DELPHI 2014 Annual Report Download - page 143

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23. 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 injection, combustion, electronics controls, exhaust handling, test and
validation capabilities, 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 interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, restructuring, other
project and integration costs related to acquisitions and other portfolio transactions and asset impairments (“Adjusted Operating
Income”) 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, 2013, the Company’s 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 (loss), net of tax, restructuring and other acquisition-related integration costs (“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,
2014, Delphi’s management began utilizing Adjusted Operating Income as the key performance measure of segment income or
loss and for planning and forecasting purposes, as management believes this measure is most reflective of the operational
profitability or loss of Delphi's operating segments. Segment Adjusted Operating Income should not be considered a substitute
for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to
Delphi, which is the most directly comparable financial measure to Adjusted Operating Income that is in accordance with U.S.
GAAP. Segment Adjusted Operating Income, 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, 2014, 2013 and
2012, as well as balance sheet data as of December 31, 2014 and 2013.
Electrical/
Electronic
Architecture Powertrain Systems Electronics and Safety Thermal Systems Eliminations and Other (1) Total
(in millions)
For the Year Ended December 31, 2014:
Net sales............................................. $ 8,274 $ 4,575 $ 2,859 $ 1,556 $ (241) $ 17,023
Depreciation and amortization........... $ 265 $ 194 $ 79 $ 49 $ — $ 587
Adjusted operating income ................ $ 1,080 $ 533 $ 352 $ 53 $ — $ 2,018
Operating income (2)......................... $ 1,008 $ 474 $ 318 $ 47 $ — $ 1,847
Equity income (loss) .......................... $ 21 $ 1 $ — $ 13 $ (18) $ 17
Net income attributable to
noncontrolling interest.................... $ 35 $ 36 $ — $ 18 $ — $ 89
Capital expenditures........................... $ 326 $ 315 $ 89 $ 76 $ 49 $ 855