Discontinued Operations
 3 Months Ended
Mar. 31, 2015
Discontinued Operations [Abstract]  
Discontinued Operations
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. In February 2015, the Company entered into a definitive agreement for the sale of substantially all of the assets and liabilities of the Company's wholly-owned Thermal Systems business to MAHLE GmbH ("MAHLE") for approximately $727 million, subject to certain closing adjustments. The sale is expected to close in the third quarter of 2015, subject to customary regulatory and other approvals, and the Company expects to receive proceeds of approximately $670 million and to recognize an after-tax gain on the divestiture of over $300 million. The sale also includes the Company's thermal original equipment service business, the results of which were previously reported within the Powertrain Systems segment. 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 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. Proceeds from this sale will be in addition to the $727 million for the wholly-owned business. The financial results of SDAAC, which are consolidated by Delphi, were historically reported as part of the Thermal Systems segment. Additionally, Delphi determined that the Company's 50 percent interest in its Korea Delphi Automotive Systems Corporation ("KDAC") joint venture, which is accounted for under the equity method and was principally reported as part of the Thermal Systems segment, met the criteria to be classified as held for sale based on management's commitment to divest the Company's interest in KDAC to a separate buyer as part of the Company's overall Thermal Systems divestiture strategy.
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. 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 planned 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.
The Company determined that the assets and liabilities of the Thermal Systems segment met the held for sale criteria in accordance with FASB ASC 205 as of March 31, 2015. Accordingly, the held for sale Thermal Systems assets and liabilities were reclassified in the consolidated balance sheet at March 31, 2015 to Assets held for sale or Liabilities held for sale, respectively, as the sale of such assets and liabilities is expected within one year, and to current or long-term assets and liabilities held for sale, as appropriate, for prior periods. The Company ceased recording depreciation of the held for sale assets in the first quarter of 2015. The following table summarizes the carrying value of the major classes of assets and liabilities of the discontinued operations, which were classified as held for sale as of March 31, 2015:
 
March 31,
2015
 
December 31,
2014
 
 
 
 
 
(in millions)
Cash and cash equivalents
$
43

 
$
45

Accounts receivable, net
249

 
228

Inventories, net
101

 
91

Property, net
325

 
322

Investments in affiliates
41

 
130

Intangible assets, net
17

 
18

Other assets
61

 
61

Total assets of the discontinued operations classified as held for sale
$
837

 
$
895

 
 
 
 
Accounts payable
$
318

 
$
303

Accrued liabilities
52

 
53

Other liabilities
36

 
35

Total liabilities of the discontinued operations classified as held for sale
$
406

 
$
391


As of March 31, 2015 and December 31, 2014, there was $122 million and $118 million, respectively, of Noncontrolling interest attributable to the Company's partner in the SDAAC joint venture.
Assets and liabilities classified as held for sale were required to be recorded at the lower of carrying value or fair value less costs to sell. Accordingly, an after-tax impairment loss of $88 million (approximately $0.30 per diluted share) was recorded in Loss from discontinued operations during the three months ended March 31, 2015 based on the evaluation of the fair value of the Company's interest in KDAC in relation to its carrying value. As of March 31, 2015, the fair value of this interest was estimated to be approximately $32 million, determined primarily based on recent negotiations with a third party and based on a non-binding offer from that potential buyer. The Company's interest in KDAC is reported within Investments in affiliates in the above table.
The estimated fair value less costs to sell of the remaining Thermal Systems business exceeded its carrying value as of March 31, 2015, and therefore no adjustment to these long-lived assets was necessary. The divestiture of the business held for sale could result in a gain or loss on sale to the extent the ultimate selling price differs from the current carrying value of the net assets recorded.
A reconciliation of the major classes of line items constituting pretax profit or loss of discontinued operations to income (loss) from discontinued operations, net of tax as presented in the consolidated statements of operations is as follows:
 
Three Months Ended March 31,
 
2015
 
2014
 
 
 
 
 
(in millions)
Net sales
$
373

 
$
379

Cost of sales
343

 
344

Selling, general and administrative
11

 
13

Amortization
1

 
2

Restructuring
1

 
1

Other income and (expense) items that are not major
—

 
1

Income from discontinued operations before income taxes and equity income
17

 
20

Income tax expense on discontinued operations
(4
)
 
(6
)
Equity income from discontinued operations, net of tax
—

 
1

Impairment loss
(88
)
 
—

(Loss) income from discontinued operations, net of tax
(75
)
 
15

Income from discontinued operations attributable to noncontrolling interests
4

 
5

Net (loss) income from discontinued operations attributable to Delphi
$
(79
)
 
$
10


(Loss) income from discontinued operations before income taxes attributable to Delphi was $(76) million and $15 million for the three months ended March 31, 2015 and 2014, respectively, which includes $1 million and $1 million, respectively, of income tax expense attributable to noncontrolling interests.