DELPHI 2012 Annual Report Download - page 47

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Brazil Matters
Delphi conducts significant business operations in Brazil that are subject to the Brazilian federal labor, social security,
environmental, tax and customs laws, as well as a variety of state and local laws. While Delphi believes it complies with such
laws, they are complex, subject to varying interpretations, and the Company is often engaged in litigation with government
agencies regarding the application of these laws to particular circumstances. In addition, Delphi also is a party to commercial
and labor litigation with private parties in Brazil. As of December 31, 2012, related claims totaling $215 million (using
December 31, 2012 foreign currency rates) have been asserted against Delphi. As of December 31, 2012, the Company
maintains accruals for these asserted claims of $38 million (using December 31, 2012 foreign currency rates). The amounts
accrued represent claims that are deemed probable of loss and are reasonably estimable based on the Company’s analyses and
assessment of the asserted claims and prior experience with similar matters. While the Company believes its accruals are
adequate, the final amounts required to resolve these matters could differ materially from the Company’s recorded estimates
and Delphi’s results of operations could be materially affected.
Iran Sanctions Disclosure
The Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRSHRA”), which was signed into law on August 10,
2012, includes a provision requiring issuers to disclose information relating to certain transactions with Iran or with persons or
entities designated under certain executive orders. Prior to the enactment of ITRSHRA, we had a longstanding policy of reviewing
and determining that any matter relating to possible transactions involving Iran did not violate applicable U.S. export controls and
sanctions laws, and we do not believe that we have conducted any transactions that violated applicable laws. During 2012, certain
of our non-U.S. affiliates engaged in transactions involving Iran in accordance with applicable law. Our non-U.S. affiliates have
ceased transactions involving Iran as of October 9, 2012, as required by ITRSHRA.
Prior to October 9, 2012, some of our non-U.S. affiliates sold items out of general inventory to non-U.S. distributors outside
of Iran, who sold those items to retail or automotive assembly, service, or repair establishments in Iran. The sales made to these
non-U.S. distributors of items that were subsequently resold into Iran totaled approximately $3.7 million and generated operating
income of approximately $0.7 million. In 2012, our non-U.S. affiliates received payments of approximately $2.7 million related
to these sales. The items were all non-U.S. origin automotive components which, if exported from the United States, would not
have required a U.S. export license (except for direct export to Iran and certain other very limited destinations or entities).
Our non-U.S. affiliates received payments from the distributors through banks outside of Iran. However, some of those
transactions may have involved transfers of funds to the distributors through Iranian Government-owned banks, and we are not
certain of the exact path of such transfers, and whether those transactions are therefore required to be disclosed under Section 13
(r)(1)(D)(iii) or otherwise of the Securities Exchange Act of 1934. The transactions disclosed herein were not prohibited under
any U.S. export controls and sanctions laws at the time the transactions were undertaken because they were not conducted by U.S.
persons or entities, did not involve ten percent (10%) or more U.S.-origin content, and were not otherwise prohibited.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.