Highlights * Second quarter 2006 net income of $50 million *
Positive free cash flow * $800 million secured term loan financing
completed * Significant new business wins * Full year 2006 EBIT-R
guidance raised VAN BUREN TOWNSHIP, Mich., Aug. 1
/PRNewswire-FirstCall/ -- Visteon Corporation (NYSE:VC) today
announced second quarter results demonstrating continued progress
toward achieving its three-year improvement plan. For the second
quarter 2006, Visteon reported net income of $50 million or $0.39
per share compared to a loss of $1.2 billion or $9.85 per share in
the second quarter 2005. (Logo:
http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO ) "We are
pleased with our strong second quarter results and our momentum in
implementing our three-year plan," said Michael F. Johnston,
chairman and chief executive officer. "Our operating results were
better than both the second quarter of 2005 and the first quarter
of this year, and we continue to make solid progress in our
restructuring efforts, in improving our base operations and in
growing our global business." Second Quarter 2006 Results For the
second quarter 2006, product sales were $2.86 billion and services
sales were $138 million. Sales for the same period a year ago
totaled $5.0 billion. Product sales were lower by $2.14 billion due
to the Oct. 1, 2005, transaction with Ford that transferred 23
Visteon facilities to Automotive Components Holdings (ACH), LLC, a
Ford-managed business entity. Visteon's net income of $50 million,
or $0.39 per share, for the current quarter included $22 million of
non-cash asset impairments related to the company's restructuring
actions and an extraordinary gain of $8 million associated with the
acquisition of a lighting facility in Mexico. Also as previously
indicated, Visteon recognized a $49 million benefit in the quarter
related to the relief of post-employment benefits for Visteon
salaried employees associated with two ACH manufacturing facilities
transferred to Ford Motor Company. Income tax expense of $17
million in the quarter included a $14 million benefit from the
restoration of deferred tax assets related to the company's
Brazilian operations. EBIT-R, as defined, was $119 million for the
second quarter 2006, an increase of $47 million from the $72
million reported in the first quarter 2006. EBIT-R for the second
quarter 2005 was a loss of $33 million. Half Year Results For the
first half 2006, product sales were $5.7 billion and services sales
were $283 million. More than half of the company's product sales
were generated from customers other than Ford, demonstrating
continued progress in diversifying Visteon's customer base. Sales
for the same period a year ago totaled $10.0 billion, of which
non-Ford sales were 35 percent. Product sales were lower by $4.3
billion due to the sale of certain plants in North America pursuant
to the ACH transactions completed in October 2005. Visteon's net
income of $53 million, or $0.41 per share, for the first six months
reflects improved operating performance and the financial benefit
of the ACH transactions with Ford. The half year results include
$22 million of non-cash asset impairments related to the company's
restructuring actions and an extraordinary gain of $8 million
associated with the acquisition of a lighting facility in Mexico.
Also as previously indicated, Visteon recognized a cumulative
benefit of $72 million in the first half of 2006 related to the
relief of post-employment benefits for Visteon salaried employees
associated with two ACH manufacturing facilities transferred to
Ford. For the first half 2005, Visteon reported a net loss of
$1.401 billion or $11.15 per share. These results included $1.176
billion, or $9.36 per share, of non-cash asset impairments. EBIT-R
for the first half 2006 totaled $191 million, increasing $329
million from a first half 2005 EBIT-R loss of $138 million. Free
Cash Flow and Financing Activities Free cash flow of $10 million
for the quarter was an improvement of $127 million over the first
quarter 2006. Free cash flow was lower than the second quarter 2005
in which Visteon received the benefit of accelerated payment terms
from Ford as part of the funding agreement. During the second
quarter 2006, Visteon closed on a seven-year $800 million secured
term loan. Proceeds from the loan were used to repay amounts
outstanding under the company's existing credit facilities that
were scheduled to expire in June 2007, including a $350 million
18-month term loan and a $241 million delayed draw term loan. In
connection with this financing, Visteon repaid $50 million of
borrowings under the company's $772 million multi-year secured
revolving credit facility and reduced the amount available under
that facility to $500 million. Visteon expects to eliminate the
multi-year revolver upon completion of new U.S. and European
five-year revolving credit facilities. The company has received
commitments for these facilities totaling $700 million from
JPMorgan Chase Bank, N.A. and Citigroup Global Markets Inc., and
expects to complete these transactions in the third quarter,
