General Motors 2010 Annual Report Download - page 236

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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;
234 General Motors Company 2010 Annual Report