Delphi second-quarter operating loss improves to $365 million; GM production drop prompts sales decline

By Caroline Salls

Pittsburgh, Aug. 8 - Delphi Corp. reported a $365 million operating loss for the quarter ended June 30 on $5.234 billion in total net sales, according to a 10-Q filed with the Securities and Exchange Commission.

While the operating loss showed improvement over a $644 million operating loss reported for the second quarter of 2007, the total net sales fell from $6 billion for the quarter ended June 30, 2007.

According to a company news release, the second-quarter revenue decline was driven primarily by a 28% decrease in GM North America production volume, which included the impact of a work stoppage at a Tier 1 supplier and Delphi's ongoing divestiture of non-core businesses that primarily supplied GM North America.

The net loss for the second quarter of 2008 was $551 million, narrowing from an $821 million net loss posted in the same period of 2007.

The improvement in net loss stemmed from the absence of charges recorded in the second quarter of 2007 related to a Securities and ERISA multi-district litigation settlement and employee termination benefits, as well as other costs resulting from the exit of a manufacturing facility in Cadiz, Spain, Delphi said in the release.

Offsetting these items in the second quarter of this year were volume reductions, including the impact of the Tier 1 supplier work stoppage, a goodwill impairment charge and a loss on extinguishment of debt resulting from the refinancing of the company's debtor-in-possession credit facility.

Delphi also showed improvement in the first half of 2008, as the company recorded a $632 million operating loss for the first six months of the year, better than the $859 million operating loss posted in the first half of last year.

Meanwhile, total net sales in the first six months of 2008 were $10.486 billion, falling short of the $11.682 billion in total net sales reported for the first half of 2007.

The net loss for the first six months of this year was $1.14 billion, improved from a $1.354 billion first-half 2007 net loss.

Cash and cash equivalents on June 30 were $1.054 billion, compared with $1.036 billion at Dec. 31, 2007.

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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