DELPHI 2012 Annual Report Download

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1
What’s Next.
2012 Annual Review

Table of contents

  • Page 1
    What's Next. 2012 Annual Review 1

  • Page 2
    ... sensing electronics to collision mitigation, Delphi continues to employ state-of-the-art technologies to help make the roads safer. Through our radar, vision and vehicle integration expertise, we've developed the most innovative active safety systems to help make high-performance safety features...

  • Page 3

  • Page 4
    ... World-Class We know the world of tomorrow will be very different from what we know today. But we want it to look the same, with blue skies, clear waters and green forests. Delphi makes an important contribution to that goal with our powertrain systems, which reduce CO2 emissions and improve fuel...

  • Page 5

  • Page 6
    4

  • Page 7
    ...radio systems with real-time traffic, enhancing convenience and productivity. We have developed an infotainment system smart enough to connect to the cloud and a vehicle's safety systems to provide connectivity and mitigate distraction all at the same time. All because, developing new products that...

  • Page 8
    We are on the path to be a great company, the best of the best. That is something earned over time, through innovation, through execution, and through value creation year after year. Rodney O'Neal Chief Executive Officer and President 6

  • Page 9
    ... as a leading global automotive supplier through the acquisition of MVL, a manufacturer of automotive connectors. We expanded our presence in the China market with the opening of three new facilities. We were added to the S&P 500 index, a real nod to the confidence that Delphi has generated in the...

  • Page 10
    2012 Net Sales by Region (in US$ Billions) 5.3 1.0 6.4 2.8 North America South America Europe, Middle East, Africa Asia Pacific 5.3 1.0 6.4 2.8 In the area of emissions and fuel economy, we saw growing numbers of countries adopt uniform expectations for fuel economy and emissions. Delphi is ...

  • Page 11
    ...to Delphi Diluted Net Income per Share Net Cash Provided by Operating Activities Capital Expenditures 2012 15,519 1,476 1,077 3.33 1,478 705 2011 16,041 1,644 1,145 2.72 1,377 630 2010 13,817 940 631 0.92 1,142 500 2012 Revenue by Segment (US$ Millions) 6,815 Electrical / Electronic Architecture...

  • Page 12
    What's New. Accelerating the Experience. 10

  • Page 13
    ... Connected Car Delphi developed a device that provides a groundbreaking car-to-cloud/cloud-to-car connectivity service, allowing a driver to track, locate, access, secure and monitor his or her family's vehicles anywhere at any time with a smartphone or browser. The first-in-its-class device works...

  • Page 14
    ...-year experience in the high-voltage world of power electronics and our commitment to lower-costs, Delphi offers green solutions that range from mild hybrid all the way to full electric - from wiring and electrical architecture to DC-DC converters, scalable battery pack controllers to automotive...

  • Page 15
    The most sophisticated electronic device you own, your vehicle has more computing power than the Space Shuttle, with up to 50 computers beneath its skin. And the trend is growing. Today's typical automobile contains one mile of wiring. In five to seven years, it will be one and a half miles. 1 10...

  • Page 16
    What's Next. Innovations of Distinction. For 2013, we will continue to shape the market with our industry leading innovation. Working with governments and our customers, we will add to an already great portfolio of new product introductions. 14

  • Page 17
    ... and robust technology pipeline. A global force serving global customers, we are also highly adapted on a regional basis in terms of our design, engineering and manufacturing facilities. In 15 major technical centers around the world, our innovators are working with our customers in their time zone...

  • Page 18
    ... per day at 2 PPM or 99.9998% quality South America 5% South America Setting the pace Recognized as a Leader in Transformative Technology Delphi innovation is renowned throughout the automotive world, garnering awards and recognition from customers, professional groups and respected monitors of...

  • Page 19
    ... of the top 20 vehicle makers in the United States Delphi business segments Electrical/Electronic Architecture Provides complete design of the vehicle's architecture, including connectors, wiring assemblies and harnesses, electrical centers and hybrid power distribution systems. Growth is driven by...

  • Page 20
    ... growth. Fueled by innovative, real-world solutions, we continue to pursue disciplined growth as a premier, global supplier to the leading vehicle makers in the world. Our path to growth is strategic. Backed by our ï¬,exible global business model, our operational and fiscal discipline leads Delphi...

  • Page 21
    Exceptional Execution Delphi's goal is to deliver ï¬,awless execution every day, and we continue to set new standards in this regard by delivering more than 60 million parts per day at 2 PPM or 99.9998% quality. 19

  • Page 22
    ... to help support our goal of allowing the world to look the same in the future, with blue skies, clear waters and green forests. Operating in 32 countries around the world, Delphi uses the same standards and protocols of excellence in global execution wherever we do business. These high standards...

  • Page 23
    ... as of June 30, 2012, the last business day of the registrant's most recently completed second fiscal quarter, was $7,306,600,068 (based on the closing sale price of the registrant's ordinary shares on that date as reported on the New York Stock Exchange). The number of the registrant's ordinary...

  • Page 24
    ... Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data...

  • Page 25
    ... factors are discussed under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's filings with the Securities and Exchange Commission. New risks and uncertainties arise from time to time, and it is impossible for us...

  • Page 26
    ... provides complete design of the vehicle's electrical architecture, including connectors, wiring assemblies and harnesses, electrical centers and hybrid high voltage and safety distribution systems. Our products provide the critical electrical and electronics backbone that supports increased vehicle...

  • Page 27
    ... of this Annual Report for further financial information about business segments. Our business is diversified across end-markets, regions, customers, vehicle platforms and products. Our customer base includes all 25 of the largest automotive OEMs in the world, and, in 2012, 25% of our net sales came...

  • Page 28
    .... OEMs continue to focus on improving fuel efficiency and reducing emissions in order to meet increasingly stringent regulatory requirements in various markets. On a worldwide basis, the relevant authorities in the European Union, the United States, China, India, Japan, Brazil, South Korea and...

  • Page 29
    ... of assembly. • High quality connectors are engineered primarily for use in the automotive and related markets, but also have applications in the aerospace, military and telematics sectors. The Electrical/Electronic Architecture connector product line's scope and customer base were significantly...

  • Page 30
    ... of delivery, product design capability, technical expertise and development capability, new product innovation, financial viability, application of lean principles, operational flexibility, customer service and overall management. In addition, our customers generally require that we demonstrate...

  • Page 31
    ... of OEM production during such future periods, customer agreements including applicable terms and conditions do not necessarily constitute firm orders. Firm orders are generally limited to specific and authorized customer purchase order releases placed with our manufacturing and distribution centers...

  • Page 32
    Our Global Operations Information concerning principal geographic areas for our continuing operations is set forth below. Net sales data reflects the manufacturing location for the years ended December 31, 2012, 2011 and 2010. Net property data is as of December 31, 2012, 2011 and 2010. Year ended ...

  • Page 33
    material specifications, combining our purchase requirements with our customers and/or suppliers, changing suppliers, hedging of certain commodities and other means. In the case of copper, which primarily affects our Electrical/Electronic Architecture segment, and aluminum, which primarily affects ...

  • Page 34
    ... of Delphi Electrical/Electronic Architecture (E/EA) effective February 2012. He also continues to serve as president of Delphi Asia-Pacific. Mr. Abulaban was most recently president of the Connection Systems product business unit for Delphi E/EA. Mr. Abulaban was appointed managing director...

  • Page 35
    ... of Delphi Electronics and Safety (E&S). He was named to his current position in February 2012 and was most recently vice president of the Infotainment & Driver Interface product business unit (PBU) for Delphi E&S since August 2009. He was previously general director of the Controls & Security PBU...

  • Page 36
    ... on our business, results of operations and financial condition. A drop in the market share and changes in product mix offered by our customers can impact our revenues. We are dependent on the continued growth, viability and financial stability of our customers. Our customers generally are OEMs in...

  • Page 37
    .... Our future growth is dependent on our making the right investments at the right time to support product development and manufacturing capacity in areas where we can support our customer base. We have identified the Asia Pacific and South American regions, and China, Brazil and India, in particular...

  • Page 38
    ... could materially increase our operating costs and materially decrease our profit margins. We, as with other component manufacturers in the automotive industry, ship products to our customers' vehicle assembly plants throughout the world so they are delivered on a "just-in-time" basis in order to...

  • Page 39
    ... in their financial or business condition. If our third-party manufacturers fail to deliver products, parts and components of sufficient quality on time and at reasonable prices, we could have difficulties fulfilling our orders, sales and profits could decline, and our commercial reputation could...

  • Page 40
    ... based on negotiated amounts for each year of service. Our primary funded non-U.S. plans are located in Mexico and the United Kingdom and were underfunded by $426 million as of December 31, 2012. The funding requirements of these benefit plans, and the related expense reflected in our financial...

  • Page 41
    ... in Asia Pacific, Eastern and Western Europe, South America and Northern Africa. We also purchase raw materials and other supplies from many different countries around the world. For the year ended December 31, 2012, approximately 67% of our net revenue came from sales outside the United States...

  • Page 42
    ... to our business could have a material adverse effect on our business, financial condition and results of operations. Risks Related to Legal, Regulatory, Tax and Accounting Matters We may incur material losses and costs as a result of warranty claims and product liability and intellectual property...

  • Page 43
    ... a material adverse effect on our business. OEMs also require their suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. Depending on the terms under which we supply products to a vehicle manufacturer, a vehicle...

  • Page 44
    ... intellectual property rights could negatively impact our business. Significant technological developments by others also could materially and adversely affect our business and results of operations and financial condition. There is a significant risk that the IRS will assert that Delphi Automotive...

