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Cerberus says Daimler distorted Chrysler loss

DETROIT (Reuters) - Chrysler on Thursday said a loss for the automaker as reported by minority owner Daimler AG DAIGn.DE did not reflect its operating profitability during its first months as a private firm.

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Daimler AG had reported on Wednesday that the Detroit-based automaker sustained a net loss equivalent to about $2.9 billion (1.5 billion pounds) between the close of its spinoff on August 4 and the end of the third quarter.

Daimler, which surprised analysts by including the detail on Chrysler’s financial performance in its own annual report, retains a 19.1 percent stake in its former subsidiary.

The remainder of Chrysler is held by private equity firm Cerberus Capital Management.

Cerberus pledged at the takeover that its status as a private venture would allow the troubled automaker focus on operations rather than the range of disclosures demanded of public companies.

But at least three times in the six months since, Cerberus has issued statements defending Chrysler’s performance in the face of information the firm has criticized as incomplete or misleading.

A Chrysler spokesman said the loss reported by Germany’s Daimler as a minority investor included charges that would not have been reported under U.S. accounting standards. Those included one-time charges for Chrysler’s restructuring, spokesman David Barnas said in a statement.

“In fact, from an operating standpoint, Chrysler was profitable during this time period,” Barnas said. “Also Chrysler lost significantly less than what was reported during the course of the whole year.”

Chrysler did not provide any further detail on its operating earnings or detail its full-year loss.

A senior Chrysler executive testified in a U.S. bankruptcy case earlier this month that the automaker had lost $1.6 billion in 2007.

Chrysler is in the second year of a planned three-year turnaround effort that includes cutting 23,000 jobs, slashing production capacity in North America and eliminating slow-selling vehicles from its lineup.

In December, Chrysler Chief Executive Bob Nardelli was quoted by the Wall Street Journal as telling employees that the automaker was “operationally” bankrupt and scrambling to sell assets to raise cash.

In response, Cerberus issued a statement saying that Chrysler, now No. 4 in the U.S. market, was exceeding most of its financial targets.

Earlier this month, Cerberus issued a statement saying it remained enthusiastic about Chrysler, which it said was “on track to exceed its multiyear restructuring and recovery plan.”

Editing by Leslie Gevirtz

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