Delaware | 1-15827 | 38-3519512 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
One Village Center Drive, Van Buren Township, Michigan | 48111 | |
(Address of principal executive offices) | (Zip Code) |
o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01. Other Events | ||||||||
Item 9.01. Financial Statements and Exhibits | ||||||||
SIGNATURE | ||||||||
EXHIBIT INDEX | ||||||||
EX-23.1 | ||||||||
EX-99.1 | ||||||||
EX-99.2 | ||||||||
EX-99.3 | ||||||||
EX-99.4 |
| Consent of Independent Registered Public Accounting Firm, attached as Exhibit 23.1 to this report and incorporated herein by reference; | ||
| Part I, Item 1: Business, attached as Exhibit 99.1 to this report and incorporated herein by reference; | ||
| Part II, Item 7: Managements Discussion and Analysis of Financial Condition and Results of Operations, attached as Exhibit 99.2 to this report and incorporated herein by reference; | ||
| Consolidated Financial Statements of the Company and Notes thereto, included in Part II, Item 8, attached as Exhibit 99.3 to this report and incorporated herein by reference; and | ||
| Part IV, Item 15: Financial Statement Schedule, attached as Exhibit 99.4 to this report and incorporated herein by reference. |
- 2 -
Exhibit No. | Description | |
23.1
|
Consent of Independent Registered Public Accounting Firm. | |
99.1
|
Part I, Item 1 of the Companys Annual Report on Form 10-K for the year ended December 31, 2010: Business, revised only to reflect segment reporting change. | |
99.2
|
Part II, Item 7 of the Companys Annual Report on Form 10-K for the year ended December 31, 2010: Managements Discussion and Analysis of Financial Condition and Results of Operations, revised only to reflect segment reporting change. | |
99.3
|
Consolidated Financial Statements of the Company and Notes thereto, included in Part II, Item 8 of the Companys Annual Report on Form 10-K for the year ended December 31, 2010, revised only to reflect segment reporting change (included with the Consolidated Financial Statements is the Report of the Independent Registered Public Accounting Firm dated March 9, 2011, except with respect to its opinion on the Companys Consolidated Financial Statements as it relates to the effects of the changes in segments discussed in Note 23, as to which the date is August 4, 2011). | |
99.4
|
Part IV, Item 15 of the Companys Annual Report on Form 10-K for the year ended December 31, 2010: Financial Statement Schedule, revised only to reflect segment reporting change. |
- 3 -
VISTEON CORPORATION |
||||
Date: August 4, 2011 | By: | /s/ Michael J. Widgren | ||
Michael J. Widgren | ||||
Vice President, Corporate Controller
and Chief Accounting Officer |
- 4 -
Exhibit No. | Description | Page | ||
23.1
|
Consent of Independent Registered Public Accounting Firm. | |||
99.1
|
Part I, Item 1 of Visteon Corporations Annual Report on Form 10-K for the year ended December 31, 2010: Business, revised only to reflect segment reporting change. | |||
99.2
|
Part II, Item 7 of Visteon Corporations Annual Report on Form 10-K for the year ended December 31, 2010: Managements Discussion and Analysis of Financial Condition and Results of Operations, revised only to reflect segment reporting change. | |||
99.3
|
Consolidated Financial Statements of Visteon Corporation and Notes thereto, included in Part II, Item 8 of Visteon Corporations Annual Report on Form 10-K for the year ended December 31, 2010, revised only to reflect segment reporting change (included with the Consolidated Financial Statements is the Report of the Independent Registered Public Accounting Firm dated March 9, 2011, except with respect to its opinion on Visteon Corporations Consolidated Financial Statements as it relates to the effects of the changes in segments discussed in Note 23, as to which the date is August 4, 2011). | |||
99.4
|
Part IV, Item 15 of Visteon Corporations Annual Report on Form 10-K for the year ended December 31, 2010: Financial Statement Schedule, revised only to reflect segment reporting change. |
- 5 -
| Globalization The automotive sector is rapidly globalizing. Accordingly, the entire automotive supply chain must balance resources and production capacity to most efficiently address diverse consumer needs and preferences as well as unique market dynamics. Developing automotive markets including Brazil, Russia, India and China, represent significant growth opportunities attributable to the increasing income levels of a growing and significant middle class in these countries and their need and desire to achieve basic mobility. However, vehicle affordability remains a challenge in these markets, highlighting the need to meet divergent requirements of consumers in both mature and emerging markets. To lower costs, OEMs are expected to continue to shift their production facilities from high-cost regions such as North America and Western Europe to lower-cost regions such as Brazil, Russia, India and China. Through these localization efforts, labor and transportation costs can be lowered, while positioning operations in markets with the highest potential for future growth. Additionally, to serve multiple markets cost effectively, OEMs continue to reduce the overall number of individual vehicle platforms and move to fewer global vehicle platforms, which typically are designed in one location but are produced and sold in many different markets around the world. This allows for design cost savings and further scale of economies through the production of a greater number of models from each platform. | |
The continued globalization of the automotive industry is pushing OEMs and suppliers to move to a more collaborative design-to-cost approach, where innovative solutions are applied to technology available in current products resulting in a much simpler variant with a lower cost, while ensuring safety and performance. Supporting OEM low cost vehicle design and development also presents suppliers with the opportunity to participate in the reinvention of how vehicles will be designed and assembled in the future. Additionally, suppliers having operations in the geographic markets in which OEMs produce global platforms enables suppliers to meet OEMs needs more economically and efficiently, thus making global coverage a source of significant competitive advantage for suppliers with a diverse global footprint. | ||
| Governmental involvement Governments in all major countries have a significant influence on the automotive sector through various environmental, energy, economic, labor and consumer safety policies and regulations. Such policies and regulations can impact vehicle design, as well as, production and assembly processes. Recent policy-making and regulatory efforts have resulted in more stringent automobile emissions standards requiring smaller and lighter vehicles and steering innovation efforts toward cleaner energy sources. During the global economic crisis that started in late 2008 and ran through the majority of 2009, governments took a significant role in supporting the automotive sector through various financial investment mechanisms and end-consumer targeted incentive programs. Most recently, vehicle safety has been the subject of significant governmental involvement in the form of fines and penalties for OEMs failing to respond timely to product safety issues through product recall campaigns. | |
As suppliers become increasingly integrated in vehicle design and development, particularly in relation to the supply of vehicle modules and systems, exposure to costs associated with product recall and warranty have increased. Additionally, as OEMs migrate to fewer global vehicle platforms, product recall and warranty issues tend to be of a much larger scale and magnitude. Successful automotive |
suppliers must possess a demonstrated track record of consistently providing customers with high quality and conforming parts. | ||
| Fuel efficiency and green initiatives In the wake of the increased cost of petroleum-based fuel, global regulatory momentum to reduce emissions, and consumer demand for more environmentally friendly products, OEMs have turned to alternative fuel combustion engines, electric vehicles and other environmentally conscious technologies. Gas-electric hybrid vehicles, as well as, all-electric and hydrogen vehicles are increasing in popularity with consumers. Additionally, OEMs are designing their vehicles with more renewable materials and are reducing the level of volatile organic compounds in their vehicles. Successful suppliers must enable the green initiatives of their customers and maintain their own environmentally conscious approach to manufacturing on a global basis. | |
| Vehicle safety, comfort and convenience Consumers are increasingly interested in products that make them feel safer and more secure. Accordingly, OEMs are incorporating more safety oriented technologies into their vehicles such as air bags, anti-lock brakes, traction control, adaptive and driver visibility enhancing lighting and driver awareness capabilities. Digital and portable technologies have dramatically influenced the lifestyle of todays consumers who expect products that enable such a lifestyle. This requires increased electronic and technical content such as in-vehicle communication, navigation and entertainment capabilities. While OEMs are taking different paths to connect their vehicles to high-speed broadband internet connections in the short-term, future vehicles are expected to be built with vehicle-to-vehicle connectivity systems. To achieve sustainable profitable growth, automotive suppliers must effectively support their customers in developing and delivering integrated products and innovative technologies at competitive prices that provide for differentiation and that address consumer preferences for vehicle safety, comfort and convenience. Suppliers that are able to generate new products and add a greater intrinsic value to the end consumer will have a significant competitive advantage. | |
| Customer price pressures and raw material cost inflation The highly competitive nature of the automotive industry drives a focus on cost and price throughout the entire automotive supply chain. Virtually all OEMs have aggressive price reduction initiatives each year with their suppliers. Further, suppliers are continually challenged by the volatile nature of critical manufacturing inputs, specifically, commodity-driven raw material and energy costs. Generally, the increased costs of raw materials and components used in the manufacture of the Companys products have been difficult to pass on to customers and the need to maintain a continued supply of raw materials has made it difficult to resist price increases and surcharges imposed by suppliers. Accordingly, suppliers must be able to reduce their operating costs in order to maintain profitability. Visteon has taken and continues to take difficult, but necessary steps to reduce its costs to offset customer price reductions and increasing costs through operating efficiencies, new manufacturing processes, collaborative design efforts, sourcing alternatives, restructuring actions and other cost reduction initiatives. |
Climate Products | Description | |
Climate Systems
|
The Company designs and manufactures fully integrated heating, ventilation and air conditioning (HVAC) systems. The Companys proprietary analytical tools and systems integration expertise enables the development of climate-oriented components, sub-systems and vehicle-level systems. Products contained in this area include: evaporators, condensers, heater cores, climate controls, compressors, air handling cases and fluid transport systems. | |
Powertrain Cooling Systems
|
The Company designs and manufactures components and modules that provide cooling and thermal management for the vehicles engine and transmission, as well as for batteries and power electronics on hybrid and electric vehicles. The Companys systems expertise and proprietary analytical tools enable development of components and modules to meet a wide array of thermal management needs. Products contained in this area include: radiators, oil coolers, charge air coolers, exhaust gas coolers, battery and power electronics coolers and systems and fluid transport systems. |
Electronics Products | Description | |
Audio / Infotainment Systems
|
The Company produces a wide range of audio/infotainment systems and components to provide in-vehicle information and entertainment, including base radio/CD head units, infotainment head units with integrated DVD/navigation, premium audiophile systems and amplifiers, and rear seat family entertainment systems. Examples of the Companys latest audio/infotainment products include digital and satellite radios, HD and DAB broadcast tuners, MACH® Voice Link technology and a range of connectivity solutions for portable devices. | |
Driver Information Systems
|
The Company designs and manufactures a wide range of instrument clusters and displays to assist driving, ranging from standard analog-electronic clusters to high resolution, fully-configurable, large-format digital LCD devices for the luxury vehicle segment. | |
Electronic Climate Controls and
Integrated Control Panels
|
The Company designs and manufactures a complete line of climate control modules with capability to provide full system integration. The array of modules available varies from single zone manual electronic modules to fully automatic multiple zone modules. The Company also provides integrated control panel assemblies which incorporate audio, climate and other feature controls to allow customers to deliver unique interior styling options and electrical architecture flexibility. | |
Powertrain and Feature Control Modules
|
The Company designs and manufactures a wide range of powertrain and feature control modules. Powertrain control modules cover a range of applications from single-cylinder small engine control systems to fully-integrated V8/V10 engine and transmission controllers. Feature control modules typically manage a variety of powertrain and other vehicle functions, including controllers for fuel pumps, 4x4 transfer cases, intake manifold tuning valves, security and voltage regulation systems and various customer convenience features. |
Interiors Products | Description | |
Cockpit Modules
|
The Companys cockpit modules incorporate structural, electronic, climate control, mechanical and safety components. Customers are provided with a complete array of services including advanced engineering and computer-aided design, styling concepts and modeling and in-sequence delivery of manufactured parts. The Companys cockpit modules are built around its instrument panels which consist of a substrate and the optional assembly of structure, ducts, registers, passenger airbag system (integrated or conventional), finished panels and the glove box assembly. | |
Door Panels and Trims
|
The Company provides a wide range of door panels /modules as well as a variety of interior trim products. | |
Console Modules
|
The Companys consoles deliver flexible and versatile storage options to the consumer. The modules are interchangeable units and offer consumers a wide range of storage options that can be tailored to their individual needs. |
Lighting Products | Description | |
Head Lamps
|
The Company designs and manufactures a wide variety of headlamps (projector, reflector or advanced front lighting systems), utilizing light-generating sources including light emitting diode (LED), high intensity discharge (HID) and halogen-based systems. To enhance driver visibility and safety, Visteon has developed advanced front lighting systems (AFS) that include features that change the beam pattern based on steering wheel angles and other vehicle conditions. Second generation AFS systems utilize GPS and on-board cameras that allow drivers to automatically use high beams without effecting oncoming traffic. | |
