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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2018	Feb. 11, 2019	Jun. 29, 2018
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
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		126,129,727
Entity Public Float			$ 5,282

Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Current Assets
Cash and cash equivalents	$ 231	$ 199
Accounts receivable - net of allowance for doubtful accounts of $1 and $0, respectively	279	221
Inventories	170	154
Income taxes receivable	16	33
Other current assets	29	25
Total Current Assets	725	632
Property, plant and equipment, net	466	448
Intangible assets, net	1,066	1,153
Goodwill	1,941	1,941
Other non-current assets	39	31
TOTAL ASSETS	4,237	4,205
Current Liabilities
Accounts payable	169	159
Product warranty liability	26	22
Current portion of long-term debt	0	12
Deferred revenue	34	41
Other current liabilities	197	183
Total Current Liabilities	426	417
Product warranty liability	40	33
Deferred revenue	88	75
Long-term debt	2,523	2,534
Deferred income taxes	329	276
Other non-current liabilities	172	181
TOTAL LIABILITIES	3,578	3,516
Commitments and Contingencies (see NOTE 17)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value, 100,000,000 shares authorized, none issued and outstanding	0	0
Paid in capital	1,788	1,758
Accumulated deficit	(1,100)	(1,055)
Accumulated other comprehensive loss, net of tax	(30)	(15)
TOTAL STOCKHOLDERS’ EQUITY	659	689
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	4,237	4,205
Voting Common Stock
STOCKHOLDERS’ EQUITY
Common stock	1	1
Non-voting Common Stock
STOCKHOLDERS’ EQUITY
Common stock	$ 0	$ 0

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Allowance for doubtful accounts	$ 1	$ 0
Preferred stock, par value (USD per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (shares)	100,000,000	100,000,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0
Voting Common Stock
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (shares)	1,880,000,000	1,880,000,000
Common stock, shares issued (shares)	126,251,266	139,990,865
Common stock, shares outstanding (shares)	126,251,266	139,990,865
Non-voting Common Stock
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common stock, shares authorized (shares)	20,000,000	20,000,000
Common stock, shares issued (shares)	0	0
Common stock, shares outstanding (shares)	0	0

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net sales	$ 2,713	$ 2,262	$ 1,840
Cost of sales	1,291	1,131	976
Gross profit	1,422	1,131	864
Selling, general and administrative	364	342	324
Engineering — research and development	131	105	88
Loss associated with impairment of long-lived assets	4	32	0
Operating income	923	652	452
Interest expense, net	(121)	(103)	(101)
Expenses related to long-term debt refinancing	0	0	(12)
Other income (expense), net	3	(22)	2
Income before income taxes	805	527	341
Income tax expense	(166)	(23)	(126)
Net income	$ 639	$ 504	$ 215
Basic earnings per share attributable to common stockholders (USD per share)	$ 4.81	$ 3.38	$ 1.28
Diluted earnings per share attributable to common stockholders (USD per share)	4.78	3.36	1.27
Dividends declared per common share (USD per share)	$ 0.60	$ 0.60	$ 0.60
Other comprehensive (loss) income, net of tax:
Foreign currency translation	$ (9)	$ 15	$ (6)
Pension and OPEB liability adjustment	1	26	3
Available-for-sale securities and interest rate swaps	(7)	7	(1)
Total other comprehensive (loss) income, net of tax	(15)	48	(4)
Comprehensive income	$ 624	$ 552	$ 211

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 639	$ 504	$ 215
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangible assets	87	90	92
Depreciation of property, plant and equipment	77	80	84
Deferred income taxes	52	(50)	114
Stock-based compensation	13	12	9
Amortization of deferred financing costs	6	6	7
Loss associated with impairment of long-lived assets	4	32	0
Impairment loss on investments in technology-related initiatives	3	16	1
Unrealized gain on derivatives	0	(29)	(1)
Expenses related to long-term debt refinancing	0	0	11
Excess tax benefit from stock-based compensation	0	0	(6)
Other	4	0	1
Changes in assets and liabilities:
Accounts receivable	(61)	(19)	(3)
Inventories	(18)	(25)	15
Accounts payable	9	30	2
Other assets and liabilities	22	11	50
Net cash provided by operating activities	837	658	591
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of long-lived assets	(100)	(91)	(71)
Investments in technology-related initiatives	(3)	(3)	(1)
Net cash used for investing activities	(103)	(94)	(72)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of common stock	(609)	(885)	(256)
Dividend payments	(80)	(89)	(100)
Payments on long-term debt	(28)	(12)	(1,215)
Proceeds from exercise of stock options	22	19	24
Taxes paid related to net share settlement of equity awards	(4)	(1)	(2)
Debt financing fees	(1)	(6)	(21)
Borrowings on revolving credit facility	0	415	0
Repayments on revolving credit facility	0	(415)	0
Issuance of long-term debt	0	400	1,000
Excess tax benefit from stock-based compensation	0	0	6
Net cash used for financing activities	(700)	(574)	(564)
Effect of exchange rate changes on cash	(2)	4	(2)
Net increase (decrease) in cash and cash equivalents	32	(6)	(47)
Cash and cash equivalents at beginning of period	199	205	252
Cash and cash equivalents at end of period	231	199	205
Supplemental disclosures:
Interest paid	115	124	78
Income taxes paid	$ 101	$ 96	$ 13

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, 2015	$ 1,188	$ 2	$ 1,690	$ (445)	$ (59)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	9		9
Pension and OPEB liability adjustment	3				3
Foreign currency translation adjustment	(6)				(6)
Available-for-sale securities and interest rate swaps	(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)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	12		12
Pension and OPEB liability adjustment	26				26
Foreign currency translation adjustment	15				15
Available-for-sale securities and interest rate swaps	7				7
Issuance of common stock	18		18
Repurchase of common stock	(885)	(1)		(884)
Dividends on common stock	(89)			(89)
Net income	504			504
Balance at Dec. 31, 2017	689	1	1,758	(1,055)	(15)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	13		13
Pension and OPEB liability adjustment	1				1
Foreign currency translation adjustment	(9)				(9)
Available-for-sale securities and interest rate swaps	(7)				(7)
Issuance of common stock	17		17
Repurchase of common stock	(609)	0		(609)
Dividends on common stock	(80)			(80)
Net income	639			639
Balance at Dec. 31, 2018	$ 659	$ 1	$ 1,788	$ (1,100)	$ (30)

OVERVIEW	12 Months Ended
OVERVIEW	Dec. 31, 2018
Accounting Policies [Abstract]
OVERVIEW	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 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 2,900 employees and 12 different transmission product lines. Although approximately 77% of revenues were generated in North America in 2018, 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, 2018

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the periods presented. The consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated.

These consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of equity.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Estimates include, but are not limited to, sales allowances, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite life intangibles, 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, 2018, and 2017, the Company’s marketable securities were classified as trading.

Trading securities are carried at fair value with the unrealized gain or loss recognized in Other income (expense), net. The fair value of the Company’s investment securities is determined by currently available market prices. See NOTE 7 “Fair Value of Financial Instruments” for more details.

Inventories

Inventories are stated at the lower of cost and net realizable value. The Company determines cost using the first-in, first-out method. The Company analyzes inventory on a quarterly basis to determine whether it is excess or obsolete inventory. Any decline in carrying value of estimated excess or obsolete inventory is recorded as a reduction of inventory and as an expense included in Cost of sales in the period it is identified.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost less accumulated depreciation. Depreciation expense is recorded using the straight-line method over the following estimated lives:



	Range in Years
Land improvements	5 – 30
Buildings and building improvements	10 – 40
Machinery and equipment	2 – 20
Software	2 – 5
Special 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 related to weak demand conditions for the TC10 product in the fourth quarter of 2017 and the decision to cease production of the TC10 product in the fourth quarter of 2018, the Company recorded a $4 million and $32 million impairment loss associated with the production of TC10 for the years ended December 31, 2018 and 2017, respectively.

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

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 2018 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 2018 annual goodwill impairment test indicated that the fair value of the reporting unit more likely than not exceeded its carrying value, indicating no impairment. Refer to NOTE 6, “Goodwill and Other Intangible Assets” for further information.

Other intangible assets have both indefinite and finite useful lives. Intangible assets with indefinite useful lives, such as the Company’s trade name, are not amortized but are tested annually for impairment. The Company has elected to perform its 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, the Company's inability to execute on marketing programs and/or delay in introduction of new products, and higher discount rate as a result of market conditions. While unpredictable and inherently uncertain, the Company believes the forecast estimates are reasonable and incorporate those assumptions that similar market participants would use in their estimates of fair value. After reviewing various qualitative factors, the Company’s annual 2018 trade name impairment test indicated that the fair value of the trade name more likely than not exceeded its carrying value, indicating no impairment. Refer to NOTE 6, “Goodwill and Other Intangible Assets” for further information.

Intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment when circumstances change that would create a triggering event. Customer relationships are amortized over the life in which expected benefits are to be consumed. The other remaining finite life intangibles are amortized on a straight-line basis over their useful lives. The Company evaluates the remaining useful life of the other intangible assets on a periodic basis to determine whether events or circumstances warrant a revision to the remaining useful life. Assumptions and estimates about future values and remaining useful lives of the Company’s intangible and other long-lived assets are complex and subjective. 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 6 “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, $6 million and $7 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Financial Instruments

The Company’s cash equivalents are invested in U.S. government backed securities and recorded at fair value in the Consolidated Balance Sheets. The carrying values of accounts receivable and accounts payable approximate fair value due to their short-term nature. The Company’s financial derivative instruments, including interest rate swaps, are carried at fair value on the Consolidated Balance Sheets. Refer to NOTE 7, “Fair Value of Financial Instruments” for more detail. The Company’s long-term debt obligations are carried at historical amounts with the Company providing fair value disclosure in NOTE 8, “Debt”.

Insurable Liabilities

The Company records liabilities for its medical, workers’ compensation, long-term disability, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated based upon historical claims experience.

Revenue Recognition

The Company records sales as each distinct performance obligation within a contract is satisfied. The Company sells extended transmission coverage (“ETC”) for which sales are deferred. ETC sales are recognized ratably over the period of coverage, which typically ranges from two to five years after initial sale. Costs associated with ETC programs are recorded as incurred during the extended period. Distributor and customer sales incentives, consisting of allowances and other rebates, are recorded as a reduction to Net sales when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. Incentive programs are generally product specific or region specific. Some factors used in estimating when an adjustment is not likely to reverse are the number of transmissions that will be affected by the incentive program and rate of acceptance of any incentive program. Consideration given to commercial customers recorded as a reduction of Net sales in the Consolidated Statements of Comprehensive Income included $80 million, $66 million, and $58 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Sales under U.S. government production contracts are recognized at the point in time when control passes to the customer, or when the U.S. government accepts the transmission and is able to direct its use in certain bill-and-hold arrangements. Deferred revenue arises from cash received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met. Under the terms of previous U.S. government contracts, there were certain price reduction clauses and provisions for potential price reductions which were estimated at the time of sale based upon the Company’s history and experience and were recorded as a reduction to Net sales. Potential reductions may be attributed to a change in projected sales volumes or plant efficiencies which impact overall costs. As of each of December 31, 2018 and 2017, 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 for each of the years ended December 31, 2018, 2017 and 2016. 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 the Company's historical rates.

Research and Development

The Company incurs costs in connection with research and development programs that are expected to contribute to future earnings. Such costs are charged to Engineering — research and development as incurred.

Environmental

The Company accrues costs related to environmental matters when it is probable that the Company has incurred a liability related to a contaminated site and the costs can be reasonably estimated. For additional information, see NOTE 17, “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 16, “Accumulated Other Comprehensive Loss”.

Derivative Instruments

In the normal course of business, the Company is exposed to fluctuations in interest rates, foreign currency exchange rates, and commodity prices. The risk is managed through the use of financial derivative instruments, when appropriate. The Company has qualified for and elected hedge accounting treatment on interest rate swap contracts. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk. NOTE 9, “Derivatives” provides further information on the accounting treatment of the Company’s derivative instruments.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The future tax benefits associated with operating loss and tax credit carryforwards are recognized as deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The need to establish a valuation allowance against the deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold, in accordance with the FASB’s authoritative accounting guidance on income taxes. Appropriate consideration is given to all positive and negative evidence related to that realization. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, and experience with tax attributes expiring unused and tax planning alternatives. The weight given to these considerations depends upon the degree to which they can be objectively verified.

Stock-Based Compensation

In March 2015, the Company’s Board of Directors adopted and, in May 2015, the Company’s stockholders approved the Allison Transmission Holdings, Inc. 2015 Equity Incentive Award Plan (“2015 Plan”), which became effective on May 14, 2015. Under the 2015 Plan, certain employees (including executive officers), consultants and directors are eligible to receive equity-based compensation, including non-qualified stock options, incentive stock options, restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), performance awards, stock appreciation rights and other equity-based awards, or any combination thereof. The 2015 Plan limits the aggregate number of shares of common stock available for issue to 15.3 million and will expire on, and no option or other equity award may be granted pursuant to the 2015 Plan after, the tenth anniversary of the date the 2015 Plan was approved by the Board of Directors.

Prior to the adoption of the 2015 Plan, the Company’s equity-based awards were granted under the Allison Transmission Holdings, Inc. 2011 Equity Incentive Award Plan (“2011 Plan”) and the Equity Incentive Plan of Allison Transmission Holdings, Inc. (“Equity Plan” and, together with the 2011 Plan, the “Prior Plans”). As of the effective date of the 2015 Plan, no new awards will be granted under the Prior Plans, but the Prior Plans will continue to govern the equity awards issued under the Prior Plans.

RSU grants are recorded at fair market value at the date of grant and vest upon continued performance of services by the RSU holders over one to three years. Performance unit grants are recorded at fair value based on a Monte-Carlo pricing model and the restrictions lapse on the date the Compensation Committee of the Board of Directors determines the number of shares that shall vest based on the related performance or market condition achievement. Non-qualified stock option grants are recorded at fair value using a Black-Scholes option pricing model and vest upon the continued performance of services by the option holder on the third anniversary of the grant date for awards under the 2015 Plan.

The Company has made a policy election under applicable accounting guidance to account for forfeitures as a reduction of stock-based compensation expense when the forfeiture actually occurs.

RSUs were granted to certain employees and directors at fair market value on the date of grant. The restrictions lapse upon continued performance by the RSU holder on the vest date which generally occurs over one, two or three years. RSU incentive compensation expense recorded was $5 million, $7 million and $2 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Performance-based awards, including performance units, were granted to certain employees at fair value at the date of grant. The Company records the fair value of each performance-based award based on a Monte-Carlo pricing model. Performance-based award incentive compensation expense recorded was $6 million, $3 million and $1 million for the years ended December 31, 2018, 2017 and 2016, 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, $2 million and $3 million for the years ended December 31, 2018, 2017 and 2016, 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 2014, the FASB issued authoritative accounting guidance on a company’s accounting for revenue from contracts with customers, which guidance was subsequently 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 was adopted by the Company effective January 1, 2018 on a modified retrospective basis. See NOTE 3, “Revenue” for information regarding the impact of the adoption of this guidance.

In February 2016, the FASB issued authoritative accounting guidance on lease accounting, which guidance was subsequently amended. The guidance requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases not considered short-term leases. Short-term leases are leases with a lease term of 12 months or less as long as the leases do not include options to purchase the underlying assets that the lessee is reasonably certain to exercise. The guidance also introduces new disclosure requirements for leasing arrangements. In July 2018, the FASB issued additional authoritative guidance on this topic giving lessees an optional adoption approach under which the impact of the adoption of the guidance would be shown as of the date of adoption. Management has elected to adopt the guidance using this modified retrospective approach. The guidance was adopted by the Company effective January 1, 2019. The Company will record a non-monetary right-of-use asset and current and non-current lease liabilities of less than $15 million on its Consolidated Balance Sheets as of January 1, 2019. The adoption of this guidance did not have a material impact on the Company's Consolidated Statements of Comprehensive Income.

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 and did not 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 post-retirement 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 and did not have a material impact on the Company’s consolidated financial statements.

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 and did not have a material impact on the Company’s consolidated financial statements.

