Visteon Corporation Reports Second Quarter 2001 Results Above
Analysts' Expectations
DEARBORN, Mich., July 20 Visteon Corporation
today announced Second Quarter net income of $60 million or $0.46 per share,
excluding restructuring costs. The company's performance was within the range
of previous guidance. Including restructuring costs of $100 million after
taxes, Second Quarter results were a net loss of $40 million or $0.31 per
share. Visteon earned $162 million or $1.25 per share in the Second Quarter
of 2000.
"We turned in a solid operating performance in a tough environment and
delivered on our projections despite unexpected production cutbacks," said
Peter J. Pestillo, Chairman and Chief Executive Officer. "The restructuring
actions we have completed are building momentum for our cost reduction efforts
and we expect to see continued improvement going forward." He added that
there is still much to do -- "The tough environment is expected to continue
through the remainder of the year."
The earnings decline compared with a year ago is more than accounted for
by price reductions and lower volume. This was offset partially by favorable
cost performance, reflecting a combination of the restructuring and operating
efficiencies, including an accelerated pace of cost reductions throughout the
organization, continued savings through the use of Internet auctions and
improved performance in Visteon's glass business.
Second Quarter sales were $4.9 billion, down $404 million compared with
the same period last year. The decrease is more than accounted for by lower
Ford revenue. Non-Ford revenue for the quarter was up 14 percent from a year
ago.
The restructuring actions included the elimination of more than 2,000
salaried positions during the quarter, exceeding the previously announced
target of 1,800. Additional restructuring actions also were taken in Europe,
which will result in the closure of two European plants and consolidation of
the work to other Visteon facilities. The restructuring actions already have
yielded cost savings and other benefits with payback expected in no more than
one year.
Operating cash flow for the Second Quarter was positive. Visteon ended
the quarter with almost $1.3 billion in cash and marketable securities.
First Half sales totaled $9.6 billion, down $906 million year over year.
First Half 2001 net income was $91 million or $0.70 per share, excluding
restructuring costs. This compares with net income of $309 million or $2.38
per share for First Half 2000. Return on sales for the first six months of
2001 was 1.1 percent, excluding restructuring costs, versus 3.0 percent for
the First Half of 2000.
Visteon won $1.2 billion in net new business in the First Half of the
year. More than 80 percent of the wins were with customers other than Ford
and more than 20 percent were outside of North America. In addition to
winning Nissan's Quality Award for the third consecutive year, Visteon was
awarded significant new business with Nissan on future light truck, minivan
and SUV platforms. Visteon also won substantial new business from General
Motors on a new truck platform and Toyota on a new European car.
The company expects Third Quarter revenue of $4.1 to $4.3 billion --
reflecting lower production volumes -- and net income, excluding
restructuring, of breakeven to $20 million. For the full year, the company
expects revenue to be $18.2 to $18.6 billion and net income, excluding
restructuring, of $150 to $200 million.
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 about 80,000 employees and a global delivery system of more than 130
technical, manufacturing, sales, and service facilities located in 25
countries.
This press release contains forward-looking statements made pursuant to
the Private Securities Litigation Reform Act of 1995. Words such as
"estimated" and "potentially" signify forward-looking statements. Forward-
looking statements are not guarantees of future results and conditions but
rather are subject to various risks and uncertainties. Some of these risks
and uncertainties are identified in our Current Report on Form 8-K filed with
the Securities and Exchange Commission on February 27, 2001. Should any risks
and uncertainties develop into actual events, these developments could have
material adverse effects on Visteon's business, financial condition and
results of operations.
