Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 23, 2021 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | Garrett Motion Inc. | |
Entity Central Index Key | 0001735707 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 76,082,592 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
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 Quarterly Report | true | |
Document Transition Report | false |
CONSOLIDATED INTERIM STATEMENTS
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Net sales (Note 4) | $ 997 | $ 745 |
Cost of goods sold | 801 | 607 |
Gross profit | 196 | 138 |
Selling, general and administrative expenses | 55 | 57 |
Other expense, net (Note 6) | 1 | 16 |
Interest expense (excludes contractual interest for the three months ended March 31, 2021 of $9 million) (Note 2) | 21 | 16 |
Non-operating expense (income) | 26 | (4) |
Reorganization items, net (Note 2) | 174 | |
(Loss) income before taxes | (81) | 53 |
Tax expense (Note 7) | 24 | 1 |
Net (loss) income | $ (105) | $ 52 |
Earnings (loss) per common share | ||
Basic | $ (1.38) | $ 0.69 |
Diluted | $ (1.38) | $ 0.68 |
Weighted average common shares outstanding | ||
Basic | 75,904,898 | 75,040,932 |
Diluted | 75,904,898 | 76,261,545 |
CONSOLIDATED INTERIM STATEMEN_2
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Income Statement [Abstract] | |
Contractual interest | $ 9 |
CONSOLIDATED INTERIM STATEMEN_3
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net (loss) income | $ (105) | $ 52 |
Foreign exchange translation adjustment | 110 | 39 |
Changes in fair value of effective cash flow hedges, net of tax (Note 15) | 1 | |
Total other comprehensive income, net of tax | 111 | 39 |
Comprehensive income | $ 6 | $ 91 |
CONSOLIDATED INTERIM BALANCE SH
CONSOLIDATED INTERIM BALANCE SHEETS (Unaudited) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 382 | $ 592 |
Restricted cash | 195 | 101 |
Accounts, notes and other receivables – net (Note 8) | 807 | 841 |
Inventories – net (Note 10) | 258 | 235 |
Other current assets | 93 | 110 |
Total current assets | 1,735 | 1,879 |
Investments and long-term receivables | 30 | 30 |
Property, plant and equipment – net | 484 | 505 |
Goodwill | 193 | 193 |
Deferred income taxes | 262 | 275 |
Other assets (Note 11) | 131 | 135 |
Total assets | 2,835 | 3,017 |
Current liabilities: | ||
Accounts payable | 1,099 | 1,019 |
Borrowings under revolving credit facility | 370 | 370 |
Current maturities of long-term debt | 6 | |
Debtor-in-possession Term Loan (Note 2) | 100 | 200 |
Accrued liabilities (Note 12) | 277 | 248 |
Total current liabilities | 1,852 | 1,837 |
Long-term debt | 1,049 | 1,082 |
Deferred income taxes | 2 | 2 |
Other liabilities (Note 13) | 125 | 114 |
Total liabilities not subject to compromise | 3,028 | 3,035 |
Liabilities subject to compromise (Note 2) | 2,107 | 2,290 |
Total liabilities | 5,135 | 5,325 |
COMMITMENTS AND CONTINGENCIES (Note 18) | ||
EQUITY (DEFICIT) | ||
Additional paid-in capital | 30 | 28 |
Retained deficit | (2,312) | (2,207) |
Accumulated other comprehensive loss (Note 16) | (18) | (129) |
Total deficit | (2,300) | (2,308) |
Total liabilities and deficit | $ 2,835 | $ 3,017 |
CONSOLIDATED INTERIM BALANCE _2
CONSOLIDATED INTERIM BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
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 | 76,531,559 | 76,229,578 |
Common stock, shares, outstanding | 76,068,026 | 75,813,634 |
CONSOLIDATED INTERIM STATEMEN_4
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (105) | $ 52 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Reorganization items, net | 19 | |
Deferred income taxes | 4 | (15) |
Depreciation | 23 | 19 |
Amortization of deferred issuance costs | 2 | 2 |
Foreign exchange loss | 33 | 12 |
Stock compensation expense | 2 | 2 |
Other | (6) | 8 |
Changes in assets and liabilities: | ||
Accounts, notes and other receivables | (2) | 58 |
Inventories | (34) | (14) |
Other assets | 14 | (10) |
Accounts payable | 74 | (29) |
Accrued liabilities | 17 | 1 |
Obligations payable to Honeywell | (21) | |
Other liabilities | (9) | (8) |
Net cash provided by operating activities | 32 | 57 |
Cash flows from investing activities: | ||
Expenditures for property, plant and equipment | (18) | (39) |
Other | 1 | |
Net cash used for investing activities | (17) | (39) |
Cash flows from financing activities: | ||
Payments of debtor-in-possession financing | (100) | |
Proceeds from revolving credit facility | 621 | |
Payments of revolving credit facility | (555) | |
Payments of long-term debt | (1) | |
Debtor-in-possession financing fees | (1) | |
Other | (3) | |
Net cash (used for) provided by financing activities | (101) | 62 |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (30) | (13) |
Net (decrease)/increase in cash, cash equivalents and restricted cash | (116) | 67 |
Cash, cash equivalents and restricted cash at beginning of period | 693 | 187 |
Cash, cash equivalents and restricted cash at end of period | 577 | $ 254 |
Supplemental Cash Flow Disclosure: | ||
Reorganization items paid | $ 145 |
CONSOLIDATED INTERIM STATEMEN_5
CONSOLIDATED INTERIM STATEMENTS OF EQUITY (DEFICIT) (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Cumulative-Effect Adjustment | Common Stock | Additional Paid-in Capital | Retained (Deficit) Earnings | Retained (Deficit) EarningsCumulative-Effect Adjustment | Accumulated Other Comprehensive Income/(loss) |
Beginning balance at Dec. 31, 2019 | $ (2,133) | $ (5) | $ 19 | $ (2,282) | $ (5) | $ 130 | |
Beginning balance, Shares at Dec. 31, 2019 | 75 | ||||||
Net income (loss) | 52 | 52 | |||||
Other comprehensive income, net of tax | 39 | 39 | |||||
Stock-based compensation | 2 | 2 | |||||
Tax withholding related to vesting of restricted stock units and other | $ (1) | (1) | |||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | ||||||
Ending balance at Mar. 31, 2020 | $ (2,046) | 20 | (2,235) | 169 | |||
Ending balance, Shares at Mar. 31, 2020 | 75 | ||||||
Beginning balance at Dec. 31, 2020 | (2,308) | 28 | (2,207) | (129) | |||
Beginning balance, Shares at Dec. 31, 2020 | 76 | ||||||
Net income (loss) | (105) | (105) | |||||
Other comprehensive income, net of tax | 111 | 111 | |||||
Stock-based compensation | 2 | 2 | |||||
Ending balance at Mar. 31, 2021 | $ (2,300) | $ 30 | $ (2,312) | $ (18) | |||
Ending balance, Shares at Mar. 31, 2021 | 76 |
Background and Basis of Present
Background and Basis of Presentation | 3 Months Ended |
Mar. 31, 2021 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Background and Basis of Presentation | Note 1. Background and Basis of Presentation 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. We are a global technology leader with significant expertise in delivering products across gasoline, diesel, natural gas and electric (hybrid and fuel cell) powertrains. These products are key enablers for fuel economy and emission standards compliance. COVID-19 and Our Credit Facilities 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 • a five-year • a five-year 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 Interim 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. The Plan (as defined below) provides for payment in full of the Company’s obligations under the Prepetition Credit Agreement. The Bankruptcy Court (as defined below) entered the Confirmation Order (as defined below) on April 26, 2021. The Company expects that the Effective Date (as defined below) will occur as soon as all conditions precedent to the Plan have been satisfied, which the Company is targeting for April 30, 2021. Although the Company is targeting occurrence of the Effective Date on April 30, 2021, the Company can make no assurances as to when, or ultimately if, the Plan will become effective. 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 Interim 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 Interim 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 Interim 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 Interim Financial Statements. The accompanying Consolidated Interim 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 The Consolidated Interim 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 Interim 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 (as defined below), as confirmed by the Bankruptcy Court, includes 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 For additional information, see Note 18, Commitments and Contingencies, of the Notes to the Consolidated Interim Financial Statements 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 Interim 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 Interim Financial Statements. The Consolidated Interim Financial Statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods. The Consolidated Interim Financial Statements should be read in conjunction with the audited annual Consolidated and Combined Financial Statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on February 16, 2020 (our “2020 Form 10-K”). The results of operations for three months ended March 31, 2021 and cash flows for the three months ended March 31, 2021 should not necessarily be taken as indicative of the entire year. We report our quarterly financial information using a calendar convention: the first, second and third quarters are consistently reported as ending on March 31, June 30 and September 30. It has been our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday in order to minimize the potentially disruptive effects of quarterly closing on our business processes. The effects of this practice are generally not significant to reported results for any quarter and only exist within a reporting year. For differences in actual closing dates that are material to year-over-year comparisons of quarterly or year-to-date results, such differences have been adjusted for the three months ended March 31, 2021. Our actual closing dates for the three months ended March 31, 2021 and 2020 were April 3, 2021 and March 28, 2020, respectively. |
Reorganization and Chapter 11 P
Reorganization and Chapter 11 Proceedings | 3 Months Ended |
Mar. 31, 2021 | |
