Exhibit 99 (a)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
Debtors:Delphi Corporation,etal.(1)
Case Number:Jointly Administered 05-44481 (RDD)
Monthly Operating Report for the Month Ended:
July 31, 2006
Debtors’ Address:
5725 Delphi Drive
Troy, Michigan 48098
Monthly Operating Loss:$505 million
Debtors’ Attorneys:
John Wm. Butler Jr. (JB 4711)
John K. Lyons (JL 4951)
Ron E. Meisler (RM 3026)
Skadden, Arps, Slate, Meagher & Flom LLP
333 West Wacker Drive
Suite 2100
Chicago, IL 60606
Telephone: (312) 407-0700
Facsimile: (312) 407-0411
And
Kayalyn A. Marafioti (KM 9632)
Thomas J. Matz (TM 5986)
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
Report Preparer:
The undersigned, having reviewed the attached report and being familiar with the Debtors’ financial affairs, verifies under the penalty of perjury that the information contained therein is complete, accurate and truthful to the best of my knowledge.(2)
| | | | | |
| | | |
| Date:August 31, 2006 | /s/ JOHN D. SHEEHAN | |
| | John D. Sheehan | |
| | Vice President and Chief Restructuring Officer | |
| |
| | |
| (1) | | See next page for a listing of Debtors by case number. |
| |
| (2) | | All amounts herein are unaudited and subject to revision. The Debtors reserve all rights to revise this report. |
DELPHI CORPORATION,etal.
MONTHLY OPERATING REPORT
| | | |
| (1) | | The Debtors in these jointly administered cases are as follows: |
| | | | | |
| | | Case |
| Debtor Name | | Number |
| |
| Delphi NY Holdings Corporation | | | 05-44480 | |
| Delphi Corporation | | | 05-44481 | |
| ASEC Manufacturing General Partnership | | | 05-44482 | |
| ASEC Sales General Partnership | | | 05-44484 | |
| Environmental Catalysts, LLC | | | 05-44503 | |
| Delphi Medical Systems Colorado Corporation | | | 05-44507 | |
| Delphi Medical Systems Texas Corporation | | | 05-44511 | |
| Delphi Medical Systems Corporation | | | 05-44529 | |
| Specialty Electronics International Ltd. | | | 05-44536 | |
| Specialty Electronics, Inc. | | | 05-44539 | |
| Delphi Liquidation Holding Company | | | 05-44542 | |
| Delphi Electronics (Holding) LLC | | | 05-44547 | |
| Delphi Technologies, Inc. | | | 05-44554 | |
| Delphi Automotive Systems Tennessee, Inc. | | | 05-44558 | |
| Delphi Mechatronic Systems, Inc. | | | 05-44567 | |
| Delphi Automotive Systems Risk Management Corporation | | | 05-44570 | |
| Exhaust Systems Corporation | | | 05-44573 | |
| Delphi China LLC | | | 05-44577 | |
| Delphi Automotive Systems Korea, Inc. | | | 05-44580 | |
| Delphi International Services, Inc. | | | 05-44583 | |
| Delphi Automotive Systems Thailand, Inc. | | | 05-44586 | |
| Delphi Automotive Systems International, Inc. | | | 05-44589 | |
| Delphi International Holdings Corporation | | | 05-44591 | |
| Delphi Automotive Systems Overseas Corporation | | | 05-44593 | |
| Delphi Automotive Systems (Holding), Inc. | | | 05-44596 | |
| Delco Electronics Overseas Corporation | | | 05-44610 | |
| Delphi Diesel Systems Corporation | | | 05-44612 | |
| Delphi LLC | | | 05-44615 | |
| Aspire, Inc. | | | 05-44618 | |
| Delphi Integrated Service Solutions, Inc. | | | 05-44623 | |
| Delphi Connection Systems | | | 05-44624 | |
| Packard Hughes Interconnect Company | | | 05-44626 | |
| DREAL, Inc. | | | 05-44627 | |
| Delphi Automotive Systems Services LLC | | | 05-44632 | |
| Delphi Services Holding Corporation | | | 05-44633 | |
| Delphi Automotive Systems Global (Holding), Inc. | | | 05-44636 | |
| Delphi Foreign Sales Corporation | | | 05-44638 | |
| Delphi Automotive Systems Human Resources LLC | | | 05-44639 | |
| Delphi Automotive Systems LLC | | | 05-44640 | |
| Delphi Furukawa Wiring Systems LLC | | | 05-47452 | |
| Delphi Receivables LLC | | | 05-47459 | |
| MobileAria, Inc. | | | 05-47474 | |
Case Number: 05-44481 (RDD) (Jointly Administered)
2
DELPHI CORPORATION,etal.
MONTHLY OPERATING REPORT
INDEX
| | | | | |
| Description | | | Page | |
| Condensed Combined Debtors-in-Possession Statement of Operations for the month ended July 31, 2006 and Year to Date January 1 to July 31, 2006 | | | 4 | |
| Condensed Combined Debtors-in-Possession Balance Sheet as of July 31, 2006 | | | 5 | |
| Condensed Combined Debtors-in-Possession Statement of Cash Flows for the month ended July 31, 2006 | | | 6 | |
| Notes to Monthly Operating Report | | | 7 | |
| Schedule of Payroll and Payroll Taxes Withheld and Incurred | | | 12 | |
| Schedule of Payroll Taxes Paid | | | 13 | |
| Schedule of Other Taxes Collected, Incurred and Paid | | | 15 | |
| Schedule of Disbursements | | | 17 | |
Case Number: 05-44481 (RDD) (Jointly Administered)
3
DELPHI CORPORATION,etal.
