DELPHI 2013 Annual Report Download - page 45

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Delphi Automotive LLP, which acquired certain businesses of the Predecessor on October 6, 2009 (the “Acquisition
Date”), was established on August 19, 2009 as a limited liability partnership incorporated under the laws of England and Wales.
At the time of its formation, Delphi Automotive LLP elected to be treated as a partnership for U.S. federal income tax purposes.
We believe there is a significant risk that the Internal Revenue Service (the “IRS”) may assert that Delphi Automotive LLP, and
as a result Delphi Automotive PLC, should be treated as a domestic corporation for U.S. federal income tax purposes,
retroactive to the Acquisition Date. If Delphi Automotive LLP were treated as a domestic corporation for U.S. federal income
tax purposes, we expect that, although Delphi Automotive PLC incorporated under the laws of Jersey and is a tax resident in
the U.K., it would also be treated as a domestic corporation for U.S. federal income tax purposes.
Delphi Automotive LLP filed U.S. federal partnership tax returns for 2009, 2010 and 2011. The IRS is currently
reviewing whether Section 7874 applies to Delphi Automotive LLP’s acquisition of certain businesses of the Predecessor. We
believe, after consultation with counsel, that neither Delphi Automotive LLP nor Delphi Automotive PLC should be treated as
domestic corporations for U.S. federal income tax purposes, and intend to vigorously contest any assertion by the IRS to the
contrary, including through litigation if we were unable to reach a satisfactory resolution with the IRS. However, no assurance
can be given that the IRS will not contend, or that a court will not conclude, that Delphi Automotive LLP, and therefore Delphi
Automotive PLC, should be treated as a domestic corporation for U.S. federal income tax purposes. No accrual for this matter
has been recorded as of December 31, 2013.
If these entities were treated as domestic corporations for U.S. federal income tax purposes, the Company would be
subject to U.S. federal income tax on its worldwide taxable income, including distributions, as well as deemed income
inclusions from some of its non-U.S. subsidiaries. This could have a material adverse impact on our income tax liability in the
future. However, the Company may also benefit from deducting certain expenses that are currently not deducted in the U.S. As
a U.S. company, any dividends we pay to non-U.S. shareholders could also be subject to U.S. federal income tax withholding at
a rate of 30% (unless reduced or eliminated by an income tax treaty), and it is possible that tax may be withheld on such
dividends in certain circumstances even before a final determination has been made with respect to the Company's U.S. income
tax status. In addition, we could be liable for the failure by Delphi Automotive LLP to withhold U.S. federal income taxes on
distributions to its non-U.S. members for periods beginning on or after the Acquisition Date.
Taxing authorities could challenge our historical and future tax positions.
The amount of tax we pay is subject to our interpretation of applicable tax laws in the jurisdictions in which we file. We
have taken and will continue to take tax positions based on our interpretation of such tax laws. In particular, we will seek to run
ourselves in such a way that we are and remain tax resident in the United Kingdom. While we believe that we have complied
with all applicable tax laws, there can be no assurance that a taxing authority will not have a different interpretation of the law
and assess us with additional taxes. Should additional taxes be assessed, this may result in a material adverse effect on our
results of operations and financial condition.
ITEM 1B. UNRESOLVED STAFF COMMENTS
We have no unresolved SEC staff comments to report.
ITEM 2. PROPERTIES
As of December 31, 2013, we owned or leased 126 major manufacturing sites and 15 major technical centers in 32
countries. A manufacturing site may include multiple plants and may be wholly or partially owned or leased. We also have
many smaller manufacturing sites, sales offices, warehouses, engineering centers, joint ventures and other investments
strategically located throughout the world. The following table shows the regional distribution of our major manufacturing sites
by the operating segment that uses such facilities:
North
America
Europe,
Middle East
& Africa Asia
Pacific South America Total
Electrical/Electronic Architecture.............. 29 22 19 8 78
Powertrain Systems.................................... 4 10 5 2 21
Electronics and Safety................................ 3 9 3 1 16
Thermal Systems........................................ 3 2 5 1 11
Total............................................................ 39 43 32 12 126
In addition to these manufacturing sites, we had 15 major technical centers: five in North America; five in Europe,
Middle East and Africa; four in Asia Pacific; and one in South America.