DELPHI 2015 Annual Report Download - page 103

Table of Contents
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Compensation expense is recognized based upon the grant date fair value of the awards applied to the Company's best estimate
of ultimate performance against the respective targets on a straight-line basis over the requisite vesting period of the awards.
The performance conditions require management to make assumptions regarding the likelihood of achieving certain
performance goals. Changes in these performance assumptions, as well as differences in actual results from management's
estimates, could result in estimated or actual values different from previously estimated fair values. Refer to Note 21. Share-
Based Compensation for additional information.
Business combinations—We account for our business combinations in accordance with the accounting guidance in
FASB ASC 805, Business Combinations. The purchase price of an acquired business is allocated to its identifiable assets and
liabilities based on estimated fair values. The excess of the purchase price over the amount allocated to the assets and liabilities,
if any, is recorded as goodwill. Determining the fair values of assets acquired and liabilities assumed requires management's
judgment, the utilization of independent appraisal firms and often involves the use of significant estimates and assumptions
with respect to the timing and amount of future cash flows, market rate assumptions, actuarial assumptions, and appropriate
discount rates, among other items. Refer to Note 20. Acquisitions and Divestitures for additional information.
Retrospective changes—Prior period information has been reclassified to present the Thermal Systems business as
discontinued operations for all periods presented, and has therefore been excluded from both continuing operations and
segment results for all periods presented in these consolidated financial statements and the notes to the consolidated financial
statements, unless otherwise noted. Refer to Note 25. Discontinued Operations for further information regarding the Company's
discontinued operations. Additionally, the Company adopted Accounting Standards Update ("ASU") 2015-03, as defined and
further described below, on a retrospective basis in 2015. In accordance with the adoption of this guidance, prior year amounts
related to deferred debt issuance costs associated with term debt have been reclassified from other long-term assets to long-
term debt in the consolidated balance sheet.
Recently issued accounting pronouncements—In April 2014, the FASB issued ASU 2014-08, 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
pre-tax 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. Delphi adopted this guidance effective January 1, 2015, and has applied it to the Company’s
discontinued operation classification of the Thermal Systems business, as further discussed in Note 25. Discontinued
Operations.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This ASU supersedes most of the
existing guidance on revenue recognition in Accounting Standards Codification ("ASC") Topic 605, Revenue Recognition and
establishes a broad principle that would require an entity to recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. To achieve this principle, an entity identifies the contract with a customer, identifies the separate
performance obligations in the contract, determines the transaction price, allocates the transaction price to the separate
performance obligations and recognizes revenue when each separate performance obligation is satisfied. The guidance is
currently effective for fiscal years beginning after December 15, 2017 and is to be applied retrospectively at the entity's election
either to each prior reporting period presented or with the cumulative effect of application recognized at the date of initial
application. Early adoption is permitted for fiscal years beginning after December 15, 2016. The Company is currently
evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award
Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This guidance requires that a
performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance
condition of the award. A reporting entity should apply existing guidance in ASC Topic 718, Compensation-Stock
Compensation, as it relates to such awards. The guidance is effective for fiscal years beginning after December 15, 2015, and
may be applied either prospectively or retrospectively. Delphi adopted this guidance effective January 1, 2015, and it did not
have a significant impact on Delphi's financial statements.
In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the
Presentation of Debt Issuance Costs. This guidance requires that debt issuance costs be presented as a direct reduction to the
carrying amount of the related debt in the balance sheet rather than as a deferred charge, consistent with the presentation of
discounts on debt. ASU 2015-15, Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent
Measurement of Debt Issuance Costs associated with Line-of-Credit Arrangements, was issued in August 2015 to clarify that
the U.S. Securities and Exchange Commission ("SEC") staff would not object to an entity deferring and presenting debt
issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs