x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Jersey
|
|
98-1367514
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
Large accelerated filer
|
|
x
.
|
|
|
|
Accelerated filer
|
¨
.
|
Non-accelerated filer
|
|
¨
.
|
|
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
|
¨
.
|
|
|
|
|
|
|
Emerging growth company
|
¨
.
|
|
||
|
|
Page
|
Part I - Financial Information
|
||
Item 1.
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
Part II - Other Information
|
||
Item 1.
|
||
Item 1A.
|
||
Item 6.
|
||
|
|
|
|
||
Exhibits
|
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in millions, except per share amounts)
|
||||||
Net sales
|
$
|
1,296
|
|
|
$
|
1,168
|
|
Operating expenses:
|
|
|
|
||||
Cost of sales
|
1,046
|
|
|
926
|
|
||
Selling, general and administrative
|
97
|
|
|
80
|
|
||
Amortization
|
4
|
|
|
4
|
|
||
Restructuring (Note 8)
|
11
|
|
|
10
|
|
||
Total operating expenses
|
1,158
|
|
|
1,020
|
|
||
Operating income
|
138
|
|
|
148
|
|
||
Interest expense
|
(20
|
)
|
|
(1
|
)
|
||
Other income (expense), net (Note 18)
|
6
|
|
|
(6
|
)
|
||
Income before income taxes and equity income
|
124
|
|
|
141
|
|
||
Income tax expense
|
(22
|
)
|
|
(31
|
)
|
||
Income before equity income
|
102
|
|
|
110
|
|
||
Equity income, net of tax
|
3
|
|
|
1
|
|
||
Net income
|
105
|
|
|
111
|
|
||
Net income attributable to noncontrolling interest
|
7
|
|
|
8
|
|
||
Net income attributable to Delphi Technologies
|
$
|
98
|
|
|
$
|
103
|
|
|
|
|
|
||||
Net income per share attributable to Delphi Technologies:
|
|
|
|
||||
Basic
|
$
|
1.10
|
|
|
$
|
1.16
|
|
Diluted
|
$
|
1.10
|
|
|
$
|
1.16
|
|
|
|
|
|
||||
Weighted average ordinary shares outstanding:
|
|
|
|
||||
Basic
|
88.71
|
|
|
88.61
|
|
||
Diluted
|
88.92
|
|
|
88.61
|
|
||
|
|
|
|
||||
Cash dividends declared per share
|
$
|
0.17
|
|
|
$
|
—
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Net income
|
$
|
105
|
|
|
$
|
111
|
|
Other comprehensive income:
|
|
|
|
||||
Currency translation adjustments
|
31
|
|
|
29
|
|
||
Net change in unrecognized gain (loss) on derivative instruments, net of tax (Note 16)
|
(1
|
)
|
|
—
|
|
||
Employee benefit plans adjustment, net of tax
|
(8
|
)
|
|
4
|
|
||
Other comprehensive income
|
22
|
|
|
33
|
|
||
Comprehensive income
|
127
|
|
|
144
|
|
||
Comprehensive income attributable to noncontrolling interests
|
9
|
|
|
9
|
|
||
Comprehensive income attributable to Delphi Technologies
|
$
|
118
|
|
|
$
|
135
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
(Unaudited)
|
|
|||||
|
|
|
|
||||
|
(in millions)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
316
|
|
|
$
|
338
|
|
Restricted cash
|
1
|
|
|
1
|
|
||
Accounts receivable, net
|
1,058
|
|
|
1,090
|
|
||
Inventories, net (Note 4)
|
498
|
|
|
498
|
|
||
Other current assets (Note 5)
|
132
|
|
|
131
|
|
||
Total current assets
|
2,005
|
|
|
2,058
|
|
||
Long-term assets:
|
|
|
|
||||
Property, net
|
1,336
|
|
|
1,316
|
|
||
Investments in affiliates
|
39
|
|
|
37
|
|
||
Intangible assets and goodwill, net (Note 2)
|
79
|
|
|
82
|
|
||
Deferred income taxes (Note 13)
|
179
|
|
|
178
|
|
||
Other long-term assets (Note 5)
|
140
|
|
|
122
|
|
||
Total long-term assets
|
1,773
|
|
|
1,735
|
|
||
Total assets
|
$
|
3,778
|
|
|
$
|
3,793
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Short-term debt (Note 9)
|
$
|
23
|
|
|
$
|
20
|
|
Accounts payable
|
819
|
|
|
931
|
|
||
Accrued liabilities (Note 6)
|
467
|
|
|
445
|
|
||
Total current liabilities
|
1,309
|
|
|
1,396
|
|
||
Long-term liabilities:
|
|
|
|
||||
Long-term debt (Note 9)
|
1,507
|
|
|
1,515
|
|
||
Pension and other postretirement benefit obligations (Note 10)
|
546
|
|
|
531
|
|
||
Other long-term liabilities (Note 6)
|
114
|
|
|
119
|
|
||
Total long-term liabilities
|
2,167
|
|
|
2,165
|
|
||
Total liabilities
|
3,476
|
|
|
3,561
|
|
||
Commitments and contingencies (Note 11)
|
|
|
|
|
|
||
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, 88,764,927 and 88,613,262 issued and outstanding as of March 31, 2018 and December 31, 2017, respectively
|
1
|
|
|
1
|
|
||
Additional paid-in-capital
|
399
|
|
|
431
|
|
||
Retained earnings
|
90
|
|
|
7
|
|
||
Accumulated other comprehensive loss (Note 15)
|
(351
|
)
|
|
(371
|
)
|
||
Total Delphi Technologies shareholders’ equity
|
139
|
|
|
68
|
|
||
Noncontrolling interest
|
163
|
|
|
164
|
|
||
Total shareholders’ equity
|
302
|
|
|
232
|
|
||
Total liabilities and shareholders’ equity
|
$
|
3,778
|
|
|
$
|
3,793
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
105
|
|
|
$
|
111
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
46
|
|
|
44
|
|
||
Amortization
|
4
|
|
|
4
|
|
||
Amortization of deferred issuance costs
|
1
|
|
|
—
|
|
||
Restructuring expense, net of cash paid
|
(7
|
)
|
|
(14
|
)
|
||
Deferred income taxes
|
2
|
|
|
—
|
|
||
Pension and other postretirement benefit expenses
|
11
|
|
|
11
|
|
||
Income from equity method investments, net of dividends received
|
(3
|
)
|
|
(1
|
)
|
||
Share-based compensation
|
5
|
|
|
5
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(23
|
)
|
|
(96
|
)
|
||
Inventories
|
(1
|
)
|
|
(32
|
)
|
||
Other assets
|
(9
|
)
|
|
(17
|
)
|
||
Accounts payable
|
(74
