SEC Filing | General Motors Company

View:

Download DOC

Download PDF

Download XLS

Form 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549-1004

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2010

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-34960

GENERAL MOTORS COMPANY

(Exact Name of Registrant as Specified in its Charter)


STATE OF DELAWARE		27-0756180
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

300 Renaissance Center, Detroit, Michigan		48265-3000
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code

(313) 556-5000

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class		Name of Each Exchange on which Registered
Common Stock		New York Stock Exchange/Toronto Stock Exchange
4.75% Series B Mandatory Convertible Junior Preferred Stock		New York Stock Exchange

Securities registered pursuant to Section 12 (g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its company Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer þ Smaller reporting company ¨

Do not check if smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The aggregate market value of the voting stock held by non-affiliates of the registrant (assuming only for purposes of this computation that directors and executive officers may be affiliates) was approximately $55.2 billion on December 31, 2010

As of February 15, 2011 the number of shares outstanding of common stock was 1,560,743,059 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement related to the Annual Stockholders Meeting to be filed subsequently are incorporated by reference into Part III of this Form 10-K.

INDEX


			Page
PART I
Item 1.	Business		1
Item 1A.	Risk Factors		26
Item 1B.	Unresolved Staff Comments		39
Item 2.	Properties		39
Item 3.	Legal Proceedings		40
Item 4.	Removed and Reserved		43
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		44
Item 6.	Selected Financial Data		47
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		49
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		134
Item 8.	Financial Statements and Supplementary Data		142
	Consolidated Statements of Operations		142
	Consolidated Balance Sheets		143
	Consolidated Statements of Cash Flows		144
	Consolidated Statements of Equity (Deficit)		146
	Notes to Consolidated Financial Statements		148
	Note 1.	Nature of Operations	148
	Note 2.	Chapter 11 Proceedings and the 363 Sale	148
	Note 3.	Basis of Presentation	167
	Note 4.	Significant Accounting Policies	169
	Note 5.	Acquisition and Disposal of Businesses	185
	Note 6.	Finance Receivables, net	190
	Note 7.	Securitizations	192
	Note 8.	Marketable Securities	193
	Note 9.	Inventories	194
	Note 10.	Equipment on Operating Leases, net	194
	Note 11.	Equity in Net Assets of Nonconsolidated Affiliates	195
	Note 12.	Property, net	201
	Note 13.	Goodwill	202
	Note 14.	Intangible Assets, net	203
	Note 15.	Restricted Cash and Marketable Securities	204
	Note 16.	Other Assets	205
	Note 17.	Variable Interest Entities	206
	Note 18.	Accrued Liabilities, Other Liabilities and Deferred Income Taxes	211
	Note 19.	Short-Term and Long-Term Debt	212
	Note 20.	Pensions and Other Postretirement Benefits	220
	Note 21.	Derivative Financial Instruments and Risk Management	246
	Note 22.	Commitments and Contingencies	253
	Note 23.	Income Taxes	263
	Note 24.	Fair Value Measurements	269
	Note 25.	Restructuring and Other Initiatives	275
	Note 26.	Impairments	280
	Note 27.	Other Automotive Expenses, net	283
	Note 28.	Interest Income and Other Non-Operating Income, net	283
	Note 29.	Stockholders’ Equity (Deficit) and Noncontrolling Interests	283
	Note 30.	Earnings (Loss) Per Share	288
	Note 31.	Stock Incentive Plans	290
	Note 32.	Transactions with Ally Financial	293
	Note 33.	Transactions with MLC	297
	Note 34.	Supplementary Quarterly Financial Information (Unaudited)	299
	Note 35.	Segment Reporting	301


			Page
	Note 36.	Supplemental Information for Consolidated Statements of Cash Flows	308
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		309
Item 9A.	Controls and Procedures		309
Item 9B.	Other Information		310
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		311
Item 11.	Executive Compensation		311
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		311
Item 13.	Certain Relationships and Related Transactions and Director Independence		311
Item 14.	Principal Accountant Fees and Services		311
PART IV
Item 15.	Exhibits and Financial Statement Schedule		312
Signatures			323

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

PART I

General Motors Company was formed by the United States Department of the Treasury (UST) in 2009 originally as a Delaware limited liability company, Vehicle Acquisition Holdings LLC, and subsequently converted to a Delaware corporation, NGMCO, Inc. This company, which on July 10, 2009 acquired substantially all of the assets and assumed certain liabilities of General Motors Corporation (363 Sale) and changed its name to General Motors Company, is sometimes referred to in this Annual Report on Form 10-K (2010 10-K) for the periods on or subsequent to July 10, 2009 as “we,” “our,” “us,” “ourselves,” the “Company,” “General Motors,” or “GM,” and is the successor entity solely for accounting and financial reporting purposes (Successor). General Motors Corporation is sometimes referred to in this 2010 10-K, for the periods on or before July 9, 2009, as “Old GM.” Prior to July 10, 2009 Old GM operated the business of the Company, and pursuant to an agreement with the Staff of the Securities and Exchange Commission (SEC) as described in a no-action letter issued to Old GM by the SEC Staff on July 9, 2009 regarding our filing requirements and those of MLC (as subsequently defined), the accompanying consolidated financial statements include the financial statements and related information of Old GM as it is our predecessor entity solely for accounting and financial reporting purposes (Predecessor). On July 10, 2009 in connection with the 363 Sale, General Motors Corporation changed its name to Motors Liquidation Company, which is sometimes referred to in this 2010 10-K for the periods after July 10, 2009 as “MLC.” MLC continues to exist as a distinct legal entity for the sole purpose of liquidating its remaining assets and liabilities.

Item 1. Business

Launch of the New General Motors

General Motors Company was formed by the UST in 2009, and prior to July 10, 2009, our business was operated by Old GM. On June 1, 2009, Old GM and three of its domestic direct and indirect subsidiaries filed voluntary petitions for relief under Chapter 11 (the Chapter 11 Proceedings) of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court). On July 10, 2009, we, through certain of our subsidiaries, acquired substantially all of the assets and assumed certain liabilities of Old GM in connection with the 363 Sale closing.

Through our purchase of substantially all of the assets and assumption of certain liabilities of Old GM in connection with the 363 Sale, we have launched a new company with a strong balance sheet, a competitive cost structure, and a strong cash position, which we believe will enable us to compete more effectively with our U.S. and foreign-based competitors in the U.S. and to continue our strong presence in growing global markets. In particular, we acquired assets that included Old GM’s strongest operations, and we believe we have a competitive operating cost structure, partly as a result of recent agreements with the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (UAW) and Canadian Auto Workers Union (CAW).

We have a vision to design, build and sell the world’s best vehicles. Our executive leadership and our employees are committed to:

•

Building our market share, revenue, earnings and cash flow;

•

Improving the quality of our cars and trucks, while increasing customer satisfaction and overall perception of our products; and

•

Continuing to take a leadership role in the development of advanced energy saving technologies, including advanced combustion engines, biofuels, fuel cells, hybrid vehicles, extended-range-electric vehicles, and advanced battery development.

Public Offering

In November and December 2010 we consummated a public offering of 550 million shares of our common stock and 100 million shares of our Series B Preferred Stock and listed our common stock on the New York Stock Exchange and the Toronto Stock Exchange and listed our Series B Preferred Stock on the New York Stock Exchange. We received net proceeds of $4.9 billion from the offering of the Series B Preferred Stock.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

General

We develop, produce and market cars, trucks and parts worldwide. We also provide automotive financing services through General Motors Financial Company, Inc. (GM Financial).

Automotive

Our automotive operations meet the demands of our customers through our four automotive segments: GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO) and GM South America (GMSA).

In the year ended December 31, 2009 we combined our vehicle sales data, market share data and production volume data in the period July 10, 2009 through December 31, 2009 with Old GM’s data in the period January 1, 2009 through July 9, 2009 for comparative purposes.

Our total worldwide vehicle sales were 8.4 million in the year ended December 31, 2010. Total combined GM and Old GM worldwide vehicle sales in the year ended December 31, 2009 were 7.5 million. Old GM’s total worldwide vehicle sales were 8.4 million in the year ended December 31, 2008. Substantially all of the cars, trucks and parts are marketed through retail dealers in North America, and through distributors and dealers outside of North America, the substantial majority of which are independently owned.

In the year ended December 31, 2010 we completed the sale of Saab Automobile AB (Saab) in February 2010 and the sale of Saab Automobile GB (Saab GB) in May 2010 and have completed the wind down of our Pontiac, Saturn and HUMMER brands.

GMNA primarily meets the demands of customers in North America with vehicles developed, manufactured and/or marketed under the following four brands:


• Buick		• Cadillac		• Chevrolet		• GMC

The demands of customers outside North America are primarily met with vehicles developed, manufactured and/or marketed under the following brands:


• Buick	• Daewoo	• Holden	• Opel
• Cadillac	• GMC	• Isuzu	• Vauxhall
• Chevrolet

At December 31, 2010 we had equity ownership stakes directly or indirectly in entities through various regional subsidiaries, including GM Daewoo Auto & Technology Co. (GM Daewoo), Shanghai General Motors Co., Ltd. (SGM), SAIC-GM-Wuling Automobile Co., Ltd. (SGMW), FAW-GM Light Duty Commercial Vehicle Co., Ltd. (FAW-GM) and SAIC GM Investment Limited (HKJV). In 2011 SGMW plans to commence sales under the Baojun brand. In January 2011 GM Daewoo announced it will be changing its name to GM Korea and will sell most of its cars under the Chevrolet brand. These companies design, manufacture and market vehicles under the following brands:


• Buick	• Daewoo	• GMC	• Jiefang
• Cadillac	• FAW	• Holden	• Wuling
• Chevrolet

In addition to the products we sell to our dealers for consumer retail sales, we also sell cars and trucks to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies and governments. We sell vehicles to fleet customers directly or through our network of dealers. Our retail and fleet customers can obtain a wide range of aftersale vehicle services and products through our dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories and extended service warranties.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Automotive Financing

On October 1, 2010 we completed the acquisition of AmeriCredit Corp. (AmeriCredit) for cash of approximately $3.5 billion and changed its name to General Motors Financial Company, Inc.

GM Financial is a leading automotive finance company that has been operating since 1992. GM Financial purchases automobile finance contracts for new and used vehicles purchased by consumers primarily from franchised and select independent dealerships. GM Financial predominantly offers financing to consumers who are typically unable to obtain financing from more traditional sources. The typical borrower has experienced prior credit difficulties or has limited credit history and generally has a credit bureau score ranging from 500 through 700. GM Financial services its loan portfolio at regional centers using automated loan servicing and collection systems. Since GM Financial provides financing in a relatively high-risk market, it expects to sustain a higher level of credit losses than other more traditional sources of financing.

GM Financial finances its loan origination volume through the use of credit facilities and securitization trusts that issue asset-backed securities to investors. GM Financial retains an interest in these securitization trusts that are over collateralized, whereby more receivables are transferred to the securitization trusts than the amount of asset-backed securities issued by the securitization trusts, as well as the estimated future excess cash flows expected to be received by GM Financial over the life of the securitization. Excess cash flows result from the difference between the finance charges received from the obligors on the receivables and the interest paid to investors in the asset-backed securities, net of credit losses and expenses.

Excess cash flows in the securitization trusts are initially utilized to fund credit enhancement requirements in order to attain specific credit ratings for the asset-backed securities issued by the securitization trusts. Once targeted credit enhancement requirements are reached and maintained, excess cash flows are distributed to GM Financial or, in a securitization utilizing a senior subordinated structure, may be used to accelerate the repayment of certain subordinated securities. In addition to excess cash flows, GM Financial receives monthly base servicing fees and collects other fees, such as late charges, as servicer for securitization trusts.

In December 2010 GM Financial began offering a lease product in certain geographic areas through our franchised dealerships that targets consumers with prime credit bureau scores leasing new GM vehicles. GM Financial expects to begin offering a nationwide lease product targeting consumers with prime and sub-prime credit scores in 2011.

Competitive Position

Information in this 2010 10-K relating to our relative position in the global automotive industry is based upon the good faith estimates of management, and includes all sales by joint ventures on a total vehicle basis, not based on the percentage of ownership in the joint venture. Market share information in this 2010 10-K is based on vehicle sales volume.

The global automotive industry is highly competitive. The principal factors that determine consumer vehicle preferences in the markets in which we operate include price, quality, available options, style, safety, reliability, fuel economy and functionality. Market leadership in individual countries in which we compete varies widely.

In the year ended December 31, 2010 our worldwide market share was 11.4%. Our vehicle sales volumes in the year ended December 31, 2010 are consistent with a gradual U.S. vehicle sales recovery from the negative economic effects of the U.S. recession first experienced by Old GM in the second half of 2008.

In the year ended December 31, 2009 combined GM and Old GM worldwide market share was 11.6%. In 2009 the U.S. continued to be negatively affected by the economic factors experienced in 2008 as U.S. automotive industry sales declined 21.4% when compared to the year ended December 31, 2008.

In the year ended December 31, 2008 Old GM’s worldwide market share was 12.3%. In 2008 worldwide market share was severely affected by the recession in Old GM’s largest market, the U.S., and the recession in Western Europe. Tightening of the credit markets, increases in the unemployment rate, declining consumer confidence as a result of declining household incomes and escalating public

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

speculation related to Old GM’s potential bankruptcy contributed to significantly lower vehicle sales in the U.S. These economic factors had a negative effect on the U.S. automotive industry and the principal factors that determine consumers’ vehicle buying decisions. As a result, consumers delayed purchasing or leasing new vehicles which caused a decline in U.S. vehicle sales.

The following table summarizes the respective U.S. market shares in passenger cars and trucks:


	Years Ended December 31,
	2010		2009		2008
GM (a)		18.8%		19.7%		22.1%
Ford		16.7%		15.9%		14.7%
Toyota		15.0%		16.7%		16.5%
Honda		10.4%		10.8%		10.6%
Chrysler		9.2%		8.8%		10.8%
Nissan		7.7%		7.3%		7.0%
Hyundai/Kia		7.6%		6.9%		5.0%

(a)

Market share data in the year ended December 31, 2009 combines our market share data in the period July 10, 2009 through December 31, 2009 with Old GM’s market share data in the period January 1, 2009 through July 9, 2009 for comparative purposes. Market share data in the year ended December 31, 2008 relates to Old GM.

Vehicle Sales

The following tables summarize total industry sales of new motor vehicles of domestic and foreign makes and the related competitive position (vehicles in thousands):


	Vehicle Sales (a)(b)(c)(d)(e) Years Ended December 31,
	2010						2009						2008
	Industry		GM		GM as a % of Industry		Industry		Combined GM and Old GM		Combined GM and Old GM as a % of Industry		Industry		Old GM		Old GM as a % of Industry
United States
Cars
Midsize		2,493		472		18.9%		2,288		518		22.7%		2,920		760		26.0%
Small		2,047		171		8.4%		2,051		202		9.8%		2,547		328		12.9%
Luxury		845		69		8.2%		778		69		8.8%		1,017		122		12.0%
Sport		263		94		36.0%		253		85		33.7%		272		48		17.7%

Total cars		5,648		807		14.3%		5,370		874		16.3%		6,756		1,257		18.6%

Trucks
Utilities		3,632		778		21.4%		3,071		642		20.9%		3,654		809		22.1%
Pick-ups		1,630		553		33.9%		1,404		487		34.7%		1,993		738		37.0%
Vans		678		74		10.9%		583		68		11.7%		841		151		17.9%
Medium Duty		189		4		1.9%		177		13		7.2%		259		26		10.0%

Total trucks		6,130		1,408		23.0%		5,236		1,210		23.1%		6,746		1,723		25.5%

Total United States		11,778		2,215		18.8%		10,607		2,084		19.7%		13,503		2,981		22.1%
Canada, Mexico and Other		2,666		410		15.4%		2,539		400		15.7%		3,065		585		19.1%

Total GMNA		14,444		2,625		18.2%		13,145		2,484		18.9%		16,567		3,565		21.5%
GME		18,952		1,662		8.8%		18,786		1,668		8.9%		21,968		2,043		9.3%
GMIO		35,072		3,077		8.8%		28,258		2,453		8.7%		24,886		1,832		7.4%
GMSA		5,160		1,026		19.9%		4,369		872		20.0%		4,449		920		20.7%

Total Worldwide		73,628		8,390		11.4%		64,559		7,477		11.6%		67,870		8,359		12.3%

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

(a)	Includes HUMMER, Saturn and Pontiac vehicle sales data.

(b)	Our vehicle sales include Saab data through February 2010.

(c)	Vehicle sales data may include rounding differences.

(d)	Certain fleet sales that are accounted for as operating leases are included in vehicle sales at the time of delivery to the daily rental car companies.

(e)

GMNA vehicle sales primarily represent sales to the ultimate customer. GME, GMIO and GMSA vehicle sales primarily represent estimated sales to the ultimate customer. In countries where end customer data is not readily available other data sources, such as wholesale volumes, are used to estimate vehicle sales.


	Vehicle Sales (a)(b)(c)(d)(e) Years Ended December 31,
	2010						2009						2008
	Industry		GM		GM as a % of Industry		Industry		Combined GM and Old GM		Combined GM and Old GM as a % of Industry		Industry		Old GM		Old GM as a % of Industry
GMNA
United States		11,778		2,215		18.8%		10,607		2,084		19.7%		13,503		2,981		22.1%
Canada		1,583		247		15.6%		1,483		254		17.1%		1,674		359		21.4%
Mexico		848		156		18.3%		774		138		17.9%		1,071		212		19.8%
Other		235		7		3.2%		282		7		2.5%		320		13		4.2%

Total GMNA		14,444		2,625		18.2%		13,145		2,484		18.9%		16,567		3,565		21.5%

GME
United Kingdom		2,293		290		12.7%		2,223		287		12.9%		2,485		384		15.4%
Germany		3,199		269		8.4%		4,049		382		9.4%		3,425		300		8.8%
Italy		2,160		170		7.9%		2,359		189		8.0%		2,423		202		8.3%
Russia		1,987		159		8.0%		1,511		142		9.4%		3,024		338		11.2%
Uzbekistan		149		145		97.1%		107		103		95.8%		108		20		18.8%
France		2,709		123		4.6%		2,685		119		4.4%		2,574		114		4.4%
Spain		1,115		100		8.9%		1,075		94		8.7%		1,363		107		7.8%
Other		5,341		406		7.6%		4,777		353		7.4%		6,566		579		8.8%

Total GME		18,952		1,662		8.8%		18,786		1,668		8.9%		21,968		2,043		9.3%

GMIO (f)(g)
China		18,354		2,352		12.8%		13,745		1,826		13.3%		9,074		1,095		12.1%
Australia		1,036		133		12.8%		937		121		12.9%		1,012		133		13.1%
South Korea		1,556		127		8.1%		1,455		115		7.9%		1,215		117		9.7%
Middle East Operations		1,150		123		10.7%		1,053		117		11.1%		1,545		144		9.3%
India		3,016		110		3.7%		2,257		69		3.1%		1,971		66		3.3%
Egypt		249		68		27.2%		206		52		25.5%		262		60		23.1%
Other		9,712		164		1.7%		8,606		152		1.8%		9,807		217		2.2%

Total GMIO		35,072		3,077		8.8%		28,258		2,453		8.7%		24,886		1,832		7.4%

GMSA
Brazil		3,515		658		18.7%		3,141		596		19.0%		2,820		549		19.5%
Argentina		665		109		16.3%		517		79		15.2%		616		95		15.5%
Colombia		254		85		33.6%		185		67		36.1%		219		80		36.3%
Venezuela		125		51		40.6%		137		49		36.1%		272		90		33.2%
Other		600		123		20.4%		389		81		20.9%		522		105		20.2%

Total GMSA		5,160		1,026		19.9%		4,369		872		20.0%		4,449		920		20.7%

Total Worldwide		73,628		8,390		11.4%		64,559		7,477		11.6%		67,870		8,359		12.3%

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

(a)	Includes HUMMER, Saturn and Pontiac vehicle sales data.

(b)	Our vehicle sales include Saab data through February 2010.

(c)	Vehicle sales data may include rounding differences.

(d)	Certain fleet sales that are accounted for as operating leases are included in vehicle sales at the time of delivery to the daily rental car companies.

(e)

(f)

Includes SGM joint venture vehicle sales in China of 1.0 million vehicles, SGMW and FAW-GM joint venture vehicle sales in China of 1.3 million vehicles and HKJV joint venture vehicle sales in India of 110,000 vehicles in the year ended December 31, 2010. Combined GM and Old GM SGM joint venture vehicle sales in China of 708,000 vehicles and combined GM and Old GM SGMW and FAW-GM joint venture vehicle sales in China of 1.1 million vehicles in the year ended December 31, 2009 and Old GM SGM joint venture vehicle sales in China of 432,000 vehicles and Old GM SGMW joint venture vehicle sales in China of 647,000 vehicles in the year ended December 31, 2008. We do not record revenue from our joint ventures’ vehicle sales.

(g)	The joint venture agreements with SGMW (44%) and FAW-GM (50%) allow for significant rights as a member as well as the contractual right to report SGMW and FAW-GM vehicle sales in China as part of our global market share.

Fleet Sales and Deliveries

The sales and market share data provided previously includes both retail and fleet vehicle sales. Fleet sales are comprised of vehicle sales to daily rental car companies, as well as leasing companies and commercial fleet and government customers. Certain fleet transactions, particularly daily rental, are generally less profitable than retail sales. As part of our pricing strategy, particularly in the U.S., we have improved our mix of sales to specific customers. In the accompanying tables fleet sales are presented as vehicle sales. A significant portion of the sales to daily rental car companies are recorded as operating leases under U.S. GAAP with no recognition of revenue at the date of initial delivery.

The following table summarizes estimated fleet sales and the amount of those sales as a percentage of total vehicle sales (vehicles in thousands):


	Years Ended December 31,
	2010		2009		2008
	GM		Combined GM and Old GM		Old GM
GMNA		715		590		953
GME		534		540		769
GMIO		330		333		389
GMSA		217		177		198

Total fleet sales (a)(b)		1,796		1,640		2,309

Fleet sales as a percentage of total vehicle sales		21.4%		21.9%		27.6%

(a)	Fleet sales vary by segment and certain amounts are estimated.

(b)	Fleet sales data may include rounding differences.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table summarizes U.S. fleet sales and the amount of those sales as a percentage of total U.S. vehicle sales (vehicles in thousands):


	Years Ended December 31,
	2010		2009		2008
	GM		Combined GM and Old GM		Old GM
Daily rental sales		429		307		480
Other fleet sales		195		207		343

Total fleet sales (a)		624		514		823

Fleet sales as a percentage of total vehicle sales
Cars		36.9%		29.0%		34.8%
Trucks		23.2%		21.6%		22.4%
Total cars and trucks		28.2%		24.7%		27.6%

(a)	Fleet sales data may include rounding differences.

Product Pricing

A number of methods are used to promote our products, including the use of dealer, retail and fleet incentives such as customer rebates and finance rate support. The level of incentives is dependent in large part upon the level of competition in the markets in which we operate and the level of demand for our products. In 2011 we will continue to price vehicles competitively, including offering strategic and tactical incentives as required. We believe this strategy, coupled with sound inventory management, will continue to strengthen the reputation of our brands and result in competitive prices.

Cyclical Nature of Business

In the automotive industry, retail sales are cyclical and production varies from month to month. Vehicle model changeovers occur throughout the year as a result of new market entries. The market for vehicles is cyclical and depends on general economic conditions, credit availability and consumer spending. In 2010 the global automotive industry, particularly in the U.S., had not yet fully recovered from the negative economic factors experienced in 2008.

Relationship with Dealers

We market vehicles worldwide through a network of independent retail dealers and distributors. At December 31, 2010 there were 4,458 vehicle dealers in the U.S., 465 in Canada and 244 in Mexico and other Central American locations. Additionally, there were a total of 15,048 distribution outlets throughout the rest of the world. These outlets include distributors, dealers and authorized sales, service and parts outlets.

The following table summarizes the number of authorized dealerships:


	December 31,
	2010		2009		2008
GMNA		5,167		6,450		7,360
GME		7,859		8,422		8,732
GMIO		6,053		5,784		4,362
GMSA		1,136		1,166		1,148

Total Worldwide		20,215		21,822		21,602

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

As part of achieving and sustaining long-term viability and the viability of our dealer network, we determined that a reduction in the number of GMNA dealerships was necessary. In determining which dealerships would remain in our network we performed analyses of volumes and consumer satisfaction indexes, among other criteria. Refer to the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Specific Management Initiatives — U.S. Dealer Reduction” for a further discussion on our U.S. dealer reduction.

We enter into a contract with each authorized dealer agreeing to sell to the dealer one or more specified product lines at wholesale prices and granting the dealer the right to sell those vehicles to retail customers from a GM approved location. Our dealers often offer more than one GM brand of vehicle at a single dealership. In fact, we actively promote this for several of our brands in a number of our markets in order to enhance dealer profitability. Authorized GM dealers offer parts, accessories, service and repairs for GM vehicles in the product lines that they sell, using genuine GM parts and accessories. Our dealers are authorized to service GM vehicles under our limited warranty program, and those repairs are to be made only with genuine GM parts. Our dealers generally provide their customers access to credit or lease financing, vehicle insurance and extended service contracts provided by GM Financial, Ally Financial, Inc., formerly GMAC, Inc. (Ally Financial) and other financial institutions.

Because dealers maintain the primary sales and service interface with the ultimate consumer of our products, the quality of GM dealerships and our relationship with our dealers and distributors are critical to our success. In addition to the terms of our contracts with our dealers, we are regulated by various country and state franchise laws that may supersede those contractual terms and impose specific regulatory requirements and standards for initiating dealer network changes, pursuing terminations for cause and other contractual matters.

Research, Development and Intellectual Property

Costs for research, manufacturing engineering, product engineering, and design and development activities relate primarily to developing new products or services or improving existing products or services, including activities related to vehicle emissions control, improved fuel economy and the safety of drivers and passengers.

The following table summarizes research and development expense (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Research and development expense	$	6,962	$	3,034	$	3,017	$	8,012

Research

Overview

Our top priority for research is to continue to develop and advance our alternative propulsion strategy, as energy diversity and environmental leadership are critical elements of our overall business strategy. Our objective is to be the recognized industry leader in fuel efficiency through the development of a wide variety of technologies to reduce petroleum consumption. To meet this objective we focus on five specific areas:

•

Continue to increase the fuel efficiency of our cars and trucks;

•

Develop alternative fuel vehicles;

•

Invest significantly in our hybrid and electric technologies;

•

Invest significantly in plug-in electric vehicle technology; and

•

Continue development of hydrogen fuel cell technology.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Fuel Efficiency

We and Old GM have complied with federal fuel economy requirements since their inception in 1978, and we are fully committed to meeting the requirements of the Energy Independence and Security Act of 2007 (EISA) and compliance with other regulatory schemes, including the California vehicle greenhouse gas emissions program. We anticipate steadily improving fuel economy for both our car and truck fleets. We are committed to meeting or exceeding all federal fuel economy standards in the 2011 through 2016 model years. We plan to achieve compliance through a combination of strategies, including: (1) extensive technology improvements to conventional powertrains; (2) increased use of smaller displacement engines and six speed automatic transmissions; (3) vehicle improvements, including increased use of lighter, front-wheel drive architectures; (4) increased hybrid and electric vehicle offerings; and (5) portfolio changes, including increasing car/crossover mix and dropping select larger vehicles in favor of smaller, more fuel efficient offerings.

We are committed to lead in the development of technologies to increase the fuel efficiency of internal combustion engines such as cylinder deactivation, direct injection, turbo-charging with engine downsizing, six speed transmissions and variable valve timing. As a full-line manufacturer that produces a wide variety of cars, trucks and sport utility vehicles, we currently offer 13 models (2011 model year) obtaining 30 mpg or more in highway driving.

Alternative Fuel Vehicles

We have been in the forefront in the development of alternative fuel vehicles, leveraging experience and capability developed around these technologies in our operations in Brazil. Alternative fuels offer the greatest near-term potential to reduce petroleum consumption in the transportation sector, especially as cellulosic sources of ethanol become more affordable and readily available in the U.S.

We currently offer 19 FlexFuel vehicles for the 2011 model year, estimated to be 40% of our U.S. vehicle sales, capable of operating on gasoline, E85 ethanol or any combination of the two. As part of an overall energy diversity strategy, we remain committed to making at least 50% of the vehicles we produce for the U.S. capable of operating on biofuels, specifically E85 ethanol, by 2012, assuming the appropriate infrastructure growth materializes. However, recent regulatory developments occurring in the fourth quarter of 2010 have altered our previous FlexFuel vehicle production goals beyond 2012. We are currently evaluating the effects of these regulatory developments.

We are focused on promoting sustainable biofuels derived from non-food sources, such as agricultural, forestry and municipal waste. We are continuing to work with our two strategic alliances with cellulosic ethanol makers: Coskata, Inc., of Warrenville, Illinois, and New Hampshire based Mascoma Corp. In October 2009, Coskata, Inc. opened its semi-commercial facility for manufacturing cellulosic ethanol and Mascoma Corp. has been making cellulosic ethanol at its Rome, New York, demonstration plant since late 2008.

We are supporting the development of biodiesel, a clean-burning alternative diesel fuel that is produced from renewable sources. In 2011 model year full-size pickups and vans, B20 capability is standard on our Duramax 6.6L turbo diesel engine. The Duramax diesel engine is available in the Chevrolet Silverado and GMC Sierra heavy-duty pickups and Chevrolet Express and GMC Savana full-size vans.

We have announced that Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) powered versions of the Chevrolet Express and GMC Savana full-size vans will be offered to fleet and commercial customers. We are currently accepting orders for the CNG cargo vans, and the LPG van cutaway models will begin production by the second quarter of 2011. The vans have specially designed engines for the gaseous fuels and come direct to the customer with the fully integrated and warranted dedicated gaseous fuel system in place.

Hybrid and Plug-In Electric Vehicles

We are investing significantly in multiple technologies offering increasing levels of vehicle electrification including hybrid, plug-in hybrid and electric vehicles with extended-range technology. We currently offer seven hybrid models. We continue to develop plug-in

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

hybrid electric vehicle technology (PHEV) which includes the Chevrolet Volt and Opel Ampera electric vehicles with extended range capabilities. We plan to invest heavily between 2011 and 2012 to support the expansion of our electrified vehicle offerings and in-house development and manufacturing capabilities of advanced batteries, electric motors and power control systems.

The GM Two-mode Hybrid system is offered with the automotive industry’s only hybrid full-size trucks and sport utility vehicles: Chevrolet Tahoe, Chevrolet Silverado, GMC Yukon and Yukon Denali, GMC Sierra, Cadillac Escalade and Escalade Platinum.

A PHEV, using a modified version of our Two-Mode Hybrid system and advanced lithium-ion battery technology, is scheduled to launch in 2012. The PHEV will provide low-speed electric-only propulsion, and blend engine and battery power to significantly improve fuel efficiency.

The Chevrolet Volt is an electric vehicle with extended range capability. For the first 25 to 50 miles, depending on terrain, driving technique, temperature and battery age, the Chevrolet Volt operates as a full-performance battery electric vehicle powered only by electricity. Once the battery is depleted, the Chevrolet Volt’s onboard engine generates the energy needed to power the vehicle over 300 additional miles on a full tank of premium fuel. Production of the 2011 Chevrolet Volt began in November 2010. The Chevrolet Volt arrived in dealerships in select U.S. geographic markets in December 2010, and we plan to have Chevrolet Volts available in all participating dealerships in the U.S. by the end of 2011. A second electric vehicle with extended range, the Opel Ampera, is scheduled to launch in Europe in late 2011.

Hydrogen Fuel Cell Technology

As part of our long-term strategy to reduce petroleum consumption and greenhouse gas emissions we are committed to continuing development of our hydrogen fuel cell technology. We and Old GM have conducted research in hydrogen fuel cell development spanning more than 40 years, and we are the only U.S. automobile manufacturer actively engaged in all elements of the fuel cell propulsion system development in-house. Our Chevrolet Equinox fuel cell electric vehicle demonstration programs, such as Project Driveway, are the largest in the world and have accumulated more than 1.7 million miles of real-world driving by consumers, celebrities, business partners and government agencies. More than 6,500 individuals have driven the fuel cell powered Chevrolet Equinox, either in short drives, such as media or special events, or as part of Project Driveway. To date, their feedback has led to technology improvements such as extending fuel cell stack life and improvements in the regenerative braking system, which has also benefited our Two-Mode Hybrid vehicles, and improvements in the infrastructure of fueling stations for hydrogen fuel cell electric vehicles. The knowledge gained during Project Driveway on the fuel cell itself has affected the development of the Chevrolet Volt battery as we are applying fuel cell thermal design knowledge to the Chevrolet Volt battery design. Project Driveway operates in Washington D.C. and California (including Los Angeles, Orange County and Sacramento) for the California Fuel Cell Partnership and the California Air Resources Board (CARB). Project Driveway also operates in the New York Metropolitan area and the greater New York City area with hydrogen fueling stations at JFK International Airport and in the Bronx. Most Project Driveway participants drive Chevrolet Equinoxes for two months with the cost of fuel and insurance provided free in exchange for participant feedback. The Chevrolet Equinox fuel cell electric vehicles do not use any gasoline or oil and emit only water vapor. We have made significant progress on the fuel cell stack for a second-generation fuel cell vehicle, though we currently have not approved such a program.

OnStar

Advancements in telematics (wireless voice and data) technology are demonstrated through our OnStar service. OnStar’s in-vehicle safety, security and communications service is available on more than 40 of our 2011 model year vehicles and currently serves 6 million subscribers in the U.S., Canada and China. In China, OnStar increased in-vehicle telematics services to more than 170,000 subscribers. OnStar’s key services include: Automatic Crash Response, Stolen Vehicle Assistance, Turn-by-Turn Navigation, OnStar Vehicle Diagnostics and Hands-Free Calling. In 2010 we offered OnStar eNav, a feature of Turn-by-Turn Navigation, available through Google Maps. OnStar subscribers are able to search for and identify destinations using Google Maps and send those destinations to their vehicles. They can then access the destinations whenever they choose and receive OnStar Turn-by-Turn directions to the destination from wherever they are. Also in 2010, Chevrolet and OnStar unveiled the automotive industry’s first

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

working smartphone application, which will allow Chevrolet Volt owners 24/7 connection and remote control of vehicle functions and OnStar features. OnStar’s Mobile Application allows drivers to communicate with their Chevrolet Volt from Motorola Droid, Apple iPhone and Blackberry Storm smartphones. It uses a real-time data connection to perform tasks from setting the charge time to unlocking the doors.

In 2009 OnStar developed an Injury Severity Prediction system based on the findings of a Center for Disease Control and Prevention expert panel which allows OnStar advisors to alert first responders when a vehicle crash is likely to have caused serious injury to the occupants. Data from OnStar’s Automatic Crash Response system will be used to automatically calculate the Injury Severity Prediction which can assist responders in determining the level of care required and the transport destination for patients. OnStar has also expanded its Stolen Vehicle Assistance services with the announcement of Remote Ignition Block. This will allow an OnStar Advisor to send a remote signal to a subscriber’s stolen vehicle to prevent the vehicle from restarting once the ignition is turned off. We believe that this capability will not only help authorities recover stolen vehicles, but can also prevent or shorten dangerous high speed pursuits.

Other Technologies

Other safety systems include the third generation of our StabiliTrak electronic stability control system. The system maximizes handling and braking by using a combination of systems and sensors including anti-lock braking systems (ABS), traction control, suspension and steering. Our Lane Departure Warning System and Side Blind Zone Alert Systems extend and enhance driver awareness and vision.

Product Development

Our vehicle development activities are integrated into a single global organization. This strategy builds on earlier efforts to consolidate and standardize our approach to vehicle development.

Under our global vehicle architecture strategy and for each of our ten global architectures, we define a global architecture as a specific range of performance characteristics and dimensions supporting a common set of major underbody components and subsystems with common interfaces.

A centralized organization is responsible for many of the non-visible parts of the vehicle such as steering, suspension, the brake system, the heating, ventilation and air conditioning system and the electrical system. This team works very closely with the global architecture development teams around the world, who are responsible for components that are unique to each brand, such as exterior and interior design, tuning of the vehicle to meet the brand character requirements and final validation to meet applicable government requirements.

We currently have ten different global architectures that are assigned to regional centers around the world. The allocation of the architectures to specific regions is based on where the expertise for the vehicle segment resides, e.g., mini and small vehicles in Asia Pacific, compact vehicles in Europe and midsize, crossover, and rear-wheel drive vehicles in North America. We are engineering most of these global architectures to enable various electric propulsion systems, rather than having unique architectures for hybrids, plug-in hybrids, extended-range electric and electric vehicles.

The ten global architectures are:


• Mini		• Midsize Truck
• Small		• Small Sport Utility Vehicle
• Compact		• Compact Sport Utility Vehicle
• Midsize		• Small Rear-Wheel Drive
• Midsize Crossover		• Large Rear-Wheel Drive

We plan to increase the volume of vehicles produced from common global architectures to more than 50% of our total volumes in 2015 from less than 17% today.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Intellectual Property

We generate and hold a significant number of patents in a number of countries in connection with the operation of our business. While none of these patents by itself is material to our business as a whole, these patents are very important to our operations and continued technological development. We hold a number of trademarks and service marks that are very important to our identity and recognition in the marketplace.

Raw Materials, Services and Supplies

We purchase a wide variety of raw materials, parts, supplies, energy, freight, transportation and other services from numerous suppliers for use in the manufacture of our products. The raw materials are primarily composed of steel, aluminum, resins, copper, lead and platinum group metals. We have not experienced any significant shortages of raw materials and normally do not carry substantial inventories of such raw materials in excess of levels reasonably required to meet our production requirements. In 2009 the weakening of commodity prices experienced in the latter part of 2008 was generally reversed with prices returning to more historical levels by year end. In early 2010, our costs increased further as commodity prices increased faster than expected due to economic growth in China and speculative activity in the commodity markets. During the middle part of 2010 there was a slight leveling of commodity prices due to European sovereign debt issues and concerns over a slowdown in China, but commodity prices have returned to steady price increases during the last few months of 2010.

In some instances, we purchase systems, components, parts and supplies from a single source and may be at an increased risk for supply disruptions. Based on our standard payment terms with our systems, components and parts suppliers, we are generally required to pay most of these suppliers on average 47 days following receipt with weekly disbursements.

Environmental and Regulatory Matters

Automotive Emissions Control

We are subject to laws and regulations that require us to control automotive emissions, including vehicle exhaust emission standards, vehicle evaporative emission standards and onboard diagnostic system (OBD) requirements, in the regions throughout the world in which we sell cars, trucks and heavy-duty engines.

North America

The U.S. federal government imposes stringent emission control requirements on vehicles sold in the U.S., and additional requirements are imposed by various state governments, most notably California. These requirements include pre-production testing of vehicles, testing of vehicles after assembly, the imposition of emission defect and performance warranties and the obligation to recall and repair customer owned vehicles that do not comply with emissions requirements. We must obtain certification that the vehicles will meet emission requirements from the Environmental Protection Agency (EPA) before we can sell vehicles in the U.S. and Canada and from the CARB before we can sell vehicles in California and other states that have adopted the California emissions requirements.

The EPA and the CARB continue to emphasize testing on vehicles sold in the U.S. for compliance with these emissions requirements. We believe that our vehicles meet the current EPA and CARB requirements. If our vehicles do not comply with the emission standards or if defective emission control systems or components are discovered in such testing, or as part of government required defect reporting, we could incur substantial costs related to emissions recalls and possible fines. We expect that new CARB and federal requirements will increase the time and mileage periods over which manufacturers are responsible for a vehicle’s emission performance.

The current EPA and the CARB emission requirements are referred to as Tier 2 and Low Emission Vehicle (LEV) II. Fleet-wide compliance with the Tier 2 and LEV II standards must be achieved based on a sales-weighted fleet average. President Obama has

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

directed the EPA to review its vehicle emission standards, and if the EPA finds that more stringent emission regulations are necessary, to promulgate such regulations. The CARB is developing its next generation emission standards, LEV III, which will further increase the stringency of its emission standards. We expect the LEV III requirements to be adopted as early as the fourth quarter of 2011 and to be phased in beginning with the 2014 model year. Both the EPA and the CARB have enacted regulations to control the emissions of greenhouse gases. Since we believe these regulations are effectively a form of fuel economy requirement, they are discussed under “Automotive Fuel Economy.”

California law requires that 11% of 2011 model year cars and certain light-duty trucks sold in the state must be zero emission vehicles (ZEV), such as electric vehicles or hydrogen fuel cell vehicles. The requirement is based on a complex system of credits that vary in magnitude by vehicle type and model year. Manufacturers have the option of meeting a portion of this requirement with partial ZEV credit for vehicles that meet very stringent exhaust and evaporative emission standards and have extended emission system warranties. An additional portion of the ZEV requirement can be met with vehicles that meet these partial ZEV requirements and incorporate advanced technology, such as a hybrid electric propulsion system meeting specified criteria. Beginning in 2012, an additional portion of the ZEV requirement can be met with PHEVs that meet the partial ZEV requirements and certain other criteria. We are complying with the ZEV requirements using a variety of means, including producing vehicles certified to the partial ZEV requirements. CARB has also announced plans to adopt, as early as the fourth quarter of 2011, 2018 model year and later requirements for ZEVs and PHEVs to achieve greenhouse gas as well as criteria pollutant emission reductions to help achieve the state’s long-term greenhouse gas reduction goals.

The Clean Air Act permits states that have areas with air quality compliance issues to adopt the California car and light-duty truck emission standards in lieu of the federal requirements. Twelve states, including New York, Massachusetts, Maine, Vermont, Connecticut, Pennsylvania, Rhode Island, New Jersey, Oregon, Washington, Maryland and New Mexico, as well as the Province of Quebec, currently have these standards in effect, although New Mexico has waived its requirements through 2016 effective January 2011. Arizona has adopted the California standards effective beginning in the 2012 model year and Delaware has adopted those standards beginning in the 2014 model year. Additional states could also adopt the California standards in the future.

Advanced OBD systems, used to identify and diagnose problems with emission control systems, are required under U.S. federal, Canadian federal and California law. Problems detected by the OBD system have the potential of increasing warranty costs and the chance for recall. OBD requirements become more challenging each year as vehicles must meet lower emission standards and new diagnostics are required. California has adopted more stringent and technically challenging OBD requirements that take effect from the 2008 through 2013 model years, including new design requirements and corresponding enforcement procedures. We have implemented hardware and software changes to comply with these more stringent requirements.

The federal Tier 2 requirements for evaporative emissions are being harmonized with the California evaporative emission requirements beginning with a 2009 model year phase-in. California plans to further increase the stringency of its evaporative emission requirements as part of its LEV III rulemaking.

Vehicles equipped with heavy-duty engines are also subject to stringent emission requirements, and could be recalled, or fines could be imposed against us, should testing or defect reporting identify a noncompliance with these emission requirements. For the 2011 model year, certain gasoline and diesel-powered Chevrolet Silverados, GMC Sierra Pickups, Chevrolet Express and GMC Savana Vans are classified as heavy-duty and subject to these requirements. We also certify heavy-duty engines for installation in other manufacturers’ products. The heavy-duty exhaust standards became more stringent in the 2010 model year. As permitted by EPA and CARB regulations, we are using a system of credits, referred to as Averaging Banking and Trading, to help meet these stringent standards. OBD requirements were first applied to heavy-duty vehicles beginning with the 2010 model year, which we are meeting with certain hardware and software changes.

Europe

In Europe, emissions are regulated by two different entities: the European Commission (EC) and the United Nations Economic Commission for Europe (UN ECE). The EC imposes harmonized emission control requirements on vehicles sold in all 27 European

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Union (EU) Member States, and other countries apply regulations under the framework of the UN ECE. EU Member States can give tax incentives to automobile manufacturers for vehicles which meet emission standards earlier than the compliance date. This can result in specific market requirements for automobile manufacturers to introduce technology earlier than is required for compliance with the EC emission standards. The current EC requirements include type approval of preproduction testing of vehicles, testing of vehicles after assembly and the obligation to recall and repair vehicles that do not comply with emissions requirements. EC and UN ECE requirements are equivalent in terms of stringency and implementation. We must demonstrate that vehicles will meet emission requirements in witness tests and obtain type approval from an approval authority before we can sell vehicles in the EU Member States.

Emission requirements in Europe will become even more stringent in the future. A new level of exhaust emission standards for cars and light-duty trucks, Euro 5 standards, was applied in 2009, while stricter Euro 6 standards will apply beginning in 2014. The OBD requirements associated with these new standards will become more challenging as well. The new European emission standards focus particularly on reducing emissions from diesel vehicles. Diesel vehicles have become important in the European marketplace, where they encompass 50% of the market share. The new requirements will require additional technologies and further increase the cost of diesel engines, which currently cost more than gasoline engines. To comply with Euro 6, we expect that we will need to implement technologies which are identical to those being developed to meet U.S. emission standards. The technologies available today are not cost effective and would therefore not be suitable for the European market for small- and mid-size diesel vehicles, which typically are under high cost pressure. Certain measures to reduce exhaust pollutant emissions have detrimental effects on vehicle fuel economy, which drives additional technology cost to maintain fuel economy.

In the long-term, notwithstanding the already low vehicle emissions in Europe, regulatory discussions in Europe are expected to continue. Regulators will continue to refine the testing requirements addressing issues such as test cycle, durability, OBD, in-service conformity and off-cycle emissions.

International Operations

In our international operations, our vehicles are subject to a broad range of vehicle emission laws and regulations. China has implemented European emission standards, with Euro 4 standards first applied in Beijing in 2008. Shanghai implemented Euro 4 standards with European OBD requirements for newly registered vehicles in 2009 and Euro 4 standards came into effect nationwide in 2010 for new vehicle approvals and will come into effect beginning in 2011 for newly registered vehicles. Beijing is expected to require many elements of Euro 5 standards for newly registered vehicles beginning in 2012 with additional elements of Euro 5 standards being enforced beginning in 2014. Nationwide implementation of Euro 5 is expected in 2013 or 2014. South Korea has implemented the following: (1) CARB emission requirements based on a sales-weighted fleet average with different application timings and levels of non-methane organic gas (which is the sum of all organic air pollutants, excluding methane) targets for gasoline and LPG powered vehicles; (2) Euro 5 standards for diesel-powered vehicles; (3) CARB standards for gasoline-powered vehicles; and (4) EU regulations for diesel-powered vehicles for OBD and evaporative emissions. The senior representatives from each of the Association of Southeast Asian Nations (ASEAN Committee) agreed that the major ASEAN countries of Thailand, Malaysia, Indonesia, Philippines and Singapore would implement Euro 4 standards for gasoline and diesel powertrains, with the exception of Singapore which already requires Euro 4 for diesel powertrains. In April 2010 most of the ASEAN countries decided to postpone Euro 4 beyond 2012 with the exception of Thailand. Since April 2010 India’s Bharat Stage IV emission standards have been required for new vehicle registrations in 13 major cities and Bharat Stage III emission standards are required throughout the rest of India. Starting in 2013 EU OBD II will be implemented for all Bharat Stage IV vehicles. Roadworthiness requirements in 13 major cities for Bharat Stage IV vehicles will commence in 2011. Japan sets specific exhaust emission and durability standards, test methods and driving cycles. In Japan, OBD is required with both EU and U.S. OBD systems accepted. All other countries in which we conduct operations within the Asia Pacific region either require or allow some form of EPA, EU or UN ECE style emission regulations with or without OBD requirements. In Russia, current emission regulations are equivalent to Euro 3 for cars and Euro 2 for commercial vehicles. The implementation of Euro 4 equivalent emission requirements for cars has been delayed to 2012. Euro 5 equivalent emission requirements for cars do not have an implementation date, but are expected to be implemented in 2015. Australia currently requires a Euro 4 equivalent emission standard and is currently considering the implementation of a Euro 5 equivalent emission standard.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

South America

In South America, some countries follow the U.S. test procedures, standards and OBD requirements and some follow the EU test procedures, standards and OBD requirements with different levels of stringency. Brazil implemented national LEV standards, L5, which preceded Tier 2 standards in the U.S., for passenger cars and light commercial vehicles in 2009. L6 standards for light diesel vehicles are to be implemented in 2012, which mandate OBD requirements for light diesel vehicles in 2015. L6 standards for light gasoline vehicles are to be implemented in 2014 for new vehicles and 2015 for all models. Argentina implemented Euro 4 standards starting with new vehicle registrations in 2009 and is moving to Euro 5 standards in 2012 for new vehicles and 2014 for all models. Chile currently requires U.S. Tier 1 or Euro 3 standards for gasoline vehicles and U.S. Tier 2 Bin 8 or Euro 4 standards for diesel vehicles and has approved U.S. Tier 2 Bin 8 or Euro 4 standards for gasoline vehicles beginning in April 2011 and U.S. Tier 2 Bin 5 or Euro 5 standards for diesel vehicles beginning in September 2011. Other countries in the South America region either have adopted some level of U.S. or EU standards or no standards at all.

Industrial Environmental Control

Our operations are subject to a wide range of environmental protection laws including those laws regulating air emissions, water discharges, waste management and environmental cleanup. In connection with the 363 Sale we have assumed various stages of investigation for sites where contamination has been alleged and a number of remediation actions to clean up hazardous wastes as required by federal and state laws. Certain environmental statutes require that responsible parties fund remediation actions regardless of fault, legality of original disposal or ownership of a disposal site. Under certain circumstances these laws impose joint and several liability, as well as liability for related damages to natural resources.

The future effect of environmental matters, including potential liabilities, is often difficult to estimate. Environmental reserves are recorded when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. This practice is followed whether the claims are asserted or unasserted. At December 31, 2010 our reserves for environmental liabilities were $195 million. The amount of current reserves is expected to be paid out over the periods of remediation for the applicable sites, which typically range from five to 30 years.

The following table summarizes the expenditures for site-remediation actions, including ongoing operations and maintenance (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Site remediation expenses	$	19	$	3	$	34	$	94

It is possible that such remediation actions could require average annual expenditures of $30 million over the next five years.

Certain remediation costs and other damages for which we ultimately may be responsible are not reasonably estimable because of uncertainties with respect to factors such as our connection to the site or to materials located at the site, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions and the nature and scope of investigations, studies and remediation to be undertaken (including the technologies to be required and the extent, duration and success of remediation). As a result, we are unable to determine or reasonably estimate the total amount of costs or other damages for which we are potentially responsible in connection with all sites, although that total could be substantial.

To mitigate the effects our worldwide facilities have on the environment, we are committed to convert as many of our worldwide facilities as possible to landfill-free facilities. Landfill-free facilities send no manufacturing waste to landfills, by either recycling or creating energy from the waste. As part of our commitment to reduce the environmental effect resulting from our worldwide facilities, our goal was to convert half of our major global manufacturing operations to landfill-free facilities by 2010. In 2010 we achieved this

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

goal with 76 landfill-free facilities, which is 52% of our worldwide facilities. At our landfill-free facilities, over 96% of waste materials are recycled or reused and 3% is converted to energy at waste-to-energy facilities. We estimate that we recycled or reused over 1.9 million tons of waste materials and estimate that we converted 38,800 tons of waste materials to energy at waste-to-energy facilities in the year ended December 31, 2010. These numbers will increase as additional manufacturing sites reach landfill-free status.

We are continuing to implement our global energy strategy with a goal to increase our green power purchases. Our web-based data collection and management system is an integrated application designed to monitor and measure energy use as well as calculate the related carbon dioxide (CO₂) emissions, including collecting and verifying energy, water, and other environmental data from facilities around the globe. We manage our greenhouse gas emissions using an integrated systems approach. This integrated systems approach includes a greenhouse gas reporting policy, global process to collect accurate data, internal and external targets and reporting progress against the established targets.

Automotive Fuel Economy

North America

The 1975 Energy Policy and Conservation Act (EPCA) provided for average fuel economy requirements for fleets of passenger cars built for the 1978 model year and thereafter. Corporate Average Fuel Economy (CAFE) reporting is required for three separate fleets, domestically produced cars, imported cars and light-duty trucks. In 2010 car standards were fixed at 27.5 mpg while the light duty trucks standards were established using targets for various vehicle sizes and vehicle model sales volumes. The following table summarizes our estimated CAFE compliance standards and our projected compliance (in mpg):


	2010 Model Year (a)				2011 Model Year (b)(c)
	Standard		GM		Standard		GM
Domestic car		27.5		30.6		30.0		31.0
Import car		27.5		34.0		28.2		30.2
Light-duty truck		22.9		25.4		22.7		22.7

(a)	Reported in our Official 2010 Mid-Model Year Automotive Fuel Economy Report to National Highway Traffic Safety Administration (NHTSA).

(b)	Reported in our Official 2011 Pre-Model Year Automotive Fuel Economy Report to NHTSA.

(c)	Beginning in 2011 all three fleet’s standards are reformed (i.e., based on vehicle size and vehicle model sales volumes).

In response to a U.S. Supreme Court decision, the EPA was directed to establish a new program to regulate greenhouse gas emissions for vehicles under the Clean Air Act. In April 2010 the EPA and the NHTSA issued a joint final rule to implement a coordinated national program consisting of new requirements for model year 2012 through 2016 light-duty vehicles that will reduce greenhouse gas emissions under the Clean Air Act and improve fuel economy pursuant to the CAFE standards under the EPCA. These reform-based standards apply to 2012 through 2016 model year passenger cars, light-duty trucks, and medium-duty passenger vehicles (collectively, light-duty vehicles) and will require an industry wide standard of 35.5 mpg by 2016. Our current product plan projects compliance with the federal programs through 2016.

Environment Canada, an agency established to preserve and enhance the quality of the natural environment and coordinate environmental policies and programs for the Canadian federal government, implemented vehicle greenhouse gas standards that were harmonized with the mandatory standards of the U.S. beginning with the 2011 model year. The Province of Quebec has indicated that it will align its vehicle greenhouse gas regulation to the Canadian federal government requirements once they are finalized.

California has passed legislation (AB 1493) requiring the CARB to regulate greenhouse gas emissions from vehicles (which is the same as regulating fuel economy). This California program is currently established for the 2009 through 2016 model years. California needed a federal waiver to implement this program and was granted this waiver in June 2009.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CARB has agreed that compliance with the federal program is deemed to be compliance with the California program for 2012 through 2016 model years. California’s program to regulate vehicle greenhouse gases is separately in effect for the 2009 through 2011 model years. The following table summarizes California’s program compliance standards and our projected compliance (in grams per mile CO₂-equivalent):


	2009 Model Year				2010 Model Year				2011 Model Year
	Standard		Combined GM and Old GM		Standard		GM		Standard		GM (a)
Passenger car and light-duty truck 1 fleet		323		297		301		295		267		291
Light–duty truck 2 + medium-duty passenger vehicle fleet		439		414		420		384		390		379

(a)	Our performance projections for the 2011 model year for passenger cars is projected to be more than the standard. We are still projecting compliance in 2011 due to the allowed use of credits earned in previous years.

Europe

In Europe, legislation was passed in 2009 to regulate vehicle CO₂ emissions beginning in 2012. Based on a target function of CO₂ to vehicle weight, each automobile manufacturer must meet a specific sales weighted fleet average target. This fleet average requirement will be phased in with 65% of vehicles sold in 2012 required to meet this target, 75% in 2013, 80% in 2014 and 100% in 2015 and beyond. Automobile manufacturers can earn super-credits under this legislation for the sales volume of vehicles having a specific CO₂ value of less than 50 grams CO₂. This is intended to encourage the early introduction of ultra-low CO₂ vehicles such as the Chevrolet Volt and Opel Ampera by providing an additional incentive to reduce the CO₂ fleet average. Automobile manufacturers may gain credit of up to seven grams for eco-innovations for those technologies which improve real-world fuel economy but may not show in the test cycle, such as solar panels on vehicles. There is also a 5% credit for E85 FlexFuel vehicles if more than 30% of refueling stations in an EU Member State sell E85. Further regulatory detail is being developed in the comitology process, which develops the detail of the regulatory requirements through a process involving the EC and EU Member States. The legislation sets a target of 95 grams per kilometer CO₂ for 2020 with an impact assessment required to further assess and develop this requirement. We have developed a compliance plan by adopting operational CO₂ targets for each market entry in Europe.

In 2009 the European Commission adopted a proposal to regulate CO₂ emissions from light commercial vehicles. The proposal is modeled after the CO₂ regulation for passenger cars. It proposes that new light commercial vehicles meet a fleet average CO₂ target of 175 grams per kilometer CO₂ with a phase-in of compliance beginning with 75% of new light commercial vehicles by 2014, 80% by 2015 and 100% compliance by 2016. The manufacturer-specific CO₂ compliance target will be determined as a function of the weight of the vehicle with all standard equipment and fuel (vehicle curb weight). Flexibilities, such as eco-innovations and super credits, are part of the regulatory proposal as well. A long-term target for 2020 of 135g/km has been also proposed, to be confirmed in 2013 after an impact assessment. We are currently performing an assessment of the effect of the proposal on our fleet of light commercial vehicles. The proposal will now go through the legislative process with the European Parliament and European Council, during which we expect some modifications to be adopted.

An EC regulation has been adopted that will require low-rolling resistance tires, tire pressure monitoring systems and gear shift indicators by 2012. An additional EC regulation has been adopted that will require labeling of tires for noise, fuel efficiency and rolling resistance, affecting vehicles at the point of sale as well as the sale of tires in the aftermarket.

Seventeen EU Member States have introduced fuel consumption or CO₂ based vehicle taxation schemes. Tax measures are within the jurisdiction of the EU Member States. We are faced with significant challenges relative to the predictability of future tax laws and differences in the tax schemes and thresholds.

International Operations

In our international operations, we face new or increasingly more stringent fuel economy standards. In China, Phase 3 fuel economy standards are under development and will move from a vehicle pass-fail system to a curb-weight based, corporate fleet

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

average scheme. Phase 3 fuel economy standards are expected to increase by 15% or more from the current Phase 2 targets and implementation is expected to be phased in from 2012 with full compliance required by 2015. Some relief for certain vehicle types and vehicles with automatic transmissions will be applied through 2015. In 2016 there will be one common standard for vehicles with either a manual or automatic transmission. China is also considering proposals to increase annual vehicle taxes, and to scale the tax rates to more heavily tax larger displacement engines beginning in 2012. In Korea, new preliminary fuel economy/CO₂ targets for 2012 through 2015 and beyond were announced in September 2010 as part of the government’s low carbon/green growth strategy. These targets are based on each vehicle’s curb weight, but in general are set at levels more stringent than fuel economy/CO₂ targets in the U.S., but less stringent than fuel economy/CO₂ targets in Europe. The proposed standards will be phased-in beginning in 2012 and finishing in 2015 with manufacturers having the option to certify either on a fuel consumption basis or a CO₂ emissions basis. Each manufacturer will be given a corporate target to meet based on an overall industry fleet fuel economy/CO₂ average. Other aspects of the program being considered include credits, incentives, and penalties. In January 2011 Korea announced the exemption level for compliance by small volume manufacturers as discussed in the Korea-U.S. and Korea-EU free trade agreement negotiations. Manufacturers with sales volumes of less than 4,500 units in 2009 will meet the small volume manufacturer’s exemption and will be subject to less stringent requirements. Korea is expected to finalize and promulgate the new fuel economy/CO₂ regulation in the first quarter of 2011. In Australia, the government is conducting an assessment of possible vehicle fuel efficiency measures including shifting from voluntary to mandatory standards and how any such move would align with the government’s policy response to climate change. Before the government makes any decisions on additional fuel efficiency measures, it will conduct an industry consultation. India is expected to establish fuel economy norms based on weight and measured in CO₂ emissions that will become mandatory in 2015. The Indian government is considering establishing voluntary limits in 2012, mandatory limits in 2015 with a 12.4% decrease from 2012 values and a 13.0% drop from 2015 limits by 2020. In 2009 automobile manufacturers in India began to voluntarily declare the fuel economy of each vehicle at the point of sale. In South Africa, CO₂ emissions are not regulated, but a new CO₂ emission tax went into effect for all new passenger cars in September 2010 with the exception of double cabbed light commercial vehicles, for which implementation is delayed until March 2011.

South America

In Brazil, governmental bodies and the Brazilian automobile manufacturers association established a national voluntary program for evaluation and labeling of light passenger and commercial vehicles equipped with internal combustion engines. This voluntary program aims to increase vehicle energy efficiency by labeling vehicles with fuel consumption measurements for urban, extra-urban and combined (equivalent to city and highway mpg measurements in the U.S.) driving conditions.

Chemical Regulations

North America

In the U.S., the EPA and several states have introduced regulations or legislation related to the selection and use of safer chemical alternatives, green chemistry and product stewardship initiatives as have several provinces in Canada. These initiatives will give broad regulatory authority over the use of certain chemical substances and potentially affect automobile manufacturers’ responsibilities for vehicle life-cycle, including chemical substance selection for product development and manufacturing. Although vehicles may not specifically be included in the regulations currently being developed, automotive sector effects are expected because substances that comprise components may be included. These emerging regulations will potentially lead to increases in cost and supply chain complexity. California’s “Safer Alternatives for Consumer Products” was the first of these regulations although implementation requirements have been delayed beyond 2010.

Europe

In 2007 the EU implemented its regulatory requirements to register, evaluate, authorize and restrict the use of chemical substances (REACH). This regulation requires chemical substances manufactured in or imported into the EU in quantities of one metric ton or more per year to be registered with the European Chemicals Agency before 2018. During REACH’s pre-registration phase, Old GM

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

and our suppliers registered those substances identified by the regulation. REACH is to be phased in over a 10 year period. During the implementation phase, REACH will require ongoing action from manufacturers and importers of pure chemical substances, chemical preparations (mixtures), and articles. This will affect us, as an original equipment manufacturer (OEM), as well as our suppliers and other suppliers in the supply chain. Under REACH, substances of very high concern may either require authorization for further use or may be restricted in the future. This could potentially increase the cost of certain alternative substances that are used to manufacture vehicles and parts or result in a supply chain disruption when a substance is no longer available to meet production timelines. Our research and development initiatives may be diverted to address future REACH requirements. In order to maintain compliance, we are continually monitoring the implementation of REACH and its effect on our suppliers and the automotive industry.

Safety

New motor vehicles and motor vehicle equipment sold in the U.S. are required to meet certain safety standards promulgated by the NHTSA. The National Traffic and Motor Vehicle Safety Act of 1966 authorized the NHTSA to determine these standards and the schedule for implementing them. In the case of a vehicle defect that creates an unreasonable risk to motor vehicle safety or if a vehicle or item of motor vehicle equipment does not comply with a safety standard, the manufacturer is required to notify owners and provide a remedy. We are required to report certain information relating to certain customer complaints, warranty claims, field reports and notices and claims involving property damage, injuries and fatalities in the U.S. and claims involving fatalities outside the U.S., as well as information concerning safety recalls and other safety campaigns outside the U.S.

We are subject to certain safety standards and recall regulations in the markets outside the U.S. These standards often have the same purpose as the U.S. standards, but may differ in their requirements and test procedures. From time to time, other countries pass regulations which are more stringent than U.S. standards. Many countries require type approval while the U.S. and Canada require self-certification.

Vehicular Noise Control

Vehicles we manufacture and sell may be subject to noise emission regulations.

In the U.S., passenger cars and light-duty trucks are subject to state and local motor vehicle noise regulations. We are committed to designing and developing our products to meet these noise regulations. Since addressing different vehicle noise regulations established in numerous state and local jurisdictions is not practical, we attempt to identify the most stringent requirements and validate to those requirements. In the rare instances where a state or local noise regulation is not covered by the composite requirement, a waiver of the requirement is requested and to date the resolution of these matters has not resulted in significant cost or other material adverse effects to us. Medium to heavy-duty trucks are regulated at the federal level. Federal truck regulations preempt all United States state or local noise regulations for trucks over 10,000 lbs. gross vehicle weight rating.

Outside the U.S., noise regulations have been established by authorities at the national and supranational level (e.g., EC or UN ECE for Europe). We believe that our vehicles meet all applicable noise regulations in the markets where they are sold.

While current noise emission regulations serve to regulate maximum allowable noise levels, proposals have been made to regulate minimum noise levels. These proposals stem from concern that vehicles that are relatively quiet, specifically hybrids, may not be heard by the sight-impaired. In the U.S., the Pedestrian Safety Enhancement Act was signed into law in January 2011 which requires NHTSA to study and then issue rulemaking on the minimum safe level of sound for hybrid and electrical vehicles. In Japan, the Ministry of Land, Infrastructure and Transport has issued guidelines on the performance and nature of any external audible pedestrian alert system, if fitted to a vehicle. The UN ECE is evaluating the use of a version of the Japanese guideline as an interim measure, pending further study. We are committed to design and manufacture vehicles to comply with potential noise emission regulations that may come from these proposals.

Potential Effect of Regulations

We are actively working on aggressive near-term and long-term plans to develop and bring to market technologies designed to further reduce emissions, mitigate remediation expenses related to environmental liabilities, improve fuel efficiency, monitor and

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

enhance the safety features of our vehicles and provide additional value and benefits to our customers. This is illustrated by our commitment to marketing more hybrid vehicles, our accelerated commitment to developing electrically powered vehicles, our use of biofuels in our expanded portfolio of FlexFuel vehicles and enhancements to conventional internal combustion engine technology which have contributed to the fuel efficiency of our vehicles. The conversion of many of our manufacturing facilities to landfill-free status has shown our commitment to mitigate potential environmental liability. We believe that the development and global implementation of new, cost-effective energy technologies in all sectors is the most effective way to improve energy efficiency, reduce greenhouse gas emissions and mitigate environmental liabilities.

Despite these advanced technology efforts, our ability to satisfy fuel economy, CO₂and other emissions requirements is contingent on various future economic, consumer, legislative and regulatory factors that we cannot control and cannot predict with certainty. If we are not able to comply with specific new requirements, which include higher CAFE standards and state CO₂requirements such as those imposed by the AB 1493 Rules, then we could be subject to sizeable civil penalties or have to restrict product offerings drastically to remain in compliance. Environmental liabilities, for which we may be responsible, are not reasonably estimable and could be substantial. Violations of safety or emissions standards could result in the recall of one or more of our products. In turn, any of these actions could have substantial adverse effects on our operations, including facility idling, reduced employment, increased costs and loss of revenue.

Pension Legislation

We are subject to a variety of federal rules and regulations, including the Employee Retirement Income Security Act of 1974, as amended (ERISA) and the Pension Protection Act of 2006 (PPA), which govern the manner in which we fund and administer our pensions for our retired employees and their spouses. The PPA is designed, among other things, to more appropriately reflect the fair value of pension assets and liabilities in order to determine funding requirements. The Pension Relief Act of 2010 provides us with additional options to amortize any shortfall amortization base for U.S. hourly and salaried qualified pension plans over seven years with amortization starting two years after the election of this relief or 15 years. While we do not need to make an election at this time, we expect to evaluate these options for the 2010 and 2011 plan years in the future. We do not have any required contributions in 2011. If we decide to elect one of these options, it could provide us with the flexibility to defer and potentially reduce the size of any minimum funding requirements for future years. We also maintain pension plans for employees in a number of countries outside the U.S., which are subject to local laws and regulations.

Export Control

We are subject to U.S. export control laws and regulations, including those administered by the U.S. Departments of State, Commerce, and Treasury. Most countries in which we do business have applicable export controls. Our Office of Export Compliance and global Export Compliance Officers are responsible for working with our business units to ensure compliance with these laws and regulations. Non-U.S. export controls are likely to become increasingly significant to our business as we develop our research and development operations on a global basis. If we fail to comply with applicable export compliance regulations, we and our employees could be subject to criminal and civil penalties and, under certain circumstances, loss of export privileges and debarment from doing business with the U.S. government and the governments of other countries.

Significant Transactions

Public Offering

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Purchase of Series A Preferred Stock and Contributions to Pension Plans

In December 2010 we used proceeds received from our Series B Preferred Stock offering along with $1.2 billion cash on hand to purchase 84 million shares of our Series A Preferred Stock from the UST for a purchase price of $2.1 billion and make a $4.0 billion cash contribution to our U.S. hourly and salaried pension plans. In January 2011 we contributed 61 million shares of our common stock to our U.S. hourly and salaried pension plans valued at $2.2 billion for funding purposes. Refer to the section of this report entitled “Management’s Discussion and Analysis of Financial Condition — Specific Management Initiatives” for additional information about the purchase of Series A Preferred Stock and contributions to U.S. hourly and salaried pension plans.

Secured Revolving Credit Facility

In October 2010 we entered into a five year, $5.0 billion secured revolving credit facility. While we do not believe that we will be required to draw on the secured revolving credit facility to fund operating activities, the facility is expected to provide additional liquidity and financing flexibility. Refer to the section of this report entitled “Management’s Discussion and Analysis of Financial Condition — Liquidity and Capital Resources — Secured Revolving Credit Facility” for additional information about the secured revolving credit facility.

Acquisition of AmeriCredit

On October 1, 2010 we completed the acquisition of AmeriCredit for cash of approximately $3.5 billion.

363 Sale

On July 10, 2009, we completed the acquisition of substantially all of the assets and assumed certain liabilities of Old GM and three of its domestic direct and indirect subsidiaries (collectively, the Sellers). The 363 Sale was consummated in accordance with the Purchase Agreement, between us and the Sellers, and pursuant to the Bankruptcy Court’s sale order dated July 5, 2009 (Purchase Agreement). Refer to the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Chapter 11 Proceedings and the 363 Sale” for additional information about the 363 Sale.

In connection with the 363 Sale, we also entered into a secured note agreement, as amended (VEBA Note Agreement) with the UAW Retiree Medical Benefits Trust (New VEBA) and issued the notes thereunder (VEBA Notes) to the New VEBA in the principal amount of $2.5 billion on July 10, 2009. The VEBA Notes had an implied interest rate of 9.0% per annum and were scheduled to be repaid in three equal installments of $1.4 billion on July 15 of 2013, 2015 and 2017. In October 2010, we repaid in full the outstanding amount (together with accreted interest thereon) of the VEBA Notes of $2.8 billion.

Agreements with UST and EDC

On July 10, 2009 we entered into a secured credit agreement with the UST (as amended, UST Credit Agreement) and assumed debt of $7.1 billion Old GM incurred under the DIP Facility (as subsequently defined). Through our wholly-owned subsidiary General Motors of Canada (GMCL), we entered into an amended and restated loan agreement (Canadian Loan Agreement) with Export Development of Canada (EDC) and assumed a CAD $1.5 billion (equivalent to $1.3 billion when entered into) term loan maturing on July 10, 2015 (Canadian Loan). Proceeds of the DIP Facility of $16.4 billion were deposited in escrow, to be distributed to us at our request if certain conditions were met and returned to us after the UST Loans and the Canadian Loan were repaid in full. Immediately after entering into the UST Credit Agreement, we made a partial pre-payment due to the termination of the U.S. government sponsored warranty program, reducing the principal balance to $6.7 billion.

In April 2010 we used funds from our escrow account to repay in full the outstanding amount of the UST Loans of $4.7 billion and GMCL repaid in full the then-outstanding amount of the Canadian Loan of $1.1 billion. Both loans were repaid prior to maturity. Following our repayment of the UST Loans and the Canadian Loan, our remaining funds of $6.6 billion that were held in escrow

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

became unrestricted. Refer to the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — UST Loans and Canadian Loan” for additional information about the UST Loans and Canadian Loan.

Agreement with Delphi Corporation

In July 2009, we entered into the Delphi Master Distribution Agreement (DMDA) with Delphi Corporation (Delphi) and other parties. Under the DMDA, we agreed to acquire Nexteer, which supplies us and other OEMs with steering systems and columns, and four domestic facilities that manufacture a variety of automotive components, primarily sold to us. We and several third party investors agreed to acquire substantially all of Delphi’s remaining assets through New Delphi and certain excluded assets and liabilities have been retained by a Delphi entity to be sold or liquidated. In October 2009, we consummated the transaction contemplated by the DMDA with Delphi, New Delphi, Old GM and other sellers and other buyers that are party to the agreement, as more fully described in Note 5 to our consolidated financial statements. Refer to the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Specific Management Initiatives — Resolution of Delphi Matters” for a description of the terms of the DMDA and related agreements.

Employees

At December 31, 2010 we employed 202,000 employees, of whom 135,000 (67%) were hourly employees and 67,000 (33%) were salaried employees. The following table summarizes worldwide employment (in thousands):


	Successor				Predecessor
	December 31, 2010		December 31, 2009		December 31, 2008
GMNA (a)		96		103		118
GME (b)		40		50		54
GMIO (c)		32		34		38
GMSA		31		28		32
GM Financial		3		—		—

Total Worldwide		202		215		242

U.S. — Salaried		28		26		30
U.S. — Hourly		49		51		62

(a)	Decrease in GMNA primarily relates to restructuring initiatives in the years ended December 31, 2010 and 2009.

(b)	Decrease in GME primarily relates to the sale of Saab, employees located within Russia and Uzbekistan transferred from our GME segment to our GMIO segment and restructuring initiatives in Belgium, Germany, Spain and the United Kingdom in the year ended December 31, 2010.

(c)	GMIO reflects a reduction of 2,400 employees due to the sale of GM India in the year ended December 31, 2010.

At December 31, 2010 49,000 of our U.S. employees (or 64%) were represented by unions, of which 48,000 employees were represented by the UAW. Many of our employees outside the U.S. were represented by various unions. At December 31, 2010, we had 400,000 U.S. hourly and 120,000 U.S. salaried retirees, surviving spouses and deferred vested participants.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Executive Officers of the Registrant

The names and ages as of February 28, 2011 of our executive officers, and their positions and offices with General Motors are as follows:


Name and (Age)		Positions and Offices
Daniel F. Akerson (62)		Chairman and Chief Executive Officer
Stephen J. Girsky (48)		Vice Chairman, Corporate Strategy, Business Development, Global Product Planning, and Global Purchasing and Supply Chain
Christopher P. Liddell (52)		Vice Chairman and Chief Financial Officer
Thomas G. Stephens (62)		Vice Chairman and Global Chief Technology Officer
Jaime Ardila (55)		GM Vice President & President, South America
Timothy E. Lee (60)		GM Vice President & President, International Operations
David N. Reilly (61)		GM Vice President & President, Europe
Mark L. Reuss (47)		GM Vice President & President, North America
Mary T. Barra (49)		GM Senior Vice President, Global Product Development
Michael P. Millikin (62)		GM Senior Vice President and General Counsel
Daniel Ammann (38)		GM Vice President, Finance and Treasurer
Selim Bingol (50)		GM Vice President, Global Communications
Nicholas S. Cyprus (57)		GM Vice President, Controller and Chief Accounting Officer
Joel Ewanick (50)		GM Vice President and Global Chief Marketing Officer
Terry S. Kline (49)		GM Vice President, Information Technology and Chief Information Officer

There are no family relationships, as defined in Item 401 of Regulation S-K, between any of the officers named above, and there is no arrangement or understanding between any of the officers named above and any other person pursuant to which he or she was selected as an officer. Each of the officers named above was elected by the Board of Directors or a committee of the Board to hold office until the next annual election of officers and until his or her successor is elected and qualified or until his or her earlier resignation or removal. The Board of Directors elects the officers immediately following each annual meeting of the stockholders and may appoint other officers between annual meetings.

Daniel F. Akerson was named Chief Executive Officer in September 2010 and Chairman in January 2011. He had been a member of our Board of Directors since July 2009 and served on the Finance and Risk Policy (Chair) and Audit Committees. Before joining GM, he was Managing Director and Head of Global Buyout of The Carlyle Group from July 2009 until August 2010 and Managing Director and Co-Head of the U.S. Buyout Fund from 2003 to 2009. Mr. Akerson previously served as Chairman and Chief Executive Officer of XO Communications, Inc. from 1999 to January 2003, Chairman of Nextel Communications from 1996 to 2001, and Chairman and Chief Executive Officer from 1996 to 1999.

Stephen J. Girsky was named Vice Chairman of Corporate Strategy, Business Development, Global Product Planning, and Global Purchasing and Supply Chain in February 2011. He had been Vice Chairman of Corporate Strategy and Business Development since March 2010. He had been a member of our Board of Directors since July 2009 and served on the Finance and Risk Policy and Public Policy Committees. Prior to joining GM, he served as Senior Advisor to the Office of the Chairman of our company from December 2009 to February 2010 and President of S. J. Girsky & Company an advisory firm, from January 2009 to March 1, 2010. From November 2008 to June 2009, Mr. Girsky was an advisor to the UAW. He served as President of Centerbridge Industrial Partners, LLC, an affiliate of Centerbridge Partners, L.P., a private investment firm, from 2006 to 2009. Prior to joining Centerbridge, Mr. Girsky was a special advisor to the Chief Executive Officer and the Chief Financial Officer of Old GM from 2005 to June 2006. Mr. Girsky also served as lead director of Dana Holding Corporation (2008 to 2009). He has been a member of the Supervisory Board of Adam Opel GmbH since January 2010.

Christopher P. Liddell joined GM as Vice Chairman and Chief Financial Officer in January 2010 and leads our financial and accounting operations on a global basis. Before joining GM, Liddell was CFO for Microsoft Corporation from May 2005 until December 2009, where he was responsible for leading their worldwide finance organization. Mr. Liddell had previously served as CFO at International Paper Company.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Thomas G. Stephens was named Vice Chairman and Global Chief Technology Officer in January 2011. He had been associated with Old GM since 1969. Mr. Stephens had been Vice Chairman, Global Product Operations since December 2009, Vice Chairman, Global Product Development from July 2009 to December 2009 and Vice Chairman, Global Product Development for Old GM since April 2009. In January 2007, Mr. Stephens was appointed Group Vice President Global Powertrain and Global Quality and became Executive Vice President in March 2008. He was named Group Vice President for Global Powertrain in July 2001.

Jaime Ardila was named GM Vice President & President, South America, effective July 2010. He had been associated with Old GM since 1984. He had served as President and Managing Director of GM Mercosur since November 2007, with responsibility for operations in Brazil, Argentina, Uruguay, Paraguay, Chile, Bolivia, and Peru. Prior to this position, he was Vice President and Chief Financial Officer of GM Latin America, Africa and Middle East since March 2003.

Timothy E. Lee was named GM Vice President & President, International Operations in December 2009. He had been associated with Old GM since 1969. He had been Group Vice President, Global Manufacturing and Labor since October 2009. He was named GM North America Vice President, Manufacturing in January 2006. Mr. Lee became Vice President of Manufacturing of GM Europe, in 2002.

David N. Reilly was named GM Vice President & President, Europe in December 2009. He had been associated with Old GM since 1975. He had been Executive Vice President, GM International Operations since August 2009. He was appointed Group Vice President and President of GM Asia Pacific in July 2006 and had previously been President and Chief Executive Officer of GM Daewoo after leading our transition team in the formation of GM Daewoo beginning in January 2002. Mr. Reilly served as Vice President for Sales, Marketing, and Aftersales of GM Europe beginning in August 2001.

In December 2006 Mr. Reilly was charged with regard to certain alleged violations of South Korean labor laws. The criminal charges are based on the alleged illegal engagement of certain workers employed by an outsourcing agency in production activities at GM Daewoo, in which we own a majority interest. The charges were filed against Mr. Reilly in his capacity as the most senior GM executive in South Korea and the company’s Representative Director, who under South Korean law is the most senior member of management of a stock corporation, and is the person typically named as the individual respondent or defendant in any legal action brought against such company. These charges constitute a criminal offense under the laws of South Korea but would not constitute a criminal offense in the United States. Mr. Reilly filed a formal request for trial to defend against the charges and was acquitted on February 19, 2009. This judgment was subsequently overturned on December 23, 2010, and is currently under appeal.

Mark L. Reuss was named GM Vice President & President, North America in December 2009. He had been associated with Old GM since 1983. Before this appointment, he served briefly as Vice President of Engineering. He managed our operations in Australia and New Zealand as the President and Managing Director of GM Holden, Ltd., from February 2008 until July 2009. In October 2005, Reuss was appointed Executive Director of North America vehicle systems and architecture, and the following year, he was named Executive Director of global vehicle integration, safety, and virtual development. In June 2001 he was named Executive Director, Architecture Engineering and GM Performance Division.

Mary T. Barra was named GM Senior Vice President, Global Product Development in February 2011. She had been Vice President, Global Human Resources from July 2009 to December 2010 and associated with Old GM since 1980. Prior to this appointment she had been Vice President, Global Manufacturing Engineering since February 2008. She had been Executive Director, Vehicle Manufacturing Engineering since January 2005, with global responsibility for General Assembly; Controls, Conveyors, Robotics and Welding; Paint and Polymer, and Advanced Vehicle Development Centers; and Industrial Engineering, Global Manufacturing System Implementation, and Pre-Production Operations.

Michael P. Millikin was appointed GM Senior Vice President and General Counsel in February 2011, with overall global responsibility for the legal affairs of GM. He had been Vice President and General Counsel from July 2009 to January 2011 and associated with Old GM since 1977. Mr. Millikin was appointed Assistant General Counsel in June 2001 and became Associate General Counsel in June 2005. He is a member of the Board of Directors of GM Daewoo and the Supervisory Board of Adam Opel GmbH.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Daniel Ammann was named GM Vice President, Finance and Treasurer of General Motors Company in April 2010. Before joining GM, he was Managing Director and Head of Industrial Investment Banking for Morgan Stanley, a position he held since 2004. During his 11 years at Morgan Stanley, he was instrumental in many high profile assignments spanning a variety of technology, service, and manufacturing clients.

Selim Bingol was appointed GM Vice President, Global Communications in March 2010, with overall responsibility for our global communications. Most recently, he served as Senior Vice President and senior partner with Fleishman-Hillard, where he specialized as a senior communications strategist to large international clients across diverse industries. He was Senior Vice President-Corporate Communications at AT&T Corporation from December 2004 until August 2007.

Nicholas S. Cyprus was named GM Vice President, Controller and Chief Accounting Officer in August 2009. He had been associated with Old GM since December 2006, when he became Controller and Chief Accounting Officer. Prior to joining Old GM, he was Senior Vice President, Controller and Chief Accounting Officer for the Interpublic Group of Companies from May 2004 to March 2006. From 1999 to 2004, Mr. Cyprus was Vice President, Controller and Chief Accounting Officer at AT&T Corporation.

Joel Ewanick was named Global Chief Marketing Officer in December 2010 and became GM Vice President in February 2011. Working in close collaboration with the regional presidents, he has responsibility for our brands globally, ensuring consistent representation for all brands. He had served as Vice President U.S. Marketing since joining GM in May, 2010. He previously served as Vice President of Marketing for Hyundai Motor America since February 2007. Prior to Hyundai Mr. Ewanick had been Director of Brand Planning for The Richards Group since June 2004.

Terry S. Kline was named GM Vice President, Information Technology and Chief Information Officer in October 2009. He had been associated with Old GM since December 2000. Previously Mr. Kline was the Global Product Development Process Information Officer and was responsible for coordinating product development process re-engineering activities and the implementation of associated information systems across our business sectors. From December 2004 until December 2007, he served as the Chief Information Officer for GM Asia Pacific.

Segment Reporting Data

Operating segment data and principal geographic area data for the year ended December 31, 2010 (Successor); July 10, 2009 through December 31, 2009 (Successor); January 1, 2009 through July 9, 2009 (Predecessor); and the year ended December 31, 2008 (Predecessor) are summarized in Note 35 to our consolidated financial statements.

Website Access to Our Reports

Our internet website address is www.gm.com.

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange Act) are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

In addition to the information about us and our subsidiaries contained in this Form 10-K, information about us can be found on our website, including information on our corporate governance principals. Our website, and information included in or linked to our website are not part of this 2010 Form 10-K. The public may read and copy the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.

The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an internet site that contains reports, proxy and information statements, and other information. The address of the SEC’s website is www.sec.gov.

* * * * * * *

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Item 1A. Risk Factors

We face a number of significant risks and uncertainties in connection with our operations. Our business, results of operations and financial condition could be materially adversely affected by the factors described below. While we describe each risk separately, some of these risks are interrelated and certain risks could trigger the applicability of other risks described below.

Our business is highly dependent on sales volume. Global vehicle sales have declined significantly from their peak levels, and there is no assurance that the global automobile market will recover in the near future or that it will not suffer a significant further downturn.

Our business and financial results are highly sensitive to sales volume, as demonstrated by the effect of sharp declines in vehicle sales on our and Old GM’s business in the U.S. since 2007 and globally since 2008. Vehicle sales in the U.S. have fallen significantly on an annualized basis since their peak in 2007, and sales globally have shown steep declines on an annualized basis since their peak in January 2008. Many of the economic and market conditions that drove the drop in vehicle sales, including declines in real estate values, unemployment, tightened credit markets, depressed consumer confidence and weak housing markets, continue to affect sales. Recent concerns over levels of sovereign indebtedness have contributed to a renewed tightening of credit markets in some of the markets in which we do business. Although vehicle sales began to recover in certain of our markets in the three months ended December 31, 2009 and the recovery has continued through December 31, 2010, the recovery in vehicle sales in certain of our markets, including North America, has been proceeding slowly and there is no assurance that this recovery in vehicle sales will continue or spread across all our markets. Further, sales volumes may again decline severely or take longer to recover than we expect, and if they do, our results of operations and financial condition will be materially adversely affected.

Our ability to change public perception of our company and products is essential to our ability to attract a sufficient number of consumers to consider our vehicles, particularly our new products, which is critical to our ability to achieve long-term profitability.

Our ability to achieve long-term profitability depends on our ability to entice consumers to consider our products when purchasing a new vehicle. The automotive industry, particularly in the U.S., is very competitive, and our competitors have been very successful in persuading customers that previously purchased our products to purchase their vehicles instead as is reflected by our loss of market share over the past three years. We believe that this is due, in part, to a negative public perception of our products in relation to those of some of our competitors. Changing this perception, including with respect to the fuel efficiency of our products, as well as the perception of our company in light of Old GM’s bankruptcy and our status as a recipient of aid under the Troubled Asset Relief Program (TARP), will be critical to our long-term profitability. If we are unable to change public perception of our company and products, especially our new products, including cars and crossovers, our results of operations and financial condition could be materially adversely affected.

Shortages of and volatility in the price of oil have caused and may have a material adverse effect on our business due to shifts in consumer vehicle demand.

Volatile oil prices in 2008 and 2009 contributed to weaker demand for some of Old GM’s and our higher margin vehicles, especially our fullsize sport utility vehicles, as consumer demand shifted to smaller, more fuel-efficient vehicles, which provide lower profit margins and in recent years represented a smaller proportion of Old GM’s and our sales volume in North America. Fullsize pick-up trucks, which are generally less fuel efficient than smaller vehicles, represented a higher percentage of Old GM’s and our North American sales during 2008 and 2009 compared to the total industry average percentage of fullsize pick-up truck sales in those periods. Demand for traditional sport utility vehicles and vans also declined during the same periods. Any increases in the price of oil in the U.S. or in our other markets or any sustained shortage of oil, including as a result of political instability in the Middle East and African nations, could weaken the demand for such vehicles, which could reduce our market share in affected markets, decrease profitability, and have a material adverse effect on our business.

The pace of introduction and market acceptance of new vehicles is important to our success, and the frequency of new vehicle introductions and vehicle improvements may be materially adversely affected by reductions in capital expenditures.

Our competitors have introduced new and improved vehicle models designed to meet consumer expectations and will continue to do so. Our profit margins, sales volumes, and market shares may decrease if we are unable to produce models that compare favorably

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

to these competing models. If we are unable to produce new and improved vehicle models on a basis competitive with the models introduced by our competitors, including models of smaller vehicles, demand for our vehicles may be materially adversely affected. Further, the pace of our development and introduction of new and improved vehicles depends on our ability to implement successfully improved technological innovations in design, engineering, and manufacturing, which requires extensive capital investment. Any capital expenditure cuts in these areas that were made in the past or that we may determine to implement in the future to reduce costs and conserve cash could reduce our ability to develop and implement improved technological innovations going forward, which may materially reduce demand for our vehicles.

Our future competitiveness and ability to achieve long-term profitability depends on our ability to control our costs, which requires us to successfully implement restructuring initiatives throughout our automotive operations.

We are continuing to implement a number of cost reduction and productivity improvement initiatives in our automotive operations, including labor modifications and substantial restructuring initiatives for our European operations. Our future competitiveness depends upon our continued success in implementing these restructuring initiatives throughout our automotive operations, especially in North America and Europe. While some of the elements of cost reduction are within our control, others such as interest rates or return on investments, which influence our expense for pensions, depend more on external factors, and there can be no assurance that such external factors will not materially adversely affect our ability to reduce our structural costs. Reducing costs may prove difficult due to our focus on increasing advertising and our belief that engineering expenses necessary to improve the performance, safety, and customer satisfaction of our vehicles are likely to increase.

Failure of our suppliers, due to difficult economic conditions affecting our industry, to provide us with the systems, components, and parts that we need to manufacture our automotive products and operate our business could result in a disruption in our operations and have a material adverse effect on our business.

We rely on many suppliers to provide us with the systems, components, and parts that we need to manufacture our automotive products and operate our business. In recent years a number of these suppliers have experienced severe financial difficulties and solvency problems, and some have sought relief under the Bankruptcy Code or similar reorganization laws. This trend intensified in 2009 due to the combination of general economic weakness, sharply declining vehicle sales, and tightened credit availability that has affected the automotive industry generally. Suppliers may encounter difficulties in obtaining credit or may receive an opinion from their independent public accountants regarding their financial statements that includes a statement expressing substantial doubt about their ability to continue as a going concern, which could trigger defaults under their financings or other agreements or impede their ability to raise new funds.

When comparable situations have occurred in the past, suppliers have attempted to increase their prices, pass through increased costs, alter payment terms, or seek other relief. In instances where suppliers have not been able to generate sufficient additional revenues or obtain the additional financing they need to continue their operations, either through private sources or government funding, which may not be available, some have been forced to reduce their output, shut down their operations, or file for bankruptcy protection. Such actions would likely increase our costs, create challenges to meeting our quality objectives, and in some cases make it difficult for us to continue production of certain vehicles. To the extent we take steps in such cases to help key suppliers remain in business, our liquidity would be adversely affected. It may also be difficult to find a replacement for certain suppliers without significant delay.

Increase in cost, disruption of supply, or shortage of raw materials could materially harm our business.

We use various raw materials in our business including steel, non-ferrous metals such as aluminum and copper, and precious metals such as platinum and palladium. The prices for these raw materials fluctuate depending on market conditions. In recent years, freight charges and raw material costs increased. Substantial increases in the prices for our raw materials increase our operating costs and could reduce our profitability if we cannot recoup the increased costs through increased vehicle prices. Some of these raw materials, such as corrosion-resistant steel, are only available from a limited number of suppliers. We cannot guarantee that we will be able to

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

maintain favorable arrangements and relationships with these suppliers. An increase in the cost or a sustained interruption in the supply or shortage of some of these raw materials, which may be caused by a deterioration of our relationships with suppliers or by events such as labor strikes, could negatively affect our net revenues and profitability to a material extent.

We operate in a highly competitive industry that has excess manufacturing capacity and attempts by our competitors to sell more vehicles could have a significant negative effect on our vehicle pricing, market share, and operating results.

The global automotive industry is highly competitive, and overall manufacturing capacity in the industry exceeds demand. Many manufacturers have relatively high fixed labor costs as well as significant limitations on their ability to close facilities and reduce fixed costs. Our competitors may respond to these relatively high fixed costs by attempting to sell more vehicles by adding vehicle enhancements, providing subsidized financing or leasing programs, offering option package discounts or other marketing incentives, or reducing vehicle prices in certain markets. Manufacturers in lower cost countries such as China and India have emerged as competitors in key emerging markets and announced their intention of exporting their products to established markets as a bargain alternative to entry-level automobiles. These actions have had, and are expected to continue to have, a significant negative effect on our vehicle pricing, market share, and operating results, and present a significant risk to our ability to enhance our revenue per vehicle.

Our competitors may be able to benefit from the cost savings offered by industry consolidation or alliances.

Designing, manufacturing and selling vehicles is capital intensive and requires substantial investments in manufacturing, machinery, research and development, product design, engineering, technology and marketing in order to meet both consumer preferences and regulatory requirements. Large OEMs are able to benefit from economies of scale by leveraging their investments and activities on a global basis across brands and nameplates. If our competitors consolidate or enter into other strategic agreements such as alliances, they may be able to take better advantage of these economies of scale. We believe that competitors may be able to benefit from the cost savings offered by consolidation or alliances, which could adversely affect our competitiveness with respect to those competitors. Competitors could use consolidation or alliances as a means of enhancing their competitiveness or liquidity position, which could also materially adversely affect our business.

Our business plan and other obligations require substantial liquidity, and inadequate cash flow could materially adversely affect our financial condition and future business operations.

We will require substantial liquidity to support our business plan and meet other funding requirements. We expect total engineering and capital spending of $15.0 billion in 2011 as we continue to refresh and broaden our product portfolio, increase our sales, and develop advanced technologies, with continued substantial expenditures on engineering and capital spending in subsequent years. At December 31, 2010 we have debt maturities and capital lease obligations of $9.9 billion through 2015, which include GM Financial. We also anticipate continued expenditures to implement long-term cost savings and restructuring plans, including our Opel/Vauxhall restructuring plan. In addition to the foregoing liquidity needs, we also have minimum liquidity covenants in our secured revolving credit facility, which require us to maintain at least $4.0 billion in consolidated global liquidity and at least $2.0 billion in consolidated U.S. liquidity. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for a further discussion of these liquidity requirements.

If our liquidity levels approach the minimum liquidity levels necessary to support our normal business operations, we may be forced to raise additional capital on terms that may not be favorable, curtail engineering and capital spending, and reduce research and development and other programs that are important to the future success of our business. A reduction in engineering and capital and research and development spending would negatively affect our ability to meet planned product launches and to refresh our product line-up at the pace contemplated in our business plan. If this were to happen, our future revenue and profitability could be negatively affected.

Although we believe we possess sufficient liquidity to operate our business, our ability to maintain adequate liquidity over the long-term will depend significantly on the volume, mix and quality of our vehicle sales and our ability to minimize operating expenses. Our liquidity needs are sensitive to changes in each of these and other factors.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

As part of our business plan, we have reduced compensation for our most highly paid executives and have reduced the number of our management and non-management salaried employees, and these actions may materially adversely affect our ability to hire and retain salaried employees.

As part of the cost reduction initiatives in our business plan, and pursuant to the direction of the Special Master for TARP Executive Compensation (the Special Master), the form and timing of the compensation for our most highly paid executives is not competitive with that offered by other major corporations. Furthermore, while we have repaid in full our indebtedness under the UST Credit Agreement, the executive compensation and corporate governance provisions of Section 111 of the Emergency Economic Stabilization Act of 2008 (EESA), including the Interim Final Rule implementing Section 111 (the Interim Final Rule), will continue to apply to us for the period specified in the EESA and the Interim Final Rule. Certain of the covenants in the UST Credit Agreement will continue to apply to us until the earlier to occur of (1) us ceasing to be a recipient of Exceptional Financial Assistance, as determined pursuant to the Interim Final Rule or any successor or final rule, or (2) UST ceasing to own any direct or indirect equity interests in us. The effect of Section 111 of EESA, the Interim Final Rule and the covenants is to restrict the compensation that we can provide to our top executives and prohibit certain types of compensation or benefits for any employees. At the same time, we have substantially decreased the number of salaried employees so that the workload is shared among fewer employees and in general the demands on each salaried employee are increased. Companies in similar situations have experienced significant difficulties in hiring and retaining highly skilled employees, particularly in competitive specialties. Given our compensation structure and increasing job demands, there is no assurance that we will continue to be able to hire and retain the employees whose expertise is required to execute our business plan while at the same time developing and producing vehicles that will stimulate demand for our products.

Our plan to reduce the number of our retail channels and brands and to consolidate our dealer network may reduce our total sales volume and our market share and not result in the cost savings we anticipate.

As part of our business plan we will focus our resources in the U.S. on four brands: Chevrolet, Cadillac, Buick and GMC. We completed the sale of Saab in February 2010 and Saab GB in May 2010, and have completed the wind down of our Pontiac, Saturn and HUMMER brands. We have recently completed the federal arbitration process concerning dealer reinstatement and at December 31, 2010 we have reduced the total number of our U.S. dealerships to 4,500. We anticipate that this reduction in retail outlets, brands, and dealers will result in cost savings over time, but there is no assurance that we will realize all the savings expected. We also anticipate our sales volume and market share will increase over time, but it is also possible that our market share could decline in the short-term and beyond because of these reductions in brands and dealers which may adversely affect our results of operations.

Our business plan contemplates that we restructure our operations in various European countries, but we may not succeed in doing so, and our failure to restructure these operations in a cost-effective and non-disruptive manner could have a material adverse effect on our business and results of operations.

Our business plan contemplates that we restructure our operations in various European countries, and we are actively working to accomplish this. Restructurings, whether or not ultimately successful, can involve significant expense and disruption to the business as well as labor disruptions, which can adversely affect the business. The restructuring of our European operations will require us to invest additional funds and require significant management attention. In September 2010 we committed up to $4.2 billion through an intercompany facility and equity commitments to fund this restructuring and Opel/Vauxhall’s ongoing cash requirements. We cannot assure you that any of our contemplated restructurings will be completed or achieve the desired results, and if we cannot successfully complete such restructurings, we may choose to, or the directors of the relevant entity may be compelled to, or creditors may force us to, seek relief for our various European operations under applicable local bankruptcy, reorganization, insolvency, or similar laws, where we may lose control over the outcome of the restructuring process due to the appointment of a local receiver, trustee, or administrator (or similar official) or otherwise and which could result in a liquidation and us losing all or a substantial part of our interest in the business.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Our U.S. defined benefit pension plans are currently underfunded, and our pension funding obligations could increase significantly due to a reduction in funded status as a result of a variety of factors, including weak performance of financial markets, declining interest rates, investment decisions that do not achieve adequate returns, and investment risk inherent in our investment portfolio.

Our future funding obligations for our U.S. defined benefit pension plans qualified with the Internal Revenue Service (IRS) depend upon the future performance of assets placed in trusts for these plans, the level of interest rates used to determine funding levels, the level of benefits provided for by the plans and any changes in government laws and regulations. Our employee benefit plans currently hold a significant amount of equity and fixed income securities. A detailed description of the investment funds and strategies is shown in Note 20 to our consolidated financial statements, which also describes significant concentrations of risk to the plan investments. Due to Old GM’s contributions to the plans and to the strong performance of these assets during prior periods, the U.S. hourly and salaried pension plans were consistently overfunded from 2005 through 2007, which allowed Old GM to maintain a surplus without making additional contributions to the plans. However, the funded status subsequently deteriorated due to a combination of factors. Adverse equity and credit markets reduced the market value of plan assets, while the present value of pension liabilities rose significantly in response to declines in the discount rate, the effect of separation programs and increases in the level of pension benefits and number of beneficiaries. This increase in beneficiaries was partially due to the inclusion of certain Delphi hourly employees. As a result of these adverse factors, our U.S. defined benefit pension plans were underfunded on a U.S. GAAP basis by $12.4 billion at December 31, 2010.

The next pension funding valuation to be prepared based on the requirements of the PPA will be as of October 1, 2010. In December 2010 we made a $4.0 billion cash contribution to our U.S. hourly and salaried pension plans and in January 2011 we contributed 61 million shares of our common stock to our U.S. hourly and salaried pension plans valued at $2.2 billion for funding purposes. The contributed shares qualify as a plan asset for funding purposes immediately, and will qualify as a plan asset for accounting purposes when certain restrictions are removed, which is expected in 2011. A hypothetical funding valuation at December 31, 2010, using the 3-Segment rate at May 31, 2010 for the funding valuation of the plan year beginning October 1, 2010 and assuming the December 31, 2010 Full Yield Curve funding interest rate for all future funding valuations projects contributions of $2.3 billion and $1.2 billion in 2015 and 2016. Our potential funding requirements are described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations and Other Long-Term Liabilities.”

If the total values of the assets held by our pension plans decline and/or the returns on such assets underperform our return assumptions, our pension expenses would generally increase and could materially adversely affect our financial position. Changes in interest rates that are not offset by contributions, asset returns and/or hedging activities could also increase our obligations under such plans. If local legal authorities increase the minimum funding requirements for our pension plans outside the U.S., we could be required to contribute more funds, which would negatively affect our cash flow. At December 31, 2010 our non-U.S. defined benefit pension plans were underfunded on a U.S. GAAP basis by $9.8 billion.

Due to the complexity and magnitude of our investments, additional risks exist. Examples include significant changes in investment policy, insufficient market capacity to complete a particular investment strategy, and an inherent divergence in objectives between the ability to manage risk in the short term and inability to quickly rebalance illiquid and long-term investments.

If we are unable to meet our required funding obligations for our U.S. pension plans under the terms imposed by regulators at a given point in time, we would need to request a funding waiver from the IRS. If the waiver were granted, we would have the opportunity to make up the missed funding, with interest to the plan. Additional periods of missed funding could further reduce the plans’ funded status, resulting in limitations on plan amendments and lump sum payouts from the plans. Continued deterioration in the plans’ funded status could result in benefit accrual elimination. These actions could materially adversely affect our relations with our employees and their labor unions.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

If adequate financing on acceptable terms is not available through Ally Financial or other sources to our customers and dealers, distributors, and suppliers to enable them to continue their business relationships with us, our business could be materially adversely affected.

Our customers and dealers require financing to purchase a significant percentage of our global vehicle sales. Historically, Ally Financial has provided most of the financing for our and Old GM’s dealers and a significant amount of financing for our and Old GM’s customers. Due to recent conditions in credit markets, particularly later in 2008, retail customers and dealers experienced severe difficulty in accessing the credit markets. As a result the number of vehicles sold or leased declined rapidly in the second half of 2008, with lease contract volume dropping significantly by the end of 2008. This had a significant adverse effect on Old GM vehicle sales overall because many of its competitors had captive financing subsidiaries that were better capitalized than Ally Financial during 2008 and 2009 and thus were able to offer consumers subsidized financing and leasing offers.

Similarly, the reduced availability of Ally Financial wholesale dealer financing (in the second half of 2008 and 2009), the increased cost of such financing, and the limited availability of other sources of dealer financing due to the general weakness of the credit market has caused and may continue to cause dealers to modify their plans to purchase vehicles from us.

Because of recent modifications to our commercial agreements with Ally Financial, Ally Financial no longer is subject to contractual wholesale funding commitments or retail underwriting targets. In addition, Ally Financial’s credit rating has declined in recent years. This may negatively affect its access to funding and therefore its ability to provide adequate financing at competitive rates to our customers and dealers. A number of other factors could negatively affect Ally Financial’s business and financial condition and therefore its ability to provide adequate financing at competitive rates. These factors include regulations to which Ally Financial is subject as a result of its bank holding company status, disruptions in Ally Financial’s funding sources and access to credit markets, Ally Financial’s significant indebtedness, adverse conditions in the residential mortgage market and housing markets that have adversely affected Ally Financial because of its mortgage business, increases or decreases in interest rates, changes in currency exchange rates and fluctuations in valuations of investment securities held by Ally Financial.

Our failure to successfully develop our own captive financing unit, including through GM Financial, could leave us at a disadvantage to our competitors that have their own captive financing subsidiaries and that therefore may be able to offer consumers and dealers financing and leasing on better terms than our customers and dealers are able to obtain.

Many of our competitors operate and control their own captive financing subsidiaries. If any of our competitors with captive financing subsidiaries are able to continue to offer consumers and dealers financing and leasing on better terms than our customers and dealers are able to obtain, consumers may be more inclined to purchase our competitors’ vehicles and our competitors’ dealers may be better able to stock our competitors’ products.

On October 1, 2010 we completed our acquisition of AmeriCredit, which we subsequently renamed General Motors Financial Company, Inc. through which we offer leasing and sub-prime financing for our customers. Our failure to successfully develop our own captive financing unit, including through GM Financial, could result in our loss of customers to our competitors with their own captive financing subsidiaries and could adversely affect our dealers’ ability to stock our vehicles if they are not able to obtain necessary financing at competitive rates from other sources.

We intend to rely on our new captive financing unit, GM Financial, to support additional consumer leasing of our vehicles and additional sales of our vehicles to consumers requiring sub-prime vehicle financing, and GM Financial faces a number of business, economic and financial risks that could impair its access to capital and negatively affect its business and operations and its ability to provide leasing and sub-prime financing options to consumers to support additional sales of our vehicles.

GM Financial is subject to various risks that could negatively affect its business, operations and access to capital and therefore its ability to provide leasing and sub-prime financing options at competitive rates to consumers of our vehicles. Because we intend to rely on GM Financial to serve as an additional source of leasing and sub-prime financing options for consumers, any impairment of GM Financial’s ability to provide such leasing or sub-prime financing would negatively affect our efforts to expand our market penetration

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

among consumers who rely on leasing and sub-prime financing options to acquire new vehicles. The factors that could adversely affect GM Financial’s business and operations and impair its ability to provide leasing and sub-prime financing at competitive rates include:

•

The availability of borrowings under its credit facilities to finance its loan and lease origination activities pending securitization;

•

Its ability to transfer loan receivables to securitization trusts and sell securities in the asset-backed securities market to generate cash proceeds to repay its credit facilities and purchase additional loan receivables;

•

The performance of loans in its portfolio, which could be materially affected by delinquencies, defaults or prepayments;

•

Its ability to implement its strategy with respect to desired loan origination volume and effective use of credit risk management techniques and servicing strategies;

•

Its ability to effectively manage risks relating to sub-prime automobile receivables;

•

Wholesale auction values of used vehicles; and

•

Fluctuations in interest rates.

The above factors, alone or in combination, could negatively affect GM Financial’s business and operations and its ability to provide leasing and sub-prime financing options to consumers to support additional sales of our vehicles.

The UST (or its designee) owns a substantial interest in us, and its interests may differ from those of our other stockholders.

The UST owns 32.0% of our outstanding shares of common stock as of February 15, 2011. As a result of this stock ownership interest, the UST has the ability to exert significant influence, through its power to vote for the election of our directors, over various matters. To the extent the UST elects to exert such significant influence over us, its interests (as a government entity) may differ from those of our other stockholders and it may influence, through its ability to vote for the election of our directors, matters including:

•

The selection, tenure and compensation of our management;

•

Our business strategy and product offerings;

•

Our relationship with our employees, unions and other constituencies; and

•

Our financing activities, including the issuance of debt and equity securities.

In particular, the UST may have a greater interest in promoting U.S. economic growth and jobs than other stockholders of the Company. For example, while we have repaid in full our indebtedness under the UST Credit Agreement, a covenant that continues to apply until the earlier of December 31, 2014 or the UST has been paid in full the total amount of all UST invested capital requires that we use our commercially reasonable best efforts to ensure, subject to exceptions, that our manufacturing volume in the United States is consistent with specified benchmarks.

In the future we may also become subject to new and additional laws and government regulations regarding various aspects of our business as a result of participation in the TARP program and the U.S. government’s ownership in our business. These regulations could make it more difficult for us to compete with other companies that are not subject to similar regulations.

Our secured revolving credit facility as well as the UST Credit Agreement and the Canadian Loan Agreement contain significant covenants that may restrict our ability and the ability of our subsidiaries to take actions management believes are important to our long-term strategy.

Our secured revolving credit facility contains representations, warranties and covenants customary for facilities of its nature, including negative covenants restricting us from incurring liens, consummating mergers or sales of assets and incurring secured

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

indebtedness, and restricting us from making certain payments, in each case, subject to exceptions and limitations. Availability under the secured revolving credit facility is subject to borrowing base limitations. The secured revolving credit facility contains minimum liquidity covenants, which require us to maintain at least $4.0 billion in consolidated global liquidity and at least $2.0 billion in consolidated U.S. liquidity.

While we have repaid in full our indebtedness under the UST Credit Agreement, the executive compensation and corporate governance provisions of Section 111 of the EESA, including the Interim Final Rule, will continue to apply to us for the period specified in the EESA and the Interim Final Rule. Certain of the covenants in the UST Credit Agreement will continue to apply to us until the earlier to occur of (1) us ceasing to be a recipient of Exceptional Financial Assistance, as determined pursuant to the Interim Final Rule or any successor or final rule, or (2) UST ceasing to own any direct or indirect equity interests in us. The effect of Section 111 of EESA, the Interim Final Rule and the covenants is to restrict the compensation that we can provide to our top executives and prohibit certain types of compensation or benefits for any employees. Similarly, covenants in our wholly-owned subsidiary GMCL’s Canadian Loan Agreement with the EDC limit compensation and benefits for Canadian employees.

The UST Credit Agreement contains a covenant requiring us to use our commercially reasonable best efforts to ensure that our manufacturing volume conducted in the United States is consistent with at least 90% of the projected manufacturing level (projected manufacturing level for this purpose being 1,934,000 units in 2011, 1,998,000 units in 2012, 2,156,000 units in 2013 and 2,260,000 units in 2014), absent a material adverse change in our business or operating environment which would make the commitment non-economic. In the event that such a material adverse change occurs, the UST Credit Agreement provides that we will use commercially reasonable best efforts to ensure that the volume of United States manufacturing is the minimum variance from the projected manufacturing level that is consistent with good business judgment and the intent of the commitment. This covenant survives our repayment of the UST Loans and remains in effect through December 31, 2014 unless the UST receives total proceeds from debt repayments, dividends, interest, preferred stock redemptions and common stock sales equal to the total dollar amount of all UST invested capital.

UST invested capital totaled $49.5 billion, representing the cumulative amount of cash received by Old GM from the UST under the UST Loan Agreement and the DIP Facility, excluding $361 million which the UST loaned to Old GM under the warranty program and which was repaid on July 10, 2009. This balance also did not include amounts advanced under the UST Ally Financial Loan as the UST exercised its option to convert this loan into Ally Financial Preferred Membership Interests previously held by Old GM in May 2009. At December 31, 2010 the UST had received cumulative proceeds of $23.1 billion from debt repayments, interest payments, Series A Preferred Stock dividends, the Series A Preferred Stock redemption and proceeds from the sale of common stock. The UST’s invested capital less proceeds received totals $26.4 billion.

To the extent we fail to comply with any of the covenants in the UST Credit Agreement that continue to apply to us, the UST is entitled to seek specific performance and the appointment of a court-ordered monitor acceptable to the UST (at our sole expense) to ensure compliance with those covenants. Compliance with the manufacturing volume covenant could require us to increase production volumes in our U.S. plants, shift production from low-cost locations to the U.S. or refrain from shifting production from U.S. plants to low-cost locations.

The Canadian Loan Agreement and related agreements include certain covenants requiring GMCL to meet certain annual Canadian production volumes expressed as ratios to total overall production volumes in the U.S. and Canada and to overall production volumes in the North American Free Trade Agreement (NAFTA) region. The targets cover vehicles and specified engine and transmission production in Canada. These agreements also include covenants on annual GMCL capital expenditures and research and development expenses. In the event a material adverse change occurs that makes the fulfillment of these covenants non-economic (other than a material adverse change caused by the actions or inactions of GMCL), there is an undertaking that the lender will consider adjustments to mitigate the business effect of the material adverse change. These covenants survive GMCL’s repayment of the loans and certain of the covenants have effect through December 31, 2016.

Compliance with the covenants contained in our secured revolving credit facility as well as the surviving provisions of the UST Credit Agreement and the Canadian Loan Agreement could restrict our ability to take actions that management believes are important to our

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

long-term strategy. If strategic transactions we wish to undertake are prohibited, our ability to execute our long-term strategy could be materially adversely affected. Furthermore, monitoring and certifying our compliance with the surviving provisions of the UST Credit Agreement and the Canadian Loan Agreement requires a high level of expense and management attention on a continuing basis.

Our planned investment in new technology in the future is significant and may not be funded at anticipated levels and, even if funded at anticipated levels, may not result in successful vehicle applications.

We intend to invest significant capital resources to support our products and to develop new technology. In addition, we plan to invest heavily in alternative fuel and advanced propulsion technologies between 2011 and 2012, largely to support our planned expansion of hybrid and electric vehicles, consistent with our announced objective of being recognized as the industry leader in fuel efficiency. Moreover, if our future operations do not provide us with the liquidity we anticipate, we may be forced to reduce, delay, or cancel our planned investments in new technology.

In some cases the technologies that we plan to employ, such as hydrogen fuel cells and advanced battery technology, are not yet commercially practical and depend on significant future technological advances by us and by suppliers. For example, in November 2010 we began producing the Chevrolet Volt, an electric car, which requires battery technology that has not yet proven to be commercially viable. There can be no assurance that these advances will occur in a timely or feasible way, that the funds that we have budgeted for these purposes will be adequate, or that we will be able to establish our right to these technologies. However, our competitors and others are pursuing similar technologies and other competing technologies, in some cases with more money available, and there can be no assurance that they will not acquire similar or superior technologies sooner than we do or on an exclusive basis or at a significant price advantage.

New laws, regulations, or policies of governmental organizations regarding increased fuel economy requirements and reduced greenhouse gas emissions, or changes in existing ones, may have a significant effect on how we do business.

We are affected significantly by governmental regulations that can increase costs related to the production of our vehicles and affect our product portfolio. We anticipate that the number and extent of these regulations, and the related costs and changes to our product lineup, will increase significantly in the future. In the U.S. and Europe, for example, governmental regulation is primarily driven by concerns about the environment (including greenhouse gas emissions), vehicle safety, fuel economy, and energy security. These government regulatory requirements could significantly affect our plans for global product development and may result in substantial costs, including civil penalties. They may also result in limits on the types of vehicles we sell and where we sell them, which can affect revenue.

CAFE provisions in the EISA mandate fuel economy standards beginning in the 2011 model year that would increase to at least 35 mpg by 2020 on a combined car and truck fleet basis, a 40% increase over current levels. California is implementing AB 1493 which will require increased fuel economy. This California program has standards currently established for the 2009 model year through the 2016 model year. Fourteen additional states and the Province of Quebec have also adopted the California greenhouse gas standards.

In May 2009 President Obama announced his intention for the federal government to implement a harmonized federal program to regulate fuel economy and greenhouse gases. He directed the EPA and the United States Department of Transportation (DOT) to work together to create standards through a joint rulemaking for control of emissions of greenhouse gases and for fuel economy. In the first phase, these standards would apply to passenger cars, light-duty trucks, and medium-duty passenger vehicles built in model years 2012 through 2016. CARB has agreed that compliance with EPA’s greenhouse gas standards will be deemed compliance with the California greenhouse gas standards for the 2012 through 2016 model years. The EPA and the NHTSA, on behalf of DOT, issued their final rule to implement this new federal program in April 2010. We have committed to work with EPA, the NHTSA, the states, and other stakeholders in support of a strong national program to reduce oil consumption and address global climate change.

We are committed to meeting or exceeding these regulatory requirements, and our product plan of record projects compliance with the anticipated federal program through the 2016 model year. We expect that to comply with these standards we will be required to

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

sell a significant volume of hybrid or electrically powered vehicles throughout the U.S., as well as implement new technologies for conventional internal combustion engines, all at increased cost levels. There is no assurance that we will be able to produce and sell vehicles that use such technologies on a profitable basis, or that our customers will purchase such vehicles in the quantities necessary for us to comply with these regulatory programs.

The EU passed legislation, effective in April 2009 to begin regulating vehicle CO₂ emissions beginning in 2012. The legislation sets a target of a fleet average of 95 grams per kilometer for 2020, with the requirements for each manufacturer based on the weight of the vehicles it sells. Additional measures have been proposed or adopted in Europe to regulate features such as tire rolling resistance, vehicle air conditioners, tire pressure monitors, gear shift indicators, and others. At the national level, 17 EU Member States have adopted some form of fuel consumption or carbon dioxide-based vehicle taxation system, which could result in specific market requirements for us to introduce technology earlier than is required for compliance with the EU emissions standards.

Other governments around the world, such as Canada, South Korea, and China are also creating new policies to address these same issues. As in the U.S., these government policies could significantly affect our plans for product development. Due to these regulations, we could be subject to sizable civil penalties or have to restrict product offerings drastically to remain in compliance. The regulations will result in substantial costs, which could be difficult to pass through to our customers, and could result in limits on the types of vehicles we sell and where we sell them, which could affect our operations, including facility closings, reduced employment, increased costs, and loss of revenue.

A significant amount of our operations are conducted by joint ventures that we cannot operate solely for our benefit.

Many of our operations, particularly in emerging markets, are carried on by joint ventures such as SGM. In joint ventures, we share ownership and management of a company with one or more parties who may not have the same goals, strategies, priorities, or resources as we do. Joint ventures are intended to be operated for the equal benefit of all co-owners, rather than for our exclusive benefit. Operating a business as a joint venture often requires additional organizational formalities as well as time-consuming procedures for sharing information and making decisions. In joint ventures, we are required to pay more attention to our relationship with our co-owners as well as with the joint venture, and if a co-owner changes, our relationship may be materially adversely affected. The benefits from a successful joint venture are shared among the co-owners, so that we do not receive all the benefits from our successful joint ventures.

Our business in China is subject to aggressive competition and is sensitive to economic and market conditions.

Maintaining a strong position in the Chinese market is a key component of our global growth strategy. The automotive market in China is highly competitive, with competition from many of the largest global manufacturers and numerous smaller domestic manufacturers. As the size of the Chinese market continues to increase, we anticipate that additional competitors, both international and domestic, will seek to enter the Chinese market and that existing market participants will act aggressively to increase their market share. Increased competition may result in price reductions, reduced margins and our inability to gain or hold market share. In addition, our business in China is sensitive to economic and market conditions that drive sales volume in China. If we are unable to maintain our position in the Chinese market or if vehicle sales in China decrease or do not continue to increase, our business and financial results could be materially adversely affected.

Restrictions in our labor agreements could limit our ability to pursue or achieve cost savings through restructuring initiatives, and labor strikes, work stoppages, or similar difficulties could significantly disrupt our operations.

Substantially all of the hourly employees in our U.S., Canadian, and European automotive operations are represented by labor unions and are covered by collective bargaining agreements, which usually have a multi-year duration. Many of these agreements include provisions that limit our ability to realize cost savings from restructuring initiatives such as plant closings and reductions in workforce. Our current collective bargaining agreement with the UAW will expire in September 2011, and while the UAW has agreed to a commitment not to strike prior to 2015, any UAW strikes, threats of strikes, or other resistance in the future could materially adversely affect our business as well as impair our ability to implement further measures to reduce costs and improve production

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

efficiencies in furtherance of our North American initiatives. A lengthy strike by the UAW that involves all or a significant portion of our manufacturing facilities in the United States would have a material adverse effect on our operations and financial condition, particularly our liquidity.

Despite the formation of our new company, we continue to have indebtedness and other obligations. Our obligations together with our cash needs may require us to seek additional financing, minimize capital expenditures, or seek to refinance some or all of our debt.

Despite the formation of our new company, we continue to have indebtedness and other obligations, including significant liabilities to our underfunded defined benefit pension plans. Our current and future indebtedness and other obligations could have several important consequences. For example, they could:

•

Require us to dedicate a larger portion of our cash flow from operations than we currently do to the payment of principal and interest on our indebtedness and other obligations, which will reduce the funds available for other purposes such as product development;

•

Make it more difficult for us to satisfy our obligations;

•

Make us more vulnerable to adverse economic and industry conditions and adverse developments in our business;

•

Limit our ability to withstand competitive pressures;

•

Limit our ability to fund working capital, capital expenditures, and other general corporate purposes; and

•

Reduce our flexibility in responding to changing business and economic conditions.

Future liquidity needs may require us to seek additional financing or minimize capital expenditures. There is no assurance that either of these alternatives would be available to us on satisfactory terms or on terms that would not require us to renegotiate the terms and conditions of our existing debt agreements.

Our failure to comply with the covenants in the agreements governing our present and future indebtedness could materially adversely affect our financial condition and liquidity.

Several of the agreements governing our indebtedness, including our secured revolving credit facility and other loan facility agreements, contain covenants requiring us to take certain actions and negative covenants restricting our ability to take certain actions. In the past, we have failed to meet certain of these covenants, including by failing to provide financial statements in a timely manner and failing certain financial tests. The Chapter 11 Proceedings and the change in control as a result of the 363 Sale triggered technical defaults in certain loans for which we had assumed the obligations. A breach of any of the covenants in the agreements governing our indebtedness, if uncured, could lead to an event of default under any such agreements, which in some circumstances could give the lender the right to demand that we accelerate repayment of amounts due under the agreement. Therefore, in the event of any such breach, we may need to seek covenant waivers or amendments from the lenders or to seek alternative or additional sources of financing, and we cannot assure you that we would be able to obtain any such waivers or amendments or alternative or additional financing on acceptable terms, if at all. Refer to Note 19 to our consolidated financial statements for additional information on technical defaults and covenant violations. Any covenant breach or event of default could harm our credit rating and our ability to obtain additional financing on acceptable terms. The occurrence of any of these events could have a material adverse effect on our financial condition and liquidity.

The ability of our new executive management team to quickly learn the automotive industry and lead our company will be critical to our ability to succeed, and our business and results of operations could be materially adversely affected if they are unsuccessful.

We have substantially changed our executive management team in the recent past. We have a new Chief Executive Officer who started on September 1, 2010 and a new Chief Financial Officer who started on January 1, 2010, both of whom have no prior outside

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

automotive industry experience. We have also promoted from within GM many new senior officers. It is important to our success that the new members of the executive management team quickly understand the automotive industry and that our senior officers quickly adapt and excel in their new senior management roles. If they are unable to do so, and as a result are unable to provide effective guidance and leadership, our business and financial results could be materially adversely affected.

We could be materially adversely affected by changes or imbalances in foreign currency exchange and other rates.

Given the nature and global spread of our business, we have significant exposures to risks related to changes in foreign currency exchange rates, commodity prices, and interest rates, which can have material adverse effects on our business. For example, at times certain of our competitors have derived competitive advantage from relative weakness of the Japanese Yen through pricing advantages for vehicles and parts imported from Japan to markets with more robust currencies like the U.S. and Western Europe. Similarly, a significant strengthening of the Korean Won relative to the U.S. dollar or the Euro would affect the competitiveness of our Korean operations as well as that of certain Korean competitors. As yet another example, a relative weakness of the British Pound compared to the Euro has an adverse effect on our results of operations in Europe. In preparing the consolidated financial statements, we translate our revenues and expenses outside the U.S. into U.S. Dollars using the average foreign currency exchange rate for the period and the assets and liabilities using the foreign currency exchange rate at the balance sheet date. As a result, foreign currency fluctuations and the associated translations could have a material adverse effect on our results of operations.

Our businesses outside the U.S. expose us to additional risks that may materially adversely affect our business.

The majority of our vehicle sales are generated outside the U.S. We are pursuing growth opportunities for our business in a variety of business environments outside the U.S. Operating in a large number of different regions and countries exposes us to political, economic, and other risks as well as multiple foreign regulatory requirements that are subject to change, including:

•

Economic downturns in foreign countries or geographic regions where we have significant operations, such as China;

•

Economic tensions between governments and changes in international trade and investment policies, including imposing restrictions on the repatriation of dividends, especially between the United States and China;

•

Foreign regulations restricting our ability to sell our products in those countries;

•

Differing local product preferences and product requirements, including fuel economy, vehicle emissions, and safety;

•

Differing labor regulations and union relationships;

•

Consequences from changes in tax laws;

•

Difficulties in obtaining financing in foreign countries for local operations; and

•

Political and economic instability, natural calamities, war, and terrorism.

The effects of these risks may, individually or in the aggregate, materially adversely affect our business.

New laws, regulations, or policies of governmental organizations regarding safety standards, or changes in existing ones, may have a significant negative effect on how we do business.

Our products must satisfy legal safety requirements. Meeting or exceeding government-mandated safety standards is difficult and costly because crashworthiness standards tend to conflict with the need to reduce vehicle weight in order to meet emissions and fuel economy standards. While we are managing our product development and production operations on a global basis to reduce costs and lead times, unique national or regional standards or vehicle rating programs can result in additional costs for product development, testing, and manufacturing. Governments often require the implementation of new requirements during the middle of a product cycle, which can be substantially more expensive than accommodating these requirements during the design of a new product.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The costs and effect on our reputation of product recalls could materially adversely affect our business.

From time to time, we recall our products to address performance, compliance, or safety-related issues. The costs we incur in connection with these recalls typically include the cost of the part being replaced and labor to remove and replace the defective part. In addition, product recalls can harm our reputation and cause us to lose customers, particularly if those recalls cause consumers to question the safety or reliability of our products. Any costs incurred or lost sales caused by future product recalls could materially adversely affect our business. Conversely, not issuing a recall or not issuing a recall on a timely basis can harm our reputation and cause us to lose customers for the same reasons as expressed above.

The sale or availability for sale of substantial amounts of our common stock could cause our common stock price to decline or impair our ability to raise capital.

Sales of a substantial number of shares of our common stock in the public market, or the perception that large sales could occur, or the conversion of shares of our Series B Preferred Stock or the perception that conversion could occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of equity and equity-related securities. At February 15, 2011 there are 1,560,743,059 shares of common stock issued and outstanding. At February 15, 2011 MLC holds a warrant to acquire 136,363,636 shares of our common stock at an exercise price of $10.00 per share, MLC holds another warrant to acquire 136,363,636 shares of our common stock at an exercise price of $18.33 per share, and the UAW Retiree Medical Benefits Trust (New VEBA) holds a warrant to acquire 45,454,545 shares of our common stock at an exercise price of $42.31 per share. Up to 151,520,000 shares of common stock, subject to anti-dilution, make-whole and other adjustments, will be issuable upon conversion of the shares of Series B Preferred Stock outstanding at February 15, 2011.

Of the 1,560,743,059 outstanding shares of common stock at February 15, 2011, the 549,700,000 shares of common stock sold in the November and December 2010 public offering are freely tradable without restriction or further registration under the Securities Act of 1933, as amended (the Securities Act), unless those shares are held by any of our “affiliates,” as that term is defined under Rule 144 of the Securities Act. Following the expiration of the applicable lock-up periods on May 13, 2011, the 950,300,000 outstanding shares of common stock held by the UST, Canada Holdings, the New VEBA and MLC at February 15, 2011 may be eligible for resale under Rule 144 under the Securities Act subject to applicable restrictions under Rule 144. In addition, pursuant to the October 15, 2009 Equity Registration Rights Agreement we entered into with the UST, Canada Holdings, the New VEBA, MLC, and our previous legal entity prior to our October 2009 holding company reorganization (which is now a wholly-owned subsidiary of the Company) (Equity Registration Rights Agreement), we have granted each of the UST, Canada Holdings, the New VEBA and MLC the right to require us in certain circumstances to file registration statements under the Securities Act covering additional resales of our common stock and other equity securities (including the warrants) held by them and the right to participate in other registered offerings in certain circumstances. As restrictions on resale end or if these stockholders exercise their registration rights or otherwise sell their shares, the market price of our common stock could decline.

In particular, the UST, Canada Holdings, the New VEBA and MLC might sell a large number of the shares of our common stock and warrants to acquire our common stock that they hold, or, in the case of the New VEBA and MLC, exercise their warrants and then sell the underlying shares of our common stock. Further, MLC might distribute shares of our common stock and warrants to acquire our common stock that it holds to its numerous creditors and other stakeholders pursuant to a plan of reorganization confirmed by the Bankruptcy Court in the Chapter 11 Proceedings, and those creditors and other stakeholders might resell those shares and warrants. Such sales or distributions of a substantial number of shares of our common stock or warrants could adversely affect the market price of our common stock.

Furthermore, on January 13, 2011 we contributed 60,606,061 shares of our common stock to our U.S. hourly and salaried pension plans. The contributed shares qualify as a plan asset for funding purposes immediately, and will qualify as a plan asset for accounting purposes when certain restrictions are removed, which is expected in 2011. In connection with such contribution, we entered into a Registration Rights Agreement dated January 13, 2011 with sub-trusts established under the U.S. hourly and salaried pension plans (Pension Plan Registration Rights Agreement), whereby we granted the pension plans the right to require us in certain circumstances

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

to file registration statements under the Securities Act covering additional resales of those shares of our common stock held by them and the right to participate in other registered offerings in certain circumstances. If the pension plans exercise their registration rights or otherwise sell their shares, the market price of our common stock could decline.

We have no current plans to pay dividends on our common stock, and our ability to pay dividends on our common stock may be limited.

We have no current plans to commence payment of a dividend on our common stock. Our payment of dividends on our common stock in the future will be determined by our Board of Directors in its sole discretion and will depend on business conditions, our financial condition, earnings and liquidity, and other factors. So long as any share of our Series A Preferred Stock or Series B Preferred Stock remains outstanding, no dividend or distribution may be declared or paid on our common stock unless all accrued and unpaid dividends have been paid on our Series A Preferred Stock and Series B Preferred Stock, subject to exceptions, such as dividends on our common stock payable solely in shares of our common stock. In addition, our secured revolving credit facility contains certain restrictions on our ability to pay dividends on our common stock, subject to exceptions such as dividends payable solely in shares of our common stock.

Any indentures and other financing agreements that we enter into in the future may limit our ability to pay cash dividends on our capital stock, including our common stock. In the event that any of our indentures or other financing agreements in the future restricts our ability to pay dividends in cash on our common stock, we may be unable to pay dividends in cash on our common stock unless we can refinance the amounts outstanding under those agreements.

In addition, under Delaware law, our Board of Directors may declare dividends on our capital stock only to the extent of our statutory “surplus” (which is defined as the amount equal to total assets minus total liabilities, in each case at fair market value, minus statutory capital), or if there is no such surplus, out of our net profits for the then current and/or immediately preceding fiscal year. Further, even if we are permitted under our contractual obligations and Delaware law to pay cash dividends on our common stock, we may not have sufficient cash to pay dividends in cash on our common stock.

* * * * * * *

Item 1B. Unresolved Staff Comments

None

* * * * * * *

Item 2. Properties

Excluding our automotive financing operations, at December 31, 2010 we had 106 locations in 25 states and 89 cities or towns in the United States excluding dealerships. Of these locations, 40 are manufacturing facilities, of which 11 are engaged in the final assembly of our cars and trucks and other manufacture automotive components and power products. Of the remaining locations, 24 are service parts operations primarily responsible for distribution and warehouse functions, and the remainder are offices or facilities primarily involved in engineering and testing vehicles. Leased properties are primarily composed of warehouses and administration, engineering and sales offices. The leases for warehouses generally provide for an initial period of five to 10 years, based upon prevailing market conditions and may contain renewal options. Leases for administrative offices are generally for shorter periods.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

We have 17 locations in Canada, and assembly, manufacturing, distribution, office or warehousing operations in 61 other countries, including equity interests in associated companies which perform assembly, manufacturing or distribution operations. Leases for warehouses outside the United States have remaining lease terms ranging from one to 12 years, many of which contain options to extend or terminate the lease. The major facilities outside the United States and Canada, which are principally vehicle manufacturing and assembly operations, are located in:


• Argentina	• Colombia	• Kenya	• South Korea	• Venezuela
• Australia	• Ecuador	• Mexico	• Spain	• Vietnam
• Belgium	• Egypt	• Poland	• Thailand
• Brazil	• Germany	• Russia	• United Kingdom
• China	• India	• South Africa	• Uzbekistan

We, our subsidiaries, or associated companies in which we own an equity interest, own most of the above facilities.

GM Financial’s automotive financing and leasing operations lease facilities for administration and regional credit centers. GM Financial has 21 facilities located in the United States and two facilities located in Canada. GM Financial also owns a servicing facility, which is located in the United States and included in total facilities located in the United States.

Our properties include facilities which, in our opinion, are suitable and adequate for the manufacture, assembly and distribution of our products.

* * * * * * *

Item 3. Legal Proceedings

The following section summarizes material pending legal proceedings to which the Company is a party, other than ordinary routine litigation incidental to the business. We and the other defendants affiliated with us intend to defend all of the following actions vigorously.

Canadian Export Antitrust Class Actions

Approximately 80 purported class actions on behalf of all purchasers of new motor vehicles in the United States since January 1, 2001, have been filed in various state and federal courts against General Motors Corporation, GMCL, Ford Motor Company, Chrysler, LLC, Toyota Motor Corporation, Honda Motor Co., Ltd., Nissan Motor Company, Limited, and Bavarian Motor Works and their Canadian affiliates, the National Automobile Dealers Association, and the Canadian Automobile Dealers Association. The nearly identical complaints alleged that the defendant manufacturers, aided by the association defendants, conspired among themselves and with their dealers to prevent the sale to U.S. citizens of vehicles produced for the Canadian market and sold by dealers in Canada. The complaints alleged that new vehicle prices in Canada are 10% to 30% lower than those in the United States, and that preventing the sale of these vehicles to U.S. citizens resulted in the payment of higher than competitive prices by U.S. consumers. The complaints, as amended, sought injunctive relief under U.S. antitrust law and treble damages under U.S. and state antitrust laws, but did not specify damages. The complaints further alleged unjust enrichment and violations of state unfair trade practices act. The federal court actions were consolidated for coordinated pretrial proceedings under the caption In re New Market Vehicle Canadian Export Antitrust Litigation Cases in the U.S. District Court for the District of Maine, and the more than 30 California cases have been consolidated in the California Superior Court in San Francisco County under the case captions Belch v. Toyota Corporation, et al. and Bell v. General Motors Corporation. Old GM’s potential liability in these matters was not assumed by General Motors Company as part of the 363 Sale, but GMCL remains subject to suit in all matters.

On March 5, 2004, the U.S. District Court for the District of Maine issued a decision holding that the purported indirect purchaser classes failed to state a claim for damages under federal antitrust law but allowed a separate claim seeking to enjoin future alleged violations to continue. The U.S. District Court for the District of Maine on March 10, 2006 certified a nationwide class of buyers and

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

lessees under Federal Rule 23(b)(2) solely for injunctive relief, and on March 21, 2007 stated that it would certify 20 separate statewide class actions for damages under various state law theories under Federal Rule 23(b)(3), covering the period from January 1, 2001 to April 30, 2003. On March 28, 2008, the U.S. Court of Appeals for the First Circuit reversed the certification of the injunctive class and ordered dismissal of the injunctive claim and remanded to the U.S. District Court for the District of Maine for determination of several issues concerning federal jurisdiction and, if such jurisdiction still exists, for reconsideration of that class certification on a more complete record. On July 2, 2009, the district court granted granted summary judgment to defendants. Plaintiffs did not appeal. As a result, the federal actions are concluded with respect to us.

In the California state court cases, the court certified a state-wide class after a class certification hearing on April 21, 2009. Defendants’ appeal to the appropriate appellate court was denied. Defendants filed other substantive motions for summary judgment, some of which were heard in January 2011 and others of which will be heard in March 2011 and at later dates. As a result, the Honda and Nissan entities have been dismissed. The disposition of GMCL’s motion for summary judgment remains undecided. In the Minnesota state court cases, the court granted summary judgment in the defendants’ favor on September 16, 2010. Plaintiffs did not appeal. A similar motion for summary judgment is under consideration by the court in the Arizona state court cases.

American Export Antitrust Class Actions

On September 25, 2007, a claim was filed in the Ontario Superior Court of Justice against GMCL and Old GM on behalf of a purported class of actual and intended purchasers of vehicles in Canada claiming that a similar alleged conspiracy was now preventing lower-cost U.S. vehicles from being sold to Canadians. The plaintiffs have delivered their certification materials. An order staying claims against MLC was granted in November 2009. In December 2010 the plaintiffs/class counsel advised that they intend to file further evidence from class members. The court has allowed the plaintiffs to file additional evidence by January 31, 2011. The plaintiffs filed additional affidavit materials, and GMCL is in the process of reviewing these affidavits. A decision has not yet been made as to whether or not to cross-examine the affiants. The date for delivery of GMCL’s responding material is March 21, 2011. A certification hearing has not yet been scheduled. No determination has been made that the case may be maintained as a class action, and it is not possible to determine the likelihood of liability or reasonably ascertain the amount of any damages.

Canadian Dealer Class Action

On January 21, 2010, a claim was filed in the Ontario Superior Court of Justice against GMCL for damages on behalf of a purported class of 215 Canadian General Motors dealers which entered into wind-down agreements with GMCL in May 2009. GMCL offered the plaintiff dealers the wind-down agreements to assist the plaintiffs’ exit from the GMCL Canadian dealer network upon the expiration of their GM Dealer Sales and Service Agreements (DSSAs) on October 31, 2010, and to assist the plaintiffs in winding down their dealer operations in an orderly fashion. The plaintiff dealers allege that the DSSAs have been wrongly terminated by GMCL and that GMCL failed to comply with franchise disclosure obligations, breached its statutory duty of fair dealing and unlawfully interfered with the dealers’ statutory right to associate in an attempt to coerce the class member dealers into accepting the wind-down agreements. The plaintiff dealers claim that the wind-down agreements are void. GMCL is vigorously defending the claims. A certification hearing was held in December 2010, and the decision on class certification was reserved. No determination has been made that the case may be maintained as a class action, and it is not possible to determine the likelihood of liability or reasonably ascertain the amount of any damages.

OnStar Analog Equipment Litigation

Our wholly-owned subsidiary OnStar Corporation (OnStar) is a party to more than 20 putative class actions filed in various states, including Michigan, Ohio, New Jersey, Pennsylvania and California. All of these cases have been consolidated for pretrial purposes in a multi-district proceeding under the caption In re OnStar Contract Litigation in the U.S. District Court for the Eastern District of Michigan. The litigation arises out of the discontinuation by OnStar of services to vehicles equipped with analog hardware. OnStar was unable to provide services to such vehicles because the cellular carriers which provide communication service to OnStar terminated analog service beginning in February 2008. In the various cases, the plaintiffs are seeking certification of nationwide or statewide classes of owners of vehicles currently equipped with analog equipment, alleging various breaches of contract,

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

misrepresentation and unfair trade practices. No determination has been made as to whether class certification motions are appropriate, and it is not possible at this time to determine whether class certification or liability is probable as to OnStar or to reasonably ascertain the amount of any liability. On August 2, 2010 plaintiffs filed a motion seeking to add General Motors LLC, our subsidiary, as an additional defendant, which was denied by the court in an opinion dated January 25, 2011.

Patent Infringement Litigation

On July 10, 2009, Kruse Technology Partnership v. General Motors Company was filed in the U.S. District Court for the Central District of California. In Kruse, the plaintiff alleged that we infringed three U.S. patents related to “Internal Combustion Engine with Limited Temperature Cycle” by making and selling diesel engines. The plaintiff did not make a claim specifying damages in this case. However, in a similar case filed against Old GM in December 2008, plaintiff asserted that its royalty damages would be significantly more than $100 million. In April 2009, the plaintiff filed a separate patent infringement action against DMAX, Inc., (DMAX) then a joint venture between Isuzu Diesel Services of America, Inc. and Old GM, and which is now a joint venture between Isuzu Diesel Services of America, Inc. and General Motors LLC. DMAX manufactures and assembles mechanical and other components of Duramax diesel engines for sale to us. The plaintiff asserted that its royalty damages claim against DMAX, Inc. would exceed $100 million and requested an injunction in both the case against DMAX and the case against General Motors LLC. The case was settled and an order dismissing the case was entered on November 5, 2010. The separate lawsuit against DMAX has also been dismissed.

Unintended Acceleration Class Actions

We were named as a co-defendant in two of the many class action lawsuits brought against Toyota arising from Toyota’s recall of certain vehicles related to reports of unintended acceleration. The two cases are Nimishabahen Patel v. Toyota Motors North America, Inc. et al. (filed in the United States District Court for the District of Connecticut on February 9, 2010) and Darshak Shah v. Toyota Motors North America, Inc. et al. (filed in the United States District court for the District of Massachusetts on or about February 16, 2010). The 2009 and 2010 model year Pontiac Vibe, which was manufactured by a joint venture between Toyota and Old GM, included components that were common with those addressed by the Toyota recall and were accordingly the subject of a parallel recall by us. Each case makes allegations regarding Toyota’s conduct related to the condition addressed by the recall and asserts breaches of implied and express warranty, unjust enrichment and violation of consumer protection statutes and seeks actual damages, multiple damages, attorneys fees, costs and injunctive relief on behalf of classes of vehicle owners which include owners of 2009 and 2010 model year Pontiac Vibes. The cases were consolidated in the multi-district proceeding pending in the Central District of California created to administer all cases in the Federal court system addressing Toyota unintended acceleration issues. We believe that, with respect to the overwhelming majority of Pontiac vehicles addressed by the two cases, the claims asserted are barred by the Sale Approval Order entered by the United States Bankruptcy Court for the Southern District of New York on July 5, 2009. On August 2, 2010, a consolidated complaint was filed in the multi-district proceeding and we were omitted from the list of named defendants. It now appears that the claims asserted will not be further pursued against us and, absent future developments, we will discontinue reporting on this matter.

UAW VEBA Contribution Claim

On April 6, 2010, the UAW filed suit against us in the U.S. District Court for the Eastern District of Michigan claiming that we breached our obligation to contribute $450 million to the New VEBA. The UAW alleges that we were required to make this contribution pursuant to the UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring dated June 22, 2007. We have filed a motion in the United States Bankruptcy Court for the Southern District of New York asserting that the UAW’s claim is barred by the bankruptcy court approved 2009 UAW Retiree Settlement Agreement and by other orders issued by the bankruptcy court that preclude additional GM contributions to the New VEBA. We also maintain that Delphi’s emergence from bankruptcy was not in the nature contemplated by the restructuring agreement and therefore, that condition to any payment remains unfulfilled. We removed this case to the U.S. Bankruptcy Court in October 2010, seeking dismissal of the UAW’s U.S. District Court lawsuit. The UAW has contested whether the Bankruptcy Court has jurisdiction and on November 3, 2010, the U.S. District Court issued a stay of further proceedings until the issue of Bankruptcy Court jurisdiction is decided.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

AmeriCredit Transaction Claims

On July 27, 2010 Robert Hatfield, Derivatively on behalf of AmeriCredit Corp v Clifton Morris, Jr. et al.was filed in the district court for Tarrant County, Texas. General Motors Holdings, LLC and General Motors Company (the GM Entities) are two of the named defendants. Among other allegations, the complaint alleges that the individual defendants breached their fiduciary duty with regard to the proposed transaction between AmeriCredit and GM. The GM Entities are accused of aiding and abetting the alleged breach of fiduciary duty by the individual defendants (officers and directors of AmeriCredit). Among other relief, the complaint sought to enjoin the transaction from closing; however, no motion for an injunction was filed.

On July 28, 2010 Labourers Pension Fund of Eastern and Central Canada, on behalf of itself and all others similarly situated v. AmeriCredit Corp, et al. was filed in the district court for Tarrant County, Texas. General Motors Company is one of the named defendants. The plaintiff sought class action status and alleged that AmeriCredit and the individual defendants (officers and directors of AmeriCredit) breached their fiduciary duties in negotiating and approving the proposed transaction between AmeriCredit and GM, and that GM aided and abetted the alleged breach of fiduciary duty. Among other relief, the complaint sought to enjoin both the transaction from closing as well as a shareholder vote on the proposed transaction; however, no motion for an injunction was filed. On January 4, 2011, plaintiffs filed a notice of nonsuit, dismissing its claims without prejudice.

On or about August 6, 2010, Carla Butler, Derivatively on behalf of AmeriCredit Corp v. Clifton Morris, Jr. et al. was filed in the district court for Tarrant County, Texas. General Motors Holdings, LLC and General Motors Company are among the named defendants. Like the previously filed Hatfield litigation related to the proposed AmeriCredit acquisition, the complaint initiating this case alleges that individual officers and directors of AmeriCredit breached their fiduciary duties to AmeriCredit shareholders. The GM Entities are accused of breaching a fiduciary duty and aiding and abetting the individual defendants in usurping a corporate opportunity. Among other relief, the complaint seeks to rescind the AmeriCredit transaction and sought to enjoin its consummation and also to award plaintiff costs and disbursements including attorneys’ and expert fees; however, no motion for an injunction was filed.

On September 1, 2010, Douglas Mogle, on behalf of himself and all others similarly situated v. AmeriCredit Corp., et al. was filed in the district court for Tarrant County, Texas. General Motors Company is among the named defendants. This complaint is similar to the Labourers Pension Fund complaint discussed above. On November 17, 2010, plaintiffs filed a notice of nonsuit, dismissing its claims without prejudice.

The Hatfield and Butler cases have been consolidated, and the plaintiffs have filed an amended consolidated complaint to include a claim for money damages. It is not possible to determine the likelihood of success or reasonably ascertain the amount of any damages, attorneys’ fees or costs that may be awarded.

Korean Labor Litigation

Commencing on or about September 29, 2010, current and former hourly employees of GM Daewoo, our majority-owned affiliate in the Republic of Korea, filed six separate group actions in the Incheon District Court in Incheon, Korea. The cases allege that GM Daewoo failed to include certain allowances in its calculation of Ordinary Wages due under the Presidential Decree of the Korean Labor Standards Act. GM Daewoo may receive additional claims by hourly employees in the future. Similar cases have been brought against other large employers in the Republic of Korea. This case is in its earliest stages and the scope of claims asserted may change. However, based on a preliminary analysis of the claims currently asserted, the allegations of plaintiffs if accepted in their entirety represent a claim of approximately 517 billion Korean Won, which is approximately $454 million.

* * * * * * *

Item 4. Removed and Reserved

* * * * * * *

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Shares of our common stock have only been publicly traded since November 18, 2010 when our common stock was listed and began trading on the New York Stock Exchange and the Toronto Stock Exchange. As a result our table below only provides data with respect to the fourth quarter for our common stock.

Quarterly price ranges of our common stock on the New York Stock Exchange, the principal market in which the stock is traded are as follows:


	Year Ended December 31, 2010
	High (a)		Low (a)
Quarter
First		N/A		N/A
Second		N/A		N/A
Third		N/A		N/A
Fourth	$	36.98	$	33.07

(a)	The quarterly price ranges for our common stock are based on high and low prices from intraday trades.

Holders

As of February 15, 2011 we had a total of 1.6 billion issued and outstanding shares of common stock and a total of 318 million shares of common stock for which warrants are initially exercisable by two warrant holders of record. As of February 15, 2011 there were 185 holders of record of our common stock.

Dividends

Since our formation, we have not paid any dividends on our common stock. We have no current plans to pay any dividends on our common stock. So long as any share of our Series A or Series B Preferred Stock remains outstanding, no dividend or distribution may be declared or paid on our common stock unless all accrued and unpaid dividends have been paid on our Series A and Series B Preferred Stock, subject to exceptions, such as dividends on our common stock payable solely in shares of our common stock. Our secured revolving credit facility contains certain restrictions on our ability to pay dividends on our common stock, subject to exceptions, such as dividends payable solely in shares of our common stock.

So long as any share of our Series A Preferred Stock remains outstanding, no dividend or distribution may be declared or paid on our Series B Preferred Stock unless all accrued and unpaid dividends have been paid on our Series A Preferred Stock, subject to exceptions, such as dividends on our Series B Preferred Stock payable solely in shares of our common stock.

Our payment of dividends in the future, if any, will be determined by our Board of Directors and will be paid out of funds legally available for that purpose. Our payment of dividends in the future will depend on business conditions, our financial condition, earnings, liquidity and capital requirements, the covenants in our new secured revolving credit facility, and other factors.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Equity Compensation Plan Information

The table below contains information about securities authorized for issuance under equity compensation plans. The features of these plans are discussed further in Note 31 to our consolidated financial statements (number of securities in millions).

Plan Category

Number of Securities
To be Issued Upon
Exercise of
Outstanding
Options,
Warrants and
Rights

Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights (a)

Number of Securities
Remaining Available
For Future Issuance
Under Equity
Compensation
Plans (b)

Equity compensation plans approved by security holders

General Motors Company 2009 Long-Term Incentive Plan and Salary Stock Plan (c)

—

(a)

The awards under the General Motors Company 2009 Long-Term Incentive Plan and Salary Stock Plan are restricted stock units. The restricted stock units do not have an exercise price, and the awards will be payable in cash if settled prior to May 17, 2011, which is six months subsequent to our public offering. In limited situations certain executives could continue to settle their awards in cash due to tax considerations of select countries.

(b)	Excludes securities reflected in the first column, “Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights.”

(c)	At December 31, 2010 all of our equity compensation plans were approved by security holders.

Repurchases of Securities

None of our issued common stock has been reacquired since its initial issuance on July 10, 2009.

Recent Sales of Unregistered Securities

Sales of Unregistered Securities

On December 31, 2010, we awarded an aggregate of 238 thousand Restricted Stock Units (RSUs) to global executives pursuant to our Salary Stock Plan (GMSSP) and 223 thousand shares, of which 137 thousand shares are outstanding as of December 31, 2010, of Restricted Stock to global executives pursuant to our 2009 Long-Term Incentive Plan. The difference between the 223 thousand shares awarded and the 137 thousand shares outstanding was used to satisfy tax obligations relating to the awards. Each RSU under the GMSSP is the economic equivalent of one share of our common stock. The RSUs do not have an expiration or exercise date or carry a conversion or exercise price. The awards will be settled in twelve equal, quarterly installments beginning on December 31, 2011. Each RSU is fully vested and presents the right to receive one share of our common stock on the applicable settlement date. Under the GMSSP, the fair value of our common stock is the average of the high and low trading prices for our common stock as reported on the New York Stock Exchange, on which our common stock is listed, on the date of the transaction. The shares of Restricted Stock were fully vested upon grant but are subject to restrictions on transfer until December 31, 2013. The securities described in this paragraph were issued pursuant to written compensatory plans or arrangements with our employees in reliance on the exemption provided by Section 4(2) of the Securities Act.

Contribution of Common Stock to U.S. Hourly and Salaried Pension Plans

On January 13, 2011 we completed the previously announced voluntary contribution of 61 million shares of our common stock to U.S. hourly and salaried pension plans, valued at $2.2 billion for funding purposes. There were 41 million shares (valued at $1.5

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

billion) contributed to the hourly pension plan and 20 million shares (valued at $0.7 billion) to the salaried pension plan. This was a voluntary contribution above our required minimum funding of the pension plans. However, we expect that the contribution will improve the funded status of the pension plans and therefore improve our risk profile. The contributed shares qualify as a plan asset for funding purposes immediately, and will qualify as a plan asset for accounting purposes when certain transfer restrictions are removed, which is expected in 2011. The common stock was issued and contributed to the pension plan in an unregistered transaction in accordance with an exemption under Section 4(2) of the Securities Act.

Use of Proceeds

In the three months ended December 31, 2010 we completed a public offering of 550 million shares of our common stock at a price of $33.00 per share, or $18.1 billion, which shares of common stock were offered by the UST, Canada Holdings and the New VEBA, and 100 million shares of Series B Preferred Stock at a price of $50.00 per share, or $5.0 billion, which shares of Series B Preferred Stock were offered by us. The following table sets forth the amounts registered and sold by each selling stockholder, the aggregate offering price of the sales, underwriters discounts and net proceeds before expenses to the selling stockholders.


Selling Stockholder	Total Shares Sold		Aggregate Offering Price		Underwriters’ Discounts		Net Proceeds After Underwriters’ Discounts
UST		412,328,814	$	13,606,850,862	$	102,051,381	$	13,504,799,481
Canada Holdings		35,021,186	$	1,155,699,138	$	8,667,744	$	1,147,031,394
New VEBA		102,350,000	$	3,377,550,000	$	25,331,625	$	3,352,218,375

We registered and sold 100 million shares of Series B Preferred stock for an aggregate offering price of $5.0 billion which, after underwriters’ discounts of $138 million resulted in net proceeds to us of $4.9 billion. Each share of our Series B Preferred Stock is convertible at the option of the holder at any time prior to December 1, 2013 into a minimum of 1.2626 shares of our common stock, and each share of Series B Preferred Stock will mandatorily convert on December 1, 2013 into a number of shares of our common stock ranging from 1.2626 to 1.5152 shares depending on the applicable market value of our common stock. The conversion ratios for option and mandatory conversions are subject to anti-dilution, make-whole and other adjustments. This offering was effected on November 17, 2010 pursuant to a Registration Statement on Form S-1 (File No. 333-168919), which the SEC declared effective on such date. Morgan Stanley & Co. Incorporated and J.P. Morgan Securities LLC acted as representatives of the several underwriters in the offering. We did not receive any of the proceeds from the sale of common stock, and we received net proceeds from the Series B Preferred Stock offering of $4.9 billion. We used these proceeds, along with $1.2 billion of cash on hand, to purchase our Series A Preferred Stock held by the UST in the amount of $2.1 billion and make a cash contribution to our U.S. hourly and salary pension plans in an amount of $4.0 billion.

We estimate that our expenses for the offerings, excluding underwriting discounts and commissions in connection with the sale of Series B Preferred Stock were $25.0 million, which does not reflect the agreement by the underwriters to reimburse us for a portion of our legal and road show costs and expenses in connection with the offering, up to a maximum aggregate amount of $3.0 million. No offering expenses were paid directly or indirectly by us to any of our directors or officers (or their associates) or persons owning 10% or more of any class of our equity securities or to any other affiliates.

* * * * * * *

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Item 6. Selected Financial Data

(Dollars in millions except per share amounts)


	Successor						Predecessor
	Year Ended December 31, 2010 (a)			July 10, 2009 Through December 31, 2009 (a)(b)			January 1, 2009 Through July 9, 2009		Years Ended December 31,
	Year Ended December 31, 2010 (a)						January 1, 2009 Through July 9, 2009		2008			2007			2006
Income Statement Data:
Total net sales and revenue (c)(d)	$	135,592		$	57,474		$	47,115	$	148,979		$	179,984		$	204,467

Reorganization gains, net (e)	$	—		$	—		$	128,155	$	—		$	—		$	—

Income (loss) from continuing operations (e)(f)	$	6,503		$	(3,786	)	$	109,003	$	(31,051	)	$	(42,685	)	$	(2,155	)
Income from discontinued operations, net of tax (g)		—			—			—		—			256			445
Gain on sale of discontinued operations, net of tax (g)		—			—			—		—			4,293			—

Net income (loss) (e)		6,503			(3,786	)		109,003		(31,051	)		(38,136	)		(1,710	)
Net (income) loss attributable to noncontrolling interests		(331	)		(511	)		115		108			(406	)		(324	)
Less: Cumulative dividends on and charge related to purchase of preferred stock (h)		1,504			131			—		—			—			—

Net income (loss) attributable to common stockholders (e)	$	4,668		$	(4,428	)	$	109,118	$	(30,943	)	$	(38,542	)	$	(2,034	)

GM $0.01 par value common stock and Old GM $1-2/3 par value common stock
Basic earnings (loss) per share:
Income (loss) from continuing operations attributable to common stockholders	$	3.11		$	(3.58	)	$	178.63	$	(53.47	)	$	(76.16	)	$	(4.39	)
Income from discontinued operations attributable to common stockholders (g)		—			—			—		—			8.04			0.79

Net income (loss) attributable to common stockholders	$	3.11		$	(3.58	)	$	178.63	$	(53.47	)	$	(68.12	)	$	(3.60	)

Diluted earnings (loss) per share:
Income (loss) from continuing operations attributable to common stockholders	$	2.89		$	(3.58	)	$	178.55	$	(53.47	)	$	(76.16	)	$	(4.39	)
Income from discontinued operations attributable to common stockholders (g)		—			—			—		—			8.04			0.79

Net income (loss) attributable to common stockholders	$	2.89		$	(3.58	)	$	178.55	$	(53.47	)	$	(68.12	)	$	(3.60	)

Cash dividends per common share	$	—		$	—		$	—	$	0.50		$	1.00		$	1.00
Balance Sheet Data (as of period end):
Total assets (d)(f)	$	138,898		$	136,295				$	91,039		$	148,846		$	185,995
Automotive notes and loans payable (i)(j)	$	4,630		$	15,783				$	45,938		$	43,578		$	47,476
GM Financial notes and loans payable (d)	$	7,032
Series A Preferred Stock (k)	$	5,536		$	6,998				$	—		$	—		$	—
Series B Preferred Stock (l)	$	4,855		$	—				$	—		$	—		$	—
Equity (deficit) (f)(m)(n)	$	37,159		$	21,957				$	(85,076	)	$	(35,152	)	$	(4,076	)

(a)	All applicable Successor share, per share and related information has been adjusted retroactively for the three-for-one stock split effected on November 1, 2010.

(b)

At July 10, 2009 we applied fresh-start reporting following the guidance in Accounting Standards Codification (ASC) 852, “Reorganizations” (ASC 852). The consolidated financial statements for the periods ended on or before July 9, 2009 do not include the effect of any changes in the fair value of assets or liabilities as a result of the application of fresh-start reporting. Therefore, our financial information at and for any period after July 10, 2009 is not comparable to Old GM’s financial information.

(c)	In November 2006 Old GM sold a 51% controlling ownership interest in Ally Financial, resulting in a significant decrease in total consolidated net sales and revenue.

(d)	GM Financial was consolidated effective October 1, 2010.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

(e)

In the period January 1, 2009 through July 9, 2009 Old GM recorded Reorganization gains, net of $128.2 billion directly associated with the Chapter 11 Proceedings, the 363 Sale and the application of fresh-start reporting. Refer to Note 2 to our consolidated financial statements for additional detail.

(f)	In September 2007 Old GM recorded full valuation allowances of $39.0 billion against net deferred tax assets in Canada, Germany and the United States.

(g)	In August 2007 Old GM completed the sale of the commercial and military operations of its Allison business. The results of operations, cash flows and the 2007 gain on sale of Allison have been reported as discontinued operations for all periods presented.

(h)	Includes a charge related to the purchase of Series A Preferred Stock of $677 million in the year ended December 31, 2010.

(i)	In December 2008 Old GM entered into the UST Loan Agreement, pursuant to which the UST agreed to provide a $13.4 billion UST Loan Facility.

(j)	In December 2010 GM Daewoo terminated a Korean Won 1.4 trillion (equivalent to $1.2 billion) credit facility following the repayment of the remaining $1.0 billion under the facility.

(k)	In December 2010 we purchased 84 million shares of our Series A Preferred Stock from the UST for a purchase price of $2.1 billion, which was equal to 102% of their aggregate liquidation amount.

(l)

Series B Preferred Stock was issued in a public offering in November and December 2010. The Series B Preferred Stock pays dividends at 4.75% and is convertible to common stock at the option of the holder until December 1, 2013 the date on which all outstanding shares of Series B Preferred Stock will be mandatorily converted into common stock based on pre-defined conversion ratios that adjust based on the share price of our common stock.

(m)	In January 2007 Old GM recorded a decrease to Retained earnings of $425 million and a decrease of $1.2 billion to Accumulated other comprehensive loss in accordance with the early adoption of the measurement provisions of ASC 715, “Compensation — Retirement Benefits” (ASC 715).

(n)	In January 2007 Old GM recorded an increase to Retained earnings of $137 million with a corresponding decrease to its liability for uncertain tax positions in accordance with ASC 740, “Income Taxes” (ASC 740).

* * * * * * *

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General Motors Company was formed by the UST in 2009 originally as a Delaware limited liability company, Vehicle Acquisition Holdings LLC, and subsequently converted to a Delaware corporation, NGMCO, Inc. This company, which on July 10, 2009 acquired substantially all of the assets and assumed certain liabilities of General Motors Corporation and changed its name to General Motors Company, is sometimes referred to in this management’s discussion and analysis of financial condition and results of operations for the periods on or subsequent to July 10, 2009 as “we,” “our,” “us,” “ourselves,” the “Company,” “General Motors,” or “GM,” and is the successor entity solely for accounting and financial reporting purposes (Successor). General Motors Corporation is sometimes referred to in this management’s discussion and analysis of financial condition and results of operations, for the periods on or before July 9, 2009, as “Old GM.” Prior to July 10, 2009 Old GM operated the business of the Company, and pursuant to the agreement with the SEC, as described in a no-action letter issued to Old GM by the SEC Staff on July 9, 2009 regarding our filing requirements and those of Motors Liquidation Company (MLC), the accompanying consolidated financial statements include the financial statements and related information of Old GM as it is our predecessor entity solely for accounting and financial reporting purposes (Predecessor). On July 10, 2009 in connection with the 363 Sale, General Motors Corporation changed its name to Motors Liquidation Company, which is sometimes referred to in this management’s discussion and analysis of financial condition and results of operations for the periods on or after July 10, 2009 as “MLC.” MLC continues to exist as a distinct legal entity for the sole purpose of liquidating its remaining assets and liabilities.

Presentation and Estimates

Basis of Presentation

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying consolidated financial statements.

We analyze the results of our business through our five segments, namely GMNA, GME, GMIO, GMSA and GM Financial.

In the year ended December 31, 2010 we changed our managerial and financial reporting structure so that certain entities geographically located within Russia and Uzbekistan were transferred from our GME segment to our GMIO segment, and certain entities geographically located in Brazil, Argentina, Colombia, Ecuador, Venezuela, Bolivia, Chile, Paraguay, Peru and Uruguay were transferred from our GMIO segment to our newly created GMSA segment. We have retrospectively revised the segment presentation for all periods presented.

Change in Presentation of Financial Statements

In 2010 we changed the presentation of our consolidated balance sheet, consolidated statement of cash flows and certain footnotes to combine line items which were either of a related nature or not individually material. We have made corresponding reclassifications to the comparable information for all periods presented.

Consistent with industry practice, market share information includes estimates of industry sales in certain countries where public reporting is not legally required or otherwise available on a consistent basis.

On October 5, 2010 our Board of Directors recommended a three-for-one stock split on shares of our common stock, which was approved by our stockholders on November 1, 2010. The stock split was effected on November 1, 2010.

Each stockholder’s percentage ownership in us and proportional voting power remained unchanged after the stock split. All applicable share, per share and related information for periods on or subsequent to July 10, 2009 has been adjusted retroactively to give effect to the three-for-one stock split.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

On October 5, 2010 our Board of Directors recommended that we amend our Certificate of Incorporation to increase the number of shares of common stock that we are authorized to issue from 2.5 billion shares to 5.0 billion shares and to increase the number of preferred shares that we are authorized to issue from 1.0 billion shares to 2.0 billion shares. Our stockholders approved these amendments on November 1, 2010, and they were effected on November 1, 2010.

Use of Estimates in the Preparation of the Financial Statements

The consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

Overview

Our Company

Our company commenced operations on July 10, 2009 when we completed the acquisition of substantially all of the assets and assumption of certain liabilities of Old GM through a 363 Sale under the Bankruptcy Code. As a result of the 363 Sale and other recent restructuring and cost savings initiatives, we have improved our financial position and level of operational flexibility as compared to Old GM when it operated the business. We commenced operations upon completion of the 363 Sale with a total amount of debt and other liabilities at July 10, 2009 that was $92.7 billion less than Old GM’s total amount of debt and other liabilities at July 9, 2009. We reached a competitive labor agreement with our unions, restructured our dealer network and reduced and refocused our brand strategy in the U.S. to our four brands.

In November and December of 2010 we consummated a public offering of 550 million shares of our common stock and 100 million shares of Series B Preferred Stock and listed both of these securities on the New York Stock Exchange and the common stock on the Toronto Stock Exchange.

Automotive

We are a leading global automotive company. Our vision is to design, build and sell the world’s best vehicles. We seek to distinguish our vehicles through superior design, quality, reliability, telematics (wireless voice and data) and infotainment and safety within their respective segments. Our business is diversified across products and geographic markets. With a global network of independent dealers we meet the local sales and service needs of our retail and fleet customers. Of our total 2010 vehicle sales volume, 73.6% was generated outside the United States, including 43.0% from emerging markets, such as Brazil, Russia, India and China (collectively BRIC), which have recently experienced the industry’s highest volume growth.

Our automotive business is organized into four geographically-based segments:

•

GMNA, with sales, manufacturing and distribution operations in the U.S., Canada and Mexico and distribution operations in Central America and the Caribbean, represented 31.3% of our total 2010 vehicle sales volume. In North America, we sell our vehicles through four brands — Chevrolet, GMC, Buick and Cadillac — which are manufactured at plants across the U.S., Canada and Mexico and imported from other GM regions. In 2010, GMNA had the largest market share of any competitor in this market at 18.2%.

•

GME has sales, manufacturing and distribution operations across Western and Central Europe. GME’s vehicle sales volume, which in addition to Western and Central Europe, includes Russia, the Commonwealth of Independent States and Eastern Europe represented 19.8% of our total 2010 vehicle sales volume. In Western and Central Europe, we sell our vehicles under

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

the Opel and Vauxhall (U.K. only) brands, which are manufactured in Europe, and under the Chevrolet brand, which is imported from South Korea where it is manufactured by GM Daewoo of which we own 70.1%. In 2010, GME had the number five market share in this market, at 8.8%.

•

GMIO, with sales, manufacturing and distribution operations in Asia-Pacific, Russia, the Commonwealth of Independent States, Eastern Europe, Africa and the Middle East, is our largest segment by vehicle sales volume. GMIO’s vehicle sales volume, which includes Asia-Pacific, Africa and the Middle East represented 36.7% of our total 2010 vehicle sales volume including sales through our joint ventures. In these regions, we sell our vehicles under the Buick, Cadillac, Chevrolet, Daewoo, FAW, GMC, Holden, Isuzu, Jiefang, Opel and Wuling brands, and we plan to commence sales under the Baojun brand in 2011. In 2010, GMIO had the second largest market share for this market at 8.8% and the number one market share in China. Of GMIO’s vehicle sales volume 76.4% is from China in 2010. Our Chinese operations are primarily comprised of three joint ventures: SGM; of which we own 49%, SGMW; of which we own 44% and FAW-GM; of which we own 50%.

•

GMSA, with sales, manufacturing and distribution operations in Brazil, Argentina, Colombia, Ecuador and Venezuela as well as sales activities in Bolivia, Chile, Paraguay, Peru and Uruguay represented 12.2% of our total 2010 vehicle sales volume. In South America, we sell our vehicles under the Chevrolet, Suzuki and Isuzu brands. In 2010 GMSA had the largest market share for this market at 19.9% and the number three market share in Brazil. Of GMSA’s vehicle sales volume 64.1% is from Brazil in 2010.

We offer a global vehicle portfolio of cars, crossovers and trucks. We are committed to leadership in vehicle design, quality, reliability, telematics and infotainment and safety, as well as to developing key energy efficiency, energy diversity and advanced propulsion technologies, including electric vehicles with range extending capabilities such as the new Chevrolet Volt.

Automotive Financing

On October 1, 2010 we completed the acquisition of AmeriCredit Corp. for cash of approximately $3.5 billion and changed its name to General Motors Financial Company, Inc.

GM Financial specializes in purchasing retail automobile installment sales contracts originated by franchised and select independent dealers in connection with the sale of used and new automobiles. GM Financial generates revenue and cash flows primarily through the purchase, retention, subsequent securitization and servicing of finance receivables. To fund the acquisition of receivables prior to securitization, GM Financial uses available cash and borrowings under its credit facilities. GM Financial earns finance charge income on the finance receivables and pays interest expense on borrowings under its credit facilities. GM Financial periodically transfers receivables to securitization trusts that issue asset-backed securities to investors. The securitization trusts are special purpose entities that are also variable interest entities that meet the requirements to be consolidated in the financial statements.

Our Strategy

Our vision is to design, build and sell the world’s best vehicles. The primary elements of our strategy to achieve this vision are to:

•

Deliver a product portfolio of the world’s best vehicles, allowing us to maximize sales under any market conditions;

•

Sell our vehicles globally by targeting developed markets, which are projected to have increases in vehicle demand as the global economy recovers, and further strengthening our position in high growth emerging markets;

•

Improve revenue realization and maintain a competitive cost structure to allow us to remain profitable at lower industry volumes and across the lifecycle of our product portfolio; and

•

Maintain a strong balance sheet by reducing financial leverage given the high operating leverage of our business model.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Our management team is focused on hiring new and promoting current talented employees who can bring new perspectives to our business in order to execute on our strategy as follows:

Deliver quality products. We intend to maintain a broad portfolio of vehicles so that we are positioned to meet global consumer preferences. We plan to do this in several ways.

•

Concentrate our design, engineering and marketing resources on fewer brands and architectures. We plan to increase the volume of vehicles produced from common global architectures to more than 50% of our total volumes in 2015 from less than 17% today. We expect that this initiative will result in greater investment per architecture and brand and will increase our product development and manufacturing flexibility, allowing us to maintain a steady schedule of important new product launches in the future. We believe our four-brand strategy in the U.S. will continue to enable us to allocate higher marketing expenditures per brand.

•

Develop products across vehicle segments in our global markets. We plan to develop vehicles in each of the key segments of the global markets in which we compete. For example, in September 2010 we introduced the Chevrolet Cruze in the U.S. small car segment, an important and growing segment where we have historically been under-represented.

•

Continued investment in a portfolio of technologies. We will continue to invest in technologies that support energy diversity and energy efficiency as well as in safety, telematics and infotainment technology. We are committed to advanced propulsion technologies and intend to offer a portfolio of fuel efficient alternatives that use energy sources such as petroleum, bio-fuels, hydrogen and electricity, including the new Chevrolet Volt. We are committed to increasing the fuel efficiency of our vehicles with internal combustion engines through features such as cylinder deactivation, direct injection, variable valve timing, turbo-charging with engine downsizing and six speed transmissions. For example, we expect the Chevrolet Cruze Eco to be capable of achieving an estimated 40 mpg on the highway with a traditional internal combustion engine. We are expanding our telematics and infotainment offerings and, as a result of our OnStar service and our partnerships with companies such as Google, are in a position to deliver safety, security, navigation and connectivity systems and features.

