Visteon Releases Fourth Quarter and Full Year 2003 Results - Not Good
DEARBORN, Mich., Jan. 23, 2004 -- Visteon Corporation today announced fourth quarter and full year results for 2003. For the fourth quarter 2003, Visteon reported a net loss of $863 million. These results include special charges of $756 million. In the fourth quarter of 2002, Visteon reported a net loss of $34 million, including special charges of $51 million.
2003 Highlights * Exit of Chesterfield seating operations * Continued implementation of European Plan for Growth * Significant progress on IT infrastructure * UAW/Ford contract ratification * Settlement of discussions with Ford * Non-Ford revenue tops $4 billion Fourth Quarter 2003
The fourth quarter 2003 results include $260 million of fixed asset write- downs, a charge of $468 million to increase deferred tax asset valuation allowances, and restructuring charges of $28 million. In aggregate, after tax, these items total $756 million, or $6.02 per share.
Revenue for fourth quarter 2003 was $4.5 billion, down $84 million from fourth quarter of 2002. Non-Ford revenue totaled $1.2 billion for the quarter, up $186 million from the fourth quarter of 2002, and represented 26% of total sales.
"We've completed many significant actions during the course of 2003 to improve our performance in 2004 and beyond," said Peter J. Pestillo, Visteon's chairman and chief executive officer. "Our agreements with Ford and the UAW, the exit of seating and other restructuring activities, combined with new business revenue, enable us to substantially improve our results going forward."
Full Year 2003
For the full year 2003, Visteon recorded a net loss of $1.2 billion or $9.65 per share. These results include the fixed asset write-downs and increase in the deferred tax asset valuation allowance recorded in the fourth quarter, and restructuring and other special items of $219 million. In aggregate, after tax, these items total $947 million, or $7.53 per share.
Total revenue for full year 2003 was $17.7 billion, down $735 million from full year 2002. Non-Ford revenue totaled $4.2 billion for the year, up $569 million from the full year 2002, and represented 24% of total sales.
For full year 2002, Visteon recorded a net loss of $352 million or $2.75 per share. Included in these results were special charges of $142 million and $265 million for the non-cash write-off for the value of goodwill associated with adoption of Statement of Financial Accounting Standards No. 142.
Cash and Debt-to-Capital
Visteon ended the year with $956 million in cash and marketable securities, up slightly from September 30, 2003. Year-end debt outstanding was $1.8 billion, and the company's debt-to-capital ratio was 49%.
2004 Outlook
Revenue for full year 2004 is projected to be in the range of $18.6 to $18.8 billion, up substantially from 2003, reflecting primarily non-Ford revenue growth. Non-Ford revenue is expected to exceed $5 billion, and represent 28% of total revenue. For the full year 2004, Visteon expects net income of $0.50 to $1.00 per share. The company expects cash from operations to exceed its capital expenditures for full year 2004.
Year-over-year improvement in earnings is expected to result from: savings related to the European Plan for Growth, exit of seating, and other actions; decreased OPEB expenses; lower SG&A expenses; material cost savings and manufacturing efficiencies; offset partially by price reductions and unfavorable economics. The company also expects significantly lower restructuring charges in 2004 than the amounts recorded for special items and restructuring in 2003.
For the first quarter 2004, Visteon expects net income in the range of $0.05 to $0.15 per share. Revenue is expected to be in the range of $4.8 to $4.9 billion for the quarter. The company expects capital expenditures to exceed cash from operations during the first quarter 2004.
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 75,000 employees and a global delivery system of more than 180 technical, manufacturing, sales and service facilities located in 25 countries.
VISTEON CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL DATA
(in millions, except per share amounts)
2003
over/(under)
2003 2002
Fourth Full Fourth Full
Quarter Year Quarter Year
Sales
Ford and affiliates $3,289 $13,475 $(270) $(1,304)
Other customers 1,170 4,185 186 569
Total sales $4,459 $17,660 $(84) $(735)
Depreciation and amortization
Depreciation $146 $572 $15 $21
Amortization 26 102 5 22
Total depreciation and
amortization $172 $674 $20 $43
Selling, administrative and
other expenses $259 $1,002 $(4) $114
Loss before income taxes $(611) $(1,150) $(562) $(1,033)
Net loss
As reported $(863) $(1,213) $(829) $(861)
Before cumulative effect
of change in accounting (863) (1,213) (829) (1,126)
Net loss per share
(basic and diluted)
As reported $(6.87) $(9.65) $(6.60) $(6.90)
Before cumulative effect
of change in accounting (6.87) (9.65) (6.60) (8.97)
Average diluted shares
outstanding 125.7 125.8 (1.3) (1.9)
Special charges (1) (2)
Included in costs of sales $436 $729 $378 $529
Included in selling,
administrative and other
expenses 14 20 (9) (3)
Total pre-tax special charges $450 $749 $369 $526
Special charges above,
after-tax $288 $479 $237 $337
Deferred tax asset
valuation 468 468 468 468
Effect of change in
accounting, net of tax - - - (265)
Total after-tax special charges $756 $947 $705 $540
Special charges per share,
based on average diluted
shares outstanding above $6.02 $7.53 $5.62 $4.35
Capital expenditures $238 $879 $(24) $156
Cash provided by
operating activities $253 $370 $(480) $(776)
Cash and borrowing (at end of period)
Cash and marketable
securities $956 $(322)
Borrowing 1,818 127
- - - - -
(1) Fourth Quarter 2003 amounts include $43 million ($28 million after- tax) related to restructuring and other actions and $407 million ($260 million after-tax) related to non-cash fixed asset write-downs. Full Year 2003 amounts include $313 million ($200 million after-tax) related to restructuring and other actions and $436 million ($279 million after-tax) related to non- cash fixed asset write-downs.
