Visteon Announces Fourth-Quarter and Full-Year 2005 Results

Highlights: * 2005 net loss narrows; cash flow improves * Multi-year action plan for year-over-year improvements through 2008 and beyond * Customer diversification continues 


VAN BUREN TOWNSHIP, Mich., Feb. 10  /PRNewswire-FirstCall/ -- Visteon Corporation (NYSE:VC) today announced fourth-quarter and full-year results for 2005.  For the fourth quarter of 2005, Visteon reported net income of $1.338 billion, or $10.25 per diluted share, on total sales of $2.9 billion. For full year 2005, Visteon reported a net loss of $270 million, or $2.14 per share, on total sales of $17.0 billion.

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"With the Ford transaction completed, we are now focused on implementing our multi-year plan to restructure Visteon and improve our earnings and free cash flow," said Michael F. Johnston, chairman and chief executive officer. "We are looking at every opportunity to accelerate our actions to achieve continued year-over-year improvements. For 2006, we are increasing our outlook for earnings and reaffirming our outlook for positive free cash flow. We are also reiterating our expectation for continued improvement in 2007 and beyond."

Fourth Quarter 2005

For the fourth quarter of 2005, product sales were $2.7 billion and services revenues were $164 million.  More than 50 percent of total product sales were generated from customers other than Ford, a significant increase over prior year.  Sales for the same period a year ago totaled $4.7 billion, of which non-Ford sales were 33 percent.  Product sales were lower primarily due to the sale of 23 North American facilities on Oct. 1, 2005, as part of the Automotive Components Holdings, LLC (ACH) transactions, lower production volumes by Ford in North America and price reductions to customers.  Services revenues of $164 million represent billings for employee and related costs for business support activities provided to ACH under terms of various agreements between Visteon and ACH that took effect Oct. 1, 2005.

Visteon's net income of $1.338 billion for the fourth quarter of 2005 included a gain of $1.8 billion related to the ACH transactions, and non-cash asset impairment charges of $335 million related to product lines manufactured principally at plants in the United States and the United Kingdom.  These manufacturing operations are addressed by Visteon's multi-year restructuring program.  This impairment charge is expected to decrease depreciation and amortization expense by approximately $25 million annually. Visteon also incurred $28 million of restructuring expenses in the quarter related to various personnel and other cost-reduction actions.  Reimbursements from the restructuring escrow account for qualified expenses incurred by Visteon in both the fourth quarter and prior quarters of 2005 totaled $51 million. For the fourth quarter of 2004, Visteon reported a net loss of $138 million, which included restructuring expenses of $41 million.

Cash provided by operating activities was $42 million for the fourth quarter of 2005, down about $150 million from the same period a year ago, as favorable performance in trade working capital was offset by an estimated $300 million net working capital run-off associated with retained receivables and payables of the business that transferred as part of the ACH transactions. Capital expenditures for the quarter of $185 million were $73 million lower than fourth quarter 2004.  Free cash flow was negative $143 million in the fourth quarter 2005, compared with negative $63 million in the same period of 2004.

Full Year 2005

Sales for full year 2005 totaled $17.0 billion, including product sales of $16.8 billion and services revenues of $164 million.  Of the product sales, 62 percent were Ford-related with 38 percent from other customers.  Sales for the same period a year ago totaled $18.7 billion, of which Ford-related sales were 70 percent and sales from other customers were 30 percent.  Sales were lower primarily due to the sale of 23 North American facilities on Oct. 1, 2005 as part of the ACH transactions, lower production volumes by Ford in North America and price reductions to customers.

2005 results include the operations of the businesses and facilities that were sold as part of the ACH transactions for the nine months for which they were owned by Visteon.  Sales generated by these former facilities as reported in Visteon's 2005 results were nearly $6.1 billion, including $611 million of sales to customers other than Ford.  For 2004, these former facilities accounted for nearly $9.0 billion of sales, including $677 million of sales to customers other than Ford.