Sell our vehicles globally. We will continue to compete in the largest and fastest growing markets globally.

•

Broaden GMNA product portfolio. We plan to launch 13 new vehicles in GMNA across our four brands in 2011 and 2012, primarily in the growing car and crossover segments, where, in some cases, we are under-represented, and an additional 29 new vehicles between 2013 and 2014. Launched vehicles in 2010 included the Chevrolet Matiz, Spark, Spark Lite and Volt, Cadillac CTS Coupe and Buick Regal. We believe that we have achieved a more balanced portfolio in the U.S. market, where we maintained a sales volume mix of 36% from cars, 38% from trucks and 26% from crossovers in 2010 compared to 51% from trucks in 2006.

•

Refresh GME’s vehicle portfolio. To improve our product quality and product perception in Europe, by the start of 2012, we plan to have 80% of our Opel/Vauxhall carlines volume refreshed such that the model stylings are less than three years old. We have four product launches scheduled in 2011. As part of our planned rejuvenation of Chevrolet’s portfolio, which increasingly supplements our Opel/Vauxhall brands throughout Europe, we are moving the entire Chevrolet lineup to new global architectures.

•

Increase sales in GMIO, particularly in China. We plan to continue to execute our growth strategies in countries where we already hold strong positions, such as China, and to improve market share in other important markets, including South Korea, South Africa, Russia, India and the ASEAN region. We aim to launch 70 new vehicles throughout GMIO through 2012. We plan to enhance and strengthen our GMIO product portfolio through three strategies: (1) leveraging our global architectures; (2) pursuing local and regional solutions to meet specific market requirements; and (3) expanding our joint venture partner collaboration opportunities.

•

Increase sales in GMSA, particularly in Brazil. We plan to continue to execute our growth strategies in countries where we already hold strong positions, such as Brazil. We aim to launch 40 new vehicles throughout GMSA through 2011. We plan to

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

strengthen our GMSA product portfolio through three strategies: (1) leveraging our global architectures; (2) pursuing local and regional solutions to meet specific market requirements; and (3) expanding our joint venture partner collaboration opportunities.

•

Ensure competitive financing is available to our dealers and customers. We currently maintain multiple financing programs and arrangements with third parties for our wholesale and retail customers to utilize when purchasing or leasing our vehicles. Through our long-standing arrangements with Ally Financial and a variety of other worldwide, regional and local lenders, we provide our customers and dealers with access to financing alternatives. We plan to further expand the range of financing options available to our customers and dealers to help grow our vehicle sales through two specific objectives: (1) ensure certainty of availability of financing; and (2) competitive and transparent pricing for financing, for our dealers and customers. We expect GM Financial will offer increased availability of leasing and sub-prime financing for our customers in the United States and Canada throughout economic cycles. We also plan to use GM Financial to initiate targeted customer marketing initiatives to expand our vehicle sales.

Reduce breakeven levels through improved revenue realization and a competitive cost structure. In developed markets, we are improving our cost structure to become profitable at lower industry volumes.

•

Capitalize on cost structure improvement and maintain reduced incentive levels in GMNA. We plan to sustain the cost reduction and operating flexibility progress we have made as a result of our North American restructuring. Our current U.S. and Canadian hourly labor agreements provide the flexibility to utilize a lower tiered wage and benefit structure for new hires, part-time employees and temporary employees. We aim to increase our vehicle profitability by maintaining competitive incentive levels with our strengthened product portfolio and by actively managing our production levels through monitoring of our dealer inventory levels. For the twelve months ended December 31, 2010 and based on GMNA’s 2010 market share, GMNA’s earnings before interest and taxes (EBIT) (EBIT is not an operating measure under U.S. GAAP — refer to “Reconciliation of Consolidated, Automotive and GM Financial Segment Results” for additional discussion) would have achieved breakeven at GMNA wholesale volume of approximately 2.3 million vehicles, consistent with an annual U.S. industry sales volume of approximately 9.5 to 10.0 million vehicles.

•

Execute on our Opel/Vauxhall restructuring plan. We expect our Opel/Vauxhall restructuring plan to lower our vehicle manufacturing costs. The plan includes manufacturing rationalization, headcount reduction, labor cost concessions from the remaining workforce and selling, general and administrative efficiency initiatives. Specifically, we have reached an agreement to reduce our European manufacturing capacity by 20% through, among other things, the closing of our Antwerp facility in Belgium and the rationalization of our powertrain operations in our Bochum and Kaiserslautern facilities in Germany. Additionally, we have reached an agreement with the labor unions in Europe to reduce labor costs by Euro 265 million per year. The objective of our restructuring, along with the refreshed product portfolio pipeline, is to restore the profitability of the GME business.

•

Enhance manufacturing flexibility. We primarily produce vehicles in locations where we sell them and we have significant manufacturing capacity in medium- and low-cost countries. We intend to maximize capacity utilization across our production footprint to meet demand without requiring significant additional capital investment. For example, we were able to leverage the benefit of a global architecture and start initial production for the U.S. of the Buick Regal 11 months ahead of schedule by temporarily shifting production from North America to Rüsselsheim, Germany.

Maintain a strong balance sheet. Given our business’s high operating leverage and the cyclical nature of our industry, we intend to minimize our financial leverage. We plan to use excess cash to repay debt and to make discretionary contributions to our U.S. pension plans. Based on this planned reduction in financial leverage and the anticipated benefits resulting from our operating strategy described above, we will aim to attain an investment grade credit rating over the long-term.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Chapter 11 Proceedings and the 363 Sale

Background

Over time as Old GM’s market share declined in North America, Old GM needed to continually restructure its business operations to reduce cost and excess capacity. Legacy labor costs and obligations and capacity in its dealer network made Old GM less competitive than new entrants into the U.S. market. These factors continued to strain Old GM’s liquidity. In 2005 Old GM incurred significant losses from operations and from restructuring activities such as providing support to Delphi and other efforts intended to reduce operating costs. Old GM managed its liquidity during this time through a series of cost reduction initiatives, capital markets transactions and sales of assets. However, the global credit market crisis had a dramatic effect on Old GM and the automotive industry. In the second half of 2008, the increased turmoil in the mortgage and overall credit markets (particularly the lack of financing for buyers or lessees of vehicles), the continued reductions in U.S. housing values, the volatility in the price of oil, recessions in the United States and Western Europe and the slowdown of economic growth in the rest of the world created a substantially more difficult business environment. The ability to execute capital markets transactions or sales of assets was extremely limited, vehicle sales in North America and Western Europe contracted severely, and the pace of vehicle sales in the rest of the world slowed. Old GM’s liquidity position, as well as its operating performance, were negatively affected by these economic and industry conditions and by other financial and business factors, many of which were beyond its control.

As a result of these economic conditions and the rapid decline in sales in the three months ended December 31, 2008 Old GM determined that, despite the actions it had then taken to restructure its U.S. business, it would be unable to pay its obligations in the normal course of business in 2009 or service its debt in a timely fashion, which required the development of a new plan that depended on financial assistance from the U.S. government.

In December 2008 Old GM requested and received financial assistance from the U.S. government and entered into the UST Loan Agreement. In early 2009 Old GM’s business results and liquidity continued to deteriorate, and, as a result, Old GM obtained additional funding from the UST under the UST Loan Agreement. Old GM, through its wholly-owned subsidiary GMCL, also received funding from EDC, a corporation wholly-owned by the Government of Canada, under a loan and security agreement entered into in April 2009 (EDC Loan Facility).

As a condition to obtaining the UST Loan Facility under the UST Loan Agreement, Old GM was required to submit a Viability Plan in February 2009 that included specific actions intended to result in the following:

•

Repayment of all loans, interest and expenses under the UST Loan Agreement, and all other funding provided by the U.S. government;

•

Compliance with federal fuel efficiency and emissions requirements and commencement of domestic manufacturing of advanced technology vehicles;

•

Achievement of a positive net present value, using reasonable assumptions and taking into account all existing and projected future costs;

•

Rationalization of costs, capitalization and capacity with respect to its manufacturing workforce, suppliers and dealerships; and

•

A product mix and cost structure that is competitive in the U.S. marketplace.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The UST Loan Agreement also required Old GM to, among other things, use its best efforts to achieve the following restructuring targets:

Debt Reduction

•

Reduction of its outstanding unsecured public debt by not less than two-thirds through conversion of existing unsecured public debt into equity, debt and/or cash or by other appropriate means.

Labor Modifications

•

Reduction of the total amount of compensation paid to its U.S. employees so that, by no later than December 31, 2009, the average of such total amount is competitive with the average total amount of such compensation paid to U.S. employees of certain foreign-owned, U.S. domiciled automakers (transplant automakers);

•

Elimination of the payment of any compensation or benefits to U.S. employees who have been fired, laid-off, furloughed or idled, other than customary severance pay; and

•

Application of work rules for U.S. employees in a manner that is competitive with the work rules for employees of transplant automakers.

VEBA Modifications

•

Modification of its retiree healthcare obligations arising under the 2008 UAW Settlement Agreement under which responsibility for providing healthcare for UAW retirees, their spouses and dependents would permanently shift from Old GM to the New Plan funded by the New VEBA, such that payment or contribution of not less than one-half of the value of each future payment was to be made in the form of Old GM common stock, subject to certain limitations.

The UST Loan Agreement provided that if, by March 31, 2009 or a later date (not to exceed 30 days after March 31, 2009) as determined by the Presidential Task Force on the Auto Industry (Auto Task Force) (Certification Deadline), the Auto Task Force had not certified that Old GM had taken all steps necessary to achieve and sustain its long-term viability, international competitiveness and energy efficiency in accordance with the Viability Plan, then the loans and other obligations under the UST Loan Agreement were to become due and payable on the thirtieth day after the Certification Deadline.

On March 30, 2009 the Auto Task Force determined that the plan was not viable and required substantial revisions. In conjunction with the March 30, 2009 announcement, the administration announced that it would offer Old GM adequate working capital financing for a period of 60 days while it worked with Old GM to develop and implement a more accelerated and aggressive restructuring that would provide a sound long-term foundation. On March 31, 2009 Old GM and the UST agreed to postpone the Certification Deadline to June 1, 2009.

Old GM made further modifications to its Viability Plan in an attempt to satisfy the Auto Task Force requirement that it undertake a substantially more accelerated and aggressive restructuring plan (Revised Viability Plan). The following is a summary of significant cost reduction and restructuring actions contemplated by the Revised Viability Plan, the most significant of which included reducing Old GM’s indebtedness and VEBA obligations.

Indebtedness and VEBA Obligations

In April 2009 Old GM commenced exchange offers for certain unsecured notes to reduce its unsecured debt in order to comply with the debt reduction condition of the UST Loan Agreement.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Old GM also commenced discussions with the UST regarding the terms of a potential restructuring of its debt obligations under the UST Loan Agreement, the UST Ally Financial Loan Agreement (as subsequently defined), and any other debt issued or owed to the UST in connection with those loan agreements pursuant to which the UST would exchange at least 50% of the total outstanding debt Old GM owed to it at June 1, 2009 for Old GM common stock.

Old GM commenced discussions with the UAW and the VEBA-settlement class representative regarding the terms of potential VEBA modifications.

Other Cost Reduction and Restructuring Actions

In addition to the efforts to reduce debt and modify the VEBA obligations, the Revised Viability Plan also contemplated the following cost reduction efforts:

•

Extended shutdowns of certain North American manufacturing facilities in order to reduce dealer inventory;

•

Refocus of resources on four U.S. brands: Chevrolet, Cadillac, Buick and GMC;

•

Acceleration of the resolution for Saab, HUMMER and Saturn and no planned future investment for Pontiac, which was phased out by the end of 2010;

•

Acceleration of the reduction in U.S. nameplates to 34 by 2010 — there were 34 nameplates at December 31, 2010;

•

A reduction in the number of U.S. dealers was targeted from 6,246 in 2008 to 3,605 in 2010 — we have completed the federal dealer arbitration process and reduced the number of U.S. dealers to 4,500 at December 31, 2010;

•

A reduction in the total number of plants in the U.S. to 34 by the end of 2010 and 31 by 2012 — there were 40 plants in the U.S. at December 31, 2010; and

•

A reduction in the U.S. hourly employment levels from 61,000 in 2008 to 40,000 in 2010 as a result of the nameplate reductions, operational efficiencies and plant capacity reductions — through these actions, our special attrition programs and other U.S. hourly workforce reductions, we have reduced the number of U.S. hourly employees to 49,000 at December 31, 2010.

Old GM had previously announced that it would reduce salaried employment levels on a global basis by 10,000 during 2009 and had instituted several programs to effect reductions in salaried employment levels. Old GM had also negotiated a revised labor agreement with the CAW to reduce its hourly labor costs to approximately the level paid to the transplant automakers; however, such agreement was contingent upon receiving longer term financial support for its Canadian operations from the Canadian federal and Ontario provincial governments.

Chapter 11 Proceedings

In connection with the Chapter 11 Proceedings, Old GM entered into a secured superpriority debtor-in-possession credit agreement with the UST and EDC (DIP Facility) and received additional funding commitments from EDC to support Old GM’s Canadian operations.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table summarizes the total funding and funding commitments Old GM received from the U.S. and Canadian governments and the additional notes Old GM issued related thereto in the period December 31, 2008 through July 9, 2009 (dollars in millions):


	Funding and Funding Commitments		Additional Notes Issued (a)		Total Obligation
Description of Funding Commitment
UST Loan Agreement (b)	$	19,761	$	1,172	$	20,933
EDC funding (c)		6,294		161		6,455
DIP Facility		33,300		2,221		35,521

Total	$	59,355	$	3,554	$	62,909

(a)	Old GM did not receive any proceeds from the issuance of these promissory notes, which were issued as additional compensation to the UST and EDC.

(b)	Includes debt of $361 million, which UST loaned to Old GM under the warranty program.

(c)

Includes approximately $2.4 billion from the EDC Loan Facility received in the period January 1, 2009 through July 9, 2009 and funding commitments of CAD $4.5 billion (equivalent to $3.9 billion when entered into) that were immediately converted into our equity. This funding was received on July 15, 2009.

363 Sale

On July 10, 2009, we completed the acquisition of substantially all of the assets and assumed certain liabilities of the Sellers. The 363 Sale was consummated in accordance with the Purchase Agreement, between us and the Sellers, and pursuant to the Bankruptcy Court’s sale order dated July 5, 2009.

In connection with the 363 Sale, the purchase price we paid to Old GM equaled the sum of:

•

A credit bid in an amount equal to the total of: (1) debt of $19.8 billion under Old GM’s UST Loan Agreement, plus notes of $1.2 billion issued as additional compensation for the UST Loan Agreement, plus interest on such debt Old GM owed as of the closing date of the 363 Sale; and (2) debt of $33.3 billion under Old GM’s DIP Facility, plus notes of $2.2 billion issued as additional compensation for the DIP Facility, plus interest Old GM owed as of the closing date, less debt of $8.2 billion owed under the DIP Facility;

•

UST’s return of the warrants Old GM previously issued to it;

•

The issuance to MLC of 150 million shares (or 10%) of our common stock and warrants to acquire newly issued shares of our common stock initially exercisable for a total of 273 million shares of our common stock (or 15% on a fully diluted basis); and

•

Our assumption of certain specified liabilities of Old GM (including debt of $7.1 billion owed under the DIP Facility).

Under the Purchase Agreement, we are obligated to issue additional shares of our common stock to MLC (Adjustment Shares) in the event that allowed general unsecured claims against MLC, as estimated by the Bankruptcy Court, exceed $35.0 billion. The maximum number of Adjustment Shares issuable is 30 million shares (subject to adjustment to take into account stock dividends, stock splits and other transactions). The number of Adjustment Shares to be issued is calculated based on the extent to which estimated general unsecured claims exceed $35.0 billion with the maximum number of Adjustment Shares issued if estimated general unsecured claims total $42.0 billion or more. In the period July 10, 2009 to December 31, 2009 we determined that it was probable that general unsecured claims allowed against MLC would ultimately exceed $35.0 billion by at least $2.0 billion. In the circumstance where expected general unsecured claims equal $37.0 billion, we would have been required to issue 8.6 million Adjustment Shares to

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

MLC as an adjustment to the purchase price. At December 31, 2009 we recorded a liability of $162 million included in Accrued liabilities. In the year ended December 31, 2010 the liability was adjusted quarterly based on available information. Based on information which became available in the three months ended December 31, 2010, we concluded it was no longer probable that general unsecured claims would exceed $35 billion and we reversed to income our previously recorded liability of $231 million for the contingently issuable Adjustment Shares.

Agreements with the UST, EDC and New VEBA

On July 10, 2009, we entered into the UST Credit Agreement and assumed debt of $7.1 billion Old GM incurred under the DIP Facility (UST Loans). Through our wholly-owned subsidiary GMCL, we entered into the Canadian Loan Agreement with EDC and assumed a CAD $1.5 billion (equivalent to $1.3 billion when entered into) term loan maturing on July 10, 2015. Proceeds of the DIP Facility of $16.4 billion were deposited in escrow, to be distributed to us at our request if certain conditions were met and returned to us after the UST Loans and the Canadian Loan were repaid in full. Immediately after entering into the UST Credit Agreement, we made a partial pre-payment due to the termination of the U.S. government sponsored warranty program, reducing the UST Loans principal balance to $6.7 billion. We also entered into the VEBA Note Agreement and issued the VEBA Notes to the New VEBA in the principal amount of $2.5 billion pursuant to the VEBA Note Agreement.

In December 2009 and March 2010 we made quarterly payments of $1.0 billion and $1.0 billion on the UST Loans and GMCL made quarterly payments of $192 million and $194 million on the Canadian Loan. In April 2010, we used funds from our escrow account to repay in full the outstanding amount of the UST Loans of $4.7 billion, and GMCL repaid in full the outstanding amount of the Canadian Loan of $1.1 billion. Both loans were repaid prior to maturity. On October 26, 2010 we repaid in full the outstanding amount (together with accreted interest thereon) of the VEBA Notes of $2.8 billion.

Refer to Note 19 to our consolidated financial statements for additional information on the UST Loans, VEBA Notes and the Canadian Loan.

Issuance of Common Stock, Preferred Stock and Warrants

On July 10, 2009 we issued the following securities to the UST, Canada Holdings, the New VEBA and MLC (shares in millions):


	Common Stock		Series A Preferred Stock
UST		912		84
Canada Holdings		175		16
New VEBA (a)		263		260
MLC (a)		150		—

		1,500		360

(a)	New VEBA also received a warrant to acquire 46 million shares of our common stock and MLC received two warrants, each to acquire 136 million shares of our common stock.

Preferred Stock

The shares of Series A Preferred Stock have a liquidation amount of $25.00 per share and accrue cumulative dividends at 9.0% per annum (payable quarterly on March 15, June 15, September 15 and December 15) that are payable if, as and when declared by our Board of Directors. So long as any share of the Series A Preferred Stock remains outstanding, no dividend or distribution may be declared or paid on our common stock or our Series B Preferred Stock unless all accrued and unpaid dividends have been paid on the Series A Preferred Stock, subject to exceptions, such as dividends on our common stock payable solely in shares of our common stock. On or after December 31, 2014 we may redeem, in whole or in part, the shares of Series A Preferred Stock outstanding, at a redemption price per share equal to $25.00 per share plus any accrued and unpaid dividends, subject to limited exceptions.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The Series A Preferred Stock was previously classified as temporary equity because the holders of the Series A Preferred Stock, as a class, owned greater than 50% of our common stock and therefore had the ability to exert control, through its power to vote for the election of our directors, over various matters, which could have included compelling us to redeem the Series A Preferred Stock in 2014 or later. In December 2010 we purchased the 84 million shares of Series A Preferred Stock held by the UST. Since the remaining holders of our Series A Preferred Stock, Canada Holdings and the New VEBA, do not own a majority of our common stock and therefore do not have the ability to exert control, through the power to vote for the election of our directors, over various matters, including compelling us to redeem the Series A Preferred Stock when it becomes callable by us on or after December 31, 2014, our classification of the Series A Preferred Stock as temporary equity is no longer appropriate. Upon the purchase of the Series A Preferred Stock held by the UST, the Series A Preferred Stock held by Canada Holdings and the New VEBA was reclassified to permanent equity at its carrying amount of $5.5 billion. Refer to Note 29 to our consolidated financial statements for additional information on the purchase of shares of Series A Preferred Stock.

Warrants

The first tranche of warrants issued to MLC is exercisable at any time prior to July 10, 2016, with an exercise price of $10.00 per share. The second tranche of warrants issued to MLC is exercisable at any time prior to July 10, 2019, with an exercise price of $18.33 per share. The warrant issued to the New VEBA is exercisable at any time prior to December 31, 2015, with an exercise price of $42.31 per share. The number of shares of our common stock underlying each of the warrants issued to MLC and the New VEBA and the per share exercise price are subject to adjustment as a result of certain events, including stock splits, reverse stock splits and stock dividends.

Additional Modifications to Pension and Other Postretirement Plans Contingent upon Completion of the 363 Sale

We modified the U.S. hourly pension plan, the U.S. executive retirement plan, the U.S. salaried life plan, the non-UAW hourly retiree medical plan and the U.S. hourly life plan. These modifications became effective upon the completion of the 363 Sale. The key modifications were:

•

Elimination of the post-age-65 benefits and placing a cap on pre-age-65 benefits in the non-UAW hourly retiree medical plan;

•

Capping the life benefit for non-UAW retirees and future retirees at $10,000 in the U.S. hourly life plan;

•

Capping the life benefit for existing salaried retirees at $10,000, reduced the retiree benefit for future salaried retirees and eliminated the executive benefit for the U.S. salaried life plan;

•

Elimination of a portion of nonqualified benefits in the U.S. executive retirement plan; and

•

Elimination of the flat monthly special lifetime benefit of $66.70 that was to commence on January 1, 2010 for the U.S. hourly pension plan.

Accounting for the Effects of the Chapter 11 Proceedings and the 363 Sale

Chapter 11 Proceedings

ASC 852 is applicable to entities operating under Chapter 11 of the Bankruptcy Code. ASC 852 generally does not affect the application of U.S. GAAP that we and Old GM followed to prepare the consolidated financial statements, but it does require specific disclosures for transactions and events that were directly related to the Chapter 11 Proceedings and transactions and events that resulted from ongoing operations.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Proceedings were recorded in Reorganization gains, net. Expenses and gains and losses directly related to the reorganization do not constitute an element of operating loss due to their nature and due to the requirement of ASC 852 that they be reported separately. Old GM’s balance sheet prior to the 363 Sale distinguished prepetition liabilities subject to compromise from prepetition liabilities not subject to compromise and from postpetition liabilities.

Specific Management Initiatives

The execution of certain management initiatives is critical to achieving our goal of sustained future profitability. The following provides a summary of these management initiatives and significant results and events.

Repayment of Debt and Reduction of Financial Leverage

Purchase of Series A Preferred Stock from the UST

In December 2010 we purchased 84 million shares of Series A Preferred Stock, held by the UST, at a price equal to 102% of the aggregate liquidation amount, for $2.1 billion. The purchase of the UST’s Series A Preferred Stock resulted in a charge of $0.7 billion.

Contribution of Cash and Common Stock to U.S. Hourly and Salaried Pension Plans

In October 2010 we announced our intention to contribute $6.0 billion to our U.S. hourly and salaried pension plans, consisting of $4.0 billion of cash and $2.0 billion of our common stock. In December 2010 we made the $4.0 billion cash contribution to our U.S. hourly and salaried pension plans consisting of a $2.7 billion contribution to the U.S. hourly pension plan and a $1.3 billion contribution to the U.S. salaried pension plan. In January 2011 we contributed 61 million shares of our common stock to our U.S. hourly and salaried pension plans valued at $2.2 billion for funding purposes. We contributed 41 million shares of our common stock to the U.S. hourly pension plan and 20 million shares of our common stock to the U.S. salaried pension plan.

Repayment of GM Daewoo Credit Facility

In December 2010 GM Daewoo terminated its $1.2 billion credit facility following the repayment of the remaining $1.0 billion under the facility.

Repayment of VEBA Notes

On July 10, 2009 we entered into the VEBA Note Agreement and issued the VEBA Notes in the principal amount of $2.5 billion to the New VEBA. In October 2010 we repaid in full the outstanding amount (together with accreted interest thereon) of the VEBA Notes of $2.8 billion.

Repayment of UST Loans and Canadian Loan

Proceeds from the DIP Facility were necessary in order to provide sufficient capital for Old GM to operate pending the closing of the 363 Sale. In connection with the 363 Sale, we assumed the UST Loans and Canadian Loan, which Old GM incurred under the DIP Facility. One of our key priorities was to repay the outstanding balances from these loans prior to maturity. We also plan to use excess cash to repay debt and reduce our financial leverage.

In April 2010, we used funds from our escrow account (described below) to repay in full the then-outstanding amount of the UST Loans of $4.7 billion and GMCL repaid in full the then-outstanding amount of the Canadian Loan of $1.1 billion. Both loans were repaid prior to maturity.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

UST Escrow Funds

Proceeds of the DIP Facility of $16.4 billion were deposited in escrow. We used our escrow account to acquire all Class A Membership Interests in DIP HOLDCO LLP, subsequently named Delphi Automotive LLP (New Delphi), in the amount of $1.7 billion and acquire Nexteer and four domestic facilities and make other related payments in the amount of $1.0 billion. We released from escrow $2.4 billion in connection with two quarterly payments on the UST Loans and Canadian Loan and another $4.7 billion was released upon the repayment of the UST Loans. The remaining funds in the amount of $6.6 billion that were held in escrow became unrestricted and the availability of those funds was no longer subject to the conditions set forth in the UST Credit Agreement.

Repayment of German Revolving Bridge Facility

In May 2009 Old GM entered into a revolving bridge facility with the German federal government and certain German states (German Facility) with a total commitment of up to Euro 1.5 billion (equivalent to $2.1 billion when entered into) and maturing November 30, 2009. The German Facility was necessary in order to provide sufficient capital to operate Opel/Vauxhall. On November 24, 2009, the debt was paid in full and extinguished.

Focus on Chinese Market

Our Chinese operations, which we established beginning in 1997, are composed of the following joint ventures: SGM, SGMW, FAW-GM, Pan Asia Technical Automotive Center Co., Ltd. (PATAC), Shanghai OnStar Telematics Co. Ltd. (Shanghai OnStar) and Shanghai Chengxin Used Car Operation and Management Co., Ltd. (Used Car JV), collectively referred to as China JVs. We view the Chinese market, the fastest growing global market by volume of vehicles sold, as important to our global growth strategy and are employing a multi-brand strategy, led by our Buick division, which we believe is a strong brand in China. In the coming years, we plan to increasingly leverage our global architectures to increase the number of nameplates under the Chevrolet brand in China. Sales and income of the joint ventures are not consolidated into our financial statements; rather, our proportionate share of the earnings of each joint venture is reflected as Equity income, net of tax.

SGM is a joint venture established by Shanghai Automotive Industry Corporation (SAIC) (51%) and us (49%) in 1997. SGM has interests in three other joint ventures in China — Shanghai GM (Shenyang) Norsom Motor Co., Ltd (SGM Norsom), Shanghai GM Dong Yue Motors Co., Ltd (SGM DY) and Shanghai GM Dong Yue Powertrain (SGM DYPT). These three joint ventures are jointly held by SGM (50%), SAIC (25%) and us (25%). The four joint ventures (SGM Group) are engaged in the production, import, and sale of a comprehensive range of products under the brands of Buick, Chevrolet, and Cadillac.

SGMW, of which we own 44%, SAIC owns 50.1% and certain Liuzhou investors own 5.9%, produces mini-commercial vehicles and passenger cars utilizing local architectures under the Wuling and Chevrolet brands. In 2010 we entered into an equity transfer agreement to purchase an additional 10% interest in SGMW from Liuzhou Wuling Motors Co., Ltd. and Liuzhou Mini Vehicles Factory, (together the Wuling Group) for $52 million in cash plus an agreement to provide technical services to the Wuling Group through 2013. Upon receiving regulatory approval in China, the transaction closed in November of 2010 increasing our ownership from 34% to 44% of the outstanding stock of SGMW. FAW-GM, of which we own 50% and China FAW Group Corporation (FAW) owns 50%, produces light commercial vehicles under the Jiefang brand and medium vans under the FAW brand. Our joint venture agreements allow for significant rights as a member as well as the contractual right to report SGMW and FAW-GM joint venture vehicle sales and production volume in China. SAIC, one of our joint venture partners, currently produces vehicles under its own brands for sale in the Chinese market. At present vehicles that SAIC produces primarily serve markets that are different from markets served by our joint ventures.

PATAC is our China-based engineering and technical joint venture with SAIC. Shanghai OnStar is our joint venture with SAIC that provides Chinese customers with a wide array of vehicle safety and information services. Used Car JV is our joint venture with SAIC that will cooperate with current distributors of SGM products in the establishment of dedicated used car sales and service facilities across China.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table summarizes certain key operational and financial data for the China JVs (dollars in millions):


	Years Ended
	December 31, 2010			December 31, 2009
Total wholesale units		2,348,391			1,823,693
Market share		12.8	%		13.3	%
Total net sales and revenues	$	25,395		$	18,098
Net income	$	2,808		$	1,636

	December 31, 2010			December 31, 2009
Cash and cash equivalents	$	5,247		$	3,516
Debt	$	61		$	30

In November 2010 we and SAIC entered into a non-binding Memorandum of Understanding (MOU) that would, if binding agreements are concluded by the parties, result in several strategic cooperation initiatives between us and SAIC. The initiatives covered by the MOU include:

•

Cooperation in the development of new energy vehicles, such as appropriate electric vehicle architectures and battery electric vehicle technical development;

•

Further expanding the role of PATAC in vehicle development, new technology development and participation in our global vehicle development process;

•

Sharing an additional vehicle architecture and powertrain application with SAIC in an effort to help reduce development costs and benefit from economies of scale;

•

Potential cooperation in providing access to our distribution network outside China for certain of SAIC’s MG branded products;

•

Providing training sources to assist a limited number of SAIC engineers with their professional development; and

•

Discussions to determine possible areas of cooperation in the development of future diesel engines.

We expect definitive agreements will be reached in the first half of 2011 for the initiatives not yet agreed to at December 31, 2010.

Development of Multiple Financing Sources and GM Financial

A significant percentage of our customers and dealers require financing to purchase our vehicles. Historically, Ally Financial has provided most of the financing for our dealers and a significant amount of financing for our customers in the U.S., Canada and various other markets around the world. We maintain other financing relationships, such as with U.S. Bank for U.S. leasing, GM Financial for sub-prime lending and a variety of local and regional financing sources around the world.

We expect GM Financial will allow us to complement our existing relationship with Ally Financial in order to provide a more complete range of financing options to our customers, specifically focusing on providing additional capabilities in leasing and sub-prime financing options. We also plan to use GM Financial for targeted customer marketing initiatives to expand our vehicle sales.

Secured Revolving Credit Facility

In October 2010 we entered into a five year, $5.0 billion secured revolving credit facility. While we do not believe the amounts available under the secured revolving credit facility will be needed to fund operating activities, the facility is expected to provide additional liquidity and financing flexibility. Refer to the section of this report entitled “— Liquidity and Capital Resources — Secured Revolving Credit Facility” for additional information about the secured revolving credit facility.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Opel/Vauxhall Restructuring Activities

In June 2010 the German federal government notified us of its decision not to provide loan guarantees to Opel/Vauxhall. As a result, we have decided to fund the requirements of Opel/Vauxhall internally, including any amounts necessary to fund the $1.4 billion in cash required to complete the European restructuring program. Opel/Vauxhall has subsequently withdrawn all applications for government loan guarantees from European governments.

Through September 2010 we committed up to a total of Euro 3.3 billion (equivalent to $4.2 billion when committed) to fund Opel/Vauxhall’s restructuring and ongoing cash requirements. This funding includes cumulative lending commitments combined into a Euro 2.6 billion intercompany facility and equity commitments of Euro 700 million.

We plan to continue to invest in capital, engineering and innovative fuel efficient powertrain technologies including an extended- range electric vehicle and battery electric vehicles. Our plan also includes aggressive capacity reductions including headcount reductions and the closing of our Antwerp, Belgium facility.

In the year ended December 31, 2010 GME recorded charges for 2010 restructuring programs of $81 million related to separation programs in the U.K. and Germany and an early retirement plan in Spain of $63 million, which will affect 1,200 employees.

In the year ended December 31, 2010 GME recorded charges of $527 million related to a separation plan associated with the closure of the Antwerp, Belgium facility. There were 2,600 employees affected, of which 1,300 separated in June 2010. In addition, GME and employee representatives entered into a Memorandum of Understanding whereby both parties cooperated in a working group, which also included the Flemish government, in order to find an outside investor to acquire and operate the facility. In October 2010 we announced that the search for an investor had been unsuccessful and the vehicle assembly operations in Antwerp, Belgium ceased at the end of 2010.

Increased GMNA Production Volume

The moderate improvement in the U.S. economy, resulting increase in U.S. industry vehicle sales and increase in demand for our products has resulted in increased production volumes for GMNA. In the year ended December 31, 2010 GMNA produced 2.8 million vehicles. This represents an increase of 46.8% compared to 1.9 million vehicles that combined GM and Old GM GMNA produced in the year ended December 31, 2009.

The following table summarizes GMNA’s quarterly production volume (in thousands):


	Three Months Ended December 31			Three Months Ended September 30			Three Months Ended June 30			Three Months Ended March 31
GMNA quarterly production volume 2010		703			707			731			668
GMNA quarterly production volume 2009		616			531	(a)		395	(b)		371	(b)
Total GMNA quarterly production volume year- over-year increase		14.1	%		33.1	%		85.1	%		80.1	%

(a)	Combined GM and Old GM GMNA production volume.

(b)	Old GM GMNA production volume.

Increased U.S. Vehicle Sales

GMNA dealers in the U.S. sold 2.2 million vehicles in the year ended December 31, 2010. This represents an increase of 131,000 vehicles (or 6.3%) from our and Old GM’s U.S. vehicle sales in the year ended December 31, 2009. This increase reflects our brand

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

rationalization strategy to focus our product engineering and design and marketing on our four brands. This strategy has resulted in increased consumer demand for certain products such as the Chevrolet Equinox, GMC Terrain, Buick LaCrosse and Cadillac SRX. These four brands accounted for 99.4% of our U.S. vehicle sales in the year ended December 31, 2010. The moderate improvement in the U.S. economy has contributed to a slow but steady improvement in U.S. industry vehicle sales and increased consumer confidence.

The continued increase in U.S. industry vehicle sales and the vehicle sales of our four brands is critical for us to maintain our worldwide profitability.

U.S. Dealer Reduction

We market vehicles worldwide through a network of independent retail dealers and distributors. As part of achieving and sustaining long-term viability and the viability of our dealer network, we determined that a reduction in the number of U.S. dealerships was necessary. In determining which dealerships would remain in our network, we performed analyses of volumes and consumer satisfaction indexes, among other criteria, and over 1,800 U.S. retail dealers signed wind-down agreements effectively terminating their dealer agreements with us on October 31, 2010. Pursuant to legislation passed in December 2009 over 1,100 dealers filed for arbitration seeking reinstatement. In 2010 the arbitration process was resolved. As a result of the arbitration process we offered 332 dealers reinstatement in their entirety and 460 existing dealers reinstatement of certain brands. At December 31, 2010 there were 4,500 vehicle dealers in the U.S. compared to 5,600 at December 31, 2009.

Section 136 Loans

Section 136 of the EISA established an incentive program consisting of both grants and direct loans to support the development of advanced technology vehicles and associated components in the U.S. In January 2011 consistent with our strategy to maintain a strong balance sheet by minimizing our financial leverage, we withdrew our $14.4 billion loan application, under Section 136, to the U.S. Department of Energy.

Brand Rationalization

We have focused our resources in the U.S. on four brands. As a result, we completed the sale of Saab in February 2010 and the sale of Saab GB in May 2010 and have completed the wind down of our Pontiac, Saturn, and HUMMER brands.

Sale of Nexteer

On November 30, 2010 we completed the sale of Nexteer, a manufacturer of steering components and half-shafts, to Pacific Century Motors. The sale of Nexteer included the global steering business which was acquired in October 2009. The 2009 acquisition of Nexteer included 22 manufacturing facilities, six engineering facilities and 14 customer support centers located in North and South America, Europe and Asia. We received consideration of $426 million in cash and a $39 million promissory note in exchange for 100% of our ownership interest in Nexteer and recorded a gain of $60 million on the sale.

Resolution of Delphi Matters

In October 2009 we consummated the transaction contemplated in the DMDA with Delphi and other parties. Under the DMDA, we agreed to acquire Nexteer, which supplies us and other OEMs with steering systems and columns, and four domestic facilities that manufacture a variety of automotive components, primarily sold to us. We, along with several third party investors who held the Delphi Tranche DIP Facility (collectively, the Investors), agreed to acquire substantially all of Delphi’s remaining assets through New Delphi. Certain excluded assets and liabilities had been retained by a Delphi entity (DPH) to be sold or liquidated. In connection with the DMDA, we agreed to pay or assume Delphi obligations of $1.0 billion related to its senior DIP credit facility, including certain

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

outstanding derivative instruments, its junior DIP credit facility, and other Delphi obligations, including certain administrative claims. At the closing of the transactions contemplated by the DMDA, we waived administrative claims associated with our advance agreements with Delphi, the payment terms acceleration agreement with Delphi and the claims associated with previously transferred pension costs for hourly employees.

We agreed to acquire, prior to the consummation of the transactions contemplated by the DMDA, all Class A Membership Interests in New Delphi for a cash contribution of $1.7 billion with the Investors acquiring Class B Membership Interests. We and the Investors also agreed to establish: (1) a secured delayed draw term loan facility for New Delphi, with us and the Investors each committing to provide loans of up to $500 million; and (2) a note of $41 million to be funded at closing by the Investors. The DMDA settled outstanding claims and assessments against and from MLC, us and Delphi, including the termination of the Master Restructuring Agreement with limited exceptions, and establishes an ongoing commercial relationship with New Delphi. We agreed to continue all existing Delphi supply agreements and purchase orders for GMNA to the end of the related product program, and New Delphi agreed to provide us with access rights designed to allow us to operate specific sites on defined triggering events to provide us with protection of supply.

In separate agreements, we, Delphi and the Pension Benefit Guarantee Corporation (PBGC) negotiated the settlement of the PBGC’s claims from the termination of the Delphi pension plans and the release of certain liens with the PBGC against Delphi’s foreign assets. In return, the PBGC was granted a 100% interest in Class C Membership Interests in New Delphi which provides for the PBGC to participate in predefined equity distributions and received a payment of $70 million from us. We maintain certain obligations relating to Delphi hourly employees to provide the difference between pension benefits paid by the PBGC according to regulation and those originally guaranteed by Old GM under the Delphi Benefit Guarantee Agreements.

Investment in Ally Financial

As part of the approval process for Ally Financial to obtain Bank Holding Company status in December 2008, Old GM agreed to reduce its ownership in Ally Financial to less than 10% of the voting and total equity of Ally Financial by December 24, 2011. At December 31, 2010 our equity ownership in Ally Financial was 9.9%.

In December 2010 the UST agreed to convert its optional conversion feature on the shares of mandatory convertible preferred securities held by the UST. Through this transaction, Ally Financial converted 110 million shares of preferred securities into 532 thousand shares of common stock. This action resulted in the dilution of our investment in Ally Financial common stock from 16.6% to 9.9%, of which 4.0% is held directly and 5.9% is held indirectly through an independent trust. Pursuant to previous commitments to reduce influence over and ownership in Ally Financial, the trustee, who is independent of us, has the sole authority to vote and is required to dispose of all Ally Financial common stock held in the trust by December 24, 2011. We can cause the trustee to return any Ally Financial common stock to us to hold directly, so long as our directly held voting and total common equity interests remain below 10%.

Special Attrition Programs, Labor Agreements and Benefit Plan Changes

During 2009 we and Old GM implemented various programs which reduced the hourly and salary workforce. Significant workforce reductions and settlements with various represented employee groups are discussed below.

2009 Special Attrition Programs

In 2009 Old GM announced special attrition programs for eligible UAW represented employees, offering cash and other incentives for individuals who elected to retire or voluntarily terminate employment.

Global Salaried Workforce Reductions

In 2009 U.S. salaried workforce reductions were accomplished primarily through a salaried retirement program or through a severance program funded from operating cash flows.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Delphi Benefit Guarantee Agreements

The Delphi Benefit Guarantee Agreements were affected by the settlement of the PBGC claims from the termination of the Delphi pension plan. We maintained the obligation to provide the difference between the pension benefits paid by the PBGC and those originally guaranteed by Old GM under the Delphi Benefit Guarantee Agreements.

U.S. Salaried Benefit Changes

U.S. salaried benefit changes reduced the salaried life benefits and a negative amendment to the U.S. salaried retiree healthcare program reduced coverage and increased cost sharing.

2009 UAW Retiree Settlement Agreement

In 2009 Old GM and the UAW agreed to a 2009 UAW Retiree Settlement Agreement which permanently shifted responsibility for providing retiree healthcare to the new plan funded by the New VEBA. Under the terms of the settlement agreement, we are released from UAW retiree healthcare claims incurred after December 31, 2009. All obligations of ours and any other entity or benefit plan of ours for retiree medical benefits for the class and the covered group arising from any agreement between us and the UAW terminated at December 31, 2009. Our obligations to the new healthcare plan and the New VEBA are limited to the terms of the settlement agreement.

At December 31, 2009 we accounted for the termination of our UAW hourly retiree medical plan and Mitigation Plan as a settlement. The resulting settlement loss of $2.6 billion recorded on December 31, 2009 represented the difference between the sum of the accrued other postretirement benefits (OPEB) liability of $10.6 billion and the existing internal VEBA assets of $12.6 billion, and $25.8 billion representing the fair value of the consideration transferred at December 31, 2009, including the contribution of the existing internal VEBA assets. Upon the settlement of the UAW hourly retiree medical plan at December 31, 2009 the VEBA Notes, Series A Preferred Stock, common stock, and warrants contributed to the New VEBA were recorded at fair value and classified as outstanding debt and equity instruments.

Prior to December 31, 2009 the 260 million shares of Series A Preferred Stock issued to the New VEBA were not considered outstanding for accounting purposes due to the terms of the revised settlement agreement with the UAW. As a result, $105 million of the $146 million of dividends paid on September 15, 2009 and $147 million of the $203 million of dividends paid on December 15, 2009 were recorded as employer contributions resulting in a reduction of Postretirement benefits other than pensions.

IUE-CWA and USW Settlement Agreement

In September 2009 we entered into a settlement agreement with MLC, The International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers — Communication Workers of America (IUE-CWA) and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW). The approved settlement agreement resulted in remeasurements of the U.S. hourly defined benefit pension plan, the non-UAW hourly retiree healthcare plan and the U.S. hourly life plan to reflect the terms of the agreement. The settlement agreement was expressly conditioned upon and did not become effective until approved by the Bankruptcy Court in MLC’s Chapter 11 proceedings, which occurred in November 2009. Several additional unions representing MLC hourly retirees joined the IUE-CWA and USW settlement agreement with respect to healthcare and life insurance. The remeasurement of these plans resulted in a decrease in a contingent liability accrual and an offsetting increase in the projected benefit obligation (PBO) or accumulated postretirement benefit obligation (APBO) of the benefit plan.

2009 CAW Agreement

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

eliminating cost of living adjustments to pensions for retired hourly workers. The 2009 CAW Agreement was conditioned on Old GM receiving longer term financial support from the Canadian and Ontario governments and those governments agreed to the terms of a loan agreement, approved the GMCL viability plan and provided funding to GMCL. The Canadian hourly defined benefit pension plan was remeasured in June 2009.

The CAW hourly retiree healthcare plan and the CAW retiree life plan were also remeasured in June 2009. Additionally, as a result of the termination of employees from the former Oshawa, Ontario truck facility, GMCL recorded a curtailment gain associated with the CAW hourly retiree healthcare plan.

In June 2009 GMCL and the CAW agreed to the terms of an independent Health Care Trust (HCT) to provide retiree healthcare benefits to certain active and retired employees and it will be implemented when certain preconditions are achieved. Certain of the preconditions have not been achieved and the HCT is not yet implemented at December 31, 2010. GMCL is obligated to make a payment of CAD $1.0 billion on the HCT implementation date which it will fund out of its CAD $1.0 billion escrow funds, adjusted for the net difference between the amount of retiree monthly contributions received during the period January 1, 2010 through the HCT implementation date less the cost of benefits paid for claims incurred by covered employees during this period. GMCL will provide a CAD $800 million note payable to the HCT on the HCT implementation date which will accrue interest at an annual rate of 7.0% with five equal annual installments of CAD $256 million due December 31 of 2014 through 2018. Concurrent with the implementation of the HCT, GMCL will be legally released from all obligations associated with the cost of providing retiree healthcare benefits to CAW active and retired employees bound by the class action process, and we will account for the related termination of CAW hourly retiree healthcare benefits as a settlement, based upon the difference between the fair value of the notes and cash contributed and the healthcare plan obligation at the settlement date. As a result of the conditions precedent to this agreement not having yet been achieved, there was no accounting recognition for the healthcare trust at December 31, 2010.

Venezuelan Exchange Regulations

Our Venezuelan subsidiaries changed their functional currency from Bolivar Fuerte (the BsF), the local currency, to the U.S. Dollar, our reporting currency, on January 1, 2010 because of the hyperinflationary status of the Venezuelan economy. Pursuant to the official devaluation of the Venezuelan currency and establishment of the dual fixed exchange rates (essential rate of BsF 2.60 to $1.00 and nonessential rate of BsF 4.30 to $1.00) in January 2010, we remeasured the BsF denominated monetary assets and liabilities held by our Venezuelan subsidiaries at the nonessential rate of 4.30 BsF to $1.00. The remeasurement resulted in a charge of $25 million recorded in Automotive cost of sales in the the year ended December 31, 2010. In the year ended December 31, 2010 all BsF denominated transactions have been remeasured at the nonessential rate of 4.30 BsF to $1.00.

In June 2010 the Venezuelan government introduced additional foreign currency exchange control regulations, which imposed restrictions on the use of the parallel foreign currency exchange market, thereby making it more difficult to convert BsF to U.S. Dollars. We periodically accessed the parallel exchange market, which historically enabled entities to obtain foreign currency for transactions that could not be processed by the Commission for the Administration of Currency Exchange (CADIVI). The restrictions on the foreign currency exchange market could affect our Venezuelan subsidiaries’ ability to pay non-BsF denominated obligations that do not qualify to be processed by CADIVI at the official exchange rates as well as our ability to benefit from those operations.

In December 2010 another official devaluation of the Venezuelan currency was announced that eliminated the essential rate effective January 1, 2011. The devaluation did not have an effect on the 2010 consolidated financial statements, however, it will affect results of operations in subsequent years because our Venezuelan subsidiaries will no longer realize gains that result from favorable foreign currency exchanges processed by CADIVI at the essential rate.

Effect of Fresh-Start Reporting

The application of fresh-start reporting significantly affected certain assets, liabilities and expenses. As a result, certain financial information at and for any period after July 10, 2009 is not comparable to Old GM’s financial information. Therefore, we did not

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

combine certain financial information in the period July 10, 2009 through December 31, 2009 with Old GM’s financial information in the period January 1, 2009 through July 9, 2009 for comparison to prior periods. For the purpose of the following discussion, we have combined our Total net sales and revenue in the period July 10, 2009 through December 31, 2009 with Old GM’s Total net sales and revenue in the period January 1, 2009 through July 9, 2009. Total net sales and revenue was not significantly affected by fresh-start reporting and therefore we combined vehicle sales data comparing the Successor and Predecessor periods. Refer to Note 2 to our consolidated financial statements for additional information on fresh-start reporting.

Because our and Old GM’s financial information is not comparable, we are providing additional financial metrics for the periods presented in addition to disclosures concerning significant transactions and trends at December 31, 2010 and 2009 and in the periods presented.

Total net sales and revenue is primarily comprised of revenue generated from the sales of vehicles, in addition to revenue from OnStar, our customer subscription service, vehicle sales accounted for as operating leases, sales of parts and accessories and GM Financial’s loan purchasing and servicing activities.

Automotive cost of sales is primarily comprised of material, labor, manufacturing overhead, freight, foreign currency transaction and translation gains and losses, product engineering, design and development expenses, depreciation and amortization, policy and warranty costs, postemployment benefit costs, and separation and impairment charges. Prior to our application of fresh-start reporting on July 10, 2009, Automotive cost of sales also included gains and losses on derivative instruments. Effective July 10, 2009 gains and losses related to all nondesignated derivatives are recorded in Interest income and other non-operating income, net.

Automotive selling, general and administrative expense is primarily comprised of costs related to the advertising, selling and promotion of products, support services, including central office expenses, labor and benefit expenses for employees not considered part of the manufacturing process, consulting costs, rental expense for offices, bad debt expense and non-income based state and local taxes.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Consolidated Results of Operations

(Dollars in Millions)


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Net sales and revenue
Automotive sales	$	135,142		$	57,329		$	46,787		$	147,732
GM Financial and other revenue		281			—			—			—
Other automotive revenue		169			145			328			1,247

Total net sales and revenue		135,592			57,474			47,115			148,979

Costs and expenses
Automotive cost of sales		118,792			56,381			55,814			149,257
GM Financial operating expenses and other		152			—			—			—
Automotive selling, general and administrative expense		11,446			6,006			6,161			14,253
Other automotive expenses, net		118			15			1,235			6,699

Total costs and expenses		130,508			62,402			63,210			170,209

Operating income (loss)		5,084			(4,928	)		(16,095	)		(21,230	)
Equity in income (loss) of and disposition of interest in Ally Financial		—			—			1,380			(6,183	)
Automotive interest expense		(1,098	)		(694	)		(5,428	)		(2,525	)
Interest income and other non-operating income, net		1,555			440			852			424
Gain (loss) on extinguishment of debt		196			(101	)		(1,088	)		43
Reorganization gains, net		—			—			128,155			—

Income (loss) before income taxes and equity income		5,737			(5,283	)		107,776			(29,471	)
Income tax expense (benefit)		672			(1,000	)		(1,166	)		1,766
Equity income, net of tax		1,438			497			61			186

Net income (loss)		6,503			(3,786	)		109,003			(31,051	)
Net (income) loss attributable to noncontrolling interests		(331	)		(511	)		115			108

Net income (loss) attributable to stockholders		6,172			(4,297	)		109,118			(30,943	)
Less: Cumulative dividends on and charge related to purchase of preferred stock (a)		1,504			131			—			—

Net income (loss) attributable to common stockholders	$	4,668		$	(4,428	)	$	109,118		$	(30,943	)

(a)	Includes charge related to the purchase of Series A Preferred Stock of $677 million in the year ended December 31, 2010.

Production and Vehicle Sales Volume

Management believes that production volume and vehicle sales data provide meaningful information regarding our automotive operating results. Production volumes manufactured by our assembly facilities are generally aligned with current period net sales and revenue, as we generally recognize revenue upon the release of the vehicle to the carrier responsible for transporting it to a dealer, which is shortly after the completion of production. Vehicle sales data, which includes retail and fleet sales, does not correlate directly to the revenue we recognize during the period. However, vehicle sales data is indicative of the underlying demand for our vehicles, and is the basis for our market share.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following tables summarize total production volume and sales of new motor vehicles and competitive position (in thousands):


	GM		Combined GM and Old GM		Old GM
	Year Ended December 31, 2010		Year Ended December 31, 2009		Year Ended December 31, 2008
Production Volume (a)
GMNA		2,809		1,913		3,449
GME		1,234		1,106		1,495
GMIO (b)		3,745		2,677		2,335
GMSA		926		807		865

Worldwide		8,714		6,503		8,144

(a)	Production volume includes vehicles produced by certain joint ventures.

(b)	The joint venture agreements with SGMW (44%) and FAW-GM (50%) allow for significant rights as a member as well as the contractual right to report SGMW and FAW-GM joint venture production in China.


	Year Ended December 31, 2010				Year Ended December 31, 2009				Year Ended December 31, 2008
	GM		GM as a % of Industry		Combined GM and Old GM		Combined GM and Old GM as a % of Industry		Old GM		Old GM as a % of Industry
Vehicle Sales (a)(b)(c)(d)(e)
GMNA		2,625		18.2%		2,484		18.9%		3,565		21.5%
GME		1,662		8.8%		1,668		8.9%		2,043		9.3%
GMIO (f)(g)		3,077		8.8%		2,453		8.7%		1,832		7.4%
GMSA		1,026		19.9%		872		20.0%		920		20.7%

Worldwide		8,390		11.4%		7,477		11.6%		8,359		12.3%

(a)	Includes HUMMER, Saab, Saturn and Pontiac vehicle sales data.

(b)	Our vehicle sales include Saab data through February 2010.

(c)	Vehicle sales data may include rounding differences.

(d)	Certain fleet sales that are accounted for as operating leases are included in vehicle sales at the time of delivery to the daily rental car companies.

(e)

(f)

Includes SGM joint venture vehicle sales in China of 1.0 million vehicles, SGMW and FAW-GM joint venture vehicle sales in China of 1.3 million vehicles and HKJV joint venture vehicle sales in India 110,000 vehicles in the year ended December 31, 2010. Combined GM and Old GM SGM joint venture vehicle sales in China of 708,000 vehicles and combined GM and Old GM SGMW and FAW-GM joint venture vehicle sales in China of 1.1 million vehicles in the year ended December 31, 2009. Old GM SGM joint venture vehicle sales in China of 432,000 and Old GM SGMW joint venture vehicle sales in China of 647,000 vehicles in the year ended December 31, 2008. We do not record revenue from our joint ventures’ vehicle sales.

(g)	The joint venture agreements with SGMW (44%) and FAW-GM (50%) allow for significant rights as a member as well as the contractual right to report SGMW and FAW-GM joint venture vehicle sales in China as part of our global market share.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Reconciliation of Consolidated, Automotive and GM Financial Segment Results

Management believes EBIT provides meaningful supplemental information regarding our automotive segments’ operating results because it excludes amounts that management does not consider part of operating results when assessing and measuring the operational and financial performance of the organization. Management believes these measures allow it to readily view operating trends, perform analytical comparisons and benchmark performance between periods and among geographic regions. We believe EBIT is useful in allowing for greater transparency of our core operations and it is therefore used by management in its financial and operational decision-making.

While management believes that EBIT provides useful information, it is not an operating measure under U.S. GAAP, and there are limitations associated with its use. Our calculation of EBIT may not be completely comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of EBIT has limitations and should not be considered in isolation from, or as a substitute for, other measures such as Net income (loss) or Net income (loss) attributable to common stockholders. Due to these limitations, EBIT is used as a supplement to U.S. GAAP measures.

Management believes income (loss) before income taxes provides meaningful supplemental information regarding GM Financial’s operating results. GM Financial uses a separate measure from our automotive operations because management believes interest income and interest expense are part of operating results when assessing and measuring the operational and financial performance of the segment.

The following table summarizes the reconciliation of our automotive segments EBIT and GM Financial’s income before income taxes to Net income (loss) attributable to stockholders (dollars in millions):


	Successor								Predecessor
	Year Ended December 31, 2010				July 10, 2009 Through December 31, 2009				January 1, 2009 Through July 9, 2009				Year Ended December 31, 2008
Automotive
EBIT
GMNA (a)	$	5,748		81.4%	$	(4,820	)	108.8%	$	(11,092	)	74.7%	$	(12,203	)	85.3%
GME (a)		(1,764	)	(25.0)%		(814	)	18.4%		(2,815	)	19.0%		(2,625	)	18.3%
GMIO (a)		2,262		32.0%		789		(17.8)%		(486	)	3.3%		(555	)	3.9%
GMSA (a)		818		11.6%		417		(9.4)%		(454	)	3.0%		1,076		(7.5)%

Total automotive EBIT		7,064		100%		(4,428	)	100%		(14,847	)	100%		(14,307	)	100%

Corporate and eliminations (b)		284				(359	)			128,044				(13,000	)
Interest income		465				184				183				655
Automotive interest expense		1,098				694				5,428				2,525
Income tax expense (benefit)		672				(1,000	)			(1,166	)			1,766
Automotive Financing
GM Financial income before income taxes		129				—				—				—

Net income (loss) attributable to stockholders	$	6,172			$	(4,297	)		$	109,118			$	(30,943	)

(a)	Our automotive operations interest and income taxes are recorded centrally in Corporate; therefore, there are no reconciling items for our automotive operating segments between EBIT and Net income (loss) attributable to stockholders.

(b)	Includes Reorganization gains, net of $128.2 billion in the period January 1, 2009 through July 9, 2009.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Total Net Sales and Revenue

(Dollars in Millions)


	Successor			Combined GM and Old GM			Successor			Predecessor
	Year Ended December 31, 2010			Year Ended December 31, 2009			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008			Year Ended 2010 vs. 2009 Change						Year Ended 2009 vs. 2008 Change
	Year Ended December 31, 2010			Year Ended December 31, 2009			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008			Amount			%			Amount			%
GMNA	$	83,035		$	56,617		$	32,426		$	24,191		$	86,187		$	26,418			46.7%		$	(29,570	)		(34.3	)%
GME		24,076			24,031			11,479			12,552			34,647			45			0.2%			(10,616	)		(30.6	)%
GMIO		21,470			14,785			8,567			6,218			24,050			6,685			45.2%			(9,265	)		(38.5	)%
GMSA		15,379			13,135			7,399			5,736			14,522			2,244			17.1%			(1,387	)		(9.6	)%
GM Financial		281			—			—			—			—			281			n.m.			—			n.m.

Total operating segments		144,241			108,568			59,871			48,697			159,406			35,673			32.9%			(50,838	)		(31.9	)%
Corporate and eliminations		(8,649	)		(3,979	)		(2,397	)		(1,582	)		(10,427	)		(4,670	)		(117.4	)%		6,448			61.8%

Total net sales and revenue	$	135,592		$	104,589		$	57,474		$	47,115		$	148,979		$	31,003			29.6%		$	(44,390	)		(29.8	)%

n.m.	= not meaningful

In the year ended December 31, 2010 Total net sales and revenue increased by $31.0 billion (or 29.6%), primarily due to: (1) increased wholesale sales volume of $19.8 billion in GMNA due to an improving economy and recent vehicle launches; (2) increased wholesale volumes of $3.9 billion in GMIO due to an improving global economy and recent vehicle launches; (3) favorable vehicle pricing effect of $2.9 billion in GMNA due to lower sales allowances, partially offset by less favorable adjustments for U.S. residual support programs for leased vehicles; (4) increased wholesale volumes of $2.2 billion in GMSA driven by launches of the Chevrolet Cruze and Chevrolet Spark; (5) favorable vehicle mix of $1.6 billion due to increased crossover and truck sales in GMNA; (6) favorable net foreign currency translation effect of $1.0 billion, primarily due to the strengthening of major currencies in 2010 against the U.S. Dollar in GMSA; (7) increased sales of $1.0 billion due to the acquisition of Nexteer and four domestic component manufacturing facilities in GMNA; (8) favorable net foreign currency translation effect of $0.9 billion in GMIO; (9) favorable vehicle mix of $0.8 billion driven by the launch of the Chevrolet Cruze and increased sales of sports utility vehicles in GMIO; (10) favorable net foreign currency remeasurement effect of $0.8 billion in GMNA; (11) derivative losses of $0.8 billion in 2009, that did not recur in 2010, primarily driven by the depreciation of the Korean Won against the U.S. Dollar in GMIO; (12) favorable vehicle mix of $0.5 billion in GME; (13) favorable vehicle pricing effect of $0.5 billion driven by launches of the Opel Astra and Opel Meriva in GME; (14) favorable vehicle pricing effect of $0.3 billion primarily in Venezuela driven by the hyperinflationary economy in GMSA; (15) increased revenues from OnStar of $0.3 billion in GMNA; and (16) finance charge income of $0.3 billion due to the acquisition of AmeriCredit.

These increases in Total net sales and revenue were partially offset by: (1) devaluation of the BsF in Venezuela of $0.9 billion in GMSA; (2) unfavorable net foreign currency translation effect of $0.7 billion in GME; (3) unfavorable vehicle mix of $0.4 billion in GMSA; and (4) decreased lease financing revenues of $0.3 billion related to the liquidation of the portfolio of automotive leases.

In the year ended December 31, 2009 Total net sales and revenue decreased by $44.4 billion (or 29.8%) primarily due to: (1) decreased revenue of $36.7 billion in GMNA related to volume reductions; (2) decrease in domestic wholesale volumes and lower exports of $9.1 billion in GMIO; (3) decreased domestic wholesale volumes of $4.8 billion in GME; (4) unfavorable foreign currency translation effect and transaction losses of $3.7 billion in GME, primarily due to the strengthening of the U.S. Dollar versus the Euro; (5) decreased wholesale volumes of $2.2 billion in GMSA; (6) decreased revenue of $1.2 billion in GME related to Saab;

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

(7) unfavorable net foreign currency effect of $1.0 billion in GMIO; (8) decreased powertrain and parts and accessories revenue of $0.8 billion in GME; and (9) decreased lease financing revenue of $0.7 billion related to the continued liquidation of the portfolio of automotive retail leases.

These decreases in Total net sales and revenue were partially offset by: (1) improved pricing, lower sales incentives and improved lease residuals of $5.4 billion in GMNA; (2) favorable vehicle mix of $2.8 billion in GMNA; (3) favorable vehicle pricing of $1.3 billion in GME; (4) decreased derivative losses of $0.9 billion in GMIO; (5) favorable pricing of $0.4 billion in GMSA, primarily due to a 60% price increase in Venezuela due to high inflation; and (6) favorable vehicle mix of $0.3 billion in GMIO driven by launches of new vehicle models at GM Daewoo.

Automotive Cost of Sales


	Successor								Predecessor
	Year Ended December 31, 2010		Percentage of Automotives sales		July 10, 2009 Through December 31, 2009		Percentage of Automotive sales		January 1, 2009 Through July 9, 2009			Percentage of Automotive sales			Year Ended December 31, 2008			Percentage of Automotive sales
Automotive cost of sales	$	118,792		87.9%	$	56,381		98.3%	$	55,814			119.3	%	$	149,257			101.0	%
Automotive gross margin	$	16,350		12.1%	$	948		1.7%	$	(9,027	)		(19.3	)%	$	(1,525	)		(1.0	)%

In the year ended December 31, 2010 Automotive cost of sales included: (1) restructuring charges of $0.8 billion in GME primarily for separation programs announced in Belgium, Spain, Germany and the United Kingdom; (2) foreign currency remeasurement losses of $0.5 billion in GMNA; (3) charges of $0.2 billion for a recall campaign on windshield fluid heaters in GMNA; (4) impairment charges related to product-specific tooling assets of $0.2 billion in GMNA; partially offset by (5) favorable adjustments of $0.4 billion to restructuring reserves primarily due to increased production capacity utilization in GMNA; and (6) foreign currency transaction gains of $0.3 billion in GMSA.

In the period July 10, 2009 through December 31, 2009 Automotive cost of sales included: (1) a settlement loss of $2.6 billion related to the termination of the UAW hourly retiree medical plan and Mitigation Plan in GMNA; (2) foreign currency remeasurement losses of $1.3 billion in GMNA; partially offset by (3) favorable adjustments of $0.7 billion in GMNA, $0.5 billion in GME and $0.1 billion in GMIO due to the sell through of inventory acquired from Old GM at July 10, 2009; and (4) foreign currency transaction gains of $0.5 billion primarily in Corporate.

Old GM

In the period January 1, 2009 through July 9, 2009 Automotive cost of sales included: (1) incremental depreciation charges of $2.1 billion in GMNA and $0.7 billion in GME; (2) a curtailment loss of $1.4 billion upon the interim remeasurement of the U.S. hourly defined benefit pension plans in GMNA; (3) separation program charges and Canadian restructuring activities of $1.1 billion in GMNA; (4) charges of $0.8 billion primarily related to the deconsolidation of Saab; (5) foreign currency translation and remeasurement losses of $0.7 billion in GMNA; (6) impairment charges of $0.4 billion in GMNA and $0.2 billion in GME primarily for product-specific tooling; (7) foreign currency transaction losses of $0.5 billion in GMSA; (8) derivative losses of $0.5 billion related to commodity and foreign currency exchange derivatives in GMNA; (9) a charge of $1.1 billion related to the Supplemental Unemployment Benefit (SUB) and the Transitional Support Program (TSP), partially offset by a favorable adjustment of $0.7 billion primarily related to the suspension of the JOBS Program, Old GM’s job security provision of the collective bargaining agreement with the UAW to continue paying idled employees certain wages and benefits in GMNA; and (10) charges of $0.3 billion related to obligations associated with various Delphi agreements in GMNA.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In the period January 1, 2009 through July 9, 2009 negative gross margin reflected sales volumes at historically low levels and Automotive cost of sales, including costs that are fixed in nature, exceeding Total net sales and revenue.

In the year ended December 31, 2008 Automotive cost of sales included: (1) restructuring charges and other costs of $6.0 billion related to Old GM’s special attrition programs in GMNA; (2) expenses of $1.7 billion related to the salaried post-65 healthcare settlement in GMNA; (3) impairment charges of $0.5 billion in GME and $0.4 billion in GMNA primarily related to product-specific tooling; (4) commodity and foreign currency exchange derivative losses of $0.8 billion in GMNA; (5) charges of $0.3 billion associated with the finalization of Old GM’s negotiations with the CAW in GMNA; (6) restructuring charges of $0.3 billion related to separation programs announced in Belgium, France, Germany and the United Kingdom in GME; (7) foreign currency transaction losses of $0.3 billion in GMSA primarily due to foreign currency exchanges processed outside CADIVI in Venezuela; partially offset by (8) net curtailment gain of $4.9 billion in GMNA related to the February 2008 Settlement Agreement for the UAW hourly medical plan; and (9) foreign currency remeasurement gains of $2.1 billion driven by the weakening of the Canadian Dollar against the U.S. Dollar in GMNA.

Automotive Selling, General and Administrative Expense


	Successor								Predecessor
	Year Ended December 31, 2010		Percentage of Automotive sales		July 10, 2009 Through December 31, 2009		Percentage of Automotive sales		January 1, 2009 Through July 9, 2009		Percentage of Automotive sales		Year Ended December 31, 2008		Percentage of Automotive sales
Automotive selling, general and administrative expense	$	11,446		8.5%	$	6,006		10.5%	$	6,161		13.2%	$	14,253		9.6%

In the year ended December 31, 2010 Automotive selling, general and administrative expense included: (1) advertising and sales promotion expenses of $5.1 billion to support media campaigns for our products, including expenses in GMNA of $3.4 billion, in GME of $0.8 billion, in GMIO of $0.6 billion and in GMSA of $0.3 billion; (2) administrative expenses of $4.4 billion, including expenses in GMNA of $2.0 billion, in GMIO of $0.8 billion, in GME of $0.6 billion and in GMSA of $0.5 billion; and (3) selling and marketing expenses of $1.4 billion primarily to support our dealerships including expenses in GMNA of $0.6 billion, in GME of $0.5 billion, in GMIO of $0.2 billion and in GMSA of $0.1 billion.

In the period July 10, 2009 through December 31, 2009 Automotive selling, general and administrative expense included: (1) advertising and sales promotion expenses of $2.5 billion to support media campaigns for our products, including expenses in GMNA of $1.7 billion, in GME of $0.4 billion, in GMIO of $0.3 billion and in GMSA of $0.1 billion; (2) administrative expenses of $2.6 billion, including expenses in GMNA of $1.1 billion, in GMIO of $0.5 billion, in GME of $0.3 billion and in GMSA of $0.2 billion; and (3) selling and marketing expenses of $1.0 billion primarily to support our dealerships including expenses in GMNA of $0.6 billion, in GME of $0.3 billion, in GMIO of $0.1 billion and in GMSA of $0.1 billion.

Old GM

In the period January 1, 2009 through July 9, 2009 Automotive selling, general and administrative expense included: (1) charges of $0.5 billion recorded for dealer wind-down costs in GMNA; and (2) a curtailment loss of $0.3 billion upon the interim remeasurement of the U.S. salary defined benefit pension plan as a result of global salary workforce reductions. This was partially offset by the positive effects of various cost savings initiatives, the cancellation of certain sales and promotion contracts as a result of the Chapter 11 Proceedings in the U.S. and overall reductions in advertising and marketing budgets.

In the year ended December 31, 2008 Automotive selling, general and administrative expense included: (1) advertising and sales promotion expenses of $6.3 billion to support media campaigns for our products, including expenses in GMNA of $4.0 billion, in

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

GME of $1.3 billion, in GMIO of $0.8 billion and in GMSA of $0.2 billion; (2) administrative expenses of $5.8 billion, including expenses in GMNA of $2.8 billion, in GMIO of $0.9 billion, in GME of $0.7 billion and in GMSA of $0.4 billion; and (3) selling and marketing expenses of $1.9 billion primarily to support our dealerships including expenses in GMNA of $0.9 billion, in GME of $0.7 billion, in GMIO of $0.2 billion and in GMSA of $0.1 billion.

Other Automotive Expenses, net


	Successor								Predecessor
	Year Ended December 31, 2010		Percentage of Total net sales and revenue		July 10, 2009 Through December 31, 2009		Percentage of Total net sales and revenue		January 1, 2009 Through July 9, 2009		Percentage of Total net sales and revenue		Year Ended December 31, 2008		Percentage of total net sales and revenue
Other automotive expenses, net	$	118		0.1%	$	15		—%	$	1,235		2.6%	$	6,699		4.5%

In the year ended December 31, 2010 Other automotive expenses, net included primarily depreciation expense of $0.1 billion related to our portfolio of automotive retail leases.

In the period July 10, 2009 through December 31, 2009 Other automotive expenses, net included: (1) depreciation expense and realized losses of $89 million related to the portfolio of automotive retail leases; (2) pension management expenses of $38 million; (3) interest expense related to our dealer financing program of $13 million; partially offset by (3) gains in GME for changes in liabilities related to Saab of $60 million; (4) recovery of amounts written off of $51 million related to the portfolio of automotive retail leases; and (5) gain on sale of vehicles of $19 million related to the portfolio of automotive retail leases.

Old GM

In the period January 1, 2009 through July 9, 2009 Other automotive expenses, net included: (1) charges of $0.8 billion in GME, primarily related to the deconsolidation of Saab; (2) charges of $0.2 billion related to Delphi; and (3) depreciation expense of $0.1 billion related to the portfolio of automotive retail leases.

In the year ended December 31, 2008 Other automotive expenses, net included: (1) charges related to the Delphi Benefit Guarantee Agreements of $4.8 billion; (2) depreciation expense of $0.7 billion related to the portfolio of automotive retail leases; (3) Goodwill impairment charges of $0.6 billion; (4) operating expenses of $0.4 billion related to the portfolio of automotive retail leases; and (5) interest expense of $0.1 billion.

Equity in Income (Loss) of and Disposition of Interest in Ally Financial


	Predecessor
	January 1, 2009 Through July 9, 2009			Percentage of Total net sales and revenue			Year Ended December 31, 2008			Percentage of Total net sales and revenue
Equity in income (loss) of and disposition of interest in Ally Financial	$	(1,097	)		(2.3	)%	$	916			0.6	%
Gain on conversion of UST Ally Financial Loan		2,477			5.3	%		—			—	%
Impairment charges related to Ally Financial Common Membership Interests		—			—	%		(7,099	)		(4.8	)%

Total equity in income (loss) of and disposition of interest in Ally Financial	$	1,380			2.9	%	$	(6,183	)		(4.2	)%

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Old GM

In the period January 1, 2009 through July 9, 2009 Equity in loss of and disposition of interest in Ally Financial included: (1) Gain of $2.5 billion recorded on the UST’s conversion of the UST Ally Financial Loan for Class B Membership Interests in Ally Financial; partially offset by (2) Old GM’s proportionate share of Ally Financial’s loss from operations on $1.1 billion.

In the year ended December 31, 2008 Equity in loss of and disposition of interest in Ally Financial included: (1) impairment charges of $7.1 billion related to Old GM’s investment in Ally Financial Common Membership Interests; partially offset by (2) Old GM’s proportionate share of Ally Financial’s income from operations of $0.9 billion.

Automotive Interest Expense


	Successor										Predecessor
	Year Ended December 31, 2010			Percentage of Automotive sales		July 10, 2009 Through December 31, 2009			Percentage of Automotive sales		January 1, 2009 Through July 9, 2009			Percentage of Automotive sales		Year Ended December 31, 2008			Percentage of Automotive sales
Automotive interest expenses	$	(1,098	)		0.8%	$	(694	)		1.2%	$	(5,428	)		11.6%	$	(2,525	)		1.7%

In the year ended December 31, 2010 Automotive interest expense included: (1) interest expense of $0.4 billion on GMIO and GMSA debt; (2) interest expense of $0.3 billion on the UST Loans, Canadian Loan and VEBA Notes; and (3) interest expense of $0.3 billion on GMNA debt.

In the period July 10, 2009 through December 31, 2009 Automotive interest expense included interest expense of $0.3 billion on the UST Loans and interest expense of $0.2 billion on GMIO debt.

Old GM

In the period January 1, 2009 through July 9, 2009 Automotive interest expense included: (1) amortization of discounts related to the UST Loan, EDC Loan, and DIP Facilities of $3.7 billion; and (2) interest expense of $1.7 billion primarily related to interest expense of $0.8 billion on unsecured debt balances, $0.4 billion on the UST Loan Facility and $0.2 billion on GMIO and GMSA debt. Old GM ceased accruing and paying interest on most of its unsecured U.S. and foreign denominated debt on June 1, 2009, the date of its Chapter 11 Proceedings.

In the year ended December 31, 2008 Automotive interest expense included: (1) interest expense of $1.6 billion on Old GM’s unsecured bonds; (2) interest expense of $0.4 billion Old GM’s Euro bonds and cross-currency swaps to hedge foreign exchange rate exposure; and (3) interest expense of $0.1 billion on Old GM’s secured revolving credit facility and U.S. term loan.

Interest Income and Other Non-Operating Income, net


	Successor								Predecessor
	Year Ended December 31, 2010		Percentage of Total net sales and revenue		July 10, 2009 Through December 31, 2009		Percentage of Total net sales and revenue		January 1, 2009 Through July 9, 2009		Percentage of Total net sales and revenue		Year Ended December 31, 2008		Percentage of Total net sales and revenue
Interest income and other non-operating income,net	$	1,555		1.1%	$	440		0.8%	$	852		1.8%	$	424		0.3%

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In the year ended December 31, 2010 Interest income and other non-operating income, net included; (1) interest income earned from investments of $0.5 billion; (2) dividends and royalties of $0.2 billion; (3) rental income of $0.2 billion; (4) reversal of liability related to the Adjustment Shares of $0.2 billion; (5) gain on sale of Saab of $0.1 billion; (6) gain on sale of Nexteer of $0.1 billion; (7) gain on bargain purchase and the fair value of the recognizable assets acquired and liabilities assumed of $0.1 billion related to the acquisition of GM Strasbourg (GMS); (8) gain on derivatives of $0.1 billion; and (8) Ally Financial exclusivity fee of $0.1 billion in GMNA.

In the period July 10, 2009 through December 31, 2009 Interest income and other non-operating income, net included: (1) gains on foreign currency exchange derivatives of $0.3 billion; (2) interest income earned from investments of $0.2 billion; (3) net rental and royalty income of $0.2 billion in GMNA; partially offset by (4) liability recorded related to the Adjustment Shares of $0.2 billion.

Old GM

In the period January 1, 2009 through July 9, 2009 Interest income and other non-operating income, net included: (1) interest income of $0.2 billion earned from investments; (2) gains on derivatives of $0.2 billion related to the return of warrants issued to the UST; (3) gains on foreign currency exchange derivatives of $0.1 billion; (4) dividends on the investment in Ally Financial Preferred Membership Interests of $0.1 billion; (5) net rental income of $0.1 billion in GMNA; (6) royalty income of $0.1 billion in GMNA; and (7) Ally Financial exclusivity fee income of $0.1 billion in GMNA.

In the year ended December 31, 2008 Interest income and other non-operating income, net included: (1) interest income earned from investments of $0.7 billion; (2) rental income of $0.2 billion; (3) dividends and royalties of $0.2 billion; (4) Ally Financial exclusivity fee income of $0.1 billion in GMNA; partially offset by (5) impairment charge of $1.0 billion related to our investment in Ally Financial Preferred Membership Interests.

Gain (Loss) on Extinguishment of Debt


	Successor					Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Gain (loss) on extinguishment of debt	$	196	$	(101	)	$	(1,088	)	$	43

In the year ended December 31, 2010 Gain (loss) on extinguishment of debt included a gain of $0.2 billion resulting from our repayment of the outstanding amount of VEBA Notes of $2.8 billion.

Old GM

In the period January 1, 2009 through July 9, 2009 Loss on extinguishment of debt included a loss of $2.0 billion related to the UST exercising its option to convert outstanding amounts of the UST Ally Financial Loan into shares of Ally Financial’s Class B Common Membership Interests. This loss was partially offset by a gain on extinguishment of debt of $0.9 billion related to an amendment to Old GM’s U.S. term loan.

In the year ended December 31, 2008 Gain (loss) on extinguishment of debt included a gain of $43 million resulting from a settlement gain recorded for the issuance of 44 million shares of common stock in exchange for $498 million principal amount of Old GM’s Series D debentures, which were retired and canceled.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Reorganization gains, net


	Predecessor
	January 1, 2009 Through July 9, 2009
Reorganization gains, net	$	128,155

Old GM

In the period January 1, 2009 through July 9, 2009 Reorganization gains, net included: (1) the gain on conversion of debt of $37.5 billion; (2) the change in net assets resulting from the application of fresh-start reporting of $33.8 billion; (3) the gain from the settlement of net liabilities retained by MLC of $25.2 billion; and (4) the fair value of Series A Preferred stock, common shares and warrants issued in connection with the 363 Sale of $20.5 billion.

Income Tax Expense (Benefit)


	Successor					Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Income tax expense (benefit)	$	672	$	(1,000	)	$	(1,166	)	$	1,766

In the year ended December 31, 2010 Income tax expense of $0.7 billion primarily resulted from current and deferred income tax provisions of $0.6 billion for profitable entities without valuation allowances, $0.3 billion withholding taxes and taxable foreign exchange gain in Venezuela, partially offset by $0.3 billion settlement of uncertain tax positions and reversal of valuation allowances.

In the period July 10, 2009 through December 31, 2009 Income tax benefit of $1.0 billion primarily resulted from a $1.4 billion income tax allocation between operations and Other comprehensive income, partially offset by income tax provisions of $0.3 billion for profitable entities without valuation allowances. Our U.S. operations incurred losses from operations with no income tax benefit due to full valuation allowances against our U.S. deferred tax assets, and we had Other comprehensive income, primarily due to remeasurement gains on our U.S. pension plans. We recorded income tax expense related to the remeasurement gains in Other comprehensive income and allocated income tax benefit to operations.

Old GM

In the period January 1, 2009 through July 9, 2009 Income tax benefit of $1.2 billion primarily resulted from the reversal of valuation allowances of $0.7 billion related to Reorganization gains, net and the resolution of a transfer pricing matter of $0.7 billion with the U.S. and Canadian governments, partially offset by income tax provisions for profitable entities without valuation allowances.

In the year ended December 31, 2008 Income tax expense of $1.8 billion primarily resulted from the recording of valuation allowances of $1.9 billion against deferred tax assets in South Korea, the United Kingdom, Spain, Australia, Texas and various non-U.S. jurisdictions.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Equity Income, net of tax


	Successor								Predecessor
	Year Ended December 31, 2010		Percentage of Total net sales and revenue		July 10, 2009 Through December 31, 2009		Percentage of Total net sales and revenue		January 1, 2009 Through July 9, 2009			Percentage of Total net sales and revenue		Year Ended December 31, 2008			Percentage of Total net sales and revenue
China JVs	$	1,297		1.0%	$	460		0.8%	$	300			0.6%	$	315			0.2%
Other equity interests	$	141		0.1%	$	37		0.1%	$	(239	)		(0.5)%	$	(129	)		(0.1)%

Total equity income, net of tax	$	1,438		1.1%	$	497		0.9%	$	61			0.1%	$	186			0.1%

In the year ended December 31, 2010 Equity income, net of tax included equity income of $1.3 billion related to our China JVs, primarily SGM and SGMW and equity income of $0.1 billion related to New Delphi.

In the period July 10, 2009 through December 31, 2009 equity income, net of tax included equity income of $0.5 billion related to our China JVs, primarily SGM and SGMW.

Old GM

In the period January 1, 2009 through July 9, 2009 Equity income, net of tax included equity income of $0.3 billion related to our China JV’s, primarily SGM and SGMW partially offset by equity losses of $0.2 billion primarily related to impairment charges at NUMMI and our proportionate share of losses at CAMI.

In the year ended December 31, 2008 Equity income, net of tax included equity income of $0.3 billion related to our China JVs, primarily SGM and SGMW partially offset by equity losses of $0.1 billion primarily related to our investments in NUMMI and CAMI.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Changes in Consolidated Financial Condition

(Dollars in Millions, Except Share Amounts)


	Successor
	December 31, 2010		December 31, 2009
ASSETS
Automotive Current Assets
Cash and cash equivalents	$	21,061	$	22,679
Marketable securities		5,555		134

Total cash, cash equivalents and marketable securities		26,616		22,813
Restricted cash and marketable securities		1,240		13,917
Accounts and notes receivable (net of allowance of $252 and $250)		8,699		7,518
Inventories		12,125		10,107
Assets held for sale		—		388
Equipment on operating leases, net		2,568		2,727
Other current assets and deferred income taxes		1,805		1,777

Total current assets		53,053		59,247
Automotive Non-current Assets
Restricted cash and marketable securities		1,160		1,489
Equity in net assets of nonconsolidated affiliates		8,529		7,936
Property, net		19,235		18,687
Goodwill		30,513		30,672
Intangible assets, net		11,882		14,547
Deferred income taxes		308		564
Assets held for sale		—		530
Other assets		3,286		2,623

Total non-current assets		74,913		77,048

Total Automotive Assets		127,966		136,295
GM Financial Assets
Finance receivables (including finance receivables transferred to special purpose entities of $7,156 at December 31, 2010)		8,197		—
Restricted cash		1,090		—
Goodwill		1,265		—
Other assets		380		—

Total GM Financial Assets		10,932		—

Total Assets	$	138,898	$	136,295

LIABILITIES AND EQUITY
Automotive Current Liabilities
Accounts payable (principally trade)	$	21,497	$	18,725
Short-term debt and current portion of long-term debt (including debt at GM Daewoo of $70 at December 31, 2010)		1,616		10,221
Liabilities held for sale		—		355
Postretirement benefits other than pensions		625		846
Accrued liabilities (including derivative liabilities at GM Daewoo of $111 at December 31, 2010)		23,419		22,288

Total current liabilities		47,157		52,435
Automotive Non-current Liabilities
Long-term debt (including debt at GM Daewoo of $835 at December 31, 2010)		3,014		5,562
Liabilities held for sale		—		270
Postretirement benefits other than pensions		9,294		8,708
Pensions		21,894		27,086
Other liabilities and deferred income taxes		13,021		13,279

Total non-current liabilities		47,223		54,905

Total Automotive Liabilities		94,380		107,340
GM Financial Liabilities
Securitization notes payable		6,128		—
Credit facilities		832		—
Other liabilities		399		—

Total GM Financial Liabilities		7,359		—

Total Liabilities		101,739		107,340
Commitments and contingencies
Preferred stock Series A, $0.01 par value (2,000,000,000 shares authorized and 360,000,000 shares issued and outstanding (each with a $25.00 liquidation preference) at December 31, 2009)		—		6,998
Equity
Preferred stock, $0.01 par value, 2,000,000,000 shares authorized:
Series A (276,101,695 shares issued and outstanding (each with a $25.00 liquidation preference) at December 31, 2010)		5,536		—
Series B (100,000,000 shares issued and outstanding (each with a $50.00 liquidation preference) at December 31, 2010)		4,855		—
Common stock, $0.01 par value (5,000,000,000 shares authorized and 1,500,136,998 shares and 1,500,000,000 shares issued and outstanding at December 31, 2010 and 2009)		15		15
Capital surplus (principally additional paid-in capital)		24,257		24,040
Retained earnings (accumulated deficit)		266		(4,394	)
Accumulated other comprehensive income		1,251		1,588

Total stockholders’ equity		36,180		21,249
Noncontrolling interests		979		708

Total equity		37,159		21,957

Total Liabilities and Equity	$	138,898	$	136,295

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Automotive

Current Assets

At December 31, 2010 Marketable securities of $5.6 billion increased by $5.4 billion due to investments in securities with maturities exceeding 90 days reflecting our improved liquidity and cash position.

At December 31, 2010 Restricted cash and marketable securities of $1.2 billion decreased by $12.7 billion (or 91.1%) primarily due to: (1) UST escrow funds of $6.6 billion became unrestricted upon our repayment of the UST Loans and Canadian Loan; (2) release of $4.7 billion from our UST escrow funds to repay the UST Loans; and (3) release of $1.2 billion from our UST escrow funds for quarterly payments on the UST Loans and Canadian Loan.

At December 31, 2010 Accounts and notes receivable of $8.7 billion increased by $1.2 billion (or 15.7%) primarily due to higher sales volumes in all regions.

At December 31, 2010 Inventories of $12.1 billion increased by $2.0 billion (or 20.0%) primarily due to increased production resulting from higher demand for our products and new product launches.

At December 31, 2010 Assets held for sale were reduced to $0 from $0.4 billion at December 31, 2009 due to the sale of Saab in February 2010 and the sale of Saab GB in May 2010.

At December 31, 2010 Equipment on operating leases, net of $2.6 billion decreased by $0.2 billion (or 5.8%) due to: (1) a decrease of $0.3 billion due to the continued liquidation of our portfolio of automotive retail leases; (2) a decrease of $0.1 billion in GME due to overall volume decreases in Germany; partially offset by (3) an increase of $0.2 billion in GMNA, primarily related to vehicles leased to daily rental car companies (vehicles leased to U.S. daily rental car companies increased to 118,000 vehicles at December 31, 2010 from 97,000 vehicles at December 31, 2009).

Non-Current Assets

At December 31, 2010 Restricted cash and marketable securities of $1.2 billion decreased by $0.3 billion (or 22.1%) primarily due to a reduction in required cash collateral arrangements as a result of our improved credit conditions compared to December 31, 2009.

At December 31, 2010 Equity in net assets of nonconsolidated affiliates of $8.5 billion increased by $0.6 billion (or 7.5%) due to: (1) equity income of $1.4 billion in the year ended December 31, 2010, primarily related to our China JVs; (2) investment of $0.4 billion in SGMW; (3) investment of $0.2 billion in HKJV; partially offset by (4) dividends received or declared of $1.2 billion, primarily related to our China JVs; (5) a decrease of $0.2 billion related to the sale of our 50% interest in a joint venture; and (6) a decrease of $0.1 billion related to the sale of a 1% ownership interest in SGM to SAIC.

At December 31, 2010 Property, net of $19.2 billion increased by $0.5 billion (or 2.9%) primarily due to: (1) capital expenditures, of $4.2 billion; (2) accruals and capital leases of $0.5 billion; partially offset by (2) depreciation of $3.8 billion; (3) decreases associated with disposals of businesses of $0.3 billion; and (4) unfavorable foreign currency translation effect of $0.1 billion.

At December 31, 2010 Goodwill of $30.5 billion decreased by $0.2 billion (or 0.5%) primarily due to unfavorable foreign currency translation effect in GME resulting from the Euro weakening against the U.S. dollar.

At December 31, 2010 Intangible assets, net of $11.9 billion decreased by $2.7 billion (or 18.3%) primarily due to amortization of $2.6 billion and foreign currency translation of $0.1 billion.

At December 31, 2010 Deferred income taxes of $0.3 billion decreased by $0.3 billion (or 45.4%) primarily due to reclassifications of deferred tax assets and changes in the allocation of valuation allowances resulting from underlying changes in the timing of tax deductions.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

At December 31, 2010 Assets held for sale were reduced to $0 from $0.5 billion at December 31, 2009 due to the sale of certain of our India operations (GM India) in February 2010. We classified these Assets held for sale as long-term at December 31, 2009 because we received a promissory note in exchange for GM India that does not convert to cash within one year.

At December 31, 2010 Other assets of $3.3 billion increased by $0.7 billion (or 25.3%) primarily due to: (1) increase of $0.3 billion in long-term notes receivable resulting primarily from the sale of GM India of $0.2 billion; (2) increase of $0.1 billion due to capitalization of debt issuance costs associated with the secured revolving credit facility; and (3) increase of $0.1 billion due to amounts paid into insurance funds for employees in early retirement programs.

Current Liabilities

At December 31, 2010 Accounts payable of $21.5 billion increased by $2.8 billion (or 14.8%) primarily due to higher payables for materials due to increased production volumes.

At December 31, 2010 Short-term debt and current portion of long-term debt of $1.6 billion decreased by $8.6 billion (or 84.2%) primarily due to: (1) repayment of the UST Loans and Canadian Loan of $7.0 billion; (2) repayment of the GM Daewoo credit facility of $1.2 billion; and (3) a net change in other obligations of $0.4 billion.

At December 31, 2010 Liabilities held for sale were reduced to $0 from $0.4 billion at December 31, 2009 due to the sale of Saab in February 2010 and the sale of Saab GB in May 2010 to Spyker Cars NV.

At December 31, 2010 Accrued liabilities of $23.4 billion increased by $1.1 billion (or 5.1%) primarily due to: (1) increase in GMNA due to higher customer deposits related to the increased number of vehicles leased to daily rental car companies of $0.5 billion; (2) increase due to tax related accruals reclassified from non-current to current of $0.3 billion; and (3) other miscellaneous accruals of $0.3 billion.

Non-Current Liabilities

At December 31, 2010 Long-term debt of $3.0 billion decreased by $2.5 billion (or 45.8%), primarily due to the repayment in full of the VEBA Notes composed of the outstanding amount (together with accreted interest thereon) of $2.8 billion and resulting gain of $0.2 billion, partially offset by additional net borrowings of $0.4 billion and unfavorable foreign currency translation effect of $0.1 billion.

At December 31, 2010 Liabilities held for sale were reduced to $0 from $0.3 billion at December 31, 2009 due to the sale of GM India in February 2010. We classified these Liabilities held for sale as long-term at December 31, 2009 because we received a promissory note in exchange for GM India that does not convert to cash within one year.

At December 31, 2010 our Postretirement benefits other than pensions liability of $9.3 billion increased by $0.6 billion (or 6.7%) primarily due to year-end remeasurement effects of $0.4 billion driven by discount rate reductions in the valuation assumptions and unfavorable foreign currency translation effect of $0.2 billion due to the strengthening of the Canadian dollar against the U.S dollar.

At December 31, 2010 our Pensions liability of $21.9 billion decreased by $5.2 billion (or 19.2%) primarily due to net contributions and benefit payments of $4.9 billion and favorable foreign currency translation effect of $0.3 billion. Gains from asset returns greater than expected were primarily offset by actuarial losses from discount rate decreases.

At December 31, 2010 Other liabilities and deferred income taxes of $13.0 billion decreased by $0.3 billion (or 1.9%) primarily due to: (1) decrease in plant closing liability in GMNA due to payments made in 2010 and employee related adjustments of $0.4 billion; (2) decrease due to tax related accruals classified to current of $0.3 billion; partially offset by (3) increase in deferred taxes of $0.4 billion.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Automotive Financing

Total GM Financial Assets

At December 31, 2010 Total GM Financial Assets of $10.9 billion was primarily composed of net automotive finance receivables of $8.2 billion, Goodwill of $1.3 billion related to the acquisition of AmeriCredit, including amounts recorded to reflect the changes in the valuation allowance on deferred tax assets that were not applicable to GM Financial on a stand-alone basis and restricted cash of $1.1 billion associated with GM Financial’s credit facilities and securitization notes payable.

Total GM Financial Liabilities

At December 31, 2010 Total GM Financial Liabilities of $7.4 billion was primarily composed of securitization notes payable of $6.1 billion issued in the asset backed securities market and advances on credit facilities of $0.8 billion.

GM North America

(Dollars in Millions)


	Successor					Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Total net sales and revenue	$	83,035	$	32,426		$	24,191		$	86,187
Income (loss) attributable to stockholders before interest and income taxes	$	5,748	$	(4,820	)	$	(11,092	)	$	(12,203	)

Production and Vehicle Sales Volume

The following tables summarize total production volume and new motor vehicle sales volume and competitive position (in thousands):


	GM		Combined GM and Old GM		Old GM
	Year Ended December 31, 2010		Year Ended December 31, 2009 (a)		Year Ended December 31, 2008 (a)
Production volume
Cars		977		727		1,543
Trucks		1,832		1,186		1,906

Total		2,809		1,913		3,449

(a)	Production volume includes vehicles produced by certain joint ventures.


	Year Ended December 31, 2010				Year Ended December 31, 2009				Year Ended December 31, 2008
	GM		GM as a % of Industry		Combined GM and Old GM		Combined GM and Old GM as a % of Industry		Old GM		Old GM as a % of Industry
Vehicle sales (a)(b)(c)(d)(e)
Total GMNA		2,625		18.2%		2,484		18.9%		3,565		21.5%
Total U.S.		2,215		18.8%		2,084		19.7%		2,981		22.1%
U.S. — Cars		807		14.3%		874		16.3%		1,257		18.6%
U.S. — Trucks		1,408		23.0%		1,210		23.1%		1,723		25.5%
Canada		247		15.6%		254		17.1%		359		21.4%
Mexico		156		18.3%		138		17.9%		212		19.8%

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

(a)	Vehicle sales primarily represent sales to the ultimate customer.

(b)	Includes HUMMER, Saturn and Pontiac vehicle sales data.

(c)	Our vehicle sales include Saab data through February 2010.

(d)	Vehicle sales data may include rounding differences.

(e)	Certain fleet sales that are accounted for as operating leases are included in vehicle sales at time of delivery to the daily rental car companies.


	GM		Combined GM and Old GM		Old GM
	Year Ended December 31, 2010		Year Ended December 31, 2009		Year Ended December 31, 2008
GMNA vehicle sales by brand (a)(b)(c)(d)(e)
Buick		168		111		154
Cadillac		156		115		170
Chevrolet		1,866		1,601		2,158
GMC		411		317		438
Other — Opel		1		1		2

Total core brands		2,602		2,145		2,922

HUMMER		4		11		30
Pontiac		12		238		383
Saab		1		10		23
Saturn		7		81		207

Total other brands		24		339		643

GMNA total		2,625		2,484		3,565

(a)	Vehicle sales primarily represent sales to the ultimate customer.

(b)	Includes HUMMER, Saturn and Pontiac vehicle sales data.

(c)	Our vehicle sales include Saab data through February 2010.

(d)	Vehicle sales data may include rounding differences.

(e)	Certain fleet sales that are accounted for as operating leases are included in vehicle sales at the time of delivery to the daily rental car companies.

GMNA Total Net Sales and Revenue

(Dollars in Millions)


	Successor		Combined GM and Old GM		Successor		Predecessor
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008		Year Ended 2010 vs. 2009 Change				Year Ended 2009 vs. 2008 Change
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008		Amount		%		Amount			%
Total net sales and revenue	$	83,035	$	56,617	$	32,426	$	24,191	$	86,187	$	26,418		46.7%	$	(29,570	)		(34.3	)%

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In the year ended December 31, 2010 Total net sales and revenue increased by $26.4 billion (or 46.7%) primarily due to: (1) increased wholesale volumes of $19.8 billion representing 873,000 vehicles (or 42.7%) due to an improving economy and successful recent vehicle launches of the Chevrolet Equinox, Chevrolet Cruze, GMC Terrain, Buick LaCrosse and Cadillac SRX; (2) favorable pricing of $2.9 billion due to decreased sales allowances partially offset by less favorable adjustments in the U.S. to the accrual for U.S. residual support programs for leased vehicles of $0.4 billion (favorable of $0.7 billion in 2010 compared to favorable of $1.1 billion in 2009); (3) favorable vehicle mix of $1.6 billion due to increased crossover and truck sales; (4) increased sales of $1.0 billion due to the acquisition of Nexteer and four domestic component manufacturing facilities; (5) favorable net foreign currency remeasurement effect of $0.8 billion primarily driven by the strengthening of the Canadian Dollar against the U.S. Dollar; and (6) increased revenues from OnStar of $0.3 billion primarily due to increased volumes.

In the year ended December 31, 2009 Total net sales and revenue decreased by $29.6 billion (or 34.3%) primarily due to: (1) decreased revenue of $36.7 billion related to volume reductions; partially offset by (2) improved pricing, lower sales incentives and improved lease residuals of $5.4 billion; and (3) favorable vehicle mix of $2.8 billion. The decrease in vehicle sales volumes was primarily due to tight credit markets, increased unemployment rates and a recession in North America, Old GM’s well publicized liquidity issues and Chapter 11 Proceedings; partially offset by improved vehicle sales related to the CARS program and an increase in dealer showroom traffic and related vehicle sales in response to our new 60-Day satisfaction guarantee program.

GMNA Earnings Before Interest and Income Taxes

(Dollars in Millions)


	Successor					Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Income (loss) attributable to stockholders before interest and income taxes	$	5,748	$	(4,820	)	$	(11,092	)	$	(12,203	)

The most significant factors which influence GMNA’s profitability are industry volume (primarily U.S. seasonally adjusted annual rate (SAAR)) and market share. While not as significant as industry volume and market share, another factor affecting GMNA profitability is the relative mix of vehicles (cars, trucks, crossovers) sold. Contribution margin is a key indicator of product profitability. Contribution margin is defined as revenue less material cost, freight, and policy and warranty expense. Vehicles with higher selling prices generally have higher contribution margins. Trucks currently have a contribution margin of approximately 140% of our portfolio on a weighted-average basis. Crossover vehicles’ contribution margins are in line with the overall portfolio on a weighted-average basis, and cars are approximately 60% of the portfolio on a weighted-average basis. As such, a sudden shift in consumer preference from trucks to cars would have an unfavorable effect on GMNA’s EBIT and breakeven point. For example, a shift in demand such that industry market share for trucks deteriorated 10 percentage points and industry market share for cars increased by 10 percentage points, holding other variables constant, would have increased GMNA’s breakeven point for the year ended December 31, 2010, as measured in terms of GMNA factory unit sales, by 200,000 vehicles. For the year ended December 31, 2010 our U.S. car market share was 14.3% and our U.S. truck market share was 23.0%. We continue to strive to achieve a product portfolio with more balanced contribution margins and less susceptibility to shifts in consumer demand.

In the year ended December 31, 2010 EBIT was $5.7 billion and included: (1) favorable adjustments of $0.4 billion to restructuring reserves primarily due to increased production capacity utilization, which resulted in the recall of idled employees to fill added shifts at multiple U.S. production sites and revisions to productivity initiatives; offset by (2) advertising and sales promotion expenses of $3.4 billion primarily to support media campaigns for our products; (3) administrative expenses of $2.0 billion; (4) selling and marketing expenses of $0.6 billion related to our dealerships; (5) foreign currency remeasurement losses of $0.5 billion primarily driven by the strengthening of the Canadian Dollar against the U.S. Dollar; (6) charges of $0.2 billion for a recall campaign on windshield fluid heaters; and (7) impairment charges related to product-specific tooling assets of $0.2 billion.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In the period July 10, 2009 through December 31, 2009 EBIT was a loss of $4.8 billion and included: (1) settlement loss of $2.6 billion related to the termination of our UAW hourly retiree medical plan and Mitigation Plan; (2) foreign currency remeasurement losses of $1.3 billion driven by the general strengthening of the Canadian Dollar versus the U.S. Dollar; (3) charges of $0.3 billion related to dealer wind-down costs for our Saturn dealers after plans to sell the Saturn brand and dealerships network were terminated; partially offset by (4) favorable adjustments in Automotive cost of sales of $0.7 billion due to the sell through of inventory acquired from Old GM at July 10, 2009. As required under U.S. GAAP, the acquired inventory was recorded at fair value as of the acquisition date using a market participant approach, which for work in process and finished goods inventory considered the estimated selling price of the inventory less the costs a market participant would incur to complete, sell and dispose of the inventory, which may be different than our costs, and the profit margin required for its completion and disposal effort.

Old GM

In the period January 1, 2009 through July 9, 2009 EBIT was a loss of $11.1 billion and included: (1) incremental depreciation charges of $2.1 billion recorded by Old GM prior to the 363 Sale for facilities included in GMNA’s restructuring activities and for certain facilities that MLC retained; (2) curtailment loss of $1.7 billion upon the interim remeasurement of the U.S. hourly and U.S. salaried defined benefit pension plans as a result of the 2009 Special Attrition Programs and salaried workforce reductions; (3) U.S. hourly and salary separation program charges and Canadian restructuring activities of $1.1 billion; (4) foreign currency remeasurement losses of $0.7 billion driven by the general strengthening of the Canadian Dollar against the U.S. Dollar; (5) charges of $0.5 billion incurred for dealer wind-down costs; (6) derivative losses of $0.5 billion related to commodity and foreign currency exchange derivatives; (7) a charge of $1.1 billion related to the SUB and TSP, partially offset by a favorable adjustment of $0.7 billion primarily related to the suspension of the JOBS Program; (8) charges of $0.4 billion primarily for impairments for special-tooling and product related machinery and equipment; (9) charges of $0.3 billion related to obligations associated with various Delphi agreements; and (10) equity losses of $0.3 billion related to impairment charges at NUMMI and our proportionate share of losses at CAMI. MLC retained the investment in NUMMI, and CAMI has been consolidated since March 1, 2009.

In the year ended December 31, 2008 EBIT was a loss of $12.2 billion and included: (1) charges of $6.0 billion related to restructuring and other costs associated with Old GM’s special attrition programs; (2) advertising and sales promotion expenses of $4.0 billion primarily to support media campaigns for our products; (3) administrative expenses of $2.8 billion; (4) expenses of $1.7 billion related to the salaried post-65 healthcare settlement; (5) selling and marketing expenses of $0.9 billion related to our dealerships; (6) losses of $0.8 billion related to commodity and foreign currency exchange derivatives; (7) impairment charges related to product-specific tooling assets of $0.4 billion; and (8) charges of $0.3 billion associated with the finalization of Old GM’s negotiations with the CAW partially offset by (9) net curtailment gain of $4.9 billion related to the 2008 UAW Settlement Agreement; and (10) foreign currency remeasurement gains of $2.1 billion driven by the weakening of the Canadian Dollar against the U.S. Dollar.

GM Europe

(Dollars in Millions)


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Total net sales and revenue	$	24,076		$	11,479		$	12,552		$	34,647
Loss attributable to stockholders before interest and income taxes	$	(1,764	)	$	(814	)	$	(2,815	)	$	(2,625	)

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Production and Vehicle Sales Volume

The following tables summarize total production volume and new motor vehicle sales volume and competitive position (in thousands):

Combined GM
and Old GM

Old GM

Year Ended
December 31, 2010

Year Ended
December 31, 2009

Year Ended
December 31, 2008

Production volume

1,234

1,106

1,495


	Year Ended December 31, 2010				Year Ended December 31, 2009				Year Ended December 31, 2008
	GM		GM as a % of Industry		Combined GM and Old GM		Combined GM and Old GM as a % of Industry		Old GM		Old GM as a % of Industry
Vehicle sales (a)(b)(c)(d)(e)
Total GME		1,662		8.8%		1,668		8.9%		2,043		9.3%
Germany		269		8.4%		382		9.4%		300		8.8%
United Kingdom		290		12.7%		287		12.9%		384		15.4%
Italy		170		7.9%		189		8.0%		202		8.3%
Russia		159		8.0%		142		9.4%		338		11.2%
Uzbekistan		145		97.1%		103		95.8%		20		18.8%
France		123		4.6%		119		4.4%		114		4.4%
Spain		100		8.9%		94		8.7%		107		7.8%

(a)	Vehicle sales primarily represent estimated sales to the ultimate customer. In countries where end customer data is not readily available other data sources, such as wholesale volumes, are used to estimate vehicle sales.

(b)

The financial results (primarily Automotive sales and Automotive cost of sales) from Chevrolet brand products sold in GME are primarily reported as part of GMIO. Chevrolet brand products included in GME vehicle sales volume and market share data was 477,000 vehicles in the year ended December 31, 2010. Combined GM and Old GM Chevrolet brand products included in GME vehicle sales and market share data was 426,000 vehicles in the year ended December 31, 2009. Old GM Chevrolet brand products included in GME vehicle sales and market share data was 510,000 vehicles in the year ended December 31, 2008. Vehicle sales volume are reported in the geographical region they are sold.

(c)	Our vehicle sales include Saab data through February 2010.

(d)	Vehicle sales data may include rounding differences.

(e)	Certain fleet sales that are accounted for as operating leases are included in vehicle sales at the time of delivery to the daily rental car companies.

GME Total Net Sales and Revenue

(Dollars in Millions)


	Successor		Combined GM and Old GM		Successor		Predecessor
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31 2008		Year Ended 2010 vs. 2009 Change				Year Ended 2009 vs. 2008 Change
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31 2008		Amount		%		Amount			%
Total net sales and revenue	$	24,076	$	24,031	$	11,479	$	12,552	$	34,647	$	45		0.2%	$	(10,616	)		(30.6	)%

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In the year ended December 31, 2010 Total net sales and revenue increased by $45 million (or 0.2%) primarily due to: (1) increased wholesale volumes of $0.5 billion representing 38,000 vehicles (or 3.1%) primarily due to 31,000 Buick Regals exported to the U.S., and increases in Turkey by 17,000 vehicles (or 68.9%), in Russia by 14,000 vehicles (or 48.9%), in the United Kingdom by 13,000 vehicles (or 5.0%), in the Netherlands by 12,000 vehicles (or 37.8%), in Portugal by 11,000 vehicles (or 103.0%), in Italy by 11,000 (or 9.0%), partially offset by a decrease in Germany of 113,000 vehicles (or 33.0%) driven by the end of the government subsidies program. The net wholesale volume increase was offset by a decrease in wholesale volumes throughout the region of $0.5 billion representing 17,000 vehicles due to the sale of Saab in February 2010; (2) favorable vehicle mix of $0.5 billion primarily due to the Opel Insignia and increased sales of other higher priced vehicles; (3) favorable vehicle pricing effect of $0.5 billion driven by launches of the Opel Astra and Opel Meriva; partially offset by (4) unfavorable net foreign currency translation effect of $0.7 billion, primarily due to the weakening of the Euro and British Pound against the U.S. Dollar; and (5) lower volumes of rental car activity and subsequent repurchases sold at auction of $0.2 billion.

In the year ended December 31, 2009 Total net sales and revenue decreased by $10.6 billion (or 30.6%) primarily due to: (1) decreased wholesale volumes of $4.8 billion representing 405,000 vehicles (or 24.8%) primarily due to decreases in the United Kingdom by 99,000 vehicles (or 26.7%), in Russia by 69,000 vehicles (or 70.2%), in Italy by 25,000 vehicles (or 16.8%), and exports to the U.S. by 33,000 vehicles (or 94.4%), partially offset by an increase in Germany by 65,000 vehicles (or 23.4%) driven by the government subsidy program. The decrease in vehicle sales volumes was primarily due to tight credit markets, increased unemployment rates, a recession in many international markets, Old GM’s well publicized liquidity issues and Chapter 11 Proceedings and the announcement that Old GM was seeking a majority investor in Adam Opel; (2) unfavorable net foreign currency translation and transaction effect of $3.7 billion driven primarily by the strengthening of the U.S. Dollar against the Euro; (3) decreased sales revenue at Saab of $1.2 billion; (4) decreased powertrain and parts and accessories revenue of $0.8 billion; partially offset by (5) favorable vehicle pricing effect of $1.3 billion.

GME Loss Before Interest and Income Taxes

(Dollars in Millions)


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Loss attributable to stockholders before interest and income taxes	$	(1,764	)	$	(814	)	$	(2,815	)	$	(2,625	)

In the year ended December 31, 2010 EBIT was a loss of $1.8 billion and included: (1) restructuring charges of $0.8 billion primarily related to separation programs announced in Belgium, Spain, Germany and the United Kingdom; (2) advertising and sales promotion expenses of $0.8 billion primarily related to support media campaigns for our products; (3) administrative expense of $0.6 billion; and (4) selling and marketing expenses of $0.5 billion related to our dealerships.

In the period July 10, 2009 through December 31, 2009 EBIT was a loss of $0.8 billion and included: (1) advertising and sales promotion expenses of $0.4 billion primarily related to support media campaigns for our products; (2) administrative expense of $0.3 billion; (3) selling and marketing expenses of $0.3 billion related to our dealerships; partially offset by (4) favorable adjustments in Automotive cost of sales of $0.5 billion due to the sell through of inventory acquired from Old GM at July 10, 2009. As required under U.S. GAAP, the acquired inventory was recorded at fair value as of the acquisition date using a market participant approach, which for work in process and finished goods inventory considered the estimated selling price of the inventory less the costs a market participant would incur to complete, sell and dispose of the inventory, which may be different than our costs, and the profit margin required for its completion and disposal effort.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Old GM

In the period January 1, 2009 through July 9, 2009 EBIT was a loss of $2.8 billion and included: (1) charges of $0.8 billion primarily related to the deconsolidation of Saab, which filed for reorganization protection under the laws of Sweden in February 2009; (2) incremental depreciation charges of $0.7 billion related to restructuring activities; (3) impairment charges of $0.2 billion related to product-specific tooling assets; and (4) operating losses of $0.2 billion related to Saab.

In the year ended December 31, 2008 EBIT was a loss of $2.6 billion and included: (1) advertising and sales promotion expenses of $1.3 billion primarily related to support media campaigns for our products; (2) administrative expense of $0.7 billion; (3) selling and marketing expenses of $0.7 billion related to our dealerships; (4) special tooling and product related machinery and equipment asset impairment charges of $0.5 billion; (5) goodwill impairment charges of $0.5 billion; and (6) restructuring charges of $0.3 billion primarily related to separation programs announced in Belgium, France, Germany and the United Kingdom.

GM International Operations

(Dollars in Millions)


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Total net sales and revenue	$	21,470	$	8,567	$	6,218		$	24,050
Income (loss) attributable to stockholders before interest and income taxes	$	2,262	$	789	$	(486	)	$	(555	)

Production and Vehicle Sales Volume

The following tables summarize total production volume and new motor vehicle sales volume and competitive position (in thousands):


	GM		Combined GM and Old GM		Old GM
	Year Ended December 31, 2010		Year Ended December 31, 2009		Year Ended December 31, 2008
Production volume
Consolidated entities		1,016		752		1,153
Joint ventures
SGMW (a)		1,256		1,109		646
SGM		1,037		712		439
FAW-GM (a)		86		43		—
Other		350		61		97

Total production volume		3,745		2,677		2,335

(a)	The joint venture agreements with SGMW (44%) and FAW-GM (50%) allow for significant rights as a member as well as the contractual right to report SGMW and FAW-GM joint venture production in China.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES


	Year Ended December 31, 2010				Year Ended December 31, 2009				Year Ended December 31, 2008
	GM		GM as a % of Industry		Combined GM and Old GM		Combined GM and Old GM as a % of Industry		Old GM		Old GM as a % of Industry
Vehicle sales (a)(b)(c)(d)(e)(f)
Total GMIO		3,077		8.8%		2,453		8.7%		1,832		7.4%
Vehicle sales– consolidated entities
Australia		133		12.8%		121		12.9%		133		13.1%
Middle East Operations		123		10.7%		117		11.1%		144		9.3%
South Korea		127		8.1%		115		7.9%		117		9.7%
Egypt		68		27.2%		52		25.5%		60		23.1%
Vehicle sales–primarily joint ventures (f)
China (g)(h)		2,352		12.8%		1,826		13.3%		1,095		12.1%
India		110		3.7%		69		3.1%		66		3.3%

(a)	Vehicle sales primarily represent estimated sales to the ultimate customer. In countries where end customer data is not readily available other data sources, such as wholesale volumes, are used to estimate vehicle sales.

(b)	Includes HUMMER vehicle sales data.

(c)	Vehicle sales data may include rounding differences.

(d)	Our vehicle sales include Saab data through February 2010.

(e)	Certain fleet sales that are accounted for as operating leases are included in vehicle sales at the time of delivery to the daily rental car companies.

(f)

(g)

Includes SGM joint venture vehicle sales in China of 1.0 million vehicles, SGMW and FAW-GM joint venture vehicle sales in China of 1.3 million vehicles and HKJV joint venture vehicle sales in India of 110,000 vehicles in the year ended December 31, 2010. Combined GM and Old GM SGM joint venture vehicle sales in China of 708,000 vehicles and combined GM and Old GM SGMW and FAW-GM joint venture vehicle sales in China of 1.1 million vehicles in the year ended December 31, 2009. Old GM SGM joint venture vehicle sales in China of 432,000 and Old GM SGMW joint venture vehicle sales in China of 647,000 vehicles in the year ended December 31, 2008. We do not record revenue from our joint ventures’ vehicle sales.

(h)	The joint venture agreements with SGMW (44%) and FAW-GM (50%) allow for significant rights as a member as well as the contractual right to report SGMW and FAW-GM joint venture vehicle sales in China as part of our global market share.

GMIO Total Net Sales and Revenue

(Dollars in Millions)


	Successor		Combined GM and Old GM		Successor		Predecessor				Year Ended 2010 vs. 2009 Change				Year Ended 2009 vs. 2008 Change
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31 2008		Year Ended 2010 vs. 2009 Change				Year Ended 2009 vs. 2008 Change
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31 2008		Amount		%		Amount			%
Total net sales and revenue	$	21,470	$	14,785	$	8,567	$	6,218	$	24,050	$	6,685		45.2%	$	(9,265	)		38.5%

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In the year ended December 31, 2010 Total net sales and revenue increased by $6.7 billion (or 45.2%) primarily due to: (1) increased wholesale volumes of $3.9 billion representing 118,000 vehicles (or 11.8%) primarily in the Middle East by 35,000 vehicles (or 28.2%) and in GM Daewoo by 100,000 vehicles (or 21.1%). The primary driver for the increase in wholesale volumes was the global economic recovery, together with the effect of launches of the Chevrolet Cruze and Chevrolet Spark throughout the region; (2) favorable net foreign currency translation effect of $0.9 billion, primarily due to the strengthening of the Korean Won, Australian Dollar and South African Rand against the U.S. Dollar; (3) favorable vehicle mix of $0.8 billion driven by the launch of the Chevrolet Cruze and increased sales of sports utility vehicles; (4) favorable vehicle pricing effect of $0.1 billion, primarily due to higher pricing on new model launches at GM Daewoo; and (5) derivative losses of $0.8 billion in the period January 1, 2009 through July 9, 2009, that did not recur in 2010, primarily driven by the weakening of the Korean Won against the U.S. Dollar in that period. Subsequent to July 10, 2009, all gains and losses on non-designated derivatives were recorded in Interest income and other non-operating income, net.

In the year ended December 31, 2009 Total net sales and revenue decreased by $9.3 billion (or 38.5%) primarily due to: (1) decreased wholesale volumes and lower exports of $9.1 billion representing 460,000 vehicles (or 31.6%) primarily in GM Daewoo by 247,000 vehicles (or 34.2%), in the Middle East by 103,000 vehicles (or 45.4%), in Australia by 59,000 vehicles (or 32.6%) and in Thailand by 53,000 vehicles (or 69.7%). The decrease in wholesale volumes was primarily due to tight credit markets, increased unemployment rates and Old GM’s well publicized liquidity issues and Chapter 11 Proceedings. These unfavorable trends were partially offset by many countries lowering interest rates and initiating programs to provide credit to consumers, which had a positive effect on vehicle sales volumes; (2) unfavorable net foreign currency translation effect of $1.0 billion, primarily due to the strengthening of the U.S. Dollar against the Korean Won and Australian Dollar in 2009, partially offset by (3) decreased derivative losses of $0.9 billion at GM Daewoo; and (4) favorable vehicle mix of $0.3 billion driven by launches of new vehicle models at GM Daewoo.

The vehicle sales related to our China and India (GM India was deconsolidated effective February 2010) joint ventures is not reflected in Total net sales and revenue. The results of our joint ventures are recorded in Equity income, net of tax.

GMIO Earnings Before Interest and Income Taxes

(Dollars in Millions)


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Income (loss) attributable to stockholders before interest and income taxes	$	2,262	$	789	$	(486	)	$	(555	)

In the year ended December 31, 2010 EBIT was $2.3 billion and included: (1) Equity income, net of tax, of $1.3 billion from the operating results of our China JVs; (2) favorable change in fair value of $0.1 billion from derivatives driven by the stronger Korean Won versus the U.S. Dollar; partially offset by (3) administrative expenses of $0.8 billion; (4) advertising and sales promotion expenses of $0.6 billion primarily to support media campaigns for our products; (5) unfavorable non-controlling interest attributable to minority shareholders of GM Daewoo and General Motors Egypt (GM Egypt) of $0.3 billion; and (6) selling and marketing expenses of $0.2 billion related to labor costs in the selling department across GMIO and also costs incurred in the establishment of the Korean direct dealership network.

In the period July 10, 2009 through December 31, 2009 EBIT was $0.8 billion and included: (1) favorable depreciation of fixed assets of $0.3 billion resulting from lower balances; and (2) favorable adjustments of $0.1 billion in Automotive cost of sales due to the sell through of inventory acquired from Old GM at July 10, 2009. As required under U.S. GAAP, the acquired inventory was

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

recorded at fair value as of the acquisition date using a market participant approach, which for work in process and finished goods inventory considered the estimated selling price of the inventory less the costs a market participant would incur to complete, sell and dispose of the inventory, which may be different than our costs, and the profit margin required for its completion and disposal effort; partially offset by (3) administrative expenses of $0.5 billion; (4) advertising and sales promotion expenses of $0.3 billion primarily to support media campaigns for our products; (5) selling and marketing expenses of $0.1 billion; and (6) unfavorable amortization of $0.1 billion related to intangible assets.

Old GM

In the period January 1, 2009 through July 9, 2009 EBIT was a loss of $0.5 billion and included: (1) derivative losses of $0.8 billion at GM Daewoo; (2) administrative expenses of $0.4 billion; (3) advertising and sales promotion expenses of $0.2 billion primarily to support media campaigns for our products; partially offset by (4) Equity income, net of tax, of $0.3 billion primarily from the operating results of our China JVs; and (5) favorable effect of $0.1 billion related to the net loss attributable to minority shareholders of GM Daewoo.

In the year ended December 31, 2008 EBIT was a loss of $0.6 billion and included: (1) derivative losses of $1.7 billion at GM Daewoo; (2) administrative expenses of $0.9 billion; (3) advertising and sales promotion expenses of $0.8 billion primarily to support media campaigns for our products; partially offset by (4) Equity income, net of tax, of $0.4 billion primarily from the operating results of our China JVs; (5) selling and marketing expenses of $0.2 billion; and (6) favorable effect of $0.1 billion related to the net loss attributable to minority shareholders of GM Daewoo.

GM South America

(Dollars in Millions)


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Total net sales and revenue	$	15,379	$	7,399	$	5,736		$	14,522
Income (loss) attributable to stockholders before interest and income taxes	$	818	$	417	$	(454	)	$	1,076

Production and Vehicle Sales Volume

The following tables summarize total production volume and new motor vehicle sales volume and competitive position (in thousands):

Combined GM
and Old GM

Old GM

Year Ended
December 31, 2010

Year Ended
December 31, 2009

Year Ended
December 31, 2008

Production volume

926

807

865

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES


	Year Ended December 31, 2010				Year Ended December 31, 2009				Year Ended December 31, 2008
	GM		GM as a % of Industry		Combined GM and Old GM		Combined GM and Old GM as a % of Industry		Old GM		Old GM as a % of Industry
Vehicle sales (a)(b)(c)
Total GMSA		1,026		19.9%		872		20.0%		920		20.7%
Brazil		658		18.7%		596		19.0%		549		19.5%
Argentina		109		16.3%		79		15.2%		95		15.5%
Colombia		85		33.6%		67		36.1%		80		36.3%
Ecuador		53		40.8%		40		43.3%		48		42.2%
Venezuela		51		40.6%		49		36.1%		90		33.2%

(a)	Vehicle sales primarily represent estimated sales to the ultimate customer. In countries where end customer data is not readily available other data sources, such as wholesale volumes, are used to estimate vehicle sales.

(b)	Vehicle sales data may include rounding differences.

(c)	Certain fleet sales that are accounted for as operating leases are included in vehicle sales at the time of delivery to the daily rental car companies.

GMSA Total Net Sales and Revenue

(Dollars in Millions)


	Successor		Combined GM and Old GM		Successor		Predecessor				Year Ended 2010 vs. 2009 Change				Year Ended 2009 vs. 2008 Change
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008		Year Ended 2010 vs. 2009 Change				Year Ended 2009 vs. 2008 Change
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008		Amount		%		Amount			%
Total net sales and revenue	$	15,379	$	13,135	$	7,399	$	5,736	$	14,522	$	2,244		17.1%	$	(1,387	)		(9.6	)%

In the year ended December 31, 2010 Total net sales and revenue increased by $2.2 billion (or 17.1%) primarily due to: (1) increased wholesale volumes of $2.2 billion representing 170,000 vehicles (or 19.1%) primarily in Brazil by 72,000 vehicles or (11.7%), in Argentina by 32,000 vehicles (or 41.4%) and in Colombia by 21,000 vehicles (or 32.9%) driven by launches of the Chevrolet Cruze and Chevrolet Spark throughout the region; (2) favorable net foreign currency translation effect of $1.0 billion, primarily due to the strengthening of major currencies in 2010 against the U.S. Dollar such as the Brazilian Real and Colombian Peso; (3) favorable vehicle pricing effect of $0.3 billion, primarily in Venezuela driven by the hyperinflationary economy; partially offset by (4) devaluation of the BsF in Venezuela of $0.9 billion; and (5) unfavorable vehicle mix of $0.4 billion driven by increased sales of the Chevrolet Spark and Chevrolet Aveo and decreased sales of the Chevrolet Meriva, Vectra and S-10.

In the year ended December 31, 2009 Total net sales and revenue decreased by $1.4 billion (or 9.6%) due to: (1) decreased wholesale volumes of $2.2 billion representing 30,000 vehicles (or 3.3%) primarily in Venezuela by 37,000 vehicles (or 44.1%), in Argentina by 19,000 vehicles (or 19.8%) and in Colombia by 13,000 vehicles (or 16.6%); partially offset by (2) favorable pricing effect of $0.4 billion primarily due to price increases in Venezuela driven by the hyperinflationary economy; and (3) increased wholesale volumes in Brazil of $0.2 billion representing 56,000 vehicles (or 10.0%).

GMSA Earnings Before Interest and Income Taxes

(Dollars in Millions)


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Income (loss) attributable to stockholders before interest and income taxes	$	818	$	417	$	(454	)	$	1,076

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In the year ended December 31, 2010 EBIT was $0.8 billion and included: (1) foreign currency transaction gains of $0.3 billion primarily due to foreign currency exchanges done at the preferential rate in Venezuela; offset by (2) administrative expenses of $0.5 billion; (3) advertising and sales promotion expenses of $0.3 billion primarily to support media campaigns for our products; and (4) selling and marketing expenses of $0.1 billion.

In the period July 10, 2009 through December 31, 2009 EBIT was $0.4 billion and included: (1) administrative expenses of $0.2 billion; (2) advertising and sales promotion expenses of $0.1 billion; and (3) selling and marketing expenses of $0.1 billion.

Old GM

In the period January 1, 2009 through July 9, 2009 EBIT was a loss of $0.5 billion and included: (1) foreign currency transaction losses of $0.5 billion primarily due to foreign currency exchanges processed outside CADIVI in Venezuela; (2) administrative expenses of $0.2 billion; (3) advertising and sales promotion expenses of $0.1 billion; and (4) selling and marketing expenses of $0.1 billion.

In the year ended December 31, 2008 EBIT was $1.1 billion and included: (1) administrative expenses of $0.4 billion; (2) foreign currency transaction losses of $0.3 billion primarily due to foreign currency exchanges processed outside CADIVI in Venezuela; (3) advertising and sales promotion expenses of $0.2 billion; and (4) selling and marketing expenses of $0.1 billion.

GM Financial

(Dollars in Millions)

Three Months Ended December 31, 2010


	Successor
	Three Months Ended December 31, 2010
Total revenue	$	281
Income before income taxes	$	129

In the three months ended December 31, 2010 Total revenue included finance charge income of $264 million and other income of $17 million. The effective yield on GM Financial’s finance receivables was 12.1% for the three months ended December 31, 2010. The effective yield represents finance charges and fees recorded in earnings and the accretion of the purchase accounting premium during the period as a percentage of average finance receivable.

Net margin is the difference between finance charge income and other income earned on GM Financial’s finance receivables and the cost to fund the receivables as well as the cost of debt incurred for general corporate purposes.

The following table summarizes GM Financial’s net margin and as a percentage of average finance receivables (dollars in millions):


	Successor
	Three Months Ended December 31, 2010
Finance charge income	$	264		12.1	%
Other income		17		0.8	%
Interest expense		(37	)	(1.7	)%

Net GM Financial margin	$	244		11.2	%

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Income Before Income Taxes

In the three months ended December 31, 2010 results included: (1) Total revenue of $281 million; partially offset by (2) operating and leased vehicle expenses of $73 million; (3) interest expense of $37 million; (4) provision for loan losses of $26 million; and (5) acquisition expenses of $16 million. GM Financial’s operating expenses are primarily related to personnel costs that include base salary and wages, performance incentives and benefits as well as related employment taxes. Provisions for loan losses are charged to income to bring the allowance for loan losses to a level which management considers adequate to absorb probable credit losses inherent in the portfolio of finance receivables originated since October 1, 2010. Interest expense represents interest paid on GM Financial’s warehouse credit facilities, securitization notes payable, other unsecured debt and the amortization of the purchase accounting premium.

Average debt outstanding in the three months ended December 31, 2010 was $7.3 billion and the effective rate of interest expensed was 2.0%.

Corporate

(Dollars in Millions)


	Successor					Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Total net sales and revenue	$	134		$	141	$	327	$	1,206
Net income (loss) attributable to stockholders	$	(877	)	$	176	$	123,902	$	(16,677	)

Nonsegment operations are classified as Corporate. Corporate includes investments in Ally Financial, certain centrally recorded income and costs, such as interest, income taxes and corporate expenditures, certain nonsegment specific revenues and expenses, including costs related to the Delphi Benefit Guarantee Agreements and a portfolio of automotive retail leases.

Corporate Total Net Sales and Revenue

(Dollars in Millions)


	Successor		Combined GM and Old GM		Successor		Predecessor				Year Ended 2010 vs. 2009 Change						Year Ended 2009 vs. 2008 Change
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008		Year Ended 2010 vs. 2009 Change						Year Ended 2009 vs. 2008 Change
	Year Ended December 31, 2010		Year Ended December 31, 2009		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008		Amount			%			Amount			%
Total net sales and revenue	$	134	$	468	$	141	$	327	$	1,206	$	(334	)		(71.4	)%	$	(738	)		(61.2	)%

Total net sales and revenue includes lease financing revenue from a portfolio of automotive retail leases.

In the year ended December 31, 2010 Total net sales and revenue decreased by $0.3 billion (or 71.4%) primarily due to decreased lease financing revenue related to the liquidation of the portfolio of automotive leases. Average outstanding automotive retail leases on-hand for GM and combined GM and Old GM were 7,000 and 73,000 for the years ended December 31, 2010 and 2009.

In the year ended December 31, 2009 Total net sales and revenue decreased by $0.7 billion (or 61.2%) primarily due to decreased lease financing revenue of $0.7 billion related to the liquidation of the portfolio of automotive retail leases. Average outstanding leases on-hand for combined GM and Old GM were 73,000 and 236,000 for the years ended December 31, 2009 and 2008.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Corporate Net Income (Loss) Attributable to Stockholders

(Dollars in Millions)


	Successor					Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Net income (loss) attributable to stockholders	$	(877	)	$	176	$	123,902	$	(16,677	)

In the year ended December 31, 2010 results included: (1) Interest expense of $1.1 billion comprised of interest expense of $0.3 billion on the UST Loans, Canadian Loan and VEBA Notes, interest expense of $0.3 billion on GMNA debt, and interest expense of $0.4 billion on GMIO and GMSA debt; (2) income tax expense of $0.6 billion primarily related to tax expense attributable to profitable entities that do not have full valuation allowances recorded against deferred tax assets; (3) administrative expenses of $0.4 billion primarily related to consultants and services provided by outside companies; partially offset by (4) interest income of $0.4 billion earned primarily on marketable securities held in GMSA; (5) the reversal of our $0.2 billion liability for the Adjustment Shares; (6) a gain on extinguishment of debt of $0.2 billion related to our repayment of the outstanding amount of VEBA Notes of $2.8 billion; and (7) dividends of $0.1 billion on our investment in Ally Financial preferred stock.

In the period July 10, 2009 through December 31, 2009 results included: (1) foreign currency transaction gains of $0.3 billion due to the appreciation of the Canadian Dollar versus the U.S. Dollar; and (2) interest expense of $0.7 billion composed of interest expense of $0.3 billion on UST Loans and interest expense of $0.2 billion on GMIO debt.

Old GM

In the period January 1, 2009 through July 9, 2009 results included: (1) centrally recorded Reorganization gains, net of $128.2 billion which is more fully discussed in Note 2 to the consolidated financial statements; (2) amortization of discounts related to the UST Loan, EDC Loan and DIP Facilities of $3.7 billion; (3) a gain recorded on the UST Ally Financial Loan of $2.5 billion upon the UST’s conversion of the UST Ally Financial Loan for Class B Common Membership Interests in Ally Financial, which gain resulted from the difference between the fair value and the carrying amount of the Ally Financial equity interests given to the UST in exchange for the UST Ally Financial Loan. The gain was partially offset by Old GM’s proportionate share of Ally Financial’s loss from operations of $1.1 billion; (4) a loss related to the extinguishment of the UST Ally Financial Loan of $2.0 billion when the UST exercised its option to convert outstanding amounts into shares of Ally Financial’s Class B Common Membership Interests; partially offset by (5) a gain on extinguishment of debt of $0.9 billion related to an amendment to Old GM’s U.S. term loan; (6) interest expense of $0.8 billion on unsecured debt balances; (7) interest expense of $0.4 billion on the UST Loan Facility; and (8) interest expense of $0.2 billion on GMIO and GMSA debt.

In the year ended December 31, 2008 results included: (1) impairment charges of $7.1 billion related to Old GM’s investment in Ally Financial’s Common Membership Interests; (2) charges of $4.8 billion related to the Delphi Benefit Guarantee Agreements; (3) interest expense of $2.5 billion primarily composed of interest expense of $1.6 billion on Old GM’s unsecured bonds, interest expense of $0.4 billion on Old GM’s Euro bonds and cross-currency swaps to hedge foreign exchange rate exposure and interest expense of $0.1 billion on Old GM’s secured revolving credit facility and U.S. term loan; (4) income tax expense of $1.8 billion related to valuation allowances against deferred tax assets in South Korea, the United Kingdom, Spain, and Australia; (5) impairment charges of $1.0 billion related to Old GM’s investment in Ally Financial’s Preferred Membership Interests; (6) servicing fees, interest, and depreciation expenses of $1.0 billion on the portfolio of automotive retail leases; partially offset by (7) global interest income of $0.6 billion driven primarily by investments in GMSA and GME.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Liquidity and Capital Resources

Liquidity Overview

We believe that our current level of cash, marketable securities and availability under our secured revolving credit facility will be sufficient to meet our liquidity needs. However, we expect to have substantial cash requirements going forward, which we plan to fund through available liquidity and cash flow from operations. Our known material future uses of cash include, among other possible demands: (1) pension and OPEB payments; (2) continuing capital expenditures; (3) spending to implement long-term cost savings and restructuring plans such as restructuring our Opel/Vauxhall operations and potential capacity reduction programs; (4) reducing our overall debt levels; (5) increase in accounts receivable due to the termination of a wholesale advance agreement with Ally Financial; and (6) certain South American income and indirect tax-related administrative and legal proceedings may require that we deposit funds in escrow or make payments which may range from $0.8 billion to $1.0 billion.

Our liquidity plans are subject to a number of risks and uncertainties, including those described in the section of this report entitled “Risk Factors,” some of which are outside our control. Macro-economic conditions could limit our ability to successfully execute our business plans and, therefore, adversely affect our liquidity plans.

Recent Initiatives

We continue to monitor and evaluate opportunities to optimize our liquidity position including actively evaluating the possible sale of non-core cost or equity method investments or other positions which could be significantly positive to our cash flow and/or earnings in the near-term.

In the year ended December 31, 2010 we made net investments of $5.4 billion in highly liquid marketable securities instruments with maturities exceeding 90 days. Previously, these funds would have been invested in short-term instruments less than 90 days and classified as a component of Cash and cash equivalents. Investments in these longer-term securities will increase the interest we earn on these investments. We continue to monitor our investment mix and may reallocate investments based on business requirements.

In June 2010 the German federal government notified us of its decision not to provide loan guarantees to Opel/Vauxhall. As a result we have decided to fund the requirements of Opel/Vauxhall internally. Opel/Vauxhall subsequently withdrew all applications for government loan guarantees from European governments. Through September 2010 we committed up to a total of Euro 3.3 billion (equivalent to $4.2 billion when committed) to fund Opel/Vauxhall’s restructuring and ongoing cash requirements. This funding includes cumulative lending commitments combined into a Euro 2.6 billion intercompany facility and equity commitments of Euro 700 million.

In October 2010 we completed our acquisition of AmeriCredit for cash of approximately $3.5 billion and changed the name from AmeriCredit to GM Financial. We funded the transaction using cash on hand.

The repayment of debt remains a key strategic initiative. We continue to evaluate potential debt repayments prior to maturity. Any such repayments may negatively affect our liquidity in the short-term. In 2010 GM Daewoo repaid in full and retired its $1.2 billion revolving credit facility. In October 2010 we repaid in full the outstanding amount (together with accreted interest thereon) of the VEBA Notes of $2.8 billion. In July 2010 our Russian subsidiary repaid a loan facility of $150 million to cure a technical default. In March and April 2010 we repaid the remaining amounts owed under the UST Loans of $5.7 billion and Canadian Loan of $1.3 billion.

As described more fully below in the section entitled “Secured Revolving Credit Facility” in October 2010 we entered into a $5.0 billion secured revolving credit facility. While we do not believe the amounts available under the secured revolving credit facility are needed to fund operating activities, the facility is expected to provide additional liquidity and financing flexibility.

In November and December 2010 we issued 100 million shares of our Series B Preferred Stock. We received net proceeds from the Series B Preferred Stock offering of $4.9 billion. Refer to the section below entitled “Series B Preferred Stock Issuance” for additional detail.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In December 2010 we purchased 84 million shares of our Series A Preferred Stock, which accrued cumulative dividends at a 9.0% annual rate, from the UST for a purchase price of $2.1 billion, which was equal to 102% of their aggregate liquidation amount pursuant to an agreement that we entered into with the UST in October 2010. We purchased the Series A Preferred Stock from the UST on the first dividend payment date for the Series A Preferred Stock after the completion of our common stock offering, December 15, 2010.

We made a voluntary contribution to our U.S. hourly and salaried defined benefit pension plans of $4.0 billion of cash in December 2010 and 61 million shares of our common stock valued at $2.2 billion for funding purposes in January 2011.

Under wholesale financing arrangements, our U.S. dealers typically borrow money from financial institutions to fund their vehicle purchases from us. Effective January 2011 we terminated a wholesale advance agreement which provided for accelerated receipt of payments made by Ally Financial on behalf of our U.S. dealers pursuant to Ally Financial’s wholesale financing arrangements with dealers. Similar modifications were made in Canada. The wholesale advance agreements cover the period for which vehicles are in transit between assembly plants and dealerships. We will no longer receive payments in advance of the date vehicles purchased by dealers are scheduled to be delivered, resulting in an average increase of approximately $2.0 billion to our accounts receivable balance, depending on sales volumes and certain other factors, and the related costs under the arrangements were eliminated.

In January 2011 we withdrew our application for loans available under Section 136 of the EISA. This decision is consistent with our stated goal to minimize our outstanding debt.

Automotive

Available Liquidity

Available liquidity includes cash balances and marketable securities. At December 31, 2010 available liquidity was $26.6 billion, not including funds available under credit facilities of $5.9 billion or in the Canadian HCT escrow account of $1.0 billion. The amount of available liquidity is subject to intra-month and seasonal fluctuations and includes balances held by various business units and subsidiaries worldwide that are needed to fund their operations.

We manage our liquidity using U.S. cash investments, cash held at our international treasury centers and available liquidity at consolidated overseas subsidiaries. The following table summarizes our liquidity (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Cash and cash equivalents	$	21,061	$	22,679
Marketable securities		5,555		134

Available liquidity		26,616		22,813
Available under credit facilities		5,919		618

Total available liquidity		32,535		23,431
UST and HCT escrow accounts (a)		1,008		13,430

Total liquidity including UST and HCT escrow accounts	$	33,543	$	36,861

(a)

Classified as Restricted cash and marketable securities. Refer to Note 15 to our consolidated financial statements for additional information on the classification of the escrow accounts. The remaining funds held in the UST escrow account were released in April 2010 following the repayment of the UST Loans and Canadian Loan.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Total available liquidity increased by $9.1 billion in the year ended December 31, 2010 primarily due to positive cash flows from operating activities of $6.6 billion, investing activities less net marketable securities acquisitions of $6.1 billion and a $5.3 billion increase in amounts available under credit facilities, which were partially offset by negative cash flows from financing activities of $9.3 billion.

Total available liquidity increased by $2.5 billion in the period July 10, 2009 through December 31, 2009 due to positive cash flows from operating, financing and investing activities of $3.6 billion which were partially offset by a $1.1 billion reduction in our borrowing capacity on certain credit facilities. The decrease in credit facilities is primarily attributable to the November 2009 extinguishment of the German Facility.

Old GM

Total available liquidity increased by $6.0 billion in the period January 1, 2009 through July 9, 2009 due to positive cash flows from financing activities partially offset by negative cash flow from operating and investing activities for a net cash flow of $4.8 billion as well as an increase of $1.1 billion in available borrowing capacity under credit facilities. This was partially offset by repayments of secured lending facilities.

VEBA Assets

We transferred all of the remaining VEBA assets along with other consideration to the New VEBA within 10 business days after December 31, 2009, in accordance with the terms of the 2009 UAW Retiree Settlement Agreement. The VEBA assets were not consolidated after the settlement was recorded at December 31, 2009 because we did not hold a controlling financial interest in the entity that held such assets at that date. Under the terms of the 2009 UAW Retiree Settlement Agreement we had an obligation for VEBA Notes of $2.5 billion and accreted interest, at an implied interest rate of 9.0% per annum. In October 2010 we repaid in full the outstanding amount (together with accreted interest thereon) of the VEBA Notes of $2.8 billion.

Under the terms of the 2009 UAW Retiree Settlement Agreement, we are released from UAW retiree healthcare claims incurred after December 31, 2009. All obligations of ours, the New Plan and any other entity or benefit plan of ours for retiree medical benefits for the class and the covered group arising from any agreement between us and the UAW terminated at December 31, 2009. Our obligations to the New Plan and the New VEBA are limited to the terms of the 2009 UAW Retiree Settlement Agreement.

Series B Preferred Stock Issuance

In November and December 2010 we issued 100 million shares of our Series B Preferred Stock. Each share of our Series B Preferred Stock is convertible at the option of the holder at any time prior to December 1, 2013 into 1.2626 shares of our common stock, and each share of Series B Preferred Stock will mandatorily convert on December 1, 2013 into a number of shares of our common stock ranging from 1.2626 to 1.5152 shares depending on the applicable market value of our common stock. The applicable market value of our common stock means the average of the closing prices per share of our common stock over the 40 consecutive trading day period ending on the third trading day immediately preceding the mandatory conversion date. The conversion ratios for optional and mandatory conversions are subject to anti-dilution, make-whole and other adjustments. We received net proceeds from the issuances of $4.9 billion. We used these proceeds, along with $1.2 billion of cash on hand, to purchase our Series A Preferred Stock held by the UST in the amount of $2.1 billion and made a cash contribution to our U.S. hourly and salary pension plans in an amount of $4.0 billion.

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

UST Loans and Canadian Loan

UST Loans

Old GM received total proceeds of $19.8 billion ($15.8 billion subsequent to January 1, 2009, including $361 million under the U.S. government sponsored warranty program) from the UST under the UST Loan Agreement entered into on December 31, 2008. In connection with the Chapter 11 Proceedings, Old GM obtained additional funding of $33.3 billion from the UST and EDC under its DIP Facility.

On July 10, 2009 we entered into the UST Credit Agreement and assumed debt of $7.1 billion which Old GM incurred under its DIP Facility. Proceeds of the UST Credit Agreement of $16.4 billion were deposited in escrow to be distributed to us at our request upon certain conditions as outlined in the UST Credit Agreement. Immediately after entering into the UST Credit Agreement, we made a partial repayment due to the termination of the U.S. government sponsored warranty program, reducing the UST Loans principal balance to $6.7 billion.

In November 2009 we signed an amendment to the UST Credit Agreement to provide for quarterly repayments of our UST Loans. Under this amendment, we agreed to make quarterly payments of $1.0 billion to the UST. In December 2009 and March 2010 we made quarterly payments of $1.0 billion on the UST Loans. In April 2010, we used funds from our escrow account to repay in full the outstanding amount of the UST Loans of $4.7 billion. The UST Loans were repaid prior to maturity. Amounts borrowed under the UST Credit Agreement may not be reborrowed.

At December 31, 2009 $12.5 billion of the proceeds of the UST Credit Agreement remained deposited in escrow. Any unused amounts in escrow on June 30, 2010 were required to be used to repay the UST Loans and Canadian Loan on a pro rata basis if the loans were not paid in full. At December 31, 2009 the UST Loans and Canadian Loan were classified as short-term debt based on these terms.

Following the repayment of the UST Loans and the Canadian Loan, the remaining funds that were held in escrow became unrestricted and the availability of those funds is no longer subject to the conditions set forth in the UST Credit Agreement.

The UST Loans accrued interest equal to the greater of the three month London Interbank Offering Rates (LIBOR) rate or 2.0%, plus 5.0%, per annum, unless the UST determined that reasonable means did not exist to ascertain the LIBOR rate or that the LIBOR rate would not adequately reflect the UST’s cost to maintain the loan. In such a circumstance, the interest rate would have been the greatest of: (1) the prime rate plus 4%; (2) the federal funds rate plus 4.5%; or (3) the three month LIBOR rate (which will not be less than 2%) plus 5%. We were required to prepay the UST Loans on a pro rata basis (among the UST Loans, VEBA Notes and Canadian Loan), in an amount equal to the amount of net cash proceeds received from certain asset dispositions, casualty events, extraordinary receipts and the incurrence of certain debt. At December 31, 2009 the UST Loans accrued interest at 7.0%.

While we have repaid in full our indebtedness under the UST Credit Agreement, the executive compensation and corporate governance provisions of Section 111 of the EESA, including the Interim Final Rule, will continue to apply to us for the period specified in the EESA and the Interim Final Rule. Certain of the covenants in the UST Credit Agreement will continue to apply to us until the earlier to occur of (1) our ceasing to be a recipient of Exceptional Financial Assistance, as determined pursuant to the Interim Final Rule or any successor or final rule, or (2) UST ceasing to own any direct or indirect equity interests in us, and impose obligations on us with respect to, among other things, certain expense policies, executive privileges and compensation requirements.

The UST Credit Agreement includes a vitality commitment which requires us to use our commercially reasonable best efforts to ensure that our manufacturing volume conducted in the United States is consistent with at least 90% of the projected manufacturing level (projected manufacturing level for this purpose being 1,934,000 units in 2011, 1,998,000 units in 2012, 2,156,000 units in 2013 and 2,260,000 units in 2014), absent a material adverse change in our business or operating environment which would make the commitment non-economic. In the event that such a material adverse change occurs, the UST Credit Agreement provides that we will use our commercially reasonable best efforts to ensure that the volume of United States manufacturing is the minimum variance from the projected manufacturing level that is

100

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

consistent with good business judgment and the intent of the commitment. This covenant survived our repayment of the UST Loans and remains in effect through December 31, 2014 unless the UST receives total proceeds from debt repayments, dividends, interest, preferred stock redemptions and common stock sales equal to the total dollar amount of all UST invested capital.

UST invested capital totaled $49.5 billion, representing the cumulative amount of cash received by Old GM from the UST under the UST Loan Agreement and the DIP Facility, excluding $361 million which the UST loaned to Old GM under the warranty program and which was repaid on July 10, 2009. This balance also did not include amounts advanced under the UST Ally Financial Loan as the UST exercised its option to convert this loan into Ally Financial Preferred Membership Interests previously held by Old GM in May 2009. At December 31, 2010 the UST had received cumulative proceeds of $23.1 billion from debt repayments, interest payments, Series A Preferred Stock dividends, sales of our common stock and Series A Preferred Stock redemption. The UST’s invested capital less proceeds received totals $26.4 billion.

Refer to Note 19 to our consolidated financial statements for additional details on the UST Loans.

Canadian Loan

On July 10, 2009, through our wholly-owned subsidiary GMCL, we entered into the Canadian Loan Agreement and assumed a CAD $1.5 billion (equivalent to $1.3 billion when entered into) term loan maturing on July 10, 2015. In November 2009 we signed an amendment to the Canadian Loan Agreement to provide for quarterly repayments of the Canadian Loan. Under this amendment, we agreed to make quarterly repayments of $192 million to EDC. In December 2009 and March 2010 we made quarterly payments of $192 million and $194 million on the Canadian Loan. In April 2010, GMCL repaid in full the outstanding amount of the Canadian Loan of $1.1 billion. The Canadian Loan was repaid prior to maturity. GMCL cannot reborrow under the Canadian Loan Agreement. The Canadian Loan accrued interest at the greater of the three-month Canadian Dealer Offered Rate or 2.0%, plus 5.0% per annum. Accrued interest was payable quarterly. At December 31, 2009 the Canadian Loan accrued interest at 7.0%.

The Canadian Loan Agreement and related agreements include certain covenants requiring GMCL to meet certain annual Canadian production volumes expressed as ratios to total overall production volumes in the U.S. and Canada and to overall production volumes in the NAFTA region. The targets cover vehicles and specified engine and transmission production in Canada. These agreements also include covenants on annual GMCL capital expenditures and research and development expenses. In the event a material adverse change occurs that makes the fulfillment of these covenants non-economic (other than a material adverse change caused by the actions or inactions of GMCL), the lender will consider adjustments to mitigate the business effect of the material adverse change. These covenants survive GMCL’s repayment of the loans and certain of the covenants have effect through December 31, 2016.

Refer to Note 19 to our consolidated financial statements for additional details on the Canadian Loan.

The following table summarizes the total funding and funding commitments we repaid to the U.S. and Canadian governments in the year ended December 31, 2010 (dollars in millions):


	Successor
	January 1, 2010 Beginning Balance		Change in Funding and Funding Commitments (a)			December 31, 2010 Total Obligation
Description of Funding Commitment
UST Loan	$	5,712	$	(5,712	)	$	—
Canadian Loan		1,233		(1,233	)		—

Total	$	6,945	$	(6,945	)	$	—

(a)	Includes an increase due to a foreign currency exchange loss on the Canadian loan of $56 million.

101

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table summarizes the total funding and funding commitments we repaid to the U.S. and Canadian governments in the period July 10, 2009 through December 31, 2009 (dollars in millions):


	Successor
	July 10, 2009 Beginning Balance		Change in Funding and Funding Commitments (a)			December 31, 2009 Total Obligation
Description of Funding Commitment
UST Loan (b)	$	7,073	$	(1,361	)	$	5,712
Canadian Loan		1,292		(59	)		1,233

Total	$	8,365	$	(1,420	)	$	6,945

(a)	Includes an increase due to a foreign currency exchange loss on the Canadian Loan of $133 million.

(b)	Includes $361 million which the UST loaned to Old GM under the warranty program and which was assumed by GM and repaid on July 10, 2009.

The following table summarizes the total funding and funding commitments Old GM received from the U.S. and Canadian governments and the additional notes Old GM issued in the period December 31, 2008 through July 9, 2009 (dollars in millions):


	Predecessor
	December 31, 2008 Through July 9, 2009
	Funding and Funding Commitments		Additional Notes Issued (a)		Total Obligation
Description of Funding Commitment
UST Funding
UST Loan Agreement	$	19,761	$	1,172	$	20,933
DIP Facility — UST (b)		30,100		2,008		32,108

Total UST Funding (c)		49,861		3,180		53,041

EDC Funding
EDC funding (d)		6,294		161		6,455
DIP Facility — EDC		3,200		213		3,413

Total EDC Funding		9,494		374		9,868

Total UST and EDC Funding	$	59,355	$	3,554	$	62,909

(a)	Old GM did not receive any proceeds from the issuance of these promissory notes, which were issued as additional compensation to the UST and EDC.

(b)	Includes debt of $361 million, which the UST loaned to Old GM under the warranty program.

(c)

(d)

102

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table summarizes the effect of the 363 Sale on the amounts owed to the UST and the EDC under the UST Loan Agreement, the DIP Facility and the EDC Loan Facility (dollars in millions):


	363 Sale
	Total Obligation		Effect of 363 Sale			GM Obligation Subsequent to 363 Sale
Description of Funding Commitment
Total UST Funding	$	53,041	$	(45,968	)	$	7,073
Total EDC Funding		9,868		(8,576	)		1,292

Total UST and EDC Funding	$	62,909	$	(54,544	)	$	8,365

Secured Revolving Credit Facility

In October 2010 we entered into a five year, $5.0 billion secured revolving credit facility, which includes a letter of credit sub-facility of up to $500 million. While we do not believe that we will draw on the secured revolving credit facility to fund operating activities, the facility is expected to provide additional liquidity and financing flexibility. Availability under the secured revolving credit facility is subject to borrowing base restrictions.

Our obligations under the secured revolving credit facility are guaranteed by certain of our domestic subsidiaries and by substantially all of our domestic assets, including accounts receivable, inventory, property, plants, and equipment, real estate, intercompany loans, intellectual property, trademarks and direct investments in Ally Financial. Obligations are also secured by the equity interests in certain of our direct domestic subsidiaries, as well as up to 65% of the voting equity interests in certain of our direct foreign subsidiaries, in each case, subject to certain exceptions. The collateral securing the secured revolving credit facility does not include, among other assets, cash, cash equivalents, marketable securities, as well as our investment in GM Financial, our investment in New Delphi and our equity interests in our China JVs and in GM Daewoo. If the secured revolving credit facility is rated investment grade by two or more of the credit rating agencies (S&P, Moody’s and Fitch) the requirement to provide collateral is eliminated.

Depending on certain terms and conditions in the secured revolving credit facility, including compliance with the borrowing base requirements and certain other covenants, we will be able to add one or more pari passu first lien loan facilities. We will also have the ability to secure up to $2.0 billion of certain non-loan obligations that we may designate from time to time as additional pari passu first lien obligations. Second-lien debt is generally allowed but second lien debt maturing prior to the final maturity date of the secured revolving credit facility is limited to $3.0 billion in outstanding obligations.

Interest rates on obligations under the secured revolving credit facility are based on prevailing per annum interest rates for Eurodollar loans or an alternative base rate plus an applicable margin, in each case, based upon the credit rating assigned to the debt evidenced by the secured revolving credit facility.

The secured revolving credit facility contains representations, warranties and covenants customary for facilities of this nature, including negative covenants restricting us and our subsidiary guarantors from incurring liens, consummating mergers or sales of assets and incurring secured indebtedness, and restricting us from making restricted payments, in each case, subject to exceptions and limitations. The secured revolving credit facility contains minimum liquidity covenants, which require us to maintain at least $4.0 billion in consolidated global liquidity and at least $2.0 billion in consolidated U.S. liquidity.

Events of default under the secured revolving credit facility include events of default customary for facilities of this nature (including customary notice and/or grace periods, as applicable) such as:

•

The failure to pay principal at the stated maturity, interest or any other amounts owed under the secured revolving credit agreement or related documents;

103

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

•

The failure of certain of our representations or warranties to be correct in all material respects;

•

The failure to perform any term, covenant or agreement in the secured revolving credit agreement or related documents;

•

The existence of certain judgments that are not vacated, discharged, stayed or bonded;

•

Certain cross defaults or cross accelerations with certain other debt;

•

Certain defaults under ERISA;

•

A change of control;

•

Certain bankruptcy events; and

•

The invalidation of the guarantees.

While the occurrence and continuance of an event of default will restrict our ability to borrow under the secured revolving credit facility, the lenders will not be permitted to exercise rights or remedies against the collateral unless the obligations under the secured revolving credit facility have been accelerated.

We incurred up-front fees, arrangement fees, and will incur ongoing commitment and other fees customary for facilities of this nature.

Credit Facilities

We make use of credit facilities as a mechanism to provide additional flexibility in managing our global liquidity. These credit facilities are typically held at the subsidiary level and are geographically dispersed across all regions. The following tables summarize our committed and uncommitted credit facilities at the dates indicated (dollars in millions):


	Total Credit Facilities				Amounts Available Under Credit Facilities
	Successor				Successor
	December 31, 2010		December 31, 2009		December 31, 2010		December 31, 2009
Committed	$	6,142	$	1,712	$	5,475	$	223
Uncommitted		490		842		444		395

Total	$	6,632	$	2,554	$	5,919	$	618


	Total Credit Facilities				Amounts Available Under Credit Facilities
	Successor				Successor
Credit Facilities	December 31, 2010		December 31, 2009		December 31, 2010		December 31, 2009
Secured Revolving Credit Facility	$	5,000	$	—	$	5,000	$	—
GM Daewoo		—		1,179		—		—
Brazil		466		425		2		77
GM Hong Kong		400		200		370		200
Other(a)		766		750		547		341

Total	$	6,632	$	2,554	$	5,919	$	618

(a)	Consists of credit facilities available primarily at our foreign subsidiaries that are not individually significant.

At December 31, 2010 we had committed credit facilities of $6.1 billion, under which we had borrowed $667 million leaving $5.5 billion available. The secured revolving credit facility comprised $5.0 billion of the amounts available under committed credit

104

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

facilities and other committed credit facilities had $475 million available. At December 31, 2010 we had uncommitted credit facilities of $490 million, under which we had borrowed $46 million leaving $444 million available. Uncommitted credit facilities include lines of credit which are available to us, but under which the lenders have no legal obligation to provide funding upon our request. We and our subsidiaries use credit facilities to fund working capital needs, product programs, facilities development and other general corporate purposes.

In 2010 GM Daewoo repaid in full and retired its Korean Won 1.4 trillion (equivalent to $1.2 billion) revolving credit facility.

At December 31, 2009 we had committed credit facilities of $1.7 billion, under which we had borrowed $1.5 billion leaving $223 million available. Of these committed credit facilities GM Daewoo comprised $1.2 billion and other entities had $0.5 billion. At December 31, 2009 we had uncommitted credit facilities of $842 million, under which we had borrowed $447 million leaving $395 million available.

At December 31, 2009 our largest credit facility was GM Daewoo’s Korean Won 1.4 trillion (equivalent to $1.2 billion) revolving credit facility. The average interest rate on outstanding amounts under this facility at December 31, 2009 was 5.69%. At December 31, 2009 the facility was fully utilized with $1.2 billion outstanding.

Restricted Cash and Marketable Securities

Following the repayment of the UST Loans and the Canadian Loan in April 2010 as previously discussed, the remaining UST escrow funds of $6.6 billion were released from escrow and became unrestricted as the availability of those funds was no longer subject to the conditions set forth in the UST Credit Agreement.

Pursuant to an agreement among GMCL, EDC and an escrow agent we had $1.0 billion remaining in an escrow account at December 31, 2010 to fund certain of GMCL’s healthcare obligations pending the satisfaction of certain preconditions which have not yet been met.

In July 2009 we subscribed for additional common shares in GMCL and paid the subscription price in cash. As required under certain agreements among GMCL, EDC, and an escrow agent, $3.6 billion of the subscription price was deposited into an escrow account to fund certain of GMCL’s pension plans and HCT obligations pending completion of certain preconditions. In September 2009 GMCL contributed $3.0 billion to the Canadian hourly defined benefit pension plan and $651 million to the Canadian salaried defined benefit pension plan, of which $2.7 billion was funded from the escrow account. In accordance with the terms of the escrow agreement, $903 million was released from the escrow account to us in September 2009.

Cash Flow

Operating Activities

In the year ended December 31, 2010 we had positive cash flows from operating activities of $6.6 billion primarily due to: (1) Net income of $6.4 billion, which included non-cash charges of $7.1 billion resulting from depreciation, impairment and amortization of long-lived assets and finite-lived intangible assets (including amortization of debt issuance costs and discounts); (2) dividends received of $0.7 billion primarily related to our China JVs; partially offset by (3) pension contributions and OPEB payments of $5.7 billion primarily related to voluntary contributions to U.S. hourly and salary pension plans of $4.0 billion; (4) payments on our previously announced restructuring programs of $1.3 billion partially offset by net charges of $0.6 billion; (5) dealer wind-down payments of $0.4 billion; and (6) unfavorable changes in working capital of $0.6 billion. The unfavorable changes in working capital were related to increases in accounts receivables, inventories and the completion of a change to weekly payment terms to our suppliers, partially offset by an increase in accounts payable related to increased production volumes.

105

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In the period July 10, 2009 through December 31, 2009 we had positive cash flows from operating activities of $1.1 billion primarily due to: (1) favorable managed working capital of $5.7 billion primarily driven by the effect of increased sales and production on accounts payable and the timing of certain supplier payments; (2) OPEB expense in excess of cash payments of $1.7 billion; (3) net income of $0.6 billion excluding depreciation, impairment and amortization of long-lived assets and finite-lived intangible assets (including amortization of debt issuance costs and discounts); partially offset by (4) pension contributions of $4.3 billion primarily to our Canadian hourly and salaried defined benefit pension plans; (5) restructuring payments of $1.2 billion; (6) interest payments of $0.6 billion and (7) sales allowance payments in excess of current period accruals for sales incentives of $0.5 billion driven by a reduction in dealer stock.

Old GM

In the period January 1, 2009 through July 9, 2009 Old GM had negative cash flows from operating activities of $18.3 billion primarily due to: (1) net loss of $8.4 billion excluding Reorganization gains, net, and depreciation, impairment and amortization of long-lived assets and finite-lived intangible assets (including amortization of debt issuance costs and discounts); (2) change in accrued liabilities of $6.8 billion; (3) unfavorable managed working capital of $5.6 billion; and (4) payments of $0.4 billion for reorganization costs associated with the Chapter 11 Proceedings.

In the year ended December 31, 2008 Old GM had negative cash flows from operating activities of $12.1 billion on a Loss from continuing operations of $31.1 billion. Operating cash flows were unfavorably affected by lower volumes and the resulting losses in North America and Western Europe, including the effect that lower production volumes had on working capital balances, and postretirement benefit payments.

Investing Activities

In the year ended December 31, 2010 we had positive cash flows from investing activities of $0.7 billion primarily due to: (1) a net decrease in Restricted cash and marketable securities of $13.0 billion primarily related to withdrawals from the UST Credit Agreement escrow account; (2) proceeds from the liquidation of operating leases of $0.3 billion; (3) proceeds received from the sale of Nexteer of $0.3 billion; (4) proceeds from the sale of property, plants and equipment of $0.2 billion; partially offset by (5) net investments in marketable securities with maturities greater than 90 days of $5.4 billion; (6) capital expenditures of $4.2 billion; and (7) the acquisition of AmeriCredit for $3.5 billion.

In the period July 10, 2009 through December 31, 2009 we had positive cash flows from investing activities of $2.2 billion primarily due to: (1) a reduction in Restricted cash and marketable securities of $5.2 billion primarily related to withdrawals from the UST escrow account; (2) $0.6 billion related to the liquidation of automotive retail leases; (3) an increase as a result of the consolidation of Saab of $0.2 billion; (4) tax distributions of $0.1 billion on Ally Financial common stock; partially offset by (5) net cash payments of $2.0 billion related to the acquisition of Nexteer, four domestic facilities and Class A Membership Interests in New Delphi; and (6) capital expenditures of $1.9 billion.

Old GM

In the period January 1, 2009 through July 9, 2009 Old GM had negative cash flows from investing activities of $21.1 billion primarily due to: (1) increase in Restricted cash and marketable securities of $18.0 billion driven primarily by the establishment of the UST and Canadian escrow accounts; (2) capital expenditures of $3.5 billion; and (3) investment in Ally Financial of $0.9 billion; partially offset by (4) liquidation of operating leases of $1.3 billion.

In the year ended December 31, 2008 Old GM had negative cash flows from investing activities of $1.8 billion primarily related to: (1) capital expenditures of $7.5 billion; (2) an increase in notes receivable of $0.4 billion; partially offset by (3) liquidations of operating leases of $3.6 billion; (4) net liquidations of marketable securities in an amount of $2.1 billion; (5) proceeds for the sale of real estate, plants and equipment of $0.3 billion; and (6) proceeds from the sale of business units and equity investments of $0.2 billion.

106

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Financing Activities

In the year ended December 31, 2010 we had negative cash flows from financing activities of $9.3 billion primarily due to: (1) repayments on the UST Loans and Canadian Loan of $5.7 billion and $1.3 billion; (2) principal payments on the VEBA Notes of $2.5 billion; (3) purchase of the Series A Preferred Stock shares from the UST of $2.1 billion; (4) repayment of GM Daewoo’s revolving credit facility of $1.2 billion; (5) dividend payments on our Series A Preferred Stock of $0.8 billion; (6) payments on the Receivables Program of $0.2 billion; (7) debt issuance fees of $0.2 billion primarily related to establishing our secured revolving credit facility; (8) net payments on other debt of $0.2 billion; partially offset by (9) proceeds from the issuance of Series B Preferred Stock of $4.9 billion.

In the period July 10, 2009 through December 31, 2009 we had positive cash flows from financing activities of $0.3 billion primarily due to: (1) funding of $4.0 billion from the EDC which was converted to our equity; partially offset by (2) payments on the UST Loans of $1.4 billion (including payments of $0.4 billion related to the warranty program); (3) net payments on the German Facility of $1.1 billion; (4) net payments on other debt of $0.4 billion; (5) a net decrease in short-term debt of $0.4 billion; (6) payment on the Canadian Loan of $0.2 billion; (7) net payments on the program announced in March 2009 by the UST to provide financial assistance to automotive suppliers (Receivables Program) of $0.1 billion; and (8) dividend payments on our Series A Preferred Stock of $0.1 billion.

Old GM

In the period January 1, 2009 through July 9, 2009 Old GM had positive cash flows from financing activities of $44.2 billion primarily due to: (1) proceeds from the DIP Facility of $33.3 billion; (2) proceeds from the UST Loan Facility and UST Ally Financial Loan of $16.6 billion; (3) proceeds from the EDC Loan Facility of $2.4 billion; (4) proceeds from the German Facility of $1.0 billion; (5) proceeds from the issuance of long-term debt of $0.3 billion; (6) proceeds from the Receivables Program of $0.3 billion; partially offset by (7) payments on other debt of $6.1 billion; (8) a net decrease in short-term debt of $2.4 billion; and (9) cash of $1.2 billion MLC retained as part of the 363 Sale.

In the year ended December 31, 2008 Old GM had positive cash flows from financing activities of $3.8 billion primarily related to: (1) borrowings on debt facilities of $5.9 billion; (2) borrowing on the UST Loan Facility of $4.0 billion; partially offset by (3) a net decrease in short-term debt of $4.1 billion; (4) debt repayments of $1.7 billion; and (5) dividend payments on Old GM common stock of $0.3 billion.

Net Liquid Assets

Management believes the use of net liquid assets provides meaningful supplemental information regarding our liquidity. We believe net liquid assets is useful in allowing for greater transparency of supplemental information used by management in its financial and operational decision making to assist in identifying resources available to meet cash requirements. Our calculation of net liquid assets may not be completely comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of net liquid assets has limitations and should not be considered in isolation from, or as a substitute for, other measures such as Cash and cash equivalents and Debt. Due to these limitations, net liquid assets is used as a supplement to U.S. GAAP measures.

107

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table summarizes net liquid assets balances (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
Cash and cash equivalents	$	21,061		$	22,679
Marketable securities		5,555			134
UST Credit Agreement escrow and HCT escrow		1,008			13,430

Total liquid assets		27,624			36,243
Short-term debt and current portion of long-term debt		(1,616	)		(10,221	)
Long-term debt		(3,014	)		(5,562	)

Net liquid assets	$	22,994		$	20,460

Total liquid assets of $27.6 billion exceeded our debt balances by $23.0 billion at December 31, 2010. The net liquid asset balance of $23.0 billion at December 31, 2010 represented an increase of $2.5 billion compared to a net liquid assets balance of $20.5 billion at December 31, 2009. The change was due to an increase of $5.4 billion in Marketable securities and a decrease of $11.2 billion in Short-term and Long-term debt, partially offset by a reduction of $12.4 billion in the UST Credit Agreement and the HCT escrow balances and a reduction of $1.6 billion in Cash and cash equivalents. The decrease in Short-term and Long-term debt primarily related to: (1) repayment in full of the UST Loans of $5.7 billion; (2) repayment in full of the VEBA Notes (together with accrued interest thereon)of $2.8 billion; (3) repayment in full of the Canadian Loan of $1.3 billion; (4) repayment in full of the GM Daewoo revolving credit facility of $1.2 billion; and (5) repayment in full of the loans related to the Receivables Program of $0.2 billion.

Other Liquidity Issues

Receivables Program

In March 2009 the UST announced that it would provide up to $5.0 billion in financial assistance to automotive suppliers by guaranteeing or purchasing certain of the receivables payable by Old GM and Chrysler LLC. The Receivables Program was to be funded by a loan facility of up to $2.5 billion provided by the UST and by capital contributions from us up to $125 million. In connection with the 363 Sale, we assumed the obligation of the Receivables Program. At December 31, 2009 our equity contributions were $55 million and the UST had outstanding loans of $150 million to the Receivables Program. In March 2010 we repaid these loans in full. The Receivables Program was terminated in accordance with its terms in April 2010. Upon termination, we shared residual capital of $25 million in the program equally with the UST and paid a termination fee of $44 million.

Loan Commitments

We have extended loan commitments to affiliated companies and critical business partners. These commitments can be triggered under certain conditions and expire in the years ranging from 2011 to 2014. At December 31, 2010 we had a total commitment of $600 million outstanding with no amounts loaned.

Status of Credit Ratings

We have been assigned initial ratings by four independent credit rating agencies: Dominion Bond Rating Services (DBRS), Fitch Ratings (Fitch), Moody’s Investor Service (Moody’s), and Standard & Poor’s (S&P). The ratings indicate the agencies’ assessment of a company’s creditworthiness such as its ability to timely pay principal and interest on debt securities, dividends on preferred securities and other contractual obligations. Lower credit ratings generally represent higher borrowing costs and reduced access to capital markets for a company. The agencies consider a number of business and financial factors when determining ratings including, but not limited to, our competitive position, sustainability of our profits and cash flows, our balance sheet and liquidity profile and our ability to meet obligations under adverse economic scenarios.

108

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

DBRS, Moody’s, Fitch, and S&P currently rate our corporate credit at non-investment grade. The following table summarizes our credit ratings at February 15, 2011:


Rating Agency	Corporate	Secured Revolving Credit Facility	Senior Unsecured	Outlook
DBRS	BB	BBB (low)	N/A	Stable
Fitch	BB-	BB+	N/A	Stable
Moody’s	Ba2	Baa3	N/A	Stable
S&P	BB-	BB+	N/A	Positive

Rating actions taken by each of the credit rating agencies from October 6, 2010 through February 15, 2011 were as follows:

DBRS: October 2010 — Assigned an initial Corporate rating of BB and a rating of BBB (low) to our secured revolving credit facility.

Fitch: October 2010 — Assigned an initial Corporate rating of BB- (affirmed in November 2010) and a rating of BB+ to our secured revolving credit facility.

Moody’s: October 2010 — Assigned an initial Corporate rating of Ba2 and assigned a rating of Baa3 to our secured revolving credit facility.

S&P: October 2010 — Assigned an initial Corporate rating of BB- and a rating of BB+ to our secured revolving credit facility. February 2011 — Outlook revised to positive from stable.

The initial ratings assigned by the agencies are an important step towards our objective to attain an investment grade credit rating over the long-term by maintaining a strong balance sheet and reducing financial leverage.

Series A Preferred Stock

Beginning December 31, 2014 we will be permitted to redeem, in whole or in part, the shares of Series A Preferred Stock outstanding, at a redemption price per share equal to $25.00 per share plus any accrued and unpaid dividends, subject to limited exceptions. As a practical matter, our ability to redeem any portion of this $6.9 billion face amount in Series A Preferred Stock will depend upon our having sufficient liquidity.

