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

Transcription

PENSION PLAN OF VISTEON SYSTEMS, L.L.C. CONNERSVILLE AND BEDFORD PLANTS
FINANCIAL STATEMENTS
December 31, 2012 and 2011
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 4, 2013
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 December 31, 2012 and 2011, the related statements
of changes in net assets available for plan benefits for the years then ended, the statement of
accumulated plan benefits as of January 1, 2012, 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.
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 4, 2013
Page Two
INDEPENDENT AUDITOR’S REPORT (CONTINUED)
Basis for Disclaimer of Opinion (continued)
We have been informed by the Plan administrator that the trustee holds the Plan’s investment
assets and executes investment transactions. The Plan administrator has obtained certifications
from the trustee as of, and for the years ended, December 31, 2012 and 2011 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.
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
Assets:
Investments at fair value (Note F):
Interest in Visteon Corporation Defined Benefit
Master Trust Fund investment accounts (Note G)
Employer contributions receivable
Total Assets
Liabilities:
Administrative expenses payable
Net Assets Available for
Plan Benefits
See notes to financial statements.
-3-
2012
2011
$ 258,418,604
-0-
$ 294,364,259
13,062,400
258,418,604
307,426,659
256,427
51,988
$ 258,162,177
$ 307,374,671
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
For the Years Ended December 31, 2012 and 2011
2012
Additions:
Net investment income allocated from Visteon
Corporation Defined Benefit Master Trust Fund
(net of expenses of $1,150,239 and $1,070,620
in 2012 and 2011, respectively)
Employer contributions
Total Additions
Deductions:
Plan benefits
Administrative expenses
Total Deductions
Net Additions (Deductions)
Net Assets Available for Plan Benefits,
Beginning of Year
Net Assets Available for Plan
Benefits, End of Year
-4-
$
29,937,432
-0-
2011
$
42,971,280
31,141,354
29,937,432
74,112,634
78,204,962
944,964
23,201,149
861,117
79,149,926
24,062,266
(49,212,494)
50,050,368
307,374,671
257,324,303
$ 258,162,177
$ 307,374,671
STATEMENT OF ACCUMULATED PLAN BENEFITS
January 1, 2012
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-
$ 248,684,847
81,500,569
$ 330,185,416
STATEMENT OF CHANGES IN ACCUMULATED PLAN BENEFITS
For the Year Ended January 1, 2012
Increase (Decrease) in Accumulated Plan Benefits Attributable to:
Benefits accumulated
Increase for interest due to the decrease in the discount period
Benefits paid
Change in actuarial assumptions (Note B)
Net Increase in Accumulated Plan Benefits
Actuarial Present Value of Accumulated Plan Benefits, January 1, 2011
Actuarial Present Value of Accumulated Plan
Benefits, January 1, 2012
-6-
$
(1,526,055)
16,342,007
(23,201,149)
24,492,802
16,107,605
314,077,811
$ 330,185,416
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 is 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”)
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.
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 does not allow
employee contributions.
Benefits
The Plan offers benefits determined by a fixed dollar benefit level, multiplied by credited
service. The Plan also pays early retirement benefits to eligible retirees based on a fixed benefit
rate and credited service.
Benefits are payable as a single-life annuity, or in the form of a joint and survivor annuity for
married participants. Benefits may commence earlier than age 65, provided certain eligibility
requirements are satisfied. Early retirement supplemental benefits are generally payable to one
month beyond age 62, or death if earlier. A special age 65 benefit (i.e., Medicare Part B
premium reimbursement) is also 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 are also 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 are
prorated based on hours worked. A lump-sum option is available.
-7-
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE A - DESCRIPTION OF THE PLAN (CONTINUED)
Benefits (continued)
Effective January 1, 2008, a 75 percent joint and survivor annuity was introduced as a payment
option. This option is 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.
Effective January 1, 2013, the Plan adopted a lump-sum payment option available for
participants who terminated service as active participants under the Visteon Pension Plan - Past
Service 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.
Vesting
Participants 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.
Contributions
Visteon 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.
-8-
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Master Trust Fund Participation
The Plan participates 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
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.
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.
-9-
Fair Value Measurements (continued)

