Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Feb. 04, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | Garrett Motion Inc. | ||
Entity Central Index Key | 0001735707 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Common Stock, Shares Outstanding | 75,813,634 | ||
Entity Public Float | $ 415 | ||
Entity File Number | 001-38636 | ||
Entity Tax Identification Number | 82-4873189 | ||
Entity Address, Address Line One | La Pièce 16 | ||
Entity Address, City or Town | Rolle | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Country | CH | ||
Entity Address, Postal Zip Code | 1180 | ||
City Area Code | 41 21 | ||
Local Phone Number | 695 30 00 | ||
Entity Interactive Data Current | Yes | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
ICFR Auditor Attestation Flag | true |
CONSOLIDATED AND COMBINED STATE
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Statement [Abstract] | |||||||||||
Net sales (Note 4) | $ 1,008 | $ 804 | $ 477 | $ 745 | $ 830 | $ 781 | $ 802 | $ 835 | $ 3,034 | $ 3,248 | $ 3,375 |
Cost of goods sold | 2,478 | 2,537 | 2,599 | ||||||||
Gross profit | 178 | 152 | 84 | 142 | 161 | 172 | 182 | 196 | 556 | 711 | 776 |
Selling, general and administrative expenses | 277 | 249 | 249 | ||||||||
Other expense, net (Note 5) | 46 | 40 | 120 | ||||||||
Interest expense (excludes contractual interest for the twelve months ended December 31, 2020 of $14 million) (Note 2) | 79 | 68 | 19 | ||||||||
Non-operating (income) expense (Note 6) | (38) | 8 | (8) | ||||||||
Reorganization items, net | 73 | ||||||||||
Income before taxes | 119 | 346 | 396 | ||||||||
Tax expense (benefit) (Note 7) | 39 | 33 | (810) | ||||||||
Net income | $ 26 | $ 11 | $ (9) | $ 52 | $ 136 | $ 38 | $ 66 | $ 73 | $ 80 | $ 313 | $ 1,206 |
Earnings (losses) per common share | |||||||||||
Basic | $ 0.34 | $ 0.15 | $ (0.12) | $ 0.69 | $ 1.82 | $ 0.51 | $ 0.88 | $ 0.98 | $ 1.06 | $ 4.20 | $ 16.28 |
Diluted | $ 0.34 | $ 0.14 | $ (0.12) | $ 0.68 | $ 1.79 | $ 0.50 | $ 0.86 | $ 0.97 | $ 1.05 | $ 4.12 | $ 16.21 |
Weighted average common shares outstanding | |||||||||||
Basic | 75,543,461 | 74,602,868 | 74,059,240 | ||||||||
Diluted | 76,100,509 | 75,934,373 | 74,402,148 |
CONSOLIDATED AND COMBINED STA_2
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (Parenthetical) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Income Statement [Abstract] | |
Contractual interest | $ 14 |
CONSOLIDATED AND COMBINED STA_3
CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net income | $ 80 | $ 313 | $ 1,206 |
Foreign exchange translation adjustment | (234) | 67 | (198) |
Defined benefit pension plan adjustment, net of tax (Note 24) | (18) | (14) | (2) |
Changes in fair value of effective cash flow hedges, net of tax (Note 18) | (7) | 4 | 35 |
Total other comprehensive (loss) income, net of tax | (259) | 57 | (165) |
Comprehensive (loss) income | $ (179) | $ 370 | $ 1,041 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 592 | $ 187 |
Restricted cash (Note 3) | 101 | |
Accounts, notes and other receivables, net (Note 8) | 841 | 707 |
Inventories, net (Note 10) | 235 | 220 |
Other current assets (Note 11) | 110 | 85 |
Total current assets | 1,879 | 1,199 |
Investments and long-term receivables | 30 | 36 |
Property, plant and equipment, net (Note 13) | 505 | 471 |
Goodwill (Note 14) | 193 | 193 |
Deferred income taxes (Note 7) | 275 | 268 |
Other assets (Note 12) | 135 | 108 |
Total assets | 3,017 | 2,275 |
Current liabilities: | ||
Accounts payable | 1,019 | 1,009 |
Borrowings under revolving credit facility (Note 16) | 370 | |
Current maturities of long-term debt (Note 16) | 4 | |
Debtor-in-possession Term Loan (Note 16) | 200 | |
Obligations payable to Honeywell, current (Note 23) | 69 | |
Accrued liabilities (Note 15) | 248 | 310 |
Total current liabilities | 1,837 | 1,392 |
Long-term debt (Note 16) | 1,082 | 1,409 |
Deferred income taxes (Note 7) | 2 | 51 |
Obligations payable to Honeywell (Note 23) | 1,282 | |
Other liabilities (Note 19) | 114 | 274 |
Total liabilities not subject to compromise | 3,035 | 4,408 |
Liabilities subject to compromise (Note 2) | 2,290 | |
Total liabilities | 5,325 | 4,408 |
COMMITMENTS AND CONTINGENCIES (Note 23) | ||
EQUITY (DEFICIT) | ||
Additional paid-in capital | 28 | 19 |
Retained earnings | (2,207) | (2,282) |
Accumulated other comprehensive loss (income) (Note 20) | (129) | 130 |
Total equity (deficit) | (2,308) | (2,133) |
Total liabilities and equity (deficit) | $ 3,017 | $ 2,275 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares, issued | 76,229,578 | 74,911,139 |
Common stock, shares, outstanding | 75,813,634 | 74,826,329 |
CONSOLIDATED AND COMBINED STA_4
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | |||
Net income | $ 80 | $ 313 | $ 1,206 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Deferred income taxes | (34) | (41) | (931) |
Reorganization items, net | 60 | ||
Depreciation | 86 | 73 | 72 |
Amortization of deferred issuance costs | 7 | 9 | 2 |
Foreign exchange (gain) loss | (58) | 19 | 15 |
Stock compensation expense | 10 | 18 | 21 |
Pension expense | 15 | 18 | 10 |
Other | 44 | 19 | 37 |
Changes in assets and liabilities: | |||
Accounts, notes and other receivables | (162) | 32 | (30) |
Receivables from related parties | 57 | ||
Inventories | (14) | (60) | 2 |
Other assets | (45) | (22) | (46) |
Accounts payable | 41 | 87 | 63 |
Payables to related parties | (50) | ||
Accrued liabilities | (13) | (60) | 49 |
Obligations payable to Honeywell | 6 | (143) | (76) |
Asbestos-related liabilities | (1) | ||
Other liabilities | 2 | (20) | (27) |
Net cash provided by operating activities | 25 | 242 | 373 |
Cash flows from investing activities: | |||
Expenditures for property, plant and equipment | (80) | (102) | (95) |
Increase in marketable securities | (21) | ||
Decrease in marketable securities | 312 | ||
Other | 16 | (4) | |
Net cash (used for) provided by investing activities | (80) | (86) | 192 |
Cash flows from financing activities: | |||
Net increase in Invested deficit | (1,493) | ||
Proceeds from debtor-in-possession financing | 200 | ||
Proceeds from revolving credit facilities | 1,449 | 745 | 331 |
Payments of revolving credit facilities | (1,100) | (745) | (331) |
Proceeds from issuance of long-term debt | 1,631 | ||
Payments of long-term debt | (2) | (163) | (6) |
Debtor-in-possession financing fees | (13) | ||
Payments related to related party notes payable | (493) | ||
Net change to cash pooling and short-term notes | (300) | ||
Other | (4) | 3 | |
Net cash provided by (used for) financing activities | 530 | (163) | (658) |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 31 | (2) | (11) |
Net increase/ (decrease) in cash, cash equivalents and restricted cash | 506 | (9) | (104) |
Cash and cash equivalents at beginning of period | 187 | 196 | 300 |
Cash, cash equivalents and restricted cash at end of period | 693 | 187 | 196 |
Supplemental cash flow disclosures: | |||
Income taxes paid (net of refunds) | 44 | 93 | 76 |
Interest expense paid | 63 | 54 | 12 |
Reorganization items paid | 14 | ||
Supplemental schedule of non-cash investing and financing activities: | |||
Expenditures for property, plant and equipment in accounts payable | $ 47 | $ 51 | $ 43 |
CONSOLIDATED AND COMBINED STA_5
CONSOLIDATED AND COMBINED STATEMENTS OF EQUITY (DEFICIT) - USD ($) shares in Millions, $ in Millions | Total | Cumulative-Effect Adjustment | Before Spin-Off | After Spin-Off | Common Stock | Additional Paid-in Capital | Retained Earnings | Retained EarningsCumulative-Effect Adjustment | Retained EarningsAfter Spin-Off | Invested Deficit | Invested DeficitBefore Spin-Off | Other Comprehensive Income/(loss) |
Beginning balance at Dec. 31, 2017 | $ (2,195) | $ (2,433) | $ 238 | |||||||||
Net income | 1,206 | $ 1,137 | $ 69 | $ 69 | $ 1,137 | |||||||
Other comprehensive income, net of tax | (165) | (165) | ||||||||||
Change in Invested deficit | (1,168) | (1,168) | ||||||||||
Spin-Off related adjustments | (200) | (200) | ||||||||||
Issuance of common stock and reclassification of invested deficit | $ (2,664) | $ 2,664 | ||||||||||
Issuance of common stock and reclassification of invested deficit, Shares | 74 | |||||||||||
Stock-based compensation | 5 | $ 5 | ||||||||||
Ending balance at Dec. 31, 2018 | (2,517) | 5 | (2,595) | 73 | ||||||||
Ending balance, Shares at Dec. 31, 2018 | 74 | |||||||||||
Net income | 313 | 313 | ||||||||||
Other comprehensive income, net of tax | 57 | 57 | ||||||||||
Stock-based compensation | 18 | 18 | ||||||||||
Stock based compensation, Shares | 1 | |||||||||||
Tax withholding related to vesting of restricted stock units and other | (4) | (4) | ||||||||||
Ending balance at Dec. 31, 2019 | (2,133) | $ (5) | 19 | (2,282) | $ (5) | 130 | ||||||
Ending balance, Shares at Dec. 31, 2019 | 75 | |||||||||||
Net income | 80 | 80 | ||||||||||
Other comprehensive income, net of tax | (259) | (259) | ||||||||||
Stock-based compensation | 10 | 10 | ||||||||||
Stock based compensation, Shares | 1 | |||||||||||
Tax withholding related to vesting of restricted stock units and other | (1) | (1) | ||||||||||
Accounting Standards Update Extensible List | us-gaap:AccountingStandardsUpdate201613Member | us-gaap:AccountingStandardsUpdate201613Member | ||||||||||
Ending balance at Dec. 31, 2020 | $ (2,308) | $ 28 | $ (2,207) | $ (129) | ||||||||
Ending balance, Shares at Dec. 31, 2020 | 76 |
Background and Basis of Present
Background and Basis of Presentation | 12 Months Ended |
Dec. 31, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Background and Basis of Presentation | Note 1. Background and Background Garrett Motion Inc. (the “Company” or “Garrett”) designs, manufactures and sells highly engineered turbocharger and electric-boosting technologies for light and commercial vehicle original equipment manufacturers (“OEMs”) and the global vehicle independent aftermarket, as well as automotive software solutions. These OEMs in turn ship to consumers globally , natural gas On October 1, 2018, the Company became an independent publicly-traded company through a pro rata distribution by Honeywell International Inc. (“Former Parent” or “Honeywell”) of 100% of the then-outstanding shares of Garrett to Honeywell’s stockholders (the “Spin-Off”). Each Honeywell stockholder of record received one share of Garrett common stock for every 10 COVID-19 In 2020, the COVID-19 virus was declared a pandemic and spread across the world, including throughout Asia, the United States and Europe. Our business operations have been materially disrupted and our revenues have decreased significantly as a result of the COVID-19 pandemic and related response measures, and we expect our financial performance in future fiscal quarters, to be materially negatively affected by the pandemic and its impact on the global automotive industry. O n June 12, 2020, the Company entered into an amendment (the “2020 Amendment”) to its Credit Agreement, dated as of September 27, 2018 (as amended, the “Prepetition Credit Agreement”) by and among the Company, Garrett LX I S.à r.l., Garrett LX II S.à r.l., Garrett LX III S.à r.l., Garrett Borrowing LLC, and Garrett Motion Sàrl (f/k/a Honeywell Technologies Sàrl), the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent, consisting of: • a seven-year term B loan facility, consisting of a tranche denominated in Euro of €375 million and a tranche denominated in U.S. Dollars of $425 million (the “Term B Facility”); • a five-year term A loan facility in an aggregate principal amount of €330 million (the “Term A Facility” and, together with the Term B Facility, the “Term Loan Facilities”); and • a five-year revolving credit facility in an aggregate principal amount of €430 million (the “Revolving Facility” and, together with the Term Loan Facilities, the “Senior Credit Facilities”). The primary purpose for entering into the 2020 Amendment was to obtain covenant relief with respect to the total leverage ratio and interest coverage ratios under the Prepetition The 2020 Amendment qualified as a debt modification that did not result in an extinguishment or have a material impact on our Consolidated Financial Statements. The commencement of the Chapter 11 Cases (as defined below) constituted an event of default that accelerated the Company’s obligations, as applicable, under the Prepetition Credit Agreement. The Prepetition Credit Agreement provides that as a result of the commencement of the Chapter 11 Cases, the principal, interest and all other amounts due thereunder shall be immediately due and payable. Any efforts to enforce the payment obligations under the Prepetition Credit Agreement are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Prepetition Credit Agreement are subject to the applicable provisions of the Bankruptcy Code. Voluntary Filing Under Chapter 11 On September 20, 2020 (the “Petition Date”), the Company and certain of its subsidiaries (collectively, the “Debtors”) each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Debtors’ chapter 11 cases (the “Chapter 11 Cases”) are being jointly administered under the caption “In re: Garrett Motion Inc., 20-12212.” On September 22 and 24, 2020, the Bankruptcy Court entered orders granting interim approval of certain forms of relief requested by the Debtors, enabling the Debtors to conduct their business activities in the ordinary course, subject to the terms and conditions of such orders, including authorizing the Debtors to pay employee wages and benefits, to pay certain taxes and certain governmental fees and charges, to continue to operate the Debtors’ cash management system in the ordinary course, to maintain certain customer programs, and to pay the prepetition claims of certain of the Debtors’ vendors. On October 20 and 21, 2020, the Bankruptcy Court entered orders granting such relief on a final basis. For goods and services provided following the Petition Date, the Debtors continue to pay vendors under normal terms. The Consolidated Financial Statements included herein have been prepared in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852, Reorganizations. See Note 2, Reorganization and Chapter 11 Proceedings, for further details. Delisting from NYSE On September 20, 2020, the Company was notified by the New York Stock Exchange (the “NYSE”) that, as a result of the Chapter 11 Cases, and in accordance with Section 802.01D of the NYSE Listed Company Manual, that the NYSE had commenced proceedings to delist the Company’s common stock from the NYSE. The NYSE indefinitely suspended trading of the Company’s common stock on September 21, 2020. The Company determined not to appeal the NYSE’s determination. On October 8, 2020, the NYSE filed a Form 25-NSE with the Securities and Exchange Commission, which removed the Company’s common stock from listing and registration on the NYSE effective as of the opening of business on October 19, 2020. Trading of the Company’s common stock now occurs on the OTC Pink Market under the symbol “GTXMQ.” Any over-the-counter market quotations of the Company’s common stock reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Going Concern The accompanying Consolidated and Combined Financial Statements have been prepared assuming that the Company will continue as a going concern and contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. Liabilities subject to compromise will be resolved in connection with the Chapter 11 Cases. The Company’s ability to continue as a going concern is contingent upon the Company’s ability to successfully implement a plan of reorganization in the Chapter 11 Cases, among other factors. As a result of the Chapter 11 Cases, the realization of assets and the satisfaction of liabilities are subject to uncertainty. While operating as debtors-in-possession under the Bankruptcy Code, the Company may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business, for amounts other than those reflected in the accompanying Consolidated and Combined Financial Statements. Further, any plan of reorganization in the Chapter 11 Cases could materially change the amounts and classifications of assets and liabilities reported in the Consolidated and Combined Financial Statements. The accompanying Consolidated and Combined Financial Statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern or as a consequence of the Chapter 11 Cases. As a result of our financial condition, uncertainty related to the impacts of COVID-19, and the risks and uncertainties surrounding the Chapter 11 Cases, substantial doubt exists that we will be able to continue as a going concern. Basis of Presentation Prior to the Spin-Off on October 1, 2018, our historical financial statements were prepared on a stand-alone combined basis and were derived from the consolidated financial statements and accounting records of Honeywell. Accordingly, for periods prior to October 1, 2018, our financial statements are presented on a combined basis and for the periods subsequent to October 1, 2018 are presented on a consolidated basis (collectively, the historical financial statements for all periods presented are referred to as “Consolidated and Combined Financial Statements”). The Consolidated and Combined Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All amounts presented are in millions, except per share amounts. Asbestos-related expenses, net of probable insurance recoveries, are presented within Other expense, net in the Consolidated and Combined Statement of Operations. Honeywell is subject to certain asbestos-related and environmental-related liabilities, primarily related to its legacy Bendix business. In conjunction with the Spin-Off, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, as well as certain operations that were part of other legacy elements of the Business, were transferred to us. The accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the indemnification and reimbursement agreement with Honeywell entered into on September 12, 2018 (the “Honeywell Indemnity Agreement”), under which Garrett ASASCO is required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. The Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. We have accounted for the Honeywell liability consistent with the agreement up to the Petition Date and classified it as part of Liabilities Subject to Compromise. Under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Honeywell Indemnity Agreement, that certain Indemnification Guarantee Agreement, dated as of September 27, 2018 (as amended, restated, amended and restated, supplemented, or otherwise modified from time to time), by and among Honeywell ASASCO 2 Inc. as payee, Garrett ASASCO as payor, and certain subsidiary guarantors as defined therein (the “Guarantee Agreement,” and together with the Honeywell Indemnity Agreement, the “Indemnity Agreements”) and the Tax Matters Agreement and (b) the dismissal with prejudice of the Honeywell Litigation in exchange for (x) a $375 million cash payment at emergence from the Chapter 11 Cases (“Emergence”) The Debtors’ entry into and performance under the PSA and the terms of the PSA, the Transaction and the Plan remain subject to approval by the Bankruptcy Court. There can be no assurances that the Debtors will obtain the approval of the Bankruptcy Court and complete the Transaction. For additional information, see Note 23, Commitments and Contingencies, of the Notes to the Consolidated and Combined Financial Statements. We evaluated (“ASC”) Segment Reporting (“CODM”) The preparation of the financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates on assumptions that it believes to be reasonable under the circumstances, including considerations for the impact from the outbreak of the COVID-19 pandemic on the Company's business due to various global macroeconomic, operational and supply chain risks as a result of COVID-19. Actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Furthermore, while operating as “debtors-in-possession” under Chapter 11, the Debtors may sell or otherwise dispose of or liquidate assets or settle liabilities, subject to the approval of the Bankruptcy Court or as otherwise permitted in the ordinary course of business and subject to restrictions of the debtor in possession (“DIP”) financing, for amounts other than those reflected in the accompanying unaudited Consolidated and Combined Financial Statements. Any such actions occurring during the Chapter 11 Cases, including through a plan of reorganization confirmed by the Bankruptcy Court could materially impact the amounts and classifications of assets and liabilities reported in the unaudited Consolidated and Combined Financial Statements. |
Reorganization and Chapter 11 P
Reorganization and Chapter 11 Proceedings | 12 Months Ended |
Dec. 31, 2020 | |
Reorganizations [Abstract] | |
Reorganization and Chapter 11 Proceedings | Note 2. Reorganization and Chapter 11 Proceedings Key Events and Voluntary Petition for Reorganization Due to the Company´s highly leveraged capital structure resulting from the Spin-Off, the Company began a strategic review process assisted by external financial advisers before the COVID-19 pandemic. The pandemic accelerated the review process to include the careful monitoring of liquidity and the consideration of potential court-supervised restructuring processes. The strategic review process lasted months and considered a wide variety of options, including strategic mergers and stand-alone recapitalizations, both out-of-court and with the assistance of Chapter 11. The result of the Company’s strategic review process was the decision to commence a pre-filing marketing process for a cash sale of the business in chapter 11, with the proceeds of the sale and any litigation recoveries related to the spin-off to be distributed to stakeholders. After the bidding process, the Company selected a winning bid of $2.1 billion from AMP Intermediate B.V. (the “Stalking Horse Bidder”) and AMP U.S. Holdings, LLC, each affiliate of KPS Capital Partners, LP, (“KPS”). As described in greater detail below, the Stalking Horse Bidder and certain of the Debtors entered into a share and asset purchase agreement (the “Stalking Horse Purchase Agreement”) on the Petition Date. The Stalking Horse Purchase Agreement constituted a “stalking horse” bid that was subject to higher and better offers by third parties in accordance with the bidding procedures approved by the Bankruptcy Court in an order entered by the Bankruptcy Court after hearings on October 21, 2020 and October 23, 2020 (the “Bidding Procedures Order”). The Bidding Procedures Order permitted third parties to submit competing proposals for the purchase and/or reorganization of the Debtors and approved stalking horse protections for the Stalking Horse Bidder. Following entry into the Stalking Horse Purchase Agreement, the Chapter 11 Cases were commenced on the Petition Date. The Debtors filed certain motions and applications intended to limit the disruption of the Chapter 11 Cases on their operations. Since the commencement of the Chapter 11 Cases, the Debtors have continued to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Bankruptcy Court granted the first day relief the Debtors requested that was designed primarily to mitigate the impact of Chapter 11 Cases on our operations, customers and employees. As a result, we are able to conduct normal business activities and pay all associated obligations for the period following the Petition Date and we are also authorized to pay prepetition employee wages and benefits and certain vendors and suppliers in the ordinary course for goods and services provided prior to the Petition Date. During the pendency of the Chapter 11 Cases, all transactions outside of the ordinary course of business require the prior approval of Bankruptcy Court. In accordance with the Bidding Procedures Order, the Debtors held an auction (the “Auction”) at which they solicited and received higher and better offers from KPS and from a consortium made up of Owl Creek Asset Management, L.P., Warlander Asset Management, L.P., Jefferies LLC, Bardin Hill Opportunistic Credit Master Fund LP, Marathon Asset Management L.P., and Cetus Capital VI, L.P., or affiliates thereof (collectively, the “OWJ Group”). In addition to the bids received at the Auction from KPS and the OWJ Group, the Debtors also received a transaction proposal in parallel to the Auction from Centerbridge Partners, L.P. On January 11, 2021, the Debtors, having determined that the proposal from the CO Group was a higher and better proposal than the successful bid of KPS at the Auction, entered into a Plan Support Agreement with the CO Group ( as amended, restated, supplemented or otherwise modified from time to time, In accordance with the terms of the PSA, on January 22, 2021, the Debtors’ entered into an Equity Backstop Commitment Agreement (the “EBCA”) with certain members of the CO Group (the “Equity Backstop Parties”), pursuant to which, among other things, the Company will conduct the rights offering contemplated by the PSA (the “Rights Offering”) and each Equity Backstop Party committed to (i) exercise its rights, as a stockholder of the Company, to purchase in the Rights Offering shares of the convertible Series A preferred stock of the Company to be offered in the Rights Offering (the “Series A Preferred Stock”) and (ii) purchase, on a pro rata basis (in accordance with percentages set forth in the EBCA), shares of Series A Preferred Stock which were offered but not subscribed for in the Rights Offering. On February 15, 2021, the Debtors and the CO Group agreed with certain of the Consenting Lenders (as defined below) to amend and restate the PSA, among other things, so as to add certain of the Consenting Lenders as parties thereto supporting the Plan. On January 24, 2021, representatives of the Equity Committee submitted a restructuring term sheet for a proposed plan of reorganization sponsored by Atlantic Park. The Equity Committee subsequently filed with the Bankruptcy Court on February 5, 2021, a proposed plan of reorganization and related disclosure statement with respect to such transaction (as reflected in the proposed plan of reorganization filed with the Bankruptcy Court, Plan Support Agreement and Equity Backstop Commitment Agreement On the Petition Date, certain of the Debtors also entered into the Stalking Horse Purchase Agreement with the Stalking Horse Bidder, pursuant to which the Stalking Horse Bidder agreed to purchase, subject to the terms and conditions contained therein, substantially all of the assets of the Debtors. The Stalking Horse Purchase Agreement constituted a “stalking horse” bid that was subject to higher and better offers by third parties in accordance with the bidding procedures approved by the Bidding Procedures Order. The Bidding Procedures Order permitted third parties to submit competing proposals for the purchase and/or reorganization of the Debtors and approved stalking horse protections for the Stalking Horse Bidder.In accordance with the Bidding Procedures Order, the Debtors held an auction (the “Auction”) at which they solicited and received higher and better offers from KPS and from a consortium made up of Owl Creek Asset Management, L.P., Warlander Asset Management, L.P., Jefferies LLC, Bardin Hill Opportunistic Credit Master Fund LP, Marathon Asset Management L.P., and Cetus Capital VI, L.P., or affiliates thereof (collectively, the “OWJ Group”). In addition to the bids received at the Auction from KPS and the OWJ Group, the Debtors also received a transaction proposal in parallel from Centerbridge Partners, L.P., Oaktree Capital Management, L.P., Honeywell International Inc. and certain other investors and parties (collectively, the “CO Group”). The Auction was completed on January 8, 2021, at which point the Debtors filed with the Bankruptcy Court (i) an auction notice noting that a bid received from KPS was the successful bid at the Auction but that the Debtors were still considering the proposal from the CO Group, (ii) a plan of reorganization (as may be amended, restated, supplemented or otherwise modified from time to time, the “Plan”) and (iii) a related disclosure statement (as may be amended, restated, supplemented or otherwise modified from time to time, the “Disclosure Statement”) On January 11, 2021, the Debtors, having determined that the proposal from the CO Group was a higher and better proposal than the successful bid of KPS at the Auction, entered into the PSA and announced their intention to pursue the Transaction. As a result of the entry into the PSA, (i) the Debtors filed a supplemental auction notice with the Bankruptcy Court on January 11, 2021 describing the Debtors’ determination to proceed with the Transaction, (ii) the Debtors filed a revised Plan and a related revised Disclosure Statement with the Bankruptcy Court on January 22, 2021 to implement the Transaction and (iii) the Stalking Horse Purchase Agreement became terminable, following which, on January 15, 2021, the Stalking Horse Bidder terminated the Stalking Horse Purchase Agreement and the Debtors subsequently paid a termination payment of $63 million and an expense reimbursement payment of $15.7 million to the Stalking Horse Bidder pursuant to the terms of the Stalking Horse Purchase Agreement and the Bidding Procedures Order. Reorganization items, net in the first quarter of Under the PSA, the material terms of the Transaction include: • Committed direct equity investment in the form of Series A Preferred Stock of the reorganized Company by certain members of the CO Group in the amount of $1,050.8 million in the aggregate in cash; • A rights offering of the reorganized Company’s Series A Preferred Stock for a maximum aggregate value of $200 million to existing holders of the Company’s common stock, backstopped by certain members of the CO Group on a fully committed basis; • Holders of shares of the Company’s existing common stock may retain their shares or, at each stockholder’s election (unless such stockholder is a party to the PSA), receive cash at $6.25 per share in exchange for cancellation of their shares; • Re-listing of the reorganized Company’s common stock on a national securities exchange; • Payment in full of all customer, supplier, trade, vendor, employee, pension, regulatory, environmental and other liabilities of the Debtors and their worldwide subsidiaries; and • A final global settlement for substantially all claims by Honeywell International Inc. and its affiliates (including spin-off-related claims, but excluding claims arising under ordinary course business dealings); • Committed debt financing for the reorganized Debtors upon Emergence, estimated to be approximately $1,100 million at Emergence. The PSA contains customary representations, warranties and covenants. The PSA is subject to certain termination events, subject to certain exceptions, including (a) the breach by any party of any of the representations, warranties, covenants, obligations or commitments set forth therein, where such breach would materially and adversely interfere with the Transaction and remains uncured; (b) the issuance by any governmental authority of an order that would have an adverse effect on a material provision of the PSA or a material portion of the Transaction or the Plan or a material adverse effect on the Debtors’ business; (c) an examiner, trustee or receiver is appointed in the Chapter 11 Cases; (d) conversion of one or more of the Chapter 11 Cases to cases under Chapter 7 of the Bankruptcy Code or dismissal of any of the Chapter 11 Cases; (e) if any of the restructuring documents after completion (i) contain terms, conditions, representations, warranties or covenants that are materially inconsistent with the terms of the PSA, (ii) are materially and adversely amended or modified with respect to the terminating party or (iii) are withdrawn without the consent of the applicable party; (f) if any party proposes, supports, assists, solicits or files a pleading seeking approval of any alternative transaction without the prior written consent of certain parties; (g) if, on or after April 19, 2021, the Plan is not filed with the Bankruptcy Court, subject to certain extensions; (h) if the effective date of the Plan has not occurred by June 30, 2021, subject to certain extensions; (i) if the Bankruptcy Court grants relief that is inconsistent with the PSA in any material respect or that would materially frustrate the purposes of the PSA; or (j) by the Debtors, if their boards of directors reasonably determine in good faith after receiving the advice of outside counsel that the Debtors’ continued performance under the PSAs would be inconsistent with the exercise of such boards’ fiduciary duties under applicable law. In accordance with the terms of the PSA, on January 22, 2021, the Debtors’ entered into the EBCA with the Equity Backstop Parties, pursuant to which, among other things, the Company will conduct the Rights Offering and each Equity Backstop Party committed to (i) exercise its rights, as a stockholder of the Company, to purchase in the Rights Offering shares of the Series A Preferred Stock and (ii) purchase, on a pro rata basis (in accordance with percentages set forth in the EBCA), shares of Series A Preferred Stock which were offered but not subscribed for in the Rights Offering. The EBCA provides for the reimbursement by the Debtors of professional fees and expenses and filing fees incurred by the Equity Backstop Parties in connection with the Chapter 11 Cases in an aggregate amount that, together with and inclusive of amounts to be reimbursed pursuant to the PSA, do not exceed $25 million prior to Emergence. The EBCA further provides for indemnification by the Debtors of losses, claims, damages, liabilities, costs and expenses incurred by the Equity Backstop Parties in connection with the Transaction. The EBCA contains customary representations, warranties and covenants. The EBCA is subject to certain termination events, including, without limitation, (a) by mutual agreement of the parties, (b) by the Company following an uncured breach of a representation, warranty or covenant in the EBCA by an Equity Backstop Party, or (c) by the Equity Backstop Parties constituting each of Centerbridge, Oaktree and a number of the other Equity Backstop Parties holding at least a majority of the rights to purchase Series A Preferred Stock pursuant to the PSA (excluding any such rights held by Centerbridge and Oaktree) following an uncured breach by the Debtors of a representation, warranty or covenant in the EBCA. The EBCA will automatically terminate if the Plan Support Agreement terminates with respect to the rights and obligations of the Debtors prior to the occurrence of the effective date of the Plan in accordance with its terms. On February 15, 2021, the Debtors and the CO Group agreed with certain of the Consenting Lenders to amend and restate the PSA so as to, certain of Plan. The PSA provides for the reimbursement by the Debtors of professional fees and expenses of the CO Group and certain of the Consenting Lenders, subject to an interim cap on certain expenses of $ 25 million prior to Emergence and with the balance to be paid at Emergence. As of February 15, 2021, the CO Group estimated that the aggregate amount of professional fees and expenses expected to be payable by the Debtors under the PSA (inclusive of any amounts payable prior to Emergence) was approximately $ 82 million. The Debtors’ entry into and performance and obligations under the PSA and the ECBA are subject to approval by the Bankruptcy Court and other customary closing conditions. On February 9, 2021, the Equity Committee filed an objection to the Debtors’ motion seeking authority to enter into and perform under the PSA and the ECBA. A hearing on the matter is scheduled to take place in the Bankruptcy Court on February 16, 2021. There can be no assurances that the Debtors will obtain the approval of the Bankruptcy Court and complete the Transaction. Restructuring Support Agreement On the Petition Date, the Debtors entered into a Restructuring Support Agreement ( as amended, restated, supplemented or otherwise modified from time to time, the “RSA On January 6, 2021, the Debtors and Consenting Lenders holding no less than a majority of the aggregate outstanding principal amount of loans under the Prepetition Credit Agreement then held by all Consenting Lenders entered into Amendment No. 1 to the Restructuring Support Agreement (the “Amendment”), which, among other things, extended certain milestones contained in the RSA. The RSA provides that the Consenting Lenders will support the Debtors’ restructuring efforts, including the approval of the Plan, as set forth in, and subject to the terms and conditions of, the RSA. In addition, the Consenting Lenders agreed to the Debtors’ entry into the DIP Term Loan Facility (as defined below) discussed below. The RSA provides certain milestones for the Chapter 11 Cases. Failure of the Debtors to satisfy these milestones without a waiver or consensual amendment would provide the Requisite Consenting Lenders a termination right under the RSA. These milestones, as modified from time to time, include (a) no later than February 22, 2021, (i) the hearing to approve the Disclosure Statement shall have occurred and (ii) the Bankruptcy Court shall have entered an order approving the Disclosure Statement on a final basis, which shall be in form and substance reasonably acceptable to the Requisite Consenting Lenders; (b) no later than April 7, 2021, a hearing shall have occurred for approval of the Plan, and within 2 Business Days thereafter, the Bankruptcy Court shall have entered the Confirmation Order on a final basis, which shall be in form and substance reasonably acceptable to the Requisite Consenting Lenders; and (c) no later than April 30, 2021, (i) the Transaction shall have closed and (ii) the Plan Effective Date shall have occurred. Plan of Reorganization Under the Bankruptcy Code, the Debtors had the exclusive right to file a plan of reorganization under Chapter 11 through and including 120 days after the Petition Date, and the Debtors currently have the exclusive right to solicit acceptances of such plan through and including 180 days after the Petition Date. This deadline may be extended with the approval of the Bankruptcy Court. As described above, in connection with the Atlantic Park Proposal, the Equity Committee filed a motion with the Bankruptcy Court seeking to modify the Debtors’ exclusive periods to file and solicit votes on a Chapter 11 plan. The Equity Committee’s motion is scheduled to be heard by the Bankruptcy Court on February 16, 2021. Under the absolute priority scheme established by the Bankruptcy Code, unless our creditors agree otherwise, all of our pre-petition liabilities and post-petition liabilities must be satisfied in full before the holders of our existing common stock can receive any distribution or retain any property under a plan of reorganization. The ultimate recovery to creditors and/or shareholders, if any, will not be determined until confirmation and implementation of a plan or plans of reorganization. We can give no assurance that any recovery or distribution of any amount will be made to any of our creditors or shareholders. A confirmed plan of reorganization could result in any of the holders of our liabilities and/or securities, including our common stock, receiving no distribution on account of their interests and cancellation of their holdings. Moreover, a plan of reorganization can be confirmed, under the Bankruptcy Code, even if the holders of our common stock vote against the plan of reorganization and even if the plan of reorganization provides that the holders of our common stock receive no distribution on account of their equity interests. As described above, the Debtors filed the Plan and Disclosure Statement on January 8, 2021, and filed a revised Plan and revised Disclosure Statement on January 22, 2021 to implement the Transaction. The Plan has not been confirmed by the Bankruptcy Court and may be supplemented or revised by the Debtors prior to the confirmation hearing to be held by the Bankruptcy Court. A hearing before the Bankruptcy Court to consider approval of the Disclosure Statement filed by the Debtors is scheduled for February 16, 2021. On February 9, 2021, the Equity Committee filed an objection to the approval of the Disclosure Statement, which will be considered at the February 16, 2021 hearing. Chapter 11 Accounting The Company has applied ASC 852 in preparing our Consolidated and Combined Financial Statements. ASC 852 requires the financial statements for periods subsequent to the Petition Date to distinguish transactions and events that are directly associated with the Company's reorganization from the ongoing operations of the business. Accordingly, revenues, expenses, realized gains and losses, and provisions for losses directly resulting from the reorganization and restructuring shall be reported separately as Reorganization items, net in the Consolidated Statements of Operations. In addition, the balance sheet distinguishes pre-petition liabilities subject to compromise from those pre-petition liabilities that are not subject to compromise and post-petition liabilities. Pre-petition liabilities that are not fully secured or those that have at least a possibility of not being repaid at the allowed claim amount have been classified as liabilities subject to compromise on the Consolidated Balance Sheet at December 31, 2020. Under the Bankruptcy Code, the Debtors may assume and assign or reject executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach subject, in the case of the rejection of unexpired leases of real property, to certain caps on damages. