Delphi posts $4.86 billion 2006 operating loss

By Caroline Salls

Pittsburgh, Feb. 27 - Delphi Corp. reported a $4.858 billion operating loss for 2006 on $26.392 billion in net sales, according to a 10-K filing with the Securities and Exchange Commission.

The figures show a decline from a $2.171 billion 2005 operating loss on net sales of $26.947 billion.

The net loss for 2006 was $5.464 billion, up from a $2.357 billion 2005 net loss.

"Despite a difficult 2006 calendar year with significant losses stemming from the challenges we are experiencing in our U.S. operations, we remain clearly focused on two key elements to ensure Delphi's long term success," chief executive officer and president Rodney O'Neal said in a company news release.

"First is meeting our customers' expectations with respect to innovation, quality, delivery and value. Second is transforming Delphi and emerging from Chapter 11 as a strong, competitive, global company.

"We are fully committed to addressing the remaining uncompetitive issues within our U.S. operations, and the challenges associated with completing our transformation and emerging from Chapter 11 business reorganization."

Chief financial officer Robert Dellinger said in the release, "Delphi's reported net loss of $5.5 billion for 2006 included $3.0 billion of charges related to the attrition of more than 20,000 traditional employees through the company's U.S. hourly special attrition programs.

"Excluding those charges, Delphi's 2006 net loss was approximately the same as the 2005 net loss of $2.4 billion. With that said, our losses are likely to continue until we completely and successfully address our high U.S. cost structure and complete all aspects of our transformation plan.

"Delphi's losses in 2006 were concentrated in the U.S. as we continued to see lower volumes, partially reflecting market share losses by GM, and commodity price increases, in addition to the charges associated with implementing our U.S. hourly attrition plans."

Delphi said its net loss also reflected revenue decreases stemming from lower General Motors North American vehicle production, coupled with continued increases of commodity costs.

Delphi said cash flow from operations was $43 million in 2006, down from $154 million in 2005.

In addition, at Dec. 31, Delphi had $1.7 billion of cash and cash equivalents, compared with $2.22 billion the year before.

According to the release, Delphi's net loss for the fourth quarter of 2006 was $853 million, on revenues of $6.4 billion.

Both figures also showed a decline from the fourth quarter of 2005, when the company reported an $828 million net loss on revenues of $6.8 billion.

Included in the 2006 fourth-quarter net loss were $200 million of non-cash impairment charges related to long-lived assets, the release said.

The fourth-quarter operating loss was $870 million, according to the 10-K.

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8, 2005 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 05-44481.

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