Visteon 10-Q/A Restatement Announcement

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A
(Amendment No. 1)
(Mark One)

≤ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2004, or

n TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission Ñle number 1-15827

VISTEON CORPORATION
(Exact name of Registrant as speciÑed in its charter)

Delaware 38-3519512
(State of incorporation) (I.R.S. employer
IdentiÑcation number)

One Village Center Drive, Van Buren Township, Michigan 48111
(Address of principal executive oÇces) (Zip code)

Registrant's telephone number, including area code: (800)-VISTEON

Indicate by check mark whether the Registrant: (1) has Ñled all reports required to be Ñled
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to Ñle such reports), and (2) has
been subject to such Ñling requirements for the past 90 days.

Yes „ No

Indicate by check mark whether the Registrant is an accelerated Ñler (as deÑned in
Exchange Act Rule 12b-2).

Yes „ No

As of March 1, 2005, the Registrant had outstanding 128,678,345 shares of common stock,
par value $1.00 per share.

Exhibit index located on page number 40.

VISTEON CORPORATION AND SUBSIDIARIES

EXPLANATORY NOTE
This Amendment No. 1 on Form 10-Q/A(quot;quot;Form 10-Q/A'') to our Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 2004, initially Ñled with the Securities and
Exchange Commission (the quot;quot;SEC'') on May 3, 2004 (the quot;quot;Original Filing''), is being Ñled
to reÖect restatements of our consolidated balance sheets at March 31, 2004 and
December 31, 2003; and our consolidated statement of operations for each of the periods
ended March 31, 2004 and March 31, 2003, and the notes related thereto. The restatements
primarily pertain to the following matters identiÑed during the course of preparing Visteon's 2004
Ñnancial statements:
‚ EÅective in January 2002, and again in January 2004, Visteon amended its retiree health
care beneÑts plans for certain of its U.S. employees. These amendments changed the
eligibility requirements for participants in the plans, and, as a result, Visteon changed the
expense attribution periods. We have determined that these changes in eligibility
requirements were not properly communicated to aÅected employees, and, therefore, the
revision to the expense attribution periods, which resulted in expense reductions,
should not have been made. The impact of the correction of these errors decreased net
income by approximately $5 million ($0.04 per share) and increased net loss by
approximately $4 million ($0.03 per share) for the quarters ended March 31, 2004 and
March 31, 2003, respectively.
‚ Visteon is making corrections for certain tooling costs originally recorded as receivables.
Costs incurred for Visteon-owned tooling used in production have been adjusted to reÖect
such costs as long-term assets and to provide related amortization expense. Non-
reimbursable costs incurred to develop customer-owned tooling have been expensed in
the periods such costs were incurred. There was no impact of the correction of these
errors on net income for the quarters ended March 31, 2004 and March 31, 2003.
‚ Visteon is making corrections for certain volume related rebates, received from numerous
capital equipment suppliers for purchases, which were originally recognized as a reduction
to expense. Costs incurred for capital equipment have been adjusted to reÖect such
discounts as a reduction to long-term assets and to adjust related depreciation and
amortization expense. The impact of the correction of these errors increased net loss by
approximately $2 million ($0.01 per share) for the quarter ended March 31, 2004.
‚ During the review of our annual United Kingdom pension valuations, we identiÑed
unrecorded pension expenses incurred as a result of special termination beneÑts provided
under Visteon's European Plan for Growth program. The impact of the correction of these
errors decreased net income by approximately $3 million ($0.02 per share) for the quarter
ended March 31, 2004.
‚ Visteon also identiÑed unrecorded postretirement health care expenses at one of Visteon's
foreign locations. There was no impact of the correction of these errors on net income for
the quarters ended March 31, 2004 and March 31, 2003.

1

‚ Visteon is correcting the amount and timing of the recognition of certain tax adjustments
made during the periods. As Visteon expects to repatriate earnings of foreign subsidiaries,
adjustments were made to provide for the tax eÅects of foreign currency movements
against the U.S. dollar. These adjustments also impacted the timing of the recognition of
deferred tax asset valuation allowances in the fourth quarter of 2003 and the third quarter
of 2004. Further, Visteon recognized an additional valuation allowance for certain deferred
tax assets that had previously been misclassiÑed and not considered in Visteon's 2003
deferred tax assessment. There was no impact of the correction of these errors on net
income for the quarters ended March 31, 2004 and March 31, 2003.

For a more detailed description of these restatements, see Note 2, quot;quot;Restatement of Financial
Statements'' to the accompanying consolidated Ñnancial statements contained in this
Form 10-Q/A. The decision to restate Visteon's consolidated Ñnancial statements was previously
announced in a press release that was Ñled with the SEC as part of a Current Report on
Form 8-K of Visteon dated January 31, 2005.

Although this Form 10-Q/A sets forth the Original Filing in its entirety, this Form 10-Q/A only
amends and restates Items 1, 2 and 4 of Part I, Item 6 of Part II and Exhibit 12.1 of Item 6 of
Part II of the Original Filing, in each case, solely as a result of, and to reÖect, the restatement,
and no other information in the Original Filing is amended hereby. The foregoing items have not
been updated to reÖect other events occurring after the Original Filing or to modify or update
those disclosures aÅected by subsequent events. In addition, pursuant to the rules of the SEC,
Item 6 of Part II of the Original Filing has been amended to contain the consent of our
independent registered public accounting Ñrm and currently-dated certiÑcations from our Chief
Executive OÇcer and Chief Financial OÇcer, as required by Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002. The consent of the independent registered public accounting Ñrm
and the certiÑcations of our Chief Executive OÇcer and Chief Financial OÇcer are attached to
this Form 10-Q/A as Exhibits 15.1, 31.1, 31.2, 32.1 and 32.2, respectively.

Except for the foregoing amended information, this Form 10-Q/A continues to describe
conditions as of the date of the Original Filing, and we have not updated the disclosures
contained herein to reÖect events that occurred at a later date. Other events occurring after the
Ñling of the Original Filing or other disclosures necessary to reÖect subsequent events have been
or will be addressed in either our amended Quarterly Reports on Form 10-Q/A for the quarterly
periods ended June 30, 2004 and/or September 30, 2004, which are being Ñled concurrently with
the Ñling of this Form 10-Q/A, or by our Annual Report on Form 10-K for the year ended
December 31, 2004, when Ñled, or other reports Ñled with the SEC subsequent to the date of this
Ñling.

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
For the Periods Ended March 31, 2004 and 2003
(in millions, except per share amounts)

First Quarter
2004 2003
(Restated) (Restated)
(unaudited)
Sales
Ford and aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $3,637 $3,721
Other customers ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,335 983
Total salesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,972 4,704
Costs and expenses (Notes 3 and 5)
Costs of sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,656 4,481
Selling, administrative and other expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 265 244
Total costs and expensesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,921 4,725
Operating income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 51 (21)
Interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4 4
Interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23 23
Net interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (19) (19)
Equity in net income of aÇliated companies (Note 3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11 15
Income (loss) before income taxesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 43 (25)
Provision (beneÑt) for income taxes (Note 3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14 (14)
Income (loss) before minority interests ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 29 (11)
Minority interests in net income of subsidiaries ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9 8
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 20 $ (19)
Earnings (loss) per share (Note 9)
BasicÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.16 $(0.15)
Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.16 (0.15)
Cash dividends per share ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.06 $ 0.06

The accompanying notes are part of the Ñnancial statements.