Rear Lamps
|
The Company designs and manufactures rear combination lamps utilizing both incandescent and LED light sources. LEDs provide customers with an innovative style and appearance with reduced power consumption and enhanced life over conventional incandescent sources. | |
Other Lamps
|
The Company designs and manufactures multiple variations of center high-mounted stop lamps, fog lamps and side lights utilizing light emitting diodes and halogen based systems. | |
Electronic Control Modules
|
The Company designs and manufactures a variety of electronic control modules specifically for lighting applications. These modules include controls for AFS, automatic headlamp leveling, LED arrays and LED driver modules (LDM). Electronics have become an increasingly important element of lighting systems that allow for the integration of visibility, safety functionality and styling with the electronic architecture of the vehicles. |
Net Property | ||||||||||||||||||||
Net Sales | and Equipment | |||||||||||||||||||
Year Ended December 31 | December 31 | |||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | ||||||||||||||||
Geographic region: |
||||||||||||||||||||
United States |
19 | % | 26 | % | 28 | % | 15 | % | 28 | % | ||||||||||
Mexico |
1 | % | | 1 | % | 2 | % | 3 | % | |||||||||||
Canada |
1 | % | 1 | % | 1 | % | 2 | % | 1 | % | ||||||||||
Intra-region eliminations |
(1 | )% | (1 | )% | (1 | )% | | | ||||||||||||
Total North America |
20 | % | 26 | % | 29 | % | 19 | % | 32 | % | ||||||||||
Germany |
2 | % | 2 | % | 3 | % | 2 | % | 2 | % | ||||||||||
France |
9 | % | 9 | % | 8 | % | 6 | % | 8 | % | ||||||||||
United Kingdom |
| 1 | % | 4 | % | | | |||||||||||||
Portugal |
5 | % | 7 | % | 6 | % | 5 | % | 6 | % | ||||||||||
Spain |
6 | % | 4 | % | 7 | % | 3 | % | 4 | % | ||||||||||
Czech Republic |
7 | % | 7 | % | 7 | % | 8 | % | 11 | % | ||||||||||
Hungary |
5 | % | 5 | % | 5 | % | 4 | % | 4 | % | ||||||||||
Other Europe |
6 | % | 4 | % | 3 | % | 4 | % | 3 | % | ||||||||||
Intra-region eliminations |
(1 | )% | (2 | )% | (2 | )% | | | ||||||||||||
Total Europe |
39 | % | 37 | % | 41 | % | 32 | % | 38 | % | ||||||||||
Korea |
28 | % | 24 | % | 22 | % | 30 | % | 17 | % | ||||||||||
China |
6 | % | 6 | % | 3 | % | 6 | % | 4 | % | ||||||||||
India |
4 | % | 3 | % | 2 | % | 6 | % | 3 | % | ||||||||||
Japan |
3 | % | 2 | % | 2 | % | 1 | % | 1 | % | ||||||||||
Other Asia |
3 | % | 2 | % | 2 | % | 2 | % | 2 | % | ||||||||||
Intra-region eliminations |
(3 | )% | (3 | )% | (1 | )% | | | ||||||||||||
Total Asia |
41 | % | 34 | % | 30 | % | 45 | % | 27 | % | ||||||||||
South America |
7 | % | 6 | % | 5 | % | 4 | % | 3 | % | ||||||||||
Inter-region eliminations |
(7 | )% | (3 | )% | (5 | )% | | | ||||||||||||
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||
Net Sales | ||||||||||||||||
Successor | Predecessor | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31 | October 1 | Year Ended December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Products |
$ | 1,886 | $ | 5,437 | $ | 6,420 | $ | 9,077 | ||||||||
Services |
1 | 142 | 265 | 467 | ||||||||||||
$ | 1,887 | $ | 5,579 | $ | 6,685 | $ | 9,544 | |||||||||
| Production volume increases across key customers globally resulted in an increase of $116 million for the three-month Successor period ended December 31, 2010 and $1.1 billion for the nine-month Predecessor period ended October 1, 2010 when compared to 2009. |
| Currency had a favorable impact on net sales for 2010 when compared to 2009. During the three-month Successor period ended December 31, 2010, the weakening of the Euro outpaced the strengthening of the Korean Won, resulting in unfavorable currency of $36 million. Favorable currency of $172 million, primarily related to the strengthening of the Korean Won partially offset by the weakening of the Euro, increased sales for the nine-month Predecessor period ended October 1, 2010. |
| Plant divestitures and closures reduced sales by $128 million during the three-month Successor period ended December 31, 2010 and $294 million during the nine-month Predecessor period ended October 1, 2010 when compared to 2009. |
| Services revenues decreased $59 million and $63 million during the three-month Successor period ended December 31, 2010 and the nine-month Predecessor period ended October 1, 2010, respectively, due to lower utilization of such services during 2010 as compared to the same periods in 2009 and the impact of the August 31, 2010 ACH Termination Agreement, whereby the Company ceased providing services to ACH, including the leasing of salary and hourly employees. |
Successor | Predecessor | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31 | October 1 | Year Ended December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Materials |
$ | 1,166 | $ | 3,245 | $ | 3,847 | $ | 5,560 | ||||||||
Labor and overhead |
341 | 1,000 | 1,237 | 1,779 | ||||||||||||
Engineering, freight and duty |
148 | 437 | 510 | 701 | ||||||||||||
Depreciation and amortization |
64 | 164 | 278 | 323 | ||||||||||||
OPEB termination |
(133 | ) | (65 | ) | (133 | ) | | |||||||||
Other |
56 | 93 | 88 | 258 | ||||||||||||
$ | 1,642 | $ | 4,874 | $ | 5,827 | $ | 8,621 | |||||||||
Successor | Predecessor | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31 | October 1 | Year Ended December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Net income (loss) attributable to Visteon |
$ | 86 | $ | 940 | $ | 128 | $ | (681 | ) | |||||||
Interest expense, net |
10 | 160 | 106 | 169 | ||||||||||||
Provision for income taxes |
19 | 131 | 80 | 116 | ||||||||||||
Depreciation and amortization |
73 | 207 | 352 | 416 | ||||||||||||
Asset impairments and other (gains)/losses |
(1 | ) | 25 | (11 | ) | 275 | ||||||||||
Deconsolidation gain |
| | (95 | ) | | |||||||||||
Restructuring and other related costs, net |
28 | 5 | 29 | 63 | ||||||||||||
Net OPEB and other employee charges |
(146 | ) | (30 | ) | (195 | ) | | |||||||||
Reorganization and other related items |
40 | (933 | ) | 60 | | |||||||||||
Adjusted EBITDA |
$ | 109 | $ | 505 | $ | 454 | $ | 358 | ||||||||
Successor | Predecessor | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31 | October 1 | Year Ended December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Cash provided from (used by) operating activities |
$ | 154 | $ | 20 | $ | 141 | $ | (116 | ) | |||||||
Capital expenditures |
(92 | ) | (117 | ) | (151 | ) | (294 | ) | ||||||||
Free Cash Flow |
$ | 62 | $ | (97 | ) | $ | (10 | ) | $ | (410 | ) | |||||
| Cancellation of any shares of Visteon common stock and any options, warrants or rights to purchase shares of Visteon common stock or other equity securities outstanding prior to the Effective Date; |
| Issuance of approximately 45,000,000 shares of Successor common stock to certain investors in a private offering (the Rights Offering) exempt from registration under the Securities Act for proceeds of approximately $1.25 billion; |
| Execution of an exit financing facility including $500 million in funded, secured debt and a $200 million asset-based, secured revolver that was undrawn at the Effective Date; and, |
| Application of proceeds from such borrowings and sales of equity along with cash on hand to make settlement distributions contemplated under the Plan, including; |
| cash settlement of the pre-petition seven-year secured term loan claims of approximately $1.5 billion, along with interest of approximately $160 million; |
| cash settlement of the U.S. asset-backed lending facility (ABL) and related letters of credit of approximately $128 million | ||
| establishment of a professional fee escrow account of $68 million; and, | ||
| cash settlement of other claims and fees of approximately $119 million; |
| Issuance of approximately 2,500,000 shares of Successor common stock to holders of pre-petition notes, including 7% Senior Notes due 2014, 8.25% Senior Notes due 2010, and 12.25% Senior Notes due 2016; holders of the 12.25% senior notes also received warrants to purchase up to 2,355,000 shares of reorganized Visteon common stock at an exercise price of $9.66 per share; |
| Issuance of approximately 1,000,000 shares of Successor common stock and warrants to purchase up to 1,552,774 shares of Successor common stock at an exercise price of $58.80 per share for Predecessor common stock interests; |
| Issuance of approximately 1,700,000 shares of restricted stock to management under a post-emergence share-based incentive compensation program; and, |
| Reinstatement of certain pre-petition obligations including certain OPEB liabilities and administrative, general and other unsecured claims. |
Liabilities | ||||||||||||
Subject to | ||||||||||||
Compromise | Plan of | |||||||||||
September 30 | Reorganization | Reorganization Gain | ||||||||||
2010 | Adjustments | October 1, 2010 | ||||||||||
(Dollars in Millions) | ||||||||||||
Debt |
$ | 2,490 | $ | 1,717 | $ | 773 | ||||||
Employee liabilities |
324 | 218 | 106 | |||||||||
Interest payable |
183 | 160 | 23 | |||||||||
Other claims |
124 | 70 | 54 | |||||||||
$ | 3,121 | $ | 2,165 | $ | 956 | |||||||
Climate | Electronics | Interiors | Lighting | Eliminations | Total | |||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||
Three months ended December
31, 2010 Successor |
$ | 954 | $ | 326 | $ | 554 | $ | 111 | $ | (59 | ) | $ | 1,886 | |||||||||||
Nine months ended October 1,
2010 Predecessor |
2,660 | 935 | 1,641 | 345 | (144 | ) | 5,437 | |||||||||||||||||
Twelve months ended December
31, 2009 Predecessor |
2,835 | 1,208 | 2,137 | 361 | (121 | ) | 6,420 | |||||||||||||||||
Increase / (Decrease) |
$ | 779 | $ | 53 | $ | 58 | $ | 95 | $ | (82 | ) | $ | 903 | |||||||||||
Three months ended December
31, 2010 Successor |
||||||||||||||||||||||||
Volume and mix |
$ | 99 | $ | (1 | ) | $ | 29 | $ | (2 | ) | $ | (9 | ) | $ | 116 | |||||||||
Currency |
(6 | ) | (14 | ) | (11 | ) | (5 | ) | | (36 | ) | |||||||||||||
Divestitures and closures |
(2 | ) | (18 | ) | (108 | ) | | | (128 | ) | ||||||||||||||
Other |
(5 | ) | (2 | ) | (18 | ) | (1 | ) | (7 | ) | (33 | ) | ||||||||||||
Nine months ended October 1,
2010 Predecessor |
||||||||||||||||||||||||
Volume and mix |
617 | 146 | 316 | 114 | (90 | ) | 1,103 | |||||||||||||||||
Currency |
97 | (1 | ) | 84 | (8 | ) | | 172 | ||||||||||||||||
Divestitures and closures |
(20 | ) | (52 | ) | (222 | ) | | | (294 | ) | ||||||||||||||
Other |
(1 | ) | (5 | ) | (12 | ) | (3 | ) | 24 | 3 | ||||||||||||||
Total |
$ | 779 | $ | 53 | $ | 58 | $ | 95 | $ | (82 | ) | $ | 903 | |||||||||||
Climate | Electronics | Interiors | Lighting | Eliminations | Total | |||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||
Three months ended December 31,
2010 Successor |
$ | 839 | $ | 236 | $ | 517 | $ | 109 | $ | (59 | ) | $ | 1,642 | |||||||||||
Nine months ended October 1,
2010 Predecessor |
2,334 | 798 | 1,551 | 335 | (144 | ) | 4,874 | |||||||||||||||||
Twelve months ended December 31,
2009 Predecessor |
2,465 | 1,084 | 2,023 | 376 | (121 | ) | 5,827 | |||||||||||||||||
Increase / (Decrease) |
$ | 708 | $ | (50 | ) | $ | 45 | $ | 68 | $ | (82 | ) | $ | 689 | ||||||||||
Three months ended December 31,
2010 Successor |
||||||||||||||||||||||||
Material |
$ | 76 | $ | (7 | ) | $ | (56 | ) | $ | (3 | ) | $ | (7 | ) | $ | 3 | ||||||||
Freight and duty |
6 | 2 | (5 | ) | | | 3 | |||||||||||||||||
Labor and overhead |
21 | (16 | ) | (25 | ) | 3 | (3 | ) | (20 | ) | ||||||||||||||
Depreciation and amortization |
1 | (3 | ) | (5 | ) | (16 | ) | | (23 | ) | ||||||||||||||
Other |
48 | (23 | ) | 36 | 8 | (6 | ) | 63 | ||||||||||||||||
Nine months ended October 1,
2010 Predecessor |
||||||||||||||||||||||||
Material |
428 | 75 | 95 | 56 | (92 | ) | 562 | |||||||||||||||||
Freight and duty |
31 | 15 | 7 | 4 | (1 | ) | 56 | |||||||||||||||||
Labor and overhead |
77 | (1 | ) | (2 | ) | 30 | 20 | 124 | ||||||||||||||||
Depreciation and amortization |
(1 | ) | (5 | ) | (9 | ) | (2 | ) | (17 | ) | (34 | ) | ||||||||||||
Other |
21 | (87 | ) | 9 | (12 | ) | 24 | (45 | ) | |||||||||||||||
Total |
$ | 708 | $ | (50 | ) | $ | 45 | $ | 68 | $ | (82 | ) | $ | 689 | ||||||||||
Interiors | Climate | Electronics | Lighting | Central | Total | |||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||
Predecessor December 31, 2009 |
$ | 21 | $ | | $ | 13 | $ | 3 | $ | 2 | $ | 39 | ||||||||||||
Expenses |
6 | 1 | 2 | 5 | 6 | 20 | ||||||||||||||||||
Exchange |
(1 | ) | | | | | (1 | ) | ||||||||||||||||
Utilization |
(9 | ) | (1 | ) | (13 | ) | (8 | ) | (6 | ) | (37 | ) | ||||||||||||
Predecessor October 1, 2010 |
$ | 17 | $ | | $ | 2 | $ | | $ | 2 | $ | 21 | ||||||||||||
Expenses |
24 | 2 | 1 | | 1 | 28 | ||||||||||||||||||
Exchange |
(1 | ) | | | | | (1 | ) | ||||||||||||||||
Utilization |
(3 | ) | | | | (2 | ) | (5 | ) | |||||||||||||||
Successor December 31, 2010 |
$ | 37 | $ | 2 | $ | 3 | $ | | $ | 1 | $ | 43 | ||||||||||||
| The non-recurrence of certain 2009 discrete items including $56 million of benefits associated with changes in uncertain tax positions, including interest and penalties; $12 million of expense associated with the establishment of a deferred tax valuation allowance for the Companys operations in Spain; $12 million of expense associated with changes in accumulated other comprehensive income; and $7 million of expense for tax law changes. |
| Lower tax expense in jurisdictions where the Company is profitable and records income and withholding tax of $23 million. |
| Income tax of $37 million associated with the adoption of fresh-start accounting on October 1, 2010. |
| $25 million increase in tax expense primarily attributable to overall higher earnings in those jurisdictions where the Company is profitable, which includes the year-over-year impact of changes in the mix of earnings and differing tax rates between jurisdictions. |
| The non-recurrence of a 2009 net benefit associated with changes in accumulated other comprehensive income of $6 million. |
Climate | Electronics | Interiors | Lighting | Other* | Eliminations | Total | ||||||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||||||
Twelve months ended
December 31, 2008 |
$ | 3,582 | $ | 1,871 | $ | 3,064 | $ | 577 | $ | 271 | $ | (288 | ) | $ | 9,077 | |||||||||||||
Volume and mix |
(371 | ) | (652 | ) | (571 | ) | (198 | ) | (74 | ) | 167 | (1,699 | ) | |||||||||||||||
Currency |
(184 | ) | (15 | ) | (98 | ) | (3 | ) | | | (300 | ) | ||||||||||||||||
Divestitures
and plant
closures |
(57 | ) | | (311 | ) | | (201 | ) | | (569 | ) | |||||||||||||||||
Other |
(135 | ) | 4 | 53 | (15 | ) | 4 | | (89 | ) | ||||||||||||||||||
Twelve months ended
December 31, 2009 |
$ | 2,835 | $ | 1,208 | $ | 2,137 | $ | 361 | $ | | $ | (121 | ) | $ | 6,420 | |||||||||||||
* | All remaining manufacturing facilities in the Other segment have been divested, closed or reclassified consistent with the Companys current management reporting structure. |
Climate | Electronics | Interiors | Lighting | Other | Eliminations | Total | ||||||||||||||||||||||
Twelve months ended
December 31, 2008 |
$ | 3,287 | $ | 1,717 | $ | 3,042 | $ | 615 | $ | 248 | $ | (288 | ) | $ | 8,621 | |||||||||||||
Material |
(491 | ) | (411 | ) | (689 | ) | (120 | ) | (167 | ) | 165 | (1,713 | ) | |||||||||||||||
Freight and duty |
(16 | ) | (33 | ) | (18 | ) | (15 | ) | (5 | ) | 2 | (85 | ) | |||||||||||||||
Labor and overhead |
(198 | ) | (26 | ) | (206 | ) | (89 | ) | (61 | ) | 37 | (543 | ) | |||||||||||||||
Depreciation and
amortization |
(15 | ) | (34 | ) | (21 | ) | 14 | (7 | ) | 18 | (45 | ) | ||||||||||||||||
Other |
(102 | ) | (129 | ) | (85 | ) | (29 | ) | (8 | ) | (55 | ) | (408 | ) | ||||||||||||||
Twelve months ended
December 31, 2009 |
$ | 2,465 | $ | 1,084 | $ | 2,023 | $ | 376 | $ | | $ | (121 | ) | $ | 5,827 | |||||||||||||
