Stockholders' Equity and Non-controlling Interests

12 Months Ended

Dec. 31, 2013

Equity [Abstract]

Shareholders' Equity and Non-controlling Interests

NOTE 14. Stockholders’ Equity and Non-controlling Interests

Share Repurchase Program

In July 2012, the board of directors authorized the repurchase of up to $100 million of the Company's common stock. During 2012, the Company repurchased 1,005,559 shares of its outstanding common stock at an weighted average price of $49.72 per share, excluding commissions, for the aggregate purchase price of $50 million. In January 2013, the board of directors reauthorized the previously authorized $100 million and increased the repurchase amount an additional $200 million, bringing the total share repurchase authorization to $300 million. In March 2013, the Company entered into an accelerated stock buyback ("ASB") program with a third-party financial institution to purchase shares of common stock for an aggregate purchase price of $125 million. Under the program, the Company paid the financial institution $125 million and received an initial delivery of 1,713,502 shares of common stock. The value of those shares on the date of delivery was $100 million at $58.36 per share and is included in common stock held in treasury. On April 17, 2013, the program concluded, and the Company received an additional 495,576 shares.

In August 2013, the Company's board of directors raised the authorization of its remaining share repurchase program from $125 million to $1 billion over the next two years. The Company entered into another ASB program in August 2013 with a third-party financial institution to purchase shares of common stock for an aggregate purchase price of $125 million. The Company paid the financial institution $125 million and received an initial delivery of 1,368,925 shares of common stock. The value of those shares on the date of delivery was $100 million at $73.05 per share and is included in common stock held in treasury. On December 20, 2013, the program concluded and the Company received an additional 307,975 shares. As of December 31, 2013, $875 million remains authorized and available for repurchase through December 31, 2015. The Company anticipates that repurchases of common stock would occur from time to time in open market transactions, non-discretionary programs or in privately negotiated transactions depending on market and economic conditions, share price, trading volumes, alternative uses of capital and other factors.

Treasury Stock

The Company's board of directors has authorized a total of $1.175 billion in share repurchases since July of 2012, of which $875 million remains authorized and available for repurchase through December 31, 2015. As a result of the execution of this share repurchase program, the Company's treasury stock has increased. The $125 million ASB that completed on April 17, 2013 contributed a total of 2,209,078 shares to treasury stock in 2013. The 125 million ASB that completed on December 20, 2013 contributed a total of 1,676,900 shares to treasury stock in 2013. In 2012, open market repurchases under the share repurchase program contributed a total of 1,005,559 shares to treasury stock. At December 31, 2013 and 2012, the Company held approximately 5,640,000 and 1,760,000 shares of common stock in treasury for use in satisfying obligations under employee incentive compensation arrangements. The Company values shares of common stock held in treasury at cost.

Warrants

The warrants to purchase up to 2,355,000 shares of common stock at an exercise price of $9.66 per share, which expire ten years from issuance ("Ten Year Warrants") may be net share settled and are recorded as permanent equity in the Company’s consolidated balance sheets with 909 and 299,171 warrants outstanding at December 31, 2013 and 2012, respectively. The Ten Year Warrants were valued at $15.00 per share on October 1, 2010 using the Black-Scholes option pricing model. Significant assumptions used in determining the fair value of such warrants at issuance included share price volatility and risk-free rate of return. The volatility assumption was based on the implied volatility and historical realized volatility for comparable companies. The risk-free rate assumption was based on U.S. Treasury bond yields.

The warrants to purchase up to 1,552,774 shares of common stock at an exercise price of $58.8 per share, which expire five years from issuance ("Five Year Warrants") may be net share settled and are recorded as permanent equity in the Company’s consolidated balance sheets with 1,548,387 and 1,549,337 warrants outstanding at December 31, 2013 and 2012, respectively. The Five Year Warrants were valued at $3.62 per share on October 1, 2010 using the Black-Scholes option pricing model. Significant assumptions used in determining the fair value of such warrants at issuance included share price volatility and risk-free rate of return. The volatility assumption was based on the implied volatility and historical realized volatility for comparable companies. The risk-free rate assumption was based on U.S. Treasury bond yields.