In August 2017, the FASB issued authoritative accounting guidance on accounting for derivative and hedge instruments. Among other things, the guidance allows the initial hedge effectiveness assessment to be performed by the end of the quarter in which the hedge is designated, permits a qualitative assessment for certain hedges if an expectation of high effectiveness can be supported throughout the term of the hedge, and removes the requirement to record ineffectiveness on cash flow hedges immediately through earnings when the hedge is highly effective. The guidance was early adopted by the Company effective April 1, 2018 and applied upon entering into interest rate swaps designated as cash flow hedges during the second quarter of 2018. When adopted in an interim period, the guidance is required to be reflected as of the beginning of the year of adoption. The Company has not previously designated any derivative instruments as hedging instruments, and thus, the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In February 2018, the FASB issued authoritative accounting guidance on transfers of stranded balances in accumulated other comprehensive loss to retained earnings. The passage of the U.S. Tax Cuts and Jobs Act by the U.S. federal government in December 2017 and existing GAAP requirements to adjust deferred tax assets and liabilities for changes in tax laws or rates created stranded balances in accumulated other comprehensive loss on deferred tax assets and liabilities previously recorded as a component to accumulated other comprehensive loss. The guidance applies to companies affected by these stranded balances and allows a reclassification of these balances to retained earnings. The guidance was adopted by the Company effective January 1, 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

In June 2018, the FASB issued authoritative accounting guidance on accounting for nonemployee awards for goods or services received by a company. The guidance was adopted by the Company effective January 1, 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued authoritative accounting guidance on the presentation of financial assets at the net amount expected to be collected. The guidance also requires the disclosure of financing receivables disaggregated by the year of origination. The guidance will be effective for the Company in fiscal year 2020, and the Company does not plan to early adopt. Management is evaluating the impact of this guidance on the Company's consolidated financial statements.

In August 2018, the FASB issued authoritative accounting guidance amending disclosure requirements for certain assets subject to fair value measurement. The guidance allows the Company to reduce the amount of disclosure on transfers between Level 1 and Level 2 assets. The guidance will be effective for the Company in fiscal year 2020, and the Company does not plan to early adopt. Management does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued authoritative accounting guidance amending disclosure requirements for the Company's defined benefit pension plans and other post-retirement benefit plan. The guidance will be effective for the Company in fiscal year 2021, but early adoption is permitted. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements.

In August 2018, the FASB issued authoritative accounting guidance on accounting for implementation costs in hosting arrangements to align these costs with existing guidance for internally developed software. The stage of implementation must be assessed to determine if costs should be capitalized or expensed, and capitalized costs should be expensed during the noncancellable term of the agreement. The guidance will be effective for the Company in fiscal year 2020, 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.

REVENUE

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

REVENUE

Adoption of New Revenue Guidance

New authoritative accounting guidance for revenue was adopted by the Company effective January 1, 2018 using the modified retrospective approach. Current period results are presented in conformity with the new authoritative accounting guidance, while prior period results are presented in conformity with prior accounting guidance.

In accordance with the modified retrospective approach, the Company recorded a one-time adjustment related to sales of ETC contracts open as of the date of adoption, which increased opening retained earnings by $5 million, net of tax, and decreased current deferred revenue by $2 million and non-current deferred revenue by $4 million as of January 1, 2018.

During the year ended December 31, 2018, the Company increased net sales by $2 million, and decreased non-current deferred revenue by $2 million, compared to prior accounting guidance, as a result of how the Company allocates revenue to the ETC performance obligation in certain contracts under the new authoritative accounting guidance for revenue.

Under the new authoritative accounting guidance, revenue is recognized as each distinct performance obligation within a contract with a customer is satisfied. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company enters into long-term supply agreements (“LTSAs”) and distributor agreements with certain customers. The LTSAs and distributor agreements do not include committed volumes until underlying purchase orders are issued; therefore, the Company determined that purchase orders are the contract with a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when the performance obligation is satisfied, as there is no right of return.

Many of the Company’s contracts have a single performance obligation, as the promise to transfer the individual good or service is not separately identifiable from other promises in the contracts and is, therefore, not distinct. Some of the Company's contracts have multiple performance obligations, most commonly the sale of both a transmission and ETC. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using a ratable allocation based on the standalone selling price of each distinct good or service in the contract.

The Company may also use volume based discounts and rebates as marketing incentives in the sales of both transmissions and service parts, which are accounted for as variable consideration. The Company records the impact of the incentives as a reduction to revenue when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. Due to the typically short duration of purchase orders and minimal number of open contracts with variable consideration at any point in time, the impact of variable consideration is immaterial. If it were to become material, the Company would explain the methods, assumptions and estimates used to determine the consideration allocated to each performance obligation. The Company estimates the impact of all other incentives based on the related sales and market conditions in the end market vocation.

Net sales are made on credit terms, generally 30 days, based on an assessment of the customer’s creditworthiness. For certain goods or services, the Company receives consideration prior to satisfying the related performance obligation. Such consideration is recorded as a contract liability in current and non-current deferred revenue as of December 31, 2018 and December 31, 2017. See NOTE 11, “Deferred Revenue” for more information including the amount of revenue earned during the year ended December 31, 2018 that had been previously deferred. The Company does not have contract assets.

Disaggregated Revenue

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. The following presents disaggregated revenue by categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (dollars in millions):



	Year ended December 31, 2018
North America On-Highway	$	1,317
North America Off-Highway	93
Defense	158
Outside North America On-Highway	383
Outside North America Off-Highway	129
Service Parts, Support Equipment and Other	633
Total Net Sales	$	2,713

Disaggregated revenue by end market is further described as follows:

North America On-Highway

Revenue from the North America On-Highway end market is driven by the sale of transmissions to original equipment manufacturers (“OEMs”), distributors and dealers that install the transmission into Class 4-5, Class 6-7 and Class 8 straight trucks, conventional transit, shuttle and coach buses, school buses and motorhome applications. Revenue from the North America On-Highway end market also includes the sale of electric hybrid-propulsion systems for transit bus. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company.

North America Off-Highway

Revenue from the North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors that serve end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company.

Defense

Revenue from the Defense end market is driven by sales of transmissions to the U.S. Government or its contractors and sales to certain government contractors outside of the U.S. for use in both wheeled and tracked defense vehicle applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company.

Periodically, the Company and the U.S. Government will enter into a bill-and-hold arrangement where a completed transmission physically remains at the Company’s facility at the request of the U.S. Government. Revenue is recognized at the point in time when it is determined that the U.S. Government accepts the transmission and is able to direct its use.

Outside North America On-Highway

Revenue from the Outside North America On-Highway end market is driven by the sale of transmissions to OEMs and distributors that produce vehicles for commercial users in medium and heavy duty applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company.

Outside North America Off-Highway

Revenue from the Outside North America Off-Highway end market is driven by sales of transmissions to OEMs and distributors serving end users who operate vehicles and auxiliary equipment in energy, mining and construction applications. Revenue is recognized at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company.

Service Parts, Support Equipment and Other

Revenue from the Service Parts, Support Equipment and Other end market is primarily derived from the sale of transmission parts and fluid purchased for the normal maintenance and repair needs of products in service and the sale of ETC contracts which extend the warranty coverages of transmissions beyond the standard warranty period.

Revenue is recognized on sales of service parts and support equipment at the point in time when control passes to the customer, which is based on shipping terms when the order is fulfilled by the Company.

Revenue from the sale of ETC contracts is recognized ratably over the time period that corresponds with the period of coverage, as the Company has determined this method best depicts the progress towards satisfaction of its performance obligation. ETC contracts are sold in one to five year durations within the North America On-Highway, Outside North America On-Highway, North America Off-Highway and Outside North America Off-Highway end markets. The ETC contract period begins when the standard warranty coverage period ends. All consideration allocated to an ETC performance obligation is initially deferred until the coverage period begins.

DEFERRED REVENUE

As of December 31, 2018, the current and non-current deferred revenue were $34 million and $88 million, respectively. As of December 31, 2017, the current and non-current deferred revenue were $41 million and $75 million, respectively. Deferred revenue activity consists of the following (dollars in millions):



	Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016
Beginning balance	$	110		$	93		$	79
Increases	52			52			37
Revenue earned	(40		)	(29		)	(23		)
Ending balance	$	122		$	116		$	93

New authoritative accounting guidance for revenue was adopted by the Company effective January 1, 2018. The Company recorded a one-time adjustment related to sales of ETC contracts open as of the date of adoption, which decreased deferred revenue by $6 million as of January 1, 2018. See NOTE 3, "Revenue" for information regarding the impact of the adoption of this guidance.

Deferred revenue recorded in current and non-current liabilities related to ETC as of December 31, 2018 were $30 million and $73 million, respectively. Deferred revenue recorded in current and non-current liabilities related to ETC as of December 31, 2017 were $30 million and $72 million, respectively.

INVENTORIES

12 Months Ended

Dec. 31, 2018

Inventory Disclosure [Abstract]

INVENTORIES

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



	December 31, 2018		December 31, 2017
Purchased parts and raw materials	$	82	$	79
Work in progress	8		6
Service parts	48		46
Finished goods	32		23
Total inventories	$	170	$	154

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 13, “Other Current Liabilities” for more information.

PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

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



	December 31, 2018			December 31, 2017
Land and land improvements	$	24		$	24
Buildings and building improvements	336			322
Machinery and equipment	643			601
Software	143			136
Special tools	201			169
Construction in progress	52			46
Total property, plant and equipment	1,399			1,298
Accumulated depreciation	(933		)	(850		)
Property, plant and equipment, net	$	466		$	448

Depreciation of property, plant and equipment was $77 million, $80 million and $84 million for the years ended December 31, 2018, 2017 and 2016, respectively.

As a result of events and circumstances related to weak demand conditions for the TC10 product in the fourth quarter of 2017 and the decision to cease production of the TC10 product in the fourth quarter of 2018, the Company reviewed certain of its long-lived assets related to the production of the TC10 product, resulting in losses of $1 million and $32 million for the years ended December 31, 2018 and 2017. See NOTE 2 “Summary of Significant Accounting Policies”, Impairment of Long-Lived Assets for more information.

GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

As of both December 31, 2018 and 2017, 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, 2018							December 31, 2017
	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		(619		)	213		832		(573		)	259
Proprietary technology	476		(434		)	42		476		(396		)	80
Customer relationships – defense	62		(41		)	21		62		(38		)	24
Patented technology – defense	28		(28		)	—		28		(28		)	—
Non-compete agreement	17		(17		)	—		17		(17		)	—
Tooling rights	5		(5		)	—		5		(5		)	—
Total	$	2,210	$	(1,144	)	$	1,066	$	2,210	$	(1,057	)	$	1,153

Amortization of intangible assets was $87 million, $90 million and $92 million for the years ended December 31, 2018, 2017 and 2016, respectively.

As of December 31, 2018 and 2017, the net carrying value of the Company’s Goodwill and Other intangible assets, net was $3,007 million and $3,094 million, respectively. The Company’s 2018 annual goodwill impairment test indicated that the fair value of the reporting unit more likely than not exceeded its carrying value, indicating no impairment. The Company's 2018 annual trade name impairment test indicated that the fair value of the trade name more likely than not exceeded its carrying value, indicating no impairment.

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



	2019		2020		2021		2022		2023
Amortization expense	$	86	$	50	$	45	$	43	$	42

- 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, 2018

Fair Value Disclosures [Abstract]

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, 2018 and December 31, 2017, 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, derivative instruments, assets held in a rabbi trust and a deferred compensation obligation. The Company’s cash equivalents consist of short-term U.S. government backed securities. The Company’s derivative instruments consist of interest rate swaps. The Company’s assets held in the rabbi trust consist principally of publicly available mutual funds and target date retirement funds. The Company’s deferred compensation obligation is directly related to the fair value of assets held in the rabbi trust.

The Company’s valuation techniques used to calculate the fair value of cash and cash equivalents, assets held in the rabbi trust and the deferred compensation obligation represent a market approach in active markets for identical assets that qualify as Level 1 in the fair value hierarchy. The Company’s valuation techniques used to calculate the fair value of derivative instruments represent a market approach with observable inputs that qualify as Level 2 in the fair value hierarchy.

The Company uses valuations from the issuing financial institutions for the fair value measurement of interest rate swaps. The floating-to-fixed interest rate swaps are based on the London Interbank Offered Rate (“LIBOR”) which is observable at commonly quoted intervals. The fair values are included in other current and non-current assets and liabilities in the Consolidated Balance Sheets.

The following table summarizes the fair value of the Company’s financial assets and (liabilities) as of December 31, 2018 and 2017 (dollars in millions):



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)					TOTAL
	2018			2017			2018			2017		2018			2017
Cash equivalents	$	111		$	50		$	—		$	—	$	111		$	50
Rabbi trust assets	9			8			—			—		9			8
Deferred compensation obligation	(9		)	(8		)	—			—		(9		)	(8		)
Derivative liabilities, net	—			—			(9		)	—		(9		)	—
Total	$	111		$	50		$	(9	)	$	—	$	102		$	50

- 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, 2018

Debt Disclosure [Abstract]

DEBT

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



	December 31, 2018		December 31, 2017
Long-term debt:
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022	$	1,148	$	1,176
Senior Notes, fixed 5.0%, due 2024	1,000		1,000
Senior Notes, fixed 4.75%, due 2027	400		400
Total long-term debt	$	2,548	$	2,576
Less: current maturities of long-term debt	—		12
deferred financing costs, net (see NOTE 2)	25		30
Total long-term debt, net	$	2,523	$	2,534

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



(dollars in millions)	2019		2020		2021		2022		2023
Payments	$	—	$	8	$	12	$	1,128	$	—

As of December 31, 2018, the Company had $2,548 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, 2018 was $2,446 million. The fair value is based on quoted Level 2 market prices of the Company’s debt as of December 31, 2018. 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.

In March 2018, 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 0.25%. The March 2018 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.

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, 2018, is either (a) 1.75% over the LIBOR or (b) 0.75% 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 0.50%, provided that neither is below 1.00%. As of December 31, 2018, the Company elected to pay the lowest all-in rate of LIBOR plus the applicable margin, or 4.26%, 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; however, the Company made voluntary prepayments of the required quarterly principal payments of $25 million in May 2018. As of December 31, 2018, 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. As of December 31, 2018, the Company had $533 million available under the Revolving Credit Facility, net of $17 million in letters of credit. Revolving Credit Facility 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 0.50%, 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 Facility 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, 2018, the Company had no amounts outstanding under the Revolving Credit Facility; however the Company would have been in compliance with the maximum total senior secured leverage ratio, achieving a 0.81x 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 the Company's 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 remain in effect as long as the Company achieves a total leverage ratio at or below the related threshold. As of December 31, 2018, the Company’s total leverage ratio was 2.05x.

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, 2018, the Company was in compliance with all covenants under the Senior Secured Credit Facility.

5.0% Senior Notes

ATI may from time to time seek to retire the 5.0% Senior Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, contractual redemptions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. 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, 2018, 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, 2018, the Company was in compliance with all covenants under the indenture governing the 4.75% Senior Notes.

DERIVATIVES

12 Months Ended

Dec. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

The Company is subject to interest rate risk related to the Senior Secured Credit Facility and enters into interest rate swaps that are based on the LIBOR to manage a portion of this exposure. The interest rate swaps are designated as cash flow hedges that qualify for hedge accounting under the hypothetical derivative method. Fair value adjustments are recorded as a component of AOCL in the Consolidated Balance Sheets. Balances in AOCL are reclassified to earnings when transactions related to the underlying risk are settled. As of December 31, 2018, the Company held interest rate swaps effective from September 2019 to September 2022 with notional values totaling $250 million and a weighted average LIBOR fixed rate of 3.01% and interest rate swaps effective from September 2019 to September 2025 with notional values totaling $250 million and a weighted average LIBOR fixed rate of 3.04%. See NOTE 7 “Fair Value of Financial Instruments” for information regarding the fair value of the Company’s interest rate swaps.

The following tabular disclosures further describe the Company’s interest rate derivatives qualifying and designated for hedge accounting and their impact on the financial condition of the Company (dollars in millions):



	December 31, 2018				December 31, 2017
	Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate swaps	Other current liabilities	$	(1	)	Other current liabilities	$	—
	Other non-current liabilities	(8		)	Other non-current liabilities	—
Total derivatives designated as hedging instruments		$	(9	)		$	—

The balance of derivative losses recorded in AOCL as of December 31, 2018 and 2017 was $9 million and zero, respectively. See NOTE 16 “Accumulated Other Comprehensive Loss” for information regarding activity recorded as a component of AOCL during the year ended December 31, 2018. The Company had no derivative losses recorded in AOCL expected to be reclassified to earnings within the next twelve months as of December 31, 2018.

