Delphi '04 losses soar to $4.8 billion

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Last Friday's news...

"...Auto-parts supplier Delphi Corp. gave its president and chief operating officer a raise and a bonus Friday as an incentive to stay on despite the board's decision to hire someone else as chief executive.

Rodney O'Neal, who began his career at General Motors Corp. in 1971 and has been Delphi's president since 2003, will receive a $1.1-million base salary and an $800,000 bonus, the company said in a filing with the U.S. Securities and Exchange Commission. O'Neal's base salary was $850,000 in 2003, the last year it was available.

O'Neal also will be eligible for a lump-sum payment of $1 million if he isn't selected as CEO when Delphi's new CEO Robert S. (Steve) Miller steps down. Delphi said Thursday it hired Miller after an international search..."

Delphi '04 losses soar to $4.8 billion

Original estimate was just $35 million

July 1, 2005

BY JAMIE BUTTERS
FREE PRESS BUSINESS WRITER

After accounting for a large tax-related expense, Delphi Corp. posted a massive loss of $4.8 billion for 2004, the company reported Thursday. It was the U.S. auto industry's biggest annual loss since Ford Motor Co.'s 2001 loss of $5.45 billion.

Following an accounting scandal, the world's largest auto-parts maker restated its financial results going back to at least 2000. Troy-based Delphi reported the new figures to regulators Thursday and said it had completed a sweeping internal investigation of faulty accounting practices.

Although the discrepancy reflects major accounting problems, it should have no direct bearing on decisions made on employee head count, benefits or plants.

Initially, Delphi had estimated that it lost $35 million in 2004, but the company warned Wall Street in May that the tax-related charge would greatly reduce profits.

The restated financial results let the company try to put the accounting scandal behind it, although they have no impact on any federal investigations into past practices.

"A clean set of financials allows the company to focus on ongoing issues that are affecting the company," Joe Amaturo, an analyst with Calyon Securities (USA) Inc., told Bloomberg News. "The issues, like its high-cost structure, are quite substantial."

Delphi also said that it overstated the company's value by $265 million in 2001. It further said that 2002 net income was inflated by $24 million but that 2003's net losses were overstated by $46 million.

The company also said its loss in the first quarter of this year was $6 million less than originally estimated in May.

The large tax-related charge that increased Delphi's 2004 losses is similar to a couple of major write-offs at rival Visteon Corp., the Ford spin-off. As Delphi and Visteon repeatedly lost money in the United States, they built up credits they could use to lower taxes levied against profits earned in future years. But when the companies can see that they have no prospects for earning profits in the United States -- meaning no likelihood of using the so-called deferred tax assets -- they take a huge one-time charge to acknowledge the situation.

The charge was unrelated to the board of directors' internal accounting investigation, said spokeswoman Claudia Baucus. "We're done, and we're moving forward."

For the first three months of 2005, Delphi reported a loss of $403 million, or 73 cents a share, compared with a restated profit of $63 million, or 11 cents per share, in the first quarter of 2004.

The company originally estimated its first-quarter loss at $409 million, compared with a profit of $47 million in the first quarter of 2004.

The first three quarters of 2004 were restated, with improved results for the first and second quarters but worse results in the third quarter.

The restated -- but unaudited -- financial results were filed with the SEC after the market closed at 4 p.m. Thursday.

Delphi's first chairman and chief executive officer, J.T. Battenberg III, is to retire today, though he will serve one month as a transition consultant.

Battenberg's replacement is Robert (Steve) Miller, 63, a financial expert who assembled the Chrysler Corp. federal bailout in 1979.

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Delphi says it made $300 million less than reported

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http://www.delphi.com/