DELPHI 2015 Annual Report Download - page 102

Table of Contents
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fulfill their 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 at multi-party sites. 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 estimates by Delphi. Refer to Note 13. Commitments and Contingencies for additional information.
Asset retirement obligations—Asset retirement obligations are recognized in accordance with FASB ASC 410, Asset
Retirement and Environmental Obligations. Conditional retirement obligations have been identified primarily related to
asbestos abatement at certain sites. To a lesser extent, conditional retirement obligations also exist at certain sites related to the
removal of storage tanks and polychlorinated biphenyl disposal costs. Asset retirement obligations were $2 million and $3
million at December 31, 2015 and 2014, respectively.
Customer concentrations—As reflected in the table below, net sales to GM and VW, Delphi's two largest customers,
totaled approximately 22%, 25% and 24% of our total net sales for the years ended December 31, 2015, 2014 and 2013,
respectively.
Percentage of Total Net Sales Accounts and Other Receivables
Year Ended December 31, December 31,
2015
December 31,
20142015 2014 2013
(in millions)
GM ................................................................... 14% 16% 15% $ 289 $ 301
VW ................................................................... 8% 9% 9% 186 187
Derivative financial instruments—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.
Exposure to fluctuations in currency exchange rates, interest rates and certain commodity prices are managed by entering
into a variety of forward contracts and swaps with various counterparties. Such financial exposures are managed in accordance
with the policies and procedures of Delphi. Delphi does not enter into derivative transactions for speculative or trading
purposes. As part of the hedging program approval process, Delphi identifies the specific financial risk which the derivative
transaction will minimize, the appropriate hedging instrument to be used to reduce the risk and the correlation between the
financial risk and the hedging instrument. Purchase orders, sales contracts, letters of intent, capital planning forecasts and
historical data are used as the basis for determining the anticipated values of the transactions to be hedged. Delphi does not
enter into derivative transactions that do not have a high correlation with the underlying financial risk. Hedge positions, as well
as the correlation between the transaction risks and the hedging instruments, are reviewed on an ongoing basis.
Foreign exchange forward contracts are accounted for as hedges of firm or forecasted foreign currency commitments to
the extent they are designated and assessed as highly effective. All foreign exchange contracts are marked to market on a
current basis. Commodity swaps are accounted for as hedges of firm or anticipated commodity purchase contracts to the extent
they are designated and assessed as effective. All other commodity derivative contracts that are not designated as hedges are
either marked to market on a current basis or are exempted from mark to market accounting as normal purchases. At
December 31, 2015 and 2014, the exposure to movements in interest rates was not hedged with derivative instruments. Refer to
Note 17. Derivatives and Hedging Activities and Note 18. Fair Value of Financial Instruments for additional information.
Extended disability benefits—Costs associated with extended disability benefits provided to inactive employees are
accrued throughout the duration of their active employment. Workforce demographic data and historical experience are utilized
to develop projections of time frames and related expense for postemployment benefits.
Workers’ compensation benefits—Workers’ compensation benefit accruals are actuarially determined and are subject to
the existing workers’ compensation laws that vary by location. Accruals for workers’ compensation benefits represent the
discounted future cash expenditures expected during the period between the incidents necessitating the employees to be idled
and the time when such employees return to work, are eligible for retirement or otherwise terminate their employment.
Share-based compensation—Our share-based compensation arrangements consist of the Delphi Automotive PLC Long
Term Incentive Plan, as amended and restated effective April 23, 2015 (the “PLC LTIP”), under which grants of restricted stock
units (“RSUs”) to Delphi's executives were made in each period from 2012 to 2015. The RSU awards include a time-based
vesting portion and a performance-based vesting portion. The performance-based vesting portion includes performance and
market conditions in addition to service conditions. The grant date fair value of the RSUs is 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, or a
contemporaneous valuation performed by an independent valuation specialist with respect to awards with market conditions.