  • Page 45
    ... the regional distribution of our major manufacturing sites by the operating segment that uses such facilities: North America Europe, Middle East & Africa Asia Pacific South America Total Electrical/Electronic Architecture ...Powertrain Systems ...Electronics and Safety ...Thermal Systems ...Total...

  • Page 46
    ..., Luxembourg. We frequently review our real estate portfolio and develop footprint strategies to support our customers' global plans, while at the same time supporting our technical needs and controlling operating expenses. We believe our evolving portfolio will meet current and anticipated future...

  • Page 47
    ... million and generated operating income of approximately $0.7 million. In 2012, our non-U.S. affiliates received payments of approximately $2.7 million related to these sales. The items were all non-U.S. origin automotive components which, if exported from the United States, would not have required...

  • Page 48
    ... ISSUER PURCHASES OF EQUITY SECURITIES Our ordinary shares have been publicly traded since November 17, 2011 when our ordinary shares were listed and began trading on the New York Stock Exchange (NYSE) under the symbol "DLPH". The following table sets forth the high and low sales price per share of...

  • Page 49
    ... stock units have no exercise price. (3) Remaining shares available under the PLC LTIP. Repurchase of Equity Securities A summary of our ordinary shares repurchased during the quarter ended December 31, 2012, is shown below: Total Number of Shares Purchased as Part of Publicly Announced Plans or...

  • Page 50
    ...7. Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto included elsewhere in this Annual Report. The financial information presented may not be indicative of our future performance. Successor (1) Year ended...

  • Page 51
    ... of information technology systems to support finance, manufacturing and product development initiatives, 2) certain plant consolidations and closures costs, 3) consolidation of many staff administrative functions into a global business service group and 4) the on-going integration costs related to...

  • Page 52
    ... automotive original equipment manufacturers ("OEMs") in the world. Business Strategy We believe the Company is well-positioned for growth from increasing global vehicle production volumes, increased demand for our Safe, Green and Connected products which are being added to vehicle content, and new...

  • Page 53
    ...technical centers around the world helps us develop innovative product solutions designed to meet their needs. As more OEMs design vehicles for global platforms, where the same vehicle architecture is shared among different regions, we are well suited to provide global design and engineering support...

  • Page 54
    ... higher margins. With these offerings, we believe we are well-positioned to benefit from the growing demand for vehicle content related to safety, fuel efficiency, emissions control and connectivity to the global information network. Our Electrical/Electronic Architecture and Electronics and Safety...

  • Page 55
    ... 26, 2012, we completed the acquisition of MVL. MVL is a leading global manufacturer of automotive connection systems with a focus on high-value, leading technology applications. We believe this transaction enhances our position as a leading supplier of automotive electrical/electronic architecture...

  • Page 56
    ...-related cost exposures using a number of approaches, including combining purchase requirements with customers and/or other suppliers, using alternate suppliers or product designs, negotiating cost reductions and/or commodity cost contract escalation clauses into our vehicle manufacturer supply...

  • Page 57
    ...results for the year ended December 31, 2012 as compared to the year ended December 31, 2011. Cost of Sales Cost of sales is primarily comprised of material, labor, manufacturing overhead, freight, fluctuations in foreign currency exchange rates, product engineering, design and development expenses...

  • Page 58
    ... of net sales... 927 $ 6.0% 901 $ 5.6% (26) Selling, general and administrative expense ("SG&A") includes administrative expenses, information technology costs and incentive compensation related costs, and increased as a percent of sales during the year ended December 31, 2012 compared to...

  • Page 59
    ...initial public offering, partially offset by transaction costs of $13 million in 2012 related to the acquisition of MVL and lower interest income. Refer to Note 17. Other income, net to the audited consolidated financial statements included herein for additional information. Income Taxes Year Ended...

  • Page 60
    ...accounting effect, including any retroactive effect, of a tax law change is accounted for in the period of enactment, which in this case is the first quarter of 2013. As a result, the Company did not recognize a tax benefit of approximately $22 million in 2012 related to the research and development...

  • Page 61
    ... income attributable to Delphi for the year ended December 31, 2012 and 2011 are as follows: Electrical/ Electronic Architecture Powertrain Systems Electronics and Safety Thermal Systems Eliminations and Other Total (in millions) For the Year Ended December 31, 2012: EBITDA...$ Depreciation...

  • Page 62
    ... are increased sales of approximately $110 million related to the net impact of acquisitions and divestitures. Gross Margin Percentage by Segment Year Ended December 31, 2012 2011 Electrical/Electronic Architecture ...Powertrain Systems ...Electronics and Safety ...Thermal Systems ...Eliminations...

  • Page 63
    ...compared to year ended December 31, 2010. The increase in total net sales resulted primarily from increased volume as a result of improved OEM production schedules in 2011 as well as the level of our content per unit, and to a lesser extent, the impacts of foreign currency exchange rate fluctuations...