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, t he Stalking Horse Bid d er 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. (“Centerbridge”), Oaktree Capital Management, L.P. (“Oaktree”), 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 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 (as amended, restated, supplemented, replaced or otherwise modified from time to time, the “EBCA”) with certain members of the CO Group (the “Original Backstop Parties”), pursuant to which, among other things, the Company would conduct the rights offering contemplated by the PSA (as modified pursuant to the PSA from time to time, the “Rights Offering”) and each Original 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 January 24, 2021, representatives of the official committee of equity securities holders (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, reasonably likely to lead to a higher and better alternative plan of reorganization as compared to the Plan. The Equity Committee filed a revised proposed plan of reorganization and disclosure statement in connection with the Atlantic Park Proposal with the Bankruptcy Court on February 15, 2021. 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, among other things, add certain of the Consenting Lenders as parties thereto supporting the Plan. Following a hearing in the Bankruptcy Court on February 16, 2021, the Debtors, the CO Group, the Equity Committee and certain additional parties agreed to proceed with a court-approved mediation process to attempt to reach a consensual resolution regarding the Equity Committee Exclusivity Motion and the Equity Committee Objection. Through the mediation, the Debtors, the CO Group, the Equity Committee and the additional parties to the mediation, reached a consensual resolution regarding certain aspects of the Plan, and on March 9, 2021, the PSA was subsequently amended and restated, and a replacement EBCA among the Debtors and certain of the Additional Investors (the “Equity Backstop Parties”) was entered into, to provide for, among other things: (i) a direct equity investment of $668.8 million by Centerbridge and Oaktree to purchase the Series A Preferred Stock to be issued pursuant to the Plan, (ii) two Rights Offerings in an aggregate amount of $632 million (including an allocation of subscription rights to the Equity Backstop Parties as consideration for their agreement to backstop the Rights Offerings), and (iii) an increase of the conversion price to common stock of the Series A Preferred Stock from $3.50 to $5.25. On March 9, 2021 the Debtors filed amended versions of the Plan and Disclosure Statement with the Bankruptcy Court to reflect this consensual resolution. On March 12, 2021 the Bankruptcy Court entered orders approving the Disclosure Statement, the proposed procedures for solicitation of votes on the Plan and the Debtors’ entry into and performance and obligations under the PSA and the EBCA, which remain subject to customary closing conditions. On March 12, 2021 the Debtors filed the solicitation versions of the Plan and Disclosure Statement with the Bankruptcy Court. As contemplated by the Plan, the Company filed a supplement to the Plan (as amended, restated, supplemented or otherwise modified from time to time, the “Plan Supplement”) with the Bankruptcy Court on April 9, 2021, which includes drafts of certain documents related to the Plan and referenced therein. On April 20, 2021, and April 22, 2021, the Debtors filed amended Plan Supplements reflecting updates and other changes and corrections to certain of the draft documentation. Also, on April 20, 2021, the Debtors also filed an amended version of the Plan, reflecting, among other things, revised treatment of certain claims and certain other technical changes and corrections. Following a hearing in the Bankruptcy Court on April 23, 2021, the Debtors filed a further amended Plan on April 26, 2021. On April 26, 2021, the Bankruptcy Court entered an order (the “Confirmation Order”), among other things, confirming the Plan. The Company expects that the effective date of the Plan (the “Effective Date”) will occur as soon as all conditions precedent to the Plan have been satisfied, which the Company is targeting for April 30, 2021. Although the Company is targeting occurrence of the Effective Date on April 30, 2021, the Company can make no assurances as to when, or ultimately if, the Plan will become effective. Plan Support Agreement and Equity Backstop Commitment Agreement On the Petition Date, certain of the Debtors 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 the Auction at which they solicited and received higher and better offers from KPS and 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 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 and (iii) a related 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 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, among other things, add certain of the Consenting Lenders as parties thereto. On March 9, 2012, the PSA was subsequently amended and restated to reflect changes agreed to among the Debtors, the CO Group, the Equity Committee and other parties during the court-approved mediation process. 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 Centerbridge and Oaktree in the amount of $668.8 million in the aggregate in cash; • Two Rights Offerings of the reorganized Company’s Series A Preferred Stock for a maximum aggregate value of $632 million (including an allocation of subscription rights to the Equity Backstop Parties as consideration for their agreement to backstop the Rights Offerings) to existing holders of the Company’s common stock, backstopped by the Equity Backstop Parties on a fully committed basis; • Holders of shares of the Company’s existing common stock may effectively 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, consisting of an approximately $1,250 million term loan facility and an approximately $300 million revolving credit facility 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. The PSA provides for the reimbursement by the Debtors of professional fees and expenses of the CO Group, subject to an interim cap of $25 million prior to Emergence and with the balance to be paid at Emergence, and certain of the Consenting Lenders and Consenting Noteholders. 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. On March 9, 2021 the Debtors entered into the replacement EBCA with the Equity Backstop Parties, pursuant to which, among other things, the Company will conduct the Rights Offerings and each Equity Backstop Party committed to (i) exercise its rights, as a stockholder of the Company, to purchase in the Rights Offerings 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 Offerings. 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. 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 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, with further amended versions of the Plan and Disclosure Statement filed with the Bankruptcy Court on February 15, 2021 and March 9, 2021. On March 12, 2021, the Debtors filed the solicitation versions of the Plan and the Disclosure Statement, and on April 20, 2021, the Debtors filed a further revised Plan. Following a hearing in the Bankruptcy Court on April 23, 2021, the Debtors filed a further revised Plan on April 26, 2021. On April 26, 2021, the Bankruptcy Court entered the Confirmation Order. It is possible that technical amendments could be made to the Plan prior to the Effective Date. Chapter 11 Accounting The Company has applied ASC 852 in preparing our Consolidated Interim 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 Interim 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 Interim Balance Sheet at March 31, 2021. 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 quarterly 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. The Plan provides for the assumption of all of the Debtors’ executory contracts and unexpired leases except for certain agreements with Honeywell. 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 Interim Statements of Operations for the three months ended March 31, 2021. Reorganization items, net, are comprised of the following for the three months ended March 31, 2021: Three Months Ended March 31, 2021 (Dollars in millions) Advisor fees $ 84 DIP Financing fees 1 Bid termination and expense reimbursement 79 Other 10 Total reorganization items, net $ 174 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. 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 issued on September 27, 2018. 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 in 2020. These costs were recorded to Reorganization items, net, in the Consolidated Statement of Operations for the year ended December 31, 2020. Refer to Note 2, Reorganization and Chapter 11 Proceedings for further discussion. The principal amounts outstanding on our Senior Secured Credit Facilities and the Senior Notes as of March 31, 2021 and December 31, 2020 are as follows: March 31, December 31, 2021 2020 (Dollars in millions) Senior Secured Credit Facilities (1) Term Loans $ 1,055 $ 1,082 Borrowings under revolving credit facility 370 370 Total consolidated Secured Debt 1,425 1,452 Long-term debt, net subject to compromise (2) Senior Notes 412 429 Total debt, prior to reclassification to Liabilities subject to compromise 1,837 1,881 Less: current portion (376 ) (370 ) Less: Amounts reclassified to Liabilities subject to compromise (412 ) (429 ) Total long-term debt $ 1,049 $ 1,082 (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 Interim Balance Sheet as of March 31, 2021. 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. 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. 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. 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 amo |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 3. Summary of Significant Accounting Policies The accounting policies of the Company are set forth in Note 3 to the audited annual Consolidated and Combined Financial Statements for the year ended December 31, 2020 included in our 2020 Form 10-K. There were no new accounting pronouncements adopted during the three months ended March 31, 2021. Reclassifications Certain reclassifications have been made to prior year amounts to conform to current year classifications, specifically certain items that had been previously recorded in selling, general and administrative expenses presented now within cost of goods sold. The reclassifications had no impact on net income, equity, or cash flows as previously reported. 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. In January 2021, the FASB issued clarification on the scope of relief related to the reference rate reform. The Company is currently evaluating the impact of the guidance related to certain existing debt agreements on our Consolidated 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 Interim Financial Statements and related disclosures. |
Revenue Recognition and Contrac
Revenue Recognition and Contracts with Customers | 3 Months Ended |
Mar. 31, 2021 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition and Contracts with Customers | Note 4. Revenue Recognition and Contracts with Customers Disaggregated Revenue Net sales by region (determined based on country of shipment) and channel are as follows: Three months ended March 31, 2021 OEM Aftermarket Other Total (Dollars in millions) United States $ 100 $ 36 $ 2 $ 138 Europe 481 39 8 528 Asia 302 10 7 319 Other International 6 6 — 12 $ 889 $ 91 $ 17 $ 997 Three months ended March 31, 2020 OEM Aftermarket Other Total (Dollars in millions) United States $ 92 $ 40 $ — $ 132 Europe 394 30 9 433 Asia 159 8 6 173 Other International 3 4 — 7 $ 648 $ 82 $ 15 $ 745 Contract Balances The following table summarizes our contract assets and liabilities balances: 2021 (Dollars in millions) Contract assets—January 1 $ 61 Contract assets—March 31 65 Change in contract assets—Increase/(Decrease) 4 Contract liabilities—January 1 $ (2 ) Contract liabilities—March 31 (1 ) Change in contract liabilities—(Increase)/Decrease $ 1 |
Research, Development & Enginee
Research, Development & Engineering | 3 Months Ended |
Mar. 31, 2021 | |
Research And Development [Abstract] | |
