Visteon Business report FY2006

Business Highlights

Financial overview

in million dollars FY2006 FY2005 Rate of


Overall   11,418 16,976 (32.7) (1)
Climate 3,044 2,858 (5.5) (2)
Electronics 3,047 3,226 (5.5) (3)
Interiors 2,830 2,999 (5.6) (4)
Other 2,536 2,556 (1) (5)

1) The ACH Transactions resulted in a decrease in product sales of $6.1 billion, which was partially offset by an increase in revenues of $383 million for services provided to ACH.

2) Continued growth in the Company's Asia Pacific consolidated subsidiaries increased net sales by $307 million. This growth was primarily driven by new business, and included favorable currency of $70 million partially offset by customer price reductions. Net sales in North America were $117 million lower year-over-year. This decrease reflects lower Ford North America vehicle production volumes and unfavorable product mix, partially offset by the launch of a new manufacturing facility in Alabama. Net sales in Europe increased $47 million reflecting higher Ford European vehicle production volumes.

3) Vehicle production volume and mix decreased net sales by $164 million, primarily attributable to lower Ford and Nissan vehicle production volume and unfavorable product mix in North America and lower sales in Asia Pacific. This reduction was partially offset by higher Ford Europe vehicle production volume. Net customer price reductions and unfavorable currency of $9 million, primarily in Europe, decreased sales year-over-year.

4) Vehicle production volume and product mix decreased net sales by $189 million. The decrease was attributable to lower Ford and Nissan vehicle production volume and unfavorable product mix in North America of $257 million and lower vehicle production by certain Europe OEM's of $94 million, partially offset by increased sales in the Asia Pacific region of $163 million.

5) Vehicle production volume and product mix decreased net sales by $72 million. Lower Ford vehicle production volume in North America, lower non-Ford vehicle production in Europe, and lower aftermarket sales decreased net sales by $125 million. This decrease was partially offset by higher vehicle production volume in Asia Pacific and South America. Favorable currency of $30 million, primarily in South America, increased sales year-over-year.


-Significant new business wins in 2006-diverse products and customers
-80% of new wins will be manufactured in lower cost facilities

<Business Wins in 2006>
North America
GM: Electronics, Interiors, Climate
Ford: Electronics, Climate
DCX: Electronics, Interiors, Climate, Lighting
Asia OEM: Interiors

VW: Electronics
PSA: Interiors, Electronics
GM: Interiors
Ford: Climate, Electronics, Interiors

Asia Pacific
Mazda: Climate
Hyundai Kia: Climate, Interiors
GM: Climate, Interiors
Ford: Climate

- In February 2006, the Company announced to supply the new 2007 Dodge Caliber with its audio system, as well as two air induction systems.

- In February 2006, the Company announced it has won a contract to supply satellite radio systems on Hyundai Motor America's Sonata. The system will include standard XM Satellite Radio and will be offered on the Sonata in late 2006.

- In May 2006, the Company was selected by Jaguar to develop an advanced instrument cluster for the all new Jaguar XK. This cluster was developed by Visteon engineers based at Visteon's technical center of excellence for electronics in Basildon, United Kingdom.

- In June 2006, Visteon in partnership with Boston Acoustics, delivers a unique, premium audio system customized specifically for the all new 2007 Jeep Compass.

- The Company provides the USB audio interface module for a wide range of VW models. Available across Europe for the current VW Golf, Golf Plus, Jetta, Touran and Passat models, including the new VW Eos, the product is distributed exclusively via VW's accessories arm, Volkswagen Individual, as an aftermarket option.
- In October 2006, the Company jointly announced with DivX, Inc. that the Rear Seat Entertainment System (RSE), which will be available as an option on the 2007 Volvo XC90 sport utility vehicle, is DivX Certified. The Visteon product is the first DVD player factory-installed by an automaker to carry DivX certification, which assures consumers it will play all DivX videos correctly.

