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Delphi Posts Third Quarter Loss of $114 Million
TROY, Mich. -- Delphi Corp. lost $114 million in the third quarter of 2004 while generating $360 million in operating cash flow, according to J.T. Battenberg III, chairman, chief executive officer and president. "As we discussed on Oct. 5, the third quarter was a more challenging environment than we experienced in the first half of 2004, with increased commodity pressures, low production volumes, product launch issues and lower attrition," he said. "While we have near-term challenges, our long-term strategy remains on track and we were able to grow our non-GM sales to 47% of third quarter revenues and generate strong operating cash flow of $360 million -- more than double the amount in the third quarter of 2003. This strong cash flow generation, fueled by our non-GM revenue growth and aggressive cost reductions, allowed Delphi to strengthen its balance sheet and will continue to position Delphi for long-term value creation."Non-GM revenues, he added, increased to 47% of total revenues, up from 40% a year ago. Non-GM revenue for the quarter reached $3.2 billion, up 20% from last year's third quarter.The company's operating cash flow was $360 million, more than double the $177 million of a year ago, due to strong working capital and efficient capital spending. "In the face of near-term headwinds, we are engaging our entire workforce in efforts to identify additional opportunities to defer non-critical SG&A and discretionary spending," said Alan Dawes, Delphi vice chairman and chief financial officer. "In addition, Delphi is focusing on the effective management of our assets, working capital and capital expenditures and limiting our hiring. We are also looking at creative solutions across the entire supply chain to reduce overall costs and counteract some of the commodity market-driven cost increases. These actions will help Delphi continue to respond to the challenges we face during the remainder of the year."In the third quarter, Delphi made additional progress on restructuring activities and announced the completion of consolidation activities at its Automotive Holdings Group Flint West, Mich., manufacturing operation. All production has ceased at the Flint West facility and all the remaining employees at the site have chosen to either retire, flowback to General Motors or transfer to other opportunities within Delphi.Meanwhile, previously announced U.S. hourly work force reductions have totaled approximately 5,675, and total reductions are expected to exceed 6,000 through the end of 2004. "While we still have a good deal of work ahead of us, the steps we're taking toward completing our October 2003 restructuring plan will enhance our long-term value for Delphi's shareholders," Dawes said.For the fourth quarter, the company expects revenues of $7 billion to $7.2 billion and earnings ranging from a loss of $18 million to a positive $32 million. "Although we expect the challenges facing our industry to continue in the near-term, we continue to drive our cost reduction activities in this intensely challenging environment and expect to remain in line with our 2004 earnings trajectory in the fourth quarter," Dawes said."