DELPHI 2014 Annual Report Download - page 113

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91
Debt securities—The fair value of debt securities is determined by direct quoted market prices on regulated financial
exchanges.
Equity securities—The fair value of equity securities is determined by direct quoted market prices on regulated financial
exchanges.
Fair Value Measurements Using Significant
Unobservable Inputs (Level 3)
Real Estate
Trust Fund Hedge Funds Insurance Contracts
(in millions)
Beginning balance at December 31, 2012....................................... $ 42 $ 91 $ 3
Actual return on plan assets:
Relating to assets still held at the reporting date...................... 2 4 —
Purchases, sales and settlements................................................... 1(5) 1
Ending balance at December 31, 2013............................................ $ 45 $ 90 $ 4
Actual return on plan assets:
Relating to assets still held at the reporting date...................... (5) 5 —
Purchases, sales and settlements................................................... 1 7 (3)
Ending balance at December 31, 2014............................................ $ 41 $ 102 $ 1
13. COMMITMENTS AND CONTINGENCIES
Ordinary Business Litigation
Delphi is from time to time subject to various legal actions and claims incidental to its business, including those arising
out of alleged defects, alleged breaches of contracts, product warranties, intellectual property matters, and employment-related
matters. It is the opinion of Delphi that the outcome of such matters will not have a material adverse impact on the consolidated
financial position, results of operations, or cash flows of Delphi. With respect to warranty matters, although Delphi cannot
ensure that the future costs of warranty claims by customers will not be material, Delphi believes its established reserves are
adequate to cover potential warranty settlements.
GM Ignition Switch Recall
In the first quarter of 2014, GM, Delphi’s largest customer, initiated a product recall related to ignition switches. Delphi
has received requests for information from, and is cooperating with, various government agencies related to this ignition switch
recall. In addition, Delphi has been named as a co-defendant along with GM (and in certain cases other parties) in product
liability and class action lawsuits related to this matter. During the second quarter of 2014, all of the class action cases were
transferred to the United States District Court for the Southern District of New York (the “District Court”) for coordinated
pretrial proceedings. Two consolidated amended class action complaints were filed in the District Court on October 14, 2014.
Delphi was not named as a defendant in either complaint. Delphi believes the allegations contained in the product liability
cases are without merit, and intends to vigorously defend against them. Although no assurances can be made as to the ultimate
outcome of these or any other future claims, Delphi does not believe a loss is probable and, accordingly, no reserve has been
made as of December 31, 2014.
Unsecured Creditors Litigation
Under the terms of the Fourth Amended and Restated Limited Liability Partnership Agreement of Delphi Automotive
LLP (the “Fourth LLP Agreement”), if cumulative distributions to the members of Delphi Automotive LLP under certain
provisions of the Fourth LLP Agreement exceed $7.2 billion, Delphi, as disbursing agent on behalf of DPHH, is required to pay
to the holders of allowed general unsecured claims against Old Delphi, $32.50 for every $67.50 in excess of $7.2 billion
distributed to the members, up to a maximum amount of $300 million. In December 2014, a complaint was filed in the
Bankruptcy Court alleging that the redemption by Delphi Automotive LLP of the membership interests of GM and the PBGC,
and the repurchase of shares and payment of dividends by Delphi Automotive PLC, constituted distributions under the terms of
the Fourth LLP Agreement approximating $7.2 billion. Delphi considers cumulative distributions through December 31, 2014
to be substantially below the $7.2 billion threshold, and intends to vigorously contest the allegations set forth in the complaint.
Accordingly, no accrual for this matter has been recorded as of December 31, 2014.