DELPHI 2015 Annual Report Download - page 125

Table of Contents
103
As further described in Note 2. Significant Accounting Policies, the Company adopted ASU 2015-17, Income Taxes
(Topic 740): Balance Sheet Classification of Deferred Taxes, on a prospective basis in 2015. As a result, deferred tax liabilities
and assets are classified as long-term in the consolidated balance sheet as of December 31, 2015. Net current and non-current
deferred tax assets and liabilities are included in the consolidated balance sheets as follows:
December 31,
2015 2014
(in millions)
Current assets.................................................................................................................................. $ — $ 171
Current liabilities ............................................................................................................................ —(8)
Long-term assets............................................................................................................................. 238 232
Long-term liabilities ....................................................................................................................... (252)(162)
Total deferred tax (liability) asset................................................................................................. $(14) $ 233
The net deferred tax liabilities of $14 million as of December 31, 2015 are primarily comprised of deferred tax liability
amounts in the U.S., Germany and Japan, offset by deferred tax asset amounts in the U.K. and China.
Net Operating Loss and Tax Credit Carryforwards
As of December 31, 2015, the Company has gross deferred tax assets of approximately $902 million for non-U.S. net
operating loss (“NOL”) carryforwards with recorded valuation allowances of $787 million. These NOL’s are available to offset
future taxable income and realization is dependent on generating sufficient taxable income prior to expiration of the loss
carryforwards. The NOL’s primarily relate to France, Luxembourg and Spain. The NOL carryforwards have expiration dates
ranging from one year to an indefinite period. The NOL carryforwards available for use on tax returns are $910 million as of
December 31, 2015, which include approximately $8 million related to windfall tax benefits attributable to stock-based
compensation for which a benefit would be recorded in additional paid-in capital if and when realized.
Deferred tax assets include $53 million and $40 million of tax credit carryforwards with recorded valuation allowances of
$31 million and $27 million at December 31, 2015 and 2014, respectively. These tax credit carryforwards expire in 2016
through 2024.
Cumulative Undistributed Foreign Earnings
No income taxes have been provided on indefinitely reinvested earnings of certain foreign subsidiaries aggregating $429
million at December 31, 2015. The amount of the unrecognized deferred income tax liability with respect to such earnings is
$82 million.
Withholding taxes of $70 million have been accrued on undistributed earnings that are not indefinitely reinvested and are
primarily related to China, South Korea, Honduras, and Morocco. There are no other material liabilities for income taxes on the
undistributed earnings of foreign subsidiaries, as the Company has concluded that such earnings are either indefinitely
reinvested or should not give rise to additional income tax liabilities as a result of the distribution of such earnings.
Uncertain Tax Positions
The Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon
examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50
percent likely of being realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company's
tax returns that do not meet these recognition and measurement standards.
A reconciliation of the gross change in the unrecognized tax benefits balance, excluding interest and penalties is as
follows: