DELPHI 2011 Annual Report Download - page 43

Table of Contents
which represented approximately 32% of the hourly workforce as of December 31, 2011. We are focused on maintaining a low fixed cost base to minimize
our 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") breakeven, which we estimate to be approximately 38% below the current production
volumes, assuming constant product mix and based on 2011 results. We believe that our lean cost structure will allow us to remain profitable at all points of
the traditional vehicle industry production cycle.
Efficient use of capital. The global vehicle components industry is generally capital intensive and a portion of a supplier's capital equipment is
frequently utilized for specific customer programs. Lead times for procurement of capital equipment are long and typically exceed start of production by one
to two years. Substantial advantages exist for suppliers that can leverage their prior investments in capital equipment or amortize the investment over higher
volume global customer programs.
Industry consolidation. Consolidation among worldwide suppliers is expected to continue as suppliers seek to achieve operating synergies and value
stream efficiencies, acquire complementary technologies, and build stronger customer relationships as OEMs continue to expand globally. We believe
companies with strong balance sheets and financial discipline are in the best position to take advantage of the industry consolidation trend. We have a strong
balance sheet with gross debt of approximately $2.1 billion and substantial liquidity of approximately $2.7 billion of cash and cash equivalents and available
financing under our Revolving Credit Facility (as defined below in Liquidity and Capital Resources) as of December 31, 2011, and no significant U.S. defined
benefit or workforce postretirement health care benefits and employer-paid postretirement basic life insurance benefits ("OPEB") liabilities. We intend to
maintain strong financial discipline targeting industry-leading earnings growth, cash flow generation and return on invested capital and to maintain sufficient
liquidity to sustain our financial flexibility throughout the industry cycle.
Our History and Structure
On August 19, 2009, Delphi Automotive LLP, a limited liability partnership organized under the laws of England and Wales, was formed for the
purpose of acquiring certain assets and subsidiaries of the former Delphi Corporation, our Predecessor, which, along with certain of its U.S. subsidiaries, had
filed voluntary petitions for bankruptcy in October 2005. On October 6, 2009, Delphi Automotive LLP acquired the major portion of the business of the
Predecessor, other than the global steering business, the U.S. manufacturing facilities in which the hourly employees were represented by the UAW and
certain non-productive U.S. assets, and Delphi Automotive LLP issued membership interests to a group of investors consisting of lenders to the Predecessor,
GM and the Pension Benefit Guaranty Corporation (the "PBGC"). For additional information see Note 1. General to the audited consolidated financial
statements included herein.
On March 31, 2011, all of the outstanding Class A and Class C membership interests held by GM and the PBGC were redeemed, respectively, for
approximately $4.4 billion. The redemption transaction was funded by a $3.0 billion credit facility entered into on March 31, 2011 (the "Credit Facility") and
existing cash.
On May 19, 2011, Delphi Automotive PLC was formed as a Jersey public limited company, and had nominal assets, no liabilities and had conducted no
operations prior to its initial public offering. On November 22, 2011, in conjunction with the completion of its initial public offering by the selling
shareholders, all of the outstanding equity of Delphi Automotive LLP was exchanged for ordinary shares in Delphi Automotive PLC. As a result, Delphi
Automotive LLP became a wholly-owned subsidiary of Delphi Automotive PLC.
Disposition of the Predecessor and Acquisition Accounting
On October 6, 2009 (the "Acquisition Date"), the Predecessor (i) consummated the transactions contemplated by the Modified Plan (as defined in Note
1. General to the audited consolidated financial statements included herein) and (ii) exited chapter 11 as DPH Holdings Corp. and its subsidiaries and affiliates
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