(2) Fourth Quarter 2002 amounts include $81 million ($51 million after- tax) related to restructuring and other actions. Full Year 2002 amounts include $223 million ($142 million after-tax) related to restructuring and other actions; and $265 million after-tax related to the non-cash write-down in the value of goodwill associated with the adoption of SFAS 142.
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
For the Years Ended
December 31, Fourth Quarter
2003 2002 2001 2003 2002
(unaudited)
(in millions, except per share amounts)
Sales
Ford and affiliates $13,475 $14,779 $14,656 $3,289 $3,559
Other customers 4,185 3,616 3,187 1,170 984
Total sales 17,660 18,395 17,843 4,459 4,543
Costs and expenses
Costs of sales 17,786 17,588 17,105 4,805 4,324
Selling, administrative
and other expenses 1,002 888 855 259 263
Total costs and
expenses 18,788 18,476 17,960 5,064 4,587
Operating income (loss) (1,128) (81) (117) (605) (44)
Interest income 17 23 55 4 6
Interest expense 94 103 131 23 25
Net interest expense (77) (80) (76) (19) (19)
Equity in net income of
affiliated companies 55 44 24 13 14
Income (loss) before income
taxes, minority interests
and change in accounting (1,150) (117) (169) (611) (49)
Provision (benefit) for
income taxes 34 (58) (72) 243 (23)
Income (loss) before
minority interests
and change in accounting (1,184) (59) (97) (854) (26)
Minority interests in
net income of subsidiaries 29 28 21 9 8
Income (loss) before
change in accounting (1,213) (87) (118) (863) (34)
Cumulative effect of
change in accounting,
net of tax - (265) - - -
Net income (loss) $(1,213) $(352) $(118) $(863) $(34)
Basic and diluted earnings
(loss) per share
Before cumulative effect
of change in accounting $(9.65) $(0.68) $(0.91) $(6.87) $(0.27)
Cumulative effect of
change in accounting - (2.07) - - -
Basic and diluted $(9.65) $(2.75) $(0.91) $(6.87) $(0.27)
Cash dividends per share $0.24 $0.24 $0.24 $0.06 $0.06
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31,
2003 2002(1)
(in millions)
Assets
Cash and cash equivalents $953 $1,204
Marketable securities 3 74
Total cash and marketable securities 956 1,278
Accounts receivable - Ford and affiliates 1,198 1,401
Accounts receivable - other customers 1,164 828
Total receivables 2,362 2,229
Inventories 761 878
Deferred income taxes 163 199
Prepaid expenses and other current assets 168 153
Total current assets 4,410 4,737
Equity in net assets of affiliated companies 215 191
Net property 5,369 5,443
Deferred income taxes 700 566
Other assets 270 233
Total assets $10,964 $11,170
Liabilities and Stockholders' Equity
Trade payables $2,270 $2,038
Accrued liabilities 924 1,021
Income taxes payable 27 14
Debt payable within one year 351 393
Total current liabilities 3,572 3,466
Long-term debt 1,467 1,298
Postretirement benefits other than pensions 469 409
Postretirement benefits payable to Ford (2) 2,090 1,874
Other liabilities 1,508 1,145
Total liabilities 9,106 8,192
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, 131 million
and 129 million shares outstanding, respectively 131 131
Capital in excess of par value of stock 3,288 3,298
Accumulated other comprehensive (loss) (21) (140)
Other (19) (33)
Earnings retained for use in business
(accumulated deficit) (1,521) (278)
Total stockholders' equity 1,858 2,978
Total liabilities and stockholders' equity $10,964 $11,170
- - - - -
(1) Certain balance sheet amounts at December 31, 2002 were reclassified to conform with current period presentation.
(2) Postretirement benefits payable to Ford are related to charges for the cost of providing retiree health care and life insurance benefits for Visteon- assigned Ford-UAW employees, and, to a minor extent, certain salaried employees. During Fourth Quarter 2003, Ford agreed to assume responsibility for approximately $1,646 million of amounts previously due Ford under the original terms of the separation agreement, which will be offset against future charges from Ford.
VISTEON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Years Ended
December 31,
2003 2002 2001
(in millions)
Cash and cash equivalents at January 1 $1,204 $1,024 $1,412
Cash flows provided by operating activities 370 1,146 436
Cash flows from investing activities
Capital expenditures (879) (723) (752)
Acquisitions and investments
in joint ventures, net (4) - (7)
Purchases of securities (48) (508) (346)
Sales and maturities of securities 118 588 260
Other 25 36 102
Net cash used in investing activities (788) (607) (743)
Cash flows from financing activities
Commercial paper (repayments) issuances, net (85) (194) 8
Other short-term debt, net 55 - -
Proceeds from issuance of other debt 238 115 114
Principal payments on other debt (121) (245) (144)
Purchase of treasury stock (5) (24) (25)
Cash dividends (31) (31) (31)
Other 77 (4) 3
Net cash provided (used in)
by financing activities 128 (383) (75)
Effect of exchange rate changes on cash 39 24 (6)
Net (decrease) increase in cash and
cash equivalents (251) 180 (388)
Cash and cash equivalents at December 31 $953 $1,204 $1,024