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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2017	Feb. 02, 2018	Jun. 30, 2017
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	ALSN
Entity Registrant Name	ALLISON TRANSMISSION HOLDINGS INC
Entity Central Index Key	0001411207
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		140,066,567
Entity Public Float			$ 5,575

Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Current Assets
Cash and cash equivalents	$ 199	$ 205
Accounts receivable	221	197
Inventories	154	126
Income taxes receivable	33	3
Other current assets	25	17
Total Current Assets	632	548
Property, plant and equipment, net	448	464
Intangible assets, net	1,153	1,242
Goodwill	1,941	1,941
Other non-current assets	31	24
TOTAL ASSETS	4,205	4,219
Current Liabilities
Accounts payable	159	128
Product warranty liability	22	25
Current portion of long-term debt	12	12
Deferred revenue	41	27
Other current liabilities	183	150
Total Current Liabilities	417	342
Product warranty liability	33	38
Deferred revenue	75	66
Long-term debt	2,534	2,147
Deferred income taxes	276	312
Other non-current liabilities	181	233
TOTAL LIABILITIES	3,516	3,138
Commitments and Contingencies (see NOTE 16)
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding
Paid in capital	1,758	1,728
Accumulated deficit	(1,055)	(586)
Accumulated other comprehensive loss, net of tax	(15)	(63)
TOTAL STOCKHOLDERS' EQUITY	689	1,081
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	4,205	4,219
Voting Common Stock
STOCKHOLDERS' EQUITY
Common stock	1	2
Non-voting Common Stock
STOCKHOLDERS' EQUITY
Common stock	$ 0	$ 0

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2017	Dec. 31, 2016
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Voting Common Stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,880,000,000	1,880,000,000
Common stock, shares issued	139,990,865	163,795,604
Common stock, shares outstanding	139,990,865	163,795,604
Non-voting Common Stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	0	0
Common stock, shares outstanding	0	0

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Net sales	$ 2,262	$ 1,840	$ 1,986
Cost of sales	1,131	976	1,052
Gross profit	1,131	864	934
Selling, general and administrative	342	324	317
Engineering - research and development	105	88	93
Loss associated with impairment of long-lived assets	32		1
Trade name impairment			80
Environmental remediation			14
Operating income	652	452	429
Interest expense, net	(103)	(101)	(114)
Expenses related to long-term debt refinancing		(12)	(26)
Other (expense) income, net	(22)	2
Income before income taxes	527	341	289
Income tax expense	(23)	(126)	(107)
Net income	$ 504	$ 215	$ 182
Basic earnings per share attributable to common stockholders	$ 3.38	$ 1.28	$ 1.03
Diluted earnings per share attributable to common stockholders	3.36	1.27	1.03
Dividends declared per common share	$ 0.60	$ 0.60	$ 0.60
Other comprehensive income (loss), net of tax:
Foreign currency translation	$ 15	$ (6)	$ (11)
Pension and OPEB liability adjustment	26	3	(3)
Available-for-sale securities	7	(1)	(5)
Total other comprehensive income (loss), net of tax	48	(4)	(19)
Comprehensive income	$ 552	$ 211	$ 163

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 504	$ 215	$ 182
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets	90	92	97
Depreciation of property, plant and equipment	80	84	88
Deferred income taxes	(50)	114	96
Loss associated with impairment of long-lived assets	32		1
Unrealized (gain) loss on derivatives	(29)	(1)	15
Impairment loss on investments in technology-related initiatives	16	1
Stock-based compensation	12	9	10
Amortization of deferred financing costs	6	7	8
Expenses related to long-term debt refinancing		11	26
Excess tax benefit from stock-based compensation	(18)	(6)	(8)
Trade name impairment			80
Other		1	1
Changes in assets and liabilities:
Accounts receivable	(19)	(3)	9
Inventories	(25)	15	(2)
Accounts payable	30	2	(25)
Other assets and liabilities	11	50	2
Net cash provided by operating activities	658	591	580
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of long-lived assets	(91)	(71)	(58)
Investments in technology-related initiatives	(3)	(1)	(2)
Net cash used for investing activities	(94)	(72)	(60)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of common stock	(885)	(256)	(306)
Borrowings on revolving credit facility	415
Repayments on revolving credit facility	(415)
Issuance of long-term debt	400	1,000	470
Dividend payments	(89)	(100)	(106)
Proceeds from exercise of stock options	19	24	23
Payments on long-term debt	(12)	(1,215)	(117)
Debt financing fees	(6)	(21)	(9)
Taxes paid related to net share settlement of equity awards	(1)	(2)	(2)
Excess tax benefit from stock-based compensation		6	8
Repurchases and redemption of long-term debt			(490)
Net cash used for financing activities	(574)	(564)	(529)
Effect of exchange rate changes on cash	4	(2)	(2)
Net decrease in cash and cash equivalents	(6)	(47)	(11)
Cash and cash equivalents at beginning of period	205	252	263
Cash and cash equivalents at end of period	199	205	252
Supplemental disclosures:
Interest paid	124	78	97
Income taxes paid	$ 96	$ 13	$ 5

Consolidated Statements of Stockholders' Equity - USD ($) $ in Millions	Total	Common Stock	Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss, net of tax
Balance at Dec. 31, 2014	$ 1,398	$ 2	$ 1,651	$ (215)	$ (40)
Stock-based compensation	10		10
Pension and OPEB liability adjustment	(3)				(3)
Foreign currency translation adjustment	(11)				(11)
Available-for-sale securities	(5)				(5)
Issuance of common stock	21		21
Repurchase of common stock	(306)			(306)
Dividends on common stock	(106)			(106)
Excess tax benefit from stock-based compensation	8		8
Net income	182			182
Balance at Dec. 31, 2015	1,188	2	1,690	(445)	(59)
Stock-based compensation	9		9
Pension and OPEB liability adjustment	3				3
Foreign currency translation adjustment	(6)				(6)
Available-for-sale securities	(1)				(1)
Issuance of common stock	23		23
Repurchase of common stock	(256)			(256)
Dividends on common stock	(100)			(100)
Excess tax benefit from stock-based compensation	6		6
Net income	215			215
Balance at Dec. 31, 2016	1,081	2	1,728	(586)	(63)
Stock-based compensation	12		12
Pension and OPEB liability adjustment	26				26
Foreign currency translation adjustment	15				15
Available-for-sale securities	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)

OVERVIEW

12 Months Ended

Dec. 31, 2017

OVERVIEW

NOTE 1.

OVERVIEW

Overview

Allison Transmission Holdings, Inc. and its subsidiaries (“Allison” or the “Company”) design and manufacture commercial and defense fully-automatic transmissions. The business was founded in 1915 and has been headquartered in Indianapolis, Indiana since inception. Allison was an operating unit of General Motors Corporation (“Old GM”) 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 2,700 employees and 13 different transmission product lines. Although approximately 79% of revenues were generated in North America in 2017, 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 1,400 independent distributor and dealer locations worldwide.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2017

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. The presentation of certain prior year disclosures has been modified to conform to the current year presentation, as commencing in the first quarter of 2017, the Company elected to report financial data in whole millions of dollars, except as otherwise noted.

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, 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 postretirement benefit expense, income taxes and deferred tax valuation allowances, derivative valuation, 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 fully-automatic transmissions.

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, 2017, the Company’s marketable securities are classified as trading.

Trading securities are carried at fair value with the unrealized gain or loss recognized in Other (expense) income, net. The fair value of the Company’s investment securities is determined by currently available market prices. See NOTE 6 “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 tools		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 in the fourth quarter of 2017, the Company reviewed certain of its long-lived assets related to the production of the TC10 product, resulting in a $32 million impairment loss recorded for the year ended December 31, 2017. Continued weak demand conditions for the TC10 product contributed to the future cash flows of the related assets being less than the carrying value of those assets.

There were no impairment charges for the year ended December 31, 2016.

The Company recorded a $1 million impairment loss during 2015 on certain of its long-lived assets related to the production of the H3000 and H4000 electric hybrid-propulsion systems. Deteriorating market conditions for hybrid-propulsion vehicles, principally as a result of decreased fuel costs, alternative fuels and other technologies, significantly contributed to the future cash flows of the related assets being less than the carrying value of those 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 2017 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, our 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 2017 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 5 “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 Company’s trade name, are not amortized but are tested annually for impairment. The Company has elected to perform our annual trade name 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, our 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 2017 trade name impairment test, as of October 31, 2017, indicated that the fair value of the trade name more likely than not exceeded its carrying value, indicating no impairment. Refer to NOTE 5 “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. They 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. NOTE 5 “Goodwill and Other Intangible Assets” provides 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 $6 million, $7 million and $8 million for the years ended December 31, 2017, 2016 and 2015, 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 and foreign currency and commodity forward contracts are carried at fair value on the Consolidated Balance Sheets. Refer to NOTE 6 “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 7 “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 when title has transferred to the customer, there is evidence of an agreement, the sales price is fixed or determinable, delivery has occurred or services have been rendered, and collectability is reasonably assured. The Company sells extended transmission coverage (“ETC”) for which sales are deferred. ETC sales are recognized ratably over the period of the ETC, 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 estimated at the time of sale based upon the Company’s history and experience and are recorded as a reduction to Net sales. Incentive programs are generally product specific or region specific. Some factors used in estimating the cost of incentives include the number of transmissions that will be affected by the incentive program and rate of acceptance of any incentive program. If the actual number of affected transmissions differs from this estimate, or if a different mix of incentives is actually paid, the impact on Net sales would be recorded in the period that the change was identified. Consideration given to commercial customers recorded as a reduction of Net sales in the Consolidated Statements of Comprehensive Income included $66 million, $58 million, and $47 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Sales under U.S. government production contracts are recorded when the product is accepted, title has transferred to the U.S. government, the sales price is fixed or determinable, delivery has occurred, and any other terms of the contract have been met. 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. As of each of December 31, 2017 and 2016, the Company had $56 million recorded in the price reduction reserve account.

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 $3 million, $3 million and $4 million for the years ended December 31, 2017, 2016 and 2015, 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 fails while in service during the relevant warranty period. The warranty reserve is adjusted in Selling, general and administrative 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 our 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 16 “Commitments and Contingencies”.

Foreign Currency Translation

Most of the 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 15 “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 including interest rate swaps and commodity and foreign currency forward contracts, when appropriate. Despite the fact that the Company either has not elected or does not qualify for hedge accounting treatment on all of its derivative instruments, the contracts are used strictly as an economic hedge and not for speculative purposes. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk. NOTE 8 “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.

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 (“RSU”s), 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.

RSUs 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. Restricted stock awards are recorded at fair market value at the date of grant and the restrictions lapse upon continued performance by the restricted stock holders on the vest date which generally occurs over one, two or three years. Performance awards 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 total stockholder return of the Company relative to the specified peer group. Non-qualified stock options 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.

Restricted stock and 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 restricted stock or RSU holders on the vest date which generally occurs over one, two or three years. Restricted stock and RSU incentive compensation expense recorded was $7 million, $2 million and $2 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Performance awards were granted to certain employees at fair value at the date of grant. The Company records the fair value of each performance award based on a Monte-Carlo pricing model. Performance award incentive compensation expense recorded was $3 million, $1 million and $1 million for the years ended December 31, 2017, 2016 and 2015, 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, $3 million and $4 million for the years ended December 31, 2017, 2016 and 2015, respectively.

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 May 2017, the FASB issued authoritative accounting guidance on accounting for modifications to the terms of employee stock compensation. The guidance clarifies which changes to terms or conditions of share-based payment awards require the entity to apply modification accounting. The guidance was adopted by the Company effective January 1, 2018. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued authoritative accounting guidance on the presentation of net periodic pension costs and net periodic postretirement benefit costs. The guidance clarifies the presentation of component costs within an employer’s financial statements and restricts component costs eligible for capitalization to the service cost component. The guidance was adopted by the Company effective January 1, 2018.

In January 2017, the FASB issued authoritative accounting guidance on evaluation of goodwill for impairment. The guidance modifies the approach to assessing impairment from testing the implied fair value goodwill to testing the fair value of the reporting unit carrying the goodwill, which eliminates Step 2 of the prior evaluation guidance. The intent of this amendment is to reduce the cost and complexity of evaluating goodwill. The guidance was early adopted by the Company effective July 1, 2017. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements.

In October 2016, the FASB issued authoritative accounting guidance on the income tax consequences of intra-company transfers other than inventory. This guidance addresses the timing of the recognition of current and deferred income taxes. Under this guidance, the recognition of current or deferred income taxes will occur at the time of the transfer of the asset. The guidance was adopted by the Company effective January 1, 2018. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued authoritative accounting guidance on the presentation and classification of certain cash receipts and cash payments on the statement of cash flows. The guidance specifically addresses cash flow issues with the objective of reducing the diversity in practice. The guidance was adopted by the Company effective January 1, 2018. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued authoritative accounting guidance on share-based payment awards to employees. The guidance involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance was adopted by the Company effective January 1, 2017. Management recorded an excess tax benefit of $18 million to income tax expense and as a component of operating cash flows for the year ended December 31, 2017, and made the accounting policy election to account for forfeitures in stock-based compensation as they occur.

In January 2016, the FASB issued authoritative accounting guidance on the classification of equity securities with readily determinable fair values into different categories (e.g. trading or available-for-sale) and the requirement for equity securities to be measured at fair value with changes in fair value recognized in net income. The guidance was adopted by the Company effective January 1, 2018. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In July 2015, the FASB issued authoritative accounting guidance to simplify the measurement of inventory. The guidance requires that inventory be measured at the lower of cost and net realizable value. When evidence exists that the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings in the period in which it occurs. Inventory measured using last-in, first-out and the retail inventory method are not impacted by the new guidance. The guidance was adopted by the Company effective January 1, 2017. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued authoritative accounting guidance on a company’s accounting for revenue from contracts with customers, which guidance has subsequently been amended. The guidance applies to all companies that enter into contracts with customers to transfer goods, services or nonfinancial assets. The guidance requires these companies to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, timing, amount and uncertainty of revenue that is recognized. The guidance allows either full or modified retrospective adoption. The guidance was adopted by the Company effective January 1, 2018 using the modified retrospective approach. Management expects that the revenue streams that will be impacted by the guidance, although immaterially, relate to non-standard transmission coverages. Certain contracts have also been reviewed individually for the potential impact. No significant changes or additions to the Company’s internal controls over financial reporting are expected as a result of implementing this guidance. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued authoritative accounting guidance on lease accounting. 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 new guidance also introduces new disclosure requirements for leasing arrangements. The guidance will be effective for the Company in fiscal year 2019, 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.

INVENTORIES

12 Months Ended

Dec. 31, 2017

INVENTORIES

NOTE 3.

INVENTORIES

Inventories consisted of the following components (dollars in millions):


	December 31, 2017		December 31, 2016
Purchased parts and raw materials	$	79	$	57
Work in progress		6		5
Service parts		46		43
Finished goods		23		21

Total inventories	$	154	$	126

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 12, “Other Current Liabilities” for more information.

PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2017

PROPERTY, PLANT AND EQUIPMENT

NOTE 4.

