DELPHI 2015 Annual Report Download - page 61

Table of Contents
39
Year Ended December 31, Variance Due To:
2015 2014
Favorable/
(unfavorable) Volume (a) FX
Operational
performance Other Total
(dollars in millions) (in millions)
Cost of sales.................... $ 12,155 $ 12,471 $ 316 $ (956) $ 897 $ 321 $ 54 $ 316
Gross margin................... $ 3,010 $ 3,028 $ (18) $ (56) $ (256) $ 321 $ (27) $ (18)
Percentage of net sales.... 19.8% 19.5%
(a) Presented net of contractual price reductions for gross margin variance.
The decrease in cost of sales reflects improved operational performance and the impacts from currency exchange,
partially offset by increased volumes before contractual price reductions for the period. The decrease in cost of sales is also
attributable to the following items in Other above:
• A decrease of $140 million in commodity costs; partially offset by
• Net increased costs of $38 million resulting from the operations of the businesses acquired and divested, as further
described in Note 20. Acquisitions and Divestitures;
• An increase of $12 million in warranty costs; and
• The net loss of $8 million recorded on business divestitures in 2015, comprised of $47 million in losses incurred on
the exit of our Argentina businesses, partially offset by the $39 million gain resulting from the sale of the Reception
Systems businesses, as further described in Note 20. Acquisitions and Divestitures.
Selling, General and Administrative Expense
Year Ended December 31,
2015 2014
Favorable/
(unfavorable)
(dollars in millions)
Selling, general and administrative expense ............................................................... $ 1,017 $ 1,036 $ 19
Percentage of net sales ................................................................................................ 6.7% 6.7%
Selling, general and administrative expense (“SG&A”) includes administrative expenses, information technology costs
and incentive compensation related costs, and was consistent as a percent of sales during the year ended December 31, 2015
compared to 2014. An increase in information technology costs and costs incurred for business acquisitions and other product
portfolio projects during the year ended December 31, 2015 was offset by reduced incentive compensation costs and amounts
paid to other service providers as compared to the prior year.
Amortization
Year Ended December 31,
2015 2014
Favorable/
(unfavorable)
(in millions)
Amortization ............................................................................................................... $ 93 $ 94 $ 1
Amortization expense reflects the non-cash charge related to definite-lived intangible assets primarily recognized as part
of the Acquisition and resulting from our business acquisitions. The consistency in amortization during the year ended
December 31, 2015 compared to 2014 reflects the continued amortization of our definite-lived intangible assets over their
estimated useful lives. Refer to Note 20. Acquisitions and Divestitures to the audited consolidated financial statements included
herein for further detail of our business acquisitions completed in 2014 and 2015, including details of the intangible assets
recorded in each transaction.
In 2016, we expect to incur non-cash amortization charges of approximately $136 million, which includes the charges
related to definite-lived intangible assets recognized as a result of the acquisitions completed in 2015, including the acquisition
of HellermannTyton on December 18, 2015.