VC Visteon Corporation

Highlights * First quarter 2006 net income of $3 million - up $166 million versus 2005 * Strong momentum implementing three-year plan * Full-year 2006 EBIT-R guidance raised * Product sales of $2.8 billion * Significant business wins strengthen customer diversification VAN BUREN TOWNSHIP, Mich., May 2 /PRNewswire-FirstCall/ -- Visteon Corporation (NYSE:VC) today announced improved first quarter results for 2006 showing strong progress toward implementing its three-year plan. For the first quarter 2006, Visteon reported net income of $3 million or $0.02 per share, a significant improvement over first quarter 2005 results of a net loss of $163 million, or $1.30 per share. (Logo: http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO ) "We are pleased with the improvement in our performance in the first quarter and the momentum we are gaining on implementing our three-year plan," said Michael F. Johnston, chairman and chief executive officer. "Our operating results were better than both the first and fourth quarters of 2005, and we have made solid progress restructuring our organization, improving our base operations and growing our global business." "Our improved performance is driven by the significant actions we are taking across all of our operations," Johnston added. "We know there is still much work to be done. We have clear plans in place to achieve our objectives, and we are looking for every opportunity to accelerate our three-year plan." First Quarter 2006 Results For the first quarter 2006, product sales were $2.8 billion and services sales totaled $145 million. Sales for the same period a year ago totaled $5.0 billion. Product sales were lower primarily due to the Oct. 1, 2005, transaction with Ford that transferred 23 Visteon facilities to Automotive Components Holdings, LLC, a Ford-managed business entity. "Our balanced portfolio positions us for future growth," Johnston noted. "We have a solid new business backlog and have started the year with some impressive wins that further diversify our customer base." For the first quarter 2006, Visteon recorded net income of $3 million, or $0.02 per share compared to a net loss of $163 million, or $1.30 per share, in the first quarter of 2005. Free cash flow was a use of $117 million for the quarter and improved by $26 million from the fourth quarter 2005, despite normal seasonality. Free cash flow was lower than the first quarter 2005 in which Visteon first received the benefit of accelerated payment terms from Ford as part of a financial agreement announced March 10, 2005. As of March 31, 2006, Visteon had $881 million of cash, a $16 million increase over the balance on Dec. 31, 2005. Total debt for the company as of March 31, 2006, was $2.08 billion, up marginally from year-end 2005. As of March 31, 2006, Visteon was well within the limits of its financial covenants in its existing credit facilities and expects to remain in compliance throughout the year. "Cash flow improved from the prior quarter because of the heightened focus and tighter controls on spending we have implemented across the company," said James F. Palmer, executive vice president and chief financial officer. "We have made progress while continuing to invest in the business at appropriate levels, and we remain committed to taking additional steps to strengthen our cash flow position." Outlook Visteon is raising its estimate for 2006 full-year for EBIT-R to a range of $120 million to $150 million. Additionally, the company still expects to generate about $50 million of free cash flow for 2006. "We have confidence in our continued improvement," Johnston added. "We are increasing our outlook for EBIT-R, reaffirming our outlook for positive free cash flow and reiterating our expectation for continued improvement in 2007 and beyond." Visteon Corporation is a leading global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. With corporate offices in Van Buren Township, Mich. (U.S.); Shanghai, China; and Kerpen, Germany; the company has more than 170 facilities in 24 countries and employs approximately 50,000 people. Forward-looking Information 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 general economic conditions, including changes in interest rates and fuel prices; the automotive vehicle production volumes and schedules of our customers, and in particular Ford's vehicle production volumes; our ability to satisfy our future capital and liquidity requirements and comply with the terms of our existing credit agreements and indentures; the financial distress of our suppliers, or other significant suppliers to out customers, and possible disruptions in the supply of commodities to us or our customers; our ability to implement, and realize the anticipated benefits of, restructuring and other cost-reduction initiatives and our successful execution of internal performance plans and other productivity efforts; the timing and expenses related to restructurings, employee reductions, acquisitions or dispositions; increases in raw material and energy costs and our ability to offset or recover these costs; the effect of pension and other post-employment benefit obligations; increases in our warranty, product liability and recall costs; the outcome of legal or regulatory proceedings to which we are or may become a party; as well as those factors identified in our filings with the SEC (including our Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2005). We assume no obligation to update these forward-looking statements. Use of Non-GAAP Financial Information This press release contains information about Visteon's financial results which is not presented in accordance with accounting principles generally accepted in the United States ("GAAP"). Such non-GAAP financial measures are reconciled to their closest GAAP financial measures at the end of this press release. The provision of these comparable GAAP financial measures for full- year 2006 is not intended to indicate that Visteon is explicitly or implicitly providing projections on those GAAP financial measures, and actual results for such measures are likely to vary from those presented. The reconciliations include all information reasonably available to the company at the date of this press release and the adjustments that management can reasonably predict. VISTEON CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Millions, Except