Visteon Corporation (VC) Q3 2011 Earnings Report, Transcript and Summary

Good morning and welcome to the Visteon Third Quarter 2011 Earnings Call. All lines have been placed on mute 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 that 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 looking statements. Please refer to the slide entitled 'forward-looking information 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 materials if you have not done so already. I would now like to introduce your host for today’s conference call, Mr. Chuck Mazur, Vice President, Investor Relations for Visteon Corporation. Mr. Mazur, you may begin. Chuck Mazur – Vice President, Investor Relations: Thank you (Brandy). Good morning and thank you for joining us for Visteon’s Third quarter 2011 earnings call. Brandy mentioned I’m Chuck Mazur the new Vice President Investor Relations and I look forward to working with all of you and we’ll be available for follow–up questions after this call. As Brandy also mentioned our presentation materials have been posted to the Investor Relations section of the website. Today’s presenters are Don Stebbins, Chairman and CEO and President and Marty Welch Executive Vice President and Chief Financial Officer. Following the formal presentation, we will open up the line to take your questions. With that, I would like to turn the call over to Don. Don Stebbins – Chairman and Chief Executive Officer and President: Thanks Chuck and good morning everyone. During today’s presentation, I will review Visteon’s 2011 Third quarter and then I will turn the call over to Marty Welch for the financial review. In the third quarter our consolidated sales totaled $2 billion 20% higher than the third quarter of 2010. Third quarter and year-to-date sales improved for all of Visteon’s product lines versus 2010 largely driven by higher production volumes and favorable currency. Adjusted EBITDA was $166 million, up 11% from a year ago. And we ended the quarter with strong liquidity, $780 million in cash and debt of $588 million, translating into a net cash position of $192 million. Our $220 million asset-backed revolving credit facility also remains undrawn. During the quarter, we were awarded over $300 million in incremental new business showing growth across all of our product lines and in all regions of the world. Through September our year-to-date new business wins of $865 million are well ahead of the $606 million in new business that we won for the entire full year of 2010. For the full-year 2011, we are affirming our full year guidance given during the second quarter earnings call for product sales and adjusted EBITDA and improving our free cash flow guidance by $25 million. Slide three shows the break-down of our third quarter revenue of $2 billion by product line by region and by customer. The slide also shows the impact of our non-consolidated joint-venture sales of $951 million on a market penetration basis. Climate, our largest product line, generated 48% of our total consolidated sales in the quarter. On a market penetration basis Interiors was our largest product line accounting for 43% of our sales largely due to Yanfeng, our non-consolidated Interiors joint venture in China. Climate represented 36% of our market penetration followed by Electronics at 16% and Lighting at 5%. On a regional basis we continue to experience strong growth in Asia with the region accounting for 44% of our total consolidated product sales. Europe represented 33%; North America 17%; and South America 6%. Including our non-consolidated affiliates, Asia increases to 60% our market penetration while Europe, North America and South America represented 24%, 12% and 4%, respectively. Hyundai-Kia accounted for 32% of our third quarter sales, Ford accounted for 26% if we include our non–consolidated affiliates Hyundai-Kia and Ford contributed 22% and 21% of our sales respectively. On slide four we compare our year–to–date regional consolidated and market penetration based sales compared to regional production. You can see that year-to-date 47% of global production was in the Asia–Pacific or 42% of Visteon’s consolidated sales were in the Asia-Pacific region. When we include our non–consolidated affiliates 58% of our sales are in the Asia-Pacific region. You can see that we are well positioned in the region of the world where industry analysts expects strong growth over the next several years. On slide five you will see that Visteon’s third quarter consolidated sales increased by 20% year-over-year and outpaced industry vehicle production volumes which increased 5% over the same period. Visteon’s sales when adjusted to exclude the impact of divestitures, closures and currencies increased 8% versus 2010. When we include our non–consolidated sales Visteon’s sales are up 14% versus 2010. On slide six, you can see continue to win significant new business. For the third quarter new business wins totaled just over $300 million giving us a nine month total of $865 million. For comparison purposes in the full year of 2010 we won $606 million of new business. Clearly, our strong balance sheet’s our technology our footprint and our service are proving to be valuable to our customer space we compete to win new business. On slide seven, we provide an overview of our new business wins by product line and by region. In the third quarter and on a year-to-date basis Climate represents the majority of our business wins, however as you can see we continue to win business across all product lines and in all regions. Slide eight provides an update from our perspective on the Thailand situation. Visteon has three manufacturing facilities in Thailand with about 850 employees our facilities were not damaged and our employees are safe. These facilities manufacture and engineer