DELPHI 2011 Annual Report Download - page 106

Table of Contents
possible termination of the U.S. pension plans; and the withdrawal of all notices of liens filed by the PBGC against the Predecessor's global non-U.S.
affiliates. The Predecessor-PBGC Settlement Agreement, which was subject to Court approval, was filed with the Court on July 21, 2009. In connection with
seeking Court approval of the Predecessor-PBGC Settlement Agreement, the Predecessor sought a finding by the Court that such termination did not violate
the Labor MOUs, the Union 1113/1114 Settlement Approval Orders, or the Local Agreement Between Delphi Connection Systems (formerly Packard-Hughes
Interconnect) And Electronic And Space Technicians Local 1553, and any modifications thereto. On July 30, 2009, the Court approved the Predecessor-
PBGC Settlement Agreement and made the finding that such agreement did not violate the Predecessor's collective bargaining agreements. On August 10,
2009, the PBGC and the Predecessor executed a termination and trusteeship agreement, retroactive to July 31, 2009, with respect to the U.S. pension plans.
Portfolio—In March 2006, the Predecessor identified non-core product lines and manufacturing sites that did not fit into its future, strategic framework,
including brake and chassis systems, catalysts, cockpits and instrument panels, door modules and latches, ride dynamics, steering, halfshafts, wheel bearings
and power products. With the exception of the catalyst and global exhaust product lines, included in the Powertrain Systems segment, the Company's non-
core product lines were included in discontinued operations, refer to Note 20. Discontinued Operations.
Costs recorded by the Predecessor related to the transformation plan for non-core product lines include employee termination benefits and other exit
costs and U.S. employee workforce transition program charges and are further described in Note 11. Restructuring and Note 20. Discontinued Operations.
Cost structure—The Predecessor implemented restructuring initiatives in pursuit of its transformation objective to reduce selling, general and
administrative expenses. These initiatives included changing the model for delivery of financial services, information technology and certain sales
administration activities; as well as the reduction of the global salaried workforce by leveraging attrition and using salaried separation plans, and the
realignment of certain salaried benefit programs with business conditions. While the continually challenging economic environment persisted in 2009, further
restructuring initiatives continued to be required. The Predecessor implemented a number of cash conservation measures, including a short-term salaried
layoff plan, the suspension of 2009 pay increases and annual incentive payments for eligible employees, the cessation of health care and life insurance
benefits in retirement to salaried employees and retirees effective March 31, 2009 and a decrease in salaried severance payments in 2009. The PBGC's
termination of the U.S. Pension Plans effective July 31, 2009 (refer to Note 13. Pension Benefits) also had the effect of reducing the Predecessor's cash needs.
4. INVENTORIES
Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or market, including direct material costs and direct and indirect
manufacturing costs. A summary of inventories is shown below:
December 31,
2011
December 31,
2010
(in millions)
Productive material $ 594 $ 544
Work-in-process 144 159
Finished goods 316 285
Total $ 1,054 $ 988
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