3

CONSOLIDATED BALANCE SHEET
(in millions)

March 31, December 31,
2004 2003
(unaudited)
Assets
Cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,187 $ 953
Marketable securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1 3
Total cash and marketable securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,188 956
Accounts receivable Ì Ford and aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,476 1,175
Accounts receivable Ì other customers (Note 7) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,184 1,185
Total receivables, net (Note 3)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,660 2,360
Inventories (Note 12) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 828 761
Deferred income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 163 163
Prepaid expenses and other current assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 186 143
Total current assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,025 4,383
Equity in net assets of aÇliated companiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 225 215
Net property ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,379 5,365
Deferred income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 716 700
Other assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 277 270
Total assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $11,622 $10,933
Liabilities and Stockholders' Equity
Trade payables ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,457 $ 2,270
Accrued liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,003 930
Income taxes payable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 39 31
Debt payable within one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 276 351
Total current liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,775 3,582
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,945 1,467
Postretirement beneÑts other than pensions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 581 515
Postretirement beneÑts payable to FordÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,079 2,090
Other liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,491 1,508
Total liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,871 9,162
Stockholders' equity
Capital stock
Preferred Stock, par value $1.00, 50 million shares authorized,
none outstanding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì
Common Stock, par value $1.00, 500 million shares authorized,
131 million shares issued, 129 million and 131 million shares
outstanding, respectivelyÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 131 131
Capital in excess of par value of stockÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,297 3,288
Accumulated other comprehensive (loss) (Note 13) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (80) (54)
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (34) (19)
Accumulated deÑcit ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,563) (1,575)
Total stockholders' equityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,751 1,771
Total liabilities and stockholders' equity ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $11,622 $10,933


4

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the Periods Ended March 31, 2004 and 2003
(in millions)

First Quarter
2004 2003
(unaudited)
Cash and cash equivalents at January 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 953 $1,204
Cash Öows provided by (used in) operating activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 103 (135)
Cash Öows from investing activities
Capital expendituresÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (196) (181)
Purchases of securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì (48)
Sales and maturities of securitiesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3 70
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 6
Net cash used in investing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (193) (153)
Cash Öows from Ñnancing activities
Commercial paper repayments, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (54) (17)
Other short-term debt, net ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (19) Ì
Proceeds from issuance of other debt, net of issuance costs ÏÏÏÏÏÏÏÏÏÏ 474 36
Principal payments on other debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (12) (27)
Purchase of treasury stockÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (11) (5)
Cash dividends ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (8) (8)
Other, including book overdraftsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (42) (1)
Net cash provided by (used in) Ñnancing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 328 (22)
EÅect of exchange rate changes on cash ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4) 2
Net increase (decrease) in cash and cash equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 234 (308)
Cash and cash equivalents at March 31 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,187 $ 896


5

NOTES TO FINANCIAL STATEMENTS
(unaudited)

NOTE 1. Financial Statements
The Ñnancial data presented herein are unaudited, but in the opinion of management reÖect
those adjustments, including normal recurring adjustments, necessary for a fair statement of such
information. Results for interim periods should not be considered indicative of results for a full
year. Reference should be made to the consolidated Ñnancial statements and accompanying
notes included in the company's Annual Report on Form 10-K for the Ñscal year ended
December 31, 2003, as Ñled with the Securities and Exchange Commission on February 13, 2004
and as amended on March 16, 2005.
Visteon Corporation (quot;quot;Visteon'') is a leading, global supplier of automotive systems,
modules and components. Visteon sells products primarily to global vehicle manufacturers, and
also sells to the worldwide aftermarket for replacement and vehicle appearance enhancement
parts. Visteon became an independent company when Ford Motor Company (quot;quot;Ford'')
established Visteon as a wholly-owned subsidiary in January 2000 and subsequently transferred
to Visteon the assets and liabilities comprising Ford's automotive components and systems
business. Ford completed its spin-oÅ of Visteon on June 28, 2000 (the quot;quot;spin-oÅ''). Prior to
incorporation, Visteon operated as Ford's automotive components and systems business.

6

NOTES TO FINANCIAL STATEMENTS Ì (Continued)
(unaudited)

NOTE 2. Restatement of Financial Statements
Visteon has restated its previously issued consolidated Ñnancial statements for 2001 through
2003 and for the Ñrst three months of 2004, primarily for accounting corrections related to
postretirement health care and pension costs, tooling costs, capital equipment costs, inventory
costing and income taxes.
The following table summarizes the impact of these adjustments to Visteon's previously
reported net income (loss). These adjustments impacted previously reported costs of sales,
selling, administrative and other expenses and income tax expense on the consolidated
statement of income.
First Quarter
2004 2003
(in millions)

Net income (loss), as originally reportedÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 30 $(15)
Accounting corrections for postretirement health care costs and pension costs
(pre-tax)(1) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (11) (6)
Accounting corrections for capital equipment costs (pre-tax)(2) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2) Ì
Tax impact of above(3) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3 2
Net income (loss), as restated ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 20 $(19)

(1) Ì EÅective in January 2002, Visteon amended its retiree health care beneÑts plan for certain
of its U.S. employees. EÅective in January 2004, a Visteon wholly owned subsidiary amended its
retiree health care beneÑts plan for its U.S. employees. These amendments changed the eligibility
requirements for participants in the plans. As a result of these amendments, Visteon changed the
expense attribution periods, which eliminated cost accruals for younger employees and increased
accrual rates for older participating employees. Prior to these amendments, Visteon accrued for
the cost of the beneÑt from a participating employee's date of hire, regardless of age. Visteon
determined that these beneÑt changes were not properly communicated to eÅected employees
pursuant to the requirements of Statement of Financial Accounting Standards No. 106 and that
such expense reductions should not have been recorded. Further, analysis of the annual United
Kingdom pension valuation identiÑed pension expenses related to special termination beneÑts
provided under Visteon's European Plan for Growth which were not fully recognized in the period
in which those beneÑts were accepted by employees ($3 million in the Ñrst quarter of 2004). The
impact of the correction of these errors decreased net income by approximately $8 million
($0.06 per share) and increased net loss by approximately $4 million ($0.03 per share), for the
Ñrst quarter ended March 31, 2004 and March 31, 2003, respectively.
(2) Ì Represents an adjustment for volume related rebates, received from numerous capital
equipment suppliers for purchases, which were originally recognized as a reduction to expense.
Costs incurred for capital equipment have been adjusted to reÖect such discounts as a reduction
to long-term assets and to adjust related depreciation and amortization expense. The impact of
the correction of these errors decreased net income approximately $2 million ($0.01 per share)
for the Ñrst quarter ended March 31, 2004.
(3) Ì Represents the deferred tax beneÑt of the pre-tax expense adjustments.

7

(unaudited)

NOTE 2. Restatement of Financial Statements Ì (Continued)
The following is a summary of the impact of the restatement on the previously issued
consolidated statement of income, consolidated balance sheets and condensed consolidated
statement of cash Öows included in this Ñling.

