General Motors 2011 Annual Report Download - page 159

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Delphi Corporation
Benefit Guarantee
In 1999, Old GM spun-off Delphi Automotive Systems Corporation, which became Delphi. Prior to the consummation of the
DMDA, Delphi was our and Old GM’s largest supplier of automotive systems, components and parts, and we and Old GM were
Delphi’s largest customer. From 2005 to 2008 Old GM’s annual purchases from Delphi ranged from approximately $6.5 billion to
approximately $10.2 billion. At the time of the spin-off, employees of Delphi Automotive Systems Corporation became employees of
Delphi, and Old GM entered into the Delphi Benefit Guarantee Agreements (DBGA) with the UAW, the International Union of
Electronic, Electrical, Salaried, Machine and Furniture Workers – Communication Workers of America (IUE-CWA) and the United
Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW)
providing contingent benefit guarantees whereby, under certain conditions, Old GM would make payments for certain pension and
OPEB benefits to certain former U.S. hourly employees that became employees of Delphi. The DBGA provided that in the 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 DBGA, in connection with Delphi’s commencement in October 2005 of Chapter 11 proceedings
under the U.S. Bankruptcy Code (Bankruptcy Code).
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 intended to: (1) resolve outstanding issues between Delphi and Old GM that arose before Delphi’s emergence
from its Chapter 11 proceedings; (2) govern certain aspects of Old GM’s ongoing commercial relationship with Delphi; and
(3) address 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 Delphi-GM Settlement Agreements.
The Amended Delphi-GM Settlement Agreements included Old GM’s commitments to reimburse Delphi for certain: (1) employee
benefit related costs, including OPEB and pension cost; (2) employee termination related costs; (3) ongoing labor costs; and
(4) production and other facilitation related costs. In addition, Old GM committed to transfers, subject to certain conditions, of net
liabilities from the Delphi Hourly Rate Plan to Old GM’s U.S. hourly pension plan.
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. As a result of the September 2008 implementation of the Delphi-GM Settlement
Agreements Old GM paid $1.0 billion to Delphi in the period January 1, 2009 through July 9, 2009 in settlement of amounts accrued
to date against Old GM commitments. We paid $288 million in 2009 prior to the consummation of the DMDA in settlement of
amounts accrued to date against our commitments.
Upon consummation of the DMDA, we settled and terminated commitments with limited exceptions under the Delphi-GM
Settlement Agreements, and we and Delphi waived all claims against each other under the Delphi-GM Settlement Agreements.
IUE-CWA and USW Settlement Agreement
In September 2009 we entered into a settlement agreement with MLC, the IUE-CWA and the USW that resolved the DBGA with
these unions. The agreement was approved by the Bankruptcy Court in November 2009.
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