Item 8. Financial Statements and Supplementary Data

CONSOLIDATED INCOME STATEMENTS

(In millions, except per share amounts)

	Years Ended December 31,
	2016				2015				2014
Net sales and revenue
Automotive	$	156,849			$	145,922			$	151,092
GM Financial	9,531				6,434				4,837
Total net sales and revenue	166,380				152,356				155,929
Costs and expenses
Automotive cost of sales	136,333				128,321				138,082
GM Financial interest, operating and other expenses	8,792				5,733				4,039
Automotive selling, general and administrative expense	11,710				13,405				12,158
Goodwill impairment charges	—				—				120
Total costs and expenses	156,835				147,459				154,399
Operating income	9,545				4,897				1,530
Automotive interest expense	572				443				403
Interest income and other non-operating income, net (Note 18)	429				621				823
Gain on extinguishment of debt (Note 13)	—				449				202
Equity income (Note 7)	2,282				2,194				2,094
Income before income taxes	11,684				7,718				4,246
Income tax expense (benefit) (Note 16)	2,416				(1,897		)		228
Net income	9,268				9,615				4,018
Net (income) loss attributable to noncontrolling interests	159				72				(69		)
Net income attributable to stockholders	$	9,427			$	9,687			$	3,949
Net income attributable to common stockholders	$	9,427			$	9,687			$	2,804
Earnings per share (Note 20)
Basic
Basic earnings per common share	$	6.12			$	6.11			$	1.75
Weighted-average common shares outstanding	1,540				1,586				1,605
Diluted
Diluted earnings per common share	$	6.00			$	5.91			$	1.65
Weighted-average common shares outstanding	1,570				1,640				1,687

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

	Years Ended December 31,
	2016				2015				2014
Net income	$	9,268			$	9,615			$	4,018
Other comprehensive income (loss), net of tax (Note 19)
Foreign currency translation adjustments and other	(384		)		(955		)		(478		)
Defined benefit plans	(969		)		1,011				(4,505		)
Other comprehensive income (loss), net of tax	(1,353		)		56				(4,983		)
Comprehensive income (loss)	7,915				9,671				(965		)
Comprehensive (income) loss attributable to noncontrolling interests	218				53				(46		)
Comprehensive income (loss) attributable to stockholders	$	8,133			$	9,724			$	(1,011	)

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

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

	December 31, 2016				December 31, 2015
ASSETS
Current Assets
Cash and cash equivalents	$	12,960			$	15,238
Marketable securities (Note 3)	11,841				8,163
Accounts and notes receivable (net of allowance of $303 and $327)	9,638				8,337
GM Financial receivables, net (Note 4; Note 11 at VIEs)	22,065				18,051
Inventories (Note 5)	13,788				13,764
Equipment on operating leases, net (Note 6)	1,896				2,783
Other current assets (Note 3; Note 11 at VIEs)	4,015				3,072
Total current assets	76,203				69,408
Non-current Assets
GM Financial receivables, net (Note 4; Note 11 at VIEs)	20,724				18,500
Equity in net assets of nonconsolidated affiliates (Note 7)	8,996				9,201
Property, net (Note 8)	35,820				31,229
Goodwill and intangible assets, net (Note 10)	6,259				5,947
GM Financial equipment on operating leases, net (Note 6; Note 11 at VIEs)	34,526				20,172
Deferred income taxes (Note 16)	35,092				36,860
Other assets (Note 3; Note 11 at VIEs)	4,070				3,021
Total non-current assets	145,487				124,930
Total Assets	$	221,690			$	194,338
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable (principally trade)	$	26,961			$	24,062
Short-term debt and current portion of long-term debt (Note 13)
Automotive	1,167				817
GM Financial (Note 11 at VIEs)	27,861				18,745
Accrued liabilities (Note 12)	29,192				27,593
Total current liabilities	85,181				71,217
Non-current Liabilities
Long-term debt (Note 13)
Automotive	9,585				7,948
GM Financial (Note 11 at VIEs)	46,015				35,601
Postretirement benefits other than pensions (Note 14)	5,803				5,685
Pensions (Note 14)	17,951				20,911
Other liabilities (Note 12)	13,080				12,653
Total non-current liabilities	92,434				82,798
Total Liabilities	177,615				154,015
Commitments and contingencies (Note 15)
Equity (Note 19)
Common stock, $0.01 par value	15				15
Additional paid-in capital	26,983				27,607
Retained earnings	26,168				20,285
Accumulated other comprehensive loss	(9,330		)		(8,036		)
Total stockholders’ equity	43,836				39,871
Noncontrolling interests	239				452
Total Equity	44,075				40,323
Total Liabilities and Equity	$	221,690			$	194,338

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

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Years Ended December 31,
	2016				2015				2014
Cash flows from operating activities
Net income	$	9,268			$	9,615			$	4,018
Depreciation, amortization and impairment charges	10,408				8,017				7,238
Foreign currency remeasurement and transaction losses	358				829				437
Undistributed earnings of nonconsolidated affiliates, net	(15		)		(147		)		(301		)
Pension contributions and OPEB payments	(3,465		)		(1,600		)		(1,315		)
Pension and OPEB (income) expense, net	(553		)		321				439
Gains on extinguishment of debt	—				(449		)		(202		)
Provision (benefit) for deferred taxes	1,886				(2,757		)		(574		)
Change in other operating assets and liabilities (Note 24)	(438		)		(2,025		)		247
Other operating activities	(904		)		(113		)		74
Net cash provided by operating activities	16,545				11,691				10,061
Cash flows from investing activities
Expenditures for property	(9,542		)		(7,874		)		(7,091		)
Available-for-sale marketable securities, acquisitions	(15,182		)		(8,113		)		(7,636		)
Trading marketable securities, acquisitions	(262		)		(1,250		)		(1,518		)
Available-for-sale marketable securities, liquidations	10,871				8,463				6,874
Trading marketable securities, liquidations	872				1,758				1,881
Acquisition of companies/investments, net of cash acquired	(809		)		(928		)		(53		)
Purchases of finance receivables, net	(17,869		)		(17,495		)		(14,744		)
Principal collections and recoveries on finance receivables	13,172				11,726				10,860
Purchases of leased vehicles, net	(19,624		)		(15,158		)		(4,776		)
Proceeds from termination of leased vehicles	2,557				1,096				533
Other investing activities	173				65				311
Net cash used in investing activities	(35,643		)		(27,710		)		(15,359		)
Cash flows from financing activities
Net increase in short-term debt	798				1,128				391
Proceeds from issuance of debt (original maturities greater than three months)	45,141				35,679				31,373
Payments on debt (original maturities greater than three months)	(23,815		)		(17,256		)		(19,524		)
Payments to purchase stock	(2,500		)		(3,520		)		(3,277		)
Dividends paid (including charge related to redemption of Series A Preferred Stock)	(2,368		)		(2,242		)		(3,165		)
Other financing activities	(117		)		(103		)		(123		)
Net cash provided by financing activities	17,139				13,686				5,675
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(213		)		(1,524		)		(1,230		)
Net decrease in cash, cash equivalents and restricted cash	(2,172		)		(3,857		)		(853		)
Cash, cash equivalents and restricted cash at beginning of period	17,332				21,189				22,042
Cash, cash equivalents and restricted cash at end of period	$	15,160			$	17,332			$	21,189
Significant Non-cash Investing and Financing Activity
Non-cash property additions	$	4,765			$	4,676			$	3,313
Non-cash business acquisition (Note 9)	$	290

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

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(In millions)

	Series A Preferred Stock				Common Stockholders’																Noncontrolling Interests				Total Equity
Common Stock				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive Loss
Balance at January 1, 2014	$	3,109			$	15			$	28,780			$	13,816			$	(3,113	)		$	567			$	43,174
Net income	—				—				—				3,949				—				69				4,018
Other comprehensive loss	—				—				—				—				(4,960		)		(23		)		(4,983		)
Redemption and cancellation of Series A Preferred Stock	(3,109		)		—				—				—				—				—				(3,109		)
Purchase of common stock	—				—				(85		)		(83		)		—				—				(168		)
Exercise of common stock warrants	—				1				38				—				—				—				39
Stock based compensation	—				—				206				(17		)		—				—				189
Cash dividends paid on Series A Preferred Stock and charge related to redemption of Series A Preferred Stock	—				—				—				(1,160		)		—				—				(1,160		)
Cash dividends paid on common stock	—				—				—				(1,928		)		—				—				(1,928		)
Dividends declared or paid to noncontrolling interests	—				—				—				—				—				(73		)		(73		)
Other	—				—				(2		)		—				—				27				25
Balance at December 31, 2014	$	—			16				28,937				14,577				(8,073		)		567				36,024
Net income					—				—				9,687				—				(72		)		9,615
Other comprehensive income					—				—				—				37				19				56
Purchase of common stock					(1		)		(1,745		)		(1,774		)		—				—				(3,520		)
Exercise of common stock warrants					—				46				—				—				—				46
Stock based compensation					—				369				(31		)		—				—				338
Cash dividends paid on common stock					—				—				(2,174		)		—				—				(2,174		)
Dividends declared or paid to noncontrolling interests					—				—				—				—				(75		)		(75		)
Other					—				—				—				—				13				13
Balance at December 31, 2015					15				27,607				20,285				(8,036		)		452				40,323
Net income					—				—				9,427				—				(159		)		9,268
Other comprehensive loss					—				—				—				(1,294		)		(59		)		(1,353		)
Issuance of common stock					—				290				—				—				—				290
Purchase of common stock					—				(1,320		)		(1,180		)		—				—				(2,500		)
Exercise of common stock warrants					—				89				—				—				—				89
Stock based compensation					—				317				(27		)		—				—				290
Cash dividends paid on common stock					—				—				(2,337		)		—				—				(2,337		)
Dividends declared or paid to noncontrolling interests					—				—				—				—				(31		)		(31		)
Other					—				—				—				—				36				36
Balance at December 31, 2016					$	15			$	26,983			$	26,168			$	(9,330	)		$	239			$	44,075

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

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Operations and Basis of Presentation

General Motors Company was incorporated as a Delaware corporation in 2009. We design, build and sell cars, trucks, crossovers and automobile parts worldwide. We also provide automotive financing services through GM Financial. We analyze the results of our business through the following segments: GMNA, GME, GMIO, 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.

Principles of Consolidation The consolidated financial statements are prepared in conformity with U.S. GAAP. All intercompany balances and transactions have been eliminated in consolidation. Except for per share amounts or as otherwise specified, amounts presented within tables are stated in millions.

We consolidate entities that we control due to ownership of a majority voting interest and we consolidate variable interest entities (VIEs) when we have variable interests and are the primary beneficiary. We continually evaluate our involvement with VIEs to determine when these criteria are met. Our share of earnings or losses of nonconsolidated affiliates is included in our consolidated operating results using the equity method of accounting when we are able to exercise significant influence over the operating and financial decisions of the affiliate. We use the cost method of accounting if we are not able to exercise significant influence over the operating and financial decisions of the affiliate.

Use of Estimates in the Preparation of the Financial Statements Accounting estimates are an integral part of the consolidated financial statements. These estimates require the use of judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

GM Financial The amounts presented for GM Financial have been adjusted to include the effect of our tax attributes on GM Financial's deferred tax positions and provision for income taxes, which are not applicable to GM Financial on a stand-alone basis, and to eliminate the effect of transactions between GM Financial and the other members of the consolidated group. Accordingly, the amounts presented will differ from those presented by GM Financial on a stand-alone basis.

Note 2. Significant Accounting Policies

The accounting policies which follow are utilized by our automotive and automotive financing operations, unless otherwise indicated.