|
)
|
|
(5
|
)
|
||
Accrued and other long-term liabilities
|
24
|
|
|
(10
|
)
|
||
Other, net
|
5
|
|
|
27
|
|
||
Pension contributions
|
(11
|
)
|
|
(11
|
)
|
||
Net cash provided by operating activities
|
75
|
|
|
16
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(66
|
)
|
|
(51
|
)
|
||
Proceeds from sale of property
|
1
|
|
|
—
|
|
||
Cost of technology investments
|
(7
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(72
|
)
|
|
(51
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net repayments under short-term debt agreements
|
(1
|
)
|
|
(1
|
)
|
||
Repayments under long-term debt agreements
|
(5
|
)
|
|
—
|
|
||
Dividend payments of consolidated affiliates to minority shareholders
|
(10
|
)
|
|
(10
|
)
|
||
Distribution of cash dividends
|
(15
|
)
|
|
—
|
|
||
Taxes withheld and paid on employees’ restricted share awards
|
(2
|
)
|
|
—
|
|
||
Other net transfers from Former Parent
|
—
|
|
|
2
|
|
||
Net cash used in financing activities
|
(33
|
)
|
|
(9
|
)
|
||
Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash
|
8
|
|
|
4
|
|
||
Decrease in cash, cash equivalents and restricted cash
|
(22
|
)
|
|
(40
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of the period
|
339
|
|
|
101
|
|
||
Cash, cash equivalents and restricted cash at end of the period
|
$
|
317
|
|
|
$
|
61
|
|
|
Ordinary Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Number of Shares
|
|
Amount
|
|
Additional Paid in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Total Delphi Technologies Shareholders’ Equity
|
|
Noncontrolling Interest
|
|
Total Shareholders’ Equity
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
(in millions)
|
|||||||||||||||||||||||||||||
Balance at January 1, 2018
|
89
|
|
|
$
|
1
|
|
|
$
|
431
|
|
|
$
|
7
|
|
|
$
|
(371
|
)
|
|
$
|
68
|
|
|
$
|
164
|
|
|
$
|
232
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
98
|
|
|
—
|
|
|
98
|
|
|
7
|
|
|
105
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
20
|
|
|
2
|
|
|
22
|
|
|||||||
Dividends on ordinary shares
|
—
|
|
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(15
|
)
|
|
(10
|
)
|
|
(25
|
)
|
|||||||
Separation related adjustments
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
(32
|
)
|
|||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||||
Taxes withheld on employees’ restricted share award vestings
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||||||
Balance at March 31, 2018
|
89
|
|
|
$
|
1
|
|
|
$
|
399
|
|
|
$
|
90
|
|
|
$
|
(351
|
)
|
|
$
|
139
|
|
|
$
|
163
|
|
|
$
|
302
|
|
Three Months Ended March 31, 2017
|
Expense Allocated
|
||
|
(in millions)
|
||
Cost of sales
|
$
|
11
|
|
Selling, general and administrative
|
33
|
|
|
Total allocated cost from Former Parent
|
$
|
44
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Productive material
|
$
|
236
|
|
|
$
|
217
|
|
Work-in-process
|
47
|
|
|
35
|
|
||
Finished goods
|
215
|
|
|
246
|
|
||
Total
|
$
|
498
|
|
|
$
|
498
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Value added tax receivable
|
$
|
57
|
|
|
$
|
59
|
|
Prepaid insurance and other expenses
|
12
|
|
|
6
|
|
||
Reimbursable engineering costs
|
16
|
|
|
20
|
|
||
Notes receivable
|
31
|
|
|
39
|
|
||
Income and other taxes receivable
|
5
|
|
|
5
|
|
||
Deposits to vendors
|
2
|
|
|
2
|
|
||
Return assets (Note 2)
|
9
|
|
|
—
|
|
||
Total
|
$
|
132
|
|
|
$
|
131
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Debt issuance costs
|
$
|
4
|
|
|
$
|
4
|
|
Income and other taxes receivable
|
64
|
|
|
57
|
|
||
Reimbursable engineering costs
|
2
|
|
|
—
|
|
||
Value added tax receivable
|
1
|
|
|
1
|
|
||
Investment in Tula (Note 2)
|
21
|
|
|
21
|
|
||
Investment in PolyCharge (Note 2)
|
7
|
|
|
—
|
|
||
Other
|
41
|
|
|
39
|
|
||
Total
|
$
|
140
|
|
|
$
|
122
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Payroll-related obligations
|
$
|
46
|
|
|
$
|
49
|
|
Employee benefits
|
17
|
|
|
29
|
|
||
Income and other taxes payable
|
66
|
|
|
63
|
|
||
Warranty obligations (Note 7)
|
67
|
|
|
64
|
|
||
Restructuring (Note 8)
|
56
|
|
|
54
|
|
||
Customer deposits
|
7
|
|
|
7
|
|
||
Freight
|
18
|
|
|
19
|
|
||
Outside services
|
15
|
|
|
14
|
|
||
Derivative financial instruments (Note 14)
|
4
|
|
|
—
|
|
||
Accrued interest
|
23
|
|
|
12
|
|
||
Deferred cost reimbursement
|
9
|
|
|
10
|
|
||
Accrued rebates
|
31
|
|
|
30
|
|
||
Deferred reimbursable engineering
|
23
|
|
|
14
|
|
||
Other
|
85
|
|
|
80
|
|
||
Total
|
$
|
467
|
|
|
$
|
445
|
|
|
March 31,
2018 |
|
December 31,
2017 |
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Environmental (Note 11)
|
$
|
3
|
|
|
$
|
3
|
|
Warranty obligations (Note 7)
|
32
|
|
|
33
|
|
||
Restructuring (Note 8)
|
41
|
|
|
47
|
|
||
Accrued income taxes
|
16
|
|
|
15
|
|
||
Deferred income taxes, net (Note 13)
|
14
|
|
|
14
|
|
||
Other
|
8
|
|
|
7
|
|
||
Total
|
$
|
114
|
|
|
$
|
119
|
|
|
Warranty Obligations
|
||
|
|
||
|
(in millions)
|
||
Accrual balance at beginning of period
|
$
|
97
|
|
Provision for estimated warranties incurred during the period
|
10
|
|
|
Changes in estimate for pre-existing warranties
|
3
|
|
|
Settlements made during the period (in cash or in kind)
|
(12
|
)
|
|