MONTHLY OPERATING REPORT
CONDENSED COMBINED DEBTORS-IN-POSSESSION STATEMENT OF OPERATIONS
(Non-filed entities, principally non-U.S. subsidiaries, excluded from Debtor group)
| | | | | | | | | |
| | | | | | | Year to Date | |
| | | Month Ended | | | January 1 to | |
| | | July 31, 2006 | | | July 31, 2006 | |
| | | (in millions) | |
| Net sales: | | | | | | | | |
| General Motors and affiliates | | $ | 450 | | | $ | 5,872 | |
| Other customers | | | 391 | | | | 4,013 | |
| Intercompany non-Debtor subsidiaries | | | 53 | | | | 361 | |
| | | | | | | |
| Total net sales | | | 894 | | | | 10,246 | |
| | | | | | | |
| | | | | | | | | |
| Operating expenses: | | | | | | | | |
| Cost of sales, excluding items listed below | | | 1,076 | | | | 10,332 | |
| U.S. employee special attrition program charges | | | 184 | | | | 2,089 | |
| Selling, general and administrative | | | 87 | | | | 613 | |
| Depreciation and amortization | | | 52 | | | | 384 | |
| | | | | | | |
| Total operating expenses | | | 1,399 | | | | 13,418 | |
| | | | | | | |
| | | | | | | | | |
| Operating loss | | | (505 | ) | | | (3,172 | ) |
| Interest expense (contractual interest expense was $43 million and $303 million, respectively) | | | (32 | ) | | | (210 | ) |
| Other income (expense), net | | | (1 | ) | | | (4 | ) |
| | | | | | | |
| Loss before reorganization items, income tax expense, equity income, and cumulative effect of accounting change | | | (538 | ) | | | (3,386 | ) |
| Reorganization items, net | | | — | | | | (25 | ) |
| Income tax expense | | | (1 | ) | | | (8 | ) |
| Equity income from non-consolidated subsidiaries, net of tax | | | 2 | | | | 29 | |
| Equity income from non-Debtor subsidiaries, net of tax | | | 3 | | | | 215 | |
| Cumulative effect of accounting change, net of tax | | | — | | | | 3 | |
| | | | | | | |
| | | | | | | | | |
| Net loss | | $ | (534 | ) | | $ | (3,172 | ) |
| | | | | | | |
The accompanying notes are an integral part of the financial statements.
Case Number: 05-44481 (RDD) (Jointly Administered)
4
DELPHI CORPORATION,etal.
MONTHLY OPERATING REPORT
CONDENSED COMBINED DEBTORS-IN-POSSESSION BALANCE SHEET
(Non-filed entities, principally non-U.S. subsidiaries, excluded from Debtor group)
| | | | | |
| | | July 31, 2006 | |
| | | (in millions) | |
ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 933 | |
| Restricted cash | | | 76 | |
| Accounts receivable, net: | | | | |
| General Motors and affiliates | | | 1,428 | |
| Other third parties | | | 1,395 | |
| Non-Debtor subsidiaries | | | 333 | |
| Notes receivable from non-Debtor subsidiaries | | | 355 | |
| Inventories, net: | | | | |
| Productive material, work-in-process and supplies | | | 967 | |
| Finished goods | | | 332 | |
| Prepaid expenses and other | | | 292 | |
| | | | |
| Total current assets | | | 6,111 | |
| | | | | |
| Long-term assets: | | | | |
| Property, net | | | 2,575 | |
| Investments in affiliates | | | 379 | |
| Investments in non-Debtor subsidiaries | | | 3,454 | |
| Goodwill | | | 152 | |
| Other intangible assets, net | | | 39 | |
| Pension intangible assets | | | 678 | |
| Other | | | 336 | |
| | | | |
| Total assets | | $ | 13,724 | |
| | | | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | |
| Current liabilities not subject to compromise: | | | | |
| Notes payable and secured debt in default | | $ | 2,496 | |
| Accounts payable | | | 1,098 | |
| Accounts payable to non-Debtor subsidiaries | | | 349 | |
| Accrued liabilities | | | 1,155 | |
| | | | |
| Total current liabilities not subject to compromise | | | 5,098 | |
| | | | | |
| Long-term liabilities not subject to compromise: | | | | |
| Debtor-in-possession financing | | | 250 | |
| Employee benefit plan obligations and other | | | 750 | |
| | | | |
| Total long-term liabilities not subject to compromise | | | 1,000 | |
| | | | | |
| Liabilities subject to compromise | | | 15,966 | |
| | | | |
| | | | | |
| Total liabilities | | | 22,064 | |
| | | | |
| | | | | |
| Stockholders’ deficit: | | | | |
| Common stock, $0.01 par value, 1,350 million shares authorized, 565 million shares issued | | | 6 | |
| Additional paid-in capital | | | 2,758 | |
| Accumulated deficit | | | (9,601 | ) |
| Minimum pension liability, Debtors only | | | (1,451 | ) |
| Treasury stock, at cost (3.2 million shares) | | | (52 | ) |
| | | | |
| Total stockholders’ deficit | | | (8,340 | ) |
| | | | |
| Total liabilities and stockholders’ deficit | | $ | 13,724 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
Case Number: 05-44481 (RDD) (Jointly Administered)
5
DELPHI CORPORATION,etal.
MONTHLY OPERATING REPORT
CONDENSED COMBINED DEBTORS-IN-POSSESSION STATEMENT OF CASH FLOWS
(Non-filed entities, principally non-U.S. subsidiaries, excluded from Debtor group)
| | | | | |
| | | Month Ended | |
| | | July 31, 2006 | |
| | | (in millions) | |
| Cash flows from operating activities: | | | | |
| Net loss | | $ | (534 | ) |
| Adjustments to reconcile net loss to net cash provided by operating activities: | | | | |
| Depreciation and amortization | | | 52 | |
| Pension and other postretirement benefit expenses | | | 124 | |
| Equity income from unconsolidated subsidiaries, net of tax | | | (2 | ) |
| Equity income from non-Debtor subsidiaries, net of tax | | | (3 | ) |
| U.S. employee special attrition program charges | | | 184 | |
| Changes in operating assets and liabilities: | | | | |
| Accounts receivable, net | | | 752 | |
| Inventories, net | | | (84 | ) |
| Prepaid expenses and other | | | (37 | ) |
| Accounts payable, accrued and other long-term liabilities | | | (340 | ) |
| Pension contributions | | | (60 | ) |
| Other postretirement benefit payments | | | (20 | ) |
| Receipts (payments) for reorganization items, net | | | (10 | ) |
| Other | | | 83 | |
| | | | |
| Net cash provided by in operating activities | | | 105 | |
| | | | |
| | | | | |
| Cash flows from investing activities: | | | | |
| Capital expenditures | | | (32 | ) |
| Other | | | 12 | |
| | | | |
| Net cash used in investing activities | | | (20 | ) |
| | | | |
| | | | | |
| Cash flows from financing activities: | | | | |
| Repayments under cash overdraft | | | (1 | ) |
| Repayments of borrowings under other debt | | | (1 | ) |
| | | | |
| Net cash used in financing activities | | | (2 | ) |
| | | | |
| | | | | |
| Increase in cash and cash equivalents | | | 83 | |
| Cash and cash equivalents at beginning of period | | | 850 | |
| | | | |
| Cash and cash equivalents at end of period | | $ | 933 | |
| | | | |
The accompanying notes are an integral part of the financial statements.
