EX-99.(A) 2 k07227exv99wxay.htm MONTHLY OPERATING REPORT exv99wxay
 

Exhibit 99(a)
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
Debtors: Delphi Corporation, et al. (1)
Case Number: Jointly Administered 05-44481 (RDD)
Monthly Operating Report for the Month Ended:
June 30, 2006
Debtors’ Address:
5725 Delphi Drive
Troy, Michigan 48098
Monthly Operating Loss: $1,850 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: July 31, 2006
  /s/ JOHN D. SHEEHAN    
 
       
 
  John D. Sheehan    
 
  Vice President and Chief Restructuring Officer, and Chief Accounting 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, et al.
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, et al.
MONTHLY OPERATING REPORT
INDEX
         
Description   Page  
Condensed Combined Debtors-in-Possession Statement of Operations for the month ended June 30, 2006 and Year to Date January 1 to June 30, 2006
    4  
Condensed Combined Debtors-in-Possession Balance Sheet as of June 30, 2006
    5  
Condensed Combined Debtors-in-Possession Statement of Cash Flows for the month ended June 30, 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, et al.
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  
    June 30, 2006     June 30, 2006  
    (in millions)  
Net sales:
               
General Motors and affiliates
  $ 960     $ 5,422  
Other customers
    618       3,620  
Intercompany non-Debtor subsidiaries
    54       308  
 
           
Total net sales
    1,632       9,350  
 
           
 
               
Operating expenses:
               
Cost of sales, excluding items listed below
    3,360       11,164  
Selling, general and administrative
    68       524  
Depreciation and amortization
    54       323  
 
           
Total operating expenses
    3,482       12,011  
 
           
 
               
Operating loss
    (1,850 )     (2,661 )
Interest expense (contractual interest expense was $42 million and $260 million, respectively)
    (30 )     (178 )
Other income (expense), net
    2       (4 )
 
           
Loss before reorganization items, income taxes and equity income
    (1,878 )     (2,843 )
Reorganization items
    (4 )     (25 )
Income tax expense
    (3 )     (7 )
Equity income from non-consolidated subsidiaries, net of tax
    6       26  
Equity income from non-Debtor subsidiaries, net of tax
    20       214  
 
           
 
               
Net loss
  $ (1,859 )   $ (2,635 )
 
           
The accompanying notes are an integral part of the financial statements.
Case Number: 05-44481 (RDD) (Jointly Administered)

4


 

DELPHI CORPORATION, et al.
MONTHLY OPERATING REPORT
CONDENSED COMBINED DEBTORS-IN-POSSESSION BALANCE SHEET
(Non-filed entities, principally non-U.S. subsidiaries, excluded from Debtor group)
         
    June 30, 2006  
    (in millions)  
ASSETS
       
Current assets:
       
Cash and cash equivalents
  $ 850  
Restricted cash
    75  
Accounts receivable, net:
       
General Motors and affiliates
    1,896  
Other third parties
    1,503  
Non-Debtor subsidiaries
    325  
Notes receivable from non-Debtor subsidiaries
    352  
Inventories, net:
       
Productive material, work-in-process and supplies
    901  
Finished goods
    316  
Prepaid expenses and other
    335  
 
     
Total current assets
    6,553  
 
       
Long-term assets:
       
Property, net
    2,601  
Goodwill
    152  
Other intangible assets, net
    40  
Pension intangible assets
    871  
Investments in non-Debtor subsidiaries
    3,418  
Other
    705  
 
     
Total assets
  $ 14,340  
 
     
 
       
LIABILITIES AND STOCKHOLDERS’ DEFICIT
       
Current liabilities not subject to compromise:
       
Notes payable and secured debt in default
  $ 2,497  
Accounts payable
    1,308  
Accounts payable to non-Debtor subsidiaries
    376  
Accrued liabilities
    1,067  
 
     
Total current liabilities
    5,248  
 
       
Long-term liabilities not subject to compromise:
       
Debtor-in-possession financing
    250  
Employee benefit plan obligations and other
    752  
 
     
Total long-term liabilities
    1,002  
 
       
Liabilities subject to compromise
    16,867  
 
     
 
       
Total liabilities
    23,117  
 
     
 
       
Stockholders’ deficit:
       
Common stock, $0.01 par value, 1,350 million shares authorized, 565 million shares issued
    6  
Additional paid-in capital
    2,755  
Accumulated deficit
    (9,064 )
Minimum pension liability, Debtors only
    (2,308 )
Accumulated other comprehensive loss, including minimum pension liability of non-Debtor subsidiaries
    (114 )
Treasury stock, at cost (3.2 million shares)
    (52 )
 
     
Total stockholders’ deficit
    (8,777 )
 
     
Total liabilities and stockholders’ deficit
  $ 14,340  
 
     
The accompanying notes are an integral part of the financial statements.
Case Number: 05-44481 (RDD) (Jointly Administered)