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtor’s estate for such damages. Generally, the assumption or assumption and assignment of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance thereunder. Accordingly, any description of an executory contract or unexpired lease with a Debtor in this annual report, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease with a Debtor is qualified by any overriding rejection rights the Company has under the Bankruptcy Code. Reorganization Items, Net The Debtors have incurred and will continue to incur significant costs associated with the reorganization, including the write-off of original issue discount and deferred long-term debt fees on debt, a component of liabilities subject to compromise, costs of debtor-in-possession financing and legal and professional fees. The amount of these charges, which since the Petition Date are being expensed as incurred, are expected to significantly affect the Company’s results of operations. In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded as Reorganization items, net within the Company's Consolidated Statements of Operations for the twelve months ended December 31, 2020. Reorganization items, net are comprised of the following for the twelve months ended December 31, 2020: Twelve Months Ended December 31, 2020 Advisor fees $ 55 DIP Financing fees 13 Write-off of pre-petition unamortized debt issuance costs 6 Other (1 ) Total reorganization items, net $ 73 Debt during Chapter 11 Cases See note 16, Long-term Debt and Credit Agreements for further discussion of the DIP facilities and the pre-petition long term debt. Financial Statement Classification of Liabilities Subject to Compromise As a result of the Chapter 11 Cases, the payment of pre-petition liabilities is generally subject to compromise pursuant to a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-bankruptcy filing liabilities are stayed. Although payment of pre-petition claims generally is not permitted, the Bankruptcy Court granted the Debtors authority to pay certain pre-petition claims in designated categories and subject to certain terms and conditions. This relief generally was designed to preserve the value of the Debtors’ business and assets. Among other things, the Bankruptcy Court authorized, but did not require, the Debtors to pay certain pre-petition claims relating to employee wages and benefits, taxes, critical vendors and foreign vendors. Pre-petition liabilities that are subject to compromise are required to be reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for different amounts. The amounts classified as liabilities subject to compromise may be subject to future adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determination of secured status of certain claims, the determination as to the value of any collateral securing claims, proof of claims or other events. The following table presents liabilities subject to compromise as reported in the Consolidated Balance Sheet at December 31, 2020: December 31, 2020 Obligations payable to Honeywell (Note 23) $ 1,482 Long-term debt (Note 16) 429 Accounts payable 82 Pension, compensation, benefit and other employee related 92 Uncertain tax positions and deferred taxes 69 Advanced discounts from suppliers 33 Lease liability (Note 17) 19 Freight Accrual 27 Product warranties and performance guarantees 16 Other 41 Total liabilities subject to compromise $ 2,290 Determination of the value at which liabilities will ultimately be settled cannot be made until the Bankruptcy Court approves the plan of reorganization. We will continue to evaluate the amount and classification of our pre-petition liabilities. Any additional liabilities that are subject to compromise will be recognized accordingly, and the aggregate amount of liabilities subject to compromise may change. Potential Claims On November 3, 2020, the Debtors filed with the Bankruptcy Court schedules and statements for Garrett Motion Holdings Inc., Garrett ASASCO Inc. and Garrett Motion Holdings II Inc. (collectively, the “Initial Reporting Debtors”), setting forth, among other things, the assets and liabilities of each of the Initial Reporting Debtors, subject to the assumptions filed in connection therewith. On December 18, 2020, the Debtors filed with the Bankruptcy Court schedules and statements for each of the remaining Debtors, setting forth, among other things, the assets and liabilities of each of the remaining Debtors, subject to the assumptions filed in connection therewith. These schedules and statements are subject to further amendment or modification. As part of the Chapter 11 Cases, parties believing that they have claims or causes of action against the Debtors may file proofs of claim evidencing such claims. On November 4, 2020, the Bankruptcy Court entered an order requiring that certain holders of pre-petition claims that are not governmental units file proofs of claim with respect to claims against the Initial Reporting Debtors by the deadline for general claims against the Sellers, which was December 18, 2020 at 4:00pm Eastern Time. On December 15, 2020, the Bankruptcy Court entered an order requiring that certain holders of pre-petition claims that are not governmental units file proofs of claim with respect to claims against the remaining Debtors by the deadline for general claims against the remaining Debtors, which is March 1, 2021 at 4:00pm Eastern Time. On December 17, 2020, the Bankruptcy Court entered an order requiring that holders of pre-petition claims arising from the purchase or sale of our common stock file proofs of claim with respect to such claims by March 1, 2021 at 4:00pm Eastern Time. The Debtors' have received 1,326 proofs of claim as of February 8, 2021, for an amount of approximately $146 billion. Automatic Stay Subject to certain specific exceptions under the Bankruptcy Code, the commencement of the Chapter 11 Cases automatically stayed most judicial or administrative actions against the Debtors and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to pre-petition claims. Absent an order from the Bankruptcy Court, substantially all of the Debtors’ pre-petition liabilities are subject to settlement in accordance with the Bankruptcy Code. Condensed Combined Debtor Only Financial Information The financial statements below represent the condensed combined financial statements of the Debtors as of and for the twelve months ended December 31, 2020. Any entities which are non-debtor entities, are not included in these condensed combined financial statements. Intercompany transactions among the Debtors have been eliminated in the financial statements contained herein. Intercompany transactions among the Debtors and the non-debtor entities have not been eliminated in the Debtors’ financial statements. For the Twelve Months Ended December 31, 2020 Net sales 2,273 Cost of goods sold 1,863 Gross profit $ 410 Selling, general and administrative expenses 252 Other expense, net 45 Interest expense 80 Non-operating (income) expense (152 ) Reorganization items, net 73 Income before taxes $ 112 Tax expense 3 Net income $ 109 December 31, 2020 (Dollars in millions) ASSETS Current assets: Cash and cash equivalents $ 516 Restricted cash 30 Accounts, notes and other receivables – net 430 Accounts and other receivables from non-debtor affiliates 240 Inventories – net 166 Other current assets 91 Total current assets 1,473 Investments and long-term receivables 6 Investment in subsidiaries 883 Property, plant and equipment – net 319 Goodwill 193 Deferred income taxes 236 Other assets 93 Total assets $ 3,203 LIABILITIES Current liabilities: Accounts payable $ 497 Borrowings under revolving credit facility 370 Current maturities of long-term debt — Debtor-in-possession Term Loan 200 Obligations payable to Honeywell, current — Accrued liabilities 106 Total current liabilities 1,173 Long-term debt 1,082 Deferred income taxes — Obligations payable to Honeywell — Other liabilities 22 Total liabilities not subject to compromise $ 2,277 Liabilities subject to compromise — External 2,290 With non-debtor affiliates 528 Total liabilities subject to compromise $ 2,818 Total liabilities $ 5,095 COMMITMENTS AND CONTINGENCIES (Note 23) EQUITY (DEFICIT) Total deficit attributable to the Debtors (1,892 ) Total liabilities and deficit $ 3,203 For the Twelve Months Ended December 31, 2020 (Dollars in millions) Cash Flows from operating activities: Net cash used for operating activities $ 15 Cash Flows from investing activities: Expenditures for property, plant and equipment (39 ) Other 5 Net cash used for investing activities $ (34 ) Cash Flows from financing activities: Proceeds from debtor-in-possession financing 200 Proceeds from revolving credit facility 1,437 Payments of revolving credit facility (1,088 ) Payments of long-term debt (2 ) Debtor-in-possession financing fees (13 ) Other — Net cash provided by financing activities 534 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 30 Net increase in cash, cash equivalents and restricted cash 545 Cash and cash equivalents at beginning of period 1 Cash, cash equivalents and restricted cash at end of period $ 546 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Principles — For the periods subsequent to the Spin-Off, the Consolidated and Combined Financial Statements include the accounts of Garrett Motion Inc. and all of its subsidiaries in which a controlling financial interest is maintained. We consolidate entities that we control due to ownership of a majority voting interest, and we consolidate variable interest entities (“VIEs”) when we have variable interests and are the primary beneficiary. Our consolidation policy requires equity investments that we exercise significant influence over but in which we do not have a controlling financial interest to be accounted for using the equity method. Investments through which we are not able to exercise significant influence over the investee and which we do not have readily determinable fair values are accounted for under the cost method. All intercompany transactions and balances are eliminated in consolidation. For the periods prior to the Spin-Off, the Consolidated and Combined Financial Statements were prepared on a stand-alone basis and include our business units and wholly owned direct and indirect subsidiaries and entities in which we had a controlling financial interest. Cash —Cash and cash equivalents include cash on hand and highly liquid investments having an original maturity of three months or less. Restricted Cash —Restricted cash primarily consists of bank deposits used to pledge as collateral in order to be able to issue bank notes as payment to certain suppliers in the Asia Pacific region (refer to Note 9. Factoring and Notes Receivable) as well as provide access to a traditional supplier payable program involving certain of our suppliers and a third-party financial institution. Trade Receivables —Trade accounts receivable are recorded at the invoiced amount as a result of transactions with customers. Garrett maintains allowances for doubtful accounts for estimated losses as a result of a customer’s inability to make required payments. As of January 1, 2020, Garrett adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new guidance requires an entity to recognize as an allowance its estimate of lifetime expected credit losses rather than incurred losses. The guidance is also applicable to contract assets such as unbilled receivables. Consistent with the new guidance, Garrett estimates losses from doubtful accounts expected over the contractual life of the receivables based on days past due as measured from the contractual due date and collection history. Garrett also takes into consideration changes in economic conditions that may not be reflected in historical trends (for example, customers in bankruptcy, liquidation or reorganization). Receivables are written-off against the allowance for doubtful accounts when they are determined uncollectible. Such determination includes analysis and consideration of the particular conditions of the account, including time intervals since last collection, customer performance against agreed upon payment plans, solvency of customer and any bankruptcy proceedings. Transfer of Financial Instruments —Sales and transfers of financial instruments are accounted for under ASC 860, Transfers and Servicing (“ASC 860”). The Company may discount and sell accounts receivables during the normal course of business. These receivables which are transferred to a third party without recourse to the Company and that meet the criteria of sales accounting as per ASC 860, are excluded from the amounts reported in the Consolidated Balance Sheets. The cash proceeds received from such sales are included in operating cash flows. The expenses associated with the factoring of receivables are recorded within Other expense, net in the Consolidated and Combined Statements of Operations. The Company may also receive bank notes in settlement of accounts receivables, primarily in the Asia Pacific region. Such bank notes are classified as notes receivables under Accounts, notes and other receivables – net in the Consolidated Balance Sheets. The collections of such bank notes are included in operating cash flows and any expenses related to discounting these are included within Other expense, net in the Consolidated and Combined Statements of Operations. The Company can hold the bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third party financial institutions in exchange for cash. Inventories —Inventories are stated at the lower of cost, determined on a first-in, first-out basis, including direct material costs and direct and indirect manufacturing costs, or net realizable value. Obsolete inventory is identified based on analysis of inventory for known obsolescence issues. The original equipment inventory on hand in excess of forecasted usage and lack of consumption in the previous 12 months is fully reserved, unless the value of such material is recoverable from either the vendor or the customer. Property, —Property, plant and equipment are recorded at cost less accumulated depreciation and amortization. For financial reporting, the straight-line method of depreciation is used over the estimated useful lives of 10 to 50 years for buildings and improvements, 2 to 16 years for machinery and equipment, 3 to 10 years for tooling equipment and 5 to 7 years for software. Leases —For the periods beginning January 1, 2019, right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of a lease (the “commencement date”) based on the present value of lease payments over the lease term. We determine if an arrangement is a lease at inception. Operating leases are included in Other assets, Accrued liabilities, and Other liabilities in our Consolidated Balance Sheets. No finance leases have been recognized. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease where it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are expensed in the period in which they occur. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For machinery and equipment, we account for the lease and non-lease components as a single lease component. We account for short-term leases by recognizing lease payments in net income on a straight-line basis over the lease term and will not recognize any ROU assets and lease liabilities on the Consolidated Balance Sheet. For the periods prior to January 1, 2019, we accounted for leases in accordance with ASC 840, Leases (“ASC 840”). Upon commencement of the Chapter 11 Cases, certain pre-petition leases have been reclassified into liabilities subject to compromise. Goodwill —Goodwill is subject to impairment testing annually, and whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. This testing compares carrying value to fair value of our single reporting unit. The Company recognizes an impairment charge for the amount by which the carrying value of the reporting unit exceeds the reporting unit´s fair value. However, any impairment should not exceed the amount of goodwill allocated to the reporting unit. Because we have a single Warranties —Expected warranty costs for products sold are recognized based on an estimate of the amount that eventually will be required to settle such obligations. These accruals are based on factors such as past experience, length of the warranty and various other considerations. Costs of product recalls, which may include the cost of the product being replaced as well as the customer’s cost of the recall, including labor to remove and replace the recalled part, are accrued as part of our warranty accrual at the time an obligation becomes probable and can be reasonably estimated. These estimates are adjusted from time to time based on facts and circumstances that impact the status of existing claims. For additional information, see Note 23, Commitments and Contingencies of Notes to Consolidated and Combined Financial Statements. Sales Recognition —On January 1, 2018, we adopted the FASB´s updated guidance on revenue from contracts with customers, ASC 606 Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. Product sales are recognized when we transfer control of the promised goods to our customer, which is based on shipping terms. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the promised goods. In the sale of products in the OEM channel, the transaction price for these goods is equal to the agreed price of each unit and represents the standalone selling price for the unit. In the sale of products in the aftermarket channel, the terms of a contract or the historical business practice can give rise to variable consideration due to, but not limited to, discounts and bonuses. We estimate variable consideration at the most likely amount we will receive from customers and reduce revenues recognized accordingly. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. Prior to January 1, 2018, sales were recognized when there was evidence of a sales agreement, the delivery of goods had occurred, the sales price was fixed or determinable and the collectability of revenue was reasonably assured. Sales were generally recorded upon shipment of product to customers and transfer of title under standard commercial terms. Sales incentives and allowances were recognized as a reduction to revenue at the time of the related sale. In addition, payments made to customers were generally recognized as a reduction to revenue at the time these payments are made or committed to the customers. Research and —Garrett conducts research and development (“R&D”) activities, which consist primarily of the development of new products and product applications. R&D costs are charged to expense as incurred. Such costs are included in Cost of goods sold of $111 million, $129 million and $128 million, for the years ended December 31, 2020, 2019 and 2018 respectively. Additionally, the Company incurs engineering-related expenses which are also included in Cost of goods sold of $13 million, $5 million and $10 million for the years ended December 31, 2020, 2019 and 2018. Asbestos-Related —Honeywell is subject to certain asbestos-related and environmental-related liabilities, primarily related to its legacy Bendix business. In conjunction with the Spin-Off, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, as well as certain operations that were part of other legacy elements of the Business, were transferred to us. The accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the indemnification and reimbursement agreement with Honeywell entered into on September 12, 2018 (the “Honeywell Indemnity Agreement”), under which Garrett ASASCO is required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90 % of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. The Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $ 25 million as converted into Euros in accordance with the terms of the agreement. Under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Indemnity Agreements and the Tax Matters Agreement and (b) the dismissal with prejudice of the Honeywell Litigation in exchange for (x) a $375 million cash payment at Emergence and (y) the Series B Preferred Stock. The Company will have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of Emergence (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence. In every case the duration of future liabilities to Honeywell will be reduced from 30 years prior to the Chapter 11 filing to a maximum of nine years. The Debtors’ entry into and performance under the PSA and the terms of the PSA, the Transaction and the Plan remain subject to approval by the Bankruptcy Court. On February 9, 2021, the Equity Committee filed an objection to the Debtors’ motion seeking authority to enter into and perform under the PSA and the ECBA. A hearing on the matter is scheduled to take place in the Bankruptcy Court on February 16, 2021. There can be no assurances that the Debtors will obtain the approval of the Bankruptcy Court and complete the Transaction. For additional information, see Note 23, Commitments and Contingencies of Notes to Consolidated and Combined Financial Statements. Stock-Based Compensation Plans —The principal awards issued under our stock-based compensation plans, which are described in Note 21, Stock-Based Compensation, are restricted stock units. The cost for such awards is measured at the grant date based on the fair value of the award. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods (generally the vesting period of the equity award) and is included in Selling, general and administrative expenses in the Consolidated and Combined Statements of Operations. Forfeitures are estimated at the time of grant to recognize expense for those awards that are expected to vest and are based on our historical forfeiture rates under our Former Parent´s plans. For periods prior to the Spin-Off, certain employees within the Business participated in stock-based compensation plans sponsored by the Former Parent. The Former Parent’s stock-based compensation plans primarily include incentive compensation plans. Awards granted under the plans consist of stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) and are based on the Former Parent’s common shares and, as such, are reflected in Invested deficit within the Consolidated and Combined Statements of Equity (Deficit). Pension Benefits —Following the Spin-Off, we sponsor defined benefit pension plans covering certain employees, primarily in Switzerland, the U.S. and Ireland. For such plans, we are required to disaggregate the service cost component of net benefit costs and report those costs in the same line item or items in the Consolidated and Combined Statements of Operations as other compensation costs arising from services rendered by the pertinent employees during the period. The other nonservice components of net benefit costs are required to be presented separately from the service cost component. We record the service cost component of Pension ongoing (income) expense in Cost of goods sold or Selling, general and administrative expenses. The remaining components of net benefit costs within Pension ongoing (income) expense, primarily interest costs and assumed return on plan assets, are recorded in Non-operating expense (income). We recognize net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) annually in the fourth quarter each year (“MTM Adjustment”). The MTM Adjustment is recorded in Non-operating expense (income). For periods prior to the Spin-Off, we sponsored a defined benefit pension plan covering certain employees in Ireland. Additionally, certain Garrett employees participated in defined benefit pension plans (the “Shared Plans”) sponsored by Honeywell which includes participants of other Honeywell subsidiaries and operations. We accounted for our participation in the Shared Plans as a multiemployer benefit plan. Accordingly, we did not record an asset or liability to recognize the funded status of the Shared Plans. The related pension expense was based on annual service cost of active Garrett participants and reported within Cost of goods sold in the Consolidated and Combined Statements of Operations. The pension expense specifically identified for the active Garrett participants in the Shared Plans for the year ended December 31, 201 8 was $ 5 million . Foreign Currency Translation —Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. Dollars are translated into U.S. Dollars using year-end exchange rates. Sales, costs and expenses are translated at the average exchange rates in effect during the year. Foreign currency translation gains and losses are included as a component of Accumulated other comprehensive income (loss). Derivative —We minimize our risks from foreign currency exchange rate fluctuations through our normal operating and financing activities and, when deemed appropriate through the use of derivative financial instruments. Derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes. Derivative financial instruments that qualify for hedge accounting must be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract. All derivatives are recorded on the balance sheet as assets or liabilities and measured at fair value. For derivatives designated as cash flow hedges, the effective portion of the changes in fair value of the derivatives are recorded in Accumulated other comprehensive income (loss) and subsequently recognized in earnings when the hedged items impact earnings. Cash flows of such derivative financial instruments are classified consistent with the underlying hedged item. On September 27, 2018, we early adopted the new accounting guidance contained in ASU 2017-12 on a modified retrospective approach. The new standard is intended to improve and simplify rules relating to hedge accounting, including the elimination of periodic hedge ineffectiveness, recognition of components excluded from hedge effectiveness assessment, the ability to elect to perform subsequent effectiveness assessments qualitatively, and other provisions designed to provide more transparency around the economics of a company’s hedging strategy. Income Taxes —We account for income taxes pursuant to the asset and liability method which requires us to recognize current tax liabilities or receivables for the amount of taxes we estimate are payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities and the expected benefits of net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. Prior to the Spin-Off, the tax provision was presented on a separate company basis as if we were a separate filer. The effects of tax adjustments and settlements from taxing authorities are presented in our Consolidated and Combined Financial Statements in the period to which they relate as if we were a separate filer. Our current obligations for taxes were settled with our Former Parent on an estimated basis and adjusted in later periods as appropriate. All income taxes due to or due from our Former Parent that have not been settled or recovered by the end of the period are reflected in Invested deficit within the Consolidated and Combined Financial Statements. We are subject to income tax in the United States (federal, state and local) as well as other jurisdictions in which we operate. The tax provision was calculated as if the Business was operating on a stand-alone basis and filed separate tax returns in the jurisdiction in which it operates. Therefore, cash tax payments and items of current and deferred taxes may not be reflective of the actual tax balances prior to or subsequent to the Spin-Off. Earnings per share —Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. On October 1, 2018, the date of consummation of the Spin-Off, 74,070,852 shares of the Company’s Common Stock were distributed to Honeywell stockholders of record as of September 18, 2018 who held their shares through the Distribution Date. Basic and diluted EPS for all periods prior to the Spin-Off reflect the number of distributed shares, or 74,070,852 shares. For 2018, the distributed shares were treated as issued and outstanding from January 1, 2018 for purposes of calculating historical basic earnings per share. Basic and diluted weighted average of common shares outstanding for the years ended December 31, 20 20 , 201 9 and 201 8 were 75,543,461 , 74,602,868 and 74,059,240 and 76,100,509 , 75,934,373 and 74,402,148 , respectively. Use of Estimates —The preparation of the Consolidated and Combined Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the Consolidated and Combined Financial Statements and related disclosures in the accompanying notes. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of changes are reflected in the Consolidated and Combined Financial Statements in the period they are determined to be necessary. In connection with the filing of the Chapter 11 Cases on the Petition Date, the Consolidated and Combined Financial Statements included herein have been prepared in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852, Reorganizations. See Note 2, Reorganization and Chapter 11 Proceedings, of the Consolidated and Combined Financial Statements for further details. Liabilities Subject to Compromise —Liabilities subject to compromise include pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured. Liabilities that may be affected by a plan of reorganization must be reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts as a result of the plan of reorganization or negotiations with creditors. If there is uncertainty about whether a secured claim is undersecured, or will be impaired under the plan of reorganization, the entire amount of the claim is included with prepetition claims in liabilities subject to compromise. Reorganization Items, Net— Effective on September 20,2020, we began to apply the provisions of accounting Standards Codification (“ASC”) 852, Reorganizations, which is applicable to companies under bankruptcy protection, and requires amendments to the presentation of key financial statement line items. ASC 852 requires that the financial statements for periods subsequent to the filing of the Chapter 11 Cases distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Revenues, expenses, realized gains and losses, and provisions for losses that can be directly associated with the reorganization and restructuring of the business must be reported separately as reorganization items, net in the consolidated statements of operations beginning September 20, 2020. Recently Adopted Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Notes to the Consolidated Financial Statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits Defined Benefit Plans – General (Subtopic 715-20), which amends certain disclosure requirements related to the defined benefit pension and other postretirement plans. The guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption is permitted. Adoption of the new guidance did not have a material impact on the Company’s disclosures. Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting, provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. We are currently evaluating the impact of the guidance related to certain existing debt agreements on our Consolidated and Combined Financial Statements. There are no other recently issued, but not yet adopted, accounting pronouncements which are expected to have a material impact on the Company’s Consolidated and Combined Financial Statements and related disclosures. |
Revenue Recognition and Contrac
Revenue Recognition and Contracts with Customers | 12 Months Ended |
Dec. 31, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition and Contracts with Customers | Note 4. Revenue Recognition and Contracts with Customers The Company generates revenue through the sale of products to customers in the OEM and aftermarket channels. OEM and aftermarket contracts generally include scheduling agreements that stipulate the pricing and delivery terms that identify the quantity and timing of the product to be transferred. Revenue recognition under ASC 606 is generally consistent with the previous standard, with the exception of how we account for payments made to customers in conjunction with future business. Historically these payments were recognized as a reduction of revenue at the time the payments were made. Under ASC 606, these payments result in deferred reductions to revenue that are subsequently recognized when the products are delivered to the customer. The Company evaluates the amounts capitalized each period end for recoverability and expenses any amounts that are no longer expected to be recovered over the term of the business arrangement. These payments are recorded in Other current assets and Other assets in our Consolidated Balance Sheets. Disaggregated Revenue For Net sales by region (determined based on country of shipment) and channel, refer to Note 26, Concentrations. We recognize virtually all of our revenues arising from performance obligations at a point in time. Less than 1% of our revenue is satisfied over time. Contract Balances The timing of revenue recognition, billings and cash collections results in unbilled receivables (contract assets) and billed accounts receivable, reported in Accounts, notes and other receivables – net, and customer advances and deposits (contract liabilities), reported in Accrued Liabilities, on the Consolidated Balance Sheets. Contract assets arise when the timing of cash collected from customers differs from the timing of revenue recognition. Contract assets are recognized when the revenue associated with the contract is recognized prior to billing and derecognized once invoiced in accordance with the terms of the contract. Contract liabilities are recorded in scenarios where we enter into arrangements where customers are contractually obligated to remit cash payments in advance of us satisfying performance obligations and recognizing revenue. Contract liabilities are generally derecognized when revenue is recognized. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period. The following table summarizes our contract assets and liabilities balances: 2020 Contract assets—January 1 $ 6 Contract assets—December 31 61 Change in contract assets—Increase/(Decrease) 55 Contract liabilities—January 1 $ (3 ) Contract liabilities—December 31 (2 ) Change in contract liabilities—(Increase)/Decrease $ 1 Performance Obligations A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For product sales, typically each product sold to a customer represents a distinct performance obligation. Virtually all of our performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. All performance obligations are expected to be satisfied within one year, with substantially all performance obligations being satisfied within a month. The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment, with cash advances (contract liabilities) and unbilled receivables (contract assets) being settled within 3 months. For some contracts, we may be entitled to receive an advance payment. We have applied the practical expedient to not disclose the value of remaining performance obligations for contracts with an original expected term of one year or less. |
Other Expense, Net
Other Expense, Net | 12 Months Ended |
Dec. 31, 2020 | |
Other Income And Expenses [Abstract] | |
Other Expense, Net | Note 5. Other Years Ended December 31, 2020 2019 2018 Indemnification related — post Spin-Off $ 41 $ 28 $ (16 ) Indemnification related — litigation $ 3 $ 11 $ — Asbestos related, net of probable insurance recoveries — — 131 Environmental remediation, non-active sites 1 — 5 Factoring and notes receivables discount fees 1 1 — $ 46 $ 40 $ 120 |
Non-Operating (Income) Expense
Non-Operating (Income) Expense | 12 Months Ended |
Dec. 31, 2020 | |
Non Operating Income Expense [Abstract] | |