Case Number: 05-44481 (RDD) (Jointly Administered)
6
DELPHI CORPORATION,et al.
NOTES TO MONTHLY OPERATING REPORT
1. Background and Organization
General —Delphi Corporation (“Delphi” or the “Company”) is a world-leading supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology.
Chapter 11 Reorganization Cases —On October 8, 2005, Delphi and certain of its United States (“U.S.”) subsidiaries (the “Initial Filers”) filed voluntary petitions for relief under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Court”), and on October 14, 2005, three additional U.S. subsidiaries of Delphi (collectively with the Initial Filers, the “Debtors”) filed voluntary petitions for relief under the Bankruptcy Code (the Debtors’ October 8, 2005 and October 14, 2005 filings are referred to herein collectively as the “Chapter 11 Filings”). See the second page of this report for a listing of the Debtors and case number information. The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. Delphi’s non-U.S. subsidiaries were not included in the filings and will continue their business operations without supervision from U.S. courts. On October 17, 2005 the Office of the United States Trustee for the Southern District of New York appointed a statutory committee of unsecured creditors. The composition of the creditors’ committee was subsequently changed. On March 22, 2006, the Court granted a motion to create an equity committee to represent the interests of Delphi’s stock owners and on April 28, 2006, the U.S. Trustee appointed a committee of equity security holders in these chapter 11 cases. The equity committee’s composition was also later changed.
On January 20, 2006, the Debtors filed with the Court the Schedules of Assets and Liabilities and Statements of Financial Affairs (the “Schedules and Statements”), as required by the Bankruptcy Code. In addition, on February 1, 2006 and April 18, 2006, the Debtors filed certain amendments to the Schedules and Statements.
On February 3, 2006, the United States Trustee convened a meeting of creditors of Delphi pursuant to section 341 of the Bankruptcy Code. A section 341 meeting is a statutorily mandated meeting of creditors, presided over by the United States Trustee, at which a debtor’s representatives appear. All creditors of the debtor are entitled to attend a section 341 meeting. At the conclusion of the section 341 meeting, the United States Trustee closed the meeting.
On April 12, 2006, the Court established a bar date of July 31, 2006 for filing proofs of claim against the Debtors’ estates.
2. Basis of Presentation
Condensed Combined Debtor-in-Possession Financial Statements —The financial statements and supplemental information contained herein are unaudited, preliminary and may not comply with generally accepted accounting principles in the United States of America (“U.S. GAAP”), in all material respects. In addition, the financial statements and supplemental information contained herein represent the condensed combined financial information for the Debtors only. Delphi’s non-Debtor subsidiaries are treated as non-consolidated subsidiaries in the attached financial statements and as such, their net income (loss) is included as “Equity income from non-Debtor subsidiaries, net of tax” in the statement of operations and their net assets are included as “Investments in non-Debtor subsidiaries” in the balance sheet.
American Institute of Certified Public Accountants Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code” (“SOP 90-7”), which is applicable to companies in chapter 11, generally does not change the manner in which financial statements are prepared. It does require, however, that the financial statements for periods subsequent to the filing of the chapter 11 petition distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. The Debtors’ financial statements contained herein have been prepared in accordance with the guidance in SOP 90-7.
The unaudited combined financial statements have been derived from the books and records of the Debtors. This information, however, has not been subject to procedures that would typically be applied to financial information presented in accordance with U.S. GAAP, and upon the application of such procedures (such as tests for asset impairment), the Debtors believe that the financial information could be subject to changes, and these changes could be material. The information furnished in this report includes primarily normal recurring adjustments but does not include all of the adjustments that would typically be made for quarterly financial statements in accordance with
Case Number: 05-44481 (RDD) (Jointly Administered)
7
DELPHI CORPORATION,et al.
NOTES TO MONTHLY OPERATING REPORT
U.S. GAAP. The amounts presented in the statement of operations for the year to date period January 1 to July 31, 2006 and other footnote disclosures include certain adjustments that were identified as a result of the completion of the Company’s consolidated financial statements for the quarters ended March 31, 2006 and June 30, 2006. As of July 31, 2006, certain prepaid balances and pre- and postpetition trade accounts payable balances are subject to further review and reclassification. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, this report should be read in conjunction with our consolidated financial statements and notes thereto included in our 2005 Annual Report on Form 10-K and our 2006 Quarterly Reports on Form 10-Q that were filed with the United States Securities and Exchange Commission.
The results of operations contained herein are not necessarily indicative of results which may be expected from any other period or for the full year and may not necessarily reflect the consolidated results of operations, financial position and cash flows of the Debtors in the future.
Intercompany Transactions —Intercompany transactions between Debtors have been eliminated in the financial statements contained herein. Intercompany transactions with the Debtors’ non-Debtor subsidiaries have not been eliminated in the financial statements and are reflected as intercompany receivables, loans, and payables.
General Motors and Affiliates—Includes activity with General Motors Corporation (“GM”) and its consolidated subsidiaries. Activity with GM’s non-consolidated subsidiaries (such as GM Shanghai) and activity with other Tier 1 suppliers who sell directly to GM is classified as other (non-GM) customer activity.