PRODUCT WARRANTY LIABILITIES

12 Months Ended

Dec. 31, 2018

Guarantees and Product Warranties [Abstract]

PRODUCT WARRANTY LIABILITIES

As of December 31, 2018, the current and non-current product warranty liabilities were $26 million and $40 million, respectively. As of December 31, 2017, the current and non-current product warranty liabilities were $22 million and $33 million, respectively. Product warranty liability activities consist of the following (dollars in millions):



	Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016
Beginning balance	$	55		$	63		$	79
Payments	(32		)	(30		)	(35		)
Increase in liability (warranty issued during period)	38			18			16
Net adjustments to liability	5			4			3
Ending balance	$	66		$	55		$	63

The adjustments to the total liability in 2018, 2017 and 2016, excluding the Dual Power Inverter Module (“DPIM”) as discussed below, were the result of general changes in estimates for various products and specific field action programs as additional claims data and field information became available.

Dual Power Inverter Module

During June 2007, General Motors Corporation 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 General Motors Corporation, 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, 2018 and 2017, the Company’s remaining DPIM liability was $1 million and $4 million, respectively, and the related receivable owed by GM to the Company was $1 million and $3 million, respectively.

DEFERRED REVENUE

12 Months Ended

Dec. 31, 2018

Revenue Recognition and Deferred Revenue [Abstract]

DEFERRED REVENUE

REVENUE

Adoption of New Revenue Guidance

Disaggregated Revenue



	Year ended December 31, 2018
North America On-Highway	$	1,317
North America Off-Highway	93
Defense	158
Outside North America On-Highway	383
Outside North America Off-Highway	129
Service Parts, Support Equipment and Other	633
Total Net Sales	$	2,713

Disaggregated revenue by end market is further described as follows:

North America On-Highway

North America Off-Highway

Defense

Outside North America On-Highway

Outside North America Off-Highway

Service Parts, Support Equipment and Other

DEFERRED REVENUE



	Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016
Beginning balance	$	110		$	93		$	79
Increases	52			52			37
Revenue earned	(40		)	(29		)	(23		)
Ending balance	$	122		$	116		$	93

OTHER INCOME (EXPENSE), NET

12 Months Ended

Dec. 31, 2018

Other Income and Expenses [Abstract]

OTHER INCOME (EXPENSE), NET

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



	Years ended December 31,
	2018			2017			2016
Post-retirement benefit plan amendment credits	$	12		$	—		$	—
Vendor settlements	(4		)	(5		)	1
Technology-related investment expense	(3		)	(16		)	(1		)
Other	(2		)	(1		)	2
Total	$	3		$	(22	)	$	2

OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2018

Other Liabilities Disclosure [Abstract]

OTHER CURRENT LIABILITIES

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



	As of December 31, 2018		As of December 31, 2017
Payroll and related costs	$	81	$	73
Sales allowances	39		34
Accrued interest payable	19		19
Vendor buyback obligation	15		14
Taxes payable	10		10
Defense price reduction reserve	9		9
Non-trade payables	3		8
Derivative liabilities	1		—
Other accruals	20		16
Total	$	197	$	183

EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2018

Retirement Benefits [Abstract]

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, 2018, 2017 and 2016.

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 $7 million for the year ended December 31, 2018, and $6 million for each of the years ended December 31, 2017 and 2016.

The Company is also responsible for OPEB costs (medical, dental, vision, and life insurance) for hourly employees hired prior to May 19, 2008, excluding those employees eligible to retire at the time of the sale of the Company. Post-retirement benefit costs consist of service cost and interest cost on accrued obligations. Actuarial gains and losses on liabilities and any prior service costs are charged (or credited) to income over the average remaining service lives of employees. The benefit cost components shown in the Consolidated Statements of Comprehensive Income are based upon certain data specific to the Company, actuarial assumptions that were used for OPEB accounting disclosures, and certain allocation methodologies such as population demographics. The plan is unfunded and any future payments will be funded by the Company’s operating cash flows. As of December 31, 2018 and 2017, 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 $93 million and $102 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, 2018 and 2017 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 (credit) and other changes recognized in AOCL for the pension and post-retirement benefit plans is as follows (dollars in millions):



	Pension Plans									Post-retirement Benefits
	Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016
Net Periodic Benefit Cost (Credit):
Service cost	$	12		$	12		$	13		$	1		$	2		$	2
Interest cost	6			6			6			4			6			7
Expected return on assets	(8		)	(7		)	(7		)	—			—			—
Prior service credit	—			—			—			(13		)	(4		)	(4		)
Net Periodic Benefit Cost (Credit)	$	10		$	11		$	12		$	(8	)	$	4		$	5
Other changes recognized in other comprehensive income:
Prior service cost (credit)	$	—		$	1		$	(5	)	$	—		$	(73	)	$	—
Net (gain) loss	(2		)	8			8			(12		)	24			(11		)
Amortizations	—			—			—			13			4			4
Total recognized – other comprehensive income	$	(2	)	$	9		$	3		$	1		$	(45	)	$	(7	)

The components of net periodic benefit costs other than the service cost component are included in Other income (expense), net in the Consolidated Statements of Comprehensive Income.

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



	Pension Plans						Post-retirement Benefits
	Year ended December 31, 2018		Year ended December 31, 2017		Year ended December 31, 2016		Year ended December 31, 2018		Year ended December 31, 2017		Year ended December 31, 2016
Discount rate	3.50	%	4.10	%	4.40	%	3.60	%	4.30	%	4.60	%
Rate of compensation increase (salaried)	3.00	%	3.00	%	3.00	%	N/A		N/A		N/A
Expected return on assets	4.50	%	4.70	%	4.70	%	N/A		N/A		N/A

The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of the Company’s plans.



	Pension Plans				Post-retirement Benefits
	As of December 31,
	2018		2017		2018		2017
Discount rate	4.20	%	3.50	%	4.20	%	3.60	%
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, 2018.

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, 2018 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, 2018 (dollars in millions):



	1% Increase		1% Decrease
Effect on total of service and interest cost	$	1	$	(1	)
Effect on post-retirement benefit obligation	$	13	$	(11	)

The following table provides a reconciliation of the changes in the net benefit obligations and fair value of plan assets for the years ended December 31, 2018, 2017 and 2016 (dollars in millions):



	Pension Plans									Post-retirement Benefits
	Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016
Benefit Obligations:
Net benefit obligation at beginning of year	$	181		$	155		$	140		$	102		$	144		$	147
Service cost	12			12			13			1			2			2
Interest cost	6			6			6			4			6			7
Plan Amendments	—			1			(5		)	—			(73		)	—
Benefits paid	(6		)	(7		)	(7		)	(2		)	(2		)	(1		)
Actuarial (gain) loss	(16		)	14			8			(12		)	25			(11		)
Net benefit obligation at end of year	$	177		$	181		$	155		$	93		$	102		$	144
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year	$	188		$	150		$	140		$	—		$	—		$	—
Actual return on plan assets	(6		)	14			6			—			—			—
Employer contributions	20			31			11			2			2			1
Benefits paid	(6		)	(7		)	(7		)	(2		)	(2		)	(1		)
Fair value of plan assets at end of year	$	196		$	188		$	150		$	—		$	—		$	—
Net Funded Status	$	19		$	7		$	(5	)	$	(93	)	$	(102	)	$	(144	)

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, 2018 and 2017 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
	2018		2017		2018		2017		2018		2017
Diversified debt securities	$	9	$	26	$	156	$	128	$	165	$	154
Diversified equity securities	20		20		8		8		28		28
Cash equivalents	3		6		—		—		3		6
Total	$	32	$	52	$	164	$	136	$	196	$	188

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 2018, 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, 2018 and 2017, on a pre-tax basis (dollars in millions):



	Pension Plans						Post-retirement Benefits
	As of December 31,
	2018			2017			2018			2017
Amounts Recognized in Balance Sheet:
Noncurrent assets	$	19		$	7		$	—		$	—
Current liabilities	—			—			(3		)	(3		)
Noncurrent liabilities	—			—			(90		)	(99		)
Total asset (liability)	$	19		$	7		$	(93	)	$	(102	)
Accumulated Other Comprehensive Loss:
Prior service credit	$	3		$	4		$	71		$	84
Actuarial (loss) gain	(8		)	(11		)	2			(10		)
Total	$	(5	)	$	(7	)	$	73		$	74

The amounts in AOCL expected to be amortized and recognized as a component of net periodic benefit cost in 2019 are as follows (dollars in millions):



	2019
	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, 2018 and 2017 was $173 million and $177 million, respectively.

As of December 31, 2018 and 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, 2018 and 2017, the salary defined benefit pension plan had plan assets greater than the projected benefit obligation and accumulated benefit obligation.

Information about expected cash flows for the Company’s pension and post-retirement benefit plans is as follows (dollars in millions):



	Pension Plans		Post-retirement Benefits
Employer Contributions:
2019 expected contributions	$	—	$	3
Expected Benefit Payments:
2019	8		3
2020	10		4
2021	11		4
2022	12		5
2023	13		5
2024-2028	67		26

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 no charge to the Consolidated Statements of Comprehensive Income for each of the years ended December 31, 2018, 2017 and 2016, and the fair value of the rabbi trust plan assets and deferred compensation obligation was $9 million and $8 million as of December 31, 2018 and 2017, respectively.

INCOME TAXES

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

INCOME TAXES

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



	Years ended December 31,
	2018		2017		2016
U.S. income	$	755	$	491	$	309
Foreign income	50		36		32
Total	$	805	$	527	$	341

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



	Years ended December 31,
	2018		2017			2016
Estimated current income taxes:
U.S. federal	$	94	$	61		$	2
Foreign	9		7			8
U.S. state and local	11		5			2
Total Current	114		73			12
Deferred income tax expense (credit), net:
U.S. federal	45		(44		)	107
Foreign	—		1			—
U.S. state and local	7		(7		)	7
Total Deferred	52		(50		)	114
Total income tax expense	$	166	$	23		$	126

On December 22, 2017, the U.S. Tax Cuts and Jobs Act was enacted into law. The U.S. Tax Cuts and Jobs Act made broad and complex changes to the U.S. tax code that impact the Company, most notably a reduction of the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017. It also included a one-time deemed repatriation tax on undistributed foreign earnings and profits.

On December 22, 2017, the United States Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provided guidance on accounting for the tax effects of the U.S. Tax Cuts and Jobs Act. The Company recognized the income tax effects of the U.S. Tax Cuts and Jobs Act for the year ended December 31, 2017, the reporting period in which it was signed into law, in accordance with SAB 118. As of December 31, 2018, the Company has completed its accounting for the tax effects of the U.S. Tax Cuts and Jobs Act.

In accordance with SAB 118, the Company recorded a deferred tax benefit of $157 million related to the re-measurement of certain deferred tax assets and liabilities and $5 million of tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings and profits for the year ended December 31, 2017. The total net benefit of $152 million was deemed a reasonable estimate of the impact of the U.S. Tax Cuts and Jobs Act for the Company as of December 31, 2017.

During the year ended December 31, 2018, the Company finalized its accounting for the enactment of the U.S. Tax Cuts and Jobs Act which resulted in a deferred tax benefit of $160 million related to the re-measurement of certain deferred tax assets and liabilities and $6 million of tax expense in connection with the transition tax on the mandatory deemed repatriation of foreign earnings and profits for a total net benefit of $154 million. The change in total net benefit of $2 million is incorporated into the Company’s income tax expense for the year ended December 31, 2018. The Company concluded that no material adjustments were required from the previous reasonable estimate related to the U.S. Tax Cuts and Jobs Act.

A reconciliation of the provision for income tax expense compared with the amounts at the U.S. federal statutory rate is as follows (dollars in millions):



	Years ended December 31,
	2018			2017			2016
Tax at U.S. statutory income tax rate	$	169		$	185		$	120
State tax expense	15			10			6
Non-deductible expenses	(9		)	7			5
Foreign rate differential	(4		)	(5		)	(5		)
Effect of tax rate changes	(4		)	—			—
Tax credits	(3		)	(21		)	—
Valuation allowance	2			3			1
Impact related to U.S. Tax Cuts and Jobs Act	—			(155		)	—
Other adjustments	—			(1		)	(1		)
Total income tax expense	$	166		$	23		$	126

The effective tax rate for the year ended December 31, 2018 was 21%, as compared with 4% in 2017. The higher rate is principally due to the one-time tax benefit recorded in 2017 in connection with the U.S. Tax Cuts and Jobs Act.

Deferred income tax assets and liabilities as of December 31, 2018 and 2017 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.

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 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. The U.S. Tax Cuts and Jobs Act requirement of a one-time repatriation tax on foreign earnings and profits resulted in the Company recording a $6 million liability for the deemed repatriation to be paid to the U.S. Government. In the future, the U.S. Tax Cuts and Jobs Act provides for tax free repatriations of earnings and profits generated by foreign subsidiaries through a 100% dividends received deduction. The remaining deferred tax liabilities, if recorded, related to unremitted earnings that are indefinitely reinvested are not material.

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



	As of December 31, 2018			As of December 31, 2017
Deferred tax assets:
Intangibles	$	29		$	35
Deferred revenue	24			25
Other accrued liabilities	20			18
Warranty accrual	14			11
Operating loss carryforwards	10			12
Sales allowances and rebates	8			6
Stock-based compensation	5			6
Technology-related investments	5			4
Inventories	4			5
Capital loss carryforwards	3			3
Environmental remediation	3			3
Unrealized loss on interest rate derivatives	1			1
Tax credits	1			—
Other	2			4
Total Deferred tax assets	129			133
Valuation allowances	(10		)	(9		)
Deferred tax liabilities:
Goodwill	(311		)	(287		)
Trade name	(114		)	(96		)
Property, plant and equipment	(10		)	(7		)
Post-retirement	(9		)	(4		)
Other	(2		)	(3		)
Total Deferred tax liabilities	(446		)	(397		)
Net Deferred tax liability	$	(327	)	$	(273	)

The estimated net operating loss carryforwards as of December 31, 2018 relate solely to U.S. state net operating loss carryforwards. Substantially all state operating loss carryforwards will not expire until 2028-2031.

Management has determined, based on an evaluation of available objective and subjective evidence, that it is more likely than not that certain foreign deferred tax assets and an anticipated capital loss carryforward will not be realized; therefore these deferred tax assets are offset with a valuation allowance of $10 million and $9 million as of December 31, 2018 and 2017, 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, 2018 and 2017. Management does not anticipate any material changes in the balance in 2019. The change in the liability for unrecognized tax benefits are as follows (dollars in millions):




December 31, 2016	$	2

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

December 31, 2017	$	2

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

December 31, 2018	$	2

For the years ended December 31, 2018, 2017 and 2016, the Company recognized no interest and penalties in the Consolidated Statements of Comprehensive Income because either no uncertain tax positions were identified or the penalties and interest anticipated were not material in all the periods presented. The Company follows a policy of recording any interest or penalties in Income tax expense.

Management does not anticipate any significant changes in unrecognized tax benefits in 2019. There was $2 million as of both December 31, 2018 and 2017 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, 2018

Equity [Abstract]

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, 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 income	$	60		$	(12	)	$	48
Balance at December 31, 2017	$	40		$	(55	)	$	(15	)
Foreign currency translation	(9		)	—			(9		)
Pension and OPEB liability adjustment	1			—			1
Available-for-sale securities and interest rate swaps	(9		)	2			(7		)
Net current period other comprehensive loss	$	(17	)	$	2		$	(15	)
Balance at December 31, 2018	$	23		$	(53	)	$	(30	)

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, 2016
AOCL Components	Amount reclassified from AOCL			Affected line item in the consolidated statements of comprehensive income
Amortization of OPEB items:
Prior service credit	$	3		Cost of sales
Actuarial gain	1			Cost of sales
Total reclassifications, before tax	4			Income before income taxes
Income tax expense	(2		)	Income 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 OPEB items:
Prior service credit	$	3		Cost of sales
	1			Selling, general and administrative
Total reclassifications, before tax	4			Income before income taxes
Income tax expense	(1		)	Income tax expense
Total reclassifications	$	3		Net of tax



	For the year ended December 31, 2018
AOCL Components	Amount reclassified from AOCL			Affected line item in the consolidated statements of comprehensive income
Amortization of OPEB items:
Prior service credit	$	13		Other income (expense), net
Total reclassifications, before tax	13			Income before income taxes
Income tax expense	(3		)	Income tax expense
Total reclassifications	$	10		Net of tax

Prior service cost and actuarial loss are included in the computation of the Company’s net periodic benefit cost. Please see NOTE 14 “Employee Benefit Plans” for additional details.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases certain facilities and equipment under various operating leases. Rent expense under the non-cancelable operating leases was $5 million for each of the years ended December 31, 2018, 2017 and 2016. Certain leases contain renewal options.