Research, Development & Engineering | Note 5. Research, Development & Engineering Garrett conducts research, development and engineering (“RD&E”) activities, which consist primarily of the development of new products and product applications. RD&E costs are charged to expense as incurred unless the Company has a contractual guarantee for reimbursement from the customer. Customer reimbursements are netted against gross RD&E expenditures as they are considered a recovery of cost. Such costs are included in Cost of goods sold as follows: Three Months Ended March 31, 2021 2020 (Dollars in millions) Research and development costs $ 33 $ 30 Engineering-related expenses 6 6 $ 39 $ 36 |
Other Expense, Net
Other Expense, Net | 3 Months Ended |
Mar. 31, 2021 | |
Other Income And Expenses [Abstract] | |
Other Expense, Net | Note 6. Other Expense, Net Three Months Ended March 31, 2021 2020 (Dollars in millions) Indemnification related — post Spin-Off $ — $ 15 Indemnification related — litigation — 1 Factoring and notes receivables discount fees 1 — $ 1 $ 16 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 7. Income Taxes For the Three Months Ended March 31, 2021 2020 (Dollars in millions) Tax expense $ 24 $ 1 Effective tax rate (29.6 )% 1.9 % The effective tax rate was (29.6%) and 1.9% for the three months ended March 31, 2021 and 2020, respectively. The negative effective tax rate for 2021 reflects a tax expense in a period of an overall pre-tax loss. The change in the effective tax rate for the three months ended March 31, 2021 compared to the prior year period primarily related to the increase in nondeductible bankruptcy costs and the absence of tax benefits from lower withholding taxes. The effective tax rate for the three months ended March 31, 2021 was lower than the U.S. federal statutory rate of 21% primarily because of pre-tax losses related to nondeductible bankruptcy and restructuring costs. For the period ended March 31, 2020 the Company computed its effective tax rate using actual year to date information rather than a full year forecast to compute an annual effective tax rate. Based on available forecasts which took into account a range of potential impacts from COVID-19, the Company’s effective tax rate was expected to be highly sensitive to changes in pre-tax book income because of non-deductible asbestos related expenses which have no correlation to earnings. Accordingly, the Company concluded that computing its effective tax rate using year to date actual results was its best estimate of tax expense for the period ended March 31, 2020 . The effective tax rate can vary from quarter to quarter due to changes in the Company’s global mix of earnings, impacts of Covid -19 In connection with the global outbreak of COVID-19, many countries have enacted legislation to provide various forms of emergency economic relief, including the CARES Act in the United States, that may provide financial benefits to the Company. Such benefits have not had a material impact on the Company. |
Accounts, Notes and Other Recei
Accounts, Notes and Other Receivables—Net | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Accounts, Notes and Other Receivables—Net | Note 8. Accounts, Notes and Other Receivables—Net March 31, 2021 December 31, 2020 (Dollars in millions) Trade receivables $ 672 $ 625 Notes receivables 70 152 Other receivables 75 77 817 854 Less—Allowance for doubtful accounts (10 ) (13 ) $ 807 $ 841 Trade Receivables include $65 million and $61 million of unbilled balances as of March 31, 2021 and December 31, 2020, respectively. These amounts are billed in accordance with the terms of customer contracts to which they relate. Unbilled receivables include $65 million and $61 million of contract assets as of March 31, 2021 and December 31, 2020, respectively. |
Factoring and Notes Receivable
Factoring and Notes Receivable | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Factoring and Notes Receivable | Note 9. Factoring and Notes Receivable The Company has entered into arrangements with financial institutions to sell eligible trade receivables. During the periods ended March 31, 2021 and December 31, 2020, the Company sold $180 million and $473 million of eligible receivables, respectively, without recourse, and accounted for these arrangements as true sales. 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. During the periods ended March 31, 2021 and December 31, 2020, the Company sold $0 and $160 million of bank notes, respectively, without recourse, and accounted for these as true sales. As of March 31, 2021 and December 31, 2020, the Company has pledged as collateral $15 million and $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 | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories-Net | Note 10. Inventories—Net March 31, 2021 December 31, 2020 (Dollars in millions) Raw materials $ 150 $ 160 Work in process 21 19 Finished products 124 97 295 276 Less—Reserves (37 ) (41 ) $ 258 $ 235 |
Other Assets
Other Assets | 3 Months Ended |
Mar. 31, 2021 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Other Assets | Note 11. Other Assets March 31, December 31, 2021 2020 (Dollars in millions) Advanced discounts to customers, non-current $ 68 $ 70 Operating right-of-use assets (Note 14) 36 36 Other 27 29 $ 131 $ 135 |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Accrued Liabilities Current [Abstract] | |
Accrued Liabilities | Note 12. Accrued Liabilities Due to the Chapter 11 filing, Accrued Liabilities that existed as of March 31, 2021 and 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. March 31, 2021 December 31, 2020 (Dollars in millions) Customer pricing reserve $ 87 $ 82 Compensation, benefit and other employee related 59 62 Taxes 29 37 Product warranties and performance guarantees 16 14 Repositioning 13 7 Advanced discounts from suppliers, current 5 5 Customer advances and deferred income (a) 9 8 Short-term lease liability (Note 14) 5 5 Other (primarily operating expenses) 54 28 $ 277 $ 248 (a) Customer advances and deferred income include $1 million and $2 million of contract liabilities as of March 31, 2021 and December 31, 2020, respectively. See Note 4, Revenue Recognition and Contracts with Customers. The Company accrued repositioning costs related to projects to optimize its product costs and right-size its organizational structure. Expenses related to the repositioning accruals are included in Cost of goods sold in our Consolidated Interim Statements of Operations. Severance Costs Exit Costs Total (Dollars in millions) Balance at December 31, 2019 $ 3 $ 1 $ 4 Charges 5 — 5 Usage—cash (2 ) — (2 ) Balance at March 31, 2020 $ 6 $ 1 $ 7 Severance Costs Exit Costs Total (Dollars in millions) Balance at December 31, 2020 $ 7 $ — $ 7 Charges 8 — 8 Usage—cash (2 ) — (2 ) Balance at March 31, 2021 $ 13 $ — $ 13 |
Other Liabilities
Other Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Other Liabilities | Note 13. Other Liabilities Due to the Chapter 11 filing, Other Liabilities that existed as of March 31,2021 and 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. March 31, December 31, 2021 2020 (Dollars in millions) Income taxes $ 47 $ 45 Designated and undesignated derivatives 21 22 Pension and other employee related 18 14 Long-term lease liability (Note 14) 14 15 Advanced discounts from suppliers 10 11 Other 15 7 $ 125 $ 114 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Leases | Note 14. 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: Three Months Ended March 31, 2021 2020 (Dollars in millions) Operating lease cost $ 4 $ 3 Supplemental cash flow information related to operating leases is as follows: Three Months Ended March 31, 2021 2020 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 3 $ 2 Right-of-use assets obtained in exchange for lease obligations: Operating leases 1 — Supplemental balance sheet information related to operating leases is as follows: March 31, December 31, 2021 2020 (Dollars in millions) Other assets $ 36 $ 36 Accrued liabilities 5 5 Other liabilities 14 15 Liabilities subject to compromise 17 19 March 31, December 31, 2021 2020 Weighted-average lease term (in years) 5.02 5.14 Weighted-average discount rate 6.18 % 6.16 % Maturities of operating lease liabilities were as follows: March 31, 2021 (Dollars in millions) 2021 $ 9 2022 10 2023 7 2024 5 2025 4 Thereafter 8 Total lease payments 43 Less imputed interest (6 ) $ 37 |
Financial Instruments and Fair
Financial Instruments and Fair Value Measures | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Financial Instruments and Fair Value Measures | Note 15. Financial Instruments and Fair Value Measures Our credit, market and foreign currency risk management policies are described in Note 18, Financial Instruments and Fair Value Measures, of the notes to the audited annual Consolidated and Combined Financial Statements for the year ended December 31, 2020 included in our 2020 Form 10-K. At March 31, 2021 and December 31, 2020, we had contracts with aggregate gross notional amounts of $170 million and 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. 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 March 31, 2021 and December 31, 2020: Fair Value Notional Amounts Assets March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020 (Dollars in millions) Undesignated forward currency exchange contracts $ 170 $ 19 $ 2 $ — (a) ( a ) Recorded within Other current assets in the Company’s Consolidated Interim Balance Sheets 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 March 31, 2021 and December 31, 2020 were 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: March 31, 2021 Carrying Value Fair Value (Dollars in millions) Liabilities not subject to compromise: Terms Loans A and B $ 1,055 $ 1,073 DIP Financing 100 100 Liabilities subject to compromise: Senior Notes 412 440 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. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2021 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Note 16. Accumulated Other Comprehensive Income (Loss) Changes in Accumulated Other Comprehensive Income (Loss) by Component Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) (Dollars in millions) Balance at December 31, 2019 $ 153 $ 4 $ (27 ) $ 130 Other comprehensive income (loss) before reclassifications 39 — — 39 Amounts reclassified from accumulated other comprehensive income (loss) — — — — Net current period other comprehensive income (loss) 39 39 Balance at March 31, 2020 $ 192 $ 4 $ (27 ) $ 169 Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) (Dollars in millions) Balance at December 31, 2020 $ (81 ) $ (3 ) $ (45 ) $ (129 ) Other comprehensive (loss) before reclassifications 110 — — 110 Amounts reclassified from accumulated other comprehensive income (loss) — 1 — 1 Net current period other comprehensive (loss) 110 1 111 Balance at March 31, 2021 $ 29 $ (2 ) $ (45 ) $ (18 ) |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Note 17. Earnings (Loss) Per Share The details of the earnings (loss) per share (“EPS”) calculations for the three months ended March 31, 2021 and 2020 are as follows: Three Months Ended March 31, 2021 2020 (Dollars in millions except per share amounts) Basic Net (loss) income $ (105 ) $ 52 Weighted average common shares outstanding 75,904,898 75,040,932 EPS – Basic $ (1.38 ) $ 0.69 Three Months Ended March 31, 2021 2020 (Dollars in millions except per share amounts) Diluted Net (loss) income $ (105 ) $ 52 Weighted average common shares outstanding – Basic 75,904,898 75,040,932 Dilutive effect of unvested RSUs and other contingently issuable shares — 1,220,613 Weighted average common shares outstanding – Diluted 75,904,898 76,261,545 EPS – Diluted $ (1.38 ) $ 0.68 Diluted EPS is computed based upon the weighted average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method and the average market price of our common stock for the period. 