UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2013~~
March 31, 2014



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-35346

DELPHI AUTOMOTIVE PLC

(Exact name of registrant as specified in its charter)



Jersey		98-1029562
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Courteney Road

Hoath Way

Gillingham, Kent ME8 0RU

United Kingdom

(Address of principal executive offices)

011-44-163-423-4422

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x. No ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x. No ¨.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨. No x.

The number of the registrant’s ordinary shares outstanding, $0.01 par value per share as of ~~November 1, 2013~~April 17, 2014, was ~~307,717,560~~303,664,259.

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DELPHI AUTOMOTIVE PLC

INDEX



		Page
	Part I - Financial Information
Item 1.	Financial Statements
	Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ (Unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ (Unaudited)	4
	Consolidated Balance Sheets as of ~~September 30, 2013~~March 31, 2014 (Unaudited) and December 31, ~~2012~~2013	5
	Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ (Unaudited)	6
	Consolidated Statement of Shareholders’ Equity for the ~~Nine~~Three Months Ended ~~September 30, 2013~~March 31, 2014 (Unaudited)	7
	Notes to Consolidated Financial Statements	8
	Cautionary Statement Regarding Forward Looking Information	4640
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4741
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6554
Item 4.	Controls and Procedures	6555

	Part II - Other Information
Item 1.	Legal Proceedings	6555
Item 1A.	Risk Factors	6555
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6656
Item 6.	Exhibits	6757

Signatures		6858
Exhibits

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DELPHI AUTOMOTIVE PLC

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2013			2012			2013			2012			2014			2013
	(in millions, except per share amounts)												(in millions, except per share amounts)
Net sales	$	4,017		$	3,663		$	12,281		$	11,752		$	4,276		$	4,024
Operating expenses:
Cost of sales	3,338			3,058			10,141			9,703			3,508			3,339
Selling, general and administrative	228			215			699			673			261			230
Amortization	27			20			79			60			26			26
Restructuring (Note 7)	37			3			95			17			22			32
Total operating expenses	3,630			3,296			11,014			10,453			3,817			3,627
Operating income	387			367			1,267			1,299			459			397
Interest expense	(34		)	(32		)	(106		)	(100		)	(35		)	(36		)
Other income (expense), net (Note 16)	4			3			(25		)	15			(16		)	(34		)
Income before income taxes and equity income	357			338			1,136			1,214			408			327
Income tax expense	(72		)	(52		)	(182		)	(227		)	(75		)	(37		)
Income before equity income	285			286			954			987			333			290
Equity income, net of tax	8			6			26			18			8			8
Net income	293			292			980			1,005			341			298
Net income attributable to noncontrolling interest	22			23			66			64			21			22
Net income attributable to Delphi	$	271		$	269		$	914		$	941		$	320		$	276
Basic net income per share:
Basic net income per share attributable to Delphi	$	0.88		$	0.84		$	2.93		$	2.89		$	1.05		$	0.88
Weighted average number of basic shares outstanding	309.68			320.93			312.08			325.00			305.85			314.68
Diluted net income per share:
Diluted net income per share attributable to Delphi	$	0.87		$	0.84		$	2.92		$	2.89		$	1.04		$	0.88
Weighted average number of diluted shares outstanding	310.62			321.28			312.87			325.28			306.89			315.36

Cash dividends declared per share	$	0.17		$	—		$	0.51		$	—		$	0.25		$	0.17

See notes to consolidated financial statements.

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DELPHI AUTOMOTIVE PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2013			2012			2013			2012			2014			2013
	(in millions)												(in millions)
Net income	$	293		$	292		$	980		$	1,005		$	341		$	298
Other comprehensive (loss) income:
Currency translation adjustments	113			82			(4		)	9			(14		)	(78		)
Net change in unrecognized gain (loss) on derivative instruments, net of tax (Note 14)	10			26			(29		)	62
Net change in unrecognized (loss) gain on derivative instruments, net of tax (Note 14)													(33		)	6
Employee benefit plans adjustment, net of tax	(5		)	(1		)	11			(2		)	1			17
Other comprehensive income (loss)	118			107			(22		)	69
Other comprehensive loss													(46		)	(55		)
Comprehensive income	411			399			958			1,074			295			243
Comprehensive income attributable to noncontrolling interests	25			24			69			64			17			22
Comprehensive income attributable to Delphi	$	386		$	375		$	889		$	1,010		$	278		$	221

See notes to consolidated financial statements.

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DELPHI AUTOMOTIVE PLC

CONSOLIDATED BALANCE SHEETS


	September 30, 2013			December 31,			March 31, 2014			December 31,
	(Unaudited)			2012			(Unaudited)			2013
	(in millions)						(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	1,053		$	1,105		$	978		$	1,389
Restricted cash	5			8			7			4
Accounts receivable, net	2,856			2,425			3,066			2,662
Inventories (Note 3)	1,233			1,066			1,235			1,093
Other current assets (Note 4)	640			623			594			604
Total current assets	5,787			5,227			5,880			5,752
Long-term assets:
Property, net	2,982			2,860			3,251			3,216
Investments in affiliates	217			231			229			234
Intangible assets, net (Note 2)	742			803			696			723
Goodwill (Note 2)	485			473			494			496
Other long-term assets (Note 4)	598			582			632			626
Total long-term assets	5,024			4,949			5,302			5,295
Total assets	$	10,811		$	10,176		$	11,182		$	11,047
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt (Note 8)	$	59		$	140		$	31		$	61
Accounts payable	2,504			2,278			2,681			2,595
Accrued liabilities (Note 5)	1,294			1,241			1,218			1,238
Total current liabilities	3,857			3,659			3,930			3,894
Long-term liabilities:
Long-term debt (Note 8)	2,359			2,324			2,418			2,351
Pension benefit obligations	909			929			958			959
Other long-term liabilities (Note 5)	463			434			382			409
Total long-term liabilities	3,731			3,687			3,758			3,719
Total liabilities	7,588			7,346			7,688			7,613
Commitments and contingencies (Note 10)
Shareholders’ equity:
Preferred shares, $0.01 par value per share, 50,000,000 shares authorized, none issued and outstanding	—			—			—			—
Ordinary shares, $0.01 par value per share, 1,200,000,000 shares authorized, 308,080,000 and 315,299,183 issued and outstanding as of September 30, 2013 and December 31, 2012, respectively	3			3
Ordinary shares, $0.01 par value per share, 1,200,000,000 shares authorized, 304,246,927 and 306,389,149 issued and outstanding as of March 31, 2014 and December 31, 2013, respectively							3			3
Additional paid-in-capital	1,718			1,723			1,693			1,699
Retained earnings	1,287			856			1,544			1,446
Accumulated other comprehensive loss	(262		)	(237		)	(279		)	(237		)
Total Delphi shareholders’ equity	2,746			2,345			2,961			2,911
Noncontrolling interest	477			485			533			523
Total shareholders’ equity	3,223			2,830			3,494			3,434
Total liabilities and shareholders’ equity	$	10,811		$	10,176		$	11,182		$	11,047

See notes to consolidated financial statements.

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DELPHI AUTOMOTIVE PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Nine Months Ended
	September 30, 2013						Three Months Ended March 31,
	2013			2012			2014			2013
	(in millions)						(in millions)
Cash flows from operating activities:
Net income	$	980		$	1,005		$	341		$	298
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	322			280			119			105
Amortization	79			60			26			26
Amortization of deferred issuance costs	8			13
Amortization of deferred debt issuance costs							2			3
Restructuring expense, net of cash paid	(11		)	(45		)	(27		)	(4		)
Deferred income taxes	23			18			8			(2		)
Pension and other postretirement benefit expenses	62			49			22			21
Income from equity method investments, net of dividends received	4			8			2			1
Loss on extinguishment of debt	39			1			34			39
Gain on sale of assets	(11		)	(4		)	2			—
Share-based compensation	36			20			14			10
Changes in operating assets and liabilities:
Accounts receivable, net	(431		)	(87		)	(404		)	(370		)
Inventories	(167		)	(69		)	(142		)	(82		)
Other assets	(43		)	(23		)	(22		)	21
Accounts payable	306			(22		)	218			194
Accrued and other long-term liabilities	(19		)	9			(53		)	(60		)
Other, net	(42		)	(3		)	20			(32		)
Pension contributions	(65		)	(42		)	(24		)	(19		)
Net cash provided by operating activities	1,070			1,168			136			149
Cash flows from investing activities:
Capital expenditures	(512		)	(563		)	(298		)	(213		)
Proceeds from sale of property / investments	24			18			1			2
Cost of business and technology acquisitions, net of cash acquired	(10		)	—			—			2
Decrease (increase) in restricted cash	3			(2		)
Acquisition of minority held shares	—			(16		)
Dividends from equity method investments in excess of earnings	—			37
(Increase) Decrease in restricted cash							(3		)	4
Net cash used in investing activities	(495		)	(526		)	(300		)	(205		)
Cash flows from financing activities:
Net repayments under other short-term debt agreements	(79		)	(16		)
Net proceeds (repayments) under other short- and long-term debt agreements							3			(27		)
Repayments under long-term debt agreements							(164		)	(1,342		)
Repayment of senior notes							(526		)	—
Proceeds from issuance of senior secured term loans, net of issuance costs	560			(5		)	—			560
Repayment under long-term debt agreements	(1,349		)	—
Proceeds from issuance of senior notes, net of issuance costs	788			—			691			790
Dividend payments of consolidated affiliates to minority shareholders	(26		)	(39		)	(7		)	(8		)
Repurchase of ordinary shares	(353		)	(300		)	(153		)	(122		)
Distribution of cash dividends	(159		)	—			(77		)	(53		)
Taxes withheld and paid on employees' restricted share awards	(14		)	—			(8		)	(14		)
Net cash used in financing activities	(632		)	(360		)	(241		)	(216		)
Effect of exchange rate fluctuations on cash and cash equivalents	5			(11		)	(6		)	(3		)
(Decrease) increase in cash and cash equivalents	(52		)	271
Decrease in cash and cash equivalents							(411		)	(275		)
Cash and cash equivalents at beginning of the period	1,105			1,363			1,389			1,105
Cash and cash equivalents at end of the period	$	1,053		$	1,634		$	978		$	830

See notes to consolidated financial statements.

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DELPHI AUTOMOTIVE PLC

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (Unaudited)


	Ordinary Shares																						Ordinary Shares
	Number of Shares		Amount		Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Delphi Shareholders’ Equity			Noncontrolling Interest			Total Shareholders’ Equity			Number of Shares		Amount		Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Delphi Shareholders’ Equity			Noncontrolling Interest			Total Shareholders’ Equity
	(in millions)																						(in millions)
Balance at January 1, 2013	315		$	3	$	1,723		$	856		$	(237	)	$	2,345		$	485		$	2,830
Balance at January 1, 2014																							306		$	3	$	1,699		$	1,446		$	(237	)	$	2,911		$	523		$	3,434
Net income	—		—		—			914			—			914			66			980			—		—		—			320			—			320			21			341
Other comprehensive loss	—		—		—			—			(25		)	(25		)	3			(22		)	—		—		—			—			(42		)	(42		)	(4		)	(46		)
Dividends on ordinary shares	—		—		2			(161		)	—			(159		)	—			(159		)	—		—		1			(78		)	—			(77		)	—			(77		)
Dividend payments of consolidated affiliates to minority shareholders	—		—		—			—			—			—			(77		)	(77		)	—		—		—			—			—			—			(7		)	(7		)
Taxes withheld on employees' restricted share award vestings	—		—		(3		)	—			—			(3		)	—			(3		)	—		—		(8		)	—			—			(8		)	—			(8		)
Repurchase of ordinary shares	(7	)	—		(40		)	(322		)	—			(362		)	—			(362		)	(2	)	—		(13		)	(144		)	—			(157		)	—			(157		)
Share based compensation	—		—		36			—			—			36			—			36			—		—		14			—			—			14			—			14
Balance at September 30, 2013	308		$	3	$	1,718		$	1,287		$	(262	)	$	2,746		$	477		$	3,223
Balance at March 31, 2014																							304		$	3	$	1,693		$	1,544		$	(279	)	$	2,961		$	533		$	3,494

See notes to consolidated financial statements.

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DELPHI AUTOMOTIVE PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL

General and basis of presentation—“Delphi,” the “Company”~~, the “Successor”~~, “we”, “us” and “our” refer to Delphi Automotive PLC, a public limited company which was formed under the laws of Jersey on May 19, 2011, together with its subsidiaries, including Delphi Automotive LLP, a limited liability partnership incorporated under the laws of England and Wales which was formed on August 19, 2009 for the purpose of acquiring certain assets of the former Delphi Corporation ("the Acquisition"), and became a subsidiary of Delphi Automotive PLC in connection with the completion of the Company’s initial public offering on November 22, 2011. The former Delphi Corporation (now known as DPH Holdings Corp. (“DPHH”)) and, as the context may require, its subsidiaries and affiliates, are referred to herein as the “Predecessor.” The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements and notes thereto included in this report should be read in conjunction with Delphi's ~~2012~~2013 Annual Report on Form 10-K.

Nature of operations—Delphi is a leading global vehicle components manufacturer and provides electrical and electronic, powertrain, safety and thermal technology solutions to the global automotive and commercial vehicle markets. Delphi operates manufacturing facilities and technical centers utilizing a regional service model that enables the Company to efficiently and effectively serve its global customers from low cost countries. In line with the growth in emerging markets, Delphi has been increasing its focus on these markets, particularly in China, where the Company has a major manufacturing base and strong customer relationships.

~~Corporate history~~—In October 2005, the Predecessor and certain of its United States (“U.S.”) subsidiaries filed voluntary petitions for reorganization relief under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Predecessor's non-U.S. subsidiaries which were not included in the Chapter 11 Filings, continued their business operations without supervision from the Bankruptcy Court and were not subject to the requirements of the Bankruptcy Code. On ~~August 19, 2009~~, Delphi Automotive LLP, a limited liability partnership organized under the laws of England and Wales, was formed for the purpose of acquiring certain assets and subsidiaries of the former Delphi Corporation, its Predecessor (“the Acquisition”). On ~~October 6, 2009~~ (the “Acquisition Date”), Delphi Automotive LLP acquired the major portion of the business of the Predecessor and issued membership interests to a group of investors consisting of lenders to the Predecessor, General Motors Company (“GM”) and the Pension Benefit Guaranty Corporation (the “PBGC”).

~~As a result of the Acquisition, Delphi Automotive LLP acquired a significant portion of the business of the Predecessor and this business constituted the entirety of the operations of the Successor.~~

~~On March 31, 2011, all of the outstanding Class A and Class C membership interests held by GM and the PBGC were redeemed, respectively, for approximately~~ ~~$4.4 billion. The redemption transaction was funded by a~~ ~~$3.0 billion~~ credit facility entered into on March 31, 2011 (the “Credit Facility”) and existing cash. Refer to Note 8. Debt and Note 12. Shareholders' Equity and Net Income Per Share for additional disclosures.

On May 19, 2011, Delphi Automotive PLC was formed as a Jersey public limited company, and had nominal assets, no liabilities and had conducted no operations prior to its initial public offering. On November 22, 2011, in conjunction with the completion of its initial public offering by the selling shareholders, all of the outstanding equity of Delphi Automotive LLP was exchanged for ordinary shares of Delphi Automotive PLC. As a result, Delphi Automotive LLP became a wholly-owned subsidiary of Delphi Automotive PLC. The transaction whereby Delphi Automotive LLP became a wholly-owned subsidiary of Delphi Automotive PLC had no accounting effects.

2. SIGNIFICANT ACCOUNTING POLICIES

Consolidation—The consolidated financial statements include the accounts of Delphi and U.S. and non-U.S. subsidiaries in which Delphi holds a controlling financial or management interest and variable interest entities of which Delphi has determined that it is the primary beneficiary. Delphi’s share of the earnings or losses of non-controlled affiliates, over which Delphi exercises significant influence (generally a 20% to 50% ownership interest), is included in the consolidated operating results using the equity method of accounting. All adjustments, consisting of only normal recurring items, which are necessary for a fair presentation, have been included. All significant intercompany transactions and balances between consolidated Delphi businesses have been eliminated.

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~~September 30, 2012, Delphi received a dividend of~~ ~~$62 million~~ ~~from one of its equity method investments. The dividend was recognized as a reduction to the investment with~~ ~~$25 million~~ ~~representing a return on investment included in cash flows from operating activities and~~ ~~$37 million~~ ~~representing a return of capital investment and included in cash flows from investing~~ activities.

Use of estimates—Preparation of consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect amounts reported therein. Generally, matters subject to estimation and judgment include amounts related to accounts receivable realization, inventory obsolescence, asset impairments, useful lives of intangible and fixed assets, deferred tax asset valuation allowances, income taxes, pension benefit plan assumptions, accruals related to litigation, warranty costs, environmental remediation costs, worker’s compensation accruals and healthcare accruals. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from those estimates.

Net income per share—Basic net income per share is computed by dividing net income attributable to Delphi by the weighted–average number of ordinary shares outstanding during the period. Diluted net income per share reflects the weighted average dilutive impact of all potentially dilutive securities from the date of issuance and is computed using the treasury stock method by dividing net income attributable to Delphi by the diluted weighted-average number of ordinary shares outstanding. Share amounts included in these notes are on a diluted basis. See Note 12. Shareholders’ Equity and Net Income Per Share for additional information including the calculation of basic and diluted net income per share.

Cash and cash equivalents—Cash and cash equivalents are defined as short-term, highly liquid investments with original maturities of three months or less.

Intangible Assets—Intangible assets were $~~742~~696 million and $~~803~~723 million as of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, respectively. Delphi amortizes definite-lived intangible assets over their estimated useful lives. Delphi has definite-lived intangible assets related to patents and developed technology, customer relationships, trade names and in-process research and development. Delphi does not amortize indefinite-lived in-process research and development, but tests for impairment annually, or more frequently when indicators of potential impairment exist. Costs to renew or extend the term of acquired intangible

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assets are recognized as expense as incurred. Amortization expense was $~~27 million~~ ~~and~~ ~~$79~~26 million for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and $~~20 million~~ ~~and~~ ~~$60~~26 million for the three ~~and nine~~ months ended ~~September 30, 2012~~March 31, 2013~~, respectively.~~.

Goodwill—Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. Delphi tests goodwill for impairment annually or more frequently when indications of potential impairment exist. Delphi monitors the existence of potential impairment indicators throughout the fiscal year.

The Company tests for goodwill impairment at the reporting unit level. Our reporting units are the components of operating segments which constitute businesses for which discrete financial information is available and is regularly reviewed by segment management. No components were aggregated in arriving at our reporting units.

The impairment test involves first qualitatively assessing goodwill for impairment. If the qualitative assessment is not met the Company then performs a quantitative assessment by first comparing the fair value of each reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the fair value exceeds carrying value, then we conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, a second step is required to measure possible goodwill impairment loss. The second step includes hypothetically valuing the tangible and intangible assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. Then, the implied fair value of the reporting unit's goodwill is compared to the carrying value of that goodwill. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of the goodwill, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the carrying value. There were no indicators of potential goodwill impairment as of March 31, 2014. Goodwill was $~~485~~494 million and $~~473~~496 million as of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, respectively.

Warranty—Expected warranty costs for products sold are recognized at the time of sale of the product based on its estimate of the amount that eventually will be required to settle such obligations. These accruals are based on factors such as past experience, production changes, industry developments and various other considerations. This estimate is adjusted from time to time based on facts and circumstances that impact the status of existing claims. Refer to Note 6. Warranty Obligations.

Income Taxes—Deferred tax assets and liabilities reflect temporary differences between the amount of assets and liabilities for financial and tax reporting purposes. Such amounts are adjusted, as appropriate, to reflect changes in tax rates expected to be in effect when the temporary differences reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date. A valuation allowance is recorded to reduce our deferred tax assets to the amount that is more likely than not to be realized. In the event we determine it is more likely than not that the deferred tax assets will not be realized in the future, the valuation adjustment to the deferred tax assets will be charged to earnings in the period in which we make such a determination. In determining the provision for income taxes for financial statement purposes, the Company makes certain estimates and judgments which affect its evaluation of the carrying value of its deferred tax assets, as well as its calculation of certain tax liabilities. Refer to Note 11. Income Taxes.

Restructuring—Delphi continually evaluates alternatives to align the business with the changing needs of its customers and to lower operating costs. This includes the realignment of its existing manufacturing capacity, facility closures, or similar actions, either in the normal course of business or pursuant to significant restructuring programs. These actions may result in employees receiving voluntary or involuntary employee termination benefits, which are mainly pursuant to union or other contractual agreements. Voluntary termination benefits are accrued when an employee accepts the related offer. Involuntary termination benefits are accrued upon the commitment to a termination plan and the benefit arrangement is communicated to affected employees, or when liabilities are determined to be probable and estimable, depending on the existence of a

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substantive plan for severance or termination. Contract termination costs are recorded when contracts are terminated or when Delphi ceases to use the leased facility and no longer derives economic benefit from the contract. All other exit costs are expensed as incurred. Refer to Note 7. Restructuring.

Customer concentrations—As reflected in the table below, net sales to GMGeneral Motors Company ("GM") and Volkswagen Group (“VW”), Delphi's two largest customers, totaled approximately ~~28%~~27% and ~~27%~~ ~~for the~~ ~~three and nine months endedSeptember 30, 2013~~ ~~and~~ ~~29%~~ ~~and~~ ~~29%~~ ~~for the~~ ~~three and nine months endedSeptember 30, 2012~~26% of our total net sales for the three months endedMarch 31, 2014 and 2013, respectively.


	Percentage of Total Net Sales								Accounts and Other Receivables				Percentage of Total Net Sales				Accounts and Other Receivables
	Three Months Ended September 30,				Nine Months Ended September 30,				September 30, 2013		December 31, 2012		Three Months Ended March 31,				March 31, 2014		December 31, 2013
	2013		2012		2013		2012		September 30, 2013		December 31, 2012		2014		2013		March 31, 2014		December 31, 2013
									(in millions)								(in millions)
GM	18	%	18	%	17	%	18	%	$	514	$	382	17	%	16	%	$	535	$	377
VW	10	%	11	%	10	%	11	%	218		109		10	%	10	%	232		199

Recently issued accounting pronouncements—~~In December 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-11,~~ ~~Disclosures about Offsetting Assets and Liabilities~~. This guidance requires entities to disclose both gross and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. In January 2013, the FASB issued ASU 2013-01, ~~Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities,~~ which clarified that the scope of ASU 2011-11 applies to derivatives and securities borrowing or lending transactions subject to an agreement similar to a master netting arrangement. The guidance is effective for annual periods beginning on or after January 1, 2013. Delphi adopted this guidance effective March 31, 2013 and applied it retrospectively for any period presented. Refer to Note 14. Derivatives and Hedging Activities for additional information. The adoption of this guidance did not have a significant impact on Delphi's financial statements.

In February 2013, the FASB issued ASU 2013-2, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This guidance requires an organization to present the effects on

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the line items of net income of significant amounts reclassified out of accumulated other comprehensive income, but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. The guidance is effective for fiscal years beginning after December 15, 2012. Delphi adopted this guidance effective January 1, 2013. Refer to Note 13. Changes in Accumulated Other Comprehensive Income (Loss) for additional information. The adoption of this guidance did not have a significant impact on Delphi's financial statements.

In March 2013, the FASB issued ASU 2013-5, Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. This guidance requires a reporting entity that ceases to have a controlling financial interest in a ~~business~~business with a foreign entity, other than a sale of in substance real estate or conveyance of oil and gas mineral rights, to release any related cumulative translation adjustment into net income. The guidance is effective for fiscal years beginning after December 15, 2013. Delphi adopted this guidance effective January 1, 2014, and it did not have a significant impact on Delphi's financial statements.

In April 2014, the FASB issued ASU 2014-8, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This guidance limits discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have a major effect on an entity’s operations and financial results. The amendments also require expanded disclosures for discontinued operations with more information about the assets, liabilities, revenues, and expenses of discontinued operations. The amendments also require an entity to disclose the pretax profit or loss attributable to a disposal of an individually significant component of an entity that does not qualify for discontinued operations reporting. The guidance is effective for fiscal years beginning after December 15, 2014 and should be applied prospectively. Early adoption is permitted. The adoption of thisguidance is not expected to have a significant impact on Delphi's financial statements.

3. INVENTORIES

Inventories are stated at the lower of cost, determined on a first-in, first-out basis, or market, including direct material costs and direct and indirect manufacturing costs. A summary of inventories is shown below:


	September 30, 2013		December 31, 2012		March 31, 2014		December 31, 2013
	(in millions)				(in millions)
Productive material	$	675	$	586	$	695	$	584
Work-in-process	145		128		145		142
Finished goods	413		352		395		367
Total	$	1,233	$	1,066	$	1,235	$	1,093

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4. ASSETS

Other current assets consisted of the following:


	September 30, 2013		December 31, 2012		March 31, 2014		December 31, 2013
	(in millions)				(in millions)
Value added tax receivable	$	181	$	194	$	188	$	177
Deferred income taxes	153		148		154		133
Prepaid insurance and other expenses	75		86		58		59
Reimbursable engineering costs	63		52		63		76
Notes receivable	44		22		32		45
Debt issuance costs (Note 8)	10		17		9		10
Income and other taxes receivable	74		47		54		57
Deposits to vendors	11		15		10		9
Derivative financial instruments (Note 14)	9		21		4		15
Other	20		21		22		23
Total	$	640	$	623	$	594	$	604

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Other long-term assets consisted of the following:


	September 30, 2013		December 31, 2012		March 31, 2014		December 31, 2013
	(in millions)				(in millions)
Deferred income taxes	$	269	$	281	$	267	$	283
Debt issuance costs (Note 8)	46		55		40		43
Income and other taxes receivable	102		88		131		123
Reimbursable engineering costs	87		50		91		79
Value added tax receivable	30		33		34		29
Derivative financial instruments (Note 14)	4		6		1		5
Other	60		69		68		64
Total	$	598	$	582	$	632	$	626

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5. LIABILITIES

Accrued liabilities consisted of the following:


	September 30, 2013		December 31, 2012		March 31, 2014		December 31, 2013
	(in millions)				(in millions)
Payroll-related obligations	$	305	$	259	$	277	$	269
Employee benefits, including current pension obligations	102		123		70		130
Executive long-term incentive plan (Note 18)	—		20
Income and other taxes payable	210		261		266		280
Warranty obligations (Note 6)	76		92		78		75
Restructuring (Note 7)	119		118		93		94
Customer deposits	29		35		33		38
Deferred income taxes	16		12		2		1
Derivative financial instruments (Note 14)	28		12		29		16
Accrued interest	29		9		20		24
Dividends payable of consolidated affiliates to minority shareholders	51		—
Other	329		300		350		311
Total	$	1,294	$	1,241	$	1,218	$	1,238

Other long-term liabilities consisted of the following:


	September 30, 2013		December 31, 2012		March 31, 2014		December 31, 2013
	(in millions)				(in millions)
Environmental (Note 10)	$	20	$	18	$	18	$	18
Extended disability benefits	13		12		10		9
Warranty obligations (Note 6)	93		74		81		94
Restructuring (Note 7)	31		45		17		45
Payroll-related obligations	11		11		12		12
Accrued income taxes	32		38		35		34
Deferred income taxes	210		185		160		151
Derivative financial instruments (Note 14)	10		1		12		6
Other	43		50		37		40
Total	$	463	$	434	$	382	$	409

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6. WARRANTY OBLIGATIONS

Expected warranty costs for products sold are recognized at the time of sale of the product based on its estimate of the amount that eventually will be required to settle such obligations. These accruals are based on factors such as past experience, production changes, industry developments and various other considerations. This estimate is adjusted from time to time based on facts and circumstances that impact the status of existing claims. Delphi has recognized its best estimate for its total aggregate warranty reserves across all of its operating segments as of ~~September 30, 2013~~March 31, 2014. The estimated reasonably possible amount to ultimately resolve all matters is not materially different from the recorded reserves as of ~~September 30, 2013~~March 31, 2014.