As of December 31, 2018, future payments under non-cancelable operating leases are as follows over each of the next five years and thereafter (dollars in millions):




2019	$	4
2020	3
2021	2
2022	1
2023	1
Thereafter	—
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, 2018, the Company had a liability recorded in the amount of $12 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, 2018

Risks and Uncertainties [Abstract]

CONCENTRATION OF RISK

As of December 31, 2018 and 2017, the Company employed approximately 2,900 and 2,700 employees, respectively, with 90% and 89%, respectively, of those employees in the U.S. Approximately 59% of the Company’s U.S. employees were represented by unions and subject to a collective bargaining agreement as of both December 31, 2018 and 2017. 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.

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



	Years ended December 31,
% of net sales	2018		2017		2016
Daimler AG	18	%	20	%	21	%
PACCAR Inc.	10	%	9	%	9	%

No other customers accounted for more than 10% of net sales of the Company during the years ended December 31, 2018, 2017 or 2016.

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



% of accounts receivable	As of December 31, 2018		As of December 31, 2017
Daimler AG	18	%	7	%
Volvo Group	11	%	11	%
Kirby Corporation	9	%	15	%

No other customers accounted for more than 10% of the outstanding accounts receivable as of December 31, 2018 or December 31, 2017.

No supplier accounted for greater than 10% of materials purchased during the years ended December 31, 2018, 2017 or 2016.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	12 Months Ended
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	Dec. 31, 2018
Related Party Transactions [Abstract]
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS 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.

COMMON STOCK	12 Months Ended
COMMON STOCK	Dec. 31, 2018
Equity [Abstract]
COMMON STOCK	COMMON STOCK The Company’s current stock repurchase program ("Repurchase Program") was announced on November 14, 2016 when the Board of Directors authorized the Company to repurchase up to $1,000 million of its common stock on the open market or through privately negotiated transactions. On November 8, 2017, the Board of Directors authorized the Company to repurchase an additional $500 million of its common stock, and on July 30, 2018, the Board of Directors authorized the Company to repurchase an additional $500 million of its common stock, bringing the total amount authorized under the Repurchase Program to $2,000 million. Also on July 30, 2018, the Board of Directors removed the termination date of the Repurchase Program. The timing and amount of stock purchases are subject to market conditions and corporate needs. The Repurchase Program may be modified, suspended or discontinued at any time at the Company’s discretion. During 2018, the Company repurchased approximately $609 million of its common stock under the Repurchase Program. All transactions during 2018 were settled in cash during the same period.

EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

EARNINGS PER SHARE

The Company presents both basic and diluted earnings per share (“EPS”) amounts. Basic EPS is calculated by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted EPS is calculated by dividing net income by the weighted average number of common shares and common equivalent shares outstanding during the reporting period that are calculated using the treasury stock method for stock-based awards. The treasury stock method assumes that the Company uses the proceeds from the exercise of awards to repurchase common stock at the average market price during the period. The assumed proceeds under the treasury stock method include the purchase price that the grantee will pay in the future and compensation cost for future service that the Company has not yet recognized. During the years ended December 31, 2018, 2017 and 2016, there were no outstanding stock options excluded from the diluted EPS calculation because they were anti-dilutive. Basic and diluted EPS for the full-year is calculated using the weighted average shares of common stock outstanding during the year while quarterly basic and diluted EPS is calculated using the weighted average shares of common stock outstanding during the quarter; therefore, the sum of the four quarters’ EPS may not equal full-year EPS.

The following table reconciles the numerators and denominators used to calculate basic EPS and diluted EPS (in millions, except per share data):



	Years ended December 31,
	2018		2017		2016
Net income	$	639	$	504	$	215
Weighted average shares of common stock outstanding	133		149		168
Dilutive effect stock-based awards	1		1		1
Diluted weighted average shares of common stock outstanding	134		150		169
Basic earnings per share attributable to common stockholders	$	4.81	$	3.38	$	1.28
Diluted earnings per share attributable to common stockholders	$	4.78	$	3.36	$	1.27

GEOGRAPHIC INFORMATION

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

GEOGRAPHIC INFORMATION

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



	Years ended December 31,
	2018		2017		2016
United States	$	1,922	$	1,614	$	1,277
China	127		62		50
Canada	104		125		115
Japan	101		75		70
Mexico	57		39		41
Germany	55		45		53
United Kingdom	55		36		28
France	40		21		16
Sweden	30		13		8
Netherlands	25		30		27
Other	197		202		155
Total	$	2,713	$	2,262	$	1,840

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



	Years ended December 31,
	2018		2017		2016
United States	$	427	$	400	$	412
India	24		32		36
Hungary	11		12		11
Other	4		4		5
Total	$	466	$	448	$	464

QUARTERLY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

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
2018
Net sales	$	663	$	711	$	692	$	647
Gross profit	342		374		368		338
Operating income	222		248		246		207
Income before income taxes	191		222		218		174
Net income	151		174		167		147
Basic earnings per share	$	1.09	$	1.30	$	1.28	$	1.15
Diluted earnings per share	$	1.08	$	1.29	$	1.27	$	1.14
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

Schedule I-Parent Company Only Financial Statements

12 Months Ended

Dec. 31, 2018

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Schedule I-Parent Company Only Financial Statements

Allison Transmission Holdings, Inc.

Schedule I—Parent Company only Balance Sheets

(dollars in millions)



	December 31, 2018			December 31, 2017
ASSETS
Current Assets:
Cash	$	—		$	—
Total Current Assets	—			—
Investments in and advances to subsidiaries	659			689
TOTAL ASSETS	$	659		$	689
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	—		$	—
Total Current Liabilities	—			—
Capital stock	1			1
Paid in capital	1,788			1,758
Treasury stock	—			—
Accumulated deficit	(1,100		)	(1,055		)
Accumulated other comprehensive loss, net of tax	(30		)	(15		)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	659		$	689

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,
	2018		2017		2016
Net sales	$	—	$	—	$	—
General and administrative fees	—		—		—
Total operating income	—		—		—
Other income:
Equity earnings of consolidated subsidiary	639		504		215
Income before income taxes	639		504		215
Income tax expense	—		—		—
Net income	$	639	$	504	$	215
Comprehensive income	$	624	$	552	$	211

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,
	2018			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	639		$	504		$	215
Deduct items included in net income not providing cash:
Equity in earnings in consolidated subsidiary	(639		)	(504		)	(215		)
Net cash provided by operating activities	—			—			—
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in subsidiaries	(22		)	(19		)	(24		)
Dividends	80			89			100
Net cash provided by investing activities	58			70			76
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions	22			19			24
Dividends	(80		)	(89		)	(100		)
Net cash used in financing activities	(58		)	(70		)	(76		)
Net increase (decrease) during period	—			—			—
Cash and cash equivalents at beginning of period	—			—			—
Cash and cash equivalents at end of period	$	—		$	—		$	—

The accompanying note is an integral part of the Parent Company only financial statements.

- 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

Schedule I-Parent Company Only Financial Statements - BASIS OF PRESENTATION	12 Months Ended
	Dec. 31, 2018
Parent Company
Condensed Financial Statements, Captions [Line Items]
BASIS OF PRESENTATION	BASIS OF PRESENTATION Allison Transmission Holdings, Inc. (the “Parent Company”) is a holding company that conducts all of its business operations through its subsidiaries. There are restrictions on the Parent Company’s ability to obtain funds from its subsidiaries through dividends (refer to NOTE 8 “Debt” of Notes to Consolidated Financial Statements). The entire amount of our consolidated net assets was subject to restrictions on payment of dividends at the end of December 31, 2018, 2017 and 2016. 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
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Dec. 31, 2018
Accounting Policies [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The information herein reflects all normal recurring material adjustments, which are, in the opinion of management, necessary for a fair statement of the results for the periods presented. The consolidated financial statements herein consist of all wholly-owned domestic and foreign subsidiaries with all significant intercompany transactions eliminated. These consolidated financial statements present the financial position, results of comprehensive income, cash flows and statements of equity.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses. Estimates include, but are not limited to, sales allowances, government price adjustments, fair market values and future cash flows associated with goodwill, indefinite life intangibles, 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	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 and Cash Equivalents Cash equivalents are defined as short-term, highly-liquid investments with original maturities of 90 days or less. Under the Company’s cash management system, checks issued but not presented to banks may result in book overdraft balances for accounting purposes and are classified within Accounts payable in the Consolidated Balance Sheets. The change in book overdrafts is reported as a component of operating cash flows for Accounts payable.
Marketable Securities	Marketable Securities The Company determines the appropriate classification of all marketable securities as “held-to-maturity,” “available-for-sale” or “trading” at the time of purchase, and re-evaluates such classifications as of each balance sheet date. As of December 31, 2018, and 2017, the Company’s marketable securities were classified as trading. Trading securities are carried at fair value with the unrealized gain or loss recognized in Other income (expense), net. The fair value of the Company’s investment securities is determined by currently available market prices. See NOTE 7 “Fair Value of Financial Instruments” for more details.
Inventories	Inventories Inventories are stated at the lower of cost and net realizable value. The Company determines cost using the first-in, first-out method. The Company analyzes inventory on a quarterly basis to determine whether it is excess or obsolete inventory. Any decline in carrying value of estimated excess or obsolete inventory is recorded as a reduction of inventory and as an expense included in Cost of sales in the period it is identified.
Property, Plant and Equipment	Property, Plant and Equipment Property, plant and equipment are recorded at cost less accumulated depreciation Software represents the costs of software developed or obtained for internal use. Software costs are amortized on a straight-line basis over their estimated useful lives. Software assets are reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable over the remaining lives of the assets. Upgrades and enhancements are capitalized if they result in added functionality, which enables the software to perform tasks it was previously incapable of performing. Software maintenance, training, data conversion and business process reengineering costs are expensed in the period in which they are incurred. Special tooling represents the costs to design and develop tools, dies, jigs and other items owned by the Company and used in the manufacture of components by suppliers under long-term supply agreements. Special tooling is depreciated over the tool’s expected life. Special tooling used in the development of new technology is expensed as incurred. Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred.
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets The carrying value of long-lived assets is evaluated whenever events or circumstances indicate that the carrying value of an asset may not be recoverable. Events or circumstances that would result in an impairment review primarily include a significant change in the use of an asset or the planned sale or disposal of an asset. The asset would be considered impaired when there is no future use planned for the asset or the future net undiscounted cash flows generated by the asset or asset group are less than its carrying value. An impairment loss would be recognized based on the amount by which the carrying value exceeds fair value. Assumptions and estimates used to determine cash flows in the evaluation of impairment and the fair values used to determine the impairment are subject to a degree of judgment and complexity. Any changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets and could result in an impairment charge. As a result of events and circumstances related to weak demand conditions for the TC10 product in the fourth quarter of 2017 and the decision to cease production of the TC10 product in the fourth quarter of 2018, the Company recorded a $4 million and $32 million impairment loss associated with the production of TC10 for the years ended December 31, 2018 and 2017, respectively. There were no impairment charges for the year ended December 31, 2016.
Goodwill and Other Intangible Assets	Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price paid over the fair value of net assets acquired. In accordance with the FASB’s authoritative accounting guidance on goodwill, the Company does not amortize goodwill but rather evaluates it for impairment on an annual basis, or more often if events or circumstances change that could cause goodwill to become impaired. Goodwill is tested for impairment at the reporting unit level, which is the same as the Company’s one operating and reportable segment. The Company does not aggregate any components into its reporting unit. The Company has elected to perform its annual goodwill impairment test on October 31 of every year using a multi-step impairment test. In Step 0, the Company has the option to evaluate various qualitative factors to determine the likelihood of impairment. If determined that the fair value is more likely than not less than the carrying value, then the Company is required to perform Step 1. If the Company does not elect to perform Step 0, it can voluntarily proceed directly to Step 1. In Step 1, the Company performs a quantitative analysis to compare the fair value of its reporting unit to its carrying value including goodwill. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that unit, goodwill is not considered impaired, and the Company is not required to perform further testing. If the carrying value of a reporting unit’s goodwill exceeds its carrying value of net assets, then the Company would record an impairment loss equal to the difference. Goodwill impairment testing for 2018 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 2018 annual goodwill impairment test indicated that the fair value of the reporting unit more likely than not exceeded its carrying value, indicating no impairment. Refer to NOTE 6, “Goodwill and Other Intangible Assets” for further information. Other intangible assets have both indefinite and finite useful lives. Intangible assets with indefinite useful lives, such as the Company’s trade name, are not amortized but are tested annually for impairment. The Company has elected to perform its 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, the Company's inability to execute on marketing programs and/or delay in introduction of new products, and higher discount rate as a result of market conditions. While unpredictable and inherently uncertain, the Company believes the forecast estimates are reasonable and incorporate those assumptions that similar market participants would use in their estimates of fair value. After reviewing various qualitative factors, the Company’s annual 2018 trade name impairment test indicated that the fair value of the trade name more likely than not exceeded its carrying value, indicating no impairment. Refer to NOTE 6, “Goodwill and Other Intangible Assets” for further information. Intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment when circumstances change that would create a triggering event. Customer relationships are amortized over the life in which expected benefits are to be consumed. The other remaining finite life intangibles are amortized on a straight-line basis over their useful lives. The Company evaluates the remaining useful life of the other intangible assets on a periodic basis to determine whether events or circumstances warrant a revision to the remaining useful life. Assumptions and estimates about future values and remaining useful lives of the Company’s intangible and other long-lived assets are complex and subjective. 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 6 “Goodwill and Other Intangible Assets” provides further information.
Deferred Financing Costs	Deferred Financing Costs The debt issuance costs related to line-of-credit arrangements is presented as a component of other non-current assets. The debt issuance costs related to other types of debt instruments such as notes and loans are presented as a component of long-term debt. Deferred financing costs continue to be amortized over the life of the related debt using the effective interest method. Amortization of deferred financing costs is recorded as part of interest expense and totaled $6 million, $6 million and $7 million for the years ended December 31, 2018, 2017 and 2016, respectively.
Financial Instruments	Financial Instruments The Company’s cash equivalents are invested in U.S. government backed securities and recorded at fair value in the Consolidated Balance Sheets. The carrying values of accounts receivable and accounts payable approximate fair value due to their short-term nature. The Company’s financial derivative instruments, including interest rate swaps, are carried at fair value on the Consolidated Balance Sheets. Refer to NOTE 7, “Fair Value of Financial Instruments” for more detail. The Company’s long-term debt obligations are carried at historical amounts with the Company providing fair value disclosure in NOTE 8, “Debt”.
Insurable Liabilities	Insurable Liabilities The Company records liabilities for its medical, workers’ compensation, long-term disability, product, general and auto liabilities. The determination of these liabilities and related expenses is dependent on claims experience. For most of these liabilities, claims incurred but not yet reported are estimated based upon historical claims experience.
Revenue Recognition	Revenue Recognition The Company records sales as each distinct performance obligation within a contract is satisfied. The Company sells extended transmission coverage (“ETC”) for which sales are deferred. ETC sales are recognized ratably over the period of coverage, which typically ranges from two to five years after initial sale. Costs associated with ETC programs are recorded as incurred during the extended period. Distributor and customer sales incentives, consisting of allowances and other rebates, are recorded as a reduction to Net sales when it is determined that the adjustment is not likely to reverse, historically on a quarterly basis. Incentive programs are generally product specific or region specific. Some factors used in estimating when an adjustment is not likely to reverse are the number of transmissions that will be affected by the incentive program and rate of acceptance of any incentive program. Consideration given to commercial customers recorded as a reduction of Net sales in the Consolidated Statements of Comprehensive Income included $80 million, $66 million, and $58 million for the years ended December 31, 2018, 2017 and 2016, respectively. Sales under U.S. government production contracts are recognized at the point in time when control passes to the customer, or when the U.S. government accepts the transmission and is able to direct its use in certain bill-and-hold arrangements. Deferred revenue arises from cash received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met. Under the terms of previous U.S. government contracts, there were certain price reduction clauses and provisions for potential price reductions which were estimated at the time of sale based upon the Company’s history and experience and were recorded as a reduction to Net sales. Potential reductions may be attributed to a change in projected sales volumes or plant efficiencies which impact overall costs. As of each of December 31, 2018 and 2017, 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 for each of the years ended December 31, 2018, 2017 and 2016. The associated costs are recorded in Cost of sales.
Warranty	Warranty Provisions for estimated expenses related to product warranties are made at the time products are sold. Warranty claims arise when a transmission 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 the Company's historical rates.
Research and Development	Research and Development The Company incurs costs in connection with research and development programs that are expected to contribute to future earnings. Such costs are charged to Engineering — research and development as incurred.
Environmental	Environmental The Company accrues costs related to environmental matters when it is probable that the Company has incurred a liability related to a contaminated site and the costs can be reasonably estimated. For additional information, see NOTE 17, “Commitments and Contingencies”.
Foreign Currency Translation	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 16, “Accumulated Other Comprehensive Loss”.
Derivative Instruments	Derivative Instruments In the normal course of business, the Company is exposed to fluctuations in interest rates, foreign currency exchange rates, and commodity prices. The risk is managed through the use of financial derivative instruments, when appropriate. The Company has qualified for and elected hedge accounting treatment on interest rate swap contracts. As necessary, the Company adjusts the values of the derivative instruments for counter-party or credit risk. NOTE 9, “Derivatives” provides further information on the accounting treatment of the Company’s derivative instruments.
Income Taxes	Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The future tax benefits associated with operating loss and tax credit carryforwards are recognized as deferred tax assets. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The need to establish a valuation allowance against the deferred tax assets is assessed periodically based on a more-likely-than-not realization threshold, in accordance with the FASB’s authoritative accounting guidance on income taxes. Appropriate consideration is given to all positive and negative evidence related to that realization. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, and experience with tax attributes expiring unused and tax planning alternatives. The weight given to these considerations depends upon the degree to which they can be objectively verified.
Stock-Based Compensation	Stock-Based Compensation In March 2015, the Company’s Board of Directors adopted and, in May 2015, the Company’s stockholders approved the Allison Transmission Holdings, Inc. 2015 Equity Incentive Award Plan (“2015 Plan”), which became effective on May 14, 2015. Under the 2015 Plan, certain employees (including executive officers), consultants and directors are eligible to receive equity-based compensation, including non-qualified stock options, incentive stock options, restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), performance awards, stock appreciation rights and other equity-based awards, or any combination thereof. The 2015 Plan limits the aggregate number of shares of common stock available for issue to 15.3 million and will expire on, and no option or other equity award may be granted pursuant to the 2015 Plan after, the tenth anniversary of the date the 2015 Plan was approved by the Board of Directors. Prior to the adoption of the 2015 Plan, the Company’s equity-based awards were granted under the Allison Transmission Holdings, Inc. 2011 Equity Incentive Award Plan (“2011 Plan”) and the Equity Incentive Plan of Allison Transmission Holdings, Inc. (“Equity Plan” and, together with the 2011 Plan, the “Prior Plans”). As of the effective date of the 2015 Plan, no new awards will be granted under the Prior Plans, but the Prior Plans will continue to govern the equity awards issued under the Prior Plans. RSU grants are recorded at fair market value at the date of grant and vest upon continued performance of services by the RSU holders over one to three years. Performance unit grants are recorded at fair value based on a Monte-Carlo pricing model and the restrictions lapse on the date the Compensation Committee of the Board of Directors determines the number of shares that shall vest based on the related performance or market condition achievement. Non-qualified stock option grants are recorded at fair value using a Black-Scholes option pricing model and vest upon the continued performance of services by the option holder on the third anniversary of the grant date for awards under the 2015 Plan. The Company has made a policy election under applicable accounting guidance to account for forfeitures as a reduction of stock-based compensation expense when the forfeiture actually occurs. RSUs were granted to certain employees and directors at fair market value on the date of grant. The restrictions lapse upon continued performance by the RSU holder on the vest date which generally occurs over one, two or three years. RSU incentive compensation expense recorded was $5 million, $7 million and $2 million for the years ended December 31, 2018, 2017 and 2016, respectively. Performance-based awards, including performance units, were granted to certain employees at fair value at the date of grant. The Company records the fair value of each performance-based award based on a Monte-Carlo pricing model. Performance-based award incentive compensation expense recorded was $6 million, $3 million and $1 million for the years ended December 31, 2018, 2017 and 2016, 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, $2 million and $3 million for the years ended December 31, 2018, 2017 and 2016, respectively.
Pension and Post-retirement Benefit Plans	Pension and Post-retirement Benefit Plans For pension and other post-retirement benefits (“OPEB”) plans in which employees participate, costs are determined within the FASB’s authoritative accounting guidance set forth in employers’ defined benefit pensions including accounting for settlements and curtailments of defined benefit pension plans, termination of benefits and accounting for post-retirement benefits other than pensions. In accordance with the authoritative accounting guidance, the Company recognizes the funded status of its defined benefit pension plans and OPEB plan in its Consolidated Balance Sheets with a corresponding adjustment to AOCL, net of tax. Post-retirement benefit costs consist of service cost and interest cost on accrued obligations. Actuarial gains and losses on liabilities, together with any prior service costs, are charged (or credited) to income over the average remaining service lives of employees. The benefit cost components shown in the Consolidated Statements of Comprehensive Income are based upon various actuarial assumptions and methodologies as prescribed by authoritative accounting guidance. These assumptions include discount rates, expected return on plan assets, health care cost trend rates, inflation, rate of compensation increases, population demographics, mortality rates and other factors. The Company reviews all actuarial assumptions on an annual basis. Changes in key economic indicators can change these assumptions. These assumptions, along with the actual value of assets at the measurement date, will impact the calculation of pension expenses for the year.
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements	Recently Adopted Accounting Pronouncements In May 2014, the FASB issued authoritative accounting guidance on a company’s accounting for revenue from contracts with customers, which guidance was subsequently 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 was adopted by the Company effective January 1, 2018 on a modified retrospective basis. See NOTE 3, “Revenue” for information regarding the impact of the adoption of this guidance. In February 2016, the FASB issued authoritative accounting guidance on lease accounting, which guidance was subsequently amended. The guidance requires lessees to present right-of-use assets and lease liabilities on the balance sheet for all leases not considered short-term leases. Short-term leases are leases with a lease term of 12 months or less as long as the leases do not include options to purchase the underlying assets that the lessee is reasonably certain to exercise. The guidance also introduces new disclosure requirements for leasing arrangements. In July 2018, the FASB issued additional authoritative guidance on this topic giving lessees an optional adoption approach under which the impact of the adoption of the guidance would be shown as of the date of adoption. Management has elected to adopt the guidance using this modified retrospective approach. The guidance was adopted by the Company effective January 1, 2019. The Company will record a non-monetary right-of-use asset and current and non-current lease liabilities of less than $15 million on its Consolidated Balance Sheets as of January 1, 2019. The adoption of this guidance did not have a material impact on the Company's Consolidated Statements of Comprehensive Income. 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 and did not 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 post-retirement 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 and did not have a material impact on the Company’s consolidated financial statements. 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 and did not have a material impact on the Company’s consolidated financial statements. In August 2017, the FASB issued authoritative accounting guidance on accounting for derivative and hedge instruments. Among other things, the guidance allows the initial hedge effectiveness assessment to be performed by the end of the quarter in which the hedge is designated, permits a qualitative assessment for certain hedges if an expectation of high effectiveness can be supported throughout the term of the hedge, and removes the requirement to record ineffectiveness on cash flow hedges immediately through earnings when the hedge is highly effective. The guidance was early adopted by the Company effective April 1, 2018 and applied upon entering into interest rate swaps designated as cash flow hedges during the second quarter of 2018. When adopted in an interim period, the guidance is required to be reflected as of the beginning of the year of adoption. The Company has not previously designated any derivative instruments as hedging instruments, and thus, the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. In February 2018, the FASB issued authoritative accounting guidance on transfers of stranded balances in accumulated other comprehensive loss to retained earnings. The passage of the U.S. Tax Cuts and Jobs Act by the U.S. federal government in December 2017 and existing GAAP requirements to adjust deferred tax assets and liabilities for changes in tax laws or rates created stranded balances in accumulated other comprehensive loss on deferred tax assets and liabilities previously recorded as a component to accumulated other comprehensive loss. The guidance applies to companies affected by these stranded balances and allows a reclassification of these balances to retained earnings. The guidance was adopted by the Company effective January 1, 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. In June 2018, the FASB issued authoritative accounting guidance on accounting for nonemployee awards for goods or services received by a company. The guidance was adopted by the Company effective January 1, 2019. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements In June 2016, the FASB issued authoritative accounting guidance on the presentation of financial assets at the net amount expected to be collected. The guidance also requires the disclosure of financing receivables disaggregated by the year of origination. The guidance will be effective for the Company in fiscal year 2020, and the Company does not plan to early adopt. Management is evaluating the impact of this guidance on the Company's consolidated financial statements. In August 2018, the FASB issued authoritative accounting guidance amending disclosure requirements for certain assets subject to fair value measurement. The guidance allows the Company to reduce the amount of disclosure on transfers between Level 1 and Level 2 assets. The guidance will be effective for the Company in fiscal year 2020, and the Company does not plan to early adopt. Management does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements. In August 2018, the FASB issued authoritative accounting guidance amending disclosure requirements for the Company's defined benefit pension plans and other post-retirement benefit plan. The guidance will be effective for the Company in fiscal year 2021, but early adoption is permitted. Management is currently evaluating the impact of this guidance on the Company's consolidated financial statements. In August 2018, the FASB issued authoritative accounting guidance on accounting for implementation costs in hosting arrangements to align these costs with existing guidance for internally developed software. The stage of implementation must be assessed to determine if costs should be capitalized or expensed, and capitalized costs should be expensed during the noncancellable term of the agreement. The guidance will be effective for the Company in fiscal year 2020, 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Property And Equipment Estimated Useful Lives