Other/ | ||||||||||||||||||||||||
Interiors | Climate | Electronics | Lighting | Central | Total | |||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||
December 31, 2008 |
$ | 49 | $ | 3 | $ | 4 | $ | | $ | 8 | $ | 64 | ||||||||||||
Expenses |
22 | 5 | 13 | 4 | 40 | 84 | ||||||||||||||||||
Utilization |
(50 | ) | (8 | ) | (4 | ) | (1 | ) | (46 | ) | (109 | ) | ||||||||||||
December 31, 2009 |
$ | 21 | $ | | $ | 13 | $ | 3 | $ | 2 | $ | 39 | ||||||||||||
| $13 million of employee severance and termination benefit costs associated with approximately 170 employees at two European Interiors facilities. |
| $11 million of employee severance and termination benefit costs associated with approximately 300 employees related to the announced closure of a North American Electronics facility. |
| $10 million of employee severance and termination benefit costs related to approximately 120 salaried employees who were located primarily at the Companys North American headquarters. |
| $4 million of employee severance and termination benefit costs associated with approximately 550 employees related to the consolidation of the Companys North American Lighting operations. |
| $67 million decrease in tax expense associated with releasing reserves, including interest and penalties, as a result of closing audits in Portugal related to the 2006 and 2007 tax years, completing transfer pricing studies in Asia and reflecting the expiration of various legal statutes of limitations. |
| $33 million increase in tax expense attributable to changes in earnings between jurisdictions where the Company is profitable and accrues income and withholding tax. |
| $10 million decrease in tax expense attributable to establishing deferred tax asset valuation allowances as the $12 million charge recorded in 2009 associated with the Companys operations in Spain was less than the $22 million non-cash charge recorded in 2008 related to the Companys operations in Brazil. |
| Tax law changes resulted in an increase in tax expense of $8 million, which includes the impact of Mexico tax reform enacted in 2009. |
October 1 | ||||
2010 | ||||
(Dollars in Millions) | ||||
Cash Sources: |
||||
Rights offering proceeds |
$ | 1,250 | ||
Exit financing proceeds, net |
482 | |||
Net release of restricted cash |
105 | |||
Total cash sources |
$ | 1,837 | ||
Cash Uses: |
||||
Secured term loan and interest |
$ | 1,660 | ||
ABL and letters of credit |
128 | |||
Rights offering and other financing fees |
59 | |||
Administrative, professional and other claims |
42 | |||
Total cash uses |
$ | 1,889 | ||
Net decrease in cash |
$ | (52 | ) | |
December 31, 2009 | ||||
and September 30, 2010 | ||||
(Dollars in Millions) | ||||
Senior Credit Agreements: |
||||
Term loan due June 13, 2013 |
$ | 1,000 | ||
Term loan due December 13, 2013 |
500 | |||
U.S. asset-based lending (ABL) facility |
89 | |||
Letters of credit |
38 | |||
8.25% notes due August 1, 2010 |
206 | |||
7.00% notes due March 10, 2014 |
450 | |||
12.25% notes due December 31, 2016 |
206 | |||
Total |
2,489 | |||
Deferred charges, debt issue fees and other, net |
1 | |||
Total pre-petition debt classified as Liabilities subject to compromise |
$ | 2,490 | ||
| The estimate involves matters that are highly uncertain at the time the accounting estimate is made; and |
| Different estimates or changes to an estimate could have a material impact on the reported financial position, changes in financial condition or results of operations. |
| Long-term rate of return on plan assets: The expected long-term rate of return is used to calculate net periodic pension cost. The required use of the expected long-term rate of return on plan assets may result in recognized returns that are greater or less than the actual returns on those plan assets in any given year. Over time, however, the expected long-term rate of return on plan assets is designed to approximate actual earned long-term returns. The expected long-term rate of return for pension assets has been chosen based on various inputs, including historical returns for the different asset classes held by the Companys trusts and its asset allocation, as well as inputs from internal and external sources regarding expected capital market returns, inflation and other variables. In determining its pension expense for the 2010 Successor Period, the Company used long-term rates of return on plan assets ranging from 3% to 10.25% outside the U.S. and 7.7% in the U.S. In determining pension expense for the 2010 Predecessor Period, the Company used long-term rates of return on plan assets ranging from 3.45% to 10.4% outside the U.S. and 7.7% in the U.S. Actual returns on U.S. pension assets for 2010, 2009 and 2008 were 18.4%, 7.5% and (7.9%), respectively, compared to the expected rate of return assumption of 7.7%, 8.1% and 8.25% respectively, for each of those years. The Companys market- |
related value of pension assets reflects changes in the fair value of assets over a five-year period, with a one-third weighting to the most recent year. Market-related value was reset to fair value at October 1, 2010. |
| Discount rate: The discount rate is used to calculate pension obligations. The discount rate assumption is based on market rates for a hypothetical portfolio of high-quality corporate bonds rated Aa or better with maturities closely matched to the timing of projected benefit payments for each plan at its annual measurement date. The Company used discount rates ranging from 1.6% to 10% to determine its pension and other benefit obligations as of December 31, 2010, including weighted average discount rates of 5.55% for U.S. pension plans, and 5.95% for non-U.S. pension plans. |
Impact on | ||||||||||||||||
Impact on | Non-U.S. 2011 | |||||||||||||||
U.S. 2011 | Impact on | Pre-tax | Impact on | |||||||||||||
Pre-tax Pension | U.S. Plan 2010 | Pension | Non-U.S. Plan 2010 | |||||||||||||
Expense | Funded Status | Expense | Funded Status | |||||||||||||
25 basis point
decrease in
discount rate(a) |
-less than $1 million | -$50 million | +$1 million | -$19 million | ||||||||||||
25 basis point
increase in
discount rate(a) |
+less than $1 million | +$47 million | -$1 million | +$18 million | ||||||||||||
25 basis point
decrease in
expected return on
assets(a) |
+$2 million | +$1 million | ||||||||||||||
25 basis point
increase in
expected return on
assets(a) |
-$2 million | -$1 million |
(a) | Assumes all other assumptions are held constant. |
| Visteons ability to satisfy its future capital and liquidity requirements; Visteons ability to access the credit and capital markets at the times and in the amounts needed and on terms acceptable to Visteon; Visteons ability to comply with covenants applicable to it; and the continuation of acceptable supplier payment terms. |
| Visteons ability to satisfy its pension and other postretirement employee benefit obligations, and to retire outstanding debt and satisfy other contractual commitments, all at the levels and times planned by management. |
| Visteons ability to access funds generated by its foreign subsidiaries and joint ventures on a timely and cost effective basis. |
| Changes in the operations (including products, product planning and part sourcing), financial condition, results of operations or market share of Visteons customers. |
| Changes in vehicle production volume of Visteons customers in the markets where it operates, and in particular changes in Fords and Hyundai Kias vehicle production volumes and platform mix. |
| Increases in commodity costs or disruptions in the supply of commodities, including steel, resins, aluminum, copper, fuel and natural gas. |
| Visteons ability to generate cost savings to offset or exceed agreed upon price reductions or price reductions to win additional business and, in general, improve its operating performance; to achieve the benefits of its restructuring actions; and to recover engineering and tooling costs and capital investments. |
| Visteons ability to compete favorably with automotive parts suppliers with lower cost structures and greater ability to rationalize operations; and to exit non-performing businesses on satisfactory terms, particularly due to limited flexibility under existing labor agreements. |
| Restrictions in labor contracts with unions that restrict Visteons ability to close plants, divest unprofitable, noncompetitive businesses, change local work rules and practices at a number of facilities and implement cost-saving measures. |
| The costs and timing of facility closures or dispositions, business or product realignments, or similar restructuring actions, including potential asset impairment or other charges related to the implementation of these actions or other adverse industry conditions and contingent liabilities. |
| Significant changes in the competitive environment in the major markets where Visteon procures materials, components or supplies or where its products are manufactured, distributed or sold. |
| Legal and administrative proceedings, investigations and claims, including shareholder class actions, inquiries by regulatory agencies, product liability, warranty, employee-related, environmental and safety claims and any recalls of products manufactured or sold by Visteon. |
| Changes in economic conditions, currency exchange rates, changes in foreign laws, regulations or trade policies or political stability in foreign countries where Visteon procures materials, components or supplies or where its products are manufactured, distributed or sold. |
| Shortages of materials or interruptions in transportation systems, labor strikes, work stoppages or other interruptions to or difficulties in the employment of labor in the major markets where Visteon purchases materials, components or supplies to manufacture its products or where its products are manufactured, distributed or sold. |
| Changes in laws, regulations, policies or other activities of governments, agencies and similar organizations, domestic and foreign, that may tax or otherwise increase the cost of, or otherwise affect, the manufacture, licensing, distribution, sale, ownership or use of Visteons products or assets. |
| Possible terrorist attacks or acts of war, which could exacerbate other risks such as slowed vehicle production, interruptions in the transportation system or fuel prices and supply. |
| The cyclical and seasonal nature of the automotive industry. |
| Visteons ability to comply with environmental, safety and other regulations applicable to it and any increase in the requirements, responsibilities and associated expenses and expenditures of these regulations. |
| Visteons ability to protect its intellectual property rights, and to respond to changes in technology and technological risks and to claims by others that Visteon infringes their intellectual property rights. |
| Visteons ability to quickly and adequately remediate control deficiencies in its internal control over financial reporting. |
| Other factors, risks and uncertainties detailed from time to time in Visteons Securities and Exchange Commission filings. |
Page No. | ||||
Managements Report on Internal Control Over Financial Reporting |
2 | |||
Report of Independent Registered Public Accounting Firm |
3 | |||
Consolidated Statements of Operations for the three months
ended December 31, 2010, the nine months ended October 1, 2010
and the years ended December 31, 2009 and 2008 |
5 | |||
Consolidated Balance Sheets as of December 31, 2010 and 2009 |
6 | |||
Consolidated Statements of Cash Flows for the three months
ended December 31, 2010, the nine months ended October 1, 2010
and the years ended December 31, 2009 and 2008 |
7 | |||
Consolidated Statements of Shareholders Equity (Deficit) for
the periods ended December 31, 2010, October 1, 2010 and
December 31, 2009 and 2008 |
8 | |||
Notes to Consolidated Financial Statements |
9 |
1
2
3
4
Successor | Predecessor | |||||||||||||||
Three Months Ended | Nine Months Ended | Year Ended | ||||||||||||||
December 31 | October 1 | December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions, Except Per Share Amounts) | ||||||||||||||||
Net sales |
||||||||||||||||
Products |
$ | 1,886 | $ | 5,437 | $ | 6,420 | $ | 9,077 | ||||||||
Services |
1 | 142 | 265 | 467 | ||||||||||||
1,887 | 5,579 | 6,685 | 9,544 | |||||||||||||
Cost of sales |
||||||||||||||||
Products |
1,642 | 4,874 | 5,827 | 8,621 | ||||||||||||
Services |
1 | 140 | 261 | 464 | ||||||||||||
1,643 | 5,014 | 6,088 | 9,085 | |||||||||||||
Gross margin |
244 | 565 | 597 | 459 | ||||||||||||
Selling, general and administrative expenses |
124 | 271 | 331 | 553 | ||||||||||||
Restructuring expenses |
28 | 20 | 84 | 147 | ||||||||||||
Reorganization items, net |
| (933 | ) | 60 | | |||||||||||
Asset impairments and other (gains) and losses |
(1 | ) | 25 | (11 | ) | 275 | ||||||||||
Reimbursement from escrow account |
| | 62 | 113 | ||||||||||||
Deconsolidation gain |
| | (95 | ) | | |||||||||||
Operating income (loss) |
93 | 1,182 | 290 | (403 | ) | |||||||||||
Interest expense |
16 | 170 | 117 | 215 | ||||||||||||
Interest income |
6 | 10 | 11 | 46 | ||||||||||||
Equity in net income of non-consolidated affiliates |
41 | 105 | 80 | 41 | ||||||||||||
Income (loss) before income taxes |
124 | 1,127 | 264 | (531 | ) | |||||||||||
Provision for income taxes |
19 | 131 | 80 | 116 | ||||||||||||
Net income (loss) |
105 | 996 | 184 | (647 | ) | |||||||||||
Net income attributable to noncontrolling interests |
19 | 56 | 56 | 34 | ||||||||||||
Net income (loss) attributable to Visteon Corporation |
$ | 86 | $ | 940 | $ | 128 | $ | (681 | ) | |||||||
Earnings (loss) per share: |
||||||||||||||||
Basic earnings (loss) attributable to Visteon Corporation |
$ | 1.71 | $ | 7.21 | $ | 0.98 | $ | (5.26 | ) | |||||||
Diluted earnings (loss) attributable to Visteon Corporation |
$ | 1.66 | $ | 7.21 | $ | 0.98 | $ | (5.26 | ) |
5
Successor | Predecessor | |||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
ASSETS |
||||||||
Cash and equivalents |
$ | 905 | $ | 962 | ||||
Restricted cash |
74 | 133 | ||||||
Accounts receivable, net |
1,101 | 1,055 | ||||||
Inventories, net |
364 | 319 | ||||||
Other current assets |
258 | 236 | ||||||
Total current assets |
2,702 | 2,705 | ||||||
Property and equipment, net |
1,582 | 1,936 | ||||||
Equity in net assets of non-consolidated affiliates |
439 | 294 | ||||||
Intangible assets, net |
396 | | ||||||
Other non-current assets |
89 | 84 | ||||||
Total assets |
$ | 5,208 | $ | 5,019 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT) |
||||||||
Short-term debt, including current portion of long-term debt |
$ | 78 | $ | 225 | ||||
Accounts payable |
1,211 | 977 | ||||||
Accrued employee liabilities |
196 | 161 | ||||||
Other current liabilities |
357 | 302 | ||||||
Total current liabilities |
1,842 | 1,665 | ||||||
Long-term debt |
483 | 6 | ||||||
Employee benefits |
522 | 568 | ||||||
Deferred tax liabilities |
190 | 159 | ||||||
Other non-current liabilities |
221 | 257 | ||||||
Liabilities subject to compromise |
| 2,819 | ||||||
Shareholders equity (deficit) |
||||||||
Preferred stock (par value $0.01, 50 million shares
authorized, none outstanding at December 31, 2010) |
| | ||||||
Common stock (par value $0.01, 250 million shares
authorized, 51 million shares issued and outstanding at
December 31, 2010) |
1 | | ||||||
Stock warrants |
29 | | ||||||
Predecessor preferred stock (par value $1.00, 50 million
shares authorized, none outstanding at December 31, 2009) |
| | ||||||
Predecessor common stock (par value $1.00, 500 million
shares authorized, 131 million shares issued and 130
million shares outstanding at December 31, 2009) |
| 131 | ||||||
Predecessor stock warrants |
| 127 | ||||||
Additional paid-in capital |
1,099 | 3,407 | ||||||
