DELPHI 2013 Annual Report Download - page 51

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(1) On October 26, 2012, we completed the acquisition of the Motorized Vehicles Division (“MVL”). MVL is a leading global manufacturer of automotive
connection systems with a focus on high-value, leading technology applications. Given the timing of the acquisition it is not fully reflected in our 2012
results and impacts comparability to 2013 results.
(2) On October 6, 2009, Delphi Automotive LLP acquired the major portion of the business of the Predecessor, and this business constituted the entirety of
the operations of the Successor. The Predecessor adopted the accounting guidance in Financial Accounting Standards Board Accounting Standards
Codification (“FASB ASC”) 852, Reorganizations, effective October 8, 2005 and has segregated the financial statements for all reporting periods
subsequent to such date and through the acquisition on October 6, 2009 by Delphi Automotive LLP and the emergence by Old Delphi from Chapter 11.
Our consolidated financial statements are not comparable to the consolidated financial statements of the Predecessor due to the effects of the emergence
from Chapter 11 and the change in the basis of presentation.
(3) Our management utilizes net income before depreciation and amortization (including long-lived asset and goodwill impairment), interest expense, other
income (expense), net, income tax expense, equity income, net of tax, restructuring and other acquisition-related costs (“Adjusted EBITDA”) to
evaluate performance. Adjusted EBITDA was used as a performance indicator for the year ended December 31, 2013. From January 1, 2011 through
December 31, 2012, the Company’s management believed that net income before depreciation and amortization (including long-lived asset and
goodwill impairment), interest expense, other income (expense), net, income tax expense, equity income, net of tax, (“EBITDA”) was a meaningful
measure of performance and it was used by management to analyze Company and stand-alone segment operating performance. Management also used
EBITDA for planning and forecasting purposes.
EBITDA and Adjusted EBITDA should not be considered substitutes for results prepared in accordance with U.S. GAAP and should not be considered
alternatives to net income (loss) attributable to Successor/Predecessor, which is the most directly comparable financial measure to EBITDA and
Adjusted EBITDA that is in accordance with U.S. GAAP. EBITDA and Adjusted EBITDA, as determined and measured by us, should also not be
compared to similarly titled measures reported by other companies.
The reconciliation of Adjusted EBITDA to EBITDA includes other transformation and rationalization costs related to 1) the implementation of
information technology systems to support finance, manufacturing and product development initiatives, 2) certain plant consolidations and closures
costs, 3) consolidation of many staff administrative functions into a global business service group and 4) other acquisition-related costs related to the
acquisition of MVL. The reconciliation of EBITDA and Adjusted EBITDA to net income (loss) attributable to Successor/Predecessor follows:
Successor (1) Predecessor (2)
Year ended December 31,
Period from
August 19 to
December 31,
2009
Period from
January 1
to October 6, 2009
2013 2012 2011 2010
Adjusted EBITDA...................................................... $ 2,384 $ 2,142 $ 2,150 $ 1,633 $ 313 $ (229)
Transformation and rationalization charges:..............
Employee termination benefits and other exit costs .. (145) (171) (31) (224) (126) (235)
Other transformation and rationalization costs.......... (15) (9) — (48) (58) (50)
EBITDA..................................................................... $ 2,224 $ 1,962 $ 2,119 $ 1,361 $ 129 $ (514)
Depreciation and amortization................................... (540) (486) (475) (421) (139) (540)
Goodwill impairment charges.................................... — — — — — —
Discontinued operations............................................. — — — — — (64)
Operating income (loss)............................................. $ 1,684 $ 1,476 $ 1,644 $ 940 $ (10) $ (1,118)
Interest expense.......................................................... (143) (136) (123) (30) (8) —
Other (expense) income, net ...................................... (18) 5 (15) 34 (17) 24
Reorganization items ................................................. — — — — — 10,210
Income (loss) from continuing operations before
income taxes and equity income (loss)...................... 1,523 1,345 1,506 944 (35) 9,116
Income tax (expense) benefit..................................... (256) (212) (305) (258) 27 311
Equity income (loss), net of tax................................. 34 27 22 17 5 (36)
Loss from discontinued operations, net of tax........... — — — — — (44)
Net income (loss)....................................................... $ 1,301 $ 1,160 $ 1,223 $ 703 $ (3) $ 9,347
Net income attributable to noncontrolling interest .... 89 83 78 72 15 29
Net income (loss) attributable to Successor/
Predecessor ................................................................ $ 1,212 $ 1,077 $ 1,145 $ 631 $ (18) $ 9,318
(4) EBITDA margin is defined as EBITDA as a percentage of revenues. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of
revenues.
(5) Working capital is calculated herein as accounts receivable plus inventories less accounts payable.
(6) Excludes temporary and contract workers. As of December 31, 2013, we employed approximately 44,000 temporary and contract workers.