PROPERTY, PLANT AND EQUIPMENT

The cost and accumulated depreciation of property, plant and equipment are as follows (dollars in millions):


	December 31, 2017			December 31, 2016
Land and land improvements	$	24		$	25
Buildings and building improvements		322			303
Machinery and equipment		601			590
Software		136			128
Special tools		169			157
Construction in progress		46			46

Total property, plant and equipment		1,298			1,249
Accumulated depreciation		(850	)		(785	)

Property, plant and equipment, net	$	448		$	464

Depreciation of property, plant and equipment was $80 million, $84 million and $88 million for the years ended December 31, 2017, 2016 and 2015, respectively.

As a result of events and circumstances in the fourth quarter of 2017, the Company reviewed certain machinery and equipment and special tools related to the production of the TC10 product. The Company completed a test for recoverability using the undiscounted cash flows of the TC10 product line. Due to continued weak demand conditions for the TC10 product, the future undiscounted cash flows of the related assets were less than the carrying value of those assets. The Company used a market approach to determine the fair value of the assets, resulting in a $32 million loss for the year ended December 31, 2017. During 2015, the Company recorded an impairment of certain machinery and equipment and special tools associated with the production of the H3000 and H4000 electric hybrid-propulsion systems. See NOTE 2 “Summary of Significant Accounting Policies”, Impairment of Long-Lived Assets for more information.

GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2017

GOODWILL AND OTHER INTANGIBLE ASSETS

NOTE 5.

GOODWILL AND OTHER INTANGIBLE ASSETS

As of December 31, 2017 and 2016, the carrying amount of the Company’s Goodwill was $1,941 million.

The following presents a summary of other intangible assets (dollars in millions):


	December 31, 2017							December 31, 2016
	Intangible assets, gross		Accumulated amortization			Intangible assets, net		Intangible assets, gross		Accumulated amortization			Intangible assets, net
Other intangible assets:
Trade name	$	790	$	—		$	790	$	790	$	—		$	790
Customer relationships – commercial		832		(573	)		259		832		(526	)		306
Proprietary technology		476		(396	)		80		476		(358	)		118
Customer relationships – defense		62		(38	)		24		62		(35	)		27
Non-compete agreement		17		(17	)		—		17		(16	)		1
Patented technology – defense		28		(28	)		—		28		(28	)		—
Tooling rights		5		(5	)		—		5		(5	)		—

Total	$	2,210	$	(1,057	)	$	1,153	$	2,210	$	(968	)	$	1,242

Amortization of intangible assets was $90 million, $92 million and $97 million for the years ended December 31, 2017, 2016 and 2015, respectively.

As of December 31, 2017 and 2016, the net carrying value of the Company’s Goodwill and Other intangible assets, net was $3,094 million and $3,183 million, respectively. The Company’s 2017 annual goodwill impairment test indicated that the fair value of the reporting unit exceeded its carrying value, indicating no impairment.

As of December 31, 2015, the Company recorded a trade name impairment charge of $80 million. The impairment charge was a result of a decline in forecasted net sales for certain of the Company’s end markets. The trade name impairment did not result in any other charges to goodwill, other intangible assets or long-lived assets.

Amortization expense related to other intangible assets for the next five years is expected to be (dollars in millions):


	2018		2019		2020		2021		2022
Amortization expense	$	87	$	86	$	50	$	45	$	43

- 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 OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2017

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 6.

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 reported 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, 2017 and 2016, the Company did not have any Level 3 financial assets or liabilities.

The Company’s assets and liabilities that are measured at fair value include cash equivalents, available-for-sale securities, 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 available-for-sale securities consisted of ordinary shares of Torotrak plc (“Torotrak”) associated with a license and exclusivity agreement with Torotrak. Torotrak’s listed shares were traded on the London Stock Exchange under the symbol “TRK” until trading was suspended in December 2017, at which time the fair value was zero, and the Company realized a loss of $13 million for the year ended December 31, 2017. The Company’s derivative instruments consisted 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, available-for-sale securities, 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 institution for the fair value measurement of interest rate derivatives. The Company corroborates the valuation through the use of third-party valuation services using a standard replacement valuation model. 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 Company did not elect hedge accounting treatment for the interest rate swaps and, as a result, fair value adjustments were charged directly to Interest expense, net in the Consolidated Statements of Comprehensive Income.

The following table summarizes the fair value of the Company’s financial assets and (liabilities) as of December 31 (dollars in millions):


	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)					TOTAL
	2017			2016			2017		2016			2017			2016
Cash equivalents	$	50		$	81		$	—	$	—		$	50		$	81
Rabbi trust assets		8			5			—		—			8			5
Deferred compensation obligation		(8	)		(5	)		—		—			(8	)		(5	)
Available-for-sale securities		—			2			—		—			—			2
Derivative liabilities, net		—			—			—		(29	)		—			(29	)

Total	$	50		$	83		$	—	$	(29	)	$	50		$	54

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

DEBT

12 Months Ended

Dec. 31, 2017

DEBT

NOTE 7.

DEBT

Long-term debt and maturities are as follows (dollars in millions):


	December 31, 2017		December 31, 2016
Long-term debt:
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022	$	1,176	$	1,188
Senior Notes, fixed 5.0%, due 2024		1,000		1,000
Senior Notes, fixed 4.75%, due 2027		400		—

Total long-term debt	$	2,576	$	2,188
Less: current maturities of long-term debt		12		12
deferred financing costs, net (see NOTE 2)		30		29

Total long-term debt, net	$	2,534	$	2,147

Principal payments required on long-term debt during the next five years are as follows:


(dollars in millions)	2018		2019		2020		2021		2022
Payments	$	12	$	12	$	12	$	12	$	1,128

As of December 31, 2017, the Company had $2,576 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”) and ATI’s Senior Secured Credit Facility (“Senior Secured Credit Facility”), which consists of the Senior Secured Credit Facility Term B-3 Loan due 2022 (“Term B-3 Loan”) and the Senior Secured Credit Facility revolving credit facility due 2021 (“Revolving Credit Facility”).

The fair value of the Company’s long-term debt obligations as of December 31, 2017 was $2,622 million. The fair value is based on quoted Level 2 market prices of the Company’s debt as of December 31, 2017. 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.

Senior Secured Credit Facility

In March 2017, ATI entered into an amendment with the term loan lenders under its Senior Secured Credit Facility to lower the applicable margins on the Term B-3 Loan by 0.5%. The amendment also eliminated the minimum LIBOR floor and reduced the minimum floor applicable to the base rate from 1.75% to 1.00% on the Term B-3 Loan. The March 2017 amendment was treated as a modification to the Senior Secured Credit Facility under GAAP, and thus the Company recorded $1 million as new deferred financing fees.

In September 2017, ATI entered into a joinder agreement with the lenders under its Senior Secured Credit Facility to increase the available commitments under the Revolving Credit Facility from $450 million to $550 million. The joinder agreement was treated as a modification to the Revolving Credit Facility under GAAP.

The Senior Secured Credit Facility is collateralized by a lien on substantially all assets of the Company including all of ATI’s capital stock and all of the capital stock or other equity interest held by the Company, ATI and each of the Company’s existing and future U.S. subsidiary guarantors (subject to certain limitations for equity interests of foreign subsidiaries and other exceptions set forth in the terms of the Senior Secured Credit Facility). Interest on the Term B-3 Loan, as of December 31, 2017, is either (a) 2.00% over the LIBOR or (b) 1.00% over the greater of the prime lending rate as quoted by the administrative agent and the federal funds effective rate published by the Federal Reserve Bank of New York plus 0.5%, provided that neither is below 1.00%. As of December 31, 2017, the Company elected to pay the lowest all-in rate of LIBOR plus the applicable margin, or 3.57%, on the Term B-3 Loan. The Senior Secured Credit Facility requires minimum quarterly principal payments on the Term B-3 Loan as well as prepayments from certain net cash proceeds of non-ordinary course asset sales and casualty and condemnation events and from a percentage of excess cash flow, if applicable. The minimum required quarterly principal payment on the Term B-3 Loan through its maturity date of September 2022 is $3 million. As of December 31, 2017, 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 Senior Secured Credit Facility also provides a Revolving Credit Facility, net of an allowance for up to $75 million in outstanding letters of credit commitments. Throughout the year ended December 31, 2017, the Company made periodic withdrawals and payments on the Revolving Credit Facility as part of its debt management plans. The maximum amount outstanding at any time during the year ended December 31, 2017 on the Revolving Credit Facility was $300 million. As of December 31, 2017, the Company had $533 million available under the Revolving Credit Facility, net of $17 million in letters of credit. Revolving credit borrowings bear interest at a variable base rate plus an applicable margin based on the Company’s total leverage ratio. Interest on the Revolving Credit Facility is either (a) 1.75% over the LIBOR or (b) 0.75% over the greater of the prime lending rate in effect on such day and the federal funds effective rate published by the Federal Reserve Bank of New York plus 0.5%, provided that neither is below 1.75%. In addition, there is an annual commitment fee, based on the Company’s total leverage ratio, on the average unused revolving credit borrowings available under the Revolving Credit Facility. Revolving credit borrowings are payable at the option of the Company throughout the term of the Senior Secured Credit Facility with the balance due in September 2021.

The Senior Secured Credit Facility requires the Company to maintain a specified maximum total senior secured leverage ratio of 5.50x when revolving loan commitments remain outstanding on the Revolving Credit Facility at the end of a fiscal quarter. As of December 31, 2017, the Company had no revolving loans outstanding; however the Company would have been in compliance with the maximum total senior secured leverage ratio, achieving a 1.13x ratio. Additionally, within the terms of the Senior Secured Credit Facility, a senior secured leverage ratio at or below 4.00x results in the elimination of excess cash flow payments on the Senior Secured Credit Facility for the applicable year. The Senior Secured Credit Facility also provides certain financial incentives based on our total leverage ratio. A total leverage ratio at or below 4.00x results in a 25 basis point reduction to the applicable margin on the Revolving Credit Facility, and a total leverage ratio at or below 3.50x results in a 12.5 basis point reduction to the Revolving Credit Facility commitment fee and an additional 25 basis point reduction to the applicable margin on the Revolving Credit Facility. These reductions would remain in effect as long as the Company achieves a total leverage ratio at or below the related threshold. As of December 31, 2017, the Company’s total leverage ratio was 2.74x.

In addition, the Senior Secured Credit Facility, 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, declare or pay certain dividends, or repurchase shares of the Company’s common stock. As of December 31, 2017, the Company is in compliance with all covenants under the Senior Secured Credit Facility.

5.0% Senior Notes

In September 2016, ATI completed an offering of $1,000 million of the 5.0% Senior Notes. The 5.0% Senior Notes were offered in a private placement exempt from registration under the Securities Act of 1933, as amended. The proceeds from the offering, together with cash on hand, were used to repay $1,200 million of the Term B-3 Loan plus accrued and unpaid interest and related transaction expenses. As a result of the offering, the Company recorded approximately $13 million as deferred financing fees in the Consolidated Balance Sheets in September 2016.

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. Prior to October 1, 2019, ATI may redeem up to 40% of the 5.0% Senior Notes by paying a price equal to 100% of the principal amount being redeemed plus the applicable “make-whole” premium. At any time on or after October 1, 2019, 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 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 Senior Secured Credit Facility. None of ATI’s domestic subsidiaries currently guarantee its obligations under the 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 31, 2017, the Company was in compliance with all covenants under the indenture governing the 5.0% Senior Notes.

4.75% Senior Notes

In September 2017, ATI completed an offering of $400 million of 4.75% Senior Notes. The 4.75% Senior Notes were offered in a private placement exempt from registration under the Securities Act of 1933, as amended. The proceeds from the offering were used for general corporate purposes and to pay related transaction fees and expenses. As a result of the offering, the Company recorded approximately $5 million as deferred financing fees in the Consolidated Balance Sheets.

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 a “make-whole” 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 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 Senior Secured Credit Facility. None of ATI’s domestic subsidiaries currently guarantee its obligations under the 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, 2017, the Company was in compliance with all covenants under the indenture governing the 4.75% Senior Notes.

DERIVATIVES

12 Months Ended

Dec. 31, 2017

DERIVATIVES

NOTE 8.

DERIVATIVES

The Company is exposed to certain financial risk from volatility in interest rates, foreign exchange rates and commodity prices. The risk is managed through the use of financial derivative instruments including interest rate swaps, foreign currency swaps and commodity swaps, when appropriate. Currently, the Company does not have any derivative instruments. The Company’s derivative instruments outstanding during 2017 were used strictly as an economic hedge and not for speculative purposes. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk.

Interest Rate

The Company is subject to interest rate risk related to the Senior Secured Credit Facility and entered into interest rate swap contracts that were based on the LIBOR to manage a portion of this exposure. The Company did not elect hedge accounting treatment for these derivatives, and as a result, fair value adjustments were charged directly to Interest expense, net in the Consolidated Statements of Comprehensive Income. During December 2017, the Company terminated the interest rate swap contracts.

A summary of the Company’s interest rate derivatives as of December 31, 2017 and 2016 follows (dollars in millions):


	December 31, 2017				December 31, 2016
	Notional Amount		Fair Value		Notional Amount		Fair Value
3.44% Interest Rate Swap L, Aug 2016 – Aug 2019*	$	—		—	$	75		(4	)
3.43% Interest Rate Swap M, Aug 2016 – Aug 2019*		—		—		100		(5	)
3.37% Interest Rate Swap N, Aug 2016 – Aug 2019*		—		—		75		(3	)
3.19% Interest Rate Swap O, Aug 2016 – Aug 2019*		—		—		75		(3	)
3.08% Interest Rate Swap P, Aug 2016 – Aug 2019*		—		—		75		(3	)
2.99% Interest Rate Swap Q, Aug 2016 – Aug 2019*		—		—		50		(2	)
2.98% Interest Rate Swap R, Aug 2016 – Aug 2019*		—		—		50		(2	)
2.73% Interest Rate Swap S, Aug 2016 – Aug 2019*		—		—		50		(1	)
2.74% Interest Rate Swap T, Aug 2016 – Aug 2019*		—		—		75		(2	)
2.66% Interest Rate Swap U, Aug 2016 – Aug 2019*		—		—		50		(1	)
2.60% Interest Rate Swap V, Aug 2016 – Aug 2019*		—		—		50		(1	)
2.40% Interest Rate Swap W, Aug 2016 – Aug 2019*		—		—		25		(1	)
2.25% Interest Rate Swap X, Aug 2016 – Aug 2019*		—		—		50		(1	)

* includes LIBOR floor of 1.00%	$	—	$	—	$	800	$	(29	)

The following tabular disclosures further describe the Company’s interest rate derivative instruments and their impact on the financial condition of the Company (dollars in millions):


	December 31, 2017				December 31, 2016
	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Derivatives not designated as hedging instruments
Interest rate swaps		Other current liabilities	$	—		Other current liabilities	$	(11	)
		Other non-current liabilities		—		Other non-current liabilities		(18	)

Total derivatives not designated as hedging instruments			$	—			$	(29	)

The following tabular disclosure describes the location and impact on the Company’s results of operations related to gain (loss) on interest rate derivatives (dollars in millions):


	December 31, 2017		December 31, 2016		December 31, 2015
Location of impact on results of operations
Interest income (expense),net	$	16	$	—	$	(14	)

PRODUCT WARRANTY LIABILITIES

12 Months Ended

Dec. 31, 2017

PRODUCT WARRANTY LIABILITIES

NOTE 9.