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The table below summarizes the activity in the product warranty liability for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014:

Warranty Obligations
(in millions)
Accrual balance at beginning of period $ 166
Provision for estimated warranties incurred during the period 52
Provision for changes in estimate for pre-existing warranties (2 )
Settlements made during the period (in cash or in kind) (50 )
Foreign currency translation and other 3
Accrual balance at end of period $ 169

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. 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.~~



	Warranty Obligations
	(in millions)
Accrual balance at beginning of period	$	169
Provision for estimated warranties incurred during the period	14
Provision for changes in estimate for pre-existing warranties	—
Settlements made during the period (in cash or in kind)	(24		)
Foreign currency translation and other	—
Accrual balance at end of period	$	159

7. 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 Delphi’s strategy, either in the normal course of business or pursuant to significant restructuring programs.

~~In the fourth quarter of 2012, Delphi initiated and committed to approximately~~ ~~$300 million~~ of various restructuring programs which includes costs related to the integration of the Motorized Vehicle Division (“MVL”) acquisition 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~~it has undertaken several restructuring programs ~~to approximately~~ ~~$375 million. Approximately~~ ~~80%~~ ~~of the restructuring actions are in Europe, including~~which include workforce reductions as well as plant ~~closures, and are expected to be substantially completed during 2014. Approximately~~ ~~$170 million~~ ~~of the total restructuring was recognized in the fourth quarter of 2012, and in the~~ ~~three and nine months endedSeptember 30, 2013~~ ~~Delphi~~closures. The Company recorded ~~employee related~~employee-related and other restructuring charges related to these programs totaling approximately $3722 million and $32 million during the three months ended ~~$95 million~~March 31, 2014 and 2013, respectively. Restructuring charges incurred during the three months ended March 31, 2014 were primarily related to Delphi's on-going restructuring programs focused on aligning manufacturing capacity and footprint with the current automotive production levels in Europe. Restructuring costs incurred during the three months ended March 31, 2013 were also primarily related to European restructuring programs, as well as to programs resulting from the integration of Motorized Vehicle Division (“MVL”), which was acquired in the third quarter of 2012. 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~~related to its restructuring ~~actions~~programs of approximately ~~$90~~$49 million and $36 million in the ~~nine~~three months ended~~September 30,~~ March 31, 2014 and 2013, ~~and expects future cash expenditures in 2013 of approximately~~ ~~$70 million~~.respectively.

The following table summarizes the restructuring charges recorded for the three ~~and nine~~ months ended~~September 30, 2013~~March 31, 2014 and ~~2012~~2013 by operating segment:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
Segment	2013		2012		2013		2012		2014		2013
	(in millions)								(in millions)
Electrical/Electronic Architecture	$	7	$	1	$	26	$	6	$	13	$	11
Powertrain Systems	8		—		20		4		2		8
Electronics and Safety	19		1		44		3		6		11
Thermal Systems	3		1		5		4		1		2
Total	$	37	$	3	$	95	$	17	$	22	$	32

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The table below summarizes the activity in the restructuring liability for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014:


	Employee Termination Benefits Liability			Other Exit Costs Liability			Total			Employee Termination Benefits Liability			Other Exit Costs Liability			Total
	(in millions)									(in millions)
Accrual balance at January 1, 2013	$	157		$	6		$	163
Accrual balance at January 1, 2014										$	135		$	4		$	139
Provision for estimated expenses incurred during the period	94			1			95			21			1			22
Payments made during the period	(103		)	(3		)	(106		)	(48		)	(1		)	(49		)
Foreign currency and other	(2		)	—			(2		)	(2		)	—			(2		)
Accrual balance at September 30, 2013	$	146		$	4		$	150
Accrual balance at March 31, 2014										$	106		$	4		$	110

8. DEBT

The following is a summary of debt outstanding, net of discounts of approximately $02 million and $40 million related to the ~~Tranche A Term Loan and the Tranche B Term Loan,~~2014 Senior Notes, defined below, as of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013:


	September 30, 2013			December 31, 2012			March 31, 2014			December 31, 2013
	(in millions)						(in millions)
Accounts receivable factoring	$	—		$	19		$	1		$	1
5.875%, senior notes, due 2019	500			500			—			500
6.125%, senior notes, due 2021	500			500			500			500
5.00%, senior notes, due 2023	800			—			800			800
4.15%, senior notes, due 2024							698			—
Tranche A Term Loan, due 2018	568			567			400			564
Tranche B Term Loan, due 2017	—			772
Capital leases and other	50			106			50			47
Total debt	2,418			2,464			2,449			2,412
Less: current portion	(59		)	(140		)	(31		)	(61		)
Long-term debt	$	2,359		$	2,324		$	2,418		$	2,351

Credit Agreement

In March 2011, in conjunction with the redemption of membership interests from Class A and Class C membership interest holders, Delphi Corporation (the ~~“Issuer”~~"Issuer")~~, a wholly-owned U.S. subsidiary of Delphi Automotive LLP,~~ entered into a credit agreement with JPMorgan Chase Bank, N.A., as lead arranger and administrative agent ~~with respect to~~(the "Original Credit Agreement"), which provided for $3.0 billion in senior secured credit facilities ~~(the “Original~~consisting of term loans (as subsequently amended from time to time, the “Tranche A Term Loan” and the “Tranche B Term Loan,” respectively) and a revolving credit facility (as subsequently amended from time to time, the “Revolving Credit ~~Agreement”~~Facility”). The Original Credit Agreement was amended and restated on each of May 17, 2011 (the “May 2011 Credit Agreement”), September 14, 2012 ~~(as so amended and restated, the~~(the “2012 Credit Agreement”) and March 1, ~~2013. (The~~2013 (the Original Credit Agreement and each amendment and restatement of the Original Credit Agreement are individually and collectively referred to herein as the “Credit Agreement”). The ~~Original~~May 2011 Credit Agreement, ~~provided for a~~which was entered into simultaneously with the issuance of senior unsecured notes in the amount of $1 billion (as more fully described below), reduced the total size of the senior secured 5~~-year term loan in an original amount of~~ ~~$258 million~~ ~~(the “Original Tranche A Term Loan” and, as subsequently modified from time~~credit facilities to ~~time, the “Tranche A Term Loan”), a senior secured~~ 6~~-year term loan in an original amount of~~ ~~$950 million~~ ~~(the “Tranche B Term Loan”), and a~~ ~~$500 million~~ ~~revolving credit facility (as subsequently modified from time to time, the “Revolving Credit Facility”).~~$2.4 billion. Under the 2012 Credit Agreement, the Company increased the Revolving Credit Facility to $1.3 billion and the ~~Original~~ Tranche A Term Loan to $574 million~~. As a result of prior payments on~~ and used the ~~Tranche A Term Loan, the Company received~~ incremental proceeds of ~~$363 million~~ ~~under the 2012 Credit Agreement, which was used~~ to pay a portion of the cost of acquiring MVL. On March 1, 2013, following the ~~senior~~ unsecured note issuance in February 2013 (as more fully described below), the Tranche B Term Loan was fully repaid, the Tranche A Term Loan was increased to $575 million, the Revolving Credit Facility was increased to $1.5 billion, and the terms of the Tranche A Term Loan and the Revolving Credit Facility were extended to March 1, 2018. ~~These~~The March 31, 2013 amendments resulted in the recognition of a loss on debt extinguishment of ~~$39~~$39 million during the ~~nine~~three months ended~~September 30, 2013~~. March 31, 2013. Approximately $14 million in issuance costs were paid in conjunction with the March 2013 amendment. In conjunction with the unsecured note issuance in March 2014 (as more fully described below), Delphi repaid a portion of its indebtedness on the Tranche A Term Loan, which resulted in the recognition of a loss on debt extinguishment related to this repayment of approximately $1 million during the three months endedMarch 31, 2014.

Unamortized debt issuance costs associated with the Tranche A Term Loan and Revolving Credit Facility of $2824 million are being amortized over the term of the Credit Agreement, as extended pursuant to the March 1, 2013 amendment. At

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March 31, 2014~~September 30, 2013~~, the Revolving Credit Facility was undrawn and Delphi had approximately $10 million in letters of credit

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issued under the Credit Agreement. Letters of credit issued under the Credit Agreement reduce availability under the Revolving Credit Facility.

Loans under the Credit Agreement bear interest, at ~~the Issuer’s~~Delphi Corporation's option, at either (a) the Administrative Agent’s Alternate Base Rate (“ABR” as defined in the Credit Agreement) or (b) the London Interbank Offered Rate ~~(“Adjusted~~(the “Adjusted LIBO Rate” as defined in the Credit Agreement) (“LIBOR”) plus in either case a percentage per annum as set forth in the table below (the “Applicable Rate”). The ~~Tranche B Term Loan had a LIBOR floor of~~ ~~1.00%. A comparison of the~~ Applicable Rates under the ~~2012~~ Credit Agreement ~~and current Credit Agreement is~~on the specified dates are set forth below:


	Credit Agreement (September 30, 2013)				2012 Credit Agreement (December 31, 2012)				March 31, 2014				December 31, 2013
	LIBOR plus		ABR plus		LIBOR plus		ABR plus		LIBOR plus		ABR plus		LIBOR plus		ABR plus
Revolving Credit Facility	1.50	%	0.50	%	2.00	%	1.00	%	1.25	%	0.25	%	1.25	%	0.25	%
Tranche A Term Loan	1.50	%	0.50	%	2.00	%	1.00	%	1.25	%	0.25	%	1.25	%	0.25	%
Tranche B Term Loan	N/A		N/A		2.50	%	1.50	%

The Applicable Rate under the Credit Agreement may increase or decrease from time to time based on changes in credit ratings with the minimum interest level of ~~1.00%~~0.00% and maximum level of 2.25%. Accordingly, the interest rate will fluctuate during the term of the Credit Agreement based on changes in the ABR, LIBOR or future changes in our corporate credit ratings. The Credit Agreement also requires that the Issuer pay certain commitment fees on the unused portion of the Revolving Credit Facility and certain letter of credit issuance and fronting fees.

The interest rate period with respect to LIBOR interest rate options can be set at one-, two-, three-, or six-months as selected by the Issuer in accordance with the terms of the Credit Agreement (or other period as may be agreed by the applicable lenders), but payable no less than quarterly. The Issuer may elect to change the selected interest rate in accordance with the provisions of the Credit Agreement. As of ~~September 30, 2013~~March 31, 2014, the Issuer selected the one-month LIBOR interest rate option, as detailed in the table below, and the amounts outstanding, and rates effective as of ~~September 30, 2013~~March 31, 2014 were based on Delphi’s current credit rating and ~~applicable margin~~the Applicable Rate for the Credit Agreement:


									Borrowings as of
			Borrowings as of		Rates effective as of				March 31, 2014		Rates effective as of
	LIBOR plus		September 30, 2013		September 30, 2013		LIBOR plus		(in millions)		March 31, 2014
Revolving Credit Facility	1.50	%	$	—	—	%	1.25	%	$	—	—	%
Tranche A Term Loan	1.50	%	568		1.6875	%	1.25	%	400		1.4375	%

The Issuer iswas obligated to make quarterly principal payments throughout the term of the Tranche A Term Loan according to the amortization schedule in the Credit Agreement. In conjunction with the partial repayment of the Tranche A Term Loan during the three months endedMarch 31, 2014, all principal payment obligations have been satisfied through March 1, 2018. Borrowings under the Credit Agreement are prepayable at the Issuer's option without premium or penalty. The Credit Agreement also contains certain mandatory prepayment provisions in the event the Company receives net cash proceeds from any asset sale or casualty event. No mandatory prepayments under these provisions have been made or are due through ~~September 30, 2013~~March 31, 2014.

The Credit Agreement contains certain covenants that limit, among other things, the Company’s (and the Company’s subsidiaries’) ability to incur additional indebtedness or liens, to dispose of assets, to make certain investments, to prepay certain indebtedness and to pay dividends, or to make other distributions or redemptions/repurchases, in respect of the Company’s equity interests. In addition, the Credit Agreement requires that the Company maintain a consolidated leverage ratio (the ratio of Consolidated Total Indebtedness to Consolidated EBITDA, each as defined in the Credit Agreement) of less than 2.75 to 1.0. The Credit Agreement also contains events of default customary for financings of this type. The Company was in compliance with the Credit Agreement covenants as of ~~September 30, 2013~~March 31, 2014. ~~At any time when Delphi Automotive PLC~~In the first quarter of 2014, the Company satisfied credit rating-related conditions to the suspension of many of the restrictive covenants and ~~Delphi Corporation have received investment grade credit ratings as specified in~~ the ~~Credit Agreement~~mandatory prepayment provisions relating to asset sales and ~~other conditions in the Credit Agreement~~casualty events discussed above. Such covenants and prepayment obligations are ~~met, all security interests on the collateral will be released, subject~~required to potential reinstatement if the investment grade condition ceases to be satisfied. In addition, certain covenants shall not apply after Delphi Automotive PLC and Delphi Corporation have received investment grade credit ratings as specified in the Credit Agreement and no default has occurred or is continuing, provided that such covenants may be reinstated if the ~~investment grade condition ceases to be~~applicable credit rating criteria are no longer satisfied.

~~All~~As of March 31, 2014, all obligations under the Credit Agreement are borrowed by Delphi Corporation and jointly and severally guaranteed by its direct and indirect parent companies, ~~and by certain of Delphi Automotive PLC’s existing and future direct and indirect subsidiaries,~~ subject to certain exceptions set forth in the Credit Agreement. ~~All~~

Prior to the first quarter of 2014, certain of Delphi Automotive PLC's direct and indirect subsidiaries, which are directly or indirectly 100% owned by Delphi Automotive PLC, fully and unconditionally guaranteed all obligations under the Credit Agreement. In addition, all obligations under the Credit Agreement, including the ~~guarantees~~guaranties of those obligations, ~~are~~were originally secured by certain assets of Delphi Corporation and the guarantors, including substantially all of the assets of Delphi Automotive PLC, and its U.S. subsidiaries, and certain assets of Delphi Corporation’s direct and indirect parent companies. All guarantees of Delphi Corporation's subsidiaries and all then-existing security interests were released during the three months

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ended March 31, 2014 when the Company satisfied certain credit-rating related and other conditions under the terms of the Credit Agreement. Such security interests and subsidiary guarantees may be reinstated at the election of the lenders if the applicable credit rating criteria are no longer satisfied.

Senior Notes

On May 17, 2011, Delphi Corporation issued $500 million of 5.875% senior unsecured notes due 2019 (the "5.875% 2011 Senior Notes") and $500 million of 6.125% senior unsecured notes due 2021 (the "6.125% 2011 Senior Notes") (collectively, the “2011 Senior Notes”) in a transaction exempt from registration under Rule 144A and Regulation S of the Securities Act of 1933 (the “Securities Act”). Delphi paid approximately $23 million of debt issuance costs in connection with the 2011 Senior Notes. The net proceeds of approximately $1 billion as well as cash on hand were used to pay down amounts outstanding under the Original Credit Agreement. In May 2012, Delphi Corporation ~~exchanged~~completed a registered exchange offer for all of the 2011 Senior Notes ~~for registered notes (“New~~(the “New Senior Notes”) with terms identical in all material respects to the terms of the 2011 Senior Notes, except that the New Senior Notes are registered under the Securities Act, and the transfer restrictions and registration rights relating to the 2011 Senior Notes no longer apply.. No proceeds were received by Delphi Corporation as a result of the exchange. In March 2014, Delphi redeemed for cash the entire $500 million aggregate principal amount outstanding of the 5.875% 2011 Senior Notes. The redemption was financed by a portion of the proceeds received from the issuance of the 2014 Senior Notes, as defined below. As a result of the redemption of the 5.875% 2011 Senior Notes, Delphi recognized a loss on debt extinguishment of approximately $33 million during the three months endedMarch 31, 2014.

Interest on the outstanding New Senior Notes is payable semi-annually on May 15 and November 15 of each year to holders of record at the close of business on May 1 or November 1 immediately preceding the interest payment date.

The indenture governing the New Senior Notes limits, among other things, Delphi’s (and Delphi’s subsidiaries’) ability to incur additional indebtedness or liens, dispose of assets, make certain restricted payments or investments, enter into transactions with affiliates and merge with or into other entities. As of ~~September 30, 2013, the Company was in compliance with the provisions of the New Senior Notes.~~

On February 14, 2013, Delphi Corporation issued $800 million of 5.00% senior unsecured notes due 2023 (the “2013 Senior Notes”) in a transaction registered under the Securities Act. The proceeds were primarily utilized to prepay our term loan indebtedness under ~~our 2012~~the Credit Agreement. Delphi paid approximately $12 million of issuance costs in connection with the 2013 Senior Notes. Interest is payable semi-annually on February 15 and August 15 of each year to holders of record at the close of business on February 1 or August 1 immediately preceding the interest payment date.

On March 3, 2014, Delphi Corporation issued $700 million in aggregate principal amount of 4.15% senior unsecured notes due 2024 (the “2014 Senior Notes”) in a transaction registered under the Securities Act. The 2014 Senior Notes were priced at 99.649% of par, resulting in a yield to maturity of 4.193%. The proceeds were primarily utilized to redeem the 5.875% 2011 Senior Notes and to repay a portion of the Tranche A Term Loan. Delphi paid approximately $6 million of issuance costs in connection with the 2014 Senior Notes. Interest is payable semi-annually on March 15 and September 15 of each year to holders of record at the close of business on March 1 or September 1 immediately preceding the interest payment date.

Although the specific terms of each indenture governing each series of senior notes vary, the ~~2013 Senior Notes limits, among other things, Delphi’s~~indentures contain certain restrictive covenants, including with respect to Delphi's (and ~~Delphi’s subsidiaries’)~~Delphi's subsidiaries) ability to incur liens, enter into sale and leaseback transactions and merge with or into other entities. As of ~~September 30, 2013~~March 31, 2014, the Company was in compliance with the provisions of all series of the ~~2013 Senior Notes.~~outstanding senior notes.

~~The~~All series of senior notes are fully and unconditionally guaranteed, jointly and severally, by Delphi Automotive PLC and by certain of ~~its existing~~Delphi Corporation's direct and ~~future subsidiaries,~~indirect parent companies, subject to customary release provisions (other than in the case of Delphi Automotive PLC). Prior to the first quarter of 2014, certain of Delphi Corporation's direct and indirect subsidiaries, which were directly or indirectly 100% owned by Delphi Automotive PLC, fully and unconditionally guaranteed all series of senior notes then outstanding; however, all Delphi Corporation subsidiary guarantees were released during the three months ended March 31, 2014 because such guarantors no longer guaranteed the Credit Agreement.

Other Financing

Accounts receivable factoring—Various accounts receivable factoring facilities are maintained in Europe and are accounted for as short-term debt. These uncommitted factoring facilities are available through various financial institutions. Additionally, ~~during the three months ended September 30,~~in 2013 Delphi entered into a new accounts receivable factoring agreement in Europe to replace and consolidate ~~current~~its European factoring facilities. The new agreement is a €350 million committed facility, ~~and~~with borrowings under the new program ~~are~~being subject to the availability of eligible accounts receivable. As of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, $01 million and $191 million, respectively, were outstanding under these European accounts receivable factoring facilities.

Capital leases and other—As of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, approximately $50 million and approximately $~~106~~47 million, respectively, of other debt issued by certain non-U.S. subsidiaries and capital lease obligations were outstanding.

Interest—Cash paid for interest related to amounts outstanding totaled $7837 million and $7412 million for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013, respectively.

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9. PENSION BENEFITS

Certain of Delphi’s non-U.S. subsidiaries sponsor defined benefit pension plans, which generally provide benefits based on negotiated amounts for each year of service. Delphi’s primary non-U.S. plans are located in France, Germany, Mexico, Portugal and the United Kingdom (“U.K.”). The U.K. and certain Mexican plans are funded. In addition, Delphi has defined benefit plans in South Korea, Turkey and Italy for which amounts are payable to employees immediately upon separation. The obligations for these plans are recorded based on the vested obligation.

Delphi sponsors a Supplemental Executive Retirement Program (“SERP”) for those employees who were U.S. executives of the Predecessor prior to September 30, 2008 and were U.S. executives of Delphi on October 7, 2009, the effective date of the program. This program is unfunded. Executives receive benefits over 5 years after an involuntary or voluntary separation from Delphi. The SERP is closed to new ~~members and was frozen effective September 30, 2008.~~members.

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The amounts shown below reflect the defined benefit pension expense for the three ~~and nine~~ months ended~~September 30, 2013~~March 31, 2014 and ~~2012~~2013:

Non-U.S. Plans U.S. Plans
Three Months Ended September 30,
2013 2012 2013 2012
(in millions)
Service cost $ 13
$ 11
$ —
$ —
Interest cost 22
22
—
—
Expected return on plan assets (17 ) (17 ) —
—
Amortization of actuarial losses 1
—
—
—
Net periodic benefit cost $ 19
$ 16
$ —
$ —


	Non-U.S. Plans						U.S. Plans				Non-U.S. Plans						U.S. Plans
	Nine Months Ended September 30,										Three Months Ended March 31,
	2013			2012			2013		2012		2014			2013			2014		2013
	(in millions)										(in millions)
Service cost	$	41		$	34		$	—	$	—	$	14		$	13		$	—	$	—
Interest cost	65			63			1		2		24			22			—		—
Expected return on plan assets	(52		)	(50		)	—		—		(19		)	(17		)	—		—
Amortization of actuarial losses	5			—			—		—		2			2			—		—
Net periodic benefit cost	$	59		$	47		$	1	$	2	$	21		$	20		$	—	$	—

Other postretirement benefit obligations were approximately $107 million and $157 million at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, respectively.

10. COMMITMENTS AND CONTINGENCIES

Environmental Matters

Delphi is subject to the requirements of U.S. federal, state, local and non-U.S. environmental and safety and health laws and regulations. As of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, the undiscounted reserve for environmental investigation and remediation was approximately $2321 million (of which $3 million was recorded in accrued liabilities and $2018 million was recorded in other long-term liabilities) and $21 million (of which $3 million was recorded in accrued liabilities and $18 million was recorded in other long-term liabilities). Delphi cannot ensure that environmental requirements will not change or become more stringent over time or that its eventual environmental remediation costs and liabilities will not exceed the amount of its current reserves. In the event that such liabilities were to significantly exceed the amounts recorded, Delphi’s results of operations could be materially affected. At ~~September 30, 2013~~March 31, 2014, the difference between the recorded liabilities and the reasonably possible range of loss was not material.

Ordinary Business Litigation

Delphi is from time to time subject to various legal actions and claims incidental to its business, including those arising out of alleged defects, alleged breaches of contracts, product warranties, intellectual property matters, and employment-related matters. It is the opinion of Delphi that the outcome of such matters will not have a material adverse impact on the consolidated financial position, results of operations, or cash flows of Delphi. With respect to warranty matters, although Delphi cannot ensure that the future costs of warranty claims by customers will not be material, Delphi believes its established reserves are adequate to cover potential warranty settlements.

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GM Recall

In the first quarter of 2014, GM, Delphi’s largest customer, initiated a product recall. Delphi has received requests for information from, and is cooperating with, various government agencies related to GM’s recall. In addition, Delphi has been named as a co-defendant along with GM and other parties in product liability and class action lawsuits related to this matter. Delphi believes the allegations contained in these complaints are without merit, and intends to vigorously defend against them. Although no assurances can be made as to the ultimate outcome of these or any other future claims, Delphi does not believe a loss is probable and, accordingly, no reserve has been made as of March 31, 2014.

Brazil Matters

Delphi conducts significant business operations in Brazil that are subject to the Brazilian federal labor, social security, environmental, tax and customs laws, as well as a variety of state and local laws. While Delphi believes it complies with such laws, they are complex, subject to varying interpretations, and the Company is often engaged in litigation with government agencies regarding the application of these laws to particular circumstances. As of ~~September 30, 2013~~March 31, 2014, the majority of claims asserted against Delphi in Brazil relate to such litigation. The remaining claims in Brazil relate to commercial and labor litigation with

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private ~~parties in Brazil.~~parties. As of ~~September 30, 2013~~March 31, 2014, claims totaling approximately $~~200~~210 million (using ~~September 30, 2013~~March 31, 2014 foreign currency rates) have been asserted against Delphi in Brazil. As of ~~September 30, 2013~~March 31, 2014, the Company maintains accruals for these asserted claims of $3332 million (using ~~September 30, 2013~~March 31, 2014 foreign currency rates). The amounts accrued represent claims that are deemed probable of loss and are reasonably estimable based on the Company’s analyses and assessment of the asserted claims and prior experience with similar matters. While the Company believes its accruals are adequate, the final amounts required to resolve these matters could differ materially from the Company’s recorded estimates and Delphi’s results of operations could be materially affected.

Other Matters

During the first quarter of 2014, Delphi identified certain potentially improper payments, made by certain manufacturing facility employees in China, that may violate certain provisions of the U.S. Foreign Corrupt Practices Act (the “FCPA”). Under the oversight of Delphi’s Audit Committee of the Board of Directors, Delphi has engaged outside counsel to assist in the review of these matters, and to evaluate existing controls and compliance policies and procedures. This review remains ongoing. Violations of the FCPA could result in criminal and/or civil liabilities and other forms of penalties or sanctions. Delphi has voluntarily disclosed these matters to the U.S. Department of Justice and the SEC, and is cooperating fully with these agencies. Although Delphi does not expect the outcome of this review to have a material adverse impact on the Company, there can be no assurance as to the ultimate outcome of these matters at this time.