Visteon's net loss of $270 million for the full year 2005 represents an improvement over 2004's net loss of $1.5 billion.  The results for 2005 include the fourth quarter non-cash charges discussed above, the gain on the ACH transactions, as well as previously announced non-cash asset impairment charges of about $1.2 billion and $46 million of restructuring expenses, partially offset by $51 million of reimbursements from the restructuring escrow account.  For 2004, Visteon's net loss included restructuring expenses of $82 million, non-cash asset impairment charges of $314 million and a non- cash charge of $871 million related to deferred tax assets.

Cash provided by operating activities was $417 million for full year 2005, about the same as 2004 full-year results. Free cash flow for full year 2005 was negative $168 million compared with a negative $409 million for full year 2004.  Capital expenditures for the year of $585 million were $242 million lower than for the full year 2004.

Cash and Debt

As of Dec. 31, 2005, Visteon had cash of $865 million, an improvement over 2004's $752 million. Visteon's 2005 debt position also improved, with total borrowings of $1.994 billion as of Dec. 31, 2005, compared with total borrowings of $2.021 billion at the end of 2004.

On Jan. 9, 2006, Visteon closed on a new 18-month secured term loan of $350 million.  The new loan expires on June 20, 2007, and replaced Visteon's $300 million secured short-term revolving credit facility that expired on Dec. 15, 2005.  The term loan was made part of Visteon's existing $772 million five-year facility agreement.  The terms and conditions of the agreement were also modified to align various covenants with Visteon's restructuring initiatives and to make changes to the consolidated leverage ratios.  Visteon also amended its $241 million delayed draw term loan agreement, which also expires in June 2007, to reflect substantially the same terms and conditions.

Outlook

Visteon is raising its estimate for 2006 full-year earnings before net interest expense and the provision for income taxes, excluding net unreimbursed restructuring expenses and non-cash asset impairments (EBIT-R) to a range of $45 million to $75 million, reflecting reduced depreciation and amortization expense estimates. Additionally, Visteon expects to generate about $50 million of free cash flow and expects 2006 full-year product sales of approximately $11.2 billion, with 58 percent coming from non-Ford sales.

"Visteon is a global leader in our core product areas of climate, interior and electronic systems, with the global reach and diverse customer mix to continue delivering year-over-year improvements," Johnston said.  "We have established a sustainable business model and solid action plans to strengthen our results and create value for our customers, employees and shareholders."

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 general economic conditions, including changes in interests rates and fuel prices; the automotive vehicle production volumes and schedules of our customers, and in particular Ford's vehicle production volumes; our ability to satisfy our future capital and liquidity requirements and comply with the terms of our existing credit agreements and indentures; the financial distress of our suppliers and possible disruptions in the supply of commodities; our ability to implement, and realize the anticipated benefits of, restructuring and other cost-reduction initiatives and our successful execution of internal performance plans and other productivity efforts; the timing and expenses related to restructurings, employee reductions, acquisitions or dispositions; increases in raw material and energy costs and our ability to offset or recover significant material surcharges; the effect of pension and other post-employment benefit obligations; increases in our warranty, product liability and recall costs; the outcome of legal or regulatory proceedings to which we are or may become a party; as well as those factors identified in our filings with the SEC (including our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2005). We assume no obligation to update these forward-looking statements.

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. The provision of these comparable GAAP financial measures for 2006 is not intended to indicate that Visteon is explicitly or implicitly providing projections on those GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the company at the date of this press release and the adjustments that management can reasonably predict.

Visteon Corporation is a leading global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers.  With corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Kerpen, Germany; the company has more than 170 facilities in 24 countries and employs approximately 50,000 people.