  • Page 64
    ...results for the year ended December 31, 2011 as compared to the year ended December 31, 2010. Cost of Sales Cost of sales is primarily comprised of material, labor, manufacturing overhead, freight, fluctuations in foreign currency exchange rates, product engineering, design and development expenses...

  • Page 65
    ... of manufacturing and engineering processes, including plant closures, in the year ended December 31, 2011 as compared to 2010, as we had largely completed our significant restructuring programs by the end of 2010. Refer to Note 10. Restructuring to the audited consolidated financial statements...

  • Page 66
    ... million related to changes in our assertion with respect to our intent to repatriate foreign earnings in certain countries. Our annual effective tax rate may be impacted by future events including changes in tax laws, geographic income mix, cash requirements, tax audits, closure of tax years, legal...

  • Page 67
    ...and improving the functionality of information technology systems to support finance, manufacturing and product development initiatives, 2) certain plant consolidations and closures costs, 3) continued consolidation of many staff administrative activities, and 4) employee benefit plan settlements in...

  • Page 68
    ...152 (25) (44) (145) $ 2,224 $ $ Gross Margin Percentage by Segment Year Ended December 31, 2011 2010 Electrical/Electronic Architecture ...Powertrain Systems ...Electronics and Safety ...Thermal Systems ...Eliminations and Other...Total...EBITDA by Segment Year Ended December 31, Volume, net of...

  • Page 69
    ... for our initial public offering. Refer to Note 15. Shareholders' Equity and Net Income Per Share to the audited consolidated financial statements for additional information. In August 2011, the Board of Managers of Delphi Automotive LLP approved a repurchase program of Class B membership interests...

  • Page 70
    ..., or approximately $1 billion based on exchange rates as of the date of the acquisition. MVL is a leading global manufacturer of automotive connection systems with a focus on high-value, leading technology applications. Upon completing the acquisition, Delphi incurred related transaction expenses...

  • Page 71
    ... 31, 2012, Delphi Corporation selected the one-month LIBOR interest rate option, as detailed in the table below, and the amounts outstanding, net of the discount (in millions) and rates effective as of December 31, 2012 were based on Delphi's current credit rating and applicable margin for the...

  • Page 72
    ... from these Federal agencies in the year ended December 31, 2012 for work performed. These programs supplement our internal research and development funds and directly support our product focus of Safe, Green and Connected. The largest current program by cost was awarded as part of the American...

  • Page 73
    ... were: Year ended December 31, 2012 2012 2011 (in millions) 2010 Electrical/Electronic Architecture ...$ Powertrain Systems ...Electronics and Safety ...Thermal Systems ...Eliminations and Other...Total capital expenditures ...$ North America ...$ Europe, Middle East & Africa...Asia Pacific...South...

  • Page 74
    ...which generally provide benefits based on negotiated amounts for each year of service. Our primary non-U.S. plans are located in France, Germany, Mexico, Portugal and the United Kingdom ("U.K."). The U.K. and certain Mexican plans are funded. In addition, we have defined benefit plans in South Korea...

  • Page 75
    ... economic factors and business strategies. Other estimates used in determining fair value include, but are not limited to, future cash flows or income related to intangibles, market rate assumptions, actuarial assumptions for benefit plans and appropriate discount rates. Our estimates of fair value...

  • Page 76
    ... generally are not subject to insurance coverage. The cost of each environmental remediation is estimated by engineering, financial, and legal specialists based on current law and considers the estimated cost of investigation and remediation required and the likelihood that, where applicable...

  • Page 77
    ...Refer to Note 12. Pension Benefits to the audited consolidated financial statements included herein for additional information. Accounts Receivable Allowance Establishing valuation allowances for doubtful accounts requires the use of estimates and judgment in regard to the risk exposure and ultimate...

  • Page 78
    ... events or otherwise, could have a material impact on our financial condition and results of operations. We calculate our current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed in subsequent years...

  • Page 79
    ...investment grade credit ratings. Refer to Note 16. Fair Value of Financial Instruments, Derivatives and Hedging Activities to the audited consolidated financial statements included herein for more information. Share-Based Compensation The Delphi Automotive PLC Long Term Incentive Plan (the "PLC LTIP...

  • Page 80
    ... financial statements included herein. We maintain risk management control systems to monitor exchange and commodity risks and related hedge positions. Positions are monitored using a variety of analytical techniques including market value and sensitivity analysis. The following analyses are based...

  • Page 81
    ... Credit Agreement. The applicable interest rates listed above for the Revolving Credit Facility and the Tranche A Term Loan may increase or decrease from time to time in increments of 0.25% to 0.50%, up to a maximum of 1.0% based on changes to our corporate credit ratings. Accordingly, the interest...

  • Page 82
    ... fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Delphi Automotive PLC's internal control over financial reporting as of December 31, 2012, based on criteria...

  • Page 83
    ... opinion, Delphi Automotive PLC maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the...