11. INCOME TAXES

~~For purposes~~At the end of ~~comparability and consistency,~~each interim period, the Company ~~uses~~makes its best estimate of the ~~notional U.S. federal~~annual expected effective income tax rate ~~when presenting~~and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to unusual or infrequent items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the ~~Company’s reconciliation~~interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or income tax contingencies is recognized in the interim period in which the change occurs.

The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in respective jurisdictions, permanent and temporary differences, and the likelihood of the realizability of deferred tax assets generated in the current year. Jurisdictions with a projected loss for the year or a year-to-date loss for which no tax benefit or expense can be recognized due to a valuation allowance are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter, based upon the composition and timing of actual earnings compared to annual projections. The estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained or our tax environment changes. To the extent that the expected annual effective income tax rate changes, the effect of the change on prior interim periods is included in the income tax ~~provision.~~ provision in the period in which the change occurs.

The Company's income tax expense and effective tax rate for the three months ended March 31, 2014 and 2013 were as follows:

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	Three Months Ended March 31,
	2014			2013
	(dollars in millions)
Income tax expense	$	75		$	37
Effective tax rate	18		%	11		%

The Company’s effective tax rate was impacted by the expiration of the U.S. research and development credit in 2014. The Company’s effective tax rate was also impacted by the tax expense (benefit) associated with unusual or infrequent items for the respective interim period as illustrated in the following table:



	Three Months Ended March 31,
	2014			2013
	(in millions)
Tax credits (1)	$	—		$	(22	)
Withholding taxes (2)	—			4
Other change in tax reserves (3)	(3		)	1
Other adjustments	(1		)	1
Income tax expense (benefit) associated with unusual or infrequent items	$	(4	)	$	(16	)


(1)	For the three months ended March 31, 2013, the tax benefit relates to the retroactive reinstatement of the U.S. research and development tax credit under The American Taxpayer Relief Act of 2012.


(2)	For the three months ended March 31, 2013, the tax expense relates to the true-up of the withholding tax liability on the undistributed earnings of an equity method investment.


(3)	For the three months endedMarch 31, 2014 and 2013, the tax benefit and expense, respectively, primarily relate to adjustments in tax reserves which were individually insignificant.

The Company is a U.K. resident taxpayer and as such is not generally subject to U.K. tax on remitted foreign earnings. As a result, the Company does not anticipate foreign earnings would be subject to a 35% tax rate upon repatriation to the U.K., as is the case when U.S. based companies repatriate earnings to the U.S. ~~A reconciliation of the provision for income taxes compared with the amounts at the notional U.S. federal statutory rate was:~~

Nine Months Ended September 30,
2013 2012
(in millions)
Notional U.S. federal income taxes at statutory rate $ 398
$ 425
Income taxed at other rates (219 ) (192 )
Change in valuation allowance —
(1 )
Other change in tax reserves (5 ) (12 )
Withholding taxes 38
11
Tax credits (48 ) (12 )
Change in tax law 12
6
Other adjustments 6
2
Total income tax expense $ 182
$ 227
Effective tax rate 16 % 19 %

The Company’s tax rate is affected by the tax rates in the jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction, jurisdictions with a statutory tax rate less than the U.S. rate of ~~35%~~ and the relative amount of losses or income for which no tax benefit or expense was recognized due to a valuation allowance. The Company's geographic income mix was favorably impacted in 2013, as compared to 2012, primarily due to tax planning initiatives.

~~The effective tax rate was~~ ~~16%~~ ~~and~~ ~~19%~~ ~~for the~~ ~~nine months endedSeptember 30, 2013~~ ~~and~~ ~~2012~~, respectively. The American Taxpayer Relief Act of 2012 was enacted on January 2, 2013 which retroactively reinstates expired tax provisions known as tax extenders including the research and development tax credit. The income tax accounting effect, including any retroactive effect, of a tax law change is accounted for in the period of enactment, which in this case was the first quarter of 2013. As a result, the effective tax rate for the ~~nine months endedSeptember 30, 2013~~ ~~was impacted by a benefit of approximately~~ ~~$22 million~~ related to the 2012 research and development credit in addition to the 2013 research and development credit. On July 17, 2013, the United Kingdom-Finance Bill of 2013 became law as the Finance Act 2013 (the "U.K. Finance Act"). The U.K. Finance Act provides for a reduction to the corporate income tax rate from ~~23%~~ to ~~21%~~ ~~effective April 1, 2014, with a further reduction to~~ ~~20%~~ effective April 1, 2015. The impact of this legislation was recorded as a discrete item during the third quarter of 2013, the period of enactment, and resulted in increased tax expense of approximately ~~$12 million~~ ~~for the~~ ~~nine months endedSeptember 30, 2013~~ ~~due to the resultant impact on the net deferred tax asset balances. The effective tax rate in the~~ ~~nine months endedSeptember 30, 2012~~ ~~was impacted by a reduction of~~ ~~$22 million~~ ~~in tax reserves due to resolution of open issues with tax authorities, an increase of~~ ~~$10 million~~ ~~primarily related to non-U.S. transfer pricing positions, an increase of~~ ~~$6 million~~ ~~related to a reduction to the corporate income tax rate in the United Kingdom from 25% to 23% and a reduction of~~ ~~$14 million~~ ~~in withholding tax expense related to 2012 non-U.S. tax planning actions.~~

Cash paid or withheld for income taxes was $~~215~~71 million and $~~228~~45 million for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013 respectively.

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Tax Return Filing Determinations and Elections

Delphi Automotive LLP, which acquired certain businesses of the Predecessor on October 6, 2009, the Acquisition Date, was established on August 19, 2009 as a limited liability partnership incorporated under the laws of England and Wales. At the time of its formation, Delphi Automotive LLP elected to be treated as a partnership for U.S. federal income tax purposes. The Company believes the Internal Revenue Service (the “IRS”) may assert that Delphi Automotive LLP, and as a result Delphi Automotive PLC, should be treated as a domestic corporation for U.S. federal income tax purposes, retroactive to the Acquisition Date. If Delphi Automotive LLP were treated as a domestic corporation for U.S. federal income tax purposes, the Company expects that, although Delphi Automotive PLC is incorporated under the laws of Jersey and a tax resident in the U.K., it would also be treated as a domestic corporation for U.S. federal income tax purposes.

Delphi Automotive LLP filed U.S. federal partnership tax returns for 2009, 2010, and 2011. ~~The~~In light of the Notice, the IRS is currently reviewing whether Section 7874 applies to Delphi Automotive LLP’s acquisition of the automotive supply and other businesses of the Predecessor. The Company believes, after consultation with counsel, that neither Delphi Automotive LLP nor Delphi Automotive PLC should be treated as a domestic corporation for U.S. federal income tax purposes, and intends to vigorously contest any assertion by the IRS to the contrary, including through litigation if the Company were unable to reach a satisfactory resolution with the IRS. However, no assurance can be given that the IRS will not contend, or that a court would not conclude, that Delphi Automotive LLP, and therefore Delphi Automotive PLC, should be treated as a domestic corporation for U.S. federal income tax purposes. No accrual for this matter has been recorded as of ~~September 30, 2013~~March 31, 2014.

If these entities were treated as domestic corporations for U.S. federal income tax purposes, the Company would be subject to U.S. federal income tax on its worldwide taxable income, including distributions, as well as deemed income inclusions from some of its non-U.S. subsidiaries. This could have a material adverse impact on our income tax liability in the future. However, the Company may also benefit from deducting certain expenses that are currently not deducted in the U.S. As a U.S. company, any dividends we pay to non-U.S. shareholders could also be subject to U.S. federal income tax withholding at a rate of 30% (unless reduced or eliminated by an income tax treaty), and it is possible that tax may be withheld on such dividends in certain circumstances even before a final determination has been made with respect to the Company's U.S. income

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tax status. In addition, we could be liable for the failure by Delphi Automotive LLP to withhold U.S. federal income taxes on distributions to its non-U.S. members for periods beginning on or after the Acquisition Date.

12. SHAREHOLDERS’ EQUITY AND NET INCOME PER SHARE

~~Overview~~

On ~~May 19, 2011, Delphi Automotive PLC was formed as a Jersey public limited company, and had nominal assets, no liabilities and had conducted no operations prior to its initial public offering. On~~ ~~November 22, 2011, in conjunction with the completion of its initial public offering, all of the outstanding equity of Delphi Automotive LLP was exchanged for~~ ~~328,244,510~~ ~~ordinary shares, par value~~ ~~$0.01~~ in Delphi Automotive PLC. As a result, Delphi Automotive LLP became a wholly-owned subsidiary of Delphi Automotive PLC, and subsequent to the exchange, Delphi Automotive PLC completed the initial public offering of ~~24,078,827~~ ~~ordinary shares by the selling shareholders for an aggregate purchase price of approximately~~ ~~$530 million. Delphi Automotive PLC did not receive any proceeds from the offering, and incurred transaction fees and expenses of approximately~~ ~~$44 million~~.

Net Income Per Share

Basic net income per share is computed by dividing net income attributable to Delphi by the weighted average number of ordinary shares outstanding during the period. Diluted net income per share reflects the weighted average dilutive impact of all potentially dilutive securities from the date of issuance and is computed using the treasury stock method by dividing net income attributable to Delphi by the diluted weighted average number of ordinary shares outstanding. For all periods presented, the calculation of net income per share contemplates the dilutive impacts, if any, of the Company’s share-based compensation plans. Refer to Note 18. Share-Based Compensation for additional information. For all applicable periods presented, the effect of the Value Creation Plan (“VCP”) awards was anti-dilutive and therefore excluded from the calculation of diluted net income per share, as discussed in Note 18. Share-Based Compensation.

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Weighted Average Shares

The following table illustrates net income per share attributable to Delphi and the weighted average shares outstanding used in calculating basic and diluted income per share:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2013		2012		2013		2012		2014		2013
	(in millions, except per share data)								(in millions, except per share data)
Numerator:
Net income attributable to Delphi	$	271	$	269	$	914	$	941	$	320	$	276
Denominator:
Weighted average ordinary shares outstanding, basic	309.68		320.93		312.08		325.00		305.85		314.68
Dilutive shares related to Restricted Stock Units ("RSUs")	0.94		0.35		0.79		0.28		1.04		0.68
Weighted average ordinary shares outstanding, including dilutive shares	310.62		321.28		312.87		325.28		306.89		315.36
Net income per share attributable to Delphi:
Basic	$	0.88	$	0.84	$	2.93	$	2.89	$	1.05	$	0.88
Diluted	$	0.87	$	0.84	$	2.92	$	2.89	$	1.04	$	0.88
Anti-dilutive securities share impact:	—		3.50		—		3.16		—		—

Share Repurchase Program

In January 2012, the Board of Directors authorized a share repurchase program of up to $300 million of ordinary ~~shares. The program was scheduled to terminate on the earlier of December 31, 2012 or when the Company attained~~ ~~$300 million~~ ~~of ordinary share repurchases,~~shares, which was fully satisfied in September 2012. Subsequently, in September 2012, the Board of Directors authorized a ~~new~~ share repurchase program of up to $750 million of ordinary shares, which was fully satisfied in April 2014. In January 2014, the Board of Directors authorized a new share repurchase program of up to $1 billion of ordinary shares. This ~~program will terminate when the Company attains~~ ~~$750 million~~ ~~of ordinary~~ share ~~repurchases and~~repurchase program provides for share ~~repurchases~~purchases in the open market or in privately negotiated transactions, depending on share price, market conditions and other factors, as determined by the Company. This program commenced following the completion of the Company's September 2012 share repurchase program in April 2014.

A summary of the ordinary shares repurchased during the three ~~and nine~~ months ended~~September 30, 2013~~March 31, 2014 and ~~September 30, 2012~~March 31, 2013 is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2013		2012		2013		2012		2014		2013
Total Number of Shares Repurchased	2,120,000		5,443,213		7,415,583		10,740,453		2,376,391		2,850,000
Average Price Paid per Share	$	56.50	$	29.78	$	48.80	$	29.08	$	66.14	$	42.79
Total (in millions)	$	120	$	162	$	362	$	312	$	157	$	122

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As of ~~September 30, 2013~~March 31, 2014, approximately $~~285~~33 million and $1 billion of share repurchases remained available under the ~~program adopted in~~ September ~~2012. Additionally, during~~2012 and January 2014 share repurchase programs, respectively. During the period from ~~October~~April 1, ~~2013~~2014 to ~~October 31, 2013,~~April 23, 2014, the Company repurchased ~~397,589~~an additional $47 million worth of shares ~~at a weighted average share price of~~ ~~$57.85~~ pursuant to an automatic trading plan with set trading instructions established by the ~~Company, leaving~~Company. As a result, approximately $~~262~~$986 million ~~remaining~~ of share repurchases remain available under the ~~September 2012~~January 2014 share repurchase program. All repurchased shares were retired, and are reflected as a reduction of ordinary share capital for the par value of the shares, with the excess applied as reductions to additional paid-in capital and retained earnings.

Dividends

On February 26, 2013, the Board of Directors approved the initiation of dividend payments on ~~its~~the Company's ordinary ~~shares~~shares. In January 2014, the Board of Directors increased the annual dividend rate from $0.68 to $1.00 per ordinary share, and declared a regular quarterly cash ~~dividend. During the~~ ~~nine months endedSeptember 30, 2013, the~~dividend of $0.25 per ordinary share. The Company has declared and paid cash dividends per common share during the periods presented as follows:

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2013
Dividend Amount
Three months ended: Per Share (in millions)
September 30 $ 0.17
$ 53
June 30 0.17
53
March 31 0.17
53
Total $ 0.51
$ 159



	Dividend		Amount
	Per Share		(in millions)
2014:
First Quarter	$	0.25	$	77

2013:
Fourth Quarter	$	0.17	$	52
Third Quarter	0.17		53
Second Quarter	0.17		53
First Quarter	0.17		53
Total	$	0.68	$	211

Other

Prior to the completion of the initial public offering on November 22, 2011, net income and other changes to membership interests were allocated to the respective outstanding classes based on the cumulative distribution provisions of the Fourth Amended and Restated Limited Liability Partnership Agreement of Delphi Automotive LLP (the “Fourth LLP Agreement”).

Under the terms of the Acquisition and the Fourth LLP Agreement, if cumulative distributions to the members of Delphi Automotive LLP under certain provisions of the Fourth LLP Agreement exceed $7.2 billion, Delphi, as disbursing agent on behalf of DPHH, is required to pay to the holders of allowed general unsecured claims against the Predecessor, $32.50 for every $67.50 in excess of $7.2 billion distributed to the members, up to a maximum amount of $300 million. This contingency is not considered probable of occurring as of ~~September 30, 2013~~March 31, 2014. and accordingly, no reserve has been recorded.

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13. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) attributable to Delphi (net of tax) for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~September 30, 2012~~March 31, 2013 are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2013			2012			2013			2012			2014			2013
	(in millions)												(in millions)
Foreign currency translation adjustments:
Balance at beginning of period	$	(179	)	$	(193	)	$	(62	)	$	(120	)	$	(17	)	$	(62	)
Aggregate adjustment for the period	110			82			(7		)	9			(10		)	(78		)
Balance at end of period	(69		)	(111		)	(69		)	(111		)	(27		)	(140		)

Gains (losses) on derivatives:
Balance at beginning of period	$	(25	)	$	(9	)	$	14		$	(45	)	$	2		$	14
Other comprehensive income before reclassifications (net tax effect of $10 million, $15 million, $9 million and $35 million)	4			24			(29		)	59
Reclassification to income (net tax effect of $5 million, $0 million, $1 million and $1 million)	6			2			—			3
Other comprehensive income before reclassifications (net tax effect of $7 million and $3 million)													(34		)	17
Reclassification to income (net tax effect of $1 million and $1 million)													1			(11		)
Balance at end of period	(15		)	17			(15		)	17			(31		)	20

Pension and postretirement plans:
Balance at beginning of period	$	(173	)	$	(19	)	$	(189	)	$	(18	)	$	(222	)	$	(189	)
Other comprehensive income before reclassifications (net tax effect of $2 million, $0 million, $2 million and $0 million)	(7		)	—			6			(1		)
Reclassification to income (net tax effect of $0 million, $0 million, $1 million and $0 million)	2			(1		)	5			(1		)
Other comprehensive income before reclassifications (net tax effect of $0 million and $0 million)													(1		)	15
Reclassification to income (net tax effect of $0 million and $0 million)													2			2
Balance at end of period	(178		)	(20		)	(178		)	(20		)	(221		)	(172		)

Accumulated other comprehensive (loss) income, end of period	(262		)	(114		)	(262		)	(114		)	$	(279	)	$	(292	)

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Reclassifications from accumulated other comprehensive income to income for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 were as follows:

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														Reclassification out of Accumulated Other Comprehensive Income
Details about Accumulated Other Comprehensive Income Components		Three Months Ended September 30, 2013			Nine Months Ended September 30, 2013			Affected Line Item in the Statement of Operations		Three Months Ended March 31, 2014			Affected Line Item in the Statement of Operations
		(in millions)								(in millions)
Gains (losses) on derivatives:	Gains (losses) on derivatives:								Gains (losses) on derivatives:
Commodity derivatives		$	(8	)	$	(17	)	Cost of Sales		$	(4	)	Cost of Sales
Foreign currency derivatives		5			19			Cost of Sales		2			Cost of Sales
Foreign currency derivatives		(8		)	(3		)	Other Income		2			Other Income
		(11		)	(1		)	Total loss before income taxes		—			Total loss before income taxes
		5			1			Income tax benefit (expense)		(1		)	Income tax expense
		(6		)	—			Net loss		(1		)	Net loss
		—			—			Net income attributable to noncontrolling interest		—			Net income attributable to noncontrolling interest
		$	(6	)	$	—		Net loss attributable to Delphi		$	(1	)	Net loss attributable to Delphi

Pension and postretirement plans:
Actuarial gains/(losses)		$	(2	)	$	(6	)	(1)		$	(2	)	(1)
		(2		)	(6		)	Total loss before income taxes		(2		)	Total loss before income taxes
		—			1			Income tax benefit		—			Income tax expense
		(2		)	(5		)	Net loss		(2		)	Net loss
		—			—			Net income attributable to noncontrolling interest		—			Net income attributable to noncontrolling interest
		$	(2	)	$	(5	)	Net loss attributable to Delphi		$	(2	)	Net loss attributable to Delphi

Total reclassifications for the period		$	(8	)	$	(5	)			$	(3	)


(1)	These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 9. Pension Benefits for additional details).

14. DERIVATIVES AND HEDGING ACTIVITIES

Delphi is exposed to market risk, such as fluctuations in foreign currency exchange rates, commodity prices and changes in interest rates, which may result in cash flow risks. To manage the volatility relating to these exposures, Delphi aggregates the exposures on a consolidated basis to take advantage of natural offsets. For exposures that are not offset within its operations, Delphi enters into various derivative transactions pursuant to its risk management policies, which prohibit holding or issuing derivative financial instruments for speculative purposes, and designation of derivative instruments is performed on a transaction basis to support hedge accounting. The changes in fair value of these hedging instruments are offset in part or in whole by corresponding changes in the fair value or cash flows of the underlying exposures being hedged. Delphi assesses the initial and ongoing effectiveness of its hedging relationships in accordance with its documented policy. As of ~~September 30, 2013~~March 31, 2014, Delphi has entered into derivative instruments to hedge cash flows extending out to ~~October 2015.~~July 2016.

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As of ~~September 30, 2013~~March 31, 2014, the Company had the following outstanding notional amounts related to commodity and foreign currency forward contracts that were entered into to hedge forecasted exposures:



~~Commodity~~	~~Quantity~~ ~~Hedged~~	~~Unit of~~ ~~Measure~~
	~~(in thousands)~~
~~Copper~~	~~87,633~~	~~pounds~~
~~Primary Aluminum~~	~~34,425~~	~~pounds~~
~~Secondary Aluminum~~	~~19,021~~	~~pounds~~



Commodity	Quantity Hedged	Unit of Measure	Notional Amount (Approximate USD Equivalent)
	(in thousands)		(in millions)
Copper	95,751	pounds	$	290
Primary Aluminum	36,841	pounds	30
Secondary Aluminum	18,267	pounds	15


Foreign Currency	Quantity Hedged	Unit of Measure	Notional Amount (Approximate USD Equivalent)		Quantity Hedged	Unit of Measure	Notional Amount (Approximate USD Equivalent)
	(in millions)				(in millions)
Mexican Peso	10,856	MXN	$	830	10,153	MXN	$	775
Euro	181	EUR	245		184	EUR	255
Brazilian Real					278	BRL	125
Polish Zloty	322	PLN	105		325	PLN	105
New Turkish Lira	214	TRY	105		215	TRY	100
Brazilian Real	193	BRL	85
Hungarian Forint					16,142	HUF	70
Chinese Yuan Renminbi	406	CNY	65		304	CNY	50
Hungarian Forint	10,877	HUF	50
Romanian Leu	138	RON	40		63	RON	20

The Company had additional commodity and foreign currency forward contracts with notional amounts that individually amounted to less than $10 million. Additionally, during the three months ended March 31, 2014, Delphi entered into and settled treasury rate lock agreements which were designated as cash flow hedges in anticipation of issuing the 2014 Senior Notes, as further discussed in Note 8. Debt. The impacts of these agreements and the related amount of hedge ineffectiveness were not material.

The fair value of derivative financial instruments recorded in the consolidated balance sheets as of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013 are as follows:


	Asset Derivatives			Liability Derivatives			Net Amounts of Assets and Liabilities Presented in the Balance Sheet		Asset Derivatives			Liability Derivatives			Net Amounts of Assets and Liabilities Presented in the Balance Sheet
	Balance Sheet Location	September 30, 2013		Balance Sheet Location	September 30, 2013		September 30, 2013		Balance Sheet Location	March 31, 2014		Balance Sheet Location	March 31, 2014		March 31, 2014
	(in millions)								(in millions)
Designated derivatives instruments:	Designated derivatives instruments:								Designated derivatives instruments:
Commodity derivatives	Other Current Assets	$	1	Accrued Liabilities	$	16			Other Current Assets	$	—	Accrued Liabilities	$	20
Foreign currency derivatives*	Other Current Assets	8		Other Current Assets	2		6		Other Current Assets	5		Other Current Assets	3		2
Foreign currency derivatives*	Accrued Liabilities	5		Accrued Liabilities	15		(10	)	Accrued Liabilities	5		Accrued Liabilities	12		(7	)
Commodity derivatives	Other Long-Term Assets	1		Other Long-Term Liabilities	4				Other Long-Term Assets	—		Other Long-Term Liabilities	8
Foreign currency derivatives*	Other Long-Term Assets	4		Other Long-Term Assets	1		3		Other Long-Term Assets	2		Other Long-Term Assets	1		1
Foreign currency derivatives*	Other Long-Term Liabilities	1		Other Long-Term Liabilities	7		(6	)	Other Long-Term Liabilities	2		Other Long-Term Liabilities	6		(4	)
Total		$	20		$	45				$	14		$	50
Derivatives not designated:
Foreign currency derivatives*	Other Current Assets	$	3	Other Current Assets	$	1	2		Other Current Assets	$	2	Other Current Assets	$	—	2
Foreign currency derivatives*	Accrued Liabilities	—		Accrued Liabilities	2		(2	)	Accrued Liabilities	—		Accrued Liabilities	2		(2	)
Total		$	3		$	3				$	2		$	2

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	Asset Derivatives			Liability Derivatives			Net Amounts of Assets and Liabilities Presented in the Balance Sheet		Asset Derivatives			Liability Derivatives			Net Amounts of Assets and Liabilities Presented in the Balance Sheet
	Balance Sheet Location	December 31, 2012		Balance Sheet Location	December 31, 2012		December 31, 2012		Balance Sheet Location	December 31, 2013		Balance Sheet Location	December 31, 2013		December 31, 2013
	(in millions)								(in millions)
Designated derivatives instruments:	Designated derivatives instruments:								Designated derivatives instruments:
Commodity derivatives	Other Current Assets	$	2	Accrued Liabilities	$	7			Other Current Assets	$	2	Accrued Liabilities	$	9
Foreign currency derivatives*	Other Current Assets	24		Other Current Assets	5		19		Other Current Assets	16		Other Current Assets	3		13
Foreign currency derivatives*	Accrued Liabilities	—		Accrued Liabilities	5		(5	)	Accrued Liabilities	3		Accrued Liabilities	10		(7	)
Commodity derivatives	Other Long-Term Assets	1		Other Long-Term Liabilities	1				Other Long-Term Assets	1		Other Long-Term Liabilities	2
Foreign currency derivatives*	Other Long-Term Assets	7		Other Long-Term Assets	2		5		Other Long-Term Assets	5		Other Long-Term Assets	1		4
Foreign currency derivatives*									Other Long-Term Liabilities	2		Other Long-Term Liabilities	6		(4	)
Total		$	34		$	20				$	29		$	31
Derivatives not designated:
None
Foreign currency derivatives*									Other Current Assets	3		Other Current Assets	3		—
										$	3		$	3

* Derivative instruments within this category are subject to master netting arrangements and are presented on a net basis in the consolidated balance sheets in accordance with accounting guidance related to the offsetting of amounts related to certain contracts.

