General Motors 2010 Annual Report Download - page 274

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.
272 General Motors Company 2010 Annual Report