Visteon Announces Q3 Results

Third Quarter Highlights - Revenue of $4.15 billion, up $270 million from a year ago - Highest non-Ford sales recorded for any quarter -- $1.38 billion, up 37 percent from a year ago - After-tax loss of $1.36 billion, including non-cash write-downs of $872 million for deferred tax assets and $314 million for fixed asset impairment - Year-over-year improvement in cash flow from operations - UAW-Ford leased headcount down 9 percent year-to-date

VAN BUREN TOWNSHIP, Mich., Oct. 21 /PRNewswire-FirstCall/ -- Visteon Corporation (NYSE: VC) today reported third quarter 2004 revenues of $4.15 billion, up 7 percent compared with the same period in 2003, driven by a 37 percent increase in non-Ford revenue. Non-Ford sales for the quarter totaled 33 percent of total revenue, up seven points compared with the same period last year.

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"The diversification of our customer base has been a driving focus throughout Visteon and reaching a new record in the third quarter for non-Ford sales reflects this effort," said Mike Johnston, president and chief executive officer. "While Ford sales were down in the quarter due to their lower production volumes in the U.S., we look forward to the launch of several exciting Ford vehicles in the North American marketplace. We expect our revenues to increase in the fourth quarter, however, our current cost structure combined with escalating material surcharges will challenge our operating performance for the rest of the year."

For the third quarter, Visteon reported Ford revenue of $2.77 billion, a decrease of $101 million compared to third quarter 2003. Visteon's sales to Ford reflect the automaker's lower production volume in North America and represent the lowest sales to Ford for any quarter in Visteon's history.

For third quarter 2004, Visteon reported a net loss of $1.36 billion or $10.86 per share, which includes $1.2 billion or $9.64 per share of special charges. This compares with a net loss of $168 million or $1.34 per share for the third quarter 2003, which included expenses for the 2003 UAW labor contract ratification bonus and nominal special charges.

During the third quarter, Visteon had several special charges that adversely impacted results by $1.2 billion or $9.64 per share. As previously announced, Visteon recorded a non-cash charge of $872 million as it increased valuation allowances against its deferred tax assets. In addition, as of July 1, 2004, Visteon is no longer recording a tax benefit on losses in several jurisdictions, including the U.S., the United Kingdom and Germany. This resulted in additional tax expense for the company in the quarter, and will lead to variability in the company's tax expense going forward.

In addition, Visteon recorded a non-cash asset impairment write-down of $314 million to reduce the net book value of fixed assets related to the steering systems product group. Under accounting rules, an asset group is considered impaired if the book value is greater than the undiscounted cash flows from the use of the asset group.

The company also recognized $25 million of charges during the third quarter 2004 related to early retirement and relocation programs to reduce its Master Agreement UAW workforce that it leases from Ford. These programs resulted in reductions in the leased UAW workforce of more than 700 people. At the end of the third quarter, Visteon's leased UAW headcount was approximately 18,000, a 9 percent decrease from year-end 2003.

2004 Year-to-Date Results

Revenue for the first nine months totaled $14 billion, increasing $795 million or 6 percent year-over-year. Non-Ford sales of $4.1 billion represent a $1.1 billion or 36 percent increase year-over-year and represent 29 percent of total sales. Ford revenue for the first nine months decreased 3 percent to $9.9 billion reflecting lower North American production, the exit of seating operations, and price downs, offset partially by favorable currency, new business, and higher volumes in Europe.

For the first nine months, Visteon reported a loss of $1.3 billion, or $10.37 per share. Included in these results are special charges of $9.35 per share. This compares with a loss of $350 million or $2.78 per share for the first nine months of 2003. Included in last year's results were $191 million of after-tax special charges and the 2003 UAW ratification bonus.

Cash flow from operating activities for the first nine months was $227 million, an improvement of nearly $200 million from the same period in 2003. Cash payments related to capital expenditures were $573 million for the first nine months of the year, compared to $641 million for the same period in 2003.

As previously announced, Visteon is exploring strategic and structural changes to its business in the U.S. and these changes will involve Ford and Visteon's legacy businesses. Because of the uncertainty surrounding future market and economic conditions, combined with Visteon's on-going discussions with Ford, Visteon is not providing specific guidance at this time.

Quarterly Conference Call Scheduled at 10 a.m. EDT Today

A conference call will be hosted today, Thursday, October 21, at 10 a.m. EDT to discuss Visteon's third quarter results in further detail, as well as other related matters. To participate in the conference call, callers in the U.S. should dial 888-452-7086 and callers outside of the U.S. should dial 706-643-3752. Please call in approximately 10 minutes before the start of the conference. For a replay of the conference, those in the U.S. should dial 800-642-1687; outside the U.S., callers should dial 706-645-9291. The pass code to access the replay is 1413774. 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 press 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 72,000 employees and a global delivery system of more than 200 technical, manufacturing, sales and service facilities located in 25 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 successful execution of internal performance plans and other cost-reduction and productivity efforts; charges resulting from asset impairment reviews, 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, 2003). We assume no obligation to update these forward-looking statements.