Revenue Recognition

Automotive Automotive net sales and revenue primarily consist of revenue generated from the sale of vehicles. Vehicle sales are recorded when title and risks and rewards of ownership have passed to our customers. For the majority of our automotive sales this occurs when a vehicle is released to the carrier responsible for transporting it to a dealer and when collectability is reasonably assured. Vehicle sales are recorded when the vehicle is delivered to the dealer in most remaining cases. Provisions for recurring or announced dealer and customer sales and leasing incentives, consisting of allowances and rebates, are recorded as reductions to Automotive net sales and revenue at the time of vehicle sale. All other incentives, allowances and rebates related to vehicles previously sold are recorded as reductions to Automotive net sales and revenue when announced. Taxes assessed by various government entities, such as sales, use and value-added taxes, collected at the time of sale are excluded from Automotive net sales and revenue.

Vehicle sales to daily rental car companies with guaranteed repurchase obligations are accounted for as operating leases. Estimated lease revenue is recorded ratably over the estimated term of the lease based on the difference between net sales proceeds and the guaranteed repurchase amount. The difference between the cost of the vehicle and estimated residual value is depreciated on a straight-line basis over the estimated term of the lease.

Automotive Financing - GM Financial Finance charge income earned on receivables is recognized using the effective interest method. Fees and commissions (including incentive payments) received and direct costs of originating loans are deferred and amortized over the term of the related finance receivables using the effective interest method and are removed from the consolidated

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

balance sheets when the related finance receivables are sold, charged off or paid in full. Accrual of finance charge income on retail finance receivables is generally suspended on accounts that are more than 60 days delinquent, accounts in bankruptcy and accounts in repossession. Payments received on nonaccrual loans are first applied to any fees due, then to any interest due and then any remaining amounts are recorded to principal. Interest accrual generally resumes once an account has received payments bringing the delinquency to less than 60 days past due. Accrual of finance charge income on commercial finance receivables is generally suspended on accounts that are more than 90 days delinquent, upon receipt of a bankruptcy notice from a borrower, or where reasonable doubt exists about the full collectability of contractually agreed upon principal and interest. Payments received on nonaccrual loans are first applied to principal. Interest accrual resumes once an account has received payments bringing the account fully current and collection of contractual principal and interest is reasonably assured (including amounts previously charged off).

Income from operating lease assets, which includes lease origination fees, net of lease origination costs and incentives, is recorded as operating lease revenue on a straight-line basis over the term of the lease agreement.

Advertising and Promotion Expenditures Advertising and promotion expenditures, which are expensed as incurred in Automotive selling, general and administrative expense, were $5.3 billion, $5.1 billion and $5.2 billion in the years ended December 31, 2016, 2015 and 2014.

Research and Development Expenditures Research and development expenditures, which are expensed as incurred in Automotive cost of sales, were $8.1 billion, $7.5 billion and $7.4 billion in the years ended December 31, 2016, 2015 and 2014.

Cash Equivalents and Restricted Cash Cash equivalents are defined as short-term, highly-liquid investments with original maturities of 90 days or less. Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash. We are required to post cash as collateral as part of certain agreements that we enter into as part of our operations. Restricted cash is invested in accordance with the terms of the underlying agreements and include amounts related to various deposits, escrows and other cash collateral. Restricted cash is included in Other current assets and Other assets in the consolidated balance sheets.

Fair Value Measurements A three-level valuation hierarchy, based upon observable and unobservable inputs, is used for fair value measurements. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions based on the best evidence available. These two types of inputs create the following fair value hierarchy: Level 1 - Quoted prices for identical instruments in active markets; Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose significant inputs are observable; and Level 3 - Instruments whose significant inputs are unobservable. Financial instruments are transferred in and/or out of Level 1, 2 or 3 at the beginning of the accounting period in which there is a change in the valuation inputs.

Marketable Securities We classify marketable securities as available-for-sale or trading. Various factors, including turnover of holdings and investment guidelines, are considered in determining the classification of securities. Available-for-sale securities are recorded at fair value with unrealized gains and losses recorded net of related income taxes in Accumulated other comprehensive loss until realized. Trading securities are recorded at fair value with changes in fair value recorded in Interest income and other non-operating income, net. We determine realized gains and losses for all securities using the specific identification method.

We measure the fair value of our marketable securities using a market approach where identical or comparable prices are available and an income approach in other cases. If quoted market prices are not available, fair values of securities are determined using prices from a pricing service, pricing models, quoted prices of securities with similar characteristics or discounted cash flow models. These prices represent non-binding quotes. Our pricing service utilizes industry-standard pricing models that consider various inputs. We conduct an annual review of our pricing service and believe the prices received from our pricing service are a reliable representation of exit prices.

An evaluation is made quarterly to determine if unrealized losses related to non-trading investments in securities are other-than-temporary. Factors considered include the length of time and extent to which the fair value has been below cost, the financial condition and near-term prospects of the issuer and the intent to sell or likelihood to be forced to sell the security before any anticipated recovery.

GM Financial Receivables Finance receivables are carried at amortized cost, net of allowance for loan losses. The component of the allowance for retail finance receivables that is collectively evaluated for impairment is based on a statistical calculation

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

which is supplemented by management judgment. GM Financial uses a combination of forecasting models to determine the allowance for loan losses. Factors that are considered when estimating the allowance include historical delinquency migration to loss, probability of default and loss given default. The loss confirmation period is a key assumption within the models and represents the average amount of time from when a loss event first occurs to when the receivable is charged off. GM Financial also considers an evaluation of overall portfolio credit quality based on various indicators.

Retail finance receivables that become classified as troubled debt restructurings (TDRs) are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. Finance charge income from loans classified as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs.

Retail finance receivables are generally charged off in the month in which the account becomes 120 days contractually delinquent if GM Financial has not yet recorded a repossession charge-off. A charge-off generally represents the difference between the estimated net sales proceeds and the amount of the contract, including accrued interest.

Inventories Inventories are stated at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business less cost to sell, and considers general market and economic conditions, periodic reviews of current profitability of vehicles, product warranty costs and the effect of current and expected incentive offers at the balance sheet date. Net realizable value for off-lease and other vehicles is current auction sales proceeds less disposal and warranty costs. Productive material, work in process, supplies and service parts are reviewed to determine if inventory quantities are in excess of forecasted usage or if they have become obsolete.

Equipment on Operating Leases Equipment on operating leases, net is reported at cost, less accumulated depreciation and impairment, net of origination fees or costs and lease incentives. Estimated income from operating lease assets, which includes lease origination fees, net of lease origination costs, is recorded as operating lease revenue on a straight-line basis over the term of the lease agreement. Leased vehicles are depreciated on a straight-line basis to an estimated residual value over the term of the lease agreements.

We have significant investments in vehicle operating lease portfolios, which consist of vehicle leases to retail customers with lease terms of two to five years and vehicles leased to rental car companies with lease terms that average eight months. We are exposed to changes in the residual values of these assets. For impairment purposes the residual values represent estimates of the values of the vehicles leased at the end of the lease contracts and are determined based on forecasted auction proceeds when there is a reliable basis to make such a determination. Realization of the residual values is dependent on the future ability to market the vehicles under prevailing market conditions. The adequacy of the estimate of the residual value is evaluated over the life of the lease and adjustments may be made to the extent the expected value of the vehicle at lease termination changes. Adjustments may be in the form of revisions to the depreciation rate or recognition of an impairment charge. Impairment is determined to exist if an impairment indicator exists and the expected future cash flows, which include estimated residual values, are lower than the carrying amount of the vehicles leased. If the carrying amount is considered impaired an impairment charge is recorded for the amount by which the carrying amount exceeds fair value. Fair value is determined primarily using the anticipated cash flows, including estimated residual values.

In our automotive operations when a leased vehicle is returned the asset is reclassified from Equipment on operating leases, net to Inventories at the lower of cost or estimated selling price, less cost to sell. Upon disposition, proceeds are recorded in Automotive net sales and revenue and costs are recorded in Automotive cost of sales. In our automotive finance operations when a leased vehicle is returned or repossessed the asset is recorded in Other assets at the lower of cost or estimated selling price, less costs to sell. Upon disposition a gain or loss is recorded in GM Financial interest, operating and other expenses for any difference between the net book value of the leased asset and the proceeds from the disposition of the asset.

Depreciation expense and impairment charges related to Equipment on operating leases, net are recorded in Automotive cost of sales or GM Financial interest, operating and other expenses.

Valuation of Cost and Equity Method Investments When events and circumstances warrant, investments accounted for under the cost or equity method of accounting are evaluated for impairment. An impairment charge is recorded whenever a decline in value of an investment below its carrying amount is determined to be other-than-temporary. Impairment charges related to equity

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

method investments are recorded in Equity income. Impairment charges related to cost method investments are recorded in Interest income and other non-operating income, net.

Property, net Property, plant and equipment, including internal use software, is recorded at cost. Major improvements that extend the useful life or add functionality are capitalized. The gross amount of assets under capital leases is included in property, plant and equipment. Expenditures for repairs and maintenance are charged to expense as incurred. We depreciate all depreciable property using the straight-line method. Leasehold improvements are amortized over the period of lease or the life of the asset, whichever is shorter. The amortization of the assets under capital leases is included in depreciation expense. Upon retirement or disposition of property, plant and equipment, the cost and related accumulated depreciation are eliminated and any resulting gain or loss is recorded in earnings. Impairment charges related to property are recorded in Automotive cost of sales, Automotive selling, general and administrative expense or GM Financial interest, operating and other expenses.

Special Tools Special tools represent product-specific powertrain and non-powertrain related tools, dies, molds and other items used in the vehicle manufacturing process. Expenditures for special tools are recorded at cost and are capitalized. We amortize special tools over their estimated useful lives using the straight-line method or an accelerated amortization method based on their historical and estimated production volume. Impairment charges related to special tools are recorded in Automotive cost of sales.

Goodwill Goodwill is tested for impairment annually on October 1 or when events occur or circumstances change that would trigger such a review. A two-step impairment test is used to identify potential goodwill impairment. Impairment exists when the carrying amount of goodwill exceeds its implied fair value. When performing our goodwill impairment testing, the fair values of our reporting units are determined based on valuation techniques using the best available information, primarily discounted cash flow projections. Because the fair value of goodwill can be measured only as a residual amount and cannot be determined directly we calculate the implied goodwill for those reporting units failing Step 1 in the same manner that goodwill is recognized in a business combination pursuant to Accounting Standards Codification (ASC) 805.

Intangible Assets, net Intangible assets, excluding goodwill, primarily include brand names, technology and intellectual property, customer relationships and dealer networks. Intangible assets are amortized on a straight-line or an accelerated method of amortization over their estimated useful lives. An accelerated amortization method reflecting the pattern in which the asset will be consumed is utilized if that pattern can be reliably determined. We consider the period of expected cash flows and underlying data used to measure the fair value of the intangible assets when selecting a useful life. Impairment charges related to intangible assets are recorded in Automotive selling, general and administrative expense or Automotive cost of sales. Amortization of developed technology and intellectual property is recorded in Automotive cost of sales. Amortization of brand names, customer relationships and our dealer networks is recorded in Automotive selling, general and administrative expense or GM Financial interest, operating and other expenses.

Valuation of Long-Lived Assets The carrying amount of long-lived assets and finite-lived intangible assets to be held and used in the business are evaluated for impairment when events and circumstances warrant. If the carrying amount of a long-lived asset group is considered impaired, a loss is recorded based on the amount by which the carrying amount exceeds fair value. Product-specific long-lived asset groups and non-product specific long-lived assets are separately tested for impairment on an asset group basis. Fair value is determined using either the market or sales comparison approach, cost approach or anticipated cash flows discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of other than by sale are considered held for use until disposition.