The fair value of Delphi’s derivative financial instruments was in a net liability position as of ~~September 30, 2013~~March 31, 2014 and ~~net asset position as of~~ December 31, ~~2012~~2013. ~~The change from a~~ ~~net asset~~ ~~as of~~ ~~December 31, 2012~~ ~~to a net liability position at~~ ~~September 30, 2013~~ ~~is primarily due to unfavorable movements in the forward rates of certain foreign currencies and commodities.~~

The effect of derivative financial instruments in the consolidated statement of operations and consolidated statement of comprehensive income for the three months ended ~~September 30, 2013~~March 31, 2014 is as follows:


Three Months Ended September 30, 2013	Gain (Loss) Recognized in OCI (Effective Portion)			Loss Reclassified from OCI into Income (Effective Portion)			Gain Recognized in Income (Ineffective Portion Excluded from Effectiveness Testing)
Three Months Ended March 31, 2014									Loss Recognized in OCI (Effective Portion)			(Loss) Gain Reclassified from OCI into Income (Effective Portion)			Gain Recognized in Income (Ineffective Portion Excluded from Effectiveness Testing)
	(in millions)								(in millions)
Designated derivatives instruments:
Commodity derivatives	$	24		$	(8	)	$	—	$	(25	)	$	(4	)	$	—
Foreign currency derivatives	(10		)	(3		)	—		(16		)	4			—
Total	$	14		$	(11	)	$	—	$	(41	)	$	—		$	—


			Gain Recognized in Income
	Gain Recognized in Income		(in millions)
Derivatives not designated:
Commodity derivatives	$	—	$	—
Foreign currency derivatives	1		1
Total	$	1	$	1

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Three Months Ended September 30, 2012
Gain
Recognized in
OCI (Effective
Portion)

(Loss) Gain
Reclassified
from OCI
into Income
(Effective
Portion)

Gain Recognized
in Income
(Ineffective
Portion Excluded
from Effectiveness
Testing)
(in millions)
Designated derivatives instruments:
Commodity derivatives $ 15
$ (7 ) $ —
Foreign currency derivatives 24
5
—
Total $ 39
$ (2 ) $ —

Loss
Recognized in
Income
Derivatives not designated:
Commodity derivatives $ —
Foreign currency derivatives (1 )
Total $ (1 )

~~The effect of derivative financial instruments in the consolidated statement of operations and consolidated statement of comprehensive income for the~~ ~~nine months endedSeptember 30,~~March 31, 2013 is as follows:

Nine Months Ended September 30, 2013
Loss
Recognized in
OCI (Effective
Portion)

(Loss) Gain
Reclassified
from OCI
into Income
(Effective
Portion)

Gain Recognized
in Income
(Ineffective
Portion Excluded
from Effectiveness
Testing)
(in millions)
Designated derivatives instruments:
Commodity derivatives $ (31 ) $ (17 ) $ —
Foreign currency derivatives (7 ) 16
—
Total $ (38 ) $ (1 ) $ —

Gain Recognized in
Income
Derivatives not designated:
Commodity derivatives $ —
Foreign currency derivatives 1
Total $ 1

Nine Months Ended September 30, 2012
Gain
Recognized in
OCI (Effective
Portion)

(Loss) Gain
Reclassified
from OCI
into Income
(Effective
Portion)

Gain Recognized
in Income
(Ineffective
Portion Excluded
from Effectiveness
Testing)
(in millions)
Designated derivatives instruments:
Commodity derivatives $ 19
$ (9 ) $ —
Foreign currency derivatives 75
5
1
Total $ 94
$ (4 ) $ 1

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Three Months Ended March 31, 2013	(Loss) Gain Recognized in OCI (Effective Portion)			(Loss) Gain Reclassified from OCI into Income (Effective Portion)			Gain Recognized in Income (Ineffective Portion Excluded from Effectiveness Testing)
	(in millions)
Designated derivatives instruments:
Commodity derivatives	$	(15	)	$	(3	)	$	—
Foreign currency derivatives	35			15			—
Total	$	20		$	12		$	—


				Loss Recognized in Income
	Loss Recognized in Income			(in millions)
Derivatives not designated:
Commodity derivatives	$	—		$	—
Foreign currency derivatives	(5		)	(1		)
Total	$	(5	)	$	(1	)

The gain or loss reclassified from OCI into income for the effective portion of designated derivative instruments and the gain or loss recognized in income for the ineffective portion of designated derivative instruments excluded from effectiveness testing were recorded to cost of sales and other income in the consolidated statements of operations for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013. The gain or loss recognized in income for non-designated derivative instruments was recorded in other income, net and cost of goods sold for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013.

Gains and losses on derivatives qualifying as cash flow hedges are recorded in OCI, to the extent that hedges are effective, until the underlying transactions are recognized in earnings. Unrealized amounts in accumulated OCI will fluctuate based on changes in the fair value of hedge derivative contracts at each reporting period. ~~Loss~~Losses included in accumulated OCI as of ~~September 30, 2013~~March 31, 2014 ~~was~~were approximately $1637 million (approximately $1531 million net of tax). Of this loss, approximately $1126 million is expected to be included in cost of sales within the next 12 months ~~$1 million~~ ~~is expected to be included in other income within the next 12 months~~ and $411 million is expected to be included in cost of sales in subsequent periods. Cash flow hedges are discontinued when Delphi determines it is no longer probable that the originally forecasted transactions will occur. The amount included in cost of sales related to hedge ineffectiveness was insignificant for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013, respectively.

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value Measurements on a Recurring Basis

All derivative instruments are required to be reported on the balance sheet at fair value unless the transactions qualify and are designated as normal purchases or sales. Changes in fair value are reported currently through earnings unless they meet hedge accounting criteria. Delphi’s derivative exposures are with counterparties with long-term investment grade credit ratings. Delphi estimates the fair value of its derivative contracts using an income approach based on valuation techniques to convert future amounts to a single, discounted amount. Estimates of the fair value of foreign currency and commodity derivative instruments are determined using exchange traded prices and rates. Delphi also considers the risk of non-performance in the estimation of fair value, and includes an adjustment for non-performance risk in the measure of fair value of derivative instruments. The non-performance risk adjustment reflects the credit default spread (“CDS”) applied to the net commodity by counterparty and foreign currency exposures by counterparty. When Delphi is in a net derivative asset position, the counterparty CDS rates are applied to the net derivative asset position. When Delphi is in a net derivative liability position, estimates of peer companies’ CDS rates are applied to the net derivative liability position.

In certain instances where market data is not available, Delphi uses management judgment to develop assumptions that are used to determine fair value. This could include situations of market illiquidity for a particular currency or commodity or where observable market data may be limited. In those situations, Delphi generally surveys investment banks and/or brokers and utilizes the surveyed prices and rates in estimating fair value.

As of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, Delphi was in a net derivative liability position of $2536 million and ~~a net~~ ~~asset~~ ~~position of~~ $142 million, respectively, and no significant adjustments were recorded for nonperformance risk based on the application of peer companies’ CDS rates and because Delphi’s exposures were to counterparties with investment grade credit ratings.

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As of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, Delphi had the following assets measured at fair value on a recurring basis:


	Total		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(in millions)								(in millions)
As of September 30, 2013
As of March 31, 2014:
Commodity derivatives	$	2	$	—	$	2	$	—	$	—	$	—	$	—	$	—
Foreign currency derivatives	11		—		11		—		5		—		5		—
Total	$	13	$	—	$	13	$	—	$	5	$	—	$	5	$	—
As of December 31, 2012:
As of December 31, 2013:
Commodity derivatives	$	3	$	—	$	3	$	—	$	3	$	—	$	3	$	—
Foreign currency derivatives	24		—		24		—		17		—		17		—
Total	$	27	$	—	$	27	$	—	$	20	$	—	$	20	$	—

As of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, Delphi had the following liabilities measured at fair value on a recurring basis:


	Total		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total		Quoted Prices in Active Markets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3
	(in millions)								(in millions)
As of September 30, 2013
As of March 31, 2014:
Commodity derivatives	$	20	$	—	$	20	$	—	$	28	$	—	$	28	$	—
Foreign currency derivatives	18		—		18		—		13		—		13		—
Total	$	38	$	—	$	38	$	—	$	41	$	—	$	41	$	—
As of December 31, 2012:
As of December 31, 2013:
Commodity derivatives	$	8	$	—	$	8	$	—	$	11	$	—	$	11	$	—
Foreign currency derivatives	5		—		5		—		11		—		11		—
Total	$	13	$	—	$	13	$	—	$	22	$	—	$	22	$	��

Financial Instruments

Delphi’s non-derivative financial instruments include debt, which consists of its accounts receivable factoring arrangements, capital leases and other debt issued by Delphi’s non-U.S. subsidiaries, the Tranche A Term Loan, the ~~Tranche B Term Loan (prior to its payoff on March 1, 2013)~~outstanding New Senior Notes, the 2013 Senior Notes and the ~~senior notes.~~2014 Senior Notes. The fair value of debt is based on quoted market prices for instruments with public market data or significant other observable inputs for instruments without a quoted public market price (Level 2). As of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, total debt was recorded at $~~2,418~~2,449 million and $~~2,464~~2,412 million, respectively, and had estimated fair values of $~~2,517~~2,555 million and $~~2,557~~2,519 million, respectively. For all other financial instruments recorded at ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013, fair value approximates book value.

Fair Value Measurements on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, Delphi also has items in its balance sheet that are measured at fair value on a nonrecurring basis. As these items are not measured at fair value on a recurring basis, they are not included in the tables above. Nonfinancial assets and liabilities that are measured at fair value on a nonrecurring basis include long-lived assets, intangible assets, asset retirement obligations, share-based compensation and liabilities for exit or disposal activities measured at fair value upon initial recognition. No significant impairment charges were recorded during the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013. Fair value of long-lived assets is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved and a review of appraisals. As such, Delphi has determined that the fair value measurements of long-lived assets fall in Level 3 of the fair value hierarchy.

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16. OTHER INCOME, NET

Other income, net included:


	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
	2013		2012			2013			2012			2014			2013
	(in millions)											(in millions)
Interest income	$	4	$	5		$	11		$	14		$	2		$	3
Loss on extinguishment of debt	—		(1		)	(39		)	(1		)	(34		)	(39		)
Gain on insurance recovery												14			—
Other, net	—		(1		)	3			2			2			2
Other income (expense), net	$	4	$	3		$	(25	)	$	15		$	(16	)	$	(34	)

As further discussed in Note 8. Debt, during the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014, Delphi redeemed for cash the entire aggregate principal amount outstanding of the 5.875% 2011 Senior Notes and repaid a portion of its indebtedness on the Tranche A Term Loan, resulting in a loss on extinguishment of debt of approximately $34 million. Additionally, during the three months endedMarch 31, 2014, Delphi reached a final settlement with its insurance carrier related to a business interruption insurance claim, and received proceeds from this settlement of approximately $14 million, net of related costs and expenses.

During the three months ended March 31, 2013 Delphi amended its Credit Agreement and repaid the entire balance of the Tranche B Term Loan from the Original Credit Agreement, resulting in a loss on extinguishment of debt of ~~$39 million~~.$39 million.

17. ACQUISITIONS AND DIVESTITURES

Acquisition of Motorized Vehicles Division of FCI

On October 26, 2012, Delphi acquired 100% of the equity interests of MVL for €765 million, or approximately $1 billion based on exchange rates on the acquisition date. MVL, a leading global manufacturer of automotive connection systems with a focus on high-value, leading technology applications, is based in Guyancourt, France, had 2011 sales of €692 million ~~(including approximately~~(approximately 12% to Delphi that ~~would~~will be eliminated on a consolidated basis) and global operations. The operating results of MVL are reported within the Electrical/Electronic Architecture segment from the date of acquisition.

Upon completing the acquisition, Delphi incurred related transaction expenses totaling approximately $13 million, which were recorded in other expenses in the statement of operations. The cash payments required to close the transaction were funded using existing cash on hand, including $363 million drawn under the Credit Agreement and additional European factoring.

The acquisition was accounted for as a business combination, with the purchase price allocated on a preliminary basis using information available, in the fourth quarter of 2012. The purchase price and related allocation were finalized in the three months ended March 31, 2013. The final purchase price and related allocation are shown below (in millions):

Assets acquired and liabilities assumed



Purchase price, net of cash acquired	$	978



Property, plant and equipment	$	249
Intangible assets	278
Other assets purchased and liabilities assumed, net	(7		)
Identifiable net assets acquired	520
Goodwill resulting from purchase	458
Total purchase price allocation	$	978

Intangible assets include estimated amounts recognized for the fair value of customer-based and technology-related assets. It is currently estimated that these intangible assets have a weighted average useful life of approximately 12 years. The valuation of the intangible assets acquired was based on management's estimates, available information, and reasonable and

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supportable assumptions. The fair value of these assets was generally estimated based on utilizing income and market approaches.

The pro forma effects of this acquisition would not materially impact Delphi's reported results for any period presented, and as a result no pro forma financial statements are presented.

~~Sale of Italian Thermal Special Application Business~~

~~On April 30, 2012, Delphi completed the sale of its Thermal Special Application business located in Italy. The net sales of this business were approximately~~ ~~$23 million~~ ~~for the period from January 1 to April 30, 2012. Delphi received net proceeds of~~ ~~$14 million~~ ~~from the sale and recognized a gain on divestiture of~~ ~~$4 million~~, which is included in cost of sales in the consolidated statement of operations for the year ended December 31, 2012. The results of operations, including the gain on divestiture were not significant to the consolidated financial statements in any period presented, and the divestiture did not meet the discontinued operations criteria.

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~~Purchase of Noncontrolling Interest in JV~~

~~In February 2012, Delphi’s Powertrain segment completed the acquisition of the remaining ownership interest in a majority-owned joint venture for a purchase price of~~ ~~$16 million~~. The acquisition was not material to the Company’s consolidated financial statements. Delphi previously had effective control of the joint venture and consolidated its results. The acquisition resulted in the elimination of the non-controlling interest.

~~Other~~

~~During the three months ended September 30, 2013, Delphi sold a European manufacturing facility that was closed as a result of its overall restructuring program, and received proceeds of approximately~~ ~~$20 million~~ ~~and recognized a gain on the disposal of approximately~~ ~~$11 million~~ ~~in cost of sales.~~

18. SHARE-BASED COMPENSATION

Long Term Incentive Plan

In November 2011, the Delphi Automotive PLC Long Term Incentive Plan (the “PLC LTIP”) was established, which allowed for the grant of awards of up to 22,977,116 ordinary shares for long-term compensation. The PLC LTIP is designed to align the interests of management and shareholders. The awards can be in the form of shares, options, stock appreciation rights, restricted stock, RSUs, performance awards, and other share-based awards to the employees, directors, consultants and advisors of the Company. In 2012, 2013 and ~~2013,~~2014, the Company awarded annual long-term grants of RSUs under the PLC LTIP to align management compensation with Delphi's overall business strategy. The Company has competitive and market-appropriate shareholding requirements. All of the RSUs granted under the PLC LTIP are eligible to receive dividend equivalents for any dividend paid from the grant date through the vesting date. Dividend equivalents are generally paid out in ordinary shares upon vesting of the underlying RSUs.

On June 13, 2012, 51,003 RSUs granted to the Board of Directors on November 22, 2011 vested. The grant date fair value was approximately $1 million, and was determined based on the closing price of the Company’s ordinary shares on November 22, 2011. Upon settlement of the RSUs, 51,003 ordinary shares were issued to members of the Board of Directors at a fair value of approximately $1 million, of which 1,020 ordinary shares were withheld to cover the minimum U.K. withholding taxes.

On June 14, 2012, Delphi granted 64,459 RSUs to the Board of Directors at a grant date fair value of approximately $2 million. The grant date fair value was determined based on the closing price of the Company’s ordinary shares on June 14, 2012. The RSUs vested on April 24, 2013 and 64,713 ordinary shares, which included shares issued in connection with dividend equivalents, were issued to members of the Board of Directors at a fair value of approximately $3 million. 7,691 ordinary shares were withheld to cover the minimum U.K. withholding taxes.

On April 25, 2013, Delphi granted 37,674 RSUs to the Board of Directors at a grant date fair value of approximately $2 million. The grant date fair value was determined based on the closing price of the Company's ordinary shares on April 25, 2013. The RSUs vested on April 2, 2014, and 38,179 ordinary shares, which included shares issued in connection with dividend equivalents, were issued to members of the Board of Directors at a fair value of approximately $3 million. 4,656 ordinary shares were withheld to cover the minimum U.K. withholding taxes.

On April 3, 2014, Delphi granted 24,144 RSUs to the Board of Directors at a grant date fair value of approximately $2 million. The grant date fair value was determined based on the closing price of the Company's ordinary shares on April 3, 2014. The RSUs will vest on April ~~2, 2014,~~22, 2015, the day before the ~~2014~~2015 annual meeting of shareholders.

In February 2012, Delphi granted approximately 1.88 million RSUs to its executives. These awards include a time-based vesting portion and a performance-based vesting portion. The time-based RSUs, which make up 25% of the awards for Delphi’s officers and 50% for Delphi’s other executives, will vest ratably over three years beginning on the first anniversary of the grant date. The performance-based RSUs, which make up 75% of the awards for Delphi’s officers and 50% for Delphi’s other executives, will vest at the completion of a three-year performance period at the end of 2014, if certain targets are met.

In February 2013, under the time-based vesting terms of the 2012 grant, 218,070 ordinary shares were issued to Delphi executives at a fair value of $9$9 million,, of which 78,692 ordinary shares were withheld to cover withholding taxes.

In February 2013, Delphi granted approximately 1.45 million RSUs to its executives. These awards include time and performance-based components and vesting terms similar to the 2012 awards described above, as well as continuity awards. The time-based RSUs will vest ratably over three years beginning on the first anniversary of the grant date and the performance-based RSUs will vest at the completion of a three-year performance period at the end of 2015 if certain targets are met.

In February 2014, under the time-based vesting terms of the 2012 and 2013 grants, 365,930 ordinary shares were issued to Delphi executives at a fair value of $23 million, of which 131,913 ordinary shares were withheld to cover minimum withholding taxes.

In February 2014, Delphi granted approximately 0.8 million RSUs to its executives. These awards include time and performance-based components and vesting terms similar to the 2013 awards described above. The time-based RSUs will vest

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ratably over three years beginning on the first anniversary of the grant date and the performance-based RSUs will vest at the completion of a three-year performance period at the end of 2016 if certain targets are met.

Any new executives hired after the annual executive RSU grant date may be eligible to participate in the PLC LTIP. Any off cycle grants made for new hires will be valued at their grant date fair value based on the closing price of the Company's ordinary shares on the date of such grant.

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Each executive will receive between 0% and 200% of his or her target performance-based award based on the Company’s performance against established company-wide performance metrics, which are:


Metric	2013 Grant		2012 Grant		2014 Grant		2013 Grant		2012 Grant
Average Return on Net Assets (1)	50	%	50	%	50	%	50	%	50	%
Cumulative Net Income	N/A		30	%	N/A		N/A		30	%
Cumulative Earnings Per Share (2)	30	%	N/A		30	%	30	%	N/A
Relative Total Shareholder Return (3)	20	%	20	%	20	%	20	%	20	%


(1)	Average return on net assets is measured by tax-affected operating income divided by average net working capital plus average net property, plant and equipment ~~expense~~ for each calendar year during the respective performance period.


(2)	Cumulative earnings per share is measured by net income attributable to Delphi divided by the weighted average number of diluted shares outstanding for ~~calendar years 2013-2015.~~the respective three-year performance period.

(3)

Relative total shareholder return is measured by comparing the average closing price per share of the Company’s ordinary shares for all available trading days in the fourth quarter of the end of the performance period to the average closing price per share of the Company’s ordinary shares for all available trading days in the fourth quarter of the year preceding the grant, including dividends, and assessed against a comparable measure of competitor and peer group companies.

The grant date fair value of the RSUs was determined based on the closing price of the Company’s ordinary shares on the date of the grant of the award, including an estimate for forfeitures, and a contemporaneous valuation performed by an independent valuation specialist with respect to the relative total shareholder return awards. Based on the target number of awards issued for the February 2014, 2013, and 2012 grants, the fair value at grant date was estimated to be approximately $53 million, $60 million and ~~$59~~$59 million,, respectively.

A summary of activity, including award grants, vesting and forfeitures is provided ~~below~~below:


	RSUs		Weighted Average Grant Date Fair Value		RSUs		Weighted Average Grant Date Fair Value
	(in thousands)				(in thousands)
Outstanding, January 1, 2013	1,899		$	31.09
Outstanding, January 1, 2014					2,918		$	36.55
Granted	1,505		41.51		789		67.84
Vested	(285	)	29.26		(366	)	34.52
Forfeited	(188	)	34.16		(83	)	37.75
Outstanding, September 30, 2013	2,931		36.41
Outstanding, March 31, 2014					3,258		44.32

Delphi recognized compensation expense of $1014 million ($811 million, net of tax) and $810 million ($68 million, net of tax) based on the Company’s best estimate of ultimate performance against the respective targets during the three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012, respectively. Delphi recognized compensation expense of~~ ~~$34 million~~ (~~$26 million, net of tax) and~~ ~~$20 million~~ (~~$15 million, net of tax) based on the Company’s best estimate of ultimate performance against the respective targets during the~~ ~~nine months endedSeptember 30,~~ 2013 ~~and~~ ~~2012~~, respectively. Delphi will continue to recognize compensation expense, based on the grant date fair value of the awards applied to the Company’s best estimate of ultimate performance against the respective targets, over the requisite vesting periods of the awards. Based on the grant date fair value of the awards and the Company’s best estimate of ultimate performance against the respective targets as of ~~September 30, 2013~~March 31, 2014, unrecognized compensation expense on a pretax basis of approximately $73110 million is anticipated to be recognized ~~through February 2016.~~over a weighted average period of approximately 2 years. For the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013, respectively, approximately $38 million and $03 million of cash was paid and reflected as a financing activity in the statements of cash flows related to the minimum statutory tax withholding for vested RSUs.

Value Creation Plan

During the second quarter of 2010, the Board of Managers approved and authorized the VCP, a long-term incentive plan designed to assist the Company in attracting, retaining, motivating and rewarding key employees of the Company and promoting the creation of long-term value. Participants were granted an award in September 2010 for the performance period ending December 31, ~~2012~~.2012. Each individual participant’s target value was based on the participants’ level of responsibility within the Company and the country in which the participant is located. The awards cliff vested on December 31, 2012,, the end

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of the performance period. In the event of a qualified termination, as defined in the VCP, prior to December 31, 2012,, the participant would have vested in a pro-rata percentage of their award as of the termination date. For any other termination, the award would have been forfeited.

Approximately $200 million of the VCP awards were settled in cash during the year ended December 31, 2012 and approximately $31 million (including $11 million of taxes to be paid) that remained in accrued liabilities as of December 31,

~~Table of Contents~~

2012 related to certain legal entities was paid out in the first quarter of 2013. The cash flow impacts for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013 were $310 million and $031 million, respectively. Final settlement of the awards for Delphi's officers was comprised of a combination of cash and ordinary shares. On December 31, 2012,, 717,230 ordinary shares were issued to Delphi's officers, of which 290,798 ordinary shares were withheld to cover U.S. withholding taxes. For the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013, respectively, approximately $110 million and $011 million of cash was paid and reflected as a financing activity in the statements of cash flows related to the minimum statutory tax withholding for the vested ordinary shares. Delphi recognized compensation expense based on estimates of the enterprise value over the requisite vesting periods of the awards. ~~Compensation expense recognized during the~~ ~~three and nine months endedSeptember 30, 2012~~ ~~totaled~~ ~~$27 million~~ (~~$20 million, net of tax) and~~ ~~$107 million~~ (~~$80 million, net of tax), respectively.~~

The VCP awards were accounted for as liability awards pursuant to FASB ASC 718, Compensation-Stock Compensation. Estimating the fair value of the liability awards under the VCP required assumptions regarding the Company’s enterprise value. Prior to public quoted market prices for averages to determine fair value estimates for the VCP, the fair market value of the liability awards was based on contemporaneous valuations performed by an independent valuation specialist, utilizing generally accepted valuation approaches.

19. SUPPLEMENTAL GUARANTOR AND NON-GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Basis of Presentation

In May 2011, Delphi Corporation issued the 2011 Senior Notes in a transaction exempt from registration under Rule 144A and Regulation S of the Securities Act. The 2011 Senior Notes were exchanged for the New Senior Notes in an exchange offer completed in May ~~2012.~~2012, and as more fully described in Note 8. Debt, the 2011 5.875% Senior Notes were redeemed and extinguished in March 2014. Additionally, in February 2013 and March 2014, Delphi Corporation issued ~~the 2013 Senior Notes~~senior notes registered under the Securities Act. All series of the ~~Company's~~ outstanding senior notes have been issued by Delphi Corporation ~~(“Subsidiary~~(the “Subsidiary Issuer”), and are fully and unconditionally guaranteed by certain of its direct and indirect parent companies ~~the (“Parent Companies”) and by certain of Delphi Automotive PLC’s direct and indirect subsidiaries~~ (the ~~“Guarantor Subsidiaries”~~“Parent Guarantors”) on a joint and several basis, subject to customary release provisions (other than in the case of Delphi Automotive PLC). ~~Subsidiaries~~All other consolidated direct and indirect subsidiaries of Delphi Automotive PLC are not subject to the ~~guarantee~~guarantees (“Non-Guarantor Subsidiaries”) ~~consist primarily~~. Prior to 2014, certain additional direct and indirect subsidiaries of Delphi Automotive PLC, which are directly or indirectly 100% owned by Delphi Automotive PLC, fully and unconditionally guaranteed all series of the ~~non-U.S.~~outstanding senior notes. However, all such guarantees of Delphi Corporation's subsidiaries ofwere released during the ~~Company.~~three months ended March 31, 2014 because such guarantors no longer guaranteed the Credit Agreement. Refer to Note 8. Debt for more information.

In lieu of providing separate audited financial statements for the Guarantors, the Company has included the accompanying condensed consolidating financial statements. These condensed consolidating financial statements are presented on the equity method. Under this method, the investments in subsidiaries are recorded at cost and adjusted for the parent’s share of the subsidiary’s cumulative results of operations, capital contributions and distributions and other equity changes. The ~~Guarantor~~Non-Guarantor Subsidiaries are combined in the condensed consolidating financial statements. The principal elimination entries are to eliminate the investments in subsidiaries and intercompany balances and transactions.

The historical presentation of certain intercompany accounts and activity within the supplemental guarantor condensed consolidating financial statements has been revised to be consistent with the presentation as of March 31, 2014.

