Good morning and welcome to the Visteon yearend 2007 earnings conference call. All lines have been placed on listen-only mode to prevent background noise. As a reminder this conference call is being recorded. Before we begin this morning's conference call, I'd like to remind you this presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to various factors, risks and uncertainties that could cause our actual results to differ materially from those expressed in these statements. Please refer to the slide entitled forward-looking statements for further information. Presentation materials for today's call were posted to the Company's website this morning. Please visit www.visteon.com/earnings to download the material if you have not already done so. After the speakers' remarks, there will be a question-and-answer period. (Operator Instructions) I'd now like to introduce your host for today's conference call, Mr. Derek Fiebig, Director of Investor Relations for Visteon Corporation. Mr. Fiebig, you may begin your conference.

Thanks, Janice, and good morning, everyone. Joining me on the call today are Mike Johnston, our Chairman and CEO, Don Stebbins, our President and COO, and Bill Quigley, our CFO. After the call we will take your questions. With that, I'll turn the call over to Mike.

Okay. Thanks, Derek, and good morning, everyone. In today's presentation, I'll make a few opening remarks before turning the call over to Don, who'll provide an operational review. As we've mentioned on the last several calls, it is our intention to increase transparency into our operations to make it easier for those of you in the financial community to understand where Visteon is heading. Last month at the Auto Show here in Detroit, we provided our outlook for 2008 and beyond. Today's presentation is focused on our results for the fourth quarter and full year 2007 and our outlook for 2008 specifically. Visteon's dependency on the North American market has declined to less than one-third of our total revenue as our sales to Ford in the region have decreased and we have launched new business with other customers globally. There are some additional concerns in the market regarding where the industry and economy here in the US is heading. However, with our diverse customer and geographic sales base, we have not seen enough change to require a change in our guidance. Our new business wins continued at a very strong pace as we won $235 million during the fourth quarter, which brought the total for the year to nearly $1 billion for the second straight year. Our restructuring activities remained on track. As with the completion of Connersville, we address the seven targeted facilities we had scheduled for 2007. Additionally, as I mentioned in January, we have begun the implementation of what we refer to as the 2009 imperative. Our operating results improved from what we expected as our last quarterly call. EBIT-R and free cash flow improved from our projections and are both are bit stronger than the estimates we provided at the Auto Show last month. We ended…

Thanks Mike. Slide 4 provides our consolidated full year sales for both 2006 and 2007. Year-over-year total product sales were basically unchanged at $10.7 billion. However, there was some fairly significant movement in the composition of our sales. We had significant growth from Hyundai/Kia as sales grew by 27% year-over-year and were 15% of total sales. Global sales to Ford declined by 14% year-over-year, primarily driven by Ford North America, where sales decline from 22% of total sales in 2006 to 15% of total sales in 2007. Bill will cover the walks in more detail. However, about $400 million of the decline was related to the closure of Connersville and Chicago plants, while volumes declines in North America accounted for another $150 million of the decrease. Turning to sales by product group on slide 5, the big change year-over-year was in the other or non-core category, which declined from 17% of sales in 2006 to 13% of total sales in 2007. This decrease reflects the divestiture of our chassis related facilities in Germany, Poland and Brazil as well as the divestiture of our starters and alternators facility in India. Our non-consolidated sale grew by $292 million or more than 20% to $1.64 billion in 2007. Yanfeng Visteon, our China-based joint venture with SAIC, had US GAAP revenue in 2007 of $937 million, an increase of $237 million or 33% year-over-year. Net income and our non-consolidated affiliates also increased substantially year-over-year as it grew over 40%. Turning to the sales by region on the following chart. You can see that there was a fairly significant decline in our North American sales as they decreased 5 percentage points and now represents 32% of total sales. This decline was completely offset by growth overseas, primarily in Asia, where our consolidated sales increased to…