                   VISTEON CORPORATION AND SUBSIDIARIES

                            SUPPLEMENTAL DATA
                               (unaudited)
                 (in millions, except per share amounts)

                                                            2004
                                                         over/(under)
                                                               2004                                2003
                                                                    Third      First  Nine      Third      First  Nine
                                                                  Quarter        Months        Quarter        Months
    Sales
          Ford  and  affiliates                    $2,772        $9,900        $(101)        $(286)
          Other  customers                              1,382          4,096            371          1,081
                Total  sales                              $4,154      $13,996          $270            $795
    Depreciation  and  amortization
          Depreciation                                      $152            $434            $10                $8
          Amortization                                          26                78              (2)                2
                Total  depreciation  and
                  amortization                              $178            $512              $8              $10

    Selling,  administrative  and
      other  expenses                                      $223            $722          $(39)          $(21)

    (Loss)  before  income  taxes
        and  minority  interests                  $(449)        $(338)      $(185)          $201

    Net  (loss)                                          $(1,360)    $(1,299)  $(1,192)        $(949)

    Net  (loss)  per  share
          Basic  and  Diluted                      $(10.86)    $(10.37)    $(9.52)      $(7.59)

    Average  shares  outstanding
          Basic  and  diluted                          125.3          125.3          (0.4)          (0.5)

    Special  charges  (1)
          Included  in  costs  of  sales        $(336)        $(352)        $335              $59
          Included  in  selling,  administrative
            and  other  expenses                              -                  -              (1)              (6)
            Total  pre-tax  special
              charges                                          $(336)        $(352)        $334              $53

    Special  charges  above,  after-tax  $(336)        $(348)        $335            $157
    Deferred  tax  asset  valuation
      allowance  (1)                                        (872)          (824)          872              824
            Total  after-tax  special
              charges                                      $(1,208)    $(1,172)    $1,207            $981

    Special  charges  per  share,  based  on
            average  diluted  shares  outstanding
            above                                              $(9.64)      $(9.35)      $9.63          $7.83

    Capital  expenditures(2)                      $210            $580          $(28)          $(61)

    Cash  (used  in)  provided  by
      operating  activities                        $(125)          $227        $(268)          $195

    Cash  and  borrowing  (compared  to  December  2003  year-end)
          Cash  and  marketable  securities                      $734                            $(222)
          Borrowing                                                              2,015                                197


    ------
    1  -  Special  charges  related  to  deferred  tax  asset  valuation  allowance,
    fixed  asset  impairment  write-down,  restructuring  and  other  actions  are
    discussed  further  in  Notes  3  and  4.    Third  quarter  2004  deferred  tax  asset
    valuation  allowance  of  $872  million  includes  $48  million  of  tax  expense
    related  to  tax  benefits  recorded  during  the  first  half  of  2004.
    2  -  Includes  amounts  related  to  capital  leases.


                                      VISTEON  CORPORATION  AND  SUBSIDIARIES

                                      CONSOLIDATED  STATEMENT  OF  OPERATIONS
                        For  the  Periods  Ended  September  30,  2004  and  2003
                                  (in  millions,  except  per  share  amounts)

                                                                      Third  Quarter              First  Nine  Months
                                                                      2004            2003            2004              2003
                                                                                              (unaudited)
    Sales
          Ford  and  affiliates                    $2,772        $2,873        $9,900        $10,186
          Other  customers                              1,382          1,011          4,096            3,015
                Total  sales                                4,154          3,884        13,996          13,201

    Costs  and  expenses  (Notes  2  and  4)
          Costs  of  sales                                4,366          3,879        13,578          12,981
          Selling,  administrative  and
            other  expenses                                  223              262              722                743
                Total  costs  and  expenses      4,589          4,141        14,300          13,724

    Operating  income  (loss)                      (435)          (257)          (304)            (523)

    Interest  income                                            5                  5                14                  13
    Debt  extinguishment  cost  (Note  7)        -                  -                11                    -
    Interest  expense                                        28                24                75                  71
          Net  interest  expense  and  debt
            extinguishment  cost                        (23)            (19)            (72)              (58)
    Equity  in  net  income  of
      affiliated  companies  (Note  2)              9                12                38                  42

    (Loss)  before  income  taxes  and
        minority  interests                            (449)          (264)          (338)            (539)
    Provision  (benefit)  for
      income  taxes  (Note  3)                          904              (99)            933              (209)

    (Loss)  before  minority
        interests                                          (1,353)          (165)      (1,271)            (330)
    Minority  interests  in  net  income
      of  subsidiaries                                          7                  3                28                  20

    Net  (loss)                                          $(1,360)        $(168)    $(1,299)          $(350)

    (Loss)  per  share  (Note  8)
          Basic  and  diluted                      $(10.86)      $(1.34)    $(10.37)        $(2.78)

    Cash  dividends  per  share                  $0.06          $0.06          $0.18            $0.18

    The  accompanying  notes  are  part  of  the  financial  statements.