Retained earnings (accumulated deficit) |
86 | (4,576 | ) | |||||
Accumulated other comprehensive income |
50 | 142 | ||||||
Treasury stock |
(5 | ) | (3 | ) | ||||
Total Visteon Corporation shareholders equity (deficit) |
1,260 | (772 | ) | |||||
Noncontrolling interests |
690 | 317 | ||||||
Total shareholders equity (deficit) |
1,950 | (455 | ) | |||||
Total liabilities and shareholders equity (deficit) |
$ | 5,208 | $ | 5,019 | ||||
6
Successor | Predecessor | |||||||||||||||
Three Months Ended | Nine Months Ended | Year Ended | ||||||||||||||
December 31 | October 1 | December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Operating Activities |
||||||||||||||||
Net income (loss) |
$ | 105 | $ | 996 | $ | 184 | $ | (647 | ) | |||||||
Adjustments to reconcile net income (loss) to net cash provided from (used by) operating activities: |
||||||||||||||||
Depreciation and amortization |
73 | 207 | 352 | 416 | ||||||||||||
Pension and OPEB, net |
(146 | ) | (41 | ) | (215 | ) | (72 | ) | ||||||||
Deconsolidation gain |
| | (95 | ) | | |||||||||||
Asset impairments and other (gains) and losses |
(1 | ) | 25 | (11 | ) | 275 | ||||||||||
Equity in net income of non-consolidated affiliates, net of dividends remitted |
(41 | ) | (92 | ) | (38 | ) | 5 | |||||||||
Reorganization items |
| (933 | ) | 60 | | |||||||||||
Other non-cash items |
45 | 40 | 8 | 11 | ||||||||||||
Changes in assets and liabilities: |
||||||||||||||||
Accounts receivable |
(53 | ) | (79 | ) | (127 | ) | 509 | |||||||||
Inventories |
5 | (75 | ) | 33 | 44 | |||||||||||
Accounts payable |
174 | 55 | 79 | (504 | ) | |||||||||||
Income taxes deferred and payable, net |
| 12 | 47 | 30 | ||||||||||||
Other assets and other liabilities |
(7 | ) | (95 | ) | (136 | ) | (183 | ) | ||||||||
Net cash provided from (used by) operating activities |
154 | 20 | 141 | (116 | ) | |||||||||||
Investing Activities |
||||||||||||||||
Capital expenditures |
(92 | ) | (117 | ) | (151 | ) | (294 | ) | ||||||||
Investments in joint ventures |
| (3 | ) | (30 | ) | (1 | ) | |||||||||
Proceeds from divestitures and asset sales |
16 | 45 | 69 | 83 | ||||||||||||
Cash associated with deconsolidation and other |
| | (11 | ) | 4 | |||||||||||
Net cash used by investing activities |
(76 | ) | (75 | ) | (123 | ) | (208 | ) | ||||||||
Financing Activities |
||||||||||||||||
Short-term debt, net |
6 | (9 | ) | (19 | ) | 28 | ||||||||||
Cash restriction, net |
16 | 43 | (133 | ) | | |||||||||||
Proceeds from (payments on) DIP facility, net of issuance costs |
| (75 | ) | 71 | | |||||||||||
Proceeds from rights offering, net of issuance costs |
| 1,190 | | | ||||||||||||
Proceeds from issuance of debt, net of issuance costs |
| 481 | 57 | 260 | ||||||||||||
Principal payments on debt |
(61 | ) | (1,651 | ) | (173 | ) | (88 | ) | ||||||||
Repurchase of unsecured debt securities |
| | | (337 | ) | |||||||||||
Other |
(1 | ) | (21 | ) | (62 | ) | (56 | ) | ||||||||
Net cash used by financing activities |
(40 | ) | (42 | ) | (259 | ) | (193 | ) | ||||||||
Effect of exchange rate changes on cash |
1 | 1 | 23 | (61 | ) | |||||||||||
Net increase (decrease) in cash and equivalents |
39 | (96 | ) | (218 | ) | (578 | ) | |||||||||
Cash and equivalents at beginning of period |
866 | 962 | 1,180 | 1,758 | ||||||||||||
Cash and equivalents at end of period |
$ | 905 | $ | 866 | $ | 962 | $ | 1,180 | ||||||||
Supplemental Disclosures: |
||||||||||||||||
Cash paid for interest |
$ | 5 | $ | 179 | $ | 126 | $ | 226 | ||||||||
Cash paid for income taxes, net of refunds |
$ | 20 | $ | 83 | $ | 77 | $ | 86 |
7
Retained | Accumulated | |||||||||||||||||||||||||||||||
Additional | Earnings | Other | ||||||||||||||||||||||||||||||
Common | Stock | Paid-In | (Accumulated | Comprehensive | Treasury | |||||||||||||||||||||||||||
Stock | Warrants | Capital | Deficit) | Income (Loss) | Stock | NCI | Total | |||||||||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||||||||||
Balance at January 1, 2008 Predecessor |
$ | 131 | $ | 127 | $ | 3,406 | $ | (4,016 | ) | $ | 275 | $ | (13 | ) | $ | 293 | $ | 203 | ||||||||||||||
Net (loss)/income |
| | | (681 | ) | | | 34 | (647 | ) | ||||||||||||||||||||||
Foreign currency translation |
| | | | (89 | ) | | (49 | ) | (138 | ) | |||||||||||||||||||||
Benefit plans |
| | | | (29 | ) | | | (29 | ) | ||||||||||||||||||||||
Other |
| | | | | | 3 | 3 | ||||||||||||||||||||||||
Comprehensive loss |
| | | (681 | ) | (118 | ) | | (12 | ) | (811 | ) | ||||||||||||||||||||
Stock-based compensation, net |
| | (1 | ) | (7 | ) | | 11 | | 3 | ||||||||||||||||||||||
Cash dividends |
| | | | | | (17 | ) | (17 | ) | ||||||||||||||||||||||
Other |
| | | | | (1 | ) | | (1 | ) | ||||||||||||||||||||||
Balance at December 31, 2008 Predecessor |
$ | 131 | $ | 127 | $ | 3,405 | $ | (4,704 | ) | $ | 157 | $ | (3 | ) | $ | 264 | $ | (623 | ) | |||||||||||||
Net income |
| | | 128 | | | 56 | 184 | ||||||||||||||||||||||||
Foreign currency translation |
| | | | (119 | ) | | 11 | (108 | ) | ||||||||||||||||||||||
Benefit plans |
| | | | 92 | | | 92 | ||||||||||||||||||||||||
Other |
| | | | 12 | | (2 | ) | 10 | |||||||||||||||||||||||
Comprehensive income (loss) |
| | | 128 | (15 | ) | | 65 | 178 | |||||||||||||||||||||||
Stock-based compensation, net |
| | 2 | | | | | 2 | ||||||||||||||||||||||||
Cash dividends |
| | | | | | (12 | ) | (12 | ) | ||||||||||||||||||||||
Balance at December 31, 2009 Predecessor |
$ | 131 | $ | 127 | $ | 3,407 | $ | (4,576 | ) | $ | 142 | $ | (3 | ) | $ | 317 | $ | (455 | ) | |||||||||||||
Net income |
| | | 940 | | | 56 | 996 | ||||||||||||||||||||||||
Foreign currency translation |
| | | | 14 | | 6 | 20 | ||||||||||||||||||||||||
Benefit plans |
| | | | (232 | ) | | | (232 | ) | ||||||||||||||||||||||
Other |
| | | | 2 | | 3 | 5 | ||||||||||||||||||||||||
Comprehensive income (loss) |
| | | 940 | (216 | ) | | 65 | 789 | |||||||||||||||||||||||
Stock-based compensation, net |
| | 1 | | | | | 1 | ||||||||||||||||||||||||
Cash dividends |
| | | | | | (23 | ) | (23 | ) | ||||||||||||||||||||||
Reorganization and fresh-start related adjustments |
(130 | ) | (86 | ) | (2,345 | ) | 3,636 | 74 | 3 | 308 | 1,460 | |||||||||||||||||||||
Balance at October 1, 2010 Successor |
$ | 1 | $ | 41 | $ | 1,063 | $ | | $ | | $ | | $ | 667 | $ | 1,772 | ||||||||||||||||
Net income |
| | | 86 | | | 19 | 105 | ||||||||||||||||||||||||
Foreign currency translation |
| | | | 1 | | 2 | 3 | ||||||||||||||||||||||||
Benefit plans |
| | | | 51 | | | 51 | ||||||||||||||||||||||||
Other |
| | | | (2 | ) | | 1 | (1 | ) | ||||||||||||||||||||||
Comprehensive income |
| | | 86 | 50 | | 22 | 158 | ||||||||||||||||||||||||
Stock-based compensation, net |
| | 21 | | | (5 | ) | | 16 | |||||||||||||||||||||||
Warrant exercises |
| (12 | ) | 15 | | | | | 3 | |||||||||||||||||||||||
Other |
| | | | | | 1 | 1 | ||||||||||||||||||||||||
Balance at December 31, 2010 Successor |
$ | 1 | $ | 29 | $ | 1,099 | $ | 86 | $ | 50 | $ | (5 | ) | $ | 690 | $ | 1,950 | |||||||||||||||
8
9
10
11
12
13
| Cancellation of any shares of Visteon common stock and any options, warrants or rights to purchase shares of Visteon common stock or other equity securities outstanding prior to the Effective Date; | |
| Issuance of approximately 45,000,000 shares of Successor common stock to certain investors in a private offering (the Rights Offering) exempt from registration under the Securities Act for proceeds of approximately $1.25 billion; | |
| Execution of an exit financing facility including $500 million in funded, secured debt and a $200 million asset-based, secured revolver that was undrawn at the Effective Date; and, | |
| Application of proceeds from such borrowings and sales of equity along with cash on hand to make settlement distributions contemplated under the Plan, including; |
| cash settlement of the pre-petition seven-year secured term loan claims of approximately $1.5 billion, along with interest of approximately $160 million; | ||
| cash settlement of the U.S. asset-backed lending facility (ABL) and related letters of credit of approximately $128 million | ||
| establishment of a professional fee escrow account of $68 million; and, | ||
| cash settlement of other claims and fees of approximately $119 million; |
| Issuance of approximately 2,500,000 shares of Successor common stock to holders of pre-petition notes, including 7% Senior Notes due 2014, 8.25% Senior Notes due 2010, and 12.25% Senior Notes due 2016; |
14
holders of the 12.25% senior notes also received warrants to purchase up to 2,355,000 shares of reorganized Visteon common stock at an exercise price of $9.66 per share; | ||
| Issuance of approximately 1,000,000 shares of Successor common stock and warrants to purchase up to 1,552,774 shares of Successor common stock at an exercise price of $58.80 per share for Predecessor common stock interests; | |
| Issuance of approximately 1,700,000 shares of restricted stock to management under a post-emergence share-based incentive compensation program; and, | |
| Reinstatement of certain pre-petition obligations including certain OPEB liabilities and administrative, general and other unsecured claims. |
Predecessor | ||||||||
Nine Months | Year Ended | |||||||
Ended October 1 | December 31 | |||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
Gain on settlement of Liabilities subject to compromise |
$ | (956 | ) | $ | | |||
Professional fees and other direct costs, net |
129 | 60 | ||||||
Gain on adoption of fresh-start accounting |
(106 | ) | | |||||
$ | (933 | ) | $ | 60 | ||||
Cash payments for reorganization expenses |
$ | 111 | $ | 26 |
December 31 | ||||
2009 | ||||
(Dollars in Millions) | ||||
Debt |
$ | 2,490 | ||
Employee liabilities |
170 | |||
Accounts payable |
115 | |||
Interest payable |
31 | |||
Other accrued liabilities |
13 | |||
$ | 2,819 | |||
15
October 1, 2010 | ||||
(Dollars in Millions) | ||||
Post-petition liabilities |
$ | 2,763 | ||
Liabilities subject to compromise |
3,121 | |||
Total post-petition liabilities and allowed claims |
5,884 | |||
Reorganization value of assets |
(5,141 | ) | ||
Excess post-petition liabilities and allowed claims |
$ | 743 | ||
16
Components of Reorganization Value | October 1, 2010 | |||
(Dollars in Millions) | ||||
Enterprise value |
$ | 2,390 | ||
Non-debt liabilities |
2,751 | |||
Reorganization value |
$ | 5,141 | ||
17
Predecessor | Reorganization | Fair Value | Successor | |||||||||||||
10/1/10 | Adjustments (a) | Adjustments (b) | 10/1/10 | |||||||||||||
Assets |
||||||||||||||||
Cash and equivalents |
$ | 918 | $ | (52 | ) (c) | $ | | $ | 866 | |||||||
Restricted cash |
195 | (105 | ) (d) | | 90 | |||||||||||
Accounts receivable, net |
1,086 | (4 | ) (e) | | 1,082 | |||||||||||
Inventories, net |
395 | | 4 | (q) | 399 | |||||||||||
Other current assets |
283 | (11 | ) (f) | (14 | ) (r),(aa) | 258 | ||||||||||
Total current assets |
2,877 | (172 | ) | (10 | ) | 2,695 | ||||||||||
Property and equipment, net |
1,812 | | (240 | ) (s) | 1,572 | |||||||||||
Equity in net assets of non-consolidated affiliates |
378 | 5 | (g) | 13 | (t) | 396 | ||||||||||
Intangible assets, net |
6 | | 361 | (u) | 367 | |||||||||||
Goodwill |
| | 38 | (v) | 38 | |||||||||||
Other non-current assets |
74 | 13 | (h) | (14 | ) (w),(aa) | 73 | ||||||||||
Total assets |
$ | 5,147 | $ | (154 | ) | $ | 148 | $ | 5,141 | |||||||
Liabilities and Stockholders Equity (Deficit) |
||||||||||||||||
Short-term debt, including current portion of
long-term debt |
$ | 128 | $ | 5 | (k) | $ | | $ | 133 | |||||||
Account payable |
1,043 | | | 1,043 | ||||||||||||
Accrued employee liabilities |
196 | 19 | (i) | 3 | (x) | 218 | ||||||||||
Other current liabilities |
326 | 95 | (j) | (58 | ) (y) | 363 | ||||||||||
Total current liabilities |
1,693 | 119 | (55 | ) | 1,757 | |||||||||||
Long-term debt |
12 | 473 | (k) | | 485 | |||||||||||
Employee benefits |
632 | 154 | (l) | (63 | ) (x) | 723 | ||||||||||
Deferred income taxes |
175 | (5 | ) (m) | (27 | ) (aa) | 197 | ||||||||||
Other non-current liabilities |
251 | (5 | ) (n) | (39 | ) (y),(aa) | 207 | ||||||||||
Liabilities subject to compromise |
3,121 | (3,121 | ) (o) | | | |||||||||||
Common stock Successor |
| 1 | (p) | | 1 | |||||||||||
Stock warrants Successor |
| 41 | (p) | | 41 | |||||||||||
Common stock Predecessor |
131 | (131 | ) (p) | | | |||||||||||
Stock warrants Predecessor |
127 | (127 | ) (p) | | | |||||||||||
Additional paid-in capital |
3,407 | (2,175 | ) (p) | (169 | ) (p) | 1,063 | ||||||||||
Accumulated deficit |
(4,684 | ) | 4,619 | (p) | 65 | (p) | | |||||||||
Accumulated other comprehensive loss |
(74 | ) | | 74 | (p) | | ||||||||||
Treasury stock |
(3 | ) | 3 | (p) | | | ||||||||||
Total Visteon shareholders equity (deficit) |
(1,096 | ) | 2,231 | (30 | ) | 1,105 | ||||||||||
Noncontrolling interests |
359 | | 308 | (z) | 667 | |||||||||||
Total shareholders equity (deficit) |
(737 | ) | 2,231 | 278 | 1,772 | |||||||||||
Total liabilities and shareholders equity
(deficit) |
$ | 5,147 | $ | (154 | ) | $ | 148 | $ | 5,141 | |||||||
18
(a) | Records adjustments necessary to give effect to the Plan, including the receipt of cash proceeds associated with the Rights Offering and Exit Facility, settlement of liabilities subject to compromise, elimination of Predecessor equity and other transactions as contemplated under the Plan. These adjustments resulted in a pre-tax gain on the settlement of liabilities subject to compromise of $956 million in the nine-month Predecessor period ended October 1, 2010 (see explanatory note o., as follows). The Company recorded a $5 million income tax benefit attributable to cancellation of inter-company indebtedness with foreign affiliates pursuant to the Plan. | |
(b) | Records adjustments necessary to reflect assets and liabilities at fair value and to eliminate Accumulated deficit and Accumulated other comprehensive income/(loss). These adjustments resulted in a pre-tax gain of $106 million in the nine-month Predecessor period ended October 1, 2010. Adjustments to record assets and liabilities at fair value on the Effective Date are as follows (dollars in millions): |
Inventory |
$ | 4 | ||
Property and equipment |
(240 | ) | ||
Equity in net assets of non-consolidated affiliates |
13 | |||
Intangible assets |
361 | |||
Goodwill |
38 | |||
Other assets |
(14 | ) | ||
Employee benefits |
60 | |||
Other liabilities |
97 | |||
Noncontrolling interests |
(308 | ) | ||
Elimination of Predecessor accumulated other comprehensive loss and other equity |
95 | |||
Pre-tax gain on fair value adjustments |
$ | 106 | ||
Net tax expense related to fresh-start adjustments |
(41 | ) | ||
Net income on fresh-start adjustments |
$ | 65 | ||
(c) | This adjustment reflects the net use of cash on the Effective Date and in accordance with the Plan (dollars in millions): |
Rights offering proceeds |
$ | 1,250 | ||
Exit financing proceeds, net |
482 | |||
Net release of restricted cash |
105 | |||
Total sources |
1,837 | |||
Seven year secured term loan and interest |
1,660 | |||
ABL and letters of credit |
128 | |||
Rights offering fees |
49 | |||
Payment of administrative and professional claims |
23 | |||
Debt issue fees |
10 | |||
Claim settlements and other |
19 | |||
Total uses |
1,889 | |||
Net decrease in cash |
$ | (52 | ) | |
(d) | The decrease in restricted cash reflects the release of $173 million of cash that was restricted under various orders of the Bankruptcy Court, partially offset by the establishment of a professional fee escrow account of $68 million. | |
(e) | This adjustment reflects the settlement of a receivable in connection with the Release Agreement. | |
(f) | This adjustment relates to the Rights Offering commitment premium deposit paid in July 2010. | |
(g) | This adjustment records additional equity in net income of non-consolidated affiliates related to the nine-month Predecessor period ended October 1, 2010. | |