3130

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Statement of Operations Three Months Ended ~~September 30,~~March 31, 2014



	Parent Guarantors			Subsidiary Issuer			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net sales	$	—		$	—		$	4,276		$	—		$	4,276
Operating expenses:
Cost of sales	—			—			3,508			—			3,508
Selling, general and administrative	5			—			256			—			261
Amortization	—			—			26			—			26
Restructuring	—			—			22			—			22
Total operating expenses	5			—			3,812			—			3,817
Operating (loss) income	(5		)	—			464			—			459
Interest (expense) income	(10		)	(47		)	(18		)	40			(35		)
Other income (expense), net	15			(19		)	28			(40		)	(16		)
(Loss) income before income taxes and equity income	—			(66		)	474			—			408
Income tax benefit (expense)	—			24			(99		)	—			(75		)
(Loss) income before equity income	—			(42		)	375			—			333
Equity in net income of affiliates	—			—			8			—			8
Equity in net income (loss) of subsidiaries	320			70			—			(390		)	—
Net income (loss)	320			28			383			(390		)	341
Net income attributable to noncontrolling interest	—			—			21			—			21
Net income (loss) attributable to Delphi	$	320		$	28		$	362		$	(390	)	$	320

Statement of Operations Three Months Ended March 31, 2013


	Parent Companies			Subsidiary Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Eliminations			Consolidated			Parent Guarantors			Subsidiary Issuer			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)																		(in millions)
Net sales	$	—		$	—		$	1,368		$	2,993		$	(344	)	$	4,017		$	—		$	—		$	4,024		$	—		$	4,024
Operating expenses:																									—
Cost of sales	—			—			1,203			2,483			(348		)	3,338			—			—			3,339			—			3,339
Selling, general and administrative	41			—			43			143			1			228			35			—			195			—			230
Amortization	—			—			14			13			—			27			—			—			26			—			26
Restructuring	—			—			3			34			—			37			—			—			32			—			32
Total operating expenses	41			—			1,263			2,673			(347		)	3,630			35			—			3,592			—			3,627
Operating (loss) income	(41		)	—			105			320			3			387			(35		)	—			432			—			397
Interest expense	(15		)	(47		)	(16		)	(3		)	47			(34		)
Interest (expense) income																			(14		)	(47		)	(19		)	44			(36		)
Other income (expense), net	15			15			1			17			(44		)	4			15			(21		)	16			(44		)	(34		)
(Loss) income before income taxes and equity income	(41		)	(32		)	90			334			6			357			(34		)	(68		)	429			—			327
Income tax benefit (expense)	—			12			(27		)	(56		)	(1		)	(72		)	—			25			(62		)	—			(37		)
(Loss) income before equity income	(41		)	(20		)	63			278			5			285			(34		)	(43		)	367			—			290
Equity in net income of affiliates	—			—			—			8			—			8			—			—			8			—			8
Equity in net income (loss) of subsidiaries	312			74			—			—			(386		)	—			310			107			—			(417		)	—
Net income (loss)	271			54			63			286			(381		)	293			276			64			375			(417		)	298
Net income attributable to noncontrolling interest	—			—			—			22			—			22			—			—			22			—			22
Net income (loss) attributable to Delphi	$	271		$	54		$	63		$	264		$	(381	)	$	271		$	276		$	64		$	353		$	(417	)	$	276

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Statement of Comprehensive Income Three Months Ended March 31, 2014



	Parent Guarantors			Subsidiary Issuer			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net income (loss)	$	320		$	28		$	383		$	(390	)	$	341
Other comprehensive income (loss):
Currency translation adjustments	—			—			(14		)	—			(14		)
Net change in unrecognized gain (loss) on derivative instruments, net of tax	—			—			(33		)	—			(33		)
Employee benefit plans adjustment, net of tax	—			—			1			—			1
Other comprehensive loss	—			—			(46		)	—			(46		)
Equity in other comprehensive (loss) income of subsidiaries	(42		)	(8		)	—			50			—
Comprehensive income (loss)	278			20			337			(340		)	295
Comprehensive income attributable to noncontrolling interests	—			—			17			—			17
Comprehensive income (loss) attributable to Delphi	$	278		$	20		$	320		$	(340	)	$	278

Statement of Comprehensive Income Three Months Ended March 31, 2013



	Parent Guarantors			Subsidiary Issuer		Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net income (loss)	$	276		$	64	$	375		$	(417	)	$	298
Other comprehensive income (loss):						—
Currency translation adjustments	—			—		(78		)	—			(78		)
Net change in unrecognized gain on derivative instruments, net of tax	—			—		6			—			6
Employee benefit plans adjustment, net of tax	—			—		17			—			17
Other comprehensive loss	—			—		(55		)	—			(55		)
Equity in other comprehensive (loss) income of subsidiaries	(55		)	5		—			50			—
Comprehensive income (loss)	221			69		320			(367		)	243
Comprehensive income attributable to noncontrolling interests	—			—		22			—			22
Comprehensive income (loss) attributable to Delphi	$	221		$	69	$	298		$	(367	)	$	221

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~~Statement~~Balance Sheet as of ~~Operations~~ ~~Nine Months Ended September 30, 2013~~March 31, 2014

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
Net sales $ —
$ —
$ 4,084
$ 9,210
$ (1,013 ) $ 12,281
Operating expenses:
Cost of sales —
—
3,556
7,611
(1,026 ) 10,141
Selling, general and administrative 120
—
145
432
2
699
Amortization —
—
41
38
—
79
Restructuring —
—
10
85
—
95
Total operating expenses 120
—
3,752
8,166
(1,024 ) 11,014
Operating (loss) income (120 ) —
332
1,044
11
1,267
Interest expense (41 ) (141 ) (47 ) (9 ) 132
(106 )
Other income (expense), net 45
9
2
49
(130 ) (25 )
(Loss) income before income taxes and equity income (116 ) (132 ) 287
1,084
13
1,136
Income tax benefit (expense) —
49
(69 ) (158 ) (4 ) (182 )
(Loss) income before equity income (116 ) (83 ) 218
926
9
954
Equity in net income of affiliates —
—
—
26
—
26
Equity in net income (loss) of subsidiaries 1,030
252
—
—
(1,282 ) —
Net income (loss) 914
169
218
952
(1,273 ) 980
Net income attributable to noncontrolling interest —
—
—
66
—
66
Net income (loss) attributable to Delphi $ 914
$ 169
$ 218
$ 886
$ (1,273 ) $ 914



	Parent Guarantors		Subsidiary Issuer		Non- Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	32	$	—	$	946	$	—		$	978
Restricted cash	—		—		7		—			7
Accounts receivable, net	—		—		3,066		—			3,066
Intercompany receivables, current	411		1,274		1,639		(3,324		)	—
Inventories	—		—		1,234		1			1,235
Other current assets	—		9		604		(19		)	594
Total current assets	443		1,283		7,496		(3,342		)	5,880
Long-term assets:
Intercompany receivables, long-term	586		902		1,298		(2,786		)	—
Property, net	—		—		3,251		—			3,251
Investments in affiliates	—		—		229		—			229
Investments in subsidiaries	5,459		1,030		—		(6,489		)	—
Intangible assets, net	—		—		1,190		—			1,190
Other long-term assets	—		40		589		3			632
Total long-term assets	6,045		1,972		6,557		(9,272		)	5,302
Total assets	$	6,488	$	3,255	$	14,053	$	(12,614	)	$	11,182
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	—	$	—	$	31	$	—		$	31
Accounts payable	—		—		2,681		—			2,681
Intercompany payables, current	2,236		204		886		(3,326		)	—
Accrued liabilities	5		19		1,212		(18		)	1,218
Total current liabilities	2,241		223		4,810		(3,344		)	3,930
Long-term liabilities:
Long-term debt	—		2,398		21		(1		)	2,418
Intercompany payables, long-term	1,286		586		915		(2,787		)	—
Pension benefit obligations	—		—		958		—			958
Other long-term liabilities	—		—		380		2			382
Total long-term liabilities	1,286		2,984		2,274		(2,786		)	3,758
Total liabilities	3,527		3,207		7,084		(6,130		)	7,688
Total Delphi shareholders’ equity	2,961		48		6,436		(6,484		)	2,961
Noncontrolling interest	—		—		533		—			533
Total shareholders’ equity	2,961		48		6,969		(6,484		)	3,494
Total liabilities and shareholders’ equity	$	6,488	$	3,255	$	14,053	$	(12,614	)	$	11,182

~~Statement of Operations~~ ~~Three Months Ended September 30, 2012~~

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
Net sales $ —
$ —
$ 1,339
$ 2,696
$ (372 ) $ 3,663
Operating expenses:
Cost of sales —
—
1,158
2,277
(377 ) 3,058
Selling, general and administrative 33
—
66
117
(1 ) 215
Amortization —
—
14
6
—
20
Restructuring —
—
1
2
—
3
Total operating expenses 33
—
1,239
2,402
(378 ) 3,296
Operating (loss) income (33 ) —
100
294
6
367
Interest expense (18 ) (47 ) (15 ) (3 ) 51
(32 )
Other income (expense), net 16
28
(2 ) 12
(51 ) 3
(Loss) income before income taxes and equity income (35 ) (19 ) 83
303
6
338
Income tax benefit (expense) —
7
(22 ) (35 ) (2 ) (52 )
(Loss) income before equity income (35 ) (12 ) 61
268
4
286
Equity in net income of affiliates —
—
—
6
—
6
Equity in net income (loss) of subsidiaries 304
61
—
—
(365 ) —
Net income (loss) 269
49
61
274
(361 ) 292
Net income attributable to noncontrolling interest —
—
—
23
—
23
Net income (loss) attributable to Delphi $ 269
$ 49
$ 61
$ 251
$ (361 ) $ 269

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Balance Sheet as of December 31, 2013



	Parent Guarantors		Subsidiary Issuer		Non- Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	7	$	—	$	1,382	$	—		$	1,389
Restricted cash	—		—		4		—			4
Accounts receivable, net	—		—		2,662		—			2,662
Intercompany receivables, current	452		1,123		1,418		(2,993		)	—
Inventories	—		—		1,102		(9		)	1,093
Other current assets	1		10		600		(7		)	604
Total current assets	460		1,133		7,168		(3,009		)	5,752
Long-term assets:
Intercompany receivables, long-term	561		888		1,283		(2,732		)	—
Property, net	—		—		3,216		—			3,216
Investments in affiliates	—		—		234		—			234
Investments in subsidiaries	5,181		1,130		—		(6,311		)	—
Intangible assets, net	—		—		1,219		—			1,219
Other long-term assets	—		43		581		2			626
Total long-term assets	5,742		2,061		6,533		(9,041		)	5,295
Total assets	$	6,202	$	3,194	$	13,701	$	(12,050	)	$	11,047
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	—	$	25	$	36	$	—		$	61
Accounts payable	—		—		2,595		—			2,595
Intercompany payables, current	2,008		204		771		(2,983		)	—
Accrued liabilities	—		23		1,222		(7		)	1,238
Total current liabilities	2,008		252		4,624		(2,990		)	3,894
Long-term liabilities:
Long-term debt	—		2,339		12		—			2,351
Intercompany payables, long-term	1,283		571		888		(2,742		)	—
Pension benefit obligations	—		—		959		—			959
Other long-term liabilities	—		—		409		—			409
Total long-term liabilities	1,283		2,910		2,268		(2,742		)	3,719
Total liabilities	3,291		3,162		6,892		(5,732		)	7,613
Total Delphi shareholders’ equity	2,911		32		6,286		(6,318		)	2,911
Noncontrolling interest	—		—		523		—			523
Total shareholders’ equity	2,911		32		6,809		(6,318		)	3,434
Total liabilities and shareholders’ equity	$	6,202	$	3,194	$	13,701	$	(12,050	)	$	11,047

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Statement of ~~Operations~~ ~~Nine Months Ended September 30, 2012~~

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
Net sales $ —
$ —
$ 4,234
$ 8,667
$ (1,149 ) $ 11,752
Operating expenses:
Cost of sales —
—
3,614
7,253
(1,164 ) 9,703
Selling, general and administrative 96
—
214
364
(1 ) 673
Amortization —
—
41
19
—
60
Restructuring —
—
5
12
—
17
Total operating expenses 96
—
3,874
7,648
(1,165 ) 10,453
Operating (loss) income (96 ) —
360
1,019
16
1,299
Interest expense (53 ) (129 ) (38 ) (10 ) 130
(100 )
Other income (expense), net 38
73
(2 ) 36
(130 ) 15
(Loss) income before income taxes and equity income (111 ) (56 ) 320
1,045
16
1,214
Income tax benefit (expense) —
21
(85 ) (158 ) (5 ) (227 )
(Loss) income before equity income (111 ) (35 ) 235
887
11
987
Equity in net income of affiliates —
—
—
18
—
18
Equity in net income (loss) of subsidiaries 1,052
235
—
—
(1,287 ) —
Net income (loss) 941
200
235
905
(1,276 ) 1,005
Net income attributable to noncontrolling interest —
—
—
64
—
64
Net income (loss) attributable to Delphi $ 941
$ 200
$ 235
$ 841
$ (1,276 ) $ 941

~~Statement of Comprehensive Income~~Cash Flows for the Three Months Ended ~~September 30, 2013~~March 31, 2014

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
Net income (loss) $ 271
$ 54
$ 63
$ 286
$ (381 ) $ 293
Other comprehensive income (loss):
Currency translation adjustments —
—
—
113
—
113
Net change in unrecognized gain (loss) on derivative instruments, net of tax —
—
12
(2 ) —
10
Employee benefit plans adjustment, net of tax —
—
—
(5 ) —
(5 )
Other comprehensive income —
—
12
106
—
118
Equity in other comprehensive income (loss) of subsidiaries 115
12
—
—
(127 ) —
Comprehensive income (loss) 386
66
75
392
(508 ) 411
Comprehensive income attributable to noncontrolling interests —
—
—
25
—
25
Comprehensive income (loss) attributable to Delphi $ 386
$ 66
$ 75
$ 367
$ (508 ) $ 386



	Parent Guarantors			Subsidiary Issuer			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net cash provided by operating activities	$	45		$	—		$	91		$	—		$	136
Cash flows from investing activities:
Capital expenditures	—			—			(298		)	—			(298		)
Proceeds from sale of property/investments	—			—			1			—			1
Cost of business and technology acquisitions, net of cash acquired	—			—			—			—			—
Increase in restricted cash	—			—			(3		)	—			(3		)
Loans to affiliates	—			(180		)	(438		)	618			—
Repayments of loans from affiliates	—			30			229			(259		)	—
Net cash used in investing activities	—			(150		)	(509		)	359			(300		)
Cash flows from financing activities:
Net proceeds from other short-term debt agreements	—			—			3			—			3
Repayments under long-term debt agreements	—			(164		)	—			—			(164		)
Repayment of senior notes	—			(526		)	—			—			(526		)
Proceeds from issuance of senior notes, net of issuance costs	—			691			—			—			691
Dividend payments of consolidated affiliates to minority shareholders	—			—			(7		)	—			(7		)
Proceeds from borrowings from affiliates	384			234			—			(618		)	—
Payments on borrowings from affiliates	(174		)	(85		)	—			259			—
Repurchase of ordinary shares	(153		)	—			—			—			(153		)
Distribution of cash dividends	(77		)	—			—			—			(77		)
Taxes withheld and paid on employees' restricted share awards	—			—			(8		)	—			(8		)
Net cash (used in) provided by financing activities	(20		)	150			(12		)	(359		)	(241		)
Effect of exchange rate fluctuations on cash and cash equivalents	—			—			(6		)	—			(6		)
Increase (decrease) in cash and cash equivalents	25			—			(436		)	—			(411		)
Cash and cash equivalents at beginning of period	7			—			1,382			—			1,389
Cash and cash equivalents at end of period	$	32		$	—		$	946		$	—		$	978

3435

Table of Contents

Statement of ~~Comprehensive Income~~ ~~Nine Months Ended September 30, 2013~~

Parent
Companies

Subsidiary
Issuer

Guarantor
Subsidiaries

Non-
Guarantor
Subsidiaries
Eliminations Consolidated
(in millions)
Net income (loss) $ 914
$ 169
$ 218
$ 952
$ (1,273 ) $ 980
Other comprehensive income (loss):
Currency translation adjustments —
—
—
(4 ) —
(4 )
Net change in unrecognized gain on derivative instruments, net of tax —
—
(27 ) (2 ) —
(29 )
Employee benefit plans adjustment, net of tax —
—
—
11
—
11
Other comprehensive (loss) income —
—
(27 ) 5
—
(22 )
Equity in other comprehensive (loss) income of subsidiaries (25 ) (27 ) —
—
52
—
Comprehensive income (loss) 889
142
191
957
(1,221 ) 958
Comprehensive income attributable to noncontrolling interests —
—
—
69
—
69
Comprehensive income (loss) attributable to Delphi $ 889
$ 142
$ 191
$ 888
$ (1,221 ) $ 889

~~Statement of Comprehensive Income~~Cash Flows for the Three Months Ended ~~September 30, 2012~~March 31, 2013

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
Net income (loss) $ 269
$ 49
$ 61
$ 274
$ (361 ) $ 292
Other comprehensive income (loss):
Currency translation adjustments —
—
—
82
—
82
Net change in unrecognized gain on derivative instruments, net of tax —
—
26
—
—
26
Employee benefit plans adjustment, net of tax —
—
—
(1 ) —
(1 )
Other comprehensive income —
—
26
81
—
107
Equity in other comprehensive income (loss) of subsidiaries 106
26
—
—
(132 ) —
Comprehensive income (loss) 375
75
87
355
(493 ) 399
Comprehensive income attributable to noncontrolling interests —
—
—
24
—
24
Comprehensive income (loss) attributable to Delphi $ 375
$ 75
$ 87
$ 331
$ (493 ) $ 375

~~Table of Contents~~

~~Statement of Comprehensive Income~~ ~~Nine Months Ended September 30, 2012~~

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
Net income (loss) $ 941
$ 200
$ 235
$ 905
$ (1,276 ) $ 1,005
Other comprehensive income (loss):
Currency translation adjustments —
—
—
9
—
9
Net change in unrecognized gain on derivative instruments, net of tax —
—
62
—
—
62
Employee benefit plans adjustment, net of tax —
—
—
(2 ) —
(2 )
Other comprehensive income —
—
62
7
—
69
Equity in other comprehensive income (loss) of subsidiaries 69
62
—
—
(131 ) —
Comprehensive income (loss) 1,010
262
297
912
(1,407 ) 1,074
Comprehensive income attributable to noncontrolling interests —
—
—
64
—
64
Comprehensive income (loss) attributable to Delphi $ 1,010
$ 262
$ 297
$ 848
$ (1,407 ) $ 1,010



	Parent Guarantors			Subsidiary Issuer			Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net cash (used in) provided by operating activities	$	(106	)	$	—		$	255		$	—		$	149
Cash flows from investing activities:
Capital expenditures	—			—			(213		)	—			(213		)
Proceeds from sale of property/investments	—			—			2			—			2
Cost of business and technology acquisitions, net of cash acquired	—			—			2			—			2
Decrease in restricted cash	—			—			4			—			4
Loans to affiliates	—			(157		)	(273		)	430			—
Repayments of loans from affiliates	—			—			—			—			—
Net cash used in investing activities	—			(157		)	(478		)	430			(205		)
Cash flows from financing activities:
Net repayments under other short-term debt agreements	—			—			(27		)	—			(27		)
Repayments under long-term debt agreements	—			(1,342		)	—			—			(1,342		)
Proceeds from issuance of senior secured term loans, net of issuance costs	—			560			—			—			560
Proceeds from issuance of senior notes, net of issuance costs	—			790			—			—			790
Dividend payments of consolidated affiliates to minority shareholders	—			—			(8		)	—			(8		)
Proceeds from borrowings from affiliates	281			149			—			(430		)	—
Repurchase of ordinary shares	(122		)	—			—			—			(122		)
Distribution of cash dividends	(53		)	—			—			—			(53		)
Taxes withheld and paid on employees' restricted share awards	—			—			(14		)	—			(14		)
Net cash provided by (used in) financing activities	106			157			(49		)	(430		)	(216		)
Effect of exchange rate fluctuations on cash and cash equivalents	—			—			(3		)	—			(3		)
Decrease in cash and cash equivalents	—			—			(275		)	—			(275		)
Cash and cash equivalents at beginning of period	2			—			1,103			—			1,105
Cash and cash equivalents at end of period	$	2		$	—		$	828		$	—		$	830

Table of Contents

~~Balance Sheet as of~~ ~~September 30, 2013~~

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
ASSETS
Current assets:
Cash and cash equivalents $ 16
$ —
$ 68
$ 969
$ —
$ 1,053
Restricted cash —
—
—
5
—
5
Accounts receivable, net —
—
822
2,034
—
2,856
Inventories —
—
367
876
(10 ) 1,233
Other current assets —
10
176
463
(9 ) 640
Total current assets 16
10
1,433
4,347
(19 ) 5,787
Long-term assets:
Property, net —
—
645
2,337
—
2,982
Investments in affiliates —
—
—
217
—
217
Investments in subsidiaries 4,520
1,642
—
—
(6,162 ) —
Intangible assets, net —
—
356
871
—
1,227
Other long-term assets 5
46
40
505
2
598
Total long-term assets 4,525
1,688
1,041
3,930
(6,160 ) 5,024
Total assets $ 4,541
$ 1,698
$ 2,474
$ 8,277
$ (6,179 ) $ 10,811
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt $ —
$ 22
$ 23
$ 14
$ —
$ 59
Accounts payable —
—
693
1,811
—
2,504
Accrued liabilities 10
28
163
1,101
(8 ) 1,294
Total current liabilities 10
50
879
2,926
(8 ) 3,857
Long-term liabilities:
Long-term debt —
2,346
2
11
—
2,359
Intercompany accounts, net 1,785
(663 ) 964
(2,086 ) —
—
Pension benefit obligations —
—
66
843
—
909
Other long-term liabilities —
—
229
234
—
463
Total long-term liabilities 1,785
1,683
1,261
(998 ) —
3,731
Total liabilities 1,795
1,733
2,140
1,928
(8 ) 7,588
Total Delphi shareholders’ equity 2,746
(35 ) 334
5,872
(6,171 ) 2,746
Noncontrolling interest —
—
—
477
—
477
Total shareholders’ equity 2,746
(35 ) 334
6,349
(6,171 ) 3,223
Total liabilities and shareholders’ equity $ 4,541
$ 1,698
$ 2,474
$ 8,277
$ (6,179 ) $ 10,811

~~Table of Contents~~

~~Balance Sheet as of~~ ~~December 31, 2012~~

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
ASSETS
Current assets:
Cash and cash equivalents $ 2
$ —
$ 118
$ 985
$ —
$ 1,105
Restricted cash —
—
—
8
—
8
Accounts receivable, net —
—
641
1,784
—
2,425
Inventories —
—
308
764
(6 ) 1,066
Other current assets —
17
141
465
—
623
Total current assets 2
17
1,208
4,006
(6 ) 5,227
Long-term assets:
Property, net —
—
592
2,268
—
2,860
Investments in affiliates —
—
—
231
—
231
Investments in subsidiaries 3,987
1,663
—
—
(5,650 ) —
Intangible assets, net —
—
390
886
—
1,276
Other long-term assets —
55
44
481
2
582
Total long-term assets 3,987
1,718
1,026
3,866
(5,648 ) 4,949
Total assets $ 3,989
$ 1,735
$ 2,234
$ 7,872
$ (5,654 ) $ 10,176
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt $ —
$ 31
$ 23
$ 86
$ —
$ 140
Accounts payable —
—
578
1,700
—
2,278
Accrued liabilities —
10
221
1,010
—
1,241
Total current liabilities —
41
822
2,796
—
3,659
Long-term liabilities:
Long-term debt —
2,308
2
14
—
2,324
Intercompany accounts, net 1,644
(537 ) 755
(1,862 ) —
—
Pension benefit obligations —
—
73
856
—
929
Other long-term liabilities —
—
192
242
—
434
Total long-term liabilities 1,644
1,771
1,022
(750 ) —
3,687
Total liabilities 1,644
1,812
1,844
2,046
—
7,346
Total Delphi shareholders’ equity 2,345
(77 ) 390
5,341
(5,654 ) 2,345
Noncontrolling interest —
—
—
485
—
485
Total shareholders’ equity 2,345
(77 ) 390
5,826
(5,654 ) 2,830
Total liabilities and shareholders’ equity $ 3,989
$ 1,735
$ 2,234
$ 7,872
$ (5,654 ) $ 10,176

~~Table of Contents~~

~~Statement of Cash Flows for the~~ ~~Nine Months Ended September 30, 2013~~

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
Net cash (used in) provided by operating activities $ (188 ) $ —
$ 366
$ 892
$ —
$ 1,070
Cash flows from investing activities:
Capital expenditures —
—
(147 ) (365 ) —
(512 )
Proceeds from sale of property/investments —
—
1
23
—
24
Cost of business and technology acquisitions, net of cash acquired —
—
—
(10 ) —
(10 )
Decrease in restricted cash —
—
—
3
—
3
Net cash used in investing activities —
—
(146 ) (349 ) —
(495 )
Cash flows from financing activities:
Net repayments under other short-term debt agreements —
—
—
(79 ) —
(79 )
Repayments under long-term debt agreements —
(1,349 ) —
—
—
(1,349 )
Proceeds from issuance of senior secured term loans, net of issuance costs —
560
—
—
—
560
Proceeds from issuance of senior notes, net of issuance costs —
788
—
—
—
788
Dividend payments of consolidated affiliates to minority shareholders —
—
—
(26 ) —
(26 )
Intercompany dividends and net increase (decrease) in intercompany obligations 714
1
(257 ) (458 ) —
—
Repurchase of ordinary shares (353 ) —
—
—
—
(353 )
Distribution of cash dividends (159 ) —
—
—
—
(159 )
Taxes withheld and paid on employees' restricted share awards —
—
(13 ) (1 ) —
(14 )
Net cash provided by (used in) financing activities 202
—
(270 ) (564 ) —
(632 )
Effect of exchange rate fluctuations on cash and cash equivalents —
—
—
5
—
5
Decrease in cash and cash equivalents 14
—
(50 ) (16 ) —
(52 )
Cash and cash equivalents at beginning of period 2
—
118
985
—
1,105
Cash and cash equivalents at end of period $ 16
$ —
$ 68
$ 969
$ —
$ 1,053

~~Table of Contents~~

~~Statement of Cash Flows for the~~ ~~Nine Months Ended September 30, 2012~~

Parent
Companies Subsidiary
Issuer Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated
(in millions)
Net cash (used in) provided by operating activities $ (34 ) $ —
$ 461
$ 741
$ —
$ 1,168
Cash flows from investing activities:
Capital expenditures —
—
(159 ) (404 ) —
(563 )
Proceeds from sale of property/investments —
—
2
16
—
18
Increase in restricted cash —
—
—
(2 ) —
(2 )
Acquisition of minority held shares —
—
—
(16 ) —
(16 )
Dividends from equity method investments in excess of earnings —
—
—
37
—
37
Net cash used in investing activities —
—
(157 ) (369 ) —
(526 )
Cash flows from financing activities:
Net repayments under other short-term debt agreements —
—
—
(16 ) —
(16 )
Proceeds from issuance of senior secured term loans, net of issuance costs —
(5 ) —
—
—
(5 )
Dividend payments of consolidated affiliates to minority shareholders —
—
—
(39 ) —
(39 )
Intercompany dividends and net increase (decrease) in intercompany obligations 284
5
(289 ) —
—
—
Repurchase of ordinary shares (300 ) —
—
—
—
(300 )
Net cash used in financing activities (16 ) —
(289 ) (55 ) —
(360 )
Effect of exchange rate fluctuations on cash and cash equivalents —
—
—
(11 ) —
(11 )
(Decrease) increase in cash and cash equivalents (50 ) —
15
306
—
271
Cash and cash equivalents at beginning of period 53
—
186
1,124
—
1,363
Cash and cash equivalents at end of period $ 3
$ —
$ 201
$ 1,430
$ —
$ 1,634

~~Table of Contents~~

20. 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 (loss), restructuring, other acquisition-related costs, asset impairments and equity income (loss), net of tax ~~restructuring and other acquisition-related costs~~ (“Adjusted ~~EBITDA”~~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, ~~2012,~~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 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, ~~2013,~~2014, Delphi’s management began utilizing Adjusted ~~EBITDA~~Operating Income as athe key performance measure of segment income or loss and for planning and forecasting purposes, ~~because~~as management believes this measure is most reflective of ~~our restructuring and other acquisition-related costs.~~the operational profitability or loss of Delphi's operating segments. Segment Adjusted ~~EBITDA and EBITDA~~Operating Income should not be considered ~~substitutes~~a substitute for results prepared in accordance with U.S. GAAP and should not be considered ~~alternatives~~an alternative to net income attributable to Delphi, which is the most directly comparable financial measure to Adjusted ~~EBITDA and EBITDA~~Operating Income that is in accordance with U.S. GAAP. Segment Adjusted ~~EBITDA and EBITDA,~~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 three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013.