Climate, Interiors and Electronics products will represent about $215 million in annual consolidated sales. Our largest customers of Thailand are Nissan, Auto Alliance General Motors and Honda. In terms of financial impact we are estimating loss sales and profits of approximately $25 million and $6 million respectively in the fourth quarter of 2011. There remains a lot of uncertainty around supplier and customer capability as it relates to Thailand. We continue to watch this situation very closely. And with that I’ll now turn it over to Marty. Marty Welch – Executive Vice President and Chief Financial Officer: Thanks Don and good morning everyone. As Don stated third quarter product sales of $2 billion were $335 million or nearly 20% higher than the third quarter of 2010. Sales were higher across all products and regions with our Climate business enjoying the largest increase in Asia–Pacific providing the largest contribution on a regional basis. Adjusted EBITDA was $166 million for the quarter $17 million higher than a year–ago. Our adjusted EBIDA excludes the impact of the 2010 OPEB termination, restructuring cost, reorganization and other cost which impact our recorded gross margin. Moving to slide ten on a year-to-date basis 2011 product sales improved $751 million versus 2010 to $6.19 billion. As in the third quarter year-to-date sales improved versus 2010 for all products and regions. Adjusted EBITDA was $526 million year-to-date $50 million higher than a year-ago. Slide 11 highlights our product sales performance for the third quarter and year-to-date. Volume and mix increased sales by $164 million in the third quarter and $595 million year-to-date reflecting an improved OEM production environment as well as strong position with Ford and Hyundai-Kia. Divestitures and closures lowered sales by $19 million in the third quarter and $144 million year-to-date more than 60% of year-to-date decrease impacted North America as we completed the exit of a number of Interiors and Electronic facilities in the first half of 2010. Currency favorably impacted sales by $204 million in the third quarter and $377 million year to date, principally reflecting the weakening dollar versus most major currencies, including the euro and Korean Won. As we’ve previously mentioned year-to-date sales increased in each product line with Climate providing largest contribution in both the quarter and year-to-date. Moving to slide 12, as of September 30 62% of our employees were in low cost countries up from 57% at the year end 2009. Our sales per employee also continues to improve from 199,000 in 2009 to 253,000 in the third quarter of 2011 a 27% increase. Turning to the Climate business on slide 14 Climate sales in the third quarter were $1 billion and gross margin was $79 million or 7.9% of sales. On a year-to-date basis Climate sales were $3.04 billion and gross margin was $258 million 8.5% of sales. Climates gross margin excluding the impact of OPEB terminations and reorganization items, decreased by $22 million in the third quarter and $56 million year–to–date when compared to last year. The entire decrease can be explained by the impact of the non–recurrence of benefits associated with the 2010 customer agreements and increased D&A resulting from the adoption of Fresh Start Accounting. Key performance drivers, volume, mix, currency and net cost performance on a combined basis were flat for the third quarter and slightly positive on year-to-date basis. Climate net cost performance has been negative in 2011 this metric has improved sequentially in each quarter of 2011. On slide 13 we see the Climate sales increased year-over-year by $140 million in the third quarter and $380 million year-to-date both volume and currency were favorable factors. Over half of Climate sales or in Asia-Pacific and Hyundai-Kia and Ford are the largest customers representing 46% and 24% respectively. We’ve included for the first time on our website a direct link to (indiscernible) financial statements. This link can be found on the main page of the Investors section of our website by clicking on the HCC's Financials link. This will redirect you to Halla’s financial statements that were prepared under Korean IFRS and translated into US dollars. These statements should be available later on today. Turning to Electronics on slide 16, our sales in the third quarter totaled $338 million and gross margin was $30 million. Gross margin included a $7 million charge related to closure of our Cadiz, Spain manufacturing facility. Adjusting for this item gross margin for the quarter was 10.9% of sales ahead of our results from the first and second quarters of 2011. For 2011 year-to-date, sales were $1.05 billion and gross margin was $105 million. Electronics gross margin excluding the impact of OPEB terminations restructuring and reorganization cost increased year–over–year by $21 million in the third quarter and $37 million year-to-date. The non-recurrence of benefits associated with 2010 customer agreements and increased D&A negatively impacted margin. The other key performance drivers, volume and mix divestitures and closures, currency and net cost performance improved Electronics margins by $25 in the third quarter and $48 year-to-date. Electronics sales increased $40 million in the third quarter and $112 million year-to-date favorable volume and currency were the main drivers. 