Delphi Earns $200 Million on Revenues of $6.9 Billion In Q4 of 2000
17 January 2001
Delphi Earns $200 Million on Revenues of $6.9 Billion In Fourth Quarter of 2000
Sales to Non-GM Customers Hits Record $8.5 Billion in 2000
Full Year Operating Cash Flow Exceeds $1.6 Billion
TROY, Mich., Jan. 17 Delphi Automotive Systems
today announced fourth quarter and 2000 calendar year financial results,
ending Delphi's first full year as an independent, publicly owned company.
Delphi Chief Financial Officer Alan S. Dawes said that a soft fourth
quarter capped a solid year for Delphi with $29.1 billion in total revenue,
$1.1 billion in net income and $1.6 billion in operating cash flow. Delphi's
net income margin of 3.8 percent was up from a 1999 margin of 3.7 percent,
while sales revenue was down slightly.
"Due to a sharp and unexpected drop in fourth quarter vehicle volumes, we
took immediate actions to reduce costs in line with resulting revenue
declines," said J.T. Battenberg III, Delphi chairman, CEO and president. "We
were successful in moderating the impact of the rapid fourth quarter order
decline through aggressive inventory management, workforce adjustments and
other cost reduction initiatives."
Although annual sales were slightly lower, net income increased
$11 million to $1.1 billion, or $1.94 earnings per share (EPS), exceeding
First Call consensus estimates of $1.90. This represents a 2 percent increase
from 1999 pro forma earnings of $1.91 EPS.
Sales to customers other than General Motors Corp. hit a record 29 percent
of total sales, or $8.47 billion, representing a 20 percent year-over-year
increase. GM remained Delphi's largest customer with sales of $20.67 billion.
Cash Flow
"At Delphi's separation from GM in 1999 we made a commitment to fund our
pension obligations within three years," Dawes said. "Strong cash flow of
$1.6 billion enabled us to fully fund employee pension plan obligations in
just 18 months."
Strong cash flow also allowed Delphi to complete the vast majority of its
true-up payments to GM, and provided capital to make two strategic business
acquisitions during the year -- Lucas Diesel Systems and Automotive Products
Distribution Services -- positioning the company for future growth in the
expanding diesel engine segment and providing highly capable European product
distribution infrastructure for Delphi's aftermarket division. Delphi also
completed several small ventures, enhancing Delphi's portfolio offerings with
products such as switch technologies, seatbelts and telematics.
As a result of strong 2000 performance, Delphi today notified employees
that the company will pay profit sharing bonuses to eligible U.S. hourly and
salaried employees in mid-March.
Fourth Quarter 2000 Earnings
Delphi's fourth quarter net income totaled $200 million, or $0.36 EPS, on
sales of $6.9 billion, exceeding industry analysts consensus estimates of
$0.32. Sales to non-GM customers increased 11 percent to $2.1 billion in the
fourth quarter.
Revenue for the fourth quarter declined $341 million, or 5 percent from
the prior year, while net income of $200 million slipped $69 million, a
decrease of 26 percent.
Dawes attributed the decline primarily to rapid deterioration of North
American vehicle volumes and the ongoing strength of the Mexican peso.
"Delphi's Mexican cost base is Peso-denominated and generates a U.S.
dollar-based revenue stream," he said. "As a result, the ongoing strength of
the Peso has negatively impacted Delphi's U.S. dollar earnings." Delphi is
the largest private employer in Mexico with approximately 76,000 employees.
Mobile MultiMedia
Delphi's Mobile MultiMedia business unit experienced rapid growth in 2000,
with $322 million in revenue for the year, representing a 700 percent increase
compared to 1999. The unit debuted 10 new products and technologies
throughout the year, including the award-winning Mobile Productivity Center
(MPC). The MPCpro, which went on sale last month, is a new electronic device
that provides drivers hands-free access to data in their Palm V or Vx handheld
computer and allows them to make hands-free phone calls through voice commands
and text-to-speech software. To order or learn more about the MPCpro, visit
http://www.delphiauto.com/communiport .
2001 Outlook
Later today Delphi will provide 2001 guidance to the media, investors and
security analysts. At the meeting Battenberg will acknowledge that he expects
the first half of 2001 to be challenging for the entire industry. "We are
cautiously optimistic that Delphi will experience another good year, and we
are working aggressively to reduce structural costs and eliminate waste in
line with lower anticipated industry volumes in 2001."
Battenberg will note, "We are also aggressively accelerating the shift in
our portfolio to high-tech electronic and electronically enhanced products."
In December 2000 Delphi announced that it was actively reviewing portfolio
management options for approximately $4 billion to $5 billion of businesses.
