DELPHI 2012 Annual Report Download - page 70

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Share Repurchases and Dividends from Equity Investees
In January 2012, the Board of Directors authorized a share repurchase program of up to $300 million of ordinary shares.
The program was scheduled to terminate on the earlier of December 31, 2012 or when the Company attained $300 million of
ordinary share repurchases, which was fully satisfied in September 2012. Subsequently, in September 2012, the Board of
Directors authorized a new share repurchase program of up to $750 million of ordinary shares. This program will terminate
when the Company attains $750 million of ordinary shares repurchases and provides for share repurchases in the open market
or in privately negotiated transactions, depending on share price, market conditions and other factors, as determined by the
Company. During the year ended December 31, 2012, Delphi repurchased 13,421,742 shares at an average price of $30.02,
which totaled approximately $403 million. Approximately $647 million of share repurchases remain available under the
program adopted in September 2012. All repurchased shares were retired.
During the year ended December 31, 2012, Delphi received a dividend of $62 million from one of its equity method
investments. The dividend was recognized as a reduction to the investment with $25 million representing a return on
investment included in cash flows from operating activities and $37 million representing a return of capital investment and
included in cash flows from investing activities.
To the extent we generate discretionary cash flow we may consider using this additional cash flow for optional
prepayments of existing indebtedness, strategic acquisitions, dividends on share capital, additional share repurchases, and/or
general corporate purposes.
Acquisition of Motorized Vehicles Division of FCI
On October 26, 2012, Delphi completed the acquisition of MVL for €765 million, or approximately $1 billion based on
exchange rates as of the date of the acquisition. MVL is a leading global manufacturer of automotive connection systems with a
focus on high-value, leading technology applications.
Upon completing the acquisition, Delphi incurred related transaction expenses totaling approximately $13 million. The
cash payments required to close the transaction were funded using existing cash on hand, including $363 million drawn in
October 2012 under the Credit Agreement.
The acquisition is being accounted for as a business combination, with the purchase price being allocated on a
preliminary basis using information available. The operating results of MVL are reported within the Electrical/Electronic
Architecture segment from the date of acquisition, and the integration of MVL is proceeding as planned.
Subsequent to announcing the transaction, in June 2012, the Company entered into €250 million of option contracts to
hedge a portion of the currency risk associated with the cash payment for the planned acquisition of MVL at a cost of $9
million. The options were unable to qualify as hedges for accounting purposes, and therefore, changes in the fair value of the
options were recognized in other income (expense), net. In the year ended December 31, 2012, the change in fair value resulted
in a $3 million loss. Subsequently, and in conjunction with the closing of the acquisition, the options were sold in October 2012
for $6 million.
Credit Agreement
In March 2011, in conjunction with the redemption of membership interests from Class A and Class C membership
interest holders, Delphi Corporation, a wholly-owned U.S. subsidiary of Delphi Automotive LLP (the "Issuer"), entered into a
credit agreement with JPMorgan Chase Bank, N.A., as lead arranger and administrative agent, with respect to $3.0 billion in
senior secured credit facilities (the "Credit Facilities"). The March 2011 credit agreement was amended and restated on
September 14, 2012 (as so amended, the “Credit Agreement”) and as of December 31, 2012 consists of a $1.3 billion 5-year
senior secured revolving credit facility (the “Revolving Credit Facility”), a senior secured 5-year term A loan in an original
amount of $258 million (the “Tranche A Term Loan”) and a senior secured 6-year term B loan in an original amount of $950
million (the “Tranche B Term Loan”). As part of the amendment in September 2012, the Company increased its borrowing
capacity under the Tranche A Term Loan by $363 million, which was used in connection with financing the acquisition of
MVL. Effective October 11, 2012, the $363 million was fully drawn in conjunction with the anticipated closing of the MVL
acquisition on October 26, 2012. Delphi paid approximately $86 million of debt issuance costs in connection with the Credit
Agreement in March 2011, of which approximately $10 million has been extinguished, and approximately $5 million in
issuance costs (including $3 million in original issue discount to be netted against the additional borrowings drawn in October
2012) were paid in conjunction with the amendment in September 2012. The debt issuance costs are being amortized over the
life of the facility. The maximum amount drawn under the Revolving Credit Facility during the year ended December 31, 2012
to manage intra-month working capital needs was $210 million. The Revolving Credit Facility was undrawn at December 31,
2012. As of December 31, 2012, Delphi had approximately $9 million in letters of credit issued under the Credit Agreement.
Letters of credit issued under the Credit Agreement reduce availability under the Revolving Credit Facility.