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What changed in VISTEON CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of VISTEON CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+189 added−195 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-16)

Top changes in VISTEON CORP's 2023 10-K

189 paragraphs added · 195 removed · 152 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeHowever, starting in 2020, the standard cyclicality of the business was altered due to the global COVID-19 pandemic and associated supply chain challenges creating rolling shutdowns amongst multiple customer production facilities. Environmental, Social, and Governance Attract and Retain The Company’s ability to sustain and grow its business requires the recruitment, retention, and development of a highly skilled and diverse workforce.
Biggest changeCorporate Sustainability and Social Responsibility Attract and Retain The Company’s ability to sustain and grow its business requires the recruitment, retention, and development of a highly skilled and diverse workforce. The Company’s Chief People Officer, reporting directly to Chief Executive Officer ("CEO"), oversees its global talent processes to attract, develop, and retain its employees.
The Company constantly works to establish and maintain positive, cooperative relations with its unions and work representatives around the world. Diversity and Inclusion 6 Diversity represents an environment where the contributions of all employees are encouraged and valued.
The Company constantly works to establish and maintain positive, cooperative relations with its unions and work representatives around the world. 6 Diversity and Inclusion Diversity represents an environment where the contributions of all employees are encouraged and valued.
The SmartCore domain controller seamlessly connects the human machine interaction ("HMI") across an increasing number of display domains, such as surround view and in-cabin sensing of driver drowsiness, attentiveness, and facial recognition. The latest generation of SmartCore utilizes high performance computing technology and integrates processing of multiple camera inputs to deliver a set of advance driver assistance features.
The SmartCore domain controller seamlessly connects the human machine interaction ("HMI") across an increasing number of display domains, such as surround view and in-cabin sensing of driver drowsiness, attentiveness, and facial recognition. The latest generation of SmartCore utilizes high performance computing technology and integrates processing of multiple camera 4 inputs to deliver a set of advance driver assistance features.
The Company's primary independent competitors include, but are not limited to, Alpine Electronics, Aptiv PLC, Continental AG, Denso Corporation, Forvia, Harman International Industries, Incorporated (a subsidiary of Samsung Electronics Co. Ltd.), Hitachi Ltd., Hyundai Mobis, Innolux Corporation, Marelli Holdings Co., Ltd., Nippon Seiki, Panasonic Corporation, Preh GmbH, Robert Bosch GmbH, and Vitesco Technologies.
The Company's primary independent competitors include, but are not limited to, Alpine Electronics, Aptiv PLC, Continental AG, Denso Corporation, Forvia, Harman International Industries, Incorporated (a subsidiary of Samsung Electronics Co. Ltd.), Hitachi Ltd., Hyundai Mobis, Innolux Corporation, LG Electronics, Marelli Holdings Co., Ltd., Nippon Seiki, Panasonic Corporation, Preh GmbH, Robert Bosch GmbH, and Vitesco Technologies.
Suppliers that can provide fully engineered systems and pre-assembled combinations of component parts are positioned to leverage the trend toward system sourcing.
Suppliers that can provide fully 3 engineered systems and pre-assembled combinations of component parts are positioned to leverage the trend toward system sourcing.
As a global organization, the Company embraces human differences and harnesses the power of its employees’ varied backgrounds, cultures, and experiences because it is the right thing to do for its people and it creates a competitive business advantage. As of December 31, 2022, the percentage of Visteon's global workforce represented by females was approximately 39%.
As a global organization, the Company embraces human differences and harnesses the power of its employees’ varied backgrounds, cultures, and experiences because it is the right thing to do for its people and it creates a competitive business advantage. As of December 31, 2023, the percentage of Visteon's global workforce represented by females was approximately 39%.
The company offers a display audio and embedded infotainment platform that is based on Android automotive operating system, enabling third-party developers to create apps easily through a software development kit and software simulation of the target hardware system. Additionally, Visteon offers an onboard artificial intelligence ("AI")-based voice assistant with natural language understanding.
The company offers a display audio and embedded infotainment platform that is based on Android automotive operating system, enabling third-party developers to create apps easily through a software development kit and software simulation of the target hardware system. Additionally, Visteon offers an onboard artificial intelligence (“AI ”)-based voice assistant with natural language understanding.
Visteon is headquartered in Van Buren Township, Michigan, and has an international network of manufacturing operations, technical centers, and joint venture operations dedicated to the design, development, manufacture, and support of its product offerings and its global customers. The Company's manufacturing and engineering footprint is primarily located in Brazil, China, India, Japan, Mexico, Portugal, and Slovakia.
Visteon is headquartered in Van Buren Township, Michigan, and has an international network of manufacturing operations, technical centers, and joint venture operations dedicated to the design, development, manufacture, and support of its product offerings and its global customers. The Company's manufacturing and engineering footprint is primarily located in Brazil, Bulgaria, China, India, Japan, Mexico, Portugal, Slovakia, Thailand, and Tunisia.
Audio and Infotainment Systems The Company offers a range of infotainment and connected car solutions, including scalable Android infotainment for seamless connectivity including integration with Android Auto and Apple CarPlay technology for wireless smartphone projection.
Infotainment The Company offers a range of infotainment and connected car solutions, including scalable Android infotainment for seamless connectivity including integration with Android Auto and Apple CarPlay technology for wireless smartphone projection.
The Company may also be required to share in all or part of recall costs if the OEM recalls vehicles for defects attributable to Visteon products. The Company’s Competition The automotive sector continues to remain highly competitive resulting from the ongoing industry consolidation.
The Company may also be required to share in all or part of recall costs if the OEM recalls vehicles for defects attributable to Visteon products. The Company’s Competition The automotive sector remains highly competitive resulting from the ongoing industry consolidation.
Consequently, the vehicle cockpit is transforming into a fully digital and connected environment with multi-display systems incorporating larger, curved, and more complex displays and the consolidation of discrete electronic control units into a multi-core domain controller. • Electric vehicles – The trend towards electrification continues to accelerate, driven by government incentives and standards, announced restrictions of internal combustion engine vehicles in multiple cities and countries, and the significant increase of investment in electrification by Original Equipment Manufacturers ("OEMs").
Consequently, the vehicle cockpit is transforming into a fully digital and connected environment with multi-display systems incorporating larger, curved, and more complex displays and the consolidation of discrete electronic control units into a multi-core domain controller. • Electric vehicles – The trend towards electrification continues, driven by government incentives and standards, announced restrictions of internal combustion engine vehicles in multiple cities and countries, and the significant investments in electrification by Original Equipment Manufacturers ("OEMs").
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 3 of significant competitive advantage for suppliers with a diversified global footprint. Additionally, OEMs are looking to suppliers for increased collaboration to lower costs, reduce risks, and decrease overall time to market.
Having operations in the geographic markets where 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 global footprint. Additionally, OEMs are looking to suppliers for increased collaboration to lower costs, reduce risks, and decrease overall time to market.
The Company, along with automotive companies around the world, has experienced a shortage in semiconductors as a result of suppliers inability to rapidly reallocate production to serve the automotive industry during a time of increased demand.
The Company, along with automotive companies around the world, has in recent years experienced a shortage in semiconductors as a result of the inability of semiconductor suppliers to rapidly reallocate production to serve the automotive industry during a time of increased demand.
The following is a summary of customers representing greater than 10 percent of the Company's annual net sales: Percentage of Total Net Sales December 31, 2022 2021 2020 Ford 22 % 22 % 22 % The Company typically supplies products to OEM customers through purchase orders, which are usually governed by general terms and conditions established by each OEM.
The following is a summary of customers representing greater than 10 percent of the Company's annual net sales: Percentage of Total Net Sales December 31, 2023 2022 2021 Ford 22 % 22 % 22 % General Motors 12 % 9 % 7 % The Company typically supplies products to OEM customers through purchase orders, which are usually governed by general terms and conditions established by each OEM.
In light of the continued importance of these matters, the Board of Directors and management have developed a multi-year road map to enhance the Company’s environmental, social and governance-related programs and disclosures, including assessment of the potential risks associated with climate change.
In light of the continued importance of these matters, the Board of Directors and management have developed a multi-year road map to enhance the Company’s sustainability and social responsibility programs and disclosures, including assessment of the potential risks associated with climate change.
As vehicles become more connected and cockpits more digitized, suppliers that can deliver modular hardware architectures, “open” software architectures, and a software platform approach will be poised to help OEMs achieve greater reuse of validated hardware circuitry, design scalability, and faster development cycles. The Company's Segment The Company’s reportable segment is Electronics.
As vehicles become more connected and cockpits more digitized, suppliers that can deliver modular hardware architectures, “open” software architectures, and a software platform approach will be poised to help OEMs achieve greater reuse of validated hardware circuitry, design scalability, and faster development cycles.
Board Oversight of Environmental, Social, and Governance Practices The Company and its Board of Directors believe positive environmental, social, and governance-related business practices strengthens the Company, increases its connection with the stockholders, and helps it to better serve its customers and the communities in which it operates.
Board Oversight of Environmental, Social, and Governance Practices The Company and its Board of Directors believe positive and responsible business practices strengthen the Company, increase its connection with the stockholders, and helps it to better serve its customers and the communities in which it operates.
The Company’s commitment to social responsibility extends to the environment, anti-corruption and trade compliance, responsible sourcing, human rights, labor practices, and worker health and safety.
The Company’s commitment to social responsibility extends to a variety of areas including the environment, anti-corruption and trade compliance, responsible sourcing, human rights, labor practices, and worker health and safety.
Customers in Europe historically shut down vehicle production during a portion of August and one week in December. In China, customers typically shut down approximately one week in early October and one week in January or February. Additionally, third-quarter automotive production is traditionally lower as new vehicle models enter production.
In China, customers typically shut down approximately one week in early October and one week in January or February. Additionally, third-quarter automotive production is traditionally lower as new vehicle models enter production.
The Company’s Business Seasonality and Cyclicality Historically, the Company’s business has been moderately seasonal because its largest North American customers typically cease production for approximately two weeks in July for model year changeovers and approximately one week in December during the winter holidays.
The Company’s Business Seasonality and Cyclicality The Company’s business is moderately seasonal because its largest North American customers typically cease production for approximately two weeks in July for model year changeovers and approximately one week in December during the winter holidays. Customers in Europe historically shut down vehicle production during a portion of August and one week in December.
Visteon believes that all employees are leaders and expects leaders to drive operational and financial results and build strong teams. Many of the Company’s employees are members of industrial trade unions and confederations within their respective countries. Often these organizations operate under collectively bargained contracts that are not specific to any one employer.
Many of the Company’s employees are members of industrial trade unions and confederations within their respective countries. Often these organizations operate under collectively bargained contracts that are not specific to any one employer.
In addition, all battery electric vehicles will require a battery management system to manage the rechargeable battery pack. • Advanced driver assistance systems and autonomous driving - The industry continues to advance toward semi-autonomous and autonomous vehicles.
Battery electric vehicles can have increased digital content with all-digital cockpit electronics and require a battery management system to manage the rechargeable battery pack. • Advanced driver assistance systems and autonomous driving - The industry continues to advance toward semi-autonomous and autonomous vehicles.
Although customer programs typically extend to future periods and although there is an expectation that the Company will supply certain levels of OEM production in those future periods, customer agreements (including the applicable terms and conditions) do not necessarily constitute firm orders.
Although customer programs typically extend to future periods and although there is an expectation that the Company will supply certain levels of OEM production in those future periods, customer agreements (including the applicable terms and conditions) do not necessarily constitute firm orders. 5 The price related to these products are typically initially negotiated on an annual basis over the vehicle platform's life cycle.
The price related to these products are typically initially negotiated on an annual basis over the vehicle platform's life cycle. To the extent there are subsequent contractual price reductions, these reductions are intended to reflect the Company's ability to 5 reduce cost through such factors as manufacturing productivity enhancements, material cost reductions, and design-related cost improvements.
To the extent there are subsequent contractual price reductions, these reductions are intended to reflect the Company's ability to reduce cost through such factors as manufacturing productivity enhancements, material cost reductions, and design-related cost improvements.
The Company is working closely with suppliers and customers to attempt to minimize potential adverse impacts of these events. The automotive supply industry is subject to inflationary pressures with respect to raw materials, labor, and associated freight costs, which can place operational and financial burdens on the entire supply chain.