Dawes also will provide near term guidance for the first quarter with
expectations of $6.5 billion to $6.6 billion in sales, $90 million to
$120 million in net income, and $150 million to $200 million of operating cash
flow for the period."
Highlights attached.
Editor's Note: Delphi Chairman, CEO and President J.T. Battenberg III,
and Chief Financial Officer Alan S. Dawes will co-host a media and security
analyst conference call to discuss Delphi's earnings beginning at 1:00 p.m.
EST today. To participate in the call, dial (212) 896-6110 and ask to be
connected to the Delphi Automotive Systems conference call.
HIGHLIGHTS - Year ended December 31, 2000 vs.
year ended December 31, 1999 comparison
Year Ended
December 31,
2000 1999
(in millions, except per share amounts)
Net sales:
General Motors $20,665 $22,302
Other customers 8,474 6,890
Total net sales 29,139 29,192
Less operating expenses:
Cost of sales, excluding
items listed below 24,744 25,035
Selling, general and administrative 1,715 1,619
Depreciation and amortization 936 856
Operating income 1,744(a) 1,682
Less interest expense 183 132
Other income, net 157 171
Income before income taxes 1,718(a) 1,721
Less income tax expense 624(a) 638
Net income $ 1,094(a) $ 1,083
Gross margin 15.1% 14.2%
Operating income margin 6.0%(a) 5.8%
Net income margin 3.8%(a) 3.7%
Basic earnings per share, 561 million
and 553 million shares outstanding,
respectively in 2000 and 1999 $ 1.95 $ 1.96
Diluted earnings per share, 564 million
and 555 million shares outstanding
in 2000 and 1999, respectively $ 1.94 $ 1.95
Basic earnings per share
- pro forma (b) $ 1.95 $ 1.92
Diluted earnings per share
- pro forma (b) $ 1.94 $ 1.91
(a) Excludes the impact of a one-time, non-cash charge of $51 million
($32 million after-tax) resulting from acquisition-related in-process
research and development. Including the $51 million charge, net
income was $1,062 million and diluted earnings per share was $1.88.
(b) Pro forma basic and diluted earnings per share are presented as if
the initial public stock offering of 100 million shares took place on
January 1, 1999, resulting in 564 million and 566 million shares
outstanding, respectively, for the year ended December 31, 1999.
HIGHLIGHTS - Three months ended December 31, 2000
vs. three months ended December 31, 1999 comparison
Three Months Ended
December 31,
2000 1999
(in millions, except per share amounts)
Net sales:
General Motors $ 4,821 $ 5,361
Other customers 2,088 1,889
Total net sales 6,909 7,250
Less operating expenses:
Cost of sales, excluding items
listed below 5,919 6,211
Selling, general and administrative 426 439
Depreciation and amortization 250 210
Operating income 314 390
Less interest expense 56 38
Other income, net 41 56
Income before income taxes 299 408
Less income tax expense 99 139
Net income $ 200 $ 269
Gross margin 14.3% 14.3%
Operating income margin 4.5% 5.4%
Net income margin 2.9% 3.7%
Basic earnings per share, 560 million
and 562 million shares outstanding
for the three months ended
December 31, 2000 and 1999,
respectively $ 0.36 $ 0.48
Diluted earnings per share,
561 million and 564 million shares
outstanding for the three months
ended December 31, 2000 and 1999,
respectively $ 0.36 $ 0.48
HIGHLIGHTS - Sector financial results
Sector Year Ended December 31,
2000 1999
2000 1999 Operating Operating
Sales Sales Income(Loss) Income(Loss)
(in millions)
Electronics & Mobile Communication
Mobile MultiMedia $ 322 $ 40 $ (23) $ (37)
Other Electronics &
Mobile Communication 5,022 5,256 493 614
Total 5,344 5,296 470 577
Safety, Thermal &
Electrical Architecture 10,003 10,512 673 687
Dynamics & Propulsion 14,345 13,975 679(a) 563
Other (553) (591) (78) (145)
Total $29,139 $29,192 $ 1,744(a) $ 1,682
Sector Three Months Ended December 31,
2000 1999
2000 1999 Operating Operating
Sales Sales Income(Loss) Income(Loss)
(in millions)
Electronics & Mobile Communication
Mobile MultiMedia $ 118 $ 12 $ (5) $ (13)
Other Electronics &
Mobile Communication 1,172 1,310 84 142
Total 1,290 1,322 79 129
Safety, Thermal &
Electrical Architecture 2,375 2,587 128 161
Dynamics & Propulsion 3,377 3,504 143 171
Other (133) (163) (36) (71)
Total $ 6,909 $ 7,250 $ 314 $ 390
(a) Excludes the one-time, non-cash charge of $51 million ($32 million
after-tax) resulting from acquisition-related in-process research and
development.