Non-Operating (Income) Expense | Note 6. Non-Operating (Income) Years Ended December 31, 2020 2019 2018 Equity income of affiliated companies $ (5 ) $ (6 ) $ (5 ) Interest income (3 ) (7 ) (7 ) Pension (income) expense — non service 5 8 2 Foreign exchange (35 ) 13 6 Others, net — — (4 ) $ (38 ) $ 8 $ (8 ) |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7. Income Taxes The sources of income (loss) from continuing operations, before income taxes, classified between domestic entities and those entities domiciled outside of the U.S., are as follows: Years Ended December 31, Income before taxes 2020 2019 2018 Domestic entities $ (87 ) $ (54 ) $ (99 ) Entities outside the U.S. 206 400 495 $ 119 $ 346 $ 396 Tax Tax expense (benefit) Years Ended December 31, 2020 2019 2018 Current: Federal $ 3 $ 9 $ 7 State 1 1 1 Foreign 69 64 113 $ 73 $ 74 $ 121 Deferred: Federal — 2 (8 ) State — — — Foreign (34 ) (43 ) (923 ) $ (34 ) $ (41 ) $ (931 ) $ 39 $ 33 $ (810 ) The U.S. Years Ended December 31, 2020 2019 2018 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % Taxes on non-U.S. earnings different from U.S. tax (6.5 )% (2.3 )% (7.7 )% Reserves for tax contingencies 15.9 % 2.5 % 4.1 % Non-deductible and permanent items 7.1 % 1.7 % 6.0 % Withholding and other taxes on foreign earnings (14.7 )% 4.4 % (231.6 )% Tax law changes — (17.3 )% — Changes in valuation allowance 10.5 % 0.5 % 5.3 % All other items (0.5 )% (1.0 )% (1.6 )% 32.8 % 9.5 % -204.5 % The effective tax rate increased by 23.3 percentage points in 2020 compared to 2019. The increase was primarily attributable to the absence of tax benefits related to the remeasurement of deferred tax assets and liabilities for tax law changes enacted during 2019, higher tax expense because of nondeductible costs incurred in connection with the Chapter 11 Cases, the resolution of tax audits and an increase in losses for jurisdictions where we do not expect to generate future tax benefits from such losses. The increase in the effective tax rate was also impacted by overall lower earnings compared to 2019 because of the adverse impacts of COVID-19, partially offset by tax benefits from lower withholding taxes on non-US earnings. The effective tax rate increased by 214.0 percentage points in 2019 compared to 2018. The increase was primarily attributable to the absence of approximately $910 million increase was partially offset by approximately $ 60 million of tax benefits related to the remeasurement of deferred tax assets and liabilities for tax law changes enacted during the year, primarily in Switzerland. Deferred The tax effects December 31, 2020 2019 Deferred tax assets: Intangibles and fixed assets $ 202 $ 205 Pension 18 12 Accruals and reserves 32 30 Net operating losses and other tax attribute carryforwards 35 27 Outside basis differences 11 17 Other 29 23 Total Deferred tax assets 327 314 Valuation allowance (34 ) (27 ) Net deferred tax assets $ 293 $ 287 Deferred tax liabilities: Outside basis differences $ (30 ) $ (49 ) Other (15 ) (21 ) Total deferred tax liabilities (45 ) (70 ) Net deferred tax asset $ 248 $ 217 As of December 31, 2020, the Company had gross net operating loss carryforwards of approximately $132 million with the majority in the below jurisdictions. Expiration Net Operating Period Loss Jurisdiction Carryforwards Brazil Indefinite $ 53 Luxembourg 2037 36 Switzerland 2027 30 $ 119 We maintain a valuation allowance of $34 million against a portion of the non-U.S. total deferred tax assets. In the event we determine that we will not be able to realize our net deferred tax assets in the future, we will reduce such amounts through an increase to tax expense in the period such determination is made. Conversely, if we determine that we will be able to realize net deferred tax assets in excess of the carrying amounts, we will decrease the recorded valuation allowance through a reduction to tax expense in the period that such determination is made. Our balance sheets present a deferred tax asset of $275 million and a deferred tax liability of $27 million after taking into account jurisdictional netting. As of December 31, 2020, $25 million of the deferred tax liability balance were reclassified to Liabilities subject to compromise. For more The Company does not intend to permanently reinvest the undistributed earnings of its foreign subsidiaries and has recorded a deferred tax liability mainly consisting of withholding taxes of approximately $13 million as of December 31, 2020. The following table summarizes the activity related to the Company’s uncertain tax positions (excluding interest and penalties and related tax attributes): 2020 2019 2018 Change in unrecognized tax benefits: Balance at beginning of year $ 54 $ 48 $ 100 Gross increases related to current period tax positions 8 8 19 Gross increases related to prior periods tax positions 6 — 9 Gross decreases related to prior periods tax positions — — (8 ) Decrease related to resolutions of audits with tax authorities (7 ) — — Expiration of the statute of limitations for the assessment of taxes (2 ) (2 ) — Potential Indemnifications to Honeywell for US and foreign taxes as contractually obligated in connection with Tax Matters Agreement — — (71 ) Foreign currency translation 1 — (1 ) Balance at end of year $ 60 $ 54 $ 48 As of December 31, 2020, 2019, and 2018 there were $60 million, $54 million, and $48 million, respectively, of unrecognized tax benefits that, if recognized, would be recorded as a component of Tax expense. Estimated interest and penalties related to uncertain tax benefits are classified as a component of tax expense in the Consolidated and Combined Statements of Operations and totaled $5 million of expense, $3 million of expense and $2 million of income for the years ended December 31, 2020, 2019, and 2018, respectively. Accrued interest and penalties were $29 million, $26 million, and $23 million, as of December 31, 2020, 2019, and 2018, respectively. We are currently under audit in a few jurisdictions for tax years ranging from 2006 through 2017. Based on the outcome of these examinations, or as a result of the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that certain unrecognized tax benefits for tax positions taken on previously filed tax returns will materially change from those recorded as liabilities in our financial statements. |
Accounts, Notes and Other Recei
Accounts, Notes and Other Receivables—Net | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Accounts, Notes and Other Receivables—Net | Note 8. Accounts, Notes and Other Receivables—Net December 31, 2020 December 31, 2019 Trade receivables $ 625 $ 574 Notes receivables 152 68 Other receivables 77 69 $ 854 $ 711 Less—Allowance for expected credit losses (13 ) (4 ) $ 841 $ 707 Trade receivables include $61 million and $4 million of unbilled balances as of December 31, 2020 and 2019, respectively. |
Factoring and Notes Receivables
Factoring and Notes Receivables | 12 Months Ended |
Dec. 31, 2020 | |
Receivables [Abstract] | |
Factoring and Notes Receivables | Note 9. Factoring and Notes Receivables The Company entered into arrangements with financial institutions to sell eligible trade receivables. For the years ended December 31, 2020 and December 31, 2019, the Company sold $473 million and $27 million of eligible receivables, respectively, without recourse, and accounted for these arrangements as a true sale. The Company also received guaranteed bank notes without recourse, in settlement of accounts receivables, primarily in the Asia Pacific region. The Company can hold the bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third party financial institutions in exchange for cash. For the years ended December 31, 2020 and December 31, 2019, the Company sold $160 million and $105 million of bank notes, respectively, without recourse, and accounted for these as true sales. As of December 31, 2020, the Company has pledged as collateral $18 million of guaranteed bank notes which have not been sold in order to be able to issue bank notes as payment to certain suppliers. Such pledged amounts are included as Notes receivables in Accounts, notes and other receivables – Net (Note 8). |
Inventories-Net
Inventories-Net | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories-Net | Note 10. Inventories—Net December 31, 2020 December 31, 2019 Raw materials $ 160 $ 142 Work in process 19 18 Finished products 97 85 $ 276 $ 245 Less—Reserves (41 ) (25 ) $ 235 $ 220 |
Other Current Assets
Other Current Assets | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Other Current Assets | Note 11. Other Current assets December 31, 2020 2019 Prepaid expenses $ 62 $ 12 Taxes receivable 22 46 Advanced discounts to customers, current 10 10 Customer reimbursable engineering 13 12 Other 3 5 $ 110 $ 85 |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Other Assets | Note 12. Other Assets December 31, 2020 2019 Advanced discounts to customers, non-current $ 70 $ 62 Operating right-of-use assets (Note 17) 36 35 Undesignated cross-currency swap at fair value — — Other 29 11 $ 135 $ 108 |
Property, Plant and Equipment -
Property, Plant and Equipment - Net | 12 Months Ended |
Dec. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Property, Plant and Equipment - Net | Note 13. Property, Plant and Equipment—Net December 31, 2020 2019 Machinery and equipment $ 711 $ 639 Tooling 390 324 Buildings and improvements 153 141 Construction in progress 86 100 Software 68 57 Land and improvements 17 16 Others 26 24 1,451 1,301 Less—Accumulated depreciation and amortization (946 ) (830 ) $ 505 $ 471 Depreciation and amortization |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill | Note 14. Goodwill The change in the carrying December 31, 2019 Currency Translation Adjustment December 31, 2020 Goodwill $ 193 — $ 193 |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities Current [Abstract] | |
Accrued Liabilities | Note 15. Accrued Liabilities Due to the Chapter 11 filing, Accrued Liabilities that existed as of December 31, 2020 and were deemed pre-petition, unsecured were reclassified as Liabilities subject to compromise, refer to Note 2, Reorganization and Chapter 11 Proceedings. December 31, 2020 December 31, 2019 Customer pricing reserve $ 82 $ 90 Compensation, benefit and other employee related 62 64 Repositioning 7 4 Product warranties and performance guarantees 14 29 Taxes 37 33 Advanced discounts from suppliers, current 5 19 Customer advances and deferred income 8 12 Accrued interest — 5 Short-term lease liability (Note 17) 5 8 Other (primarily operating expenses) 28 46 $ 248 $ 310 The Company accrued repositioning costs related to projects to optimize our product costs and to right-size our organizational structure. Expenses related to the repositioning accruals are included in Cost of goods sold in our Consolidated and Combined Statement of Operations. Severance Costs Exit Costs Total Balance at December 31, 2018 13 2 15 Charges 2 — 2 Usage—cash (8 ) (2 ) (10 ) Adjustments (3 ) 1 (2 ) Foreign currency translation (1 ) — (1 ) Balance at December 31, 2019 $ 3 $ 1 $ 4 Charges 10 — 10 Usage—cash (7 ) — (7 ) Adjustments 1 (1 ) — Foreign currency translation — — — Balance at December 31, 2020 $ 7 $ — $ 7 |
Long-term Debt and Credit Agree
Long-term Debt and Credit Agreements | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Long-term Debt and Credit Agreements | Note 16. Long-term Debt and Credit Agreements DIP Credit Agreement On October 6, 2020, the Bankruptcy Court entered an order granting interim approval of the Debtors’ entry into a Senior Secured Super-Priority Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”), with the lenders party thereto (as amended, restated, supplemented or otherwise modified from time to time, the “DIP Lenders”) and Citibank N.A. as administrative agent (the “DIP Agent”). On October 9, 2020 (the “Closing Date”), the Company, the DIP Agent and the DIP Lenders entered into the DIP Credit Agreement. The DIP Credit Agreement provides for a senior secured, super-priority term loan (the “DIP Term Loan Facility”) with a maximum principal amount of $200 million , $100 million of which was funded on the Closing Date and $100 million of which was subsequently funded on October 22, 2020 (the “Delayed Draw Borrowing Date”), following entry of the Bankruptcy Court’s final order approving the DIP Term Loan Facility on October 21, 2020 The maturity date of the DIP Term Loan Facility is the earlier to occur of (a) March 31, 2021 (the “Scheduled Maturity Date”); provided, however, that upon the Company’s written request such Scheduled Maturity Date can be extended by three separate one-month extensions subject to (i) the payment of an extension fee to the Lenders equal to 0.50% of the principal amount of the Loans outstanding at the time of such extension, (ii) no default or Event of Default (as defined in the DIP Credit Agreement) existing at the time of such extension and (iii) accuracy of the representations and warranties in all material respects at the time of such extension and after giving effect thereto; and (b) the effective date of a plan of reorganization; and certain other events under the DIP Credit Agreement. The outstanding principal amount under the DIP Term Loan Facility will bear interest at a rate equal to (x) prior to March 31, 2021, LIBOR (subject to a 1.00% LIBOR floor) plus 4.50% per annum and (y) following March 31, 2021, if the Scheduled Maturity Date has been extended at such time, LIBOR (subject to a 1.00% LIBOR floor) plus 5.50% per annum, in each case, payable every 30 days in arrears. On the Closing Date, the Company paid 1.00% in commitment fees on the total commitment plus 2.00% in fees in the form of original issue discount on the initial $100 million borrowing. On the Delayed Draw Borrowing Date, date the Company paid 2.00% in fees in the form of original issue discount on the $100 million delayed draw loan. Upon an event of default, all outstanding amounts under the DIP Credit Agreement will bear interest at a rate equal to the applicable interest rate plus an additional 2.00% per annum and be payable on demand. Pursuant to the terms of the DIP Credit Agreement, certain subsidiaries of the Company that guarantee the obligations arising under the prepetition Credit Agreement and that are Debtors in the Chapter 11 Case have guaranteed the Company’s obligations under the DIP Credit Agreement. Subject to certain exceptions, the DIP Term Loan Facility is secured by a security interest in substantially all of the assets of the Company and the guarantors. The DIP Financing is subject to certain covenants, including, without limitation, related to the incurrence of additional debt, liens, the making of restricted payments, and the Company’s failure to comply with certain bankruptcy-related covenants, in each case as set forth in the DIP Credit Agreement. The DIP Credit Agreement contains representations, warranties and events of default that are customary for debtor-in-possession facilities of this type. The DIP Financing is subject to certain prepayment events, including, without limitation, upon the sale of certain assets, in each case as set forth in the DIP Credit Agreement. On October 12, 2020, the Company, the DIP Agent and the DIP Lenders entered into the First Amendment to the DIP Credit Agreement (the “First Amendment”). The First Amendment eliminates the obligation for the Company to pay certain fees to the DIP Lenders in connection with certain prepayment events under the DIP Credit Agreement. The principal amounts outstanding on Debtor-in-possession financing are as follows: December 31, 2020 Debtor-in-possession financing $ 200 Pre-petition Long-Term Debt during the Chapter 11 Cases We are party to the Prepetition Credit Agreement, consisting of: a seven-year five-year five-year On September 27, 2018, we completed the offering of €350 million (approximately $410 million based on exchange rates as of September 27, 2018) in aggregate principal amount of 5.125% senior notes due 2026 (the “Senior Notes”). The Senior Notes bear interest at a fixed annual interest rate of 5.125% and mature on October 15, 2026. The Senior Notes were issued pursuant to an Indenture, dated September 27, 2018 (the “Indenture”), which, among other things and subject to certain limitations and exceptions, limits our ability and the ability of our restricted subsidiaries to: (i) incur, assume or guarantee additional indebtedness or issue certain disqualified equity interests and preferred shares, (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (iii) make investments, (iv) consummate certain asset sales or transfers, (v) engage in certain transactions with affiliates, (vi) grant or assume certain liens on assets to secure debt unless the Senior Notes are secured equally and ratably (vii) restrict dividends and other payments by certain of their subsidiaries and (vii) consolidate, merge, sell or otherwise dispose of all or substantially all of our or our restricted subsidiaries’ assets. All debt issuance costs, except for those associated to the Revolving Credit Facility, are deferred and recognized as a direct deduction to the related debt liability and are amortized to interest expense over the debt term. The company paid approximately $37 million of debt issuance costs in connection with the Term A Facility, Term B Facility, and Senior Notes. As a result of the Chapter 11 Cases, and in order to adjust the carrying amount of the debt to the expected allowed claim amount in accordance with ASC 852, the Company expensed $6 million of deferred issuance costs related to the pre-petition Senior Notes which are not fully secured. These costs were recorded to Reorganization items, net, in the Consolidated and Combined Statement of Operations for the year ended December 31, 2020. Refer to Note 2, Reorganization and Chapter 11 Proceedings for further discussion. Debt issuance costs associated with the Revolving Credit Facility were capitalized in Other assets and are amortized to interest expense over the debt term. Approximately, $6 million of debt issuance costs were paid in connection with the Revolving Credit Facility. The principal amounts outstanding on our Senior Secured Credit Facilities and the Senior Notes as of December 31, 2020 and December 31, 2019 are as follows: December 31, December 31, 2020 2019 (Dollars in millions) Senior Secured Credit Facilities (1) Term Loans 1,082 1,026 Borrowings under revolving credit facility 370 — Total consolidated Secured Debt $ 1,452 $ 1,026 Long-term debt, net subject to compromise (2) Senior Notes 429 387 Total debt, prior to reclassification to Liabilities subject to compromise $ 1,881 $ 1,413 Less: current portion — (4 ) Less: Amounts reclassified to Liabilities subject to compromise (429 ) — Total long-term debt $ 1,452 $ 1,409 (1) The Term A Facility, Term B Facility and Revolving Facility are fully secured. These continue to be accounted for under ASC 470. (2) The Senior Notes are not fully secured and have been reclassified to Liabilities subject to compromise in the Company's Consolidated Balance Sheet as of December 31, 2020. As of the Petition Date, the Company ceased accruing related interest expense and amortization of debt issuance costs. The commencement of the Chapter 11 Cases constituted an event of default that accelerated the Company’s obligations and terminated undrawn commitments, as applicable, under the Prepetition Credit Agreement. The Prepetition Credit Agreement provides that as a result of the commencement of the Chapter 11 Cases, the principal, interest and all other amounts due thereunder shall be immediately due and payable. Any efforts to enforce the payment obligations under the Prepetition Credit Agreement are automatically stayed as a result of the Chapter 11 Cases, and the creditors’ rights of enforcement in respect of the Prepetition Credit Agreement are subject to the applicable provisions of the Bankruptcy Code. During the Chapter 11 Cases and pursuant to an order of the Bankruptcy Court, we make monthly payments of adequate protection at the contractual non-default rate of interest on loans and certain other obligations under our Senior Secured Credit Facilities. Following commencement of the Chapter 11 Cases, the contractual non-default rate of interest that is applicable under Senior Secured Credit Facilities is either (a) in the case of dollar denominated borrowings, base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”), (b) in the case of borrowings denominated in certain permitted foreign currencies other than dollars or euros, an adjusted LIBOR rate (“LIBOR”) (which shall not be less than zero), or (c) in the case of borrowings denominated in euros, an adjusted EURIBOR rate (“EURIBOR”) (which shall not be less than zero), in each case, plus an applicable margin. Pursuant to the 2020 Amendment, (i) the margin applicable to loans under the Term B Facility increased by 75 basis points through the maturity date and (ii) the margin applicable to loans under the Revolving Facility and Term A Facility increased by 25 basis points until the Company delivers consolidated financial statements as of and for its first fiscal quarter ending on or after the last day of the Relief Period (as defined in the 2020 Amendment). Pursuant to the 2020 Amendment, the margin applicable to loans under our Senior Secured Credit Facilities increased by 25 basis points on September 4, 2020 following a downgrade in our corporate credit rating by S&P Global ratings. The applicable margin for the U.S. Dollar tranche of the Term B Facility is currently 2.50% per annum (for ABR loans) while that for the euro tranche of the Term B Facility is currently 3.75% per annum (for EURIBOR loans). The applicable margin for each of the Term A Facility and the Revolving Facility varies based on our leverage ratio which is increased by 25 basis points until the Company delivers consolidated financial statements as of and for its first fiscal quarter ending on or after the last day of the Relief Period. Accordingly, the interest rates for the Senior Secured Credit Facilities will fluctuate during the term of the Credit Agreement based on changes in the ABR, LIBOR, EURIBOR or future changes in our corporate rating or leverage ratio. Contractual Maturities In connection with our Chapter 11 cases, all pre-petition debt amounts have been stayed and separately stated as part of Liabilities subject to compromise. Their resolution will be based upon the requirements in the Plan of Reorganization. Given the uncertainties related to the resolution of the Chapter 11 cases, all pre-petition debt has been included at their contractual maturities. December 31, 2020 2021 $ 4 2022 70 2023 247 2024 4 2025 777 Thereafter 431 $ 1,533 Less: current portion — $ 1,533 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Leases | Note 17. Leases We have operating leases that primarily consist of real estate, machinery and equipment. Our leases have remaining lease terms of up to 10 years, some of which include options to extend the leases for up to two years, and some of which include options to terminate the leases within the year. The components of lease expense are as follows: Years Ended December 31, 2020 2019 Operating lease cost $ 15 $ 14 Rent expense under ASC 840 was $14 million in 2018. Supplemental cash flow information related to operating leases is as follows: Years Ended December 31, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 13 $ 12 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7 $ 12 Supplemental balance sheet information related to operating leases is as follows: Years Ended December 31, 2020 2019 Other assets $ 36 $ 35 Accrued liabilities 5 8 Other liabilities 15 28 Liabilities subject to compromise 19 — Years Ended December 31, 2020 2019 Weighted-average lease term (in years) 5.14 6.30 Weighted-average discount rate 6.16 6.36 Maturities of operating lease liabilities were as follows: Year Ended December 31, 2020 2021 $ 12 2022 10 2023 7 2024 5 2025 4 Thereafter 8 Total lease payments 46 Less imputed interest (7 ) $ 39 |
Financial Instruments and Fair
Financial Instruments and Fair Value Measures | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Financial Instruments and Fair Value Measures | Note 18. Financial Instruments and Fair Value Measures Credit and Market Risk —We continually monitor the creditworthiness of our customers to which we grant credit terms in the normal course of business. The terms and conditions of our credit sales are designed to mitigate or eliminate concentrations of credit risk with any single customer. Foreign Currency Risk Management —We are exposed to market risks from changes in currency exchange rates. These exposures may impact future earnings and/or operating cash flows. Our exposure to market risk for changes in foreign currency exchange rates arises from international financing activities between subsidiaries, foreign currency denominated monetary assets and liabilities and transactions arising from international trade. We hedge currency exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign currency exchange forward contracts (foreign currency exchange contracts). We hedge monetary assets and liabilities denominated in non-functional currencies. Prior to conversion into U.S. dollars, these assets and liabilities are remeasured at spot exchange rates in effect on the balance sheet date. The effects of changes in spot rates are recognized in earnings and included in Non-operating (income) expense. At December 31, 2020 and December 31, 2019, we had contracts with aggregate gross notional amounts of $19 million and $1,820 million, respectively, to limit interest rate risk and to exchange foreign currencies, principally the U.S. Dollar, Swiss Franc, British Pound, Euro, Chinese Yuan, Japanese Yen, Mexican Peso, New Romanian Leu, Czech Koruna, Australian Dollar and Korean Won. As a result of the Chapter 11 Cases, the Company has been limited in its ability to enter into hedging transactions. The Company has obtained Bankruptcy Court authorization for continuing hedging activities in the ordinary course of business, however, counterparties have either been unwilling to enter into hedging transactions with the Company during the Chapter 11 Cases or have required the Company to fully cash collateralize its obligations under the relevant hedging instrument, which has effectively reduced the Company’s ability to hedge foreign currency exposures beyond those relating to trade payables and receivables. Fair Value of Financial Instruments —The FASB’s accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 20 20 and December 31, 201 9 : Fair Value Notional Amounts Assets Liabilities December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Designated forward currency exchange contracts — $ 392 — $ 5 (a) — $ 1 (b) Undesignated instruments: Undesignated cross-currency swap — 420 — — (c) — 1 Undesignated interest rate swap — 561 — — — 1 (d) Undesignated forward currency exchange contracts 19 447 — 2 (a) — 3 (b) Total undesignated instruments 19 1,428 — 2 — 5 Total designated and undesignated instruments $ 19 $ 1,820 $ — $ 7 $ — $ 6 ( a ) Recorded within Other current assets in the Company’s Consolidated Balance Sheets ( b ) Recorded within Accrued liabilities in the Company’s Consolidated Balance Sheets (c) Recorded within Other assets in the Company’s Consolidated Balance Sheets (d) Recorded within Other liabilities in the Company´s Consolidated Balance Sheets On June 7, 2019, the Company entered into interest rate swap contracts to limit its exposure to interest rate risk by converting the interest payments on variable rate debt to fixed rate payments. These interest rate swaps have not been designated as hedging instruments for accounting purposes. The Company initiated a cash flow hedging program in the first quarter of 2019 and has since then entered into forward currency exchange contracts to mitigate exposure to foreign currency exchange rate volatility and the associated impact on earnings related to forecasted foreign currency commitments. These forward currency exchange contracts are assessed as highly effective and are designated as cash flow hedges. Gains and losses on derivatives qualifying as cash flow hedges are recorded in Accumulated other comprehensive income (loss) until the underlying transactions are recognized in earnings. On September 27, 2018, the Company entered into a floating-floating cross-currency swap contract to hedge the foreign currency exposure from foreign currency-denominated debt which will mature on September 27, 2025. The gain or loss on this derivative instrument is recognized in earnings and included in Non-operating (income). For the year ended December 31, 2020, losses recorded in Non-operating expense (income), under the cross-currency swap contract were $20 million. For the year ended December 31, 2019, gains recorded in Non-operating expense (income), under the cross-currency swap contract were $1 million. The foreign currency exchange, interest rate swap and cross-currency swap contracts are valued using market observable inputs. As such, these derivative instruments are classified within Level 2. The assumptions used in measuring fair value of the cross-currency swap are considered Level 2 inputs, which are based upon market observable interest rate curves, cross currency basis curves, credit default swap curves, and foreign exchange rates. Following our voluntary filing for Chapter 11 protection, and as noted in the table above, the majority of our foreign exchange, interest rate swap, and cross-currency swap contracts were terminated at or prior to September 30, 2020. All outstanding amounts as of December 31, 2020 are classified as Other Liabilities and are fully secured and payable upon Emergence. Any valuation difference from our Petition Date to the termination date will be reflected in Reorganization items, net. See Note 2, Reorganization and Chapter 11 Proceedings, for additional information. A number of our forward currency exchange contracts are also designated as accounting hedges. Upon termination, these amounts have been dedesignated. As the Company still anticipates the forecasted transaction to commence, the amounts in accumulated comprehensive incomes will be released based on our original forecast. The carrying value of Cash, cash equivalents and restricted cash, Account receivables and Notes and Other receivables contained in the Consolidated Balance Sheets approximates fair value. The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value: December 31, 2020 Carrying Value Fair Value Liabilities not subject to compromise: Terms Loans A and B $ 1,082 $ 1,083 DIP Financing $ 200 $ 200 Liabilities subject to compromise: Senior Notes $ 429 $ 429 The Company determined the fair value of certain of its long-term debt and related current maturities utilizing transactions in the listed markets for similar liabilities. As such, the fair value of the long-term debt and related current maturities is considered Level 2. |
Other Liabilities
Other Liabilities | 12 Months Ended |
Dec. 31, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Note 19. Other Liabilities Due to the Chapter 11 filing, Other Liabilities that existed as of December 31, 2020 and were deemed pre-petition, unsecured were reclassified as Liabilities subject to compromise, refer to Note 2, Reorganization and Chapter 11 Proceedings. Years Ended December 31, 2020 2019 Pension and other employee related $ 14 $ 94 Advanced discounts from suppliers 11 46 Income taxes 45 79 Long-term lease liability (Note 17) 15 28 Undesignated cross-currency and interest rate swaps (Note 18) 22 2 Other 7 25 $ 114 $ 274 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2020 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Note 20. Accumulated Other The changes in accumulated Pre-Tax Tax After-Tax Year Ended December 31, 2018 Foreign exchange translation adjustment $ (198 ) $ — $ (198 ) Pension adjustments (2 ) — (2 ) Changes in fair value of effective cash flow hedges 37 (2 ) 35 $ (163 ) $ (2 ) $ (165 ) Year Ended December 31, 2019 Foreign exchange translation adjustment $ 59 $ 8 $ 67 Pension adjustments (18 ) 4 (14 ) Changes in fair value of effective cash flow hedges 2 2 4 $ 43 $ 14 $ 57 Year Ended December 31, 2020 Foreign exchange translation adjustment $ (212 ) $ (22 ) $ (234 ) Pension adjustments (17 ) (1 ) (18 ) Changes in fair value of effective cash flow hedges (8 ) 1 (7 ) $ (237 ) $ (22 ) $ (259 ) Changes Total Foreign Changes in Fair Accumulated Exchange Value of Other Translation Effective Cash Pension Comprehensive Adjustment Flow Hedges Adjustments Income (Loss) Balance at December 31, 2018 $ 86 $ 0 $ (13 ) $ 73 Other comprehensive income (loss) before reclassifications 67 27 (27 ) 67 Amounts reclassified from accumulated other comprehensive income — (23 ) 13 (10 ) Net current period other comprehensive income (loss) 67 4 (14 ) 57 Balance at December 31, 2019 $ 153 $ 4 $ (27 ) $ 130 Other comprehensive income (loss) before reclassifications (234 ) (3 ) (29 ) (266 ) Amounts reclassified from accumulated other comprehensive income — (4 ) 11 7 Net current period other comprehensive income (loss) (234 ) (7 ) (18 ) (259 ) Balance at December 31, 2020 $ (81 ) $ (3 ) $ (45 ) $ (129 ) Reclassifications Year ended December 31, 2020 Affected Line in the Consolidated and Combined Statement of Operations Selling, Cost of General and Net Goods Administrative Non-Operating (Income) Sales Sold Expenses Expense Total Amortization of Pension and Other Postretirement Items: Actuarial losses recognized $ — $ — $ — $ 13 $ 13 Losses (gains) on cash flow hedges — (4 ) — — (4 ) Tax expense (benefit) — — — — (2 ) Total reclassifications for the period, net of tax $ 7 Year ended December 31, 2019 Affected Line in the Consolidated and Combined Statement of Operations Selling, Cost of General and Net Goods Administrative Non-Operating (Income) Sales Sold Expenses Expense Total Amortization of Pension and Other Postretirement Items: Actuarial losses recognized $ — $ — $ — $ 13 $ 13 Losses (gains) on cash flow hedges — (25 ) — — (25 ) Tax expense (benefit) 2 Total reclassifications for the period, net of tax $ (10 ) |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | Note 21. Stock-Based Compensation On September 14, 2018, our Board adopted, and Honeywell, as our sole stockholder, approved, the 2018 Stock Incentive Plan of Garrett Motion Inc. and its Affiliates (the “Stock Incentive Plan”) and the 2018 Stock Plan for Non-Employee Directors (the “Director Equity Plan”). The Stock Incentive Plan provides for the grant of stock options, stock appreciation rights, performance awards, restricted stock units, restricted stock, other stock-based awards, and cash-based awards to employees of Garrett or its affiliates, and independent contractors or consultants of Garrett. The maximum aggregate number of shares of our common stock that may be issued under the Stock Incentive Plan is 10,000,000 shares and, for the Director Equity Plan, 400,000 shares. Up to 5,000,000 shares may be granted as incentive stock options under the Stock Incentive Plan. As of December 31, 2020, there were 5,641,452 and 344,860 shares of our common stock available for future issuance under the Stock Incentive Plan and Director Equity Plan, respectively. Restricted Stock Units — Restricted stock unit (“RSU”) awards are issued to certain key employees and directors at fair market value at the date of grant. RSUs typically vest over a period of three or four years, and when vested, each unit entitles the holder to one share of our common stock. The following table summarizes information about RSU activity related to our Stock Incentive Plan and Director Equity Plan for each of the periods presented: Number of Restricted Stock Units Weighted Average Grant Date Fair Value Per Share Non-vested at December 31, 2018 3,369,622 $ 10.12 Granted 629,037 15.36 Vested (967,518 ) 5.26 Forfeited (236,501 ) 14.47 Non-vested at December 31, 2019 2,794,640 $ 12.62 Granted 878,904 6.70 Vested (1,185,121 ) 7.83 Forfeited (949,454 ) 8.11 Non-vested at December 31, 2020 1,538,969 13.11 As of December 31, 2020, there was approximately $9 million of total unrecognized compensation cost related to unvested RSUs granted under our Stock Incentive Plan, which is expected to be recognized over a weighted-average period of 1.5 years. The following table summarizes the impact to the Consolidated and Combined Statement of Operations from RSUs: Years Ended December 31, 2020 2019 2018 Compensation expense $ 9 $ 15 $ 5 Future income tax benefit recognized 3 — 1 Stock Options — The exercise price, term and other conditions applicable to each option granted under our stock incentive plans are generally determined by the Compensation Committee of the Board. The exercise price of stock options is set on the grant date and may not be less than the fair market value per share of our stock on that date. The fair value is recognized as an expense over the employee’s requisite service period (generally the vesting period of the award). Options generally vest over a period four years and expire after ten years. The following table summarizes the impact to the Consolidated and Combined Statement of Operations from stock options. There were no stock options granted prior to 2019. Years Ended December 31, 2020 2019 Compensation expense $ 1 $ 1 Future income tax benefit recognized — — The fair value related to stock options granted was determined using Black-Scholes option pricing model and the weighted average assumptions are shown in the table below: Key Black-Scholes Assumptions Year Ended December 31, 2020 Risk-free interest rate 2.6% Expected term (years) 6.25 Volatility 42.08% Dividend yield 0.0% Fair value per stock option 7.28 The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. Volatility is determined based on the historical volatility of peer companies over a period corresponding to the expected term. Expected term is determined using a simplified approach, calculated as the midpoint between the vesting period and the contractual term of the award. The risk-free interest rate is determined based upon the yield of an outstanding U.S. Treasury note with a term equal to the expected term of the option granted. The following table summarizes information about stock option activity related to the Stock Incentive Plan for each of the periods presented: Number of Stock Options Weighted Average Exercise Price (per share) Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2018 — $ — — — Granted 483,408 16.17 Exercised — — Forfeited (34,375 ) 16.17 Expired — — Outstanding as of December 31, 2019 449,033 16.17 9.26 — Granted — — Exercised — — Forfeited (37,482 ) 16.17 Expired (8,034 ) 16.17 Outstanding as of December 31, 2020 403,517 16.17 8.26 — Exercisable as of December 31, 2020 102,420 — — — There were no stock options granted in 2020. No options were exercised during the year ended December 31, 2020. As of December 31, 2020, there was no intrinsic value for the outstanding and exercisable shares under options. As of December 31, 2020, there was $2 million of unrecognized stock-based compensation expense related to stock options that is expected to be recognized over a weighted average period of approximately 2.2 years. Performance Stock Units — The Company has issued PSUs under its 2019 and 2020 long term incentive plans which, upon vesting, entitles the holder to shares of our common stock. The actual number of shares an employee receives for each PSU depends on the Company’s performance against various measures. For the 2019 plan, the performance measures are related to organic revenue growth, adjusted EBITDA and leveraged cash flows, weighted 20%, 40%, and 40%, respectively, over a three-year three-year The following table summarizes information about PSU activity related to the Stock Incentive Plan for each of the periods presented: Number of Performance Stock Units Weighted Average Grant Date Fair Value Per Share Non-vested at December 31, 2018 — $ — Granted 379,090 16.17 Vested — — Forfeited (47,769 ) 16.17 Non-vested at December 31, 2019 331,321 $ 16.17 Granted 1,021,069 8.36 Vested — — Forfeited (1,038,279 ) 8.48 Non-vested at December 31, 2020 314,111 16.17 The fair value of the PSUs is based on the fair market value of the Company’s stock at the grant date. The number of underlying shares to be issued will be based on actual performance achievement over the performance period. The per unit weighted average fair value at the date of grant for PSUs granted during the year ended December 31, 2020 was $8.36. The fair value of each PSU grant is amortized monthly into compensation expense on a graded vesting (accelerated) basis over a vesting period of 36 months. The accrual of compensation costs is based on our estimate of the final expected value of the award and is adjusted as required for the performance-based condition. The Company estimates forfeitures at time of issuance, which results in a reduction in compensation expense. As the payout of PSUs includes dividend equivalents, no separate dividend yield assumption is required in calculating the fair value of the PSUs. The Company currently does not pay dividends. As of December 31, 2020, there was approximately $1 million of total unrecognized compensation cost related to non-vested PSUs granted under the Stock Incentive Plan which is expected to be recognized over a weighted-average period of 1 year. The following table summarizes the impact to the Consolidated and Combined Statement of Operations from PSUs. There were no PSUs granted prior to 2019. Years Ended December 31, 2020 2019 Compensation expense $ — $ 2 Future income tax benefit recognized — — Continuity Awards — In June 2020, in response to the unprecedented and ongoing market uncertainty resulting from the COVID-19 pandemic and in connection with the Board’s evaluation of strategic alternatives for the Company, the Compensation Committee approved one-time cash continuity awards (“Continuity Awards”) to ensure retention of key individuals in exchange for the forfeiture of RSUs and PSUs granted in February 2020. The Continuity Awards total $11 million, with $9 million paid in June 2020 and $2 million expected to be paid in 2021. The Continuity Awards are subject to repayment if prior to June 2021, the recipient has a qualifying termination of employment. Given the Continuity Awards have a 1-year service requirement, the combined transaction is accounted for as a modification to liability-classified awards. The total incremental compensation cost resulting from the modification is $5 million. As of December 31, 2020, there was $5 million of unrecognized compensation cost related to the Continuity Awards that is expected to be recognized over a weighted-average period of approximately 0.5 years. The following table summarizes information about Continuity Award activity for the year ended December 31, 2020: Number of Awards Weighted Average Grant Date Fair Value Per Award Non-vested at December 31, 2019 — $ — Granted 43 257,536 Vested — — Forfeited — — Non-vested at December 31, 2020 43 $ 257,536 The following table summarizes the impact to the Consolidated and Combined Statement of Operations from Continuity Awards for the year ended December 31, 2020. Year Ended December 31, 2020 Compensation expense $ 7 Future income tax benefit recognized 1 Stock Based Awards Granted by Honeywell — For periods prior to the Spin-Off, Honeywell maintained stock-based compensation plans for the benefit of its officers, directors and employees. Under the Former Parent´s stock-based compensation plans, Honeywell awarded RSUs, stock options and PSUs to certain employees. Stock-based compensation expense related to awards granted by Honeywell recognized in the Consolidated and Combined Statements of Operations amounted to $16 million for the year ended December 31, 2018 of which approximately $10 million are specifically identified for employees within the Business and $6 million is related to shared employees not specifically identifiable to the Business. These amounts represent stock-based compensation expenses attributable to the Business based on the awards and terms previously granted under the incentive compensation plans to employees within the Business and an allocation of Former Parent’s corporate and shared functional employee stock based compensation expenses. Accordingly, the amounts presented are not necessarily indicative of current and future awards and do not necessarily reflect the results that the Business would have experienced as an independent company for the periods presented. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Note 22. Earnings Per Share On October 1, 2018, the date of consummation of the Spin-Off, 74,070,852 shares of the Company’s common stock were distributed to Honeywell stockholders of record as of September 18, 2018 who held their shares through the Distribution Date. Basic and Diluted EPS for all historical periods prior to the Spin-Off reflect the number of distributed shares, or 74,070,852 shares. For 2018, these shares are treated as issued and outstanding from January 1, 2018 to the Spin-Off for purposes of calculating basic earnings per share. The details of the earnings per share calculations for the years ended December 31, 2020, 2019 and 2018 are as follows: Years Ended December 31, 2020 2019 2018 Basic Net Income $ 80 $ 313 $ 1,206 Weighted average common shares outstanding 75,543,461 74,602,868 74,059,240 EPS – $ 1.06 $ 4.20 $ 16.28 Years Ended December 31, 2020 2019 2018 Diluted Net Income $ 80 $ 313 $ 1,206 Weighted average common shares outstanding – Basic 75,543,461 74,602,868 74,059,240 Dilutive effect of unvested RSUs 557,048 1,331,505 342,908 Weighted average common shares outstanding – Diluted 76,100,509 75,934,373 74,402,148 EPS – Diluted $ 1.05 $ 4.12 $ 16.21 Diluted EPS is computed based upon the weighted average number of common shares outstanding for the year plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the year. The diluted earnings per share calculations exclude the effect of stock options when the options’ assumed proceeds exceed the average market price of the common shares during the period. For the years ended December 31, 2020 and December 31, 2019, the weighted number of stock options excluded from the computations was 428,690 and 483,408, respectively. These stock options were outstanding for the years ended December 31, 2020 and December 31, 2019, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 23. Commitments Chapter 11 Proceedings Commencement of the Chapter 11 Cases automatically stayed the proceedings and actions against us that are described below, in addition to actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company’s bankruptcy estates. The Plan filed by the Debtors, if confirmed by the Bankruptcy Court, will provide for the treatment of claims against the Company’s bankruptcy estates, including pre-petition liabilities that have not been satisfied or addressed during the Chapter 11 Cases. See Note 1, Background and Basis of Presentation and Note 2, Reorganization and Chapter 11 Proceedings for additional information on the Chapter 11 Cases, the RSA, the Stalking Horse Purchase Agreement, the PSA, the ECBA, the Transaction and the DIP Credit Agreement. Obligations payable to Honeywell Honeywell is a defendant in asbestos-related personal injury actions mainly related to its legacy Bendix friction materials (“Bendix”) business. The Bendix business manufactured automotive brake linings that contained chrysotile asbestos in an encapsulated form. Claimants consist largely of individuals who allege exposure to asbestos from brakes from either performing or being in the vicinity of individuals who performed brake replacements. Certain operations that were part of the Bendix business were transferred to Garrett. In connection with the Spin-Off, Garrett ASASCO, a wholly owned indirect subsidiary of the Company, entered into the Honeywell Indemnity Agreement with Honeywell on September 12, 2018. As of the Spin-Off date of October 1, 2018, Garrett ASASCO is obligated to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of this Honeywell Indemnity Agreement, Garrett ASASCO is responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Euro-to-U.S. dollar exchange rate determined by Honeywell as of a date within two business days prior to the date of the Distribution (1.16977 USD = 1 EUR) equivalent of $175 million in respect of such liabilities arising in any given calendar year. The payments that Garrett ASASCO is required to make to Honeywell pursuant to the terms of the Honeywell Indemnity Agreement will not be deductible for U.S. federal income tax purposes. The Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $ 25 million as converted into Euros in accordance with the terms of the agreement. During the first quarter of 2020 , Garrett ASASCO paid Honeywell the Euro-equivalent of $ million in connection with the Honeywell Indemnity Agreement. Honeywell and Garrett agreed to defer the payment under the Honeywell Indemnity Agreement due May 1, 2020 to December 31, 2020 (the “Q2 Payment”) , however w e do not expect Garrett ASASCO to make payments to Honeywell under the Honeywell Indemnity Agreement during the pendency of the Chapter 11 Cases. The Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for, among other things, the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Indemnity Agreements. On December 2, 2019, the Company and its subsidiary, Garrett ASASCO, filed a Summons with Notice in the Commercial Division of the Supreme Court of the State of New York, County of New York (the “NY Supreme Court”) commencing an action (the “Action”) against Honeywell, certain of Honeywell’s subsidiaries and certain of Honeywell’s employees for declaratory judgment, breach of contract, breach of fiduciary duties, aiding and abetting breach of fiduciary duties, corporate waste, breach of the implied covenant of good faith and fair dealing, and unjust enrichment. On January 15, 2020, the Company and Garrett ASASCO, filed a Complaint in the NY Supreme Court in connection with the Action. The lawsuit arises from the Honeywell Indemnity Agreement. The Company is seeking declaratory relief; compensatory damages in an amount to be determined at trial; rescission of the Honeywell Indemnity Agreement; attorneys’ fees and costs and such other and further relief as the Court may deem just and proper. There can be no assurance as to the time and resources that will be required to pursue these claims or the ultimate outcome of the lawsuit. Among other claims, Garrett asserts that Honeywell is not entitled to indemnification because it improperly seeks indemnification for amounts attributable to punitive damages and intentional misconduct, and because it has failed to establish other prerequisites for indemnification under New York law. Specifically, the claim asserts that Honeywell has failed to establish its right to indemnity for each and every asbestos settlement of the thousands for which it seeks indemnification. The Action seeks to establish that the Honeywell Indemnity Agreement is not enforceable, in whole or in part. On December 18, 2020, Honeywell filed proofs of claim in the Chapter 11 Cases, asserting that the Company owes at least $1.9 billion in respect of such claims. The Bankruptcy Court was scheduled to estimate the amount of Honeywell’s claims in an estimation proceeding that was scheduled to commence on February 1, 2021 On January 11, 2021, the Company announced that it had agreed to settle Honeywell’s claims as part of a revised Plan. The Plan is subject to various conditions, including approval by the Bankruptcy Court. Under the Plan, Honeywell would receive a $375 million payment and Series B Preferred Stock payable in installments of $35 million in 2022, and $100 million annually 2023-2030. The Company would have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of the Emergence date (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence. On January 15, 2021, the Bankruptcy Court ordered that the Action and the estimation proceeding both be stayed pending the Bankruptcy Court’s consideration of the Plan. The confirmation hearing for the Plan is currently On September 12, 2018, we also entered into a tax matters agreement with Honeywell (the “Tax Matters Agreement”), which governs the respective rights, responsibilities and obligations of Honeywell and us after the Spin-Off with respect to all tax matters (including tax liabilities, tax attributes, tax returns and tax contests). The Tax Matters Agreement generally provides that, following the Spin-Off date of October 1, 2018, we are responsible and will indemnify Honeywell for all taxes, including income taxes, sales taxes, value-added and payroll taxes, relating to Garrett for all periods, including periods prior to the completion date of the Spin-Off. Among other items, as a result of the mandatory transition tax imposed by the Tax Cuts and Jobs Act, Garrett ASASCO is required to make payments to a subsidiary of Honeywell in the amount representing the net tax liability of Honeywell under the mandatory transition tax attributable to us, as determined by Honeywell. Additionally, the Tax Matters Agreement provides that Garrett ASASCO is to make payments to a subsidiary of Honeywell for a portion of Honeywell’s net tax liability under Section 965(h)(6)(A) of the Internal Revenue Code for mandatory transition taxes that Honeywell determined is attributable to us (the “MTT Claim”). Following the Spin-Off, Honeywell asserted that Garrett ASASCO was obligated to pay $240 million to Honeywell for the MTT Claim under the Tax Matters Agreement. Accordingly, and in connection with the Tax Matters Agreement, we made payments to Honeywell, under protest, for the Euro-equivalent of $18 million and $19 million during 2019 and the fourth quarter of 2018, respectively, for the MTT Claim. On October 30, 2020, however, Honeywell filed an SEC Form 10-Q for the quarterly period ended September 30, 2020, reporting that its claim against us under the Tax Matters Agreement, including the MTT Claim, is now $273 million. Under the terms of the Tax Matters Agreement, Garrett ASASCO is required to pay this amount in Euros, without interest, in five annual installments, each equal to 8% of the aggregate amount, followed by three additional annual installments equal to 15%, 20% and 25% of the aggregate amount, respectively. Following the Spin-Off in October 2018, Garrett ASASCO paid the first annual installment in October 2018, with subsequent annual installments to be paid in April of each year. The annual installment due on April 1, 2020 was initially deferred to December 31, 2020 in agreement with Honeywell, and subsequently not paid as a result of the automatic stay applicable to the Debtors under the Bankruptcy Code as a result of the Chapter 11 Cases. We do not expect Garrett ASASCO to make payments to Honeywell under the Tax Matters Agreement during the pendency of the Chapter 11 Cases. On July 17, 2020, we provided notice to Honeywell asserting that Honeywell has caused material breaches of the Tax Matters Agreement and that the Tax Matters Agreement is unenforceable. The value and validity of Honeywell’s claims under the Tax Matters Agreement, including the MTT Claim, are currently being litigated in the Chapter 11 Cases. As described above, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for, among other things, the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Tax Matters Agreement. In addition, the Tax Matters Agreement addresses the allocation of liability for taxes incurred as a result of restructuring activities undertaken to effectuate the Spin-Off. The Tax Matters Agreement also provides that we are required to indemnify Honeywell for certain taxes (and reasonable expenses) resulting from the failure of the Spin-Off and related internal transactions to qualify for their intended tax treatment under U.S. federal, state and local income tax law, as well as foreign tax law. Further, the Tax Matters Agreement also imposes certain restrictions on us and our subsidiaries (including restrictions on share issuances, redemptions or repurchases, business combinations, sales of assets and similar transactions) that are designed to address compliance with Section 355 of the Internal Revenue Code of 1986, as amended, and are intended to preserve the tax-free nature of the Spin-Off. The Obligation payable to Honeywell related to these agreements was deemed a pre-petition, unsecured liability subject to compromise. On the Petition Date, the Obligation was stayed from further payment and, in accordance with ASC 852-10, measured at the expected allowed claim amount. The Company measured the expected allowed claim as of December 31, 2020 utilizing a combination of data points including: (1) the historical actuarial claims data provided by Honeywell up to December 31, 2019 (2) the aforementioned Honeywell claims estimation trial proceedings, (3) Honeywell’s bankruptcy claim filed with the Bankruptcy Court, and (4) the expected settlement of the Honeywell liabilities as per the Plan of Reorganization. The following table summarizes our Obligation payable to Honeywell related to these agreements. As of December 31, 2020, all amounts have been reclassified to Liabilities subject to compromise on the Consolidated Balance Sheets: 2020 Asbestos and environmental Tax Matters Total Beginning of year $ 1,090 $ 261 $ 1,351 Accrual for update to estimated liability — — — Legal fees expensed 41 — 41 Payments to Honeywell (35 ) — (35 ) Currency translation adjustment 100 25 125 End of year $ 1,196 $ 286 $ 1,482 Current 2 40 42 Non-current 1,194 246 1,440 Total $ 1,196 $ 286 $ 1,482 2019 Asbestos and environmental Tax Matters Total Beginning of year $ 1,244 $ 282 $ 1,526 Accrual for update to estimated liability (18 ) 3 (15 ) Legal fees expensed 44 — 44 Payments to Honeywell (153 ) (18 ) (171 ) Currency translation adjustment (27 ) (6 ) (33 ) End of year $ 1,090 $ 261 $ 1,351 Current 51 18 69 Non-current 1,039 243 1,282 Total $ 1,090 $ 261 $ 1,351 Asbestos Matters The accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the Honeywell Indemnity Agreement with Honeywell entered into by Garrett ASASCO on September 12, 2018, under which Garrett ASASCO is required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. The Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. As stated above, on January 11, 2021, the Company announced that it had agreed to settle Honeywell’s claims as part of a revised Plan. This settlement would extinguish our obligations to Honeywell under the Honeywell Indemnity Agreement. The Plan is subject to various conditions, including approval by the Bankruptcy Court. The following Asbestos-Related Year ended December 31, 2020 Year ended December 31, 2019 Year ended December 31, 2018 Bendix Other Total Bendix Other Total Bendix Other Total Beginning of year $ — $ — $ - $ — $ 1 $ 1 $ 1,703 $ 9 $ 1,712 Accrual for update to estimated liabilities — — — — — — 141 — 141 Change in estimated cost of future claims — — — — — — — — — Update of expected resolution values for pending claims — — — — — — — — — Asbestos-related liability payments — — — — — — (151 ) (4 ) (155 ) Spin-Off related adjustments — — — — — — (1,693 ) (4 ) (1,697 ) Balance Sheet Reclassification — — — — (1 ) (1 ) — — — End of year $ — $ — $ — $ — $ — $ — $ — $ 1 $ 1 Insurance Recoveries 2020 2019 2018 Bendix Bendix Bendix Beginning of year $ — $ — $ 191 Probable insurance recoveries related to estimated liability — — 10 Insurance receipts for asbestos-related liabilities — — (24 ) Insurance receivables settlements and write-offs — — 1 Other — — — Spin-Off related adjustments — — (178 ) $ — $ — $ — There are no asbestos related liabilities recorded as of December 31, 2020 and 2019. Securities Litigation On September 25, 2020, a putative securities class action complaint was filed against Garrett Motion Inc. and certain current and former Garrett officers and directors, in the United States District Court for the Southern District of New York. The case bears the caption : Steven Husson, Individually and On Behalf of All Others Similarly Situated, v. Garrett Motion Inc., Olivier Rabiller, Alessandro Gili, Peter Bracke, Sean Deason, and Su Ping Lu On October 5, 2020, another putative securities class action complaint was filed against certain current and former Garrett officers and directors, in the United States District Court for the Southern District of New York. This case bears the caption: The Gabelli Asset Fund, The Gabelli Dividend & Income Trust, The Gabelli Value 25 Fund Inc., The Gabelli Equity Trust Inc., SM Investors LP and SM Investors II LP, on behalf of themselves and all others similarly situated, v. Su Ping Lu, Olivier Rabiller, Alessandro Gili, Peter Bracke, Sean Deason, Craig Balis, Thierry Mabru, Russell James, Carlos M. Cardoso, Maura J. Clark, Courtney M. Enghauser, Susan L. Main, Carsten Reinhardt, and Scott A. Tozier , Case No. 1:20-cv-08296-JPC (SDNY) (the “Gabelli Action”). The Gabelli Action also asserts claims under Sections 10(b) and 20(a) of the Exchange Act. On November 5, 2020, another putative securities class action complaint was filed against certain current and former Garrett officers and directors, in the United States District Court for the Southern District of New York. This case bears the caption: Joseph Froehlich, Individually and On Behalf of All Others Similarly Situated, v. Olivier Rabiller, Allesandro Gili, Peter Bracke, Sean Deason, and Su Ping Lu All three actions are currently assigned to Judge John P. Cronan. Su Ping Lu filed a waiver of service in the Gabelli Action on November 10, 2020. On November 24, 2020, competing motions were filed seeking the appointment of lead plaintiff and lead counsel and the consolidation of the Husson, Gabelli, and Froehlich Actions. On December 8, 2020, counsel for the plaintiffs in the Gabelli Action – the Entwistle & Cappucci law firm – filed an unopposed stipulation and proposed order that would (1) appoint the plaintiffs in the Gabelli Action – the “Gabelli Entities” – the lead plaintiffs; (2) would appoint Entwistle & Cappucci as lead counsel for the plaintiff class; (3) consolidate the Gabelli Action, the Husson Action, and the Froehlich Action; (4) set a date by which lead plaintiff would file a consolidated amended complaint by February 25, 2021; and (5) set a date by which defendants shall respond to a consolidated amended complaint of April 26, 2021. On January 21, 2021, the district court issued an order consolidating the three actions as In re Garrett Motion Inc. Securities Litigation The Company’s insurer, AIG has accepted the defense, subject the customary reservation of rights. The Bankruptcy Court has set a bar date of March 1, 2021 Make-Whole Litigation On November 13, 2020, certain of the Debtors (the “Plaintiffs”) filed a complaint in the Bankruptcy Court against the indenture trustee (the “Indenture Trustee”) of the 5.125% senior notes due 2026 (the “Senior Notes”) seeking declaratory judgment on two claims for relief that the Debtors do not owe, and the holders of the Senior Notes (the “Noteholders”) are not entitled to, any make-whole premium under the Indenture (the “Make-Whole” and such litigation, the “Make-Whole Litigation”). Certain Noteholders have contended in these Chapter 11 Cases that the Noteholders are entitled to payment of the Make-Whole under the terms of the Indenture, which provide for the payment of the Make-Whole if the Debtors exercise their right to redeem the Senior Notes prior to maturity, as a result of the Debtors’ commencement of their Chapter 11 Cases. The Plaintiffs believe that the Noteholders are not entitled to any Make-Whole because the Debtors have not exercised their right of redemption as contemplated by the Indenture and, in the alternative, the Make-Whole should be disallowed as unmatured interest pursuant to Section 502(b)(2) of the Bankruptcy Code. On January 8, 2021, the Indenture Trustee filed an answer to the Debtors’ complaint. Pursuant to the Plan, the Make Whole is an allowed claim in the amount of $15 million. As the Plan has not been approved by the Bankruptcy Court, the Make Whole was not recorded as of December 31, 2020. Pursuant to the PSA, the Debtors have agreed to suspend all litigation activities related to and to stay the Make-Whole Litigation through Emergence and to dismiss with prejudice such proceedings upon Emergence. Other Matters We are subject any contingency that is probable of occurrence and reasonably estimable. We continually assess the likelihood of adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. In September 2020, the Brazilian tax authorities issued an infraction notice against Garrett Motion Industria Automotiva Brasil Ltda, challenging the use of certain tax credits between January 2017 and February 2020. The infraction notice results in a loss contingency that may or may not ultimately be incurred by the Company. The estimated total amount of the contingency as of December 31, 2020 was $29 million including penalties and interest. The Company appealed the infraction notice on October 23, 2020. The Company believes, based on management’s assessment and the advice of external legal counsel, that it has meritorious arguments in connection with the infraction notice and any liability for the infraction notice is currently not probable. Accordingly, no accrual is required at this time. Warranties In the normal Years Ended December 31, 2020 2019 2018 Beginning of year $ 29 $ 32 $ 28 Accruals for warranties/guarantees issued during the year 19 31 33 Settlement of warranty/guarantee claims (17 ) (34 ) (29 ) Less: Amounts reclassified to Liabilities subject to compromise (16 ) — — $ 15 $ 29 $ 32 |
Defined Benefit Pension Plans
Defined Benefit Pension Plans | 12 Months Ended |
Dec. 31, 2020 | |
Compensation And Retirement Disclosure [Abstract] | |
Defined Benefit Pension Plans | Note 24. Defined Benefit We sponsor several funded U.S. and non-U.S. defined benefit pension plans. Pension benefits for many of our U.S. employees are provided through a non-contributory, qualified defined benefit plan. All non-union hourly and salaried employees that joined the Business or Garrett for the first time after December 31, 2012, are not eligible to participate in our U.S. defined benefit pension plans. We also sponsor defined benefit pension plans which cover non-U.S. employees who are not U.S. citizens, in Switzerland and Ireland. Other pension plans outside of the U.S. are not material to the Company either individually or in the aggregate. For periods prior to the Spin-Off, we only accounted for our pension plan in Ireland as a defined benefit pension plan. Our other pension plans were accounted for as multiemployer plans. On October 1, 2018, in connection with the Spin-Off, we performed an interim remeasurement of our defined benefit pension plan in Ireland to update the discount rate as of the date immediately prior to the Spin-Off. The following tables summarize the balance sheet impact, including the benefit obligations, assets and funded status associated with our significant pension plans. Pension Benefits U.S. Plans U.S. Plans Non-U.S. Plans Non-U.S. Plans 2020 2019 2020 2019 Change in benefit obligation: Benefit obligation at beginning of the year $ 206 $ 178 $ 226 $ 172 Service cost 1 1 9 6 Interest cost 6 7 2 2 Plan amendments — — (10 ) 1 Actuarial (gains) losses (1) 17 29 18 37 Benefits paid (10 ) (9 ) (3 ) (6 ) Settlements and curtailments (2) — — (10 ) — Foreign currency translation — — 22 — Transfers — — 2 10 Other — — 3 4 Benefit obligation at end of the year 220 206 259 226 Change in plan assets: Fair value of plan assets at beginning of the year 204 177 150 123 Actual return on plan assets 25 36 8 14 Employer contributions — — 7 6 Benefits paid (10 ) (9 ) (3 ) (6 ) Settlements and curtailments (2) — — (10 ) — Foreign currency translation — — 15 — Transfers — — 2 10 Other — — 3 3 Fair value of plan assets at end of year 219 204 172 150 Funded status of plans $ (1 ) $ (2 ) $ (87 ) $ (76 ) Amounts recognized in Consolidated Balance Sheet consist of: Accrued pension liabilities - noncurrent (3) — (2 ) — (76 ) Liabilities subject to compromise (4) (1 ) — (87 ) — Net amount recognized $ (1 ) $ (2 ) $ (87 ) $ (76 ) (1) The actuarial loss on the U.S. plans during 2020 was $17 million, driven by lower discount rates. For the non-US plans, the 2020 actuarial loss amounted to $18 million. The decrease of discount rates led to an assumption loss of $19 million in Ireland and $4 million in Switzerland. The increased salary assumption in Ireland caused an additional loss of about $1 million. This financial loss was partially offset by the $6 million experience gain on the projected benefit obligation in Switzerland, mainly attributable to the larger than expected asset outflow related to employees leaving Garrett and taking along their pension fund account balances. (2) In Switzerland the total lump sum benefit payments of $10 million were greater than the service cost and interest cost for year ended December 31, 2020, therefore settlement accounting was applied. Following the settlement accounting, part of the previously unrecognized loss, approximately $1 million was recognized as pension settlement expense. (3) Included in Other liabilities in the Consolidated Balance Sheet (4) Included in Liabilities subject to compromise in the Consolidated Balance Sheet Amounts recognized in Accumulated other comprehensive (income) loss associated with our significant pension and other postretirement benefit plans at December 31, 2020 and December 31, 2019 are as follows: Pension Benefits U.S. Plans U.S. Plans Non-U.S. Plans Non-U.S. Plans 2020 2019 2020 2019 Prior service (credit) $ (1 ) $ (2 ) $ (9 ) $ 1 Net actuarial loss 9 6 24 21 Net amount recognized $ 8 $ 4 $ 15 $ 22 The components of net periodic benefit (income) cost and other amounts recognized in Other comprehensive (income) loss for our significant pension and other postretirement benefit plans include the following components: Pension Benefits U.S. Plans Non-U.S. Plans Net Periodic Benefit Cost 2020 2019 2020 2019 2018 (1) Service cost $ 1 $ 1 $ 9 $ 6 $ 4 Interest cost 6 7 2 2 2 Expected return on plan assets (11 ) (10 ) (6 ) (4 ) (3 ) Recognition of actuarial losses — — 13 13 3 Settlements and curtailments (2) — — 1 — — Net periodic benefit (income) cost $ (4 ) $ (2 ) $ 19 $ 17 $ 6 (1) For the periods prior to the Spin-Off, only the pension plan in Ireland is reflected as a non-U.S. defined benefit pension plan as all other pension plans were accounted for as multiemployer plans. Following the Spin-Off, the defined benefit pension plan in Switzerland is also reflected. (2) In Switzerland the total lump sum benefit payments of $10 million were greater than the service cost and interest cost for year ended December 31, 2020, therefore settlement accounting was applied. Following the settlement accounting, part of the previously unrecognized loss, approximately $1 million was recognized as pension settlement expense. Other Changes in Plan Assets and Benefits Obligations Recognized in U.S. Plans Non-U.S. Plans Other Comprehensive (Income) Loss 2020 2019 2020 2019 2018 (1) Actuarial (gains) losses $ 3 $ 2 $ 15 $ 27 $ (4 ) Prior service (credit) — — (10 ) 1 1 Actuarial losses recognized during year — — (14 ) (13 ) (3 ) Foreign currency translation — — 2 1 — Total recognized in other comprehensive (income) loss $ 3 $ 2 $ (7 ) $ 16 $ (6 ) Total recognized in net periodic benefit (income) cost and other comprehensive (income) loss $ (1 ) $ — $ 12 $ 33 $ — (1) For the periods prior to the Spin-Off, only the pension plan in Ireland is reflected as a non-U.S. defined benefit pension plan as all other pension plans were accounted for as multiemployer plans. Following the Spin-Off, the defined benefit pension plan in Switzerland is also reflected. Major actuarial assumptions used in determining the benefit obligations and net periodic benefit (income) cost for our significant benefit plans are presented in the following table as weighted averages. Pension Benefits U.S. Plans Non-U.S. Plans 2020 2019 2020 2019 2018 (1) Actuarial assumptions used to determine benefit obligations as of December 31: Discount rate 2.65 % 3.30 % 0.46 % 0.79 % 1.50 % Expected annual rate of compensation increase 3.57 % 3.74 % 1.82 % 1.77 % 1.77 % Interest credited to accounts (2) — — 1.50 % 1.50 % 1.50 % Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: Discount rate—benefit obligation 3.30 % 4.44 % 0.79 % 1.65 % 1.50 % Discount rate—service cost 4.47 % 4.47 % 1.20 % 1.20 % 1.50 % Discount rate—interest cost 4.06 % 4.06 % 1.74 % 1.74 % 1.50 % Expected rate of return on plan assets 5.49 % 5.80 % 3.79 % 3.34 % 3.77 % Expected annual rate of compensation increase 3.74 % 3.74 % 1.77 % 1.77 % 1.77 % (1) For the periods prior to the Spin-Off, only the pension plan in Ireland is reflected as a non-U.S. defined benefit pension plan as all other pension plans were accounted for as multiemployer plans. Following the Spin-Off, the defined benefit pension plan in Switzerland is also reflected. (2) Only applicable to the defined benefit pension plan in Switzerland. The discount rate for our significant pension plans reflects the current rate at which the associated liabilities could be settled at the measurement date of December 31. To determine the discount rates, we use a modeling process that involves matching the expected cash outflows of our benefit plans to a yield curve constructed from a portfolio of high quality, fixed-income debt instruments. We use the single weighted-average yield of this hypothetical portfolio as a discount rate benchmark. For both our U.S. and non-U.S. defined benefit pension plans, we estimate the service and interest cost components of net period benefit (income) cost by utilizing a full yield curve approach in the estimation of these cost components by applying the specific spot rates along the yield curve used in the determination of the pension benefit obligation to their underlying projected cash flows. This approach provides a more precise measurement of service and interest costs by improving the correlation between projected cash flows and their corresponding spot rates. For non-U.S. benefit plans, actuarial assumptions reflect economic and market factors relevant to each country. The following amounts relate to our significant pension plans with accumulated benefit obligations exceeding the fair value of plan assets. December 31, U.S. Plans Non-U.S. Plans 2020 2019 2020 2019 Projected benefit obligation $ — $ — $ 259 $ 226 Accumulated benefit obligation — — 239 212 Fair value of plan assets — — 172 150 Our asset investment strategy for our U.S. pension plan focuses on maintaining a diversified portfolio using various asset classes in order to achieve market exposure and diversification on an interim basis as we develop our long-term investment objectives on a risk adjusted basis. Once finalized, we will implement our long-term strategy. Our interim target allocations are as follows: 35% equity securities, 50% fixed income securities and cash, 10% real estate investments, and 5% high yield bonds. Equity securities include mutual funds that invest in companies located both inside and outside the United States. Fixed income securities include exposure to medium and high quality investment grade corporate bonds, pooled consumer loans and U.S. government bonds with an average maturity of 5 - 25 years . The real estate fund invests in real estate investment trusts – companies that purchase office buildings, hotels and other real estate property. The high yield bond fund invests in a diversified portfolio of intermediate term below investment-grade debt securities. Our assets are reviewed on a daily basis to ensure that we are within the targeted asset allocation ranges and, if necessary, asset balances are adjusted back within target allocations. Our non-U.S. pension assets are typically managed by decentralized fiduciary committees. Our non-U.S. investment policies are different for each country as local regulations, funding requirements, and financial and tax considerations are part of the funding and investment allocation process in each country. The fair values of both our U.S. and non-U.S. pension plans assets by asset category are as follows: U.S. Plans December 31, 2020 Total Level 1 Level 2 Level 3 Equity funds $ 79 $ — $ 79 $ — Short-term investments 2 — 2 — Corporate bond funds 117 — 117 — Real estate funds 21 — 21 — Total assets at fair value $ 219 $ — $ 219 $ — U.S. Plans December 31, 2019 Total Level 1 Level 2 Level 3 Equity funds $ 74 $ — $ 74 $ — Short-term investments 2 — 2 — Corporate bond funds 106 — 106 — Real estate funds 22 — 22 — Total assets at fair value $ 204 $ — $ 204 $ — Non-U.S. Plans December 31, 2020 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 5 $ 5 $ — $ — Equity funds 76 — 76 — Government bond funds 35 — 35 — Corporate bond funds 23 — 23 — Real estate funds 20 — 20 — Other 13 — 13 — Total assets at fair value $ 172 $ 5 $ 167 $ — Non-U.S. Plans December 31, 2019 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 2 $ 2 $ — $ — Equity funds 68 — 68 — Government bond funds 30 — 30 — Corporate bond funds 21 — 21 — Real estate funds 18 — 18 — Other 11 — 11 — Total assets at fair value $ 150 $ 2 $ 148 $ — Equity funds, corporate bond funds, government bond funds, real estate funds and short-term investments are valued either by bids provided by brokers or dealers or quoted prices of securities with similar characteristics. Other includes diversified mutual funds. These investments are valued at estimated fair value based on quarterly financial information received from the investment advisor and/or general partner. Our general funding policy for qualified defined benefit pension plans is to contribute amounts at least sufficient to satisfy regulatory funding standards. We are not required to make any contributions to our U.S. pension plan in 2020. In 2020, contributions of $7 million were made to our non-U.S. pension plans to satisfy regulatory funding requirements. In 2021, we expect to make contributions of cash and/or marketable securities of approximately $7 million to our non-U.S. pension plans to satisfy regulatory funding standards. Contributions for both our U.S. and non-U.S. pension plans do not reflect benefits paid directly from Company assets. Benefit payments, including amounts to be paid from Company assets, and reflecting expected future service, as appropriate, are expected to be paid as follows: U.S. Plans Non-U.S. Plans 2021 $ 10 $ 3 2022 11 4 2023 11 4 2024 11 4 2025 11 4 2026-2030 57 24 |
China Variable Interest Entity
China Variable Interest Entity | 12 Months Ended |
Dec. 31, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