The automotive supply industry is subject to inflationary pressures with respect to raw materials, labor, and associated freight costs, which can place operational and financial burdens on the entire supply chain. Accordingly, the Company continues to take actions with its customers and suppliers to mitigate the impact of these inflationary pressures in the future.
The Company’s telematics solution uses a single hardware and flexible software architecture to support regional telematics service providers and mobile networks. The Company’s wireless gateway platform is designed to meet future connectivity requirements.
Telematics Solutions The Company provides a cost-optimized, high-speed telematics control unit to enable secure connected car services, software updates, and data. The Company’s telematics solution uses a single hardware and flexible software architecture to support regional telematics service providers and mobile networks. The Company’s wireless gateway platform is designed to meet future connectivity requirements.
The Company has also submitted its longer term greenhouse gas (GHG) emission reduction target for 2030 which includes scope 3 CO 2 emissions to the science based targets initiative (SBTi) for validation.
The Company’s longer term greenhouse gas (GHG) emission reduction target for 2030 which includes scope 3 CO 2 emissions, has been validated by the Science Based Targets initiative (SBTi) and the Company is working to be carbon neutral by 2040.
This computing module allows Visteon's customers to implement in-house applications software into body controls for brand and market differentiation. The Company’s Customers The Company's ultimate customers are global vehicle manufacturers including BMW, Ford, Geely, General Motors, Honda, Jaguar/Land Rover, Mahindra, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Renault, Stellantis, Tata, Toyota, and Volkswagen.
The Company’s Customers The Company's ultimate customers are global vehicle manufacturers including BMW, Ford, Geely, General Motors, Honda, Jaguar/Land Rover, Mahindra, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Renault, Stellantis, Tata, Toyota, and Volkswagen.
Actions to mitigate inflationary pressures with suppliers include aggregation of purchase requirements to achieve optimal volume benefits, negotiation of cost reductions, and identification of more cost competitive suppliers.
Actions to mitigate inflationary pressures with customers include collaboration on alternative product designs and material specifications, contractual price escalation clauses, and negotiated customer recoveries. Actions to mitigate inflationary pressures with suppliers include aggregation of purchase requirements to achieve optimal volume benefits, negotiation of cost reductions, and identification of more cost competitive suppliers.
Regulation Visteon operates in a constantly evolving global regulatory environment and is subject to numerous and varying regulatory requirements for its product performance and material content.
It has implemented and maintains a health and safety management system that is certified to the OHSAS 18001 or ISO 45001 standard. Regulation Visteon operates in a constantly evolving global regulatory environment and is subject to numerous and varying regulatory requirements for its product performance and material content.
Visteon’s integrated power electronics solutions combine a bi-directional on-board charging module with a DC-to-DC 4 converter to ensure a systems approach that maximizes power conversion efficiency. Visteon’s solution is scalable to support between 400-volt to 800-volt systems with higher rate battery charging speeds.
High-Voltage Power Electronics The Company offers integrated and scalable power electronics units that support conversion of grid-to-battery pack electric current. Visteon’s integrated power electronics solutions combine a bi-directional on-board charging module with a DC-to-DC converter to ensure a systems approach that maximizes power conversion efficiency.
The Company's semiconductor suppliers, along with most automotive component supply companies that use semiconductors, have been unable to fully meet the vehicle production demands of its customers due to events which are outside the Company's control, including but not limited to, the COVID-19 pandemic, the global semiconductor shortage, and other extraordinary events.
The Company's semiconductor suppliers, along with most automotive component supply companies that use semiconductors, were unable to fully meet the vehicle production demands of its customers due to events which were outside the Company's control. While the supply situation has improved, the Company continues to work closely with suppliers and customers to minimize potential adverse impacts of these events.
By providing a platform approach that can support multiple charging protocols and flexible battery pack architectures, Visteon provides a robust design-to-production strategy that enables advanced features that are fast-to-market. High-Voltage Power Electronics The Company offers integrated and scalable power electronics units that support conversion of grid-to-battery pack electric current.
Visteon’s wireless BMS reliably and securely replaces wired communication between battery modules to improve the lifetime enterprise cost, battery weight, and packaging efficiency, and facilitates second-life battery repurposing. By providing a platform approach that can support multiple charging protocols and flexible battery pack architectures, Visteon provides a robust design-to-production strategy that enables advanced features that are fast-to-market.
The Company’s Chief People Officer, reporting directly to Chief Executive Officer ("CEO"), oversees its global talent processes to attract, develop, and retain its employees. To attract the best talent, the Company offers market competitive compensation and benefits around the globe, annual and long-term incentive programs, and health and wellness benefits.
To attract the best talent, the Company offers market competitive compensation and benefits around the globe, annual and long-term incentive programs, and health and wellness benefits. The Company also provides a variety of resources to help its employees grow in their current roles and build new skills.
The latest generation of SmartCore is offered with a suite of connected services including over the air update solution and Automotive App Store. Body Domain Controller The Company offers a range of body domain modules which integrate several functions such as central gateway, body controls, comfort, and vehicle access solutions into one device.
Body Domain Controller The Company offers a range of body domain modules which integrate several functions such as central gateway, body controls, comfort, and vehicle access solutions into one device. This computing module allows Visteon's customers to implement in-house applications software into body controls for brand and market differentiation.
Visteon’s design provides a solution that allows for fast-charging and high-efficiency in a packaging that reduces weight and space to improve overall system cost. Telematics Solutions The Company provides a cost-optimized, high-speed telematics control unit to enable secure connected car services, software updates, and data.
Visteon’s solution is scalable to support between 400-volt to 800-volt systems with higher rate battery charging speeds. Visteon’s design provides a solution that allows for fast-charging and high-efficiency in a packaging that reduces weight and space to improve overall system cost.
The Company continues to build tools to be used by leaders to develop employees in their current role and create new opportunities within the organization to learn and grow. Because retention of the employee base is significant to its business strategy, executive management discusses it with the Board of Directors on a regular basis.
Because retention of the employee base is significant to its business strategy, executive management discusses it with the Board of Directors on a regular basis. Workforce Visteon’s strength comes from a workforce of approximately 10,000 employees operating in approximately 17 countries globally.
The Company also provides a variety of resources to help its employees grow in their current roles and build new skills. Hundreds of online courses are available in the Company’s learning management system where individual development is emphasized as part of the annual goal setting process.
Hundreds of online courses are available in the Company’s learning management system and individual development plans are encouraged for all of our employees. The Company continues to build tools to be used by leaders to develop employees in their current role and create new opportunities within the organization to learn and grow.
Workforce Visteon’s strength comes from a workforce of approximately 10,000 employees operating in approximately 18 countries globally. The Company's workforce is globally distributed with 29% of employees located in the Americas, 31% in Europe, 14% in China, and 26% in the Asia Pacific region.
The Company's workforce is globally distributed with 28% of employees located in the Americas, 30% in Europe, 14% in China, and 28% in the Asia Pacific region. Visteon believes that all employees are leaders and expects leaders to drive operational and financial results and build strong teams.
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The shift to electric vehicles increases the digital content of a vehicle as the majority of cockpit electronics will be all-digital to support the new electrical architecture.
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The Company's Segment The Company reports operating and financial results in a single segment based on the consolidated information used by management in evaluating the financial performance of our business and allocating resources. This single segment reflects the Company’s core business; Electronics.
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Battery Management Systems (“BMS”) The Company offers configurable battery management systems that support both wired and wireless battery sensing and control. Visteon’s wireless BMS reliably and securely replaces wired communication between battery modules to improve the lifetime enterprise cost, battery weight, and packaging efficiency, and facilitates second-life battery repurposing.
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The latest generation of SmartCore is offered with a suite of connected services including an over the air ("OTA") update solution and an automotive App Store. Battery Management Systems (“BMS”) The Company offers configurable battery management systems that support both wired and wireless battery sensing and control.
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It has implemented and maintains a health and safety management system that is certified to the OHSAS 18001 or ISO 45001 standard. The Company provides regular health and safety reports to the Board of Directors including updates on the return to work health and safety protocols globally as a result of COVID-19.
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The Company’s website and the information contained therein or connected thereto are not intended to be incorporated by reference into this Annual Report on Form 10-K.
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Accordingly, the Company continues to take actions with its customers and suppliers to mitigate the impact of these inflationary pressures in the future. Actions to mitigate inflationary pressures with customers include collaboration on alternative product designs and material specifications, contractual price escalation clauses, and negotiated customer recoveries.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAlthough those disputes were resolved, the Company cannot predict the outcome of future interactions and it is possible that any future disputes and/or changes to the contractual obligations with the joint venture partner could have a material impact on the Company’s business, operating results, financial condition, and cash flow. 10 The Company’s ability to effectively operate could be hindered if it fails to attract and retain key personnel The Company’s ability to operate its business and implement its strategies effectively depends, in part, on the efforts of its executive officers and other key employees.
Biggest changeAlthough those disputes were resolved, the Company cannot predict the outcome of future interactions and it is possible that any future disputes and/or changes to the contractual obligations with the joint venture partner could have a material impact on the Company’s business, operating results, financial condition, and cash flow.
The Company has invested significantly and is expected to continue to invest significantly in joint ventures with other parties to conduct business in China and elsewhere in Asia. These investments may include manufacturing operations, technical centers, and research and development activities, to support anticipated growth in the region.
The Company has invested significantly and is expected to continue to invest in joint ventures with other parties to conduct business in China and elsewhere in Asia. These investments may include manufacturing operations, technical centers, and research and development activities, to support anticipated growth in the region.
Industry and Competition Related Risk Factors The Company may not realize sales represented by awarded business The Company estimates awarded business using certain assumptions, including projected future sales volumes based on data from OEM customers and industry benchmarks. The OEM customers generally do not guarantee production volumes.
Industry and Competition Related Risk Factors The Company may not realize sales represented by awarded business The Company estimates awarded business using certain assumptions, including projected future sales volumes based on data from OEM customers and industry benchmarks. The OEM customers do not generally guarantee production volumes.
The discontinuation or loss of business, or lack of commercial success, with respect to a particular product for which the Company is a significant supplier could reduce the Company’s sales and harm its profitability Although the Company has purchase orders from many of its customers, these purchase orders generally provide for the supply of a customer’s annual requirements for a particular vehicle model and assembly plant, or in some cases, for the supply of a 11 customer’s requirements for the life of a particular vehicle model, rather than for the purchase of a specific quantity of products.
The discontinuation or loss of business, or lack of commercial success, with respect to a particular product for which the Company is a significant supplier could reduce the Company’s sales and harm its profitability Although the Company has purchase orders from many of its customers, these purchase orders generally provide for the supply of a customer’s annual requirements for a particular vehicle model and assembly plant, or in some cases, for the supply of a customer’s requirements for the life of a particular vehicle model, rather than for the purchase of a specific quantity of products.
Concerns about the Company's practices with regard to the collection, use, disclosure, or security of personal information or other privacy related matters, even if unfounded, could damage its reputation and adversely affect its operating results. Furthermore, regulatory authorities around the world are considering a number of legislative and regulatory proposals concerning cybersecurity and data protection.
Concerns about the Company's practices with regard to the collection, use, disclosure, or security of personal information or other privacy related matters, even if unfounded, could damage its reputation and adversely affect its operating results. Regulatory authorities around the world are considering a number of legislative and regulatory proposals concerning cybersecurity and data protection.
Price pressures from customers may adversely affect the Company’s business Downward pricing pressures by automotive OEMs, while characteristic of the automotive industry, are increasing. Virtually all automakers have implemented aggressive price-reduction initiatives and objectives each year with their suppliers, and such actions are expected to continue in the future.
Price pressures from customers may adversely affect the Company’s business 11 Downward pricing pressures by automotive OEMs, while characteristic of the automotive industry, are increasing. Virtually all automakers have implemented aggressive price-reduction initiatives and objectives each year with their suppliers, and such actions are expected to continue in the future.
Any supply-chain disruption, however small, could cause the complete shutdown of an assembly line of one of the Company’s customers, and any such shutdown could lead to material claims for compensation. 9 The Company has experienced and may in the future experience supplier price increases that could negatively affect its operations and profitability.
Any supply-chain disruption, however small, could cause the complete shutdown of an assembly line of one of the Company’s customers, and any such shutdown could lead to material claims for compensation. The Company has experienced and may in the future experience supplier price increases that could negatively affect its operations and profitability.