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 three months ended March 31, 2021 and March 31, 2020, the weighted number of stock options excluded from the computations was 399,489 and 441,966, respectively. These stock options were outstanding for the three months ended March 31, 2021 and 2020, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 18. Commitments and Contingencies 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, as confirmed by the Bankruptcy Court provides 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 EBCA, 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 certain Honeywell 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 $ 35 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 we 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, as confirmed by the Bankruptcy Court, include s 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 March 5, 2020, Honeywell filed a “Notice of Motion to Dismiss Garrett’s Complaint”. On September 20, 2020, Garrett and certain of its subsidiaries each filed the Chapter 11 Cases. On September 23, 2020, Garrett removed the case to the United States District Court for the Southern District of New York, and on September 24, 2020, the case was referred to the Bankruptcy Court, where the case is currently pending. On October 13, 2020, Honeywell filed a motion to dismiss in the Bankruptcy Court. Garrett does not believe Honeywell’s motion has merit. A pre-trial conference took place on October 22, 2020. The Court heard argument on Honeywell’s pending motion to dismiss on November 18, 2020; the Court has not yet issued a decision. On November 2, 2020, the Garrett entities that are Debtors and Debtors in Possession filed a Motion Pursuant to Sections 105(a) and 502(c) To Establish Procedures For Estimating The Maximum Amount Of Honeywell’s Claims And Related Relief (“Motion”). The Court heard argument on the Motion on November 18. The Court ordered an estimation proceeding to take place to estimate all of Honeywell’s claims against the Garrett entities that are Debtors and Debtors in Possession. 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. As noted below, the estimation proceeding has been stayed by order of the Bankruptcy Court. On January 11, 2021, the Company announced that it had agreed to settle Honeywell’s claims as part of a broader revised Plan. The Plan is subject to various conditions. 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. On April 26, 2021, the Bankruptcy Court entered the Confirmation Order. 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% 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, as confirmed by the Bankruptcy Court, includes 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 March 31, 2021 and December 31, 2020, all amounts have been reclassified to Liabilities subject to compromise on the Consolidated Interim Balance Sheets: Three Months Ended March 31, 2021 Asbestos and environmental Tax Matters Total (Dollars in millions) Beginning of year $ 1,196 $ 286 $ 1,482 Currency translation adjustment (49 ) (12 ) (61 ) End of period $ 1,147 $ 274 $ 1,421 Current 2 39 41 Non-current 1,145 235 1,380 Total $ 1,147 $ 274 $ 1,421 Twelve Months Ended December 31, 2020 Asbestos and environmental Tax Matters Total (Dollars in millions) Beginning of year $ 1,090 $ 261 $ 1,351 Legal fees expensed 41 — 41 Payments to Honeywell (35 ) — (35 ) Currency translation adjustment 100 25 125 End of period $ 1,196 $ 286 $ 1,482 Current 2 40 42 Non-current 1,194 246 1,440 Total $ 1,196 $ 286 $ 1,482 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. On April 26, 2021, the Bankruptcy Court 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 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; and (3) consolidate the Gabelli Action, the Husson Action, and the Froehlich Action. On January 21, 2021, the Court granted the motion to consolidate the actions and granted the Gabelli Entities’ motions for appointment as lead plaintiff and for selection of lead counsel. On February 25, 2021, plaintiffs filed a Consolidated Amended Complaint for Violation of the Federal Securities Laws. Defendants’ motion to dismiss is due by April 26, 2021; Plaintiffs’ opposition is due by June 25, 2021; and Defendants’ reply is due by July 26, 2021. The Company’s insurer, AIG has accepted the defense, subject the customary reservation of rights. The bankruptcy court set a bar date of March 1, 2021 for current and former shareholders to file claims against the Debtors arising from rescission of a purchase or sale of common stock of Garrett Motion Inc., for damages arising from the purchase or sale of common stock of Garrett Motion Inc., or for reimbursement or contribution allowed under section 502 of the Bankruptcy Code on account of such claims arising (or deemed to have arisen) prior to the Petition Date for all securities claims arising prior to the Petition Date. We are not yet able to assess the likelihood that any such claims will be allowed. To the extent allowed, each holder of such claims will be entitled to receive, (x) its pro rata share of the aggregate cash payments received or recoverable from any insurance policies of the Company on account of any such allowed claims and (y) solely to the extent that such payments are less than the amount of its allowed claim, payment in full of the remaining amount of its allowed claim, at the option of the reorganized Debtors, in cash or a number of shares of Garrett common stock at a value of $6.25 per share. 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’ position is 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. On January 11, 2021, the Company announced that it had agreed to settle the Make-Whole Litigation as part of the transactions and settlements embodied in the Plan. The Plan is subject to various conditions. Pursuant to the settlement embodied in the Plan, the Make Whole is an allowed claim in the amount of $15 million. As the Confirmation Order was not entered by the Bankruptcy Court until April 26, 2021, the Make Whole was not recorded as of March 31, 2021. The Debtors and the Indenture Trustee agreed to suspend all litigation activities related to and stay the Make-Whole Litigation to permit Bankruptcy Court consideration of the Plan and to dismiss with prejudice the Make-Whole Litigation upon the Effective Date. Other Matters We are subject 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 (“ Befiex Befiex |
Pension Benefits
Pension Benefits | 3 Months Ended |
Mar. 31, 2021 | |
Compensation And Retirement Disclosure [Abstract] | |
Pension Benefits | Note 19. Pension Benefits We sponsor several funded U.S. and non-U.S. defined benefit pension plans. Significant plans outside of the U.S. are in Switzerland and Ireland. Other pension plans outside of the U.S. are not material to the Company either individually or in the aggregate. 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 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 in 2021, of which $1 million has been contributed through the first three months of the year. Net periodic benefit costs for our significant defined benefit plans include the following components: Three Months Ended March 31, U.S. Plans Non-U.S. Plan, 2021 2020 2021 2020 (Dollars in millions) Service cost $ — $ — $ 3 $ 2 Interest cost 1 1 — — Expected return on plan assets (3 ) (3 ) (2 ) (1 ) $ (2 ) $ (2 ) $ 1 $ 1 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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Chapter 11 Accounting | Chapter 11 Accounting The Company has applied ASC 852 in preparing our Consolidated Interim 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 Interim 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 Interim Balance Sheet at March 31, 2021. 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 quarterly 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. The Plan provides for the assumption of all of the Debtors’ executory contracts and unexpired leases except for certain agreements with Honeywell. |
Reclassifications | Reclassifications Certain reclassifications have been made to prior year amounts to conform to current year classifications, specifically certain items that had been previously recorded in selling, general and administrative expenses presented now within cost of goods sold. The reclassifications had no impact on net income, equity, or cash flows as previously reported. |
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. In January 2021, the FASB issued clarification on the scope of relief related to the reference rate reform. The Company is currently evaluating the impact of the guidance related to certain existing debt agreements on our Consolidated 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 Interim Financial Statements and related disclosures. |
Reorganization and Chapter 11_2
Reorganization and Chapter 11 Proceedings (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Reorganizations [Abstract] | |
Schedule of Reorganization Items Net | Reorganization items, net, are comprised of the following for the three months ended March 31, 2021: Three Months Ended March 31, 2021 (Dollars in millions) Advisor fees $ 84 DIP Financing fees 1 Bid termination and expense reimbursement 79 Other 10 Total reorganization items, net $ 174 |
Schedule of Principal 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 March 31, 2021 and December 31, 2020 are as follows: March 31, December 31, 2021 2020 (Dollars in millions) Senior Secured Credit Facilities (1) Term Loans $ 1,055 $ 1,082 Borrowings under revolving credit facility 370 370 Total consolidated Secured Debt 1,425 1,452 Long-term debt, net subject to compromise (2) Senior Notes 412 429 Total debt, prior to reclassification to Liabilities subject to compromise 1,837 1,881 Less: current portion (376 ) (370 ) Less: Amounts reclassified to Liabilities subject to compromise (412 ) (429 ) Total long-term debt $ 1,049 $ 1,082 (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 Interim Balance Sheet as of March 31, 2021. As of the Petition Date, the Company ceased accruing related interest expense and amortization of debt issuance costs. |
Schedule of Liabilities Subject to Compromise | The following table presents liabilities subject to compromise as reported in the Consolidated Interim Balance Sheet at March 31, 2021 and December 31, 2020, respectively: March 31, December 31, 2021 2020 (Dollars in millions) Obligations payable to Honeywell (Note 18) $ 1,421 $ 1,482 Long-term debt (1) 412 429 Pension, compensation, benefit and other employee related 82 92 Uncertain tax positions and deferred taxes 61 69 Accounts payable 35 82 Advanced discounts from suppliers 28 33 Lease liability (Note 14) 17 19 Product warranties and performance guarantees 16 16 Freight Accrual — 27 Other 35 41 Total liabilities subject to compromise $ 2,107 $ 2,290 (1) Please see above Pre-petition Long-Term Debt during the Chapter 11 Cases sub-section for details of the pre-petition debt reported as liabilities subject to compromise. |