Property —Includes property, plant, and equipment and is recorded at cost net of accumulated depreciation.
Special Attrition Program —On March 22, 2006, Delphi, GM and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) agreed on a special attrition program, and on May 5, 2006, the Court entered an order approving the motion with certain modifications. The order was subsequently amended on May 12, 2006. The special attrition program offers, among other things, certain eligible Delphi U.S. hourly employees represented by the UAW normal and early voluntary retirements with a lump sum incentive payment of $35,000, which is being paid by GM. The program also provides a pre-retirement program and transfer to and retirement from GM. On June 9, 2006, Delphi, GM, and the UAW subsequently agreed on a supplemental agreement that will expand the special attrition program to include a pre-retirement program for employees with 26 years of credited service and provide buyout payments which, depending on the amount of seniority or credited service, would range from $40,000 to $140,000. GM has agreed to pay one-half of these buyout amounts. The supplemental agreement was approved by the Court on June 29, 2006 and on July 7, 2006, the Court entered an order approving the motion. Approximately 21,700 U.S. hourly employees represented by the UAW are eligible for buyout payments, with approximately 14,700 of those employees eligible to participate in the retirement and pre-retirement programs. As of July 31, 2006, approximately 12,700 employees had elected to participate in the special attrition program. The application period for eligible employees to elect an option under the supplemental agreement ends September 15, 2006.
On June 16, 2006, Delphi, GM, and the Industrial Division of the Communication Workers of America, AFL-CIO, CLC (“IUE-CWA”) reached agreement on the terms of a special attrition program which mirrors in all material respects the UAW special attrition program taken together with the UAW supplemental agreement. GM has agreed to pay the incentive payment of $35,000 and to pay one-half of the buyout payments, except for employees at Delphi’s New Brunswick operations, with respect to whom previously agreed upon terms apply. The IUE-CWA special attrition program was approved by the Court on June 29, 2006 and on July 7, 2006, the Court entered an order approving the motion. Approximately 7,500 U.S. hourly employees represented by the IUE-CWA are eligible for buyout payments, with approximately 3,200 of those employees eligible to participate in the retirement and pre-retirement programs. As of July 31, 2006, approximately 2,400 employees had elected to participate in the special attrition program. The application period for eligible employees to elect an option under the special attrition program ended August 9, 2006.
The Debtors have recorded postemployment wage and benefit charges in “U.S. employee special attrition program charges” of approximately $184 million during July 2006 and $576 million year to date for the pre-retirement and buyout portions of the cost of the special attrition programs for UAW and IUE-CWA-represented hourly employees who had elected to participate in the special attrition program as of July 31, 2006. In addition, the
Case Number: 05-44481 (RDD) (Jointly Administered)
8
DELPHI CORPORATION,et al.
NOTES TO MONTHLY OPERATING REPORT
Debtors recorded a net pension and postemployment benefit curtailment charge in “U.S. employee special attrition program charges” of $1.5 billion year to date, primarily due to reductions in anticipated future service as a result of the retirements. The Debtors expect to incur additional pension and postemployment benefit curtailments as additional employees elect to participate in the special attrition program. Due to the complex nature of the calculation of these curtailments, however, they will only be recorded at quarter-end.
As a result of the special attrition program, the Debtors determined that previously recorded accruals for postemployment benefits, representing the future cash expenditures expected during the period between the idling of affected employees and the time when such employees are redeployed, retire, or otherwise terminate their employment, were no longer necessary and accordingly were released. The Debtors have recorded credits in “Cost of Sales” of approximately $103 million year to date as a result of the release of previously recorded postemployment benefit accruals.
As discussed above, GM agreed to pay the lump sum incentive payments of $35,000 per eligible employee, and one-half of the buyout payments ranging from $40,000 to $140,000 per eligible employee, depending on the amount of seniority or credited service. Since, however, all of the underlying employee payroll and related data resides in the Debtors’ recordkeeping systems, Delphi in conjunction with GM determined that the most practical and expeditious way to make these payments timely would be for the Debtors to pay their employees directly and invoice GM for reimbursement of the amounts paid. As of July 31, 2006, all amounts paid had been reimbursed by GM, with the exception of approximately $0.4 million related to certain employer payroll taxes, the allocation of payment of which remains under discussion between the parties.
Contractual Interest Expense—Contractual interest expense represents amounts due under the contractual terms of outstanding debt during the month, including unsecured debt subject to compromise for which interest expense is not recognized in the income statement in accordance with the provisions of SOP 90-7.
Taxes —Delphi accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” and recognizes current and deferred income tax assets and liabilities based upon all events that have been recognized in the consolidated financial statements as measured by the enacted tax laws. Due to the Company’s history of U.S. losses over the past years, combined with the deterioration in its current U.S. operating outlook, during the fourth quarter of 2004, Delphi established a 100% valuation allowance against its U.S. deferred tax assets. As a result, Delphi discontinued recognizing income tax benefits for net operating losses incurred in periods subsequent to December 31, 2004 and continues to record a 100% valuation allowance against all U.S. deferred tax assets.
The Debtors have received authorization, but not direction, to pay sales, use, trust fund, and certain other taxes in the normal course. Accordingly, the Debtors have paid the applicable taxes when due. See the schedules of payroll and other taxes paid for additional information regarding taxes paid.
3. Debtor-in-Possession (“DIP”) Financing
On October 14, 2005, Delphi entered into a Revolving Credit, Term Loan and Guaranty Agreement (the “DIP Credit Facility”) to borrow up to $2.0 billion from a syndicate of lenders. The DIP Credit Facility consists of a $1,750 million revolving facility and a $250 million term loan facility (collectively, the “DIP Loans”). The DIP Credit Facility contains various representations, warranties and covenants by the Debtors that are customary for transactions of this nature, including (without limitation) reporting requirements and maintenance of financial covenants.