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. 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, 2012 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 4.75 percent and 5.40 percent for the years ended January 1,
2012 and 2011, respectively, for the purpose of calculating the present value of accumulated plan
benefits.
The foregoing actuarial assumptions are based on the Plan continuing indefinitely. Were the
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.
-10-
Contributions
Employer contributions are accrued by the Plan based upon amounts determined under corporate
pension funding policies (see Note C).
Payment of Benefits
Plan benefits are recorded when paid.
Administrative Expenses
Expenses of administering the Plan are paid by the Plan, with the exception of fees for actuarial
studies not covered in the annual plan valuation. Certain fees paid for legal, accounting,
actuarial, investment management, and other professional services were rendered by parties-ininterest. Pension Benefit Guaranty Corporation (“PBGC”) insurance premiums and disability
retirement medical examination fees are also 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.
-11-
Subsequent Events
The Plan’s management has evaluated subsequent events through October 4, 2013, the date that
the accompanying financial statements were available to be issued.
NOTE C - FUNDING POLICIES
Pension costs are accrued by Visteon and are funded as required, subject to full-funding
limitations. Prior service costs are amortized and funded over periods of not more than 30 years
from the date such costs were established. Visteon’s funding for 2012 and 2011 meets the
minimum funding requirements of the Code, ERISA, and the Pension Protection Act of 2006.
Cost rates are determined by the independent actuary and are based on acceptable actuarial
methods and actuarial assumptions (see Note B). Actuarial gains or losses, including those from
investments, are 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
December 31, 2012 or 2011. 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 2009.
NOTE E - PLAN TERMINATION
Although it has expressed no intention to do so, Visteon has the right under the Plan to
discontinue contributions and to terminate the Plan, subject to the requirements of ERISA. In the
event the 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.
-12-
NOTE E - PLAN TERMINATION (CONTINUED)
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 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 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.
Assets certified by the trustee as of December 31, 2012 and 2011 are as follows:
Certified Assets:
Investments representing five percent or more of
the Plan's net assets available for plan benefits:
Interest in Master Trust investment accounts
-13-
2012
2011
$ 258,418,604
$ 294,364,259
NOTE F - PLAN INVESTMENTS AND FAIR VALUE (Unaudited) (CONTINUED)
Investment income for the years ended December 31, 2012 and 2011 is as follows:
2012
Net investment income allocated from
Master Trust investment accounts
$
29,937,432
2011
$
42,971,280
NOTE G - MASTER TRUST INVESTMENTS AND FAIR VALUE (Unaudited)
The Master Trust combines, for investment purposes, assets of the Visteon Pension Plan - Past
Service, the UAW Visteon Pension Account Plan, 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.
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.
-14-
(CONTINUED)
The Master Trust’s fair value hierarchy for those assets and liabilities measured at fair value on a
recurring basis as of December 31, 2012 and 2011 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
2012
Assets:
Investments at fair value:
Common trust funds (pooled):
Indexed equity
International equity
$
Registered investment companies:
Global asset allocation funds
International equity funds
Other investments:
Liability-driven investments:
Treasury futures
Cash and cash equivalents
Global asset allocation
Hedge fund of funds
Common and preferred stocks
Total Investments
-0-0-
$
290,765
63,259
$
-0-0-
$
290,765
63,259
-0-
354,024
-0-
354,024
94,329
66,821
-0-0-
-0-0-
94,329
66,821
161,150
-0-
-0-
161,150
-014,032
-0-0347
147,435
-0-0-0-0-
-0-0140,086
139,107
-0-
147,435
14,032
140,086
139,107
347
14,379
147,435
279,193
441,007
175,529
