income tax expense (credit), net: U.S. federal 58 45 (44 ) Foreign — — 1 U.S. state and local 7 7 (7 ) Total Deferred 65 52 (50 ) Total income tax expense $ 164 $ 166 $ 23 |
Reconciliation of Provision for Income Tax Expense | A reconciliation of the provision for income tax expense compared with the amounts at the U.S. federal statutory rate is as follows (dollars in millions): Years ended December 31, 2019 2018 2017 Tax at U.S. statutory income tax rate $ 161 $ 169 $ 185 State tax expense 14 15 10 Non-deductible expenses (7 ) (9 ) 7 Tax credits (4 ) (3 ) (21 ) Effect of tax rate changes (2 ) (4 ) — Valuation allowance 1 2 3 Foreign rate differential (1 ) (4 ) (5 ) Impact related to U.S. Tax Cuts and Jobs Act — — (155 ) Other adjustments 2 — (1 ) Total income tax expense $ 164 $ 166 $ 23 |
Deferred Tax Assets and Liabilities | Temporary differences and carryforwards that gave rise to deferred tax assets and liabilities included the following (dollars in millions): As of December 31 2019 As of December 31 2018 Deferred tax assets: Deferred revenue $ 28 $ 24 Intangibles 23 29 Other accrued liabilities 23 20 Warranty accrual 11 14 Operating loss carryforwards 8 10 Interest rate hedges 8 2 Stock-based compensation 7 5 Sales allowances and rebates 6 8 Inventories 6 4 Technology-related investments 5 5 Other 7 8 Total Deferred tax assets 132 129 Valuation allowances (10 ) (10 ) Deferred tax liabilities: Goodwill (337 ) (311 ) Trade name (132 ) (114 ) Property, plant and equipment (28 ) (10 ) Post-retirement (6 ) (9 ) Other (2 ) (2 ) Total Deferred tax liabilities (505 ) (446 ) Net Deferred tax liability $ (383 ) $ (327 ) |
Liability for Unrecognized Tax Benefit | December 31, 2017 $ 2 Increases in unrecognized tax benefits as a result of current year activity — December 31, 2018 $ 2 Increases in unrecognized tax benefits as a result of current year activity 1 December 31, 2019 $ 3 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Changes in Accumulated Other Comprehensive Loss by Component | The changes in components of AOCL consisted of the following (dollars in millions): Before Tax Tax (Expense) Benefit Reclassification of stranded tax effects After Tax Balance at December 31, 2016 $ (20 ) $ (43 ) $ — $ (63 ) Foreign currency translation 15 — — 15 Pension and OPEB liability adjustment 34 (8 ) — 26 Available-for-sale securities 11 (4 ) — 7 Net current period other comprehensive income (loss) $ 60 $ (12 ) $ — $ 48 Balance at December 31, 2017 $ 40 $ (55 ) $ — $ (15 ) Foreign currency translation (9 ) — — (9 ) Pension and OPEB liability adjustment 1 — — 1 Available-for-sale securities (9 ) 2 — (7 ) Net current period other comprehensive (loss) income $ (17 ) $ 2 $ — $ (15 ) Balance at December 31, 2018 $ 23 $ (53 ) $ — $ (30 ) Foreign currency translation (3 ) — — (3 ) Pension and OPEB liability adjustment (11 ) 2 9 — Available-for-sale securities and interest rate swaps (24 ) 6 (1 ) (19 ) Net current period other comprehensive (loss) income $ (38 ) $ 8 $ 8 $ (22 ) Balance at December 31, 2019 $ (15 ) $ (45 ) $ 8 $ (52 ) |
Reclassification out of Accumulated Other Comprehensive Loss | The following table shows the location in the Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (dollars in millions): For the year ended December 31, 2017 AOCL Components Amount reclassified from AOCL Affected line item in the consolidated statements of comprehensive income Amortization of OPEB items: Prior service credit $ 3 Other income (expense), net Actuarial gain 1 Other income (expense), net Total reclassifications, before tax 4 Income before income taxes Income tax expense (1 ) Income tax expense Total reclassifications $ 3 Net of tax For the year ended December 31, 2018 AOCL Components Amount reclassified from AOCL Affected line item in the consolidated statements of comprehensive income Amortization of OPEB items: Prior service credit $ 13 Other income (expense), net Total reclassifications, before tax 13 Income before income taxes Income tax expense (3 ) Income tax expense Total reclassifications $ 10 Net of tax For the year ended December 31, 2019 AOCL Components Amount reclassified from AOCL Affected line item in the consolidated statements of comprehensive income Amortization of OPEB items: Prior service credit $ 13 Other income (expense), net Total reclassifications, before tax 13 Income before income taxes Income tax expense (3 ) Income tax expense Total reclassifications $ 10 Net of tax |
Concentration of Risk (Tables)
Concentration of Risk (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Risks And Uncertainties [Abstract] | |
Schedules of Concentration of Risk by Risk Factor | customers accounted for greater than 10% of net sales within the last three years presented. Years ended December 31, % of net sales 2019 2018 2017 Daimler AG 20 % 18 % 20 % PACCAR Inc. 12 % 10 % 9 % Navistar International Corporation 11 % 8 % 8 % % of accounts receivable As of December 31, 2019 As of December 31, 2018 Daimler AG 19 % 18 % Navistar International Corporation 13 % 9 % Volvo Group 6 % 11 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Numerators and Denominators Used to Calculate Basic EPS and Diluted EPS | The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (in millions, except per share data): Years ended December 31, 2019 2018 2017 Net income $ 604 $ 639 $ 504 Weighted average shares of common stock outstanding 122 133 149 Dilutive effect stock-based awards 1 1 1 Diluted weighted average shares of common stock outstanding 123 134 150 Basic earnings per share attributable to common stockholders $ 4.95 $ 4.81 $ 3.38 Diluted earnings per share attributable to common stockholders $ 4.91 $ 4.78 $ 3.36 |
Geographic Information (Tables)
Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Segment Reporting [Abstract] | |
Net Sales by Country | The Company had the following net sales by country (dollars in millions): Years ended December 31, 2019 2018 2017 United States $ 1,915 $ 1,922 $ 1,614 China 136 127 62 Canada 104 104 125 Japan 79 101 75 Mexico 71 57 39 Germany 59 55 45 France 37 40 21 United Kingdom 35 55 36 Brazil 34 14 18 Turkey 27 24 24 Other 201 214 203 Total $ 2,698 $ 2,713 $ 2,262 |
Schedule of Disclosure of Long-Lived Assets by Geographic Location | The Company had the following net long-lived assets by country (dollars in millions): Years ended December 31, 2019 2018 2017 United States $ 583 $ 427 $ 400 India 17 24 32 Hungary 11 11 12 Other 5 4 4 Total $ 616 $ 466 $ 448 |
Quarterly Financial Informati_2
Quarterly Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Data | The following is a summary of the unaudited quarterly results of operations. The Company believes that all adjustments considered necessary for a fair presentation in accordance with GAAP have been included (unaudited, in millions, except per share data). Quarters ended, March 31 June 30 September 30 December 31 2019 Net sales $ 675 $ 737 $ 669 $ 617 Gross profit 359 389 348 298 Operating income 244 259 224 165 Income before income taxes 211 229 194 134 Net income 167 181 149 107 Basic earnings per share $ 1.33 $ 1.47 $ 1.24 $ 0.90 Diluted earnings per share $ 1.32 $ 1.46 $ 1.23 $ 0.90 2018 Net sales $ 663 $ 711 $ 692 $ 647 Gross profit 342 374 368 338 Operating income 222 248 246 207 Income before income taxes 191 222 218 174 Net income 151 174 167 147 Basic earnings per share $ 1.09 $ 1.30 $ 1.28 $ 1.15 Diluted earnings per share $ 1.08 $ 1.29 $ 1.27 $ 1.14 |
Overview - Additional Informati
Overview - Additional Information (Detail) | 12 Months Ended | |
Dec. 31, 2019EmployeeCustomer | Dec. 31, 2018Employee | |
Organization, Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Number of employees | Employee | 3,700 | 2,900 |
Worldwide independent distributor and dealer locations | Customer | 1,500 | |
Sales Revenue, Net | North America | Geographic Concentration Risk | ||
Organization, Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | ||