Thanks, Don, and good morning, ladies and gentlemen. This slide provides a summary of our financial results for the fourth quarter. Product sales of $2.7 billion were slightly up from a year ago, yet as we have discussed in previous calls, we continue to experience a significant shift in the composition of our sales on both the customer and regional basis, which we will review in more detail. Our net loss for the quarter was $43 million or $0.33 per share as compared to a net loss a year ago of $39 million. However, our 2007 results do include non-cash asset impairments of $30 million related principally to our restructuring actions as well as Visteon funded restructuring and related costs of about $32 million as compared to our 2006 results. As we discussed in the third quarter, we are now in the 50/50 cost sharing match under the escrow account. EBIT-R, which excludes asset impairments and net restructuring expenses, was positive $15 million for the quarter as compared to negative $37 million a year ago, an improvement of $52 million. Cash provided by operating activities was $331 million compared to $239 million a year ago also an improvement of $92 million. Capital spending in the quarter was $144 million, slightly higher than a year ago, reflecting increased spending related to new business launches in 2008 for both interiors and our climate business. Free cash flow in the quarter was $187 million, $56 million higher than last year. This year-over-year improvement is despite the fact that the fourth quarter last year includes $21 million benefit from increased receivable sales in the quarter under our Europe securitization facility. In 2007, receivables sold under this facility quarter-to-quarter were essentially flat at about $99 million. Finally, we ended the year with significant cash balances…

Thanks, Bill. And before we open the line for Q&A, I wanted to summarize our 2007 performance. In a nutshell, we delivered, we exceeded our objectives and although, we know there is much more work to be done and that the global production environment is uncertain at best, we are attacking 2008 with the knowledge that our liquidity is in good shape, that our sales are more geographically balanced that ever before and we've averaged over $1 billion of new incremental business wins over the past two years and we've addressed 18 of the 30 facilities that are the cornerstone of our restructuring plan and that our quality and safety performance has dramatically improved. So, although, I can say with certainty that 2008 will be another challenging year, I am confident that the Visteon team will continue to perform. We'd now be happy to take your questions.

Janice, if you can please remind the callers how to get in line for question-and-answer.

(Operator Instructions) Your first question comes from the line of Joe Amaturo of Buckingham Research.

Good morning. Quick question, with respect to your pension fund, could you give us the asset return that you -- the actual asset return in 2007 and what the funding status of the US pension and OPEB was?

Yeah, Joe. This is Bill. If you take a look at on a global basis with respect to our funding which will obviously be in our 10-K as we file. On a U.S basis we are about 89% funded at the end of the year and on a non-U.S basis about 75% funded, which is a significant improvement from the prior year, overall, about 82% funded on the pension front. With respect to returns they were obviously higher than our expectation at 8%, but were obviously -- as we look into 2008, we're going to monitoring that and just you know it's estimates based on the market.

Okay. And then on the OPEB side?

Yeah. OPEB, again, will be disclosed. Our OPEB liability on a year-over-year basis has declined. Our total health and life is about $540 million for our Visteon plants, the hourly plants as well as the salary plants at about $121 million. So total is $600 million.

Okay. And then this is one other one. With respect to the overhead cost actions and the implementation cost could you give us a sense of the cadence throughout 2008 of when you expect to realize the cost savings and the outflows?

Joe, if you take a look, we had charges in the fourth quarter actually about $63 million of which we have got some the 50/50 match on the escrow. A piece of that was about $11 million related to actions that are occurring for the 2009 imperatives. So as we look to be out here we'll have implementation costs as we talked. Those will be probably in the near term, and the savings as we go forward will be in the latter half of the year.

Okay. All right. Thank you.

Thanks Joe.

Your next question comes from the line of Jeff Skoglund with UBS.

Hey, good morning.

Good morning, Jeff.

Just let me dive into the interior business a little more just given how much that margins are below the corporate average. And I was wondering if I know you are not giving guidance by segment but just generically, can you talk about kind of the outlook for raw material -- the impact of raw materials there. The competitive landscape has obviously changed a lot over the last few years and has changed a fair amount over the last month. And then kind of what's the impact, I don't know if there is a way to separate the impact of Nissan truck volumes in there or any other significant movement in customer volumes, but maybe you can shed some additional color on kind of where that business is going around those metrics?