China Variable Interest Entity | Note 25. China Variable Interest Entity On September 20, 2018 in preparation of the Spin-Off, the Company entered into an agreement by and between Honeywell and Garrett (the “China Purchase Agreement”) in which Honeywell agreed to sell to Garrett 100% of the equity interests of Honeywell Transportation Investment (China) Co., Ltd. (“Garrett China”) consisting of our primary operations in China, in exchange for upfront consideration of 8,444,077 shares of our common stock. No further consideration from Garrett was due. The China Purchase Agreement was amended to extend the date of the transfer of the equity interests in Garrett China from September 20, 2019 to June 30, 2020. Prior to the transfer of the equity interests, Garrett China was considered a variable interest entity for which Garrett is the primary beneficiary because the China Purchase Agreement provided Garrett control to direct the management and operation of Garrett China as well as all economic benefits and losses. The intent of the agreement was to place Garrett in the same position as if it already owned 100% of the equity interests of Garrett China. As the agreement was effective prior to the Spin-Off date while the Company and Garrett China were under common control of Honeywell, the assets and liabilities of Garrett China were recognized at their carrying amounts. On June 3, 2020 Honeywell transferred 100% of the equity interests of Garrett China in accordance with the China Purchase Agreement. Following the transfer, Garrett continues to consolidate Garrett China. However, Garrett China is no longer considered to be a variable interest entity as Garrett now owns 100% of the equity interests. There was no change in the basis of the net assets of Garrett China as the transaction did not result in a change of control under U.S. GAAP. |
Concentrations
Concentrations | 12 Months Ended |
Dec. 31, 2020 | |
Risks And Uncertainties [Abstract] | |
Concentrations | Note 26. Concentrations Sales concentration —Net sales by region (determined based on country of shipment) and channel are as follows: Year ended December 31, 2020 OEM Aftermarket Other Total United States $ 309 $ 148 $ 5 $ 462 Europe 1,395 122 30 1,547 Asia 928 41 26 995 Other International 11 19 — 30 $ 2,643 $ 330 $ 61 $ 3,034 Year ended December 31, 2019 OEM Aftermarket Other Total United States $ 307 $ 171 $ 7 $ 485 Europe 1,631 136 39 1,806 Asia 843 51 29 923 Other International 15 19 — 34 $ 2,796 $ 377 $ 75 $ 3,248 Year ended December 31, 2018 OEM Aftermarket Other Total United States $ 338 $ 175 $ 5 $ 518 Europe 1,686 151 54 1,891 Asia 847 50 26 923 Other International 22 21 — 43 $ 2,893 $ 397 $ 85 $ 3,375 Customer concentration —Net sales to Garrett’s largest customer and the corresponding percentage of total net sales are as follows: Net sales Years ended December 31, 2020 % 2019 % 2018 % Customer A $ 301 10 $ 374 12 $ 455 13 Others 2,733 90 2,874 88 2,920 87 $ 3,034 100 $ 3,248 100 $ 3,375 100 Long-lived assets —Long-lived assets by region are as follows: Long-lived Assets (1) December 31, 2020 2019 2018 United States $ 21 $ 24 $ 26 Europe 315 285 273 Asia 151 141 123 Other International 18 21 16 $ 505 $ 471 $ 438 (1) Long-lived Supplier concentration —The Company’s largest supplier accounted for 8%, 12% and 14% of direct materials purchases for the years ended December 31, 2020, 2019 and 2018 respectively. |
Related Party Transactions with
Related Party Transactions with Honeywell | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions with Honeywell | Note 27. Related Party Transactions with Honeywell Subsequent to Spin-Off Following the Spin-Off, Honeywell is no longer considered a related party. We have Obligations payable to Honeywell related to the Indemnification and Reimbursement Agreement and Tax Matters Agreement. See Note 23 Commitments and Contingencies for further details. Prior to Spin-Off The Consolidated and Combined Financial Statements for periods prior to the Spin-Off have been prepared on a stand-alone basis and are derived from the consolidated financial statements and accounting records of Honeywell. Prior to the Spin-Off, Honeywell provided certain services, such as legal, accounting, information technology, human resources and other infrastructure support, on behalf of the Business. The cost of these services has been allocated to the Business on the basis of the proportion of revenues. We consider the allocations to be a reasonable reflection of the benefits received by the Business. During the year ended December 31, 2018, Garrett was allocated $87 million of general corporate expenses incurred by Honeywell, and such amounts are included within Selling, general and administrative expenses in the Consolidated and Combined Statements of Operations. As certain expenses reflected in the Consolidated and Combined Financial Statements include allocations of corporate expenses from Honeywell, these statements could differ from those that would have been prepared had Garrett operated on a stand-alone basis. The Company received interest income for related party notes receivables of $1 million for the year ended December 31, 2018. Additionally, the Company incurred interest expense for related party notes payable of $1 million for the year ended December 31, 2018. |
Unaudited Quarterly Financial I
Unaudited Quarterly Financial Information | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Financial Information | Note 28. Unaudited Quarterly Financial Information The following tables show selected unaudited quarterly results of operations for 2020 and 2019. The quarterly data have been prepared on the same basis as the audited annual financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our results of operations for these periods. 2020 March 31 June 30 September 30 December 31 Year Ended December 31, Net Sales $ 745 $ 477 $ 804 $ 1,008 $ 3,034 Gross Profit 142 84 152 178 556 Net Income (Loss) 52 (9 ) 11 26 80 Earnings (loss) per share - basic 0.69 (0.12 ) 0.15 0.34 1.06 Earnings (loss) per share - diluted 0.68 (0.12 ) 0.14 0.34 1.05 2019 March 31 June 30 September 30 December 31 Year Ended December 31, Net Sales $ 835 $ 802 $ 781 $ 830 $ 3,248 Gross Profit 196 182 172 161 711 Net Income (Loss) 73 66 38 136 313 Earnings (loss) per share - basic 0.98 0.88 0.51 1.82 4.20 Earnings (loss) per share - diluted 0.97 0.86 0.50 1.79 4.12 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Chapter 11 Accounting | Chapter 11 Accounting The Company has applied ASC 852 in preparing our Consolidated and Combined Financial Statements. ASC 852 requires the financial statements for periods subsequent to the Petition Date to distinguish transactions and events that are directly associated with the Company's reorganization from the ongoing operations of the business. Accordingly, revenues, expenses, realized gains and losses, and provisions for losses directly resulting from the reorganization and restructuring shall be reported separately as Reorganization items, net in the Consolidated Statements of Operations. In addition, the balance sheet distinguishes pre-petition liabilities subject to compromise from those pre-petition liabilities that are not subject to compromise and post-petition liabilities. Pre-petition liabilities that are not fully secured or those that have at least a possibility of not being repaid at the allowed claim amount have been classified as liabilities subject to compromise on the Consolidated Balance Sheet at December 31, 2020. Under the Bankruptcy Code, the Debtors may assume and assign or reject executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a prepetition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors of performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a pre-petition general unsecured claim for damages caused by such deemed breach subject, in the case of the rejection of unexpired leases of real property, to certain caps on damages. Counterparties to such rejected contracts or leases may assert unsecured claims in the Bankruptcy Court against the applicable Debtor’s estate for such damages. Generally, the assumption or assumption and assignment of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance thereunder. Accordingly, any description of an executory contract or unexpired lease with a Debtor in this annual report, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease with a Debtor is qualified by any overriding rejection rights the Company has under the Bankruptcy Code. |
Principles of Consolidation and Combination | Principles — For the periods subsequent to the Spin-Off, the Consolidated and Combined Financial Statements include the accounts of Garrett Motion Inc. and all of its subsidiaries in which a controlling financial interest is maintained. We consolidate entities that we control due to ownership of a majority voting interest, and we consolidate variable interest entities (“VIEs”) when we have variable interests and are the primary beneficiary. Our consolidation policy requires equity investments that we exercise significant influence over but in which we do not have a controlling financial interest to be accounted for using the equity method. Investments through which we are not able to exercise significant influence over the investee and which we do not have readily determinable fair values are accounted for under the cost method. All intercompany transactions and balances are eliminated in consolidation. For the periods prior to the Spin-Off, the Consolidated and Combined Financial Statements were prepared on a stand-alone basis and include our business units and wholly owned direct and indirect subsidiaries and entities in which we had a controlling financial interest. |
Cash and Cash Equivalents | Cash —Cash and cash equivalents include cash on hand and highly liquid investments having an original maturity of three months or less. |
Restricted Cash | Restricted Cash —Restricted cash primarily consists of bank deposits used to pledge as collateral in order to be able to issue bank notes as payment to certain suppliers in the Asia Pacific region (refer to Note 9. Factoring and Notes Receivable) as well as provide access to a traditional supplier payable program involving certain of our suppliers and a third-party financial institution. |
Trade Receivables and Allowance for Doubtful Accounts | Trade Receivables —Trade accounts receivable are recorded at the invoiced amount as a result of transactions with customers. Garrett maintains allowances for doubtful accounts for estimated losses as a result of a customer’s inability to make required payments. As of January 1, 2020, Garrett adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The new guidance requires an entity to recognize as an allowance its estimate of lifetime expected credit losses rather than incurred losses. The guidance is also applicable to contract assets such as unbilled receivables. Consistent with the new guidance, Garrett estimates losses from doubtful accounts expected over the contractual life of the receivables based on days past due as measured from the contractual due date and collection history. Garrett also takes into consideration changes in economic conditions that may not be reflected in historical trends (for example, customers in bankruptcy, liquidation or reorganization). Receivables are written-off against the allowance for doubtful accounts when they are determined uncollectible. Such determination includes analysis and consideration of the particular conditions of the account, including time intervals since last collection, customer performance against agreed upon payment plans, solvency of customer and any bankruptcy proceedings. |
Transfer of Financial Instruments | Transfer of Financial Instruments —Sales and transfers of financial instruments are accounted for under ASC 860, Transfers and Servicing (“ASC 860”). The Company may discount and sell accounts receivables during the normal course of business. These receivables which are transferred to a third party without recourse to the Company and that meet the criteria of sales accounting as per ASC 860, are excluded from the amounts reported in the Consolidated Balance Sheets. The cash proceeds received from such sales are included in operating cash flows. The expenses associated with the factoring of receivables are recorded within Other expense, net in the Consolidated and Combined Statements of Operations. The Company may also receive bank notes in settlement of accounts receivables, primarily in the Asia Pacific region. Such bank notes are classified as notes receivables under Accounts, notes and other receivables – net in the Consolidated Balance Sheets. The collections of such bank notes are included in operating cash flows and any expenses related to discounting these are included within Other expense, net in the Consolidated and Combined Statements of Operations. The Company can hold the bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third party financial institutions in exchange for cash. |
Inventories | Inventories —Inventories are stated at the lower of cost, determined on a first-in, first-out basis, including direct material costs and direct and indirect manufacturing costs, or net realizable value. Obsolete inventory is identified based on analysis of inventory for known obsolescence issues. The original equipment inventory on hand in excess of forecasted usage and lack of consumption in the previous 12 months is fully reserved, unless the value of such material is recoverable from either the vendor or the customer. |
Property, Plant and Equipment | Property, —Property, plant and equipment are recorded at cost less accumulated depreciation and amortization. For financial reporting, the straight-line method of depreciation is used over the estimated useful lives of 10 to 50 years for buildings and improvements, 2 to 16 years for machinery and equipment, 3 to 10 years for tooling equipment and 5 to 7 years for software. |
Leases | Leases —For the periods beginning January 1, 2019, right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of a lease (the “commencement date”) based on the present value of lease payments over the lease term. We determine if an arrangement is a lease at inception. Operating leases are included in Other assets, Accrued liabilities, and Other liabilities in our Consolidated Balance Sheets. No finance leases have been recognized. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We use the implicit rate when readily determinable. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease where it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are expensed in the period in which they occur. We have lease agreements with lease and non-lease components, which are generally accounted for separately. For machinery and equipment, we account for the lease and non-lease components as a single lease component. We account for short-term leases by recognizing lease payments in net income on a straight-line basis over the lease term and will not recognize any ROU assets and lease liabilities on the Consolidated Balance Sheet. For the periods prior to January 1, 2019, we accounted for leases in accordance with ASC 840, Leases (“ASC 840”). Upon commencement of the Chapter 11 Cases, certain pre-petition leases have been reclassified into liabilities subject to compromise. |
Goodwill | Goodwill —Goodwill is subject to impairment testing annually, and whenever events or changes in circumstances indicate that the carrying amount may not be fully recoverable. This testing compares carrying value to fair value of our single reporting unit. The Company recognizes an impairment charge for the amount by which the carrying value of the reporting unit exceeds the reporting unit´s fair value. However, any impairment should not exceed the amount of goodwill allocated to the reporting unit. Because we have a single |
Warranties and Guarantees | Warranties —Expected warranty costs for products sold are recognized based on an estimate of the amount that eventually will be required to settle such obligations. These accruals are based on factors such as past experience, length of the warranty and various other considerations. Costs of product recalls, which may include the cost of the product being replaced as well as the customer’s cost of the recall, including labor to remove and replace the recalled part, are accrued as part of our warranty accrual at the time an obligation becomes probable and can be reasonably estimated. These estimates are adjusted from time to time based on facts and circumstances that impact the status of existing claims. For additional information, see Note 23, Commitments and Contingencies of Notes to Consolidated and Combined Financial Statements. |
Sales Recognition | Sales Recognition —On January 1, 2018, we adopted the FASB´s updated guidance on revenue from contracts with customers, ASC 606 Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. Product sales are recognized when we transfer control of the promised goods to our customer, which is based on shipping terms. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the promised goods. In the sale of products in the OEM channel, the transaction price for these goods is equal to the agreed price of each unit and represents the standalone selling price for the unit. In the sale of products in the aftermarket channel, the terms of a contract or the historical business practice can give rise to variable consideration due to, but not limited to, discounts and bonuses. We estimate variable consideration at the most likely amount we will receive from customers and reduce revenues recognized accordingly. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. Prior to January 1, 2018, sales were recognized when there was evidence of a sales agreement, the delivery of goods had occurred, the sales price was fixed or determinable and the collectability of revenue was reasonably assured. Sales were generally recorded upon shipment of product to customers and transfer of title under standard commercial terms. Sales incentives and allowances were recognized as a reduction to revenue at the time of the related sale. In addition, payments made to customers were generally recognized as a reduction to revenue at the time these payments are made or committed to the customers. |
Research and Development | Research and —Garrett conducts research and development (“R&D”) activities, which consist primarily of the development of new products and product applications. R&D costs are charged to expense as incurred. Such costs are included in Cost of goods sold of $111 million, $129 million and $128 million, for the years ended December 31, 2020, 2019 and 2018 respectively. Additionally, the Company incurs engineering-related expenses which are also included in Cost of goods sold of $13 million, $5 million and $10 million for the years ended December 31, 2020, 2019 and 2018. |
Asbestos-Related Contingencies and Insurance Recoveries | Asbestos-Related —Honeywell is subject to certain asbestos-related and environmental-related liabilities, primarily related to its legacy Bendix business. In conjunction with the Spin-Off, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, as well as certain operations that were part of other legacy elements of the Business, were transferred to us. The accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the indemnification and reimbursement agreement with Honeywell entered into on September 12, 2018 (the “Honeywell Indemnity Agreement”), under which Garrett ASASCO is required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90 % of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. The Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $ 25 million as converted into Euros in accordance with the terms of the agreement. Under the terms of the PSA and the Transaction, the Plan, if confirmed by the Bankruptcy Court, will include a global settlement with Honeywell providing for (a) the full and final satisfaction, settlement, release, and discharge of all liabilities under or related to the Indemnity Agreements and the Tax Matters Agreement and (b) the dismissal with prejudice of the Honeywell Litigation in exchange for (x) a $375 million cash payment at Emergence and (y) the Series B Preferred Stock. The Company will have the option to prepay the Series B Preferred Stock in full at any time at a call price equivalent to $584 million as of Emergence (representing the present value of the installments at a 7.25% discount rate). The Company will also have the option to make a partial payment of the Series B Preferred Stock, reducing the present value to $400 million, at any time within 18 months of Emergence. In every case the duration of future liabilities to Honeywell will be reduced from 30 years prior to the Chapter 11 filing to a maximum of nine years. The Debtors’ entry into and performance under the PSA and the terms of the PSA, the Transaction and the Plan remain subject to approval by the Bankruptcy Court. On February 9, 2021, the Equity Committee filed an objection to the Debtors’ motion seeking authority to enter into and perform under the PSA and the ECBA. A hearing on the matter is scheduled to take place in the Bankruptcy Court on February 16, 2021. There can be no assurances that the Debtors will obtain the approval of the Bankruptcy Court and complete the Transaction. For additional information, see Note 23, Commitments and Contingencies of Notes to Consolidated and Combined Financial Statements. |
Stock-Based Compensation Plans | Stock-Based Compensation Plans —The principal awards issued under our stock-based compensation plans, which are described in Note 21, Stock-Based Compensation, are restricted stock units. The cost for such awards is measured at the grant date based on the fair value of the award. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods (generally the vesting period of the equity award) and is included in Selling, general and administrative expenses in the Consolidated and Combined Statements of Operations. Forfeitures are estimated at the time of grant to recognize expense for those awards that are expected to vest and are based on our historical forfeiture rates under our Former Parent´s plans. For periods prior to the Spin-Off, certain employees within the Business participated in stock-based compensation plans sponsored by the Former Parent. The Former Parent’s stock-based compensation plans primarily include incentive compensation plans. Awards granted under the plans consist of stock options, restricted stock units (“RSUs”) and performance stock units (“PSUs”) and are based on the Former Parent’s common shares and, as such, are reflected in Invested deficit within the Consolidated and Combined Statements of Equity (Deficit). |
Pension Benefits | Pension Benefits —Following the Spin-Off, we sponsor defined benefit pension plans covering certain employees, primarily in Switzerland, the U.S. and Ireland. For such plans, we are required to disaggregate the service cost component of net benefit costs and report those costs in the same line item or items in the Consolidated and Combined Statements of Operations as other compensation costs arising from services rendered by the pertinent employees during the period. The other nonservice components of net benefit costs are required to be presented separately from the service cost component. We record the service cost component of Pension ongoing (income) expense in Cost of goods sold or Selling, general and administrative expenses. The remaining components of net benefit costs within Pension ongoing (income) expense, primarily interest costs and assumed return on plan assets, are recorded in Non-operating expense (income). We recognize net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) annually in the fourth quarter each year (“MTM Adjustment”). The MTM Adjustment is recorded in Non-operating expense (income). For periods prior to the Spin-Off, we sponsored a defined benefit pension plan covering certain employees in Ireland. Additionally, certain Garrett employees participated in defined benefit pension plans (the “Shared Plans”) sponsored by Honeywell which includes participants of other Honeywell subsidiaries and operations. We accounted for our participation in the Shared Plans as a multiemployer benefit plan. Accordingly, we did not record an asset or liability to recognize the funded status of the Shared Plans. The related pension expense was based on annual service cost of active Garrett participants and reported within Cost of goods sold in the Consolidated and Combined Statements of Operations. The pension expense specifically identified for the active Garrett participants in the Shared Plans for the year ended December 31, 201 8 was $ 5 million . |
Foreign Currency Translation | Foreign Currency Translation —Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. Dollars are translated into U.S. Dollars using year-end exchange rates. Sales, costs and expenses are translated at the average exchange rates in effect during the year. Foreign currency translation gains and losses are included as a component of Accumulated other comprehensive income (loss). |
Derivative Financial Instruments | Derivative —We minimize our risks from foreign currency exchange rate fluctuations through our normal operating and financing activities and, when deemed appropriate through the use of derivative financial instruments. Derivative financial instruments are used to manage risk and are not used for trading or other speculative purposes. Derivative financial instruments that qualify for hedge accounting must be designated and effective as a hedge of the identified risk exposure at the inception of the contract. Accordingly, changes in fair value of the derivative contract must be highly correlated with changes in fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract. All derivatives are recorded on the balance sheet as assets or liabilities and measured at fair value. For derivatives designated as cash flow hedges, the effective portion of the changes in fair value of the derivatives are recorded in Accumulated other comprehensive income (loss) and subsequently recognized in earnings when the hedged items impact earnings. Cash flows of such derivative financial instruments are classified consistent with the underlying hedged item. On September 27, 2018, we early adopted the new accounting guidance contained in ASU 2017-12 on a modified retrospective approach. The new standard is intended to improve and simplify rules relating to hedge accounting, including the elimination of periodic hedge ineffectiveness, recognition of components excluded from hedge effectiveness assessment, the ability to elect to perform subsequent effectiveness assessments qualitatively, and other provisions designed to provide more transparency around the economics of a company’s hedging strategy. |
Income Taxes | Income Taxes —We account for income taxes pursuant to the asset and liability method which requires us to recognize current tax liabilities or receivables for the amount of taxes we estimate are payable or refundable for the current year and deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts and their respective tax bases of assets and liabilities and the expected benefits of net operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period enacted. A valuation allowance is provided when it is more likely than not that a portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and the reversal of deferred tax liabilities during the period in which related temporary differences become deductible. Prior to the Spin-Off, the tax provision was presented on a separate company basis as if we were a separate filer. The effects of tax adjustments and settlements from taxing authorities are presented in our Consolidated and Combined Financial Statements in the period to which they relate as if we were a separate filer. Our current obligations for taxes were settled with our Former Parent on an estimated basis and adjusted in later periods as appropriate. All income taxes due to or due from our Former Parent that have not been settled or recovered by the end of the period are reflected in Invested deficit within the Consolidated and Combined Financial Statements. We are subject to income tax in the United States (federal, state and local) as well as other jurisdictions in which we operate. The tax provision was calculated as if the Business was operating on a stand-alone basis and filed separate tax returns in the jurisdiction in which it operates. Therefore, cash tax payments and items of current and deferred taxes may not be reflective of the actual tax balances prior to or subsequent to the Spin-Off. |
Earnings per share | Earnings per share —Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. On October 1, 2018, the date of consummation of the Spin-Off, 74,070,852 shares of the Company’s Common Stock were distributed to Honeywell stockholders of record as of September 18, 2018 who held their shares through the Distribution Date. Basic and diluted EPS for all periods prior to the Spin-Off reflect the number of distributed shares, or 74,070,852 shares. For 2018, the distributed shares were treated as issued and outstanding from January 1, 2018 for purposes of calculating historical basic earnings per share. Basic and diluted weighted average of common shares outstanding for the years ended December 31, 20 20 , 201 9 and 201 8 were 75,543,461 , 74,602,868 and 74,059,240 and 76,100,509 , 75,934,373 and 74,402,148 , respectively. |
Use of Estimates | Use of Estimates —The preparation of the Consolidated and Combined Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the Consolidated and Combined Financial Statements and related disclosures in the accompanying notes. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of changes are reflected in the Consolidated and Combined Financial Statements in the period they are determined to be necessary. In connection with the filing of the Chapter 11 Cases on the Petition Date, the Consolidated and Combined Financial Statements included herein have been prepared in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852, Reorganizations. See Note 2, Reorganization and Chapter 11 Proceedings, of the Consolidated and Combined Financial Statements for further details. |
Liabilities Subject to Compromise | Liabilities Subject to Compromise —Liabilities subject to compromise include pre-petition liabilities that are unsecured, under-secured or where it cannot be determined that the liabilities are fully secured. Liabilities that may be affected by a plan of reorganization must be reported at the amounts expected to be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts as a result of the plan of reorganization or negotiations with creditors. If there is uncertainty about whether a secured claim is undersecured, or will be impaired under the plan of reorganization, the entire amount of the claim is included with prepetition claims in liabilities subject to compromise. |
Reorganization Items, Net | Reorganization Items, Net— Effective on September 20,2020, we began to apply the provisions of accounting Standards Codification (“ASC”) 852, Reorganizations, which is applicable to companies under bankruptcy protection, and requires amendments to the presentation of key financial statement line items. ASC 852 requires that the financial statements for periods subsequent to the filing of the Chapter 11 Cases distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Revenues, expenses, realized gains and losses, and provisions for losses that can be directly associated with the reorganization and restructuring of the business must be reported separately as reorganization items, net in the consolidated statements of operations beginning September 20, 2020. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) Notes to the Consolidated Financial Statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits Defined Benefit Plans – General (Subtopic 715-20), which amends certain disclosure requirements related to the defined benefit pension and other postretirement plans. The guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption is permitted. Adoption of the new guidance did not have a material impact on the Company’s disclosures. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting, provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments in this Update apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. We are currently evaluating the impact of the guidance related to certain existing debt agreements on our Consolidated and Combined Financial Statements. There are no other recently issued, but not yet adopted, accounting pronouncements which are expected to have a material impact on the Company’s Consolidated and Combined Financial Statements and related disclosures. |
Reorganization and Chapter 11_2
Reorganization and Chapter 11 Proceedings (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Reorganizations [Abstract] | |
Schedule of Reorganization Items Net | Reorganization items, net are comprised of the following for the twelve months ended December 31, 2020: Twelve Months Ended December 31, 2020 Advisor fees $ 55 DIP Financing fees 13 Write-off of pre-petition unamortized debt issuance costs 6 Other (1 ) Total reorganization items, net $ 73 |
Schedule of Liabilities Subject to Compromise | The following table presents liabilities subject to compromise as reported in the Consolidated Balance Sheet at December 31, 2020: December 31, 2020 Obligations payable to Honeywell (Note 23) $ 1,482 Long-term debt (Note 16) 429 Accounts payable 82 Pension, compensation, benefit and other employee related 92 Uncertain tax positions and deferred taxes 69 Advanced discounts from suppliers 33 Lease liability (Note 17) 19 Freight Accrual 27 Product warranties and performance guarantees 16 Other 41 Total liabilities subject to compromise $ 2,290 |
Schedule of Condensed Combined Financial Statements of Debtors | The financial statements below represent the condensed combined financial statements of the Debtors as of and for the twelve months ended December 31, 2020. Any entities which are non-debtor entities, are not included in these condensed combined financial statements. Intercompany transactions among the Debtors have been eliminated in the financial statements contained herein. Intercompany transactions among the Debtors and the non-debtor entities have not been eliminated in the Debtors’ financial statements. For the Twelve Months Ended December 31, 2020 Net sales 2,273 Cost of goods sold 1,863 Gross profit $ 410 Selling, general and administrative expenses 252 Other expense, net 45 Interest expense 80 Non-operating (income) expense (152 ) Reorganization items, net 73 Income before taxes $ 112 Tax expense 3 Net income $ 109 December 31, 2020 (Dollars in millions) ASSETS Current assets: Cash and cash equivalents $ 516 Restricted cash 30 Accounts, notes and other receivables – net 430 Accounts and other receivables from non-debtor affiliates 240 Inventories – net 166 Other current assets 91 Total current assets 1,473 Investments and long-term receivables 6 Investment in subsidiaries 883 Property, plant and equipment – net 319 Goodwill 193 Deferred income taxes 236 Other assets 93 Total assets $ 3,203 LIABILITIES Current liabilities: Accounts payable $ 497 Borrowings under revolving credit facility 370 Current maturities of long-term debt — Debtor-in-possession Term Loan 200 Obligations payable to Honeywell, current — Accrued liabilities 106 Total current liabilities 1,173 Long-term debt 1,082 Deferred income taxes — Obligations payable to Honeywell — Other liabilities 22 Total liabilities not subject to compromise $ 2,277 Liabilities subject to compromise — External 2,290 With non-debtor affiliates 528 Total liabilities subject to compromise $ 2,818 Total liabilities $ 5,095 COMMITMENTS AND CONTINGENCIES (Note 23) EQUITY (DEFICIT) Total deficit attributable to the Debtors (1,892 ) Total liabilities and deficit $ 3,203 For the Twelve Months Ended December 31, 2020 (Dollars in millions) Cash Flows from operating activities: Net cash used for operating activities $ 15 Cash Flows from investing activities: Expenditures for property, plant and equipment (39 ) Other 5 Net cash used for investing activities $ (34 ) Cash Flows from financing activities: Proceeds from debtor-in-possession financing 200 Proceeds from revolving credit facility 1,437 Payments of revolving credit facility (1,088 ) Payments of long-term debt (2 ) Debtor-in-possession financing fees (13 ) Other — Net cash provided by financing activities 534 Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 30 Net increase in cash, cash equivalents and restricted cash 545 Cash and cash equivalents at beginning of period 1 Cash, cash equivalents and restricted cash at end of period $ 546 |
Revenue Recognition and Contr_2
Revenue Recognition and Contracts with Customers (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Summary of Contract Assets and Liabilities | The following table summarizes our contract assets and liabilities balances: 2020 Contract assets—January 1 $ 6 Contract assets—December 31 61 Change in contract assets—Increase/(Decrease) 55 Contract liabilities—January 1 $ (3 ) Contract liabilities—December 31 (2 ) Change in contract liabilities—(Increase)/Decrease $ 1 |
Other Expenses, Net (Tables)
Other Expenses, Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Other Income And Expenses [Abstract] | |
Schedule of Other Operating Cost and Expense | Years Ended December 31, 2020 2019 2018 Indemnification related — post Spin-Off $ 41 $ 28 $ (16 ) Indemnification related — litigation $ 3 $ 11 $ — Asbestos related, net of probable insurance recoveries — — 131 Environmental remediation, non-active sites 1 — 5 Factoring and notes receivables discount fees 1 1 — $ 46 $ 40 $ 120 |
Non-Operating (Income) Expense
Non-Operating (Income) Expense (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Non Operating Income Expense [Abstract] | |
Schedule of Non-Operating (Income) Expense | Years Ended December 31, 2020 2019 2018 Equity income of affiliated companies $ (5 ) $ (6 ) $ (5 ) Interest income (3 ) (7 ) (7 ) Pension (income) expense — non service 5 8 2 Foreign exchange (35 ) 13 6 Others, net — — (4 ) $ (38 ) $ 8 $ (8 ) |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income (loss) Before Income Taxes | The sources of income (loss) from continuing operations, before income taxes, classified between domestic entities and those entities domiciled outside of the U.S., are as follows: Years Ended December 31, Income before taxes 2020 2019 2018 Domestic entities $ (87 ) $ (54 ) $ (99 ) Entities outside the U.S. 206 400 495 $ 119 $ 346 $ 396 |
Schedule of Income Tax Expense (Benefit) | Tax Tax expense (benefit) Years Ended December 31, 2020 2019 2018 Current: Federal $ 3 $ 9 $ 7 State 1 1 1 Foreign 69 64 113 $ 73 $ 74 $ 121 Deferred: Federal — 2 (8 ) State — — — Foreign (34 ) (43 ) (923 ) $ (34 ) $ (41 ) $ (931 ) $ 39 $ 33 $ (810 ) |
Schedule of Effective Income Tax Rate Reconciliation | The U.S. Years Ended December 31, 2020 2019 2018 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % Taxes on non-U.S. earnings different from U.S. tax (6.5 )% (2.3 )% (7.7 )% Reserves for tax contingencies 15.9 % 2.5 % 4.1 % Non-deductible and permanent items 7.1 % 1.7 % 6.0 % Withholding and other taxes on foreign earnings (14.7 )% 4.4 % (231.6 )% Tax law changes — (17.3 )% — Changes in valuation allowance 10.5 % 0.5 % 5.3 % All other items (0.5 )% (1.0 )% (1.6 )% 32.8 % 9.5 % -204.5 % |
