DELPHI 2014 Annual Report Download - page 52

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(1) On October 26, 2012, we completed the acquisition of the Motorized Vehicles Division (“MVL”). MVL is a leading global manufacturer of automotive
connection systems with a focus on high-value, leading technology applications. Given the timing of the acquisition it is not fully reflected in our 2012
results and impacts comparability to 2013 results.
(2) Includes long-lived asset and goodwill impairments.
(3) Our management utilizes net income before interest expense, other income (expense), net, income tax expense, restructuring, other project and
integration costs related to acquisitions and other portfolio transactions, asset impairments and equity income (loss), net of tax (“Adjusted Operating
Income”) to evaluate performance. 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. 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. Adjusted Operating Income, as determined and measured by Delphi,
should also not be compared to similarly titled measures reported by other companies.
The reconciliation of Adjusted Operating Income to Operating Income includes restructuring, other project and integration costs related to acquisitions
and other portfolio transactions, asset impairments and other transformation and rationalization costs related to 1) the implementation of information
technology systems to support finance, manufacturing and product development initiatives, 2) certain plant consolidations and closures costs and 3)
consolidation of many staff administrative functions into a global business service group. The reconciliation of Adjusted Operating Income to net
income (loss) attributable to the Company is as follows:
Year Ended December 31,
2014 2013 2012 2011 2010
(in millions)
Adjusted operating income....................................................... $ 2,018 $ 1,844 $ 1,671 $ 1,688 $ 1,221
Restructuring ............................................................................ (144) (145) (171) (31) (224)
Other acquisition and portfolio project costs ........................... (20) (15) (9) — —
Asset impairments.................................................................... (7) — (15) (13) (9)
Other transformation and rationalization costs ........................ — — — — (48)
Operating income ..................................................................... $ 1,847 $ 1,684 $ 1,476 $ 1,644 $ 940
Interest expense........................................................................ $ (135) $ (143) $ (136) $ (123) $ (30)
Other (expense) income, net..................................................... (7) (18) 5 (15) 34
Income before income taxes and equity income ...................... 1,705 1,523 1,345 1,506 944
Income tax expense .................................................................. (282) (256) (212) (305) (258)
Equity income, net of tax ......................................................... 17 34 27 22 17
Net income ............................................................................... 1,440 1,301 1,160 1,223 703
Net income attributable to noncontrolling interest................... 89 89 83 78 72
Net income attributable to Delphi ............................................ $ 1,351 $ 1,212 $ 1,077 $ 1,145 $ 631
(4) Adjusted operating income margin is defined as adjusted operating income as a percentage of revenues.
(5) Working capital is calculated herein as accounts receivable plus inventories less accounts payable.
(6) Excludes temporary and contract workers. As of December 31, 2014, we employed approximately 37,000 temporary and contract workers.