HIGHLIGHTS - Year ended December 31, 2000 liquidity and capital resources
BALANCE SHEET DATA:
(in millions)
December 31, December 31,
2000 1999
Cash and cash equivalents $ 760 $ 1,546
Debt 3,182 1,757
Net liquidity $(2,422) $ (211)
Total stockholders' equity $ 3,766 $ 3,200
RECONCILIATION OF 2000 NET LIQUIDITY:
(in millions)
Net liquidity at December 31, 1999 $ (211)
Net income 1,094 (a)
Depreciation and amortization 936
Capital expenditures (1,272)
Other, net 878
Operating cash flow less capital expenditures 1,636
Cash paid for acquisitions, net of cash acquired (897)
Pension contributions (1,125)
Amounts paid to GM for pension
and other postretirement benefit adjustments (1,515)
Dividends and other non-operating (310)
Net liquidity at December 31, 2000 $ (2,422)
(a) Excludes the one-time, non-cash charge of $51 million ($32 million
after-tax) resulting from acquisition-related in-process research and
development.
HIGHLIGHTS - Three months ended December 31, 2000
liquidity and capital resources
BALANCE SHEET DATA:
(in millions)
December 31, September 30,
2000 2000
Cash and cash equivalents $ 760 $ 727
Debt 3,182 2,838
Net liquidity $(2,422) $(2,111)
Total stockholders' equity $ 3,766 $ 3,583
RECONCILIATION OF FOURTH QUARTER NET LIQUIDITY:
(in millions)
Net liquidity at September 30, 2000 $(2,111)
Net income 200
Depreciation and amortization 250
Capital expenditures (317)
Other, net 392
Operating cash flow less capital expenditures 525
Amounts paid to GM for pension and other
postretirement benefit adjustments (800)
Dividends and other non-operating (36)
Net liquidity at December 31, 2000 $(2,422)
CONSOLIDATED BALANCE SHEETS
December 31,
2000 1999
(in millions)
ASSETS
Current assets:
Cash and cash equivalents $ 760 $ 1,546
Accounts receivable, net:
General Motors and affiliates 3,308 3,817
Other customers 2,050 1,555
Inventories, net 1,707 1,749
Deferred income taxes 569 1,071
Prepaid expenses and other 209 73
Total current assets 8,603 9,811
Long-term assets:
Property, net 5,718 5,106
Deferred income taxes 2,043 1,930
Other 2,157 1,503
Total assets $18,521 $18,350
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion
of long-term debt $ 1,559 $ 117
Accounts payable 2,871 3,096
Separation related obligation 247 1,515
Accrued liabilities 1,566 2,009
Total current liabilities 6,243 6,737
Long-term liabilities:
Long-term debt 1,623 1,640
Postretirement benefits
other than pensions 4,573 4,254
Other 2,316 2,519
Total liabilities 14,755 15,150
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value,
1,350 million shares authorized,
565 million shares issued
in 2000 and 1999 6 6
Additional paid-in capital 2,450 2,601
Retained earnings 1,869 964
Accumulated translation adjustments (463) (324)
Treasury stock, at cost (5.2 million
and 2.6 million shares in 2000
and 1999, respectively) (96) (47)
Total stockholders' equity 3,766 3,200
Total liabilities and
stockholders' equity $ 18,521 $ 18,350
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
December 31,
2000 1999
(in millions)
Cash flows from operating activities:
Net income $ 1,062 $ 1,083
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 936 856
Acquisition-related in-process
research and development 51 --
Changes in operating assets and liabilities:
Accounts receivable, net 238 (3,759)
Inventories, net 172 21
Prepaid expenses and other (82) (27)
Deferred income taxes 406 (55)
Accounts payable (314) 836
Separation related payments to GM (1,515) --
Accrued liabilities (576) 2,090
Other long-term liabilities (25) (2,117)
Other (85) (142)
Net cash provided by (used in)
operating activities 268 (1,214)
Cash flows from investing activities:
Capital expenditures (1,272) (1,200)
Cost of acquisitions, net
of cash acquired (897) --
Other 115 145
Net cash used in investing
activities (2,054) (1,055)
Cash flows from financing activities:
Net proceeds from issuance
of common stock -- 1,621
Net proceeds from issuance of debt
securities and borrowings
under credit facilities 1,410 1,403
Dividend payments (157) (79)
Purchase of treasury stock (64) (67)
Other (95) --
Net cash provided by
financing activities 1,094 2,878
Effect of exchange rate fluctuations
on cash and cash equivalents (94) (58)
(Decrease) increase in cash
and cash equivalents (786) 551
Cash and cash equivalents
at beginning of year 1,546 995
Cash and cash equivalents
at end of year $ 760 $ 1,546