TMCnet News
VISTEON CORP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Edgar Glimpses Via Acquire Media NewsEdge) Management's Discussion and Analysis ("MD&A") is intended to help the reader understand the results of operations, financial condition and cash flows of Visteon Corporation ("Visteon" or the "Company"). MD&A is provided as a supplement to, and should be read in conjunction with, the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed with the Securities and Exchange Commission on February 28, 2013 and the financial statements and accompanying notes to the financial statements included elsewhere herein. Executive Summary Description of Business Visteon is a global supplier of climate, electronics, and interiors systems, modules and components to automotive original equipment manufacturers ("OEMs") including BMW, Chrysler, Daimler, Ford, General Motors, Honda, Hyundai, Kia, Nissan, PSA Peugeot Citroën, Renault, Toyota and Volkswagen. The Company has a broad network of manufacturing operations, technical centers and joint venture operations throughout the world, supported by approximately 23,000 employees dedicated to the design, development, manufacture and support of its product offering and its global customers. Financial Results Summary Visteon recorded net sales of $1,856 million for the first quarter of 2013, an increase of $139 million from the same period in 2012. Sales for the three months ended March 31, 2013 were impacted by higher production volumes for the Climate and Electronics product groups, primarily in North America and Asia, partially offset by declines for the Interiors product group in Europe. Customer pricing, partially offset by favorable foreign currency and design improvements, decreased sales. The Company's sales for the three month period ended March 31, 2013 were distributed by product group, geographic region, and customer as follows: [[Image Removed]] [[Image Removed]] [[Image Removed]] The Company's sales are significantly impacted by global light vehicle production volumes. A summary of global light vehicle production levels for the three month periods ended March 31, 2013 and 2012 are presented below by geographic region. Light Vehicle Production Three Months Ended March 31 2013 2012 Change (Units in Millions) Global 20.8 21.1 (1.2 )% North America 4.0 4.0 0.5 % South America 1.0 1.0 7.6 % Europe 4.8 5.2 (7.9 )% China 5.0 4.6 10.1 % Japan/Korea 3.4 3.8 (12.6 )% India 1.0 1.1 (6.2 )% ASEAN 1.2 1.0 28.1 % Source: IHS Automotive 26 -------------------------------------------------------------------------------- Table of Contents The Company reported net income attributable to Visteon of $69 million, or $1.33 per diluted share during the three months ended March 31, 2013 representing an increase of $98 million compared to the same period of 2012. The improvement included a decrease in tax expense of approximately $58 million associated with changes in unrecognized tax benefits, including interest and penalties. The Company generated $122 million of cash from its operating activities during the three months ended March 31, 2013 an improvement of $103 million when compared to the three months ended March 31, 2012. As of March 31, 2013, Visteon had global cash balances of $995 million, including $15 million of restricted cash. Total debt was $777 million as of March 31, 2013. Share Repurchase Program In July 2012, the Company's board of directors authorized the repurchase of up to $100 million of the Company's common stock. In January 2013, the board of directors reauthorized the current $100 million and increased the repurchase amount to an additional $200 million, bringing the total share repurchase authorization to $300 million. In March 2013, the Company entered into an accelerated stock buyback ("ASB") program with a third-party financial institution to purchase shares of common stock for an aggregate purchase price of $125 million. On April 17, 2013 the ASB program concluded with the Company having repurchased a total of 2,209,078 shares. As of March 31, 2013, $125 million remains authorized for repurchase over the next two years. Strategic Transformation In September 2012, the Company announced a comprehensive shareholder value creation plan. A summary of activities associated with the shareholder value creation plan is provided below. • Climate consolidation - During the first quarter of 2013, Halla Climate Control Corporation ("Halla") purchased certain subsidiaries and intellectual property of Visteon's global climate business for approximately $410 million. As of March 31, 2013 Visteon had received $344 million in proceeds associated with the transaction. Remaining proceeds are associated with certain subsidiaries and joint ventures located in China and are expected to be received during the second quarter of 2013. With effect from February 1, 2013, this combined climate business has been operating under the name of Halla Visteon Climate Control ("HVCC"). HVCC is majority-owned by Visteon and headquartered in South Korea. • Interiors strategy - The Company continues to explore alternatives for its Interiors business including, but not limited to, divestiture, partnership or alliance. While the Company views Interiors as a non-core business, it continues to make commitments to this business and intends to divest in the future only under acceptable terms and conditions. • Electronics optimization - The Company continues to explore opportunities to optimize the size and scale of its Electronics business with a specific focus on cockpit electronic products. • Cost reduction program - The Company continues to implement a previously announced $100 million restructuring program designed to reduce fixed costs and to improve operational efficiency by addressing certain under-performing operations. During the first quarter of 2013, the Company recorded additional restructuring charges of approximately $20 million associated with this program for total inception to date expense under the program of $55 million. The Company anticipates recording additional restructuring charges related to this program in future periods as underlying plans are finalized. 27 -------------------------------------------------------------------------------- Table of Contents |