PENSION PLAN OF VISTEON SYSTEMS, L.L.C.

Transcription

PENSION PLAN OF VISTEON SYSTEMS, L.L.C. CONNERSVILLE AND BEDFORD PLANTS
FINANCIAL STATEMENTS
March 31, 2014 and December 31, 2013
CONTENTS
INDEPENDENT AUDITOR’S REPORT
1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits
3
Statements of Changes in Net Assets Available for Plan Benefits
4
Statement of Accumulated Plan Benefits
5
Statement of Changes in Accumulated Plan Benefits
6
NOTES TO FINANCIAL STATEMENTS
7
1200 Buhl Building
535 Griswold Street
Detroit, Michigan 48226-3689
(313) 965-2655 • Fax (313) 965-4614
INDEPENDENT AUDITOR’S REPORT
October 27, 2014
To the Participants and Plan Administrator
Pension Plan of Visteon Systems, L.L.C. - Connersville and Bedford Plants
Report on the Financial Statements
We were engaged to audit the accompanying financial statements of the Pension Plan of Visteon Systems,
L.L.C. - Connersville and Bedford Plants (the “Plan”), which comprise the statements of net assets
available for plan benefits as of March 31, 2014 and December 31, 2013, the related statements of
changes in net assets available for plan benefits for the three-month period ended March 31, 2014 and the
year ended December 31, 2013, the statement of accumulated plan benefits as of January 1, 2014, and the
related statement of changes in accumulated plan benefits for the year then ended, as well as the related
notes to the financial statements.
Management’s Responsibility for the Financial Statements
The Plan’s management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on conducting the audits in
accordance with auditing standards generally accepted in the United States of America. Because of the
matter described in the “Basis for Disclaimer of Opinion” paragraph, however, we were not able to obtain
sufficient appropriate audit evidence to provide a basis for an audit opinion.
Basis for Disclaimer of Opinion
As permitted by 29 CFR 2520.103-8 of the Department of Labor’s (“DOL”) Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), the Plan administrator instructed us not to perform, and we did not perform, any auditing
procedures with respect to the information summarized in Notes F and G, which was certified by The
Northern Trust Company, the trustee of the Plan, except for comparing the information with the related
information included in the financial statements. We have been informed by the Plan administrator that
the trustee holds the Plan’s investment assets and executes investment transactions.
An Independent Member of the BDO Seidman Alliance
Participants and Plan Administrator
Pension Plan of Visteon Systems, L.L.C. - Connersville and Bedford Plants
October 27, 2014
Page Two
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
Basis for Disclaimer of Opinion (continued)
The Plan administrator has obtained certifications from the trustee as of March 31, 2014 and December
31, 2013, and for the three-month period ended March 31, 2014 and the year ended December 31, 2013,
that the information provided to the Plan administrator by the trustee is complete and accurate.
Disclaimer of Opinion
Because of the significance of the matter described in the “Basis for Disclaimer of Opinion” paragraph,
we have not been able to obtain sufficient, appropriate audit evidence to provide a basis for an audit
opinion. Accordingly, we do not express an opinion on these financial statements.
Emphasis of Matter
As described in Note A to the financial statements, the Plan’s sponsor decided to merge the Plan into
another plan sponsored by the Plan sponsor, effective March 31, 2014. All Plan assets were transferred to
the other plan on that date. Our report is not modified with respect to this matter.
Report on Form and Content in Compliance with DOL Rules and Regulations
The form and content of the information included in the financial statements, other than that derived from
the information certified by the trustee, have been audited by us in accordance with auditing standards
generally accepted in the United States of America and, in our opinion, are presented in compliance with
the DOL’s Rules and Regulations for Reporting and Disclosure under ERISA.
CERTIFIED PUBLIC ACCOUNTANTS
Detroit, Michigan
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
2014
Assets:
Investments at fair value (Note F):
Interest in Visteon Corporation Defined Benefit
Master Trust Fund investment accounts (Note G)
$
Total Assets
Liabilities:
Administrative expenses payable
Net Assets Available for
Plan Benefits
$
See notes to financial statements.