  • Page 84
    DELPHI AUTOMOTIVE PLC CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, 2012 2011 2010 (in millions, except per share amounts) Net sales ...Operating expenses: Cost of sales ...Selling, general and administrative...Amortization ...Restructuring (Note 10) ...Total operating expenses......

  • Page 85
    .... Other comprehensive (loss) income is net of a $57 million tax effect, a $22 million tax effect, and a $7 million tax effect related to employee benefit plans adjustments for the years ended December 31, 2012, 2011 and 2010, respectively. See notes to consolidated financial statements. 63

  • Page 86
    DELPHI AUTOMOTIVE PLC CONSOLIDATED BALANCE SHEETS December 31, 2012 (in millions) 2011 ASSETS Current assets: Cash and cash equivalents...Restricted cash ...Accounts receivable, net ...Inventories (Note 3) ...Other current assets (Note 4)...Total current assets...Long-term assets: Property, net (...

  • Page 87
    ... of issuance costs ...Repayment of five-year notes ...Dividend payments of consolidated affiliates to minority shareholders...Repurchase of ordinary shares ...Distributions to Delphi equity holders...Redemption of membership interests...Net cash used in financing activities...Effect of exchange rate...

  • Page 88
    DELPHI AUTOMOTIVE PLC CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY Ordinary Shares Membership Interests Accumulated Other Comprehensive Income (Loss) Total Delphi Shareholders' Equity Number of Shares Amount Additional Paid in Capital Retained Earnings Class A Class B Class C Class E-1 ...

  • Page 89
    ... accounting principles generally accepted in the United States of America ("U.S. GAAP"). Nature of operations-Delphi is a leading global vehicle components manufacturer and provides electrical and electronic, powertrain, safety and thermal technology solutions to the global automotive and commercial...

  • Page 90
    ...incurred. Total research and development expenses (including engineering) were $1.2 billion, $1.2 billion and $1.0 billion for the years ended December 31, 2012, 2011 and 2010, respectively. Cash and cash equivalents-Cash and cash equivalents are defined as short-term, highly liquid investments with...

  • Page 91
    ...the special tool or the life of the related vehicle program, whichever is shorter. Engineering, testing and other costs incurred in the design and development of production parts are expensed as incurred, unless the costs are reimbursable, as specified in a customer contract. As of December 31, 2012...

  • Page 92
    ... the fiscal year. The Company tests for goodwill impairment at the reporting unit level. Our reporting units are the components of operating segments which constitute businesses for which discrete financial information is available and is regularly reviewed by segment management. No components were...

  • Page 93
    ... qualify and are designated as normal purchases or sales. Changes in fair value are reported currently through earnings unless they meet hedge accounting criteria. Exposure to fluctuations in currency exchange rates, interest rates and certain commodity prices are managed by entering into...

  • Page 94
    ... receivables. The update will require entities to provide a greater level of disaggregated information about the credit quality of its financing receivables and its allowance for credit losses. The guidance is effective for public companies for interim and annual reporting periods ending on or after...

  • Page 95
    ... to have a significant impact on Delphi's financial statements. In February 2013, the FASB issued ASU 2013-2, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This guidance requires an organization to present the effects on the line items of net income of significant...

  • Page 96
    ... method of accounting. These affiliates are not publicly traded companies and are located primarily in South Korea, China and Mexico. Delphi's ownership percentages vary generally from approximately 20% to 50%, with the most significant investments in Korea Delphi Automotive Systems Corporation...

  • Page 97
    ... Ended December 31, 2012 2011 (in millions) 2010 Sales to affiliates...$ Purchases from affiliates ...$ 36 112 $ $ 66 129 $ $ 62 190 6. PROPERTY, NET Property, net consisted of: Estimated Useful Lives (Years) December 31, 2012 (in millions) 2011 Land Land and leasehold improvements Buildings...

  • Page 98
    ... Carrying Carrying Amortization Amount Amount (in millions) Amortized intangible assets: Patents and developed technology Customer relationships Trade names Total Unamortized intangible assets: In-process research & development Goodwill Total $ 636 293 103 1,032 14 473 1,519 $ 142 85 16...

  • Page 99
    ...related obligations ...Employee benefits, including current pension obligations ...Executive long-term incentive plan (Note 19) ...Income and other taxes payable ...Warranty obligations (Note 9)...Restructuring (Note 10) ...Customer deposits ...Deferred income taxes (Note 14) ...Derivative financial...

  • Page 100
    ... year ended December 31, 2012. 10. RESTRUCTURING Delphi's restructuring activities are undertaken as necessary to implement management's strategy, streamline operations, take advantage of available capacity and resources, and ultimately achieve net cost reductions. These activities generally relate...

  • Page 101
    ...163 $ $ As part of Delphi's ongoing efforts to lower costs and operate efficiently, the Company recorded $10 million of restructuring costs during 2011 in North America and South America, primarily related to the Electrical/Electronic Architecture segment. The Company also recorded $10 million of...

