Visteon reports first-quarter cash use of $131 million on operating activities

By Jennifer Lanning Drey

Portland, Ore., May 2 - Visteon Corp.'s lower first-quarter earnings contributed to the company's use of $131 million on operating activities during the quarter, compared with just $32 million in the same period a year ago, chief financial officer William G. Quigley III said during the company's quarterly earnings conference call held Wednesday.

Visteon reported a first-quarter net loss of $153 million, compared with net income of $3 million for the comparable period in 2006.

The company had a cash balance of $872 million at March 31, down from $1.06 billion at Dec. 31.

Free cash flow in the quarter was negative $195 million, compared with negative $117 million in the first quarter of 2006, Quigley reported.

During the call, Visteon executives said the company's first-quarter cash flow was impacted by normal seasonal factors, customer and geographic sales mix, a change in payment terms from Ford in North America and operating performance.

The company reported total debt of $2.2 billion at March 31, a number Quigley said does not reflect a $500 million term loan the company closed in April.

"With the $500 million addition to the term loan, we have provided ourselves with additional runway as we continue to implement our improvement plan," Quigley said.

Visteon has no significant debt maturities until its 8¼% notes mature in 2010.

When asked during the question-and-answer portion of the call about other possible uses for the new $500 million term loan, the company executives said they would consider taking out the 8¼% notes but also said the primary function of the new liquidity is to absorb any significant disruption that may occur in the coming months.

Company executives reiterated on Wednesday that Visteon remains on track to meet its goal of being cash flow positive in 2009.

During the call, Quigley, along with Visteon chief operating officer Donald Stebbins, said the company continues to deliver on its multi-year restructuring plan, which has a goal of closing two operations and selling five businesses in 2007.

"Our improvement plan remains on track. We are addressing our non-core and non-performing operations, and we remain focused on the efficient use of our cash resources," Quigley said.

In March, Visteon reached an agreement to sell certain chassis operations in Germany, Poland and Brazil.

Additionally, the company recently stopped production at its interiors facility in Chicago.

Visteon is a Van Buren Township, Mich., automotive systems and technology supplier.

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