-3-
2013
-0-
$ 257,104,319
-0-
257,104,319
-0-
134,686
-0-
$ 256,969,633
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the Three-Month Period Ended March 31, 2014
and the Year Ended December 31, 2013
2014
Additions:
Net investment income allocated from Visteon
Corporation Defined Benefit Master Trust Fund
(net of expenses of $153,220 and $877,681
in 2014 and 2013, respectively)
$
Total Additions
Deductions:
Plan benefits
Administrative expenses
Transfer of net assets to Visteon Pension Plan Past Service (Note A)
Total Deductions
Net Deductions
Net Assets Available for Plan Benefits,
Beginning of Period
Net Assets Available for Plan
Benefits, End of Period
$
-4-
2013
10,223,210
$
22,694,482
10,223,210
22,694,482
5,276,801
224,473
23,269,551
617,475
261,691,569
-0-
267,192,843
23,887,026
(256,969,633)
(1,192,544)
256,969,633
258,162,177
-0-
$ 256,969,633
STATEMENT OF ACCUMULATED PLAN BENEFITS
January 1, 2014
Actuarial Present Value of Accumulated Plan Benefits (Note B):
Vested benefits:
Participants currently receiving payments
Participants with deferred benefits
Total Actuarial Present Value of
Accumulated Plan Benefits
-5-
$ 234,732,217
15,047,424
$ 249,779,641
STATEMENT OF CHANGES IN ACCUMULATED PLAN BENEFITS
For the Year Ended January 1, 2014
Increase (Decrease) in Accumulated Plan Benefits Attributable to:
Increase for interest due to the decrease in the discount period
Benefits paid
Actuarial losses
Change in actuarial assumptions (Note B)
Net Decrease in Accumulated Plan Benefits
Actuarial Present Value of Accumulated Plan Benefits, January 1, 2013
Actuarial Present Value of Accumulated Plan
Benefits, January 1, 2014
-6-
$
10,080,479
(23,269,551)
390,387
(21,501,833)
(34,300,518)
284,080,159
$ 249,779,641
NOTES TO FINANCIAL STATEMENTS
NOTE A - DESCRIPTION OF THE PLAN
General
The following brief description of the Pension Plan of Visteon Systems, L.L.C. - Connersville
and Bedford Plants (the “Plan”) is provided for general information purposes only. Participants
should refer to the Summary Plan Description for more details regarding the Plan.
The Plan has been a defined benefit plan subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). The Plan was established to provide
vested benefits, in the form of a lifetime annuity, to retirees and former hourly employees at the
Bedford, Indiana and Connersville, Indiana facilities of Visteon Systems, L.L.C. (“Visteon
Systems”) who were covered under the respective collective bargaining agreements with the
International Union of Electronic, Electrical, Technical, Salaried, Machine, and Furniture
Workers, AFL-CIO, prior to the closure of those facilities, along with their surviving spouses.
Plan Merger
As of March 31, 2014, the Plan was amended so that the Plan’s participants were transferred to,
and the net assets and accumulated plan benefits of the Plan were merged with, and into, the
Visteon Pension Plan – Past Service (the “Past Service Plan”), a defined benefit plan sponsored
by Visteon Corporation (“Visteon”). On that date, the Plan’s participants became participants in
the Connersville or Bedford components, as applicable, of the Past Service Plan. The amounts of
net assets and accumulated plan benefits transferred were $261,691,569 and $249,779,641,
respectively.
Eligibility
Participation in the Plan began at the earlier of the date of completion of three years of credited
service or age 21 and one year of eligibility or credited service. The Plan has not allowed
employee contributions.
Benefits
The Plan has offered benefits determined by a fixed dollar benefit level, multiplied by credited
service. The Plan has also paid early retirement benefits to eligible retirees based on a fixed
benefit rate and credited service.
Benefits have been payable as a single-life annuity, or in the form of a joint and survivor annuity
for married participants. Benefits could commence earlier than age 65, provided certain
eligibility requirements were satisfied. Early retirement supplemental benefits have generally
been payable to one month beyond age 62, or death if earlier.
-7-
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE A - DESCRIPTION OF THE PLAN (CONTINUED)
Benefits (continued)
A special age 65 benefit (i.e., Medicare Part B premium reimbursement) has also been available
for eligible current and future retirees. Connersville participants who retire on or after January 1,
2007 are no longer eligible for the special age 65 benefit. Current and future retirees have also
been eligible for an additional monthly benefit if they are enrolled in Medicare Part D.