Additional financial detail is available at http://www.visteon.com
VISTEON CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DATA
(in millions, except per share amounts, percentages and as noted)
2001
over/(under)
2001 2000
Second First Second First
Quarter Half Quarter Half
Sales (unaudited)
Ford and affiliates $4,067 $7,980 $(504) $(1,067)
Other customers 838 1,648 100 161
Total sales $4,905 $9,628 $(404) $(906)
Depreciation and
amortization
Depreciation $142 $282 $(13) $(17)
Amortization 26 56 5 13
Total depreciation
and amortization $168 $338 $(8) $(4)
Selling, administrative and
other expenses*
Amount $180 $369 $(12) $ -
Percent of revenue 3.7% 3.8% 0.1 pts 0.3 pts
Operating income (loss)
As reported $(42) $26 $(310) $(495)
Excluding restructuring
costs* 116 184 (152) (337)
Net income (loss)
As reported $(40) $(9) $(202) $(318)
Excluding
restructuring costs* 60 91 (102) (218)
Earnings (loss) per share
(basic and diluted)
As reported $(0.31) $(0.07) $(1.56) $(2.45)
Excluding
restructuring costs* 0.46 0.70 (0.79) (1.68)
Cash dividends per share $0.06 $0.12 N/A N/A
Effective tax rate 37% 37% - pts - pts
EBITDA*
Amount $284 $522 $(160) $(341)
Percent of revenue 5.8% 5.4% (2.6) pts (2.8) pts
After tax returns*
On sales 1.3% 1.1% (1.9) pts (1.9) pts
On assets 2.3 1.8 (3.5) (3.5)
On equity 6.9 5.3 (18.2) (18.9)
Capital expenditures
Amount $168 $340 $(1) $56
Percent of revenue 3.4% 3.5% 0.2 pts 0.8 pts
Operating cash flow** $233 $(126) $67 $226
Cash and borrowing
(at end of period)
Cash and marketable
securities $1,263 $298
Borrowing 1,971 (109)
- - - - -
* Second quarter of 2001 and year-to-date 2001 amounts exclude costs
related to restructuring items of $158 million ($100 million after-tax), of
which $81 million was recorded as selling, administrative and other expense.
** Includes capital expenditures and excludes restructuring/independence
actions.
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended June 30, 2001 and 2000
(in millions, except per share amounts)
Second Quarter First Half
2001 2000 2001 2000
(unaudited) (unaudited)
Sales
Ford and affiliates $4,067 $4,571 $7,980 $9,047
Other customers 838 738 1,648 1,487
Total sales 4,905 5,309 9,628 10,534
Costs and expenses
(Notes 2 and 3)
Costs of sales 4,686 4,849 9,152 9,644
Selling,
administrative and
other expenses 261 192 450 369
Total costs
and expenses 4,947 5,041 9,602 10,013
Operating income (loss) (42) 268 26 521
Interest income 14 18 33 52
Interest expense 36 30 72 87
Net interest
expense (22) (12) (39) (35)
Equity in net income
of affiliated companies 7 10 11 17
Income (loss) before
income taxes (57) 266 (2) 503
Provision (benefit) for
income taxes (23) 96 (4) 182
Income (loss) before
minority interests (34) 170 2 321
Minority interests in
net income of subsidiaries 6 8 11 12
Net income (loss) $(40) $162 $(9) $309
Average number of shares
of Common Stock
outstanding (Note 4) 131 130 131 130
Earnings (loss) and
dividends per share
(Note 4)
Basic and diluted $(0.31) $1.25 $(0.07) $2.38
Cash dividends $ 0.06 $ - $0.12 $ -
The accompanying notes are part of the financial statements.