If the Company pays or declares a dividend or makes a distribution on common stock payable in shares of its common stock, the number of shares of common stock or other shares of common stock for which a Warrant (the Five Year Warrants and Ten Year Warrants, collectively) is exercisable shall be adjusted so that the holder of each Warrant shall be entitled upon exercise to receive the number of shares of common stock that such warrant holder would have owned or have been entitled to receive after the happening of any of the events described above, had such Warrant been exercised immediately prior to the happening of such event. In addition, if the Company pays an extraordinary dividend (as defined in each Warrant Agreement) to common share holders, then the exercise price shall be decreased effective immediately after the effective date of such extraordinary dividend, dollar-for-dollar by the fair market value of any securities or other assets paid or distributed on each share of common stock.

Non-Controlling Interests

Non-controlling interests in the Visteon Corporation economic entity are as follows:

	December 31
	2013		2012
	(Dollars in Millions)
HVCC	$	777	$	723
YFVE	139		—
Visteon Interiors Korea, Ltd.	22		20
Other	15		13
Total non-controlling interests	$	953	$	756

Pursuant to the November 2013 step acquisition of a controlling interest in YFVE, Visteon applied business combination accounting and consolidated YFVE. In connection with the purchase accounting, Visteon recorded the estimated fair value of the non-controlling interest in YFVE at $138 million.

During the first quarter of 2013, Halla Climate Control Corporation purchased certain subsidiaries and intellectual property of Visteon's global climate business for approximately $410 million. The transfer of Visteon's Climate operations to HVCC represented a common control transaction. Accordingly, the assets and liabilities were transferred at their respective carrying value and no gain or loss was recorded by the Company. HVCC designs, develops and manufactures automotive climate control products, including air-conditioning systems, modules, compressors, and heat exchangers for sale to global OEMs. The Company holds a 70% interest in HVCC, a consolidated subsidiary.

Accumulated Other Comprehensive Income (Loss)

Changes in Accumulated other comprehensive income (loss) (“AOCI”) and reclassifications out of AOCI by component includes:

	Year Ended December 31
	2013			2012
	(Dollars in Millions)
Changes in AOCI:
Beginning balance	$	(90	)	$	(25	)
Other comprehensive income (loss) before reclassification, net of tax	124			(66		)
Amounts reclassified from AOCI	(46		)	1
Ending balance	$	(12	)	$	(90	)
Changes in AOCI by component:
Foreign currency translation adjustments
Beginning balance	$	11		$	(41	)
Other comprehensive (loss) income before reclassification, net of tax	(11		)	47
Amounts reclassified from AOCI (a)	(37		)	5
Ending balance	(37		)	11
Benefit plans
Beginning balance	(108		)	25
Other comprehensive income (loss) before reclassification, net of tax (b)	131			(147		)
Amounts reclassified from AOCI (c)	2			14
Ending balance	25			(108		)
Unrealized hedging gains (loss)
Beginning balance	7			(9		)
Other comprehensive income before reclassification, net of tax (d)	4			34
Amounts reclassified from AOCI (e)	(11		)	(18		)
Ending balance	—			7
AOCI ending balance	$	(12	)	$	(90	)

(a) Amount included in Other expense in Consolidated Statement of Comprehensive Income.

(b) Net tax benefits of $4 million and $11 million are related to benefit plans for the year ended December 31, 2013 and 2012, respectively.

(c) Amount included in the computation of net periodic pension cost. (See Note 10 Employee retirement benefits for additional details.)

(d) Net tax benefit of $3 million and tax expense of $6 million are related to unrealized hedging gains (loss) for the year ended December 31, 2013 and 2012, respectively.

(e) Amount is included in Cost of sales in Consolidated Statement of Comprehensive Income.

Restricted Net Assets

Restricted net assets related to the Company’s non-consolidated affiliates were approximately $228 million and $756 million, respectively, as of December 31, 2013 and 2012. Restricted net assets related to the Company’s consolidated subsidiaries were approximately $405 million and $165 million, respectively as of December 31, 2013 and 2012. Restricted net assets of consolidated subsidiaries are attributable to the Company’s operations in China, where certain regulatory requirements and governmental restraints result in significant restrictions on the Company’s consolidated subsidiaries ability to transfer funds to the Company.