45% of electronics sales are in Europe from a customer perspective Ford is our largest customer contributing 44% of total sales. Turning to Interiors on slide 18 sales in the third quarter were $606 million gross margin was $31 million or 5.1% of sales local sales and margins have both decreased versus the second quarter. As we highlighted during our second quarter earnings call, second quarter sales and margins benefited from customer agreements. Similar agreements provided only a minimal benefit in the third quarter. On a year-to-date basis sales were $1.85 billion and gross margin was $116 million. Interiors gross margin excluding the impact of OPEB and reorganization cost was up $1 million year-over-year in the third quarter and up $21 million year-to-date. The key performance drivers, volume and mix, divestitures and closures currency and net cost performance were relatively flat in total for the third quarter and positive year-to-date. Slide 19, shows that Interiors sales increased by $115 million in the third quarter and $213 million year-to-date, volume and currency were both favorable factors. On a regional basis Interiors sales are fairly balanced between Europe and Asia–Pacific and the four largest customers are Hyundai-Kia, Renault-Nissan Ford and PSA. You should note that this information reflects our consolidated sales only and does not include our consolidated sales from our joint ventures such as Yanfeng and Visteon. Moving on to Lighting on slide 20 sales in the third quarter were $131 million gross margin was $8 million or 6.1% of sales. Lighting year-to-date sales were $394 million and gross margin was $15 million. Lighting’s gross margin excluding the impact of OPEB reorganization increased year-over-year $5 million in the third quarter and $4 million year-to-date. Favorable factors included lower D&A and higher volume offset by a negative cost performance. Lighting sales increased year-over-year by $31 million in the third quarter, $49 million year-to-date two–thirds of Lighting sales are in Europe with the remainder largely in North America largest customers Ford, followed by General Motors and (indiscernible). Moving to slide 22 SG&A expense totaled $100 million in the third quarter $9 million higher than the third quarter of 2010. Year-to-date SG&A expense was $313 million, $21 million higher than 2010. Excluding the impact of the termination of OPEB plans reorganization and other employee cost SG&A increased by $12 million in the third quarter and $27 million year-to-date. The drivers of the change in SG&A are outlined in the right side of this slide, the increase is largely explained by currency, intangibles amortization related to fresh started counting and increased expense related to employee equity awards. Despite the increase in cost SG&A as a percent of sales improved slightly for both the third quarter and on a year-to-date basis. On slide 23, we see that the third quarter of 2011 equity and net income of Visteon’s non-consolidated affiliates totaled $43 million an increase of $8 million or 23% versus 2010. Higher OEM production volumes particularly in China and favorable customer positions with SAIC, SVW and SGM drove significant growth in Yanfeng Visteon and its affiliates. On the right side of this slide we’ve provided a summary of YFV’s financial results on a U.S GAAP basis. And this information is also disclosed in notes to our periodic SEC filings. On a U.S. GAPP basis, YFV’s net sales rose to $740 million in the third quarter of 2011, net income is $68 million in the current quarter increased approximately 30% compared to 2010. Moving to slide 24, adjusted EBITDA on the third quarter of 2011 was $166 million compared to a $149 million in the third quarter a year–ago. On a year-to-date basis adjusted EBITDA improved from quarter and $76 million in 2010 to 526 million in 2011. (: Free cash flow in the third quarter of 2011 was use of $24 million. Year–to–date free cash flow was use of $1030 million. Cash from operating activities in the third quarter was $35 and $55 million year-to-date reflecting trade working capital usage, cash taxes,, pension contributions and payment of Chapter 11 related expenses. Capital expenditures were $59 million in the third quarter of this amount $43 million was in Climate mostly driven by Asia and primarily in support of future customer programs. Cash balances, including restricted cash at September 30 were $780 million, down $81 million from June 30, primarily due to negative free cash flow and negative exchange, Slide 26 provides an overview of our 2011 year-to-date product line capital expenditures. Through September of this year $125 million or nearly 70% of Visteon’s capital expenditures have been related to Climate – to the Climate product line. On a regional basis more than half of Visteon’s capital expenditures supported Asia-Pacific region. Now turning to Duckyang on slide 27, on Monday of this week Visteon sold a small portion of its investment to Duckyang one of our interior joint–ventures reducing our interest to a non–controlling 50%. Duckyang will be deconsolidated from the company’s financial statements and equity method economy will be applied effective November 1. At Duckyang we then deconsolidated for the period ending September 30 2011 year-to-date sales would have been $5.67 billion versus the $6.19 billion and gross margin would have been 8.6% versus the 8%. And my last slide 28, talking about guidance as Don stated we are reaffirming our full year guidance for product sales and adjusted EBITDA and improving our guidance for free cash flow. Full year product sales or guidance is $8 billion to $8.2 billion our adjusted EBITDA guidance is $660 million to $680 million and our full year free cash flow is projected at a used of $150 million the change due to primarily to lower claims in restructuring. That concludes our third quarter presentation, before we open the line for questions I like to address recent media reports that are speculated on specific actions Visteon is said be exploring. Our practice is that we do not comment on rumors and speculation. So at this time we’d like to take our questions and Brandy please open up the call for Q&A section.