Concentration of risk, percentage | 77.00% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional Information (Details) shares in Millions, $ in Millions | Jan. 01, 2019USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Mar. 31, 2015shares |
Segment Reporting | |||||||||||||
Number of operating segment | Segment | 1 | ||||||||||||
Number of reportable segment | Segment | 1 | ||||||||||||
Impairment of Long-Lived Assets | |||||||||||||
Loss associated with impairment of long-lived assets | $ 2 | $ 4 | $ 32 | ||||||||||
Deferred Financing Costs | |||||||||||||
Amortization of deferred financing costs | 5 | 6 | 6 | ||||||||||
Revenue Recognition | |||||||||||||
Military price reduction reserve | $ 56 | $ 56 | 56 | 56 | |||||||||
Net sales | 617 | $ 669 | $ 737 | $ 675 | $ 647 | $ 692 | $ 711 | $ 663 | 2,698 | 2,713 | 2,262 | ||
Stock-Based Compensation | |||||||||||||
Aggregate number of shares of common stock available for issuance under the 2015 Plan | shares | 15.3 | ||||||||||||
Recently Adopted Accounting Pronouncements | |||||||||||||
Right-of-use asset | $ 14 | 24 | 24 | ||||||||||
Current lease liabilities | 4 | 5 | 5 | ||||||||||
Non-current lease liabilities | 9 | $ 18 | 18 | ||||||||||
Reclassification of stranded tax effects | 8 | 8 | |||||||||||
ASU 2016-02 | |||||||||||||
Recently Adopted Accounting Pronouncements | |||||||||||||
Right-of-use asset | 14 | ||||||||||||
Assets transferred | 1 | ||||||||||||
Current lease liabilities | 4 | ||||||||||||
Non-current lease liabilities | $ 9 | ||||||||||||
Restricted Stock And Restricted Stock Unit | |||||||||||||
Stock-Based Compensation | |||||||||||||
Incentive compensation expense | 5 | 5 | 7 | ||||||||||
Performance Awards | |||||||||||||
Stock-Based Compensation | |||||||||||||
Incentive compensation expense | 6 | 6 | 3 | ||||||||||
Stock Options | |||||||||||||
Stock-Based Compensation | |||||||||||||
Incentive compensation expense | $ 2 | 2 | 2 | ||||||||||
Vesting Schedule One | Restricted Stock Units (RSUs) | |||||||||||||
Stock-Based Compensation | |||||||||||||
Option vesting period | 1 year | ||||||||||||
Vesting Schedule One | Restricted Stock And Restricted Stock Unit | |||||||||||||
Stock-Based Compensation | |||||||||||||
Option vesting period | 1 year | ||||||||||||
Vesting Schedule Three | Restricted Stock Units (RSUs) | |||||||||||||
Stock-Based Compensation | |||||||||||||
Option vesting period | 3 years | ||||||||||||
Vesting Schedule Three | Restricted Stock And Restricted Stock Unit | |||||||||||||
Stock-Based Compensation | |||||||||||||
Option vesting period | 3 years | ||||||||||||
Vesting Schedule Two | Restricted Stock And Restricted Stock Unit | |||||||||||||
Stock-Based Compensation | |||||||||||||
Option vesting period | 2 years | ||||||||||||
Engineering Services | |||||||||||||
Revenue Recognition | |||||||||||||
Net sales | $ 11 | $ 3 | $ 3 | ||||||||||
Minimum | |||||||||||||
Revenue Recognition | |||||||||||||
Extended Transmission Coverage sales, recognition period | 2 years | ||||||||||||
Maximum | |||||||||||||
Revenue Recognition | |||||||||||||
Extended Transmission Coverage sales, recognition period | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Property Plant and Equipment Estimated Lives (Details) | 12 Months Ended |
Dec. 31, 2019 | |
Land improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 5 years |
Land improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 30 years |
Buildings and building improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 10 years |
Buildings and building improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 40 years |
Machinery and equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 2 years |
Machinery and equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 20 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 2 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 5 years |
Special tooling | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 2 years |
Special tooling | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated Lives | 10 years |
Revenue - Additional Informatio
Revenue - Additional Information (Detail) | 12 Months Ended | |
Dec. 31, 2019USD ($)Segment | Dec. 31, 2018USD ($) | |
Deferred Revenue Arrangement [Line Items] | ||
Adjustments based on variable consideration | $ | $ 0 | $ 0 |
Credit term period | 30 days | |
Contract assets | $ | $ 0 | $ 0 |
Number of operating segment | Segment | 1 | |
Number of reportable segment | Segment | 1 | |
Minimum | ||
Deferred Revenue Arrangement [Line Items] | ||
Duration of contract sold | 1 year | |
Maximum | ||
Deferred Revenue Arrangement [Line Items] | ||
Duration of contract sold | 5 years |
Revenue - Disaggregated Revenue
Revenue - Disaggregated Revenue by Categories (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||||||||
Total Net Sales | $ 617 | $ 669 | $ 737 | $ 675 | $ 647 | $ 692 | $ 711 | $ 663 | $ 2,698 | $ 2,713 | $ 2,262 |
North America On-Highway | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Net Sales | 1,474 | 1,317 | |||||||||
North America Off-Highway | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Net Sales | 30 | 93 | |||||||||
Defense | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Net Sales | 151 | 158 | |||||||||
Outside North America On-Highway | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Net Sales | 390 | 383 | |||||||||
Outside North America Off-Highway | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Net Sales | 109 | 129 | |||||||||
Service Parts, Support Equipment and Other | |||||||||||
Disaggregation of Revenue [Line Items] | |||||||||||
Total Net Sales | $ 544 | $ 633 |
Inventories - Schedule of Compo
Inventories - Schedule of Components of Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Purchased parts and raw materials | $ 91 | $ 82 |
Work in progress | 17 | 8 |
Service parts | 60 | 48 |
Finished goods | 31 | 32 |
Total inventories | $ 199 | $ 170 |
Property, Plant and Equipment -
Property, Plant and Equipment - Schedule of Property Plant and Equipment Cost and Accumulated Depreciation (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 1,595 | $ 1,399 | |
Construction in progress | 141 | 52 | |
Accumulated depreciation | (979) | (933) | |
Property, plant and equipment, net | 616 | 466 | $ 448 |
Land improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 25 | 24 | |
Buildings and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 342 | 336 | |
Machinery and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 722 | 643 | |
Software | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 163 | 143 | |
Special tooling | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 202 | $ 201 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Additional Information (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019USD ($)Acquisition | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Long Lived Assets Held For Sale [Line Items] | |||
Depreciation of property, plant and equipment | $ 81 | $ 77 | $ 80 |
Loss associated with impairment of long-lived assets | $ 2 | 4 | 32 |
Number of acquisitions completed during the year | Acquisition | 3 | ||
T C10 Product | |||
Long Lived Assets Held For Sale [Line Items] | |||
Loss associated with impairment of long-lived assets | $ 1 | $ 32 |
Goodwill And Other Intangible_3
Goodwill And Other Intangible Assets - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 2,041,000,000 | $ 1,941,000,000 | $ 1,941,000,000 |
Amortization of intangible assets | 86,000,000 | 87,000,000 | $ 90,000,000 |
Net carrying value of Goodwill and other intangible assets | 3,083,000,000 | 3,007,000,000 | |
Trade name impairment | $ 0 | $ 0 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Schedule of Other Intangible Assets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross, Total | $ 2,223 | $ 2,160 |
Accumulated amortization | (1,181) | (1,094) |
Intangible assets, net, Total | 1,042 | 1,066 |
Customer relationships – commercial | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 839 | 832 |
Accumulated amortization | (664) | (619) |