PRODUCT WARRANTY LIABILITIES

As of December 31, 2017, the current and non-current product warranty liabilities were $22 million and $33 million, respectively. As of December 31, 2016, the current and non-current product warranty liabilities were $25 million and $38 million, respectively. Product warranty liability activities consist of the following (dollars in millions):


	Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Beginning balance	$	63		$	79		$	84
Payments		(30	)		(35	)		(33	)
Increase in liability (warranty issued during period)		18			16			21
Net adjustments to liability		4			3			6
Accretion (for predecessor liabilities)		—			—			1

Ending balance	$	55		$	63		$	79

During 2017, 2016 and 2015, the Company recorded approximately $1 million, $1 million and $9 million, respectively, of adjustments to the product warranty liabilities as a result of specific field action programs. As a result of the uncertainty surrounding the nature and frequency of specific field action programs, these liabilities will change as additional field information becomes available.

The remaining adjustments to the total liability in 2017, 2016 and 2015, excluding the Dual Power Inverter Module (“DPIM”) as discussed below, were the result of general changes in estimates for various products as additional claims data and field information became available.

Dual Power Inverter Module

During June 2007, Old GM recognized the estimated cost of replacing the DPIM used on H 40/50 EP electric hybrid systems. Certain units were falling short of their expected service life and the Company’s predecessor, Allison Transmission, an operating unit of Old GM, decided to cover repair or replacement for an extended period. The Company is responsible for the first $12 million of qualified cost while General Motors Company (“GM”) is responsible for the next $34 million of costs, with any amount over $46 million being shared one-third by the Company and two-thirds by GM for shipments through June 30, 2009. As of December 31, 2017 and 2016, the Company’s remaining DPIM liability was $4 million and $6 million, respectively, and the related receivable owed by GM to the Company was $3 million and $3 million, respectively.

DEFERRED REVENUE

12 Months Ended

Dec. 31, 2017

DEFERRED REVENUE

NOTE 10.

DEFERRED REVENUE

As of December 31, 2017, the current and non-current deferred revenue were $41 million and $75 million, respectively. As of December 31, 2016, the current and non-current deferred revenue were $27 million and $66 million, respectively. Deferred revenue activity consists of the following (dollars in millions):


	Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Beginning balance	$	93		$	79		$	69
Increases		52			37			32
Revenue earned		(29	)		(23	)		(22	)

Ending balance	$	116		$	93		$	79

Deferred revenue recorded in current and non-current liabilities related to ETC as of December 31, 2017 were $30 million and $72 million, respectively. Deferred revenue recorded in current and non-current liabilities related to ETC as of December 31, 2016 were $26 million and $66 million, respectively.

OTHER (EXPENSE) INCOME, NET

12 Months Ended

Dec. 31, 2017

OTHER (EXPENSE) INCOME, NET

NOTE 11.

OTHER (EXPENSE) INCOME, NET

Other (expense) income, net consists of the following (dollars in millions):


	Years ended December 31,
	2017			2016			2015
Technology-related investment expense	$	(16	)	$	(1	)	$	—
Vendor settlements		(5	)		1			3
Other		(1	)		2			(3	)

Total	$	(22	)	$	2		$	—

OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2017

OTHER CURRENT LIABILITIES

NOTE 12.

OTHER CURRENT LIABILITIES

Other current liabilities consist of the following (dollars in millions):


	As of December 31, 2017		As of December 31, 2016
Payroll and related costs	$	73	$	52
Sales allowances		34		24
Accrued interest payable		19		17
Vendor buyback obligation		14		13
Taxes payable		10		10
Defense price reduction reserve		9		9
Non-trade payables		8		4
Derivative liabilities		—		11
Other accruals		16		10

Total	$	183	$	150

EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2017

EMPLOYEE BENEFIT PLANS

NOTE 13.

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 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.

For all hourly employees hired after May 18, 2008, the defined benefit pension plan was replaced with a defined contribution pension plan, and the company-sponsored retiree healthcare was also eliminated for those hired after May 18, 2008. The charge to expense for the hourly defined contribution pension plan was $2 million for each of the years ended December 31, 2017, 2016 and 2015.

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’s salaried defined contribution retirement savings plan requires the Company to match employee contributions up to certain predefined limits based upon eligible base salary. In addition to the matching contribution, the Company is required to make a contribution equal to 1% of eligible base salary for salaried employees with a service date on or after January 1, 1993 to cover certain benefits in retirement that are different from salaried employees with a service date prior to January 1, 1993. In addition, for salaried employees with a service date on or after January 1, 2001, the Company is required to contribute to its defined contribution retirement savings plan an amount equal to 4% of eligible base salary under the program. The charge to expense for the salaried defined contribution retirement savings plan was $6 million for each of the years ended December 31, 2017, 2016 and 2015.

The Company is also responsible for OPEB costs (medical, dental, vision, and life insurance) for hourly employees hired prior to May 19, 2008. 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, 2017 and 2016, 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 $102 million and $144 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 has recorded $2 million in its OPEB liability as of both December 31, 2017 and 2016 with a corresponding adjustment to AOCL, net of tax.

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 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, 2017			Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Net Periodic Benefit Cost:
Service cost	$	12		$	13		$	14		$	2		$	2		$	2
Interest cost		6			6			5			6			7			5
Expected return on assets		(7	)		(7	)		(8	)		—			—			—
Prior service credit		—			—			—			(4	)		(4	)		(3	)

Net Periodic Benefit Cost	$	11		$	12		$	11		$	4		$	5		$	4
Other changes recognized in other comprehensive income:
Prior service cost (credit)	$	1		$	(5	)	$	—		$	(73	)	$	—		$	—
Net loss (gain)		8			8			(4	)		24			(11	)		4
Amortizations		—			—			—			4			4			4

Total recognized – other comprehensive income	$	9		$	3		$	(4	)	$	(45	)	$	(7	)	$	8

The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost.


	Pension Plans									Post-retirement Benefits
	Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Discount rate		4.10	%		4.40	%		3.90	%		4.30	%		4.60	%		4.00	%
Rate of compensation increase (salaried)		3.00	%		3.00	%		3.00	%		N/A			N/A			N/A
Expected return on assets		4.70	%		4.70	%		6.25	%		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,

2017

2016

2017

2016

Discount rate

3.50

4.10

3.60

4.30

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, 2017.

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, 2017 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 the following effects in the year ended December 31, 2017 (dollars in millions):


	1% Increase		1% Decrease
Effect on total of service and interest cost	$	2	$	(1	)
Effect on post-retirement benefit obligation	$	15	$	(12	)

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, 2017, 2016 and 2015 (dollars in millions):


	Pension Plans									Post-retirement Benefits
	Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Benefit Obligations:
Net benefit obligation at beginning of year	$	155		$	140		$	134		$	144		$	147		$	136
Service cost		12			13			14			2			2			2
Interest cost		6			6			5			6			7			5
Plan Amendments		1			(5	)		—			(73	)		—			—
Benefits paid		(7	)		(7	)		(2	)		(2	)		(1	)		(1	)
Actuarial loss (gain)		14			8			(11	)		25			(11	)		5

Net benefit obligation at end of year	$	181		$	155		$	140		$	102		$	144		$	147

Fair Value of Plan Assets:
Fair value of plan assets at beginning of year	$	150		$	140		$	135		$	—		$	—		$	—
Actual return on plan assets		14			6			2			—			—			—
Employer contributions		31			11			5			2			1			1
Benefits paid		(7	)		(7	)		(2	)		(2	)		(1	)		(1	)

Fair value of plan assets at end of year	$	188		$	150		$	140		$	—		$	—		$	—

Net Funded Status	$	7		$	(5	)	$	—		$	(102	)	$	(144	)	$	(147	)

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, 2017 and 2016 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
	2017		2016		2017		2016		2017		2016
Diversified debt securities	$	26	$	12	$	128	$	112	$	154	$	124
Diversified equity securities		20		22		8		—		28		22
Cash equivalents		6		4		—		—		6		4

Total	$	52	$	38	$	136	$	112	$	188	$	150

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 2017, 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, 2017 and 2016, on a pre-tax basis (dollars in millions):


	Pension Plans						Post-retirement Benefits
	As of December 31,
	2017			2016			2017			2016
Amounts Recognized in Balance Sheet:
Noncurrent assets	$	7		$	—		$	—		$	—
Current liabilities		—			—			(3	)		(2	)
Noncurrent liabilities		—			(5	)		(99	)		(142	)

Total asset (liability)	$	7		$	(5	)	$	(102	)	$	(144	)

Accumulated Other Comprehensive Loss:
Prior service credit	$	4		$	5		$	84		$	15
Actuarial (loss) gain		(11	)		(3	)		(10	)		15

Total	$	(7	)	$	2		$	74		$	30

The amounts in AOCL expected to be amortized and recognized as a component of net periodic benefit cost in 2018 are as follows (dollars in millions):


	2018
	Pension Plans			Post-retirement Benefits
Prior service credit	$	1		$	13
Actuarial loss		(1	)		—

Total	$	—		$	13

The accumulated benefit obligation for the Company’s pension plans as of December 31, 2017 and 2016 was $177 million and $151 million, respectively.

As of December 31, 2017 and 2016, the projected benefit obligation, the accumulated benefit obligation, and the fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets and for pension plans with an accumulated benefit obligation in excess of plan assets were as follows (dollars in millions):

Hourly Plan

Salary Plan

As of December 31,

2017

2016

2017

2016

Plans with projected benefit obligation in excess of plan assets:

Projected benefit obligation

N/A

Fair value of plan assets

N/A

Plans with accumulated benefit obligation in excess of plan assets:

Accumulated benefit obligation

N/A

N/A

Fair value of plan assets

N/A

N/A

As of December 31, 2017, the hourly defined benefit pension plan had plan assets greater than the projected benefit obligation and the accumulated benefit obligation. As of December 31, 2017, the salary defined benefit pension plan had plan assets greater than the projected benefit obligation and accumulated benefit obligation.

As of December 31, 2016, the salary defined benefit pension plan had plan assets greater than the 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:
2018 expected contributions	$	—	$	3
Expected Benefit Payments:
2018		9		3
2019		10		3
2020		11		4
2021		12		5
2022		13		5
2023-2027		68		27

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.

In June 2012, the Company established 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 a charge of zero to the Consolidated Statements of Comprehensive Income for each of the years ended December 31, 2017, 2016 and 2015, and the fair value of the rabbi trust plan assets and deferred compensation obligation was $8 million and $5 million as of December 31, 2017 and 2016, respectively.

INCOME TAXES

12 Months Ended

Dec. 31, 2017

INCOME TAXES

NOTE 14.

INCOME TAXES

Income before income taxes included the following (dollars in millions):


	Years ended December 31,
	2017		2016		2015
U.S. income	$	491	$	309	$	261
Foreign income		36		32		28

Total	$	527	$	341	$	289

The provision for income tax expense was estimated as follows (dollars in millions):


	Years ended December 31,
	2017			2016		2015
Estimated current income taxes:
U.S. federal	$	61		$	2	$	3
Foreign		7			8		6
U.S. state and local		5			2		2

Total Current		73			12		11
Deferred income tax (credit) expense, net:
U.S. federal		(44	)		107		90
Foreign		1			—		—
U.S. state and local		(7	)		7		6

Total Deferred		(50	)		114		96

Total income tax expense	$	23		$	126	$	107

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was enacted into law. The Tax Act makes 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. The Tax Act also makes other changes including, but not limited to, the acceleration of depreciation for certain assets placed into service after September 27, 2017 as well as a one-time deemed repatriation tax on undistributed foreign earnings and profits. Beginning in 2018, the Tax Act makes other changes impacting the Company such as additional limitations on executive compensation, the repeal of the domestic manufacturing deduction and qualifications around certain research and development expenditures.

On December 22, 2017, the United States Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. The Company recognized the income tax effects of the Tax Act for the year ended December 31, 2017, the reporting period in which the Tax Act was signed into law, in accordance with SAB 118. As such, the Company’s financial results reflect the income tax effects of the Tax Act and provisional amounts for those specific income tax effects of the Tax Act that could be reasonably estimated.

In accordance with SAB 118, the Company recorded a $157 million deferred tax benefit 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.

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,
	2017			2016			2015
Tax at U.S. statutory income tax rate	$	185		$	120		$	101
Impact related to Tax Act		(155	)		—			—
Tax credits		(21	)		—			—
Foreign rate differential		(5	)		(5	)		(3	)
Non-deductible expenses		7			5			4
Valuation allowance		3			1			(1	)
State tax expense		10			6			5
Adjustment to deferred tax expense		—			—			1
Other adjustments		(1	)		(1	)		—

Total income tax expense	$	23		$	126		$	107

The effective tax rate for the year ended December 31, 2017 was 4%, as compared with 37% in 2017. The lower rate is principally due to $155 million of tax benefit recorded in connection with the Tax Act, largely due to the $157 million decrease in net deferred tax liabilities to reflect the decrease in the corporate income tax rate from 35% to 21%.

Deferred income tax assets and liabilities as of December 31, 2017 and 2016 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 statements of financial position. 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. As such, the Company re-measured its deferred tax assets and liabilities as a direct result of the enactment of the Tax Act. The primary impact of the re-measurement was a reduction in deferred tax assets and liabilities in connection with the reduction of the U.S. corporate income tax rate from 35% to 21%.

As of December 31, 2017, the Company had approximately $62 million of undistributed earnings in foreign subsidiaries which were subject to the one-time repatriation tax on foreign earnings required by the Tax Act. As a result, the Company recorded a charge of $5 million for the one-time repatriation tax, to be paid to the U.S. Government over the next eight years. The Company has not recognized any deferred tax liabilities associated with earnings in foreign subsidiaries, except for its subsidiaries located in China and Hong Kong, as they are intended to be permanently reinvested and used to support foreign operations. The deferred tax liabilities, if recorded, related to unremitted earnings that are indefinitely reinvested are not material. The Company has recorded a deferred tax liability of $2 million for the tax liability associated with the remittance of previously taxed income and unremitted earnings for its subsidiaries located in China and Hong Kong, which in previous periods had been considered indefinitely reinvested.

Temporary differences and carryforwards that gave rise to deferred tax assets and liabilities included the following (dollars in millions):


	As of December 31, 2017			As of December 31, 2016
Deferred tax assets:
Intangibles	$	35		$	64
Deferred revenue		25			35
Other accrued liabilities		18			34
Operating loss carryforwards		12			14
Warranty accrual		11			22
Stock-based compensation		6			8
Sales allowances and rebates		6			7
Inventories		5			6
Technology-related investments		4			9
Capital loss carryforwards		3			—
Environmental remediation		3			5
Unrealized loss on interest rate derivatives		1			11
Post-retirement		—			12
Tax credits		—			8
Other		4			8

Total Deferred tax assets		133			243

Valuation allowances		(9	)		(5	)

Deferred tax liabilities:
Goodwill		(287	)		(409	)
Trade name		(96	)		(122	)
Property, plant and equipment		(7	)		(15	)
Post-retirement		(4	)		—
Other		(3	)		(2	)

Total Deferred tax liabilities		(397	)		(548	)

Net Deferred tax liability	$	(273	)	$	(310	)

The estimated net operating loss carryforwards as of December 31, 2017 relate solely to U.S. state net operating loss carryforwards. Substantially all state operating loss carryforwards will not expire until 2027-2032.