Schedule of Principal Amounts Outstanding on Debtor-In-Possession Financing | The principal amounts outstanding on Debtor-in-possession financing as of March 31, 2021 and December 31, 2020 are as follows: March 31, December 31, 2021 2020 (Dollars in millions) Debtor-in-possession financing $ 100 $ 200 |
Schedule of Condensed Combined Financial Statements of Debtors | The financial statements below represent the condensed and combined interim financial statements of the Debtors as of and for the three months ended March 31, 2021. Any entities which are non-debtor entities, are not included in these condensed and combined interim 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 Three Months Ended March 31, 2021 (Dollars in millions) Net sales $ 753 Cost of goods sold 602 Gross profit 151 Selling, general and administrative expenses 53 Interest expense 23 Non-operating expense 12 Reorganization items, net 174 Income before taxes (111 ) Tax expense 20 Net loss $ (131 ) March 31, 2021 December 31, 2020 (Dollars in millions) ASSETS Current assets: Cash and cash equivalents $ 276 $ 516 Restricted cash 40 30 Accounts, notes and other receivables – net 450 430 Accounts and other receivables from non-debtor affiliates 263 240 Inventories – net 178 166 Other current assets 75 91 Total current assets 1,282 1,473 Investments and long-term receivables 8 6 Investment in subsidiaries 888 883 Property, plant and equipment – net 304 319 Goodwill 193 193 Deferred income taxes 229 236 Other assets 89 93 Total assets $ 2,993 $ 3,203 LIABILITIES Current liabilities: Accounts payable $ 597 $ 497 Borrowings under revolving credit facility 370 370 Current maturities of long-term debt 6 — Debtor-in-possession Term Loan 100 200 Accrued liabilities 135 106 Total current liabilities 1,208 1,173 Long-term debt 1,049 1,082 Other liabilities 29 22 Total liabilities not subject to compromise 2,286 2,277 Liabilities subject to compromise External 2,107 2,290 With non-debtor affiliates 488 528 Total liabilities subject to compromise 2,595 2,818 Total liabilities $ 4,881 $ 5,095 COMMITMENTS AND CONTINGENCIES (Note 18) EQUITY (DEFICIT) Total deficit attributable to the Debtors (1,888 ) (1,892 ) Total liabilities and deficit $ 2,993 $ 3,203 For the Three Months Ended March 31, 2021 (Dollars in millions) Cash Flows from operating activities: Net cash used for operating activities $ (100 ) Cash Flows from investing activities: Expenditures for property, plant and equipment (5 ) Other 1 Net cash used for investing activities (4 ) Cash Flows from financing activities: Payments of debtor-in-possession financing (100 ) Debtor-in-possession financing fees (1 ) Net cash used for financing activities (101 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (26 ) Net decrease in cash, cash equivalents and restricted cash (231 ) Cash, cash equivalents and restricted cash at beginning of period 547 Cash, cash equivalents and restricted cash at end of period $ 316 |
Revenue Recognition and Contr_2
Revenue Recognition and Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue From Contract With Customer [Abstract] | |
Summary of Net Sales by Region and Channel | Net sales by region (determined based on country of shipment) and channel are as follows: Three months ended March 31, 2021 OEM Aftermarket Other Total (Dollars in millions) United States $ 100 $ 36 $ 2 $ 138 Europe 481 39 8 528 Asia 302 10 7 319 Other International 6 6 — 12 $ 889 $ 91 $ 17 $ 997 Three months ended March 31, 2020 OEM Aftermarket Other Total (Dollars in millions) United States $ 92 $ 40 $ — $ 132 Europe 394 30 9 433 Asia 159 8 6 173 Other International 3 4 — 7 $ 648 $ 82 $ 15 $ 745 |
Summary of Contract Assets and Liabilities | The following table summarizes our contract assets and liabilities balances: 2021 (Dollars in millions) Contract assets—January 1 $ 61 Contract assets—March 31 65 Change in contract assets—Increase/(Decrease) 4 Contract liabilities—January 1 $ (2 ) Contract liabilities—March 31 (1 ) Change in contract liabilities—(Increase)/Decrease $ 1 |
Research, Development & Engin_2
Research, Development & Engineering (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Research And Development [Abstract] | |
Summary of Research, Development & Engineering Activities | Garrett conducts research, development and engineering (“RD&E”) activities, which consist primarily of the development of new products and product applications. RD&E costs are charged to expense as incurred unless the Company has a contractual guarantee for reimbursement from the customer. Customer reimbursements are netted against gross RD&E expenditures as they are considered a recovery of cost. Such costs are included in Cost of goods sold as follows: Three Months Ended March 31, 2021 2020 (Dollars in millions) Research and development costs $ 33 $ 30 Engineering-related expenses 6 6 $ 39 $ 36 |
Other Expenses, Net (Tables)
Other Expenses, Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Other Income And Expenses [Abstract] | |
Schedule of Other Operating Cost and Expense | Three Months Ended March 31, 2021 2020 (Dollars in millions) Indemnification related — post Spin-Off $ — $ 15 Indemnification related — litigation — 1 Factoring and notes receivables discount fees 1 — $ 1 $ 16 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Tax Expense and Effective Tax Rate | For the Three Months Ended March 31, 2021 2020 (Dollars in millions) Tax expense $ 24 $ 1 Effective tax rate (29.6 )% 1.9 % |
Accounts, Notes and Other Rec_2
Accounts, Notes and Other Receivables—Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes and Other Receivables Net | March 31, 2021 December 31, 2020 (Dollars in millions) Trade receivables $ 672 $ 625 Notes receivables 70 152 Other receivables 75 77 817 854 Less—Allowance for doubtful accounts (10 ) (13 ) $ 807 $ 841 |
Inventories-Net (Tables)
Inventories-Net (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | March 31, 2021 December 31, 2020 (Dollars in millions) Raw materials $ 150 $ 160 Work in process 21 19 Finished products 124 97 295 276 Less—Reserves (37 ) (41 ) $ 258 $ 235 |
Other Assets (Tables)
Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Schedule of Other Assets | March 31, December 31, 2021 2020 (Dollars in millions) Advanced discounts to customers, non-current $ 68 $ 70 Operating right-of-use assets (Note 14) 36 36 Other 27 29 $ 131 $ 135 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accrued Liabilities Current [Abstract] | |
Summary of Accrued Liabilities | March 31, 2021 December 31, 2020 (Dollars in millions) Customer pricing reserve $ 87 $ 82 Compensation, benefit and other employee related 59 62 Taxes 29 37 Product warranties and performance guarantees 16 14 Repositioning 13 7 Advanced discounts from suppliers, current 5 5 Customer advances and deferred income (a) 9 8 Short-term lease liability (Note 14) 5 5 Other (primarily operating expenses) 54 28 $ 277 $ 248 (a) Customer advances and deferred income include $1 million and $2 million of contract liabilities as of March 31, 2021 and December 31, 2020, respectively. See Note 4, Revenue Recognition and Contracts with Customers. |
Summary of Expenses Related to the Repositioning Accruals | The Company accrued repositioning costs related to projects to optimize its product costs and right-size its organizational structure. Expenses related to the repositioning accruals are included in Cost of goods sold in our Consolidated Interim Statements of Operations. Severance Costs Exit Costs Total (Dollars in millions) Balance at December 31, 2019 $ 3 $ 1 $ 4 Charges 5 — 5 Usage—cash (2 ) — (2 ) Balance at March 31, 2020 $ 6 $ 1 $ 7 Severance Costs Exit Costs Total (Dollars in millions) Balance at December 31, 2020 $ 7 $ — $ 7 Charges 8 — 8 Usage—cash (2 ) — (2 ) Balance at March 31, 2021 $ 13 $ — $ 13 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Liabilities | Due to the Chapter 11 filing, Other Liabilities that existed as of March 31,2021 and 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. March 31, December 31, 2021 2020 (Dollars in millions) Income taxes $ 47 $ 45 Designated and undesignated derivatives 21 22 Pension and other employee related 18 14 Long-term lease liability (Note 14) 14 15 Advanced discounts from suppliers 10 11 Other 15 7 $ 125 $ 114 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Summary of Components of Lease Expense | The components of lease expense are as follows: Three Months Ended March 31, 2021 2020 (Dollars in millions) Operating lease cost $ 4 $ 3 |
Summary of Supplemental Cash Flow Information Related to Operating Leases | Supplemental cash flow information related to operating leases is as follows: Three Months Ended March 31, 2021 2020 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 3 $ 2 Right-of-use assets obtained in exchange for lease obligations: Operating leases 1 — |
Summary of Supplemental Balance Sheet Information Related to Operating Leases | Supplemental balance sheet information related to operating leases is as follows: March 31, December 31, 2021 2020 (Dollars in millions) Other assets $ 36 $ 36 Accrued liabilities 5 5 Other liabilities 14 15 Liabilities subject to compromise 17 19 March 31, December 31, 2021 2020 Weighted-average lease term (in years) 5.02 5.14 Weighted-average discount rate 6.18 % 6.16 % |
Schedule of Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities were as follows: March 31, 2021 (Dollars in millions) 2021 $ 9 2022 10 2023 7 2024 5 2025 4 Thereafter 8 Total lease payments 43 Less imputed interest (6 ) $ 37 |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measures (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 and December 31, 2020: Fair Value Notional Amounts Assets March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020 (Dollars in millions) Undesignated forward currency exchange contracts $ 170 $ 19 $ 2 $ — (a) ( a ) Recorded within Other current assets in the Company’s Consolidated Interim 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: March 31, 2021 Carrying Value Fair Value (Dollars in millions) Liabilities not subject to compromise: Terms Loans A and B $ 1,055 $ 1,073 DIP Financing 100 100 Liabilities subject to compromise: Senior Notes 412 440 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) | Changes in Accumulated Other Comprehensive Income (Loss) by Component Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) (Dollars in millions) Balance at December 31, 2019 $ 153 $ 4 $ (27 ) $ 130 Other comprehensive income (loss) before reclassifications 39 — — 39 Amounts reclassified from accumulated other comprehensive income (loss) — — — — Net current period other comprehensive income (loss) 39 39 Balance at March 31, 2020 $ 192 $ 4 $ (27 ) $ 169 Foreign Exchange Translation Adjustment Changes in Fair Value of Effective Cash Flow Hedges Pension Adjustments Total Accumulated Other Comprehensive Income (Loss) (Dollars in millions) Balance at December 31, 2020 $ (81 ) $ (3 ) $ (45 ) $ (129 ) Other comprehensive (loss) before reclassifications 110 — — 110 Amounts reclassified from accumulated other comprehensive income (loss) — 1 — 1 Net current period other comprehensive (loss) 110 1 111 Balance at March 31, 2021 $ 29 $ (2 ) $ (45 ) $ (18 ) |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings (Loss) Per Share | The details of the earnings (loss) per share (“EPS”) calculations for the three months ended March 31, 2021 and 2020 are as follows: Three Months Ended March 31, 2021 2020 (Dollars in millions except per share amounts) Basic Net (loss) income $ (105 ) $ 52 Weighted average common shares outstanding 75,904,898 75,040,932 EPS – Basic $ (1.38 ) $ 0.69 Three Months Ended March 31, 2021 2020 (Dollars in millions except per share amounts) Diluted Net (loss) income $ (105 ) $ 52 Weighted average common shares outstanding – Basic 75,904,898 75,040,932 Dilutive effect of unvested RSUs and other contingently issuable shares — 1,220,613 Weighted average common shares outstanding – Diluted 75,904,898 76,261,545 EPS – Diluted $ (1.38 ) $ 0.68 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments And Contingencies Disclosure [Abstract] | |
