Visteon Announces Q3 Results

Highlights * Restructuring efforts remain on track * Taking significant actions to respond to market conditions * Significant new business wins * Long-term financing completed

VAN BUREN TOWNSHIP, Mich., Oct. 31 /PRNewswire-FirstCall/ -- Visteon Corporation (NYSE: VC) today reported third quarter 2006 results that included a net loss of $177 million, or $1.38 per share, an improvement over the third quarter 2005's net loss of $207 million, or $1.64 per share. The company also reported continued progress in implementing its three-year plan, which includes restructuring, improving base operations and profitably growing its business.

(Logo: http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO )

"Our third quarter results came under pressure due, in part, to significant reductions in vehicle production by a number of our customers. We are taking aggressive actions to resize the business in light of these declines, and we expect conditions to continue to be challenging for the remainder of the year and into 2007," said Michael F. Johnston, chairman and chief executive officer. "Through the efforts of our employees around the world, we continued to make solid progress implementing our three-year plan which is key to positioning Visteon for the long-term."

Third Quarter Results

For third quarter 2006, product sales were $2.48 billion. Sales for the same period a year ago totaled $4.12 billion. Lower product sales were primarily due to the Oct. 1, 2005 transaction with Ford Motor Co. that transferred 23 Visteon facilities to Automotive Components Holdings, LLC (ACH), a Ford-managed business entity. Services sales for third quarter 2006 were $133 million; no sales for services were recorded in third quarter 2005.

Visteon reported a net loss of $177 million, or $1.38 per share, for the quarter which included $14 million of restructuring expenses that qualify for reimbursement from the escrow account established to fund restructuring activities. In the third quarter 2005, Visteon reported a net loss of $207 million, or $1.64 per share, which included $11 million of restructuring expenses.

EBIT-R, as defined below, for the third quarter was a loss of $127 million, improving $10 million from the same period a year ago.

Nine Month Results

For the first nine months of 2006, product sales were $8.16 billion. 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 $14.11 billion, of which non-Ford sales were 35 percent. Product sales were lower by $5.95 billion, primarily due to the transfer of certain plants to ACH in October 2005. Services sales for the first nine months of 2006 were $416 million; no sales for services were recorded in the first nine months of 2005.

Visteon's net loss of $124 million, or $0.97 per share, for the first nine months reflects cost savings net of customer price reductions, the financial benefit of the elimination of the plants transferred to ACH and lower depreciation and amortization expense. The 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, both of which were recognized in the second quarter of 2006. 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 nine months of 2005, Visteon reported a net loss of $1.61 billion, or $12.78 per share. These results included $1.18 billion, or $9.35 per share, of non-cash asset impairments and $18 million of restructuring expenses.

EBIT-R for the first nine months of 2006 totaled $64 million, an increase of $339 million compared to an EBIT-R loss of $275 million for the first nine- months of 2005.

New Business Wins

During the first nine months of the year, Visteon was awarded new incremental business totaling nearly $1 billion, more than 20 percent of which will go into production in 2007. The company continues to win new business from a diverse range of customers around the world and across each of the company's key product lines of climate, electronics, including lighting, and interiors.

"Our business wins highlight the strength of our global footprint, our innovation, the capability of our people and the growing diversification of our customer base," said Donald J. Stebbins, president and chief operating officer. "Growing the business profitably and leveraging technology for our customers are key elements of our three-year plan."

Free Cash Flow and Financing Activities

Free cash flow of negative $116 million for the quarter was an improvement of $137 million over third quarter 2005. For the first nine months of 2006, free cash flow was negative $223 million, compared with negative $25 million for the same period in 2005 in which Visteon received the benefit of accelerated payment terms from Ford as part of the funding agreement.

During the third quarter, Visteon closed on a new U.S. secured five-year revolving credit facility with an aggregate availability of up to $350 million and a European accounts receivable securitization facility that provides for up to $325 million of funding for qualified trade receivables, both of which expire in 2011. These facilities replaced the company's multi-year secured revolving credit facility of $500 million that was to expire in June 2007.

The completion of these financings, including the seven-year $800 million secured term loan closed earlier this year, provides Visteon with additional flexibility as it implements its three-year plan.

Restructuring and Other Actions

Visteon's three-year restructuring plan remains on track. In January of this year, the company announced plans to fix, sell or close 23 facilities, of which 11 were to be addressed in 2006. To date, the company has addressed seven of the 11 facilities. The company continues to evaluate alternatives and solutions for the remaining facilities, including divestitures, that yield acceptable returns to the company. In the third quarter, the company announced two additional restructuring actions that were not in the original plan. These actions were the announcement of the closure of Visteon's Chicago facility and the exit of its Vitro Flex glass joint venture.

Visteon is also announcing that it expects to reduce its salaried workforce by approximately 900 people, primarily in higher cost countries. A charge of up to $65 million is expected to be recorded in the fourth quarter of 2006, and the related costs will qualify for reimbursement from the escrow account. The company anticipates that this action will generate up to $75 million of annual savings when completed.

"We are making good progress implementing our restructuring activities," said James F. Palmer, executive vice president and chief financial officer. "In addition to the original actions identified, we have addressed more facilities and announced plans to further reduce our salaried workforce to continue improving performance. We know we have to do more to meet our objectives, and we are taking the necessary actions."

Outlook

The fourth quarter of 2006 is expected to be challenged by low production volumes from several key customers globally. Visteon currently estimates that its 2006 full year EBIT-R will be in the range of $40 million to $50 million, reflecting lower production levels and other cost pressures in the second half of the year. Additionally, the company currently expects free cash flow to be negative $100 million for full year 2006. Full year product sales are expected to be $10.9 billion.

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 26 countries and employs approximately 46,000 people.

1 | 2 | 3  Next Page »



Review Article Be the first to review this article

Featured Video
Editorial
Jeff RoweJeff's MCAD Blogging
by Jeff Rowe
Siemens Goes ECAD With Mentor Graphics Acquisition
Jobs
Mechanical Engineer for IDEX Corporation at West Jordan,, UT
GIS Analyst II for Air Worldwide at Boston, MA
Senior Structural Engineer for Design Everest at San Francisco, CA
Business Partner Manager for Cityworks - Azteca Systems, LLC at Sandy, UT
Upcoming Events
Design & Manufacturing, Feb 7 - 9, 2017 Anaheim Convention Center, Anaheim, CA at Anaheim Convention Center Anaheim CA - Feb 7 - 9, 2017
Innorobo 2017 at Docks de Paris Paris France - May 16 - 18, 2017
Display Week 2017 at Los Angeles Convention Center 1201 S Figueroa St Los Angeles CA - May 21 - 26, 2017



Internet Business Systems © 2016 Internet Business Systems, Inc.
595 Millich Dr., Suite 216, Campbell, CA 95008
+1 (408)-337-6870 — Contact Us, or visit our other sites:
AECCafe - Architectural Design and Engineering EDACafe - Electronic Design Automation GISCafe - Geographical Information Services TechJobsCafe - Technical Jobs and Resumes ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy Policy Advertise