Bedford employees hired on or after June 14, 2004 participated in a cash balance design under
the Plan. The Plan credited each participant’s account annually with a $1,000 contribution credit
and an interest credit using the 30-year U.S. Treasury Bond rate. Contribution credits have been
prorated based on hours worked. A lump-sum option has been available.
Effective January 1, 2008, a 75 percent joint and survivor annuity was introduced as a payment
option. This option has been a modified pension payable monthly during the participant’s life
and, after his or her death, 75 percent of the monthly amount payable to the participant is payable
monthly to the designated beneficiary.
During September 2012, Visteon announced the Visteon Pension Accelerated Payment Program,
which is a voluntary program offered to certain vested participants who terminated on or prior to
July 31, 2012 and who are not receiving benefits as of December 1, 2012. This program offers
the opportunity for each participant to elect a single lump-sum payout to be paid in December
2012, commencement of a monthly benefit beginning as early as January 2013, or
commencement of his or her retirement benefit at the participant’s early or normal retirement
date, upon request.
The Plan was amended in 2013 to introduce the 2013 Visteon Pension Accelerated Payment
Program for certain vested participants who did not commence benefits as of October 11, 2013
and whose benefits could not be readily calculated under the 2012 program. This program
offered the opportunity for each participant to elect a single lump-sum payout to be paid in
December 2013, commencement of a monthly benefit beginning as early as January 2014, or
commencement of his or her retirement benefit at the participant’s early or normal retirement
date, upon request.
Effective January 1, 2013, the Plan adopted a lump-sum payment option available for
participants who terminated service as active participants under the Past Service Plan after July
31, 2012 and commence benefits after December 31, 2012 without respect to retirement
eligibility. Immediate annuity options are also provided as required to accompany a lump-sum
option.
-8-
NOTE A - DESCRIPTION OF THE PLAN (CONTINUED)
Vesting
Participants have become fully vested at normal retirement age (65) or after attaining five (or, in
the case of participants in the cash balance design employed on or after January 1, 2008, three)
years of service with Visteon Systems.
Contributions
Visteon Systems has historically made contributions to the Plan, as determined by its actuaries,
to provide the Plan with sufficient assets to pay benefits to participants. Contributions to the
Plan must satisfy minimum funding requirements under the Internal Revenue Code of 1986, as
amended (the “Code”), ERISA, and the Pension Protection Act of 2006.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan have been prepared on the accrual basis of accounting.
Master Trust Fund Participation
The Plan has participated in the Visteon Corporation Defined Benefit Master Trust Fund (the
“Master Trust”). See Note G for details of the Plan’s participation in the Master Trust, as well as
the valuation of the investments in the Master Trust.
Investments
The Master Trust’s investments are stated at fair value. Fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date (an exit price).
Purchases and sales of Plan and Master Trust investment account securities are reflected on a
trade-date basis. Gains and losses on sales of securities are based on average costs. Dividend
income of the investment accounts is recorded on the ex-dividend date. Income from other
investments of the Master Trust investment accounts is recorded as earned on an accrual basis.
Net appreciation includes the Master Trust’s gains and losses on investments bought and sold, as
well as held, during the year.
-9-
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value Measurements
The Plan uses fair value measurements in the preparation of its financial statements, which
utilize various inputs, including those that can be readily observable, corroborated, or are
generally unobservable. The Plan utilizes market-based data and valuation techniques that
maximize the use of observable inputs and minimize the use of unobservable inputs.
Additionally, the Plan applies assumptions that market participants would use in pricing an asset
or liability, including assumptions about risk.
The measurement of fair value includes a hierarchy based on the quality of inputs used to
measure fair value. Financial assets and liabilities are categorized into this three-level fair value
hierarchy, based on the inputs to the valuation technique. The fair value hierarchy gives the
highest priority to quoted prices in active markets for identical assets and liabilities and the
lowest priority to unobservable inputs.
The various levels of the fair value hierarchy are described as follows:

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 Plan 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
The use of observable market data, when available, is required in making fair value
measurements. When inputs used to measure fair value fall within different levels of the
hierarchy, the level within which the fair value measurement is categorized is based on the
lowest level input that is significant to the fair value measurement.
Actuarial Present Value of Accumulated Plan Benefits
Accumulated plan benefits are those future periodic payments, based on scheduled benefit
improvements and including lump-sum distributions, that are attributable under the Plan’s
provisions to the service employees have rendered to the valuation date.
