General Motors 2013 Annual Report Download - page 109

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
punitive damages are claimed in some of these lawsuits and such claims are inherently unpredictable, accruals incorporate historic
experience with these types of claims. Liabilities have been recorded in Accrued liabilities and Other liabilities and deferred income
taxes for the expected cost of all known product liability claims plus an estimate of the expected cost for product liability claims that
have already been incurred and are expected to be filed in the future for which we are self-insured.
We indemnify dealers for certain product liability related claims including products sold by Old GM. We monitor actual claims
experience and make periodic adjustments to our estimates. Based on both management’s judgment concerning the projected number
and value of both dealer indemnification obligations and product liability claims, we have applied actuarial methodologies and
estimated the liability. We expect our product liability reserve to rise in future periods as new claims arise from incidents subsequent
to July 9, 2009.
Credit Card Programs
Credit card programs offer rebates that can be applied primarily against the purchase or lease of our vehicles.
Environmental Liability
Automotive operations, like operations of other companies engaged in similar businesses, are subject to a wide range of
environmental protection laws, including laws regulating air emissions, water discharges, waste management and environmental
remediation. Liabilities have been recorded primarily in Other liabilities and deferred income taxes for the expected costs to be paid
over the periods of remediation for the applicable sites, which typically range from five to 30 years.
The final outcome of environmental matters cannot be predicted with certainty at this time. Subsequent adjustments to initial
estimates are recorded as necessary based upon additional information obtained. In future periods new laws or regulations, advances
in remediation technologies and additional information about the ultimate remediation methodology to be used could significantly
change our estimates. It is possible that the resolution of one or more environmental matters could exceed the amounts accrued in an
amount that could be material to our financial condition, results of operations and cash flows. At December 31, 2013 we estimate the
remediation losses could range from $120 million to $230 million.
Other Matters
Brazil Excise Tax Incentive
In October 2012 the Brazilian government issued a decree which increased an excise tax rate by 30 percentage points, but also
provided an offsetting tax incentive that requires participating companies to meet certain criteria, such as local investment and fuel
efficiency standards. Participating companies that fail to meet the required criteria are subject to clawback provisions and fines. At
December 31, 2013 we believe it is reasonably assured that the program requirements will be met based on the current business model
and available technologies.
GME Planned Spending Guarantee
As part of our Opel/Vauxhall restructuring plan agreed to with European labor representatives we have committed to achieving
specified milestones associated with planned spending from 2011 to 2014 on certain product programs. If we fail to accomplish the
requirements set out under the agreement we will be required to pay certain amounts up to Euro 265 million for each of those years,
and/or interest on those amounts, to our employees. Certain inventory with a carrying amount of $200 million and $186 million at
December 31, 2013 and 2012 was pledged as collateral under the agreement. Through December 31, 2013 spending was sufficient to
meet the current requirements under the agreement and the specified milestones have been accomplished. Management has the intent
and believes it has the ability to meet the future requirements under the agreement.
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