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DELPHI CORPORATION, et al.
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  
    June 30, 2006  
    (in millions)  
Cash flows from operating activities:
       
Net loss
  $ (1,859 )
Adjustments to reconcile net loss to net cash provided by operating activities:
       
Depreciation and amortization
    54  
Pension and other postretirement benefit expenses
    1,685  
Equity income from unconsolidated subsidiaries, net of tax
    (6 )
Equity income from non-Debtor subsidiaries, net of tax
    (20 )
Reorganization items
    4  
Changes in operating assets and liabilities:
       
Accounts receivable, net
    (68 )
Inventories, net
    (4 )
Prepaid expenses and other
    (53 )
Accounts payable, accrued and other long-term liabilities
    181  
Pension contributions
    (1 )
Other postretirement benefit payments
    (23 )
Receipts (payments) for reorganization items, net
    (7 )
Other
    (27 )
 
     
Net cash used in operating activities
    (144 )
 
     
 
       
Cash flows from investing activities:
       
Capital expenditures
    (30 )
Proceeds from sale of property
    3  
Other
    (1 )
 
     
Net cash used in investing activities
    (28 )
 
     
 
       
Cash flows from financing activities:
       
Proceeds advanced under bank overdraft
    5  
Repayments of borrowings under other debt
    (1 )
 
     
Net cash provided by financing activities
    4  
 
     
 
       
Decrease in cash and cash equivalents
    (168 )
Cash and cash equivalents at beginning of period
    1,018  
 
     
Cash and cash equivalents at end of period
  $ 850  
 
     
The accompanying notes are an integral part of the financial statements.
Case Number: 05-44481 (RDD) (Jointly Administered)

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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. 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 that was 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. Approximately 14,500 U.S. hourly employees represented by the UAW were eligible to participate in the program and approximately 12,500 employees elected to participate. 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 buyouts for UAW-represented hourly employees. This supplemental agreement also includes 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. 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 3,200 U.S. hourly employees represented by the IUE-CWA are eligible to participate in the retirement, including the pre-retirement, program while the remainder of the approximately 7,900 employees represented by the IUE-CWA are eligible for buyout payments. As of June 30, 2006, approximately 385 employees had elected to participate. The application period for eligible employees to elect an option under the special attrition program ends August 9, 2006.
     The Debtors have recorded postemployment wage and benefit charges in “Cost of Sales” of approximately $180 million during June 2006 and $392 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. In addition, the Debtors recorded a net pension and postemployment benefit curtailment charge in “Cost of Sales” of $1.56 billion in June 2006, primarily due to reductions in anticipated future service as a result of the retirements. The Debtors expect to incur additional pension and postemployment benefit curtailment charges as additional employees elect to participate in the special attrition program.
Case Number: 05-44481 (RDD) (Jointly Administered)

8


 

DELPHI CORPORATION, et al.
NOTES TO MONTHLY OPERATING REPORT
     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 $18 million during June 2006 and $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. However, since 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. An agreement between Delphi and GM has been drafted and currently anticipates payment terms of 10 business days, the intent of which is to allow GM adequate time to review the invoice and detailed supporting employee payroll and related documentation. This agreement is expected to be executed before the submission of the July Monthly Operating Report. As of June 30, 2006, all amounts paid to employees had been reimbursed by GM, with the exception of a $3.4 million related employer payroll taxes, which is still within the allowable 10 business day review period.
     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 financing documents, as amended, and $2.5 billion under certain prepetition facilities, for a total financing of $4.5 billion.
Case Number: 05-44481 (RDD) (Jointly Administered)

9


 

DELPHI CORPORATION, et al.
NOTES TO MONTHLY OPERATING REPORT
     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 June 30, 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  
    June 30, 2006     June 30, 2006  
    (in millions)  
Professional fees directly related to reorganization
  $ (11 )   $ (67 )
Interest income
    6       39  
Gain on settlement of prepetition liabilities
    1       3  
 
           
Total Reorganization Items
  $ (4 )   $ (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 June 30, 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 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
Case Number: 05-44481 (RDD) (Jointly Administered)

10


 

DELPHI CORPORATION, et al.
NOTES TO MONTHLY OPERATING REPORT
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:
         
    June 30, 2006  
    (in millions)  
Pension obligations
  $ 5,313  
Postretirement obligations other than pensions
    6,675  
Debt and notes payable
    2,461  
Accounts payable
    831  
Other
    1,587  
 
     
Total Liabilities Subject to Compromise
  $ 16,867  
 
     
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)

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DELPHI CORPORATION, et al.
SCHEDULE OF PAYROLL AND PAYROLL TAXES WITHHELD AND INCURRED
MONTH ENDED JUNE 30, 2006
                 