CONSOLIDATED STATEMENT OF INCOME

First Quarter
2004 2003
As As
Originally As Originally As
Reported Restated Reported Restated
(in millions)
Sales
Ford and aÇliates ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $3,637 $3,637 $3,721 $3,721
Other customers ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,335 1,335 983 983
Total salesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,972 4,972 4,704 4,704
Costs and expenses
Costs of sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,645 4,656 4,477 4,481
Selling, administrative and other expenses ÏÏ 263 265 242 244
Total costs and expenses ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4,908 4,921 4,719 4,725
Operating income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 64 51 (15) (21)
Interest income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 4 4 4 4
Interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 23 23 23 23
Net interest expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (19) (19) (19) (19)
Equity in net income of aÇliated companies ÏÏÏ 11 11 15 15
Income (loss) before income taxes and
minority interests ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 56 43 (19) (25)
Provision (beneÑt) for income taxes ÏÏÏÏÏÏÏÏÏÏ 17 14 (12) (14)
Income (loss) before minority interests ÏÏÏÏÏÏ 39 29 (7) (11)
Minority interest in net income of subsidiaries ÏÏ 9 9 8 8
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 30 $ 20 $ (15) $ (19)
Income (loss) per share
BasicÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 0.24 $ 0.16 $(0.12) $(0.15)
Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.23 0.16 (0.12) (0.15)

8

(unaudited)

CONSOLIDATED BALANCE SHEET

March 31, 2004 December 31, 2003
As As
(in millions)
Assets
Cash and cash equivalentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 1,187 $ 1,187 $ 953 $ 953
Marketable securities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1 1 3 3
Total cash and marketable securities ÏÏÏÏÏÏ 1,188 1,188 956 956
Accounts receivable Ì Ford and aÇliates ÏÏÏÏ 1,499 1,476 1,198 1,175
Accounts receivable Ì other customersÏÏÏÏÏÏ 1,163 1,184 1,164 1,185
Total receivables ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2,662 2,660 2,362 2,360
Inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 828 828 761 761
Deferred income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 163 163 163 163
Prepaid expenses and other current assets ÏÏ 211 186 168 143
Total current assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,052 5,025 4,410 4,383
Equity in net assets of aÇliated companiesÏÏÏ 225 225 215 215
Net property ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5,386 5,379 5,369 5,365
Deferred income taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 713 716 700 700
Other assetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 277 277 270 270
Total AssetsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $11,653 $11,622 $10,964 $10,933
Liabilities and Stockholders' Equity
Trade payables ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 2,457 $ 2,457 $ 2,270 $ 2,270
Accrued liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 994 1,003 924 930
Income taxes payable ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35 39 27 31
Debt payable within one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 276 276 351 351
Total current liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3,762 3,775 3,572 3,582
Long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,945 1,945 1,467 1,467
Postretirement beneÑts other than pensions ÏÏ 527 581 469 515
Postretirement beneÑts payable to FordÏÏÏÏÏÏ 2,079 2,079 2,090 2,090
Other liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,491 1,491 1,508 1,508
Total liabilities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9,804 9,871 9,106 9,162
Stockholders' equity
Capital stockÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 131 131 131 131
Capital in excess of par value of stockÏÏÏÏÏÏÏ 3,297 3,297 3,288 3,288
Accumulated other comprehensive (loss) ÏÏÏÏ (46) (80) (21) (54)
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (34) (34) (19) (19)
Accumulated deÑcit ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1,499) (1,563) (1,521) (1,575)
Total stockholders' equityÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,849 1,751 1,858 1,771
Total liabilities and stockholders' equity ÏÏ $11,653 $11,622 $10,964 $10,933

In addition, certain amounts in Notes 3, 4, 5, 6, 9, 13, and 14 have been restated to reÖect
the restatement adjustments described above.

9

(unaudited)

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
First Quarter
2004 2003
As As
(in millions)
Cash and cash equivalents at January 1 ÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 953 $ 953 $1,204 $1,204
Cash Öows provided by (used in) operating activities ÏÏ 105 103 (135) (135)
Cash Öows used in investing activities ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (195) (193) (153) (153)
Cash Öows provided by (used in) Ñnancing activities ÏÏ 328 328 (22) (22)
EÅect of exchange rate changes on cash ÏÏÏÏÏÏÏÏÏÏÏÏÏ (4) (4) 2 2
Net increase (decrease) in cash and cash
equivalents ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 234 234 (308) (308)
Cash and cash equivalents at December 31 ÏÏÏÏÏÏÏÏÏÏ $1,187 $1,187 $ 896 $ 896

NOTE 3. Selected Costs, Income and Other Information
Depreciation and Amortization
Depreciation and amortization expenses are summarized as follows:
First Quarter
2004 2003
(in millions)
Depreciation ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $140 $140
Amortization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 26 23
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $166 $163

Investments in AÇliates
The following table presents summarized Ñnancial data for those aÇliates accounted for
under the equity method. The amounts represent 100% of the results of operations of these
aÇliates. Visteon reports its share of their net income in the line quot;quot;Equity in net income of
aÇliated companies'' on the Consolidated Statement of Income.
First Quarter
2004 2003
(in millions)
Net sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $334 $291
Gross proÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 61 67
Net income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 21 30

10

(unaudited)

NOTE 3. Selected Costs, Income and Other Information Ì (Continued)
Purchase and Supply Agreement with Ford
Under the terms of the new purchase and supply agreement entered into with Ford on
December 19, 2003, Visteon agreed to pay Ford $150 million in lieu of additional productivity
price reductions on components supplied by Visteon in North America during 2003. This payment
was accrued for in 2003 as a reduction to sales. Visteon paid $50 million in December 2003 and
$100 million during the Ñrst quarter of 2004.

Accounts Receivable
The allowance for doubtful accounts was $39 million at March 31, 2004 and $35 million at
December 31, 2003.

Income Taxes
Visteon's provision (beneÑt) for income taxes, which is computed based upon income
(loss) before income taxes excluding equity in net income of aÇliated companies, reÖects an
eÅective tax rate of 44% for the Ñrst quarter of 2004, compared with (35%) for the Ñrst quarter
of 2003. The change in our eÅective tax rate is due primarily to the need to maintain full valuation
allowances against deferred tax assets in certain foreign jurisdictions. We expect our full year
2004 eÅective tax rate to be 38%; however, the rate could vary quarter-to-quarter. Further, the
rate is largely dependent on pre-tax income (loss) by country, and any changes in our forecast
or actual results could have a signiÑcant impact on our eÅective tax rate for a given quarter or
for the full year.

11

(unaudited)

NOTE 4. Stock-Based Awards
Starting January 1, 2003, Visteon began expensing the fair value of stock-based awards
granted to employees pursuant to Statement of Financial Accounting Standards No. 123
(quot;quot;SFAS 123''), quot;quot;Accounting for Stock-Based Compensation.'' This standard was adopted on a
prospective method basis for stock-based awards granted, modiÑed or settled after
December 31, 2002. For stock options and restricted stock awards granted prior to
January 1, 2003, Visteon measures compensation cost using the intrinsic value method. If
compensation cost for all stock-based awards had been determined based on the estimated fair
value of stock options and the fair value set at the date of grant for restricted stock awards, in
accordance with the provisions of SFAS 123, Visteon's reported net income (loss) and income
(loss) per share would have changed to the pro forma amounts indicated below:
First Quarter
2004 2003
(Restated)
(in millions, except
per share amounts)
Net income (loss), as reported ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 20 $ (19)
Add: Stock-based employee compensation expense included
in reported net income (loss), net of related tax eÅects ÏÏÏ 2 1
Deduct: Total stock-based employee compensation expense
determined under fair value based method for all awards,
net of related tax eÅects ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4) (3)
Pro forma net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 18 $ (21)
Income (loss) per share:
As reported:
Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $0.16 $(0.15)
Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.16 (0.15)
Pro forma:
Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $0.14 $(0.17)
Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.14 (0.17)

NOTE 5. Special Charges
First Quarter 2004 Actions
In the Ñrst quarter of 2004, Visteon recorded pre-tax charges of $14 million in costs of sales
($10 million after-tax) which includes $9 million for the separation of about 50 hourly employees
located at Visteon's plants in Europe through a continuation of a special voluntary retirement and
separation program started in 2002, and $5 million related to the involuntary separation of about
220 employees as a result of the planned closure of our La Verpilliere, France, manufacturing
facility by the end of 2004. The involuntary separations of the employees at the La Verpilliere
facility are expected to occur at various times throughout 2004. Additional charges, if any, as a
result of the Ñnalization of employee termination beneÑts above those legally required, will be
recorded during the remainder of 2004 based on the estimated dates of the employee
separations. All of the other actions were substantially completed in the Ñrst quarter of 2004.

