VAN BUREN TOWNSHIP, Mich., Feb. 25, 2009 /PRNewswire-FirstCall/ -- Fourth Quarter Financial Summary -- Product sales of $1.55 billion -- Net loss of $328 million; EBIT-R of negative $94 million -- Non-cash impairment charge of $200 million for Interiors business -- Cash generated by operating activities of $37 million -- Year-end cash balance of $1.18 billion Restructuring and Other Cost-Reduction Actions -- Three-year plan completed; 30 restructuring actions finished ahead of schedule -- Salaried workforce reduction on track -- Additional cost-saving measures implemented
Visteon Corporation (NYSE: VC) today announced fourth-quarter and full-year 2008 results. For fourth quarter 2008, Visteon reported a net loss of $328 million, or $2.53 per share, on sales from continuing operations of $1.7 billion. The fourth quarter 2008 net loss includes a non-cash asset impairment charge of $200 million for long-lived assets utilized in the Interiors business. For fourth quarter 2007, Visteon reported a net loss of $43 million, or 33 cents per share, on sales of $2.9 billion. EBIT-R, as defined below, for fourth quarter 2008 was negative $94 million, compared with $15 million in fourth quarter 2007. For the full year 2008, Visteon reported a net loss of $663 million, or $5.12 per share, on sales of $9.5 billion compared with a net loss of $372 million, or $2.87 per share, on sales of $11.3 billion for full year 2007.
"Visteon's financial results for the fourth quarter 2008 were significantly affected by the global economic slowdown as automakers quickly reduced production levels in nearly every market," said Donald J. Stebbins, chairman and chief executive officer.
Visteon continues to execute cost-reduction actions in response to the current market conditions beyond those associated with the previously announced three-year improvement plan. These additional cost-reduction actions include global salary and hourly workforce reductions, shortened work weeks, temporary reductions in pay, elimination of 401(k) matching and merit increases, along with other cost- saving measures.
Additionally, during 2008 Visteon completed the remaining restructuring activities under its three-year improvement plan, bringing the total number of completed actions to 30. These actions were completed ahead of schedule, at lower cost, and with greater savings than initially planned.
"The restructuring actions completed under the three-year improvement plan have resulted in significant diversification of our business across customers and regions, which makes Visteon an important partner during these extremely difficult market conditions," added Stebbins.
Visteon's fourth-quarter product sales were more diversified among customers than any previous quarter. Approximately 30 percent of fourth quarter product sales were to Ford Motor Co., while Hyundai-Kia accounted for 28 percent. Renault-Nissan and PSA/Peugeot-Citroen each accounted for about 6 percent of sales. On a regional basis, Europe and Asia Pacific each accounted for about 35 percent of total product sales, with North America accounting for 22 percent and the balance in South America.
Fourth Quarter 2008 Results
For fourth quarter 2008, total sales were $1.65 billion, including product sales of $1.55 billion and services revenue of approximately $100 million. Product sales decreased by about $1.2 billion year-over-year as lower production and sourcing actions, net of new business, reduced sales by about $685 million. Divestitures and closures, in connection with the three-year plan, and foreign currency further reduced sales by about $200 million and $250 million, respectively. The company experienced lower sales in each of the major regions in which it operates, reflecting decreased production volumes by all customers as vehicle sales declined in response to global economic conditions.
Product gross margin for fourth quarter 2008 was negative $10 million, compared with $201 million a year earlier. The impact of lower production levels, divestitures and closures, and foreign currency more than offset savings from restructuring activities and favorable net cost performance.
Selling, general and administrative expense for fourth quarter 2008 totaled $111 million, a decrease of $80 million or 42 percent compared with the same period a year ago.
For fourth quarter 2008, the company reported a net loss of $328 million, or $2.53 per share. This compares with a net loss of $43 million, or 33 cents per share, in the same period a year ago. Fourth quarter 2008 results include asset impairments and a loss on divestitures of $205 million, as well as $51 million in restructuring and other reimbursable expenses, of which $32 million is reimbursable from the escrow account. Fourth quarter results for 2007 included $30 million of asset impairments and $65 million of restructuring and other reimbursable expenses, of which $33 million was reimbursable from the escrow account. Income taxes for fourth quarter 2008 were a $37 million benefit, compared with a benefit of $45 million in the same period a year earlier. EBIT-R for fourth quarter 2008 was negative $94 million, compared with $15 million in the prior year.
Full Year 2008 Results
For the full year 2008, Visteon's sales from continuing operations were $9.54 billion, including $9.1 billion of product sales. Product sales decreased $1.64 billion from 2007 as divestitures and closures of approximately $1.0 billion in connection with the three-year plan, and lower production volume of approximately $750 million, were partially offset by $170 million of foreign currency. Services revenue for the year of $467 million decreased $87 million from 2007.
Product gross margin for 2008 was $456 million, decreasing $111 million from the same period a year ago. This decrease reflects the impact of lower production volumes and divestitures and closures, partially offset by net cost performance, restructuring savings and favorable currency.
Selling, general and administrative expense for 2008 totaled $553 million, a decrease of $83 million from the prior year.
Visteon reported a net loss of $663 million, or $5.12 per share, for 2008, compared with a net loss of $372 million, or $2.87 per share, for 2007. Results for 2008 included $175 million of restructuring and other reimbursable expenses and $113 million of reimbursements from the escrow account, and $275 million of asset impairments and loss on divestitures. The company's provision for income taxes totaled $94 million for 2008, an increase of $74 million from the prior year. EBIT-R decreased $13 million from 2007 to a negative $62 million.
Cash Flow and Liquidity
Cash generated by operating activities totaled $37 million for fourth quarter 2008, compared with $331 million for the same period a year earlier. Capital expenditures were $64 million for the quarter, compared with $144 million in fourth quarter 2007. Free cash flow, as defined below, was a use of $27 million for fourth quarter 2008, compared with a source of $187 million for the same period in 2007.
Cash from operations for 2008 was a use of $116 million compared with a source of $293 million for 2007. Capital expenditures of $294 million in 2008 were $82 million lower than in 2007. For 2008, free cash flow was a use of $410 million, compared with a use of $83 million for 2007.
As of Dec. 31, 2008, Visteon had cash balances totaling $1.18 billion and total debt of $2.76 billion, which included $75 million drawn on the company's asset-based U.S. revolving credit facility and $92 million outstanding under its European receivables securitization facility. The company drew $30 million under the asset-based U.S. revolving credit facility on Jan. 28, 2009, which exhausted substantially all of the current availability under these facilities, taking into account letters of credit issued under the U.S. facility. The European receivables securitization facility was amended as of Oct. 30, 2008, to provide for both additional availability and flexibility under the structure. The amendment resulted in the inclusion of the facility on the company's consolidated balance sheet as of Dec. 31, 2008. The consolidation of this facility affected Visteon's receivable and debt balances, with no impact on cash.
Additionally, the escrow account used to fund restructuring actions totaled $68 million at Dec. 31, 2008. These funds are not consolidated within Visteon's financial statements nor are they included in the balances referenced in this news release.