Edgar Filing: General Motors Co

Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549-1004

Form 10-Q



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-34960

GENERAL MOTORS COMPANY

(Exact name of registrant as specified in its charter)



STATE OF DELAWARE	27-0756180
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

300 Renaissance Center, Detroit, Michigan	48265-3000
(Address of principal executive offices)	(Zip Code)

(313) 667-1500

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

As of October 17, 2017 the number of shares outstanding of common stock was 1,420,407,560 shares.

INDEX



			Page
PART I
Item 1.	Condensed Consolidated Financial Statements		1
	Condensed Consolidated Income Statements (Unaudited)		1
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)		1
	Condensed Consolidated Balance Sheets (Unaudited)		2
	Condensed Consolidated Statements of Cash Flows (Unaudited)		3
	Condensed Consolidated Statements of Equity (Unaudited)		4
	Notes to Condensed Consolidated Financial Statements		5
	Note 1.	Nature of Operations and Basis of Presentation	5
	Note 2.	Discontinued Operations	6
	Note 3.	Marketable Securities	8
	Note 4.	GM Financial Receivables	10
	Note 5.	Inventories	11
	Note 6.	Equipment on Operating Leases	11
	Note 7.	Equity in Net Assets of Nonconsolidated Affiliates	12
	Note 8.	Variable Interest Entities	12
	Note 9.	Automotive and GM Financial Debt	13
	Note 10.	Derivative Financial Instruments	14
	Note 11.	Product Warranty and Related Liabilities	15
	Note 12.	Pensions and Other Postretirement Benefits	16
	Note 13.	Commitments and Contingencies	16
	Note 14.	Income Taxes	21
	Note 15.	Restructuring and Other Initiatives	21
	Note 16.	Stockholders' Equity and Noncontrolling Interests	22
	Note 17.	Earnings Per Share	23
	Note 18.	Acquisition of Business	23
	Note 19.	Segment Reporting	24
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		47
Item 4.	Controls and Procedures		47
PART II
Item 1.	Legal Proceedings		48
Item 1A.	Risk Factors		48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		48
Item 6.	Exhibits		49
Signature			50

During the three months ended September 30, 2017 we closed the sale of the Opel and Vauxhall business and certain other assets in Europe (the Opel/Vauxhall Business) to Peugeot, S.A. (PSA Group). The Opel/Vauxhall Business and our European financing subsidiaries and branches (the Fincos, and together with the Opel/Vauxhall Business, the European Business) are presented as discontinued operations in our condensed consolidated financial statements for all periods presented. The transfer of the Fincos is expected to close by the end of the year subject to the receipt of the necessary regulatory approvals and satisfaction of other closing conditions. The assets and liabilities of the Fincos are presented as held for sale as of September 30, 2017, and the assets and liabilities of the European Business are presented as held for sale as of December 31, 2016 in our condensed consolidated financial statements.

Table of Contents

GENERAL MOTORS COMPANY AND SUBSIDIARIES

PART I

Item 1. Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)



	Three Months Ended					Nine Months Ended
	September 30, 2017			September 30, 2016		September 30, 2017			September 30, 2016
Net sales and revenue
Automotive	$	30,466		$	36,530	$	98,983		$	102,862
GM Financial	3,157			2,359		8,890			6,426
Total net sales and revenue	33,623			38,889		107,873			109,288
Costs and expenses
Automotive cost of sales	26,511			31,139		85,161			87,761
GM Financial interest, operating and other expenses	2,892			2,202		8,133			5,938
Automotive selling, general and administrative expense	2,304			2,400		7,141			7,378
Total costs and expenses	31,707			35,741		100,435			101,077
Operating income	1,916			3,148		7,438			8,211
Automotive interest expense	151			145		430			413
Interest income and other non-operating income, net	165			109		277			295
Equity income (Note 7)	500			497		1,585			1,717
Income before income taxes	2,430			3,609		8,870			9,810
Income tax expense (Note 14)	2,316			902		3,637			2,436
Income from continuing operations	114			2,707		5,233			7,374
Income (loss) from discontinued operations, net of tax (Note 2)	(3,096		)	5		(3,935		)	119
Net income (loss)	(2,982		)	2,712		1,298			7,493
Net (income) loss attributable to noncontrolling interests	1			61		(11		)	99
Net income (loss) attributable to stockholders	$	(2,981	)	$	2,773	$	1,287		$	7,592

Net income (loss) attributable to common stockholders	$	(2,983	)	$	2,773	$	1,285		$	7,592

Earnings per share (Note 17)
Basic earnings per common share – continuing operations	$	0.08		$	1.79	$	3.52		$	4.83
Basic earnings (loss) per common share – discontinued operations	$	(2.14	)	$	—	$	(2.65	)	$	0.07
Basic earnings (loss) per common share	$	(2.06	)	$	1.79	$	0.87		$	4.90
Weighted-average common shares outstanding – basic	1,445			1,550		1,483			1,548

Diluted earnings per common share – continuing operations	$	0.08		$	1.76	$	3.46		$	4.73
Diluted earnings (loss) per common share – discontinued operations	$	(2.11	)	$	—	$	(2.61	)	$	0.08
Diluted earnings (loss) per common share	$	(2.03	)	$	1.76	$	0.85		$	4.81
Weighted-average common shares outstanding – diluted	1,472			1,574		1,507			1,578

Dividends declared per common share	$	0.38		$	0.38	$	1.14		$	1.14

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions) (Unaudited)



	Three Months Ended						Nine Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
Net income (loss)	$	(2,982	)	$	2,712		$	1,298		$	7,493
Other comprehensive income (loss), net of tax (Note 16)
Foreign currency translation adjustments and other	371			(92		)	572			(27		)
Defined benefit plans	1,213			30			973			79
Other comprehensive income (loss), net of tax	1,584			(62		)	1,545			52
Comprehensive income (loss)	(1,398		)	2,650			2,843			7,545
Comprehensive (income) loss attributable to noncontrolling interests	3			75			(9		)	130
Comprehensive income (loss) attributable to stockholders	$	(1,395	)	$	2,725		$	2,834		$	7,675

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts) (Unaudited)



