Visteon to Delay Filing of Form 10-Q
May 10 2005 - 5:00PM
PR Newswire (US)
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/
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