Work stoppages and similar events could significantly disrupt the Company’s business Because the automotive industry relies heavily on just-in-time delivery of components during the assembly and manufacture of vehicles, a work stoppage at one or more of the Company’s manufacturing and assembly facilities could have material adverse effects on the business.
Work stoppages and similar events could significantly disrupt the Company’s business 10 Because the automotive industry relies heavily on just-in-time delivery of components during the assembly and manufacture of vehicles, a work stoppage at one or more of the Company’s manufacturing and assembly facilities could have material adverse effects on the business.
As a result, the Company is dependent on single or limited sources of supply for certain components used in the manufacture of its products including semiconductor chips, which are integral components of new vehicles and are embedded in multiple vehicle systems including automotive and cockpit electronics.
As a result, the Company is dependent on single or limited sources of supply for certain components used in the manufacture of its products including semiconductor chips, which are integral components of new vehicles and are embedded in multiple vehicle systems, including cockpit electronics.
If such shortages of semiconductors or other critical components from other suppliers continue longer than anticipated, or worsen, it could impact the Company's ability to meet its production schedules for some of its key products or to ship such products to its customers in a timely fashion.
If shortages of semiconductors or other critical components from other suppliers develop, continue longer than anticipated, or worsen, it could impact the Company's ability to meet its production schedules for some of its key products or to ship such products to its customers in a timely fashion.
The Company believes it has a number of legal defenses to such claims and intends to defend any potential claims vigorously. Should the company be unsuccessful in their defense, these losses and expenses could be significant, and may include consequential losses such as lost profits.
The Company believes it has a number of legal defenses to such claims and intends to defend any potential claims vigorously. Should the company be unsuccessful in their defense, these losses and expenses could be significant, and may include consequential losses such as lost 9 profits.
Developments or assertions by or against the Company relating to intellectual property rights could materially impact its business The Company owns significant intellectual property, including a number of patents, trademarks, copyrights, and trade secrets and is involved in numerous licensing arrangements.
Developments or assertions by or against the Company relating to intellectual property rights could materially impact its business 12 The Company owns significant intellectual property, including a number of patents, trademarks, copyrights, and trade secrets and is involved in numerous licensing arrangements.
Natural disasters could cause disruption to the Company’s ability to serve its customers and communities in times of need and extended periods of disruption could have an adverse effect on its results of operations. 14 Item 1B. Unresolved Staff Comments None
Natural disasters could cause disruption to the Company’s ability to serve its customers and communities in times of need and extended periods of disruption could have an adverse effect on its results of operations. Item 1B. Unresolved Staff Comments None
A successful warranty or product liability claim against the Company, or a 12 requirement that the Company participate in a product recall campaign, could have materially adverse effects on the Company’s business, operating results, financial condition, and cash flow.
A successful warranty or product liability claim against the Company, or a requirement that the Company participate in a product recall campaign, could have materially adverse effects on the Company’s business, operating results, financial condition, and cash flow.
The Company is highly dependent on Ford Motor Company and decreases in this customer’s vehicle production volumes would adversely affect the Company Ford is one of the Company’s largest ultimate customers and accounted for 22% of sales for each of the years 2022, 2021 and 2020, respectively.
The Company is highly dependent on Ford Motor Company and decreases in this customer’s vehicle production volumes would adversely affect the Company Ford is one of the Company’s largest ultimate customers and accounted for 22% of sales for each of the years 2023, 2022 and 2021, respectively.
The loss of the services of any key employees, and particularly the Company’s Chief Executive Officer, or the failure to attract or retain other qualified personnel could have a material adverse effect on the Company’s business, ability to secure future programs, operating results, financial condition, and cashflow.
The loss of the services of any key employees, and particularly the Company’s Chief Executive Officer, or the failure to attract or retain other qualified personnel could have a material adverse effect on the Company’s business, ability to secure future programs, operating results, financial condition, and cash flow.
Item 1A. Risk Factors Set forth below are certain risks and uncertainties facing the Company. Additional risks and uncertainties, including those not presently known or that the Company believes to be immaterial, also may adversely affect the Company.
Item 1A. Risk Factors Set forth below are some of the most significant risks and uncertainties facing the Company. Additional risks and uncertainties, including those not presently known or that the Company believes to be immaterial, also may adversely affect the Company.
The Company continues to work closely with its suppliers and customers to minimize any potential adverse impacts of the semiconductor supply shortage and monitor the availability of semiconductor microchips and other component parts and raw materials, customer vehicle production schedules, and any other supply chain inefficiencies that may arise, due to this or any other issue.
As a result of the semiconductor shortages in recent years, the Company continues to work closely with its suppliers and customers to minimize any potential adverse impacts of the semiconductor supply shortage and monitor the availability of semiconductor microchips and other component parts and raw materials, customer vehicle production schedules, and any other supply chain inefficiencies that may arise, due to this or any other issue.
The Company’s intellectual property plays an important role in maintaining its competitive position in a number of the markets served. The Company may utilize intellectual property in its products that requires a license from a third-party.
The Company’s intellectual property plays an important role in maintaining its competitive position in a number of the markets served. The Company may directly or through a supplied component utilize intellectual property in its products that requires a license from a third-party.
Automotive sales and production are cyclical and can be affected by general economic or industry conditions, labor relations issues, fuel prices, regulatory requirements, government initiatives, trade agreements, the cost and availability of credit, and other factors. Due to overall global economic conditions, including semiconductor shortages that continued in 2022, the automotive industry experienced constrained production schedules.
Automotive sales and production are cyclical and can be affected by general economic or industry conditions, labor relations issues, fuel prices, regulatory requirements, government initiatives, trade agreements, the cost and availability of credit, and other factors. Due to overall global economic conditions, including semiconductor shortages and supply chain disruptions, the automotive industry experienced constrained production schedules in recent years.
The Company’s customers may halt or delay production for the same reason if one of their other suppliers fails to deliver necessary components. This may cause the Company’s customers, in turn to suspend their orders, or instruct us to suspend delivery of Visteon's products, which may adversely affect the Company's financial performance.
The Company’s customers may halt or delay production if one of their other suppliers fails to deliver necessary components. This may cause the Company’s customers to suspend their orders or instruct us to suspend delivery of the Company's products, which may adversely affect the Company's financial performance.
(including China) and significant intellectual property assets are licensed to joint ventures and customers in foreign jurisdictions. If a material intellectual property theft or forced transfer were to occur, it could materially and adversely affect the Company’s business, operating results, financial condition, and cash flow.
The Company also derives significant revenue from countries outside the U.S. (including China) and significant intellectual property assets are licensed to joint ventures and customers in foreign jurisdictions. If a material intellectual property theft or forced transfer were to occur, it could materially and adversely affect the Company’s business, operating results, financial condition, and cash flow.
While the Company believes that such licenses generally can be obtained, there is no assurance that the necessary licenses can be obtained on commercially acceptable terms or at all.
While the Company believes that such licenses generally can be obtained by the Company, or supplier if a supplied component, there is no assurance that the necessary licenses can be obtained on commercially acceptable terms or at all.
Failure to obtain the right to use third-party intellectual property could preclude the Company from selling certain products, and developments or assertions by or against the Company relating to intellectual property rights, could have materially adverse effects on the Company’s business, operating results, financial condition, and cash flow. The Company also derives significant revenue from countries outside the U.S.
Failure by the Company or its suppliers to obtain the right to use third-party intellectual property could preclude the Company from selling certain products, and developments or assertions by or against the Company relating to intellectual property rights, could have materially adverse effects on the Company’s business, operating results, financial condition, and cash flow.
General Risk Factors A disruption in the Company's information technology systems, including because of cyberattack, could adversely affect its business and financial performance The Company relies on the accuracy, capacity, and security of its information technology systems as well as those of its customers, suppliers, partners, and service providers to conduct its business.
General Risk Factors A disruption to the Company's infrastructure of information technology systems, or those of our customers, supplies, sub-suppliers, partners, service providers or other contract parties, including because of cyberattack, could adversely affect its business and financial performance The Company relies on the accuracy, capacity, and security of its infrastructure and information technology systems to conduct its business.
A significant disruption in the supply of a key component due to a work stoppage at any of the Company’s suppliers or subsuppliers could have the same consequences, and accordingly, have a material adverse effect on the Company’s business, operating results, financial condition, and cash flow.
A significant disruption in the supply of a key component due to a work stoppage at any of the Company’s suppliers or sub-suppliers, or reduced orders from the Company’s customers as a result of work stoppages, could have a material adverse effect on the Company’s business, operating results, financial condition, and cash flow.
Trade negotiations between the U.S. and Chinese governments, and between the U.S. and European governments, remain ongoing.
Trade negotiations are ongoing, notably between the U.S. and Chinese governments.
Despite the security and risk-prevention measures the Company has implemented, the Company's systems could be breached, damaged, or otherwise interrupted by a system failure, cyberattack, malicious computer software (including malware or ransomware), unauthorized physical or electronic access, or other natural or man-made incidents or disasters. The Company is also susceptible to security breaches that may go undetected.
Despite the security and risk-prevention measures the Company has implemented, including related to cybersecurity, our products or services could be breached, damaged, taken over, or otherwise interrupted by a system failure, cyberattack, malicious computer software (including malware or ransomware), unauthorized physical or electronic access, or other natural or man-made incidents or disasters.
However, given the uncertainty regarding the scope and duration of existing tariffs, as well as the potential for additional tariffs or trade barriers by or between the U.S., China, or other countries, the Company can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful.
However, given the uncertainty regarding the negotiations, including the potential for additional tariffs or trade barriers by or between the U.S., China (including but not limited to the Uyghur Forced Labor Prevention Act), or other countries, the Company can provide no assurance that any strategies we implement to mitigate the impact of any trade actions will be successful.
The Company cannot provide any assurance that such an ownership change will not occur, in which case the availability of the Company's NOLs and other tax attributes could be significantly limited or 13 possibly eliminated.
The Company cannot provide any assurance that such an ownership change will not occur, in which case the availability of the Company's NOLs and other tax attributes could be significantly limited or possibly eliminated. Certain tax benefit preservation provisions of its corporate documents could delay or prevent a change of control, even if that change would be beneficial to stockholders.
To the extent that business is interrupted or data is lost, destroyed, or inappropriately used or disclosed, such disruptions could lead to legal claims against the Company and adversely affect the Company’s competitive position, reputation, relationships with customers, financial condition, operating results, and cash flows.
To the extent a breach occurs as noted above, or data is lost, destroyed, or inappropriately used or disclosed, such disruptions could lead to legal claims against the Company and adversely affect the Company’s competitive position, reputation, relationships with customers, financial condition, operating results, and cash flows and/or subject us to regulatory actions, including those contemplated by data privacy laws and regulations.
Should any such risks and uncertainties develop into actual events, these developments could have material adverse effects on the Company’s business, operating results, financial condition, and cash flow.
Should any such risks and uncertainties develop into actual events, these developments could have material adverse effects on the Company’s business, operating results, financial condition, cash flow and/or the value of the Company’s securities. This information should be considered in connection with the description of the Company’s business, Management’s Discussion & Analysis, and the Company’s financial statements and accompanying notes.
Moreover, even without such legislation or regulation, increased awareness of, or any adverse publicity regarding, the effects of greenhouse gases could harm the Company’s reputation or reduce customer demand for its products and services.
Moreover, even without such legislation or regulation, increased awareness of, or any adverse publicity regarding, the effects of greenhouse gases could harm the Company’s reputation or reduce customer demand for its products and services. Automakers have also started implementing climate-related initiatives and objectives each year with their suppliers, and such actions are expected to continue in the future.
Privacy and security concerns relating to the Company's current or future products and services could damage its reputation and deter current and potential users from using them The Company may gain access to sensitive, confidential, or personal data or information that is subject to privacy and security laws, regulations, and customer-imposed controls.
Failure of the Company’s products or services to effectively protect against these vulnerabilities can damage its reputation and adversely affect its operating results. Further, through our products or services, the Company may gain access to sensitive, confidential, or personal data or information that is subject to privacy and security laws, regulations, and customer-imposed controls.
As a result, volatility in certain exchange rates could adversely impact Visteon financial results and comparability of results from period to period.
The Company's primary exposures are to the euro, Chinese renminbi, Brazilian real, Mexican peso, Thai bhat, Indian rupee, and Japanese yen. Volatility in certain exchange rates could adversely impact Visteon financial results and comparability of results from period to period.
