Visteon Announces Preliminary Second Quarter 2005 Financial Information
08 August 2005 - 10:00PM
PR Newswire (US)
Second Quarter Highlights * Non-Ford sales of $1.8 billion; new
business wins continue in core areas * Refinancing of credit
facilities completed * Ford MOU signed; progress continues toward
definitive agreements VAN BUREN TOWNSHIP, Mich., Aug. 8
/PRNewswire-FirstCall/ -- Visteon Corporation (NYSE:VC), today
announced preliminary second quarter 2005 sales of $5.0 billion and
a net loss of $1.2 billion or $9.49 per share. These preliminary
results include previously announced non-cash fixed asset
impairment charges of $1.1 billion, or $9.01 per share. (Logo:
http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO ) The
preliminary financial information presented is unaudited and
remains subject to change because, as announced on May 10, 2005,
the company's Audit Committee is conducting an independent review
of the accounting for certain transactions originating in the
company's North American purchasing activities. On August 1, 2005,
Visteon provided an update on preliminary conclusions reached to
date with respect to the transactions that have been the primary
focus of the independent review. However, Visteon is not yet able
to determine whether further adjustments may be required to the
preliminary financial results presented, or in any other period,
resulting from completion of the independent review, the company's
or its independent registered public accounting firm's review
processes or any subsequent events. Non-Ford sales for the second
quarter 2005 grew by $401 million, or 29 percent, compared with the
second quarter 2004, to an all-time high of $1.8 billion and
represented 36 percent of total sales. Ford sales decreased more
than 7 percent to $3.2 billion, primarily reflecting lower
production levels in North America and Europe. Currency favorably
impacted total sales by $120 million. Through the first half of the
year Visteon has won more net new business with non-Ford customers
than it did in the first half of 2004. These wins are balanced
across several customers; 90 percent are in the core areas of
electronics, interiors and climate and more than 80 percent are
outside of North America. "Our customer diversification continues
as non-Ford sales were 36 percent of total sales in the second
quarter and we continue to win new business with these customers in
our key growth products," said Mike Johnston, Visteon chairman and
chief executive officer. "We also took a major step toward
addressing a number of structural challenges in the company's North
American manufacturing operations by signing the memorandum of
understanding with Ford. The Ford transaction will allow us to
focus our efforts and resources to support our global customers in
the core areas of electronics, interiors and climate and to take
the required actions to improve our financial performance." As
announced on August 1, 2005, second quarter 2005 preliminary
financial results include a non-cash charge of $1.1 billion for
fixed assets in both North America and Europe. In North America,
non-cash charges of nearly $900 million were recorded as the
company reduced, to estimated fair value, the carrying value of
fixed assets related to the 24 facilities that will be transferred
to Ford. Visteon also recorded a non-cash charge of about $250
million to reduce the carrying value of certain non-core fixed
assets, primarily in Europe, related to drive line and engine air
fuel systems. Compared with results from the same period a year
ago, second quarter 2005 results were adversely impacted by lower
Ford production volumes, price reductions and increased reserves
for Tier 1 customer bankruptcies. Second quarter results were
positively impacted by the benefits of the Ford Funding Agreement
agreed to in March 2005 as well as other net cost efficiencies. The
Ford Funding Agreement reduced the wage reimbursement to Ford for
Visteon- assigned Ford / UAW hourly employees. Visteon ended the
second quarter 2005 with $823 million of cash and $1,921 million in
debt, resulting in net debt of $1.1 billion, $128 million lower
than it was on March 31, 2005. This reduction was a result of
improved operating cash flow primarily reflecting the benefit of
reduced payment terms provided by the Ford Funding Agreement as
well as reduced capital spending. Refinancing of Credit Facilities
During the quarter, Visteon also obtained a new $300 million
secured short-term credit facility, and revised the terms of its
existing $775 million, five-year facility and the $250 million
delayed draw term loan. On August 1, 2005, Visteon drew down $450
million on its revised bank facilities to fund the repayment of its
maturing $250 million 7.95 percent notes and to provide additional
required liquidity due to working capital needs associated with
summer shut down at its primary customers. Visteon expects to repay
a portion of the amount drawn on the bank facilities when it
receives the $250 million short-term loan from Ford upon reaching
definitive agreements with Ford relating to the Ford MOU.
