General Motors 2010 Annual Report Download - page 232

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.
230 General Motors Company 2010 Annual Report