12

(unaudited)

NOTE 5. Special Charges Ì (Continued)
During the Ñrst quarter of 2004, Visteon paid Ford about $23 million of previously accrued
amounts related to an agreement entered into in 2003 to reimburse Ford for the actual net costs
of transferring seating production, including costs related to Ford hourly employee voluntary
retirement and separation programs that Ford is expected to implement.

First Quarter 2003 Actions

In the Ñrst quarter of 2003, Visteon recorded pre-tax charges of $31 million ($20 million
after-tax), with $26 million recorded in costs of sales and $5 million in selling, administrative and
other expenses. This includes $27 million related to the involuntary separation of about
135 U.S. salaried employees, the separation of about 35 hourly employees located at Visteon's
plants in Europe through a continuation of a special voluntary retirement and separation program
started in 2002, and the elimination of about 120 manufacturing positions in Mexico and other
minor actions. Included in the $31 million pre-tax charge are $4 million of non-cash charges
related to the write-down of a group of coiled spring and stamping equipment at our Monroe,
Michigan, plant for which production activities were discontinued and the future undiscounted
cash Öows were less than the carrying value of these Ñxed assets held for use. Visteon
measured the impairment loss by comparing the carrying value of these Ñxed assets to the
expected proceeds from disposal of the assets after completion of remaining production
commitments. The above actions were substantially completed during the Ñrst quarter of 2003.

Reserve Activity

Reserve balances of $32 million and $45 million at March 31, 2004 and December 31, 2003,
respectively, are included in current accrued liabilities on the accompanying balance sheets. The
March 31, 2004 reserve balance of $32 million includes $23 million related primarily to 2003
restructuring activities. Visteon currently anticipates that the restructuring activities to which all of
the above charges relate will be substantially completed by the end of 2004.
Automotive Glass Total
Operations Operations Visteon
(Restated)
(in millions)
December 31, 2003 reserve balance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 45 $Ì $ 45
First quarter 2004 actions:
Included in costs of sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14 Ì 14
Total net expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 59 Ì 59
Utilization ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (27) Ì (27)
March 31, 2004 reserve balance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 32 $Ì $ 32

Utilization in the Ñrst quarter of 2004 of $27 million was primarily related to severance pay.

On April 14, 2004, Visteon announced its intention to move a portion of its Bedford, Indiana,
plant operations to an undetermined manufacturing site. This action could affect about 600 of the
plant's 1,150 hourly and salaried employees. Timing of this intended move has not been determined.
Charges related to this move, if any, will be recognized as appropriate when detailed move plans are
completed and the terms of any termination beneÑt arrangements are established.

13

(unaudited)

NOTE 6. Employee Retirement BeneÑts
Visteon's retirement plans' expense for the Ñrst quarter of 2004 and 2003 are summarized
as follows:
Health Care
and Life
Retirement Plans Insurance
U.S. Plans Non-U.S. Plans BeneÑts
2004 2003 2004 2003 2004 2003
(Restated)
(in millions)
First Quarter
Service cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 14 $ 13 $ 9 $ 8 $ 11 $ 9
Interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 17 15 17 13 16 13
Expected return on plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (16) (14) (15) (13) Ì Ì
Amortization of:
Plan amendments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2 2 3 2 Ì Ì
(Gains) losses and otherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1 Ì Ì Ì 6 3
Special termination beneÑtsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì 3 7 Ì Ì
Expense for Visteon-assigned Ford-UAW and certain
salaried employeesÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 31 21 Ì Ì 37 83
Net pension/postretirement expense ÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 49 $ 37 $ 17 $ 17 $ 70 $108

As discussed in our 2003 Annual Report on Form 10-K, Visteon's expected contributions
during 2004 to U.S. retirement plans and postretirement health care and life insurance plans are
$193 million and $72 million, respectively, including payments to Ford of $115 million and
$38 million, respectively. As of March 31, 2004, contributions to U.S. retirement plans and
postretirement health care and life insurance plans were $23 million and $15 million, respectively,
including payments to Ford of $17 million and $14 million, respectively.
The Medicare Prescription Drug Improvement and Modernization Act of 2003 (the quot;quot;Medicare
Act'') was signed into law on December 8, 2003. This legislation provides for a federal subsidy
beginning in 2006 to sponsors of retiree healthcare beneÑt plans that provide a beneÑt at least
actuarially equivalent to the beneÑt established by the law. Visteon's plans generally provide
retiree drug beneÑts that exceed the value of the beneÑt that will be provided by Medicare
Part D, and we have concluded that our plans are actuarially equivalent, pending further deÑnition
of the criteria used to determine equivalence. This subsidy is estimated to reduce the beneÑt
obligation for Visteon plans by $87 million as of March 31, 2004, and will be recognized through
reduced retiree healthcare expense over the related employee future service lives, subject to Ñnal
accounting guidance to be issued by the Financial Accounting Standards Board.
As a result of charges during the period as well as the effect of the Medicare Act, the portion of
the postretirement benefit obligation payable to Ford considered contingently payable is
$1,079 million and $1,138 million at March 31, 2004 and December 31, 2003, respectively.

14

(unaudited)

NOTE 7. Asset Securitization
In the Ñrst quarter of 2004, Visteon established a $100 million revolving accounts receivable
securitization facility in the United States (quot;quot;facility agreement''). Under this facility agreement,
Visteon can sell a portion of its U.S. trade receivables to Visteon Receivables LLC (quot;quot;VRL''), a
wholly-owned consolidated special purpose entity. VRL may then sell, on a non-recourse basis
(subject to certain limited exceptions), an undivided interest in the receivables to an
asset-backed, multi-seller commercial paper conduit, which is unrelated to Visteon or VRL. The
conduit typically Ñnances the purchases through the issuance of commercial paper, with back-up
purchase commitments from the conduit's Ñnancial institution. The sale of the undivided interest
in the receivables from VRL to the conduit will be accounted for as a sale under the provisions of
Statement of Financial Accounting Standards No. 140, quot;quot;Accounting for the Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities.'' When VRL sells an undivided
interest to the conduit, VRL retains the remaining undivided interest. The value of the undivided
interest sold to the conduit will be excluded from our consolidated balance sheet and will reduce
our accounts receivable balance. This facility expires in March 2005 and can be extended
annually through March 2008 based upon the mutual agreement of the parties. Additionally, this
facility contains Ñnancial covenants similar to our unsecured revolving credit facilities. In
April 2004, VRL made an initial sale of a $25 million undivided interest in about $300 million of
total receivables.
As of March 31, 2004, Visteon has sold euro 35 million ($43 million) of trade receivables
under a European sale of receivables agreement with a bank. This agreement provides for the
sale of up to euro 40 million in trade receivables.