subject to market conditions. Proceeds were also used to repurchase
$150 million of the company's 8.25 percent notes that are due in
2010. This repurchase resulted in a gain of $8 million in the
second quarter which was offset by expense associated with debt
issuance costs related to the extinguished credit facilities. As of
June 30, 2006, Visteon had $836 million of cash and total debt of
$2.0 billion and was well within the limits of its financial
covenants in its existing credit facilities. "Effectively managing
the drivers of free cash flow is a top priority for everyone within
the Visteon organization," said James F. Palmer, executive vice
president and chief financial officer. "We are taking steps at
every level to continue strengthening our cash flow position, while
appropriately investing in the business for the future." New
Business Wins The company continues to win new business from a
diverse range of customers across each of the company's key product
lines. Significant wins in North America include DaimlerChrysler
programs in Climate and Lighting and a program with an Asian
vehicle manufacturer in Interiors. Additionally during this period,
Visteon was awarded Climate business in Asia from Hyundai and in
Europe from Ford. "Our business wins speak to the strength of our
focused product portfolio and our ability to deliver the innovation
and quality our customers expect," said Donald J. Stebbins,
president and chief operating officer. "These wins demonstrate that
we are executing on every aspect of our three-year plan, including
growing the business through product innovation, customer
diversification, profitable sales growth and leveraging technology
for global competitive advantage." Outlook Third quarter 2006 is
expected to be challenging, reflecting seasonally low production
volumes globally. Visteon is raising its estimate for 2006 full
year EBIT-R to a range of $170 million to $200 million.
Additionally, the company still expects to generate about $50
million of free cash flow and expects 2006 full-year product sales
of approximately $11.0 billion. "Our momentum and the actions we
are taking to address the business dynamics we are facing give us
confidence that we will continue to make progress in achieving and,
where possible, accelerating our three-year plan," Johnston added.
"We are increasing our outlook for earnings, reaffirming our
outlook for positive free cash flow and reiterating our expectation
for continued year-over-year improvement during the three-year
improvement plan." Visteon Corporation is a leading global
automotive supplier that designs, engineers and manufactures
innovative climate, interior, electronic and lighting products for
vehicle manufacturers, and also provides a range of products and
services to aftermarket customers. With corporate offices in Van
Buren Township, Mich. (U.S.); Shanghai, China; and Kerpen, Germany;
the company has more than 170 facilities in 24 countries and
employs approximately 47,000 people. Forward-looking Information
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 general economic conditions, including
changes in interests rates and fuel prices; the automotive vehicle
production volumes and schedules of our customers, and in
particular Ford's vehicle production volumes; our ability to
satisfy our future capital and liquidity requirements and comply
with the terms of our existing credit agreements and indentures;
the financial distress of our suppliers, or other significant
suppliers to our customers, and possible disruptions in the supply
of commodities to us or our customers; our ability to implement,
and realize the anticipated benefits of, restructuring and other
cost-reduction initiatives and our successful execution of internal
performance plans and other productivity efforts; the timing and
expenses related to restructurings, employee reductions,
acquisitions or dispositions; increases in raw material and energy
costs and our ability to offset or recover these costs; the effect
of pension and other post-employment benefit obligations; increases
in our warranty, product liability and recall costs; the outcome of
legal or regulatory proceedings to which we are or may become a
party; as well as those factors identified in our filings with the
SEC (including our Annual Report on Form 10-K for the fiscal year
ended December 31, 2005). We assume no obligation to update these
forward-looking statements. Use of Non-GAAP Financial Information
This press release contains information about Visteon's financial
results which is not presented in accordance with accounting
principles generally accepted in the United States ("GAAP"). Such
non-GAAP financial measures are reconciled to their closest GAAP
financial measures at the end of this press release. The provision
of these comparable GAAP financial measures for full- year 2006 is
not intended to indicate that Visteon is explicitly or implicitly
providing projections on those GAAP financial measures, and actual
results for such measures are likely to vary from those presented.