	September 30, 2017			December 31, 2016
ASSETS
Current Assets
Cash and cash equivalents	$	12,792		$	12,574
Marketable securities (Note 3)	8,454			11,841
Accounts and notes receivable, net	10,013			8,700
GM Financial receivables, net (Note 4; Note 8 at VIEs)	19,399			16,127
Inventories (Note 5)	11,789			11,040
Equipment on operating leases, net (Note 6)	1,632			1,110
Other current assets (Note 8 at VIEs)	4,909			3,633
Current assets held for sale (Note 2)	7,630			11,178
Total current assets	76,618			76,203
Non-current Assets
GM Financial receivables, net (Note 4; Note 8 at VIEs)	21,021			17,001
Equity in net assets of nonconsolidated affiliates (Note 7)	8,820			8,996
Property, net	35,178			32,603
Goodwill and intangible assets, net	5,854			6,149
Equipment on operating leases, net (Note 6; Note 8 at VIEs)	41,775			34,342
Deferred income taxes	30,723			33,172
Other assets (Note 8 at VIEs)	5,005			3,849
Non-current assets held for sale (Note 2)	4,508			9,375
Total non-current assets	152,884			145,487
Total Assets	$	229,502		$	221,690

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable (principally trade)	$	23,265		$	23,333
Short-term debt and current portion of long-term debt (Note 9)
Automotive	1,127			1,060
GM Financial (Note 8 at VIEs)	24,480			22,737
Accrued liabilities	26,603			25,893
Current liabilities held for sale (Note 2)	6,374			12,158
Total current liabilities	81,849			85,181
Non-current Liabilities
Long-term debt (Note 9)
Automotive	12,508			9,500
GM Financial (Note 8 at VIEs)	54,558			41,826
Postretirement benefits other than pensions (Note 12)	5,758			5,803
Pensions (Note 12)	14,119			15,264
Other liabilities	12,743			12,415
Non-current liabilities held for sale (Note 2)	4,490			7,626
Total non-current liabilities	104,176			92,434
Total Liabilities	186,025			177,615
Commitments and contingencies (Note 13)
Equity (Note 16)
Common stock, $0.01 par value	14			15
Additional paid-in capital	25,782			26,983
Retained earnings	24,230			26,168
Accumulated other comprehensive loss	(7,783		)	(9,330		)
Total stockholders’ equity	42,243			43,836
Noncontrolling interests	1,234			239
Total Equity	43,477			44,075
Total Liabilities and Equity	$	229,502		$	221,690

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (Unaudited)



	Nine Months Ended
	September 30, 2017			September 30, 2016
Cash flows from operating activities
Income from continuing operations	$	5,233		$	7,374
Depreciation, amortization and impairment charges	9,084			7,125
Foreign currency remeasurement and transaction (gains) losses	(12		)	143
Undistributed earnings of nonconsolidated affiliates, net	370			400
Pension contributions and OPEB payments	(1,109		)	(3,097		)
Pension and OPEB income, net	(646		)	(587		)
Provision for deferred taxes	3,517			2,194
Change in other operating assets and liabilities	(6,061		)	(1,271		)
Net cash provided by operating activities – continuing operations	10,376			12,281
Net cash provided by operating activities – discontinued operations	64			308
Net cash provided by operating activities	10,440			12,589
Cash flows from investing activities
Expenditures for property	(6,353		)	(6,102		)
Available-for-sale marketable securities, acquisitions	(4,499		)	(8,613		)
Trading marketable securities, acquisitions	—			(249		)
Available-for-sale marketable securities, liquidations	7,901			8,090
Trading marketable securities, liquidations	—			846
Acquisition of companies/investments, net of cash acquired	(5		)	(802		)
Purchases of finance receivables, net	(15,134		)	(10,389		)
Principal collections and recoveries on finance receivables	9,363			7,368
Purchases of leased vehicles, net	(14,809		)	(14,959		)
Proceeds from termination of leased vehicles	4,649			1,799
Other investing activities	98			200
Net cash used in investing activities – continuing operations	(18,789		)	(22,811		)
Net cash used in investing activities – discontinued operations (Note 2)	(3,972		)	(1,188		)
Net cash used in investing activities	(22,761		)	(23,999		)
Cash flows from financing activities
Net decrease in short-term debt	(374		)	(289		)
Proceeds from issuance of debt (original maturities greater than three months)	43,048			30,598
Payments on debt (original maturities greater than three months)	(26,034		)	(15,294		)
Payments to purchase common stock	(2,994		)	(1,501		)
Proceeds from issuance of GM Financial preferred stock	985			—
Dividends paid	(1,701		)	(1,782		)
Other financing activities	(271		)	(172		)
Net cash provided by financing activities – continuing operations	12,659			11,560
Net cash provided by financing activities – discontinued operations	20			585
Net cash provided by financing activities	12,679			12,145
Effect of exchange rate changes on cash, cash equivalents and restricted cash	362			52
Net increase in cash, cash equivalents and restricted cash	720			787
Cash, cash equivalents and restricted cash at beginning of period	15,160			17,332
Cash, cash equivalents and restricted cash at end of period	$	15,880		$	18,119

Cash, cash equivalents and restricted cash – continuing operations at end of period (Note 3)	$	15,315		$	17,392
Cash, cash equivalents and restricted cash – discontinued operations at end of period	$	565		$	727
Significant Non-cash Investing and Financing Activity
Non-cash property additions – continuing operations	$	3,833		$	3,841
Non-cash property additions – discontinued operations	$	—		$	847
Non-cash business acquisition – continuing operations (Note 18)	$	—		$	290
Non-cash proceeds on sale of discontinued operations (Note 2)	$	808		$	—

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In millions) (Unaudited)



	Common Stockholders’												Noncontrolling Interests			Total Equity
	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
Balance at January 1, 2016	$	15		$	27,607		$	20,285		$	(8,036	)	$	452		$	40,323
Net income	—			—			7,592			—			(99		)	7,493
Other comprehensive income	—			—			—			83			(31		)	52
Issuance of common stock	—			290			—			—			—			290
Purchase of common stock	—			(820		)	(681		)	—			—			(1,501		)
Exercise of common stock warrants	—			59			—			—			—			59
Stock based compensation	—			105			(16		)	—			—			89
Cash dividends paid on common stock	—			—			(1,763		)	—			—			(1,763		)
Dividends to noncontrolling interests	—			—			—			—			(25		)	(25		)
Other	—			—			—			—			(2		)	(2		)
Balance at September 30, 2016	$	15		$	27,241		$	25,417		$	(7,953	)	$	295		$	45,015

