DELPHI 2015 Annual Report Download - page 160

Table of Contents
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(2) In the first quarter of 2015, Delphi recognized an after-tax impairment loss of $88 million within discontinued operations, in the second quarter of
2015, Delphi recognized an after-tax gain on the divestiture of discontinued operations of $285 million and in the third quarter of 2015, Delphi
recognized an after-tax gain on the divestiture of discontinued operations of $47 million.
(3) In the first quarter of 2015, Delphi recognized a loss on extinguishment of debt of $52 million.
(4) Due to the use of the weighted average shares outstanding for each quarter for computing earnings per share, the sum of the quarterly per share
amounts may not equal the per share amount for the year.
(5) In the first quarter of 2014, Delphi recognized a loss on extinguishment of debt of $34 million.
NOTE 25. DISCONTINUED OPERATIONS
During the first quarter of 2015, the Company determined that its previously reported Thermal Systems segment met the
criteria to be classified as a discontinued operation as a result of entering into a definitive agreement for the sale of substantially
all of the assets and liabilities of the Company's wholly owned Thermal Systems business and a commitment to a plan to
dispose of the Company's interests in two joint ventures which were previously reported within the Thermal Systems segment.
On June 30, 2015 the Company closed the sale of its wholly owned Thermal Systems business to MAHLE GmbH
("MAHLE"). The Company received cash proceeds of approximately $670 million and recognized a gain on the divestiture
within income from discontinued operations of $271 million (approximately $0.95 per diluted share), net of tax expense of $52
million, transaction costs of $10 million and $18 million of post-closing adjustments recorded in the fourth quarter of 2015
primarily related to settlement of working capital items and contingent liabilities. Consideration associated with the divestiture
remains subject to further post-closing adjustments, primarily related to working capital. In conjunction with the sale, Delphi
and MAHLE also entered into a transition services agreement under which Delphi will provide certain administrative and other
services, as well as a supply agreement under which Delphi will supply certain products, primarily for a period of up to
eighteen months following the closing of the transaction. Delphi recorded $8 million to other income (expense), net for the year
ended December 31, 2015 for certain fees earned pursuant to the transition services agreement.
Delphi and MAHLE also entered into a separate letter of intent regarding the sale of Delphi's 50 percent interest in its
Shanghai Delphi Automotive Air Conditioning ("SDAAC") joint venture, subject to customary regulatory and other approvals.
Subsequently, one of Delphi's joint venture partners, Shanghai Aerospace Automobile Electromechanical Co., Ltd ("SAAE"),
notified Delphi that it was exercising its right of first refusal to purchase Delphi's interest, and in October 2015, Delphi and
SAAE entered into a definitive agreement for the sale of Delphi's SDAAC interest. The sale is expected to close in the first half
of 2016, subject to customary regulatory and other approvals, and the Company expects to receive proceeds of approximately
$100 million. The financial results of SDAAC, which are consolidated by Delphi, were historically reported as part of the
Thermal Systems segment. Delphi's interest in this joint venture remains classified as held for sale as of December 31, 2015.
Additionally, on September 24, 2015 the Company closed the sale of its 50 percent interest in its Korea Delphi
Automotive Systems Corporation ("KDAC") joint venture, which was accounted for under the equity method and was
principally reported as part of the Thermal Systems segment, to the joint venture partner for net cash proceeds of $70 million.
During the year ended December 31, 2015, the Company recorded a net loss of $41 million (approximately $0.14 per diluted
share) on the KDAC divestiture within income from discontinued operations, which includes the $88 million impairment loss
recorded in the first quarter of 2015, as further described below.
As the divestiture of the Thermal Systems segment, including the Company's interests in SDAAC and KDAC and the
thermal original equipment service business, represents a strategic shift that will have a major effect on the Company's
operations and financial results, the assets and liabilities, operating results, and operating and investing cash flows for the
former Thermal Systems segment are presented as discontinued operations separate from the Company’s continuing operations
for all periods presented. Discontinued operations also includes the Company's thermal original equipment service business,
which was included in the sale of the wholly owned Thermal Systems business, the results of which were previously reported
within the Powertrain Systems segment. Certain operations, primarily related to contract manufacturing services, which were
previously included within the Thermal Systems reporting segment, were excluded from the scope of the divestiture, and are
reported in continuing operations within the Electronics and Safety segment for all periods presented. No amounts for shared
general and administrative operating expense or interest expense were allocated to discontinued operations. Delphi does not
anticipate significant continuing involvement with the divested Thermal Systems business following the closing of the
transactions.