The reconciliations include all information reasonably available to
the company at the date of this press release and the adjustments
that management can reasonably predict. VISTEON CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in
Millions, Except Per Share Data) (Unaudited) Three-Months Ended
Six-Months Ended June 30 June 30 2006 2005 2006 2005 Net sales
Products $2,863 $5,003 $5,679 $9,990 Services 138 - 283 - 3,001
5,003 5,962 9,990 Cost of sales Products 2,553 4,760 5,126 9,600
Services 137 - 281 - 2,690 4,760 5,407 9,600 Gross margin 311 243
555 390 Selling, general and administrative expenses 194 274 362
524 Asset impairments 22 1,176 22 1,176 Restructuring expenses 12 -
21 7 Reimbursement from Escrow Account 12 - 21 - Operating income
(loss) 95 (1,207) 171 (1,317) Interest expense, net 38 31 77 60
Equity in net income of non-consolidated affiliates 12 8 19 14
Income (loss) before income taxes, minority interests, change in
accounting and extraordinary item 69 (1,230) 113 (1,363) Provision
(benefit) for income taxes 17 (2) 47 20 Minority interests in
consolidated subsidiaries 10 10 17 18 Net income (loss) before
change in accounting and extraordinary item 42 (1,238) 49 (1,401)
Cumulative effect of change in accounting, net of tax - - (4) - Net
income (loss) before extraordinary item 42 (1,238) 45 (1,401)
Extraordinary item, net of tax 8 - 8 - Net income (loss) $50
$(1,238) $53 $(1,401) Per share data: Basic and diluted earnings
(loss) per share before change in accounting and extraordinary item
$0.33 $(9.85) $0.38 $(11.15) Cumulative effect of change in
accounting, net of tax - - (0.03) - Basic and diluted earnings
(loss) per share before extraordinary item 0.33 (9.85) 0.35 (11.15)
Extraordinary item, net of tax 0.06 - 0.06 - Basic and diluted
earnings (loss) per share $0.39 $(9.85) $0.41 $(11.15) Average
shares outstanding (millions) Basic 127.8 125.7 127.5 125.6 Diluted
127.9 125.7 127.6 125.6 VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Dollars in Millions) (Unaudited) June
30 December 31 2006 2005 ASSETS Cash and equivalents $836 $865
Accounts receivable, net Ford Motor Company 616 618 Non-Ford Motor
Company 1,208 1,120 Inventories, net 570 537 Other current assets
238 205 Total current assets 3,468 3,345 Equity in net assets of
non-consolidated affiliates 210 226 Property and equipment, net
3,029 2,973 Other non-current assets 190 192 Total assets $6,897
$6,736 LIABILITIES AND SHAREHOLDERS' EQUITY / (DEFICIT) Short-term
debt, including current portion of long-term debt $131 $485
Accounts payable 1,710 1,803 Employee benefits, including pensions
265 233 Other current liabilities 437 438 Total current liabilities
2,543 2,959 Long-term debt 1,910 1,509 Postretirement benefits
other than pensions 699 724 Postretirement benefits payable to Ford
Motor Company 127 154 Employee benefits, including pensions 653 647
Deferred income taxes 212 175 Other non-current liabilities 447 382
Minority interests in consolidated subsidiaries 249 234
Shareholders' equity / (deficit) Preferred stock (par value $1.00,
50 million shares authorized, none outstanding) - - Common stock
(par value $1.00, 500 million shares authorized, 131 million shares
issued, 128 million and 129 million shares outstanding,
respectively) 131 131 Stock warrants 127 127 Additional paid-in
capital 3,397 3,396 Accumulated deficit (3,387) (3,440) Accumulated
other comprehensive loss (181) (234) Other (30) (28) Total
shareholders' equity / (deficit) 57 (48) Total liabilities and
shareholders' equity / (deficit) $6,897 $6,736 VISTEON CORPORATION
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in
Millions) (Unaudited) Three-Months Ended Six-Months Ended June 30
June 30 2006 2005 2006 2005 Cash provided from (used by) operating
activities Net income (loss) $50 $(1,238) $53 $(1,401) Adjustments
to reconcile net income (loss) to net cash provided from operating
activities: Depreciation and amortization 106 180 208 356
Postretirement benefit relief (49) - (72) - Asset impairments 22
1,176 22 1,176 Extraordinary item, net of tax (8) - (8) - Equity in