Foreign currency translation and other
|
1
|
|
|
Accrual balance at end of period
|
$
|
99
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Powertrain Systems
|
$
|
11
|
|
|
$
|
4
|
|
Delphi Technologies Aftermarket
|
—
|
|
|
6
|
|
||
Total
|
$
|
11
|
|
|
$
|
10
|
|
|
Employee Termination Benefits Liability
|
|
Other Exit Costs Liability
|
|
Total
|
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Accrual balance at January 1, 2018
|
$
|
98
|
|
|
$
|
3
|
|
|
$
|
101
|
|
Provision for estimated expenses incurred during the period
|
11
|
|
|
—
|
|
|
11
|
|
|||
Payments made during the period
|
(16
|
)
|
|
(2
|
)
|
|
(18
|
)
|
|||
Foreign currency and other
|
3
|
|
|
—
|
|
|
3
|
|
|||
Accrual balance at March 31, 2018
|
$
|
96
|
|
|
$
|
1
|
|
|
$
|
97
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
|
(in millions)
|
||||||
$750 million Term Loan A Facility, due 2022 (net of $5 and $5 unamortized issuance costs)
|
$
|
740
|
|
|
$
|
745
|
|
$800 million Senior Notes at 5.00%, due 2025 (net of $13 and $14 unamortized issuance costs and $4 and $4 discount, respectively)
|
783
|
|
|
782
|
|
||
Other
|
7
|
|
|
8
|
|
||
Total debt
|
1,530
|
|
|
1,535
|
|
||
Less: current portion
|
(23
|
)
|
|
(20
|
)
|
||
Long-term debt
|
$
|
1,507
|
|
|
$
|
1,515
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||
|
LIBOR plus
|
|
ABR plus
|
|
LIBOR plus
|
|
ABR plus
|
||||
Revolving Credit Facility
|
1.45
|
%
|
|
0.45
|
%
|
|
1.45
|
%
|
|
0.45
|
%
|
Term Loan A Facility
|
1.75
|
%
|
|
0.75
|
%
|
|
1.75
|
%
|
|
0.75
|
%
|
|
|
|
Borrowings as of
|
|
|
|||
|
|
|
March 31, 2018
|
|
Rate effective as of
|
|||
|
Applicable Rate
|
|
(in millions)
|
|
March 31, 2018
|
|||
Term Loan A Facility
|
LIBOR plus 1.75%
|
|
$
|
745
|
|
|
3.44
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Service cost
|
$
|
10
|
|
|
$
|
8
|
|
Interest cost
|
9
|
|
|
8
|
|
||
Expected return on plan assets
|
(14
|
)
|
|
(11
|
)
|
||
Amortization of actuarial losses
|
6
|
|
|
6
|
|
||
Net periodic benefit cost
|
$
|
11
|
|
|
$
|
11
|
|
|
Powertrain Systems
|
|
Delphi Technologies Aftermarket
|
|
Eliminations and Other (1)
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Internal Combustion Engine Products
|
$
|
867
|
|
|
$
|
—
|
|
|
$
|
(72
|
)
|
|
$
|
795
|
|
Electronics & Electrification
|
286
|
|
|
—
|
|
|
(2
|
)
|
|
284
|
|
||||
Independent Aftermarket
|
—
|
|
|
155
|
|
|
—
|
|
|
155
|
|
||||
Original Equipment Service
|
—
|
|
|
62
|
|
|
—
|
|
|
62
|
|
||||
Total
|
$
|
1,153
|
|
|
$
|
217
|
|
|
$
|
(74
|
)
|
|
$
|
1,296
|
|
For the Three Months Ended March 31, 2017:
|
|
|
|
|
|
|
|
||||||||
Internal Combustion Engine Products
|
$
|
775
|
|
|
$
|
—
|
|
|
$
|
(75
|
)
|
|
$
|
700
|
|
Electronics & Electrification
|
248
|
|
|
—
|
|
|
(2
|
)
|
|
246
|
|
||||
Independent Aftermarket
|
—
|
|
|
148
|
|
|
—
|
|
|
148
|
|
||||
Original Equipment Service
|
—
|
|
|
74
|
|
|
—
|
|
|
74
|
|
||||
Total
|
$
|
1,023
|
|
|
$
|
222
|
|
|
$
|
(77
|
)
|
|
$
|
1,168
|
|
(1)
|
Eliminations and Other includes the elimination of inter-segment transactions.
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in millions, except per share data)
|
||||||
Numerator:
|
|
|
|
||||
Net income attributable to Delphi Technologies
|
$
|
98
|
|
|
$
|
103
|
|
Denominator:
|
|
|
|
||||
Weighted average ordinary shares outstanding, basic
|
88.71
|
|
|
88.61
|
|
||
Dilutive shares related to restricted stock units (“RSUs”)
|
0.21
|
|
|
—
|
|
||
Weighted average ordinary shares outstanding, including dilutive shares
|
88.92
|
|
|
88.61
|
|
||
|
|
|
|
||||
Net income per share attributable to Delphi Technologies:
|
|
|
|
||||
Basic
|
$
|
1.10
|
|
|
$
|
1.16
|
|
Diluted
|
$
|
1.10
|
|
|
$
|
1.16
|
|
Anti-dilutive securities share impact
|
—
|
|
|
—
|
|
|
Dividend
|
|
Amount
|
||||
|
Per Share
|
|
(in millions)
|
||||
2018:
|
|
|
|
||||
First quarter
|
$
|
0.17
|
|
|
$
|
15
|
|
Total
|
$
|
0.17
|
|
|
$
|
15
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Foreign currency translation adjustments:
|
|
|
|
||||
Balance at beginning of period
|
$
|
(85
|
)
|
|
$
|
(419
|
)
|
Aggregate adjustment for the period (1)
|
29
|
|
|
28
|
|
||
Balance at end of period
|
(56
|
)
|
|
(391
|
)
|
||
|
|
|
|
||||
Gains (losses) on derivatives:
|
|
|
|
||||
Balance at beginning of period
|
—
|
|
|
—
|
|
||
Other comprehensive income before reclassifications (net tax effect of $0 and $0)
|
(1
|
)
|
|
—
|
|
||
Reclassification to income (net tax effect of $0 and $0)
|
—
|
|
|
—
|
|
||
Balance at end of period
|
(1
|
)
|
|
—
|
|
||
|
|
|
|
||||
Pension and postretirement plans:
|
|
|
|
||||
Balance at beginning of period
|
(286
|
)
|
|
(292
|
)
|
||
Other comprehensive income before reclassifications (net tax effect of $2 and $2)
|
(13
|
)
|
|
(1
|
)
|
||
Reclassification to income (net tax effect of $1 and $1)
|
5
|
|
|
5
|
|
||
Balance at end of period
|
(294
|
)
|
|
(288
|
)
|
||
|
|
|
|
||||
Accumulated other comprehensive loss, end of period
|
$
|
(351
|
)
|
|
$
|
(679
|
)
|
(1)
|
Includes losses of less than
$1 million
for the
three months ended
March 31, 2018
related to non-derivative net investment hedges. Refer to Note 16. Derivatives and Hedging Activities for further description of these hedges.