-10-
Actuarial Present Value of Accumulated Plan Benefits (continued)
These include benefits expected to be paid to: (a) retired or terminated employees or their
beneficiaries, (b) beneficiaries of employees who have died, and (c) present employees or their
beneficiaries.
The actuarial present value of accumulated plan benefits is determined by the independent
actuary, Towers Watson, and is the amount that results from applying actuarial assumptions to
reflect the time value of money and the probability of payment of benefits. The probability of
benefits becoming payable, and when, is based on assumptions related to death, disability,
withdrawal, or retirement occurring after the valuation date. The significant actuarial
assumptions used in the valuation as of January 1, 2014 are: (a) the RP2000 generational
mortality tables, (b) rates of retirement, disability, and withdrawal based on age and years of
service, and (c) discount rates of 4.55 percent and 3.70 percent for the years ended January 1,
2014 and 2013, respectively, for the purpose of calculating the present value of accumulated plan
benefits.
The foregoing actuarial assumptions are based on the Past Service Plan continuing indefinitely.
Were the Past Service Plan to terminate, different actuarial assumptions and other factors might
be applicable in determining the actuarial present value of accumulated plan benefits.
The actuarial present value of accumulated plan benefits is reported based on certain
assumptions pertaining to interest rates, inflation rates, and demographics. Due to the nature of
these assumptions and the uncertainties inherent in setting them, it is at least reasonably possible
that changes in the near term to these assumptions would be material to the financial statements.
Contributions
Employer contributions have been accrued by the Plan based upon amounts determined under
corporate pension funding policies (see Note C).
Payment of Benefits
Plan benefits have been recorded when paid.
Administrative Expenses
Expenses of administering the Plan have been paid by the Plan, with the exception of fees for
actuarial studies not covered in the annual plan valuation.
-11-
Administrative Expenses (continued)
Certain fees paid for legal, accounting, actuarial, investment management, and other professional
services were rendered by parties-in-interest. Pension Benefit Guaranty Corporation (“PBGC”)
insurance premiums and disability retirement medical examination fees have also been paid by
the Plan.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, and accumulated plan benefits,
as well as disclosure of contingent assets and liabilities, at the date of the financial statements,
and the reported amounts of changes in net assets and accumulated plan benefits during the
reporting period. Actual results could differ from those estimates.
Risks and Uncertainties
The Master Trust invests in various securities, including government securities and bonds,
corporate debt instruments, other fixed income securities, stocks, liability-driven investments,
alternative investments, and derivative instruments. Investment securities in general are exposed
to various risks, such as interest rate, credit, and overall market volatility. Due to the level of
risk associated with certain investment securities, changes in the value of investment securities
will occur in the near term, and such changes could materially affect the amounts reported in the
financial statements.
Subsequent Events
On July 15, 2014, Visteon entered into an agreement with Prudential Insurance Company of
America (“Prudential”) and amended the Past Service Plan to purchase irrevocable annuity
contracts for certain hourly retirees who participate in the North Penn, Connersville, and Bedford
components of the merged Past Service Plan. An independent fiduciary was used in the selection
of the annuity carrier. Those included in the transaction were participants or beneficiaries who
commenced benefits on or before December 31, 2013. Participants in the North Penn,
Connersville, and Bedford components of the merged Past Service Plan not included in the
transaction were disabled participants whose future benefits elections may change at age 55, as
well as any participant who commenced benefits on or after January 1, 2014. At the time of the
purchase agreement, approximately 3,900 participants and beneficiaries, and approximately $350
million in pension obligations, were included.
-12-
Subsequent Events (continued)
The annuity contracts provide for continued payment to the participants (and beneficiaries, when
applicable) in the same form that was in effect under the Past Service Plan immediately prior to
the purchase. On October 1, 2014, payments were successfully transitioned to Prudential. The
individuals included in this annuity purchase will no longer be participants (or beneficiaries) of
the Past Service Plan, and the Past Service Plan will have no further obligation for any benefits
to a participant or beneficiary who received an annuity certificate.
The Plan’s management has evaluated subsequent events through October 27, 2014, the date that
the accompanying financial statements were available to be issued.