Pension and OPEB Plans

Attribution, Methods and Assumptions The cost of benefits provided by defined benefit pension plans is recorded in the period employees provide service. The cost of pension plan amendments that provide for benefits already earned by plan participants is amortized over the expected period of benefit which may be the duration of the applicable collective bargaining agreement specific to the plan, the expected future working lifetime or the life expectancy of the plan participants.

The cost of medical, dental, legal service and life insurance benefits provided through postretirement benefit plans is recorded in the period employees provide service. The cost of postretirement plan amendments that provide for benefits already earned by plan participants is amortized over the expected period of benefit which may be the average period to full eligibility or the average life expectancy of the plan participants.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

An expected return on plan asset methodology is utilized to calculate future pension expense for certain significant funded benefit plans. A market-related value of plan assets methodology is also utilized that averages gains and losses on the plan assets over a period of years to determine future pension expense. The methodology recognizes 60% of the difference between the fair value of assets and the expected calculated value in the first year and 10% of that difference over each of the next four years.

The discount rate assumption is established for each of the retirement-related benefit plans at their respective measurement dates. In the U.S. we use a cash flow matching approach that uses projected cash flows matched to spot rates along a high quality corporate bond yield curve to determine the present value of cash flows to calculate a single equivalent discount rate. Effective 2016 we applied the individual annual yield curve rates instead of the single equivalent discount rate to determine the service cost and interest cost for our pension and OPEB plans. This refinement more specifically links the cash flows related to service cost and interest cost to bonds maturing in their year of payment.

The benefit obligation for pension plans in Canada, the U.K. and Germany represents 91% of the non-U.S. pension benefit obligation at December 31, 2016. The discount rates for plans in Canada, the U.K. and Germany are determined using a cash flow matching approach similar to the U.S. approach.

Plan Asset Valuation Due to the lack of timely available market information for certain investments in the asset classes described below as well as the inherent uncertainty of valuation, reported fair values may differ from fair values that would have been used had timely available market information been available.

Common and Preferred Stock Common and preferred stock for which market prices are readily available at the measurement date are valued at the last reported sale price or official closing price on the primary market or exchange on which they are actively traded and are classified in Level 1. Such equity securities for which the market is not considered to be active are valued via the use of observable inputs, which may include, among others, the use of adjusted market prices last available, bids or last available sales prices and/or other observable inputs and are classified in Level 2. Common and preferred stock classified in Level 3 are privately issued securities or other issues that are valued via the use of valuation models using significant unobservable inputs that generally consider, among others, aged (stale) pricing, earnings multiples, discounted cash flows and/or other qualitative and quantitative factors.

Debt Securities Valuations for debt securities are based on quotations received from independent pricing services or from dealers who make markets in such securities. Debt securities priced via pricing services that utilize matrix pricing which considers readily observable inputs such as the yield or price of bonds of comparable quality, coupon, maturity and type as well as dealer supplied prices, are classified in Level 2. Debt securities that are typically priced by dealers and pricing services via the use of proprietary pricing models which incorporate significant unobservable inputs are classified in Level 3. These inputs primarily consist of yield and credit spread assumptions, discount rates, prepayment curves, default assumptions and recovery rates.

Investment Funds, Private Equity and Debt Investments and Real Estate Investments Investment funds, private equity and debt investments and real estate investments are valued based on the Net Asset Value (NAV) per Share (or its equivalent) as a practical expedient to estimate fair value due to the absence of readily available market prices.

NAV's are provided by the respective investment sponsors or investment advisers and are subsequently reviewed and approved by management. In the event management concludes a reported NAV does not reflect fair value or is not determined as of the financial reporting measurement date, we will consider whether and when deemed necessary to make an adjustment at the balance sheet date. In determining whether an adjustment to the external valuation is required, we will review material factors that could affect the valuation, such as changes in the composition or performance of the underlying investments or comparable investments, overall market conditions, expected sale prices for private investments which are probable of being sold in the short-term and other economic factors that may possibly have a favorable or unfavorable effect on the reported external valuation.

Stock Incentive Plans Our stock incentive plans include RSUs, RSAs, Performance Share Units (PSUs) and stock options. We measure and record compensation expense based on the fair value of our common stock on the date of grant for RSUs, RSAs and PSUs and the grant date fair value of stock options determined utilizing a lattice model or the Black-Scholes-Merton formula. Compensation cost for awards that do not have an established accounting grant date is based on the fair value of our common stock at the end of each reporting period. We record compensation cost for RSUs, RSAs and PSUs on a straight-line basis over the entire vesting period, or for retirement eligible employees over the requisite service period. We use the graded vesting method to record compensation cost for stock options over the lesser of the vesting period or the time period an employee becomes eligible

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

to retain the award at retirement. The liability for stock incentive plan awards settled in cash is remeasured to fair value at the end of each reporting period.

Product Warranty and Recall Campaigns The estimated costs related to product warranties are accrued at the time products are sold and are charged to Automotive cost of sales. These estimates are established using historical information on the nature, frequency and average cost of claims of each vehicle line or each model year of the vehicle line and assumptions about future activity and events. Revisions are made when necessary and are based on changes in these factors.

The estimated costs related to recall campaigns are generally accrued at the time of vehicle sale in GMNA by applying a frequency times severity approach that considers the number of historical recall campaigns, the number of vehicles per recall campaign, the estimated number of vehicles to be repaired and the cost per vehicle for each recall campaign. The estimated costs associated with recall campaigns in other geographical regions are accrued when probable and estimable using the estimated costs of repairs and the estimated number of vehicles to be repaired. Costs associated with recall campaigns are charged to Automotive cost of sales. Revisions are made when necessary based on changes in these factors.

Income Taxes The liability method is used in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements using the statutory tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recorded in the results of operations in the period that includes the enactment date under the law.

Deferred income tax assets are evaluated quarterly to determine if valuation allowances are required or should be adjusted. We establish valuation allowances for deferred tax assets based on a more likely than not standard. The ability to realize deferred tax assets depends on the ability to generate sufficient taxable income within the carryback or carryforward periods provided for in the tax law for each applicable tax jurisdiction. The assessment regarding whether a valuation allowance is required or should be adjusted also considers all available positive and negative evidence factors. It is difficult to conclude a valuation allowance is not required when there is significant objective and verifiable negative evidence, such as cumulative losses in recent years. We utilize a rolling three years of actual and current year results as the primary measure of cumulative losses in recent years.

Income tax expense (benefit) for the year is allocated between continuing operations and other categories of income such as Other comprehensive income (loss). In periods in which there is a pre-tax loss from continuing operations and pre-tax income in another income category, the tax benefit allocated to continuing operations is determined by taking into account the pre-tax income of other categories.

We record uncertain tax positions on the basis of a two-step process whereby we determine whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and for those tax positions that meet the more likely than not recognition, we recognize the largest amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with the related tax authority. We record interest and penalties on uncertain tax positions in Income tax expense (benefit).

Foreign Currency Transactions and Translation The assets and liabilities of foreign subsidiaries that use the local currency as their functional currency are translated to U.S. Dollars based on the current exchange rate prevailing at each balance sheet date and any resulting translation adjustments are included in Accumulated other comprehensive loss. The assets and liabilities of foreign subsidiaries whose local currency is not their functional currency are remeasured from their local currency to their functional currency and then translated to U.S. Dollars. Revenues and expenses are translated into U.S. Dollars using the average exchange rates prevailing for each period presented.

Gains and losses arising from foreign currency transactions and the effects of remeasurements discussed in the preceding paragraph are recorded in Automotive cost of sales and GM Financial interest, operating and other expenses unless related to Automotive debt, which are recorded in Interest income and other non-operating income, net. Foreign currency transaction and remeasurement losses were $358 million, $829 million and $437 million in the years ended December 31, 2016, 2015 and 2014.

Derivative Financial Instruments Derivative financial instruments are recognized as either assets or liabilities at fair value. The accounting for changes in the fair value of each derivative financial instrument depends on whether it has been designated and qualifies as an accounting hedge, as well as the type of hedging relationship identified. Derivative instruments are not used for trading or speculative purposes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Automotive We utilize options, swaps and forward contracts to manage foreign currency and commodity price risks. The change in fair value of option and forward contracts not designated as hedges is recorded in Interest income and other non-operating income, net. Cash flows for all derivative financial instruments are classified in cash flows from operating activities. At December 31, 2016 and 2015 we had derivative instruments not designated as hedges in asset positions with notional amounts of $5.7 billion and $6.8 billion and in liability positions with notional amounts of $651 million and $264 million. The fair value of these derivative instruments was insignificant at December 31, 2016 and 2015.

Certain foreign currency and commodity forward contracts have been designated as cash flow hedges. The risk being hedged is the foreign currency and commodity price risk related to forecasted transactions. If the contract has been designated as a cash flow hedge, the effective portion of changes in the fair value of the cash flow hedge is deferred in Accumulated other comprehensive loss and is recognized in Automotive cost of sales when the hedged item affects earnings. Any ineffective portion is recorded in Automotive cost of sales in the period of remeasurement. At December 31, 2016 the notional amount of these derivative instruments in asset positions was $909 million and was insignificant at December 31, 2015. The fair value of these derivative instruments was insignificant at December 31, 2016 and 2015.

Automotive Financing - GM Financial GM Financial utilizes interest rate option and swap agreements to manage interest rate risk and foreign currency swap agreements to manage foreign currency risk. The change in fair value of the option and swap agreements not designated as hedges is recorded in GM Financial interest, operating and other expenses. Cash flows for all derivative financial instruments are classified in cash flows from operating activities. At December 31, 2016 and 2015 GM Financial had derivative instruments not designated as hedges in asset positions with notional amounts of $20.7 billion and $11.9 billion and liability positions with notional amounts of $20.6 billion and $13.9 billion. The fair value of these derivatives was insignificant at December 31, 2016 and 2015.

Certain interest rate swap agreements have been designated as fair value hedges of fixed-rate debt. At December 31, 2016 and 2015 the notional amounts of these instruments in liability positions were $7.7 billion and $1.0 billion. The fair value of these derivative instruments in liability positions was $276 million at December 31, 2016 and was insignificant at December 31, 2015. The risk being hedged is the risk of changes in the fair value of the hedged debt attributable to changes in the benchmark interest rate. If the swap has been designated as a fair value hedge, the changes in the fair value of the hedged debt are recorded in Interest expense. The change in fair value of the related derivative (excluding accrued interest) is also recorded in Interest expense.

Beginning in 2016 certain interest rate swap and foreign currency swap agreements have been designated as cash flow hedges. At December 31, 2016 the notional amount of these designated instruments in asset positions was $3.5 billion and in liability positions was $2.1 billion. The fair value of these derivative instruments was insignificant at December 31, 2016. The risk being hedged is the foreign currency and interest rate risk related to forecasted transactions. If the contract has been designated as a cash flow hedge, the effective portion of changes in the fair value of the cash flow hedge is deferred in Accumulated other comprehensive loss and is recognized in GM Financial interest, operating and other expenses when the hedged item affects earnings. Any ineffective portion is recorded in GM Financial interest, operating and other expenses in the period of remeasurement.

The gains or losses on all derivative instruments included in the consolidated income statements and Accumulated other comprehensive loss were insignificant in the years ended December 31, 2016, 2015 and 2014.

Recently Adopted Accounting Standards Effective January 1, 2016 we retrospectively adopted Accounting Standards Update (ASU) 2015-17, "Balance Sheet Classification of Deferred Taxes", which requires all deferred tax assets and liabilities to be classified as non-current. As a result current Deferred income taxes and Accrued liabilities decreased by $8.6 billion and $249 million and non-current Deferred income taxes increased by $8.4 billion at December 31, 2015 in our consolidated balance sheets.