Balance at January 1, 2017	$	15		$	26,983		$	26,168		$	(9,330	)	$	239		$	44,075
Net income	—			—			1,287			—			11			1,298
Other comprehensive income	—			—			—			1,547			(2		)	1,545
Purchase of common stock	(1		)	(1,476		)	(1,517		)	—			—			(2,994		)
Exercise of common stock warrants	—			42			—			—			—			42
Issuance of GM Financial preferred stock	—			—			—			—			985			985
Stock based compensation	—			293			(25		)	—			—			268
Cash dividends paid on common stock	—			—			(1,683		)	—			—			(1,683		)
Dividends to noncontrolling interests	—			—			—			—			(18		)	(18		)
Other	—			(60		)	—			—			19			(41		)
Balance at September 30, 2017	$	14		$	25,782		$	24,230		$	(7,783	)	$	1,234		$	43,477

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Operations and Basis of Presentation

General Motors Company (sometimes referred to in this Quarterly Report on Form 10-Q as we, our, us, ourselves, the Company, General Motors or GM) designs, builds and sells cars, trucks, crossovers and automobile parts worldwide. We also provide automotive financing services through General Motors Financial Company, Inc. (GM Financial). We analyze the results of our continuing operations through the following segments: GM North America (GMNA), GM International Operations (GMIO), GM South America (GMSA) and GM Financial. Nonsegment operations and Maven, our ride- and car-sharing business, are classified as Corporate. Corporate includes certain centrally recorded income and costs such as interest, income taxes, corporate expenditures including autonomous vehicle-related engineering costs and certain nonsegment specific revenues and expenses.

On July 31, 2017 we closed the sale of the Opel and Vauxhall business and certain other assets in Europe (the Opel/Vauxhall Business) to Peugeot S.A. (PSA Group). Both the Opel/Vauxhall Business and our European financing subsidiaries and branches (the Fincos, and together with the Opel/Vauxhall Business, the European Business) are presented as discontinued operations in our condensed consolidated financial statements for all periods presented. The assets and liabilities of the Fincos are presented as held for sale as of September 30, 2017, and the assets and liabilities of the European Business are presented as held for sale as of December 31, 2016 in our condensed consolidated financial statements. Unless otherwise indicated, information in these notes to the condensed consolidated financial statements relates to our continuing operations. Refer to Note 2 for additional details regarding the disposal of the Opel/Vauxhall Business and the planned disposals of the Fincos.

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2016 Form 10-K. Except for per share amounts or as otherwise specified, dollar amounts presented within tables are stated in millions.

In May 2014 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09), which requires us to recognize revenue when a customer obtains control rather than when we have transferred substantially all risks and rewards of a good or service and requires expanded disclosures. ASU 2014-09, as amended, is effective for us beginning January 1, 2018. ASU 2014-09 will affect the amount and timing of certain revenue related transactions primarily resulting from the earlier recognition of certain sales incentives and fixed fee license arrangements. Upon adoption of ASU 2014-09 sales incentives will be recorded at the time of sale rather than at the later of sale or announcement and fixed fee license arrangements will be recognized when the customer is granted access to intellectual property instead of over the contract period. Certain transactions with daily rental car companies may also qualify to be accounted for as a sale as opposed to the current accounting as an operating lease. We expect to adopt the provisions of ASU 2014-09 on a modified retrospective basis through a cumulative adjustment to equity. Upon adoption of ASU 2014-09 we estimate a reduction to Equity of up to $1.0 billion. This estimate is subject to change as a result of future changes in market conditions, incentive program offerings, and dealer inventory levels. We continue to assess the overall impact the adoption of ASU 2014-09 will have on our consolidated financial statements and are continuing to test and refine our processes designed to comply with ASU 2014-09 to permit adoption by January 1, 2018.

In January 2016 the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” (ASU 2016-01), which requires equity investments that are not accounted for under the equity method of accounting to be measured at fair value with changes recognized in net income and which updates certain presentation and disclosure requirements. ASU 2016-01 is effective for us beginning January 1, 2018 and requires a cumulative-effect adjustment for certain items upon adoption. At September 30, 2017 the carrying value of equity investments that are not accounted for under the equity method of accounting totaled approximately $500 million and unrealized gains or losses were insignificant. We do not believe the adoption of ASU 2016-01 will be material to our consolidated financial statements.

In March 2017 the FASB issued ASU 2017-07, "Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" (ASU 2017-07), which requires that the service cost component of net periodic pension and other postretirement benefits (OPEB) (income) expense be presented in the same income statement line item as other employee compensation costs, while the remaining components of net periodic pension and OPEB (income) expense are to be presented outside operating income. ASU 2017-07 is effective for us on a retrospective basis beginning

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

January 1, 2018 and will result in the reclassification of non-service cost components from primarily Automotive cost of sales to Interest income and other non-operating income, net. We expect a resulting decrease to Operating income and an increase to Interest income and other non-operating income, net of approximately $1.3 billion for the year ended December 31, 2016.

In August 2017 the FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities" (ASU 2017-12), which simplifies the application of hedge accounting and more closely aligns hedge accounting with companies' risk management strategies thereby making more hedging strategies eligible for hedge accounting. Unlike current guidance, ASU 2017-12 permits hedge accounting for specific risks in hedging relationships involving nonfinancial risk and interest rate risk. ASU 2017-12 is effective for us beginning January 1, 2019, with early adoption permitted. ASU 2017-12 requires a cumulative-effect adjustment for certain items upon adoption. We are currently evaluating the impact the adoption of ASU 2017-12 will have on our consolidated financial statements. The simplifications to the application of hedge accounting may result in the future expansion of our use of hedge accounting.

Note 2. Discontinued Operations

On March 5, 2017 we entered into a Master Agreement (the Agreement) to sell our European Business to PSA Group for net consideration with an estimated value of approximately $2.5 billion. On July 31, 2017 we closed the sale of our Opel/Vauxhall Business to PSA Group. The transfer of the Fincos is expected to close by the end of the year subject to the receipt of the necessary regulatory approvals and satisfaction of other closing conditions.