Automotive Financing

Liquidity Overview

GM Financial’s primary sources of cash are finance charge income, servicing fees, distributions from securitization trusts, borrowings under credit facilities, transfers of finance receivables to trusts in securitization transactions and collections, recoveries on finance receivables and net proceeds from senior notes and convertible senior notes transactions. GM Financial’s primary uses of cash are purchases of finance receivables, repayment of credit facilities, securitization notes payable and other indebtedness, funding credit enhancement requirements for securitization transactions and credit facilities, repurchases of unsecured debt and operating expenses.

GM Financial used cash of $0.9 billion for the purchase of finance receivables in the three months ended December 31, 2010. Generally, these purchases are funded initially utilizing cash and borrowings under credit facilities and subsequently funded in securitization transactions.

109

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Available Liquidity

The following table summarizes GM Financial’s available liquidity (dollars in millions):


	Successor
	December 31, 2010
Cash and cash equivalents	$	195
Borrowing capacity on unpledged eligible receivables		272

Total liquidity	$	467

Credit Facilities

In the normal course of business, in addition to using available cash, GM Financial pledges receivables to and borrows under credit facilities to fund operations and repays these borrowings as appropriate under GM Financial’s cash management strategy. The following table summarizes credit facilities at December 31, 2010 (dollars in millions):


	Successor
	Facility Amount		Advances Outstanding
Syndicated warehouse facility (a)	$	1,300	$	278
Medium-term note facility (b)				490
Bank funding facilities (c)				64

Total			$	832

(a)	In February 2011 GM Financial extended the maturity date of the syndicated warehouse facility to May 2012 and increased the borrowing capacity to $2.0 billion from $1.3 billion.

(b)	The revolving period under this facility has ended and the outstanding debt balance will be repaid over time based on the amortization of the receivables pledged until October 2016 when any remaining amount outstanding will be due and payable.

(c)	The revolving period under this facility has ended and the outstanding debt balance under the bank funding facilities are secured by asset-backed securities of $65 million.

GM Financial is required to hold certain funds in restricted cash accounts to provide additional collateral for borrowings under the credit facilities and securitization notes payable. GM Financial’s funding agreements contain various covenants requiring minimum financial ratios, asset quality and portfolio performance ratios (portfolio net loss and delinquency ratios, and pool level cumulative net loss ratios) as well as limits on deferment levels. Failure to meet any of these covenants could result in an event of default under these agreements. If an event of default occurs under these agreements, the lenders could elect to declare all amounts outstanding under these agreements to be immediately due and payable, enforce their interests against collateral pledged under these agreements or, with respect to the syndicated warehouse facility, restrict GM Financial’s ability to obtain additional borrowings.

110

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Non-Cash Charges (Gains)

The following table summarizes significant non-cash charges (gains) (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Impairment charges related to investment in Ally Financial Common Membership Interests	$	—		$	—		$	—		$	7,099
Impairment charges related to investment in Ally Financial common stock		—			270			—			—
Impairment charges related to investment in Ally Financial Preferred Membership Interests		—			—			—			1,001
Net curtailment gain related to finalization of the 2008 UAW Settlement Agreement		—			—			—			(4,901	)
Net contingent Adjustment Shares issuable to MLC		(162	)		162			—			—
Salaried post-65 healthcare settlement		—			—			—			1,704
Impairment charges related to equipment on operating leases		49			18			63			759
Impairment charges related to long-lived assets		240			2			566			1,010
Impairment charges related to investments in equity and cost method investments		—			4			28			119
Other than temporary impairments charges related to debt and equity securities		—			—			11			62
Impairment charges related to goodwill		—			—			—			610
Gain on the acquisition of GMS		(66	)		—			—			—
UAW OPEB healthcare settlement		—			2,571			—			—
CAW settlement		—			—			—			340
Loss (gain) on extinguishment of debt		—			—			(906	)		—
Loss on extinguishment of UST Ally Financial Loan		—			—			1,994			—
Gain on conversion of UST Ally Financial Loan		—			—			(2,477	)		—
Reorganization gains, net		—			—			(128,563	)		—
Valuation allowances against deferred tax assets (a)		(63	)		(63	)		(751	)		1,450

Total significant non-cash charges (gains)	$	(2	)	$	2,964		$	(130,035	)	$	9,253

(a)	Amounts exclude changes related to income tax expense (benefit) in jurisdictions with a full valuation allowance throughout the period. Refer to Note 23 to the consolidated financial statements.

Defined Benefit Pension Plan Contributions

Plans covering eligible U.S. salaried employees hired prior to January 2001 and hourly employees hired prior to October 15, 2007 generally provide benefits of stated amounts for each year of service as well as supplemental benefits for employees who retire with 30 years of service before normal retirement age. Salaried and hourly employees hired after these dates participate in defined contribution or cash balance plans. Our and Old GM’s policy for qualified defined benefit pension plans is to contribute annually not less than the minimum required by applicable law and regulation, or to directly pay benefit payments where appropriate. At December 31, 2010 all legal funding requirements had been met.

111

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table summarizes contributions made to the defined benefit pension plans or direct payments (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
U.S. hourly and salaried	$	4,000	$	—	$	—	$	—
Other U.S.		95		31		57		90
Non-U.S.		777		4,287		529		977

Total contributions	$	4,872	$	4,318	$	586	$	1,067

We made a voluntary contribution to our U.S. hourly and salaried defined benefit pension plans of cash of $4.0 billion in December 2010 and 61 million shares of our common stock valued at $2.2 billion for funding purposes in January 2011. The contributed shares qualify as a plan asset for funding purposes immediately, and will qualify as a plan asset for accounting purposes when certain restrictions are removed, which is expected in 2011.

The following table summarizes the underfunded status of pension plans (dollars in billions):


	Successor
	December 31, 2010		December 31, 2009
U.S. hourly and salaried	$	11.5	$	16.2
U.S. nonqualified		0.9		0.9

Total U.S. pension plans		12.4		17.1
Non-U.S.		9.8		10.3

Total underfunded	$	22.2	$	27.4

On a U.S. GAAP basis, the U.S. pension plans were underfunded by $12.4 billion and $17.1 billion at December 31, 2010 and 2009. The change in funded status was primarily attributable to the actual return on plan assets of $11.6 billion and contributions of $4.1 billion, partially offset by actuarial losses primarily attributable to discount rate decreases of $5.3 billion and service and interest costs of $5.7 billion.

On a U.S. GAAP basis, the non-U.S. pension plans were underfunded by $9.8 billion and $10.3 billion at December 31, 2010 and 2009. The change in funded status was primarily attributable to: (1) actual return on plan assets of $1.2 billion; (2) employer contributions and benefit payments of $0.8 billion; (3) net favorable foreign currency translations of $0.3 billion; partially offset by (4) service and interest costs of $1.6 billion; and (5) actuarial losses and other of $0.2 billion.

Hourly and salaried OPEB plans provide postretirement life insurance to most U.S. retirees and eligible dependents and postretirement health coverage to some U.S. retirees and eligible dependents. Certain of the non-U.S. subsidiaries have postretirement benefit plans, although most participants are covered by government sponsored or administered programs.

The following table summarizes the underfunded status of OPEB plans (dollars in billions):


	Successor
	December 31, 2010		December 31, 2009
U.S. OPEB plans	$	5.7	$	5.8
Non-U.S. OPEB plans.		4.2		3.8

Total underfunded	$	9.9	$	9.6

112

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table summarizes net benefit payments expected to be paid in the future, which include assumptions related to estimated future employee service, but does not reflect the effect of the 2009 CAW Agreement which provides for our independent HCT (dollars in millions):


	Successor
	Years Ended December 31,
	Pension Benefits(a)				Other Benefits
	U.S. Plans		Non-U.S. Plans		U.S. Plans(b)		Non-U.S. Plans
2011	$	8,765	$	1,460	$	451	$	189
2012	$	8,463	$	1,461	$	427	$	199
2013	$	8,186	$	1,480	$	407	$	209
2014	$	7,999	$	1,513	$	391	$	220
2015	$	7,855	$	1,534	$	379	$	231
2016-2020	$	36,033	$	7,889	$	1,796	$	1,287

(a)	Benefits for most U.S. pension plans and certain non-U.S. pension plans are paid out of plan assets rather than our cash and cash equivalents.

(b)	Benefit payments presented in this table reflect the effect of the implementation of the 2009 UAW Retiree Settlement Agreement, which releases us from UAW retiree healthcare claims incurred after December 31, 2009.

Off-Balance Sheet Arrangements

We do not currently utilize off balance sheet securitization arrangements. All trade or financing receivables and related obligations subject to securitization programs are recorded on our consolidated balance sheets at December 31, 2010 and 2009.

Guarantees Provided to Third Parties

We have provided guarantees related to the residual value of operating leases, certain suppliers’ commitments, certain product-related claims and commercial loans made by Ally Financial and outstanding with certain third parties excluding vehicle repurchase obligations, residual support and risk sharing related to Ally Financial. The maximum potential obligation under these commitments was $581 million at December 31, 2010. The maximum potential obligation under these commitments was $1.0 billion at December 31, 2009.

In May 2009 Old GM and Ally Financial agreed to expand repurchase obligations for Ally Financial financed inventory at certain dealers in Europe, Asia, Brazil and Mexico. In November 2008 Old GM and Ally Financial agreed to expand repurchase obligations for Ally Financial financed inventory at certain dealers in the United States and Canada. Our current agreement with Ally Financial requires the repurchase of Ally Financial financed inventory invoiced to dealers after September 1, 2008, with limited exclusions, in the event of a qualifying voluntary or involuntary termination of the dealer’s sales and service agreement. Repurchase obligations exclude vehicles which are damaged, have excessive mileage or have been altered. The repurchase obligation ended in August 2010 for vehicles invoiced through August 2009, ends in August 2011 for vehicles invoiced through August 2010 and ends in August 2012 for vehicles invoiced through August 2011.

The maximum potential amount of future payments required to be made to Ally Financial under this guarantee would be based on the repurchase value of total eligible vehicles financed by Ally Financial in dealer stock and is estimated to be $18.8 billion at December 31, 2010. This amount was estimated to be $14.2 billion at December 31, 2009. If vehicles are required to be repurchased under this arrangement, the total exposure would be reduced to the extent vehicles are able to be resold to another dealer or at auction. The fair value of the guarantee was $21 million and $46 million at December 31, 2010 and 2009 which considers the likelihood of dealers terminating and estimated the loss exposure for the ultimate disposition of vehicles.

Refer to Notes 22 and 32 to our consolidated financial statements for additional information on guarantees we have provided.

113

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Contractual Obligations and Other Long-Term Liabilities

We have the following minimum commitments under contractual obligations, including purchase obligations. A purchase obligation is defined as an agreement to purchase goods or services that is enforceable and legally binding on us and that specifies all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Other long-term liabilities are defined as long-term liabilities that are recorded on our consolidated balance sheet. Based on this definition, the following table includes only those contracts which include fixed or minimum obligations. The majority of our purchases are not included in the table as they are made under purchase orders which are requirements based and accordingly do not specify minimum quantities.

The following table summarizes aggregated information about our outstanding contractual obligations and other long-term liabilities at December 31, 2010 (dollars in millions):


	Payments Due by Period
	2011		2012-2013		2014-2015		2016 and after		Total
Automotive debt (a)	$	1,488	$	1,014	$	160	$	3,209	$	5,871
Automotive Financing debt (b)		3,495		2,658		766		—		6,919
Capital lease obligations		127		138		99		297		661
Automotive interest payments (c)		169		280		308		683		1,440
Automotive Financing interest payments (d)		175		146		40		1		362
Postretirement benefits (e)		469		164		—		—		633
Contractual commitments for capital expenditures		1,165		2		—		—		1,167
Operating lease obligations (f)		460		609		401		492		1,962
Other contractual commitments:
Material		1,071		1,541		322		73		3,007
Information technology		956		156		16		—		1,128
Marketing		761		393		200		136		1,490
Facilities		146		151		65		10		372
Rental car repurchases		4,309		—		—		—		4,309
Policy, product warranty and recall campaigns liability		2,884		3,151		790		206		7,031
Other		87		33		—		—		120

Total contractual commitments (g) (h) (i)	$	17,762	$	10,436	$	3,167	$	5,107	$	36,472

Non-contractual postretirement benefits (j)	$	171	$	1,078	$	1,221	$	21,182	$	23,652

(a)	Projected future payments on lines of credit were based on amounts drawn at December 31, 2010.

(b)	GM Financial credit facilities and securitization notes payable have been classified based on expected payoff date. Senior notes and convertible senior notes principal amounts have been classified based on maturity date.

(c)	Amounts include Automotive interest payments based on contractual terms and current interest rates on our debt and capital lease obligations. Automotive interest payments based on variable interest rates were determined using the current interest rate in effect at December 31, 2010.

(d)

GM Financial interest payments are calculated based on LIBOR plus the respective credit spreads and specified fees associated with the medium-term note facility and the syndicated warehouse facility, the coupon rate for the senior notes and convertible senior notes and a fixed rate of interest for securitization notes payable. GM Financial interest payments on the floating rate tranches of the securitization notes payable were converted to a fixed rate based on the floating rate plus any expected hedge payments.

(e)

Amounts include other postretirement benefit payments under the current U.S. contractual labor agreements for 2011 and Canada labor agreements through 2012 and 2013. Amounts do not include pension funding obligations, which are discussed below under the caption “Required Pension Funding Obligations.”

(f)	Amounts include operating lease obligations for both Automotive and Automotive Financing. Automotive is included net of sublease income.

114

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

(g)	Future payments in local currency amounts were translated into U.S. Dollars using the balance sheet spot rate at December 31, 2010.

(h)	Amounts do not include future cash payments for long-term purchase obligations and other accrued expenditures (unless specifically listed in the table above) which were recorded in Accounts payable or Accrued liabilities at December 31, 2010.

(i)	Amounts exclude the future annual contingent obligations of Euro 265 million in the years 2011 to 2014 related to our Opel/Vauxhall restructuring plan.

(j)

Amount includes all expected future payments for both current and expected future service at December 31, 2010 for other postretirement benefit obligations for salaried employees and hourly other postretirement benefit obligations extending beyond the current North American union contract agreements. Amounts do not include pension funding obligations, which are discussed below under the caption “Required Pension Funding Obligations.”

The table above does not reflect unrecognized tax benefits of $5.2 billion due to the high degree of uncertainty regarding the future cash outflows associated with these amounts. We expect to settle a contested income tax matter in GMSA for cash of $0.2 billion in 2011.

The table above also does not reflect certain contingent loan and funding commitments that we have made with suppliers, other third parties and certain joint ventures. At December 31, 2010 we had commitments of $0.6 billion under these arrangements that were undrawn.

Required Pension Funding Obligations

We do not have any required contributions due to our U.S. qualified plans in 2011. The next pension funding valuation to be prepared based on the requirements of the PPA of 2006 will be as of October 1, 2010. Based on the PPA, we have the option to select a funding interest rate for the valuation based on either the Full Yield Curve method or the 3-Segment method, both of which are considered to be acceptable methods. The PPA also provides the flexibility of selecting a 3-Segment rate up to the preceding five months from the valuation date of October 1, 2010, i.e., the 3-Segment rate at May 31, 2010. Therefore, for a hypothetical funding valuation at December 31, 2010 we have assumed the 3-Segment rate at May 31, 2010 as the base for funding interest rate that we could use for the actual funding valuation. Since this hypothetical election does not limit us to only using the 3-Segment rate beyond 2010, we have assumed that we retain the flexibility of selecting a funding interest rate based on either the Full Yield Curve method or the 3-Segment method. A hypothetical funding valuation at December 31, 2010 using the 3-Segment rate at May 31, 2010 for plan year beginning October 1, 2010 funding valuation, and assuming the December 31, 2010 Full Yield Curve funding interest rate for all future funding valuations projects contributions of $2.3 billion, and $1.2 billion in 2015 and 2016.

Alternatively, a hypothetical funding valuation at December 31, 2010 using the 3-Segment rate at May 31, 2010 for plan year beginning October 1, 2010 funding valuation and assuming the December 31, 2010 3-Segment interest rate for all future valuation projects contributions of $0.3 billion in 2016.

In both cases, we have assumed that the pension plans earn the expected return of 8.0% in the future and no changes in funding rates. U.S. pension funding interest rate and return on assets rate sensitivity are shown below, assuming the 3-segment rate at May 31, 2010 for plan year beginning on October 1, 2010 funding valuation and the full yield curve interest rate for all future valuations (in billions):


	Funding Interest Rate Sensitivity Table										Estimated Return on Assets–7% - 100 basis point decrease
	50 basis point increase		25 basis point increase		Base Line		25 basis point decrease		50 basis point decrease
2011	$	—	$	—	$	—	$	—	$	—	$	—
2012	$	—	$	—	$	—	$	—	$	—	$	—
2013	$	—	$	—	$	—	$	—	$	—	$	—
2014	$	—	$	—	$	—	$	—	$	0.5	$	—
2015	$	—	$	0.7	$	2.3	$	4.0	$	5.1	$	3.1
2016	$	0.7	$	1.5	$	1.2	$	1.0	$	0.8	$	2.9

115

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

In January 2011 we completed the previously announced voluntary contribution of 61 million shares of our common stock to our U.S. hourly and salaried pension plans, valued at $2.2 billion for funding purposes. This was a voluntary contribution and the amount is reflected in the plan assets used to project the future required contributions above since the contributed shares qualify as a plan asset for funding purposes immediately. The contributed shares will qualify as a plan asset for accounting purposes when certain transfer restrictions are removed, which is expected in 2011.

The hypothetical valuations do not consider the potential election of relief provisions that are available to us under the Pension Relief Act of 2010 (PRA) for 2010 and 2011 plan year valuations.

We expect to contribute $95 million to our U.S. non-qualified plans and $740 million to our non-U.S. pension plans in 2011.

Fair Value Measurements

Automotive

At December 31, 2010 assets and liabilities classified in Level 3 were not significant. Prior to the three months ended December 31, 2010 significant assets and liabilities classified in Level 3, with the related Level 3 inputs, were as follows:

•

Foreign currency derivatives — Level 3 inputs used to determine the fair value of foreign currency derivative liabilities include the appropriate credit spread to measure our nonperformance risk. Given our nonperformance risk was not observable through a liquid credit default swap market we based this measurement on an analysis of comparable industrial companies to determine the appropriate credit spread which would be applied to us and Old GM by market participants. In the three months ended December 31, 2010 we incorporated our published credit agency ratings into our credit rating conclusions. In the three months ended December 31, 2010 we determined that our nonperformance risk no longer represents a significant input in the determination of the fair value of our foreign currency derivative liabilities. We have transferred these liabilities to Level 2.

Refer to Notes 21 and 24 to our consolidated financial statements for additional information regarding fair value measurements.

Level 3 Assets and Liabilities

At December 31, 2010 we used Level 3 inputs to measure net liabilities of $14 million (or less than 0.1%) of our total liabilities. These net liabilities included $10 million (or less than 0.1%) of the total assets, and $24 million (or 16.4%) of the total liabilities that we measured at fair value.

In the year ended December 31, 2010 assets and liabilities measured using Level 3 inputs decreased $658 million from a net liability of $672 million to a net liability of $14 million. This reduction was primarily due to unrealized and realized gains on derivatives, the settlement of derivative positions according to their terms and maturities and the reclassification of outstanding derivative contracts from Level 3 to Level 2 during the three months ended December 31, 2010.

At December 31, 2010 our nonperformance risk remains unobservable through a liquid credit default swap market. During the three months ended December 31, 2010 we determined that our nonperformance risk no longer represents significant input in the determination of the fair value of our derivatives. The effect of our nonperformance risk in the valuation has been reduced due to the reduction in the remaining duration and magnitude of these net derivative liability positions. In October 2010 we transferred foreign currency derivatives with a fair market value of $183 million from Level 3 to Level 2.

At December 31, 2009 we used Level 3 inputs to measure net liabilities of $672 million (or 0.6%) of our total liabilities. These net liabilities included $33 million (or 0.1%) of the total assets, and $705 million (or 98.7%) of the total liabilities (all of which were derivative liabilities) that we measured at fair value. At December 31, 2009 we also included a nonperformance risk adjustment of $47 million in the fair value measurement of these derivatives which reflects a discount of 6.5% to the fair value before considering our credit risk.

116

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

For periods presented from June 1, 2009 through September 30, 2009 nonperformance risk for us and Old GM was not observable through a liquid credit default swap market as a result of the Chapter 11 Proceedings and lack of traded instruments for us after the 363 Sale. Foreign currency derivatives with a fair market value of $1.6 billion were transferred from Level 2 to Level 3 in the period January 1, 2009 through July 9, 2009.

In the three months ended March 31, 2009 Old GM determined the credit profile of certain foreign subsidiaries was equivalent to Old GM’s nonperformance risk which was observable through the credit default swap market and bond market based on prices for recent trades. Foreign currency derivatives with a fair value of $2.1 billion were transferred from Level 3 into Level 2.

Realized gains and losses related to assets and liabilities measured using Level 3 inputs did not have a material effect on operations, liquidity or capital resources in the year ended December 31, 2010 and the periods July 10, 2009 through December 31, 2009, January 1, 2009 through July 9, 2009 and the year ended December 31, 2008.

Automotive Financing

At December 31, 2010 significant assets and liabilities classified in Level 3, with the related Level 3 inputs, are as follows:

•

Interest rate swaps – Level 3 inputs are used to determine the fair value of GM Financial’s interest rate swaps because they are not exchange traded but instead traded in over-the-counter markets where quoted market prices are not readily available. The fair value of derivatives is derived using models that primarily use market observable inputs, such as interest rate yield curves and credit curves. The effects of GM Financial’s and the counterparties’ non-performance risk to the derivative trades is considered when measuring the fair value of derivative assets and liabilities.

Refer to Notes 21 and 24 to our consolidated financial statements for additional information regarding fair value measurements.

Dividends

The declaration of any dividend on our common stock is a matter to be acted upon by our Board of Directors in its sole discretion. Since our formation, we have not paid any dividends on our common stock. We have no current plans to pay any dividends on our common stock. Our payment of dividends on our common stock in the future, if any, will be determined by our Board of Directors in its sole discretion out of funds legally available for that purpose and will depend on business conditions, our financial condition, earnings, liquidity and capital requirements, the covenants in our debt instruments, and other factors.

So long as any share of our Series A or B Preferred Stock remains outstanding, no dividend or distribution may be declared or paid on our common stock unless all accrued and unpaid dividends have been paid on our Series A and B Preferred Stock, subject to exceptions, such as dividends on our common stock payable solely in shares of our common stock. Our secured revolving credit facility contains certain restrictions on our ability to pay dividends, subject to exceptions, such as dividends payable solely in shares of our common stock.

The following tables summarize dividends paid on our Series A and B Preferred Stock (dollars in millions):


	Three Months Ended December 31, 2010		Three Months Ended September 30, 2010		Three Months Ended June 30, 2010		Three Months Ended March 31, 2010		Year Ended December 31, 2010 Total
Series A Preferred Stock (a)	$	202	$	203	$	202	$	203	$	810
Series B Preferred Stock (b)		—		—		—		—		—

Total Preferred Stock dividends paid	$	202	$	203	$	202	$	203	$	810

(a)	Does not include the $677 million charge related to the purchase of 84 million shares of Series A Preferred Stock from the UST.

(b)	At December 31, 2010 cumulative unpaid dividends on our Series B Preferred Stock was $25 million.

117

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES


	Three Months Ended December 31, 2009		July 10, 2009 Through September 30, 2009		July 10, 2009 Through December 31, 2009
Series A Preferred Stock (a)	$	203	$	146	$	349

(a)

Prior to December 31, 2009 the 260 million shares of Series A Preferred Stock issued to the New VEBA were not considered outstanding for accounting purposes due to the terms of the 2009 UAW Retiree Settlement Agreement. As a result, $105 million of the $146 million of dividends paid in the three months ended September 30, 2009 and $147 million of the $203 million dividends paid in the three months ended December 31, 2009 were recorded as a reduction of Postretirement benefits other than pensions.

Our payment of dividends in the future, if any, will be determined by our Board of Directors and will be paid out of funds legally available for that purpose.

Critical Accounting Estimates

The consolidated financial statements are prepared in conformity with U.S. GAAP, which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods. We have discussed the development, selection and disclosures of our critical accounting estimates with the Audit Committee of the Board of Directors, and the Audit Committee has reviewed the disclosures relating to these estimates.

The critical accounting estimates that affect the consolidated financial statements and that use judgments and assumptions are listed below. In addition, the likelihood that materially different amounts could be reported under varied conditions and assumptions is discussed.

Fresh-Start Reporting

The Bankruptcy Court did not determine a reorganization value in connection with the 363 Sale. Reorganization value is defined as the value of our assets without liabilities. In order to apply fresh-start reporting, ASC 852 requires that total postpetition liabilities and allowed claims be in excess of reorganization value and prepetition stockholders receive less than 50.0% of our common stock. Based on our estimated reorganization value, we determined that on July 10, 2009 both the criteria of ASC 852 were met and, as a result, we applied fresh-start reporting.

Our reorganization value was determined using the sum of:

•

Our discounted forecast of expected future cash flows from our business subsequent to the 363 Sale, discounted at rates reflecting perceived business and financial risks;

•

The fair value of operating liabilities;

•

The fair value of our non-operating assets, primarily our investments in nonconsolidated affiliates and cost method investments; and

•

The amount of cash we maintained at July 10, 2009 that we determined to be in excess of the amount necessary to conduct our normal business activities.

The sum of the first, third and fourth bullet items equals our Enterprise value.

118

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Our discounted forecast of expected future cash flows included:

•

Forecasted cash flows for the six months ended December 31, 2009 and the years ending December 31, 2010 through 2014, for each of Old GM’s former segments including GMNA, GME, GM Latin America/Africa/Middle East (GMLAAM) and GM Asia Pacific (GMAP) and for certain subsidiaries that incorporated:

•

Industry SAAR of vehicle sales and our related market share as follows:

•

Worldwide — 59.1 million vehicles and market share of 11.9% in 2010 increasing to 81.0 million vehicles and market share of 12.2% in 2014;

•

North America — 14.2 million vehicles and market share of 17.8% in 2010 increasing to 19.8 million vehicles and decreasing market share of 17.6% in 2014;

•

Europe — 16.8 million vehicles and market share of 9.5% in 2010 increasing to 22.5 million vehicles and market share of 10.3% in 2014;

•

LAAM — 6.1 million vehicles and market share of 18.0% in 2010 increasing to 7.8 million vehicles and market share of 18.4% in 2014; and

•

AP — 22.0 million vehicles and market share of 8.4% in 2010 increasing to 30.8 million vehicles and market share of 8.6% in 2014.

•

Projected product mix, which incorporates the 2010 introductions of the Chevrolet Volt, Chevrolet/Holden Cruze, Cadillac CTS Coupe, Opel/Vauxhall Meriva and Opel/Vauxhall Astra Station Wagon;

•

Projected changes in our cost structure due to restructuring initiatives that encompass reduction of hourly and salaried employment levels by approximately 18,000;

•

The terms of the 2009 UAW Retiree Settlement Agreement, which released us from UAW retiree healthcare claims incurred after December 31, 2009;

•

Projected capital spending to support existing and future products, which range from $4.9 billion in 2010 to $6.0 billion in 2014; and

•

Anticipated changes in global market conditions.

•

A terminal value, which was determined using a growth model that applied long-term growth rates ranging from 0.5% to 6.0% and a weighted-average long-term growth rate of 2.6% to our projected cash flows beyond 2014. The long-term growth rates were based on our internal projections as well as industry growth prospects; and

•

Discount rates that considered various factors including bond yields, risk premiums, and tax rates to determine a weighted-average cost of capital (WACC), which measures a company’s cost of debt and equity weighted by the percentage of debt and equity in a company’s target capital structure. We used discount rates ranging from 16.5% to 23.5% and a weighted-average rate of 22.8%.

To estimate the value of our investment in nonconsolidated affiliates we used multiple valuation techniques, but we primarily used discounted cash flow analysis. Our excess cash of $33.8 billion, including Restricted cash and marketable securities of $21.2 billion, represents cash in excess of the amount necessary to conduct our ongoing day-to-day business activities and to keep them running as a going concern. Refer to Note 15 to our consolidated financial statements for additional discussion of Restricted cash and marketable securities.

119

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Our estimate of reorganization value assumes the achievement of the future financial results contemplated in our forecasted cash flows, and there can be no assurance that we will realize that value. The estimates and assumptions used are subject to significant uncertainties, many of which are beyond our control, and there is no assurance that anticipated financial results will be achieved.

Assumptions used in our discounted cash flow analysis that have the most significant effect on our estimated reorganization value include:

•

Our estimated WACC;

•

Our estimated long-term growth rates; and

•

Our estimate of industry sales and our market share in each of Old GM’s former segments.

The following table reconciles our enterprise value to our estimated reorganization value and the estimated fair value of our Equity (in millions except per share amounts):


	Successor
	July 10, 2009
Enterprise value	$	36,747
Plus: Fair value of operating liabilities (a)		80,832

Estimated reorganization value (fair value of assets) (b)		117,579
Adjustments to tax and employee benefit-related assets (c)		(6,074	)
Goodwill (c)		30,464

Carrying amount of assets	$	141,969


Enterprise value	$	36,747
Less: Fair value of debt		(15,694	)
Less: Fair value of warrants issued to MLC (additional paid-in-capital)		(2,405	)
Less: Fair value of liability for Adjustment Shares		(113	)
Less: Fair value of noncontrolling interests		(408	)
Less: Fair value of Series A Preferred Stock (d)		(1,741	)

Fair value of common equity (common stock and additional paid-in capital)	$	16,386

Common shares outstanding (d)		1,238
Per share value	$	13.24

(a)	Operating liabilities are our total liabilities excluding the liabilities listed in the reconciliation above of our enterprise value to the fair value of our common equity.

(b)	Reorganization value does not include assets with a carrying amount of $1.8 billion and a fair value of $2.0 billion at July 9, 2009 that MLC retained.

(c)

The application of fresh-start reporting resulted in the recognition of goodwill. When applying fresh-start reporting, certain accounts, primarily employee benefit and income tax related, were recorded at amounts determined under specific U.S. GAAP rather than at fair value and the difference between the U.S. GAAP and fair value amounts gives rise to goodwill, which is a residual. Further, we recorded valuation allowances against certain of our deferred tax assets, which under ASC 852 also resulted in goodwill. Our employee benefit related obligations were recorded in accordance with ASC 712, “Compensation — Nonretirement Postemployment Benefits” (ASC 712) and ASC 715 and deferred income taxes were recorded in accordance with ASC 740.

120

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

(d)

The 260 million shares of Series A Preferred Stock, 263 million shares of our common stock, and warrant to acquire 46 million shares of our common stock issued to the New VEBA on July 10, 2009 were not considered outstanding until the UAW retiree medical plan was settled on December 31, 2009. The fair value of these instruments was included in the liability recognized at July 10, 2009 for this plan. The common shares issued to the New VEBA are excluded from common shares outstanding at July 10, 2009. Refer to Note 20 to our consolidated financial statements for a discussion of the termination of our UAW hourly retiree medical plan and Mitigation Plan and the resulting payment terms to the New VEBA.

The following table summarizes the approximate effects that a change in the WACC and long-term growth rate assumptions would have had on our determination of the fair value of our common equity at July 10, 2009 keeping all other assumptions constant (dollars in billions except per share amounts):


Change in Assumption	Effect on Fair Value of Common Equity at July 10, 2009		Effect on Per Share Value at July 10, 2009
Two percentage point decrease in WACC	+$	2.9	+$	2.35
Two percentage point increase in WACC	–$	2.4	–$	1.92

One percentage point increase in long-term growth rate	+$	0.5	+$	0.40
One percentage point decrease in long-term growth rate	–$	0.5	–$	0.37

In order to estimate these effects, we adjusted the WACC and long-term growth rate assumptions for each of Old GM’s former segments and for certain subsidiaries. The aggregated effect of these assumption changes on each of Old GM’s former segments and for certain subsidiaries does not necessarily correspond to assumption changes made at a consolidated level.

Pensions

The defined benefit pension plans are accounted for on an actuarial basis, which requires the selection of various assumptions, including an expected rate of return on plan assets and a discount rate. Due to significant events, including those discussed in Note 20 to our consolidated financial statements, certain of the pension plans were remeasured at various dates in the year ended December 31, 2010, the periods July 10, 2009 through December 31, 2009, January 1, 2009 through July 9, 2009 and in the year ended December 31, 2008.

Net pension expense is calculated based on the expected return on plan assets and not the actual return on plan assets. The expected return on U.S. plan assets that is included in pension expense is determined from periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks using standard deviations and correlations of returns among the asset classes that comprise the plans’ asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. In December 2010 an analysis of the investment policy was completed for the U.S. pension plans which reduced the expected return on assets to 8.0% from 8.5% at December 31, 2009. The decrease in expected return on assets is primarily related to lower bond yields and updated return assumptions for equities and equity-like asset classes. Differences between the expected return on plan assets and the actual return on plan assets are recorded in Accumulated other comprehensive income (loss) as an actuarial gain or loss, and subject to possible amortization into net pension expense over future periods. A market-related value of plan assets, which averages gains and losses over a period of years, is utilized in the determination of future pension expense. For substantially all pension plans, market-related value is defined as an amount that initially recognizes 60.0% of the difference between the actual fair value of assets and the expected calculated value, and 10.0% of that difference over each of the next four years. The market-related value of assets at December 31, 2010 used to determine U.S. and non-U.S. net periodic pension income for the year ending December 31, 2011 was $4.1 billion and $0.3 billion lower than the actual fair value of plan assets at December 31, 2010.

Another key assumption in determining net pension expense is the assumed discount rate to be used to discount plan obligations. We estimate this rate for U.S. plans using a cash flow matching approach, which uses projected cash flows matched to spot rates along

121

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

a high quality corporate yield curve to determine the present value of cash flows to calculate a single equivalent discount rate. Old GM used an iterative process to determine the discount rate based on a hypothetical investment in a portfolio of high-quality bonds rated AA or higher by a recognized rating agency and a hypothetical reinvestment of the proceeds of such bonds upon maturity using forward rates derived from a yield curve until the U.S. pension obligation was defeased. This reinvestment component was incorporated into the methodology because it was not feasible, in light of the magnitude and time horizon over which U.S. pension obligations extend, to accomplish full defeasance through direct cash flows from an actual set of bonds selected at any given measurement date.

The benefit obligation for pension plans in Canada, the United Kingdom and Germany comprise 92% of the non-U.S. pension benefit obligation at December 31, 2010. The discount rates for Canadian plans are determined using a cash flow matching approach, similar to the U.S. approach. The discount rates for plans in the United Kingdom and Germany use a curve derived from high quality corporate bonds with maturities consistent with the plans’ underlying duration of expected benefit payments.

The following table summarizes rates used to determine net pension expense:


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Weighted-average expected long-term rate of return on U.S. plan assets		8.48%		8.50%		8.50%		8.50%
Weighted-average expected long-term rate of return on non-U.S. plan assets		7.42%		7.97%		7.74%		7.78%
Weighted-average discount rate for U.S. plan obligations		5.36%		5.63%		6.27%		6.56%
Weighted-average discount rate for non-U.S. plan obligations		5.19%		5.82%		6.23%		5.77%

Significant differences in actual experience or significant changes in assumptions may materially affect the pension obligations. The effect of actual results differing from assumptions and the changing of assumptions are included in unamortized net actuarial gains and losses that are subject to amortization to expense over future periods.

The following table summarizes the unamortized actuarial gain (before tax) on pension plans (dollars in billions):


	Successor
	December 31, 2010		December 31, 2009
Unamortized actuarial gain	$	2.9	$	3.0

The following table summarizes the actual and expected return on pension plan assets (dollars in billions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
U.S. actual return	$	11.6	$	9.9	$	(0.2	)	$	(11.4	)
U.S. expected return	$	6.6	$	3.0	$	3.8		$	8.0
Non-U.S. actual return	$	1.2	$	1.2	$	0.2		$	(2.9	)
Non-U.S. expected return	$	1.0	$	0.4	$	0.4		$	1.0

122

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table illustrates the sensitivity to a change in certain assumptions for the pension plans, holding all other assumptions constant (dollars in millions):


	Successor
	U.S. Plans				Non-U.S. Plans
	Effect on 2011 Pension Expense		Effect on December 31, 2010 PBO		Effect on 2011 Pension Expense		Effect on December 31, 2010 PBO
25 basis point decrease in discount rate	–$	110	+$	2,540	–$	7	+$	714
25 basis point increase in discount rate	+$	90	–$	2,470	+$	10	–$	677
25 basis point decrease in expected return on assets	+$	210		—	+$	35		—
25 basis point increase in expected return on assets	–$	210		—	–$	35		—

The U.S. pension plans generally provide covered U.S. hourly employees hired prior to October 15, 2007 with pension benefits of negotiated, flat dollar amounts for each year of credited service earned by an individual employee. Early retirement supplements are also provided to those who retire prior to age 62. Hourly employees hired after October 15, 2007 participate in a cash balance pension plan. Formulas providing for such stated amounts are contained in the applicable labor contract. Pension expense and the pension obligations do not consider any future benefit increases or decreases that may occur beyond current labor contracts. The usual cycle for negotiating new labor contracts is every four years. We do not have a past practice of maintaining a consistent level of benefit increases or decreases from one contract to the next.

The following data illustrates the sensitivity of changes in pension expense and pension obligation based on the last remeasurement of the U.S hourly pension plan at December 31, 2010, as a result of changes in future benefit units for U.S. hourly employees, effective after the expiration of the current contract (dollars in millions):


	Successor
Change in future benefit units	Effect on 2011 Pension Expense		Effect on December 31, 2010 PBO
One percentage point increase in benefit units	+$	81	+$	240
One percentage point decrease in benefit units	–$	79	–$	233

We utilize a variety of pricing sources to estimate the fair value of our pension assets, including: independent pricing vendors, dealer or counterparty supplied valuations, third party appraisals, appraisals prepared by investment managers, or investment sponsor or third party administrator supplied net asset value (or its equivalent) per share (NAV) used as a practical expedient.

A significant portion of our pension assets are classified in Level 3. Pension assets for which fair value is determined through the use of NAV and for which we may not have the ability to redeem our entire investment with the investee at NAV as of the measurement date or in the near-term, are classified in Level 3. We classify pension assets that include significant unobservable inputs in Level 3.

Significant assets classified in Level 3, with the related Level 3 inputs to the valuation that may be subject to volatility and change, and additional considerations for leveling, are as follows:

•

Government, agency and corporate debt securities — Pricing services and dealers often use proprietary pricing models which incorporate unobservable inputs. These inputs primarily consist of yield and credit spread assumptions. Management may consider other security attributes such as liquidity, market activity, price level, credit ratings and geo-political risk, in assessing the observability of inputs used by pricing services or dealers, which may affect classification in the fair value hierarchy.

123

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

•

Group annuity contracts – The value of each group annuity contract or policy depends, in part, on the values of the units of the separately managed investment accounts backing the contract. The fair value of the separately managed investment account assets is based on the fair value of the underlying assets owned by these accounts. The separately managed investment accounts, which typically calculate NAV, and underlying assets are valued in accordance with the valuation policies of the respective insurers. Inherent restrictions that do not allow redemption of our entire investment at NAV at the measurement date or in the near-term are the primary considerations for these investments being classified in Level 3.

•

Agency and non-agency mortgage and other asset-backed securities — Pricing services and dealers often use proprietary pricing models which incorporate unobservable inputs. These inputs typically consist of prepayment curves, discount rates, default assumptions and recovery rates. Management may consider other security attributes such as liquidity, market activity, price level, credit ratings and geo-political risk, in assessing the observability of inputs used by pricing services or dealers, which may affect classification in the fair value hierarchy.

•

Investment funds, private equity and debt investments, and real estate assets — The funds and certain special purpose entities valued using NAV, and in which we may not have the ability to redeem our entire investment with the investee at NAV at the measurement date or in near-term, are classified in Level 3. The Level 3 inputs for these investments include NAV provided by the investment sponsor or third party administrator. When NAV was not used as a practical expedient, the fair value estimates provided by investment sponsors are used. These fair value estimates are reviewed, and in cases where these estimates do not represent fair value they may be adjusted by management based on changes in the composition or performance of the underlying investments or comparable investments, overall market conditions, and other economic factors. Such fair value adjustments at December 31, 2009 and 2010 were not significant.

Refer to Note 4 to our consolidated financial statements for a more detailed discussion of the inputs used to determine fair value for each significant asset class or category.

Other Postretirement Benefits

OPEB plans are accounted for on an actuarial basis, which requires the selection of various assumptions, including a discount rate and healthcare cost trend rates. Old GM estimated the discount rate using an iterative process based on a hypothetical investment in a portfolio of high-quality bonds rated AA or higher by a recognized rating agency and a hypothetical reinvestment of the proceeds of such bonds upon maturity using forward rates derived from a yield curve until the U.S. OPEB obligation was defeased. This reinvestment component was incorporated into the methodology because it was not feasible, in light of the magnitude and time horizon over which the U.S. OPEB obligations extend, to accomplish full defeasance through direct cash flows from an actual set of bonds selected at any given measurement date.

Beginning in September 2008, the discount rate used for the benefits to be paid from the UAW retiree medical plan during the period September 2008 through December 2009 was based on a yield curve which used projected cash flows of representative high-quality AA rated bonds matched to spot rates along a yield curve to determine the present value of cash flows to calculate a single equivalent discount rate. All other U.S. OPEB plans started using a discount rate based on a yield curve on July 10, 2009. The UAW retiree medical plan was settled on December 31, 2009 and the plan assets were contributed to the New VEBA as part of the payment terms under the 2009 UAW Retiree Settlement Agreement. We are released from UAW retiree healthcare claims incurred after December 31, 2009.

The significant non-U.S. OPEB plans cover Canadian employees. The discount rates for the Canadian plans are determined using a cash flow matching approach, similar to the U.S. OPEB plans.

124

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The following table summarizes the weighted-average discount rate used to determine net OPEB expense for the significant plans:


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Weighted-average discount rate for U.S. plans		5.57%		6.81%		8.11%		7.02%
Weighted-average discount rate for non-U.S. plans		5.22%		5.47%		6.77%		5.90%

As a result of modifications made as part of the 363 Sale, there are no significant uncapped U.S. healthcare plans remaining at December 31, 2010 and, therefore, the healthcare cost trend rate no longer has a significant effect in the U.S. An estimate is developed of the healthcare cost trend rates used to value benefit obligations for non-U.S. plans through review of historical retiree cost data and near-term healthcare outlook which includes appropriate cost control measures that have been implemented. Changes in the healthcare cost trend rate can have significant effect on the actuarially determined obligation and related OPEB expense.

The following table summarizes the healthcare cost trend rates used in the remeasurement of the APBO:


	Successor
	December 31, 2010			December 31, 2009
Assumed Healthcare Trend Rates	Non-U.S. Plans (a)			Non-U.S. Plans
Initial healthcare cost trend rate		5.6	%		5.4	%
Ultimate healthcare cost trend rate		3.4	%		3.3	%
Number of years to ultimate trend rate		8			8

(a)	The implementation of the HCT in Canada is anticipated and will significantly reduce our exposure to changes in the healthcare cost trend rate.

The following table summarizes the effect of a one-percentage point change in the assumed healthcare trend rates based on the last remeasurement of the benefit plans at December 31, 2010 (dollars in millions):


	Successor
	Non-U.S. Plans (a)
Change in Assumption	Effect on 2011 Aggregate Service and Interest Cost		Effect on December 31, 2010 APBO
One percentage point increase	+$	31	+$	491
One percentage point decrease	–$	25	–$	392

(a) The implementation of the HCT in Canada is anticipated and will significantly reduce our exposure to changes in the healthcare cost trend rate.

Layoff Benefits

UAW employees are provided with reduced wages and continued coverage under certain employee benefit programs through the SUB and TSP job security programs. The number of weeks that an employee receives these benefits depends on the employee’s classification as well as the number of years of service that the employee has accrued. A similar tiered benefit is provided to CAW employees. Considerable management judgment and assumptions are required in calculating the related liability, including productivity initiatives, capacity actions and federal and state unemployment payments. The assumptions for the related benefit costs include the incidence of mortality, retirement, turnover and the healthcare trend rate, which are applied on a consistent basis with other U.S. hourly benefit plans. While we believe our judgments and assumptions are reasonable, changes in the assumptions underlying these estimates, which we revise each quarter, could result in a material effect on the financial statements in a given period.

125

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Deferred Taxes / Valuation Allowances

We establish and Old GM established valuation allowances for deferred tax assets based on a more likely than not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. We consider and Old GM considered the following possible sources of taxable income when assessing the realization of deferred tax assets:

•

Future reversals of existing taxable temporary differences;

•

Future taxable income exclusive of reversing temporary differences and carryforwards;

•

Taxable income in prior carryback years; and

•

Tax-planning strategies.

The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence factors, including but not limited to:

•

Nature, frequency, and severity of recent losses;

•

Duration of statutory carryforward periods;

•

Historical experience with tax attributes expiring unused; and

•

Near- and medium-term financial outlook.

Concluding a valuation allowance is not required is difficult when there is significant negative evidence that is objective and verifiable, such as cumulative losses in recent years. We utilize and Old GM utilized a rolling three years of actual and current year anticipated results as the primary measure of cumulative losses in recent years, as adjusted for non-recurring matters.

The valuation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns and future profitability. Our accounting for deferred tax consequences represents our best estimate of those future events. Changes in our current estimates, due to unanticipated events or otherwise, could have a material impact on our financial condition and results of operations.

Though objective and verifiable negative evidence continues to outweigh positive evidence in our key valuation allowance jurisdictions, we are experiencing positive evidence trends in various jurisdictions. South Korea and Australia are farther ahead in this trend of sustained operating profits and taxable income. U.S. and Canada operations are showing early signs of this positive evidence trend, and Germany, Spain and the United Kingdom operations are not yet experiencing such a favorable shift. To the extent this trend continues, it is reasonably possible our conclusion regarding the need for full valuation allowances could change, resulting in the reversal of some or all of the valuation allowances.

Refer to Note 23 to our consolidated financial statements for additional information regarding deferred taxes and valuation allowances.

Valuation of Vehicle Operating Leases and Lease Residuals

In accounting for vehicle operating leases, a determination is made at the inception of a lease of the estimated realizable value (i.e., residual value) of the vehicle at the end of the lease. Residual value represents an estimate of the market value of the vehicle at the end of the lease term, which typically ranges from nine months to five years. A customer is obligated to make payments during the term of a lease to the contract residual. A customer is not obligated to purchase a vehicle at the end of a lease, and we are and Old GM was exposed to a risk of loss to the extent the value of a vehicle is below the residual value estimated at contract inception.

Residual values are initially determined by consulting independently published residual value guides. Realization of residual values is dependent on the future ability to market vehicles under prevailing market conditions. Over the life of a lease, the adequacy of the

126

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

estimated residual value is evaluated and adjustments are made to the extent the expected value of a vehicle at lease termination declines. Adjustments may be in the form of revisions to depreciation rates or recognition of impairment charges. Impairment is determined to exist if the undiscounted expected future cash flows are lower than the carrying amount of the leased vehicle. Additionally, for automotive retail leases, an adjustment may also be made to the estimate of sales incentive accruals for residual support and risk sharing programs initially recorded when the vehicles are sold.

With respect to residual values of automotive leases to daily rental car companies, due to the short-term nature of the operating leases, Old GM historically had forecasted auction proceeds at lease termination. In the three months ended December 31, 2008 forecasted auction proceeds in the United States differed significantly from actual auction proceeds due to highly volatile economic conditions, in particular a decline in consumer confidence and available consumer credit, which affected the residual values of vehicles at auction. Due to these significant uncertainties, Old GM determined that it no longer had a reliable basis to forecast auction proceeds in the United States and began utilizing current auction proceeds to estimate the residual values in the impairment analysis for the automotive leases to daily rental car companies, which is consistent with Old GM’s impairment analyses for automotive retail leases. As a result of this change in estimate, Old GM recorded an incremental impairment charge of $144 million in the three months ended December 31, 2008 related to the automotive leases to daily rental car companies.

The following table summarizes recorded impairment charges related to automotive retail leases to daily rental car companies and automotive retail leases (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Automotive retail leases to daily rental car companies	$	49	$	18	$	47	$	382
Automotive retail leases (a)	$	—	$	—	$	16	$	377

(a)	The year ended December 31, 2008 includes an increase in intersegment residual support and risk sharing reserves of $220 million recorded as a reduction of revenue in GMNA.

We continue to use the lower of forecasted or current auction proceeds to estimate residual values for impairment purposes. Significant differences between the estimate of residual values and actual experience may materially affect impairment charges recorded, if any, and the rate at which vehicles in Equipment on operating leases, net are depreciated. Significant differences will also affect the residual support and risk sharing reserves established as a result of certain agreements with Ally Financial, whereby Ally Financial is reimbursed up to an agreed-upon percentage of certain residual value losses they experience on their operating lease portfolio. During the year ended December 31, 2010 we recorded favorable adjustments to our residual support and risk sharing liabilities of $0.6 billion in the U.S. due to increases in estimated residual values.

The following table illustrates the effect of changes in our estimate of vehicle sales proceeds at lease termination on residual support and risk sharing reserves related to vehicles owned by Ally Financial at December 31, 2010 and 2009 holding all other assumptions constant (dollars in millions):


	Successor
	December 31, 2010 Effect on Residual Support and Risk Sharing Reserves		December 31, 2009 Effect on Residual Support and Risk Sharing Reserves
10% increase in vehicle sales proceeds	–$	73	–$	534
10% decrease in vehicle sales proceeds	+$	196	+$	381

The critical assumptions underlying the estimated carrying amount of leased vehicles included within Equipment on operating leases, net include: (1) estimated market value information obtained and used in estimating residual values; (2) proper identification and estimation of business conditions; (3) remarketing abilities; and (4) vehicle and marketing programs. Changes in these assumptions could have a significant effect on the estimate of residual values.

127

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Due to the contractual terms of our residual support and risk sharing agreements with Ally Financial, which currently limit our maximum obligation to Ally Financial should vehicle residual values decrease, an increase in sales proceeds does not have the equivalent offsetting effect on our residual support and risk sharing reserves as a decrease in sales proceeds.

The following table summarizes the maximum obligation and recorded receivables and liabilities associated with the contractual terms of our residual support and risk sharing agreements with Ally Financial (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
Maximum obligation
Residual support	$	523		$	1,159
Risk sharing agreements	$	692		$	1,392
Outstanding receivables (liabilities)
Residual support	$	24		$	(369	)
Risk sharing agreements	$	(269	)	$	(366	)

When a lease vehicle is returned or repossessed by us, the asset is recorded at the lower of cost or estimated selling price, less cost to sell.

Impairment of Goodwill

Goodwill arises from the application of fresh-start reporting and acquisitions accounted for as business combinations. Goodwill is tested for impairment in the fourth quarter of each year for all reporting units, or more frequently if events occur or circumstances change that would warrant such a review. An impairment charge is recorded for the amount, if any, by which the carrying amount of goodwill exceeds its implied value. Our reporting units are GMNA, GME, GM Financial and various reporting units within the GMIO and GMSA segments. Due to the integrated nature of our manufacturing operations and the sharing of vehicle platforms among brands, assets and other resources are shared extensively within GMNA and GME and financial information by brand or country is not discrete below the operating segment level such that GMNA and GME do not contain reporting units below the operating segment level. GM Financial also does not contain reporting units below the operating segment level. GMIO and GMSA are less integrated given the lack of regional trade pacts and other unique geographical differences and thus contain separate reporting units below the operating segment level.

At December 31, 2010 we had goodwill of $31.8 billion, which predominately arose upon the application of fresh-start reporting and the acquisition of AmeriCredit. When applying fresh-start reporting, certain accounts, primarily employee benefit and income tax related, were recorded at amounts determined under specific U.S. GAAP rather than fair value, and the difference between the U.S. GAAP and fair value amounts gives rise to goodwill, which is a residual. Our employee benefit related accounts were recorded in accordance with ASC 712 and ASC 715 and deferred income taxes were recorded in accordance with ASC 740. Further, we recorded valuation allowances against certain of our deferred tax assets, which under ASC 852 also resulted in goodwill. If all identifiable assets and liabilities had been recorded at fair value upon application of fresh-start reporting, no goodwill would have resulted. In conjunction with the acquisition of GM Financial in October 2010, we recorded $1.3 billion of acquisition related goodwill, including $153 million recorded at the acquisition-date to establish a valuation allowance for deferred taxes which was not applicable to GM Financial on a stand-alone basis.

In the future, we have an increased likelihood of measuring goodwill for possible impairment during our annual or event-driven goodwill impairment testing and in evaluating whether it is more likely than not that a goodwill impairment exists for reporting units with zero or negative carrying values. An event-driven impairment test is required if it is more likely than not that the fair value of a reporting unit is less than its net book value. Because our reporting units were recorded at their fair values upon application of fresh-start reporting, it is more likely a decrease in the fair value of our reporting units from their fresh-start reporting values could occur, and such a decrease would trigger the need to measure for possible goodwill impairments. Refer to Note 4 to our consolidated financial statements for additional information related to the adoption of ASU 2010-28, “Intangibles, Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units.”

128

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Future goodwill impairments could occur should the fair value-to-U.S. GAAP adjustments differences decrease. Goodwill predominately resulted from our recorded liabilities for certain employee benefit obligations being higher than the fair value of these obligations because lower discount rates were utilized in determining the U.S. GAAP values compared to those utilized to determine fair values. The discount rates utilized to determine the fair value of these obligations were based on our incremental borrowing rates, which included our nonperformance risk. Our incremental borrowing rates are also affected by changes in market interest rates. Further, the recorded amounts of our assets were lower than their fair values because of the recording of valuation allowances on certain of our deferred tax assets. The difference between these fair value-to-U.S. GAAP amounts would decrease upon an improvement in our credit rating, thus resulting in a decrease in the spread between our employee benefit related obligations under U.S. GAAP and their fair values. A decrease will also occur upon reversal of our deferred tax asset valuation allowances. Should the fair value-to-U.S. GAAP adjustments differences decrease for these reasons, the implied goodwill balance will decline. Accordingly, at the next annual or event-driven goodwill impairment test, to the extent the carrying amount of a reporting unit exceeds its fair value, a goodwill impairment could occur. Future goodwill impairments could also occur should we reorganize our internal reporting structure in a manner that changes the composition of one or more of our reporting units. Upon such an event, goodwill would be reassigned to the affected reporting units using a relative-fair-value allocation approach, unless the entity was never integrated, and not based on the amount of goodwill that was originally attributable to fair value-to-U.S. GAAP differences that gave rise to goodwill.

When performing our goodwill impairment testing, the fair values of our reporting units were determined based on valuation techniques using the best available information, primarily discounted cash flow projections. We make significant assumptions and estimates about the extent and timing of future cash flows, growth rates and discount rates. The cash flows are estimated over a significant future period of time, which makes those estimates and assumptions subject to a high degree of uncertainty. Where available and as appropriate, comparative market multiples and the quoted market price of our common stock are used to corroborate the results of the discounted cash flow method. While we believe that the assumptions and estimates used to determine the estimated fair values of each of our reporting units are reasonable, a change in assumptions underlying these estimates could result in a material effect on the consolidated financial statements. Assumptions used in our discounted cash flow analysis that have the most significant effect on the estimated fair value of our reporting units include:

•

Our estimated WACC;

•

Our estimated long-term growth rates; and

•

Our estimate of industry sales and our market share.

During the three months ended December 31, 2010 we performed our annual goodwill impairment testing for all reporting units. Based on this testing, we determined that goodwill was not impaired. The valuation methodologies utilized to perform our goodwill impairment testing were consistent with those used in our application of fresh-start reporting on July 10, 2009, as discussed in Note 2 to our consolidated financial statements, and in any subsequent annual or event-driven impairment tests and resulted in Level 3 measures. The following table summarizes the key assumptions for each of our more significant reporting units utilized in our 2010 annual goodwill impairment testing as of October 1, 2010 (dollars and volumes in millions):


	Goodwill Amount as of October 1, 2010		WACC		Long-Term Growth Rates		Industry Sales				Market Share
	Goodwill Amount as of October 1, 2010		WACC		Long-Term Growth Rates		2011		2014		2011		2014
GMNA	$	26,410		16.5%		1.5%		15.9		20.2		18.5%		18.2%
GME	$	3,096		17.0%		0.5%		18.4		21.3		6.8%		7.6%
GM Daewoo (a)	$	632		16.0%		3.0%		77.9		91.8		1.2%		1.4%
Holden	$	186		14.5%		3.0%		1.0		1.1		12.4%		13.5%
GM Mercosur	$	120		15.3%		4.7%		4.6		5.4		18.6%		17.0%

(a)	Industry sales volume and market share for GM Daewoo are based on global industry volumes as GM Daewoo exports vehicles globally.

129

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

The WACCs considered various factors including bond yields, risk premiums, and tax rates; the terminal values were determined using a growth model that applied a reporting unit’s long-term growth rate to its projected cash flows beyond 2014; and industry sales and a market share for each reporting unit included annual estimates through 2014, except for GME which is through 2015.

Our fair value estimates assume the achievement of the future financial results contemplated in our forecasted cash flows, and there can be no assurance that we will realize that value. The estimates and assumptions used are subject to significant uncertainties, many of which are beyond our control, and there is no assurance that anticipated financial results will be achieved.

In calculating the fair values of our more significant reporting units during our 2010 annual goodwill impairment testing, keeping all other assumptions constant, the carrying values of these reporting units would still exceed their estimated fair values had our WACC increased by 16.5 percentage points for GMNA, 7 percentage points for GME, 11 percentage points for GM Daewoo, 13.5 percentage points for Holden and 8.7 percentage points for GM Mercosur.

In the three months ended June 30, 2010 there were event-driven changes in circumstances within our GME reporting unit that warranted the testing of goodwill for impairment. In the three months ended June 30, 2010 anticipated competitive pressure on our margins in the near- and medium-term led us to believe that the goodwill associated with our GME reporting unit may be impaired. Utilizing the best available information at June 30, 2010, the date of impairment measurement, we performed a Step 1 goodwill impairment test for our GME reporting unit, and concluded that goodwill was not impaired. The fair value of our GME reporting unit was estimated to be approximately $325 million over its carrying amount. If we had not passed Step 1, we believe the amount of any goodwill impairment would approximate $140 million representing the net decrease, from July 9, 2009 through June 30, 2010, in the fair value-to-U.S. GAAP differences attributable to those assets and liabilities that gave rise to goodwill.

Refer to Notes 13 and 26 to our consolidated financial statements for additional information on goodwill impairments.

Impairment of Long-Lived Assets

The carrying amount of long-lived assets and finite-lived intangible assets to be held and used in the business are evaluated when events and circumstances warrant. If the carrying amount of a long-lived asset group is considered impaired, a loss is recorded based on the amount by which the carrying amount exceeds the fair value for the asset group to be held and used. Product-specific long-lived assets are tested for impairment at the platform level. Non-product line specific long-lived assets are tested for impairment on a segment basis in GMNA, GME, and GM Financial and tested at or within our various reporting units within GMIO and GMSA segments. Assets classified as held for sale are recorded at the lower of carrying amount or fair value less cost to sell. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. We develop anticipated cash flows from historical experience and internal business plans. A considerable amount of management judgment and assumptions are required in performing the long-lived asset impairment tests, principally in determining the fair value of the asset groups and the assets’ average estimated useful life. While we believe our judgments and assumptions are reasonable, a change in assumptions underlying these estimates could result in a material effect to the consolidated financial statements. Long-lived assets could become impaired in the future as a result of declines in profitability due to significant changes in volume, pricing or costs. Refer to Note 26 to our consolidated financial statements for additional information on impairments of long-lived assets and intangibles.

Valuation of Cost and Equity Method Investments

When events and circumstances warrant, equity investments accounted for under the cost or equity method of accounting are evaluated for impairment. An impairment charge would be recorded whenever a decline in value of an equity investment below its carrying amount is determined to be other than temporary. In determining if a decline is other than temporary we consider and Old GM considered such factors as the length of time and extent to which the fair value of the investment has been less than the carrying amount of the equity affiliate, the near-term and longer-term operating and financial prospects of the affiliate and the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery.

130

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

When available, quoted market prices are used to determine fair value. If quoted market prices are not available, fair value is based upon valuation techniques that use, where possible, market-based inputs. Generally, fair value is estimated using a combination of the income approach and the market approach because circumstances usually do not permit the use of a single approach. Under the income approach, estimated future cash flows are discounted at a rate commensurate with the risk involved using marketplace assumptions. Under the market approach, valuations are based on actual comparable market transactions and market earnings and book value multiples for the same or comparable entities. The assumptions used in the income and market approaches have a significant effect on the determination of fair value. Significant assumptions include estimated future cash flows, appropriate discount rates, and adjustments to market transactions and market multiples for differences between the market data and the investment being valued. Changes to these assumptions could have a significant effect on the valuation of cost and equity method investments.

In the three months ended December 31, 2009 we recorded impairment charges related to our investment in Ally Financial common stock of $270 million. We determined the fair value of our investment in Ally Financial common stock using a market multiple, sum-of-the-parts methodology. This methodology considered the average price/tangible book value multiples of companies deemed comparable to each of Ally Financial’s operations, which were then aggregated to determine Ally Financial’s overall fair value. Based on our analysis, the estimated fair value of our investment in Ally Financial common stock was determined to be $970 million, resulting in an impairment charge of $270 million. The following table illustrates the effect of a 0.1 change in the average price/tangible book value multiple on our impairment charge (dollars in millions):


Change in Assumption	Effect on December 31, 2009 Impairment Charges
Increase in average price/tangible book value multiple	+$	100
Decrease in average price/tangible book value multiple	–$	100

At December 31, 2010 the balance of our investment in Ally Financial common stock was $964 million and the balance of our investment in Ally Financial preferred stock was $665 million.

Derivatives

Derivatives are used in the normal course of business to manage exposures arising from market risks resulting from changes in certain commodity prices and interest and foreign currency exchange rates. Derivatives are accounted for in the consolidated balance sheets as assets or liabilities at fair value.

Significant judgments and estimates are used in estimating the fair values of derivative instruments, particularly in the absence of quoted market prices. Internal models are used to value a majority of derivatives. The models use, as their basis, readily observable market inputs, such as time value, forward interest rates, volatility factors, and current and forward market prices for commodities and foreign currency exchange rates.

The valuation of derivative liabilities takes into account our nonperformance risk. At December 31, 2010 and December 31, 2009, our nonperformance risk was not observable through a liquid credit default swap market. Our nonperformance risk was estimated using internal analysis to develop conclusions on our implied credit rating, which we used to determine the appropriate credit spread, which would be applied to us by market participants. Prior to receiving published credit ratings we developed our credit rating conclusions using an analysis of comparable industrial companies. At December 31, 2010 we incorporated published credit agency ratings of GM into our credit rating conclusions. At December 31, 2009, all derivatives whose fair values contained a significant credit adjustment based on our nonperformance risk were classified in Level 3. At December 31, 2010, we have determined that our non-performance risk no longer represents a significant input in the determination of the fair value of our derivatives. As of December 31, 2010 all automotive operations derivatives have been classified in Level 2.

Sales Incentives

The estimated effect of sales incentives to dealers and customers is recorded as a reduction of Automotive revenue, and in certain instances, as an increase to Automotive cost of sales, at the later of the time of sale or announcement of an incentive program to dealers. There may be numerous types of incentives available at any particular time, including a choice of incentives for a specific

131

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

model. Incentive programs are generally brand specific, model specific or region specific, and are for specified time periods, which may be extended. Significant factors used in estimating the cost of incentives include the volume of vehicles that will be affected by the incentive programs offered by product, product mix and the rate of customer acceptance of any incentive program, and the likelihood that an incentive program will be extended, all of which are estimated based on historical experience and assumptions concerning customer behavior and future market conditions. When an incentive program is announced, the number of vehicles in dealer inventory eligible for the incentive program is determined, and a reduction of Automotive revenue or increase to Automotive cost of sales is recorded in the period in which the program is announced. If the actual number of affected vehicles differs from this estimate, or if a different mix of incentives is actually paid, the reduction in Automotive revenue or increase to Automotive cost of sales for sales incentives could be affected. There are a multitude of inputs affecting the calculation of the estimate for sales incentives, and an increase or decrease of any of these variables could have a significant effect on recorded sales incentives.

Policy, Warranty and Recalls

The estimated costs related to policy and product warranties are accrued at the time products are sold, and the estimated costs related to product recalls based on a formal campaign soliciting return of that product are accrued when they are deemed to be probable and can be reasonably estimated. These estimates are established using historical information on the nature, frequency, and average cost of claims of each vehicle line or each model year of the vehicle line. However, where little or no claims experience exists for a model year or a vehicle line, the estimate is based on long-term historical averages. Revisions are made when necessary, based on changes in these factors. These estimates are re-evaluated on an ongoing basis. We actively study trends of claims and take action to improve vehicle quality and minimize claims. Actual experience could differ from the amounts estimated requiring adjustments to these liabilities in future periods. Due to the uncertainty and potential volatility of the factors contributing to developing estimates, changes in our assumptions could materially affect our results of operations.

Accounting Standards Not Yet Adopted

Accounting standards not yet adopted are discussed in Note 4 to our consolidated financial statements.

Forward-Looking Statements

In this report and in reports we subsequently file with the SEC on Forms 10-K and 10-Q and file or furnish on Form 8-K, and in related comments by our management, we use words like “anticipate,” “believe,” “continue,” “could,” “designed,” “effect,” “estimate,” “evaluate,” “expect,” “forecast,” “goal,” “initiative,” “intend,” “may,” “objective,” “outlook,” “plan,” “potential,” “priorities,” “project,” “pursue,” “seek,” “should,” “target,” “when,” “would,” or the negative of any of those words or similar expressions to identify forward-looking statements that represent our current judgment about possible future events. In making these statements we rely on assumptions and analyses based on our experience and perception of historical trends, current conditions and expected future developments as well as other factors we consider appropriate under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any events or financial results, and our actual results may differ materially due to a variety of important factors, both positive and negative. These factors, which may be revised or supplemented in subsequent reports on SEC Forms 10-K, 10-Q and 8-K, include among others the following:

•

Our ability to realize production efficiencies and to achieve reductions in costs as a result of our restructuring initiatives and labor modifications;

•

Our ability to maintain quality control over our vehicles and avoid material vehicle recalls;

•

Our ability to maintain adequate liquidity and financing sources and an appropriate level of debt, including as required to fund our planned significant investment in new technology, and, even if funded, our ability to realize successful vehicle applications of new technology;

•

The effect of business or liquidity difficulties for us or one or more subsidiaries on other entities in our corporate group as a result of our highly integrated and complex corporate structure and operation;

•

Our ability to continue to attract customers, particularly for our new products, including cars and crossover vehicles;

132

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

•

Availability of adequate financing on acceptable terms to our customers, dealers, distributors and suppliers to enable them to continue their business relationships with us;

•

The financial viability and ability to borrow of our key suppliers and their ability to provide systems, components and parts without disruption;

•

Our ability to take actions we believe are important to our long-term strategy, including our ability to enter into certain material transactions outside of the ordinary course of business, which may be limited due to significant covenants in our secured revolving credit facility;

•

Our ability to manage the distribution channels for our products, including our ability to consolidate our dealer network;

•

The ability to successfully restructure our European operations;

•

The continued availability of both wholesale and retail financing from Ally Financial and its affiliates in the United States, Canada and the other markets in which we operate to support our ability to sell vehicles in those markets, which is dependent on Ally Financial’s ability to obtain funding and which may be suspended by Ally Financial if Ally Financial’s credit exposure to us exceeds certain limitations provided in our operating arrangements with Ally Financial;

•

Our ability to develop captive financing capability, including through GM Financial and to successfully integrate GM Financial into our operations;

•

Overall strength and stability of general economic conditions and of the automotive industry, both in the United States and in global markets;

•

Continued economic instability or poor economic conditions in the United States and global markets, including the credit markets, or changes in economic conditions, commodity prices, housing prices, foreign currency exchange rates or political stability in the markets in which we operate;

•

Shortages of and increases or volatility in the price of oil, including as a result of political instability in the Middle East and African nations;

•

Significant changes in the competitive environment, including the effect of competition and excess manufacturing capacity in our markets, on our pricing policies or use of incentives and the introduction of new and improved vehicle models by our competitors;

•

Significant changes in economic and market conditions in China, including the effect of competition from new market entrants, on our vehicle sales and market position in China;

•

Changes in the existing, or the adoption of new, laws, regulations, policies or other activities of governments, agencies and similar organizations, including where such actions may affect the production, licensing, distribution or sale of our products, the cost thereof or applicable tax rates;

•

Costs and risks associated with litigation;

•

Significant increases in our pension expense or projected pension contributions resulting from changes in the value of plan assets, the discount rate applied to value the pension liabilities or other assumption changes; and

•

Changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, which could have an effect on earnings.

We caution readers not to place undue reliance on forward-looking statements. We undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other factors that affect the subject of these statements, except where we are expressly required to do so by law.

* * * * * * *

133

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Automotive

We and Old GM entered into a variety of foreign currency exchange, interest rate and commodity forward contracts and options to manage exposures arising from market risks resulting from changes in foreign currency exchange rates, interest rates and certain commodity prices. We do not enter into derivative transactions for speculative purposes.

The overall financial risk management program is under the responsibility of the Risk Management Committee, which reviews and, where appropriate, approves strategies to be pursued to mitigate these risks. The Risk Management Committee is comprised of members of our Management and functions under the oversight of the Finance and Risk Committee, a committee of the Board of Directors. The Finance and Risk Committee assists and guides the Board in its oversight of our financial and risk management strategies. A risk management control framework is utilized to monitor the strategies, risks and related hedge positions, in accordance with the policies and procedures approved by the Risk Management Committee.

In August 2010 we changed our risk management policy. Our prior policy was intended to reduce volatility of forecasted cash flows primarily through the use of forward contracts and swaps. The intent of the new policy is primarily to protect against risk arising from extreme adverse market movements on our key exposures and involves a shift to greater use of purchased options.

A discussion of our and Old GM’s accounting policies for derivative financial instruments is included in Note 4 to our consolidated financial statements. Further information on our exposure to market risk is included in Note 21 to our consolidated financial statements.

Old GM’s credit standing and liquidity position in the first half of 2009 and the Chapter 11 Proceedings severely limited its ability to manage risks using derivative financial instruments as most derivative counterparties were unwilling to enter into transactions with Old GM. Subsequent to the 363 Sale and through December 31, 2009, we were largely unable to enter forward contracts pending the completion of negotiations with potential derivative counterparties. Since August 2010 we executed new agreements with counterparties that enable us to enter into options, forward contracts and swaps.

The following analyses provide quantitative information regarding exposure to foreign currency exchange rate risk, interest rate risk, commodity price risk and equity price risk. Sensitivity analysis is used to measure the potential loss in the fair value of financial instruments with exposure to market risk. The models used assume instantaneous, parallel shifts in exchange rates, interest rate yield curves and commodity prices. For options and other instruments with nonlinear returns, models appropriate to these types of instruments are utilized to determine the effect of market shifts. There are certain shortcomings inherent in the sensitivity analyses presented, primarily due to the assumption that interest rates and commodity prices change in a parallel fashion and that spot exchange rates change instantaneously. In addition, the analyses are unable to reflect the complex market reactions that normally would arise from the market shifts modeled and do not contemplate the effects of correlations between foreign currency pairs, or offsetting long-short positions in currency pairs which may significantly reduce the potential loss in value.

Foreign Currency Exchange Rate Risk

We have and Old GM had foreign currency exposures related to buying, selling, and financing in currencies other than the functional currencies of the operations. Derivative instruments, such as foreign currency forwards, swaps and options are used primarily to hedge exposures with respect to forecasted revenues, costs and commitments denominated in foreign currencies. At December 31, 2010 such contracts have remaining maturities of up to 12 months. At December 31, 2010 our three most significant foreign currency exposures are the Euro/British Pound, U.S. Dollar/Korean Won, and Euro/Korean Won.

At December 31, 2010 and 2009 the net fair value liability of financial instruments with exposure to foreign currency risk was $3.3 billion and $5.9 billion. This presentation utilizes a population of foreign currency exchange derivatives and foreign currency denominated debt and excludes the offsetting effect of foreign currency cash, cash equivalents and other assets. The potential loss in fair value for such financial instruments from a 10% adverse change in all quoted foreign currency exchange rates would be $513 million and $941 million at December 31, 2010 and 2009.

134

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

We are and Old GM was exposed to foreign currency risk due to the translation of the results of certain international operations into U.S. Dollars as part of the consolidation process. Fluctuations in foreign currency exchange rates can therefore create volatility in the results of operations and may adversely affect our financial position.

The following table summarizes the amounts of automotive foreign currency translation and transaction gains (losses) (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009
Foreign currency translation gain (loss) recorded in accumulated other comprehensive income (loss)	$	235		$	157		$	232
Foreign currency transaction gain (loss) recorded in earnings	$	(209	)	$	(755	)	$	(1,077	)

Interest Rate Risk

We are and Old GM was subject to market risk from exposure to changes in interest rates related to certain financial instruments, primarily debt, capital lease obligations and certain marketable securities.

Interest rate risk in Old GM was managed primarily with interest rate swaps. The interest rate swaps Old GM entered into usually involved the exchange of fixed for variable rate interest payments to effectively convert fixed rate debt into variable rate debt in order to achieve a target range of variable rate debt. At December 31, 2010 we did not have any interest rate swap derivative positions to manage interest rate exposures in our automotive operations.

The following table summarizes our automotive debt by fixed rate and variable rate (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Short-term debt — fixed rate	$	305	$	592
Short-term debt — variable rate		1,311		9,629

Total short-term debt	$	1,616	$	10,221

Short-term debt — fixed rate denominated in U.S. dollars	$	96	$	232
Short-term debt — fixed rate denominated in foreign currency		209		360

Total short-term debt — fixed rate	$	305	$	592

Short-term debt — variable rate denominated in U.S. dollars	$	347	$	6,253
Short-term debt — variable rate denominated in foreign currency		964		3,376

Total short-term debt — variable rate	$	1,311	$	9,629

Long-term debt — fixed rate	$	2,519	$	4,689
Long-term debt — variable rate		495		873

Total long-term debt	$	3,014	$	5,562

Long-term debt — fixed rate denominated in U.S. dollars	$	601	$	3,401
Long-term debt — fixed rate denominated in foreign currency		1,918		1,288

Total long-term debt – fixed rate	$	2,519	$	4,689

Long-term debt — variable rate denominated in U.S. dollars	$	287	$	551
Long-term debt — variable rate denominated in foreign currency		208		322

Total long-term debt — variable rate	$	495	$	873

135

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

At December 31, 2010 and 2009 the fair value liability of debt and capital leases was $4.8 billion and $16.0 billion. The potential increase in fair value resulting from a 10% decrease in quoted interest rates would be $166 million and $402 million at December 31, 2010 and 2009.

At December 31, 2010 we had $6.6 billion in marketable securities with exposure to interest rate risk. We invest in securities of various types and maturities, the value of which are subject to fluctuations in interest rates. The potential decrease in fair value from a 50 basis point increase in interest rates would be $15 million at December 31, 2010. Our exposure to interest rate risk on marketable securities at December 31, 2009 was insignificant.

Commodity Price Risk

We are and Old GM was exposed to changes in prices of commodities used in the automotive business, primarily associated with various non-ferrous and precious metals for automotive components and energy used in the overall manufacturing process. Certain commodity purchase contracts meet the definition of a derivative. Old GM entered into various derivatives, such as commodity swaps and options, to offset its commodity price exposures. We use commodity options to offset our commodity price exposures.

At December 31, 2010 and 2009 the net fair value asset of commodity derivatives was $84 million and $11 million. The potential loss in fair value resulting from a 10% adverse change in the underlying commodity prices would be $47 million and $6 million at December 31, 2010 and 2009. This amount excludes the offsetting effect of the commodity price risk inherent in the physical purchase of the underlying commodities.

Equity Price Risk

We are and Old GM was exposed to changes in prices of equity securities held. We typically do not attempt to reduce our market exposure to these equity instruments. Our exposure includes certain investments we hold in warrants of other companies. At December 31, 2010 and 2009 the fair value of these warrants was $44 million and $25 million. At December 31, 2010 and 2009 our exposure also includes investments of $43 million and $45 million in equity securities recorded at fair value. These amounts represent the maximum exposure to loss from these investments.

At December 31, 2010, the carrying amount of cost method investments was $1.7 billion, of which the carrying amounts of our investments in Ally Financial common stock and Ally Financial preferred stock were $964 million and $665 million. At December 31, 2009 the carrying amount of cost method investments was $1.7 billion, of which the carrying amounts of our investments in Ally Financial common stock and preferred stock were $970 million and $665 million. These amounts represent the maximum exposure to loss from these investments.

Counterparty Risk

We are exposed to counterparty risk on derivative contracts, which is the loss we could incur if a counterparty to a derivative contract defaulted. We enter into agreements with counterparties that allow the set-off of certain exposures in order to manage this risk.

Our counterparty risk is managed by our Risk Management Committee, which establishes exposure limits by counterparty. We monitor and report our exposures to the Risk Management Committee on a periodic basis. At December 31, 2010 a majority of all of our counterparty exposures are with counterparties that are rated A or higher.

Concentration of Credit Risk

We are exposed to concentration of credit risk primarily through holding cash and cash equivalents (which include money market funds), short- and long-term investments and derivatives. As part of our risk management process, we monitor and evaluate the credit standing of the financial institutions with which we do business. The financial institutions with which we do business are generally highly rated and geographically dispersed.

136

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

We are exposed to credit risk related to the potential inability to access liquidity in money market funds we invested in if the funds were to deny redemption requests. As part of our risk management process, we invest in large funds that are managed by reputable financial institutions. We also follow investment guidelines to limit our exposure to individual funds and financial institutions.

Automotive Financing

Fluctuations in market interest rates affect GM Financial’s credit facilities and securitization transactions. GM Financial’s gross interest rate spread, which is the difference between interest earned on finance receivables and interest paid, is affected by changes in interest rates as a result of GM Financial’s dependence upon the issuance of variable rate securities and the incurrence of variable rate debt to fund purchases of finance receivables.

Credit Facilities

Fixed interest rate receivables purchased by GM Financial are pledged to secure borrowings under its credit facilities. Amounts borrowed under these credit facilities bear interest at variable rates that are subject to frequent adjustments to reflect prevailing market interest rates. To protect the interest rate spread within each credit facility, GM Financial is contractually required to enter into interest rate cap agreements in connection with borrowings under its credit facilities. The purchaser of the interest rate cap pays a premium in return for the right to receive the difference in the interest cost at any time a specified index of market interest rates rises above the stipulated cap rate. The purchaser of the interest rate cap bears no obligation or liability if interest rates fall below the cap rate. As part of GM Financial’s interest rate risk management strategy and when economically feasible, it may simultaneously enter into a corresponding interest rate cap agreement in order to offset the premium paid by the trust to purchase the interest rate cap and thus retain the interest rate risk. The fair value of the interest rate cap purchased is included in Total GM Financial Assets and the fair value of the interest rate cap agreement sold is included in Total GM Financial Liabilities.

Securitizations

The interest rate demanded by investors in GM Financial’s securitization transactions depends on prevailing market interest rates for comparable transactions and the general interest rate environment. GM Financial utilizes several strategies to minimize the effect of interest rate fluctuations on its gross interest rate margin, including the use of derivative financial instruments and the regular sale or pledging of automotive receivables to securitization trusts.

In GM Financial’s securitization transactions, it transfers fixed rate finance receivables to securitization trusts that, in turn, sell either fixed rate or floating rate securities to investors. The fixed rates on securities issued by the trusts are indexed to market interest rate swap spreads for transactions of similar duration or various LIBOR rates and do not fluctuate during the term of the securitization. The floating rates on securities issued by the trusts are indexed to LIBOR and fluctuate periodically based on movements in LIBOR. Derivative financial instruments, such as interest rate swap and cap derivatives, are used to manage the gross interest rate spread on these transactions. GM Financial uses interest rate swap derivatives to convert the variable rate exposures on securities issued by its securitization trusts to a fixed rate, thereby locking in the gross interest rate spread to be earned by it over the life of a securitization. Interest rate swap derivatives purchased by GM Financial do not affect the amount of cash flows received by holders of the asset-backed securities issued by the trusts. The interest rate swap derivative serve to offset the effect of increased or decreased interest paid by the trusts on floating rate asset-backed securities on the cash flows received from the trusts. GM Financial utilizes such arrangements to modify its net interest sensitivity to levels deemed appropriate based on risk tolerance. In circumstances where the interest rate risk is deemed to be tolerable, usually if the risk is less than one year in term at inception, GM Financial may choose not to hedge potential fluctuations in cash flows due to changes in interest rates. Its special purpose entities are contractually required to purchase a derivative financial instrument to protect the net spread in connection with the issuance of floating rate securities even if GM Financial chooses not to hedge its future cash flows. Although the interest rate cap derivatives are purchased by the trusts, cash outflows from the trusts ultimately affect GM Financial’s retained interests in the securitization transactions as cash expended by the securitization trusts will decrease the ultimate amount of cash to be received by GM Financial. Therefore, when economically feasible, GM Financial may simultaneously sell a corresponding interest rate cap derivative to offset the premium paid

137

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

by the trust to purchase the interest rate cap derivative. The fair value of the interest rate cap derivatives purchased in connection with securitization transactions are included in Total GM Financial Assets and the fair value of the interest rate cap derivatives sold are included in Total GM Financial Liabilities. Changes in the fair value of the interest rate cap derivatives are a component of interest expense recorded in GM Financial operating expenses and other.

GM Financial has entered into interest rate swap derivatives to hedge the variability in interest payments on eight of its active securitization transactions. Portions of these interest rate swap derivatives are designated and qualify as cash flow hedges. The fair value of interest rate swap derivatives designated as hedges is included in GM Financial Other liabilities. Interest rate swap derivatives that are not designated as hedges are included in GM Financial Other assets.

The following table summarizes GM Financial’s interest rate sensitive assets and liabilities by year of expected maturity and the fair value of those assets and liabilities at December 31, 2010 (dollars in millions):


	Years Ending December 31,																		December 31, 2010
	2011			2012			2013			2014			2015			Thereafter			Fair Value
Assets
Finance receivables
Principal amounts	$	3,755		$	2,434		$	1,287		$	678		$	372		$	161		$	8,186
Weighted-average annual percentage rate		15.74	%		15.66	%		15.57	%		15.36	%		15.21	%		15.37	%
Interest rate swap agreements
Notional amounts	$	754		$	460		$	13		$	—		$	—		$	—		$	23
Average pay rate		5.32	%		3.53	%		0.97	%		—			—			—
Average receive rate		1.03	%		1.16	%		0.43	%		—			—			—
Interest rate cap agreements
Notional amounts	$	177		$	164		$	144		$	169		$	79		$	213		$	8
Average strike rate		4.81	%		4.73	%		4.71	%		4.53	%		4.18	%		3.47	%
Liabilities
Credit facilities
Principal amounts	$	533		$	296		$	—		$	—		$	—		$	—		$	832
Weighted-average interest rate		3.19	%		2.28	%		—			—			—			—
Securitization notes
Principal amounts	$	2,961		$	1,703		$	659		$	423		$	275		$	—		$	6,107
Weighted-average interest rate		3.44	%		4.03	%		4.44	%		4.38	%		4.88	%		—
Senior notes
Principal amounts	$	—		$	—		$	—		$	—		$	68		$	—		$	71
Weighted-average interest rate		—			—			—			—			8.50	%		—
Convertible senior notes
Principal amounts	$	1		$	—		$	1		$	—		$	—		$	—		$	1
Weighted-average coupon interest rate		0.75	%		—			2.13	%		—			—			—
Interest rate swap agreements
Notional amounts	$	754		$	460		$	13		$	—		$	—		$	—		$	47
Average pay rate		5.32	%		3.53	%		0.97	%		—			—			—
Average receive rate		1.03	%		1.16	%		0.43	%		—			—			—
Interest rate cap agreements
Notional amounts	$	104		$	123		$	144		$	169		$	79		$	213		$	8
Average strike rate		4.94	%		4.85	%		4.71	%		4.53	%		4.18	%		3.47	%

138

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

GM Financial estimates the realization of financing receivables in future periods using discount rate, prepayment and credit loss assumptions similar to its historical experience. Notional amounts on interest rate swap and cap derivatives are based on contractual terms. Credit facilities and securitization notes payable amounts have been classified based on expected payoff. Senior notes and convertible senior notes principal amounts have been classified based on maturity.

The notional amounts of interest rate swap and cap derivatives, which are used to calculate the contractual payments to be exchanged under the contracts, represent average amounts that will be outstanding for each of the years included in the table. Notional amounts do not represent amounts exchanged by parties and, thus, are not a measure of GM Financial’s exposure to loss through its use of these derivatives.

GM Financial monitors hedging activities to ensure that the value of derivative financial instruments, their correlation to the contracts being hedged and the amounts being hedged continue to provide effective protection against interest rate risk. However, there can be no assurance that these strategies will be effective in minimizing interest rate risk or that increases in interest rates will not have an adverse effect on GM Financial’s profitability. GM Financial does not enter into derivative transactions for speculative purposes.

* * * * * * *

139

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

General Motors Company, its Directors, and Stockholders:

We have audited the internal control over financial reporting of General Motors Company and subsidiaries (the Company) as of December 31, 2010, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting in Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule of General Motors Company and subsidiaries as of and for the year ended December 31, 2010 (Successor). Our report dated March 1, 2011 expressed an unqualified opinion on those financial statements and financial statement schedule and included an explanatory paragraph related to the Successor’s adoption of a revised accounting standard related to consolidation principles.

/S/ DELOITTE & TOUCHE LLP

Deloitte & Touche LLP

Detroit, Michigan

March 1, 2011

140

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

General Motors Company, its Directors, and Stockholders:

We have audited the accompanying Consolidated Balance Sheets of General Motors Company and subsidiaries as of December 31, 2010 (Successor) and 2009 (Successor), and the related Consolidated Statements of Operations, Cash Flows and Equity (Deficit) for the year ended December 31, 2010 (Successor) and the period July 10, 2009 through December 31, 2009 (Successor), and the Consolidated Statements of Operations, Cash Flows and Equity (Deficit) of General Motors Corporation and subsidiaries for the period January 1, 2009 through July 9, 2009 (Predecessor) and the year ended December 31, 2008 (Predecessor) (Successor and Predecessor collectively, the Company). Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of General Motors Company and subsidiaries at December 31, 2010 (Successor) and 2009 (Successor) and the results of their operations and their cash flows for the year ended December 31, 2010 (Successor) and the period July 10, 2009 through December 31, 2009 (Successor), and the results of operations and cash flows of General Motors Corporation and Subsidiaries for the period January 1, 2009 through July 9, 2009 (Predecessor) and the year ended December 31, 2008 (Predecessor), in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 4 to the consolidated financial statements, the Successor adopted amendments to Accounting Standards Codification (ASC) Topic 810, Consolidation, effective January 1, 2010.

As discussed in Note 2 to the consolidated financial statements, on July 10, 2009 the Successor completed the acquisition of substantially all of the assets and assumed certain of the liabilities of the Predecessor in accordance with the Amended and Restated Master Sale and Purchase Agreement pursuant to Section 363(b) of the Bankruptcy Code and the Bankruptcy Court sale order dated July 5, 2009. Accordingly, the accompanying consolidated financial statements have been prepared in accordance with ASC Topic 852, Reorganizations. The Successor applied fresh-start reporting and recognized the acquired net assets at fair value, resulting in a lack of comparability with the prior period financial statements of the Predecessor.

As discussed in Note 4 to the consolidated financial statements, the Predecessor adopted amendments to ASC Topic 805, Business Combinations, effective January 1, 2009.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Successor’s internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 1, 2011 expressed an unqualified opinion on the Successor’s internal control over financial reporting.

/S/ DELOITTE & TOUCHE LLP

Deloitte & Touche LLP

Detroit, Michigan

March 1, 2011

141

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

Item 8. Financial Statements and Supplementary Data


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Net sales and revenue
Automotive sales	$	135,142		$	57,329		$	46,787		$	147,732
GM Financial and other revenue		281			—			—			—
Other automotive revenue		169			145			328			1,247

Total net sales and revenue		135,592			57,474			47,115			148,979

Costs and expenses
Automotive cost of sales		118,792			56,381			55,814			149,257
GM Financial operating expenses and other		152			—			—			—
Automotive selling, general and administrative expense		11,446			6,006			6,161			14,253
Other automotive expenses, net		118			15			1,235			6,699

Total costs and expenses		130,508			62,402			63,210			170,209

Operating income (loss)		5,084			(4,928	)		(16,095	)		(21,230	)
Equity in income (loss) of and disposition of interest in Ally Financial		—			—			1,380			(6,183	)
Automotive interest expense		(1,098	)		(694	)		(5,428	)		(2,525	)
Interest income and other non-operating income, net		1,555			440			852			424
Gain (loss) on extinguishment of debt		196			(101	)		(1,088	)		43
Reorganization gains, net (Note 2)		—			—			128,155			—

Income (loss) before income taxes and equity income		5,737			(5,283	)		107,776			(29,471	)
Income tax expense (benefit)		672			(1,000	)		(1,166	)		1,766
Equity income, net of tax		1,438			497			61			186

Net income (loss)		6,503			(3,786	)		109,003			(31,051	)
Net (income) loss attributable to noncontrolling interests		(331	)		(511	)		115			108

Net income (loss) attributable to stockholders		6,172			(4,297	)		109,118			(30,943	)
Less: Cumulative dividends on and charge related to purchase of preferred stock (Note 29)		1,504			131			—			—

Net income (loss) attributable to common stockholders	$	4,668		$	(4,428	)	$	109,118		$	(30,943	)

Earnings (loss) per share (Note 30)
Basic
Net income (loss) attributable to common stockholders	$	3.11		$	(3.58	)	$	178.63		$	(53.47	)
Weighted-average common shares outstanding		1,500			1,238			611			579
Diluted
Net income (loss) attributable to common stockholders	$	2.89		$	(3.58	)	$	178.55		$	(53.47	)
Weighted-average common shares outstanding		1,624			1,238			611			579
Cash dividends per common share	$	—		$	—		$	—		$	0.50

Reference should be made to the notes to consolidated financial statements.

142

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except share amounts)


	Successor
	December 31, 2010		December 31, 2009
ASSETS
Automotive Current Assets
Cash and cash equivalents	$	21,061	$	22,679
Marketable securities		5,555		134

Total cash, cash equivalents and marketable securities		26,616		22,813
Restricted cash and marketable securities		1,240		13,917
Accounts and notes receivable (net of allowance of $252 and $250)		8,699		7,518
Inventories		12,125		10,107
Assets held for sale		—		388
Equipment on operating leases, net		2,568		2,727
Other current assets and deferred income taxes		1,805		1,777

Total current assets		53,053		59,247
Automotive Non-current Assets
Restricted cash and marketable securities		1,160		1,489
Equity in net assets of nonconsolidated affiliates		8,529		7,936
Property, net		19,235		18,687
Goodwill		30,513		30,672
Intangible assets, net		11,882		14,547
Deferred income taxes		308		564
Assets held for sale		—		530
Other assets		3,286		2,623

Total non-current assets		74,913		77,048

Total Automotive Assets		127,966		136,295
GM Financial Assets
Finance receivables (including finance receivables transferred to special purpose entities of $7,156 at December 31, 2010; Note 7)		8,197		—
Restricted cash		1,090		—
Goodwill		1,265		—
Other assets		380		—

Total GM Financial Assets		10,932		—

Total Assets	$	138,898	$	136,295

LIABILITIES AND EQUITY
Automotive Current Liabilities
Accounts payable (principally trade)	$	21,497	$	18,725
Short-term debt and current portion of long-term debt (including debt at GM Daewoo of $70 at December 31, 2010; Note 17)		1,616		10,221
Liabilities held for sale		—		355
Postretirement benefits other than pensions		625		846
Accrued liabilities (including derivative liabilities at GM Daewoo of $111 at December 31, 2010; Note 17)		23,419		22,288

Total current liabilities		47,157		52,435
Automotive Non-current Liabilities
Long-term debt (including debt at GM Daewoo of $835 at December 31, 2010; Note 17)		3,014		5,562
Liabilities held for sale		—		270
Postretirement benefits other than pensions		9,294		8,708
Pensions		21,894		27,086
Other liabilities and deferred income taxes		13,021		13,279

Total non-current liabilities		47,223		54,905

Total Automotive Liabilities		94,380		107,340
GM Financial Liabilities
Securitization notes payable (Note 19)		6,128		—
Credit facilities		832		—
Other liabilities		399		—

Total GM Financial Liabilities		7,359		—

Total Liabilities		101,739		107,340
Commitments and contingencies (Note 22)
Preferred stock Series A, $0.01 par value (2,000,000,000 shares authorized and 360,000,000 shares issued and outstanding (each with a $25.00 liquidation preference) at December 31, 2009)		—		6,998
Equity
Preferred stock, $0.01 par value, 2,000,000,000 shares authorized:
Series A (276,101,695 shares issued and outstanding (each with a $25.00 liquidation preference) at December 31, 2010)		5,536		—
Series B (100,000,000 shares issued and outstanding (each with a $50.00 liquidation preference) at December 31, 2010)		4,855		—
Common stock, $0.01 par value (5,000,000,000 shares authorized and 1,500,136,998 shares and 1,500,000,000 shares issued and outstanding at December 31, 2010 and 2009)		15		15
Capital surplus (principally additional paid-in capital)		24,257		24,040
Retained earnings (accumulated deficit)		266		(4,394	)
Accumulated other comprehensive income		1,251		1,588

Total stockholders’ equity		36,180		21,249
Noncontrolling interests		979		708

Total equity		37,159		21,957

Total Liabilities and Equity	$	138,898	$	136,295

Reference should be made to the notes to consolidated financial statements.

143

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Cash flows from operating activities
Net income (loss)	$	6,503		$	(3,786	)	$	109,003		$	(31,051	)
Less: GM Financial income		90			—			—			—

Automotive income (loss)		6,413			(3,786	)		109,003			(31,051	)
Adjustments to reconcile income (loss) to net cash provided by (used in) operating activities
Depreciation, impairment charges and amortization expense		6,923			4,511			6,873			18,724
Delphi charges		—			—			—			4,797
Foreign currency translation and transaction (gain) loss		209			755			1,077			(1,705	)
Amortization of discount and issuance costs on debt issues		163			140			3,897			189
(Gain) loss related to Saab deconsolidation and bankruptcy filing		—			(59	)		478			—
Undistributed earnings of nonconsolidated affiliates		(753	)		(497	)		1,036			(727	)
Pension contributions and OPEB payments		(5,723	)		(5,832	)		(2,472	)		(4,898	)
Pension and OPEB expense, net		412			3,570			3,234			2,747
Withdrawals (contributions) to VEBA		—			(252	)		9			1,355
(Gain) loss on extinguishment of debt		(196	)		101			1,088			—
Gain on disposition of Ally Financial Common Membership Interests		—			—			(2,477	)		—
Reorganization gains, net (including cash payments $408)		—			—			(128,563	)		—
Provisions (benefits) for deferred taxes		242			(1,427	)		(600	)		1,163
Change in other investments and miscellaneous assets		(137	)		292			596			(395	)
Change in other operating assets and liabilities, net of acquisitions and disposals (Note 36)		(981	)		3,372			(10,229	)		94
Other		17			176			(1,253	)		(2,358	)

Net cash provided by (used in) operating activities–Automotive		6,589			1,064			(18,303	)		(12,065	)

Net income–GM Financial		90			—			—			—
Adjustments to reconcile income to net cash provided by operating activities		86			—			—			—
Change in operating assets and liabilities		15			—			—			—

Net cash provided by operating activities–GM Financial		191			—			—			—

Net cash provided by (used in) operating activities		6,780			1,064			(18,303	)		(12,065	)

Reference should be made to the notes to consolidated financial statements.

144

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)

(In millions)


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Cash flows from investing activities
Expenditures for property		(4,200	)		(1,862	)		(3,517	)		(7,530	)
Available-for-sale marketable securities, acquisitions		(11,012	)		—			(202	)		(3,771	)
Trading marketable securities, acquisitions		(358	)		(158	)		—			—
Available-for-sale marketable securities, liquidations		5,611			3			185			5,866
Trading marketable securities, liquidations		343			168			—			—
Acquisition of companies, net of cash acquired other than cash acquired with GM Financial		(3,580	)		(2,127	)		—			(1	)
Increase due to consolidation of business units		63			222			46			—
Distributions from (investments in) Ally Financial		—			72			(884	)		—
Operating leases, liquidations		346			564			1,307			3,610
Proceeds from sale of business units/equity investments, net		317			—			—			232
Proceeds from sale of real estate, plants and equipment		188			67			38			347
Change in notes receivable		46			61			(23	)		(430	)
Increase in restricted cash and marketable securities		(871	)		(3,604	)		(18,461	)		(87	)
Decrease in restricted cash and marketable securities		13,823			8,775			418			—
Other investing activities		2			(25	)		(41	)		—

Net cash provided by (used in) investing activities–Automotive		718			2,156			(21,134	)		(1,764	)

GM Financial cash on hand at acquisition		538			—			—			—
Purchase of receivables		(947	)		—			—			—
Principal collections and recoveries on receivables		871			—			—			—
Other investing activities		53			—			—			—

Net cash provided by (used in) investing activities–GM Financial		515			—			—			—

Net cash provided by (used in) investing activities		1,233			2,156			(21,134	)		(1,764	)
Cash flows from financing activities
Net decrease in short-term debt		(1,097	)		(352	)		(2,364	)		(4,100	)
Proceeds from issuance of debt (original maturities greater than three months)		718			6,153			53,949			9,928
Payments on debt (original maturities greater than three months)		(10,536	)		(5,259	)		(6,072	)		(1,702	)
Proceeds from issuance of stock		4,857			—			—			—
Payments to purchase stock		(1,462	)		—			—			—
Cash, cash equivalents and restricted cash retained by MLC		—			—			(1,216	)		—
Payments to acquire noncontrolling interest		(6	)		(100	)		(5	)		—
Debt issuance costs and fees paid for debt modification		(161	)		—			(63	)		—
Cash dividends paid (including premium paid on redemption of stock)		(1,572	)		(97	)		—			(283	)

Net cash provided by (used in) financing activities–Automotive		(9,259	)		345			44,229			3,843

Net change in credit facilities		212			—			—			—
Issuance of debt		700			—			—			—
Payments of debt		(1,419	)		—			—			—
Other financing activities		(4	)		—			—			—

Net cash provided by (used in) financing activities–GM Financial		(511	)		—			—			—

Net cash provided by (used in) financing activities		(9,770	)		345			44,229			3,843
Effect of exchange rate changes on cash and cash equivalents–Automotive		(57	)		492			168			(778	)

Net increase (decrease) in cash and cash equivalents–Automotive		(2,009	)		4,057			4,960			(10,764	)

Net increase (decrease) in cash and cash equivalents–GM Financial		195			—			—			—
Cash and cash equivalents reclassified as assets held for sale–Automotive		391			(391	)		—			—

Cash and cash equivalents at beginning of period–Automotive		22,679			19,013			14,053			24,817

Cash and cash equivalents at end of period–Automotive	$	21,061		$	22,679		$	19,013		$	14,053

Cash and cash equivalents at end of period–GM Financial	$	195		$	—		$	—		$	—

Reference should be made to the notes to consolidated financial statements.

145

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(In millions)


	Series A Preferred Stock		Series B Preferred Stock		Common Stockholders’										Noncontrolling Interests			Comprehensive Income (Loss)			Total Equity (Deficit)
	Series A Preferred Stock		Series B Preferred Stock		Common Stock		Capital Surplus		Retained Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Comprehensive Income (Loss)			Total Equity (Deficit)
Balance at December 31, 2007, Predecessor	$	—	$	—	$	943	$	16,100	$	(39,426	)	$	(13,987	)	$	1,218					$	(35,152	)
Net income (loss)		—		—		—		—		(30,943	)		—			(108	)	$	(31,051	)		(31,051	)
Other comprehensive income (loss)
Foreign currency translation loss		—		—		—		—		—			(1,155	)		(161	)		(1,316	)
Cash flow hedging losses, net		—		—		—		—		—			(811	)		(420	)		(1,231	)
Unrealized loss on securities		—		—		—		—		—			(298	)		—			(298	)
Defined benefit plans, net (Note 29)		—		—		—		—		—			(16,088	)		—			(16,088	)

Other comprehensive income (loss)		—		—		—		—		—			(18,352	)		(581	)		(18,933	)		(18,933	)

Comprehensive income (loss)																		$	(49,984	)

Effects of Ally Financial adoption of ASC 820 and ASC 825		—		—		—		—		(76	)		—			—						(76	)
Stock options		—		—		—		32		1			—			—						33
Common stock issued for settlement of Series D debentures		—		—		74		357		—			—			—						431
Cash dividends paid to Old GM common stockholders		—		—		—		—		(283	)		—			—						(283	)
Dividends declared or paid to noncontrolling interests		—		—		—		—		—			—			(46	)					(46	)
Other		—		—		—		—		—			—			1						1

Balance December 31, 2008, Predecessor		—		—		1,017		16,489		(70,727	)		(32,339	)		484						(85,076	)
Net income (loss)		—		—		—		—		109,118			—			(115	)	$	109,003			109,003
Other comprehensive income (loss)
Foreign currency translation gain		—		—		—		—		—			232			(85	)		147
Cash flow hedging gains, net		—		—		—		—		—			99			177			276
Unrealized gain on securities		—		—		—		—		—			46			—			46
Defined benefit plans, net (Note 29)		—		—		—		—		—			(3,408	)		—			(3,408	)

Other comprehensive income (loss)		—		—		—		—		—			(3,031	)		92			(2,939	)		(2,939	)

Comprehensive income (loss)																		$	106,064

Dividends declared or paid to noncontrolling interests		—		—		—		—		—			—			(26	)					(26	)
Other		—		—		1		5		(1	)		—			(27	)					(22	)

Balance July 9, 2009, Predecessor		—		—		1,018		16,494		38,390			(35,370	)		408						20,940

Reference should be made to the notes to consolidated financial statements.

146

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(In millions)


	Series A Preferred Stock		Series B Preferred Stock		Common Stockholders’												Noncontrolling Interests			Comprehensive Income (Loss)			Total Equity (Deficit)
	Series A Preferred Stock		Series B Preferred Stock		Common Stock			Capital Surplus			Retain Earnings (Accumulated Deficit)			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests			Comprehensive Income (Loss)			Total Equity (Deficit)
Balance July 9, 2009, Predecessor		—		—		1,018			16,494			38,390			(35,370	)		408						20,940
Fresh-start reporting adjustments:
Elimination of predecessor common stock, capital surplus and accumulated deficit		—		—		(1,018	)		(16,494	)		(38,390	)		—			—						(55,902	)
Elimination of accumulated other comprehensive loss		—		—		—			—			—			35,370			—						35,370
Issuance of GM common stock		—		—		12			18,779			—			—			—						18,791

Balance July 10, 2009 Successor		—		—		12			18,779			—			—			408						19,199
Net income (loss)		—		—		—			—			(4,297	)		—			511		$	(3,786	)		(3,786	)
Other comprehensive income (loss)
Foreign currency translation gain		—		—		—			—			—			157			(33	)		124
Cash flow hedging losses, net		—		—		—			—			—			(1	)		—			(1	)
Unrealized gain on securities		—		—		—			—			—			2			—			2
Defined benefit plans, net (Note 29)		—		—		—			—			—			1,430			—			1,430

Other comprehensive income (loss)		—		—		—			—			—			1,588			(33	)		1,555			1,555

Comprehensive income (loss)																				$	(2,231	)

Common stock related to settlement of UAW hourly retiree medical plan		—		—		3			4,933			—			—			—						4,936
Common stock warrants related to settlement of UAW hourly retiree medical plan		—		—		—			220			—			—			—						220
Participation in GM Daewoo equity rights offering		—		—		—			108			—			—			(108	)					—
Purchase of noncontrolling interest in CAMI		—		—		—			—			—			—			(100	)					(100	)
Cash dividends paid on Series A Preferred Stock		—		—		—			—			(97	)		—			—						(97	)
Other		—		—		—			—			—			—			30						30

Balance December 31, 2009, Successor		—		—		15			24,040			(4,394	)		1,588			708						21,957
Net income		—		—		—			—			6,172			—			331		$	6,503			6,503
Other comprehensive income (loss)
Foreign currency translation gain		—		—		—			—			—			223			(13	)		210
Cash flow hedging losses, net		—		—		—			—			—			(22	)		—			(22	)
Unrealized loss on securities		—		—		—			—			—			(7	)		—			(7	)
Defined benefit plans, net (Note 29)		—		—		—			—			—			(545	)		—			(545	)

Other comprehensive income (loss)		—		—		—			—			—			(351	)		(13	)		(364	)		(364	)

Comprehensive income (loss)																				$	6,139

Reclassification of Series A Preferred Stock to permanent equity		5,536		—		—			—			—			—			—						5,536
Issuance of Series B Preferred Stock		—		4,855		—			—			—			—			—						4,855
Dividends declared or paid to noncontrolling interest		—		—		—			—			—			—			(85	)					(85	)
Repurchase of noncontrolling interest shares		—		—		—			1			—			—			(7	)					(6	)
Sale of businesses		—		—		—			—			—			14			(18	)					(4	)
Stock-based compensation		—		—		—			216			—			—			—						216
Effect of adoption of amendments to ASC 810 regarding variable interest entities (Note 4)		—		—		—			—			—			—			76						76
Cash dividends paid on Series A Preferred Stock and Cumulative dividends on Series B Preferred Stock and charge related to purchase of Series A Preferred Stock		—		—		—			—			(1,512	)		—			—						(1,512	)
Other		—		—		—			—			—			—			(13	)					(13	)

Balance December 31, 2010, Successor	$	5,536	$	4,855	$	15		$	24,257		$	266		$	1,251		$	979					$	37,159

Reference should be made to the notes to consolidated financial statements.

147

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Operations

General Motors Company was formed by the United States Department of the Treasury (UST) in 2009 originally as a Delaware limited liability company, Vehicle Acquisition Holdings LLC, and subsequently converted to a Delaware corporation, NGMCO, Inc. This company, which on July 10, 2009 acquired substantially all of the assets and assumed certain liabilities of General Motors Corporation (363 Sale) and changed its name to General Motors Company, is sometimes referred to in these consolidated financial statements for the periods on or subsequent to July 10, 2009 as “we,” “our,” “us,” “ourselves,” the “Company,” “General Motors,” or “GM,” and is the successor entity solely for accounting and financial reporting purposes (Successor). General Motors Corporation is sometimes referred to in these consolidated financial statements, for the periods on or before July 9, 2009, as “Old GM.” Prior to July 10, 2009 Old GM operated the business of the Company, and pursuant to the agreement with the Securities and Exchange Commission (SEC), as described in a no-action letter issued to Old GM by the SEC Staff on July 9, 2009 regarding our filing requirements and those of Motors Liquidation Company (MLC), the accompanying consolidated financial statements include the financial statements and related information of Old GM as it is our predecessor entity solely for accounting and financial reporting purposes (Predecessor). On July 10, 2009 in connection with the 363 Sale, General Motors Corporation changed its name to Motors Liquidation Company, which is sometimes referred to in these consolidated financial statements for the periods on or after July 10, 2009 as “MLC.” MLC continues to exist as a distinct legal entity for the sole purpose of liquidating its remaining assets and liabilities.

On October 1, 2010 we acquired 100% of the outstanding equity interests of AmeriCredit Corp. (AmeriCredit), an automotive finance company which we subsequently renamed General Motors Financial Company, Inc. (GM Financial).

We develop, produce and market cars, trucks and parts worldwide. We also conduct finance operations through GM Financial. These financing operations consist principally of financing automobile purchases and leases for retail customers.

We analyze the results of our business through our five segments, which are GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO), GM South America (GMSA) and GM Financial. Nonsegment operations are classified as Corporate. Corporate includes investments in Ally Financial, Inc. (Ally Financial) (formerly GMAC Inc.), certain centrally recorded income and costs, such as interest, income taxes and corporate expenditures, certain nonsegment specific revenues and expenses, including costs related to the Delphi Benefit Guarantee Agreements (as subsequently defined in Note 20) and a portfolio of automotive retail leases.

We own a 9.9% equity interest in Ally Financial, which is accounted for as a cost method investment because we cannot exercise significant influence. Ally Financial provides a broad range of financial services, including consumer vehicle financing, automotive dealership and other commercial financing, residential mortgage services, and automobile service contracts.

Note 2. Chapter 11 Proceedings and the 363 Sale

Background

Over time as Old GM’s market share declined in North America, Old GM needed to continually restructure its business operations to reduce cost and excess capacity. Legacy labor costs and obligations and capacity in its dealer network made Old GM less competitive than new entrants into the U.S. market. These factors continued to strain Old GM’s liquidity. In 2005 Old GM incurred significant losses from operations and from restructuring activities such as providing support to Delphi Corporation (Delphi) and other efforts intended to reduce operating costs. Old GM managed its liquidity during this time through a series of cost reduction initiatives, capital markets transactions and sales of assets. However, the global credit market crisis had a dramatic effect on Old GM and the automotive industry. In the second half of 2008, the increased turmoil in the mortgage and overall credit markets (particularly the lack of financing for buyers or lessees of vehicles), the continued reductions in U.S. housing values, the volatility in the price of oil, recessions in the U.S. and Western Europe and the slowdown of economic growth in the rest of the world created a substantially more difficult business environment. The ability to execute capital markets transactions or sales of assets was extremely limited, vehicle sales in North America and Western Europe contracted severely, and the pace of vehicle sales in the rest of the world slowed. Old GM’s liquidity position, as well as its operating performance, were negatively affected by these economic and industry conditions and by other financial and business factors, many of which were beyond its control.

148

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In December 2008 Old GM requested and received financial assistance from the U.S. government and entered into a loan and security agreement with the UST, which was subsequently amended (UST Loan Agreement). In early 2009 Old GM’s business results and liquidity continued to deteriorate, and, as a result, Old GM obtained additional funding from the UST under the UST Loan Agreement. Old GM also received funding from Export Development Canada (EDC), a corporation wholly-owned by the government of Canada, under a loan and security agreement entered into in April 2009 (EDC Loan Facility).

As a condition to obtaining the loans under the UST Loan Agreement, Old GM was required to submit a Viability Plan in February 2009 that included specific actions intended to result in the following:

•

Repayment of all loans, interest and expenses under the UST Loan Agreement, and all other funding provided by the U.S. government;

•

Compliance with federal fuel efficiency and emissions requirements and commencement of domestic manufacturing of advanced technology vehicles;

•

Achievement of a positive net present value, using reasonable assumptions and taking into account all existing and projected future costs;

•

Rationalization of costs, capitalization and capacity with respect to its manufacturing workforce, suppliers and dealerships; and

•

A product mix and cost structure that is competitive in the U.S. marketplace.

The UST Loan Agreement also required Old GM to, among other things, use its best efforts to achieve the following restructuring targets:

Debt Reduction

•

Reduction of its outstanding unsecured public debt by not less than two-thirds through conversion of existing unsecured public debt into equity, debt and/or cash or by other appropriate means.

Labor Modifications

•

Elimination of the payment of any compensation or benefits to U.S. employees who have been fired, laid-off, furloughed or idled, other than customary severance pay; and

•

Application of work rules for U.S. employees in a manner that is competitive with the work rules for employees of transplant automakers.

149

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

VEBA Modifications

•

Modification of its retiree healthcare obligations arising under the 2008 UAW Settlement Agreement under which responsibility for providing healthcare for International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW) retirees, their spouses and dependents would permanently shift from Old GM to the New Plan funded by the UAW Retiree Medical Benefits Trust (New VEBA), such that payment or contribution of not less than one-half of the value of each future payment was to be made in the form of Old GM common stock, subject to certain limitations.

Indebtedness and VEBA obligations

In April 2009 Old GM commenced exchange offers for certain unsecured notes to reduce its unsecured debt in order to comply with the debt reduction condition of the UST Loan Agreement.

In addition, Old GM commenced discussions with the UAW and the VEBA-settlement class representative regarding the terms of potential VEBA modifications.

Other Cost Reduction and Restructuring Actions

In addition to the efforts to reduce debt and modify the VEBA obligations, the Revised Viability Plan also contemplated the following cost reduction efforts:

•

Extended shutdowns of certain North American manufacturing facilities in order to reduce dealer inventory;

•

Refocus its resources on four core U.S. brands: Chevrolet, Cadillac, Buick and GMC;

•

Acceleration of the resolution for Saab Automobile AB (Saab), HUMMER and Saturn and no planned future investment for Pontiac, which was phased out by the end of 2010;

150

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

Acceleration of the reduction in U.S. nameplates to 34 by 2010 — there were 34 nameplates at December 31, 2010;

•

A reduction in the number of U.S. dealers from 6,246 in 2008 to 3,605 in 2010 — we have completed the federal dealer arbitration process and reduced the number of U.S. dealers to 4,500 at December 31, 2010;

•

A reduction in the total number of plants in the U.S. to 34 by the end of 2010 and 31 by 2012 — there were 40 plants in the U.S. at December 31, 2010; and

•

Old GM had previously announced that it would reduce salaried employment levels on a global basis by 10,000 during 2009 and had instituted several programs to effect reductions in salaried employment levels. Old GM had also negotiated a revised labor agreement with the Canadian Auto Workers Union (CAW) to reduce its hourly labor costs to approximately the level paid to the transplant automakers; however, such agreement was contingent upon receiving longer term financial support for its Canadian operations from the Canadian federal and Ontario provincial governments.

Chapter 11 Proceedings

Old GM was not able to complete the cost reduction and restructuring actions in its Revised Viability Plan, including the debt reductions and VEBA modifications, which resulted in extreme liquidity constraints. As a result, on June 1, 2009 Old GM and certain of its direct and indirect subsidiaries filed voluntary petitions for relief under Chapter 11 (Chapter 11 Proceedings) of the U.S. Bankruptcy Code (Bankruptcy Code) in the U.S. Bankruptcy Court for the Southern District of New York (Bankruptcy Court).


Description of Funding Commitment	Funding and Funding Commitments		Additional Notes Issued (a)		Total Obligation
UST Loan Agreement (b)	$	19,761	$	1,172	$	20,933
EDC funding (c)		6,294		161		6,455
DIP Facility		33,300		2,221		35,521

Total	$	59,355	$	3,554	$	62,909

(a)	Old GM did not receive any proceeds from the issuance of these promissory notes, which were issued as additional compensation to the UST and EDC.

(b)	Includes debt of $361 million, which the UST loaned to Old GM under the warranty program.

(c)

151

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

363 Sale

On July 10, 2009 we completed the acquisition of substantially all of the assets and assumed certain liabilities of Old GM and certain of its direct and indirect subsidiaries (collectively, the Sellers). The 363 Sale was consummated in accordance with the Amended and Restated Master Sale and Purchase Agreement, dated June 26, 2009, as amended, (Purchase Agreement) between us and the Sellers, and pursuant to the Bankruptcy Court’s sale order dated July 5, 2009.

In connection with the 363 Sale, the purchase price paid to Old GM was composed of:

•

The UST’s return of the warrants Old GM previously issued to it;

•

Our assumption of certain specified liabilities of Old GM (including debt of $7.1 billion owed under the DIP Facility).

Under the Purchase Agreement, we are obligated to issue Adjustment Shares to MLC in the event that allowed general unsecured claims against MLC, as estimated by the Bankruptcy Court, exceed $35.0 billion. The maximum number of Adjustment Shares issuable is 30 million shares (subject to adjustment to take into account stock dividends, stock splits and other transactions). The number of Adjustment Shares to be issued is calculated based on the extent to which estimated general unsecured claims exceed $35.0 billion with the maximum number of Adjustment Shares issued if estimated general unsecured claims total $42.0 billion or more. In the period July 10, 2009 to December 31, 2009 we determined that it was probable that general unsecured claims allowed against MLC would ultimately exceed $35.0 billion by at least $2.0 billion. In the circumstance where estimated general unsecured claims equal $37.0 billion, we would have been required to issue 8.6 million Adjustment Shares to MLC as an adjustment to the purchase price. At December 31, 2009 we recorded a liability of $162 million included in Accrued liabilities. In the year ended December 31, 2010 the liability was adjusted quarterly based on available information. Based on information which became available in the three months ended December 31, 2010, we concluded it was no longer probable that general unsecured claims would exceed $35.0 billion and we reversed to income our previously recorded liability of $231 million for the contingently issuable Adjustment Shares.

Agreements with the UST, EDC and New VEBA

On July 10, 2009 we entered into the UST Credit Agreement and assumed debt of $7.1 billion maturing on July 10, 2015 that Old GM incurred under its DIP Facility (UST Loans). Immediately after entering into the UST Credit Agreement, we made a partial prepayment, reducing the UST Loans principal balance to $6.7 billion. We also entered into the VEBA Note Agreement and issued a note in the principal amount of $2.5 billion (VEBA Notes) to the New VEBA. Through our wholly-owned subsidiary General Motors of Canada Limited (GMCL), we also entered into the amended and restated Canadian Loan Agreement with EDC, as a result of which GMCL has a CAD $1.5 billion (equivalent to $1.3 billion when entered into) term loan (Canadian Loan).

152

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Refer to Note 19 for additional information on the UST Loans, VEBA Notes and the Canadian Loan.

Issuance of Common Stock, Preferred Stock and Warrants

On July 10, 2009 we issued the following securities to the UST, Canada GEN Investment Corporation (formerly 7176384 Canada Inc.), a corporation organized under the laws of Canada (Canada Holdings), the New VEBA and MLC (shares in millions):


	Common Stock		Series A Preferred Stock
UST		912		84
Canada Holdings		175		16
New VEBA (a)		263		260
MLC (a)		150		—

		1,500		360

(a)	New VEBA also received a warrant to acquire 46 million shares of our common stock and MLC received two warrants, each to acquire 136 million shares of our common stock.

Preferred Stock

The Series A Preferred Stock was previously classified as temporary equity because the holders of the Series A Preferred Stock, as a class, owned greater than 50% of our common stock and therefore had the ability to exert control, through the power to vote for the election of our directors, over various matters, which could include compelling us to redeem the Series A Preferred Stock in 2014 or later. In December 2010 we purchased 84 million shares of Series A Preferred Stock, held by the UST. Since the remaining holders of our Series A Preferred Stock, Canada Holdings and the New VEBA, do not own a majority of our common stock and therefore do not have the ability to exert control, through the power to vote for the election of our directors, over various matters, including compelling us to redeem the Series A Preferred Stock when it becomes callable by us on or after December 31, 2014, our classification of the Series A Preferred Stock as temporary equity is no longer appropriate. As such, upon the purchase of the Series A Preferred Stock held by the UST, the Series A Preferred Stock held by Canada Holdings and the New VEBA was reclassified to permanent equity at its carrying amount of $5.5 billion. Refer to Note 29 for additional information on the purchase of shares of Series A Preferred Stock.

Warrants

153

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Additional Modifications to Pension and Other Postretirement Plans Contingent upon the Completion of the 363 Sale

•

Elimination of the post 65 benefits and capping the pre 65 benefits in the non-UAW hourly retiree medical plan;

•

Capping the life benefit for non-UAW retirees and future retirees at $10,000 in the U.S. hourly life plan;

•

Capping the life benefit for existing salaried retirees at $10,000, reduced the retiree benefit for future salaried retirees and eliminated the executive benefit for the U.S. salaried life plan;

•

Elimination of a portion of nonqualified benefits in the U.S. executive retirement plan; and

•

Elimination of the flat monthly special lifetime benefit of $66.70 that was to commence on January 1, 2010 for the U.S. hourly pension plan.

Accounting for the Effects of the Chapter 11 Proceedings and the 363 Sale

Chapter 11 Proceedings

Accounting Standards Codification (ASC) 852, “Reorganizations,” (ASC 852) is applicable to entities operating under Chapter 11 of the Bankruptcy Code. ASC 852 generally does not affect the application of U.S. GAAP that we and Old GM followed to prepare the consolidated financial statements, but it does require specific disclosures for transactions and events that were directly related to the Chapter 11 Proceedings and transactions and events that resulted from ongoing operations.

Old GM prepared its consolidated financial statements in accordance with the guidance in ASC 852 in the period June 1, 2009 through July 9, 2009. Revenues, expenses, realized gains and losses, and provisions for losses directly related to the Chapter 11 Proceedings were recorded in Reorganization gains, net. Reorganization gains, net do not constitute an element of operating loss due to their nature and due to the requirement of ASC 852 that they be reported separately. Old GM’s balance sheet prior to the 363 Sale distinguished prepetition liabilities subject to compromise from prepetition liabilities not subject to compromise and from postpetition liabilities. Cash amounts provided by or used in the Chapter 11 Proceedings are separately disclosed in the statement of cash flows.

Application of Fresh-Start Reporting

Our reorganization value was determined using the sum of:

•

Our discounted forecast of expected future cash flows from our business subsequent to the 363 Sale, discounted at rates reflecting perceived business and financial risks;

•

The fair value of operating liabilities;

•

The fair value of our non-operating assets, primarily our investments in nonconsolidated affiliates and cost method investments; and

154

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

The amount of cash we maintained at July 10, 2009 that we determined to be in excess of the amount necessary to conduct our normal business activities.

The sum of the first, third and fourth bullet items equals our Enterprise value.

Our discounted forecast of expected future cash flows included:

•

Industry seasonally adjusted annual rate (SAAR) of vehicle sales and our related market share based on vehicle sales volumes as follows:

•

Worldwide — 59.1 million vehicles and market share of 11.9% in 2010 increasing to 81.0 million vehicles and market share of 12.2% in 2014;

•

North America — 14.2 million vehicles and market share of 17.8% in 2010 increasing to 19.8 million vehicles and decreasing market share of 17.6% in 2014;

•

Europe — 16.8 million vehicles and market share of 9.5% in 2010 increasing to 22.5 million vehicles and market share of 10.3% in 2014;

•

LAAM — 6.1 million vehicles and market share of 18.0% in 2010 increasing to 7.8 million vehicles and market share of 18.4% in 2014; and

•

AP — 22.0 million vehicles and market share of 8.4% in 2010 increasing to 30.8 million vehicles and market share of 8.6% in 2014.

•

Projected product mix, which incorporates the 2010 introductions of the Chevrolet Volt, Chevrolet/Holden Cruze, Cadillac CTS Coupe, Opel/Vauxhall Meriva and Opel/Vauxhall Astra Station Wagon;

•

Projected changes in our cost structure due to restructuring initiatives that encompass reduction of hourly and salaried employment levels by approximately 18,000;

•

The terms of the 2009 UAW Retiree Settlement Agreement, which released us from UAW retiree healthcare claims incurred after December 31, 2009;

•

Projected capital spending to support existing and future products, which range from $4.9 billion in 2010 to $6.0 billion in 2014; and

•

Anticipated changes in global market conditions.

•

155

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

To estimate the value of our investment in nonconsolidated affiliates we used multiple valuation techniques, but we primarily used discounted cash flow analyses. Our excess cash of $33.8 billion, including Restricted cash and marketable securities of $21.2 billion, represents cash in excess of the amount necessary to conduct our ongoing day-to-day business activities and to keep them running as a going concern. Refer to Note 15 for additional discussion of Restricted cash and marketable securities.

•

Our estimated WACC;

•

Our estimated long-term growth rates; and

•

Our estimate of industry sales and our market share in each of Old GM’s former segments.

The following table reconciles our enterprise value to our estimated reorganization value and the estimated fair value of our Equity (in millions except per share amounts):


	Successor
	July 10, 2009
Enterprise value	$	36,747
Plus: Fair value of operating liabilities (a)		80,832

Estimated reorganization value (fair value of assets) (b)		117,579
Adjustments to tax and employee benefit-related assets (c)		(6,074	)
Goodwill (c)		30,464

Carrying amount of assets	$	141,969

Enterprise value	$	36,747
Less: Fair value of debt		(15,694	)
Less: Fair value of warrants issued to MLC (additional paid-in-capital)		(2,405	)
Less: Fair value of liability for Adjustment Shares		(113	)
Less: Fair value of noncontrolling interests		(408	)
Less: Fair value of Series A Preferred Stock (d)		(1,741	)

Fair value of common equity (common stock and additional paid-in capital)	$	16,386

Common shares outstanding (d)		1,238
Per share value	$	13.24

(a)	Operating liabilities are our total liabilities excluding the liabilities listed in the reconciliation above of our enterprise value to the fair value of our common equity.

(b)	Reorganization value does not include assets with a carrying amount of $1.8 billion and a fair value of $2.0 billion at July 9, 2009 that MLC retained.

(c)

156

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

in goodwill. Our employee related obligations were recorded in accordance with ASC 712, “Compensation-Nonretirement Postemployment Benefits” (ASC 712) and ASC 715, “Compensation Benefits” (ASC 715) and deferred income taxes were recorded in accordance with ASC 740, “Income Taxes” (ASC 740).

(d)

The 260 million shares of Series A Preferred Stock, 263 million shares of our common stock, and warrant to acquire 46 million shares of our common stock issued to the New VEBA on July 10, 2009 were not considered outstanding until the UAW retiree medical plan was settled on December 31, 2009. The fair value of these instruments was included in the liability recognized at July 10, 2009 for this plan. The common shares issued to the New VEBA are excluded from common shares outstanding at July 10, 2009. Refer to Note 20 for a discussion of the termination of our UAW hourly retiree medical plan and Mitigation Plan and the resulting payment terms to the New VEBA.

157

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Effect of 363 Sale Transaction and Application of Fresh-Start Reporting

The following table summarizes the adjustments to Old GM’s consolidated balance sheet as a result of the 363 Sale and the application of fresh-start reporting and presents our consolidated balance sheet at July 10, 2009 (dollars in millions):


	Predecessor July 9, 2009			Reorganization via 363 Sale Adjustments			Fresh-Start Reporting Adjustments			Successor after Reorganization via 363 Sale and Fresh- Start Reporting Adjustments July 10, 2009
ASSETS
Current Assets
Cash and cash equivalents	$	19,054		$	(41	)	$	—		$	19,013
Marketable securities		139			—			—			139

Total cash and marketable securities		19,193			(41	)		—			19,152
Restricted cash and marketable securities		20,290			(1,175	)		—			19,115
Accounts and notes receivable, net		8,396			3,859			(79	)		12,176
Inventories		9,802			(140	)		(66	)		9,596
Equipment on operating leases, net		3,754			2			90			3,846
Other current assets and deferred income taxes		1,874			75			69			2,018

Total current assets		63,309			2,580			14			65,903
Non-Current Assets
Restricted cash and marketable securities		1,401			(144	)		—			1,257
Equity in net assets of non consolidated affiliates		1,972			4			3,822			5,798
Equipment on operating leases, net		23			—			3			26
Property, net		36,216			(137	)		(17,579	)		18,500
Goodwill		—			—			30,464			30,464
Intangible assets, net		210			—			15,864			16,074
Deferred income taxes		79			550			43			672
Prepaid pension		121			—			(24	)		97
Other assets		1,244			(12	)		1,946			3,178

Total non-current assets		41,266			261			34,539			76,066

Total Assets	$	104,575		$	2,841		$	34,553		$	141,969

LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities
Accounts payable (principally trade)	$	13,067		$	(42	)	$	42		$	13,067
Short-term debt and current portion of long-term debt		43,412			(30,179	)		(56	)		13,177
Postretirement benefits other than pensions		187			1,645			124			1,956
Accrued liabilities		25,607			(81	)		(1,132	)		24,394

Total current liabilities		82,273			(28,657	)		(1,022	)		52,594
Non-Current Liabilities
Long-term debt		4,982			(977	)		(1,488	)		2,517
Postretirement benefits other than pensions		3,954			14,137			310			18,401
Pensions		15,434			14,432			2,113			31,979
Liabilities subject to compromise		92,611			(92,611	)		—			—
Other liabilities and deferred income taxes		14,449			278			811			15,538

Total non-current liabilities		131,430			(64,741	)		1,746			68,435

Total Liabilities		213,703			(93,398	)		724			121,029
Preferred stock		—			1,741			—			1,741
Equity (Deficit)
Old GM
Preferred stock		—			—			—			—
Preference stock		—			—			—			—
Common stock		1,018			—			(1,018	)		—
Capital surplus (principally additional paid-in capital)		16,494			—			(16,494	)		—
General Motors Company
Common stock		—			12			—			12
Capital surplus (principally additional paid-in capital)		—			18,779			—			18,779
Retained earnings (Accumulated deficit)		(91,602	)		63,492			28,110			—
Accumulated other comprehensive income (loss)		(35,370	)		12,295			23,075			—

Total stockholders’ equity (deficit)		(109,460	)		94,578			33,673			18,791
Noncontrolling interests		332			(80	)		156			408

Total equity (deficit)		(109,128	)		94,498			33,829			19,199

Total Liabilities and Equity (Deficit)	$	104,575		$	2,841		$	34,553		$	141,969

158

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Reorganization Via 363 Sale Adjustments

The following table summarizes the reorganization adjustments previously discussed including the liabilities that were extinguished or reclassified from Liabilities subject to compromise as part of the 363 Sale (dollars in millions):


	UST (a)			Canada Holdings (b)			New VEBA (c)			Pension and OPEB (d)			MLC (e)			Other (f)			Total
Assets MLC retained, net	$	—		$	—		$	—		$	—		$	1,797		$	—		$	1,797

Accounts payable (principally trade)		—			—			—			—			(42	)		—			(42	)
Short-term debt and current portion of long-term debt extinguished		(31,294	)		(5,972	)		—			—			(1,278	)		—			(38,544	)
Short-term debt and current portion of long-term debt assumed		7,073			1,292			—			—			—			—			8,365

Net reduction to short-term debt and current portion of long-term debt		(24,221	)		(4,680	)		—			—			(1,278	)		—			(30,179	)
Postretirement benefits other than pensions, current		—			—			1,409			236			—			—			1,645
Accrued liabilities		(54	)		—			—			219			(310	)		64			(81	)

Total current liabilities		(24,275	)		(4,680	)		1,409			455			(1,630	)		64			(28,657	)
Long-term debt extinguished		—			—			—			—			(977	)		—			(977	)
Postretirement benefits other than pensions, non-current		—			—			10,547			3,590			—			—			14,137
Pensions		—			—			—			14,432			—			—			14,432
Liabilities subject to compromise		(20,824	)		—			(19,687	)		(23,453	)		(28,553	)		(94	)		(92,611	)
Other liabilities and deferred income taxes		—			—			—			391			(184	)		71			278

Total liabilities		(45,099	)		(4,680	)		(7,731	)		(4,585	)		(31,344	)		41			(93,398	)

Accumulated other comprehensive income balances relating to entities MLC retained		—			—			—			—			(21	)		—			(21	)
Additional EDC funding		—			(3,887	)		—			—			—			—			(3,887	)
Fair value of preferred stock issued		1,462			279			—			—			—			—			1,741
Fair value of common stock issued		12,076			2,324			—			—			1,986			—			16,386
Fair value of warrants		—			—			—			—			2,405			—			2,405
Release of valuation allowances and other tax adjustments		—			—			—			—			—			(751	)		(751	)

Reorganization gain		(31,561	)		(5,964	)		(7,731	)		(4,585	)		(25,177	)		(710	)		(75,728	)

Amounts attributable to noncontrolling interests		—			—			—			—			(80	)		—			(80	)
Amounts recorded in Accumulated other comprehensive income as part of Reorganization via 363 Sale adjustments		—			—			7,731			4,585			—			—			12,316

Total retained earnings adjustment	$	(31,561	)	$	(5,964	)	$	—		$	—		$	(25,257	)	$	(710	)	$	(63,492	)

159

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(a)

Liabilities owed to the UST under the UST Loan Agreement of $20.6 billion, with accrued interest of $251 million, and under the DIP Facility of $30.9 billion with accrued interest of $54 million and borrowings related to the warranty program of $361 million were extinguished in connection with the 363 Sale through the assumption of the UST Loans of $7.1 billion and the issuance of 912 million shares of our common stock with a fair value of $12.1 billion and 84 million shares of Series A Preferred Stock with a fair value of $1.5 billion.

(b)

Liabilities owed to Canada Holdings under the EDC Loan Facility of $2.6 billion and under the DIP Facility of $3.4 billion were extinguished in connection with the 363 Sale through the assumption of the Canadian Loan of CAD $1.5 billion (equivalent of $1.3 billion when entered into) and the issuance of 175 million shares of our common stock with a fair value of $2.3 billion and 16 million shares of Series A Preferred Stock with a fair value of $279 million. In addition, we recorded an increase in Accounts and notes receivable, net of $3.9 billion at July 10, 2010 for amounts to be received from the EDC in exchange for the equity Canada Holdings received in connection with the 363 Sale.

(c)

As a result of modifications to the UAW hourly retiree medical plan that became effective upon the 363 Sale, we recorded a reorganization gain of $7.7 billion that represented the difference between the carrying amount of our $19.7 billion plan obligation at July 9, 2009 and the July 10, 2009 actuarially determined value of $12.0 billion for our modified plan based on the revised terms of the 2009 UAW Retiree Settlement Agreement. Our obligation to the UAW hourly retiree medical plan was settled on December 31, 2009. Prior to the December 31, 2009 settlement, the VEBA Notes, Series A Preferred Stock, common stock and warrants contributed to the New VEBA were not considered outstanding. Refer to Note 20 for additional information on the 2009 UAW Retiree Settlement Agreement.

(d)

As a result of modifications to benefit plans that became effective upon the 363 Sale, we recorded a reorganization gain of $4.6 billion, which represented the difference between the carrying amount of our obligations under certain plans at July 9, 2009, and our new actuarially determined obligations at July 10, 2009. Major changes include:

•

For the non-UAW hourly retiree healthcare plan, we recorded a $2.7 billion gain resulting from elimination of post 65 benefits and placing a cap on pre 65 benefits;

•

For retiree life insurance we recorded a $923 million gain, resulting from capping benefits at $10,000 for non-UAW hourly retirees and future retirees, capping benefits at $10,000 for existing salaried retirees, reducing benefits for future salaried retirees, and elimination of executive benefits;

•

For the U.S. supplemental executive retirement plan, we recorded a $221 million gain from the elimination of a portion of nonqualified benefits; and

•

For the U.S. hourly defined benefit pension plan, we recorded a $675 million gain, representing the net of a $3.3 billion obligation decrease resulting from the elimination of the flat monthly special lifetime benefit that was to commence on January 1, 2010, offset by an obligation increase of $2.6 billion from a discount rate decrease from 6.25% to 5.83% and other assumption changes.

(e)

Represents the net liabilities MLC retained in connection with the 363 Sale, primarily consisting of Old GM’s unsecured debt and amounts owed to the UST under the DIP Facility of $1.2 billion. These net liabilities were settled in exchange for assets retained by MLC with a carrying amount of $1.8 billion and a fair value of $2.0 billion, 150 million shares of our common stock with a fair value of $2.0 billion, warrants to acquire an additional 273 million shares of our common stock with a fair value of $2.4 billion and the right to contingently receive the Adjustment Shares. We increased Other liabilities and deferred income taxes to reflect the estimated fair value of $113 million for our obligation to issue the Adjustment Shares to MLC.

160

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the carrying amount of the assets MLC retained (dollars in millions):


	Predecessor
	Carrying amount at July 9, 2009
Cash and cash equivalents	$	41
Restricted cash and marketable securities, current		1,175
Accounts and notes receivable, net		28
Inventories		140
Equipment on operating leases, net		(2	)
Other current assets and deferred income taxes		46
Restricted cash and marketable securities, non-current		144
Equity in net assets of nonconsolidated affiliates		(4	)
Property, net		137
Deferred income taxes		80
Other assets, non-current		12

Total assets	$	1,797

(f)

We assumed $94 million of certain employee benefit obligations that were included in Liabilities subject to compromise that are now included in Accrued liabilities ($64 million) and Other liabilities ($30 million). These primarily relate to postemployment benefits not modified as a part of the 363 Sale. In addition, in connection with the 363 Sale, we concluded that it was more likely than not that certain net deferred tax assets, primarily in Brazil, will be realized. Therefore, we reversed the existing valuation allowances related to such deferred tax assets resulting in an increase of $121 million in Other current assets and an increase of $630 million in Deferred income taxes, non-current. To record other tax effects of the 363 Sale, we recorded an increase to Other liabilities of $41 million. We recorded a net reorganization gain of $710 million in Income tax expense (benefit) as a result of these adjustments.

Fresh-Start Reporting Adjustments

In applying fresh-start reporting at July 10, 2009, which generally follows the provisions of ASC 805, “Business Combinations” (ASC 805), we recorded the assets acquired and the liabilities assumed from Old GM at fair value except for deferred income taxes and certain liabilities associated with employee benefits. These adjustments are final and no determinations of fair value are considered provisional. The significant assumptions related to the valuations of our assets and liabilities recorded in connection with fresh-start reporting are subsequently discussed.

Accounts and Notes Receivable

We recorded Accounts and notes receivable at their fair value of $12.2 billion, which resulted in a decrease of $79 million.

Inventory

We recorded Inventory at its fair value of $9.6 billion, which was determined as follows:

•

Finished goods were determined based on the estimated selling price of finished goods on hand less costs to sell including disposal and holding period costs, and a reasonable profit margin on the selling and disposal effort for each specific category of finished goods being evaluated. Finished goods primarily include new vehicles, off-lease and company vehicles and service parts and accessories;

•

Work in process was determined based on the estimated selling price once completed less total costs to complete the manufacturing process, costs to sell including disposal and holding period costs, a reasonable profit margin on the remaining manufacturing, selling and disposal effort; and

161

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

Raw materials were determined based on current replacement cost.

Compared to amounts recorded by Old GM, finished goods increased by $622 million, including elimination of Old GM’s LIFO reserve of $1.1 billion, work in process decreased by $555 million, raw materials decreased by $39 million and sundry items with nominal individual value decreased by $94 million.

Equipment on Operating Leases, Current and Non-Current

We recorded Equipment on operating leases, current and non-current at its fair value of $3.9 billion, which was determined as follows: (1) automotive leases to daily rental car companies were determined based on the market value of comparable vehicles; and (2) automotive retail leases were determined by discounting the expected future cash flows generated by the automotive retail leases including the estimated residual value of the vehicles when sold. Equipment on operating leases, current and non-current increased from that recorded by Old GM by $93 million as a result of our determination of fair value.

Other Current Assets and Deferred Income Taxes

We recorded Other current assets which included prepaid assets and other current assets at their fair value of $1.5 billion and deferred income taxes of $487 million. These amounts are $69 million higher than the amounts recorded by Old GM.

Equity in Net Assets of Nonconsolidated Affiliates

We recorded Equity in net assets of nonconsolidated affiliates at its fair value of $5.8 billion. Fair value of these investments was determined using discounted cash flow analyses, which included the following assumptions and estimates:

•

Forecasted cash flows for the seven months ended December 31, 2009 and the years ending 2010 through 2013, which incorporated projected sales volumes, product mixes, projected capital spending to support existing and future products, research and development of new products and technologies and anticipated changes in local market conditions;

•

A terminal value, which was calculated by assuming a maintainable level of after-tax debt-free cash flow and multiplying it by a capitalization factor that reflected the investor’s WACC adjusted for the estimated long-term perpetual growth rate;

•

A discount rate of 13.4% that considered various factors including risk premiums and tax rates to determine the investor’s WACC given the assumed capital structure of comparable companies; and

•

The fair value of investment property and investments in affiliates was determined using market comparables.

Equity in net assets of nonconsolidated affiliates was higher than Old GM’s by $3.8 billion as a result of our determination of fair value.

Property

We recorded Property, which includes land, buildings and land improvements, machinery and equipment, construction in progress and special tools, at its fair value of $18.5 billion. Fair value was based on the highest and best use of specific properties. To determine fair value we considered and applied three approaches:

•

The market or sales comparison approach which relies upon recent sales or offerings of similar assets on the market to arrive at a probable selling price. Certain adjustments were made to reconcile differences in attributes between the comparable sales and the appraised assets. This method was utilized for certain assets related to land, buildings and land improvements and information technology.

•

The cost approach which considers the amount required to construct or purchase a new asset of equal utility at current prices, with adjustments in value for physical deterioration, functional obsolescence and economic obsolescence. This method was

162

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

primarily utilized for certain assets related to land, buildings and land improvements, leasehold interests, and the majority of our machinery and equipment and tooling. Economic obsolescence represents a loss in value due to unfavorable external conditions such as the economics of our industry and was a factor in establishing fair value. Our machinery, equipment and special tools amounts, determined under the cost approach, were adjusted for economic obsolescence. Due to the downturn in the automotive industry, significant excess capacity exists and the application of the cost approach generally requires the replacement cost of an asset to be adjusted for physical deterioration, and functional and economic obsolescence. We estimated economic obsolescence as the difference between the discounted cash flows expected to be realized from our utilization of the assets as a group, compared to the initial estimate of value from the cost approach method. We did not reduce any fixed asset below its liquidation in place value as a result of economic obsolescence; however the effects of economic obsolescence caused some of our fixed assets to be recorded at their liquidation in place values.

•

The income approach which considers value in relation to the present worth of future benefits derived from ownership, usually measured through the capitalization of a specific level of income which can be derived from the subject asset. This method assumed fair value could not exceed the present value of the cash flows the assets generate discounted at a risk related rate of return commensurate with the level of risk inherent in the subject asset. This method was used to value certain assets related to buildings and improvements, leasehold interest, machinery and equipment and tooling.

The following table summarizes the components of Property as a result of the application of fresh-start reporting at July 10, 2009 and Property, net at July 9, 2009:


	Successor		Predecessor
	July 10, 2009		July 9, 2009
Land	$	2,524	$	1,040
Buildings and land improvements, net		3,731		8,490
Machinery and equipment, net		5,915		13,597
Construction in progress		1,838		2,307

Real estate, plants, and equipment, net		14,008		25,434
Special tools, net		4,492		10,782

Total property, net	$	18,500	$	36,216

Goodwill

We recorded Goodwill of $30.5 billion upon application of fresh-start reporting. When applying fresh-start reporting, certain accounts, primarily employee benefit and income tax related, were recorded at amounts determined under specific U.S. GAAP rather than fair value and the difference between the U.S. GAAP and fair value amounts gives rise to goodwill, which is a residual. Further, we recorded valuation allowances against certain of our deferred tax assets, which under ASC 852 also resulted in goodwill. Our employee benefit related accounts were recorded in accordance with ASC 712 and ASC 715 and deferred income taxes were recorded in accordance with ASC 740. None of the goodwill from this transaction is deductible for tax purposes.

Intangible Assets

We recorded Intangible assets of $16.1 billion at their fair values. The following is a summary of the approaches used to determine the fair value of our significant intangible assets:

•

We recorded $7.9 billion for the fair value of technology. The relief from royalty method was used to calculate the $7.7 billion fair value of developed technology. The significant assumptions used included:

•

Forecasted revenue for each technology category by Old GM’s former segments;

163

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

Royalty rates based on licensing arrangements for similar technologies and obsolescence factors by technology category;

•

Discount rates ranging from 24.0% to 26.0% based on our WACC and adjusted for perceived business risks related to these developed technologies; and

•

Estimated economic lives, which ranged from seven to 20 years.

•

The excess earnings method was used to determine the fair value of in-process research and development of $175 million. The significant assumptions used in this approach included:

•

Forecasted revenue for certain technologies not yet proven to be commercially feasible;

•

The probability and cost of obtaining commercial feasibility;

•

Discount rates ranging from 4.2% (when the probability of obtaining commercial feasibility was considered elsewhere in the model) to 36.0%; and

•

Estimated economic lives ranging from approximately 10 to 20 years.

•

The relief from royalty method was also used to calculate the fair value of brand names of $5.5 billion. The significant assumptions used in this method included:

•

Forecasted revenue for each brand name by Old GM’s former segments;

•

Royalty rates based on licensing arrangements for the use of brands and trademarks in the automotive industry and related industries;

•

Discount rates ranging from 22.8% to 27.0% based on our WACC and adjusted for perceived business risks related to these intangible assets; and

•

Indefinite economic lives for our ongoing brands.

•

Our most significant brands included Buick, Cadillac, Chevrolet, GMC, Opel/Vauxhall and OnStar. We also recorded defensive intangible assets associated with brands we eliminated, which included Pontiac, Saturn and Oldsmobile.

•

A cost approach was used to calculate the fair value of our dealer networks and customer relationships of $2.1 billion. The estimated fair value of our dealer networks of $1.6 billion was determined by multiplying our estimated costs to recreate our dealer networks by our estimate of an optimal number of dealers. An income approach was used to calculate the fair value of our customer relationships of $508 million. The significant assumptions used in this approach included:

•

Forecasted revenue;

•

Customer retention rates;

•

Profit margins; and

•

A discount rate of 20.8% based on an appropriate WACC and adjusted for perceived business risks related to these customer relationships.

•

We recorded other intangible assets of $560 million primarily related to existing contracts, including leasehold improvements, that were favorable relative to available market terms.

164

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the components of our intangible assets and their weighted-average amortization periods.


	Weighted-Average Amortization Period (years)		Recorded Value
Technology and related intellectual property		5	$	7,889
Brands		38		5,476
Dealer network and customer relationships		21		2,149
Favorable contracts		28		543
Other intangible assets		3		17

Total intangible assets			$	16,074

Deferred Income Taxes, Non-Current

We recorded Deferred income taxes, non-current of $672 million which was an increase of $43 million compared to that recorded by Old GM.

Other Assets, Non-Current

We recorded Other assets, non-current of $3.2 billion. Other assets, non-current differed from Old GM’s primarily related to: (1) an increase of $1.3 billion and $629 million in the value of our investments in Ally Financial common stock and preferred stock; (2) an increase of $175 million in the value of our investment in Saab; partially offset by (3) an elimination of $191 million for certain prepaid rent balances and other adjustments.

We calculated the fair value of our investment in Ally Financial common stock of $1.3 billion using a market multiple sum-of-the-parts methodology, a market approach. This approach considered the average price/tangible book value multiples of companies deemed comparable to each of Ally Financial’s Auto Finance, Commercial Finance and Insurance operations in determining the fair value of each of these operations, which were then aggregated to determine Ally Financial’s overall fair value. The significant inputs used in our fair value analysis were as follows:

•

Ally Financial’s June 30, 2009 financial statements, as well as the financial statements of comparable companies in the Auto Finance, Commercial Finance and Insurance industries;

•

Expected performance of Ally Financial, as well as our view on its ability to access capital markets; and

•

The value of Ally Financial’s mortgage operations, taking into consideration the continuing challenges in the housing markets and mortgage industry, and its need for additional liquidity to maintain business operations.

We calculated the fair value of our investment in Ally Financial preferred stock of $665 million using a discounted cash flow approach. The present value of the cash flows was determined using assumptions regarding the expected receipt of dividends on Ally Financial preferred stock and the expected call date. The discount rate of 16.9% was determined based on yields of similar Ally Financial securities.

Accounts Payable

We recorded Accounts payable at its fair value of $13.1 billion.

Debt

We recorded short-term debt, current portion of long-term debt and long-term debt at their total fair value of $15.7 billion, which was calculated using a discounted cash flow methodology using our implied credit rating of CCC for most of our debt instruments (our credit rating was not observable as a result of the Chapter 11 Proceedings), adjusted where appropriate for any security interests.

165

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the UST Loans and the Canadian Loan, carrying amount was determined to approximate fair value because these loans were fully collateralized by the restricted cash placed in escrow and were entered into on July 10, 2009 at market terms. Short-term debt, current portion of long-term debt and long-term debt decreased $1.5 billion as a result of our calculation of fair value. Refer to Note 15 for additional information on the escrow arrangement.

Pensions, Postretirement Benefits Other than Pensions, Current and Non-Current, and Prepaid Pensions

We recorded Pensions of $32.0 billion and Prepaid pensions of $97 million, which includes the actuarial measurement of those benefit plans that were not modified in connection with the 363 Sale. As a result of these actuarial measurements, our recorded value was $2.1 billion higher than Old GM’s for Pensions and Prepaid pensions for those plans not modified in connection with the 363 Sale. When the pension plans were measured at July 10, 2009, the weighted-average return on assets was 8.5% and 8.0% for U.S. and non-U.S. plans. The weighted-average discount rate utilized to measure the plans at July 10, 2009 was 5.9% and 5.8% for U.S. and non-U.S. plans.

We also recorded Postretirement benefits other than pensions, current and non-current of $20.4 billion, which is an increase of $434 million compared to the amounts recorded by Old GM for those plans not modified in connection with the 363 Sale. When the other non-UAW postretirement benefit plans were measured at July 10, 2009, the weighted-average discount rate used was 6.0% and 5.5% for the U.S. and non-U.S. plans. For the U.S. there are no significant uncapped healthcare plans remaining at December 31, 2009, and therefore, the healthcare cost trend rate does not have a significant effect on our U.S. plans. For non-U.S. plans the initial healthcare cost trend used was 5.4% and the ultimate healthcare cost trend rate was 3.3% with eight years to the ultimate trend rate.

Accrued Liabilities, Other Liabilities, and Deferred Income Taxes, Current and Non-Current

We recorded Accrued liabilities of $24.4 billion and Other liabilities and deferred income taxes of $15.5 billion. Accrued liabilities and Other liabilities differed from those of Old GM primarily relating to:

•

$1.2 billion less in deferred revenue, the fair value of which was determined based on our remaining performance obligations considering future costs associated with these obligations;

•

$349 million decrease in warranty liability, the fair value of which was determined by discounting the forecasted future cash flows based on historical claims experience using rates ranging from 1.4% in 2009 to 4.3% in 2017;

•

A decrease of $179 million to lease-related obligations;

•

A decrease of $162 million related to certain customer deposits;

•

$582 million increase in deferred income taxes; and

•

$980 million of recorded unfavorable contractual obligations, primarily related to the Delphi-GM Settlement Agreements. The fair value of the unfavorable contractual obligations was determined by discounting forecasted cash flows representing the unfavorable portions of contractual obligations at our implied credit rating. Refer to Note 22 for further information on the Delphi-GM Settlement Agreements.

Equity (Deficit) and Preferred Stock

The changes to Equity (Deficit) reflect our recapitalization, the elimination of Old GM’s historical equity, the issuance of our common stock, preferred stock and warrants to the UST, Canada Holdings and MLC at fair value, and the application of fresh-start reporting.

166

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Noncontrolling Interests

We recorded the fair value of our Noncontrolling interests at $408 million which was $156 million higher than Old GM.

363 Sale and Fresh-Start Reporting Adjustments

The following table summarizes Old GM’s Reorganization gains, net, arising from the 363 Sale and fresh-start reporting that primarily resulted from the adjustments previously discussed (dollars in millions):


	Predecessor
	January 1, 2009 Through July 9, 2009
Change in net assets resulting from the application of fresh-start reporting	$	33,829
Fair value of New GM’s Series A Preferred Stock, common shares and warrants issued in 363 Sale		20,532
Gain from the conversion of debt owed to UST to equity		31,561
Gain from the conversion of debt owed to EDC to equity		5,964
Gain from the modification and measurement of our VEBA obligation		7,731
Gain from the modification and measurement of other employee benefit plans		4,585
Gain from the settlement of net liabilities retained by MLC via the 363 Sale		25,177
Income tax benefit for release of valuation allowances and other tax adjustments		710
Other 363 Sale adjustments		(21	)

Total adjustment from 363 Sale Transaction and fresh-start reporting		130,068
Adjustment recorded to Income tax benefit for release of valuation allowances and other tax adjustments		(710	)
Other losses, net		(1,203	)

Total Reorganization gains, net	$	128,155

Other losses, net of $1.2 billion primarily relate to costs incurred during our Chapter 11 Proceedings, including:

•

Losses of $958 million on extinguishments of debt resulting from Old GM’s repayment of its secured revolving credit facility, its U.S. term loan, and its secured credit facility;

•

Losses of $398 million on contract rejections, settlements of claims and other lease terminations;

•

Professional fees of $38 million; and

•

Gain of $247 million related to the release of Accumulated other comprehensive income (loss) associated with previously designated derivative financial instruments.

Note 3. Basis of Presentation

Principles of Consolidation

The consolidated financial statements include our accounts and those of our subsidiaries that we control due to ownership of a majority voting interest. We continually evaluate our involvement with variable interest entities (VIEs) to determine whether we have variable interests and are the primary beneficiary of the VIE. When this criteria is met, we are required to consolidate the VIE. Our share of earnings or losses of nonconsolidated affiliates is included in our consolidated operating results using the equity method of accounting when we are able to exercise significant influence over the operating and financial decisions of the affiliate. We use the cost method of accounting if we are not able to exercise significant influence over the operating and financial decisions of the affiliate. All intercompany balances and transactions have been eliminated in consolidation. Old GM utilized the same principles of consolidation in its consolidated financial statements.

167

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Use of Estimates in the Preparation of the Financial Statements

The consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments, and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenue and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

GM Financial

The assets and liabilities of GM Financial, our automotive finance operations, are presented on a non-classified basis. The amounts presented for GM Financial have been adjusted to include the effect of our tax attributes on GM Financial’s deferred tax positions and provision for income taxes since the date of acquisition, which are not applicable to GM Financial on a stand-alone basis, and to eliminate the effect of transactions between GM Financial and the other members of the consolidated group. Accordingly, the amounts presented will differ from those presented by GM Financial on a stand-alone basis.

Change in Segments

In the year ended December 31, 2010 we changed our managerial and financial reporting structure so that certain entities geographically located within Russia and Uzbekistan were transferred from our GME segment to our GMIO segment and certain entities geographically located in Brazil, Argentina, Colombia, Ecuador, Venezuela, Bolivia, Chile, Paraguay, Peru and Uruguay were transferred from our GMIO segment to our newly created GMSA segment. We have retrospectively revised the segment presentation for all periods presented.

Change in Presentation of Financial Statements

In 2010, we changed the presentation of our consolidated balance sheet, consolidated statement of cash flows and certain footnotes to combine line items which were either of a related nature or not individually material. We have made corresponding reclassifications to the comparable information for all periods presented.

Stock Split

Each stockholder’s percentage ownership in us and proportional voting power remained unchanged after the stock split. All applicable Successor share, per share and related information in the consolidated financial statements and notes has been adjusted retroactively to give effect to the three-for-one stock split.

Increase in Authorized Shares

On October 5, 2010, our Board of Directors recommended that we amend our Certificate of Incorporation to increase the number of shares of common stock that we are authorized to issue from 2.5 billion shares to 5.0 billion shares and to increase the number of preferred shares that we are authorized to issue from 1.0 billion shares to 2.0 billion shares. Our stockholders approved these amendments on November 1, 2010, and they were effected on November 1, 2010.

Venezuelan Exchange Regulations

168

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

to the official devaluation of the Venezuelan currency and establishment of the dual fixed exchange rates (essential rate of BsF 2.60 to $1.00 and nonessential rate of BsF 4.30 to $1.00) in January 2010, we remeasured the BsF denominated monetary assets and liabilities held by our Venezuelan subsidiaries at the nonessential rate of 4.30 BsF to $1.00. The remeasurement resulted in a charge of $25 million recorded in Automotive cost of sales in the year ended December 31, 2010. In the year ended December 31, 2010 all BsF denominated transactions have been remeasured at the nonessential rate of 4.30 BsF to $1.00.

The following tables provide financial information for our Venezuelan subsidiaries at and for the year ended December 31, 2010, which include amounts receivable from and payable to, and transactions with, affiliated entities (dollars in millions):


	Successor
	December 31, 2010
Total automotive assets (a)	$	1,322
Total automotive liabilities (b)	$	985


	Successor
	Year Ended December 31, 2010
Total net sales and revenue	$	1,139
Net income (loss) attributable to stockholders (c)	$	320

(a)	Includes BsF denominated and non-BsF denominated monetary assets of $393 million and $527 million.

(b)	Includes BsF denominated and non-BsF denominated monetary liabilities of $661 million and $324 million.

(c)

Includes a gain of $119 million related to the devaluation of the BsF in January 2010 and a gain of $273 million in the year ended December 31, 2010 due to favorable foreign currency exchanges that were processed by CADIVI at the essential rate. The $119 million gain on the devaluation was offset by a $144 million loss recorded by U.S. entities on BsF denominated assets, which is not included in the Net income (loss) attributable to stockholders reported above.

The total amount pending government approval for settlement at December 31, 2010 is BsF 1.9 billion (equivalent to $432 million), for which some requests have been pending from 2007. The amount includes payables to affiliated entities of $263 million, which includes dividends payable of $144 million.

Note 4. Significant Accounting Policies

In connection with our application of fresh-start reporting, we established a set of accounting policies which, unless otherwise indicated, utilized the accounting policies of our predecessor entity, Old GM.

169

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The accounting policies which follow are utilized by our automotive and automotive financing operations, unless otherwise indicated.

Revenue Recognition

Automotive

Automotive sales are primarily composed of revenue generated from the sale of vehicles. Vehicle sales are recorded when title and risks and rewards of ownership have passed, which is generally when a vehicle is released to the carrier responsible for transporting it to a dealer and when collectability is reasonably assured. Provisions for recurring dealer and customer sales and leasing incentives, consisting of allowances and rebates, are recorded as reductions to Automotive sales at the time of vehicle sales. All other incentives, allowances, and rebates related to vehicles previously sold are recorded as reductions to Automotive sales when announced.

Vehicle sales to daily rental car companies with guaranteed repurchase obligations are accounted for as operating leases. Estimated lease revenue is recorded ratably over the estimated term of the lease based on the difference between net sales proceeds and the guaranteed repurchase amount. The difference between the cost of the vehicle and estimated residual value is depreciated on a straight-line basis over the estimated term of the lease.

Sales of parts and accessories to GM dealers are recorded when the goods arrive at the dealership and when collectability is reasonably assured. Sales of aftermarket products and powertrain components are recorded when title and risks and rewards of ownership have passed, which is generally when the product is released to the carrier responsible for transporting them to the customer and when collectability is reasonably assured.

Revenue from OnStar, comprised of customer subscriptions related to comprehensive in-vehicle security, communications and diagnostic systems, is deferred and recorded on a straight-line basis over the subscription period. An OnStar subscription is provided as part of the sale or lease of certain vehicles. The fair value of the subscription is recorded as deferred revenue when a vehicle is sold, and amortized over the subscription period. Prepaid minutes for the Hands-Free Calling system are deferred and recorded on a straight-line basis over the life of the contract.

Payments received from banks for credit card programs in which there is a redemption liability are recorded on a straight-line basis over the estimated period of time the customer will accumulate and redeem their rebate points. This time period is estimated to be 60 months for the majority of the credit card programs. This redemption period is reviewed periodically to determine if it remains appropriate. The redemption liability anticipated to be paid to the dealer is estimated and accrued at the time specific vehicles are sold to the dealer. The redemption cost is classified as a reduction of Automotive sales.

Automotive Financing

Finance income earned on receivables is recognized using the effective interest method. Fees and commissions (including incentive payments) received and direct costs of originating loans are deferred and amortized over the term of the related finance receivables using the effective interest method and are removed from the consolidated balance sheets when the related finance receivables are sold, charged off or paid in full. Accrual of finance charge income is suspended on accounts that are more than 60 days delinquent, accounts in bankruptcy, and accounts in repossession.

Income from operating lease assets, which includes lease origination fees, net of lease origination costs, is recorded as operating lease revenue on a straight-line basis over the term of the lease agreement.

170

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Finance Receivables

Automotive Financing

Pre-Acquisition Finance Receivables

Finance receivables originated prior to the acquisition of AmeriCredit were adjusted to fair value at October 1, 2010. As a result of the acquisition, the allowance for loan losses at October 1, 2010 was eliminated and a net discount was recorded on the receivables. A portion of the discount attributable to future credit losses is recorded as a non-accretable discount and utilized as such losses occur. Any deterioration in the performance of pre-acquisition receivables, indicating that the non-accretable discount has become insufficient to cover future credit losses, in the pre-acquisition portfolio, will result in an incremental allowance for loan losses being recorded. Improvements in performance of the pre-acquisition receivables, indicating that the non-accretable discount exceeds expected future credit losses will not be a direct offset to charge-offs, but will result in a transfer of the excess non-accretable discount to accretable discount, which will be recorded as finance charge income over the remaining life of the receivables.

A portion of the fair value adjustment on the finance receivables is included as an accretable premium. This premium is accreted into finance charge income over the remaining life of the receivables utilizing the effective interest method.

Post-Acquisition Finance Receivables

Finance receivables originated after the acquisition of AmeriCredit are carried at amortized cost, net of allowance for loan losses. Provisions for loan losses are charged to operations in amounts sufficient to maintain an allowance for loan losses at a level considered adequate to cover probable credit losses inherent in GM Financial’s post-acquisition finance receivables.

The allowance for loan losses is established systematically based on the determination of the amount of probable credit losses inherent in the post-acquisition finance receivables as of the balance sheet date. We review charge-off experience factors, delinquency reports, historical collection rates, estimates of the value of the underlying collateral, economic trends, such as unemployment rates, and other information in order to make the necessary judgments as to probable credit losses. We also use historical charge-off experience to determine a loss confirmation period, which is defined as the time between when an event, such as delinquency status, giving rise to a probable credit loss occurs with respect to a specific account and when such account is charged off. This loss confirmation period is applied to the forecasted probable credit losses to determine the amount of losses inherent in finance receivables at the balance sheet date.

Allowance For Doubtful Accounts – Trade Receivables

Automotive

We estimate the balance of allowance for doubtful accounts by analyzing accounts receivable balances by age, and our estimate includes separately providing for specific customer balances when it is deemed probable that the balance is uncollectible. Account balances are charged off against the allowance when it is probable the receivable will not be recovered.

Inventory

Automotive

Inventories are stated at the lower of cost or market (LCM). In connection with fresh-start reporting, we elected to use the FIFO costing method for all inventories previously accounted for by Old GM using the LIFO costing method.

171

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Market, which represents selling price less cost to sell, considers general market and economic conditions, periodic reviews of current profitability of vehicles, and the effect of current incentive offers at the balance sheet date. Market for off-lease and other vehicles is current auction sales proceeds less disposal and warranty costs. Productive material, work in process, supplies and service parts are reviewed to determine if inventory quantities are in excess of forecasted usage, or if they have become obsolete.

Advertising

The following table summarizes advertising expenditures, which are expensed as incurred (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Advertising expense	$	4,259	$	2,110	$	1,471	$	5,303

Research and Development Expenditures

Automotive

The following table summarizes research and development expenditures, which are expensed as incurred (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Research and development expense	$	6,962	$	3,034	$	3,017	$	8,012

Property, net

Property, plants and equipment, including internal use software, is recorded at cost. Major improvements that extend the useful life or add functionality of property are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. We depreciate all depreciable property using the straight-line method. Leasehold improvements are amortized over the period of lease or the life of the asset, whichever is shorter. For depreciable property placed in service before January 2001, Old GM used accelerated depreciation methods. For depreciable property placed in service after January 2001, Old GM used the straight-line method. Upon retirement or disposition of property, plants and equipment, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in earnings. Impairment charges related to property are recorded in Automotive cost of sales or GM Financial operating expenses and other. Refer to Notes 12 and 26 for additional information on property and impairments.

Special Tools

Automotive

Special tools represent product-specific powertrain and non-powertrain related tools, dies, molds and other items used in the vehicle manufacturing process. Expenditures for special tools are recorded at cost and are capitalized. In connection with our application of fresh-start reporting, we began amortizing all non-powertrain special tools using an accelerated amortization method. We amortize powertrain special tools over their estimated useful lives using the straight-line method. Old GM amortized all special tools using the straight-line method over their estimated useful lives. Refer to Note 12 for additional information on special tools.

172

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Goodwill

Goodwill arises from the application of fresh-start reporting and acquisitions accounted for as business combinations. Goodwill is tested for impairment for all reporting units on an annual basis during the fourth quarter, or more frequently, if events occur or circumstances change that would warrant such a review. An impairment charge is recorded for the amount, if any, by which the carrying amount of goodwill exceeds its implied fair value. Fair values of reporting units are established using a discounted cash flow method. Our reporting units are GMNA, GME, GM Financial and various reporting units within the GMIO and GMSA segments. Due to the integrated nature of our manufacturing operations and the sharing of vehicle platforms among brands, assets and other resources are shared extensively within GMNA and GME and financial information by brand or country is not discrete below the operating segment level such that GMNA and GME do not contain reporting units below the operating segment level. GM Financial also does not contain reporting units below the operating segment level. GMIO and GMSA are less integrated given the lack of regional trade pacts and other unique geographical differences and thus contain separate reporting units below the operating segment level. Where available and as appropriate, comparative market multiples and the quoted market price for our common stock are used to corroborate the results of the discounted cash flow method. Goodwill would be reassigned on a relative-fair-value basis to a portion of a reporting unit to be disposed of or upon the reorganization of the composition of one or more of our reporting units, unless the reporting unit was never integrated. Refer to Note 26 for additional information on goodwill impairments.

Intangible Assets, net

Intangible assets, excluding Goodwill, primarily include brand names (including defensive intangibles associated with discontinued brands), technology and intellectual property, customer relationships, dealer network and favorable contracts.

All intangible assets are amortized on a straight-line or an accelerated method of amortization over their estimated useful lives. An accelerated amortization method reflecting the pattern in which the asset will be consumed is utilized if that pattern can be reliably determined. If that pattern cannot be reliably determined, a straight-line amortization method is used. We consider the period of expected cash flows and underlying data used to measure the fair value of the intangible assets when selecting a useful life.

Amortization of developed technology and intellectual property is recorded in Automotive cost of sales. Amortization of brand names, customer relationships and our dealer network is recorded in Automotive selling, general and administrative expense or GM Financial operating expenses and other. Refer to Notes 2 and 14 for additional information on intangible assets.

Valuation of Long-Lived Assets

The carrying amount of long-lived assets and finite-lived intangible assets to be held and used in the business are evaluated for impairment when events and circumstances warrant. If the carrying amount of a long-lived asset group is considered impaired, a loss is recorded based on the amount by which the carrying amount exceeds the fair value for the asset group to be held and used. Product-specific long-lived asset groups are tested for impairment at the platform level. Non-product specific long-lived assets are tested for impairment on a segment basis in GMNA, GME, and GM Financial and tested at or within our various reporting units within our GMIO and GMSA segments. Assets classified as held for sale are recorded at the lower of carrying amount or fair value less cost to sell. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of other than by sale are considered held for use until disposition. Product-specific assets may become impaired as a result of declines in profitability due to changes in volume, pricing or costs.

We tested certain long-lived assets for impairment in the year ended December 31, 2010 and in the period July 10, 2009 through December 31, 2009 and Old GM tested certain long-lived assets for impairment in the period January 1, 2009 through July 9, 2009 and in the year ended December 31, 2008. Long-lived asset impairment charges were recorded based on the results of the analyses. Refer to Note 26 for additional information on impairment charges.

173

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Valuation of Cost and Equity Method Investments

When events and circumstances warrant, investments accounted for under the cost or equity method of accounting are evaluated for impairment. An impairment charge is recorded whenever a decline in value of an investment below its carrying amount is determined to be other than temporary. In determining if a decline is other than temporary, factors such as the length of time and extent to which the fair value of the investment has been less than the carrying amount of the investment, the near-term and longer-term operating and financial prospects of the affiliate and the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery are considered. Impairment charges related to equity method investments are recorded in Equity income, net of tax. Impairment charges related to cost method investments are recorded in Interest income and other non-operating income, net.

Equipment on Operating Leases, net

Equipment on operating leases, net, including leased vehicles within Total GM Financial Assets, is reported at cost, less accumulated depreciation and net of origination fees or costs. Estimated income from operating lease assets, which includes lease origination fees, net of lease origination costs, is recorded as operating lease revenue on a straight-line basis over the term of the lease agreement. Depreciation of vehicles is provided on a straight-line basis to an estimated residual value over the term of the lease agreement.

We have and Old GM had significant investments in vehicles in operating lease portfolios, which are comprised of vehicle leases to retail customers with lease terms of up to 60 months and vehicles leased to rental car companies with lease terms that average nine months or less. We are and Old GM was exposed to changes in the residual values of those assets. For impairment purposes, the residual values represent estimates of the values of the assets at the end of the lease contracts and are determined based on the lower of forecasted or current auction proceeds in the U.S. and Canada and forecasted auction proceeds outside of the U.S. and Canada when there is a reliable basis to make such a determination. Realization of the residual values is dependent on the future ability to market the vehicles under the prevailing market conditions. The adequacy of the estimate of the residual value is evaluated over the life of the lease and adjustments may be made to the extent the expected value of the vehicle at lease termination changes. Adjustments may be in the form of revisions to the depreciation rate or recognition of an impairment charge. Impairment is determined to exist if the undiscounted expected future cash flows, which include estimated residual values, are lower than the carrying amount of the asset. If the carrying amount is considered impaired, an impairment charge is recorded for the amount by which the carrying amount exceeds the fair value. Fair value is determined primarily using the anticipated cash flows, including estimated residual values.

In our automotive operations, when a leased vehicle is returned the asset is reclassified from Equipment on operating leases, net to Inventories at the lower of cost or estimated selling price, less costs to sell. In our automotive finance operations, when a leased vehicle is returned or repossessed the asset is recorded at the lower of cost or estimated selling price, less costs to sell, and upon disposition a gain or loss is recorded for any difference between the net book value of the lease and the proceeds from the disposition of the asset.