                   VISTEON CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
          (Dollars in millions, except share and per share data)
                               (Unaudited)


                             Three Months Ended          Year Ended
                                 December 31,            December 31,

                                2005     2004          2005       2004
  Net sales
      Product                 $2,701   $4,679       $16,812    $18,657
      Services                   164        -           164          -
                               2,865    4,679        16,976     18,657

  Cost of sales
      Product                  2,638    4,521        16,259     17,769
      Services                   163        -           163          -
                               2,801    4,521        16,422     17,769

  Gross margin                    64      158           554        888
  Selling, general and
   administrative expenses       183      252           946        980
  Restructuring expenses          28       41            46         82
  Reimbursement from
   Escrow Account                 51        -            51          -
  Impairment of
   long-lived assets             335        -         1,511        314
  Gain on ACH transactions     1,832        -         1,832          -
  Operating income (loss)      1,401     (135)          (66)      (488)
  Interest expense, net           34       24           132         96
  Equity in net income of
   non-consolidated affiliates     3        7            25         45
  Income (loss) before
   income taxes and minority
   interests in consolidated
   subsidiaries                1,370     (152)         (173)      (539)
  Provision (benefit) for
   income taxes                   23      (21)           64        962
  Minority interests in
   consolidated subsidiaries       9        7            33         35
  Net income (loss)           $1,338    $(138)        $(270)   $(1,536)

  Basic and diluted income
   (loss) per common share:
  Basic income (loss)
   per share                  $10.58   $(1.10)       $(2.14)   $(12.26)
  Basic average shares
   outstanding (millions)      126.5    125.3         126.0      125.3
  Diluted income (loss)
   per share                  $10.25   $(1.10)       $(2.14)   $(12.26)
  Diluted average shares
   outstanding (millions)      130.6    125.3         126.0      125.3

  Cash dividends per share       $ -    $0.06           $ -      $0.24



                   VISTEON CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                          (Dollars in millions)

                                                      December 31,
                                                  Unaudited
                                                    2005         2004

                                 ASSETS

  Cash and cash equivalents                         $865         $752
  Accounts receivable, net
      Ford Motor Company                             618        1,255
      Non-Ford Motor Company                       1,120        1,285
  Inventories, net                                   537          889
  Prepaid expenses and other current assets          205          249

  Total current assets                             3,345        4,430

  Property, plant and equipment, net               2,973        5,303
  Other assets                                       418          559

  Total assets                                    $6,736      $10,292


        LIABILITIES AND SHAREHOLDERS' (DEFICIT) / EQUITY

  Short-term debt, including current portion
   of long-term debt                                $485         $508
  Accounts payable                                 1,803        2,493
  Employee benefits, including pensions              233          341
  Accrued expenses and other current liabilities     438          580

  Total current liabilities                        2,959        3,922

  Long-term debt                                   1,509        1,513
  Postretirement benefits other than pensions        724          639
  Postretirement benefits payable to
   Ford Motor Company                                154        2,135
  Employee benefits, including pensions              647          751
  Deferred income taxes                              175          287
  Other liabilities                                  382          516
  Minority interests in consolidated subsidiaries    234          209

  Shareholders' (deficit) / equity
      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, 129 million
       and 130 million shares outstanding,
       respectively)                                 131          131
      Stock warrants                                 127            -
      Capital in excess of par value of stock      3,394        3,380
      Accumulated other comprehensive
       income (loss)                                (232)           5
      Other                                          (28)         (26)
      Accumulated deficit                         (3,440)      (3,170)

  Total shareholders' (deficit) / equity             (48)         320

  Total liabilities and shareholders'
   (deficit) / equity                             $6,736      $10,292



                   VISTEON CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Dollars in millions)
                               (Unaudited)

                                      Three Months Ended     Year Ended
                                          December 31,       December 31,

                                        2005     2004      2005      2004

  Cash provided from (used by)
   operating activities
  Net income (loss)                   $1,338    $(138)    $(270)  $(1,536)
  Adjustments to reconcile net
   income (loss) to net cash
   provided from operating
   activities:
      Gain on ACH transactions        (1,832)       -    (1,832)        -
      Depreciation and amortization      122      171       595       685
      Impairment of long-lived assets    335        -     1,511       314
      Equity in net income of
       non-consolidated affiliates,
       net of dividends remitted          12       (6)       23        (2)
      Other non-cash items                15       12        44        40
  Changes in assets and liabilities:
      Accounts receivable                577      258       684       (52)
      Inventories                         33      125        34         3
      Accounts payable                  (579)     (74)     (593)       82
      Postretirement benefits
       other than pensions                 8       33       227       180
      Income taxes deferred
       and payable, net                    1      (42)      (40)      869
      Other assets and
       other liabilities                  12     (144)       34      (165)