Per Share Data) (Unaudited) Three-Months Ended March 31 2006 2005 Net sales Product $2,816 $4,987 Services 145 - 2,961 4,987 Cost of sales Product 2,573 4,840 Services 144 - 2,717 4,840 Gross margin 244 147 Selling, general and administrative expenses 168 250 Restructuring expenses 9 7 Reimbursement from Escrow Account 9 - Operating income (loss) 76 (110) Interest expense, net 39 29 Equity in net income of non-consolidated affiliates 7 6 Income (loss) before income taxes and minority interests in consolidated subsidiaries and cumulative effect of change in accounting 44 (133) Provision for income taxes 30 22 Minority interests in consolidated subsidiaries 7 8 Net income (loss) before cumulative effect of change in accounting 7 (163) Cumulative effect of change in accounting, net of tax (4) - Net income (loss) $3 $(163) Per share data: Basic and diluted earnings (loss) per share before cumulative effect of change in accounting $0.05 $(1.30) Cumulative effect of change in accounting, net of tax (0.03) - Basic and diluted earnings (loss) per share $0.02 $(1.30) Average shares outstanding (millions) Basic 127.1 125.6 Diluted 127.2 125.6 VISTEON CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Millions) (Unaudited) March 31 December 31 2006 2005 ASSETS Cash and equivalents $881 $865 Accounts receivable, net Ford Motor Company 584 618 Non-Ford Motor Company 1,180 1,120 Inventories, net 544 537 Prepaid expenses and other current assets 229 205 Total current assets 3,418 3,345 Equity in net assets of non-consolidated affiliates 234 226 Property and equipment, net 2,994 2,973 Other assets 172 192 Total assets $6,818 $6,736 LIABILITIES AND SHAREHOLDERS' DEFICIT Short-term debt, including current portion of long-term debt $234 $485 Accounts payable 1,764 1,803 Employee benefits, including pensions 245 233 Accrued expenses and other current liabilities 394 438 Total current liabilities 2,637 2,959 Long-term debt 1,849 1,509 Postretirement benefits other than pensions 727 724 Postretirement benefits payable to Ford Motor Company 130 154 Employee benefits, including pensions 646 647 Deferred income taxes 191 175 Other liabilities 416 382 Minority interests in consolidated subsidiaries 237 234 Shareholders' deficit Preferred stock (par value $1.00, 50 million shares authorized, none outstanding) - - Common stock (par value $1.00, 500 million shares authorized, 131 million shares issued, 128 million and 129 million shares outstanding, respectively) 131 131 Stock warrants 127 127 Additional paid-in capital 3,397 3,396 Accumulated deficit (3,437) (3,440) Accumulated other comprehensive loss (202) (234) Other (31) (28) Total shareholders' deficit (15) (48) Total liabilities and shareholders' deficit $6,818 $6,736 VISTEON CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) (Unaudited) Three-Months Ended March 31 2006 2005 Cash provided from (used by) operating activities Net income (loss) $3 $(163) Adjustments to reconcile net income (loss) to net cash provided from operating activities: Depreciation and amortization 102 176 Equity in net income of non-consolidated affiliates, net of dividends remitted 7 3 Other non-cash items (23) 22 Changes in assets and liabilities: Accounts receivable 2 (23) Inventories 1 (58) Accounts payable (99) 140 Other assets and liabilities (25) 81 Net cash (used by) provided from operating activities (32) 178 Cash provided from (used by) investing activities Capital expenditures (85) (127) Acquisitions and investments in joint ventures, net - (9) Proceeds from asset disposals 7 19 Net cash used by investing activities (78) (117) Cash provided from (used by) financing activities Other short-term debt, net (270) 21 Proceeds from issuance of other debt, net of issuance costs 371 12 Principal payments on other debt (7) (13) Other, including book overdrafts 21 (17) Net cash provided from financing activities 115 3 Effect of exchange rate changes on cash 11 (7) Net increase in cash and equivalents 16 57 Cash and equivalents at beginning of year 865 752 Cash and equivalents at end of period $881 $809 VISTEON CORPORATION AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Dollars in Millions) (Unaudited) In this press release the Company has provided information regarding certain non-GAAP financial measures including "EBIT-R" and "free cash flow." Such non-GAAP financial measures are reconciled to their closest US GAAP financial measure in the schedules below. EBIT-R: EBIT-R represents net income (loss) before net interest expense and provision for income taxes and excludes impairment and net unreimbursed restructuring charges. Management believes EBIT-R is useful to investors because the excluded items may vary significantly in timing or amounts and/or may obscure trends useful in evaluating and comparing the Company's continuing operating activities. Three-Months Ended 2006 March 31 Estimate 2006 2005 Net income (loss) $3 $(163) $(150)-$(120) Interest expense, net 39 29 160 Provision for income taxes 30 22 110 Net unreimbursed restructuring expense - 7 - EBIT-R $72 $(105) $120-$150 EBIT-R is not a recognized term under GAAP and does not purport to be an alternative to net income (loss) as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation of EBIT-R may not be comparable to other similarly titled measures of other companies. Additionally, EBIT-R is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Free Cash Flow: Free cash flow represents cash flow from operating activities less capital expenditures. Management believes that free cash flow is useful in analyzing the Company's ability to service and repay its debt and it uses the measure for planning and forecasting future periods, as well as in compensation decisions. Three-Months Ended 2006 March 31 December 31 Estimate 2006 2005 2005 Cash provided from operating activities $(32) $178 $42 $500 Capital expenditures (85) (127) (185) (450) Free cash flow $(117) $51 $(143) $50 Free cash flow is not a recognized term under GAAP and does not reflect cash used to service debt and does not reflect funds available for investment or other discretionary uses. http://www.newscom.com/cgi-bin/prnh/20001201/DEF008LOGO DATASOURCE: Visteon Corporation CONTACT: Media Inquiries: Kimberley Goode, +1-734-710-5000, , or Analyst Inquiries: Derek Fiebig, +1-734-710-5800, , both of Visteon Corporation Web site: http://www.visteon.com/

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