General Motors 2010 Annual Report Download - page 273

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.
General Motors Company 2010 Annual Report 271