Okay. Let's try to hit a couple of those questions. If -- for the interior business, I think you are right. The business globally has changed a significant amount over the past year -- past few years and will continue to change. I think the events of last week also are predictive in terms of there are still some distress in the supplier community on the side and there was another filing last night of a smaller plastic supplier. So that's going to continue to play out over the next couple of years, I think, which from our perspective provides us opportunity. As we look at the, our business as it exists today and what we expect over '08 and '09, we expect margin improvement as we go forward in each of the years. We do have a number of key programs that are coming on stream over the next eighteen months or so. We've got a tremendous footprint in our relationship, our investment in Yanfeng Visteon in China that separates us from, I think everybody else in the world, in terms of our positioning there. So from that perspective, when you look at the restructuring actions that are taking place and will take significant losses out of the interior segment, you combine that with the new programs that are coming on stream, our investment, our relationship with Yanfeng Visteon, I think for us the interior overtime is going to be a good business.

Let me finally be a little more specific. You had bankruptcies a couple of years ago, like Collins & Aikman and a couple others, and some of the business that's coming online now was booked post that and do you expect a significant margin boost from that? And then, secondly, with some of the bankruptcies that were announced last week and some resourcing going on, is there a way you can maybe bring some of that business online on an accelerated basis to offset some of the volumes hits that you've have taken with customers like Nissan.

Yeah. I mean we're certainly in there pitching trying to help out the customers anyway we can based upon the recent turmoil, and we are extremely confident that the business that we're launching that was won over the past couple years and that is going to launch -- is launching today quite frankly and over the next 12 months is good profitable business for us. So, that is certainly part of the margin expansion story as we go forward.

Okay. And then second question would be on the working capital front, it was a big source of cash in 2007. And I think if I remember from your January presentation in Detroit, you expected a modest use, I think maybe $25 million in 2008. I guess the question is why shouldn't we expect little bit of payback for that in 2008? And how confident are you in that $25 million?

Yeah. This is Bill. If you take a look at our trade working capital performance, it was strong in the quarter as well as for the full year. And you're exactly right, we did talk in January with respect that we will see some drag, we believe about $25 million as you stated in 2008, principally related to terms changes associated with Ford North America. I think the groups have done excellent job with respect to -- especially on the receivable front. You'll see it's a large driver of that free cash flow performance. With respect to past dues, building our tooling on a timely basis and recovering that tolling, so I think from that perspective we're in a good position at the end of 2007. To your point, I mean if something we got to continue to do and stand top of it, but I think there has been market improvement during the last several years with respect to receivables in general. And so, again, we've got to stay on it. We expect some drag next year, but again that's really related principally to commercial term changes.

What's the dollar impact of that Ford term change?

We estimate about $15 million to $25 million depending on their volumes.

Got it. Thanks. By the way the slides are great this quarter.

Thanks Jeff.

Thank you.

Your next question comes from the line of Himanshu Patel with JP Morgan.

Hi. This is Ranjit for Himanshu. Could you talk about your interior segment? I know '08 -- I think you said that product launches impacted your margins. I mean what's you --how do you think you're going to improve margin from that segment in '09 and 2010 going forward?

It breaks down into a couple of simple buckets, probably three. The first is the restructuring actions. As we've laid out those 30 facilities, some of that is interior related. So as we execute on those facilities, the interior's business will improve because of that. Secondly, as we described as the new business that we won comes on stream and replaces the older business. The margin is substantially different and substantially better than the margin in the past, so that will be the third and then the -- for the third item would be the just normal running the business better Lean manufacturing, use of Six Sigma, less scrap and rework, et cetera. More uptime on the machines and we see that already in each of our interiors facility so that is beginning to happen as we speak and was partially the cause of the improvement in the fourth quarter.