The Company’s substantial international operations make it vulnerable to risks associated with doing business in foreign countries The Company has manufacturing and distribution facilities in many foreign locations.
The price increases are often driven by raw material pricing and availability, component or part availability, manufacturing capacity, industry allocations, logistics capacity, natural disasters or pandemics, the effects of climate change, inflation, and significant changes in the financial or business condition of its suppliers The Company’s substantial international operations make it vulnerable to risks associated with doing business in foreign countries The Company has manufacturing and distribution facilities in many foreign locations.
Such a breach or interruption could result in business disruption, theft of the Company's intellectual property or trade secrets, and unauthorized access to personal information.
Any of these events could result in, amongst other things, the following to the Company or its customers, suppliers, sub-suppliers, or other contract parties: (i) a business disruption, including plant operations, (ii) theft of intellectual property, including trade secrets, or (iii) unauthorized access to personal information, including employee or end consumer personal information.
Removed
In 2022, the Company continued to experience semiconductor shortages and once again expects such shortages to persist in 2023.
Added
The Company’s ability to effectively operate could be hindered if it fails to attract and retain key personnel The Company’s ability to operate its business and implement its strategies effectively depends, in part, on the efforts of its executive officers and other key employees.
Removed
However, if the Company is not able to mitigate the semiconductor shortage impact, any direct or indirect supply chain disruptions may have a material adverse impact on its business, operating results, financial condition, or cash flows.
Added
Advances in AI technology may generate developments against which existing intellectual property laws may not adequately protect and which may also give rise to a proliferation of infringement which we may not be able to address effectively.
Removed
The price increases are often driven by raw material pricing and availability, component or part availability, manufacturing capacity, industry allocations, logistics capacity, natural disasters or pandemics, the effects of climate change, inflation, and significant changes in the financial or business condition of its suppliers The Company’s business, operating results, financial condition, and cash flows have been, and may continue to be, adversely affected by the COVID-19 pandemic The COVID-19 pandemic poses the risk that the Company or its affiliates and joint ventures, employees, suppliers, customers, and others may be restricted or prevented from conducting business activities for indefinite or intermittent periods of time, including as a result of employee health and safety concerns, shutdowns, shelter in place orders, travel restrictions, and other actions and restrictions that may be requested or mandated by governmental authorities.
Added
Privacy and security concerns (including cyber security) relating to the Company's current or future products and services could have a material adverse impact on our business, damage its reputation and deter current and potential users from using them The Company’s products and services contain digital technology designed to support connected vehicles, and for some products may also collect and store sensitive end-user data (that may include personally identifiable information).
Removed
In addition, the Company has experienced, and may continue to experience, disruptions or delays in the supply chain as a result of such actions, which is likely to result in higher supply chain costs to us in order to maintain the supply of materials and components for Visteon's products.
Added
For example, the Organization for Economic Cooperation and Development (the "OECD"), the European Union and other countries (including countries in which the Company operates) have committed to enacting 13 substantial changes to numerous long-standing tax principles impacting how large multinational enterprises are taxed.
Removed
The Company cannot predict the degree to which, or the period over which, its financial condition and operations will be affected by this pandemic and related safety measures, the effects of which could have a material adverse impact on the Company’s business, financial condition and results of operations.
Added
In particular, the OECD's Pillar Two initiative introduces a 15% global minimum tax applied on a country-by-country basis and for which many jurisdictions have now committed to an effective enactment date starting January 1, 2024.
Removed
Certain tax benefit preservation provisions of its corporate documents could delay or prevent a change of control, even if that change would be beneficial to stockholders.
Added
The impact of these potential new rules as well as any other changes in domestic and international tax rules and regulations could have a material effect on the Company’s overall effective tax rate.
Removed
The Company's primary exposures are to the euro, Chinese renminbi, Brazilian real, Mexican peso, Thai bhat, Indian rupee, Japenese yen, and Bulgarian lev. Exchange rates are difficult to predict, and the Company’s financial instruments designed to hedge against foreign exchange exposure may not completely insulate the Company from those exposures.
Added
The Company's systems have in the past and could in the future be breached, damaged, taken over, or otherwise interrupted by a system failure, cyberattack, malicious computer software (including malware or ransomware), unauthorized physical or electronic access, or other natural or man-made incidents or disasters.
Added
For example, on July 3, 2023, the Company experienced a disruption of certain IT services and assets at its third-party data center provider that resulted in some IT services experiencing interruptions and loss of data. These events have occurred with more frequency within our industry and are expected to continue (and possibly increase) moving forward.
Added
Although the Company has placed a high priority on cybersecurity and continues to enhance (through investments) our controls, processes and practices designed to protect our operational systems and products from a breach, the company’s actions may not be quick enough to fully protect our operational systems and products against all vulnerabilities, including technologies developed to bypass our security measures.
Added
In addition, the company’s employees or customers may accidentally provide their access credentials or other sensitive information to bad actors who could gain access to our secure systems and networks.
Added
Nothing ensures that the company’s actions or investments to improve its systems, products, processes and risk management framework or remediate vulnerabilities will be sufficient or deployed quickly enough to prevent or limit the impact of any breach.
Added
Undetected or unrecognized breaches also create a risk to the Company since it takes time to first discover the breach and then patch the vulnerability. The Company also cannot anticipate all the various methods of attacks and have defenses prepared in advance against these types of attacks, and it cannot predict the extent, frequency or impact these attacks may have.
Added
Moreover, the Company may be required to incur significant costs to protect against the damage caused by these disruptions or security breaches in the future. The Company is also dependent on the security measures implemented by our customers, suppliers, and other third-party service providers to protect their own systems, infrastructures, and products.
Added
A breach that impacts any of these third-parties' systems could result in unauthorized access to the Company’s or 14 its customers' or suppliers' sensitive data or the Company’s own information technology systems.
Added
It could also cause the Company to be non-compliant with applicable laws, subject us to legal claims, disrupt our operations, damage our reputation, or cause a loss of confidence in our products or services, any of which could adversely affect our financial condition, operating results, or cash flow.
Added
If the Company is unable to meet these new requirements in the future through improved operating efficiencies, new manufacturing processes, sourcing alternatives, and other sustainability initiatives, the Company’s business could be adversely affected.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt December 31, 2022, the Company and its consolidated subsidiaries owned or leased: • 30 corporate offices, technical and engineering centers and customer service centers in 13 countries around the world, all of which were leased. • 14 manufacturing and/or assembly facilities in Brazil, China, India, Japan, Mexico, Portugal, Slovakia, Tunisia, and Thailand, of which 11 were leased and 3 were owned.
Biggest changeAt December 31, 2023, the Company and its consolidated subsidiaries owned or leased: • 27 corporate offices, technical and engineering centers and customer service centers in 13 countries around the world, all of which were leased. • 14 manufacturing and/or assembly facilities in Brazil, China, India, Japan, Mexico, Portugal, Slovakia, Tunisia, and Thailand, of which 11 were leased and 3 were owned. 16 In addition, the Company's non-consolidated affiliates operate 6 manufacturing and/or assembly locations, primarily in the Asia Pacific region.
In addition, the Company's non-consolidated affiliates operate 6 manufacturing and/or assembly locations, primarily in the Asia Pacific region. The Company considers its facilities to be adequate for its current uses.
The Company considers its facilities to be adequate for its current uses.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+2 added−0 removed0 unchanged
Biggest changeItem 3. Legal Proceedings Certain legal proceedings in which the Company is involved are discussed in Note 18, "Commitments and Contingencies" to the Company's consolidated financial statements included in Part II, Item 8 of this Form 10-K, "Financial Statements and Supplementary Data" and should be considered an integral part of Part I, Item 3, "Legal Proceedings." Item 4.
Biggest changeCertain legal proceedings in which the Company is involved are discussed in Note 18, “Commitments and Contingencies” to the Company's consolidated financial statements included in Part II, Item 8 of this Form 10-K, “Financial Statements and Supplementary Data” and should be considered an integral part of Part I, Item 3, “Legal Proceedings.” Item 4. Mine Safety Disclosures None 17
Added
Item 3. Legal Proceedings From time to time, the Company is involved in various legal matters and proceedings arising in the ordinary course of business.
Added
While the Company incurs costs, including but not limited to, attorneys’ fees, the Company does not currently expect any of these matters or proceedings to have a material effect on its results of operations, financial position or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company’s Board evaluates the Company’s dividend policy based on all relevant factors. The Company’s credit agreements limit the amount of cash payments for dividends that may be made. Additionally, the ability of the Company’s subsidiaries to transfer dividends is subject to various restrictions, including regulatory requirements and governmental restraints.
Biggest changeNo dividends were paid by the Company on its common stock during the years ended December 31, 2023 and 2022. The Company’s Board evaluates the Company’s dividend policy based on all relevant factors. The Company’s credit agreements limit the amount of cash payments for dividends that may be made.
Auto Parts Index. The graph below assumes that $100 was invested on December 31, 2017 in each of the Company's common stock, the stocks comprising the S&P 500 Index and the stocks comprising the Dow Jones U.S. Auto Parts Index, and that all dividends have been reinvested.
Auto Parts Index. The graph below assumes that $100 was invested on December 31, 2018 in each of the Company's common stock, the stocks comprising the S&P 500 Index and the stocks comprising the Dow Jones U.S. Auto Parts Index, and that all dividends have been reinvested.
The following information in Item 5 is not deemed to be “soliciting material” or be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 (“Exchange Act”) or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing. 18 Performance Graph The following graph compares the cumulative total stockholder return from December 31, 2017 through December 31, 2022, for Visteon's existing common stock, the S&P 500 Index and the Dow Jones U.S.
The following information in Item 5 is not deemed to be “soliciting material” or be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 (“Exchange Act”) or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing. 20 Performance Graph The following graph compares the cumulative total stockholder return from December 31, 2018 through December 31, 2023, for Visteon's existing common stock, the S&P 500 Index and the Dow Jones U.S.
Auto Parts Index $100.00 $68.30 $85.56 $99.27 $118.94 $87.05 S&P 500 $100.00 $93.76 $120.84 $140.49 $178.27 $143.61 The above comparisons are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance of the Company's common stock or the referenced indices. Item 6. Selected Financial Data None 19
Auto Parts Index $100.00 $121.42 $145.84 $166.84 $123.06 $125.33 S&P 500 $100.00 $128.88 $149.83 $190.13 $153.16 $190.27 The above comparisons are required by the Securities and Exchange Commission and are not intended to forecast or be indicative of possible future performance of the Company's common stock or the referenced indices. Item 6. Selected Financial Data None 21
No sales of the Company’s common stock were made by or on behalf of the Company or an affiliated purchaser during the fourth quarter of 2022.
Additionally, the ability of the Company’s subsidiaries to transfer dividends is subject to various restrictions, including regulatory requirements and governmental restraints. No sales of the Company’s common stock were made by or on behalf of the Company or an affiliated purchaser during the fourth quarter of 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities As of February 9, 2023, the Company had 2,981 s hareholders of record. No dividends were paid by the Company on its common stock during the years ended December 31, 2022 and 2021.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company's common stock, $0.01 par value per share, trades on the Nasdaq Global Select Market under the symbol "VC". As of February 8, 2024, the Company had 2,725 s hareholders of record.
December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 Visteon Corporation $100.00 $48.17 $69.19 $100.30 $88.81 $104.55 Dow Jones U.S.
December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 December 31, 2022 December 31, 2023 Visteon Corporation $100.00 $143.65 $208.23 $184.37 $217.04 $207.20 Dow Jones U.S.
Added
On March 2, 2023 the Company's board of directors authorized a share repurchase program of $300 million of common stock through December 31, 2026. Under this program, the Company will repurchase shares at the prevailing market prices pursuant to specified share price and daily volume limits.
Added
As of December 31, 2023, the Company has $194 million of authorized purchases of common stock remaining. The following table summarizes information relating to purchases made by or on behalf of the Company, or an affiliated purchaser, of shares of the Company’s common stock during the fourth quarter of 2023.