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in millions)
June 30, December 31,
2001 2000
(unaudited)
Assets
Cash and cash equivalents $1,195 $1,412
Marketable securities 68 65
Total cash and marketable
securities 1,263 1,477
Accounts receivable -
Ford and affiliates 1,835 1,333
Accounts receivable - other customers 903 857
Total receivables 2,738 2,190
Inventories (Note 5) 908 948
Deferred income taxes 193 192
Prepaid expenses and other
current assets 134 198
Total current assets 5,236 5,005
Equity in net assets of
affiliated companies 147 142
Net property 5,394 5,497
Deferred income taxes 126 100
Other assets 517 581
Total assets $11,420 $11,325
Liabilities and Stockholders' Equity
Trade payables $2,079 $1,949
Accrued liabilities 1,011 1,086
Income taxes payable 109 147
Debt payable within one year 581 622
Total current liabilities 3,780 3,804
Long-term debt 1,390 1,397
Other liabilities 2,835 2,601
Deferred income taxes 16 18
Total liabilities 8,021 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 3,315 3,311
Accumulated other comprehensive income (246) (179)
Other (30) (12)
Earnings retained for use in business 229 254
Total stockholders' equity 3,399 3,505
Total liabilities and
stockholders' equity $11,420 $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 June 30, 2001 and 2000
(in millions)
First Half First Half
2001 2000
(unaudited)
Cash and cash equivalents at January 1 $1,412 $1,849
Cash flows provided by (used in)
operating activities 182 (1,619)
Cash flows from investing activities
Capital expenditures (340) (284)
Purchases of securities (148) -
Sales and maturities of securities 145 -
Other 35 (13)
Net cash used in investing
activities (308) (297)
Cash flows from financing activities
Cash distributions from prior owner - 85
Commercial paper (repayments)
issuances, net (9) 410
Payments on short-term debt - (509)
Proceeds from issuance of
short-term debt 1 1,200
Proceeds from issuance of other debt 54 14
Principal payments on other debt (97) (200)
Purchase of treasury stock (20) -
Cash dividends (16) -
Other - 21
Net cash (used in) provided
by financing activities (87) 1,021
Effect of exchange rate changes on cash (4) 11
Net decrease in cash and cash equivalents (217) (884)
Cash and cash equivalents at June 30 $1,195 $965
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 are
unaudited, but in the opinion of management reflect those adjustments,
including normal recurring 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
company's Annual Report on Form 10-K for the fiscal year ended December 31,
2000, as filed with the Securities and Exchange Commission on February 27,
2001.
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:
Second Quarter First Half
2001 2000 2001 2000
(in millions)
Depreciation $142 $155 $282 $299
Amortization 26 21 56 43
Total $168 $176 $338 $342
3. Special Charges -- During the second quarter of 2001, as part of a
review of staff and plant operations, Visteon eliminated more than 2,000
salaried positions worldwide. As a result of these actions, Visteon recorded
a pre-tax charge of $146 million in the second quarter of 2001 reflecting
retirement and separation programs that were implemented during the quarter.
About 90% of the separations were completed in the second quarter of 2001.
The remaining separations, related primarily to European employees that have
accepted benefits under voluntary programs, will be completed during the
second half of 2001.
In addition, Visteon recorded a pre-tax charge in the second quarter of
2001 of $12 million related to the planned closure of two European facilities,
ZEM in Poland and Wickford in the U.K., and other actions.
Of the total pre-tax charges of $158 million ($100 million after-tax)
described above, $81 million is recorded in selling, administrative and other
expenses and $77 million is recorded in costs of sales, and $142 million is
recorded by the Automotive Operations segment and $16 million is recorded by
the Glass Operations segment. As of June 30, 2001, Visteon has spent or
utilized about $87 million related to these charges, which includes amounts
related to special pension and other postretirement benefits.
During the second quarter of 2000, Visteon recorded a pre-tax charge of
approximately $13 million ($8 million after-tax) for Visteon-designated
employees that were part of special voluntary retirement and separation
programs.
4. 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. The calculation of diluted income per
share takes into account the effect of dilutive potential common stock, such
as stock options and restricted stock. For the second quarter and first half
of 2001 potential common stock of about 404,000 and 202,000 shares,
respectively, is excluded as its effect would have been antidilutive. 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.