In November 2016 the Financial Accounting Standards Board (FASB) issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash" (ASU 2016-18), which clarifies the presentation of restricted cash and restricted cash equivalents in the statements of cash flows. Under ASU 2016-18 restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. We adopted ASU 2016-18 during the three months ended December 31, 2016 on a retrospective basis. As a result Net cash provided by operating activities decreased by $287 million in the year ended December 31, 2015 and increased by an insignificant amount in the year ended December 31, 2014. Net cash used in investing activities decreased by $325 million and $339 million in the years ended December 31, 2015 and 2014 and beginning-of-period cash, cash equivalents and restricted cash increased by $2.1 billion, $2.2 billion and $2.0 billion in 2016, 2015 and 2014.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Accounting Standards Not Yet Adopted In May 2014 the FASB issued 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 have not yet determined whether we will adopt the provisions of ASU 2014-09 on a retrospective basis or through a cumulative adjustment to equity. We do not expect the adoption of ASU 2014-09 to be material to our consolidated financial statements. We continue to assess the overall impact the adoption of ASU 2014-09 will have on our consolidated financial statements, and anticipate testing our new controls and processes designed to comply with ASU 2014-09 throughout 2017 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, among other items, 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 updates certain presentation and disclosure requirements. ASU 2016-01 is effective for us beginning January 1, 2018. At December 31, 2016 the carrying value of equity investments that are not accounted for under the equity method of accounting totaled $526 million and unrealized gains or losses were insignificant. Currently we do not believe the adoption of ASU 2016-01 will have a material impact on our consolidated financial statements, however changes in future market conditions and equity investment balances prior to the implementation date will affect the impact the adoption may have on our consolidated financial statements.

In February 2016 the FASB issued ASU 2016-02, "Leases" (ASU 2016-02), which requires us as the lessee to recognize most leases on the balance sheet thereby resulting in the recognition of lease assets and liabilities for those leases currently classified as operating leases. The accounting for leases where we are the lessor remains largely unchanged. ASU 2016-02 is effective for us beginning January 1, 2019 with early adoption permitted. While we are currently assessing the impact ASU 2016-02 will have on our consolidated financial statements, we expect the primary impact to our consolidated financial position upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases on our consolidated balance sheets resulting in the recording of right of use assets and lease obligations. Our current minimum commitments under noncancelable operating leases are disclosed in Note 15.

In June 2016 the FASB issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), that requires entities to use a new impairment model based on expected losses. Under this new model an entity would recognize an impairment allowance equal to its current estimate of credit losses on financial assets measured at amortized cost. ASU 2016-13 is effective for us beginning January 1, 2020 with early adoption permitted January 1, 2019. Credit losses under the new model will consider relevant information about past events, current conditions and reasonable and supportable forecasts, resulting in recognition of lifetime expected credit losses by GM Financial upon loan origination as compared to our current accounting that recognizes credit losses as incurred. We are currently evaluating new processes to calculate credit losses in accordance with ASU 2016-13 that, once completed, will determine the impact on our consolidated financial statements which at the date of adoption will increase the allowance for credit losses with a resulting negative adjustment to retained earnings.

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 CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	Fair Value Level		December 31, 2016				December 31, 2015
Cash and cash equivalents
Cash, cash equivalents and time deposits			$	6,077			$	7,730
Available-for-sale securities
U.S. government and agencies	2		1,158				—
Corporate debt	2		2,524				4,071
Money market funds	1		1,802				2,275
Sovereign debt	2		1,399				1,162
Total available-for-sale securities – cash equivalents			6,883				7,508
Total cash and cash equivalents			$	12,960			$	15,238
Marketable securities
Available-for-sale securities
U.S. government and agencies	2		$	5,886			$	5,329
Corporate debt	2		3,611				2,196
Mortgage and asset-backed	2		197				—
Sovereign debt	2		2,147				57
Total available-for-sale securities – marketable securities			11,841				7,582
Trading securities – sovereign debt	2		—				581
Total marketable securities			$	11,841			$	8,163
Restricted cash
Cash, cash equivalents and time deposits			$	531			$	833
Available-for-sale securities, primarily money market funds	1		1,687				1,340
Total restricted cash			$	2,218			$	2,173
Available-for-sale securities included above with contractual maturities (excluding mortgage and asset-backed securities)
Due in one year or less			$	10,957
Due between one and five years			5,786
Total available-for-sale securities with contractual maturities			$	16,743

Sales proceeds from investments classified as available-for-sale and sold prior to maturity were $8.5 billion, $7.9 billion and $5.9 billion in the years ended December 31, 2016, 2015 and 2014. Net unrealized gains and losses on trading securities were insignificant in the years ended December 31, 2016, 2015 and 2014.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows:

	December 31, 2016				December 31, 2015
Cash and cash equivalents	$	12,960			$	15,238
Restricted cash included in Other current assets	1,613				1,529
Restricted cash included in Other assets	587				565
Total cash, cash equivalents and restricted cash as shown in the consolidated statements of cash flows	$	15,160			$	17,332

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Note 4. GM Financial Receivables

	December 31, 2016												December 31, 2015
	Retail				Commercial				Total				Retail				Commercial				Total
Finance receivables, collectively evaluated for impairment, net of fees	$	30,989			$	10,652			$	41,641			$	27,512			$	8,127			$	35,639
Finance receivables, individually evaluated for impairment, net of fees	1,921				70				1,991				1,612				82				1,694
GM Financial receivables	32,910				10,722				43,632				29,124				8,209				37,333
Less: allowance for loan losses	(793		)		(50		)		(843		)		(735		)		(47		)		(782		)
GM Financial receivables, net	$	32,117			$	10,672			$	42,789			$	28,389			$	8,162			$	36,551
Fair value of GM Financial receivables									$	42,739											$	36,707

GM Financial estimates 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 using current risk-adjusted rates 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 GM Financial's cash flow model. A substantial majority of GM Financial's commercial finance receivables have variable interest rates and maturities of one year or less. Therefore, the carrying amount, a level 2 input, is considered to be a reasonable estimate of fair value.

	Years Ended December 31,
	2016				2015				2014
Allowance for loan losses at beginning of period	$	782			$	695			$	548
Provision for loan losses	669				624				604
Charge-offs	(1,173		)		(999		)		(914		)
Recoveries	561				487				470
Effect of foreign currency	4				(25		)		(13		)
Allowance for loan losses at end of period	$	843			$	782			$	695

The allowance for loan losses on retail and commercial finance receivables included a collective allowance of $560 million, $553 million and $518 million and a specific allowance of $283 million, $229 million and $177 million at December 31, 2016, 2015 and 2014.

Retail Finance Receivables GM Financial uses proprietary scoring systems in its 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. In addition to GM Financial's proprietary scoring systems GM Financial considers other individual consumer factors such as employment history, financial stability and capacity to pay. Subsequent to origination GM Financial reviews 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 December 31, 2016 and 2015, 48% and 60% 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. At the time of loan origination, substantially all of GM Financial's international consumers have the equivalent of prime credit scores.

GM Financial purchases retail finance contracts from automobile dealers without recourse, and accordingly, the dealer has no liability to GM Financial if the consumer defaults on the contract. Finance receivables are collateralized by vehicle titles and GM Financial has the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract.

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 December 31, 2016 and 2015 the accrual of finance charge income had been suspended on delinquent retail finance receivables with contractual amounts due of $807 million and $778 million. The following table

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

summarizes the contractual amount of delinquent retail finance receivables, which is not significantly different than the recorded investment of the retail finance receivables:

	December 31, 2016							December 31, 2015
	Amount				Percent of Contractual Amount Due			Amount				Percent of Contractual Amount Due
31-to-60 days delinquent	$	1,235			3.7	%		$	1,237			4.2	%
Greater-than-60 days delinquent	542				1.7	%		481				1.6	%
Total finance receivables more than 30 days delinquent	1,777				5.4	%		1,718				5.8	%
In repossession	51				0.1	%		46				0.2	%
Total finance receivables more than 30 days delinquent or in repossession	$	1,828			5.5	%		$	1,764			6.0	%

At December 31, 2016 and 2015 retail finance receivables classified as TDRs and individually evaluated for impairment were $1.9 billion and $1.6 billion and the allowance for loan losses included $276 million and $220 million of specific allowances on these receivables.

Commercial Finance Receivables GM Financial's commercial finance receivables consist of dealer financings, primarily for inventory purchases. A proprietary model is used to assign a risk rating to each dealer. A credit review of each dealer is performed at least annually, and if necessary, the dealer's risk rating is adjusted on the basis of the review. Dealers in Group VI are subject to additional restrictions on funding, up to suspension of lines of credit and liquidation of assets. At December 31, 2016 and 2015 the commercial finance receivables on non-accrual status were insignificant. The following table summarizes the credit risk profile by dealer grouping of the commercial finance receivables:

		December 31, 2016				December 31, 2015
Group I	– Dealers with superior financial metrics	$	1,576			$	1,298
Group II	– Dealers with strong financial metrics	3,299				2,573
Group III	– Dealers with fair financial metrics	3,842				2,597
Group IV	– Dealers with weak financial metrics	1,201				1,058
Group V	– Dealers warranting special mention due to potential weaknesses	636				501
Group VI	– Dealers with loans classified as substandard, doubtful or impaired	168				182
		$	10,722			$	8,209

Note 5. Inventories

	December 31, 2016
	GMNA				GME				GMIO				GMSA				Total
Total productive material, supplies and work in process	$	3,226			$	684			$	974			$	759			$	5,643
Finished product, including service parts	4,108				2,229				1,107				701				8,145
Total inventories	$	7,334			$	2,913			$	2,081			$	1,460			$	13,788

	December 31, 2015
	GMNA				GME				GMIO				GMSA				Total
Total productive material, supplies and work in process	$	2,705			$	713			$	1,113			$	616			$	5,147
Finished product, including service parts	4,884				2,166				954				613				8,617
Total inventories	$	7,589			$	2,879			$	2,067			$	1,229			$	13,764

Note 6. Equipment on Operating Leases

Equipment on operating leases in our automotive operations consists of vehicle sales to daily rental car companies with a guaranteed repurchase obligation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	December 31, 2016				December 31, 2015
Equipment on operating leases	$	2,076			$	3,037
Less: accumulated depreciation	(180		)		(254		)
Equipment on operating leases, net	$	1,896			$	2,783

	Years Ended December 31,
	2016				2015				2014
Depreciation expense	$	167			$	341			$	507
Impairment charges	$	188			$	215			$	155

GM Financial originates leases to retail customers that are recorded as operating leases.

	December 31, 2016				December 31, 2015
GM Financial equipment on operating leases	$	40,875			$	23,005
Less: accumulated depreciation	(6,349		)		(2,833		)
GM Financial equipment on operating leases, net	$	34,526			$	20,172

Depreciation expense related to GM Financial equipment on operating leases, net was $4.6 billion, $2.3 billion and $868 million in the years ended December 31, 2016, 2015 and 2014.

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

	2017				2018				2019				2020				2021
Minimum rental receipts under operating leases	$	5,649			$	4,176			$	1,869			$	180			$	4

Note 7. Equity in Net Assets of Nonconsolidated Affiliates

Nonconsolidated affiliates are entities in which an equity ownership interest is maintained and for which the equity method of accounting is used due to our ability to exert significant influence over decisions relating to their operating and financial affairs. Revenue and expenses of our joint ventures are not consolidated into our financial statements; rather, our proportionate share of the earnings of each joint venture is reflected as Equity income.

	Years Ended December 31,
	2016				2015				2014
Automotive China JVs equity income	$	1,973			$	2,057			$	2,066
Other joint ventures equity income	309				137				28
Total Equity income	$	2,282			$	2,194			$	2,094

Investments in Nonconsolidated Affiliates

	December 31, 2016				December 31, 2015
Automotive China JVs carrying amount	$	7,859			$	7,997
Other investments carrying amount	1,137				1,204
Total equity in net assets of nonconsolidated affiliates	$	8,996			$	9,201

At December 31, 2016 and 2015 the carrying amount of our investments in certain joint ventures exceeded our share of the underlying net assets by $4.3 billion primarily related to goodwill from the application of fresh-start reporting and purchase of additional interests in nonconsolidated affiliates.