(Operator Instructions) And your first question comes from the line of Colin Langan of UBS. Colin Langan – UBS: Good morning.

Hi Colin. Colin Langan – UBS: I know you just said you wouldn’t comment on the recent news, but any color on your priority in terms of the segments in your long-term view, and any update on your interest in the other 30% of Halla? Is that something that your -- has changed? I think, in the Frankfurt show, you indicated maybe you wouldn't be willing to use any cash at this point in time?

Guys I think the I’ll follow on Marty’s comment that we won’t specifically comment but we have been I think pretty clear in terms of or other comments in terms of remaining convinced that portfolio optimization is an important part of the Visteon story in terms of maximizing shareholder value. And that in either scenario either we’re acquiring or divesting we certainly will remain disciplined and thoughtful throughout that process and our expectation is that we’re going to be a leader in our product groups and if there’s not a clear path to that leadership and that’s built from a customer view point as well as from a return profile then we’ll certainly move to help that business. Colin Langan – UBS: Okay. And I guess any color, Marty, in terms of your -- how maybe you'll do things differently, in terms of you taking over as CFO?

As I’ve got you know I’ve been in the middle of my third week so getting to know the team here we have really excellent finance team here and a lot of good operators like I tell you there’s a lot of focus on the operating side on a net cost performance metric and people are working really hard. So we’re going to continue to be very open and tell people what we’re doing and try to move the company forward. Colin Langan – UBS: And -- and any color on why you went -- brought you over to this job -- I mean, since the press release didn’t really provide any details and then what sort of attracted you to the Company?

Well I’ve a history in the auto industry and spent 10 years at Chrysler, and in the past I was the CFO of Federal-Mogul. And so I know the space, I wasn’t specifically looking for another full time job but it kind of came at me and I had a couple of sessions with Don and the opportunity it looked very intriguing and so I guess in a real sense I was recruited. Colin Langan – UBS: Okay. I guess more on the quarter. Why the strategic action with Duckyang. I mean, why the sale of that --part of that interest?

Yeah this is a transaction that we’ve been working on for five or six months or so and just given the way the business is constructive it’s not advantageous for us to have to consolidate it. Colin Langan – UBS: Okay.