Intangible assets, net | 175 | 213 |
Proprietary technology | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 481 | 476 |
Accumulated amortization | (473) | (434) |
Intangible assets, net | 8 | 42 |
Customer relationships – defense | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Intangible assets, gross | 62 | 62 |
Accumulated amortization | (44) | (41) |
Intangible assets, net | 18 | 21 |
Trade name | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Indefinite lived intangible assets | 791 | $ 790 |
In process research and development | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||
Indefinite lived intangible assets | $ 50 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Schedule of Amortization Expense Related to Other Intangible Assets for Next Five Fiscal Years (Details) $ in Millions | Dec. 31, 2019USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
2020 | $ 51 |
2021 | 46 |
2022 | 45 |
2023 | 43 |
2024 | $ 8 |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets - Schedule of Impact of Acquisition on the Goodwill of Operating and Reporting Segment (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Beginning balance | $ 1,941 | $ 1,941 |
Acquisitions | 100 | |
Net current period impact to goodwill | 100 | 0 |
Ending balance | $ 2,041 | $ 1,941 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Additional Information (Details) - Fair Value, Inputs, Level 3 - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Significant Other Observable Inputs (Level 3) | ||
Financial assets | $ 0 | $ 0 |
Financial liabilities | $ 0 | $ 0 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Summary of Fair Value of Financial Assets and (Liabilities) (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 70 | $ 111 |
Rabbi trust assets | 12 | 9 |
Deferred compensation obligation | (12) | (9) |
Total | 36 | 102 |
Derivatives Designated as Hedging Instruments | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liabilities, net | (34) | (9) |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash equivalents | 70 | 111 |
Rabbi trust assets | 12 | 9 |
Deferred compensation obligation | (12) | (9) |
Total | 70 | 111 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Derivatives Designated as Hedging Instruments | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liabilities, net | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Rabbi trust assets | 0 | 0 |
Deferred compensation obligation | 0 | 0 |
Total | (34) | (9) |
Significant Other Observable Inputs (Level 2) | Derivatives Designated as Hedging Instruments | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Derivative liabilities, net | $ (34) | $ (9) |
Debt - Summary of Long-Term Deb
Debt - Summary of Long-Term Debt and Maturities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Total long-term debt | $ 2,544 | $ 2,548 |
Current portion of long-term debt | 6 | 0 |
deferred financing costs, net | 26 | 25 |
Long-term debt | 2,512 | 2,523 |
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 0 | 1,148 |
Senior Notes, Fixed 5.0%, Due 2024 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 1,000 | 1,000 |
Senior Secured Credit Facility Term Loan, Variable, Due 2026 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 644 | 0 |
Senior Notes, Fixed 4.75%, Due 2027 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 400 | 400 |
Senior Notes, Fixed 5.875%, Due 2029 | ||
Debt Instrument [Line Items] | ||
Total long-term debt | 500 | $ 0 |
deferred financing costs, net | $ 6 |
Debt - Summary of Long-Term D_2
Debt - Summary of Long-Term Debt and Maturities (Parenthetical) (Details) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022 | ||
Debt Instrument [Line Items] | ||
Debt instrument, due date | 2022 | 2022 |
Senior Notes, Fixed 5.0%, Due 2024 | ||
Debt Instrument [Line Items] | ||
Debt instrument, due date | 2024 | 2024 |
Debt instrument, stated interest rate | 5.00% | 5.00% |
Senior Secured Credit Facility Term Loan, Variable, Due 2026 | ||
Debt Instrument [Line Items] | ||
Debt instrument, due date | 2026 | 2026 |
Senior Notes, Fixed 4.75%, Due 2027 | ||
Debt Instrument [Line Items] | ||
Debt instrument, due date | 2027 | 2027 |
Debt instrument, stated interest rate | 4.75% | 4.75% |
Senior Notes, Fixed 5.875%, Due 2029 | ||
Debt Instrument [Line Items] | ||
Debt instrument, due date | 2029 | 2029 |
Debt instrument, stated interest rate | 5.875% | 5.875% |
Debt - Principal Payments Requi
Debt - Principal Payments Required on Long Term Debt (Details) $ in Millions | Dec. 31, 2019USD ($) |
Debt Disclosure [Abstract] | |
2020 | $ 6 |
2021 | 6 |
2022 | 6 |
2023 | 6 |
2024 | $ 1,006 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||
Total long-term debt | $ 2,544 | $ 2,548 | |
Fair value of long-term debt obligations | 2,636 | ||
Senior Notes, Fixed 5.0%, Due 2024 | |||
Debt Instrument [Line Items] | |||
Total long-term debt | $ 1,000 | $ 1,000 | |
Debt instrument, stated interest rate | 5.00% | 5.00% | |
Debt instrument, maturity month and year | 2024-09 | ||
Senior Notes, Fixed 4.75%, Due 2027 | |||
Debt Instrument [Line Items] | |||
Total long-term debt | $ 400 | $ 400 | |
Debt instrument, stated interest rate | 4.75% | 4.75% | |
Debt instrument, maturity month and year | 2027-10 | ||
Senior Notes, Fixed 5.875%, Due 2029 | |||
Debt Instrument [Line Items] | |||
Total long-term debt | $ 500 | $ 0 | |
Debt instrument, stated interest rate | 5.875% | 5.875% | |
Debt instrument, maturity month and year | 2029-06 | ||
Senior Secured Credit Facility Term Loan, Variable, Due 2026 | |||
Debt Instrument [Line Items] | |||
Total long-term debt | $ 644 | $ 0 | |
Debt instrument, maturity month and year | 2026-03 | ||
New Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Total long-term debt | $ 50 | ||
Debt instrument, maturity month and year | 2024-09 | ||
Credit facility, commitments amount | $ 600 |
Debt - New Senior Secured Credi
Debt - New Senior Secured Credit Facility - Additional Information (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||||
Total long-term debt | $ 2,544,000,000 | $ 2,548,000,000 | |||
Deferred financing fees | $ 26,000,000 | $ 25,000,000 | |||
Prior Term Loan | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 0.25% | ||||
Total long-term debt | $ 500,000,000 | ||||
Prior Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Total long-term debt | $ 550,000,000 | ||||
Debt instrument, due date | 2021 | 2021 | |||
Deferred financing fees | $ 1,000,000 | ||||
New Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Total long-term debt | 50,000,000 | ||||
Debt instrument extended, due date | 2024 | ||||
Debt instrument, maturity month and year | 2024-09 | ||||
Credit facility, commitments amount | $ 600,000,000 | ||||
Borrowing capacity at any time | 90,000,000 | ||||
Available revolving credit facility | $ 595,000,000 | ||||
Commitment fee percentage | 0.25% | ||||
Amount outstanding | $ 0 | ||||
Achieved senior secured leverage ratio | 0.42 | ||||
New Revolving Credit Facility | Letter of Credit | |||||
Debt Instrument [Line Items] | |||||
Credit facility, commitments amount | $ 75,000,000 | ||||
Available revolving credit facility | $ 5,000,000 | ||||
New Revolving Credit Facility | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 1.25% | ||||
New Revolving Credit Facility | LIBOR | First Lien Net Leverage Ratio is Above 4.00x | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 1.75% | ||||
New Revolving Credit Facility | LIBOR | First Lien Net Leverage Ratio is Equal to or Less Than 4.00x and above 3.50x | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 1.50% | ||||
New Revolving Credit Facility | LIBOR | First Lien Net Leverage Ratio is Equal to or Below 3.50x | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 1.25% | ||||
New Revolving Credit Facility | Base Rate | First Lien Net Leverage Ratio is Above 4.00x | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 0.75% | ||||