Depreciation expense is recorded using the straight-line method over the following estimated lives:



	Range in Years
Land improvements	5 – 30
Buildings and building improvements	10 – 40
Machinery and equipment	2 – 20
Software	2 – 5
Special tools	2 – 10

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



	December 31, 2018			December 31, 2017
Land and land improvements	$	24		$	24
Buildings and building improvements	336			322
Machinery and equipment	643			601
Software	143			136
Special tools	201			169
Construction in progress	52			46
Total property, plant and equipment	1,399			1,298
Accumulated depreciation	(933		)	(850		)
Property, plant and equipment, net	$	466		$	448

REVENUE (Tables)

12 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregated Revenue by Categories

The following presents disaggregated revenue by categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors (dollars in millions):



	Year ended December 31, 2018
North America On-Highway	$	1,317
North America Off-Highway	93
Defense	158
Outside North America On-Highway	383
Outside North America Off-Highway	129
Service Parts, Support Equipment and Other	633
Total Net Sales	$	2,713

INVENTORIES (Tables)

12 Months Ended

Dec. 31, 2018

Inventory Disclosure [Abstract]

Components of Inventories

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



	December 31, 2018		December 31, 2017
Purchased parts and raw materials	$	82	$	79
Work in progress	8		6
Service parts	48		46
Finished goods	32		23
Total inventories	$	170	$	154

PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2018

Property, Plant and Equipment [Abstract]

Property Plant and Equipment Cost and 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

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



	December 31, 2018			December 31, 2017
Land and land improvements	$	24		$	24
Buildings and building improvements	336			322
Machinery and equipment	643			601
Software	143			136
Special tools	201			169
Construction in progress	52			46
Total property, plant and equipment	1,399			1,298
Accumulated depreciation	(933		)	(850		)
Property, plant and equipment, net	$	466		$	448

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

12 Months Ended

Dec. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Other Intangible Assets

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



	December 31, 2018							December 31, 2017
	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		(619		)	213		832		(573		)	259
Proprietary technology	476		(434		)	42		476		(396		)	80
Customer relationships – defense	62		(41		)	21		62		(38		)	24
Patented technology – defense	28		(28		)	—		28		(28		)	—
Non-compete agreement	17		(17		)	—		17		(17		)	—
Tooling rights	5		(5		)	—		5		(5		)	—
Total	$	2,210	$	(1,144	)	$	1,066	$	2,210	$	(1,057	)	$	1,153

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):



	2019		2020		2021		2022		2023
Amortization expense	$	86	$	50	$	45	$	43	$	42

FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Summary of Fair Value of Financial Assets and (Liabilities)



	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)					TOTAL
	2018			2017			2018			2017		2018			2017
Cash equivalents	$	111		$	50		$	—		$	—	$	111		$	50
Rabbi trust assets	9			8			—			—		9			8
Deferred compensation obligation	(9		)	(8		)	—			—		(9		)	(8		)
Derivative liabilities, net	—			—			(9		)	—		(9		)	—
Total	$	111		$	50		$	(9	)	$	—	$	102		$	50

DEBT (Tables)

12 Months Ended

Dec. 31, 2018

Debt Disclosure [Abstract]

Summary of Long-Term Debt and Maturities

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



	December 31, 2018		December 31, 2017
Long-term debt:
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022	$	1,148	$	1,176
Senior Notes, fixed 5.0%, due 2024	1,000		1,000
Senior Notes, fixed 4.75%, due 2027	400		400
Total long-term debt	$	2,548	$	2,576
Less: current maturities of long-term debt	—		12
deferred financing costs, net (see NOTE 2)	25		30
Total long-term debt, net	$	2,523	$	2,534

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)	2019		2020		2021		2022		2023
Payments	$	—	$	8	$	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, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and their Impact on the Financial Condition



	December 31, 2018				December 31, 2017
	Balance Sheet Location	Fair Value			Balance Sheet Location	Fair Value
Derivatives designated as hedging instruments:
Interest rate swaps	Other current liabilities	$	(1	)	Other current liabilities	$	—
	Other non-current liabilities	(8		)	Other non-current liabilities	—
Total derivatives designated as hedging instruments		$	(9	)		$	—

PRODUCT WARRANTY LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2018

Guarantees and Product Warranties [Abstract]

Product Warranty Liability Activities

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



	Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016
Beginning balance	$	55		$	63		$	79
Payments	(32		)	(30		)	(35		)
Increase in liability (warranty issued during period)	38			18			16
Net adjustments to liability	5			4			3
Ending balance	$	66		$	55		$	63

DEFERRED REVENUE (Tables)

12 Months Ended

Dec. 31, 2018

Revenue Recognition and Deferred Revenue [Abstract]

Deferred Revenue for Extended Transmission Coverage Activity

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



	Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016
Beginning balance	$	110		$	93		$	79
Increases	52			52			37
Revenue earned	(40		)	(29		)	(23		)
Ending balance	$	122		$	116		$	93

OTHER INCOME (EXPENSE), NET (Tables)

12 Months Ended

Dec. 31, 2018

Other Income and Expenses [Abstract]

Computation of Other (Expense) Income, Net

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



	Years ended December 31,
	2018			2017			2016
Post-retirement benefit plan amendment credits	$	12		$	—		$	—
Vendor settlements	(4		)	(5		)	1
Technology-related investment expense	(3		)	(16		)	(1		)
Other	(2		)	(1		)	2
Total	$	3		$	(22	)	$	2

OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2018

Other Liabilities Disclosure [Abstract]

Summary of Other Current Liabilities

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



	As of December 31, 2018		As of December 31, 2017
Payroll and related costs	$	81	$	73
Sales allowances	39		34
Accrued interest payable	19		19
Vendor buyback obligation	15		14
Taxes payable	10		10
Defense price reduction reserve	9		9
Non-trade payables	3		8
Derivative liabilities	1		—
Other accruals	20		16
Total	$	197	$	183

EMPLOYEE BENEFIT PLANS (Tables)

12 Months Ended

Dec. 31, 2018

Retirement Benefits [Abstract]

Net Periodic Benefit Costs

Information about the net periodic benefit cost (credit) and other changes recognized in AOCL for the pension and post-retirement benefit plans is as follows (dollars in millions):



	Pension Plans									Post-retirement Benefits
	Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016
Net Periodic Benefit Cost (Credit):
Service cost	$	12		$	12		$	13		$	1		$	2		$	2
Interest cost	6			6			6			4			6			7
Expected return on assets	(8		)	(7		)	(7		)	—			—			—
Prior service credit	—			—			—			(13		)	(4		)	(4		)
Net Periodic Benefit Cost (Credit)	$	10		$	11		$	12		$	(8	)	$	4		$	5
Other changes recognized in other comprehensive income:
Prior service cost (credit)	$	—		$	1		$	(5	)	$	—		$	(73	)	$	—
Net (gain) loss	(2		)	8			8			(12		)	24			(11		)
Amortizations	—			—			—			13			4			4
Total recognized – other comprehensive income	$	(2	)	$	9		$	3		$	1		$	(45	)	$	(7	)

Weighted-Average Actuarial Assumptions

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



	Pension Plans						Post-retirement Benefits
	Year ended December 31, 2018		Year ended December 31, 2017		Year ended December 31, 2016		Year ended December 31, 2018		Year ended December 31, 2017		Year ended December 31, 2016
Discount rate	3.50	%	4.10	%	4.40	%	3.60	%	4.30	%	4.60	%
Rate of compensation increase (salaried)	3.00	%	3.00	%	3.00	%	N/A		N/A		N/A
Expected return on assets	4.50	%	4.70	%	4.70	%	N/A		N/A		N/A

The table below provides the weighted-average actuarial assumptions used to determine the benefit obligations of the Company’s plans.