On October 27, 2005, Delphi entered into the First Amendment to the DIP Credit Facility (the “First Amendment”). Under the terms of the First Amendment the Company has agreed, among other things, to mandatory prepayments from Asset Sales and Recovery Events (each as defined in the First Amendment). The First Amendment also modified the terms of the Borrowing Base (as defined in the DIP Credit Facility) computation, which limits the amount outstanding under the DIP Loans at any one time.
On October 28, 2005, the Court granted, on a final basis, the Debtors’ motion for approval of the DIP financing order. The DIP financing order granted final approval of the DIP Credit Facility, as amended, and final approval of an adequate protection package for certain prepetition facilities. Following approval of the final DIP financing order, the Debtors have access to $2 billion in DIP financing subject to the terms and conditions set forth in the DIP
Case Number: 05-44481 (RDD) (Jointly Administered)
9
DELPHI CORPORATION,et al.
NOTES TO MONTHLY OPERATING REPORT
financing documents, as amended, and $2.5 billion under certain prepetition facilities, for a total financing of $4.5 billion.
On November 21, 2005, Delphi entered into an Amended and Restated Revolving Credit, Term Loan and Guaranty Agreement (the “Amended DIP Credit Facility”) which, among other things, adds new lenders to the DIP Credit Facility, increases the interest rate that was provided under the DIP Credit Facility, and alters the provisions regarding future amendments. The Amended DIP Credit Facility carries an interest rate at the option of Delphi of either (i) the Administrative Agent’s Alternate Base Rate (as defined in the Amended DIP Credit Facility) plus 1.75% or (ii) 2.75% above the Eurodollar base rate, which is the London Interbank Borrowing Rate (“LIBOR”). The LIBOR interest rate period can be set at a one, three, or six-month period as selected by Delphi in accordance with the terms of the Amended DIP Credit Facility. Accordingly, the interest rate will fluctuate based on the movement of the Alternate Base Rate or LIBOR through the term of the DIP Loans. The Amended DIP Credit Facility will expire on the earlier of October 8, 2007 and the date of substantial consummation of a Reorganization Plan that is confirmed pursuant to an order of the Court. Borrowings under the Amended DIP Credit Facility are prepayable at Delphi’s option without premium or penalty.
Also on November 21, 2005, the $250 million term loan was funded and the Company elected to pay interest at LIBOR plus 2.75% for a six month period. On May 22, 2006 the Company elected to pay interest at LIBOR plus 2.75% for a one month period and has continued to elect LIBOR plus 2.75% for a one month period each subsequent monthly period. As of July 31, 2006, there were no amounts outstanding under the DIP revolving facility, but the Company had approximately $75 million in letters of credit outstanding under the DIP revolving facility as of that date.
4. Reorganization Items
SOP 90-7 requires reorganization items such as realized gains and losses from the settlement of prepetition liabilities, provisions for losses resulting from the reorganization and restructuring of the business, as well as professional fees directly related to the process of reorganizing the Debtors under chapter 11, to be separately disclosed. The Debtors’ reorganization items consist of the following:
| | | | | | | | | |
| | | | | | | Year to Date | |
| | | Month Ended | | | January 1 to | |
| | | July 31, 2006 | | | July 31, 2006 | |
| | | (in millions) | |
| Professional fees directly related to reorganization | | $ | (9 | ) | | $ | (76 | ) |
| Interest income | | | 9 | | | | 48 | |
| Gain on settlement of prepetition liabilities | | | — | | | | 3 | |
| | | | | | | |
| Total Reorganization Items | | $ | — | | | $ | (25 | ) |
| | | | | | | |
Professional fees directly related to the reorganization (“Professional Fees”) include fees and reimbursable expenses associated with advisors to the Debtors, unsecured creditors, secured creditors, and unions. Professional Fees for the month ended July 31, 2006 were estimated by the Debtors and will be reconciled to actual invoices when received.
5. Liabilities Subject To Compromise
As a result of the Chapter 11 Filings, the payment of prepetition indebtedness is subject to compromise or other treatment under a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-chapter 11 liabilities are stayed. Although prepetition claims are generally stayed, at hearings held in mid October 2005 and November 2005, the Court granted final approval of the Debtors’ “first day” motions generally designed to stabilize the Debtors’ operations and covering, among other things, human capital obligations, supplier relations, customer relations, business operations, tax matters, cash management, utilities, case management, and retention of professionals.
The Debtors have been paying and intend to continue to pay undisputed postpetition claims in the ordinary course of business. In addition, the Debtors may reject prepetition executory contracts and unexpired leases with respect to the Debtors’ operations with the approval of the Court. Damages resulting from rejection of executory contracts and unexpired leases are treated as general unsecured claims and will be classified as liabilities subject to
Case Number: 05-44481 (RDD) (Jointly Administered)
10
DELPHI CORPORATION,et al.
NOTES TO MONTHLY OPERATING REPORT
compromise. On April 12, 2006, the Court entered an order establishing July 31, 2006 as the bar date. The bar date is the date by which claims against the Debtors arising prior to the Debtors’ Chapter 11 Filings must be filed if the claimants wish to receive any distribution in the chapter 11 cases. On April 17, 2006, the Debtors commenced notification, including publication, to all known actual and potential creditors informing them of the bar date and the required procedures with respect to the filing of proofs of claim with the Court. Any differences between claim amounts listed by the Debtors in their Schedules of Assets and Liabilities (as amended) and claims filed by creditors will be investigated and, if necessary, the Court will make the final determination as to the amount, nature, and validity of claims. The determination of how liabilities will ultimately be settled and treated cannot be made until the Court approves a chapter 11 plan of reorganization. Accordingly, the ultimate amount of such liabilities is not determinable at this time. Classification for purposes of these financial statements of any prepetition liabilities on any basis other than liabilities subject to compromise is not an admission against interest or legal conclusion by the Debtors as to the manner of classification, treatment, allowance, or payment in the Debtors’ chapter 11 cases, including in connection with any plan of reorganization that may be confirmed by the Court and that may become effective pursuant to the Court’s order.
