General Motors 2010 Annual Report Download - page 116

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.
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114 General Motors Company 2010 Annual Report