New Revolving Credit Facility | Base Rate | First Lien Net Leverage Ratio is Equal to or Less Than 4.00x and above 3.50x | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 0.50% | ||||
New Revolving Credit Facility | Base Rate | First Lien Net Leverage Ratio is Equal to or Below 3.50x | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 0.25% | ||||
New Revolving Credit Facility | Minimum | First Lien Net Leverage Ratio is Above 4.00x | |||||
Debt Instrument [Line Items] | |||||
Net leverage ratio | 4 | ||||
New Senior Secured Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, due date | 2022 | ||||
Deferred financing fees | 5,000,000 | ||||
Debt instrument extended, due date | 2026 | ||||
Debt issuance expense | 1,000,000 | ||||
Net leverage ratio | 4 | ||||
Required senior secured leverage ratio | 5.50 | ||||
New Senior Secured Credit Facility | Minimum | First Lien Net Leverage Ratio is Equal to or Less Than 4.00x and above 3.50x | |||||
Debt Instrument [Line Items] | |||||
Net leverage ratio | 3.50 | ||||
New Senior Secured Credit Facility | Maximum | First Lien Net Leverage Ratio is Equal to or Less Than 4.00x and above 3.50x | |||||
Debt Instrument [Line Items] | |||||
Net leverage ratio | 4 | ||||
New Senior Secured Credit Facility | Maximum | First Lien Net Leverage Ratio is Equal to or Below 3.50x | |||||
Debt Instrument [Line Items] | |||||
Net leverage ratio | 3.50 | ||||
Prior Senior Secured Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Deferred financing fees | $ 5,000,000 | ||||
New Term Loan | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 0.25% | ||||
Debt instrument effective interest rate | 3.54% | ||||
Debt instrument, maturity month and year | 2026-03 | ||||
Principal payments on term loans | $ 2,000,000 | ||||
New Term Loan | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 0.75% | ||||
New Term Loan | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 0.50% | ||||
New Term Loan | Minimum | LIBOR | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 1.75% | ||||
New Term Loan | Minimum | Base Rate | |||||
Debt Instrument [Line Items] | |||||
Applicable margin over base rate | 1.00% | ||||
Floor rate | 1.00% |
Debt - 5.0% Senior Notes (Detai
Debt - 5.0% Senior Notes (Details) | Dec. 31, 2019 |
Senior Notes, fixed 5.0%, due 2024 | |
Debt Instrument [Line Items] | |
Debt instrument, stated interest rate | 5.00% |
Debt - 4.75% Senior Notes (Deta
Debt - 4.75% Senior Notes (Details) - Four Point Seven Five Percentage Senior Notes Due Twenty Twenty Seven | 12 Months Ended |
Dec. 31, 2019 | |
Debt Instrument [Line Items] | |
Debt instrument, stated interest rate | 4.75% |
Debt Instrument, Redemption, Period One | |
Debt Instrument [Line Items] | |
Percentage of principal amount redeemed | 104.75% |
Debt Instrument, Redemption, Period Two | |
Debt Instrument [Line Items] | |
Percentage of principal amount redeemed | 100.00% |
Maximum | Debt Instrument, Redemption, Period One | |
Debt Instrument [Line Items] | |
Percentage of principal amount redeemable | 40.00% |
Debt - 5.875% Senior Notes - Ad
Debt - 5.875% Senior Notes - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||
Deferred financing fees | $ 26,000,000 | $ 25,000,000 | |
Senior Notes, Fixed 5.875%, Due 2029 | |||
Debt Instrument [Line Items] | |||
Debt instrument, stated interest rate | 5.875% | 5.875% | |
Face amount | $ 500,000,000 | ||
Deferred financing fees | $ 6,000,000 | ||
Senior Notes, Fixed 5.875%, Due 2029 | Debt Instrument, Redemption, Period One | |||
Debt Instrument [Line Items] | |||
Percentage of principal amount redeemed | 105.875% | ||
Senior Notes, Fixed 5.875%, Due 2029 | Debt Instrument, Redemption, Period Two | |||
Debt Instrument [Line Items] | |||
Percentage of principal amount redeemed | 100.00% | ||
Senior Notes, Fixed 5.875%, Due 2029 | Maximum | Debt Instrument, Redemption, Period One | |||
Debt Instrument [Line Items] | |||
Percentage of principal amount redeemable | 40.00% | ||
Debt instrument, redemption date | Jun. 1, 2022 | ||
Senior Notes, Fixed 5.875%, Due 2029 | Maximum | Debt Instrument, Redemption, Period Two | |||
Debt Instrument [Line Items] | |||
Debt instrument, redemption date | Jun. 1, 2024 | ||
Senior Notes, Fixed 5.875%, Due 2029 | Minimum | Debt Instrument, Redemption, Period Three | |||
Debt Instrument [Line Items] | |||
Debt instrument, redemption date | Jun. 1, 2024 |
Derivatives - Additional Inform
Derivatives - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative [Line Items] | ||||
Notional amount | $ 250,000,000 | |||
Accumulated other comprehensive loss, net of tax | (15,000,000) | $ 23,000,000 | $ 40,000,000 | $ (20,000,000) |
Accumulated other comprehensive income (loss), be Reclassified During Next 12 Months | 6,000,000 | |||
Interest Expense | ||||
Derivative [Line Items] | ||||
Amount reclassified from accumulated other comprehensive loss to earnings | 1,000,000 | |||
Interest Rate Swaps A | ||||
Derivative [Line Items] | ||||
Notional amount | 250,000,000 | |||
Interest Rate Swaps B | ||||
Derivative [Line Items] | ||||
Notional amount | 250,000,000 | |||
Interest Rate Swap C | ||||
Derivative [Line Items] | ||||
Notional amount | 250,000,000 | |||
Available-for-sale securities and interest rate swaps | ||||
Derivative [Line Items] | ||||
Accumulated other comprehensive loss, net of tax | $ (34,000,000) | $ (9,000,000) | ||
LIBOR | Interest Rate Swaps A | ||||
Derivative [Line Items] | ||||
Fixed interest rate | 3.01% | |||
LIBOR | Interest Rate Swaps B | ||||
Derivative [Line Items] | ||||
Fixed interest rate | 3.04% | |||
LIBOR | Interest Rate Swap C | ||||
Derivative [Line Items] | ||||
Fixed interest rate | 2.82% |
Derivatives - Derivative Instru
Derivatives - Derivative Instruments and their Impact on Financial Condition (Details) - Derivatives Designated as Hedging Instruments - Interest Rate Swaps - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Derivative [Line Items] | ||
Total derivatives designated as hedging instruments | $ (34) | $ (9) |
Other current liabilities | ||
Derivative [Line Items] | ||
Interest rate swaps, liability | (7) | (1) |
Other non-current liabilities | ||
Derivative [Line Items] | ||
Interest rate swaps, liability | $ (27) | $ (8) |
Product Warranty Liabilities -
Product Warranty Liabilities - Additional Information (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Guarantees [Abstract] | ||
Product warranty liability, current | $ 24 | $ 26 |
Product warranty liability, non-current | $ 28 | $ 40 |
Product Warranty Liabilities _2
Product Warranty Liabilities - Product Warranty Liability Activities (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Guarantees [Abstract] | |||
Beginning balance | $ 66 | $ 55 | $ 63 |
Payments | (26) | (32) | (30) |
Increase in liability (warranty issued during period) | 21 | 38 | 18 |
Net adjustments to liability | (9) | 5 | 4 |
Ending balance | $ 52 | $ 66 | $ 55 |
Deferred Revenue - Additional I
Deferred Revenue - Additional Information (Details) - USD ($) $ in Millions | Jan. 02, 2018 | Dec. 31, 2019 | Dec. 31, 2018 |
Disaggregation of Revenue [Line Items] | |||
Deferred revenue current liabilities | $ 35 | $ 34 | |
Deferred revenue non-current liabilities | 104 | 88 | |
ETC contracts | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue current liabilities | 29 | 30 | |
Deferred revenue non-current liabilities | $ 84 | $ 73 | |
Accounting Standards Update 2014-09 | |||
Disaggregation of Revenue [Line Items] | |||
Increase (decrease) in deferred revenue | $ (6) |
Deferred Revenue - Summary of D
Deferred Revenue - Summary of Deferred Revenue Activity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Change In Contract With Customer Liability [Line Items] | |||
Beginning balance | $ 122 | $ 110 | |
Increases | 55 | 52 | |
Revenue earned | (38) | (40) | |
Ending balance | $ 139 | 122 | $ 110 |
Accounting Standards Update 2014-09 | Calculated under Revenue Guidance in Effect before Topic 606 | |||
Change In Contract With Customer Liability [Line Items] | |||
Beginning balance | $ 116 | 93 | |
Increases | 52 | ||