NOTE 8. Debt
2004 2003
(in millions)
Debt payable within one year
Commercial paper ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 27 $ 81
Other Ì short-term ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 214 234
Current portion of long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 35 36
Total debt payable within one year ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 276 351
Long-term debt
8.25% notes due August 1, 2010 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 723 716
7.95% notes due August 1, 2005 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 516 518
7.00% notes due March 10, 2014 ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 452 Ì
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 254 233
Total long-term debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1,945 1,467
Total debt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $2,221 $1,818

15

(unaudited)

NOTE 8. Debt Ì (Continued)
On March 10, 2004, Visteon completed a public oÅering of unsecured Ñxed-rate term debt
securities totaling $450 million with a maturity of ten years. The securities bear interest at a
stated rate of 7.00%, with interest payable semi-annually on March 10 and September 10,
beginning on September 10, 2004. The securities rank equally with Visteon's existing and future
unsecured Ñxed-rate term debt securities and senior to any future subordinated debt. The
unsecured term debt securities agreement contains certain restrictions, including, among others,
a limitation relating to liens and sale-leaseback transactions, as deÑned in the agreement. In the
opinion of management, Visteon was in compliance with all of these restrictions. In addition, an
interest rate swap has been entered into for a portion of this debt ($225 million). This swap
eÅectively converts the securities from Ñxed interest rate to variable interest rate instruments.
On April 6, 2004, Visteon repurchased $250 million of Visteon's existing 7.95% Ñve-year
notes maturing on August 1, 2005. In the second quarter of 2004, Visteon will record a pre-tax
debt extinguishment charge of $11 million, which consists of redemption premiums and
transaction costs ($19 million), oÅset partially by the accelerated recognition of gains from
interest rate swaps associated with the repurchased debt ($8 million).

NOTE 9. Income (Loss) Per Share of Common Stock
Basic income (loss) per share of common stock is calculated by dividing reported net
income (loss) by the average number of shares of common stock outstanding during the
applicable period, adjusted for restricted stock. The calculation of diluted income (loss) per
share takes into account the eÅect of dilutive potential common stock, such as stock options,
and contingently returnable shares, such as restricted stock.
First Quarter
2004 2003
(Restated)
(in millions, except
per share amounts)
Numerator:
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 20 $ (19)
Denominator:
Average common stock outstanding ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 129.9 129.9
Less: Average restricted stock outstandingÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4.6) (3.9)
Basic shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 125.3 126.0
Net dilutive eÅect of restricted stock and stock options ÏÏÏÏÏ 3.2 Ì
Diluted shares ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 128.5 126.0
Income (loss) per share:
Basic ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $0.16 $(0.15)
Diluted ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.16 (0.15)

16

(unaudited)

NOTE 9. Income (Loss) Per Share of Common Stock Ì (Continued)
For the Ñrst quarter of 2003 potential common stock of about 515,000 shares are excluded
from the calculation of diluted income (loss) per share because the eÅect of including them
would have been antidilutive.

NOTE 10. Variable Interest Entities
In December 2003, the FASB issued revised Interpretation No. 46 (quot;quot;FIN 46'') quot;quot;Consolidation of
Variable Interest Entities.'' Until this interpretation, a company generally included another entity in its
consolidated financial statements only if it controlled the entity through voting interests. FIN 46
requires a variable interest entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority
of the entity's residual returns. Application of FIN 46 was required during the fourth quarter of 2003
for interests in structures that are commonly referred to as special-purpose entities and for all other
types of variable interest entities in the first quarter of 2004.
During the Ñrst quarter of 2004, Visteon began to consolidate Lextron/Visteon Automotive
Systems, a joint venture with Lextron Corporation located in Canton, Mississippi, which started to
supply integrated cockpit modules and front-end modules to Nissan in late 2003. Visteon owns
49% of this joint venture. Consolidation of this entity was based on an assessment of the amount
of equity investment at risk, the subordinated Ñnancial support provided by Visteon, and
Visteon's supply of the joint venture's inventory. The eÅect of consolidating this entity on
Visteon's results of operations or Ñnancial position as of March 31, 2004 was not signiÑcant as
substantially all of the joint venture's liabilities and costs are related to activity with Visteon.
From June 30, 2002, a variable interest entity owned by an aÇliate of a bank is included in
Visteon's consolidated Ñnancial statements. This entity was established in early 2002 to build a
leased facility for Visteon to centralize customer support functions, research and development,
and administrative operations. Construction of the facility is planned to be completed in 2004 at a
cost of about $250 million, with initial occupancy starting in mid-2004. The lease agreement
requires Visteon to make lease payments after construction is substantially completed equal to all
interest then due and payable by the variable interest entity under the related credit agreement.
The lease term expires in 2017, at which time Visteon is required to either purchase the facility at
a price equal to the sum of all borrowings under the related credit agreement, less certain
proceeds and other amounts applied against the balance, or renew the lease upon the mutual
agreement of Visteon and the lessor. As of March 31, 2004, this entity has incurred about
$159 million in expenditures related to this facility.

17

(unaudited)

NOTE 11. Product Warranty
A reconciliation of changes in the product warranty liability is summarized as follows:
First Quarter
2004
(in millions)
Beginning Balance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $22
Accruals for products shipped ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 7
Accruals for pre-existing warranties (including changes in estimates) ÏÏ 9
Settlements ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (8)
Ending Balance ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $30

NOTE 12. Inventories
Inventories are summarized as follows:
2004 2003
(Restated)
(in millions)
Raw materials, work-in-process and supplies ÏÏÏÏÏÏÏÏÏÏÏ $592 $518
Finished products ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 236 243
Total inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $828 $761
U.S. inventories ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $472 $436

NOTE 13. Comprehensive Income
Comprehensive income is summarized as follows:
First Quarter
2004 2003
(Restated)
(in millions)
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 20 $(19)
Change in foreign currency translation adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (28) 15
Other ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2 7
Total comprehensive (loss) income ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (6) $ 3

Accumulated other comprehensive loss is comprised of the following:
2004 2003
(Restated)
(in millions)
Foreign currency translation adjustments ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 69 $ 97
Realized and unrealized gains on derivatives, net of taxÏÏÏÏ 9 8
Unrealized loss on marketable securities, net of tax ÏÏÏÏÏ Ì (1)
Minimum pension liability, net of tax ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (158) (158)
Total accumulated other comprehensive loss ÏÏÏÏÏÏÏÏÏÏ $ (80) $ (54)

18

(unaudited)

NOTE 14. Segment Information
Visteon's reportable operating segments are Automotive Operations and Glass Operations.
Financial information for the reportable operating segments is summarized as follows:
(Restated)
(in millions)
First Quarter
2004:
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 4,833 $139 $ 4,972
Income (loss) before taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 34 9 43
Net income (loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14 6 20
Special charges before taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 14 Ì 14
Special charges after taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 10 Ì 10
Total assets, end of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,354 268 11,622
2003:
Sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 4,551 $153 $ 4,704
Income (loss) before taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (29) 4 (25)
Net income (loss)ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (22) 3 (19)
Special charges before taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 30 1 31
Special charges after taxes ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 19 1 20
Total assets, end of period ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 11,159 285 11,444