    Employee Payroll Taxes   Employer Payroll
Gross Wages Paid   Withheld   Taxes Owed
 
$380,961,762
  $ 115,294,516     $ 31,203,097  
 
     
Note:
  As disclosed in Note 2 “Basis of Presentation – Special Attrition Program,” certain eligible Delphi U.S. hourly employees represented by the UAW elected normal and early voluntary retirements and received lump sum incentive payments of $35,000 each. These payments were made by Delphi and reimbursed by GM, and are included in the schedule above.
Case Number: 05-44481 (RDD) (Jointly Administered)

12


 

DELPHI CORPORATION, et al.
SCHEDULE OF PAYROLL TAXES PAID
MONTH ENDED JUNE 30, 2006
         
Payee   Payroll Taxes Paid
 
Internal Revenue Service
  $ 120,816,786  
State of Michigan
    5,377,975  
City of Flint, MI
    119,906  
City of Saginaw, MI
    97,717  
City of Grand Rapids, MI
    10,506  
City of Detroit, MI
    3,418  
City of Walker, MI
    2,726  
City of Pontiac, MI
    489  
City of Lansing, MI
    90  
State of Ohio
    3,290,896  
City of Dayton, OH
    272,226  
City of Kettering, OH
    131,023  
City of Moraine, OH
    124,464  
City of Warren, OH
    101,869  
City of Vandalia, OH
    60,388  
Ohio School District
    28,336  
City of Columbus, OH
    19,100  
City of Rita, OH
    13,730  
City of Hubbard, OH
    5,391  
City of Huron, OH
    4,189  
City of Trotwood, OH
    3,435  
City of Dublin, OH
    2,088  
City of Lordstown, OH
    956  
City of Springfield, OH
    796  
City of Toledo, OH
    734  
City of Cincinnati, OH
    336  
City of Xenia, OH
    245  
City of Akron, OH
    164  
City of Fairfield, OH
    140  
City of Canton, OH
    109  
City of Mansfield, OH
    87  
City of W Carrollton, OH
    32  
State of New York
    2,186,824  
State of Indiana
    1,563,673  
Allen County, IN
    90  
State of Alabama
    477,410  
City of Gadsden, AL
    12,769  
State of Mississippi
    468,103  
State of Wisconsin
    406,123  
State of Georgia
    237,566  
State of California
    97,935  
State of Oklahoma
    66,965  
State of New Jersey
    52,751  
State of Pennsylvania
    45,568  
State of Illinois
    23,526  
State of Colorado
    21,366  
City of Denver, CO
    238  
State of Kansas
    12,376  
State of South Carolina
    11,679  
State of Maryland
    3,131  
State of Missouri
    2,990  
State of Kentucky
    2,788  
State of North Carolina
    2,511  
State of Virginia
    2,441  
State of Oregon
    1,551  
State of Connecticut
    1,497  
State of Louisiana
    898  
State of Arizona
    894  
Case Number: 05-44481 (RDD) (Jointly Administered)

13


 

DELPHI CORPORATION, et al.
SCHEDULE OF PAYROLL TAXES PAID
MONTH ENDED JUNE 30, 2006
         
Payee   Payroll Taxes Paid  
 
State of Arkansas
    650  
State of Minnesota
    562  
City of Philadelphia, PA
    264  
State of Delaware
    247  
State of Texas
    127  
City of Towamencin, PA
    36  
State of West Virginia
    1  
Country of Switzerland
    6,035  
Inland Revenue Service (UK)
    554  
 
     
Total
  $ 136,202,486  
 
     
Case Number: 05-44481 (RDD) (Jointly Administered)

14


 

