Visteon Announces Third Quarter 2010 Results
[ Back ]   [ More News ]   [ Home ]
Visteon Announces Third Quarter 2010 Results

(PRNewswire) —


On Oct. 1, Visteon completed all conditions to the effectiveness of its Plan of Reorganization and emerged from Chapter 11 with a significantly deleveraged capital structure

Visteon Corporation (OTC: VSTO) today announced its third quarter 2010 results, reporting a net loss of $140 million, or $1.08 per share, on product sales of $1.7 billion. These results included a net charge of $115 million for obligations related to certain U.S. other post-retirement employee benefit (OPEB) plans and $54 million in reorganization expenses. For the third quarter of 2009, Visteon reported a net loss of $38 million, or 29 cents per share, on product sales of $1.68 billion; the net loss included $23 million in reorganization expenses. Adjusted EBITDA, as defined below, was $149 million for the third quarter of 2010, or 8.8 percent of product sales, an improvement of $20 million compared with the third quarter of 2009.

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

(Logo: http://photos.prnewswire.com/prnh/20001201/DEF008LOGO )

Hyundai-Kia accounted for approximately 30 percent of Visteon’s third-quarter product sales, with Ford Motor Co. generating 25 percent, Renault-Nissan 8 percent and PSA Peugeot-Citroen 6 percent. On a regional basis, Asia accounted for 42 percent of Visteon’s total product sales − up from 36 percent a year earlier − with Europe representing 34 percent, North America 17 percent and South America 7 percent.

“Our record percentage of sales to customers in Asia demonstrates Visteon’s global breadth and the strength of our global product lines,” said Donald J. Stebbins, chairman, chief executive officer and president. “As a result of our restructuring actions and continued focus on cost control, our adjusted EBITDA was up 16 percent on essentially flat sales.”

Third Quarter 2010 Results

For the third quarter, total sales were approximately $1.73 billion, including product sales of more than $1.70 billion and services revenue of $28 million. Product sales in the third quarter increased by $26 million year-over-year, or approximately 2 percent, reflecting slightly higher production volumes tempered by currency movements and the impact of previously completed plant divestitures and closures. On Sept. 1, Visteon also concluded its leasing agreements with, and transferred about 2,100 employees to, Automotive Components Holdings, LLC, ending services provided under these arrangements.

Gross margin for the third quarter of $40 million, compared with $120 million a year earlier, included a $111 million charge related to obligations under certain OPEB plans. On a year-over-year basis, unfavorable currency movements and the impact of plant closures and divestitures of about $37 million were more than offset by increased production volumes and continued manufacturing and net cost efficiencies.  

Selling, general and administrative expense for the third quarter of $91 million included $4 million of charges related to OPEB plans. Adjusting for the impact of these charges, selling, general and administrative expense was lower by $8 million compared with 2009, reflecting the company’s ongoing efforts to maintain a globally competitive cost structure.

Reorganization expenses of $54 million in the third quarter consisted of professional fees and other costs. Compared with the same period in 2009, these expenses were higher by $31 million, reflecting the significant increase in activities associated with the company’s plan of reorganization and emergence.

Interest expense, net for the third quarter, totaled $31 million compared with $6 million in the same period in 2009. This increase is principally attributable to interest expense associated with the company’s $1.5 billion seven-year secured term loan; such amounts were not provided for in the same period a year earlier. Commensurate with the company’s emergence from Chapter 11 on Oct. 1, 2010, $1.66 billion in outstanding principle and interest payable under this secured lending was paid in full.

For the third quarter, the company reported a net loss of $140 million, or $1.08 per share. This compared with a net loss of $38 million, or 29 cents per share, in the same period a year ago.

First Nine Months of 2010

For the first nine months of 2010, total sales of $5.58 billion were higher by $921 million, or 20 percent, compared with the same period a year earlier. For the first nine months, Visteon reported a net loss of $108 million, or 83 cents per share, compared with a net loss of $148 million, or $1.14 per share, during the first nine months of 2009. Adjusted EBITDA for the first nine months of 2010 was $476 million, or 8.8 percent of product sales, compared with $224 million, or 5 percent of product sales, in the first nine months of 2009.

The company experienced higher sales in each of the major regions in which it operates, reflecting increased production volumes by all customers as vehicle sales rebounded in response to stronger global economic conditions. For the first nine months, Visteon won approximately $633 million of future business, with 42 percent generated in Asia and 39 percent in Europe.

“Our diversified customer base and strong global manufacturing and engineering capabilities, combined with our now significantly improved capital structure, position Visteon extremely well for growth and success in key global markets,” Stebbins said.

Cash Flow and Liquidity

For the third quarter of 2010, Visteon generated $50 million in cash from operating activities, compared with $84 million for the third quarter of 2009. Cash from operating activities was lower in the quarter compared with the same period a year earlier, principally due to increased reorganization cash payments.

Capital expenditures in the third quarter were $51 million, compared with $29 million in the same period a year earlier. Free cash flow, as defined below, was a use of $1 million in the third quarter, compared with positive $55 million in the third quarter of 2009. In the third quarter of 2010, the company also paid in full $75 million of borrowings under its DIP credit agreement.

