Visteon Corporation Reports First Quarter 2001
Earnings of $31 Million; Implements Customer-Facing
Corporate Structure
DEARBORN, Mich., April 20 /PRNewswire Interactive News Release/ -- Despite
a tougher industry climate with lower volumes, Visteon Corporation
today announced it earned $31 million, or $0.24 per share during the First
Quarter of 2001. Visteon's First Quarter results compare with earnings of
$147 million in the First Quarter of 2000.
(Photo: http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO )
First Quarter earnings are down $93 million when compared with 2000 pro
forma results, which are adjusted for the effects of independence-related
costs resulting from Visteon's separation from Ford Motor Company. The
decline in earnings is more than accounted for by the effect of price
reductions and lower production volume in North America. Lower costs were a
partial offset.
First Quarter 2001 revenue was $4.7 billion, down 10 percent compared with
2000. The decrease is more than accounted for by lower sales to Ford,
reflecting primarily reduced production in North America. Added revenue from
new business provided a partial offset. The after-tax return on sales during
the quarter was 0.8 percent.
Visteon ended the First Quarter with $1.1 billion in cash and marketable
securities, maintaining the Company's strong financial position.
"We are starting the year with a strong balance sheet and a substantial
increase in non-Ford wins, which shows a growing level of confidence in
Visteon by an increasing number of OEMs," said Visteon Chairman and Chief
Executive Officer Peter J. Pestillo. "This additional new business with
non-Ford customers is important to the future of Visteon because it helps us
diversify our business portfolio."
The company recently announced a new customer-facing structure, which
included the elimination of 1,800 jobs worldwide. The structuring, which we
expect to be complete in the Second Quarter, will result in a one-time charge
estimated at $135 million after taxes. This charge will be reflected in
Second Quarter results and the costs recovered in a little more than a year.
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 82,000 employees and a global delivery system of more than 130 technical,
manufacturing, sales, and service facilities located in 25 countries.
Additional financial detail is available at http://www.visteon.com
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended March 31, 2001 and 2000
(in millions, except per share amounts)
First Quarter
2001 2000
(unaudited)
Sales
Ford and affiliates $3,913 $4,476
Other customers 810 749
Total sales 4,723 5,225
Costs and expenses (Note 2)
Costs of sales 4,466 4,795
Selling, administrative and other expenses 189 177
Total costs and expenses 4,655 4,972
Operating income 68 253
Interest income 19 34
Interest expense 36 57
Net interest expense (17) (23)
Equity in net income of affiliated companies 4 7
Income before income taxes 55 237
Provision for income taxes 19 86
Income before minority interests 36 151
Minority interests in net income of subsidiaries 5 4
Net income $31 $147
Average number of shares of Common Stock
outstanding (Note 3) 131 130
Earnings and dividends per share (Note 3)
Basic and diluted $0.24 $1.13
Cash dividends $0.06 $ -
The accompanying notes are part of the financial statements.
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
March 31, December 31,
2001 2000
(unaudited)
Assets
Cash and cash equivalents $940 $1,412
Marketable securities 150 65
Total cash and marketable securities 1,090 1,477
Accounts receivable - Ford and affiliates 1,863 1,333
Accounts receivable - other customers 913 857
Total receivables 2,776 2,190
Inventories (Note 4) 940 948
Deferred income taxes 194 192
Prepaid expenses and other current assets 152 198
Total current assets 5,152 5,005
Equity in net assets of
affiliated companies 149 142
Net property 5,416 5,497
Deferred income taxes 95 100
Other assets 612 581
Total assets $11,424 $11,325
Liabilities and Stockholders' Equity
Trade payables $2,138 $1,949
Accrued liabilities 925 1,086
Income taxes payable 129 147
Debt payable within one year 640 622
Total current liabilities 3,832 3,804
Long-term debt 1,365 1,397
Other liabilities 2,702 2,601
Deferred income taxes 17 18
Total liabilities 7,916 7,820
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
and outstanding 131 131
Capital in excess of par value of stock 3,311 3,311
Accumulated other comprehensive income (199) (179)
Other (12) (12)
Earnings retained for use in business 277 254
Total stockholders' equity 3,508 3,505
Total liabilities and
stockholders' equity $11,424 $11,325
The accompanying notes are part of the financial statements.
VISTEON CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Periods Ended March 31, 2001 and 2000
(in millions)
First Quarter
2001 2000
(unaudited)
Cash and cash equivalents at January 1 $1,412 $1,849
Cash flows used in operating activities (187) (846)
Cash flows from investing activities
Capital expenditures (172) (115)
Purchases of securities (85) -
Other 3 (10)
Net cash used in investing activities (254) (125)
Cash flows from financing activities
Cash distributions to prior owner - (38)
Commercial paper issuances, net (15) -
Proceeds from short-term debt 1 118
Proceeds from issuance of other debt 28 28
Principal payments on other debt (31) (50)
Cash dividends (8) -
Net cash (used in)/provided by
financing activities (25) 58
Effect of exchange rate changes on cash (6) 7
Net decrease in cash and cash equivalents (472) (906)
Cash and cash equivalents at March 31 $940 $943
The accompanying notes are part of the financial statements.
VISTEON CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Financial Statements - The financial data presented herein is
unaudited, but in the opinion of management reflect those adjustments
necessary for a fair presentation of such information. Results for interim
periods should not be considered indicative of results for a full year.
Reference should be made to the consolidated financial statements and
accompanying notes included in the 2000 Annual Report on Form 10-K as filed
with the Securities and Exchange Commission.
