DELPHI 2015 Annual Report Download - page 82

Table of Contents
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Refer to Note 12. Pension Benefits to the audited consolidated financial statements included herein for further
information on (1) historical benefit costs of the pension plans, (2) the principal assumptions used to determine the pension
benefit expense and the actuarial value of the projected benefit obligation for the U.S. and non-U.S. pension plans, (3) a
sensitivity analysis of potential changes to pension obligations and expense that would result from changes in key assumptions
and (4) funding obligations.
Environmental Matters
We are subject to the requirements of U.S. federal, state and local, and non-U.S., environmental and safety and health
laws and regulations. These include laws regulating air emissions, water discharge, hazardous materials and waste
management. We have an environmental management structure designed to facilitate and support our compliance with these
requirements globally. Although it is our intent to comply with all such requirements and regulations, we cannot provide
assurance that we are at all times in compliance. Environmental requirements are complex, change frequently and have tended
to become more stringent over time. Accordingly, we cannot assure that environmental requirements will not change or become
more stringent over time or that our eventual environmental remediation costs and liabilities will not be material.
Certain environmental laws assess liability on current or previous owners or operators of real property for the cost of
removal or remediation of hazardous substances. In addition to clean-up actions brought by U.S. federal, state, local and non-
U.S. agencies, plaintiffs could raise personal injury or other private claims due to the presence of hazardous substances on or
from a property. We are currently in the process of investigating and cleaning up some of our current or former sites. In
addition, there may be soil or groundwater contamination at several of our properties resulting from historical, ongoing or
nearby activities.
As of December 31, 2015 and 2014, the undiscounted reserve for environmental investigation and remediation was
approximately $4 million (of which $1 million was recorded in accrued liabilities and $3 million was recorded in other long-
term liabilities) and $5 million (of which $1 million was recorded in accrued liabilities and $4 million was recorded in other
long-term liabilities). Additionally, approximately $6 million and $16 million as of December 31, 2015 and December 31,
2014, respectively, of undiscounted reserve for environmental investigation and remediation attributable to discontinued
operations was included within liabilities held for sale. Delphi cannot ensure that environmental requirements will not change
or become more stringent over time or that its eventual environmental remediation costs and liabilities will not exceed the
amount of its current reserves. In the event that such liabilities were to significantly exceed the amounts recorded, Delphi’s
results of operations could be materially affected.
Legal Proceedings
For a description of our legal proceedings, see Item 3. Legal Proceedings and Note 13. Commitments and Contingencies
to the audited consolidated financial statements included herein.
Significant Accounting Policies and Critical Accounting Estimates
Our significant accounting policies are described in Note 2. Significant Accounting Policies to the audited consolidated
financial statements included herein. Certain of our accounting policies require the application of significant judgment by
management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are
subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing
contracts, our evaluation of trends in the industry, information provided by our customers and information available from other
outside sources, as appropriate.
We consider an accounting estimate to be critical if:
• It requires us to make assumptions about matters that were uncertain at the time we were making the estimate, and
• Changes in the estimate or different estimates that we could have selected would have had a material impact on our
financial condition or results of operations.
Acquisitions
In accordance with accounting guidance for the provisions in FASB ASC 805, Business Combinations, we allocate the
purchase price of an acquired business to its identifiable assets and liabilities based on estimated fair values. The excess of the
purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill. In addition, an acquisition
may include a contingent consideration component, such as our acquisition agreements for Antaya, Ottomatika and Control-
Tec. The fair value of the contingent consideration is estimated as of the date of the acquisition and is recorded as part of the
purchase price. This estimate is updated in future periods and any changes in the estimate, which are not considered an
adjustment to the purchase price, are recorded in our consolidated statements of operations.