The net consideration paid at closing for the Opel/Vauxhall Business was $1.4 billion, consisting of (1) $1.1 billion in cash; and (2) $808 million in warrants in PSA Group; partially offset by (3) the $478 million de-risking premium payment made to PSA Group for assuming certain underfunded pension liabilities. The warrants are not exercisable for five years and do not include any governance or voting rights with respect to PSA Group. In addition, we agreed to sell the shares of PSA Group received upon exercise of the warrants within 35 days after exercise. The net consideration to be paid for the Fincos will be 0.8 times their book value at closing, which we estimate will be approximately $1.1 billion based on exchange rates at September 30, 2017, subject to foreign currency fluctuations. The purchase price is subject to certain working capital adjustments as provided in the Agreement.

The total charge from the sale of the European Business is expected to be approximately $6.3 billion, net of tax. During the three months ended September 30, 2017 the Company recorded a charge of $5.4 billion, of which $3.1 billion is recorded in Income (loss) from discontinued operations, net of tax and $2.3 billion is recorded in Income tax expense, as a result of the sale of the Opel/Vauxhall Business. The charge relates to: (1) $4.3 billion of deferred tax assets that will no longer be realizable or that transferred to PSA Group; (2) $1.5 billion related to previously deferred pension losses and payment of the de-risking premium to PSA Group for its assumption of certain underfunded pension liabilities; and (3) other net charges primarily related to contract cancellations, working capital adjustments and certain transitional services and other costs to support the separation of operations to be provided for a period of time following closing; partially offset by proceeds. During the three months ended June 30, 2017 we recognized, on a pre-tax basis, a charge of $836 million in Income (loss) from discontinued operations consisting of (1) a charge of $421 million for the cancellation of production programs resulting from the convergence of vehicle platforms between the European Business and PSA Group; (2) a disposal loss of $324 million as a result of the Fincos being classified as held for sale; and (3) other insignificant charges. We expect to record a disposal loss of approximately $300 million upon sale of the Fincos.

Our wholly-owned subsidiary (the Seller) has agreed to indemnify PSA Group for certain losses resulting from any inaccuracy of the representations and warranties or breaches of our covenants included in the Agreement and for certain other liabilities, including emissions and product liabilities. The Company has entered into a guarantee for the benefit of PSA Group and pursuant to which the Company has agreed to guarantee the Seller's obligation to indemnify PSA Group for certain losses resulting from any inaccuracy of certain representations and warranties or breaches of our covenants in the Agreement and for certain other liabilities. Certain of these indemnification obligations are subject to time limitations, thresholds and/or caps as to the amount of required payments.

We retained net underfunded pension liabilities of $6.8 billion owed primarily to current pensioners and former employees of the European Business with vested pension rights. PSA Group assumed approximately $3.1 billion of net underfunded pension liabilities primarily with respect to active employees of the Opel/Vauxhall Business, and during the three months ended September 30, 2017 the Seller made payments to PSA Group, or one or more pension funding vehicles, of $3.4 billion in respect of these assumed liabilities, which includes pension funding payments for active employees and the de-risking premium payment of $478 million discussed above. At closing we drew upon our three-year unsecured revolving credit facility to fund these payments. We issued debt securities, as described in Note 9, thereafter to repay the amount drawn on our credit facility.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

As part of the retained pension liabilities described above, we retained the United Kingdom defined benefit pension plans in existence at signing related to the Opel/Vauxhall Business, including responsibility for service cost accruals through the closing date. Those plans with active participants closed to future accrual as of July 30, 2017. Any future service cost accruals on and from the closing date will be the responsibility of PSA Group.

We have agreed to purchase from and supply to PSA Group certain vehicles for a period of time following closing. During the three and nine months ended September 30, 2017 Total net sales and revenue from continuing operations include $362 million and purchases and expenses incurred by our continuing operations were insignificant related to transactions with the Opel/Vauxhall Business that would have been eliminated in consolidation prior to the sale of the Opel/Vauxhall Business. During the nine months ended September 30, 2017 cash payments were insignificant and cash receipts of $558 million were recorded in Net cash provided by operating cash flows - continuing operations related to transactions with the Opel/Vauxhall Business.

The following table summarizes the results of the discontinued operations:



	Three Months Ended						Nine Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
Automotive net sales and revenue	$	1,553		$	4,444		$	11,257		$	15,011
GM Financial net sales and revenue	147			132			414			418
Total net sales and revenue	1,700			4,576			11,671			15,429
Automotive cost of sales	1,583			4,279			11,049			14,287
GM Financial interest, operating and other expenses	99			104			301			317
Automotive selling, general, and administrative expense	134			324			813			1,011
Other income and (expense) items	(74		)	10			(72		)	75
Loss from discontinued operations before taxes	190			121			564			111
Loss on sale of discontinued operations before taxes(a)(b)	1,150			—			1,986			—
Total loss from discontinued operations before taxes	1,340			121			2,550			111
Income tax expense (benefit)(b)(c)	1,756			(126		)	1,385			(230		)
Income (loss) from discontinued operations, net of tax	$	(3,096	)	$	5		$	(3,935	)	$	119

__________


(a)	Includes contract cancellation charges associated with the disposal in the nine months ended September 30, 2017.


(b)	Total loss on sale of discontinued operations, net of tax was $3.1 billion and $3.7 billion for the three and nine months ended September 30, 2017.