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 $9 million and $5 million as of December 31, 2017 and 2016, respectively.

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, we recognize 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, 2017 and 2016. Management does not anticipate any material changes in the balance within the coming year. The change in the liability for unrecognized tax benefits are as follows (dollars in millions):


December 31, 2015	$	2

Increases in unrecognized tax benefits as a result of current year activity		—

December 31, 2016	$	2

Increases in unrecognized tax benefits as a result of current year activity		—



December 31, 2017	$	2

For the years ended December 31, 2017, 2016 and 2015, 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 within the coming year. There was $2 million as of both December 31, 2017 and 2016 of unrecognized tax benefits that, if recognized, would affect the annual effective tax rate. All of the Company’s 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 LOSS

12 Months Ended

Dec. 31, 2017

ACCUMULATED OTHER COMPREHENSIVE LOSS

NOTE 15.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in components of AOCL consisted of the following (dollars in millions):


	Before Tax			Tax (Expense) Benefit			After Tax
Balance at December 31, 2014	$	5		$	(45	)	$	(40	)

Foreign currency translation		(11	)		—			(11	)
Pension and OPEB liability adjustment		(3	)		—			(3	)
Available-for-sale securities		(8	)		3			(5	)

Net current period other comprehensive loss	$	(22	)	$	3		$	(19	)

Balance at December 31, 2015	$	(17	)	$	(42	)	$	(59	)

Foreign currency translation		(6	)		—			(6	)
Pension and OPEB liability adjustment		4			(2	)		2
Available-for-sale securities		(1	)		1			—

Net current period other comprehensive loss	$	(3	)	$	(1	)	$	(4	)

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 loss	$	60		$	(12	)	$	48

Balance at December 31, 2017	$	40		$	(55	)	$	(15	)

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, 2015
AOCL Components	Amount reclassified from AOCL			Affected line item in the consolidated statements of comprehensive income
Amortization of defined benefit pension items:
Prior service credit	$	3			Cost of sales
		—			Selling, general and administrative
		—			Engineering – research and development
Actuarial gain		—			Cost of sales

Total reclassifications, before tax		3			Income before income taxes
Income tax expense		(1	)		Tax expense

Total reclassifications	$	2			Net of tax


	For the year ended December 31, 2016
AOCL Components	Amount reclassified from AOCL			Affected line item in the consolidated statements of comprehensive income
Amortization of defined benefit pension items:
Prior service credit	$	3			Cost of sales
		—			Selling, general and administrative
		—			Engineering – research and development
Actuarial gain		1			Cost of sales
		—			Selling, general and administrative
		—			Engineering – research and development

Total reclassifications, before tax		4			Income before income taxes
Income tax expense		(2	)		Tax expense

Total reclassifications	$	2			Net of tax


	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 defined benefit pension items:
Prior service credit	$	3			Cost of sales
		1			Selling, general and administrative
		—			Engineering – research and development
Actuarial gain		—			Cost of sales

Total reclassifications, before tax		4			Income before income taxes
Income tax expense		(1	)		Tax expense

Total reclassifications	$	3			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 13 “Employee Benefit Plans” for additional details.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2017

COMMITMENTS AND CONTINGENCIES

NOTE 16.

COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases certain facilities under various operating leases. Rent expense under the non-cancelable operating leases was $5 million for each of the years ended December 31, 2017, 2016 and 2015. Certain leases contain renewal options.

As of December 31, 2017, future payments under non-cancelable operating leases are as follows over each of the next five years and thereafter (dollars in millions):


2018	$	4
2019		2
2020		2
2021		1
2022		1
Thereafter		1

Total	$	11

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. As of December 31, 2017, the Company had a liability recorded in the amount of $13 million.

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

12 Months Ended

Dec. 31, 2017

CONCENTRATION OF RISK

NOTE 17.

CONCENTRATION OF RISK

As of December 31, 2017 and 2016, the Company employed approximately 2,700 employees with 89% of those employees in the U.S. Approximately 59% and 58% of the Company’s U.S. employees were represented by unions and subject to a collective bargaining agreement as of December 31, 2017 and 2016, 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	2017			2016			2015
Daimler AG		20	%		21	%		21	%
Navistar, Inc.		8	%		9	%		10	%
Volvo Group		8	%		8	%		10	%

No other customers accounted for more than 10% of net sales of the Company during the years ended December 31, 2017, 2016 or 2015.

Three customers accounted for greater than 10% of outstanding accounts receivable within the last two years presented.


% of accounts receivable	As of December 31, 2017			As of December 31, 2016
Kirby Corporation¹		15	%		4	%
Volvo Group		11	%		6	%
Daimler AG		7	%		19	%

As of December 31, 2017, Kirby Corporation (“Kirby”) was the parent company of customers United Engines LLC and Stewart & Stevenson LLC. As of December 31, 2016, Kirby was the parent company of United Engines LLC.

No other customers accounted for more than 10% of the outstanding accounts receivable as of December 31, 2017 or December 31, 2016.

No supplier accounted for greater than 10% of materials purchased during the years ended December 31, 2017, 2016 or 2015.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2017

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

NOTE 18.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Senior Notes Held by Executive Officers

In May 2015, the Company redeemed $100,000 and $450,000 of ATI’s 7.125% Senior Notes held by Lawrence E. Dewey, Chairman and Chief Executive Officer, and David S. Graziosi, President and Chief Financial Officer, respectively, at the specified redemption price in the governing indenture equal to 103.563% of the principal amount plus any accrued and unpaid interest.

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 stock repurchase program approved by the Board of Directors in November 2016. The purchase closed on February 8, 2017 and was funded with cash on hand and borrowings under the Revolving Credit Facility. The shares were subsequently retired.

Sales to Customer Indirectly Owned by Director

During 2017, the Company had net sales of less than $30 million to Gillig LLC (“Gillig”) and less than $6 million to General Dynamics Corporation (“GD”). James A. Star, a member of the Company’s Board of Directors, has an indirect material interest in Gillig as a result of trusts for the benefit of his wife and children collectively owning an approximately 5% interest in the entities that directly and indirectly own Gillig LLC. In addition, all of the remaining direct and indirect interests in Gillig LLC are owned by trusts for the benefit of members of Mr. Star’s wife’s immediate and extended family. Mr. Star also has an indirect material interest in GD as a result of trusts for the benefit of his wife, children and members of his wife’s family collectively owning approximately 10% of the outstanding shares of common stock of GD.

COMMON STOCK

12 Months Ended

Dec. 31, 2017

COMMON STOCK

NOTE 19.

COMMON STOCK

On November 14, 2016, the Company’s Board of Directors authorized the Company to repurchase up to $1,000 million of its common stock pursuant to a stock repurchase program (“2016 Repurchase Program”). On November 8, 2017, the Company’s Board of Directors increased the authorization by $500 million bringing the total amount authorized under the 2016 Repurchase Program to $1,500 million. The terms of the 2016 Repurchase Program provide that the Company may repurchase shares of our common stock, from time to time depending on market conditions and corporate needs, in the open market or through privately negotiated transactions in accordance with Rule 10b-18 of the Exchange Act. Unless earlier terminated by our Board of Directors, the 2016 Repurchase Program will expire on December 31, 2019.

During 2017, the Company purchased approximately $885 million of its common stock under the 2016 Repurchase Program. All transactions during 2017 were settled in cash during the same period.

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2017

EARNINGS PER SHARE

NOTE 20.

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. As of December 31, 2017, 2016, and 2015, the Company had 0.2 million, 0.2 million, and 0.7 million outstanding stock options that were not included in 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,
	2017		2016		2015
Net income	$	504	$	215	$	182

Weighted average shares of common stock outstanding		149		168		176
Dilutive effect stock-based awards		1		1		1

Diluted weighted average shares of common stock outstanding		150		169		177

Basic earnings per share attributable to common stockholders	$	3.38	$	1.28	$	1.03

Diluted earnings per share attributable to common stockholders	$	3.36	$	1.27	$	1.03

GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2017

GEOGRAPHIC INFORMATION

NOTE 21.

GEOGRAPHIC INFORMATION

The Company had the following net sales by country (dollars in millions):


	Years ended December 31,
	2017		2016		2015
United States	$	1,614	$	1,277	$	1,460
Canada		125		115		96
Japan		75		70		49
China		62		50		64
Germany		45		53		40
Mexico		39		41		36
United Kingdom		36		28		44
Netherlands		30		27		19
Turkey		28		26		30
Other		208		153		148

Total	$	2,262	$	1,840	$	1,986

The Company had the following net long-lived assets by country (dollars in millions):


	Years ended December 31,
	2017		2016		2015
United States	$	400	$	412	$	419
India		32		36		43
Hungary		12		11		13
Others		4		5		5

Total	$	448	$	464	$	480

QUARTERLY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2017

QUARTERLY FINANCIAL INFORMATION

NOTE 22.

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
*2017*
Net sales	$	499	$	580	$	595	$	588
Gross profit		251		290		302		288
Operating income		149		177		198		128
Income before income taxes		127		146		170		84
Net income		83		95		111		215
Basic earnings per share	$	0.53	$	0.63	$	0.75	$	1.52
Diluted earnings per share	$	0.52	$	0.63	$	0.75	$	1.51

*2016*
Net sales	$	462	$	475	$	434	$	469
Gross profit		215		227		204		218
Operating income		111		127		104		110
Income before income taxes		77		99		71		94
Net income		48		61		45		61
Basic earnings per share	$	0.28	$	0.36	$	0.27	$	0.37
Diluted earnings per share	$	0.28	$	0.36	$	0.27	$	0.36

Schedule I-Parent Company only Balance Sheets

12 Months Ended

Dec. 31, 2017

Schedule I-Parent Company only Balance Sheets

Allison Transmission Holdings, Inc.

Schedule I—Parent Company only Balance Sheets

(dollars in millions)


	December 31, 2017			December 31, 2016
ASSETS
Current Assets:
Cash	$	—		$	—

Total Current Assets		—			—
Investments in and advances to subsidiaries		689			1,081

TOTAL ASSETS	$	689		$	1,081


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	—		$	—

Total Current Liabilities		—			—
Capital stock		1			2
Paid in capital		1,758			1,728
Treasury stock		—			—
Accumulated deficit		(1,055	)		(586	)
Accumulated other comprehensive loss, net of tax		(15	)		(63	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	689		$	1,081

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,
	2017		2016		2015
Net sales	$	—	$	—	$	—
General and administrative fees		—		—		—

Total operating income		—		—		—

Other income:
Equity earnings of consolidated subsidiary		504		215		182

Income before income taxes		504		215		182
Income tax expense		—		—		—

Net income	$	504	$	215	$	182

Comprehensive income	$	552	$	211	$	163

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,
	2017			2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	504		$	215		$	182
Deduct items included in net income not providing cash:
Equity in earnings in consolidated subsidiary		(504	)		(215	)		(182	)

Net cash provided by operating activities		—			—			—

CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in subsidiaries		(19	)		(24	)		(23	)
Dividends		89			100			106

Net cash provided by investing activities		70			76			83

CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions		19			24			23
Dividends		(89	)		(100	)		(106	)

Net cash used in financing activities		(70	)		(76	)		(83	)

Net increase (decrease) during period		—			—			—
Cash and cash equivalents at beginning of period		—			—			—

Cash and cash equivalents at end of period	$	—		$	—		$	—

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

+ References + Details

BASIS OF PRESENTATION	12 Months Ended
BASIS OF PRESENTATION	Dec. 31, 2017
Parent Company
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 7 “Debt” of the Consolidated Financial Statements). The entire amount of our consolidated net assets was subject to restrictions on payment of dividends at the end of December 31, 2017, 2016 and 2015. 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 ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2017

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

Use of Estimates

Use of Estimates

Segment Reporting

Segment Reporting

Cash and Cash Equivalents

Cash and Cash Equivalents

Marketable Securities

Marketable Securities

Inventories

Inventories

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 tools		2 – 10

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

There were no impairment charges for the year ended December 31, 2016.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Deferred Financing Costs

Deferred Financing Costs

Financial Instruments

Financial Instruments

Insurable Liabilities

Insurable Liabilities

Revenue Recognition

Revenue Recognition

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.

Warranty

Warranty

Research and Development

Research and Development

Environmental

Environmental

Foreign Currency Translation

Foreign Currency Translation

Derivative Instruments

Derivative Instruments

Income Taxes

Income Taxes

Stock-Based Compensation

Stock-Based Compensation

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.

