Full Cooperation

Delphi Corp. CEO J.T. Battenberg III says his decision on Feb. 23 to retire after 44 years with the $28.7 billion automotive supplier and its former parent, General Motors Corp., has nothing to do with an accounting scandal that cost chief financial officer Alan Dawes his job and sent the company's stock price plummeting.

Delphi will restate its earnings for 2001 and subsequent years because of improper accounting for certain lump-sum “rebate transaction” payments to Delphi from some of its suppliers.

The company's audit committee says in the 8-K filing to the Securities and Exchange Commission that Delphi overstated cash flow by $200 million in 2000, and that improper accounting for the transactions in 2001 resulted in Delphi overstating pre-tax income by $61 million.

The committee is investigating other transactions between 1999 and 2004 and is examining Delphi's accounting for $237 million in cash payments made to GM in 2000 with regard to outstanding pre-separation warranty claims.

At a media briefing at company headquarters in Troy, MI, Battenberg says Delphi is cooperating fully with authorities in the investigation.

Battenberg says Delphi had $1 billion in cash reserves at the end of 2004 and access to $3 billion in revolving credit facilities and $2 billion in short-term funding.

“My decision to retire has absolutely nothing to do with this investigation,” Battenberg says. “It has everything to do with my personal timetable I established years ago.” He says he will stay on the job to ensure a smooth transition.