DELPHI 2011 Annual Report Download - page 23

Table of Contents
on our results of operations, particularly during economic downturns. If we are unable to improve utilization levels for these manufacturing lines and correctly
manage capacity, the increased expense levels will have an adverse effect on our business, financial condition and results of operations. In addition, some of
our manufacturing lines are located in China or other foreign countries that are subject to a number of additional risks and uncertainties, including increasing
labor costs and political, social and economic instability.
We may not be able to respond quickly enough to changes in regulations, technology and technological risks, and to develop our intellectual property
into commercially viable products.
Changes in legislative, regulatory or industry requirements or in competitive technologies may render certain of our products obsolete or less attractive.
Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced products on a timely
basis are significant factors in our ability to remain competitive and to maintain or increase our revenues. We cannot provide assurance that certain of our
products will not become obsolete or that we will be able to achieve the technological advances that may be necessary for us to remain competitive and
maintain or increase our revenues in the future. We are also subject to the risks generally associated with new product introductions and applications,
including lack of market acceptance, delays in product development or production and failure of products to operate properly. The pace of our development
and introduction of new and improved products depends on our ability to implement successfully improved technological innovations in design, engineering
and manufacturing, which requires extensive capital investment. Any capital expenditure cuts in these areas that we may determine to implement in the future
to reduce costs and conserve cash could reduce our ability to develop and implement improved technological innovations, which may materially reduce
demand for our products.
To compete effectively in the automotive supply industry, we must be able to launch new products to meet changing consumer preferences and our
customers' demand in a timely and cost-effective manner. Our ability to respond to competitive pressures and react quickly to other major changes in the
marketplace including in the case of automotive sales, increased gasoline prices or consumer desire for and availability of vehicles using alternative fuels is
also a risk to our future financial performance.
We cannot provide assurance that we will be able to install and certify the equipment needed to produce products for new product programs in time for
the start of production, or that the transitioning of our manufacturing facilities and resources to full production under new product programs will not impact
production rates or other operational efficiency measures at our facilities. Development and manufacturing schedules are difficult to predict, and we cannot
provide assurance that our customers will execute on schedule the launch of their new product programs, for which we might supply products. Our failure to
successfully launch new products, or a failure by our customers to successfully launch new programs, could adversely affect our results.
Changes in factors that impact the determination of our non-U.S. pension liabilities may adversely affect us.
Certain of our non-U.S. subsidiaries sponsor defined benefit pension plans, which generally provide benefits based on negotiated amounts for each year
of service. Our primary non-U.S. plans are located in Mexico and the United Kingdom and were underfunded by $319 million as of December 31, 2011. The
funding requirements of these benefit plans, and the related expense reflected in our financial statements, are affected by several factors that are subject to an
inherent degree of uncertainty and volatility, including governmental regulation. In addition to the defined benefit pension plans, we have retirement
obligations driven by requirements in many of the countries in which we operate. These legally required plans require payments at the time benefits are due.
Obligations, net of plan assets, related to the defined benefit pension plans and statutorily required retirement obligations totaled $609 million at
December 31, 2011, of which $16 million is included in accrued liabilities and $593 million is included in long-term liabilities in our consolidated balance
sheet. Key assumptions used to value these benefit obligations and the cost of providing such benefits, funding requirements and expense recognition
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