I think are aware its significant amount of pass–through business and so it’s really not been advantage to us to consolidate that entity. Colin Langan – UBS: So when this comes out, does that mean the Interiors margin will look a little bit better for what’s remaining?

Yes absolutely. Colin Langan – UBS: Okay. But this would also mean that your mix, in terms of being 58% Asia of that still goes well I guess the 58% will stay the same – but the consolidated mix will go down once this is taken up – this is all Asia, that’s right?

That’s correct. Colin Langan – UBS: Okay. And can you actually provide color on your exposure to the ones I know if there was kind of volatile this quarter, I thought it’d be a bit more of an issue, I mean, it seems like there’s more headwind in Climate?

Great so. What happens is we’re little out of balance on the line cost base and Climate is – is heavily (warned) but when you get over to the sales side a meaningful amount of the sales are in dollars or in euro. So you don’t get the exact matching when the – when it then wand moves, contrast that with our euro situation where we are much more in balance with cost and revenue. Colin Langan – UBS: Okay. And what I mean, any sort of ratio between the cost and the sales difference?

So the revenue a portion of the revenue in Climate its not in one its probably about a third. Colin Langan – UBS: Okay. Just one last one. The – you didn't change your guidance today, and even though your numbers came in a little bit better than expected. Particularly in terms of sales is the deconsolidation of Duckyang part of why sales guidance didn't change since revenues actually seems to come into this side, what factor is given a pretty strong (indiscernible)?

Right so as we look at Q4 okay when I have the two months less of Duckyang in there but you also have the impact of the floods in Thailand also that we see softening in South America specifically at one of the plants one of the four plants as has been shutdown for a significant portion of Q4. We also see softening in India and in China. So as we look for the next couple of months here it’s a fairly uncertain environment in terms of production which is why we didn’t move up to sales line. Colin Langan – UBS: All right, thank you very much.

Your next question comes from the line of John Murphy with Bank of America/Merrill Lynch. John Murphy – Bank of America/Merrill Lynch: First question, on page six, you’re showing a pretty good ramp–up in new business wins. I’m just curious, as we think about that in -- in two factors. I mean first, I mean obviously, your emergence has given you a little bit more credibility sort of maybe credibility or attractiveness to -- to your customers, so it sounds like that’s helping out. But sort of the second factor is there’s a lot of speculation in the market and in the -- in the industry that the Company could be – parts of the Company could be sold off. I’m just curious as you’re going to market with your customers, how those two factors really play out, and as you’re going to market with those customers to win new business, is it specifically through Halla, specifically through Duckyang, or is it -- are you going to market with those guys with your customers as Visteon?

In terms of I guess I’ll specifically address kind of the Halla and Duckyang those two businesses from how we operate that with respect to the customers they predominately handle to Korean customer base solely. And then so if we were to I want to use the Climate example to call on another customer Volkswagen that would be a Visteon relationship and then we would decide whether or not if we won the business whether or not it would be produced in a quote on quote Halla facility or a Visteon facility and how the engineering community would breakdown etcetera, etcetera. So the customer interface with Halla and with Duckyang is predominately on the Korean OE side. A border question I think what you have is two things that oppose each other with same respect is that certainly the balance sheet the Visteon has an entity that’s going to continue the ability for us to put our global footprint and our engineering and technology (audio gap) and that shows and the backlog certainly the press report Visteon being broken up or being sold only hurts that ability to win new business. John Murphy – Bank of America/Merrill Lynch: Okay, that – that’s very helpful. And if we were to think about I apologize if there’s a little bit of speculation -- but if you were to think about Halla being fully owned by Visteon, meaning you buy this 30%, would that, do you think change your go-to-market strategy that you just mentioned of Halla being the face with – with Hyundai and Kia, or would that relationship shift towards Visteon going to market to Halla – I mean to Hyundai and Kia? I mean would you still be able to keep the same relationship setup the same way it is right now if you owned that additional 30%?