Memorandum of Understanding with Ford On May 25, 2005, Visteon and
Ford announced that they had entered into a memorandum of
understanding to transfer 24 North American facilities to a
Ford-managed entity. The parties have made significant progress
toward signing definitive agreements, including resolving most of
the significant transactional issues and receiving U.S. anti-trust
and union approvals. Both parties remain committed to the goal of
closing the transaction by the end of the third quarter. Visteon
and Ford have been working diligently to define how Visteon will
support the Ford-managed entity after closing of the transaction.
Although agreements are not completely formalized, Visteon
anticipates a significant portion of its salaried workforce in
North America will support the Ford- managed entity. These
employees will continue to support the transferred business as
required and the Ford-managed entity will reimburse Visteon for the
cost of these employees. Conference Call Scheduled at 9:00 a.m. EDT
Today At 9 a.m. (EDT) today, a conference call is scheduled to
discuss the results in further detail, as well as other related
matters. Dial-in numbers: U.S.: 888-452-7086; International:
706-643-3752 (Call in approximately 10 minutes prior to the start
of the conference.) Those interested in hearing a replay of the
conference in the United States should call 800-642-1687;
international callers should dial 706-645- 9291. The pass code to
access the replay is 6927704 (domestic and international). The
replay will be available for one week. Visteon will provide a
broadcast of the quarterly meeting for the general public via a
live audio webcast. The conference call, along with the financial
results release, presentation material and other supplemental
information, can be accessed through Visteon's Web site at
http://www.visteon.com/earnings . Visteon Corporation is a leading
full-service supplier that delivers consumer-driven technology
solutions to automotive manufacturers worldwide and through
multiple channels within the global automotive aftermarket. Visteon
has approximately 70,000 employees and a global delivery system of
more than 200 technical, manufacturing, sales and service
facilities located in 24 countries. This press release contains
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward- looking
statements are not guarantees of future results and conditions but
rather are subject to various factors, risks and uncertainties that
could cause our actual results to differ materially from those
expressed in these forward-looking statements, including the
automotive vehicle production volumes and schedules of our
customers, and in particular Ford's North American vehicle
production volumes; our ability to enter into definitive agreements
that reflect the terms of the memorandum of understanding with Ford
and close the transactions that are contemplated in the memorandum
of understanding; implementing structural changes that result from
the closing of the transactions contemplated by the memorandum of
understanding in order to achieve a competitive and sustained
business; our ability to satisfy our future capital and liquidity
requirements and comply with the terms of our credit agreements;
the results of the investigation being conducted by Visteon's Audit
Committee and the company's inability to make timely filings with
the SEC; the financial distress of our suppliers; our successful
execution of internal performance plans and other cost-reduction
and productivity efforts; charges resulting from restructurings,
employee reductions, acquisitions or dispositions; our ability to
offset or recover significant material surcharges; the effect of
pension and other post- employment benefit obligations; as well as
those factors identified in our filings with the SEC (including our
Annual Report on Form 10-K for the year- ended December 31, 2004).
We assume no obligation to update these forward- looking
statements. VISTEON CORPORATION AND SUBSIDIARIES SECOND QUARTER
2005 FINANCIAL INFORMATION SUMMARY (preliminary and unaudited) (in
millions, except per share amounts) Sales Ford and affiliates
$3,223 Other customers 1,780 Total sales $5,003 Costs of sales
$5,891 Selling, administrative and other expenses $274 Operating
loss $(1,162) Loss before income taxes and minority interests
$(1,185) Net loss $(1,193) Net loss per share Basic and diluted
$(9.49) Average shares outstanding Basic and diluted 125.7 Special
charges (included in costs of sales) $(1,132) Special charges
above, after-tax $(1,132) Special charges per share, based on
average diluted shares outstanding above $(9.01) Other Selected
Information Depreciation and amortization Depreciation $154
Amortization 26 Total depreciation and amortization $180 Net
interest expense $31 Income tax benefit $(2) Capital expenditures
(including $2 million related to capital leases) $152 Cash and
borrowing Cash $823 Borrowing 1,921
http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO DATASOURCE:
Visteon Corporation CONTACT: Media Inquiries: Jim Fisher,
+1-734-710-5557, , or Investor Inquiries: Derek Fiebig,
+1-734-710-5800, , both of Visteon Corporation Web site:
http://www.visteon.com/
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