NOTE C - FUNDING POLICIES
Pension costs have been accrued by Visteon Systems and have been funded as required, subject
to full-funding limitations. Prior service costs have been amortized and funded over periods of
not more than 30 years from the date such costs were established. Visteon System’s funding for
2014 and 2013 meets the minimum funding requirements of the Code, ERISA, and the Pension
Protection Act of 2006.
Cost rates have been determined by the independent actuary and have been based on acceptable
actuarial methods and actuarial assumptions (see Note B). Actuarial gains or losses, including
those from investments, have been amortized over the participants’ future lifetimes.
NOTE D - INCOME TAX STATUS
The Plan obtained its latest determination letter on July 2, 2010, in which the Internal Revenue
Service (“IRS”) stated that the Plan, as then designed, was in compliance with the applicable
requirements of the Code. The Plan administrator and the Plan’s tax counsel believe that the
Plan is currently designed and being operated in compliance with the applicable requirements of
the Code. In addition, the Plan administrator is not aware of any unrecognized tax benefits as of
March 31, 2014 or December 31, 2013. Therefore, no provision for income taxes has been
included in the Plan’s financial statements. The Plan is no longer subject to federal income tax
examinations by the IRS for years prior to 2010.
NOTE E - PLAN TERMINATION
Although it has expressed no intention to do so, Visteon has the right under the Past Service Plan
to discontinue contributions and to terminate the Past Service Plan, subject to the requirements of
ERISA.
-13-
NOTE E - PLAN TERMINATION (CONTINUED)
In the event the Past Service Plan is terminated, the net assets available to provide retirement
benefits will be allocated by benefit category in the following order of precedence:
1. Life income benefits being paid to former employees (or their beneficiaries) as of three years
prior to the termination date and life income benefits that would have been payable to
employees (or their beneficiaries) who were eligible to retire as of three years prior to the
termination date. This category is limited to the lowest benefit that would have been payable
during the five years prior to the termination date.
2. Other benefits which are nonforfeitable and are insured by the PBGC, determined without
regard to the dollar limitation. This category includes a five-year phase-in of benefit
increases which would have been excluded under the prior category.
3. All other nonforfeitable (vested) benefits, including benefit increases, which would have
been excluded from the prior categories
4. All other benefits payable under the Past Service Plan
After satisfaction of all plan liabilities, any residual assets may be distributed to Visteon.
Generally, the PBGC guarantees normal retirement benefits, early retirement benefits (up to the
amount accrued for normal retirement), and certain disability and survivor’s benefits. However,
the PBGC does not guarantee all types and forms of benefits under the Past Service Plan, and the
amount of benefit protection is subject to phase-in and dollar limitations. If benefits have been
increased within five years prior to plan termination, the benefit increases may not be
guaranteed.
NOTE F - PLAN INVESTMENTS AND FAIR VALUE (Unaudited)
The following is a summary of unaudited information regarding the Plan, included in the Plan’s
financial statements, that was prepared by the trustee, The Northern Trust Company. The Plan
administrator has obtained certifications from the trustee that such information is complete and
accurate. Master Trust information included in Note G was also prepared by the trustee and is
also unaudited.
-14-
NOTE F - PLAN INVESTMENTS AND FAIR VALUE (Unaudited) (CONTINUED)
Assets certified by the trustee as of March 31, 2014 and December 31, 2013 are as follows:
2014
Certified Assets:
Investments representing five percent or more of
the Plan's net assets available for plan benefits:
Interest in Master Trust investment accounts
$
2013
-0-
$ 257,104,319
Investment income for the three-month period ended March 31, 2014 and the year ended
December 31, 2013 is as follows:
2014
Net investment income allocated from
Master Trust investment accounts
$
10,223,210
2013
$
22,694,482
NOTE G - MASTER TRUST INVESTMENTS AND FAIR VALUE (Unaudited)
The Master Trust combines, for investment purposes, assets of the Visteon Pension Plan - Past
Service and the Pension Plan of Visteon Systems, L.L.C. - Connersville and Bedford Plants
(collectively, the “Plans”). The assets of the Master Trust are held in separate investment
accounts.
The Plans hold units of the investment accounts, and each unit represents an equal, undivided
interest in the assets of that investment account. Investment income and administrative expenses
relating to the Master Trust are allocated to the individual Plans based upon each Plan’s units as
a percentage of the total units of the Master Trust as of the valuation date. The percentage of
assets held by each of the Plans also may change by the purchase or sale of assets at each
monthly valuation date.