As of Sept. 30, 2010, Visteon had global cash balances, including restricted cash, of $1.1 billion, nearly $300 million higher than on Sept. 30, 2009.

Emergence from Chapter 11

On Oct. 1, 2010, Visteon emerged from Chapter 11 after completing all conditions required for its plan of reorganization to become effective. The financial results for the period ended Sept. 30, 2010, do not include the effect of any changes in Visteon’s capital structure nor changes in the fair value of assets and liabilities as a result of the adoption of fresh start accounting relating to Visteon’s emergence from Chapter 11 on Oct. 1, 2010. These adjustments will be effective Oct. 1, 2010, and reflected in the company’s financial results for the three months from Oct. 1 through Dec. 31, 2010, and thereafter.

In connection with the company’s emergence, proceeds from the rights offering and the direct purchase commitment of $1.25 billion, funding of a new seven-year $500 million exit financing term loan and cash on hand were used to settle outstanding borrowings and accrued interest under the existing secured term loan of $1.66 billion, borrowings and outstanding letters of credit under its U.S. asset-based lending facility of $128 million, and other claims and fees of about $119 million.

Additionally, on Oct. 1, the company entered into a $200 million secured revolving credit facility that remains undrawn.

Following these transactions, on Oct. 1, 2010, Visteon had global cash balances of $956 million (including $68 million of cash held in escrow for payment of reorganization expenses) and outstanding debt of $618 million.

Visteon is a leading global automotive supplier that designs, engineers and manufactures innovative climate, electronic, interior and lighting products for vehicle manufacturers. With corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Chelmsford, UK; the company has facilities in 26 countries and employs approximately 26,500 people. Learn more at www.visteon.com.

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, but not limited to,


Caution should be taken not to place undue reliance on our forward-looking statements, which represent our view only as of the date of this release, and which we assume no obligation to update. The financial results presented herein are preliminary and unaudited; final financial results will be included in the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010.

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.

VISTEON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Millions, Except Per Share Data)

(Unaudited)







Three Months Ended

Nine Months Ended


September 30

September 30


2010

2009

2010

2009

Net sales





Products

$  1,702

$  1,676

$  5,437

$  4,453

Services

28

61

142

205


1,730

1,737

5,579

4,658

Cost of sales  





Products

1,663

1,557

4,877

4,211

Services

27

60

140

202


1,690

1,617

5,017

4,413

Gross margin

40

120

562

245

Selling, general and administrative expenses

91

95

292

300

Reorganization expenses

54

23

123

30

Restructuring expenses

3

27

20

72

Reimbursement from Escrow Account

-

-

-

62

Deconsolidation gain

-

-

-

95

Asset impairment and loss on divestitures

-

-

25

-






Operating (loss) income

(108)

(25)

102

-

Interest expense, net

31

6

160

102

Equity in net income of non-consolidated affiliates

35

26

100

52






(Loss) income before income taxes

(104)

(5)

42

(50)

Provision for income taxes

19

18

94

63






Net loss

(123)

(23)

(52)

(113)

Net income attributable to noncontrolling interests

17

15

56

35

Net loss attributable to Visteon

$  (140)

$  (38)

$  (108)

$  (148)

Per share data:





Net loss per share attributable to Visteon

$  (1.08)

$  (0.29)

$  (0.83)

$  (1.14)






Average shares outstanding (millions)





Basic

129.4

129.4

129.4

129.4

Diluted

129.4

129.4

129.4

129.4



VISTEON CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in Millions)

(Unaudited)





September 30

December 31


2010

2009




ASSETS






Cash and equivalents

$  918

$  962

Restricted cash

195

133

Accounts receivable, net

1,086

1,055

Inventories, net

395

319

Other current assets

283

236

Total current assets

2,877

2,705




Property and equipment, net

1,812

1,936

Equity in net assets of non-consolidated affiliates

378

294

Other non-current assets

80

84

Total assets

$  5,147

$  5,019







LIABILITIES AND SHAREHOLDERS' DEFICIT






Short-term debt, including current portion of long-term debt

$  128

$  225

Accounts payable

1,043

977

Accrued employee liabilities

196

161

Other current liabilities

326

302

Total current liabilities

1,693

1,665




Long-term debt

12

6

Employee benefits

632

568

Deferred income taxes

175

159

Other non-current liabilities

251

257

Liabilities subject to compromise

3,121

2,819







Shareholders' 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, 130 million shares outstanding)

131

131

Stock warrants

127

127

Additional paid-in capital

3,408

3,408

Accumulated deficit

(4,684)

(4,576)

Accumulated other comprehensive (loss) income

(74)

142

Other

(4)

(4)

Total Visteon Corporation shareholders' deficit

(1,096)

(772)

Noncontrolling interests

359

317

Total shareholders' deficit

(737)

(455)

Total liabilities and shareholders' deficit

$  5,147

$  5,019






VISTEON CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Millions)

(Unaudited)







Three Months Ended

Nine Months Ended


September 30

September 30


2010

2009

2010

2009






Operating Activities





Net loss

$  (123)

