DELPHI 2013 Annual Report Download - page 116

94
Cumulative Undistributed Foreign Earnings
No income taxes have been provided on indefinitely reinvested earnings of certain foreign subsidiaries aggregating $92
million at December 31, 2013. The amount of the unrecognized deferred income tax liability with respect to such earnings is
$27 million.
Withholding taxes of $59 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:
Year ended
December 31,
2013
Year ended
December 31,
2012
Year ended
December 31,
2011
(in millions)
Balance at beginning of year................................................................. $ 74 $ 99 $ 82
Liabilities assumed in acquisition....................................................... — 2 —
Additions related to current year......................................................... — 3 43
Additions related to prior years........................................................... 16 10 7
Reductions related to prior years ........................................................ (25)(40)(24)
Reductions due to expirations of statute of limitations....................... (4) — (6)
Settlements-cash.................................................................................. — — (3)
Balance at end of year ........................................................................... $ 61 $ 74 $ 99
A portion of the Company's unrecognized tax benefits would, if recognized, reduce its effective tax rate. The remaining
unrecognized tax benefits relate to tax positions for which only the timing of the benefit is uncertain. Recognition of these tax
benefits would reduce the Company’s effective tax rate only through a reduction of accrued interest and penalties. As of
December 31, 2013 and 2012, the amounts of unrecognized tax benefit that would reduce the Company’s effective tax rate
were $42 million and $57 million, respectively. In addition, $22 million and $23 million for 2013 and 2012, respectively, would
be offset by the write-off of a related deferred tax asset, if recognized.
The Company recognizes interest and penalties relating to unrecognized tax benefits as part of income tax expense. Total
accrued liabilities for interest and penalties were $15 million and $18 million at December 31, 2013 and 2012, respectively.
Total interest and penalties recognized as part of income tax expense was a $3 million benefit, a $3 million expense and a $3
million benefit for the years ended December 31, 2013, 2012 and 2011, respectively.
The Company files tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the
world. Taxing jurisdictions significant to Delphi include the China, Brazil, France, Germany, Mexico, Poland, the U.S. and the
U.K. Open tax years related to these taxing jurisdictions remain subject to examination and could result in additional tax
liabilities. In general, the Company's affiliates are no longer subject to income tax examinations by foreign tax authorities for
years before 2001. It is reasonably possible that audit settlements, the conclusion of current examinations or the expiration of
the statute of limitations in several jurisdictions could impact the Company’s unrecognized tax benefits.