In January 2006, the Company announced a new restructuring plan that could affect up to 23 of its facilities worldwide.
Completed 11 actions in 2006

-Fixed 3 facilities
-Closed 6 facilities
-Sold 2 operations

Other actions announced

Salaried census reduction
Closure of Chicago

318 million dollars cash available in escrow account end of 2006

Outlook for 2007
-Product sales backlog
Anticipated net product sales for 2007 through 2009 from new and replacement programs, less net sales from phased-out and canceled programs are approximately 1 billion dollars.

-Restructuring update
30 facilities identified for restructuring:

11 completed in 2006
19 facilities to be addressed over the next three years

Incremental actions driven by:

Volume reductions
Capacity rationalization
Make/ Buy opportunities


R&D expenditure
in million dollars 2006 2005 2004 2003
R&D expenditure 594 804 896 913

Product Development
USB module
The USB module is a versatile music and data source that allows users to connect USB sticks and portable media players to the vehicle's audio system and listen to music without carrying CDs in the car. This is Visteon's latest offering that meets consumers' portability and connectivity needs. In the Volkswagen solution, Visteon's USB audio interface is mounted in the center console. The system's plug-and-play design supports quick and easy handling of data transfer from the USB stick to the car's audio system. The USB audio interface, which supports MP3 and other common digital music formats, allows music to be selected and controlled via the audio interface or the optional multifunction steering wheel. (From a press release by the company on 20.June, 2006)

Hydrogen fuel cell
A Visteon Corporation technical expert is on hand as GM launches its hydrogen fuel cell-powered concept vehicle, the Sequel. This fully functional advanced vehicle emits only water vapor and sports a host of futuristic technology including Visteon's advanced electronics steer-by-wire system.Visteon's steer-by-wire system consists of front and rear electromechanical actuators, a torque feedback emulator for the steering wheel, and a distributed electronic control system. The electronic architecture of the steer-by-wire system offers the potential to enhance steering functionality by enabling features such as automatic lane keeping, park assist, variable-ratio steering and advanced vehicle dynamics control.The technology used for the steer-by-wire system is also applied to other advanced electronics technology at Visteon, including blind spot detection. (From a press release by the company on Sept. 12, 2006)

Investment Activities

Capital Expenditure

  FY2006 FY2005 FY2004
in million dollars 373 585 827

Overseas Investments
- In March 2006, the Company launched production of automotive climate control components and systems in Turkey. The new facility is operated by the Company's Korean affiliate Halla Climate Control Corporation. The plant, located in Gebze, manufactures and assembles heating, ventilation and air-conditioning (HVAC) units and cooling modules for the Hyundai Accent. The new plant initially employs approximately 150 people. It is expected to run at full production capacity by October 2006.

- In May 2006, the Company celebrated the official opening of a manufacturing plant in Dalian, China, which produces air conditioning components for a variety of auto manufacturers. The Halla Climate Control (Dalian) facility will make compressors and sub-components for automakers in China and elsewhere in the Asia Pacific region. Visteon owns 70 percent of the equity shares of Halla Climate Control (HCC). The 90,000-square meter plant is a greenfield facility capable of producing advanced and environmentally friendly compressors. The plant will have more than 300 employees and a planned production capacity of one million units annually.

- In the Company 2006, Visteon began producing automotive components at its new manufacturing plant in the Slovak Republic. The facility manufactures interior and climate control products and gives Visteon a manufacturing base to serve the rapidly expanding automotive market in Slovakia and Eastern Europe. The Nitra plant supplies door panels for PSA Peugeot-Citroen's new Peugeot 207. The facility is scheduled to begin producing climate control components for the Kia Accent. The Nitra facility houses state-of-the-art injection molding equipment and is designed for in-sequence production and shipping of door panels to PSA's assembly plant in Trnava, located 17 miles (45 kilometers) from Nitra. The facility is 145,313 square feet (13,500 square meters) and sits on 861,113 square feet (80,000 square meters) of land.

- In October 2006, the Company opened the $10 million Visteon Technical and Services Center in Chennai, India. The 110,000 square-foot facility is set to become Visteon's center of excellence for automotive embedded software, providing support to Visteon globally, including joint ventures and aftermarket business.