	Pension Plans				Post-retirement Benefits
	As of December 31,
	2018		2017		2018		2017
Discount rate	4.20	%	3.50	%	4.20	%	3.60	%
Rate of compensation increase (salaried)	3.00	%	3.00	%	N/A		N/A

Health Care Costs Trends



	1% Increase		1% Decrease
Effect on total of service and interest cost	$	1	$	(1	)
Effect on post-retirement benefit obligation	$	13	$	(11	)

Reconciliation of Changes in Net Benefit Obligations and Fair Value of Plan Assets

The following table provides a reconciliation of the changes in the net benefit obligations and fair value of plan assets for the years ended December 31, 2018, 2017 and 2016 (dollars in millions):



	Pension Plans									Post-retirement Benefits
	Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016			Year ended December 31, 2018			Year ended December 31, 2017			Year ended December 31, 2016
Benefit Obligations:
Net benefit obligation at beginning of year	$	181		$	155		$	140		$	102		$	144		$	147
Service cost	12			12			13			1			2			2
Interest cost	6			6			6			4			6			7
Plan Amendments	—			1			(5		)	—			(73		)	—
Benefits paid	(6		)	(7		)	(7		)	(2		)	(2		)	(1		)
Actuarial (gain) loss	(16		)	14			8			(12		)	25			(11		)
Net benefit obligation at end of year	$	177		$	181		$	155		$	93		$	102		$	144
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year	$	188		$	150		$	140		$	—		$	—		$	—
Actual return on plan assets	(6		)	14			6			—			—			—
Employer contributions	20			31			11			2			2			1
Benefits paid	(6		)	(7		)	(7		)	(2		)	(2		)	(1		)
Fair value of plan assets at end of year	$	196		$	188		$	150		$	—		$	—		$	—
Net Funded Status	$	19		$	7		$	(5	)	$	(93	)	$	(102	)	$	(144	)

Fair Value of Plan Assets

The fair values of plan assets for the Company’s pension plans as of December 31, 2018 and 2017 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
	2018		2017		2018		2017		2018		2017
Diversified debt securities	$	9	$	26	$	156	$	128	$	165	$	154
Diversified equity securities	20		20		8		8		28		28
Cash equivalents	3		6		—		—		3		6
Total	$	32	$	52	$	164	$	136	$	196	$	188

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, 2018 and 2017, on a pre-tax basis (dollars in millions):



	Pension Plans						Post-retirement Benefits
	As of December 31,
	2018			2017			2018			2017
Amounts Recognized in Balance Sheet:
Noncurrent assets	$	19		$	7		$	—		$	—
Current liabilities	—			—			(3		)	(3		)
Noncurrent liabilities	—			—			(90		)	(99		)
Total asset (liability)	$	19		$	7		$	(93	)	$	(102	)
Accumulated Other Comprehensive Loss:
Prior service credit	$	3		$	4		$	71		$	84
Actuarial (loss) gain	(8		)	(11		)	2			(10		)
Total	$	(5	)	$	(7	)	$	73		$	74

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 2019 are as follows (dollars in millions):



	2019
	Pension Plans			Post-retirement Benefits
Prior service credit	$	1		$	13
Actuarial loss	(1		)	—
Total	$	—		$	13

Expected Cash Flows for Pension and Post-Retirement Benefit Plans

Information about expected cash flows for the Company’s pension and post-retirement benefit plans is as follows (dollars in millions):



	Pension Plans		Post-retirement Benefits
Employer Contributions:
2019 expected contributions	$	—	$	3
Expected Benefit Payments:
2019	8		3
2020	10		4
2021	11		4
2022	12		5
2023	13		5
2024-2028	67		26

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Loss Before Income Taxes

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



	Years ended December 31,
	2018		2017		2016
U.S. income	$	755	$	491	$	309
Foreign income	50		36		32
Total	$	805	$	527	$	341

Provision for Income Tax Expense

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



	Years ended December 31,
	2018		2017			2016
Estimated current income taxes:
U.S. federal	$	94	$	61		$	2
Foreign	9		7			8
U.S. state and local	11		5			2
Total Current	114		73			12
Deferred income tax expense (credit), net:
U.S. federal	45		(44		)	107
Foreign	—		1			—
U.S. state and local	7		(7		)	7
Total Deferred	52		(50		)	114
Total income tax expense	$	166	$	23		$	126

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,
	2018			2017			2016
Tax at U.S. statutory income tax rate	$	169		$	185		$	120
State tax expense	15			10			6
Non-deductible expenses	(9		)	7			5
Foreign rate differential	(4		)	(5		)	(5		)
Effect of tax rate changes	(4		)	—			—
Tax credits	(3		)	(21		)	—
Valuation allowance	2			3			1
Impact related to U.S. Tax Cuts and Jobs Act	—			(155		)	—
Other adjustments	—			(1		)	(1		)
Total income tax expense	$	166		$	23		$	126

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, 2018			As of December 31, 2017
Deferred tax assets:
Intangibles	$	29		$	35
Deferred revenue	24			25
Other accrued liabilities	20			18
Warranty accrual	14			11
Operating loss carryforwards	10			12
Sales allowances and rebates	8			6
Stock-based compensation	5			6
Technology-related investments	5			4
Inventories	4			5
Capital loss carryforwards	3			3
Environmental remediation	3			3
Unrealized loss on interest rate derivatives	1			1
Tax credits	1			—
Other	2			4
Total Deferred tax assets	129			133
Valuation allowances	(10		)	(9		)
Deferred tax liabilities:
Goodwill	(311		)	(287		)
Trade name	(114		)	(96		)
Property, plant and equipment	(10		)	(7		)
Post-retirement	(9		)	(4		)
Other	(2		)	(3		)
Total Deferred tax liabilities	(446		)	(397		)
Net Deferred tax liability	$	(327	)	$	(273	)

Liability for Unrecognized Tax Benefit




December 31, 2016	$	2

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

December 31, 2017	$	2

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

December 31, 2018	$	2

ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables)

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Changes in Accumulated Other Comprehensive Loss by Component

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



	Before Tax			Tax (Expense) Benefit			After Tax
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 income	$	60		$	(12	)	$	48
Balance at December 31, 2017	$	40		$	(55	)	$	(15	)
Foreign currency translation	(9		)	—			(9		)
Pension and OPEB liability adjustment	1			—			1
Available-for-sale securities and interest rate swaps	(9		)	2			(7		)
Net current period other comprehensive loss	$	(17	)	$	2		$	(15	)
Balance at December 31, 2018	$	23		$	(53	)	$	(30	)

Reclassification out of Accumulated Other Comprehensive Loss

The following table shows the location in the Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (dollars in millions):



	For the year ended December 31, 2016
AOCL Components	Amount reclassified from AOCL			Affected line item in the consolidated statements of comprehensive income
Amortization of OPEB items:
Prior service credit	$	3		Cost of sales
Actuarial gain	1			Cost of sales
Total reclassifications, before tax	4			Income before income taxes
Income tax expense	(2		)	Income 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 OPEB items:
Prior service credit	$	3		Cost of sales
	1			Selling, general and administrative
Total reclassifications, before tax	4			Income before income taxes
Income tax expense	(1		)	Income tax expense
Total reclassifications	$	3		Net of tax



	For the year ended December 31, 2018
AOCL Components	Amount reclassified from AOCL			Affected line item in the consolidated statements of comprehensive income
Amortization of OPEB items:
Prior service credit	$	13		Other income (expense), net
Total reclassifications, before tax	13			Income before income taxes
Income tax expense	(3		)	Income tax expense
Total reclassifications	$	10		Net of tax

COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Future Payments under Non-Cancelable Operating Leases

As of December 31, 2018, future payments under non-cancelable operating leases are as follows over each of the next five years and thereafter (dollars in millions):




2019	$	4
2020	3
2021	2
2022	1
2023	1
Thereafter	—
Total	$	11

CONCENTRATION OF RISK (Tables)

12 Months Ended

Dec. 31, 2018

Risks and Uncertainties [Abstract]

Schedules of Concentration of Risk by Risk Factor

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



	Years ended December 31,
% of net sales	2018		2017		2016
Daimler AG	18	%	20	%	21	%
PACCAR Inc.	10	%	9	%	9	%

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



% of accounts receivable	As of December 31, 2018		As of December 31, 2017
Daimler AG	18	%	7	%
Volvo Group	11	%	11	%
Kirby Corporation	9	%	15	%

EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

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,
	2018		2017		2016
Net income	$	639	$	504	$	215
Weighted average shares of common stock outstanding	133		149		168
Dilutive effect stock-based awards	1		1		1
Diluted weighted average shares of common stock outstanding	134		150		169
Basic earnings per share attributable to common stockholders	$	4.81	$	3.38	$	1.28
Diluted earnings per share attributable to common stockholders	$	4.78	$	3.36	$	1.27

GEOGRAPHIC INFORMATION (Tables)

12 Months Ended

Dec. 31, 2018

Segment Reporting [Abstract]

Net Sales by Country

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



	Years ended December 31,
	2018		2017		2016
United States	$	1,922	$	1,614	$	1,277
China	127		62		50
Canada	104		125		115
Japan	101		75		70
Mexico	57		39		41
Germany	55		45		53
United Kingdom	55		36		28
France	40		21		16
Sweden	30		13		8
Netherlands	25		30		27
Other	197		202		155
Total	$	2,713	$	2,262	$	1,840

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,
	2018		2017		2016
United States	$	427	$	400	$	412
India	24		32		36
Hungary	11		12		11
Other	4		4		5
Total	$	466	$	448	$	464

QUARTERLY FINANCIAL INFORMATION (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Quarterly Data



	Quarters ended,
	March 31		June 30		September 30		December 31
2018
Net sales	$	663	$	711	$	692	$	647
Gross profit	342		374		368		338
Operating income	222		248		246		207
Income before income taxes	191		222		218		174
Net income	151		174		167		147
Basic earnings per share	$	1.09	$	1.30	$	1.28	$	1.15
Diluted earnings per share	$	1.08	$	1.29	$	1.27	$	1.14
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

OVERVIEW - Additional Information (Detail)	12 Months Ended
OVERVIEW - Additional Information (Detail)	Dec. 31, 2018 Employee Customer Product	Dec. 31, 2017 Employee
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Number of employees \| Employee	2,900	2,700
Transmission product lines \| Product	12
Worldwide independent distributor and dealer locations \| Customer	1,400
Sales Revenue, Net \| North America \| Geographic Concentration Risk
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Concentration of risk, percentage	77.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property Plant and Equipment Estimated Lives (Detail)	12 Months Ended
	Dec. 31, 2018
Land improvements \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	5 years
Land improvements \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	30 years
Buildings and building improvements \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	10 years
Buildings and building improvements \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	40 years
Machinery and equipment \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	2 years
Machinery and equipment \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	20 years
Software \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	2 years
Software \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, estimated Lives	5 years
Special 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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) shares in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2018 USD ($) Segment	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Jan. 01, 2019 USD ($)	Mar. 31, 2015 shares
Segment Reporting
Number of operating segment \| Segment									1
Number of reportable segment \| Segment									1
Impairment of Long-Lived Assets
Loss associated with impairment of long-lived assets									$ 4,000,000	$ 32,000,000	$ 0
Asset impairment charge											0
Deferred Financing Costs
Amortization of deferred financing costs									6,000,000	6,000,000	7,000,000
Revenue Recognition
Sales incentives									80,000,000	66,000,000	58,000,000
Military price reduction reserve	$ 56,000,000				$ 56,000,000				56,000,000	56,000,000
Net sales	$ 647,000,000	$ 692,000,000	$ 711,000,000	$ 663,000,000	$ 588,000,000	$ 595,000,000	$ 580,000,000	$ 499,000,000	2,713,000,000	2,262,000,000	1,840,000,000
Stock-Based Compensation
Aggregate number of shares of common stock available for issuance under the 2015 Plan \| shares													15.3
Incentive compensation expense									2,000,000	2,000,000	3,000,000
Restricted Stock And Restricted Stock Unit
Stock-Based Compensation
Incentive compensation expense									5,000,000	7,000,000	2,000,000
Performance Awards
Stock-Based Compensation
Incentive compensation expense									$ 6,000,000	3,000,000	1,000,000
Vesting Schedule One \| Restricted Stock And Restricted Stock Unit
Stock-Based Compensation
Option vesting period									1 year
Vesting Schedule One \| Restricted Stock Units (RSUs)
Stock-Based Compensation
Option vesting period									1 year
Vesting Schedule Two \| Restricted Stock And Restricted Stock Unit
Stock-Based Compensation
Option vesting period									2 years
Vesting Schedule Three \| Restricted Stock And Restricted Stock Unit
Stock-Based Compensation
Option vesting period									3 years
Vesting Schedule Three \| Restricted Stock Units (RSUs)
Stock-Based Compensation
Option vesting period									3 years
Engineering Services
Revenue Recognition
Net sales									$ 3,000,000	$ 3,000,000	$ 3,000,000
Minimum
Revenue Recognition
Extended Transmission Coverage sales, recognition period									2 years
Maximum
Revenue Recognition
Extended Transmission Coverage sales, recognition period									5 years
ASU 2016-02 \| Subsequent Event
Recently Adopted Accounting Pronouncements
Right-of-use asset (less than)												$ 15,000,000
Non-current lease liabilities (less than)												$ 15,000,000

REVENUE - Additional Information (Detail)		3 Months Ended								9 Months Ended	12 Months Ended
REVENUE - Additional Information (Detail)	Jan. 01, 2018 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Sep. 30, 2017 USD ($)	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)	Sep. 30, 2018	Dec. 31, 2018 USD ($) Segment	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Deferred Revenue Arrangement [Line Items]
Net sales		$ 647,000,000	$ 692,000,000	$ 711,000,000	$ 663,000,000	$ 588,000,000	$ 595,000,000	$ 580,000,000	$ 499,000,000		$ 2,713,000,000	$ 2,262,000,000	$ 1,840,000,000
Credit term period											30 days
Contract assets		$ 0									$ 0
Number of operating segment \| Segment											1
Number of reportable segment \| Segment											1
Minimum
Deferred Revenue Arrangement [Line Items]
Duration of contract sold										1 year
Maximum
Deferred Revenue Arrangement [Line Items]
Duration of contract sold										5 years
Adoption of New Revenue Guidance
Deferred Revenue Arrangement [Line Items]
Increase in retained earnings	$ 5,000,000
Deferred revenue current liabilities	(2,000,000)
Deferred revenue non-current liabilities	(4,000,000)
Accounting Standards Update 2014-09
Deferred Revenue Arrangement [Line Items]
Net sales											$ 2,000,000
Increase (decrease) in deferred revenue non-current liabilities	$ (6,000,000)
Accounting Standards Update 2014-09 \| Non-current Deferred Revenue
Deferred Revenue Arrangement [Line Items]
Increase (decrease) in deferred revenue non-current liabilities											$ (2,000,000)

REVENUE - Disaggregated Revenue by Categories (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disaggregation of Revenue [Line Items]
Total Net Sales	$ 647	$ 692	$ 711	$ 663	$ 588	$ 595	$ 580	$ 499	$ 2,713	$ 2,262	$ 1,840
North America On-Highway
Disaggregation of Revenue [Line Items]
Total Net Sales									1,317
North America Off-Highway
Disaggregation of Revenue [Line Items]
Total Net Sales									93
Defense
Disaggregation of Revenue [Line Items]
Total Net Sales									158
Outside North America On-Highway
Disaggregation of Revenue [Line Items]
Total Net Sales									383
Outside North America Off-Highway
Disaggregation of Revenue [Line Items]
Total Net Sales									129
Service Parts, Support Equipment and Other
Disaggregation of Revenue [Line Items]
Total Net Sales									$ 633

INVENTORIES - Components of Inventories (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Inventory Disclosure [Abstract]
Purchased parts and raw materials	$ 82	$ 79
Work in progress	8	6
Service parts	48	46
Finished goods	32	23
Total inventories	$ 170	$ 154

PROPERTY, PLANT AND EQUIPMENT - Property Plant and Equipment Cost and Accumulated Depreciation (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,399	$ 1,298
Construction in progress	52	46
Accumulated depreciation	(933)	(850)
Property, plant and equipment, net	466	448	$ 464
Land improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	24	24
Buildings and building improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	336	322
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	643	601
Software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	143	136
Special tools
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 201	$ 169