|
(1)
|
These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 10. Pension Benefits for additional details).
|
Foreign Currency
|
|
Quantity
Hedged |
|
Unit of
Measure |
|
Notional Amount
(USD Equivalent) |
|||
|
|
(in millions)
|
|||||||
Chinese Yuan Renminbi
|
|
373
|
|
|
RMB
|
|
$
|
60
|
|
Mexican Peso
|
|
344
|
|
|
MXN
|
|
20
|
|
|
Euro
|
|
16
|
|
|
EUR
|
|
20
|
|
|
Singapore Dollar
|
|
13
|
|
|
SGD
|
|
10
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|
Net Amounts of Assets and (Liabilities) Presented in the Balance Sheet
|
||||||||||
Balance Sheet Location*
|
|
March 31,
2018 |
|
Balance Sheet Location*
|
|
March 31,
2018 |
|
March 31,
2018 |
||||||
|
|
|
|
|
|
|
|
|
||||||
(in millions)
|
||||||||||||||
Designated as cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||
Accrued liabilities
|
|
$
|
—
|
|
|
Accrued liabilities
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
Other long-term liabilities
|
|
1
|
|
|
Other long-term liabilities
|
|
1
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
|
|
||||||
Total designated as hedges
|
|
$
|
1
|
|
|
|
|
$
|
2
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||||
Derivatives not designated as hedges:
|
|
|
|
|
|
|
|
|
||||||
Accrued liabilities
|
|
—
|
|
|
Accrued liabilities
|
|
3
|
|
|
(3
|
)
|
|||
Total not designated as hedges
|
|
$
|
—
|
|
|
|
|
$
|
3
|
|
|
|
Three Months Ended March 31, 2018
|
Gain (Loss) Recognized in OCI
|
|
Gain (Loss) Reclassified from OCI into Income
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Derivatives designated as cash flow hedges
|
$
|
(1
|
)
|
|
$
|
—
|
|
Total
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
Loss Recognized in Income
|
||
|
|
||
|
(in millions)
|
||
Derivatives not designated
|
$
|
(4
|
)
|
Total
|
$
|
(4
|
)
|
|
Total
|
|
Quoted Prices in Active Markets
Level 1 |
|
Significant Other Observable Inputs
Level 2 |
|
Significant Unobservable Inputs
Level 3 |
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
As of March 31, 2018:
|
|
||||||||||||||
Foreign currency derivatives
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
Total
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
Three Months Ended March 31,
|
||||||
|
2018
|
|
2017
|
||||
|
|
|
|
||||
|
(in millions)
|
||||||
Interest income
|
$
|
1
|
|
|
$
|
—
|
|
Components of net periodic benefit cost other than service cost (Note 10)
|
(1
|
)
|
|
(3
|
)
|
||
Other, net
|
6
|
|
|
(3
|
)
|
||
Other income (expense), net
|
$
|
6
|
|
|
$
|
(6
|
)
|
Metric
|
2018 Grant
|
|
|
2016 - 2017 Former Parent Grants
|
|
|
2013 - 2015 Former Parent Grants
|
Average return on net assets (1)
|
50%
|
|
|
50%
|
|
|
50%
|
Cumulative net income
|
25%
|
|
|
25%
|
|
|
N/A
|
Cumulative earnings per share (2)
|
N/A
|
|
|
N/A
|
|
|
30%
|
Relative total shareholder return (3)
|
25%
|
|
|
25%
|
|
|
20%
|
(1)
|
Average return on net assets is measured by the Company’s tax-affected operating income divided by average net working capital plus average net property, plant and equipment for each calendar year during the respective performance period.
|
(2)
|
Cumulative earnings per share is measured by net income attributable to Delphi Technologies divided by the weighted average number of diluted shares outstanding for 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 the defined period at the end of the performance period to the average closing price per share of the Company’s ordinary shares for the defined period at the beginning of the performance period, including dividends, and assessed against a comparable measure of competitor and peer group companies.
|
Grant Date
|
|
RSUs Granted
|
|
Grant Date Fair Value
|
|
Time-Based Award Vesting Dates
|
|
Performance-Based Award Vesting Date
|
|
|
(in millions)
|
|
|
|
|
||
February 2018
|
|
0.3
|
|
$16
|
|
Annually on the anniversary grant date, 2019-2021
|
|
December 31, 2020
|
|
RSUs
|
|
Weighted Average Grant Date Fair Value
|
|||
|
(in thousands)
|
|
|
|||
Nonvested, January 1, 2018
|
712
|
|
|
$
|
37.34
|
|
Granted
|
490
|
|
|
48.43
|
|
|
Vested
|
(100
|
)
|
|
37.29
|
|
|
Forfeited
|
(11
|
)
|
|
38.13
|
|
|
Nonvested, March 31, 2018
|
1,091
|
|
|
42.31
|
|
•
|
Powertrain Systems, which manufactures fuel injection systems as well as various other powertrain products including valvetrain, fuel delivery modules, ignition coils, canisters, sensors, valves and actuators. This segment also offers electronic control modules and corresponding software, algorithms and calibration that provide centralized and reliable management of various powertrain components. Additionally, we provide power electronics solutions that include supervisory controllers and software, along with DC/DC converters and inverters and on-board chargers that convert electricity to enable hybrid and electric vehicle propulsion systems.
|
•
|
Delphi Technologies Aftermarket, which sells aftermarket products to independent aftermarket and original equipment service customers. This segment also supplies a wide range of aftermarket products and services covering the fuel injection, electronics and engine management, maintenance, and test equipment and vehicle diagnostics categories.
|
•
|
Eliminations and Other, which includes the elimination of inter-segment transactions.
