DELPHI 2011 Annual Report Download - page 45

Table of Contents
financial information on a combined basis for the Predecessor period from January 1 to October 6, 2009 and the Successor period from August 19 to
December 31, 2009 ("Full Year 2009"), except as noted below. We have compared consolidated net sales and EBITDA of the Successor for the year ended
December 31, 2010 to the total net sales and Adjusted EBITDA for the Full Year 2009. We believe these comparisons are most meaningful and useful in
providing a thorough understanding of the financial statements. Where applicable, "Operations Not Acquired" is included in the tables below explaining the
variance attributable to the acquisition by GM on October 6, 2009 of the manufacturing facilities in the U.S. at which the hourly employees were represented
by the UAW.
Consolidated Results of Operations
Our improved total net sales during the year ended December 31, 2011 as compared to 2010 reflect the impacts of increased OEM production volumes
as well as the level of our content per unit, and, to a lesser extent, the impacts of foreign currency exchange rate fluctuations. Although global OEM
production volumes increased over 3%, for the year ended December 31, 2011 versus 2010, excluding production decreases from Japan and Japanese OEM
production in North America of 9% resulting from the Japan earthquake and tsunami, global OEM production volumes increased 6%, for the year ended
December 31, 2011 as compared to 2010. We did not experience any significant adverse impacts resulting from the Japan earthquake and tsunami,
particularly given that the Japanese OEMs are not among our principal customers. To the extent that the Japanese OEMs grow faster than others as they make
up for lost production in 2011, we would expect that our volume growth from our OEM customers could be slower than the market.
The improvements in OEM production volumes continue to indicate a stabilization of the global economy. However, current OEM production volumes
in North America and Western Europe continue to be substantially less than OEM production volumes prior to the disruptions in the economic and credit
markets experienced in 2008 and 2009. As a result of the significant restructuring actions implemented by the Predecessor and continued by us in 2010, our
reduced cost structure is enabling us to translate the total net sales growth achieved in 2011 into strong gross margin and improved operating earnings.
Significant issues affected the Predecessor's financial performance in 2009, including a depressed global vehicle production environment for OEMs,
pricing pressures and increasingly volatile commodity prices. In addition, the Predecessor was adversely impacted by legacy U.S. labor liabilities, which
included noncompetitive wage and benefit levels and restrictive collectively-bargained labor agreement provisions which historically inhibited the
Predecessor's responsiveness to market conditions, including exiting non-strategic, non-profitable operations or flexing the size of the unionized workforce
when volume decreases. Also, during 2009, the Predecessor's operational challenges intensified as a result of the continued downturn in general economic
conditions, including reduced consumer spending and confidence, high oil prices and the credit market crisis, all of which resulted in global vehicle
manufacturers reducing production and taking other restructuring actions.
We benefited from the restructuring initiatives implemented throughout the last several years and in particular, in 2009 from the restructuring of the
business that took place through the acquisition of the Predecessor's global steering business and the UAW manufacturing facilities by GM, together with its
subsidiaries and affiliates, in the U.S. as of the Acquisition Date, as defined and further discussed below. In addition, we benefited from the increase in OEM
production volumes beginning in the fourth quarter of 2009 and continuing throughout 2010 and 2011. Our results of operations include the effects of the
improvement in the cost structure and the operating leverage we can now employ with improvements in OEM production volumes versus the Predecessor.
While production volume levels improved in 2011 and 2010 as compared to the production volume levels experienced in 2009, we continued to face
challenges, with production volumes globally still significantly lower than 2007 due to the lingering effects from the disruptions in the economy and credit
markets in 2008 and 2009 and volatile commodity prices. As a result of the Acquisition, beginning in 2010, we incurred and expect to incur incremental,
annual non-cash amortization charges of approximately $80 million related to the recognition of acquired intangible assets. Additionally, in conjunction with
the initial public offering in November 2011, we incurred transaction-related fees and recognized expenses in the year ended December 31, 2011 of
approximately $44 million.
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