Revenue earned | (29) | ||
Ending balance | $ 116 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2019 | |
Leases [Abstract] | ||||
Right-of-use assets | $ 24,000,000 | $ 14,000,000 | ||
Current lease liabilities | 5,000,000 | 4,000,000 | ||
Non-current lease liabilities | $ 18,000,000 | $ 9,000,000 | ||
Discount rate | 4.36% | |||
Remaining lease term | 7 years 8 months 12 days | |||
Operating expense | $ 5,000,000 | |||
Short term operating lease expense | 0 | |||
Rent expense | $ 5,000,000 | $ 5,000,000 | ||
New ROU assets | $ 14,000,000 |
Leases - Schedule of Lease Matu
Leases - Schedule of Lease Maturity, Prior Guidance (Details) $ in Millions | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 4 |
2020 | 3 |
2021 | 2 |
2022 | 1 |
2023 | 1 |
Thereafter | 0 |
Ending balance | $ 11 |
Leases - Schedule of Lease Ma_2
Leases - Schedule of Lease Maturity, Current Guidance (Details) $ in Millions | Dec. 31, 2019USD ($) |
Leases [Abstract] | |
2020 | $ 6 |
2021 | 4 |
2022 | 3 |
2023 | 3 |
2024 | 2 |
Thereafter | 9 |
Total lease payments | 27 |
Less: Interest | 4 |
Present value of lease liabilities | $ 23 |
Leases - Schedule of Right of U
Leases - Schedule of Right of Use Assets (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 |
Lessee, Lease, Description [Line Items] | ||
Total right-of-use assets | $ 24 | $ 14 |
Building | ||
Lessee, Lease, Description [Line Items] | ||
Total right-of-use assets | 21 | |
Land | ||
Lessee, Lease, Description [Line Items] | ||
Total right-of-use assets | 1 | |
Vehicles | ||
Lessee, Lease, Description [Line Items] | ||
Total right-of-use assets | 1 | |
Equipment | ||
Lessee, Lease, Description [Line Items] | ||
Total right-of-use assets | $ 1 |
Other Income (Expense), Net (De
Other Income (Expense), Net (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Other Income And Expenses [Abstract] | |||
Post-retirement benefit plan amendment credits | $ 11 | $ 12 | $ 0 |
Vendor settlements | 0 | (4) | (5) |
Technology-related investment expense | 0 | (3) | (16) |
Other | (1) | (2) | (1) |
Total | $ 10 | $ 3 | $ (22) |
Other Current Liabilities - Sum
Other Current Liabilities - Summary of Other Current Liabilities (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Payables And Accruals [Abstract] | |||
Payroll and related costs | $ 87 | $ 81 | |
Sales allowances | 32 | 39 | |
Accrued interest payable | 21 | 19 | |
Vendor buyback obligation | 16 | 15 | |
Taxes payable | 12 | 10 | |
Derivative liabilities | 7 | 1 | |
Lease liability | 5 | $ 4 | |
Vendor liability | 3 | 5 | |
Non-trade payables | 2 | 3 | |
Defense price reduction reserve | 9 | ||
Other accruals | 17 | 15 | |
Total | $ 202 | $ 197 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Defined Benefit Plan Disclosure [Line Items] | |||||
Excise tax as a percentage of value of plan that exceeds the threshold amount | 40.00% | ||||
Effect of excise tax on post-retirement benefit obligation | $ 2,000,000 | ||||
Accumulated benefit obligation | $ 199,000,000 | 173,000,000 | |||
Deferred compensation expense | 0 | 0 | $ 0 | ||
Deferred compensation obligation | 12,000,000 | 9,000,000 | |||
Post-retirement Benefits | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Net benefit obligation | $ 94,000,000 | 93,000,000 | 102,000,000 | $ 144,000,000 | $ 93,000,000 |
Hourly Plan | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined benefit plan, service period before normal retirement age | 30 years | ||||
Retirement Savings Plans | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Defined contribution plan expense | $ 11,000,000 | $ 9,000,000 | $ 8,000,000 | ||
Future Post Retirement Medical Care Costs and Prescription Drug Costs | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Health care cost trend rate | 5.20% | ||||
Health care cost ultimate trend rate | 4.50% | ||||
Health care cost ultimate trend year | 2036 |
Employee Benefit Plans - Employ
Employee Benefit Plans - Employee Benefit Plans (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Total recognized – other comprehensive income | $ 0 | $ (1) | $ (26) |
Pension Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | 10 | 12 | 12 |
Interest cost | 7 | 6 | 6 |
Expected return on assets | (9) | (8) | (7) |
Prior service credit | 0 | 0 | 0 |
Net Periodic Benefit Cost (Credit) | 8 | 10 | 11 |
Prior service cost (credit) | 0 | 0 | 1 |
Net (gain) loss | (2) | (2) | 8 |
Amortizations | 0 | 0 | 0 |
Total recognized – other comprehensive income | (2) | (2) | 9 |
Post-retirement Benefits | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | 1 | 1 | 2 |
Interest cost | 4 | 4 | 6 |
Expected return on assets | 0 | 0 | 0 |
Prior service credit | (13) | (13) | (4) |
Net Periodic Benefit Cost (Credit) | (8) | (8) | 4 |
Prior service cost (credit) | 0 | 0 | (73) |
Net (gain) loss | (1) | (12) | 24 |
Amortizations | 13 | 13 | 4 |
Total recognized – other comprehensive income | $ 12 | $ 1 | $ (45) |
Employee Benefit Plans - Weight
Employee Benefit Plans - Weighted-Average Actuarial Assumptions Used to Determine Net Periodic Benefit Cost (Detail) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Pension Plans | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Discount rate | 4.20% | 3.50% | 4.10% |
Rate of compensation increase (salaried) | 3.00% | 3.00% | 3.00% |
Expected return on assets | 4.50% | 4.50% | 4.70% |
Post-retirement Benefits | |||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |||
Discount rate | 4.20% | 3.60% | 4.30% |
Employee Benefit Plans - Weig_2
Employee Benefit Plans - Weighted-Average Actuarial Assumptions Used to Determine Benefit Obligations (Detail) | Dec. 31, 2019 | Dec. 31, 2018 |
Pension Plans | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Discount rate | 3.20% | 4.20% |
Rate of compensation increase (salaried) | 3.00% | 3.00% |
Post-retirement Benefits | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Discount rate | 3.20% | 4.20% |
Employee Benefit Plans - Health
Employee Benefit Plans - Health Care Costs Trends (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Compensation And Retirement Disclosure [Abstract] | |
Effect of 1% increase on total of service and interest cost | $ 1 |
Effect of 1% increase on post-retirement benefit obligation | 13 |
Effect of 1% decrease on total of service and interest cost | (1) |
Effect of 1% decrease on post-retirement benefit obligation | $ (11) |
Employee Benefit Plans - Reconc
Employee Benefit Plans - Reconciliation of Changes in Net Benefit Obligations and Fair Value of Plan Assets (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Pension Plans | |||
Benefit Obligations: | |||
Net benefit obligation at beginning of year | $ 177 | $ 181 | $ 155 |
Service cost | 10 | 12 | 12 |
Interest cost | 7 | 6 | 6 |
Plan Amendments | 0 | 0 | 1 |
Benefits paid | (9) | (6) | (7) |
Actuarial loss (gain) | 19 | (16) | 14 |
Net benefit obligation at end of year | 204 | 177 | 181 |
Fair Value of Plan Assets: | |||
Fair value of plan assets at beginning of year | 196 | 188 | 150 |
Actual return on plan assets | 30 | (6) | 14 |
Employer contributions | 0 | 20 | 31 |
Benefits paid | (9) | (6) | (7) |
Fair value of plan assets at end of year | 217 | 196 | 188 |
Net Funded Status | 13 | 19 | 7 |
Post-retirement Benefits | |||
Benefit Obligations: | |||
Net benefit obligation at beginning of year | 93 | 102 | 144 |
Service cost | 1 | 1 | 2 |
Interest cost | 4 | 4 | 6 |
Plan Amendments | 0 | 0 | (73) |
Benefits paid | (2) | (2) | (2) |
Actuarial loss (gain) | (2) | (12) | 25 |
Net benefit obligation at end of year | 94 | 93 | 102 |
Fair Value of Plan Assets: | |||
Fair value of plan assets at beginning of year | 0 | 0 | 0 |
Actual return on plan assets | 0 | 0 | 0 |
Employer contributions | 2 | 2 | 2 |
Benefits paid | (2) | (2) | (2) |
Fair value of plan assets at end of year | 0 | 0 | 0 |
Net Funded Status | $ (94) | $ (93) | $ (102) |
Employee Benefit Plans - Fair V
Employee Benefit Plans - Fair Value of Plan Assets by Asset Category (Detail) - Pension Plans - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | $ 217 | $ 196 | $ 188 | $ 150 |