|
|
Powertrain Systems
|
|
Delphi Technologies Aftermarket
|
|
Eliminations
and Other (1) |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,153
|
|
|
$
|
217
|
|
|
$
|
(74
|
)
|
|
$
|
1,296
|
|
Depreciation & amortization
|
$
|
49
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
50
|
|
Adjusted operating income
|
$
|
142
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
159
|
|
Operating income
|
$
|
123
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
138
|
|
Equity income, net of tax
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Net income attributable to noncontrolling interest
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
Powertrain Systems
|
|
Delphi Technologies Aftermarket
|
|
Eliminations
and Other (1) |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2017:
|
|
|
|
|
|
|
|
||||||||
Net sales
|
$
|
1,023
|
|
|
$
|
222
|
|
|
$
|
(77
|
)
|
|
$
|
1,168
|
|
Depreciation & amortization
|
$
|
46
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
48
|
|
Adjusted operating income
|
$
|
150
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
162
|
|
Operating income
|
$
|
142
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
148
|
|
Equity income, net of tax
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Net income attributable to noncontrolling interest
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
(1)
|
Eliminations and Other includes the elimination of inter-segment transactions.
|
|
Powertrain Systems
|
|
Delphi Technologies Aftermarket
|
|
Eliminations
and Other |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Adjusted operating income
|
$
|
142
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
159
|
|
Restructuring
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||
Separation costs (1)
|
(8
|
)
|
|
(2
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Operating income
|
$
|
123
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
138
|
|
|
Interest expense
|
|
|
|
|
|
|
(20
|
)
|
|||||||
Other income, net
|
|
|
|
|
|
|
6
|
|
|||||||
Income before income taxes and equity income
|
|
|
|
|
|
|
124
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
(22
|
)
|
|||||||
Equity income, net of tax
|
|
|
|
|
|
|
3
|
|
|||||||
Net income
|
|
|
|
|
|
|
105
|
|
|||||||
Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
7
|
|
|||||||
Net income attributable to Delphi Technologies
|
|
|
|
|
|
|
$
|
98
|
|
(1)
|
Separation costs include incremental expenses associated with becoming a stand-alone publicly-traded company.
|
|
Powertrain Systems
|
|
Delphi Technologies Aftermarket
|
|
Eliminations
and Other |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2017:
|
|
|
|
|
|
|
|
||||||||
Adjusted operating income
|
$
|
150
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
162
|
|
Restructuring
|
(4
|
)
|
|
(6
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Asset impairments
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Operating income
|
$
|
142
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
148
|
|
|
Interest expense
|
|
|
|
|
|
|
(1
|
)
|
|||||||
Other expense, net
|
|
|
|
|
|
|
(6
|
)
|
|||||||
Income before income taxes and equity income
|
|
|
|
|
|
|
141
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
(31
|
)
|
|||||||
Equity income, net of tax
|
|
|
|
|
|
|
1
|
|
|||||||
Net income
|
|
|
|
|
|
|
111
|
|
|||||||
Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
8
|
|
|||||||
Net income attributable to Delphi Technologies
|
|
|
|
|
|
|
$
|
103
|
|
•
|
global and regional economic conditions, including conditions affecting the credit market and those resulting from the United Kingdom referendum held on June 23, 2016 in which voters approved an exit from the European Union, commonly referred to as “Brexit”;
|
•
|
risks inherent in operating as a global company, such as, fluctuations in interest rates and foreign currency exchange rates and economic, political and trade conditions around the world;
|
•
|
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;
|
•
|
potential changes to beneficial free trade laws and regulations such as the North American Free Trade Agreement;
|
•
|
the ability of the Company to achieve the intended benefits from its separation from its former parent or from acquisitions the Company may make;
|
•
|
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 or suppliers;
|
•
|
the ability of the Company to attract and retain customers;
|
•
|
new technologies that displace demand for our products and our ability to develop and commercialize new products to meet our customers’ needs;
|
•
|
changes in customer preferences and requirements, including any resultant inability to realize the sales represented by our bookings;
|
•
|
changes in the costs of raw materials;
|
•
|
the Company’s indebtedness, including the amount thereof and capital availability and cost;
|
•
|
the cost and outcome of any claims, legal proceedings or investigations;
|
•
|
the failure or breach of information technology systems;
|
•
|
severe weather conditions and natural disasters and any resultant disruptions on the supply or production of goods or services or customer demands;
|
•
|
acts of war and/or terrorism, as well as the impact of actions taken by governments as a result of further acts or threats of terrorism; and
|
•
|
the timing and occurrence (or non-occurrence) of other events or circumstances that may be beyond our control.
|
•
|
Separation from Delphi Automotive PLC
|
•
|
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
|
•
|
Expand Leadership in Technologies that Solve Our Customers’ Most Complex Challenges.
We are focused on providing technologies and solutions that solve some of our customers’ biggest propulsion-related challenges. Leveraging the breadth and depth of our engineering capabilities, we believe we have strong positions in fuel injectors, fuel pumps, variable valve timing and variable valve actuation. Additionally, we provide leading technology solutions in the areas of electronics and electrification, including engine control modules and power electronics, where we see above-market growth driven by increasing levels of electrification. Our power electronics technologies include products such as high-voltage inverters, DC/DC converters and on-board chargers that convert electricity to enable hybrid and electric vehicle propulsion systems. Our comprehensive portfolio of powertrain products helps customers meet increasingly stringent global regulatory requirements while also enhancing vehicle performance.
|
•
|
Focused Regional Strategies To Best Serve Our Customers’ Needs.
The combination of our global operating capabilities and our portfolio of advanced technologies help us serve our global customers’ local needs. We have a presence in all major global regions and have positioned ourselves as a leading supplier of advanced vehicle propulsion technologies, including electrification, that are tailored to satisfy our customers’ needs in each region. We believe our focus on providing customer solutions to meet increasingly stringent emissions and fuel efficiency regulations will collectively drive greater demand for our products and enable us to experience above-market growth.
|
•
|
Continue to Enhance Aftermarket Position.
Globally, we plan to gain scale by focusing on higher value, faster growing product lines such as electronics and services, which include diagnostics and remanufacturing. We also seek to accelerate growth by leveraging our regional product program strengths to expand our portfolio across regions. In addition, we expect to benefit from aftermarket growth in key markets around the world, including China.
|
•
|
Leverage Our Lean and Flexible Cost Structure to Deliver Strong Earnings and Cash Flow Growth
. We recognize the importance of maintaining a lean and flexible business model in order to deliver earnings and cash flow growth. We intend to improve our cost competitiveness by leveraging our enterprise operating system, continuously increasing operational efficiency, maximizing manufacturing output and rotating our facilities to best-cost countries. We have ongoing processes and resources dedicated to further improvement of our operations, and we expect to use our cash flow to reinvest in our business to drive growth.
|
•
|
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;
|
•
|
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.