Pension and Post-retirement Benefit Plans

Pension and Post-retirement Benefit Plans

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2017

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 tools		2 – 10

INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2017

Components of Inventories

Inventories consisted of the following components (dollars in millions):


	December 31, 2017		December 31, 2016
Purchased parts and raw materials	$	79	$	57
Work in progress		6		5
Service parts		46		43
Finished goods		23		21

Total inventories	$	154	$	126

PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2017

Property Plant and Equipment Cost and Accumulated Depreciation

The cost and accumulated depreciation of property, plant and equipment are as follows (dollars in millions):


	December 31, 2017			December 31, 2016
Land and land improvements	$	24		$	25
Buildings and building improvements		322			303
Machinery and equipment		601			590
Software		136			128
Special tools		169			157
Construction in progress		46			46

Total property, plant and equipment		1,298			1,249
Accumulated depreciation		(850	)		(785	)

Property, plant and equipment, net	$	448		$	464

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Other Intangible Assets

The following presents a summary of other intangible assets (dollars in millions):


	December 31, 2017							December 31, 2016
	Intangible assets, gross		Accumulated amortization			Intangible assets, net		Intangible assets, gross		Accumulated amortization			Intangible assets, net
Other intangible assets:
Trade name	$	790	$	—		$	790	$	790	$	—		$	790
Customer relationships – commercial		832		(573	)		259		832		(526	)		306
Proprietary technology		476		(396	)		80		476		(358	)		118
Customer relationships – defense		62		(38	)		24		62		(35	)		27
Non-compete agreement		17		(17	)		—		17		(16	)		1
Patented technology – defense		28		(28	)		—		28		(28	)		—
Tooling rights		5		(5	)		—		5		(5	)		—

Total	$	2,210	$	(1,057	)	$	1,153	$	2,210	$	(968	)	$	1,242

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):


	2018		2019		2020		2021		2022
Amortization expense	$	87	$	86	$	50	$	45	$	43

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2017

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 (dollars in millions):


	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)					TOTAL
	2017			2016			2017		2016			2017			2016
Cash equivalents	$	50		$	81		$	—	$	—		$	50		$	81
Rabbi trust assets		8			5			—		—			8			5
Deferred compensation obligation		(8	)		(5	)		—		—			(8	)		(5	)
Available-for-sale securities		—			2			—		—			—			2
Derivative liabilities, net		—			—			—		(29	)		—			(29	)

Total	$	50		$	83		$	—	$	(29	)	$	50		$	54

DEBT (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Long-Term Debt and Maturities

Long-term debt and maturities are as follows (dollars in millions):


	December 31, 2017		December 31, 2016
Long-term debt:
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022	$	1,176	$	1,188
Senior Notes, fixed 5.0%, due 2024		1,000		1,000
Senior Notes, fixed 4.75%, due 2027		400		—

Total long-term debt	$	2,576	$	2,188
Less: current maturities of long-term debt		12		12
deferred financing costs, net (see NOTE 2)		30		29

Total long-term debt, net	$	2,534	$	2,147

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)	2018		2019		2020		2021		2022
Payments	$	12	$	12	$	12	$	12	$	1,128

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21475-112644

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 470
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=75038535&loc=d3e64711-112823

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21538-112644

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 6
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21506-112644

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28541-108399

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 835
-SubTopic 30
-Section 45
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21521-112644

+ Details

DERIVATIVES (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Company's Interest Rate Derivatives

A summary of the Company’s interest rate derivatives as of December 31, 2017 and 2016 follows (dollars in millions):


	December 31, 2017				December 31, 2016
	Notional Amount		Fair Value		Notional Amount		Fair Value
3.44% Interest Rate Swap L, Aug 2016 – Aug 2019*	$	—		—	$	75		(4	)
3.43% Interest Rate Swap M, Aug 2016 – Aug 2019*		—		—		100		(5	)
3.37% Interest Rate Swap N, Aug 2016 – Aug 2019*		—		—		75		(3	)
3.19% Interest Rate Swap O, Aug 2016 – Aug 2019*		—		—		75		(3	)
3.08% Interest Rate Swap P, Aug 2016 – Aug 2019*		—		—		75		(3	)
2.99% Interest Rate Swap Q, Aug 2016 – Aug 2019*		—		—		50		(2	)
2.98% Interest Rate Swap R, Aug 2016 – Aug 2019*		—		—		50		(2	)
2.73% Interest Rate Swap S, Aug 2016 – Aug 2019*		—		—		50		(1	)
2.74% Interest Rate Swap T, Aug 2016 – Aug 2019*		—		—		75		(2	)
2.66% Interest Rate Swap U, Aug 2016 – Aug 2019*		—		—		50		(1	)
2.60% Interest Rate Swap V, Aug 2016 – Aug 2019*		—		—		50		(1	)
2.40% Interest Rate Swap W, Aug 2016 – Aug 2019*		—		—		25		(1	)
2.25% Interest Rate Swap X, Aug 2016 – Aug 2019*		—		—		50		(1	)

* includes LIBOR floor of 1.00%	$	—	$	—	$	800	$	(29	)

Derivative Instruments and their Impact on the Financial Condition

The following tabular disclosures further describe the Company’s interest rate derivative instruments and their impact on the financial condition of the Company (dollars in millions):


	December 31, 2017				December 31, 2016
	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
Derivatives not designated as hedging instruments
Interest rate swaps		Other current liabilities	$	—		Other current liabilities	$	(11	)
		Other non-current liabilities		—		Other non-current liabilities		(18	)

Total derivatives not designated as hedging instruments			$	—			$	(29	)

Summary of Gain (Loss) on Interest Rate Derivatives

The following tabular disclosure describes the location and impact on the Company’s results of operations related to gain (loss) on interest rate derivatives (dollars in millions):


	December 31, 2017		December 31, 2016		December 31, 2015
Location of impact on results of operations
Interest income (expense),net	$	16	$	—	$	(14	)

PRODUCT WARRANTY LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2017

Product Warranty Liability Activities

Product warranty liability activities consist of the following (dollars in millions):


	Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Beginning balance	$	63		$	79		$	84
Payments		(30	)		(35	)		(33	)
Increase in liability (warranty issued during period)		18			16			21
Net adjustments to liability		4			3			6
Accretion (for predecessor liabilities)		—			—			1

Ending balance	$	55		$	63		$	79

DEFERRED REVENUE (Tables)

12 Months Ended

Dec. 31, 2017

Deferred Revenue for Extended Transmission Coverage Activity

Deferred revenue activity consists of the following (dollars in millions):


	Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Beginning balance	$	93		$	79		$	69
Increases		52			37			32
Revenue earned		(29	)		(23	)		(22	)

Ending balance	$	116		$	93		$	79

OTHER (EXPENSE) INCOME, NET (Tables)

12 Months Ended

Dec. 31, 2017

Computation of Other (Expense) Income, Net

Other (expense) income, net consists of the following (dollars in millions):


	Years ended December 31,
	2017			2016			2015
Technology-related investment expense	$	(16	)	$	(1	)	$	—
Vendor settlements		(5	)		1			3
Other		(1	)		2			(3	)

Total	$	(22	)	$	2		$	—

OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Other Current Liabilities

Other current liabilities consist of the following (dollars in millions):


	As of December 31, 2017		As of December 31, 2016
Payroll and related costs	$	73	$	52
Sales allowances		34		24
Accrued interest payable		19		17
Vendor buyback obligation		14		13
Taxes payable		10		10
Defense price reduction reserve		9		9
Non-trade payables		8		4
Derivative liabilities		—		11
Other accruals		16		10

Total	$	183	$	150

EMPLOYEE BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2017

Net Periodic Benefit Costs

Information about the net periodic benefit cost 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, 2017			Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Net Periodic Benefit Cost:
Service cost	$	12		$	13		$	14		$	2		$	2		$	2
Interest cost		6			6			5			6			7			5
Expected return on assets		(7	)		(7	)		(8	)		—			—			—
Prior service credit		—			—			—			(4	)		(4	)		(3	)

Net Periodic Benefit Cost	$	11		$	12		$	11		$	4		$	5		$	4
Other changes recognized in other comprehensive income:
Prior service cost (credit)	$	1		$	(5	)	$	—		$	(73	)	$	—		$	—
Net loss (gain)		8			8			(4	)		24			(11	)		4
Amortizations		—			—			—			4			4			4

Total recognized – other comprehensive income	$	9		$	3		$	(4	)	$	(45	)	$	(7	)	$	8

Health Care Costs Trends


	1% Increase		1% Decrease
Effect on total of service and interest cost	$	2	$	(1	)
Effect on post-retirement benefit obligation	$	15	$	(12	)

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, 2017, 2016 and 2015 (dollars in millions):


	Pension Plans									Post-retirement Benefits
	Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Benefit Obligations:
Net benefit obligation at beginning of year	$	155		$	140		$	134		$	144		$	147		$	136
Service cost		12			13			14			2			2			2
Interest cost		6			6			5			6			7			5
Plan Amendments		1			(5	)		—			(73	)		—			—
Benefits paid		(7	)		(7	)		(2	)		(2	)		(1	)		(1	)
Actuarial loss (gain)		14			8			(11	)		25			(11	)		5

Net benefit obligation at end of year	$	181		$	155		$	140		$	102		$	144		$	147

Fair Value of Plan Assets:
Fair value of plan assets at beginning of year	$	150		$	140		$	135		$	—		$	—		$	—
Actual return on plan assets		14			6			2			—			—			—
Employer contributions		31			11			5			2			1			1
Benefits paid		(7	)		(7	)		(2	)		(2	)		(1	)		(1	)

Fair value of plan assets at end of year	$	188		$	150		$	140		$	—		$	—		$	—

Net Funded Status	$	7		$	(5	)	$	—		$	(102	)	$	(144	)	$	(147	)

Fair Value of Plan Assets

The fair values of plan assets for the Company’s pension plans as of December 31, 2017 and 2016 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
	2017		2016		2017		2016		2017		2016
Diversified debt securities	$	26	$	12	$	128	$	112	$	154	$	124
Diversified equity securities		20		22		8		—		28		22
Cash equivalents		6		4		—		—		6		4

Total	$	52	$	38	$	136	$	112	$	188	$	150

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, 2017 and 2016, on a pre-tax basis (dollars in millions):


	Pension Plans						Post-retirement Benefits
	As of December 31,
	2017			2016			2017			2016
Amounts Recognized in Balance Sheet:
Noncurrent assets	$	7		$	—		$	—		$	—
Current liabilities		—			—			(3	)		(2	)
Noncurrent liabilities		—			(5	)		(99	)		(142	)

Total asset (liability)	$	7		$	(5	)	$	(102	)	$	(144	)

Accumulated Other Comprehensive Loss:
Prior service credit	$	4		$	5		$	84		$	15
Actuarial (loss) gain		(11	)		(3	)		(10	)		15

Total	$	(7	)	$	2		$	74		$	30

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 2018 are as follows (dollars in millions):


	2018
	Pension Plans			Post-retirement Benefits
Prior service credit	$	1		$	13
Actuarial loss		(1	)		—

Total	$	—		$	13

Projected and Accumulated Benefit Obligation and Fair Value of Plan Assets for Pension Plans with Projected Benefit Obligation in Excess of Plan Assets

Hourly Plan

Salary Plan

As of December 31,

2017

2016

2017

2016

Plans with projected benefit obligation in excess of plan assets:

Projected benefit obligation

N/A

Fair value of plan assets

N/A

Plans with accumulated benefit obligation in excess of plan assets:

Accumulated benefit obligation

N/A

N/A

Fair value of plan assets

N/A

N/A

As of December 31, 2016, the salary defined benefit pension plan had plan assets greater than the accumulated benefit obligation.

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:
2018 expected contributions	$	—	$	3
Expected Benefit Payments:
2018		9		3
2019		10		3
2020		11		4
2021		12		5
2022		13		5
2023-2027		68		27

Benefit Obligation

Weighted-Average Actuarial Assumptions

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,

2017

2016

2017

2016

Discount rate

3.50

4.10

3.60

4.30

Rate of compensation increase (salaried)

3.00

3.00

N/A

N/A

Benefit Cost

Weighted-Average Actuarial Assumptions

The table below provides the weighted-average actuarial assumptions used to determine the net periodic benefit cost.


	Pension Plans									Post-retirement Benefits
	Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2015
Discount rate		4.10	%		4.40	%		3.90	%		4.30	%		4.60	%		4.00	%
Rate of compensation increase (salaried)		3.00	%		3.00	%		3.00	%		N/A			N/A			N/A
Expected return on assets		4.70	%		4.70	%		6.25	%		N/A			N/A			N/A

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

Income Loss Before Income Taxes

Income before income taxes included the following (dollars in millions):


	Years ended December 31,
	2017		2016		2015
U.S. income	$	491	$	309	$	261
Foreign income		36		32		28

Total	$	527	$	341	$	289

Provision for Income Tax Expense

The provision for income tax expense was estimated as follows (dollars in millions):


	Years ended December 31,
	2017			2016		2015
Estimated current income taxes:
U.S. federal	$	61		$	2	$	3
Foreign		7			8		6
U.S. state and local		5			2		2

Total Current		73			12		11
Deferred income tax (credit) expense, net:
U.S. federal		(44	)		107		90
Foreign		1			—		—
U.S. state and local		(7	)		7		6

Total Deferred		(50	)		114		96

Total income tax expense	$	23		$	126	$	107

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,
	2017			2016			2015
Tax at U.S. statutory income tax rate	$	185		$	120		$	101
Impact related to Tax Act		(155	)		—			—
Tax credits		(21	)		—			—
Foreign rate differential		(5	)		(5	)		(3	)
Non-deductible expenses		7			5			4
Valuation allowance		3			1			(1	)
State tax expense		10			6			5
Adjustment to deferred tax expense		—			—			1
Other adjustments		(1	)		(1	)		—

Total income tax expense	$	23		$	126		$	107

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, 2017			As of December 31, 2016
Deferred tax assets:
Intangibles	$	35		$	64
Deferred revenue		25			35
Other accrued liabilities		18			34
Operating loss carryforwards		12			14
Warranty accrual		11			22
Stock-based compensation		6			8
Sales allowances and rebates		6			7
Inventories		5			6
Technology-related investments		4			9
Capital loss carryforwards		3			—
Environmental remediation		3			5
Unrealized loss on interest rate derivatives		1			11
Post-retirement		—			12
Tax credits		—			8
Other		4			8

Total Deferred tax assets		133			243

Valuation allowances		(9	)		(5	)

Deferred tax liabilities:
Goodwill		(287	)		(409	)
Trade name		(96	)		(122	)
Property, plant and equipment		(7	)		(15	)
Post-retirement		(4	)		—
Other		(3	)		(2	)

Total Deferred tax liabilities		(397	)		(548	)

Net Deferred tax liability	$	(273	)	$	(310	)

Liability for Unrecognized Tax Benefit

The change in the liability for unrecognized tax benefits are as follows (dollars in millions):


December 31, 2015	$	2

Increases in unrecognized tax benefits as a result of current year activity		—

December 31, 2016	$	2

Increases in unrecognized tax benefits as a result of current year activity		—



December 31, 2017	$	2

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

12 Months Ended

Dec. 31, 2017

Changes in Components of AOCL

The changes in components of AOCL consisted of the following (dollars in millions):


	Before Tax			Tax (Expense) Benefit			After Tax
Balance at December 31, 2014	$	5		$	(45	)	$	(40	)

Foreign currency translation		(11	)		—			(11	)
Pension and OPEB liability adjustment		(3	)		—			(3	)
Available-for-sale securities		(8	)		3			(5	)

Net current period other comprehensive loss	$	(22	)	$	3		$	(19	)

Balance at December 31, 2015	$	(17	)	$	(42	)	$	(59	)

Foreign currency translation		(6	)		—			(6	)
Pension and OPEB liability adjustment		4			(2	)		2
Available-for-sale securities		(1	)		1			—

Net current period other comprehensive loss	$	(3	)	$	(1	)	$	(4	)

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 loss	$	60		$	(12	)	$	48

Balance at December 31, 2017	$	40		$	(55	)	$	(15	)

Consolidated Statements of Comprehensive Income Affected by Reclassifications from by AOCL

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, 2015
AOCL Components	Amount reclassified from AOCL			Affected line item in the consolidated statements of comprehensive income
Amortization of defined benefit pension items:
Prior service credit	$	3			Cost of sales
		—			Selling, general and administrative
		—			Engineering – research and development
Actuarial gain		—			Cost of sales

Total reclassifications, before tax		3			Income before income taxes
Income tax expense		(1	)		Tax expense

Total reclassifications	$	2			Net of tax


	For the year ended December 31, 2016
AOCL Components	Amount reclassified from AOCL			Affected line item in the consolidated statements of comprehensive income
Amortization of defined benefit pension items:
Prior service credit	$	3			Cost of sales
		—			Selling, general and administrative
		—			Engineering – research and development
Actuarial gain		1			Cost of sales
		—			Selling, general and administrative
		—			Engineering – research and development

Total reclassifications, before tax		4			Income before income taxes
Income tax expense		(2	)		Tax expense

Total reclassifications	$	2			Net of tax


	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 defined benefit pension items:
Prior service credit	$	3			Cost of sales
		1			Selling, general and administrative
		—			Engineering – research and development
Actuarial gain		—			Cost of sales

Total reclassifications, before tax		4			Income before income taxes
Income tax expense		(1	)		Tax expense

Total reclassifications	$	3			Net of tax

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2017

Future Payments under Non-Cancelable Operating Leases

As of December 31, 2017, future payments under non-cancelable operating leases are as follows over each of the next five years and thereafter (dollars in millions):


2018	$	4
2019		2
2020		2
2021		1
2022		1
Thereafter		1

Total	$	11

CONCENTRATION OF RISK (Tables)

12 Months Ended

Dec. 31, 2017

Schedules of Concentration of Risk by Risk Factor

Three customers accounted for greater than 10% of net sales within the last three years presented.


