DELPHI 2011 Annual Report Download - page 38

Table of Contents
General to the audited consolidated financial statements included herein), transactions and events that were directly associated with the reorganization
from the ongoing operations of the business. Our consolidated financial statements are not comparable to the consolidated financial statements of the
Predecessor due to the effects of the consummation of the Modified Plan and the change in the basis of presentation. For more information, please refer
to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
(2) 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 and equity income, net of tax ("EBITDA") to evaluate performance. EBITDA was used as a performance
indicator for the year ended December 31, 2011.
Through December 31, 2010, our management relied on Adjusted EBITDA as a key performance measure. Our 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, transformation and rationalization charges related to plant consolidations, plant wind-downs and discontinued
operations ("Adjusted EBITDA") was a meaningful measure of performance and it was used by management and the Board of Managers of Delphi
Automotive LLP to analyze Company and stand-alone segment operating performance and for planning and forecasting purposes. Effective January 1,
2011, our management began utilizing EBITDA as a key performance measure because our restructuring was substantially completed in 2010. 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.
In the year ended December 31, 2011, we reached a final customer commercial settlement that resulted in an unusual warranty expense of $76 million.
This amount adversely affected EBITDA and Adjusted EBITDA in such period.
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
and 3) consolidation of many staff administrative functions into a global business service group. The reconciliation of EBITDA and Adjusted EBITDA to
net income (loss) attributable to Successor/Predecessor follows:
Successor Predecessor
Period from
August 19
to December 31,
2009
Period from
January 1 to
October 6,
2009
Year ended December 31, Year ended December 31,
2011 2010 2008 2007
Adjusted EBITDA $ 2,150 $ 1,633 $ 313 $ (229) $ 269 $ 731
Transformation and rationalization charges:
Employee termination benefits and other exit costs (31) (224) (126) (235) (326) (301)
Other transformation and rationalization costs — (48) (58) (50) (154) (814)
EBITDA $ 2,119 $ 1,361 $ 129 $ (514) $ (211) $ (384)
Depreciation and amortization (475) (421) (139) (540) (822) (871)
Goodwill impairment charges — — — — (325) —
Discontinued operations — — — (64) (67) (302)
Operating income (loss) $ 1,644 $ 940 $ (10) $ (1,118) $ (1,425) $ (1,557)
Interest expense (123) (30) (8) — (434) (764)
Other (expense) income, net (15) 34 (17) 24 9 47
Reorganization items — — — 10,210 5,147 (163)
Income (loss) from continuing operations before income taxes and equity income (loss) 1,506 944 (35) 9,116 3,297 (2,437)
Income tax (expense) benefit (305) (258) 27 311 (163) 547
Equity income (loss), net of tax 22 17 5 (36) 29 35
Loss from discontinued operations, net of tax — — — (44) (97) (1,142)
Net income (loss) $ 1,223 $ 703 $ (3) $ 9,347 $ 3,066 $ (2,997)
Net income attributable to noncontrolling interest 78 72 15 29 29 68
Net income (loss) attributable to Successor/Predecessor $ 1,145 $ 631 $ (18) $ 9,318 $ 3,037 $ (3,065)
(3) EBITDA margin is defined as EBITDA as a percentage of revenues. Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of
revenues.
(4) Working capital is calculated herein as accounts receivable plus inventories less accounts payable.
(5) Excludes temporary and contract workers. As of December 31, 2011, we employed approximately 39,000 temporary and contract workers.
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