General Motors 2011 Annual Report Download - page 181

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Under a lease pull-ahead program, a customer is encouraged to terminate their lease early and buy or lease a new GM vehicle. Ally
Financial waives the customer’s remaining payment obligation under their current lease and Ally Financial is compensated for any
foregone revenue from the waived payments. Since these programs generally accelerate the resale of the vehicle, the proceeds are
typically higher than if the vehicle had been sold at contract maturity. The reimbursement to Ally Financial for the foregone payments
is reduced by the amount of this benefit.
Exclusivity Arrangements
We have entered into exclusivity agreements with Ally Financial whereby: (1) for a two-year period, retail financing incentive
programs can be offered through a third party financing source under certain specified circumstances, and after such two-year period
beginning in January 2011 any such incentive programs can be offered on a graduated basis through third parties on a non-exclusive
basis, or if Ally Financial matches the rates offered by such third party on a side-by-side basis with Ally Financial; (2) Ally Financial
has no obligation to provide financing; and (3) Ally Financial has no targets against which it could be assessed penalties. After
December 24, 2013 we will have the right to offer retail financing incentive programs through any third party financing source,
including Ally Financial, without any restrictions or limitations.
Contractual Exposure Limit
We have an agreement with Ally Financial that limits certain unsecured obligations arising from service agreements to Ally
Financial to $1.5 billion and limits the sum of maximum unsecured exposure and maximum secured exposure to the greater of $3.0
billion or 15% of Ally Financial’s capital from and after December 30, 2010.
Vehicle Repurchase Obligations
Our agreement with Ally Financial requires the repurchase of Ally Financial financed inventory invoiced to dealers with limited
exclusions, in the event of a qualifying voluntary or involuntary termination of the dealer’s sales and service agreement. The
repurchase obligation ended in August 2010 for vehicles invoiced through August 2009, ended in August 2011 for vehicles invoiced
through August 2010, ends in August 2012 for vehicles invoiced through August 2011 and ends in August 2013 for vehicles invoiced
through August 2012.
The maximum potential amount of future payments under this guarantee is based on the repurchase value of total eligible vehicles
financed by Ally Financial in dealer stock. If vehicles are required to be repurchased under this arrangement, the total exposure would be
reduced to the extent vehicles are able to be resold to another dealer. The fair value of the guarantee, which considers the likelihood of
dealers terminating and estimated loss exposure for ultimate disposition of vehicles, was recorded as a reduction of revenue.
Balance Sheet
The following table summarizes the balance sheet effects of transactions with Ally Financial (dollars in millions):
Successor
December 31,
2011
December 31,
2010
Assets
Accountsandnotesreceivable,net(a) ...................................................... $ 243 $ 290
Otherassets(b) ........................................................................ $ 26
Liabilities
Accountspayable(c) .................................................................... $ 59 $ 168
Short-term debt and current portion of long-term debt (d) ....................................... $1,068 $1,043
Accrued liabilities and other liabilities (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 650 $1,167
Long-termdebt(f) ...................................................................... $ 8 $ 43
Othernon-currentliabilities(g)............................................................ $ 35 $ 84
General Motors Company 2011 Annual Report 179