501,459
279,193
956,181
177
-0-
-0-
177
Liabilities:
Payables and unsettled trades
Net Assets
$
175,352
-15-
$
501,459
$
279,193
$
956,004
(CONTINUED)
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Significant
Inputs
Inputs
(Level 2)
(Level 3)
(in thousands)
Total
2011
Assets:
Common and preferred stocks:
Information technology
Consumer discretionary
Financial
Industrial
Health care
Materials
Energy
Utilities
Consumer staples
Telecommunications
Other
$
40,803
19,389
19,199
18,744
16,173
15,060
7,590
5,734
3,568
2,763
366
$
-0-0-0-0-0-0-0-0-0-0-0-
$
-0-0-0-0-0-0-0-0-0-0-0-
$
40,803
19,389
19,199
18,744
16,173
15,060
7,590
5,734
3,568
2,763
366
149,389
-0-
-0-
149,389
-0-0-
166,554
49,499
-0-0-
166,554
49,499
-0-
216,053
-0-
216,053
67,645
55,050
53,183
-0-0-0-
-0-0-0-
67,645
55,050
53,183
Indexed equity
Registered investment companies:
Fixed income total return funds
Equity and fixed income global funds
International equity funds
$
175,878
-16-
$
-0-
$
-0-
$
175,878
(CONTINUED)
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Significant
Inputs
Inputs
(Level 2)
(Level 3)
(in thousands)
Total
2011 (continued)
Assets (continued):
Investments at fair value (continued):
Other investments:
Liability-driven investments:
Swaps
Hedge fund of funds
$
Total Investments
-080,134
-0-0-
$
255,933
-0-0-0-
$
-0-0142,190
128,185
$
255,933
80,134
142,190
128,185
80,134
255,933
270,375
606,442
405,401
471,986
270,375
1,147,762
6,112
-0-
-0-
6,112
270,375
$ 1,141,650
Liabilities:
Payables and unsettled trades
Net Assets
$
399,289
$
471,986
$
The Plan’s interest in the Master Trust as of December 31, 2012 and 2011 is as follows:
Plan's Approximate Percentage Interest
in Investment Accounts
-17-
2012
2011
27.03%
25.78%
(CONTINUED)
Net investment income in the Master Trust for the years ended December 31, 2012 and 2011 is
as follows:
2012
2011
(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
$
5,864
5,998
216
(2,284)
$
4,866
609
245
2,075
9,794
7,795
(4,511)
(4,264)
5,283
$
3,531
Net appreciation of Master Trust assets by type of investment during the years ended December
31, 2012 and 2011 is as follows:
2012
2011
(in thousands)
Common and preferred stocks
Common trust funds (pooled)
Hedge fund of funds
Registered investment companies
Liability-driven investments
Derivative instruments and other investments
Net Appreciation in Fair
Value of Investments
$
52,030
(15,092)
4
18,002
8,191
37,914
10,427
3
$ 111,479
-18-
$
(1,926)
1,477
(2)
(7,501)
(882)
(6,663)
183,354
7
$ 167,864
(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
$
290,765
63,259
140,086
139,107
$
633,217
Redemption
Frequency (If
Currently
Eligible)
Redemption
Notice
Period
Daily
Monthly
Monthly
Quarterly
2 days
2-6 days
3-30 days
70-95 days
The above categories include investments in pooled common trust funds, a global asset
allocation fund, 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 partnership 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.
-19-
(CONTINUED)
The fair value reconciliation of the Master Trust’s Level 3 assets, measured at fair value on a
recurring basis, for the years ended December 31, 2012 and 2011 is as follows:
Global
Asset
Allocation
Hedge
Fund of
Funds
(in thousands)
Total
2012
Changes in Level 3 Assets:
Net realized and unrealized gains
Purchases
Issuances
Less: Sales
$
Net Increase (Decrease) in
Level 3 Assets
18,002
-01,222
(21,328)
$
(2,104)
Net gains 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, 2012
$
26,193
3,759
1,222
(22,356)
10,922
8,818
142,190
128,185
270,375
$ 140,086
$ 139,107
$ 279,193
$
11,400
$
8,191
$
19,591
$
(7,501)
-01,309
(1,422)
$
(882)
11,200
-0(1,867)
$
(8,383)
11,200
1,309
(3,289)
Balance, January 1, 2012
Balance, December 31, 2012
8,191
3,759
-0(1,028)
2011
Changes in Level 3 Assets:
Net realized and unrealized losses
Purchases
Issuances
Less: Sales
Net Increase (Decrease) in
Level 3 Assets
(7,614)
8,451
837
149,804
119,734
269,538
$ 142,190
$ 128,185
$ 270,375
$
$
$
Balance, January 1, 2011
Balance, December 31, 2011
Net 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, 2011
-20-
(7,734)
(882)
(8,616)
(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.
-21-

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

Transcription

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