Impairment charges related to Equipment on operating leases, net are recorded in Automotive cost of sales or GM Financial operating expenses and other. Refer to Notes 26 and 32 for additional information on impairments and operating lease arrangements with Ally Financial.

Foreign Currency Transactions and Translation

The assets and liabilities of foreign subsidiaries, that use the local currency as their functional currency, are translated to U.S. Dollars based on the current exchange rate prevailing at each balance sheet date and any resulting translation adjustments are included in Accumulated other comprehensive income (loss). The assets and liabilities of foreign subsidiaries whose local currency is not their functional currency are remeasured from their local currency to their functional currency, and then translated to U.S. Dollars. Revenues and expenses are translated into U.S. Dollars using the average exchange rates prevailing for each period presented.

174

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Gains and losses arising from foreign currency transactions, which include the effects of remeasurements discussed in the preceding paragraph, are recorded in Automotive cost of sales and GM Financial operating expenses and other.

The following table summarizes the effects of foreign currency transactions (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Gain (loss) resulting from foreign currency transactions	$	(210	)	$	(755	)	$	(1,077	)	$	1,705

Policy, Warranty and Recall Campaigns

Automotive

The estimated costs related to policy and product warranties are accrued at the time products are sold. These estimates are established using historical information on the nature, frequency, and average cost of claims of each vehicle line or each model year of the vehicle line. Revisions are made when necessary, based on changes in these factors. Trends of claims are actively studied and actions are taken to improve vehicle quality and minimize claims.

The estimated costs related to product recalls based on a formal campaign soliciting return of that product are accrued when they are deemed to be probable and can be reasonably estimated.

Environmental Costs

Automotive

A liability for environmental remediation costs is recorded when a loss is probable and can be reasonably estimated. For environmental sites where there are potentially multiple responsible parties, a liability for the allocable share of the costs related to involvement with the site is recorded, as well as an allocable share of costs related to insolvent parties or unidentified shares, neither of which are reduced for possible recoveries from insurance carriers. For environmental sites where we and Old GM are the only potentially responsible parties, a liability is recorded for the total estimated costs of remediation before consideration of recovery from insurers or other third parties. The process of estimating environmental remediation liabilities is complex and dependent primarily on the nature and extent of historical information and physical data relating to a contaminated site, the complexity of the site, the uncertainty as to what remediation and technology will be required, and the outcome of discussions with regulatory agencies and other potentially responsible parties at multi-party sites.

We have an established process to develop environmental liabilities that is used globally. This process consists of a number of phases that begins with visual site inspections and an examination of historical site records. Once a potential problem is identified, physical sampling of the site, which may include analysis of ground water and soil borings, is performed. The evidence obtained is then evaluated and if necessary, a remediation strategy is developed and submitted to the appropriate regulatory body for approval. The final phase of this process involves the commencement of remediation activities according to the approved plan.

When applicable, estimated liabilities for costs relating to ongoing operating, maintenance, and monitoring at environmental sites where remediation has commenced are recorded. Subsequent adjustments to initial estimates are recorded as necessary based upon additional information obtained. In future periods, new laws or regulations, advances in remediation technologies and additional information about the ultimate remediation methodology to be used could significantly change our estimates.

175

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Cash Equivalents

Cash equivalents are defined as short-term, highly-liquid investments with original maturities of 90 days or less.

Fair Value Measurements

A three-level valuation hierarchy is used for fair value measurements. The three-level valuation hierarchy is based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available. These three types of inputs create the following fair value hierarchy:

•

Level 1 — Quoted prices for identical instruments in active markets;

•

Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose significant inputs are observable; and

•

Level 3 — Instruments whose significant inputs are unobservable.

Financial instruments are transferred in and/or out of Level 3 in the valuation hierarchy at the beginning of the accounting period based upon the significance of the unobservable inputs to the overall fair value measurement. Level 3 financial instruments typically include, in addition to the unobservable inputs, observable components that are validated to external sources.

Marketable Securities

We classify marketable securities as available-for-sale or trading. Various factors, including turnover of holdings and investment guidelines, are considered in determining the classification of securities. Available-for-sale securities are recorded at fair value with unrealized gains and losses recorded, net of related income taxes, in Accumulated other comprehensive income (loss) until realized. Trading securities are recorded at fair value with changes in fair value recorded in Interest income and other non-operating income, net. We determine realized gains and losses for all securities using the specific identification method.

Old GM classified all marketable securities as available-for-sale.

Securities are classified in Level 1 when quoted prices in an active market for identical securities are available. If quoted market prices are not available, fair values of securities are determined using prices from a pricing vendor, pricing models, quoted prices of securities with similar characteristics or discounted cash flow models and are generally classified in Level 2. These prices represent non-binding quotes. U.S. government and agency securities, certificates of deposit, commercial paper, and corporate debt securities are classified in Level 2. Our pricing vendor utilizes industry-standard pricing models that consider various inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads and benchmark securities as well as other relevant economic measures. Securities are classified in Level 3 in certain cases where there are unobservable inputs to the valuation in the marketplace.

We conduct an annual review of our pricing vendor. This review includes discussion and analysis of the inputs used by the pricing vendor to provide prices for the types of securities we hold. These inputs included interest rate yields, bid/ask quotes, prepayment speeds and prices for comparable securities. Based on our review we believe the prices received from our pricing vendor are a reliable representation of fair value.

An evaluation is made monthly to determine if unrealized losses related to non-trading investments in debt and equity securities are other than temporary. Factors considered in determining whether a loss on a debt security is other than temporary include: (1) the length of time and extent to which the fair value has been below cost; (2) the financial condition and near-term prospects of the issuer; and (3) the intent to sell or likelihood to be forced to sell the security before any anticipated recovery. Prior to April 1, 2009 Old GM

176

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

considered its ability and intent to hold the investment for a sufficient period of time to allow for any anticipated recovery. If losses are determined to be other than temporary, the loss is recorded in Interest income and other non-operating income, net and the investment carrying amount is adjusted to a revised fair value.

Derivative Instruments

We are party to a variety of foreign currency exchange rate, interest rate swap, interest rate cap and commodity derivative contracts entered into in connection with the management of exposure to fluctuations in foreign currency exchange rates, interest rates and certain commodity prices.

Our financial risk management program is under the responsibility of the Risk Management Committee, which reviews and, where appropriate, approves strategies to be pursued to mitigate these risks. The Risk Management Committee is composed of members of our management and functions under the oversight of the Finance and Risk Committee, a committee of the Board of Directors. The Finance and Risk Committee assists and guides the Board in its oversight of our financial and risk management strategies. A risk management control framework is utilized to monitor the strategies, risks and related hedge positions, in accordance with the policies and procedures approved by the Risk Management Committee.

In August 2010 we changed our automotive operations risk management policy with respect to foreign exchange and commodities. Under our prior policy we intended to reduce volatility of forecasted cash flows primarily through the use of forward contracts and swaps. The intent of the new policy is to protect against risk arising from extreme adverse market movements on our key exposures and involves a shift to greater use of purchased options.

GM Financial is exposed to market risks arising from adverse changes in interest rates due to floating interest rate exposure on its credit facilities and on certain securitization notes payable. GM Financial’s special purpose entities (SPEs) are contractually required to purchase derivative instruments as credit enhancements in connection with securitization transactions and credit facilities. These financial exposures and contractual requirements are managed in accordance with corporate policies and procedures and a risk management control system is used to assist in monitoring hedging programs, derivative positions and hedging strategies. Hedging documentation includes hedging objectives, practices and procedures and the related accounting treatment.

The accounting for changes in the fair value of each derivative financial instrument depends on whether it has been designated and qualifies as an accounting hedge, as well as the type of hedging relationship identified. Derivative financial instruments entered into by our automotive operations are not designated in hedging relationships. Certain of the derivatives entered into by GM Financial have been designated in cash flow hedging relationships. Derivatives that receive hedge accounting treatment are evaluated for effectiveness at the time they are designated as well as throughout the hedging period. We do not hold derivative financial instruments for speculative purposes.

All derivatives are recorded at fair value and presented gross in the consolidated balance sheets. Internal models are used to value a majority of derivatives. The models use, as their basis, readily observable market inputs, such as time value, forward interest rates, volatility factors, and current and forward market prices for commodities and foreign currency exchange rates. Derivative contracts that are valued based upon models with significant unobservable market inputs, primarily estimated forward and prepayment rates, are classified in Level 3.

The valuation of derivative liabilities takes into account our nonperformance risk. At December 31, 2010 and 2009 our nonperformance risk was not observable through a liquid credit default swap market. Our nonperformance risk was estimated using internal analysis to develop conclusions on our implied credit rating, which we used to determine the appropriate credit spread, which would be applied to us by market participants. Prior to receiving published credit ratings we developed our credit rating conclusions using an analysis of comparable industrial companies. At December 31, 2010 we incorporated published credit agency ratings of GM into our credit rating conclusions. At December 31, 2009 all derivatives whose fair values contained a significant credit adjustment based on our nonperformance risk were classified in Level 3. At December 31, 2010 we have determined that our non-performance

177

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

risk no longer represents a significant input in the determination of the fair value of our derivatives. Consequently, at December 31, 2010 all automotive operations derivatives were reclassified to Level 2.

We record the earnings effect resulting from the change in fair value of automotive operations derivative instruments in Interest income and other non-operating income, net. We record the earnings effect resulting from the change in fair value of derivative instruments entered into by GM Financial in GM Financial operating expenses and other.

Effective changes in fair value of derivatives designated as cash flow hedges are recorded in Cash flow hedging gain (losses) within a separate component of Accumulated other comprehensive income (loss). Amounts are reclassified from Accumulated other comprehensive income (loss) when the underlying hedged item affects earnings. All ineffective changes in fair value are recorded in earnings. We also discontinue hedge accounting prospectively when it is determined that a derivative instrument has ceased to be effective as an accounting hedge or if the underlying hedged cash flow is no longer probable of occurring.

Prior to October 1, 2008, Old GM recorded changes in fair value of derivatives designated as fair value hedges in earnings offset by changes in fair value of the hedged item to the extent the derivative was effective as a hedge. Old GM recorded the change in fair value of derivative instruments in the same line item in the consolidated statements of operations as the underlying exposure being hedged.

As part of Old GM’s quarterly tests for hedge effectiveness in the three months ended December 31, 2008, Old GM was unable to conclude that its cash flow and fair value hedging relationships continued to be highly effective. Therefore, Old GM discontinued the application of hedge accounting for derivative instruments used in cash flow and fair value hedging relationships. Old GM recorded certain releases of deferred gains and losses arising from previously designated cash flow and fair value hedges in earnings. The earnings effect resulting from the change in fair value of derivative instruments was recorded in the same line item in the consolidated statements of operations as the underlying exposure being hedged.

We enter into contracts with counterparties that we believe are creditworthy and generally settle on a net basis. We perform a quarterly assessment of our counterparty credit risk, including a review of credit ratings, credit default swap rates and potential nonperformance of the counterparty. Based on our most recent quarterly assessment of our counterparty credit risk, we consider this risk to be low.

The cash flows from derivative instruments are classified in the same categories as the hedged items in the consolidated statement of cash flows.

Refer to Note 21 for additional information related to derivative transactions.

Income Taxes

The liability method is used in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recorded in the results of operations in the period that includes the enactment date under the law.

Deferred income tax assets are evaluated quarterly to determine if valuation allowances are required or should be adjusted. We establish and Old GM established valuation allowances for deferred tax assets based on a more likely than not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. We consider and Old GM considered the following possible sources of taxable income when assessing the realization of deferred tax assets:

•

Future reversals of existing taxable temporary differences;

•

Future taxable income exclusive of reversing temporary differences and carryforwards;

178

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

Taxable income in prior carryback years; and

•

Tax-planning strategies.

The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence factors, including but not limited to:

•

Nature, frequency, and severity of recent losses;

•

Duration of statutory carryforward periods;

•

Historical experience with tax attributes expiring unused; and

•

Near- and medium-term financial outlook;

Income tax expense (benefit) for the year is allocated between continuing operations and other categories of income such as Discontinued operations or other comprehensive income (loss). In periods in which there is a pre-tax loss from continuing operations and pre-tax income in another income category, the tax benefit allocated to continuing operations is determined by taking into account the pre-tax income of other categories.

We record interest and penalties on uncertain tax positions in Income tax expense (benefit). Old GM recorded interest income on uncertain tax positions in Interest income and other non-operating income, net, interest expense in Automotive interest expense and penalties in Automotive selling, general and administrative expense.

Pension and Other Postretirement Plans

Attribution, Methods and Assumptions

The cost of benefits provided by defined benefit pension plans is recorded in the period employees provide service. The cost of pension plan amendments that provide for benefits already earned by plan participants is amortized over the expected period of benefit which may be: (1) the duration of the applicable collective bargaining agreement specific to the plan; (2) expected future working lifetime; or (3) the life expectancy of the plan participants.

The cost of medical, dental, legal service and life insurance benefits provided through postretirement benefit plans is recorded in the period employees provide service. The cost of postretirement plan amendments that provide for benefits already earned by plan participants is amortized over the expected period of benefit which may be the average period to full eligibility or the average life expectancy of the plan participants.

U.S. salaried retiree medical plan amendments are amortized over the period to full eligibility and actuarial gains and losses are amortized over the average remaining years of future service.

Actuarial (gains) losses and new prior service costs (credits) for the U.S. hourly healthcare plans are amortized over a time period corresponding with the average life expectancy of the plan participants.

179

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

An expected return on plan asset methodology is utilized to calculate future pension expense for certain significant funded benefit plans. A market-related value of plan assets methodology is also utilized that averages gains and losses on the plan assets over a period of years to determine future pension expense. The methodology recognizes 60.0% of the difference between the fair value of assets and the expected calculated value in the first year and 10.0% of that difference over each of the next four years.

The discount rate assumption is established for each of the retirement-related benefit plans at their respective measurement dates. In the U.S. and Canada, we use a cash flow matching approach that uses projected cash flows matched to spot rates along a high quality corporate yield curve to determine the present value of cash flows to calculate a single equivalent discount rate.

In the U.S., Old GM established a discount rate assumption to reflect the yield of a hypothetical portfolio of high quality, fixed-income debt instruments that would produce cash flows sufficient in timing and amount to satisfy projected future benefits.

In countries other than the U.S. and Canada, discount rates are established depending on the local financial markets, using a high quality yield curve based on local bonds, a yield curve adjusted to reflect local conditions using foreign currency swaps or local actuarial standards.

Plan Asset Valuation

Cash Equivalents and Other Short-Term Investments

Money market funds and other similar short-term investment funds are valued using the net asset value per share (NAV) as provided by the investment sponsor or third party administrator. Prices for short-term debt securities are received from independent pricing services or from dealers who make markets in such securities. Independent pricing services utilize matrix pricing which considers readily available inputs such as the yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices. Cash equivalents and other short-term investments are generally classified in Level 2.

Group Annuity Contracts

Group annuity contracts are the contracts or policies issued by a life insurance company, which are used as a funding instrument for specified benefits payments to be made in accordance with the defined benefit pension plans. The contracts or policies may be backed by one or more separately managed investment accounts, which hold investments in high quality fixed income securities. The value of each contract or policy depends, in part, on the values of the units of the separately managed investment accounts backing the contract. The fair value of the separately managed investment account assets is based on the fair value of the underlying assets owned by the separately managed investment accounts. The separately managed investment accounts, which typically calculate NAV (or its equivalent), and underlying assets are valued in accordance with the valuation policies of the respective insurers. From time to time, the defined benefit pension plans’ liabilities may increase as a result of these contracts when the required reserves, as estimated by an insurer under the terms of the contract or policy, exceed the fair value of contract assets. The resulting difference represents an outstanding contract asset deficiency that must be funded by the defined benefit pension plan’s sponsor. Group annuity contracts are generally classified in Level 3.

Common and Preferred Stock

Equity securities for which market quotations are readily available are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are classified in Level 1. In the event there were no sales during the five-day period before the reporting date and the five-day period after the reporting date or closing prices are not available, securities are valued at the last quoted bid price or may be valued using the last available price and are typically classified in Level 2. Common and preferred stock classified in Level 3 are typically those that are thinly traded, delisted, or privately issued securities or other issues that are priced by a dealer or pricing service using inputs such as

180

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

aged (stale) pricing, and/or other qualitative factors. We may consider other security attributes such as liquidity and market activity in assessing the observability of inputs used by pricing services or dealers, which may affect classification in the fair value hierarchy.

Government, Agency and Corporate Debt Securities

U.S. government and government agency obligations, foreign government and government agency obligations, municipal securities, supranational obligations, corporate bonds, bank notes, floating rate notes, and preferred securities are valued based on quotations received from independent pricing services or from dealers who make markets in such securities. Pricing services utilize matrix pricing which considers readily available inputs such as the yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally classified in Level 2. Securities within this asset class that are classified in Level 3 are typically priced by dealers and pricing services that use proprietary pricing models which incorporate unobservable inputs. These inputs primarily consist of yield and credit spread assumptions. We may consider other security attributes such as liquidity, market activity, price level, credit ratings and geo-political risk in assessing the observability of inputs used by pricing services or dealers, which may affect classification.

Agency and Non-Agency Mortgage and Other Asset-Backed Securities

U.S. and foreign government agency mortgage and asset-backed securities, non-agency collateralized mortgage obligations, commercial mortgage securities, residential mortgage securities and other asset-backed securities are valued based on quotations received from independent pricing services or from dealers who make markets in such securities. Pricing services utilize matrix pricing which considers prepayment speed assumptions, attributes of the collateral, yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices and are generally classified in Level 2. Securities within this asset class that are classified in Level 3 are typically priced by dealers and pricing services that use proprietary pricing models which incorporate unobservable inputs. These inputs primarily consist of prepayment curves, discount rates, default assumptions and recovery rates. We may consider other security attributes such as liquidity, market activity, price level, credit ratings and geo-political risk in assessing the observability of inputs used by pricing services or dealers, which may affect classification.

Investment Funds, Private Equity and Debt Investments and Real Estate Investments

Exchange traded funds and real estate investment trusts, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are classified in Level 1. Investments in non-exchange traded funds and certain SPEs (e.g., limited partnerships, limited liability companies), which may be fully redeemed at NAV in the near-term (within 90 days), are generally measured at fair value on the basis of the NAV provided by the investment sponsor or its third party administrator, and generally classified in Level 2. Investments within this asset class that are classified in Level 3 include investments in funds, which may not be fully redeemed at NAV in the near-term, and are typically measured on the basis of the NAV. Level 3 investments also include direct private equity, debt, and real estate investments, which have inherent restrictions on near-term redemption. Fair value estimates for direct private equity, private debt, and real estate investments are provided by the respective investment sponsors and are subsequently reviewed and approved by management. In the event management concludes a reported NAV or fair value estimate (collectively, external valuation) does not reflect fair value or is not determined as of the financial reporting measurement date, we will consider whether an adjustment is necessary. In determining whether an adjustment to the external valuation is required, we will review material factors that could affect the valuation, such as changes to the composition or performance of the underlying investment(s) or comparable investments, overall market conditions, and other economic factors that may possibly have a favorable or unfavorable effect on the reported external valuation. We may adjust the external valuation to ensure fair value as of the balance sheet date.

Derivatives

Exchange traded derivatives, for which market quotations are readily available, are valued at the last reported sale price or official closing price as reported by an independent pricing service on the primary market or exchange on which they are traded and are

181

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

classified in Level 1. Over-the-counter derivatives are typically valued through independent pricing services and are generally classified in Level 2. Derivatives classified in Level 3 are typically priced by dealers and pricing services that use proprietary pricing models which incorporate unobservable inputs. These inputs include extrapolated or model-derived assumptions such as volatilities and yield and credit spread assumptions.

Due to the lack of timely available market information for certain investments in the asset classes described above as well as the inherent uncertainty of valuation, reported fair values may differ from fair values that would have been used had timely available market information been available.

Early Retirement Programs

An early retirement program was offered to certain German employees that allows these employees to transition from employment into retirement before their legal retirement age. Eligible employees who elect to participate in this pre-retirement leave program work full time in half of the pre-retirement period, the active period, and then do not work for the remaining half, the inactive period, and receive 50.0% of their salary in this pre-retirement period. Program related benefits are recognized over the period from when the employee signed the program contract until the end of the employee’s active service period.

Extended Disability Benefits

Estimated extended disability benefits are accrued ratably over the employee’s active service period using measurement provisions similar to those used to measure our other postretirement benefits (OPEB) obligations. The liability is composed of the future obligations for income replacement, healthcare costs and life insurance premiums for employees currently disabled and those in the active workforce who may become disabled. Future disabilities are estimated in the current workforce using actuarial methods based on historical experience. We record actuarial gains and losses immediately in earnings. Old GM amortized net actuarial gains and losses over the remaining duration of the obligation.

Labor Force

On a worldwide basis, we have and Old GM had a concentration of the workforce working under the guidelines of unionized collective bargaining agreements. At December 31, 2010 49,000 of our U.S. employees (or 64%) were represented by unions, of which 48,000 employees were represented by the UAW. The current labor contract with the UAW is effective for a four-year term that began in October 2007 and expires in September 2011. The contract included a $3,000 lump sum payment in the year ended December 31, 2007 and performance bonuses of 3.0%, 4.0% and 3.0% of wages in the years ended December 31, 2008, 2009 and 2010 for each UAW employee. These payments are amortized over the 12-month period following the respective payment dates. In February 2009 Old GM and the UAW agreed to suspend the 2009 and 2010 performance bonus payments.

Job Security Programs

In May 2009 Old GM and the UAW entered into an agreement that suspended the Job Opportunity Bank (JOBS) Program, modified the Supplemental Unemployment Benefit (SUB) program and added the Transitional Support Program (TSP). These job security programs provide employee reduced wages and continued coverage under certain employee benefit programs depending on the employee’s classification as well as the number of years of service that the employee has accrued. A similar tiered benefit is provided to CAW employees. We recognize a liability for these SUB/TSP benefits over the expected service period of employees, based on our best estimate of the probable liability at the measurement date.

Prior to the implementation of the modified job security programs, costs for postemployment benefits to hourly employees idled on an other than temporary basis were accrued based on our best estimate of the wage, benefit and other costs to be incurred, and costs related to the temporary idling of employees were expensed as incurred.

182

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Incentive Plans

We measure and record compensation expense for all share-based payment awards based on the award’s estimated fair value. We grant awards to our employees through the 2009 Long Term Incentive Plan and the GM Salary Stock Plan. We record compensation expense over the applicable vesting period of an award.

In November and December 2010 we consummated a public offering of 550 million shares of our common stock. Prior to this offering, the fair value of awards granted was based on the estimated fair value of our common stock. Commencing in November 2010 the fair value of our common stock is based on the New York Stock Exchange trading price. Refer to Note 31 for additional information regarding stock incentive plans.

Salary stock awards granted are fully vested and nonforfeitable upon grant, therefore compensation cost is recorded on the date of grant.

Old GM

All of Old GM’s awards for the period January 1, 2009 through July 9, 2009, and the year ended December 31, 2008 were accounted for at fair value, and compensation expense was recorded based on the award’s estimated fair value. No share-based compensation expense was recorded for the top 25 most highly compensated employees in 2009, in compliance with the Loan and Security Agreement with the UST.

Stock options granted were measured on the date of grant using the Black-Scholes option-pricing model to determine fair value. Compensation expense was recorded on a graded vesting schedule. Old GM issued treasury shares upon exercise of employee stock options.

Option awards contingent on performance and market conditions were measured on the date of grant using a Monte-Carlo simulation model to determine fair value. Vesting was contingent upon a one-year service period and multiple performance and market requirements and was recorded on a graded vesting schedule over a weighted-average derived service period.

Market condition based cash-settled awards were granted to participants based on a minimum percentile ranking of Old GM’s total stockholder return compared to all other companies in the S&P 500 for the same performance period. The fair value of each market condition based cash-settled award was estimated on the date of grant, and for each subsequent reporting period, remeasured using a Monte-Carlo simulation model that used multiple input variables.

Cash restricted stock units were granted to certain of Old GM’s global executives that provided cash equal to the value of underlying restricted share units at predetermined vesting dates. Compensation expense was recorded on a straight-line basis over the requisite service period for each separately vesting portion of the award. The fair value of each cash-settled award was remeasured at the end of each reporting period, and the liability and related expense adjusted based on the new fair value of Old GM’s common stock.

All outstanding Old GM awards remained with Old GM and we did not replace them in the 363 Sale.

Recently Adopted Accounting Principles

Variable Interest Entities

In January 2010 we adopted amendments to ASC 810, “Consolidation” (ASC 810). These amendments require an enterprise to qualitatively assess the determination of the primary beneficiary of a VIE based on whether the enterprise: (1) has the power to direct

183

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the activities of a VIE that most significantly affect the entity’s economic performance; and (2) has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. These amendments also require, among other considerations, an ongoing reconsideration of the primary beneficiary. In February 2010 the Financial Accounting Standard Board (FASB) issued guidance that permitted an indefinite deferral of these amendments for entities that have all the attributes of an investment company or that apply measurement principles consistent with those followed by investment companies. An entity that qualifies for the deferral will continue to be assessed under the overall guidance on the consolidation of VIE’s in effect prior to the adoption of these amendments. This deferral was applicable to certain investment companies associated with our employee benefit plans and investment companies managing investments on behalf of unrelated third parties.

The amendments were adopted prospectively. Upon adoption, we consolidated General Motors Egypt (GM Egypt). Due to our application of fresh-start reporting on July 10, 2009 and because our investment in GM Egypt was accounted for using the equity method of accounting, there was no difference between the net assets added to the consolidated balance sheet upon consolidation and the amount of previously recorded interest in GM Egypt. As a result, there is no cumulative effect of a change in accounting principle to Accumulated deficit. However, the consolidation of GM Egypt resulted in an increase in Total assets of $254 million, an increase in Total liabilities of $178 million, and an increase in Noncontrolling interest of $76 million. The effect of these amendments was measured based on the amount at which the asset, liability and noncontrolling interest would have been carried or recorded in the consolidated financial statements if these amendments had been effective since inception of our relationship with GM Egypt. Refer to Note 17 for additional information regarding the effect of the adoption of these amendments.

Transfers of Financial Assets

In January 2010 we adopted certain amendments to ASC 860, “Transfer and Servicing” (ASC 860). ASC 860 eliminated the concept of a qualifying SPE, establishes a new definition of participating interest that must be met for transfers of portions of financial assets to be eligible for sale accounting, clarifies and amends the derecognition criteria for a transfer of financial assets to be accounted for as a sale, and changes the amount that can be recorded as a gain or loss on a transfer accounted for as a sale when beneficial interests are received by the transferor. The adoption of these amendments did not have an effect on the consolidated financial statements.

Accounting Standards Not Yet Adopted

In September 2009 the FASB issued Accounting Standard Update (ASU) 2009-13, “Multiple-Deliverable Revenue Arrangements” (ASU 2009-13). ASU 2009-13 addresses the unit of accounting for multiple-element arrangements. In addition, ASU 2009-13 revises the method by which consideration is allocated among the units of accounting. Specifically, the overall consideration is allocated to each deliverable by establishing a selling price for individual deliverables based on a hierarchy of evidence, involving vendor-specific objective evidence, other third party evidence of the selling price, or the reporting entity’s best estimate of the selling price of individual deliverables in the arrangement. ASU 2009-13 will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. ASU 2009-13 is not expected to have a material effect on the consolidated financial statements.

In December 2010, the FASB issued ASU 2010-28, “Intangibles—Goodwill and Other: When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts” (ASU 2010-28). The amendments in this ASU modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. ASU 2010-28 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Any resulting goodwill impairment is recorded as a cumulative-effect adjustment to beginning Retained earnings (accumulated deficit) in the period of adoption.

GME has a negative carrying amount; as such, we will apply the provisions of ASU 2010-28 effective January 1, 2011. When a reduction occurs in the fair-value-to-U.S. GAAP differences attributable to those assets and liabilities that gave rise to goodwill upon

184

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

our application of fresh-start reporting, the amount of our implied goodwill can decline. Prior to the adoption of ASU 2010-28, any such decline does not result in recognition of an impairment loss as long as Step 1 of the goodwill impairment test is passed (as was the case at our October 1, 2010 annual testing date). However, proceeding directly to Step 2 of the goodwill impairment test as required in this circumstance upon adoption of ASU 2010-28 would result in recognition of any such impairment.

We are currently in the process of valuing the amount of the implied goodwill as of January 1, 2011 for GME, and estimate the high end of the range of possible adjustment to be approximately $1.3 billion. Our estimate represents the net decrease, from July 10, 2009 through January 1, 2011, in the fair-value-to-U.S. GAAP differences attributable to those assets and liabilities that gave rise to goodwill upon our application of fresh-start reporting resulting primarily from an overall improvement in our incremental borrowing rate and corresponding decrease in our nonperformance risk since July 10, 2009. The actual goodwill impairment determination can also be affected by other factors in the Step 2 impairment test which we have not yet finalized. As a result, the actual adjustment may be different than our current estimate upon the finalization of our valuation procedures and determination of our implied goodwill for GME at January 1, 2011.

Note 5. Acquisition and Disposal of Businesses

Acquisition of AmeriCredit Corp.

On October 1, 2010 we acquired 100% of the outstanding equity interests of AmeriCredit, an automotive finance company, renamed General Motors Financial Company, Inc., for cash of approximately $3.5 billion. The acquisition of AmeriCredit will allow us to provide a more complete range of financing options to our customers across the U.S. and Canada, specifically focusing on providing additional capabilities in leasing and sub-prime vehicle financing options.

The following table summarizes the consideration paid, acquisition-related costs, and the assets acquired and liabilities assumed recognized at the acquisition date in connection with the acquisition of AmeriCredit (dollars in millions, except per share amounts):


	Successor
	October 1, 2010
Consideration
Cash paid to AmeriCredit common shareholders of $24.50 per share	$	3,327
Cash paid to cancel outstanding stock warrants		94
Cash paid to settle equity-based compensation awards		33

Total consideration	$	3,454

Acquisition-related costs (a)	$	43

Assets acquired and liabilities assumed
Cash	$	538
Restricted cash		1,136
Finance receivables (b)		8,231
Other assets, including identifiable intangible assets		200
Securitization notes payable and other borrowings (c)		(7,564	)
Other liabilities		(352	)

Identifiable net assets acquired		2,189
Goodwill resulting from the acquisition of AmeriCredit		1,265

	$	3,454

(a)	Acquisition-related costs of $43 million were expensed as incurred. The acquisition related costs include $27 million recorded in Automotive selling, general and administrative expense and $16 million recorded in GM Financial operating expenses and other.

185

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(b)

The Finance receivables were recorded at fair value, which was determined using a discounted cash flow approach. The contractual cash flows were adjusted for estimated prepayments, defaults, recoveries, finance charge income and servicing costs and discounted using a discount rate commensurate with risks and maturity inherent in the finance contracts. As of the acquisition date, the contractually required payments receivable was $10.7 billion of which $9.7 billion was expected to be collected.

(c)	The fair value of securitization notes payable and other borrowings was principally determined using quoted market rates.

We recorded goodwill in the amount of $1.3 billion for the excess of consideration paid over the fair value of the individual assets acquired and liabilities assumed. Goodwill includes $153 million recorded to establish a valuation allowance for deferred tax assets that was not applicable to GM Financial on a stand-alone basis. All of the goodwill was assigned to the newly formed GM Financial reporting segment. The goodwill expected to be tax deductible is $159 million and was generated from previous acquisitions by GM Financial.

The results of operations of GM Financial are included in our results beginning October 1, 2010. The following table summarizes the actual amounts of revenue and earnings of GM Financial included in our consolidated financial statements for the year ended December 31, 2010 and the supplemental pro forma revenue and earnings of the combined entity as if the acquisition had occurred on January 1, 2009 (dollars in millions):


	Successor (Unaudited)							Predecessor (Unaudited)
	GM Financial amounts included in results for Year Ended December 31, 2010		Pro Forma-Combined					Pro Forma-Combined
			Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009
Total net sales and revenue	$	281	$	136,665	$	58,215		$	48,074
Net income (loss) attributable to stockholders	$	90	$	6,634	$	(4,125	)	$	109,234

The supplemental pro forma information was adjusted to give effect to the tax effected amortization of a premium on finance receivables and a premium on securitization notes payable and other borrowings, depreciation and amortization related to other assets and acquisition related costs. The pro forma information should not be considered indicative of the results had the acquisition been consummated on January 1, 2009, nor are they indicative of future results.

Sale of Nexteer

On November 30, 2010 we completed the sale of Nexteer, a manufacturer of steering components and half-shafts, to Pacific Century Motors. The sale of the Nexteer business included the global steering business which was acquired in October 2009 as discussed under Acquisition of Delphi Businesses below. The 2009 acquisition of Nexteer included 22 manufacturing facilities, six engineering facilities and 14 customer support centers located in North and South America, Europe and Asia.

We received consideration of $426 million in cash and a $39 million promissory note in exchange for 100% of our ownership interest in Nexteer and recorded a gain of $60 million on the sale which is recorded in Interest income and other non-operating income, net. Subsequent to the sale, Nexteer became one of our third party suppliers and we remain a significant customer. During 2010 Nexteer recorded revenue of $1.8 billion, of which $939 million were sales to us. During the period from October 6, 2009, the date of acquisition, to December 31, 2009, Nexteer reported revenue of $453 million, of which $218 million were sales to us. We did not provide the pro forma financial information because we do not believe the information is material.

186

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisition of Strasbourg

On October 1, 2010 we acquired 100% of the outstanding equity interest of General Motors Strasbourg S.A.S (GMS) for cash of one Euro from MLC. GMS is an entity engaged in the business of developing and manufacturing automatic transmissions for luxury and performance light automotive vehicles which was previously owned by Old GM but retained by MLC in connection with the 363 Sale. MLC was unable to sell GMS and upon notification of their plan to liquidate GMS, we agreed to repurchase the business. We believe the repurchase of GMS allows us to maintain good relationships and to help expand our business within the European region.

We recorded the fair value of the assets acquired and liabilities assumed as of October 1, 2010, the date we obtained control, and have included GMS’s results of operations and cash flows from that date forward. The following table summarizes the amounts recorded in connection with the acquisition of GMS, which are included in our GME segment (dollars in millions):


	Successor
	October 1, 2010
Assets acquired and liabilities assumed
Cash	$	49
Accounts receivable (a)		60
Inventory		56
Property, net		25
Other non-current assets		3
Current liabilities (b)		(116	)
Non-current liabilities		(11	)

Bargain purchase gain	$	66

(a)	Accounts receivable includes $32 million that is due from us.

(b)	Current liabilities include $8 million that is due to us.

We determined that the excess of fair value over consideration paid was attributable to potential future restructuring scenarios made necessary due to the uncertainty in sales demand beyond in-place supply agreements. Restructuring costs, if incurred, would be expensed in future periods. As potential future restructuring activities do not qualify to be recorded as a liability in the application of the acquisition method of accounting, none was recorded, and we recorded the excess as a bargain purchase gain, classified as Interest income and other non-operating income, net. We did not provide the pro forma financial information because we do not believe the information is material. We began to record the results of GMS operations in our consolidated financial statements from the date of acquisition.

Sale of India Operations

In December 2009 we and SAIC Motor Hong Kong Investment Limited (SAIC-HK) entered into a joint venture, SAIC GM Investment Limited (HKJV) to invest in automotive projects outside of markets in China, initially focusing on markets in India. On February 1, 2010 we sold certain of our operations in India (GM India), part of our GMIO segment to HKJV, in exchange for a promissory note due in 2013. The amount due under the promissory note may be partially reduced, or increased, based on GM India’s cumulative earnings before interest and taxes for the three year period ending December 31, 2012. In connection with the sale we recorded net consideration of $185 million and an insignificant gain. The sale transaction resulted in a loss of control and the deconsolidation of GM India on February 1, 2010. Accordingly, we removed the assets and liabilities of GM India from our consolidated financial statements and recorded an equity interest in HKJV to reflect cash of $50 million we contributed to HKJV and a $123 million commitment to provide additional capital that we are required to make in accordance with the terms of the joint venture agreement. We have recorded a corresponding liability to reflect our obligation to provide additional capital.

187

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Acquisition of Delphi Businesses

In July 2009 we entered into the Delphi Master Disposition Agreement (DMDA) with Delphi and other parties. Under the DMDA, we agreed to acquire Delphi’s global steering business (Nexteer), which supplies us and other original equipment manufacturers (OEMs) with steering systems and columns, and four domestic facilities that manufacture a variety of automotive components, primarily sold to us. In addition, we and several third party investors who held the Delphi Tranche DIP facilities (collectively the Investors) agreed to acquire substantially all of Delphi’s remaining assets through DIP HOLDCO, LLP, subsequently named Delphi Automotive LLP (New Delphi). Certain excluded assets and liabilities were retained by a Delphi entity (DPH) to be sold or liquidated. In connection with the DMDA, we agreed to pay or assume Delphi obligations of $1.0 billion related to Delphi’s senior DIP credit facility, including certain outstanding derivative instruments, its junior DIP credit facility, and other Delphi obligations, including certain administrative claims. At the closing of the transactions contemplated by the DMDA, we waived administrative claims associated with the advance agreements with Delphi, the payment terms acceleration agreement with Delphi, and the claims associated with previously transferred pension costs for hourly employees. Refer to Note 22 for additional information on the DMDA.

We agreed to acquire, prior to the consummation of the transactions contemplated by the DMDA, all Class A Membership Interests in New Delphi for a cash contribution of $1.7 billion with the Investors acquiring Class B Membership Interests and the Pension Benefit Guarantee Corporation (PBGC) receiving Class C Membership Interests. We and the Investors also agreed to establish: (1) a secured delayed draw term loan facility for New Delphi, with us and the Investors each committing to provide loans of up to $500 million; and (2) a note of $41 million to be funded at closing by the Investors. In addition, the DMDA settled outstanding claims and assessments against and from MLC, us and Delphi, including the settlement of commitments under the MRA (as defined in Note 22) with limited exceptions, and establishes an ongoing commercial relationship with New Delphi. We also agreed to continue all existing Delphi supply agreements and purchase orders for GMNA to the end of the related product program, and New Delphi agreed to provide us with access rights designed to allow us to operate specific sites on defined triggering events to provide us with protection of supply. The DMDA contains specific waterfall provisions for the allocation of distributions among the Class A, Class B and Class C New Delphi Membership Interests. Once the cumulative amount distributed by New Delphi exceeds $7.0 billion, our Class A Membership Interests will represent 35% of New Delphi with Class B representing the remaining 65%, excluding certain distributions to New Delphi directors and management and the unsecured creditors of Old Delphi. Our Class A Membership Interest entitles us to 49.12% of the first $1.0 billion of cumulative distributions and 57.78% of the next $1.0 billion of cumulative distributions excluding certain distributions to New Delphi directors and management. Additional distributions are applied to specific distribution levels until cumulative distributions reach $7.0 billion.

In October 2009 we consummated the transactions contemplated by the DMDA. The terms of the DMDA provided a means for Delphi to emerge from bankruptcy and to effectively serve its customers by focusing on its core business. The DMDA also enabled us to access essential components and steering technologies through the businesses we acquired.

We funded the acquisitions, transaction related costs and settlements of certain pre-existing arrangements through net cash payments of $2.7 billion and assumption of liabilities and wind-down obligations of $120 million. Additionally, we waived our rights to $550 million and $300 million previously advanced to Delphi under the advance agreements and the payment terms acceleration agreement and our rights to claims associated with previously transferred pension costs for hourly employees. Of these amounts, we contributed $1.7 billion to New Delphi and paid the PBGC $70 million.

The terms of the DMDA resulted in the settlement of certain obligations related to various commitments accrued as of the transaction date under the Delphi-GM Settlement Agreements. A settlement loss of $127 million was recorded upon consummation of the DMDA. Additional net charges of $49 million were recorded in the three months ended December 31, 2009 associated with the DMDA. Refer to Note 22 for additional information on the Delphi-GM Settlement Agreements.

188

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the consideration provided under the DMDA and the allocation to its various elements based on their estimated fair values (dollars in millions):


	Successor
	October 6, 2009
Net cash paid	$	2,656
Waived advance agreements, payment terms acceleration agreement and other administrative claims (a)		966
Wind-down obligations and assumed liabilities		120

Total consideration provided	$	3,742

Fair value of Nexteer and four facilities	$	287
Fair value of Class A Membership Interests in New Delphi		1,912
Separately acquired assets of Delphi		41
Settlement of obligation to PBGC		387
Settlement of other obligations to Delphi		1,066
Expenses of the transaction		49

Allocation of fair value to DMDA elements	$	3,742

(a)	Previously advanced amounts of $850 million and value of other administrative claims of $116 million.

The Class A Membership Interests in New Delphi are accounted for using the equity method of accounting.

The following table summarizes the amounts allocated to the fair value of the assets acquired and liabilities assumed of Nexteer and the four domestic facilities, which are included in the results of our GMNA segment (dollars in millions):


	Successor
	October 6, 2009
Cash and cash equivalents	$	40
Accounts and notes receivable, net		541
Inventories		245
Other current assets and deferred income taxes		28
Property, net		202
Deferred income taxes		39
Other assets		3
Goodwill (a)		61
Accounts payable (principally trade)		(316	)
Short-term debt and current portion of long-term debt		(67	)
Accrued expenses		(101	)
Long-term debt		(10	)
Other liabilities and deferred income taxes		(364	)
Noncontrolling interests		(14	)

Fair value of Nexteer and four domestic facilities	$	287

(a)

Goodwill of $61 million recorded in the GMNA reporting unit arises from the difference between the economic value of long-term employee related liabilities and their recorded amounts at the time of acquisition and deferred taxes. The total amount of goodwill deductible for tax purposes is expected to be $398 million. The difference between book goodwill and tax goodwill results from different allocations for tax purposes than that utilized for book purposes.

189

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Nexteer and the four domestic facilities had revenue of $3.7 billion in the year ended December 31, 2008 of which 68% was related to sales to Old GM. Furthermore, through the terms of the MRA, we provided Delphi labor cost subsidies and production cash burn support to many of the facilities acquired. Refer to Note 22 for additional information on the MRA. Since we and Old GM accounted for a significant portion of Nexteer’s and the four domestic facilities’ sales and because we were providing subsidies to Delphi related to these facilities, the acquisition of these businesses did not have a significant effect on our consolidated financial results as the costs associated with these facilities have been recorded as inventory costs and recorded in Automotive cost of sales. We did not provide pro forma financial information because we do not believe this information would be material given the intercompany nature of Nexteer and the four domestic facilities sales activity.

Saab Bankruptcy and Sale

In February 2009 Saab, part of our GME segment, filed for protection under the reorganization laws of Sweden in order to reorganize itself into a stand-alone entity. Old GM determined that the reorganization proceeding resulted in a loss of the elements of control necessary for consolidation and therefore Old GM deconsolidated Saab in February 2009. Old GM recorded a loss of $824 million in Other automotive expenses, net related to the deconsolidation. The loss reflected the remeasurement of Old GM’s net investment in Saab to its estimated fair value of $0, costs associated with commitments and obligations to suppliers and others, and a commitment to provide up to $150 million of DIP financing. We acquired Old GM’s investment in Saab in connection with the 363 Sale. In August 2009 Saab exited its reorganization proceeding, and we regained the elements of control and consolidated Saab at an insignificant fair value.

Saab’s assets and liabilities were classified as held for sale at December 31, 2009. Saab’s total assets of $388 million included cash and cash equivalents, inventory and receivables, and its total liabilities of $355 million included accounts payable, warranty and pension obligations and other liabilities.

In February 2010 we completed the sale of Saab and in May 2010 we completed the sale of Saab Automobile GB (Saab GB) to Spyker Cars NV. Of the negotiated cash purchase price of $74 million, we received $50 million at closing and received the remaining $24 million in July 2010. We also received preference shares in Saab with a face value of $326 million and an estimated fair value that is insignificant and received $114 million as repayment of the DIP financing that we provided to Saab during 2009. In the year ended December 31, 2010 we recorded a gain of $123 million in Interest income and other non-operating income, net reflecting cash received of $166 million less net assets with a book value of $43 million.

Note 6. Finance Receivables, net

Automotive Financing

The following table summarizes the components of Finance receivables, net (dollars in millions):


	Successor
	December 31, 2010
Pre-acquisition finance receivables (pre-acquisition carrying amount)	$	7,724
Post-acquisition finance receivables		924

Total finance receivables		8,648
Purchase price premium		423
Less non-accretable discount on pre-acquisition finance receivables		(848	)
Less allowance for loan losses on post-acquisition receivables		(26	)

Total finance receivables, net	$	8,197

Finance contracts are purchased by GM Financial from automobile dealers without recourse, and accordingly, the dealer has no liability to GM Financial if the consumer defaults on the contract. Finance receivables are collateralized by vehicle titles and GM Financial has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract.

190

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 31, 2010 the accrual of finance charge income has been suspended on delinquent finance receivables of $491 million.

The following table summarizes purchase price premium (dollars in millions):


	Successor
	October 1, 2010 Through December 31, 2010
Balance at beginning of period	$	500
Amortization of premium		(77	)

Balance at end of period	$	423

The following table summarizes non-accretable discount (dollars in millions):


	Successor
	October 1, 2010 Through December 31, 2010
Balance at beginning of period	$	968
Recoveries		101
Charge-offs		(221	)

Balance at end of period	$	848

The following table summarizes the allowance for loan losses (dollars in millions):


	Successor
	October 1, 2010 Through December 31, 2010
Balance at beginning of period	$	—
Provision for loan losses		26
Recoveries		—
Charge-offs		—

Balance at end of period	$	26

191

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Credit Quality

Credit bureau scores, generally referred to as FICO scores, are determined during GM Financial’s automotive loan origination process. The following table summarizes the credit risk profile of finance receivables by FICO score band, determined at origination (dollars in millions):


	Successor
	December 31, 2010
FICO score less than 540	$	1,328
FICO score 540 to 599		3,396
FICO score 600 to 659		2,758
FICO score greater than 660		1,166

Total finance receivables	$	8,648

Delinquency

The following summarizes finance receivables more than 30 days delinquent, but not yet in repossession, and in repossession, but not yet charged off (dollars in millions):


	Successor
	December 31, 2010
	Amount		Percent
Delinquent contracts
31 to 60 days	$	535		6.2%
Greater-than-60 days		212		2.4%

Total finance receivables more than 30 days delinquent		747		8.6%
In repossession		28		0.3%

Total finance receivables more than 30 days delinquent and in repossession	$	775		8.9%

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. Delinquencies may vary from period to period based upon the average age of the portfolio, seasonality within the calendar year and economic factors.

Note 7. Securitizations

Automotive Financing

The following table summarizes securitization activity and cash flows from SPEs used for securitizations (dollars in millions):


	Successor
	October 1, 2010 Through December 31, 2010
Receivables securitized	$	743
Net proceeds from securitization	$	700
Servicing fees
Variable interest entities	$	46
Distributions from Trusts
Variable interest entities	$	216

GM Financial retains servicing responsibilities for receivables transferred to certain SPEs. At December 31, 2010 GM Financial serviced finance receivables that have been transferred to certain SPEs of $7.2 billion.

192

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8. Marketable Securities

Automotive

The following table summarizes information regarding marketable securities (dollars in millions):


	Successor
	December 31, 2010								December 31, 2009
	Cost		Unrealized				Fair Value		Cost		Unrealized				Fair Value
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Marketable Securities
Available-for-sale securities
United States government and agencies	$	2,023	$	—	$	—	$	2,023	$	2	$	—	$	—	$	2
Sovereign debt		773		—		—		773		—		—		—		—
Certificates of deposit		954		—		—		954		8		—		—		8
Corporate debt		1,670		1		2		1,669		—		—		—		—

Total available-for-sale securities		5,420		1		2		5,419		10		—		—		10
Total trading securities		129		10		3		136		122		7		5		124

Total Marketable securities	$	5,549	$	11	$	5	$	5,555	$	132	$	7	$	5	$	134

We maintained $89 million and $79 million of the above trading securities as compensating balances to support letters of credit of $74 million and $66 million at December 31, 2010 and 2009. We have access to these securities in the normal course of business; however, the letters of credit may be withdrawn if the minimum collateral balance is not maintained.

The following table summarizes securities classified as Cash and cash equivalents and Restricted cash and marketable securities (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Securities classified as Cash and cash equivalents	$	12,964	$	11,176
Securities classified as Restricted cash and marketable securities	$	1,474	$	14,178

Refer to Note 24 for classes of securities underlying Cash and cash equivalents and Restricted cash and marketable securities.

The following table summarizes proceeds from and realized gains and losses on disposals of investments in marketable securities classified as available-for-sale and sold prior to maturity (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Sales proceeds	$	11	$	3	$	185	$	4,001
Realized gains	$	—	$	—	$	3	$	44
Realized losses	$	—	$	—	$	10	$	88

193

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the fair value of investments classified as available-for-sale securities by contractual maturity at December 31, 2010 (dollars in millions):


	Successor
	Amortized Cost		Fair Value
Due in one year or less	$	5,059	$	5,059
Due after one year through five years		361		360

Total contractual maturities of available-for-sale securities	$	5,420	$	5,419

Refer to Note 26 for the amounts recorded as other than temporary impairments on debt and equity securities.

Note 9. Inventories

Automotive

The following table summarizes the components of Inventories (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Productive material, supplies and work in process	$	5,487	$	4,201
Finished product, including service parts		6,638		5,906

Total inventories	$	12,125	$	10,107

In the period January 1, 2009 through July 9, 2009 and in the year ended December 31, 2008 Old GM’s U.S. LIFO eligible inventory quantities were reduced. These reductions resulted in liquidations of LIFO inventory quantities, which were carried at lower costs prevailing in prior years as compared with the costs of purchases in the period January 1, 2009 through July 9, 2009 and in the year ended December 31, 2008. These liquidations decreased Old GM’s Automotive cost of sales by $5 million in the period January 1, 2009 through July 9, 2009 and $355 million in the year ended December 31, 2008.

Note 10. Equipment on Operating Leases, net

Automotive

Equipment on operating leases, net is comprised of vehicle sales to daily rental car companies and to retail customers.

The following table summarizes information related to Equipment on operating leases, net and the related accumulated depreciation (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
Equipment on operating leases	$	2,843		$	3,070
Less accumulated depreciation		(275	)		(343	)

Equipment on operating leases, net	$	2,568		$	2,727

194

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes depreciation expense and impairment charges related to Equipment on operating leases, net (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Depreciation expense and impairment charges	$	549	$	586	$	338	$	1,575

Refer to Note 26 for additional information on impairment charges related to Equipment on operating leases, net.

Note 11. Equity in Net Assets of Nonconsolidated Affiliates

Automotive

Nonconsolidated affiliates are entities in which an equity ownership interest is maintained and for which the equity method of accounting is used, due to the ability to exert significant influence over decisions relating to their operating and financial affairs.

The following table summarizes information regarding equity in income (loss) of and disposition of interest in nonconsolidated affiliates (dollars in millions):


	Successor					Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Ally Financial	$	—	$	—		$	(1,097	)	$	916
Gain on conversion of UST Ally Financial Loan		—		—			2,477			—
Ally Common Membership Interest impairment charges		—		—			—			(7,099	)

Total equity in income (loss) of and disposition of interest in Ally Financial	$	—	$	—		$	1,380		$	(6,183	)

China JVs (a)	$	1,297	$	460		$	300		$	315
New United Motor Manufacturing, Inc. (b)		—		—			(243	)		(118	)
New Delphi (c)		117		(1	)		—			—
Others		24		38			4			(11	)

Total equity income, net of tax	$	1,438	$	497		$	61		$	186

(a)

Includes Shanghai General Motors Co., Ltd. (SGM) (49%) in the period February 1, 2010 through December 31, 2010 and (50%) in the month of January 2010, in the periods July 10, 2009 through December 31, 2009 and January 1, 2009 through July 9, 2009, and in the year ended December 31, 2008 and SAIC-GM-Wuling Automobile Co., Ltd. (SGMW) (44%) in the period November 16, 2010 through December 31, 2010 and (34%) in the periods January 1, 2010 through November 15, 2010, July 10, 2009 through December 31, 2009, January 1, 2009 through July 9, 2009, and the year ended December 31, 2008.

(b)	New United Motor Manufacturing, Inc. (NUMMI) (50%) was retained by MLC as a part of the 363 Sale.

(c)	New Delphi was acquired in October 2009. Refer to Note 5 for additional information on acquisition of Delphi businesses.

Investment in China JVs

Our Chinese operations, which we established beginning in 1997, are comprised of the following joint ventures: SGM, SGMW, FAW-GM Light Duty Commercial Vehicle, Ltd. (FAW-GM), Pan Asia Technical Automotive Center Co., Ltd. (PATAC), Shanghai OnStar Telematics Co. Ltd. (Shanghai OnStar) and Shanghai Chengxin Used Car Operation and Management Co., Ltd. (Used Car

195

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

JV), collectively referred to as the China JVs. Sales and income of these joint ventures are not consolidated into our financial statements; rather, our proportionate share of the earnings of each joint venture is reflected as Equity income, net of tax.

SGMW produces mini-commercial vehicles and passenger cars utilizing local architectures under the Wuling, Chevrolet and Baojun brands. FAW-GM, of which we own 50% and China FAW Group Corporation (FAW) owns 50%, produces light commercial vehicles under the Jiefang brand and medium vans under the FAW brand. Our joint venture agreements allow for significant rights as a member.

SAIC, one of our joint venture partners, currently produces vehicles under its own brands for sale in the Chinese market. At present vehicles that SAIC produces primarily serve markets that are different from markets served by our joint ventures.

In February 2010 we sold a 1% ownership interest in SGM to SAIC-HK, reducing our ownership interest to 49%. The sale of the 1% ownership interest to SAIC was predicated on our ability to work with SAIC to obtain a $400 million line of credit from a commercial bank to us. We also received a call option to repurchase the 1% which is contingently exercisable based on events which we do not unilaterally control. As part of the loan arrangement SAIC provided a commitment whereby, in the event of default, SAIC will purchase the ownership interest in SGM that we pledged as collateral for the loan. We recorded an insignificant gain on this transaction in the year ended December 31, 2010.

In November 2010 we purchased an additional 10% interest in SGMW from the Liuzhou Wuling Motors Co., Ltd. and Liuzhou Mini Vehicles Factory, collectively the Wuling Group, for cash of $52 million plus an agreement to provide technical services to the Wuling Group for a period of three years. As a result of this transaction, we own 44%, SAIC owns 50.1% and certain Liuzhou investors own 5.9% of the outstanding stock of SGMW. The fair value of the additional 10% interest in SGMW was $394 million at the date of the transaction, as determined using a discounted cash flow methodology. The difference between the cash consideration and the fair value of the 10% interest in SGMW is being deferred and amortized over the three year period we will provide technical services to the Wuling Group. During the year ended December 31, 2010 $14 million was amortized and recorded in Interest income and other non-operating income, net.

Investment in and Summarized Financial Data of Nonconsolidated Affiliates

The following table summarizes the carrying amount of investments in significant nonconsolidated affiliates (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Carrying amount of investment in China JVs	$	6,133	$	5,648
Carrying amount of investment in New Delphi		2,043		1,908
Carrying amount of other investments		353		380

Total equity in net assets of nonconsolidated affiliates	$	8,529	$	7,936

196

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On July 10, 2009 our investments in SGM and its subsidiaries were adjusted to their fair values. Our investment in SGM was increased by fresh-start reporting adjustments of $3.5 billion. This fair value adjustment of $3.5 billion was allocated as follows: (1) goodwill of $2.9 billion; (2) intangible assets of $0.6 billion; and (3) property of $38 million. The increase in basis related to intangible assets is being amortized on a straight-line basis over the remaining useful lives of the assets ranging from seven to 25 years, with amortization expense of $24 million per year. The increase in basis related to property is being depreciated on a straight-line basis over the remaining useful lives of the assets ranging from two to 22 years, with depreciation expense of $5 million per year.

On July 10, 2009 our investment in SGMW was adjusted to its fair value. Our investment in SGMW was increased by fresh-start reporting adjustments of $265 million which were allocated as follows: (1) goodwill of $165 million; (2) intangible assets of $93 million; and (3) property of $7 million. The increase in basis related to intangible assets is being amortized on a straight-line basis over the remaining useful lives of 25 years, with amortization expense of $4 million per year. The increase in basis related to property is being depreciated on a straight-line basis over the remaining useful lives of the assets ranging from three to 22 years.

As a result of our purchase of an additional 10% interest in SGMW, our additional investment was recorded at its fair value of $394 million, an increase of $322 million from SGMW’s book value. This fair value increase was allocated as follows: (1) goodwill of $231 million; (2) intangible assets of $82 million; (3) inventory of $5 million; and (4) property of $4 million. The increase in basis related to intangible assets is being amortized on a straight-line basis over the remaining useful lives of 25 years, with amortization expense of $3 million per year. The increase in basis related to property is being depreciated on a straight-line basis over the remaining useful lives of the assets ranging from three to 22 years.

The following table presents summarized financial data for all of our nonconsolidated affiliates, excluding Ally Financial (dollars in millions):


	China JVs		Others		Total		China JVs		Others		Total
	December 31, 2010		December 31, 2010		December 31, 2010		December 31, 2009		December 31, 2009		December 31, 2009
Summarized Balance Sheet Data
Current assets	$	9,689	$	9,708	$	19,397	$	6,954	$	8,507	$	15,461
Non-current assets		4,147		5,001		9,148		3,794		4,874		8,668

Total assets	$	13,836	$	14,709	$	28,545	$	10,748	$	13,381	$	24,129

Current liabilities	$	8,931	$	4,745	$	13,676	$	6,695	$	4,608	$	11,303
Non-current liabilities		580		2,232		2,812		302		1,905		2,207

Total liabilities	$	9,511	$	6,977	$	16,488	$	6,997	$	6,513	$	13,510

Non-controlling interests	$	766	$	474	$	1,240	$	638	$	440	$	1,078


	Year Ended December 31, 2010 (a)		Year Ended December 31, 2009 (b)		Year Ended December 31, 2008
Summarized Operating Data
China JV’s net sales	$	25,395	$	18,098	$	10,883
Others’ net sales		17,500		7,457		10,415

Total net sales	$	42,895	$	25,555	$	21,298

China JV’s net income	$	2,808	$	1,636	$	671
Others’ net income		656		161		(5,212	)

Total net income	$	3,464	$	1,797	$	(4,541	)

197

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(a)	Summarized financial information is not included for a joint venture that we dissolved in June 2010. We recognized equity income of $10 million in the six months ended June 30, 2010.

(b)	Summarized financial information is not included for a joint venture which remained with MLC at July 9, 2009. Old GM recognized equity loss of $243 million in the period January 1, 2009 through July 9, 2009.

Transactions with Nonconsolidated Affiliates

Nonconsolidated affiliates are involved in various aspects of the development, production and marketing of cars, trucks and parts, and we purchase component parts and vehicles from certain nonconsolidated affiliates for resale to dealers. The following tables summarize the effects of transactions with nonconsolidated affiliates, excluding transactions with Ally Financial which are disclosed in Note 32, which are not eliminated in consolidation (dollars in millions):


	Successor					Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Results of Operations
Automotive sales	$	2,910	$	899		$	596		$	1,076
Automotive purchases, net	$	2,881	$	1,190		$	737		$	3,815
Automotive selling, general and administrative expense	$	3	$	(19	)	$	(19	)	$	62
Automotive interest expense	$	16	$	—		$	—		$	—
Interest income and other non-operating income (expense), net	$	43	$	14		$	(9	)	$	231


	Successor
	December 31, 2010		December 31, 2009
Financial Position
Accounts and notes receivable, net	$	1,618	$	771
Accounts payable (principally trade)	$	641	$	579


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Cash Flows
Operating	$	719		$	538		$	546	$	(1,014	)
Investing	$	(74	)	$	(67	)	$	—	$	370
Financing	$	—		$	—		$	—	$	—

Investment in Ally Financial

In January 2009 Old GM entered into the UST Ally Financial Loan Agreement pursuant to which Old GM borrowed $884 million (UST Ally Financial Loan) and utilized those funds to purchase 190,921 Class B Common Membership Interests in Ally Financial. The UST Ally Financial Loan was scheduled to mature in January 2012 and bore interest, payable quarterly, at the same rate of interest as the UST Loans. The UST Ally Financial Loan Agreement was secured by Old GM’s Common and Preferred Membership Interests in Ally Financial. The UST had the option to convert outstanding amounts into a maximum of 190,921 shares of Ally Financial’s Class B Common Membership Interests on a pro rata basis.

198

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In May 2009 the UST exercised this option, the outstanding principal and interest under the UST Ally Financial Loan was extinguished, and Old GM recorded a net gain of $483 million. The net gain was comprised of a gain on the disposition of Ally Financial Common Membership Interests of $2.5 billion recorded in Equity in income of and disposition of interest in Ally Financial and a loss on extinguishment of the UST Ally Financial Loan of $2.0 billion recorded in Loss on extinguishment of debt. After the exchange, Old GM’s ownership was reduced to 24.5% of Ally Financial’s Common Membership Interests.

Ally Financial converted its status to a C corporation effective June 30, 2009. At that date, Old GM began to account for its investment in Ally Financial using the cost method rather than the equity method as Old GM could not exercise significant influence over Ally Financial. Prior to converting to a C corporation, Old GM’s investment in Ally Financial was accounted for in a manner similar to an investment in a limited liability partnership and the equity method was applied because Old GM’s influence was more than minor. In connection with Ally Financial’s conversion into a C corporation, each unit of each class of Ally Financial Membership Interests was converted into shares of capital stock of Ally Financial with substantially the same rights and preferences as such Membership Interests. On July 10, 2009 we acquired the investment in Ally Financial’s common and preferred stocks in connection with the 363 Sale.

In December 2009 the UST made a capital contribution to Ally Financial of $3.8 billion. The UST also exchanged all of its existing Ally Financial non-convertible preferred stock for newly issued mandatory convertible preferred securities valued at $5.3 billion and converted mandatory convertible preferred securities valued at $3.0 billion into Ally Financial common stock. These actions resulted in the dilution of our investment in Ally Financial common stock from 24.5% to 16.6%, of which 6.7% was held directly and 9.9% was held indirectly through an independent trust.

The following tables summarize financial information of Ally Financial for the period Ally Financial was accounted for as a nonconsolidated affiliate (dollars in millions):


	Six Months Ended June 30, 2009			Year Ended December 31, 2008
Consolidated Statement of Income (Loss)
Total financing revenue and other interest income	$	6,916		$	18,054
Total interest expense	$	3,936		$	10,441
Depreciation expense on operating lease assets	$	2,113		$	5,478
Gain on extinguishment of debt	$	657		$	12,628
Total other revenue	$	2,117		$	15,271
Total noninterest expense	$	3,381		$	8,349
Loss from continuing operations before income tax expense	$	(2,260	)	$	4,737
Income tax expense from continuing operations	$	972		$	(136	)
Net income (loss) from continuing operations	$	(3,232	)	$	4,873
Loss from discontinued operations, net of tax	$	(1,346	)	$	(3,005	)
Net income (loss)	$	(4,578	)	$	1,868

199

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	June 30, 2009
Condensed Consolidated Balance Sheet
Loans held for sale	$	11,440
Total finance receivables and loans, net	$	87,520
Investment in operating leases, net	$	21,597
Other assets	$	22,932
Total assets	$	181,248
Total debt	$	105,175
Accrued expenses and other liabilities	$	41,363
Total liabilities	$	155,202
Preferred stock held by UST	$	12,500
Preferred stock	$	1,287
Total equity	$	26,046

Ally Financial – Preferred and Common Membership Interests

The following tables summarize the activity with respect to the investment in Ally Financial Common and Preferred Membership Interests for the period Ally Financial was accounted for as a nonconsolidated affiliate (dollars in millions):


	Predecessor
	Ally Financial Common Membership Interests			Ally Financial Preferred Membership Interests
Balance at January 1, 2009	$	491		$	43
Old GM’s proportionate share of Ally Financial’s losses (a)		(1,130	)		(7	)
Investment in Ally Financial Common Membership Interests		884			—
Gain on disposition of Ally Financial Common Membership Interests		2,477			—
Conversion of Ally Financial Common Membership Interests		(2,885	)		—
Other, primarily accumulated other comprehensive loss		163			—

Balance at June 30, 2009	$	—		$	36

(a)

Due to impairment charges and Old GM’s proportionate share of Ally Financial’s losses, the carrying amount of Old GM’s investments in Ally Financial Common Membership Interests was reduced to $0. Old GM recorded its proportionate share of Ally Financial’s remaining losses to its investment in Ally Financial Preferred Membership Interests.

200

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 12. Property, net

Automotive

The following table summarizes the components of Property, net (dollars in millions):


	Successor
	Estimated Useful Lives (Years)		December 31, 2010			Estimated Useful Lives (Years)		December 31, 2009
Land		—	$	2,536			—	$	2,602
Buildings and land improvements		2-40		4,324			2-40		4,292
Machinery and equipment		3-30		8,727			3-30		6,686
Construction in progress		—		1,754			—		1,649

Real estate, plants, and equipment				17,341					15,229
Less accumulated depreciation				(3,277	)				(1,285	)

Real estate, plants, and equipment, net				14,064					13,944
Special tools, net		1-13		5,171			1-13		4,743

Total property, net			$	19,235				$	18,687

The following table summarizes the amount of interest capitalized and excluded from Automotive interest expense related to Property, net (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Capitalized interest	$	62	$	21	$	28	$	576

The following table summarizes the amount of capitalized software included in Property, net (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Capitalized software in use, net	$	287	$	263
Capitalized software in the process of being developed	$	96	$	81

The following table summarizes depreciation, impairment charges and amortization expense related to Property, net, recorded in Automotive cost of sales, Automotive selling, general and administrative expense and Other automotive expenses, net (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Depreciation and impairment of long-lived assets	$	1,988	$	1,355	$	4,352	$	4,863
Amortization and impairment of special tools		1,826		865		2,139		3,493

Total depreciation, impairment charges and amortization expense	$	3,814	$	2,220	$	6,491	$	8,356

Capitalized software amortization expense (a)	$	195	$	132	$	136	$	209

(a)	Included in Total depreciation, impairment charges and amortization expense.

201

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Old GM initiated restructuring plans prior to the 363 Sale to reduce the total number of powertrain, stamping and assembly plants and to eliminate certain brands and nameplates. In addition, MLC retained certain assets that we did not acquire in connection with the 363 Sale and were deemed not to have a useful life beyond July 9, 2009. As a result, Old GM recorded incremental depreciation and amortization on certain of these assets as they were expected to be utilized over a shorter period of time than their previously estimated useful lives. We record incremental depreciation and amortization for changes in useful lives subsequent to the initial determination. We recorded incremental depreciation and amortization of $18 million and $20 million in the year ended December 31, 2010 and the period July 10, 2009 through December 31, 2009. Old GM recorded incremental depreciation and amortization of approximately $2.8 billion and $0.8 billion in the period January 1, 2009 through July 9, 2009 and the year ended December 31, 2008.

Note 13. Goodwill

Consolidated

The following table summarizes the changes in the carrying amounts of Goodwill (dollars in millions):


	Successor
	GMNA			GME			GMIO			GMSA (a)		Total Automotive			GM Financial		Total
Balance at January 1, 2010	$	26,409		$	3,335		$	771		$	157	$	30,672		$	—	$	30,672
Reporting unit reorganization (b)		—			(82	)		82			—		—			—		—
Goodwill acquired (c)		—			—			—			—		—			1,265		1,265
Disposals		(17	)		—			(2	)		—		(19	)		—		(19	)
Effect of foreign currency translation and other		2			(200	)		50			8		(140	)		—		(140	)

Balance at December 31, 2010		26,394			3,053			901			165		30,513			1,265		31,778
Accumulated impairment charges		—			—			—			—		—			—		—

Goodwill	$	26,394		$	3,053		$	901		$	165	$	30,513		$	1,265	$	31,778


	Successor
	GMNA		GME		GMIO			GMSA (a)		Total Automotive			Total
Balance at July 10, 2009 (d)	$	26,348	$	3,262	$	713		$	141	$	30,464		$	30,464
Goodwill acquired		61		—		—			—		61			61
Effect of foreign currency translation and other		—		73		71			16		160			160
Goodwill included in Assets held for sale		—		—		(13	)		—		(13	)		(13	)

Balance at December 31, 2009		26,409		3,335		771			157		30,672			30,672
Accumulated impairment charges		—		—		—			—		—			—

Goodwill	$	26,409	$	3,335	$	771		$	157	$	30,672		$	30,672

(a)	Reflects the revised segment presentation for our newly created GMSA segment. Refer to Note 35 for additional information.

(b)

(c)

On October 1, 2010 our acquisition of AmeriCredit became effective. Pursuant to ASC 805 we assigned fair value to all assets, including identifiable intangible assets, and liabilities acquired. Subsequent to assigning fair values and recording deferred income taxes in accordance with ASC 740, a residual amount of $1.3 billion was recorded as Goodwill. Goodwill includes $153 million that was recorded at the acquisition date to establish a valuation allowance for deferred tax assets that were not applicable to GM Financial on a stand-alone basis.

202

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(d)

We recorded Goodwill of $30.5 billion upon application of fresh-start reporting. If all identifiable assets and liabilities had been recorded at fair value upon application of fresh-start reporting, no goodwill would have resulted. However, when applying fresh-start reporting, certain accounts, primarily employee benefit plan and income tax related, were recorded at amounts determined under specific U.S. GAAP rather than fair value and the difference between the U.S. GAAP and fair value amounts gave rise to goodwill, which is a residual. Our employee benefit related accounts were recorded in accordance with ASC 712 and 715 and deferred income taxes were recorded in accordance with ASC 740. Further, we recorded valuation allowances against certain of our deferred tax assets, which under ASC 852 also resulted in Goodwill. These valuation allowances were due in part to Old GM’s history of recurring operating losses, and our projections at the 363 Sale date of continued near-term operating losses in certain jurisdictions. While the 363 Sale constituted a significant restructuring that eliminated many operating and financing costs, Old GM had undertaken significant restructurings in the past that failed to return certain jurisdictions to profitability. At the 363 Sale date, we concluded that there was significant uncertainty as to whether the recent restructuring actions would return these jurisdictions to sustained profitability, thereby necessitating the establishment of a valuation allowance against certain deferred tax assets. None of the goodwill from this transaction is deductible for tax purposes.

In the three months ended December 31, 2010 and 2009 we performed our annual goodwill impairment analysis of our reporting units at October 1, 2010 and 2009, and in the three months ended June 30, 2010 an event-driven impairment analysis for GME which resulted in no goodwill impairment charges.

The valuation methodologies utilized to perform our goodwill impairment testing were consistent with those used in our application of fresh-start reporting on July 10, 2009, as discussed in Note 2, and in any subsequent annual or event-driven impairment tests and resulted in Level 3 measures.

Our fair value estimate assumes the achievement of the future financial results contemplated in our forecasted cash flows, and there can be no assurance that we will realize that value. The estimates and assumptions used are subject to significant uncertainties, many of which are beyond our control, and there is no assurance that anticipated financial results will be achieved.

Refer to Note 26 for additional information on goodwill impairments in prior periods.

Note 14. Intangible Assets, net

Automotive

The following table summarizes the components of Intangible assets, net (dollars in millions):


	Successor
	December 31, 2010								December 31, 2009
	Weighted- Average Remaining Amortization Period (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted- Average Remaining Amortization Period (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Technology and intellectual property		3	$	7,751	$	3,650	$	4,101		4	$	7,741	$	1,460	$	6,281
Brands		37		5,439		222		5,217		38		5,508		72		5,436
Dealer network and customer relationships		20		2,172		199		1,973		21		2,205		67		2,138
Favorable contracts		26		526		120		406		24		542		39		503
Other		2		19		9		10		3		17		3		14

Total amortizing intangible assets		21		15,907		4,200		11,707		20		16,013		1,641		14,372
Non amortizing in process research and development				175		—		175				175		—		175

Total intangible assets			$	16,082	$	4,200	$	11,882			$	16,188	$	1,641	$	14,547

203

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the amortization expense related to intangible assets (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009 (a)		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Amortization expense related to intangible assets	$	2,560	$	1,584	$	44	$	83

(a)	Amortization expense in the period July 10, 2009 through December 31, 2009 includes an impairment charge of $21 million related to technology and intellectual property. Refer to Note 26 for additional information on the impairment charge.

The following table summarizes estimated amortization expense related to intangible assets in each of the next five years (dollars in millions):


	Estimated Amortization Expense
2011	$	1,785
2012	$	1,560
2013	$	1,227
2014	$	611
2015	$	314

Note 15. Restricted Cash and Marketable Securities

Automotive

Cash and marketable securities subject to contractual restrictions and not readily available are classified as Restricted cash and marketable securities. Restricted cash and marketable securities are invested in accordance with the terms of the underlying agreements. Funds previously held in the UST Credit Agreement and currently held in the Canadian Health Care Trust (HCT) escrow and other accounts have been invested in government securities and money market funds in accordance with the terms of the escrow agreements. At December 31, 2010 and 2009 we held securities of $1.5 billion and $14.2 billion that were classified as Restricted cash and marketable securities. Refer to Note 24 for additional information on securities classified as Restricted cash and marketable securities.

The following table summarizes the components of automotive Restricted cash and marketable securities (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Current
UST Credit Agreement (a)	$	—	$	12,475
Canadian Health Care Trust (b)		1,008		955
Receivables Program (c)		—		187
Securitization trusts		6		191
Pre-funding disbursements		32		94
Other (d)		194		15

Total current automotive Restricted cash and marketable securities		1,240		13,917
Non-current
Collateral for insurance related activities		588		658
Other non-current (d)		572		831

Total automotive Restricted cash and marketable securities	$	2,400	$	15,406

204

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(a)	In April 2010 the UST Loans and Canadian Loan were paid in full and funds remaining in escrow were no longer subject to restrictions.

(b)	Under the terms of an escrow agreement between GMCL, the EDC and an escrow agent, GMCL established a CAD $1.0 billion (equivalent to $893 million when entered into) escrow to fund certain of its healthcare obligations.

(c)	The Receivables Program provided financial assistance to automotive suppliers by guaranteeing or purchasing certain receivables payable by us. In April 2010 the Receivable Program was terminated in accordance with its terms.

(d)	Includes amounts related to various letters of credit, deposits, escrows and other cash collateral requirements.

Automotive Financing

Cash subject to contractual restrictions and not readily available is classified as restricted cash.

The following table summarizes the components of automotive financing restricted cash (dollars in millions):


	Successor
	December 31, 2010
Restricted cash — securitization notes payable (a)	$	926
Restricted cash — credit facilities (a)		131
Restricted cash — other (b)		33

Total automotive financing restricted cash	$	1,090

(a)	Cash pledged to support securitization transactions and credit facilities is invested in highly liquid securities with original maturities of 90 days or less or in highly rated guaranteed investment contracts.

(b)	Other restricted cash is pledged in association with derivative transactions.

Note 16. Other Assets

Automotive

The following table summarizes the components of Other assets (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Investment in Ally Financial common stock	$	964	$	970
Investment in Ally Financial preferred stock		665		665
Notes receivable (a)		465		149
Taxes other than income taxes		299		297
Derivative assets		44		44
Other		849		498

Total other assets	$	3,286	$	2,623

(a)	At December 31, 2010 a note receivable of $245 million is included related to the sale of GM India. Refer to Note 5 for additional information.

205

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 17. Variable Interest Entities

Consolidated VIEs

Automotive

VIEs that we do not control through a majority voting interest that are consolidated because we are or Old GM was the primary beneficiary primarily include: (1) previously divested suppliers for which we provide or Old GM provided guarantees or financial support; (2) a program announced by the UST in March 2009 to provide financial assistance to automotive suppliers (Receivables Program); (3) vehicle sales and marketing joint ventures that manufacture, market and sell vehicles in certain markets; (4) leasing SPEs which held real estate assets and related liabilities for which Old GM provided residual guarantees; and (5) an entity which manages certain private equity investments held by our and Old GM’s defined benefit plans, along with seven associated general partner entities.

Certain creditors and beneficial interest holders of these VIEs have or had limited, insignificant recourse to our general credit or Old GM’s general credit. In the event that creditors or beneficial interest holders were to have such recourse to our or Old GM’s general credit, we or Old GM could be held liable for certain of the VIEs’ obligations. GM Daewoo Auto & Technology Co. (GM Daewoo), a non-wholly owned consolidated subsidiary that we control through a majority voting interest, is also a VIE because in the future it may require additional subordinated financial support. The creditors of GM Daewoo’s short-term debt of $70 million, preferred shares classified as long-term debt of $835 million and current derivative liabilities of $111 million at December 31, 2010 do not have recourse to our general credit. In February 2011 we provided a guarantee to Korean Development Bank, a minority shareholder in GM Daewoo, to redeem GM Daewoo’s preferred shares should GM Daewoo not have sufficient legally distributable earnings.

The following table summarizes the carrying amount of consolidated VIEs that we do not control through a majority voting interest or are part of GM Financial’s securitization transactions (dollars in millions):


	Successor
	December 31, 2010 (a)(b)		December 31, 2009 (a)
Assets
Cash and cash equivalents	$	145	$	15
Restricted cash and marketable securities		1		191
Accounts and notes receivable, net		121		14
Inventories		108		15
Other current assets		14		—
Property, net		44		5
Other assets		48		33

Total assets	$	481	$	273

Liabilities
Accounts payable (principally trade)	$	226	$	17
Short-term borrowings and current portion of long-term debt		5		205
Accrued liabilities		34		10
Other liabilities		42		23

Total liabilities	$	307	$	255

(a)	Amounts exclude GM Daewoo.

(b)	At December 31, 2010 GM Egypt had Total assets of $401 million and Total liabilities of $277 million.

206

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the amounts recorded in earnings related to consolidated VIEs we do not control through a majority voting interest or are part of GM Financial’s securitization transactions (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010 (a)(b)		July 10, 2009 Through December 31, 2009 (a)		January 1, 2009 Through July 9, 2009 (a)			Year Ended December 31, 2008 (a)
Total net sales and revenue	$	753	$	41	$	31		$	40
Automotive cost of sales		623		8		(1	)		5
Automotive selling, general administrative expense		34		8		5			(11	)
Other automotive expenses, net		3		9		10			19
Automotive interest expense		6		14		22			—
Interest income and other non-operating income, net		6		—		—			—
Reorganization loss, net		—		—		26			—
Income tax expense		11		1		—			—
Equity income, net of tax		2		—		—			—

Net income (loss)	$	84	$	1	$	(31	)	$	27

(a)	Amounts exclude GM Daewoo.

(b)	In the year ended December 31, 2010 GM Egypt recorded Total net sales and revenue of $714 million.

GM Egypt

GM Egypt, of which we own 31%, is an automotive manufacturing organization that was previously accounted for using the equity method of accounting. GM Egypt was founded in March 1983 to assemble and manufacture vehicles. Certain voting and other rights permit us to direct those activities of GM Egypt that most significantly affect its economic performance. In connection with our adoption of amendments to ASC 810, we consolidated GM Egypt in January 2010.

Receivables Program

At December 31, 2009 our equity contributions were $55 million and the UST had outstanding loans of $150 million to the Receivables Program. In March 2010 we repaid these loans in full. The Receivables Program was terminated in accordance with its terms in April 2010. Upon termination, we shared residual capital of $25 million in the program equally with the UST and paid a termination fee of $44 million.

CAMI

In March 2009 Old GM determined that due to changes in contractual arrangements related to CAMI Automotive Inc. (CAMI), it was required to reconsider its previous conclusion that CAMI was not a VIE. As a result of Old GM’s analysis, it determined that CAMI was a VIE and Old GM was the primary beneficiary, and therefore Old GM consolidated CAMI. The equity interests held by Old GM and held by the noncontrolling interest had a fair value of approximately $12 million. Total assets were approximately $472 million comprised primarily of property, plants, and equipment and related party accounts receivable and inventory. Total liabilities were approximately $460 million, comprised primarily of long-term debt, accrued liabilities and pension and other post-employment benefits. In December 2009 we acquired the remaining noncontrolling interest of CAMI from Suzuki Motor Corporation for $100 million, increasing our ownership interest from 50% to 100%. CAMI is a wholly-owned subsidiary and therefore not included in the previous tabular disclosure.

207

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Automotive Financing

GM Financial’s continuing involvement with the credit facilities and securitization trusts includes servicing loans held by the SPEs and holding a residual interest in the SPE. The SPEs are considered VIEs because they do not have sufficient equity at risk, and are consolidated because GM Financial is the primary beneficiary and has the power over those activities that most significantly affect the economic performance of the SPEs, and has an obligation to absorb losses or the right to receive benefits from the SPEs which are potentially significant. Refer to Notes 6, 7 and 19 for additional information on GM Financial’s involvement with the SPEs.

GM Financial is not required to provide any additional financial support to its sponsored credit facilities and securitization SPEs. The finance receivables and other assets held by these subsidiaries are not available to our creditors or creditors of our other subsidiaries. Refer to Notes 6 and 7 for disclosures related to the amounts held by the SPEs as of the balance sheet dates.

Nonconsolidated VIEs

Automotive

VIEs that are not consolidated because we are not or Old GM was not the primary beneficiary primarily include: (1) troubled suppliers for which we provide or Old GM provided guarantees or financial support; (2) vehicle sales and marketing joint ventures that manufacture, market and sell vehicles and related services; (3) leasing entities for which residual value guarantees were made; (4) certain research entities for which annual ongoing funding requirements exist; and (5) Ally Financial.

Guarantees and financial support are provided to certain current or previously divested suppliers in order to ensure that supply needs for production are not disrupted due to a supplier’s liquidity concerns or possible shutdowns. Types of financial support that we provide and Old GM provided include, but are not limited to: (1) funding in the form of a loan; (2) guarantees of the supplier’s debt or credit facilities; (3) one-time payments to fund prior losses of the supplier; (4) indemnification agreements to fund the suppliers’ future losses or obligations; (5) agreements to provide additional funding or liquidity to the supplier in the form of price increases or changes in payment terms; and (6) assisting the supplier in finding additional investors. The maximum exposure to loss related to these VIEs is not expected to be in excess of the amount of net accounts and notes receivable recorded with the suppliers and any related guarantees and loan commitments.

We have and Old GM had investments in joint ventures that manufacture, market and sell vehicles in certain markets. The majority of these joint ventures are typically self-funded and financed with no contractual terms that require us to provide future financial support. Future funding is required for HKJV, as subsequently discussed. The maximum exposure to loss is not expected to be in excess of the carrying amount of the investments recorded in Equity in net assets of nonconsolidated affiliates, and any related capital funding requirements.

208

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the amounts recorded for nonconsolidated VIEs and the related off-balance sheet guarantees and maximum exposure to loss, excluding Ally Financial that is disclosed in Note 32 (dollars in millions):


	Successor
	December 31, 2010				December 31, 2009
	Carrying Amount		Maximum Exposure to Loss (a)		Carrying Amount		Maximum Exposure to Loss (a)
Assets
Accounts and notes receivable, net	$	108	$	108	$	8	$	8
Equity in net assets of nonconsolidated affiliates		274		274		96		50
Other assets		60		59		26		26

Total assets	$	442	$	441	$	130	$	84

Liabilities
Accounts payable (principally trade)	$	1	$	—	$	—	$	—
Other liabilities		44		—		—		—

Total liabilities	$	45	$	—	$	—	$	—

Off-Balance Sheet
Residual value guarantees			$	—			$	32
Loan commitments (b)				100				115
Other guarantees				3				4
Other liquidity arrangements (c)				223				—

Total guarantees and liquidity arrangements			$	326			$	151

(a)	Amounts at December 31, 2010 and 2009 included $148 million and $139 million related to troubled suppliers.

(b)	Amounts at December 31, 2010 and 2009 include undrawn loan commitments, primarily $100 million related to American Axle and Manufacturing Holdings, Inc. (American Axle).

(c)	Amounts at December 31, 2010 include capital funding requirements, primarily an additional contingent future funding requirement of up to $223 million related to HKJV.

Stated contractual voting or similar rights for certain of our joint venture arrangements provide various parties with shared power over the activities that most significantly affect the economic performance of certain nonconsolidated VIEs. Such nonconsolidated VIEs are operating joint ventures located in developing international markets.

American Axle

In September 2009 we paid $110 million to American Axle, a former subsidiary and current supplier, to settle and modify existing commercial arrangements and acquire warrants to purchase 4 million shares of American Axle’s common stock. We also provided American Axle with a second lien term loan facility of up to $100 million. Additional warrants will be granted if amounts are drawn on the second lien term loan facility.

As a result of these transactions, we concluded that American Axle was a VIE for which we were not the primary beneficiary and we currently lack the power through voting or similar rights to direct those activities of American Axle that most significantly affect its economic performance. Our variable interests in American Axle include the warrants we received and the second lien term loan facility, which expose us to possible future losses depending on the financial performance of American Axle. At December 31, 2010 no amounts were outstanding under the second lien term loan facility. At December 31, 2010 our maximum contractual exposure to loss related to American Axle was $144 million, which represented the fair value of the warrants of $44 million and the potential

209

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

exposure of $100 million related to the second lien term loan facility. In February 2011 we exercised the warrants and sold the shares and received proceeds of $48 million.

Ally Financial

We own 9.9% of Ally Financial’s common stock and preferred stock with a liquidation preference of $1.0 billion. Ally Financial is a VIE as it does not have sufficient equity at risk; however, we are not the primary beneficiary and we currently lack the power through voting or similar rights to direct those activities of Ally Financial that most significantly affect its economic performance. Refer to Notes 11 and 32 for additional information on our investment in Ally Financial, our significant agreements with Ally Financial and our maximum exposure under those agreements.

Saab

Our primary variable interest in Saab is the preference shares that we received in connection with the sale, which have a face value of $326 million and were recorded at an estimated fair value that is insignificant. We concluded that Saab is a VIE as it does not have sufficient equity at risk. We also determined that we are not the primary beneficiary because we lack the power to direct those activities that most significantly affect its economic performance. We continue to be obligated to fund certain Saab related liabilities, primarily warranty obligations related to vehicles sold prior to the disposition of Saab. At December 31, 2010 our maximum exposure to loss related to Saab was $105 million. Refer to Note 5 for additional information on the sale of Saab.

HKJV

In December 2009 we established the HKJV operating joint venture to invest in automotive projects outside of China, initially focusing on markets in India. HKJV purchased GM India in February 2010. We determined that HKJV is a VIE because it will require additional subordinated financial support, and we determined that we are not the primary beneficiary because we share the power with SAIC-HK to direct those activities that most significantly affect HKJV’s economic performance. Refer to Note 5 for additional information on HKJV.

210

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 18. Accrued Liabilities, Other Liabilities and Deferred Income Taxes

Automotive

The following table summarizes the components of Accrued liabilities, other liabilities and deferred income taxes:


	Successor
	December 31, 2010		December 31, 2009
Current
Dealer and customer allowances, claims and discounts	$	6,885	$	6,444
Deposits from rental car companies		5,037		4,583
Deferred revenue		1,104		892
Policy, product warranty and recall campaigns		2,587		2,965
Payrolls and employee benefits excluding postemployment benefits		2,141		1,325
Insurance reserves		245		243
Taxes other than income taxes		1,083		1,031
Derivative liability		115		568
Postemployment benefits including facility idling reserves		672		985
Interest		48		142
Pensions		425		430
Income taxes		702		219
Deferred income taxes		23		57
Other		2,352		2,404

Total accrued liabilities	$	23,419	$	22,288

Non-current
Dealer and customer allowances, claims and discounts	$	344	$	1,311
Deferred revenue		753		480
Policy, product warranty and recall campaigns		4,202		4,065
Payrolls and employee benefits excluding postemployment benefits		1,549		1,818
Insurance reserves		285		269
Derivative liability		7		146
Postemployment benefits including facility idling reserves		1,574		1,944
Income taxes		650		944
Deferred income taxes		1,207		807
Other		2,450		1,495

Total other liabilities and deferred income taxes	$	13,021	$	13,279

211

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes activity for policy, product warranty, recall campaigns and certified used vehicle warranty liabilities (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Beginning balance	$	7,030		$	7,193		$	8,491		$	9,615
Warranties issued and assumed in period		3,204			1,388			1,069			4,277
Payments		(3,662	)		(1,797	)		(1,851	)		(5,068	)
Adjustments to pre-existing warranties		210			66			(153	)		294
Effect of foreign currency translation		7			180			63			(627	)
Liability adjustment, net due to the deconsolidation of Saab (a)		—			—			(77	)		—

Ending balance		6,789			7,030			7,542			8,491
Effect of application of fresh-start reporting		—			—			(349	)		—

Ending balance including effect of application of fresh-start reporting	$	6,789		$	7,030		$	7,193		$	8,491

(a)	In August 2009 Saab met the criteria to be classified as held for sale and, as a result, Saab’s warranty liability was classified as held for sale at December 31, 2009.

Note 19. Short-Term and Long-Term Debt

Automotive

The following table summarizes the components of automotive short-term debt and current portion of long-term debt (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
UST Loans	$	—	$	5,712
Canadian Loan		—		1,233
GM Daewoo Revolving Credit Facility		—		1,179
Short-term debt — third parties		80		296
Short-term debt— related parties (a)		1,043		1,077
Current portion of long-term debt		493		724

Total automotive short-term debt and current portion of long-term debt	$	1,616	$	10,221

Available under short-term line of credit agreements (b)	$	445	$	220
Interest rate range on outstanding short-term debt (c)		0.0 –16.7%		0.0 –19.0%
Weighted-average interest rate on outstanding short-term debt (d)		5.7%		6.5%

(a)	Primarily dealer financing from Ally Financial for dealerships we consolidate.

(b)	Commitment fees are paid on credit facilities at rates negotiated in each agreement. Amounts paid and expensed for these commitment fees during the years ended December 31, 2010 and 2009 were insignificant.

(c)	Includes zero coupon debt.

(d)	Includes coupon rates on debt denominated in various foreign currencies.

212

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the components of automotive long-term debt (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
VEBA Notes	$	—		$	2,825
Other long-term debt		3,507			3,461

Total debt		3,507			6,286
Less current portion of long-term debt		(493	)		(724	)

Total automotive long-term debt	$	3,014		$	5,562

Available under long-term line of credit agreements (a)	$	5,474		$	398

(a)	Commitment fees are paid on credit facilities at rates negotiated in each agreement. Amounts paid and expensed for these commitment fees during the years ended December 31, 2010 and 2009 were insignificant.

Automotive Financing

The following table summarizes the components of GM Financial debt (dollars in millions):


	Successor
	December 31, 2010
Credit facilities
Medium-term note facility	$	490
Syndicated warehouse facility		278
Bank funding facilities		64

Total credit facilities		832
Securitization notes payable		6,128
Senior notes and convertible senior notes (a)		72

Total GM Financial debt	$	7,032

(a)	Senior notes and convertible senior notes are included in GM Financial Other liabilities.

Automotive

Secured Revolving Credit Facility

213

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

ability to secure up to $2.0 billion of certain non-loan obligations that we may designate from time to time as additional pari passu first lien obligations. Second-lien debt is generally allowed but second lien debt maturing prior to the final maturity date of the secured revolving credit facility is limited to $3.0 billion in outstanding obligations.

•

The failure to pay principal at the stated maturity, interest or any other amounts owed under the secured revolving credit agreement or related documents;

•

The failure of certain of our representations or warranties to be correct in all material respects;

•

The failure to perform any term, covenant or agreement in the secured revolving credit agreement or related documents;

•

The existence of certain judgments that are not vacated, discharged, stayed or bonded;

•

Certain cross defaults or cross accelerations with certain other debt;

•

Certain defaults under the Employee Retirement Income Security Act of 1974, as amended (ERISA);

•

A change of control;

•

Certain bankruptcy events; and

•

The invalidation of the guarantees.

We incurred up-front fees, arrangement fees, and will incur ongoing commitment and other fees customary for a facility of this nature.

UST Loans and UST Loan Agreement

On July 10, 2009 we entered into the UST Credit Agreement and assumed debt of $7.1 billion maturing on July 10, 2015 which Old GM incurred under its DIP Facility. Immediately after entering into the UST Credit Agreement, we made a partial repayment due to the termination of the U.S. government sponsored warranty program, reducing the UST Loans principal balance to $6.7 billion. In

214

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 2010 and December 2009 we made quarterly payments of $1.0 billion on the UST Loans. In April 2010 we repaid the full outstanding amount of $4.7 billion using funds from our escrow account.

While we have repaid the UST Loans in full, certain of the covenants in the UST Credit Agreement and the executive compensation and corporate governance provisions of Section 111 of the Emergency Stabilization Act of 2008, as amended, including the Interim Final Rule implementing Section 111 (the Interim Final Rule), remain in effect until the earlier to occur of the UST ceasing to own direct or indirect equity interests in us or our ceasing to be a recipient of Exceptional Financial Assistance, as determined pursuant to the Interim Final Rule, and impose obligations on us with respect to, among other things, certain expense policies, executive privileges and compensation requirements.

The following table summarizes interest expense and interest paid on the UST Loans, the loans under the UST Loan Agreement (UST Loan Facility) and the DIP Facility (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010 (a)		July 10, 2009 Through December 31, 2009 (a)		January 1, 2009 Through July 9, 2009 (b)
Interest expense	$	117	$	226	$	4,006
Interest paid	$	206	$	137	$	144

(a)	UST Loans.

(b)	UST Loan Facility and the DIP Facility.

VEBA Notes

In connection with the 363 Sale, we entered into the VEBA Note Agreement and issued VEBA Notes of $2.5 billion to the New VEBA. The VEBA Notes had an implied interest rate of 9.0% per annum. The VEBA Notes and accrued interest were contractually scheduled to be repaid in three equal installments of $1.4 billion on July 15 of 2013, 2015 and 2017.

The obligations under the VEBA Note Agreement were secured by substantially all of our U.S. assets, subject to certain exceptions, including our equity interests in certain of our foreign subsidiaries, limited in most cases to 65% of the equity interests of the pledged foreign subsidiaries due to tax considerations.

In October 2010 we repaid in full the outstanding amount (together with accreted interest thereon) of the VEBA Notes of $2.8 billion, which resulted in a gain of $198 million included in Gain (loss) on extinguishment of debt.

The following table summarizes interest expense on the VEBA Notes (dollars in millions):


	Successor
	Year Ended December 31, 2010
Interest expense	$	166

Canadian Loan Agreement and EDC Loan Facility

On July 10, 2009 we entered into the Canadian Loan Agreement and assumed a CAD $1.5 billion (equivalent to $1.3 billion when entered into) term loan maturing on July 10, 2015. In March 2010 and December 2009 we made quarterly payments of $194 million and $192 million on the Canadian Loan. In April 2010 GMCL repaid in full the outstanding amount of the Canadian Loan of $1.1 billion.

215

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes interest expense and interest paid on the Canadian Loan and the EDC Loan Facility (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010 (a)		July 10, 2009 Through December 31, 2009 (a)		January 1, 2009 Through July 9, 2009 (b)
Interest expense	$	26	$	46	$	173
Interest paid	$	26	$	46	$	6

(a)	Canadian Loan.

(b)	EDC Loan Facility.

GM Daewoo Revolving Credit Facility

GM Daewoo’s revolving credit facility was a Korean Won denominated facility secured by substantially all of GM Daewoo’s property, plants, and equipment. Amounts borrowed under this facility accrued interest based on the Korean Won denominated 91-day certificate of deposit rate. The facility was used by GM Daewoo for general corporate purposes, including working capital needs. During 2010 GM Daewoo repaid in full its KRW 1.4 trillion (equivalent of $1.2 billion at the time of payment) revolving credit facility.

German Revolving Bridge Facility

In May 2009 Old GM entered into a revolving bridge facility with the German government and certain German states (German Facility) with a total commitment of up to Euro 1.5 billion (equivalent to $2.1 billion when entered into). In November 2009 the debt was paid in full and extinguished.

The following table summarizes interest expense and interest paid on the German Facility, including amortization of related discounts (dollars in millions):


	Successor		Predecessor
	July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009
Interest expense	$	32	$	5
Interest paid	$	37	$	—

Other Long-Term Debt


	Successor
	December 31, 2010		December 31, 2009
Unsecured debt	$	1,985	$	1,228
Secured debt		868		1,540
Capital leases		654		693

Total other long-term debt (a)	$	3,507	$	3,461

Weighted-average coupon rate		2.7%		5.8%

(a)	Net of a $1.9 billion and $1.6 billion discount at December 31, 2010 and 2009.

216

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Technical Defaults and Covenant Violations

Several of our loan facilities require compliance with certain financial and operational covenants as well as regular reporting to lenders, including providing certain subsidiary financial statements. Failure to meet certain of these requirements may result in a covenant violation or an event of default depending on the terms of the agreement. An event of default may allow lenders to declare amounts outstanding under these agreements immediately due and payable, to enforce their interests against collateral pledged under these agreements or restrict our ability to obtain additional borrowings. No technical defaults or covenant violations existed at December 31, 2010.

Automotive Financing

Credit Facilities

The following table summarizes details regarding terms and availability of GM Financial’s credit facilities at December 31, 2010 (in millions):


	Facility Amount		Advances Outstanding		Finance Receivables Pledged		Restricted Cash Pledged (a)
Syndicated warehouse facility (b)	$	1,300	$	278	$	409	$	8
Medium-term note facility (c)				490		539		95
Bank funding facilities (d)				64		—		—

			$	832	$	948	$	103

(a)	These amounts do not include cash collected on finance receivables pledged of $28 million which is included in GM Financial Restricted cash at December 31, 2010.

(b)	In February 2011 GM Financial extended the maturity date of the syndicated warehouse facility to May 2012 and increased the borrowing capacity to $2.0 billion from $1.3 billion.

(c)	The revolving period under this facility has ended and the outstanding debt balance will be repaid over time based on the amortization of the receivables pledged until October 2016 when any remaining amount outstanding will be due and payable.

(d)	The revolving period under this facility has ended and the outstanding balance under the bank funding facilities are secured by asset-backed securities of $65 million.

GM Financial’s credit facilities are administered by agents on behalf of institutionally managed commercial paper or medium-term note conduits. Under these funding agreements, GM Financial transfers finance receivables to its special purpose financing trusts. These subsidiaries, in turn, issue notes to the agents, collateralized by such finance receivables and cash. The agents provide funding under the notes to the subsidiaries pursuant to an advance formula, and the subsidiaries forward the funds to GM Financial in consideration for the transfer of finance receivables. These subsidiaries are separate legal entities and the finance receivables and other assets held by these subsidiaries are legally owned by these subsidiaries and are not available to GM Financial’s creditors or their other subsidiaries. Advances under the funding agreements bear interest at commercial paper, London Interbank Offered Rates (LIBOR) or prime rates plus a credit spread and specified fees depending upon the source of funds provided by the agents.

Credit Facility Covenants

GM Financial is required to hold certain funds in restricted cash accounts to provide additional collateral for borrowings under certain of its credit facilities. The credit facilities contain various covenants requiring minimum financial ratios, asset quality and portfolio performance ratios including portfolio net loss and delinquency ratios, and pool level cumulative net loss ratios, as well as limits on deferment levels. Failure to meet any of these covenants could result in an event of default under these agreements. If an

217

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

event of default occurs under these agreements, the lenders could elect to declare all amounts outstanding under these agreements to be immediately due and payable, enforce their interests against collateral pledged under these agreements or restrict GM Financial’s ability to obtain additional borrowings under this facility. At December 31, 2010 GM Financial was in compliance with all covenants in its credit facilities. Refer to Note 15 for additional discussion on GM Financial’s restricted cash.

Securitization Notes Payable

Securitization notes payable represents debt issued by GM Financial in securitization transactions. Debt issuance costs are amortized over the expected term of the securitizations on an effective yield basis. As a result of the acquisition, GM Financial recorded a purchase price premium of $133 million that is being amortized over the expected term of the notes. At December 31, 2010 unamortized purchase price premium of $107 million is included in Securitization notes payable.

The following table summarizes securitization notes payable at December 31, 2010 (dollars in millions):


Transaction	Maturity Dates (a)	Original Note Amounts		Original Weighted Average Interest Rates		Total Receivables Pledged		Note Balance
2006	May 2013 – January 2014	$	945 -1,350		5.2% - 5.6%	$	600	$	537
2007	October 2013 – March 2016	$	1,000 -1,500		5.2% - 5.5%		1,715		1,610
2008 (b)	October 2014 – April 2015	$	500 - 750		6.0% -10.5%		911		501
2009	January 2016 – July 2017	$	227 - 725		2.7% - 7.5%		715		494
2010	June 2016 – January 2018	$	200 - 850		2.2% - 3.8%		3,014		2,683
BV2005 (c)	May 2012 – June 2014	$	186 - 232		4.6% - 5.1%		27		28
LB2006 (c)	May 2013 – January 2014	$	450 - 500		5.0% - 5.4%		174		168

						$	7,156	$	6,021

Purchase accounting premium									107

Total securitization notes payable								$	6,128

(a)	Maturity date represents final legal maturity of securitization notes payable. Securitization notes payable are expected to be paid based on amortization of the finance receivables pledged to the trusts.

(b)	Note balance does not include asset-backed securities of $65 million pledged to the bank funding facilities.

(c)	Transactions relate to certain special purpose financing trusts acquired by GM Financial.

At the time of securitization of finance receivables, GM Financial is required to pledge assets equal to a specified percentage of the securitization pool to support the securitization transaction. The assets pledged consist of cash deposited to a restricted account and additional receivables delivered to the trust, which create overcollateralization. The securitization transactions require the percentage of assets pledged to support the transaction to increase until a specified level is attained. Excess cash flows generated by the trusts are added to the restricted cash account or used to pay down outstanding debt in the trusts, creating overcollateralization until the targeted percentage level of assets has been reached. Once the targeted percentage level of assets is reached and maintained, excess cash flows generated by the trusts are released to GM Financial as distributions from trusts. As the balance of the securitization pool declines, the amount of pledged assets needed to maintain the required percentage level is reduced. Assets in excess of the required percentage are also released to GM Financial as distributions from trusts.

Securitization Notes Payable Covenants

With respect to GM Financial’s securitization transactions covered by a financial guaranty insurance policy, agreements with the insurers provide that if portfolio performance ratios (delinquency, cumulative default or cumulative net loss) in a trust’s pool of receivables exceed certain targets, the specified credit enhancement levels would be increased.

218

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Agreements with GM Financial’s financial guaranty insurance providers contain additional specified targeted portfolio performance ratios that are higher than those described in the preceding paragraph. If, at any measurement date, the targeted portfolio performance ratios with respect to any insured trust were to exceed these higher levels, provisions of the agreements permit GM Financial’s financial guaranty insurance providers to declare the occurrence of an event of default and terminate GM Financial’s servicing rights to the receivables transferred to that trust. At December 31, 2010 no such servicing right termination events have occurred with respect to any of the trusts formed by GM Financial.

Senior Notes and Convertible Senior Notes

As a result of the acquisition of AmeriCredit, the holders of the senior notes and the convertible senior notes had the right to require GM Financial to repurchase some or all of their notes as provided in the indentures for such notes. The repurchase dates for any notes tendered to GM Financial pursuant to procedures previously delivered to holders of senior notes and convertible senior notes were December 3, 2010 with respect to the senior notes, and December 10, 2010 with respect to the convertible senior notes. The repurchase price with respect to the senior notes is 101% of the principal amount of the notes plus accrued interest, and the repurchase price with respect to the convertible senior notes is the principal amount of the notes plus accrued interest. Pursuant to the terms of the convertible senior notes indentures a payment of $0.69 per $1,000 of principal amount of the convertible senior notes due in 2011 and $0.81 per $1,000 of principal amount of the convertible senior notes due in 2013 was made to those who elected to convert as a result of the acquisition. During the three months ended December 31, 2010 GM Financial repurchased convertible senior notes of $461 million and senior notes of $2 million.

Long-Term Debt Maturities

Consolidated

The following table summarizes long-term debt maturities including capital leases (dollars in millions):


	At December 31,
	Automotive		Automotive Financing (a)		Total
2011	$	493	$	3,495	$	3,988
2012		752		1,998		2,750
2013		400		660		1,060
2014		132		423		555
2015		128		343		471
Thereafter		3,506		—		3,506

	$	5,411	$	6,919	$	12,330

(a)	GM Financial credit facilities and securitization notes payable are based on expected payoff date. Senior notes and convertible senior notes principal amounts are based on maturity.

At December 31, 2010 future interest payments on automotive capital lease obligations was $564 million. GM Financial does not have capital lease obligations at December 31, 2010.

Old GM

Secured Revolving Credit Facility, U.S. Term Loan and Secured Credit Facility

In March 2009 Old GM entered into an agreement to amend its $1.5 billion U.S. term loan. Because the terms of the amended U.S. term loan were substantially different than the original terms, primarily due to the revised borrowing rate, Old GM accounted for the amendment as a debt extinguishment. As a result, Old GM recorded the amended U.S. term loan at fair value and recorded a gain on the extinguishment of the original loan facility of $906 million in the period January 1, 2009 through July 9, 2009.

219

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In connection with the Chapter 11 Proceedings, Old GM’s $4.5 billion secured revolving credit facility, $1.5 billion U.S. term loan and $125 million secured credit facility were paid in full on June 30, 2009. Old GM recorded a loss of $958 million in Reorganization gains, net related to the extinguishments of the debt primarily due to the face value of the U.S. term loan exceeding the carrying amount.

Contractual interest expense not accrued or recorded on pre-petition debt was $200 million in the period January 1, 2009 through July 9, 2009 (includes contractual interest expense related to contingent convertible debt of $44 million).

Contingent Convertible Debt

Old GM adopted the provisions of ASC 470-20, “Debt with Conversion and Other Options” (ASC 470-20) in January 2009, with retrospective application to prior periods. At July 9, 2009 Old GM’s contingent convertible debt outstanding was $7.4 billion, comprised of principal of $7.9 billion and unamortized discounts of $551 million. Upon adoption of ASC 470-20, the effective interest rate on Old GM’s outstanding contingent convertible debt ranged from 7.0% to 7.9%. In connection with the 363 Sale, MLC retained the contingent convertible debt.

The following table summarizes the components of Interest expense related to contingent convertible debt (dollars in millions):


	Predecessor
	January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Interest accrued or paid (a)	$	176	$	427
Amortization of discounts		51		136

Interest expense	$	227	$	563

(a)	Contractual interest expense not accrued or recorded on pre-petition debt as a result of the Chapter 11 Proceedings totaled $44 million in the period January 1, 2009 through July 9, 2009.

Note 20. Pensions and Other Postretirement Benefits

Consolidated

Employee Pension and Other Postretirement Benefit Plans

Defined Benefit Pension Plans

Defined benefit pension plans covering eligible U.S. hourly employees (hired prior to October 15, 2007) and Canadian hourly employees generally provide benefits of negotiated, stated amounts for each year of service and supplemental benefits for employees who retire with 30 years of service before normal retirement age. Non-skilled trades hourly U.S. employees hired after October 15, 2007 participate in a defined benefit cash balance plan. In September 2010 the U.S. hourly defined benefit pension plan was amended to create a legally separate new defined benefit pension plan for the participants who are covered by the cash balance benefit formula. The underlying benefits offered to plan participants were unchanged. The benefits provided by the defined benefit pension plans covering eligible U.S. (hired prior to January 1, 2001) and Canadian salaried employees and employees in certain other non-U.S. locations are generally based on years of service and compensation history. There is also an unfunded nonqualified pension plan covering certain U.S. executives for service prior to January 1, 2007, and it is based on an “excess plan” for service after that date.

Defined Contribution Plans

The Savings-Stock Purchase Plan (S-SPP) is a defined contribution retirement savings plan for eligible U.S. salaried employees. The S-SPP provides discretionary matching contributions up to certain predefined limits based upon eligible base salary. The matching contribution for the S-SPP was suspended by Old GM in November 2008, and we reinstated the matching contribution for

220

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the S-SPP in October 2009. The contribution equal to 1.0% of eligible base salary for U.S. salaried employees with a service commencement date on or after January 1, 1993 was discontinued effective on January 1, 2010. For eligible U.S. salaried employees with a service commencement date on or after January 1, 2001 a retirement contribution to the S-SPP equal to 4.0% of eligible base salary is provided. Contributions are also made to certain non-U.S. defined contribution plans. Certain U.S. hourly employees are not eligible for postretirement healthcare. Such employees receive a $1.00 per compensated hour contribution into their Personal Saving Plan account.

The following table summarizes contributions to defined contribution plans (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Total contributions	$	241	$	100	$	70	$	297

Other Postretirement Benefit Plans

Certain hourly and salaried defined benefit plans provide postretirement medical, dental, legal service and life insurance to eligible U.S. and Canadian retirees and their eligible dependents. Certain other non-U.S. subsidiaries have postretirement benefit plans, although most non-U.S. employees are covered by government sponsored or administered programs.

Significant Plan Amendments, Benefit Modifications and Related Events

Remeasurements

Significant interim remeasurements are included in the change in benefit obligation for the year ended December 31, 2010. There were no significant remeasurements, curtailments or settlements as a result of changes to the underlying benefits offered to the plan participants.

Patient Protection and Affordable Care Act

The Patient Protection and Affordable Care Act was signed into law in March 2010 and contains provisions that require all future reimbursement receipts under the Medicare Part D retiree drug subsidy program to be included in taxable income. This taxable income inclusion will not significantly affect us because effective January 1, 2010 we no longer provide prescription drug coverage to post-age 65 Medicare-eligible participants and we have a full valuation allowance against our net deferred tax assets in the U.S. We have assessed the other provisions of this new law, based on information known at this time and we have included the effect, which is not significant, in our benefit obligations at December 31, 2010.

Expected Contributions

In January 2011 we completed the previously announced voluntary contribution of 61 million shares of our common stock to our U.S. hourly and salaried pension plans, valued at approximately $2.2 billion for funding purposes. This was a voluntary contribution that is above our minimum funding requirements of the pension plans. The contributed shares qualify as a plan asset for funding purposes immediately, and will qualify as a plan asset for accounting purposes when certain transfer restrictions are removed, which is expected in 2011. We are evaluating whether we will make additional voluntary contributions to our U.S. pension plans in 2011. We expect to contribute $95 million to our U.S. non-qualified pension plans and $740 million to our non-U.S. pension plans in 2011.

221

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables summarize the significant defined benefit plan interim remeasurements, the related changes in accumulated postretirement benefit obligations (APBO), projected benefit obligations (PBO) and the associated curtailments, settlements and termination benefits recorded in our earnings in the period July 10, 2009 through December 31, 2009 and the period January 1, 2009 through July 9, 2009, which are subsequently discussed (dollars in millions):


Successor
July 10, 2009 Through December 31, 2009
Event and Remeasurement Date When Applicable	Affected Plans	Change in Discount Rate				Increase (Decrease) Since the Most Recent Remeasurement Date (a)			Gain (Loss)
Event and Remeasurement Date When Applicable	Affected Plans	From		To		PBO/APBO			Curtailments		Settlements			Termination Benefits and Other
2009 Special Attrition Programs (b)	U.S. hourly defined benefit pension plan		—		—	$	58		$	—	$	—		$	(58	)

Global salaried workforce reductions (b)	U.S. salaried defined benefit pension plan		—		—		175			—		—			(175	)

2009 UAW Retiree Settlement Agreement — December	UAW hourly retiree medical plan		—		—		(22,654	)		—		(2,571	)		—

IUE-CWA and USW Settlement Agreement — November (c)	U.S. hourly defined benefit pension plan		5.58%		5.26%		1,897			—		—			—

	Non-UAW hourly retiree healthcare plan		6.21%		5.00%		360			—		—			—

	U.S. hourly life plan		5.41%		5.56%		53			—		—			—

Delphi Benefit Guarantee Agreements — August (c)	U.S. hourly defined benefit pension plan		5.83%		5.58%		2,548			—		—			—

Total						$	(17,563	)	$	—	$	(2,571	)	$	(233	)

(a)	The increase (decrease) includes effect of the event, gain or loss from remeasurement, net periodic benefit cost and benefit payments. Excludes effect of asset returns that are higher or lower than expected.

(b)	Reflects the effect on PBO. There was no remeasurement.

(c)	Includes reclassification of contingent liability to benefit plan obligation.

222

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Predecessor
January 1, 2009 Through July 9, 2009
Event and Remeasurement Date When Applicable	Affected Plans	Change in Discount Rate				Increase (Decrease) Since the Most Recent Remeasurement Date (a)			Gain (Loss)
Event and Remeasurement Date When Applicable	Affected Plans	From		To		PBO/APBO			Curtailments			Settlements		Termination Benefits and Other
2009 Special Attrition Programs — June	U.S. hourly defined benefit pension plan		6.15%		6.25%	$	7		$	(1,390	)	$	—	$	(12	)

Global salaried workforce reductions — June	U.S. salaried defined benefit pension plan						24			(327	)		—		—

U.S. salaried benefits changes — February	U.S. salaried retiree life insurance plan		7.25%		7.15%		(420	)		—			—		—

U.S. salaried benefits changes — June	U.S. salaried retiree healthcare program						(265	)		—			—		—

2009 CAW Agreement — June	Canadian hourly defined benefit pension plan		6.75%		5.65%		340			—			—		(26	)

2009 CAW Agreement — June	CAW hourly retiree healthcare plan and CAW retiree life plan		7.00%		5.80%		(143	)		93			—		—

Total						$	(457	)	$	(1,624	)	$	—	$	(38	)

(a)	The increase (decrease) includes effect of the event, gain or loss from remeasurement, net periodic benefit cost, benefit payments and effect of foreign currency translation. Excludes effect of asset returns that are higher or lower than expected.

During 2009 we and Old GM implemented various programs which reduced the hourly and salary workforce. Significant workforce reductions, settlements of pre-bankruptcy claims with various represented employee groups and plan amendments resulted in plan remeasurements as follows:

•

Special attrition programs resulted in a reduction in the hourly workforce;

•

Global salaried workforce actions reduced employment;

•

The Delphi Benefit Guarantee Agreements were affected by the settlement of the PBGC claims from the termination of the hourly Delphi pension plan. We maintained the obligation to provide the difference between the pension benefits paid by the PBGC and those originally guaranteed by Old GM under the Delphi Benefit Guarantee Agreements; and

•

U.S. salaried benefit changes reduced the salaried life benefits and a negative amendment to the U.S. salaried retiree healthcare program reduced coverage and increased cost sharing.

2009 UAW Retiree Settlement Agreement

In 2009 we and the UAW agreed to a 2009 UAW Retiree Settlement Agreement which permanently shifted responsibility for providing retiree healthcare to the new plan funded by the New VEBA. Under the terms of the settlement agreement, we are released from UAW retiree healthcare claims incurred after December 31, 2009. All obligations of ours and any other entity or benefit plan of

223

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

ours for retiree medical benefits for the class and the covered group arising from any agreement between us and the UAW terminated at December 31, 2009. Our obligations to the new healthcare plan and the New VEBA are limited to the terms of the settlement agreement.

At December 31, 2009 we accounted for the termination of our UAW hourly retiree medical plan and Mitigation Plan as a settlement. The resulting settlement loss of $2.6 billion recorded on December 31, 2009 represented the difference between the sum of the accrued OPEB liability of $10.6 billion and the existing internal VEBA assets of $12.6 billion, and $25.8 billion representing the fair value of the consideration transferred on December 31, 2009, including the contribution of the existing internal VEBA assets. Upon the settlement of the UAW hourly retiree medical plan at December 31, 2009 the VEBA Notes, Series A Preferred Stock, common stock, and warrants contributed to the New VEBA were recorded at fair value and classified as outstanding debt and equity instruments.

Prior to December 31, 2009 the 260 million shares of Series A Preferred Stock issued to the New VEBA were not considered outstanding for accounting purposes due to the terms of the settlement agreement with the UAW. As a result, $105 million of the $146 million of dividends paid on September 15, 2009 and $147 million of the $203 million of dividends paid on December 15, 2009 were recorded as employer contributions resulting in a reduction of Postretirement benefits other than pensions.

IUE-CWA and USW Settlement Agreement

2009 CAW Agreement

In March 2009 Old GM announced that the members of the CAW had ratified an agreement intended to reduce costs in Canada through introducing co-payments for healthcare benefits, increasing employee healthcare cost sharing, freezing pension benefits and eliminating cost of living adjustments to pensions for retired hourly workers. The 2009 CAW Agreement was conditioned on Old GM receiving longer term financial support from the Canadian and Ontario governments and those governments agreed to the terms of a loan agreement, approved the GMCL viability plan and provided funding to GMCL. The Canadian hourly defined benefit pension plan was remeasured in June 2009.

In June 2009 GMCL and the CAW agreed to the terms of an independent HCT to provide retiree healthcare benefits to certain active and retired employees and it will be implemented when certain preconditions are achieved. Certain of the preconditions have not been achieved and the HCT is not yet implemented at December 31, 2010. GMCL is obligated to make a payment of CAD $1.0 billion on the HCT implementation date which it will fund out of its CAD $1.0 billion escrow funds, adjusted for the net difference between the amount of retiree monthly contributions received during the period January 1, 2010 through the HCT implementation date less the cost of benefits paid for claims incurred by covered employees during this period. GMCL will provide a CAD $800 million note payable to the HCT on the HCT implementation date which will accrue interest at an annual rate of 7.0% with five equal annual installments of CAD $256 million due December 31 of 2014 through 2018. Concurrent with the implementation of the HCT,

224

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GMCL will be legally released from all obligations associated with the cost of providing retiree healthcare benefits to CAW active and retired employees bound by the class action process, and we will account for the related termination of CAW hourly retiree healthcare benefits as a settlement, based upon the difference between the fair value of the notes and cash contributed and the healthcare plan obligation at the settlement date. As a result of the conditions precedent to this agreement not having yet been achieved, there was no accounting recognition for the healthcare trust at December 31, 2010.

The following tables summarize the change in benefit obligations and related plan assets (dollars in millions):


	Successor
	Year Ended December 31, 2010
	U.S. Plans Pension Benefits			Non-U.S. Plans Pension Benefits			U.S. Plans Other Benefits			Non-U.S. Plans Other Benefits
Change in benefit obligations
Beginning benefit obligation	$	101,571		$	24,374		$	5,788		$	3,797
Service cost		451			386			21			32
Interest cost		5,275			1,187			288			200
Plan participants’ contributions		—			7			53			9
Amendments		2			(5	)		3			—
Actuarial losses		5,251			168			255			185
Benefits paid		(9,149	)		(1,447	)		(740	)		(173	)
Foreign currency translation adjustments		—			189			—			200
Divestitures		(6	)		(75	)		(2	)		—
Curtailments, settlements, and other		—			(22	)		1			2

Ending benefit obligation		103,395			24,762			5,667			4,252

Change in plan assets
Beginning fair value of plan assets		84,500			14,027			31			—
Actual return on plan assets		11,561			1,234			5			—
Employer contributions		4,095			777			651			164
Plan participants’ contributions		—			7			53			9
Benefits paid		(9,149	)		(1,447	)		(740	)		(173	)
Foreign currency translation adjustments		—			505			—			—
Divestitures		—			(59	)		—			—
Settlements		—			(174	)		—			—
Other		—			33			—			—

Ending fair value of plan assets		91,007			14,903			—			—

Ending funded status	$	(12,388	)	$	(9,859	)	$	(5,667	)	$	(4,252	)

Amounts recorded in the consolidated balance sheet
Non-current asset	$	—		$	72		$	—		$	—
Current liability		(93	)		(332	)		(440	)		(185	)
Non-current liability		(12,295	)		(9,599	)		(5,227	)		(4,067	)

Net amount recorded	$	(12,388	)	$	(9,859	)	$	(5,667	)	$	(4,252	)

Amounts recorded in Accumulated other comprehensive income (loss)
Net actuarial gain (loss)	$	3,609		$	(701	)	$	(460	)	$	(259	)
Net prior service credit		10			12			—			85

Total recorded in Accumulated other comprehensive income (loss)	$	3,619		$	(689	)	$	(460	)	$	(174	)

225

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor
	July 10, 2009 Through December 31, 2009
	U.S. Plans Pension Benefits			Non-U.S. Plans Pension Benefits			U.S. Plans Other Benefits			Non-U.S. Plans Other Benefits
Change in benefit obligations
Beginning benefit obligation	$	98,012		$	21,392		$	27,639		$	3,420
Service cost		216			157			62			17
Interest cost		2,578			602			886			94
Plan participants’ contributions		—			4			172			—
Amendments		(13	)		(9	)		1			(89	)
Actuarial (gains) losses		3,102			1,592			1,732			64
Benefits paid		(3,938	)		(714	)		(1,700	)		(70	)
Medicare Part D receipts		—			—			84			—
IUE-CWA & USW related liability transfer		—			—			514			—
Foreign currency translation adjustments		—			1,469			—			376
Delphi benefit guarantee and other		1,365			—			—			—
UAW retiree medical plan settlement		—			—			(25,822	)		—
Curtailments, settlements, and other (a)		249			(119	)		2,220			(15	)

Ending benefit obligation		101,571			24,374			5,788			3,797

Change in plan assets
Beginning fair value of plan assets		78,493			8,616			10,702			—
Actual return on plan assets		9,914			1,201			1,909			—
Employer contributions		31			4,287			1,528			70
Plan participants’ contributions		—			4			172			—
Benefits paid		(3,938	)		(714	)		(1,700	)		(70	)
UAW hourly retiree medical plan asset settlement		—			—			(12,586	)		—
Foreign currency translation adjustments		—			765			—			—
Other		—			(132	)		6			—

Ending fair value of plan assets		84,500			14,027			31			—

Ending funded status	$	(17,071	)	$	(10,347	)	$	(5,757	)	$	(3,797	)

Amounts recorded in the consolidated balance sheet
Non-current asset	$	—		$	98		$	—		$	—
Current liability		(93	)		(337	)		(685	)		(161	)
Non-current liability		(16,978	)		(10,108	)		(5,072	)		(3,636	)

Net amount recorded	$	(17,071	)	$	(10,347	)	$	(5,757	)	$	(3,797	)

Amounts recorded in Accumulated other comprehensive income (loss)
Net actuarial gain (loss)	$	3,803		$	(833	)	$	(212	)	$	(65	)
Net prior service credit		13			9			1			89

Total recorded in Accumulated other comprehensive income (loss)	$	3,816		$	(824	)	$	(211	)	$	24

(a)	U.S. other benefits includes the $2.6 billion settlement loss resulting from the termination of the UAW hourly retiree medical plan and Mitigation Plan.

226

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	January 1, 2009 Through July 9, 2009
	U.S. Plans Pension Benefits			Non-U.S. Plans Pension Benefits			U.S. Plans Other Benefits			Non-U.S. Plans Other Benefits
Change in benefit obligations
Beginning benefit obligation	$	98,135		$	19,995		$	39,960		$	2,930
Service cost		243			155			69			12
Interest cost		3,077			596			1,615			102
Plan participants’ contributions		—			8			169			—
Amendments		(8	)		(584	)		(705	)		(482	)
Actuarial (gains) losses		(260	)		959			77			436
Benefits paid		(5,319	)		(769	)		(2,115	)		(90	)
Medicare Part D receipts		—			—			150			—
Foreign currency translation adjustments		—			856			—			159
Curtailments, settlements, and other		1,559			(76	)		8			(15	)

Ending benefit obligation		97,427			21,140			39,228			3,052
Effect of application of fresh-start reporting		585			252			(11,589	)		368

Ending benefit obligation including effect of application of fresh-start reporting		98,012			21,392			27,639			3,420

Change in plan assets
Beginning fair value of plan assets		84,545			8,086			9,969			—
Actual return on plan assets		(203	)		227			444			—
Employer contributions		57			529			1,947			90
Plan participants’ contributions		—			8			169			—
Benefits paid		(5,319	)		(769	)		(2,115	)		(90	)
Foreign currency translation adjustments		—			516			—			—
Other		41			(197	)		(10	)		—

Ending fair value of plan assets		79,121			8,400			10,404			—
Effect of application of fresh-start reporting		(628	)		216			298			—

Ending fair value of plan assets including effect of application of fresh-start reporting		78,493			8,616			10,702			—

Ending funded status		(18,306	)		(12,740	)		(28,824	)		(3,052	)
Effect of application of fresh-start reporting		(1,213	)		(36	)		11,887			(368	)

Ending funded status including effect of application of fresh-start reporting	$	(19,519	)	$	(12,776	)	$	(16,937	)	$	(3,420	)

Amounts recorded in the consolidated balance sheet
Non-current assets	$	—		$	97		$	—		$	—
Current liability		(74	)		(339	)		(1,809	)		(147	)
Non-current liability		(19,445	)		(12,534	)		(15,128	)		(3,273	)

Net amount recorded	$	(19,519	)	$	(12,776	)	$	(16,937	)	$	(3,420	)

Amounts recorded in Accumulated other comprehensive income (loss)
Net actuarial loss	$	(38,007	)	$	(7,387	)	$	(1,631	)	$	(1,005	)
Net prior service credit (cost)		(1,644	)		754			5,028			860
Transition obligation		—			(7	)		—			—

Total recorded in Accumulated other comprehensive income (loss)		(39,651	)		(6,640	)		3,397			(145	)
Effect of application of fresh-start reporting		39,651			6,640			(3,397	)		145

Total recorded in Accumulated other comprehensive income (loss)	$	—		$	—		$	—		$	—

In the year ended December 31, 2010 we experienced actual return on plan assets on our U.S. pension plan assets of $11.6 billion compared to expected returns of $6.6 billion that were recognized as a component of our net pension expense. As a result of the U.S. hourly defined benefit pension plan interim remeasurement, a portion of the effect of the actual plan asset gains was recognized in the market-related value of plan assets during the remainder of the period subsequent to the interim remeasurement. The market related

227

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

value of plan assets used in the calculation of expected return on pension plan assets at December 31, 2010 is $4.1 billion lower than the actual fair value of plan assets for U.S. pension plans and $319 million lower than the actual fair value of plan assets for non-U.S. pension plans. Therefore, the effect of the improvement in the financial markets will not be fully reflected in net pension expense in the year ending December 31, 2011. Refer to Note 4 for additional information on our use of the market-related value of plan assets accounting policy.

The following table summarizes the total accumulated benefit obligations (ABO), the fair value of plan assets for defined benefit pension plans with ABO in excess of plan assets, and the PBO and fair value of plan assets for defined benefit pension plans with PBO in excess of plan assets (dollars in millions):


	Successor
	December 31, 2010				December 31, 2009
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
ABO	$	103,110	$	24,371	$	101,397	$	23,615
Plans with ABO in excess of plan assets
ABO	$	103,090	$	23,519	$	101,397	$	22,708
Fair value of plan assets	$	90,983	$	13,959	$	84,500	$	12,721
Plans with PBO in excess of plan assets
PBO	$	103,375	$	24,350	$	101,571	$	23,453
Fair value of plan assets	$	90,983	$	14,419	$	84,500	$	13,008

The following tables summarize the components of net periodic pension and OPEB expense along with the assumptions used to determine benefit obligations (dollars in millions):


	Successor
	Year Ended December 31, 2010
	U.S. Plans Pension Benefits			Non-U.S. Plans Pension Benefits			U.S. Plans Other Benefits		Non-U.S. Plans Other Benefits
Components of expense
Service cost (a)	$	548		$	386		$	21	$	32
Interest cost		5,275			1,187			288		200
Expected return on plan assets		(6,611	)		(987	)		—		—
Amortization of prior service cost (credit)		(1	)		(1	)		3		(9	)
Recognition of net actuarial loss		—			21			—		—
Curtailments, settlements, and other losses		—			60			—		—

Net periodic pension and OPEB (income) expense	$	(789	)	$	666		$	312	$	223

Weighted-average assumptions used to determine benefit obligations at December 31
Discount rate		4.96%			5.09%			5.07%		4.97%
Rate of compensation increase		3.96%			3.25%			1.41%		4.33%
Weighted-average assumptions used to determine net expense for the year ended December 31 (b)
Discount rate		5.36%			5.19%			5.57%		5.22%
Expected return on plan assets		8.48%			7.42%			8.50%		—
Rate of compensation increase		3.94%			3.25%			1.48%		4.45%

(a)	U.S. pension plan service cost includes plan administrative expenses of $97 million.

(b)	Determined at the beginning of the period and updated for remeasurements.

228

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor
	July 10, 2009 Through December 31, 2009
	U.S. Plans Pension Benefits			Non-U.S. Plans Pension Benefits			U.S. Plans Other Benefits			Non-U.S. Plans Other Benefits
Components of expense
Service cost (a)	$	254		$	157		$	62		$	17
Interest cost		2,578			602			886			94
Expected return on plan assets		(3,047	)		(438	)		(432	)		—
Amortization of prior service cost (credit)		—			—			—			(1	)
Curtailments, settlements, and other losses		249			9			2,580			—

Net periodic pension and OPEB expense	$	34		$	330		$	3,096		$	110

Weighted-average assumptions used to determine benefit obligations at December 31
Discount rate		5.52%			5.31%			5.57%			5.22%
Rate of compensation increase		3.94%			3.27%			1.48%			4.45%
Weighted-average assumptions used to determine net expense for the year ended December 31(b)
Discount rate		5.63%			5.82%			6.81%			5.47%
Expected return on plan assets		8.50%			7.97%			8.50%			—
Rate of compensation increase		3.94%			3.23%			1.48%			4.45%

(a)	U.S. pension plan service cost includes plan administrative expenses of $38 million.

(b)	Determined at the beginning of the period and updated for remeasurements. Appropriate discount rates were used to measure the effects of curtailments and plan amendments on various plans.

229

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	U.S. Plans Pension Benefits						Non-U.S. Plans Pension Benefits						U.S. Plans Other Benefits						Non-U.S. Plans Other Benefits
	January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Components of expense
Service cost	$	243		$	527		$	155		$	410		$	69		$	241		$	12		$	32
Interest cost		3,077			5,493			596			1,269			1,615			3,519			102			225
Expected return on plan assets		(3,810	)		(8,043	)		(364	)		(969	)		(444	)		(1,281	)		—			—
Amortization of prior service cost (credit)		429			1,077			(12	)		407			(1,051	)		(1,918	)		(63	)		(86	)
Amortization of transition obligation		—			—			2			6			—			—			—			—
Recognized net actuarial loss		715			317			193			275			32			508			23			110
Curtailments, settlements, and other losses (gains)		1,720			3,823			97			270			21			(3,476	)		(123	)		11

Net periodic pension and OPEB (income) expense	$	2,374		$	3,194		$	667		$	1,668		$	242		$	(2,407	)	$	(49	)	$	292

Weighted-average assumptions used to determine benefit obligations at period end
Discount rate		5.86%			6.27%			5.82%			6.22%			6.86%			8.25%			5.47%			7.00%
Rate of compensation increase		3.94%			5.00%			3.23%			3.59%			1.48%			2.10%			4.45%			4.45%
Weighted-average assumptions used to determine net expense for the period (a)
Discount rate		6.27%			6.56%			6.23%			5.77%			8.11%			7.02%			6.77%			5.90%
Expected return on plan assets		8.50%			8.50%			7.74%			7.78%			8.50%			8.40%			—			—
Rate of compensation increase		5.00%			5.00%			3.08%			3.59%			1.87%			3.30%			4.45%			4.00%

(a)	Determined at the beginning of the period and updated for remeasurements. Appropriate discount rates were used to measure the effects of curtailments and plan amendments on various plans.

230

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Assumptions

Healthcare Trend Rate

As a result of modifications made to healthcare plans in connection with the 363 Sale, there are no significant uncapped U.S. healthcare plans remaining, therefore, the healthcare cost trend rate does not have a significant effect on our U.S. plans.


	Successor
	December 31, 2010		December 31, 2009
Assumed Healthcare Trend Rates	Non-U.S. Plans(a)		Non-U.S. Plans
Initial healthcare cost trend rate		5.6%		5.4%
Ultimate healthcare cost trend rate		3.4%		3.3%
Number of years to ultimate trend rate		8		8

(a)	The implementation of the HCT in Canada is anticipated and will significantly reduce our exposure to changes in the healthcare cost trend rate.

Healthcare trend rate assumptions are determined for inclusion in healthcare OPEB valuation at each remeasurement. The healthcare trend rates are developed using historical cash expenditures and near-term outlook for retiree healthcare. This information is supplemented with information gathered from actuarial based models, information obtained from healthcare providers and known significant events.

The following table summarizes the effect of a one-percentage point change in the assumed healthcare trend rates (dollars in millions):


	Successor
	Non-U.S. Plans (a)
Change in Assumption	Effect on 2011 Aggregate Service and Interest Cost		Effect on December 31, 2010 APBO
One percentage point increase		+$31		+$491
One percentage point decrease		-$25		-$392

(a)	The implementation of the HCT in Canada is anticipated and will significantly reduce our exposure to changes in the healthcare cost trend rate.

Investment Strategies and Long-Term Rate of Return

Detailed periodic studies conducted by outside actuaries and an internal asset management group, consisting of an analysis of capital market assumptions and employing Monte-Carlo simulations, are used to determine the long-term strategic mix among asset classes, risk mitigation strategies, and the expected return on asset assumptions for U.S. pension plans. The U.S. study includes a review of alternative asset allocation and risk mitigation strategies, anticipated future long-term performance of individual asset classes, risks evaluated using standard deviation techniques and correlations among the asset classes that comprise the plans’ asset mix. Similar studies are performed for the significant non-U.S. pension plans with the assistance of outside actuaries and asset managers. While the studies incorporate data from recent fund performance and historical returns, the expected return on plan asset assumptions are determined based on long-term, prospective rates of return.

The strategic asset mix and risk mitigation strategies for the U.S. and non-U.S. pension plans are tailored specifically for each plan. Individual plans have distinct liabilities, liquidity needs, and regulatory requirements. Consequently, there are different investment policies set by individual plan fiduciaries. Although investment policies and risk mitigation strategies may differ among certain U.S. and non-U.S. pension plans, each investment strategy is considered to be optimal in the context of the specific factors affecting each plan.

231

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In setting a new strategic asset mix, consideration is given to the likelihood that the selected mix will effectively fund the projected pension plan liabilities, while aligning with the risk tolerance of the plans’ fiduciaries. The strategic asset mix for U.S. defined benefit pension plans is intended to reduce exposure to equity market risks, to utilize asset classes which reduce volatility and to utilize asset classes where active management has historically generated above market returns.

In December 2010 an analysis of the investment policy was completed for the U.S. pension plans which reduced the expected return on assets to 8.0% from 8.5% at December 31, 2009. The decrease in expected return on assets is primarily related to lower bond yields and updated assumptions for equities and equity-like asset classes. This analysis included a study of capital market assumptions and the selection of a policy portfolio that is optimal in the context of the plans’ fiduciaries objectives. The selected portfolio is composed of a number of asset classes with favorable return characteristics including: a significant allocation to debt securities with credit exposure, some of which have expected returns that are similar to that of equities, significant exposures to private market securities (equity, debt, and real estate) and absolute return strategies (i.e., hedge fund strategies with low exposure to market risks). The expected long-term rate of return assumption is enhanced by these diversified strategies and is consistent with the long-term historical return for the U.S. plans.

The expected return on plan asset assumptions used in determining pension expense for non-U.S. pension plans is determined in a similar manner to the U.S. plans, and the rate of 7.42% for the year ended December 31, 2010 is a weighted-average of all of the funded non-U.S. plans.

Target Allocation Percentages

Minor changes were made to the U.S. target allocation percentages by asset category as a result of the asset and liability study that was approved in December 2010.

An asset and liability study conducted of the Canadian plans’ target allocation percentages was approved by GMCL’s Board of Directors and became effective in July 2010. Significant changes were made to the target allocation percentages by asset category as a result of this study. The study was generated following a contribution to the Canadian plans in September 2009 of CAD $4.0 billion which improved the funded position. A less aggressive asset mix was implemented to preserve this position by shifting the target allocation away from return seeking equity type assets toward a liability hedging strategy that utilizes more fixed income assets.

The following table summarizes the target allocations by asset category for U.S. and non-U.S. defined benefit pension plans:


	Successor
	December 31, 2010				December 31, 2009
	U.S. Plans		Non-U.S. Plans		U.S. Plans		Non-U.S. Plans
Asset Categories
Equity securities		29.0%		36.0%		28.0%		64.0%
Debt securities		41.0%		48.0%		42.0%		24.0%
Real estate		8.0%		9.0%		9.0%		9.0%
Other (a)		22.0%		7.0%		21.0%		3.0%

Total		100.0%		100.0%		100.0%		100.0%

(a)	Includes private equity and absolute return strategies.

232

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pension Plan Assets and Fair Value Measurements

The following tables summarize the fair value of defined benefit pension plan assets by asset class (dollars in millions):


	Successor
	Fair Value Measurements of U.S. Plan Assets at December 31, 2010									Fair Value Measurements of Non-U.S. Plan Assets at December 31, 2010
	Level 1		Level 2		Level 3		Total U.S. Plan Assets			Level 1		Level 2			Level 3		Total Non-U.S. Plan Assets			Total U.S. and Non- U.S. Plan Assets
Assets
Direct investments
Cash equivalents and other short-term investments	$	—	$	—	$	—	$	—		$	—	$	620		$	—	$	620		$	620
Common and preferred stocks		—		—		—		—			2,781		13			—		2,794			2,794
Government and agency debt securities (a)		—		—		—		—			—		3,410			4		3,414			3,414
Corporate debt securities (b)		—		—		—		—			—		1,964			41		2,005			2,005
Agency mortgage and asset-backed securities		—		—		—		—			—		44			—		44			44
Non-agency mortgage and asset-backed securities		—		—		—		—			—		86			—		86			86
Private equity and debt investments		—		—		—		—			—		—			169		169			169
Real estate assets		—		—		—		—			—		—			926		926			926
Derivatives		—		—		—		—			—		75			—		75			75

Total direct investments		—		—		—		—			2,781		6,212			1,140		10,133			10,133

Investment funds
Cash equivalent funds		—		—		—		—			—		97			—		97			97
Equity funds		—		12,395		—		12,395			2		2,001			200		2,203			14,598
Fixed income funds		—		9,339		—		9,339			—		1,085			—		1,085			10,424
Multi-strategy funds		—		2,544		—		2,544			—		34			—		34			2,578
Real estate funds		—		—		—		—			11		39			337		387			387
Other investment funds (c)		—		—		—		—			—		—			432		432			432

Total investment funds		—		24,278		—		24,278			13		3,256			969		4,238			28,516
Other		—		—		—		—			—		104			281		385			385

Total assets before Investment Trusts		—		24,278		—		24,278			2,794		9,572			2,390		14,756			39,034

Liabilities
Derivatives		—		—		—		—			—		(52	)		—		(52	)		(52	)

Total liabilities before Investment Trusts		—		—		—		—			—		(52	)		—		(52	)		(52	)

Net assets before Investment Trusts	$	—	$	24,278	$	—		24,278		$	2,794	$	9,520		$	2,390		14,704			38,982

Investment Trusts (d)								66,918										—			66,918

Total net assets and Investment Trusts								91,196										14,704			105,900

Other plan assets and liabilities (e)								(189	)									199			10

Net plan assets							$	91,007									$	14,903		$	105,910

(a)	Includes U.S. and sovereign government and agency issues; excludes mortgage and asset-backed securities.

(b)	Includes bank debt obligations.

(c)	Primarily investments in alternative investment funds.

(d)	Refer to the subsequent discussion of Investment Trusts for the leveling of the underlying assets of the Investment Trusts.

(e)	Cash held by the plans, net of amounts payable for investment manager fees, custody fees and other expenses.

233

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor
	Fair Value Measurements of U.S. Plan Assets at December 31, 2009									Fair Value Measurements of Non-U.S. Plan Assets at December 31, 2009
	Level 1		Level 2		Level 3		Total U.S. Plan Assets			Level 1		Level 2			Level 3		Total Non-U.S. Plan Assets			Total U.S. and Non- U.S. Plan Assets
Assets
Direct investments
Cash equivalents and other short-term investments	$	—	$	—	$	—	$	—		$	137	$	463		$	—	$	600		$	600
Common and preferred stocks		—		—		—		—			3,002		56			—		3,058			3,058
Government and agency debt securities (a)		—		—		—		—			93		4,136			65		4,294			4,294
Corporate debt securities (b)		—		—		—		—			2		483			109		594			594
Agency mortgage and asset-backed securities		—		—		—		—			—		62			7		69			69
Non-agency mortgage and asset-backed securities		—		—		—		—			—		42			16		58			58
Private equity and debt investments		—		—		—		—			—		—			110		110			110
Real estate assets		—		—		—		—			14		—			825		839			839
Derivatives		—		—		—		—			—		66			—		66			66

Total direct investments		—		—		—		—			3,248		5,308			1,132		9,688			9,688

Investment funds
Cash equivalent funds		—		—		—		—			19		4			—		23			23
Equity funds		—		14,495		—		14,495			1		2,575			75		2,651			17,146
Fixed income funds		—		9,643		4,221		13,864			—		1,012			—		1,012			14,876
Multi-strategy funds		—		2,337		—		2,337			—		18			—		18			2,355
Real estate funds		—		916		—		916			—		35			217		252			1,168
Other investment funds (c)		—		—		—		—			—		8			95		103			103

Total investment funds		—		27,391		4,221		31,612			20		3,652			387		4,059			35,671
Other		—		—		—		—			—		206			—		206			206

Total assets before Investment Trusts		—		27,391		4,221		31,612			3,268		9,166			1,519		13,953			45,565

Liabilities
Derivatives		—		—		—		—			—		(43	)		—		(43	)		(43	)

Total liabilities before Investment Trusts		—		—		—		—			—		(43	)		—		(43	)		(43	)

Net assets before Investment Trusts	$	—	$	27,391	$	4,221		31,612		$	3,268	$	9,123		$	1,519		13,910			45,522

Investment Trusts (d)								53,043										—			53,043

Total net assets and Investment Trusts								84,655										13,910			98,565

Other plan assets and liabilities (e)								(155	)									117			(38	)

Net plan assets							$	84,500									$	14,027		$	98,527

234

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(a)	Includes U.S. and sovereign government and agency issues; excludes mortgage and asset-backed securities.

(b)	Includes bank debt obligations.

(c)	Primarily investments in alternative investment funds.

(d)	Refer to the subsequent discussion of Investment Trusts for the leveling of the underlying assets of the Investment Trusts.

(e)	Cash held by the plans, net of amounts payable for investment manager fees, custody fees and other expenses.

The following table summarizes the fair value of derivative assets and liabilities owned by the non-U.S. plans by underlying risk (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
Derivative assets
Foreign currency contracts	$	56		$	66
Equity contracts		19			—

Total derivative assets		75			66

Derivative liabilities
Foreign currency contracts		(45	)		(43	)
Equity contracts		(7	)		—

Total derivative liabilities		(52	)		(43	)

Total net derivative assets	$	23		$	23

The following tables summarize the activity for U.S. plan assets classified in Level 3, other than assets held in Investment Trusts (dollars in millions):


	Successor
	Year Ended December 31, 2010
	Balance at January 1, 2010		Net Unrealized Gains (Losses)		Net Realized Gains (Losses)		Purchases, Sales and Settlements		Transfers into (out of) Level 3			Balance at December 31, 2010
Fixed income funds	$	4,221	$	—	$	—	$	—	$	(4,221	)	$	—



	Successor
	July 10 Through December 31, 2009
	Balance at July 10, 2009		Net Unrealized Gains (Losses)		Net Realized Gains (Losses)		Purchases, Sales and Settlements			Transfers into (out of) Level 3		Balance at December 31, 2009
Fixed income funds	$	5,488	$	910	$	158	$	(2,335	)	$	—	$	4,221

	Predecessor
	January 1 Through July 9, 2009
	Balance at January 1, 2009		Net Unrealized Gains (Losses)		Net Realized Gains (Losses)		Purchases, Sales and Settlements			Transfers into (out of) Level 3		Balance at July 9, 2009
Fixed income funds	$	4,508	$	998	$	7	$	(25	)	$	—	$	5,488

235

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables summarize the activity for non-U.S. plan assets classified in Level 3 (dollars in millions):


	Successor
	Year Ended December 31, 2010
	Balance at January 1, 2010		Net Unrealized Gains (Losses)			Net Realized Gains (Losses)			Purchases, Sales and Settlements			Transfers into (out of) Level 3			Exchange Rate Movements			Balance at December 31, 2010
Direct investments
Government and agency debt securities	$	65	$	1		$	(3	)	$	(13	)	$	(46	)	$	—		$	4
Corporate debt securities		109		2			—			(35	)		(38	)		3			41
Agency mortgage and asset- backed securities		7		—			—			—			(7	)		—			—
Non-agency mortgage and asset-backed securities		16		10			(11	)		(5	)		(10	)		—			—
Private equity and debt investments		110		15			—			36			—			8			169
Real estate assets		825		29			1			22			7			42			926

Total direct investments		1,132		57			(13	)		5			(94	)		53			1,140

Investment funds
Equity funds		75		30			2			(72	)		155			10			200
Real estate funds		217		28			(1	)		101			—			(8	)		337
Other investment funds		95		44			—			68			212			13			432

Total investment funds		387		102			1			97			367			15			969

Other investments		—		17			—			(9	)		253			20			281

Total non-U.S. plan assets	$	1,519	$	176		$	(12	)	$	93		$	526		$	88		$	2,390


	Successor
	July 10, 2009 Through December 31, 2009
	Balance at July 10, 2009		Net Unrealized Gains (Losses)			Net Realized Gains (Losses)			Purchases, Sales and Settlements			Transfers into (out of) Level 3			Exchange Rate Movements			Balance at December 31, 2009
Direct investments
Government and agency debt securities	$	8	$	(1	)	$	—		$	60		$	(3	)	$	1		$	65
Corporate debt securities		17		6			1			37			43			5			109
Agency mortgage and asset-backed securities		6		—			—			—			1			—			7
Non-agency mortgage and asset-backed securities		10		19			(6	)		(11	)		3			1			16
Private equity and debt investments		149		(1	)		—			(52	)		—			14			110
Real estate assets		785		(52	)		—			11			—			81			825

Total direct investments		975		(29	)		(5	)		45			44			102			1,132

Investment funds
Equity funds		27		12			(9	)		43			(2	)		4			75
Real estate funds		199		25			(2	)		(4	)		—			(1	)		217
Other investment funds		107		3			1			(16	)		—			—			95

Total investment funds		333		40			(10	)		23			(2	)		3			387

Total non-U.S. plan assets	$	1,308	$	11		$	(15	)	$	68		$	42		$	105		$	1,519

236

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	January 1, 2009 Through July 9, 2009
	Balance at January 1, 2009		Net Unrealized Gains (Losses)			Net Realized Gains (Losses)			Purchases, Sales and Settlements			Transfers into (out of) Level 3			Exchange Rate Movements		Balance at July 9, 2009
Direct investments
Government and agency debt securities	$	—	$	—		$	—		$	4		$	4		$	—	$	8
Corporate debt securities		16		—			2			(2	)		—			1		17
Agency mortgage and asset-backed securities		6		—			—			—			—			—		6
Non-agency mortgage and asset-backed securities		1		(3	)		—			(2	)		14			—		10
Private equity and debt investments		163		(33	)		—			11			—			8		149
Real estate assets		831		(99	)		—			12			—			41		785

Total direct investments		1,017		(135	)		2			23			18			50		975

Investment funds
Equity funds		33		2			(1	)		10			(19	)		2		27
Real estate funds		206		(21	)		(3	)		(3	)		—			20		199
Other investment funds		94		2			—			1			—			10		107

Total investment funds		333		(17	)		(4	)		8			(19	)		32		333

Total non-U.S. plan assets	$	1,350	$	(152	)	$	(2	)	$	31		$	(1	)	$	82	$	1,308

Transfers In and/or Out of Level 3

In the year ended December 31, 2010, fixed income funds of $4.2 billion within the U.S. plan assets were transferred out of Level 3 to Level 2. This resulted from management’s ability to validate certain liquidity and redemption restrictions that permit the plans to redeem their interest in these investment funds in the near-term (generally within 90 days) at NAV.

There were no significant transfers in and/or out of Level 3 within the non-U.S. plan assets.

Fund Investment Strategies

Cash equivalent funds asset class includes funds that primarily invest in short-term, high quality securities including U.S. government securities, U.S. dollar-denominated obligations of U.S. and foreign depository institutions, commercial paper, corporate bonds and asset-backed securities.

Equity funds asset class includes funds that primarily invest in U.S. equities as well as equity securities issued by companies incorporated, listed or domiciled in developed and/or emerging markets countries. Certain fund managers may attempt to profit from security mispricing in equity markets. Equity long/short managers typically construct portfolios consisting of long and short positions, which may be determined by a variety of techniques including fundamental, quantitative, and technical analysis. Index funds, exchange traded funds and derivatives may be used for hedging purposes to limit exposure to various risk factors.

Fixed income funds asset class includes investments in high quality and high yield funds as well as in credit arbitrage funds. High quality fixed income funds primarily invest in U.S. government securities, investment-grade corporate bonds, mortgages and asset-backed securities. High yield fixed income funds primarily invest in U.S. high yield fixed income securities issued by corporations which are rated below investment grade by one or more nationally recognized rating agencies, are unrated but are believed by the investment manager to have similar risk characteristics or are rated investment grade or higher but are priced at yields comparable to

237

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

securities rated below investment grade and believed to have similar risk characteristics. Credit arbitrage funds typically invest in a variety of credit and credit-related instruments that allow fund managers to profit from mispricing of these credit instruments. Certain derivatives may be used for hedging purposes by some fixed income fund managers to limit exposure to various risk factors.

Funds of hedge funds asset class includes funds that primarily invest in a portfolio of alternative investment funds. Funds of hedge fund managers typically seek to achieve their objectives by allocating capital across a broad array of alternative investment funds and/or investment managers.

Global macro funds asset class includes funds that primarily enter into leveraged transactions utilizing a variety of equity, fixed income and derivative instruments to benefit from anticipated price movements of stock, interest rates, foreign exchange currencies, and physical commodities markets while minimizing downside risk. Global macro managers employ a global approach and may invest in a variety of markets to participate in expected market movements.

Multi-strategy funds asset class includes funds that invest in broadly diversified portfolios of equity, fixed income and derivative instruments. Certain funds may also employ multiple alternative investment strategies, in combination, such as global macro, event-driven (which seeks to profit from opportunities created by significant transactional events such as spin-offs, mergers and acquisitions, bankruptcy reorganizations, recapitalizations and share buybacks), and relative value (which seeks to take advantage of pricing discrepancies between instruments including equities, debt, options and futures).

Real estate funds asset class includes funds that primarily invest in entities which are principally engaged in the ownership, acquisition, development, financing, sale and/or management of income-producing real estate properties, both commercial and residential. These funds typically seek long-term growth of capital and current income that is above average relative to public equity funds.

Other investment funds generally consist of funds that employ broad-ranging strategies and styles. The objective of such funds is to deliver returns having relatively low volatility and correlation to movements in major equity and bond markets. Funds in this category typically employ single strategies such as event-driven or relative value.

Investment Trusts

A significant portion of the U.S. hourly and salaried pension plan assets are invested through a series of group trusts (Investment Trusts) which permit the commingling of assets from more than one employer. The group trust structure permitted the formation of a series of group trust investment accounts. Each group trust has a beneficial interest in the assets of the underlying investment accounts which are invested to achieve an investment strategy based on the desired plan asset targeted allocations. For purposes of fair value measurement, each plan’s interests in the group trusts are classified as a plan asset.

A plan’s interest in an Investment Trust is determined based on the Investment Trust’s beneficial interest in the underlying net assets. Beneficial interests in the individual Investment Trusts owned by the plans were 99.0% and 97.4% on a combined basis at December 31, 2010 and 2009.

The following table summarizes the U.S. plans’ interest in certain net assets of the Investment Trusts (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
U.S. pension plans’ funded beneficial interest	$	66,918		$	53,043
OPEB 401(h) plans’ funded beneficial interest		—			3
Interests held in trusts by plans of other employers		646			969

Total fair value of underlying assets of Investment Trusts		67,564			54,015
Less:
Cash		(2,828	)		(3,022	)
Net non-security (assets) liabilities		126			(323	)

Net assets of the Investment Trusts	$	64,862		$	50,670

238

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables summarize the fair value of the underlying net assets by asset class held by the investment accounts owned by the Investment Trusts (dollars in millions):


	Successor
	Fair Value Measurements of Investment Trust Underlying Assets at December 31, 2010 (a)
	Level 1			Level 2			Level 3			Total
Assets
Cash equivalents and other short-term investments	$	—		$	6,920		$	—		$	6,920
Common and preferred stocks		6,756			788			64			7,608
Government and agency debt securities (b)		—			5,402			75			5,477
Corporate debt securities (c)		—			8,252			562			8,814
Agency mortgage and asset-backed securities		—			476			—			476
Non-agency mortgage and asset-backed securities		—			1,863			831			2,694
Group annuity contracts		—			—			3,115			3,115
Investment funds
Equity funds		20			436			382			838
Fixed income funds		48			543			2,287			2,878
Funds of hedge funds		—			516			6,344			6,860
Global macro funds		—			111			4			115
Multi-strategy funds		—			2,080			3,566			5,646
Other investment funds		—			150			188			338
Private equity and debt investments		—			—			8,297			8,297
Real estate assets (d)		1,648			1			5,792			7,441
Derivatives		73			1,407			24			1,504

Total assets		8,545			28,945			31,531			69,021

Liabilities
Common and preferred stocks (e)		(1,287	)		(121	)		—			(1,408	)
Debt securities (e)		—			—			(2	)		(2	)
Real estate assets (e)		(41	)		—			—			(41	)
Derivatives		(184	)		(2,441	)		(83	)		(2,708	)

Total liabilities		(1,512	)		(2,562	)		(85	)		(4,159	)

Total net assets	$	7,033		$	26,383		$	31,446		$	64,862

(a)	Underlying assets are reported at the overall trust level, which includes our plan assets as well as plan assets of non-affiliated plan sponsors.

(b)	Includes U.S. and sovereign government and agency issues; excludes mortgage and asset-backed securities.

(c)	Includes bank debt obligations.

(d)	Includes public real estate investment trusts.

(e)	Primarily investments sold short.

239

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor
	Fair Value Measurements of Investment Trust Underlying Assets at December 31, 2009 (a)
	Level 1			Level 2			Level 3			Total
Assets
Cash equivalents and other short-term investments	$	—		$	5,003		$	—		$	5,003
Common and preferred stocks		4,614			177			53			4,844
Government and agency debt securities (b)		—			2,866			1,552			4,418
Corporate debt securities (c)		—			4,988			1,764			6,752
Agency mortgage and asset-backed securities		—			394			6			400
Non-agency mortgage and asset-backed securities		—			861			1,525			2,386
Group annuity contracts		—			—			3,301			3,301
Investment funds
Equity funds		299			226			576			1,101
Fixed income funds		570			960			2,267			3,797
Funds of hedge funds		—			641			4,455			5,096
Global macro funds		95			266			719			1,080
Multi-strategy funds		34			1,170			1,829			3,033
Other investment funds		1			76			459			536
Private equity and debt investments		—			1			7,210			7,211
Real estate assets (d)		325			—			5,209			5,534
Derivatives		170			1,246			320			1,736

Total assets		6,108			18,875			31,245			56,228

Liabilities
Common and preferred stocks (e)		(2,102	)		(8	)		(2	)		(2,112	)
Debt securities (e)		—			(18	)		(3	)		(21	)
Real estate assets (e)		(33	)		—			—			(33	)
Derivatives		(113	)		(3,071	)		(208	)		(3,392	)

Total liabilities		(2,248	)		(3,097	)		(213	)		(5,558	)

Total net assets	$	3,860		$	15,778		$	31,032		$	50,670

(a)	Underlying assets are reported at the overall trust level, which includes our plan assets as well as plan assets of non-affiliated plan sponsors.

(b)	Includes U.S. and sovereign government and agency issues; excludes mortgage and asset-backed securities.

(c)	Includes bank debt obligations.

(d)	Includes public real estate investment trusts.

(e)	Primarily investments sold short.

240

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the fair value of derivative assets and liabilities owned by the Investment Trusts by underlying risk (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
Derivative assets
Interest rate contracts	$	1,251		$	1,297
Foreign exchange contracts		92			309
Equity contracts		96			36
Credit contracts		65			94

Total derivative assets		1,504			1,736

Derivative liabilities
Interest rate contracts		(2,294	)		(3,206	)
Foreign exchange contracts		(146	)		(76	)
Equity contracts		(243	)		(49	)
Credit contracts		(25	)		(61	)

Total derivative liabilities		(2,708	)		(3,392	)

Total net derivative assets (liabilities)	$	(1,204	)	$	(1,656	)

The following tables summarize the activity of the underlying net assets of the Investment Trusts classified in Level 3 (dollars in millions):


	Successor
	Year Ended December 31, 2010
	Balance at January 1, 2010			Net Unrealized Gains (Losses)			Net Realized Gains (Losses)			Purchases, Sales and Settlements			Transfers into (out of) Level 3			Balance at December 31, 2010
Assets
Common and preferred stocks	$	53		$	23		$	(20	)	$	4		$	4		$	64
Government and agency debt securities		1,552			(8	)		17			(163	)		(1,323	)		75
Corporate debt securities		1,764			56			(5	)		(543	)		(710	)		562
Agency mortgage and asset-backed securities		6			—			—			(1	)		(5	)		—
Non-agency mortgage and asset-backed securities		1,525			393			(249	)		(167	)		(671	)		831
Group annuity contracts		3,301			(95	)		161			(252	)		—			3,115
Investment funds
Equity funds		576			(1	)		16			7			(216	)		382
Fixed income funds		2,267			136			94			(307	)		97			2,287
Funds of hedge funds		4,455			103			325			1,500			(39	)		6,344
Global macro funds		719			103			(92	)		(614	)		(112	)		4
Multi-strategy funds		1,829			359			26			1,521			(169	)		3,566
Other investment funds		459			(2	)		(29	)		(161	)		(79	)		188
Private equity and debt investments		7,210			578			590			(81	)		—			8,297
Real estate assets		5,209			523			57			3			—			5,792

Total assets		30,925			2,168			891			746			(3,223	)		31,507

Liabilities
Common and preferred stocks		(2	)		—			—			—			2			—
Debt securities		(3	)		—			—			—			1			(2	)

Total liabilities		(5	)		—			—			—			3			(2	)

Derivatives, net		112			(54	)		3			(38	)		(82	)		(59	)

Total net assets	$	31,032		$	2,114		$	894		$	708		$	(3,302	)	$	31,446

241

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor
	July 10, 2009 Through December 31, 2009
	Balance at July 10, 2009			Net Unrealized Gains (Losses)			Net Realized Gains (Losses)			Purchases, Sales and Settlements			Transfers into (out of) Level 3			Balance at December 31, 2009
Assets
Common and preferred stocks	$	17		$	12		$	(6	)	$	35		$	(5	)	$	53
Government and agency debt securities		29			140			28			66			1,289			1,552
Corporate debt securities		749			173			(6	)		615			233			1,764
Agency mortgage and asset-backed securities		3			5			(3	)		3			(2	)		6
Non-agency mortgage and asset-backed securities		544			455			(162	)		393			295			1,525
Group annuity contracts		3,393			(33	)		74			(133	)		—			3,301
Investment funds
Equity funds		538			87			(7	)		(20	)		(22	)		576
Fixed income funds		2,179			736			(397	)		32			(283	)		2,267
Funds of hedge funds		3,480			321			1			653			—			4,455
Global macro funds		864			157			(5	)		(31	)		(266	)		719
Multi-strategy funds		1,100			49			112			719			(151	)		1,829
Other investment funds		318			16			1			124			—			459
Private equity and debt investments		6,618			264			205			123			—			7,210
Real estate assets		5,701			(1,086	)		364			230			—			5,209

Total assets		25,533			1,296			199			2,809			1,088			30,925

Liabilities
Common and preferred stocks		(4	)		(1	)		—			2			1			(2	)
Debt securities		—			—			—			(3	)		—			(3	)

Total liabilities		(4	)		(1	)		—			(1	)		1			(5	)

Derivatives, net		(314	)		(8	)		(22	)		66			390			112

Total net assets	$	25,215		$	1,287		$	177		$	2,874		$	1,479		$	31,032


	Predecessor
	January 1, 2009 Through July 9, 2009
	Balance at January 1, 2009			Net Unrealized Gains (Losses)			Net Realized Gains (Losses)			Purchases, Sales and Settlements			Transfers into (out of) Level 3			Balance at July 9, 2009
Assets
Common and preferred stocks	$	11		$	(2	)	$	2		$	6		$	—		$	17
Government and agency debt securities		9			3			—			17			—			29
Corporate debt securities		604			172			(47	)		15			5			749
Agency mortgage and asset-backed securities		5			—			—			(1	)		(1	)		3
Non-agency mortgage and asset-backed securities		717			(147	)		(16	)		9			(19	)		544
Group annuity contracts		3,316			(57	)		83			51			—			3,393
Investment funds
Equity funds		456			18			—			64			—			538
Fixed income funds		1,427			498			—			254			—			2,179
Funds of hedge funds		3,106			27			—			347			—			3,480
Global macro funds		1,351			(20	)		82			(549	)		—			864
Multi-strategy funds		1,486			24			6			(416	)		—			1,100
Other investment funds		701			(73	)		(19	)		(281	)		(10	)		318
Private equity and debt investments		7,564			(1,049	)		(64	)		167			—			6,618
Real estate assets		7,899			(2,440	)		(10	)		252			—			5,701

Total assets		28,652			(3,046	)		17			(65	)		(25	)		25,533

Liabilities
Common and preferred stocks		(1	)		1			1			(5	)		—			(4	)

Total liabilities		(1	)		1			1			(5	)					(4	)
Derivatives, net		1,420			(1,469	)		(229	)		(36	)		—			(314	)

Total net assets (liabilities)	$	30,071		$	(4,514	)	$	(211	)	$	(106	)	$	(25	)	$	25,215

242

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Investment Trusts Transfers In and/or Out of Level 3

During the year ended December 31, 2010 significant transfers out of Level 3 to Level 2 included government and agency debt securities of $1.3 billion, corporate debt securities of $0.7 billion and non-agency mortgage and asset-backed securities of $0.7 billion. These transfers were primarily the result of improved pricing transparency of these securities, which allowed management to corroborate observable pricing inputs received from independent pricing services.

During the year ended December 31, 2010 investment funds of $0.6 billion were transferred out of Level 3 to Level 2. This resulted from management’s ability to validate certain liquidity and redemption restrictions that permit the Investment Trusts to redeem their interest in these investment funds in the near-term (generally within 90 days) at NAV.

OPEB Plan Assets and Fair Value Measurements

As a result of the December 31, 2009 UAW hourly retiree medical plan settlement, there were no significant OPEB plan assets at December 31, 2010.

The following table summarizes the fair value of OPEB plan assets by asset category (dollars in millions):


	Successor
	Fair Value Measurements at December 31, 2009
	Level 1		Level 2		Level 3		Total U.S. Plan Assets
Direct investments
Cash equivalents and other short-term investments	$	—	$	28	$	—	$	28
Investment Funds — Mutual and commingled funds		—		37		—		37
Other		—		—		2		2

Total assets	$	—	$	65	$	2		67

Employee-owned assets								(10	)

Net non-security liabilities								(26	)

Total OPEB plan assets							$	31

The following tables summarize the activity for the OPEB plan assets classified in Level 3 (dollars in millions):


	Successor
	July 10, 2009 Through December 31, 2009
	Balance at July 10, 2009		Net Unrealized Gains (Losses)			Net Realized Gains (Losses)			Purchases, Sales and Settlements			Transfers into (out of) Level 3			Balance at December 31, 2009
Common and preferred stocks	$	3	$	3		$	(2	)	$	(4	)	$	—		$	—
Government and agency debt securities		1		21			4			(248	)		222			—
Corporate debt securities		122		51			3			(344	)		168			—
Non-agency mortgage and asset-backed securities		18		(29	)		(1	)		(2	)		14			—
Investment funds — Mutual and commingled funds		2,188		154			(17	)		(2,315	)		(10	)		—
Private equity and debt investments		243		36			—			(279	)		—			—
Real estate assets		356		(78	)		—			(136	)		(142	)		—
Other		2		—			—			—			—			2

Total OPEB plan assets Level 3	$	2,933	$	158		$	(13	)	$	(3,328	)	$	252		$	2

243

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	January 1, 2009 Through July 9, 2009
	Balance at January 1, 2009		Net Unrealized Gains (Losses)			Net Realized Gains (Losses)			Purchases, Sales and Settlements			Transfers into (out of) Level 3			Balance at July 9, 2009
Common and preferred stocks	$	—	$	(5	)	$	—		$	8		$	—		$	3
Government and agency debt securities		—		—			—			—			1			1
Corporate debt securities		89		26			(5	)		12			—			122
Non-agency mortgage and asset-backed securities		24		—			(1	)		(5	)		—			18
Investment funds — Mutual and commingled funds		2,403		333			(104	)		(272	)		(172	)		2,188
Private equity and debt investments		245		17			(16	)		(3	)		—			243
Real estate assets		415		(71	)		1			11			—			356
Other		2		—			—			—			—			2

Total OPEB plan assets Level 3	$	3,178	$	300		$	(125	)	$	(249	)	$	(171	)	$	2,933

Significant Concentrations of Risk

The pension plans’ Investment Trusts include investments in certain investment funds, equity, debt and real estate investments and derivative instruments. Some or all of these investments may be illiquid. The investment managers may be unable to quickly liquidate some or all of these investments at an amount close or equal to fair value in order to meet a plan’s liquidity requirements or to respond to specific events such as deterioration in the creditworthiness of any particular issuer or counterparty.

Illiquid investments held in the Investment Trusts are generally long-term investments that complement the long-term nature of pension obligations and are not used to fund benefit payments when currently due. Plan management monitors liquidity risk on an ongoing basis and has procedures in place that are designed to maintain flexibility in addressing plan-specific, broader industry and market liquidity events.

Certain assets held by the Investment Trusts represent investments in group annuity contracts. We entered into group annuity contracts with various life insurance companies to provide pension benefits to certain of our salaried workforce and backed these obligations by high quality fixed income securities. We, as the plans’ sponsor, might be exposed to counterparty risk if any or all of the life insurance companies fail to perform in accordance with the terms and conditions stipulated in the contracts, or any or all of the life insurance companies become insolvent or experience other forms of financial distress. We and the plans might also be exposed to liquidity risk due to the funding obligation that may arise under these contracts. The plans’ management monitors counterparty and liquidity risks on an on-going basis and has procedures in place that are designed to monitor the financial performance of the life insurance companies that are parties to these contracts and maintain flexibility in addressing contract-specific and broader market events.

The pension plans’ Investment Trusts may contain financial instruments denominated in foreign currencies. Consequently, the plans might be exposed to risks that the foreign currency exchange rates might change in a manner that has an adverse effect on the value of the Investment Trusts’ foreign currency denominated assets or liabilities. The Investment Trusts use forward currency contracts to manage foreign currency risk.

The pension plans’ Investment Trusts may invest in fixed income securities for which any change in the relevant interest rates for particular securities might result in an investment manager being unable to secure similar returns upon the maturity or the sale of securities. In addition, changes to prevailing interest rates or changes in expectations of future interest rates might result in an increase or decrease in the fair value of the securities held. The plans’ Investment Trusts may use interest rate swaps and other financial derivative instruments to manage interest rate risk.

Counterparty credit risk is the risk that a counterparty to a financial instrument held by the Investment Trusts will default on its commitment. Counterparty risk is primarily related to over-the-counter derivative instruments used to manage risk exposures related

244

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

to interest rates on long-term debt securities and foreign currency exchange rate fluctuations. The risk of default can be influenced by various factors including macro-economic conditions, market liquidity, fiscal and monetary policies and counterparty-specific characteristics and activities. Certain agreements with counterparties employ set-off, collateral support arrangements and other risk mitigating procedures designed to reduce the net exposure to credit risk in the event of counterparty default. Credit policies and processes are in place to manage concentrations of counterparty risk by seeking to undertake transactions with large well-capitalized counterparties and by monitoring the creditworthiness of these counterparties.

Plan Funding Policy and Contributions

The funding policy for qualified defined benefit pension plans is to contribute annually not less than the minimum required by applicable law and regulations or to directly pay benefit payments where appropriate. At December 31, 2010, all legal funding requirements had been met.

The following table summarizes pension contributions to the defined benefit pension plans or direct payments to plan beneficiaries (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
U.S. hourly and salaried	$	4,000	$	—	$	—	$	—
Other U.S.		95		31		57		90
Non-U.S.		777		4,287		529		977

Total contributions	$	4,872	$	4,318	$	586	$	1,067

Required Pension Funding Obligations

We do not have any required contributions due to our U.S. qualified plans in 2011. The next pension funding valuation to be prepared based on the requirements of the Pension Protection Act (PPA) of 2006 will be as of October 1, 2010. Based on the PPA, we have the option to select a funding interest rate for the valuation based on either the Full Yield Curve method or the 3-Segment method, both of which are considered to be acceptable methods. A hypothetical funding valuation at December 31, 2010, using the 3-Segment rate at May 31, 2010 for the funding plan year beginning October 1, 2010 and assuming the December 31, 2010 Full Yield Curve funding interest rate for all future funding valuations projects contributions of $2.3 billion, and $1.2 billion in 2015 and 2016. Alternatively, a hypothetical funding valuation at December 31, 2010 using the 3-Segment rate at May 31, 2010 for the funding plan year beginning October 1, 2010 and assuming the December 31, 2010 3-Segment interest rate for all future funding valuations projects contributions of $0.3 billion in 2016. In both cases, we have assumed that the pension plans earn the expected return of 8.0%. In addition to the discount rate and return on assets, the pension contributions could be affected by various other factors including the effect of any legislative changes. We are evaluating whether we will make additional voluntary contributions in 2011.

