DELPHI 2011 Annual Report Download - page 105

Table of Contents
Reimbursement of hourly labor costs—Old GM agreed to reimburse the Predecessor for hourly workforce labor costs in excess of $26 per hour,
excluding certain costs, including hourly pension and OPEB contributions provided under the supplemental wage agreement, at specified UAW
manufacturing facilities retained by the Predecessor. The economic substance of this provision of the Amended MRA was to lower the Predecessor's labor
costs at specified UAW-represented manufacturing facilities to $26 per hour, excluding certain costs, in order to maintain more competitive operations in the
U.S. During the period from January 1 to October 6, 2009, the Predecessor received $106 million of reimbursement from GM of hourly labor costs in excess
of $26 per hour. The Predecessor recorded $50 million as a reduction to operating expenses during the period from January 1 to October 6, 2009, with $25
million recognized in periods prior to January 1, 2009. Additionally, $31 million was recognized in 2009 as a reduction to operating expenses in discontinued
operations.
Production cash burn breakeven reimbursement—The Predecessor had agreed to continue manufacturing at certain non-core sites to meet Old GM's
production requirements and Old GM had agreed to provide the Predecessor with operating cash flow breakeven support, or production cash burn breakeven
("PCBB"), from January 1, 2008 through site-specified time periods to compensate the Predecessor for keeping these sites in production. Additionally, Old
GM had agreed to reimburse capital spending in excess of $50,000 per month at the PCBB sites from January 1, 2008 through site-specified time periods.
PCBB reimbursement, including capital spending, from Old GM was recognized contemporaneously as incurred, and was treated as a reduction to operating
expenses, fixed assets or discontinued operations, as appropriate. During the period from January 1 to October 6, 2009, the Predecessor received $150 million
of PCBB reimbursement from GM, of which $86 million was recorded as income from discontinued operations and $2 million was recorded as a reduction to
the Predecessor's operating expenses.
Reimbursement of hourly workers' compensation and other benefits—Old GM agreed to reimburse the Predecessor for all current and future workers
compensation, disability, supplemental unemployment benefits, and severance obligations paid by the Predecessor after January 1, 2009 in relation to all
current and former UAW-represented hourly active, inactive, and retired employees. Consistent with the substance of the provision, the Predecessor
recognized anticipated, future reimbursements from Old GM contemporaneously with the Predecessor's incurrence of related cash payments. During the
period from January 1 to October 6, 2009, the Predecessor received related reimbursements from GM of $28 million. The Predecessor recorded $35 million as
a reduction to operating expenses during the period from January 1 to October 6, 2009.
Pensions—Subsequent to entering chapter 11, the Predecessor had generally limited its contributions to the GM Hourly-Rate Employees Pension Plan
(the "Hourly Plan"), the Delphi Retirement Program for Salaried Employees (the "Salaried Plan"), the ASEC Manufacturing Retirement Program, the Delphi
Mechatronics Retirement Program, the PHI Bargaining Retirement Plan and the PHI Non-Bargaining Retirement Plan (collectively, the "U.S. Pension Plans")
to "normal cost" contributions, which are less than the minimum funding requirements established by the Internal Revenue Code and the Employee
Retirement Income Security Act ("ERISA"). Following the Court's approval of the Hourly and Salaried Pension Program Modification Motion on
September 23, 2008, the Salaried Plan, the Mechatronic Plan, the ASEC Plan, and the PHI Non-Bargaining Plan were frozen effective September 30, 2008.
The Hourly Plan was frozen on November 30, 2008. By freezing the U.S. pension plans, the Predecessor halted the accrual of normal cost payments going
forward, thereby preserving liquidity.
On July 21, 2009, the Predecessor announced that the PBGC was expected to make a determination whether to initiate the termination process for the
U.S. pension plans. Also on July 21, 2009, the Predecessor reached agreement with the PBGC to settle the PBGC's various claims against the Predecessor and
its global affiliates (the "Predecessor-PBGC Settlement Agreement"). Pursuant to that settlement agreement, the PBGC received a $3 billion allowed general
unsecured non-priority claim which received the same treatment given to holders of general unsecured claims as set forth in the Modified Plan. The PBGC
received additional consideration from GM which, together with the PBGC's allowed unsecured claim, was in consideration for, among other things, a full
release of all causes of action, claims, and liens; the liability to be assumed by the PBGC related to the
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