(h) | This adjustment records $13 million of estimated debt issuance costs capitalized in connection with the exit financing facility. |
19
(i) | This adjustment reflects the reinstatement of OPEB and non-qualified pension obligations expected to be paid within 12 months. | |
(j) | This adjustment reflects the establishment of a liability for the payment of $122 million of allowed general unsecured and other claims in accordance with the Plan partially offset by $23 million of accrued reorganization items that were paid on the Effective Date and $4 million for amounts settled in connection with the Release Agreement. | |
(k) | This adjustment reflects the new $500 million secured term loan, net of $10 million original issuance discount and $12 million of fees paid to the lenders. | |
(l) | This adjustment represents the reinstatement of $154 million of other postretirement employee benefit (OPEB) and non-qualified pension obligations from Liabilities subject to compromise in accordance with the terms of the Plan. | |
(m) | This adjustment reflects the deferred tax impact of certain intercompany liabilities subject to compromise that were cancelled in accordance with the Plan. | |
(n) | This adjustment eliminates incentive compensation accruals for terminated Predecessor compensation plans. | |
(o) | This adjustment reflects the settlement of liabilities subject to compromise (LSC) in accordance with the Plan, as shown below (dollars in millions): |
LSC | Settlement per | Gain on | ||||||||||
September 30, 2010 | Fifth Amended Plan | Settlement of LSC | ||||||||||
Debt |
$ | 2,490 | $ | 1,717 | $ | 773 | ||||||
Employee liabilities |
324 | 218 | 106 | |||||||||
Interest payable |
183 | 160 | 23 | |||||||||
Other claims |
124 | 70 | 54 | |||||||||
$ | 3,121 | $ | 2,165 | $ | 956 | |||||||
Income tax benefit |
5 | |||||||||||
After-tax gain on settlement of LSC |
$ | 961 | ||||||||||
(p) | The cancellation of Predecessor Visteon common stock in accordance with the Plan and elimination of corresponding shareholders deficit balances, are shown below (dollars in millions): |
Predecessor | ||||||||||||||||
Shareholders | Successor | |||||||||||||||
Deficit | Shareholders | |||||||||||||||
September 30, | Reorganization | Fresh-Start | Equity | |||||||||||||
2010 | Adjustments | Adjustments | October 1, 2010 | |||||||||||||
Common stock |
||||||||||||||||
Predecessor |
$ | 131 | $ | (131 | ) | $ | | $ | | |||||||
Successor |
| 1 | | 1 | ||||||||||||
Stock warrants |
||||||||||||||||
Predecessor |
127 | (127 | ) | | | |||||||||||
Successor |
| 41 | | 41 | ||||||||||||
Additional paid-in capital |
||||||||||||||||
Predecessor |
3,407 | (3,407 | ) | | | |||||||||||
Successor |
| 1,232 | (169 | ) | 1,063 | |||||||||||
Accumulated deficit |
(4,684 | ) | 4,619 | 65 | | |||||||||||
Accumulated other comprehensive loss |
(74 | ) | | 74 | | |||||||||||
Treasury stock |
(3 | ) | 3 | | | |||||||||||
Visteon Shareholders (deficit) equity |
$ | (1,096 | ) | $ | 2,231 | $ | (30 | ) | $ | 1,105 | ||||||
This adjustment also reflects the issuance of Successor common stock. A reconciliation of the reorganization value of assets to the Successors common stock is shown below (dollars in millions, except per share amounts): |
Reorganization value of assets |
$ | 5,141 | ||
Less: fair value of debt |
(618 | ) | ||
Less: fair value of noncontrolling interests |
(667 | ) | ||
Less: fair value of liabilities (excluding debt) |
(2,751 | ) | ||
Successor common stock and warrants |
$ | 1,105 | ||
Less: fair value of warrants |
(41 | ) | ||
Successor common stock |
$ | 1,064 | ||
Shares outstanding at October 1, 2010 |
48,642,520 | |||
Per share value |
$ | 21.87 |
20
The per-share value of $21.87 was utilized to determine the value of shares issued for settlement of allowed claims. | ||
(q) | Inventory was recorded at fair value and was estimated to exceed book value by approximately $26 million. Raw materials were valued at current replacement cost. Work-in-process was valued at estimated finished goods selling price less estimated disposal costs, completion costs and a reasonable profit allowance for selling effort. Finished goods were valued at estimated selling price less estimated disposal costs and a reasonable profit allowance for selling effort. Additionally, fresh-start accounting adjustments for supply and spare parts inventory items of $22 million were a partial offset. | |
(r) | The adjustment to other current assets includes a $7 million prepaid insurance balance and $2 million of other deferred fee amounts with no future benefit to the Successor. Additionally, this adjustment includes a $5 million decrease in deferred tax assets associated with fair value adjustments (see explanatory note aa for additional details related to deferred tax adjustments). | |
(s) | The Company estimates that the book value of property and equipment exceeds the fair value by $240 million after giving consideration to the highest and best use of the assets. Fair value estimates were based on a combination of the cost or market approach, as appropriate. Fair value under the market approach was based on recent sale transactions for similar assets, while fair value under the cost approach was based on the amount required to construct or purchase an asset of equal utility, considering physical deterioration, functional obsolescence and economic obsolescence. | |
(t) | Investments in non-consolidated affiliates were recorded at fair value primarily based on an income approach utilizing the dividend discount model. Significant assumptions included estimated future dividends for each applicable non-consolidated affiliate and discount rates. | |
(u) | Identifiable intangible assets are primarily comprised of developed technology, customer-related intangibles and trade names. Fair value estimates of intangible assets were based on income approaches utilizing projected financial information consistent with the Fourth Amended Disclosure Statement, as described below: |
| Developed technology and trade name intangible assets were valued using the relief from royalty method, which estimates the value of an intangible asset to be equal to the present value of future royalties that would be paid for the right to use the asset if it were not owned. Significant assumptions included estimated future revenues for each technology category and trade name, royalty rates, tax rates and discount rates. | ||
| Customer related intangible assets were valued using the multi-period excess earnings method, which estimates the value of an intangible asset to be equal to the present value of future earnings attributable to the asset group after recognition of required returns to other contributory assets. Significant assumptions included estimated future revenues for existing customers, retention rates based on historical experience, tax rates, discount rates, and contributory asset charges including employee intangibles. |
(v) | Reorganization value in excess of the fair value allocated to identifiable tangible and intangible assets was recorded as goodwill. In adjusting the balance sheet accounts to fair value, the Company estimated excess reorganization value of approximately $38 million, which has been reflected as goodwill and was determined as follows (dollars in millions): |
Enterprise value |
$ | 2,390 | ||
Add: Estimated fair value of non-debt liabilities |
2,751 | |||
Reorganization value |
5,141 | |||
Less: Estimated fair value of assets |
5,103 | |||
Reorganization value in excess of fair value of assets |
$ | 38 | ||
(w) | Adjustments to other non-current assets included a decrease of $10 million related to deferred tax assets associated with fair value adjustments and a decrease of $4 million related to discounting of amounts due in future periods (see explanatory note aa for additional details related to deferred tax adjustments). | |
(x) | The adjustments to accrued employee liabilities and employee benefits are related to the remeasurement of pension and OPEB obligations at the Effective Date, based on certain assumptions including discount rates. | |
(y) | The adjustments to other current and other non-current liabilities include decreases of $51 million and $31 million, respectively, to eliminate deferred revenue, which was initially recorded in connection with payments received from customers under various support and accommodation agreements. The decrease in other current liabilities also includes $5 million for discounting of future obligations, while the decrease in non-current liabilities also includes $8 million for non-income tax liabilities and $5 million for deferred tax liabilities, partially offset by $6 million related to leasehold intangibles (see explanatory note aa for additional details related to deferred tax adjustments). | |
(z) | Noncontrolling interests are recorded at fair value based on publicly available market values, where possible, and based on other customary valuation methodologies where publicly available market values are not possible, |
21
including comparable company and discounted cash flow models. The Company estimates that the fair value of noncontrolling interests exceeds book value by $308 million. | ||
(aa) | Deferred tax impacts associated with fresh-start adjustments result from changes in the book values of tangible and intangible assets while the tax basis in such assets remains unchanged. The Company anticipates that a full valuation allowance will be maintained in the U.S.; accordingly this adjustment relates to the portion of fresh-start adjustments applicable to certain non-U.S. jurisdictions where the Company is subject to and pays income taxes. Additionally, the amount of non-U.S. accumulated earnings considered permanently reinvested was modified in connection with the adoption of fresh-start accounting, resulting in a decrease in deferred tax liabilities associated with foreign withholding taxes of approximately $30 million. Deferred tax adjustments include the following (dollars in millions): |
Balance Sheet Account Classification: | ||||
Other current assets |
$ | 2 | ||
Other non-current assets |
10 | |||
Deferred income taxes |
27 | |||
Net increase in deferred tax liabilities |
39 | |||
Other balance sheet adjustments |
2 | |||
Net tax expense related to fresh-start adjustments |
$ | 41 | ||
22
Interiors |
Climate | Electronics | Lighting | Other/ Central |
Total | |||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||
Predecessor December 31, 2007 |
$ | 58 | $ | 23 | $ | 7 | $ | | $ | 24 | $ | 112 | ||||||||||||
Expenses |
42 | 20 | 3 | | 82 | 147 | ||||||||||||||||||
Exchange |
(3 | ) | | | | | (3 | ) | ||||||||||||||||
Utilization |
(48 | ) | (40 | ) | (6 | ) | | (98 | ) | (192 | ) | |||||||||||||
Predecessor December 31, 2008 |
$ | 49 | $ | 3 | $ | 4 | $ | | $ | 8 | $ | 64 | ||||||||||||
Expenses |
22 | 5 | 13 | 4 | 40 | 84 | ||||||||||||||||||
Utilization |
(50 | ) | (8 | ) | (4 | ) | (1 | ) | (46 | ) | (109 | ) | ||||||||||||
Predecessor December 31, 2009 |
$ | 21 | $ | | $ | 13 | $ | 3 | $ | 2 | $ | 39 | ||||||||||||
Expenses |
6 | 1 | 2 | 5 | 6 | 20 | ||||||||||||||||||
Exchange |
(1 | ) | | | | | (1 | ) | ||||||||||||||||
Utilization |
(9 | ) | (1 | ) | (13 | ) | (8 | ) | (6 | ) | (37 | ) | ||||||||||||
Predecessor October 1, 2010 |
$ | 17 | $ | | $ | 2 | $ | | $ | 2 | $ | 21 | ||||||||||||
Expenses |
24 | 2 | 1 | | 1 | 28 | ||||||||||||||||||
Exchange |
(1 | ) | | | | | (1 | ) | ||||||||||||||||
Utilization |
(3 | ) | | | | (2 | ) | (5 | ) | |||||||||||||||
Successor December 31, 2010 |
$ | 37 | $ | 2 | $ | 3 | $ | | $ | 1 | $ | 43 | ||||||||||||
| $13 million of employee severance and termination benefit costs associated with approximately 170 employees at two European Interiors facilities. | |
| $11 million of employee severance and termination benefit costs associated with approximately 300 employees related to the announced closure of a North American Electronics facility. | |
| $10 million of employee severance and termination benefit costs related to approximately 120 salaried employees who were located primarily at the Companys North American headquarters. | |
| $4 million of employee severance and termination benefit costs associated with approximately 550 employees related to the consolidation of the Companys North American Lighting operations. |
23
| $33 million of employee severance and termination benefit costs associated with approximately 290 employees to reduce the Companys salaried workforce in higher cost countries. | |
| $23 million of employee severance and termination benefit costs associated with approximately 20 salaried and 250 hourly employees at a European Interiors facility. | |
| $18 million of employee severance and termination benefit costs associated with 55 employees at the Companys Other products facility located in Swansea, UK. In connection with the divestiture of that facility, Visteon UK Limited agreed to reduce the number of employees to be transferred, which resulted in $5 million of employee severance benefits and $13 million of special termination benefits. | |
| $9 million of employee severance and termination benefit costs related to approximately 100 hourly and salaried employees at certain manufacturing facilities located in the UK. | |
| $6 million of employee severance and termination benefit costs associated with approximately 40 employees at a European Interiors facility. | |
| $5 million of contract termination charges related to the closure of a European Other facility. | |
| $5 million of employee severance and termination benefit costs for the closure of a European Interiors facility. |
24
Successor | Predecessor | |||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
Raw materials |
$ | 120 | $ | 125 | ||||
Work-in-process |
174 | 159 | ||||||
Finished products |
76 | 78 | ||||||
370 | 362 | |||||||
Valuation reserves |
(6 | ) | (43 | ) | ||||
$ | 364 | $ | 319 | |||||
Successor | Predecessor | |||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
Pledged accounts receivable |
$ | 90 | $ | 19 | ||||
Recoverable taxes |
80 | 86 | ||||||
Deposits |
35 | 55 | ||||||
Deferred tax assets |
33 | 32 | ||||||
Prepaid assets |
16 | 30 | ||||||
Other |
4 | 14 | ||||||
$ | 258 | $ | 236 | |||||
25
\
Successor | Predecessor | |||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
Deferred tax assets |
$ | 13 | $ | 17 | ||||
Debt issue costs |
12 | | ||||||
Notes and other receivables |
6 | 9 | ||||||
Assets held for sale |
| 16 | ||||||
Other |
58 | 42 | ||||||
$ | 89 | $ | 84 | |||||
Successor | Predecessor | |||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
Land |
$ | 213 | $ | 82 | ||||
Buildings and improvements |
312 | 797 | ||||||
Machinery, equipment and other |
935 | 2,764 | ||||||
Construction in progress |
93 | 75 | ||||||
Total property and equipment |
1,553 | 3,718 | ||||||
Accumulated depreciation |
(55 | ) | (1,860 | ) | ||||
1,498 | 1,858 | |||||||
Product tooling, net of amortization |
84 | 78 | ||||||
Property and equipment, net |
$ | 1,582 | $ | 1,936 | ||||
Successor | Predecessor | |||||||||||||||
Three Months Ended | Nine Months Ended | Year Ended | ||||||||||||||
December 31 | October 1 | December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Depreciation |
$ | 55 | $ | 191 | $ | 326 | $ | 380 | ||||||||
Amortization |
7 | 16 | 26 | 36 | ||||||||||||
$ | 62 | $ | 207 | $ | 352 | $ | 416 | |||||||||
26
Yanfeng | All Others | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Current assets |
$ | 1,066 | $ | 667 | $ | 319 | $ | 306 | ||||||||
Other assets |
502 | 412 | 195 | 202 | ||||||||||||
Total assets |
$ | 1,568 | $ | 1,079 | $ | 514 | $ | 508 | ||||||||
Current liabilities |
$ | 884 | $ | 662 | $ | 287 | $ | 275 | ||||||||
Other liabilities |