Regardless of the ownership whether its 70 or 51 or 100 the relationship that Halla has with Hyundai, Kia is outstanding and we would make no move again regardless of the ownership we would make no move to change that. John Murphy – Bank of America/Merrill Lynch: Okay, thank you. And also on the Duckyang, the portion that was sold there, why was it only – only a portion? I mean if it sounds like its pass-through sales, there’s not a lot of great profit being booked there the returns are – sound like they are on the low side. I mean, why not sell that entire part, I mean the entire business that you own at Duckyang and is that something that’s strategic and how helpful in your relationship with the Korean manufacturers just in total? I am just trying to understand why it was only a partial sale?

Two things one its it is important to do to the Korean customer base and then secondly its important to the Global Interiors business again I think as many of the customers many of the suppliers probably talked about their more and more global platforms and the ability to have a base in Korea that could help follow so to speak the green customers around the world is important. John Murphy – Bank of America/Merrill Lynch: Okay. Then just lastly on Europe, what do you think your flexibility is to respond to potential shifts in Europe. And obviously the concern is that Europe could potentially drop –off a cliff, down another 10% or 15% on volumes, not saying that’s what you’re saying, but in case there was a real downdraft in volumes in Europe, what’s your ability to respond? Where are you on capacity utilization right now do you have a lot of temp workers that you could pull-off the lines to really mitigate some of the pressure there just trying to understand Europe?

Yeah and then we’re not calling as we mentioned we’re calling for the drop–off the cliff in Europe but understand that it is a possibility. I think we have done a very good job in terms of as we’ve ramped up over the past 18 months or so to do as much of that with a temporary workforce as we could. We’ve not named the specific percentage because it varies greatly between each plant. So I mean it would come down to kind of a program–by–program analysis but I think we’ve done a pretty job there certainly we do have some many Western European plants that as you know are more difficult and that’s where we’ve tried to hire temp workers for the increases in volumes. John Murphy – Bank of America/Merrill Lynch: Okay great. Thank you very much.

Yeah thanks John.

Your next question comes from the line of Kirk Ludtke with CRT Capital Group. Kirk Ludtke – CRT Capital Group: Good morning, everyone.

Yeah Kirk. Kirk Ludtke – CRT Capital Group: I was wondering we could if maybe you could expand on the net cost performance line. And it looks like it was if I add all of the segments up, it was a negative $9 million in the quarter, but year-to-date it’s a negative $62 million. And I’m just curious if -- if there’s any more color you can provide and if you think this – what this is attributable to and if and if there is – this could turn out to being positive at some point in the future?

Historically if you look over the past few years that cost performance has been a positive for us. This year we’ve run into a few issues one being commodity cost increases and the recoveries so historically we recover somewhere in the neighborhood of 70%. We’re recovering a little bit less than that. And certainly the magnitude of the commodity cost increases has been larger so the absolute dollar impact has been greater. In addition to that as I think we’ve talked about on the previous calls the pricing pressure has been higher this year than historical norms would indicate and so that also is a significant contributing factor to the negative cost performance Kirk Ludtke – CRT Capital Group: Okay. So the -- the commodity costs, I would guess maybe next year, could be a tailwind. Is that possible?

It is possible we actually as we look at the fourth quarter we think that net cost performance will be slightly positive. Kirk Ludtke – CRT Capital Group: Okay. And then shifting gears back to the fourth quarter guidance. It looks like you’re forecasting a use in the fourth quarter, a use of cash in the fourth quarter. And I was just curious, usually you generate cash in the fourth quarter and I was curious as to what that was that attributable to?

Right so there is a some significant payments that are in the plan and continuing to pay–down the restructuring liabilities and those things they have to do with when settlements are made on the various Chapter 11 claims and so forth and so I actually directly related operations I was actually cash provided from working capital the main operations in the fourth quarter. Kirk Ludtke – CRT Capital Group: And okay now I – okay I remember now. So Chapter 11 claims, do you have a sense for how much those are in the fourth quarter?

I do not I would I would kick it back to we’ll get back to on it.

Chuck we get back to on it. Kirk Ludtke – CRT Capital Group: Now I remember there was some restructuring that got pushed back as well is that still we get.