Visteon Corporation ("Visteon") is a leading, global supplier of
automotive systems, modules and components. Visteon sells products primarily
to global vehicle manufacturers, and also sells to the worldwide aftermarket
for replacement and vehicle appearance enhancement parts. Visteon became an
independent company when Ford Motor Company ("Ford") established Visteon as a
wholly-owned subsidiary in January 2000 and subsequently transferred to
Visteon the assets and liabilities comprising Ford's automotive components and
systems business. Ford completed its spin-off of Visteon on June 28, 2000
(the "spin-off"). Prior to incorporation, Visteon operated as Ford's
automotive components and systems business.
2. Selected costs and expenses are summarized as follows:
First Quarter
2001 2000
(in millions)
Depreciation $140 $144
Amortization 30 22
Total $170 $166
3. Income Per Share of Common Stock - Basic income per share of Common
Stock is calculated by dividing the income attributable to Common Stock by the
average number of shares of Common Stock outstanding during the applicable
period, adjusted for restricted stock. For purposes of the earnings per share
calculations, 130 million shares of Common Stock are treated as outstanding
for periods prior to the spin-off from Ford.
4. Inventories are summarized as follows:
March 31, December 31,
2001 2000
(in millions)
Raw materials, work-in-process
and supplies $803 $829
Finished products 137 119
Total inventories $940 $948
U.S. inventories $602 $586
5. Comprehensive Income - Other comprehensive income mainly includes
foreign currency translation adjustments. Total comprehensive income is
summarized as follows:
First Quarter
2001 2000
(in millions)
Net income $31 $147
Other comprehensive income (20) (37)
Total comprehensive income $11 $110
6. Accounting Change - Visteon adopted Statement of Financial Accounting
Standards No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activities," on January 1, 2001. SFAS 133 (as amended by SFAS 137 and
138) establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires recognition of all
derivatives as either assets or liabilities on the balance sheet and
measurement of the instruments at fair value. The change in fair value of a
derivative is required to be recorded each period in current earnings or other
comprehensive income, depending on whether the derivative is designated as
part of a hedge transaction and if so, the type of hedge transaction.
For anticipated transactions, Visteon uses forward contracts to hedge the
variability in cash flows related to exchange rate movements. Visteon uses
derivatives to hedge anticipated exposures up to two years in the future. For
a derivative designated as a cash flow hedge, the effective portion of the
derivative's gain or loss due to a change in fair value is initially recorded
as a component of other comprehensive income and subsequently reclassified
into earnings when the hedged exposure affects earnings. For a derivative not
designated as a hedging instrument, the gain or loss is recognized in earnings
in the period of change.
The first quarter impact of implementing this new standard on Visteon's
results of operations and financial condition was not material.
7. Segment Information - Visteon's reportable operating segments are
Dynamics & Energy Conversion; Comfort, Communication & Safety; and Glass.
Financial information for the reportable operating segments is summarized as
follows:
Dynamics & Comfort,
Energy Communication & Total
Conversion Safety Glass Other Visteon
(in millions)
First Quarter
2001
Sales $2,152 $2,406 $165 $ - $4,723
Income/(loss)
before taxes 13 62 (5) (15) 55
Net income/(loss) 9 34 (2) (10) 31
Average assets 5,183 5,898 294 - 11,375
2000
Sales $2,425 $2,603 $197 $ - $5,225
Income/(loss)
before taxes 106 153 (2) (20) 237
Net income/(loss) 67 94 (1) (13) 147
Average assets 5,304 6,088 728 - 12,120
Other includes net interest expense not allocated to the reportable
operating segments.
8. Subsequent Event - During April 2001, Visteon eliminated about 950
U.S. staff jobs, representing about 12 percent of Visteon's U.S. salaried
workforce. As part of a review of operations outside the U.S., as well as
plant structure within the U.S., the company expects about 1,800 worldwide
jobs to be eliminated when combined with the actions implemented in April
2001. The structuring is expected to be completed by the end of the second
quarter of 2001 and will result in a one-time charge estimated at $135 million
after taxes ($215 million before taxes) in the second quarter of 2001.
Visteon Corporation and Subsidiaries
SUPPLEMENTAL DATA
(in millions, except per share amounts, percentages and as noted)
First Quarter
2001 Over/(Under)
Actual Actual Pro Forma
2001 2000 2000 *
Sales
Ford and Affiliates $3,913 $(563) $(563)
Other Customers 810 61 61
Total Sales $4,723 $(502) $(502)
Depreciation & Amortization
Depreciation $140 $(4) $(4)
Amortization 30 8 8
Total Depreciation &
Amortization $170 $4 $4
Selling, Administrative and Other
Expenses
Amount $189 $12 $(15)
Percent of Revenue 4.0% 0.6 pts 0.1 pts
Operating Income $68 $(185) $(160)
Net Income $31 $(116) $(93)
Earnings per Share (Basic and
Diluted) $0.24 $(0.89) $(0.71)
Cash Dividends per Share $0.06 NA NA
Effective Tax Rate 37% - pts - pts
EBITDA
Amount $238 $(181) $(156)
Percent of Revenue 5.0% (3.0)pts (2.5)pts
After Tax Returns
On Sales 0.8% (2.1)pts (1.6)pts
On Assets 1.3 (3.7) NA
On Equity 3.5 NA NA
Capital Expenditures
Amount $172 $57 $57
Percent of Revenue 3.6% 1.4 pts 1.4 pts
Operating Cash Flow ** $(359) $642 NA
Cash And Borrowing (at March 31)
Cash and Marketable Securities $1,090 $147 $390
Borrowing 2,005 (447) (195)
- - - - -
* As provided in the prospectus dated June 13, 2000
** Includes capital spending, excludes dividends, acquisitions and
divestitures
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