NOTE 15. Litigation and Claims
Various legal actions, governmental investigations and proceedings, and claims are pending or
may be instituted or asserted in the future against Visteon, including those arising out of alleged
defects in Visteon's products; governmental regulations relating to safety; employment-related
matters; customer, supplier and other contractual relationships; intellectual property rights; product
warranties; product recalls; and environmental matters. Some of the foregoing matters involve or
may involve compensatory, punitive or antitrust or other treble damage claims in very large amounts,
or demands for recall campaigns, environmental remediation programs, sanctions, or other relief
which, if granted, would require very large expenditures.
Litigation is subject to many uncertainties, and the outcome of individual litigated matters is
not predictable with assurance. Reserves have been established by Visteon for matters
discussed in the foregoing paragraph where losses are deemed probable; these reserves are
adjusted periodically to reÖect estimates of ultimate probable outcomes. It is reasonably possible,
however, that some of the matters discussed in the foregoing paragraph for which reserves have
not been established could be decided unfavorably to Visteon and could require Visteon to pay
damages or make other expenditures in amounts, or a range of amounts, that cannot be
estimated at March 31, 2004. Visteon does not reasonably expect, based on its analysis, that any
adverse outcome from such matters would have a material eÅect on our Ñnancial condition,
results of operations or cash Öows, although such an outcome is possible.

19

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Visteon Corporation

We have reviewed the accompanying consolidated balance sheet of Visteon Corporation and
its subsidiaries as of March 31, 2004, and the related consolidated statement of income for each
of the three-month periods ended March 31, 2004 and March 31, 2003 and the condensed
consolidated statement of cash Öows for the three-month periods ended March 31, 2004 and
March 31, 2003. These interim Ñnancial statements are the responsibility of the Company's
management.

We conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim Ñnancial information consists
principally of applying analytical procedures and making inquiries of persons responsible for
Ñnancial and accounting matters. It is substantially less in scope than an audit conducted in
accordance with the standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion regarding the Ñnancial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modiÑcations that should be made to
the accompanying consolidated interim Ñnancial statements for them to be in conformity with
accounting principles generally accepted in the United States of America.

We previously audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheet as of December 31, 2003, and
the related consolidated statements of operations, stockholders' equity, and of cash Öows for the
year then ended (not presented herein), and in our report dated January 22, 2004, except as to
the eÅects of the matters described in Note 2, which are as of March 16, 2005, we expressed an
unqualiÑed opinion on those consolidated Ñnancial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet information as of December 31, 2003, is
fairly stated in all material respects in relation to the consolidated balance sheet from which it
has been derived.

As discussed in Note 2 to the consolidated Ñnancial statements, the Company restated its
Ñnancial statements as of March 31, 2004 and December 31, 2003 and for each of the three-
month periods ended March 31, 2004 and March 31, 2003.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Detroit, Michigan
April 20, 2004, except as to the eÅects of the matters described in Note 2, which are as of
March 16, 2005

20

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESTATEMENT

Visteon has restated its previously issued consolidated Ñnancial statements for 2001 through
2003 and for the Ñrst three months of 2004, primarily for accounting corrections related to
postretirement health care and pension costs, tooling costs, capital equipment costs, inventory
costing and income taxes.

As a result of the restatement, net income decreased $10 million (33.3% of the originally
reported amount) for the Ñrst three months ended March 31, 2004 and net loss increased
$4 million (26.7% of the originally reported amount) for the Ñrst three months ended
March 31, 2003. The restatement decreased reported net income per share by $0.07 for the
Ñrst three months ended March 31, 2004 and increased reported net loss per share by $0.03
for the Ñrst three months ended March 31, 2003.

Further information on the nature and impact of these adjustments is provided in Note 2,
quot;quot;Restatement of Financial Statements'' to our consolidated Ñnancial statements included
elsewhere in this Form 10-Q/A.

The financial data presented herein are unaudited, but in the opinion of management reflect
those adjustments, including normal recurring adjustments, necessary for a fair statement of such
information. Reference should be made to the consolidated financial statements and accompanying
notes included in the company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003, as filed with the Securities and Exchange Commission on February 13, 2004
and as amended on March 16, 2005.

Overview

Visteon's worldwide sales for the Ñrst quarter of 2004 were $5.0 billion, compared with
$4.7 billion for the same period in 2003. Much of the increase in sales was a result of higher
sales to non-Ford customers, which increased 36% over Ñrst quarter 2003 levels, and the
favorable impact of exchange rates. Ford's Ñrst quarter 2004 combined production volumes for
North America and Europe, our primary sales markets with Ford, were down slightly compared
with the same period last year. As a result, our Ñrst quarter 2004 sales to Ford declined slightly
compared to the same period in 2003.

Net income for the Ñrst quarter of 2004 was $20 million, or $0.16 per share, an improvement
of $39 million over a net loss of $19 million, or $0.15 per share, for the Ñrst quarter of 2003.
ProÑt improvement came from cost reductions, increased non-Ford business, and restructuring
eÅorts. We expect recent initiatives, such as the European Plan for Growth, the exit from our
unproÑtable ChesterÑeld seating operations and the restructuring of postretirement beneÑt
obligations to Ford, to continue to beneÑt us on our path to proÑtability.

We continue to focus on cash Öow generation and maintaining a strong liquidity position. Our
cash provided by operating activities was $103 million, a $238 million improvement from the Ñrst
quarter of 2003, and we ended the quarter with $1.2 billion in cash and marketable securities.
During the quarter, we improved our trade working capital Öows, issued new public debt
securities, commenced a tender oÅer to repurchase a portion of our outstanding debt securities
that mature in 2005 and set in place a revolving accounts receivable securitization facility.

21

RESULTS OF OPERATIONS Ì (Continued)
Restructuring, Dispositions and Special Charges

The table below presents special charges related to restructuring initiatives and other actions
during the Ñrst quarter of 2004 and 2003:
(in millions)
First Quarter 2004 (Restated):
Special charges:
European Plan for GrowthÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ (9) $Ì $ (9)
Other actions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (5) Ì (5)
Total Ñrst quarter 2004 special charges, before taxes ÏÏÏÏÏ $(14) $Ì $(14)

Total Ñrst quarter 2004 special charges, after taxes ÏÏÏÏÏÏÏ $(10) $Ì $(10)
First Quarter 2003:
Special charges:
North American salaried restructuring ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(18) $Ì $(18)
Monroe Plant equipment write-down ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (4) Ì (4)
European Plan for GrowthÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (3) Ì (3)
Other actions ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (5) (1) (6)
Total Ñrst quarter 2003 special charges, before taxes ÏÏÏÏÏ $(30) $(1) $(31)

Total Ñrst quarter 2003 special charges, after taxes ÏÏÏÏÏÏÏ $(19) $(1) $(20)

In the Ñrst quarter of 2004, Visteon recorded pre-tax charges of $14 million in costs of sales
($10 million after-tax) which includes $9 million for the separation of about 50 hourly employees
located at several Visteon plants in Europe through a continuation of a special voluntary
retirement and separation program started in 2002, and an additional $5 million related to the
involuntary separation of about 220 employees as a result of the planned closure of our
La Verpilliere, France, manufacturing facility by the end of 2004. The involuntary separations of
the employees at the La Verpilliere facility are expected to occur at various times throughout
2004. Additional charges, if any, as a result of the Ñnalization of employee termination beneÑts
above those legally required, will be recorded during the remainder of 2004 based on the
estimated dates of the employee separations. All of the other actions were substantially
completed in the Ñrst quarter of 2004.