Added
Period Total Number of Shares (or Units) Purchased (1) Average Price Paid per Share (or Unit) Total Number of Shares (or units) Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (in millions) October 1 to October 31, 2023 76,515 132.76 76,515 214 November 1 to November 31, 2023 — — — 214 December 1 to December 31, 2023 161,238 124.04 161,238 194 Total 237,753 126.85 237,753 194 (1) The Company does not include shares surrendered to pay taxes incurred upon exercises of stock options for purposes of this Item 5 of Part II of this Annual Report on Form 10-K.
Added
(2) The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. All dollar amounts presented exclude such excise taxes, as applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

59 edited+12 added−31 removed37 unchanged
Biggest changeGAAP financial measure, as defined below. 21 Results of Operations Year ended December 31, 2022 Compared to Year ended December 31, 2021 The Company's consolidated results of operations for the years ended December 31, 2022 and 2021 were as follows: Year Ended December 31, (In millions) 2022 2021 Change Net sales $ 3,756 $ 2,773 $ 983 Cost of sales (3,388) (2,519) (869) Gross margin 368 254 114 Selling, general and administrative expenses (188) (175) (13) Restructuring and impairment (14) (14) — Interest expense, net (10) (8) (2) Equity in net (loss) income of non-consolidated affiliates (1) 6 (7) Other income, net 20 18 2 Income (loss) before income taxes 175 81 94 Provision for income taxes (45) (31) (14) Net income (loss) 130 50 80 Less: Net (income) loss attributable to non-controlling interests (6) (9) 3 Net income (loss) attributable to Visteon Corporation $ 124 $ 41 $ 83 Adjusted EBITDA $ 348 $ 228 $ 120 Net Sales and Cost of Sales (In millions) Net Sales Cost of Sales Gross Margin December 31, 2021 $ 2,773 $ (2,519) $ 254 Volume, mix, and net new business 722 (573) 149 Customer pricing, net 395 — 395 Currency (136) 109 (27) Engineering costs, net — (15) (15) Cost performance, design changes and other 2 (390) (388) December 31, 2022 $ 3,756 $ (3,388) $ 368 Net sales for the year ended December 31, 2022 totaled $3,756 million, which represents an increase of $983 million compared with 2021.
Biggest changeVisteon continued to work with its customers to pass along the elevated costs caused by semiconductor shortages. * Adjusted EBITDA is a Non-GAAP financial measure, as defined below. 23 Results of Operations Year ended December 31, 2023 Compared to Year ended December 31, 2022 The Company's consolidated results of operations for the years ended December 31, 2023 and 2022 were as follows: Year Ended December 31, (In millions) 2023 2022 Change Net sales $ 3,954 $ 3,756 $ 198 Cost of sales (3,467) (3,388) (79) Gross margin 487 368 119 Selling, general and administrative expenses (207) (188) (19) Restructuring and impairment (5) (14) 9 Interest expense, net (7) (10) 3 Equity in net (loss) income of non-consolidated affiliates (10) (1) (9) Other income, net (1) 20 (21) Income (loss) before income taxes 257 175 82 Benefit from (provision for) income taxes 248 (45) 293 Net income (loss) 505 130 375 Less: Net (income) loss attributable to non-controlling interests (19) (6) (13) Net income (loss) attributable to Visteon Corporation $ 486 $ 124 $ 362 Adjusted EBITDA $ 434 $ 348 $ 86 2023 includes a non-cash tax benefit of $313 million related to a reduction in the valuation allowance against the U.S. deferred tax assets.
See Note 18, "Commitments and Contingencies" in the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information. Restructuring 30 The Company accrues costs in connection with its restructuring of the engineering, administration, and manufacturing organizations. These accruals include estimates primarily related to employee headcount, local statutory benefits, and other employee termination costs.
See Note 18, "Commitments and Contingencies" in the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information. Restructuring The Company accrues costs in connection with its restructuring of the engineering, administration, and manufacturing organizations. These accruals include estimates primarily related to employee headcount, local statutory benefits, and other employee termination costs.
For these, materially different amounts could be reported under varied conditions and assumptions. Other items in the Company's consolidated financial statements require estimation, however, in the Company's opinion, they are not as critical as those discussed below. Impairment of Long-lived Assets The Company monitors long-lived assets for impairment indicators on an ongoing basis.
For these, materially different amounts could be reported under varied conditions and assumptions. Other items in the Company's consolidated financial statements require estimation, however, in the Company's opinion, they are not as critical as those discussed below. Impairment of Long-lived Assets 28 The Company monitors long-lived assets for impairment indicators on an ongoing basis.
(b) Excludes impact of assets used to hedge discount rate volatility. Income Taxes The Company is subject to income taxes in the U.S. and numerous non-U.S. jurisdictions. Significant judgment is required in determining the Company’s worldwide provision for income taxes, deferred tax assets and liabilities, and valuation allowances recorded against the Company’s net deferred tax assets.
(b) Excludes impact of assets used to hedge discount rate volatility. 30 Income Taxes The Company is subject to income taxes in the U.S. and numerous non-U.S. jurisdictions. Significant judgment is required in determining the Company’s worldwide provision for income taxes, deferred tax assets and liabilities, and valuation allowances recorded against the Company’s net deferred tax assets.
In 2022, due to the current geopolitical situation in Eastern Europe the Company elected to close the Russian facility resulting in a non-cash impairment charge of $5 million to fully impair property and equipment and reduce inventory to its net realizable value .
In 2022, due to the geopolitical situation in Eastern Europe the Company elected to close the Russian facility resulting in a non-cash impairment charge of $5 million to fully impair property and equipment and reduce inventory to its net realizable value .
If such permanently reinvested funds were repatriated to the U.S., no U.S. federal taxes would be imposed on the distribution of such foreign earnings due to U.S. tax reform enacted in December 2017, but the Company would be required to accrue additional tax expense, primarily related to foreign withholding taxes.
If such permanently reinvested funds were repatriated to the U.S., no U.S. federal taxes would be imposed on the distribution of such foreign earnings due to U.S. tax reform enacted in December 2017. However, the Company would be required to accrue additional tax expense primarily related to foreign withholding taxes.
The primary assumptions affecting the Company’s accounting for employee benefits, as of December 31, 2022, are as follows: Expected long-term rate of return on plan assets The expected long-term rate of return is used to calculate net periodic pension cost.
The primary assumptions affecting the Company’s accounting for employee benefits, as of December 31, 2023, are as follows: Expected long-term rate of return on plan assets The expected long-term rate of return is used to calculate net periodic pension cost.
The following table illustrates the sensitivity to a change in certain assumptions for Company sponsored U.S. and non-U.S. pension plans on its 2022 funded status and 2023 pretax pension expense. Impact on U.S. 2023 Pretax Pension Expense Impact on U.S. Plan 2022 Funded Status Impact on Non-U.S. 2023 Pretax Pension Expense Impact on Non-U.S.
The following table illustrates the sensitivity to a change in certain assumptions for Company sponsored U.S. and non-U.S. pension plans on its 2023 funded status and 2024 pretax pension expense. Impact on U.S. 2024 Pretax Pension Expense Impact on U.S. Plan 2023 Funded Status Impact on Non-U.S. 2024 Pretax Pension Expense Impact on Non-U.S.
The magnitude of the impact on the financial statements, results of operations, and cash flows will depend on the evolution of the semiconductor supply shortage, plant production schedules, supply chain impacts, and global economic impacts. Company Highlights Visteon continued to focus on execution throughout 2022, building a foundation of sustainable growth, margin expansion, and cash flow generation.
The magnitude of the impact on the financial statements, results of operations, and cash flows will depend on the evolution of the semiconductor supply, plant production schedules, supply chain impacts, and global economic impacts. Company Highlights Visteon continued to focus on execution throughout 2023, building a foundation of sustainable growth, margin expansion, and cash flow generation.
You should understand that various factors, in addition to those discussed elsewhere in this document, could affect the Company’s future results and could cause results to differ materially from those expressed in such forward-looking statements, including: • Significant or prolonged shortage of critical components from Visteon’s suppliers including, but not limited to semiconductors and those components from suppliers who are sole or primary sources. • Continued and future impacts related to the conflict between Russia and the Ukraine including supply chain disruptions, reduction in customer demand, and the imposition of sanctions on Russia. • Continued and future impacts of the coronavirus ("COVID-19") pandemic on Visteon’s financial condition and business operations including global supply chain disruptions, market downturns, reduced consumer demand, and new government actions or restrictions. • Failure of the Company’s joint venture partners to comply with contractual obligations or to exert influence or pressure in China. • 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. • Visteon’s ability to satisfy its future capital and liquidity requirements; Visteon’s ability to access the credit and capital markets at the times and in the amounts needed and on terms acceptable to Visteon; Visteon’s ability to comply with covenants applicable to it; and the continuation of acceptable supplier payment terms. • Visteon’s 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 Visteon’s customers. • Changes in vehicle production volume of Visteon’s customers in the markets where it operates. • Increases in commodity costs and the Company's ability to offset or recover these costs or disruptions in the supply of commodities, including resins, copper, fuel, and natural gas. • Visteon’s 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. • Visteon’s 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 Visteon’s 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. 33 • 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, interest rates and fuel prices, 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. • Visteon’s 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. • 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 Visteon’s 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, changes in fuel prices, and disruptions of supply. • The cyclical and seasonal nature of the automotive industry. • Visteon’s 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. • Disruptions in information technology systems including, but not limited to, system failure, cyber-attack, malicious computer software (malware including ransomware), unauthorized physical or electronic access, or other natural or man-made incidents or disasters. • Visteon’s 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. • Visteon’s 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 Visteon’s Securities and Exchange Commission filings. 34
You should understand that various factors, in addition to those discussed elsewhere in this document, could affect the Company’s future results and could cause results to differ materially from those expressed in such forward-looking statements, including: • Significant or prolonged shortage of critical components from Visteon’s suppliers including, but not limited to semiconductors and those components from suppliers who are sole or primary sources. • Continued and future impacts related to the conflict between Russia and the Ukraine including supply chain disruptions, reduction in customer demand, and the imposition of sanctions on Russia. • Failure of the Company’s joint venture partners to comply with contractual obligations or to exert undue influence in China. 31 • 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. • Visteon’s ability to satisfy its future capital and liquidity requirements; Visteon’s ability to access the credit and capital markets at the times and in the amounts needed and on terms acceptable to Visteon; Visteon’s ability to comply with covenants applicable to it; and the continuation of acceptable customer and supplier payment terms. • Visteon's ability to avoid or continue to operate during a strike, or partial work stoppage or slow down at any of Visteon's principal customers • Visteon’s 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 Visteon’s customers. • Changes in vehicle production volume of Visteon’s customers in the markets where it operates. • Increases in commodity costs and the Company's ability to offset or recover these costs or disruptions in the supply of commodities, including resins, copper, fuel, and natural gas. • Visteon’s 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. • Visteon’s 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 Visteon’s 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. • 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, interest 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. • Visteon’s 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. • 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 Visteon’s 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, changes in fuel prices, and disruptions of supply. • The cyclical and seasonal nature of the automotive industry. • Visteon’s 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. • Disruptions in information technology systems including, but not limited to, system failure, cyber-attack, malicious computer software (malware including ransomware), unauthorized physical or electronic access, or other natural or man-made incidents or disasters. 32 • Visteon’s 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. • Visteon’s 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 Visteon’s Securities and Exchange Commission filings.
Adjusted EBITDA The Company defines Adjusted EBITDA as net income attributable to the Company adjusted to eliminate the impact of depreciation and amortization, restructuring and impairment expense, provision for income taxes, non-cash stock-based compensation expense, net interest expense, net income attributable to non-controlling interests, equity in net income of non-consolidated affiliates, loss on divestiture, discontinued operations, and other gains and losses not reflective of the Company's ongoing operations.
Adjusted EBITDA The Company defines Adjusted EBITDA as net income attributable to the Company adjusted to eliminate the impact of depreciation and amortization, non-cash stock-based compensation expense, provision for income taxes, net interest expense, net income attributable to non-controlling interests, restructuring and impairment expense, equity in net income of non-consolidated affiliates, and other gains and losses not reflective of the Company's ongoing operations.
In addition, the Company uses Adjusted EBITDA (i) as a factor in incentive compensation decisions, (ii) to evaluate the effectiveness of the Company's business strategies and (iii) the Company's credit agreements use measures similar to Adjusted EBITDA to measure compliance with certain covenants.
