Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation– The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"), except that the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  However, in the opinion of Accuride Corporation ("Accuride" or the "Company"), all adjustments (consisting primarily of normal recurring accruals) considered necessary to present fairly the condensed consolidated financial statements have been included.  

On September 2, 2016, the Company announced and consummated the sale of its wholly-owned subsidiary, Brillion Iron Works, Inc. ("Brillion"), to Grede Holdings LLC.  The sale concluded for a purchase price of $14.0 million in cash, subject to a working capital adjustment.  The Company recognized a loss of $19.3 million, including $2.3 million of transactional fees, related to the disposal.  In connection with the disposal of Brillion, we have reclassified certain prior-period amounts to discontinued operations in order to conform to the current-period presentation.

The results of operations for the nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016.  The unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto disclosed in Accuride's Annual Report on Form 10-K for the year ended December 31, 2015.

On September 2, 2016  Accuride entered into a definitive agreement (the "Merger Agreement") to be acquired by Crestview Partners, L.L.C. ("Crestview"), for $2.58 per share in cash.  It is expected that the transaction process will result in a sale closing during the fourth quarter of 2016, subject to, among other things, approval by Accuride's stockholders and the completion of customary regulatory reviews.  Afterwards, Accuride will operate as an independent business within Crestview's portfolio of companies.

Noncontrolling Interest

Noncontrolling Interest—Noncontrolling interests represent ownership interest in the Company's majority-owned subsidiary, Gianetti Ruote, S.r.l. ("Gianetti"), held by third parties. Noncontrolling interest is recognized as a component of equity in the Company's consolidated balance sheets and as net income (loss) attributable to noncontrolling interest in the consolidated statements of operations and comprehensive income (loss) and is captured within the summary of changes in equity attributable to controlling and noncontrolling interest. 

Management's Estimates and Assumptions

Management's Estimates and Assumptions– The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.

Earnings Per Common Share

Earnings Per Common Share – Basic and diluted earnings per common share were computed as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(In thousands except per share data)	2016			2015			2016			2015
Numerator:
Net income (loss) from continuing operations	$	(6,751	)	$	5,398		$	(2,852	)	$	10,156
Net loss from discontinued operations		(21,861	)		(3,578	)		(28,042	)		(2,585	)
Net income (loss) attributable to stockholders	$	(28,612	)	$	1,820		$	(30,894	)	$	7,571
Denominator:
Weighted average shares outstanding – Basic		48,332			48,015			48,247			47,943
Weighted average shares outstanding – Diluted		48,332			49,422			48,247			48,844
Basic income (loss) per common share
From continuing operations	$	(0.14	)	$	0.11		$	(0.06	)	$	0.21
From discontinued operations		(0.45	)		(0.07	)		(0.58	)		(0.05	)
Basic income (loss) per common share	$	(0.59	)	$	0.04		$	(0.64	)	$	0.16
Diluted income (loss) per common share
From continuing operations	$	(0.14	)	$	0.11		$	(0.06	)	$	0.21
From discontinued operations		(0.45	)		(0.07	)		(0.58	)		(0.05	)
Diluted income (loss) per common share	$	(0.59	)	$	0.04		$	(0.64	)	$	0.16

As of September 30, 2016, there were options exercisable for 138,231 shares that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive.  As of September 30, 2015, there were options exercisable for 144,095 shares that were not included in the computation of diluted earnings per share because the effect would be anti-dilutive.

Share-Based Compensation

Share-Based Compensation –Compensation expense for share-based compensation programs recognized as a component of operating expenses was $0.7 million for both three months ended September 30, 2016 and September 30, 2015.  Compensation expense for share-based compensation programs recognized as a component of operating expenses was $1.8 million and $2.1 million for the nine months ended September 30, 2016 and September 30, 2015, respectively.

As of September 30, 2016, there was approximately $2.7 million of unrecognized pre-tax compensation expense related to share-based awards not yet vested that will be recognized over a weighted-average period of 1.5 years.  The closing of the pending merger transaction between Accuride and Crestview, as described above, would result in a change of control under outstanding share-based award agreements, which would result in such awards vesting on an accelerated basis or being terminated as of closing.

Income Tax

Income Tax – We compute on a quarterly basis an estimated annual effective tax rate considering ordinary income and related income tax (benefit) expense. Ordinary income refers to income (loss) before income tax expense excluding significant, unusual, or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs. Other items included in income tax expense in the periods in which they occur include the cumulative effect of changes in tax laws or rates, foreign exchange gains and losses, adjustments to uncertain tax positions, and adjustments to our valuation allowance due to changes in judgment in the realizability of federal and state deferred tax assets in future years.

We have assessed the need to maintain a valuation allowance for deferred tax assets based on an assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income.  Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance.  Due to our recent history of U.S. and Italian operating and taxable losses, the inconsistency of income, and the uncertainty of our financial outlook, we continue to maintain a full valuation allowance against our U.S. and Italian deferred tax assets in those jurisdictions.  Deferred tax assets in our Canadian and Mexican jurisdictions are more likely than not to be recognized, therefore, no valuation allowance has been recorded for these assets.