Estimated fair value amounts have been determined using available market information and
various valuation methods, depending on the type of instrument. In evaluating the fair value
information, considerable judgment is required to interpret the market data used to develop the
estimates. The use of different market assumptions and/or different valuation techniques may
have a material effect on the estimated fair value amounts. Accordingly, the estimates of fair
value presented herein may not be indicative of the amounts that could be realized in a current
market exchange.
-15-
(CONTINUED)
The units of the investment accounts are valued at the end of each month based on the fair value
of the underlying assets as determined by the trustee at those dates.
Investments of the investment accounts traded on securities exchanges and on over-the-counter
markets are valued at quoted market prices existing on the regular monthly valuation dates. All
other investments not having an established market price are valued at their estimated fair value
as determined by the trustee. Interests in common and commingled trust funds are valued at unit
values based on the fair value of the underlying investments. Substantially all of the investments
of common and commingled trust funds are valued at quoted market prices.
The Master Trust’s fair value hierarchy for those assets measured at fair value on a recurring
basis as of March 31, 2014 and December 31, 2013 is summarized as follows:
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Significant
Observable Unobservable
Inputs
Inputs
(Level 2)
(Level 3)
(in thousands)
Total
2014
Assets:
Investments at fair value:
Common trust funds (pooled):
Indexed equity
International equity
$
Registered investment companies:
Global asset allocation funds
International equity funds
$
-0-0-
$
225,517
52,794
$
-0-0-
$
225,517
52,794
-0-
278,311
-0-
278,311
173,128
52,023
-0-0-
-0-0-
173,128
52,023
225,151
-16-
$
-0-
$
-0-
$
225,151
(CONTINUED)
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Significant
Inputs
Inputs
(Level 2)
(Level 3)
(in thousands)
Total
2014 (continued)
Assets (continued):
Investments at fair value (continued):
Other investments:
Liability-driven investments:
Treasury futures
Cash and cash equivalents
Global asset allocation
Hedge fund of funds
Limited partnership
Common and preferred stocks
$
Total Investments
-02,062
-0-0-0450
147,400
-0-0-0-0-0-
$
-0-070,985
227,759
26,314
-0-
$
147,400
2,062
70,985
227,759
26,314
450
2,512
147,400
325,058
474,970
227,663
425,711
325,058
978,432
99
-0-
-0-
99
Receivables and unsettled trades
Net Assets
$
$
227,762
$
425,711
$
325,058
$
978,531
$
-0-0-
$
221,190
51,506
$
-0-0-
$
221,190
51,506
2013
Assets:
Indexed equity
Registered investment companies:
Global asset allocation funds
International equity funds
$
-0-
272,696
-0-
272,696
179,277
52,956
-0-0-
-0-0-
179,277
52,956
232,233
-17-
$
-0-
$
-0-
$
232,233
(CONTINUED)
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Significant
Inputs
Inputs
(Level 2)
(Level 3)
(in thousands)
Total
2013 (continued)
Assets (continued):
Investments at fair value (continued):
Other investments:
Liability-driven investments:
Treasury futures
Hedge fund of funds
Limited partnership
$
Total Investments
-09,564
-0-0-0355
$
118,158
-0-0-0-0-0-
$
-0-069,488
221,533
26,210
-0-
$
118,158
9,564
69,488
221,533
26,210
355
9,919
118,158
317,231
445,308
242,152
390,854
317,231
950,237
35
-0-
-0-
35
Receivables and unsettled trades
Net Assets
$
242,187
$
390,854
$
317,231
$
950,272
The Plan’s interest in the Master Trust as of March 31, 2014 and December 31, 2013 is as
follows:
2014
Plan's Approximate Percentage Interest
in Investment Accounts
-18-
-0-
2013
27.06%
(CONTINUED)
Net investment income in the Master Trust for the three-month period ended March 31, 2014 and
the year ended December 31, 2013 is as follows:
2014
2013
(in thousands)
Dividend income
Interest income
Other investment income
Net change in accrued income
$
Total Investment Income
Less: Investment fees and expenses
Net Investment Income
$
252
606
-093
$
5,589
4,062
1
(285)
951
9,367
(667)
(3,263)
284
$
6,104
Net appreciation of Master Trust assets by type of investment during the three-month period