Diversified debt Securities | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 177 | 165 | ||
Diversified equity Securities | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 34 | 28 | ||
Cash and Cash Equivalents | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 6 | 3 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 43 | 32 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Diversified debt Securities | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 13 | 9 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Diversified equity Securities | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 24 | 20 | ||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Cash and Cash Equivalents | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 6 | 3 | ||
Significant Other Observable Inputs (Level 2) | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 174 | 164 | ||
Significant Other Observable Inputs (Level 2) | Diversified debt Securities | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 164 | 156 | ||
Significant Other Observable Inputs (Level 2) | Diversified equity Securities | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | 10 | 8 | ||
Significant Other Observable Inputs (Level 2) | Cash and Cash Equivalents | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Fair Value of Plan Assets | $ 0 | $ 0 |
Employee Benefit Plans - Plan A
Employee Benefit Plans - Plan Asset Allocation (Detail) | Dec. 31, 2019 |
Hourly Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 100.00% |
Salary Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 100.00% |
Cash and Cash Equivalents | Hourly Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 2.00% |
Cash and Cash Equivalents | Salary Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 2.00% |
Diversified equity Securities | Hourly Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 15.00% |
Diversified equity Securities | Salary Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 15.00% |
Diversified debt Securities | Hourly Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 83.00% |
Diversified debt Securities | Salary Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Target allocation | 83.00% |
Employee Benefit Plans - Amount
Employee Benefit Plans - Amounts Recognized in Balance Sheet and Accumulated Other Comprehensive Income AOCI (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Pension Plans | |||
Amounts Recognized in Balance Sheet: | |||
Noncurrent assets | $ 13 | $ 19 | |
Current liabilities | 0 | 0 | |
Noncurrent liabilities | 0 | 0 | |
Total asset (liability) | 13 | 19 | $ 7 |
Accumulated Other Comprehensive Loss: | |||
Prior service credit | 3 | 3 | |
Actuarial (loss) gain | (6) | (8) | |
Total | (3) | (5) | |
Post-retirement Benefits | |||
Amounts Recognized in Balance Sheet: | |||
Noncurrent assets | 0 | 0 | |
Current liabilities | (3) | (3) | |
Noncurrent liabilities | (91) | (90) | |
Total asset (liability) | (94) | (93) | $ (102) |
Accumulated Other Comprehensive Loss: | |||
Prior service credit | 57 | 71 | |
Actuarial (loss) gain | 4 | 2 | |
Total | $ 61 | $ 73 |
Employee Benefit Plans - Amou_2
Employee Benefit Plans - Amounts in Accumulated Other Comprehensive Loss AOCL Expected to be Amortized and Recognized as Component of Net Periodic Benefit Cost in 2017 (Detail) $ in Millions | Dec. 31, 2019USD ($) |
Pension Plans | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Prior service credit | $ 0 |
Actuarial loss | 0 |
Total | 0 |
Post-retirement Benefits | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Prior service credit | 13 |
Actuarial loss | 0 |
Total | $ 13 |
Employee Benefit Plans - Expect
Employee Benefit Plans - Expected Cash Flows for Pension and Post-Retirement Benefit Plans (Detail) $ in Millions | Dec. 31, 2019USD ($) |
Pension Plans | |
Employer Contributions: | |
2020 expected contributions | $ 0 |
Expected Benefit Payments: | |
2020 | 10 |
2021 | 11 |
2022 | 12 |
2023 | 13 |
2024 | 13 |
2025-2029 | 67 |
Post-retirement Benefits | |
Employer Contributions: | |
2020 expected contributions | 3 |
Expected Benefit Payments: | |
2020 | 3 |
2021 | 3 |
2022 | 4 |
2023 | 4 |
2024 | 4 |
2025-2029 | $ 22 |
Income Taxes - Income Before In
Income Taxes - Income Before Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
U.S. income | $ 712 | $ 755 | $ 491 |
Foreign income | 56 | 50 | 36 |
Total | $ 768 | $ 805 | $ 527 |
Income Taxes - Provision for In
Income Taxes - Provision for Income Tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Estimated current income taxes: | |||
U.S. federal | $ 75 | $ 94 | $ 61 |
Foreign | 13 | 9 | 7 |
U.S. state and local | 11 | 11 | 5 |
Total Current | 99 | 114 | 73 |
Deferred income tax expense (credit), net: | |||
U.S. federal | 58 | 45 | (44) |
Foreign | 0 | 0 | 1 |
U.S. state and local | 7 | 7 | (7) |
Total Deferred | 65 | 52 | (50) |
Total income tax expense | $ 164 | $ 166 | $ 23 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Contingency [Line Items] | |||
Effective income tax rate reconciliation corporate income tax rate, percent | 21.00% | 21.00% | 35.00% |
Deferred income tax benefit in connection with tax act | $ 160,000,000 | $ 157,000,000 | |
Deemed repatriation tax | 6,000,000 | 5,000,000 | |
Total net benefit | 154,000,000 | 152,000,000 | |
Change in total net benefit | $ 2,000,000 | ||
Effective income tax rate reconciliation, percent | 21.00% | 21.00% | |
Tax liability associated with foreign subsidiary | $ 3,000,000 | ||
Liability for deemed repatriation | $ 6,000,000 | ||
Repatriations of earnings and profits generated by foreign subsidiaries dividends, percent | 100.00% | ||
Valuation allowances | $ 10,000,000 | $ 10,000,000 | |
Unrecognized tax benefits, income tax penalties and interest accrued | 0 | 0 | $ 0 |
Unrecognized tax benefits that, if recognized, would affect the annual effective tax rate | $ 3,000,000 | $ 2,000,000 | |
Minimum | |||
Income Tax Contingency [Line Items] | |||
Percentage of tax benefit realized upon settlement | 50.00% |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Provision for Income Tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Tax at U.S. statutory income tax rate | $ 161 | $ 169 | $ 185 |
State tax expense | 14 | 15 | 10 |
Non-deductible expenses | (7) | (9) | 7 |
Tax credits | (4) | (3) | (21) |
Effect of tax rate changes | (2) | (4) | 0 |
Valuation allowance | 1 | 2 | 3 |
Foreign rate differential | (1) | (4) | (5) |
Impact related to U.S. Tax Cuts and Jobs Act | 0 | 0 | (155) |
Other adjustments | 2 | 0 | (1) |
Total income tax expense | $ 164 | $ 166 | $ 23 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
Deferred revenue | $ 28 | $ 24 |
Intangibles | 23 | 29 |
Other accrued liabilities | 23 | 20 |
Warranty accrual | 11 | 14 |
Operating loss carryforwards | 8 | 10 |
Interest rate hedges | 8 | 2 |
Stock-based compensation | 7 | 5 |
Sales allowances and rebates | 6 | 8 |
Inventories | 6 | 4 |
Technology-related investments | 5 | 5 |
Other | 7 | 8 |
Total Deferred tax assets | 132 | 129 |
Valuation allowances | (10) | (10) |
Deferred tax liabilities: | ||
Goodwill | (337) | (311) |
Trade name | (132) | (114) |
Property, plant and equipment | (28) | (10) |
Post-retirement | (6) | (9) |
Other | (2) | (2) |
Total Deferred tax liabilities | (505) | (446) |
Net Deferred tax liability | $ (383) | $ (327) |
Income Taxes - Liability for Un
Income Taxes - Liability for Unrecognized Tax Benefit (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Unrecognized Tax Benefits, Beginning Balance | $ 2 | $ 2 |
Increases in unrecognized tax benefits as a result of current year activity | 1 | 0 |
Unrecognized Tax Benefits, Ending Balance | $ 3 | $ 2 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Changes in Components of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | Jan. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Before Tax, beginning balance | $ 23 | $ 23 | $ 40 | $ (20) |