Yeah I think as we mentioned last quarter we made pretty difficult decision to close one of our. facilities in Spain and in the second quarter we took a charge for the – for the minimum, statutory minimum amount of severance now we’re still in our forecast and in our guidance we have assumed that we come to a resolution with the Spanish unions their and pay-out those sums. Kirk Ludtke – CRT Capital Group: Okay, great, I appreciate that. And it looks like, it looks like the third-party forecasters are still looking for production to be up sequentially in North America and Europe. It sounds like – it sounds like maybe you’re thinking they might be ahead of themselves.

I think our assumption is that North America would be up Europe is going to be slightly down and then again I would some of that we maybe a little bit harder to hit and that given where our programs are etcetera but again and I would think that Asia would be up and South America would be somewhat flattish. Kirk Ludtke – CRT Capital Group: Okay, I appreciate it. Thank you very much.

All right. Thank you.

(Operator Instructions) Your next question comes from the line of Himanshu Patel with JPMorgan. Himanshu Patel – JPMorgan: Hi good morning guys.

Good morning Himanshu. Himanshu Patel – JPMorgan: Just I a few questions Don I wanted to go back to the summer Analyst Day that you guys held a few months ago. Two points from that event I wanted to follow-up on. You guys had mentioned that it seemed like there was an operational integration effort going on between Yanfeng and the consolidated Interiors business, or at least you had hoped to commence that. I’m curious, have you made progress on that, and is that still a strategy you guys are pursuing?

It is there strategy that we are perusing and there have been a number of meetings among the leadership of Yanfeng as well as leadership of Visteon Interiors consolidated so to speak. Himanshu Patel – JPMorgan: Okay. And then at that meeting, I think, it was the first time you guys publicly mentioned that, it would ultimately perhaps make sense to own all of Halla, for a lot of the reasons we’ve talked about. I’m just curious, can you help us think through the variables behind that decision and in particular I wanted to understand, is that a decision that is entirely under Visteon’s control or are there exogenous dating events that may prevent the timing of when that happens, whether it’s customer considerations or Korean takeover laws or whatever it may be?

In terms of the control of the decision it would be a Visteon decision. And certainly the financing markets and those types of things will play into that decision. But in terms of and I think you have to be quite respectful of any customer relationship issues again from our perspective, in answer to John’s question earlier and if we were to buy the 30% or if we stroll down to 51% it doesn’t really matter regardless the relationship has been built over many, many years with the Halla team and so I would never move to change that. In terms of how we go about it again it is significant use of capital and so it we way the various alternatives against the benefits that we would obtain by owing the other 30%. Himanshu Patel – JPMorgan: And that’s still acquisitions, internal investments, and buyback, in that order?

I would say internal acquisitions internal capitals financing the two other significant items on the play. Himanshu Patel – JPMorgan: Okay, great. And then, I can’t refuse but ask, but on the recent press release around the CFO change, you guys obviously paid that sort of one-off random comment about retaining financial advisers. I’m just curious, what was the thinking behind the timing of that announcement?

Well, a couple of things first I would say that different firms bring different skill sets to the table so as we looked at it adding Goldman to the advisors table brings expertise of a large global investment bank with significant capital market expertise and experience that we thought we could benefit from. Understand that it’s a bit unusual in terms of putting that information into a press release but it something that we’ve received a lot of questions on and so rather than do it kind of on a one-off basis we thought we would put in the press release and that comment also holds for the corporate governance items I know it’s a little but unusual to put that out in a public announcement but again the investors that we talked on a daily basis had some questions about that. So we utilized that press release timing to do that. Himanshu Patel – JPMorgan: And is the scope of assignments between Rothschild and Goldman entirely separate?

No I would say that the work that they both do overlaps and certainly there’s some work that Rothschild given the history that we’ve had with them I would call them – call it their work. So to speak and then Goldman will have their own work to do as well. Himanshu Patel – JPMorgan: Okay, great. Couple of housekeeping items, could you guys give us some color on pension performance year-to-date?

