Delphi first-quarter operating loss slides to $534 million, but net income spikes to $556 million

By Caroline Salls

Pittsburgh, May 11 - Delphi Corp. recorded a $534 million operating loss for the first quarter of 2009 on $2.525 billion in total net sales, according to a 10-Q filed Monday with the Securities and Exchange Commission.

The first-quarter numbers were better in 2008, when the company posted a $267 million operating loss on $5.252 billion in total net sales.

However, the company reported $556 million in net income for the three months ended March 31, much better than the $577 million net loss posted for the three months ended March 31, 2008.

Delphi said the net income for the first quarter of 2009 was favorably impacted by $1.2 billion from the termination of benefits to salaried employees and retirees; $153 million from the company's amended global services and master restructuring agreements recognized in the first quarter of 2009; the absence of $79 million of previously capitalized fees paid to potential investors and their affiliates; $36 million of work-force transition program charges recorded during the first quarter of 2008; and $30 million related to the loss on sale of Delphi's global bearings business recorded during the first quarter of 2008.

Delphi had $650 million in cash and cash equivalents at March 31, compared with $959 million at Dec. 31.

According to the 10-Q, substantial uncertainty and a significant decline in capacity in the credit markets, the global economic downturn and the current economic climate in the automotive industry have adversely impacted Delphi's ability to develop a revised recapitalization plan and successfully emerge from bankruptcy.

Delphi said it is in talks with all of its stakeholders to formulate further plan modifications, and it has made changes to its business plan consistent with the extremely low volume production environment in the global automotive industry and depressed global capital and equity markets.

To address the likelihood of continued low U.S. automotive production volumes, Delphi said it is continuing to implement a number of cash conservation measures, including temporary layoffs and salaried benefit cuts for both active employees and retirees, delay of capital and other expenditures, permanent salaried work-force reductions and other cost saving measures to ensure adequate liquidity for operations until volumes recover or until the company is able to complete further restructuring efforts.

In addition, the company said it expects dramatically lower production volumes throughout the second and third quarters of 2009 given the recently announced production shutdowns by both General Motors Corp. and Chrysler, which Delphi said will likely result in significantly lower receivables and earnings and a subsequent reduction in cash flow toward the beginning of the third quarter.

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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.