19 | 11 | 16 | 30 | ||||||||||||
Shareholders equity |
665 | 406 | 211 | 203 | ||||||||||||
Total liabilities and shareholders equity |
$ | 1,568 | $ | 1,079 | $ | 514 | $ | 508 | ||||||||
Net Sales | Gross Margin | Net Income | ||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||||||||||||||
Yanfeng |
$ | 2,573 | $ | 1,452 | $ | 1,059 | $ | 398 | $ | 217 | $ | 190 | $ | 218 | $ | 118 | $ | 71 | ||||||||||||||||||
All other |
893 | 711 | 805 | 142 | 109 | 119 | 71 | 42 | 14 | |||||||||||||||||||||||||||
$ | 3,466 | $ | 2,163 | $ | 1,864 | $ | 540 | $ | 326 | $ | 309 | $ | 289 | $ | 160 | $ | 85 | |||||||||||||||||||
27
Weighted | ||||||||||||||||
Gross | Net | Average | ||||||||||||||
Carrying | Accumulated | Carrying | Useful Life | |||||||||||||
Value | Amortization | Value | (years) | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Definite-lived intangible assets |
||||||||||||||||
Developed technology |
$ | 214 | $ | 7 | $ | 207 | 8 | |||||||||
Customer related |
121 | 3 | 118 | 9 | ||||||||||||
Other |
9 | 1 | 8 | 5 | ||||||||||||
$ | 344 | $ | 11 | $ | 333 | |||||||||||
Goodwill and indefinite-lived
intangible assets |
||||||||||||||||
Goodwill |
$ | 38 | ||||||||||||||
Trade names |
25 | |||||||||||||||
$ | 63 | |||||||||||||||
Successor | Predecessor | |||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
Claims settlements |
$ | 50 | $ | | ||||
Accrued reorganization items |
47 | 22 | ||||||
Product warranty and recall reserves |
44 | 40 | ||||||
Non-income taxes payable |
41 | 47 | ||||||
Restructuring reserves |
43 | 39 | ||||||
Income taxes payable |
38 | 27 | ||||||
Accrued interest payable |
11 | 3 | ||||||
Deferred income |
6 | 51 | ||||||
Other accrued liabilities |
77 | 73 | ||||||
$ | 357 | $ | 302 | |||||
28
Successor | Predecessor | |||||||
December 31 | ||||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
Income tax reserves |
$ | 96 | $ | 101 | ||||
Non-income taxes payable |
43 | 62 | ||||||
Product warranty and recall reserves |
31 | 39 | ||||||
Deferred income |
20 | 27 | ||||||
Other accrued liabilities |
31 | 28 | ||||||
$ | 221 | $ | 257 | |||||
Weighted | ||||||||||||||||||||
Average | ||||||||||||||||||||
Interest Rate | Carrying Value | |||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||||||
Maturity | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||
Short-term debt |
||||||||||||||||||||
Current portion of long-term debt |
6.1 | % | 6.0 | % | $ | 7 | $ | 65 | ||||||||||||
DIP credit facility |
| 9.5 | % | | 75 | |||||||||||||||
Other short-term |
3.4 | % | 4.1 | % | 71 | 85 | ||||||||||||||
Total short-term debt |
78 | 225 | ||||||||||||||||||
Long-term debt |
||||||||||||||||||||
Term loan |
2017 | 8.0 | % | | 472 | | ||||||||||||||
Other |
2012-2017 | 11.2 | % | 5.0 | % | 11 | 6 | |||||||||||||
Total long-term debt |
483 | 6 | ||||||||||||||||||
Total debt |
$ | 561 | $ | 231 | ||||||||||||||||
29
30
31
32
Three Months Ended December 31, 2010 | ||||||||||||
Retirement Plans | Health Care and Life | |||||||||||
U.S Plans | Non-U.S Plans | Insurance Benefits | ||||||||||
(Dollars in Millions) | ||||||||||||
Costs Recognized in Income |
||||||||||||
Service cost |
$ | 2 | $ | 2 | $ | | ||||||
Interest cost |
18 | 6 | | |||||||||
Expected return on plan assets |
(19 | ) | (5 | ) | | |||||||
Plan termination income |
| | (146 | ) | ||||||||
Employee retirement benefit expenses |
$ | 1 | $ | 3 | $ | (146 | ) | |||||
Weighted Average Assumptions Used for
Expenses |
||||||||||||
Discount rate for expense |
5.30 | % | 5.40 | % | 4.65 | % | ||||||
Rate of increase in compensation |
3.50 | % | 3.40 | % | N/A | |||||||
Assumed long-term rate of return on assets |
7.70 | % | 5.60 | % | N/A | |||||||
Initial health care cost trend rate |
N/A | N/A | 8.00 | % | ||||||||
Ultimate health care cost trend rate |
N/A | N/A | 5.10 | % | ||||||||
Year ultimate trend rate reached |
N/A | N/A | 2015 |
Three Months Ended December 31, 2010 | ||||||||||||
Retirement Plans | Health Care and Life | |||||||||||
U.S Plans | Non-U.S Plans | Insurance Benefits | ||||||||||
(Dollars in Millions) | ||||||||||||
Change in Benefit Obligation |
||||||||||||
Benefit obligation beginning |
$ | 1,407 | $ | 486 | $ | 171 | ||||||
Service cost |
2 | 2 | | |||||||||
Interest cost |
18 | 6 | | |||||||||
Amendments/other |
| | (145 | ) | ||||||||
Actuarial gain |
(44 | ) | (39 | ) | (1 | ) | ||||||
Foreign exchange translation |
| (6 | ) | | ||||||||
Benefits paid |
(23 | ) | (4 | ) | (8 | ) | ||||||
Benefit obligation ending |
$ | 1,360 | $ | 445 | $ | 17 | ||||||
Change in Plan Assets |
||||||||||||
Plan assets beginning |
$ | 1,035 | $ | 330 | $ | | ||||||
Actual return on plan assets |
(14 | ) | 8 | |
33
Three Months Ended December 31, 2010 | ||||||||||||
Retirement Plans | Health Care and Life | |||||||||||
U.S Plans | Non-U.S Plans | Insurance Benefits | ||||||||||
(Dollars in Millions) | ||||||||||||
Sponsor contributions |
| 6 | 8 | |||||||||
Foreign exchange translation |
| (3 | ) | | ||||||||
Benefits paid/other |
(25 | ) | (4 | ) | (8 | ) | ||||||
Plan assets ending |
$ | 996 | $ | 337 | $ | | ||||||
Funded status at December 31, 2010 |
$ | (364 | ) | $ | (108 | ) | $ | (17 | ) | |||
Balance Sheet Classification |
||||||||||||
Other non-current assets |
$ | | $ | 6 | $ | | ||||||
Accrued employee liabilities |
(2 | ) | (3 | ) | (3 | ) | ||||||
Employee benefits |
(362 | ) | (111 | ) | (8 | ) | ||||||
Other current liabilities |
| | (6 | ) | ||||||||
Accumulated other comprehensive
income |
||||||||||||
Actuarial gain |
(9 | ) | (42 | ) | |
34
Retirement Plans | Health Care and Life | |||||||||||||||||||||||||||||||||||
U.S Plans | Non-U.S Plans | Insurance Benefits | ||||||||||||||||||||||||||||||||||
Nine Months | Nine Months | Nine Months | ||||||||||||||||||||||||||||||||||
Ended | Year Ended | Ended | Year Ended | Ended | Year Ended | |||||||||||||||||||||||||||||||
October 1 | December 31 | October 1 | December 31 | October 1 | December 31 | |||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||||||||||||||
Costs Recognized in
Income |
||||||||||||||||||||||||||||||||||||
Service cost |
$ | 7 | $ | 13 | $ | 21 | $ | 4 | $ | 7 | $ | 19 | $ | | $ | 1 | $ | 3 | ||||||||||||||||||
Interest cost |
56 | 74 | 73 | 19 | 31 | 70 | 3 | 18 | 31 | |||||||||||||||||||||||||||
Expected return on plan
assets |
(55 | ) | (79 | ) | (83 | ) | (14 | ) | (26 | ) | (57 | ) | | | | |||||||||||||||||||||
Reinstatement of benefits |
| | | | | | 306 | | | |||||||||||||||||||||||||||
Amortization of: |
||||||||||||||||||||||||||||||||||||
Plan amendments |
(2 | ) | (2 | ) | (1 | ) | 1 | 2 | 5 | (374 | ) | (75 | ) | (30 | ) | |||||||||||||||||||||
Losses and other |
2 | 1 | | | | 2 | 43 | 18 | 10 | |||||||||||||||||||||||||||
Special termination
benefits |
1 | 6 | 6 | | | | | | | |||||||||||||||||||||||||||
Curtailments |
(14 | ) | (2 | ) | (1 | ) | | 5 | 2 | | (161 | ) | (79 | ) | ||||||||||||||||||||||
Settlements |
| | | | | 20 | (1 | ) | | | ||||||||||||||||||||||||||
Visteon sponsored plan
net pension /
postretirement benefit
expense |
(5 | ) | 11 | 15 | 10 | 19 | 61 | (23 | ) | (199 | ) | (65 | ) | |||||||||||||||||||||||
Expense for certain
salaried employees whose
pensions are partially
covered by Ford |
1 | 10 | | | | | (15 | ) | (8 | ) | (7 | ) | ||||||||||||||||||||||||
Employee retirement
benefit expenses
excluding restructuring
related expenses |
$ | (4 | ) | $ | 21 | $ | 15 | $ | 10 | $ | 19 | $ | 61 | $ | (38 | ) | $ | (207 | ) | $ | (72 | ) | ||||||||||||||
Retirement benefit
related restructuring
expenses |
||||||||||||||||||||||||||||||||||||
Special termination
benefits |
$ | 2 | $ | 12 | $ | 16 | $ | | $ | 9 | $ | 27 | $ | | $ | | $ | 1 | ||||||||||||||||||
Other |
| 7 | 2 | | | | | | | |||||||||||||||||||||||||||
Total employee
retirement benefit
related restructuring
expenses |
$ | 2 | $ | 19 | $ | 18 | $ | | $ | 9 | $ | 27 | $ | | $ | | $ | 1 | ||||||||||||||||||
Fresh-start accounting
adjustments. |
$ | (138 | ) | $ | | $ | | $ | (107 | ) | $ | | $ | | $ | 128 | $ | | | |||||||||||||||||
Weighted Average
Assumptions Used for
Expenses |
||||||||||||||||||||||||||||||||||||
Discount rate |
5.90 | % | 6.35 | % | 6.30 | % | 6.10 | % | 6.05 | % | 5.70 | % | 5.65 | % | 6.05 | % | 6.30 | % | ||||||||||||||||||
Rate of compensation
increase |
3.50 | % | 3.25 | % | 3.75 | % | 3.50 | % | 3.15 | % | 3.30 | % | N/A | N/A | N/A | |||||||||||||||||||||
Assumed long-term rate
of return on assets |
7.70 | % | 8.10 | % | 8.25 | % | 6.00 | % | 6.70 | % | 6.80 | % | N/A | N/A | N/A | |||||||||||||||||||||
Initial health care cost
trend rate |
N/A | N/A | N/A | N/A | N/A | N/A | 9.00 | % | 8.33 | % | 9.00 | % | ||||||||||||||||||||||||
Ultimate health care
cost trend rate |
N/A | N/A | N/A | N/A | N/A | N/A | 5.00 | % | 5.00 | % | 5.00 | % | ||||||||||||||||||||||||
Year ultimate health
care cost trend rate
reached |
N/A | N/A | N/A | N/A | N/A | N/A | 2017 | 2014 | 2013 |
35
| Curtailment gains of $153 million related to the OPEB plans in connection with the elimination of Company-paid medical, prescription drug and life insurance coverage. This plan change eliminated future service for active plan participants, as such the amounts in accumulated other comprehensive income relating to prior plan changes were recognized as curtailment gains. | |
| Curtailment gains of $10 million associated with the U.S. salaried pension and OPEB plans in connection with employee headcount reductions under previously announced restructuring actions. | |
| Curtailment losses of $6 million related to the reduction of future service in the UK pension plans in connection with employee headcount reductions in the UK. These losses were partially offset by a $1 million curtailment gain in Mexico related to employee headcount reductions under previously announced restructuring actions. These curtailments reduced the benefit obligations by $2 million. |
| Curtailment gains of $79 million related to elimination of employee benefits associated with U.S. OPEB plans in connection with employee headcount reductions under previously announced restructuring actions. These curtailments reduced the benefit obligations by $7 million. | |
| Curtailment losses of $7 million related to the reduction of future service in the UK pension plan for employees at the Companys Swansea, UK operation in connection with the Swansea Divestiture. These losses were partially offset by curtailment gains in Germany, Mexico and France related to employee headcount reductions under previously announced restructuring actions. These curtailments reduced the benefit obligations by $7 million in the UK and $4 million across Germany, Mexico and France. | |
| Settlement losses of $20 million related to UK employee pension obligations of approximately $90 million transferred to Ford in October 2008 for employees that transferred from Visteon to Ford during the years 2005 through 2007 in accordance with the ACH Transactions. |
36
Retirement Plans | Health Care and Life | |||||||||||||||||||||||
U.S Plans | Non-U.S Plans | Insurance Benefits | ||||||||||||||||||||||
Nine Months | Nine Months | Year Ended | Nine Months | Year Ended | ||||||||||||||||||||
Ended October 1 | Year Ended December 31 | Ended October 1 | December 31 | Ended October 1 | December 31 | |||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||
Change in Benefit Obligation |
||||||||||||||||||||||||
Benefit obligation beginning |
$ | 1,301 | $ | 1,234 | $ | 435 | $ | 894 | $ | 66 | $ | 325 | ||||||||||||
Service cost |
7 | 13 | 4 | 7 | | 1 | ||||||||||||||||||
Interest cost |
56 | 74 | 19 | 31 | 3 | 18 | ||||||||||||||||||
Participant contributions |
| | | 1 | | 1 | ||||||||||||||||||
Reinstatement of liability |
| | | | 305 | | ||||||||||||||||||
Amendments/other |
(21 | ) | | 1 | | (187 | ) | (273 | ) | |||||||||||||||
Actuarial loss/(gain) |
136 | 36 | 49 | (57 | ) | (4 | ) | 21 | ||||||||||||||||
Special termination benefits |
3 | 18 | | 9 | | | ||||||||||||||||||
Curtailments, net |
(22 | ) | (2 | ) | (1 | ) | (2 | ) | | | ||||||||||||||
Settlements |
(2 | ) | | | (3 | ) | | | ||||||||||||||||
Foreign exchange translation |
| | (10 | ) | 22 | | 1 | |||||||||||||||||
Divestitures |
| | | (443 | ) | | | |||||||||||||||||
Benefits paid |
(51 | ) | (72 | ) | (11 | ) | (24 | ) | (12 | ) | (28 | ) | ||||||||||||
Benefit obligation ending |
$ | 1,407 | $ | 1,301 | $ | 486 | $ | 435 | $ | 171 | $ | 66 | ||||||||||||
Change in Plan Assets |
||||||||||||||||||||||||
Plan assets beginning |
$ | 913 | $ | 908 | $ | 315 | $ | 652 | $ | | $ | | ||||||||||||
Actual return on plan assets |
174 | 62 | 23 | (4 | ) | | | |||||||||||||||||
Sponsor contributions |
1 | 19 | 11 | 26 | 12 | 27 | ||||||||||||||||||
Participant contributions |
| | | 1 | | 1 | ||||||||||||||||||
Foreign exchange translation |
| | (8 | ) | 18 | | | |||||||||||||||||
Settlements |
| | | (3 | ) | | | |||||||||||||||||
Divestitures |
| | | (351 | ) | | | |||||||||||||||||
Benefits paid/other |
(53 | ) | (76 | ) | (11 | ) | (24 | ) | (12 | ) | (28 | ) | ||||||||||||
Plan assets ending |
$ | 1,035 | $ | 913 | $ | 330 | $ | 315 | $ | | $ | | ||||||||||||
Funded status at end of period |
$ | (372 | ) | $ | (388 | ) | $ | (156 | ) | $ | (120 | ) | $ | (171 | ) | $ | (66 | ) | ||||||
Balance Sheet Classification |
||||||||||||||||||||||||
Other non-current assets |
$ | | $ | 1 | $ | 5 | $ | 6 | $ | | $ | | ||||||||||||
Accrued employee liabilities |
(2 | ) | | (3 | ) | (3 | ) | (31 | ) | (17 | ) | |||||||||||||
Employee benefits |
(370 | ) | (358 | ) | (158 | ) | (123 | ) | (140 | ) | (49 | ) | ||||||||||||
Liabilities subject to compromise
(non-qualified plans) |
| (31 | ) | | | | | |||||||||||||||||
Accumulated other comprehensive
income/(loss): |
||||||||||||||||||||||||
Actuarial loss |
| 173 | | 28 | | 42 | ||||||||||||||||||
Prior service (credit)/cost |
| (22 | ) | | 8 | | (311 | ) | ||||||||||||||||
Deferred taxes |
| (1 | ) | | 30 | | | |||||||||||||||||
$ | | $ | 150 | $ | | $ | 66 | $ | | $ | (269 | ) | ||||||||||||
37
Retirement Plans | Health Care and | |||||||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | Life Insurance Benefits | ||||||||||||||||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | Successor | Predecessor | |||||||||||||||||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2010 | 2009 | 2010 | 2010 | 2009 | ||||||||||||||||||||||||||||
Weighted Average Assumptions
|
||||||||||||||||||||||||||||||||||||
Discount rate |
5.55 | % | 5.30 | % | 5.95 | % | 5.95 | % | 5.40 | % | 6.10 | % | 5.00 | % | 4.65 | % | 5.70 | % | ||||||||||||||||||
Expected rate of return
on assets |
7.50 | % | 7.70 | % | 7.70 | % | 5.40 | % | 5.55 | % | 6.00 | % | N/A | N/A | N/A | |||||||||||||||||||||
Rate of increase in
compensation |
3.50 | % | 3.50 | % | 3.50 | % | 3.55 | % | 3.45 | % | 3.50 | % | N/A | N/A | N/A | |||||||||||||||||||||
Initial health care
cost trend rate |
N/A | N/A | N/A | N/A | N/A | N/A | 8.50 | % | 8.00 | % | 8.30 | % | ||||||||||||||||||||||||
Ultimate health care
cost trend rate |
N/A | N/A | N/A | N/A | N/A | N/A | 5.00 | % | 5.10 | % | 5.25 | % | ||||||||||||||||||||||||
Year ultimate health
care cost trend rate
reached |
N/A | N/A | N/A | N/A | N/A | N/A | 2017 | 2015 | 2015 |
Retirement Plans | ||||||||||||||||||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | Health Care and Life Insurance Benefits | ||||||||||||||||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | Successor | Predecessor | |||||||||||||||||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2010 | 2009 | 2010 | 2010 | 2009 | ||||||||||||||||||||||||||||
(Dollars in Millions) | (Dollars in Millions) | |||||||||||||||||||||||||||||||||||
Actuarial (gain)/loss |
$ | (9 | ) | $ | (5 | ) | $ | 55 | $ | (42 | ) | $ | 41 | $ | (26 | ) | $ | (1 | ) | $ | (4 | ) | $ | 21 | ||||||||||||
Prior service (credit)/cost |