New Accounting Pronouncements

New Accounting Pronouncements - On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers.  The amendments in this update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605. The objective of the amendment is to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards ("IFRS"). The amendment is effective for annual reporting periods beginning after December 15, 2016, and interim periods therein. Early adoption is not permitted.

On August 12, 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606):  Deferral of the Effective Date".  The amendments in this update defer the effective date of Update 2014-09 for all entities by one year. The Company is evaluating the effect, if any, on its financial statements.

On August 27, 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern. The amendments in this update provide guidance in U.S. GAAP about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. In doing so, the amendments should reduce diversity in the timing and content of footnote disclosures. The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is evaluating the effect, if any, on its financial statements.

On July 22, 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The FASB is using this update as part of its Simplification Initiative. The amendments in this update more closely align the measurement of inventory in GAAP with the measurement of Inventory in IFRS. This amendment is for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendment should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is evaluating the effect, if any, on its financial statements.

On January 5, 2016, the FASB issued ASU 2016-01, Financial Instructions-Overall (Topic 825-10).  The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is evaluating the effect, if any, on its financial statements.

On February 25, 2016, the FASB issued ASU 2016-02, Leases (Topic 842).  The amendments in this update will increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This amendment is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The Company is evaluating the effect, if any, on its financial statements.

On March 17, 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606).  The amendments in this update clarify the implementation guidance on principal versus agent considerations. The amendments in this update are effective and the transition requirements are the same as the effective date and transition requirements of ASU 2014-09.  The Company is evaluating the effect, if any, on its financial statements.

On March 30, 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensations (Topic 718).  The amendments in this update are intended to simplify accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  Early adoption is permitted.  The Company is evaluating the effect, if any, on its financial statements.

On April 14, 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments in this update clarify guidance related to identifying performance obligations and licensing implementation guidance contained in ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements in Topic 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company is evaluating the effect, if any, on its financial statements.

On May 9, 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients. The amendments in this update address narrow-scope improvements to the guidance on collectibility, noncash consideration, and completed contracts at transition. Additionally, the amendments in this update provide a practical expedient for contract modifications at transition and an accounting policy election related to the presentation of sales taxes and other similar taxes collected from customers. The effective date and transition requirements for the amendments in this update are the same as the effective date and transition requirements in Topic 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company is evaluating the effect, if any, on its financial statements.

On June 16, 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instrument.  The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the amendments in the ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  The Company is evaluating the effect, if any, on its financial statements.

On August 26, 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force).  The amendments in this updated address how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics.  The updated specifically address cash flow issues with debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle.  For public business entities, the amendments in the ASU are effective for the fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.  The Company is evaluating the effect, if any, on its financial statements.

Recent Accounting Adoptions

Recent Accounting Adoptions – On June 19, 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide that a Performance Target Could Be Achieved after the Requisite Service Period.   This update is intended to resolve the diverse accounting treatment of those awards in practice. The amendment is effective for annual and interim periods within those annual periods beginning after December 15, 2015.  This amendment did not have a material effect on the financial statements.

               On February 18, 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis.  This update is intended to change the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The amendment is effective for annual and interim periods within those annual periods beginning after December 15, 2015. This amendment did not have a material effect on the financial statements.

On April 15, 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.   The amendments in this update provide guidance to customers about whether a cloud computing arrangement includes a software license. The amendment is effective for annual and interim periods within those annual periods beginning after December 15, 2015. This amendment did not have a material effect on the financial statements.

On April 7, 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. FASB issued this update as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.

The Company has recently adopted ASU 2015-03. Accordingly, costs relating to obtaining the senior secured notes, which are capitalized and amortized over the term of the related debt using the effective interest method, have been reclassified to Long Term Debt in the accompanying condensed consolidated balance sheets. The prior year consolidated balance sheet has been adjusted to conform to the current year presentation, in accordance with the retroactive requirements of ASU 2015-03.  Deferred financing costs net of accumulated amortization associated with the senior secured notes as of September 30, 2016 and December 31, 2015 were $2.4 million and $3.1 million, respectively.

At its Emerging Issues Task Force meeting on June 18, 2015, the SEC staff clarified that ASU 2015-03 does not address issuance costs associated with revolving-debt arrangements and announced that it would not object to an entity deferring and presenting such costs as an asset and subsequently amortizing the costs ratably over the term of the revolving debt arrangement. Based on the SEC staff's comments, the Company has elected to recognize costs incurred in connection with the revolving ABL Credit Facility (the "ABL Facility") as a deferred asset. These deferred financing costs are subsequently amortized over the life of the related debt using the effective interest method. Deferred financing costs net of accumulated amortization associated with the ABL Facility as of September 30, 2016 and December 31, 2015 were $0.7  million and $1.0 million, respectively.