  • Page 102
    ...the Tranche A Term Loan by $363 million, which was used in connection with financing the acquisition of FCI Group's ("FCI") Motorized Vehicles Division MVL. This additional borrowing was available as a delayed draw facility on and after September 14, 2012 for 30 days. Effective October 11, 2012, the...

  • Page 103
    ... 31, 2012, Delphi Corporation selected the one-month LIBOR interest rate option, as detailed in the table below, and the amounts outstanding, net of the discount (in millions) and rates effective as of December 31, 2012 were based on Delphi's current credit rating and applicable margin for the...

  • Page 104
    ...provide benefits based on negotiated amounts for each year of service. Delphi's primary non-U.S. plans are located in France, Germany, Mexico, Portugal and the United Kingdom ("U.K."). The U.K. and certain Mexican plans are funded. In addition, Delphi has defined benefit plans in South Korea, Turkey...

  • Page 105
    ...and 2011. Year ended December 31, 2012 Year ended December 31, 2011 (in millions) Benefit obligation at beginning of period ...Interest cost ...Actuarial loss ...Benefits paid ...Benefit obligation at end of period...Change in plan assets: Fair value of plan assets at beginning of period ...Delphi...

  • Page 106
    ... 2012 Year ended December 31, 2011 (in millions) Benefit obligation at beginning of period ...Liabilities assumed in the acquisition ...Divestitures ...Service cost ...Interest cost ...Actuarial loss ...Benefits paid ...Impact of curtailments ...Plan amendments and other ...Exchange rate movements...

  • Page 107
    ... methods and included the following: U.S. Plans Year Ended December 31, 2012 2011 (in millions) 2010 Interest cost ...$ Net periodic benefit cost ...$ 3 3 $ $ Non-U.S. Plans 3 3 $ $ 4 4 Year Ended December 31, 2012 2011 (in millions) 2010 Service cost...$ Interest cost...Expected return...

  • Page 108
    ...of recent fund performance and historical returns, in developing the long-term rate of return assumptions. The assumptions for the United Kingdom and Mexico are primarily long-term, prospective rates. Delphi's pension expense for 2013 is determined at the 2012 year end measurement date. For purposes...

  • Page 109
    ... asset classes include developed market equities, emerging market equities, private equity, global high quality and high yield fixed income, real estate, and absolute return strategies. The fair values of Delphi's pension plan assets weighted-average asset allocations at December 31, 2012 and 2011...

  • Page 110
    ... quoted market prices on regulated financial exchanges of the underlying investments included in the fund. Real Estate-The fair value of real estate properties is estimated using an annual appraisal provided by the administrator of the property investment. Management believes this is an appropriate...

  • Page 111
    ... connection with an investigation of automotive parts suppliers concerning possible violations of antitrust laws related to the supply of wire harnesses to vehicle manufacturers. Delphi is cooperating fully with the European authorities. Investigations of this nature often continue for several years...

  • Page 112
    ... business operations in Brazil that are subject to the Brazilian federal labor, social security, environmental, tax and customs laws, as well as a variety of state and local laws. While Delphi believes it complies with such laws, they are complex, subject to varying interpretations, and the Company...

  • Page 113
    ... United States. The effective tax rate in the year ended December 31, 2011 was impacted by the release of $52 million of valuation allowances, offset by an increase of $10 million in withholding tax expense primarily related to the funding of the redemption of all the outstanding Class A and Class...

  • Page 114
    ...accounting effect, including any retroactive effect, of a tax law change is accounted for in the period of enactment, which in this case is the first quarter of 2013. As a result, the Company did not recognize a tax benefit of approximately $22 million in 2012 related to the research and development...

  • Page 115
    ... of $3 million for the years ended December 31, 2012, 2011 and 2010, respectively. The Company files tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. Taxing jurisdictions significant to Delphi include the China, Brazil, France, Germany...

  • Page 116
    ...withhold U.S. federal income taxes on distributions to its non-U.S. members for periods beginning on or after the Acquisition Date. 15. SHAREHOLDERS' EQUITY AND NET INCOME PER SHARE Overview On May 19, 2011, Delphi Automotive PLC was formed as a Jersey public limited company, and had nominal assets...

  • Page 117
    ..., on November 22, 2011, Delphi Automotive PLC completed the exchange of all of the outstanding equity of Delphi Automotive LLP for 328,244,510 ordinary shares in Delphi Automotive PLC. For the year ended December 31, 2011, the net income per share is presented giving effect to this transaction on...

  • Page 118
    ... reward board members and to promote the creation of long-term value for interest holders of Delphi Automotive LLP. The fair value of the membership interests issued on the Acquisition Date was allocated between the respective classes based on the distribution provisions of the Second LLP Agreement...

  • Page 119
    ... outstanding classes based on the cumulative distribution provisions of the Fourth LLP Agreement. In conjunction with the adoption in 2010 of the 2010 Board of Managers Class E-1 Interest Incentive Plan and the VCP, both of which were long-term incentive plans designed to assist the Company in...