	Electrical/ Electronic Architecture		Powertrain Systems		Electronics and Safety		Thermal Systems		Eliminations and Other (1)			Total			Electrical/ Electronic Architecture		Powertrain Systems		Electronics and Safety		Thermal Systems		Eliminations and Other (1)			Total
	(in millions)														(in millions)
For the Three Months Ended September 30, 2013:
For the Three Months Ended March 31, 2014:														For the Three Months Ended March 31, 2014:
Net sales	$	1,956	$	1,048	$	705	$	364	$	(56	)	$	4,017		$	2,111	$	1,104	$	730	$	389	$	(58	)	$	4,276
EBITDA	$	298	$	134	$	81	$	12	$	—		$	525
Adjusted EBITDA	$	309	$	142	$	100	$	15	$	—		$	566
Depreciation and amortization	$	61	$	48	$	19	$	10	$	—		$	138		$	64	$	51	$	19	$	11	$	—		$	145
Adjusted operating income															$	273	$	115	$	83	$	12	$	—		$	483
Operating income	$	237	$	86	$	62	$	2	$	—		$	387		$	258	$	113	$	77	$	11	$	—		$	459
Equity income	$	4	$	1	$	—	$	4	$	(1	)	$	8
Equity income (loss)															$	6	$	2	$	—	$	2	$	(2	)	$	8
Net income attributable to noncontrolling interest	$	11	$	6	$	—	$	5	$	—		$	22		$	7	$	9	$	—	$	5	$	—		$	21

4137

Table of Contents

Electrical/
Electronic
Architecture Powertrain
Systems Electronics
and Safety Thermal
Systems Eliminations
and Other (1) Total
(in millions)
For the Three Months Ended September 30, 2012:
Net sales $ 1,607
$ 1,087
$ 648
$ 374
$ (53 ) $ 3,663
EBITDA $ 210
$ 169
$ 78
$ 23
$ —
$ 480
Adjusted EBITDA $ 211
$ 169
$ 79
$ 24
$ —
$ 483
Depreciation and amortization $ 39
$ 44
$ 20
$ 10
$ —
$ 113
Operating income $ 171
$ 125
$ 58
$ 13
$ —
$ 367
Equity income (loss) $ 5
$ (1 ) $ —
$ 3
$ (1 ) $ 6
Net income attributable to noncontrolling interest $ 10
$ 8
$ —
$ 5
$ —
$ 23

Electrical/
Electronic
Architecture Powertrain
Systems Electronics
and Safety Thermal
Systems Eliminations
and Other (1) Total
(in millions)
For the Nine Months Ended September 30, 2013:
Net sales $ 5,921
$ 3,316
$ 2,123
$ 1,097
$ (176 ) $ 12,281
EBITDA $ 883
$ 474
$ 253
$ 58
$ —
$ 1,668
Adjusted EBITDA $ 919
$ 494
$ 297
$ 63
$ —
$ 1,773
Depreciation and amortization $ 174
$ 140
$ 55
$ 32
$ —
$ 401
Operating income $ 709
$ 334
$ 198
$ 26
$ —
$ 1,267
Equity income $ 11
$ 4
$ —
$ 12
$ (1 ) $ 26
Net income attributable to noncontrolling interest $ 31
$ 22
$ —
$ 13
$ —
$ 66


	Electrical/ Electronic Architecture		Powertrain Systems		Electronics and Safety		Thermal Systems		Eliminations and Other (1)			Total			Electrical/ Electronic Architecture		Powertrain Systems		Electronics and Safety		Thermal Systems		Eliminations and Other (1)			Total
	(in millions)														(in millions)
For the Nine Months Ended September 30, 2012:
For the Three Months Ended March 31, 2013:														For the Three Months Ended March 31, 2013:
Net sales	$	5,049	$	3,597	$	2,092	$	1,192	$	(178	)	$	11,752		$	1,921	$	1,107	$	693	$	360	$	(57	)	$	4,024
EBITDA	$	708	$	571	$	269	$	91	$	—		$	1,639
Adjusted EBITDA	$	714	$	575	$	272	$	95	$	—		$	1,656
Depreciation and amortization	$	112	$	134	$	62	$	32	$	—		$	340		$	54	$	48	$	18	$	11	$	—		$	131
Adjusted operating income															$	231	$	114	$	72	$	14	$	—		$	431
Operating income	$	596	$	437	$	207	$	59	$	—		$	1,299		$	218	$	106	$	61	$	12	$	—		$	397
Equity income (loss)	$	14	$	—	$	—	$	7	$	(3	)	$	18		$	3	$	—	$	—	$	5	$	—		$	8
Net income attributable to noncontrolling interest	$	28	$	24	$	—	$	12	$	—		$	64		$	10	$	8	$	—	$	4	$	—		$	22


(1)	Eliminations and Other includes the elimination of inter-segment transactions.

~~Table of Contents~~

The reconciliation of Adjusted ~~EBITDA~~Operating Income to ~~EBITDA~~Operating Income includes restructuring and other acquisition-related costs. The reconciliation of Adjusted ~~EBITDA~~Operating Income to net income attributable to Delphi for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013 are as follows:


	Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total				Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total
	(in millions)																		(in millions)
For the Three Months Ended September 30, 2013:
Adjusted EBITDA	$	309		$	142		$	100		$	15		$	—	$	566
For the Three Months Ended March 31, 2014:																		For the Three Months Ended March 31, 2014:
Adjusted operating income																			$	273		$	115		$	83		$	12		$	—	$	483
Restructuring	(7		)	(8		)	(19		)	(3		)	—		(37		)		(13		)	(2		)	(6		)	(1		)	—		(22		)
Other acquisition-related costs	(4		)	—			—			—			—		(4		)		(2		)	—			—			—			—		(2		)
EBITDA	$	298		$	134		$	81		$	12		$	—	$	525
Depreciation and amortization	(61		)	(48		)	(19		)	(10		)	—		(138		)
Operating income	$	237		$	86		$	62		$	2		$	—	387				$	258		$	113		$	77		$	11		$	—	459
Interest expense															(34		)																(35		)
Other income, net															4																		(16		)
Income before income taxes and equity income															357																		408
Income tax expense															(72		)																(75		)
Equity income, net of tax															8																		8
Net income															$	293																	$	341
Net income attributable to noncontrolling interest															22																		21
Net income attributable to Delphi															$	271																	$	320

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	Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total				Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total
	(in millions)																		(in millions)
For the Three Months Ended September 30, 2012:
Adjusted EBITDA	$	211		$	169		$	79		$	24		$	—	$	483
For the Three Months Ended March 31, 2013:																		For the Three Months Ended March 31, 2013:
Adjusted operating income																			$	231		$	114		$	72		$	14		$	—	$	431
Restructuring	(1		)	—			(1		)	(1		)	—		(3		)		(11		)	(8		)	(11		)	(2		)	—		(32		)
EBITDA	$	210		$	169		$	78		$	23		$	—	$	480
Depreciation and amortization	(39		)	(44		)	(20		)	(10		)	—		(113		)
Other acquisition-related costs																			(2		)	—			—			—			—		(2		)
Operating income	$	171		$	125		$	58		$	13		$	—	367				$	218		$	106		$	61		$	12		$	—	397
Interest expense															(32		)																(36		)
Other income, net															3																		(34		)
Income before income taxes and equity income															338																		327
Income tax expense															(52		)																(37		)
Equity income, net of tax															6																		8
Net income															$	292																	$	298
Net income attributable to noncontrolling interest															23																		22
Net income attributable to Delphi															$	269																	$	276

Electrical/
Electronic
Architecture Powertrain
Systems Electronics
and Safety Thermal
Systems Eliminations
and Other Total
(in millions)
For the Nine Months Ended September 30, 2013:
Adjusted EBITDA $ 919
$ 494
$ 297
$ 63
$ —
$ 1,773
Restructuring (26 ) (20 ) (44 ) (5 ) —
(95 )
Other acquisition-related costs (10 ) —
—
—
—
(10 )
EBITDA $ 883
$ 474
$ 253
$ 58
$ —
$ 1,668
Depreciation and amortization (174 ) (140 ) (55 ) (32 ) —
(401 )
Operating income $ 709
$ 334
$ 198
$ 26
$ —
1,267
Interest expense (106 )
Other expense, net (25 )
Income before income taxes and equity income 1,136
Income tax expense (182 )
Equity income, net of tax 26
Net income $ 980
Net income attributable to noncontrolling interest 66
Net income attributable to Delphi $ 914

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Electrical/
Electronic
Architecture Powertrain
Systems Electronics
and Safety Thermal
Systems Eliminations
and Other Total
(in millions)
For the Nine Months Ended September 30, 2012:
Adjusted EBITDA $ 714
$ 575
$ 272
$ 95
$ —
$ 1,656
Restructuring (6 ) (4 ) (3 ) (4 ) —
(17 )
EBITDA $ 708
$ 571
$ 269
$ 91
$ —
$ 1,639
Depreciation and amortization (112 ) (134 ) (62 ) (32 ) —
(340 )
Operating income $ 596
$ 437
$ 207
$ 59
$ —
1,299
Interest expense (100 )
Other income, net 15
Income before income taxes and equity income 1,214
Income tax expense (227 )
Equity income, net of tax 18
Net income $ 1,005
Net income attributable to noncontrolling interest 64
Net income attributable to Delphi $ 941

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q, including the exhibits being filed as part of this report, as well as other statements made by Delphi Automotive PLC (“Delphi,” the “Company,” “we,” “us” and “our”), contain forward-looking statements that reflect, when made, the Company’s current views with respect to current events and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to the Company’s operations and business environment, which may cause the actual results of the Company to be materially different from any future results, express or implied, by such forward-looking statements. All statements that address future operating, financial or business performance or the Company’s strategies or expectations are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” and other comparable terminology. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: global economic conditions, including conditions affecting the credit market; the cyclical nature of automotive sales and production; the potential disruptions in the supply of and changes in the competitive environment for raw material integral to the Company’s products; the Company’s ability to maintain contracts that are critical to its operations; the ability of the Company to integrate and realize the benefits of recent acquisitions; the ability of the Company to attract, motivate and/or retain key executives; the ability of the Company to avoid or continue to operate during a strike, or partial work stoppage or slow down by any of its unionized employees or those of its principal customers, and the ability of the Company to attract and retain customers. Additional factors are discussed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s filings with the Securities and Exchange Commission, including those set forth in the Company's Annual Report on Form 10-K for fiscal year ended December 31, ~~2012.~~2013. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. It should be remembered that the price of the ordinary shares and any income from them can go down as well as up. Delphi disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events and/or otherwise, except as may be required by law.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help you understand the business operations and financial condition of the Company for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014. This discussion should be read in conjunction with Item 1. Financial Statements. Our MD&A is presented in eight sections:

Executive Overview

Consolidated Results of Operations

Results of Operations by Segment

Liquidity and Capital Resources

Off-Balance Sheet Arrangements

Contingencies and Environmental Matters

Recently Issued Accounting Pronouncements

Critical Accounting Estimates

Within the MD&A, “Delphi,” the “Company,” “we,” “us” and “our” refer to Delphi Automotive PLC, a public limited company which was formed under the laws of Jersey on May 19, 2011, together with its subsidiaries, including Delphi Automotive LLP, a limited liability partnership incorporated under the laws of England and Wales which was formed on August 19, 2009 for the purpose of acquiring certain assets and subsidiaries of the former Delphi Corporation, and became a subsidiary of Delphi Automotive PLC in connection with the completion of the Company’s initial public offering on November 22, 2011.

Executive Overview

Our Business

We are a leading global vehicle components manufacturer and provide electrical and electronic, powertrain, safety and thermal technology solutions to the global automotive and commercial vehicle markets. We are one of the largest vehicle component manufacturers and our customers include all 25 of the largest automotive original equipment manufacturers (“OEMs”) in the world.

~~Delphi's~~Our total net sales during the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 were $~~4.0 billion~~ ~~and~~ ~~$12.3~~4.3 billion, an increase of ~~10%~~ ~~and~~ 5%6% compared to the same ~~periods~~period of ~~2012, respectively.~~2013. The increase in our total net sales is attributable to increased sales in North America and Asia Pacific. Although ~~declines~~our net sales in Europe also increased modestly in the first quarter, reflecting signs of stabilization in the European economy, our sales continue to be impacted by persisting economic ~~environment~~uncertainties in the ~~third quarter~~region which have resulted in tepid growth in OEM production. Partially offsetting these increases were ~~less pronounced than previous quarters,~~reduced sales in our smallest region, South America, resulting from continued ~~and persistent economic uncertainties translated into tepid consumer demand for vehicles. Consequently, further~~ reductions in OEM ~~vehicle~~ production ~~schedules, as well as reduced vehicle content, adversely affects our sales and results of operations.~~schedules. Our ~~sales in Europe compared to the prior year period increased 7% in the~~ ~~three months endedSeptember 30, 2013~~ ~~primarily as a result of the Motorized Vehicle Division (“MVL”) acquisition in October 2012, but declined 2% in the~~ ~~nine months endedSeptember 30, 2013, reflecting these continued weak business conditions. However, our~~ overall lean cost structure, along with improving sales in North America as the U.S. economy continues to strengthen, and above-market sales growth in the Asia Pacific region, specifically China, enabled us to maintain strong gross margins consistent with the prior year period.

~~In light of~~We are focused on maintaining a low fixed cost structure that we believe provides us flexibility to remain profitable despite decreases in industry volumes and throughout the traditional vehicle industry production cycle. Accordingly, we will continue to adjust our cost structure and manufacturing footprint in response to continued economic uncertainties, ~~particularly in Europe, and~~ as ~~part~~evidenced by the restructuring activities, including the actions related to the integration of ~~our continued efforts to optimize our industry leading cost structure and increase shareholder value,~~MVL, we initiated ~~and committed to approximately $75 million of further restructuring actions, primarily~~ in ~~Europe, during the first quarter of 2013. These restructuring initiatives are in addition to approximately~~ ~~$300 million~~ ~~of restructuring programs initiated during~~ the fourth quarter of 2012 ~~bringing the overall commitments~~and first quarter of ~~our restructuring programs to~~2013 totaling approximately $375 million. ~~Approximately~~ ~~80%~~ ~~of the overall~~These restructuring actions are ~~in Europe,~~principally focused on the European region, and are expected to be substantially completed ~~during 2014. Approximately $170 million of the total was recognized~~ in the ~~fourth quarter~~first half of ~~2012, with an additional~~ ~~$37 million~~ ~~and~~ ~~$95 million~~ ~~recognized in the~~ ~~three and nine months endedSeptember 30, 2013~~.2014. As we continue to operate in a cyclical industry that is impacted by movements in the global ~~economy,~~and regional economies, we continually evaluate opportunities to further adjust our cost structure. ~~However, we~~We believe our strong balance sheet coupled with our flexible cost structure will position us to capitalize on any strengthening of the global economy and improvements in OEM production volumes.

Trends, Uncertainties and Opportunities

Rate of economic recovery. Our business is directly related to automotive sales and automotive vehicle production by our customers. Automotive sales depend on a number of factors, including economic conditions. Although global automotive vehicle production increased approximately 6%3% from ~~2011~~2012 to ~~2012~~2013 and ~~is expected~~we expect it to increase by an additional 2% in ~~2013,~~

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2014, the economic recovery has been uneven from a regional perspective. Economic uncertainties continue to persist in Europe, resulting in reduced consumer demand for vehicles and ~~a decrease in~~essentially flat vehicle production in Europe ~~of 5% from 2011~~in 2013 as compared to 2012, with an ~~additional decline~~increase of 2%1% expected ~~from 2012~~in 2014 as compared to ~~2013.~~2013 in the region. Continued economic weakness in Europe or weakness in North America or Asia could result in a significant reduction in automotive sales and production by our customers,

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which would have an adverse effect on our business, results of operations and financial condition. Additionally, volatility in oil and gasoline prices negatively impacts consumer confidence and automotive sales, as well as the mix of future sales (from trucks and sport utility vehicles toward smaller, fuel-efficient passenger cars). While our diversified customer and geographic revenue base have well positioned us to withstand the impact of industry downturns and benefit from industry upturns, shifts to vehicles with less content would adversely impact our profitability.

Emerging markets growth. Rising income levels in emerging markets, principally China, are resulting in stronger growth rates in these markets. Our strong global presence and presence in these markets have positioned us to experience above-market growth rates. We continue to expand our established presence in emerging markets, positioning us to benefit from the expected growth opportunities in these regions. We are capitalizing on our long-standing relationships with the global OEMs and further enhancing our positions with the emerging market OEMs to continue expanding our worldwide leadership. We continue to build upon our extensive geographic reach to capitalize on fast-growing automotive markets. We believe that our presence in low cost countries positions us to realize incremental margin improvements as the global balance of automotive production shifts towards the emerging markets.

We have a strong presence in China, where we have operated for ~~nearly~~approximately 20 years. All of our business segments have operations and sales in China. As a result, we have well-established relationships with all of the major OEMs in China. We generated approximately $~~2.3~~2.7 billion in revenue from China in ~~2012.~~2013. With only 22 of our 33 offered products locally manufactured in ~~2012,~~2013, we believe we have the opportunity to expand additional product lines into China, and as a result, we see further growth potential.

Market driven products. Our product offerings satisfy the OEMs’ need to meet increasingly stringent government regulations and meet consumer preferences for products that address the mega-trends of Safe, Green and Connected, leading to increased content per vehicle, greater profitability and higher margins. With these offerings, we believe we are well-positioned to benefit from the growing demand for vehicle content related to safety, fuel efficiency, emissions control, automated features and connectivity to the global information network. Our Electrical/Electronic Architecture and Electronics and Safety segments are benefiting from the substantial increase in vehicle content and electrification requiring a complex and reliable electrical architecture and systems to operate, such as hybrid power electronics, electrical vehicle monitoring, lane departure warning systems, integrated electronic displays, navigation systems and consumer electronics. Our ability to design a reliable electrical architecture that optimizes power distribution and/or consumption is key to satisfying the OEMs’ need to reduce emissions while continuing to meet the demands of consumers. Additionally, our Powertrain Systems and Thermal Systems segments are also focused on addressing the demand for increased fuel efficiency and emission control by improving fuel consumption and heat dissipation, which are principal factors influencing fuel efficiency and emissions.

Global capabilities. Many OEMs are ~~adopting~~continuing to adopt global vehicle platforms to increase standardization, reduce per unit cost and increase capital efficiency and profitability. As a result, OEMs are selecting suppliers that have the capability to manufacture products on a worldwide basis, as well as the flexibility to adapt to regional variations. Suppliers with global scale and strong design, engineering and manufacturing capabilities, are best positioned to benefit from this trend. Our global footprint enables us to serve the global OEMs on a worldwide basis as we gain market share with the emerging market OEMs. This regional model ~~has largely migrated to service~~principally services the North American market out of Mexico, the South American market out of Brazil, the European market out of Eastern Europe and North Africa and the Asia Pacific market out of China.

Product development. The automotive component supply industry is highly competitive, both domestically and internationally. Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced products on a timely and cost competitive basis will be a significant factor in our ability to remain competitive. To compete effectively in the automotive supply industry, we must be able to launch new products to meet our customers’ demands in a timely manner. Our innovative technologies and robust global engineering and development capabilities have well positioned us to meet the increasingly stringent vehicle manufacturer demands.

OEMs are increasingly looking to their suppliers to simplify vehicle design and assembly processes to reduce costs. As a result, suppliers that sell vehicle components directly to manufacturers (Tier I suppliers) have assumed many of the design, engineering, research and development and assembly functions traditionally performed by vehicle manufacturers. Suppliers that can provide fully-engineered solutions, systems and pre-assembled combinations of component parts are positioned to leverage the trend toward system sourcing.

Engineering, design & development. Our history and culture of innovation have enabled us to develop significant intellectual property and design and development expertise to provide advanced technology solutions that meet the demands of our customers. We have a team of more than ~~18,000~~19,000 scientists, engineers and technicians as of December 31, ~~2012~~2013 focused on developing leading product solutions for our key markets, located at 15 major technical centers in Brazil, China, France,

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Germany, India, Luxembourg, Mexico, Poland, South Korea, the United Kingdom and the United States. We invest approximately ~~$1.6~~$1.7 billion (which includes approximately $400 million of co-investment by customers and government agencies) annually in research and development and engineering, to maintain our portfolio of innovative products, and owned/

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held approximately ~~7,000~~8,000 patents and protective rights as of December 31, ~~2012.~~2013. We also encourage “open innovation” and collaborate extensively with peers in the industry, government agencies and academic institutions. Our technology competencies are recognized by both customers and suppliers, as well as by government agencies, who have co-invested approximately $400 million annually in new product development, accelerating the pace of innovation and reducing the risk associated with successful commercialization of technological breakthroughs.

In the past, suppliers often incurred the initial cost of engineering, designing and developing automotive component parts, and recovered their investments over time by including a cost recovery component in the price of each part based on expected volumes. Recently, we and many other suppliers have negotiated for cost recovery payments independent of volumes. This trend reduces our economic risk.

Pricing. Cost-cutting initiatives adopted by our customers result in increased downward pressure on pricing. Our customer supply agreements generally require step-downs in component pricing over the periods of production and OEMs have historically possessed significant leverage over their outside suppliers because the automotive component supply industry is fragmented and serves a limited number of automotive OEMs. Our profitability depends in part on our ability to generate sufficient production cost savings in the future to offset price reductions.

We are focused on maintaining a low fixed cost structure that provides us flexibility to remain profitable despite decreases in industry volumes and at all points of the traditional vehicle industry production cycle. We believe that our lean cost structure will allow us to remain profitable ~~at all points of~~throughout the traditional vehicle industry production cycle. As a result, approximately ~~93%~~94% of our hourly workforce is located in low cost countries. Furthermore, we have substantial operational flexibility by leveraging a large workforce of temporary workers, which represented approximately 31% of the hourly workforce as of ~~September 30, 2013~~March 31, 2014. However, we will continue to adjust our cost structure and manufacturing footprint in response to continued economic ~~uncertainties, as evidenced~~uncertainties. As we continue to operate in a cyclical industry that is impacted by ~~the restructuring activities, including the actions related to the integration of MVL, we initiated~~movements in the ~~fourth quarter of 2012~~global and ~~continued in 2013. Assuming constant product mix and pricing, and based on~~regional economies, we continually evaluate opportunities to further adjust our 2012 results, we estimate that our 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”) breakeven level would be reached if we experienced a 36% downturn to current product volumes.cost structure.

We have a strong balance sheet with gross debt of approximately $2.4 billion and substantial liquidity of approximately $~~2.6~~2.5 billion of cash and cash equivalents and available financing under our Revolving Credit Facility (as defined below in Liquidity and Capital Resources) as of ~~September 30, 2013~~March 31, 2014, and no significant U.S. defined benefit or workforce postretirement health care benefits and employer-paid postretirement basic life insurance benefits (“OPEB”) liabilities. We intend to maintain strong financial discipline targeting industry-leading earnings growth, cash flow generation and return on invested capital and to maintain sufficient liquidity to sustain our financial flexibility throughout the industry cycle.

OEM Product Recalls. There has been a recent increase in the number of vehicles recalled by OEMs in North America. These recalls can either be initiated by the OEMs or influenced by regulatory agencies. Although we have not experienced any significant impacts to date, it is possible that we may be adversely affected in the future if this recent increase continues.

Efficient use of capital. The global vehicle components industry is generally capital intensive and a portion of a supplier’s capital equipment is frequently utilized for specific customer programs. Lead times for procurement of capital equipment are long and typically exceed start of production by one to two years. Substantial advantages exist for suppliers that can leverage their prior investments in capital equipment or amortize the investment over higher volume global customer programs.

Industry consolidation. Consolidation among worldwide suppliers is expected to continue as suppliers seek to achieve operating synergies and value stream efficiencies, acquire complementary technologies, and build stronger customer relationships as OEMs continue to expand globally. We believe companies with strong balance sheets and financial discipline are in the best position to take advantage of the industry consolidation trend.

On October 26, 2012, we completed the acquisition of FCI Group's (“FCI”) MVL. MVL is a leading global manufacturer of automotive connection systems with a focus on high-value, leading technology applications. We believe this transaction enhances our position as a leading supplier of automotive electrical/electronic architecture, expands our portfolio of high-growth electronic connectors, further strengthens our premier customer base, enhances our footprint in fast-growing markets, provides significant opportunity to accelerate long-term sales and earnings growth and delivers significant synergies which are expected to expand EBITDA margins. We are integrating MVL into our Electrical/Electronic Architecture segment. Given the timing of the acquisition it is not fully reflected in our 2012 results and impacts comparability to 2013 results.

~~Mexico Tax Reform~~. Delphi conducts its Mexican operations primarily through the maquiladora regime, which has historically provided certain tax benefits. Currently proposed tax reform legislation that may become effective January 1, 2014 would increase the statutory tax rate for these operations as well as limit certain deductions. This proposed legislation has been approved by the Mexican congress and is awaiting presidential approval. The Company is currently reviewing the proposed Mexico tax reform initiatives and legislation, however, it is not practicable at this time to determine the impact, if any, on our results from operations.

