( DPH) said that if talks with its unions and former parent
don't lead to an agreement to address its liabilities and the high cost of its U.S. operations, the company will consider other options, including filing for bankruptcy.
The company said last week that it drew down $1.5 billion of its $1.8 billion revolving credit line. Delphi said the draw would make additional cash available to finance its business during its discussions with its main labor groups and with GM regarding a restructuring of its U.S. segment.
"Despite significant U.S. financial challenges, we continue to experience growth and profitability in our international operations," Chairman and CEO Robert S. Miller said in a press release Monday. "While we are pleased with our regional performance, it is apparent that we must immediately address the U.S. legacy issues. We are engaging our major unions in discussions to seek modifications required to implement our restructuring plan, as well as with GM to seek related financial support."
If the talks don't produce a viable plan, Delphi could undertake "other strategic alternatives, including Chapter 11 reorganization for our U.S. businesses."
The company also reported its quarterly results Monday, posting second-quarter revenue of $7 billion and a loss of $338 million, or 60 cents a share. A year ago, Delphi had revenue of $7.5 billion, and earnings of $143 million, or 25 cents a share. Revenue to customers other than GM was $3.6 billion in the latest quarter, representing 51% of the total.
Analysts were looking for revenue of $7.1 billion in the second quarter, according to Thomson First Call.
Delphi's second-quarter cash flow used in operations was $305 million, including $625 million in pension contributions. Also during the quarter, Delphi reduced its workforce by about 2,100 positions, bringing year-to-date job cuts to about 3,600.
The company expects continued lower North American production levels in the third quarter. As a result, revenue is expected to range between $6.1 billion and $6.3 billion, below estimates for $6.6 billion, and margins will be lower compared with those in the first half of the year. Delphi expects cash flow from operations to be negative in the third quarter.
Shares of Delphi were dropping 21 cents to $4.75 in trading before the opening bell.