SOP 90-7 requires prepetition liabilities that are subject to compromise to be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. The amounts currently classified as liabilities subject to compromise may be subject to future adjustments depending on Court actions, further developments with respect to disputed claims, determinations of the secured status of certain claims, the values of any collateral securing such claims, or other events. Liabilities subject to compromise consist of the following:
| | | | | |
| | | July 31, 2006 | |
| | | (in millions) | |
| Pension obligations | | $ | 4,201 | |
| Postretirement obligations other than pensions, including amounts payable to GM | | | 7,771 | |
| Debt and notes payable | | | 2,460 | |
| Accounts payable | | | 858 | |
| Other | | | 676 | |
| | | | |
| Total Liabilities Subject to Compromise | | $ | 15,966 | |
| | | | |
6. Postpetition Accounts Payable
To the best of the Debtors’ knowledge, all undisputed postpetition accounts payable have been and are being paid under agreed-upon payment terms.
Case Number: 05-44481 (RDD) (Jointly Administered)
11
DELPHI CORPORATION,etal.
SCHEDULE OF PAYROLL AND PAYROLL TAXES WITHHELD AND INCURRED
MONTH ENDED JULY 31, 2006
| | | | | | | | | | | |
| | | | | Employee Payroll Taxes | | Employer Payroll Taxes |
| Gross Wages Paid | | Withheld | | Owed |
| |
| $ | 296,253,910 | | | $ | 86,620,900 | | | $ | 23,794,399 | |
| |
| | |
| Note: | | As disclosed in Note 2 “Basis of Presentation — Special Attrition Program,” certain eligible Delphi U.S. hourly employees represented by the UAW and the IUE-CWA received lump sum incentive payments or buyout payments. These payments were made by Delphi and are wholly or partially reimbursed by GM, and are included in the schedule above. |
Case Number: 05-44481 (RDD) (Jointly Administered)
12
DELPHI CORPORATION,etal.
SCHEDULE OF PAYROLL TAXES PAID
MONTH ENDED JULY 31, 2006
| | | | | |
| Payee | | Payroll Taxes Paid | |
| |
| Internal Revenue Service | | $ | 101,821,603 | |
| State of Michigan | | | 4,265,475 | |
| City of Flint, MI | | | 221,424 | |
| City of Saginaw, MI | | | 183,341 | |
| City of Grand Rapids, MI | | | 21,356 | |
| City of Walker, MI | | | 6,770 | |
| City of Detroit, MI | | | 3,445 | |
| City of Pontiac, MI | | | 476 | |
| City of Lansing, MI | | | 90 | |
| State of Ohio | | | 3,447,491 | |
| City of Dayton, OH | | | 416,802 | |
| City of Kettering, OH | | | 156,066 | |
| City of Moraine, OH | | | 155,004 | |
| City of Warren, OH | | | 125,702 | |
| City of Columbus, OH | | | 97,681 | |
| City of Vandalia, OH | | | 66,672 | |
| City of Youngstown, OH | | | 64,028 | |
| Ohio School District | | | 43,298 | |
| City of Niles, OH | | | 41,432 | |
| City of Norwalk, OH | | | 9,953 | |
| City of Port Clinton, OH | | | 7,749 | |
| City of Huron, OH | | | 6,604 | |
| City of Hubbard, OH | | | 6,535 | |
| City of Bellevue, OH | | | 6,036 | |
| City of Trotwood, OH | | | 4,499 | |
| City of Rita, OH | | | 4,342 | |
| City of Newton Falls, OH | | | 2,266 | |
| City of Dublin, OH | | | 2,204 | |
| City of Lordstown, OH | | | 1,111 | |
| City of Xenia, OH | | | 1,017 | |
| City of Toledo, OH | | | 963 | |
| City of Hamilton, OH | | | 905 | |
| City of Cincinnati, OH | | | 539 | |
| City of Lorain, OH | | | 361 | |
| City of Canton, OH | | | 294 | |
| City of Springfield, OH | | | 271 | |
| City of Ontario, OH | | | 217 | |
| City of Akron, OH | | | 165 | |
| City of Fairfield, OH | | | 164 | |
| City of Reading, OH | | | 87 | |
| City of W Carrollton, OH | | | 32 | |
| State of New York | | | 2,393,257 | |
| State of Indiana | | | 2,203,952 | |
| Allen County, IN | | | 103 | |
| State of Alabama | | | 1,003,134 | |
| City of Gadsden, AL | | | 16,585 | |
| State of Wisconsin | | | 899,514 | |
| State of Georgia | | | 235,400 | |
| State of Mississippi | | | 119,519 | |
| State of California | | | 90,659 | |
| State of New Jersey | | | 79,605 | |
| State of Pennsylvania | | | 46,383 | |
| City of Philadelphia, PA | | | 257 | |
| City of Towamencin, PA | | | 36 | |
| State of Kansas | | | 38,085 | |
| State of Illinois | | | 22,791 | |
| State of Colorado | | | 21,189 | |
| City of Denver, CO | | | 238 | |
Case Number: 05-44481 (RDD) (Jointly Administered)
13
DELPHI CORPORATION,etal.
SCHEDULE OF PAYROLL TAXES PAID
MONTH ENDED JULY 31, 2006
| | | | | |
| Payee | | Payroll Taxes Paid | |
| |
| State of South Carolina | | $ | 10,276 | |
| State of Texas | | | 6,386 | |
| State of Oregon | | | 4,392 | |
| State of Oklahoma | | | 3,878 | |
| State of Maryland | | | 3,748 | |
| State of Kentucky | | | 3,326 | |
| City of Bowling Green, KY | | | 398 | |
| State of Missouri | | | 2,727 | |
| City of Kansas City, MO | | | 1,567 | |
| State of North Carolina | | | 2,491 | |
| State of Virginia | | | 2,483 | |
| State of Utah | | | 1,644 | |
| State of West Virginia | | | 1,383 | |
| State of Minnesota | | | 1,213 | |
| State of Louisiana | | | 1,020 | |
| State of Arizona | | | 952 | |
| State of Connecticut | | | 758 | |
| State of Arkansas | | | 719 | |
| State of Delaware | | | 247 | |
| State of Washington | | | 194 | |
| State of Iowa | | | 3 | |
| Inland Revenue Service (UK) | | | 705,798 | |
| Country of Switzerland | | | 6,005 | |
| | | | |
| Total | | $ | 119,126,785 | |
| | | | |
Case Number: 05-44481 (RDD) (Jointly Administered)
14
DELPHI CORPORATION,etal.
