CHICAGO -- Visteon Corp. on Monday said an internal probe has found errors in its accounting for freight expenses and material surcharges, forcing it to delay regulatory filings and possibly restate results for the first quarter and earlier periods.
Visteon also said it still expects to close on its bailout agreement with former parent Ford Motor Co. by the Sept. 30 date the companies set in May, and a second-quarter noncash charge for the deal will be lower than previously thought.
The parts maker on May 10 said it would delay filing a first-quarter report with the U.S. Securities and Exchange Commission because it was investigating potential improper conduct by a former senior finance employee.
On Monday, Visteon said it has not yet filed its first quarter 10-Q form with the SEC and does not expect to make its second-quarter filing before the Aug. 9 deadline. It plans to release preliminary second-quarter results on Aug. 8.
Visteon said preliminary audit results found that about $44 million of freight expenses, $27 million of materials surcharges and $6 million of supplier expenses should have been recorded in prior periods, hurting first-quarter results.
"Certainly the accounting issues remain a concern, as to whether this is fully the extent of it," said Mark Oline, Fitch Ratings managing director.
The review, by the board's audit committee, covers transactions originating in its North American purchasing activity and is not yet complete, Visteon said.
Visteon, which was spun off from No. 2 U.S. automaker Ford in 2000, said it is not able to determine whether it needs to restate prior results or further adjust first-quarter results.
Also on Monday, Visteon said it expects a noncash charge of $1.1 billion in the second quarter, down from a previous estimate for $1.3 billion because of higher-than-expected values placed on assets being transferred in the Ford deal.
Visteon expects charges of nearly $900 million in North America and about $250 million in Europe related to the Ford deal. It expects a gain from completing the deal with Ford well in excess of the charges.
"The extensive restructuring actions indicate that a number of those facilities are of questionable value," Oline said. "The real question remains: Are the assets and the cost structure associated with them sufficiently competitive to produce free cash flow going forward?"
Visteon in May agreed to sell 24 unprofitable North American plants to Ford and to return 17,400 high-paid U.S. workers it leased from the automaker to work in the plants after the spin-off.
The deal will reduce Visteon's reliance on Ford to 50 percent of revenue, down from 70 percent before the deal, and cut the parts supplier to annual revenue of about $11.4 billion, from $18.7 billion in 2004.
Visteon will need additional restructuring after it completes the Ford deal to assure that its remaining assets have a competitive cost structure, Oline said.
Ford plans to transfer the factories to a holding company under Chief Executive Al Ver, eventually selling or closing most of them and buying out about 5,000 of the union workers.