Summary of Obligation Payable to Honeywell | The following table summarizes our Obligation payable to Honeywell related to these agreements. As of March 31, 2021 and December 31, 2020, all amounts have been reclassified to Liabilities subject to compromise on the Consolidated Interim Balance Sheets: Three Months Ended March 31, 2021 Asbestos and environmental Tax Matters Total (Dollars in millions) Beginning of year $ 1,196 $ 286 $ 1,482 Currency translation adjustment (49 ) (12 ) (61 ) End of period $ 1,147 $ 274 $ 1,421 Current 2 39 41 Non-current 1,145 235 1,380 Total $ 1,147 $ 274 $ 1,421 Twelve Months Ended December 31, 2020 Asbestos and environmental Tax Matters Total (Dollars in millions) Beginning of year $ 1,090 $ 261 $ 1,351 Legal fees expensed 41 — 41 Payments to Honeywell (35 ) — (35 ) Currency translation adjustment 100 25 125 End of period $ 1,196 $ 286 $ 1,482 Current 2 40 42 Non-current 1,194 246 1,440 Total $ 1,196 $ 286 $ 1,482 |
Pension Benefits (Tables)
Pension Benefits (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Compensation And Retirement Disclosure [Abstract] | |
Summary of Net Periodic Benefit Cost | Net periodic benefit costs for our significant defined benefit plans include the following components: Three Months Ended March 31, U.S. Plans Non-U.S. Plan, 2021 2020 2021 2020 (Dollars in millions) Service cost $ — $ — $ 3 $ 2 Interest cost 1 1 — — Expected return on plan assets (3 ) (3 ) (2 ) (1 ) $ (2 ) $ (2 ) $ 1 $ 1 |
Background and Basis of Prese_2
Background and Basis of Presentation - Additional Information (Details) € in Millions | Jun. 12, 2020USD ($) | Sep. 12, 2018USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2022USD ($) | Jun. 12, 2020EUR (€) |
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. | ||||
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% | ||||
2020 Amended Credit Agreement | Revolving Credit Facility | |||||
Background And Basis Of Presentation [Line Items] | |||||
Debt instrument, face amount | € | € 430 | ||||
Debt instrument term | 5 years | ||||
PSA and The Transaction, The Amended Plan | Honeywell International Inc | |||||
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 | ||||
PSA and The Transaction, The Amended Plan | Honeywell International Inc | 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 | ||||
PSA and The Transaction, The Amended Plan | Honeywell International Inc | Series B Preferred Stock | Scenario Forecast | |||||
Background And Basis Of Presentation [Line Items] | |||||
Preferred stock issued payable in instalments | $ 35,000,000 | ||||
Term B Loan Facility | 2020 Amended Credit Agreement | |||||
Background And Basis Of Presentation [Line Items] | |||||
Debt instrument, face amount | $ 425,000,000 | 375 | |||
Debt instrument term | 7 years | ||||
Term A Loan Facility | 2020 Amended Credit Agreement | |||||
Background And Basis Of Presentation [Line Items] | |||||
Debt instrument, face amount | € | € 330 | ||||
Debt instrument term | 5 years |
Reorganization and Chapter 11_3
Reorganization and Chapter 11 Proceedings - Additional Information (Details) | Mar. 17, 2021USD ($) | Mar. 09, 2021USD ($)$ / shares | Mar. 08, 2021$ / shares | Feb. 15, 2021USD ($) | Jan. 11, 2021USD ($)$ / shares | Oct. 22, 2020USD ($) | Oct. 09, 2020USD ($) | Oct. 06, 2020 | Sep. 04, 2020 | Jun. 12, 2020USD ($) | Sep. 27, 2018USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Apr. 26, 2021USD ($)Claim | Sep. 20, 2020 | Jun. 12, 2020EUR (€) | Sep. 27, 2018EUR (€) |
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Professional and filing fees by debtor | $ 84,000,000 | ||||||||||||||||
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. | ||||||||||||||||
Subsequent Event | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Number of proofs of claim filed | Claim | 2,487 | ||||||||||||||||
Unsecured claims amount | $ 146,000,000,000 | ||||||||||||||||
Senior Secured Credit Facilities | Federal Funds Effective Rate and Overnight Bank Funding Rate | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Debt instrument applicable margin rate | 0.50% | ||||||||||||||||
Senior Secured Credit Facilities | LIBOR Loans | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Debt instrument applicable margin rate | 1.00% | ||||||||||||||||
RSA | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Aggregate outstanding principal amount of loan percentage | 61.00% | ||||||||||||||||
2020 Amended Credit Agreement | Senior Secured Credit Facilities | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Debt instrument applicable margin rate | 0.25% | ||||||||||||||||
Maximum | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Professional and filing fees by debtor | $ 25,000,000 | ||||||||||||||||
Term Loan Facility | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Debtor-in-possession financing, committed amount upon emergence | $ 1,250,000,000 | ||||||||||||||||
Revolving Credit Facility | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Debtor-in-possession financing, committed amount upon emergence | $ 300,000,000 | ||||||||||||||||
Payment of debt issuance costs | 6,000,000 | ||||||||||||||||
Revolving Credit Facility | Credit Agreement | Senior Secured Credit Facilities | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Line of credit, term | 5 years | ||||||||||||||||
Line of credit, maximum borrowing capacity | € | € 430,000,000 | ||||||||||||||||
Term B Facility | Senior Secured Credit Facilities | ABR Loans | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Debt instrument applicable margin rate | 2.50% | ||||||||||||||||
Term B Facility | Senior Secured Credit Facilities | EURIBOR Loans | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Debt instrument applicable margin rate | 3.75% | ||||||||||||||||
Term B Facility | Credit Agreement | Senior Secured Credit Facilities | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Line of credit, term | 7 years | ||||||||||||||||
Line of credit, maximum borrowing capacity | $ 425,000,000 | 375,000,000 | |||||||||||||||
Term B Facility | 2020 Amended Credit Agreement | Senior Secured Credit Facilities | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Debt instrument applicable margin rate | 0.75% | ||||||||||||||||
Term A Facility | Credit Agreement | Senior Secured Credit Facilities | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Line of credit, term | 5 years | ||||||||||||||||
Line of credit, maximum borrowing capacity | € | € 330,000,000 | ||||||||||||||||
Term A Facility | 2020 Amended Credit Agreement | Senior Secured Credit Facilities | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Debt instrument applicable margin rate | 0.25% | ||||||||||||||||
5.125% Senior Notes Due 2026 | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Senior notes | $ 410,000,000 | $ 412,000,000 | $ 429,000,000 | € 350,000,000 | |||||||||||||
Debt instrument, annual fixed interest rate | 5.125% | 5.125% | |||||||||||||||
Debt instrument maturity date | Oct. 15, 2026 | ||||||||||||||||
Stalking Horse Bidder and AMP U.S. Holdings, LLC | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Winning bid selected | $ 2,100,000,000 | ||||||||||||||||
Stalking Horse Bidder | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Bankruptcy proceedings, date petition for bankruptcy Filed | Jan. 11, 2021 | ||||||||||||||||
Termination payment | $ 63,000,000 | ||||||||||||||||
Reimbursement payment expense | $ 15,700,000 | ||||||||||||||||
CO Group | PSA | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Common stock exchange rate for cancellation per share | $ / shares | $ 6.25 | ||||||||||||||||
Professional and filing fees by debtor | $ 25,000,000 | ||||||||||||||||
Estimated professional and filing fees by debtor | $ 82,000,000 | ||||||||||||||||
CO Group | Series A Preferred Stock | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Equity method investment aggregate amount in cash | 668,800,000 | ||||||||||||||||
Equity method investment maximum aggregate value | $ 632,000,000 | $ 632,000,000 | |||||||||||||||
Conversion price | $ / shares | $ 5.25 | $ 3.50 | |||||||||||||||
CO Group | Series A Preferred Stock | Centerbridge and Oaktree | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Equity method investment aggregate amount in cash | $ 668,800,000 | ||||||||||||||||
DIP Agent and DIP Lenders | DIP Term Loan Facility | |||||||||||||||||
Reorganization And Chapter11 Proceedings [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 | Apr. 30, 2021 | Mar. 31, 2021 | |||||||||||||||
Debtor-in-possession financing extensions description | The original maturity date of the DIP Term Loan Facility was 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. On March 17, 2021, the Company prepaid $100 million that was previously outstanding under the DIP Credit Agreement, and on March 31, 2021 the Company exercised its first extension option and extended the maturity date for the loans remaining outstanding under the DIP Credit Agreement to April 30, 2021. | ||||||||||||||||
Principal amount of loans outstanding percentage | 0.50% | ||||||||||||||||
Debtor-in-possession financing prepaid outstanding loan | $ 100,000,000 | ||||||||||||||||
Debtor-in-possession interest rate description | Following the exercise by the Company of its initial maturity date extension option, the outstanding principal amount under the DIP Term Loan Facility bears interest at a rate equal to LIBOR (subject to a 1.00% LIBOR floor) plus 5.50% per annum 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, 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 | 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 | Maximum | DIP Term Loan Facility | |||||||||||||||||
Reorganization And Chapter11 Proceedings [Line Items] | |||||||||||||||||
Principal amount to be funded | $ 200,000,000 |
Reorganization and Chapter 11_4
Reorganization and Chapter 11 Proceedings - Schedule of Reorganization Items Net (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Reorganizations [Abstract] | |
Advisor fees | $ 84 |
DIP Financing fees | 1 |
Bid termination and expense reimbursement | 79 |
Other | 10 |
Total reorganization items, net | $ 174 |
Reorganization and Chapter 11_5
Reorganization and Chapter 11 Proceedings - Schedule of Principal Amounts Outstanding on Senior Secured Credit Facilities and Senior Notes (Details) € in Millions, $ in Millions | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Sep. 27, 2018USD ($) | Sep. 27, 2018EUR (€) |
Long-term debt, net subject to compromise | ||||
Total debt, prior to reclassification to Liabilities subject to compromise | $ 1,837 | $ 1,881 | ||