The following table summarizes our direct ownership interests in China JVs at December 31, 2016 and 2015:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	Direct Ownership
Automotive China JVs
SAIC General Motors Corp., Ltd. (SGM)	50	%
SAIC GM (Shenyang) Norsom Motors Co., Ltd. (SGM Norsom)	25	%
SAIC GM Dong Yue Motors Co., Ltd. (SGM DY)	25	%
SAIC GM Dong Yue Powertrain Co., Ltd. (SGM DYPT)	25	%
SAIC GM Wuling Automobile Co., Ltd.	44	%
FAW-GM Light Duty Commercial Vehicle Co., Ltd.	50	%
Pan Asia Technical Automotive Center Co., Ltd.	50	%
Shanghai OnStar Telematics Co., Ltd. (Shanghai OnStar)	40	%
Shanghai Chengxin Used Car Operation and Management Co., Ltd. (Shanghai Chengxin Used Car)	33	%
SAIC General Motors Sales Co., Ltd.	49	%
Other joint ventures
SAIC-GMAC	35	%

SGM is a joint venture we established with Shanghai Automotive Industry Corporation (SAIC) (50%). SGM has interests in three other joint ventures in China: SGM Norsom, SGM DY and SGM DYPT. These three joint ventures are jointly held by SGM (50%), SAIC (25%) and ourselves. These four joint ventures are engaged in the production, import and sale of a range of products under the Buick, Chevrolet and Cadillac brands. SGM also has interests in Shanghai OnStar (20%), Shanghai Chengxin Used Car (33%) and SAIC-GMAC (20%). Shanghai Automotive Group Finance Company Ltd., a subsidiary of SAIC, owns 45% of SAIC-GMAC.

Summarized Financial Data of Nonconsolidated Affiliates

	December 31, 2016												December 31, 2015
	Automotive China JVs				Others				Total				Automotive China JVs				Others				Total
Summarized Balance Sheet Data
Current assets	$	17,325			$	8,383			$	25,708			$	17,270			$	9,358			$	26,628
Non-current assets	12,712				5,991				18,703				10,801				4,266				15,067
Total assets	$	30,037			$	14,374			$	44,411			$	28,071			$	13,624			$	41,695
Current liabilities	$	21,428			$	7,277			$	28,705			$	19,141			$	8,477			$	27,618
Non-current liabilities	1,393				3,898				5,291				1,132				1,933				3,065
Total liabilities	$	22,821			$	11,175			$	33,996			$	20,273			$	10,410			$	30,683
Noncontrolling interests	$	856			$	1			$	857			$	907			$	6			$	913

	Years Ended December 31,
	2016				2015				2014
Summarized Operating Data
Automotive China JVs' net sales	$	47,150			$	44,959			$	43,853
Others' net sales	2,412				3,571				3,171
Total net sales	$	49,562			$	48,530			$	47,024
Automotive China JVs' net income	$	4,117			$	4,290			$	4,312
Others' net income	378				435				91
Total net income	$	4,495			$	4,725			$	4,403

Transactions with Nonconsolidated Affiliates Our nonconsolidated affiliates are involved in various aspects of the development, production and marketing of cars, trucks, crossovers and automobile parts. We enter into transactions with certain nonconsolidated

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

affiliates to purchase and sell component parts and vehicles. The following tables summarize transactions with and balances related to our nonconsolidated affiliates:

	Years Ended December 31,
	2016				2015				2014
Automotive sales and revenue	$	913			$	1,764			$	2,762
Automotive purchases, net	$	806			$	93			$	311
Dividends received	$	2,120			$	2,047			$	1,793
Operating cash flows	$	2,532			$	3,782			$	4,321

	December 31, 2016				December 31, 2015
Accounts and notes receivable, net	$	818			$	721
Accounts payable	$	554			$	179
Undistributed earnings	$	2,172			$	2,158

Note 8. Property

	Estimated Useful Lives in Years		December 31, 2016				December 31, 2015
Land			$	1,645			$	1,636
Buildings and improvements	5-40		6,655				5,562
Machinery and equipment	3-27		22,855				19,338
Construction in progress			5,347				4,633
Real estate, plants and equipment			36,502				31,169
Less: accumulated depreciation			(11,614		)		(9,516		)
Real estate, plants and equipment, net			24,888				21,653
Special tools, net	1-9		10,932				9,576
Total property, net			$	35,820			$	31,229

The amount of capitalized software included in Property, net was $1.1 billion and $907 million at December 31, 2016 and 2015. The amount of interest capitalized and excluded from Automotive interest expense related to Property, net was insignificant in the years ended December 31, 2016, 2015 and 2014.

	Years Ended December 31,
	2016				2015				2014
Depreciation and amortization expense	$	5,015			$	4,251			$	4,187
Impairment charges	$	68			$	628			$	709
Capitalized software amortization expense(a)	$	466			$	378			$	295

---

(a)	Included in depreciation and amortization expense.

Note 9. Acquisition of Business

On May 12, 2016 we acquired all of the outstanding capital stock of Cruise, an autonomous vehicle technology company, to further accelerate our development of autonomous vehicles. The deal consideration at closing was $581 million, of which $291 million was paid in cash and approximately $290 million was paid through the issuance of new common stock. The fair value of the common stock issued was determined based on the closing price of our common stock on May 12, 2016. In conjunction with the acquisition, we entered into other agreements that will result in future costs contingent upon the continued employment of key individuals and additional performance-based awards contingent upon the achievement of specific technology and commercialization milestones.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Of the total consideration, $130 million was allocated to intangible assets, primarily in-process research and development with an indefinite life until fully developed and commercialized, $39 million was allocated to deferred tax liabilities, net of other assets, and $490 million was allocated to non-tax-deductible goodwill in Corporate primarily related to the synergies expected to arise as a result of the acquisition.

The results of operations associated with this acquisition were not significant to our consolidated financial statements. Accordingly, pro forma financial information is not presented. We have included the financial results of Cruise in our consolidated financial statements from the date of acquisition.

Note 10. Goodwill and Intangible Assets

At December 31, 2016 our total goodwill balance of $1.9 billion consisted of $1.4 billion recorded in GM Financial and $490 million included in Corporate. At December 31, 2015 our goodwill balance of $1.4 billion was recorded in GM Financial.

	December 31, 2016												December 31, 2015
	Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount				Gross Carrying Amount				Accumulated Amortization				Net Carrying Amount
Technology and intellectual property	$	8,399			$	7,940			$	459			$	8,263			$	7,838			$	425
Brands	4,421				933				3,488				4,427				808				3,619
Dealer network, customer relationships and other	1,356				912				444				1,346				814				532
Total intangible assets	$	14,176			$	9,785			$	4,391			$	14,036			$	9,460			$	4,576

Our amortization expense related to Intangible assets was $328 million, $327 million, and $676 million in the years ended December 31, 2016, 2015 and 2014.

Amortization expense related to Intangible assets is estimated to be approximately $200 million in each of the next five years.

Note 11. Variable Interest Entities

GM Financial uses special purpose entities (SPEs) that are considered 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 by GM Financial 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 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:

	December 31, 2016				December 31, 2015
Restricted cash – current	$	1,532			$	1,345
Restricted cash – non-current	$	535			$	531
GM Financial receivables, net of fees – current	$	15,220			$	12,224
GM Financial receivables, net of fees – non-current	$	14,151			$	12,597
GM Financial equipment on operating leases, net	$	19,341			$	11,684
GM Financial short-term debt and current portion of long-term debt	$	20,005			$	13,545
GM Financial long-term debt	$	18,239			$	15,841

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.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Note 12. Accrued and Other Liabilities

	December 31, 2016				December 31, 2015
Accrued liabilities
Dealer and customer allowances, claims and discounts	$	9,934			$	8,076
Deposits primarily from rental car companies	3,010				5,051
Deferred revenue	2,755				2,227
Product warranty and related liabilities	3,517				3,487
Payrolls and employee benefits excluding postemployment benefits	3,067				2,378
Other	6,909				6,374
Total accrued liabilities	$	29,192			$	27,593
Other liabilities
Deferred revenue	$	2,362			$	2,007
Product warranty and related liabilities	6,184				5,792
Employee benefits excluding postemployment benefits	926				896
Postemployment benefits including facility idling reserves	798				833
Other	2,810				3,125
Total other liabilities	$	13,080			$	12,653

	Years Ended December 31,
	2016				2015				2014
Product Warranty and Related Liabilities
Warranty balance at beginning of period	$	9,279			$	9,646			$	7,601
Warranties issued and assumed in period – recall campaigns and courtesy transportation	982				986				2,910
Warranties issued and assumed in period – product warranty	2,552				2,325				2,540
Payments	(3,710		)		(3,987		)		(4,326		)
Adjustments to pre-existing warranties	625				588				1,187
Effect of foreign currency and other	(27		)		(279		)		(266		)
Warranty balance at end of period	$	9,701			$	9,279			$	9,646

During the three months ended September 30, 2014 we began accruing the costs for recall campaigns at the time of vehicle sale in GMNA, which resulted in a charge due to a change in estimate for previously sold vehicles of $874 million recorded in the three months ended June 30, 2014. We had historically accrued estimated costs related to recall campaigns in GMNA when probable and reasonably estimable, which typically occurred once it was determined a specific recall campaign was needed and announced. We estimate our reasonably possible loss in excess of amounts accrued for recall campaigns to be an insignificant amount at December 31, 2016.

Note 13. Automotive and GM Financial Debt

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	December 31, 2016				December 31, 2015
Secured debt	$	136			$	220
Unsecured debt	9,795				7,619
Capital leases	821				926
Total automotive debt(a)	$	10,752			$	8,765
Fair value utilizing Level 1 inputs	$	9,515			$	6,972
Fair value utilizing Level 2 inputs	2,097				2,116
Fair value of automotive debt	$	11,612			$	9,088
Available under credit facility agreements	$	14,035			$	12,168
Interest rate range on outstanding debt(b)	0.0-18.0%				0.0-18.0%
Weighted-average interest rate on outstanding short-term debt(b)	10.5		%		9.6		%
Weighted-average interest rate on outstanding long-term debt(b)	5.2		%		4.7		%

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(a)	Includes net discount and debt issuance costs of $499 million and $549 million at December 31, 2016 and 2015.

(b)	Includes coupon rates on debt denominated in various foreign currencies and interest free loans.

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 December 31, 2016 and December 31, 2015 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 February 2016 we issued $2.0 billion in aggregate principal amount of senior unsecured notes comprising $1.25 billion of 6.60% notes due in 2036 and $750 million of 6.75% notes due in 2046. These notes contain terms and covenants customary of these types of securities including limitations on the amount of certain secured debt we may incur. The net proceeds from the issuance of these senior unsecured notes were used to fund discretionary contributions to our U.S. hourly pension plan as described in Note 14.

In May 2016 we amended and restated our two primary revolving credit facilities, increasing our aggregate borrowing capacity from $12.5 billion to $14.5 billion. These facilities consist of a three-year, $4.0 billion facility and a five-year, $10.5 billion facility. Both facilities are available to us as well as certain wholly-owned subsidiaries, including GM Financial. The three-year, $4.0 billion facility allows for borrowings in U.S. Dollars and other currencies and includes a GM Financial borrowing sub-limit of $1.0 billion and a letter of credit sub-facility of $1.0 billion. The five-year, $10.5 billion facility allows for borrowings in U.S. Dollars and other currencies and includes a GM Financial borrowing sub-limit of $3.0 billion and a letter of credit sub-limit of $500 million.

