0. 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, aftermarket, and original equipment service.


•	Electronics and Safety, which includes component and systems integration expertise in infotainment and connectivity, body controls and security systems, displays, mechatronics, passive and active safety electronics and electric and hybrid electric vehicle power electronics, as well as advanced development of software.


•	Thermal Systems, which includes heating, ventilating and air conditioning (“HVAC”) systems, components for multiple transportation and other adjacent markets, and powertrain cooling and related technologies.


•	Eliminations and Other, which includes i) the elimination of inter-segment transactions, and ii) certain other expenses and income of a non-operating or strategic nature.

The accounting policies of the segments are the same as those described in Note 2. Significant Accounting Policies, except that the disaggregated financial results for the segments have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting internal operating decisions. Generally, Delphi evaluates performance based on stand-alone segment net income before interest expense, other income (expense), net, income tax expense, restructuring, other acquisition-related costs, asset impairments and equity income (loss), net of tax (“Adjusted Operating Income”) and accounts for inter-segment sales and transfers as if the sales or transfers were to third parties, at current market prices. Through December 31, 2013, the Company’s management believed that net income before depreciation and amortization (including long-lived asset and goodwill impairment), interest expense, other income (expense), net, income tax expense, equity income (loss), net of tax, restructuring and other acquisition-related costs (“Adjusted EBITDA”) was a meaningful measure of performance and it was used by management to analyze Company and stand-alone segment operating performance. Management also used Adjusted EBITDA for planning and forecasting purposes. Effective January 1, 2014, Delphi’s management began utilizing Adjusted Operating Income as the key performance measure of segment income or loss and for planning and forecasting purposes, as management believes this measure is most reflective of the operational profitability or loss of Delphi's operating segments. Segment Adjusted Operating Income should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Delphi, which is the most directly comparable financial measure to Adjusted Operating Income that is in accordance with U.S. GAAP. Segment Adjusted Operating Income, as determined and measured by Delphi, should also not be compared to similarly titled measures reported by other companies.

Included below are sales and operating data for Delphi’s segments for the three and six months ended June 30, 2014 and 2013.



	Electrical/ Electronic Architecture		Powertrain Systems		Electronics and Safety		Thermal Systems		Eliminations and Other (1)			Total

	(in millions)
For the Three Months Ended June 30, 2014:
Net sales	$	2,165	$	1,198	$	753	$	397	$	(62	)	$	4,451
Depreciation and amortization	$	65	$	48	$	21	$	12	$	—		$	146
Adjusted operating income	$	298	$	142	$	89	$	18	$	—		$	547
Operating income	$	283	$	105	$	84	$	16	$	—		$	488
Equity income (loss)	$	4	$	—	$	—	$	7	$	(1	)	$	10
Net income attributable to noncontrolling interest	$	10	$	9	$	—	$	5	$	—		$	24



	Electrical/ Electronic Architecture		Powertrain Systems		Electronics and Safety		Thermal Systems		Eliminations and Other (1)			Total

	(in millions)
For the Three Months Ended June 30, 2013:
Net sales	$	2,044	$	1,161	$	725	$	373	$	(63	)	$	4,240
Depreciation and amortization	$	59	$	44	$	18	$	11	$	—		$	132
Adjusted operating income	$	266	$	146	$	89	$	12	$	—		$	513
Operating income	$	254	$	142	$	75	$	12	$	—		$	483
Equity income (loss)	$	4	$	3	$	—	$	3	$	—		$	10
Net income attributable to noncontrolling interest	$	10	$	8	$	—	$	4	$	—		$	22



	Electrical/ Electronic Architecture		Powertrain Systems		Electronics and Safety		Thermal Systems		Eliminations and Other (1)			Total

	(in millions)
For the Six Months Ended June 30, 2014:
Net sales	$	4,276	$	2,302	$	1,483	$	786	$	(120	)	$	8,727
Depreciation and amortization	$	129	$	99	$	40	$	23	$	—		$	291
Adjusted operating income	$	571	$	257	$	172	$	30	$	—		$	1,030
Operating income	$	541	$	218	$	161	$	27	$	—		$	947
Equity income (loss)	$	10	$	2	$	—	$	9	$	(3	)	$	18
Net income attributable to noncontrolling interest	$	17	$	18	$	—	$	10	$	—		$	45