The Company uses Adjusted EBITDA as a factor in incentive compensation decisions and to evaluate the effectiveness of the Company's business strategies. In addition, the Company's credit agreements use measures similar to Adjusted EBITDA to measure compliance with certain covenants.
To address the near-term challenges created from the worldwide semiconductor and supply chain shortages, Visteon implemented a series of proactive initiatives aimed at increasing product availability for its customers while minimizing the impact of incremental costs to the business.
To address the near-term challenges created from the worldwide semiconductor and supply chain shortages, Visteon continued the proactive initiatives aimed at increasing product availability for its customers while minimizing the impact of incremental costs to the business.
Equity in Net Income of Non-Consolidated Affiliates Equity in net income of non-consolidated affiliates was a $1 million loss and a $6 million gain for the years ended December 31, 2022 and 2021, respectively. The decrease in equity in net income is primarily due to various operational and non-operational charges incurred at an affiliate.
Equity in Net Income of Non-Consolidated Affiliates Equity in net income of non-consolidated affiliates was a loss of $10 million and $1 million for the years ended December 31, 2023 and 2022, respectively. The decrease is primarily due to various operational and non-operational charges incurred at an affiliate.
Cash balances totaling $356 million were located in jurisdictions outside of the United States, of which approximately $130 million is considered permanently reinvested for funding ongoing operations outside of the U.S.
Cash balances totaling $383 million were located in jurisdictions outside of the United States, of which approximately $85 million is considered permanently reinvested for funding ongoing operations outside of the U.S.
Plan 2022 Funded Status 25 basis point decrease in discount rate (a)(b) Less than -$1 million -$16 million Less than -$1 million -$6 million 25 basis point increase in discount rate (a)(b) Less than +$1 million +$15 million Less than +$1 million +$6 million 25 basis point decrease in expected return on assets (a) +$1.6 million Less than +$1 million 25 basis point increase in expected return on assets (a) -$1.6 million Less than -$1 million (a) Assumes all other assumptions are held constant.
Plan 2023 Funded Status 25 basis point decrease in discount rate (a)(b) Less than -$1 million -$17 million Less than -$1 million -$7 million 25 basis point increase in discount rate (a)(b) Less than +$1 million +$16 million Less than +$1 million +$6 million 25 basis point decrease in expected return on assets (a) +$1.6 million Less than +$1 million 25 basis point increase in expected return on assets (a) -$1.6 million Less than -$1 million (a) Assumes all other assumptions are held constant.
Moreover, repatriation efforts may be modified by the Company according to prevailing circumstances. Access to additional capital through the debt or equity markets is influenced by the Company's credit ratings. As of December 31, 2022, the Company’s corporate credit rating is Ba3 and BB- by Moody’s and Standard & Poor’s, respectively.
Moreover, repatriation efforts may be modified by the Company according to prevailing circumstances. Access to additional capital through the debt or equity markets is influenced by the Company's credit ratings. As of December 31, 2023, the Company’s corporate credit rating is BB- by Standard & Poor’s.
Forward-looking statements give current expectations or forecasts of future events. Words such as “anticipate”, “expect”, “intend”, “plan”, “believe”, “seek”, “estimate” and other words and terms of similar meaning in connection with discussions of future operating or financial performance signify forward-looking statements.
Words such as “anticipate”, “expect”, “intend”, “plan”, “believe”, “seek”, “estimate” and other words and terms of similar meaning in connection with discussions of future operating or financial performance signify forward-looking statements.
Debt and Capital Structure See "Liquidity" above and also see Note 10, "Debt" and Note 14, "Stockholders' Equity and Non-controlling Interests" to the Company's consolidated financial statements included in Item 8 of this Form 10-K for further information. 29 Fair Value Measurements See Note 16, "Fair Value Measurements" to the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.
Debt and Capital Structure See "Liquidity" above and also see Note 10, "Debt" and Note 14, "Stockholders' Equity and Non-controlling Interests" to the Company's consolidated financial statements included in Item 8 of this Form 10-K for further information.
Visteon's broad portfolio of cockpit electronics technology, the industry's first wireless battery management system, and the development of safety technology integrated into its domain controllers positions Visteon to support these macro trends in the automotive industry. • Long-Term Growth - The Company has continued to win business at a rate that exceeds current sales levels by demonstrating product quality, technical and development capability, new product innovation, reliability, timeliness, product design, manufacturing capability, and flexibility, as well as overall customer service. • Enhance Shareholder Returns While Maintaining a Strong Balance Sheet - The Company has returned approximately $3.3 billion to shareholders since 2015.
Visteon's broad portfolio of cockpit electronics technology, the industry's first wireless battery management system, and the development of safety technology integrated into its domain controllers positions Visteon to support these macro trends in the automotive industry. • Long-Term Growth - The Company has continued to win business at a rate that exceeds current sales levels by demonstrating product quality, technical and development capability, new product innovation, reliability, timeliness, product design, manufacturing capability, and flexibility, as well as overall customer service. • Enhance Shareholder Returns While Maintaining a Strong Balance Sheet - The Company has continued to maintain a strong balance sheet to withstand industry volatility while providing a foundation for future growth and shareholder returns.
See Note 16, "Fair Value Measurements" and Note 6, "Property and Equipment" in the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.
Fair Value Measurements See Note 16, "Fair Value Measurements" to the Company's consolidated financial statements included in Item 8 of this Form 10-K for additional information.
Pension Plans Certain Company employees participate in defined benefit pension plans or retirement/termination indemnity plans. The Company has approximately $92 million in unfunded net pension liabilities as of December 31, 2022, of which approximately $71 million and $21 million are attributable to U.S. and non-U.S. pension plans, respectively.
Pension Plans Certain Company employees participate in defined benefit pension plans or retirement/termination indemnity plans. The Company has approximately $142 million in unfunded net pension liabilities as of December 31, 2023, of which approximately $113 million and $29 million are attributable to U.S. and non-U.S. pension plans, respectively.
Plans 2022 2021 2022 2021 Expected Rate of Return 6.23% 6.15% 2.00% - 8.90% 2.00% to 7.00% Long-Term Rates of Return 6.90% 6.23% 2.00% - 9.45% 2.00% to 7.00% Actual Rates of Return (17.10)% 9.40% (31.10)% 5.77% The Company has set the long-term rates of return assumptions for its 2023 pension expense which range from 2.00% to 9.45% outside the U.S. and 6.90% in the U.S.
Plans 2023 2022 2023 2022 Expected Rate of Return 6.87% 6.23% 2.00% - 9.45% 2.00% - 8.90% Long-Term Rates of Return 7.23% 6.90% 2.00% - 9.60% 2.00% - 9.45% Actual Rates of Return 3.22% (17.10)% 4.78% (31.10)% The Company has set the long-term rates of return assumptions for its 2024 pension expense which range from 2.00% to 9.60% outside the U.S. and 7.23% in the U.S.
Restructuring and Impairment During 2022, the Company recorded $9 million of restructuring expense primarily related to employee severance. Due to the current geopolitical situation in Eastern Europe the Company elected to close the Russian facility resulting in a 2022 non-cash impairment charge of $5 million to fully impair property and equipment and reduce inventory to its net realizable value .
In 2022, due to the geopolitical situation in Eastern Europe the Company elected to close the Russian facility resulting in a non-cash impairment charge of $5 million to fully impair property and equipment and reduce inventory to its net realizable value .
Plans 2022 2021 2022 2021 Weighted Average Discount Rates 2.48% 1.99% 2.23% 1.66% Discount Rates 2.48% 1.99% 0.55% to 9.55% 0.8% to 8.75% 31 While the Company believes that these assumptions are appropriate, significant differences in actual experience or significant changes in these assumptions may materially affect the Company’s pension benefit obligations and its future expense.
Plans 2023 2022 2023 2022 Weighted Average Discount Rates 5.40% 2.48% 5.33% 2.23% Discount Rates 5.40% 2.48% 1.20% - 11.50% 0.55% to 9.55% While the Company believes that these assumptions are appropriate, significant differences in actual experience or significant changes in these assumptions may materially affect the Company’s pension benefit obligations and its future expense.
Assumptions, including the discount rate, expected long-term rate of return on plan assets, and rate of increase in compensation, are described in Note 11, “Employee Benefit Plans” to the Company’s consolidated financial statements included in Item 8 of this Form 10-K, which are incorporated herein by reference.
Assumptions, including the discount rate, expected long-term rate of return on plan assets, and rate of increase in compensation, are described in Note 11, “Employee Benefit Plans” to the Company’s consolidated financial statements included in Item 8 of this Form 10-K, which are incorporated herein by reference. 29 Actual results that differ from assumptions used are accumulated and amortized over future periods and, accordingly, generally affect recognized expense in future periods.
The Company's platforms leverage proven, scalable hardware and software solutions that enable the digital, electric, and autonomous evolution of its global automotive customers. The automotive mobility market is expected to grow faster than underlying vehicle production volumes as the vehicle shifts from analog to digital and towards device and cloud connected, electric vehicles, and vehicles with more advanced safety features.
The automotive mobility market is expected to grow faster than underlying vehicle production volumes as the vehicle shifts from analog to digital and towards device and cloud connected, electric vehicles, and vehicles with more advanced safety features.
Affiliate working capital lines, which are utilized by the Company's consolidated joint ventures, had availability of $192 million and the Company had $400 million of available credit under the revolving credit facility as of December 31, 2022. Cash Balances As of December 31, 2022, the Company had total cash and equivalents of $523 million, including $3 million of restricted cash.
Affiliate working capital lines had availability of $151 million and the Company had $400 million of available credit under the revolving credit facility as of December 31, 2023. Cash Balances As of December 31, 2023, the Company had total cash and equivalents of $518 million, including $3 million of restricted cash.
Unfavorable cost performance, design changes and other increased cost of sales by $390 million primarily due to supply chain and material cost impacts associated with the worldwide semiconductor supply shortage. 22 A summary of net engineering costs is shown below: Year Ended December 31, (In millions) 2022 2021 Gross engineering costs $ (341) $ (325) Engineering recoveries 145 134 Engineering costs, net $ (196) $ (191) Gross engineering costs relate to forward model program development and advanced engineering activities and exclude contractually reimbursable engineering costs.
Favorable cost performance, design changes and other decreased cost of sales by $302 million primarily due to improved supply chain dynamics related to the worldwide semiconductor supply shortage as well as manufacturing efficiencies. 24 A summary of net engineering costs is shown below: Year Ended December 31, (In millions) 2023 2022 Gross engineering costs $ (330) $ (341) Engineering recoveries 120 145 Engineering costs, net $ (210) $ (196) Gross engineering costs relate to forward model program development and advanced engineering activities and exclude contractually reimbursable engineering costs.
Favorable volumes and net new business increased net sales by $722 million due to modest increases in customer production and continued market outperformance as a result of recent product launches. Customer pricing increased net sales by $395 million, primarily due to customer recoveries.
Volumes and net new business increased net sales by $500 million due to increases in customer production and continued market outperformance as a result of recent product launches. Customer pricing decreased net sales by $256 million primarily as a result of lower customer recoveries due to improving supply chain dynamics related to the worldwide semiconductor supply shortage.
Actual results that differ from assumptions used are accumulated and amortized over future periods and, accordingly, generally affect recognized expense in future periods. Therefore, assumptions used to calculate benefit obligations as of the annual measurement date directly impact the expense to be recognized in future periods.
Therefore, assumptions used to calculate benefit obligations as of the annual measurement date directly impact the expense to be recognized in future periods.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses were $188 million, or 5.0% of net sales, and $175 million, or 6.3% of net sales, during the years ended December 31, 2022 and 2021, respectively. The increase is primarily due to increased employee related compensation, bad debt and travel and consulting expenses, partially offset by foreign currency.
Selling, General, and Administrative Expenses Selling, general, and administrative expenses were $207 million, or 5.2% of net sales, and $188 million, or 5.0% of net sales, during the years ended December 31, 2023 and 2022, respectively. The increase is primarily due to increased personnel costs and reserves for bad debt.
Unfavorable currency decreased net sales by $136 million, primarily attributable to the euro, Chinese renminbi, and Japanese yen. Cost of sales increased $869 million for the year ended December 31, 2022, when compared with 2021. Volume, mix and net new business increased cost of sales by $573 million.
