VAN BUREN TOWNSHIP, MI — Visteon today announced that the Audit Committee of its board of directors has completed its independent review of the accounting for certain transactions relating to the company’s North American purchasing group.
As previously reported, the Audit Committee — which retained Paul, Weiss, Rifkind, Wharton & Garrison LLP, as outside counsel, who retained Navigant Consulting, as forensic accountants — determined that certain expenses for freight, raw materials and other supplier costs originating in North America were recorded in periods after December 31, 2004, and should have been recorded in prior periods; the company’s management has concurred in that determination. Based on the results of this review, the company concluded that its financial statements for the years ended December 31, 2004, 2003 and 2002 included in its 2004 Form 10-K (and the related 2004 Management Report on Internal Control Over Financial Reporting) should no longer be relied upon, and that restatements will be required for these periods.
The company estimates that the restatements to correct these errors and other identified adjustments will increase Visteon’s previously reported $1.499 billion after-tax net loss for 2004 by $35-40 million, or approximately 3 percent; its previously reported after-tax net loss of $1.207 billion for 2003 by $20-25 million, or approximately 2 percent; and its previously reported after-tax net loss of $368 million for 2002 by $10-15 million, or approximately 4 percent. Visteon is assessing the impact of these corrections and other adjustments on previously announced financial results for 2005 and will include the results of that assessment in the company’s quarterly reports on Form 10-Q for 2005. Visteon plans to complete its review of the proposed adjustments to facilitate the filing of restated quarterly and annual financial results for 2004, 2003 and 2002, to be included in an amended 2004 annual report on Form 10-K and quarterly reports on Form 10-Q for 2005, with the SEC in the fourth quarter of 2005.
The Audit Committee’s independent review has also determined that many of the accounting errors resulted principally from improper conduct on the part of two former, non-executive finance employees responsible for the accounting oversight of these matters, and specifically from the periodic setting of accruals for freight expenses at inadequate levels, as well as delays in the processing of freight payments and raw material price increases without adequate consideration of applicable accounting standards.
For more information about Visteon, go to: www.visteon.com.
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