In July 2009 $862 million was deposited into an escrow account pursuant to an agreement among Old GM, EDC and an escrow agent. In July 2009 we subscribed for additional common shares in GMCL and paid the subscription price in cash. As required under certain agreements among GMCL, EDC, and an escrow agent, $3.6 billion of the subscription price was deposited into an escrow account to fund certain of GMCL’s pension plans and HCT obligations pending completion of certain preconditions. In September 2009 GMCL contributed $3.0 billion to the Canadian hourly defined benefit pension plan and $651 million to the Canadian salaried defined benefit pension plan, of which $2.7 billion was funded from the escrow account. In accordance with the terms of the escrow agreement, $903 million was released from the escrow account to us in September 2009. At December 31, 2010 $1.0 billion remained in the escrow account.

245

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

OPEB Contributions

The following table summarizes contributions (withdrawals) to the U.S. OPEB plans (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008 (a)
Employer contributions (withdrawals)	$	651	$	1,528	$	1,947	$	(1,356	)
Plan participants’ contributions.		53		172		169		401

Total contributions (withdrawals)	$	704	$	1,700	$	2,116	$	(955	)

(a)	Both the U.S. non-UAW hourly and salaried VEBAs were effectively liquidated by December 31, 2008 resulting in withdrawals from plan assets.

Benefit Payments


	Successor
	Years Ended December 31,
	Pension Benefits (a)				Other Benefits
	U.S. Plans		Non-U.S. Plans		U.S. Plans (b)		Non-U.S. Plans
2011	$	8,765	$	1,460	$	451	$	189
2012	$	8,463	$	1,461	$	427	$	199
2013	$	8,186	$	1,480	$	407	$	209
2014	$	7,999	$	1,513	$	391	$	220
2015	$	7,855	$	1,534	$	379	$	231
2016-2020	$	36,033	$	7,889	$	1,796	$	1,287

(a)	Benefits for most U.S. pension plans and certain non-U.S. pension plans are paid out of plan assets rather than our cash and cash equivalents.

(b)	Benefit payments presented in this table reflect the effect of the implementation of the 2009 UAW Retiree Settlement Agreement which releases us from UAW retiree healthcare claims incurred after December 31, 2009.

Note 21. Derivative Financial Instruments and Risk Management

Automotive

Derivatives and Hedge Accounting

We are party to a variety of foreign currency exchange rate and commodity derivative contracts entered into in connection with the management of exposure to fluctuations in foreign currency exchange rates and certain commodity prices.

Our derivative instruments consist of derivative contracts or economic hedges, including forward contracts and options that we acquired from Old GM or purchased directly from counterparties. At December 31, 2010 and 2009 no outstanding derivative contracts were designated in hedging relationships other than those derivative contracts designated in a hedging relationship by GM Financial.

246

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Refer to Note 24 for additional information on the fair value measurements of our derivative instruments. Refer to Note 4 for additional information on our derivatives accounting policy.

Counterparty Credit Risk

Derivative financial instruments contain an element of credit risk attributable to the counterparties’ ability to meet the terms of the agreements. Since August 2010 we executed new agreements with counterparties that will require, under certain circumstances, that the counterparty post collateral with us for net asset positions. At December 31, 2010 we held collateral of $74 million from counterparties and recorded the related obligation in Accrued liabilities. The maximum amount of loss due to credit risk that we would incur if the counterparties to the derivative instruments failed completely to perform according to the terms of the contract was $143 million at December 31, 2010. Agreements are entered into with counterparties that allow the set-off of certain exposures in order to manage the risk. At December 31, 2010 the total net derivative asset position for all counterparties with which we were in a net asset position, less the collateral we held, was $108 million.

At December 31, 2010 a majority of all derivative counterparty exposures were with counterparties that were rated A or higher.

Credit Risk Related Contingent Features

Certain of our agreements with counterparties require that we provide cash collateral for net liability positions that we may have with such counterparty. At December 31, 2010 no collateral was posted related to derivative instruments, and we did not have any agreements with counterparties to derivative instruments containing covenants requiring the maintenance of certain credit rating levels or credit risk ratios that would require the posting of collateral in the event that such covenants are violated.

Fair Value of Derivatives

The following table summarizes the fair value of our derivative instruments (dollars in millions):


	Successor
	December 31, 2010				December 31, 2009
	Asset Derivatives (a)(b)		Liability Derivatives (c)(d)		Asset Derivatives (a)(b)		Liability Derivatives (c)(d)
Derivative Instruments
Current Portion
Foreign currency exchange	$	80	$	113	$	104	$	568
Commodity		93		2		11		—

Total current portion	$	173	$	115	$	115	$	568

Non-Current Portion
Foreign currency exchange	$	—	$	—	$	19	$	146
Commodity		—		7		—		—
Warrants		44		—		25		—

Total non-current portion	$	44	$	7	$	44	$	146

(a)	Current portion recorded in Other current assets and deferred income taxes

(b)	Non-current portion recorded in Other assets.

(c)	Current portion recorded in Accrued liabilities.

(d)	Non-current portion recorded in Other liabilities and deferred income taxes.

247

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Gains and (Losses) on Derivatives

The following table summarizes derivative gains and (losses) recorded in earnings (dollars in millions):


	Successor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009
Foreign Currency Exchange Derivatives
Interest income and other non-operating income, net	$	82		$	279
Interest Rate Swap Derivatives
Automotive interest expense		—			(1	)
Commodity Derivatives
Interest income and other non-operating income, net		(33	)		—
Warrants
Interest income and other non-operating income, net		19			—

Total gains (losses) recorded in earnings	$	68		$	278

Commodity Notionals

The following table summarizes the notional amounts of our commodity derivative contracts (units in thousands):


	Units	Successor
Commodity	Units	December 31, 2010		December 31, 2009
Aluminum and aluminum alloy	Metric tons		448		39
Copper	Metric tons		44		4
Lead	Metric tons		69		7
Heating oil	Gallons		125,160		10,797
Natural gas	MMBTU		—		1,355
Natural gas	Gigajoules		—		150
Palladium	Troy ounce		444		—
Platinum	Troy ounce		91		—
Electricity (embedded derivative)	MWh		1,304		—

Foreign Currency Exchange Notionals

The following table summarizes the total notional amounts of our foreign currency exchange derivatives (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Foreign currency exchange derivatives	$	5,910	$	6,333
Embedded foreign currency exchange derivatives	$	1,421	$	—

In 2010 we entered into a long-term supply agreement which provides for pricing to be partially denominated in a currency other than the functional currency of the parties to the contract. This pricing feature was determined to be an embedded derivative which we have bifurcated for valuation and accounting purposes. The fair value of this embedded derivative was insignificant as of December 31, 2010.

248

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Derivatives

In September 2009 in connection with an agreement with American Axle, we received warrants to purchase 4 million shares of American Axle common stock exercisable at $2.76 per share. Gains and losses related to these warrants were recorded in Interest income and other non-operating income, net. At December 31, 2010 the fair value of these warrants was $44 million. In February 2011 we exercised the warrants and sold the shares and received proceeds of $48 million.

In connection with our investment in New Delphi, which we account for using the equity method, we record our share of New Delphi’s Other comprehensive income (loss) in Accumulated other comprehensive income (loss). In the years ended December 31, 2010 and 2009 we recorded cash flow hedge losses of $22 million and $1 million related to our share of New Delphi’s hedging losses.

Automotive Financing

GM Financial is exposed to market risks arising from adverse changes in interest rates due to floating interest rate exposure on its credit facilities and on certain securitization notes payable.

The effect of derivative instruments on earnings and Accumulated other comprehensive income was insignificant for the three months ended December 31, 2010.

The following table summarizes interest rate swaps, caps and foreign currency exchange derivatives (dollars in millions):


	Successor
	December 31, 2010
	Notional		Fair Value
Assets (a)
Interest rate swaps	$	1,227	$	23
Interest rate caps		946		8

Total assets	$	2,173	$	31

Liabilities (b)
Interest rate swaps	$	1,227	$	47
Interest rate caps		832		8
Foreign currency exchange (c)		49		2

Total liabilities	$	2,108	$	57

(a)	Recorded in GM Financial Other assets.

(b)	Recorded in GM Financial Other liabilities.

(c)	Notional has been translated from Canadian dollars to U.S. dollars at the December 31, 2010 rate.

Credit Risk Related Contingent Features

Under the terms of our derivative financial instruments, GM Financial is required to pledge certain funds to be held in restricted cash accounts as collateral for the outstanding derivative transactions. As of December 31, 2010, these restricted cash accounts totaled $33 million and are included in GM Financial Restricted cash.

249

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Old GM

Derivatives and Hedge Accounting

Derivatives Not Designated for Hedge Accounting

Old GM previously entered into a variety of foreign currency exchange, interest rate and commodity forward contracts and options to maintain a desired level of exposure arising from market risks resulting from changes in foreign currency exchange rates, interest rates and certain commodity prices.

In May 2009 Old GM reached agreements with certain of the counterparties to its derivative contracts to terminate the derivative contracts prior to stated maturity. Commodity, foreign currency exchange and interest rate forward contracts were settled for cash of $631 million, resulting in a loss of $537 million. The loss was recorded in Automotive sales, Automotive cost of sales and Automotive interest expense in the amounts of $22 million, $457 million and $58 million.

When an exposure economically hedged with a derivative contract was no longer forecasted to occur, in some cases a new derivative instrument was entered into to offset the exposure related to the existing derivative instrument. In some cases, counterparties were unwilling to enter into offsetting derivative instruments and, as such, there was exposure to future changes in the fair value of these derivatives with no underlying exposure to offset this risk.

The following table summarizes gains and (losses) recorded for derivatives originally entered into to hedge exposures that subsequently became probable not to occur (dollars in millions):


	Predecessor
	January 1, 2009 Through July 9, 2009
Interest income and other non-operating income, net	$	91

Gains and (Losses) on Derivatives

The following table summarizes derivative gains and (losses) recorded in earnings (dollars in millions):


	Predecessor
	January 1, 2009 Through July 9, 2009
Foreign Currency Exchange Derivatives
Automotive sales	$	(688	)
Automotive cost of sales		(211	)
Interest income and other non-operating income, net		91
Interest Rate Swap Derivatives
Automotive interest expense		(38	)
Commodity Derivatives
Automotive cost of sales		(332	)
Warrants
Interest income and other non-operating income, net		164

Total gains (losses) recorded in earnings	$	(1,014	)

In connection with the UST Loan Agreement, Old GM granted warrants to the UST for 122 million shares of its common stock exercisable at $3.57 per share. Old GM recorded the warrants as a liability and recorded gains and losses related to this derivative in Interest income and other non-operating income, net. In connection with the 363 Sale, the UST returned the warrants and they were cancelled.

250

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Cash Flow Hedges

Old GM previously designated certain financial instruments as cash flow hedges to manage its exposure to certain foreign currency exchange risks. For foreign currency transactions, Old GM typically hedged forecasted exposures for up to three years in the future. For foreign currency exposure on long-term debt, Old GM typically hedged exposures for the life of the debt.

On October 1, 2008 Old GM ceased hedge accounting treatment for derivatives that were previously designated as qualifying cash flow hedges. Subsequent to that date Old GM recorded gains and losses arising from changes in the fair value of the derivative instruments in earnings, resulting in a net gain of $157 million in the three months ended December 31, 2008. This gain was recorded in Automotive sales and Automotive cost of sales in the amounts of $127 million and $30 million.

The following table summarizes financial statement classification and amounts reclassified from Accumulated other comprehensive income (loss) into earnings related to effective cash flow hedging relationships (dollars in millions):


	Predecessor
	Gain (Loss) Reclassified			Gain (Loss) Reclassified
	January 1, 2009 Through July, 9, 2009			Year Ended December 31, 2008
Automotive sales	$	(351	)	$	198
Automotive cost of sales		19			205
Reorganization gains, net		247			—

Total gains (losses) reclassified from accumulated other comprehensive income (loss)	$	(85	)	$	403

Hedge ineffectiveness related to instruments designated as cash flow hedges was insignificant in the year ended December 31, 2008.

In connection with the Chapter 11 Proceedings, at June 1, 2009 Accumulated other comprehensive income (loss) balances of $247 million associated with previously designated financial instruments were reclassified into Reorganization gains, net because the underlying forecasted debt and interest payments were probable not to occur.

The following table summarizes gains and (losses) that were reclassified from Accumulated other comprehensive income (loss) for cash flow hedges associated with previously forecasted transactions that subsequently became probable not to occur (dollars in millions):


	Predecessor
	Gain (Loss) Reclassified
	January 1, 2009 Through July 9, 2009
Automotive sales	$	(182	)
Reorganization gains, net		247

Total gains (losses) reclassified from accumulated other comprehensive income (loss)	$	65

251

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Change in Accumulated Other Comprehensive Income (Loss)

The following table summarizes the net change in Accumulated other comprehensive income (loss) related to cash flow hedging activities (dollars in millions):


	Predecessor
	January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Beginning net unrealized gain (loss) on derivatives	$	(490	)	$	321
Change in fair value		—			(1,054	)
Reclassification to earnings		99			243

Ending net unrealized gain (loss) on derivatives	$	(391	)	$	(490	)

In connection with our application of fresh-start reporting, the remaining previously deferred cash flow hedging gains and losses of $391 million in Accumulated other comprehensive income (loss) were adjusted to $0 at July 10, 2009.

Fair Value Hedges

Old GM previously used interest rate swaps designated as fair value hedges to manage certain of its exposures associated with its borrowings. Old GM hedged its exposures to the maturity date of the underlying interest rate exposure.

Gains and losses on derivatives designated and qualifying as fair value hedges, as well as the offsetting gains and losses on the debt attributable to the hedged interest rate risk, were recorded in Automotive interest expense to the extent the hedge was effective. The gains and losses related to the hedged interest rate risk were recorded as an adjustment to the carrying amount of the debt. Previously recorded adjustments to the carrying amount of the debt were amortized to Automotive interest expense over the remaining debt term. In the period January 1, 2009 through July 9, 2009 Old GM amortized an insignificant amount of previously deferred fair value hedge gains and losses to Automotive interest expense. Old GM recorded no hedging ineffectiveness in the year ended December 31, 2008.

On October 1, 2008 Old GM ceased hedge accounting treatment for derivatives that were previously designated as qualifying fair value hedges. Subsequent to this date Old GM recorded gains and losses arising from changes in the fair value of the derivative instruments in earnings, resulting in a net gain of $279 million recorded in Automotive interest expense in the three months ended December 31, 2008.

In connection with the Chapter 11 Proceedings, at June 1, 2009 Old GM had basis adjustments of $18 million to the carrying amount of debt that ceased to be amortized to Automotive interest expense. At June 1, 2009 the debt related to these basis adjustments was classified as Liabilities subject to compromise and no longer subject to interest accruals or amortization. We did not assume this debt from Old GM in connection with the 363 Sale.

Net Investment Hedges

Old GM was subject to foreign currency exposure related to net investments in certain foreign operations and used foreign currency denominated debt to hedge this exposure. For nonderivative instruments that were designated as, and qualified as, a hedge of a net investment in a foreign operation, the effective portion of the unrealized and realized gains and losses were recorded as a Foreign currency translation adjustment in Accumulated other comprehensive income (loss). In connection with the 363 Sale, MLC retained the foreign currency denominated debt and it ceased to operate as a hedge of net investments in foreign operations. In connection with our application of fresh-start reporting, the effective portions of unrealized gains and losses previously recorded to Accumulated other comprehensive income (loss) were adjusted to $0 at July 10, 2009.

252

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the gains related to net investment hedges recorded as a Foreign currency translation adjustment in Accumulated other comprehensive income (loss) (dollars in millions):


	Predecessor
	January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Effective portion of net investment hedges	$	5	$	106

Derivatives Not Meeting a Scope Exception from Fair Value Accounting

Old GM previously entered into purchase contracts that were accounted for as derivatives with changes in fair value recorded in Automotive cost of sales, as these contracts did not qualify for the normal purchases and normal sales scope exception in ASC 815, “Derivatives and Hedging.” Certain of these contracts were terminated in the period January 1, 2009 through July 9, 2009. MLC retained the remainder of these purchase contracts in connection with the 363 Sale.

Note 22. Commitments and Contingencies

Consolidated

The following tables summarize information related to commitments and contingencies (dollars in millions):


	Successor
	December 31, 2010				December 31, 2009
	Liability Recorded		Maximum Liability (a)		Liability Recorded		Maximum Liability (a)
Guarantees (b)
Operating lease residual values	$	7	$	59	$	—	$	79
Ally Financial commercial loans (c)	$	—	$	17	$	2	$	167
Supplier commitments and other obligations	$	—	$	63	$	3	$	218
Other product-related claims	$	50	$	442	$	54	$	553

(a)	Calculated as future undiscounted payments.

(b)	Excludes residual support and risk sharing programs and vehicle repurchase obligations related to Ally Financial.

(c)

At December 31, 2009 includes $127 million related to a guarantee provided to Ally Financial in Brazil in connection with dealer floor plan financing. This guarantee is collateralized by an interest in certificates of deposit of $127 million purchased from Ally Financial to which we have title and which were recorded in Restricted cash and marketable securities. The purchase of the certificates of deposit was funded in part by contributions from dealers for which we had recorded a corresponding deposit liability of $104 million, which was recorded in Other liabilities. In the year ended December 31, 2010 this guarantee was terminated.


	Successor
	December 31, 2010		December 31, 2009
	Liability Recorded		Liability Recorded
Credit card programs (a)
Redemption liability (b)	$	167	$	140
Deferred revenue(c)	$	408	$	464
Environmental liability (d)	$	195	$	190
Product liability	$	365	$	319
Liability related to contingently issuable shares	$	—	$	162
Other litigation-related liability and tax administrative matters (e)	$	1,471	$	1,192

253

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(a)	At December 31, 2010 and 2009 qualified cardholders had rebates available, net of deferred program revenue, of $2.8 billion and $3.1 billion.

(b)	Redemption liabilities are recorded in Accrued liabilities.

(c)	Deferred revenue is recorded in Other liabilities and deferred income taxes. At December 31, 2010 and 2009 deferred revenue includes an unfavorable contract liability recorded in applying fresh-start reporting at July 10, 2009.

(d)	Includes $45 million and $28 million recorded in Accrued liabilities at December 31, 2010 and 2009, and the remainder was recorded in Other liabilities and deferred income taxes.

(e)	Consists primarily of tax related litigation not recorded pursuant to ASC 740 as well as various non-U.S. labor related matters.

Guarantees

We have provided guarantees related to the residual value of certain operating leases. These guarantees terminate in years ranging from 2011 to 2035. Certain leases contain renewal options.

We have agreements with third parties that guarantee the fulfillment of certain suppliers’ commitments and other obligations. These guarantees expire in years ranging from 2011 to 2015, or upon the occurrence of specific events.

In some instances, certain assets of the party whose debt or performance we have guaranteed may offset, to some degree, the cost of the guarantee. The offset of certain of our payables to guaranteed parties may also offset certain guarantees, if triggered.

We also provide payment guarantees on commercial loans made by Ally Financial and outstanding with certain third parties, such as dealers or rental car companies. These guarantees either expire in years ranging from 2012 to 2029 or are ongoing. We determined the value ascribed to the guarantees to be insignificant based on the credit worthiness of the third parties. Refer to Note 32 for additional information on guarantees that we provide to Ally Financial.

In connection with certain divestitures of assets or operating businesses, we have entered into agreements indemnifying certain buyers and other parties with respect to environmental conditions pertaining to real property we owned. We have provided guarantees with respect to benefits to be paid to former employees of divested businesses relating to pensions, postretirement healthcare and life insurance. We periodically enter into agreements that incorporate indemnification provisions in the normal course of business. It is not possible to estimate our maximum exposure under these indemnifications or guarantees due to the conditional nature of these obligations. No amounts have been recorded for such obligations as they are not probable or estimable at this time, and the fair value of the guarantees at issuance was insignificant.

In addition to the guarantees and indemnifying agreements mentioned previously, we periodically enter into agreements that incorporate indemnification provisions in the normal course of business. Due to the nature of these agreements, the maximum potential amount of future undiscounted payments to which we may be exposed cannot be estimated. No amounts have been recorded for such indemnities as our obligations under them are not probable or estimable at this time, and the fair value of the guarantees at issuance was insignificant.

In addition to the guarantees and indemnifying agreements previously discussed, we indemnify dealers for certain product liability related claims as subsequently discussed.

With respect to other product-related claims involving products manufactured by certain joint ventures, we believe that costs incurred are adequately covered by recorded accruals. These guarantees expire in 2020.

254

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Credit Card Programs

Credit card programs offer rebates that can be applied primarily against the purchase or lease of our vehicles.

Environmental Liability

In connection with the 363 Sale, we acquired certain properties that are subject to environmental remediation.

Automotive operations, like operations of other companies engaged in similar businesses, are subject to a wide range of environmental protection laws, including laws regulating air emissions, water discharges, waste management and environmental remediation. We are in various stages of investigation or remediation for sites where contamination has been alleged. We are and Old GM was involved in a number of actions to remediate hazardous wastes as required by federal and state laws. Such statutes require that responsible parties fund remediation actions regardless of fault, legality of original disposal or ownership of a disposal site.

The future effect of environmental matters, including potential liabilities, is often difficult to estimate. An environmental reserve is recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. This practice is followed whether the claims are asserted or unasserted. Liabilities have been recorded for the expected costs to be paid over the periods of remediation for the applicable sites, which typically range from 5 to 30 years.

For many sites, the remediation costs and other damages for which we ultimately may be responsible may vary because of uncertainties with respect to factors such as the connection to the site or to materials there, the involvement of other potentially responsible parties, the application of laws and other standards or regulations, site conditions, and the nature and scope of investigations, studies and remediation to be undertaken (including the technologies to be required and the extent, duration and success of remediation).

The final outcome of environmental matters cannot be predicted with certainty at this time. Accordingly, it is possible that the resolution of one or more environmental matters could exceed the amounts accrued in an amount that could be material to our financial condition and results of operations. At December 31, 2010 we estimate the remediation losses could range from $150 million to $370 million.

Product Liability

With respect to product liability claims involving our and Old GM’s products, it is believed that any judgment against us for actual damages will be adequately covered by our recorded accruals and, where applicable, excess insurance coverage. Although punitive damages are claimed in some of these lawsuits, and such claims are inherently unpredictable, accruals incorporate historic experience with these types of claims. Liabilities have been recorded for the expected cost of all known product liability claims plus an estimate of the expected cost for all product liability claims that have already been incurred and are expected to be filed in the future for which we are self-insured. These amounts were recorded in Accrued liabilities and exclude Old GM’s asbestos claims, which are discussed separately.

In accordance with our assumption of dealer sales and service agreements, we indemnify dealers for certain product liability related claims. Our experience related to dealer indemnification obligations where we are not a party arising from incidents prior to July 10, 2009 is limited. We monitor actual claims experience for consistency with this estimate and make periodic adjustments as appropriate. Since July 10, 2009, the volume of product liability claims against us has been less than projected. In addition, as of this time due to the relatively short period for which we have been directly responsible for such claims, we have fewer pending matters than Old GM had in the past and than we expect in the future. Based on both management judgments concerning the projected number and value of both dealer indemnification obligations and product liability claims against us, we have estimated the associated liability. We have lowered our overall product liability estimate for dealer indemnifications and our exposure in the year ended December 31, 2010 resulting in a $132 million favorable adjustment driven primarily by a lower than expected volume of claims. We expect our product liability reserve to rise in future periods as new claims arise from incidents subsequent to July 9, 2009.

255

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Liability Related to Contingently Issuable Shares

We are obligated to issue Adjustment Shares of our common stock to MLC in the event that allowed general unsecured claims against MLC, as estimated by the Bankruptcy Court, exceed $35.0 billion. The maximum number of Adjustment Shares issuable is 30 million shares (subject to adjustment to take into account stock dividends, stock splits and other transactions). The number of Adjustment Shares to be issued is calculated based on the extent to which estimated general unsecured claims exceed $35.0 billion with the maximum number of Adjustment Shares issued if estimated general unsecured claims total $42.0 billion or more. In the period July 10, 2009 to December 31, 2009 we determined that it was probable that general unsecured claims allowed against MLC would ultimately exceed $35.0 billion by at least $2.0 billion. In that circumstance, we would have been required to issue 8.6 million Adjustment Shares to MLC as an adjustment to the purchase price. At December 31, 2009 we recorded a liability of $162 million included in Accrued liabilities. In the year ended December 31, 2010 the liability was adjusted quarterly based on available information. Based on information which became available in the three months ended December 31, 2010, we concluded it was no longer probable that general unsecured claims would exceed $35.0 billion, and we reversed to income our previously recorded liability of $231 million for the contingently issuable Adjustment Shares which is recorded in Interest income and other non-operating income, net. We believe it is reasonably possible that general unsecured claims allowed against MLC will range between $32.5 billion and $36.0 billion.

Other Litigation-Related Liability and Tax Administrative Matters

Various legal actions, governmental investigations, claims and proceedings are pending against us or MLC including a number of shareholder class actions, bondholder class actions and class actions under ERISA and other matters arising out of alleged product defects, including asbestos-related claims; employment-related matters; governmental regulations relating to safety, emissions, and fuel economy; product warranties; financial services; dealer, supplier and other contractual relationships; tax-related matters not recorded pursuant to ASC 740 and environmental matters.

With regard to the litigation matters discussed in the previous paragraph, reserves have been established for matters in which it is believed that losses are probable and can be reasonably estimated, the majority of which are associated with tax-related matters not recorded pursuant to ASC 740 as well as various non-U.S. labor-related matters. Tax related matters not recorded pursuant to ASC 740 (indirect tax-related matters) are items being litigated globally pertaining to value added taxes, customs, duties, sales, property taxes and other non-income tax related tax exposures. The various non-U.S. labor-related matters include claims from current and former employees related to alleged unpaid wage, benefit, severance, and other compensation matters. Certain South American administrative proceedings are indirect tax-related and may require that we deposit funds in escrow; such escrow deposits may range from $560 million to $760 million. Some of the matters may involve compensatory, punitive, or other treble damage claims, environmental remediation programs, or sanctions, that if granted, could require us to pay damages or make other expenditures in amounts that could not be reasonably estimated at December 31, 2010. We believe that appropriate accruals have been established for such matters based on information currently available. Reserves for litigation losses are recorded in Accrued liabilities and Other liabilities and deferred income taxes. These accrued reserves represent the best estimate of amounts believed to be our liability in a range of expected losses. Litigation is inherently unpredictable, however, and unfavorable resolutions could occur. Accordingly, it is possible that an adverse outcome from such proceedings could exceed the amounts accrued in an amount that could be material to our financial condition, results of operations and cash flows in any particular reporting period.

Commencing on or about September 29, 2010, current and former hourly employees of GM Daewoo, our majority-owned affiliate in the Republic of Korea, filed six separate group actions in the Incheon District Court in Incheon, Korea. The cases allege that GM Daewoo failed to include certain allowances in its calculation of Ordinary Wages due under the Presidential Decree of the Korean Labor Standards Act. Similar cases have been brought against other large employers in the Republic of Korea. At December 31, 2010 GM Daewoo accrued 122 billion Korean Won (equivalent to $110 million) in connection with these cases (70% of which was recorded in Net income attributable to stockholders, based on our ownership interest in GM Daewoo). The current estimate of the value of plaintiffs’ claim, if allowed in full, exceeds the accrual by 395 billion Korean Won (equivalent to $344 million). GM Daewoo believes the claims in excess of the accrual are without merit but, given the inherent uncertainties of the litigation process and further

256

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

uncertainties arising because this litigation is at its earliest stages, this amount represents the high end of the range of reasonably possible liability exposure. Both the scope of claims asserted and GM Daewoo’s assessment of any or all of individual claim elements may change. This accrual is included in the reserves for non-U.S. labor-related matters.

In July 2008 Old GM reached a tentative settlement of the General Motors Securities Litigation suit and recorded an additional charge of $277 million, of which $139 million was paid in the year ended December 31, 2008. Also in the year ended December 31, 2008, Old GM recorded $215 million as a reduction to Automotive selling, general and administrative expense associated with insurance-related indemnification proceeds for previously recorded litigation related costs, including the cost incurred to settle the General Motors Securities Litigation suit.

GME Planned Spending Guarantee

As part of our Opel/Vauxhall restructuring plan, agreed to with European labor representatives, we have committed to achieve specified milestones associated with planned spending from 2011 to 2014 on certain product programs. If we fail to accomplish the requirements set out under the agreement, we will be required to pay certain amounts up to Euro 265 million for each of those years, and/or interest on those amounts, to our employees. Certain inventory with a carrying amount of $193 million at December 31, 2010 was pledged as collateral under the agreement. Management has the intent and believes it has the ability to meet the requirements under the agreement.

Asset Retirement Obligations

Conditional asset retirement obligations relate to legal obligations associated with retirement of tangible long-lived assets that result from acquisition, construction, development, or normal operation of a long-lived asset. An analysis is performed of such obligations associated with all real property owned or leased, including facilities, warehouses, and offices. Estimates of conditional asset retirement obligations relate, in the case of owned properties, to costs estimated to be necessary for the legally required removal or remediation of various regulated materials, primarily asbestos. Asbestos abatement was estimated using site-specific surveys where available and a per square foot estimate where surveys were unavailable. For leased properties, such obligations relate to the estimated cost of contractually required property restoration.

Recording conditional asset retirement obligations results in increased fixed asset balances with a corresponding increase to liabilities. Asset balances, net of accumulated depreciation, of $36 million and $53 million at December 31, 2010 and 2009 are recorded in Property, net, while the related liabilities are included in Other liabilities. The following table summarizes the activity related to asset retirement obligations (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009
Beginning balance	$	102		$	97		$	237
Accretion expense		6			4			12
Liabilities incurred		6			21			5
Liabilities settled or disposed		(12	)		(9	)		(2	)
Effect of foreign currency translation		2			3			5
Revisions to estimates		(1	)		(14	)		1
Reclassified to liabilities subject to compromise (a)		—			—			(121	)

Ending balance		103			102			137
Effect of application of fresh-start reporting		—			—			(40	)

Ending balance including effect of application of fresh-start reporting	$	103		$	102		$	97

(a)	Represents the asset retirement obligations associated with assets MLC retained.

257

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Noncancelable Operating Leases

The following table summarizes our minimum commitments under noncancelable operating leases having remaining terms in excess of one year, primarily for property (dollars in millions):


	2011			2012			2013			2014			2015			2016 and after
Minimum commitments (a)	$	520		$	406		$	318		$	266		$	232		$	851
Sublease income		(60	)		(60	)		(55	)		(51	)		(46	)		(359	)

Net minimum commitments	$	460		$	346		$	263		$	215		$	186		$	492

(a)	Certain of the leases contain escalation clauses and renewal or purchase options.


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Rental expense under operating leases	$	604	$	255	$	369	$	934

Asbestos-Related Liability

In connection with the 363 Sale, MLC retained substantially all of the asbestos-related claims outstanding.

Like most automobile manufacturers, Old GM had been subject to asbestos-related claims in recent years.

Old GM recorded the estimated liability associated with asbestos personal injury claims where the expected loss was both probable and could reasonably be estimated. Old GM retained a firm specializing in estimating asbestos claims to assist Old GM in determining the potential liability for pending and unasserted future asbestos personal injury claims.

Old GM reviewed a number of factors, including the analyses provided by the firm specializing in estimating asbestos claims in order to determine a reasonable estimate of the probable liability for pending and future asbestos-related claims projected to be asserted over the subsequent 10 years, including legal defense costs. Old GM monitored actual claims experience for consistency with this estimate and made periodic adjustments as appropriate. Old GM recorded asbestos-related expenses of $18 million and $51 million in the period January 1, 2009 through July 9, 2009 and the year ended December 31, 2008.

Delphi Corporation

Benefit Guarantee

In 1999, Old GM spun-off Delphi Automotive Systems Corporation, which became Delphi. Prior to the consummation of the DMDA, Delphi was our and Old GM’s largest supplier of automotive systems, components and parts, and we and Old GM were Delphi’s largest customer. From 2005 to 2008 Old GM’s annual purchases from Delphi ranged from approximately $6.5 billion to approximately $10.2 billion. At the time of the spin-off, employees of Delphi Automotive Systems Corporation became employees of Delphi. As part of the separation agreements, Delphi assumed the pension and other postretirement benefit obligations for the transferred U.S. hourly employees who retired after January 1, 2000 and Old GM retained pension and other postretirement obligations for U.S. hourly employees who retired on or before January 1, 2000. Additionally at the time of the spin-off, Old GM entered into the Delphi Benefit Guarantee Agreements with the UAW, the IUE-CWA and the USW providing contingent benefit guarantees whereby, under certain conditions, Old GM would make payments for certain pension and OPEB benefits to certain former

258

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

U.S. hourly employees that became employees of Delphi. The Delphi Benefit Guarantee Agreements provided, in general, that in the event that Delphi or its successor companies ceased doing business, terminated its pension plan or ceased to provide credited service or OPEB benefits at certain levels due to financial distress, Old GM could be liable to provide the corresponding benefits at the required level. With respect to pension benefits, the guarantee arises only to the extent the pension benefits Delphi and the PBGC provided fall short of the guaranteed amount.

In October 2005 Old GM received notice from Delphi that it was more likely than not that Old GM would become obligated to provide benefits pursuant to the Delphi Benefit Guarantee Agreements, in connection with Delphi’s commencement in October 2005 of Chapter 11 proceedings under the Bankruptcy Code. In June 2007 Old GM entered into a memorandum of understanding with Delphi and the UAW (Delphi UAW MOU) that included terms relating to the consensual triggering, under certain circumstances, of the Delphi Benefit Guarantee Agreements as well as additional terms relating to Delphi’s restructuring. Under the Delphi UAW MOU, Old GM also agreed to pay for certain healthcare costs of Delphi retirees and their beneficiaries in order to provide a level of benefits consistent with those provided to Old GM’s retirees and their beneficiaries under the Mitigation Plan, if Delphi terminated OPEB benefits. In August 2007 Old GM also entered into memoranda of understanding with Delphi and the IUE-CWA and with Delphi and the USW containing terms consistent with the comprehensive Delphi UAW MOU.

Delphi-GM Settlement Agreements

In September 2007 and as amended at various times through September 2008, Old GM and Delphi entered into the Delphi-GM Settlement Agreements consisting of the Global Settlement Agreement (GSA), the Master Restructuring Agreement (MRA) and the Implementation Agreements with the UAW, IUE-CWA and the USW (Implementation Agreements). The GSA was intended to resolve outstanding issues between Delphi and Old GM that arose before Delphi’s emergence from its Chapter 11 proceedings. The MRA was intended to govern certain aspects of Old GM’s ongoing commercial relationship with Delphi. The Implementation Agreements addressed a limited transfer of pension assets and liabilities, and the triggering of the benefit guarantees on the basis set forth in term sheets to the Implementation Agreements. In September 2008 the Bankruptcy Court entered an order in Delphi’s Chapter 11 proceedings approving the Amended Delphi-GM Settlement Agreements which then became effective.

The more significant items contained in the Amended Delphi-GM Settlement Agreements included Old GM’s commitment to:

•

Reimburse Delphi for its costs to provide OPEB to certain of Delphi’s hourly retirees from December 31, 2006 through the date that Delphi ceases to provide such benefits and assume responsibility for OPEB going forward;

•

Reimburse Delphi for the normal cost of credited service in Delphi’s pension plan between January 1, 2007 and the date its pension plans are frozen;

•

First hourly pension transfer — Transfer net liabilities of $2.1 billion from the Delphi Hourly Rate Plan (Delphi HRP) to Old GM’s U.S. hourly pension plan in September 2008;

•

Second hourly pension transfer — Transfer the remaining Delphi HRP net liabilities upon Delphi’s substantial consummation of its plan of reorganization (POR) subject to certain conditions being met;

•

Reimburse Delphi for all retirement incentives and half of the buyout payments made pursuant to the various attrition program provisions and to reimburse certain U.S. hourly buydown payments made to certain hourly employees of Delphi;

•

Award certain future product programs to Delphi, provide Delphi with ongoing preferential sourcing for other product programs, eliminate certain previously agreed upon price reductions, and restrict the ability to re-source certain production to alternative suppliers;

•

Labor cost subsidy — Reimburse certain U.S. hourly labor costs incurred to produce systems, components and parts for GM vehicles from October 2006 through September 2015 at certain U.S. facilities owned or to be divested by Delphi;

259

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

Production cash burn support — Reimburse Delphi’s cash flow deficiency attributable to production at certain U.S. facilities that continue to produce systems, components and parts for GM vehicles until the facilities are either closed or sold by Delphi;

•

Facilitation support — Pay Delphi $110 million in both 2009 and 2010 in quarterly installments in connection with certain U.S. facilities owned by Delphi until Delphi’s emergence from its Chapter 11 proceedings;

•

Temporarily accelerate payment terms for Delphi’s North American sales to Old GM upon substantial consummation of its POR, until 2012;

•

Reimburse Delphi, beginning in January 2009, for actual cash payments related to workers compensation, disability, supplemental unemployment benefits and severance obligations for all current and former UAW-represented hourly active and inactive employees; and

•

Guarantee a minimum recovery of the net working capital that Delphi has invested in certain businesses held for sale.

The GSA also resolved all claims in existence at its effective date (with certain limited exceptions) that either Delphi or Old GM had or may have had against the other. The GSA and related agreements with Delphi’s unions released us, Old GM and our related parties (as defined), from any claims of Delphi and its related parties (as defined), as well as any employee benefit related claims of Delphi’s unions and hourly employees. Additionally, the GSA provided that Old GM would receive certain administrative claims against the Delphi bankruptcy estate or preferred stock in the emerged entity.

As a result of the September 2008 implementation of the Delphi-GM Settlement Agreements Old GM paid $1.0 billion and $1.4 billion to Delphi in the period January 1, 2009 through July 9, 2009 and the year ended December 31, 2008 in settlement of amounts accrued to date against Old GM commitments. We paid $288 million in 2009 prior to the consummation of the DMDA in settlement of amounts accrued to date against our commitments.

Upon consummation of the DMDA, the MRA was terminated with limited exceptions, and we and Delphi waived all claims against each other under the GSA.

IUE-CWA and USW Settlement Agreement

As more fully discussed in Note 20, in September 2009 we entered into a settlement agreement with MLC, the IUE-CWA and the USW that resolved the Delphi Benefit Guarantee Agreements with these unions. The settlement agreement provides for a measure of retiree healthcare and life insurance to be provided to certain retirees represented by these unions. The agreement also provides certain IUE-CWA and USW retirees from Delphi a pension “top up” equal to the difference between the amount of PBGC pension payments and the amount of pension benefits that otherwise would have been paid by the Delphi HRP according to its terms had it not been terminated. Further, the settlement agreement provided certain current employees of Delphi or Delphi divested units up to seven years credited service in Old GM’s U.S. hourly defined benefit pension plan, commencing November 30, 2008, the date that Delphi froze the Delphi HRP. The agreement was approved by the Bankruptcy Court in November 2009.

Advance Agreements

In the period January 1, 2009 to July 9, 2009 and the year ended December 31, 2008 Old GM entered into various agreements and amendments to such agreements to advance a maximum of $950 million to Delphi, subject to Delphi’s continued satisfaction of certain conditions and milestones. Through the consummation of the DMDA, we entered into further amendments to the agreements, primarily to extend the deadline for Delphi to satisfy certain milestones, which if not met, would have prevented Delphi from continued access to the credit facility. At October 6, 2009 $550 million had been advanced under the credit facility. Upon consummation of the DMDA, we waived our rights to the advanced amounts that became consideration to Delphi and other parties under the DMDA. Refer to Note 5 for additional information on the consummation of the DMDA.

260

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Payment Terms Acceleration Agreement

In October 2008 subject to Delphi obtaining an extension or other accommodation of its DIP financing through June 30, 2009, Old GM agreed to temporarily accelerate payment of North American payables to Delphi in the three months ended June 30, 2009. In January 2009 Old GM agreed to immediately accelerate $50 million in advances towards the temporary acceleration of North American payables. Additionally, Old GM agreed to accelerate $150 million and $100 million of North American payables to Delphi in March and April of 2009 bringing the total amount accelerated to the total agreed upon $300 million. Upon consummation of the DMDA, we waived our rights to the accelerated payments that became consideration to Delphi and other parties under the DMDA.

Delphi Master Disposition Agreement

In July 2009 we, Delphi and the PBGC negotiated an agreement to be effective upon consummation of the DMDA regarding the settlement of PBGC’s claims from the termination of the Delphi pension plans and the release of certain liens with the PBGC against Delphi’s foreign assets. In return, the PBGC received a payment of $70 million from us and was granted a 100% interest in Class C Membership Interests in New Delphi which provide for the PBGC to participate in predefined equity distributions. We maintain the obligation to provide the difference between pension benefits paid by the PBGC according to regulation and those originally guaranteed by Old GM under the Delphi Benefit Guarantee Agreements.

In October 2009 we consummated the transaction contemplated by the DMDA with Delphi, New Delphi, Old GM and other sellers and other buyers that are party to the DMDA, as more fully described in Note 5. Upon consummation of the DMDA, the MRA was terminated with limited exceptions, and we and Delphi waived all claims against each other under the GSA. Upon consummation of the DMDA we settled our commitments to Delphi accrued to date except for the obligation to provide the difference between pension benefits paid by the PBGC according to regulation and those originally guaranteed by Old GM under the Delphi Benefit Guarantee Agreements that we continue to maintain. In addition, the DMDA establishes an ongoing commercial relationship with New Delphi. We also agreed to continue all existing Delphi supply agreements and purchase orders for GMNA to the end of the related product program, and New Delphi agreed to provide us with access rights designed to allow us to operate specific sites on defined triggering events to provide us with protection of supply.

Delphi Charges

The following table summarizes charges that have been recorded with respect to the various agreements with Delphi (dollars in millions):


	Successor		Predecessor
	July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Other automotive expenses, net	$	8	$	184	$	4,797
Automotive cost of sales		193		142		555
Reorganization gains, net		—		662		—

Total Delphi charges	$	201	$	988	$	5,352

These charges reflect the best estimate of obligations associated with the various Delphi agreements, including obligations under the Delphi Benefit Guarantee Agreements, updated to reflect the DMDA. At July 9, 2009 these charges reflect the obligation to the PBGC upon consummation of the DMDA, consisting of the estimated fair value of the PBGC Class C Membership Interests in New Delphi of $317 million and the payment of $70 million due from us. Further, at July 9, 2009 these charges reflect an estimated value of $966 million pertaining to claims we have against Delphi that were waived upon consummation of the DMDA. The estimated value of the claims represents the excess after settlement of certain pre-existing commitments to Delphi of the fair value of Nexteer, the four

261

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

domestic facilities and the investment in New Delphi over the cash consideration paid under the DMDA. Refer to Note 5 for additional information on the total consideration paid under the DMDA and the allocation of such consideration to the various units of account.

The charges recorded in the year ended December 31, 2008 primarily related to estimated losses associated with the guarantee of Delphi’s hourly pension plans and the write off of any estimated recoveries from Delphi. The charges also reflected a benefit of $622 million due to a reduction in the estimated liability associated with Delphi OPEB related costs for Delphi active employees and retirees, based on the terms of the New VEBA, who were not previously participants in Old GM’s plans. The terms of the New VEBA also reduced Old GM’s OPEB obligation for Delphi employees who returned to Old GM and became participants in the UAW hourly medical plan primarily in 2006. Such benefit is included in the actuarial gain recorded in our UAW hourly medical plan. Refer to Note 22 for additional information on the Delphi benefit plans.

262

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 23. Income Taxes

Consolidated

The following table summarizes Income (loss) before income taxes and equity income (dollars in millions):


	Successor					Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
U.S. income (loss)	$	2,648	$	(6,647	)	$	105,420	$	(26,742	)
Non-U.S. income (loss)		3,089		1,364			2,356		(2,729	)

Income (loss) before income taxes and equity income	$	5,737	$	(5,283	)	$	107,776	$	(29,471	)

Provision (Benefit) for Income Taxes

The following table summarizes the provision (benefit) for income taxes (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Current income tax expense (benefit)
U.S. federal	$	(10	)	$	7		$	(60	)	$	(31	)
Non-U.S.		441			421			(522	)		668
U.S. state and local		(1	)		(1	)		16			(34	)

Total current		430			427			(566	)		603

Deferred income tax expense (benefit)
U.S. federal		(25	)		(1,204	)		110			(163	)
Non-U.S.		259			(52	)		(716	)		1,175
U.S. state and local		8			(171	)		6			151

Total deferred		242			(1,427	)		(600	)		1,163

Total income tax expense (benefit)	$	672		$	(1,000	)	$	(1,166	)	$	1,766

Annual tax provisions include amounts considered sufficient to pay assessments that may result from examination of prior year tax returns.

The following table summarizes the cash paid (received) for income taxes (dollars in millions):


	Successor					Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Cash paid (received) for income taxes	$	357	$	(65	)	$	(1,011	)	$	718

Provisions are made for estimated U.S. and non-U.S. income taxes, less available tax credits and deductions, which may be incurred on the remittance of our and Old GM’s share of basis differences in investments in foreign subsidiaries and corporate joint ventures not deemed to be permanently reinvested. Taxes have not been provided on basis differences in investments in foreign subsidiaries and corporate joint ventures which are deemed permanently reinvested of $6.9 billion and $5.5 billion at December 31, 2010 and 2009. Quantification of the deferred tax liability, if any, associated with permanently reinvested earnings is not practicable.

263

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes a reconciliation of the provision (benefit) for income taxes compared with the amounts at the U.S. federal statutory rate (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Tax at U.S. federal statutory income tax rate	$	2,008		$	(1,849	)	$	37,721		$	(10,315	)
State and local tax expense		334			(559	)		(260	)		(1,151	)
Foreign income taxed at other than 35%		1,579			64			(119	)		1,229
Taxes on unremitted earnings of subsidiaries		(10	)		(151	)		(12	)		(235	)
Change in valuation allowance		(2,903	)		1,338			6,609			13,064
Change in statutory tax rates		—			163			1			151
Research and development incentives		(235	)		(14	)		(113	)		(367	)
Medicare prescription drug benefit		—			—			18			(104	)
Settlements of prior year tax matters		(170	)		—			—			—
VEBA contribution		—			(328	)		—			—
Non-taxable reorganization gain		—			—			(45,564	)		—
Foreign currency remeasurement		143			340			207			(608	)
Other adjustments		(74	)		(4	)		346			102

Total income tax expense (benefit)	$	672		$	(1,000	)	$	(1,166	)	$	1,766

Deferred Income Tax Assets and Liabilities

Deferred income tax assets and liabilities at December 31, 2010 and 2009 reflect the effect of temporary differences between amounts of assets, liabilities and equity for financial reporting purposes and the bases of such assets, liabilities and equity as measured by tax laws, as well as tax loss and tax credit carryforwards.

The following table summarizes the components of temporary differences and carryforwards that give rise to deferred tax assets (liabilities) (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
Deferred tax assets
Postretirement benefits other than pensions	$	3,884		$	5,231
Pension and other employee benefit plans		7,127			8,951
Warranties, dealer and customer allowances, claims and discounts		4,276			4,255
Property, plants and equipment		2,275			3,333
Capitalized research expenditures		5,033			4,693
Tax carryforwards		20,109			18,880
Miscellaneous U.S.		2,387			2,693
Miscellaneous non-U.S.		357			1,049

Total deferred tax assets before valuation allowances		45,448			49,085
Less: Valuation allowances		(42,979	)		(45,281	)

Net deferred tax assets		2,469			3,804
Deferred tax liabilities
Intangible assets		2,609			3,642

Total deferred tax liabilities		2,609			3,642

Net deferred tax assets (liabilities)	$	(140	)	$	162

264

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes deferred tax assets (liabilities) (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
Current deferred tax assets	$	782		$	462
Current deferred tax liabilities		(23	)		(57	)
Non-current deferred tax assets		308			564
Non-current deferred tax liabilities		(1,207	)		(807	)

Net deferred tax assets (liabilities)	$	(140	)	$	162

The following table summarizes the amount and expiration dates of our operating loss and tax credit carryforwards at December 31, 2010 (dollars in millions):


	Successor
	Expiration Dates		Amounts
U.S. federal and state loss carryforwards		2011-2030	$	11,050
Non-U.S. loss and tax credit carryforwards		Indefinite		1,088
Non-U.S. loss and tax credit carryforwards		2011-2030		4,173
U.S. alternative minimum tax credit		Indefinite		699
U.S. general business credits (a)		2011-2030		1,956
U.S. foreign tax credits		2011-2018		1,143

Total loss and tax credit carryforwards			$	20,109

(a)	The general business credits are principally composed of research and experimentation credits.

Valuation Allowances

The valuation allowances recognized relate to certain net deferred tax assets in U.S. and non-U.S. jurisdictions. The following table summarizes the change in the valuation allowance (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Beginning balance	$	45,281		$	42,666		$	59,777		$	42,208
Additions (Reversals)
U.S.		(2,196	)		2,226			(14,474	)		14,146
Canada		63			405			(802	)		759
Germany		(139	)		67			(792	)		140
Spain		378			(40	)		(200	)		1,109
Brazil		1			1			(442	)		(135	)
South Korea		(121	)		(221	)		321			724
Australia		(39	)		7			190			340
U.K.		(121	)		109			62			330
Sweden		(58	)		33			(1,057	)		(58	)
Other		(70	)		28			83			214

Ending balance	$	42,979		$	45,281		$	42,666		$	59,777

265

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In July 2009 Old GM recorded adjustments resulting in a net decrease in valuation allowances of $20.7 billion as a result of the 363 Sale and fresh-start reporting. The net decrease primarily resulted from U.S. federal and state tax attribute reduction of $12.2 billion related to debt cancellation income, a net difference of $5.5 billion between fresh-start reporting and historical U.S. GAAP bases of assets and liabilities at entities with valuation allowances, net valuation allowances of $1.7 billion associated with assets and liabilities retained by Old GM, a foreign tax attribute reduction of $0.9 billion and release of valuation allowances of $0.7 billion. After the deconsolidation of our Saab unit in February 2009, corresponding deferred taxes and valuation allowances in Sweden were no longer recorded in Old GM financial statements.

Old GM established or released the following significant valuation allowances for jurisdictions not on a full valuation allowance throughout the applicable period (dollars in millions):


	Predecessor
Jurisdiction(s)	Valuation Allowance Charge/(Release)			Period Ended
Brazil	$	(465	)	July 9, 2009
Various non-U.S.	$	(286	)	July 9, 2009
South Korea	$	725		December 31, 2008
Various non-U.S.	$	329		December 31, 2008
Australia	$	284		December 31, 2008
Texas	$	152		December 31, 2008
Spain	$	206		March 31, 2008
United Kingdom	$	173		March 31, 2008

Over the past several years, we and Old GM have accumulated pre-tax losses in the U.S. and various non-U.S. jurisdictions. These historical pre-tax losses were driven by several factors including but not limited to instability of the global economic environment, automotive price competition, relatively high cost structure, unfavorable commodity prices, unfavorable regulatory and tax environments and a challenging foreign currency exchange environment. By December 31, 2008, after weighing these objective and verifiable negative evidence factors with all other available positive and negative evidence, Old GM determined it was more likely than not it would not realize its net deferred tax assets, and established valuation allowances for major jurisdictions including the U.S., Canada, Brazil, Australia, South Korea, Germany, Spain and the United Kingdom. Additional concerns arose related to the U.S. parent company’s liquidity which led us to establish valuation allowances for Texas and various non-U.S. jurisdictions, even though many of these jurisdictions had historical profits and no other significant negative evidence factors.

In 2009 the U.S. parent company liquidity concerns were resolved in connection with the Chapter 11 Proceedings and the 363 Sale, and many non-U.S. jurisdictions, including Brazil, were generating and projecting U.S. GAAP and local taxable income. To the extent there were no other significant negative evidence factors, Old GM determined it was more likely than not it would realize its net deferred tax assets and reversed valuation allowances in Brazil and various non-U.S. jurisdictions.

Although we are a new company, and our ability to achieve future profitability was enhanced by the cost and liability reductions that occurred as a result of the Chapter 11 Proceedings and 363 Sale, Old GM’s historic operating results remain relevant as they are reflective of the industry and the effect of economic conditions. The fundamental businesses and inherent risks in which we globally operate did not change from those in which Old GM operated. As such, subsequent to the Chapter 11 Proceedings and the 363 Sale, due to objective and verifiable negative evidence including cumulative and current losses, we determined it was still more likely than not the net deferred tax assets would not be realized in major jurisdictions including the U.S., Canada, Australia, South Korea, Germany, Spain and the United Kingdom.

At December 31, 2010 objective and verifiable negative evidence continues to outweigh positive evidence in our key valuation allowance jurisdictions. If, in the future, we generate taxable income in jurisdictions where we have recorded full valuation allowances, on a sustained basis, our conclusion regarding the need for full valuation allowances in these tax jurisdictions could

266

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

change, resulting in the reversal of some or all of the valuation allowances. If our operations generate taxable income prior to reaching profitability on a sustained basis, we would reverse a portion of the valuation allowance related to the corresponding realized tax benefit for that period, without changing our conclusions on the need for a full valuation allowance against the remaining net deferred tax assets.

Uncertain Tax Positions

The following table summarizes gross unrecognized tax benefits before valuation allowances and the amount that would favorably affect the effective tax rate in future periods after valuation allowances (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Gross unrecognized tax benefits before valuation allowances	$	5,169	$	5,410
Amount that would favorably affect effective tax rate in future	$	785	$	618
Amount of liability for uncertain tax positions benefits netted against deferred tax assets in the same jurisdiction (a)	$	3,605	$	4,007

(a)	The remaining uncertain tax positions are classified as current and non-current liabilities.

The following table summarizes activity of the total amounts of unrecognized tax benefits (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Beginning balance	$	5,410		$	4,096		$	2,803		$	2,754
Additions to tax positions in the current year		195			1,454			1,493			208
Additions to tax positions in prior years		803			22			594			751
Reductions to tax positions in the current year		—			(44	)		(25	)		(47	)
Reductions to tax positions in prior years		(475	)		(128	)		(626	)		(725	)
Reductions in tax positions due to lapse of statutory limitations		(18	)		—			(281	)		—
Settlements		(761	)		(111	)		(16	)		(275	)
Other		15			121			154			137

Ending balance	$	5,169		$	5,410		$	4,096		$	2,803

The following tables summarize information regarding income tax related interest and penalties (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Interest income	$	13	$	—	$	249		$	26
Interest expense (benefit)	$	20	$	30	$	(31	)	$	13
Penalties	$	1	$	—	$	30		$	4

267

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor
	December 31, 2010		December 31, 2009
Accrued interest receivable	$	—	$	10
Accrued interest payable	$	250	$	275
Accrued penalties	$	119	$	137

Other Matters

Most of the tax attributes generated by Old GM and its domestic and foreign subsidiaries (net operating loss carryforwards and various income tax credits) survived the Chapter 11 Proceedings, and we are using or expect to use the tax attributes to reduce future tax liabilities. The ability to utilize certain of the U.S. tax attributes in future tax periods could be limited by Section 382(a) of the Internal Revenue Code. On November 1, 2010, we amended our certificate of incorporation to minimize the likelihood of an ownership change occurring for Section 382 purposes. In Germany, we have net operating loss carryforwards for corporate income tax and trade tax purposes through November 30, 2009 that, as a result of reorganizations that took place in 2008 and 2009, were not recorded as deferred tax assets. Although we received a ruling from the German tax authorities confirming the availability of these losses for carry over on January 26, 2011, a European Union Commission review concluded the German law on which the ruling was based is void and therefore reaffirmed these loss carryforwards are not available. We are evaluating options that would allow these loss carryforwards to reduce future taxable income. In Australia, we have net operating loss carryforwards which are subject to meeting a “Same Business Test” requirement that we assess on a quarterly basis.

In the U.S., we have continuing responsibility for Old GM’s open tax years. Old GM’s federal income tax returns for 2004 through 2006 were audited by the Internal Revenue Service (IRS), and the review was concluded in February 2010. The IRS is currently auditing Old GM’s federal 2007 and 2008 tax years. The IRS is also reviewing the January 1 through July 9, 2009 Old GM tax year as part of the IRS Compliance Assurance Process (CAP), the objective of which is to reach early issue resolution and increase audit efficiency. Our July 10, 2009 through December 31, 2009 and 2010 tax years are also under IRS CAP review. In addition to the U.S., income tax returns are filed in multiple jurisdictions and are subject to examination by taxing authorities throughout the world. We have open tax years from 2001 to 2009 with various significant tax jurisdictions. These open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the sustainability of income tax credits for a given audit cycle. Given the global nature of our operations, there is a risk that transfer pricing disputes may arise.

In May 2009 the U.S. and Canadian governments resolved a transfer pricing matter for Old GM which covered the tax years 2001 through 2007. In the three months ended June 30, 2009 this resolution resulted in a tax benefit of $692 million and interest of $229 million. Final administrative processing of the Canadian case closing occurred in late 2009, and final administrative processing of the U.S. case closing occurred in February 2010.

In June 2010 a Mexican income tax audit covering the 2002 and 2003 years was concluded and an assessment of 2.0 billion pesos (equivalent to $165 million) including tax, interest and penalties was issued. We do not agree with the assessment and intend to appeal. We believe we have adequate reserves established and collection of the assessment will be suspended during the appeal period and any subsequent proceedings through U.S. and Mexican competent authorities.

In November 2010 an agreement was reached with the Canadian government to resolve various income tax matters in the years 2003 through 2009. In the three months ended December 31, 2010, this resolution resulted in a tax benefit of $140 million including interest.

Based on an unfavorable Brazilian Supreme court decision rendered to a separate Brazilian taxpayer on a similar income tax matter, it is likely we will settle a contested income tax matter for $242 million in the next twelve months. This amount was fully reserved in a prior period.

268

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At December 31, 2010, aside from the Brazilian matter, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits in the next twelve months.

Note 24. Fair Value Measurements

Automotive

Fair Value Measurements on a Recurring Basis

The following tables summarize the financial instruments measured at fair value on a recurring basis (dollars in millions):


	Successor
	Fair Value Measurements on a Recurring Basis at December 31, 2010
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents (a)
United States government and agency	$	—	$	1,085	$	—	$	1,085
Sovereign debt		—		523		—		523
Certificates of deposit		—		2,705		—		2,705
Money market funds		4,844		—		—		4,844
Commercial paper		—		3,807		—		3,807
Marketable securities
Trading securities
Equity		21		17		—		38
Debt		—		98		—		98
Available–for–sale securities
United States government and agency		—		2,023		—		2,023
Sovereign debt		—		773		—		773
Certificates of deposit		—		954		—		954
Corporate debt		—		1,669		—		1,669
Restricted cash and marketable securities (a)
United States government and agency		—		99		—		99
Money market funds		345		—		—		345
Sovereign debt		—		1,011		—		1,011
Corporate debt		—		19		—		19
Other assets
Equity		5		—		—		5
Convertible debt		—		—		10		10
Derivatives
Commodity		—		93		—		93
Foreign currency		—		80		—		80
Other		—		44		—		44

Total assets	$	5,215	$	15,000	$	10	$	20,225

Liabilities
Other liabilities
Options	$	—	$	—	$	24	$	24
Derivatives
Foreign currency		—		113		—		113
Commodity		—		9		—		9

Total liabilities	$	—	$	122	$	24	$	146

(a)	Cash and time deposits recorded in Cash and cash equivalents and Restricted cash and marketable securities have been excluded.

269

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor
	Fair Value Measurements on a Recurring Basis at December 31, 2009
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents (a)
United States government and agency	$	—	$	580	$	—	$	580
Certificates of deposit		—		2,140		—		2,140
Money market funds		7,487		—		—		7,487
Commercial paper		—		969		—		969
Marketable securities
Trading securities
Equity		15		17		—		32
Debt		—		92		—		92
Available–for–sale securities
United States government and agency		—		2		—		2
Certificates of deposit		—		8		—		8
Restricted cash and marketable securities (a)
United States government and agency		—		140		—		140
Money market funds		13,083		—		—		13,083
Sovereign debt		—		955		—		955
Other assets
Equity		13		—		—		13
Derivatives
Commodity		—		11		—		11
Foreign currency		—		90		33		123
Other		—		25		—		25

Total assets	$	20,598	$	5,029	$	33	$	25,660

Liabilities
Derivatives
Foreign currency	$	—	$	9	$	705	$	714

Total liabilities	$	—	$	9	$	705	$	714

(a)	Cash and time deposits recorded in Cash and cash equivalents and Restricted cash and marketable securities have been excluded.

Transfers In and/or Out of Level 3

At December 31, 2010 our non-performance risk remains unobservable through a liquid credit default swap market. In the three months ended December 31, 2010 we determined that our non-performance risk no longer represents a significant input in the determination of the fair value of our derivatives. The effect of our non-performance risk in the valuation has been reduced due to the reduction in the remaining duration and magnitude of these net derivative liability positions. In October 2010 we transferred foreign currency derivatives with a fair market value of $183 million out of Level 3 to Level 2.

In the period January 1, 2009 through July 9, 2009 Old GM’s mortgage- and asset-backed securities were transferred out of Level 3 to Level 2 as the significant inputs used to measure fair value and quoted prices for similar instruments were determined to be observable in an active market.

270

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For periods presented from June 1, 2009 through September 30, 2010 nonperformance risk for us and Old GM was not observable through a liquid credit default swap market as a result of the Chapter 11 Proceedings and lack of traded instruments for us after the 363 Sale. As a result, foreign currency derivatives with a fair market value of $1.6 billion were transferred into Level 3 from Level 2 in the period January 1, 2009 through July 9, 2009.

The following tables summarize the activity for financial instruments classified in Level 3 (dollars in millions):


	Successor
	Level 3 Financial Assets and (Liabilities)
	Mortgage- backed Securities		Commodity Derivatives, Net		Foreign Currency Derivatives			Options			Other Securities		Total Net Assets (Liabilities)
Balance at January 1, 2010	$	—	$	—	$	(672	)	$	—		$	—	$	(672	)
Total realized/unrealized gains (losses)
Included in earnings		—		—		103			(3	)		—		100
Included in other comprehensive income (loss)		—		—		(10	)		—			—		(10	)
Purchases, issuances and settlements		—		—		394			(21	)		10		383
Transfer in and/or out of Level 3		—		—		185			—			—		185

Balance at December 31, 2010	$	—	$	—	$	—		$	(24	)	$	10	$	(14	)

Amount of total gains and (losses) in the period included in earnings attributable to the change in unrealized gains or (losses) relating to assets still held at the reporting date	$	—	$	—	$	—		$	(3	)	$	—	$	(3	)


	Successor
	Level 3 Financial Assets and (Liabilities)
	Mortgage- backed Securities		Commodity Derivatives, Net		Foreign Currency Derivatives			Options			Other Securities		Total Net Assets (Liabilities)
Balance at July 10, 2009	$	—	$	—	$	(1,430	)	$	—		$	—	$	(1,430	)
Total realized/unrealized gains (losses)
Included in earnings		—		—		238			—			—		238
Included in other comprehensive income (loss)		—		—		(103	)		—			—		(103	)
Purchases, issuances and settlements		—		—		623			—			—		623
Transfer in and/or out of Level 3		—		—		—			—			—		—

Balance at December 31, 2009	$	—	$	—	$	(672	)	$	—		$	—	$	(672	)

Amount of total gains and (losses) in the period included in earnings attributable to the change in unrealized gains or (losses) relating to assets still held at the reporting date	$	—	$	—	$	214		$	—		$	—	$	214

271

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	Level 3 Financial Assets and (Liabilities)
	Mortgage- backed Securities			Commodity Derivatives, Net			Foreign Currency Derivatives			Other Derivative Instruments			Other Securities			Total Net Assets (Liabilities)
Balance at January 1, 2009	$	49		$	(17	)	$	(2,144	)	$	(164	)	$	17		$	(2,259	)
Total realized/unrealized gains (losses)
Included in earnings		(2	)		13			26			164			(5	)		196
Included in other comprehensive income (loss)		—			—			(2	)		—			—			(2	)
Purchases, issuances and settlements		(14	)		4			105			—			(7	)		88
Transfer in and/or out of Level 3		(33	)		—			585			—			(5	)		547

Balance at July 9, 2009	$	—		$	—		$	(1,430	)	$	—		$	—		$	(1,430	)

Amount of total gains and (losses) in the period included in earnings attributable to the change in unrealized gains or (losses) relating to assets still held at the reporting date	$	—		$	—		$	28		$	—		$	—		$	28

Short-Term and Long-Term Debt

We determined the fair value of debt based on a discounted cash flow model which used benchmark yield curves plus a spread that represented the yields on traded bonds of companies with comparable credit ratings and risk profiles.

The following table summarizes the carrying amount and estimated fair values of short-term and long-term debt (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Carrying amount (a)	$	4,630	$	15,783
Fair value (a)	$	4,840	$	16,024

(a)	Accounts and notes receivable, net and Accounts payable (principally trade) are not included because the carrying amount approximates fair value due to their short-term nature.

Ally Financial Common and Preferred Stock

At December 31, 2010 we estimated the fair value of Ally Financial common stock using a market approach that applies the average price to tangible book value multiples of comparable companies to the consolidated Ally Financial tangible book value. This approach provides our best estimate of the fair value of our investment in Ally Financial common stock at December 31, 2010 due to Ally Financial’s transition to a bank holding company and less readily available information with which to value Ally Financial’s business operations individually. The significant inputs used in our fair value analysis were Ally Financial’s December 31, 2010 financial statements, as well as the financial statements and price to tangible book value multiples of comparable companies in the banking and finance industry.

At December 31, 2009 we estimated the fair value of our investment in Ally Financial common stock using a market approach based on the average price to tangible book value multiples of comparable companies to each of Ally Financial’s Auto Finance, Commercial Finance, Mortgage, and Insurance operations to determine the fair value of the individual operations. These values were aggregated to estimate the fair value of Ally Financial’s common stock. The significant inputs used to determine the appropriate multiple for Ally Financial and used in our analysis were as follows:

•

Ally Financial’s December 31, 2009 financial statements, as well as the financial statements and price to tangible book value multiples of comparable companies in the Auto Finance, Commercial Finance and Insurance industries;

•

Historical segment equity information separately provided by Ally Financial;

272

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

Expected performance of Ally Financial, as well as our view on its ability to access capital markets; and

•

At December 31, 2010 and 2009 we calculated the fair value of our investment in Ally Financial’s preferred stock using a discounted cash flow approach. The present value of the cash flows was determined using assumptions regarding the expected receipt of dividends on Ally Financial’s preferred stock and the expected call date.

The following table summarizes the carrying amount and estimated fair value of Ally Financial common and preferred stock (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Common stock
Carrying amount (a)	$	964	$	970
Fair value	$	1,031	$	970
Preferred stock
Carrying amount	$	665	$	665
Fair value	$	1,055	$	989

(a)	Investment in Ally Financial common stock at December 31, 2010 and 2009 includes the 9.9% and 16.6% held directly and indirectly through an independent trust.

Automotive Financing

Fair Value Measurements on a Recurring Basis

The following table summarizes the financial instruments measured at fair value on a recurring basis (dollars in millions):


	Successor
	Fair Value Measurements on a Recurring Basis at December 31, 2010
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents (a)
Money market funds	$	167	$	—	$	—	$	167
Restricted cash (a)
Money market funds		952		—		—		952
Derivatives
Interest rate swaps (b)		—		—		23		23
Interest rate caps (b)		—		8		—		8

Total assets	$	1,119	$	8	$	23	$	1,150

Liabilities
Derivatives
Interest rate swaps (b)	$	—	$	—	$	47	$	47
Interest rate caps (b)		—		8		—		8
Foreign currency contracts		—		2		—		2

Total liabilities	$		$	10	$	47	$	57

273

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(a)	Cash deposits and cash held in Guaranteed Investment Contracts have been excluded.

(b)	The fair value of interest rate cap and swap derivatives are based upon quoted market prices when available. If quoted prices are not available, the fair value is estimated by discounting future net cash flows expected to be settled using a current risk adjusted rate.

Transfers In and/or Out of Level 3

The following table summarizes the activity for financial instruments classified in Level 3 (dollars in millions):


	Successor
	Assets			(Liabilities)
	Interest Rate Swap Derivatives			Interest Rate Swap Derivatives
Balance at October 1, 2010	$	27		$	(61	)
Transfers in and/or out of Level 3		—			—
Total realized/unrealized gains (losses)
Included in earnings		1			(1	)
Included in other comprehensive income (loss)		—			—
Settlements		(5	)		15

Balance at December 31, 2010	$	23		$	(47	)

The following table summarizes estimated fair values, carrying amounts and various methods and assumptions used in valuing GM Financial’s financial instruments (dollars in millions):


	December 31, 2010
	Carrying Amount		Estimated Fair Value
Financial assets
Finance receivables, net (a)	$	8,197	$	8,186

Financial liabilities
Credit facilities(b)	$	832	$	832
Securitization notes payable (c)	$	6,128	$	6,107
Senior notes and convertible senior notes (c)	$	72	$	72

(a)	The fair value of the finance receivables is estimated based upon forecasted cash flows discounted using a pre-tax weighted-average cost of capital. The forecast includes among other things items such as prepayment, defaults, recoveries and fee income assumptions.

(b)	Credit facilities have variable rates of interest and maturities of three years or less. The carrying amount is considered to be a reasonable estimate of fair value.

(c)

The fair values of the securitization notes payable and senior notes and convertible senior notes are based on quoted market prices, when available. If quoted market prices are not available, the fair value is estimated by discounting future net cash flows expected to be settled using a current risk-adjusted rate.

274

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 25. Restructuring and Other Initiatives

Automotive

We have and Old GM had previously executed various restructuring and other initiatives, and we plan to execute additional initiatives in the future, if necessary, in order to preserve adequate liquidity, to align manufacturing capacity and other costs with prevailing global automotive production and to improve the utilization of remaining facilities. Related charges are recorded in Automotive cost of sales and Automotive selling, general and administrative expense.

Refer to Note 26 for asset impairment charges related to our restructuring initiatives and Note 20 for pension and other postretirement benefit charges resulting from our hourly and salaried employee separation initiatives, including special attrition programs.

GM Financial did not execute any new restructuring initiatives in the three months ended December 31, 2010. Charges and payments for restructuring activities in the three months ended December 31, 2010 related to previously announced programs are not significant.

The following table summarizes Automotive restructuring reserves (excluding restructuring reserves related to dealer wind-down agreements) and charges by segment, including postemployment benefit reserves and charges (dollars in millions):


	Successor
	GMNA			GME			GMIO			GMSA			Total
Balance at July 10, 2009	$	2,905		$	433		$	32		$	16		$	3,386
Additions		44			37			76			9			166
Interest accretion and other		15			35			—			—			50
Payments		(994	)		(61	)		(109	)		(19	)		(1,183	)
Revisions to estimates		30			—			1			(3	)		28
Effect of foreign currency		88			7			3			1			99

Balance at December 31, 2009		2,088			451			3			4			2,546
Additions		50			734			1			2			787
Interest accretion and other		36			114			—			—			150
Payments		(712	)		(589	)		(1	)		(7	)		(1,309	)
Revisions to estimates		(361	)		(8	)		—			1			(368	)
Effect of foreign currency		34			(38	)		—			—			(4	)

Balance at December 31, 2010 (a)	$	1,135		$	664		$	3		$	—		$	1,802

275

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	GMNA			GME			GMIO			GMSA			Total
Balance at January 1, 2008	$	868		$	580		$	—		$	4		$	1,452
Additions		2,165			242			96			34			2,537
Interest accretion and other		41			62			—			—			103
Payments		(745	)		(368	)		(33	)		(20	)		(1,166	)
Revisions to estimates		320			(18	)		—			(3	)		299
Effect of foreign currency		(193	)		(30	)		(18	)		(2	)		(243	)

Balance at December 31, 2008		2,456			468			45			13			2,982
Additions		1,835			20			27			38			1,920
Interest accretion and other		16			11			—			—			27
Payments		(1,014	)		(65	)		(43	)		(48	)		(1,170	)
Revisions to estimates		(401	)		—			—			9			(392	)
Effect of foreign currency		50			(1	)		3			4			56

Balance at July 9, 2009		2,942			433			32			16			3,423
Effect of application of fresh-start reporting		(37	)		—			—			—			(37	)

Ending balance including effect of application of fresh-start reporting	$	2,905		$	433		$	32		$	16		$	3,386

(a)	The remaining cash payments related to these restructuring reserves primarily relate to postemployment benefits to be paid.

GMNA recorded charges, interest accretion and other, and revisions to estimates that decreased the restructuring reserves by $275 million in the year ended December 31, 2010. The decreases were primarily related to increased production capacity utilization, which resulted in the recall of idled employees to fill added shifts at multiple U.S. production sites and revisions to productivity initiatives, partially offset by Canadian restructuring activities.

GME recorded charges, interest accretion and other, and revisions to estimates of $840 million in the year ended December 31, 2010 for separation programs primarily related to the following initiatives:

•

Separation charges of $527 million related to the closure of the Antwerp, Belgium facility which affects 2,600 employees.

•

Separation charges of $72 million and revisions to estimates to decrease the reserve by $9 million related to separation/layoff plans and an early retirement plan in Spain which affects 1,200 employees.

•

Separation charges of $31 million related to a voluntary separation program in the United Kingdom.

•

Separation charges of $95 million and interest accretion and other of $104 million related to a voluntary separation program and previously announced programs in Germany.

We have committed to a restructuring plan for GME, and as of December 31, 2010 we expect to expend up to $1.4 billion. Of this amount $0.8 billion was recorded in 2010 as charges for the separation programs described above. We expect to incur an additional $0.6 billion primarily in 2011 and 2012 to complete these programs. Because these programs involve voluntary separations, no liabilities are recorded until offers to employees are accepted.

276

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GMNA recorded charges, interest accretion and other, and revisions to estimates of $89 million in the period July 10, 2009 through December 31, 2009 for separation programs primarily related to the following initiatives:

•

The restructuring reserves were increased by $213 million due to an increase in the SUB and TSP accrual of $183 million related to capacity actions, productivity initiatives, acquisition of Nexteer and four domestic facilities and Canadian restructuring activities of $30 million.

•

The salaried and hourly workforce severance accruals were reduced by $146 million as a result of elections subsequently made by terminating employees. Such amounts were reclassified as special termination benefits and were funded from the U.S. defined benefit pension plans and other applicable retirement benefit plans.

GME recorded charges, interest accretion and other, and revisions to estimates of $72 million in the period July 10, 2009 through December 31, 2009 primarily related to separation charges for early retirement programs and additional liability adjustments, primarily in Germany.

GMIO recorded charges, interest accretion and other, and revisions to estimates of $77 million in the period July 10, 2009 through December 31, 2009, primarily related to separation charges of $72 million related to restructuring programs in Australia for salaried and hourly employees.

Dealer Wind-downs

We market vehicles worldwide through a network of independent retail dealers and distributors. As part of achieving and sustaining long-term viability and the viability of our dealer network, we determined that a reduction in the number of GMNA dealerships was necessary. At December 31, 2010 there were 5,200 dealers in GMNA compared to 6,500 at December 31, 2009. Certain dealers in the U.S. that had signed wind-down agreements with us elected to file for reinstatement through a binding arbitration process. At December 31, 2010 the arbitration process had been resolved. As a result of the arbitration process we offered 332 dealers reinstatement in their entirety and 460 existing dealers reinstatement of certain brands.

The following table summarizes GMNA’s restructuring reserves related to dealer wind-down agreements in the period July 10, 2009 through December 31, 2009 and in the year ended December 31, 2010 (dollars in millions):


	Successor
	U.S.			Canada and Mexico			Total
Balance at July 10, 2009	$	398		$	118		$	516
Additions		229			46			275
Payments		(167	)		(118	)		(285	)
Transfer to legal reserve		—			(17	)		(17	)
Effect of foreign currency		—			12			12

Balance at December 31, 2009		460			41			501
Revisions to estimates		(2	)		9			7
Payments		(323	)		(43	)		(366	)
Effect of foreign currency		—			2			2

Balance at December 31, 2010	$	135		$	9		$	144

Restructuring reserves related to dealer wind-down agreements in the period July 10, 2009 through December 31, 2009 increased primarily due to additional accruals recorded for wind-down payments to Saturn dealerships in accordance with the deferred termination agreements that Saturn dealers signed.

277

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Old GM

GMNA recorded charges, interest accretion and other, and revisions to estimates of $1.5 billion in the period January 1, 2009 through July 9, 2009 for separation programs related to the following initiatives:

•

Postemployment benefit charges in the U.S. of $825 million related to 13,000 hourly employees who participated in the 2009 Special Attrition Programs.

•

SUB and TSP related charges in the U.S. of $707 million, recorded as an additional liability determined by an actuarial analysis at the implementation of the SUB and TSP and related suspension of the JOBS Program.

•

Revisions to estimates of $401 million to decrease the reserve, primarily related to $335 million for the suspension of the JOBS Program and $141 million for estimated future wages and benefits due to employees who participated in the 2009 Special Attrition Programs; offset by a net increase of $86 million related to Canadian salaried workforce reductions and other restructuring initiatives in Canada.

•

Separation charges of $250 million for a U.S. salaried severance program to allow 6,000 terminated employees to receive ongoing wages and benefits for up to 12 months.

•

Postemployment benefit charges in Canada of $38 million related to 380 hourly employees who participated in a special attrition program at the Oshawa Facility.

GME recorded charges, interest accretion and other, and revisions to estimates of $31 million in the period January 1, 2009 through July 9, 2009 primarily related to separation charges for early retirement programs and additional liability adjustments, primarily in Germany.

GMIO recorded charges, interest accretion and other, and revisions to estimates of $27 million in the period January 1, 2009 through July 9, 2009 primarily related to separation charges in Australia of $19 million related to a facility idling. The program affects employees who left through December 2009.

GMSA recorded charges, interest accretion and other, and revisions to estimates of $47 million in the period January 1, 2009 through July 9, 2009 related to voluntary and involuntary separation programs in South America affecting 3,300 salaried and hourly employees.

GMNA recorded charges, interest accretion and other, and revisions to estimates of $2.5 billion in the year ended December 31, 2008 for separation programs related to the following initiatives:

•

Postemployment benefit costs in the U.S. and Canada of $2.1 billion, which was comprised of $1.7 billion related to previously announced capacity actions and $407 million for special attrition programs.

•

Revisions to estimates that increased the reserve of $320 million.

•

Separation charges of $40 million for a U.S. salaried severance program, which allowed terminated employees to receive ongoing wages and benefits for up to 12 months.

GME recorded charges, interest accretion and other, and revisions to estimates of $286 million in the year ended December 31, 2008 for separation programs related to the following initiatives:

•

Separation charges in Germany of $107 million related to early retirement programs, along with additional minor separations under other current programs.

•

Separation charges in Belgium of $92 million related to current and previously announced programs.

•

Separation charges of $43 million related to separation programs and the cost of previously announced initiatives, which include voluntary separations, in Sweden, the United Kingdom, Spain and France.

278

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GMIO recorded charges, interest accretion and other, and revisions to estimates of $96 million in the year ended December 31, 2008 primarily related to separation charges of $76 million related to a facility idling in Australia.

GMSA recorded charges, interest accretion and other, and revisions to estimates of $31 million in the year ended December 31, 2008 related to separation charges in South America.

Dealer Wind-downs

The following table summarizes GMNA’s restructuring reserves related to dealer wind-down agreements in the period January 1, 2009 through July 9, 2009 (dollars in millions):


	Predecessor
	U.S.		Canada and Mexico			Total
Balance at January 1, 2009	$	—	$	—		$	—
Additions		398		120			518
Payments		—		(2	)		(2	)

Balance at July 9, 2009	$	398	$	118		$	516

279

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 26. Impairments

Automotive

The following table summarizes impairment charges (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
GMNA
Goodwill	$	—	$	—	$	—	$	154
Intangibles assets		—		21		—		—
Product-specific tooling assets		234		1		278		291
Cancelled powertrain programs		—		—		42		120
Equity and cost method investments		—		4		28		119
Vehicles leased to rental car companies		—		—		11		160
Automotive retail leases (a)		—		—		—		220
Other than temporary impairment charges on debt and equity securities (b)		—		—		—		47

Total GMNA impairment charges		234		26		359		1,111
GME
Goodwill		—		—		—		456
Product-specific tooling assets		—		—		237		497
Vehicles leased to rental car companies		49		18		36		222

Total GME impairment charges		49		18		273		1,175
GMIO
Product-specific tooling assets		6		1		7		66
Asset impairment charges related to restructuring initiatives		—		—		—		28

Total GMIO impairment charges		6		1		7		94
GMSA
Product specific tooling assets		—		—		—		6
Asset impairment charges related to restructuring initiatives		—		—		—		2
Other long-lived assets		—		—		2		—

Total GMSA impairment charges		—		—		2		8
Corporate
Other than temporary impairment charges on debt and equity securities (b)		—		—		11		15
Automotive retail leases		—		—		16		157
Ally Financial Common Membership Interests		—		—		—		7,099
Ally Financial common stock		—		270		—		—
Ally Financial Preferred Membership Interests		—		—		—		1,001

Total Corporate impairment charges		—		270		27		8,272

Total impairment charges	$	289	$	315	$	668	$	10,660

(a)	The year ended December 31, 2008 includes an increase in intersegment residual support and risk sharing reserves of $220 million recorded as a reduction of revenue in GMNA.

(b)	Refer to Note 8 and Note 24 for additional information on marketable securities and financial instruments measured at fair value on a recurring basis.

280

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair value measurements, excluding vehicles leased to rental car companies and automotive retail leases, utilized projected cash flows discounted at a rate commensurate with the perceived business risks related to the assets involved. Fair value measurements of vehicles leased to rental car companies utilized projected cash flows from vehicle sales at auction. Fair value measurements of automotive retail leases utilized discounted projected cash flows from lease payments and anticipated future auction proceeds.

The following tables summarize assets measured at fair value (all of which utilized Level 3 inputs) on a nonrecurring basis subsequent to initial recognition (dollars in millions):


	Successor
	Year Ended December 31, 2010 (a)		Fair Value Measurements Using
	Year Ended December 31, 2010 (a)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Year Ended December 31, 2010 Total Losses
Product-specific tooling assets	$	—	$	—	$	—	$	—	$	(240	)
Vehicles leased to rental car companies	$	537-668	$	—	$	—	$	537-668		(49	)

									$	(289	)

(a)	Amounts represent the fair value measure (or range of measures) during the period.


	Successor
	Period Ended December 31, 2009 (a)		Fair Value Measurements Using
	Period Ended December 31, 2009 (a)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		July 10, 2009 Through December 31, 2009 Total Losses
Product-specific tooling assets	$	—	$	—	$	—	$	—	$	(2	)
Equity and cost method investments (other than Ally Financial)	$	1	$	—	$	—	$	1		(4	)
Vehicles leased to rental car companies (b)	$	543 - 567	$	—	$	—	$	543 - 567		(18	)
Ally Financial common stock	$	970	$	—	$	—	$	970		(270	)
Intangible assets	$	—	$	—	$	—	$	—		(21	)

									$	(315	)

(a)	Amounts represent the fair value measure (or range of measures) during the period.

(b)

In the period July 10, 2009 through September 30, 2009 we recorded impairment charges of $12 million to write down vehicles leased to rental car companies to their fair value of $543 million. In the three months ended December 31, 2009 we recorded an impairment charge of $6 million to write down vehicles leased to rental car companies to their fair value of $567 million.

At December 31, 2009 we determined that indicators were present that suggested our investments in Ally Financial common and preferred stock could be impaired. Such indicators included the continuing deterioration in Ally Financial’s mortgage operations, as evidenced by the strategic actions Ally Financial took in December 2009 to position itself to sell certain mortgage assets. These actions resulted in Ally Financial recording an increase in its provision for loan losses of $2.4 billion in the three months ended December 31, 2009. These indicators also included Ally Financial’s receipt of $3.8 billion of additional financial support from the UST on December 30, 2009.

281

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As a result of these impairment indicators, we evaluated the fair value of our investments in Ally Financial common and preferred stock and recorded an impairment charge of $270 million related to our Ally Financial common stock to record the investment at its estimated fair value of $970 million. We determined the fair value of these investments using valuation methodologies that were consistent with those we used in our application of fresh-start reporting. In applying these valuation methodologies at December 31, 2009, however, we updated the analyses to reflect changes in market comparables and other relevant assumptions.

Old GM


	Predecessor
	Period Ended July 9, 2009 (a)		Fair Value Measurements Using						January 1, 2009 Through July 9, 2009 Total Losses
	Period Ended July 9, 2009 (a)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		January 1, 2009 Through July 9, 2009 Total Losses
Product-specific tooling assets (b)	$	0-85	$	—	$	—	$	0-85	$	(522	)
Cancelled powertrain programs	$	—	$	—	$	—	$	—		(42	)
Other long-lived assets	$	—	$	—	$	—	$	—		(2	)
Equity and cost method investments (other than Ally Financial)	$	—	$	—	$	—	$	—		(28	)
Vehicles leased to rental car companies (c)	$	539-2,057	$	—	$	—	$	539-2,057		(47	)
Automotive retail leases	$	1,519	$	—	$	—	$	1,519		(16	)

									$	(657	)

(a)	Amounts represent the fair value measure (or range of measures) during the period.

(b)

In the three months ended March 31, 2009 Old GM recorded impairment charges of $285 million to write down product-specific tooling assets to their fair value of $85 million. In the three months ended June 30, 2009 Old GM recorded impairment charges of $237 million to write down product-specific tooling assets to their fair value of $0.

(c)

In the three months ended March 31, 2009 Old GM recorded impairment charges of $29 million to write down vehicles leased to rental car companies to their fair value $2.1 billion. In the three months ended June 30, 2009 Old GM recorded impairment charges of $17 million to write down vehicles leased to rental car companies to their fair value of $543 million. In the period July 1, 2009 through July 9, 2009 Old GM recorded impairment charges of $1 million to write down vehicles leased to rental car companies to their fair value of $539 million.

Contract Cancellations

The following table summarizes net contract cancellation charges recorded in Automotive cost of sales primarily related to the cancellation of product programs (dollars in millions):


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009
GMNA (a)	$	30	$	80	$	157
GME		3		—		12
GMIO		—		2		8

Total contract cancellations	$	33	$	82	$	177

(a)	The year ended December 31, 2010 includes favorable changes in estimate on contract cancellations of $30 million.

282

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 27. Other Automotive Expenses, net

The following table summarizes the components of Other automotive expenses, net (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Operating and other expenses (income)	$	(7	)	$	(35	)	$	22	$	409
Expenses related to Saab deconsolidation, net (Note 5)		—			(60	)		824		—
Saab impairment charges		—			—			88		—
Delphi related charges (Note 22)		—			8			184		4,797
Depreciation and amortization expense		125			89			101		749
Goodwill impairment charges (Note 26)		—			—			—		610
Interest expense		—			13			16		134

Total other automotive expenses, net	$	118		$	15		$	1,235	$	6,699

Interest expense and depreciation and amortization expense recorded in Other automotive expenses, net relates to a portfolio of automotive retail leases.

Note 28. Interest Income and Other Non-Operating, net

Automotive

The following table summarizes the components of Interest income and other non-operating income, net (dollars in millions):


	Successor					Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Interest income	$	465	$	184		$	183	$	655
Net gains on derivatives		68		278			—		—
Rental income		164		88			100		209
Dividends and royalties		213		105			145		171
Other (a)		645		(215	)		424		(611	)

Total interest income and other non-operating income, net	$	1,555	$	440		$	852	$	424

(a)

Amounts for the year ended December 31, 2010 include a gain on the reversal of an accrual for contingently issuable Adjustment Shares of $162 million, a gain on the sale of Saab of $123 million, a gain on the acquisition of GMS of $66 million and a gain on the sale of Nexteer of $60 million. Amounts for the period July 10, 2009 through December 31, 2009 include impairment charges related to Ally Financial common stock of $270 million. Amounts for the year ended December 31, 2008 include impairment charges related to Ally Financial Preferred Membership Interests of $1.0 billion.

Note 29. Stockholders’ Equity (Deficit) and Noncontrolling Interests

Consolidated

Preferred Stock

We have 2.0 billion shares of preferred stock authorized, with a par value of $0.01 per share.

283

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Series A Preferred Stock

At December 31, 2010 we had 276 million shares of Series A Preferred Stock issued and outstanding. The Series A Preferred Stock ranks senior with respect to liquidation preference and dividend rights to our common stock and Series B Preferred Stock and any other class or series of stock that we may issue. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of our affairs, a holder of Series A Preferred Stock will be entitled to be paid, before any distribution or payment may be made to any holders of common stock or Series B Preferred Stock, the liquidation amount of $25.00 per share and the amount of any accrued and unpaid dividends, if any, whether or not declared, prior to such distribution or payment date. Holders of the Series A Preferred Stock are entitled to receive dividends at the sole discretion of our Board of Directors at a rate of 9.0% per annum. Unless all accrued and unpaid dividends on the Series A Preferred Stock are paid in full, no dividends or distributions may be paid on common stock or Series B Preferred Stock and no shares of common stock or Series B Preferred Stock may be purchased or redeemed by us (subject to certain exceptions that are specified in the certificate of designations for the Series A Preferred Stock). Dividends, if declared, will be payable on March 15, June 15, September 15 and December 15 of each year. In the year ended December 31, 2010 we paid dividends on our Series A Preferred Stock of $810 million or $2.25 per share. In the year ended December 31, 2009 we paid dividends on our Series A Preferred Stock of $349 million or $0.97 per share. We may not redeem the Series A Preferred Stock prior to December 31, 2014. On or after December 31, 2014, the Series A Preferred Stock may be redeemed, in whole or in part, for cash at a price per share equal to the $25.00 per share liquidation amount, plus any accrued and unpaid dividends.

The Series A Preferred Stock was originally classified as temporary equity because the holders of Series A Preferred Stock, as a class, owned greater than 50% of our common stock and therefore had the ability to exert control, through its power to vote for the election of our directors, over various matters, including compelling us to redeem the Series A Preferred Stock when it becomes callable by us on or after December 31, 2014. In December 2010 we purchased 84 million shares of Series A Preferred Stock, held by the UST, at a price equal to 102% of the aggregate liquidation amount, for $2.1 billion. The purchase of the UST’s Series A Preferred Stock resulted in a charge of $0.7 billion recorded in Cumulative dividends on and charge related to purchase of preferred stock. Upon the purchase of the Series A Preferred Stock held by the UST, the Series A Preferred Stock held by Canada Holdings and the New VEBA was reclassified to permanent equity at its carrying amount of $5.5 billion because the remaining holders of our Series A Preferred Stock, Canada Holdings and the New VEBA, do not own a majority of our common stock and therefore do not have the ability to exert control, through the power to vote for the election of our directors, over various matters, including compelling us to redeem the Series A Preferred Stock when it becomes callable by us on or after December 31, 2014. Upon a redemption or purchase of any or all Series A Preferred Stock, the difference, if any, between the recorded amount of the Series A Preferred Stock being redeemed or purchased and the consideration paid would be recorded as a charge to Net income attributable to common stockholders. If all of the Series A preferred Stock were to be redeemed or purchased at its par value, the amount of the charge would be $1.4 billion.

Series B Preferred Stock

At December 31, 2010 we had 100 million shares of Series B Preferred Stock issued and outstanding. The Series B Preferred Stock, with respect to dividend rights and rights upon our liquidation, winding-up or dissolution, ranks: (1) senior to our common stock and to each other class of capital stock or series of preferred stock the terms of which do not expressly provide that such class or series ranks senior to, or on a parity with, the Series B Preferred Stock; (2) on a parity with any class of capital stock or series of preferred stock the terms of which expressly provide that such class or series will rank on a parity with the Series B Preferred Stock; (3) junior to our Series A Preferred Stock and to each class of capital stock or series of preferred stock the terms of which expressly provide that such class or series will rank senior to the Series B Preferred Stock; and (4) junior to all of our existing and future debt obligations. Holders of our Series B Preferred Stock are entitled to dividends that accumulate at a rate of 4.75% per annum. Dividends, if declared based on the sole discretion of our Board of Directors, will be payable on March 1, June 1, September 1 and December 1. The Series B Preferred Stock is not redeemable and has a liquidation preference in the amount of $50.00 per share. The holders of the Series B Preferred Stock do not have voting rights, except with respect to certain fundamental changes in the terms of the Series B Preferred Stock, in the case of certain dividend arrearages and as required under Delaware law. Each share of the Series B Preferred Stock, unless previously converted, will automatically convert on December 1, 2013 (mandatory conversion date) into a number of shares of

284

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

our common stock. The number of shares of our common stock issuable upon conversion of each share of Series B Preferred Stock on the mandatory conversion date, is determined based on the applicable market value of our common stock subject to anti-dilution adjustments and accumulated and unpaid dividends. The applicable market value of our common stock is the average of the closing prices of our common stock over the 40 consecutive trading day period ending on the third trading day immediately preceding the mandatory conversion date. Holders of the Series B Preferred Stock have the right to convert their shares at any time prior to the mandatory conversion date at a conversion ratio of 1.2626 shares of our common stock for each share of the Series B Preferred Stock that is optionally converted, subject to anti-dilution, make-whole and other adjustments.

If the applicable market value of our common stock upon mandatory conversion falls within a price range of $33.00 to $39.60 per common share, the holder receives a variable number of shares of our common stock with a value equal to the security’s liquidation value of $50.00 per share (plus accumulated dividends on the Series B Preferred Stock). If the applicable market value of our common stock upon mandatory conversion is above or below the price range of $33.00 to $39.60 per common share, the Series B Preferred Stock converts into a fixed number of shares of our common stock based on a fixed conversion ratio. The fixed conversion ratio will be 1.2626 shares of common stock for each share of Series B Preferred Stock when the applicable market value of our common stock is greater than $39.60. The fixed conversion ratio will be 1.5152 shares of common stock for each share of Series B Preferred Stock when the applicable market value of our common stock is less than $33.00. The fixed conversion ratios will be adjusted for events that would otherwise dilute a Series B Preferred Stock holder’s interest. These anti-dilution provisions provide a holder of the Series B Preferred Stock a right to participate in our undistributed earnings because a dividend, if declared, would result in a transfer of value to the holder through an adjustment to the fixed conversion ratios. Based on the nature of the Series B Preferred Stock and the nature of these anti-dilution provisions, we have concluded that the Series B Preferred Stock is a participating security and, as such, the application of the two-class method for computing earnings per share is required. Under the two-class method for computing earnings per share, undistributed earnings will be allocated to the Series B Preferred Stock in each period in which the applicable market value of our common stock is above or below the price range of $33.00 to $39.60 per common share. The amount of the undistributed earnings to be allocated to the Series B Preferred Stock is based on the terms of the anti-dilution provisions and reflects the incremental value above the $50.00 per share liquidation value that the holder would receive if the market value of our common stock falls outside the price range of $33.00 to $39.60. When the applicable market value of our common stock falls within the price range of $33.00 to $39.60 per common share, no undistributed earnings will be allocated to the Series B Preferred Stock for earnings per share purposes because a holder of Series B Preferred Stock is entitled only to the security’s liquidation value of $50.00 per share (plus accumulated dividends on the Series B Preferred Stock) upon mandatory conversion and therefore does not participate in earnings. For purposes of computing diluted earnings per share, the if-converted method will be used to the extent that the result is more dilutive than the application of the two-class method.

Common Stock

We have 5.0 billion shares of common stock authorized, with a par value of $0.01 per share. At December 31, 2010 and 2009 we had 1.5 billion shares issued and outstanding. Holders of our common stock are entitled to dividends at the sole discretion of our Board of Directors. However, the terms of the Series A Preferred Stock and Series B Preferred Stock prohibit, subject to exceptions, the payment of dividends on our common stock, unless all accrued and unpaid dividends on the Series A Preferred Stock and Series B Preferred Stock are paid in full. Holders of common stock are entitled to one vote per share on all matters submitted to our stockholders for a vote. The liquidation rights of holders of our common stock are secondary to the payment or provision for payment of all our debts and liabilities and to holders of our Series A Preferred Stock and Series B Preferred Stock, if any such shares are then outstanding.

Warrants

In connection with the 363 Sale, we issued two warrants, each to acquire 136 million shares of common stock, to MLC and one warrant to acquire 46 million shares of common stock to the New VEBA. The first of the MLC warrants is exercisable at any time prior to July 10, 2016 at an exercise price of $10.00 per share, and the second of the MLC warrants is exercisable at any time prior to July 10, 2019 at an exercise price of $18.33 per share. The New VEBA warrant is exercisable at any time prior to December 31, 2015

285

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

at an exercise price of $42.31 per share. The number of shares of common stock underlying each of the warrants and the per share exercise price thereof are subject to adjustment as a result of certain events, including stock splits, reverse stock splits and stock dividends.

Noncontrolling Interests

In October 2009 we completed our participation in an equity rights offering in GM Daewoo, a majority-owned and consolidated subsidiary, for Korean Won 491 billion (equivalent to $417 million when entered into). As a result of the participation in the equity rights offering, our ownership interest in GM Daewoo increased from 50.9% to 70.1%. Funds from our UST escrow account were utilized for this rights offering.

In December 2009 we acquired the remaining noncontrolling interest of CAMI from Suzuki Motor Corporation for $100 million increasing our ownership interest from 50% to 100%. This transaction resulted in no charge to Capital surplus.

The table below summarizes the changes in equity resulting from Net loss attributable to common stockholders and transfers from (to) noncontrolling interests (dollars in millions):


	Successor
	July 10, 2009 Through December 31, 2009
Net loss attributable to common stockholders	$	(4,428	)
Increase in capital surplus resulting from GM Daewoo equity rights offering		108

Changes from net loss attributable to common stockholders and transfers from (to) noncontrolling interests	$	(4,320	)

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the components of Accumulated other comprehensive income (loss), net of taxes (dollars in millions):


	Successor						Predecessor
	December 31, 2010			December 31, 2009			December 31, 2008
Foreign currency translation gain (loss)	$	394		$	157		$	(2,122	)
Cash flow hedging losses, net		(23	)		(1	)		(490	)
Net unrealized gain (loss) on securities		(5	)		2			(33	)
Defined benefit plans, net		885			1,430			(29,694	)

Accumulated other comprehensive income (loss)	$	1,251		$	1,588		$	(32,339	)

286

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Comprehensive Income (Loss)

The following tables summarize the components of Other comprehensive income (loss) attributable to common stockholders (dollars in millions):


	Successor
	Year Ended December 31, 2010								July 10, 2009 Through December 31, 2009
	Pre-tax Amount			Tax Expense (Benefit)		Net Amount			Pre-tax Amount			Tax Expense (Benefit)		Net Amount
Foreign currency translation gain	$	210		$	—	$	210		$	135		$	11	$	124
Cash flow hedging losses, net		(22	)		—		(22	)		(1	)		—		(1	)
Unrealized gain (loss) on securities		(7	)		—		(7	)		7			5		2
Defined benefit plans
Prior service benefit (cost) from plan amendments		7			1		6			112			130		(18	)
Less: amortization of prior service cost included in net periodic benefit cost		(12	)		—		(12	)		—			—		—

Net prior service cost		(5	)		1		(6	)		112			130		(18	)
Actuarial gain (loss) from plan measurements		(530	)		34		(564	)		2,702			1,247		1,455
Less: amortization of actuarial gain (loss) included in net periodic benefit cost		25			—		25			(6	)		1		(7	)

Net actuarial amounts		(505	)		34		(539	)		2,696			1,248		1,448

Defined benefit plans, net		(510	)		35		(545	)		2,808			1,378		1,430

Other comprehensive income (loss)		(329	)		35		(364	)		2,949			1,394		1,555
Less: other comprehensive loss attributable to noncontrolling interests		(13	)		—		(13	)		(33	)		—		(33	)

Other comprehensive income (loss) attributable to common stockholders	$	(316	)	$	35	$	(351	)	$	2,982		$	1,394	$	1,588

287

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	January 1, 2009 Through July 9, 2009									Year Ended December 31, 2008
	Pre-tax Amount			Tax Expense (Benefit)			Net Amount			Pre-tax Amount			Tax Expense (Benefit)			Net Amount
Foreign currency translation gain (loss)	$	187		$	40		$	147		$	(1,289	)	$	27		$	(1,316	)
Cash flow hedging gains (losses), net		145			(131	)		276			(1,284	)		(53	)		(1,231	)
Unrealized gain (loss) on securities		46			—			46			(298	)		—			(298	)
Defined benefit plans
Prior service benefit (cost) from plan amendments		(3,882	)		(1,551	)		(2,331	)		449			(1	)		450
Less: amortization of prior service cost included in net periodic benefit cost		5,162			3			5,159			(5,063	)		284			(5,347	)

Net prior service benefit (cost)		1,280			(1,548	)		2,828			(4,614	)		283			(4,897	)
Actuarial loss from plan measurements		(2,574	)		1,532			(4,106	)		(14,684	)		(120	)		(14,564	)
Less: amortization of actuarial loss included in net periodic benefit cost		(2,109	)		22			(2,131	)		3,524			159			3,365

Net actuarial amounts		(4,683	)		1,554			(6,237	)		(11,160	)		39			(11,199	)
Net transition assets from plan initiations		6			1			5			—			—			—
Less: amortization of transition asset /obligation included in net periodic benefit cost		(5	)		(1	)		(4	)		11			3			8

Net transition amounts		1			—			1			11			3			8
Defined benefit plans, net		(3,402	)		6			(3,408	)		(15,763	)		325			(16,088	)

Other comprehensive income (loss)		(3,024	)		(85	)		(2,939	)		(18,634	)		299			(18,933	)
Less: other comprehensive income (loss) attributable to noncontrolling interests		92			—			92			(581	)		—			(581	)

Other comprehensive income (loss) attributable to common stockholders	$	(3,116	)	$	(85	)	$	(3,031	)	$	(18,053	)	$	299		$	(18,352	)

Note 30. Earnings (Loss) Per Share

Basic and diluted earnings (loss) per share was computed by dividing Net income (loss) attributable to common stockholders by the weighted-average common shares outstanding in the period. Diluted earnings (loss) per share was computed by giving effect to all potentially dilutive securities that were outstanding.

The following table summarizes basic and diluted earnings (loss) per share (in millions, except for per share amounts):

288

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor					Predecessor
	Year Ended December 31, 2010 (a)		July 10, 2009 Through December 31, 2009 (b)			January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Basic
Net income (loss) attributable to common stockholders — basic	$	4,668	$	(4,428	)	$	109,118	$	(30,943	)
Addition of preferred dividends to holders of Series B Preferred Stock		25		—			—		—

Net income (loss) attributable to common stockholders-diluted	$	4,693	$	(4,428	)	$	109,118	$	(30,943	)

Basic and Diluted shares
Weighted-average common shares outstanding-basic		1,500		1,238			611		579
Dilutive effect of warrants		106		—			—		—
Dilutive effect of conversion of Series B Preferred Stock		17		—			—		—
Dilutive effect of RSUs		1		—			—		—

Weighted-average common shares outstanding-diluted		1,624		1,238			611		579

Basic earnings per share	$	3.11	$	(3.58	)	$	178.63	$	(53.47	)
Diluted earnings per share	$	2.89	$	(3.58	)	$	178.55	$	(53.47	)

(a)	The year ended December 31, 2010 includes earned but undeclared dividends of $26 million on our Series A Preferred Stock and $25 million on our Series B Preferred Stock, which decreases Net income attributable to common stockholders.

(b)

The period July 10, 2009 through December 31, 2009 includes accumulated but undeclared dividends of $34 million on Series A Preferred Stock, which increases Net loss attributable to common stockholders, and excludes dividends of $252 million on Series A Preferred Stock, which were paid to the New VEBA prior to December 31, 2009. The 260 million shares of Series A Preferred Stock issued to the New VEBA were not considered outstanding until December 31, 2009 due to the terms of the 2009 UAW Retiree Settlement Agreement.

In the year ended December 31, 2010 we considered potentially dilutive securities in our diluted earnings per share computation under the treasury stock method. In periods prior to our public offering, we utilized an average stock price based upon estimates of the fair value of our common stock. Subsequent to our public offering, we used the New York Stock Exchange price.

In the year ended December 31, 2010 because the market value of our common stock was within the price range of $33.00 to $39.60 per common share no undistributed earnings were allocated to our Series B Preferred Stock under the two-class method for purposes of calculating basic earnings per share. The dilutive effect of these securities was determined by assuming conversion of the securities at issuance resulting in an increase to the weighted-average common shares outstanding and an increase to Net income attributable to common stockholders for accumulated dividends on our Series B Preferred Stock.

In the year ended December 31, 2010 warrants to purchase 318 million shares were outstanding, of which 46 million were not included in the computation of diluted earnings per share because the warrants’ exercise price was greater than the average market price of the common shares. Under the treasury stock method, the assumed exercise of the remaining 272 million warrants resulted in 106 million dilutive shares for the year ended December 31, 2010.

In the year ended December 31, 2010 diluted earnings per share included the assumed issuance of unvested restricted stock units (RSUs) granted to certain global executives. The dilutive effect of the RSUs was included only for the period subsequent to our public offering as the RSUs prior were accounted for as liability awards prior to that date. At December 31, 2010 there were 11 million unvested RSUs outstanding.

289

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the period July 10, 2009 through December 31, 2009, outstanding warrants to purchase 272 million shares of common stock were not included in the computation of diluted loss per share because the effect would have been antidilutive and RSUs were excluded from the computation of diluted earnings per share as these awards were payable in cash during that time. At December 31, 2009 there were 1 million RSUs outstanding.

In the year ended December 31, 2010 and the period July 10, 2009 through December 31, 2009 the Adjustment Shares were excluded from the computation of basic and diluted earnings per share as the condition that would result in the issuance of the Adjustment Shares was not satisfied.

The 61 million shares of common stock contributed to our pension plan in January 2011 will not be included in the computation of earnings per share until they meet the criteria to qualify as plan assets for accounting purposes.

Old GM

In the period January 1, 2009 through July 9, 2009 diluted earnings per share included the potential effect of the assumed exercise of certain stock options. Old GM excluded 208 million of stock options and warrants in the computation of diluted earnings per share because the exercise price was greater than the average market price of the common shares.

Due to Old GM’s net losses in the year ended December 31, 2008, the assumed exercise of stock options and warrants had an antidilutive effect and therefore was excluded from the computation of diluted loss per share. Old GM excluded 101 million such options and warrants in the computation of diluted loss per share.

No shares potentially issuable to satisfy the in-the-money amount of Old GM’s convertible debentures have been included in the computation of diluted income (loss) per share for the period January 1, 2009 through July 9, 2009 and in the year ended December 31, 2008 as the conversion options in various series of convertible debentures were not in-the-money.

Note 31. Stock Incentive Plans

Consolidated

Our stock incentive plans consist of the 2009 Long-Term Incentive Plan as amended December 22, 2010 (2009 GMLTIP) and the Salary Stock Plan as amended October 5, 2010 (GMSSP). Both plans are administered by the Executive Compensation Committee of our Board of Directors. The aggregate number of shares with respect to which awards may be granted under these plans shall not exceed 75 million.

The following table summarizes compensation expense and total Income tax expense recorded for our stock incentive plans (dollars in millions):


	Successor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009
Compensation expense (a)	$	235	$	23
Income tax expense (b)	$	—	$	8

(a)	Includes an insignificant amount of restricted stock granted in December 2010.

(b)	Income tax expense does not include U.S. and non-U.S. jurisdictions which have full valuation allowances.

290

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-Term Incentive Plan

In 2010 we granted RSUs to certain global executives under the 2009 GMLTIP. We granted 15 million RSUs valued at the grant date fair value of our common stock in the year ended December 31, 2010 and no RSUs under this plan in the period June 10, 2009 through December 31, 2009. Awards granted under the 2009 GMLTIP will generally vest over a three year service period. Compensation cost for these awards are recorded on a straight-line basis over the vesting period. Our policy is to issue new shares upon settlement of RSUs.

The awards for the Top 25 highest compensated employees will settle three years from the grant date in 25% increments in conjunction with each 25% of our Troubled Asset Relief Program (TARP) obligations that are repaid. The awards for the non-top 25 highest compensated employees will settle after three years in 25% increments in conjunction with each 25% of the U.S. and Canadian government loans that are repaid. The U.S. and Canadian government loans were fully repaid in April 2010, thus these awards will be settled upon completion of the remaining three year service period.

Retirement eligible participants that are non-top 25 highest compensated employees who retire during the service period will retain and vest in a pro-rata portion of RSUs earned. The vested award will be payable on the third anniversary date of the grant. Compensation cost for these employees is recognized on a straight-line basis over the requisite service period.

Prior to our public offering, all RSU awards were classified as liability awards as they were payable in cash. On November 18, 2010 we reclassified all of the RSU liability awards to equity for those awards that became payable in shares in accordance with the plan terms.

Salary Stock

In November 2009 we initiated a salary stock program for certain global executives under the GMSSP whereby, a portion of each participant’s total annual compensation was accrued and converted to RSUs at each salary payment date. In 2010 a portion of each participant’s salary accrued on each salary payment date converted to RSUs on a quarterly basis. Our policy is to issue new shares upon settlement of these awards.

The awards are fully vested and nonforfeitable upon grant, therefore compensation cost is fully recognized on the date of grant. The awards are settled quarterly over a three year period commencing on the first anniversary date of grant. Under the terms of the plan, each installment is now redeemable one year earlier from the original settlement date as we have repaid the financial assistance we received from the UST under the TARP program in 2010. Prior to our public offering, all RSU awards were classified as liability awards as they were payable in cash. On November 18, 2010 we reclassified all of the RSU liability awards to equity for those awards that became payable in shares in accordance with the plan terms.

The compensation cost of each RSU granted under the 2009 GMLTIP and GMSSP that will be settled in equity is based on the fair value of our common stock on the date of grant or, for those RSUs reclassified from liability to equity-based awards, the fair value of our common stock as of the date of the public offering.

291

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes our RSU activity under the 2009 GMLTIP and GMSSP in the period July 10, 2009 through December 31, 2010 (RSUs in millions):


	Successor
	RSUs
	Shares			Weighted- Average Grant Date Fair Value		Weighted- Average Remaining Contractual Term
RSUs outstanding at July 10, 2009		—		$	—
Granted		1.1		$	16.39
Settled		—		$	—
Forfeited or expired		—		$	—

RSUs outstanding at December 31, 2009		1.1		$	16.39
Granted		17.2		$	19.17
Settled		(0.3	)	$	16.39
Forfeited or expired		(0.8	)	$	18.80

RSUs outstanding at December 31, 2010		17.2		$	19.03		1.8

RSUs unvested and expected to vest at December 31, 2010		11.9		$	18.82		2.2

RSUs vested and payable at December 31, 2010		4.7		$	19.58		—

At December 31, 2010 the total unrecognized compensation expense for nonvested equity awards granted under the 2009 GMLTIP was $313 million. This expense is expected to be recorded over a weighted-average period of 2.2 years.

In the year ended December 31, 2010 total payments for 291,753 RSUs settled under the GMSSP was $5 million.

Old GM

Old GM had various stock incentive plans which were administered by either its Executive Compensation Committee of its Board of Directors or its Vice President of Human Resources. Stock incentive awards consisted of stock options, market-contingent stock options, stock performance awards and cash-based restricted stock units. Stock incentive awards, some of which were subject to performance conditions, were granted at fair value and were subject to various vesting conditions. In connection with the 363 Sale, MLC retained the responsibility for administering Old GM’s stock incentive plans. We have recorded no compensation expense related to Old GM’s stock incentive plans subsequent to July 9, 2009.

The following table summarizes compensation expense (benefit) and total Income tax expense (benefit) recorded for the Old GM Stock Incentive Plans (dollars in millions):


	Predecessor
	January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Compensation expense (benefit)	$	(10	)	$	(65	)
Income tax expense (benefit) (a)	$	—		$	3

(a)	Income tax expense (benefit) does not include U.S. and non-U.S. jurisdictions which have full valuation allowances.

292

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 32. Transactions with Ally Financial

Automotive

Old GM entered into various operating and financing arrangements with Ally Financial, a related party, and in connection with the 363 Sale we assumed the terms and conditions of these arrangements. The following tables describe the financial statement effects of and maximum obligations under these agreements (dollars in millions):


	Successor
	December 31, 2010			December 31, 2009
Operating lease residuals
Residual support (a)
Liabilities (receivables) recorded	$	(24	)	$	369
Maximum obligation	$	523		$	1,159
Risk sharing (a)
Liabilities recorded	$	269		$	366
Maximum obligation	$	692		$	1,392
Note payable to Ally Financial	$	—		$	35
Vehicle repurchase obligations
Maximum obligations	$	18,807		$	14,249
Fair value of guarantee	$	21		$	46

(a)

Represents liabilities (receivables) recorded and maximum obligations for agreements entered into prior to December 31, 2008. Agreements entered into in 2010 and 2009 do not include residual support or risk sharing programs. In the year ended December 31, 2010 favorable adjustments to our residual support and risk sharing liabilities of $0.6 billion were recorded in the U.S. due to increases in estimated residual values.


	Successor				Predecessor
	Year Ended December 31, 2010		July 10, 2009 Through December 31, 2009		January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Marketing incentives and operating lease residual payments (a)	$	1,111	$	695	$	601	$	3,400
Exclusivity fee revenue	$	99	$	47	$	52	$	105
Royalty income	$	15	$	7	$	8	$	16

(a)	Payments to Ally Financial related to U.S. marketing incentive and operating lease residual programs. Excludes payments to Ally Financial related to the contractual exposure limit, as subsequently discussed.

Marketing Incentives and Operating Lease Residuals

As a marketing incentive, interest rate support, residual support, risk sharing, capitalized cost reduction and lease pull-ahead programs are initiated as a way to lower customers’ monthly lease and retail contractual payments.

Under an interest rate support program, Ally Financial is paid an amount at the time of lease or retail contract origination to adjust the interest rate in the retail contract or implicit in the lease below Ally Financial’s standard interest rate. Such marketing incentives are referred to as rate support or subvention and the amount paid at contract origination represents the present value of the difference between the customer’s contractual rate and Ally Financial’s standard rate for a given program.

Under a residual support program, a customer’s contract residual value is adjusted above Ally Financial’s standard residual value. Ally Financial is reimbursed to the extent that sales proceeds are less than the customer’s contract residual value, limited to Ally

293

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial’s standard residual value. As it relates to Ally Financial’s U.S. lease originations and U.S. balloon retail contract originations occurring after April 30, 2006, Old GM agreed to pay the present value of the expected residual support owed to Ally Financial at the time of contract origination as opposed to after contract termination when the off-lease vehicles are sold. The actual residual support amount owed to Ally Financial is calculated as the contracts terminate and, in cases where the actual amount differs from the expected amount paid at contract origination, the difference is paid to or paid by Ally Financial, depending if sales proceeds are lower or higher than estimated at contract origination.

Under a risk-sharing arrangement, residual losses are shared equally with Ally Financial to the extent that remarketing proceeds are below Ally Financial’s standard residual value (limited to a floor). As a result of revisions to the risk-sharing arrangement, Old GM agreed to pay Ally Financial a quarterly fee through 2014.

In the event it is publicly announced that a GM vehicle brand will be discontinued, phased-out, sold or other strategic options are being considered, the residual value of the related vehicles may change. If such an announcement in the U.S. or Canada results in an estimated decrease in the residual value of the related vehicles, Ally Financial will be reimbursed for the estimated decrease for certain vehicles for a certain period of time. If such an announcement results in an increase in the residual value of the related vehicles, Ally Financial will pay the increase in the sale proceeds received at auction.

Under a capitalized cost reduction program, Ally Financial is paid an amount at the time of lease or retail contract origination to reduce the principal amount implicit in the lease or retail contract below the standard manufacturers’ suggested retail price.

Under a lease pull-ahead program, a customer is encouraged to terminate their lease early and buy or lease a new GM vehicle. As part of such a program, Ally Financial waives the customer’s remaining payment obligation under their current lease, and Ally Financial is compensated for any foregone revenue from the waived payments. Since these programs generally accelerate the resale of the vehicle, the proceeds are typically higher than if the vehicle had been sold at contract maturity. The reimbursement to Ally Financial for the foregone payments is reduced by the amount of this benefit. Anticipated payments are made to Ally Financial each month based on the estimated number of customers expected to participate in a lease-pull ahead program. These estimates are adjusted once all vehicles that could have been pulled-ahead have terminated and the vehicles have been sold. Any differences between the estimates and the actual amounts owed to or from Ally Financial are subsequently settled.

In May 2009 Old GM entered into the Amended and Restated United States Consumer Financing Services Agreement (Amended Financing Agreement) with an effective date of December 29, 2008. The terms of the Amended Financing Agreement included conditions of interest rate support, residual support, risk sharing, capitalized cost reduction, and lease pull-ahead programs.

Exclusivity Arrangement

In November 2006 Old GM granted Ally Financial exclusivity for U.S., Canadian and international GM-sponsored consumer and wholesale marketing incentives for products in specified markets around the world, with the exception of Saturn branded products. In return for exclusivity, Ally Financial paid an annual exclusivity fee of $105 million ($75 million for the U.S. retail business, $15 million for the Canadian retail business, $10 million for the international operations retail business, and $5 million for the dealer business).

As a result of the Amended Financing Agreement, Old GM and Ally Financial agreed to modify certain terms related to the exclusivity arrangements: (1) for a two-year period, retail financing incentive programs can be offered through a third party financing source under certain specified circumstances, and in some cases subject to the limitation that pricing offered by such third party meets certain restrictions, and after such two-year period any such incentive programs can be offered on a graduated basis through third parties on a non-exclusive, side-by-side basis with Ally Financial provided that pricing with such third parties meets certain requirements; (2) Ally Financial has no obligation to provide financing; and (3) Ally Financial has no targets against which it could be assessed penalties. After December 24, 2013 we will have the right to offer retail financing incentive programs through any third party financing source, including Ally Financial, without any restrictions or limitations.

294

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Beginning in 2009 under the Amended Financing Agreement, Old GM agreed to pro-rate the exclusivity fee in the U.S. and Canada under certain circumstances if incentives were offered through a third party financing source. The international exclusivity fee arrangement remains unchanged and the dealer exclusivity fee was terminated.

In December 2008 Old GM and FIM Holdings entered into the Ally Financial Exchange Agreement with Ally Financial. Pursuant to the Ally Financial Exchange Agreement, Old GM and FIM Holdings exchanged their respective amounts funded under the Ally Financial Participation Agreement for 79,368 Class B Common Membership Interests and 82,608 Class A Common Membership Interests. As the carrying amount of the amount funded under the Ally Financial Participation Agreement approximated fair value, Old GM did not recognize a gain or loss on the exchange.

Contractual Exposure Limit

An agreement between Ally Financial and Old GM limited certain unsecured obligations arising from service agreements to Ally Financial in the U.S. to $1.5 billion. In accordance with the Amended Financing Agreement, Old GM and Ally Financial agreed to increase the probable potential unsecured exposure limit from $1.5 billion in the United States to $2.1 billion globally. Ally Financial’s maximum potential unsecured exposure to us cannot exceed $4.1 billion globally. Old GM and Ally Financial also agreed to reduce the global unsecured obligation limit from $2.1 billion to $1.5 billion at December 31, 2010. Old GM and Ally Financial agreed that the sum of the maximum unsecured and committed secured exposures at December 31, 2010 will not exceed the greater of $3.0 billion or 15% of Ally Financial’s capital.

Vehicle Repurchase Obligations

In May 2009 Old GM and Ally Financial agreed to expand Old GM’s repurchase obligations for Ally Financial financed inventory at certain dealers in Europe, Asia, Brazil and Mexico. In November 2008 Old GM and Ally Financial agreed to expand repurchase obligations for Ally Financial financed inventory at certain dealers in the United States and Canada. The current agreement with Ally Financial requires the repurchase of Ally Financial financed inventory invoiced to dealers after September 1, 2008, with limited exclusions, in the event of a qualifying voluntary or involuntary termination of the dealer’s sales and service agreement. Repurchase obligations exclude vehicles which are damaged, have excessive mileage or have been altered. The repurchase obligation ended in August 2010 for vehicles invoiced through August 2009, ends in August 2011 for vehicles invoiced through August 2010 and ends August 2012 for vehicles invoiced through August 2011.

The maximum potential amount of future payments required to be made to Ally Financial under this guarantee is based on the repurchase value of total eligible vehicles financed by Ally Financial in dealer stock. If vehicles are required to be repurchased under this arrangement, the total exposure would be reduced to the extent vehicles are able to be resold to another dealer. The fair value of the guarantee, which considers the likelihood of dealers terminating and estimated loss exposure for ultimate disposition of vehicles, was recorded as a reduction of revenue.

Automotive Retail Leases

In November 2006 Ally Financial transferred automotive retail leases to Old GM, along with related debt and other assets. Ally Financial retained an investment in a note, which is secured by the automotive retail leases. Ally Financial continues to service the portfolio of automotive retail leases and related debt and receives a servicing fee. Ally Financial is obligated, as servicer, to repurchase any equipment on operating leases that are in breach of any of the covenants in the securitization agreements. In addition, in a number of the transactions securitizing the equipment on operating leases, the trusts issued one or more series of floating rate debt obligations and entered into derivative transactions to eliminate the market risk associated with funding the fixed payment lease assets with floating interest rate debt. To facilitate these securitization transactions, Ally Financial entered into secondary derivative transactions with the primary derivative counterparties, essentially offsetting the primary derivatives. As part of the transfer, Old GM assumed the rights and obligations of the primary derivative while Ally Financial retained the secondary, leaving both companies

295

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

exposed to market value movements of their respective derivatives. Old GM subsequently entered into derivative transactions with Ally Financial that are intended to offset the exposure each party has to its component of the primary and secondary derivatives.

Royalty Arrangement

For certain insurance products, Old GM entered into 10-year intellectual property license agreements with Ally Financial giving Ally Financial the right to use the GM name on certain products. In exchange, Ally Financial pays a royalty fee of 3.25% of revenue, net of cancellations, related to these products with a minimum annual guarantee of $15 million in the United States.

Balance Sheet

The following table summarizes the balance sheet effects of transactions with Ally Financial (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Assets
Accounts and notes receivable, net (a)	$	290	$	404
Restricted cash and marketable securities (b)	$	—	$	127
Other assets (c)	$	26	$	27
Liabilities
Accounts payable (d)	$	168	$	131
Short-term debt and current portion of long-term debt (e)	$	1,043	$	1,077
Accrued liabilities and other liabilities (f)	$	1,167	$	817
Long-term debt (g)	$	43	$	59
Other non-current liabilities (h)	$	84	$	383

(a)	Represents wholesale settlements due from Ally Financial, amounts owed by Ally Financial with respect to automotive retail leases and receivables for exclusivity fees and royalties.

(b)	Represents certificates of deposit purchased from Ally Financial that are pledged as collateral for certain guarantees provided to Ally Financial in Brazil in connection with dealer floor plan financing.

(c)	Primarily represents distributions due from Ally Financial on our investments in Ally Financial preferred stock.

(d)	Primarily represents amounts billed to us and payable related to incentive programs.

(e)

Represents wholesale financing, sales of receivable transactions and the short-term portion of term loans provided to certain dealerships which we own or in which we have an equity interest. It includes borrowing arrangements with various foreign locations and arrangements related to Ally Financial’s funding of company-owned vehicles, rental car vehicles awaiting sale at auction and funding of the sale of vehicles to which title is retained while the vehicles are consigned to Ally Financial or dealers, primarily in the United Kingdom. Financing remains outstanding until the title is transferred to the dealers. This amount also includes the short-term portion of a note payable related to automotive retail leases.

(f)

Primarily represents accruals for marketing incentives on vehicles which are sold, or anticipated to be sold, to customers or dealers and financed by Ally Financial in North America. This includes the estimated amount of residual support accrued under the residual support and risk sharing programs, rate support under the interest rate support programs, operating lease and finance receivable capitalized cost reduction incentives paid to Ally Financial to reduce the capitalized cost in automotive lease contracts and retail automotive contracts, and amounts owed under lease pull-ahead programs. In addition it includes interest accrued on the transactions in (e) above.

(g)	Primarily represents the long-term portion of term loans from Ally Financial to certain consolidated dealerships.

(h)	Primarily represents long-term portion of liabilities for marketing incentives on vehicles financed by Ally Financial.

296

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Statement of Operations

The following table summarizes the income statement effects of transactions with Ally Financial (dollars in millions):


	Successor						Successor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009		Year Ended December 31, 2008
Total net sales and revenue (reduction) (a)	$	(1,383	)	$	(259	)	$	207	$	(2,350	)
Automotive cost of sales and other automotive expenses (b)	$	36		$	113		$	180	$	688
Interest income and other non-operating income, net (c)	$	228		$	127		$	166	$	192
Automotive interest expense (d)	$	243		$	121		$	100	$	221
Servicing expense (e)	$	2		$	22		$	16	$	144
Derivative losses (f)	$	—		$	1		$	2	$	4

(a)

Primarily represents the increase (reduction) in Total net sales and revenue for marketing incentives on vehicles which were sold, or anticipated to be sold, to customers or dealers and financed by Ally Financial. This includes the estimated amount of residual support accrued under residual support and risk sharing programs, rate support under the interest rate support programs, operating lease and finance receivable capitalized cost reduction incentives paid to Ally Financial to reduce the capitalized cost in automotive lease contracts and retail automotive contracts, and costs under lease pull-ahead programs. This amount is offset by net sales for vehicles sold to Ally Financial for employee and governmental lease programs and third party resale purposes.

(b)	Primarily represents cost of sales on the sale of vehicles to Ally Financial for employee and governmental lease programs and third party resale purposes. Also includes miscellaneous expenses on services performed by Ally Financial.

(c)

Represents income on investments in Ally Financial preferred stock and Preferred Membership Interests, exclusivity and royalty fee income and reimbursements by Ally Financial for certain services provided to Ally Financial. Included in this amount is rental income related to Ally Financial’s primary executive and administrative offices located in the Renaissance Center in Detroit, Michigan. The lease agreement expires in November 2016.

(d)	Represents interest incurred on term loans, notes payable and wholesale settlements.

(e)	Represents servicing fees paid to Ally Financial on certain automotive retail leases.

(f)	Represents amounts recorded in connection with a derivative transaction entered into with Ally Financial as the counterparty.

Note 33. Transactions with MLC

Automotive

In connection with the 363 Sale, we and MLC entered into a Transition Services Agreement (TSA), pursuant to which, among other things, we provided MLC with certain transition services and support functions in connection with their operation and ultimate liquidation in bankruptcy. MLC is required to pay the applicable usage fees specified with respect to various types of services under the TSA. Types of services provided under the TSA included: (1) property management; (2) assistance in idling certain facilities; (3) provisions of access rights and storage of personal property at certain facilities; (4) security; (5) administrative services including accounting, treasury and tax; (6) purchasing; (7) information systems and services support; (8) communication services to the public; and (9) splinter union services including payroll and benefits administration. Services MLC provides to us under the TSA include: (1) provisions of access rights and storage of personal property at certain facilities; (2) assistance in obtaining certain permits and consents to permit us to own and operate purchased assets in connection with the 363 Sale; (3) allowing us to manage and exercise our rights under the TSA; and (4) use of certain real estate and equipment while we are in negotiation to assume or renegotiate certain leases or enter into agreements to purchase certain lease-related assets. At December 31, 2010 we are not obligated to provide any services under the TSA.

297

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On October 1, 2010 we completed the acquisition of the Strasbourg transmission business from MLC. The purchase price was one Euro. Refer to Note 5 for additional information on the acquisition of GMS.

Statement of Operations

The following table summarizes the income statements effect of transactions with MLC (dollars in millions):


	Successor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009
Automotive cost of sales (a)	$	(19	)	$	(8	)
Interest income and other non-operating income, net	$	—		$	1

(a)	Primarily related to royalty income partially offset by reimbursements for engineering expenses incurred by MLC.

Balance Sheet

The following table summarizes the balance sheets effect of transactions with MLC (dollars in millions):


	Successor
	December 31, 2010		December 31, 2009
Accounts and notes receivable, net (a)	$	—	$	16
Other assets	$	—	$	1
Accounts payable (a)	$	1	$	59
Accrued liabilities	$	—	$	(1	)

(a)	Primarily related to the purchase and sale of component parts.

Cash Flow

The following table summarizes the cash flow effects of transactions with MLC (dollars in millions):


	Successor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009
Operating — Automotive (a)	$	(148	)	$	(88	)
Financing — Automotive (b)	$	5		$	25

(a)	Primarily includes payments to MLC related to the purchase and the sale of component parts.

(b)	Payments received from a facility in Strasbourg, France that MLC retained and we subsequently acquired in October 2010.

298

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 34. Supplementary Quarterly Financial Information (Unaudited)

Consolidated

The following tables summarize supplementary quarterly financial information (dollars in millions, except per share amounts):


	Successor
	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
2010
Total net sales and revenue	$	31,476	$	33,174	$	34,060	$	36,882
Automotive gross margin	$	3,885	$	4,415	$	4,592	$	3,627
Net income	$	1,196	$	1,612	$	2,223	$	1,472
Net income attributable to common stockholders	$	865	$	1,334	$	1,959	$	510
Net income attributable to common stockholders, per share, basic	$	0.58	$	0.89	$	1.31	$	0.34
Net income attributable to common stockholders, per share, diluted	$	0.55	$	0.85	$	1.20	$	0.31


	Successor						Predecessor
	July 10, 2009 Through September 30, 2009			4th Quarter			1st Quarter			2nd Quarter			July 1, 2009 Through July 9, 2009
2009
Total net sales and revenue	$	25,147		$	32,327		$	22,431		$	23,047		$	1,637
Automotive gross margin (loss)	$	1,593		$	(500	)	$	(2,180	)	$	(6,337	)	$	(182	)
Net income (loss)	$	(571	)	$	(3,215	)	$	(5,899	)	$	(13,237	)	$	128,139
Net income (loss) attributable to common stockholders	$	(908	)	$	(3,520	)	$	(5,975	)	$	(12,905	)	$	127,998
Net income (loss) attributable to common stockholders, per share, basic	$	(0.73	)	$	(2.84	)	$	(9.78	)	$	(21.12	)	$	209.49
Net income (loss) attributable to common stockholders, per share, diluted	$	(0.73	)	$	(2.84	)	$	(9.78	)	$	(21.12	)	$	209.38

Results for the three months ended December 31, 2010 included:

•

A charge of $677 million related to our purchase of 84 million shares of Series A Preferred Stock from the UST.

•

A reversal of our $231 million liability for contingently issuable Adjustment Shares based on a revised assessment of the estimate of allowed general unsecured claims against MLC.

•

A gain of $198 million related to our repayment of the VEBA Notes of $2.8 billion.

•

Restructuring reserve decrease of $183 million in GMNA primarily related to capacity actions and revisions to productivity initiatives.

•

Restructuring charges and interest accretion and other of $154 million in GME primarily related to separation programs announced in Belgium, Spain, Germany and the United Kingdom.

•

Income before income taxes and equity income and net income of $129 million and $90 million related to the October 1, 2010 acquisition of GM Financial including net income of $10 million related to amounts recorded to reflect the changes in the valuation allowance on deferred tax assets that were not applicable to GM Financial on a stand-alone basis.

299

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Results for the three months ended September 30, 2010 included:

•

Restructuring charges and interest accretion and other of $153 million in GME primarily related to separation programs announced in Belgium, Spain, Germany and the United Kingdom.

•

Impairment charges of $140 million related to product-specific tooling assets in GMNA.

Results for the three months ended June 30, 2010 included:

•

Restructuring charges and interest accretion and other of $235 million in GME primarily related to separation programs announced in Belgium, the United Kingdom and Germany.

•

Charge of $200 million relating to a recall campaign on windshield fluid heaters.

Results for the three months ended March 31, 2010 included:

•

Restructuring charges and interest accretion and other of $305 million in GME primarily related to separation programs announced in Belgium and Spain. These charges were partially offset by a favorable adjustment of $104 million related to GMNA restructuring reserves due to increased production capacity utilization, which resulted in the recall of idled employees to fill added shifts at multiple U.S. production sites.

Results for the three months ended December 31, 2009 included:

•

Impairment charges of $270 million related to our investment in Ally Financial common stock.

•

Settlement loss of $2.6 billion related to the 2009 UAW Settlement Agreement.

Results for the period July 10, 2009 through September 30, 2009 included:

•

Charges of $195 million related to dealer wind-down agreements.

Old GM

Results for the period July 1, 2009 through July 9, 2009 included:

•

Accelerated debt discount amortization of $600 million on the DIP Facility.

•

Reorganization gains, net of $129.3 billion. Refer to Note 2 for additional information on these gains.

•

Charges of $398 million related to dealer wind-down agreements.

Results for the three months ended June 30, 2009 included:

•

Gain of $2.5 billion on the disposition of Ally Financial Common Membership Interests partially offset by a loss on extinguishment of the UST Ally Financial Loan of $2.0 billion.

300

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

•

Accelerated debt discount amortization of $1.6 billion on the DIP Facility.

•

Charges of $1.9 billion related to U.S. salaried and hourly headcount reduction programs.

•

Restructuring charges of $1.1 billion related to SUB and TSP.

•

Reorganization costs of $1.1 billion, primarily related to loss on extinguishment of debt of $958 million.

•

Impairment charges of $239 million related to product-specific tooling assets.

Results for the three months ended March 31, 2009 included:

•

Old GM amended the terms of its U.S. term loan and recorded a gain of $906 million on the extinguishment of the original loan facility.

•

Upon Saab’s filing for reorganization, Old GM recorded charges of $618 million related to its net investment in, and advances to, Saab and other commitments and obligations.

•

Impairment charges of $327 million related to product-specific tooling assets and cancelled powertrain programs.

Note 35. Segment Reporting

Consolidated

We design, build and sell cars, trucks and parts worldwide. We also conduct our automotive finance operations through GM Financial. We manage our operations through our five segments: GMNA, GME, GMIO, GMSA and GM Financial. Each segment has a manager responsible for executing our strategies. Our automotive manufacturing operations are integrated within the segments, benefit from broad-based trade agreements and are subject to regulatory requirements, such as Corporate Average Fuel Economy (CAFE) regulations. While not all vehicles within a segment are individually profitable on a fully loaded cost basis, those vehicles are needed in our product mix in order to attract customers to dealer showrooms and to maintain sales volumes for other, more profitable vehicles. Because of these factors, we do not manage our business on an individual brand or vehicle basis. The chief operating decision maker evaluates the operating results and performance of our automotive segments through Income (loss) before interest and income taxes and evaluates GM Financial through Income (loss) before income taxes.

Substantially all of the cars, trucks and parts produced are marketed through retail dealers in North America, and through distributors and dealers outside of North America, the substantial majority of which are independently owned.

In addition to the products sold to dealers for consumer retail sales, cars and trucks are also sold to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies and governments. Sales to fleet customers are completed through the network of dealers and in some cases sold directly to fleet customers. Retail and fleet customers can obtain a wide range of aftersale vehicle services and products through the dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories and extended service warranties.

301

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GMNA primarily meets the demands of customers in North America with vehicles developed, manufactured and/or marketed under the following four brands:


• Buick		• Cadillac		• Chevrolet		• GMC

The demands of customers outside of North America are primarily met with vehicles developed, manufactured and/or marketed under the following brands:


• Buick	• Daewoo	• Holden	• Opel
• Cadillac	• GMC	• Isuzu	• Vauxhall
• Chevrolet

At December 31, 2010 we also had equity ownership stakes directly or indirectly in entities through various regional subsidiaries, including GM Daewoo, SGM, SGMW, FAW-GM and HKJV. In January 2011 GM Daewoo announced it will be changing its name to GM Korea and will sell most of its cars under the Chevrolet brand. These companies design, manufacture and market vehicles under the following brands:


• Buick	• Daewoo	• GMC	• Jiefang
• Cadillac	• FAW	• Holden	• Wuling
• Chevrolet

Nonsegment operations are classified as Corporate and Corporate assets, liabilities and results of operations are a component of Total Automotive in our consolidated financial statements. Corporate includes investments in Ally Financial, certain centrally recorded income and costs, such as interest, income taxes and corporate expenditures, certain nonsegment specific revenues and expenses, including costs related to the Delphi Benefit Guarantee Agreements and a portfolio of automotive retail leases.

All intersegment balances and transactions have been eliminated in consolidation.

302

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following tables summarize key financial information by segment (dollars in millions):


	Successor
	GMNA		GME			GMIO		GMSA			Corporate			Eliminations			Total Automotive			GM Financial (a)		Eliminations			Total
At and For the Year Ended December 31, 2010
Sales
External customers	$	79,514	$	22,868		$	17,730	$	15,030		$	—		$	—		$	135,142		$	—	$	—		$	135,142
Financing operations Revenue		—		—			—		—			—			—			—			281		—			281
Intersegment		3,521		1,208			3,740		314			—			(8,783	)		—			—		—			—
Other revenue		—		—			—		35			134			—			169			—		—			169

Total net sales and revenue	$	83,035	$	24,076		$	21,470	$	15,379		$	134		$	(8,783	)	$	135,311		$	281	$	—		$	135,592

Income (loss) before interest and income taxes	$	5,748	$	(1,764	)	$	2,262	$	818		$	389		$	(105	)	$	7,348		$	166	$	—		$	7,514

Corporate interest income												465									—		—			465
Interest expense												1,098									37		—			1,135

Income (loss) before income taxes												(244	)								129	$	—			6,844

Income tax expense												633									39					672

Net income (loss) attributable to stockholders											$	(877	)							$	90				$	6,172

Equity in net assets of nonconsolidated affiliates	$	2,094	$	8		$	6,427	$	—		$	—		$	—		$	8,529		$	—	$	—		$	8,529
Total assets	$	76,285	$	18,375		$	19,655	$	12,964		$	35,141		$	(34,418	)	$	128,002		$	10,940	$	(44	)	$	138,898
Expenditures for property	$	2,380	$	634		$	729	$	411		$	46		$	—		$	4,200		$	2	$	—		$	4,202
Depreciation, amortization and impairment of long-lived assets and finite-lived intangible assets	$	4,434	$	1,476		$	349	$	496		$	168		$	—		$	6,923		$	7	$	—		$	6,930
Equity income (loss), net of tax	$	120	$	11		$	1,307	$	(2	)	$	2		$	—		$	1,438		$	—	$	—		$	1,438
Significant noncash charges (gains)
Net contingent Adjustment Shares	$	—	$	—		$	—	$	—		$	(162	)	$	—		$	(162	)	$	—	$	—		$	(162	)
Gain on acquisition of GMS		—		(66	)		—		—			—			—			(66	)		—		—			(66	)
Reversal of valuation allowances against deferred tax assets (b)		—		—			—		—			(63	)		—			(63	)		—		—			(63	)
Impairment charges related to product-specific tooling assets		234		—			6		—			—			—			240			—		—			240
Impairment charges related to equipment on operating leases		—		49			—		—			—			—			49			—		—			49

Total significant noncash charges (gains)	$	234	$	(17	)	$	6	$	—		$	(225	)	$	—		$	(2	)	$	—	$	—		$	(2	)

(a)

The financial information presented for our GM Financial segment includes adjustments made to decrease Income tax expense and increase Net income (loss) attributable to stockholders by $10 million and increase Total assets by $22 million to record the effect of changes in the valuation allowance on deferred tax assets that were not applicable to GM Financial on a stand-alone basis.

(b)	Amounts exclude changes related to income tax expense (benefit) in jurisdictions with a full valuation allowance throughout the period.

303

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor
	GMNA			GME			GMIO		GMSA		Corporate			Eliminations			Total Automotive
At and For the Period July 10, 2009 Through December 31, 2009
Sales
External customers	$	31,454		$	11,340		$	7,221	$	7,314	$	—		$	—		$	57,329
Intersegment		972			139			1,346		81		—			(2,538	)		—
Other revenue		—			—			—		4		141			—			145

Total net sales and revenue	$	32,426		$	11,479		$	8,567	$	7,399	$	141		$	(2,538	)	$	57,474

Income (loss) before interest and income taxes	$	(4,820	)	$	(814	)	$	789	$	417	$	(314	)	$	(45	)	$	(4,787	)

Interest income												184						184
Interest expense												694						694
Income tax expense (benefit)												(1,000	)					(1,000	)

Net income (loss) attributable to stockholders											$	176					$	(4,297	)

Equity in net assets of nonconsolidated affiliates	$	1,928		$	180		$	5,798	$	3	$	27		$	—		$	7,936
Total assets	$	78,719		$	18,824		$	17,530	$	11,295	$	36,475		$	(26,548	)	$	136,295
Expenditures for property	$	911		$	547		$	272	$	131	$	1		$	—		$	1,862
Depreciation, amortization and impairment of long-lived assets and finite-lived intangible assets	$	2,732		$	938		$	237	$	224	$	110		$	—		$	4,241
Equity income (loss), net of tax	$	(7	)	$	8		$	495	$	1	$	—		$	—		$	497
Significant noncash charges (gains)
Contingent Adjustment Shares	$	—		$	—		$	—	$	—	$	162		$	—		$	162
Reversal of valuation allowances against deferred tax assets (a)		—			—			—		—		(63	)		—			(63	)
Impairment charges related to investment in Ally Financial common stock		—			—			—		—		270			—			270
UAW OPEB healthcare settlement		2,571			—			—		—		—			—			2,571

Total significant noncash charges	$	2,571		$	—		$	—	$	—	$	369		$	—		$	2,940

(a)	Amounts exclude changes related to income tax expense (benefit) in jurisdictions with a full valuation allowance throughout the period.

304

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	GMNA			GME			GMIO			GMSA			Corporate			Eliminations			Total Automotive
For the Period January 1, 2009 Through July 9, 2009
Sales
External customers	$	23,490		$	12,419		$	5,194		$	5,684		$	—		$	—		$	46,787
Intersegment		701			133			1,024			51			—			(1,909	)		—
Other revenue		—			—			—			1			327			—			328

Total net sales and revenue	$	24,191		$	12,552		$	6,218		$	5,736		$	327		$	(1,909	)	$	47,115

Income (loss) before interest and income taxes	$	(11,092	)	$	(2,815	)	$	(486	)	$	(454	)	$	127,981		$	63		$	113,197

Interest income														183						183
Interest expense														5,428						5,428
Income tax expense (benefit)														(1,166	)					(1,166	)

Net income attributable to stockholders													$	123,902					$	109,118

Expenditures for property	$	2,282		$	795		$	279		$	137		$	24		$	—		$	3,517
Depreciation, amortization and impairment of long-lived assets and finite-lived intangible assets	$	4,759		$	1,492		$	386		$	94		$	142		$	—		$	6,873
Equity in income of and disposition of interest in Ally Financial	$	—		$	—		$	—		$	—		$	1,380		$	—		$	1,380
Equity income (loss), net of tax	$	(277	)	$	3		$	334		$	—		$	1		$	—		$	61
Significant noncash charges (gains)
Gain on extinguishment of debt	$	—		$	—		$	—		$	—		$	(906	)	$	—		$	(906	)
Loss on extinguishment of UST Ally Financial Loan		—			—			—			—			1,994			—			1,994
Gain on conversion of UST Ally Financial Loan		—			—			—			—			(2,477	)		—			(2,477	)
Reversal of valuation allowances against deferred tax assets (a)		—			—			—			—			(751	)		—			(751	)
Impairment charges related to equipment on operating leases		11			36			—			—			16			—			63
Impairment charges related to long-lived assets		320			237			7			2			—			—			566
Reorganization gains, net (b)		—			—			—			—			(128,563	)		—			(128,563	)

Total significant noncash charges (gains)	$	331		$	273		$	7		$	2		$	(130,687	)	$	—		$	(130,074	)

(a)	Amounts exclude changes related to income tax expense (benefit) in jurisdictions with a full valuation allowance throughout the period.

(b)	Refer to Note 2 for additional information on Reorganization gains, net.

305

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	GMNA			GME			GMIO			GMSA		Corporate			Eliminations			Total Automotive
For the Year Ended December 31, 2008
Sales
External customers	$	82,938		$	32,440		$	18,181		$	14,173	$	—		$	—		$	147,732
Intersegment		3,249			2,207			5,869			308		—			(11,633	)		—
Other revenue		—			—			—			41		1,206			—			1,247

Total net sales and revenue	$	86,187		$	34,647		$	24,050		$	14,522	$	1,206		$	(11,633	)	$	148,979

Income (loss) before interest and income taxes	$	(12,203	)	$	(2,625	)	$	(555	)	$	1,076	$	(13,041	)	$	41		$	(27,307	)

Interest income													655						655
Interest expense													2,525						2,525
Income tax expense													1,766						1,766

Net income (loss) attributable to stockholders												$	(16,677	)				$	(30,943	)

Expenditures for property	$	4,242		$	1,345		$	1,063		$	343	$	537		$	—		$	7,530
Depreciation, amortization and impairment of long-lived assets and finite-lived intangible assets	$	5,910		$	2,353		$	700		$	243	$	808		$	—		$	10,014
Equity in income (loss) of and disposition of interest in Ally Financial	$	—		$	—		$	—		$	—	$	(6,183	)	$	—		$	(6,183	)
Equity income (loss), net of tax	$	(201	)	$	31		$	354		$	—	$	2		$	—		$	186
Significant noncash charges (gains)
Impairment charges related to investment in Ally Financial Common Membership Interests	$	—		$	—		$	—		$	—	$	7,099		$	—		$	7,099
Impairment charges related to investment in Ally Financial Preferred Membership Interests		—			—			—			—		1,001			—			1,001
Impairment charges related to equipment on operating leases		380			222			—			—		157			—			759
Impairment charges related to investments in NUMMI and CAMI		119			—			—			—		—			—			119
Other than temporary impairment charges related to debt and equity securities		47			—			—			—		15			—			62
Impairment charges related to goodwill		154			456			—			—		—			—			610
Impairment charges related to long-lived assets		411			497			94			8		—			—			1,010
Net curtailment gain related to finalization of Settlement Agreement		(4,901	)		—			—			—		—			—			(4,901	)
Salaried post-65 healthcare settlement		1,704			—			—			—		—			—			1,704
CAW settlement		340			—			—			—		—			—			340
Valuation allowances against deferred tax assets (a)		—			—			—			—		1,450			—			1,450

Total significant noncash charges (gains)	$	(1,746	)	$	1,175		$	94		$	8	$	9,722		$	—		$	9,253

(a)	Amounts exclude changes related to income tax expense (benefit) in jurisdictions with a full valuation allowance throughout the period.

306

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Automotive revenue is attributed to geographic areas based on the country in which the product is sold, except for revenue from certain joint ventures. In such case, the revenue is attributed based on the geographic location of the joint venture. Automotive Financing revenue is attributed to the geographic area where the financing is originated. The following table summarizes information concerning principal geographic areas (dollars in millions):


	Successor								Predecessor
	At and For the Year Ended December 31, 2010				At and For the Period July 10, 2009 Through December 31, 2009				At and For the Period January 1, 2009 Through July 9, 2009				At and For the Year Ended December 31, 2008
	Net Sales & Revenue		Long Lived Assets		Net Sales & Revenue		Long Lived Assets		Net Sales & Revenue		Long Lived Assets		Net Sales & Revenue		Long Lived Assets
North America
U.S.	$	72,736	$	10,351	$	28,007	$	10,245	$	21,152	$	20,742	$	75,382	$	25,105
Canada and Mexico		10,195		2,773		4,682		3,031		3,486		5,943		12,983		5,898
GM Financial
U.S.		279		46		—		—		—		—		—		—
Canada		2		1		—		—		—		—		—		—
Europe
France		1,820		63		923		17		1,024		67		2,629		264
Germany		5,004		1,852		2,851		2,299		3,817		3,670		6,663		4,013
Italy		2,509		176		1,119		192		1,221		169		3,169		183
Spain		1,398		665		862		778		609		1,206		1,711		1,230
United Kingdom		5,253		761		2,531		815		2,749		1,189		7,142		1,066
Other European Countries		6,905		764		3,046		839		3,024		1,821		11,195		2,402
Asia
Korea		7,301		1,519		3,014		982		2,044		1,941		7,131		2,115
Thailand		561		341		166		151		103		383		560		395
Other Asian Countries		482		74		575		47		435		347		1,098		309
South America
Argentina		1,215		183		436		195		363		131		1,147		120
Brazil		9,513		1,425		4,910		1,142		3,347		1,081		8,329		890
Venezuela		1,130		47		850		46		981		43		2,107		43
Other South American Countries		3,220		166		1,136		157		984		102		2,653		72
All Other Geographic Locations		6,069		643		2,366		481		1,776		1,158		5,080		1,144

Total consolidated	$	135,592	$	21,850	$	57,474	$	21,417	$	47,115	$	39,993	$	148,979	$	45,249

The following table summarizes the aggregation of principal geographic information by U.S. and non-U.S. (dollars in millions):


	Successor								Predecessor
	At and For the Year Ended December 31, 2010				At and For the Period July 10, 2009 Through December 31, 2009				At and For the Period January 1, 2009 Through July 9, 2009				At and For the Year Ended December 31, 2008
	Net Sales & Revenue		Long Lived Assets		Net Sales & Revenue		Long Lived Assets		Net Sales & Revenue		Long Lived Assets		Net Sales & Revenue		Long Lived Assets
U.S.	$	73,015	$	10,397	$	28,007	$	10,245	$	21,152	$	20,742	$	75,382	$	25,105
Non-U.S.		62,577		11,453		29,467		11,172		25,963		19,251		73,597		20,144

Total U.S. and non-U.S.	$	135,592	$	21,850	$	57,474	$	21,417	$	47,115	$	39,993	$	148,979	$	45,249

307

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 36. Supplemental Information for Consolidated Statements of Cash Flows

Consolidated

The following table summarizes the sources (uses) of cash provided by changes in other operating assets and liabilities (dollars in millions):


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Year Ended December 31, 2008
Accounts receivable	$	(641	)	$	660		$	(268	)	$	1,315
Prepaid expenses and other deferred charges		299			315			1,416			(287	)
Inventories		(2,229	)		(315	)		3,509			77
Accounts payable		2,259			5,363			(8,846	)		(4,556	)
Income taxes payable		51			401			606			1,044
Accrued liabilities and other liabilities		(92	)		(3,225	)		(6,815	)		1,607
Fleet rental — acquisitions		(3,625	)		(1,198	)		(961	)		(4,157	)
Fleet rental — liquidations		2,997			1,371			1,130			5,051

Total	$	(981	)	$	3,372		$	(10,229	)	$	94

Cash paid for interest — Automotive	$	1,001		$	618		$	2,513		$	2,484

Cash paid for interest — GM Financial		66

Total cash paid for interest	$	1,067

* * * * * * *

308

GENERAL MOTORS COMPANY AND SUBSIDIARIES

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

* * * * * * *

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (Exchange Act) is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our Chairman and CEO and our Vice Chairman and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) at December 31, 2010. Based on these evaluations, our CEO and CFO concluded that our disclosure controls and procedures required by paragraph (b) of Rules 13a-15 or 15d-15 were effective as of December 31, 2010.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining effective internal control over financial reporting. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP.

Our internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.

Our management performed an assessment of the effectiveness of our internal control over financial reporting at December 31, 2010, utilizing the criteria discussed in the “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. The objective of this assessment was to determine whether our internal control over financial reporting was effective at December 31, 2010.

Based on management’s assessment, we have concluded that our internal control over financial reporting was effective at December 31, 2010. The effectiveness of our internal control over financial reporting has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its report which is included herein.

Remediation and Changes in Internal Controls

In our 2009 Annual Report on Form 10-K, we identified a material weakness because we did not maintain effective controls over the period-end financial reporting process. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

In 2009, significant activities were performed in remediating the material weakness. However, we were not able to sufficiently test the operating effectiveness of certain remediated internal controls given the limited time that controls were in operation. During 2010, management led various initiatives to further enhance our controls over period-end financial reporting, including training and

309

GENERAL MOTORS COMPANY AND SUBSIDIARIES

enhanced procedures related to the preparation of the statement of cash flows, to help ensure controls over the period-end financial reporting process would operate as they had been designed and deployed during the 2009 material weakness remediation efforts. Based upon the actions taken and our testing and evaluation of the effectiveness of our internal controls, we have concluded the material weakness related to controls over the period-end financial reporting process no longer existed as of December 31, 2010.

Other than as previously discussed, there have not been any other changes in our internal control over financial reporting in the three months ended December 31, 2010, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


/s/ DANIEL F. AKERSON				/s/ CHRISTOPHER P. LIDDELL
Daniel F. Akerson Chairman and Chief Executive Officer				Christopher P. Liddell Vice Chairman and Chief Financial Officer

March 1, 2011				March 1, 2011

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent or detect all errors and all fraud. A control system cannot provide absolute assurance due to its inherent limitations; it is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. A control system also can be circumvented by collusion or improper management override. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of such limitations, disclosure controls and procedures and internal control over financial reporting cannot prevent or detect all misstatements, whether unintentional errors or fraud. However, these inherent limitations are known features of the financial reporting process, therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

* * * * * * *

Item 9B. Other Information

None

* * * * * * *

310

GENERAL MOTORS COMPANY AND SUBSIDIARIES

PART III

Item 10. Directors, Executive Officers and Corporate Governance

We have adopted a code of ethics that applies to the Corporation’s directors, officers, and employees, including the Chief Executive Officer, Chief Financial Officer, Controller and Chief Accounting Officer and any other persons performing similar functions. The text of our code of ethics, “Winning With Integrity,” has been posted on our website at http://investor.gm.com at Investors — Corporate Governance.” We will provide a copy of the code of ethics without charge upon request to Corporate Secretary, General Motors Company, Mail Code 482-C25-A36, 300 Renaissance Center, P.O. Box 300, Detroit, MI 48265-3000.

* * * * * * *

Items 10, 11, 12, 13, and 14

Information required by Part III (Items 10, 11, 12, 13, and 14) of this Form 10-K is incorporated by reference from our definitive Proxy Statement for our 2011 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission, pursuant to Regulation 14A, not later than 120 days after the end of the 2010 fiscal year, all of which information is hereby incorporated by reference in, and made part of, this Form 10-K, except the information required by Item 10 with respect to our code of ethics in Item 10 above and disclosure of our executive officers, which is included in Item 1 of Part I of this report.

* * * * * * *

311

GENERAL MOTORS COMPANY AND SUBSIDIARIES

PART IV

ITEM 15. Exhibits and Financial Statement Schedule

(a)	1. All Financial Statements and Supplemental Information

Financial Statement Schedule II — Valuation and Qualifying Accounts

Exhibits

(b)

Exhibits


Exhibit Number	Exhibit Name
3.1	Restated Certificate of Incorporation of General Motors Company dated December 7, 2010, incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K of General Motors Company filed December 13, 2010	Incorporated by Reference

3.2	Bylaws of General Motors Company, dated December 7, 2010, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K of General Motors Company filed December 13, 2010	Incorporated by Reference

4.1	Certificate of Designations of Series A Fixed Rate Cumulative Perpetual Preferred Stock of General Motors Company, incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of General Motors Company filed November 16, 2009	Incorporated by Reference

4.2	Certificate of Designations of 4.75% Series B Mandatory Convertible Junior Preferred Stock of General Motors Company	Incorporated by Reference

10.1†	Second Amended and Restated Secured Credit Agreement among General Motors Company, as Borrower, the Guarantors, and the United States Department of the Treasury, as Lender, dated August 12, 2009, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

10.2†	Assignment and Assumption Agreement and Third Amendment to Second Amended and Restated Secured Credit Agreement among General Motors LLC, General Motors Holdings LLC, General Motors Company and the United States Department of the Treasury, as Lender, dated as of October 19, 2009, incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

10.3	Letter Agreement regarding the Second Amended and Restated Secured Credit Agreement among General Motors Holdings LLC, as Borrower, the Guarantors, and the United States Department of the Treasury, as Lender, dated September 22, 2010, incorporated by reference to Exhibit 10.41 to Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed September 23, 2010	Incorporated by Reference

10.4†	Credit Agreement, dated as of October 27, 2010, among the General Motors Holdings LLC, the lenders party thereto, Citibank, N.A., as administrative agent, and Bank of America, N.A., as syndication agent, incorporated herein by reference to Exhibit 10.3 to Amendment No. 5 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed November 3, 2010	Incorporated by Reference

10.5†	Second Amended and Restated Loan Agreement by and among General Motors of Canada Limited, as Borrower, and the other loan parties and Export Development Canada, as Lender, dated July 10, 2009, incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

312

GENERAL MOTORS COMPANY AND SUBSIDIARIES


Exhibit Number	Exhibit Name
10.6	Amendment to Second Amended and Restated Loan Agreement by and among General Motors of Canada Limited, as Borrower, and the other loan parties and Export Development Canada, as Lender, dated October 15, 2009, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of General Motors Company filed October 23, 2009	Incorporated by Reference

10.7	Settlement Agreement dated as of September 10, 2009, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of General Motors Company filed September 17, 2009	Incorporated by Reference

10.8	Agreement, dated as of October 15, 2009 between General Motors Company (fka General Motors Holding Company), General Motors LLC (fka General Motors Company) and Motors Liquidation Company, incorporated herein by reference to Exhibit 10.7 to the Current Report on Form 8-K of General Motors Company filed November 16, 2009	Incorporated by Reference

10.9	Stockholders Agreement, dated as of October 15, 2009 between General Motors Company, the United States Department of the Treasury, Canada GEN Investment Corporation (fka 7176384 Canada Inc.), the UAW Retiree Medical Benefits Trust, and, for limited purposes, General Motors LLC, incorporated herein by reference to Exhibit 10.8 to the Current Report on Form 8-K of General Motors Company filed November 16, 2009	Incorporated by Reference

10.10	Equity Registration Rights Agreement, dated as of October 15, 2009, between General Motors Company, the United States Department of Treasury, Canada GEN Investment Corporation (fka 7176384 Canada Inc.), the UAW Retiree Medical Benefits Trust, Motors Liquidation Company, and, for limited purposes, General Motors LLC, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Motors Liquidation Company filed October 21, 2009	Incorporated by Reference

10.11	Letter Agreement regarding Equity Registration Rights Agreement, dated October 21, 2010, among General Motors Company, the United States Department of Treasury, Canada GEN Investment Corporation, the UAW Retiree Medical Benefits Trust and Motors Liquidation Company, incorporated herein by reference to Exhibit 10.43 to Amendment No. 5 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed November 3, 2010	Incorporated by Reference

10.12	Master Disposition Agreement among Delphi Corporation, GM Components Holdings, LLC, General Motors Company, Motors Liquidation Company (fka General Motors Corporation), DIP Holdco 3, LLC, and the other sellers and other buyers party thereto dated July 26, 2009, incorporated herein by reference to Exhibit 10.9 to the Current Report on Form 8-K of General Motors Company filed August 7, 2009	Incorporated by Reference

10.13	Investment Commitment Agreement by and among Silver Point Capital Fund, LP, Silver Point Capital Offshore Fund, Ltd., Elliott Associates, LP, DIP Holdco 3, LLC, and General Motors Company dated July 26, 2009, incorporated herein by reference to Exhibit 10.10 to the Current Report on Form 8-K of General Motors Company filed August 7, 2009	Incorporated by Reference

10.14	Amended and Restated Global Settlement Agreement Between Delphi Corporation and General Motors Corporation, Dated September 12, 2008, incorporated herein by reference to Exhibit 10(b) to the Quarterly Report on Form 10-Q of Motors Liquidation Company filed November 10, 2008	Incorporated by Reference

313

GENERAL MOTORS COMPANY AND SUBSIDIARIES


Exhibit Number	Exhibit Name
10.15	UAW Retiree Settlement Agreement, dated July 10, 2009, between General Motors Company and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the UAW), with the UAW also entering into the agreement as the authorized representative of certain persons receiving retiree benefits pursuant to collectively bargained plans, programs and/or agreement between General Motors Company and the UAW, incorporated herein by reference to Exhibit 10.12 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.16	Form of Compensation Statement, incorporated herein by reference to Exhibit 10.14 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.17	Summary of Employment Arrangement between General Motors Company and Daniel F. Akerson, incorporated herein by reference to Item 5.02 of the Current Report on Form 8-K of General Motors Company filed September 10, 2010	Incorporated by Reference

10.18	Employment Agreement for Christopher P. Liddell, incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of General Motors Company filed May 17, 2010	Incorporated by Reference

10.19	Summary of Consulting Arrangement between General Motors Company and Stephen J. Girsky, incorporated herein by reference to Item 1.01 of the Current Report on Form 8-K of General Motors Company filed January 15, 2010	Incorporated by Reference

10.20	Summary of Employment Arrangement between General Motors Company and Stephen J. Girsky, incorporated herein by reference to Item 1.01 of the Current Report on Form 8-K of General Motors Company filed March 5, 2010	Incorporated by Reference

10.21	Summary of Employment Arrangement between General Motors Company and Edward E. Whitacre, Jr., incorporated herein by reference to Item 5.02 of the Current Report on Form 8-K of General Motors Company filed February 19, 2010	Incorporated by Reference

10.22	Summary of Fee Arrangement between General Motors Company and Edward E. Whitacre, Jr., incorporated herein by reference to Item 5.02 of the Current Report on Form 8-K of General Motors Company filed September 10, 2010	Incorporated by Reference

10.23	General Motors Executive Retirement Plan, as amended August 2, 2010, incorporated by reference to Exhibit 10.20 to Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed October 14, 2010	Incorporated by Reference

10.24	General Motors Company 2009 Long-Term Incentive Plan, as amended December 22, 2010	Filed Herewith

10.25	General Motors Company Salary Stock Plan, as amended October 5, 2010, incorporated by reference to Exhibit 10.22 to Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed October 14, 2010	Incorporated by Reference

10.26	General Motors Company Short Term Incentive Plan, incorporated by reference to Exhibit 10.17 to Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed October 14, 2010	Incorporated by Reference

10.27	Form of Restricted Stock Unit Grant made to top 25 highly compensated employees under General Motors Company 2009 Long-Term Incentive Plan, as Amended March 1, 2010, incorporated herein by reference to Exhibit 10.20 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

314

GENERAL MOTORS COMPANY AND SUBSIDIARIES


Exhibit Number	Exhibit Name
10.28	Form of Restricted Stock Unit Grant (Cash Settlement) made to top 25 highly compensated employees under General Motors Company 2009 Long-Term Incentive Plan, as Amended March 1, 2010, incorporated herein by reference to Exhibit 10.21 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.29	Form of Restricted Stock Unit Grant made to certain executive officers, incorporated herein by reference to Exhibit 10.a to the Quarterly Report on Form 10-Q of Motors Liquidation Company filed May 8, 2008	Incorporated by Reference

10.30	Form of General Motors Company 2010 Equity Grant Award Agreement	Filed Herewith

10.31	Form of General Motors Company March 15, 2010 Restricted Stock Unit Grant Agreement, as amended December 31, 2010	Filed Herewith

10.32	General Motors Company Vehicle Operations — Senior Management Vehicle Program (SMVP) Supplement, revised December 15, 2005, incorporated herein by reference to Exhibit 10(g) to the Annual Report on Form 10-K of Motors Liquidation Company filed March 28, 2006	Incorporated by Reference

10.33†	Amended and Restated United States Consumer Financing Services Agreement between GMAC LLC and General Motors Corporation dated May 22, 2009, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

10.34†	Amended and Restated Master Services Agreement between GMAC LLC and General Motors Corporation dated May 22, 2009, incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

10.35	Agreement, dated as of October 22, 2001, between General Motors Corporation and General Motors Acceptance Corporation, incorporated herein by reference to Exhibit 10 to the Annual Report on Form 10-K of Motors Liquidation Company filed March 28, 2006	Incorporated by Reference

10.36	United States Consumer Agreement, dated as of November 30, 2006, between General Motors Corporation and GMAC LLC, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Motors Liquidation Company filed November 30, 2006	Incorporated by Reference

10.37	Amended and Restated Warrant Agreement, dated as of October 16, 2009, between General Motors Company and U.S. Bank National Association, including Form of Warrant Certificate attached as Exhibit D thereto, relating to warrants with a $30 original ($10 after stock split) exercise price and a July 10, 2016 expiration date, incorporated herein by reference to Exhibit 10.29 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.38	Amended and Restated Warrant Agreement, dated as of October 16, 2009, between General Motors Company and U.S. Bank National Association, including Form of Warrant Certificate attached as Exhibit D thereto, relating to warrants with a $55 original ($18.33 after stock split) exercise price and a July 10, 2019 expiration date, incorporated herein by reference to Exhibit 10.30 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

315

GENERAL MOTORS COMPANY AND SUBSIDIARIES


Exhibit Number	Exhibit Name
10.39	Amended and Restated Warrant Agreement, dated as of October 16, 2009, between General Motors Company and U.S. Bank National Association, including Form of Warrant Certificate attached as Exhibit D thereto, relating to warrants with a $126.92 original ($42.31 after stock split) exercise price and a December 31, 2015 expiration date, incorporated herein by reference to Exhibit 10.31 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.40	Amended and Restated Master Sale and Purchase Agreement, dated June 26, 2009, between General Motors Corporation, Saturn LLC, Saturn Distribution Corporation, Chevrolet-Saturn of Harlem, Inc., and General Motors Company (fka NGMCO, Inc.), incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K of Motors Liquidation Company filed July 2, 2009	Incorporated by Reference

10.41	First Amendment to Amended and Restated Master Sale and Purchase Agreement, dated June 30, 2009, between General Motors Corporation, Saturn LLC, Saturn Distribution Corporation, Chevrolet-Saturn of Harlem, Inc., and General Motors Company (fka NGMCO, Inc.), incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K of Motors Liquidation Company filed July 8, 2009	Incorporated by Reference

10.42	Second Amendment to Amended and Restated Master Sale and Purchase Agreement, dated July 5, 2009, between General Motors Corporation, Saturn LLC, Saturn Distribution Corporation, Chevrolet-Saturn of Harlem, Inc., and General Motors Company (fka NGMCO, Inc.), incorporated herein by reference to Exhibit 2.2 to the Current Report on Form 8-K of Motors Liquidation Company filed July 8, 2009	Incorporated by Reference

10.43	Letter Agreement regarding Series A Purchase, dated October 27, 2010, between General Motors Company and the United States Department of the Treasury, incorporated herein by reference to Item 10.42 to Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed September 28, 2010	Incorporated by Reference

10.44	Registration Rights Agreement, dated as of January 13, 2011, by and among General Motors Company, Evercore Trust Company, N.A., as trustee of the General Motors Special Hourly-Rate Employees Pension Trust, and Evercore Trust Company, N.A., as trustee of the General Motors Special Salaried Employees Pension Trust	Filed Herewith

10.45	Stockholders Agreement, dated as of January 13, 2011, by and among General Motors Company, Evercore Trust Company, N.A., as trustee of the General Motors Special Hourly-Rate Employees Pension Trust, and Evercore Trust Company, N.A., as trustee of the General Motors Special Salaried Employees Pension Trust	Filed Herewith

12	Computation of Ratios of Earnings to Fixed Charges for the Year Ended December 31, 2010, the Periods July 10, 2009 through December 31, 2009 and January 1, 2009 through July 9, 2009 and for the Years Ended December 31, 2008, 2007 and 2006	Filed Herewith

21	Subsidiaries of the Registrant as of December 31, 2010	Filed Herewith

24	Power of Attorney for Directors of General Motors Company	Filed Herewith

31.1	Section 302 Certification of the Chief Executive Officer	Filed Herewith

31.2	Section 302 Certification of the Chief Financial Officer	Filed Herewith

32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed Herewith

316

GENERAL MOTORS COMPANY AND SUBSIDIARIES


Exhibit Number	Exhibit Name
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed Herewith

99.1	Consolidated Financial Statements of Ally Financial Inc. (fka GMAC Inc.) and subsidiaries at December 31, 2010 and 2009 and for each of the three years in the period ended December 31, 2010	Filed Herewith

99.2	Principal Executive Officer and Principal Financial Officer Executive Privileges and Compensation Certificate	Filed Herewith

†	Certain confidential portions have been omitted pursuant to a request for confidential treatment, which has been separately filed with the Securities and Exchange Commission.