SCHEDULE OF OTHER TAXES COLLECTED, INCURRED AND PAID
MONTH ENDED JULY 31, 2006
| | | | | | | | | | | |
| Taxing Jurisdiction | | Tax Type | | Tax Due | | Tax Paid |
| |
| Saginaw, Michigan | | Personal Property | | $ | 1,270,624 | | | $ | 1,270,624 | |
| Flint, Michigan | | Personal Property | | | 1,119,855 | | | | 1,119,855 | |
| Torrington, Connecticut | | Personal Property | | | 1,817 | | | | 1,817 | |
| Bristol, Connecticut | | Personal Property | | | 1,700 | | | | 1,700 | |
| Berlin, Connecticut | | Personal Property | | | 1,576 | | | | 1,576 | |
| Salisbury, Connecticut | | Personal Property | | | 1,541 | | | | 1,541 | |
| Thomaston, Connecticut | | Personal Property | | | 1,292 | | | | 1,292 | |
| Waterbury, Connecticut | | Personal Property | | | 1,220 | | | | 1,220 | |
| Royal Oak, Michigan | | Personal Property | | | 1,131 | | | | 1,131 | |
| Norwich, Connecticut | | Personal Property | | | 1,085 | | | | 1,085 | |
| Traverse City, Michigan | | Personal Property | | | 982 | | | | 982 | |
| Ann Arbor, Michigan | | Personal Property | | | 912 | | | | 912 | |
| Naugatuck, Connecticut | | Personal Property | | | 441 | | | | 441 | |
| Burlington, Massachusetts | | Personal Property | | | 266 | | | | 266 | |
| Southington, Connecticut | | Personal Property | | | 166 | | | | 166 | |
| South Windsor, Connecticut | | Personal Property | | | 141 | | | | 141 | |
| Chester, Connecticut | | Personal Property | | | 131 | | | | 131 | |
| Pontiac, Michigan | | Personal Property | | | 43 | | | | 43 | |
| Derby, Connecticut | | Personal Property | | | 13 | | | | 13 | |
| Watertown, Connecticut | | Personal Property | | | 4 | | | | 4 | |
| Flint, Michigan | | Real Property | | | 518,688 | | | | 518,688 | |
| Rochester, New York | | Real Property | | | 467,271 | | | | 467,271 | |
| Saginaw, Michigan | | Real Property | | | 354,427 | | | | 354,427 | |
| Montgomery County, Ohio | | Real Property | | | 190,660 | | | | 190,660 | |
| Trumbull County, Ohio | | Real Property | | | 100,353 | | | | 100,353 | |
| Erie County, Ohio | | Real Property | | | 28,663 | | | | 28,663 | |
| Portage County, Ohio | | Real Property | | | 5,567 | | | | 5,567 | |
| State of Ohio | | Use | | | 531,284 | | | | 531,284 | |
| State of Michigan | | Use | | | 422,096 | | | | 422,096 | |
| State of Indiana | | Use | | | 198,346 | | | | 198,346 | |
| State of New York | | Use | | | 119,553 | | | | 119,553 | |
| Limestone County, Alabama (Payee ALATAX - Tax Trust Account) | | Use | | | 35,087 | | | | 35,087 | |
| State of New Jersey | | Use | | | 31,628 | | | | 31,628 | |
| State of Texas | | Use | | | 25,570 | | | | 25,570 | |
| State of Wisconsin | | Use | | | 24,401 | | | | 24,401 | |
| State of Mississippi | | Use | | | 14,068 | | | | 14,068 | |
| State of Georgia | | Use | | | 7,733 | | | | 7,733 | |
| Gadsden, Alabama (Payee ALATAX - Tax Trust Account) | | Use | | | 4,718 | | | | 4,718 | |
| State of Illinois | | Use | | | 1,649 | | | | 1,649 | |
| Etowah County, Alabama (Payee ALATAX - Tax Trust Account) | | Use | | | 1,021 | | | | 1,021 | |
| Colorado Department of Revenue | | Use | | | 443 | | | | 443 | |
| Tuscaloosa County, Alabama | | Use | | | 98 | | | | 98 | |
| Tuscaloosa, Alabama | | Use | | | 37 | | | | 37 | |
| State of Ohio | | Kilowatt Hour | | | 74,461 | | | | 74,461 | |
| State of Alabama | | Consumer Use | | | 36,012 | | | | 36,012 | |
| State of Alabama | | Seller's Use | | | 19,404 | | | | 19,404 | |
| State of Texas | | Sales | | | 4,034 | | | | 4,034 | |
| Board of Equalization, State of California | | Sales | | | 1,031 | | | | 1,031 | |
| State of Illinois | | Sales | | | 957 | | | | 957 | |
| Department of Revenue, Colorado | | Sales | | | 46 | | | | 46 | |
| State of Pennsylvania | | Sales | | | 15 | | | | 15 | |
Case Number: 05-44481 (RDD) (Jointly Administered)
15
DELPHI CORPORATION,etal.