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Consolidated Results of Operations

Delphi typically experiences fluctuations in revenue due to changes in OEM production schedules, vehicle sales mix and the net of new and lost business (which we refer to collectively as volume), increased prices attributable to escalation clauses in our supply contracts for recovery of increased commodity costs (which we refer to as commodity pass-through), fluctuations in foreign currency exchange rates (which we refer to as FX), contractual reductions of the sales price to the OEM (which we refer to as contractual price reductions) and engineering changes. Changes in sales mix can have either favorable or unfavorable impacts on revenue. Such changes can be the result of shifts in regional growth, shifts in OEM sales demand, as well as shifts in consumer demand related to vehicle segment purchases and content penetration. For instance, a shift in sales demand favoring a particular OEM’s vehicle model for which we do not have a supply contract may negatively impact our revenue. A shift in regional sales demand toward certain markets could favorably impact the sales of those of our customers that have a large market share in those regions, which in turn would be expected to have a favorable impact on our revenue.

We typically experience (as described below) fluctuations in operating income due to:

Volume, net of contractual price reductions—changes in volume offset by contractual price reductions (which typically range from 1% to 3% of net sales) and changes in mix;

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Operational performance—changes to costs for materials and commodities or manufacturing variances; and

Other—including restructuring costs and any remaining variances not included in Volume, net of contractual price reductions or Operational performance.

The automotive component supply industry is subject to inflationary pressures with respect to raw materials and labor which have placed and will continue to place operational and profitability burdens on the entire supply chain. We will continue to work with our customers and suppliers to mitigate the impact of these inflationary pressures in the future. In addition, we expect commodity cost volatility, particularly related to copper, aluminum and petroleum-based resin products, to have a continual impact on future earnings and/or operating cash flows. As such, we continually seek to mitigate both inflationary pressures and our material-related cost exposures using a number of approaches, including combining purchase requirements with customers and/or other suppliers, using alternate suppliers or product designs, negotiating cost reductions and/or commodity cost contract escalation clauses into our vehicle manufacturer supply contracts, and hedging.

Three ~~and Nine~~ Months Ended ~~September 30, 2013~~March 31, 2014 versus Three ~~and Nine~~ Months Ended ~~September 30, 2012~~March 31, 2013

The results of operations for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013 were as follows:


	Three Months Ended September 30,													Nine Months Ended September 30,													Three Months Ended March 31,
	2013					2012					Favorable/ (unfavorable)			2013					2012					Favorable/ (unfavorable)			2014					2013					Favorable/ (unfavorable)
	(dollars in millions)																										(dollars in millions)
Net sales	$	4,017				$	3,663				$	354		$	12,281				$	11,752				$	529		$	4,276				$	4,024				$	252
Cost of sales	3,338					3,058					(280		)	10,141					9,703					(438		)	3,508					3,339					(169		)
Gross margin	679			16.9	%	605			16.5	%	74			2,140			17.4	%	2,049			17.4	%	91			768			18.0	%	685			17.0	%	83
Selling, general and administrative	228					215					(13		)	699					673					(26		)	261					230					(31		)
Amortization	27					20					(7		)	79					60					(19		)	26					26					—
Restructuring	37					3					(34		)	95					17					(78		)	22					32					10
Operating income	387					367					20			1,267					1,299					(32		)	459					397					62
Interest expense	(34		)			(32		)			(2		)	(106		)			(100		)			(6		)	(35		)			(36		)			1
Other income (expense), net	4					3					1			(25		)			15					(40		)	(16		)			(34		)			18
Income before income taxes and equity income	357					338					19			1,136					1,214					(78		)	408					327					81
Income tax expense	(72		)			(52		)			(20		)	(182		)			(227		)			45			(75		)			(37		)			(38		)
Income before equity income	285					286					(1		)	954					987					(33		)	333					290					43
Equity income, net of tax	8					6					2			26					18					8			8					8					—
Net income	293					292					1			980					1,005					(25		)	341					298					43
Net income attributable to noncontrolling interest	22					23					1			66					64					(2		)	21					22					(1		)
Net income attributable to Delphi	$	271				$	269				$	2		$	914				$	941				$	(27	)	$	320				$	276				$	44

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Total Net Sales

Below is a summary of our total net sales for the three months ended ~~September 30, 2013~~March 31, 2014 versus ~~September 30, 2012~~March 31, 2013.

Three Months Ended September 30, Variance Due To:
2013 2012
Favorable/
(unfavorable)

Volume, net of
contractual
price
reductions
FX
Commodity
pass-
through
Other Total
(in millions) (in millions)
Total net sales $ 4,017
$ 3,663
$ 354
$ 112
$ 46
$ (10 ) $ 206
$ 354



	Three Months Ended March 31,						Variance Due To:
	2014		2013		Favorable/ (unfavorable)		Volume, net of contractual price reductions		FX		Commodity pass- through			Other		Total
	(in millions)						(in millions)
Total net sales	$	4,276	$	4,024	$	252	$	229	$	43	$	(20	)	$	—	$	252

Total net sales for the three months ended ~~September 30, 2013~~March 31, 2014 increased ~~10%~~6% compared to the three months ended ~~September 30, 2012~~March 31, 2013. We experienced volume growth of 4% for the period, partially offset by contractual price reductions, as well as an increase due to favorable currency impacts, primarily related to the Euro. Net sales also increased due to increased sales resulting from the acquisition of MVL in October 2012, net of other divestitures, of approximately $206 million, reflected in Other above.

~~Below is a summary of our total net sales for the~~ ~~nine months endedSeptember 30, 2013~~ ~~versus~~ ~~September 30, 2012~~.

Nine Months Ended September 30, Variance Due To:
2013 2012
Favorable/
(unfavorable)

Volume, net of
contractual
price
reductions
FX
Commodity
pass-
through
Other Total
(in millions) (in millions)
Total net sales $ 12,281
$ 11,752
$ 529
$ (135 ) $ 44
$ (14 ) $ 634
$ 529

~~Total net sales for the~~ ~~nine months endedSeptember 30, 2013increased~~5% ~~compared to the~~ ~~nine months endedSeptember 30, 2012. Volumes were consistent overall~~7% for the period as a result of increased sales in North America and Asia Pacific, partially offset by ~~continued OEM production volume reductions in Europe. Overall net sales increased primarily as a result~~contractual price reductions.

Table of ~~the acquisition of MVL in October 2012, net of other divestitures, of approximately $627 million, reflected in Other above.~~Contents

Cost of Sales

Cost of sales is primarily comprised of material, labor, manufacturing overhead, freight, fluctuations in foreign currency exchange rates, product engineering, design and development expenses, depreciation and amortization, warranty costs and other operating expenses. Gross margin is revenue less cost of sales and gross margin percentage is gross margin as a percentage of net sales.

Cost of sales increased $~~280~~169 million for the three months ended ~~September 30, 2013~~March 31, 2014 compared to the three months ended ~~September 30, 2012~~March 31, 2013, as summarized below. The Company's material cost of sales was approximately 50% of net sales in both the three months endedMarch 31, 2014 and March 31, 2013.


	Three Months Ended September 30,									Variance Due To:														Three Months Ended March 31,									Variance Due To:
	2013			2012			Favorable/ (unfavorable)			Volume (a)			FX			Operational performance		Other			Total			2014			2013			Favorable/ (unfavorable)			Volume (a)			FX			Operational performance		Other			Total
	(dollars in millions)									(in millions)														(dollars in millions)									(in millions)
Cost of sales	$	3,338		$	3,058		$	(280	)	$	(145	)	$	(43	)	$	78	$	(170	)	$	(280	)	$	3,508		$	3,339		$	(169	)	$	(225	)	$	(29	)	$	88	$	(3	)	$	(169	)
Gross margin	$	679		$	605		$	74		$	(34	)	$	3		$	78	$	27		$	74		$	768		$	685		$	83		$	3		$	14		$	88	$	(22	)	$	83
Percentage of net sales	16.9		%	16.5		%																		18.0		%	17.0		%


(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 three month period and unfavorable currency impacts resulting from fluctuations in currency exchange rates, partially offset by improved operational ~~performance, and the following items in Other above:~~performance.

~~Increased costs of approximately $150 million resulting primarily from the acquisition of MVL in October 2012, net of other divestitures.~~

~~The absence of a favorable customer settlement related to warranty of $25 million in the prior period.~~

~~Table of Contents~~

~~A 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.~~

~~Cost of sales~~ ~~increased$438 million~~ ~~for the~~ ~~nine months endedSeptember 30, 2013~~ ~~compared to the~~ ~~nine months endedSeptember 30, 2012, as summarized below.~~

Nine Months Ended September 30, Variance Due To:
2013 2012
Favorable/
(unfavorable)
Volume (a) FX
Operational
performance
Other Total
(dollars in millions) (in millions)
Cost of sales $ 10,141
$ 9,703
$ (438 ) $ (120 ) $ (38 ) $ 198
$ (478 ) $ (438 )
Gross margin $ 2,140
$ 2,049
$ 91
$ (256 ) $ 6
$ 198
$ 143
$ 91
Percentage of net sales 17.4 % 17.4 %


~~(a)~~	~~Presented net of contractual price reductions for gross margin variance.~~

~~The~~ ~~increase~~ in cost of sales reflects consistent volumes before contractual price reductions for the nine month period, partially offset by operational performance improvements, and the following items in Other above:

~~Increased costs of approximately $466 million resulting primarily from the acquisition of MVL in October 2012, net of other divestitures.~~

~~The absence of a favorable customer settlement related to warranty of $25 million in the prior period.~~

~~A 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

Three Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(dollars in millions)
Selling, general and administrative expense $ 228
$ 215
$ (13 )
Percentage of net sales 5.7 % 5.9 %


	Nine Months Ended September 30,									Three Months Ended March 31,
	2013			2012			Favorable/ (unfavorable)			2014			2013			Favorable/ (unfavorable)
	(dollars in millions)									(dollars in millions)
Selling, general and administrative expense	$	699		$	673		$	(26	)	$	261		$	230		$	(31	)
Percentage of net sales	5.7		%	5.7		%				6.1		%	5.7		%

Selling, general and administrative expense (“SG&A”) includes administrative expenses, information technology costs and incentive compensation related costs, and ~~decreased~~increased slightly as a percentage of sales for the three months ended ~~September 30, 2013~~March 31, 2014 compared to ~~2012~~ ~~while remaining essentially flat as a percentage of sales during the nine months ended~~ ~~September 30,~~ 2013 ~~compared to~~ ~~2012~~ due to ~~a reduction~~an increase in accruals for incentive compensation, ~~offset by~~Information Technology costs ~~from the acquisition of MVL in October 2012.~~and for other service providers.

~~Table of Contents~~

Amortization

Three Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Amortization $ 27
$ 20
$ (7 )

Nine Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Amortization $ 79
$ 60
$ (19 )



	Three Months Ended March 31,
	2014		2013		Favorable/ (unfavorable)
	(in millions)
Amortization	$	26	$	26	$	—

Amortization expense reflects the non-cash charge related to definite-lived intangible assets. The ~~increase~~relative consistency in amortization during the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 compared to ~~2012~~2013 reflects continued amortization of our definite-lived intangible assets, which resulted primarily from the acquisition of MVL in October ~~2012. In 2013, we expect to incur incremental, non-cash amortization charges of approximately $20 million, primarily as a result of the MVL acquisition.~~2012, over their estimated useful lives.

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Restructuring


	Three Months Ended September 30,									Three Months Ended March 31,
	2013			2012			Favorable/ (unfavorable)			2014			2013			Favorable/ (unfavorable)
	(dollars in millions)									(dollars in millions)
Restructuring	$	37		$	3		$	(34	)	$	22		$	32		$	10
Percentage of net sales	0.9		%	0.1		%				0.5		%	0.8		%

Nine Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(dollars in millions)
Restructuring $ 95
$ 17
$ (78 )
Percentage of net sales 0.8 % 0.1 %

The ~~increase~~decrease in restructuring expense ~~in 2013~~during the three months endedMarch 31, 2014 as compared to ~~2012~~2013 is due to the initiation of various restructuring actions, primarily in Europe, in the fourth quarter of 2012 and in the first quarter of ~~various~~2013 which are expected to total approximately $375 million. These restructuring actions ~~primarily in Europe,~~were initiated in response to lower OEM production volumes in Europe and continued economic ~~uncertainties. The restructuring actions~~uncertainties, and include workforce reductions, as well as plant closures, and are expected to be substantially completed during the first half of 2014.

Refer to Note 7. Restructuring to the consolidated financial statements for additional information.

Interest Expense

Three Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Interest expense $ 34
$ 32
$ (2 )

~~Table of Contents~~



	Three Months Ended March 31,
	2014		2013		Favorable/ (unfavorable)
	(in millions)
Interest expense	$	35	$	36	$	1

Nine Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Interest expense $ 106
$ 100
$ (6 )

The ~~increase~~decrease in interest expense reflects the issuance of ~~$800~~$700 million of 4.15% 10-year unsecured senior notes in the first quarter of ~~2013~~2014, offset by a reduction in interest expense from the ~~repayments~~repayment of a portion of the Tranche A Term Loan and the redemption of the 5.875% 2011 senior ~~secured Tranche B Term Loan.~~notes.

Refer to Note 8. Debt to the consolidated financial statements for additional information.

Other Income, net

Three Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Other income, net $ 4
$ 3
$ 1

Nine Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Other (expense) income, net $ (25 ) $ 15
$ (40 )



	Three Months Ended March 31,
	2014			2013			Favorable/ (unfavorable)
	(in millions)
Other income (expense), net	$	(16	)	$	(34	)	$	18

The ~~decrease~~increase in other income, net for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 as compared to the ~~nine~~three months ended ~~September 30, 2012~~March 31, 2013 is a result of Delphi ~~amending~~repaying a portion of the Tranche A Term Loan and redeeming the 5.875% 2011 senior notes during the three months endedMarch 31, 2014, resulting in a loss on extinguishment of debt of $34 million. Additionally, during the three months endedMarch 31, 2014, Delphi reached a final settlement with its insurance carrier related to a business interruption insurance claim, and received proceeds from the settlement of approximately $14 million, net of related costs and expenses.

During the three months endedMarch 31, 2013, Delphi amended its Credit Agreement and ~~repaying~~repaid the entire balance of the Tranche B Term Loan from the Original Credit Agreement, resulting in a loss on extinguishment of debt of $39 million.

Refer to Note 16. Other income, net and Note 8. Debt to the consolidated financial statements included herein for additional information.

~~Income Taxes~~

Three Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Income tax expense $ 72
$ 52
$ (20 )

Nine Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Income tax expense $ 182
$ 227
$ 45

The Company’s tax rate is affected by the tax rates in the jurisdictions in which the Company operates, the relative amount of income earned by jurisdiction, jurisdictions with a statutory tax rate less than the U.S. rate of 35% and the relative amount of losses or income for which no tax benefit or expense was recognized due to a valuation allowance. The Company's geographic income mix was favorably impacted in ~~2013, as compared to~~ ~~2012, primarily due to tax planning initiatives.~~

~~The effective tax rate was~~ ~~20%~~ ~~and~~ ~~15%~~ ~~for the~~ ~~three months endedSeptember 30, 2013~~ ~~and~~ ~~2012, respectively. The effective tax rate for the~~ ~~three months endedSeptember 30, 2013~~ was impacted by the United Kingdom-Finance Bill of 2013, which became law as the Finance Act 2013 (the "U.K. Finance Act") on July 17, 2013. The U.K. Finance Act provides for a reduction to the corporate income tax rate from ~~23%~~ to ~~21%~~ ~~effective April 1, 2014, with a further reduction to~~ ~~20%~~ ~~effective~~

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~~April 1, 2015.~~ Income Taxes



	Three Months Ended March 31,
	2014		2013		Favorable/ (unfavorable)
	(in millions)
Income tax expense	$	75	$	37	$	(38	)

The ~~impact of this legislation was recorded as a discrete item during the third quarter of 2013, the period of enactment, and resulted in increased tax expense of approximately~~ ~~$12 million~~ ~~for the~~ ~~three months endedSeptember 30, 2013~~ ~~due to the resultant impact on the net deferred tax asset balances. The effective tax rate in the~~ ~~three months endedSeptember 30, 2012~~ ~~was favorably impacted as a result of the relative mix of income earned in each jurisdiction and tax planning actions, partially offset by an increase of~~ ~~$6 million~~ ~~related to a reduction to the corporate income tax rate in the United Kingdom from 25% to 23%.~~

~~The~~Company’s effective tax rate was ~~16%~~ ~~and~~ ~~19%~~ ~~for the~~ ~~nine months endedSeptember 30, 2013~~ ~~and~~ ~~2012~~, respectively. The American Taxpayer Relief Act of 2012 was enacted on January 2, 2013 which retroactively reinstated expired tax provisions known as tax extenders including the research and development tax credit. The income tax accounting effect, including any retroactive effect, of a tax law change is accounted for in the period of enactment, which in this case was the first quarter of 2013. As a result, the effective tax rate for the ~~nine months endedSeptember 30, 2013~~ ~~was~~ impacted by ~~a benefit~~the expiration of ~~approximately~~ ~~$22 million~~ ~~related to~~ the ~~2012~~U.S. research and development credit in ~~addition to the 2013 research and development credit. On July 17, 2013, the United Kingdom-Finance Bill of 2013 became law as the Finance Act 2013 (the "U.K. Finance Act").~~2014. The U.K. Finance Act provides for a reduction to the corporate income tax rate from 23% to 21% effective April 1, 2014, with a further reduction to 20% effective April 1, 2015. The impact of this legislation was recorded as a discrete item during the third quarter of 2013, the period of enactment, and resulted in increased tax expense of approximately ~~$12 million~~ ~~for the~~ ~~nine months endedSeptember 30, 2013~~ ~~due to the resultant impact on the net deferred tax asset balances. The~~Company’s effective tax rate was also impacted by the tax expense (benefit) associated with unusual or infrequent items for the respective interim period as illustrated in the ~~nine months endedSeptember 30, 2012~~ ~~was impacted by a reduction of~~ ~~$22 million~~ ~~in tax reserves due to resolution of open issues with tax authorities, an increase of~~ ~~$10 million~~ ~~primarily related to non-U.S. transfer pricing positions, an increase of~~ ~~$6 million~~ ~~related to a reduction to the corporate income tax rate in the United Kingdom from 25% to 23% and a reduction of~~ ~~$14 million~~ ~~in withholding tax expense related to 2012 non-U.S. tax planning actions.~~following table:



	Three Months Ended March 31,
	2014			2013
	(in millions)
Tax credits (1)	$	—		$	(22	)
Withholding taxes (2)	—			4
Other change in tax reserves (3)	(3		)	1
Other adjustments	(1		)	1
Income tax expense (benefit) associated with unusual or infrequent items	$	(4	)	$	(16	)


(1)	For the three months ended March 31, 2013, the tax benefit relates to the retroactive reinstatement of the U.S. research and development tax credit under The American Taxpayer Relief Act of 2012.


(2)	For the three months ended March 31, 2013, the tax expense relates to the true-up of the withholding tax liability on the undistributed earnings of an equity method investment.


(3)	For the three months endedMarch 31, 2014 and 2013, the tax benefit and expense, respectively, primarily relate to adjustments in tax reserves which were individually insignificant.

Equity Income

Three Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Equity income, net of tax $ 8
$ 6
$ 2

Nine Months Ended September 30,
2013 2012
Favorable/
(unfavorable)
(in millions)
Equity income, net of tax $ 26
$ 18
$ 8



	Three Months Ended March 31,
	2014		2013		Favorable/ (unfavorable)
	(in millions)
Equity income, net of tax	$	8	$	8	$	—

Equity income, net of tax reflects Delphi’s interest in the results of ongoing operations of entities accounted for as equity-method investments. Equity income ~~increased~~ ~~during~~for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 was consistent as compared to the three ~~and nine~~ months ended ~~September 30, 2012~~March 31, 2013 primarily due to ~~improved~~the consistent performance of our ~~Korean~~ joint ventures.

Results of Operations by Segment

We operate our 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, ~~diesel and automotive~~ aftermarket, and original equipment service.

Thermal Systems, which includes heating, ventilating and air conditioning 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.

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Through December 31, ~~2012,~~2013, we evaluated performance based on stand-alone segment Adjusted EBITDA and accounted for inter-segment sales and transfers as if the sales or transfers were to third parties, at current market prices. Our 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, ~~2013,~~2014, our management began utilizing segment Adjusted ~~EBITDA~~Operating Income as athe key performance measure ~~because~~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 our ~~significant restructuring and other acquisition-related costs.~~operating segments. Segment Adjusted ~~EBITDA and EBITDA~~Operating Income should not be considered ~~substitutes~~a substitute for results prepared in accordance with U.S. GAAP and should not be considered ~~alternatives~~an alternative to net income attributable to Delphi, which is the most directly comparable financial measure to Adjusted ~~EBITDA and EBITDA~~Operating Income that is in accordance with U.S. GAAP. Segment Adjusted ~~EBITDA and EBITDA,~~Operating Income, as determined and measured by Delphi, should also not be compared to similarly titled measures reported by other companies.


	Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total				Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total
	(in millions)																		(in millions)
For the Three Months Ended September 30, 2013:
Adjusted EBITDA	$	309		$	142		$	100		$	15		$	—	$	566
For the Three Months Ended March 31, 2014:																		For the Three Months Ended March 31, 2014:
Adjusted Operating income																			$	273		$	115		$	83		$	12		$	—	$	483
Restructuring	(7		)	(8		)	(19		)	(3		)	—		(37		)		(13		)	(2		)	(6		)	(1		)	—		(22		)
Other acquisition-related costs	(4		)	—			—			—			—		(4		)		(2		)	—			—			—			—		(2		)
EBITDA	$	298		$	134		$	81		$	12		$	—	$	525
Depreciation and amortization	(61		)	(48		)	(19		)	(10		)	—		(138		)
Operating income	$	237		$	86		$	62		$	2		$	—	387				$	258		$	113		$	77		$	11		$	—	459
Interest expense															(34		)																(35		)
Other income, net															4																		(16		)
Income before income taxes and equity income															357																		408
Income tax expense															(72		)																(75		)
Equity income, net of tax															8																		8
Net income															$	293																	$	341
Net income attributable to noncontrolling interest															22																		21
Net income attributable to Delphi															$	271																	$	320

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Electrical/
Electronic
Architecture Powertrain
Systems Electronics
and Safety Thermal
Systems Eliminations
and Other Total
(in millions)
For the Three Months Ended September 30, 2012:
Adjusted EBITDA $ 211
$ 169
$ 79
$ 24
$ —
$ 483
Restructuring (1 ) —
(1 ) (1 ) —
(3 )
EBITDA $ 210
$ 169
$ 78
$ 23
$ —
$ 480
Depreciation and amortization (39 ) (44 ) (20 ) (10 ) —
(113 )
Operating income $ 171
$ 125
$ 58
$ 13
$ —
367
Interest expense (32 )
Other income, net 3
Income before income taxes and equity income 338
Income tax expense (52 )
Equity income, net of tax 6
Net income $ 292
Net income attributable to noncontrolling interest 23
Net income attributable to Delphi $ 269

~~Table of Contents~~


	Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total				Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total
	(in millions)																		(in millions)
For the Nine Months Ended September 30, 2012:
Adjusted EBITDA	$	714		$	575		$	272		$	95		$	—	$	1,656
For the Three Months Ended March 31, 2013:																		For the Three Months Ended March 31, 2013:
Adjusted Operating income																			$	231		$	114		$	72		$	14		$	—	$	431
Restructuring	(6		)	(4		)	(3		)	(4		)	—		(17		)		(11		)	(8		)	(11		)	(2		)	—		(32		)
EBITDA	$	708		$	571		$	269		$	91		$	—	$	1,639
Depreciation and amortization	(112		)	(134		)	(62		)	(32		)	—		(340		)
Other acquisition-related costs																			(2		)	—			—			—			—		(2		)
Operating income	$	596		$	437		$	207		$	59		$	—	1,299				$	218		$	106		$	61		$	12		$	—	397
Interest expense															(100		)																(36		)
Other income, net															15																		(34		)
Income before income taxes and equity income															1,214																		327
Income tax expense															(227		)																(37		)
Equity income, net of tax															18																		8
Net income															$	1,005																	$	298
Net income attributable to noncontrolling interest															64																		22
Net income attributable to Delphi															$	941																	$	276

Net sales, gross margin as a percentage of net sales and Adjusted ~~EBITDA~~Operating Income by segment for the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013 are as follows:

Net Sales by Segment

Three Months Ended September 30, Variance Due To:
2013 2012
Favorable/
(unfavorable)

Volume, net of
contractual
price
reductions
FX
Commodity
Pass-through
Other Total
(in millions) (in millions)
Electrical/Electronic Architecture $ 1,956
$ 1,607
$ 349
$ 132
$ 12
$ (9 ) $ 214
$ 349
Powertrain Systems 1,048
1,087
(39 ) (55 ) 16
—
—
(39 )
Electronics and Safety 705
648
57
41
15
—
1
57
Thermal Systems 364
374
(10 ) (5 ) 2
(1 ) (6 ) (10 )
Eliminations and Other (56 ) (53 ) (3 ) (1 ) 1
—
(3 ) (3 )
Total $ 4,017
$ 3,663
$ 354
$ 112
$ 46
$ (10 ) $ 206
$ 354

~~Included in Other above are increased sales of approximately $206 million related to the net impact of acquisitions and divestitures.~~

~~Table of Contents~~

Nine Months Ended September 30, Variance Due To:
2013 2012
Favorable/
(unfavorable)

Volume, net of
contractual
price
reductions
FX
Commodity
Pass-through
Other Total
(in millions) (in millions)
Electrical/Electronic Architecture $ 5,921
$ 5,049
$ 872
$ 214
$ 5
$ (14 ) $ 667
$ 872
Powertrain Systems 3,316
3,597
(281 ) (303 ) 17
—
5
(281 )
Electronics and Safety 2,123
2,092
31
2
23
—
6
31
Thermal Systems 1,097
1,192
(95 ) (52 ) (1 ) —
(42 ) (95 )
Eliminations and Other (176 ) (178 ) 2
4
—
—
(2 ) 2
Total $ 12,281
$ 11,752
$ 529
$ (135 ) $ 44
$ (14 ) $ 634
$ 529

~~Included in Other above are increased sales of approximately $627 million related to the net impact of acquisitions and divestitures.~~



	Three Months Ended March 31,									Variance Due To:
	2014			2013			Favorable/ (unfavorable)			Volume, net of contractual price reductions			FX			Commodity Pass-through			Other			Total
	(in millions)									(in millions)
Electrical/Electronic Architecture	$	2,111		$	1,921		$	190		$	203		$	8		$	(20	)	$	(1	)	$	190
Powertrain Systems	1,104			1,107			(3		)	(24		)	22			—			(1		)	(3		)
Electronics and Safety	730			693			37			24			12			—			1			37
Thermal Systems	389			360			29			28			2			—			(1		)	29
Eliminations and Other	(58		)	(57		)	(1		)	(2		)	(1		)	—			2			(1		)
Total	$	4,276		$	4,024		$	252		$	229		$	43		$	(20	)	$	—		$	252