(c)	Includes $2.0 billion of deferred tax assets that transferred to PSA Group in the three and nine months ended September 30, 2017.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

The following table summarizes the assets and liabilities of the Fincos at September 30, 2017 and the European Business at December 31, 2016:



	September 30, 2017		December 31, 2016
Current Assets
Cash and cash equivalents	$	242	$	386
Accounts and notes receivable, net	65		938
GM Financial receivables, net	6,995		5,938
Inventories	—		2,748
Equipment on operating leases, net	—		786
Other current assets	328		382
Total current assets held for sale	7,630		11,178
Non-current Assets
GM Financial receivables, net	4,308		3,723
Property, net	65		3,217
Deferred income taxes	122		1,920
Other assets	13		515
Total non-current assets held for sale	4,508		9,375
Total Assets Held for Sale	$	12,138	$	20,553

Current Liabilities
Accounts payable (principally trade)	$	178	$	3,628
Short-term debt and current portion of long-term debt
Automotive	—		107
GM Financial	6,014		5,124
Accrued liabilities	182		3,299
Total current liabilities held for sale	6,374		12,158
Non-current Liabilities
Long-term debt
Automotive	—		85
GM Financial	4,327		4,189
Pensions	126		2,687
Other liabilities	37		665
Total non-current liabilities held for sale	4,490		7,626
Total Liabilities Held for Sale	$	10,864	$	19,784

Note 3. Marketable Securities

The following table summarizes the fair value of cash equivalents and marketable securities which approximates cost:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)



	Fair Value Level	September 30, 2017		December 31, 2016
Cash and cash equivalents
Cash, cash equivalents and time deposits		$	6,124	$	5,692
Available-for-sale securities
U.S. government and agencies	2	160		1,158
Corporate debt	2	1,770		2,524
Money market funds	1	2,983		1,801
Sovereign debt	2	1,755		1,399
Total available-for-sale securities – cash equivalents		6,668		6,882
Total cash and cash equivalents		$	12,792	$	12,574
Marketable securities
U.S. government and agencies	2	$	3,285	$	5,886
Corporate debt	2	3,720		3,611
Mortgage and asset-backed	2	584		197
Sovereign debt	2	865		2,147
Total available-for-sale securities – marketable securities		$	8,454	$	11,841
Restricted cash
Cash, cash equivalents and time deposits		$	199	$	248
Available-for-sale securities, primarily money market funds	1	2,324		1,665
Total restricted cash		$	2,523	$	1,913

Available-for-sale securities included above with contractual maturities(a)
Due in one year or less		$	6,417
Due between one and five years		5,138
Total available-for-sale securities with contractual maturities		$	11,555

__________


(a)	Excludes mortgage and asset-backed securities.

Sales proceeds from investments classified as available-for-sale and sold prior to maturity were $3.7 billion and $1.6 billion in the three months ended September 30, 2017 and 2016 and $5.1 billion and $5.8 billion in the nine months ended September 30, 2017 and 2016. Net unrealized gains and losses on available-for-sale securities and realized gains and losses on trading securities were insignificant in the three and nine months ended September 30, 2017 and 2016. Cumulative unrealized gains and losses on available-for-sale securities were insignificant at September 30, 2017 and December 31, 2016.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheet to the total shown in the condensed consolidated statement of cash flows:



	September 30, 2017
Cash and cash equivalents	$	12,792
Restricted cash included in Other current assets	1,940
Restricted cash included in Other assets	583
Total	$	15,315

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Note 4. GM Financial Receivables



	September 30, 2017									December 31, 2016
	Retail			Commercial			Total			Retail			Commercial			Total
Finance receivables, collectively evaluated for impairment, net of fees	$	30,052		$	9,119		$	39,171		$	24,480		$	7,506		$	31,986
Finance receivables, individually evaluated for impairment, net of fees	2,170			27			2,197			1,920			27			1,947
GM Financial receivables	32,222			9,146			41,368			26,400			7,533			33,933
Less: allowance for loan losses	(899		)	(49		)	(948		)	(765		)	(40		)	(805		)
GM Financial receivables, net	$	31,323		$	9,097		$	40,420		$	25,635		$	7,493		$	33,128

Fair value of GM Financial receivables							$	40,513								$	33,181

We estimate the fair value of retail finance receivables using observable and unobservable Level 3 inputs within a cash flow model. The inputs reflect assumptions regarding expected prepayments, deferrals, delinquencies, recoveries and charge-offs of the loans within the portfolio. The cash flow model produces an estimated amortization schedule of the finance receivables. The projected cash flows are then discounted to derive the fair value of the portfolio. Macroeconomic factors could affect the credit performance of the portfolio and therefore could potentially affect the assumptions used in our cash flow model. A substantial majority of our commercial finance receivables have variable interest rates. The carrying amount, a Level 2 input, is considered to be a reasonable estimate of fair value.



	Three Months Ended						Nine Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
Allowance for loan losses at beginning of period	$	893		$	828		$	805		$	749
Provision for loan losses	204			167			573			501
Charge-offs	(287		)	(284		)	(858		)	(826		)
Recoveries	135			128			420			403
Effect of foreign currency	3			(2		)	8			10
Allowance for loan losses at end of period	$	948		$	837		$	948		$	837

The allowance for loan losses on retail and commercial finance receivables included a collective allowance of $617 million and $525 million and a specific allowance of $331 million and $280 million at September 30, 2017 and December 31, 2016.

Retail Finance Receivables We use proprietary scoring systems in the underwriting process that measure the credit quality of retail finance receivables using several factors, such as credit bureau information, consumer credit risk scores (e.g. FICO scores or its equivalent) and contract characteristics. We also consider other factors such as employment history, financial stability and capacity to pay. Subsequent to origination we review the credit quality of retail finance receivables based on customer payment activity. In North America, while we historically focused on consumers with lower than prime credit scores, we have expanded our prime lending programs. At September 30, 2017 and December 31, 2016, 39% and 48% of the retail finance receivables in North America were from consumers with sub-prime credit scores, which are defined as FICO scores or its equivalent of less than 620 at the time of loan origination.

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. At September 30, 2017 and December 31, 2016 the accrual of finance charge income had been suspended on delinquent retail finance receivables with contractual amounts due of $797 million and $798 million. The following table summarizes the contractual amount of delinquent retail finance receivables, which is not significantly different than the recorded investment of the retail finance receivables:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)



	September 30, 2017				September 30, 2016
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
31-to-60 days delinquent	$	1,176	3.6	%	$	1,112	4.4	%
Greater-than-60 days delinquent	521		1.6	%	491		1.9	%
Total finance receivables more than 30 days delinquent	1,697		5.2	%	1,603		6.3	%
In repossession	55		0.2	%	57		0.2	%
Total finance receivables more than 30 days delinquent or in repossession	$	1,752	5.4	%	$	1,660	6.5	%

At September 30, 2017 and December 31, 2016 retail finance receivables classified as troubled debt restructurings and individually evaluated for impairment were $2.2 billion and $1.9 billion and the allowance for loan losses included $328 million and $276 million of specific allowances on these receivables.