The revolving credit facilities require us to maintain at least $4.0 billion in global liquidity and at least $2.0 billion in U.S. liquidity. If we fail to maintain an investment grade corporate rating from at least two of the following credit rating agencies: Fitch, Moody's and S&P, certain subsidiaries of ours will be required to provide guarantees under the terms of the revolving credit facilities. Interest rates on obligations under the revolving credit facilities are based on prevailing annual interest rates for Eurodollar loans or an alternative base rate, plus an applicable margin.

In the years ended December 2015 and 2014 we prepaid and retired debt obligations with a total carrying amount of $538 million and $325 million which primarily represented unsecured debt in Brazil and recorded a net gain on extinguishment of debt of $449 million and $202 million.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

		December 31, 2016								December 31, 2015
		Carrying Amount				Fair Value				Carrying Amount				Fair Value
Secured debt		$	39,270			$	39,357			$	30,689			$	30,671
Unsecured debt		34,606				35,220				23,657				23,726
Total GM Financial debt		$	73,876			$	74,577			$	54,346			$	54,397
Fair value utilizing Level 2 inputs						$	69,990							$	48,716
Fair value utilizing Level 3 inputs						$	4,587							$	5,681

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 that has terms of one year or less or has been priced within the last six months, the carrying amount or 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.

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 11 for additional information on GM Financial's involvement with VIEs. The weighted-average interest rate on secured debt was 2.09% at December 31, 2016. The revolving credit facilities have maturity dates over periods ranging up to six years. At the end of the revolving period, if not renewed, the debt will amortize over a defined period. GM Financial is required to hold certain funds in restricted cash accounts to provide additional collateral for borrowings under certain secured credit facilities. Securitization notes payable at December 31, 2016 are due beginning in 2018 through 2024. In the year ended December 31, 2016 GM Financial issued securitization notes payable of $16.9 billion and entered into new or renewed credit facilities with a total net additional borrowing capacity of $4.0 billion, which had substantially the same terms as existing debt.

Unsecured debt consists of senior notes, credit facilities, retail customer deposits and other unsecured debt. Senior notes outstanding at December 31, 2016 are due beginning in 2017 through 2026 and have a weighted-average interest rate of 3.33%. In March 2016 GM Financial issued $2.75 billion in aggregate principal amount of senior notes comprising $1.5 billion of 4.20% notes due in March 2021 and $1.25 billion of 5.25% notes due in March 2026. In May 2016 GM Financial issued $3.0 billion in aggregate principal amount of senior notes comprising $1.4 billion of 2.40% notes due in May 2019, $1.2 billion of 3.70% notes due in May 2023 and $400 million of floating rate notes due in May 2019. Also in May 2016 GM Financial issued Euro 500 million of 1.168% term notes due in May 2020. In July 2016 GM Financial issued $2.0 billion of 3.20% senior notes due in July 2021. In September 2016 GM Financial issued Euro 750 million of 0.955% term notes due in September 2023. In October 2016 GM Financial issued $1.75 billion in aggregate principal amount of senior notes comprising $750 million of 2.35% notes due in October 2019, $750 million of 4.00% notes due in October 2026 and $250 million of floating rate notes due in October 2019. In November 2016 GM Financial issued Euro 100 million of floating rate notes due in December 2017. In January 2017 GM Financial issued $2.5 billion in aggregate principal amount of senior notes comprising $1.25 billion of 3.45% notes due in January 2022, $750 million of 4.35% due in January 2027 and $500 million of floating rate notes due in January 2022. Each of these notes contain terms and covenants including limitations on GM Financial's ability to incur certain liens.

GM Financial accepts deposits from retail banking customers in Germany. At December 31, 2016 and December 31, 2015 the outstanding balance of these deposits was $1.9 billion and $1.3 billion, of which 42% and 44% were overnight deposits, and had weighted-average interest rates of 0.91% and 1.25%.

The terms of advances on revolving credit facilities and other unsecured debt have original maturities of up to five years. The weighted-average interest rate on credit facilities and other unsecured debt was 7.50% at December 31, 2016.

	Years Ended December 31,
	2016				2015				2014
Automotive interest expense	$	572			$	443			$	403
Automotive Financing - GM Financial interest expense	2,108				1,616				1,426
Total interest expense	$	2,680			$	2,059			$	1,829

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

The following table summarizes contractual maturities including capital leases at December 31, 2016:

	Automotive				Automotive Financing(a)				Total
2017	$	1,175			$	28,596			$	29,771
2018	1,655				15,740				17,395
2019	126				11,231				11,357
2020	71				5,914				5,985
2021	56				5,098				5,154
Thereafter	8,168				7,791				15,959
	$	11,251			$	74,370			$	85,621

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(a)	Secured debt, credit facilities and other unsecured debt are based on expected payoff date. Senior notes principal amounts are based on maturity.

At December 31, 2016 future interest payments on automotive capital lease obligations were $371 million. GM Financial had no capital lease obligations at December 31, 2016.

Compliance with Debt Covenants Several of our loan facilities, including our revolving credit facilities, require compliance with certain financial and operational covenants as well as regular reporting to lenders, including providing certain subsidiary financial statements. Some of GM Financial’s secured and unsecured debt agreements also contain various covenants, including maintaining portfolio performance ratios as well as limits on deferment levels. Failure to meet certain of these requirements may result in a covenant violation or an event of default depending on the terms of the agreement. An event of default may allow lenders to declare amounts outstanding under these agreements immediately due and payable, to enforce their interests against collateral pledged under these agreements or restrict our ability or GM Financial's ability to obtain additional borrowings. No technical defaults or covenant violations existed at December 31, 2016.

Note 14. Pensions and Other Postretirement Benefits

Employee Pension and Other Postretirement Benefit Plans

Defined Benefit Pension Plans Defined benefit pension plans covering eligible U.S. hourly employees (hired prior to October 2007) and Canadian hourly employees (hired prior to October 2016) generally provide benefits of negotiated, stated amounts for each year of service and supplemental benefits for employees who retire with 30 years of service before normal retirement age. The benefits provided by the defined benefit pension plans covering eligible U.S. (hired prior to January 1, 2001) and Canadian salaried employees and employees in certain other non-U.S. locations are generally based on years of service and compensation history. Accrual of defined pension benefits ceased in 2012 for U.S. and Canadian salaried employees. There is also an unfunded nonqualified pension plan covering primarily U.S. executives for service prior to January 1, 2007 and it is based on an “excess plan” for service after that date.

The funding policy for qualified defined benefit pension plans is to contribute annually not less than the minimum required by applicable laws and regulations or to directly pay benefit payments where appropriate. In the year ended December 31, 2016 all legal funding requirements were met; additionally we made discretionary contributions to our U.S. hourly pension plan of $2.0 billion. These discretionary contributions were funded with the net proceeds from the issuance of the automotive senior unsecured notes described in Note 13. The following table summarizes contributions made to the defined benefit pension plans:

	Years Ended December 31,
	2016				2015				2014
U.S. hourly and salaried	$	2,054			$	95			$	143
Non-U.S.	1,033				1,120				770
Total	$	3,087			$	1,215			$	913

We expect to contribute $73 million to our U.S. non-qualified plans and $970 million to our non-U.S. pension plans in 2017.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Based on our current assumptions, over the next five years we expect no significant mandatory contributions to our U.S. qualified pension plans and mandatory contributions totaling $1.8 billion to our Canada and U.K. pension plans.

Other Postretirement Benefit Plans Certain hourly and salaried defined benefit plans provide postretirement medical, dental, legal service and life insurance to eligible U.S. and Canadian retirees and their eligible dependents. Certain other non-U.S. subsidiaries have postretirement benefit plans, although most non-U.S. employees are covered by government sponsored or administered programs. We made contributions to the U.S. OPEB plans of $335 million, $340 million and $354 million in the years ended December 31, 2016, 2015 and 2014. Plan participants' contributions were insignificant in the years ended December 31, 2016, 2015 and 2014.

Defined Contribution Plans We have defined contribution plans for eligible U.S. salaried and hourly employees that provide discretionary matching contributions. Contributions are also made to certain non-U.S. defined contribution plans. We made contributions to our defined contribution plans of $594 million, $535 million and $513 million in the years ended December 31, 2016, 2015 and 2014.

Significant Plan Amendments, Benefit Modifications and Related Events

Other Remeasurements We incorporated the mortality improvement tables issued by the Society of Actuaries (SOA) in the three months ended December 31, 2016 that lowered life expectancies and thereby indicated the amount of estimated aggregate benefit payments to our U.S. pension plans' participants was decreasing. This change in assumption decreased the December 31, 2016 U.S. pension and OPEB plans’ obligations by $888 million. In the three months ended December 31, 2014 the SOA issued new mortality and mortality improvement tables that raised life expectancies and thereby indicated the amount of estimated aggregate benefit payments to our U.S. pension plans' participants was increasing. We incorporated these SOA mortality and mortality improvement tables into our December 31, 2014 measurement of our U.S. pension and OPEB plans' benefit obligations. The change in these assumptions increased the December 31, 2014 U.S. pension and OPEB plans' obligations by $2.2 billion.

Pension and OPEB Obligations and Plan Assets

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	Year Ended December 31, 2016												Year Ended December 31, 2015
	Pension Benefits								Global OPEB Plans				Pension Benefits								Global OPEB Plans
	U.S.				Non-U.S.					U.S.				Non-U.S.
Change in benefit obligations
Beginning benefit obligation	$	71,486			$	23,763			$	6,066			$	76,724			$	27,897			$	6,625
Service cost	220				371				18				272				405				24
Interest cost	2,212				578				201				2,754				763				238
Actuarial (gains) losses	416				1,508				230				(2,623		)		(256		)		(209		)
Benefits paid	(5,507		)		(1,474		)		(400		)		(5,641		)		(1,332		)		(407		)
Foreign currency translation adjustments	—				(638		)		45				—				(3,332		)		(225		)
Curtailments, settlements and other	—				(58		)		20				—				(382		)		20
Ending benefit obligation	68,827				24,050				6,180				71,486				23,763				6,066
Change in plan assets
Beginning fair value of plan assets	61,072				12,990				—				65,823				14,669				—
Actual return on plan assets	4,004				762				—				795				997				—
Employer contributions	2,054				1,033				378				95				1,120				385
Benefits paid	(5,507		)		(1,474		)		(400		)		(5,641		)		(1,332		)		(407		)
Foreign currency translation adjustments	—				(232		)		—				—				(2,017		)		—
Settlements and other	(1		)		(81		)		22				—				(447		)		22
Ending fair value of plan assets	61,622				12,998				—				61,072				12,990				—
Ending funded status	$	(7,205	)		$	(11,052	)		$	(6,180	)		$	(10,414	)		$	(10,773	)		$	(6,066	)
Amounts recorded in the consolidated balance sheets
Non-current assets	$	—			$	91			$	—			$	—			$	125			$	—
Current liabilities	(73		)		(324		)		(377		)		(67		)		(334		)		(381		)
Non-current liabilities	(7,132		)		(10,819		)		(5,803		)		(10,347		)		(10,564		)		(5,685		)
Net amount recorded	$	(7,205	)		$	(11,052	)		$	(6,180	)		$	(10,414	)		$	(10,773	)		$	(6,066	)
Amounts recorded in Accumulated other comprehensive loss
Net actuarial gain (loss)	$	55			$	(4,904	)		$	(901	)		$	116			$	(3,796	)		$	(689	)
Net prior service (cost) credit	27				(21		)		54				31				(33		)		63
Total recorded in Accumulated other comprehensive loss	$	82			$	(4,925	)		$	(847	)		$	147			$	(3,829	)		$	(626	)