317

GENERAL MOTORS COMPANY AND SUBSIDIARIES

EXHIBIT INDEX


Exhibit Number	Exhibit Name
3.1	Restated Certificate of Incorporation of General Motors Company dated December 7, 2010, incorporated herein by reference to Exhibit 3.2 to the Current Report on Form 8-K of General Motors Company filed December 13, 2010	Incorporated by Reference

3.2	Bylaws of General Motors Company, dated December 7, 2010, incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K of General Motors Company filed December 13, 2010	Incorporated by Reference

4.1	Certificate of Designations of Series A Fixed Rate Cumulative Perpetual Preferred Stock of General Motors Company, incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of General Motors Company filed November 16, 2009	Incorporated by Reference

4.2	Certificate of Designations of 4.75% Series B Mandatory Convertible Junior Preferred Stock of General Motors Company	Incorporated by Reference

10.1†	Second Amended and Restated Secured Credit Agreement among General Motors Company, as Borrower, the Guarantors, and the United States Department of the Treasury, as Lender, dated August 12, 2009, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

10.2†	Assignment and Assumption Agreement and Third Amendment to Second Amended and Restated Secured Credit Agreement among General Motors LLC, General Motors Holdings LLC, General Motors Company and the United States Department of the Treasury, as Lender, dated as of October 19, 2009, incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

10.3	Letter Agreement regarding the Second Amended and Restated Secured Credit Agreement among General Motors Holdings LLC, as Borrower, the Guarantors, and the United States Department of the Treasury, as Lender, dated September 22, 2010, incorporated by reference to Exhibit 10.41 to Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed September 23, 2010	Incorporated by Reference

10.4†	Credit Agreement, dated as of October 27, 2010, among the General Motors Holdings LLC, the lenders party thereto, Citibank, N.A., as administrative agent, and Bank of America, N.A., as syndication agent, incorporated herein by reference to Exhibit 10.3 to Amendment No. 5 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed November 3, 2010	Incorporated by Reference

10.5†	Second Amended and Restated Loan Agreement by and among General Motors of Canada Limited, as Borrower, and the other loan parties and Export Development Canada, as Lender, dated July 10, 2009, incorporated herein by reference to Exhibit 10.5 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

10.6	Amendment to Second Amended and Restated Loan Agreement by and among General Motors of Canada Limited, as Borrower, and the other loan parties and Export Development Canada, as Lender, dated October 15, 2009, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of General Motors Company filed October 23, 2009	Incorporated by Reference

10.7	Settlement Agreement dated as of September 10, 2009, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of General Motors Company filed September 17, 2009	Incorporated by Reference

318

GENERAL MOTORS COMPANY AND SUBSIDIARIES


Exhibit Number	Exhibit Name
10.8	Agreement, dated as of October 15, 2009 between General Motors Company (fka General Motors Holding Company), General Motors LLC (fka General Motors Company) and Motors Liquidation Company, incorporated herein by reference to Exhibit 10.7 to the Current Report on Form 8-K of General Motors Company filed November 16, 2009	Incorporated by Reference

10.9	Stockholders Agreement, dated as of October 15, 2009 between General Motors Company, the United States Department of the Treasury, Canada GEN Investment Corporation (fka 7176384 Canada Inc.), the UAW Retiree Medical Benefits Trust, and, for limited purposes, General Motors LLC, incorporated herein by reference to Exhibit 10.8 to the Current Report on Form 8-K of General Motors Company filed November 16, 2009	Incorporated by Reference

10.10	Equity Registration Rights Agreement, dated as of October 15, 2009, between General Motors Company, the United States Department of Treasury, Canada GEN Investment Corporation (fka 7176384 Canada Inc.), the UAW Retiree Medical Benefits Trust, Motors Liquidation Company, and, for limited purposes, General Motors LLC, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Motors Liquidation Company filed October 21, 2009	Incorporated by Reference

10.11	Letter Agreement regarding Equity Registration Rights Agreement, dated October 21, 2010, among General Motors Company, the United States Department of Treasury, Canada GEN Investment Corporation, the UAW Retiree Medical Benefits Trust and Motors Liquidation Company, incorporated herein by reference to Exhibit 10.43 to Amendment No. 5 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed November 3, 2010	Incorporated by Reference

10.12	Master Disposition Agreement among Delphi Corporation, GM Components Holdings, LLC, General Motors Company, Motors Liquidation Company (fka General Motors Corporation), DIP Holdco 3, LLC, and the other sellers and other buyers party thereto dated July 26, 2009, incorporated herein by reference to Exhibit 10.9 to the Current Report on Form 8-K of General Motors Company filed August 7, 2009	Incorporated by Reference

10.13	Investment Commitment Agreement by and among Silver Point Capital Fund, LP, Silver Point Capital Offshore Fund, Ltd., Elliott Associates, LP, DIP Holdco 3, LLC, and General Motors Company dated July 26, 2009, incorporated herein by reference to Exhibit 10.10 to the Current Report on Form 8-K of General Motors Company filed August 7, 2009	Incorporated by Reference

10.14	Amended and Restated Global Settlement Agreement Between Delphi Corporation and General Motors Corporation, Dated September 12, 2008, incorporated herein by reference to Exhibit 10(b) to the Quarterly Report on Form 10-Q of Motors Liquidation Company filed November 10, 2008	Incorporated by Reference

10.15	UAW Retiree Settlement Agreement, dated July 10, 2009, between General Motors Company and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (the UAW), with the UAW also entering into the agreement as the authorized representative of certain persons receiving retiree benefits pursuant to collectively bargained plans, programs and/or agreement between General Motors Company and the UAW, incorporated herein by reference to Exhibit 10.12 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.16	Form of Compensation Statement, incorporated herein by reference to Exhibit 10.14 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

319

GENERAL MOTORS COMPANY AND SUBSIDIARIES


Exhibit Number	Exhibit Name

10.17	Summary of Employment Arrangement between General Motors Company and Daniel F. Akerson, incorporated herein by reference to Item 5.02 of the Current Report on Form 8-K of General Motors Company filed September 10, 2010	Incorporated by Reference

10.18	Employment Agreement for Christopher P. Liddell, incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q of General Motors Company filed May 17, 2010	Incorporated by Reference

10.19	Summary of Consulting Arrangement between General Motors Company and Stephen J. Girsky, incorporated herein by reference to Item 1.01 of the Current Report on Form 8-K of General Motors Company filed January 15, 2010	Incorporated by Reference

10.20	Summary of Employment Arrangement between General Motors Company and Stephen J. Girsky, incorporated herein by reference to Item 1.01 of the Current Report on Form 8-K of General Motors Company filed March 5, 2010	Incorporated by Reference

10.21	Summary of Employment Arrangement between General Motors Company and Edward E. Whitacre, Jr., incorporated herein by reference to Item 5.02 of the Current Report on Form 8-K of General Motors Company filed February 19, 2010	Incorporated by Reference

10.22	Summary of Fee Arrangement between General Motors Company and Edward E. Whitacre, Jr., incorporated herein by reference to Item 5.02 of the Current Report on Form 8-K of General Motors Company filed September 10, 2010	Incorporated by Reference

10.23	General Motors Executive Retirement Plan, as amended August 2, 2010, incorporated by reference to Exhibit 10.20 to Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed October 14, 2010	Incorporated by Reference

10.24	General Motors Company 2009 Long-Term Incentive Plan, as amended December 22, 2010	Filed Herewith

10.25	General Motors Company Salary Stock Plan, as amended October 5, 2010, incorporated by reference to Exhibit 10.22 to Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed October 14, 2010	Incorporated by Reference

10.26	General Motors Company Short Term Incentive Plan, incorporated by reference to Exhibit 10.17 to Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed October 14, 2010	Incorporated by Reference

10.27	Form of Restricted Stock Unit Grant made to top 25 highly compensated employees under General Motors Company 2009 Long-Term Incentive Plan, as Amended March 1, 2010, incorporated herein by reference to Exhibit 10.20 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.28	Form of Restricted Stock Unit Grant (Cash Settlement) made to top 25 highly compensated employees under General Motors Company 2009 Long-Term Incentive Plan, as Amended March 1, 2010, incorporated herein by reference to Exhibit 10.21 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.29	Form of Restricted Stock Unit Grant made to certain executive officers, incorporated herein by reference to Exhibit 10.a to the Quarterly Report on Form 10-Q of Motors Liquidation Company filed May 8, 2008	Incorporated by Reference

10.30	Form of General Motors Company 2010 Equity Grant Award Agreement	Filed Herewith

10.31	Form of General Motors Company March 15, 2010 Restricted Stock Unit Grant Agreement, as amended December 31, 2010	Filed Herewith

320

GENERAL MOTORS COMPANY AND SUBSIDIARIES


Exhibit Number	Exhibit Name

10.32	General Motors Company Vehicle Operations — Senior Management Vehicle Program (SMVP) Supplement, revised December 15, 2005, incorporated herein by reference to Exhibit 10(g) to the Annual Report on Form 10-K of Motors Liquidation Company filed March 28, 2006	Incorporated by Reference

10.33†	Amended and Restated United States Consumer Financing Services Agreement between GMAC LLC and General Motors Corporation dated May 22, 2009, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

10.34†	Amended and Restated Master Services Agreement between GMAC LLC and General Motors Corporation dated May 22, 2009, incorporated herein by reference to Exhibit 10.2 to the Current Report on Form 8-K/A of General Motors Company filed November 16, 2010	Incorporated by Reference

10.35	Agreement, dated as of October 22, 2001, between General Motors Corporation and General Motors Acceptance Corporation, incorporated herein by reference to Exhibit 10 to the Annual Report on Form 10-K of Motors Liquidation Company filed March 28, 2006	Incorporated by Reference

10.36	United States Consumer Agreement, dated as of November 30, 2006, between General Motors Corporation and GMAC LLC, incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Motors Liquidation Company filed November 30, 2006	Incorporated by Reference

10.37	Amended and Restated Warrant Agreement, dated as of October 16, 2009, between General Motors Company and U.S. Bank National Association, including Form of Warrant Certificate attached as Exhibit D thereto, relating to warrants with a $30 original ($10 after stock split) exercise price and a July 10, 2016 expiration date, incorporated herein by reference to Exhibit 10.29 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.38	Amended and Restated Warrant Agreement, dated as of October 16, 2009, between General Motors Company and U.S. Bank National Association, including Form of Warrant Certificate attached as Exhibit D thereto, relating to warrants with a $55 original ($18.33 after stock split) exercise price and a July 10, 2019 expiration date, incorporated herein by reference to Exhibit 10.30 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.39	Amended and Restated Warrant Agreement, dated as of October 16, 2009, between General Motors Company and U.S. Bank National Association, including Form of Warrant Certificate attached as Exhibit D thereto, relating to warrants with a $126.92 original ($42.31 after stock split) exercise price and a December 31, 2015 expiration date, incorporated herein by reference to Exhibit 10.31 to the Annual Report on Form 10-K of General Motors Company filed April 7, 2010	Incorporated by Reference

10.40	Amended and Restated Master Sale and Purchase Agreement, dated June 26, 2009, between General Motors Corporation, Saturn LLC, Saturn Distribution Corporation, Chevrolet-Saturn of Harlem, Inc., and General Motors Company (fka NGMCO, Inc.), incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K of Motors Liquidation Company filed July 2, 2009	Incorporated by Reference

10.41	First Amendment to Amended and Restated Master Sale and Purchase Agreement, dated June 30, 2009, between General Motors Corporation, Saturn LLC, Saturn Distribution Corporation, Chevrolet-Saturn of Harlem, Inc., and General Motors Company (fka NGMCO, Inc.), incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K of Motors Liquidation Company filed July 8, 2009	Incorporated by Reference

321

GENERAL MOTORS COMPANY AND SUBSIDIARIES


Exhibit Number	Exhibit Name
10.42	Second Amendment to Amended and Restated Master Sale and Purchase Agreement, dated July 5, 2009, between General Motors Corporation, Saturn LLC, Saturn Distribution Corporation, Chevrolet-Saturn of Harlem, Inc., and General Motors Company (fka NGMCO, Inc.), incorporated herein by reference to Exhibit 2.2 to the Current Report on Form 8-K of Motors Liquidation Company filed July 8, 2009	Incorporated by Reference

10.43	Letter Agreement regarding Series A Purchase, dated October 27, 2010, between General Motors Company and the United States Department of the Treasury, incorporated herein by reference to Item 10.42 to Amendment No. 4 to the Registration Statement on Form S-1 (File No. 333-168919) of General Motors Company filed September 28, 2010	Incorporated by Reference

10.44	Registration Rights Agreement, dated as of January 13, 2011, by and among General Motors Company, Evercore Trust Company, N.A., as trustee of the General Motors Special Hourly-Rate Employees Pension Trust, and Evercore Trust Company, N.A., as trustee of the General Motors Special Salaried Employees Pension Trust	Filed Herewith

10.45	Stockholders Agreement, dated as of January 13, 2011, by and among General Motors Company, Evercore Trust Company, N.A., as trustee of the General Motors Special Hourly-Rate Employees Pension Trust, and Evercore Trust Company, N.A., as trustee of the General Motors Special Salaried Employees Pension Trust	Filed Herewith

12	Computation of Ratios of Earnings to Fixed Charges for the Year Ended December 31, 2010, the Periods July 10, 2009 through December 31, 2009 and January 1, 2009 through July 9, 2009 and for the Years Ended December 31, 2008, 2007 and 2006	Filed Herewith

21	Subsidiaries of the Registrant as of December 31, 2010	Filed Herewith

24	Power of Attorney for Directors of General Motors Company	Filed Herewith

31.1	Section 302 Certification of the Chief Executive Officer	Filed Herewith

31.2	Section 302 Certification of the Chief Financial Officer	Filed Herewith

32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed Herewith

32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed Herewith

99.1	Consolidated Financial Statements of Ally Financial Inc. (fka GMAC Inc.) and subsidiaries at December 31, 2010 and 2009 and for each of the three years in the period ended December 31, 2010	Filed Herewith

99.2	Principal Executive Officer and Principal Financial Officer Executive Privileges and Compensation Certificate	Filed Herewith

†	Certain confidential portions have been omitted pursuant to a request for confidential treatment, which has been separately filed with the Securities and Exchange Commission.

* * * * * * *

322

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


	GENERAL MOTORS COMPANY
	(Registrant)

Date: March 1, 2011	By:	/s/ DANIEL F. AKERSON
		Daniel F. Akerson
		Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on this 1st day of March 2011 by the following persons on behalf of the Registrant and in the capacities indicated, including a majority of the directors.


Signature		Title

/s/ DANIEL F. AKERSON (Daniel F. Akerson)		Chairman and Chief Executive Officer

/s/ CHRISTOPHER P. LIDDELL (Christopher P. Liddell)		Vice Chairman and Chief Financial Officer

/s/ NICK S. CYPRUS (Nick S. Cyprus)		Vice President, Controller and Chief Accounting Officer

/s/ DAVID BONDERMAN (David Bonderman)		Director

/s/ ERROLL B. DAVIS, JR. (Erroll B. Davis, Jr.)		Director

/s/ STEPHEN J. GIRSKY (Stephen J. Girsky)		Director

/s/ E. NEVILLE ISDELL (E. Neville Isdell)		Director

/s/ ROBERT D. KREBS (Robert D. Krebs)		Director

/s/ PHILIP A. LASKAWY (Philip A. Laskawy)		Director

/s/ KATHRYN V. MARINELLO (Kathryn V. Marinello)		Director

/s/ PATRICIA F. RUSSO (Patricia F. Russo)		Director

/s/ CAROL M. STEPHENSON (Carol M. Stephenson)		Director

/s/ DR. CYNTHIA A. TELLES (Dr. Cynthia A. Telles)		Director

323

CONFIDENTIAL

GENERAL MOTORS COMPANY AND SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

(Dollars in millions)


Description	Balance at Beginning of Period		Additions Charged to Costs and Expenses		Additions Charged to Other Accounts		Deductions		Effect of Application of Fresh- Start Reporting			Balance at End of Period
Successor

For the year ended December 31, 2010
Allowances Deducted from Assets
Accounts and notes receivable (for doubtful receivables)	$	250		93		—		91		—		$	252
Other investments and miscellaneous assets (receivables and other)	$	7		—		14		14		—		$	7

For the period July 10, 2009 through December 31, 2009
Allowances Deducted from Assets
Accounts and notes receivable (for doubtful receivables)	$	—		251		—		1		—		$	250
Other investments and miscellaneous assets (receivables and other)	$	—		—		7		—		—		$	7

Predecessor

For the period January 1, 2009 through July 9, 2009
Allowances Deducted from Assets
Accounts and notes receivable (for doubtful receivables)	$	422		1,482		76		6		(1,974	)	$	—
Other investments and miscellaneous assets (receivables and other)	$	43		—		3		—		(46	)	$	—

For the Year Ended December 31, 2008
Allowances Deducted from Assets
Accounts and notes receivable (for doubtful receivables)	$	338		157		—		73		—		$	422
Other investments and miscellaneous assets (receivables and other)	$	14		—		29		—		—		$	43

324

General Motors Company 2009 Long-Term Incentive Plan

Exhibit 10.24

GENERAL MOTORS COMPANY 2009 LONG-TERM INCENTIVE PLAN

As Amended December 22, 2010

SECTION 1. Purpose. The purpose of the General Motors Company 2009 Long-Term Incentive Plan is to motivate and reward participating Employees toward the long-term success of the business by making them participants in that success. Capitalized terms used in the Plan shall have the definitions set forth in Section 11 of the Plan.

SECTION 2. Administration. The Plan shall be administered by the Committee. The Committee shall have full discretionary power and authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to (i) select the Employees of the Company and its Subsidiaries to whom Awards may be granted hereunder; (ii) determine the number of Shares to be covered by each Award granted hereunder; (iii) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property, or canceled, and (iv) interpret and administer the Plan and any Award Agreement, and establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan. The Committee may delegate to an appropriate Executive Officer of the Company responsibility for determining, within the limits established by the Committee, individual Awards for Employees who are not Executive Committee members or Executive Officers of the Company.

Terms of Awards granted to Employees subject to compliance with the provisions of the Interim Final Rule and any determinations by the Special Master for TARP Executive Compensation will be determined by the Committee and will be included in the Award Agreements for those Employees

SECTION 3. Shares Subject to the Plan.

(a) Subject to the provisions of Section 3(f) below, the aggregate number of Shares with respect to which Awards may be granted under this Plan shall not exceed 75,000,000 Shares. Shares subject to awards granted under the General Motors Company Salary Stock Plan and the General Motors Company Short-Term Incentive Plan shall reduce the number of Shares with respect to which Awards may be granted under this Plan. Each share subject to a Stock Option or Stock Appreciation Right will reduce the number of shares available for issuance under the Plan by one share, and each share subject to a Restricted Stock Unit or Stock Award will reduce the number of shares available for issuance by two and one-half shares. Subject to the provisions of Section 3(f), for awards that are intended to constitute qualified performance based compensation under 162m, grants of Options or Stock Appreciation Rights in any calendar year may not cover more than 1,000,000 shares and grants of RSUs or Stock Awards in any calendar year may not cover more than 250,000 shares.

(b) Awards granted under the Plan that are settled in cash will not count against the approved share reserve. Awards, other than Substitute Awards, that are forfeited or otherwise terminate without the issuance of Shares will no longer be charged against the maximum share limitation and will again be available for future grants. These Shares will return to the available share pool at the same ratio at which they were granted.

(c) Shares withheld by or delivered to the Company to satisfy the exercise or conversion price of an Award or in payment of taxes will not again be available for future grants.

(d) Substitute Awards will not reduce the number of Shares authorized for grant hereunder.

(e) Any Shares delivered in settlement of Awards hereunder may consist, in whole or in part, of authorized and unissued Shares, treasury Shares or Shares purchased in the open market or otherwise.

(f) In the event of any merger, reorganization, consolidation, re-capitalization, stock split or reverse stock split, stock dividend, extraordinary cash dividend, or other change in corporate structure affecting the Company’s Shares, the Committee shall make such adjustments in the aggregate number of Shares which may be delivered under this Plan and the number of Shares subject to Awards granted under this Plan (provided the number of Shares subject to any Award shall always be a whole number), as may be determined to be appropriate by the Committee in order to prevent unintended enhancement or diminution of the benefits or potential benefits intended to be conferred on Participants pursuant to Awards granted hereunder.

SECTION 4. Eligibility.

(a) Any Employee shall be eligible to be selected as a Participant.

(b) Conditions Precedent. As a condition precedent to the vesting and settlement of any portion of an Award, Participants shall: (i) continue to render services as an Employee (unless this condition is waived by the Committee), (ii) refrain from engaging in any activity which, in the opinion of the Committee, is in any manner inimical or in any way contrary to the best interests of the Company, (iii) not for a period of 12 months following any voluntary termination of employment, directly or indirectly, knowingly induce any Employee or employee of an affiliate of the Company to leave their employment for participation, directly or indirectly, with any existing or future business venture associated with such individual, and (iv) furnish to the Company such information with respect to the satisfaction of the foregoing conditions precedent as the Committee shall reasonably request. Except as otherwise provided under paragraph 6(d)(i) below, the failure by any Participant to satisfy such conditions precedent shall result in the immediate cancellation of the unvested portion of any Award previously made to such Participant and such Participant shall not be entitled to receive any consideration in respect of such cancellation.

SECTION 5. The Committee may require a Participant to enter into such agreements as the Committee considers appropriate and in the best interests of the Company.

SECTION 6. Stock Awards and Restricted Stock Units.

(a) Grant and Performance Conditions. The Committee may grant Restricted Stock Unit Awards or Stock Awards to Participants, from time to time. Such Awards shall be valued by reference to a designated number of Shares. A Stock Award or RSU Award shall be subject to the terms and conditions set forth in this Section 6 and the terms set forth in the applicable Award Agreement. In the case of a discrepancy between the Plan and the RSU Award Agreement, the terms of the RSU Award Agreement will control.

(b) Nonforfeitability. No portion of a Stock Award or RSU Award shall become nonforfeitable or transferable, as applicable, prior to a date specified by the Committee in the Award Agreement except as set forth in Section 6(d). A Participant must remain continuously employed by the Company or a Subsidiary through the nonforfeitability date specified in the Award Agreement except as set forth in Section 6(d). Awards shall be conditioned upon the achievement of Performance Conditions, if applicable, as specified in the Award Agreement.

(c) Payment and Delivery. No RSU Award shall be paid or settled prior to the first applicable Settlement Date, except as provided in Section 6(d)(i).

(d) Termination of Employment. Except as set forth in this subsection, upon the termination of a Participant’s employment, any Award (or portion thereof) held by such Participant that has not become nonforfeitable in accordance with Section 6(b) at the time of such termination shall be forfeited.

(i) In the event that the Participant’s employment terminates as a result of his or her death, a pro rata portion of the Award held by such Participant shall be retained and become nonforfeitable. The retained portion shall be determined by multiplying the number of shares comprising or underlying the Award by a fraction, the numerator of which is the number of full and partial calendar months elapsed from the Proration Date to the date of death and the denominator of which is the number of months from the Grant Date to the date on which such Award would have become nonforfeitable in accordance with Section 6(b). In no event will such fraction exceed 1.0. The retained portion of any RSU Award will be settled in the form provided in Section 6(e) and the Settlement Date for such Awards will occur as soon as practicable after the date of death.

(ii) In the event of the Participant’s Disability, all Awards (or portions thereof) held by such Participant will be retained and any RSU awards will be subject to the payment and delivery provisions set forth in Section 6(c). The retained RSU Award (or portion thereof) will be settled in the form provided in Section 6(e).

(iii) In the case of any Award which is not a TARP Award, in the event that the Participant retires from the Company at age 55 or older with ten or more years of service (or equivalent retirement eligibility in countries outside the United States) or for Awards granted after March 15, 2010 , retirement at age 55 or older with ten or more years of service (or equivalent retirement eligibility in countries outside the United States) or age 62 or older, subject to other terms and conditions of the Plan, a pro rata portion of the Award held by such Participant shall be retained and become nonforfeitable. The retained portion shall be determined by multiplying the number of shares comprising or underlying the Award by a fraction, the numerator of which is the number of full and partial calendar months elapsed from the Proration Date to the date of retirement and the denominator of which is the number of months from the Grant Date to the date on which such Award would have become nonforfeitable in accordance with Section 6(b). In no event will such fraction exceed 1.0. Any retained RSU Awards will be settled on the Settlement Date in the form provided in Section 6(e).

(iv) In the case of any TARP Award, in the event that the Participant retires from the Company at age 55 or older with ten or more years of service (or equivalent retirement eligibility in countries outside the United States) or for Awards granted after March 15, 2010 , the Participant retires at age 55 or older with ten or more years of service (or equivalent retirement eligibility in countries outside the United States) or age 62 or older, and such Participant has remained continuously employed for two years from the Grant Date, subject to other terms and conditions of the Plan, a prorated portion of the Award held by such Participant shall be retained and become nonforfeitable. The retained portion shall be determined by multiplying the number of shares comprising or underlying the Award by a fraction, the numerator of which is the number of full and partial calendar months elapsed from the Proration Date to the date of retirement and the denominator of which is the number of months from the Grant Date to the date on which such Award would have become nonforfeitable in accordance with Section 6(b). In no event will such fraction exceed 1.0. Any retained RSU Awards will be settled on the Settlement Date in the form provided in Section 6(e).

(v) Notwithstanding the above provisions, any Participant who retires or separates from the Company or a Subsidiary under the terms of an approved separation agreement or program will not be entitled to retain any portion of an Award.

(e) Form of Settlement. Each RSU Award shall be settled on any applicable Settlement Date by delivery of Shares. If a Settlement Date for any RSU Award occurs prior to the date which is six months following the consummation of an underwritten public offering of Shares, the Award shall be settled by the delivery of the Fair Market Value of Shares, in cash. Such delivery shall take place promptly after the applicable Settlement Date; provided, however, that such delivery shall be made in all events not later than December 31 of the calendar year in which such Settlement Date occurs.

(f) No Rights of a Shareholder. No holder of any RSU Award shall have any rights to dividends or any other rights of a stockholder with respect to Shares subject to the Award prior to becoming the record owner of such Shares.

(g) Leave of Absence. Notwithstanding Section 6(d), a qualifying leave of absence shall not constitute a termination of employment. A Participant’s absence or leave shall be deemed to be a qualifying leave of absence if approved by the Committee in its sole discretion.

SECTION 7. Stock Options and Stock Appreciation Rights

(a) Grant Price. The Grant Price of any Option or SAR shall not be less than the Fair Market Value (and in no event less than the par value) of the Shares on the date the Option or SAR is granted, except in the case of Substitute Awards.

(b) ISO; Nonqualified Option. Determination as to whether Options granted shall be “Incentive Stock Options” (“ISO’s), Nonqualified Stock Options, and as to any restrictions

which shall be placed on Options, shall be made by the Committee under such procedures as it may, from time to time, determine and each Option granted hereunder shall be identified as either an ISO or a Nonqualified Stock Option at the time of grant.

(c) Terms of Options or Stock Appreciation Rights. Options and SARs granted under this Plan shall be subject to the following provisions, except as otherwise determined by the Committee:

(i) Vesting and Exercise. Except in the case of death or except as set forth in Section 7(c)(iii)(B) or as set forth in Section 9, no Option or SAR shall vest or become exercisable prior to the first anniversary of the “Grant Date” (or such other date as may be established by the Committee or its delegate(s)); and after such date Options or SARs shall be exercisable only in accordance with the terms and conditions established at the time of grant and reflected in the Award Agreement. Unless otherwise specified in the Award Agreement, beginning on the first anniversary of the Grant Date, Options or SARs will vest and become exercisable in one-third increments. Subject to paragraph 7(c)(iii), each increment will first vest and become exercisable on the first, second and third anniversaries of the Grant Date, respectively. Upon becoming exercisable, the Option or SAR will remain exercisable until expiration, except as set for in Section 7(c)(iii).

(ii) Term of Options or SARs. The normal expiration date of an Option or SAR shall be determined at the time of grant, provided that each Option or SAR shall expire not more than ten years after the Grant Date.

(iii) Termination of Employment. Except as set forth in this subsection, upon the termination of a Participant’s employment, any Award (or portion thereof) held by such Participant that has not vested in accordance with Section 7(c)(i) at the time of such termination shall be forfeited

(A) If the Employee quits employment with the Company or is terminated by the Company for inadequate job performance, or for willful misconduct harmful to the Company, all unvested and vested Options or SARs held by such Participant shall be forfeited as of the date of such termination, or if earlier, as of the date that such grounds for termination by the Company first exist.

(B) If the Employee retires from the Company at age 55 or older with ten or more years of credited service (or for a Participant who is a tax resident of a location outside the United States at equivalent normal retirement age in such country) or age 62 or older in the United States, subject to the other terms and conditions of the Plan, all Options or SARs will vest immediately, and will be exercisable until the expiration date of such Option. Notwithstanding this provision, the Committee may from time to time determine in its discretion that holders of Options or SARs retiring from the Company during specified time periods under specified circumstances may vest in and retain some portion of their Options or SARs granted in the year the retirement occurs.

(C) If employment is terminated by reason of death, all Options shall immediately vest and remain exercisable until the third anniversary of the date of death or, if earlier, the expiration date of such Option.

(D) If an employee becomes disabled, Options will continue to vest and become exercisable in accordance with the original terms of the grant while the Employee remains on the disability leave and, subject to the other terms and conditions of the Plan, vested Options will remain exercisable for the full remaining term.

(E) If employment terminates for any reason other than as set forth above (including, for the avoidance of doubt, retirement not meeting the conditions set forth in Section 7(c)(iii)(B) or other voluntary termination with the consent of the Company), subject to the other terms and conditions of the Plan, all vested Options will remain exercisable until the third anniversary of the date of termination of employment or, if earlier, the expiration date of such Option.

(F) If employment terminates for any reason (other than death) prior to the first anniversary of the date an Option is granted, except as provided in Section 7(c)(iii)(B) the Option shall be forfeited and terminate on the date of termination of employment.

(iv) Leave of Absence. Notwithstanding Section 7(c)(iii), a qualifying leave of absence shall not constitute a termination of employment. A Participant’s absence or leave shall be deemed to be a qualifying leave of absence if approved by the Committee in its sole discretion.

(v) Payment of Exercise Price. All Shares purchased upon exercise of any Option shall be paid for in full at the time of purchase or adequate provision for such payment shall be made. Such payment shall be made (A) in cash, (B) through delivery or constructive delivery of Shares (provided that such Shares may be subject to such holding period or other requirement as the Committee may impose, (C) a combination of cash and stock or (D) through a broker-assisted cashless exercise facility if established by the Company. Any Shares delivered as a result of an Option exercise shall be valued at their Fair Market Value on the exercise date of the Option.

SECTION 8. Amendments, Termination and Recoupment.

(a) The Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided, however; that no such amendment, alteration, suspension, discontinuation or termination shall be made without (i) stockholder approval if such approval is necessary to comply with the rules of the New York Stock Exchange or such other national securities exchange as may be from time to time the principal trading market for Shares, and (ii) except as provided in Section 8(f), the consent of the affected Participant, if such action would materially impair the rights of such Participant under any outstanding Award.

(b) The Committee may delegate to another committee, as it may appoint, the authority to take any action consistent with the terms of the Plan, either before or after an Award has been granted, which such other committee deems necessary or advisable to comply with any government laws or regulatory requirements of a foreign country, including, but not limited to, modifying or amending the terms and conditions governing any Awards, or establishing any local country plans as sub-plans to this Plan. In addition, under all circumstances, the Committee may make non-substantive administrative changes to the Plan so as to conform with or take advantage of governmental requirements, statutes or regulations.

(c) The Committee may amend the terms of any Award and any Award Agreement theretofore granted, prospectively or retroactively, but no such amendment shall materially impair the rights of any Participant without his or her consent except as provided in Section 8(f).

(d) Notwithstanding any provision of this Plan to the contrary, any Award made and any amount of cash or Shares delivered in settlement thereof to a Participant under this Plan is subject to being called for repayment to the Company in any situation where the Board of Directors or a Committee thereof determines that the Company’s Policy on Recoupment of Compensation requires such repayment, or that repayment is otherwise required by the rules of any national securities exchange on which the stock of the Company may be listed. The determination regarding repayment under this provision shall be within the sole discretion of the Committee and shall be final and binding on the Participant and the Company.

(e) If any provision of the Plan or any Award Agreement is invalid or unenforceable in any jurisdiction, (i) such provision shall be modified or eliminated, but only to the extent necessary to eliminate such invalidity or unenforceability and (ii) such invalidity, unenforceability, modification or elimination shall not affect the validity or enforceability of such provision in any other jurisdiction and shall not affect the validity or enforceability of any other provision of the Plan or any Award.

(f) Any Award hereunder that is or becomes a TARP Award is intended to comply with applicable Treasury regulations under TARP and shall be interpreted and amended as necessary to comply with any interpretations or guidance of the Special Master or his successor. In the event that an Award hereunder becomes a TARP Award, or is otherwise affected by any decision of the Special Master or his successor, the Company shall inform the affected Participant.

SECTION 9. General Provisions.

(a) An Award may not be sold, exercised, pledged, assigned, hypothecated, transferred, or disposed of in any manner except as may be expressly set forth in the Award Agreement.

(b) Neither the Award nor any benefits arising out of this Plan shall constitute part of a Participant’s employment or service contract with the Company or any Subsidiary. The Awards under this Plan are not intended to be treated as compensation for any purpose under any other Company plan.

(c) No Employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants under the Plan.

(d) Nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment or service contract or confer or be deemed to confer on any Employee or Participant any right to continue in the employ or service of, or to continue any other relationship with the Company or any Subsidiary or limit in any way the right of the Company or any Subsidiary to terminate an Employee’s employment or a Participant’s service at any time, with or without cause.

(e) All Shares delivered under the Plan pursuant to any Award shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, any instructions of the Special Master and the Committee may cause a legend or legends to be put on any certificates or other indicia of ownership of such Shares to make appropriate reference to such restrictions.

(f) No Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would comply with all applicable requirements of the U.S. federal securities laws and any other laws to which such offer, if made, would be subject.

(g) The Company and its Subsidiaries shall be authorized to withhold from any Award granted or payment due under the Plan the amount of withholding taxes due in respect of an Award or payment hereunder and to take such other action as may be necessary in the opinion of the Company or its Subsidiaries to satisfy all obligations for the payment of such taxes. The Committee shall be authorized to establish procedures for election by Participants to satisfy such obligation for the payment of such taxes by delivery of or transfer of Shares to the Company (to the extent the Participant has owned the surrendered Shares for more than six months if such a limitation is necessary to avoid a charge to the Company for financial reporting purposes), or by directing the Company to retain Shares (up to the minimum required tax withholding rate, to the extent such limitation is necessary to avoid a charge to the Company for financial reporting purposes) otherwise deliverable in connection with the Award.

(h) Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

(i) The provisions of the Plan shall be construed, regulated and administered according to the laws of the State of Delaware without giving effect to principles of conflicts of law, except to the extent superseded by any controlling Federal statute.

(j) Awards may be granted to Participants who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees employed in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy; provided, however, that amendments deemed necessary under this Section 9(j) may not be made without stockholder approval or Participant approval, if such approval is required by Section 78. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Employees on assignments outside their home country.

(k) If the Company shall have any unpaid claim against the Participant arising out of or in connection with the Participant’s employment with the Company, prior to settlement of an Award, such claim may be offset against Awards under this Plan (up to $5,000 per year) and upon settlement of any Award, such claim may be offset in total. Such claim may include, but is not limited to, unpaid taxes or corporate business credit card charges.

(l) Notwithstanding any provision of this Plan, no Plan elections, modifications or distributions will be allowed or implemented if they would cause the Participant to be subject to tax (including interest and penalties) under Section 409A of the Code. The settlement of Awards hereunder may be delayed up to six months following a Participant’s termination of employment if the Participant is a “specified employee” for purposes of Section 409A and such delay is necessary to avoid the imposition of tax (including interest and penalties) under Section 409A.

SECTION 10. Term of Plan. The Plan shall terminate on the day after the date when all Awards hereunder have been settled in accordance with the terms of the Plan.

SECTION 11. Definitions. As used in the Plan, the following terms shall have the meanings set forth below:

(a) “Award” shall mean any Options, Stock Appreciation Rights, Stock Award or award of Restricted Stock Units granted hereunder.

(b) “Award Agreement” shall mean the written instrument evidencing the terms of an Award hereunder.

(d) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto, and any reference to any section of the Code shall also include any successor provision thereto.

(e) “Committee” shall mean the Executive Compensation Committee of the Board, its named successor, or such other persons or committee to whom the Board has delegated any authority, as may be appropriate.

(f) “Company” shall mean General Motors Company, a Delaware Company, or its successor.

(g) “Disability” shall mean the Participant is unable to engage in any gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.

(h) “Employee” shall mean any individual who is employed by the Company or any Subsidiary.

(i) “Exchange Act” shall mean the U.S. Securities Exchange Act of 1934.

(j) “Executive Officer” shall mean any Participant required to provide periodic statements of beneficial ownership of Company equity securities as an executive officer of the Company under Section 16(a) of the Exchange Act.

(k) “Fair Market Value” shall mean the value of a Share, determined as follows: prior to the establishment of when-issued trading of the Shares on a national securities exchange, as determined by the Committee in its discretion; and after the establishment of when-issued trading of the Shares on a national securities exchange, the average of the high and low trading (or when-issued trading) prices for the Shares as reported on such national securities exchange for the applicable date or, if no such prices are reported for that date, the average of the high and low trading (or when-issued trading) prices on the immediately preceding date for which such prices were reported.

(l) “Grant Date” shall mean the grant date specified in the Award Agreement.

(m) “Grant Price” shall mean the average of the high and low trading price per Share on the Grant Date.

(n) “Incentive Stock Options” or “ISO” shall mean an Option granted hereunder that is intended to comply with the provisions of Section 422 of the Code.

(o) “Nonqualified Option” shall mean an Option that is not an ISO.

(p) “Options” or “Stock Options” shall mean any right granted to a Participant under the Plan pursuant to and described in Section 7 allowing such Participant to purchase Shares at such price or prices and during such period or periods, as the Committee shall determine and shall include ISOs and Nonqualified Options.

(q) “Participant” shall mean an Employee who is selected by the Committee to receive an Award under the Plan

(r) “Plan” shall mean this General Motors Company 2009 Long-Term Incentive Plan, as amended from time to time.

(s) “Performance Conditions” shall mean measures of the operational performance of the Company or other performance criteria selected by the Committee, the degree of achievement of which will determine the portion of an Award that is earned by the Participant as specified in the Award Agreement. In creating these measures, the Committee may establish the

specific goals based upon or relating to one or more of the following business criteria: asset turnover, cash flow, contribution margin, cost objectives, cost reduction, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation and amortization (EBITDA), earnings per share, economic value added, free cash flow, increase in customer base, initial public offering, inventory turnover, liquidity, market share, net income, net income margin, operating cash flow, operating profit margin, pre-tax income, productivity, profit margin, quality, return on assets, return on net assets, return on capital, return on equity, revenue, revenue growth, and/or warranty. The business criteria may be expressed in absolute terms or relative to the performance of other companies or to an index.

(t) “Proration Date” shall be a date established by the Committee at the time of grant of an Award and specified in the Award Agreement. If no such date is established, the Proration Date shall be the Grant Date.

(u) “Restricted Stock Unit” or “RSU” shall mean any unit granted pursuant to and described in Section 6.

(v) “Settlement Date” shall mean the date on which the Award becomes nonforfeitable and payable in accordance with the provisions of the Plan and the Award Agreement.

(w) “Shares” shall mean shares of the common stock of the Company, $0.01 par value.

(x) “Special Master” shall mean the Office of the Special Master for TARP Executive Compensation, established by the United States Secretary of the Treasury under the American Recovery and Reinvestment Act of 2009 or any other office or agency which succeeds to the powers thereof.

(y) “Stock Appreciation Right” shall mean an Award denominated in Shares that entitles the Participant within the exercise period to receive a payment equal to the increase in value between the Grant Price and the fair market value of the underlying Shares at date of exercise.

(z) “Stock Award” shall mean an Award of shares hereunder which may be subject to such restrictions on transfer and/or forfeitability conditions as are specified in the applicable Award Agreement.

(aa) “Subsidiary” shall mean (i) a company of which capital stock having ordinary voting power to elect a majority of the board of directors of such company is owned, directly or indirectly, by the Company or (ii) any unincorporated entity in respect of which the Company can exercise, directly or indirectly, comparable control to that described in clause (i).

(bb) “Substitute Award” shall mean an Award granted hereunder in assumption or replacement of an award issued by a company acquired by the Company or with which the Company or its Subsidiary combines.

(cc) “TARP Award” shall mean an Award hereunder that is at any time required to comply with the requirements for “long-term restricted stock” set forth in Treasury Regulations Section 31 CFR 30.1 (Q-1) and as interpreted and applied by the Special Master.

(dd) “Unit” shall mean a Restricted Stock Unit or RSU.

Form of General Motors Company 2010 Equity Grant Award Agreement

Exhibit 10.30

Template 1

December 31, 2010

General Motors Company 2010 Equity Grant Award Agreement

2010 Short Term Incentive Equity & 2010 Long Term Incentive Equity

Private and GM Confidential

[insert name of Participant]

[insert location (e.g., GM do Brasil) of Participant]

Dear [insert name]

This letter describes the details under which you are being granted a Stock Award under the General Motors Company (GM) 2009 Long-Term Incentive Plan, as amended December 22, 2010 (the Plan).

A copy of the Plan can be found on Execunet in MySocrates. Capitalized terms used in this Award Agreement have the meaning given in the Plan unless noted otherwise. In the event of any conflict between this Award Agreement and the Plan, the terms of this Award Agreement shall prevail.

The full terms of your Award are set out in this Award Agreement and the Plan.

Details of the Award


Feature		Description

Issuer		General Motors Company, a Delaware corporation

Number of Shares Granted to You		[*insert number] Restricted Stock Share (RSs*) under the General Motors Company 2009 Long-Term Incentive Plan as amended December 22, 2010.

Grant Date		December 31, 2010

Proration Date		Not Applicable

Payment		No amount is payable by you for the issuance of this Stock Award or in connection with the settlement of any Stock Award.

Nonforfeitability		This Award is not subject to forfeiture.

Performance Condition		Not applicable


Settlement Conditions and Settlement Date(s):		Shares of GM Common Stock will be transferred to your account at Solium Capital on the Grant Date and will be restricted from sale or transfer until the Settlement Date(s). The Stock Award is non-forfeitable during the restriction period. The restrictions from sale or transfer of Shares underlying this Stock Award will lapse on the following Settlement Date(s) : XXX shares delivered will become unrestricted December 31, 2011 XXX shares delivered will become unrestricted December 31, 2013

Form of Payment		Shares of GM Common Stock credited to your account at Solium on the Grant Date will become unrestricted on the Settlement Date(s) above.

Termination of Employment		Stock Awards will become unrestricted and transferrable on the scheduled Settlement Date(s)

Important Information about TARP		The Corporation is subject to the requirements of the American Recovery and Reinvestment Act of 2009, and regulations issued by the U.S. Department of the Treasury thereunder. These requirements are known as “TARP” and are interpreted by the Office of the Special Master for TARP Executive Compensation. This Award may become subject to special requirements under TARP. If necessary, we have the right to change this Award, or interpret its provisions, so as to make it comply with TARP and rulings by the Special Master thereunder. In general, TARP applies to Awards granted to or held by the 100 most highly compensated employees of the Corporation and its Subsidiaries, and more stringent requirements apply to Awards granted to or held by the 25 most highly compensated employees. The determinations of these groups are made annually. If your Award is or becomes subject to TARP or to any rulings of the Special Master, you will be informed.

Certain Defined Terms		Certain terms used in this Award Agreement are defined in the Plan document. Some of these definitions are summarized below.

Additional Terms

The following additional terms apply to this Stock Award, your participation in the Plan and the grant of this Stock Award to you. By accepting the Grant you irrevocably agree and acknowledge in favor of GM that:

1.	to enable GM to issue you Stock Awards (and any Shares), and administer the Plan and any Award, you consent to the exchange and disclosure of your personal information, including transmission of that information from your country of employment, residence or citizenship, to other countries;

2.	the Plan is established voluntarily by GM, it is discretionary in nature and it may be modified, suspended or terminated by GM at any time, as provided in the Plan;

3.	the Award and your participation in the Plan is not offered in lieu of, or in substitution for, any payment of remuneration, severance payments, leave entitlements, or any other compensation payable to you;

4.	participation in the Plan is voluntary and occasional and does not create any contractual or other right to future participation in the Plan, Awards or benefits in lieu of participation in the Plan, even if Awards are offered repeatedly;

Awards under, and your participation in, the Plan do not form part of your remuneration for the purposes of determining payments in lieu of notice of termination of your employment of office, severance payments, leave entitlements, or any other compensation payable to you. No Award, payment, or other right or benefit, under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit-sharing, group insurance, welfare or benefit plan of any GM Subsidiary;

GM, any of GM’s Subsidiaries, their respective affiliates, officers and employees make no representation concerning the financial benefit or taxation consequences of any Award or participation in the Plan. You are strongly advised to seek your own professional legal and taxation advice concerning the impact of the Plan and your Award;

7.	the future value of the underlying Shares is unknown and cannot be predicted with certainty and the Shares may increase or decrease in value;

you will have no entitlement to compensation or damages as a result of any loss or diminution in value of Shares, RSUs or any other rights acquired contract; pursuant to the Plan, including, without limitation, as a result of the termination of your employment by GM or any of its Subsidiaries for any reason whatsoever and whether or not in breach of; and

9.	you have read this Award Agreement and the Plan carefully and understand their terms.

Acceptance Offer

To accept this offer you will need to follow the link below and indicate your acceptance of all the terms outlined in this Agreement and the Plan not later than January 31, 2011. In the United States, this Award will be taxable income for 2010 regardless of the timing of your acceptance. If you do not accept the grant by that time, this offer will lapse and be incapable of acceptance (unless otherwise agreed to by GM).

Method of Acknowledgement.

If you have any questions concerning this offer or the Plan you should refer to Execunet or Global Compensation (Chris Tipton +1-313-665-3012).

Yours sincerely,

Form of General Motors Company Restricted Stock Unit Grant Agreement, as amended

Exhibit 10.31

Template 3

December 31, 2010

General Motors Company March 15, 2010 Restricted Stock Unit Grant

As Amended December 31, 2010

Private and GM Confidential

[insert name of Participant]

[insert location (e.g., GM do Brasil) of Participant]

Dear [insert name]

This letter amends the terms of your Award of Restricted Stock Units granted March 15, 2010 under the General Motors Company (GM) 2009 Long-Term Incentive Plan, as amended December 22, 2010 (the Plan).

The full terms of your amended Award are set out in this Award Agreement and the Plan.

Details of the Award


Feature		Description

Issuer		General Motors Company, a Delaware corporation

Original Number of RSUs Granted to You		[*insert number] Restricted Stock Units (RSUs*) under the General Motors Company 2009 Long-Term Incentive Plan as amended March 1, 2010.

Original Grant Date		March 15, 2010

Amendment:		Effective December 31, 2010, the above Award has been amended by the Executive Compensation Committee of the General Motors Board of Directors to a Stock Award comprised of fully vested Restricted Stock

Restricted Stock Shares		[*insert number*] Restricted Stock Shares granted under the General Motors Company 2009 Long-Term Incentive Plan as amended December 22, 2010.

Payment		No amount is payable by you for the issuance of this Stock Award or in connection with the settlement of any Stock Award.

Nonforfeitability		This grant is not subject to forfeiture.


Performance Condition		Not applicable

Settlement Conditions and Settlement Date(s):		Shares of GM Common Stock will be transferred to your Solium account effective December 31, 2010 and will be restricted from sale or transfer until the Settlement Date(s) below. This Stock Award is non-forfeitable during the restriction period. The restriction from sale and transfer will lapse on the following Settlement Date(s): 100% of the Stock Award will become unrestricted March 15, 2013

Form of Payment		Shares of GM Common Stock credited to your account at Solium on the Grant Date will become unrestricted on the Settlement Date(s) above.

Termination of Employment		Undelivered RSUs will be settled on the scheduled settlement date

Important Information about TARP		The Corporation is subject to the requirements of the American Recovery and Reinvestment Act of 2009, and regulations issued by the U.S. Department of the Treasury thereunder. These requirements are known as “TARP” and are interpreted by the Office of the Special Master for TARP Executive Compensation. This Award may become subject to special requirements under TARP. If necessary, we have the right to change this Award, or interpret its provisions, so as to make it comply with TARP and rulings by the Special Master thereunder. In general, TARP applies to Awards granted to or held by the 100 most highly compensated employees of the Corporation and its Subsidiaries, and more stringent requirements apply to Awards granted to or held by the 25 most highly compensated employees. The determinations of these groups are made annually. If your Award is or becomes subject to TARP or to any rulings of the Special Master, you will be informed.

Certain Defined Terms		Certain terms used in this Award Agreement are defined in the Plan document. Some of these definitions are summarized below.

Additional Terms

The following additional terms apply to the Award to you, your participation in the Plan and the grant of RSUs (and any Shares) or Stock Awards to you. By accepting the Grant you irrevocably agree and acknowledge in favor of GM that:

1.	to enable GM to issue you RSUs (and any Shares), and administer the Plan and any Award, you consent to the exchange and disclosure of your personal information, including transmission of that information from your country of employment, residence or citizenship, to other countries;

2.	the Plan is established voluntarily by GM, it is discretionary in nature and it may be modified, suspended or terminated by GM at any time, as provided in the Plan;

3.	the Award and your participation in the Plan is not offered in lieu of, or in substitution for, any payment of remuneration, severance payments, leave entitlements, or any other compensation payable to you;

4.	participation in the Plan is voluntary and occasional and does not create any contractual or other right to future participation in the Plan, Awards or benefits in lieu of participation in the Plan, even if Awards are offered repeatedly;

GM, any of its Subsidiaries, their respective affiliates, officers and employees make no representation concerning the financial benefit or taxation consequences of any Award or participation in the Plan. You are strongly advised to seek your own professional legal and taxation advice concerning the impact of the Plan and your Award;

7.	the future value of the underlying Shares is unknown and cannot be predicted with certainty and the Shares may increase or decrease in value;

you will have no entitlement to compensation or damages as a result of any loss or diminution in value of Shares, RSUs or any other rights acquired pursuant to the Plan, including, without limitation, as a result of the termination of your employment by GM or any of its Subsidiaries for any reason whatsoever and whether or not in breach of contract;

9.	you have read this Award Agreement and the Plan carefully and understand their terms.

Acceptance Offer

Method of Acknowledgement.

If you have any questions concerning this offer or the Plan you should refer to Execunet or Global Compensation (Chris Tipton +1-313-665-3012).

Yours sincerely,

Registration Rights Agreement

Exhibit 10.44

EXECUTION VERSION

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of January 13, 2011, by and among GENERAL MOTORS COMPANY, a Delaware corporation (the “Corporation”), Evercore Trust Company, N.A. (“Evercore”), as trustee of, and acting on behalf of, the GENERAL MOTORS SPECIAL HOURLY-RATE EMPLOYEES PENSION TRUST (the “Hourly Plan Trust”) established under the GENERAL MOTORS HOURLY-RATE EMPLOYEES PENSION PLAN (the “Hourly Pension Plan”) for the account and on behalf of the Hourly Pension Plan, and Evercore, as trustee of, and acting on behalf of, the GENERAL MOTORS SPECIAL SALARIED EMPLOYEES PENSION TRUST (individually, the “Salaried Plan Trust”, and, together with the Hourly Plan Trust, the “Trusts” ) established under the GENERAL MOTORS RETIREMENT PROGRAM FOR SALARIED EMPLOYEES (the “Salaried Pension Plan” ) for the account and on behalf of the Salaried Pension Plan.

WHEREAS, concurrently with the execution of this Agreement, the Corporation, the Hourly Plan Trust and the Salaried Plan Trust have executed that certain Contribution Agreement, dated as of the date hereof, pursuant to which the Corporation is contributing (i) to the Hourly Plan Trust 40,404,041 shares of common stock, par value $0.01 per share, of the Corporation (“Common Stock”), and (ii) to the Salaried Plan Trust 20,202,020 shares of Common Stock (such shares of Common Stock contributed to the Trusts, the “Common Shares”);

WHEREAS, concurrently with the execution of this Agreement, the Corporation, the Hourly Plan Trust and the Salaried Plan Trust have executed that certain Stockholders Agreement, dated as of the date hereof, to govern the rights and obligations of the parties with respect to certain matters relating to the Corporation and each Trust’s ownership and voting of the Common Shares; and

WHEREAS, the Corporation has agreed to provide the Hourly Plan Trust and the Salaried Plan Trust with registration rights with respect to the Common Shares that are held by each of them and their permitted assigns, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained in this Agreement, and for other good and valuable consideration, the value, receipt and sufficiency of which are acknowledged, the parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Certain Defined Terms. As used in this Agreement, the following terms have the following meanings set forth below or in the sections set forth below:

“Adverse Disclosure” means public disclosure of material non-public information that, in the Corporation’s good faith judgment, after consultation with independent outside counsel to the Corporation, (a) would be required to be made in any registration statement or report filed with the SEC by the Corporation so that such registration statement or report would not be materially misleading; (b) would not be required to be made at such time but for the filing of such registration statement; and (c) the Corporation has a bona fide business purpose for not disclosing publicly.

“Adverse Effect” shall have the meaning set forth in Section 2.1.6.

“Advice” shall have the meaning set forth in Section 2.7.

“Affiliate” means, with respect to any Person, any other Person who Controls, is Controlled by or is under common Control with, such Person.

“Agreement” shall have the meaning set forth in the Preamble.

“Co-Managers” shall have the meaning set forth in Section 2.1.4(a).

“Common Shares” shall have the meaning set forth in the Recitals.

“Common Stock” shall have the meaning set forth in the Recitals.

“Control” means the direct or indirect power to direct or cause the direction of management or policies of a Person, whether through the ownership of voting securities, general partnership interests or management member interests, by contract or trust agreement, pursuant to a voting trust or otherwise. “Controlling” and “Controlled” have the correlative meanings.

“Corporation” shall have the meaning set forth in the Preamble.

“Corporation Shelf Registration” shall have the meaning set forth in Section 2.2.1.

“Demand Registration” shall have the meaning set forth in Section 2.1.1(a).

“Demand Request” shall have the meaning set forth in Section 2.1.1(a).

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

“Equity Registration Rights Agreement” means that certain Equity Registration Rights Agreement, dated as of October 15, 2009, by and among the Corporation, the United States Department of the Treasury, Canada GEN Investment Corporation (formerly known as 7176384 Canada Inc.), the UAW Retiree Medical Benefits Trust, Motors Liquidation Company and, for limited purposes, General Motors LLC, as amended from time to time, including the supplemental Letter Agreement, dated October 21, 2010, among the Corporation, the United States Department of the Treasury, Canada GEN Investment Corporation, the UAW Retiree Medical Benefits Trust and Motors Liquidation Company.

“Evercore” shall have the meaning set forth in the Preamble.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“Excluded Registration” means a registration under the Securities Act of (a) securities pursuant to one or more Demand Registrations pursuant to Article 2 hereof, (b) securities registered on Form S-4 or S-8 or any similar successor forms, (c) securities convertible into or exercisable or exchangeable for Common Stock and (d) securities registered on Form S-3 or any successor form covering solely securities issued under a dividend reinvestment program.

“Existing Registrable Securities” means “Registrable Securities,” as defined in the Equity Registration Rights Agreement.

“Existing Registrable Securities Holder” means “Holder,” as defined in the Equity Registration Rights Agreement.

“FINRA” shall have the meaning set forth in Section 2.5(a)(xvi).

“Governmental Authority” means any United States or non-United States federal, provincial, state or local government or other political subdivision thereof, any entity, authority, agency or body exercising executive, legislative, judicial, regulatory or administrative functions of any such government or political subdivision, and any supranational organization of sovereign states exercising such functions for such sovereign states.

“Holder” means each of (a) the Hourly Plan Trust, (b) the Salaried Plan Trust and (c) any direct or indirect transferee of any Holder who shall become a party to this Agreement in accordance with Section 2.10.

“Hourly Pension Plan” shall have the meaning set forth in the Preamble.

“Hourly Plan Trust” shall have the meaning set forth in the Preamble.

“Indemnitee” shall have the meaning set forth in Section 2.9.1.

“Indemnitor” shall have the meaning set forth in Section 2.9.3(a).

“Initial Sale Time” shall have the meaning set forth in Section 2.9.1.

“Inspectors” shall have the meaning set forth in Section 2.5(a)(xii).

“Issuer Free Writing Prospectus” shall have the meaning set forth in Section 2.6.

“Lead Underwriters” shall have the meaning set forth in Section 2.1.4(a).

“Losses” shall have the meaning set forth in Section 2.9.1.

“Market Value” shall mean (a) with respect to shares of Common Stock, for so long as the Common Stock is listed for trading on the NYSE, the closing price of the Common Stock on the NYSE on the trading day immediately preceding the date of the Demand Request or Transfer Notice, or (b) with respect to any other particular class or type of Registrable Securities, or if the Common Stock is no longer listed for trading on the NYSE, (i) at any time securities of the same class or type as the applicable Registrable Securities are listed on a U.S. national securities

exchange, or at any time the Common Stock is listed for trading on a U.S. national securities exchange other than the NYSE, the closing price of such class or type of securities or the Common Stock, as applicable, on the trading day immediately preceding the date of the Demand Request or Transfer Notice, or (ii) other than in the case of clause (a) or (b)(i), the estimated market value determined in good faith by the Corporation based upon the advice of a nationally recognized independent investment banking firm retained by the Corporation (at the sole expense of the Corporation) for this purpose (which investment banking firm shall be reasonably acceptable to the Holders of a majority of the Registrable Securities covered by the Demand Request or Transfer Notice).

“Material Adverse Change” means (a) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or over-the-counter market in the United States of America; (b) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States of America; (c) a material outbreak or escalation of armed hostilities or other international or national calamity (including an act of terrorism) involving the United States of America or the declaration by the United States of a national emergency or war or a material adverse change in national or international financial, political or economic conditions; or (d) any material adverse change in the business, assets or condition (financial or otherwise) of the Corporation and its subsidiaries, taken as a whole.

“NI 71-101” shall have the meaning set forth in Section 2.9.6.

“NYSE” means the New York Stock Exchange.

“Person” means any individual, partnership, firm, corporation, association, trust, unincorporated organization, joint venture, limited liability company, Governmental Authority or other entity.

“Piggyback Offering” shall have the meaning set forth in Section 2.2.1.

“Records” shall have the meaning set forth in Section 2.5(a)(xii).

“register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness (or automatic effectiveness) of such registration statement.

“Registrable Securities” means (a) the Common Shares and (b) any equity security issued in exchange for or with respect to any Common Shares referred to in clauses (a) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or similar transaction, or otherwise. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities on the earliest of the date on which such securities: (i) have been registered under the Securities Act and disposed of in accordance with a registration statement; (ii) have been sold pursuant to Rule 144 under the Securities Act (or any successor provision); (iii) are held by a Holder that may sell all such Registrable Securities held by it in a single day pursuant to, and in accordance with, Rule 144 under the Securities Act (or any successor provision); (iv) cease to be outstanding (whether as a result of exercise, redemption, repurchase, conversion or otherwise); or (v) are held by any Person who is not a Holder. For purposes hereof, “on the basis of the number of

securities,” “on the basis of the number of Existing Registrable Securities” and “on the basis of the number of Registrable Securities” shall be determined assuming the exercise in full of any warrants subject to the Equity Registration Rights Agreement.

“Representatives” means, with respect to any Person, any of such Person’s officers, directors, employees, agents, attorneys, accountants, actuaries, consultants or financial advisors or any other Person acting on behalf of such Person.

“Requesting Holders” shall have the meaning set forth in Section 2.1.1(a).

“Salaried Pension Plan” shall have the meaning set forth in the Preamble.

“Salaried Plan Trust” shall have the meaning set forth in the Preamble.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

“Shelf Registration” shall have the meaning set forth in Section 2.1.2(a).

“Suspension Notice” shall have the meaning set forth in Section 2.7.

“Take-Down” shall have the meaning set forth in Section 2.1.2(b).

“Transfer Notice” shall have the meaning set forth in Section 2.1.2(b).

“Trusts” shall have the meaning set forth in the Preamble.

Section 1.2 Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation,” unless the context expressly provides otherwise. All references herein to Articles, Sections, paragraphs, subparagraphs or clauses shall be deemed references to Articles, Sections, paragraphs, subparagraphs or clauses of this Agreement, unless the context requires otherwise. Unless otherwise specified, the words “this Agreement,” “herein,” “hereof,” “hereto” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if.” Unless expressly stated otherwise, any law defined or referred to herein means such law as from time to time amended, modified or supplemented, including by succession of comparable successor laws and references to all attachments thereto and instruments incorporated therein.

ARTICLE 2

REGISTRATION RIGHTS

Section 2.1 Demand Registration.

Section 2.1.1 Request for Registration.

(a) Subject to Section 2.1.3, any Holder or Holders of Registrable Securities shall have the right to require the Corporation to file a registration statement under the Securities Act for a public offering of all or part of its or their Registrable Securities (a “Demand Registration”) by delivering to the Corporation written notice stating that such right is being exercised, naming, if applicable and to the extent known by such Holder or Holders, any other Holders whose Registrable Securities are to be included in such registration (collectively, the “Requesting Holders”), specifying the number and type of each such Holder’s Registrable Securities to be included in such registration, specifying whether the Registrable Securities to be included by the Requesting Holder are all of the Registrable Securities then held by such Requesting Holder and, subject to Section 2.1.4 hereof, describing the intended method of distribution thereof (a “Demand Request”). Subject to Section 2.1.3, after receipt of any Demand Request, the Corporation shall comply with the applicable notice requirements set forth in Section 2.1.5.

(b) Subject to Section 2.1.3 and Section 2.1.7, the Corporation shall file the registration statement in respect of a Demand Registration as promptly as practicable and, in any event, (i) with respect to the filing of a Form S-3, within forty-five (45) days and (ii) with respect to the filing of any other type of registration statement, within ninety (90) days after receiving a Demand Request, and shall use reasonable best efforts to cause the same to be declared effective by the SEC as promptly as practicable after such filing.

Section 2.1.2 Shelf Registration; Take-Downs.

(a) Subject to Section 2.1.3, with respect to any Demand Registration, at any time that the Corporation is eligible to use Form S-3 or an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) on Form S-3 (or any successor forms) with respect to the Registrable Securities, the Requesting Holders may request that the Corporation (i) file a registration statement pursuant to Rule 415 under the Securities Act (or any successor rule) to effect such Demand Registration, or (ii) at any time that a registration statement pursuant to Rule 415 covering Registrable Securities is effective, register additional Registrable Securities of the Requesting Holders pursuant to such shelf registration statement to effect such Demand Registration (in either case, a “Shelf Registration”). For the avoidance of doubt, a Shelf Registration shall be deemed a “Demand Registration” for all purposes under this Agreement, except as otherwise provided in Section 2.1.3.

(b) Subject to Section 2.1.3, any Holder or Holders with Registrable Securities registered pursuant to a Shelf Registration that intend to effect an underwritten offering with respect to such Registrable Securities shall deliver a notice to the Corporation at least thirty five (35) days prior to the commencement of such underwritten offering, stating (i) that such Holder or Holders intend to effect an underwritten offering of all or part of the Registrable Securities included by such Holder or Holders in the Shelf Registration, (ii) if applicable and to the extent

known by such Holder, any other Holders whose Registrable Securities are to be included in the underwritten offering, (iii) the number and type of each such Holder’s Registrable Securities to be included in such underwritten offering, (iv) whether the Registrable Securities to be included by such Holder are all of the Registrable Securities then held by such Holder, and (v) the proposed timetable for such underwritten offering. Any Holder with Registrable Securities registered pursuant to a Shelf Registration that intends to effect any non-underwritten registered sale or transfer of such Registrable Securities pursuant to the Shelf Registration (each a “Take-Down”) shall deliver a notice to the Corporation at least five (5) days prior to effecting such non-underwritten sale or transfer, stating (i) that such Holder intends to effect a non-underwritten sale or transfer of all or part of the Registrable Securities included by such Holder in the Shelf Registration, (ii) the number and type of the Registrable Securities to be included in such sale or transfer and (iii) the proposed manner and timetable for such sale or transfer. A notice provided by any Requesting Holder pursuant to the first two sentences of this Section 2.1.2(b) is referred to herein as a “Transfer Notice.” Subject to Section 2.1.3, after receipt of any Transfer Notice, the Corporation shall comply with the applicable notice requirements set forth in Section 2.1.5. For the avoidance of doubt, a Take-Down shall not be deemed to be a Demand Registration and shall not be subject to Section 2.1.3.

(c) Subject to Section 2.1.3, the Corporation shall use its reasonable best efforts to keep any Shelf Registration requested pursuant to Section 2.1.2(a) continuously effective under the Securities Act in order to permit the prospectus forming a part thereof to be usable by the Holders until the earlier of (i) the date as of which all Registrable Securities have been sold pursuant to the Shelf Registration or another registration statement filed under the Securities Act (but in no event prior to the applicable period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder) and (ii) the date as of which all of such Requesting Holders are permitted to sell their Registrable Securities without registration pursuant to Rule 144 under the Securities Act without volume limitation or other restrictions on transfer thereunder.

(d) The Corporation shall, from time to time, supplement and amend the Shelf Registration if required by the Securities Act, including the rules, regulations or instructions applicable to the registration form used by the Corporation for such Shelf Registration.

(e) Whether or not any Holder submits a Demand Request for a Demand Registration, at any time on or after July 1, 2011, the Corporation shall have the right to file a registration statement under the Securities Act (or file a prospectus supplement to a prospectus included in an existing registration statement or file an amendment to an existing registration statement) for a public offering pursuant to Rule 415 under the Securities Act (or any successor rule) of all or any part of the Registrable Securities held by any Holder or Holders. Any such registration shall be deemed a “Shelf Registration” for all purposes under this Agreement. For the avoidance of doubt, any such registration may be registered on Form S-3 or an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) on Form S-3 (or any successor forms) so long as the Corporation is then eligible to use such form.

Section 2.1.3 Limitations.

(a) Notwithstanding anything to the contrary herein, a Holder shall not be permitted to submit a Demand Request, or submit a Transfer Notice for an underwritten offering, or otherwise effect any such Demand Registration or underwritten offering, prior to November 18, 2011.

(b) A Holder shall not be permitted to submit a Demand Request, or submit a Transfer Notice for an underwritten offering, or otherwise effect any such Demand Registration or underwritten offering unless such Demand Request or Transfer Notice for an underwritten offering is for either (i) a number of Registrable Securities having a Market Value equal to or exceeding $750,000,000 in the aggregate or (ii) all of the Registrable Securities then held by the Requesting Holder.

(c) A Holder shall not be permitted to submit a Demand Request, or submit a Transfer Notice for an underwritten offering, or otherwise effect any such Demand Registration or underwritten offering, within one hundred eighty (180) days after (i) the effective date of the registration statement (other than a registration statement pursuant to Rule 415 under the Securities Act (or any successor rule)) for any underwritten offering of equity securities by the Corporation (whether for the account of the Corporation or otherwise) or any of the Existing Registrable Securities Holders or (ii) the completion of any underwritten offering of equity securities by the Corporation (whether for the account of the Corporation or otherwise) or any of the Existing Registrable Securities Holders under a registration statement pursuant to Rule 415 under the Securities Act (or any successor rule)).

(d) The Corporation shall not be required to effect more than one (1) Demand Registration (which shall include for this purpose any underwritten offering pursuant to a Shelf Registration but shall exclude a Shelf Registration) in the aggregate during any consecutive twelve (12) month period. Notwithstanding the foregoing, for the avoidance of doubt, the limitation set forth in this Section 2.1.3 shall not apply to any non-underwritten Take-Down by any Holder under a Shelf Registration.

Section 2.1.4 Demand Registrations for Underwritten Offerings.

(a) At the request of the Holders of a majority of the Registrable Securities submitting a Demand Request or Transfer Notice for an underwritten offering of Registrable Securities, the Corporation shall direct the applicable underwriter to conduct such offering in the form of a “firm commitment.” With respect to any such underwritten offering, (i) the Holders of a majority of the Registrable Securities to be registered or included in such underwritten offering shall select the investment banking firm or firms to lead the underwritten offering (the “Lead Underwriters”); provided that such Lead Underwriters shall be reasonably acceptable to the Corporation, and (ii) the Corporation shall select the other investment banking firms, if any, to co-manage such underwritten offering (the “Co-Managers”); provided that such Co-Managers shall be reasonably acceptable to the Holders of a majority of the Registrable Securities to be registered or included in such underwritten offering.

(b) If a Demand Registration is for an underwritten offering or a transfer pursuant to a Shelf Registration involves an underwritten offering, no Holder may participate in any such underwritten offering unless such Holder (i) agrees to sell such Holder’s Registrable Securities on the basis provided in any underwriting arrangements approved by the Corporation; provided that such arrangements are subject to the consent of the Holders of a majority of the Registrable

Securities to be registered or included in such underwritten offering, and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements; provided, however, that no such Holder shall be required to make any representations or warranties in connection with any such underwritten offering other than representations and warranties as to (A) such Holder’s ownership of its Registrable Securities to be transferred free and clear of all liens, claims, and encumbrances, (B) such Holder’s power and authority to effect such transfer, and (C) such matters pertaining to compliance with securities laws as may be reasonably requested; provided, further, however, that any obligation of each such Holder to indemnify the Lead Underwriters and any Co-Managers pursuant to any such underwriting arrangements shall (i) only be with respect to information it provides to the Corporation in writing for use in such underwritten offering, (ii) be several, not joint and several, and (iii) be limited to the net amount received by such Holder from the sale of its Registrable Securities pursuant to such offering.

Section 2.1.5 Rights of Nonrequesting Holders and the Corporation. Subject to Section 2.1.3, after receipt of any Demand Request or any Transfer Notice relating to an underwritten offering pursuant to a Shelf Registration, the Corporation shall promptly (but in any event within five (5) days) give written notice of (i) such proposed Demand Registration to all other Holders or (ii) such Transfer Notice to such other Holders whose securities are covered by such Shelf Registration, who shall have the right, exercisable by written notice to the Corporation within five (5) days of their receipt of the Corporation’s notice, to elect to include in such Demand Registration or underwritten offering such portion of their Registrable Securities as they may request. All Holders requesting to have their Registrable Securities included in a Demand Registration or underwritten offering shall be deemed to be “Requesting Holders” for purposes of this Section 2.1. For the avoidance of doubt, subject to Section 2.1.6, the Corporation may register in any Demand Registration any equity securities of the Corporation.

Section 2.1.6 Priority on Demand Registrations. With respect to any underwritten offering based on a Demand Registration (including an underwritten offering pursuant to a Shelf Registration), if the Lead Underwriters (after consultation with the Co-Managers) advise that the inclusion of the securities proposed to be included in such registration would adversely affect the price, timing or distribution of the offering or otherwise adversely affect its success (an “Adverse Effect”), the Corporation shall include in such underwritten offering (a) first, the Registrable Securities requested to be included therein by the Requesting Holders and any Existing Registrable Securities requested to be included therein by Existing Registrable Securities Holders in accordance with Section 2.2.1 of the Equity Registration Rights Agreement, pro rata among the holders of such securities on the basis of the number of securities owned by each such holder, and (b) second, any other securities requested to be included in such underwritten offering, including securities to be sold for the account of the Corporation; provided, however, that if more than 50% of the Registrable Securities of any Holder subject to a Demand Request or Transfer Notice for an underwritten offering are excluded pursuant to the terms of this Section 2.1.6 from the applicable Demand Registration or underwritten offering pursuant to a Shelf Registration, the offering shall not be deemed to constitute a Demand Registration for the purposes of Section 2.1.3.

Section 2.1.7 Deferral of Filing; Suspension of Use. The Corporation may defer the filing (but not the preparation) or the effectiveness, or suspend the use, of any registration

statement required by or filed pursuant to Section 2.1, at any time if (a) the Corporation determines, in its sole discretion, that such action or use (or proposed action or use) would require the Corporation to make an Adverse Disclosure, or (b) prior to receiving the Demand Request or Transfer Notice, as applicable, the board of directors of the Corporation had determined to effect a registered underwritten public offering of Corporation equity securities or Corporation securities convertible into or exchangeable for Corporation equity securities for the Corporation’s account and the Corporation had taken substantial steps (such as selecting a managing underwriter for such offering) and is proceeding with reasonable diligence to effect such offering; provided, however, that the Corporation shall not exercise its rights to deferral or suspension pursuant to this Section 2.1.7, and shall not so effect any such deferral or suspension, for more than a total of one hundred eighty (180) days (which need not be consecutive) in any consecutive twelve (12) month period. In making any such determination to defer the filing or effectiveness, or suspend the use, of a registration statement required by Section 2.1, the Corporation shall not be required to consult with or obtain the consent of any Holder or any investment manager therefor, and any such determination shall be in the sole discretion of the Corporation, and neither the Holders nor any investment manager for any Holder shall be responsible or have any liability therefor. The Corporation shall promptly notify the Holders of any deferral or suspension pursuant to this Section 2.1.7 and the Corporation agrees that it will terminate any such deferral or suspension as promptly as reasonably practicable and will promptly notify each Holder in writing of the termination of any such deferral or suspension.

Section 2.1.8 Withdrawal from Demand Registration. Any Holder may withdraw its Registrable Securities from a Demand Registration or underwritten offering at any time (prior to a sale thereunder) by providing the Corporation with written notice. Upon receipt of such written notice, the Corporation shall continue all efforts to secure registration or effect the underwritten offering of the remaining Registrable Securities not requested to be withdrawn, unless the remaining Registrable Securities would not meet the requirements of Section 2.1.3(b), in which case, the Corporation may in its sole discretion cease all efforts to proceed with registration or the underwritten offering. If the Corporation ceases all efforts to secure registration or effect the underwritten offering pursuant to this Section 2.1.8, then such registration or underwritten offering shall nonetheless be deemed an effective or completed Demand Registration or completed underwritten offering pursuant to a Shelf Registration for all purposes hereunder unless (i) the withdrawal is made following the occurrence of a Material Adverse Change not known to the Requesting Holders at the time of the Demand Request or Transfer Notice or (ii) the Requesting Holders pay or reimburse the Corporation for all out-of-pocket fees and expenses reasonably incurred in connection with such Demand Registration or underwritten offering; provided that if, after a Demand Registration has become effective or an underwritten offering of Registrable Securities has been commenced, it is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court, it shall be deemed not to have been effected and shall not count as a Demand Registration or underwritten offering for the purposes of Section 2.1.3.

Section 2.1.9 Competing Demand Registrations. Notwithstanding anything to the contrary herein, in the event that any Demand Request or Transfer Notice for an underwritten offering of Registrable Securities submitted by a Holder under this Agreement (or the effectuation of the related Demand Registration or underwritten offering in accordance with this Agreement) is in conflict with or otherwise inconsistent with any Demand Request (as defined in

the Equity Registration Rights Agreement) or Transfer Notice (as defined in the Equity Registration Rights Agreement) submitted by any Existing Registrable Securities Holder for an underwritten offering of Existing Registrable Securities (or the effectuation of the related registration or underwritten offering in accordance with the Equity Registration Rights Agreement), then the Demand Request or Transfer Notice for an underwritten offering of Registrable Securities submitted by a Holder under this Agreement (and the related registration or underwritten offering in accordance with this Agreement) shall be treated for all purposes hereunder (including for purposes of determining priority for inclusion) as a Piggyback Offering initiated by an Existing Registrable Securities Holder.

Section 2.2 Piggyback Offerings.

Section 2.2.1 Right to Piggyback. Each time the Corporation proposes to offer any of its equity securities in a registered underwritten offering (other than pursuant to an Excluded Registration) under the Securities Act (whether for the account of the Corporation or the account of any equity holder of the Corporation other than a Holder) (a “Piggyback Offering”), the Corporation shall give prompt written notice to each Holder of Registrable Securities (which notice shall be given not less than ten (10) days prior to (i) the offering in the case of an underwritten offering pursuant to Rule 415 under the Securities Act (or any successor rule) (a “Corporation Shelf Registration”) or (ii) the anticipated filing date of the Corporation’s registration statement in a registration other than a Corporation Shelf Registration), which notice shall offer each such Holder the opportunity to include any or all of its Registrable Securities in such underwritten offering, subject to the limitations contained in Section 2.2.2 hereof. Each Holder who desires to have its Registrable Securities included in such underwritten offering shall so advise the Corporation in writing (stating the number and type of Registrable Securities desired to be registered or included) within three (3) days after the date of such notice from the Corporation. Any Holder shall have the right to withdraw such Holder’s request for inclusion of such Holder’s Registrable Securities in any underwritten offering pursuant to this Section 2.2.1 by giving written notice to the Corporation of such withdrawal. Subject to Section 2.2.2 below, the Corporation shall include in such underwritten offering all such Registrable Securities so requested to be included therein. Notwithstanding the foregoing, the Corporation may at any time withdraw or cease proceeding with any such offering if it shall at the same time withdraw or cease proceeding with the offering of all other equity securities originally proposed to be included in such offering.

Section 2.2.2 Priority on Piggyback Offerings.

(a) If a Piggyback Offering was initiated by the Corporation, and if the managing underwriter advises that the inclusion of the securities proposed to be included in such Piggyback Offering would cause an Adverse Effect, the Corporation shall include in such Piggyback Offering (i) first, the securities the Corporation proposes to sell, (ii) second, any Existing Registrable Securities requested to be included in such Piggyback Offering by Existing Registrable Securities Holders in accordance with Section 2.2.1 of the Equity Registration Rights Agreement, pro rata among such Existing Registrable Securities Holders on the basis of the number of Existing Registrable Securities owned by each such Existing Registrable Securities Holder, and (iii) third, any Registrable Securities requested to be included in such Piggyback Offering by the Holders and any other securities requested to be included in such Piggyback

Offering, pro rata among the holders of such securities (including the Registrable Securities of the Holders) on the basis of the number of such securities owned by each such holder. If as a result of the provisions of this Section 2.2.2(a), any Holder shall not be entitled to include all Registrable Securities in such Piggyback Offering that such Holder has requested to be so included, such Holder may withdraw its request to include its Registrable Securities in such Piggyback Offering.

(b) If a Piggyback Offering was initiated by an Existing Registrable Securities Holder, and if the managing underwriter advises that the inclusion of the securities proposed to be included in such Piggyback Offering would cause an Adverse Effect, the Corporation shall include in such Piggyback Offering (i) first, the Existing Registrable Securities requested to be included in such Piggyback Offering by Existing Registrable Securities Holders in accordance with Section 2.1 of the Equity Registration Rights Agreement, pro rata among such Existing Registrable Securities Holders on the basis of the number of Existing Registrable Securities owned by each such Existing Registrable Securities Holder, and (ii) second, any Registrable Securities requested to be included in such Piggyback Offering by the Holders and any other securities requested to be included in such Piggyback Offering, including securities to be sold for the account of the Corporation, pro rata among the holders of such securities (including the Registrable Securities of the Holders) and the Corporation on the basis of the number of such securities owned by each such holder and the number of securities requested to be included in such Piggyback Offering by the Corporation. If as a result of the provisions of this Section 2.2.2(b), any Holder shall not be entitled to include all Registrable Securities in such Piggyback Offering that such Holder has requested to be so included, such Holder may withdraw its request to include its Registrable Securities in such Piggyback Offering

(c) If a Piggyback Offering was initiated by a security holder of the Corporation (other than a Holder or an Existing Registrable Securities Holder), and if the managing underwriter advises that the inclusion of the securities proposed to be included in such Piggyback Offering would cause an Adverse Effect, the Corporation shall include in such Piggyback Offering (i) first, the securities requested to be included therein by the security holders requesting such Piggyback Offering and the Existing Registrable Securities requested to be included in such Piggyback Offering by Existing Registrable Securities Holders in accordance with Section 2.2.1 of the Equity Registration Rights Agreement, pro rata among the holders of such securities on the basis of the number of securities owned by each such holder, and (ii) second, any Registrable Securities requested to be included in such Piggyback Offering by the Holders and any other securities requested to be included in such Piggyback Offering, including securities to be sold for the account of the Corporation, pro rata among the holders of such securities (including the Registrable Securities of the Holders) and the Corporation on the basis of the number of such securities owned by each such holder and the number of securities requested to be included in such Piggyback Offering by the Corporation. If as a result of the provisions of this Section 2.2.2(c) any Holder shall not be entitled to include all Registrable Securities in such Piggyback Offering that such Holder has requested to be so included, such Holder may withdraw such Holder’s request to include Registrable Securities in such Piggyback Offering.

(d) No Holder may participate in a Piggyback Offering unless such Holder (i) agrees to sell such Holder’s Registrable Securities on the basis provided in any underwriting

arrangements approved by the Corporation and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents, each in customary form and reasonably satisfactory to the Holders, reasonably required under the terms of such underwriting arrangements; provided, however, that no such Holder shall be required to make any representations or warranties in connection with any such registration other than representations and warranties as to (A) such Holder’s ownership of its Registrable Securities to be sold or transferred free and clear of all liens, claims and encumbrances, (B) such Holder’s power and authority to effect such transfer, and (C) such matters pertaining to compliance with securities laws as may be reasonably requested; provided, further, however, that any obligation of each such Holder to indemnify the underwriters pursuant to any such underwriting arrangements shall (x) only be with respect to information it provides to the Corporation in writing for use in such underwritten offering, (y) be several, not joint and several, and (z) be limited to the net amount received by such Holder from the sale of its Registrable Securities pursuant to such registration.

Section 2.2.3 Selection of Underwriters. The Corporation, or the Existing Registrable Securities Holders to the extent contemplated by the Equity Registration Rights Agreement, shall select the investment banking firm or firms to manage the Piggyback Offering.

Section 2.2.4 No registration of Registrable Securities effected pursuant to this Section 2.2 shall be deemed to have been effected pursuant to Section 2.1.1 or Section 2.1.2 or shall relieve the Corporation of its obligations under Section 2.1.1 or Section 2.1.2.

Section 2.3 SEC Form S-3. Notwithstanding anything to the contrary herein, the Corporation shall use its reasonable best efforts to cause Demand Registrations to be registered on Form S-3 or an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) on Form S-3 (or any successor forms) once the Corporation becomes eligible to use such form, and if the Corporation is not then eligible under the Securities Act to use such form, Demand Registrations shall be registered on the form for which the Corporation then qualifies. After becoming eligible to use Form S-3 or an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) on Form S-3, the Corporation shall use its reasonable best efforts to remain so eligible.

Section 2.4 Holdback Agreements.

(a) The Corporation shall not effect any public sale or distribution of its equity securities or any securities convertible into or exchangeable or exercisable for its equity securities, except in each case as part of the offering pursuant to a Demand Registration, during the sixty (60) day period (or such lesser period as the Lead Underwriters or managing underwriters may permit) beginning on the effective date of any registration statement in connection with an underwritten Demand Registration (other than a Shelf Registration), except for (i) sales or distributions pursuant to registrations on Form S-4 or Form S-8 or any successor form, (ii) the issuance of shares of Common Stock upon the conversion, exercise or exchange, by the holder thereof, of options, warrants or other securities convertible into or exercisable or exchangeable for Common Stock pursuant to the terms of such options, warrants or other securities, (iii) sales or distributions pursuant to the terms of any other agreement to issue shares of Common Stock (or any securities convertible into or exchangeable or exercisable for Common

Stock) in effect on the date of the Demand Request, including any such agreement in connection with any previously disclosed acquisition, merger, consolidation or other business combination and (iv) the issuance of shares of Common Stock in connection with transfers to dividend reinvestment plans or to employee benefit plans in order to enable any such employee benefit plan to fulfill its funding obligations in the ordinary course.

(b) If any Holders of Registrable Securities provide a Transfer Notice relating to an underwritten offering of Registrable Securities registered pursuant to a Shelf Registration, the Corporation shall not effect any public sale or distribution of its equity securities or any securities convertible into or exchangeable or exercisable for its equity securities, except in each case as part of such underwritten offering, during the sixty (60) day period (or such lesser period as the Lead Underwriters or managing underwriters may permit) beginning on the pricing date for such underwritten offering, except for (i) sales or distributions pursuant to registrations on Form S-4 or Form S-8 or any successor form, (ii) the issuance of shares of Common Stock upon the conversion, exercise or exchange, by the holder thereof, of options, warrants or other securities convertible into or exercisable or exchangeable for Common Stock pursuant to the terms of such options, warrants or other securities, (iii) sales or distributions pursuant to the terms of any other agreement to issue shares of Common Stock (or any securities convertible into or exchangeable or exercisable for Common Stock) in effect on the date of the Transfer Notice, including any such agreement in connection with any previously disclosed acquisition, merger, consolidation or other business combination and (iv) the issuance of shares of Common Stock in connection with transfers to dividend reinvestment plans or to employee benefit plans in order to enable any such employee benefit plan to fulfill its funding obligations in the ordinary course.

(c) Each Holder agrees, in the event of an underwritten offering of equity securities by the Corporation (whether for the account of the Corporation or otherwise), not to offer, sell, contract to sell or otherwise dispose of any Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock, including any sale pursuant to Rule 144 under the Securities Act (except as part of such underwritten offering), during the sixty (60) day period (or such lesser period in each case as the Lead Underwriters or managing underwriters may permit) beginning on the effective date of the registration statement for such underwritten offering (or, in the case of an offering pursuant to an effective shelf registration statement pursuant to Rule 415, the pricing date for such underwritten offering); provided, however, that (i) any applicable period shall terminate on such earlier date as the Corporation gives notice to the Holders that the Corporation declines to proceed with any such offering and (ii) the sum of all holdback periods applicable to the Holders shall not exceed one hundred twenty (120) days (which need not be consecutive) in any given twelve (12) month period.

Section 2.5 Registration Procedures.

(a) If and whenever the Corporation is required to effect the registration of any Registrable Securities pursuant to this Agreement, subject to the terms and conditions of this Agreement, the Corporation shall use its reasonable best efforts to effect the registration and the sale, as applicable, of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Corporation shall as expeditiously as possible:

(i) prepare and file with the SEC, pursuant to Section 2.1 with respect to any Demand Registration, a registration statement on any appropriate form under the Securities Act with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective as promptly as practicable; provided that as far in advance as practicable before filing such registration statement or any amendment thereto, the Corporation shall furnish to the selling Holders copies of reasonably complete drafts of all such documents prepared to be filed (including exhibits), and any such selling Holder shall have the opportunity to object to any information contained therein and the Corporation shall consider in good faith any corrections reasonably requested by such selling Holder with respect to such information prior to filing any such registration statement or amendment; provided, further, that the Corporation shall not file any such registration statement, and any amendment thereto, to which a Holder shall reasonably object in writing on a timely basis, unless in the Corporation’s judgment such filing is necessary to comply with applicable law;

(ii) except in the case of a Shelf Registration, prepare and file with the SEC such amendments, post-effective amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than one hundred eighty (180) days (or such lesser period as is necessary for the underwriters in an underwritten offering to sell unsold allotments) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the selling Holders thereof set forth in such registration statement;

(iii) in the case of a Shelf Registration, comply with the provisions of Section 2.1.2(c) and Section 2.1.2(d);

(iv) furnish to each selling Holder of Registrable Securities and the underwriters of the securities being registered, without charge, such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), any documents incorporated by reference therein and such other documents as such selling Holders or underwriters may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such selling Holders or the sale of such securities by such underwriters (it being understood that, subject to Section 2.1.7, Section 2.4(c), Section 2.6 and Section 2.7 and the requirements of the Securities Act and applicable state securities laws, the Corporation consents to the use of the prospectus and any amendment or supplement thereto by each selling Holder and the underwriters in connection with the offering and sale of the Registrable Securities covered by the registration statement of which such prospectus, amendment or supplement is a part);

(v) use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as the Lead Underwriters or managing underwriters reasonably request (or, in the event the registration statement does not relate to an underwritten offering, as the selling Holders of a majority of such Registrable Securities being offered may reasonably request); use its reasonable best efforts to keep each such registration or qualification (or exemption therefrom) effective during the period in which such registration statement is required to be kept effective; and do any and all other acts

and things which may be reasonably necessary or advisable to enable each selling Holder to consummate the disposition of the Registrable Securities owned by such selling Holder in such jurisdictions; provided, however, that the Corporation shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph, (B) consent to general service of process in any such jurisdiction or (C) take any action that would subject it to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject;

(vi) promptly notify each selling Holder and each underwriter and (if requested by any such Person) confirm such notice in writing (A) when a prospectus or any prospectus supplement or post-effective amendment has been filed and, with respect to a registration statement or any post-effective amendment, when the same has become effective, (B) of the issuance by any state securities or other regulatory authority of any order suspending the qualification or exemption from qualification of any of the Registrable Securities under state securities or “blue sky” laws or the initiation, or threatened initiation, of any proceedings for that purpose, or (C) of the happening of any event which makes any statement made in a registration statement or related prospectus untrue or which requires the making of any changes in such registration statement, prospectus or documents so that they shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and, as promptly as practicable thereafter, prepare and file with the SEC and furnish a supplement or amendment to such prospectus so that, as thereafter deliverable to the purchasers of such Registrable Securities, such prospectus shall not contain any untrue statement of a material fact or omit a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(vii) permit any selling Holder that might reasonably be deemed to be an underwriter or a Controlling Person of the Corporation to participate in the preparation of such registration or comparable statement and to require the insertion therein of material, furnished to the Corporation in writing, which in the reasonable judgment of such Holder and its counsel should be included;

(viii) make available members of the management of the Corporation or the applicable Corporation subsidiaries for reasonable assistance in the selling efforts relating to any offering of Registrable Securities covered by a registration statement filed pursuant to this Agreement, to the extent customary for such offering (including, without limitation, to the extent customary, senior management attendance at due diligence meetings with prospective investors or underwriters and their counsel and road shows); provided, however, that management need only be made available for one such offering for any Holder in any twelve (12) month period;

(ix) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, including the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, and make generally available to the Corporation’s security holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than thirty (30) days after the end of the twelve (12) month period beginning with the first day of the Corporation’s first fiscal quarter commencing after the effective date of a registration statement, which earnings statement shall cover said twelve (12) month period, and

which requirement shall be deemed to be satisfied if the Corporation timely files complete and accurate information on Forms 10-K, 10-Q and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act;

(x) if requested by the Lead Underwriters, managing underwriters or any selling Holder, promptly incorporate in a prospectus supplement or post-effective amendment such information as the Lead Underwriters, managing underwriters or any selling Holder reasonably requests to be included therein, including, with respect to the Registrable Securities being sold by the selling Holders, the purchase price being paid therefor by the underwriters and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering, and promptly make all required filings of such prospectus supplement or post-effective amendment;

(xi) as promptly as practicable after filing with the SEC of any document which is incorporated by reference into a registration statement (in the form in which it was incorporated), deliver a copy of each such document to each selling Holder;

(xii) promptly make available for inspection by any selling Holder, any underwriter participating in any disposition pursuant to any registration statement, and any attorney, accountant or other agent or Representative retained by any such selling Holder or underwriter (collectively, the “Inspectors”), all financial and other records and pertinent corporate documents (collectively, the “Records”) and properties of the Corporation, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Corporation’s officers, directors and employees to supply all information reasonably requested by any such Inspector in connection with such registration statement; provided, however, that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement or the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction, the Corporation shall not be required to provide any information under this subparagraph (xiii) if (A) the Corporation believes, after consultation with counsel for the Corporation, that to do so would cause the Corporation to forfeit an attorney-client privilege that was applicable to such information or (B) either (l) the Corporation has requested and been granted from the SEC confidential treatment of such information contained in any filing with the SEC or documents provided supplementally or otherwise or (2) the Corporation reasonably determines in good faith that such Records are confidential and so notifies the Inspectors in writing, unless prior to furnishing any such information with respect to clause (B) such selling Holder of Registrable Securities requesting such information agrees to enter into a confidentiality agreement in a form acceptable to the Corporation; and provided, further, that each selling Holder of Registrable Securities agrees that it shall, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Corporation and allow the Corporation, at its expense, to undertake appropriate action and to prevent disclosure of the Records deemed confidential;

(xiii) furnish to each selling Holder and underwriter a signed counterpart of (A) an opinion or opinions of counsel to the Corporation (which may be in-house counsel) provided that such counsel is reasonably acceptable to such Holders and the underwriter, and (B) a comfort letter or comfort letters from the Corporation’s independent public accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the selling Holders, Lead Underwriters or managing underwriters reasonably requests;

(xiv) cause the Registrable Securities included in any registration to be listed on each securities exchange, if any, on which similar securities issued by the Corporation are then listed;

(xv) provide a transfer agent and registrar for all Registrable Securities registered hereunder and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

(xvi) cooperate with each selling Holder and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the Financial Industry Regulatory Authority (“FINRA”);

(xvii) during the period when the prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;

(xviii) notify each selling Holder of Registrable Securities promptly of any request by the SEC for the amending or supplementing of such registration statement or prospectus or for additional information;

(xix) subject to Section 2.1.4(b) and Section 2.2.2(d), enter into such agreements (including underwriting agreements) as are customary in connection with an underwritten registration; and

(xx) advise each selling Holder of such Registrable Securities, promptly after it receives notice or obtains knowledge thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued.

(b) The selling Holders shall reasonably cooperate with the Corporation in the preparation and filing of any registration statement under the Securities Act pursuant to this Agreement and provide the Corporation with all information reasonably necessary to complete such preparation as the Corporation may, from time to time, reasonably request in writing, and the Corporation may exclude from such registration the Registrable Securities of any selling Holder (or not proceed with such registration) if such selling Holder unreasonably fails to furnish such information within a reasonable time after receiving such request. Promptly following any sale or other transfer of any Registrable Securities, each Holder shall notify the Corporation in writing thereof, which notice shall specify the amount and type of securities involved, the date of the sale or transfer and whether the sale or transfer was effected under a registration statement or otherwise.

(c) Each of the parties shall treat all notices of proposed transfers and registrations, and all information relating to any blackout periods under Section 2.1.7 received

from another party with the strictest confidence (and in accordance with the terms of any applicable confidentiality agreement among the Corporation and the Holder) and shall not disseminate such information.

Section 2.6 Free Writing Prospectuses. Each of the Holders agrees that, unless it obtains the prior consent of the Corporation, it shall not make any offer relating to the Registrable Securities that would constitute a “free writing prospectus,” as defined in Rule 405 under the Securities Act, required to be filed with the SEC. The Corporation represents that any “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act, prepared by or on behalf of the Corporation (an “Issuer Free Writing Prospectus”) shall not include any information that conflicts with the information contained in a registration statement or prospectus and that any Issuer Free Writing Prospectus, when taken together with the information in the registration statement and the prospectus, shall not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

Section 2.7 Suspension of Dispositions. Each Holder agrees that upon receipt of any notice (a “Suspension Notice”) from the Corporation of the happening of any event of the kind described in Section 2.5(a)(vi)(B) or (C) or Section 2.5(a)(xx) such Holder shall forthwith discontinue disposition of Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus, or until it is advised in writing (the “Advice”) by the Corporation that the use of the prospectus may be resumed, and has received copies of any additional or supplemental filings which are incorporated by reference in the prospectus, and, if so directed by the Corporation, such Holder shall deliver to the Corporation all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Corporation shall give any such notice, the time period regarding the effectiveness of registration statements set forth in Section 2.5(a)(ii) hereof, if applicable, shall be extended by the number of days during the period from and including the date of the giving of the Suspension Notice to and including the date when each seller of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus or the Advice. The Corporation shall use its reasonable best efforts and take such actions as are reasonably necessary to render the Advice as promptly as practicable.

Section 2.8 Registration Expenses. The Corporation shall pay all reasonable fees and expenses incident to the performance of or compliance with its obligations under this Article 2, including (a) all registration and filing fees, including fees and expenses (i) with respect to filings required to be made with all applicable securities exchanges and/or FINRA and (ii) of compliance with securities or “blue sky” laws including any fees and disbursements of counsel for the underwriter(s) in connection with “blue sky” qualifications of the Registrable Securities pursuant to Section 2.5(a)(v), (b) printing expenses, including expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and of printing prospectuses if the printing of prospectuses is requested by the Lead Underwriters or managing underwriter(s), if any, or by the Holder, (c) messenger, telephone and delivery expenses of the Corporation, (d) fees and disbursements of counsel for the Corporation, (e) expenses of the Corporation incurred in connection with any “road show” or other marketing efforts, (f) fees and disbursements of all independent certified public accountants (including,

without limitation, the expenses of any special audit and “cold comfort” letters required by or incident to this Agreement) and any other Persons, including special experts, retained by the Corporation, and (g) fees up to $250,000 plus reasonable disbursements of one legal counsel for the Requesting Holders in connection with each registration or offering of their Registrable Securities or sale (including, for the avoidance of doubt, a Take-Down) of their Registrable Securities under a Shelf Registration but only if such registration, offering or sale either is effected or, pursuant to Section 2.7, is postponed. For the avoidance of doubt, the Corporation shall not be required to pay any, and each Holder shall pay its own, underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities pursuant to any registration statement, or any other expenses of any Holder. In addition, the Corporation shall bear all of its internal expenses (including all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing of the securities to be registered on any securities exchange or inter-dealer quotation system on which similar securities issued by the Corporation are then listed and the fees and expenses of any Person, including special experts, retained by the Corporation.

Section 2.9 Indemnification.

Section 2.9.1 Indemnification by the Corporation. The Corporation agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Holder, the trustees of any Holder, the investment manager or managers acting on behalf of any Holder with respect to the Registrable Securities, Persons, if any, who Control any of them, and each of their respective Representatives (each, an “Indemnitee”), from and against any and all losses, penalties, judgments, suits, costs, claims, damages, liabilities and expenses, joint or several (including reasonable costs of investigation and legal expenses) (“Losses”) arising out of or caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement described herein or any related prospectus or Issuer Free Writing Prospectus relating to the Registrable Securities (as amended or supplemented if the Corporation shall have furnished any amendments or supplements thereto), or arising out of or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein in the case of the prospectus, in light of the circumstances in which they were made, not misleading, except insofar as such Losses arise out of or are caused by any such untrue statement or omission included or omitted in conformity with information furnished to the Corporation in writing by such Indemnitee or any Person acting on behalf of such Indemnitee expressly for use therein; provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectuses or Issuer Free Writing Prospectuses shall not inure to the benefit of such Indemnitee if the Person asserting any Losses against such Indemnitee purchased Registrable Securities and (a) prior to the time of sale of the Registrable Securities to such Person (the “Initial Sale Time”) the Corporation shall have notified the respective Holder that the preliminary prospectus or Issuer Free Writing Prospectus (as it existed prior to the Initial Sale Time) contains an untrue statement of material fact or omits to state therein a material fact required to be stated therein in order to make the statements therein not misleading, (b) such untrue statement or omission of a material fact was corrected in a preliminary prospectus or, where permitted by law, Issuer Free Writing Prospectus and such corrected preliminary prospectus or Issuer Free Writing Prospectus was provided to such Holder a reasonable amount of time in advance of the Initial Sale Time such that the corrected preliminary prospectus or

Issuer Free Writing Prospectus could have been provided to such Person prior to the Initial Sale Time, (c) such corrected preliminary prospectus or Issuer Free Writing Prospectus (excluding any document then incorporated or deemed incorporated therein by reference) was not conveyed to such Person at or prior to the Initial Sale Time and (d) such Losses would not have occurred had the corrected preliminary prospectus or Issuer Free Writing Prospectus (excluding any document then incorporated or deemed incorporated therein by reference) been conveyed to such Person as provided for in clause (c) above. This indemnity shall be in addition to any liability the Corporation may otherwise have under this Agreement or otherwise. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Holder or any indemnified party and shall survive the transfer of Registrable Securities by any Holder.

Section 2.9.2 Indemnification by the Holders. Each Holder agrees, to the fullest extent permitted under applicable law severally and not jointly, to indemnify and hold harmless each of the Corporation, its directors, officers, employees and agents, and each Person, if any, who Controls the Corporation, to the same extent as the foregoing indemnity from the Corporation, but only with respect to Losses arising out of or caused by an untrue statement or omission included or omitted in conformity with information furnished in writing by or on behalf of the respective Holder expressly for use in any registration statement described herein or any related prospectus relating to the Registrable Securities (as amended or supplemented if the Corporation shall have furnished any amendments or supplements thereto). No claim against the assets of any Holder shall be created by this Section 2.9.2, except as and to the extent permitted by applicable law. Notwithstanding the foregoing, no Holder shall be liable to the Corporation or any such Person for any amount in excess of the net amount received by the Holder from the sale of Registrable Securities in the offering giving rise to such liability.

Section 2.9.3 Indemnification Procedures.

(a) In case any claim is asserted or any proceeding (including any governmental investigation) shall be instituted where indemnity may be sought by an Indemnitee pursuant to any of the preceding paragraphs of this Section 2.9, such Indemnitee shall promptly notify in writing the Person against whom such indemnity may be sought (the “Indemnitor”); provided, however, that the omission so to notify the Indemnitor shall not relieve the Indemnitor of any liability which it may have to such Indemnitee except to the extent that the Indemnitor was prejudiced by such failure to notify. The Indemnitor, upon request of the Indemnitee, shall retain counsel reasonably satisfactory to the Indemnitee to represent (subject to the following sentences of this Section 2.9.3(a)) the Indemnitee and any others the Indemnitor may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any Indemnitee shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnitee unless (a) the Indemnitor and the Indemnitee shall have mutually agreed to the retention of such counsel, (b) the Indemnitor fails to take reasonable steps necessary to defend diligently any claim within ten calendar days after receiving written notice from the Indemnitee that the Indemnitee believes the Indemnitor has failed to take such steps, or (c) the named parties to any such proceeding (including any impleaded parties) include both the Indemnitor and the Indemnitee and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests or legal defenses between them and, in all such cases, the Indemnitor shall only be responsible for the reasonable fees and expenses of such counsel. It is understood

that the Indemnitor shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate law firm (in addition to any local counsel) for all such Indemnitees not having actual or potential differing interests or legal defenses among them, and that all such fees and expenses shall be reimbursed as they are incurred. The Indemnitor shall not be liable for any settlement of any proceeding affected without its written consent.

(b) If the indemnification provided for in this Section 2.9 is unavailable to an Indemnitee in respect of any Losses referred to herein, then the Indemnitor, in lieu of indemnifying such Indemnitee hereunder, shall contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnitor and the Indemnitee and Persons acting on behalf of or Controlling the Indemnitor or the Indemnitee in connection with the statements or omissions or violations which resulted in such Losses, as well as any other relevant equitable considerations. If the indemnification described in Section 2.9.1 or Section 2.9.2 is unavailable to an Indemnitee, the relative fault of the Corporation, any Holder and Persons acting on behalf of or Controlling the Corporation or any such Holder shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Corporation, a Holder or by Persons acting on behalf of the Corporation or any Holder and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Indemnitor shall not be required to contribute pursuant to this Section 2.9.3(b) if there has been a settlement of any proceeding affected without its written consent. No claim against the assets of any Holder shall be created by this Section 2.9.3(b), except as and to the extent permitted by applicable law. Notwithstanding the foregoing, no Holder shall be required to make a contribution in excess of the net amount received by such Holder from the sale of Registrable Securities in the offering giving rise to such liability.

Section 2.9.4 Survival. The indemnification contained in this Section 2.9 shall remain operative and in full force and effect regardless of any termination of this Agreement.

Section 2.9.5 Special Indemnification Exception in Piggyback Offerings. Each Holder hereby acknowledges that, as contemplated by the Equity Registration Rights Agreement, neither the Government Holders, the VEBA nor the Debtor (each as defined in the Equity Registration Rights Agreement) shall be required to indemnify any Indemnitee in connection with any underwritten offering contemplated hereunder in which such Government Holder, the VEBA or the Debtor participates pursuant to the Equity Registration Rights Agreement.

Section 2.9.6 Canadian Offerings.

(a) In connection with any prospectus offerings and sales of Registrable Securities in Canada, references in this Section 2.9 to any “untrue statement” or “untrue statement of a material fact” in any “prospectus” or “related prospectus” (or phrases to similar effect) shall be deemed to cover any “misrepresentation” in any “Canadian Prospectus” (as defined below). For the avoidance of doubt, (i) the Corporation and each of the Holders shall be entitled to the applicable rights to, and shall be subject to the applicable obligations in respect of, indemnification and contribution set forth in this Section 2.9 in connection with sales of

Registrable Securities pursuant to any Canadian Prospectus and (ii) the proviso in Section 2.9.1 that begins with the words “provided, however, that the foregoing indemnity agreement with respect to any preliminary prospectuses or Issuer Free Writing Prospectuses…” shall not apply with respect to a misrepresentation in a Canadian Prospectus.

(b) As used in this Section 2.9.6, the term “misrepresentation” has the meaning attributed to such term in the applicable securities legislation of each province and territory of Canada, and the term “Canadian Prospectus” means a prospectus filed by the Corporation under the applicable securities laws of any province or territory of Canada qualifying the distribution of Registrable Securities and includes a preliminary prospectus, a preliminary MJDS prospectus (as defined in National Instrument 71-101 – The Multijurisdictional Disclosure System (“NI 71-101”)), a final prospectus, an MJDS prospectus (as defined in NI 71-101), any amendment or supplement thereto and any related materials, as applicable.

Section 2.10 Transfer of Registration Rights. The rights and obligations of a Holder under this Agreement may be assigned to any transferee or assignee that directly acquires Registrable Securities from such Holder, but only if (a) the respective Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Corporation concurrent with such transfer or assignment, and (b) concurrent with such transfer or assignment, such transferee or assignee furnishes the Corporation with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being transferred or assigned, and the transferee or assignee agrees in writing with the Corporation to be bound by all the provisions and obligations contained herein as a Holder hereunder. Notwithstanding the foregoing, any transferee or assignee who becomes bound by the provisions of this Agreement pursuant to the first sentence of this Section 2.10 shall have all rights and obligations as a “Holder” hereunder.

Section 2.11 Rule 144. For so long as the Corporation has a class of equity securities registered under Section 12(b) or Section 12(g) of the Exchange Act, or is otherwise required to report under Section 15(d) of the Exchange Act, the Corporation shall file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder and shall take such further action as the Holders may reasonably request, all to the extent required from time to time to enable the Holders to sell Common Stock without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. The Corporation shall promptly upon the request of any Holder furnish to such Holder evidence of the number of shares of Common Stock then outstanding, as of the most recent date practicable. Any sale or transfer by a Holder of Registrable Securities that could have been effected either as a sale of securities pursuant to, and in accordance with, Rule 144 under the Securities Act (or any successor provision) or a sale covered by a Shelf Registration shall be deemed for all purposes under this Agreement to be a sale or transfer by such Holder pursuant to, and in accordance with, Rule 144 under the Securities Act.

Section 2.12 Preservation of Rights.

(a) The Corporation will not (i) grant any registration rights to third parties which are inconsistent with the rights granted hereunder or (ii) enter into any agreement, take any action, or permit any change to occur, with respect to its securities that violates the rights expressly granted to the Holders in this Agreement.

(b) Each Holder acknowledges and agrees that (i) it has received and reviewed in its entirety the Equity Registration Rights Agreement and (ii) the Equity Registration Rights Agreement does not violate the terms of this Agreement.

ARTICLE 3

TERMINATION

Section 3.1 Termination. Other than Sections 2.8 and 2.9 and Article 4, this Agreement and the obligations of the Corporation hereunder shall terminate upon the time when there are no Registrable Securities remaining. With respect to each Holder, other than Sections 2.8 and 2.9 and Article 4, this Agreement and the rights and obligations of such Holder hereunder shall terminate when such Holder no longer holds any Registrable Securities. Notwithstanding the foregoing, all liabilities or obligations under Sections 2.8 and 2.9 and Article 4 shall remain in effect in accordance with the terms of such provisions.

ARTICLE 4

MISCELLANEOUS

Section 4.1 Notices. Any notice, request, instruction, consent, document or other communication required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been sufficiently given or served for all purposes (a) upon delivery when personally delivered; (b) on the delivery date after having been sent by a nationally or internationally recognized overnight courier service (charges prepaid); (c) at the time received when sent by registered or certified mail, return receipt requested, postage prepaid; or (d) at the time when confirmation of successful transmission is received (or the first business day following such receipt if the date of such receipt is not a business day) if sent by facsimile, in each case, to the recipient at the address or facsimile number, as applicable, indicated below:

If to the Corporation:

General Motors Company

Treasurer’s Office

767 Fifth Avenue

New York, New York 10153

Attention: Treasurer

Facsimile: 212-418-3695

with copies to:

General Motors Company

300 Renaissance Center

Mail Code 482-C25-D81

Detroit, Michigan 48265-3000

Attention: General Counsel

Facsimile: 313-667-3188

and

Jenner & Block LLP

353 North Clark Street

Chicago, Illinois 60654-3456

Attention: Joseph P. Gromacki

Brian R. Boch

Facsimile: 312-923-2737

312-923-2980

If to the Hourly Plan Trust:

Evercore Trust Company, N.A.

55 East 52nd Street

New York, New York 10055

Attention: Norman P. Goldberg

Facsimile: 202-318-0072

with copies to:

General Motors Investment Management Corporation

767 Fifth Avenue

New York, New York 10153

Attention: General Counsel

Facsimile: 212-418-6123

and

K&L Gates LLP

535 Smithfield Street

Pittsburgh, Pennsylvania 15222-2312

Attention: Charles R. Smith

Marcia C. Kelson

Facsimile: 412-355-6501

If to the Salaried Plan Trust:

Evercore Trust Company, N.A.

55 East 52nd Street

New York, New York 10055

Attention: Norman P. Goldberg

Facsimile: 202-318-0072

with copies to:

General Motors Investment Management Corporation

767 Fifth Avenue

New York, New York 10153

Attention: General Counsel

Facsimile: 212-418-6123

and

K&L Gates LLP

535 Smithfield Street

Pittsburgh, Pennsylvania 15222-2312

Attention: Charles R. Smith

Marcia C. Kelson

Facsimile: 412-355-6501

provided, however, if any party shall have designated a different addressee and/or contact information by notice in accordance with this Section 4.1, then to the last addressee as so designated.

Section 4.2 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other organizational power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate or organizational action and no such further action is required, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to ERISA and applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

Section 4.3 No Third Party Beneficiaries. This Agreement shall be for the sole and exclusive benefit of (a) the Corporation and its successors and permitted assigns, (b) each Holder (including any trustee or sub-trustee thereof) and any other investment manager or managers acting on behalf of such Holder with respect to the Registrable Securities and their respective successors and permitted assigns and (c) each of the Persons entitled to indemnification under Section 2.9 hereof. Nothing in this Agreement shall be construed to give any other Person any legal or equitable right, remedy or claim under this Agreement.

Section 4.4 Cooperation. Each party hereto shall take such further action, and execute such additional documents, as may be reasonably requested by any other party hereto in order to carry out the purposes of this Agreement.

Section 4.5 Governing Law; Forum Selection. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York irrespective of the choice of laws principles of the State of New York other than Section 5-1401 of the General Obligations Law of the State of New York. Any action or proceeding against the parties relating in any way to this Agreement may be brought and enforced exclusively in the courts of the State of New York located in the Borough of Manhattan or (to the extent subject matter jurisdiction exists therefor) the U.S. District Court for the Southern District of New York, and the parties irrevocably submit to the jurisdiction of both courts in respect of any such action or proceeding.

Section 4.6 WAIVER OF JURY TRIAL. EACH PARTY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN, AND AGREES TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.

Section 4.7 Successors and Assigns. Except as otherwise expressly provided herein, including pursuant to Section 2.10, neither this Agreement nor any of the rights, interests or obligations provided by this Agreement may be assigned by any party (whether by operation of law or otherwise) without the prior written consent of the other parties, and any such assignment without such prior written consent shall be null and void. Subject to the preceding sentence and except as otherwise expressly provided herein, this Agreement shall be binding upon and benefit the Corporation, each Holder, and their respective successors and permitted assigns.

Section 4.8 Entire Agreement. This Agreement contains the final, exclusive and entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether written or oral, among the parties with respect to the subject matter hereof. This Agreement shall not be deemed to contain or imply any restriction, covenant, representation, warranty, agreement or undertaking of any party with respect to the transactions contemplated hereby other than those expressly set forth herein, and none shall be deemed to exist or be inferred with respect to the subject matter hereof.

Section 4.9 Severability. Whenever possible, each term and provision of this Agreement will be interpreted in such manner as to be effective and valid under law. If any term or provision of this Agreement, or the application thereof to any Person or any circumstance, is held to be illegal, invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be legal, valid and enforceable, the intent and purpose of such illegal, invalid or unenforceable provision and (b) the remainder of this Agreement or such term or provision and the application of such term or provision to other Persons or circumstances shall remain in full force and effect and shall not be affected by such illegality, invalidity or unenforceability, nor shall such invalidity or unenforceability affect the legality, validity or enforceability of such term or provision, or the application thereof, in any jurisdiction.

Section 4.10 Enforcement of this Agreement. The parties agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties shall, without the posting of a bond, be entitled, subject to a determination by a court of competent jurisdiction, to an injunction or injunctions to prevent any such failure of performance under, or breaches of, this Agreement, and to enforce specifically the terms and provisions hereof and thereof, this being in addition to all other remedies available at law or in equity, and each party agrees that it will not oppose the granting of such relief on the basis that the requesting party has an adequate remedy at law.

Section 4.11 Amendment. This Agreement may not be amended, modified or supplemented except upon the execution and delivery of a written agreement executed by a duly authorized representative or officer of each of the parties.

Section 4.12 Headings. The descriptive headings of the Articles, Sections and paragraphs of this Agreement are included for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit, modify or affect any of the provisions hereof.

Section 4.13 Counterparts; Facsimiles. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same Agreement. All signatures of the parties may be transmitted by facsimile or electronic delivery, and each such facsimile signature or electronic delivery signature (including a pdf signature) will, for all purposes, be deemed to be the original signature of the party whose signature it reproduces and be binding upon such party.

Section 4.14 Time Periods. Unless otherwise specified in this Agreement, an action required under this Agreement to be taken within a certain number of days shall be taken within that number of calendar days (and not business days); provided, however, that if the last day for taking such action falls on a day that is not a business day, the period during which such action may be taken shall be automatically extended to the next business day.

Section 4.15 Legends and Notations. Each of the Holders covenants and agrees that it will cooperate with the Corporation and take all action necessary to ensure that the Corporation’s stock transfer records relating to any Registrable Securities held by such Holder (whether held in certificated or uncertificated form) conspicuously bears a legend or other appropriate notation or designation in substantially the following form in addition to any other legend, notation or designation that may be required by the Corporation:

THE SECURITIES REPRESENTED HEREBY ARE ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A REGISTRATION RIGHTS AGREEMENT, DATED JANUARY 13, 2011, AMONG THE ISSUER OF THESE SECURITIES AND THE HOLDERS REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD

OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto, being duly authorized, have executed and delivered this Registration Rights Agreement on the date first above written.


GENERAL MOTORS COMPANY

By:


Name:


Title:

GENERAL MOTORS SPECIAL HOURLY-RATE EMPLOYEES PENSION TRUST

By: Evercore Trust Company, N.A., as Trustee

By:


Name:


Title:

GENERAL MOTORS SPECIAL SALARIED EMPLOYEES PENSION TRUST

By: Evercore Trust Company, N.A., as Trustee

By:


Name:


Title:

Stockholders Agreement

Exhibit 10.45

EXECUTION VERSION

STOCKHOLDERS AGREEMENT

This Stockholders Agreement (this “Agreement”) is entered into as of January 13, 2011, by and among GENERAL MOTORS COMPANY, a Delaware corporation (the “Corporation”), Evercore Trust Company, N.A. (“Evercore”), as trustee of, and acting on behalf of, the GENERAL MOTORS SPECIAL HOURLY-RATE EMPLOYEES PENSION TRUST (the “Hourly Plan Trust”) established under the GENERAL MOTORS HOURLY-RATE EMPLOYEES PENSION PLAN (the “Hourly Pension Plan”) for the account and on behalf of the Hourly Pension Plan, and Evercore, as trustee of, and acting on behalf of, the GENERAL MOTORS SPECIAL SALARIED EMPLOYEES PENSION TRUST (individually, the “Salaried Plan Trust”, and, together with the Hourly Plan Trust, the “Trusts” ) established under the GENERAL MOTORS RETIREMENT PROGRAM FOR SALARIED EMPLOYEES (the “Salaried Pension Plan”) for the account and on behalf of the Salaried Pension Plan.

WHEREAS, concurrently with the execution of this Agreement, the Corporation, the Hourly Plan Trust and the Salaried Plan Trust have executed that certain Contribution Agreement, dated as of the date hereof (the “Contribution Agreement”), pursuant to which the Corporation is contributing (i) to the Hourly Plan Trust 40,404,041 shares of common stock, par value $0.01 per share, of the Corporation (“Common Stock”), and (ii) to the Salaried Plan Trust 20,202,020 shares of Common Stock (such shares of Common Stock contributed to the Trusts, the “Common Shares”);

WHEREAS, concurrently with the execution of this Agreement, the Corporation, the Hourly Plan Trust and the Salaried Plan Trust have executed that certain Registration Rights Agreement, dated as of the date hereof, which provides each of the Trusts and its permitted assigns with certain registration rights with respect to the Common Shares, on the terms and conditions set forth therein; and

WHEREAS, in connection with the foregoing, the parties hereto wish to enter into this Agreement to govern the rights and obligations of the parties with respect to certain matters relating to the Corporation and each Trust’s ownership and voting of the Common Shares.

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Certain Defined Terms. As used herein, the following terms shall have the following meanings:

“Affiliate” means, with respect to any Person, any other Person who Controls, is Controlled by or is under common Control with, such Person.

“Agreement” shall have the meaning set forth in the Preamble.

“Board” means the Board of Directors of the Corporation.

“Common Shares” shall have the meaning set forth in the Recitals.

“Common Stock” shall have the meaning set forth in the Recitals.

“Contribution Agreement” shall have the meaning set forth in the Recitals.

“Corporation” shall have the meaning set forth in the Preamble.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

“Evercore” shall have the meaning set forth in the Preamble.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“Executive Officer” means any officer who is subject to Section 16(a) of the Exchange Act.

“Group” has the meaning given to such term in Section 13(d)(3) of the Exchange Act.

“Hourly Pension Plan” shall have the meaning set forth in the Preamble.

“Hourly Plan Trust” shall have the meaning set forth in the Preamble.

“Nominee” shall have the meaning set forth in Section 3.2.

“Person” means any individual, partnership, firm, corporation, association, trust, unincorporated organization, joint venture, limited liability company, Governmental Authority or other entity.

“Proxy” or “Proxies” has the meaning given to such term in Rule 14a-1 of the Exchange Act.

“Rule 144” means Rule 144 under the Securities Act (or any successor provision).

“Salaried Pension Plan” shall have the meaning set forth in the Preamble.

“Salaried Plan Trust” shall have the meaning set forth in the Preamble.

“Securities” means (a) the Common Shares, and (b) any equity security issued in exchange for or with respect to any of the Common Shares referred to in clause (a) above by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or similar transaction, or otherwise.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

“Solicitation” has the meaning given to such term in Rule 14a-1 of the Exchange Act.

“Transfer” means, directly or indirectly, to sell, transfer, assign, pledge, hedge, encumber, hypothecate or similarly dispose of, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, hedge, encumbrance, hypothecation or similar disposition.

“Trusts” shall have the meaning set forth in the Preamble.

“Voting Securities” means any securities of the Corporation, including the Common Stock, with the power to vote with respect to the election of directors of the Corporation generally and any securities convertible into or exchangeable for securities of the Corporation with the power to vote with respect to the election of directors of the Corporation generally.

Section 1.2 Terms Generally. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, unless the context expressly provides otherwise. All references herein to Sections, paragraphs, subparagraphs or clauses shall be deemed references to Sections, paragraphs, subparagraphs or clauses of this Agreement, unless the context requires otherwise. Unless otherwise specified, the words “this Agreement”, “herein”, “hereof”, “hereto” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “extent” in the phrase “to the extent” shall mean the degree to which a subject or other thing extends, and such phrase shall not mean simply “if”. Unless expressly stated otherwise, any law defined or referred to herein means such law as from time to time amended, modified or supplemented, including by succession of comparable successor laws and references to all attachments thereto and instruments incorporated therein. References to a Person are also to its permitted successors and assigns.

ARTICLE II

CERTAIN COVENANTS AND RESTRICTIONS

Section 2.1 Standstill. Neither of the Trusts shall, during the term of this Agreement, directly or indirectly, alone or in concert with others, without the prior written consent of the Board, take any of the actions set forth below (or take any action that would require the Corporation to make any public announcement regarding any of the following):

(a) acquire, announce an intention to acquire, offer or propose to acquire or agree to acquire, by purchase or otherwise, beneficial ownership of any Voting Securities, other than (i) the acquisition of Common Stock pursuant to the Contribution Agreement or (ii) the acquisition of Voting Securities in connection with any future contribution of Voting Securities by the Corporation to such Trust;

(b) make, or in any way participate in, any Solicitation of Proxies to vote any Voting Securities or any Solicitation of any written consent to corporate action from any holders of Voting Securities, seek to advise, assist, instigate, encourage or influence any Person with respect to the voting of any Voting Securities, initiate or propose any stockholder proposal or induce or attempt to induce any other Person to initiate any stockholder proposal;

(c) make any statement or proposal, whether written or oral, to the Board, or to any director, officer or agent of the Corporation, or make any public announcement or proposal whatsoever with respect to a merger or other business combination, sale or transfer of any asset or assets of the Corporation that individually or collectively are material to the Corporation, recapitalization, extraordinary dividend, share repurchase, liquidation or other extraordinary corporate transaction involving the Corporation or any other transaction which could result in a change of control of the Corporation, or solicit or encourage any other Person to make any such statement, proposal or announcement;

(d) form, join or in any way participate in a Group with respect to any Voting Securities of the Corporation;

(e) deposit any Voting Securities into a voting trust or subject any Voting Securities to any arrangement or agreement with respect to the voting of any Voting Securities, other than as expressly contemplated by this Agreement;

(f) call, request the calling of, or otherwise seek to assist in the calling of, a special meeting of the stockholders of the Corporation;

(g) participate in any meeting of the stockholders or execute any written consent to corporate action with respect to the Corporation, other than in accordance with this Agreement;

(h) seek to place a representative on the Board or seek the removal of any member of the Board;

(i) act alone or in concert with others to seek to Control or influence in any manner the management, the Board or the policies of the Corporation or any of its Affiliates;

(j) make a request (public or otherwise) to the Corporation (or its directors, officers, stockholders, employees or agents) to amend or waive this Section 2.1 or the Certificate of Incorporation (including any certificate of designations thereunder) or Bylaws of the Corporation, including any request (public or otherwise) to permit such Trust or its Affiliates, or any other Person, to take any action in respect of the matters referred to in this Section 2.1;

(k) publicly disclose any intention, plan or arrangement inconsistent with this Section 2.1; or

(l) advise, assist, instigate, encourage or influence any other Person to do any of the foregoing.

The foregoing provisions shall not prohibit either Trust from:

(i) acquiring any interest in any fund or collective investment vehicle that owns Voting Securities (so long as (x) such acquisition is not undertaken for the purpose of avoiding this Section 2.1, (y) Voting Securities comprise no more than 5% of the net asset value of such fund or investment vehicle and (z) neither such Trust nor any of its Affiliates possesses the right, power or ability to Control such fund or collective investment vehicle or its manager); or

(ii) subject to Section 2.2, tendering into any tender or exchange offer as seller.

Section 2.2 Transfer Restrictions. Subject to the restrictions set forth in this Section 2.2 (which restrictions shall not apply with respect to sales made in an underwritten offering pursuant to a registration statement of the Corporation), each of the Trusts shall have the right to Transfer all or any portion of its Securities, subject to compliance with applicable law.

(a) Without the prior written consent of the Board, neither of the Trusts shall Transfer any Securities (or any interest therein) to (i) any one Person or Group (whether such Person or Group is buying for its own account or as a fiduciary on behalf of one or more accounts) if the Securities subject to such Transfer would represent more than 2% of the Common Stock then outstanding or (ii) any one Person or Group if such Person or Group is then required to file, or has filed, or as a result of such Transfer would be required to file (to the knowledge of such Trust after reasonable inquiry), a statement on Schedule 13D under the Exchange Act with respect to its equity interest in the Corporation. Notwithstanding the foregoing, either of the Trusts may Transfer any or all of its shares of Securities pursuant to an exchange offer or a tender offer (or a request or invitation for tenders) to the extent not prohibited pursuant to Section 2.2(b), or pursuant to a merger or consolidation.

(b) Without the prior written consent of the Board, neither of the Trusts shall Transfer any Securities to any automotive manufacturer or any Affiliate thereof.

(c) No Transfer of Securities in violation of this Agreement, or in violation of any restrictive legends, notations or designations on the certificates for or other evidences of ownership of the Securities, shall be made or recorded on the books of the Corporation, and any such Transfer shall be void and of no effect.

(d) Upon the Corporation’s request, each of the Trusts shall promptly notify the Corporation in writing of the number and type of Securities then beneficially owned by such Trust.

Section 2.3 Legends and Notations. Each of the Trusts covenants and agrees that it will cooperate with the Corporation and take all action necessary to ensure that the Corporation’s stock transfer records relating to any Securities held by such Trust (whether held in certificated or uncertificated form) conspicuously bears a legend or other appropriate notation or designation in substantially the following form in addition to any other legend, notation or designation that may be required by the Corporation:

THE SECURITIES REPRESENTED HEREBY ARE ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS OF A STOCKHOLDERS AGREEMENT, DATED JANUARY 13, 2011, AMONG THE ISSUER OF SUCH SECURITIES AND THE INVESTORS REFERRED TO THEREIN, A COPY OF WHICH IS ON FILE WITH THE ISSUER. THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH SAID AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH SAID AGREEMENT WILL BE VOID.

ARTICLE III

VOTING AGREEMENT

Section 3.1 Agreement to Vote. Each of the Trusts hereby irrevocably and unconditionally agrees that from and after the date hereof until the date of termination of this Agreement in accordance with its terms, at any meeting (whether annual or special and each adjournment or postponement thereof) of the Corporation’s stockholders, however called, or in connection with any proposed action by written consent of the Corporation’s stockholders, such Trust will (a) appear at such meeting or otherwise cause any and all Securities held by such Trust to be counted as present thereat for purposes of calculating a quorum and (b) vote or cause to be voted (including by written consent, if applicable) such Securities on each matter presented to the stockholders of the Corporation in the same proportionate manner (either “for,” “against,” “withheld” or otherwise) as (x) in the case of proposed stockholder action at a meeting of the Corporation’s stockholders, the holders of Common Stock (other than such Trust, and the directors and Executive Officers of the Corporation) that were present and entitled to vote on such matter voted in connection with each such matter and (y) in the case of proposed stockholder action by written consent, all the holders of Common Stock (other than such Trust, and the directors and Executive Officers of the Corporation) consented or did not consent in connection with each such matter.

Section 3.2 Irrevocable Proxy. Each of the Trusts hereby revokes any and all previous proxies granted with respect to the Securities held by such Trust. Subject to the last two sentences of this Section 3.2, upon the request of the Corporation and subject to applicable law, each of the Trusts shall, or shall use its reasonable best efforts to cause any Person serving as the nominee (the “Nominee”) of such Trust with respect to the Securities held by such Trust to, irrevocably appoint the Corporation or its designee as such Trust’s proxy to vote (or cause to be voted) such Securities in accordance with Section 3.1 hereof. Such proxy shall be irrevocable and coupled with an interest. In the event that any such Nominee for any reason fails to irrevocably appoint the Corporation or its designee as such Trust’s proxy in accordance with this Section 3.2, such Trust shall cause such Nominee to vote the Securities held by such Trust in accordance with Section 3.1. In the event that either of the Trusts or any Nominee fails for any reason to vote such Securities in accordance with the requirements of Section 3.1, then the

Corporation or its designee shall have the right to vote the Securities held by such Trust in accordance with Section 3.1. Subject to applicable law, the vote of the Corporation or its designee shall control in any conflict between the vote by the Corporation or its designee of either Trust’s Securities and a vote by such Trust (or any Nominee on behalf of such Trust) of its Securities. Notwithstanding the foregoing, the proxy granted by each of the Trusts and/or any Nominee shall be automatically revoked upon termination of this Agreement in accordance with its terms.

Section 3.3 Inconsistent Voting Agreements. Each of the Trusts hereby agrees that such Trust shall not enter into any agreement, contract or understanding with any Person (prior to the termination of this Agreement in accordance with its terms) directly or indirectly to vote, grant a proxy or power of attorney or give instructions with respect to the voting of the Securities held by such Trust in any manner which is inconsistent with this Agreement.

Section 3.4 ERISA Fiduciary Limitations. The foregoing provisions of this Article III notwithstanding, the actions of the trustee of either Trust with respect to voting any Securities held by either Trust are governed by the fiduciary duties and requirements of ERISA. The trustee of the Trusts will follow the provisions set forth in this Article III unless the trustee concludes based on the advice of its counsel that following such provisions would be contrary to ERISA’s mandates. If the trustee so determines that it cannot follow the provisions of this Article III, the trustee will exercise its own fiduciary judgment in determining how to vote the Securities held by the Trusts.

ARTICLE IV

MISCELLANEOUS

If to the Corporation:

General Motors Company

Treasurer’s Office

767 Fifth Avenue

New York, New York 10153

Attention: Treasurer

Facsimile: 212-418-3695

with copies to:

General Motors Company

300 Renaissance Center

Mail Code 482-C25-D81

Detroit, Michigan 48265-3000

Attention: General Counsel

Facsimile: 313-667-3188

and

Jenner & Block LLP

353 North Clark Street

Chicago, Illinois 60654-3456

Attention: Joseph P. Gromacki

Brian R. Boch

Facsimile: 312-923-2737

312-923-2980

If to the Hourly Plan Trust:

Evercore Trust Company, N.A.

55 East 52nd Street

New York, New York 10055

Attention: Norman P. Goldberg

Facsimile: 202-318-0072

with copies to:

General Motors Investment Management Corporation

767 Fifth Avenue

New York, New York 10153

Attention: General Counsel

Facsimile: 212-418-6123

and

K&L Gates LLP

201 Sixth Avenue

Pittsburgh, Pennsylvania 15222

Attention: Charles R. Smith

Marcia C. Kelson

Facsimile: 412-355-6501

If to the Salaried Plan Trust:

Evercore Trust Company, N.A.

55 East 52nd Street

New York, New York 10055

Attention: Norman P. Goldberg

Facsimile: 202-318-0072

with copies to:

General Motors Investment Management Corporation

767 Fifth Avenue

New York, New York 10153

Attention: General Counsel

Facsimile: 212-418-6123

and

K&L Gates LLP

210 Sixth Avenue

Pittsburgh, Pennsylvania 15222

Attention: Charles R. Smith

Marcia C. Kelson

Facsimile: 412-355-6501

provided, however, if any party shall have designated a different addressee and/or contact information by notice in accordance with this Section 4.1, then to the last addressee as so designated.

Section 4.2 Authority. Each of the parties hereto represents to the other parties that (a) it has the corporate or other organizational power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it has been duly authorized by all necessary corporate or organizational action and no such further action is required, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to ERISA and applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and general equity principles.

Section 4.3 Termination. The rights, restrictions and obligations of the parties hereto shall terminate and this Agreement shall have no further force and effect upon (a) in the case of the Corporation, the date on which neither of the Trusts holds any Securities; (b) in the case of the Hourly Plan Trust, the date on which the Hourly Plan Trust no longer holds any Securities; and (c) in the case of the Salaried Plan Trust, the date on which the Salaried Plan Trust no longer holds any Securities; provided that the provisions of this Article IV shall continue in perpetuity.

Section 4.4 No Third Party Beneficiaries. This Agreement shall be for the sole and exclusive benefit of (a) the Corporation and its successors and permitted assigns, (b) the Hourly Plan Trust (including any trustee or sub-trustee thereof) and any other investment manager or

managers acting on behalf of the Hourly Plan Trust with respect to the Securities and their respective successors and permitted assigns, and (c) the Salaried Plan Trust (including any trustee or sub-trustee thereof) and any other investment manager or managers acting on behalf of the Salaried Plan Trust with respect to the Securities and their respective successors and permitted assigns. Nothing in this Agreement shall be construed to give any other Person any legal or equitable right, remedy or claim under this Agreement.

Section 4.5 Cooperation. Each party hereto shall take such further action, and execute such additional documents, as may be reasonably requested by any other party hereto in order to carry out the purposes of this Agreement.

Section 4.6 Governing law; Forum Selection. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York irrespective of the choice of laws principles of the State of New York other than Section 5-1401 of the General Obligations law of the State of New York. Any action or proceeding against the parties relating in any way to this Agreement may be brought and enforced exclusively in the courts of the State of New York located in the Borough of Manhattan or (to the extent subject matter jurisdiction exists therefor) the U.S. District Court for the Southern District of New York, and the parties irrevocably submit to the jurisdiction of both courts in respect of any such action or proceeding.

SECTION 4.7 WAIVER OF JURY TRIAL. EACH PARTY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY DISPUTE IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN, AND AGREES TO TAKE ANY AND ALL ACTION NECESSARY OR APPROPRIATE TO EFFECT SUCH WAIVER.

Section 4.8 Successors and Assigns. Except as otherwise expressly provided herein, neither this Agreement nor any of the rights, interests or obligations provided by this Agreement may be assigned by any party (whether by operation of law or otherwise) without the prior written consent of the other parties, and any such assignment without such prior written consent shall be null and void. Subject to the preceding sentence and except as otherwise expressly provided herein, this Agreement shall be binding upon and benefit the Corporation, the Hourly Plan Trust and the Salaried Plan Trust and their respective successors and permitted assigns.

Section 4.9 Entire Agreement. This Agreement contains the final, exclusive and entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, whether written or oral, among the parties with respect to the subject matter hereof, except for (i) that certain letter agreement by and among General Motors Investment Management Corporation (formerly known as Promark Investment Advisors, Inc.) (“GMIMCo”), General Motors LLC (“GM LLC”) and Evercore, dated as of January 6, 2011, with respect to services to be performed by Evercore with respect to the Hourly Pension Plan, (ii) the Trust Agreement by and between Evercore and GMIMCo, dated as of January 11, 2011, evidencing the Hourly Plan Trust, (iii) that certain letter agreement by and among GMIMCo, GM LLC and Evercore, dated as of January 6, 2011, with respect to services to be performed by Evercore with respect to the Salaried Pension Plan, and (iv) the Trust Agreement by and between Evercore and GMIMCo, dated as of January 11, 2011, evidencing the Salaried Plan Trust. This Agreement shall not be deemed to contain or imply any

restriction, covenant, representation, warranty, agreement or undertaking of any party with respect to the transactions contemplated hereby other than those expressly set forth herein, and none shall be deemed to exist or be inferred with respect to the subject matter hereof.

Section 4.10 Severability. Whenever possible, each term and provision of this Agreement will be interpreted in such manner as to be effective and valid under law. If any term or provision of this Agreement, or the application thereof to any Person or any circumstance, is held to be illegal, invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be legal, valid and enforceable, the intent and purpose of such illegal, invalid or unenforceable provision and (b) the remainder of this Agreement or such term or provision and the application of such term or provision to other Persons or circumstances shall remain in full force and effect and shall not be affected by such illegality, invalidity or unenforceability, nor shall such invalidity or unenforceability affect the legality, validity or enforceability of such term or provision, or the application thereof, in any jurisdiction.

Section 4.11 Enforcement of this Agreement. The parties agree that irreparable damage would occur in the event that any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the parties shall, without the posting of a bond, be entitled, subject to a determination by a court of competent jurisdiction, to an injunction or injunctions to prevent any such failure of performance under, or breaches of, this Agreement, and to enforce specifically the terms and provisions hereof and thereof, this being in addition to all other remedies available at law or in equity, and each party agrees that it will not oppose the granting of such relief on the basis that the requesting party has an adequate remedy at law.

Section 4.12 Amendments. This Agreement may not be amended, modified or supplemented except upon the execution and delivery of a written agreement executed by a duly authorized representative or officer of each of the parties.

Section 4.13 Headings. The descriptive headings of the Articles, Sections and paragraphs of this Agreement are included for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit, modify or affect any of the provisions hereof.

Section 4.14 Counterparts; Facsimiles. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which taken together shall constitute one and the same Agreement. All signatures of the parties may be transmitted by facsimile or electronic delivery, and each such facsimile signature or electronic delivery signature (including a pdf signature) will, for all purposes, be deemed to be the original signature of the party whose signature it reproduces and be binding upon such party.

* * * *

IN WITNESS WHEREOF, the parties hereto, being duly authorized, have executed and delivered this Stockholders Agreement on the date first above written.


GENERAL MOTORS COMPANY

By:


Name:


Title:

GENERAL MOTORS SPECIAL HOURLY-RATE EMPLOYEES PENSION TRUST

By: Evercore Trust Company, N.A., as Trustee

By:


Name:


Title:

GENERAL MOTORS SPECIAL SALARIED EMPLOYEES PENSION TRUST

By: Evercore Trust Company, N.A., as Trustee

By:


Name:


Title:

Computation of Ratios of Earnings to Fixed Charges

Exhibit 12

GENERAL MOTORS COMPANY AND SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

(Dollars in millions)


	Successor						Predecessor
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			Years Ended December 31,
	Year Ended December 31, 2010			July 10, 2009 Through December 31, 2009			January 1, 2009 Through July 9, 2009			2008			2007			2006
Income (loss) from continuing operations before income taxes and equity income	$	5,737		$	(5,283	)	$	107,776	(a)	$	(29,471	)	$	(6,346	)	$	(5,743	)

Fixed charges included in income (loss) from continuing operations
Interest and related charges on debt		1,155			707			5,444			2,659			3,399			17,029
Portion of rentals deemed to be interest		171			72			104			264			230			346
Interest capitalized in period		62			26			28			244			24			44

Total fixed charges included in income (loss) from continuing operations		1,388			805			5,576			3,167			3,653			17,419

Amortization of capitalized interest		1			—			46			77			48			51
Equity (income) loss of Ally Financial, Inc.		—			—			(1,380	)		6,183			1,245			5
Dividends from nonconsolidated affiliates		1,171			422			112			440			693			366
Interest capitalized		(62	)		(26	)		(28	)		(244	)		(24	)		(44	)

Earnings (losses) available for fixed charges	$	8,235		$	(4,082	)	$	112,102		$	(19,848	)	$	(731	)	$	12,054

Fixed charges included in income (loss) from continuing operations	$	1,388		$	805		$	5,576		$	3,167		$	3,653		$	17,419

Preferred dividends
Dividends on Series A and Series B Preferred Stock	$	1,504		$	131		$	—		$	—		$	—		$	—

Preferred dividends grossed up to a pre-income tax basis	$	1,703		$	162		$	—		$	—		$	—		$	—

Combined fixed charges and preferred dividends	$	3,091		$	967		$	5,576		$	3,167		$	3,653		$	17,419

Ratios of earnings to fixed charges		5.93						20.10									0.69

Ratio of earnings to combined fixed charges and preferred stock dividends		2.66						20.10									0.69

(a)	Earnings for the period January 1, 2009 through July 9, 2009 include Reorganization gains, net of $128.2 billion.

Earnings for the period July 10, 2009 through December 31, 2009 and the years ended December 31, 2008, and 2007 were inadequate to cover fixed charges. Additional earnings of $5.0 billion, $23.0 billion and $4.4 billion for the period July 10, 2009 through December 31, 2009 and the years ended December 31, 2008 and 2007 would have been necessary to bring ratios for these periods to 1.0.

Subsidiaries of the Registrant as of December 31, 2010

Exhibit 21

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
06 Ormskirk Limited		England and Wales
1908 Holdings Ltd.		Cayman Islands
2035208 Ontario Inc.		Canada
2140879 Ontario Inc.		Canada
6153933 Canada Ltd.		Canada
ACAR Leasing Ltd.		Delaware
ACF Investment Corp.		Delaware
Adam Opel GmbH		Germany
Advantage Chevrolet of Bolingbrook, Inc.		Delaware
AFS Funding Corp.		Nevada
AFS Funding Trust		Delaware
AFS Management Corp.		Nevada
AFS SenSub Corp.		Nevada
Aftermarket (UK) Limited		England
Aftermarket Italia S.r.l. in liquidazione		Italy
AL Mansour Automotive SAE		Egypt
ALBI Trust		Delaware
ALC Leasing Ltd.		Delaware
Ally Financial Inc.		Delaware
AmeriCredit Automobile Receivables Trust 2005-C-F		Delaware
AmeriCredit Automobile Receivables Trust 2005-D-A		Delaware
AmeriCredit Automobile Receivables Trust 2006-1		Delaware
AmeriCredit Automobile Receivables Trust 2006-A-F		Delaware
AmeriCredit Automobile Receivables Trust 2006-B-G		Delaware
AmeriCredit Automobile Receivables Trust 2006-R-M		Delaware
AmeriCredit Automobile Receivables Trust 2007-1		Delaware
AmeriCredit Automobile Receivables Trust 2007-A-X		Delaware
AmeriCredit Automobile Receivables Trust 2007-B-F		Delaware
AmeriCredit Automobile Receivables Trust 2007-C-M		Delaware
AmeriCredit Automobile Receivables Trust 2007-D-F		Delaware
AmeriCredit Automobile Receivables Trust 2008-1		Delaware
AmeriCredit Automobile Receivables Trust 2008-2		Delaware
AmeriCredit Automobile Receivables Trust 2008-A-F		Delaware
AmeriCredit Automobile Receivables Trust 2009-1		Delaware
AmeriCredit Automobile Receivables Trust 2010-1		Delaware
AmeriCredit Automobile Receivables Trust 2010-2		Delaware
AmeriCredit Automobile Receivables Trust 2010-3		Delaware
AmeriCredit Automobile Receivables Trust 2010-4		Delaware
AmeriCredit Automobile Receivables Trust 2010-A		Delaware
AmeriCredit Automobile Receivables Trust 2010-B		Delaware
AmeriCredit Canada Receivables Funding Trust		Canada
AmeriCredit Class B Note Funding Trust		Delaware
AmeriCredit Class C Note Funding Trust		Delaware
AmeriCredit Consumer Discount Company		Pennsylvania

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
AmeriCredit Consumer Loan Company, Inc.		Nevada
AmeriCredit Corporation of California		California
AmeriCredit Financial Services of Canada Ltd.		Canada
AmeriCredit Financial Services, Inc.		Delaware
AmeriCredit Flight Operations, LLC		Texas
AmeriCredit Funding Corp. XI		Delaware
AmeriCredit Management Trust		Connecticut
AmeriCredit MTN Corp. V		Delaware
AmeriCredit MTN Receivables Trust V		Delaware
AmeriCredit NS I Co.		Canada
AmeriCredit NSII Co.		Canada
AmeriCredit Prime Automobile Receivables Trust 2007-1		Delaware
AmeriCredit Prime Automobile Receivables Trust 2007-2-M		Delaware
AmeriCredit Prime Automobile Receivables Trust 2007-2-M		Delaware
AmeriCredit Prime Automobile Receivables Trust 2009-1		Delaware
AmeriCredit Syndicated Warehouse Trust		Delaware
Andiamo Riverfront, LLC		Michigan
Annunciata Corporation		Delaware
Antelope Valley Chevrolet, Inc.		Delaware
APEO Trust		Delaware
APGO Trust		Delaware
Approach (UK) Limited		England and Wales
Argonaut Holdings, Inc.		Delaware
Athens Chevrolet, Inc.		Delaware
ATK Automotive Technology Kaiserslautern GmbH		Germany
Auto Lease Finance Corporation		Cayman Islands
Autohaus G.V.O. GmbH		Germany
Autovision (Scotland) Limited		Scotland
Aviation Spectrum Resources Holdings, Incorporated		Delaware
Baker (Crewe) Limited		England and Wales
Ballards of Watford Limited		England and Wales
Bay View 2005 LJ-1 Owner Trust		Delaware
Bay View 2005 LJ-2 Owner Trust		Delaware
Bay View 2005-3 Owner Trust		Delaware
Bay View Acceptance Corporation		Nevada
Bay View Deposit Corporation		Delaware
Baylis (Gloucester) Limited		England and Wales
Belmont Grampian Limited		Scotland
Berse Road (No. 1) Limited		England
Berse Road (No. 2) Limited		England
Bicknell (Malvern) Limited		England and Wales
Bill Osborne Chevrolet Ltd.		Canada
Blackdown Motor Company Limited		England and Wales
BOCO (Proprietary) Limited		South Africa
Boco Trust		South Africa

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
Brandish Limited		England and Wales
Britain Chevrolet, Inc.		Delaware
Buick Pontiac GMC of Moosic, Inc.		Delaware
Buttonpaper Limited		England
Cadillac Polanco, S.A. de C.V.		Mexico
CAMI Automotive, Inc.		Canada
Canadian Satellite Radio Holdings Inc.		Canada
CAR Group, Inc.		Delaware
Carrefour 440 Chevrolet Pontiac Buick GMC		Canada
Carve-Out Ownership Cooperative LLC		Delaware
Caterpillar Logistics SCS		Italy
Caterpillar Logistics Supply Chain Services GmbH		Germany
Champion Chevrolet, Pontiac, Buick, Inc.		Delaware
Charles Hurst Motors Limited		Northern Ireland
Chevrolet Austria GmbH		Austria
Chevrolet Belgium NV		Belgium
Chevrolet Central and Eastern Europe		Hungary
Chevrolet Deutschland GmbH		Germany
Chevrolet Espana, S.A.		Spain
Chevrolet Euro Parts Center B.V.		Netherlands
Chevrolet Europe GmbH		Switzerland
Chevrolet Finland Oy		Finland
Chevrolet France		France
Chevrolet Italia S.p.A.		Italy
Chevrolet Nederland B.V.		Netherlands
Chevrolet of Novato, Inc.		Delaware
Chevrolet Poland Sp. z o.o.		Poland
Chevrolet Portugal, Lda.		Portugal
Chevrolet Sales (Thailand) Limited		Thailand
Chevrolet Sales India Private Ltd.		India
Chevrolet Sociedad Anonima de Ahorro para Fines Determinados		Argentina
Chevrolet Suisse S.A.		Switzerland
Chevrolet Sverige AB		Sweden
Chevrolet Türkiye Otomotive Limited Sirketi		Turkey
Chevrolet UK Limited Ltd		England
CHEVYPLAN S.A. Sociedad Administradora de Planes de Autofinanciamiento Comercial		Colombia
Cole Buick Pontiac GMC		Delaware
Concept Vehicles Limited		England and Wales
Controladora AC Delco S.A. de C.V.		Mexico
Controladora General Motors, S.A. de C.V.		Mexico
Coskata, Inc.		Delaware
Crash Avoidance Metrics Partnerships		Michigan
Crown Motors (Dagenham) Limited		England and Wales
CSM Holdings Limited		England and Wales
Daewoo Motor De Puerto Rico Inc.		Puerto Rico

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
Dealer Guarantee Ltd.		England
Dealership Liquidations, Inc.		Michigan
Delphi Automotive LLP		England and Wales
Delphi Energy and Engine Management Systems UK Overseas Corporation		Delaware
Desert Sun Roswell, Inc.		Delaware
Detroit Investment Fund, L.P.		Delaware
Dinuba Auto Center, Inc.		Delaware
DIP Holdco LLP		United Kingdom
DMAX, Ltd.		Ohio
Dobies (Carlisle) Limited		England and Wales
Doraville Bond Corporation		Delaware
Drive Motor Retail Limited		England and Wales
Eden (GM) Limited		England and Wales
Elasto S.A.		Ecuador
Envia Systems, Inc.		Delaware
Espace 328 SARL		France
F G Barnes (Maidstone) Limited		England and Wales
Fabrica Nacional de Autobuses Fanabus, S.A.		Venezuela
FAW-GM Light Duty Commercial Vehicle Co., Ltd.		China
Fiducie Carrefour 440		Canada
Fredericktown Chevrolet Co., Inc.		Delaware
Galleria Chevrolet-Cadillac, Inc.		Delaware
Gateway Chevrolet Motor Company		Delaware
GEMA Automotive, Inc.		Delaware
General International Insurance Services Limited		Bermuda
General International Limited		Bermuda
General Motors (China) Investment Company Limited		China
General Motors (Hong Kong) Company Limited		Hong Kong
General Motors (Thailand) Limited		Thailand
General Motors - Colmotores S.A.		Colombia
General Motors Africa and Middle East FZE		United Arab Emirates
General Motors Asia Pacific (Japan) Limited		Japan
General Motors Asia Pacific (Pte) Ltd.		Singapore
General Motors Asia Pacific Holdings, LLC		Delaware
General Motors Asia, Inc.		Delaware
General Motors Asset Management Corporation		Delaware
General Motors Australia Ltd.		Australia
General Motors Austria GmbH		Austria
General Motors Auto LLC		Russian Federation
General Motors Automobiles Philippines, Inc.		Philippines
General Motors Automotive Holdings, S.L.		Spain
General Motors Belgium N.V.		Belgium
General Motors Chile Industria Automotriz Limitada		Chile
General Motors China, Inc.		Delaware
General Motors CIS,LLC		Russian Federation

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
General Motors Company		Delaware
General Motors Coordination Center BVBA		Belgium
General Motors Daewoo Auto and Technology CIS LLC		Russian Federation
General Motors de Argentina S.r.l.		Argentina
General Motors de Mexico, S. de R.L. de C.V.		Mexico
General Motors del Ecuador S.A.		Ecuador
General Motors do Brasil Ltda.		Brazil
General Motors East Africa Limited		Kenya
General Motors Egypt, S.A.E.		Egypt
General Motors Espana, S.L.U.		Spain
General Motors Europe AG		Switzerland
General Motors Europe Holdings, S.L.		Spain
General Motors Financial Company, Inc.		Texas
General Motors Finland Oy		Finland
General Motors Foundation, Inc.		Michigan
General Motors France		France
General Motors Global Service Operations, Inc.		Delaware
General Motors Hellas S.A.		Greece
General Motors Holdings LLC		Delaware
General Motors India Private Limited		India
General Motors International Holdings, Inc.		Delaware
General Motors International Services Company SAS		Colombia
General Motors Investment Management Corporation		Delaware
General Motors Investments Pty. Ltd.		Australia
General Motors Ireland		Ireland
General Motors Israel Ltd.		Israel
General Motors Italia S.r.l.		Italy
General Motors Korea, Inc.		Delaware
General Motors Limited		England
General Motors LLC		Delaware
General Motors Manufacturing Poland Sp. z o.o.		Poland
General Motors Nederland B.V.		Netherlands
General Motors New Zealand Pensions Limited		New Zealand
General Motors Norge AS		Norway
General Motors of Canada Limited (active)		Canada
General Motors Overseas Commercial Vehicle Corporation		Delaware
General Motors Overseas Corporation (active)		Delaware
General Motors Overseas Distribution Corporation		Delaware
General Motors Peru S.A.		Peru
General Motors Poland Spolka, z o. o.		Poland
General Motors Portugal Lda.		Portugal
General Motors Powertrain (Thailand) Limited		Thailand
General Motors Powertrain - Europe S.r.l.		Italy
General Motors Powertrain - Germany GmbH		Germany
General Motors Powertrain - Hungary Ltd.		Hungary

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
General Motors Powertrain - Kaiserslautern Germany GmbH		Germany
General Motors Powertrain - Uzbekistan CJSC		Uzbekistan
General Motors Powertrain - Austria GmbH		Austria
General Motors Research Corporation		Delaware
General Motors South Africa (Pty) Limited		South Africa
General Motors Southeast Asia Operations Limited		Thailand
General Motors Strasbourg		France
General Motors Suisse S.A.		Switzerland
General Motors Taiwan Ltd.		Taiwan, Province of China
General Motors Technical Centre India Private Limited		India
General Motors Thailand Investments, LLC		Delaware
General Motors Treasury Center, LLC		Delaware
General Motors Türkiye Limited Sirketi		Turkey
General Motors U.S. Trading Corp.		Nevada
General Motors UK Limited		England
General Motors Uruguay, S.A.		Uruguay
General Motors Uzbekistan Closed Joint Stock Company		Uzbekistan
General Motors Venezolana, C.A.		Venezuela
General Motors Ventures LLC		Delaware
General Motors Warehousing and Trading (Shanghai) Co. Ltd.		China
General Motors-Holden’s Sales Pty. Limited		Australia
General Sales Company of West Chester, Inc.		Delaware
Genie Mecanique Zairois, S.A.R.L.		Congo, The Democratic Republic
Global Human Body Models Consortium, LLC		Michigan
Global Tooling Service Company Europe Limited		England and Wales
GM (UK) Pension Trustees Limited		England
GM (UK) Unclassified Pension Trustees Limited		England and Wales
GM - Isuzu Camiones Andinos de Colombia Ltda.		Colombia
GM - ISUZU Camiones Andinos del Ecuador GMICA Ecuador Cia. Ltda.		Ecuador
GM Administradora de Bens Ltda.		Brazil
GM APO Holdings, LLC		Delaware
GM Auslandsprojekte GmbH		Germany
GM Auto World Korea Co.		Korea, Republic of
GM Automotive Services Belgium NV		Belgium
GM Automotive UK		England
GM Car Company LLC		Delaware
GM Components Holdings, LLC		Delaware
GM Daewoo Auto & Technology Company		Korea, Republic of
GM Daewoo UK Limited		England
GM Eurometals, Inc.		Delaware
GM Europe Treasury Company AB		Sweden
GM Finance Co. Holdings LLC		Delaware
GM GEFS HOLDINGS (CHC4) ULC		Canada

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
GM GEFS HOLDINGS CANADA ULC		Canada
GM Global Purchasing and Supply Chain Romania Srl		Romania
GM Global Technology Operations LLC		Delaware
GM Global Tooling Company, Inc.		Delaware
GM Holden Ltd.		Australia
GM International Sales Ltd.		Cayman Islands
GM Inversiones Santiago Limitada		Chile
GM Investment Trsutees Limited		England
GM Korea Co., Ltd.		Korea, Republic of
GM LAAM Holdings, LLC		Delaware
GM Nigeria Limited		Nigeria
GM Overseas Funding, LLC		Delaware
GM Personnel Services, Inc.		Delaware
GM Plats (Proprietary) Limited		South Africa
GM Preferred Finance Co. Holdings LLC		Delaware
GM Preferred Receivables LLC		Delaware
GM Purchasing Vauxhall UK Limited		England
GM Retirees Pension Trustees Limited		England
GM Subsystems Manufacturing, LLC		Delaware
GM Supplier Receivables LLC		Delaware
GM Technologies, LLC		Delaware
GM Trust GmbH & Co KG		Germany
GM Warranty LLC		Delaware
GM-AVTOVAZ CJSC		Russian Federation
GM-DI Leasing Corporation		Delaware
GM-Saab Communication GmbH		Switzerland
GM-UMI Technology Research and Development Ltd.		Israel
GMAC Auto Lease Purchase Corporation		Cayman Islands
GMAC Holding S.A. de C.V.		Mexico
GMAM Absolute Return Strategies Fund, LLC		Delaware
GMAM Real Estate I, LLC		Delaware
GMCH&SP Private Equity II L.P.		Canada
GMEH Holding, LLC		Delaware
GMETR Trade Receivables LLC		Delaware
GMOC Administrative Services Corporation		Delaware
GMODC Receivables Funding LLC		Delaware
GMODC Trade Receivables LLC		Delaware
Grand Pointe Holdings, Inc.		Michigan
Grand Pointe Park Condominium Association		Michigan
H.S.H. Limited		England and Wales
Haines & Strange Limited		England and Wales
Hicom-Chevrolet, Sdn Bhd (ceased operations)		Malaysia
HOLDCORP S.A.		Ecuador
Holden Employees Superannuation Fund Pty Ltd		Australia
Holden New Zealand Limited		New Zealand

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
HRL Laboratories, LLC		Delaware
Hydrogenics Corporation		Canada
Hérouville Motors SARL		France
IBC Pension Trustees Limited		England
IBC Vehicles Limited		England
Inchcape (Exeter) Limited		England and Wales
Industries Mecaniques Maghrebines, S.A.		Tunisia
Integrity Automotive Group, Inc.		Delaware
ISF Internationale Schule Frankfurt-Rhein-Main Geschäftsführungsgesellschaft mbH		Germany
ISF Internationale Schule Frankfurt-Rhein-Main GmbH & Co. KG		Germany
ISPOL Holding B.V.		Netherlands
Isuzu Motors Polska Sp. z o.o.		Poland
Isuzu Truck South Africa (Pty.) Limited (ITSA)		South Africa
IUE-GM National Joint Skill Development and Training Committee		Ohio
Jeffery (Wandsworth) Limited		England and Wales
Joe Morgan Chevrolet Cadillac, Inc.		Delaware
JS Folsom Automotive, Inc.		Delaware
Koneyren, Inc.		Michigan
Lange (West End) Limited		England and Wales
Las Cruces Automotive Group, Inc.		Delaware
LCV Platform Engineering Corp.		Japan
Lease Ownership Cooperative LLC		Delaware
Lidlington Engineering Company, Ltd.		Delaware
Long B each Acceptance Auto Receivables Trust 2007-A		Delaware
Long Beach Acceptance Auto Receivables Trust 2005-A		Delaware
Long Beach Acceptance Auto Receivables Trust 2005-B		Delaware
Long Beach Acceptance Auto Receivables Trust 2006-A		Delaware
Long Beach Acceptance Auto Receivables Trust 2006-B		Delaware
Long Beach Acceptance Corp.		Delaware
Long Beach Acceptance Receivables Corp.		Delaware
Long Beach Acceptance Receivables Corp. Warehouse I		Delaware
Lookers Birmingham Limited		England and Wales
MAC International FZCO		United Arab Emirates
Mack Buick-GMC, Inc.		Delaware
MacLeods of Perth Limited		Scotland
Mangino Chevrolet, Inc.		Delaware
Marshall of Ipswich Limited		England and Wales
Marshall of Peterborough Limited		England and Wales
Marshall of Stevenage Ltd		England and Wales
Mascoma Corporation		Delaware
Metal Casting Technology, Inc.		Delaware
Millbrook Pension Management Limited		England
Millbrook Proving Ground Limited		England
Milton Chevrolet, Inc. (Sobh-Locklear Chevrolet)		Delaware
Monetization of Carve-Out, LLC		Delaware

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
Moran Cadillac - GMC, Inc.		Delaware
Moran Chevrolet, Inc.		Delaware
Motorbodies Luton Limited		England and Wales
Motors Holding LLC		Delaware
Motors Holding San Fernando Valley, Inc.		Delaware
Motors Investments (Duncan) Limited		England and Wales
Motors Properties Limited		England and Wales
MPL No. 1 Limited		England and Wales
Multi-Use Lease Entity Trust		Delaware
Murketts of Cambridge Limited		England and Wales
NJDOI/GMAM Core Plus Real Estate Investment Program, L.P.		Delaware
NJDOI/GMAM CT High Grade Partners II, L.P.		Delaware
NJDOI/GMAM Opportunistic Real Estate Investment Program, L.P.		Delaware
North American New Cars, Inc.		Delaware
Now Motor Retailing Limited		England and Wales
OEConnection LLC		Delaware
OEConnection Manager Corp.		Delaware
Omnibus BB Transportes, S. A.		Ecuador
OnStar Global Services Corporation		Delaware
OnStar, LLC		Delaware
Opel Danmark A/S		Denmark
Opel Eisenach GmbH		Germany
Opel Southeast Europe LLC		Hungary
Opel Special Vehicles GmbH		Germany
Opel Sverige AB		Sweden
P. T. Mesin Isuzu Indonesia		Indonesia
P.T. G M AutoWorld Indonesia		Indonesia
P.T. General Motors Indonesia		Indonesia
Pan Asia Technical Automotive Center Company, Ltd.		China
Parkwood Holdings Ltd.		Cayman Islands
Patrick (Durham) Limited		England and Wales
Pearl (Crawley) Limited		England and Wales
Performance Equity Management, LLC		Delaware
Peter Vardy (Perth) Limited		Scotland
PIMS Co.		Delaware
Plan Automotor Ecuatoriano S.A. Planautomotor		Ecuador
Promark Global Advisors Limited		England
Promark Trust Bank, N.A.		New York
ProSTEP AG		Germany
Quantum Fuel Systems Technologies Worldwide, Inc.		Delaware
RAG BILDUNG Opel GmbH		Germany
Randstad WorkNet GmbH		Germany
Reeve (Derby) Limited		England and Wales
Reg Vardy (VMC) Limited		England and Wales
Renaissance Center Management Company		Michigan

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
Renton Cadillac Pontiac GMC, Inc.		Delaware
Retailer Guarantee Ltd.		Unknown
Riverfront Holdings III, Inc.		Delaware
Riverfront Holdings Phase II, Inc.		Delaware
Riverfront Holdings, Inc.		Delaware
Ruedas de Aluminio, C.A.		Venezuela
Rumble (Bedworth) Limited		England and Wales
S.C. UNION MOTORS CAR SALES S.L.R.		Romania
Saab Automobile AB		Sweden
Saab Automobile Investering AB		Sweden
Saab GB Pension Plan Trustees Company Limited		England and Wales
Saab Great Britain Limited		England
SAIC General Motors Investment Limited		China
SAIC GM Wuling Automobile Company Limited		China
Sakti3, Inc.		Delaware
Salmon Street Ltd.		Australia
San Fernando Valley Automotive, LLC		Delaware
Sarmiento 1113 S.A. (en liquidacion)		Argentina
Saturn County Bond Corporation		Delaware
SB (Helston) Limited		England and Wales
Seward (Wessex) Limited		England and Wales
Shanghai Automotive Industry Sales Co., Ltd.		China
Shanghai Chengxin Used Car Operation and Management Company Limited		China
Shanghai General Motors Corporation Ltd.		China
Shanghai GM (Shenyang) Norsom Motors Co. Ltd		China
Shanghai GM Dong Yue Motors Company Limited		China
Shanghai GM Dong Yue Powertrain Company Limited		China
Shanghai OnStar Telematics Co. Ltd.		China
Sherwoods (Darlington) Limited		England and Wales
Sirius XM Radio Inc.		Delaware
Sistemas de Compra Programada Chevrolet, C.A.		Venezuela
Skurrays Limited		England
Slaters (GM) Limited		England and Wales
Slaughter Motor Company, Inc.		Delaware
Smokey Point Buick Pontiac GMC, Inc.		Delaware
Southern (Merthyr) Limited		England and Wales
Superbroad Limited		United Kingdom
Superior Chevrolet, Inc.		Delaware
TCO No.1 Limited		England and Wales
Thurlow Nunn (JV) Limited		England and Wales
Todd Wenzel Chevrolet, Inc.		Delaware
Trimarco Pontiac-Buick-GMC, Inc. (Gary Trimarco Automotive)		Delaware
Truck and Bus Engineering U.K., Limited		Delaware
Tustain Motors Limited		England and Wales
United States Advanced Battery Consortium, LLC		Michigan

GENERAL MOTORS COMPANY

AND SUBSIDIARIES, JOINT VENTURES, AND AFFILIATES

OF THE REGISTRANT

AS OF DECEMBER 31, 2010


Company Name		State or Sovereign Power of Incorporation
United States Automotive Materials Partnership, LLC		Michigan
United States Council for Automotive Research LLC		Michigan
Universal Motors Israel Ltd.		Israel
Uptown Chevrolet-Cadillac, Inc.		Delaware
Vauxhall Motors Limited		England
Vehicle Asset Universal Leasing Trust		Delaware
Vehicle Recycling Partnership, LLC		Michigan
Vertu Motors (VMC) Limited		England and Wales
VHC Sub-Holdings (UK)		England
Vickers (Lakeside) Limited		England and Wales
Vietnam-Daewoo Motor Co., Ltd		Viet Nam
Vision Motors Limited		England and Wales
VM Holdings B.V.		Netherlands
VM Motori S.p.A.		Italy
VM North America, Inc.		Delaware
VMO Properties Limited		England and Wales
VRP Venture Capital Rheinland-Pfalz Nr. 2 GmbH & Co. KG		Germany
W. Grose Northampton Limited		England and Wales
Wheatcroft (Worksop) Limited		England and Wales
Whitehead (Rochdale) Limited		England and Wales
Whitmore’s of Edenbridge Limited		England and Wales
Wilson & Co. (Motor Sales) Limited		England and Wales
Wind Point Partners III, L.P.		Delaware
WRE, Inc.		Michigan

Total - 471

Power of Attorney for Directors of General Motors Company

Exhibit 24

SIGNATURES


		GENERAL MOTORS COMPANY (Registrant)

Date: March 1, 2011	By:	/s/ DANIEL F. AKERSON Daniel F. Akerson Chairman and Chief Executive Officer


Signature		Title

/s/ DANIEL F. AKERSON		Chairman and Chief Executive Officer
(Daniel F. Akerson)

/s/ CHRISTOPHER P. LIDDELL		Vice Chairman and Chief Financial Officer
(Christopher P. Liddell)

/s/ NICK S. CYPRUS		Vice President, Controller and Chief Accounting Officer
(Nick S. Cyprus)

/s/ DAVID BONDERMAN		Director
(David Bonderman)

/s/ ERROLL B. DAVIS, JR.		Director
(Erroll B. Davis, Jr.)

/s/ STEPHEN J. GIRSKY		Director
(Stephen J. Girsky)

/s/ E. NEVILLE ISDELL		Director
(E. Neville Isdell)

/s/ ROBERT D. KREBS		Director
(Robert D. Krebs)

/s/ PHILIP A. LASKAWY		Director
(Philip A. Laskawy)

/s/ KATHRYN V. MARINELLO		Director
(Kathryn V. Marinello)

/s/ PATRICIA F. RUSSO		Director
(Patricia F. Russo)

/s/ CAROL M. STEPHENSON		Director
(Carol M. Stephenson)

/s/ DR. CYNTHIA A. TELLES		Director
(Dr. Cynthia A. Telles)

Section 302 Certification of the Chief Executive Officer

Exhibit 31.1

CERTIFICATION

I, Daniel F. Akerson, certify that:

1. I have reviewed this Annual Report on Form 10-K of General Motors Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ DANIEL F. AKERSON

Daniel F. Akerson

Chairman and Chief Executive Officer

Date: March 1, 2011

Section 302 Certification of the Chief Financial Officer

Exhibit 31.2

CERTIFICATION

I, Christopher P. Liddell, certify that:

1. I have reviewed this Annual Report on Form 10-K of General Motors Company;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ CHRISTOPHER P. LIDDELL

Christopher P. Liddell

Vice Chairman and Chief Financial Officer

Date: March 1, 2011

Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of General Motors Company (the “Company”) on Form 10-K for the period ended December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel F. Akerson, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ DANIEL F. AKERSON

Daniel F. Akerson

Chairman and Chief Executive Officer

Date: March 1, 2011

Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of General Motors Company (the “Company”) on Form 10-K for the period ended December 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Christopher P. Liddell, Vice Chairman and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ CHRISTOPHER P. LIDDELL

Christopher P. Liddell

Vice Chairman and Chief Financial Officer

Date: March 1, 2011

Consolidated Financial Statements of Ally Financial Inc.

Exhibit 99.1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Ally Financial Inc.:

We have audited the accompanying Consolidated Balance Sheet of Ally Financial Inc. and subsidiaries (the “Company”) as of December 31, 2010 and 2009, and the related Consolidated Statements of Income, Changes in Equity, and Cash Flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

Deloitte & Touche LLP

Detroit, Michigan

February 25, 2011

Consolidated Statement of Income

Ally Financial Inc. Ÿ Form 10-K


Year ended December 31, ($ in millions)	2010			2009			2008
Financing revenue and other interest income
Interest and fees on finance receivables and loans	$	6,555		$	6,395		$	8,432
Interest on loans held-for-sale		664			447			837
Interest on trading securities		15			132			127
Interest and dividends on available-for-sale investment securities		362			226			376
Interest-bearing cash		70			99			375
Other interest income, net		1			86			325
Operating leases		3,780			5,715			7,582

Total financing revenue and other interest income		11,447			13,100			18,054
Interest expense
Interest on deposits		660			700			707
Interest on short-term borrowings		447			566			1,451
Interest on long-term debt		5,729			6,008			8,283

Total interest expense		6,836			7,274			10,441
Depreciation expense on operating lease assets		2,030			3,748			5,478
Impairment of investment in operating leases		—			—			1,218

Net financing revenue		2,581			2,078			917
Other revenue
Servicing fees		1,563			1,549			1,747
Servicing asset valuation and hedge activities, net		(394	)		(1,104	)		(263	)

Total servicing income, net		1,169			445			1,484
Insurance premiums and service revenue earned		1,865			1,977			2,710
Gain on mortgage and automotive loans, net		1,267			811			159
(Loss) gain on extinguishment of debt		(123	)		665			12,628
Other gain (loss) on investments, net		505			166			(378	)
Other (loss) gain on trading securities, net		(6	)		173			(689	)
Other income, net of losses		644			180			(643	)

Total other revenue		5,321			4,417			15,271
Total net revenue		7,902			6,495			16,188
Provision for loan losses		442			5,604			3,102
Noninterest expense
Compensation and benefits expense		1,622			1,576			1,916
Insurance losses and loss adjustment expenses		876			1,042			1,402
Other operating expenses		3,783			5,232			5,031

Total noninterest expense		6,281			7,850			8,349
Income (loss) from continuing operations before income tax expense (benefit)		1,179			(6,959	)		4,737
Income tax expense (benefit) from continuing operations		153			74			(136	)

Net income (loss) from continuing operations		1,026			(7,033	)		4,873

Income (loss) from discontinued operations, net of tax		49			(3,265	)		(3,005	)

Net income (loss)	$	1,075		$	(10,298	)	$	1,868

The Notes to the Consolidated Financial Statements are an integral part of these statements.