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
Favorable/(unfavorable)
|
||||||
|
|
|
|
|
|
||||||
|
(dollars in millions)
|
||||||||||
Net sales
|
$
|
1,296
|
|
|
$
|
1,168
|
|
|
$
|
128
|
|
Cost of sales
|
1,046
|
|
|
926
|
|
|
(120
|
)
|
|||
Gross margin
|
250
|
|
19.3%
|
242
|
|
20.7%
|
8
|
|
|||
Selling, general and administrative
|
97
|
|
|
80
|
|
|
(17
|
)
|
|||
Amortization
|
4
|
|
|
4
|
|
|
—
|
|
|||
Restructuring
|
11
|
|
|
10
|
|
|
(1
|
)
|
|||
Operating income
|
138
|
|
|
148
|
|
|
(10
|
)
|
|||
Interest expense
|
(20
|
)
|
|
(1
|
)
|
|
(19
|
)
|
|||
Other income (expense), net
|
6
|
|
|
(6
|
)
|
|
12
|
|
|||
Income before income taxes and equity income
|
124
|
|
|
141
|
|
|
(17
|
)
|
|||
Income tax expense
|
(22
|
)
|
|
(31
|
)
|
|
9
|
|
|||
Income before equity income
|
102
|
|
|
110
|
|
|
(8
|
)
|
|||
Equity income, net of tax
|
3
|
|
|
1
|
|
|
2
|
|
|||
Net income
|
105
|
|
|
111
|
|
|
(6
|
)
|
|||
Net income attributable to noncontrolling interest
|
7
|
|
|
8
|
|
|
(1
|
)
|
|||
Net income attributable to Delphi Technologies
|
$
|
98
|
|
|
$
|
103
|
|
|
$
|
(5
|
)
|
|
Three Months Ended March 31,
|
|
|
Variance Due To:
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
Favorable/(unfavorable)
|
|
|
Volume, net of contractual price reductions
|
|
FX
|
|
Other
|
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(in millions)
|
|
|
|
||||||||||||||||||||||||
Total net sales
|
$
|
1,296
|
|
|
$
|
1,168
|
|
|
$
|
128
|
|
|
|
$
|
55
|
|
|
$
|
93
|
|
|
$
|
(20
|
)
|
|
$
|
128
|
|
|
Three Months Ended March 31,
|
|
|
Variance Due To:
|
||||||||||||||||||||||||||||
|
2018
|
|
2017
|
|
Favorable/(unfavorable)
|
|
|
Volume (a)
|
|
FX
|
|
Operational performance
|
|
Other
|
|
Total
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
(dollars in millions)
|
|
|
(in millions)
|
||||||||||||||||||||||||||||
Cost of sales
|
$
|
1,046
|
|
|
$
|
926
|
|
|
$
|
(120
|
)
|
|
|
$
|
(72
|
)
|
|
$
|
(49
|
)
|
|
$
|
4
|
|
|
$
|
(3
|
)
|
|
$
|
(120
|
)
|
Gross margin
|
$
|
250
|
|
|
$
|
242
|
|
|
$
|
8
|
|
|
|
$
|
(17
|
)
|
|
$
|
44
|
|
|
$
|
4
|
|
|
$
|
(23
|
)
|
|
$
|
8
|
|
Percentage of net sales
|
19.3
|
%
|
|
20.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Presented net of $16 million of contractual price reductions for gross margin variance.
|
•
|
$3 million of costs incurred during the
three months ended
March 31, 2018
related to commercial settlements;
|
•
|
$3 million of increased warranty costs during the
three months ended
March 31, 2018
;
|
•
|
The absence of a $17 million reduction to cost of sales during the
three months ended
March 31, 2017
related to a commercial agreement for reimbursement of previously incurred development costs, offset by $4 million of related asset impairments, in conjunction with a program cancellation by one of the Company’s OEM customers during the
three months ended
March 31, 2017
; offset by
|
•
|
Other favorable changes that primarily includes the absence of cost of sales related to the original equipment services business that remained with the Former Parent.
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
Favorable/
(unfavorable)
|
||||||
|
|
|
|
|
|
||||||
|
(dollars in millions)
|
||||||||||
Selling, general and administrative expense
|
$
|
97
|
|
|
$
|
80
|
|
|
$
|
(17
|
)
|
Percentage of net sales
|
7.5
|
%
|
|
6.8
|
%
|
|
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
Favorable/
(unfavorable)
|
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Amortization
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
Favorable/
(unfavorable)
|
||||||
|
|
|
|
|
|
||||||
|
(dollars in millions)
|
||||||||||
Restructuring
|
$
|
11
|
|
|
$
|
10
|
|
|
$
|
(1
|
)
|
Percentage of net sales
|
0.8
|
%
|
|
0.9
|
%
|
|
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
Favorable/
(unfavorable)
|
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Interest expense
|
$
|
20
|
|
|
$
|
1
|
|
|
$
|
(19
|
)
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
Favorable/
(unfavorable)
|
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Other income (expense), net
|
$
|
6
|
|
|
$
|
(6
|
)
|
|
$
|
12
|
|
•
|
An increase of $6 million related to remeasurement of cross currency intercompany loans;
|
•
|
A decrease of $2 million in the components of net periodic benefit cost other than service costs related to the Company’s defined benefit pension plans;
|
•
|
$1 million of rental income; and
|
•
|
$1 million of interest income.
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
2017
|
|
Favorable/
(unfavorable)
|
||||||
|
|
|
|
|
|
||||||
|
(in millions)
|
||||||||||
Income tax expense
|
$
|
22
|
|
|
$
|
31
|
|
|
$
|
9
|
|
•
|
Powertrain Systems, which manufactures fuel injection systems as well as various other powertrain products including valvetrain, fuel delivery modules, ignition coils, canisters, sensors, valves and actuators. This segment also offers electronic control modules and corresponding software, algorithms and calibration that provide centralized and reliable management of various powertrain components. Additionally, we provide power electronics solutions that include supervisory controllers and software, along with the DC/DC converters and inverters and on-board chargers that convert electricity to enable hybrid and electric vehicle propulsion systems.
|
•
|
Delphi Technologies Aftermarket, which sells aftermarket products to independent aftermarket and original equipment service customers. This segment also supplies a wide range of aftermarket products and services covering the fuel injection, electronics and engine management, maintenance, and test equipment and vehicle diagnostics categories.
|
•
|
Eliminations and Other, which includes the elimination of inter-segment transactions.