Shareholder approval was obtained at the May 2001 Annual Meeting of the
Visteon Shareholders for the Visteon Corporation 2000 Incentive Plan
("Incentive Plan"), and the related awards granted under this plan through
such date, and the Visteon Corporation Employees Equity Incentive Plan
("EEIP"). The total number of shares of Visteon common stock subject to
awards under the Incentive Plan and EEIP is 13 million and 6.5 million shares,
respectively.
During the second quarter of 2001, Visteon granted under the Incentive
Plan about 900,000 shares of performance-based restricted stock and granted
under the Incentive Plan and EEIP options covering about 3.1 million shares
with an exercise price equal to the average of the highest and lowest prices
at which Visteon common stock was traded on the New York Stock Exchange on the
grant date. The performance-based restricted stock awards vest upon the
achievement of the applicable performance goals at the completion of a
performance period, which is generally three years. Performance goals are
related to return on equity and quality measures. Compensation expense is
recognized over the performance period based upon an estimate of the
likelihood of achieving the performance goals and also reflects changes in the
price of Visteon common stock. Stock options will become exercisable one-
third after one year from the date of grant, an additional one-third after two
years and in full after three years, and expire 10 years from the date of
grant.
5. Inventories are summarized as follows:
June 30, December 31,
2001 2000
(in millions)
Raw materials, work-in-process and supplies $765 $829
Finished products 143 119
Total inventories $908 $948
U.S. inventories $572 $586
6. Debt -- During the second quarter of 2001, Visteon amended its
financing arrangements with third-party lenders that provide $2 billion of
contractually committed, unsecured revolving credit facilities. The
amendments extended the maturity dates on both the 364-day and long-term
facilities by one year, while all other terms remained substantially the same.
7. Comprehensive Income -- Other comprehensive income mainly includes
foreign currency translation adjustments. Total comprehensive income is
summarized as follows:
Second Quarter First Half
2001 2000 2001 2000
(in millions)
Net income (loss) $(40) $162 $(9) $309
Other comprehensive income (loss) (47) (21) (67) (58)
Total comprehensive income (loss) $(87) $141 $(76) $251
8. 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.
Consistent with the first quarter of 2001, the impact of implementing this
new standard on Visteon's results of operations and financial condition for
the three and six months ended June 30, 2001 was not material.
9. Segment Information -- Operating segments are defined as components of
an enterprise about which separate financial information is available that is
evaluated regularly by the chief operating decision makers, or a decision
making group, in deciding how to allocate resources and in assessing
performance. Visteon's chief operating decision-making group is the Strategy
Council, which is comprised of the Chairman and Chief Executive Officer and
six other senior executives.
In the second quarter of 2001, Visteon implemented a new organization
which is focused on customer business groups, and supported by centralized
product development, manufacturing and administrative functions. Consistent
with the new organization, Visteon's reportable operating segments are
Automotive Operations and Glass Operations. Automotive Operations provides
various automotive systems and components mainly to OEM customers; Glass
Operations supplies architectural and flat glass to a broad customer base,
including OEMs. The new segments replace the previous product-oriented
reportable operating segments. Prior year information has been restated to
conform with the new organization. Financial information for the reportable
operating segments is summarized as follows:
Automotive Glass Total
Operations Operations Visteon
(in millions)
Second Quarter
2001
Sales $4,730 $175 $4,905
Income (loss) before taxes (45) (12) (57)
Net income (loss) (33) (7) (40)
Average assets 11,113 309 11,422
2000
Sales $5,105 $204 $5,309
Income (loss) before taxes 284 (18) 266
Net income (loss) 173 (11) 162
Average assets 11,134 609 11,743
First Half
2001
Sales $9,288 $340 $9,628
Income (loss) before taxes 15 (17) (2)
Net income (loss) - (9) (9)
Average assets 11,069 304 11,373
2000
Sales $10,133 $401 $10,534
Income (loss) before taxes 523 (20) 503
Net income (loss) 321 (12) 309
Average assets 11,395 677 12,072
MAKE YOUR OPINION COUNT - Click Here
