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Goodwill and Intangible Assets
 12 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]
5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill The following table provides a reconciliation of changes in goodwill for the year ended December 31, 2019 and the year ended December 31, 2018:

 
Driveline
 
Metal Forming
 
Powertrain
 
Casting
 
Consolidated
 
(in millions)
Balance as of January 1, 2018
$
211.1

 
$
558.9

 
$
478.8

 
$
405.5

 
$
1,654.3

Acquisition of MPG
—

 
0.9

 
—

 
—

 
0.9

Acquisition of USM Mexico
1.3

 
—

 
—

 
—

 
1.3

Impairment charge
—

 
—

 
(80.0
)
 
(405.5
)
 
(485.5
)
Sale of business
—

 
—

 
(15.1
)
 
—

 
(15.1
)
Foreign currency translation
(0.3
)
 
(7.4
)
 
(6.4
)
 
—

 
(14.1
)
Balance as of December 31, 2018
$
212.1


$
552.4


$
377.3


$
—

 
$
1,141.8

Reorganization
187.2

 
190.1

 
(377.3
)
 
—

 
—

Impairment charge
—

 
(440.0
)
 
—

 
—

 
(440.0
)
Foreign currency translation
(1.0
)
 
(1.7
)
 
—

 
—

 
(2.7
)
Balance as of December 31, 2019
$
398.3

 
$
300.8

 
$
—

 
$
—

 
$
699.1



We conduct our annual goodwill impairment test in the fourth quarter of each year. In performing this test, we utilize a third-party valuation specialist to assist management in determining the fair value of our reporting units. Fair value of each reporting unit is estimated based on a combination of discounted cash flows and the use of pricing multiples derived from an analysis of comparable public companies multiplied against historical and/or anticipated financial metrics of each reporting unit. These calculations contain uncertainties as they require management to make assumptions including, but not limited to, market comparables, future cash flows of the reporting units, and appropriate discount and long-term growth rates. This fair value determination is categorized as Level 3 within the fair value hierarchy.

In the first quarter of 2019, we initiated a global restructuring program (the 2019 Program) to further streamline our business by consolidating our four existing segments into three segments. See Note 4 - Restructuring and Acquisition-Related Costs for further detail on this reorganization of our segments. Prior to this reorganization, our former Powertrain segment was also a reporting unit for purposes of measuring and reporting goodwill. The goodwill that was previously attributable to the former Powertrain reporting unit was reallocated to the Driveline and Metal Forming reporting units based on the relative fair value of the respective portions that became attributable to those reporting units. The initiation of the 2019 Program and the reorganization of our business represented a triggering event in the first quarter of 2019 to test goodwill for impairment prior to reallocating the former Powertrain goodwill to Driveline and Metal Forming. No impairment was identified as a result of completing this goodwill impairment test.

As a result of our annual goodwill impairment test in the fourth quarter of 2019, we determined that the carrying value of our Metal Forming reporting unit was greater than its fair value. As such, we recorded a goodwill impairment charge of $440.0 million in 2019 associated with this reporting unit. This impairment was primarily the result of a decline in the projected cash flows of this reporting unit under our long-range plan completed in the fourth quarter of 2019, as compared to the long-range plan completed in the fourth quarter of 2018. This was driven, in part, by lower forecasted sales volumes in the internal and external data sources used to form our projections. At December 31, 2019, accumulated goodwill impairment losses were $925.5 million.

As a result of our test in the fourth quarter of 2018, we determined that the carrying values of our Casting and former Powertrain reporting units were greater than their respective fair values. As such, we recorded non-cash goodwill impairment charges of $405.5 million associated with our Casting reporting unit and $80.0 million associated with our former Powertrain reporting unit in 2018. These impairments were primarily the result of a general contraction of pricing multiples associated with capital intensive businesses such as the business conducted by our Casting and former Powertrain reporting units, as well as a decline in the projected cash flows of
these reporting units under our long-range plan completed in the fourth quarter of 2018, as compared to the long-range plan completed in the fourth quarter of 2017.

The decline in projected cash flows for the Powertrain reporting unit was primarily the result of decreased contribution margin on lower production volumes for certain passenger car programs that we support. The decline in projected cash flows for the Casting reporting unit was primarily the result of a projected increase in labor costs in an effort to address workforce shortages at certain locations, as well as an increase in other maintenance and capital requirements.

In the second quarter of 2018, we completed the sale of the aftermarket business associated with our former Powertrain segment. We allocated $15.1 million of goodwill to the sold business, which represented the fair value of the business sold relative to the fair value of the associated reporting unit.

Other Intangible Assets The following table provides a reconciliation of the gross carrying amount and associated accumulated amortization for AAM's total intangible assets, which are all subject to amortization, as of December 31, 2019 and December 31, 2018:
 
December 31,
 
December 31,
 
2019
 
2018
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
(in millions)
Capitalized computer software
$
45.8

 
$
(27.6
)
 
$
18.2

 
$
38.0

 
$
(20.1
)
 
$
17.9

Customer platforms
856.2

 
(174.4
)
 
681.8

 
952.2

 
(123.5
)
 
828.7

Customer relationships
53.0

 
(9.4
)
 
43.6

 
147.0

 
(16.5
)
 
130.5

Technology and other
156.0

 
(35.1
)
 
120.9

 
156.2

 
(22.2
)
 
134.0

Total
$
1,111.0

 
$
(246.5
)
 
$
864.5

 
$
1,293.4

 
$
(182.3
)
 
$
1,111.1



In the fourth quarter of 2019, we completed the sale of the U.S. operations of our Casting business to entities affiliated with Gamut Capital Management, L.P. As such, during 2019 we reduced the gross carrying amount of our customer platforms and customer relationships by $96.0 million and $94.0 million, respectively, and reduced the associated accumulated amortization by $17.2 million and $14.6 million, respectively.

As a result of the acquisition of MPG in 2017, we recorded intangible assets related to aftermarket customer relationships that were associated with the former Powertrain aftermarket business that we sold in the second quarter of 2018. As such, during 2018 we reduced the gross carrying amount of our customer relationships by $4.8 million, and reduced the associated accumulated amortization by $0.3 million.

Amortization expense for our intangible assets was $95.4 million for the year ended December 31, 2019, $99.4 million for the year ended December 31, 2018, and $75.3 million for the year ended December 31, 2017. The change in amortization expense in 2019, as compared to 2018, was primarily attributable to the sale of the U.S. operations of our Casting business in the fourth quarter of 2019. The increase in amortization expense in 2018, as compared to 2017, was primarily attributable to the impact of twelve months of amortization on the MPG intangibles in 2018, as compared to nine months of amortization in 2017. Estimated amortization expense is approximately $87 million per year for each of the years 2020 through 2024.