$  (23)

$  (52)

$  (113)

Adjustments to reconcile net loss to net cash  





provided from (used by) operating activities:





Depreciation and amortization

67

93

207

255

OPEB and pension amortization and curtailment

(31)

(4)

(346)

(16)

OPEB reinstatement

155

-

305

-

Reorganization expenses

54

23

123

30

Equity in net income of non-consolidated affiliates, net of





 dividends remitted

(25)

(26)

(87)

(46)

Asset impairments and loss on divestitures

-

-

25

-

Deconsolidation gain

-

-

-

(95)

Other non-cash items

(15)

(5)

(1)

(1)

Changes in assets and liabilities:





Accounts receivable

27

(103)

(79)

(142)

Inventories

(25)

(18)

(75)

6

Accounts payable

1

114

55

50

Other

(35)

33

148

(79)

Net cash provided from (used by) operating activities

50

84

223

(151)






Investing Activities





Capital expenditures

(51)

(29)

(117)

(87)

Cash associated with deconsolidation

-

-

-

(11)

Other, including proceeds from divestitures and asset sales

19

1

42

5

Net cash used by investing activities

(32)

(28)

(75)

(93)






Financing Activities





Increase in restricted cash

(14)

(7)

(62)

(102)

Short-term debt, net

(4)

(5)

(9)

(24)

Proceeds from issuance of debt, net of issuance costs

1

-

9

56

Principal payments on debt

(87)

-

(99)

(119)

Other, including book overdrafts

(14)

2

(32)

(56)

Net cash used by financing activities

(118)

(10)

(193)

(245)

Effect of exchange rate changes on cash

39

19

1

21

Net (decrease) increase in cash and equivalents

(61)

65

(44)

(468)

Cash and equivalents at beginning of period

979

647

962

1,180

Cash and equivalents at end of period

$  918

$  712

$  918

$  712



VISTEON CORPORATION AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Dollars in Millions)

(Unaudited)






In this press release the Company has provided information regarding certain non-GAAP financial measures including "Adjusted EBITDA "and "free cash flow."  Such non-GAAP financial measures are reconciled to their closest GAAP financial measure in the schedules below.






Adjusted EBITDA: Adjusted EBITDA is presented as a supplemental measure of the Company's performance that management believes 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 across reporting periods. The Company defines Adjusted EBITDA as net income (loss) attributable to Visteon, plus net interest expense, provision for income taxes and depreciation and amortization, as further adjusted to eliminate the impact of asset impairments, gains or losses on divestitures, net restructuring expenses and other reimbursable costs, certain non-recurring employee charges and benefits, reorganization items, and other non-operating gains and losses. Because not all companies use identical calculations this presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies.









Three Months Ended

September 30

Nine Months Ended

September 30







2010

2009

2010

2009

Net loss

$  (140)

$  (38)

$  (108)

$  (148)

Interest expense, net

31

6

160

102

Provision for income taxes

19

18

94

63

Depreciation and amortization

67

93

207

255

Impairments and net transaction





 gains and losses

-

-

25

(95)

Restructuring and other related costs, net

3

27

5

17

Net OPEB and other employee charges

115

-

(30)

-

Reorganization expenses

54

23

123

30

Adjusted EBITDA

$  149

$  129

$  476

$  224








Adjusted EBITDA is not a recognized term under GAAP and does not purport to be a substitute for net income (loss) as an indicator of operating performance or cash flows from operating activities as a measure of liquidity. Adjusted EBITDA has limitations as an analytical tool and is not intended to be a measure of cash flow available for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements.  In addition, the Company uses Adjusted EBITDA (i) as a factor in incentive compensation decisions, (ii) to evaluate the effectiveness of the Company's business strategies, and (iii) the Company's credit agreements use measures similar to Adjusted EBITDA to measure compliance with certain covenants.






Free Cash Flow: Free cash flow is presented as a supplemental measure of the Company's liquidity that management believes is useful to investors in analyzing the Company's ability to service and repay its debt. The Company defines free cash flow as cash flow from operating activities less capital expenditures. Because not all companies use identical calculations, this presentation of free cash flow may not be comparable to other similarly titled measures of other companies.




Three Months Ended

Nine Months Ended


September 30

September 30







2010

2009

2010

2009

Net cash provided from (used by)





 operating activities

$  50

$  84

$  223

$  (151)

Capital expenditures

(51)

(29)

(117)

(87)

Free cash flow

$  (1)

$  55

$  106

$  (238)








Free cash flow is not a recognized term under GAAP and does not purport to be a substitute for cash flows from operating activities as a measure of liquidity. Free cash flow has limitations as an analytical tool and does not reflect cash used to service debt and does not reflect funds available for investment or other discretionary uses.  In addition, the Company uses free cash flow (i) as a factor in incentive compensation decisions, and (ii) for planning and forecasting future periods.



SOURCE Visteon Corporation

Contact:
Visteon Corporation
Media: Jim Fisher
Phone: +1-734-710-5557
Email Contact Investors: Michael Lewis
Phone: +1-734-710-5800
Email Contact
Web: http://www.visteon.com