|
|
Powertrain Systems
|
|
Delphi Technologies Aftermarket
|
|
Eliminations
and Other |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2018:
|
|
|
|
|
|
|
|
||||||||
Adjusted operating income
|
$
|
142
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
159
|
|
Restructuring
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
||||
Separation costs (1)
|
(8
|
)
|
|
(2
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Operating income
|
$
|
123
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
138
|
|
|
Interest expense
|
|
|
|
|
|
|
(20
|
)
|
|||||||
Other income, net
|
|
|
|
|
|
|
6
|
|
|||||||
Income before income taxes and equity income
|
|
|
|
|
|
|
124
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
(22
|
)
|
|||||||
Equity income, net of tax
|
|
|
|
|
|
|
3
|
|
|||||||
Net income
|
|
|
|
|
|
|
105
|
|
|||||||
Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
7
|
|
|||||||
Net income attributable to Delphi Technologies
|
|
|
|
|
|
|
$
|
98
|
|
(1)
|
Separation costs include incremental expenses associated with becoming a stand-alone publicly-traded company.
|
|
Powertrain Systems
|
|
Delphi Technologies Aftermarket
|
|
Eliminations
and Other |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(in millions)
|
||||||||||||||
For the Three Months Ended March 31, 2017:
|
|
|
|
|
|
|
|
||||||||
Adjusted operating income
|
$
|
150
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
162
|
|
Restructuring
|
(4
|
)
|
|
(6
|
)
|
|
—
|
|
|
(10
|
)
|
||||
Asset impairments
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Operating income
|
$
|
142
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
148
|
|
|
Interest expense
|
|
|
|
|
|
|
(1
|
)
|
|||||||
Other expense, net
|
|
|
|
|
|
|
(6
|
)
|
|||||||
Income before income taxes and equity income
|
|
|
|
|
|
|
141
|
|
|||||||
Income tax expense
|
|
|
|
|
|
|
(31
|
)
|
|||||||
Equity income, net of tax
|
|
|
|
|
|
|
1
|
|
|||||||
Net income
|
|
|
|
|
|
|
111
|
|
|||||||
Net income attributable to noncontrolling interest
|
|
|
|
|
|
|
8
|
|
|||||||
Net income attributable to Delphi Technologies
|
|
|
|
|
|
|
$
|
103
|
|
|
Three Months Ended March 31,
|
|
|
Variance Due To:
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
Favorable/
(unfavorable)
|
|
|
Volume, net of contractual price reductions
|
|
FX
|
|
Other
|
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(in millions)
|
|
|
(in millions)
|
||||||||||||||||||||||||
Powertrain Systems
|
$
|
1,153
|
|
|
$
|
1,023
|
|
|
$
|
130
|
|
|
|
$
|
43
|
|
|
$
|
87
|
|
|
$
|
—
|
|
|
$
|
130
|
|
Delphi Technologies Aftermarket
|
217
|
|
|
222
|
|
|
(5
|
)
|
|
|
3
|
|
|
12
|
|
|
(20
|
)
|
|
(5
|
)
|
|||||||
Eliminations and Other
|
(74
|
)
|
|
(77
|
)
|
|
3
|
|
|
|
9
|
|
|
(6
|
)
|
|
—
|
|
|
3
|
|
|||||||
Total
|
$
|
1,296
|
|
|
$
|
1,168
|
|
|
$
|
128
|
|
|
|
$
|
55
|
|
|
$
|
93
|
|
|
$
|
(20
|
)
|
|
$
|
128
|
|
|
Three Months Ended March 31,
|
||||
|
2018
|
|
2017
|
||
Powertrain Systems
|
17.5
|
%
|
|
19.6
|
%
|
Delphi Technologies Aftermarket
|
22.1
|
%
|
|
18.5
|
%
|
Eliminations and Other
|
—
|
%
|
|
—
|
%
|
Total
|
19.3
|
%
|
|
20.7
|
%
|
|
Three Months Ended March 31,
|
|
|
Variance Due To:
|
||||||||||||||||||||||||
|
2018
|
|
2017
|
|
Favorable/
(unfavorable)
|
|
|
Volume, net of contractual price reductions
|
|
Operational performance
|
|
Other
|
|
Total
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(in millions)
|
|
|
(in millions)
|
||||||||||||||||||||||||
Powertrain Systems
|
$
|
142
|
|
|
$
|
150
|
|
|
$
|
(8
|
)
|
|
|
$
|
(20
|
)
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
(8
|
)
|
Delphi Technologies Aftermarket
|
17
|
|
|
12
|
|
|
5
|
|
|
|
1
|
|
|
1
|
|
|
3
|
|
|
5
|
|
|||||||
Eliminations and Other
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
|
$
|
159
|
|
|
$
|
162
|
|
|
$
|
(3
|
)
|
|
|
$
|
(19
|
)
|
|
$
|
7
|
|
|
$
|
9
|
|
|
$
|
(3
|
)
|
•
|
Favorable foreign currency impacts of $38 million;
|
•
|
Decreased costs of $6 million at our Delphi Technologies Aftermarket segment related to certain Brazilian legal matters during the
three months ended
March 31, 2017
; offset by
|
•
|
$3 million of costs incurred during the
three months ended
March 31, 2018
related to commercial settlements;
|
•
|
$3 million of increased warranty costs during the
three months ended
March 31, 2018
;
|
•
|
$13 million impact related to being a stand-alone publicly-traded company, including: the absence of the original equipment services business that remained with the Former Parent, incremental costs and inefficiencies associated with being a stand-alone publicly-traded company subsequent to the Separation and costs associated with the Transition Services Agreement and Contract Manufacturing Services Agreement entered with our Former Parent in connection with the Separation;
|
•
|
The absence of a $17 million reduction to cost of sales during the
three months ended
March 31, 2017
related to a commercial agreement for reimbursement of previously incurred development costs, in conjunction with a program cancellation by one of the Company’s OEM customers during the
three months ended
March 31, 2017
.
