Chrysler lost $2.7 billion after buyout

2/28/2008

DETROIT - Chrysler LLC lost about $2.7 billion in the two months after Daimler AG sold controlling interest in the U.S. automaker to a New York private equity firm, Daimler said in its annual report yesterday.

The figure, for the period from Aug. 4 to Sept. 30, 2007, was calculated under international financial reporting standards used in Europe and not under U.S. accounting standards, Daimler said.

The loss includes about $466 million in expenses incurred in the fourth quarter of last year, including Chrysler restructuring costs and costs related to a new four-year contract with the United Auto Workers, Daimler said in its report, filed with the U.S. Securities and Exchange Commission.

Daimler reported that for the full year in 2007, Chrysler lost $1.2 billion when converted at the euro-to-dollar exchange rate that Daimler reported for the third quarter.

It was unclear how much of Chrysler's fourth-quarter results were included in the figure because neither Daimler nor Chrysler would answer questions about the report.

The figures, though, give a glimpse into how Chrysler has performed financially since Daimler sold 80.1 percent of the automaker to New York-based Cerberus Capital Management LP in August.

Chrysler now is a privately held company and is no longer required to report its earnings.

Daimler also said in its report that former Chrysler Chief Executive Officer Tom LaSorda received about $18.9 million from Daimler last year, including a roughly $14.3 million payment made after the sale to Cerberus took place.

Former Chief Operating Officer Eric Ridenour received about $7.5 million, including a $4.4 million payment made after the sale.

The payments to Mr. LaSorda and Mr. Ridenour include salary, benefits, performance bonuses, company cars, security expenses, and what Daimler described as "midterm and longterm compensation."

Both were members of the former DaimlerChrysler AG's Board of Management. Mr. La-

Sorda remains with the company as vice chairman and president; Mr. Ridenor left.

The payments after the sale "were intended to facilitate a timely and successful transaction while at the same time defining the conditions for a retirement from the board by Mr. LaSorda and Mr. Ridenour," the annual report said.

Cerberus hired Robert Nardelli, former CEO of Home Depot Inc., as Chrysler's chairman and CEO, and it brought in Jim Press, a former top Toyota Motor Corp. executive, as vice chairman and president.

Chrysler spokesman David Barnas would not confirm or deny the report's loss figures as accurate, but said the automaker has ample cash and capital to meet its current and future objectives.

Daimler spokesman Thomas Frohlich deferred all questions to the annual report.