Consolidated Balance Sheet

Ally Financial Inc. Ÿ Form 10-K


December 31, ($ in millions)	2010			2009
Assets
Cash and cash equivalents
Noninterest-bearing	$	1,714		$	1,840
Interest-bearing		9,956			12,948

Total cash and cash equivalents		11,670			14,788
Trading securities		240			739
Investment securities		14,846			12,158
Loans held-for-sale, net ($6,424 and $5,545 fair value-elected)		11,411			20,625
Finance receivables and loans, net
Finance receivables and loans, net ($1,015 and $1,391 fair value-elected)		102,413			77,701
Allowance for loan losses		(1,873	)		(2,445	)

Total finance receivables and loans, net		100,540			75,256
Investment in operating leases, net		9,128			15,995
Mortgage servicing rights		3,738			3,554
Premiums receivable and other insurance assets		2,181			2,720
Other assets		17,564			19,887
Assets of operations held-for-sale		690			6,584

Total assets	$	172,008		$	172,306

Liabilities
Deposit liabilities
Noninterest-bearing	$	2,131		$	1,755
Interest-bearing		36,917			30,001

Total deposit liabilities		39,048			31,756
Short-term borrowings		7,508			10,292
Long-term debt ($972 and $1,294 fair value-elected)		86,612			88,021
Interest payable		1,829			1,637
Unearned insurance premiums and service revenue		2,854			3,192
Reserves for insurance losses and loss adjustment expenses		862			1,215
Accrued expenses and other liabilities		12,126			10,456
Liabilities of operations held-for-sale		680			4,898

Total liabilities		151,519			151,467
Equity
Common stock and paid-in capital		19,668			13,829
Mandatorily convertible preferred stock held by U.S. Department of Treasury		5,685			10,893
Preferred stock		1,287			1,287
Accumulated deficit		(6,410	)		(5,630	)
Accumulated other comprehensive income		259			460

Total equity		20,489			20,839

Total liabilities and equity	$	172,008		$	172,306

The Notes to the Consolidated Financial Statements are an integral part of these statements.

Consolidated Balance Sheet

Ally Financial Inc. Ÿ Form 10-K

The assets of consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and the liabilities of these entities for which creditors (or beneficial interest holders) do not have recourse to our general credit at December 31, 2010, were as follows.


($ in millions)
Assets
Loans held-for-sale, net	$	21
Finance receivables and loans, net
Finance receivables and loans, net ($1,015 fair value-elected)		33,483
Allowance for loan losses		(238	)

Total finance receivables and loans, net		33,245
Investment in operating leases, net		1,065
Other assets		3,194
Assets of operations held-for-sale		85

Total assets	$	37,610

Liabilities
Short-term borrowings	$	964
Long-term debt ($972 fair value-elected)		24,466
Interest payable		15
Accrued expenses and other liabilities		352
Liabilities of operations held-for-sale		45

Total liabilities	$	25,842

The Notes to the Consolidated Financial Statements are an integral part of these statements.

Consolidated Statement of Changes in Equity

Ally Financial Inc. Ÿ Form 10-K


($ in millions)	Members’ interests		Mandatorily convertible preferred interests held by U.S. Department of Treasury		Preferred interests		Retained earnings			Accumulated other comprehensive income (loss)			Total equity			Comprehensive income (loss)
Balance at December 31, 2007	$	8,912			$	1,052	$	4,649		$	952		$	15,565
Cumulative effect of a change in accounting principle, net of tax (a)								(155	)					(155	)

Balance at January 1, 2008, after cumulative effect of adjustments	$	8,912			$	1,052	$	4,494		$	952		$	15,410
Capital contributions (b)		758												758
Net income								1,868						1,868		$	1,868
Dividends to members (b)								(79	)					(79	)
Issuance of preferred interests			$	5,000		235								5,235
Other comprehensive loss											(1,341	)		(1,341	)		(1,341	)
Other								3						3

Balance at December 31, 2008	$	9,670	$	5,000	$	1,287	$	6,286		$	(389	)	$	21,854		$	527

Capital contributions (b)	$	1,247											$	1,247
Net loss							$	(4,578	)					(4,578	)	$	(4,578	)
Preferred interests dividends paid to the U.S. Department of Treasury								(160	)					(160	)
Preferred interests dividends								(195	)					(195	)
Dividends to members (b)								(119	)					(119	)
Issuance of preferred interests			$	7,500										7,500
Other comprehensive income										$	497			497			497

Balance at June 30, 2009, before conversion from limited liability company to a corporation (c)	$	10,917	$	12,500	$	1,287	$	1,234		$	108		$	26,046		$	(4,081	)

Statement continues on the next page.

Consolidated Statement of Changes in Equity

Ally Financial Inc. Ÿ Form 10-K


($ in millions)	Common stock and paid-in capital		Mandatorily convertible preferred stock held by U.S. Department of Treasury			Preferred stock		Retained earnings (accumulated deficit)			Accumulated other comprehensive income (loss)			Total equity			Comprehensive (loss) income
Balance at June 30, 2009, after conversion from limited liability company to a corporations (c)	$	10,917	$	12,500		$	1,287	$	1,234		$	108		$	26,046		$	(4,081	)
Capital contributions (b)		55													55
Net loss									(5,720	)					(5,720	)		(5,720	)
Preferred stock dividends paid to the U.S. Department of Treasury									(695	)					(695	)
Preferred stock dividends (b)									(175	)					(175	)
Dividends to shareholders (b)									(274	)					(274	)
Issuance of preferred stock				1,250											1,250
Conversion of preferred stock		2,857		(2,857	)
Other comprehensive income												352			352			352

Balance at December 31, 2009	$	13,829	$	10,893		$	1,287	$	(5,630	)	$	460		$	20,839		$	(9,449	)

Cumulative effect of a change in accounting principle, net of tax (d)									(57	)		4			(53	)

Balance at January 1, 2010, after cumulative effect of adjustments	$	13,829	$	10,893		$	1,287	$	(5,687	)	$	464		$	20,786
Capital contributions		15													15
Net income									1,075						1,075		$	1,075
Preferred stock dividends paid to the U.S. Department of Treasury									(963	)					(963	)
Preferred stock dividends (b)									(282	)					(282	)
Dividends to shareholders (b)									(11	)					(11	)
Conversion of preferred stock and related amendment (e)		5,824		(5,208	)				(616	)
Other comprehensive loss												(205	)		(205	)		(205	)
Other (f)									74						74

Balance at December 31, 2010	$	19,668	$	5,685		$	1,287	$	(6,410	)	$	259		$	20,489		$	870

(a)	Relates to the adoption of ASC Topic 820, Fair Value Measurements and Disclosures, which increased retained earnings by $23 million and the adoption of ASC Topic 825, Financial Instruments, which decreased retained earnings by $178 million.

(b)	Refer to Note 26 to the Consolidated Financial Statements for further detail.

(c)

Effective June 30, 2009, we converted from a Delaware limited liability company into a Delaware corporation. Each unit of each class of common membership interest issued and outstanding immediately prior to the conversion was converted into an equivalent number of shares of common stock with substantially the same rights and preferences as the common membership interests. Upon conversion, holders of our preferred membership interests also received an equivalent number of preferred stock with substantially the same rights and preferences as the former preferred membership interests.

(d)	Relates to the adoption of ASU 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. Refer to Note 1 for additional information.

(e)	Refer to Note 20 to the Consolidated Financial Statements for further detail.

(f)	Represents a reduction of the estimated payment accrued for tax distributions as a result of the completion of the GMAC LLC U.S. Return of Partnership Income for the tax period January 1, 2009, through June 30, 2009. Refer to Note 24 to the Consolidated Financial Statement for further details.

The Notes to the Consolidated Financial Statements are an integral part of these statements.

Consolidated Statement of Cash Flows

Ally Financial Inc. Ÿ Form 10-K


Year ended December 31, ($ in millions)	2010			2009			2008
Operating activities
Net income (loss)	$	1,075		$	(10,298	)	$	1,868
Reconciliation of net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization		4,100			5,958			6,722
Operating lease impairment		—			—			1,234
Impairment of goodwill and other intangible assets		—			607			58
Other impairment		170			1,516			—
Amortization and valuation adjustments of mortgage servicing rights		872			142			2,250
Provision for loan losses		469			6,173			3,683
(Gain) loss on sale of loans, net		(1,014	)		(192	)		1,825
Net (gains) losses on investment securities		(520	)		(2	)		1,203
Loss (gain) on extinguishment of debt		123			(665	)		(12,628	)
Originations and purchases of loans held-for-sale		(73,823	)		(88,283	)		(132,023	)
Proceeds from sales and repayments of loans held-for-sale		80,093			78,673			141,312
Net change in
Trading securities		(39	)		734			741
Deferred income taxes		(272	)		(402	)		(396	)
Interest payable		177			83			(651	)
Other assets		1,240			3,711			(1,213	)
Other liabilities		(504	)		(1,473	)		178
Other, net		(540	)		(1,414	)		(68	)

Net cash provided by (used in) operating activities		11,607			(5,132	)		14,095

Investing activities
Purchases of available-for-sale securities		(24,116	)		(21,148	)		(16,202	)
Proceeds from sales of available-for-sale securities		17,872			10,153			14,068
Proceeds from maturities of available-for-sale securities		4,527			4,527			7,502
Net (increase) decrease in finance receivables and loans		(17,306	)		14,259			5,570
Proceeds from sales of finance receivables and loans		3,138			260			1,366
Change in notes receivable from GM		(38	)		803			(62	)
Purchases of operating lease assets		(3,551	)		(732	)		(10,544	)
Disposals of operating lease assets		8,627			6,612			7,633
(Purchases) sales of mortgage servicing rights, net		(56	)		—			797
Proceeds from sale of business units, net (a)		161			296			319
Other, net (b)		3,175			2,098			471

Net cash (used in) provided by investing activities		(7,567	)		17,128			10,918

Statement continues on the next page.

Consolidated Statement of Cash Flows

Ally Financial Inc. Ÿ Form 10-K


Year ended December 31, ($ in millions)	2010			2009			2008
Financing activities
Net change in short-term debt		(3,629	)		(338	)		(22,815	)
Net increase in bank deposits		6,556			10,703			6,447
Proceeds from issuance of long-term debt		39,002			30,679			44,724
Repayments of long-term debt		(49,530	)		(61,493	)		(59,627	)
Proceeds from issuance of common stock		—			1,247			—
Proceeds from issuance of preferred stock to the U.S. Department of Treasury		—			8,750			5,000
Dividends paid		(1,253	)		(1,592	)		(113	)
Other, net		869			1,064			(1,784	)

Net cash used in financing activities		(7,985	)		(10,980	)		(28,168	)

Effect of exchange-rate changes on cash and cash equivalents		102			(602	)		629

Net (decrease) increase in cash and cash equivalents		(3,843	)		414			(2,526	)
Adjustments for change in cash and cash equivalents of operations held-for-sale (a) (b)		725			(777	)		—
Cash and cash equivalents at beginning of year		14,788			15,151			17,677

Cash and cash equivalents at end of year	$	11,670		$	14,788		$	15,151

Supplemental disclosures
Cash paid for
Interest	$	5,531		$	7,868		$	12,092
Income taxes		517			355			130
Noncash items
Increase in finance receivables and loans due to a change in accounting principle (c)		17,990			—			—
Increase in long-term debt due to a change in accounting principle (c)		17,054			—			—
Increase in equity (d)		—			—			235
Capital contributions from stockholders/members		—			34			758
Conversion of preferred stock to common equity		5,208			—			—
Other disclosures
Proceeds from sales and repayments of mortgage loans held-for-investment originally designated as held-for-sale		1,324			1,010			1,747
Consolidation of loans, net		137			1,410			—
Consolidation of variable interest entity debt		78			1,184			—
Deconsolidation of loans, net		1,969			—			2,353
Deconsolidation of variable interest entity debt		1,903			—			2,539

(a)	The amounts for the year ended December 31, 2010, are net of cash and cash equivalents of $1.2 billion of business units at the time of disposition.

(b)	Cash flows of operations held-for-sale are reflected within operating, investing, and financing activities in the Consolidated Statement of Cash Flows. The cash balance of these operations are reported as assets of operations held-for-sale on the Consolidated Balance Sheet.

(c)	Relates to the adoption of ASU 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. Refer to Note 1 for additional information.

(d)	Represents long-term debt exchanged for preferred interests in 2008.

The Notes to the Consolidated Financial Statements are an integral part of these statements.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

1.	Description of Business and Significant Accounting Policies

Ally Financial Inc. (formerly GMAC Inc. and referred to herein as Ally, we, our, or us) is a leading, independent, globally diversified, financial services firm with $172 billion in assets and operations in 37 countries. Founded in 1919, we are a leading automotive financial services company with over 90 years experience providing a broad array of financial products and services to automotive dealers and their customers. We are also one of the largest residential mortgage companies in the United States. We became a bank holding company on December 24, 2008, under the Bank Holding Company Act of 1956, as amended (the BHC Act). Our banking subsidiary, Ally Bank, is an indirect wholly owned subsidiary of Ally Financial Inc. and a leading franchise in the growing direct (online and telephonic) banking market, with $33.9 billion of deposits at December 31, 2010.

Residential Capital, LLC

Residential Capital, LLC (ResCap), one of our mortgage subsidiaries, was negatively impacted by the events and conditions in the mortgage banking industry and the broader economy. The market deterioration led to fewer sources of, and significantly reduced levels of, liquidity available to finance ResCap’s operations. ResCap is highly leveraged relative to its cash flow and previously recognized credit and valuation losses resulting in a significant deterioration in capital. ResCap’s consolidated tangible net worth, as defined, was $846 million at December 31, 2010, and ResCap remained in compliance with all of its consolidated tangible net worth covenants. For this purpose, consolidated tangible net worth is defined as ResCap’s consolidated equity excluding intangible assets. There continues to be a risk that ResCap may not be able to meet its debt service obligations, may default on its financial debt covenants due to insufficient capital, and/or may be in a negative liquidity position in future periods.

ResCap actively manages its liquidity and capital positions and is continually working on initiatives to address its debt covenant compliance and liquidity needs including debt maturing in the next twelve months and other risks and uncertainties. ResCap’s initiatives could include, but are not limited to, the following: continuing to work with key credit providers to optimize all available liquidity options; possible further reductions in assets and other restructuring activities; focusing production on conforming and government-insured residential mortgage loans; exploring strategic alternatives such as alliances, joint ventures, and other transactions with third parties with respect to certain ResCap assets and businesses; and continued exploration of opportunities for funding and capital support from Ally and its affiliates. The outcomes of most of these initiatives are to a great extent outside of ResCap’s control resulting in increased uncertainty as to their successful execution.

During 2009 and 2010, we performed a strategic review of our mortgage business. As a result of this, we effectively exited the European mortgage market through the sale of our U.K. and continental Europe operations. The sale of these operations was completed on October 1, 2010. Certain components of the sale were completed on September 30, 2010. Refer to Note 2 for additional information on the sale. We also completed the sale of certain higher-risk legacy mortgage assets and settled representation and warranty claims with certain counterparties. The ongoing focus of our Mortgage Origination and Servicing operations will be predominately the origination of conforming and government-insured residential mortgages and mortgage servicing. While the opportunities for further risk mitigation remain, the risk in our Mortgage Legacy Portfolio and Other operations has been materially reduced as compared to recent levels.

In the future, Ally and ResCap may take additional actions with respect to ResCap as each party deems appropriate. These actions may include Ally providing or declining to provide additional liquidity and capital support for ResCap; refinancing or restructuring some or all of ResCap’s existing debt; the purchase or sale of ResCap debt securities in the public or private markets for cash or other consideration; entering into derivative or other hedging or similar transactions with respect to ResCap or its debt securities; Ally purchasing assets from ResCap; or undertaking corporate transactions such as a tender offer or exchange offer for some or all of ResCap’s outstanding debt securities, a merger, sale, asset sales, consolidation, spin-off, distribution, or other business combination or reorganization or similar action with respect to all or part of ResCap and/or its affiliates. In this context, Ally and ResCap typically consider a number of factors to the extent applicable and appropriate including, without limitation, the financial condition, results of operations, and prospects of Ally and ResCap; ResCap’s ability to obtain third-party financing; tax considerations; the current and anticipated future trading price levels of ResCap’s debt instruments; conditions in the mortgage banking industry and general economic conditions; other investment and business opportunities available to Ally and/or ResCap; and any nonpublic information that ResCap may possess or that Ally receives from ResCap.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

ResCap remains heavily dependent on Ally and its affiliates for funding and capital support, and there can be no assurance that Ally or its affiliates will continue such actions or that Ally will choose to execute any further strategic transactions with respect to ResCap, or that any transactions undertaken will be successful.

Although our continued actions through various funding and capital initiatives demonstrate support for ResCap, there are currently no commitments or assurances for future capital support. Consequently, there remains substantial doubt about ResCap’s ability to continue as a going concern. Should we no longer continue to support the capital or liquidity needs of ResCap or should ResCap be unable to successfully execute other initiatives, it would have a material adverse effect on ResCap’s business, results of operations, and financial position.

Ally has extensive financing and hedging arrangements with ResCap that could be at risk of nonpayment if ResCap were to file for bankruptcy. At December 31, 2010, we had $1.9 billion in secured financing arrangements with ResCap of which $1.5 billion in loans was utilized. Amounts outstanding under the secured financing and hedging arrangements fluctuate. If ResCap were to file for bankruptcy, ResCap’s repayments of its financing facilities, including those with us, could be slower. In addition, we could be an unsecured creditor of ResCap to the extent that the proceeds from the sale of our collateral are insufficient to repay ResCap’s obligations to us. It is possible that other ResCap creditors would seek to recharacterize our loans to ResCap as equity contributions or to seek equitable subordination of our claims so that the claims of other creditors would have priority over our claims. In addition, should ResCap file for bankruptcy, our $846 million investment related to ResCap’s equity position would likely be reduced to zero. If a ResCap bankruptcy were to occur and a substantial amount of our credit exposure is not repaid to us, it would have an adverse impact on our near-term net income and capital position, but we do not believe it would have a materially adverse impact on Ally’s consolidated financial position over the longer term.

Consolidation and Basis of Presentation

The Consolidated Financial Statements include our accounts and accounts of our majority-owned subsidiaries after eliminating all significant intercompany balances and transactions and include all variable interest entities (VIEs) in which we are the primary beneficiary. Refer to Note 11 for further details on our VIEs. Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (GAAP).

We operate our international subsidiaries in a similar manner as we operate in the United States of America (U.S. or United States), subject to local laws or other circumstances that may cause us to modify our procedures accordingly. The financial statements of subsidiaries that operate outside of the United States generally are measured using the local currency as the functional currency. All assets and liabilities of foreign subsidiaries (excluding Venezuela due to hyperinflation) are translated into U.S. dollars at year-end exchange rates. The resulting translation adjustments are recorded in accumulated other comprehensive income, a component of equity. Income and expense items are translated at average exchange rates prevailing during the reporting period.

Certain amounts in prior periods have been reclassified to conform to the current presentation.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and that affect income and expenses during the reporting period and related disclosures. In developing the estimates and assumptions, management uses all available evidence; however, actual results could differ because of uncertainties associated with estimating the amounts, timing, and likelihood of possible outcomes.

Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and certain highly liquid investment securities with maturities of three months or less from the date of purchase. Cash and cash equivalents that have restrictions on our ability to withdraw the funds are included in other assets on our Consolidated Balance Sheet. The book value of cash equivalents approximates fair value because of the short maturities of these instruments. Certain securities with original maturities less than 90 days that are held as a portion of longer-term investment portfolios, primarily held by our Insurance operations, are classified as investment securities.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Securities

Our portfolio of securities includes government securities, corporate bonds, asset- and mortgage-backed securities, interests in securitization trusts, equity securities, and other investments. Securities are classified based on management’s intent. Our trading securities primarily consist of retained and purchased interests in certain securitizations. The retained interests are carried at fair value with changes in fair value recorded in current period earnings. Debt securities that management has the intent and ability to hold to maturity are classified as held-to-maturity and reported at amortized cost. All other securities are classified as available-for-sale and carried at fair value with unrealized gains and losses included in accumulated other comprehensive income or loss, a component of equity, on an after-tax basis. Premiums and discounts on debt securities are amortized as an adjustment to investment yield generally over the contractual term of the security. We employ a systematic methodology that considers available evidence in evaluating potential other-than-temporary impairment of our investments classified as available-for-sale or held-to-maturity. If the cost of an investment exceeds its fair value, we evaluate, among other factors, the magnitude and duration of the decline in fair value. We also evaluate the financial health of and business outlook for the issuer, the performance of the underlying assets for interests in securitized assets, and our intent and ability to hold the investment.

Once a decline in fair value of an equity security is determined to be other-than-temporary, an impairment charge for the credit component is recorded to other gain (loss) on investments, net, in our Consolidated Statement of Income, and a new cost basis in the investment is established. Noncredit component losses of a debt security are recorded in other comprehensive income (loss) when we do not intend to sell the security or is not more likely than not to have to sell the security prior to the security’s anticipated recovery. Noncredit component losses are amortized over the remaining life of the debt security by offsetting the recorded value of the asset.

Realized gains and losses on investment securities are reported in other gain (loss) on investments, net, and are determined using the specific identification method.

For detail on trading securities refer to Note 6 and for detail on investment securities refer to Note 7.

Loans Held-for-sale

Loans held-for-sale may include consumer automobile, consumer mortgage, and commercial receivables and loans. Loans held-for-sale are carried at the lower of cost or estimated fair value. Loan origination fees, as well as discount points and incremental direct origination costs, are initially recorded as an adjustment of the cost of the loan and are reflected in the gain or loss on sale of loans when sold. Fair value is determined by type of loan and is generally based on contractually established commitments from investors, current investor yield requirements, current secondary market pricing, or cash flow models using market-based yield requirements. Certain of our domestic consumer mortgages are reported at fair value as a result of the fair value option election. Refer to Note 8 for details on loans held-for-sale and Note 27 for details on fair value measurement.

Finance Receivables and Loans

Finance receivables and loans are reported at the principal amount outstanding, net of unearned income, premiums and discounts, and allowances. Unearned income, which includes deferred origination fees reduced by origination costs and unearned rate support received from an automotive manufacturer on certain automotive loans, is amortized over the contractual life of the related finance receivable or loan using the interest method. Loan commitment fees are generally deferred and amortized over the commitment period. For detail on finance receivables and loans, refer to Note 9.

We classify finance receivables and loans between loans held-for-sale and loans held-for-investment based on management’s assessment of our intent and ability to hold loans for the foreseeable future or until maturity. Management’s intent and ability with respect to certain loans may change from time to time depending on a number of factors including economic, liquidity, and capital conditions. Management’s view of the foreseeable future is generally a twelve-month period based on the longest reasonably reliable net income, liquidity, and capital forecast period.

Our portfolio segments are based on the level at which we develop and document our methodology for determining the allowance for loan losses. Additionally, the classes of finance receivables are based on several factors including the method

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

for monitoring and assessing credit risk, the method of measuring carrying value, and the risk characteristics of the finance receivable. Based on an evaluation of our process for developing the allowance for loan losses including the nature and extent of exposure to credit risk arising from finance receivables, we have determined our portfolio segments to be consumer automobile, consumer mortgage, and commercial.

•

Consumer automobile — Consists of retail automobile financing for new and used vehicles.

•

Consumer mortgage — Consists of the following classes of finance receivables.

•

1st Mortgage — Consists of residential mortgage loans that are secured in a first-lien position and have priority over all other liens or claims on the respective collateral.

•

Home equity — Consists of residential home equity loans or mortgages with a subordinate-lien position.

•

Commercial — Consists of the following classes of finance receivables.

•

Commercial and Industrial

•

Automobile — Consists of financing operations to fund dealer purchases of new and used vehicle through wholesale or floorplan financing. Additional commercial offerings include automotive dealer term loans, revolving lines of credit, and dealer fleet financing.

•

Mortgage — Consists primarily of warehouse lending.

•

Other — Consists of senior secured commercial lending and our resort finance portfolio. We sold our resort finance portfolio during the third quarter of 2010.

•

Commercial Real Estate

•

Automobile — Consists of term loans to finance dealership land and buildings.

•

Mortgage — Related primarily to activities within our business capital group, which provides financing to residential land developers and homebuilders. These activities are in wind-down and do not represent a material component of our business.

Nonaccrual Loans

Revenue recognition is suspended when all classes of finance receivables and loans are placed on nonaccrual status. Generally, all classes of finance receivables and loans are placed on nonaccrual status when principal or interest has been delinquent for 90 days or when determined not to be probable of full collection. Exceptions include commercial real estate loans that are placed on nonaccrual status when delinquent for 60 days. Revenue accrued, but not collected, at the date finance receivables and loans are placed on nonaccrual status is reversed and subsequently recognized only to the extent it is received in cash or until it qualifies for return to accrual status. However, where there is doubt regarding the ultimate collectability of loan principal, all cash received is applied to reduce the carrying value of such loans. Finance receivables and loans are restored to accrual status only when contractually current and the collection of future payments is reasonably assured. Typically, this requires a sustained period of repayment performance of at least six consecutive months by the borrower.

Generally, we recognize all classes of loans as past due when they are 30 days delinquent.

Impaired Loans

All classes of commercial loans are considered impaired when we determine it is probable that we will be unable to collect all amounts due according to the terms of the loan agreement. Income recognition is consistent with that of nonaccrual loans discussed above. For collateral dependent loans, if the recorded investment in impaired loans exceeds the fair value of the collateral, a valuation allowance is established as a component of the allowance for loan losses.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

For all classes of consumer loans, impaired loans are loans that have been modified in troubled debt restructurings. Troubled debt restructurings typically result from our loss mitigation activities and could include rate reductions, principal forgiveness, forbearance, and other actions intended to minimize the economic loss and to avoid foreclosure or repossession of collateral. A troubled debt restructuring involving only a modification of terms requires that the restructured loan be measured at the present value of the expected future cash flows discounted at the effective interest rate at the time of modification, as based on the original loan terms. Alternately, the loan may be measured for impairment based on the fair value of the underlying collateral if the loan is collateral dependent. If the value of the loan is less than the recorded investment in the loan, we recognize an impairment by creating a valuation allowance or by adjusting an existing valuation allowance for the impaired loan. For loans held-for-investment that are not carried at fair value and are troubled debt restructurings, impairment is measured based on the present value of the expected future cash flows discounted at the loan’s effective interest rate prior to the restructuring. Loans with insignificant delays or insignificant short falls in the amount of payments expected not to be collected are not considered to be impaired.

Our policy is to place all modified loans, including troubled debt restructured loans on nonaccrual status until the loan has been brought fully current, the collection of contractual principal and interest is reasonably assured, and six consecutive months of repayment performance is achieved.

Charge-offs

As a general rule, consumer automobile loans are written down to estimated collateral value, less costs to sell, once a loan becomes 120 days past due; and second-lien consumer mortgage loans within our home equity class are charged off at 180 days past due. Consumer first-lien mortgage loans, which consists of our entire 1st mortgage class and a subset of our home equity class that are secured by real estate are written down to estimated collateral value, less costs to sell, once a mortgage loan becomes 180 days past due. Consumer automobile and second-lien consumer mortgage loans in bankruptcy that are 60 days past due are fully charged off within 60 days of receipt of notification of filing from the bankruptcy court. First-lien consumer mortgage loans in bankruptcy that are 60 days past due are written down to estimated collateral value, less costs to sell, within 60 days of receipt of notification of filing from the bankruptcy court. Regardless of other timelines noted within this policy, loans are considered collateral dependent at the time foreclosure proceedings begin and are charged off to the fair value of the underlying collateral, less costs to sell at that time.

Commercial loans are individually evaluated and where collectability of the recorded balance is in doubt are written down to fair value of the collateral less costs to sell. Generally, all commercial loans, both collateral and noncollateral dependent, are charged off when they are 360 days or more past due.

Allowance for Loan Losses

The allowance for loan losses (the allowance) is management’s estimate of incurred losses in the lending portfolios. We determine the amount of the allowance required for each of our portfolio segments based on its relative risk characteristics. The evaluation of these factors for both consumer and commercial finance receivables and loans involves complex, subjective judgments. Additions to the allowance are charged to current period earnings through the provision for loan losses; amounts determined to be uncollectible are charged directly against the allowance, net of amounts recovered on previously charged-off accounts.

The allowance is comprised of two components: reserves established for specific loans evaluated as impaired and portfolio-level reserves established for large groups of typically smaller balance homogenous loans that are collectively evaluated for impairment. We evaluate the adequacy of the allowance based on the combined total of these two components. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain. It is possible that others, given the same information, may at any point in time reach different reasonable conclusions.

Measurement of impairment for specific reserves is generally determined on a loan by loan basis. An individual loan should be considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the contractual terms of the agreement. Loans determined to be specifically impaired are measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, an observable market price, or the estimated fair value of the collateral less estimated costs to sell, whichever is

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

determined to be the most appropriate. When these measurement values are lower than the carrying value of that loan, impairment is recognized. Loans that are deemed not to be individually impaired are pooled with other loans with similar risk characteristics for evaluation of impairment for the portfolio-level allowance.

For the purpose of calculating portfolio-level reserves, we have determined logical grouping of loans into three portfolio segments: consumer automobile, consumer mortgage, and commercial. The allowance consists of the combination of a quantitative assessment component based on statistical models, a retrospective evaluation of actual loss information to loss forecasts, and a qualitative component based on management judgment. Management takes into consideration relevant qualitative factors, including external and internal trends such as the impacts of changes in underwriting standards, collections and account management effectiveness, geographic concentrations, and economic events, among other factors, that have occurred but are not yet reflected in the quantitative assessment component. All qualitative adjustments are adequately documented, reviewed and approved through our established risk governance processes. Refer to Note 9 for detail on the allowance for loan losses.

Consumer Loans

Our consumer automobile and consumer mortgage portfolio segments are reviewed for impairment based on an analysis of loans that are grouped into common risk categories (i.e., past due status, loan or lease type, collateral type, borrower, industry or geographic concentrations). We perform periodic and systematic detailed reviews of our lending portfolios to identify inherent risks and to assess the overall collectability of those portfolios. Loss models are utilized for these portfolios, which consider a variety of factors including, but not limited to, historical loss experience, current economic conditions, anticipated repossessions or foreclosures based on portfolio trends, delinquencies and credit scores, and expected loss factors by loan type.

Consumer Automobile Portfolio Segment

The allowance for loan losses within the consumer automobile portfolio segment is calculated by leveraging proprietary statistical models and other risk indicators to pools of loans with similar risk characteristics, including credit bureau score, loan-to-value and vehicle type, to arrive at an estimate of incurred losses in the portfolio. These statistical loss forecasting models are utilized to estimate incurred losses and consider a variety of factors including, but not limited to, historical loss experience, estimated defaults based on portfolio trends, delinquencies, and general economic and business trends. These statistical models predict forecasted losses inherent in the portfolio based on both vintage and migration analyses.

The forecasted losses consider historical factors such as frequency (the number of contracts that we expect to default) and loss severity (the expected loss on a per vehicle basis). The loss severity within the consumer automobile portfolio segment is impacted by the market values of vehicles that are repossessed. Vehicle market values are affected by numerous factors including the condition of the vehicle upon repossession, the overall price and volatility of gasoline or diesel fuel, consumer preference related to specific vehicle segments, and other factors.

The quantitative assessment component is supplemented with qualitative reserves based on management’s determination that such adjustments provide a better estimate of credit losses. This qualitative assessment takes into consideration relevant internal and external factors that have occurred but are not yet reflected in the forecasted losses and may affect the credit quality of the portfolio.

Our methodology and policies with respect to the allowance for loan losses for our consumer automobile portfolio segment did not change during 2010.

Consumer Mortgage Portfolio Segment

The allowance for loan losses within the consumer mortgage portfolio segment is calculated by leveraging proprietary statistical models based on pools of loans with similar risk characteristics, including credit bureau score, loan-to-value, loan age, documentation type, product type, and loan purpose, to arrive at an estimate of incurred losses in the portfolio. These statistical loss forecasting models are utilized to estimate incurred losses and consider a variety of factors including, but not limited to, historical loss experience, estimated foreclosures or defaults based on portfolio trends, delinquencies, and general economic and business trends.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The forecasted losses are statistically derived based on a suite of loan-level behavior models linked into a state transition modeling framework. This transition framework predicts various stages of delinquency, default, and voluntary prepayment over the course of the life of the loan. The transition probability is a function of the loan and borrower characteristics and economic variables and considers historical factors such as frequency (the number of contracts that we except to default) and loss severity (the expected loss on a per property basis). When a default event is predicted, a severity model is applied to estimate future loan losses. The loss severity within the consumer mortgage portfolio segment is impacted by the market values of foreclosed properties, which is affected by numerous factors, including geographic considerations and the condition of the foreclosed property.

Our methodology and policies with respect to the allowance for loan losses for our consumer mortgage portfolio segment did not change during 2010.

Commercial

The allowance for loan losses within the commercial portfolio is comprised of reserves established for specific loans evaluated as impaired and portfolio-level reserves based on nonimpaired loans grouped into pools based on similar risk characteristics and collectively evaluated.

A loan is considered impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement based on current information and events. These loans are primarily evaluated individually and are risk-rated based on borrower, collateral, and industry-specific information that management believes is relevant in determining the occurrence of a loss event and measuring impairment. Management establishes specific allowances for commercial loans determined to be individually impaired based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, observable market price or the fair value of collateral, whichever is determined to be the most appropriate. Estimated costs to sell or realize the value of the collateral on a discounted basis are included in the impairment measurement, when appropriate.

Nonimpaired loans are grouped into pools based on similar risk characteristics and collectively evaluated. Our risk rating models use historical loss experience, concentrations, current economic conditions, and performance trends. The commercial historical loss experience is updated quarterly to incorporate the most recent data reflective of the current economic environment. The determination of the allowance is influenced by numerous assumptions and many factors that may materially affect estimates of loss, including volatility of loss given default, probability of default, and rating migration. In assessing the risk rating of a particular loan, several factors are considered including an evaluation of historical and current information involving subjective assessments and interpretations. In addition, the allowance related to the commercial portfolio segment is influenced by estimated recoveries from automotive manufacturers relative to guarantees or agreements with them to repurchase vehicles used as collateral to secure the loans.

The quantitative assessment component is supplemented with qualitative reserves based on management’s determination that such adjustments provide a better estimate of credit losses. This qualitative assessment takes into consideration relevant internal and external factors that have occurred and may affect the credit quality of the portfolio.

Our methodology and policies with respect to the allowance for loan losses for our commercial portfolio segment did not change during 2010.

Securitizations and Variable Interest Entities

We securitize, sell, and service consumer automobile loans, operating leases, wholesale loans, and consumer mortgage loans. Securitization transactions typically involve the use of variable interest entities and are accounted for either as sales or secured financings. Economic interests in the securitized and sold assets are generally retained in the form of senior or subordinated interests, interest- or principal-only strips, cash reserve accounts, residual interests, and servicing rights.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

In order to conclude whether or not a variable interest entity is required to be consolidated, careful consideration and judgment must be given to the continuing involvement with the variable interest entity. Subsequent to the implementation of ASU 2009-17 on January 1, 2010, in circumstances where we have both the power to direct the activities of the entity that most significantly impact the entity’s performance and the obligation to absorb losses or the right to receive benefits of the entity that could be significant, we would conclude that we would consolidate the entity, which would also preclude us from recording an accounting sale on the transaction. In the case of a consolidated variable interest entity, the accounting is consistent with a secured financing, i.e., we continue to carry the loans and we record the securitized debt on our balance sheet. Further, there is no specific accounting record of our economic interests, but rather, they are captured as the difference between the loan and debt accounting.

In transactions where either one or both of the power or economic criteria mentioned above are not met, we then must determine whether or not we achieve a sale for accounting purposes. In order to achieve a sale for accounting purposes, the assets being transferred must be legally isolated, not be constrained by restrictions from further transfer, and be deemed to be beyond our control. If we were to fail any of the three criteria for accounting sale, the accounting would be consistent with the preceding paragraph (i.e., a secured borrowing). However, if we meet the criteria, the transaction would be recorded as a sale, and the variable interest entity would not be consolidated, refer to Note 11 for discussion on variable interest entities.

Prior to the implementation of ASU 2009-17, many of our securitization were performed utilizing qualifying special purpose entities, which were exempt from consideration for consolidation so long as the transaction would otherwise qualify as a sale. Therefore, these transactions were recorded as sales. Additionally, the gain or loss on sale was dependent on the previous carrying amount of the assets involved in the transfer and were allocated between the assets sold and the retained interests based on relative fair values except for certain servicing assets and liabilities, which were initially recorded at fair value on the date of the sale.

Subsequent to the implementation of ASU 2009-17, gains or losses on off-balance sheet securitizations take into consideration the fair value of the retained interests including the value of certain servicing assets or liabilities, which are initially recorded at fair value at the date of sale. The estimate of the fair value of the retained interests and servicing requires us to exercise significant judgment about the timing and amount of future cash flows from the interests. Refer to the Note 27 for a discussion of fair value estimates.

Gains or losses on off-balance sheet securitizations and sales are reported in gain (loss) on mortgage and automotive loans, net, in our Consolidated Statement of Income for consumer automobile loans, wholesale loans, and consumer mortgage loans. Declines in the fair value of retained interests below the carrying amount are reflected in other comprehensive income, a component of equity, or as other (loss) gain on investments, net, in our Consolidated Statement of Income if such declines are determined to be other than temporary or if the interests are classified as trading. Retained interests, as well as any purchased securities, are generally included in available-for-sale investment securities, trading investment securities, or other assets. Designation as available-for-sale or trading depends on management’s intent. Securities that are noncertificated and cash reserve accounts related to securitizations are included in other assets on our Consolidated Balance Sheet.

We retain servicing responsibilities for all of our consumer automobile loan, operating lease, and wholesale loan securitizations and for the majority of our consumer mortgage loan securitizations. We may receive servicing fees based on the securitized loan balances and certain ancillary fees, all of which are reported in servicing fees in the Consolidated Statement of Income. We also retain the right to service the consumer mortgage loans sold in securitization transactions involving the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Government National Mortgage Association (Ginnie Mae) (collectively the Government-sponsored Enterprises or GSEs) and private investors. We also serve as the collateral manager in the securitizations of commercial investment securities.

Whether on or off balance sheet, the investors in the securitization trusts generally have no recourse to our other assets outside of customary market representation and warranty repurchase provisions.

Mortgage Servicing Rights

Primary servicing rights represent our right to service consumer residential mortgages securitized by us or through the GSEs and third-party whole-loan sales. Primary servicing involves the collection of payments from individual borrowers and

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

the distribution of these payments to the investors or master servicer. Master-servicing rights represent our right to service mortgage- and asset-backed securities and whole-loan packages issued for investors. Master servicing involves the collection of borrower payments from primary servicers and the distribution of those funds to investors in mortgage- and asset-backed securities and whole-loans packages. We also purchase and sell primary and master-servicing rights through transactions with other market participants.

We capitalize the value expected to be realized from performing specified mortgage servicing activities for others as mortgage servicing rights (MSRs). These capitalized servicing rights are purchased or retained upon sale or securitization of mortgage loans. MSRs are not recorded on securitizations accounted for as secured financings.

We measure all mortgage servicing assets and liabilities at fair value. We define our servicing rights based on both the availability of market inputs and the manner in which we manage the risks of our servicing assets and liabilities. We leverage all available relevant market data to determine the fair value of our recognized servicing assets and liabilities.

Since quoted market prices for MSRs are not readily available, we estimate the fair value of MSRs by determining the present value of future expected cash flows using modeling techniques that incorporate management’s best estimates of key variables including expected cash flows, prepayment speeds, and return requirements commensurate with the risks involved. Cash flow assumptions are modeled using our internally forecasted revenue and expenses, and where possible, the reasonableness of assumptions is periodically validated through comparisons to market data. Prepayment speed estimates are determined from historical prepayment rates on similar assets or obtained from third-party data. Return requirement assumptions are determined using data obtained from market participants, where available, or based on current relevant interest rates plus a risk-adjusted spread. We also consider other factors that can impact the value of the MSRs, such as surety provider termination clauses and servicer terminations that could result if we failed to materially comply with the covenants or conditions of our servicing agreements and did not remedy the failure. Since many factors can affect the estimate of the fair value of MSRs, we regularly evaluate the major assumptions and modeling techniques used in our estimate and review these assumptions against market comparables, if available. We monitor the actual performance of our MSRs by regularly comparing actual cash flow, credit, and prepayment experience to modeled estimates. Refer to Note 12 for further discussion of our servicing activities.

Repossessed and Foreclosed Assets

Assets are classified as repossessed and foreclosed and included in other assets when physical possession of the collateral is taken regardless of whether foreclosure proceedings have taken place. Repossessed and foreclosed assets are carried at the lower of the outstanding balance at the time of repossession or foreclosure or the fair value of the asset less estimated costs to sell. Losses on the revaluation of repossessed and foreclosed assets are charged to the allowance for loan and lease losses at the time of repossession. Declines in value after repossession are charged to other operating expenses for loans and depreciation expense for lease contracts as incurred.

Goodwill and Other Intangibles

Goodwill and other intangible assets, net of accumulated amortization, are reported in other assets. In accordance with applicable accounting standards, goodwill represents the excess of the cost of an acquisition over the fair value of net assets acquired, including identifiable intangibles. Goodwill is reviewed for impairment utilizing a two-step process. The first step of the impairment test requires us to define the reporting units and compare the fair value of each of these reporting units to the respective carrying value. The fair value of the reporting units in our impairment test is determined based on various analyses including discounted cash flow projections using assumptions a market participant would use. If the carrying value is less than the fair value, no impairment exists, and the second step does not need to be completed. If the carrying value is higher than the fair value or there is an indication that impairment may exist, a second step must be performed to compute the amount of the impairment, if any. Applicable accounting standards require goodwill to be tested for impairment annually at the same time every year and whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Our annual goodwill impairment assessment is performed as of August 31 of each year. Refer to Note 14 for a discussion of the related goodwill impairment charge in 2009 and 2008. There was no goodwill impairment charge in 2010.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Investment in Operating Leases

Investment in operating leases is reported at cost, less accumulated depreciation and net of impairment charges and origination fees or costs. Depreciation of vehicles is generally provided on a straight-line basis to an estimated residual value over the lease term. Rate support payments that we receive from manufacturers are treated as a reduction to the cost-basis in the underlying lease asset and are recognized over the life of the contract as a reduction to depreciation expense. We periodically evaluate our depreciation rate for leased vehicles based on projected residual values. Income from operating lease assets that includes lease origination fees, net of lease origination costs, is recognized as operating lease revenue on a straight-line basis over the scheduled lease term.

We have significant investments in the residual values of assets in our operating lease portfolio. The residual values represent an estimate of the values of the assets at the end of the lease contracts and are initially determined based on residual values established at contract inception by consulting independently published residual value guides. Realization of the residual values is dependent on our future ability to market the vehicles under the prevailing market conditions. Over the life of the lease, we evaluate the adequacy of our estimate of the residual value and may make adjustments to the depreciation rates to the extent the expected value of the vehicle (including any residual support payments from GM) at lease termination changes. In addition to estimating the residual value at lease termination, we also evaluate the current value of the operating lease asset and test for impairment to the extent necessary based on market considerations and portfolio characteristics. Impairment is determined to exist if the undiscounted expected future cash flows are lower than the carrying value of the asset. If our operating lease assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount of the assets exceeds the fair value as estimated by discounted cash flows. Certain triggering events necessitated an impairment review of the investment in operating leases of our Global Automotive Services beginning in the second quarter of 2008. Refer to Note 10 for a discussion of the impairment charges recognized in 2008.

When a lease vehicle is returned to us, the asset is reclassified from investment in operating leases to other assets and recorded at the lower-of-cost or estimated fair value, less costs to sell.

Impairment of Long-lived Assets

The carrying value of long-lived assets (including property and equipment) are evaluated for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable from the estimated undiscounted future cash flows expected to result from their use and eventual disposition. Recoverability of assets to be held and used is measured by a comparison of their carrying amount to future net undiscounted cash flows expected to be generated by the assets. If these assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount of the assets exceeds the fair value as estimated by discounted cash flows. Refer to the previous section of this note titled Investment in Operating Leases for a discussion pertaining to impairments related to our investment in operating leases in 2008. No material impairment was recognized in 2010 or 2009.

An impairment test on an asset group to be discontinued, held-for-sale, or otherwise disposed of is performed upon occurrence of a triggering event or when certain criteria are met (e.g., the asset can be disposed of within twelve months, appropriate levels of authority have approved the sale, and there is an active program to locate a buyer). Long-lived assets held-for-sale are recorded at the lower of their carrying amount or estimated fair value less cost to sell. If the carrying value of the assets held-for-sale exceeds the fair value less cost to sell, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets less cost to sell. During 2010 and 2009, impairment losses were recognized on asset groups that were classified as held-for-sale or disposed of by sale. Refer to Note 2 for a discussion of held-for-sale and discontinued operations.

Property and Equipment

Property and equipment stated at cost, net of accumulated depreciation and amortization, are reported in other assets. Included in property and equipment are certain buildings, furniture and fixtures, leasehold improvements, company vehicles, IT hardware and software, and capitalized software costs. Depreciation is computed on the straight-line basis over the estimated useful lives of the assets, which generally ranges from 3 to 30 years. Capitalized software is generally amortized on a straight-line basis over its useful life, which generally ranges from three to five years. Capitalized software that is not expected to provide substantive service potential or for which development costs significantly exceed the amount originally

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

expected is considered impaired and written down to fair value. Software expenditures that are considered general, administrative, or of a maintenance nature are expensed as incurred.

Private Debt Exchange and Cash Tender Offers

In 2008, we commenced separate private exchange and cash tender offers to purchase and/or exchange certain of outstanding notes held by eligible holders for cash, newly issued notes of Ally, and in the some cases preferred stock of a wholly owned Ally subsidiary. Refer to Note 17 for additional information related to the exchange and cash tender offers.

In evaluating the accounting for the private debt exchange and cash tender offers (the Offers), management was required to make a determination as to whether the Offers should be accounted for as a troubled debt restructuring (TDR) or an extinguishment of Ally and ResCap debt. In concluding on the accounting, management evaluated applicable accounting guidance. The relevant accounting guidance required us to determine whether the exchanges of debt instruments should be accounted for as a TDR. A TDR results when it is determined, evaluating six factors considered to be indicators of whether a debtor is experiencing financial difficulties, that the debtor is experiencing financial difficulties, and the creditors grant a concession; otherwise, such exchanges should be accounted for as an extinguishment or modification of debt. The assessment of this critical accounting estimate required management to apply a significant amount of judgment in evaluating the inputs, estimates, and internally generated forecast information to conclude on the accounting for the Offers.

In assessing whether Ally was experiencing financial difficulties for the purpose of accounting for the Offers, management applied applicable accounting guidance. Our assessment considered internal analyses such as our short- and long-term liquidity projections, net income forecasts, and runoff projections. These analyses were based upon our consolidated financial condition and our comprehensive ability to service both Ally and ResCap obligations and were based only on our current business capabilities and funding sources. In addition to our baseline projections, these analyses incorporated stressed scenarios reflecting continued deterioration of the credit markets, further GM financial distress, and significant curtailments of loans originations. Management assigned probability weights to each scenario to determine an overall risk-weighted projection of our ability to meet our consolidated obligations as they come due. These analyses indicated that we could service all Ally and ResCap obligations as they came due in the normal course of business.

Our assessment also considered capital market perceptions of our financial condition, such as our credit agency ratings, market values for our debt, analysts’ reports, and public statements made by us and our stakeholders. Due to the rigor applied to our internal projections, management placed more weight on our internal projections and less weight on capital market expectations.

Based on this analysis and after the consideration of the applicable accounting guidance, management concluded the Offers were not deemed to be a TDR. As a result of this conclusion, the Offers were accounted for as an extinguishment of debt.

Applying extinguishment accounting, we recognized a gain at the time of the exchange for the difference between the carrying value of the exchanged notes and the fair value of the newly issued securities. In accordance with applicable fair value accounting guidance related to Level 3 fair value measures, we performed various analyses with regard to the valuation of the newly issued instruments. Level 3 fair value measures are valuations that are derived primarily from unobservable inputs and rely heavily on management assessments, assumptions, and judgments. In determining the fair value of the newly issued instruments, we performed an internal analysis using trading levels on the trade date, December 29, 2008, of existing Ally unsecured debt, adjusted for the features of the new instruments. We also obtained bid-ask spreads from brokers attempting to make a market in the new instruments.

Based on the determined fair values, we recognized a pretax gain upon extinguishment of $11.5 billion and reflected the newly issued preferred shares at their face value, which was estimated to be $234 million on December 29, 2008. The majority of costs associated with the Offers were deferred in the basis of the newly issued bonds. In the aggregate, the offers resulted in an $11.7 billion increase to our consolidated equity position.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Unearned Insurance Premiums and Service Revenue

Insurance premiums, net of premiums ceded to reinsurers, and service revenue are earned over the terms of the policies. The portion of premiums and service revenue written applicable to the unexpired terms of the policies is recorded as unearned insurance premiums or unearned service revenue. For extended service and maintenance contracts, premiums and service revenues are earned on a basis proportionate to the anticipated loss emergence. For other short duration contracts, premiums and unearned service revenue are earned on a pro rata basis. For further detail, refer to Note 3.

Deferred Policy Acquisition Costs

Commissions, including compensation paid to producers of automotive service contracts and other costs of acquiring insurance that are primarily related to and vary with the production of business, are deferred and recorded in other assets. Deferred policy acquisition costs are amortized over the terms of the related policies and service contracts on the same basis as premiums and revenue are earned except for direct response advertising costs, which are amortized over their expected future benefit. We group costs incurred for acquiring like contracts and consider anticipated investment income in determining the recoverability of these costs.

Reserves for Insurance Losses and Loss Adjustment Expenses

Reserves for insurance losses and loss adjustment expenses are established for the unpaid cost of insured events that have occurred as of a point in time. More specifically, the reserves for insurance losses and loss adjustment expenses represent the accumulation of estimates for both reported losses and those incurred, but not reported, including claims adjustment expenses relating to direct insurance and assumed reinsurance agreements. Estimates for salvage and subrogation recoverable are recognized at the time losses are incurred and netted against provision for insurance losses and loss adjustment expenses. Reserves are established for each business at the lowest meaningful level of homogeneous data. Since the reserves are based on estimates, the ultimate liability may vary from such estimates. The estimates are regularly reviewed and adjustments, which can potentially be significant, are included in earnings in the period in which they are deemed necessary. Refer to Note 18 for detail on these reserves.

Loan Repurchase and Obligations Related to Loan Sales

Our Mortgage operations sell loans that take the form of securitizations guaranteed by the GSEs and whole-loan purchasers. In addition, we infrequently sell securities to investors through private-label securitizations. In connection with these activities we provide to the GSEs, investors, whole-loan purchasers, and financial guarantors (monolines) various representations and warranties related to the loans sold. These representations and warranties generally relate to, among other things, the ownership of the loan, the validity of the lien securing the loan, the loan’s compliance with the criteria for inclusion in the transaction, including compliance with underwriting standards or loan criteria established by the buyer, ability to deliver required documentation and compliance with applicable laws. Generally, the representations and warranties described in Note 30 may be enforced at any time over the life of the loan. ResCap assumes all of the customary representation and warranty obligations for loans purchased from Ally Bank and subsequently sold into the secondary market. In the event ResCap fails to meet these obligations, Ally Financial Inc. has provided a guarantee to Ally Bank that covers it from liability.

Upon a breach of a representation, we correct the breach in a manner conforming to the provisions of the sale agreement. This may require us either to repurchase the loan or to indemnify (make-whole) a party for incurred losses or provide other recourse to a GSE or investor. Repurchase demands and claims for indemnification payments are reviewed on a loan-by-loan basis to validate if there has been a breach requiring repurchase or a make-whole payment. We actively contest claims to the extent we do not consider them valid. In cases where we repurchase loans, we bear the subsequent credit loss on the loans. Repurchased loans are classified as held-for-sale and initially recorded at fair value. We seek to manage the risk of repurchase and associated credit exposure through our underwriting and quality assurance practices and by servicing mortgage loans to meet investor standards.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

of future home price changes as well as other qualitative factors including investor behavior. In cases where we do not have or have limited current or historical demand experience with an investor, because it is difficult to predict the level and timing of future demands, if any, losses cannot currently be reasonably estimated, and a liability is not recognized. Management monitors the adequacy of the overall reserve and makes adjustments to the level of reserve, as necessary, after consideration of other qualitative factors including ongoing dialogue with counterparties.

At the time a loan is sold, an estimate of the fair value of the liability is recorded and classified in accrued expenses and other liabilities on our Consolidated Balance Sheet, and recorded as a component of gain (loss) on mortgage and automotive loans, net, in our Consolidated Statement of Income. We recognize changes in the reserve when additional relevant information becomes available. Changes in the liability are recorded as other operating expenses in our Consolidated Statement of Income.

Derivative Instruments and Hedging Activities

We use derivative instruments for risk management purposes. Some of our derivative instruments are designated in qualifying hedge accounting relationships; other derivatives instruments do not qualify for hedge accounting or are not elected to be designated in a qualifying hedging relationship. In accordance with applicable accounting standards, all derivative financial instruments, whether designated for hedge accounting or not, are required to be recorded on the balance sheet as assets or liabilities and measured at fair value. Additionally, we generally report derivative financial instruments in the Consolidated Balance Sheet on a gross basis. However, in certain instances we report our position on a net basis where we have asset and liability derivative positions with a single counterparty, we have a legally enforceable right of offset, and we intend to settle the position on a net basis. For additional detail on derivative instruments and hedging activities, refer to Note 23.

At inception of a hedging relationship, we designate each qualifying derivative financial instrument as a hedge of the fair value of a specifically identified asset or liability (fair value hedge); as a hedge of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge); or as a hedge of the foreign-currency exposure of a net investment in a foreign operation. We formally document all relationships between hedging instruments and hedged items and risk management objectives for undertaking various hedge transactions. Both at the hedge’s inception and on an ongoing basis, we formally assess whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in fair values or cash flows of hedged items.

Changes in the fair value of derivative financial instruments that are designated and qualify as fair value hedges along with the gain or loss on the hedged asset or liability attributable to the hedged risk, are recorded in the current period earnings. For qualifying cash flow hedges, the effective portion of the change in the fair value of the derivative financial instruments is recorded in accumulated other comprehensive income, a component of equity, and recognized in the income statement when the hedged cash flows affect earnings. For a derivative designated as hedging the foreign-currency exposure of a net investment in a foreign operation, the gain or loss is reported in accumulated other comprehensive income as part of the cumulative translation adjustment with the exception of the spot to forward difference, which is recorded in current period earnings. The ineffective portions of fair value, cash flow, and net investment hedges are immediately recognized in earnings, along with the portion of the change in fair value that is excluded from the assessment of hedge effectiveness, if any.

The hedge accounting treatment described herein is no longer applied if a derivative financial instrument is terminated or the hedge designation is removed or is assessed to be no longer highly effective. For these terminated fair value hedges, any changes to the hedged asset or liability remain as part of the basis of the asset or liability and are recognized into income over the remaining life of the asset or liability. For terminated cash flow hedges, unless it is probable that the forecasted cash flows will not occur within a specified period, any changes in fair value of the derivative financial instrument previously recognized remain in other comprehensive income, a component of equity, and are reclassified into earnings in the same period that the hedged cash flows affect earnings. The previously recognized net derivative gain or loss for a net investment hedge continues to remain in accumulated other comprehensive income until earnings are impacted by sale or liquidation of the associated foreign operation. In all instances, after hedge accounting is no longer applied, any subsequent changes in fair value of the derivative instrument will be recorded into earnings.

Changes in the fair value of derivative financial instruments held for risk management purposes that are not designated as hedges under GAAP are reported in current period earnings.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Loan Commitments

We enter into commitments to make loans whereby the interest rate on the loans is set prior to funding (i.e., interest rate lock commitments). Interest rate lock commitments for mortgage loans to be originated for sale are derivative financial instruments carried at fair value in accordance with applicable accounting standards with changes in fair value included within current period earnings. The fair value of the interest rate lock commitments, which include expected net future cash flows related to the associated servicing of the loan, are accounted for through earnings for all written loan commitments accounted for at fair value. Servicing assets are recognized as distinct assets once they are contractually separated from the underlying loan by sale or securitization. Day-one gains or losses on derivative interest rate lock commitments are recognized when applicable.

Income Taxes

Effective June 30, 2009, we converted from an LLC to a Delaware corporation, thereby ceasing to be a pass-through entity for income tax purposes. As a result, we recorded our deferred tax assets and liabilities using the estimated corporate effective tax rate. Our banking, insurance, and foreign subsidiaries were generally always corporations and continued to be subject to tax and provide for U.S. federal, state, and foreign income taxes.

Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense.

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating our ability to recover our deferred tax assets within the jurisdiction from which they arise we consider all available positive and negative evidence including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, we begin with historical results adjusted for the results of discontinued operations and changes in accounting policies and incorporate assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income (loss). For the years ended December 31, 2010 and 2009, we have concluded that the negative evidence is more objective and therefore outweighs the positive evidence, and therefore we have recorded total valuation allowances on net deferred tax assets of $2.0 billion and $2.5 billion, respectively. For additional information regarding our provision for income taxes, refer to Note 24.

We recognize accrued interest and penalties related to uncertain income tax positions in interest expense and other operating expenses, respectively.

Stock-based Compensation

Under accounting guidance for stock compensation, compensation cost recognized includes cost for stock-based awards. For certain stock-based awards compensation cost is ratably charged to expense over the applicable service periods. For other stock-based awards the awards require liability treatment and are remeasured quarterly at fair value until they are paid, with changes in fair value charged to compensation expense in the period in which the change occurs. Refer to Note 25 for a discussion of our share-based compensation plans.

Foreign Exchange

Foreign-denominated assets and liabilities resulting from foreign-currency transactions are valued using period-end foreign-exchange rates and the results of operations and cash flows are determined using approximate weighted average exchange rates for the period. Translation adjustments are related to foreign subsidiaries using local currency as their functional currency and are reported as a separate component of accumulated other comprehensive income in the Consolidated Statement of Changes in Equity. We may elect to enter into foreign-currency derivatives to mitigate our exposure to changes in foreign-exchange rates. Refer to Derivative Instruments and Hedging Activities above for a discussion of our hedging activities of the foreign-currency exposure of a net investment in a foreign operation.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Recently Adopted Accounting Standards

Transfers and Servicing — Accounting for Transfers of Financial Assets (ASU 2009-16)

As of January 1, 2010, we adopted Accounting Standards Update (ASU) 2009-16 (formerly Statement of Financial Accounting Standards Board (SFAS) No. 166), which amended Accounting Standards Codification (ASC) Topic 860, Transfers and Servicing. This standard removes the concept of a qualifying special-purpose entity (QSPE) and creates more stringent conditions for reporting a sale when a portion of a financial asset is transferred. To determine if a transfer is to be accounted for as a sale, the transferor must assess whether the transferor and all of the entities included in the transferor’s consolidated financial statements surrendered control of the assets. For partial asset transfers, the transferred portion must represent a pro rata component of the entire asset with no form of subordination. This standard is applied prospectively for transfers that occur on or after the effective date; however, the elimination of the QSPE concept required us to retrospectively assess all current off-balance sheet QSPE structures for consolidation under ASC Topic 810, Consolidation, and record a cumulative-effect adjustment to retained earnings for any consolidation change. Retrospective application of ASU 2009-16, specifically the QSPE removal, was assessed as part of the analysis required by ASU 2009-17, Consolidations —Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. Refer to the section below for further information related to ASU 2009-17.

Consolidations — Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (ASU 2009-17)

As of January 1, 2010, we adopted ASU 2009-17 (formerly SFAS No. 167), which amended ASC Topic 810, Consolidation. This standard addresses the primary beneficiary assessment criteria for determining whether an entity is required to consolidate a variable interest entity (VIE). This standard requires an entity to determine whether it is the primary beneficiary by performing a qualitative assessment rather than using the quantitative-based model that was required under the previous accounting guidance. The qualitative assessment consists of determining whether the entity has both the power to direct the activities that most significantly impact the VIE’s economic performance and the right to receive benefits or obligation to absorb losses that could potentially be significant to the VIE. As a result of the implementation of ASU 2009-16 and ASU 2009-17, several of our securitization structures previously held off-balance sheet were recognized as consolidated entities resulting in a day-one increase of $17.6 billion to assets and liabilities on our Consolidated Balance Sheet ($10.1 billion of the increase related to operations classified as held-for-sale). As part of the day-one entry, there was an immaterial adjustment to our opening equity balance.

Fair Value Measurements and Disclosures — Improving Disclosures about Fair Value Measurements (ASU 2010-06)

As of March 31, 2010, we adopted the majority of ASU 2010-06, which amends ASC Topic 820, Fair Value Measurements and Disclosures. The ASU requires fair value disclosures for each asset and liability class, disclosures related to inputs and valuation methods for measurements that use Level 2 or Level 3 inputs, disclosures of significant transfers between Levels 1 and 2, and the gross presentation of significant transfers into or out of Level 3 within the Level 3 rollforward. The ASU also requires the gross presentation of purchases, sales, issuances, and settlements within the Level 3 rollforward; however, this specific requirement will be effective for us during the three months ended March 31, 2011. The disclosure requirement by class is a greater level of disaggregation compared to the previous requirement, which was based on the major asset or liability category. While the adoption of ASU 2010-06 expanded our disclosures related to fair value measurements, it did not modify the accounting treatment or measurement of items at fair value and, as such, did not have a material impact on our consolidated financial condition or results of operation.

Derivatives and Hedging — Scope Exception Related to Embedded Credit Derivatives (ASU 2010-11)

As of July 1, 2010, we adopted ASU 2010-11, which clarifies that the transfer of credit risk that is only in the form of subordination of one financial instrument to another financial instrument (such as the subordination of one beneficial interest to another tranche of a securitization) is the only embedded derivative feature that does not require an analysis for bifurcation or separate accounting under ASC 815, Derivatives and Hedging. In addition, the ASU provides guidance on whether other embedded credit derivatives in financial instruments are subject to bifurcation and separate accounting. The adoption did not have a material impact on our consolidated financial condition or results of operation.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Receivables — Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses (ASU 2010-20)

As of December 31, 2010, we adopted ASU 2010-20, which requires expanded disclosures related to the credit quality of finance receivables and loans. This disclosure will be effective for us during the December 31, 2010, reporting period. The ASU also requires a rollforward of the allowance for loan losses, additional activity based disclosures for both financing receivables, and the allowance for each reporting period and certain new disclosures about troubled debt restructurings all of which would be effective for us during the March 31, 2011, reporting period. We have early adopted the rollforward requirement in the December 31, 2010, reporting period. As of January 19, 2011, the Financial Accounting Standards Board (FASB) issued ASU 2011-01, Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20, which effectively defers the disclosure requirements in ASU 2010-20 related to trouble debt restructurings while they deliberate other potential changes to the accounting for troubled debt restructurings. This deferral will end when the deliberations conclude and the guidance is issued. This is anticipated to be for reporting periods ended after June 15, 2011. Since the guidance relates only to disclosures, adoption will not have a material effect on our consolidated financial condition or results of operation.

Recently Issued Accounting Standards

Revenue Recognition — Revenue Arrangements with Multiple Deliverables (ASU 2009-13)

In October 2009, the FASB issued ASU 2009-13, which amends ASC Topic 605, Revenue Recognition. The guidance significantly changes the accounting for revenue recognition in arrangements with multiple deliverables and eliminates the residual method, which allocated the discount of a multiple deliverable arrangement among the delivered items. Under the guidance, entities will be required to allocate the total consideration to all deliverables at inception using the relative selling price and to allocate any discount in the arrangement proportionally to each deliverable based on each deliverable’s selling price. ASU 2009-13 is effective for revenue arrangements that we enter into or materially modify on or after January 1, 2011. We do not expect the adoption to have a material impact to our consolidated financial condition or results of operation.

Intangibles — Goodwill and Other (ASU 2010-28)

In December 2010, the FASB issued ASU 2010-28, which amends ASC Topic 350, Intangibles — Goodwill and Other, to modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test. Additionally, when determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. ASU 2010-28 is effective for us on January 1, 2011. We do not expect the adoption to have a material impact to our consolidated financial condition or results of operation.

Financial Services — Insurance — Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts (ASU 2010-26)

In December 2010, the FASB issued ASU 2010-26, which amends ASC 944, Financial Services — Insurance. The amendments in this ASU specify which costs incurred in the acquisition of new and renewal insurance contracts should be capitalized. All other acquisition-related costs should be expensed as incurred. If the initial application of the amendments in this ASU results in the capitalization of acquisition costs that had not been previously capitalized, an entity may elect not to capitalize those types of costs. The ASU is effective for us on January 1, 2012. We do not expect the adoption to have a material impact to our consolidated financial condition or results of operation.

2.	Discontinued and Held-for-sale Operations

Discontinued Operations

We classified certain operations as discontinued using generally accepted accounting principles in the United States of America, as the associated operations and cash flows will be eliminated from our ongoing operations and we will not have any significant continuing involvement in their operations after the respective sale transactions. For all periods presented, all of the operating results for these operations were removed from continuing operations and are presented separately as discontinued operations, net of tax. The Notes to the Consolidated Financial Statements were adjusted to exclude discontinued operations unless otherwise noted.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Select Mortgage — Legacy Portfolio and Other Operations

During 2009, we committed to sell certain international operations. These operations included residential mortgage loan origination, acquisition, servicing, asset management, sale, and securitizations in the United Kingdom and continental Europe (the Netherlands and Germany). On September 30, 2010, and October 1, 2010, we completed the sale of these operations.

Select Insurance Operations

During 2009, we committed to sell the U.S. and U.K. consumer property and casualty insurance business. These operations provided vehicle and home insurance through a number of distribution channels including independent agents, affinity groups, and the internet. The sale of our U.S. consumer property and casualty insurance business was completed during the first quarter of 2010. We are in active negotiations and expect to complete the sale of our U.K. consumer property and casualty insurance business during the first half of 2011.

Select International Automotive Finance Operations

During 2010, we ceased operations of our International Automotive Finance operations in Australia and Russia and classified them as discontinued. During the fourth quarter of 2010, we also committed to sell our operations in Venezuela, which resulted in a pretax loss of $108 million during the three months ended December 31, 2010. The loss represents the impairment recognized to present the operations at the lower-of-cost or fair value. The fair value was determined using an internally developed discounted cash flow model (a Level 3 fair value input). The impairment loss was primarily driven by the realization of an unfavorable accumulated translation adjustment of $94 million. We expect to complete the sale of our Venezuela operations during 2011.

During 2009, we committed to sell certain operations of our International Automotive Finance operations including our Argentina, Poland, and Ecuador operations and our Masterlease operations in Australia, Belgium, France, Italy, Mexico, the Netherlands, Poland, and the United Kingdom. Our Masterlease operations provide full-service individual leasing and fleet leasing products including maintenance, fleet, and accident management services as well as fuel programs, short-term vehicle rental, and title and licensing services. During 2009, we completed the sale of the Masterlease operations in Italy, Mexico, and the Netherlands. During 2010, we completed the sale of our automotive finance operations in Poland and our Masterlease operations in Australia, Poland, Belgium, and France. In July and December 2010, we completed the sale of our Argentina operations and our Masterlease operations in the United Kingdom, respectively. We completed the sale of our Ecuador operations during the first quarter of 2011.

Select Commercial Finance Group Operations

During 2009, we committed to sell the North American-based factoring business of our Commercial Finance Group. On April 30, 2010, the sale of the North American-based factoring business was completed.

Select Financial Information

The pretax income or loss recognized for the discontinued operations, including the direct costs to transact a sale, could differ from the ultimate sales price due to the fluidity of ongoing negotiations, price volatility, changing interest rates, changing foreign-currency rates, and future economic conditions.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Selected financial information of discontinued operations is summarized below.


Year ended December 31, ($ in millions)	2010			2009			2008
Select Mortgage — Legacy and Other operations
Total net revenue (loss)	$	60		$	(637	)	$	(2,073	)
Pretax income (loss) including direct costs to transact a sale		47			(2,234	)		(2,955	)
Tax (benefit) expense		(3	)		—			100
Select Insurance operations
Total net revenue	$	417		$	1,448		$	1,780
Pretax (loss) income including direct costs to transact a sale (a)		(23	)		(810	)		97
Tax (benefit) expense		(1	)		(99	)		25
Select International operations
Total net revenue	$	117		$	352		$	432
Pretax income (loss) including direct costs to transact a sale (a)		10			(323	)		15
Tax (benefit) expense		(4	)		(26	)		13
Select Commercial Finance operations
Total net revenue	$	11		$	39		$	49
Pretax income (loss) including direct costs to transact a sale (a)		7			(32	)		(23	)
Tax (benefit) expense		—			(9	)		1

(a)	Includes certain income tax activity recognized by Corporate and Other.

Held-for-sale Operations

The assets and liabilities of operations held-for-sale are summarized below.


December 31, 2010 ($ in millions)	Select Insurance operations (a)			Select International operations (b)			Total held-for-sale operations
Assets
Cash and cash equivalents
Noninterest-bearing	$	5		$	14		$	19
Interest-bearing		—			33			33

Total cash and cash equivalents		5			47			52
Investment securities		435			—			435
Finance receivables and loans, net
Finance receivables and loans, net		—			242			242
Allowance for loan losses		—			(3	)		(3	)

Total finance receivables and loans, net		—			239			239
Premiums receivable and other insurance assets		169			—			169
Other assets		138			16			154
Impairment on assets of held-for-sale operations		(224	)		(135	)		(359	)

Total assets	$	523		$	167		$	690

Liabilities
Interest-bearing deposit liabilities	$	—		$	6		$	6
Short-term borrowings		—			47			47
Long-term debt		—			115			115
Interest payable		—			2			2
Unearned insurance premiums and service revenue		115			—			115
Reserves for insurance losses and loss adjustment expenses		362			—			362
Accrued expenses and other liabilities		33			—			33

Total liabilities	$	510		$	170		$	680

(a)	Includes the U.K. consumer property and casualty insurance business.

(b)	Includes the International Automotive Finance operations of Ecuador and Venezuela.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


December 31, 2009 ($ in millions)	Select Mortgage – Legacy and Other operations (a)			Select Insurance operations (b)			Select International operations (c)			Select Commercial Finance Group operations (d)			Total held-for-sale operations
Assets
Cash and cash equivalents
Noninterest-bearing	$	4		$	578		$	33		$	—		$	615
Interest-bearing		151			—			11			—			162

Total cash and cash equivalents		155			578			44			—			777
Trading securities		36			—			—			—			36
Investment securities		—			794			—			—			794
Loans held-for-sale, net		214			—			—			—			214
Finance receivables and loans, net
Finance receivables and loans, net		2,650			—			660			233			3,543
Allowance for loan losses		(89	)		—			(11	)		—			(100	)

Total finance receivables and loans, net		2,561			—			649			233			3,443
Investment in operating leases, net		—			—			885			—			885
Mortgage servicing rights		(26	)		—			—			—			(26	)
Premiums receivable and other insurance assets		—			1,126			—			—			1,126
Other assets		512			176			135			—			823
Impairment on assets of held-for-sale operations		(903	)		(231	)		(324	)		(30	)		(1,488	)

Total assets	$	2,549		$	2,443		$	1,389		$	203		$	6,584

Liabilities
Short-term borrowings	$	—		$	34		$	57		$	—		$	91
Long-term debt		1,749			—			237			—			1,986
Interest payable		3			—			1			—			4
Unearned insurance premiums and service revenue		—			517			—			—			517
Reserves for insurance losses and loss adjustment expenses		—			1,471			—			—			1,471
Accrued expenses and other liabilities		430			84			128			187			829

Total liabilities	$	2,182		$	2,106		$	423		$	187		$	4,898

(a)	Includes the operations in continental Europe and the United Kingdom.

(b)	Includes the U.S. and U.K. consumer property and casualty insurance businesses.

(c)	Includes the International Automotive Finance operations of Argentina, Ecuador, and Poland and Masterlease in Australia, Belgium, France, Poland, and the United Kingdom.

(d)	Includes the North American-based factoring business of our Commercial Finance Group.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Recurring Fair Value

The following tables display the assets and liabilities of our held-for-sale operations measured at fair value on a recurring basis. Refer to Note 27 for descriptions of valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to these models, and significant assumptions used.


	Recurring fair value measurements
December 31, 2010 ($ in millions)	Level 1		Level 2			Level 3			Total
Assets
Investment securities
Available-for-sale securities
Debt securities
Foreign government	$	256	$	—		$	—		$	256
Other		—		179			—			179

Total assets	$	256	$	179		$	—		$	435


	Recurring fair value measurements
December 31, 2009 ($ in millions)	Level 1		Level 2			Level 3			Total
Assets
Trading securities
Mortgage-backed
Residential	$	—	$	—		$	36		$	36

Total trading securities		—		—			36			36
Investment securities
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies		243		2			—			245
States and political subdivisions		—		24			—			24
Foreign government		329		—			—			329
Corporate debt securities		—		7			—			7
Other		—		189			—			189

Total debt securities		572		222			—			794
Mortgage servicing rights		—		—			(26	)		(26	)
Other assets
Interests retained in financial asset sales		—		—			153			153
Fair value of derivative contracts in receivable position
Interest rate contracts		—		60			—			60

Total assets	$	572	$	282		$	163		$	1,017

Liabilities
Accrued expenses and other liabilities
Fair value of derivative contracts in liability position
Interest rate contracts	$	—	$	(40	)	$	—		$	(40	)

Total liabilities	$	—	$	(40	)	$	—		$	(40	)

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following tables present the reconciliation for all Level 3 assets and liabilities of our held-for-sale operations measured at fair value on a recurring basis.


	Level 3 recurring fair value measurements
($ in millions)	Fair value at January 1, 2010			Net realized/ unrealized gains (losses) included in earnings (a)			Purchases, issuances, and settlements, net			Fair value at December 31, 2010		Net unrealized gains included in earnings still held at December 31, 2010 (a)
Assets
Trading securities
Mortgage-backed
Residential	$	36		$	3		$	(39	)	$	—	$	—

Total trading securities		36			3			(39	)		—		—
Consumer mortgage finance receivables and loans, net (b)		—			422			(422	) (c)		—		—
Mortgage servicing rights		(26	)		—			26			—		—
Other assets
Interests retained in financial asset sales		153			—			(153	)		—		—

Total assets	$	163		$	425		$	(588	)	$	—	$	—

Liabilities
Secured debt
On-balance sheet securitization debt (b)	$	—		$	(57	)		$57	(c)	$	—	$	—

Total liabilities	$	—		$	(57	)	$	57		$	—	$	—

(a)	Reported as income (loss) from discontinued operations, net of tax, in the Consolidated Statement of Income.

(b)	Carried at fair value due to fair value option elections.

(c)	Includes a $10.1 billion increase due to the adoption of ASU 2009-17 on January 1, 2010. This increase was subsequently offset when the operations were sold on September 30, 2010.

3.	Insurance Premiums and Service Revenue Earned

The following table is a summary of insurance premiums and service revenue written and earned.


	2010						2009						2008
Year ended December 31, ($ in millions)	Written			Earned			Written			Earned			Written			Earned
Insurance premiums
Direct	$	882		$	807		$	795		$	854		$	982		$	1,054
Assumed		233			299			604			680			737			682

Gross insurance premiums		1,115			1,106			1,399			1,534			1,719			1,736
Ceded		(268	)		(267	)		(604	)		(695	)		(481	)		(321	)

Net insurance premiums		847			839			795			839			1,238			1,415
Service revenue		770			1,026			685			1,138			964			1,295

Insurance premiums and service revenue written and earned	$	1,617		$	1,865		$	1,480		$	1,977		$	2,202		$	2,710

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

4.	Other Income, Net of Losses

Details of other income, net of losses, were as follows.


Year ended December 31, ($ in millions)	2010			2009			2008
Mortgage processing fees and other mortgage income (loss)	$	234		$	128		$	(257	)
Late charges and other administrative fees (a)		140			156			159
Remarketing fees		137			128			120
Full-service leasing fees		72			128			154
Income (loss) from equity-method investments (b)		56			17			(496	)
Real estate services, net		9			(267	)		(62	)
Fair value adjustment on derivatives (c)		(162	)		(56	)		(99	)
Change due to fair value option elections (d)		(217	)		(215	)		(237	)
Other, net		375			161			75

Total other income, net of losses	$	644		$	180		$	(643	)

(a)	Includes nonmortgage securitization fees.

(b)

During 2008, we recognized $765 million in losses related to an investment accounted for using the equity method. The losses included $195 million as an estimate of our share of the investee’s net loss and the impairment of our remaining investment interests of $570 million. At December 31, 2008, we had no remaining balance in our investment, no further financial obligations, and ceased equity-method accounting.

(c)	Refer to Note 23 for a description of derivative instruments and hedging activities.

(d)	Refer to Note 27 for a description of fair value option elections.

5.	Other Operating Expenses

Details of other operating expenses were as follows.


Year ended December 31, ($ in millions)	2010		2009		2008
Mortgage representation and warranty, net	$	670	$	1,494	$	238
Insurance commissions		587		635		803
Technology and communications		500		593		565
Professional services		303		505		607
Vehicle remarketing and repossession		188		194		287
Advertising and marketing		172		202		154
Lease and loan administration		160		164		151
Regulatory and licensing fees		119		90		15
State and local nonincome taxes		111		118		95
Occupancy		97		107		157
Premises and equipment depreciation		92		85		123
Restructuring		80		63		192
Full-service leasing vehicle maintenance costs		64		132		150
Other		640		850		1,494

Total other operating expenses	$	3,783	$	5,232	$	5,031

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

6.	Trading Securities

The fair value for our portfolio of trading securities was as follows.


December 31, ($ in millions)	2010		2009
U.S. Treasury	$	77	$	—
Mortgage-backed
Residential		69		143
Asset-backed		94		596

Total trading securities	$	240	$	739

Net unrealized gains on securities held at December 31, (a)	$	21	$	203

(a)	Net unrealized losses totaled $1,864 million at December 31, 2008.

7.	Investment Securities

Our portfolio of investment securities includes bonds, equity securities, asset- and mortgage-backed securities, interests in securitization trusts, and other investments. The cost, fair value, and gross unrealized gains and losses on available-for-sale and held-to-maturity securities were as follows.


	2010									2009
	Cost		Gross unrealized					Fair value		Cost		Gross unrealized					Fair value
December 31, ($ in millions)	Cost		gains		losses			Fair value		Cost		gains		losses			Fair value
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies	$	3,307	$	22	$	(11	)	$	3,318	$	3,501	$	15	$	(6	)	$	3,510
States and political subdivisions		3		—		(1	)		2		779		36		(4	)		811
Foreign government		1,231		19		(2	)		1,248		1,161		20		(8	)		1,173
Mortgage-backed
Residential (a)		5,844		60		(79	)		5,825		3,404		76		(19	)		3,461
Asset-backed		1,934		15		(1	)		1,948		1,000		7		(2	)		1,005
Corporate debt		1,537		34		(13	)		1,558		1,408		74		(9	)		1,473
Other		152		—		(1	)		151		47		—		—			47

Total debt securities (b)		14,008		150		(108	)		14,050		11,300		228		(48	)		11,480
Equity securities		766		60		(30	)		796		631		52		(8	)		675

Total available-for-sale securities (c)		14,774		210		(138	)		14,846		11,931		280		(56	)		12,155

Held-to-maturity securities
Total held-to-maturity securities		—		—		—			—		3		—		—			3

Total investment securities	$	14,774	$	210	$	(138	)	$	14,846	$	11,934	$	280	$	(56	)	$	12,158

(a)	Residential mortgage-backed securities include agency-backed bonds totaling $4,503 million and $2,248 million at December 31, 2010 and 2009, respectively.

(b)	In connection with certain borrowings and letters of credit relating to certain assumed reinsurance contracts, $153 million and $164 million of primarily U.K. Treasury securities were pledged as collateral at December 31, 2010 and 2009, respectively.

(c)	Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled $12 million and $15 million at December 31, 2010 and 2009, respectively.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The maturity distribution of available-for-sale debt securities outstanding is summarized in the following tables. Prepayments may cause actual maturities to differ from scheduled maturities.

December 31, 2010

Total

Due in
one year
or less

Due after one
year through
five years

Due after five
years through
ten years

Due after ten
years (a)

($ in millions)

Amount

Yield

Amount

Yield

Amount

Yield

Amount

Yield

Amount

Yield

Fair value of available-for-sale debt securities (b)

U.S. Treasury and federal agencies

3,318

1.4

124

1.2

3,094

1.3

100

3.7

—

States and political subdivisions

8.7

—

8.7

Foreign government

1,248

3.1

2.2

1,092

3.1

149

3.5

—

Mortgage-backed Residential

5,825

3.8

—

3.2

4.4

5,704

3.8

Asset-backed

1,948

2.5

—

1,146

2.2

500

2.4

302

4.0

Corporate debt

1,558

3.9

5.7

811

3.5

593

4.3

132

4.0

Other

151

1.5

151

1.5

—

Total available-for-sale debt securities

14,050

3.0

304

1.7

6,200

2.1

1,406

3.5

6,140

3.8

Amortized cost of available-for-sale debt securities

14,008

305

6,152

1,388

6,163

(a)	Investments with no stated maturities are included as contractual maturities of greater than 10 years. Actual maturities may differ due to call or prepayment options.

(b)	Yields on tax-exempt obligations have been computed on a tax-equivalent basis.


December 31, 2009	Total					Due in one year or less					Due after one year through five years					Due after five years through ten years					Due after ten years (a)
($ in millions)	Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield			Amount		Yield
Fair value of available-for-sale debt securities (b)
U.S. Treasury and federal agencies	$	3,510		1.9	%	$	103		1.1	%	$	3,390		1.9	%	$	17		4.1	%	$	—		—	%
States and political subdivisions		811		7.0			9		7.0			175		7.2			147		7.0			480		6.9
Foreign government		1,173		3.8			66		1.7			872		3.8			229		4.5			6		5.3
Mortgage-backed Residential		3,461		6.5			—		—			2		6.5			36		13.0			3,423		6.4
Asset-backed		1,005		2.5			34		5.2			735		2.3			186		2.6			50		3.9
Corporate debt		1,473		5.2			283		3.4			575		5.8			570		5.4			45		6.9
Other		47		3.6			—		—			32		3.4			15		4.0			—		—

Total available-for-sale debt securities	$	11,480		4.3		$	495		2.8		$	5,781		2.8		$	1,200		5.2		$	4,004		6.5

Amortized cost of available-for-sale debt securities	$	11,300				$	473				$	5,728				$	1,169				$	3,930

(a)	Investments with no stated maturities are included as contractual maturities of greater than 10 years. Actual maturities may differ due to call or prepayment options.

(b)	Yields on tax-exempt obligations have been computed on a tax-equivalent basis.

The balance of cash equivalents was $5.3 billion and $1.8 billion at December 31, 2010 and 2009, respectively and are composed primarily of money market accounts and short-term securities, including U.S. Treasury bills.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following table presents gross gains and losses realized upon the sales of available-for-sale securities and other-than-temporary impairment.


Year ended December 31, ($ in millions)	2010			2009			2008
Gross realized gains	$	541		$	350		$	109
Gross realized losses		(35	)		(129	)		(264	)
Other-than-temporary impairment		(1	)		(55	)		(223	)

Net realized gains (losses)	$	505		$	166		$	(378	)

The following table presents interest and dividends on available-for-sale securities.


Year ended December 31, ($ in millions)	2010		2009		2008
Taxable interest	$	335	$	180	$	307
Taxable dividends		17		9		26
Interest and dividends exempt from U.S. federal income tax		10		37		43

Interest and dividends on available-for-sale securities	$	362	$	226	$	376

Certain available-for-sale securities were sold at a loss in 2010, 2009, and 2008 as a result of market conditions within these respective periods (e.g., a downgrade in the rating of a debt security). The table below summarizes available-for-sale securities in an unrealized loss position in accumulated other comprehensive income. Based on the methodology described below that has been applied to these securities, we believe that the unrealized losses relate to factors other than credit losses in the current market environment. At December 31, 2010, we do not have the intent to sell the debt securities with an unrealized loss position in accumulated other comprehensive income, and it is not more likely than not that we will not be required to sell these securities before recovery of their amortized cost basis. Also, at December 31, 2010, we had the ability and intent to hold equity securities with an unrealized loss position in accumulated other comprehensive income. As a result, we believe that the securities with an unrealized loss position in accumulated other comprehensive income are not considered to be other-than-temporarily impaired at December 31, 2010. Refer to Note 1 to the Consolidated Financial Statements for further information related to investment securities and our methodology for evaluating potential other-than-temporary impairment.


	2010										2009
	Less than 12 months					12 months or longer					Less than 12 months					12 months or longer
December 31, ($ in millions)	Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies	$	702	$	(11	)	$	—	$	—		$	1,430	$	(6	)	$	—	$	—
States and political subdivisions		2		(1	)		—		—			82		(2	)		8		(2	)
Foreign government		323		(2	)		—		—			536		(8	)		—		—
Mortgage-backed		3,159		(77	)		11		(2	)		811		(14	)		6		(5	)
Asset-backed		238		(1	)		2		—			202		(1	)		22		(1	)
Corporate debt		653		(13	)		5		—			47		(1	)		120		(8	)
Other		80		(1	)		—		—			7		—			—		—

Total temporarily impaired debt securities		5,157		(106	)		18		(2	)		3,115		(32	)		156		(16	)
Total temporarily impaired equity securities		250		(27	)		26		(3	)		115		(5	)		52		(3	)

Total temporarily impaired available-for-sale securities	$	5,407	$	(133	)	$	44	$	(5	)	$	3,230	$	(37	)	$	208	$	(19	)

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

8.	Loans Held-for-sale, Net

The composition of loans held-for-sale, net, reported at carrying value was as follows.


	2010						2009
December 31, ($ in millions)	Domestic		Foreign		Total		Domestic		Foreign		Total
Consumer automobile	$	—	$	—	$	—	$	9,417	$	184	$	9,601
Consumer mortgage
1st Mortgage		10,191		364		10,555		9,269		530		9,799
Home equity		856		—		856		1,068		—		1,068

Total consumer mortgage (a)		11,047		364		11,411		10,337		530		10,867
Commercial
Commercial and industrial
Other		—		—		—		—		157		157

Total commercial		—		—		—		—		157		157

Total loans held-for-sale (b)	$	11,047	$	364	$	11,411	$	19,754	$	871	$	20,625

(a)	Fair value option-elected domestic consumer mortgages were $6.4 billion and $5.5 billion at December 31, 2010 and 2009, respectively. Refer to Note 27 for additional information.

(b)	Totals are net of unamortized premiums and discounts and deferred fees and costs of $161 million and $318 million at December 31, 2010 and 2009, respectively.

During the year ended December 31, 2009, our Mortgage operations reclassified loans with an unpaid principal balance of $8.5 billion from finance receivables and loans, net, to loans held-for-sale, net, on our Consolidated Balance Sheet. Due to capital preservation strategies, business divestitures, and future liquidity considerations, we changed our intent to hold these mortgage loans for the foreseeable future. These loans were measured at fair value immediately prior to the transfer resulting in a valuation loss of $3.4 billion during the year ended December 31, 2009. We recognized the credit and noncredit component of these losses in provision for loan losses and gain (loss) on mortgage loans, net, respectively, in our Consolidated Statement of Income.

The following table summarizes held-for-sale mortgage loans reported at carrying value by higher-risk loan type.


Year ended December 31, ($ in millions)	2010		2009
High original loan-to-value (greater than 100%) mortgage loans	$	331	$	390
Payment-option adjustable-rate mortgage loans		16		47
Interest-only mortgage loans		481		1,360
Below-market rate (teaser) mortgages		151		183

Total (a)	$	979	$	1,980

(a)	The majority of these loans are held by our Mortgage Legacy Portfolio and Other operations at December 31, 2010 and 2009.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

9.	Finance Receivables and Loans, Net

The composition of finance receivables and loans, net, reported at carrying value before allowance for loan losses was as follows.


	2010						2009
December 31, ($ in millions)	Domestic		Foreign		Total		Domestic		Foreign		Total
Consumer automobile	$	34,604	$	16,650	$	51,254	$	12,514	$	17,731	$	30,245
Consumer mortgage
1st Mortgage		6,917		390		7,307		6,921		405		7,326
Home equity		3,441		—		3,441		3,886		1		3,887

Total consumer mortgage		10,358		390		10,748		10,807		406		11,213
Commercial
Commercial and industrial
Automobile		24,944		8,398		33,342		19,604		7,943		27,547
Mortgage		1,540		41		1,581		1,572		96		1,668
Other		1,795		312		2,107		2,688		437		3,125
Commercial real estate
Automobile		2,071		216		2,287		2,008		221		2,229
Mortgage		1		78		79		121		162		283

Total commercial		30,351		9,045		39,396		25,993		8,859		34,852
Loans at fair value (a)		663		352		1,015		1,391		—		1,391

Total finance receivables and loans (b)	$	75,976	$	26,437	$	102,413	$	50,705	$	26,996	$	77,701

(a)	Includes domestic consumer mortgages at fair value as a result of fair value option election. Refer to Note 27 for additional information.

(b)	Totals are net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $2.9 billion and $2.4 billion at December 31, 2010 and 2009, respectively.

The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans.


($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at January 1, 2010	$	1,024		$	640		$	781		$	2,445
Cumulative effect of change in accounting principles (a)		222			—			—			222
Charge-offs
Domestic		(776	)		(239	)		(282	)		(1,297	)
Foreign		(194	)		(4	)		(151	)		(349	)

Total charge-offs		(970	)		(243	)		(433	)		(1,646	)

Recoveries
Domestic		319			26			18			363
Foreign		71			1			13			85

Total recoveries		390			27			31			448

Net charge-offs		(580	)		(216	)		(402	)		(1,198	)
Provision for loan losses		304			164			(26	)		442
Discontinued operations		—			—			(4	)		(4	)
Other		—			(8	)		(26	)		(34	)

Allowance at December 31, 2010	$	970		$	580		$	323		$	1,873

Allowance for loan losses
Individually evaluated for impairment	$	—		$	100		$	127		$	227
Collectively evaluated for impairment		970			480			196			1,646
Loans acquired with deteriorated credit quality		20			—			—			20
Finance receivables and loans at historical cost
Ending balance		51,254			10,748			39,396			101,398
Individually evaluated for impairment		—			487			1,308			1,795
Collectively evaluated for impairment		51,254			10,261			38,088			99,603
Loans acquired with deteriorated credit quality		170			—			—			170

(a)	Effect of change in accounting principle due to adoption of ASU 2009-17. Refer to Note 1 for additional information.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at January 1, 2009	$	1,394		$	1,142		$	897		$	3,433
Charge-offs
Domestic		(1,001	)		(1,424	)		(955	)		(3,380	)
Foreign		(372	)		(185	)		(76	)		(633	)
Write downs related to transfers to held-for-sale		(11	)		(3,417	)		(10	)		(3,438	)

Total charge-offs		(1,384	)		(5,026	)		(1,041	)		(7,451	)

Recoveries
Domestic		189			68			19			276
Foreign		71			—			5			76

Total recoveries		260			68			24			352

Net charge-offs		(1,124	)		(4,958	)		(1,017	)		(7,099	)
Provision for loan losses		755			3,951			898			5,604
Discontinued operations		13			556			(3	)		566
Other		(14	)		(51	)		6			(59	)

Allowance at December 31, 2009	$	1,024		$	640		$	781		$	2,445

Allowance for loan losses
Individually evaluated for impairment	$	—		$	80		$	471		$	551
Collectively evaluated for impairment		1,024			560			310			1,894
Loans acquired with deteriorated credit quality		37			—			—			37
Finance receivables and loans at historical cost
Ending balance		30,245			11,213			34,852			76,310
Individually evaluated for impairment		—			263			2,121			2,384
Collectively evaluated for impairment		30,245			10,950			32,731			73,926
Loans acquired with deteriorated credit quality		320			—			—			320

Loans are considered impaired when we determine it is probable that we will be unable to collect all amounts due according to the terms of the loan agreement.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following tables present information about our impaired finance receivables and loans.


December 31, ($ in millions)	Unpaid principal balance		Carrying value before allowance		Impaired with no allowance		Impaired with an allowance		Allowance for impaired loans
2010
Consumer mortgage
1st Mortgage	$	410	$	404	$	—	$	404	$	59
Home equity		82		83		—		83		40

Total consumer mortgage		492		487		—		487		99
Commercial
Commercial and industrial
Automobile		340		356		33		323		23
Mortgage		44		40		—		40		14
Other		135		133		20		113		51
Commercial real estate
Automobile		206		197		108		89		29
Mortgage		71		71		28		43		10

Total commercial		796		797		189		608		127

Total consumer and commercial	$	1,288	$	1,284	$	189	$	1,095	$	226

2009
Consumer mortgage
1st Mortgage	$	228	$	225	$	11	$	214	$	62
Home equity		37		38		—		38		18

Total consumer mortgage		265		263		11		252		80
Commercial
Commercial and industrial
Automobile		428		512		61		451		56
Mortgage		72		—		—		—		—
Other (a)		987		981		101		880		251
Commercial real estate
Automobile		367		280		136		144		44
Mortgage		271		269		5		264		111

Total commercial		2,125		2,042		303		1,739		462

Total consumer and commercial	$	2,390	$	2,305	$	314	$	1,991	$	542

(a)

Primarily reflects the resort finance portfolio with an unpaid principal balance of $782 million, a carrying value before allowance of $779 million, an impaired with no allowance balance of $99 million, an impaired with an allowance balance of $680 million, and an allowance for impaired loans balance of $148 million.


Year ended December 31, ($ in millions)	2010		2009		2008
Consumer mortgage
Average balance of impaired loans during the year	$	484	$	610	$	203
Interest income recognized on impaired loans during the year		19		25		18
Commercial
Average balance of impaired loans during the year		1,450		2,818		1,600
Interest income recognized on impaired loans during the year		30		60		9
Total consumer and commercial
Average balance of impaired loans during the year		1,934		3,428		1,803
Interest income recognized on impaired loans during the year		49		85		27

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following table presents an analysis of our past due finance receivables and loans.


December 31, 2010 ($ in millions)	30-59 days past due		60-89 days past due		90 days or more past due		Total past due		Current		Total finance receivables and loans
Consumer automobile	$	828	$	175	$	197	$	1,200	$	50,054	$	51,254
Consumer mortgage
1st Mortgage		115		67		205		387		6,920		7,307
Home equity		20		12		13		45		3,396		3,441

Total consumer mortgage		135		79		218		432		10,316		10,748
Commercial
Commercial and industrial
Automobile		21		19		85		125		33,217		33,342
Mortgage		—		36		4		40		1,541		1,581
Other		—		—		20		20		2,087		2,107
Commercial real estate
Automobile		—		4		78		82		2,205		2,287
Mortgage		—		—		71		71		8		79

Total commercial		21		59		258		338		39,058		39,396

Total consumer and commercial	$	984	$	313	$	673	$	1,970	$	99,428	$	101,398

The following table presents the carrying amount of our finance receivables and loans on nonaccrual status.


December 31, ($ in millions)	2010		2009
Consumer automobile	$	207	$	386
Consumer mortgage
1st Mortgage		500		359
Home equity		61		71

Total consumer mortgage		561		430
Commercial
Commercial and industrial
Automobile		296		347
Mortgage		40		72
Other (a)		134		987
Commercial real estate
Automobile		199		280
Mortgage		71		197

Total commercial		740		1,883

Total consumer and commercial	$	1,508	$	2,699

(a)	Amount at December 31, 2009, includes the resort finance portfolio with a nonaccrual loan balance of $779 million. We sold our resort finance portfolio during the third quarter of 2010.

Management performs a quarterly analysis of the consumer automobile, consumer mortgage, and commercial portfolios using a range of credit quality indicators to assess the adequacy of the allowance based on historical and current trends. The tables below present select credit quality indicators that are used in the determination of allowance for our consumer automobile, consumer mortgage, and commercial portfolios.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following table presents performing and nonperforming credit quality indicators in accordance with our internal accounting policies for our consumer finance receivables and loans.


	2010						2009
December 31, ($ in millions)	Performing		Nonperforming		Total		Performing		Nonperforming		Total
Consumer automobile	$	51,047	$	207	$	51,254	$	29,859	$	386	$	30,245
Consumer mortgage
1st Mortgage		6,807		500		7,307		6,967		359		7,326
Home equity		3,380		61		3,441		3,816		71		3,887

Total consumer mortgage	$	10,187	$	561	$	10,748	$	10,783	$	430	$	11,213

The following table presents pass and criticized credit quality indicators based on regulatory definitions for our commercial finance receivables and loans.


	2010						2009
December 31, ($ in millions)	Pass		Criticized (a)		Total		Pass		Criticized (a)		Total
Commercial
Commercial and industrial
Automobile	$	31,254	$	2,088	$	33,342	$	25,512	$	2,035	$	27,547
Mortgage		1,504		77		1,581		1,532		136		1,668
Other		1,041		1,066		2,107		945		2,180		3,125
Commercial real estate
Automobile		2,013		274		2,287		1,965		264		2,229
Mortgage		—		79		79		13		270		283

Total commercial	$	35,812	$	3,584	$	39,396	$	29,967	$	4,885	$	34,852

(a)	Includes loans classified as special mention, substandard, or doubtful. These classifications are based on regulatory definitions and generally represent loans within our portfolio that are of higher default risk.

Concentration Risk

Consumer

We monitor our consumer loan portfolio for concentration risk across the geographies in which we lend. The highest concentrations of loans in the United States are in California and Texas, which represent 16.4% of our total outstanding consumer loans at December 31, 2010.

Concentrations in our mortgage portfolio are closely monitored given the volatility of the housing markets. Our consumer mortgage loan concentrations in California, Florida, and Michigan receive particular attention as the real estate value depreciation in these states has been the most severe.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following table shows consumer finance receivables and loans recorded at historical cost reported at carrying value before allowance for loan losses by state and foreign concentration.


	2010 (a)						2009
December 31,	Automobile			1st Mortgage and home equity			Automobile			1st Mortgage and home equity
Texas		9.2	%		4.4	%		7.5	%		2.9	%
California		4.6			24.5			2.7			23.3
Florida		4.4			4.1			2.1			4.4
Michigan		3.7			5.0			1.4			5.4
New York		3.4			2.4			2.4			2.9
Illinois		2.8			4.7			1.9			4.4
Pennsylvania		3.2			1.7			2.4			1.8
Ohio		2.5			1.0			1.6			1.2
Georgia		2.2			1.8			1.4			2.0
North Carolina		2.0			2.0			1.3			2.2
Other United States		29.4			44.7			16.7			45.9
Canada		14.2			3.6			20.1			3.6
Germany		5.7			—			13.3			—
Brazil		5.2			—			6.8			—
Other foreign		7.5			0.1			18.4			—

Total consumer loans		100.0	%		100.0	%		100.0	%		100.0	%

(a)	Presentation is in descending order as a percentage of total consumer finance receivables and loans at December 31, 2010.

The following table includes our five largest state and foreign concentrations within our higher-risk finance receivables and loans recorded at historical cost and reported at carrying value before allowance for loan losses.


December 31, ($ in millions)	High original loan-to-value (greater than 100%) mortgage loans		Payment-option adjustable-rate mortgage loans		Interest-only mortgage loans		Below-market rate (teaser) mortgages		All higher-risk loans
2010
California	$	—	$	1	$	993	$	89	$	1,083
Virginia		—		—		330		12		342
Maryland		—		—		256		7		263
Michigan		—		—		225		10		235
Illinois		—		—		197		8		205
All other domestic and foreign		5		4		1,680		158		1,847

Total	$	5	$	5	$	3,681	$	284	$	3,975

2009
California	$	1	$	2	$	1,128	$	102	$	1,233
Virginia		—		—		397		13		410
Maryland		—		—		309		8		317
Michigan		—		—		259		11		270
Illinois		—		—		230		9		239
All other domestic and foreign		6		5		2,023		188		2,222

Total	$	7	$	7	$	4,346	$	331	$	4,691

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Commercial Real Estate

The commercial real estate portfolio consists of loans issued primarily to automotive dealers, homebuilders, and commercial real estate firms. The following table shows commercial real estate finance receivables and loans reported at carrying value before allowance for loan losses by geographic region and property type.


December 31,	2010			2009
Geographic region
Texas		10.5	%		11.2	%
Florida		10.3			11.8
Michigan		10.1			8.5
California		9.6			9.8
Virginia		4.4			3.9
New York		3.8			3.7
Pennsylvania		3.7			3.4
Oregon		3.1			2.1
Georgia		2.7			2.1
Alabama		2.4			2.1
Other United States		26.9			26.2
United Kingdom		5.0			7.3
Canada		4.4			4.3
Germany		0.5			0.6
Other foreign		2.6			3.0

Total outstanding commercial real estate loans		100.0	%		100.0	%

Property type
Automobile dealers		91.8	%		84.3	%
Residential		2.5			2.7
Land and land development		0.8			5.7
Apartments		0.1			2.9
Other		4.8			4.4

Total outstanding commercial real estate loans		100.0	%		100.0	%

Commercial Criticized Exposure

Exposures deemed criticized represent loans that are classified by regulatory authorities as special mention, substandard, or doubtful. The following table shows industry concentrations commercial criticized finance receivables and loans reported at carrying value before allowance for loan losses.


December 31,	2010			2009
Industry
Automotive		66.5	%		49.7	%
Real estate (a)		12.1			23.4
Health/medical		7.3			7.9
Manufacturing		3.5			3.1
Services		1.9			2.1
Hardgoods		1.8			1.1
Retail		1.5			2.6
All other		5.4			10.1

Total commercial criticized finance receivables and loans		100.0	%		100.0	%

(a)	Includes resort finance, which represented 17.3% of the portfolio at December 31, 2009.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

10.

Investment in Operating Leases, Net

Investments in operating leases were as follows.


December 31, ($ in millions)	2010			2009
Vehicles and other equipment, after impairment	$	13,571		$	23,919
Accumulated depreciation		(4,443	)		(7,924	)

Investment in operating leases, net	$	9,128		$	15,995

Depreciation expense on operating lease assets includes remarketing gains and losses recognized on the sale of operating lease assets. The following summarizes the components of depreciation expense on operating lease assets.


Year ended December 31, ($ in millions)	2010			2009			2008
Depreciation expense on operating lease assets (excluding remarketing gains)	$	2,734		$	4,264		$	5,100
Gross remarketing (gains) losses		(704	)		(516	)		378

Depreciation expense on operating lease assets	$	2,030		$	3,748		$	5,478

The following table presents the future lease nonresidual rental payments due from customers for equipment on operating leases.


Year ended December 31, ($ in millions)
2011	$	1,513
2012		648
2013		454
2014		173
2015 and after		343

Total	$	3,131

Our investment in operating lease assets represents the net book value of our leased assets based on the expected residual value upon remarketing the vehicle at the end of the lease. As described in Note 26, GM may sponsor residual support programs that result in the contractual residual value being in excess of our standard residual value. GM reimburses us if remarketing sales proceeds are less than the customer’s contract residual value limited to our standard residual value. In addition to residual support programs, GM also participates in a risk-sharing arrangement whereby GM shares equally in residual losses to the extent that remarketing proceeds are below our standard residual rates (limited to a floor). In connection with the sale of 51% ownership interest in Ally, GM settled its estimated liabilities with respect to residual support and risk sharing on a portion of our operating lease portfolio. Based on the December 31, 2010, outstanding U.S. operating lease portfolio, the maximum amount that could be paid by GM under the residual support programs and the risk-sharing arrangement was $475 million and $996 million, respectively, as more fully discussed in Note 26. We did not receive any residual support or risk-sharing incentives from GM or Chrysler on leases originated in 2010 or 2009.

In light of the significant declines in used vehicle prices during 2008 in the United States, Canada, and several international markets, we concluded certain triggering events occurred during the year ended December 31, 2008, requiring an evaluation of recoverability for certain operating lease assets within our Global Automotive Services. We grouped these operating lease assets at the lowest level that we could reasonably estimate the identifiable cash flows. In assessing for recoverability, we compared our estimates of future cash flows related to these lease assets to their corresponding carrying values. We considered all of the expected cash flows including customer payments, the expected residual value upon remarketing the vehicle at lease termination, and any payments from GM under residual and risk-sharing agreements. To the extent these undiscounted cash flows were less than their respective carrying values, we discounted the cash flows to arrive at an estimated fair value. As a result of this evaluation, during the year ended December 31, 2008, we reduced our carrying values to equal the estimated fair values and realized impairment charges of $1,234 million. Impairments recognized by our North American Automotive Finance operations consisted of $808 million related to sport-utility vehicles and trucks in the

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

United States and Canada and $384 million related to the car portfolio in the United States. The impairment recognized by our International Automotive Finance operations totaled $42 million for full-service leasing portfolio. During the year ended December 31, 2009, $16 million of the 2008 impairment charges related to the full-service leasing portfolio were reclassified to discontinued operations.

While we believe our estimates of discounted future cash flows used for the impairment analysis were reasonable based on current market conditions, the process required the use of significant estimates and assumptions. In developing these estimates and assumptions, management used all available evidence. However, because of uncertainties associated with estimating the amounts, timing, and likelihood of possible outcomes, the actual cash flows could ultimately differ from those estimated as part of the recoverability and impairment analyses.

Imbedded in our residual value projections are estimates of projected recoveries from GM relative to residual support and risk-sharing agreements. No adjustment to these estimates has been made for the collectability of the projected recoveries from GM. At December 31, 2010, expected residual values included estimates of payments from GM of $322 million related to residual support and risk-sharing agreements. To the extent GM is not able to fully honor its obligations relative to these agreements, our depreciation expense and remarketing performance would be negatively impacted.

11.

Securitizations and Variable Interest Entities

Overview

We are involved in several types of securitization and financing transactions that utilize special-purpose entities (SPEs). An SPE is an entity that is designed to fulfill a specified limited need of the sponsor. Our principal use of SPEs is to obtain liquidity and favorable capital treatment by securitizing certain of our financial assets.

The SPEs involved in securitization and other financing transactions are generally considered VIEs. VIEs are entities that have either a total equity investment that is insufficient to permit the entity to finance its activities without additional subordinated financial support or whose equity investors lack the ability to control the entity’s activities.

Securitizations

We provide a wide range of automobile loans or installment contracts and operating leases and mortgage loan products to a diverse customer base. We often securitize these originated loans and leases (which we collectively describe as loans or financial assets) through the use of securitization entities, which may or may not be consolidated on our Consolidated Balance Sheet. We securitize consumer automobile loans through private-label securitizations. We securitize consumer mortgage loans through either the GSEs or nonagency mortgages securitization. During 2010, our consumer mortgage loans were primarily securitized through the GSEs.

In executing a securitization transaction, we typically sell pools of financial assets to a wholly owned, bankruptcy-remote SPE, which then transfers the financial assets to a separate, transaction-specific securitization entity for cash, servicing rights, and in some transactions, other retained interests. The securitization entity is funded through the issuance of beneficial interests in the securitized financial assets. The beneficial interests take the form of either notes or trust certificates which are sold to investors and/or retained by us. These beneficial interests are collateralized by the transferred loans and entitle the investors to specified cash flows generated from the securitized loans. In the aggregate, these beneficial interests have the same average life as the transferred financial assets. In addition to providing a source of liquidity and cost-efficient funding, securitizing these financial assets also reduces our credit exposure to the borrowers beyond any economic interest we may retain. We securitize conforming residential mortgage loans through GSE securitizations, and nonconforming mortgage loans through nonagency securitizations.

Each securitization is governed by various legal documents that limit and specify the activities of the securitization entity. The securitization entity is generally allowed to acquire the loans, to issue beneficial interests to investors to fund the acquisition of the loans, and to enter into derivatives or other yield maintenance contracts (e.g., bond insurance) to hedge or mitigate certain risks related to the financial assets or beneficial interests of the entity. Additionally, the securitization entity is required to service the assets it holds and the beneficial interests it issues. A servicer, who is generally us, is appointed pursuant to the underlying legal documents to perform these functions. Servicing functions include, but are not limited to, making certain payments of property taxes and insurance premiums, default and property maintenance payments, as well as

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

advancing principal and interest payments before collecting them from individual borrowers. Our servicing responsibilities, which constitute continued involvement in the transferred financial assets, consist of primary servicing (i.e., servicing the underlying transferred financial assets) and/or master servicing (i.e., servicing the beneficial interests that result from the securitization transactions). Certain securitization entities also require the servicer to advance scheduled principal and interest payments due on the beneficial interests issued by the entity regardless of whether cash payments are received on the underlying transferred financial assets. Accordingly, we are required to provide these servicing advances when applicable. Refer to Note 1 and Note 12 for additional information regarding our servicing rights.

The GSEs provide a guarantee of the payment of principal and interest on the beneficial interests issued in securitizations. In private-label securitizations, cash flows from the assets initially transferred into the securitization entity represent the sole source for payment of distributions on the beneficial interests issued by the securitization entity, and for payments to the parties that perform services for the securitization entity, such as the servicer or the trustee. In certain nonagency securitization transactions, a liquidity facility may exist to provide temporary liquidity to the entity. The liquidity provider generally is reimbursed prior to other parties in subsequent distribution periods. Monoline insurance may also exist to cover certain shortfalls to certain investors in the beneficial interests issued by the securitization entity. As noted above, in certain nonagency securitizations, the servicer is required to advance scheduled principal and interest payments due on the beneficial interests regardless of whether cash payments are received on the underlying transferred financial assets. The servicer is allowed to reimburse itself for these servicing advances. Additionally, certain nonagency securitization transactions may allow for the acquisition of additional loans subsequent to the initial loan transfer. Principal collections on other loans and/or the issuance of new beneficial interests, such as variable funding notes, generally fund these loans; we are often contractually required to invest in these new interests.

We may retain beneficial interests in our nonagency securitizations, which may represent a form of significant continuing economic interest. These retained interests include, but are not limited to, senior or subordinate mortgage- or asset-backed securities, interest-only strips, principal-only strips, and residuals. Certain of these retained interests provide credit enhancement to the trust as they may absorb credit losses or other cash shortfalls. Additionally, the securitization agreements may require cash flows to be directed away from certain of our retained interests due to specific over-collateralization requirements, which may or may not be performance-driven.

We generally hold certain conditional repurchase options that allow us to repurchase assets from the securitization entity. The majority of the securitizations provide us, as servicer, with a call option that allows us to repurchase the remaining transferred financial assets or outstanding beneficial interests at our discretion once the asset pool reaches a predefined level, which represents the point where servicing becomes burdensome (a clean-up call option). The repurchase price is typically the par amount of the loans plus accrued interest. Additionally, we may hold other conditional repurchase options that allow us to repurchase a transferred financial asset if certain events outside our control are met. The typical conditional repurchase option is a delinquent loan repurchase option that gives us the option to purchase the loan or contract if it exceeds a certain prespecified delinquency level. We have complete discretion regarding when or if we will exercise these options, but generally, we would do so only when it is in our best interest.

Other than our customary representation and warranty provisions, these securitizations are nonrecourse to us, thereby transferring the risk of future credit losses to the extent the beneficial interests in the securitization entities are held by third parties. Our obligation to provide support is limited to the customary representation and warranty provisions. Representation and warranty provisions generally require us to repurchase loans or indemnify the investor for incurred losses to the extent it is determined that the loans were ineligible or were otherwise defective at the time of sale. Refer to Note 30 for detail on representation and warranty provisions. We did not provide any noncontractual financial support to any of these entities during 2010 or 2009.

Other Variable Interest Entities

Servicer Advance Funding Entity

To assist in the financing of our servicer advance receivables, we formed an SPE that issues term notes to third-party investors that are collateralized by servicer advance receivables. These servicer advance receivables are transferred to the SPE and consist of delinquent principal and interest advances we made as servicer, to various investors; property taxes and

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

insurance premiums advanced to taxing authorities and insurance companies on behalf of borrowers; and amounts advanced for mortgages in foreclosure. The SPE funds the purchase of the receivables through financing obtained from the third-party investors and subordinated loans or an equity contribution from our mortgage activities. This SPE is consolidated on our balance sheet at December 31, 2010 and 2009. The beneficial interest holder of this SPE does not have legal recourse to our general credit. We do not have a contractual obligation to provide any type of financial support in the future, nor have we provided noncontractual financial support to the entity during 2010 or 2009.

Other

In 2010, we sold a portfolio of resort finance backed receivables to a third party that financed the acquisition through an SPE. We provided seller financing for the purchase of these assets and also hold a contingent value right in the SPE, which were both recorded at fair value. We do not consolidate the SPE because we have no control over the activities of the SPE.

We have involvements with various other on-balance sheet, immaterial SPEs. Most of these SPEs are used for additional liquidity, whereby we sell certain financial assets into the VIE and issue beneficial interests to third parties for cash.

We also provide long-term guarantee contracts to certain nonconsolidated affordable housing entities. Since we do not have control over the entities or the power to make decisions, we do not consolidate the entities and our involvement is limited to the guarantee.

Involvement with Variable Interest Entities

The determination of whether financial assets transferred by us to these VIEs (and related liabilities) are consolidated on our balance sheet (also referred to as on-balance sheet) or not consolidated on our balance sheet (also referred to as off-balance sheet) depends on the terms of the related transaction and our continuing involvement (if any) with the SPE. Prior to the adoption of ASU 2009-17, which amended ASC 810, we were deemed the primary beneficiary and therefore consolidated VIEs when we absorbed the majority of the expected losses or expected residual returns of the entity, and the entity was not considered a qualified special-purpose entity (QSPE). Subsequent to the adoption of ASU 2009-17, we are deemed the primary beneficiary and therefore consolidate VIEs (including entities previously considered QSPEs) for which we have both (a) the power, through voting rights or similar rights, to direct the activities that most significantly impact the VIE’s economic performance, and (b) a variable interest (or variable interests) that (i) obligates us to absorb losses that could potentially be significant to the VIE and/or (ii) provides us the right to receive residual returns of the VIE that could potentially be significant to the VIE. We determine whether we hold a significant variable interest in a VIE based on a consideration of both qualitative and quantitative factors regarding the nature, size, and form of our involvement with the VIE. We assess whether we are the primary beneficiary of a VIE on an ongoing basis. Refer to the section in this note titled Changes in Accounting for Variable Interest Entities for additional information.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Our involvement with consolidated and nonconsolidated VIEs in which we hold variable interests is presented below.


December 31, ($ in millions)	Consolidated involvement with VIEs			Assets of nonconsolidated VIEs (a)			Maximum exposure to loss in nonconsolidated VIEs
2010
On-balance sheet variable interest entities
Consumer automobile	$	20,064		$	—		$	—
Consumer mortgage — nonagency		1,397			—			—
Commercial automobile		15,114			—			—
Other		1,035			—			—
Off-balance sheet variable interest entities
Consumer mortgage — Ginnie Mae		2,909	(b)		43,595			43,595	(c)
Consumer mortgage — CMHC		124	(b)		4,222			124	(d)
Consumer mortgage — nonagency		183	(b)		5,371			5,371	(c)
Commercial other		483	(e)		—	(f)		698

Total	$	41,309		$	53,188		$	49,788

2009
On-balance sheet variable interest entities
Consumer automobile	$	23,957		$	—		$	—
Consumer mortgage — nonagency		3,856			—			—
Commercial automobile		8,225			—			—
Other		1,930			—			—
Off-balance sheet variable interest entities
Consumer automobile		—			7,899			7,899	(c)
Consumer mortgage — Ginnie Mae		2,258	(b)		35,049			35,049	(c)
Consumer mortgage — CMHC		117	(b)		3,740			117	(d)
Consumer mortgage — nonagency		388	(b)		31,428			31,428	(c)
Commercial other		(47	) (g)		—	(f)		177

Total	$	40,684		$	78,116		$	74,670

(a)	Asset values represent the current unpaid principal balance of outstanding consumer finance receivables and loans within the VIEs.

(b)

Includes $2.5 billion and $2.0 billion classified as consumer finance receivables and loans, $162 million and $268 million classified as trading securities or other assets, and $569 million and $542 million classified as MSRs at December 31, 2010 and 2009, respectively. CMHC is the Canada Mortgage and Housing Corporation.

(c)

Maximum exposure to loss represents the current unpaid principal balance of outstanding loans based on our customary representation and warranty provisions. This measure is based on the unlikely event that all of the loans have underwriting defects or other defects that trigger a representation and warranty provision and the collateral supporting the loans are worthless. This required disclosure is not an indication of our expected loss.

(d)

Due to combination of the credit loss insurance on the mortgages and the guarantee by CMHC on the issued securities, the maximum exposure to loss would be limited to the amount of the retained interests. Additionally, the maximum loss would occur only in the event that CMHC dismisses ResMor as servicer of the loans due to servicer performance or insolvency.

(e)	Includes $515 million and $20 million classified as commercial finance receivables and loans and other assets, respectively, net of liabilities of $52 million classified as other liabilities on our Consolidated Balance Sheet.

(f)	Includes VIEs for which we have no management oversight and therefore we are not able to provide the total assets of the VIEs. However, in 2010 we sold loans with an unpaid principal balance of $1.5 billion into these VIEs.

(g)	This amount is classified as accrued expenses and other liabilities on our Consolidated Balance Sheet.

On-balance Sheet Variable Interest Entities

We engage in securitization and other financing transactions that do not qualify for off-balance sheet treatment. In these situations, we hold beneficial interests or other interests in the VIE, which represents a form of significant continuing economic interest. The interests held include, but are not limited to, senior or subordinate mortgage- or asset-backed securities, interest-only strips, principal-only strips, residuals, and servicing rights. Certain of these retained interests provide credit enhancement to the securitization entity as they may absorb credit losses or other cash shortfalls. Additionally, the securitization documents may require cash flows to be directed away from certain of our retained interests due to specific over-collateralization requirements, which may or may not be performance-driven. Because these securitization entities are consolidated, these retained interests and servicing rights are not recognized as separate assets on our Consolidated Balance Sheet.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Prior to the adoption of ASU 2009-17, we consolidated certain securitization entities that were not QSPEs because we either did not meet sale accounting requirements or held the first loss position in these securitization entities and, as a result, absorbed the majority of the expected losses and expected residual returns of the VIE. Subsequent to adoption of ASU 2009-17 as of January 1, 2010, we consolidate certain of these entities because we had a controlling financial interest in the VIE, primarily due to our servicing activities, and because we hold a significant variable interest in the VIE. Under ASC 810, as amended by ASU 2009-17, we are generally the primary beneficiary of automobile securitization entities, as well as certain mortgage nonagency securitization entities for which we perform servicing activities and have retained a significant variable interest in the form of a beneficial interest. In cases where we did not meet sale accounting under previous guidance, unless we have made modifications to the overall transaction, we do not meet sale accounting under current guidance as we are not permitted to revisit sale accounting guidelines under the current guidance. In cases where substantive modifications are made, we then reassess the transaction under the amended guidance, based on the new circumstances. Refer to the section in this note titled Changes in Accounting for Variable Interest Entities for additional information.

The following table presents the carrying amounts and classifications of assets and liabilities of consolidated VIEs as reported on our Consolidated Balance Sheet. The consolidated VIEs included in the tables below represent separate entities with which we are involved. The third-party investors in the obligations of consolidated VIEs have legal recourse only to the assets of the VIEs and do not have such recourse to us, except for the customary representation and warranty provisions or when we are the counterparty to certain derivative transactions involving the VIE. In addition, the cash flows from the assets are restricted only to pay such liabilities. Thus, our economic exposure to loss from outstanding third-party financing related to consolidated VIEs is significantly less than the carrying value of the consolidated VIE assets. All assets are restricted for the benefit of the beneficial interest holders. Refer to Note 27 for discussion of the assets and liabilities for which the fair value option has been elected.


December 31, ($ in millions)	2010			2009
Assets
Loans held-for-sale, net	$	21		$	237
Finance receivables and loans, net
Consumer		18,744			15,293
Commercial		14,739			6,623
Allowance for loan losses		(238	)		(573	)

Total finance receivables and loans, net		33,245			21,343
Investment in operating leases, net		1,065			9,996
Other assets		3,194			4,252
Assets of operations held-for-sale		85			2,140

Total assets	$	37,610			37,968

Liabilities
Short-term borrowings	$	964		$	1,530
Long-term debt		24,466			24,220
Interest payable		15			27
Accrued expenses and other liabilities		352			562
Liabilities of operations held-for-sale		45			2,083

Total liabilities	$	25,842		$	28,422

Off-balance Sheet Variable Interest Entities

The nature, purpose, and activities of nonconsolidated securitization entities are similar to those of our consolidated securitization entities with the primary difference being the nature and extent of our continuing involvement. The cash flows from the assets of nonconsolidated securitization entities generally are the sole source of payment on the securitization entities’ liabilities. The creditors of these securitization entities have no recourse to us with the exception of market customary representation and warranty provisions as described in Note 30.

Prior to the adoption of ASU 2009-17, we did not consolidate securitization entities that met the requirements of a QSPE. Subsequent to the adoption of ASU 2009-17 as of January 1, 2010, nonconsolidated VIEs include entities for which we either do not hold significant variable interests or do not provide servicing or asset management functions for the financial assets held by the securitization entity. Additionally, to qualify for off-balance sheet treatment, transfers of financial assets must meet the sale accounting conditions in ASC 860. Our residential mortgage loan securitizations consist of GSEs and nonagency

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

securitizations. Under ASU 2009-17, we are not the primary beneficiary of any GSE loan securitization transaction because we do not have the power to direct the significant activities of such entities. Additionally, under ASU 2009-17, we do not consolidate certain nonagency mortgage securitizations because we do not have a variable interest that could potentially be significant or we do not have power to direct the activities that most significantly impact the performance of the VIE.

For nonconsolidated securitization entities, the transferred financial assets are removed from our balance sheet provided the conditions for sale accounting are met. The financial assets obtained from the securitization are primarily reported as cash, servicing rights, or retained interests (if applicable). Typically, we conclude that the fee we are paid for servicing consumer automobile finance receivables represents adequate compensation, and consequently, we do not recognize a servicing asset or liability. As an accounting policy election, we elected fair value treatment for our existing MSR portfolio. Liabilities incurred as part of these securitization transactions, such as representation and warranty provisions, are recorded at fair value at the time of sale and are reported as accrued expenses and other liabilities on our Consolidated Balance Sheet. Upon the sale of the loans, we recognize a gain or loss on sale for the difference between the assets recognized, the assets derecognized, and the liabilities recognized as part of the transaction.

The following summarizes all pretax gains and losses recognized on financial assets sold into nonconsolidated securitization and similar asset-backed financing entities.


Year ended December 31, ($ in millions)	2010		2009		2008
Consumer automobile	$	—	$	—	$	(68	)
Consumer mortgage — GSEs		1,065		854		369
Consumer mortgage — nonagency		17		21		(161	)
Commercial automobile		—		110		269

Total pretax gain	$	1,082	$	985	$	409

Key economic assumptions used in measuring the initial fair value of retained interests related to sales of financial assets to nonconsolidated securitization entities were as follows during 2010, 2009, and 2008. Refer to Note 12 for servicing-related assumptions and to Note 27 for fair value assumptions and classifications.


Year ended December 31,	Consumer automobile (a)		Consumer mortgage (b)
2010 (c)
Key assumptions (d)
Prepayment speed (e)		(f)		2.4–48.1%
Weighted average life (in years)		(f)		0.2–5.0
Expected credit losses		(f)		0.2–9.3%
Discount rate		(f)		0.3–60.0%

2009 (g)
Key assumptions (d)
Prepayment speed (e)		(f)		10.0–12.0%
Weighted average life (in years)		(f)		4.6–6.3
Expected credit losses		(f)		11.0%
Discount rate		(f)		0.6–16.0%

2008 (g)
Key assumptions (d)
Prepayment speed (e)		1.2–1.4%		1.9–30.0%
Weighted average life (in years)		1.9–2.0		2.4–9.1
Expected credit losses		1.6–2.5%		0.0–3.5%
Discount rate		22.0–25.0%		2.8–25.0%

(a)	The fair value of retained interests in commercial automobile securitization approximates carrying value because of the short-term and floating-rate nature of commercial automobile loans.

(b)	Consumer residential mortgage loans include home equity loans and lines, high loan-to-value loans, and residential first and second mortgage loans. Assumptions on GSE loans are not included as we do not hold a retained interest in those transactions.

(c)	Includes retained interests related to securitization entities deconsolidated in the current year.

(d)	The assumptions used to measure the expected yield on variable-rate retained interests are based on a benchmark interest rate yield curve plus a contractual spread, as appropriate. The actual yield curve utilized varies depending on the specific retained interests.

(e)	Based on monthly prepayment speeds for consumer automobile loans and constant prepayment rate (CPR) for consumer mortgage loans.

(f)	During 2010 and 2009, no consumer automobile loans were sold into nonconsolidated securitization entities.

(g)	Includes sales to entities that are now consolidated under ASU 2009-17.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Refer to Note 30 for initial fair value assumptions involving our customary representation and warranty liabilities.

The following tables summarize cash flows received from and paid related to securitization entities, asset-backed financings, or other similar transfers of financial assets where the transfer is accounted for as a sale and we have a continuing involvement with the transferred assets (e.g., servicing) that were outstanding in 2010, 2009, and 2008. Cash flows presented below may not be comparable because the prior two years include cash flows related to securitization entities that are now consolidated. Additionally, these tables contain information regarding cash flows received from and paid to nonconsolidated securitization entities that existed during each year.


Year ended December 31, ($ in millions)	Consumer automobile			Commercial automobile		Consumer mortgage GSEs			Consumer mortgage nonagency
2010
Cash proceeds from transfers completed during the year	$	—		$	—	$	68,822		$	1,090
Cash flows received on retained interests in securitization entities		—			—		—			81
Cash proceeds from collections reinvested in revolving securitization entities		—			—		—			—
Servicing fees		1			—		1,081			209
Purchases of previously transferred financial assets		—			—		(1,865	)		(282	)
Representations and warranties obligations		—			—		(389	)		(18	)
Other cash flows		(6	)		—		(39	)		(22	)

2009
Cash proceeds from transfers completed during the year	$	—		$	—	$	56,251		$	1,258
Cash flows received on retained interests in securitization entities		269			1,009		—			119
Cash proceeds from collections reinvested in revolving securitization entities		—			5,998		—			—
Servicing fees		111			39		643			272
Purchases of previously transferred financial assets		—			—		(385	)		(1	)
Representations and warranties obligations		—			—		(343	)		(64	)
Other cash flows		(64	)		—		(177	)		(123	)

2008
Cash proceeds from transfers completed during the year	$	4,916		$	—	$	49,483		$	2,333
Cash flows received on retained interests in securitization entities		301			505		—			193
Cash proceeds from collections reinvested in revolving securitization entities		—			57,022		—			—
Servicing fees		165			117		513			385
Purchases of previously transferred financial assets		—			—		(481	)		(2	)
Representations and warranties obligations		—			—		(148	)		(160	)
Other cash flows		(75	)		—		(166	)		(50	)

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following tables summarizes the key economic assumptions and the sensitivity of the fair value of retained interests to immediate 10% and 20% adverse changes in those assumptions.


($ in millions)	Consumer automobile (a)		Consumer mortgage nonagency
2010
Carrying value/fair value of retained interests (b)		$—		$162
Weighted average life (in years)		—		0.1–11.6
Annual prepayment rate		–%WAM		2.4–48.1%WAM
Impact of 10% adverse change		$—		$(2)
Impact of 20% adverse change		—		(3)
Loss assumption		—%		0.0–46.4%
Impact of 10% adverse change		$—		$—
Impact of 20% adverse change		—		—
Discount rate		—%		0.3–80.0%
Impact of 10% adverse change		$—		$(2)
Impact of 20% adverse change		—		(4)
Market interest rate		—%		0.3–4.1%
Impact of 10% adverse change		$—		$—
Impact of 20% adverse change		—		(1)

2009 (c) (d)
Carrying value/fair value of retained interests (b)		$661		$268
Weighted average life (in years)		0.0–0.9		0.0–4.6
Annual prepayment rate		0.2–1.1%WAM		0.6–97.5%WAM
Impact of 10% adverse change		$(1)		$(20)
Impact of 20% adverse change		(2)		(36)
Loss assumption		1.1–4.8%		0.0–100.0%
Impact of 10% adverse change		$(13)		$(4)
Impact of 20% adverse change		(26)		(8)
Discount rate		40%		0.2–102.5%
Impact of 10% adverse change		$(23)		$(10)
Impact of 20% adverse change		(44)		(20)
Market interest rate		(e)		(e)
Impact of 10% adverse change		$—		$(3)
Impact of 20% adverse change		—		(4)

(a)	There were no retained interests in consumer or commercial automobile securitizations at December 31, 2010.

(b)	These amounts are recorded in trading securities or other assets at fair value. Refer to Note 27 for fair value valuation methods.

(c)	Amounts include items that were consolidated after the adoption of ASU 2009-17.

(d)	There were no retained interests in commercial automobile securitizations at December 31, 2009.

(e)	Forward benchmark interest rate yield curve plus contractual spread.

These sensitivities are hypothetical and should be viewed with caution. Changes in fair value based on a 10% and 20% variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., increased market interest rates may result in lower prepayments and increased credit losses), which may magnify or counteract the sensitivities. Further, these sensitivities show only the change in the asset balances and do not show any expected change in the fair value of the instruments used to manage the interest rate and prepayment risks associated with these assets. Refer to Note 12 for further detail on sensitivities related to our mortgage servicing rights.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Expected static pool net credit losses include actual incurred losses plus projected net loan losses divided by the original balance of the outstandings comprising the securitization pool. The following table displays the expected static pool net credit losses on our securitization transactions.


December 31, (a)	2010	2009	2008
Consumer automobile	(b)	2.9%	1.9%
Consumer mortgage (c)	0.0–46.4%	0.0–100.0%	0.0–59.0%

(a)	Static pool losses not applicable to commercial automobile finance receivable securitizations because of their short-term nature.

(b)	There were no consumer automobile off-balance sheet securitization entities at December 31, 2010.

(c)	Consumer residential mortgage loan securitizations do not include static pool losses for the GSE securitizations due to the GSE guarantees.

The following table represents on-balance sheet loans held-for-sale and finance receivable and loans, off-balance sheet securitizations, and whole-loan sales where we have continuing involvement. The table presents quantitative information about delinquencies and net credit losses. Refer to Note 12 for further detail on total serviced assets.


	Total finance receivables and loans				Amount 60 days or more past due				Net credit losses
December 31, ($ in millions)	2010		2009		2010		2009		2010		2009
On-balance sheet loans
Consumer automobile	$	51,254	$	39,846	$	373	$	564	$	613	$	1,185
Consumer mortgage (a)		23,174		23,471		3,437		5,945		335		4,958
Commercial automobile		35,629		29,776		186		89		84		94
Commercial mortgage		1,660		1,951		110		256		91		790
Commercial other		2,107		3,282		20		1,006		227		133

Total on-balance sheet loans		113,824		98,326		4,126		7,860		1,350		7,160

Off-balance sheet securitization entities
Consumer automobile		—		7,475		—		144		1		260
Consumer mortgage — GSEs (b)		253,192		229,781		13,990		13,471		n/m		n/m
Consumer mortgage — nonagency		73,638		103,201		12,220		18,962		4,605		7,478

Total off-balance sheet securitization entities		326,830		340,457		26,210		32,577		4,606		7,738

Whole-loan transactions (c)		38,212		44,219		2,950		2,051		300		556

Total	$	478,866	$	483,002	$	33,286	$	42,488	$	6,256	$	15,454

n/m = not meaningful

(a)

Includes loans subject to conditional repurchase options of $2.3 billion and $1.7 billion guaranteed by the GSEs, and $146 million and $237 million sold to certain nonagency mortgage securitization entities at December 31, 2010 and 2009, respectively. These loans are initially recorded at fair value.

(b)	Anticipated credit losses are not meaningful due to the GSE guarantees.

(c)	Whole-loan transactions are not part of a securitization transaction, but represent automobile and consumer mortgage pools of loans sold to nonagency investors.

Changes in Accounting for Variable Interest Entities

During 2009, we executed an amendment to a commercial automobile securitization entity that was previously considered as a QSPE and, therefore, was not consolidated. The amendment contractually required us to deposit additional cash into a collateral account held by the securitization entity. Management determined the amendment caused the entity to no longer be considered a QSPE, and therefore we consolidated the entity. We continued to consolidate this entity after adoption of ASU 2009-17.

ASU 2009-17 became effective on January 1, 2010, and upon adoption, we consolidated certain securitization entities that were previously held off-balance sheet. On January 1, 2010, we recognized a net increase of $17.6 billion to assets and liabilities on our Consolidated Balance Sheet ($10.1 billion of the increase relates to operations classified as held-for-sale that

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

were ultimately sold). Refer to Note 1 for further discussion of the requirements of ASC 860 and ASC 810, including changes to the accounting requirements related to transfers of financial assets and consolidation of VIEs.

We previously held on our Consolidated Balance Sheet certain mortgage securitization entities, which were on-balance sheet prior to the adoption of ASU 2009-17 because we did not meet the sale accounting requirements at the inception of the transactions. Specific provisions inherent in these deals, included but were not limited to, the ability of the trust to enter into a derivative contract and the inclusion of a loan repurchase right. The existence of the ability to enter into a derivative precluded the entities from being deemed a QSPE and the existence of the loan repurchase right precluded sale accounting treatment. These two provisions, when used in combination, were deemed substantive and precluded sale accounting. We also retained servicing and, in most cases, retained an economic interest in the entities in the form of economic residuals, subordinate bonds, and/or IO strips. During 2010, we completed the sale of 100% of our retained residuals and subordinate bonds related to certain of these on-balance sheet securitization entities. In addition, any repurchase rights associated with these structures were removed from these deals through exercise of such right. These collective actions were deemed to be substantial to warrant a re-characterization of the original transactions and, as such, they were reassessed under ASC 860 and it was concluded that the securitization entities satisfied sale accounting requirements. Furthermore, the sale of the 100% economic interests resulted in the loss of a controlling financial interest in the securitization entities and accordingly consolidation was not required. The combination of these actions resulted in the derecognition of assets previously sold to these securitization entities. Consolidated assets and consolidated liabilities of $1.2 billion and $1.2 billion, respectively, associated with this transaction were derecognized and a gain of $51 million was recorded.

During 2010, we further completed the sale of our significant retained residuals and subordinate bonds related to certain other on-balance sheet securitization entities, which were consolidated upon adoption of ASU 2009-17 (but were not consolidated prior to the adoption of ASU 2009-17). Since we disposed of our variable interests in these securitization entities to unrelated third parties, a reassessment was required to determine whether we continued to hold a controlling financial interest. All subordinate retained economic interests in these entities were sold and therefore we no longer held a controlling financial interest. All assets and liabilities associated with the trust were derecognized and all retained interests in the entities, including insignificant retained senior interests and mortgage servicing rights, were recorded at their fair values at the date of deconsolidation. Consolidated assets and consolidated liabilities of $709 million and $707 million, respectively, associated with this transaction were derecognized and a gain of $1 million was recorded.

Related to these deconsolidations above, we continue to hold servicing rights associated with these transactions, however retained servicing does not preclude deconsolidation because the retained servicing we hold does not absorb a potentially significant level of variability in the securitization entities. Upon completion of the sale, $9 million of servicing rights and $1 million of retained interests associated with this transaction were recorded.

12.

Servicing Activities

Mortgage Servicing Rights

The following table summarizes activity related to MSRs which are carried at fair value.


Year ended December 31, ($ in millions)	2010			2009
Estimated fair value at January 1,	$	3,554		$	2,848
Additions recognized on sale of mortgage loans		1,006			807
Additions from purchases of servicing rights		56			19
Subtractions from sales of servicing assets		(1	)		(19	)
Changes in fair value
Due to changes in valuation inputs or assumptions used in the valuation model		23			1,120
Other changes in fair value		(894	)		(1,261	)
Transfer to assets of operations held-for-sale		—			25
Decrease due to change in accounting principle		(19	)		—
Other changes that affect the balance		13			15

Estimated fair value at December 31,	$	3,738		$	3,554

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model include all changes due to a revaluation by a model or by a benchmarking exercise. Other changes in fair value primarily include the accretion of the present value of the discount related to forecasted cash flows and the economic runoff of the portfolio. The decrease due to change in accounting principle reflects the effect of the initial adoption of ASU 2009-17. Refer to Note 1 for additional information.

The key economic assumptions and sensitivity of the fair value of MSRs to immediate 10% and 20% adverse changes in those assumptions were as follows.


December 31, ($ in millions)	2010			2009
Weighted average life (in years)		7.0			5.2
Weighted average prepayment speed		9.8	%		15.6	%
Impact on fair value of 10% adverse change	$	(155	)	$	(167	)
Impact on fair value of 20% adverse change		(295	)		(321	)

Weighted average discount rate		12.3	%		10.3	%
Impact on fair value of 10% adverse change	$	(80	)	$	(82	)
Impact on fair value of 20% adverse change		(156	)		(160	)

These sensitivities are hypothetical and should be considered with caution. Changes in fair value based on a 10% and 20% variation in assumptions generally cannot be extrapolated because the relationship of the change in assumptions to the change in fair value may not be linear. Also, the effect of a variation in a particular assumption on the fair value is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another (e.g., increased market interest rates may result in lower prepayments and increased credit losses) that could magnify or counteract the sensitivities. Further, these sensitivities show only the change in the asset balances and do not show any expected change in the fair value of the instruments used to manage the interest rates and prepayment risks associated with these assets.

Risk Mitigation Activities

The primary risk of our servicing rights is interest rate risk and the resulting impact on prepayments. A significant decline in interest rates could lead to higher-than-expected prepayments that could reduce the value of the MSRs. We economically hedge the impact of these risks with both derivative and nonderivative financial instruments. Refer to Note 23 for additional information regarding the derivative financial instruments used to economically hedge MSRs.

The components of servicing valuation and hedge activities, net, were as follows.


Year ended December 31, ($ in millions)	2010			2009			2008
Change in estimated fair value of mortgage servicing rights	$	(872	)	$	(106	)	$	(2,227	)
Change in fair value of derivative financial instruments		478			(998	)		1,964

Servicing valuation and hedge activities, net	$	(394	)	$	(1,104	)	$	(263	)

Mortgage Servicing Fees

The components of mortgage servicing fees were as follows.


Year ended December 31, ($ in millions)	2010		2009		2008
Contractual servicing fees, net of guarantee fees and including subservicing	$	1,065	$	1,071	$	1,196
Late fees		77		77		112
Ancillary fees		190		164		144

Total mortgage servicing fees	$	1,332	$	1,312	$	1,452

Mortgage Servicing Advances

In connection with our primary servicing activities (i.e., servicing of mortgage loans), we make certain payments of property taxes and insurance premiums, default and property maintenance payments, as well as advances of principal and interest payments before collecting them from individual borrowers. Servicing advances including contractual interest are

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

priority cash flows in the event of a loan principal reduction or foreclosure and ultimate liquidation of the real estate-owned property, thus making their collection reasonably assured. These servicing advances are included in other assets on the Consolidated Balance Sheet and totaled $1.9 billion and $1.8 billion at December 31, 2010 and 2009, respectively. We maintain an allowance for uncollected primary servicing advances of $25 million and $23 million at December 31, 2010 and 2009, respectively. Our potential obligation is influenced by the loan’s performance and credit quality. Additionally, we have a fiduciary responsibility for mortgage escrow and custodial funds that totaled $4.2 billion and $3.7 billion at December 31, 2010 and 2009, respectively. A portion of these balances are included in deposit liabilities on our Consolidated Balance Sheet. Refer to Note 15 for additional information.

When we act as a subservicer of mortgage loans we perform the responsibilities of a primary servicer but do not own the corresponding primary servicing rights. We receive a fee from the primary servicer for such services. As the subservicer, we would have the same responsibilities of a primary servicer in that we would make certain payments of property taxes and insurance premiums, default and property maintenance, as well as advances of principal and interest payments before collecting them from individual borrowers. At December 31, 2010 and 2009, outstanding servicer advances related to subserviced loans were $140 million and $155 million, respectively, and we had a reserve for uncollected subservicer advances of $1 million and $2 million, respectively.

At December 31, 2010 and 2009, we were the master servicer (i.e., servicer of beneficial interests issued by mortgage securitization entities) for 528,249 and 682,148 loans, respectively, having an aggregate unpaid principal balance of $72.6 billion and $94.6 billion, respectively. In many cases, where we act as master servicer, we also act as primary servicer. In connection with our master-servicing activities, we service the mortgage-backed and mortgage-related asset-backed securities and whole-loan packages sold to investors. As the master servicer, we collect mortgage loan payments from primary servicers and distribute those funds to investors in the mortgage-backed and mortgage-related asset-backed securities and whole-loan packages. As the master servicer, we are required to advance scheduled payments to the securitization trust or whole-loan investors. To the extent the primary servicer does not advance the payments, we are responsible for advancing the payment to the trust or whole-loan investors. Master-servicing advances, including contractual interest, are priority cash flows in the event of a default, thus making their collection reasonably assured. In most cases, we are required to advance these payments to the point of liquidation of the loan or reimbursement of the trust or whole-loan investors. We had outstanding master-servicing advances of $90 million and $47 million at December 31, 2010 and 2009, respectively. We had no reserve for uncollected master-servicing advances at December 31, 2010 or 2009.

Serviced Mortgage Assets

Our total serviced mortgage assets consist of primary, master and subservicing activities as follows.

•

Loans owned by us and we are the primary servicer. — These loans are categorized as loans held-for-sale or consumer finance receivables and loans. Included in consumer finance receivables and loans are on-balance sheet securitization entities. Our loans held-for-sale and consumer finance receivable and loan portfolios are discussed in further detail in Note 8 and Note 9, respectively.

•

Loans sold to third-party investors where we have retained primary servicing. — The loans sold to a third-party investor were sold through an off-balance sheet securitization entity or a whole-loan transaction.

•

Loans that have never been and currently are not owned by us but the primary servicing rights have been purchased. — In the case of purchased servicing rights, there is no recourse to us outside of customary contractual provisions relating to the execution of the services we provide.

•

Loans that have never been and currently are not owned by us but for which we act as subservicer under contractual agreements with the primary servicer. — In these cases, loans are not recorded on our Consolidated Balance Sheet. In the case of subservicing rights, there is no recourse to us outside of customary contractual provisions relating to the execution of the services we provide.

In many cases we act as both the primary and master servicer. However, in certain cases, we also service loans that have been purchased and subsequently sold through a securitization trust or whole-loan sale whereby the originator retained the primary servicing rights and we retained the master-servicing rights.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The unpaid principal balance of our serviced mortgage assets were as follows.


December 31, ($ in millions)	2010		2009
On-balance sheet mortgage loans
Held-for-sale and investment	$	20,224	$	26,333
Operations held-for-sale		—		3,160
Off-balance sheet mortgage loans
Loans sold to third-party investors
Nonagency		63,685		71,505
GSEs		255,388		231,310
Whole-loan		17,524		21,120
Purchased servicing rights		3,946		4,800
Operations held-for-sale		—		17,526

Total primary serviced mortgage loans		360,767		375,754
Subserviced mortgage loans		24,173		28,357
Subserviced operations held-for-sale		—		293

Total subserviced mortgage loans		24,173		28,650
Master-servicing-only mortgage loans		10,548		14,865

Total serviced mortgage loans	$	395,488	$	419,269

Our Mortgage operations that conduct primary and master-servicing activities are required to maintain certain servicer ratings in accordance with master agreements entered into with GSEs. At December 31, 2010, our Mortgage operations were in compliance with the servicer-rating requirements of the master agreements.

In certain domestic securitizations of our Mortgage operations, the surety or other provider of contractual credit support is entitled to declare a servicer default and terminate the servicer upon the failure of the loans to meet certain portfolio delinquency and/or cumulative-loss thresholds. Our Mortgage operations received notice of termination from surety providers with respect to securitizations having an unpaid principal balance of $346 million and $4.8 billion during the years ended December 31, 2010 and 2009, respectively.

Automobile Servicing Activities

We service consumer automobile contracts. Historically, we have sold a portion of the consumer automobile contracts that we originated. With respect to contracts we sell, we retain the right to service and earn a servicing fee for our servicing function. Typically, we conclude that the fee we are paid for servicing consumer automobile finance receivables represents adequate compensation, and consequently, we do not recognize a servicing asset or liability. We recognized automobile servicing fees of $231 million, $237 million, and $295 million during the years ended December 31, 2010, 2009, and 2008, respectively.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Automobile Serviced Assets

The total serviced automobile assets were as follows.


	Outstanding
December 31, ($ in millions)	2010		2009
On-balance sheet automobile loans
Consumer automobile	$	51,254	$	39,846
Commercial automobile		35,629		29,776
Operating leases		9,128		15,995
Operations held-for-sale		242		660
Off-balance sheet automobile loans
Loans sold to third-party investors
Securitizations		—		7,251
Whole-loan		18,126		18,768
Other		979		1,365

Total serviced automobile loans	$	115,358	$	113,661

13.

Premiums Receivable and Other Insurance Assets

Premiums receivable and other insurance assets consisted of the following.


December 31, ($ in millions)	2010		2009
Prepaid reinsurance premiums	$	249	$	346
Reinsurance recoverable on unpaid losses		487		670
Reinsurance recoverable on paid losses		54		114
Premiums receivable		341		388
Deferred policy acquisition costs		1,050		1,202

Total premiums receivable and other insurance assets	$	2,181	$	2,720

14.

Other Assets

The components of other assets were as follows.


December 31, ($ in millions)	2010			2009
Property and equipment at cost	$	1,315		$	1,416
Accumulated depreciation		(939	)		(1,080	)

Net property and equipment		376			336
Fair value of derivative contracts in receivable position		3,966			2,654
Servicer advances		2,137			2,180
Restricted cash collections for securitization trusts (a)		1,705			3,654
Collateral placed with counterparties		1,569			1,760
Restricted cash and cash equivalents		1,323			1,590
Cash reserve deposits held-for -securitization trusts (b)		1,168			1,594
Debt issuance costs		704			829
Other accounts receivable		641			573
Prepaid expenses and deposits		638			749
Interests retained in financial asset sales		568			471
Goodwill		525			526
Nonmarketable equity securities		504			715
Investment in used vehicles held-for-sale		386			522
Real estate and other investments		280			340
Accrued interest and rent receivable		238			326
Repossessed and foreclosed assets		211			336
Other assets		625			732

Total other assets	$	17,564		$	19,887

(a)	Represents cash collection from customer payments on securitized receivables. These funds are distributed to investors as payments on the related secured debt.

(b)	Represents credit enhancement in the form of cash reserves for various securitization transactions we have executed.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The changes in the carrying amounts of goodwill for the periods shown were as follows.


($ in millions)	North American Automotive Finance operations			International Automotive Finance operations			Insurance operations			Other			Total
Goodwill acquired prior to December 31, 2008	$	14		$	527		$	953		$	1,541		$	3,035
Accumulated impairment losses		(14	)		—			(42	)		(1,541	)		(1,597	)
Foreign-currency translation		—			(37	)		(44	)		—			(81	)

Goodwill at December 31, 2008	$	—		$	490		$	867		$	—		$	1,357
Sale of reporting unit		—			—			(107	)		—			(107	)
Impairment losses (a)		—			—			(607	) (b)		—			(607	)
Transfer of assets of discontinued operations held-for-sale		—			(22	)		(108	)		—			(130	)
Foreign-currency translation		—			1			12			—			13

Goodwill at December 31, 2009 (c)	$	—		$	469		$	57		$	—		$	526
Transfer of assets of discontinued operations held-for-sale		—			(1	)		(1	)		—			(2	)
Foreign-currency translation		—			—			1			—			1

Goodwill at December 31, 2010	$	—		$	468		$	57		$	—		$	525

(a)	The impairment losses of our Insurance operations were reported as loss from discontinued operations, net of tax, in the Consolidated Statement of Income. All other impairment losses were reported as other operating expenses in the Consolidated Statement of Income.

(b)

During the three months ended December 31, 2008, and the three months ended June 30, 2009, our Insurance operations initiated an evaluation of goodwill for potential impairment, which was in addition to our annual impairment evaluation. These tests were initiated in light of a more-than-likely expectation that a reporting unit or a significant portion of a reporting unit will be sold. The fair value was determined using offers provided by willing purchasers. Based on the preliminary results of the assessments, our Insurance operations concluded that the carrying value of these reporting units exceeded the fair value resulting in an impairment loss during both 2008 and 2009.

(c)	Net of accumulated impairment losses of $649 million for Insurance operations.

15.

Deposit Liabilities

Deposit liabilities consisted of the following.


December 31, ($ in millions)	2010		2009
Domestic deposits
Noninterest-bearing deposits	$	2,108	$	1,755
NOW and money market checking accounts		8,081		7,213
Certificates of deposit		23,728		19,861
Dealer deposits		1,459		1,041

Total domestic deposit liabilities		35,376		29,870

Foreign deposits
Noninterest-bearing deposits		23		—
NOW and money market checking accounts		961		165
Certificates of deposit		2,390		1,555
Dealer deposits		298		166

Total foreign deposit liabilities		3,672		1,886

Total deposit liabilities	$	39,048	$	31,756

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Noninterest-bearing deposits primarily represent third-party escrows associated with our mortgage loan-servicing portfolio. The escrow deposits are not subject to an executed agreement and can be withdrawn without penalty at any time. At December 31, 2010 and 2009, certificates of deposit included $7.0 billion and $4.8 billion, respectively, of domestic certificates of deposit in denominations of $100 thousand or more.

The following table presents the scheduled maturity of total certificates of deposit.


Year ended December 31, ($ in millions)
2011	$	12,842
2012		6,832
2013		2,554
2014		1,160
2015		2,730

Total certificates of deposit	$	26,118

16.

Short-term Borrowings

The following table presents the composition of our short-term borrowings portfolio.


	2010							2009
December 31, ($ in millions)	Unsecured		Secured		Total			Unsecured		Secured		Total
Demand notes	$	2,033	$	—	$	2,033		$	1,311	$	—	$	1,311
Bank loans and overdrafts		1,970		—		1,970			1,598		—		1,598
Federal Home Loan Bank		—		1,300		1,300			—		—		—
Federal Reserve bank advances		—		—		—			—		5,000		5,000
Other (a)		224		1,981		2,205			356		2,027		2,383

Total short-term borrowings	$	4,227	$	3,281	$	7,508		$	3,265	$	7,027	$	10,292

Weighted average interest rate (b)						3.5	%						2.0	%

(a)	Other primarily includes nonbank secured borrowings at our Mortgage and International Automotive Finance operations.

(b)	Based on the debt outstanding and the interest rate at December 31 of each year.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

17.

Long-term Debt

The following tables present the composition of our long-term debt portfolio.

December 31, ($ in millions)

Amount

Interest
rate

Weighted
average
interest
rate (a)

Due date
range

2010

Senior debt

Fixed rate (b)

45,905

Variable rate

2,314

Total senior debt (c)

48,219

0.00–16.21%

6.56

2011–2049

Subordinated debt

Fixed rate

4,227

Variable rate (d)

6,632

Total subordinated debt (e)

10,859

0.83–17.05%

4.76

2011–2018

VIE secured debt

Fixed rate

10,706

Variable rate

13,760

Total VIE secured debt

24,466

0.30–8.30%

2.62

2011–2016

Trust preferred securities

Fixed rate

2,621

8.00%

8.00

2040

Fair value adjustment (f)

447

Total long-term debt (g)

86,612

2009

Senior debt

Fixed rate (b)

45,357

Variable rate

4,133

Total senior debt (c)

49,490

0.00–15.31%

6.47

2010–2049

Subordinated debt

Fixed rate

4,778

Variable rate (d)

6,387

Total subordinated debt (e)

11,165

1.36–17.05%

5.53

2010–2018

VIE secured debt

Fixed rate

4,461

Variable rate

19,756

Total VIE secured debt

24,217

0.31–14.99%

2.85

2010–2016

Trust preferred securities

Fixed rate

2,620

Fair value adjustment (f)

529

8.00%

8.00

2040

Total long-term debt (g)

88,021

(a)	Based on the debt outstanding and the interest rate at December 31 of each year.

(b)	Includes $7.4 billion at both December 31, 2010 and 2009, guaranteed by the Federal Deposit Insurance Corporation (FDIC) under the Temporary Liquidity Guarantee Program (TLGP).

(c)	Includes secured long-term debt of $4.0 billion and $6.7 billion at December 31, 2010 and 2009, respectively.

(d)	Includes $6.4 billion of debt outstanding from the Ally Bank and, U.S. Canadian automotive secured revolving credit facilities at December 31, 2010, and $6.1 billion outstanding from our syndicated U.S. and Canadian automotive secured revolving credit facility at December 31, 2009.

(e)	Includes secured long-term debt of $10.6 billion and $10.8 billion at December 31, 2010 and 2009, respectively.

(f)	Amount represents the hedge accounting adjustment of fixed-rate debt.

(g)	Includes fair value option-elected secured long-term debt of $972 million and $1.3 billion at December 31, 2010 and 2009, respectively. Refer to Note 27 for additional information.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


	2010						2009
December 31, ($ in millions)	Unsecured		Secured		Total		Unsecured		Secured		Total
Long-term debt
Due within one year	$	8,555	$	13,603	$	22,158	$	7,429	$	18,898	$	26,327
Due after one year		38,499		25,508		64,007		38,331		22,834		61,165
Fair value adjustment		447		—		447		529		—		529

Total long-term debt	$	47,501	$	39,111	$	86,612	$	46,289	$	41,732	$	88,021

The following table presents the scheduled maturity of long-term debt, assuming no early redemptions will occur. The actual payment of secured debt may vary based on the payment activity of the related pledged assets.


Year ended December 31, ($ in millions)	2011			2012			2013			2014			2015			2016 and thereafter			Fair value adjustment		Total
Unsecured
Long-term debt	$	9,530		$	12,637		$	1,884		$	1,974		$	3,650		$	20,548		$	447	$	50,670
Original issue discount		(975	)		(350	)		(263	)		(191	)		(57	)		(1,333	)		—		(3,169	)

Total unsecured		8,555			12,287			1,621			1,783			3,593			19,215			447		47,501

Secured
Long-term debt		13,502			9,145			8,631			3,261			2,514			1,711			—		38,764
Troubled debt restructuring concession (a)		101			105			82			46			13			—			—		347

Total secured		13,603			9,250			8,713			3,307			2,527			1,711			—		39,111

Total long-term debt	$	22,158		$	21,537		$	10,334		$	5,090		$	6,120		$	20,926		$	447	$	86,612

(a)

In the second quarter of 2008, ResCap executed an exchange offer that resulted in a concession being recognized as an adjustment to the carrying value of certain new secured notes. This concession is being amortized over the life of the new notes through a reduction to interest expense using an effective yield methodology.

The following table presents the scheduled maturity of long-term debt held by ResCap, assuming no early redemptions will occur. The actual payment of secured debt may vary based on the payment activity of the related pledged assets.


Year ended December 31, ($ in millions)	2011		2012		2013		2014		2015		2016 and thereafter		Fair value adjustment		Total
ResCap
Unsecured debt
Long-term debt	$	209	$	357	$	529	$	100	$	114	$	—	$	33	$	1,342
Original issue discount		—		—		—		—		—		—		—		—

Total unsecured		209		357		529		100		114		—		33		1,342

Secured debt
Long-term debt		508		—		707		707		707		1,234		—		3,863
Troubled debt restructuring concession		101		105		82		46		13		—		—		347

Total secured debt		609		105		789		753		720		1,234		—		4,210

ResCap — Total long-term debt	$	818	$	462	$	1,318	$	853	$	834	$	1,234	$	33	$	5,552

To achieve the desired balance between fixed- and variable-rate debt, we utilize interest rate swap agreements. The use of these derivative financial instruments had the effect of synthetically converting $24.0 billion of our fixed-rate debt into variable-rate obligations and $17.5 billion of our variable-rate debt into fixed-rate obligations at December 31, 2010. In addition, certain of our debt obligations are denominated in currencies other than the currency of the issuing country. Foreign-currency swap agreements are used to hedge exposure to changes in the exchange rates of obligations.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following summarizes assets restricted as collateral for the payment of the related debt obligation primarily arising from securitization transactions accounted for as secured borrowings and repurchase agreements.


	2010				2009
December 31, ($ in millions)	Total		Ally Bank (a)		Total		Ally Bank (a)
Loans held-for-sale	$	1,035	$	—	$	1,420	$	—
Mortgage assets held-for-investment and lending receivables		12,451		11,137		11,356		9,410
Consumer automobile finance receivables		27,164		14,927		24,082		6,812
Commercial automobile finance receivables		19,741		15,034		21,447		5,095
Investment securities		2,227		2,190		2,676		2,613
Investment in operating leases, net		3,199		—		13,323		—
Mortgage servicing rights		2,801		1,746		2,474		1,015
Other assets		3,990		1,700		4,273		1,264

Total assets restricted as collateral (b)	$	72,608	$	46,734	$	81,051	$	26,209

Secured debt (c)	$	42,392	$	20,199	$	48,759	$	11,777

(a)	Ally Bank is a component of the total column.

(b)

Ally Bank has an advance agreement with the Federal Home Loan Bank of Pittsburgh (FHLB) and access to the Federal Reserve Bank Discount Window. Ally Bank had assets pledged and restricted as collateral to the FHLB and Federal Reserve Bank totaling $15.2 billion and $22.4 billion at December 31, 2010 and 2009, respectively. These assets were composed of consumer and commercial mortgage finance receivables and loans, net, consumer automobile finance receivables and loans, net, and investment securities. Under the agreement with the FHLB, Ally Bank also had assets pledged as collateral under a blanket lien totaling $5.3 billion and $1.9 billion at December 31, 2010 and 2009, respectively. These assets were primarily composed of mortgage servicing rights, consumer automobile finance receivables and loans, net, and other assets. Availability under these programs is generally only for the operations of Ally Bank and cannot be used to fund the operations or liabilities of Ally or its subsidiaries.

(c)	Includes $3,281 million and $7,027 million of short-term borrowings at December 31, 2010 and 2009, respectively.

Trust Preferred Securities

On December 30, 2009, we entered into a Securities Purchase and Exchange Agreement with the U.S. Department of Treasury (the Treasury) and GMAC Capital Trust I, a Delaware statutory trust (the Trust), which is a finance subsidiary that is wholly owned by Ally. As part of the agreement, the Trust sold to the Treasury 2,540,000 trust preferred securities (TRUPS) issued by the Trust with an aggregate liquidation preference of $2.5 billion. Additionally, we issued and sold to the Treasury a ten-year warrant to purchase up to 127,000 additional TRUPS with an aggregate liquidation preference of $127 million, at an initial exercise price of $0.01 per security, which the Treasury immediately exercised in full. The TRUPS have no stated maturity date but must be redeemed upon the redemption or maturity (February 15, 2040) of the Debentures. The TRUPS are generally nonvoting, other than voting on certain matters under certain circumstances, including generally, the adverse amendment of the amended and restated declaration of trust governing the TRUPS (the Declaration), and with respect to certain actions to be taken upon the occurrence of certain events of default on the TRUPS or, under certain circumstances, on the Debentures. During any period in which TRUPS remain outstanding but in which distributions on the TRUPS have not been fully paid, Ally is not permitted to (i) declare or pay dividends on; make any distributions with respect thereto; or redeem, purchase, or otherwise acquire, any of Ally’s capital stock or (ii) make any payments of principal, interest, or premium on, or repay, repurchase, or redeem any debt securities that rank on a parity with or junior in interest to the Debentures with certain specified exceptions.

Covenants and Other Requirements

We are subject to a leverage ratio under a revolving syndicated credit facility secured by U.S. and Canadian automotive receivables. The leverage ratio covenant requires our reporting segments, excluding our Mortgage operations, to have a ratio of consolidated borrowed funds to consolidated net worth not to exceed 11.0:1. At December 31, 2010, the leverage ratio was 3.3:1.

In secured funding transactions, there are trigger events that could cause the debt to be prepaid at an accelerated rate or could cause our usage of the credit facility to be discontinued. The triggers are generally based on the financial health and performance of the servicer as well as performance criteria for the pool of receivables, such as delinquency ratios, loss ratios, commercial payment rates. There were no trigger events in 2010.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

When we issue debt securities in private offerings we are generally subject to registration rights agreements. Under these agreements, we agree to use reasonable efforts to cause the consummation of a registered exchange offer or to file a shelf registration statement within a prescribed period. In the event that we fail to meet these obligations, we may be required to pay additional penalty interest with respect to the covered debt during the period in which we fail to meet our contractual obligations.

Funding Facilities

We utilize both committed and uncommitted credit facilities. The financial institutions providing the uncommitted facilities are not legally obligated to advance funds under them. The amounts outstanding under our various funding facilities are included on our Consolidated Balance Sheet.

The total capacity in our committed funding facilities is provided by banks through private transactions. The committed secured funding facilities can be revolving in nature and allow for additional funding during the commitment period, or they can be amortizing and do not allow for any further funding after the closing date. At December 31, 2010, $28.8 billion of our $32.2 billion of committed capacity was revolving. Generally, our revolving facilities have a tenor of 364 days and are renewed annually.

Committed Funding Facilities


	Outstanding				Unused capacity (a)				Total capacity
December 31, ($ in billions)	2010		2009		2010		2009		2010		2009
Bank funding
Secured	$	6.4	$	—	$	1.9	$	—	$	8.3	$	—
Nonbank funding
Unsecured
Automotive Finance operations		0.8		0.7		—		0.1		0.8		0.8
Secured
Automotive Finance operations and other		8.3		23.0		9.1		9.0		17.4		32.0
Mortgage operations		1.0		1.7		0.6		0.4		1.6		2.1

Total nonbank funding		10.1		25.4		9.7		9.5		19.8		34.9

Shared capacity (b)		0.2		0.8		3.9		3.2		4.1		4.0

Total committed facilities		16.7		26.2		15.5		12.7		32.2		38.9

Whole-loan forward flow agreements (c)		—		—		—		9.4		—		9.4

Total	$	16.7	$	26.2	$	15.5	$	22.1	$	32.2	$	48.3

(a)	Funding from committed secured facilities is available on request in the event excess collateral resides in certain facilities or is available to the extent incremental collateral is available and contributed to the facilities.

(b)	Funding is generally available for assets originated by Ally Bank or the parent company, Ally Financial Inc.

(c)	Represents commitments of financial institutions to purchase U.S. automotive retail assets.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Uncommitted Funding Facilities


	Outstanding				Unused capacity				Total capacity
December 31, ($ in billions)	2010		2009		2010		2009		2010		2009
Bank funding
Secured
Federal Reserve funding programs	$	—	$	5.0	$	4.0	$	2.8	$	4.0	$	7.8
FHLB advances		5.3		5.1		0.2		0.8		5.5		5.9

Total bank funding		5.3		10.1		4.2		3.6		9.5		13.7

Nonbank funding
Unsecured
Automotive Finance operations		1.4		0.8		0.6		0.1		2.0		0.9
Secured
Automotive Finance operations		0.1		0.3		—		0.1		0.1		0.4
Mortgage operations		—		—		0.1		0.2		0.1		0.2

Total nonbank funding		1.5		1.1		0.7		0.4		2.2		1.5

Total uncommitted facilities	$	6.8	$	11.2	$	4.9	$	4.0	$	11.7	$	15.2

Private Debt Exchange and Cash Tender Offers

On November 20, 2008, we commenced separate private exchange and cash tender offers to purchase and/or exchange certain of our and our subsidiaries (the Ally Offers) and ResCap’s (the ResCap Offers) outstanding notes held by eligible holders for cash, newly issued notes of Ally, and in the case of the Ally Offers only, preferred stock of a wholly owned Ally subsidiary.

In the Ally Offers, we offered to purchase and/or exchange any and all of certain old Ally notes (the Ally Old Notes) held by eligible holders for, at the election of each eligible holder, either (a)(1) newly issued senior guaranteed notes of Ally on substantially the same terms as the applicable series of Ally Old Notes exchanged (the Guaranteed Notes), except for the Guaranteed Notes being guaranteed by certain subsidiaries of Ally, and (2) newly issued 9% perpetual senior preferred stock (which has been subsequently reduced to 7% pursuant to the terms of such securities) with a liquidation preference of $1,000 per share of a wholly owned nonconsolidated subsidiary of Ally (the New Preferred Stock) or (b) cash, in each case in the amounts per $1,000 principal amount of Ally Old Notes as specified in the related offering materials. To the extent that cash required to purchase all Ally Old Notes tendered pursuant to cash elections exceeded $2 billion, each eligible holder who made a cash election had the amount of Ally Old Notes it tendered for cash accepted on a pro rata basis across all series such that the aggregate amount of cash spent in the offers equaled $2 billion, and the balance of Ally Old Notes each such holder tendered that was not accepted for purchase for cash was exchanged into new securities as if such holder had made a new securities election in accordance with option (a) described above.

The Guaranteed Notes (the Note Guarantees) are guaranteed, on a joint and several basis, by GMAC Latin America Holdings LLC, GMAC International Holdings B.V., GMAC Continental LLC, IB Finance Holding Company LLC, and Ally US LLC (each a Note Guarantor), which are all wholly owned subsidiaries of Ally. The Note Guarantees are senior obligations of each Note Guarantor and rank equally with all existing and future senior debt of each Note Guarantor. The Note Guarantees rank senior to all subordinated debt of each Note Guarantor.

In the ResCap Offers, Ally offered to purchase and/or exchange any and all of certain ResCap notes (the ResCap Old Notes) held by eligible holders for, at the election of each eligible holder, either (a)(1) in the case of 8.50% notes of ResCap maturing on May 15, 2010, newly issued 7.50% senior notes of Ally due 2013 (the New Senior Notes) or (2) in the case of all other series of ResCap Old Notes, a combination of New Senior Notes and newly issued 8.00% subordinated notes of Ally due 2018 (the Subordinated Notes), or (b) cash, in all cases in the amount of $1,000 principal amount of ResCap Old Notes as specified in the related offering materials. To the extent that cash required to purchase all ResCap Old Notes tendered pursuant to cash elections exceeded $500 million, each eligible holder who made a cash election had the amount of ResCap Old Notes it tendered for cash accepted on a pro rata basis across all series such that the aggregate amount of cash spent in the offers equaled $500 million, and the balance of ResCap Old notes each such holder tendered that was not accepted for purchase for cash was exchanged into new securities as if such holder had made a new securities election in accordance with option (a) described above.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The Ally Offers and ResCap offers (collectively, the Offers) settled on December 31, 2008. Approximately $17.5 billion in the aggregate principal amount (or 59%) of the outstanding Ally Old Notes were validly tendered and accepted in the Ally Offers, and approximately $3.7 billion in aggregate principal amount (or 39%) of the outstanding ResCap Old Notes were validly tendered and accepted in the ResCap Offers.

The Ally Offers and the ResCap Offers were accounted for as a debt modification and resulted in a pretax gain on extinguishment of debt of $11.5 billion. The gain on extinguishment consisted of a $3.8 billion principal discount, a $5.4 billion discount representing the difference between the face value and the estimated fair value of the new Ally and ResCap notes, and a $2.3 billion discount representing the difference between the face value and estimated fair value of new preferred stock. The discount of the new Ally and ResCap notes will be amortized as interest expense over the terms of the new notes using the effective interest method. Refer to Note 1 for additional information related to the accounting policy.

18.

Reserves for Insurance Losses and Loss Adjustment Expenses

The following table provides a reconciliation of the activity in the reserves for insurance losses and loss adjustment expenses.


Year ended December 31, ($ in millions)	2010			2009			2008
Balance at beginning of year	$	1,215		$	2,895		$	3,089
Reinsurance recoverables		(670	)		(1,660	)		(893	)

Net balance at beginning of year		545			1,235			2,196
Net reserves reclassified from liabilities of discontinued operations held-for-sale (a)		784			—			—
Net reserves ceded — retroactive reinsurance (b)		(85	)		—			(703	)
Net reserves sold (c)		(452	)		(82	)		—
Incurred from continuing operations related to
Current year		932			1,021			1,437
Prior years (d)		(56	)		19			(41	)

Total incurred from continuing operations		876			1,040			1,396
Incurred from discontinued operations related to
Current year		301			1,007			1,142
Prior years (e)		1			(4	)		(16	)

Total incurred from discontinued operations		302			1,003			1,126
Paid related to
Current year		(1,015	)		(1,353	)		(1,692	)
Prior years		(316	)		(583	)		(931	)

Total paid		(1,331	)		(1,936	)		(2,623	)
Net reserves reclassified to liabilities of discontinued operations held-for-sale (f)		(269	)		(784	)		—
Effects of exchange-rate changes		5			69			(157	)

Net balance at end of year		375			545			1,235
Reinsurance recoverables		487			670			1,660

Balance at end of year	$	862		$	1,215		$	2,895

(a)	Represents the fair value of reserves of discontinued operations held-for-sale at the beginning of the year.