Any thoughts on where our gross margin from that business could get to over sort of by the 2010 time period?

I wouldn't like to say we don't really forecast by segment.

Okay. Can you tell us your thoughts on cash and liquidity right now you expect about $300 million of cash burn in '08? '09 is expected to be positive, you are setting about $1.7 billion of cash. So are you considering potential acquisitions, is that a possibility or is this a cushion you think you need through '08?

As we discussed even in January of this year, we feel very good with respect to the liquidity we have available especially in light of those current market. And we are obviously expecting a cash flow uses next year of about $300 million. So as we look today and given the markets, we are going to continue obviously to monitor where opportunities maybe presented to us or may emerge in the markets with respect to debt maturities. From an acquisition perspective, there are some limitations with respect to what we can do in that front under our debt agreements. It will be opportunist there as well, but I wouldn't suggest that you do something in the near term that would be of any size or magnitude, given what we've got on our plate with respect to moving forward and restructuring the company currently.

Okay. And lastly, I noticed some of your assumptions for the customer platform production has gone down a bit, I think in Europe and North America and you've kept guidance intact. Any thoughts on what happened and what is providing offsets?

In January, we did note that we would be taking down, if you will, production volumes for a number of our customers. And we really haven't blocked and adjusted that much from that guidance. We outlined that in the January update. So we're looking at obviously Ford North America down about 4% on year-over-year basis, Nissan truck in North America down about 6%, Ford Europe about flat and Hyundai/Kia obviously up a bit on a year-over-year basis. So as we look even currently, with respect to the projections out there from a sour productions unit, we feel pretty good about those right now. Those are projections or assumptions that we have currently with respect to production volume.

Okay. Thank you.

And next question comes from the line of John Murphy with Merrill Lynch.

Good morning, guys.

Good morning, John.

First question is just the follow-up on the loss that Ford backlog business. I am just wondering if you could expand on how much of that you think is really being resourced and how much is being insourced to Ford and is there, a big chunk of that business is going back into ACH?

I'll take the piece of the insource. I don't believe any of it is being insourced to Ford or we haven't seen any of that. Again, the discussion topic and is predominantly around the power train control module business, that is in our electronics product group. This is a business that essentially Visteon has been single sourced for many, many years. And Ford, about a year and a half ago, two years ago I think started to dual source that product. So certainly that has impacted us negatively in the electronics segment as we move through 2007 and into 2008.

John, Mike. One of things to remember is when we did the transaction that resulted in ACH, really all of the business for that product in North America really went back to ACH at that point in time. So any sourcing actions that are going on today would not be taken -- we don't have a base business that would be available to source to ACH. It all went to ACH with the transaction. So they're really -- we're not seeing any movement of other business into what now is ACH.

And if we think your restructuring actions that you've outlined in great detail, which we greatly appreciate, how much of this do you believe that you can actually capture at the EBIT line or the EBIT-R line or the operating line whichever line you want to pick there without leakage?

When you refer to leakage, actually being --

Well, if we look at the cumulative savings that you have on slide 8 restructuring actions of $315 million in 2008, I mean do you believe you're going to actually -- is that a net number or gross numbers, I guess is the more simple question.

Yeah. The gross as we -- as again we're trying to put some more transparency into the discussion. Those are gross savings numbers. As we look at what happens to the margins absent those restructuring, we try to capture that in our divestitures and closures, in volume mix, new business walks. So those are gross savings. We feel pretty confident with those gross savings.

Okay.

As we look out and what we've achieved to date, we've launched our restructuring plan. So from that perspective, we actually raised it earlier or later 2007 with respect to what we thought those savings would be. So from a leakage perspective, volume at the end of the day, obviously can impact our operating performance on a go-forward basis. But with respect to the savings and those gross savings, we feel very good about those gross savings.

So we should think of those as sort of constant volume mix numbers, right?

Yes.

Okay. And then…

Well, in constant volume and mix we've provided information with respect to what we think that environment will be in '08.

