DELPHI 2011 Annual Report Download - page 101

Table of Contents
Workers' compensation benefits—Workers' compensation benefit accruals are actuarially determined and are subject to the existing workers'
compensation laws that vary by location. Accruals for workers' compensation benefits represent the discounted future cash expenditures expected during the
period between the incidents necessitating the employees to be idled and the time when such employees return to work, are eligible for retirement or otherwise
terminate their employment. Delphi assumed only workers' compensation liabilities associated with claims incurred after the Petition Date for the employees
it hired. The remaining workers' compensation liabilities of the Predecessor were discharged as part of the bankruptcy process, assumed by GM as part of its
acquisition of substantially all of the Predecessor's global steering business and the manufacturing facilities in the U.S. at which the employees were
represented by the UAW, or remained liabilities of DPHH. Pursuant to the Amended MRA (as defined in Note 3. Elements of Predecessor Transformation
Plan), GM reimbursed the Predecessor for workers compensation benefits paid by the Predecessor from January 1, 2009 through October 6, 2009 in relation
to all current and former UAW-represented hourly active, inactive, and retired employees. Refer to Note 3. Elements of Predecessor Transformation Plan for
more information.
Discontinued operations—In accordance with FASB ASC 360-10, Property, Plant, and Equipment, the general accounting principles applicable to the
impairment or disposal of long-lived assets, a business component that is disposed of or classified as held for sale is reported as discontinued operations if the
cash flows of the component have been or will be eliminated from the ongoing operations of an entity and that entity will no longer have any significant
continuing involvement in the business component. The results of discontinued operations are aggregated and presented separately in the consolidated
statements of operations and consolidated statements of cash flows. Assets and liabilities of the discontinued operations are aggregated and reported
separately as assets and liabilities held for sale in the consolidated balance sheet. Amounts presented for prior years are required to be reclassified to effect
their classification as discontinued operations.
For periods from January 1 to October 6, 2009 and prior, amounts have been derived from the consolidated financial statements and accounting records
of the Predecessor using the historical basis of assets and liabilities held for sale and historical results of operations related to the Predecessor's global steering
and halfshaft businesses (the "Steering Business") and the Automotive Holdings Group ("AHG"), which includes various non-core product lines and plant
sites that did not fit the Predecessor's strategic framework. At the Acquisition Date, substantially all of the Steering Business was acquired from the
Predecessor by GM. While the historical results of operations of the Steering Business and AHG include general corporate allocations of certain functions
historically provided by the Predecessor, such as accounting, treasury, tax, human resources, facility maintenance, and other services, no amounts for these
general corporate retained functions have been allocated to discontinued operations in the statements of operations. Expenses related to the service cost of
employee pension and other postretirement benefit plans were allocated to discontinued operations in the statements of operations. Allocations have been
made based upon a reasonable allocation method. Refer to Note 20. Discontinued Operations for more information.
Contractual interest expense and interest expense on unsecured claims—Contractual interest expense represents amounts due under the contractual
terms of outstanding debt, including debt subject to compromise for which interest expense is not recognized in accordance with the provisions of FASB ASC
852, Reorganizations. Contractual interest expense was $494 million for the period from January 1 to October 6, 2009. In September 2007, the Predecessor
began recording prior contractual interest expense related to certain prepetition debt because it became probable that the interest would become an allowed
claim based on the provisions of the plan of reorganization filed with the Court in September 2007 and confirmed, as amended, on January 25, 2008. The plan
of reorganization confirmed on January 25, 2008 also provided that certain holders of allowed unsecured claims against the Predecessor would be paid
postpetition interest on their claims, calculated at the contractual non-default rate from the Petition Date through January 25, 2008, when the Predecessor
ceased accruing interest on these claims. At December 31, 2008, the Predecessor had accrued interest of $415 million related to prepetition claims. As
discussed in Note 3. Elements of Predecessor Transformation Plan, on July 30, 2009, the Court confirmed the Modified Plan, eliminating postpetition interest
on prepetition debt and allowed unsecured claims. Therefore, the reversal of the $415 million of accrued interest was included as a reduction of interest
expense in the consolidated statement of operations of the Predecessor for the period from January 1 to October 6, 2009.
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