Original Source: FD (FAIR DISCLOSURE) WIRE
. Derek Fiebig, Visteon Corporation, Director of IR . Mike Johnston, Visteon Corporation, President, COO . Dan Coulson, Visteon Corporation, EVP, CFO
Company announced 4Q03 and FY03 revenues of $4.459b and $17.7b respectively. Guidance was for 1Q04 revenue to be in the range of $4.8-4.9b, and 1Q04 net income to be in the range of $0.05-0.15 per share. Q&A Focus: Outlook, balance sheet.
A. Key Data From Call 1. 2004 non-Ford Revenue = Forecasted to Exceed $5b. 2. Revenue for 4Q03 = $4.459b. 3. Non-Ford revenue was $1.170b in 4Q03. 4. Full-Year 2003 Revenue = approx $17.7b. 5. 4Q03 Total Net After-Tax Loss = $863m. 6. FY03 Total Net After-Tax Loss = $1.213b.
7. FY03 Special Charges = $947m after taxes. 8. 4Q03 Cash From Operating Activities = $253m positive. 9. FY03 Cash From Operating Activities = $370m positive. 10. Year-End 2003 Inventory = $761m.
11. 4Q03 Capex = totaled $238m. 12. FY03 Capex = $879m. 13. Year-End 2003 Cash and Marketable Securities = $956m. 14. Debt at December 31 = $1.8b. 15. Current Debt to Capital Ratio = 49%. 16. 2004 GAAP Net Income Forecasted = 0.50-1.00. 17. 1Q04 Revenue Guidance = $4.8-4.9b.
18. 1Q04 Net Income Guidance = $0.05-0.15 per share.
S1. Recap of 2003 Highlights (M.J.) 1. Significant Event: 1. Signing of new commercial agreements with Ford. 1. Worked with Ford and UAW to ratify new contract last fall. 2. Negotiations are underway on company's supplemental UAW labor agreement. 1. Agreement is on track to be completed within the 90-day window. 2. Significant Initiatives: 1. Separation of IT systems from Ford. 1. Going very well. 2. Completed first major phase in October, and anticipate
completion by mid-year 2004. 2. Continued implementation for the European plan for growth, which is also on track. 3. Major success in 2003 was exit from seating operation in Chesterfield.
1. Allowed company to reallocate resources to more profitable
businesses. 4. Strong cash levels throughout year. 1. A great support to transformation effort. 5. Non-Ford revenue now tops $4b. 1. About 16% higher than 2002. 3. Diversification Details: 1. Growth of non-Ford business continues. 2. 2004 non-Ford revenue is forecasted to exceed $5b. 1. Up over $1b from 2003, increasing about 25%. 2. Should account for 28% of total sales. 3. Significant growth with Nissan, Daimler-Chrysler, Volkswagen, Hyundai, and BMW. 4. 2005 non-Ford revenue should be double the amount it was at the time of co.'s spin. 5. In terms of Ford business, North American average content per
vehicle remains at $3,000. 1. Even though company exited seating in 1H03. 6. Ford revenue is forecasted to remain flat. 4. 2004 Highlights: 1. Achieved EPS of $0.50-1.00, in line with guidance.
2. Will continue to focus on securing new business with non-Ford
customers. 1. Especially in the electronics, interior and climate areas. 3. Increasing and accelerating throughput on new products through the pipeline of commercialization.
1. Implementing stronger operating processes to drive margin improvement.
4. Set to deliver ongoing savings through global commodity
strategies and collaborative idea generation program known as
Save. 5. Will continue to deliver manufacturing costs and efficiency improvements in 2004. 1. Execution of Visteon Manufacturing Operating System (VMOS) is going well. 2. Ensuring the best practices are shared and applied uniformly across plants.
6. Expect to see continued positive movement in driving down
fixed costs YoverY. 1. Expecting SG&A to decrease over $50m in 2004, vs. 2003. 2. Continuing aggressive approach to reducing administrative costs worldwide. 7. In 2004, company will not be facing increasing IT spending as in 2003. 1. Development of IT infrastructure will provide company useful information in running business. 8. Continued shift to low-cost engineering centers.
9. Will benefit from earlier restructuring actions. 1. Exiting of seating, the European plan for growth, and the asset writedown will help bottom-line results on a YoverY basis. 10. The focus on these priorities will enable company to achieve 2004 financial objectives and hit earnings guidance of $0.50-1.00 per share.
S2. Financials (D.C.) 1. Review of Revenue: 1. Revenue for 4Q03 totaled $4.459b. 1. Down $84m - or 2% vs. 4Q02. 2. Decline was more than accounted for by lower Ford revenue - which was down $270m, or about 8%. 2. Non-Ford revenue was $1.170b in 4Q03.
1. Up $186m, or 19% from 4Q02. 2. Improvement reflected the impact of new business, and favorable currency effects. 1. Currency effects improved non-Ford revenue by about $80m. 3. Non-Ford revenue accounted for 26% of total revenue in 4Q03. 3. Full-Year 2003 revenue totalled almost $17.7b. 1. Down $735m, or 4% from 2002. 2. Decrease reflected primarily lower Ford production in North America. 3. Ford production volume in North America was down 403,000 units, or 10% for the full year, and down 51,000 units or 5% for 4Q03. 4. In total, company had a net, after-tax loss of $863m in 4Q03. 1. $1.213b for the full year. 2. Compares with losses of $34m and $352m for 4Q02, and full-year 2002 respectively.
3. 2003 amounts include special charges of $756m, and $947m for
4Q03 and full-year respectively. 5. On a per share basis, the net loss for 4Q03 was $6.87, and $9.65 for the full year. 2. Special Charges for 2003: 1. Special charges for the full year totaled $947m after taxes. 1. $7.53 per share. 2. Of this amount, $756m, or $6.02 was taken in 4Q03. 2. Largest charge was to increase deferred tax valuation allowance by $468m in 4Q03.
1. This non-cash charge relates to net operating losses in certain foreign countries. 2. Also includes a portion of U.S. deferred tax assets where recoverability is less likely. 3. Will continue to monitor the valuation allowance. 1. May need to be increased if expected results are not achieved, particularly in the U.S. 2. It may also be decreased or recaptured entirely once
sustained profitability is restored. 4. Company took an asset impairment charge of $260m dollars after taxes in 4Q03 based on a review of company's fixed asset carrying values. 1. The charge was to impair the assets of six product groupings - bumpers, fuel tanks, starter and alternators, steering columns, suspensions systems, and wiper/washers. 5. Ful year 2003 restructuring charges also included a total of $219m for the exiting of seating, implementation of European growth, and other smaller special charges. 1. Of this amount, $28m was reflected in 4Q03. 6. Cash provided by operating activities was $253m positive in 4Q03. 1. For the full year, $370m positive. 7. Net loss includes the special charges. 1. A substantial portion of these charges reversed for cash purposes. 2. They are non-cash items. 3. Reversal is shown in Other Line, primary accruals. 8. Company continues to improve trade working capital. 1. Total trade working capital - receivables, plus inventory, less trade payables, was at its lowest level since company was public. 2. Inventory of $761m at year-end is down more than $100m from a year ago. 3. Efforts continue to reflect the ability of operating team to deliver improved performance.
9. Capex in 4Q03 totaled $238m, and was $879m for the full year.
3. Trade Payables Program: 1. Reassessed trade payables program based on guidance shared by the SEC at a recent AICPA conference.
1. As a result, company has reclassified this item on balance
sheet - from trade payables to short-term debt. 2. Changes in trade payables program will now be reported as financing activities instead of operating activities. 3. Balance of this program was $100m at year-end 2003, up $55m from …