XML 95 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
Fair Value
12 Months Ended
Dec. 31, 2012
Fair Value [Abstract]  
Fair Value Disclosures [Text Block]
FAIR VALUE

The fair value accounting guidance defines fair value as “the 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 definition is based on an exit price rather than an entry price, regardless of whether the entity plans to hold or sell the asset.  This guidance also establishes a fair value hierarchy to prioritize inputs used in measuring fair value as follows:

Level 1:  Observable inputs such as quoted prices in active markets;
Level 2:  Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
Level 3:  Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

FINANCIAL INSTRUMENTS  The estimated fair values of our financial assets and liabilities that are recognized at fair value on a recurring basis, using available market information and other observable data are as follows:

 
December 31, 2012
 
December 31, 2011
 
 
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
 
Input
 
(in millions)
 
(in millions)
 
 
Balance Sheet Classification
 
 
 
 
 
 
 
 
 
Cash equivalents
$
6.5

 
$
6.5

 
$
36.0

 
$
36.0

 
Level 1
Prepaid expenses and other
 
 
 
 
 
 
 
 
 
    Currency forward contracts
2.3

 
2.3

 
0.1

 
0.1

 
Level 2
Other assets and deferred charges
 
 
 
 
 
 
 
 
 
    Currency forward contracts

 

 
0.1

 
0.1

 
Level 2
Other accrued expenses
 
 
 
 
 
 
 
 
 
Currency forward contracts

 

 
5.6

 
5.6

 
Level 2


The carrying values of our cash, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these instruments.  The carrying values of our borrowings under the foreign credit facilities approximate their fair value due to the frequent resetting of the interest rates.  We estimated the fair value of our outstanding debt using available market information and other observable data to be as follows:
 
 
December 31, 2012
 
December 31, 2011
 
 
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
 
Input
 
(in millions)
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Amended Revolving Credit Facility
$

 
$

 
$

 
$

 
Level 2
9.25% Notes
337.5

 
377.4

 
379.0

 
415.0

 
Level 2
7.875% Notes
300.0

 
310.1

 
300.0

 
295.5

 
Level 2
7.75% Notes
200.0

 
216.5

 
200.0

 
195.0

 
Level 2
6.625% Notes
550.0

 
555.5

 

 

 
Level 2
5.25% Notes

 

 
249.9

 
243.8

 
Level 2


Investments in our defined benefit plans are stated at fair value. See Note 6 - Employee Benefit Plans for additional fair value disclosures of our pension plan assets as of December 31, 2012 and December 31, 2011.

LONG-LIVED ASSETS  In 2012 and 2011, as part of our impairment analysis, we were required to measure the fair value of certain long-lived assets.  In 2012, we considered the expected future use of certain long-lived assets remaining at our Detroit Manufacturing Complex. In 2011, we considered the expected future use of the long-lived assets located at our Cheektowaga Manufacturing Facility. Assets that will not be redeployed to other AAM facilities were determined to be fully impaired.

The following table summarizes impairments of long-lived assets measured at fair value on a nonrecurring basis subsequent to initial recognition:
Balance Sheet Classification
 
Fair Value Measurements using Level 3 Inputs
 
Asset Impairment Recorded in Twelve Months ended December 31, 2012
 
Fair Value Measurements using Level 3 Inputs
 
Asset Impairment Recorded in Twelve Months ended December 31, 2011
 
 
(in millions)
Property, plant and equipment, net
 
$

 
$
5.8

 
$

 
$
8.1

Other assets and deferred charges
 

 

 

 
0.5



In the fourth quarter of 2012, we reassessed the expected future use of certain assets remaining at DMC that were previously leased assets that had been purchased in 2011 for $18.6 million. As a result, we recorded an impairment charge of $5.8 million related to the assets that we no longer intend to redeploy and use at another AAM facility. In 2011, at the time we elected to buyout the leases we considered the expected future use of these long-lived assets as part of our fair value measurement and recorded them at their estimated fair value. Assets that were not to be redeployed to other AAM facilities were written down to their estimated net realizable value, which resulted in a net charge to cost of goods sold of $5.3 million in 2011.

Finite-lived Intangibles In 2011, Saab, our former partner in the e-AAM joint venture, filed for bankruptcy and entered into liquidation status. As a result, in 2011, we recorded a $1.6 million impairment charge to selling, general and administrative expenses to write off the intangible asset associated with the long-term supply agreement with Saab acquired as part of our joint venture formation in 2010. The following table summarizes the impairment of finite-lived intangible assets measured at fair value on a nonrecurring basis subsequent to initial recognition:
Balance Sheet Classification
 
Fair Value Measurement Using Level 3 Inputs
 
Impairment Recorded in the Twelve Months Ended December 31, 2011
 
 
(in millions)
Other assets and deferred charges
 
$

 
$
1.6