	Years ended December 31,
% of net sales	2017			2016			2015
Daimler AG		20	%		21	%		21	%
Navistar, Inc.		8	%		9	%		10	%
Volvo Group		8	%		8	%		10	%

No other customers accounted for more than 10% of net sales of the Company during the years ended December 31, 2017, 2016 or 2015.

Three customers accounted for greater than 10% of outstanding accounts receivable within the last two years presented.


% of accounts receivable	As of December 31, 2017			As of December 31, 2016
Kirby Corporation¹		15	%		4	%
Volvo Group		11	%		6	%
Daimler AG		7	%		19	%

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2017

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,
	2017		2016		2015
Net income	$	504	$	215	$	182

Weighted average shares of common stock outstanding		149		168		176
Dilutive effect stock-based awards		1		1		1

Diluted weighted average shares of common stock outstanding		150		169		177

Basic earnings per share attributable to common stockholders	$	3.38	$	1.28	$	1.03

Diluted earnings per share attributable to common stockholders	$	3.36	$	1.27	$	1.03

GEOGRAPHIC INFORMATION (Tables)

12 Months Ended

Dec. 31, 2017

Net Sales by Country

The Company had the following net sales by country (dollars in millions):


	Years ended December 31,
	2017		2016		2015
United States	$	1,614	$	1,277	$	1,460
Canada		125		115		96
Japan		75		70		49
China		62		50		64
Germany		45		53		40
Mexico		39		41		36
United Kingdom		36		28		44
Netherlands		30		27		19
Turkey		28		26		30
Other		208		153		148

Total	$	2,262	$	1,840	$	1,986

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,
	2017		2016		2015
United States	$	400	$	412	$	419
India		32		36		43
Hungary		12		11		13
Others		4		5		5

Total	$	448	$	464	$	480

QUARTERLY FINANCIAL INFORMATION (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Data


	Quarters ended,
	March 31		June 30		September 30		December 31
*2017*
Net sales	$	499	$	580	$	595	$	588
Gross profit		251		290		302		288
Operating income		149		177		198		128
Income before income taxes		127		146		170		84
Net income		83		95		111		215
Basic earnings per share	$	0.53	$	0.63	$	0.75	$	1.52
Diluted earnings per share	$	0.52	$	0.63	$	0.75	$	1.51

*2016*
Net sales	$	462	$	475	$	434	$	469
Gross profit		215		227		204		218
Operating income		111		127		104		110
Income before income taxes		77		99		71		94
Net income		48		61		45		61
Basic earnings per share	$	0.28	$	0.36	$	0.27	$	0.37
Diluted earnings per share	$	0.28	$	0.36	$	0.27	$	0.36

Overview - Additional Information (Detail)	12 Months Ended
Overview - Additional Information (Detail)	Dec. 31, 2017 Employee Customer Product	Dec. 31, 2016 Employee
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Transmission product lines \| Product	13
Worldwide independent distributor and dealer locations \| Customer	1,400
Number of employees \| Employee	2,700	2,700
Sales Revenue, Net \| North America \| Geographic Concentration Risk
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Concentration of risk, percentage	79.00%

Summary of Significant Accounting Policies - Additional Information (Detail) shares in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($) Segment	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Mar. 31, 2015 shares
Summary Of Significant Accounting Policies [Line Items]
Number of operating segment \| Segment	1
Number of reportable segment \| Segment	1
Loss associated with impairment of long-lived assets	$ 32		$ 1
Asset impairment charge		$ 0
Amortization of deferred financing costs	6	7	8
Sales incentives	66	58	47
Military price reduction reserve	56	56
Engineering services revenue	3	3	4
Aggregate number of shares of common stock available for issuance under the 2015 Plan \| shares				15.3
Incentive compensation expense	2	3	4
Excess tax benefit from stock-based compensation	18	6	8
Restricted Stock And Restricted Stock Unit
Summary Of Significant Accounting Policies [Line Items]
Incentive compensation expense	7	2	2
Performance Awards
Summary Of Significant Accounting Policies [Line Items]
Incentive compensation expense	$ 3	$ 1	$ 1
Vesting Schedule One \| Restricted Stock And Restricted Stock Unit
Summary Of Significant Accounting Policies [Line Items]
Option vesting period	1 year
Vesting Schedule One \| Restricted Stock Units (RSUs)
Summary Of Significant Accounting Policies [Line Items]
Option vesting period	1 year
Vesting Schedule One \| Restricted Stock
Summary Of Significant Accounting Policies [Line Items]
Option vesting period	1 year
Vesting Schedule Two \| Restricted Stock And Restricted Stock Unit
Summary Of Significant Accounting Policies [Line Items]
Option vesting period	2 years
Vesting Schedule Two \| Restricted Stock Units (RSUs)
Summary Of Significant Accounting Policies [Line Items]
Option vesting period	2 years
Vesting Schedule Two \| Restricted Stock
Summary Of Significant Accounting Policies [Line Items]
Option vesting period	2 years
Vesting Schedule Three \| Restricted Stock And Restricted Stock Unit
Summary Of Significant Accounting Policies [Line Items]
Option vesting period	3 years
Vesting Schedule Three \| Restricted Stock Units (RSUs)
Summary Of Significant Accounting Policies [Line Items]
Option vesting period	3 years
Vesting Schedule Three \| Restricted Stock
Summary Of Significant Accounting Policies [Line Items]
Option vesting period	3 years
Minimum
Summary Of Significant Accounting Policies [Line Items]
Extended Transmission Coverage sales, recognition period	2 years
Maximum
Summary Of Significant Accounting Policies [Line Items]
Extended Transmission Coverage sales, recognition period	5 years

Property Plant and Equipment Estimated Lives (Detail)	12 Months Ended
Property Plant and Equipment Estimated Lives (Detail)	Dec. 31, 2017
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
Building and Building Improvements \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	10 years
Building 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 tools \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	2 years
Special tools \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	10 years

Components of Inventories (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Inventory [Line Items]
Purchased parts and raw materials	$ 79	$ 57
Work in progress	6	5
Service parts	46	43
Finished goods	23	21
Total inventories	$ 154	$ 126

Property Plant and Equipment Cost and Accumulated Depreciation (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Construction in progress	$ 46	$ 46
Property and equipment, gross	1,298	1,249
Accumulated depreciation	(850)	(785)
Property, plant and equipment, net	448	464	$ 480
Land Improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	24	25
Building and Building Improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	322	303
Machinery and Equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	601	590
Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	136	128
Special tools
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 169	$ 157

Property Plant and Equipment - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Depreciation of property, plant and equipment	$ 80	$ 84	$ 88
Loss associated with impairment of long-lived assets	$ 32		$ 1

Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Goodwill [Line Items]
Goodwill	$ 1,941	$ 1,941
Amortization of intangible assets	90	92	$ 97
Net carrying value of Goodwill and other intangible assets	$ 3,094	$ 3,183
Trade name impairment			$ 80

Summary of Other Intangible Assets (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Line Items]
Trade name	$ 790	$ 790
Intangible assets, gross	2,210	2,210
Accumulated amortization	(1,057)	(968)
Intangible assets, net	1,153	1,242
Customer relationships - commercial
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	832	832
Accumulated amortization	(573)	(526)
Intangible assets, net	259	306
Proprietary technology
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	476	476
Accumulated amortization	(396)	(358)
Intangible assets, net	80	118
Customer relationships - defense
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	62	62
Accumulated amortization	(38)	(35)
Intangible assets, net	24	27
Non-compete agreement
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	17	17
Accumulated amortization	(17)	(16)
Intangible assets, net		1
Patented technology - defense
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	28	28
Accumulated amortization	(28)	(28)
Tooling rights
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	5	5
Accumulated amortization	$ (5)	$ (5)

Amortization Expense Related to Other Intangible Assets for Next Five Fiscal Years (Detail) $ in Millions	Dec. 31, 2017 USD ($)
Finite-Lived Intangible Assets
2018	$ 87
2019	86
2020	50
2021	45
2022	$ 43

Fair Value of Financial Instruments - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Torotrak shares fair value	$ 0	$ 2,000,000
Loss on sale shares	(13,000,000)
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets	0	0
Financial liabilities	$ 0	$ 0

Summary of Fair Value of Financial Assets and (Liabilities) (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 50	$ 81
Rabbi trust assets	8	5
Deferred compensation obligation	(8)	(5)
Available-for-sale securities	0	2
Derivative liabilities, net		(29)
Total	50	54
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	50	81
Rabbi trust assets	8	5
Deferred compensation obligation	(8)	(5)
Available-for-sale securities		2
Total	$ 50	83
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities, net		(29)
Total		$ (29)

Summary of Long-Term Debt and Maturities (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Debt Instrument [Line Items]
Total long-term debt	$ 2,576		$ 2,188
Less: current maturities of long-term debt	12		12
Less: deferred financing costs, net (see NOTE 2)	30		29
Total long-term debt, net	2,534		2,147
Senior Secured Credit Facility Term B-3 Loan, variable due 2022
Debt Instrument [Line Items]
Total long-term debt	1,176		1,188
5.0% Senior Notes due 2024
Debt Instrument [Line Items]
Total long-term debt	1,000		$ 1,000
Less: deferred financing costs, net (see NOTE 2)				$ 13
4.75% Senior Notes due 2027
Debt Instrument [Line Items]
Total long-term debt	$ 400	$ 400
Less: deferred financing costs, net (see NOTE 2)		$ 5

Summary of Long-Term Debt and Maturities (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Sep. 30, 2017	Sep. 30, 2016
Senior Secured Credit Facility Term B-3 Loan, variable due 2022
Debt Instrument [Line Items]
Debt instrument, due date	2022	2022
5.0% Senior Notes due 2024
Debt Instrument [Line Items]
Debt instrument, stated interest rate	5.00%	5.00%		5.00%
Debt instrument, due date	2024	2024
4.75% Senior Notes due 2027
Debt Instrument [Line Items]
Debt instrument, stated interest rate	4.75%		4.75%
Debt instrument, due date	2027

Principal Payments Required on Long Term Debt (Detail) $ in Millions	Dec. 31, 2017 USD ($)
Long Term Debt [Line Items]
2018	$ 12
2019	12
2020	12
2021	12
2022	$ 1,128

Debt - Additional Information (Detail) - USD ($)	1 Months Ended		12 Months Ended
Debt - Additional Information (Detail) - USD ($)	Mar. 31, 2017	Sep. 30, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Sep. 30, 2017	Aug. 31, 2017
Debt Instrument [Line Items]
Total long-term debt			$ 2,576,000,000	$ 2,188,000,000
Fair value of long-term debt obligations			$ 2,622,000,000
Total leverage ratio			274.00%
Repurchase and redemption of long-term debt					$ 490,000,000
Deferred financing costs, net			$ 30,000,000	29,000,000
Revolving Credit Facility, variable, due 2021
Debt Instrument [Line Items]
Maximum revolving credit facility						$ 550,000,000	$ 450,000,000
Available revolving credit facility			533,000,000
Maximum amount of letters of credit commitments available under the revolving credit facility			75,000,000
Revolving credit facility, maximum amount outstanding			300,000,000
Letters of Credit			$ 17,000,000
Maturity date of revolving credit borrowings			2021-09
Basis point reduction to applicable margin, resulting from total leverage ratio below minimum			0.25%
Basis point reduction to commitment fee, resulting from total leverage ratio below minimum			0.125%
Additional basis point reduction to applicable margin, resulting from total leverage ratio below minimum			0.25%
Revolving Loans Outstanding			$ 0
Revolving Credit Facility, variable, due 2021 \| greater of the prime lending rate or federal funds
Debt Instrument [Line Items]
Applicable margin over base rate			0.50%
Revolving Credit Facility, variable, due 2021 \| greater of the prime lending rate or federal funds \| Minimum
Debt Instrument [Line Items]
Applicable margin over base rate			0.75%
Debt instrument, floor rate			1.75%
Revolving Credit Facility, variable, due 2021 \| LIBOR
Debt Instrument [Line Items]
Applicable margin over base rate			1.75%
Senior Secured Credit Facility
Debt Instrument [Line Items]
Required senior secured leverage ratio			550.00%
Achieved senior secured leverage ratio			113.00%
Senior secured leverage ratio for applicable margin reduction			400.00%
Total leverage ratio for applicable margin reduction			400.00%
Total leverage ratio for commitment fee reduction			350.00%
Senior Secured Credit Facility Term B-3 Loan, variable due 2022
Debt Instrument [Line Items]
Debt instrument maturity month and year			2022-09
Total long-term debt			$ 1,176,000,000	$ 1,188,000,000
Debt financing fees	$ 1,000,000
Debt instrument effective interest rate			3.57%
Principal payments on term loans			$ 3,000,000
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 \| greater of the prime lending rate or federal funds
Debt Instrument [Line Items]
Applicable margin over base rate	0.50%		0.50%
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 \| greater of the prime lending rate or federal funds \| Minimum
Debt Instrument [Line Items]
Applicable margin over base rate	1.00%		1.00%	1.75%
Debt instrument, floor rate			1.00%
Senior Secured Credit Facility Term B-3 Loan, variable due 2022 \| LIBOR
Debt Instrument [Line Items]
Applicable margin over base rate			2.00%
4.75% Senior Notes due 2027
Debt Instrument [Line Items]
Debt instrument maturity month and year			2027-10
Debt instrument, interest rate, stated percentage			4.75%			4.75%
Total long-term debt			$ 400,000,000			$ 400,000,000
Deferred financing costs, net						$ 5,000,000
4.75% Senior Notes due 2027 \| Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Debt instrument redemption redeemable prior date			Oct. 01, 2020
Debt Instrument, redemption price, percentage			104.75%
4.75% Senior Notes due 2027 \| Debt Instrument, Redemption, Period Two
Debt Instrument [Line Items]
Debt instrument redemption redeemable prior date			Oct. 01, 2022
Debt Instrument, redemption price, percentage			100.00%
4.75% Senior Notes due 2027 \| Maximum \| Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Debt Instrument, redemption Price, percentage of principal amount redeemed			40.00%
5.0% Senior Notes due 2024
Debt Instrument [Line Items]
Debt instrument maturity month and year			2024-09
Debt instrument, interest rate, stated percentage		5.00%	5.00%	5.00%
Total long-term debt			$ 1,000,000,000	$ 1,000,000,000
Deferred financing costs, net		$ 13,000,000
Debt instrument redemption redeemable prior date			Oct. 01, 2019
Debt Instrument, redemption price, percentage			100.00%
5.0% Senior Notes due 2024 \| Maximum
Debt Instrument [Line Items]
Debt Instrument, redemption Price, percentage of principal amount redeemed			40.00%
Senior Secured Credit Facility Term B-3 Loan, variable, due 2019
Debt Instrument [Line Items]
Total long-term debt		1,000,000,000
Repurchase and redemption of long-term debt		$ 1,200,000,000