Unfavorable currency decreased net sales by $44 million, primarily attributable to the Chinese renminbi, Japanese yen, and Indian rupee, partially offset by the euro. Other cost performance, primarily related to design changes, decreased sales by $2 million. Cost of sales increased $79 million for the year ended December 31, 2023, when compared with 2022.
The reconciliation of Adjusted EBITDA to net income attributable to Visteon for the years ended December 31, 2022 and 2021 is as follows: Year Ended December 31, (In millions) 2022 2021 Change Net income (loss) attributable to Visteon Corporation $ 124 $ 41 $ 83 Depreciation and amortization 108 108 — Restructuring and impairment 14 14 — Provision for income taxes 45 31 14 Non-cash, stock-based compensation expense 26 18 8 Interest expense, net 10 8 2 Net (income) loss attributable to non-controlling interests 6 9 (3) Equity in net loss (income) of non-consolidated affiliates 1 (6) 7 Other, net 14 5 9 Adjusted EBITDA $ 348 $ 228 $ 120 Adjusted EBITDA was $348 million for the year ended December 31, 2022, representing an increase of $120 million when compared with Adjusted EBITDA of $228 million for 2021.
The reconciliation of Adjusted EBITDA to net income attributable to Visteon for the years ended December 31, 2023 and 2022 is as follows: Year Ended December 31, (In millions) 2023 2022 Change Net income (loss) attributable to Visteon Corporation $ 486 $ 124 $ 362 Depreciation and amortization 104 108 (4) Restructuring and impairment 5 14 (9) (Benefit from) provision for income tax (248) 45 (293) Non-cash, stock-based compensation expense 34 26 8 Interest expense, net 7 10 (3) Net income (loss) attributable to non-controlling interests 19 6 13 Equity in net loss (income) of non-consolidated affiliates 10 1 9 Other, net 17 14 3 Adjusted EBITDA $ 434 $ 348 $ 86 2023 includes a non-cash tax benefit of $313 million related to a reduction in the valuation allowance against the U.S. deferred tax assets.
Recent Accounting Pronouncements See Note 1, “Summary of Significant Accounting Policies” to the Company's consolidated financial statements under Item 8 of this Form 10-K for a discussion of recent accounting pronouncements. 32 Forward-Looking Statements Certain statements contained or incorporated in this Annual Report on Form 10-K which are not statements of historical fact constitute “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”).
Forward-Looking Statements Certain statements contained or incorporated in this Annual Report on Form 10-K which are not statements of historical fact constitute “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Forward-looking statements give current expectations or forecasts of future events.
Net cash used by investing activities during the year ended December 31, 2021 totaled $63 million, as compared to $98 million in 2020, representing a decrease of $35 million. The decrease is primarily due to lower cash paid for capital expenditures of $34 million.
This increase in cash used by investing activities is primarily due to increased capital expenditures of $44 million. Financing Activities Net cash used by financing activities during the year ended December 31, 2023 totaled $156 million, as compared to a use of $9 million for 2022, representing increased usage of $147 million.
The increase in tax expense reflects $7 million attributable to changes in the year-over-year mix of earnings and differing tax rates between jurisdictions which reflects the overall increase in earnings in jurisdictions where the Company is profitable and withholding taxes, as well as $3 million related to the year-over-year impact of various tax law changes primarily in India and uncertain tax positions.
Excluding this item, the $20 million year-over-year increase in income tax expense is primarily attributable to the overall increase in pre-tax income, including changes in the mix of earnings and differing tax rates between jurisdictions as well as withholding taxes.
Net engineering costs of $196 million for the year ended December 31, 2022, including the impacts of currency, were $5 million higher than the same period of 2021. This increase is primarily related to higher engineering costs resulting from incremental program management costs with a joint venture partner partially offset by increased engineering recoveries.
Net engineering costs of $210 million for the year ended December 31, 2023, including the impacts of currency, were $14 million higher than the same period of 2022. This increase is primarily related to lower recoveries, higher personnel cost, and inflation; partially offset by the timing of project expense.
Additional discussion regarding the Company's restructuring activities is provided in Note 3, "Restructuring and Impairments" in the Company's consolidated financial statements included in Item 8 of this Form 10-K. The Company has committed to make investments totaling $15 million in two entities principally focused on the automotive sector pursuant to limited partnership agreements.
During the year ended December 31, 2023, the Company paid $8 million related to restructuring activities. Additional discussion regarding the Company's restructuring activities is provided in Note 3, "Restructuring and Impairments" in the Company's consolidated financial statements included in Item 8 of this Form 10-K.
Wins included multiple large multi-display wins bringing total displays wins in excess of $1.6 billion for the year, multiple SmartCore™ domain wins with lifetime revenue in excess of $1 billion, discrete cluster wins of approximately $1 billion, and incremental battery management system wins that extend the scope of previous customer wins. 1 Adjusted EBITDA is a Non-U.S.
Wins included cluster wins of approximately $1.6 billion, driven primarily by digital clusters, multiple SmartCore™ wins with lifetime revenue in excess of $1.3 billion, multiple large multi-display wins bringing total displays wins in excess of $0.8 billion for the year, momentum in connected services with the Company's first App Store win, first power electronics win for an integrated battery junction box, and incremental battery management system wins that extend the scope of previous customer wins.
As of December 31, 2022, the Company has contributed $11 million toward the aggregate investment commitments. As a limited partner in each entity, the Company will periodically make capital contributions toward this total commitment amount. Purchase Obligations As of December 31, 2022, the Company has contractual purchase obligations of approximately $51 million through 2025.
The Company has committed to make investments totaling $15 million in two entities principally focused on the automotive sector pursuant to limited partnership agreements. As of December 31, 2023, the Company has contributed $12 million toward the aggregate investment commitments. As a limited partner in each entity, the Company will periodically make capital contributions toward this total commitment amount.
Other Income, Net Other income, net consists of the following: Year Ended December 31, (In millions) 2022 2021 Pension financing benefits, net $ 20 $ 18 Gain on sale of investment 3 — Foreign currency translation charge (3) — $ 20 $ 18 The Company recorded a sale of an equity investment during the year ended December 31, 2022, resulting in a gain of $3 million.
Other Income, Net Other income, net consists of the following: Year Ended December 31, (In millions) 2023 2022 Pension financing benefits, net $ 11 $ 20 Gain on sale of investment — 3 Foreign currency translation charge — (3) Township settlement (12) — $ (1) $ 20 25 Income Taxes The Company's benefit from income taxes was $248 million for year ended December 31, 2023, an increased benefit of $293 million when compared with income tax expense in 2022.
Other Items Affecting Liquidity During the year ended December 31, 2022, cash contributions to the Company's non-U.S. employee retirement plans were approximately $7 million. Contributions related to certain non-U.S. plans of approximately $2 million have been deferred until 2024 due to COVID-19 relief measures.
Other Items Affecting Liquidity During the year ended December 31, 2023, cash contributions to the Company's non-U.S. employee retirement plans were approximately $7 million. Additionally, the Company expects to make contributions to its US and non-US defined benefit pension plans of $9 and $7 million, respectively, during 2024.
Leases The Company has operating leases primarily for corporate offices, technical and engineering centers, vehicles, and certain equipment with future lease obligations ranging from 2023 to 2033.
Leases The Company has operating leases primarily for corporate offices, technical and engineering centers, vehicles, and certain equipment with future lease obligations ranging from 2024 to 2033. Additional discussion regarding the Company's leasing 27 activities is provided in Note 8, "Leases" in the Company's consolidated financial statements included in Item 8 of this Form 10-K.
Net Sales and Cost of Sales (In millions) Net Sales Cost of Sales Gross Margin December 31, 2020 $ 2,548 $ (2,303) $ 245 Volume, mix, and net new business 185 (168) 17 Customer pricing, net 8 — 8 Currency 52 (41) 11 Engineering costs, net — 20 20 Cost performance, design changes and other (20) (27) (47) December 31, 2021 $ 2,773 $ (2,519) $ 254 Net sales for the year ended December 31, 2021 totaled $2,773 million, which represents an increase of $225 million compared with 2020.
Net Sales and Cost of Sales (In millions) Net Sales Cost of Sales Gross Margin December 31, 2022 $ 3,756 $ (3,388) $ 368 Volume, mix, and net new business 500 (386) 114 Customer pricing, net (256) — (256) Currency (44) 19 (25) Engineering costs, net — (14) (14) Cost performance, design changes, and other (2) 302 300 December 31, 2023 $ 3,954 $ (3,467) $ 487 Net sales for the year ended December 31, 2023 totaled $3,954 million, which represents an increase of $198 million compared with 2022.
MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s consolidated financial statements and related notes appearing in Item 8 of this Form 10-K “Financial Statements and Supplementary Data”. Executive Summary Strategic Priorities Visteon is a global automotive technology company serving the mobility industry, dedicated to creating more enjoyable, connected, and safe driving experiences.
MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s consolidated financial statements and related notes appearing in Item 8 of this Form 10-K “Financial Statements and Supplementary Data”. For discussion related to changes in financial condition and the results of operations for fiscal year 2022-related items, refer to Part II, Item 7.
These unfavorable impacts were partially offset by higher net income of $98 million and dividends received from non-consolidated affiliates of $18 million. Investing Activities Net cash used by investing activities during the year ended December 31, 2022 totaled $68 million, as compared to cash used of $63 million in 2021, representing an increase of $5 million.
The increases are partially offset by an increase of $39 million of cash paid for taxes. Investing Activities Net cash used by investing activities during the year ended December 31, 2023 totaled $123 million, as compared to cash used of $68 million in 2022, representing increased usage of $55 million.
In addition, the Company has continued to maintain a strong balance sheet to withstand near-term industry volatility while providing a foundation for future growth and shareholder returns. 20 Financial Results The pie charts below highlight the sales breakdown for Visteon for the year ended December 31, 2022. *Regional sales are based on the geographic region where sale originates and not where customer is located (excludes inter-regional eliminations).
The Company repurchased $106 million of Company common stock during 2023 as part of this program. 22 Financial Results The pie charts below highlight the sales breakdown for Visteon for the year ended December 31, 2023. *Regional sales are based on the geographic region where sale originates and not where customer is located (excludes inter-regional eliminations).
For further information related to the Company’s unrecognized tax benefits, see Note 13, “Income Taxes,” to the consolidated financial statements included in this Report. Cash Flows Operating Activities The Company generated $167 million of cash from operating activities during the year ended December 31, 2022, as compared to $58 million during 2021 representing a $109 million increase.
Cash Flows Operating Activities The Company generated $267 million of cash from operating activities during the year ended December 31, 2023, as compared to $167 million during 2022 representing a $100 million increase.
As of December 31, 2022, the Company had unrecognized tax benefits, including interest and penalties, that would be expected to result in a cash outlay of $7 million. Given the number of years, jurisdictions and positions subject to examination, the Company is unable to estimate the period of cash settlement, if any, with the respective taxing authorities.
Taxes The Company may be required to make significant cash outlays related to its unrecognized tax benefits, including interest and penalties. As of December 31, 2023, the Company had unrecognized tax benefits, including interest and penalties, that would be expected to result in a cash outlay of $17 million.
Interest Expense, Net Net interest expense for the year ended December 31, 2021, was $8 million, representing a decrease of $3 million as compared to 2020.
Interest Expense, Net Net interest expense for the year ended December 31, 2023, was $7 million, representing a decrease of $3 million as compared to 2022. Interest expense for these periods is primarily related to the Company's term debt facility partially offset by cash balances invested at higher interest rates.
Global Automotive Market Conditions and Production Levels The automotive industry has been negatively impacted by the COVID-19 pandemic and the ongoing semiconductor shortage. Industry vehicle volumes have increased in 2022 however remain near historically low levels despite strong consumer demand due to the ongoing semiconductor shortage.
Global Automotive Market Conditions and Production Levels For the last few years, the industry has been negatively impacted by the COVID-19 pandemic, worldwide semiconductor and other supply related shortages, a UAW strike, and increased geopolitical challenges. Industry vehicle volumes increased in 2022 and again in 2023 as the worldwide semiconductor and other supply related shortages have eased.
Lower warranty expense and net engineering costs, excluding currency, increased Adjusted EBITDA by $5 million and $20 million, respectively. 27 Liquidity Overview The Company's primary sources of liquidity are cash flows from operations, existing cash balances, and borrowings under available credit facilities.
