DELPHI 2012 Annual Report Download - page 138

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116
21. SEGMENT REPORTING
Delphi operates its core business along the following operating segments, which are grouped on the basis of similar
product, market and operating factors:
• Electrical/Electronic Architecture, which includes complete electrical architecture and component products.
• Powertrain Systems, which includes extensive systems integration expertise in gasoline, diesel and fuel handling
and full end-to-end systems including fuel and air injection, combustion, electronics controls, exhaust handling,
test and validation capabilities, diesel and automotive aftermarket, and original equipment service.
• Electronics and Safety, which includes component and systems integration expertise in infotainment and
connectivity, body controls and security systems, displays, mechatronics, passive and active safety electronics and
electric and hybrid electric vehicle power electronics, as well as advanced development of software.
• Thermal Systems, which includes heating, ventilating and air conditioning (“HVAC”) systems, components for
multiple transportation and other adjacent markets, and powertrain cooling and related technologies.
• Eliminations and Other, which includes i) the elimination of inter-segment transactions, and ii) certain other
expenses and income of a non-operating or strategic nature.
The accounting policies of the segments are the same as those described in Note 2. Significant Accounting Policies,
except that the disaggregated financial results for the segments have been prepared using a management approach, which is
consistent with the basis and manner in which management internally disaggregates financial information for the purposes of
assisting internal operating decisions. Generally, Delphi evaluates performance based on stand-alone segment 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”) and accounts for inter-segment sales and
transfers as if the sales or transfers were to third parties, at current market prices. Through December 31, 2010, the Company’s
management believed that Adjusted EBITDA was a meaningful measure of performance and it was used by management to
analyze Company and stand-alone segment operating performance. Management also used Adjusted EBITDA for planning and
forecasting purposes. Effective January 1, 2011, Delphi’s management began utilizing 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”) as a key performance measure because its restructuring was substantially
completed in 2010. Segment 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 attributable to Delphi, which is the most
directly comparable financial measure to EBITDA and Adjusted EBITDA that is in accordance with U.S. GAAP. Segment
EBITDA and Adjusted EBITDA, as determined and measured by Delphi, should also not be compared to similarly titled
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 Thermal
Systems Eliminations
and Other (1) Total
(in millions)
For the Year Ended December 31, 2012:
Net sales......................................... $ 6,815 $ 4,656 $ 2,732 $ 1,541 $ (225) $ 15,519
EBITDA......................................... $ 887 $ 698 $ 274 $ 103 $ — $ 1,962
Depreciation and amortization....... $ 164 $ 182 $ 97 $ 43 $ — $ 486
Operating income (2)..................... $ 723 $ 516 $ 177 $ 60 $ — $ 1,476
Equity income (loss) ...................... $ 13 $ 1 $ 3 $ 11 $ (1) $ 27
Net income attributable to
noncontrolling interest................ $ 37 $ 31 $ — $ 15 $ — $ 83