Derivatives - Additional Information (Detail)	Dec. 31, 2017 Derivative
Number of derivative instruments held	0

Summary of Company's Interest Rate Derivatives (Detail) - Derivatives not designated as hedging instruments

Dec. 31, 2016

USD ($)

Derivatives, Fair Value [Line Items]

Fair Value

$ (29,000,000)

Interest Rate Swap L

Derivatives, Fair Value [Line Items]

Notional Amount

75,000,000

^[1]

Fair Value

(4,000,000)

^[1]

Interest Rate Swap M

Derivatives, Fair Value [Line Items]

Notional Amount

100,000,000

^[1]

Fair Value

(5,000,000)

^[1]

Interest Rate Swap N

Derivatives, Fair Value [Line Items]

Notional Amount

75,000,000

^[1]

Fair Value

(3,000,000)

^[1]

Interest Rate Swap O

Derivatives, Fair Value [Line Items]

Notional Amount

75,000,000

^[1]

Fair Value

(3,000,000)

^[1]

Interest Rate Swap P

Derivatives, Fair Value [Line Items]

Notional Amount

75,000,000

^[1]

Fair Value

(3,000,000)

^[1]

Interest Rate Swap Q

Derivatives, Fair Value [Line Items]

Notional Amount

50,000,000

^[1]

Fair Value

(2,000,000)

^[1]

Interest Rate Swap R

Derivatives, Fair Value [Line Items]

Notional Amount

50,000,000

^[1]

Fair Value

(2,000,000)

^[1]

Interest Rate Swap S

Derivatives, Fair Value [Line Items]

Notional Amount

50,000,000

^[1]

Fair Value

(1,000,000)

^[1]

Interest Rate Swap T

Derivatives, Fair Value [Line Items]

Notional Amount

75,000,000

^[1]

Fair Value

(2,000,000)

^[1]

Interest Rate Swap U

Derivatives, Fair Value [Line Items]

Notional Amount

50,000,000

^[1]

Fair Value

(1,000,000)

^[1]

Interest Rate Swap V

Derivatives, Fair Value [Line Items]

Notional Amount

50,000,000

^[1]

Fair Value

(1,000,000)

^[1]

Interest Rate Swap W

Derivatives, Fair Value [Line Items]

Notional Amount

25,000,000

^[1]

Fair Value

(1,000,000)

^[1]

Interest Rate Swap X

Derivatives, Fair Value [Line Items]

Notional Amount

50,000,000

^[1]

Fair Value

(1,000,000)

^[1]

Interest Rate Swaps

Derivatives, Fair Value [Line Items]

Notional Amount

$ 800,000,000

[1]	includes LIBOR floor of 1.00%

Summary of Company's Interest Rate Derivatives (Parenthetical) (Detail) - Derivatives not designated as hedging instruments	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
LIBOR
Derivatives, Fair Value [Line Items]
LIBOR floor	1.00%	1.00%
Interest Rate Swap L
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	3.44%	3.44%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap M
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	3.43%	3.43%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap N
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	3.37%	3.37%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap O
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	3.19%	3.19%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap P
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	3.08%	3.08%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap Q
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	2.99%	2.99%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap R
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	2.98%	2.98%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap S
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	2.73%	2.73%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap T
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	2.74%	2.74%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap U
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	2.66%	2.66%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap V
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	2.60%	2.60%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap W
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	2.40%	2.40%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08
Interest Rate Swap X
Derivatives, Fair Value [Line Items]
Derivative, Fixed Interest Rate	2.25%	2.25%
Derivative, Maturity Date, Range Start	2016-08
Derivative, Maturity Date, Range End	2019-08

Derivative Instruments and their Impact on the Financial Condition (Detail) - Derivatives not designated as hedging instruments $ in Millions	Dec. 31, 2016 USD ($)
Derivative [Line Items]
Total derivatives not designated as hedging instruments	$ (29)
Interest Rate Swaps \| Other current liabilities
Derivative [Line Items]
Derivative Liability, Fair Value	(11)
Interest Rate Swaps \| Other non-current liabilities
Derivative [Line Items]
Derivative Liability, Fair Value	$ (18)

Summary of Gain (Loss) on Interest Rate Derivatives (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2015
Derivatives not designated as hedging instruments \| Interest rate contracts \| Interest income (expense), net
Derivative [Line Items]
Gain (loss) on derivatives	$ 16	$ (14)

Product Warranty Liabilities - Additional Information (Detail) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
	Jun. 30, 2007	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Guarantor Obligations [Line Items]
Product warranty liability, current		$ 22	$ 25
Product warranty liability, non-current		33	38
Adjustments to product warranty liabilities		1	1	$ 9
Warranty liability		55	63	$ 79	$ 84
Dual Power Inverter Module
Guarantor Obligations [Line Items]
Product warranty, qualified cost	$ 12
Product warranty, qualified cost sharing ratio for any amount over $46 million	33.33%
Warranty liability		4	6
Dual Power Inverter Module \| General Motors
Guarantor Obligations [Line Items]
Product warranty, qualified cost	$ 34
Product warranty, qualified cost sharing ratio for any amount over $46 million	66.67%
Other receivable		$ 3	$ 3
Dual Power Inverter Module \| Product Warranty
Guarantor Obligations [Line Items]
Product warranty, qualified cost	$ 46

Product Warranty Liability Activities (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Guarantor Obligations [Line Items]
Beginning balance	$ 63	$ 79	$ 84
Payments	(30)	(35)	(33)
Increase in liability (warranty issued during period)	18	16	21
Net adjustments to liability	4	3	6
Accretion (for predecessor liabilities)			1
Ending balance	$ 55	$ 63	$ 79

Deferred Revenue - Additional Information (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Deferred Revenue Arrangement [Line Items]
Deferred revenue current liabilities	$ 41	$ 27
Deferred revenue non-current liabilities	75	66
Extended Transmission Coverage ("ETC")
Deferred Revenue Arrangement [Line Items]
Deferred revenue current liabilities	30	26
Deferred revenue non-current liabilities	$ 72	$ 66

- Definition

The carrying amount of consideration received or receivable as of the balance sheet date on potential earnings that were not recognized as revenue in conformity with GAAP, and which are expected to be recognized as such within one year or the normal operating cycle, if longer, including sales, license fees, and royalties, but excluding interest income.

+ References + Details

- Definition

The noncurrent portion of deferred revenue amount as of balance sheet date. Deferred revenue is a liability related to a revenue producing activity for which revenue has not yet been recognized, and is not expected to be recognized in the next twelve months. Generally, an entity records deferred revenue when it receives consideration from a customer before achieving certain criteria that must be met for revenue to be recognized in conformity with GAAP.

+ References + Details

Deferred Revenue Activity (Detail) - USD ($) $ in Millions	12 Months Ended
Deferred Revenue Activity (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Deferred Revenue Arrangement [Line Items]
Beginning balance	$ 93	$ 79	$ 69
Increases	52	37	32
Revenue earned	(29)	(23)	(22)
Ending balance	$ 116	$ 93	$ 79

Other (Expense) Income, Net (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Components of Other Income (Expense) [Line Items]
Technology-related investment expense	$ (16)	$ (1)
Vendor settlements	(5)	1	$ 3
Other	(1)	2	$ (3)
Total	$ (22)	$ 2

Summary of Other Current Liabilities (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Other Current Liabilities [Line Items]
Payroll and related costs	$ 73	$ 52
Sales allowances	34	24
Accrued interest payable	19	17
Vendor buyback obligation	14	13
Taxes payable	10	10
Defense price reduction reserve	9	9
Non-trade payables	8	4
Derivative liabilities		11
Other accruals	16	10
Total	$ 183	$ 150

Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
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	$ 2
Accumulated benefit obligation	177	151
Deferred compensation obligation	8	5
Nonqualified Deferred Compensation Plan
Defined Benefit Plan Disclosure [Line Items]
Deferred compensation expense	0	0	$ 0
Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Deferred compensation obligation	8	5
Quoted Prices in Active Markets for Identical Assets (Level 1) \| Nonqualified Deferred Compensation Plan
Defined Benefit Plan Disclosure [Line Items]
Rabbi trust assets	8	5
Deferred compensation obligation	$ 8	5
Hourly Plan
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, service period before normal retirement age	30 years
Defined contribution plan expense	$ 2	2	2
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
Salary Plan
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan expense	$ 6	6	6
Defined contribution plan, employer contribution for employee with severance date on or after January 1, 1993	1.00%
Defined contribution plan, employer matching contribution	4.00%
Post-retirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Net benefit obligation	$ 102	$ 144	$ 147	$ 136

Employee Benefit Plans (Detail) - USD ($) $ in Millions	12 Months Ended
Employee Benefit Plans (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
Total recognized - other comprehensive income	$ (26)	$ (3)	$ 3
Pension Plans
Defined Benefit Plan Disclosure [Line Items]
Service cost	12	13	14
Interest cost	6	6	5
Expected return on assets	(7)	(7)	(8)
Net Periodic Benefit Cost	11	12	11
Prior service cost (credit)	1	(5)
Net loss (gain)	8	8	(4)
Total recognized - other comprehensive income	9	3	(4)
Post-retirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost	2	2	2
Interest cost	6	7	5
Prior service credit	(4)	(4)	(3)
Net Periodic Benefit Cost	4	5	4
Prior service cost (credit)	(73)
Net loss (gain)	24	(11)	4
Amortizations	4	4	4
Total recognized - other comprehensive income	$ (45)	$ (7)	$ 8

Weighted-Average Actuarial Assumptions Used to Determine Net Periodic Benefit Cost (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Pension Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Discount rate	4.10%	4.40%	3.90%
Rate of compensation increase (salaried)	3.00%	3.00%	3.00%
Expected return on assets	4.70%	4.70%	6.25%
Post-retirement Benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Discount rate	4.30%	4.60%	4.00%

Weighted-Average Actuarial Assumptions Used to Determine Benefit Obligations (Detail)	Dec. 31, 2017	Dec. 31, 2016
Pension Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Discount rate	3.50%	4.10%
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	3.60%	4.30%

Health Care Costs Trends (Detail) $ in Millions	12 Months Ended
Health Care Costs Trends (Detail) $ in Millions	Dec. 31, 2017 USD ($)
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Effect of 1% increase on total of service and interest cost	$ 2
Effect of 1% increase on post-retirement benefit obligation	15
Effect of 1% decrease on total of service and interest cost	(1)
Effect of 1% decrease on post-retirement benefit obligation	$ (12)

Reconciliation of Changes in Net Benefit Obligations and Fair Value of Plan Assets (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Pension Plans
Benefit Obligations:
Net benefit obligation at beginning of year	$ 155	$ 140	$ 134
Service cost	12	13	14
Interest cost	6	6	5
Plan Amendments	1	(5)
Benefits paid	(7)	(7)	(2)
Actuarial loss (gain)	14	8	(11)
Net benefit obligation at end of year	181	155	140
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year	150	140	135
Actual return on plan assets	14	6	2
Employer contributions	31	11	5
Benefits paid	(7)	(7)	(2)
Fair value of plan assets at end of year	188	150	140
Net Funded Status	7	(5)
Post-retirement Benefits
Benefit Obligations:
Net benefit obligation at beginning of year	144	147	136
Service cost	2	2	2
Interest cost	6	7	5
Plan Amendments	(73)
Benefits paid	(2)	(1)	(1)
Actuarial loss (gain)	25	(11)	5
Net benefit obligation at end of year	102	144	147
Fair Value of Plan Assets:
Employer contributions	2	1	1
Benefits paid	(2)	(1)	(1)
Net Funded Status	$ (102)	$ (144)	$ (147)

Fair Value of Plan Assets by Asset Category (Detail) - Pension Plans - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	$ 188	$ 150	$ 140	$ 135
Diversified debt Securities
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	154	124
Diversified equity Securities
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	28	22
Cash and Cash Equivalents
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	6	4
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	52	38
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	26	12
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	20	22
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	4
Significant Other Observable Inputs (Level 2)
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	136	112
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	128	$ 112
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	$ 8

Plan Asset Allocation (Detail)	Dec. 31, 2017
Hourly Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Target allocation	100.00%
Hourly Plan \| Cash and Cash Equivalents
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Target allocation	2.00%
Hourly Plan \| Diversified equity Securities
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Target allocation	15.00%
Hourly Plan \| Diversified debt Securities
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Target allocation	83.00%
Salary Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Target allocation	100.00%
Salary Plan \| Cash and Cash Equivalents
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Target allocation	2.00%
Salary Plan \| Diversified equity Securities
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Target allocation	15.00%
Salary Plan \| Diversified debt Securities
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Target allocation	83.00%

Amounts Recognized in Balance Sheet and Accumulated Other Comprehensive Income AOCI (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Pension Plans
Amounts Recognized in Balance Sheet:
Noncurrent assets	$ 7
Noncurrent liabilities		$ (5)
Total asset (liability)	7	(5)
Accumulated Other Comprehensive Loss:
Prior service credit	4	5
Actuarial (loss) gain	(11)	(3)
Total	(7)	2
Post-retirement Benefits
Amounts Recognized in Balance Sheet:
Current liabilities	(3)	(2)
Noncurrent liabilities	(99)	(142)
Total asset (liability)	(102)	(144)	$ (147)
Accumulated Other Comprehensive Loss:
Prior service credit	84	15
Actuarial (loss) gain	(10)	15
Total	$ 74	$ 30

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, 2017 USD ($)
Pension Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Prior service credit	$ 1
Actuarial loss	(1)
Post-retirement Benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Prior service credit	13
Total	$ 13

Projected and Accumulated Benefit Obligation and Fair Value of Plan Assets for Pension Plans with Projected Benefit Obligation in Excess of Plan Assets (Detail) $ in Millions	Dec. 31, 2016 USD ($)
Hourly Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Projected benefit obligation	$ 76
Fair value of plan assets	75
Accumulated benefit obligation	76
Fair value of plan assets	75
Salary Plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Projected benefit obligation	78
Fair value of plan assets	$ 75

Expected Cash Flows for Pension and Post-Retirement Benefit Plans (Detail) $ in Millions	Dec. 31, 2017 USD ($)
Pension Plans
Expected Benefit Payments:
2018	$ 9
2019	10
2020	11
2021	12
2022	13
2023-2027	68
Post-retirement Benefits
Employer Contributions:
2018 expected contributions	3
Expected Benefit Payments:
2018	3
2019	3
2020	4
2021	5
2022	5
2023-2027	$ 27

Income Before Income Taxes (Detail) - USD ($) $ in Millions	12 Months Ended
Income Before Income Taxes (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule of Components of Income Before Income Tax Expense (Benefit) [Line Items]
U.S. income	$ 491	$ 309	$ 261
Foreign income	36	32	28
Total	$ 527	$ 341	$ 289