  • Page 120
    ..., Delphi enters into various derivative transactions pursuant to its risk management policies, which prohibit holding or issuing derivative financial instruments for speculative purposes, and designation of derivative instruments is performed on a transaction basis to support hedge accounting...

  • Page 121
    ... Long-Term Liabilities Other Long-Term Liabilities $ 17 - 35 11 17 80 The fair value of Delphi's derivative financial instruments increased from a net liability position at December 31, 2011 to a net asset position at December 31, 2012 primarily due to favorable movements in the forward rates of...

  • Page 122
    ...gain or loss recognized in income for the ineffective portion of designated derivative instruments excluded from effectiveness testing were recorded to cost of sales in the consolidated statements of operations for the years ended December 31, 2012 and 2011. The gain or loss recognized in income for...

  • Page 123
    ... qualify and are designated as normal purchases or sales. Changes in fair value are reported currently through earnings unless they meet hedge accounting criteria. Delphi's derivative exposures are with counterparties with long-term investment grade credit ratings. Delphi estimates the fair value...

  • Page 124
    ... approximately $13 million in transaction costs related to the acquisition of MVL that was completed in October 2012. During the year ended December 31, 2011, Delphi incurred approximately $44 million in transaction costs related to our initial public offering completed in November 2011. As further...

  • Page 125
    ... global manufacturer of automotive connection systems with a focus on high-value, leading technology applications, is based in Guyancourt, France, had 2011 sales of â,¬692 million (approximately 12% to Delphi that will be eliminated on a consolidated basis) and global operations. Upon completing...

  • Page 126
    ...-affected operating income divided by average net working capital plus average net property, plant and equipment expense for each calendar year. Relative total shareholder return measured by comparing the average closing price per share of the Company's ordinary shares for all available trading days...

  • Page 127
    ... Delphi completed an initial public offering on November 22, 2011, and the resulting total equity valuation of the Company (based on the average closing price of Delphi shares during the 15-day period beginning on the 30th day after the closing of the offering), plus the value of prior distributions...

  • Page 128
    ... and 2012 for the Class E-1 awards and for the years ended December 31, 2010, 2011, 2012 and 2013 for the VCP awards. These financial projections represented management's best estimate at the time of the contemporaneous valuations. Discount rates used to determine the present value of future cash...

  • Page 129
    ... FINANCIAL STATEMENTS Basis of Presentation In May 2011, Delphi Corporation issued the Senior Notes in a transaction exempt from registration under Rule 144A and Regulation S of the Securities Act. The Senior Notes were exchanged for the New Senior Notes in an exchange offer completed in May 2012...

  • Page 130
    ...in millions) Net sales Operating expenses: Cost of sales Selling, general and administrative Amortization Restructuring Total operating expenses Operating (loss) income Interest expense Other income (expense), net (Loss) income before income taxes and equity income Income tax benefit (expense) (Loss...

  • Page 131
    ......Employee benefit plans adjustment, net of tax ...Other comprehensive loss...Equity in other comprehensive (loss) income of subsidiaries...Comprehensive income (loss) ...Comprehensive income attributable to noncontrolling interests ...Comprehensive income (loss) attributable to Delphi ... $ 1,145...

  • Page 132
    ...Employee benefit plans adjustment, net of tax ...Other comprehensive income ...Equity in other comprehensive income (loss) of subsidiaries...Comprehensive income (loss) ...Comprehensive income attributable to noncontrolling interests ...Comprehensive income (loss) attributable to Delphi ... $ 631...

  • Page 133
    ...: Short-term debt...Accounts payable...Accrued liabilities...Total current liabilities...Long-term liabilities: Long-term debt ...Intercompany accounts, net ...Pension benefit obligations...Other long-term liabilities ...Total long-term liabilities ...Total liabilities ...Total Delphi shareholders...

  • Page 134
    ...: Short-term debt...Accounts payable...Accrued liabilities...Total current liabilities...Long-term liabilities: Long-term debt ...Intercompany accounts, net ...Pension benefit obligations...Other long-term liabilities ...Total long-term liabilities ...Total liabilities ...Total Delphi shareholders...

  • Page 135
    ... of senior secured term loans ...Dividend payments of consolidated affiliates to minority shareholders...Intercompany dividends and net increase (decrease) in intercompany obligations ...Repurchase of ordinary shares ...Net cash (used in) provided by financing activities ...Effect of exchange rate...

  • Page 136
    ... affiliates to minority shareholders...Intercompany dividends and net increase (decrease) in intercompany obligations ...Distribution to Delphi equity holders...Redemption of membership interests...Net cash provided by (used in) financing activities ...Effect of exchange rate fluctuations on cash...

  • Page 137
    ... affiliates to minority shareholders...Net cash used in financing activities ...Effect of exchange rate fluctuations on cash and cash equivalents ...Increase (decrease) in cash and cash equivalents. Cash and cash equivalents at beginning of period...Cash and cash equivalents at end of period...