| (21 | ) | | | 1 | | (150 | ) | (187 | ) | (273 | ) | |||||||||||||||||||||||
Fresh-start adjustments |
| (138 | ) | | | (107 | ) | | | 128 | | |||||||||||||||||||||||||
Reclassification to net
income/(loss) |
| 14 | 2 | | (1 | ) | (89 | ) | 151 | 332 | 218 | |||||||||||||||||||||||||
$ | (9 | ) | $ | (150 | ) | $ | 57 | $ | (42 | ) | $ | (66 | ) | $ | (115 | ) | $ | | $ | 269 | $ | (34 | ) | |||||||||||||
38
Retirement Health | ||||||||||||
Pension Benefits | and Life | |||||||||||
U.S. | Non-U.S. | Payments | ||||||||||
(Dollars in Millions) | ||||||||||||
2011 |
$ | 75 | $ | 12 | $ | 9 | ||||||
2012 |
70 | 13 | | |||||||||
2013 |
70 | 14 | | |||||||||
2014 |
70 | 17 | | |||||||||
2015 |
69 | 16 | | |||||||||
Years 2016 2020 |
354 | 100 | 1 |
Target Allocation | Percentage of Plan Assets | |||||||||||||||||||||||
U.S. | Non-U.S. | U.S. | Non-U.S. | |||||||||||||||||||||
Successor | Successor | Predecessor | Successor | Predecessor | ||||||||||||||||||||
2011 | 2011 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
Equity securities |
40 | % | 18 | % | 41 | % | 40 | % | 14 | % | 11 | % | ||||||||||||
Fixed income |
30 | 71 | 24 | 27 | 78 | 78 | ||||||||||||||||||
Alternative strategies |
30 | 4 | 33 | 33 | 5 | 5 | ||||||||||||||||||
Cash |
| 7 | 2 | | 3 | 6 | ||||||||||||||||||
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||
39
Weighted Average |
|||||||||||||
RSAs | RSUs | Grant Date Fair Value | |||||||||||
(In Thousands) | |||||||||||||
Non-vested at October 1, 2010 |
| | $ | | |||||||||
Granted |
1,246 | 421 | $ | 57.93 | |||||||||
Vested |
(211 | ) | (64 | ) | $ | 57.93 | |||||||
Forfeited |
| | $ | | |||||||||
Non-vested at December 31, 2010 |
1,035 | 357 | $ | 57.93 | |||||||||
40
Weighted | Weighted | |||||||||||||||
Average | Average | |||||||||||||||
Stock Options | Exercise Price | SARs | Exercise Price | |||||||||||||
(In Thousands) | (In Thousands) | |||||||||||||||
Outstanding at December 31, 2007 |
12,928 | $ | 10.80 | 9,965 | $ | 7.19 | ||||||||||
Granted |
100 | $ | 3.63 | 4,266 | $ | 3.64 | ||||||||||
Exercised |
| $ | | | $ | | ||||||||||
Forfeited or expired |
(1,029 | ) | $ | 11.83 | (1,334 | ) | $ | 6.65 | ||||||||
Outstanding at December 31, 2008 |
11,999 | $ | 10.70 | 12,897 | $ | 6.07 | ||||||||||
Granted |
| $ | | | $ | | ||||||||||
Exercised |
| $ | | | $ | | ||||||||||
Forfeited or expired |
(1,493 | ) | $ | 10.64 | (2,355 | ) | $ | 8.27 | ||||||||
Outstanding at December 31, 2009 |
10,506 | $ | 10.70 | 10,542 | $ | 5.60 | ||||||||||
Forfeited, expired or cancelled |
(10,506 | ) | $ | 10.70 | (10,542 | ) | $ | 5.60 | ||||||||
Outstanding at October 1, 2010 |
| $ | | | $ | | ||||||||||
Weighted | ||||||||||||
Average | ||||||||||||
Grant Date Fair | ||||||||||||
RSAs | RSUs | Value | ||||||||||
(In Thousands) | ||||||||||||
Non-vested at December 31, 2007 |
92 | 4,573 | $ | 6.42 | ||||||||
Granted |
1,305 | 3,326 | $ | 3.60 | ||||||||
Vested |
(35 | ) | (3,335 | ) | $ | 5.61 | ||||||
Forfeited |
(182 | ) | (418 | ) | $ | 5.18 | ||||||
Non-vested at December 31, 2008 |
1,180 | 4,146 | $ | 4.60 | ||||||||
Granted |
| | $ | | ||||||||
Vested |
(42 | ) | (1,678 | ) | $ | 6.08 | ||||||
Forfeited |
(204 | ) | (357 | ) | $ | 4.49 | ||||||
Non-vested at December 31, 2009 |
934 | 2,111 | $ | 3.80 | ||||||||
Vested |
(15 | ) | (5 | ) | $ | 7.05 | ||||||
Forfeited or cancelled |
(919 | ) | (2,106 | ) | $ | 3.39 | ||||||
Non-vested at October 1, 2010 |
| | $ | | ||||||||
41
Successor | Predecessor | |||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
December 31 | October 1 | Year Ended December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
U.S |
$ | 21 | $ | 425 | $ | (1,250 | ) | $ | (440 | ) | ||||||
Non-U.S |
62 | 597 | 1,434 | (132 | ) | |||||||||||
Total income (loss) before income taxes |
$ | 83 | $ | 1,022 | $ | 184 | $ | (572 | ) | |||||||
Current tax provision |
||||||||||||||||
U.S. federal |
$ | 1 | $ | 5 | $ | 4 | $ | (4 | ) | |||||||
Non-U.S |
28 | 80 | 90 | 96 | ||||||||||||
U.S. state and local |
(1 | ) | 3 | 1 | 1 | |||||||||||
Total current |
28 | 88 | 95 | 93 | ||||||||||||
Deferred tax provision (benefit) |
||||||||||||||||
U.S. federal |
(1 | ) | 2 | 5 | | |||||||||||
Non-U.S |
(8 | ) | 42 | (16 | ) | 22 | ||||||||||
U.S. state and local |
| (1 | ) | (4 | ) | 1 | ||||||||||
Total deferred |
(9 | ) | 43 | (15 | ) | 23 | ||||||||||
Total provision for income taxes |
$ | 19 | $ | 131 | $ | 80 | $ | 116 | ||||||||
Successor | Predecessor | |||||||||||||||
Three Months Ended | Nine Months Ended | Year Ended | ||||||||||||||
December 31 | October 1 | December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Income (loss) before income taxes, excluding
equity in net income of non-consolidated
affiliates, multiplied by the U.S. statutory
rate of 35% |
$ | 29 | $ | 358 | $ | 64 | $ | (200 | ) | |||||||
Effect of: |
||||||||||||||||
Impact of foreign operations, including
withholding taxes |
(4 | ) | (4 | ) | (3 | ) | (5 | ) | ||||||||
State and local income taxes |
(1 | ) | 1 | (22 | ) | (14 | ) | |||||||||
Tax reserve adjustments |
1 | (1 | ) | (52 | ) | 12 | ||||||||||
Impact of U.K. Administration |
| | (444 | ) | | |||||||||||
Change in valuation allowance |
(6 | ) | (753 | ) | 521 | 316 | ||||||||||
Fresh-start accounting adjustments and
reorganization items, net |
| 553 | 22 | | ||||||||||||
Impact of tax law change |
| | 10 | | ||||||||||||
Liquidation of consolidated foreign affiliate |
| | (17 | ) | | |||||||||||
Other |
| (23 | ) | 1 | 7 | |||||||||||
Provision for income taxes |
$ | 19 | $ | 131 | $ | 80 | $ | 116 | ||||||||
42
43
Successor | Predecessor | |||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
Deferred tax assets |
||||||||
Employee benefit plans |
$ | 139 | $ | 275 | ||||
Capitalized expenditures for tax reporting |
135 | 142 | ||||||
Net operating losses and carryforwards |
1,097 | 1,813 | ||||||
All other |
279 | 428 | ||||||
Subtotal |
1,650 | 2,658 | ||||||
Valuation allowance |
(1,463 | ) | (2,238 | ) | ||||
Total deferred tax assets |
$ | 187 | $ | 420 | ||||
Deferred tax liabilities |
||||||||
Depreciation and amortization |
$ | 74 | $ | 127 | ||||
All other |
257 | 404 | ||||||
Total deferred tax liabilities |
331 | 531 | ||||||
Net deferred tax liabilities |
$ | 144 | $ | 111 | ||||
44
Successor | Predecessor | |||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
December 31 | October 1 | Year Ended December 31 | ||||||||||
2010 | 2010 | 2009 | ||||||||||
(Dollars in Millions) | ||||||||||||
Beginning balance |
$ | 126 | $ | 190 | $ | 238 | ||||||
Tax positions related to current period
Additions |
7 | 13 | 16 | |||||||||
Tax positions related to prior periods
Additions |
3 | 2 | 3 | |||||||||
Reductions |
(1 | ) | (58 | ) | (55 | ) | ||||||
Settlements with tax authorities |
(1 | ) | | (3 | ) | |||||||
Lapses in statute of limitations |
(2 | ) | (18 | ) | (10 | ) | ||||||
Effect of exchange rate changes |
(1 | ) | (3 | ) | 1 | |||||||
Ending balance |
$ | 131 | $ | 126 | $ | 190 | ||||||
| Approximately 45,000,000 shares of Successor common stock to certain investors in a private offering exempt from registration under the Securities Act for proceeds of approximately $1.25 billion; |
45
| Approximately 2,500,000 shares of Successor common stock to holders of pre-petition notes, including 7% Senior Notes due 2014, 8.25% Senior Notes due 2010, and 12.25% Senior Notes due 2016; holders of the 12.25% senior notes also received warrants, which expire ten years from issuance, to purchase up to 2,355,000 shares of Successor common stock at an exercise price of $9.66 per share (Ten Year Warrants); | |
| Approximately 1,000,000 shares of Successor common stock and warrants, which expire five years from issuance, to purchase up to 1,552,774 shares of Successor common stock at an exercise price of $58.80 per share (Five Year Warrants) for Predecessor common stock interests; | |
| Approximately 1,200,000 shares of Successor restricted stock issued to management under a post-emergence share-based incentive compensation program. The Company holds approximately 500,000 shares of Successor common stock in treasury at December 31, 2010 for use in satisfying obligations under employee incentive compensation arrangements. |
Successor | Predecessor | |||||||
2010 | 2009 | |||||||
(Dollars in Millions) | ||||||||
Foreign currency translation adjustments |
$ | 1 | $ | 89 | ||||
Pension and other postretirement benefit adjustments, net of tax |
51 | 53 | ||||||
Unrealized losses on derivatives |
(2 | ) | | |||||
Total accumulated other comprehensive income |
$ | 50 | $ | 142 | ||||
46
Successor | Predecessor | |||||||||||||||
Three Months | Nine Months | |||||||||||||||
Ended | Ended | Year Ended | ||||||||||||||
December 31 | October 1 | December 31 | ||||||||||||||
2010 | 2010 | 2009 | 2008 | |||||||||||||
(Dollars in Millions, Except Per Share Amounts) | ||||||||||||||||
Numerator: |
||||||||||||||||
Net income (loss) attributable to Visteon |
$ | 86 | $ | 940 | $ | 128 | $ | (681 | ) | |||||||
Denominator: |
||||||||||||||||
Average common stock outstanding |
50.2 | 130.3 | 130.4 | 129.4 | ||||||||||||
Dilutive effect of warrants |
1.5 | | | | ||||||||||||
Diluted shares |
51.7 | 130.3 | 130.4 | 129.4 | ||||||||||||
Basic and Diluted per Share Data: |
||||||||||||||||
Earnings (loss) per share attributable to Visteon: |
||||||||||||||||
Basic |
$ | 1.71 | $ | 7.21 | $ | 0.98 | $ | (5.26 | ) | |||||||
Diluted |
$ | 1.66 | $ | 7.21 | $ | 0.98 | $ | (5.26 | ) |
| Level 1 Financial assets and liabilities whose values are based on unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has the ability to access. | |
| Level 2 Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable for substantially the full term of the asset or liability. | |
| Level 3 Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. |
47
Successor | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
(Dollars in Millions) | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Retirement plan assets |
$ | 383 | $ | 488 | $ | 462 | $ | 1,333 | ||||||||
Foreign currency instruments |
| 1 | | 1 | ||||||||||||
Total |
$ | 383 | $ | 489 | $ | 462 | $ | 1,334 | ||||||||
Liability Category |
||||||||||||||||
Interest rate swaps |
$ | | $ | 1 | $ | | $ | |
Predecessor | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
(Dollars in Millions) | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Retirement plan assets |
$ | 376 | $ | 415 | $ | 437 | $ | 1,228 |
| Cash and cash equivalents, which consist of U.S. and foreign currencies held by designated trustees. Foreign currencies held are reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. | |
| Registered investment companies are mutual funds that are registered with the Securities and Exchange Commission. Mutual fund shares are traded actively on public exchanges. The share prices for mutual funds are published at the close of each business day. Mutual funds contain both equity and fixed income securities. | |
| Common and preferred stock include equity securities issued by U.S. and non-U.S. corporations. Common and preferred securities are traded actively on exchanges and price quotes for these shares are readily available. |
48
| Other investments include several miscellaneous assets and liabilities and are primarily comprised of liabilities related to pending trades and collateral settlements. |
| Treasury and government securities consist of bills, notes, bonds, and other fixed income securities issued directly by a non-U.S. treasury or by government-sponsored enterprises. These assets are valued using observable inputs. | |
| Common trust funds are comprised of shares or units in commingled funds that are not publicly traded. The underlying assets in these funds (equity securities, fixed income securities and commodity-related securities) are publicly traded on exchanges and price quotes for the assets held by these funds are readily available. | |
| Liability Driven Investing (LDI) is an investment strategy that utilizes swaps to hedge discount rate volatility. The swaps are collateralized on a daily basis resulting in counterparty exposure that is limited to one days activity. Swaps are a derivative product, utilizing a pricing model to calculate market value. | |
| Corporate debt securities consist of fixed income securities issued by non-U.S. corporations. These assets are valued using a bid evaluation process with bid data provided by independent pricing sources. |
| Global tactical asset allocation funds (GTAA) are common trust funds comprised of shares or units in commingled funds that are not publicly traded. GTAA managers primarily invest in equity, fixed income and cash instruments, with the ability to change the allocation mix based on market conditions while remaining within their specific strategy guidelines. The underlying assets in these funds may be publicly traded (equities and fixed income) and price quotes may be readily available. Assets may also be invested in various derivative products whose prices cannot be readily determined. | |
| Limited partnership hedge fund of funds (HFF) directly invest in a variety of hedge funds. The investment strategies of the underlying hedge funds are primarily focused on fixed income and equity based investments. There is currently minimal exposure to less liquid assets such as real estate or private equity in the portfolio. However, due to the private nature of the partnership investments, pricing inputs are not readily observable. Asset valuations are developed by the general partners that manage the partnerships. | |
| Insurance contracts are reported at cash surrender value and have no observable inputs. |
Successor | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets | Significant | Significant | ||||||||||||||
for Identical | Observable | Unobservable | ||||||||||||||
Assets | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
(Dollars in Millions) | ||||||||||||||||
Registered investment companies |
$ | 140 | $ | | $ | | $ | 140 | ||||||||
Common trust funds |
| 205 | | 205 | ||||||||||||
LDI |
| 208 | | 208 | ||||||||||||
GTAA |
| | 150 | 150 | ||||||||||||
Common and preferred stock |
139 | | | 139 | ||||||||||||
HFF |
| | 119 | 119 | ||||||||||||
Cash and cash equivalents |
26 | | | 26 | ||||||||||||
Insurance contracts |
| | 9 | 9 | ||||||||||||
Total |
$ | 305 | $ | 413 | $ | 278 | $ | 996 | ||||||||
49
Predecessor | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
(Dollars in Millions) | ||||||||||||||||
Registered investment companies |
$ | 196 | $ | | $ | | $ | 196 | ||||||||
Common trust funds |
| 195 | | 195 | ||||||||||||
LDI |
| 151 | | 151 | ||||||||||||
GTAA |
| | 130 | 130 | ||||||||||||
HFF |
| | 113 | 113 | ||||||||||||
Common and preferred stock |
108 | | | 108 | ||||||||||||
Cash and cash equivalents |
12 | | | 12 | ||||||||||||
Insurance contracts |
| | 10 | 10 | ||||||||||||
Other |
(2 | ) | | | (2 | ) | ||||||||||
Total |
$ | 314 | $ | 346 | $ | 253 | $ | 913 | ||||||||
Insurance | ||||||||||||
GTAA | HFF | contracts | ||||||||||
(Dollars in Millions) | ||||||||||||
Predecessor Beginning balance at December 31, 2008 |
$ | 98 | $ | 97 | $ | 9 | ||||||
Actual return on plan assets: |
||||||||||||
Relating to assets still held at the reporting date |
31 | 9 | 2 | |||||||||
Relating to assets sold during the period |
(1 | ) | | | ||||||||
Purchases, sales and settlements |
2 | 7 | (1 | ) | ||||||||
Predecessor Ending balance at December 31, 2009 |
$ | 130 | $ | 113 | $ | 10 | ||||||
Actual return on plan assets: |
||||||||||||
Relating to assets still held at the reporting date |
11 | 3 | 1 | |||||||||
Relating to assets sold during the period |
| | | |||||||||
Purchases, sales and settlements |
| | (1 | ) | ||||||||
Predecessor Ending balance at October 1, 2010 |
$ | 141 | $ | 116 | $ | 10 | ||||||
Actual return on plan assets: |
