Delphi Automotive Reduces Forecast For 2002.(Delphi Automotive Systems)(Brief Article)(Statistical Data Included)

Delphi Automotive Systems forecast reduced vehicle sales during 2002, due to expected softening demand as current zero-percent interest incentive programs are lifted and consumers react conservatively to the contracting global economy.

J.T. Battenberg III, chairman, chief executive officer and president, and Alan S. Dawes, chief financial officer, detailed Delphi's financial outlook and planned actions for 2002, and reviewed the company's progress on portfolio restructuring during a recent conference call with investors, media and industry analysts.

Battenberg said the company faces an increasingly difficult global economic outlook in 2002, primarily caused by a downturn in the U.S. automotive market. "Although the economic climate throughout 2001 has been difficult, Delphi made several significant accomplishments toward its restructuring and portfolio goals," said Battenberg.

"In 2001 we implemented plans to reduce our breakeven level and to transform and streamline our portfolio, reduce excess capacity and operating costs, and respond to extraordinary national events and global industry conditions. We believe our progress in 2001, coupled with additional actions planned for 2002, prepare Delphi for upcoming challenges. With these actions, we can capitalize on economic and automotive market recovery with a stronger portfolio, operating the company at a lower breakeven point."

"Reflecting lower vehicle production levels and the impact of discontinued businesses, Delphi is expecting global sales of $25.5 billion in 2002. This sales guidance is down from a sales outlook of $26.1 billion in 2001," said Dawes. Revenue from customers other than GM in 2002 is forecast at 36 percent of total sales, or $9.2 billion, up from 32 percent non-GM sales for 2001.

For 2002, Delphi is forecasting net income of $275 million, up from a forecast of $220 million to $225 million in 2001 (excluding large charges of $100 million to $150 million in 2002 and $404 million in 2001, related to the previously announced restructuring plan). "Cash flow remains strong and is forecast at $800 million for 2002 as a result of our aggressive and sustainable reduction in expenses and working capital," said Dawes.

"At the forecast 2002 sales and earnings level, we expect to return to our historical earnings curve and restore our earnings to the same relative levels we attained in 1999 and 2000 when volumes were 10 percent to 15 percent higher," he said.

In March 2001, Delphi announced a restructuring plan to close nine plants, consolidate operations at nearly 40 others and reduce the global workforce by 11,500 positions. "We are on track to complete these actions by the end of the first quarter of 2002. Through the third quarter, we have closed seven of the nine plants and we have reduced the workforce by 8,500 positions, the majority through mutual separation programs," Dawes said.

Dawes said the company is expecting approximately 1,400 to 1,825 additional employees to leave the company by the end of the fourth quarter, with the remainder of the original 11,500 to separate during the first quarter of 2002.

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