ended March 31, 2014 and the year ended December 31, 2013 is as follows:
2014
2013
(in thousands)
Common trust funds (pooled)
Registered investment companies
Liability-driven investments
Hedge fund of funds
Limited partnership
$
Net Appreciation in Fair
Value of Investments
-19-
5,718
2,232
29,306
(1)
1,340
6,226
250
187
$ 45,258
$ 99,144
16,654
(62,380)
1
7,224
14,871
573
2,168
$ 78,255
(CONTINUED)
Additional information about the nature and risk of the Master Trust’s investments in Level 2
and Level 3 assets that calculate net asset value per share is as follows:
Fair
Value
(in thousands)
Indexed equity
Hedge fund of funds
Limited partnership
$
225,517
52,794
70,985
227,759
26,314
$
603,369
Redemption
Frequency (If
Currently
Eligible)
Redemption
Notice
Period
Daily
Monthly
Monthly
Quarterly
Quarterly
2 days
2 days
3-30 days
70-95 days
70-95 days
The above categories include investments in pooled common trust funds, a global asset
allocation fund, a limited partnership, and a hedge fund of funds that all invest primarily in
equities. The fair value of the investments in each of these categories has been estimated using
the net asset value per share of the investments.
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.
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 partnerships and hedge funds of funds 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.
-20-
(CONTINUED)
The fair value reconciliation of the Master Trust’s Level 3 assets, measured at fair value on a
recurring basis, for the three-month period ended March 31, 2014 and the year ended December
31, 2013 is as follows:
Global
Asset
Allocation
Hedge
Fund of
Limited
Funds
Partnership
(in thousands)
Total
2014
Changes in Level 3 Assets:
Net realized and unrealized gains
Purchases
Change in accrued income
Less: Sales
$
Net Increase in
Level 3 Assets
Balance, January 1, 2014
1,340
94
63
-0-
$
6,226
23,000
-0(23,000)
$
250
(146)
-0-0-
$
7,816
22,948
63
(23,000)
1,497
6,226
104
7,827
69,488
221,533
26,210
317,231
$ 227,759
$
26,314
$ 325,058
250
Balance, March 31, 2014
$
70,985
Net gains for the period included in changes
in net assets attributable to the change in
unrealized gains or losses relating to assets
still held as of March 31, 2014
$
1,340
$
6,226
$
$
7,224
-0717
(67)
(78,336)
$
14,871
93,000
-0-0-0-
$
$
7,816
$
22,668
95,045
717
(67)
(80,189)
2013
Changes in Level 3 Assets:
Net realized and unrealized gains
Purchases
Issuances
Change in accrued income
Less: Sales
Net Increase (Decrease)
in Level 3 Assets
Balance, January 1, 2013
Balance, December
31, 2013
Net gains (losses) for the year included in
changes in net assets attributable to the
change in unrealized gains or losses relating
to assets still held as of December 31, 2013
$
573
2,045
-0-0(1,853)
(70,462)
107,871
765
38,174
139,950
113,662
25,445
279,057
69,488
$ 221,533
$
26,210
$ 317,231
$
$
573
$ (16,629)
-21-
14,871
$
(1,185)
(CONTINUED)
The Master Trust is party to certain agreements that are designed to manage exposure to
currency, equity, and interest rate risks in accordance with the investment policy statement for
the Visteon U.S. Pension Fund. The fair value of these instruments is based on the net present
value of future payments or as is reflected on the exchange on which the instrument is traded.
The notional amount represents the dollar value of the underlying security that determines the
derivative instrument’s periodic payments. The total notional amount does not reflect the
amount at risk.
Foreign currency derivatives were used for the purpose of hedging changes in the fair value of
assets that result from currency fluctuations. Interest rate futures, options, and swaps were used
to manage interest rate exposure.
NOTE H - PARTY-IN-INTEREST TRANSACTIONS
Certain Master Trust investments are units of common trust money market funds managed by the
Plan’s trustee. Furthermore, certain administrative expenses are paid to the Plan’s trustee and
other parties-in-interest. Therefore, these transactions qualify as party-in-interest transactions.
-22-

PENSION PLAN OF VISTEON SYSTEMS, L.L.C.

Transcription

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