Visteon impacted by low production levels in Q3; reports liabilities of $2.48 billion

By Jennifer Lanning Drey

Portland, Ore., Oct. 31 - Visteon Corp. is facing challenging current and near-term production levels that are "severely" pressuring its results, president and chief operating officer Donald J. Stebbins said during the company's quarterly earnings conference call on Tuesday.

Visteon's third-quarter results were significantly impacted by lower production among its largest customers, he said.

Visteon had total liabilities of $2.48 billion at Sept. 30, compared with $2.96 billion at Dec. 31, 2005, according to a company news release.

The company's free cash flow for the third quarter was negative $116 million at Sept. 30; however, cash flow is historically negative during that period, chief financial officer James F. Palmer said during the call.

He also reported that capital expenditures were $82 million during the quarter.

"The third quarter has historically been a difficult quarter for us in working capital performance," Palmer said.

During the quarter, Visteon closed on a new U.S. secured five-year revolving credit facility with an aggregate availability of up to $350 million and a European accounts receivable securitization facility that provides up to $325 million of funding for qualified trade receivables, according to a company news release.

The facilities replaced the company's $500 million multi-year secured revolving credit facility that was to expire in June 2007. The new credit facilities expire in 2011, according to the release.

The company said the completion of the financings, plus the seven-year $800 million secured term loan it closed earlier this year, provide Visteon with additional flexibility as it implements its three-year restructuring plan.

Actions being taken under the plan include shifting company manufacturing and the engineering of operations to lower-cost countries. To this end, Visteon opened new facilities in India, China, Turkey and Slovakia this year.

In addition, Visteon has identified 23 of its plants that will be fixed, closed or sold, and the company is preparing to reduce headcount by 900 employees, Stebbins said.

Visteon's year-to-date restructuring costs total $35 million, which is less than previously estimated due to lower-than-expected severance costs and attrition that has allowed the company to reduce costs without incurring debt, he said.

Visteon expects to be cash flow positive by the end of the fourth quarter, due in part to working capital reductions, Palmer said Tuesday.

New business from a diverse range of global customers is also expected to help improve Visteon's position in the future, Stebbins said.

During the first nine months of 2006, the company was awarded new incremental business totaling nearly $1 billion, which will go into production in 2007.

"As we look ahead, the new business wins will continue the diversification of our customer base and increase the profitability of the company," Stebbins said.

Visteon is an automotive supplier based in Van Buren Township, Mich., that provides products for vehicle manufacturers and after-market consumers.

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