Gross Margin Percentage by Segment


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2013		2012		2013		2012		2014		2013
Electrical/Electronic Architecture	18.5	%	16.3	%	18.3	%	17.3	%	18.8	%	17.8	%
Powertrain Systems	17.1	%	19.0	%	18.3	%	19.6	%	18.7	%	18.0	%
Electronics and Safety	16.3	%	15.6	%	17.0	%	16.3	%	18.2	%	16.0	%
Thermal Systems	6.6	%	9.4	%	8.2	%	10.7	%	8.5	%	9.2	%
Eliminations and Other	—	%	—	%	—	%	—	%	—	%	—	%
Total	16.9	%	16.5	%	17.4	%	17.4	%	18.0	%	17.0	%

Table of Contents

Adjusted ~~EBITDA~~Operating Income by Segment


	Three Months Ended September 30,								Variance Due To:											Three Months Ended March 31,							Variance Due To:
	2013		2012		Favorable/ (unfavorable)			��	Volume, net of contractual price reductions			Operational performance		Other			Total			2014		2013		Favorable/ (unfavorable)			Volume, net of contractual price reductions			Operational performance		Other			Total
	(in millions)								(in millions)											(in millions)							(in millions)
Electrical/Electronic Architecture	$	309	$	211	$	98			$	24		$	19	$	55		$	98		$	273	$	231	$	42		$	36		$	32	$	(26	)	$	42
Powertrain Systems	142		169		(27		)		(34		)	30		(23		)	(27		)	115		114		1			(15		)	25		(9		)	1
Electronics and Safety	100		79		21				(12		)	22		11			21			83		72		11			(16		)	29		(2		)	11
Thermal Systems	15		24		(9		)		(12		)	9		(6		)	(9		)	12		14		(2		)	(2		)	3		(3		)	(2		)
Eliminations and Other	—		—		—				1			—		(1		)	—			—		—		—			—			—		—			—
Total	$	566	$	483	$	83			$	(33	)	$	80	$	36		$	83		$	483	$	431	$	52		$	3		$	89	$	(40	)	$	52

As noted in the table above, Adjusted ~~EBITDA~~Operating Income for the three months ended ~~September 30, 2013~~March 31, 2014 as compared to the three months ended ~~September 30, 2012~~March 31, 2013 was impacted by volume and contractual price reductions including product mix, and operational performance improvements, as well as the following items included in Other in the table above:

$314 million of ~~increase due to fluctuations in foreign currency exchange rates.~~increased depreciation and amortization; and

~~$56 million of increase due to acquisitions/divestitures primarily related to the October 2012 MVL acquisition.~~

~~A gain on the disposal of property of approximately $11 million resulting from the sale of a manufacturing site that was closed as a result of Delphi's overall restructuring program.~~

~~The absence of a favorable customer settlement related to warranty of $25 million in the prior period.~~

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Nine Months Ended September 30, Variance Due To:
2013 2012
Favorable/
(unfavorable)

Volume, net of
contractual
price
reductions

Operational
performance
Other Total
(in millions) (in millions)
Electrical/Electronic Architecture $ 919
$ 714
$ 205
$ (1 ) $ 50
$ 156
$ 205
Powertrain Systems 494
575
(81 ) (158 ) 66
11
(81 )
Electronics and Safety 297
272
25
(63 ) 68
20
25
Thermal Systems 63
95
(32 ) (33 ) 15
(14 ) (32 )
Eliminations and Other —
—
—
1
—
(1 ) —
Total $ 1,773
$ 1,656
$ 117
$ (254 ) $ 199
$ 172
$ 117

~~As noted in the table above, Adjusted EBITDA~~Increased accruals for ~~the~~ ~~nine months endedSeptember 30, 2013~~ ~~as compared to the~~ ~~nine months endedSeptember 30, 2012~~ ~~was impacted by volume~~incentive compensation and ~~contractual price reductions including product mix, and operational performance improvements, as well as the following items included in Other in the table above:~~

~~$7 million of increase due to fluctuations in foreign currency exchange rates.~~

~~$156 million of increase due to acquisitions/divestitures primarily related to the October 2012 MVL acquisition.~~

~~A gain on the disposal of property of approximately $11 million resulting from the sale of a manufacturing site that was closed as a result of Delphi's overall restructuring program.~~

~~The absence of a favorable customer settlement related to warranty of $25 million in the prior period.~~

costs for service providers.

Liquidity and Capital Resources

Overview of Capital Structure

Our liquidity requirements are primarily to fund our business operations, including capital expenditures and working capital requirements, as well as to fund debt service requirements, operational restructuring activities, and dividends on share capital. Our primary sources of liquidity are cash flows from operations, our existing cash balance, and as necessary, borrowings under available credit facilities. To the extent we generate discretionary cash flow we may consider using this additional cash flow for optional prepayments of existing indebtedness, strategic acquisitions, additional share repurchases, and/or general corporate purposes. We will also continually explore ways to enhance our capital structure.

As of ~~September 30, 2013~~March 31, 2014, we had cash and cash equivalents of $~~1.1~~1.0 billion and net debt (defined as outstanding debt less cash and cash equivalents) of $~~1.4~~1.5 billion. We also have access to additional liquidity pursuant to the terms of the $1.5 billion Revolving Credit Facility and athe €350 million committed European accounts receivable factoring facility as described below. We expect existing cash, available liquidity and cash flows from operations to continue to be sufficient to fund our global operating activities, including restructuring ~~and dividend~~ payments, any mandatory payments required under the Credit Agreement as described below, dividends on ordinary shares and capital expenditures. We also continue to expect to be able to move funds between different countries to manage our global liquidity needs without material adverse tax implications, subject to current monetary policies and to the terms of the Credit Agreement. Based on this, we believe we possess sufficient liquidity to fund our operations and capital investments in ~~2013~~2014 and beyond.

Share Repurchases

In January 2012, the Board of Directors authorized a share repurchase program of up to $300 million of ordinary ~~shares. The program was scheduled to terminate on the earlier of December 31, 2012 or when the Company attained~~ ~~$300 million~~ ~~of ordinary share repurchases,~~shares, which was fully satisfied in September 2012. Subsequently, in September 2012, the Board of Directors authorized a ~~new~~ share repurchase program of up to $750 million of ordinary shares, which was fully satisfied in April 2014. In January 2014, the Board of Directors authorized a new share repurchase program of up to $1 billion of ordinary shares. This share repurchase program ~~will terminate when the Company attains~~ ~~$750 million~~ ~~of ordinary shares repurchases and~~ provides for share ~~repurchases~~purchases in the open market or in privately negotiated transactions, depending on share price, market conditions and other factors, as determined by the Company. This program commenced following the completion of the Company's September 2012 share repurchase program in April 2014.

A summary of the ordinary shares repurchased during the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014 and ~~September 30, 2012~~March 31, 2013 is as follows:

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	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2013		2012		2013		2012		2014		2013
Total Number of Shares Repurchased	2,120,000		5,443,213		7,415,583		10,740,453		2,376,391		2,850,000
Average Price Paid per Share	$	56.50	$	29.78	$	48.80	$	29.08	$	66.14	$	42.79
Total (in millions)	$	120	$	162	$	362	$	312	$	157	$	122

Dividends to Holders of Ordinary Shares

On February 26, 2013, the Board of Directors approved the initiation of dividend payments on the Company's ordinary shares and declared a regular quarterly cash dividend. In January 2014, the Board of Directors increased the annual dividend rate from $0.68 to $1.00 per ordinary share, and declared a regular quarterly cash dividend of $0.25 per ordinary share. The Company has declared and paid cash dividends per common share during the periods presented as follows:

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	Dividend		Amount
	Per Share		(in millions)
2014:
First Quarter	$	0.25	$	77

2013:
Fourth Quarter	$	0.17	$	52
Third Quarter	0.17		53
Second Quarter	0.17		53
First Quarter	0.17		53
Total	$	0.68	$	211

In addition, in April 2014, the Board of Directors declared a regular quarterly cash dividend of $0.25 per ordinary share, payable on May 28, 2014 to shareholders of record at the close of business on May 14, 2014.

Dividends from Equity Investees

During the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014, Delphi received ~~dividends~~a dividend of $10 million ~~and~~ ~~$30 million~~from ~~two~~one of its equity method ~~investments, respectively.~~investments. During the three months endedMarch 31, 2013, Delphi received a dividend of $9 million from one of its equity method investments. The dividends were recognized as a reduction to the investment and represented a return on investment included in cash flows from operating activities. ~~During the~~ ~~nine months endedSeptember 30, 2012, Delphi received a dividend of~~ ~~$62 million~~ ~~from one of its equity method investments. The dividend was recognized as a reduction to the investment with~~ ~~$25 million~~ ~~representing a return on investment included in cash flows from operating activities and~~ ~~$37 million~~ ~~representing a return of capital investment and included in cash flows from investing activities.~~

~~Dividends to Holders of Ordinary Shares~~

~~On February 26, 2013, the Board of Directors approved the initiation of dividend payments on its ordinary shares and declared a regular quarterly cash dividend. During the~~ ~~nine months endedSeptember 30, 2013, the Company declared and paid cash dividends per common share as follows:~~

2013
Dividend Amount
Three months ended: Per Share (in millions)
September 30 $ 0.17
$ 53
June 30 0.17
53
March 31 0.17
53
Total $ 0.51
$ 159

~~In addition, in October 2013, the Board of Directors declared a regular quarterly cash dividend of $0.17~~ ~~per ordinary share, payable on November 27, 2013 to shareholders of record at the close of business on November 15, 2013.~~

Credit Agreement

In March 2011, in conjunction with the redemption of membership interests from Class A and Class C membership interest holders, Delphi Corporation (the ~~“Issuer”~~"Issuer")~~, a wholly-owned U.S. subsidiary of Delphi Automotive LLP,~~ entered into a credit agreement with JPMorgan Chase Bank, N.A., as lead arranger and administrative agent ~~with respect to~~(the "Original Credit Agreement"), which provided for $3.0 billion in senior secured credit facilities ~~(the “Original~~consisting of term loans (as subsequently amended from time to time, the “Tranche A Term Loan” and the “Tranche B Term Loan,” respectively) and a revolving credit facility (as subsequently amended from time to time, the “Revolving Credit ~~Agreement”~~Facility”). The Original Credit Agreement was amended and restated on each of May 17, 2011 (the “May 2011 Credit Agreement”), September 14, 2012 ~~(as so amended and restated, the~~(the “2012 Credit Agreement”) and March 1, ~~2013. (The~~2013 (the Original Credit Agreement and each amendment and restatement of the Original Credit Agreement are individually and collectively referred to herein as the “Credit Agreement”). The ~~Original~~May 2011 Credit Agreement, ~~provided for a~~which was entered into simultaneously with the issuance of senior unsecured notes in the amount of $1 billion (as more fully described below), reduced the total size of the senior secured ~~5-year term loan in an original amount of~~ ~~$258 million~~ ~~(the “Original Tranche A Term Loan” and, as subsequently modified from time~~credit facilities to ~~time, the “Tranche A Term Loan”), a senior secured 6-year term loan in an original amount of~~ ~~$950 million~~ ~~(the “Tranche B Term Loan”), and a~~ ~~$500 million~~ ~~revolving credit facility (as subsequently modified from time to time, the “Revolving Credit Facility”).~~$2.4 billion. Under the 2012 Credit Agreement, the Company increased the Revolving Credit Facility to $1.3 billion and the ~~Original~~ Tranche A Term Loan to $574 million~~. As a result of prior payments on~~ and used the ~~Tranche A Term Loan, the Company received~~ incremental proceeds of ~~$363 million~~ ~~under the 2012 Credit Agreement, which was used~~ to pay a portion of the cost of acquiring MVL. On March 1, 2013, following the ~~senior~~ unsecured note issuance in February 2013 (as more fully described below), the Tranche B Term Loan was fully repaid, the Tranche A Term Loan was increased to $575 million, the Revolving Credit Facility was increased to $1.5 billion, and the terms of the Tranche A Term Loan and the Revolving Credit Facility were extended to March 1, 2018. ~~These~~The March 31, 2013 amendments resulted in the recognition of a loss on debt extinguishment of ~~$39~~$39 million during the ~~nine~~three months ended~~September 30, 2013~~. March 31, 2013. Approximately $14 million in issuance costs were paid in conjunction with the March 2013 amendment. In conjunction with the unsecured note issuance in March 2014 (as more fully described below), Delphi repaid a portion of its indebtedness on the Tranche A Term Loan, which resulted in the recognition of a loss on debt extinguishment related to this repayment of approximately $1 million during the three months endedMarch 31, 2014.

Unamortized debt issuance costs associated with the Tranche A Term Loan and Revolving Credit Facility of $28

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24 million are being amortized over the term of the Credit Agreement, as extended pursuant to the March 1, 2013 amendment. At ~~September 30, 2013~~March 31, 2014 the Revolving Credit Facility was undrawn and Delphi had approximately $10 million in letters of credit issued under the Credit Agreement. The maximum amount drawn under the Revolving Credit Facility during the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 to manage intra-month working capital needs was ~~$280~~$85 million. Letters of credit issued under the Credit Agreement reduce availability under the Revolving Credit Facility.

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(the “Applicable Rate”). The ~~Tranche B Term Loan had a LIBOR floor of~~ ~~1.00%. A comparison of the~~ Applicable Rates under the ~~2012~~ Credit Agreement ~~and current Credit Agreement is~~on the specified dates are set forth below:


	Credit Agreement (September 30, 2013)				2012 Credit Agreement (December 31, 2012)				March 31, 2014				December 31, 2013
	LIBOR plus		ABR plus		LIBOR plus		ABR plus		LIBOR plus		ABR plus		LIBOR plus		ABR plus
Revolving Credit Facility	1.50	%	0.50	%	2.00	%	1.00	%	1.25	%	0.25	%	1.25	%	0.25	%
Tranche A Term Loan	1.50	%	0.50	%	2.00	%	1.00	%	1.25	%	0.25	%	1.25	%	0.25	%
Tranche B Term Loan	N/A		N/A		2.50	%	1.50	%


									Borrowings as of
			Borrowings as of		Rates effective as of				March 31, 2014		Rates effective as of
	LIBOR plus		September 30, 2013		September 30, 2013		LIBOR plus		(in millions)		March 31, 2014
Revolving Credit Facility	1.50	%	$	—	—	%	1.25	%	$	—	—	%
Tranche A Term Loan	1.50	%	568		1.6875	%	1.25	%	400		1.4375	%

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substantially all of the assets of Delphi Automotive PLC, and its U.S. subsidiaries, and certain assets of Delphi Corporation’s direct and indirect parent companies. All guarantees of Delphi Corporation's subsidiaries and all then-existing security interests were released during the three months ended March 31, 2014 when the Company satisfied certain credit-rating related and other conditions under the terms of the Credit Agreement. Such security interests and subsidiary guarantees may be reinstated at the election of the lenders if the applicable credit rating criteria are no longer satisfied.

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Senior Notes

On February 14, 2013, Delphi Corporation issued $800 million of 5.00% senior unsecured notes due 2023 (the “2013 Senior Notes”) in a transaction registered under the Securities Act. The proceeds were primarily utilized to prepay our term loan indebtedness under our 2012 Credit Agreement. Delphi paid approximately $12 million of issuance costs in connection with the 2013 Senior Notes. Interest is payable semi-annually on February 15 and August 15 of each year to holders of record at the close of business on February 1 or August 1 immediately preceding the interest payment date.

~~The~~All series of senior notes are fully and unconditionally guaranteed, jointly and severally, by Delphi Automotive PLC and by certain of ~~its existing~~Delphi Corporation's direct and ~~future subsidiaries,~~indirect parent companies, subject to customary release provisions (other than in the case of Delphi Automotive PLC). Prior to the first quarter of 2014, certain of Delphi Corporation’s direct and indirect subsidiaries, which were directly or indirectly 100% owned by Delphi Automotive PLC, fully and unconditionally guaranteed all series of senior notes then outstanding; however, all Delphi Corporation subsidiary guarantees were released during the three months ended March 31, 2014 because such guarantors no longer guaranteed the Credit Agreement.

Other Financing

Government Programs—Delphi commonly seeks manufacturing development and financial assistance incentive programs that may be awarded by government entities. Delphi has numerous technology and manufacturing development programs that are competitively awarded from agencies of the U.S. Federal Government. These U.S. based programs are from the U.S. Department of Transportation (“DOT”), the U.S. Department of Energy (“DOE”), and the U.S. Department of Defense (“DoD”). We received approximately $6$2 million from these Federal agencies in the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 for work performed. We continue to pursue many technology development programs by bidding on competitively procured programs from DOT, DOE and DoD. Some of these programs were bid with us being the lead or “Prime Contractor”, and some were bid with us as a “Subrecipient” to the Prime Contractor.

~~Additionally, during the~~ ~~nine months endedSeptember 30, 2013~~, we received approximately $27 million of capital spending reimbursements related to specific capital spending initiatives which added manufacturing equipment capacity and employees to Delphi facilities located in Eastern Europe.

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~~Warranty settlement~~—On April 30, 2011, we paid €90 million (approximately $133 million at April 30, 2011 exchange rates) under the terms of a March 2011 warranty settlement. In April 2012, we made the final scheduled payment of €60 million (approximately $80 million at April 30, 2012 exchange rates) related to this matter.

Cash Flows

Intra-month cash flow cycles vary by region, but in general we are users of cash through the first half of a typical month and we generate cash during the latter half of a typical month. Due to this cycle of cash flows, we may utilize short-term financing, including our Revolving Credit Facility and European facilities, to manage our intra-month working capital needs. Our cash balance typically peaks at month end.

Cash in the U.S. is primarily managed centrally through a U.S. cash pooling arrangement and cash in Europe is primarily managed centrally through a European cash pooling arrangement. Outside the U.S. and Europe, cash may be managed through a country cash pool, a self-managed cash flow arrangement or a combination of the two depending on our presence in the respective country.

Operating Activities. Net cash provided by operating activities totaled $~~1,070~~136 million and $~~1,168~~149 million for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013, respectively. The $9813 million decrease primarily reflects ~~lower earnings,~~ increased working capital requirements and ~~the timing of accrued amounts related to the VCP, the final amount of which was paid out in its entirety during the~~ ~~nine months endedSeptember 30, 2013~~.higher payments for restructuring programs, partially offset by increased earnings. Cash flow from operating activities for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 consisted primarily of net earnings of $~~980~~341 million increased by $~~502~~179 million for non-cash charges for depreciation and amortization ~~pension and other postretirement benefit expenses~~ and extinguishment of debt, partially offset by $~~472~~434 million related to changes in operating assets and liabilities, net of restructuring and pension contributions. Cash flow from operating activities for the ~~nine~~three months ended ~~September 30, 2012~~March 31, 2013 consisted of primarily of net earnings of $~~1,005~~298 million increased by $~~389~~170 million for non-cash charges for depreciation and amortization and ~~pension and other postretirement benefit expenses,~~extinguishment of debt, partially offset by $~~282~~352 million related to changes in operating assets and liabilities, net of restructuring and pension contributions.

Investing Activities. Net cash used in investing activities totaled $~~495~~300 million and $~~526~~205 million for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013, respectively. The ~~decrease~~increase is primarily due to the ~~decrease~~increase in capital expenditures of ~~$51 million, partially offset by~~ ~~$37 million~~ ~~of dividends from equity method investments in excess of earnings received in the~~ ~~nine months endedSeptember 30, 2012~~.$85 million.

Financing Activities. Net cash used in financing activities totaled $~~632~~241 million and $~~360~~216 million for the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 and ~~2012~~2013, respectively. The increase in net cash used in financing activities during the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 compared to the ~~nine~~three months ended ~~September 30, 2012~~March 31, 2013 is primarily due to the use of an incremental $5331 million of cash on hand in ~~2013~~2014 as compared to ~~2012~~2013 to repurchase ordinary shares and the ~~$159~~increase of $24 million ~~payment of~~ in cash dividends paid on Delphi's ordinary shares. Additionally, the net proceeds of approximately $691 million received from the issuance of the 4.15% senior unsecured notes due 2024 were primarily used to redeem the 5.875% 2011 Senior Notes and to repay a portion of the Tranche A Term Loan. In the three months endedMarch 31, 2013, the net proceeds of approximately $790 million received from the issuance of the 5.00% senior unsecured notes due in 2023 were used in conjunction with the amendment of the 2012 Credit Agreement to pay off in its entirety the $773 million of the Tranche B Term Loan.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financial arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contingencies and Environmental Matters

The information concerning contingencies, including environmental contingencies and the amount currently held in reserve for environmental matters, contained in Note 10. Commitments and Contingencies to the unaudited consolidated financial statements included in Part I, Item 1 of this report is incorporated herein by reference.

Recently Issued Accounting Pronouncements

The information concerning recently issued accounting pronouncements contained in Note 2. Significant Accounting Policies, to the unaudited consolidated financial statements included in Part 1, Item 1 of this report is incorporated herein by reference.

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Critical Accounting Estimates

There have been no significant changes in our critical accounting estimates during the three ~~and nine~~ months ended ~~September 30, 2013~~March 31, 2014.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to the information concerning our exposures to market risk as stated in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2012.~~2013.

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ITEM 4. CONTROLS AND PROCEDURES

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the U.S. Securities Exchange Act of 1934. The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance of achieving their objectives.

As of ~~September 30, 2013~~March 31, 2014, the Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated, for disclosure purposes, ~~changes to the Company’s internal control over financial reporting that occurred during the~~ ~~nine months endedSeptember 30, 2013~~ that have materially affected, or are reasonably likely to affect, the Company’s internal control over financial reporting. As noted in our Annual Report on Form 10-K, management has excluded the acquired operations of the Motorized Vehicle Division of FCI (“MVL”) from its assessment of the effectiveness of the ~~Company's internal control over financial reporting~~Company’s disclosure controls and procedures, as ~~MVL was acquired during~~defined in Rules 13a-15(e) and 15d-15(e) under the ~~fourth quarter~~Securities Exchange Act of ~~2012.~~1934, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the desired control objectives were achieved as of ~~September 30, 2013~~March 31, 2014.

Changes in Internal Control over Financial Reporting

~~Except as noted below, there~~There were no material changes in the Company’s internal controls over financial reporting during the ~~nine~~three months ended ~~September 30, 2013~~March 31, 2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

~~During the~~ ~~nine months endedSeptember 30, 2013~~, the Company implemented a global financial consolidations software system, and maintained and monitored appropriate internal controls during the implementation period. The Company believes that its internal control environment has been enhanced as a result of this implementation.

PART IIII. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are from time to time subject to various actions, claims, suits, government investigations, and other proceedings incidental to our business, including those arising out of alleged defects, breach of contracts, competition and antitrust matters, product warranties, intellectual property matters, personal injury claims and employment-related matters. For a description of risks related to various legal proceedings and claims, see Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, ~~2012.~~2013. For a description of our outstanding material legal proceedings, see Note 10. Commitments and Contingencies to the unaudited consolidated financial statements included in this report.

ITEM 1A. RISK FACTORS

There have been no material changes in risk factors for the Company in the period covered by this report. For information regarding factors that could affect the Company’s results of operations, financial condition and liquidity, see the risk factors discussed in Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2012.~~2013.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

A summary of our ordinary shares repurchased during the three months ended ~~September 30, 2013~~March 31, 2014, is shown below:

Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) (1)
July 1, 2013 to July 31, 2013 —
$ —
—
$ 405
August 1, 2013 to August 31, 2013 701,809
54.77
701,809
366
September 1, 2013 to September 30, 2013 1,418,191
57.36
1,418,191
285
Total 2,120,000
56.50
2,120,000



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) (3)
January 1, 2014 to January 31, 2014	—	$	—	—	$	1,190
February 1, 2014 to February 28, 2014	727,227	65.74		727,227	1,142
March 1, 2014 to March 31, 2014	1,649,164	66.31		1,649,164	1,033
Total	2,376,391	66.14		2,376,391



(1)	The total number of shares purchased under the Board authorized plans are described below. The number of shares purchased excludes the 131,913 shares granted for vested RSUs during the three months ended March 31, 2014 that were withheld to cover minimum withholding taxes.



(2)	Excluding commissions.



(3)	In ~~September 2012,~~January 2014, the Board of Directors authorized a new share repurchase program of up to ~~$750 million.~~$1 billion. This program follows the completion of ~~$300 million of shares repurchased under~~ the ~~Company's~~ previously announced share repurchase ~~program that was~~programs of $300 million and $750 million, which were approved by the Board of Directors and commenced in January ~~2012.~~2012 and September 2012, respectively. The timing of repurchases is dependent on price, market conditions and applicable regulatory requirements.



~~(2)~~	~~Excluding commissions.~~

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ITEM 6. EXHIBITS



Exhibit Number		Description
4.1		Second Supplemental Indenture, dated as of March 3, 2014, among Delphi Corporation, the Guarantors named therein, Wilmington Trust, National Association, as Trustee, and Deutsche Bank Trust Company Americas, as Registrar, Paying Agent and Authenticating Agent (incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K of the Company filed with the SEC on March 3, 2014)
31.1		Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer*
31.2		Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer*
32.1		Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
101.INS		XBRL Instance Document#
101.SCH		XBRL Taxonomy Extension Schema Document#
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document#
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document#
101.LAB		XBRL Taxonomy Extension Label Linkbase Document#
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document#

* Filed herewith.

# Filed electronically with the Report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




		DELPHI AUTOMOTIVE PLC

		/s/ Kevin P. Clark
		By: Kevin P. Clark
		Executive Vice President and
		Chief Financial Officer

Dated: ~~November 5, 2013~~
April 24, 2014

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Three Months Ended September 30, 2012	Gain Recognized in OCI (Effective Portion)		(Loss) Gain Reclassified from OCI into Income (Effective Portion)			Gain Recognized in Income (Ineffective Portion Excluded from Effectiveness Testing)
	(in millions)
Designated derivatives instruments:
Commodity derivatives	$	15	$	(7	)	$	—
Foreign currency derivatives	24		5			—
Total	$	39	$	(2	)	$	—



	Gain Recognized in Income
Derivatives not designated:
Commodity derivatives	$	—
Foreign currency derivatives	1
Total	$	1



Nine Months Ended September 30, 2012	Gain Recognized in OCI (Effective Portion)		(Loss) Gain Reclassified from OCI into Income (Effective Portion)			Gain Recognized in Income (Ineffective Portion Excluded from Effectiveness Testing)
	(in millions)
Designated derivatives instruments:
Commodity derivatives	$	19	$	(9	)	$	—
Foreign currency derivatives	75		5			1
Total	$	94	$	(4	)	$	1

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨. (Do not check if a smaller reporting company)

Smaller reporting company