GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

At December 31, 2015 and 2014, goodwill consists of the following:



	December 31, 2015
	Powertrain			Motorparts			Total
Gross carrying amount, January 1	$	582		$	809		$	1,391
Acquisitions and purchase accounting adjustments	74			—			74
Foreign exchange	(8		)	—			(8		)
Gross carrying amount, December 31	$	648		$	809		$	1,457

Accumulated impairment, January 1	$	(92	)	$	(598	)	(690		)
Impairment	(44		)	(50		)	(94		)
Accumulated impairment, December 31	$	(136	)	$	(648	)	$	(784	)

Net carrying value, December 31	$	512		$	161		$	673

	December 31, 2014
	Powertrain			Motorparts			Total
Gross carrying amount, January 1	$	579		$	783		$	1,362
Acquisitions and purchase accounting adjustments	6			26			32
Foreign exchange	(3		)	—			(3		)
Gross carrying amount, December 31	$	582		$	809		$	1,391

Accumulated impairment, January 1	$	(92	)	$	(478	)	$	(570	)
Impairment	—			(120		)	(120		)
Accumulated impairment, December 31	$	(92	)	$	(598	)	$	(690	)

Net carrying value, December 31	$	490		$	211		$	701

At December 31, 2015 and 2014, intangible assets consist of the following:



	December 31, 2015							December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Definite-lived intangible assets:
Developed technology	$	140	$	(86	)	$	54	$	116	$	(73	)	$	43
Customer relationships	683		(333		)	350		598		(287		)	311
	$	823	$	(419	)	$	404	$	714	$	(360	)	$	354

Indefinite-lived intangible assets:
Trademarks and brand names						$	230						$	227

The Company recorded amortization expense of $59 million, $49 million, and $47 million associated with definite-lived intangible assets during the years ended December 31, 2015, 2014 and 2013. The Company utilizes the straight line method of amortization, recognized over the estimated useful lives of the assets. The Company’s developed technology intangible assets have useful lives of between 9 and 15 years. The Company’s customer relationships intangible assets have useful lives of between 2 and 24 years.

The Company’s estimated future amortization expense for its definite-lived intangible assets is as follows:



2016	$	58
2017	58
2018	49
2019	49
2020	49
Thereafter	141
	$	404

Goodwill

The Company conducts its review for goodwill impairments on October 1 of each year for all reporting units.

Powertrain

Based on our annual goodwill impairment testing we determined that goodwill was impaired for three reporting units within the Powertrain segment, as the fair values decreased below their carrying values. The decreases in fair values during 2015 were driven by decreases in operating results for these reporting units. Based on the results of our annual goodwill impairment test, we recorded an estimate of goodwill impairment charges of $44 million in the year ended December 31, 2015 in our Powertrain segment. Due to the complexity of the second step goodwill impairment test, the Company did not finalize its assessment prior to filing its annual report.

Motorparts

As part of an interim goodwill impairment test as of September 30, 2015, the Company determined there were impairment indicators for one of its reporting units and conducted an impairment analysis. Decreases in operating results for certain reporting units as a result of the negative effect of exchange rates and negative economic conditions resulted in impairment indicators prior to the annual impairment assessment. Based on the results of our interim goodwill impairment tests, we recorded goodwill impairment charges of $56 million in the three months ended September 30, 2015 in our Motorparts segment.

Based on the results of our annual goodwill impairment tests, there were no additional goodwill impairment charges in the year ended December 31, 2015 in our Motorparts segment.

Due to the complexity of the 2014 second step goodwill impairment test, the Company did not finalize its assessment until the first quarter of 2015. During the three months ended March 31, 2015, the Company concluded its assessment of the step two goodwill impairment analysis as of October 1, 2014 and recorded a reduction of $6 million to its initial estimate of the goodwill impairment charge for the year ended December 31, 2014.

Additional declines in operating results or forecasts due to a strengthening of the US dollar or deterioration of economic conditions could result in an impairment charge in future periods.

For the year ended December 31, 2014, the Company noted impairment indicators existed in one reporting unit within the Motorparts segment. Among other factors, this reporting unit experienced lower than expected profits and cash flows resulting from decreases in volumes and pricing pressure from customers towards the end of 2014. As a result of these impairment indicators, the Company concluded that there was also a potential impairment of its long-lived assets and definite-lived intangible assets. These impairment tests were performed before the goodwill impairment test, and an impairment loss related to long-lived assets of $7 million was recognized prior to goodwill being tested for impairment.

The Company then tested goodwill for impairment and determined the carrying value of one reporting unit, within the Motorparts segment, exceeded its fair value. Accordingly, as part of a step two goodwill impairment test, the Company made a preliminary conclusion that the carrying amount of the reporting unit's goodwill exceeded the implied fair value of that goodwill and an impairment loss of $120 million was recognized for the year ended December 31, 2014.

Fair Value Measurements

The fair values of the Company's reporting units were determined based on valuation techniques using the best available information, primarily discounted cash flow projections. These fair values require the Company to make significant assumptions and estimates about the extent and timing of future cash flows, growth rates, market share and discount rates that represent unobservable inputs into our valuation methodologies. The cash flows are estimated over a significant future period of time, which makes those estimates and assumptions subject to a high degree of uncertainty. Where available and as appropriate, comparative market multiples and the quoted market price of our common stock are used to corroborate the results of the discounted cash flow method. Assumptions used in the discounted cash flow analysis that have the most significant effect on the estimated fair value of the Company's reporting units are:


•	the weighted average cost of capital


•	revenue growth-rates

Reporting Units

The Company has nine reporting units that have goodwill as of December 31, 2015. The following table categorizes the Company’s goodwill by reporting unit as of October 1, 2015 according to the level of excess between the reporting unit’s fair value and carrying value giving effect to the 2015 impairment charges:

As of December 31, 2014, the Motorparts segment moved from a product-centered reporting structure to a regional reporting structure in order to align with its regional focus.

Other Intangible Assets

The Company performs its annual trademarks and brand names impairment analysis as of October 1, or more frequently if impairment indicators exist. This impairment analysis compares the fair values of these assets to the related carrying values, and impairment charges are recorded for any excess of carrying values over fair values. The fair values are based upon the prospective stream of hypothetical after-tax royalty cost savings discounted at rates that reflect the rates of return appropriate for these intangible assets.

The Company had no trademark and brand name impairments from the October 1, 2015 and 2014 impairment analysis.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Fair Value
Exceeds
Carrying Value

Reporting Units 1 - 2

Reporting Units 3 - 9