	Electrical/ Electronic Architecture		Powertrain Systems		Electronics and Safety		Thermal Systems		Eliminations and Other (1)			Total

	(in millions)
For the Six Months Ended June 30, 2013:
Net sales	$	3,965	$	2,268	$	1,418	$	733	$	(120	)	$	8,264
Depreciation and amortization	$	113	$	92	$	36	$	22	$	—		$	263
Adjusted operating income	$	497	$	260	$	161	$	26	$	—		$	944
Operating income	$	472	$	248	$	136	$	24	$	—		$	880
Equity income (loss)	$	7	$	3	$	—	$	8	$	—		$	18
Net income attributable to noncontrolling interest	$	20	$	16	$	—	$	8	$	—		$	44


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

The reconciliation of Adjusted Operating Income to Operating Income includes restructuring, other acquisition-related costs and asset impairments. The reconciliation of Adjusted Operating Income to net income attributable to Delphi for the three and six months ended June 30, 2014 and 2013 are as follows:



	Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total

	(in millions)
For the Three Months Ended June 30, 2014:
Adjusted operating income	$	298		$	142		$	89		$	18		$	—	$	547
Restructuring	(13		)	(37		)	(3		)	(2		)	—		(55		)
Other acquisition-related costs	(1		)	—			—			—			—		(1		)
Asset impairments	(1		)	—			(2		)	—			—		(3		)
Operating income	$	283		$	105		$	84		$	16		$	—	488
Interest expense															(33		)
Other income, net															3
Income before income taxes and equity income															458
Income tax expense															(62		)
Equity income, net of tax															10
Net income															406
Net income attributable to noncontrolling interest															24
Net income attributable to Delphi															$	382



	Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems		Eliminations and Other		Total

	(in millions)
For the Three Months Ended June 30, 2013:
Adjusted operating income	$	266		$	146		$	89		$	12	$	—	$	513
Restructuring	(8		)	(4		)	(14		)	—		—		(26		)
Other acquisition-related costs	(4		)	—			—			—		—		(4		)
Operating income	$	254		$	142		$	75		$	12	$	—	483
Interest expense														(36		)
Other income, net														5
Income before income taxes and equity income														452
Income tax expense														(73		)
Equity income, net of tax														10
Net income														389
Net income attributable to noncontrolling interest														22
Net income attributable to Delphi														$	367



	Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total

	(in millions)
For the Six Months Ended June 30, 2014:
Adjusted operating income	$	571		$	257		$	172		$	30		$	—	$	1,030
Restructuring	(26		)	(39		)	(9		)	(3		)	—		(77		)
Other acquisition-related costs	(3		)	—			—			—			—		(3		)
Asset impairments	(1		)	—			(2		)	—			—		(3		)
Operating income	$	541		$	218		$	161		$	27		$	—	947
Interest expense															(68		)
Other income, net															(13		)
Income before income taxes and equity income															866
Income tax expense															(137		)
Equity income, net of tax															18
Net income															747
Net income attributable to noncontrolling interest															45
Net income attributable to Delphi															$	702



	Electrical/ Electronic Architecture			Powertrain Systems			Electronics and Safety			Thermal Systems			Eliminations and Other		Total

	(in millions)
For the Six Months Ended June 30, 2013:
Adjusted operating income	$	497		$	260		$	161		$	26		$	—	$	944
Restructuring	(19		)	(12		)	(25		)	(2		)	—		(58		)
Other acquisition-related costs	(6		)	—			—			—			—		(6		)
Operating income	$	472		$	248		$	136		$	24		$	—	880
Interest expense															(72		)
Other income, net															(29		)
Income before income taxes and equity income															779
Income tax expense															(110		)
Equity income, net of tax															18
Net income															687
Net income attributable to noncontrolling interest															44
Net income attributable to Delphi															$	643