Before Tax, ending balance | (15) | 23 | 40 | |
Tax (Expense) Benefit, beginning balance | (53) | (53) | (55) | (43) |
Tax (Expense) Benefit, ending balance | (45) | (53) | (55) | |
Reclassification of stranded tax effects, ending balance | 8 | |||
Before Tax | (38) | (17) | 60 | |
Tax (Expense) Benefit | 8 | 2 | (12) | |
Reclassification of stranded tax effects | 8 | 8 | ||
Total other comprehensive (loss) income, net of tax | (22) | (15) | 48 | |
Balance | 659 | 659 | 689 | 1,081 |
Balance | 781 | 659 | 689 | |
Foreign currency items | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Before Tax | (3) | (9) | 15 | |
Total other comprehensive (loss) income, net of tax | (3) | (9) | 15 | |
Pension and OPEB liability adjustment | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Before Tax | (11) | 1 | 34 | |
Tax (Expense) Benefit | 2 | (8) | ||
Reclassification of stranded tax effects | 9 | |||
Total other comprehensive (loss) income, net of tax | 1 | 26 | ||
Available-for-sale securities and interest rate swaps | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Before Tax | (24) | (9) | 11 | |
Tax (Expense) Benefit | 6 | 2 | (4) | |
Reclassification of stranded tax effects | (1) | |||
Total other comprehensive (loss) income, net of tax | (19) | (7) | 7 | |
Accumulated Other Comprehensive Loss, net of tax | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Balance | $ (30) | (30) | (15) | (63) |
Balance | $ (52) | $ (30) | $ (15) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Accumulated Other Comprehensive Income Loss [Line Items] | |||||||||||
Other income (expense), net | $ 10 | $ 3 | $ (22) | ||||||||
Income before income taxes | $ 134 | $ 194 | $ 229 | $ 211 | $ 174 | $ 218 | $ 222 | $ 191 | 768 | 805 | 527 |
Income tax expense | (164) | (166) | (23) | ||||||||
Net income | $ 107 | $ 149 | $ 181 | $ 167 | $ 147 | $ 167 | $ 174 | $ 151 | 604 | 639 | 504 |
Reclassified from AOCL | Prior service cost | |||||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | |||||||||||
Other income (expense), net | 13 | 13 | 3 | ||||||||
Reclassified from AOCL | Actuarial gain | |||||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | |||||||||||
Other income (expense), net | 1 | ||||||||||
Reclassified from AOCL | Pension and OPEB liability adjustment | |||||||||||
Accumulated Other Comprehensive Income Loss [Line Items] | |||||||||||
Income before income taxes | 13 | 13 | 4 | ||||||||
Income tax expense | (3) | (3) | (1) | ||||||||
Net income | $ 10 | $ 10 | $ 3 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | 3 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments And Contingencies Disclosure [Abstract] | |
Increase (decrease) in environmental liability | $ 3 |
Estimated undiscounted liabilities payment period | 30 years |
Concentration of Risk - Additio
Concentration of Risk - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2019EmployeeCustomer | Dec. 31, 2018EmployeeCustomer | Dec. 31, 2017Customer | |
Concentration Risk [Line Items] | |||
Number of employees | Employee | 3,700 | 2,900 | |
Number of Employees, Geographic Area | United States | Labor Force Concentration | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 91.00% | 90.00% | |
Workforce Subject to Collective Bargaining Arrangements | United States | Unionized employees subject to collective bargaining agreement | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 45.00% | 59.00% | |
Sales Revenue, Net | Customer Concentration Risk | |||
Concentration Risk [Line Items] | |||
Number of significant customers | 3 | 3 | 3 |
Accounts Receivable | Credit Concentration Risk | |||
Concentration Risk [Line Items] | |||
Number of significant customers | 3 | 3 |
Concentration of Risk - Custome
Concentration of Risk - Customers Accounted for Greater Than Ten Percent of Net Sales (Details) - Sales Revenue, Net - Customer Concentration Risk | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Daimler AG | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 20.00% | 18.00% | 20.00% |
PACCAR Inc. | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 12.00% | 10.00% | 9.00% |
Navistar International Corporation | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 11.00% | 8.00% | 8.00% |
Concentration of Risk - Custo_2
Concentration of Risk - Customers Accounted for Greater Than Ten Percent of Accounts Receivable (Details) - Accounts Receivable - Credit Concentration Risk | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Daimler AG | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 19.00% | 18.00% |
Navistar International Corporation | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 13.00% | 9.00% |
Volvo Group | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 6.00% | 11.00% |
Certain Relationships and Rel_2
Certain Relationships and Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions | May 07, 2019 | Feb. 03, 2017 | Dec. 31, 2019 |
2016 Repurchase Program | |||
Related Party Transaction [Line Items] | |||
Common stock, repurchased during the period | $ 393 | ||
Ashe Capital Management, LP | |||
Related Party Transaction [Line Items] | |||
Common stock repurchased during the period (shares) | 4,977,043 | ||
Ashe Capital Management, LP | 2016 Repurchase Program | |||
Related Party Transaction [Line Items] | |||
Common stock, repurchased during the period | $ 232 | ||
ValueAct Capital Master Fund, L.P | |||
Related Party Transaction [Line Items] | |||
Common stock repurchased during the period (shares) | 10,525,204 | ||
Common stock, repurchased during the period | $ 363 | ||
Repurchase agreement closing date | Feb. 8, 2017 |
Common Stock - Additional Infor
Common Stock - Additional Information (Details) - 2016 Repurchase Program - USD ($) | 12 Months Ended | ||||
Dec. 31, 2019 | May 09, 2019 | Jul. 30, 2018 | Nov. 08, 2017 | Nov. 14, 2016 | |
Common Stock Disclosure [Line Items] | |||||
Stock repurchase program, authorized amount | $ 3,000,000,000 | $ 1,000,000,000 | |||
Stock repurchase program, increase in authorized amount | $ 1,000,000,000 | $ 500,000,000 | $ 500,000,000 | ||
Common stock, repurchased during the period | $ 393,000,000 | ||||
Stock repurchase program, remaining amount | $ 1,052,000,000 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |||
Shares excluded from diluted EPS calculation (in shares) | 0 | 0 | 0 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Reconciliation of Numerators and Denominators Used to Calculate Basic EPS and Diluted EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |||||||||||
Net income | $ 107 | $ 149 | $ 181 | $ 167 | $ 147 | $ 167 | $ 174 | $ 151 | $ 604 | $ 639 | $ 504 |
Weighted average shares of common stock outstanding | 122 | 133 | 149 | ||||||||
Dilutive effect stock-based awards | 1 | 1 | 1 | ||||||||
Diluted weighted average shares of common stock outstanding | 123 | 134 | 150 | ||||||||
Basic earnings per share attributable to common stockholders (USD per share) | $ 0.90 | $ 1.24 | $ 1.47 | $ 1.33 | $ 1.15 | $ 1.28 | $ 1.30 | $ 1.09 | $ 4.95 | $ 4.81 | $ 3.38 |
Diluted earnings per share attributable to common stockholders (USD per share) | $ 0.90 | $ 1.23 | $ 1.46 | $ 1.32 | $ 1.14 | $ 1.27 | $ 1.29 | $ 1.08 | $ 4.91 | $ 4.78 | $ 3.36 |
Geographic Information - Net Sa
Geographic Information - Net Sales by Country (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | $ 617 | $ 669 | $ 737 | $ 675 | $ 647 | $ 692 | $ 711 | $ 663 | $ 2,698 | $ 2,713 | $ 2,262 |
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 1,915 | 1,922 | 1,614 | ||||||||
China | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 136 | 127 | 62 | ||||||||
Canada | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 104 | 104 | 125 | ||||||||
Japan | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 79 | 101 | 75 | ||||||||
Mexico | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 71 | 57 | 39 | ||||||||
Germany | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 59 | 55 | 45 | ||||||||
United Kingdom | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 35 | 55 | 36 | ||||||||
France | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 37 | 40 | 21 | ||||||||
Brazil | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 34 | 14 | 18 | ||||||||
Turkey | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | 27 | 24 | 24 | ||||||||
Other | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Total Net Sales | $ 201 | $ 214 | $ 203 |
Geographic Information - Net Lo
Geographic Information - Net Long-Lived Assets by Country (Details) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | $ 616 | $ 466 | $ 448 |
United States | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | 583 | 427 | 400 |
India | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | 17 | 24 | 32 |
Hungary | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | 11 | 11 | 12 |
Other | |||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||
Property, plant and equipment, net | $ 5 | $ 4 | $ 4 |
Quarterly Financial Informati_3
Quarterly Financial Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 617 | $ 669 | $ 737 | $ 675 | $ 647 | $ 692 | $ 711 | $ 663 | $ 2,698 | $ 2,713 | $ 2,262 |
Gross profit | 298 | 348 | 389 | 359 | 338 | 368 | 374 | 342 | 1,394 | 1,422 | 1,131 |
Operating income | 165 | 224 | 259 | 244 | 207 | 246 | 248 | 222 | 892 | 923 | 652 |
Income before income taxes | 134 | 194 | 229 | 211 | 174 | 218 | 222 | 191 | 768 | 805 | 527 |
Net income | $ 107 | $ 149 | $ 181 | $ 167 | $ 147 | $ 167 | $ 174 | $ 151 | $ 604 | $ 639 | $ 504 |
Basic earnings per share (USD per share) | $ 0.90 | $ 1.24 | $ 1.47 | $ 1.33 | $ 1.15 | $ 1.28 | $ 1.30 | $ 1.09 | $ 4.95 | $ 4.81 | $ 3.38 |
Diluted earnings per share (USD per share) | $ 0.90 | $ 1.23 | $ 1.46 | $ 1.32 | $ 1.14 | $ 1.27 | $ 1.29 | $ 1.08 | $ 4.91 | $ 4.78 | $ 3.36 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - USD ($) $ in Millions | Sep. 09, 2019 | Apr. 16, 2019 | Apr. 12, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses | $ 232 | $ 0 | $ 0 | |||
Goodwill | 2,041 | $ 1,941 | $ 1,941 | |||
Walker Die Casting | ||||||
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses | $ 103 | |||||
Pre-existing accounts payable | 4 | |||||
Preliminary purchase price | 99 | |||||
Property, plant and equipment | 53 | |||||
Goodwill | 21 | 21 | ||||
Inventory | 18 | |||||
Intangible assets | 4 | |||||
Other net assets | 3 | |||||
Walker Die Casting | Customer Relationships | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 3 | |||||
Weighted average remaining useful lives | 7 years | |||||
Walker Die Casting | Trade name | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 1 | |||||
Weighted average remaining useful lives | 15 years | |||||
AxleTech Electric Vehicle Systems Division | ||||||
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses | $ 124 | |||||
Property, plant and equipment | 1 | |||||
Goodwill | 67 | $ 67 | ||||
Intangible assets | 56 | |||||
AxleTech Electric Vehicle Systems Division | In Process Research and Development | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | 50 | |||||
AxleTech Electric Vehicle Systems Division | Customer Relationships | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 3 | |||||
Weighted average remaining useful lives | 6 years | |||||
AxleTech Electric Vehicle Systems Division | Developed Technology | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets | $ 3 | |||||
Weighted average remaining useful lives | 14 years | |||||
Vantage Power Limited | ||||||
Business Acquisition [Line Items] | ||||||
Payments to acquire businesses | $ 9 | |||||
Additional payment amount | $ 8 | |||||
Payment term | 3 years |
Schedule I-Parent Company Onl_3
Schedule I-Parent Company Only Financial Statements - Balance Sheets (Detail) - USD ($) $ in Millions | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets: | ||||
Cash | $ 192 | $ 231 | ||
Total Current Assets | 686 | 725 | ||
TOTAL ASSETS | 4,450 | 4,237 | ||
Current Liabilities: | ||||
Accounts payable | 150 | 169 | ||
Total Current Liabilities | 417 | 426 | ||
Capital stock | 781 | 659 | $ 689 | $ 1,081 |
Paid in capital | 1,802 | 1,788 | ||
Accumulated deficit | (970) | (1,100) | ||
Accumulated other comprehensive loss, net of tax | (52) | (30) | ||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | 4,450 | 4,237 | ||
Parent Company | ||||
Current Assets: | ||||
Cash | 0 | 0 | ||
Total Current Assets | 0 | 0 | ||
Investments in and advances to subsidiaries | 781 | 659 | ||
TOTAL ASSETS | 781 | 659 | ||
Current Liabilities: | ||||
Accounts payable | 0 | 0 | ||
Total Current Liabilities | 0 | 0 | ||
Capital stock | 1 | 1 | ||
Paid in capital | 1,802 | 1,788 | ||
Treasury stock | 0 | 0 | ||
Accumulated deficit | (970) | (1,100) | ||
Accumulated other comprehensive loss, net of tax | (52) | (30) | ||
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY | $ 781 | $ 659 |
Schedule I-Parent Company Onl_4
Schedule I-Parent Company Only Financial Statements - Comprehensive Income (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Condensed Financial Statements Captions [Line Items] | |||||||||||
Net sales | $ 617 | $ 669 | $ 737 | $ 675 | $ 647 | $ 692 | $ 711 | $ 663 | $ 2,698 | $ 2,713 | $ 2,262 |
Operating income | 165 | 224 | 259 | 244 | 207 | 246 | 248 | 222 | 892 | 923 | 652 |
Other income: | |||||||||||
Income before income taxes | 134 | 194 | 229 | 211 | 174 | 218 | 222 | 191 | 768 | 805 | 527 |
Income tax expense | (164) | (166) | (23) | ||||||||
Net income | $ 107 | $ 149 | $ 181 | $ 167 | $ 147 | $ 167 | $ 174 | $ 151 | 604 | 639 | 504 |
Comprehensive income | 582 | 624 | 552 | ||||||||
Parent Company | |||||||||||
Condensed Financial Statements Captions [Line Items] | |||||||||||
Net sales | 0 | 0 | 0 | ||||||||
General and administrative fees | 0 | 0 | 0 | ||||||||
Operating income | 0 | 0 | 0 | ||||||||
Other income: | |||||||||||
Equity earnings of consolidated subsidiary | 604 | 639 | 504 | ||||||||
Income before income taxes | 604 | 639 | 504 | ||||||||
Income tax expense | 0 | 0 | 0 | ||||||||
Net income | 604 | 639 | 504 | ||||||||
Comprehensive income | $ 582 | $ 624 | $ 552 |
Schedule I-Parent Company Onl_5
Schedule I-Parent Company Only Financial Statements - Cash Flows (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ 107 | $ 149 | $ 181 | $ 167 | $ 147 | $ 167 | $ 174 | $ 151 | $ 604 | $ 639 | $ 504 |
Deduct items included in net income not providing cash: | |||||||||||
Net cash provided by operating activities | 847 | 837 | 658 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Investments in subsidiaries | (1) | (3) | (3) | ||||||||
Net cash used for investing activities | (405) | (103) | (94) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Dividends | (73) | (80) | (89) | ||||||||
Net cash used for financing activities | (480) | (700) | (574) | ||||||||
Net (decrease) increase in cash and cash equivalents | (39) | 32 | (6) | ||||||||
Cash and cash equivalents at beginning of period | 231 | 199 | 231 | 199 | 205 | ||||||
Cash and cash equivalents at end of period | 192 | 231 | 192 | 231 | 199 | ||||||
Parent Company | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | 604 | 639 | 504 | ||||||||
Deduct items included in net income not providing cash: | |||||||||||
Equity in earnings in consolidated subsidiary | (604) | (639) | (504) | ||||||||
Net cash provided by operating activities | 0 | 0 | 0 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Investments in subsidiaries | (5) | (22) | (19) | ||||||||
Dividends | 73 | 80 | 89 | ||||||||
Net cash used for investing activities | 68 | 58 | 70 | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Capital contributions | 5 | 22 | 19 | ||||||||
Dividends | (73) | (80) | (89) | ||||||||
Net cash used for financing activities | (68) | (58) | (70) | ||||||||
Net (decrease) increase in cash and cash equivalents | 0 | 0 | 0 | ||||||||
Cash and cash equivalents at beginning of period | $ 0 | $ 0 | 0 | 0 | 0 | ||||||
Cash and cash equivalents at end of period | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 |