Visteon (NASDAQ:VC)
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Visteon to Delay Filing of Form 10-Q
VAN BUREN TOWNSHIP, Mich., May 10 /PRNewswire-FirstCall/ -- Visteon
Corporation (NYSE:VC) today announced that it would delay the filing of its
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2005,
which is due today. This action is the result of the decision by the Audit
Committee of the Board of Directors, as recommended by the company's
management, to conduct an independent review of the accounting for certain
transactions originating primarily in the company's North American purchasing
activity.
(Logo: http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO )
During the preparation of Visteon's first quarter 2005 Form 10-Q, the company's
management identified errors in its accruals for costs principally associated
with freight and material surcharges that relate to prior periods. During the
course of the company's internal review, allegations of potential improper
conduct by a former senior finance employee responsible for the accounting
oversight for North American purchasing activities were raised. As a result of
these allegations, the Audit Committee intends to engage outside accounting and
legal advisors to further investigate these matters.
As a result of its internal review, to date Visteon's management has identified
the following items which were recorded in the company's first quarter 2005
unaudited financial results as previously reported on April 27, 2005 that
relate to prior periods:
* Approximately $13 million of freight expense payable to third party North
American transportation providers for services rendered prior to the end of
2004; and
* Approximately $18 million of material surcharges payable to North American
suppliers of certain raw materials used in the manufacture of the company's
products that were incurred prior to the end of 2004.
As the Audit Committee's independent investigation is just commencing, Visteon
is not able to determine whether these items or any other adjustments that may
be identified will require restatement of prior period results or further
adjustments to the previously reported first quarter 2005 financial results.
Therefore, Visteon is not currently able to determine the effects of all
potential adjustments to its results of operations for any particular period,
or whether these or other errors will result in the determination that one or
more additional material weaknesses in the company's internal control over
financial reporting exist for purposes of Section 404 of the Sarbanes- Oxley
Act. While the Audit Committee intends to conduct its investigation in an
expedient manner, Visteon cannot provide an estimate of when the first quarter
2005 Form 10-Q, or if necessary, any amended SEC filings, will be made.
Ford Discussions and Liquidity
Visteon has been exploring strategic and structural changes to its business in
the United States that would involve restructuring its agreements with Ford.
Visteon and Ford have been discussing a concept designed to address operating
needs of both companies. Recent discussions with Ford have been constructive
and are progressing. The action to delay the filing of our first quarter 2005
Form 10-Q is not expected to impact these discussions.
Absent significant structural changes to Visteon's U.S. business, including an
agreement with Ford that will allow the company to achieve a sustainable and
competitive business model, the company believes that cash flow from
operations, including the impact of the Ford funding agreement, will not be
sufficient to fund capital spending, debt maturities and other cash obligations
in 2005, and, therefore, Visteon will need to incur additional debt. Liquidity
from internal or external sources to meet these obligations is dependent on a
number of factors, including availability of cash balances and access to
borrowing facilities and/or capital markets. Visteon can provide no assurance
that such liquidity will be available at the times or in the amounts needed, or
on terms and conditions acceptable to Visteon, because of the uncertainty
regarding economic and market conditions, as well as the ultimate outcome of
our strategic and structural discussions with Ford. At March 31, 2005, Visteon
was in compliance with its covenants relating to its existing credit
facilities, although given current market conditions and the need to complete
strategic and structural discussions with Ford, there can be no assurance that
Visteon will remain in compliance with such covenants in the future, especially
during the third quarter which normally requires the use of liquidity resources
due to seasonal effects. If a covenant were violated and not cured within 30
days, or otherwise waived, the availability of the company's credit facilities
could be withdrawn, and repayment of outstanding borrowings could be
accelerated. In this event, Visteon would seek to replace its existing credit
facilities with other credit facilities or secured borrowings, although the
company cannot provide assurance that sufficient replacement sources would be
available. In addition, the company's credit facilities and bond indenture
require it to submit interim financial information within prescribed time
periods. Although Visteon's failure to file its first quarter 2005 Form 10-Q
does not result in immediate non- compliance under such agreements, a
significant delay in completing the investigation and submitting its Form 10-Q
could result in non-compliance in the future.
In light of the upcoming expiration of Visteon's existing 364-day revolving
credit facility in June 2005, the company is actively exploring its financing
alternatives. Given current market conditions, the company's financial
performance and its credit ratings, any financing alternative will likely
require significantly more restrictive covenants and collateralization.
Visteon's ability to provide lenders with collateral at the times and in
amounts needed may be limited by the results, if any, of its negotiations with
Ford, restrictive covenants regarding limitations on liens in its indenture and
any contractual rights that Ford may successfully assert to offset against
payables to Visteon amounts Ford claims are owed to it by Visteon. In
addition, the results of any discussions with Ford could significantly impact
the carrying value of certain assets and related liabilities that support and
are dependent upon Ford's North American business.
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 70,000 employees and a global delivery system of more than 200
technical, manufacturing, sales and service facilities located in 24 countries.
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 the automotive vehicle production volumes and schedules
of our customers, and in particular Ford's North American vehicle production
volumes; the successful completion of our discussions with Ford and, if
successful, implementing structural changes that result from those discussions
to achieve a competitive and sustained business; our ability to satisfy our
future capital and liquidity requirements; the results of the investigation
being conducted by Visteon's Audit Committee; our successful execution of
internal performance plans and other cost-reduction and productivity efforts;
charges resulting from restructurings, employee reductions, acquisitions or
dispositions; our ability to offset or recover significant material surcharges;
the effect of pension and other post- employment benefit obligations; as well
as those factors identified in our filings with the SEC (including our Annual
Report on Form 10-K for the year- ended December 31, 2004). We assume no
obligation to update these forward- looking statements.
http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO
DATASOURCE: Visteon Corporation
CONTACT: Media Inquiries: Jim Fisher, +1-734-710-5557,
, or Analyst Inquiries: Derek Fiebig, +1-734-710-5800,
, both of Visteon Corporation
Web site: http://www.visteon.com/