Provision for Income Tax Expense (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Estimated current income taxes:
U.S. federal	$ 61	$ 2	$ 3
Foreign	7	8	6
U.S. state and local	5	2	2
Total Current	73	12	11
Deferred income tax (credit) expense, net:
U.S. federal	(44)	107	90
Foreign	1
U.S. state and local	(7)	7	6
Total Deferred	(50)	114	96
Total income tax expense	$ 23	$ 126	$ 107

Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Taxes [Line Items]
Corporate tax rate		35.00%
Deferred income tax expense (benefit) in connection with tax act		$ (157,000,000)
Tax expense recorded on repatriation of foreign earnings		$ 5,000,000
Effective income tax rate reconciliation, percent		4.00%
Income tax expense (benefit) in connection with tax act		$ (155,000,000)
Net undistributed earnings in foreign subsidiaries		62,000,000
Deemed repatriation tax		$ 5,000,000
Period of paying deemed repatriation tax		8 years
Tax liability associated with foreign subsidiaries		$ 2,000,000
Valuation allowances		9,000,000	$ 5,000,000
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		$ 2,000,000	$ 2,000,000
Scenario, Forecast [Member]
Income Taxes [Line Items]
Corporate tax rate	21.00%
Minimum
Income Taxes [Line Items]
Net operating loss carryforwards, expiration year		2027
Maximum
Income Taxes [Line Items]
Net operating loss carryforwards, expiration year		2032

Reconciliation of Provision for Income Tax Expense (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reconciliation of Provision of Income Taxes [Line Items]
Tax at U.S. statutory income tax rate	$ 185	$ 120	$ 101
Impact related to Tax Act	(155)
Tax credits	(21)
Foreign rate differential	(5)	(5)	(3)
Non-deductible expenses	7	5	4
Valuation allowance	3	1	(1)
State tax expense	10	6	5
Adjustment to deferred tax expense			1
Other adjustments	(1)	(1)
Total income tax expense	$ 23	$ 126	$ 107

Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Deferred tax assets:
Intangibles	$ 35	$ 64
Deferred revenue	25	35
Other accrued liabilities	18	34
Operating loss carryforwards	12	14
Warranty accrual	11	22
Stock-based compensation	6	8
Sales allowances and rebates	6	7
Inventories	5	6
Technology-related investments	4	9
Capital loss carryforwards	3
Environmental remediation	3	5
Unrealized loss on interest rate derivatives	1	11
Post-retirement		12
Tax credits		8
Other	4	8
Total Deferred tax assets	133	243
Valuation allowances	(9)	(5)
Deferred tax liabilities:
Goodwill	(287)	(409)
Trade name	(96)	(122)
Property, plant and equipment	(7)	(15)
Post-retirement	(4)
Other	(3)	(2)
Total Deferred tax liabilities	(397)	(548)
Net Deferred tax liability	$ (273)	$ (310)

Liability for Unrecognized Tax Benefit (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Income Tax Contingency [Line Items]
Unrecognized Tax Benefits, Beginning Balance	$ 2	$ 2
Increases in unrecognized tax benefits as a result of current year activity	0	0
Unrecognized Tax Benefits, Ending Balance	$ 2	$ 2

Changes in Components of AOCL (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (20)	$ (17)	$ 5
Foreign currency translation, before tax	15	(6)	(11)
Pension and OPEB liability adjustment, before tax	34	4	(3)
Available-for-sale securities, before tax	11	(1)	(8)
Net current period other comprehensive income (loss)	60	(3)	(22)
Ending balance	40	(20)	(17)
Beginning balance	(43)	(42)	(45)
Foreign currency translation, tax expense	0	0	0
Pension and OPEB liability adjustment, tax expense	(8)	(2)
Available-for-sale securities, tax expense	(4)	1	3
Net current period other comprehensive income (loss)	(12)	(1)	3
Ending balance	(55)	(43)	(42)
Beginning Balance	(63)	(59)	(40)
Foreign currency translation, after tax	15	(6)	(11)
Pension and OPEB liability adjustment, after tax	26	2	(3)
Available-for-sale securities, after tax	7	(1)	(5)
Total other comprehensive income (loss), net of tax	48	(4)	(19)
Ending balance	$ (15)	$ (63)	$ (59)

Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cost of sales									$ 1,131	$ 976	$ 1,052
Selling, general and administrative expenses									342	324	317
Engineering - research and development									105	88	93
Income before income taxes	$ 84	$ 170	$ 146	$ 127	$ 94	$ 71	$ 99	$ 77	527	341	289
Income tax expense									(23)	(126)	(107)
Total reclassifications	$ 215	$ 111	$ 95	$ 83	$ 61	$ 45	$ 61	$ 48	504	215	182
Reclassified from AOCL \| Prior service cost
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cost of sales									3	3	3
Selling, general and administrative expenses									1
Engineering - research and development									0	0	0
Reclassified from AOCL \| Actuarial loss
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cost of sales										1
Engineering - research and development									0	0	0
Reclassified from AOCL \| Accumulated Defined Benefit Plans Adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Income before income taxes									4	4	3
Income tax expense									(1)	(2)	(1)
Total reclassifications									$ 3	$ 2	$ 2

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Commitments and Contingencies Disclosure [Line Items]
Rent expense	$ 5	$ 5	$ 5
Environmental liability	$ 13

Future Payments under Non-Cancelable Operating Leases (Detail) $ in Millions	Dec. 31, 2017 USD ($)
Operating Leased Assets [Line Items]
2018	$ 4
2019	2
2020	2
2021	1
2022	1
Thereafter	1
Total	$ 11

Concentration of Risk - Additional Information (Detail)	12 Months Ended
Concentration of Risk - Additional Information (Detail)	Dec. 31, 2017 Employee Customer	Dec. 31, 2016 Employee Customer	Dec. 31, 2015 Customer
Concentration Risk [Line Items]
Number of employees \| Employee	2,700	2,700
Collective bargaining agreement, expiration date	2023-11
Employees in the U.S \| UNITED STATES \| Labor Force Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	89.00%	89.00%
Workforce Subject to Collective Bargaining Arrangements [Member] \| UNITED STATES \| Unionized employees subject to collective bargaining agreement
Concentration Risk [Line Items]
Concentration risk, percentage	59.00%	58.00%
Sales Revenue, Goods, 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

Customers Accounted for Greater Than Ten Percent of Net Sales (Detail) - Sales Revenue, Net - Customer Concentration Risk	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Daimler AG
Concentration Risk [Line Items]
Concentration risk, percentage	20.00%	21.00%	21.00%
Navistar Inc
Concentration Risk [Line Items]
Concentration risk, percentage	8.00%	9.00%	10.00%
Volvo Group
Concentration Risk [Line Items]
Concentration risk, percentage	8.00%	8.00%	10.00%

Customers Accounted for Greater Than Ten Percent of Accounts Receivable (Detail) - Accounts Receivable - Credit Concentration Risk

12 Months Ended

Dec. 31, 2017

Dec. 31, 2016

Kirby Corporation [Member]

Concentration Risk [Line Items]

Concentration risk, percentage

^[1]

15.00%

4.00%

Volvo Group

Concentration Risk [Line Items]

Concentration risk, percentage

11.00%

6.00%

Daimler AG

Concentration Risk [Line Items]

Concentration risk, percentage

7.00%

19.00%

[1]	As of December 31, 2017, Kirby Corporation ("Kirby") was the parent company of customers United Engines LLC and Stewart & Stevenson LLC. As of December 31, 2016, Kirby was the parent company of United Engines LLC.

Certain Relationships and Related Party Transactions - Additional Information (Detail) - USD ($)		1 Months Ended	12 Months Ended
	Feb. 03, 2017	May 31, 2015	Dec. 31, 2017
Fixed 7.125% Senior Notes
Related Party Transaction [Line Items]
Senior Notes, stated interest rate		7.125%
Percentage of principal amount redeemed		103.563%
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, value	$ 363,000,000
Repurchase agreement closing date	Feb. 08, 2017
Lawrence E. Dewey \| Fixed 7.125% Senior Notes
Related Party Transaction [Line Items]
Senior notes held by executive officers		$ 100,000
David S. Graziosi \| Fixed 7.125% Senior Notes
Related Party Transaction [Line Items]
Senior notes held by executive officers		$ 450,000
James A. Star \| Gillig
Related Party Transaction [Line Items]
Percentage of ownership interest			5.00%
James A. Star \| Gillig \| Maximum
Related Party Transaction [Line Items]
Net sales from related parties			$ 30,000,000
James A. Star \| GD
Related Party Transaction [Line Items]
Percentage of ownership interest			10.00%
James A. Star \| GD \| Maximum
Related Party Transaction [Line Items]
Net sales from related parties			$ 6,000,000

Common Stock - Additional Information (Detail) - 2016 Repurchase Program - USD ($)		12 Months Ended
	Nov. 14, 2016	Dec. 31, 2017	Nov. 08, 2017
Common Stock Disclosure [Line Items]
Common stock, repurchases authorized	$ 1,000,000,000		$ 500,000,000
Stock repurchase program, authorized amount	$ 1,500,000,000
Stock repurchase program expiration date	Dec. 31, 2019
Common stock, repurchased during the period		$ 885,000,000

Earnings Per Share - Additional Information (Detail) - shares shares in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive stock options not included in the diluted EPS computation	0.2	0.2	0.7

Reconciliation of Numerators and Denominators Used to Calculate Basic EPS and Diluted EPS (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Computation of Earnings Per Share [Line Items]
Net income	$ 215	$ 111	$ 95	$ 83	$ 61	$ 45	$ 61	$ 48	$ 504	$ 215	$ 182
Weighted average shares of common stock outstanding									149	168	176
Dilutive effect stock-based awards									1	1	1
Diluted weighted average shares of common stock outstanding									150	169	177
Basic earnings per share attributable to common stockholders	$ 1.52	$ 0.75	$ 0.63	$ 0.53	$ 0.37	$ 0.27	$ 0.36	$ 0.28	$ 3.38	$ 1.28	$ 1.03
Diluted earnings per share attributable to common stockholders	$ 1.51	$ 0.75	$ 0.63	$ 0.52	$ 0.36	$ 0.27	$ 0.36	$ 0.28	$ 3.36	$ 1.27	$ 1.03

Net Sales by Country (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
Net Sales by Country (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales	$ 588	$ 595	$ 580	$ 499	$ 469	$ 434	$ 475	$ 462	$ 2,262	$ 1,840	$ 1,986
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									1,614	1,277	1,460
CANADA
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									125	115	96
JAPAN
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									75	70	49
GERMANY
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									45	53	40
CHINA
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									62	50	64
MEXICO
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									39	41	36
UNITED KINGDOM
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									36	28	44
Other Countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									208	153	148
NETHERLANDS
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									30	27	19
TURKEY
Revenues from External Customers and Long-Lived Assets [Line Items]
Total net sales									$ 28	$ 26	$ 30

Net Long-Lived Assets by Country (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	$ 448	$ 464	$ 480
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	400	412	419
INDIA
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	32	36	43
HUNGARY
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	12	11	13
Other Countries
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	$ 4	$ 5	$ 5

Quarterly Financial Information (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Quarterly Financial Information [Line Items]
Net sales	$ 588	$ 595	$ 580	$ 499	$ 469	$ 434	$ 475	$ 462	$ 2,262	$ 1,840	$ 1,986
Gross profit	288	302	290	251	218	204	227	215	1,131	864	934
Operating income	128	198	177	149	110	104	127	111	652	452	429
Income before income taxes	84	170	146	127	94	71	99	77	527	341	289
Net income	$ 215	$ 111	$ 95	$ 83	$ 61	$ 45	$ 61	$ 48	$ 504	$ 215	$ 182
Basic earnings per share	$ 1.52	$ 0.75	$ 0.63	$ 0.53	$ 0.37	$ 0.27	$ 0.36	$ 0.28	$ 3.38	$ 1.28	$ 1.03
Diluted earnings per share	$ 1.51	$ 0.75	$ 0.63	$ 0.52	$ 0.36	$ 0.27	$ 0.36	$ 0.28	$ 3.36	$ 1.27	$ 1.03

Schedule I Parent Company Only Balance Sheets (Detail) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Current Assets:
Cash	$ 199	$ 205	$ 252	$ 263
Total Current Assets	632	548
TOTAL ASSETS	4,205	4,219
Current Liabilities:
Accounts payable	159	128
Total Current Liabilities	417	342
Capital stock	689	1,081	1,188	1,398
Paid in capital	1,758	1,728
Accumulated deficit	(1,055)	(586)
Accumulated other comprehensive loss, net of tax	(15)	(63)	(59)	(40)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	4,205	4,219
Parent Company
Current Assets:
Cash	0	0	$ 0	$ 0
Total Current Assets	0	0
Investments in and advances to subsidiaries	689	1,081
TOTAL ASSETS	689	1,081
Current Liabilities:
Accounts payable	0	0
Total Current Liabilities	0	0
Capital stock	1	2
Paid in capital	1,758	1,728
Treasury stock	0	0
Accumulated deficit	(1,055)	(586)
Accumulated other comprehensive loss, net of tax	(15)	(63)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$ 689	$ 1,081

Schedule I Parent Company Only Statements of Comprehensive Income (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Condensed Financial Statements, Captions [Line Items]
Net sales	$ 588	$ 595	$ 580	$ 499	$ 469	$ 434	$ 475	$ 462	$ 2,262	$ 1,840	$ 1,986
Operating income	128	198	177	149	110	104	127	111	652	452	429
Other income:
Income before income taxes	84	170	146	127	94	71	99	77	527	341	289
Income tax expense									(23)	(126)	(107)
Net income	$ 215	$ 111	$ 95	$ 83	$ 61	$ 45	$ 61	$ 48	504	215	182
Comprehensive income									552	211	163
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									504	215	182
Income before income taxes									504	215	182
Income tax expense									0	0	0
Net income									504	215	182
Comprehensive income									$ 552	$ 211	$ 163

Schedule I Parent Company only Statements of Cash Flows (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 215	$ 111	$ 95	$ 83	$ 61	$ 45	$ 61	$ 48	$ 504	$ 215	$ 182
Deduct items included in net income not providing cash:
Net cash provided by operating activities									658	591	580
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used for investing activities									(94)	(72)	(60)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends									(89)	(100)	(106)
Net cash used for financing activities									(574)	(564)	(529)
Net decrease in cash and cash equivalents									(6)	(47)	(11)
Cash and cash equivalents at beginning of period				205				252	205	252	263
Cash and cash equivalents at end of period	199				205				199	205	252
Parent Company
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income									504	215	182
Deduct items included in net income not providing cash:
Equity in earnings in consolidated subsidiary									(504)	(215)	(182)
Net cash provided by operating activities									0	0	0
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in subsidiaries									(19)	(24)	(23)
Dividends									89	100	106
Net cash used for investing activities									70	76	83
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions									19	24	23
Dividends									(89)	(100)	(106)
Net cash used for financing activities									(70)	(76)	(83)
Net decrease 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