PROPERTY, PLANT AND EQUIPMENT - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Long Lived Assets Held-for-sale [Line Items]
Depreciation of property, plant and equipment	$ 77	$ 80	$ 84
Loss associated with impairment of long-lived assets	4	32	$ 0
TC10 Product
Long Lived Assets Held-for-sale [Line Items]
Loss associated with impairment of long-lived assets	$ 1	$ 32

GOODWILL AND OTHER INTANGIBLE ASSETS - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 1,941,000,000	$ 1,941,000,000
Amortization of intangible assets	87,000,000	90,000,000	$ 92,000,000
Net carrying value of Goodwill and other intangible assets	3,007,000,000	$ 3,094,000,000
Trade name impairment	$ 0

GOODWILL AND OTHER INTANGIBLE ASSETS - Summary of Other Intangible Assets (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Line Items]
Trade name	$ 790	$ 790
Accumulated amortization	(1,144)	(1,057)
Intangible assets, gross, total	2,210	2,210
Intangible assets, net, total	1,066	1,153
Customer relationships – commercial
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	832	832
Accumulated amortization	(619)	(573)
Intangible assets, net	213	259
Proprietary technology
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	476	476
Accumulated amortization	(434)	(396)
Intangible assets, net	42	80
Customer relationships – defense
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	62	62
Accumulated amortization	(41)	(38)
Intangible assets, net	21	24
Patented technology – defense
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	28	28
Accumulated amortization	(28)	(28)
Non-compete agreement
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	17	17
Accumulated amortization	(17)	(17)
Intangible assets, net		0
Tooling rights
Goodwill and Intangible Assets Disclosure [Line Items]
Intangible assets, gross	5	5
Accumulated amortization	$ (5)	$ (5)

GOODWILL AND OTHER INTANGIBLE ASSETS - Amortization Expense Related to Other Intangible Assets for Next Five Fiscal Years (Detail) $ in Millions	Dec. 31, 2018 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2019	$ 86
2020	50
2021	45
2022	43
2023	$ 42

FAIR VALUE OF FINANCIAL INSTRUMENTS - Additional Information (Detail) - Level 3 - USD ($)	Dec. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets	$ 0	$ 0
Financial liabilities	$ 0	$ 0

FAIR VALUE OF FINANCIAL INSTRUMENTS - Summary of Fair Value of Financial Assets and (Liabilities) (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	$ 111	$ 50
Rabbi trust assets	9	8
Deferred compensation obligation	(9)	(8)
Derivative liabilities, net	(9)	0
Total	102	50
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	111	50
Rabbi trust assets	9	8
Deferred compensation obligation	(9)	(8)
Derivative liabilities, net	0	0
Total	111	50
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash equivalents	0	0
Rabbi trust assets	0	0
Deferred compensation obligation	0	0
Derivative liabilities, net	(9)	0
Total	$ (9)	$ 0

DEBT - Summary of Long-Term Debt and Maturities (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Sep. 30, 2016
Debt Instrument [Line Items]
Total long-term debt	$ 2,548	$ 2,576
Less: current maturities of long-term debt	0	12
Less: deferred financing costs, net	25	30
Total long-term debt, net	2,523	2,534
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022
Debt Instrument [Line Items]
Total long-term debt	1,148	1,176
Senior Notes, fixed 5.0%, due 2024
Debt Instrument [Line Items]
Total long-term debt	$ 1,000	1,000
Debt instrument, stated interest rate	5.00%			5.00%
Senior Notes, fixed 4.75%, due 2027
Debt Instrument [Line Items]
Total long-term debt	$ 400	$ 400	$ 400
Less: deferred financing costs, net			$ 5
Debt instrument, stated interest rate	4.75%		4.75%

DEBT - Principal Payments Required on Long Term Debt (Detail) $ in Millions	Dec. 31, 2018 USD ($)
Debt Disclosure [Abstract]
2019	$ 0
2020	8
2021	12
2022	1,128
2023	$ 0

DEBT - Additional Information (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Sep. 30, 2016
Debt Instrument [Line Items]
Long-term debt	$ 2,548	$ 2,576
Fair value of long-term debt obligations	2,446
Senior Notes, fixed 5.0%, due 2024
Debt Instrument [Line Items]
Long-term debt	$ 1,000	1,000
Debt instrument, stated interest rate	5.00%			5.00%
Senior Notes, fixed 4.75%, due 2027
Debt Instrument [Line Items]
Long-term debt	$ 400	400	$ 400
Debt instrument, stated interest rate	4.75%		4.75%
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022
Debt Instrument [Line Items]
Long-term debt	$ 1,148	$ 1,176
ATI
Debt Instrument [Line Items]
Long-term debt	$ 2,548

DEBT - Senior Secured Credit Facility (Detail)		1 Months Ended			12 Months Ended
DEBT - Senior Secured Credit Facility (Detail)	Dec. 31, 2016	May 31, 2018 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2018 USD ($)	Sep. 30, 2017 USD ($)	Aug. 31, 2017 USD ($)
Debt Instrument [Line Items]
Total leverage ratio					2.05
Revolving Credit Facility, variable, due 2021
Debt Instrument [Line Items]
Maximum revolving credit facility						$ 550,000,000	$ 450,000,000
Maximum amount of letters of credit commitments available under the revolving credit facility					$ 75,000,000
Available revolving credit facility					533,000,000
Letters of Credit					17,000,000
Amount outstanding					$ 0
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 Credit Facility, variable, due 2021 \| LIBOR
Debt Instrument [Line Items]
Applicable margin over base rate					1.75%
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%
Senior Secured Credit Facility
Debt Instrument [Line Items]
Required senior secured leverage ratio					5.50
Achieved senior secured leverage ratio					0.81
Senior secured leverage ratio for applicable margin reduction					4.00
Total leverage ratio for applicable margin reduction					4.00
Total leverage ratio for commitment fee reduction					3.50
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022
Debt Instrument [Line Items]
Change in applicable margin over base rate			0.25%	0.50%
Applicable margin over base rate					0.50%
Debt financing fees			$ 1,000,000	$ 1,000,000
Debt instrument effective interest rate					4.26%
Principal payments on term loans					$ 3,000,000
Voluntary prepayments of principal amount		$ 25,000,000
Senior Secured Credit Facility Term B-3 Loan, variable, due 2022 \| LIBOR \| Minimum
Debt Instrument [Line Items]
Applicable margin over base rate					1.75%
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					1.00%
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					0.75%
Debt instrument, floor rate	1.75%			1.00%

DEBT - 5.0% Senior Notes (Details) - Senior Notes, fixed 5.0%, due 2024	12 Months Ended
	Dec. 31, 2018	Sep. 30, 2016
Debt Instrument [Line Items]
Debt instrument, stated interest rate	5.00%	5.00%
Percentage of principal amount redeemed	100.00%
Maximum
Debt Instrument [Line Items]
Percentage of principal amount redeemable	40.00%

DEBT - 4.75% Senior Notes (Details) - USD ($) $ in Millions	12 Months Ended
DEBT - 4.75% Senior Notes (Details) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2017
Debt Instrument [Line Items]
Long-term debt	$ 2,548	$ 2,576
Deferred financing costs	25	30
Senior Notes, fixed 4.75%, due 2027
Debt Instrument [Line Items]
Long-term debt	$ 400	$ 400	$ 400
Debt instrument, stated interest rate	4.75%		4.75%
Deferred financing costs			$ 5
Prior to October 1, 2020 \| Senior Notes, fixed 4.75%, due 2027
Debt Instrument [Line Items]
Percentage of principal amount redeemed	104.75%
Prior to October 1, 2020 \| Senior Notes, fixed 4.75%, due 2027 \| Maximum
Debt Instrument [Line Items]
Percentage of principal amount redeemable	40.00%
Prior to October 1, 2022 \| Senior Notes, fixed 4.75%, due 2027
Debt Instrument [Line Items]
Percentage of principal amount redeemed	100.00%

DERIVATIVES - Additional Information (Detail) - USD ($)	Dec. 31, 2018	Dec. 31, 2017
Derivative [Line Items]
Accumulated other comprehensive loss, net of tax	$ (30,000,000)	$ (15,000,000)
Accumulated other comprehensive income (loss), be Reclassified During Next 12 Months	0
Interest Rate Swaps A
Derivative [Line Items]
Notional Amount	250,000,000
Interest Rate Swaps B
Derivative [Line Items]
Notional Amount	$ 250,000,000
LIBOR \| Interest Rate Swaps A
Derivative [Line Items]
Derivative, Fixed Interest Rate	3.01%
LIBOR \| Interest Rate Swaps B
Derivative [Line Items]
Derivative, Fixed Interest Rate	3.04%
Derivatives designated for hedge accounting
Derivative [Line Items]
Accumulated other comprehensive loss, net of tax	$ (9,000,000)	$ 0

DERIVATIVES - Derivative Instruments and their Impact on the Financial Condition (Detail) - Designated as Hedging Instrument - Interest Rate Swaps - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Derivative [Line Items]
Total derivatives not designated as hedging instruments	$ (9)	$ 0
Other current liabilities
Derivative [Line Items]
Fair Value	(1)	0
Other non-current liabilities
Derivative [Line Items]
Fair Value	$ (8)	$ 0

PRODUCT WARRANTY LIABILITIES - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Guarantor Obligations [Line Items]
Product warranty liability, current	$ 26	$ 22
Product warranty liability, non-current	40	33
Warranty liability	66	55	$ 63	$ 79
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	$ 1	4
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	$ 1	$ 3
Dual Power Inverter Module \| Product Warranty
Guarantor Obligations [Line Items]
Product warranty, qualified cost	$ 46

PRODUCT WARRANTY LIABILITIES - Product Warranty Liability Activities (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward]
Beginning balance	$ 55	$ 63	$ 79
Payments	(32)	(30)	(35)
Increase in liability (warranty issued during period)	38	18	16
Net adjustments to liability	5	4	3
Ending balance	$ 66	$ 55	$ 63

DEFERRED REVENUE - Additional Information (Detail) - USD ($) $ in Millions	Jan. 01, 2018	Dec. 31, 2018	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Deferred revenue current liabilities		$ 34	$ 41
Deferred revenue non-current liabilities		88	75
Accounting Standards Update 2014-09
Disaggregation of Revenue [Line Items]
Increase (decrease) in deferred revenue	$ (6)
ETC contracts
Disaggregation of Revenue [Line Items]
Deferred revenue current liabilities		30	30
Deferred revenue non-current liabilities		$ 73	$ 72

DEFERRED REVENUE - Deferred Revenue Activity (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Change in Contract with Customer, Liability [Roll Forward]
Beginning balance	$ 110	$ 93	$ 79
Increases	52	52	37
Revenue earned	(40)	(29)	(23)
Ending balance	$ 122	$ 116	$ 93

OTHER INCOME (EXPENSE), NET (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Other Income and Expenses [Abstract]
Post-retirement benefit plan amendment credits	$ 12	$ 0	$ 0
Vendor settlements	(4)	(5)	1
Technology-related investment expense	3	16	1
Other	(2)	(1)	2
Total	$ 3	$ (22)	$ 2

OTHER CURRENT LIABILITIES Summary of Other Current Liabilities (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Other Liabilities Disclosure [Abstract]
Payroll and related costs	$ 81	$ 73
Sales allowances	39	34
Accrued interest payable	19	19
Vendor buyback obligation	15	14
Taxes payable	10	10
Defense price reduction reserve	9	9
Non-trade payables	3	8
Derivative liabilities	1	0
Other accruals	20	16
Total	$ 197	$ 183

EMPLOYEE BENEFIT PLANS - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plan Disclosure [Line Items]
Excise tax as a percentage of value of plan that exceeds the threshold amount	40.00%
Effect of excise tax on post-retirement benefit obligation	$ 2,000,000	$ 2,000,000
Accumulated benefit obligation	173,000,000	177,000,000
Deferred compensation expense	0	0	$ 0
Deferred compensation obligation	$ 9,000,000	8,000,000
Hourly Plan
Defined Benefit Plan Disclosure [Line Items]
Defined benefit plan, service period before normal retirement age	30 years
Defined contribution plan expense	$ 2,000,000	2,000,000	2,000,000
Future Post Retirement Medical Care Costs and Prescription Drug Costs
Defined Benefit Plan Disclosure [Line Items]
Health care cost trend rate	5.20%
Health care cost ultimate trend rate	4.50%
Health care cost ultimate trend year	2036
Salary Plan
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan expense	$ 7,000,000	6,000,000	6,000,000
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	$ 93,000,000	$ 102,000,000	$ 144,000,000	$ 147,000,000

EMPLOYEE BENEFIT PLANS - Employee Benefit Plans (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Total recognized – other comprehensive income	$ (1)	$ (26)	$ (3)
Pension Plans
Defined Benefit Plan Disclosure [Line Items]
Service cost	12	12	13
Interest cost	6	6	6
Expected return on assets	(8)	(7)	(7)
Prior service credit	0	0	0
Net Periodic Benefit Cost (Credit)	10	11	12
Prior service cost (credit)	0	1	(5)
Net (gain) loss	(2)	8	8
Amortizations	0	0	0
Total recognized – other comprehensive income	(2)	9	3
Post-retirement Benefits
Defined Benefit Plan Disclosure [Line Items]
Service cost	1	2	2
Interest cost	4	6	7
Expected return on assets	0	0	0
Prior service credit	(13)	(4)	(4)
Net Periodic Benefit Cost (Credit)	(8)	4	5
Prior service cost (credit)	0	(73)	0
Net (gain) loss	(12)	24	(11)
Amortizations	13	4	4
Total recognized – other comprehensive income	$ 1	$ (45)	$ (7)

EMPLOYEE BENEFIT PLANS - Weighted-Average Actuarial Assumptions Used to Determine Net Periodic Benefit Cost (Detail)	12 Months Ended
	Dec. 31, 2018	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%	4.40%
Rate of compensation increase (salaried)	3.00%	3.00%	3.00%
Expected return on assets	4.50%	4.70%	4.70%
Post-retirement Benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Discount rate	3.60%	4.30%	4.60%

EMPLOYEE BENEFIT PLANS - Weighted-Average Actuarial Assumptions Used to Determine Benefit Obligations (Detail)	Dec. 31, 2018	Dec. 31, 2017
Pension Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Discount rate	4.20%	3.50%
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	4.20%	3.60%

EMPLOYEE BENEFIT PLANS - Health Care Costs Trends (Detail) $ in Millions	12 Months Ended
	Dec. 31, 2018 USD ($)
Retirement Benefits [Abstract]
Effect of 1% increase on total of service and interest cost	$ 1
Effect of 1% increase on post-retirement benefit obligation	13
Effect of 1% decrease on total of service and interest cost	(1)
Effect of 1% decrease on post-retirement benefit obligation	$ (11)

EMPLOYEE BENEFIT PLANS - Reconciliation of Changes in Net Benefit Obligations and Fair Value of Plan Assets (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Pension Plans
Benefit Obligations:
Net benefit obligation at beginning of year	$ 181	$ 155	$ 140
Service cost	12	12	13
Interest cost	6	6	6
Plan Amendments	0	1	(5)
Benefits paid	(6)	(7)	(7)
Actuarial (gain) loss	(16)	14	8
Net benefit obligation at end of year	177	181	155
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year	188	150	140
Actual return on plan assets	(6)	14	6
Employer contributions	20	31	11
Benefits paid	(6)	(7)	(7)
Fair value of plan assets at end of year	196	188	150
Net Funded Status	19	7	(5)
Post-retirement Benefits
Benefit Obligations:
Net benefit obligation at beginning of year	102	144	147
Service cost	1	2	2
Interest cost	4	6	7
Plan Amendments	0	(73)	0
Benefits paid	(2)	(2)	(1)
Actuarial (gain) loss	(12)	25	(11)
Net benefit obligation at end of year	93	102	144
Fair Value of Plan Assets:
Fair value of plan assets at beginning of year	0	0	0
Actual return on plan assets	0	0	0
Employer contributions	2	2	1
Benefits paid	(2)	(2)	(1)
Fair value of plan assets at end of year	0	0	0
Net Funded Status	$ (93)	$ (102)	$ (144)

EMPLOYEE BENEFIT PLANS - Fair Value of Plan Assets by Asset Category (Detail) - Pension Plans - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	$ 196	$ 188	$ 150	$ 140
Diversified debt Securities
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	165	154
Diversified equity Securities
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	28	28
Cash and Cash Equivalents
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	3	6
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	32	52
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	9	26
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	20
Quoted Prices in Active Markets for Identical Assets (Level 1) \| Cash and Cash Equivalents
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	3	6
Significant Other Observable Inputs (Level 2)
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	164	136
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	156	128
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	8
Significant Other Observable Inputs (Level 2) \| Cash and Cash Equivalents
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Fair Value of Plan Assets	$ 0	$ 0