DELPHI CORPORATION, et al.
SCHEDULE OF OTHER TAXES COLLECTED, INCURRED AND PAID
MONTH ENDED JUNE 30, 2006
                     
Taxing Jurisdiction   Tax Type   Tax Due   Tax Paid
 
Ohio Department of Treasury
  Use   $ 443,703     $ 443,703  
Michigan Department of Treasury
  Use     259,968       259,968  
Indiana Department of Revenue
  Use     199,667       199,667  
New York Department of Taxation & Finance
  Use     119,433       119,433  
Mississippi Tax Commission
  Use     76,202       76,202  
Wisconsin Department of Revenue
  Use     40,126       40,126  
Limestone County, Alabama (Payee ALATAX — Tax Trust Account)
  Use     36,515       36,515  
New Jersey Sales Tax Division
  Use     31,590       31,590  
Texas Comptroller of Public Accounts
  Use     22,899       22,899  
Georgia Sales Tax Division
  Use     7,382       7,382  
Gadsden City, Alabama (Payee ALATAX — Tax Trust Account)
  Use     5,991       5,991  
Etowah County, Alabama (Payee LGREC Inc.)
  Use     1,405       1,405  
Tuscaloosa County, Alabama
  Use     469       469  
Colorado Dept of Revenue
  Use     351       351  
Tuscaloosa, Alabama
  Use     37       37  
Mississippi Office of Revenue
  Income     193,750       193,750  
Kentucky Department of Revenue
  Income     105,000       105,000  
State of New Jersey — Division of Taxation
  Income     31,000       31,000  
New York State Corporation Tax
  Income     15,000       15,000  
Pennsylvania Department of Revenue
  Income     13,000       13,000  
Wisconsin Department of Revenue
  Income     8,000       8,000  
Swiss Federal Taxing Authority
  Income     6,752       6,752  
Czech Republic
  Income     1,148       1,148  
Alabama Department of Revenue
  Income     1,000       1,000  
Ohio Department of Treasury
  Kilowatt Hour     69,532       69,532  
Franklin County, Indiana
  Real Property     39,535       39,535  
Henry County, Indiana
  Real Property     4,168       4,168  
Alabama Department of Revenue
  Consumer’s Use     37,779       37,779  
Internal Revenue Service
  Federal Excise     34,000       34,000  
Alabama Department of Revenue
  Seller’s Use     31,122       31,122  
Oklahoma Tax Commission
  Franchise     20,100       20,100  
Pennsylvania Department of Revenue
  Franchise     10,500       10,500  
State of Michigan
  Single Business     30,000       30,000  
Internal Revenue Service
  Withholding (non-payroll)     21,000       21,000  
State of California Board of Equalization
  Sales & Use     3,000       3,000  
South Carolina Department of Revenue
  Sales & Use     86       86  
Canada Customs and Revenue Agency
  Goods & Services     1,747       1,747  
St. Joseph County, Indiana
  Personal Property     835       835  
Henry County, Indiana
  Personal Property     364       364  
San Diego County, California
  Personal Property     195       195  
Lynchburg, Virginia
  Personal Property     179       179  
Pulaski, Tennessee
  Personal Property     54       54  
Hingham, Massachusetts
  Personal Property     14       14  
Franklin County, Indiana
  Personal Property     2       2  
Connecticut Commissioner of Revenue Services
  Franchise     700       700  
Case Number: 05-44481 (RDD) (Jointly Administered)

15


 

DELPHI CORPORATION, et al.
SCHEDULE OF OTHER TAXES COLLECTED, INCURRED AND PAID
MONTH ENDED JUNE 30, 2006
                     
Taxing Jurisdiction   Tax Type   Tax Due   Tax Paid
 
Colorado Dept of Revenue
  Utility     203       203  
Colorado Dept of Revenue
  Sales     21       21  
         
Total
      $ 1,925,524     $ 1,925,524  
         
     
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, et al.
SCHEDULE OF DISBURSEMENTS
MONTH ENDED JUNE 30, 2006
                 
    Case    
Debtor Name   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       4,011,144  
Delphi Medical Systems Texas Corporation
    05-44511       1,822,726  
Delphi Medical Systems Corporation
    05-44529       1,621,627  
Specialty Electronics International Ltd.
    05-44536        
Specialty Electronics, Inc.
    05-44539       391,961  
Delphi Liquidation Holding Company
    05-44542        
Delphi Electronics (Holding) LLC
    05-44547        
Delphi Technologies, Inc.
    05-44554       5,033,244  
Delphi Automotive Systems Tennessee, Inc.
    05-44558        
Delphi Mechatronic Systems, Inc.
    05-44567       11,414,164  
Delphi Automotive Systems Risk Management Corporation
    05-44570        
Exhaust Systems Corporation
    05-44573       7,348,404  
Delphi China LLC
    05-44577        
Delphi Automotive Systems Korea, Inc.
    05-44580       98,033  
Delphi International Services, Inc.
    05-44583       7,669,283  
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       99,510  
Delphi Automotive Systems (Holding), Inc.
    05-44596        
Delco Electronics Overseas Corporation
    05-44610       8,414,485  
Delphi Diesel Systems Corporation
    05-44612       34,456,588  
Delphi LLC
    05-44615        
Aspire, Inc.
    05-44618       195,612  
Delphi Integrated Service Solutions, Inc.
    05-44623       271,137  
Delphi Connection Systems
    05-44624       8,248,246  
Packard Hughes Interconnect Company
    05-44626        
DREAL, Inc.
    05-44627        
Delphi Automotive Systems Services LLC
    05-44632       234,661,636  
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       161,072,382  
Delphi Automotive Systems LLC
    05-44640       1,946,751,422  
Delphi Furukawa Wiring Systems LLC
    05-47452       31,641  
Delphi Receivables LLC
    05-47459        
MobileAria, Inc.
    05-47474       659,064  
 
(4)   Operating expenses for the month ended June 30, 2006 were used as a proxy for disbursements.
Case Number: 05-44481 (RDD) (Jointly Administered)

17