Schedule of Deferred Tax Assets (Liabilities) and Effects of Temporary Differences | Deferred The tax effects December 31, 2020 2019 Deferred tax assets: Intangibles and fixed assets $ 202 $ 205 Pension 18 12 Accruals and reserves 32 30 Net operating losses and other tax attribute carryforwards 35 27 Outside basis differences 11 17 Other 29 23 Total Deferred tax assets 327 314 Valuation allowance (34 ) (27 ) Net deferred tax assets $ 293 $ 287 Deferred tax liabilities: Outside basis differences $ (30 ) $ (49 ) Other (15 ) (21 ) Total deferred tax liabilities (45 ) (70 ) Net deferred tax asset $ 248 $ 217 |
Schedule of Net Operating Loss Carryforwards | As of December 31, 2020, the Company had gross net operating loss carryforwards of approximately $132 million with the majority in the below jurisdictions. Expiration Net Operating Period Loss Jurisdiction Carryforwards Brazil Indefinite $ 53 Luxembourg 2037 36 Switzerland 2027 30 $ 119 |
Schedule of Unrecognized Tax Benefits Roll Forward | The following table summarizes the activity related to the Company’s uncertain tax positions (excluding interest and penalties and related tax attributes): 2020 2019 2018 Change in unrecognized tax benefits: Balance at beginning of year $ 54 $ 48 $ 100 Gross increases related to current period tax positions 8 8 19 Gross increases related to prior periods tax positions 6 — 9 Gross decreases related to prior periods tax positions — — (8 ) Decrease related to resolutions of audits with tax authorities (7 ) — — Expiration of the statute of limitations for the assessment of taxes (2 ) (2 ) — Potential Indemnifications to Honeywell for US and foreign taxes as contractually obligated in connection with Tax Matters Agreement — — (71 ) Foreign currency translation 1 — (1 ) Balance at end of year $ 60 $ 54 $ 48 |
Accounts, Notes and Other Rec_2
Accounts, Notes and Other Receivables—Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes and Other Receivables Net | December 31, 2020 December 31, 2019 Trade receivables $ 625 $ 574 Notes receivables 152 68 Other receivables 77 69 $ 854 $ 711 Less—Allowance for expected credit losses (13 ) (4 ) $ 841 $ 707 |
Inventories-Net (Tables)
Inventories-Net (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | December 31, 2020 December 31, 2019 Raw materials $ 160 $ 142 Work in process 19 18 Finished products 97 85 $ 276 $ 245 Less—Reserves (41 ) (25 ) $ 235 $ 220 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | December 31, 2020 2019 Prepaid expenses $ 62 $ 12 Taxes receivable 22 46 Advanced discounts to customers, current 10 10 Customer reimbursable engineering 13 12 Other 3 5 $ 110 $ 85 |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | December 31, 2020 2019 Advanced discounts to customers, non-current $ 70 $ 62 Operating right-of-use assets (Note 17) 36 35 Undesignated cross-currency swap at fair value — — Other 29 11 $ 135 $ 108 |
Property, Plant and Equipment_2
Property, Plant and Equipment - Net (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property Plant And Equipment [Abstract] | |
Schedule of Property, Plant and Equipment - Net | December 31, 2020 2019 Machinery and equipment $ 711 $ 639 Tooling 390 324 Buildings and improvements 153 141 Construction in progress 86 100 Software 68 57 Land and improvements 17 16 Others 26 24 1,451 1,301 Less—Accumulated depreciation and amortization (946 ) (830 ) $ 505 $ 471 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Carrying Amount of Goodwill | The change in the carrying December 31, 2019 Currency Translation Adjustment December 31, 2020 Goodwill $ 193 — $ 193 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Liabilities Current [Abstract] | |
Summary of Accrued Liabilities | December 31, 2020 December 31, 2019 Customer pricing reserve $ 82 $ 90 Compensation, benefit and other employee related 62 64 Repositioning 7 4 Product warranties and performance guarantees 14 29 Taxes 37 33 Advanced discounts from suppliers, current 5 19 Customer advances and deferred income 8 12 Accrued interest — 5 Short-term lease liability (Note 17) 5 8 Other (primarily operating expenses) 28 46 $ 248 $ 310 |
Summary of Expenses Related to the Repositioning Accruals | The Company accrued repositioning costs related to projects to optimize our product costs and to right-size our organizational structure. Expenses related to the repositioning accruals are included in Cost of goods sold in our Consolidated and Combined Statement of Operations. Severance Costs Exit Costs Total Balance at December 31, 2018 13 2 15 Charges 2 — 2 Usage—cash (8 ) (2 ) (10 ) Adjustments (3 ) 1 (2 ) Foreign currency translation (1 ) — (1 ) Balance at December 31, 2019 $ 3 $ 1 $ 4 Charges 10 — 10 Usage—cash (7 ) — (7 ) Adjustments 1 (1 ) — Foreign currency translation — — — Balance at December 31, 2020 $ 7 $ — $ 7 |
Long-term Debt and Credit Agr_2
Long-term Debt and Credit Agreements (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Principal Amounts Outstanding on Debtor-In-Possession Financing | The principal amounts outstanding on Debtor-in-possession financing are as follows: December 31, 2020 Debtor-in-possession financing $ 200 |
Summary of Amounts Outstanding on Senior Secured Credit Facilities and Senior Notes | The principal amounts outstanding on our Senior Secured Credit Facilities and the Senior Notes as of December 31, 2020 and December 31, 2019 are as follows: December 31, December 31, 2020 2019 (Dollars in millions) Senior Secured Credit Facilities (1) Term Loans 1,082 1,026 Borrowings under revolving credit facility 370 — Total consolidated Secured Debt $ 1,452 $ 1,026 Long-term debt, net subject to compromise (2) Senior Notes 429 387 Total debt, prior to reclassification to Liabilities subject to compromise $ 1,881 $ 1,413 Less: current portion — (4 ) Less: Amounts reclassified to Liabilities subject to compromise (429 ) — Total long-term debt $ 1,452 $ 1,409 (1) The Term A Facility, Term B Facility and Revolving Facility are fully secured. These continue to be accounted for under ASC 470. (2) The Senior Notes are not fully secured and have been reclassified to Liabilities subject to compromise in the Company's Consolidated Balance Sheet as of December 31, 2020. As of the Petition Date, the Company ceased accruing related interest expense and amortization of debt issuance costs. |
Schedule of Contractual Maturities | Given the uncertainties related to the resolution of the Chapter 11 cases, all pre-petition debt has been included at their contractual maturities. December 31, 2020 2021 $ 4 2022 70 2023 247 2024 4 2025 777 Thereafter 431 $ 1,533 Less: current portion — $ 1,533 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases [Abstract] | |
Summary of Components of Lease Expense | The components of lease expense are as follows: Years Ended December 31, 2020 2019 Operating lease cost $ 15 $ 14 |
Summary of Supplemental Cash Flow Information Related to Operating Leases | Supplemental cash flow information related to operating leases is as follows: Years Ended December 31, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 13 $ 12 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 7 $ 12 |
Summary of Supplemental Balance Sheet Information Related to Operating Leases | Supplemental balance sheet information related to operating leases is as follows: Years Ended December 31, 2020 2019 Other assets $ 36 $ 35 Accrued liabilities 5 8 Other liabilities 15 28 Liabilities subject to compromise 19 — Years Ended December 31, 2020 2019 Weighted-average lease term (in years) 5.14 6.30 Weighted-average discount rate 6.16 6.36 |
Schedule of Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities were as follows: Year Ended December 31, 2020 2021 $ 12 2022 10 2023 7 2024 5 2025 4 Thereafter 8 Total lease payments 46 Less imputed interest (7 ) $ 39 |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measures (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Summary of Financial Assets and Liabilities Accounted for at Fair Value on Recurring Basis | The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 20 20 and December 31, 201 9 : Fair Value Notional Amounts Assets Liabilities December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Designated forward currency exchange contracts — $ 392 — $ 5 (a) — $ 1 (b) Undesignated instruments: Undesignated cross-currency swap — 420 — — (c) — 1 Undesignated interest rate swap — 561 — — — 1 (d) Undesignated forward currency exchange contracts 19 447 — 2 (a) — 3 (b) Total undesignated instruments 19 1,428 — 2 — 5 Total designated and undesignated instruments $ 19 $ 1,820 $ — $ 7 $ — $ 6 ( a ) Recorded within Other current assets in the Company’s Consolidated Balance Sheets ( b ) Recorded within Accrued liabilities in the Company’s Consolidated Balance Sheets (c) Recorded within Other assets in the Company’s Consolidated Balance Sheets (d) Recorded within Other liabilities in the Company´s Consolidated Balance Sheets |
Summary of Financial Assets and Liabilities Not Carried at Fair Value | The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value: December 31, 2020 Carrying Value Fair Value Liabilities not subject to compromise: Terms Loans A and B $ 1,082 $ 1,083 DIP Financing $ 200 $ 200 Liabilities subject to compromise: Senior Notes $ 429 $ 429 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Liabilities | Due to the Chapter 11 filing, Other Liabilities that existed as of December 31, 2020 and were deemed pre-petition, unsecured were reclassified as Liabilities subject to compromise, refer to Note 2, Reorganization and Chapter 11 Proceedings. Years Ended December 31, 2020 2019 Pension and other employee related $ 14 $ 94 Advanced discounts from suppliers 11 46 Income taxes 45 79 Long-term lease liability (Note 17) 15 28 Undesignated cross-currency and interest rate swaps (Note 18) 22 2 Other 7 25 $ 114 $ 274 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) | The changes in accumulated Pre-Tax Tax After-Tax Year Ended December 31, 2018 Foreign exchange translation adjustment $ (198 ) $ — $ (198 ) Pension adjustments (2 ) — (2 ) Changes in fair value of effective cash flow hedges 37 (2 ) 35 $ (163 ) $ (2 ) $ (165 ) Year Ended December 31, 2019 Foreign exchange translation adjustment $ 59 $ 8 $ 67 Pension adjustments (18 ) 4 (14 ) Changes in fair value of effective cash flow hedges 2 2 4 $ 43 $ 14 $ 57 Year Ended December 31, 2020 Foreign exchange translation adjustment $ (212 ) $ (22 ) $ (234 ) Pension adjustments (17 ) (1 ) (18 ) Changes in fair value of effective cash flow hedges (8 ) 1 (7 ) $ (237 ) $ (22 ) $ (259 ) Changes Total Foreign Changes in Fair Accumulated Exchange Value of Other Translation Effective Cash Pension Comprehensive Adjustment Flow Hedges Adjustments Income (Loss) Balance at December 31, 2018 $ 86 $ 0 $ (13 ) $ 73 Other comprehensive income (loss) before reclassifications 67 27 (27 ) 67 Amounts reclassified from accumulated other comprehensive income — (23 ) 13 (10 ) Net current period other comprehensive income (loss) 67 4 (14 ) 57 Balance at December 31, 2019 $ 153 $ 4 $ (27 ) $ 130 Other comprehensive income (loss) before reclassifications (234 ) (3 ) (29 ) (266 ) Amounts reclassified from accumulated other comprehensive income — (4 ) 11 7 Net current period other comprehensive income (loss) (234 ) (7 ) (18 ) (259 ) Balance at December 31, 2020 $ (81 ) $ (3 ) $ (45 ) $ (129 ) Reclassifications Year ended December 31, 2020 Affected Line in the Consolidated and Combined Statement of Operations Selling, Cost of General and Net Goods Administrative Non-Operating (Income) Sales Sold Expenses Expense Total Amortization of Pension and Other Postretirement Items: Actuarial losses recognized $ — $ — $ — $ 13 $ 13 Losses (gains) on cash flow hedges — (4 ) — — (4 ) Tax expense (benefit) — — — — (2 ) Total reclassifications for the period, net of tax $ 7 Year ended December 31, 2019 Affected Line in the Consolidated and Combined Statement of Operations Selling, Cost of General and Net Goods Administrative Non-Operating (Income) Sales Sold Expenses Expense Total Amortization of Pension and Other Postretirement Items: Actuarial losses recognized $ — $ — $ — $ 13 $ 13 Losses (gains) on cash flow hedges — (25 ) — — (25 ) Tax expense (benefit) 2 Total reclassifications for the period, net of tax $ (10 ) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Restricted Stock Activity Related to Stock Incentive Plan | The following table summarizes information about RSU activity related to our Stock Incentive Plan and Director Equity Plan for each of the periods presented: Number of Restricted Stock Units Weighted Average Grant Date Fair Value Per Share Non-vested at December 31, 2018 3,369,622 $ 10.12 Granted 629,037 15.36 Vested (967,518 ) 5.26 Forfeited (236,501 ) 14.47 Non-vested at December 31, 2019 2,794,640 $ 12.62 Granted 878,904 6.70 Vested (1,185,121 ) 7.83 Forfeited (949,454 ) 8.11 Non-vested at December 31, 2020 1,538,969 13.11 |
Schedule of Fair Valuation Assumptions of Stock Options Using Black Scholes Pricing Model | The fair value related to stock options granted was determined using Black-Scholes option pricing model and the weighted average assumptions are shown in the table below: Key Black-Scholes Assumptions Year Ended December 31, 2020 Risk-free interest rate 2.6% Expected term (years) 6.25 Volatility 42.08% Dividend yield 0.0% Fair value per stock option 7.28 |
Summary of Stock Option Activity Related to Stock Incentive Plan | The following table summarizes information about stock option activity related to the Stock Incentive Plan for each of the periods presented: Number of Stock Options Weighted Average Exercise Price (per share) Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2018 — $ — — — Granted 483,408 16.17 Exercised — — Forfeited (34,375 ) 16.17 Expired — — Outstanding as of December 31, 2019 449,033 16.17 9.26 — Granted — — Exercised — — Forfeited (37,482 ) 16.17 Expired (8,034 ) 16.17 Outstanding as of December 31, 2020 403,517 16.17 8.26 — Exercisable as of December 31, 2020 102,420 — — — |
Summary of Performance Stock Unit Activity Related to Stock Incentive Plan | The following table summarizes information about PSU activity related to the Stock Incentive Plan for each of the periods presented: Number of Performance Stock Units Weighted Average Grant Date Fair Value Per Share Non-vested at December 31, 2018 — $ — Granted 379,090 16.17 Vested — — Forfeited (47,769 ) 16.17 Non-vested at December 31, 2019 331,321 $ 16.17 Granted 1,021,069 8.36 Vested — — Forfeited (1,038,279 ) 8.48 Non-vested at December 31, 2020 314,111 16.17 |
Summary of Continuity Award Activity | The following table summarizes information about Continuity Award activity for the year ended December 31, 2020: Number of Awards Weighted Average Grant Date Fair Value Per Award Non-vested at December 31, 2019 — $ — Granted 43 257,536 Vested — — Forfeited — — Non-vested at December 31, 2020 43 $ 257,536 |
Restricted Stock Units | |
Summary of Information about Income Statement Impact | The following table summarizes the impact to the Consolidated and Combined Statement of Operations from RSUs: Years Ended December 31, 2020 2019 2018 Compensation expense $ 9 $ 15 $ 5 Future income tax benefit recognized 3 — 1 |
Stock Options | |
Summary of Information about Income Statement Impact | The following table summarizes the impact to the Consolidated and Combined Statement of Operations from stock options. There were no stock options granted prior to 2019. Years Ended December 31, 2020 2019 Compensation expense $ 1 $ 1 Future income tax benefit recognized — — |
Performance Stock Units | |
Summary of Information about Income Statement Impact | The following table summarizes the impact to the Consolidated and Combined Statement of Operations from PSUs. There were no PSUs granted prior to 2019. Years Ended December 31, 2020 2019 Compensation expense $ — $ 2 Future income tax benefit recognized — — |
Continuity Awards | |
Summary of Continuity Award Activity | The following table summarizes the impact to the Consolidated and Combined Statement of Operations from Continuity Awards for the year ended December 31, 2020. Year Ended December 31, 2020 Compensation expense $ 7 Future income tax benefit recognized 1 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings Per Share | The details of the earnings per share calculations for the years ended December 31, 2020, 2019 and 2018 are as follows: Years Ended December 31, 2020 2019 2018 Basic Net Income $ 80 $ 313 $ 1,206 Weighted average common shares outstanding 75,543,461 74,602,868 74,059,240 EPS – $ 1.06 $ 4.20 $ 16.28 Years Ended December 31, 2020 2019 2018 Diluted Net Income $ 80 $ 313 $ 1,206 Weighted average common shares outstanding – Basic 75,543,461 74,602,868 74,059,240 Dilutive effect of unvested RSUs 557,048 1,331,505 342,908 Weighted average common shares outstanding – Diluted 76,100,509 75,934,373 74,402,148 EPS – Diluted $ 1.05 $ 4.12 $ 16.21 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Summary of Obligation Payable to Honeywell | The Obligation payable to Honeywell related to these agreements was deemed a pre-petition, unsecured liability subject to compromise. On the Petition Date, the Obligation was stayed from further payment and, in accordance with ASC 852-10, measured at the expected allowed claim amount. The Company measured the expected allowed claim as of December 31, 2020 utilizing a combination of data points including: (1) the historical actuarial claims data provided by Honeywell up to December 31, 2019 (2) the aforementioned Honeywell claims estimation trial proceedings, (3) Honeywell’s bankruptcy claim filed with the Bankruptcy Court, and (4) the expected settlement of the Honeywell liabilities as per the Plan of Reorganization. The following table summarizes our Obligation payable to Honeywell related to these agreements. As of December 31, 2020, all amounts have been reclassified to Liabilities subject to compromise on the Consolidated Balance Sheets: 2020 Asbestos and environmental Tax Matters Total Beginning of year $ 1,090 $ 261 $ 1,351 Accrual for update to estimated liability — — — Legal fees expensed 41 — 41 Payments to Honeywell (35 ) — (35 ) Currency translation adjustment 100 25 125 End of year $ 1,196 $ 286 $ 1,482 Current 2 40 42 Non-current 1,194 246 1,440 Total $ 1,196 $ 286 $ 1,482 2019 Asbestos and environmental Tax Matters Total Beginning of year $ 1,244 $ 282 $ 1,526 Accrual for update to estimated liability (18 ) 3 (15 ) Legal fees expensed 44 — 44 Payments to Honeywell (153 ) (18 ) (171 ) Currency translation adjustment (27 ) (6 ) (33 ) End of year $ 1,090 $ 261 $ 1,351 Current 51 18 69 Non-current 1,039 243 1,282 Total $ 1,090 $ 261 $ 1,351 |
Summary of Asbestos Related Liabilities and Insurance Recoveries | The following Asbestos-Related Year ended December 31, 2020 Year ended December 31, 2019 Year ended December 31, 2018 Bendix Other Total Bendix Other Total Bendix Other Total Beginning of year $ — $ — $ - $ — $ 1 $ 1 $ 1,703 $ 9 $ 1,712 Accrual for update to estimated liabilities — — — — — — 141 — 141 Change in estimated cost of future claims — — — — — — — — — Update of expected resolution values for pending claims — — — — — — — — — Asbestos-related liability payments — — — — — — (151 ) (4 ) (155 ) Spin-Off related adjustments — — — — — — (1,693 ) (4 ) (1,697 ) Balance Sheet Reclassification — — — — (1 ) (1 ) — — — End of year $ — $ — $ — $ — $ — $ — $ — $ 1 $ 1 Insurance Recoveries 2020 2019 2018 Bendix Bendix Bendix Beginning of year $ — $ — $ 191 Probable insurance recoveries related to estimated liability — — 10 Insurance receipts for asbestos-related liabilities — — (24 ) Insurance receivables settlements and write-offs — — 1 Other — — — Spin-Off related adjustments — — (178 ) $ — $ — $ — |
Summary Information Concerning Our Recorded Obligations For Product Warranties and Product Performance Guarantees | As noted in Note 2, Reorganization, the Debtors have been granted certain First Day Orders that allow the Company to continue to operate as a debtor-in-possession and continue to perform on these warranty and guarantee obligations in the ordinary course of business. The following Years Ended December 31, 2020 2019 2018 Beginning of year $ 29 $ 32 $ 28 Accruals for warranties/guarantees issued during the year 19 31 33 Settlement of warranty/guarantee claims (17 ) (34 ) (29 ) Less: Amounts reclassified to Liabilities subject to compromise (16 ) — — $ 15 $ 29 $ 32 |
Defined Benefit Pension Plans (
Defined Benefit Pension Plans (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Compensation And Retirement Disclosure [Abstract] | |
Summary of Balance Sheet Impact, Including Benefit Obligations, Assets and Funded Status Associated with Significant Pension Plans | The following tables summarize the balance sheet impact, including the benefit obligations, assets and funded status associated with our significant pension plans. Pension Benefits U.S. Plans U.S. Plans Non-U.S. Plans Non-U.S. Plans 2020 2019 2020 2019 Change in benefit obligation: Benefit obligation at beginning of the year $ 206 $ 178 $ 226 $ 172 Service cost 1 1 9 6 Interest cost 6 7 2 2 Plan amendments — — (10 ) 1 Actuarial (gains) losses (1) 17 29 18 37 Benefits paid (10 ) (9 ) (3 ) (6 ) Settlements and curtailments (2) — — (10 ) — Foreign currency translation — — 22 — Transfers — — 2 10 Other — — 3 4 Benefit obligation at end of the year 220 206 259 226 Change in plan assets: Fair value of plan assets at beginning of the year 204 177 150 123 Actual return on plan assets 25 36 8 14 Employer contributions — — 7 6 Benefits paid (10 ) (9 ) (3 ) (6 ) Settlements and curtailments (2) — — (10 ) — Foreign currency translation — — 15 — Transfers — — 2 10 Other — — 3 3 Fair value of plan assets at end of year 219 204 172 150 Funded status of plans $ (1 ) $ (2 ) $ (87 ) $ (76 ) Amounts recognized in Consolidated Balance Sheet consist of: Accrued pension liabilities - noncurrent (3) — (2 ) — (76 ) Liabilities subject to compromise (4) (1 ) — (87 ) — Net amount recognized $ (1 ) $ (2 ) $ (87 ) $ (76 ) (1) The actuarial loss on the U.S. plans during 2020 was $17 million, driven by lower discount rates. For the non-US plans, the 2020 actuarial loss amounted to $18 million. The decrease of discount rates led to an assumption loss of $19 million in Ireland and $4 million in Switzerland. The increased salary assumption in Ireland caused an additional loss of about $1 million. This financial loss was partially offset by the $6 million experience gain on the projected benefit obligation in Switzerland, mainly attributable to the larger than expected asset outflow related to employees leaving Garrett and taking along their pension fund account balances. (2) In Switzerland the total lump sum benefit payments of $10 million were greater than the service cost and interest cost for year ended December 31, 2020, therefore settlement accounting was applied. Following the settlement accounting, part of the previously unrecognized loss, approximately $1 million was recognized as pension settlement expense. (3) Included in Other liabilities in the Consolidated Balance Sheet (4) Included in Liabilities subject to compromise in the Consolidated Balance Sheet |
Summary of Accumulated Other Comprehensive (Income) Loss Associated with Pension and Other Postretirement Benefit Plans | Amounts recognized in Accumulated other comprehensive (income) loss associated with our significant pension and other postretirement benefit plans at December 31, 2020 and December 31, 2019 are as follows: Pension Benefits U.S. Plans U.S. Plans Non-U.S. Plans Non-U.S. Plans 2020 2019 2020 2019 Prior service (credit) $ (1 ) $ (2 ) $ (9 ) $ 1 Net actuarial loss 9 6 24 21 Net amount recognized $ 8 $ 4 $ 15 $ 22 |
Summary of Net Periodic Benefit (Income) Cost and Other Amounts Recognized in Other Comprehensive (Income) Loss | The components of net periodic benefit (income) cost and other amounts recognized in Other comprehensive (income) loss for our significant pension and other postretirement benefit plans include the following components: Pension Benefits U.S. Plans Non-U.S. Plans Net Periodic Benefit Cost 2020 2019 2020 2019 2018 (1) Service cost $ 1 $ 1 $ 9 $ 6 $ 4 Interest cost 6 7 2 2 2 Expected return on plan assets (11 ) (10 ) (6 ) (4 ) (3 ) Recognition of actuarial losses — — 13 13 3 Settlements and curtailments (2) — — 1 — — Net periodic benefit (income) cost $ (4 ) $ (2 ) $ 19 $ 17 $ 6 (1) For the periods prior to the Spin-Off, only the pension plan in Ireland is reflected as a non-U.S. defined benefit pension plan as all other pension plans were accounted for as multiemployer plans. Following the Spin-Off, the defined benefit pension plan in Switzerland is also reflected. (2) In Switzerland the total lump sum benefit payments of $10 million were greater than the service cost and interest cost for year ended December 31, 2020, therefore settlement accounting was applied. Following the settlement accounting, part of the previously unrecognized loss, approximately $1 million was recognized as pension settlement expense. |
Other Changes in Plan Assets and Benefits Obligations Recognized in Other Comprehensive (Income) Loss | Other Changes in Plan Assets and Benefits Obligations Recognized in U.S. Plans Non-U.S. Plans Other Comprehensive (Income) Loss 2020 2019 2020 2019 2018 (1) Actuarial (gains) losses $ 3 $ 2 $ 15 $ 27 $ (4 ) Prior service (credit) — — (10 ) 1 1 Actuarial losses recognized during year — — (14 ) (13 ) (3 ) Foreign currency translation — — 2 1 — Total recognized in other comprehensive (income) loss $ 3 $ 2 $ (7 ) $ 16 $ (6 ) Total recognized in net periodic benefit (income) cost and other comprehensive (income) loss $ (1 ) $ — $ 12 $ 33 $ — (1) For the periods prior to the Spin-Off, only the pension plan in Ireland is reflected as a non-U.S. defined benefit pension plan as all other pension plans were accounted for as multiemployer plans. Following the Spin-Off, the defined benefit pension plan in Switzerland is also reflected. |
Summary of Major Actuarial Assumptions Used in Determining Benefit Obligations and Net Periodic Benefit (Income) Cost | Major actuarial assumptions used in determining the benefit obligations and net periodic benefit (income) cost for our significant benefit plans are presented in the following table as weighted averages. Pension Benefits U.S. Plans Non-U.S. Plans 2020 2019 2020 2019 2018 (1) Actuarial assumptions used to determine benefit obligations as of December 31: Discount rate 2.65 % 3.30 % 0.46 % 0.79 % 1.50 % Expected annual rate of compensation increase 3.57 % 3.74 % 1.82 % 1.77 % 1.77 % Interest credited to accounts (2) — — 1.50 % 1.50 % 1.50 % Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: Discount rate—benefit obligation 3.30 % 4.44 % 0.79 % 1.65 % 1.50 % Discount rate—service cost 4.47 % 4.47 % 1.20 % 1.20 % 1.50 % Discount rate—interest cost 4.06 % 4.06 % 1.74 % 1.74 % 1.50 % Expected rate of return on plan assets 5.49 % 5.80 % 3.79 % 3.34 % 3.77 % Expected annual rate of compensation increase 3.74 % 3.74 % 1.77 % 1.77 % 1.77 % (1) For the periods prior to the Spin-Off, only the pension plan in Ireland is reflected as a non-U.S. defined benefit pension plan as all other pension plans were accounted for as multiemployer plans. Following the Spin-Off, the defined benefit pension plan in Switzerland is also reflected. (2) Only applicable to the defined benefit pension plan in Switzerland. |
Summary of Amounts Relate to Significant Pension Plans with Accumulated Benefit Obligations Exceeding Fair Value of Plan Assets | The following amounts relate to our significant pension plans with accumulated benefit obligations exceeding the fair value of plan assets. December 31, U.S. Plans Non-U.S. Plans 2020 2019 2020 2019 Projected benefit obligation $ — $ — $ 259 $ 226 Accumulated benefit obligation — — 239 212 Fair value of plan assets — — 172 150 |
Summary of Fair Values of Both U.S. and Non-U.S. Pension Plans Assets by Asset Category | The fair values of both our U.S. and non-U.S. pension plans assets by asset category are as follows: U.S. Plans December 31, 2020 Total Level 1 Level 2 Level 3 Equity funds $ 79 $ — $ 79 $ — Short-term investments 2 — 2 — Corporate bond funds 117 — 117 — Real estate funds 21 — 21 — Total assets at fair value $ 219 $ — $ 219 $ — U.S. Plans December 31, 2019 Total Level 1 Level 2 Level 3 Equity funds $ 74 $ — $ 74 $ — Short-term investments 2 — 2 — Corporate bond funds 106 — 106 — Real estate funds 22 — 22 — Total assets at fair value $ 204 $ — $ 204 $ — Non-U.S. Plans December 31, 2020 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 5 $ 5 $ — $ — Equity funds 76 — 76 — Government bond funds 35 — 35 — Corporate bond funds 23 — 23 — Real estate funds 20 — 20 — Other 13 — 13 — Total assets at fair value $ 172 $ 5 $ 167 $ — Non-U.S. Plans December 31, 2019 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 2 $ 2 $ — $ — Equity funds 68 — 68 — Government bond funds 30 — 30 — Corporate bond funds 21 — 21 — Real estate funds 18 — 18 — Other 11 — 11 — Total assets at fair value $ 150 $ 2 $ 148 $ — |
Summary of Benefit Payments | Benefit payments, including amounts to be paid from Company assets, and reflecting expected future service, as appropriate, are expected to be paid as follows: U.S. Plans Non-U.S. Plans 2021 $ 10 $ 3 2022 11 4 2023 11 4 2024 11 4 2025 11 4 2026-2030 57 24 |
Concentrations (Tables)
Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Risks And Uncertainties [Abstract] | |
Summary of Net Sales by Region | Sales concentration —Net sales by region (determined based on country of shipment) and channel are as follows: Year ended December 31, 2020 OEM Aftermarket Other Total United States $ 309 $ 148 $ 5 $ 462 Europe 1,395 122 30 1,547 Asia 928 41 26 995 Other International 11 19 — 30 $ 2,643 $ 330 $ 61 $ 3,034 Year ended December 31, 2019 OEM Aftermarket Other Total United States $ 307 $ 171 $ 7 $ 485 Europe 1,631 136 39 1,806 Asia 843 51 29 923 Other International 15 19 — 34 $ 2,796 $ 377 $ 75 $ 3,248 Year ended December 31, 2018 OEM Aftermarket Other Total United States $ 338 $ 175 $ 5 $ 518 Europe 1,686 151 54 1,891 Asia 847 50 26 923 Other International 22 21 — 43 $ 2,893 $ 397 $ 85 $ 3,375 |
Summary of Net Sales to Largest Customer and Corresponding Percentage of Total Net Sales | Customer concentration —Net sales to Garrett’s largest customer and the corresponding percentage of total net sales are as follows: Net sales Years ended December 31, 2020 % 2019 % 2018 % Customer A $ 301 10 $ 374 12 $ 455 13 Others 2,733 90 2,874 88 2,920 87 $ 3,034 100 $ 3,248 100 $ 3,375 100 |
Summary of Long-lived Assets by Region | Long-lived assets —Long-lived assets by region are as follows: Long-lived Assets (1) December 31, 2020 2019 2018 United States $ 21 $ 24 $ 26 Europe 315 285 273 Asia 151 141 123 Other International 18 21 16 $ 505 $ 471 $ 438 (1) Long-lived |
Unaudited Quarterly Financial_2
Unaudited Quarterly Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of Unaudited Quarterly Financial Information | The following tables show selected unaudited quarterly results of operations for 2020 and 2019. The quarterly data have been prepared on the same basis as the audited annual financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair statement of our results of operations for these periods. 2020 March 31 June 30 September 30 December 31 Year Ended December 31, Net Sales $ 745 $ 477 $ 804 $ 1,008 $ 3,034 Gross Profit 142 84 152 178 556 Net Income (Loss) 52 (9 ) 11 26 80 Earnings (loss) per share - basic 0.69 (0.12 ) 0.15 0.34 1.06 Earnings (loss) per share - diluted 0.68 (0.12 ) 0.14 0.34 1.05 2019 March 31 June 30 September 30 December 31 Year Ended December 31, Net Sales $ 835 $ 802 $ 781 $ 830 $ 3,248 Gross Profit 196 182 172 161 711 Net Income (Loss) 73 66 38 136 313 Earnings (loss) per share - basic 0.98 0.88 0.51 1.82 4.20 Earnings (loss) per share - diluted 0.97 0.86 0.50 1.79 4.12 |
Background and Basis of Prese_2
Background and Basis of Presentation - Additional Information (Details) € in Millions, shares in Millions | Oct. 01, 2018shares | Sep. 12, 2018USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2022USD ($) | Jun. 12, 2020USD ($) | Jun. 12, 2020EUR (€) |
Background And Basis Of Presentation [Line Items] | ||||||
Debt instrument, face amount | $ 1,533,000,000 | |||||
Indemnification and Reimbursement Agreement | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Agreement termination date | Dec. 31, 2048 | |||||
Agreement termination description | The Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. | |||||
2020 Amended Credit Agreement | Revolving Credit Facility | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Debt instrument, face amount | € | € 430 | |||||
2020 Amended Credit Agreement | Term B Loan Facility | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Debt instrument, face amount | $ 425,000,000 | 375 | ||||
2020 Amended Credit Agreement | Term A Loan Facility | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Debt instrument, face amount | € | € 330 | |||||
Honeywell International Inc | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Conversion common stock shareowner received ratio | 0.1 | |||||
Description of conversion common stock shareowner received ratio | Each Honeywell stockholder of record received one share of Garrett common stock for every 10 shares of Honeywell common stock held on the record date. | |||||
Shares of Garrett common stock distributed | shares | 74 | |||||
Liability for asbestos and environmental claims maximum amount converted into euros | $ 25,000,000 | |||||
Honeywell International Inc | Indemnification and Reimbursement Agreement | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Percentage of net insurance receipts | 90.00% | |||||
Honeywell International Inc | Indemnification and Reimbursement Agreement | Maximum | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Liability for asbestos and environmental claims maximum amount converted into euros | $ 25,000,000 | |||||
Honeywell International Inc | Bendix | Indemnification and Reimbursement Agreement | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% | |||||
Honeywell International Inc | PSA and The Transaction, The Amended Plan | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Litigation cash payment at emergence | $ 375,000,000 | |||||
Option for partial payment period at emergence | 18 months | |||||
Reduction of duration of future liabilities prior to chapter 11 filing | 30 years | |||||
Maximum duration of future liabilities under chapter 11 filing | 9 years | |||||
Honeywell International Inc | PSA and The Transaction, The Amended Plan | Series B Preferred Stock | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Preferred stock issued payable annually in 2023 | $ 100,000,000 | |||||
Preferred stock issued payable annually in 2024 | 100,000,000 | |||||
Preferred stock issued payable annually in 2025 | 100,000,000 | |||||
Preferred stock issued payable annually in 2026 | 100,000,000 | |||||
Preferred stock issued payable annually in 2027 | 100,000,000 | |||||
Preferred stock issued payable annually in 2028 | 100,000,000 | |||||
Preferred stock issued payable annually in 2029 | 100,000,000 | |||||
Preferred stock issued payable annually in 2030 | 100,000,000 | |||||
Option to prepay preferred stock at call price | $ 584,000,000 | |||||
Discount rate | 7.25% | |||||
Option for partial payment of preferred stock reducing present value | $ 400,000,000 | |||||
Honeywell International Inc | PSA and The Transaction, The Amended Plan | Series B Preferred Stock | Scenario Forecast | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Preferred stock issued payable in instalments | $ 35,000,000 | |||||
Honeywell International Inc | Garrett Motion Inc. | ||||||
Background And Basis Of Presentation [Line Items] | ||||||
Pro rata distribution of outstanding shares, percentage | 100.00% |
Reorganization and Chapter 11_3
Reorganization and Chapter 11 Proceedings - Additional Information (Details) $ / shares in Thousands, $ in Millions | Feb. 15, 2021USD ($) | Jan. 22, 2021USD ($) | Jan. 11, 2021USD ($)$ / shares | Dec. 31, 2020USD ($) | Feb. 08, 2021USD ($)Claim | Sep. 20, 2020 |
Reorganization And Chapter11 Proceedings [Line Items] | ||||||
Professional and filing fees by debtor | $ 55 | |||||
RSA | ||||||
Reorganization And Chapter11 Proceedings [Line Items] | ||||||
Aggregate outstanding principal amount of loan percentage | 61.00% | |||||
Subsequent Event | ||||||
Reorganization And Chapter11 Proceedings [Line Items] | ||||||
Debtor-in-possession financing, estimated amount for emergence | $ 1,100 | |||||
Number of proofs of claim filed | Claim | 1,326 | |||||
Unsecured claims amount | $ 146,000 | |||||
Subsequent Event | Maximum | ||||||
Reorganization And Chapter11 Proceedings [Line Items] | ||||||
Professional and filing fees by debtor | $ 25 | |||||
Stalking Horse Bidder and AMP U.S. Holdings, LLC | ||||||
Reorganization And Chapter11 Proceedings [Line Items] | ||||||
Winning bid selected | $ 2,100 | |||||
Stalking Horse Bidder | Subsequent Event | ||||||
Reorganization And Chapter11 Proceedings [Line Items] | ||||||
Bankruptcy proceedings, date petition for bankruptcy Filed | Jan. 11, 2021 | |||||
Termination payment | $ 63 | |||||
Reimbursement payment expense | $ 15.7 | |||||
CO Group | Subsequent Event | PSA | ||||||
Reorganization And Chapter11 Proceedings [Line Items] | ||||||
Common stock exchange rate for cancellation per share. | $ / shares | $ 6,250 | |||||
Professional and filing fees by debtor | $ 25 | |||||
Estimated professional and filing fees by debtor | $ 82 | |||||
CO Group | Subsequent Event | Series A Preferred Stock | ||||||
Reorganization And Chapter11 Proceedings [Line Items] | ||||||
Equity method investment aggregate amount in cash | $ 1,050.8 | |||||
Equity method investment maximum aggregate value | $ 200 |
Reorganization and Chapter 11_4
Reorganization and Chapter 11 Proceedings - Schedule of Reorganization Items Net (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Reorganizations [Abstract] | |
Advisor fees | $ 55 |
DIP Financing fees | 13 |
Write-off of pre-petition unamortized debt issuance costs | 6 |
Other | (1) |
Total reorganization items, net | $ 73 |
Reorganization and Chapter 11_5
Reorganization and Chapter 11 Proceedings - Schedule of Liabilities Subject to Compromise (Details) $ in Millions | Dec. 31, 2020USD ($) |
Reorganizations [Abstract] | |
Obligations payable to Honeywell | $ 1,482 |
Long-term debt | 429 |
Accounts payable | 82 |
Pension, compensation, benefit and other employee related | 92 |
Uncertain tax positions and deferred taxes | 69 |
Advanced discounts from suppliers | 33 |
Lease liability | 19 |
Freight Accrual | 27 |
Product warranties and performance guarantees | 16 |
Other | 41 |
Total liabilities subject to compromise | $ 2,290 |
Reorganization and Chapter 11_6
Reorganization and Chapter 11 Proceedings - Condensed Statements of Operations of Debtors (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net sales | $ 1,008 | $ 804 | $ 477 | $ 745 | $ 830 | $ 781 | $ 802 | $ 835 | $ 3,034 | $ 3,248 | $ 3,375 |
Cost of goods sold | 2,478 | 2,537 | 2,599 | ||||||||
Gross profit | 178 | 152 | 84 | 142 | 161 | 172 | 182 | 196 | 556 | 711 | 776 |
Selling, general and administrative expenses | 277 | 249 | 249 | ||||||||
Other expense, net | 46 | 40 | 120 | ||||||||
Interest expense | 79 | 68 | 19 | ||||||||