EMPLOYEE BENEFIT PLANS - Plan Asset Allocation (Detail)	Dec. 31, 2018
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%

EMPLOYEE BENEFIT PLANS - Amounts Recognized in Balance Sheet and Accumulated Other Comprehensive Income AOCI (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Pension Plans
Amounts Recognized in Balance Sheet:
Noncurrent assets	$ 19	$ 7
Current liabilities	0	0
Noncurrent liabilities	0	0
Total asset (liability)	19	7	$ (5)
Accumulated Other Comprehensive Loss:
Prior service credit	3	4
Actuarial (loss) gain	(8)	(11)
Total	(5)	(7)
Post-retirement Benefits
Amounts Recognized in Balance Sheet:
Noncurrent assets	0	0
Current liabilities	(3)	(3)
Noncurrent liabilities	(90)	(99)
Total asset (liability)	(93)	(102)	$ (144)
Accumulated Other Comprehensive Loss:
Prior service credit	71	84
Actuarial (loss) gain	2	(10)
Total	$ 73	$ 74

EMPLOYEE BENEFIT PLANS - Amounts in Accumulated Other Comprehensive Loss AOCL Expected to be Amortized and Recognized as Component of Net Periodic Benefit Cost in 2017 (Detail) $ in Millions	Dec. 31, 2018 USD ($)
Pension Plans
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Prior service credit	$ 1
Actuarial loss	(1)
Total	0
Post-retirement Benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Prior service credit	13
Actuarial loss	0
Total	$ 13

EMPLOYEE BENEFIT PLANS - Expected Cash Flows for Pension and Post-Retirement Benefit Plans (Detail) $ in Millions	Dec. 31, 2018 USD ($)
Pension Plans
Employer Contributions:
2019 expected contributions	$ 0
Expected Benefit Payments:
2019	8
2020	10
2021	11
2022	12
2023	13
2024-2028	67
Post-retirement Benefits
Employer Contributions:
2019 expected contributions	3
Expected Benefit Payments:
2019	3
2020	4
2021	4
2022	5
2023	5
2024-2028	$ 26

INCOME TAXES - Income Before Income Taxes (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
U.S. income	$ 755	$ 491	$ 309
Foreign income	50	36	32
Total	$ 805	$ 527	$ 341

INCOME TAXES - Provision for Income Tax Expense (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Estimated current income taxes:
U.S. federal	$ 94	$ 61	$ 2
Foreign	9	7	8
U.S. state and local	11	5	2
Total Current	114	73	12
Deferred income tax expense (credit), net:
U.S. federal	45	(44)	107
Foreign	0	1	0
U.S. state and local	7	(7)	7
Total Deferred	52	(50)	114
Total income tax expense	$ 166	$ 23	$ 126

INCOME TAXES - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Deferred income tax benefit in connection with tax act	$ 160,000,000	$ 157,000,000
Deemed repatriation tax	6,000,000	5,000,000
Total net benefit	154,000,000	$ 152,000,000
Change in total net benefit	$ 2,000,000
Effective income tax rate reconciliation, percent	21.00%	4.00%
Tax liability associated with foreign subsidiaries	$ 2,000,000
Liability for deemed repatriation	6,000,000
Valuation allowances	10,000,000	$ 9,000,000
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

INCOME TAXES - Reconciliation of Provision for Income Tax Expense (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Tax at U.S. statutory income tax rate	$ 169	$ 185	$ 120
State tax expense	15	10	6
Non-deductible expenses	(9)	7	5
Foreign rate differential	(4)	(5)	(5)
Effect of tax rate changes	(4)	0	0
Tax credits	(3)	(21)	0
Valuation allowance	2	3	1
Impact related to U.S. Tax Cuts and Jobs Act	0	(155)	0
Other adjustments	0	(1)	(1)
Total income tax expense	$ 166	$ 23	$ 126

INCOME TAXES - Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Intangibles	$ 29	$ 35
Deferred revenue	24	25
Other accrued liabilities	20	18
Warranty accrual	14	11
Operating loss carryforwards	10	12
Sales allowances and rebates	8	6
Stock-based compensation	5	6
Technology-related investments	5	4
Inventories	4	5
Capital loss carryforwards	3	3
Environmental remediation	3	3
Unrealized loss on interest rate derivatives	1	1
Tax credits	1	0
Other	2	4
Total Deferred tax assets	129	133
Valuation allowances	(10)	(9)
Deferred tax liabilities:
Goodwill	(311)	(287)
Trade name	(114)	(96)
Property, plant and equipment	(10)	(7)
Post-retirement	(9)	(4)
Other	(2)	(3)
Total Deferred tax liabilities	(446)	(397)
Net Deferred tax liability	$ (327)	$ (273)

INCOME TAXES - Liability for Unrecognized Tax Benefit (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Unrecognized Tax Benefits, Beginning Balance	$ 2	$ 2
Increases in unrecognized tax benefits as a result of current year activity	0	0
Unrecognized Tax Benefits, Ending Balance	$ 2	$ 2

ACCUMULATED OTHER COMPREHENSIVE LOSS - Changes in Accumulated Other Comprehensive Loss by Component (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Before Tax, beginning balance	$ 40	$ (20)	$ (17)
Before Tax	(17)	60	(3)
Before Tax, ending balance	23	40	(20)
Tax (Expense) Benefit, beginning balance	(55)	(43)	(42)
Tax (Expense) Benefit	2	(12)	(1)
Tax (Expense) Benefit, ending balance	(53)	(55)	(43)
Balance	689	1,081	1,188
Total other comprehensive (loss) income, net of tax	(15)	48	(4)
Balance	659	689	1,081
Foreign currency translation
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Before Tax	(9)	15	(6)
Tax (Expense) Benefit	0	0	0
Total other comprehensive (loss) income, net of tax	(9)	15	(6)
Pension and OPEB liability adjustment
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Before Tax	1	34	4
Tax (Expense) Benefit	0	(8)	(2)
Total other comprehensive (loss) income, net of tax	1	26	2
Available-for-sale securities
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Before Tax	(9)	11	(1)
Tax (Expense) Benefit	2	(4)	1
Total other comprehensive (loss) income, net of tax	(7)	7	0
Accumulated Other Comprehensive Loss, net of tax
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance	(15)	(63)	(59)
Balance	$ (30)	$ (15)	$ (63)

ACCUMULATED OTHER COMPREHENSIVE LOSS - Consolidated Statements of Comprehensive Income affected by reclassifications from AOCL (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cost of sales									$ 1,291	$ 1,131	$ 976
Selling, general and administrative expenses									364	342	324
Income before income taxes	$ 174	$ 218	$ 222	$ 191	$ 84	$ 170	$ 146	$ 127	805	527	341
Income tax expense									(166)	(23)	(126)
Total reclassifications	$ 147	$ 167	$ 174	$ 151	$ 215	$ 111	$ 95	$ 83	639	504	215
Reclassified from AOCL \| Prior service cost
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cost of sales									13	3	3
Selling, general and administrative expenses										1
Reclassified from AOCL \| Actuarial gain
Accumulated Other Comprehensive Income (Loss) [Line Items]
Cost of sales											1
Reclassified from AOCL \| Defined Benefit Plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Income before income taxes									13	4	4
Income tax expense									(3)	(1)	(2)
Total reclassifications									$ 10	$ 3	$ 2

COMMITMENTS AND CONTINGENCIES - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 5	$ 5	$ 5
Environmental liability	$ 12

COMMITMENTS AND CONTINGENCIES - Future Payments under Non-Cancelable Operating Leases (Detail) $ in Millions	Dec. 31, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2019	$ 4
2020	3
2021	2
2022	1
2023	1
Thereafter	0
Total	$ 11

CONCENTRATION OF RISK - Additional Information (Detail)	12 Months Ended
CONCENTRATION OF RISK - Additional Information (Detail)	Dec. 31, 2018 Employee Customer	Dec. 31, 2017 Employee Customer	Dec. 31, 2016 Customer
Concentration Risk [Line Items]
Number of employees \| Employee	2,900	2,700
Number of Employees, Geographic Area \| United States \| Labor Force Concentration
Concentration Risk [Line Items]
Concentration risk, percentage	90.00%	89.00%
Workforce Subject to Collective Bargaining Arrangements \| United States \| Unionized employees subject to collective bargaining agreement
Concentration Risk [Line Items]
Concentration risk, percentage	59.00%
Sales Revenue, Goods, Net \| Customer Concentration Risk
Concentration Risk [Line Items]
Number of significant customers	2	3	3
Accounts Receivable \| Credit Concentration Risk
Concentration Risk [Line Items]
Number of significant customers	3	3

CONCENTRATION OF RISK - Customers Accounted for Greater Than Ten Percent of Net Sales (Detail) - Sales Revenue, Net - Customer Concentration Risk	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Daimler AG
Concentration Risk [Line Items]
Concentration risk, percentage	18.00%	20.00%	21.00%
PACCAR Inc.
Concentration Risk [Line Items]
Concentration risk, percentage	10.00%	9.00%	9.00%

CONCENTRATION OF RISK - Customers Accounted for Greater Than Ten Percent of Accounts Receivable (Detail) - Accounts Receivable - Credit Concentration Risk	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Daimler AG
Concentration Risk [Line Items]
Concentration risk, percentage	18.00%	7.00%
Volvo Group
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%	11.00%
Kirby Corporation
Concentration Risk [Line Items]
Concentration risk, percentage	9.00%	15.00%

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS - Additional Information (Detail) - ValueAct Capital Master Fund, L.P $ in Millions	Feb. 03, 2017 USD ($) shares
Related Party Transaction [Line Items]
Common stock repurchased during the period (shares) \| shares	10,525,204
Common stock, repurchased during the period \| $	$ 363
Repurchase agreement closing date	Feb. 08, 2017

COMMON STOCK - Additional Information (Detail) - 2016 Repurchase Program - USD ($)	12 Months Ended
	Dec. 31, 2018	Jul. 30, 2018	Nov. 08, 2017	Nov. 14, 2016
Common Stock Disclosure [Line Items]
Common stock, repurchases authorized			$ 500,000,000	$ 1,000,000,000
Increase in authorized amount		$ 500,000,000
Stock repurchase program, authorized amount		$ 2,000,000,000
Common stock, repurchased during the period	$ 609,000,000

EARNINGS PER SHARE - Additional Information (Detail) - shares	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Earnings Per Share [Abstract]
Anti-dilutive stock options not included in the diluted EPS computation	0	0	0

EARNINGS PER SHARE - 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, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Earnings Per Share [Abstract]
Net income	$ 147	$ 167	$ 174	$ 151	$ 215	$ 111	$ 95	$ 83	$ 639	$ 504	$ 215
Weighted average shares of common stock outstanding (shares)									133	149	168
Dilutive effect stock-based awards (shares)									1	1	1
Diluted weighted average shares of common stock outstanding (shares)									134	150	169
Basic earnings per share attributable to common stockholders (USD per share)	$ 1.15	$ 1.28	$ 1.30	$ 1.09	$ 1.52	$ 0.75	$ 0.63	$ 0.53	$ 4.81	$ 3.38	$ 1.28
Diluted earnings per share attributable to common stockholders (USD per share)	$ 1.14	$ 1.27	$ 1.29	$ 1.08	$ 1.51	$ 0.75	$ 0.63	$ 0.52	$ 4.78	$ 3.36	$ 1.27

GEOGRAPHIC INFORMATION - Net Sales by Country (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales	$ 647	$ 692	$ 711	$ 663	$ 588	$ 595	$ 580	$ 499	$ 2,713	$ 2,262	$ 1,840
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									1,922	1,614	1,277
China
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									127	62	50
Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									104	125	115
Japan
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									101	75	70
Mexico
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									57	39	41
Germany
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									55	45	53
United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									55	36	28
France
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									40	21	16
Sweden
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									30	13	8
Netherlands
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									25	30	27
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Net Sales									$ 197	$ 202	$ 155

GEOGRAPHIC INFORMATION - Net Long-Lived Assets by Country (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	$ 466	$ 448	$ 464
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	427	400	412
India
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	24	32	36
Hungary
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	11	12	11
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Property, plant and equipment, net	$ 4	$ 4	$ 5

QUARTERLY FINANCIAL INFORMATION (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Quarterly Financial Information Disclosure [Abstract]
Net sales	$ 647	$ 692	$ 711	$ 663	$ 588	$ 595	$ 580	$ 499	$ 2,713	$ 2,262	$ 1,840
Gross profit	338	368	374	342	288	302	290	251	1,422	1,131	864
Operating income	207	246	248	222	128	198	177	149	923	652	452
Income before income taxes	174	218	222	191	84	170	146	127	805	527	341
Net income	$ 147	$ 167	$ 174	$ 151	$ 215	$ 111	$ 95	$ 83	$ 639	$ 504	$ 215
Basic earnings per share (USD per share)	$ 1.15	$ 1.28	$ 1.30	$ 1.09	$ 1.52	$ 0.75	$ 0.63	$ 0.53	$ 4.81	$ 3.38	$ 1.28
Diluted earnings per share (USD per share)	$ 1.14	$ 1.27	$ 1.29	$ 1.08	$ 1.51	$ 0.75	$ 0.63	$ 0.52	$ 4.78	$ 3.36	$ 1.27

Schedule I-Parent Company Only Financial Statements - Balance Sheets (Detail) - USD ($) $ in Millions	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current Assets:
Cash	$ 231	$ 199
Total Current Assets	725	632
TOTAL ASSETS	4,237	4,205
Current Liabilities:
Accounts payable	169	159
Total Current Liabilities	426	417
Capital stock	659	689	$ 1,081	$ 1,188
Paid in capital	1,788	1,758
Accumulated deficit	(1,100)	(1,055)
Accumulated other comprehensive loss, net of tax	(30)	(15)
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	4,237	4,205
Parent Company
Current Assets:
Cash	0	0	$ 0	$ 0
Total Current Assets	0	0
Investments in and advances to subsidiaries	659	689
TOTAL ASSETS	659	689
Current Liabilities:
Accounts payable	0	0
Total Current Liabilities	0	0
Capital stock	1	1
Paid in capital	1,788	1,758
Treasury stock	0	0
Accumulated deficit	(1,100)	(1,055)
Accumulated other comprehensive loss, net of tax	(30)	(15)
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY	$ 659	$ 689

Schedule I-Parent Company Only Financial Statements - Comprehensive Income (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Condensed Financial Statements, Captions [Line Items]
Net sales	$ 647	$ 692	$ 711	$ 663	$ 588	$ 595	$ 580	$ 499	$ 2,713	$ 2,262	$ 1,840
Operating income	207	246	248	222	128	198	177	149	923	652	452
Other income:
Income before income taxes	174	218	222	191	84	170	146	127	805	527	341
Income tax expense									(166)	(23)	(126)
Net income	$ 147	$ 167	$ 174	$ 151	$ 215	$ 111	$ 95	$ 83	639	504	215
Comprehensive income									624	552	211
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									639	504	215
Income before income taxes									639	504	215
Income tax expense									0	0	0
Net income									639	504	215
Comprehensive income									$ 624	$ 552	$ 211

Schedule I-Parent Company Only Financial Statements - Cash Flows (Detail) - USD ($) $ in Millions	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 147	$ 167	$ 174	$ 151	$ 215	$ 111	$ 95	$ 83	$ 639	$ 504	$ 215
Deduct items included in net income not providing cash:
Net cash provided by operating activities									837	658	591
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in subsidiaries									(3)	(3)	(1)
Net cash used for investing activities									(103)	(94)	(72)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends									(80)	(89)	(100)
Net cash used for financing activities									(700)	(574)	(564)
Net increase (decrease) in cash and cash equivalents									32	(6)	(47)
Cash and cash equivalents at beginning of period				199					199
Cash and cash equivalents at end of period	231				199				231	199
Parent Company
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income									639	504	215
Deduct items included in net income not providing cash:
Equity in earnings in consolidated subsidiary									(639)	(504)	(215)
Net cash provided by operating activities									0	0	0
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in subsidiaries									(22)	(19)	(24)
Dividends									80	89	100
Net cash used for investing activities									58	70	76
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions									22	19	24
Dividends									(80)	(89)	(100)
Net cash used for financing activities									(58)	(70)	(76)
Net increase (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

Label	Element	Value
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 5,000,000
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ 5,000,000