The following table summarizes the total accumulated benefit obligations (ABO), the ABO and fair value of plan assets for defined benefit pension plans with ABO in excess of plan assets, and the PBO and fair value of plan assets for defined benefit pension plans with PBO in excess of plan assets:

	December 31, 2016								December 31, 2015
	U.S.				Non-U.S.				U.S.				Non-U.S.
ABO	$	68,813			$	23,711			$	71,475			$	23,388
Plans with ABO in excess of plan assets
ABO	$	68,813			$	23,010			$	71,475			$	22,683
Fair value of plan assets	$	61,622			$	12,205			$	61,072			$	12,160
Plans with PBO in excess of plan assets
PBO	$	68,827			$	23,352			$	71,486			$	23,052
Fair value of plan assets	$	61,622			$	12,209			$	61,072			$	12,170

The following table summarizes the components of net periodic pension and OPEB expense along with the assumptions used to determine benefit obligations:

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	Year Ended December 31, 2016												Year Ended December 31, 2015												Year Ended December 31, 2014
	Pension Benefits								Global OPEB Plans				Pension Benefits								Global OPEB Plans				Pension Benefits								Global OPEB Plans
	U.S.				Non-U.S.					U.S.				Non-U.S.					U.S.				Non-U.S.
Components of expense
Service cost	$	381			$	390			$	18			$	406			$	431			$	24			$	380			$	389			$	23
Interest cost	2,212				578				201				2,754				763				238				3,060				1,031				273
Expected return on plan assets	(3,778		)		(737		)		—				(3,896		)		(798		)		—				(3,914		)		(873		)		—
Amortization of prior service cost (credit)	(4		)		14				(13		)		(4		)		15				(14		)		(4		)		17				(16		)
Amortization of net actuarial (gains) losses	(25		)		189				19				8				233				37				(91		)		154				8
Curtailments, settlements and other(a)	—				2				—				—				124				—				(1		)		3				—
Net periodic pension and OPEB (income) expense	$	(1,214	)		$	436			$	225			$	(732	)		$	768			$	285			$	(570	)		$	721			$	288
Weighted-average assumptions used to determine benefit obligations
Discount rate	3.92		%		2.72		%		3.93		%		4.06		%		3.20		%		4.13		%		3.73		%		3.14		%		3.83		%
Rate of compensation increase(b)	N/A				2.79		%		N/A				N/A				2.79		%		4.21		%		N/A				2.85		%		4.21		%
Weighted-average assumptions used to determine net expense
Discount rate	3.36		%		2.99		%		3.49		%		3.73		%		3.15		%		3.83		%		4.46		%		4.10		%		4.56		%
Expected rate of return on plan assets	6.33		%		5.98		%		N/A				6.38		%		6.23		%		N/A				6.53		%		6.28		%		N/A
Rate of compensation increase(b)	N/A				2.80		%		N/A				N/A				2.85		%		4.21		%		N/A				2.90		%		4.21		%

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(a)	The curtailment charges recorded in the year ended December 31, 2015 were due primarily to the GM Canada hourly pension plan that was remeasured as a result of a voluntary separation program.

(b)	As a result of ceasing the accrual of additional benefits for salaried plan participants, the rate of compensation increase does not have a significant effect on our U.S. pension and OPEB plans.

Effective January 2016 the discount rate used to determine the service cost and interest cost for our pension and OPEB plans was based on individual annual yield curve rates. This refinement was considered a change in estimate and applied prospectively. The use of the individual annual yield curve rates has reduced the service cost and interest cost by $768 million in the year ended December 31, 2016, which was offset in the actuarial gains and losses upon the December 31, 2016 remeasurement of the plans' obligations.

U.S. pension plan service cost includes administrative expenses and Pension Benefit Guarantee Corporation premiums which were insignificant in the years ended December 31, 2016, 2015 and 2014. Weighted-average assumptions used to determine net expense are determined at the beginning of the period and updated for remeasurements. Non-U.S. pension plan administrative expenses included in service cost were insignificant in the years ended December 31, 2016, 2015 and 2014.

Estimated amounts to be amortized from Accumulated other comprehensive loss into net periodic benefit cost in the year ending December 31, 2017 based on December 31, 2016 plan measurements are $261 million, consisting primarily of amortization of the net actuarial loss in the non-U.S. pension plans.

Assumptions

Investment Strategies and Long-Term Rate of Return Detailed periodic studies are conducted by our internal asset management group as well as outside actuaries and are used to determine the long-term strategic mix among asset classes, risk mitigation strategies and the expected long-term return on asset assumptions for the U.S. pension plans. The U.S. study includes a review of alternative asset allocation and risk mitigation strategies, anticipated future long-term performance and risk of the individual asset classes that comprise the plans' asset mix. Similar studies are performed for the significant non-U.S. pension plans with the assistance of outside actuaries and asset managers. While the studies incorporate data from recent plan performance and historical returns, the expected long-term return on plan asset assumptions are determined based on long-term prospective rates of return.

We continue to pursue various options to fund and derisk our pension plans, including continued changes to the pension asset portfolio mix to reduce funded status volatility. The strategic asset mix and risk mitigation strategies for the plans are tailored specifically for each plan. Individual plans have distinct liabilities, liquidity needs and regulatory requirements. Consequently there are different investment policies set by individual plan fiduciaries. Although investment policies and risk mitigation strategies may differ among plans, each investment strategy is considered to be appropriate in the context of the specific factors affecting each plan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

In setting new strategic asset mixes, consideration is given to the likelihood that the selected asset mixes will effectively fund the projected pension plan liabilities, while aligning with the risk tolerance of the plans' fiduciaries. The strategic asset mixes for U.S. defined benefit pension plans are increasingly designed to satisfy the competing objectives of improving funded positions (market value of assets equal to or greater than the present value of the liabilities) and mitigating the possibility of a deterioration in funded status.

Derivatives may be used to provide cost effective solutions for rebalancing investment portfolios, increasing or decreasing exposure to various asset classes and for mitigating risks, primarily interest rate and currency risks. Equity and fixed income managers are permitted to utilize derivatives as efficient substitutes for traditional securities. Interest rate derivatives may be used to adjust portfolio duration to align with a plan's targeted investment policy. Alternative investment managers are permitted to employ leverage, including through the use of derivatives, which may alter economic exposure.

In December 2016 an investment policy study was completed for the U.S. pension plans. The study resulted in new target asset allocations being approved for the U.S. pension plans with resulting changes to the expected long-term rate of return on assets. The weighted-average long-term rate of return on assets decreased from 6.3% at December 31, 2015 to 6.2% at December 31, 2016. The expected long-term rate of return on plan assets used in determining pension expense for non-U.S. plans is determined in a similar manner to the U.S. plans.

Target Allocation Percentages The following table summarizes the target allocations by asset category for U.S. and non-U.S. defined benefit pension plans:

	December 31, 2016						December 31, 2015
	U.S.			Non-U.S.			U.S.			Non-U.S.
Equity	15	%		21	%		14	%		21	%
Debt	61	%		50	%		62	%		50	%
Other(a)	24	%		29	%		24	%		29	%
Total	100	%		100	%		100	%		100	%

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(a)	Primarily includes private equity, real estate and absolute return strategies which mainly consist of hedge funds.

Assets and Fair Value Measurements The following tables summarize the fair value of U.S. and non-U.S. defined benefit pension plan assets by asset class:

	December 31, 2016																December 31, 2015
	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
U.S. Pension Plan Assets
Common and preferred stocks	$	8,288			$	35			$	3			$	8,326			$	7,637			$	18			$	8			$	7,663
Government and agency debt securities(a)	—				11,374				—				11,374				—				14,318				—				14,318
Corporate and other debt securities	—				25,452				—				25,452				—				22,963				1				22,964
Other investments, net	486				288				403				1,177				466				130				472				1,068
Net plan assets subject to leveling	$	8,774			$	37,149			$	406			46,329				$	8,103			$	37,429			$	481			46,013
Plan assets measured at net asset value
Investment funds													6,509																6,321
Private equity and debt investments													4,012																4,529
Real estate investments													3,634																3,828
Total plan assets measured at net asset value													14,155																14,678
Other plan assets, net(b)													1,138																381
Net plan assets													$	61,622															$	61,072

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	December 31, 2016																December 31, 2015
	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
Non-U.S. Pension Plan Assets
Common and preferred stocks	$	984			$	3			$	—			$	987			$	1,079			$	1			$	1			$	1,081
Government and agency debt securities(a)	—				3,222				—				3,222				—				3,258				—				3,258
Corporate and other debt securities	—				2,044				3				2,047				—				1,953				1				1,954
Other investments, net	37				152				595				784				47				47				642				736
Net plan assets subject to leveling	$	1,021			$	5,421			$	598			7,040				$	1,126			$	5,259			$	644			7,029
Plan assets measured at net asset value
Investment funds													4,449																4,475
Private equity and debt investments													546																529
Real estate investments													1,092																1,095
Total plan assets measured at net asset value													6,087																6,099
Other plan assets (liabilities), net(b)													(129		)														(138		)
Net plan assets													$	12,998															$	12,990

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(a)	Includes U.S. and sovereign government and agency issues.

(b)	Cash held by the plans, net of amounts receivable/payable for unsettled security transactions and payables for investment manager fees, custody fees and other expenses.

The activity attributable to U.S. and non-U.S. Level 3 defined benefit pension plan investments was insignificant in the years ended December 31, 2016 and 2015.

Alternative Investment Strategies Investment funds include hedge funds, funds of hedge funds, equity funds and fixed income funds. Hedge funds and funds of hedge funds managers typically seek to achieve their objectives by allocating capital across a broad array of funds and/or investment managers. Equity funds invest in U.S. common and preferred stocks as well as similar equity securities issued by companies incorporated, listed or domiciled in developed and/or emerging market countries. Fixed income funds include investments in high quality funds and, to a lesser extent, high yield funds. High quality fixed income funds invest in government securities, investment-grade corporate bonds and mortgage and asset-backed securities. High yield fixed income funds invest in high yield fixed income securities issued by corporations which are rated below investment grade. Other investment funds also included in this category primarily represent multi-strategy funds that invest in broadly diversified portfolios of equity, fixed income and derivative instruments.

Private equity and debt investments primarily consist of investments in private equity and debt funds. These investments provide exposure to and benefit from long-term equity investments in private companies, including leveraged buy-outs, venture capital and distressed debt strategies.

Real estate investments include funds that invest in entities which are primarily engaged in the ownership, acquisition, development, financing, sale and/or management of income-producing real estate properties, both commercial and residential. These funds typically seek long-term growth of capital and current income that is above average relative to public equity funds.

Significant Concentrations of Risk The assets of the pension plans include certain investment funds, private equity and debt investments and real estate investments. Investment managers may be unable to quickly sell or redeem some or all of these investments at an amount close or equal to fair value in order to meet a plan's liquidity requirements or to respond to specific events such as deterioration in the creditworthiness of any particular issuer or counterparty.

Illiquid investments held by the plans are generally long-term investments that complement the long-term nature of pension obligations and are not used to fund benefit payments when currently due. Plan management monitors liquidity risk on an ongoing basis and has procedures in place that are designed to maintain flexibility in addressing plan-specific, broader industry and market liquidity events.

The pension plans may invest in financial instruments denominated in foreign currencies and may be exposed to risks that the foreign currency exchange rates might change in a manner that has an adverse effect on the value of the foreign currency denominated assets or liabilities. Forward currency contracts may be used to manage and mitigate foreign currency risk.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

The pension plans may invest in debt securities for which any change in the relevant interest rates for particular securities might result in an investment manager being unable to secure similar returns upon the maturity or the sale of securities. In addition changes to prevailing interest rates or changes in expectations of future interest rates might result in an increase or decrease in the fair value of the securities held. Interest rate swaps and other financial derivative instruments may be used to manage interest rate risk.