Yes.

So in that context, yes, in that environment.

Then if we look at, as you are divesting smaller businesses overtime, you seem to be alluding to -- running into sort of a labor hurdle and working with labor to get out of these businesses and my understanding was you really got in rid of the large majority of your UAW Tier 1 workers with ACH or with return of ACH to Ford. And these are anything in particular or you need going on here with these labor hurdles or they just sort of the standard practice of getting out of the business?

I don't think we've try to talk in any detail about labor difficulties. I would say that labors are one of the constituencies that we have to work with when we are closing these facilities and its standard operating procedure so to speak to deal with them on a fair basis as we exit. And I think we've been very, very successful in all of the -- again, we've completed 18 of the 30 actions and really with no disruption to speak of. And so we've been quite successful in our methodology and our process that we use and I think everything's worked up very well so far.

Okay. And then just lastly on the Ford escrow account. How much is left in the escrow account at this point?

Yeah. Yearend it was about $140 million. We have a receivable on the books which you'll see as we file our K next week of about $22 million, which came into one of the accounts of this year in '08. So I look at $144 million on face and there was a $22 million claim against it, so $118 million, $120 million.

Okay. Thank you very much.

Your next question comes from the line of Rod Lache with Deutsche Bank.

Hang on. Next question, I guess Rod is not there please?

One moment sir. Mr. Lache your line is open.

Sorry, can you hear me?

Yes. There you go, Rod.

I'm sorry about that. This is [Dan Gobstan] for Rod. I apologize. I just have one question. The impact of divesting on profitable businesses is the savings from that included in your restructuring savings?

We had indicated I think specifically with respect to the North American aftermarket that was not necessarily facility action. So that savings, although, in our projections is not in that cumulative gross savings of $420 million.

Okay. Thanks everything else has been answered, I appreciate it.

Thank you.

Thanks, Dan.

Your next question comes from the line of Patrick Archambault with Goldman Sachs.

Hi good morning.

Good morning, Patrick.

I guess just one question about the guidance of breakeven for this year. Just trying to pencil to that, you know with the I guess headwind on the revenue side of about a $1 billion, you are walking from a negative EBIT-R of I guess minus 50 to breakeven and it sounds like you have maybe about a $150 million of cost savings rolling on. That would imply that really your negative contribution margin on that last $1 billion would maybe be 10% or lower. And I just wanted to see if, am I thinking about that right? Is it because a lot of the business that's being lost was relatively low quality or maybe assist the new stuff that's launching and replacing at around the net basis is just much better quality. Like how do we think about that?

Yeah. This is Bill. We tried to provide some of that transparency again in January with respect to how we look and our drivers of EBIT-R on a year-over-year basis. To your point, we do have significant savings, gross savings obviously in 2008 versus 2007. Our net plant restructuring is about $70 million. We've had, obviously, our 2009 imperative, which should draw in another $80 million or so and then just the base business efficiencies are about $80 million. Yet, divestiture and closures as well as volume mix in new business from a contribution perspective, those are year-over-year impacts to us of about $180 million. So you are right, we have got the savings coming online, but at the same time if you look at it just on a contribution perspective, without the sales, you've got fixed costs to deal with. Those fixed costs, as we deal with them are on the gross savings number. So we've got a lot to do obviously, but that doing in $1 billion in business, on a year-over-year basis is coming down, we've got to take the costs structure out, that's related to those businesses.

Okay. Thanks. And just in terms of piggybacking on some these interiors questions. How are the contracts set up on most recent business wins including the ones that are on your backlog in terms of cost escalators for raw materials? Would they automatically adjust upwards if feedstock prices continue to rise as they have been?

Yeah. Without being specific, we do have coverage on raw material with most of our customers on price escalations that usually is a, let's say, kind of the standard is kind of a six-month time lag for that. Some are better, some are worse in terms of timing, but there is language that covers us.