Non-operating (income) expense | (38) | 8 | (8) | ||||||||
Reorganization items, net | 73 | ||||||||||
Income before taxes | 119 | 346 | 396 | ||||||||
Tax expense (benefit) (Note 7) | 39 | 33 | (810) | ||||||||
Net income | $ 26 | $ 11 | $ (9) | $ 52 | $ 136 | $ 38 | $ 66 | $ 73 | 80 | $ 313 | $ 1,206 |
Debtors | |||||||||||
Net sales | 2,273 | ||||||||||
Cost of goods sold | 1,863 | ||||||||||
Gross profit | 410 | ||||||||||
Selling, general and administrative expenses | 252 | ||||||||||
Other expense, net | 45 | ||||||||||
Interest expense | 80 | ||||||||||
Non-operating (income) expense | (152) | ||||||||||
Reorganization items, net | 73 | ||||||||||
Income before taxes | 112 | ||||||||||
Tax expense (benefit) (Note 7) | 3 | ||||||||||
Net income | $ 109 |
Reorganization and Chapter 11_7
Reorganization and Chapter 11 Proceedings - Condensed Balance Sheets of Debtors (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||||
Cash and cash equivalents | $ 592 | $ 187 | ||
Restricted cash | 101 | |||
Accounts, notes and other receivables – net | 841 | 707 | ||
Inventories – net | 235 | 220 | ||
Other current assets | 110 | 85 | ||
Total current assets | 1,879 | 1,199 | ||
Investments and long-term receivables | 30 | 36 | ||
Property, plant and equipment – net | 505 | 471 | ||
Goodwill | 193 | 193 | ||
Deferred income taxes | 275 | 268 | ||
Other assets | 135 | 108 | ||
Total assets | 3,017 | 2,275 | ||
Current liabilities: | ||||
Accounts payable | 1,019 | 1,009 | ||
Borrowings under revolving credit facility | 370 | |||
Current maturities of long-term debt (Note 16) | 4 | |||
Debtor-in-possession Term Loan | 200 | |||
Obligations payable to Honeywell, current | 69 | |||
Accrued liabilities (Note 15) | 248 | 310 | ||
Total current liabilities | 1,837 | 1,392 | ||
Long-term debt | 1,082 | 1,409 | ||
Deferred income taxes | 2 | 51 | ||
Obligations payable to Honeywell (Note 23) | 1,282 | |||
Other liabilities | 114 | 274 | ||
Total liabilities not subject to compromise | 3,035 | 4,408 | ||
Liabilities subject to compromise | ||||
Total liabilities subject to compromise | 2,290 | |||
Total liabilities | 5,325 | 4,408 | ||
COMMITMENTS AND CONTINGENCIES (Note 23) | ||||
EQUITY (DEFICIT) | ||||
Total deficit attributable to the Debtors | (2,308) | (2,133) | $ (2,517) | $ (2,195) |
Total liabilities and equity (deficit) | 3,017 | $ 2,275 | ||
Debtors | ||||
Current assets: | ||||
Cash and cash equivalents | 516 | |||
Restricted cash | 30 | |||
Accounts, notes and other receivables – net | 430 | |||
Accounts and other receivables from non-debtor affiliates | 240 | |||
Inventories – net | 166 | |||
Other current assets | 91 | |||
Total current assets | 1,473 | |||
Investments and long-term receivables | 6 | |||
Investment in subsidiaries | 883 | |||
Property, plant and equipment – net | 319 | |||
Goodwill | 193 | |||
Deferred income taxes | 236 | |||
Other assets | 93 | |||
Total assets | 3,203 | |||
Current liabilities: | ||||
Accounts payable | 497 | |||
Borrowings under revolving credit facility | 370 | |||
Debtor-in-possession Term Loan | 200 | |||
Accrued liabilities (Note 15) | 106 | |||
Total current liabilities | 1,173 | |||
Long-term debt | 1,082 | |||
Other liabilities | 22 | |||
Total liabilities not subject to compromise | 2,277 | |||
Liabilities subject to compromise | ||||
External | 2,290 | |||
With non-debtor affiliates | 528 | |||
Total liabilities subject to compromise | 2,818 | |||
Total liabilities | 5,095 | |||
COMMITMENTS AND CONTINGENCIES (Note 23) | ||||
EQUITY (DEFICIT) | ||||
Total deficit attributable to the Debtors | (1,892) | |||
Total liabilities and equity (deficit) | $ 3,203 |
Reorganization and Chapter 11_8
Reorganization and Chapter 11 Proceedings - Condensed Statements of Cash Flows of Debtors (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities: | |||
Net cash used for operating activities | $ 25 | $ 242 | $ 373 |
Cash flows from investing activities: | |||
Expenditures for property, plant and equipment | (80) | (102) | (95) |
Other | 16 | (4) | |
Net cash (used for) provided by investing activities | (80) | (86) | 192 |
Cash flows from financing activities: | |||
Proceeds from revolving credit facilities | 1,449 | 745 | 331 |
Payments of revolving credit facilities | (1,100) | (745) | (331) |
Payments of long-term debt | (2) | (163) | (6) |
Other | (4) | 3 | |
Net cash provided by (used for) financing activities | 530 | (163) | (658) |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 31 | (2) | (11) |
Net increase/ (decrease) in cash, cash equivalents and restricted cash | 506 | (9) | (104) |
Cash and cash equivalents at beginning of period | 187 | 196 | 300 |
Cash, cash equivalents and restricted cash at end of period | 693 | 187 | $ 196 |
Debtors | |||
Cash flows from operating activities: | |||
Net cash used for operating activities | 15 | ||
Cash flows from investing activities: | |||
Expenditures for property, plant and equipment | (39) | ||
Other | 5 | ||
Net cash (used for) provided by investing activities | (34) | ||
Cash flows from financing activities: | |||
Proceeds from debtor-in-possession financing | 200 | ||
Proceeds from revolving credit facilities | 1,437 | ||
Payments of revolving credit facilities | (1,088) | ||
Payments of long-term debt | (2) | ||
Debtor-in-possession financing fees | (13) | ||
Net cash provided by (used for) financing activities | 534 | ||
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | 30 | ||
Net increase/ (decrease) in cash, cash equivalents and restricted cash | 545 | ||
Cash and cash equivalents at beginning of period | 1 | ||
Cash, cash equivalents and restricted cash at end of period | $ 546 | $ 1 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) | Jan. 01, 2020USD ($) | Oct. 01, 2018shares | Sep. 12, 2018USD ($) | Sep. 30, 2018shares | Dec. 31, 2020USD ($)Segmentshares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($)shares |
Significant Accounting Policies [Line Items] | |||||||
Number of reporting unit with negative carrying value | Segment | 1 | ||||||
Goodwill, impairment | $ 0 | ||||||
Basic and diluted shares | shares | 74,070,852 | ||||||
Weighted average common shares outstanding – Basic | shares | 75,543,461 | 74,602,868 | 74,059,240 | ||||
Weighted average common shares outstanding – Diluted | shares | 76,100,509 | 75,934,373 | 74,402,148 | ||||
ASU 2018-13 | |||||||
Significant Accounting Policies [Line Items] | |||||||
Accounting standards adoption date | Jan. 1, 2020 | ||||||
Change in accounting principle, accounting standards update, early adoption | false | ||||||
Accounting standards update adopted | true | ||||||
Change in accounting principle, accounting standards update, immaterial effect | true | ||||||
ASU 2016-13 | |||||||
Significant Accounting Policies [Line Items] | |||||||
Accounting standards adoption date | Jan. 1, 2020 | ||||||
Change in accounting principle, accounting standards update, early adoption | false | ||||||
Accounting standards update adopted | true | ||||||
ASU 2016-13 | Cumulative-Effect Adjustment | |||||||
Significant Accounting Policies [Line Items] | |||||||
Increase in allowance for doubtful accounts | $ 5,000,000 | ||||||
Shared Plan | |||||||
Significant Accounting Policies [Line Items] | |||||||
Pension expense | $ 5,000,000 | ||||||
Indemnification and Reimbursement Agreement | |||||||
Significant Accounting Policies [Line Items] | |||||||
Agreement termination description | The Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. | ||||||
Reimbursement agreement termination date | Dec. 31, 2048 | ||||||
Honeywell International Inc | |||||||
Significant Accounting Policies [Line Items] | |||||||
Liability for asbestos and environmental claims maximum amount converted into euros | $ 25,000,000 | ||||||
Number of spin-off common Stock distributed | shares | 74,070,852 | ||||||
Honeywell International Inc | PSA and The Transaction, The Amended Plan | |||||||
Significant Accounting Policies [Line Items] | |||||||
Litigation cash payment at emergence | $ 375,000,000 | ||||||
Option for partial payment period at emergence | 18 months | ||||||
Reduction of duration of future liabilities prior to chapter 11 filing | 30 years | ||||||
Maximum duration of future liabilities under chapter 11 filing | 9 years | ||||||
Honeywell International Inc | PSA and The Transaction, The Amended Plan | Series B Preferred Stock | |||||||
Significant Accounting Policies [Line Items] | |||||||
Option to prepay preferred stock at call price | $ 584,000,000 | ||||||
Discount rate | 7.25% | ||||||
Option for partial payment of preferred stock reducing present value | $ 400,000,000 | ||||||
Honeywell International Inc | Indemnification and Reimbursement Agreement | |||||||
Significant Accounting Policies [Line Items] | |||||||
Percentage of net insurance receipts | 90.00% | ||||||
Bendix | Honeywell International Inc | Indemnification and Reimbursement Agreement | |||||||
Significant Accounting Policies [Line Items] | |||||||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% | ||||||
Cost of Goods Sold | |||||||
Significant Accounting Policies [Line Items] | |||||||
Research and development cost | 111,000,000 | $ 129,000,000 | 128,000,000 | ||||
Engineering-related expenses | $ 13,000,000 | $ 5,000,000 | $ 10,000,000 | ||||
Maximum | Honeywell International Inc | Indemnification and Reimbursement Agreement | |||||||
Significant Accounting Policies [Line Items] | |||||||
Liability for asbestos and environmental claims maximum amount converted into euros | $ 25,000,000 | ||||||
Buildings and Improvements | Minimum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 10 years | ||||||
Buildings and Improvements | Maximum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 50 years | ||||||
Machinery and Equipment | Minimum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 2 years | ||||||
Machinery and Equipment | Maximum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 16 years | ||||||
Tooling Equipment | Minimum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 3 years | ||||||
Tooling Equipment | Maximum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 10 years | ||||||
Software | Minimum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 5 years | ||||||
Software | Maximum | |||||||
Significant Accounting Policies [Line Items] | |||||||
Estimated useful lives | 7 years |
Revenue Recognition and Contr_3
Revenue Recognition and Contracts with Customers - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Revenue Recognition And Contracts With Customers [Line Items] | |
Revenue performance obligation, description of timing | The timing of satisfying the performance obligation is typically indicated by the terms of the contract. All performance obligations are expected to be satisfied within one year, with substantially all performance obligations being satisfied within a month |
Contract with customer cash advances and unbilled receivables settlement period | 3 months |
Revenue performance obligation, description of payment terms | The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment, with cash advances (contract liabilities) and unbilled receivables (contract assets) being settled within 3 months. For some contracts, we may be entitled to receive an advance payment. |
Revenue, Practical Expedient, Initial Application and Transition, Nondisclosure of Transaction Price Allocation to Remaining Performance Obligation [true false] | true |
Maximum | |
Revenue Recognition And Contracts With Customers [Line Items] | |
Revenue performance obligation satisfied over time percentage | 1.00% |
Revenue Recognition and Contr_4
Revenue Recognition and Contracts with Customers - Summary of Contract Assets and Liabilities (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Contract With Customer Asset And Liability [Abstract] | |
Contract assets—January 1 | $ 6 |
Contract assets—December 31 | 61 |
Change in contract assets—Increase/(Decrease) | 55 |
Contract liabilities—January 1 | (3) |
Contract liabilities—December 31 | (2) |
Change in contract liabilities—(Increase)/Decrease | $ 1 |
Revenue Recognition and Contr_5
Revenue Recognition and Contracts with Customers - Additional Information (Details 1) | Dec. 31, 2020 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01 | |
Revenue Recognition And Contracts With Customers [Line Items] | |
Performance obligation expected to be satisfied, period | 1 year |
Other Expense, Net - Schedule o
Other Expense, Net - Schedule of Other Operating Cost and Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other Income And Expenses [Abstract] | |||
Indemnification related — post Spin-Off | $ 41 | $ 28 | $ (16) |
Indemnification related — litigation | 3 | 11 | |
Asbestos related, net of probable insurance recoveries | 131 | ||
Environmental remediation, non-active sites | 1 | 5 | |
Factoring and notes receivables discount fees | 1 | 1 | |
Other Expense, Net | $ 46 | $ 40 | $ 120 |
Non-Operating (Income) Expens_2
Non-Operating (Income) Expense - Schedule of Non-Operating Expense (Income) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Non Operating Income Expense [Abstract] | |||
Equity income of affiliated companies | $ (5) | $ (6) | $ (5) |
Interest income | (3) | (7) | (7) |
Pension (income) expense — non service | 5 | 8 | 2 |
Foreign exchange | (35) | 13 | 6 |
Others, net | (4) | ||
Non-operating expense (income) | $ (38) | $ 8 | $ (8) |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income (loss) Before Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income before taxes | |||
Domestic entities | $ (87) | $ (54) | $ (99) |
Entities outside the U.S. | 206 | 400 | 495 |
Income before taxes | $ 119 | $ 346 | $ 396 |
Income Taxes - Schedule of Tax
Income Taxes - Schedule of Tax Expense (Benefits) (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Current: | |||
Federal | $ 3 | $ 9 | $ 7 |
State | 1 | 1 | 1 |
Foreign | 69 | 64 | 113 |
Total current income tax expense (benefit) | 73 | 74 | 121 |
Deferred: | |||
Federal | 2 | (8) | |
Foreign | (34) | (43) | (923) |
Total deferred income tax expense (benefit) | (34) | (41) | (931) |
Income tax expense (benefit) | $ 39 | $ 33 | $ (810) |
Income Taxes - Schedule of U.S
Income Taxes - Schedule of U.S Federal Statutory Income Tax Rate Reconciled to Effective Income Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
U.S. federal statutory income tax rate | 21.00% | 21.00% | 21.00% |
Taxes on non-U.S. earnings different from U.S. tax | (6.50%) | (2.30%) | (7.70%) |
Reserves for tax contingencies | 15.90% | 2.50% | 4.10% |
Non-deductible and permanent items | 7.10% | 1.70% | 6.00% |
Withholding and other taxes on foreign earnings | (14.70%) | 4.40% | (231.60%) |
Tax law changes | (17.30%) | ||
Changes in valuation allowance | 10.50% | 0.50% | 5.30% |
All other items | (0.50%) | (1.00%) | (1.60%) |
Effective income tax rate | 32.80% | 9.50% | (204.50%) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes [Line Items] | ||||
Increase (decrease) to the effective tax rate, percentage | 23.30% | (214.00%) | ||
Deferred tax liability non-recurring tax benefits | $ 910 | |||
Deferred tax assets and liability changes enacted | $ 60 | |||
Net operating loss carryforwards | $ 132 | |||
Valuation allowance | 34 | 27 | ||
Deferred income taxes | 275 | 268 | ||
Deferred tax liability, before reclassification | 27 | |||
Deferred tax liability reclassified to liabilities subject to compromise | 25 | |||
Deferred tax liability, withholding taxes | 13 | |||
Unrecognized tax benefits | 60 | 54 | $ 48 | |
Interest and penalties, expense (benefit) | 5 | (3) | (2) | |
Accrued interest and penalties | $ 29 | $ 26 | $ 23 | |
Earliest Tax Year | ||||
Income Taxes [Line Items] | ||||
Income tax examinations In progress, years | 2006 | |||
Latest Tax Year | ||||
Income Taxes [Line Items] | ||||
Income tax examinations In progress, years | 2017 | |||
Non-US | ||||
Income Taxes [Line Items] | ||||
Valuation allowance | $ 34 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets (Liabilities) (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Intangibles and fixed assets | $ 202 | $ 205 |
Pension | 18 | 12 |
Accruals and reserves | 32 | 30 |
Net operating losses and other tax attribute carryforwards | 35 | 27 |
Outside basis differences | 11 | 17 |
Other | 29 | 23 |
Total Deferred tax assets | 327 | 314 |
Valuation allowance | (34) | (27) |
Net deferred tax assets | 293 | 287 |
Deferred tax liabilities: | ||
Outside basis differences | (30) | (49) |
Other | (15) | (21) |
Total deferred tax liabilities | (45) | (70) |
Net deferred tax asset | $ 248 | $ 217 |
Income Taxes - Schedule of Net
Income Taxes - Schedule of Net Operating Loss Carryforwards (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Operating Loss Carryforwards [Line Items] | |
Net Operating Loss Carryforwards | $ 119 |
Brazil | |
Operating Loss Carryforwards [Line Items] | |
Expiration Period Jurisdiction | Indefinite |
Net Operating Loss Carryforwards | $ 53 |
Luxembourg | |
Operating Loss Carryforwards [Line Items] | |
Expiration Period Jurisdiction | 2037 |
Net Operating Loss Carryforwards | $ 36 |
Switzerland | |
Operating Loss Carryforwards [Line Items] | |
Expiration Period Jurisdiction | 2027 |
Net Operating Loss Carryforwards | $ 30 |
Income Taxes - Schedule of Chan
Income Taxes - Schedule of Changes in Uncertain Tax Positions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Change in unrecognized tax benefits: | |||
Balance at beginning of year | $ 54 | $ 48 | $ 100 |
Gross increases related to current period tax positions | 8 | 8 | 19 |
Gross increases related to prior periods tax positions | 6 | 9 | |
Gross decreases related to prior periods tax positions | (8) | ||
Decrease related to resolutions of audits with tax authorities | (7) | ||
Expiration of the statute of limitations for the assessment of taxes | (2) | (2) | |
Potential Indemnifications to Honeywell for US and foreign taxes as contractually obligated in connection with Tax Matters Agreement | (71) | ||
Foreign currency translation | 1 | (1) | |
Balance at end of year | $ 60 | $ 54 | $ 48 |
Accounts, Notes and Other Rec_3
Accounts, Notes and Other Receivables Net - Schedule of Accounts, Notes and Other Receivables Net (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Trade receivables | $ 625 | $ 574 |
Notes receivables | 152 | 68 |
Other receivables | 77 | 69 |
Accounts, notes and other receivables, gross | 854 | 711 |
Less—Allowance for expected credit losses | (13) | (4) |
Accounts, notes and other receivables, net | $ 841 | $ 707 |
Accounts, Notes and Other Rec_4
Accounts, Notes and Other Receivables Net - Additional Information (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | ||
Unbilled balances | $ 61 | $ 4 |
Factoring and Notes Receivabl_2
Factoring and Notes Receivables - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Receivables [Abstract] | ||
Sale of trade receivables | $ 473 | $ 27 |
Proceeds from sale of bank notes | 160 | $ 105 |
Guaranteed bank notes pledged as collateral | $ 18 |
Inventories-Net - Summary of In
Inventories-Net - Summary of Inventories (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Inventory Combining Work In Process And Raw Materials Alternative Gross [Abstract] | ||
Raw materials | $ 160 | $ 142 |
Work in process | 19 | 18 |
Finished products | 97 | 85 |
Inventory, gross | 276 | 245 |
Less—Reserves | (41) | (25) |
Inventories | $ 235 | $ 220 |
Other Current Assets - Schedule
Other Current Assets - Schedule of Other Current Assets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 62 | $ 12 |
Taxes receivable | 22 | 46 |
Advanced discounts to customers, current | 10 | 10 |
Customer reimbursable engineering | 13 | 12 |
Other | 3 | 5 |
Other current assets | $ 110 | $ 85 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Other Assets [Line Items] | ||
Advanced discounts to customers, non-current | $ 70 | $ 62 |
Operating right-of-use assets (Note 17) | $ 36 | $ 35 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Other | $ 29 | $ 11 |
Total | $ 135 | $ 108 |
Property, Plant and Equipment_3
Property, Plant and Equipment - Net - Schedule of Property, Plant and Equipment - Net (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,451 | $ 1,301 |
Less—Accumulated depreciation and amortization | (946) | (830) |
Total property, plant and equipment-net | 505 | 471 |
Machinery and Equipment | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 711 | 639 |
Tooling | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 390 | 324 |
Buildings and improvements | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 153 | 141 |
Construction in progress | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 86 | 100 |
Software | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 68 | 57 |
Land and improvements | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | 17 | 16 |
Others | ||
Property Plant And Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 26 | $ 24 |
Property, Plant and Equipment_4
Property, Plant and Equipment - Net - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property Plant And Equipment [Abstract] | |||
Depreciation and amortization expense | $ 86 | $ 73 | $ 72 |
Goodwill - Schedule of Carrying
Goodwill - Schedule of Carrying Amount of Goodwill (Details) $ in Millions | Dec. 31, 2020USD ($) |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Beginning balance | $ 193 |
Ending balance | $ 193 |
Accrued Liabilities - Summary o
Accrued Liabilities - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Accrued Liabilities Current [Abstract] | ||
Customer pricing reserve | $ 82 | $ 90 |
Compensation, benefit and other employee related | 62 | 64 |
Repositioning | 7 | 4 |
Product warranties and performance guarantees | 14 | 29 |
Taxes | 37 | 33 |
Advanced discounts from suppliers, current | 5 | 19 |
Customer advances and deferred income | 8 | 12 |
Accrued interest | 5 | |
Short-term lease liability (Note 17) | 5 | 8 |
Other (primarily operating expenses) | 28 | 46 |
Accrued Liabilities | $ 248 | $ 310 |
Accrued Liabilities - Summary_2
Accrued Liabilities - Summary of Expenses Related to the Repositioning Accruals (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | $ 4 | $ 15 |
Charges | 10 | 2 |
Usage—cash | (7) | (10) |
Adjustments | (2) | |
Foreign currency translation | (1) | |
Balance at end of period | 7 | 4 |
Severance Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | 3 | 13 |
Charges | 10 | 2 |
Usage—cash | (7) | (8) |
Adjustments | 1 | (3) |
Foreign currency translation | (1) | |
Balance at end of period | 7 | 3 |
Exit Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | 1 | 2 |
Usage—cash | 0 | (2) |
Adjustments | $ (1) | 1 |
Balance at end of period | $ 1 |
Long-term Debt and Credit Agr_3
Long-term Debt and Credit Agreements - Additional Information (Details) | Oct. 22, 2020USD ($) | Oct. 09, 2020USD ($) | Oct. 06, 2020 | Sep. 04, 2020 | Jun. 12, 2020USD ($) | Sep. 27, 2018USD ($) | Dec. 31, 2020USD ($) | Jun. 12, 2020EUR (€) | Dec. 31, 2019USD ($) | Sep. 27, 2018EUR (€) |
Debt Instrument [Line Items] | ||||||||||
Payment of debt issuance costs | $ 37,000,000 | |||||||||
Write-off of pre-petition unamortized debt issuance costs | $ 6,000,000 | |||||||||
Line of credit, interest rate terms | Following commencement of the Chapter 11 Cases, the contractual non-default rate of interest that is applicable under Senior Secured Credit Facilities is either (a) in the case of dollar denominated borrowings, base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”), (b) in the case of borrowings denominated in certain permitted foreign currencies other than dollars or euros, an adjusted LIBOR rate (“LIBOR”) (which shall not be less than zero), or (c) in the case of borrowings denominated in euros, an adjusted EURIBOR rate (“EURIBOR”) (which shall not be less than zero), in each case, plus an applicable margin. | |||||||||
Senior Secured Credit Facilities | Federal Funds Effective Rate and Overnight Bank Funding Rate | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument applicable margin rate | 0.50% | |||||||||
Senior Secured Credit Facilities | LIBOR Loans | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument applicable margin rate | 1.00% | |||||||||
Term B Facility | Senior Secured Credit Facilities | ABR Loans | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument applicable margin rate | 2.50% | |||||||||
Term B Facility | Senior Secured Credit Facilities | EURIBOR Loans | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument applicable margin rate | 3.75% | |||||||||
Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Payment of debt issuance costs | 6,000,000 | |||||||||
5.125% Senior Notes Due 2026 | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Senior notes | $ 410,000,000 | $ 429,000,000 | $ 387,000,000 | € 350,000,000 | ||||||
Debt instrument, annual fixed interest rate | 5.125% | 5.125% | ||||||||
Debt instrument maturity date | Oct. 15, 2026 | |||||||||
Credit Agreement | Term B Facility | Senior Secured Credit Facilities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit, term | 7 years | |||||||||
Line of credit, maximum borrowing capacity | $ 425,000,000 | € 375,000,000 | ||||||||
Credit Agreement | Term A Facility | Senior Secured Credit Facilities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit, term | 5 years | |||||||||
Line of credit, maximum borrowing capacity | € | 330,000,000 | |||||||||
Credit Agreement | Revolving Credit Facility | Senior Secured Credit Facilities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Line of credit, term | 5 years | |||||||||
Line of credit, maximum borrowing capacity | € | € 430,000,000 | |||||||||
2020 Amended Credit Agreement | Senior Secured Credit Facilities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument applicable margin rate | 0.25% | |||||||||
2020 Amended Credit Agreement | Term B Facility | Senior Secured Credit Facilities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument applicable margin rate | 0.75% | |||||||||
2020 Amended Credit Agreement | Term A Facility | Senior Secured Credit Facilities | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument applicable margin rate | 0.25% | |||||||||
DIP Agent and DIP Lenders | DIP Term Loan Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debtor-in-possession, date of approval by Bankruptcy court | Oct. 6, 2020 | |||||||||
Principal amount to be funded | $ 100,000,000 | $ 100,000,000 | ||||||||
Debtor-in-possession financing maturity date | Mar. 31, 2021 | |||||||||
Debtor-in-possession financing extensions description | The maturity date of the DIP Term Loan Facility is the earlier to occur of (a) March 31, 2021 (the “Scheduled Maturity Date”); provided, however, that upon the Company’s written request such Scheduled Maturity Date can be extended by three separate one-month extensions subject to (i) the payment of an extension fee to the Lenders equal to 0.50% of the principal amount of the Loans outstanding at the time of such extension, (ii) no default or Event of Default (as defined in the DIP Credit Agreement) existing at the time of such extension and (iii) accuracy of the representations and warranties in all material respects at the time of such extension and after giving effect thereto; and (b) the effective date of a plan of reorganization; and certain other events under the DIP Credit Agreement. | |||||||||
Principal amount of loans outstanding percentage | 0.50% | |||||||||
Debtor-in-possession interest rate description | The outstanding principal amount under the DIP Term Loan Facility will bear interest at a rate equal to (x) prior to March 31, 2021, LIBOR (subject to a 1.00% LIBOR floor) plus 4.50% per annum and (y) following March 31, 2021, if the Scheduled Maturity Date has been extended at such time, LIBOR (subject to a 1.00% LIBOR floor) plus 5.50% per annum, in each case, payable every 30 days in arrears. On the Closing Date, the Company paid 1.00% in commitment fees on the total commitment plus 2.00% in fees in the form of original issue discount on the initial $100 million borrowing. On the Delayed Draw Borrowing Date, date the Company paid 2.00% in fees in the form of original issue discount on the $100 million delayed draw loan. Upon an event of default, all outstanding amounts under the DIP Credit Agreement will bear interest at a rate equal to the applicable interest rate plus an additional 2.00% per annum and be payable on demand. | |||||||||
Debtor-in-possession financing,floor rate | 1.00% | |||||||||
Debtor-in-possession financing,LIBOR rate | 4.50% | |||||||||
Debtor-in-possession extended financing LIBOR rate | 5.50% | |||||||||
Debtor-in-possession financing commitment fees percentage | 1.00% | |||||||||
Debtor-in-possession financing commitment fees issue discount on initial borrowing percentage | 2.00% | |||||||||
Initial draw of principal amount borrowed | $ 100,000,000 | |||||||||
Debtor-in-possession financing, commitment fees issue discount on delayed draw loan percentage | 2.00% | |||||||||
Delayed draw of principal amount borrowed | $ 100,000,000 | |||||||||
Debtor-in-possession financing,additional interest rate | 2.00% | |||||||||
DIP Agent and DIP Lenders | DIP Term Loan Facility | Maximum | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount to be funded | $ 200,000,000 |
Long-term Debt and Credit Agr_4
Long-term Debt and Credit Agreements - Schedule of Principal Amounts Outstanding on Debtor-In-Possession Financing (Details) $ in Millions | Dec. 31, 2020USD ($) |
Debt Disclosure [Abstract] | |
Debtor-in-possession Term Loan | $ 200 |
Long-term Debt and Credit Agr_5
Long-term Debt and Credit Agreements - Schedule of Principal Amounts Outstanding on Senior Secured Credit Facilities and Senior Notes (Details) € in Millions, $ in Millions | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 27, 2018USD ($) | Sep. 27, 2018EUR (€) |
Liabilities subject to compromise | ||||
Total debt, prior to reclassification to Liabilities subject to compromise | $ 1,881 | $ 1,413 | ||
Less: current portion | (4) | |||
Less: Amounts reclassified to Liabilities subject to compromise | (429) | |||
Total long-term debt | 1,452 | 1,409 | ||
5.125% Senior Notes Due 2026 | ||||
Liabilities subject to compromise | ||||
Senior notes | 429 | 387 | $ 410 | € 350 |
Credit Agreement | Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Total consolidated Secured Debt | 1,452 | 1,026 | ||
Credit Agreement | Term A and B Facility | Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Total consolidated Secured Debt | 1,082 | $ 1,026 | ||
Credit Agreement | Revolving Credit Facility | Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Total consolidated Secured Debt | $ 370 |
Long-term Debt and Credit Agr_6
Long-term Debt and Credit Agreements - Schedule of Contractual Maturities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Disclosure [Abstract] | ||
2021 | $ 4 | |
2022 | 70 | |
2023 | 247 | |
2024 | 4 | |
2025 | 777 | |
Thereafter | 431 | |
Principal amount | 1,533 | |
Less: current portion | $ (4) | |
Debt instrument, face amount | $ 1,533 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2018 | |
Lessee Lease Description [Line Items] | ||
Operating lease, option to extend | true | |
Operating lease, option to extend, description | some of which include options to extend the leases for up to two years | |
Operating lease, option to terminate | true | |
Operating lease, option to terminate, description | some of which include options to terminate the leases within the year | |
Rent expense | $ 14 | |
Maximum | ||
Lessee Lease Description [Line Items] | ||
Operating lease, remaining lease terms | 10 years | |
Operating lease, options to extend, years | 2 years |
Leases - Summary of Components
Leases - Summary of Components of Lease Expense (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 15 | $ 14 |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating cash outflows from operating leases | $ 13 | $ 12 |
Right-of-use assets obtained in exchange for lease obligations, operating leases | $ 7 | $ 12 |
Leases - Summary of Supplemen_2
Leases - Summary of Supplemental Balance Sheet Information Related to Operating Leases (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Other assets | $ 36 | $ 35 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Accrued liabilities | $ 5 | $ 8 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | us-gaap:AccruedLiabilitiesCurrent |
Other liabilities | $ 15 | $ 28 |
Operating Lease Liability Noncurrent Statement Of Financial Position [Extensible List] | us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OtherLiabilitiesNoncurrent |
Liabilities subject to compromise | $ 19 | |
Weighted-average lease term (in years) | 5 years 1 month 20 days | 6 years 3 months 18 days |
Weighted-average discount rate | 6.16% | 6.36% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Millions | Dec. 31, 2020USD ($) |
Leases [Abstract] | |
2021 | $ 12 |
2022 | 10 |
2023 | 7 |
2024 | 5 |
2025 | 4 |
Thereafter | 8 |
Total lease payments | 46 |
Less imputed interest | (7) |
Operating lease, liabilities | $ 39 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | gtx:AccruedAndOtherLiabilitiesMember |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measures - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||
Derivative, aggregate gross notional amount | $ 19,000,000 | $ 1,820,000,000 |
Interest Rate Swap Contract | ||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||
Derivative, inception date | Jun. 7, 2019 | |
Cross-currency Swap Contract | ||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||
Derivative, inception date | Sep. 27, 2018 | |
Floating cross-currency swap contract maturity date | Sep. 27, 2025 | |
Cross-currency Swap Contract | Non-operating Expense (Income) | ||
Derivative Instruments And Hedging Activities Disclosures [Line Items] | ||
Gains on derivative instrument | $ 20,000,000 | $ 1,000,000 |
Financial Instruments and Fai_4
Financial Instruments and Fair Value Measures - Summary of Financial Assets and Liabilities Accounted for at Fair Value on Recurring Basis (Details) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | $ 19,000,000 | $ 1,820,000,000 |
Fair Value Measurements Recurring | Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 19,000,000 | 1,820,000,000 |
Fair Value, Assets | 7,000,000 | |
Fair Value, Liabilities | 6,000,000 | |
Fair Value Measurements Recurring | Level 2 | Designated as Hedging | Forward Currency Exchange Contracts | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 392,000,000 | |
Fair Value, Assets | 5,000,000 | |
Fair Value, Liabilities | 1,000,000 | |
Fair Value Measurements Recurring | Level 2 | Undesignated as Hedging | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 19,000,000 | 1,428,000,000 |
Fair Value, Assets | 2,000,000 | |
Fair Value, Liabilities | 5,000,000 | |
Fair Value Measurements Recurring | Level 2 | Undesignated as Hedging | Forward Currency Exchange Contracts | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | $ 19,000,000 | 447,000,000 |
Fair Value, Assets | 2,000,000 | |
Fair Value, Liabilities | 3,000,000 | |
Fair Value Measurements Recurring | Level 2 | Undesignated as Hedging | Cross-currency Swap | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 420,000,000 | |
Fair Value, Liabilities | 1,000,000 | |
Fair Value Measurements Recurring | Level 2 | Undesignated as Hedging | Interest Rate Swap | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | 561,000,000 | |
Fair Value, Liabilities | $ 1,000,000 |
Financial Instruments and Fai_5
Financial Instruments and Fair Value Measures - Summary of Financial Assets and Liabilities Not Carried at Fair Value (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | $ 3,035 | $ 4,408 |
Carrying Value | Terms Loans A and B | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 1,082 | |
Carrying Value | Debtor In Possession Financing | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 200 | |
Carrying Value | 5.125% Senior Notes Due 2026 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 429 | |
Fair Value | Terms Loans A and B | Level 2 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 1,083 | |
Fair Value | Debtor In Possession Financing | Level 2 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 200 | |
Fair Value | 5.125% Senior Notes Due 2026 | Level 2 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | $ 429 |
Other Liabilities - Schedule of
Other Liabilities - Schedule of Other Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Other Liabilities Disclosure [Abstract] | ||
Pension and other employee related | $ 14 | $ 94 |
Advanced discounts from suppliers | 11 | 46 |
Income taxes | 45 | 79 |
Long-term lease liability (Note 17) | 15 | 28 |
Undesignated cross-currency and interest rate swaps (Note 18) | 22 | 2 |
Other | 7 | 25 |
Other Liabilities | $ 114 | $ 274 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |||
Foreign exchange translation adjustment, pre-tax | $ (212) | $ 59 | $ (198) |
Pension adjustments, pre-tax | (17) | (18) | (2) |
Changes in fair value of effective cash flow hedges, pre-tax | (8) | 2 | 37 |
Other Comprehensive Income (Loss),pre-tax | (237) | 43 | (163) |
Foreign exchange translation adjustment, tax | (22) | 8 | |
Pension adjustments, tax | (1) | 4 | |
Changes in fair value of effective cash flow hedges, tax | 1 | 2 | (2) |
Other Comprehensive Income (Loss), tax | (22) | 14 | (2) |
Foreign exchange translation adjustment, after-tax | (234) | 67 | (198) |
Pension adjustments, after-tax | (18) | (14) | (2) |
Changes in fair value of effective cash flow hedges, after-tax | (7) | 4 | 35 |
Total other comprehensive (loss) income, net of tax | $ (259) | $ 57 | $ (165) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning balance | $ (2,133) | $ (2,517) | $ (2,195) |
Total other comprehensive (loss) income, net of tax | (259) | 57 | (165) |
Ending balance | (2,308) | (2,133) | (2,517) |
Foreign Exchange Translation Adjustment | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning balance | 153 | 86 | |
Other comprehensive income (loss) before reclassifications | (234) | 67 | |
Total other comprehensive (loss) income, net of tax | (234) | 67 | |
Ending balance | (81) | 153 | 86 |
Change in Fair Value of Effective Cash Flow Hedges | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning balance | 4 | 0 | |
Other comprehensive income (loss) before reclassifications | (3) | 27 | |
Amounts reclassified from accumulated other comprehensive income | (4) | (23) | |
Total other comprehensive (loss) income, net of tax | (7) | 4 | |
Ending balance | (3) | 4 | 0 |
Pension Adjustments | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning balance | (27) | (13) | |
Other comprehensive income (loss) before reclassifications | (29) | (27) | |
Amounts reclassified from accumulated other comprehensive income | 11 | 13 | |
Total other comprehensive (loss) income, net of tax | (18) | (14) | |
Ending balance | (45) | (27) | (13) |
Total Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income Loss [Line Items] | |||
Beginning balance | 130 | 73 | 238 |
Other comprehensive income (loss) before reclassifications | (266) | 67 | |
Amounts reclassified from accumulated other comprehensive income | 7 | (10) | |
Total other comprehensive (loss) income, net of tax | (259) | 57 | (165) |