  Net cash provided from
   operating activities                   42      195       417       418

  Cash provided from (used by)
   investing activities
  Capital expenditures                  (185)    (258)     (585)     (827)
  Acquisitions and investments
   in joint ventures, net                 (1)       -       (21)        -
  Net cash proceeds from
   ACH transactions                      (12)       -       299         -
  Sales and maturities of securities       -        8         -        11
  Other, including proceeds from
   asset disposals                        37       16        76        34

  Net cash used by
   investing activities                 (161)    (234)     (231)     (782)

  Cash provided from (used by)
   financing activities
  Commercial paper repayments, net         -      (50)        -       (81)
  Other short-term debt, net              48       10       239       (20)
  Proceeds from issuance of
   other debt, net of issuance costs      10       28        50       576
  Maturity/repurchase of
   unsecured debt securities               -        -      (250)     (269)
  Principal payments on other debt       (30)       -       (69)      (32)
  Treasury stock activity                  -        -        (2)      (11)
  Cash dividends                           -       (7)        -       (31)
  Other, including book overdrafts        57       51       (19)        3

  Net cash provided from (used by)
   financing activities                   85       32       (51)      135

  Effect of exchange rate changes
   on cash                                 1       30       (22)       28

  Net (decrease) increase in
   cash and cash equivalents             (33)      23       113      (201)

  Cash and cash equivalents at
   beginning of period                   898      729       752       953

  Cash and cash equivalents
   at end of year                       $865     $752      $865      $752



                   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 "free cash flow" and "EBIT-R." Such non-GAAP financial measures are reconciled to their closest US GAAP financial measure in the schedules below.

EBIT-R: EBIT-R represents net income (loss) before net interest expense and provision for income taxes and excludes impairment and net unreimbursed restructuring charges as well as the gain on the ACH transactions.  Management believes EBIT-R is useful to investors because it provides meaningful supplemental information regarding the Company's operating results 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.

                      Three Months Ended     Year Ended           2006
                          December 31,       December 31,       Estimate

                         2005      2004     2005      2004

  Net Income (Loss)    $1,338     $(138)   $(270)  $(1,536)  $(250) - $(220)

    Interest
     expense, net          34        24      132        96         160
    Provision (benefit)
     for income taxes      23       (21)      64       962         105
    Impairment of
     long-lived assets    335         -    1,511       314          30
    Net unreimbursed
     restructuring
     expense                -        41        7        82           -
    Gain on ACH
     transactions      (1,832)        -   (1,832)        -           -

  EBIT-R                $(102)     $(94)   $(388)     $(82)      $45 - $75




EBIT-R is not a recognized term under GAAP and does not purport to be an alternative to net income (loss) as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity.  Because not all companies use identical calculations, this presentation of EBIT-R may not be comparable to other similarly titled measures of other companies. Additionally, EBIT-R is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements.

Free Cash Flow: Free cash flow represents cash flow from operating activities less capital expenditures.  Management believes that free cash flow is useful in analyzing the Company's ability to service and repay its debt and it uses the measure for planning and forecasting in future periods, as well as in management compensation decisions.

                           Three Months Ended     Year Ended          2006
                               December 31,       December 31,      Estimate

                              2005      2004     2005     2004

  Cash provided from
   operating activities        $42      $195     $417     $418        $500

    Capital expenditures      (185)     (258)    (585)    (827)       (450)

  Free cash flow             $(143)     $(63)   $(168)   $(409)        $50




Free cash flow is not a recognized term under GAAP and does not reflect cash used to service debt and does not reflect funds available for investment or other discretionary uses. 

First Call Analyst: 

FCMN Contact: 

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

DATASOURCE: Visteon Corporation



CONTACT:  Media Inquiries: Jim Fisher, [phone], mobile:

[phone], , or Investor Inquiries: Derek Fiebig,

[phone],  , both of Visteon Corporation



Web site:  http://www.visteon.com/ 

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