Okay. Great. And lastly just on slide 28 with the cash, can you just provide us with -- you probably disclosed it last quarter, but can you just provide us a bit the U.S cash from last quarter Q3?

From the third quarter?

Yeah.

Yeah U.S. cash was about $500 million.

Okay. Great. Thank you very much.

Thanks.

Ladies and gentlemen, we have time for one more question. Your next question comes from the line of Doug Carson with Banc of America.

Hi, guys. Thanks. Just a quick question on the cash, with $1.02 billion on the balance sheet that's U.S related, as your guidance is for $300 million burn, which is total company. Can you give us an idea of how much you could burn in North America, giving I think North America will probably be more challenged than the rest of the world. Trying to get an idea of what the U.S balance could look like at the end of '08?

This is Bill again. We don't actually provide, obviously geographic distributions of what our free cash flow would be, but if you think about that $1.2 billion in the US. I think you really need to think about on a Europe and U.S or North America combined basis. I think we've shown actually with this balance of $1.2 billion, now that we can access all those cash balances, both in the U.S as well as Europe and move that cash around. So obviously, if we'll have need in Europe we'll put the cash there to execute our restructuring as well as have the opportunity to bring cash back from Europe into the U.S as we needed.

That's why we'll think about the availability in the U.S at like 1.5, then.

Yes.

To include Europe.

Yes. You need to look at the full North America and Europe balances of cash.

Okay.

Plus we have obviously two facilities. The US ABL, which remains, obviously we have not utilized anything there other than letters of credit and then we have additional liquidity available under our Europe securitization facility. Again, we haven't really utilized that. We have an ambit level of about $100 million utilization in it.

You guys have done a good job kind of increasing liquidity here. The $280 million cash that was moved from Halla, If we got in a crisis, let's say, down the road '08, '09, is there any kind of more potential to generate cash from overseas from Halla?

I think we've done this in the past obviously from a transactional perspective. This is a good -- it was both a good financial as well as operational transaction quite frankly, the transaction Halla transactions referred with this in 2007. There are some limitations with respect to the term debt on what we can do there on Halla. But we still have some availability, if you will, to look for additional transaction such as that. But again it's an operational benefit, as well as obviously a great financial benefit with respect to accessing that cash very efficiently.

At the Auto Show you guys comment on liquidity at the end of big concern and put a lot of effort into improving the liquidity and with discussions about looking at various bonds across your cap structures there is a focus on the 2010 bonds. And since Detroit, they are down 6 or 7 points and I am wondering at $81 million price does that change the interest in buying some of those back, given the focus on liquidity, because they're at about 18%. Just wondering if that has increased the focus given where the price is?

Yeah. This is Mike. I would say our goal throughout the year was to position ourselves at the end of '07 with sufficient liquidity, so that we kind of removed that as an issue for folks looking at us and give ourselves the flexibility coming into an uncertain '08, frankly, to just continue to execute our plan and we find ourselves right where we wanted to be. And so we have the ability now to maybe opportunistically look at some possible uses of that, but frankly we wouldn't disclose what that is today, we just feel good that we got ourselves where we wanted to be and we have the flexibility to execute our plan going forward.

Sure. Thanks. And last quick one. On the vendor side, obviously there are some small vendors that have been having lot of trouble and some recent bankruptcies. Can you give us an idea of the scope of how many vendors you have that you'd kind of put maybe on the hot list of who's having problems because there is a lot of working capital problems at your competitors. Right now they are trying to fund some of these troubled vendors.

Yeah, we have, we do have a hot list that we track pretty closely. I mean it hasn't changed very much from last year in terms of the number that remains fairly stagnant in terms of the number we track, the names change every once in a while. But from our perspective, it's going to be a challenging year for the smaller suppliers and we are on top of it. We are watching it.

Not a significant change. Okay. Thanks a lot, guys.

Thank you.

Thanks, Doug. That concludes our call for today. I will be around to answer your questions for the rest of the day. Thanks for your participation.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may disconnect at this time. Good day.