                                      VISTEON  CORPORATION  AND  SUBSIDIARIES

                                                CONSOLIDATED  BALANCE  SHEET
                                                            (in  millions)

                                                                                              September  30,      December  31,
                                                                                                      2004                    2003
                                                                                              (unaudited)
    Assets
          Cash  and  cash  equivalents                                          $729                    $953
          Marketable  securities                                                        5                          3
                Total  cash  and  marketable  securities                734                      956
          Accounts  receivable  -  Ford  and  affiliates        1,521                  1,198
          Accounts  receivable  -  other  customers
            (Note  6)                                                                        1,152                  1,164
                Total  receivables,  net  (Note  2)                      2,673                  2,362
          Inventories  (Note  11)                                                    891                      761
          Deferred  income  taxes  (Note  3)                                    18                      163
          Prepaid  expenses  and  other  current
            assets  (Note  2)                                                              250                      168
                Total  current  assets                                            4,566                  4,410
          Equity  in  net  assets  of  affiliated  companies      213                      215
          Net  property                                                                  5,060                  5,369
          Deferred  income  taxes  (Note  3)                                    23                      700
          Other  assets                                                                      231                      270
                Total  assets                                                        $10,093              $10,964

    Liabilities  and  Stockholders'  Equity
          Trade  payables                                                            $2,363                $2,270
          Accrued  liabilities                                                        943                      924
          Income  taxes  payable                                                        38                        27
          Debt  payable  within  one  year  (Note  7)                    535                      351
                Total  current  liabilities                                  3,879                  3,572
          Long-term  debt  (Note  7)                                            1,480                  1,467
          Postretirement  benefits  other  than  pensions        556                      469
          Postretirement  benefits  payable  to  Ford            2,123                  2,090
          Deferred  income  taxes  (Note  3)                                  146                          3
    Other  liabilities                                                              1,422                  1,505
                      Total  liabilities                                            9,606                  9,106
    Stockholders'  equity
          Capital  stock
                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,  130  million  and  131  million
                  shares  outstanding,  respectively                      131                      131
          Capital  in  excess  of  par  value  of  stock            3,294                  3,288
          Accumulated  other  comprehensive
            loss  (Note  12)                                                                (67)                    (21)
          Other                                                                                    (28)                    (19)
          Accumulated  deficit                                                  (2,843)              (1,521)
                Total  stockholders'  equity                                    487                  1,858
                Total  liabilities  and  stockholders'
                  equity                                                                  $10,093              $10,964

    The  accompanying  notes  are  part  of  the  financial  statements.


                                      VISTEON  CORPORATION  AND  SUBSIDIARIES

                            CONDENSED  CONSOLIDATED  STATEMENT  OF  CASH  FLOWS
                        For  the  Periods  Ended  September  30,  2004  and  2003
                                                            (in  millions)


                                                                                                      First  Nine  Months
                                                                                                      2004                2003
                                                                                                            (unaudited)
    Cash  and  cash  equivalents  at  January  1                      $953                $1,204
    Cash  flows  provided  by  operating  activities              227                        32
    Cash  flows  from  investing  activities
          Capital  expenditures                                                    (573)                  (641)
          Purchases  of  securities                                                    -                      (48)
          Sales  and  maturities  of  securities                              3                      118
          Other                                                                                      18                        17
                Net  cash  used  in  investing  activities            (552)                  (554)
    Cash  flows  from  financing  activities
          Commercial  paper  repayments,  net                              (31)                    (66)
    Other  short-term  debt,  net                                                (30)                      85
    Proceeds  from  issuance  of  other  debt,
      net  of  issuance  costs                                                        548                      356
          Repurchase  of  unsecured  debt
            securities  (Note  7)                                                    (269)                        -
    Principal  payments  on  other  debt                                    (32)                  (121)
          Purchase  of  treasury  stock                                          (11)                      (5)
          Cash  dividends                                                                  (24)                    (24)
          Other,  including  book  overdrafts                              (48)                        5
                Net  cash  provided  by  financing  activities      103                      230
    Effect  of  exchange  rate  changes  on  cash                        (2)                      27
    Net  decrease  in  cash  and  cash  equivalents                (224)                  (265)
    Cash  and  cash  equivalents  at  September  30                $729                    $939

    The  accompanying  notes  are  part  of  the  financial  statements.


                                      VISTEON  CORPORATION  AND  SUBSIDIARIES

                                            NOTES  TO  FINANCIAL  STATEMENTS
                                                              (unaudited)

    NOTE  1.    Financial  Statements

 


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