Commercial Finance Receivables Our commercial finance receivables consist of dealer financings, primarily for inventory purchases. A proprietary model is used to assign a risk rating to each dealer. We perform periodic credit reviews of each dealership and adjust the dealership's risk rating, if necessary. Dealers in Group VI are subject to additional restrictions on funding, including suspension of lines of credit and liquidation of assets. At September 30, 2017 and December 31, 2016 the commercial finance receivables on non-accrual status were insignificant. The following table summarizes the credit risk profile by dealer risk rating of commercial finance receivables:



		September 30, 2017		December 31, 2016
Group I	– Dealers with superior financial metrics	$	1,547	$	1,372
Group II	– Dealers with strong financial metrics	3,465		2,526
Group III	– Dealers with fair financial metrics	2,913		2,598
Group IV	– Dealers with weak financial metrics	881		613
Group V	– Dealers warranting special mention due to elevated risks	238		334
Group VI	– Dealers with loans classified as substandard, doubtful or impaired	102		90
		$	9,146	$	7,533

Note 5. Inventories



	September 30, 2017
	GMNA		GMIO		GMSA		Total
Total productive material, supplies and work in process	$	3,587	$	720	$	649	$	4,956
Finished product, including service parts	4,572		1,425		836		6,833
Total inventories	$	8,159	$	2,145	$	1,485	$	11,789



	December 31, 2016
	GMNA		GMIO		GMSA		Total
Total productive material, supplies and work in process	$	3,277	$	970	$	761	$	5,008
Finished product, including service parts	4,119		1,208		705		6,032
Total inventories	$	7,396	$	2,178	$	1,466	$	11,040

Note 6. Equipment on Operating Leases

Equipment on operating leases consists of leases to retail customers that are recorded as operating leases and vehicle sales to daily rental car companies with a guaranteed repurchase obligation.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)



	September 30, 2017			December 31, 2016
Equipment on operating leases	$	52,632		$	41,851
Less: accumulated depreciation	(9,225		)	(6,399		)
Equipment on operating leases, net(a)	$	43,407		$	35,452

__________


(a)	Includes $41.8 billion and $34.3 billion of GM Financial equipment on operating leases, net at September 30, 2017 and December 31, 2016.

Depreciation expense related to equipment on operating leases, net was $1.8 billion and $1.3 billion in the three months ended September 30, 2017 and 2016 and $4.9 billion and $3.3 billion in the nine months ended September 30, 2017 and 2016.

The following table summarizes minimum rental payments due to GM Financial on leases to retail customers:



	Year Ending December 31,
	2017		2018		2019		2020		2021
Minimum rental receipts under operating leases	$	1,800	$	6,256	$	3,861	$	1,182	$	110

Note 7. Equity in Net Assets of Nonconsolidated Affiliates



	Three Months Ended				Nine Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Automotive China equity income	$	459	$	459	$	1,472	$	1,448
Other joint ventures equity income	41		38		113		269
Total Equity income	$	500	$	497	$	1,585	$	1,717

There have been no significant ownership changes in our Automotive China joint ventures (Automotive China JVs) since December 31, 2016.



	Three Months Ended				Nine Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Summarized Operating Data of Automotive China JVs
Automotive China JVs' net sales	$	12,161	$	10,945	$	34,177	$	32,417
Automotive China JVs' net income	$	964	$	956	$	2,912	$	3,021

Dividends received from our nonconsolidated affiliates were $382 million and an insignificant amount in the three months ended September 30, 2017 and 2016 and $2.0 billion in the nine months ended September 30, 2017 and 2016. At September 30, 2017 and December 31, 2016 we had undistributed earnings of $1.8 billion and $2.2 billion related to our nonconsolidated affiliates.

Note 8. Variable Interest Entities

GM Financial uses special purpose entities (SPEs) that are considered variable interest entities (VIEs) to issue variable funding notes to third party bank-sponsored warehouse facilities or asset-backed securities to investors in securitization transactions. The debt issued by these VIEs is backed by finance receivables and leasing related assets transferred to the VIEs (Securitized Assets). GM Financial determined that it is the primary beneficiary of the SPEs because the servicing responsibilities for the Securitized Assets give GM Financial the power to direct the activities that most significantly impact the performance of the VIEs and the variable interests in the VIEs give GM Financial the obligation to absorb losses and the right to receive residual returns that could potentially be significant. The assets serve as the sole source of repayment for the debt issued by these entities. Investors in the notes issued by the VIEs do not have recourse to GM Financial or its other assets, with the exception of customary representation and warranty repurchase provisions and indemnities that GM Financial provides as the servicer. GM Financial is not required and does not currently intend to provide additional financial support to these SPEs. While these subsidiaries are included in GM Financial's condensed consolidated financial statements, they are separate legal entities and their assets are legally owned by them and are not available to GM Financial's creditors. The following table summarizes the assets and liabilities related to GM Financial's consolidated VIEs:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)



	September 30, 2017		December 31, 2016
Restricted cash – current	$	1,768	$	1,302
Restricted cash – non-current	$	523	$	478
GM Financial receivables, net of fees – current	$	13,782	$	12,437
GM Financial receivables, net of fees – non-current	$	12,411	$	11,917
GM Financial equipment on operating leases, net	$	23,751	$	19,341
GM Financial short-term debt and current portion of long-term debt	$	19,207	$	17,526
GM Financial long-term debt	$	20,981	$	16,659

GM Financial recognizes finance charge, leased vehicle and fee income on the Securitized Assets and interest expense on the secured debt issued in a securitization transaction and records a provision for loan losses to recognize probable loan losses inherent in the finance receivables.

Note 9. Automotive and GM Financial Debt



	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Total automotive debt	$	13,635	$	14,798	$	10,560	$	11,399
Fair value utilizing Level 1 inputs			$	12,877			$	9,515
Fair value utilizing Level 2 inputs			$	1,921			$	1,884

The fair value of automotive debt measured utilizing Level 1 inputs was based on quoted prices in active markets for identical instruments that a market participant can access at the measurement date. The fair value of automotive debt measured utilizing Level 2 inputs was based on a discounted cash flow model using observable inputs. This model utilizes observable inputs such as contractual repayment terms and benchmark yield curves, plus a spread based on our senior unsecured notes that is intended to represent our nonperformance risk. We obtain the benchmark yield curves and yields on unsecured notes from independent sources that are widely used in the financial industry. At September 30, 2017 and December 31, 2016 the fair value of automotive debt exceeded its carrying amount due primarily to a decrease in bond yields compared to yields at the time of issuance.