||||||||||||
Relating to assets still held at the reporting date |
9 | 3 | (1 | ) | ||||||||
Relating to assets sold during the period |
| | | |||||||||
Successor Ending balance at December 31, 2010 |
$ | 150 | $ | 119 | $ | 9 |
Successor | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets | Significant | Significant | ||||||||||||||
for Identical | Observable | Unobservable | ||||||||||||||
Assets | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
(Dollars in Millions) | ||||||||||||||||
Insurance contracts |
$ | | $ | | $ | 179 | $ | 179 | ||||||||
Treasury and government securities |
| 51 | | 51 | ||||||||||||
Registered investment companies |
62 | | | 62 | ||||||||||||
Cash and cash equivalents |
13 | | | 13 | ||||||||||||
Corporate debt securities |
| 8 | | 8 | ||||||||||||
Common trust funds |
| 6 | | 6 | ||||||||||||
Limited partnerships (HFF) |
| | 5 | 5 | ||||||||||||
Common and preferred stock |
3 | | | 3 | ||||||||||||
Other |
| 10 | | 10 | ||||||||||||
Total |
$ | 78 | $ | 75 | $ | 184 | $ | 337 | ||||||||
50
Predecessor | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
Quoted Prices | ||||||||||||||||
in Active | Significant | Significant | ||||||||||||||
Markets for | Observable | Unobservable | ||||||||||||||
Identical Assets | Inputs | Inputs | ||||||||||||||
Asset Category | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
(Dollars in Millions) | ||||||||||||||||
Insurance contracts |
$ | | $ | | $ | 180 | $ | 180 | ||||||||
Treasury and government securities |
| 56 | | 56 | ||||||||||||
Registered investment companies |
51 | | | 51 | ||||||||||||
Cash and cash equivalents |
9 | | | 9 | ||||||||||||
Corporate debt securities |
| 8 | | 8 | ||||||||||||
Common trust funds |
| 5 | | 5 | ||||||||||||
Limited partnerships (HFF) |
| | 4 | 4 | ||||||||||||
Common and preferred stock |
2 | | | 2 | ||||||||||||
Total |
$ | 62 | $ | 69 | $ | 184 | $ | 315 | ||||||||
Insurance | ||||||||
contracts | HFF | |||||||
(Dollars in Millions) | ||||||||
Predecessor Beginning balance at December 31, 2008 |
$ | 173 | $ | 2 | ||||
Actual return on plan assets: |
||||||||
Relating to assets held at the reporting date |
12 | | ||||||
Purchases, sales and settlements |
(5 | ) | 2 | |||||
Predecessor Ending balance at December 31, 2009 |
$ | 180 | $ | 4 | ||||
Actual return on plan assets: |
||||||||
Relating to assets held at the reporting date |
(1 | ) | | |||||
Purchases, sales and settlements |
(1 | ) | | |||||
Predecessor Ending balance at October 1, 2010 |
$ | 178 | $ | 4 | ||||
Actual return on plan assets: |
||||||||
Relating to assets held at the reporting date |
(1 | ) | | |||||
Purchases, sales and settlements |
2 | 1 | ||||||
Successor Ending balance at December 31, 2010 |
$ | 179 | $ | 5 | ||||
51
52
Assets | Liabilities | |||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||||||||
Risk Hedged | Classification | 2010 | 2009 | Classification | 2010 | 2009 | ||||||||||||||||
Foreign currency |
Other current assets | $ | 2 | $ | 2 | Other current assets | $ | 1 | $ | 2 | ||||||||||||
Foreign currency |
Other current liabilities | 3 | | Other current liabilities | 3 | | ||||||||||||||||
Interest rates |
Other non-current assets | | | Other non-current liabilities | 1 | | ||||||||||||||||
$ | 5 | $ | 2 | $ | 5 | $ | 2 | |||||||||||||||
Amount of Gain (Loss) | ||||||||||||||||||||||||||||||||||||
Reclassified from | ||||||||||||||||||||||||||||||||||||
Recorded in AOCI | AOCI into Income | Recorded in Income | ||||||||||||||||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | Successor | Predecessor | |||||||||||||||||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2010 | 2009 | 2010 | 2010 | 2009 | ||||||||||||||||||||||||||||
Foreign currency
risk Cost of
sales |
||||||||||||||||||||||||||||||||||||
Cash flow hedges |
$ | (1 | ) | $ | | $ | (3 | ) | $ | 1 | $ | 6 | $ | 2 | $ | | $ | | $ | | ||||||||||||||||
Non-designated cash
flow hedges |
| | | | | | 3 | (1 | ) | 2 | ||||||||||||||||||||||||||
$ | (1 | ) | $ | | $ | (3 | ) | $ | 1 | $ | 6 | $ | 2 | $ | 3 | $ | (1 | ) | $ | 2 | ||||||||||||||||
Interest rate risk
Interest expense |
||||||||||||||||||||||||||||||||||||
Fair value hedges |
$ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | 2 | ||||||||||||||||||
Cash flow hedges |
(1 | ) | | 7 | | | (15 | ) | | | | |||||||||||||||||||||||||
$ | (1 | ) | $ | | $ | 7 | $ | | $ | | $ | (15 | ) | $ | | $ | | $ | 2 | |||||||||||||||||
53
Successor | Predecessor | |||||||
2010 | 2009 | |||||||
Ford and affiliates |
22 | % | 22 | % | ||||
Hyundai Motor Company |
17 | % | 17 | % | ||||
Hyundai Mobis Company |
14 | % | 14 | % | ||||
PSA Peugeot Citroën |
6 | % | 10 | % |
54
55
Successor | Predecessor | ||||||||||||||
Three Months | Nine Months | Year Ended | |||||||||||||
Ended | Ended | ||||||||||||||
December 31 | October 1 | December 31 | |||||||||||||
2010 | 2010 | 2009 | |||||||||||||
(Dollars in Millions) | |||||||||||||||
Beginning balance |
$ | 76 | $ | 79 | $ | 100 | |||||||||
Accruals for products shipped |
7 | 19 | 28 | ||||||||||||
Changes in estimates |
(2 | ) | (4 | ) | (10 | ) | |||||||||
Settlements |
(6 | ) | (18 | ) | (39 | ) | |||||||||
Ending balance |
$ | 75 | $ | 76 | $ | 79 | |||||||||
56
| Climate The Companys Climate product line includes climate air handling modules, powertrain cooling modules, heat exchangers, compressors, fluid transport and engine induction systems. Climate accounted for approximately 49%, 48%, 43%, and 38% of the Companys total product sales, excluding intra-product line eliminations, for the three-month Successor period ended December 31, 2010, the ninemonth Predecessor period ended October 1, 2010 and the years ended December 31, 2009 and 2008, respectively. | |
| Electronics The Companys Electronics product line includes audio systems, infotainment systems, driver information systems, powertrain and feature control modules, climate controls, and electronic control modules. Electronics accounted for approximately 17%, 17%, 18%, and 20% of the Companys total product sales, excluding intra-product line eliminations, for the three-month Successor period ended December 31, 2010, the |
57
ninemonth Predecessor period ended October 1, 2010 and the years ended December 31, 2009 and 2008, respectively. |
| Interiors The Companys Interiors product line includes instrument panels, cockpit modules, door trim and floor consoles. Interiors accounted for approximately 28%, 29%, 33%, and 33% of the Companys total product sales, excluding intra-product line eliminations, for the three-month Successor period ended December 31, 2010, the nine-month Predecessor period ended October 1, 2010 and the years ended December 31, 2009 and 2008, respectively. | |
| Lighting The Companys Lighting product line includes headlamps, rear combination lamps, center high-mounted stop lamps, fog lamps and electronic control modules. Lighting accounted for approximately 6% of the Companys total product sales, excluding intra-product line eliminations, in the three-month Successor period ended December 31, 2010, the nine-month Predecessor period ended October 1, 2010 and the years ended December 31, 2009 and 2008. | |
| Services The Companys Services operations provide various transition services in support of divestiture transactions, principally related to the ACH Transactions. The Company supplied leased personnel and transition services as required by certain agreements entered into by the Company with ACH as a part of the ACH Transactions and as amended in 2008. As of August 31, 2010, the Company ceased providing substantially all transition and other services or leasing employees to ACH. Services to ACH were provided at a rate approximately equal to the Companys cost. |
Net Sales | Gross Margin | |||||||||||||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||||||||||||||||||
Three | Three | |||||||||||||||||||||||||||||||
Months | Nine Months | Months | Nine Months | |||||||||||||||||||||||||||||
Ended | Ended | Year Ended | Ended | Ended | Year Ended | |||||||||||||||||||||||||||
December 31 | October 1 | December 31 | December 31 | October 1 | December 31 | |||||||||||||||||||||||||||
2010 | 2010 | 2009 | 2008 | 2010 | 2010 | 2009 | 2008 | |||||||||||||||||||||||||
Climate |
$ | 954 | $ | 2,660 | $ | 2,835 | $ | 3,582 | $ | 115 | $ | 326 | $ | 370 | $ | 295 | ||||||||||||||||
Electronics |
326 | 935 | 1,208 | 1,871 | 90 | 137 | 124 | 154 | ||||||||||||||||||||||||
Interiors |
554 | 1,641 | 2,137 | 3,064 | 37 | 90 | 114 | 22 | ||||||||||||||||||||||||
Lighting |
111 | 345 | 361 | 577 | 2 | 10 | (15 | ) | (38 | ) | ||||||||||||||||||||||
Other |
| | | 271 | | | | 23 | ||||||||||||||||||||||||
Eliminations |
(59 | ) | (144 | ) | (121 | ) | (288 | ) | | | | | ||||||||||||||||||||
Total Products |
1,886 | 5,437 | 6,420 | 9,077 | 244 | 563 | 593 | 456 | ||||||||||||||||||||||||
Services |
1 | 142 | 265 | 467 | | 2 | 4 | 3 | ||||||||||||||||||||||||
Total consolidated |
$ | 1,887 | $ | 5,579 | $ | 6,685 | $ | 9,544 | $ | 244 | $ | 565 | $ | 597 | $ | 459 | ||||||||||||||||
58
Inventories, net | Property and Equipment, net | |||||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(Dollars in Millions) | ||||||||||||||||
Climate |
$ | 214 | $ | 167 | $ | 974 | $ | 899 | ||||||||
Electronics |
73 | 60 | 159 | 189 | ||||||||||||
Interiors |
50 | 58 | 212 | 299 | ||||||||||||
Lighting |
25 | 28 | 109 | 203 | ||||||||||||
Other |
2 | 6 | | | ||||||||||||
Total Products |
364 | 319 | 1,454 | 1,590 | ||||||||||||
Corporate |
| | 128 | 346 | ||||||||||||
Total consolidated |
$ | 364 | $ | 319 | $ | 1,582 | $ | 1,936 | ||||||||
Depreciation and Amortization | Capital Expenditures | |||||||||||||||||||||||||||||||
Successor | Predecessor | Successor | Predecessor | |||||||||||||||||||||||||||||
Three | Nine | Three | Nine | |||||||||||||||||||||||||||||
Months | Months | Months | Months | |||||||||||||||||||||||||||||
Ended | Ended | Year Ended | Ended | Ended | Year Ended | |||||||||||||||||||||||||||
December 31 | October 1 | December 31 | December 31 | October 1 | December 31 | |||||||||||||||||||||||||||
2010 | 2010 | 2009 | 2008 | 2010 | 2010 | 2009 | 2008 | |||||||||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||||||||||
Climate |
$ | 46 | $ | 102 | $ | 137 | $ | 151 | $ | 56 | $ | 60 | $ | 74 | $ | 140 | ||||||||||||||||
Electronics |
8 | 20 | 44 | 76 | 11 | 12 | 19 | 24 | ||||||||||||||||||||||||
Interiors |
8 | 27 | 49 | 70 | 14 | 20 | 34 | 68 | ||||||||||||||||||||||||
Lighting |
4 | 22 | 45 | 32 | 7 | 17 | 16 | 32 | ||||||||||||||||||||||||
Other |
| | | 7 | | | | 1 | ||||||||||||||||||||||||
Total Products |
66 | 171 | 275 | 336 | 88 | 109 | 143 | 265 | ||||||||||||||||||||||||
Corporate |
7 | 36 | 77 | 80 | 4 | 8 | 8 | 29 | ||||||||||||||||||||||||
Total consolidated |
$ | 73 | $ | 207 | $ | 352 | $ | 416 | $ | 92 | $ | 117 | $ | 151 | $ | 294 | ||||||||||||||||
59
Net Sales | ||||||||||||||||||||||||
Successor | Predecessor | |||||||||||||||||||||||
Nine | ||||||||||||||||||||||||
Three Months | Months | |||||||||||||||||||||||
Ended | Ended | Year Ended | Property and Equipment, net | |||||||||||||||||||||
December 31 | October 1 | December 31 | Successor | Predecessor | ||||||||||||||||||||
2010 | 2010 | 2009 | 2008 | 2010 | 2009 | |||||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||||||
Geographic region: |
||||||||||||||||||||||||
United States |
$ | 271 | $ | 1,155 | $ | 1,710 | $ | 2,667 | $ | 240 | $ | 549 | ||||||||||||
Mexico |
13 | 36 | 27 | 75 | 27 | 53 | ||||||||||||||||||
Canada |
21 | 61 | 46 | 66 | 31 | 19 | ||||||||||||||||||
Intra-region eliminations |
(10 | ) | (40 | ) | (29 | ) | (71 | ) | | | ||||||||||||||
North America |
295 | 1,212 | 1,754 | 2,737 | 298 | 621 | ||||||||||||||||||
Germany |
40 | 129 | 158 | 274 | 26 | 40 | ||||||||||||||||||
France |
177 | 512 | 609 | 799 | 101 | 148 | ||||||||||||||||||
United Kingdom |
| | 34 | 401 | 4 | 7 | ||||||||||||||||||
Portugal |
91 | 304 | 441 | 606 | 80 | 107 | ||||||||||||||||||
Spain |
115 | 311 | 287 | 657 | 45 | 68 | ||||||||||||||||||
Czech Republic |
131 | 387 | 449 | 632 | 121 | 222 | ||||||||||||||||||
Hungary |
82 | 258 | 315 | 469 | 65 | 71 | ||||||||||||||||||
Other Europe |
125 | 292 | 293 | 250 | 63 | 76 | ||||||||||||||||||
Intra-region eliminations |
(29 | ) | (81 | ) | (93 | ) | (159 | ) | | | ||||||||||||||
Europe |
732 | 2,112 | 2,493 | 3,929 | 505 | 739 | ||||||||||||||||||
Korea |
583 | 1,520 | 1,589 | 2,077 | 476 | 324 | ||||||||||||||||||
China |
125 | 325 | 380 | 282 | 96 | 80 | ||||||||||||||||||
India |
85 | 225 | 213 | 238 | 96 | 60 | ||||||||||||||||||
Japan |
62 | 152 | 138 | 224 | 14 | 16 | ||||||||||||||||||
Other Asia |
71 | 177 | 142 | 223 | 33 | 32 | ||||||||||||||||||
Intra-region eliminations |
(66 | ) | (166 | ) | (158 | ) | (162 | ) | | | ||||||||||||||
Asia |
860 | 2,233 | 2,304 | 2,882 | 715 | 512 | ||||||||||||||||||
South America |
123 | 386 | 427 | 474 | 64 | 64 | ||||||||||||||||||
Inter-region eliminations |
(123 | ) | (364 | ) | (293 | ) | (478 | ) | | | ||||||||||||||
$ | 1,887 | $ | 5,579 | $ | 6,685 | $ | 9,544 | $ | 1,582 | $ | 1,936 | |||||||||||||
60
(a) | The following documents are filed as part of this report: |
Balance at | (Benefits)/ | Balance | ||||||||||||||||||
Beginning | Charges to | at End | ||||||||||||||||||
of Period | Income | Deductions(a) | Other(b) | of Period | ||||||||||||||||
(Dollars in Millions) | ||||||||||||||||||||
Successor Three Months Ended December 31, 2010: |
||||||||||||||||||||
Allowance for doubtful accounts |
$ | | $ | (4 | ) | $ | 4 | $ | | $ | | |||||||||
Valuation allowance for deferred taxes |
1,485 | (6 | ) | | (16 | ) | 1,463 | |||||||||||||
Predecessor Nine Months Ended October 1, 2010: |
||||||||||||||||||||
Allowance for doubtful accounts |
$ | 23 | $ | 3 | $ | (2 | ) | $ | (24 | ) | $ | | ||||||||
Valuation allowance for deferred taxes |
2,238 | (753 | ) | | | 1,485 | ||||||||||||||
Predecessor Year Ended December 31, 2009: |
||||||||||||||||||||
Allowance for doubtful accounts |
$ | 37 | $ | 5 | $ | (19 | ) | $ | | $ | 23 | |||||||||
Valuation allowance for deferred taxes |
2,079 | 521 | | (362 | ) | 2,238 | ||||||||||||||
Predecessor Year Ended December 31, 2008: |
||||||||||||||||||||
Allowance for doubtful accounts |
$ | 18 | $ | 1 | $ | | $ | 18 | $ | 37 | ||||||||||
Valuation allowance for deferred taxes |
2,102 | 316 | | (339 | ) | 2,079 |
(a) | Deductions represent uncollectible accounts charged off. | |
(b) | Valuation allowance for deferred taxes Represents adjustments recorded through other comprehensive income, exchange and includes other adjustments in 2009 and 2008 such as adjustments related to the Companys U.S. residual tax liability on assumed repatriation of foreign earnings, various tax return true-up adjustments and adjustments related to deferred tax attributes adjusted for uncertain tax positions carrying a full valuation allowance, all of which impact deferred taxes and the related valuation allowances. In 2009, other also includes the transfer of the remaining U.K. tax attributes carrying a full valuation allowance to the Administrators as a result of the UK Administration and related deconsolidation in the first quarter of 2009. In 2008, other also includes the transfer of certain U.K. tax attributes carrying a full valuation allowance to Linamar Corporation in connection with the Swansea Divestiture in the third quarter of 2008. | |
Allowance for doubtful accounts | ||
Other represents the revaluation of accounts receivable to fair value upon the adoption of fresh-start accounting in connection with the emergence from bankruptcy on October 1, 2010 and an increase of allowance amounts upon amendment of the European securitization in October 2008 whereby the transferor was consolidated in accordance with the requirements of accounting guidance. |