This is Michael Lewis. Himanshu, starting with the pension as we talked about before is that the way things are typically done January timeframe, we have been watching performance of our asset in those classes particularly in U.S. and as we mentioned in entire conversations within our asset class groups we have a strategy to mitigate the duration between the asset classes between assets and liabilities. So although we haven’t publicly announced but we are on returns we are happy with the performance of the asset class we continue to watch the variables in terms of the discount rates and the strategy we have to build those assets, to pass those cash flows. So I think from our perspective our strategy is still the right strategy to have, we continue to watch and continue to monitor looking forward in terms of in terms of the unfunded issues with our clients. Himanshu Patel – JPMorgan: And just a related question on that. Be I -- I know there’s a GAAP measurement date, and kind of a I guess a (Investor) funding measurement date for minimum funding calculation purposes. Are they both December 30 for you guys, or is the funding date October 1?

We have two we have an October date and January date. Himanshu Patel – JPMorgan: Okay, great, that’s all I had. Thank you, guys.

Thanks Himanshu.

Your next question comes from the line of Joe Stauff with Susquehanna. Joe Stauff – Susquehanna: Hey, good morning. Thank you. Don, the exercise obviously is going on from all investors, in terms of your portfolio, and as you think about your global portfolio, can you expand -- you had mentioned, in response to an earlier question, can you just outline basically the pros and cons of both having a global footprint in this business versus having what is obviously a more -- or a smaller, or regionally focused presence? Just kind of outline the reasons why you think you should be global versus again, in a scenario going forward, where you trim up maybe some of the regional parts of your portfolio?

Yeah I think that is very most basic level. The customers in the number of cases and you can click many of the customers be it Japanese, Korean, European North American or souring programs on a global basis. And the reason they are doing that is because its mostly advantageous to them obviously in terms of their cost performance and the business that they can give out to the supply base. So there are a number of programs where when you go in the customer is asking you okay for my European production sites where will you manufacture for my North American production sites, where will you manufacture etcetera. So to be excluded just because we’re a regional player it doesn’t seem to be the right strategy from our perspective especially given the fact that we have a significant footprint around the world today. And especially given that one of the advantages to Visteon is that we have a footprint in the growth markets and that we’ve been there for an extended period of time. And its not a situation where in most cases there is a the rare instance but most cases we have a facility in the country or in the region where the OE’s is going to be or is located today. Joe Stauff – Susquehanna: Got it. And is there I guess any guess or parameters you can give us with respect to the response thing the number of RFPs going forward, in theory, that you could be excluded from because you don’t have a global footprint is x? Is there, would you be willing to give us an estimate or some level parameters with respect to that?

If I knew I would be happy to give it to you. That’s something we can take a look at, I don’t have that knowledge today. So I would be happy to do some more comment. Joe Stauff – Susquehanna: Okay, great. And just one follow-up relative to the earlier pension question. Have you guys ever provided the sensitivity associated with the expected returns that you have for that portfolio, and let’s say for every 1% under or over, what it means for the unfunded balance?

Hey Joe this is Michael Lewis again. We have provided sensitivity on accounting basis for instance for 25 basis point on the U.S. plan for a change in that discount rate it would be about $50 million change in unfunded position. But again that can be used as a parameter for the U.S. plan on an accounting basis relative to my other comments about how we use the assets and liabilities and funding itself we experience and life would be different because of how we are using our strategy on the viability and the duration action between the assets and liabilities. So while there’s an accounting sensitivity provided the funding itself its going to be a little bit different and keep in mind that any of the funding changes will also be amortized over time. Joe Stauff – Susquehanna: It’s always nebulous, but I’ll ask the question nonetheless. Thanks you guys, thanks a lot, guys.

Thanks Joe.

(Operator Instructions) Your next question comes from the line of Richard Haydon with Yield Capital Richard Haydon – Yield Capital: ?:

No it was not. Richard Haydon – Yield Capital: Okay so, okay that’s t the first. And second, the negative expected $6 billion hit in Thailand in the fourth quarter, what level of profitability is that an EBITDA number, or is it some other number?

Yes it’s a EBITDA number. Richard Haydon – Yield Capital: Okay. Thank you.

Welcome.

And there are no further questions at this time sir. Don Stebbins – Chairman and Chief Executive Officer and President: Thank you very much, we appreciate it we’ll be around to answer to any other questions you have throughout the day. Thanks (Brandy).

Thank you, sir. Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. We now disconnect at this time.