|
|
Dividend
|
|
Amount
|
||||
|
Per Share
|
|
(in millions)
|
||||
2018:
|
|
|
|
||||
First quarter
|
$
|
0.17
|
|
|
$
|
15
|
|
Total
|
$
|
0.17
|
|
|
$
|
15
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||
|
LIBOR plus
|
|
ABR plus
|
|
LIBOR plus
|
|
ABR plus
|
||||
Term Loan A Facility
|
1.75
|
%
|
|
0.75
|
%
|
|
1.75
|
%
|
|
0.75
|
%
|
|
|
|
Borrowings as of
|
|
|
|||
|
|
|
March 31, 2018
|
|
Rate effective as of
|
|||
|
Applicable Rate
|
|
(in millions)
|
|
March 31, 2018
|
|||
Term Loan A Facility
|
LIBOR plus 1.75%
|
|
$
|
745
|
|
|
3.44
|
%
|
Exhibit
Number
|
|
Description
|
*+10.1
|
|
|
*21.1
|
|
|
*31.1
|
|
|
*31.2
|
|
|
*32.1
|
|
|
*32.2
|
|
|
*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
|
|
|
|
|
|
DELPHI TECHNOLOGIES PLC
|
|
|
|
|
|
/s/ Vivid Sehgal
|
|
|
By: Vivid Sehgal
|
|
|
Chief Financial Officer
|
|
|
|
Participant
|
[NAME]
|
Number of Shares
|
|
Underlying Award
|
[#]
Shares (the “
RSU Shares
”)
|
Grant Date
|
April 26, 2018
(the “
Grant Date
”)
|
Vesting
|
Subject to Section 2, the RSU Shares shall vest on
April 24, 2019
(the “
Scheduled Vesting Date
”).
|
Business Entity
|
Ownership Form
|
Domestic Jurisdiction (Entity Owned)
|
Delphi Powertrain Corporation
|
Direct
|
Delaware
|
Delphi Powertrain Systems Management Limited
|
Direct
|
England and Wales
|
Delphi Powertrain Systems Holdings SARL
|
Direct
|
Luxembourg
|
Delphi Singapore Holdings Pte. Ltd.
|
Direct
|
Singapore
|
Delphi Singapore Investments Pte. Ltd.
|
Direct
|
Singapore
|
Delphi Automotive Systems Australia Ltd.
|
Indirect
|
Australia
|
Delphi Technologies IP Limited
|
Indirect
|
Barbados
|
Delphi Powertrain Systems Industria e Comercio Ltda
|
Indirect
|
Brazil
|
Beijing Delphi Wan Yuan Engine Management Systems Co., Ltd.
|
Indirect
|
China
|
Delphi Diesel Systems (Yantai) Co., Ltd.
|
Indirect
|
China
|
Delphi Shanghai Dynamics and Propulsion Systems Co., Ltd.
|
Indirect
|
China
|
Delphi Trading (Shanghai) Co., Ltd.
|
Indirect
|
China
|
Beijing Delphi Technology Development Co., Ltd.
|
Indirect
|
China
|
Delphi Technologies (Suzhou) Co., Ltd.
|
Indirect
|
China
|
Delphi Powertrain International Services, LLC
|
Indirect
|
Delaware
|
Delphi Powertrain Technologies General Partnership
|
Indirect
|
Delaware
|
Delphi Powertrain Systems, LLC
|
Indirect
|
Delaware
|
Delphi Technologies Financing UK Limited
|
Indirect
|
England and Wales
|
Delphi Automotive Operations UK Limited
|
Indirect
|
England and Wales
|
Delphi Diesel Systems Limited
|
Indirect
|
England and Wales
|
Delphi Diesel Systems Pension Trustees Limited
|
Indirect
|
England and Wales
|
Delphi Electronics Overseas Company Ltd
|
Indirect
|
England and Wales
|
Delphi Electronics Overseas Company Pensions Trustees Ltd
|
Indirect
|
England and Wales
|
Delphi Financial Operations UK Limited
|
Indirect
|
England and Wales
|
Delphi Financial Services (UK) Limited
|
Indirect
|
England and Wales
|
Delphi Lockheed Automotive Limited
|
Indirect
|
England and Wales
|
Delphi Lockheed Automotive Pension Trustees Limited
|
Indirect
|
England and Wales
|
Hartridge Limited
|
Indirect
|
England and Wales
|
Delphi France Holdings SAS
|
Indirect
|
France
|
Delphi France SAS
|
Indirect
|
France
|
Delphi Powertrain Systems Deutschland GmbH
|
Indirect
|
Germany
|
Delphi Powertrain Systems Hungary Kft
|
Indirect
|
Hungary
|
Delphi Propulsion Systems Private Limited
|
Indirect
|
India
|
Delphi Powertrain Systems Italia Srl
|
Indirect
|
Italy
|
Delphi Japan Limited Co.
|
Indirect
|
Japan
|
Delphi Powertrain Systems Korea Ltd
|
Indirect
|
Korea
|
Delphi Technologies Korea LLC
|
Indirect
|
Korea
|
Delphi Automotive Systems Luxembourg S.A.
|
Indirect
|
Luxembourg
|
Delphi Holdfi Holdings S.a.r.l.
|
Indirect
|
Luxembourg
|
Delphi Holdfi Luxembourg S.a.r.l.
|
Indirect
|
Luxembourg
|
Delphi Luxembourg Investments S.a.r.l.
|
Indirect
|
Luxembourg
|
Delphi Powertrain Systems Operations Luxembourg S.ar.l.
|
Indirect
|
Luxembourg
|
Delphi Technologies Holdings Luxembourg S.a.r.l.
|
Indirect
|
Luxembourg
|
Delphi Technologies Malta Holdings Limited
|
Indirect
|
Malta
|
AS Catalizadores Ambientales, S. de R.L.de C.V.
|
Indirect
|
Mexico
|
Delphi Diesel Systems, S. de R.L. de C.V.
|
Indirect
|
Mexico
|
Delphi Netherlands BV
|
Indirect
|
Netherlands
|
Delphi Canada Inc.
|
Indirect
|
Ontario
|
Delphi Powertrain Systems Poland sp, z.o.o.
|
Indirect
|
Poland
|
Delphi Powertrain Systems Portugal S.A.
|
Indirect
|
Portugal
|
D2 Industrial Development and Production SRL
|
Indirect
|
Romania
|
Delphi Diesel Systems Romania, SRL
|
Indirect
|
Romania
|
Closed Joint Stock Company “Delphi Samara”
|
Indirect
|
Russian Federation
|
Delphi Automotive Systems Singapore Investments Pte Ltd
|
Indirect
|
Singapore
|
Delphi Diesel Systems S.L.
|
Indirect
|
Spain
|
Delphi Automotive Taiwan Ltd.
|
Indirect
|
Taiwan
|
Delphi Otomotiv Sistemleri Sanayi ve Ticaret Anonim Sirketi
|
Indirect
|
Turkey
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Delphi Technologies PLC;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Liam Butterworth
|
|
Liam Butterworth
|
|
President & Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Delphi Technologies PLC;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Vivid Sehgal
|
|
Vivid Sehgal
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Liam Butterworth
|
|
Liam Butterworth
|
|
President & Chief Executive Officer
|
|
(Principal Executive Officer)
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Vivid Sehgal
|
|
Vivid Sehgal
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|