DELPHI 2015 Annual Report Download - page 140

Table of Contents
118
Acquisition of Ottomatika, Inc.
On July 23, 2015, Delphi acquired 100% of the equity interests of Ottomatika, Inc. ("Ottomatika"), an automated vehicle
software developer, for total consideration of $32 million. The Company paid $16 million at closing utilizing cash on hand,
with additional cash payments totaling $11 million deferred over a period of 3 years and additional contingent consideration of
up to $5 million contingent upon the achievement of certain product development milestones over a 3-year period. The range of
the undiscounted amounts the Company could be required to pay under this arrangement is between $0 and $5 million. As of
the closing date of the acquisition, the contingent consideration was assigned a fair value of approximately $5 million. Refer to
Note 18. Fair Value of Financial Instruments for additional information regarding the measurement of the contingent
consideration liability. The results of operations of Ottomatika are reported within the Electronics and Safety segment from the
date of acquisition. Delphi previously held a convertible debt investment in Ottomatika, and as a result of this transaction
recognized a gain on its previously held investment of $2 million within other income (expense), net in the consolidated
statement of operations as a result of remeasuring this investment to fair value.
The acquisition was accounted for as a business combination. The purchase price and related allocation to the acquired
net assets of Ottomatika based on their estimated fair values is shown below (in millions):
Assets acquired and liabilities assumed
Purchase price, cash consideration......................................................................................................................... $ 16
Purchase price, deferred consideration................................................................................................................... 11
Purchase price, fair value of contingent consideration .......................................................................................... 5
Fair value of previously held investment ............................................................................................................... 4
Total purchase price........................................................................................................................................... $ 36
Indefinite-lived intangible assets............................................................................................................................ $ 24
Definite-lived intangible assets .............................................................................................................................. 1
Other liabilities, net ................................................................................................................................................ (8)
Identifiable net assets acquired.......................................................................................................................... 17
Goodwill resulting from purchase.......................................................................................................................... 19
Total purchase price allocation.......................................................................................................................... $ 36
Intangible assets include amounts recognized for the fair value of in-process research and development, which will not be
amortized, but tested for impairment until the completion or abandonment of the associated research and development efforts,
and non-competition agreements, which will be amortized over their estimated useful lives of approximately 4 years. The fair
value of these assets was generally estimated utilizing income and market approaches.
The pro forma effects of this acquisition would not materially impact the Company's reported results for any period
presented, and as a result no pro forma financial statements are presented.
Sale of Reception Systems Business
On July 31, 2015, Delphi completed the sale of its Reception Systems business for net cash proceeds of approximately
$25 million and $39 million of buyer-assumed pension liabilities. The net sales of this business, which was previously reported
within the Electronics and Safety segment, were approximately $55 million for the six months ended June 30, 2015. Delphi
recognized a pre-tax gain on the divestiture of $39 million, which is included in cost of sales in the consolidated statement of
operations. The results of operations of this business, including the gain on divestiture, were not significant to the consolidated
financial statements for any period presented, and the divestiture did not meet the discontinued operations criteria.
Sale of Thermal Systems Business
On June 30, 2015, Delphi completed the sale of the Company's wholly owned Thermal Systems business. On September
24, 2015, Delphi completed the sale of its interest in its KDAC joint venture. The Company has also entered into a separate
agreement for the sale of its interest in its SDAAC joint venture, which is classified as held for sale as of December 31, 2015.
Delphi's interests in these joint ventures were previously reported within the Thermal Systems segment. Accordingly, the results
of the Thermal Systems business are classified as discontinued operations. Refer to Note 25. Discontinued Operations for
further disclosure related to the Company's discontinued operations and the related assets and liabilities classified as held for
sale as of December 31, 2015.