Other cost performance increased Adjusted EBITDA by $261 million primarily related to design changes and improved supply chain dynamics related to the worldwide semiconductor supply shortage as well as manufacturing efficiencies. 26 Liquidity Overview The Company's primary sources of liquidity are cash flows from operations, existing cash balances, and borrowings under available credit facilities.
Visteon continued to build the foundation for sustainable growth launching 45 new products during 2022. Visteon's next-generation products continue to be featured on its customer's key vehicles and platforms. Additionally, Visteon was awarded $6 billion in new business wins with strong performance in all product categories.
Adjusted EBITDA* was $434 million, or 11% of sales as a result of operational leverage from higher volumes as well as commercial and cost discipline. Visteon continued to build the foundation for sustainable growth launching 129 new products during 2023. Visteon's next-generation products continue to be featured on its customer's key vehicles and platforms.
As a result of these actions and continued growth-over-market, Visteon reported sales of $3,756 million, a year-over-year increase of 40% when excluding the negative impact from currency. This represents a continued out-performance compared to industry and customer production volumes. Adjusted EBITDA 1 was $348 million, or 9.3% of sales.
Visteon reported sales of $3,954 million, a year-over-year increase of 5%, which represents continued out-performance compared to customer production. When excluding the impact of pricing from supply chain recoveries, Visteon’s base sales grew 12% from the prior year.
Cost of sales increased $216 million for the year ended December 31, 2021, when compared with 2020. Volume, mix and net new business increased cost of sales by $168 million. Foreign currency increased cost of sales by $41 million, primarily attributable to the euro, Brazilian real, and Chinese renminbi.
Volume, mix and net new business increased cost of sales by $386 million. Foreign currency decreased cost of sales by $19 million, primarily attributable to the Chinese renminbi and India rupee, partially offset by the Mexican peso. Net engineering costs, excluding currency, increased cost of sales by $14 million.
Favorable volumes and mix increased Adjusted EBITDA by $149 million. Foreign currency decreased Adjusted EBITDA by $19 million, primarily attributable to the euro, Chinese renminbi, and Japanese yen.
Adjusted EBITDA was $434 million for the year ended December 31, 2023, representing an increase of $86 million when compared with Adjusted EBITDA of $348 million for 2022. Favorable volumes and mix increased Adjusted EBITDA by $114 million. Foreign currency decreased Adjusted EBITDA by $24 million, primarily attributable to the Japanese yen and Mexican peso.
During 2020, the Company approved various restructuring programs impacting engineering, administrative, and manufacturing functions to improve efficiency and rationalize the Company’s footprint. The Company recorded $1 million and $76 million of restructuring expense for cash severance, retention, and termination costs for the years ended December 31, 2021 and 2020, respectively related to these programs .
Restructuring and Impairment The Company recorded $5 million and $9 million of net restructuring expense for the years ended December 31, 2023 and 2022, respectively, primarily related to employee severance.
Favorable volumes and mix increased Adjusted EBITDA by $17 million. Foreign currency increased Adjusted EBITDA by $7 million, primarily attributable to the euro, Brazilian real, and Chinese renminbi. Increased costs, primarily due to supply chain and material cost impacts associated with the worldwide semiconductor supply shortage, partially offset by customer recoveries, decreased Adjusted EBITDA by $13 million.
Net engineering costs, excluding currency, decreased Adjusted EBITDA by $12 million. Customer pricing decreased Adjusted EBITDA by $256 million primarily as a result of lower semiconductor open market purchases and the associated customer recoveries due to improving supply chain dynamics related to the worldwide semiconductor supply shortage.
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Visteon expects ongoing uncertainty and volatility as a result of the on-going shortages of semiconductors, geopolitical situation in Eastern Europe, uncertain global economy, and the COVID-19 related impacts in China and other countries.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for fiscal year 2022, which was filed with the Securities and Exchange Commission on February 16, 2023.
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Early in 2021, Visteon set up a cross-functional task force which implemented several actions including the purchase of semiconductors through brokers and distributors, expedited logistics, and engineering redesigns while leading calls with customers and suppliers to minimizing manufacturing downtime. In addition, Visteon worked with its customers to pass along the elevated costs caused by semiconductor shortages.
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Executive Summary Strategic Priorities Visteon is a global automotive technology company serving the mobility industry, dedicated to creating more enjoyable, connected, and safe driving experiences. The Company's platforms leverage proven, scalable hardware and software solutions that enable the digital, electric, and autonomous evolution of its global automotive customers.
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Foreign currency decreased cost of sales by $109 million, primarily attributable to the euro, Chinese renminbi, and Japanese yen.
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In March 2023, the Company announced a $300 million share repurchase program maturing at the end of 2026.
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Interest Expense, Net Net interest expense for the year ended December 31, 2022, was $10 million, representing an increase of $2 million as compared to 2021.
Added
However, industry production volumes of approximately 90 million units in 2023 remained below recent industry production levels that peaked in 2017 and risks related to vehicle affordability, economic uncertainty, potential geopolitical challenges, and customer market share changes create ongoing uncertainties.
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The increase in interest expense as compared to 2021 is primarily due to interest on the Company's SOFR based facility partially offset by the settlement of the derivatives associated with the terminated LIBOR based debt as well as increased interest income.
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Additionally, Visteon was awarded $7.2 billion in new business wins with strong representation in all product categories.
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During the year ended December 31, 2022, the Company recorded a charge of $3 million related to foreign currency translation amounts recorded in accumulated other comprehensive loss associated with the close of the Russian facility. 23 Income Taxes The Company's provision for income taxes was $45 million for year ended December 31, 2022, an increase of $14 million when compared with 2021.
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During the fourth quarter of 2023, the Company released $313 million of its deferred tax valuation allowance related to its U.S. federal and certain state deferred tax assets.
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The increase in tax expense is primarily attributable to the increase in pretax income, changes in the year-over-year mix of earnings, as well as establishing full valuation allowances on the deferred tax assets of two foreign subsidiaries.
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On March 2, 2023 the Company's board of directors authorized a share repurchase program of $300 million of common stock through December 31, 2026. Under this program, the Company will repurchase shares at the prevailing market prices pursuant to specified share price and daily volume limits.
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Other changes in the Company's deferred tax asset valuation allowances did not materially impact net tax expense during the years ended December 31, 2022 or 2021.
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During the year ended December 31, 2023, the Company has purchased 783,290 shares at an average price of $135.22 related to this program. Purchase Obligations As of December 31, 2023, the Company has contractual purchase obligations of approximately $22 million through 2028.
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Lower warranty expense and net engineering costs, excluding currency, decreased Adjusted EBITDA by $4 million and $15 million, respectively. 24 Year ended December 31, 2021 Compared to Year ended December 31, 2020 The Company's consolidated results of operations for the years ended December 31, 2021 and 2020 were as follows: Year Ended December 31, (In millions) 2021 2020 Change Net sales $ 2,773 $ 2,548 $ 225 Cost of sales (2,519) (2,303) (216) Gross margin 254 245 9 Selling, general and administrative expenses (175) (193) 18 Restructuring and impairment (14) (76) 62 Interest expense, net (8) (11) 3 Equity in net income of non-consolidated affiliates 6 6 — Other income, net 18 9 9 Income (loss) before income taxes 81 (20) 101 Provision for income taxes (31) (28) (3) Net income (loss) 50 (48) 98 Net (income) loss attributable to non-controlling interests (9) (8) (1) Net income (loss) attributable to Visteon Corporation $ 41 $ (56) $ 97 Adjusted EBITDA* $ 228 $ 192 $ 36 * Adjusted EBITDA is a Non-U.S.
Added
Given the number of years, jurisdictions and positions subject to examination, the Company is unable to estimate the period of cash settlement, if any, with the respective taxing authorities. For further information related to the Company’s unrecognized tax benefits, see Note 13, “Income Taxes,” to the consolidated financial statements included in this Report.
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Favorable volumes and net new business increased net sales by $185 million. Customer pricing increased net sales by $8 million, primarily due to customer recoveries. Favorable currency increased net sales by $52 million, primarily attributable to the euro, Brazilian real, and Chinese renminbi. Other cost performance, primarily related to design changes, reduced sales by $20 million.
Added
The increase in cash from operations in 2023 when compared to the prior period is primarily attributable to higher Adjusted EBITDA of $86 million and improved working capital usage of $50 million, primarily related to customer collections and improved inventory management, offset by decreased payables.
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Net engineering costs, excluding currency, decreased cost of sales by $20 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Company's use of derivative instruments is limited to mitigation of market risks. Derivative instruments are not used for speculative or trading purposes, as per clearly defined risk management policies. Additionally, the Company's use of derivative instruments creates exposure to credit loss in the event of nonperformance by the counterparty to the derivative financial instruments.
Biggest changeThe Company's use of derivative instruments is strictly intended for hedging purposes to mitigate market risks pursuant to written risk management policies. Accordingly, derivative instruments are not used for speculative or trading purposes. The Company's use of derivative instruments creates exposure to credit loss in the event of non-performance by the counter-party to the derivative financial instruments.
The Company continues to evaluate derivatives available in the marketplace and may decide to utilize derivatives in the future to manage select commodity risks if an acceptable hedging instrument is identified for the Company's exposure level at that time, as well as the effectiveness of the financial hedge among other factors. 35
The Company continues to evaluate derivatives available in the marketplace and may decide to utilize derivatives in the future to manage select commodity risks if an acceptable hedging instrument is identified for the Company's exposure level at that time, as well as the effectiveness of the financial hedge among other factors. 33
Foreign Currency Risk The Company’s net cash inflows and outflows exposed to the risk of changes in foreign currency exchange rates arise from the sale of products in countries other than the manufacturing source, foreign currency denominated supplier payments, debt and other payables, subsidiary dividends, investments in subsidiaries, and anticipated foreign currency denominated transaction proceeds.
Foreign Currency Risk The Company’s net cash inflows and outflows exposed to the risk of changes in foreign currency exchange rates arise from the sale of products in countries other than the manufacturing source, foreign currency denominated customer receipts, supplier payments, debt and other payables, subsidiary dividends, investments in subsidiaries, and anticipated foreign currency denominated transaction proceeds.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk The primary market risks to which the Company is exposed include changes in foreign currency exchange rates, interest rates and certain commodity prices. The Company manages these risks through the use of derivative instruments and various operating actions including fixed price contracts with suppliers and cost sourcing arrangements with customers.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk The primary market risks to which the Company is exposed include changes in currency exchange rates, interest rates and certain commodity prices. The Company manages these risks through operating actions including fixed price contracts with suppliers and cost sourcing arrangements with customers and through various derivative instruments.
Where possible, the Company utilizes derivative financial instruments to manage foreign currency exchange rate risks. Forward and option contracts may be utilized to reduce the impact to the Company's cash flow from adverse movements in exchange rates. Foreign currency exposures are reviewed periodically, and any natural offsets are considered prior to entering into a derivative financial instrument.
The Company may utilize derivative financial instruments to manage foreign currency exchange rate risks. Forward and option contracts may be utilized to reduce the impact to the Company's cash flow from adverse movements in exchange rates. Foreign currency exposures are reviewed periodically, and any natural offsets are considered prior to entering into a derivative financial instrument.
The hypothetical pretax gain or loss in fair value from a 10% favorable or adverse change in quoted currency exchange rates would be approximately $21 million and $29 million for foreign currency derivative financial instruments as of December 31, 2022 and 2021, respectively.
The hypothetical pretax gain or loss in fair value from a 10% favorable or adverse change in quoted currency exchange rates would be approximately $21 million for foreign currency derivative financial instruments as of December 31, 2023 and 2022.
The Company limits this exposure by entering into agreements directly with a variety of highly rated financial institutions that are expected to fully satisfy their obligations under the contracts. Additionally, the Company's ability to utilize derivatives to manage market risk is dependent on credit conditions and market conditions given the current economic environment.
The Company limits this exposure by entering into agreements directly with a variety of major financial institutions with high credit standards and that are expected to fully satisfy their obligations under the contracts. Additionally, the Company's ability to utilize derivatives to manage market risk is dependent on credit conditions, market conditions, and prevailing economic environment.
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The Company’s primary hedged foreign currency exposures include the euro and Brazilian real. Where possible, the Company utilizes a strategy of partial coverage for transactions in these currencies. The Company's policy requires that hedge transactions relate to a specific portion of the exposure not to exceed the aggregate amount of the underlying transaction.

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