Delphi narrows losses, raises concerns

Delphi narrows losses, raises concerns

Delphi cuts its CEO’s bonus by $4 million.

DETROIT (AP) — Auto supplier Delphi Corp. said its fourth-quarter and year-end losses narrowed in 2007, partially as a result of a hefty tax benefit, but it warned it could have trouble obtaining the financing it needs to emerge from bankruptcy.

Troy-based Delphi, the former parts-making operation of General Motors Corp., posted a net loss of $542 million in the fourth quarter, compared with a net loss of $853 million in the same quarter of 2006. The results included a charge of $595 million to write down the assets of its discontinued operations businesses, along with a tax benefit of $703 million related to gains stemming from lower employee benefit liabilities.

Revenue fell to $5.3 billion from $5.5 billion in the year-ago quarter.

Non-GM revenue totaled $3.5 billion, or 65 percent of total revenue, compared with $3.3 billion, or 60 percent of revenue, in the 2006 quarter.

Delphi posted a net loss of $3.1 billion for the year, compared with a net loss of $5.5 billion in 2006. Revenues fell by $400 million to $22.3 billion for the year. Delphi said its non-GM revenues totaled $14 billion, up 4 percent from 2006. Non-GM business made up 63 percent of revenues, Delphi said.

“We continue to focus on emerging from Chapter 11 in a challenging environment,” said Delphi President and Chief Executive Rodney O’Neal.

Meanwhile, the Detroit Free Press reported that Delphi Corp. has cut the cash bonus it had planned to give O’Neal when the company exits bankruptcy by more than $4 million.

In a filing Tuesday with the Securities and Exchange Commission, the parts supplier said is slated to receive a $1-million bonus, down from $5.3 million. The cut follows an order from U.S. Bankruptcy Judge Robert Drain for Delphi to reduce the $80 million in cash bonuses it planned to give top executives to $16.5 million.

O’Neal also would receive $10.5 million in stock and options, which includes a $500,000 boost compared with Delphi’s plan before the judge required the changes.

Delphi, which was spun off by GM in 1999, filed for bankruptcy in 2005. It is trying to secure $6.1 billion in loans to emerge from bankruptcy by the end of the month but is having difficulty in the tight credit market. If the company does not secure the exit financing it needs by the end of March, equity investors led by hedge fund Appaloosa Management LP could abandon a crucial deal to invest as much as $2.55 billion.

In another court filing Tuesday, Delphi said “there can be no assurances that such exit financing can be obtained.”

GM may be forced to step in and provide some financial backing in order to assure its supply of parts.

Meanwhile, a federal judge has tentatively approved a $38.25 million settlement of a lawsuit filed by investors in the auto parts maker Delphi Corp. against the Deloitte Touche accounting firm.

Judge Gerald Rosen scheduled an April 29 hearing to ensure the settlement is fair, according to a Feb. 6 order. Deloitte Touche, which was Delphi’s outside accountant, agreed in December to make the payment as part of a $325 million settlement of investor claims of misconduct by Delphi.

A Securities and Exchange Commission investigation found Delphi manipulated its earnings from 2000 to 2004. Deloitte Touche has said settling was in the firm’s best interest.