DELPHI 2013 Annual Report Download - page 77

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Legal and Other Contingencies
We are involved from time to time in various legal proceedings and claims, including commercial or contractual disputes,
product liability claims, government investigations, product warranties and environmental and other matters, that arise in the
normal course of business. We routinely assess the likelihood of any adverse judgments or outcomes related to these matters, as
well as ranges of probable losses, by consulting with internal personnel involved with such matters as well as with outside legal
counsel handling such matters. We have accrued for estimated losses in accordance with U.S. GAAP for those matters where
we believe that the likelihood of a loss has occurred, is probable and the amount of the loss is reasonably estimable. The
determination of the amount of such reserves is based on knowledge and experience with regard to past and current matters and
consultation with internal personnel involved with such matters and with outside legal counsel handling such matters. The
amount of such reserves may change in the future due to new developments or changes in circumstances. The inherent
uncertainty related to the outcome of these matters can result in amounts materially different from any provisions made with
respect to their resolution.
Environmental Matters
Environmental remediation liabilities are recognized when a loss is probable and can be reasonably estimated. Such
liabilities generally are not subject to insurance coverage. The cost of each environmental remediation is estimated by
engineering, financial, and legal specialists based on current law and considers the estimated cost of investigation and
remediation required and the likelihood that, where applicable, other responsible parties will be able to fulfill their legal
obligations and commitments. The process of estimating environmental remediation liabilities is complex and dependent
primarily on the nature and extent of historical information and physical data relating to a contaminated site, the complexity of
the site, the uncertainty as to what remediation and technology will be required, and the outcome of discussions with regulatory
agencies and, if applicable, other responsible parties. In future periods, new laws or regulations, advances in remediation
technologies and additional information about the ultimate remediation methodology to be used could significantly change our
estimates. Refer to Note 13. Commitments and Contingencies to the audited consolidated financial statements included herein
for additional details. We cannot ensure that environmental requirements will not change or become more stringent over time or
that our eventual environmental costs and liabilities will not exceed the amount of current reserves. In the event that such
liabilities were to significantly exceed the amounts recorded, our results of operations could be materially affected.
Restructuring
Accruals have been recorded in conjunction with our restructuring actions. These accruals include estimates primarily
related to employee termination costs, contract termination costs and other related exit costs in conjunction with workforce
reduction and programs related to the rationalization of manufacturing and engineering processes. Actual costs may vary from
these estimates. These accruals are reviewed on a quarterly basis and changes to restructuring actions are appropriately
recognized when identified.
Pensions
We use actuarial estimated and related actuarial methods to calculate our obligation and expense. We are required to
select certain actuarial assumptions, which are determined based on current market conditions, historical information and
consultation with and input from our actuaries and asset managers. Refer to Note 12. Pension Benefits to the audited
consolidated financial statements included herein for additional details. The key factors which impact our estimates are
(1) discount rates; (2) asset return assumptions; and (3) actuarial assumptions such as retirement age and mortality which are
determined as of the current year measurement date. We review our actuarial assumptions on an annual basis and make
modifications to the assumptions based on current rates and trends when appropriate. Experience gains and losses, as well as
the effects of changes in actuarial assumptions and plan provisions are recognized in other comprehensive income. Cumulative
actuarial gains and losses in excess of 10% of the projected benefit obligation (“PBO”) for a particular plan are amortized over
the average future service period of the employees in that plan.
The principal assumptions used to determine the pension expense and the actuarial value of the projected benefit
obligation for the U.S. and non-U.S. pension plans were:
Assumptions used to determine benefit obligations at December 31:
Pension Benefits
U.S. Plans Non-U.S. Plans
2013 2012 2013 2012
Weighted-average discount rate................................................................................. 3.00% 2.40% 4.58% 4.41%
Weighted-average rate of increase in compensation levels....................................... N/A N/A 3.85% 3.50%