(b)

On November 30, 2010, we entered into a loss portfolio transfer that ceded our losses and loss adjustment expenses related to business underwritten by our international reinsurance agency, which was sold on the same date. On November 3, 2008, we entered into a loss portfolio transfer that ceded our losses and loss adjustment expenses related to business underwritten by our U.S. reinsurance agency, which was sold on the same date. The loss portfolio transfers were accounted for as retroactive reinsurance. Retroactive reinsurance balances result from reinsurance placed to cover losses on insured events occurring prior to the inception of a reinsurance contract.

(c)	During 2010 and 2009, we completed the sale of our U.S. personal automotive insurance business.

(d)	Incurred losses and loss adjustment expenses from continuing operations were adjusted as a result of changes in prior years’ reserve estimates for certain assumed reinsurance coverages, international private passenger automobile coverages, or dealer-related products.

(e)	Incurred losses and loss adjustment expenses from discontinued operations were adjusted as a result of changes in prior year reserve estimates for certain private passenger automobile coverages.

(f)	Reclassification is net of reinsurance recoveries.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

19.

Accrued Expenses and Other Liabilities

The components of accrued expenses and other liabilities were as follows.


December 31, ($ in millions)	2010		2009
Fair value of derivative contracts in payable position	$	3,860	$	1,895
Loan repurchase liabilities		2,500		1,953
Accounts payable		1,267		1,275
Collateral received from counterparties		916		432
Reserve for mortgage representation and warranty obligation		830		1,263
Current and deferred income taxes, net		647		1,058
Employee compensation and benefits		591		403
GM payable, net		202		179
Securitization trustee payable		179		528
Reinsurance payable		91		208
Deferred revenue		85		91
Other liabilities		958		1,171

Total accrued expenses and other liabilities	$	12,126	$	10,456

20.

Equity

Common Stock

Our common stock has a par value of $0.01 and there are 2,021,384 shares authorized for issuance. Our common stock is not registered with the Securities and Exchange Commission, and there is no established trading market for the shares. The Treasury holds 73.78% of Ally common stock. The following table presents changes in the number of shares issued and outstanding.


(in shares)	2010		2009		2008
Members’ interest / common stock (a)
January 1,		799,120		269,960		107,984
New issuances:
Conversion of Series F-2 Preferred Stock (b)		531,850		—		—
Common equity investments (c)		—		269,960		—
Conversion of Series F Preferred Stock (d)		—		259,200		—
Contributions of loan participations (e)		—		—		161,976

December 31,		1,330,970		799,120		269,960

(a)

On June 30, 2009, our members’ interests became common stock due to our conversion from a limited liability company to a corporation. As a result, each unit of each class of common and preferred membership interests issued and outstanding was converted into shares of capital stock with substantially the same rights and preferences as such membership interests. Refer to Note 24 for additional information regarding the tax impact of the conversion.

(b)	On December 30, 2010, 110,000,000 shares of Series F-2 Preferred Stock owned by the Treasury were converted into 531,850 shares of Ally common stock.

(c)	On January 16, 2009, we completed a rights offering for $1.3 billion of common equity from existing Ally common shareholders.

(d)	On December 30, 2009, 60,000,000 shares of Series F Preferred Stock, all of which were owned by the Treasury, were converted into 259,200 shares of Ally common stock.

(e)	On December 29, 2008, GM and an affiliate of Cerberus Capital Management contributed to Ally $750 million of subordinated participations in a $3.5 billion senior secured credit facility between Ally and ResCap in exchange for additional common membership interests in Ally.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Mandatorily Convertible Preferred Stock held by the Treasury

Series F-2 Preferred Stock

On December 30, 2009, Ally entered into a Securities Purchase and Exchange Agreement (the Purchase Agreement) with the Treasury, pursuant to which a series of transactions occurred resulting in the Treasury acquiring 228,750,000 shares of Ally’s newly issued Fixed Rate Cumulative Mandatorily Convertible Preferred Stock, Series F-2 (the New MCP), with a total liquidation preference of $11,437,500,000. On December 30, 2010, the Treasury converted 110,000,000 shares of the New MCP into 531,850 shares of Ally common stock. The conversion occurred at an agreed upon rate that exceeded the initial conversion rate as defined in Exhibit H to the Ally Certificate of Incorporation. The fair value of the additional shares was approximately $586 million and represented an inducement. The fair value of the additional common shares issued to the Treasury was determined using a combination of valuation techniques consistent with the market approach (Level 3 fair value inputs). The market approach we used to estimate the fair value of our common stock incorporated a combination of the tangible equity and earnings multiples from comparable publicly traded companies deemed similar to Ally (and its operating segments) and by observing comparable transactions in the marketplace. We also considered the implied valuation of our common stock based on the December 30, 2010, conversion with the Treasury.

In connection with the conversion, the New MCP Certificate of Designation was amended to require us to deliver additional shares to the New MCP holders upon occurrence of certain specified events. The fair value associated with this provision was $30 million and was reflected in the New MCP balance at December 31, 2010. The fair value of the provision was determined utilizing an option pricing model using inputs and assumptions that management believes a willing market participant would use in estimating fair value (a Level 3 fair value input).

As a result, the Treasury now holds 118,750,000 shares of the New MCP, with a total liquidation preference of $5,937,500,000. Dividends of the New MCP accrue at 9% per annum. Dividends are payable quarterly, in arrears, only if and when declared by Ally’s Board of Directors. The New MCP generally is nonvoting, other than class-voting on certain matters under certain circumstances, including generally, the authorization of senior capital stock, the adverse amendment of the New MCP, and any exchange or reclassification involving the New MCP or merger or consolidation of Ally. Upon conversion of the New MCP into Ally common stock, the holder would have the voting rights associated with the common stock.

The shares of the New MCP are convertible into common stock at the applicable conversion rate (as provided in the Certificate of Designation) either: (i) at Ally’s option, at any time or from time to time, with the prior approval of the Federal Reserve provided that Ally is not permitted to convert any shares of the New MCP held by the Treasury except (a) with the prior written consent of the Treasury (which consent may be granted in the sole discretion of the Treasury with respect to each conversion considering such factors as it deems appropriate at such time, which may include seeking to condition the terms on which it may provide such consent, which may include seeking an alteration of the conversion rate) or (b) pursuant to an order of the Federal Reserve compelling such a conversion; or (ii) at the option of the holder, upon the occurrence of certain specified transactions. All shares of the New MCP that remain outstanding on December 30, 2016, will automatically convert into common stock at a conversion rate of 0.00432 common shares per share of the New MCP. Under any conversion of the New MCP, settlement will always occur by issuance of our common stock.

Subject to the approval of the Federal Reserve and the restrictions imposed by the terms of our other preferred stock, we may opt to redeem, in whole or in part, from time to time, the New MCP then outstanding at any time. On or before December 30, 2011, the New MCP may be redeemed at the liquidation preference, plus any accrued and unpaid dividends. After December 30, 2011, the New MCP may be redeemed at the greater of the liquidation preference, plus any accrued and unpaid dividends or the as-converted value, as defined in the Certificate of Designation.

Subject to certain exceptions, for so long as any shares of the New MCP are outstanding and owned by the Treasury, Ally is generally prohibited from paying certain dividends or distributions on, or redeeming, repurchasing, or acquiring its capital stock or other equity securities without the consent of the Treasury. Additionally, Ally is generally prohibited from making any dividends or distributions on, or redeeming, repurchasing, or acquiring its capital stock or other equity securities unless all accrued and unpaid dividends for all past dividend periods on the New MCP are fully paid.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following table summarizes information about the New MCP.


December 31,	2010		2009
Par value (per share)	$	0.01	$	0.01
Liquidation preference (per share)	$	50	$	50
Number of shares authorized		228,750,000		228,750,000
Number of shares issued and outstanding (a)		118,750,000		228,750,000

(a)	On December 30, 2010, 110,000,000 shares were converted into 531,850 shares of Ally common stock.

Preferred Stock

The following table summarizes information about our Series G and Series A preferred stock.


December 31,	2010		2009
Series G
Par value (per share)	$	0.01	$	0.01
Liquidation preference (per share)	$	1,000	$	1,000
Number of shares authorized		2,576,601		2,576,601
Number of shares issued and outstanding		2,576,601		2,576,601
Series A
Par value (per share)	$	0.01	$	0.01
Liquidation preference (per share)	$	1,000	$	1,000
Number of shares authorized		4,021,764		4,021,764
Number of shares issued and outstanding		1,021,764		1,021,764

Series G Preferred Stock

Effective June 30, 2009, and as previously disclosed, we converted (the Conversion) from a Delaware limited liability company into a Delaware corporation in accordance with applicable law. In connection with the Conversion, the 7% Cumulative Perpetual Preferred Stock (the Blocker Preferred) of Preferred Blocker Inc. (PBI), a wholly owned subsidiary, was required to be converted into or exchanged for preferred stock. For this purpose, we had previously authorized for issuance its 7% Fixed Rate Cumulative Perpetual Preferred Stock, Series G (the Series G Preferred Stock). Pursuant to the terms of a Certificate of Merger, effective October 15, 2009, PBI merged with and into Ally with Ally continuing as the surviving entity. At that time, each share of the Blocker Preferred issued and outstanding immediately prior to the effective time of the merger was converted into the right to receive an equal number of newly issued shares of Series G Preferred Stock. In the aggregate, 2,576,601 shares of Series G Preferred Stock were issued to holders of the Blocker Preferred in connection with the merger. The Series G Preferred Stock ranks equally in right of payment with each of our outstanding series of preferred stock in accordance with the terms thereof.

The Series G Preferred Stock accrues dividends at a rate of 7% per annum. Dividends are payable quarterly, in arrears, only if and when declared by Ally’s Board of Directors. The Series G Preferred Stock may not be redeemed prior to December 31, 2011. Subject to any other restrictions contained in the terms of any other series of stock or other agreements that Ally is or may become subject to, on or after December 31, 2011, at Ally’s option and subject to Ally having obtained any required regulatory approvals, Ally may, subject to certain conditions, redeem the Series G Preferred Stock, in whole or in part, at any time or from time to time, upon proper notice given, at a redemption price equal to the liquidation amount plus the amount of any accrued and unpaid dividends thereon through the date of redemption. The Series G Preferred Stock generally is nonvoting other than class-voting on certain matters under certain circumstances including generally, the authorization of senior capital stock or amendments that adversely impact the Series G Preferred Stock. Ally is generally prohibited from making any Restricted Payments on or prior to January 1, 2014, and may only make Restricted Payments after January 1, 2014, if certain conditions are satisfied. For this purpose, Restricted Payments include, subject to certain exceptions, any dividend payment or distribution of assets on any common stock or any redemption, purchase, or other acquisition of any shares of common stock.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Series A Preferred Stock

A subsidiary of GM currently holds 1,021,764 shares of Ally Fixed Rate Perpetual Preferred Stock, Series A (the Series A Preferred Stock). We are required to make distributions at a rate of 10% per annum for each fiscal quarter with respect to the Series A Preferred Stock if certain conditions are met. The Ally Board of Directors is permitted to reduce any distribution to the extent required to avoid a reduction of the equity capital of Ally below a minimum amount of equity capital as specified in our Certificate of Incorporation. In addition, with the consent of GM, the Ally Board of Directors may suspend the payment of distributions with respect to any one or more fiscal quarters. Distributions not made do not accumulate. Ally’s other series of outstanding preferred stock, outstanding debt, and certain agreements between Ally and the Treasury, limit Ally’s ability to repurchase or redeem the Series A Preferred Stock. The terms of such other stock and agreements will, under a variety of circumstances, prohibit Ally from repurchasing or redeeming any shares of the Series A Preferred Stock or will require that Ally redeem such other series of preferred stock on a pro rata basis with any shares of the Series A Preferred Stock that it redeems. Subject to an applicable replacement capital covenant and any other restrictions contained in the terms of any other series of stock, Ally may redeem all or any portion of the outstanding shares of Series A Preferred Stock. Any such redemption shall be at a price equal to (i) at any time prior to November 30, 2011, the sum of the liquidation amount, multiplied by 1.03, plus any accrued but unpaid dividends, or (ii) at any time from and after November 30, 2011, the sum of the liquidation amount and any accrued but unpaid dividends. The Series A Preferred Stock generally is nonvoting other than class voting on certain matters under certain circumstances including generally, the authorization of senior capital stock or amendments that adversely impact the Series A Preferred Stock.

21.

Accumulated Other Comprehensive Income (Loss)

The following table presents changes, net of tax, in each component of accumulated in other comprehensive income (loss).


($ in millions)	Unrealized gains (losses) on investment securities (a)			Translation adjustments and net investment hedges			Cash flow hedges			Defined benefit pension plans			Accumulated other comprehensive income (loss)
Balance at January 1, 2008	$	92		$	852		$	(9	)	$	17		$	952
Net unrealized losses arising during the period		(255	)		(1,020	)		(24	)		(138	)		(1,437	)
Less: Net realized losses reclassified to net income		(91	)		—			(5	)		—			(96	)

2008 net change		(164	)		(1,020	)		(19	)		(138	)		(1,341	)

Balance at December 31, 2008		(72	)		(168	)		(28	)		(121	)		(389	)
Net unrealized gains arising during the period		115			601			—			24			740
Less: Net realized losses reclassified to net income		(108	)		—			(1	)		—			(109	)

2009 net change		223			601			1			24			849

Balance at December 31, 2009		151			433			(27	)		(97	)		460
Net unrealized gains (losses) arising during the period		320			(18	)		33			(40	)		295
Less: Net realized gains (losses) reclassified to net income		497			(1	)		—			—			496

2010 net change		(177	)		(17	)		33			(40	)		(201	)

Balance at December 31, 2010	$	(26	)	$	416		$	6		$	(137	)	$	259

(a)	Represents the after-tax difference between the fair value and amortized cost of our available-for-sale securities portfolio.

22.

Regulatory Capital and Other Regulatory Matters

As a bank holding company, we and our wholly owned banking subsidiary, Ally Bank, are subject to risk-based capital and leverage guidelines issued by federal and state banking regulators that require that our capital-to-assets ratios meet certain minimum standards. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

discretionary action by regulators that, if undertaken, could have a direct material effect on our consolidated financial statements or the results of operations and financial condition of Ally Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets and certain off-balance sheet items as calculated under regulatory accounting practices. Our capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors.

The risk-based capital ratios are determined by allocating assets and specified off-balance sheet financial instruments into several broad risk categories with higher levels of capital being required for the categories, which presents greater risk. Under the guidelines, total capital is divided into two tiers: Tier 1 capital and Tier 2 capital. Tier 1 capital generally consists of common equity, minority interests, and qualifying preferred stock (including fixed-rate cumulative preferred stock issued and sold to the Treasury) less goodwill and other adjustments. Tier 2 capital generally consists of preferred stock not qualifying as Tier 1 capital, limited amounts of subordinated debt and the allowance for loan losses, and other adjustments. The amount of Tier 2 capital may not exceed the amount of Tier 1 capital.

Total risk-based capital is the sum of Tier 1 and Tier 2 capital. Under the guidelines, banking organizations are required to maintain a minimum Total risk-based capital ratio (total capital to risk-weighted assets) of 8% and a Tier 1 risk-based capital ratio of 4%.

The federal banking regulators also have established minimum leverage ratio guidelines. The leverage ratio is defined as Tier 1 capital divided by adjusted average total assets (which reflect adjustments for disallowed goodwill and certain intangible assets). The minimum Tier 1 leverage ratio is 3% or 4% depending on factors specified in the regulations.

A banking institution meets the regulatory definition of “well-capitalized” when its Total risk-based capital ratio equals or exceeds 10% and its Tier 1 risk-based capital ratio equals or exceeds 6% unless subject to a regulatory directive to maintain higher capital levels and for insured depository institutions, a leverage ratio that equals or exceeds 5%.

In conjunction with the Supervisory Capital Assessment Program (S-CAP), the banking regulators have developed a new measure of capital called “Tier 1 common” defined as Tier 1 capital less noncommon elements including qualified perpetual preferred stock, qualifying minority interest in subsidiaries, and qualifying trust preferred securities.

On October 29, 2010, Ally, IB Finance Holding Company, LLC, Ally Bank, and the FDIC entered into a Capital and Liquidity Maintenance Agreement (CLMA) that supersedes an original agreement dated July 21, 2008. The CLMA requires capital at Ally Bank to be maintained at a level such that Ally Bank’s leverage ratio is at least 15%, which is consistent with capital requirements currently applicable to Ally Bank and thus does not impose any additional capital requirements. For this purpose, the leverage ratio is determined in accordance with the FDIC’s regulations related to capital maintenance.

Additionally, on May 21, 2009, the Federal Reserve Board (FRB) granted Ally Bank an expanded exemption from Section 23A of the Federal Reserve Act and the FRB’s Regulation W. The exemption enables Ally Bank to make certain extensions of credit to consumers for the purchase of GM vehicles or vehicles floorplanned by Ally and to provide floorplan financing for the purchase of GM vehicles, subject to certain limitations. The exemption requires Ally to maintain a Total risk-based capital ratio of 15% and Ally Bank to maintain a Tier 1 leverage ratio of 15%.

On January 28, 2010, the federal banking agencies published a final rule amending the risk-based capital guidelines associated with the implementation of ASU 2009-17. The rule permits banking organizations to phase in the effects of the consolidation on risk-weighted assets and also makes provisions associated with the impact of allowance for loan and lease losses effects on Tier 2 capital during 2010. Ally elected to utilize this optional phase-in approach. After full implementation of the phase-in on January 1, 2011, we will continue to be in compliance with all required minimum ratios. Refer to Note 1 for additional information related to the adoption of ASU 2009-17.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following table summarizes our capital ratios.


	2010					2009					Required		Well- capitalized
December 31, ($ in millions)	Amount		Ratio			Amount		Ratio			minimum		minimum
Risk-based capital
Tier 1 (to risk-weighted assets)
Ally Financial Inc.	$	22,189		15.00	%	$	22,398		14.15	%		4.00%		6.00%
Ally Bank		10,738		19.23	%		7,768		20.85	%		4.00%		6.00%
Total (to risk-weighted asset)
Ally Financial Inc.	$	24,213		16.36	%	$	24,623		15.55	%		15.00% (a)		10.00%
Ally Bank		11,438		20.48	%		8,237		22.10	%		8.00%		10.00%
Tier 1 leverage (to adjusted average assets) (b)
Ally Financial Inc.	$	22,189		13.05	%	$	22,398		12.70	%		3.00–4.00%		(c)
Ally Bank		10,738		15.81	%		7,768		15.42	%		15.00% (d)		5.00%
Tier 1 common (to risk-weighted assets)
Ally Financial Inc.	$	12,677		8.57	%	$	7,678		4.85	%		n/a		n/a
Ally Bank		n/a		n/a			n/a		n/a			n/a		n/a

n/a = not applicable

(a)	Ally, in accordance with the FRB exemption from Section 23A, is required to maintain a Total risk-based capital ratio of 15%.

(b)

Federal regulatory reporting guidelines require the calculation of adjusted average assets using a daily average methodology. We currently calculate using a combination of monthly and daily average methodologies. We are in the process of modifying information systems to address the daily average requirement.

(c)	There is no Tier 1 leverage component in the definition of a well-capitalized bank holding company.

(d)	Ally Bank, in accordance with the FRB exemption from Section 23A, is required to maintain a Tier 1 leverage ratio of at least 15%.

At December 31, 2010, Ally and Ally Bank were “well-capitalized” and met all capital requirements to which we were subject.

Basel Capital Accord

The minimum risk-based capital requirements adopted by the federal banking agencies follow the Capital Accord of the Bank for International Settlements’ Basel Committee on Banking Supervision (Basel Committee). The Capital Accord was published in 1988 and generally applies to depository institutions and their holding companies in the United States. In 2004, the Basel Committee published a revision to the Capital Accord (Basel II). The goal of the Basel II capital rules is to provide more risk-sensitive regulatory capital calculations and promote enhanced risk management practices among large, internationally active banking organizations. U.S. banking regulators published final Basel II rules in December 2007. Ally is required to comply with the Basel II rules, as implemented by the U.S. banking regulators. Prior to full implementation of the Basel II rules, Ally is required to complete a qualification period of four consecutive quarters during which it needs to demonstrate that it meets the requirements of the rules to the satisfaction of its primary U.S. banking regulator. The U.S. implementation timetable consists of the qualification period followed by a minimum transition period of three years. During the transition period, Basel II risk-based capital requirements cannot fall below certain floors based on pre-existing capital regulations (Basel I). Ally is currently in the qualification period and expects to be in compliance with all relevant Basel II rules within the established timelines.

In addition to Basel II, the Basel Committee recently adopted new capital, leverage and liquidity guidelines under the Basel Accord (Basel III), which, when implemented in the United States, may have the effect of raising capital requirements beyond those required by current law and the Dodd-Frank Act. Basel III increases the minimum Tier 1 common equity ratio to 4.5%, net of regulatory deductions, and introduces a capital conservation buffer of an additional 2.5% of common equity to risk-weighted assets, raising the target minimum common equity ratio to 7.0%. Basel III increases the minimum Tier 1 capital ratio to 8.5% inclusive of the capital conservation buffer, increases the minimum total capital ratio to 10.5% inclusive of the capital buffer, and introduces a countercyclical capital buffer of up to 2.5% of common equity or other fully loss absorbing capital for periods of excess credit growth. Basel III also introduces a nonrisk adjusted Tier 1 leverage ratio of 3%, based on a

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

measure of the total exposure rather than total assets, and new liquidity standards. The Basel III capital, leverage and liquidity standards will be phased in over a multiyear period. The Basel III rules, when implemented, will also impose a 15% cap on the amount of Tier 1 capital that can be met, in the aggregate, through significant investments in the common shares of unconsolidated financial subsidiaries, MSRs and deferred tax assets through timing differences. In addition, under Basel III rules, after a ten-year phase out period beginning on January 13, 2013, trust preferred and other “hybrid” securities will no longer qualify as Tier 1 capital.

International Banks, Finance Companies, and Other Foreign Operations

Certain of our foreign subsidiaries operate in local markets as either banks or regulated finance companies and are subject to regulatory restrictions. These regulatory restrictions, among other things, require that our subsidiaries meet certain minimum capital requirements and may restrict dividend distributions and ownership of certain assets. Total assets of our regulated international banks and finance companies were approximately $14.5 billion and $13.6 billion at December 31, 2010 and 2009, respectively. In addition, the Bank Holding Company Act imposes restrictions on Ally’s ability to invest equity abroad without FRB approval. Many of our other operations are also heavily regulated in many jurisdictions outside the United States.

Depository Institutions

On December 24, 2008, Ally Bank received approval from the Utah Department of Financial Institutions (UDFI) to convert from an industrial bank to a commercial nonmember state-chartered bank. Ally Bank’s deposits are insured by the FDIC, and Ally Bank is required to file periodic reports with the FDIC concerning its financial condition. Total assets of Ally Bank were $70.3 billion and $55.3 billion at December 31, 2010 and 2009, respectively.

Ally Bank is subject to Utah law (and, in certain instances, federal law) which places restrictions and limitations on the amount of dividends or other distributions. Ally did not receive any dividends from Ally Bank in 2010 or 2009.

The Federal Reserve Bank requires banks to maintain minimum average reserve balances. The amount of the required reserve balance for Ally Bank was $2.4 million and $34.3 million at December 31, 2010 and 2009, respectively.

U.S. Mortgage Business

Our U.S. mortgage business is subject to extensive federal, state, and local laws, rules, and regulations, in addition to judicial and administrative decisions that impose requirements and restrictions on this business. As a Federal Housing Administration lender, certain of our U.S. mortgage subsidiaries are required to submit audited financial statements to the Department of Housing and Urban Development on an annual basis. It is also subject to examination by the Federal Housing Commissioner to assure compliance with Federal Housing Administration regulations, policies, and procedures. The federal, state, and local laws, rules, and regulations to which our U.S. mortgage business is subject, among other things, impose licensing obligations and financial requirements; limit the interest rates, finance charges, and other fees that can be charged; regulate the use of credit reports and the reporting of credit information; impose underwriting requirements; regulate marketing techniques and practices; require the safeguarding of nonpublic information about customers; and regulate servicing practices, including the assessment, collection, foreclosure, claims handling, and investment and interest payments on escrow accounts.

Certain of our mortgage subsidiaries are required to maintain regulatory net worth requirements. Failure to meet minimum capital requirements can initiate certain mandatory actions by federal, state, and foreign agencies that could have a material effect on our results of operations and financial condition. These entities were in compliance with these requirements at December 31, 2010.

Insurance Companies

Our Insurance operations are subject to certain minimum aggregate capital requirements, net asset and dividend restrictions under applicable state and foreign insurance law, and the rules and regulations promulgated by various U.S. and foreign regulatory agencies. Under various state and foreign insurance regulations, dividend distributions may be made only from statutory unassigned surplus, with approvals required from the regulatory authorities for dividends in excess of certain statutory limitations. At December 31, 2010, the maximum dividend that could be paid by the insurance subsidiaries over the next twelve months without prior statutory approval was $190 million.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

23.

Derivative Instruments and Hedging Activities

We enter into interest rate and foreign-currency swaps, futures, forwards, options, and swaptions in connection with our market risk management activities. Derivative instruments are used to manage interest rate risk relating to specific groups of assets and liabilities, including investment securities, MSRs, debt, and deposits. In addition, we use foreign exchange contracts to mitigate foreign-currency risk associated with foreign-currency-denominated debt, foreign exchange transactions, and our net investment in foreign subsidiaries. Our primary objective for utilizing derivative financial instruments is to manage market risk volatility associated with interest rate and foreign-currency risks related to the assets and liabilities.

Interest Rate Risk

We execute interest rate swaps to modify our exposure to interest rate risk by converting certain fixed-rate instruments to a variable rate. We apply hedge accounting for certain derivative instruments used to hedge fixed-rate debt. We monitor our mix of fixed- and variable-rate debt in relation to the rate profile of our assets. When it is cost effective to do so, we may enter into interest rate swaps to achieve our desired mix of fixed- and variable-rate debt. Our qualifying accounting hedges consist of hedges of fixed-rate debt obligations in which receive-fixed swaps are designated as hedges of specific fixed-rate debt obligations.

We enter into economic hedges to mitigate exposure for the following categories.

•

MSRs and retained interests — Our MSRs and retained interest portfolios are generally subject to loss in value when mortgage rates decline. Declining mortgage rates generally result in an increase in refinancing activity that increases prepayments and results in a decline in the value of MSRs and retained interests. To mitigate the impact of this risk, we maintain a portfolio of financial instruments, primarily derivatives that increase in value when interest rates decline. The primary objective is to minimize the overall risk of loss in the value of MSRs due to the change in fair value caused by interest rate changes and their interrelated impact to prepayments.

We use a multitude of derivative instruments to manage the interest rate risk related to MSRs and retained interests. They include, but are not limited to, interest rate futures contracts, call or put options on U.S. Treasuries, swaptions, mortgage-backed securities (MBS) futures, U.S. Treasury futures, interest rate swaps, interest rate floors, and interest rate caps. We monitor and actively manage our risk on a daily basis, and therefore trading volume can be large.

•

Mortgage loan commitments and mortgage and automobile loans held-for-sale — We are exposed to interest rate risk from the time an interest rate lock commitment (IRLC) is made until the time the mortgage loan is sold. Changes in interest rates impact the market price for our loans; as market interest rates decline, the value of existing IRLCs and loans held-for-sale go up and vice versa. Our primary objective in risk management activities related to IRLCs and mortgage loans held-for-sale is to eliminate or greatly reduce any interest rate risk associated with these items.

The primary derivative instrument we use to accomplish the risk management objective for mortgage loans and IRLCs is forward sales of mortgage-backed securities, primarily Fannie Mae or Freddie Mac to-be-announced securities. These instruments typically are entered into at the time the IRLC is made. The value of the forward sales contracts moves in the opposite direction of the value of our IRLCs and mortgage loans held-for-sale. We also use other derivatives, such as interest rate swaps, options, and futures, to economically hedge certain portions of the mortgage portfolio. Nonderivative instruments may also be periodically used to economically hedge the mortgage portfolio, such as short positions on U.S. Treasuries. We monitor and actively manage our risk on a daily basis. We do not apply hedge accounting to this derivative portfolio.

Our automotive whole-loan forward flow agreements, which represented the commitment of financial institutions to purchase U.S. automotive retail assets, expired during 2010. We completed the final transaction under these arrangements in October 2010.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

•

Debt — As part of our previous on-balance sheet securitizations and/or secured aggregation facilities, certain interest rate swaps or interest rate caps were included within consolidated variable interest entities; these swaps or caps were generally required to meet certain rating agency requirements or were required by the facility lender or provider. The interest rate swaps and/or caps are generally entered into when the debt is issued; accordingly, current trading activity on this particular derivative portfolio is minimal. Additionally, effective January 1, 2010, the derivatives that were hedging certain of our off-balance sheet securitization activities are now hedging these securitizations as on-balance sheet securitization activities. We consolidated the off-balance sheet securitizations on January 1, 2010, due to accounting principle changes associated with ASU 2009-17. Refer to Note 1 and Note 11 for additional information related to the recent adoption and subsequent reassessments.

With the exception of a portion of our fixed-rate debt, we do not apply hedge accounting to our derivative portfolio held to economically hedge our debt portfolio. Typically, the significant terms of the interest rate swaps match the significant terms of the underlying debt resulting in an effective conversion of the rate of the related debt.

•

Other — We enter into futures, options, and swaptions to economically hedge our net fixed versus variable interest rate exposure. We also enter into equity options to economically hedge our exposure to the equity markets.

Foreign Currency Risk

We enter into derivative financial instrument contracts to hedge exposure to variability in cash flows related to foreign-currency financial instruments. Currency swaps and forwards are used to hedge foreign exchange exposure on foreign-currency-denominated debt by converting the funding currency to the same currency of the assets being financed. Similar to our interest rate hedges, the swaps are generally entered into or traded concurrent with the debt issuance with the terms of the swap matching the terms of the underlying debt.

Our foreign subsidiaries maintain both assets and liabilities in local currencies; these local currencies are generally the subsidiaries’ functional currencies for accounting purposes. Foreign-currency exchange-rate gains and losses arise when the assets or liabilities of our subsidiaries are denominated in currencies that differ from its functional currency. In addition, our equity is impacted by the cumulative translation adjustments resulting from the translation of foreign subsidiary results; this impact is reflected in our other comprehensive income (loss). We enter into foreign-currency forwards and option-based contracts with external counterparties to hedge foreign exchange exposure on our net investments in foreign subsidiaries. Our net investment hedges are recorded at fair value with changes recorded to other comprehensive income (loss) with the exception of the spot to forward difference that is recorded in current period earnings. The net derivative gain or loss remains in other comprehensive income (loss) until earnings are impacted by the sale or the liquidation of the associated foreign operation.

In addition, we have a centralized lending program to manage liquidity for all of our subsidiary businesses. Foreign-currency-denominated loan agreements are executed with our foreign subsidiaries in their local currencies. We evaluate our foreign-currency exposure resulting from intercompany lending and manage our currency risk exposure by entering into foreign-currency derivatives with external counterparties. Our foreign-currency derivatives are recorded at fair value with changes recorded as income offsetting the gains and losses on the hedged foreign-currency transactions.

Except for our net investment hedges, we generally elected not to treat any foreign-currency derivatives as hedges for accounting purposes principally because the changes in the fair values of the foreign-currency swaps are substantially offset by the foreign-currency revaluation gains and losses of the underlying assets and liabilities.

Credit Risk

Derivative financial instruments contain an element of credit risk if counterparties are unable to meet the terms of the agreements. Credit risk associated with derivative financial instruments is measured as the net replacement cost should the counterparties that owe us under the contract completely fail to perform under the terms of those contracts, assuming no recoveries of underlying collateral as measured by the market value of the derivative financial instrument.

To further mitigate the risk of counterparty default, we maintain collateral agreements with certain counterparties. The agreements require both parties to maintain collateral in the event the fair values of the derivative financial instruments meet established thresholds. In the event that either party defaults on the obligation, the secured party may seize the collateral.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Generally, our collateral arrangements are bilateral such that we and the counterparty post collateral for the value of their total obligation to each other. Contractual terms provide for standard and customary exchange of collateral based on changes in the market value of the outstanding derivatives. The securing party posts additional collateral when their obligation rises or removes collateral when it falls. We also have unilateral collateral agreements whereby we are the only entity required to post collateral.

Certain derivative instruments contain provisions that require us to either post additional collateral or immediately settle any outstanding liability balances upon the occurrence of a specified credit risk-related event. If a credit risk related event had been triggered at December 31, 2010, the amount of additional collateral required to be posted by us would have been insignificant.

We placed cash and securities collateral totaling $1.6 billion and $1.8 billion at December 31, 2010 and 2009, respectively, in accounts maintained by counterparties. We received cash collateral from counterparties totaling $916 million and $432 million at December 31, 2010 and 2009, respectively. The receivables for collateral placed and the payables for collateral received are included on our Consolidated Balance Sheet in other assets and accrued expenses and other liabilities, respectively. In certain circumstances, we receive or post securities as collateral with counterparties. We do not record such collateral received on our Consolidated Balance Sheet unless certain conditions are met. At December 31, 2010 and 2009, we received noncash collateral of $29 million and $107 million, respectively.

Balance Sheet Presentation

The following tables summarize the fair value amounts of derivative instruments reported on our Consolidated Balance Sheet. The fair value amounts are presented on a gross basis, are segregated by derivatives that are designated and qualifying as hedging instruments or those that are not, and are further segregated by type of contract within those two categories.


	2010						2009
	Fair value of derivative contracts in				Notional amount		Fair value of derivative contracts in				Notional amount
December 31, ($ in millions)	receivable position (a)		liability position (b)		Notional amount		receivable position (a)		liability position (b)		Notional amount
Qualifying accounting hedges
Interest rate risk
Fair value accounting hedges	$	443	$	114	$	11,895	$	478	$	47	$	16,938
Foreign exchange risk
Net investment accounting hedges		12		72		4,407		10		41		2,414
Cash flow accounting hedges		—		—		—		—		112		334

Total foreign exchange risk		12		72		4,407		10		153		2,748

Total qualifying accounting hedges		455		186		16,302		488		200		19,686

Economic hedges
Interest rate risk
MSRs and retained interests		2,896		3,118		325,768		805		816		153,818
Mortgage loan commitments and mortgage and automobile loans held-for-sale		232		80		38,788		225		132		45,470
Off-balance sheet securitization activities		—		—		—		139		—		4,440
Debt		160		107		21,269		392		548		53,501
Other		80		129		32,734		50		24		12,629

Total interest rate risk		3,368		3,434		418,559		1,611		1,520		269,858
Foreign exchange risk		143		240		14,359		555		175		22,927

Total economic hedges		3,511		3,674		432,918		2,166		1,695		292,785

Total derivatives	$	3,966	$	3,860	$	449,220	$	2,654	$	1,895	$	312,471

(a)	Reported as other assets on the Consolidated Balance Sheet. Includes accrued interest of $263 million and $314 million at December 31, 2010 and 2009, respectively.

(b)	Reported as accrued expenses and other liabilities on the Consolidated Balance Sheet. Includes accrued interest of $23 million and $91 million at December 31, 2010 and 2009, respectively.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Statement of Income Presentation and Accumulated Other Comprehensive Income

The following table summarizes the location and amounts of gains and losses reported in our Consolidated Statement of Income on derivative instruments.


Year ended December 31, ($ in millions)	2010			2009
Qualifying accounting hedges
Gain (loss) recognized in earnings on derivatives (a)
Interest rate contracts
Interest on long-term debt	$	171		$	(311	)
(Loss) gain recognized in earnings on hedged items (b)
Interest rate contracts
Interest on long-term debt		(129	)		260

Total qualifying accounting hedges		42			(51	)

Economic hedges
Gain (loss) recognized in earnings on derivatives
Interest rate contracts
Servicing asset valuation and hedge activities, net		478			(998	)
Loss on mortgage and automotive loans, net		(332	)		(156	)
Other loss on investments, net		—			(4	)
Other income, net of losses		(91	)		20
Other operating expenses		(9	)		(14	)

Total interest rate contracts		46			(1,152	)

Foreign exchange contracts (c)
Interest on long-term debt		(169	)		(66	)
Other income, net of losses		158			(806	)

Total foreign exchange contracts		(11	)		(872	)

Gain (loss) recognized in earnings on derivatives	$	77		$	(2,075	)

(a)	Amounts exclude gains of $329 million and $535 million for the year ended December 31, 2010 and 2009, respectively, related to interest for qualifying accounting hedges of debt, which are primarily offset by the fixed coupon payment on the long-term debt.

(b)	Amounts exclude gains of $210 million and $144 million related to amortization of deferred basis adjustments on the hedged items for the year ended December 31, 2010 and 2009, respectively.

(c)	Amounts exclude losses of $14 million and gains of $632 million for the year ended December 31, 2010, and 2009, respectively, related to the revaluation of the related foreign-denominated debt or receivable.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following table summarizes derivative instruments used in cash flow hedge accounting relationships and net investment hedge accounting relationships.


Year ended December 31, ($ in millions)	2010			2009
Cash flow hedges
Foreign exchange contracts
Net gain (loss) recognized in other comprehensive income (a)	$	4		$	10

Net investment hedges
Foreign exchange contracts
Gain reclassified from accumulated other comprehensive income to other income, net of losses	$	12		$	—
Loss recorded directly to other income, net of losses (b)		(18	)		—

Total other income, net of losses	$	(6	)	$	—

Loss recognized in other comprehensive income (c)	$	(183	)	$	(32	)

(a)

The amount for the year ended December 31, 2010, represents gains of $111 million related to the effective portion of cash flow hedges offset by the reclassification of accumulated gains totaling $107 million from accumulated other comprehensive income on our Consolidated Balance Sheet to other income, net of losses on the Consolidated Statement of Income. The amount for the year ended December 31, 2009, represents losses of $18 million related to the effective portion of cash flow hedges offset by the reclassification of accumulated losses totaling $28 million from accumulated other comprehensive income on our Consolidated Balance Sheet to other income, net of losses on the Consolidated Statement of Income. The reclassified amounts completely offset the effective portion related to the revaluation of the related foreign-denominated debt. The amount of hedge ineffectiveness on cash flow hedges during the years ended December 31, 2010, and 2009, was insignificant.

(b)	The amounts represent the forward points excluded from the assessment of hedge effectiveness.

(c)

The amounts represent the effective portion of net investment hedges during the years ended December 31, 2010 and 2009. There are offsetting gains recognized in accumulated other comprehensive income of $187 million and $1 million for the years ended December 31, 2010 and 2009, respectively, related to the revaluation of the related net investment in foreign operations. The amount of hedge ineffectiveness on net investment hedges during the years ended December 31, 2010, and 2009, was insignificant.

24.

Income Taxes

Effective June 30, 2009, we converted from a limited liability company (LLC) to a corporation (the Conversion). Prior to the Conversion, most of our U.S. entities were pass-through entities for U.S. federal income tax purposes. U.S. federal, state, and local income taxes were generally not provided for these entities as they were not taxable entities except in a few local jurisdictions that tax LLCs or partnerships. LLC members were required to report their share of our taxable income on their respective income tax returns. As a result of the Conversion, we became subject to corporate U.S. federal, state, and local taxes beginning in the third quarter of 2009.

Deferred tax assets and liabilities result from temporary differences between assets and liabilities measured for financial reporting purposes and those measured for income tax return purposes. The Conversion resulted in a $1.2 billion increase in income tax expense related to the establishment of deferred tax liabilities and assets of $2.5 billion and $1.3 billion, respectively. Our banking, insurance, and foreign subsidiaries generally were and continue to be corporations that are subject to U.S. and foreign income taxes and are required to provide for these taxes. The Conversion did not change the tax status of these subsidiaries.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The significant components of income tax expense (benefit) from continuing operations were as follows.


Year ended December 31, ($ in millions)	2010			2009			2008
Current income tax expense
U.S. federal	$	12		$	146		$	148
Foreign		474			175			168
State and local		58			14			27

Total current expense		544			335			343

Deferred income tax benefit
U.S. federal		(6	)		(109	)		(166	)
Foreign		(378	)		(34	)		(279	)
State and local		(7	)		(118	)		(34	)

Total deferred benefit		(391	)		(261	)		(479	)

Total income tax expense (benefit) from continuing operations	$	153		$	74		$	(136	)

A reconciliation of the statutory U.S. federal income tax rate to our effective income tax rate for continuing operations is shown in the following table.


Year ended December 31,	2010			2009			2008
Statutory U.S. federal tax rate		35.0	%		35.0	%		35.0	%
Change in tax rate resulting from
Changes in unrecognized tax benefits		3.2			(0.1	)		—
State and local income taxes, net of federal income tax benefit		0.2			4.1			0.6
Effect of valuation allowance change		(12.2	)		(30.7	)		2.9
Foreign income tax rate differential		(6.5	)		(0.7	)		0.2
Taxes on unremitted earnings of subsidiaries		(6.0	)		0.4			—
Tax-exempt income		(0.5	)		0.2			(0.2	)
Foreign capital loss		(0.1	)		15.0			—
Change in tax status		—			(17.9	)		—
LLC results not subject to federal or state income taxes		—			(7.8	)		(41.2	)
Other		(0.1	)		1.4			(0.2	)

Effective tax rate		13.0	%		(1.1	)%		(2.9	)%

At December 31, 2010, we had U.S. federal and state net operating and capital loss carryforwards of $1.4 billion and $2.3 billion, respectively. The federal net operating loss carryforwards expire in the years 2025–2030. The capital loss carryforwards expire in the years 2013–2015. The corresponding expiration periods for the state operating and capital loss carryforwards are 2014–2030 and 2014–2015, respectively. Additionally, foreign tax credits carryforwards of $123 million are available as of December 31, 2010, in the United States and expire in the years 2012–2020.

Also, at December 31, 2010, we had foreign net operating loss carryforwards of $1.7 billion. The foreign operating loss carryforwards of $1.1 billion in the United Kingdom, Austria, Belgium, Brazil, Denmark, and Sweden have an indefinite carryforward period. The Canadian loss carryforwards of $0.4 billion expire in the years 2024–2030. The remaining net operating loss carryforwards of $0.2 billion expire in the years 2011–2025.

We assessed the available positive and negative evidence to estimate if sufficient future taxable income of the appropriate character will be generated to utilize the existing deferred tax assets. A significant piece of objective negative evidence evaluated for certain tax jurisdictions that have legal entities with net deferred tax assets was the cumulative loss incurred over the three-year period ended December 31, 2010 and the absence of any available tax-planning strategies. This objective negative evidence outweighed the positive evidence, which was more subjective in nature.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Based on this assessment, valuation allowances have been recorded against our domestic net deferred tax assets and certain international net deferred tax assets. However, the amount of the net deferred tax asset considered realizable could change in the future depending on actual taxable income or capital gains and other relevant factors. In particular, it is reasonably possible that we will reverse, within the next twelve months, a valuation allowance recorded on net deferred tax assets of our Canadian subsidiary totaling $92 million at December 31, 2010. Included within tax expense was a benefit of $144 million in 2010, and charges of $2.1 billion in 2009 and $139 million in 2008 to adjust valuation allowances reflecting our judgment that certain tax assets will not be realized.

The significant components of deferred tax assets and liabilities are reflected in the following table.


December 31, ($ in millions)	2010			2009
Deferred tax assets
Tax loss carryforwards	$	1,728		$	1,121
Provision for loan losses		753			1,702
Mark-to-market on consumer loans		655			160
Contingency		223			207
Sales of finance receivables and loans		205			22
State and local taxes		170			242
Unearned insurance premiums		151			184
Tax credit carryforwards		132			18
Basis difference in subsidiaries		82			917
Other		363			330

Gross deferred tax assets		4,462			4,903

Valuation allowance		(1,993	)		(2,503	)

Net deferred tax assets		2,469			2,400

Deferred tax liabilities
Lease transactions		1,545			1,556
Deferred acquisition costs		332			401
Unrealized gains on securities		304			368
Debt transactions		84			—
MSRs		54			278
Tax on unremitted earnings		46			19
Other		101			80

Gross deferred tax liabilities		2,466			2,702

Net deferred tax assets (liabilities)	$	3		$	(302	)

Foreign pretax income totaled $0.6 billion in 2010, and foreign pretax losses totaled $1.7 billion and $2.2 billion in 2009 and 2008, respectively. Foreign pretax income is subject to U.S. taxation when effectively repatriated. Through the Conversion date, our U.S. incorporated insurance and banking operations provided federal income taxes on the undistributed earnings of foreign subsidiaries to the extent these earnings were not deemed indefinitely reinvested outside the United States. It was the responsibility of our members to provide for federal income taxes on the undistributed foreign subsidiary earnings of our disregarded entities to the extent the earnings was not indefinitely reinvested. Subsequent to the Conversion date, all of our domestic subsidiaries fully provide for federal income taxes on the undistributed earnings of foreign subsidiaries except to the extent these earnings are indefinitely reinvested outside the United States. At December 31, 2010, $4.1 billion of accumulated undistributed earnings of foreign subsidiaries were indefinitely reinvested. Quantification of the unrecognized deferred tax liability for temporary differences related to investments in foreign subsidiaries that are essentially permanent in duration is not practicable.

Tax benefits related to positions considered uncertain are recognized only if, based on the technical merits of the issue, it is more likely than not that we will sustain the position and then at the largest amount that is greater than 50% likely to be realized upon ultimate settlement.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following table provides a reconciliation of the beginning and ending amount of unrecognized tax benefits.


($ in millions)	2010			2009			2008
Balance at January 1,	$	172		$	150		$	155
Additions based on tax positions related to the current year		69			27			8
Additions for tax positions of prior years		3			24			33
Reductions for tax positions of prior years		(23	)		(24	)		(19	)
Settlements		(9	)		(28	)		(2	)
Expiration of statute of limitations		(2	)		—			—
Foreign-currency translation adjustments		4			23			(25	)

Balance at December 31,	$	214		$	172		$	150

At December 31, 2010, 2009, and 2008, the balance of unrecognized tax benefits that, if recognized, would affect our effective tax rate is $199 million, $157 million, and $148 million, respectively. Included in the unrecognized tax benefits balances are some items, the recognition of which would not affect the effective tax rate, such as the tax effect of certain temporary differences, the portion of gross state unrecognized tax benefits that would be offset by the tax benefit of the associated federal deduction and the portion of gross foreign unrecognized tax benefits that would be offset by tax reductions in other jurisdictions.

We recognize accrued interest and penalties related to uncertain income tax positions in interest expense and other operating expenses, respectively. For the years ended December 31, 2010, 2009, and 2008, $26 million, $12 million, and $25 million, respectively, were accrued for interest and penalties with the cumulative accrued balance totaling $201 million at December 31, 2010; $170 million at December 31, 2009; and $132 million at December 31, 2008. In addition, the accrued balances for interest and penalties were impacted by translation adjustments on those denominated in foreign currencies.

We anticipate the examination of various U.S. income tax returns along with the examinations by various foreign, state, and local jurisdictions will be completed within the next twelve months. As such, it is reasonably possible that certain tax positions may be settled and the unrecognized tax benefits would decrease by $121 million which includes interest and penalties.

We file tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. For our most significant operations, at December 31, 2010, the following summarizes the oldest tax years that remain subject to examination.


Jurisdiction	Tax year
United States		2004
Canada		2003
Germany		2007
United Kingdom		1995
Mexico		2004
Brazil		2005

25.

Employee Benefit and Compensation Plans

Defined Contribution Plan

A significant number of our employees are covered by defined contribution plans. Employer contributions vary based on criteria specific to each individual plan and amounted to $62 million, $61 million, and $76 million in 2010, 2009, and 2008, respectively. These costs were recorded in compensation and benefit expenses in our Consolidated Statement of Income. We expect contributions for 2011 to be similar to contributions made in 2010.

Defined Benefit Pension Plan

Certain of our employees are eligible to participate in separate retirement plans that provide for pension payments upon retirement based on factors such as length of service and salary. In recent years, we have transferred, frozen, or terminated a significant number of our other defined benefit plans. During 2009, we began the process of terminating certain of our international pension plans that resulted in a minimal impact on earnings. All income and expense noted for pension accounting was recorded in compensation and benefits expense in our Consolidated Statement of Income.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following summarizes information related to our pension plans.


Year ended December 31, ($ in millions)	2010			2009
Projected benefit obligation	$	509		$	457
Fair value of plan assets		388			356

Underfunded status	$	(121	)	$	(101	)

The underfunded status of our pension plans increased in 2010 primarily due to annual changes in actuarial assumptions, in particular, the discount rate, which were partially offset by an improvement of the fair value of plan assets as a result of market performance. The underfunded position is recognized on the Consolidated Balance Sheet and the change in the underfunded position was recorded in other comprehensive income (loss).

Net periodic pension expense (income) includes curtailment, settlement, and other gains and losses and was minimal for 2010, 2009, and 2008.

Other Postretirement Benefits

Certain of our subsidiaries participated in various postretirement medical, dental, vision, and life insurance plans. We have provided for certain amounts associated with estimated future postretirement benefits other than pensions and characterized such amounts as other postretirement benefits. Other postretirement benefits expense (income), which is recorded in compensation and benefits expense in our Consolidated Statement of Income, was minimal in 2010, 2009, and 2008. We expect our other postretirement benefit expense to continue to be minimal in future years.

Share-based Compensation Plans

Based on our transactions with the Treasury during 2009, we are required to comply with the limitations on executive pay as determined by the Special Master of TARP Compensation (Special Master). As such, we established Deferred Stock Units (DSUs) and Incentive Restricted Stock Units (IRSUs) as forms of compensation to our senior executives, which were subsequently approved by the Special Master. We also grant Restricted Stock Units (RSUs) to executives under the Long-Term Equity Compensation Incentive Plan (LTIP). Each of our approved compensation plans and awards were designed to provide our executives with an opportunity to share in the future growth in value of Ally, which is necessary to attract and retain key executives. These compensation plans are share-based compensation plans accounted for under ASC 718, Compensation — Stock Compensation.

During 2010, Ally converted the awards associated with our share-based compensation plans from basis points to phantom shares, which resulted in each basis point being converted to approximately 80 phantom shares. This change did not affect the vesting, fair value, or any other features of the awards. Also in 2010, Ally amended its LTIP plan documents for retirement-eligible individuals. Individuals meeting the retirement criteria are now eligible to continue with the established vesting and payment schedule for their outstanding awards, should they retire. As such, Ally recorded an additional $6 million of compensation expense in 2010, which would have otherwise been recognized in future periods.

In December 2010, as part of the annual valuation process as required by the LTIP plan, Ally remeasured the award value for the outstanding stock awards from $7,812 per share to $10,342 per share. The new value was determined based on the share valuation used in the MCP conversion transaction with the Treasury. See further discussion in Note 20. The increase in award value was approved by the Compensating, Nominating and Governance Committee (CNG Committee) and the Ally Board of Directors and resulted in additional compensation expense for RSU, DSU, and IRSU awards of $15 million, $25 million, and $3 million, respectively, recognized in December 2010.

RSU awards are incentive awards granted to executives as phantom shares of Ally. The majority of awards granted in 2008 and 2009 vest ratably on an annual basis based on continued service on December 31 with the final tranche vesting on December 31, 2012. Awards granted in 2010 vest ratably over a three-year period starting on the date the award was issued with the majority of the awards fully vesting in February 2013. Participants have the option at grant date to defer the valuation and payout for any tranche until the final year of the award. Under applicable accounting rules, the awards require liability treatment and are remeasured quarterly at fair value until they are paid. The compensation costs related to these awards are ratably charged to expense over the applicable service period. Changes in fair value related to the portion of the awards that

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

have vested and have not been paid are recognized in earnings in the period in which the changes occur. The fair value of the awards granted during 2008 was diluted by the capital transactions that occurred at the end of 2008. The total RSU awards outstanding at December 31, 2010, represented approximately 23,321 shares with 6,001 shares awarded during 2008, 7,249 shares awarded during 2009, and 10,071 shares awarded during 2010. The total RSU awards outstanding at December 31, 2009, represented approximately 22,455 shares with 13,265 shares awarded during 2008 and 9,190 shares awarded during 2009. We recognized compensation expense of $63 million and $25 million for the years ended December 31, 2010 and 2009, respectively.

DSU awards are granted to senior executives as phantom shares of Ally and are included as part of their base salary. The DSU awards are granted ratably each pay period throughout the year, vest immediately upon grant, and are paid in cash ratably each year after grant for five years. Under applicable accounting rules, the awards require liability treatment and are remeasured quarterly at fair value until they are paid, with each change in value fully charged to compensation expense in the period in which the change occurs. The total DSU awards outstanding at December 31, 2010 and 2009, represented approximately 10,035 shares and 4,555 shares respectively. We recognized compensation expense of $75 million and $35 million for the years ended December 31, 2010 and 2009, respectively, for the outstanding awards.

IRSU awards are incentive awards granted to senior executives as phantom shares of Ally. The IRSU awards cliff vest three years from the date of grant based on continued service with Ally. The IRSU awards are paid out in 25% increments once we pay the Treasury a corresponding 25% increment of our TARP obligations. A participant must be employed by Ally at the time of the payback to receive a payout for their award. The payouts are based on the fair value of the phantom shares at the time of payback. Under applicable accounting rules, the awards require liability treatment and are remeasured quarterly at fair value until they are paid. The compensation costs related to these awards are ratably charged to expense over the requisite service period. Changes in fair value relating to the portion of the awards that have vested and have not been paid are recognized in earnings in the period in which the changes occur. The total IRSU awards outstanding at December 31, 2010 and 2009, represented approximately 4,996 shares and 3,596 shares respectively. We recognized compensation expense of $10 million and $1 million for the years ended December 31, 2010 and 2009, respectively, for the outstanding awards.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

26.

Related Party Transactions

Related party activities represent transactions with GM, FIM Holdings LLC (FIM Holdings), and affiliated companies. GM and FIM Holdings have both a direct and indirect ownership interest in Ally.

Balance Sheet

A summary of the balance sheet effect of transactions with GM, FIM Holdings, and affiliated companies follows.


December 31, ($ in millions)	2010		2009
Assets
Available-for-sale investment in asset-backed security — GM (a)	$	—	$	20
Secured
Finance receivables and loans, net
Commercial and industrial — Automobile
Wholesale automotive financing — GM (b)		253		280
Term loans to dealers — GM (b)		48		71
Lending receivables — affiliates of FIM Holdings		49		54
Notes receivable from GM (c)		438		884
Investment in operating leases, net — GM (d)		65		69
Other assets
Other — GM		22		102

Total secured		875		1,460
Unsecured
Commercial and industrial — Automobile
Notes receivable from GM (c)		45		27
Other assets
Subvention receivables (rate and residual support) — GM		200		165
Lease pull-ahead receivable — GM		1		21
Other — GM		22		26

Total unsecured		268		239
Liabilities
Unsecured short-term borrowings
Notes payable to GM	$	25	$	154
Accrued expenses and other liabilities
Wholesale payable — GM		113		161
Other payables — GM		89		18

(a)	In November 2006, Ally retained an investment in a note secured by operating lease assets transferred to GM. As part of the transfer, Ally provided a note to a trust, a wholly owned subsidiary of GM. The note was classified in investment securities on the Consolidated Balance Sheet.

(b)	Represents wholesale financing and term loans to certain dealerships wholly owned by GM or in which GM has an interest. The loans are generally secured by the underlying vehicles or assets of the dealerships.

(c)

Represents wholesale financing we provide to GM for vehicles, parts, and accessories in which GM retains title while consigned to us or dealers primarily in Italy and Germany in 2010 and in the United Kingdom and Italy in 2009. The financing to GM remains outstanding until the title is transferred to Ally or the dealers. The amount of financing provided to GM under this arrangement varies based on inventory levels. These loans are secured by the underlying vehicles or other assets (except loans relating to parts and accessories in Italy).

(d)	Primarily represents buildings classified as operating lease assets that are leased to GM-affiliated entities. These leases are secured by the underlying assets.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Statement of Income

A summary of the income statement effect of transactions with GM, FIM Holdings, and affiliated companies follows.


Year ended December 31, ($ in millions)	2010			2009			2008
Net financing revenue
GM and affiliates lease residual value support — North American operations (a)	$	(82	)	$	195		$	779
GM and affiliates rate support — North American operations		674			770			985
Wholesale subvention and service fees from GM		189			215			304
Interest earned on wholesale automotive financing		9			14			25
Interest earned on term loans to dealers		2			3			4
Interest expense on loans with GM		(4	)		(46	)		(52	)
Interest earned on notes receivable from GM
Interest on notes receivable from GM and affiliates		9			63			122
Interest on wholesale settlements (b)		178			149			103
Interest income (expense) on loans with FIM Holdings affiliates, net		4			3			(40	)
Consumer lease payments from GM (c)		15			78			66
Other revenue
Insurance premiums earned from GM		155			159			242
Service fees on transactions with GM		8			6			6
Revenues from GM-leased properties, net		2			9			13
Losses on model home asset sales with an affiliate of Cerberus		—			—			(27	)
Other (d)		1			(3	)		5
Servicing fees
U.S. automobile operating leases (e)		2			25			85
Servicing asset valuation
Losses on sales of securitized excess servicing to Cerberus		—			—			(24	)
Expense
Off-lease vehicle selling expense reimbursement (f)		(14	)		(26	)		(47	)
Other expenses for exclusivity and royalty fees and other services (g)		130			122			206

(a)	Represents total amount of residual support and risk sharing (incurred) earned under the residual support and risk-sharing programs.

(b)	The settlement terms related to the wholesale financing of certain GM products are at shipment date. To the extent that wholesale settlements with GM are made before the expiration of transit, we receive interest from GM.

(c)

GM sponsors lease pull-ahead programs whereby consumers are encouraged to terminate lease contracts early in conjunction with the acquisition of a new GM vehicle with the customer’s remaining payment obligation waived. For certain programs, GM compensates us for the waived payments adjusted based on remarketing results associated with the underlying vehicle.

(d)	Includes income or (expense) related to derivative transactions that we enter into with GM as counterparty.

(e)	Represents servicing income related to automobile leases distributed as a dividend to GM on November 22, 2006.

(f)	An agreement with GM provides for the reimbursement of certain selling expenses incurred by us on off-lease vehicles sold by GM at auction.

(g)	We reimburse GM for certain services, rent, and marketing expenses provided to us. This amount includes rental payments for our primary executive and administrative offices located in the Renaissance Center in Detroit, Michigan.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Statement of Changes in Equity

A summary of the changes to the statement of changes in equity related to transactions with GM, FIM Holdings, and affiliated companies follows.


Year ended December 31, ($ in millions)	2010			2009		2008
Equity
Capital contributions received (a)	$	—		$	1,280	$	758
Dividends paid to shareholders/members (b)		11			393		79
Preferred stock dividends — GM		102			128		—
Other (c)		(74	)		—		—

(a)

On January 16, 2009, we completed a $1.25 billion rights offering pursuant to which we issued additional common membership interests to FIM Holdings and a subsidiary of GM. On December 29, 2008, GM and an affiliate of Cerberus Capital Management contributed to Ally $750 million subordinated participations in a $3.5 billion senior secured credit facility between Ally and ResCap in exchange for additional common membership interests in Ally.

(b)

Pursuant to an operating agreement, certain of our shareholders were permitted distributions to pay the taxes they incurred from ownership of their Ally interests prior to our conversion from a tax partnership to a corporation. In March 2009, we executed a transaction that had 2008 tax-reporting implications for our shareholders. In accordance with the operating agreement, the approvals of both our Ally Board of Directors and the Treasury were obtained in advance for the payment of tax distributions to our shareholders. In 2010, the amount distributed to GM was $11 million. This represented an accrual for GM tax settlements and refunds received related to tax periods prior to the November 30, 2006, sale by GM of 51% interest in Ally (Sale Transactions). Amounts distributed to GM and FIM Holdings were $220 million and $173 million, respectively, for the year ended December 31, 2009. The 2009 amount includes $55 million of remittances to GM for tax settlements and refunds received related to tax periods prior to the Sale Transactions. The 2008 amounts primarily represent remittances to GM for tax settlements and refunds received related to tax periods prior to the Sale Transactions as required by the terms of the Purchase and Sale Agreement between GM and FIM Holdings.

(c)	Represents a reduction of the estimated payment accrued for tax distributions as a result of the completion of the GMAC LLC U.S. Return of Partnership Income for the tax period January 1, 2009, through June 30, 2009.

GM, GM dealers, and GM-related employees compose a significant portion of our customer base, and our Global Automotive Service operations are highly dependent on GM production and sales volume. As a result, a significant adverse change in GM’s business, including significant adverse changes in GM’s liquidity position and access to the capital markets, the production or sale of GM vehicles, the quality or resale value of GM vehicles, the use of GM marketing incentives, GM’s relationships with its key suppliers, GM’s relationship with the United Auto Workers and other labor unions, and other factors impacting GM or its employees could have a significant adverse effect on our profitability and financial condition.

We provide vehicle financing through purchases of retail automobile and lease contracts with retail customers of GM dealers. We also finance the purchase of new and used vehicles by GM dealers through wholesale financing, extend other financing to GM dealers, provide fleet financing for GM dealers to buy vehicles they rent or lease to others, provide wholesale vehicle inventory insurance to GM dealers, provide automotive extended service contracts through GM dealers, and offer other services to GM dealers. GM’s level of automobile production and sales directly impacts our financing and leasing volume; the premium revenue for wholesale vehicle inventory insurance; the volume of automotive extended service contracts; and the profitability and financial condition of the GM dealers to whom we provide wholesale financing, term loans, and fleet financing. In addition, the quality of GM vehicles affects our obligations under automotive extended service contracts relating to such vehicles. Further, the resale value of GM vehicles, which may be impacted by various factors relating to GM’s business such as brand image, the number of new GM vehicles produced, the number of used vehicles remarketed, or reduction in core brands, affects the remarketing proceeds we receive upon the sale of repossessed vehicles and off-lease vehicles at lease termination.

At December 31, 2010, we had an estimated $875 million in secured credit exposure, which included primarily wholesale vehicle financing to GM-owned dealerships, notes receivable from GM, and vehicles leased directly to GM. We further had $691 million in unsecured exposure, which included estimates of payments from GM related to residual support and risk-sharing agreements. Under the terms of certain agreements between Ally and GM, Ally has the right to offset certain of its exposures to GM against amounts Ally owes to GM.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Retail and Lease Programs

GM may elect to sponsor incentive programs (on both retail contracts and operating leases) by supporting financing rates below the standard market rates at which we purchase retail contracts and leases. These marketing incentives are also referred to as rate support or subvention. When GM utilizes these marketing incentives, they pay us the present value of the difference between the customer rate and our standard rate at contract inception, which we defer and recognize as a yield adjustment over the life of the contract.

GM may also sponsor residual support programs as a way to lower customer monthly payments. Under residual support programs, the customer’s contractual residual value is adjusted above our standard residual values. In addition, under risk-sharing programs and eligible contracts, GM shares equally in residual losses at the time of the vehicle’s disposal to the extent that remarketing proceeds are below our standard residual values (limited to a floor).

For contracts where we are entitled to receive residual support, GM pays the present value of the expected residual support owed to us at contract origination as opposed to after contract termination at the time of sale of the related vehicle. The residual support amount GM ultimately owes us is finalized as the leases actually terminate. Under the terms of the residual support program, in cases where the estimate was incorrect, GM may be obligated to pay us, or we may be obligated to reimburse GM.

Based on the December 31, 2010, outstanding North American operating lease and retail balloon portfolios, the additional maximum contractual amount that could be paid by GM under the residual support programs was $475 million and would be paid only in the unlikely event that the proceeds from the entire portfolio of lease assets were lower than both the contractual residual value and our standard residual rates.

Based on the December 31, 2010, outstanding North American operating lease portfolio, the maximum contractual amount that could be paid under the risk-sharing arrangements was $996 million and would be paid only in the unlikely event that the proceeds from all outstanding lease vehicles were lower than our standard residual rates and no higher than the contractual risk-sharing floor.

Retail and lease contracts acquired by us that included rate subvention from GM as a percentage of total new GM retail and lease contracts acquired, were as follows.


December 31,	2010			2009
GM and affiliates subvented contracts acquired
North American operations		51	%		69	%
International operations (a)		43	%		53	%

(a)	Represents subvention for continuing operations only.

Distribution of Operating Lease Assets

In connection with the Sale Transactions, we transferred to GM certain U.S. lease assets, related secured debt, and other assets, respectively. We retained an investment in a note, which had an immaterial balance at December 31, 2010, which was secured by the lease assets distributed to GM. We continue to service the assets and related secured debt on behalf of GM and receive a fee for this service. As required for other securitization transactions, we are obligated as servicer to repurchase any lease asset that is in breach of any of the covenants of the securitization documents. In addition, in a number of the transactions securitizing the lease assets transferred to GM, the trusts issued one or more series of floating-rate debt obligations and entered into primary derivative transactions to remove the market risk associated with funding the fixed payment lease assets with floating interest rate debt. To facilitate these securitization transactions, we entered into secondary derivative transactions with the primary derivative counterparties essentially offsetting the primary derivatives. As part of the distribution, GM assumed the rights and obligations of the primary derivatives whereas we retained the secondary, leaving both companies exposed to market value movements of their respective derivatives. Ally and GM subsequently entered into derivative transactions with each other intended to offset the exposure each party has to its component of the primary and secondary derivatives. At December 31, 2010, these derivative transactions were expired.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Exclusivity Arrangement

On November 30, 2006, and in connection with the Sale Transactions, GM and Ally entered into several service agreements that codified the mutually beneficial historical relationship between the companies. One such agreement was the United States Consumer Financing Services Agreement (the Financing Services Agreement). The Financing Services Agreement, among other things, provided that subject to certain conditions and limitations, whenever GM offers vehicle financing and leasing incentives to customers (e.g., lower interest rates than market rates), it would do so exclusively through Ally. This requirement is effective through November 2016, and in consideration for this, Ally pays to GM an annual exclusivity fee and was required to meet certain targets with respect to consumer retail and lease financings of new GM vehicles.

Effective December 29, 2008, and in connection with the approval of Ally’s application to become a bank holding company, GM and Ally modified certain terms and conditions of the Financing Services Agreement. Certain of these amendments include the following : (1) for a two-year period, GM can offer retail financing incentive programs through a third-party financing source under certain specified circumstances and, in some cases, subject to the limitation that pricing offered by such third party meets certain restrictions, and after such two-year period GM can offer any such incentive programs on a graduated basis through third parties on nonexclusive, side-by-side basis with Ally, provided that pricing of such third parties meets certain requirements; (2) Ally will have no obligation to provide operating lease products; and (3) Ally will have no targets against which it could be assessed penalties. After December 31, 2013, GM will have the right to offer retail financing incentive programs through any third-party financing source, including Ally, without any restrictions or limitations. A primary objective of the Financing Services Agreement continues to be supporting distribution and marketing of GM products.

Royalty Agreement

For certain insurance products, GM and Ally have entered into the Intellectual Property License Agreement for the right of Ally to use the GM name on certain insurance products. In exchange, Ally will pay to GM a minimum annual guaranteed royalty fee of $15 million.

Other

GM provides payment guarantees on certain commercial assets we have outstanding with certain third-party customers. At December 31, 2010 and 2009, commercial obligations guaranteed by GM were $122 million and $68 million, respectively. Additionally, GM is bound by repurchase obligations to repurchase new vehicle inventory under certain circumstances, such as dealer franchise termination.

27.

Fair Value

Fair Value Measurements

For purposes of this disclosure, fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. Fair value is based on the assumptions market participants would use when pricing an asset or liability. Additionally, entities are required to consider all aspects of nonperformance risk, including the entity’s own credit standing, when measuring the fair value of a liability.

GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels.


Level 1		Inputs are quoted prices in active markets for identical assets or liabilities at the measurement date. Additionally, the entity must have the ability to access the active market, and the quoted prices cannot be adjusted by the entity.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


Level 2		Inputs are other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices in active markets for similar assets or liabilities; quoted prices in inactive markets for identical or similar assets or liabilities; or inputs that are observable or can be corroborated by observable market data by correlation or other means for substantially the full term of the assets or liabilities.

Level 3		Unobservable inputs are supported by little or no market activity. The unobservable inputs represent management’s best assumptions of how market participants would price the assets or liabilities. Generally, Level 3 assets and liabilities are valued using pricing models, discounted cash flow methodologies, or similar techniques that require significant judgment or estimation.

Transfers		Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfer occurred. There were no significant transfers between any levels during the year ended December 31, 2010.

Following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models, and significant assumptions utilized.

•

Trading securities — Trading securities are recorded at fair value. Our portfolio includes U.S. Treasury, asset-backed, and mortgage-backed securities (including senior and subordinated interests) and may be investment- grade, noninvestment grade, or unrated securities. We base our valuation of trading securities on observable market prices when available; however, observable market prices may not be available for a significant portion of these assets due to illiquidity in the markets. When observable market prices are not available, valuations are primarily based on internally developed discounted cash flow models (an income approach) that use assumptions consistent with current market conditions. The valuation considers recent market transactions, experience with similar securities, current business conditions, and analysis of the underlying collateral, as available. To estimate cash flows, we utilize various significant assumptions including market observable inputs (e.g., forward interest rates) and internally developed inputs (e.g., prepayment speeds, delinquency levels, and credit losses).

•

Available-for-sale securities — Available-for-sale securities are carried at fair value primarily based on observable market prices. If observable market prices are not available, our valuations are based on internally developed discounted cash flow models (an income approach) that use a market-based discount rate and consider recent market transactions, experience with similar securities, current business conditions, and analysis of the underlying collateral, as available. To estimate cash flows, we are required to utilize various significant assumptions including market observable inputs (e.g., forward interest rates) and internally developed inputs (including prepayment speeds, delinquency levels, and credit losses).

•

Loans held-for-sale, net — Our automobile loans held-for-sale are accounted for at the lower-of-cost or fair value. The automobile loans at fair value are presented in the nonrecurring fair value measurement table. We based our valuation of automobile loans held-for-sale on internally developed discounted cash flow models (an income approach) and classified all these loans as Level 3. These valuation models estimate the exit price we expect to receive in the loan’s principal market, which depending on characteristics of the loans may be the whole-loan market or the securitization market. Although we utilize and give priority to market observable inputs, such as interest rates and market spreads within these models, we are typically required to utilize internal inputs, such as prepayment speeds, credit losses, and discount rates. While numerous controls exist to calibrate, corroborate, and validate these internal inputs, these internal inputs require the use of judgment and can have a significant impact on the determination of the loan’s value. Accordingly, we classified all automobile loans held-for-sale as Level 3.

Our mortgage loans held-for-sale are accounted for at either fair value because of fair value option elections or they are accounted for at the lower-of-cost or fair value. Mortgage loans held-for-sale are typically pooled together and sold into certain exit markets depending on underlying attributes of the loan, such as GSE eligibility (domestic

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

only), product type, interest rate, and credit quality. Two valuation methodologies are used to determine the fair value of mortgage loans held-for-sale. The methodology used depends on the exit market as described below.

Level 2 mortgage loans — This includes all mortgage loans measured at fair value on a recurring basis due to fair value option elections. Refer to the section in this note titled Fair Value Option of Financial Assets and Financial Liabilities for additional information. Level 2 also includes all nonagency domestic loans or international loans where recently negotiated market prices for the loan pool exist with a counterparty (which approximates fair value) or quoted market prices for similar loans are available. As these valuations are derived from quoted market prices, we classify these valuations as Level 2 in the fair value disclosures.

Level 3 mortgage loans — This includes all mortgage loans measured at fair value on a nonrecurring basis. The fair value of these loans was determined using internally developed valuation models because observable market prices were not available. These valuation models estimate the exit price we expect to receive in the loan’s principal market, which depending on characteristics of the loan may be the whole-loan or securitization market. Although we utilize and give priority to market observable inputs such as interest rates and market spreads within these models, we are typically required to utilize internal inputs, such as prepayment speeds, credit losses, and discount rates. While numerous controls exist to calibrate, corroborate, and validate these internal inputs, the generation of these internal inputs requires the use of judgment and can have a significant impact on the determination of the loan’s fair value. Accordingly, we classify these valuations as Level 3 in the fair value disclosures.

•

Consumer mortgage finance receivables and loans, net — We elected the fair value option for certain consumer mortgage finance receivables and loans. The elected mortgage loans collateralized on-balance sheet securitization debt in which we estimated credit reserves pertaining to securitized assets that could have exceeded or already had exceeded our economic exposure. We also elected the fair value option for all mortgage securitization trusts required to be consolidated due to the adoption of ASU 2009-17. The elected mortgage loans represent a portion of the consumer finance receivable and loans consolidated upon adoption of ASU 2009-17. The balance that was not elected was reported on the balance sheet at the principal amount outstanding, net of charge-offs, allowance for loan losses, and premiums or discounts.

Securitized mortgage loans are legally isolated from us and are beyond the reach of our creditors. The loans are measured at fair value using a portfolio approach or an in-use premise. Values of loans held on an in-use basis may differ considerably from loans held-for-sale that can be sold in the whole-loan market. This difference arises primarily due to the liquidity of the asset- and mortgage-backed securitization market and is evident in the fact that spreads applied to lower rated asset- and mortgage-backed securities are considerably wider than spreads observed on senior bonds classes and in the whole-loan market. The objective in fair valuing the loans and related securitization debt is to account properly for our retained economic interest in the securitizations. As a result of reduced liquidity in capital markets, values of both these loans and the securitized bonds are expected to be volatile. Since this approach involves the use of significant unobservable inputs, we classified all the mortgage loans elected under the fair value option as Level 3, at December 31, 2010 and 2009. Refer to the section within this note titled Fair Value Option of Financial Assets and Financial Liabilities for additional information.

•

Commercial finance receivables and loans, net — We evaluate our commercial finance receivables and loans, net, for impairment. We generally base the evaluation on the fair value of the underlying collateral supporting the loans when expected to be the sole source of repayment. When the carrying value exceeds the fair value of the collateral, an impairment loss is recognized and reflected as a nonrecurring fair value measurement.

•

MSRs — We typically retain MSRs when we sell assets into the secondary market. MSRs currently do not trade in an active market with observable prices; therefore, we use internally developed discounted cash flow models (an income approach) to estimate the fair value of MSRs. These internal valuation models estimate net cash flows based on internal operating assumptions that we believe would be used by market participants combined with market-based assumptions for loan prepayment rates, interest rates, and discount rates that we believe approximate yields required by investors in this asset. Cash flows primarily include servicing fees, float income, and late fees in

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

each case less operating costs to service the loans. The estimated cash flows are discounted using an option-adjusted spread-derived discount rate.

•

Interests retained in financial asset sales — Interests retained in financial asset sales are carried at fair value. The interests retained are in securitization trusts and deferred purchase prices on the sale of whole-loans. Due to inactivity in the market, valuations are based on internally developed discounted cash flow models (an income approach) that use a market-based discount rate. The valuation considers recent market transactions, experience with similar assets, current business conditions, and analysis of the underlying collateral, as available. To estimate cash flows, we utilize various significant assumptions, including market observable inputs (e.g., forward interest rates) and internally developed inputs (e.g., prepayment speeds, delinquency levels, and credit losses).

•

Derivative instruments — We enter into a variety of derivative financial instruments as part of our risk management strategies. Certain of these derivatives are exchange traded, such as Eurodollar futures, or traded within highly active dealer markets, such as agency to-be-announced securities. To determine the fair value of these instruments, we utilize the exchange price or dealer market price for the particular derivative contract; therefore, we classified these contracts as Level 1.

We also execute over-the-counter derivative contracts, such as interest rate swaps, swaptions, forwards, caps, and floors. We utilize third-party-developed valuation models that are widely accepted in the market to value these over-the-counter derivative contracts. The specific terms of the contract and market observable inputs (such as interest rate forward curves and interpolated volatility assumptions) are entered into the model. We classified these over-the-counter derivative contracts as Level 2 because all significant inputs into these models were market observable.

We also hold certain derivative contracts that are structured specifically to meet a particular hedging objective. These derivative contracts often are utilized to hedge risks inherent within certain on-balance sheet securitizations. To hedge risks on particular bond classes or securitization collateral, the derivative’s notional amount is often indexed to the hedged item. As a result, we typically are required to use internally developed prepayment assumptions as an input into the model to forecast future notional amounts on these structured derivative contracts. Accordingly, we classified these derivative contracts as Level 3.

We are required to consider all aspects of nonperformance risk, including our own credit standing, when measuring fair value of a liability. We consider our credit risk and the credit risk of our counterparties in the valuation of derivative instruments through a credit valuation adjustment (CVA). The CVA calculation utilizes our credit default swap spreads and the spreads of the counterparty. Additionally, we reduce credit risk on the majority of our derivatives by entering into legally enforceable agreements that enable the posting and receiving of collateral associated with the fair value of our derivative positions on an ongoing basis.

•

Collateral placed with counterparties — Collateral in the form of investment securities are primarily carried at fair value using quoted prices in active markets for similar assets.

•

Repossessed and foreclosed assets — Foreclosed on or repossessed assets resulting from loan defaults are carried at the lower of either cost or fair value and are included in other assets on the Consolidated Balance Sheet. The fair value disclosures include only assets carried at fair value.

The majority of assets acquired due to default are foreclosed assets. We revalue foreclosed assets on a periodic basis. We classified properties that are valued by independent third-party appraisals as Level 2. When third-party appraisals are not obtained, valuations are typically obtained from third-party broker price opinion; however, depending on the circumstances, the property list price or other sales price information may be used in lieu of a broker price opinion. Based on historical experience, we adjust these values downward to take into account damage and other factors that typically cause the actual liquidation value of foreclosed properties to be less than broker price opinion or other price sources. This valuation adjustment is necessary to ensure the valuation ascribed to these assets considers unique factors and circumstances surrounding the foreclosed asset. As a result of applying internally developed adjustments to the third-party-provided valuation of the foreclosed property, we classified these assets as Level 3 in the fair value disclosures.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

•

On-balance sheet securitization debt — We elected the fair value option for certain mortgage loans held-for-investment and the related on-balance sheet securitization debt. We value securitization debt that was elected pursuant to the fair value option and any economically retained positions using market observable prices whenever possible. The securitization debt is principally in the form of asset- and mortgage-backed securities collateralized by the underlying mortgage loans held-for-investment. Due to the attributes of the underlying collateral and current market conditions, observable prices for these instruments are typically not available. In these situations, we consider observed transactions as Level 2 inputs in our discounted cash flow models. Additionally, the discounted cash flow models utilize other market observable inputs, such as interest rates, and internally derived inputs including prepayment speeds, credit losses, and discount rates. Fair value option-elected financing securitization debt is classified as Level 3 as a result of the reliance on significant assumptions and estimates for model inputs. Refer to the section within this note titled Fair Value Option for Financial Assets and Financial Liabilities for further information about the election. The debt that was not elected under the fair value option is reported on the balance sheet at cost, net of premiums or discounts and issuance costs.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Recurring Fair Value

The following tables display the assets and liabilities measured at fair value on a recurring basis including financial instruments elected for the fair value option. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The tables below display the hedges separately from the hedged items; therefore, they do not directly display the impact of our risk management activities.


	Recurring fair value measurements
December 31, 2010 ($ in millions)	Level 1			Level 2			Level 3			Total
Assets
Trading securities
U.S. Treasury and federal agencies	$	77		$	—		$	—		$	77
Mortgage-backed
Residential		—			25			44			69
Asset-backed		—			—			94			94

Total trading securities		77			25			138			240
Investment securities
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies		3,313			5			—			3,318
States and political subdivisions		—			2			—			2
Foreign government		873			375			—			1,248
Mortgage-backed
Residential		—			5,824			1			5,825
Asset-backed		—			1,948			—			1,948
Corporate debt securities		—			1,558			—			1,558
Other debt securities		—			151			—			151

Total debt securities		4,186			9,863			1			14,050
Equity securities (a)		796			—			—			796

Total available-for-sale securities		4,982			9,863			1			14,846
Mortgage loans held-for-sale, net (b)		—			6,420			4			6,424
Consumer mortgage finance receivables and loans, net (b)		—			—			1,015			1,015
Mortgage servicing rights		—			—			3,738			3,738
Other assets
Interests retained in financial asset sales		—			—			568			568
Fair value of derivative contracts in receivable position
Interest rate contracts		242			3,464			105			3,811
Foreign currency contracts		—			155			—			155

Total fair value of derivative contracts in receivable position		242			3,619			105			3,966
Collateral placed with counterparties (c)		728			—			—			728

Total assets	$	6,029		$	19,927		$	5,569		$	31,525

Liabilities
Long-term debt
On-balance sheet securitization debt (b)	$	—		$	—		$	(972	)	$	(972	)
Accrued expenses and other liabilities
Fair value of derivative contracts in liability position
Interest rate contracts		(208	)		(3,222	)		(118	)		(3,548	)
Foreign currency contracts		—			(312	)		—			(312	)

Total fair value of derivative contracts in liability position		(208	)		(3,534	)		(118	)		(3,860	)

Total liabilities	$	(208	)	$	(3,534	)	$	(1,090	)	$	(4,832	)

(a)	Our investment in any one industry did not exceed 23%.

(b)	Carried at fair value due to fair value option elections.

(c)	Represents collateral in the form of investment securities. Cash collateral was excluded above.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


	Recurring fair value measurements
December 31, 2009 ($ in millions)	Level 1			Level 2			Level 3			Total
Assets
Trading securities
Mortgage-backed
Residential	$	—		$	44		$	99		$	143
Asset-backed		—			—			596			596

Total trading securities		—			44			695			739
Investment securities
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies		1,989			1,521			—			3,510
States and political subdivisions		—			811			—			811
Foreign government		911			262			—			1,173
Mortgage-backed
Residential		—			3,455			6			3,461
Asset-backed		—			985			20			1,005
Corporate debt securities		2			1,471			—			1,473
Other		47			—			—			47

Total debt securities		2,949			8,505			26			11,480
Equity securities		671			4			—			675

Total available-for-sale securities		3,620			8,509			26			12,155
Mortgage loans held-for-sale, net (a)		—			5,545			—			5,545
Consumer mortgage finance receivables and loans, net (a)		—			—			1,391			1,391
Mortgage servicing rights		—			—			3,554			3,554
Other assets
Cash reserve deposits held-for-securitization trusts		—			—			31			31
Interests retained in financial asset sales		—			—			471			471
Fair value of derivative contracts in receivable position		184			2,035			435			2,654
Collateral placed with counterparties (b)		808			37			—			845

Total assets	$	4,612		$	16,170		$	6,603		$	27,385

Liabilities
Long-term debt
On-balance sheet securitization debt (a)	$	—		$	—		$	(1,294	)	$	(1,294	)
Accrued expenses and other liabilities
Fair value of derivative contracts in liability position		(172	)		(1,391	)		(332	)		(1,895	)

Total liabilities	$	(172	)	$	(1,391	)	$	(1,626	)	$	(3,189	)

(a)	Carried at fair value due to fair value option elections.

(b)	Represents collateral in the form of investment securities. Cash collateral was excluded above.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following tables present the reconciliation for all Level 3 assets and liabilities measured at fair value on a recurring basis. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The Level 3 items presented below may be hedged by derivatives and other financial instruments that are classified as Level 1 or Level 2. Thus, the following tables do not fully reflect the impact of our risk management activities.


	Level 3 recurring fair value measurements
	Fair value at January 1, 2010			Net realized/unrealized gains (losses)						Purchases, issuances, and settlements, net			Fair value at December 31, 2010			Net unrealized gains (losses) included in earnings still held at December 31, 2010
($ in millions)	Fair value at January 1, 2010			included in earnings			included in other comprehensive income			Purchases, issuances, and settlements, net			Fair value at December 31, 2010
Assets
Trading securities
Mortgage-backed
Residential	$	99		$	6	(a)	$	—		$	(61	)	$	44		$	24	(a)
Asset-backed		596			—			5			(507	)		94			—

Total trading securities		695			6			5			(568	)		138			24
Investment securities
Available-for-sale securities
Debt securities
Mortgage-backed Residential		6			—			(2	)		(3	)		1			—
Asset-backed		20			—			—			(20	)		—			—

Total debt securities		26			—			(2	)		(23	)		1			—
Mortgage loans held-for-sale, net (b)		—			3	(b)		—			1			4			3	(b)
Consumer mortgage finance receivables and loans, net (b)		1,391			1,903	(b)		—			(2,279	)		1,015			1,189	(b)
Mortgage servicing rights		3,554			(871	) (c)		—			1,055			3,738			(871	) (c)
Other assets
Cash reserve deposits held-for-securitization trusts		31			—			—			(31	)		—			—
Interests retained in financial asset sales		471			94	(d)		—			3			568			14	(d)
Fair value of derivative contracts in receivable (liability) position, net Interest rate contracts, net		103			180	(e)		—			(296	)		(13	)		388	(e)

Total assets	$	6,271		$	1,315		$	3		$	(2,138	)	$	5,451		$	747

Liabilities
Long-term debt
On-balance sheet securitization debt (b)	$	(1,294	)	$	(1,881	) (b)	$	—		$	2,203		$	(972	)	$	(1,387	) (b)

Total liabilities	$	(1,294	)	$	(1,881	)	$	—		$	2,203		$	(972	)	$	(1,387	)

(a)	The fair value adjustment was reported as other (loss) gain on trading securities, net, and the related interest was reported as interest on trading securities in the Consolidated Statement of Income.

(b)	Carried at fair value due to fair value option elections. Refer to the next section of this note titled Fair Value Option for Financial Assets and Liabilities for the location of the gains and losses in the Consolidated Statement of Income.

(c)	Fair value adjustment was reported as servicing-asset valuation and hedge activities, net, in the Consolidated Statement of Income.

(d)	Reported as other income, net of losses, in the Consolidated Statement of Income.

(e)	Refer to Note 23 for information related to the location of the gains and losses on derivative instruments in the Consolidated Statement of Income.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


	Level 3 recurring fair value measurements
				Net realized/unrealized (losses) gains						Purchases, issuances, and settlements, net			Net transfers into/ (out of) Level 3			Fair value at December 31, 2009			Net unrealized (losses) gains included in earnings still held at December 31, 2009
($ in millions)	Fair value at January 1, 2009			included in earnings			included in other comprehensive income			Purchases, issuances, and settlements, net			Net transfers into/ (out of) Level 3			Fair value at December 31, 2009
Assets
Trading securities
Mortgage-backed
Residential	$	211		$	(42	) (a)	$	—		$	(89	)	$	19		$	99		$	33	(a)
Asset-backed		509			165	(a)		13			(91	)		—			596			166	(a)

Total trading securities		720			123			13			(180	)		19			695			199
Investment securities
Available-for-sale securities
Debt securities
Mortgage-backed
Residential		2			—			(4	)		—			8			6			—
Asset-backed		607			6	(b)		5			(598	)		—			20			—

Total debt securities		609			6			1			(598	)		8			26			—
Equity securities		22			—			1			—			(23	)		—			—

Total available-for-sale securities		631			6			2			(598	)		(15	)		26			—
Consumer mortgage finance receivables and loans, net (c)		1,861			941	(c)		—			(1,411	)		—			1,391			480	(c)
Mortgage servicing rights		2,848			(122	) (d)		—			828			—			3,554			(110	) (d)
Other assets
Cash reserve deposits held-for-securitization trusts		41			2	(e)		—			(12	)		—			31			3	(e)
Interests retained in financial asset sales		1,001			(14	) (e)		3			(519	)		—			471			(10	) (e)
Fair value of derivative contracts in receivable (liability) position, net		149			324	(f)		(5	)		(510	)		145			103			917	(f)

Total assets	$	7,251		$	1,260		$	13		$	(2,402	)	$	149		$	6,271		$	1,479

Liabilities
Long-term debt
On-balance sheet securitization debt (c)	$	(1,899	)	$	(875	) (c)	$	—		$	1,480		$	—		$	(1,294	)	$	(455	) (c)

Total liabilities	$	(1,899	)	$	(875	)	$	—		$	1,480		$	—		$	(1,294	)	$	(445	)

(a)	The fair value adjustment was reported as other (loss) gain on trading securities, net, and the related interest was reported as interest on trading securities in the Consolidated Statement of Income.

(b)	The fair value adjustment was reported as other gain (loss) on investment, net, and the related interest and dividends were reported as interest and dividends on available-for-sale investment securities.

(c)	Carried at fair value due to fair value option elections. Refer to the next section of this note titled Fair Value Option for Financial Assets and Liabilities for the location of the gains and losses in the Consolidated Statement of Income.

(d)	Fair value adjustment reported as servicing-asset valuation and hedge activities, net, in the Consolidated Statement of Income.

(e)	Reported as other income, net of losses, in the Consolidated Statement of Income.

(f)	Refer to Note 23 for information related to the location of the gains and losses on derivative instruments in the Consolidated Statement of Income.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Nonrecurring Fair Value

We may be required to measure certain assets at fair value from time to time. These periodic fair value measures typically result from the application of lower-of-cost or fair value accounting or certain impairment measures. These items would constitute nonrecurring fair value measures.

The following tables display the assets measured at fair value on a nonrecurring basis.


	Nonrecurring fair value measures								Lower-of-cost or fair value or valuation reserve allowance			Total gains included in earnings for the year ended
December 31, 2010 ($ in millions)	Level 1		Level 2		Level 3		Total					Total gains included in earnings for the year ended
Assets
Mortgage loans held-for-sale, net (a)	$	—	$	—	$	844	$	844	$	(48	)		n/m	(b)
Commercial finance receivables and loans, net (c)
Automobile		—		—		379		379		(52	)		n/m	(b)
Mortgage		—		28		26		54		(14	)		n/m	(b)
Other		—		—		107		107		(61	)		n/m	(b)

Total commercial finance receivables and loans, net		—		28		512		540		(127	)
Other assets
Real estate and other investments (d)		—		5		—		5		n/m		$	—
Repossessed and foreclosed assets (e)		—		43		44		87		(13	)		n/m	(b)

Total assets	$	—	$	76	$	1,400	$	1,476	$	(188	)	$	—

n/m = not meaningful

(a)	Represents loans held-for-sale that are required to be measured at the lower-of-cost or fair value. The table above includes only loans with fair values below cost during 2010. The related valuation allowance represents the cumulative adjustment to fair value of those specific assets.

(b)

We consider the applicable valuation or loan loss allowance to be the most relevant indicator of the impact on earnings caused by the fair value measurement. Accordingly, the table above excludes total gains and losses included in earnings for these items. The carrying values are inclusive of the respective valuation or loan loss allowance.

(c)	Represents the portion of the portfolio specifically impaired during 2010. The related valuation allowance represents the cumulative adjustment to fair value of those specific receivables.

(d)	Represents model homes impaired during 2010. The total loss included in earnings represents adjustments to the fair value of the portfolio based on the estimated fair value if the model home is under lease or the estimated value if the model home is marketed for sale.

(e)	The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


	Nonrecurring fair value measures								Lower-of-cost or fair value or valuation reserve allowance			Total losses included in earnings for the year ended
December 31, 2009 ($ in millions)	Level 1		Level 2		Level 3		Total					Total losses included in earnings for the year ended
Assets
Loans held-for-sale, net (a)	$	—	$	31	$	5,453	$	5,484	$	(227	)		n/m	(b)
Commercial finance receivables and loans, net (c)		—		85		1,443		1,528		(770	)	$	(87	) (d)
Other assets
Real estate and other investments (e)		—		49		65		114		n/m	(f)		(226	)
Repossessed and foreclosed assets (g)		—		111		108		219		(104	)		n/m	(b)
Goodwill (h)		—		—		—		—		n/m	(f)		(607	)

Total assets	$	—	$	276	$	7,069	$	7,345	$	(1,101	)	$	(920	)

n/m = not meaningful

(a)	Represents loans held-for-sale that are required to be measured at the lower-of-cost or fair value. The table above includes only loans with fair values below cost during 2009. The related valuation allowance represents the cumulative adjustment to fair value of those specific assets.

(b)

(c)	Represents the portion of the portfolio specifically impaired during 2009. The related valuation allowance represents the cumulative adjustment to fair value of those specific receivables.

(d)	Represents losses recognized on the impairment of our resort finance portfolio, which provided debt capital to resort and timeshare developers.

(e)	Represents model homes impaired during 2009. The total loss included in earnings represents adjustments to the fair value of the portfolio based on the estimated fair value if the model home is under lease or the estimated fair value if the model home is marketed for sale.

(f)	The total gain (loss) included in earnings is the most relevant indicator of the impact on earnings.

(g)	The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value.

(h)	Represents goodwill impaired during 2009. The impairment related to a reporting unit within our Insurance operations.

Fair Value Option for Financial Assets and Financial Liabilities

On January 1, 2008, we elected to measure at fair value certain domestic consumer mortgage finance receivables and loans and the related debt held in on-balance sheet mortgage securitization structures. During the three months ended September 30, 2009, we also elected the fair value option for conforming and government-insured residential mortgage loans held-for-sale funded after July 31, 2009. As of January 1, 2010, we elected the fair value option for all on-balance sheet mortgage securitization structures that were required to be consolidated due to the adoption of ASU 2009-17. Refer to Note 1 for additional information related to the adoption. Our intent in electing fair value for all these items was to mitigate a divergence between accounting losses and economic exposure for certain assets and liabilities.

A description of the financial assets and liabilities elected to be measured at fair value is as follows.

•

On-balance sheet mortgage securitizations — We carry the fair value-elected consumer loans as finance receivable and loans, net, on the Consolidated Balance Sheet. Our policy is to separately record interest income on the fair value-elected loans (unless the loans are placed on nonaccrual status); however, the accrued interest was excluded from the fair value presentation. We classified the fair value adjustment recorded for the loans as other income, net of losses, in the Consolidated Statement of Income.

We continued to record the fair value-elected debt balances as long-term debt on the Consolidated Balance Sheet. Our policy is to separately record interest expense on the fair value-elected securitization debt, which continues to be classified as interest on long-term debt in the Consolidated Statement of Income. We classified the fair value adjustment recorded for this fair value-elected debt as other income, net of losses, in the Consolidated Statement of Income.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

•

Conforming and government-insured mortgage loans held-for-sale — During the three months ended September 30, 2009, we elected the fair value option for conforming and government-insured mortgage loans held-for-sale funded after July 31, 2009. We elected the fair value option to mitigate earnings volatility by better matching the accounting for the assets with the related hedges.

Excluded from the fair value option were conforming and government-insured loans funded on or prior to July 31, 2009, and those repurchased or reorganized. The loans funded on or prior to July 31, 2009, were ineligible because the election must be made at the time of funding. Repurchased and rerecognized conforming and government-insured loans were not elected because the election will not mitigate earning volatility. We repurchase or rerecognize loans due to representation and warranty obligations or conditional repurchase options. Typically, we will be unable to resell these assets through regular channels due to characteristics of the assets. Since the fair value of these assets is influenced by factors that cannot be hedged, we did not elect the fair value option.

We carry the fair value-elected conforming and government-insured loans as loans held-for-sale, net, on the Consolidated Balance Sheet. Our policy is to separately record interest income on the fair value-elected loans (unless they are placed on nonaccrual status); however, the accrued interest was excluded from the fair value presentation. Upfront fees and costs related to the fair value-elected loans were not deferred or capitalized. The fair value adjustment recorded for these loans is classified as gain (loss) on mortgage loans, net, in the Consolidated Statement of Income. In accordance with GAAP, the fair value option election is irrevocable once the asset is funded even if it is subsequently determined that a particular loan cannot be sold.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following tables summarize the fair value option elections and information regarding the amounts recorded as earnings for each fair value option-elected item.


	Changes included in the Consolidated Statement of Income
Year ended December 31, ($ in millions)	Interest and fees on finance receivables and loans			Interest on loans held-for-sale			Interest on long-term debt			Gain on mortgage loans, net		Other income, net of losses			Total included in earnings			Change in fair value due to credit risk (a)
2010
Assets
Mortgage loans held-for-sale, net	$	—		$	221	(b)	$	—		$	845	$	3		$	1,069		$	—	(c)
Consumer mortgage finance receivables and loans, net		555	(b)		—			—			—		1,348			1,903			(8	) (d)
Liabilities
Long-term debt
On-balance sheet securitization debt	$	—		$	—		$	(313	) (e)	$	—	$	(1,568	)		(1,881	)	$	29	(f)

Total															$	1,091

2009
Assets
Mortgage loans held-for-sale, net	$	—		$	85	(b)	$	—		$	344	$	—		$	429		$	—	(c)
Consumer mortgage finance receivables and loans, net		508	(b)		—			—			—		433			941			(118	) (d)
Liabilities
Long-term debt
On-balance sheet securitization debt	$	—		$	—		$	(227	) (e)	$	—	$	(648	)		(875	)	$	230	(f)

Total															$	495

(a)	Factors other than credit quality that impact fair value include changes in market interest rates and the illiquidity or marketability in the current marketplace. Lower levels of observable data points in illiquid markets generally result in wide bid/offer spreads.

(b)	Interest income is measured by multiplying the unpaid principal balance on the loans by the coupon rate and the number of days of interest due.

(c)	The credit impact for loans held-for-sale is assumed to be zero because the loans are either suitable for sale or are covered by a government guarantee.

(d)	The credit impact for consumer mortgage finance receivables and loans was quantified by applying internal credit loss assumptions to cash flow models.

(e)	Interest expense is measured by multiplying bond principal by the coupon rate and the number of days of interest due to the investor.

(f)

The credit impact for on-balance sheet securitization debt is assumed to be zero until our economic interests in a particular securitization is reduced to zero at which point the losses on the underlying collateral will be expected to be passed through to third-party bondholders. Losses allocated to third-party bondholders, including changes in the amount of losses allocated, will result in fair value changes due to credit. We also monitor credit ratings and will make credit adjustments to the extent any bond classes are downgraded by rating agencies.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

The following table provides the aggregate fair value and the aggregate unpaid principal balance for the fair value option-elected loans and long-term debt instruments.


	2010						2009
December 31, ($ in millions)	Unpaid principal balance			Fair value (a)			Unpaid principal balance			Fair value (a)
Assets
Mortgage loans held-for-sale, net
Total loans	$	6,354		$	6,424		$	5,427		$	5,545
Nonaccrual loans		3			1			3			3
Loans 90+ days past due (b)		—			—			—			—
Consumer mortgage finance receivables and loans, net
Total loans		2,905			1,015			7,180			1,391
Nonaccrual loans (c)		586			260			2,343			499
Loans 90+ days past due (b)(c)		366			184			1,434			314
Liabilities
Long-term debt
On-balance sheet securitization debt	$	(2,969	)	$	(972	)	$	(7,166	)	$	(1,294	)

(a)	Excludes accrued interest receivable.

(b)	Loans 90+ days past due are also presented within the nonaccrual loan balance and the total loan balance; however, excludes government-insured loans that are still accruing interest.

(c)

The fair value of consumer mortgage finance receivables and loans is calculated on a pooled basis; therefore, we allocated the fair value of nonaccrual loans and loans 90+ days past due to individual loans based on the unpaid principal balances. For further discussion regarding the pooled basis, refer to the previous section of this note titled Consumer mortgage finance receivables and loans, net.

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Fair Value of Financial Instruments

The following table presents the carrying and estimated fair value of assets and liabilities that are considered financial instruments. Accordingly, items that do not meet the definition of a financial instrument are excluded from the table. When possible, we use quoted market prices to determine fair value. Where quoted market prices are not available, the fair value is internally derived based on appropriate valuation methodologies with respect to the amount and timing of future cash flows and estimated discount rates. However, considerable judgment is required in interpreting market data to develop estimates of fair value, so the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange. The effect of using different market assumptions or estimation methodologies could be material to the estimated fair values. Fair value information presented herein was based on information available at December 31, 2010 and 2009.


	2010				2009
December 31, ($ in millions)	Carrying value		Estimated fair value		Carrying value		Estimated fair value
Financial assets
Trading securities	$	240	$	240	$	739	$	739
Investment securities		14,846		14,846		12,158		12,158
Loans held-for-sale, net		11,411		11,449		20,625		19,855
Finance receivables and loans, net		100,540		99,462		75,256		72,213
Interests retained in financial asset sales		568		568		471		471
Fair value of derivative contracts in receivable position		3,966		3,966		2,654		2,654
Collateral placed with counterparties (a)		728		728		845		845
Financial liabilities
Deposit liabilities (b)	$	37,291	$	37,546	$	30,549	$	30,795
Short-term borrowings		7,508		7,509		10,292		10,282
Long-term debt (c)		87,181		88,996		88,527		85,306
Fair value of derivative contracts in liability position		3,860		3,860		1,895		1,895

(a)	Represents collateral in the form of investment securities. Cash collateral was excluded above.

(b)	The carrying value and fair value amounts exclude dealer deposits.

(c)	Debt includes deferred interest for zero-coupon bonds of $569 million and $506 million at December 31, 2010 and 2009, respectively.

The following describes the methodologies and assumptions used to determine fair value for the respective classes of financial instruments. In addition to the valuation methods discussed below, we also followed guidelines for determining whether a market was not active and a transaction was not distressed. As such, we assumed the price that would be received in an orderly transaction (including a market-based return) and not in forced liquidation or distressed sale.

•

Trading securities — Refer to the previous section of this note titled Trading securities for a description of the methodologies and assumptions used to determine fair value.

•

Investment securities — Bonds, equity securities, and other available-for-sale investment securities are carried at fair value. Refer to the previous section of this note titled Available-for-sale securities for a description of the methodologies and assumptions used to determine fair value. The fair value of the held-to-maturity investment securities is based on valuation models using market-based assumption.

•

Loans held-for-sale, net — Refer to the previous sections of this note also titled Loans held-for-sale, net, for a description of methodologies and assumptions used to determine fair value.

•

Finance receivables and loans, net — With the exception of mortgage loans held-for-investment, the fair value of finance receivables was based on discounted future cash flows using applicable spreads to approximate current rates applicable to each category of finance receivables (an income approach). The carrying value of wholesale receivables in certain markets and certain other automobile- and mortgage-lending receivables for which interest rates reset on a short-term basis with applicable market indices are assumed to approximate fair value either because of the short-term nature or because of the interest rate adjustment feature. The fair value of wholesale receivables in other markets was based on discounted future cash flows using applicable spreads to approximate current rates applicable to similar assets in those markets.

100

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

For mortgage loans held-for-investment used as collateral for securitization debt, we used a portfolio approach or an in-use premise to measure these loans at fair value. The objective in fair valuing these loans (which are legally isolated and beyond the reach of our creditors) and the related collateralized borrowings is to reflect our retained economic position in the securitizations. For mortgage loans held-for-investment that are not securitized, we used valuation methods and assumptions similar to those used for mortgage loans held-for-sale. These valuations consider unique attributes of the loans such as geography, delinquency status, product type, and other factors. Refer to the previous section in this note titled Loans held-for-sale, net, for a description of methodologies and assumptions used to determine the fair value of mortgage loans held-for-sale.

•

Derivative instruments — Refer to the previous section of this note titled Derivative instruments for a description of the methodologies and assumptions used to determine fair value.

•

Collateral placed with counterparties — Collateral placed with counterparties in the table above represents only collateral in the form of investment securities. Refer to the previous section of this note also titled Collateral placed with counterparties for additional information.

•

Interests retained in financial asset sales — Refer to the previous sections of this note titled Interests retained in financial asset sales for a description of the methodologies and assumptions used to determine fair value.

•

Debt — The fair value of debt was determined using quoted market prices for the same or similar issues, if available, or was based on the current rates offered to us for debt with similar remaining maturities.

•

Deposit liabilities — Deposit liabilities represent certain consumer bank deposits as well as mortgage escrow deposits. The fair value of deposits with no stated maturity is equal to their carrying amount. The fair value of fixed-maturity deposits was estimated by discounting cash flows using currently offered rates for deposits of similar maturities.

28.

Segment and Geographic Information

Operating segments are defined as components of an enterprise that engage in business activity from which revenues are earned and expenses incurred for which discrete financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and in assessing performance.

Basis of Presentation

We report our results of operations on a line-of-business basis through five operating segments – North American Automotive Finance operations, International Automotive Finance operations, Insurance operations, Mortgage – Origination and Servicing operations, and Mortgage – Legacy Portfolio and Other operations, with the remaining activity reported in Corporate and Other. The operating segments are determined based on the products and services offered and geographic considerations, and reflect the manner in which financial information is currently evaluated by management. The following is a description of each of our reportable operating segments.

•

North American Automotive Finance operations — Provides automotive financing services to consumers and automotive dealers in the United States and Canada and includes the automotive activities of Ally Bank and ResMor Trust. For consumers, we offer retail automotive financing and leasing for new and used vehicles, and through our commercial automotive financing operations, we fund dealer purchases of new and used vehicles through wholesale or floorplan financing.

•

International Automotive Finance operations — Provides automotive financing and full-service leasing to consumers and dealers outside of the United States and Canada. Our International Automotive Finance operations will focus the majority of new originations in five core international markets: Germany, the United Kingdom, Brazil, Mexico, and China through our joint venture.

•

Insurance operations — Offers consumer and commercial insurance products sold primarily through the dealer channel including vehicle extended service contracts, commercial insurance coverage in the United States and internationally (primarily covering dealers’ wholesale vehicle inventory), and personal automobile insurance in certain countries outside the United States.

101

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

•

Mortgage — Origination and Servicing operations —The principal activities include originating, purchasing, selling, and securitizing conforming and government-insured residential mortgage loans in the United States and Canada; servicing residential mortgage loans for ourselves and others; and providing collateralized lines of credit to other mortgage originators, which we refer to as warehouse lending. We also originate high-quality prime jumbo mortgage loans in the United States. We finance our mortgage loan originations primarily in Ally Bank in the United States and in our trust company, ResMor Trust, in Canada.

•

Mortgage — Legacy Portfolio and Other operations — Primarily consists of loans originated prior to January 1, 2009, and includes noncore business activities including discontinued operations, portfolios in runoff, and cash held in the ResCap legal entity. These activities, all of which we have discontinued, include, among other things: lending to real estate developers and homebuilders in the United States and United Kingdom; purchasing, selling, and securitizing nonconforming residential mortgage loans (with the exception of U.S. prime jumbo mortgage loans) in both the United States and internationally; certain conforming origination channels closed in 2008; and our mortgage reinsurance business.

Corporate and Other consists of our Commercial Finance Group, certain equity investments, other corporate activities, the residual impacts of our corporate funds-transfer-pricing (FTP) and treasury asset liability management activities (ALM), and reclassifications and eliminations between the reportable operating segments.

We utilize an FTP methodology for the majority of our business operations. The FTP methodology assigns charge rates and credit rates to classes of assets and liabilities based on expected duration and the LIBOR swap curve plus an assumed credit spread. Matching duration allocates interest income and interest expense to these reportable segments so their respective results are insulated from interest rate risk. This methodology is consistent with our ALM practices, which includes managing interest rate risk centrally at a corporate level. The net residual impact of the FTP methodology is included within the results of Corporate and Other as summarized below.

The information presented in our reportable operating segments and geographic areas tables that follow are based in part on internal allocations, which involve management judgment.

Change in Reportable Segment Information

As a result of a change in management’s view of our operations, we have changed the presentation and profit measures of our reportable operating segments as of December 31, 2010. These changes include the following.

•

We presented our Origination and Servicing operations and Legacy Portfolio and Other operations reportable operating segments under the new collective business description, Mortgage. Previously our Origination and Servicing operations and Legacy Portfolio and Other operations were combined in one reportable operating segment, Mortgage operations. The new presentation is consistent with the organizational alignment of the business and management’s current view of the mortgage business.

•

Beginning in the fourth quarter of 2010, we began presenting operating results for all of our reportable operating segments on solely a pretax basis. This presentation is consistent with the measure of operating segment results regularly reviewed by our chief operating decision maker.

•

During the fourth quarter of 2010, we made modifications to the FTP allocations applicable to our North American Automotive Finance operations commercial loan portfolio.

Amounts for 2009 and 2008 have been reclassified to conform to the current management view.

102

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Financial information for our reportable operating segments is summarized as follows.


	Global Automotive Services								Mortgage (a)
Year ended December 31, ($ in millions)	North American Automotive Finance operations			International Automotive Finance operations (b)			Insurance operations		Origination and Servicing operations			Legacy Portfolio and Other operations			Corporate and Other (c)			Consolidated (d)
2010
Net financing revenue (loss)	$	3,321		$	683		$	97	$	(26	)	$	605		$	(2,099	)	$	2,581
Other revenue (expense)		690			316			2,263		1,834			260			(42	)		5,321

Total net revenue (loss)		4,011			999			2,360		1,808			865			(2,141	)		7,902
Provision for loan losses		286			54			—		(29	)		173			(42	)		442
Other noninterest expense		1,381			717			1,791		920			946			526			6,281

Income (loss) from continuing operations before income tax expense	$	2,344		$	228		$	569	$	917		$	(254	)	$	(2,625	)	$	1,179

Total assets	$	81,893		$	15,979		$	8,789	$	24,478		$	12,308		$	28,561		$	172,008

2009
Net financing revenue (loss)	$	3,074		$	705		$	192	$	(58	)	$	626		$	(2,461	)	$	2,078
Other revenue (expense)		757			263			2,079		1,063			(685	)		940			4,417

Total net revenue (loss)		3,831			968			2,271		1,005			(59	)		(1,521	)		6,495
Provision for loan losses		611			230			—		41			4,231			491			5,604
Other noninterest expense		1,596			895			1,942		925			2,014			478			7,850

Income (loss) from continuing operations before income tax expense	$	1,624		$	(157	)	$	329	$	39		$	(6,304	)	$	(2,490	)	$	(6,959	)

Total assets	$	68,282		$	21,802		$	10,614	$	20,010		$	18,884		$	32,714		$	172,306

2008
Net financing revenue (loss)	$	1,531		$	877		$	261	$	(149	)	$	510		$	(2,113	)	$	917
Other revenue		1,066			365			2,700		1,281			168			9,691			15,271

Total net revenue		2,597			1,242			2,961		1,132			678			7,578			16,188
Provision for loan losses		1,198			204			—		8			1,682			10			3,102
Other noninterest expense		1,721			936			2,462		662			2,066			502			8,349

(Loss) income from continuing operations before income tax expense	$	(322	)	$	102		$	499	$	462		$	(3,070	)	$	7,066		$	4,737

Total assets	$	71,981		$	29,290		$	12,013	$	11,870		$	32,893		$	31,429		$	189,476

(a)	Represents the ResCap legal entity and the mortgage activities of Ally Bank and ResMor Trust.

(b)	Amounts include intrasegment eliminations between our North American Automotive Finance operations, International Automotive Finance operations, and Insurance operations.

(c)	At December 31, 2010, 2009, and 2008, total assets were $1.6 billion, $3.3 billion, and $6.0 billion for the Commercial Finance Group, respectively.

(d)	Net financing revenue after the provision for loan losses totaled $2,139 million, $(3,526) million, and $(2,185) million in 2010, 2009, and 2008, respectively.

103

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Information concerning principal geographic areas was as follows.


Year ended December 31, ($ in millions)	Revenue (a)			Income (loss) from continuing operations before income tax expense (benefit)(b)			Net income (loss) (b)			Identifiable assets (c)		Long-lived assets (d)
2010
Canada	$	904		$	449		$	402		$	17,321	$	1,522
Europe		807			346			278			11,321		406
Latin America		869			170			164			6,917		35
Asia		4			7			(43	)		24		—

Total foreign		2,584			972			801			35,583		1,963
Total domestic (e)		5,318			207			274			135,900		7,541

Total	$	7,902		$	1,179		$	1,075		$	171,483	$	9,504

2009
Canada	$	654		$	197		$	148		$	17,885	$	3,985
Europe		921			31			(86	)		15,555		906
Latin America		709			116			163			6,574		33
Asia		(55	)		(24	)		(13	)		1,378		8

Total foreign		2,229			320			212			41,392		4,932
Total domestic (e)		4,266			(7,279	)		(10,510	)		130,388		11,399

Total	$	6,495		$	(6,959	)	$	(10,298	)	$	171,780	$	16,331

2008
Canada	$	(116	)	$	(526	)	$	(382	)	$	19,044	$	6,211
Europe		1,236			224			116			37,266		2,349
Latin America		971			186			228			7,350		167
Asia		(6	)		(13	)		(20	)		2,445		179

Total foreign		2,085			(129	)		(58	)		66,105		8,906
Total domestic (e)		14,103			4,866			1,926			122,014		17,915

Total	$	16,188		$	4,737		$	1,868		$	188,119	$	26,821

(a)	Revenue consists of net financing revenue and total other revenue as presented in our Consolidated Statement of Income.

(b)	The domestic amounts include original discount amortization of $1.2 billion, $1.1 billion, and $70 million for the years ended December 31, 2010, 2009, and 2008, respectively.

(c)	Identifiable assets consist of total assets excluding goodwill.

(d)	Long-lived assets consist of investment in operating leases, net, and net property and equipment.

(e)	Amounts include eliminations between our domestic and foreign operations.

29.

Parent and Guarantor Consolidating Financial Statements

Certain of our senior notes are guaranteed by a group of subsidiaries (the Guarantors). The Guarantors, each of which is a 100% directly owned subsidiary of Ally Financial Inc., are Ally US LLC, IB Finance Holding Company, LLC, GMAC Latin America Holdings LLC, GMAC International Holdings B.V., and GMAC Continental LLC. The Guarantors fully and unconditionally guarantee the senior notes on a joint and several basis.

The following financial statements present condensed consolidating financial data for (i) Ally Financial Inc. (on a parent company-only basis), (ii) the combined Guarantors, (iii) the combined nonguarantor subsidiaries (all other subsidiaries), (iv) an elimination column for adjustments to arrive at the information for the parent company, Guarantors, and nonguarantors on a consolidated basis, and (v) the parent company and our subsidiaries on a consolidated basis.

Investments in subsidiaries are accounted for by the parent company and the Guarantors using the equity method for this presentation. Results of operations of subsidiaries are therefore classified in the parent company’s and Guarantors’ investment in subsidiaries accounts. The elimination entries set forth in the following condensed consolidating financial statements eliminate distributed and undistributed income of subsidiaries, investments in subsidiaries, and intercompany balances and transactions between the parent, Guarantors, and nonguarantors.

104

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Condensed Consolidating Statement of Income


Year ended December 31, 2010 ($ in millions)	Parent			Guarantors			Nonguarantors			Consolidating adjustments			Ally consolidated
Financing revenue and other interest income
Interest and fees on finance receivables and loans	$	938		$	26		$	5,591		$	—		$	6,555
Interest and fees on finance receivables and loans — intercompany		526			5			4			(535	)		—
Interest on loans held-for-sale		75			—			589			—			664
Interest on trading securities		—			—			15			—			15
Interest and dividends on available-for-sale investment securities		4			—			360			(2	)		362
Interest and dividends on available-for-sale investment securities — intercompany		112			—			9			(121	)		—
Interest-bearing cash		13			—			57			—			70
Other interest income, net		—			—			2			(1	)		1
Operating leases		1,063			—			2,717			—			3,780

Total financing revenue and other interest income		2,731			31			9,344			(659	)		11,447
Interest expense
Interest on deposits		52			—			608			—			660
Interest on short-term borrowings		43			1			403			—			447
Interest on long-term debt		3,804			14			1,903			8			5,729
Interest on intercompany debt		(21	)		6			560			(545	)		—

Total interest expense		3,878			21			3,474			(537	)		6,836
Depreciation expense on operating lease assets		435			—			1,595			—			2,030

Net financing (loss) revenue		(1,582	)		10			4,275			(122	)		2,581
Dividends from subsidiaries
Nonbank subsidiaries		182			5			—			(187	)		—
Other revenue
Servicing fees		434			—			1,130			(1	)		1,563
Servicing-asset valuation and hedge activities, net		—			—			(394	)		—			(394	)

Total servicing income, net		434			—			736			(1	)		1,169
Insurance premiums and service revenue earned		—			—			1,865			—			1,865
Gain on mortgage and automotive loans, net		31			—			1,236			—			1,267
Loss on extinguishment of debt		(127	)		—			(8	)		12			(123	)
Other gain on investments, net		6			—			505			(6	)		505
Other (loss) gain on trading securities, net		(13	)		—			7			—			(6	)
Other income, net of losses		(80	)		1			1,284			(561	)		644

Total other revenue		251			1			5,625			(556	)		5,321
Total net revenue		(1,149	)		16			9,900			(865	)		7,902
Provision for loan losses		(204	)		(1	)		647			—			442
Noninterest expense
Compensation and benefits expense		785			11			826			—			1,622
Insurance losses and loss adjustment expenses		—			—			876			—			876
Other operating expenses		744			4			3,632			(597	)		3,783

Total noninterest expense		1,529			15			5,334			(597	)		6,281
(Loss) income from continuing operations before income tax (benefit) expense and undistributed income of subsidiaries		(2,474	)		2			3,919			(268	)		1,179
Income tax (benefit) expense from continuing operations		(592	)		(1	)		746			—			153

Net (loss) income from continuing operations		(1,882	)		3			3,173			(268	)		1,026

Income (loss) from discontinued operations, net of tax		70			—			(21	)		—			49
Undistributed income of subsidiaries
Bank subsidiary		902			902			—			(1,804	)		—
Nonbank subsidiaries		1,985			259			—			(2,244	)		—

Net income	$	1,075		$	1,164		$	3,152		$	(4,316	)	$	1,075

105

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


Year ended December 31, 2009 ($ in millions)	Parent			Guarantors			Nonguarantors			Consolidating adjustments			Ally consolidated
Financing revenue and other interest income
Interest and fees on finance receivables and loans	$	891		$	36		$	5,468		$	—		$	6,395
Interest and fees on finance receivables and loans — intercompany		837			5			7			(849	)		—
Interest on loans held-for-sale		238			—			209			—			447
Interest on trading securities		—			—			132			—			132
Interest and dividends on available-for-sale investment securities		—			—			226			—			226
Interest and dividends on available-for-sale investment securities — intercompany		280			—			3			(283	)		—
Interest-bearing cash		26			—			73			—			99
Other interest income, net		—			—			86			—			86
Operating leases		466			—			5,249			—			5,715

Total financing revenue and other interest income		2,738			41			11,453			(1,132	)		13,100
Interest expense
Interest on deposits		27			—			673			—			700
Interest on short-term borrowings		30			2			534			—			566
Interest on long-term debt		3,819			22			2,407			(240	)		6,008
Interest on intercompany debt		(46	)		10			684			(648	)		—

Total interest expense		3,830			34			4,298			(888	)		7,274
Depreciation expense on operating lease assets		169			—			3,579			—			3,748

Net financing (loss) revenue		(1,261	)		7			3,576			(244	)		2,078
Dividends from subsidiaries
Nonbank subsidiaries		550			—			—			(550	)		—
Other revenue
Servicing fees		690			—			859			—			1,549
Servicing-asset valuation and hedge activities, net		—			—			(1,104	)		—			(1,104	)

Total servicing income, net		690			—			(245	)		—			445
Insurance premiums and service revenue earned		—			—			1,977			—			1,977
Gain on mortgage and automotive loans, net		10			—			801			—			811
Gain on extinguishment of debt		623			—			1,751			(1,709	)		665
Other gain on investments, net		558			—			153			(545	)		166
Other gain on trading securities, net		8			—			165			—			173
Other income, net of losses		(249	)		2			1,025			(598	)		180

Total other revenue		1,640			2			5,627			(2,852	)		4,417
Total net revenue		929			9			9,203			(3,646	)		6,495
Provision for loan losses		(148	)		—			5,752			—			5,604
Noninterest expense
Compensation and benefits expense		590			6			980			—			1,576
Insurance losses and loss adjustment expenses		—			—			1,042			—			1,042
Other operating expenses		714			12			5,109			(603	)		5,232

Total noninterest expense		1,304			18			7,131			(603	)		7,850
Loss from continuing operations before income tax (benefit) expense and undistributed (loss) income of subsidiaries		(227	)		(9	)		(3,680	)		(3,043	)		(6,959	)
Income tax (benefit) expense from continuing operations		(24	)		—			98			—			74

Net loss from continuing operations		(203	)		(9	)		(3,778	)		(3,043	)		(7,033	)

Loss from discontinued operations, net of tax		(287	)		—			(2,978	)		—			(3,265	)
Undistributed (loss) income of subsidiaries
Bank subsidiary		(1,953	)		(1,953	)		—			3,906			—
Nonbank subsidiaries		(7,855	)		70			—			7,785			—

Net loss	$	(10,298	)	$	(1,892	)	$	(6,756	)	$	8,648		$	(10,298	)

106

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


Year ended December 31, 2008 ($ in millions)	Parent			Guarantors			Nonguarantors			Consolidating adjustments			Ally consolidated
Financing revenue and other interest income
Interest and fees on finance receivables and loans	$	1,029		$	41		$	7,367		$	(5	)	$	8,432
Interest and fees on finance receivables and loans — intercompany		1,079			31			200			(1,310	)		—
Interest on loans held-for-sale		473			—			364			—			837
Interest on trading securities		—			—			130			(3	)		127
Interest and dividends on available-for-sale investment securities		99			—			263			14			376
Interest and dividends on available-for-sale investment securities — intercompany		6			—			8			(14	)		—
Interest-bearing cash		136			—			239			—			375
Other interest income, net		(40	)		—			362			3			325
Operating leases		4,238			—			3,350			(6	)		7,582

Total financing revenue and other interest income		7,020			72			12,283			(1,321	)		18,054
Interest expense
Interest on deposits		87			—			620			—			707
Interest on short-term borrowings		270			10			1,168			3			1,451
Interest on long-term debt		3,420			16			5,354			(507	)		8,283
Interest in intercompany debt		(83	)		38			855			(810	)		—

Total interest expense		3,694			64			7,997			(1,314	)		10,441
Depreciation expense on operating lease assets		2,731			(2	)		2,749			—			5,478
Impairment of investment in operating leases		915			—			303			—			1,218

Net financing (loss) revenue		(320	)		10			1,234			(7	)		917
Dividends from subsidiaries
Nonbank subsidiaries		568			—			—			(568	)		—
Other revenue
Servicing fees		918			—			829			—			1,747
Servicing-asset valuation and hedge activities, net		—			—			(263	)		—			(263	)

Total servicing income, net		918			—			566			—			1,484
Insurance premiums and service revenue earned		—			—			2,710			—			2,710
(Loss) gain on mortgage and automotive loans, net		(165	)		—			324			—			159
Gain on extinguishment of debt		8,131			—			1,916			2,581			12,628
Other loss on investments, net		(67	)		—			(311	)		—			(378	)
Other gain (loss) on trading securities, net		3			—			(692	)		—			(689	)
Other income, net of losses		(914	)		2			1,058			(789	)		(643	)

Total other revenue		7,906			2			5,571			1,792			15,271
Total net revenue		8,154			12			6,805			1,217			16,188
Provision for loan losses		696			2			2,404			—			3,102
Noninterest expense
Compensation and benefits expense		444			10			1,462			—			1,916
Insurance losses and loss adjustment expenses		—			—			1,402			—			1,402
Other operating expenses		1,231			3			4,700			(903	)		5,031

Total noninterest expense		1,675			13			7,564			(903	)		8,349
Income (loss) from continuing operations before income tax expense (benefit) and undistributed loss of subsidiaries		5,783			(3	)		(3,163	)		2,120			4,737
Income tax expense (benefit) from continuing operations		8			(1	)		(143	)		—			(136	)

Net income (loss) from continuing operations		5,775			(2	)		(3,020	)		2,120			4,873

Income (loss) from discontinued operations, net of tax		10			—			(3,015	)		—			(3,005	)
Undistributed loss of subsidiaries
Bank subsidiary		(116	)		(116	)		—			232			—
Nonbank subsidiaries		(3,801	)		(368	)		—			4,169			—

Net income (loss)	$	1,868		$	(486	)	$	(6,035	)	$	6,521		$	1,868

107

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Condensed Consolidating Balance Sheet


December 31, 2010 ($ in millions)	Parent			Guarantors			Nonguarantors			Consolidating adjustments			Ally consolidated
Assets
Cash and cash equivalents
Noninterest-bearing	$	1,251		$	—		$	463		$	—		$	1,714
Interest-bearing		3,414			1			6,541			—			9,956
Interest-bearing — intercompany		—			—			504			(504	)		—

Total cash and cash equivalents		4,665			1			7,508			(504	)		11,670
Trading securities		—			—			240			—			240
Investment securities		1,488			—			13,358			—			14,846
Investment securities — intercompany		2			—			—			(2	)		—
Loans held-for-sale		—			—			11,411			—			11,411
Finance receivables and loans, net
Finance receivables and loans, net		10,047			425			91,941			—			102,413
Intercompany loans to
Bank subsidiary		3,650			—			—			(3,650	)		—
Nonbank subsidiaries		9,461			367			463			(10,291	)		—
Allowance for loan losses		(266	)		(1	)		(1,606	)		—			(1,873	)

Total finance receivables and loans, net		22,892			791			90,798			(13,941	)		100,540
Investment in operating leases, net		3,864			—			5,264			—			9,128
Intercompany receivables from
Bank subsidiary		5,930			—			—			(5,930	)		—
Nonbank subsidiaries		—			213			—			(213	)		—
Investment in subsidiaries
Bank subsidiary		10,886			10,886			—			(21,772	)		—
Nonbank subsidiaries		23,632			3,123			—			(26,755	)		—
Mortgage servicing rights		—			—			3,738			—			3,738
Premiums receivable and other insurance assets		—			—			2,190			(9	)		2,181
Other assets		2,912			3			15,539			(890	)		17,564
Assets of operations held-for-sale		(160	)		—			850			—			690

Total assets	$	76,111		$	15,017		$	150,896		$	(70,016	)	$	172,008

Liabilities
Deposit liabilities
Noninterest-bearing	$	—		$	—		$	2,131		$	—		$	2,131
Interest-bearing		1,459			—			35,458			—			36,917

Total deposit liabilities		1,459			—			37,589			—			39,048
Short-term borrowings		2,519			89			4,900			—			7,508
Long-term debt		43,897			239			42,476			—			86,612
Intercompany debt to
Nonbank subsidiaries		504			462			13,481			(14,447	)		—
Intercompany payables to
Nonbank subsidiaries		4,466			—			1,716			(6,182	)		—
Interest payable		1,229			3			597			—			1,829
Unearned insurance premiums and service revenue		—			—			2,854			—			2,854
Reserves for insurance losses and loss adjustment expenses		—			—			862			—			862
Accrued expenses and other liabilities		1,548			1			11,437			(860	)		12,126
Liabilities of operations held-for-sale		—			—			680			—			680

Total liabilities		55,622			794			116,592			(21,489	)		151,519

Total equity		20,489			14,223			34,304			(48,527	)		20,489

Total liabilities and equity	$	76,111		$	15,017		$	150,896		$	(70,016	)	$	172,008

108

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


December 31, 2009 ($ in millions)	Parent			Guarantors			Nonguarantors			Consolidating adjustments			Ally consolidated
Assets
Cash and cash equivalents
Noninterest-bearing	$	418		$	—		$	1,422		$	—		$	1,840
Interest-bearing		339			5			12,604			—			12,948
Interest-bearing — intercompany		—			—			—			—			—

Total cash and cash equivalents		757			5			14,026			—			14,788
Trading securities		—			—			739			—			739
Investment securities		—			—			12,158			—			12,158
Investment securities — Intercompany		380			—			261			(641	)		—
Loans held-for-sale		1,758			—			18,867			—			20,625
Finance receivables and loans, net
Finance receivables and loans, net		4,997			524			72,180			—			77,701
Intercompany loans to
Bank subsidiary		5,139			—			—			(5,139	)		—
Nonbank subsidiaries		16,073			83			161			(16,317	)		—
Allowance for loan losses		(383	)		(3	)		(2,059	)		—			(2,445	)

Total finance receivables and loans, net		25,826			604			70,282			(21,456	)		75,256
Investment in operating leases, net		1,479			—			14,516			—			15,995
Intercompany receivables from
Bank subsidiary		1,001			—			—			(1,001	)		—
Nonbank subsidiaries		178			—			198			(376	)		—
Investment in subsidiaries
Bank subsidiary		7,903			7,903			—			(15,806	)		—
Nonbank subsidiaries		26,186			3,067			—			(29,253	)		—
Mortgage servicing rights		—			—			3,554			—			3,554
Premiums receivable and other insurance assets		—			—			2,728			(8	)		2,720
Other assets		4,443			4			16,795			(1,355	)		19,887
Assets of operations held-for-sale		(324	)		—			6,908			—			6,584

Total assets	$	69,587		$	11,583		$	161,032		$	(69,896	)	$	172,306

Liabilities
Deposit liabilities
Noninterest-bearing	$	—		$	—		$	1,755		$	—		$	1,755
Interest-bearing		1,041			—			28,960			—			30,001

Total deposit liabilities		1,041			—			30,715			—			31,756
Short-term borrowings		1,795			39			8,458			—			10,292
Long-term debt		40,888			406			46,732			(5	)		88,021
Intercompany debt to
Nonbank subsidiaries		260			163			21,702			(22,125	)		—
Intercompany payables to
Nonbank subsidiaries		1,385			1			—			(1,386	)		—
Interest payable		1,082			12			553			(10	)		1,637
Unearned insurance premiums and service revenue		—			—			3,192			—			3,192
Reserves for insurance losses and loss adjustment expenses		—			—			1,215			—			1,215
Accrued expenses and other liabilities		2,297			(7	)		9,452			(1,286	)		10,456
Liabilities of operations held-for-sale		—			—			4,898			—			4,898

Total liabilities		48,748			614			126,917			(24,812	)		151,467

Total equity		20,839			10,969			34,115			(45,084	)		20,839

Total liabilities and equity	$	69,587		$	11,583		$	161,032		$	(69,896	)	$	172,306

109

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Condensed Consolidating Statement of Cash Flows


Year ended December 31, 2010 ($ in millions)	Parent			Guarantors			Nonguarantors			Consolidating adjustments			Ally consolidated
Operating activities
Net cash provided by operating activities	$	4,552		$	13		$	7,230		$	(188	)	$	11,607
Investing activities
Purchases of available-for-sale securities		(1,485	)		—			(22,631	)		—			(24,116	)
Proceeds from sales of available-for-sale securities		41			—			17,872			(41	)		17,872
Proceeds from maturities of available-for-sale securities		—			—			4,527			—			4,527
Net decrease in investment securities — intercompany		323			—			260			(583	)		—
Net (increase) decrease in finance receivables and loans		(5,177	)		98			(12,227	)		—			(17,306	)
Proceeds from sales of finance receivables and loans		6			—			3,132			—			3,138
Change in notes receivable from GM		—			(2	)		(36	)		—			(38	)
Net decrease (increase) in loans — intercompany		7,736			(283	)		(302	)		(7,151	)		—
Net (increase) decrease in operating lease assets		(2,770	)		—			7,846			—			5,076
Purchases of mortgage servicing rights, net		—			—			(56	)		—			(56	)
Capital contributions to subsidiaries		(2,036	)		(1,737	)		—			3,773			—
Returns of contributed capital		880			—			—			(880	)		—
Sale of business unit, net		59			—			102			—			161
Other, net		104			(1	)		3,072			—			3,175

Net cash (used in) provided by investing activities		(2,319	)		(1,925	)		1,559			(4,882	)		(7,567	)
Financing activities
Net change in short-term debt — third party		735			50			(4,414	)		—			(3,629	)
Net increase in bank deposits		—			—			6,556			—			6,556
Proceeds from issuance of long-term debt — third party		5,824			90			33,047			41			39,002
Repayments of long-term debt — third party		(4,292	)		(256	)		(44,982	)		—			(49,530	)
Net change in debt — intercompany		243			300			(7,774	)		7,231			—
Dividends paid — third party		(1,253	)		—			—			—			(1,253	)
Dividends paid and returns of contributed capital — intercompany		—			—			(1,068	)		1,068			—
Capital contributions from parent		—			1,725			2,048			(3,773	)		—
Other, net		418			—			451			—			869

Net cash provided by (used in) financing activities		1,675			1,909			(16,136	)		4,567			(7,985	)
Effect of exchange-rate changes on cash and cash equivalents		—			—			102			—			102

Net increase (decrease) in cash and cash equivalents		3,908			(3	)		(7,245	)		(503	)		(3,843	)
Cash and cash equivalents reclassified to assets held-for-sale		—			—			725			—			725
Cash and cash equivalents at beginning of year		757			5			14,026			—			14,788

Cash and cash equivalents at end of year	$	4,665		$	2		$	7,506		$	(503	)	$	11,670

110

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


Year ended December 31, 2009 ($ in millions)	Parent			Guarantors			Nonguarantors			Consolidating adjustments			Ally consolidated
Operating activities
Net cash (used in) provided by operating activities	$	(3,308	)	$	25		$	(1,299	)	$	(550	)	$	(5,132	)
Investing activities
Purchases of available-for-sale securities		(145	)		—			(21,148	)		145			(21,148	)
Proceeds from sales of available-for-sale securities		89			—			10,153			(89	)		10,153
Proceeds from maturities of available-for-sale securities		—			—			4,527			—			4,527
Net decrease (increase) in investment securities — intercompany		2			—			(103	)		101			—
Net (increase) decrease in finance receivables and loans		(363	)		118			14,504			—			14,259
Proceeds from sales of finance receivables and loans		446			—			(186	)		—			260
Change in notes receivable from GM		—			—			803			—			803
Net (increase) decrease in loans — intercompany		(2,551	)		163			(261	)		2,649			—
Net (increase) decrease in operating lease assets		(1,519	)		—			7,399			—			5,880
Capital contributions to subsidiaries		(8,092	)		(6,052	)		—			14,144			—
Returns of contributed capital		706			—			—			(706	)		—
Sale of business unit, net		—			—			296			—			296
Other, net		(64	)		(1	)		2,163			—			2,098

Net cash (used in) provided by investing activities		(11,491	)		(5,772	)		18,147			16,244			17,128
Financing activities
Net change in short-term debt — third party		6			(78	)		(266	)		—			(338	)
Net increase in bank deposits		—			—			10,703			—			10,703
Proceeds from issuance of long-term debt — third party		9,641			128			20,821			89			30,679
Repayments of long-term debt — third party		(8,831	)		(107	)		(52,410	)		(145	)		(61,493	)
Net change in debt — intercompany		(7	)		(255	)		2,995			(2,733	)		—
Proceeds from issuance of common members’ interests		1,247			—			—			—			1,247
Proceeds from issuance of preferred stock held by U.S. Department of Treasury		8,750			—			—			—			8,750
Dividends paid – third party		(1,592	)		—			—			—			(1,592	)
Dividends paid and returns of contributed capital — intercompany		—			—			(1,256	)		1,256			—
Capital contributions from parent		—			6,052			8,092			(14,144	)		—
Other, net		699			—			365			—			1,064

Net cash provided by (used in) financing activities		9,913			5,740			(10,956	)		(15,677	)		(10,980	)
Effect of exchange-rate changes on cash and cash equivalents		—			—			(602	)		—			(602	)

Net (decrease) increase in cash and cash equivalents		(4,886	)		(7	)		5,290			17			414
Cash and cash equivalents reclassified to assets held-for-sale		—			—			(777	)		—			(777	)
Cash and cash equivalents at beginning of year		5,643			12			9,513			(17	)		15,151

Cash and cash equivalents at end of year	$	757		$	5		$	14,026		$	—		$	14,788

111

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K


Year ended December 31, 2008 ($ in millions)	Parent			Guarantors			Nonguarantors			Consolidating adjustments			Ally consolidated
Operating activities
Net cash provided by (used in) operating activities	$	2,049		$	(19	)	$	12,633		$	(568	)	$	14,095
Investing activities
Purchases of available-for-sale securities		(6,783	)		—			(11,317	)		1,898			(16,202	)
Proceeds from sales of available-for-sale securities		8,903			—			5,165			—			14,068
Proceeds from maturities of available-for-sale securities		898			—			6,604			—			7,502
Net increase in investment securities — intercompany		—			—			(158	)		158			—
Net decrease (increase) in finance receivables and loans		6,504			(32	)		(902	)		—			5,570
Proceeds from sales of finance receivables and loans		1,347			—			19			—			1,366
Change in notes receivable from GM		—			—			(62	)		—			(62	)
Net (increase) decrease in loans — intercompany		(7,559	)		149			2,418			4,992			—
Net decrease (increase) in operating lease assets		2,925			2			(5,838	)		—			(2,911	)
Sales of mortgage servicing rights, net		—			—			797			—			797
Capital contributions to subsidiaries		(1,402	)		(24	)		—			1,426			—
Returns of contributed capital		274			—			—			(274	)		—
Sale of business unit, net		—			—			319			—			319
Other, net		(515	)		(1	)		987			—			471

Net cash provided by (used in) investing activities		4,592			94			(1,968	)		8,200			10,918
Financing activities
Net change in short-term debt — third party		(5,393	)		118			(17,540	)		—			(22,815	)
Net increase in bank deposits		—			—			6,447			—			6,447
Proceeds from issuance of long-term debt — third party		—			245			44,479			—			44,724
Repayments of long-term debt		(10,001	)		(263	)		(47,465	)		(1,898	)		(59,627	)
Net change in debt — intercompany		268			(181	)		5,080			(5,167	)		—
Proceeds from issuance of preferred stock held by U.S. Department of Treasury		5,000			—			—			—			5,000
Dividends paid — third party		(113	)		—			—			—			(113	)
Dividends paid and returns of contributed capital — intercompany		—			(16	)		(826	)		842			—
Capital contributions from parent		—			24			1,402			(1,426	)		—
Other, net		(1,761	)		—			(23	)		—			(1,784	)

Net cash used in financing activities		(12,000	)		(73	)		(8,446	)		(7,649	)		(28,168	)
Effect of exchange-rate changes on cash and cash equivalents		—			—			629			—			629

Net (decrease) increase in cash and cash equivalents		(5,359	)		2			2,848			(17	)		(2,526	)
Cash and cash equivalents at beginning of year		11,002			10			6,665			—			17,677

Cash and cash equivalents at end of year	$	5,643		$	12		$	9,513		$	(17	)	$	15,151

112

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

30.

Guarantees, Commitments, Contingencies, and Other Risks

Guarantees

Guarantees are defined as contracts or indemnification agreements that contingently require us to make payments to third parties based on changes in the underlying agreements with the guaranteed parties. The following summarizes our outstanding guarantees made to third parties on our Consolidated Balance Sheet, for the periods shown.


	2010				2009
December 31, ($ in millions)	Maximum liability		Carrying value of liability		Maximum liability		Carrying value of liability
Default automotive repurchases	$	1,274	$	151	$	699	$	81
Guarantees for repayment of third-party debt		1,068		989		782		—
Standby letters of credit and other guarantees		513		121		2,012		153

Default Automotive Repurchases

Our International Automotive Finance operations provide certain investors in our on- and off-balance sheet arrangements (securitizations) and whole-loan transactions with repurchase commitments for loans that become contractually delinquent within a specified time from their date of origination or purchase. The maximum obligation represents the principal balance for loans sold that are covered by these stipulations. Refer to Note 11 for further information regarding our securitization trusts.

Guarantees for Repayment of Third-party Debt

Under certain arrangements, our International Automotive Finance operations guarantee the repayment of third-party debt obligations in the case of default. These guarantees are collateralized by retail loans or finance leases.

Standby Letters of Credit

Our Commercial Finance Group issues standby letters of credit to customers that represent irrevocable guarantees of payment of specified financial obligations. Third-party beneficiaries primarily utilize standby letters of credit as insurance in the event of nonperformance by our customers. Assets of the customers (i.e., trade receivables, inventory, and cash deposits) generally collateralize letters of credit. Expiration dates on letters of credit range from certain ongoing commitments that will expire during the upcoming year to terms of several years for certain letters of credit.

If nonperformance by a customer occurs for letters of credit, we can be liable for payment of the letter of credit to the beneficiary with our likely recourse being a charge back to the customer or liquidation of the collateral. The majority of customers with whom we have letter of credit exposure fall into the “acceptable” risk-rating category of our Commercial Finance Group’s internal risk-rating system. This category is essentially at the midpoint of our risk rating classifications.

113

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Commitments

Financing Commitments

The contractual commitments were as follows.


December 31, ($ in millions)	2010		2009
Commitments to
Sell mortgages or securities (a)	$	14,349	$	10,465
Originate/purchase mortgages or securities (a)		7,735		9,193
Sell retail automotive receivables (b)		—		4,807
Provide capital to investees (c)		76		145
Warehouse and construction-lending commitments (d)		1,509		1,291
Home equity lines of credit (e)		2,749		2,972
Unused revolving credit line commitments (f)		1,910		3,006

(a)	Amounts primarily include commitments accounted for as derivatives.

(b)	We entered into agreements with third-party banks to sell automotive retail receivables in which we transferred all credit risk to the purchaser (whole-loan sales). We completed the final transactions under these deals in October 2010.

(c)	We are committed to contribute capital to certain private equity funds. The fair value of these commitments is considered in the overall valuation of the underlying assets with which they are associated.

(d)	The fair value of these commitments is considered in the overall valuation of the related assets.

(e)

We are committed to fund the remaining unused balances on home equity lines of credit for certain home equity loans sold into securitization structures (both on- and off-balance sheet structures) if certain deal-specific triggers are met. At December 31, 2010, the commitments to fund home equity lines of credit in off-balance sheet securitizations represented $1.0 billion of the total unfunded commitments of $2.7 billion.

(f)	The unused portion of revolving lines of credit reset at prevailing market rates and, as such, approximate market value.

The mortgage-lending and revolving credit line commitments contain an element of credit risk. Management reduces its credit risk for unused mortgage-lending and unused revolving credit line commitments by applying the same credit policies in making commitments as it does for extending loans. We typically require collateral as these commitments are drawn.

Lease Commitments

Future minimum rental payments required under operating leases, primarily for real property, with noncancelable lease terms expiring after December 31, 2010, are as follows.


Year ended December 31, ($ in millions)
2011	$	85
2012		64
2013		57
2014		51
2015		39
2016 and thereafter		60

Total minimum payment required	$	356

Certain of the leases contain escalation clauses and renewal or purchase options. Rental expenses under operating leases were $97 million, $104 million, and $189 million in 2010, 2009, and 2008, respectively.

114

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Contractual Commitments

We have entered into multiple agreements for information technology, marketing and advertising, and voice and communication technology and maintenance. Many of the agreements are subject to variable price provisions, fixed or minimum price provisions, and termination or renewal provisions.


Year ended December 31, ($ in millions)
2011	$	291
2012 and 2013		324
2014 and 2015		194
2016 and thereafter		9

Total future payment obligations	$	818

Contingencies

Legal Contingencies

We are subject to potential liability under laws and government regulations and various claims and legal actions that are pending or may be asserted against us.

We are named as defendants in a number of legal actions and are, from time to time, involved in governmental proceedings arising in connection with our various businesses. Some of the pending actions purport to be class actions. We establish reserves for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims. Based on information currently available, advice of counsel, available insurance coverage, and established reserves, it is the opinion of management that the eventual outcome of the actions against us will not have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

Temporary Suspension of Mortgage Foreclosure Sales and Evictions

Representatives of federal and state governments, including the United States Department of Justice, the FRB, the FDIC, the SEC and law enforcement authorities in all 50 states, have announced investigations into the procedures followed by mortgage servicing companies and banks, including subsidiaries of Ally, in connection with mortgage foreclosure home sales and evictions. We are cooperating with these investigations. The result of these investigations is uncertain but we expect that Ally or its subsidiaries will become subject to penalties, sanctions, or other adverse actions that could have a material adverse impact on us.

On September 17, 2010, GMAC Mortgage, LLC (GMACM), an indirect wholly owned subsidiary of Ally Financial Inc., temporarily suspended mortgage foreclosure home sales and evictions and postponed hearings on motions for judgment in certain states. This decision was made after an operational matter was detected in the execution of certain affidavits used in connection with judicial foreclosures in some but not all states. The issue relates to whether persons signing the affidavits had appropriately verified the information in them and whether they were signed in the immediate physical presence of a notary. In response to this and to enhance existing processes, GMACM implemented supplemental procedures that are used in all new foreclosure cases to seek to ensure that affidavits are properly verified and executed. GMACM is also conducting an additional review of all foreclosure files in all states prior to going to foreclosure sale.

Our review related to this matter is ongoing, and we cannot predict the ultimate impact of any deficiencies that have been or may be identified in our historical foreclosure processes. However, thus far we have not found any evidence of unwarranted foreclosures. There are potential risks related to these matters that extend beyond potential liability on individual foreclosure actions. Specific risks could include, for example, claims and litigation related to foreclosure file remediation and resubmission; claims from investors that hold securities that become adversely impacted by continued delays in the foreclosure process; actions by courts, state attorneys general, or regulators to delay further the foreclosure process after submission of corrected affidavits; regulatory fines and sanctions; and reputational risks. At December 31, 2010, we recorded a liability of approximately $13 million related to potential fines and penalties we determined were probable and estimable.

115

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

We did not record any additional liability related to unasserted claims or loss contingencies at December 31, 2010, because we do not believe such liabilities are probable and estimable based on information currently available nor are we able to estimate a range of losses.

Mortgage-backed Securities Litigation

There are nine cases relating to various private-label MBS offerings that are currently pending. Plaintiffs in these cases include Cambridge Place Investment Management Inc. (two cases pending in Suffolk County Superior Court, Massachusetts); The Charles Schwab Corporation (case pending in San Francisco County Superior Court, California); Federal Home Loan Bank of Chicago (case pending in Cook County Circuit Court, Illinois); Federal Home Loan Bank of Indianapolis (case filed in Marion County Superior Court, Indiana); Massachusetts Mutual Life Ins. Co. (case pending in federal court in the District of Massachusetts); Allstate Insurance Co. (served in Hennepin County, Minnesota, District Court); New Jersey Carpenters Health Fund, et al. (a putative class action in which certification has been denied, pending in federal court in the Southern District of New York); and the West Virginia Investment Management Board (case pending in the Kanawha County Circuit Court, West Virginia). Each of the above cases includes as defendants certain of our mortgage subsidiaries, and the New Jersey Carpenters and Massachusetts Mutual cases also include as defendants certain current and former employees. The plaintiffs in all cases have alleged that the various defendant subsidiaries made misstatements and omissions in registration statements, prospectuses, prospectus supplements, and other documents related to MBS offerings. The alleged misstatements and omissions typically concern underwriting standards. Plaintiffs claim that such misstatements and omissions constitute violations of state and/or federal securities law and common law including negligent misrepresentation and fraud. Plaintiffs seek monetary damages and rescission. The range of any potential losses related to these matters is not currently determinable.

There are two additional cases pending in the New York County Supreme Court where MBIA Insurance Corp. (MBIA) has alleged that two of our mortgage subsidiaries breached their contractual representations and warranties relating to the characteristics of the mortgage loans contained in certain insured MBS offerings. MBIA further alleges that the defendant subsidiaries failed to follow certain remedy procedures set forth in the contracts and improperly serviced the mortgage loans. Along with claims for breach of contract, MBIA also alleges fraud. The range of any potential losses related to these matters is not currently determinable.

Private-label Matters

Claims related to private-label mortgage-backed securities (PLS) have been brought under federal and state securities laws (among other theories), and it is possible that additional similar claims will be brought in the future. The claims made to date are similar in some respects to the repurchase demands we have previously disclosed related to alleged breaches of representations and warranties our mortgage subsidiaries made in connection with mortgage loans they sold or securitized. Further and as previously disclosed, the Federal Housing Finance Agency (FHFA), as conservator of Fannie Mae and Freddie Mac, announced on July 12, 2010, that it issued 64 subpoenas to various entities seeking documents related to PLS in which Fannie Mae and Freddie Mac had invested. Certain of our mortgage subsidiaries received such subpoenas. In connection with our settlement with Fannie Mae announced on December 23, 2010, the FHFA has agreed to withdraw the subpoenas that relate to Fannie Mae. However, we continue to respond to the subpoenas related to Freddie Mac. The FHFA has indicated that documents provided in response to the subpoenas will enable the FHFA to determine whether they believe issuers of PLS are potentially liable to Freddie Mac for losses they might have suffered. While a final outcome in any existing or future legal proceeding related to the foregoing, if unfavorable, could result in additional liability, the range of any potential losses related to the above described matters is not currently determinable.

Other Contingencies

We are subject to potential liability under various other exposures including tax, nonrecourse loans, self-insurance, and other miscellaneous contingencies. We establish reserves for these contingencies when the item becomes probable and the costs can be reasonably estimated. The actual costs of resolving these items may be substantially higher or lower than the amounts reserved for any one item. Based on information currently available, it is the opinion of management that the eventual outcome of these items will not have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

116

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Other Risks

Loan Repurchases and Obligations Related to Loan Sales

Overview

Our Mortgage operations sell loans that take the form of securitizations guaranteed by the GSEs and to whole-loan investors. We have issued private-label mortgage-backed securities infrequently since 2007. In prior years, our volume of private-label securitization issuances were considerably larger, and they included securitized loans where monolines have insured the related bonds. We have settled with both Fannie Mae and Freddie Mac, limiting our remaining exposure with the GSEs. In connection with securitizations and loan sales, investors are provided various representations and warranties related to the loans sold. The specific representations and warranties vary among different transactions and investors but typically relate to, among other things, the ownership of the loan, the validity of the lien securing the loan, the loan’s compliance with the criteria for inclusion in the transaction, including compliance with underwriting standards or loan criteria established by the buyer, the ability to deliver required documentation and compliance with applicable laws. In general, the representations and warranties described above may be enforced at any time unless a sunset provision is in place. ResCap assumes all of the customary representation and warranty obligations for loans purchased from Ally Bank and subsequently sold into the secondary market, generally through securitizations guaranteed by the GSEs. In the event ResCap fails to meet these obligations, Ally Financial Inc. has provided Ally Bank a guaranteed coverage of liability. Upon a breach of a representation, the breach is corrected in a manner conforming to the provisions of the sale agreement. This may require us either to repurchase the loan or indemnify the investor for incurred losses.

Originations

We believe our exposure to representation and warranty claims is most significant for loans sold between 2004 through 2008, specifically the 2006 and 2007 vintages which were originated and sold prior to enhanced underwriting standards and risk-mitigation actions implemented in 2008 and forward, including product offerings which are more conservative. Since 2009, we have focused primarily on prime conforming and government-insured mortgages in the United States and high-quality government-insured residential mortgages in Canada. In addition, we ceased offering interest-only jumbo mortgages in 2010. Our representation and warranty risk-mitigation strategies include, but are not limited to, pursuing settlements with investors where economically beneficial in order to resolve a pipeline of demands in lieu of loan by loan assessments that could result in us repurchasing loans, aggressively contesting claims we do not consider valid (rescinding claims), or actively seeking recourse against correspondent lenders from whom we purchased loans.

Repurchase Process

As soon as practical, after receiving a claim under representation and warranty obligations, we evaluate the request and take appropriate action. Historically, repurchase demands were related to loans that became delinquent within the first few years following origination and varied by investor. As a result of market developments over the past several years repurchase demand behavior has changed significantly. Direct investors, GSEs, and whole-loan investors are more likely to submit claims for loans that become delinquent at any time while a loan is outstanding or when a loan incurs a loss. Actual incurred losses more significantly drive monoline investor behavior, which can significantly extend the period over which claims are likely to be presented. This occurs because insurance claims paid by the monolines are not required until overcollateralization is depleted and the monolines are not incented to request loan repurchases until they have paid the insurance claims. Representation and warranty claims are generally reviewed on a loan by loan basis to validate if there has been a breach requiring a potential repurchase or indemnification payment. We actively contest claims to the extent we do not consider them valid. We are not required to either repurchase the loan or provide an indemnification payment where claims are not valid.

We seek to manage the risk of repurchase and the associated credit exposure through our underwriting and quality assurance practices and by servicing mortgage loans to meet investor standards. We believe that, in general, the longer a loan performs prior to default the less likely it is that an alleged breach of representation and warranty will have a material impact on the loan’s performance. When we do repurchase loans, we bear the subsequent credit loss on the loans. Repurchased loans are classified as held-for-sale and initially recorded at fair value. While investors’ repurchase and demand behavior has changed given the recent market conditions, we continue to maintain constructive relationships with the GSEs and other investors.

117

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Representation and Warranty Obligation Reserve Methodology

The reserve for representation and warranty obligations reflects management’s best estimate of probable lifetime loss. We consider historical and recent demand trends in establishing the reserve. The methodology used to estimate the reserve considers a variety of assumptions including borrower performance (both actual and estimated future defaults), repurchase demand behavior, historical loan defect experience, and historical and estimated future loss experience, which includes projections of future home price changes as well as other qualitative factors including investor behavior. In cases where we do not have or have limited current or historical demand experience with an investor, it is difficult to predict and estimate the level and timing of any potential future demands. As such, losses cannot currently be reasonably estimated and a liability is not recognized. Management monitors the adequacy of the overall reserve and makes adjustments to the level of reserve, as necessary, after consideration of other qualitative factors including ongoing dialogue with counterparties.

At the time a loan is sold, an estimate of the fair value of the liability is recorded and classified in accrued expenses and other liabilities on our Consolidated Balance Sheet and recorded as a component of gain (loss) on mortgage and automotive loans, net, in our Consolidated Statement of Income. We recognize changes in the reserve when additional relevant information becomes available. Changes in the liability are recorded as other operating expenses in our Consolidated Statement of Income. The repurchase reserve at December 31, 2010, primarily represents exposure not related to the GSEs.

The following tables summarize the changes in our reserve for representation and warranty obligations.


Year ended December 31, ($ in millions)	2010			2009
Balance at January 1,	$	1,263		$	231
Provision for mortgage representation and warranty expenses
Loan sales		70			11
Change in estimate — continuing operations		670			1,475
Change in estimate — discontinued operations		—			6

Total additions		740			1,492
Realized losses (a)		(1,185	)		(450	)
Recoveries		12			9
Transfer to discontinued operations		—			(19	)

Balance at December 31,	$	830		$	1,263

(a)	Includes principal losses and accrued interest on repurchased loans, indemnification payments, and settlements with counterparty.

Government-sponsored Enterprises

Between 2004 and 2008, we sold $250.8 billion of loans. Each GSE has specific guidelines and criteria for sellers and servicers of loans underlying their securities. In addition, the risk of credit loss of the loan sold was generally transferred to investors upon sale of the securities into the secondary market. Conventional conforming loans were sold to either Freddie Mac or Fannie Mae, and government-insured loans were securitized with Ginnie Mae. For the year ended December 31, 2010, we received $842 million in repurchase claims of which $784 million are associated with the 2004 through 2008 vintages of loans sold to the GSEs. We resolved $968 million claims including $756 million in either settlement, repurchase, or indemnification payments and $212 million related to rescinded claims. Our representation and warranty obligation liability with respect to the GSEs considers the existing unresolved claims and our best estimate of future claims we might receive. We consider our experiences with the each GSE in evaluating our liability. During 2010, we reached agreements with Freddie Mac and Fannie Mae which resolve material repurchase obligations with each counterparty.

In March 2010, certain of our mortgage subsidiaries entered into an agreement with Freddie Mac under which we made a one-time payment to Freddie Mac for the release of repurchase obligations relating to most of the mortgage loans sold to Freddie Mac prior to January 1, 2009. The agreement does not cover any violation of servicing obligations related to any failure to comply with any requirements of law applicable to foreclosing on property serving as collateral for any applicable mortgage loan. This agreement does not release any of our obligations with respect to loans where our subsidiary, Ally Bank, is the owner of the servicing.

118

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

On December 23, 2010, certain of our mortgage subsidiaries entered into an agreement with Fannie Mae under which we made a one-time payment to Fannie Mae for the release of repurchase obligations, including private-label securitization exposure, related to most of the mortgage loans we sold to Fannie Mae prior to June 30, 2010. We continue to be responsible for other contractual obligations we have with Fannie Mae including all indemnification obligations that may arise in connection with the servicing of the mortgages. The agreement does not cover any violation of servicing obligations related to any failure to comply with any requirements of law applicable to foreclosing on property serving as collateral for any applicable mortgage loan. This agreement does not release any of our obligations with respect to loans where our subsidiary, Ally Bank, is the owner of the servicing.

The FHFA as conservator of Fannie Mae and Freddie Mac, announced on July 12, 2010, that it issued 64 subpoenas to various entities seeking documents related to private-label mortgage-backed securities in which Fannie Mae and Freddie Mac had invested. Certain of these subpoenas were directed at our mortgage subsidiaries. In connection with the agreement reached with Fannie Mae, the FHFA has agreed to withdraw those subpoenas that relate to Fannie Mae while the subpoenas that relate to Freddie Mac remain open.

Whole-loan Sales

In addition to the settlements with the GSEs noted earlier, we have settled with several whole-loan investors concerning alleged breaches of underwriting standards. For the year ended December 31, 2010, we have received $126 million in repurchase claims of which $120 million are associated with the 2004 through 2008 vintages of loans sold to whole-loan investors. We resolved $108 million of claims, including $44 million in either settlements, repurchases, or indemnification payments and $64 million related to rescinded claims.

Monoline Insurers

Historically, our Mortgage operations have securitized whole loans where the monolines have insured all or some of the related bonds and have guaranteed the timely repayment of bond principal and interest when an issuer defaults. Overall, the representation and warranty obligations to monoline insurers are not as stringent as those to the GSEs and impose a higher burden of proof on the insurer. Typically, any alleged breach requires the insurer to have both the ability to assert a claim as well as evidence that a defect has had a material adverse effect on the interest of the security holders or the insurer. For the period 2004 through 2008, we sold $42.7 billion of loans into these monoline-wrapped securitizations. For the year ended December 31, 2010, we received $151 million in repurchase claims from the monolines associated with the 2004 through 2008 securitizations. We resolved $43 million of the claims including $36 million of indemnification payments and $7 million related to rescinded claims.

Unlike the repurchase protocols and experience established with the GSEs, experience with monolines has not been as predictable. A significant portion of the outstanding unresolved monoline repurchase claims are with one insurer with whom we are currently in litigation.

Private-label Securitization

Historically, our Mortgage operations were very active in the securitization market selling whole loans into special-purpose entities and selling these private-label mortgage backed securities to investors. We have issued private-label mortgage-backed securities infrequently since 2007.

In general, representations and warranties provided as part of our securitization activities are less rigorous than those provided to the GSEs and generally impose higher burdens on investors seeking repurchase. In order to successfully assert a claim, an investor must prove breach of the representations and warranties that materially and adversely affects the interest of all investors. Securitization documents typically provide the investors with a right to request that the trustee investigate and initiate a repurchase claim. However, a class of investors generally are required to coordinate with other investors in that class comprising not less than 25% of the percentage interest constituting a class of securities for that class issued by the trust to pursue claims for breach of representations and warranties. In addition, our private-label securitizations generally require that the servicer or trustee give notice to the other parties whenever it becomes aware of facts or circumstances that reveal a breach of representation that materially and adversely affects the interest of the certificate holders. If, for example, we as servicer became aware of such facts and circumstances, we would typically be required to initiate a repurchase at that time. The GSEs were among the purchasers of securities in our private-label securitizations.

119

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

Regarding our securitization activities, we have exposure to potential loss primarily through two avenues. First, investors may request that we repurchase loans or make the investor whole for losses incurred if it is determined that we violated representations and warranties made at the time of the sale. Contractual representations and warranties are different based on the specific deal structure and investor. Second, investors in securitizations may attempt to achieve rescission of their investments, or damages through litigation by claiming that the applicable offering documents were materially deficient. If an investor properly made and proved its allegations, the investor might attempt to claim that damages could include loss of market value on the investment even if there were little or no credit loss in the underlying loans. We have a limited amount of repurchase experience with these investors, and therefore it is currently not possible to estimate future repurchase obligations and any related loss or range of loss.

31.

Quarterly Financial Statements (unaudited)


2010 ($ in millions)	First quarter			Second quarter			Third quarter			Fourth quarter
Net financing revenue	$	752		$	709		$	590		$	530
Total other revenue		1,098			1,388			1,457			1,378

Total net revenue		1,850			2,097			2,047			1,908
Provision for loan losses		144			218			9			71
Other noninterest expense		1,519			1,444			1,713			1,605

Income from continuing operations before income tax expense		187			435			325			232
Income tax expense from continuing operations		36			33			48			36

Net income from continuing operations		151			402			277			196

Income (loss) from discontinued operations, net of tax		11			163			(8	)		(117	)

Net income	$	162		$	565		$	269		$	79

2009
Net financing revenue	$	459		$	379		$	564		$	676
Total other revenue		1,247			865			1,407			898

Total net revenue		1,706			1,244			1,971			1,574
Provision for loan losses		745			1,117			679			3,063
Other noninterest expense		1,650			1,723			2,163			2,314

Loss from continuing operations before income tax (benefit) expense		(689	)		(1,596	)		(871	)		(3,803	)
Income tax (benefit) expense from continuing operations		(128	)		1,093			(294	)		(597	)

Net loss from continuing operations		(561	)		(2,689	)		(577	)		(3,206	)

Loss from discontinued operations, net of tax		(114	)		(1,214	)		(190	)		(1,747	)

Net loss	$	(675	)	$	(3,903	)	$	(767	)	$	(4,953	)

2008
Net financing revenue (loss)	$	702		$	226		$	464		$	(475	)
Total other revenue		1,859			1,271			780			11,361

Total net revenue		2,561			1,497			1,244			10,886
Provision for loan losses		431			642			837			1,192
Other noninterest expense		1,840			2,128			2,468			1,913

Income (loss) from continuing operations before income tax expense (benefit)		290			(1,273	)		(2,061	)		7,781
Income tax expense (benefit) from continuing operations		74			8			(116	)		(102	)

Net income (loss) from continuing operations		216			(1,281	)		(1,945	)		7,883

Loss from discontinued operations, net of tax		(805	)		(1,201	)		(578	)		(421	)

Net (loss) income	$	(589	)	$	(2,482	)	$	(2,523	)	$	7,462

120

Notes to Consolidated Financial Statements

Ally Financial Inc. Ÿ Form 10-K

32.

Subsequent Events

Declaration of Quarterly Dividend Payments

On January 4, 2011, the Ally Board of Directors declared quarterly dividend payments on certain outstanding preferred stock. This included a cash dividend of $1.125 per share, or a total of $134 million, on Fixed Rate Cumulative Mandatorily Convertible Preferred Stock, Series F-2 and a cash dividend of $17.50 per share, or a total of $45 million, on Fixed Rate Cumulative Perpetual Preferred Stock, Series G. The dividends were paid on February 15, 2011.

February 2011 Notes Offering and Debt Repurchase

On February 11, 2011, we completed a securities offering of $2.25 billion in aggregate principal amount of Ally senior guaranteed notes due February 2014. The offering included $1.0 billion of fixed rate notes at par to yield 4.5% and $1.25 billion of floating rate notes with the same maturity date to yield a spread of 320 basis points over the three-month London interbank offer rate.

In addition, in February, we repurchased certain debt that will result in a $42 million loss for the first quarter 2011. The loss primarily represented accelerated original issue discount amortization of $31 million that was scheduled to amortize in 2011.

121

Executive Privileges and Compensation Certificate

Exhibit 99.2

EXECUTIVE PRIVILEGES AND COMPENSATION CERTIFICATE

February 24, 2011

This certificate is delivered pursuant to Section 111 of the Emergency Economic Stabilization ACT of 2008 (“EESA”), as amended by the American Recovery and Reinvestment Act of 2009 (“ARRA”).

The undersigned hereby certify, to the best of their knowledge in their capacities as Principal Executive Officer and Principal Financial Officer of General Motors Holdings LLC, and not in their individual capacities, as follows:

(i) The compensation committee of General Motors Company has discussed, reviewed, and evaluated with the senior risk officer at least every six months during the period beginning on January 1, 2010 and ending with December 31, 2010, senior executive officer (SEO) compensation plans and employee compensation plans and the risks these plans pose to General Motors Holdings LLC;

(ii) The compensation committee of General Motors Company has identified and limited during the period beginning on January 1, 2010 and ending with December 31, 2010 the features in the SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of General Motors Holdings LLC and identified any features in the employee compensation plans that pose risks to General Motors Holdings LLC and limited those features to ensure that General Motors Holdings LLC is not unnecessarily exposed to risks;

(iii) The compensation committee has reviewed at least every six months during the period beginning on January 1, 2010 and ending with December 31, 2010 the terms of each employee compensation plan and identified the features in the plan that could encourage the manipulation of reported earnings of General Motors Holdings LLC to enhance the compensation of an employee and has limited these features that would encourage the manipulation of reported earnings of General Motors Holdings LLC;

(iv) The compensation committee of General Motors Company will certify to the reviews of the SEO compensation plans and employee compensation plans required under (i) and (iii) above;

(v) The compensation committee of General Motors Company will provide a narrative description of how it limited during any part of the most recently completed fiscal year that was a TARP period the features in

(A) SEO compensation plans that could lead SEOs to take unnecessary and excessive risks that could threaten the value of General Motors Holdings LLC;

(B) Employee compensation plans that unnecessarily expose General Motors Holdings LLC to risks; and

1 of 4

(C) Employee compensation plans that could encourage the manipulation of reported earnings of General Motors Holdings LLC to enhance the compensation of an employee;

(vi) General Motors Holdings LLC has required that bonus payments to SEOs or any of the next twenty most highly compensated employees, as defined in the regulations and guidance established under section 111 of EESA (bonus payments), be subject to a recovery or ‘‘clawback’’ provision during any part of the most recently completed fiscal year that was a TARP period if the bonus payments were based on materially inaccurate financial statements or any other materially inaccurate performance metric criteria;

(vii) General Motors Holdings LLC has prohibited any golden parachute payment, as defined in the regulations and guidance established under section 111 of EESA, to a SEO or any of the next five most highly compensated employees during the period beginning on January 1, 2010 and ending with December 31, 2010;

(viii) General Motors Holdings LLC has limited bonus payments to its applicable employees in accordance with section 111 of EESA and the regulations and guidance established thereunder during the period beginning on January 1, 2010 and ending with December 31, 2010 and has received or is in the process of receiving approvals from the Office of the Special Master for TARP Executive Compensation for compensation payments and structures as required under the regulations and guidance established under section 111 of EESA, and has not made any payments inconsistent with those approved payments and structures;

(ix) General Motors Holdings LLC and its employees have complied with the excessive or luxury expenditures policy, as defined in the regulations and guidance established under section 111 of EESA, during the period beginning on January 1, 2010 and ending with December 31, 2010, and that any expenses requiring approval of the board of directors, a committee of the board of directors, an SEO, or an executive officer with a similar level of responsibility, were properly approved;

(x) General Motors Company will permit a non-binding shareholder resolution in compliance with any applicable Federal securities rules and regulations on the disclosures provided under the Federal securities laws related to SEO compensation paid or accrued during any part of the most recently completed fiscal year that was a TARP period;

(xi) General Motors Holdings LLC will disclose the amount, nature, and justification for the offering during the period beginning on January 1, 2010 and ending with December 31, 2010 of any perquisites, as defined in the regulations and guidance established under section 111 of EESA, whose total value exceeds $25,000 for each employee subject to the bonus payment limitations identified in paragraph (viii);

2 of 4

(xii) General Motors Holdings LLC, either directly or through the Executive Privileges and Compensation Compliance Certificate provided by the Executive Compensation Committee, will disclose whether General Motors Holdings LLC, the board of directors of General Motors Company, or the compensation committee of General Motors Company has engaged during the period beginning on January 1, 2010 and ending with December 31, 2010 a compensation consultant; and the services the compensation consultant or any affiliate of the compensation consultant provided during this period;

(xiii) General Motors Holdings LLC has prohibited the payment of any gross-ups, as defined in the regulations and guidance established under section 111 of EESA, to the SEOs and the next twenty most highly compensated employees during the period beginning on January 1, 2010 and ending with December 31, 2010;

(xiv) General Motors Holdings LLC has substantially complied with all other requirements related to employee compensation that are provided in the agreement between General Motors Holdings LLC and Treasury, including any amendments;

(xv) General Motors Holdings LLC has provided listings to the U. S. Treasury of the SEOs and the twenty next most highly compensated employees for the current fiscal year, with the non-SEOs ranked in order of level of annual compensation starting with the greatest amount. The following employees are the SEOs of General Motors Company:

Senior Executive Officers (SEOs)


Employee Name		Title
Akerson, Daniel F.		Chairman & Chief Executive Officer
Whitacre, Jr., Edward E.		Chairman & Chief Executive Officer (Retired)
Girsky, Stephen J.		Vice Chairman, Corporate Strategy, Business Development, Global Product Planning, & Global Purchasing and Supply Chain
Liddell, Christopher P.		Vice Chairman & Chief Financial Officer
Stephens, Thomas G.		Vice Chairman & Global Chief Technology Officer
Reilly, David N.		GM Vice President & President, Europe

3 of 4

(xvi) I understand that a knowing and willful false or fraudulent statement made in connection with this certification may be punished by fine, imprisonment, or both.

The foregoing certification is made and delivered in our capacities described above for and on behalf of General Motors Holdings LLC as of the date first written above.


GENERAL MOTORS HOLDINGS LLC

By:		/s/ DANIEL F. AKERSON
Daniel F. Akerson
Principal Executive Officer

By:		/s/ CHRISTOPHER P. LIDDELL
Christopher P. Liddell
Principal Financial Officer

4 of 4