  • Page 138
    ... measures reported by other companies. Included below are sales and operating data for Delphi's segments for the years ended December 31, 2012, 2011 and 2010, as well as balance sheet data as of December 31, 2012 and 2011. Electrical/ Electronic Architecture Powertrain Systems Electronics and Safety...

  • Page 139
    ...644 22 78 Electrical/ Electronic Architecture Powertrain Systems Electronics and Safety Thermal Systems Eliminations and Other (1) Total (in millions) For the Year Ended December 31, 2010: Net sales ...$ EBITDA...$ Adjusted EBITDA...$ Depreciation and amortization...$ Operating income (loss...

  • Page 140
    ... of information technology systems to support finance, manufacturing and product development initiatives, 2) certain plant consolidations and closures costs, 3) consolidation of many staff administrative functions into a global business service group, and 4) employee benefit plan settlements...

  • Page 141
    ... 31. Year ended December 31, 2012 Net Property(1) Year ended December 31, 2011 (in millions) Net Sales Net Sales Net Property(1) Net Sales Net Property(1) Year ended December 31, 2010 United States ...Other North America...Europe, Middle East & Africa(2)...Asia Pacific ...South America...Total...

  • Page 142
    ... Company's unaudited quarterly results of continuing operations for fiscal 2012 and 2011. Three months ended March 31, 2012 Net sales ...$ Cost of sales (1)...Gross profit...Operating income ...Net income ...Net income attributable to Delphi ...Basic net income per share: Basic net income per share...

  • Page 143
    ... of the Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of the Company's internal control over financial reporting as of December 31, 2012 based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway...

  • Page 144
    ... conditions described below. Kevin Clark was named executive vice president in addition to his responsibilities as chief financial officer of Delphi. As a public company, the importance of continued strong financial discipline and oversight across our entire business, combined with the development...

  • Page 145
    ... applies to the Company's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, by posting such information on the Company's website, at the address specified above. The Company's Corporate Governance Guidelines...

  • Page 146
    ... filed as part of this Form 10-K. (1) Financial Statements: Reports of Independent Registered Public Accounting Firm Consolidated Statements of Operations for the Years Ended December 31, 2012, 2011 and 2010 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2012...

  • Page 147
    ...(5)+ Form of Non-Employee Director RSU Award Agreement pursuant to Delphi Automotive PLC Long Term Incentive Plan, as amended(6)+ Second Amended and Restated Delphi Automotive LLP 2010 Management Value Creation Plan(6)+ Letter Agreement, dated October 29, 2012, between the Company and Kevin P. Clark...

  • Page 148
    ... Statement on Form 8-A (File No. 001-35346) of Delphi Automotive PLC on November 10, 2011 and incorporated herein by reference. (5) Filed with Form 10-K for the year ended December 31, 2011 on February 17, 2012 and incorporated herein by reference. (6) Filed with Form 10-Q for the period ended...

  • Page 149
    ... duly authorized. DELPHI AUTOMOTIVE PLC /s/ Kevin P. Clark By: Kevin P. Clark Executive Vice President and Chief Financial Officer Dated: February 11, 2013 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below as of February 11, 2013, by the...

  • Page 150
    /s/ Sean O. Mahoney Sean O. Mahoney /s/ Michael McNamara Michael McNamara /s/ Thomas W. Sidlik Thomas W. Sidlik /s/ Bernd Wiedemann Bernd Wiedemann /s/ Lawrence A. Zimmerman Lawrence A. Zimmerman Director Director Director Director Director 128

  • Page 151
    ... 6, 2009 Year ended December 31, 2008 Year ended December 31, 2012 Income (loss) before income taxes and equity income...$ Cash dividends received from non-consolidated affiliates and other...Portion of rentals deemed to be interest...Interest and related charges on debt...Earnings available for...

  • Page 152
    ... and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 11, 2013 /s/ Rodney O'Neal Rodney O'Neal Chief Executive Officer...

  • Page 153
    ... Certification of Principal Financial Officer I, Kevin P. Clark, certify that: 1. 2. I have reviewed this annual report on Form 10-K of Delphi Automotive PLC; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to...

  • Page 154
    ... Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 11, 2013 /s/ Rodney O'Neal Rodney O'Neal Chief Executive Officer & President (Principal Executive...

  • Page 155
    ... ACT OF 2002 In connection with the filing of this annual report on Form 10-K of Delphi Automotive PLC (the "Company") for the period ended December 31, 2012, with the Securities and Exchange Commission on the date hereof (the "Report"), I, Kevin Clark, Chief Financial Officer, certify, pursuant to...

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    ... Report, Forms 10-K and 10-Q and other Delphi publications are available via our website at www.delphi.com or contact: Delphi Investor Relations Services Delphi Automotive PLC 5725 Delphi Drive Troy, MI, 48098 Phone: (248) 813-2494 Stock Exchange The company's ordinary shares are traded on the New...

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