Less: current portion | (376) | (370) | ||
Less: Amounts reclassified to Liabilities subject to compromise | (412) | (429) | ||
Total long-term debt | 1,049 | 1,082 | ||
5.125% Senior Notes Due 2026 | ||||
Long-term debt, net subject to compromise | ||||
Senior notes | 412 | 429 | $ 410 | € 350 |
Credit Agreement | Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Total consolidated Secured Debt | 1,425 | 1,452 | ||
Credit Agreement | Term A and B Facility | Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Total consolidated Secured Debt | 1,055 | 1,082 | ||
Credit Agreement | Revolving Credit Facility | Senior Secured Credit Facilities | ||||
Debt Instrument [Line Items] | ||||
Total consolidated Secured Debt | $ 370 | $ 370 |
Reorganization and Chapter 11_6
Reorganization and Chapter 11 Proceedings - Schedule of Liabilities Subject to Compromise (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Reorganizations [Abstract] | ||
Obligations payable to Honeywell | $ 1,421 | $ 1,482 |
Long-term debt | 412 | 429 |
Pension, compensation, benefit and other employee related | 82 | 92 |
Uncertain tax positions and deferred taxes | 61 | 69 |
Accounts payable | 35 | 82 |
Advanced discounts from suppliers | 28 | 33 |
Lease liability | 17 | 19 |
Product warranties and performance guarantees | 16 | 16 |
Freight Accrual | 27 | |
Other | 35 | 41 |
Total liabilities subject to compromise | $ 2,107 | $ 2,290 |
Reorganization and Chapter 11_7
Reorganization and Chapter 11 Proceedings - Schedule of Principal Amounts Outstanding on Debtor-In-Possession Financing (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Disclosure [Abstract] | ||
Debtor-in-possession financing | $ 100 | $ 200 |
Reorganization and Chapter 11_8
Reorganization and Chapter 11 Proceedings - Condensed Statements of Operations of Debtors (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net sales | $ 997 | $ 745 |
Cost of goods sold | 801 | 607 |
Gross profit | 196 | 138 |
Selling, general and administrative expenses | 55 | 57 |
Interest expense | 21 | 16 |
Non-operating expense | 26 | (4) |
Reorganization items, net | 174 | |
(Loss) income before taxes | (81) | 53 |
Tax expense | 24 | 1 |
Net (loss) income | (105) | $ 52 |
Debtors | ||
Net sales | 753 | |
Cost of goods sold | 602 | |
Gross profit | 151 | |
Selling, general and administrative expenses | 53 | |
Interest expense | 23 | |
Non-operating expense | 12 | |
Reorganization items, net | 174 | |
(Loss) income before taxes | (111) | |
Tax expense | 20 | |
Net (loss) income | $ (131) |
Reorganization and Chapter 11_9
Reorganization and Chapter 11 Proceedings - Condensed Balance Sheets of Debtors (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||||
Cash and cash equivalents | $ 382 | $ 592 | ||
Restricted cash | 195 | 101 | ||
Accounts, notes and other receivables – net | 807 | 841 | ||
Inventories – net | 258 | 235 | ||
Other current assets | 93 | 110 | ||
Total current assets | 1,735 | 1,879 | ||
Investments and long-term receivables | 30 | 30 | ||
Property, plant and equipment – net | 484 | 505 | ||
Goodwill | 193 | 193 | ||
Deferred income taxes | 262 | 275 | ||
Other assets | 131 | 135 | ||
Total assets | 2,835 | 3,017 | ||
Current liabilities: | ||||
Accounts payable | 1,099 | 1,019 | ||
Borrowings under revolving credit facility | 370 | 370 | ||
Current maturities of long-term debt | 6 | |||
Debtor-in-possession Term Loan | 100 | 200 | ||
Accrued liabilities | 277 | 248 | ||
Total current liabilities | 1,852 | 1,837 | ||
Long-term debt | 1,049 | 1,082 | ||
Other liabilities | 125 | 114 | ||
Total liabilities not subject to compromise | 3,028 | 3,035 | ||
Liabilities subject to compromise | ||||
Total liabilities subject to compromise | 2,107 | 2,290 | ||
Total liabilities | 5,135 | 5,325 | ||
COMMITMENTS AND CONTINGENCIES (Note 18) | ||||
EQUITY (DEFICIT) | ||||
Total deficit attributable to the Debtors | (2,300) | (2,308) | $ (2,046) | $ (2,133) |
Total liabilities and deficit | 2,835 | 3,017 | ||
Debtors | ||||
Current assets: | ||||
Cash and cash equivalents | 276 | 516 | ||
Restricted cash | 40 | 30 | ||
Accounts, notes and other receivables – net | 450 | 430 | ||
Accounts and other receivables from non-debtor affiliates | 263 | 240 | ||
Inventories – net | 178 | 166 | ||
Other current assets | 75 | 91 | ||
Total current assets | 1,282 | 1,473 | ||
Investments and long-term receivables | 8 | 6 | ||
Investment in subsidiaries | 888 | 883 | ||
Property, plant and equipment – net | 304 | 319 | ||
Goodwill | 193 | 193 | ||
Deferred income taxes | 229 | 236 | ||
Other assets | 89 | 93 | ||
Total assets | 2,993 | 3,203 | ||
Current liabilities: | ||||
Accounts payable | 597 | 497 | ||
Borrowings under revolving credit facility | 370 | 370 | ||
Current maturities of long-term debt | 6 | |||
Debtor-in-possession Term Loan | 100 | 200 | ||
Accrued liabilities | 135 | 106 | ||
Total current liabilities | 1,208 | 1,173 | ||
Long-term debt | 1,049 | 1,082 | ||
Other liabilities | 29 | 22 | ||
Total liabilities not subject to compromise | 2,286 | 2,277 | ||
Liabilities subject to compromise | ||||
External | 2,107 | 2,290 | ||
With non-debtor affiliates | 488 | 528 | ||
Total liabilities subject to compromise | 2,595 | 2,818 | ||
Total liabilities | 4,881 | 5,095 | ||
COMMITMENTS AND CONTINGENCIES (Note 18) | ||||
EQUITY (DEFICIT) | ||||
Total deficit attributable to the Debtors | (1,888) | (1,892) | ||
Total liabilities and deficit | $ 2,993 | $ 3,203 |
Reorganization and Chapter 1_10
Reorganization and Chapter 11 Proceedings - Condensed Statements of Cash Flows of Debtors (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net cash used for operating activities | $ 32 | $ 57 |
Cash flows from investing activities: | ||
Expenditures for property, plant and equipment | (18) | (39) |
Other | 1 | |
Net cash used for investing activities | (17) | (39) |
Cash flows from financing activities: | ||
Debtor-in-possession financing fees | (1) | |
Net cash (used for) provided by financing activities | (101) | 62 |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (30) | (13) |
Net (decrease)/increase in cash, cash equivalents and restricted cash | (116) | 67 |
Cash, cash equivalents and restricted cash at beginning of period | 693 | 187 |
Cash, cash equivalents and restricted cash at end of period | 577 | $ 254 |
Debtors | ||
Cash flows from operating activities: | ||
Net cash used for operating activities | (100) | |
Cash flows from investing activities: | ||
Expenditures for property, plant and equipment | (5) | |
Other | 1 | |
Net cash used for investing activities | (4) | |
Cash flows from financing activities: | ||
Payments of debtor-in-possession financing | (100) | |
Debtor-in-possession financing fees | (1) | |
Net cash (used for) provided by financing activities | (101) | |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (26) | |
Net (decrease)/increase in cash, cash equivalents and restricted cash | (231) | |
Cash, cash equivalents and restricted cash at beginning of period | 547 | |
Cash, cash equivalents and restricted cash at end of period | $ 316 |
Revenue Recognition and Contr_3
Revenue Recognition and Contracts with Customers - Summary of Net Sales by Region and Channel (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation Of Revenue [Line Items] | ||
Net sales | $ 997 | $ 745 |
United States | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 138 | 132 |
Europe | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 528 | 433 |
Asia | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 319 | 173 |
Other International | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 12 | 7 |
OEM | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 889 | 648 |
OEM | United States | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 100 | 92 |
OEM | Europe | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 481 | 394 |
OEM | Asia | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 302 | 159 |
OEM | Other International | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 6 | 3 |
Aftermarket | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 91 | 82 |
Aftermarket | United States | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 36 | 40 |
Aftermarket | Europe | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 39 | 30 |
Aftermarket | Asia | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 10 | 8 |
Aftermarket | Other International | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 6 | 4 |
Other | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 17 | 15 |
Other | United States | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 2 | |
Other | Europe | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | 8 | 9 |
Other | Asia | ||
Disaggregation Of Revenue [Line Items] | ||
Net sales | $ 7 | $ 6 |
Revenue Recognition and Contr_4
Revenue Recognition and Contracts with Customers - Summary of Contract Assets and Liabilities (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Contract With Customer Asset And Liability [Abstract] | |
Contract assets—January 1 | $ 61 |
Contract assets—March 31 | 65 |
Change in contract assets—Increase/(Decrease) | 4 |
Contract liabilities—January 1 | (2) |
Contract liabilities—March 31 | (1) |
Change in contract liabilities—(Increase)/Decrease | $ 1 |
Research, Development & Engin_3
Research, Development & Engineering - Summary of Research, Development & Engineering Activities (Details) - Cost of Goods Sold - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Research And Development Arrangement Contract To Perform For Others [Line Items] | ||
Research, development & engineering expense, total | $ 39 | $ 36 |
Research and Development Costs | ||
Research And Development Arrangement Contract To Perform For Others [Line Items] | ||
Research, development & engineering expense, total | 33 | 30 |
Engineering-Related Expenses | ||
Research And Development Arrangement Contract To Perform For Others [Line Items] | ||
Research, development & engineering expense, total | $ 6 | $ 6 |
Other Expense, Net - Schedule o
Other Expense, Net - Schedule of Other Operating Cost and Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Other Income And Expenses [Abstract] | ||
Indemnification related — post Spin-Off | $ 15 | |
Indemnification related — litigation | 1 | |
Factoring and notes receivables discount fees | $ 1 | |
Other Expense, Net | $ 1 | $ 16 |
Income Taxes - Tax Expense and
Income Taxes - Tax Expense and Effective Tax Rate (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Tax expense | $ 24 | $ 1 |
Effective tax rate | (29.60%) | 1.90% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate | (29.60%) | 1.90% |
U.S. federal statutory income tax rate | 21.00% |
Accounts, Notes and Other Rec_3
Accounts, Notes and Other Receivables-Net - Schedule of Accounts, Notes and Other Receivables Net (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | ||
Trade receivables | $ 672 | $ 625 |
Notes receivables | 70 | 152 |
Other receivables | 75 | 77 |
Accounts, notes and other receivables, gross | 817 | 854 |
Less—Allowance for doubtful accounts | (10) | (13) |
Accounts, notes and other receivables, net | $ 807 | $ 841 |
Accounts, Notes and Other Rec_4
Accounts, Notes and Other Receivables-Net - Additional Information (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | ||
Unbilled balances | $ 65 | $ 61 |
Unbilled contracts assets | $ 65 | $ 61 |
