Delphi attributes $788 million third-quarter net loss to idled employee contract costs

By Caroline Salls

Pittsburgh, Nov. 9 - Delphi Corp. reported a third-quarter net loss of $788 million on revenues of $6.28 billion, down from a net loss of $119 million on revenues of $6.64 billion in the same period of 2004, according to a company news release.

Included in the third-quarter 2005 net loss was $136 million of accrued contract costs of idled employees who were previously expected to either return to active service or depart through retirement or flowback to GM, the release said.

Non-GM revenues for the quarter ended Sept. 30 were $3.33 billion, up 6% from $3.15 billion in the third quarter of 2004.

Non-GM growth was more than offset by a 16% year-over-year decline in GM revenues, according to the release.

Third-quarter cash used in operations was $833 million, compared to $238 million of cash provided by operations in the same quarter of 2004.

According to the release, cash used in operations was negatively impacted by shorter supplier payment terms, principally in the United States.

"The sizable loss in this quarter only underscores the urgent need to address our U.S. labor cost issues," chairman and chief executive officer Robert S. "Steve" Miller said in the release.

"Delphi can not continue indefinitely to operate our facilities in the U.S., which lose a substantial amount of money, without being able to adjust our cost structure.

"The continued pressures Delphi faces from low GMNA production volumes, commodity price increases, pension and post-retirement health care cost increases, along with the cost of paying for idled workers, will only intensify our U.S. losses until we come up with a competitive, sustainable plan of reorganization for our U.S. operations through the Chapter 11 process."

Delphi, a Troy, Mich.-based automotive electronics manufacturer, filed for bankruptcy on Oct. 8 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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