Ending balance | $ (129) | $ 130 | $ 73 |
Accumulated Other Comprehensi_5
Accumulated Other Comprehensive Income (Loss) - Reclassification Out of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Defined Benefit Plan Disclosure [Line Items] | |||||||||||
Net sales | $ 1,008 | $ 804 | $ 477 | $ 745 | $ 830 | $ 781 | $ 802 | $ 835 | $ 3,034 | $ 3,248 | $ 3,375 |
Cost of goods sold | 2,478 | 2,537 | 2,599 | ||||||||
Selling, general and administrative expenses | 277 | 249 | 249 | ||||||||
Non-operating (income) expense | 38 | (8) | 8 | ||||||||
Income before taxes | 119 | 346 | 396 | ||||||||
Tax (benefit) expense | 39 | 33 | (810) | ||||||||
Net income | $ 26 | $ 11 | $ (9) | $ 52 | $ 136 | $ 38 | $ 66 | $ 73 | 80 | 313 | $ 1,206 |
Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||
Tax (benefit) expense | (2) | 2 | |||||||||
Net income | 7 | (10) | |||||||||
Reclassification out of Accumulated Other Comprehensive Income | Accumulated Defined Benefit Plans Adjustment, Net Gain (Loss) Attributable to Parent | |||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||
Non-operating (income) expense | 13 | 13 | |||||||||
Income before taxes | 13 | 13 | |||||||||
Reclassification out of Accumulated Other Comprehensive Income | Change in Fair Value of Effective Cash Flow Hedges | |||||||||||
Defined Benefit Plan Disclosure [Line Items] | |||||||||||
Cost of goods sold | (4) | (25) | |||||||||
Income before taxes | $ (4) | $ (25) |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Sep. 14, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock compensation expense | $ 10 | $ 18 | $ 21 | ||
Honeywell International Inc | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock-based compensation expense | 16 | ||||
Honeywell International Inc | Employees | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock-based compensation expense | 10 | ||||
Honeywell International Inc | Shared Employees | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock-based compensation expense | $ 6 | ||||
Stock Options | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock options granted | 0 | ||||
Stock-based compensation expense | 1 | 1 | |||
Restricted Stock Units | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Total unrecognized compensation cost | $ 9 | ||||
Weighted-average recognition period | 1 year 6 months | ||||
Stock-based compensation expense | $ 9 | 15 | $ 5 | ||
Restricted Stock Units | Maximum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 4 years | ||||
Restricted Stock Units | Minimum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Performance Stock Units | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Stock units granted | 0 | ||||
Stock-based compensation expense | $ 2 | ||||
Continuity Awards | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Weighted-average recognition period | 6 months | ||||
Total unrecognized compensation cost | $ 5 | ||||
Stock units granted | 43 | ||||
Stock-based compensation expense | $ 11 | $ 7 | |||
Stock compensation expense | $ 9 | ||||
Share-based compensation expected to be paid in 2021 | 2 | ||||
Incremental compensation cost | $ 5 | ||||
Share-based compensation award service period | 1 year | ||||
Stock Incentive Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Common stock available for future issuance | 5,641,452 | ||||
Stock Incentive Plan | Maximum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Aggregate number of shares of common stock that may be issued | 10,000,000 | ||||
Stock Incentive Plan | Stock Options | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Weighted-average recognition period | 2 years 2 months 12 days | ||||
Stock options granted | 0 | 483,408 | |||
Options exercised | 0 | ||||
Aggregate intrinsic value of outstanding under options | $ 0 | ||||
Aggregate intrinsic value of exercisable shares under options | 0 | ||||
Total unrecognized compensation cost | $ 2 | ||||
Weighted average grant date fair value of options granted | $ 16.17 | ||||
Stock Incentive Plan | Stock Options | Maximum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Aggregate number of shares of common stock that may be issued | 5,000,000 | ||||
Stock Incentive Plan | Performance Stock Units | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 36 months | ||||
Total unrecognized compensation cost | $ 1 | ||||
Weighted-average recognition period | 1 year | ||||
Weighted average grant date fair value of options granted | $ 8.36 | ||||
Stock units granted | 1,021,069 | 379,090 | |||
Director Equity Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Common stock available for future issuance | 344,860 | ||||
Director Equity Plan | Maximum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Aggregate number of shares of common stock that may be issued | 400,000 | ||||
2019 PSUs | Performance Stock Units | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Vesting rights percentage depends on performance measures are related to organic revenue growth | 20.00% | ||||
Vesting rights percentage depends on performance measures are related to adjusted EBITDA | 40.00% | ||||
Vesting rights percentage depends on performance measures are related to leveraged cash flows | 40.00% | ||||
2020 PSUs | Performance Stock Units | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Vesting period | 3 years | ||||
Vesting rights percentage depends on performance measures are related to organic revenue growth | 30.00% | ||||
Vesting rights percentage depends on performance measures are related to adjusted free cash flow | 30.00% | ||||
Vesting rights percentage depends on performance measures are related to total shareholder return | 40.00% | ||||
Percentage of target level to grant performance stock units subject to shareholder return | 250.00% | ||||
2020 PSUs | Performance Stock Units | Maximum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Percentage of target level to grant performance stock units | 200.00% | ||||
2020 PSUs | Performance Stock Units | Minimum | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Percentage of target level to grant performance stock units | 0.00% |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Restricted Stock Activity Related to Stock Incentive Plan and Director Equity Plan (Details) - Restricted Stock Units - Stock Incentive Plan and Director Equity Plan - $ / shares | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Restricted Stock Units | ||
Non-vested, Beginning Balance | 2,794,640 | 3,369,622 |
Granted | 878,904 | 629,037 |
Vested | (1,185,121) | (967,518) |
Forfeited | (949,454) | (236,501) |
Non-vested Ending Balance | 1,538,969 | 2,794,640 |
Weighted Average Grant Date Fair ValuePer Share | ||
Non-vested, Beginning Balance | $ 12.62 | $ 10.12 |
Granted | 6.70 | 15.36 |
Vested | 7.83 | 5.26 |
Forfeited | 8.11 | 14.47 |
Non-vested, Ending Balance | $ 13.11 | $ 12.62 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Impact to Consolidated and Combined Statement of Operations from RSUs (Details) - Restricted Stock Units - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Compensation expense | $ 9 | $ 15 | $ 5 |
Future income tax benefit recognized | $ 3 | $ 1 |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Impact to Consolidated and Combined Statement of Operations from Stock Options (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Stock Options | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Compensation expense | $ 1 | $ 1 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Fair Value Assumption of Stock Options Using Black Scholes Pricing Model (Details) | 12 Months Ended |
Dec. 31, 2020$ / shares | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Risk-free interest rate | 2.60% |
Expected term (years) | 6 years 3 months |
Volatility | 42.08% |
Dividend yield | 0.00% |
Fair value per stock option | $ 7.28 |
Stock Based Compensation - Summ
Stock Based Compensation - Summary of Stock Option Activity under Stock Incentive Plan (Details) - Stock Options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Stock Options | |||
Granted | 0 | ||
Stock Incentive Plan | |||
Number of Stock Options | |||
Number of Stock Options,Beginning Balance | 449,033 | ||
Granted | 0 | 483,408 | |
Exercised | 0 | ||
Forfeited | (37,482) | (34,375) | |
Expired | (8,034) | ||
Number of Stock Options,Ending Balance | 403,517 | 449,033 | |
Number of Stock Options,Exercisable | 102,420 | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price, Beginning Balance | $ 16.17 | ||
Granted | $ 16.17 | ||
Forfeited | 16.17 | 16.17 | |
Expired | 16.17 | ||
Weighted Average Exercise Price, Ending Balance | $ 16.17 | $ 16.17 | |
Weighted average remaining contractual term | 8 years 3 months 3 days | 9 years 3 months 3 days | |
Aggregate intrinsic value | $ 0 | ||
Aggregate intrinsic value, Exercisable | $ 0 |
Stock-Based Compensation - Su_4
Stock-Based Compensation - Summary of Performance Stock Units Related to Stock Incentive Plan (Details) - Performance Stock Units - $ / shares | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Performance Stock Unit | |||
Granted | 0 | ||
Stock Incentive Plan | |||
Number of Performance Stock Unit | |||
Non-vested, Beginning Balance | 331,321 | ||
Granted | 1,021,069 | 379,090 | |
Forfeited | (1,038,279) | (47,769) | |
Non-vested Ending Balance | 314,111 | 331,321 | |
Weighted Average Grant Date Fair ValuePer Share | |||
Non-vested, Beginning Balance | $ 16.17 | ||
Granted | 8.36 | $ 16.17 | |
Forfeited | 8.48 | 16.17 | |
Non-vested, Ending Balance | $ 16.17 | $ 16.17 |
Stock-Based Compensation - Su_5
Stock-Based Compensation - Summary of Impact to Consolidated and Combined Statement of Operations from PSUs (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Performance Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Compensation expense | $ 2 |
Stock-Based Compensation - Su_6
Stock-Based Compensation - Summary of Continuity Award Activity (Details) - Continuity Awards | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Number of Performance Stock Unit | |
Granted | shares | 43 |
Non-vested Ending Balance | shares | 43 |
Weighted Average Grant Date Fair Value Per Award | |
Granted | $ / shares | $ 257,536 |
Non-vested, Ending Balance | $ / shares | $ 257,536 |
Stock-Based Compensation - Su_7
Stock-Based Compensation - Summary of Information about Income Statement Impact from Continuity Awards (Details) - Continuity Awards - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Jun. 30, 2020 | Dec. 31, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Compensation expense | $ 11 | $ 7 |
Future income tax benefit recognized | $ 1 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Dec. 31, 2020 | Dec. 31, 2019 | Oct. 01, 2018 | |
Shares of common stock distributed | 76,229,578 | 74,911,139 | ||
Basic and diluted shares | 74,070,852 | |||
Antidilutive shares excluded from computation of diluted EPS | 428,690 | 483,408 | ||
Honeywell International Inc | Exit Costs | ||||
Shares of common stock distributed | 74,070,852 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Basic | |||||||||||
Net income | $ 26 | $ 11 | $ (9) | $ 52 | $ 136 | $ 38 | $ 66 | $ 73 | $ 80 | $ 313 | $ 1,206 |
Weighted average common shares outstanding – Basic | 75,543,461 | 74,602,868 | 74,059,240 | ||||||||
EPS – Basic | $ 0.34 | $ 0.15 | $ (0.12) | $ 0.69 | $ 1.82 | $ 0.51 | $ 0.88 | $ 0.98 | $ 1.06 | $ 4.20 | $ 16.28 |
Diluted | |||||||||||
Net income | $ 26 | $ 11 | $ (9) | $ 52 | $ 136 | $ 38 | $ 66 | $ 73 | $ 80 | $ 313 | $ 1,206 |
Weighted average common shares outstanding – Basic | 75,543,461 | 74,602,868 | 74,059,240 | ||||||||
Dilutive effect of unvested RSUs | 557,048 | 1,331,505 | 342,908 | ||||||||
Weighted average common shares outstanding – Diluted | 76,100,509 | 75,934,373 | 74,402,148 | ||||||||
EPS – Diluted | $ 0.34 | $ 0.14 | $ (0.12) | $ 0.68 | $ 1.79 | $ 0.50 | $ 0.86 | $ 0.97 | $ 1.05 | $ 4.12 | $ 16.21 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | Dec. 18, 2020USD ($) | Oct. 01, 2018USD ($)Installment | Sep. 12, 2018USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2020USD ($)Claim | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2022USD ($) | Jan. 22, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2017USD ($) |
Loss Contingencies [Line Items] | ||||||||||||
Loss contingency payable | $ 1,000,000 | $ 1,000,000 | $ 1,712,000,000 | |||||||||
Payment made in connection with the Indemnification and Reimbursement Agreement | 155,000,000 | |||||||||||
Asbestos related liabilities | $ 0 | $ 0 | ||||||||||
Proofs of claim filed | Claim | 915 | |||||||||||
Make-whole premium claim amount | $ 0 | |||||||||||
Brazilian Tax Authorities | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Estimated amount of contingency including penalties and interest | $ 29,000,000 | |||||||||||
Subsequent Event | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Make-whole premium claim amount | $ 15,000,000 | |||||||||||
Honeywell Indemnity Agreement | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Loss contingency payable | $ 175,000,000 | |||||||||||
Minimum amount agreed to maintain for termination | 25,000,000 | |||||||||||
Agreement termination description | The Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. | |||||||||||
Indemnification and Reimbursement Agreement | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Minimum amount agreed to maintain for termination | $ 25,000,000 | |||||||||||
Agreement termination description | The Honeywell Indemnity Agreement provides that the agreement will terminate upon the earlier of (x) December 31, 2048 or (y) December 31st of the third consecutive year during which certain amounts owed to Honeywell during each such year were less than $25 million as converted into Euros in accordance with the terms of the agreement. | |||||||||||
Honeywell International Inc | PSA and The Transaction, The Amended Plan | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Litigation cash payment at emergence | $ 375,000,000 | |||||||||||
Option for partial payment period at emergence | 18 months | |||||||||||
Honeywell International Inc | PSA and The Transaction, The Amended Plan | Series B Preferred Stock | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Preferred stock issued payable annually in 2023 | $ 100,000,000 | |||||||||||
Preferred stock issued payable annually in 2024 | 100,000,000 | |||||||||||
Preferred stock issued payable annually in 2025 | 100,000,000 | |||||||||||
Preferred stock issued payable annually in 2026 | 100,000,000 | |||||||||||
Preferred stock issued payable annually in 2027 | 100,000,000 | |||||||||||
Preferred stock issued payable annually in 2028 | 100,000,000 | |||||||||||
Preferred stock issued payable annually in 2029 | 100,000,000 | |||||||||||
Preferred stock issued payable annually in 2030 | 100,000,000 | |||||||||||
Option to prepay preferred stock at call price | $ 584,000,000 | |||||||||||
Discount rate | 7.25% | |||||||||||
Option for partial payment of preferred stock reducing present value | $ 400,000,000 | |||||||||||
Honeywell International Inc | PSA and The Transaction, The Amended Plan | Series B Preferred Stock | Scenario Forecast | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Preferred stock issued payable in instalments | $ 35,000,000 | |||||||||||
Honeywell International Inc | Tax Matters Agreement | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Obligation payment connection with mandatory transition tax claim | $ 240,000,000 | $ 273,000,000 | ||||||||||
Number of annual installments | Installment | 5 | |||||||||||
Mandatory transition tax rate first installment | 8.00% | |||||||||||
Mandatory transition tax rate second installment | 8.00% | |||||||||||
Mandatory transition tax rate third installment | 15.00% | |||||||||||
Mandatory transition tax rate fourth installment | 20.00% | |||||||||||
Mandatory transition tax rate fifth installment | 25.00% | |||||||||||
Payments related Tax Matters Agreement | $ 19,000,000 | $ 18,000,000 | ||||||||||
Honeywell International Inc | Minimum | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Loss contingency, owes | $ 1,900,000,000 | |||||||||||
Honeywell International Inc | Honeywell Indemnity Agreement | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Percentage of net insurance receipts | 90.00% | |||||||||||
Payment made in connection with the Indemnification and Reimbursement Agreement | $ 35,000,000 | |||||||||||
Description of indemnification agreement | As of the Spin-Off date of October 1, 2018, Garrett ASASCO is obligated to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of this Honeywell Indemnity Agreement, Garrett ASASCO is responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Euro-to-U.S. dollar exchange rate determined by Honeywell as of a date within two business days prior to the date of the Distribution (1.16977 USD = 1 EUR) equivalent of $175 million in respect of such liabilities arising in any given calendar year. | |||||||||||
Honeywell International Inc | Indemnification and Reimbursement Agreement | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Percentage of net insurance receipts | 90.00% | |||||||||||
Bendix | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Loss contingency payable | $ 1,703,000,000 | |||||||||||
Payment made in connection with the Indemnification and Reimbursement Agreement | $ 151,000,000 | |||||||||||
Bendix | Honeywell International Inc | Honeywell Indemnity Agreement | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% | |||||||||||
Bendix | Honeywell International Inc | Indemnification and Reimbursement Agreement | ||||||||||||
Loss Contingencies [Line Items] | ||||||||||||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Obligation Payable to Honeywell (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Loss Contingencies [Line Items] | ||
Current | $ 69 | |
Non-current | 1,282 | |
Exit Costs | Honeywell International Inc | ||
Loss Contingencies [Line Items] | ||
Beginning of year | $ 1,351 | 1,526 |
Accrual for update to estimated liability | (15) | |
Legal fees expensed | 41 | 44 |
Payments to Honeywell | (35) | (171) |
Currency translation adjustment | 125 | (33) |
End of year | 1,482 | 1,351 |
Current | 42 | 69 |
Non-current | 1,440 | 1,282 |
Total | 1,482 | 1,351 |
Exit Costs | Honeywell International Inc | Asbestos and Environmental | ||
Loss Contingencies [Line Items] | ||
Beginning of year | 1,090 | 1,244 |
Accrual for update to estimated liability | (18) | |
Legal fees expensed | 41 | 44 |
Payments to Honeywell | (35) | (153) |
Currency translation adjustment | 100 | (27) |
End of year | 1,196 | 1,090 |
Current | 2 | 51 |
Non-current | 1,194 | 1,039 |
Total | 1,196 | 1,090 |
Exit Costs | Honeywell International Inc | Tax Matters Agreement | ||
Loss Contingencies [Line Items] | ||
Beginning of year | 261 | 282 |
Accrual for update to estimated liability | 3 | |
Payments to Honeywell | (18) | |
Currency translation adjustment | 25 | (6) |
End of year | 286 | 261 |
Current | 40 | 18 |
Non-current | 246 | 243 |
Total | $ 286 | $ 261 |
Commitments and Contingencies_3
Commitments and Contingencies - Summary of Asbestos Related Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Loss Contingencies [Line Items] | ||
Beginning of year | $ 1 | $ 1,712 |
Accrual for update to estimated liabilities | 141 | |
Asbestos-related liability payments | (155) | |
Spin-Off related adjustments | (1,697) | |
Balance Sheet Reclassification | (1) | |
End of year | 1 | |
Bendix | ||
Loss Contingencies [Line Items] | ||
Beginning of year | 1,703 | |
Accrual for update to estimated liabilities | 141 | |
Asbestos-related liability payments | (151) | |
Spin-Off related adjustments | (1,693) | |
Other Asbestos Related Liabilities | ||
Loss Contingencies [Line Items] | ||
Beginning of year | 1 | 9 |
Asbestos-related liability payments | (4) | |
Spin-Off related adjustments | (4) | |
Balance Sheet Reclassification | $ (1) | |
End of year | $ 1 |
Commitments and Contingencies_4
Commitments and Contingencies - Summary of Insurance Recoveries for Asbestos Related Liabilities (Details) - Bendix $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Loss Contingencies [Line Items] | |
Beginning of year | $ 191 |
Probable insurance recoveries related to estimated liability | 10 |
Insurance receipts for asbestos-related liabilities | (24) |
Insurance receivables settlements and write-offs | 1 |
Spin-Off related adjustments | $ (178) |
Commitments and Contingencies_5
Commitments and Contingencies - Summary Information Concerning Our Recorded Obligations For Product Warranties and Product Performance Guarantees (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |||
Beginning of year | $ 29 | $ 32 | $ 28 |
Accruals for warranties/guarantees issued during the year | 19 | 31 | 33 |
Settlement of warranty/guarantee claims | (17) | (34) | (29) |
Less: Amounts reclassified to Liabilities subject to compromise | (16) | ||
End of year | $ 15 | $ 29 | $ 32 |
Defined Benefit Pension Plans -
Defined Benefit Pension Plans - Summary of Balance Sheet Impact, Including Benefit Obligations, Assets and Funded Status Associated with Significant Pension Plans (Details) - Pension Benefits - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
U.S. Plans | |||
Change in benefit obligation: | |||
Benefit obligation at beginning of the year | $ 206 | $ 178 | |
Service cost | 1 | 1 | |
Interest cost | 6 | 7 | |
Actuarial (gains) losses | 17 | 29 | |
Benefits paid | (10) | (9) | |
Benefit obligation at end of the year | 220 | 206 | $ 178 |
Change in plan assets: | |||
Fair value of plan assets at beginning of the year | 204 | 177 | |
Actual return on plan assets | 25 | 36 | |
Benefits paid | (10) | (9) | |
Fair value of plan assets at end of year | 219 | 204 | 177 |
Funded status of plans | (1) | (2) | |
Amounts recognized in Consolidated Balance Sheet consist of: | |||
Accrued pension liabilities - noncurrent | (2) | ||
Liabilities subject to compromise | (1) | ||
Net amount recognized | (1) | (2) | |
Non-U.S. Plans | |||
Change in benefit obligation: | |||
Benefit obligation at beginning of the year | 226 | 172 | |
Service cost | 9 | 6 | 4 |
Interest cost | 2 | 2 | 2 |
Plan amendments | (10) | 1 | |
Actuarial (gains) losses | 18 | 37 | |
Benefits paid | (3) | (6) | |
Settlements and curtailments | (10) | ||
Foreign currency translation | 22 | ||
Transfers | 2 | 10 | |
Other | 3 | 4 | |
Benefit obligation at end of the year | 259 | 226 | 172 |
Change in plan assets: | |||
Fair value of plan assets at beginning of the year | 150 | 123 | |
Actual return on plan assets | 8 | 14 | |
Employer contributions | 7 | 6 | |
Benefits paid | (3) | (6) | |
Settlements and curtailments | (10) | ||
Foreign currency translation | 15 | ||
Transfers | 2 | 10 | |
Other | 3 | 3 | |
Fair value of plan assets at end of year | 172 | 150 | $ 123 |
Funded status of plans | (87) | (76) | |
Amounts recognized in Consolidated Balance Sheet consist of: | |||
Accrued pension liabilities - noncurrent | (76) | ||
Liabilities subject to compromise | (87) | ||
Net amount recognized | $ (87) | $ (76) |
Defined Benefit Pension Plans_2
Defined Benefit Pension Plans - Summary of Balance Sheet Impact, Including Benefit Obligations, Assets and Funded Status Associated with Significant Pension Plans (Parenthetical) (Details) - Pension Benefits - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
U.S. Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Actuarial (gains) losses | $ 17 | $ 29 |
Non-U.S. Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Actuarial (gains) losses | 18 | $ 37 |
Total lump sum benefit payments | 10 | |
Unrecognized loss recognized as pension settlement expense | 1 | |
Ireland | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Assumption loss due to decrease of discount rates | 19 | |
Additional loss due to increased salary assumptions | 1 | |
Switzerland | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Assumption loss due to decrease of discount rates | 4 | |
Financial loss partially offset by experience gain | $ 6 |
Defined Benefit Pension Plans_3
Defined Benefit Pension Plans - Summary of Accumulated Other Comprehensive (Income) Loss Associated with Pension and Other Postretirement Benefit Plans (Details) - Pension Benefits - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
U.S. Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Prior service (credit) | $ (1) | $ (2) |
Net actuarial loss | 9 | 6 |
Net amount recognized | 8 | 4 |
Non-U.S. Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Prior service (credit) | (9) | 1 |
Net actuarial loss | 24 | 21 |
Net amount recognized | $ 15 | $ 22 |
Defined Benefit Pension Plans_4
Defined Benefit Pension Plans - Summary of Net Periodic Benefit (Income) Cost and Other Amounts Recognized in Other Comprehensive (Income) Loss (Details) - Pension Benefits - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
U.S. Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | $ 1 | $ 1 | |
Interest cost | 6 | 7 | |
Expected return on plan assets | (11) | (10) | |
Net periodic benefit (income) cost | (4) | (2) | |
Non-U.S. Plans | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Service cost | 9 | 6 | $ 4 |
Interest cost | 2 | 2 | 2 |
Expected return on plan assets | (6) | (4) | (3) |
Recognition of actuarial losses | 13 | 13 | 3 |
Settlements and curtailments | 1 | ||
Net periodic benefit (income) cost | $ 19 | $ 17 | $ 6 |
Defined Benefit Pension Plans_5
Defined Benefit Pension Plans - Summary of Net Periodic Benefit (Income) Cost and Other Amounts Recognized in Other Comprehensive (Income) Loss (Parenthetical) (Details) - Pension Benefits - Non-U.S. Plans $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |
Total lump sum benefit payments | $ 10 |
Unrecognized loss recognized as pension settlement expense | $ 1 |
Defined Benefit Pension Plans_6
Defined Benefit Pension Plans - Other Changes in Plan Assets and Benefits Obligations Recognized in Other Comprehensive (Income) Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Other Changes in Plan Assets and Benefits Obligations Recognized in Other Comprehensive (Income) Loss | |||
Total recognized in other comprehensive (income) loss | $ 17 | $ 18 | $ 2 |
Pension Benefits | U.S. Plans | |||
Other Changes in Plan Assets and Benefits Obligations Recognized in Other Comprehensive (Income) Loss | |||
Actuarial (gains) losses | 3 | 2 | |
Total recognized in other comprehensive (income) loss | 3 | 2 | |
Total recognized in net periodic benefit (income) cost and other comprehensive (income) loss | (1) | ||
Pension Benefits | Non-U.S. Plans | |||
Other Changes in Plan Assets and Benefits Obligations Recognized in Other Comprehensive (Income) Loss | |||
Actuarial (gains) losses | 15 | 27 | (4) |
Prior service (credit) | (10) | 1 | 1 |
Actuarial losses recognized during year | (14) | (13) | (3) |
Foreign currency translation | 2 | 1 | |
Total recognized in other comprehensive (income) loss | (7) | 16 | $ (6) |
Total recognized in net periodic benefit (income) cost and other comprehensive (income) loss | $ 12 | $ 33 |
Defined Benefit Pension Plans_7
Defined Benefit Pension Plans - Summary of Major Actuarial Assumptions Used in Determining Benefit Obligations and Net Periodic Benefit (Income) Cost (Details) - Pension Benefits | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
U.S. Plans | |||
Actuarial assumptions used to determine benefit obligations as of December 31: | |||
Discount rate | 2.65% | 3.30% | |
Expected annual rate of compensation increase | 3.57% | 3.74% | |
Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: | |||
Expected rate of return on plan assets | 5.49% | 5.80% | |
Expected annual rate of compensation increase | 3.74% | 3.74% | |
Non-U.S. Plans | |||
Actuarial assumptions used to determine benefit obligations as of December 31: | |||
Discount rate | 0.46% | 0.79% | 1.50% |
Expected annual rate of compensation increase | 1.82% | 1.77% | 1.77% |
Interest credited to accounts (2) | 1.50% | 1.50% | 1.50% |
Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: | |||
Expected rate of return on plan assets | 3.79% | 3.34% | 3.77% |
Expected annual rate of compensation increase | 1.77% | 1.77% | 1.77% |
Beneftit Obligation | U.S. Plans | |||
Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: | |||
Discount rate | 3.30% | 4.44% | |
Beneftit Obligation | Non-U.S. Plans | |||
Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: | |||
Discount rate | 0.79% | 1.65% | 1.50% |
Service Cost | U.S. Plans | |||
Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: | |||
Discount rate | 4.47% | 4.47% | |
Service Cost | Non-U.S. Plans | |||
Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: | |||
Discount rate | 1.20% | 1.20% | 1.50% |
Interest Cost | U.S. Plans | |||
Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: | |||
Discount rate | 4.06% | 4.06% | |
Interest Cost | Non-U.S. Plans | |||
Actuarial assumptions used to determine net periodic benefit (income) cost for years ended December 31: | |||
Discount rate | 1.74% | 1.74% | 1.50% |
Defined Benefit Pension Plans_8
Defined Benefit Pension Plans - Summary of Amounts Relate to Significant Pension Plans with Accumulated Benefit Obligations Exceeding Fair Value of plan Assets (Details) - Pension Benefits - Non-U.S. Plans - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
Defined Benefit Plan Disclosure [Line Items] | ||
Projected benefit obligation | $ 259 | $ 226 |
Accumulated benefit obligation | 239 | 212 |
Fair value of plan assets | $ 172 | $ 150 |
Defined Benefit Pension Plans_9
Defined Benefit Pension Plans - Additional Information (Details) - Pension Benefits $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Non-U.S. Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
Pension contribution | $ 7 |
Expected pension contribution in the next fiscal year | $ 7 |
Equity Securities | |
Defined Benefit Plan Disclosure [Line Items] | |
Target allocations percentage | 35.00% |
Defined Benefit Plan Fixed Income Securities And Cash | |
Defined Benefit Plan Disclosure [Line Items] | |
Target allocations percentage | 50.00% |
Real Estate Investments | |
Defined Benefit Plan Disclosure [Line Items] | |
Target allocations percentage | 10.00% |
High Yield Bonds | |
Defined Benefit Plan Disclosure [Line Items] | |
Target allocations percentage | 5.00% |
Fixed Income Securities | Minimum | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined Benefit Plan Plan Assets Maturity Period | 5 years |
Fixed Income Securities | Maximum | |
Defined Benefit Plan Disclosure [Line Items] | |
Defined Benefit Plan Plan Assets Maturity Period | 25 years |
Defined Benefit Pension Plan_10
Defined Benefit Pension Plans - Summary of Fair Values of Both U.S. and Non-U.S. Pension Plans Assets by Asset Category (Details) - Pension Benefits - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 |
U.S. Plans | Equity Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | $ 79 | $ 74 |
U.S. Plans | Short-Term Investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 2 | 2 |
U.S. Plans | Corporate Bond Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 117 | 106 |
U.S. Plans | Real Estate Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 21 | 22 |
U.S. Plans | Assets at Fair Value | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 219 | 204 |
Non-U.S. Plans | Cash and Cash Equivalents | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 5 | 2 |
Non-U.S. Plans | Equity Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 76 | 68 |
Non-U.S. Plans | Government Bond Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 35 | 30 |
Non-U.S. Plans | Corporate Bond Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 23 | 21 |
Non-U.S. Plans | Real Estate Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 20 | 18 |
Non-U.S. Plans | Other | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 13 | 11 |
Non-U.S. Plans | Assets at Fair Value | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 172 | 150 |
Level 1 | Non-U.S. Plans | Cash and Cash Equivalents | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 5 | 2 |
Level 1 | Non-U.S. Plans | Assets at Fair Value | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 5 | 2 |
Level 2 | U.S. Plans | Equity Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 79 | 74 |
Level 2 | U.S. Plans | Short-Term Investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 2 | 2 |
Level 2 | U.S. Plans | Corporate Bond Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 117 | 106 |
Level 2 | U.S. Plans | Real Estate Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 21 | 22 |
Level 2 | U.S. Plans | Assets at Fair Value | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 219 | 204 |
Level 2 | Non-U.S. Plans | Equity Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 76 | 68 |
Level 2 | Non-U.S. Plans | Government Bond Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 35 | 30 |
Level 2 | Non-U.S. Plans | Corporate Bond Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 23 | 21 |
Level 2 | Non-U.S. Plans | Real Estate Funds | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 20 | 18 |
Level 2 | Non-U.S. Plans | Other | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | 13 | 11 |
Level 2 | Non-U.S. Plans | Assets at Fair Value | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Total assets at fair value | $ 167 | $ 148 |
Defined Benefit Pension Plan_11
Defined Benefit Pension Plans - Summary of Benefit Payments (Details) - Pension Benefits $ in Millions | Dec. 31, 2020USD ($) |
U.S. Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
2021 | $ 10 |
2022 | 11 |
2023 | 11 |
2024 | 11 |
2025 | 11 |
2026-2030 | 57 |
Non-U.S. Plans | |
Defined Benefit Plan Disclosure [Line Items] | |
2021 | 3 |
2022 | 4 |
2023 | 4 |
2024 | 4 |
2025 | 4 |
2026-2030 | $ 24 |
China Variable Interest Entity
China Variable Interest Entity - Additional Information (Details) - shares | 1 Months Ended | |
Sep. 30, 2018 | Jun. 03, 2020 | |
Honeywell International Inc | Garrett China | ||
Variable Interest Entity [Line Items] | ||
Equity interest ownership percentage | 100.00% | |
Garrett China | Variable Interest Entity, Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Variable interest ownership percentage | 100.00% | |
Equity interests in exchange for shares of common stock issued | 8,444,077 |
Concentrations - Summary of Net
Concentrations - Summary of Net Sales by Region and Channel (Details) - Sales Concentration - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Concentration Risk [Line Items] | |||
Net sales | $ 3,034 | $ 3,248 | $ 3,375 |
OEM | |||
Concentration Risk [Line Items] | |||
Net sales | 2,643 | 2,796 | 2,893 |
Aftermarket | |||
Concentration Risk [Line Items] | |||
Net sales | 330 | 377 | 397 |
Other | |||
Concentration Risk [Line Items] | |||
Net sales | 61 | 75 | 85 |
United States | |||
Concentration Risk [Line Items] | |||
Net sales | 462 | 485 | 518 |
United States | OEM | |||
Concentration Risk [Line Items] | |||
Net sales | 309 | 307 | 338 |
United States | Aftermarket | |||
Concentration Risk [Line Items] | |||
Net sales | 148 | 171 | 175 |
United States | Other | |||
Concentration Risk [Line Items] | |||
Net sales | 5 | 7 | 5 |
Europe | |||
Concentration Risk [Line Items] | |||
Net sales | 1,547 | 1,806 | 1,891 |
Europe | OEM | |||
Concentration Risk [Line Items] | |||
Net sales | 1,395 | 1,631 | 1,686 |
Europe | Aftermarket | |||
Concentration Risk [Line Items] | |||
Net sales | 122 | 136 | 151 |
Europe | Other | |||
Concentration Risk [Line Items] | |||
Net sales | 30 | 39 | 54 |
Asia | |||
Concentration Risk [Line Items] | |||
Net sales | 995 | 923 | 923 |
Asia | OEM | |||
Concentration Risk [Line Items] | |||
Net sales | 928 | 843 | 847 |
Asia | Aftermarket | |||
Concentration Risk [Line Items] | |||
Net sales | 41 | 51 | 50 |
Asia | Other | |||
Concentration Risk [Line Items] | |||
Net sales | 26 | 29 | 26 |
Other International | |||
Concentration Risk [Line Items] | |||
Net sales | 30 | 34 | 43 |
Other International | OEM | |||
Concentration Risk [Line Items] | |||
Net sales | 11 | 15 | 22 |
Other International | Aftermarket | |||
Concentration Risk [Line Items] | |||
Net sales | $ 19 | $ 19 | $ 21 |
Concentrations - Summary of N_2
Concentrations - Summary of Net Sales to Largest Customer and Corresponding Percentage of Total Net Sales (Details) - Customer Concentration - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Concentration Risk [Line Items] | |||
Net sales | $ 3,034 | $ 3,248 | $ 3,375 |
Net sales, percentage | 100.00% | 100.00% | 100.00% |
Customer A | |||
Concentration Risk [Line Items] | |||
Net sales | $ 301 | $ 374 | $ 455 |
Net sales, percentage | 10.00% | 12.00% | 13.00% |
Others | |||
Concentration Risk [Line Items] | |||
Net sales | $ 2,733 | $ 2,874 | $ 2,920 |
Net sales, percentage | 90.00% | 88.00% | 87.00% |
Concentrations - Summary of Lon
Concentrations - Summary of Long Lived Assets by Region (Details) - USD ($) $ in Millions | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Concentration Risk [Line Items] | |||
Long-lived assets | $ 505 | $ 471 | |
Long-lived Assets Concentration | |||
Concentration Risk [Line Items] | |||
Long-lived assets | 505 | 471 | $ 438 |
Long-lived Assets Concentration | United States | |||
Concentration Risk [Line Items] | |||
Long-lived assets | 21 | 24 | 26 |
Long-lived Assets Concentration | Europe | |||
Concentration Risk [Line Items] | |||
Long-lived assets | 315 | 285 | 273 |
Long-lived Assets Concentration | Asia | |||
Concentration Risk [Line Items] | |||
Long-lived assets | 151 | 141 | 123 |
Long-lived Assets Concentration | Other International | |||
Concentration Risk [Line Items] | |||
Long-lived assets | $ 18 | $ 21 | $ 16 |
Concentrations - Additional Inf
Concentrations - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Supplier Concentration | Purchases | |||
Concentration Risk [Line Items] | |||
Concentration risk, percentage | 8.00% | 12.00% | 14.00% |
Related Party Transactions wi_2
Related Party Transactions with Honeywell - Additional Information (Details) - Honeywell International Inc $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Notes Receivables | |
Related Party Transaction [Line Items] | |
Interest income received for related party | $ 1 |
Notes Payable | |
Related Party Transaction [Line Items] | |
Interest expense incurred for related party | 1 |
Selling, General and Administrative Expenses | |
Related Party Transaction [Line Items] | |
General corporate expenses included within selling, general and administrative expenses | $ 87 |
Unaudited Quarterly Financial_3
Unaudited Quarterly Financial Information - Summary of Unaudited Quarterly Financial Information (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net Sales | $ 1,008 | $ 804 | $ 477 | $ 745 | $ 830 | $ 781 | $ 802 | $ 835 | $ 3,034 | $ 3,248 | $ 3,375 |
Gross Profit | 178 | 152 | 84 | 142 | 161 | 172 | 182 | 196 | 556 | 711 | 776 |
Net income | $ 26 | $ 11 | $ (9) | $ 52 | $ 136 | $ 38 | $ 66 | $ 73 | $ 80 | $ 313 | $ 1,206 |
Earnings (loss) per share - basic | $ 0.34 | $ 0.15 | $ (0.12) | $ 0.69 | $ 1.82 | $ 0.51 | $ 0.88 | $ 0.98 | $ 1.06 | $ 4.20 | $ 16.28 |
Earnings (loss) per share - diluted | $ 0.34 | $ 0.14 | $ (0.12) | $ 0.68 | $ 1.79 | $ 0.50 | $ 0.86 | $ 0.97 | $ 1.05 | $ 4.12 | $ 16.21 |