DELPHI 2015 Annual Report Download - page 68

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Table of Contents
46
Year Ended December 31, Variance Due To:
2014 2013
Favorable/
(unfavorable) Volume (a) FX
Operational
performance Other Total
(dollars in millions) (in millions)
Cost of sales.................... $ 12,471 $ 12,274 $ (197) $ (575) $ 6 $ 426 $ (54) $ (197)
Gross margin................... $ 3,028 $ 2,777 $ 251 $ (99) $ 18 $ 426 $ (94) $ 251
Percentage of net sales.... 19.5% 18.5%
(a) Presented net of contractual price reductions for gross margin variance.
The increase in cost of sales reflects increased volumes before contractual price reductions for the period, partially offset
by operational performance improvements and the following unfavorable items in Other above:
• Approximately $41 million of increased depreciation and amortization; and
• The absence of a prior period gain on the disposal of property of approximately $11 million from the sale of a
manufacturing site that was closed as a result of Delphi's overall restructuring program.
Selling, General and Administrative Expense
Year Ended December 31,
2014 2013
Favorable/
(unfavorable)
(dollars in millions)
Selling, general and administrative expense ............................................................... $ 1,036 $ 916 $ (120)
Percentage of net sales ................................................................................................ 6.7% 6.1%
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, 2014
compared to 2013 due to an increase in accruals for incentive compensation, information technology costs and for other service
providers.
Amortization
Year Ended December 31,
2014 2013
Favorable/
(unfavorable)
(in millions)
Amortization ............................................................................................................... $ 94 $ 97 $ 3
Amortization expense reflects the non-cash charge related to definite-lived intangible assets primarily recognized as part
of the Acquisition and resulting from the acquisition of MVL in October 2012. The relative consistency in amortization expense
during the year ended December 31, 2014 compared to 2013 reflects the continued amortization of these definite-lived
intangible assets.
Restructuring
Year Ended December 31,
2014 2013
Favorable/
(unfavorable)
(dollars in millions)
Restructuring............................................................................................................... $ 140 $ 137 $ (3)
Percentage of net sales ................................................................................................ 0.9% 0.9%
Restructuring expenses recorded during 2014 were primarily attributable to the expenses incurred in conjunction with our
on-going restructuring programs focused on aligning our manufacturing capacity and footprint with the automotive production
levels in Europe and South America. These charges included the recognition of employee-related and other costs of $35 million