net income of non-consolidated affiliates, net of dividends
remitted (4) 13 3 16 Other non-cash items (4) 1 (4) 23 Changes in
assets and liabilities: Accounts receivable (13) 71 (11) 48
Inventories (20) 41 (19) (17) Accounts payable (74) (32) (173) 108
Other assets and liabilities 102 115 77 196 Net cash provided from
operating activities 108 327 76 505 Cash provided from (used by)
investing activities Capital expenditures (98) (150) (183) (277)
Proceeds from sales of assets 4 16 11 35 Other investments - (7) -
(16) Net cash used by investing activities (94) (141) (172) (258)
Cash provided from (used by) financing activities Proceeds from
debt, net of issuance costs 805 1 1,176 34 Principal payments on
debt (706) (122) (983) (135) Repurchase of unsecured debt
securities (141) - (141) - Other, including book overdrafts (30)
(37) (9) (54) Net cash (used by) provided from financing activities
(72) (158) 43 (155) Effect of exchange rate changes on cash 13 (14)
24 (21) Net (decrease) increase in cash and equivalents (45) 14
(29) 71 Cash and equivalents at beginning of period 881 809 865 752
Cash and equivalents at end of period $836 $823 $836 $823 VISTEON
CORPORATION AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES (Dollars in Millions) (Unaudited) In this press release
the Company has provided information regarding non- GAAP financial
measures of "EBIT-R" and "free cash flow." Such non-GAAP financial
measures are reconciled to their closest US GAAP financial measure
below. EBIT-R: EBIT-R represents net income (loss) before net
interest expense, provision for income taxes and extraordinary item
and excludes impairment of long-lived assets and net unreimbursed
restructuring charges. Management believes EBIT-R is useful to
investors because the excluded items may vary significantly in
timing or amounts and/or may obscure trends useful in evaluating
and comparing the Company's continuing operating activities.
Three-Months Ended Six-Months Ended FY 2006 June 30 June 30
Estimate 2006 2005 2006 2005 Net income (loss) $50 $(1,238) $53
$(1,401) $(109) - $(79) Interest expense, net 38 31 77 60 155
Provision (benefit) for income taxes 17 (2) 47 20 110 Asset
impairments 22 1,176 22 1,176 22 Extraordinary item, net of tax (8)
- (8) - (8) Net unreimbursed restructuring expense - - - 7 - EBIT-R
$119 $(33) $191 $(138) $170 - $200 EBIT-R is not a recognized term
under U.S. GAAP and does not purport to be an alternative to net
income (loss) as an indicator of operating performance or to cash
flows from operating activities as a measure of liquidity. Because
not all companies use identical calculations, this presentation of
EBIT-R may not be comparable to other similarly titled measures of
other companies. Additionally, EBIT-R is not intended to be a
measure of free cash flow for management's discretionary use, as it
does not consider certain cash requirements such as interest
payments, tax payments and debt service requirements. Free Cash
Flow: Free cash flow represents cash flow from operating activities
less capital expenditures. Management believes that free cash flow
is useful in analyzing the Company's ability to service and repay
its debt and it uses the measure for planning and forecasting
future periods, as well as in compensation decisions. Three-Months
Ended Six-Months Ended 2006 June 30 June 30 Estimate 2006 2005 2006
2005 Cash provided from operating activities $108 $327 $76 $505
$450 Capital expenditures (98) (150) (183) (277) (400) Free cash
flow $10 $177 $(107) $228 $50 Free cash flow is not a recognized
term under U.S. GAAP and does not reflect cash used to service debt
and does not reflect funds available for investment or other
discretionary uses.
http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO DATASOURCE:
Visteon Corporation CONTACT: Media Inquiries: Kimberley Goode,
+1-734-710-5000, , or Analyst Inquiries: Derek Fiebig,
+1-734-710-5800, , both of Visteon Corporation Web site:
http://www.visteon.com/
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