DELPHI 2013 Annual Report Download - page 101

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The table below summarizes the activity in the product warranty liability for the years ended December 31, 2013 and
2012:
Year Ended December 31,
2013 2012
(in millions)
Accrual balance at beginning of year............................................................................................ $ 166 $ 315
Provision for estimated warranties incurred during the year................................................. 68 56
Provision for changes in estimate for pre-existing warranties............................................... (4)(42)
Settlements made during the year (in cash or in kind)........................................................... (68)(171)
Foreign currency translation and other .................................................................................. 7 8
Accrual balance at end of year...................................................................................................... $ 169 $ 166
In 2009, Delphi received information regarding potential warranty claims related to certain components supplied by
Delphi’s Powertrain segment. In 2010, Delphi recorded a change in the previous estimate of probable loss related to this matter
by recognizing warranty expense in cost of sales of $75 million. This adjustment resulted in a corresponding $75 million
decrease in net income attributable to Delphi and a corresponding unfavorable earnings per share impact of $0.11 for the year
ended December 31, 2010. In March 2011, Delphi reached a settlement with its customer related to warranty claims on certain
components previously supplied by Delphi’s Powertrain segment and reflected a change in its previous estimate of probable
loss as a result of the settlement agreement by recognizing $76 million of warranty expense in cost of sales. This adjustment
resulted in a corresponding $76 million decrease in net income attributable to Delphi and a corresponding unfavorable earnings
per share impact of $0.18 for the year ended December 31, 2011. In April 2011, in accordance with the terms of the settlement
agreement, Delphi made a payment of €90 million (approximately $133 million at April 30, 2011 exchange rates) and in April
2012, Delphi made the final scheduled payment of €60 million (approximately $80 million at April 30, 2012 exchange rates)
related to this matter. In September 2012, as a result of favorable warranty claims experience, Delphi reached a final settlement
with its customer related to ongoing warranty claims for production subsequent to the March 2011 settlement, and recorded a
change in its previous estimate of warranty claims by recognizing a $25 million reduction of warranty expense in cost of sales
in September 2012. This adjustment resulted in a corresponding $25 million increase in net income attributable to Delphi and a
corresponding favorable earnings per share impact of $0.08 for the 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
to the realignment of existing manufacturing capacity and closure of facilities and other exit or disposal activities, as it relates
to executing the Company’s strategy, either in the normal course of business or pursuant to significant restructuring programs.
In October 2012, Delphi initiated and committed to approximately $300 million of various restructuring programs which
includes costs related to the integration of MVL that are intended to further improve Delphi's industry leading cost structure. As
part of Delphi's continued efforts to optimize its cost structure, during the first quarter of 2013, an additional $75 million of
restructuring actions were initiated, bringing the overall commitments of Delphi's restructuring programs to approximately
$375 million. These restructuring actions are principally focused on the European region, and are expected to be substantially
completed in the first half of 2014. Approximately $170 million of the total restructuring was recognized in the fourth quarter
of 2012, and during the year ended December 31, 2013 Delphi recorded employee related and other restructuring charges
totaling $145 million. Restructuring charges for employee separation and termination benefits are paid either over the
severance period or in a lump sum in accordance with either statutory requirements or individual agreements. Delphi incurred
cash expenditures for these restructuring actions of approximately $150 million and $20 million in the years ended December
31, 2013 and December 31, 2012.