In the Ñrst quarter of 2003, Visteon recorded pre-tax charges of $31 million ($20 million
after-tax). These charges include $18 million related to the involuntary separation of about
135 U.S. salaried employees, $3 million for the separation of about 35 hourly employees located
at Visteon's plants in Europe through a continuation of a special voluntary retirement and
separation program started in 2002, and $6 million for the elimination of about 120 manufacturing
positions in Mexico and other minor actions. Included in the $31 million pre-tax charge are
$4 million of non-cash charges related to the write-down of a group of coiled spring and
stamping equipment at our Monroe, Michigan, plant for which production activities were
discontinued and the future undiscounted cash Öows were less than the carrying value of these
Ñxed assets held for use. Visteon measured the impairment loss by comparing the carrying value
of these Ñxed assets to the expected proceeds from disposal of the assets after completion of
remaining production commitments. The above actions were substantially completed during the
Ñrst quarter of 2003.

22

Cash payments related to special charges, including those for severance and special pension
beneÑts, were $67 million and $41 million during the Ñrst quarters of 2004 and 2003, respectively.
The Ñrst quarter 2004 amount includes payments to Ford of about $23 million of previously
accrued amounts related to an agreement entered into in 2003 to reimburse Ford for the actual
net costs of transferring seating production, including costs related to Ford hourly employee
voluntary retirement and separation programs that Ford is expected to implement.

We continue to evaluate the possibility of partnerships, sales or closings involving other
under-performing or non-core businesses. However, there can be no assurance that a transaction
or other arrangement favorable to Visteon will occur in the near term or at all. On April 14, 2004,
Visteon announced its intention to move a portion of its Bedford, Indiana, plant operations to an
undetermined manufacturing site. This action could affect about 600 of the plant's 1,150 hourly and
salaried employees. Timing of this intended move has not been determined. Charges related to this
move, if any, will be recognized as appropriate when detailed move plans are completed and the
terms of any termination benefit arrangements are established.

Results of Operations

First Quarter 2004 Compared with First Quarter 2003

Sales for each of our segments for the Ñrst quarter of 2004 and 2003 are summarized in the
following table:
2004
First Quarter over/(under)
2004 2003 2003
(in millions)
Automotive Operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $4,833 $4,551 $282
Glass Operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 139 153 (14)
Total sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $4,972 $4,704 $268
Memo: Sales to non-Ford customers
Amount ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $1,335 $ 983 $352
Percentage of total sales ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 27% 21% 6 pts

Sales for Automotive Operations were $4.8 billion in 2004, compared with $4.6 billion in
2003, an increase of $282 million or 6%. This increase reÖects favorable currency changes of
$196 million and the impact of new business primarily with non-Ford customers oÅset partially by
price reductions. Additionally, 2004 sales were aÅected by the loss of $128 million in revenue
from the exit of seating operations on June 23, 2003.

Sales for Glass Operations were $139 million in 2004, compared with $153 million in 2003,
a decrease of $14 million or 9%, resulting primarily from lower Ford North America production
volume.

Costs of Sales for the Ñrst quarter of 2004 were $4.7 billion, up $175 million compared with
the Ñrst quarter of 2003. Costs of sales includes primarily material, labor, manufacturing
overhead and other costs, such as product development costs. The increase reÖects currency
Öuctuations of $175 million, and higher variable costs associated with new business with
customers, oÅset partially by an elimination of variable costs of $153 million resulting from the
exit of our seating operations, and favorable cost performance. Special charges included in this
line item were $14 million in 2004 and $26 million in 2003.

23

Selling, administrative and other expenses for the Ñrst quarter of 2004 were $265 million,
$21 million higher compared with the Ñrst quarter of 2003. The increase reÖects primarily
incremental Information Technology (quot;quot;IT'') actions of $22 million. Costs associated with such
incremental IT actions are expected to continue into mid-2004. Special charges included in this
line item were $5 million for 2003.
Net interest expense of $19 million in the Ñrst quarter of 2004 was even with the Ñrst
quarter of 2003.
Equity in net income of aÇliated companies was $11 million in the Ñrst quarter of 2004,
compared with $15 million in the Ñrst quarter of 2003, with the decrease related primarily to our
aÇliates in Asia.
Income (loss) before income taxes, and minority interests, including and excluding special
charges, is the primary proÑtability measure used by our chief operating decision makers. The
following table shows income (loss) before income taxes for the Ñrst quarter of 2004 and 2003,
for each of our segments:
2004
First Quarter over
2004 2003 2003
(Restated)
(in millions)
Automotive Operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 34 $(29) $63
Glass OperationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 9 4 5
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 43 $(25) $68
Memo:
Special charges included above ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(14) $(31) $17
Automotive Operations' Ñrst quarter 2004 proÑt before income taxes was $34 million
compared with a loss of $29 million for the Ñrst quarter of 2003. Special charges before taxes in
2004 were down $17 million from 2003. Additionally, 2003 results include a loss of $25 million
from seating operations that were exited June 23, 2003. Results were aÅected also by new
business and favorable cost performance, oÅset partially by price reductions.
ProÑt before income taxes for Glass Operations in Ñrst quarter of 2004 was $9 million
compared with $4 million before taxes for the Ñrst quarter of 2003, reÖecting favorable cost
performance, oÅset partially by lower volume.
Provision (beneÑt) for income taxes represents an eÅective income tax rate of 44% in the
Ñrst quarter of 2004 compared with (35%) in the Ñrst quarter of the prior year. The change in
our eÅective tax rate is primarily due to the need to maintain full valuation allowances against
deferred tax assets in certain foreign jurisdictions.
Minority interests in net income of subsidiaries was $9 million in the Ñrst quarter of 2004,
compared with $8 million in the Ñrst quarter of 2003. Minority interest amounts are related
primarily to our 70% ownership interest in Halla Climate Control Corporation located in Korea.

24

Net income (loss) for the Ñrst quarter of 2004 and 2003 are shown in the following table for
each of our segments:
2004
First Quarter over
2004 2003 2003
(Restated)
(in millions)
Automotive Operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 14 $(22) $36
Glass OperationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 6 3 3
Total ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 20 $(19) $39
Memo:
Special charges included above ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(10) $(20) $10
Visteon reported a net proÑt for the Ñrst quarter of 2004 of $20 million compared with a net
loss of $19 million for the Ñrst quarter of 2003 because of the factors described above in income
(loss) before income taxes. Special charges after taxes were $10 million and $20 million for the
Ñrst quarter of 2004 and 2003, respectively.

Liquidity and Capital Resources
Overview
Visteon's funding objective is to Ñnance its worldwide business with cash from operations,
supplemented when required by a combination of liquidity sources, including but not limited to
cash and cash investments, receivables programs, and committed and uncommitted bank
facilities and securities issuance. These sources are used also to fund working capital needs,
which are highly variable during the year because of changing customer production schedules.
Visteon's balance sheet reÖects cash and marketable securities of $1,188 million and total
debt of $2,221 million at March 31, 2004, compared with cash and marketable securities of
$956 million and total debt of $1,818 million at December 31, 2003. Net debt, deÑned as the
amount by which total debt exceeds total cash and marketable securities, was $1,033 million at
March 31, 2004, and $862 million at December 31, 2003. The increase in cash and marketable
securities is more than explained by the March 2004 issuance of $450 million in debt securities,
and the increase in net debt is primarily due to an increase in trade working capital related to
higher volumes at the end of the Ñrst quarter compared with the year-end shutdown period.
Visteon's ratio of total debt to total capital, which consists of total debt plus total stockholders'
equity, was 56% at March 31, 2004 and 51% at December 31, 2003, and increased primarily
because of the recent debt issuance.