Factoring and Notes Receivable
Factoring and Notes Receivable - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Receivables [Abstract] | ||
Sale of trade receivables | $ 180 | $ 473 |
Proceeds from sale of bank notes | 0 | 160 |
Guaranteed bank notes pledged as collateral | $ 15 | $ 18 |
Inventories-Net - Summary of In
Inventories-Net - Summary of Inventories (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Combining Work In Process And Raw Materials Alternative Gross [Abstract] | ||
Raw materials | $ 150 | $ 160 |
Work in process | 21 | 19 |
Finished products | 124 | 97 |
Inventory, gross | 295 | 276 |
Less—Reserves | (37) | (41) |
Inventories | $ 258 | $ 235 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | ||
Advanced discounts to customers, non-current | $ 68 | $ 70 |
Operating right-of-use assets (Note 14) | $ 36 | $ 36 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Total | Total |
Other | $ 27 | $ 29 |
Total | $ 131 | $ 135 |
Accrued Liabilities - Summary o
Accrued Liabilities - Summary of Accrued Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Accrued Liabilities Current [Abstract] | ||
Customer pricing reserve | $ 87 | $ 82 |
Compensation, benefit and other employee related | 59 | 62 |
Taxes | 29 | 37 |
Product warranties and performance guarantees | 16 | 14 |
Repositioning | 13 | 7 |
Advanced discounts from suppliers, current | 5 | 5 |
Customer advances and deferred income | 9 | 8 |
Short-term lease liability (Note 14) | 5 | 5 |
Other (primarily operating expenses) | 54 | 28 |
Accrued Liabilities | $ 277 | $ 248 |
Accrued Liabilities - Summary_2
Accrued Liabilities - Summary of Accrued Liabilities (Parenthetical) (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Accrued Liabilities Current [Abstract] | ||
Contract liabilities | $ 1 | $ 2 |
Accrued Liabilities - Summary_3
Accrued Liabilities - Summary of Expenses Related to the Repositioning Accruals (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | $ 7 | $ 4 |
Charges | 8 | 5 |
Usage—cash | (2) | (2) |
Balance at end of period | 13 | 7 |
Severance Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | 7 | 3 |
Charges | 8 | 5 |
Usage—cash | (2) | (2) |
Balance at end of period | $ 13 | 6 |
Exit Costs | ||
Restructuring Cost And Reserve [Line Items] | ||
Balance at beginning of period | 1 | |
Usage—cash | 0 | |
Balance at end of period | $ 1 |
Other Liabilities - Schedule of
Other Liabilities - Schedule of Other Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | ||
Income taxes | $ 47 | $ 45 |
Designated and undesignated derivatives | 21 | 22 |
Pension and other employee related | 18 | 14 |
Long-term lease liability (Note 14) | 14 | 15 |
Advanced discounts from suppliers | 10 | 11 |
Other | 15 | 7 |
Other Liabilities | $ 125 | $ 114 |
Leases - Additional Information
Leases - Additional Information (Details) | 3 Months Ended |
Mar. 31, 2021 | |
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 |
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 | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Leases [Abstract] | ||
Operating lease cost | $ 4 | $ 3 |
Leases - Summary of Supplementa
Leases - Summary of Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Leases [Abstract] | ||
Operating cash outflows from operating leases | $ 3 | $ 2 |
Right-of-use assets obtained in exchange for lease obligations, operating leases | $ 1 |
Leases - Summary of Supplemen_2
Leases - Summary of Supplemental Balance Sheet Information Related to Operating Leases (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Other assets | $ 36 | $ 36 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other assets (Note 11) | Other assets (Note 11) |
Accrued liabilities | $ 5 | $ 5 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued liabilities (Note 12) | Accrued liabilities (Note 12) |
Other liabilities | $ 14 | $ 15 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other liabilities (Note 13) | Other liabilities (Note 13) |
Liabilities subject to compromise | $ 17 | $ 19 |
Weighted-average lease term (in years) | 5 years 7 days | 5 years 1 month 20 days |
Weighted-average discount rate | 6.18% | 6.16% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Millions | Mar. 31, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 9 |
2022 | 10 |
2023 | 7 |
2024 | 5 |
2025 | 4 |
Thereafter | 8 |
Total lease payments | 43 |
Less imputed interest | (6) |
Operating lease, liabilities | $ 37 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | gtx:AccruedAndOtherNonCurrentLiabilitiesMember |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measures - Additional Information (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | ||
Derivative, aggregate gross notional amount | $ 170,000,000 | $ 19,000,000 |
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 ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Notional Amounts | $ 170,000,000 | $ 19,000,000 |
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 | 170,000,000 | $ 19,000,000 |
Fair Value, Assets | $ 2,000,000 |
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 | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | $ 3,028 | $ 3,035 |
Carrying Value | Terms Loans A and B | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 1,055 | |
Carrying Value | Debtor In Possession Financing | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 100 | |
Carrying Value | 5.125% Senior Notes Due 2026 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 412 | |
Fair Value | Terms Loans A and B | Level 2 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 1,073 | |
Fair Value | Debtor In Possession Financing | Level 2 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Liabilities not subject to compromise | 100 | |
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 | $ 440 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) by Component (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | $ (2,308) | $ (2,133) |
Total other comprehensive income, net of tax | 111 | 39 |
Ending balance | (2,300) | (2,046) |
Foreign Exchange Translation Adjustment | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (81) | 153 |
Other comprehensive income (loss) before reclassifications | 110 | 39 |
Total other comprehensive income, net of tax | 110 | 39 |
Ending balance | 29 | 192 |
Changes in Fair Value of Effective Cash Flow Hedges | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (3) | 4 |
Amounts reclassified from accumulated other comprehensive income (loss) | 1 | |
Total other comprehensive income, net of tax | 1 | |
Ending balance | (2) | 4 |
Pension Adjustments | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (45) | (27) |
Ending balance | (45) | (27) |
Total Accumulated Other Comprehensive Income (Loss) | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Beginning balance | (129) | 130 |
Other comprehensive income (loss) before reclassifications | 110 | 39 |
Amounts reclassified from accumulated other comprehensive income (loss) | 1 | |
Total other comprehensive income, net of tax | 111 | 39 |
Ending balance | $ (18) | $ 169 |
Earnings (Loss) Per Share - Sch
Earnings (Loss) Per Share - Schedule of Basic and Diluted Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Basic | ||
Net (loss) income | $ (105) | $ 52 |
Weighted average common shares outstanding - Basic | 75,904,898 | 75,040,932 |
EPS – Basic | $ (1.38) | $ 0.69 |
Diluted | ||
Net (loss) income | $ (105) | $ 52 |
Weighted average common shares outstanding - Basic | 75,904,898 | 75,040,932 |
Dilutive effect of unvested RSUs and other contingently issuable shares | 1,220,613 | |
Weighted average common shares outstanding – Diluted | 75,904,898 | 76,261,545 |
EPS – Diluted | $ (1.38) | $ 0.68 |
Earnings (Loss) Per Share - Add
Earnings (Loss) Per Share - Additional Information (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Antidilutive shares excluded from computation of diluted EPS | 399,489 | 441,966 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | Dec. 18, 2020USD ($) | Oct. 01, 2018USD ($)Installment | Sep. 12, 2018USD ($) | Mar. 31, 2021USD ($)$ / shares | Mar. 31, 2020USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2022USD ($) | Jan. 11, 2021USD ($) | Sep. 30, 2020USD ($) |
Loss Contingencies [Line Items] | ||||||||||
Make-whole premium claim amount | $ 0 | $ 15,000,000 | ||||||||
Brazilian Tax Authorities | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Estimated amount of contingency including penalties and interest | 27,000,000 | |||||||||
Right to offset federal tax | $ 27,000,000 | |||||||||
Debtors | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Common stock exchange rate for cancellation per share | $ / shares | $ 6.25 | |||||||||
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 [Member] | ||||||||||
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 certain Honeywell 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 $175 million in respect of such liabilities arising in any given calendar year. | |||||||||
Honeywell International Inc | Indemnification and Reimbursement Agreement | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Percentage of net insurance receipts | 90.00% | |||||||||
Bendix | Honeywell International Inc | Honeywell Indemnity Agreement | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% | |||||||||
Bendix | Honeywell International Inc | Indemnification and Reimbursement Agreement | ||||||||||
Loss Contingencies [Line Items] | ||||||||||
Percentage of asbestos and environmental liabilities liable to pay | 90.00% |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Obligation Payable to Honeywell (Details) - Exit Costs - Honeywell International Inc - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Loss Contingencies [Line Items] | ||
Beginning of year | $ 1,482 | $ 1,351 |
Legal fees expensed | 41 | |
Payments to Honeywell | (35) | |
Currency translation adjustment | (61) | 125 |
End of period | 1,421 | 1,482 |
Current | 41 | 42 |
Non-current | 1,380 | 1,440 |
Total | 1,421 | 1,482 |
Asbestos and Environmental | ||
Loss Contingencies [Line Items] | ||
Beginning of year | 1,196 | 1,090 |
Legal fees expensed | 41 | |
Payments to Honeywell | (35) | |
Currency translation adjustment | (49) | 100 |
End of period | 1,147 | 1,196 |
Current | 2 | 2 |
Non-current | 1,145 | 1,194 |
Total | 1,147 | 1,196 |
Tax Matters Agreement | ||
Loss Contingencies [Line Items] | ||
Beginning of year | 286 | 261 |
Currency translation adjustment | (12) | 25 |
End of period | 274 | 286 |
Current | 39 | 40 |
Non-current | 235 | 246 |
Total | $ 274 | $ 286 |
Pension Benefits - Additional I
Pension Benefits - Additional Information (Details) - Pension Benefits - Non-U.S. Plans $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | |
Expected pension contribution in the next fiscal year | $ 7 |
Pension contribution | $ 1 |
Pension Benefits - Summary of N
Pension Benefits - Summary of Net Periodic Benefit Cost (Details) - Pension Benefits - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
United States | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Interest cost | $ 1 | $ 1 |
Expected return on plan assets | (3) | (3) |
Net periodic benefit costs | (2) | (2) |
Non-U.S. Plans | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | 3 | 2 |
Expected return on plan assets | (2) | (1) |
Net periodic benefit costs | $ 1 | $ 1 |