In August 2017 we issued $3.0 billion in aggregate principal amount of senior unsecured notes with an initial weighted average interest rate of 4.5% and maturity dates ranging from 2020 to 2048. The indentures governing these notes contain terms and covenants customary of these types of securities including limitation on the amount of certain secured debt we may incur. The net proceeds from the issuance of these senior unsecured notes were used to repay the $3.0 billion drawn on our three-year unsecured revolving credit facility in the three months ended September 30, 2017 to fund the payments to PSA Group, or one or more pension funding vehicles, for the assumed net underfunded pension liabilities in connection with the sale of the Opel/Vauxhall Business as described in Note 2.



	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Secured debt	$	40,775	$	40,889	$	35,087	$	35,162
Unsecured debt	38,263		39,411		29,476		30,045
Total GM Financial debt	$	79,038	$	80,300	$	64,563	$	65,207

Fair value utilizing Level 2 inputs			$	78,293			$	62,951
Fair value utilizing Level 3 inputs			$	2,007			$	2,256

The fair value of GM Financial debt measured utilizing Level 2 inputs was based on quoted market prices for identical instruments and if unavailable, quoted market prices of similar instruments. For debt with original maturity or revolving period of eighteen months or less par value is considered to be a reasonable estimate of fair value. The fair value of GM Financial debt measured utilizing Level 3 inputs was based on the discounted future net cash flows expected to be settled using current risk-adjusted rates.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Secured debt consists of revolving credit facilities and securitization notes payable. Most of the secured debt was issued by VIEs and is repayable only from proceeds related to the underlying pledged Securitized Assets. Refer to Note 8 for additional information on GM Financial's involvement with VIEs. In the nine months ended September 30, 2017 we entered into new or renewed credit facilities with a total net additional borrowing capacity of $1.7 billion, which had substantially the same terms as existing debt and we issued $18.8 billion in aggregate principal amount of securitization notes payable with an initial weighted average interest rate of 2.09% and maturity dates ranging from 2019 to 2025.

Unsecured debt consists of senior notes, credit facilities and other unsecured debt. In the nine months ended September 30, 2017 we issued $10.6 billion in aggregate principal amount of senior notes with an initial weighted average interest rate of 2.87% and maturity dates ranging from 2019 to 2027.

Each of the revolving credit facilities and the indentures governing GM Financial's notes contain terms and covenants including limitations on GM Financial's ability to incur certain liens.

Note 10. Derivative Financial Instruments

Automotive The following table presents the notional amounts based on asset or liability positions of derivative financial instruments in our automotive operations:



	Fair Value Level	September 30, 2017		December 31, 2016
Derivatives designated as hedges(a)
Assets
Cash flow hedges
Foreign currency	2	$	—	$	803
Commodity	2	73		106
Total assets		$	73	$	909
Derivatives not designated as hedges(a)
Assets
Foreign currency	2/3	$	3,671	$	4,483
Commodity	2	553		1,061
PSA warrants(b)	2	47		—
Total assets		$	4,271	$	5,544
Liabilities
Foreign currency	2/3	$	2,025	$	470
Commodity	2	70		181
Total liabilities		$	2,095	$	651

__________


(a)	The fair value of these derivative instruments at September 30, 2017 and December 31, 2016 and the gains/losses included in our condensed consolidated income statements and statements of comprehensive income for the three and nine months ended September 30, 2017 and 2016 were insignificant.


(b)	The fair value of the PSA warrants was $903 million at September 30, 2017.

We estimate the fair value of the PSA warrants using a Black-Scholes valuation model. The significant inputs to the model include the PSA stock price and the estimated dividend yield. The estimated dividend yield is adjusted based on the terms of the Agreement. Under the terms of the Agreement we are entitled to the dividends distributed by PSA since the warrants issuance date. Gains or losses as a result of the change in the fair value of the PSA warrants are recorded in Interest income and other non-operating income, net.

GM Financial The following table presents the notional amounts based on asset or liability positions of GM Financial's derivative financial instruments:

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)



	Fair Value Level	September 30, 2017		December 31, 2016
Derivatives designated as hedges(a)
Assets
Fair value hedges – interest rate swaps	2	$	3,500	$	—
Cash flow hedges
Interest rate swaps	2/3	2,561		3,070
Foreign currency	2	1,356		—
Total cash flow hedges		3,917		3,070
Total assets		$	7,417	$	3,070
Liabilities
Fair value hedges – interest rate swaps(b)	2	$	7,860	$	7,700
Cash flow hedges
Interest rate swaps	2/3	—		500
Foreign currency	2	—		791
Total cash flow hedges		—		1,291
Total liabilities		$	7,860	$	8,991
Derivatives not designated as hedges(a)
Assets
Interest rate swaps	2/3	$	33,218	$	7,959
Interest rate caps and floors	2	16,810		9,698
Foreign currency	2	1,182		—
Total assets		$	51,210	$	17,657
Liabilities
Interest rate swaps	2/3	$	12,823	$	6,170
Interest rate caps and floors	2	18,467		12,146
Total liabilities		$	31,290	$	18,316

__________


(a)	The fair value of these derivative instruments at September 30, 2017 and December 31, 2016 and the gains/losses included in our condensed consolidated income statements and statements of comprehensive income for the three and nine months ended September 30, 2017 and 2016 were insignificant.


(b)	The fair value of these derivative instruments was $260 million and $276 million at September 30, 2017 and December 31, 2016.