Financing Arrangements
On March 10, 2004, Visteon completed a public oÅering (the quot;quot;Notes Sale'') of unsecured
Ñxed-rate 7.00% term debt securities totaling $450 million in aggregate principal amount due in
March 2014. Proceeds from the Notes Sale were used for a debt retirement and for general
corporate purposes. Concurrent with the Notes Sale, Visteon announced an oÅer (the quot;quot;Tender
OÅer'') to purchase for cash up to $250 million aggregate principal amount of our 7.95% notes
due in August 2005. The Tender OÅer expired on April 2, 2004 and $250 million of these notes
were retired on April 6, 2004.

25

In March 2004, Visteon established a $100 million revolving accounts receivable
securitization facility (the quot;quot;facility'') in the U.S. The facility allows for sale of a portion of U.S.
trade receivables to a wholly-owned consolidated special purpose entity, Visteon Receivables
LLC (quot;quot;VRL''), which may then sell an undivided interest in the receivables to an asset-backed
multi-seller conduit which is unrelated to Visteon or VRL. In April 2004, VRL made an initial
receivables sale to the conduit of $25 million. The facility expires in March 2005 and is
extendable annually through March 2008 through mutual agreement of both parties, as discussed
further in Note 7 to the consolidated Ñnancial statements.
Visteon has Ñnancing arrangements with a syndicate of third-party lenders providing
contractually committed, unsecured revolving credit facilities in an aggregate maximum amount of
$1,580 million (the quot;quot;Credit Facilities''). The Credit Facilities include a 364-day revolving credit
line in the amount of $555 million, which expires June 2004, and a Ñve-year revolving credit line
in the amount of $775 million, which expires June 2007. Visteon is currently renegotiating the
364-day facility that expires in June. The Credit Facilities also include a Ñve-year, delayed-draw
term loan in the amount of $250 million, which will be used primarily to Ñnance new construction
for facilities consolidation in Southeast Michigan. During the Ñrst quarter of 2004, the 364-day
revolving credit line agreement was amended to increase various interest rates applicable to
borrowings under such facility. At March 31, 2004, there were no borrowings outstanding under
the 364-day facility or the Ñve-year facility; there were $47 million of obligations under standby
letters of credit under the Ñve-year facility, and $128 million borrowed against the delayed-draw
term loan. The Credit Facilities contain certain aÇrmative and negative covenants, including a
Ñnancial covenant not to exceed a leverage ratio of net debt to EBITDA (excluding special
charges and other items) of 3.5 to 1. Increases in the ratio of net debt to EBITDA can occur
during quarters following seasonal shutdown periods, when cash usage increases. In the opinion
of management, Visteon has been in compliance with all covenants since the inception of the
Credit Facilities. During 2004, we expect to continue to be in compliance, although there can be
no assurance that this will be the case especially during quarters following seasonal shutdown
periods, when our cash usage may increase signiÑcantly.
Visteon has maintained a commercial paper program utilizing the Credit Facilities as backup.
As of March 31, 2004, we had $27 million outstanding under our commercial paper program
compared with $81 million outstanding at December 31, 2003.
Visteon maintains a trade payables program through General Electric Capital Corporation
(quot;quot;GECC'') that provides Ñnancial Öexibility to Visteon and its suppliers. The program is presently
under review by both parties. When a supplier participates in the program, GECC pays the
supplier the amount due from Visteon in advance of the original due date. In exchange for the
earlier payment, our suppliers accept a discounted payment. Visteon pays GECC the full amount.
Approximately $100 million was outstanding to GECC under this program at March 31, 2004 and
December 31, 2003. As part of the same program with GECC, Visteon is allowed to defer
payment to GECC for a period of up to 30 days. At March 31, 2004, Visteon had not exercised
the deferral option of the program.
In addition, Visteon at times participates in a trade payables program offered by one of our
customers. When we participate, our receivables are reduced and our cash balances are increased.
We did not participate in the program as of March 31, 2004, although at December 31, 2003 our
receivables had been reduced by $75 million due to this program.
Visteon has entered into interest rate swaps to manage our interest rate risk. These swaps
eÅectively convert a portion of Visteon's Ñxed rate debt into variable rate debt, and as a result,
approximately 40% of Visteon's borrowings are eÅectively on a Ñxed rate basis, while the
remainder is subject to changes in short-term interest rates.

26

Credit Ratings
Our long-term credit rating with Standard & Poor's (quot;quot;S&P'') is BB°; with Moody's it is Ba1,
and with Fitch it is BBB¿. Both S&P and Moody's rate Visteon as quot;quot;stable.'' Fitch rates our
short-term credit as F3. Both S&P and Moody's have covered Visteon since June 2000, while
Fitch initiated coverage on June 11, 2003. We continue to have access to suÇcient liquidity, and
believe we will continue to have access, to meet ongoing operating requirements although that
access is less reliable and could be more costly than it was previously.

Cash Requirements
Visteon's expected cash outÖows related to debt have changed since December 31, 2003 as
a result of completing in March 2004 the Notes Sale and the April 2004 Tender OÅer as
discussed further in Note 8 to the consolidated Ñnancial statements.
As of March 31, 2004, Visteon had guaranteed about $22 million of borrowings held by
unconsolidated joint ventures. In addition, we have guaranteed Tier 2 suppliers' debt and lease
obligations of about $16 million at March 31, 2004 to ensure the continued supply of essential
parts.
Cash required to meet capital expenditure needs in the Ñrst quarter 2004 was $196 million.
Capital expenditures in 2004 are expected to be higher than historic levels as described below
under quot;quot;Cash Flows Ì Investing Activities.'' Visteon's cash and liquidity needs also are impacted
by the level, variability, and timing of our customers' worldwide vehicle production, which varies
based on economic conditions and market shares in major markets. Our intra-year needs are
impacted also by seasonal eÅects in the industry, such as the shutdown of operations for about
two weeks in July, the subsequent ramp-up of new model production and the additional
one-week shutdown in December by our primary North American customers. These seasonal
eÅects normally require use of liquidity resources during the Ñrst and third quarters.
Visteon expects improved performance for 2004 will result in cash from operating activities
exceeding capital expenditure requirements, although this may not be the case during speciÑc
quarters. Based on our present assessment of future customer production levels over a two-year
time horizon, we believe we can meet general and seasonal cash needs using cash Öows from
operations, cash balances and borrowings, if needed. Visteon also believes we can supplement
these sources with access to the capital markets on satisfactory terms and in adequate amounts,
if needed, although there can be no assurance that this will be the case.

Pension and Postretirement BeneÑts
First quarter 2004 postretirement healthcare and life insurance expense decreased by
$38 million when compared with the same period in 2003, primarily as a result of Visteon's
amended and restated agreements with Ford and the Medicare Act. Pension expense for Ñrst
quarter of 2004 and 2003 was $66 million and $54 million, respectively, primarily reÖecting lower
discount rates and the eÅect of the 2003 Ford-UAW collective bargaining agreement.

27

Visteon 10-Q/A Restatement Announcement

Visteon 10-Q/A Restatement Announcement

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