SCHEDULE OF OTHER TAXES COLLECTED, INCURRED AND PAID
MONTH ENDED JULY 31, 2006
| | | | | | | | | | | |
| Taxing Jurisdiction | | Tax Type | | Tax Due | | | Tax Paid | |
| |
| Board of Equalization, State of California | | Sales & Use | | $ | 1,003 | | | $ | 1,003 | |
| Department of Revenue, South Carolina | | Sales & Use | | | 53 | | | | 53 | |
| State of Washington | | Business and Occupation | | | 261 | | | | 261 | |
| Department of Revenue, Colorado | | Utility | | | 211 | | | | 211 | |
| Oklahoma Insurance Department | | Surplus Lines Insurance | | | 785 | | | | — | |
| | | | | |
| Total | | | | $ | 5,626,574 | | | $ | 5,625,789 | |
| | | | | |
| | |
| Note 1: | | The amounts listed above for tax due and tax paid include postpetition taxes and only those prepetition taxes for which the Debtors have received Court authorization to pay. Accordingly, certain prepetition taxes (primarily on real and personal property) that the Debtors do not have authority to pay are not included in the schedule above. Such prepetition taxes are included in the balance sheet as part of “Liabilities Subject to Compromise.” |
| |
| Note 2: | | Certain Debtors also pay transaction taxes such as value added tax (“VAT”) to certain foreign countries based upon the purchase or supply of goods or services within the country and the importation of goods into the country from outside the country. For the purchase of goods or services in certain foreign countries, VAT may either be collected by the supplier from the Debtors or paid directly by the Debtors through self-assessment. For the supply of goods or services in certain foreign countries, the Debtors may collect VAT from the customers and remit the tax to the foreign governments. Upon importation in certain countries, VAT may be paid by the Debtors. In most cases, VAT is recoverable either as an input VAT credit or as a refund. The process of calculating VAT owed or refundable is a complex process of netting VAT paid, collected, and remitted. To the best of the Company’s knowledge, all VAT has been paid and is being paid when due. In addition, certain Debtors incur foreign withholding taxes on certain payments from various foreign non-Debtor subsidiaries. These foreign withholding taxes generally apply to interest, royalties, dividends, and service payments received from certain foreign non-Debtor subsidiaries. The foreign withholding taxes are required to be withheld by the foreign non-Debtor subsidiaries and paid over to the foreign tax authorities on behalf of the Debtors. To the best of the Company’s knowledge, all foreign withholding taxes have been withheld by the foreign non-Debtor subsidiaries when required to be withheld and paid over to the appropriate foreign tax authorities when due. These foreign tax payments have not been included in the schedule above. |
Case Number: 05-44481 (RDD) (Jointly Administered)
16
DELPHI CORPORATION,etal.
SCHEDULE OF DISBURSEMENTS
MONTH ENDED JULY 31, 2006
| | | | | | | | | |
| Debtor Name | | Case Number | | Amount(4) |
| |
| Delphi NY Holdings Corporation | | | 05-44480 | | | $ | — | |
| Delphi Corporation | | | 05-44481 | | | | — | |
| ASEC Manufacturing General Partnership | | | 05-44482 | | | | — | |
| ASEC Sales General Partnership | | | 05-44484 | | | | — | |
| Environmental Catalysts, LLC | | | 05-44503 | | | | — | |
| Delphi Medical Systems Colorado Corporation | | | 05-44507 | | | | 3,157,115 | |
| Delphi Medical Systems Texas Corporation | | | 05-44511 | | | | 1,615,388 | |
| Delphi Medical Systems Corporation | | | 05-44529 | | | | 757,443 | |
| Specialty Electronics International Ltd. | | | 05-44536 | | | | — | |
| Specialty Electronics, Inc. | | | 05-44539 | | | | 191,666 | |
| Delphi Liquidation Holding Company | | | 05-44542 | | | | — | |
| Delphi Electronics (Holding) LLC | | | 05-44547 | | | | — | |
| Delphi Technologies, Inc. | | | 05-44554 | | | | 2,978,388 | |
| Delphi Automotive Systems Tennessee, Inc. | | | 05-44558 | | | | — | |
| Delphi Mechatronic Systems, Inc. | | | 05-44567 | | | | 7,554,881 | |
| Delphi Automotive Systems Risk Management Corporation | | | 05-44570 | | | | — | |
| Exhaust Systems Corporation | | | 05-44573 | | | | 7,210,335 | |
| Delphi China LLC | | | 05-44577 | | | | — | |
| Delphi Automotive Systems Korea, Inc. | | | 05-44580 | | | | 115,367 | |
| Delphi International Services, Inc. | | | 05-44583 | | | | 7,854,227 | |
| Delphi Automotive Systems Thailand, Inc. | | | 05-44586 | | | | — | |
| Delphi Automotive Systems International, Inc. | | | 05-44589 | | | | — | |
| Delphi International Holdings Corporation | | | 05-44591 | | | | — | |
| Delphi Automotive Systems Overseas Corporation | | | 05-44593 | | | | 13,362 | |
| Delphi Automotive Systems (Holding), Inc. | | | 05-44596 | | | | — | |
| Delco Electronics Overseas Corporation | | | 05-44610 | | | | 8,824,283 | |
| Delphi Diesel Systems Corporation | | | 05-44612 | | | | 27,482,628 | |
| Delphi LLC | | | 05-44615 | | | | — | |
| Aspire, Inc. | | | 05-44618 | | | | 182,816 | |
| Delphi Integrated Service Solutions, Inc. | | | 05-44623 | | | | 342,231 | |
| Delphi Connection Systems | | | 05-44624 | | | | 4,487,509 | |
| Packard Hughes Interconnect Company | | | 05-44626 | | | | — | |
| DREAL, Inc. | | | 05-44627 | | | | — | |
| Delphi Automotive Systems Services LLC | | | 05-44632 | | | | 187,475,863 | |
| Delphi Services Holding Corporation | | | 05-44633 | | | | — | |
| Delphi Automotive Systems Global (Holding), Inc. | | | 05-44636 | | | | — | |
| Delphi Foreign Sales Corporation | | | 05-44638 | | | | — | |
| Delphi Automotive Systems Human Resources LLC | | | 05-44639 | | | | 164,268,353 | |
| Delphi Automotive Systems LLC | | | 05-44640 | | | | 1,365,245,138 | |
| Delphi Furukawa Wiring Systems LLC | | | 05-47452 | | | | 177,935 | |
| Delphi Receivables LLC | | | 05-47459 | | | | — | |
| MobileAria, Inc. | | | 05-47474 | | | | 1,985,678 | |
| | |
| (4) | | Operating expenses for the month ended July 31, 2006 were used as a proxy for disbursements. |
Case Number: 05-44481 (RDD) (Jointly Administered)
17