Note 11. Product Warranty and Related Liabilities



	Three Months Ended						Nine Months Ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
Warranty balance at beginning of period	$	8,890		$	8,639		$	9,069		$	8,550
Warranties issued and assumed in period – recall campaigns	173			306			527			627
Warranties issued and assumed in period – product warranty	481			631			1,586			1,717
Payments	(787		)	(861		)	(2,382		)	(2,524		)
Adjustments to pre-existing warranties	(317		)	101			(405		)	390
Effect of foreign currency and other	39			5			84			61
Warranty balance at end of period	$	8,479		$	8,821		$	8,479		$	8,821

We estimate our reasonably possible loss in excess of amounts accrued for recall campaigns to be insignificant at September 30, 2017. Refer to Note 13 for reasonably possible losses on Takata Corporation (Takata) matters.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Note 12. Pensions and Other Postretirement Benefits



	Three Months Ended September 30, 2017									Three Months Ended September 30, 2016
	Pension Benefits						Global OPEB Plans			Pension Benefits						Global OPEB Plans
	U.S.			Non-U.S.			Global OPEB Plans			U.S.			Non-U.S.			Global OPEB Plans
Service cost	$	79		$	45		$	4		$	96		$	80		$	4
Interest cost	536			115			51			553			127			50
Expected return on plan assets	(919		)	(185		)	—			(945		)	(179		)	—
Amortization of prior service cost (credit)	(1		)	2			(3		)	(1		)	4			(3		)
Amortization of net actuarial (gains) losses	(2		)	29			8			(6		)	34			5
Net periodic pension and OPEB (income) expense	$	(307	)	$	6		$	60		$	(303	)	$	66		$	56



	Nine Months Ended September 30, 2017									Nine Months Ended September 30, 2016
	Pension Benefits						Global OPEB Plans			Pension Benefits						Global OPEB Plans
	U.S.			Non-U.S.			Global OPEB Plans			U.S.			Non-U.S.			Global OPEB Plans
Service cost	$	237		$	131		$	14		$	287		$	195		$	13
Interest cost	1,608			366			149			1,659			384			150
Expected return on plan assets	(2,757		)	(528		)	—			(2,834		)	(538		)	—
Amortization of prior service cost (credit)	(3		)	4			(10		)	(3		)	10			(10		)
Amortization of net actuarial (gains) losses	(5		)	124			24			(19		)	104			15
Net periodic pension and OPEB (income) expense	$	(920	)	$	97		$	177		$	(910	)	$	155		$	168

We made discretionary contributions to our U.S. hourly pension plan of $2.0 billion in the nine months ended September 30, 2016.

Note 13. Commitments and Contingencies

Litigation-Related Liability and Tax Administrative Matters In the normal course of business, we are named from time to time as a defendant in various legal actions, including arbitrations, class actions and other litigation, that arise in connection with our business as a global company. We identify below the material individual proceedings and investigations in connection with which we believe a material loss is reasonably possible or probable. We accrue for matters when we believe that losses are probable and can be reasonably estimated. At September 30, 2017 and December 31, 2016 total accruals of $1.1 billion and $1.2 billion were recorded in Accrued liabilities and Other liabilities. In many proceedings, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the size or range of the possible loss. Accordingly an adverse outcome from such proceedings could exceed the amounts accrued by an amount that could be material to our results of operations or cash flows in any particular reporting period.

Proceedings Related to Ignition Switch Recall and Other Recalls In 2014 we announced various recalls relating to safety and other matters. Those recalls included recalls to repair ignition switches that could under certain circumstances unintentionally move from the “run” position to the “accessory” or “off” position with a corresponding loss of power, which could in turn prevent airbags from deploying in the event of a crash.

Through October 17, 2017 we were aware of over 100 putative class actions pending against GM in various courts in the U.S. and Canada alleging that consumers who purchased or leased vehicles manufactured by GM or General Motors Corporation had been economically harmed by one or more of the recalls announced in 2014 and/or the underlying vehicle conditions associated with those recalls (economic-loss cases). In general, these economic-loss cases seek recovery for purported compensatory damages, such as alleged benefit-of-the-bargain damages or damages related to alleged diminution in value of the vehicles, as well as punitive damages, injunctive relief and other relief. There is also a civil action brought by the Arizona Attorney General relating to the recalls that seeks civil penalties and injunctive relief for alleged violations of state laws.

We also were aware of several hundred actions pending in various courts in the U.S. and Canada alleging injury or death as a result of defects that may be the subject of recalls announced in 2014 (personal injury cases). In general, these personal injury cases seek recovery for purported compensatory damages, punitive damages and other relief. Since 2016, several bellwether trials

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have taken place in the personal injury cases in the U.S. District Court for the Southern District of New York (Southern District), which is administering a federal multi-district litigation, and in a Texas state court, which is administering a Texas state multi-district litigation (MDL). None of these trials resulted in a finding of liability against GM. An additional personal injury bellwether trial is scheduled in 2018 along with non-bellwether trials in various courts.

On July 15, 2016 the Southern District granted in part and denied in part GM's motion to dismiss plaintiffs' complaint in the federal multi-district litigation seeking damages for alleged economic loss relating to the ignition switch and other recalls by GM in 2014. Among other things, the Southern District dismissed plaintiffs' claims brought under the Racketeer Influenced and Corrupt Organization Act (RICO) and rejected plaintiffs' broadest theory of damages – that plaintiffs could seek recovery for alleged reduction in the value of their vehicles due to damage to GM's reputation and brand as a result of the ignition switch matter. The Southern District granted GM's motion to dismiss with respect to certain state law claims but denied it as to other state law claims.

On September 15, 2016, plaintiffs filed a Fourth Amended Consolidated Complaint amending their economic-loss claims, and GM moved to dismiss certain claims in that Complaint as well. On June 30, 2017, the Southern District issued an order granting in part and denying in part GM’s motion. In its order, among other things, the Southern District reaffirmed its dismissal of plaintiffs’ brand devaluation claim and theory of damages and dismissed the claims of any plaintiff who purchased a vehicle before GM came into existence in July 2009. With respect to plaintiffs’ claims under the laws of certain states that were at issue in the motion, the Court granted GM’s motion to dismiss with respect to certain state law claims but denied it as to other state law claims.

In April 2015 the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) issued a decision precluding claims against us based upon pre-sale accidents, claims based upon the acts or conduct by General Motors Corporation and claims asserting successor liability for obligations owed by General Motors Corporation (successor liability claims), except for claims asserting liabilities that had been expressly assumed by us in the July 2009 Sale Agreement, and claims that could be asserted against us only if they were otherwise viable and arose solely out of our own independent post-closing acts and did not in any way rely on acts or conduct by General Motors Corporation.