Benefit Payments Benefits for most U.S. pension plans and certain non-U.S. pension plans are paid out of plan assets rather than our Cash and cash equivalents. The following table summarizes net benefit payments expected to be paid in the future, which include assumptions related to estimated future employee service:

	Pension Benefits								Other Benefits
	U.S. Plans				Non-U.S. Plans				Global Plans
2017	$	5,476			$	1,382			$	380
2018	$	5,195			$	1,247			$	374
2019	$	5,068			$	1,242			$	369
2020	$	4,953			$	1,234			$	365
2021	$	4,762			$	1,230			$	362
2022 - 2026	$	22,157			$	5,909			$	1,775

Note 15. 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 December 31, 2016 and 2015, accruals were $1.3 billion and $1.2 billion and 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, customer satisfaction 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 January 27, 2017 we were aware of 100 putative class actions pending against GM in various federal and state trial courts in the U.S. and 21 putative class actions pending in various Provincial Courts in 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 are also two civil actions brought by state governmental entities relating to the 2014 recalls that seek injunctive relief as well as civil penalties and attorneys' fees for alleged violations of state laws.

Through January 27, 2017 we were aware of 284 actions pending in various federal and state trial courts in the U.S. and 14 actions pending in various Provincial Courts in 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.

During 2016, the U.S. District Court for the Southern District of New York (the district court) and a Texas court administering a Texas state multidistrict litigation scheduled a combined eight ignition-switch personal injury cases for bellwether trials. None of those resulted in a finding of liability against GM; juries in two cases returned verdicts in favor of GM, a court dismissed one case on summary judgment, plaintiffs dismissed two cases with prejudice before trial, and the parties settled the remaining three

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

cases. The district court has scheduled additional personal injury bellwether trials for 2017 and 2018. Each bellwether trial will be tried on its facts and the result of any subsequent bellwether trial may be different from the earlier bellwether trials.

On July 15, 2016 the district court granted in part and denied in part GM's motion to dismiss plaintiffs' complaint seeking damages for alleged economic loss relating to the ignition switch and other recalls by GM in 2014. The district court dismissed plaintiffs' claims brought under the Racketeer Influenced and Corrupt Organization Act (RICO), and those brought by any plaintiff whose vehicle was not allegedly defective when sold. The district court also 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 district court also held that plaintiffs did not have a common basis for their claims across all defects and models to proceed as a single class, and that the remaining claims may have to proceed individually or in subclasses of vehicles affected by a common defect. Further, the district court held that the named plaintiffs may assert claims only on behalf of owners of the same vehicle models that they themselves purchased (or leased) or models with sufficiently similar defects, and that it will not specify the specific permissible class claims until the class-certification stage. Finally, the district court granted GM's motion to dismiss with respect to certain state law claims but denied it as to other state law claims. The court held that the viability of state law claims will depend on each state's specific laws and plaintiffs' specific factual allegations. While the ruling addressed post-bankruptcy claims, we believe the district court's legal holdings should apply to limit plaintiffs' pre-bankruptcy claims similarly. On September 15, 2016, Plaintiffs filed a Fourth Amended Consolidated Complaint amending their economic-loss claims. On December 7, 2016 GM moved to dismiss certain claims in that complaint as well.

Because many plaintiffs in the actions described in the above paragraphs are suing over the conduct of General Motors Corporation or vehicles manufactured by that entity for liabilities not expressly assumed by GM, we moved to enforce the terms of the July 2009 Sale Order and Injunction (2009 Sale Order) issued by the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) to preclude claims from being asserted against us for, among other things, personal injuries based on pre-sale accidents, any economic-loss claims based on acts or conduct of General Motors Corporation and claims asserting successor liability for obligations owed by General Motors Corporation (successor liability claims). On April 15, 2015 the 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 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. Plaintiffs appealed the Bankruptcy Court’s decision and we cross appealed with respect to certain issues to preserve our rights.

On July 13, 2016 a three judge panel of the United States Court of Appeals for the Second Circuit (Second Circuit) issued a decision and judgment affirming in part, reversing in part, and vacating portions of the Bankruptcy Court's April 15, 2015 decision and subsequent judgment. Among other things, the Second Circuit held that the 2009 Sale Order could not be enforced to bar claims against GM asserted by either plaintiffs who purchased used vehicles after the sale closing or against purchasers who asserted claims relating to the ignition switch defect, including pre-closing personal injury claims and economic-loss claims. The Second Circuit also vacated that portion of the Bankruptcy Court judgment enforcing the 2009 Sale Order against plaintiffs with pre-sale claims based on defects other than the ignition switch and remanded that issue to the Bankruptcy Court for further proceedings. The Second Circuit denied our request for an en banc review of the panel's decision and judgment. On December 13, 2016 we petitioned for certiorari to the United States Supreme Court. In 2014 GM voluntarily established the Ignition Switch Recall Compensation Program (the Program), administered by an independent administrator, which provided compensation for individuals who died or suffered personal injuries (or for their families) as a result of the ignition switch defect, both before and after bankruptcy. The Program completed its claims review process in the three months ended September 30, 2015, but continues to process acceptances that require court approval and resolve liens related to accepted claims. Accident victims (or their families) that accept a payment under the Program agree to settle all claims against GM related to the accident. As a result, certain pre-closing personal injury claims relating to the ignition switch defect were resolved through this program.

In the putative shareholder class action filed in the United States District Court for the Eastern District of Michigan (Eastern District) on behalf of purchasers of our common stock from November 17, 2010 to July 24, 2014 (Shareholder Class Action), the lead plaintiff, the New York State Teachers' Retirement System, alleged that GM and several current and former officers and employees made material misstatements and omissions relating to problems with the ignition switch and other matters in SEC filings and other public statements. On May 23, 2016 the Eastern District entered a judgment approving a class-wide settlement of the Shareholder Class Action for $300 million. One shareholder has filed an appeal of the decision approving the settlement.

On February 11, 2016 the Delaware Supreme Court affirmed the dismissal of four consolidated shareholder derivative actions that had been pending in the Delaware Chancery Court. In light of the Delaware Supreme Court’s decision, proceedings have

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

resumed in the two consolidated shareholder derivative actions in the Eastern District that had been stayed pending disposition of the Delaware cases and the Eastern District is now considering our motion to dismiss in those actions. In early 2016 an additional shareholder derivative action was filed in the Eastern District against certain current and former GM directors and officers making similar allegations to the two other shareholder derivative actions that are pending in the Eastern District. This new derivative action has been transferred to the same judge handling those two other shareholder derivative actions. Two derivative actions filed in the Circuit Court of Wayne County, Michigan, which have been consolidated, are stayed pending disposition of the federal derivative actions.

In connection with the 2014 recalls, we have from time to time received subpoenas and other requests for information related to investigations by agencies or other representatives of U.S. federal, state and the Canadian governments. On January 18, 2017, GM resolved an SEC investigation. On December 15, 2016, we received notice of a Final Decision and Order from the Federal Trade Commission closing its investigation into GM's certified pre-owned vehicle advertising. The Final Decision and Order does not require any payment by GM, but it does require GM to make certain advertising disclosures and send notices to certain customers who purchased certified pre-owned vehicles. Ongoing matters of investigations as of December 31, 2016 include litigation initiated by the Arizona Attorney General, litigation initiated by the Orange County District Attorney, and investigations by 49 state attorneys general which may result in litigation. We believe we are cooperating fully with all reasonable pending requests for information. We have accrued for these matters to the extent required by law and regulations. Such matters could in the future result in the imposition of material damages, fines, civil consent orders, civil and criminal penalties or other remedies.

Under the DPA we consented to the filing of a two-count information (the information) in the district court charging GM with a scheme to conceal material facts from a government regulator, in violation of Title 18, United States Code, Section 1001, and wire fraud, in violation of Title 18, United States Code, Section 1343. We have pled not guilty to the charges alleged in the information. Under the DPA we paid the United States $900 million as a financial penalty. Payment was made in the three months ended September 30, 2015.

Pursuant to the DPA, the Office agreed to recommend to the district court that prosecution of GM on the information be deferred for three years. The Office also agreed that if we are in compliance with all of our obligations under the DPA, the Office will, within 30 days after the expiration of the period of deferral (including any extensions thereto), seek dismissal with prejudice of the information filed against GM. The DPA further provides that, in the event the Office determines during the period of deferral of prosecution (or any extensions thereof) that we have violated any provision of the DPA, the Office may in its discretion either prosecute GM on the charges alleged in the information or impose an extension of the period of deferral of prosecution of up to one additional year, but in no event will the total term of the deferral-of-prosecution period under the DPA exceed four years.

In the DPA, we also agreed to retain an independent monitor (the Monitor) for a period of three years to review and assess our policies, practices or procedures related to statements about motor vehicle safety, the provision of information to those responsible for recall decisions, recall processes and addressing known defects in certified pre-owned vehicles. The Office has the authority to lengthen the Monitor's term up to one year if the Office determines we have violated the DPA. Likewise, the Office may shorten the Monitor's term if the Office determines that a monitor is no longer necessary. We are required to pay the compensation and expenses of the Monitor and of the persons hired under his or her authority. The Monitor commenced his term in November 2015.

The total amount accrued at December 31, 2016 reflects amounts for a combination of settled but unpaid matters, and for the remaining unsettled investigations, claims and/or lawsuits relating to the ignition switch recalls and other related recalls represents a combination of our best single point estimates where determinable and, where no such single point estimate is determinable, our estimate of the low end of the range of probable loss with regard to such matters, if that is determinable. We believe it is probable that we will incur additional liabilities beyond what has already been accrued with regard to at least a portion of the remaining matters, whether through settlement or judgment; however, we are currently unable to estimate an overall amount or range of loss because these matters involve significant uncertainties, including the legal theory or the nature of the investigations, claims and/or lawsuits, the complexity of the facts, the lack of documentation available to us with respect to particular cases or groups of cases, the results of any investigation or litigation and the timing of resolution of the investigation or litigations, including any appeals, further proceedings following the Supreme Court's decision as to whether it will grant review of the Second Circuit's July 13, 2016 decision, and further proceedings following the district court's July 15, 2016 decision and its decision on GM's motion to dismiss the Fourth Amended and Consolidated Complaint in the multidistrict litigation. We will continue to consider resolution of pending matters involving ignition switch recalls and other recalls where it makes sense to do so.

GM Canada Dealers' Claim On February 12, 2010 a claim was filed in the Ontario Superior Court of Justice against GM Canada on behalf of a purported class of over 200 former GM Canada dealers (the Plaintiff Dealers) which had entered into wind-

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

down agreements with GM Canada. In May 2009 in the context of the global restructuring of GM's business and the possibility that GM Canada might be required to initiate insolvency proceedings, GM Canada offered the Plaintiff Dealers the wind-down agreements to assist with their exit from the GM Canada dealer network and to facilitate winding down their operations in an orderly fashion. The Plaintiff Dealers allege that their Dealer Sales and Service Agreements were wrongly terminated by GM Canada and that GM Canada failed to comply with certain disclosure obligations, breached its statutory duty of fair dealing and unlawfully interfered with the Plaintiff Dealers' statutory right to associate in an attempt to coerce the Plaintiff Dealers into accepting the wind-down agreements. The Plaintiff Dealers seek damages and assert that the wind-down agreements are rescindable. The Plaintiff Dealers' initial pleading makes reference to a claim “not exceeding” 750 million Canadian Dollars, without explanation of any specific measure of damages. On March 1, 2011 the court approved certification of a class for the purpose of deciding a number of specifically defined issues. A number of former dealers opted out of participation in the litigation, leaving 181 dealers in the certified class. On July 8, 2015 the Ontario Superior Court dismissed the Plaintiff Dealers’ claim against GM Canada. The court also dismissed GM Canada’s counterclaim against the Plaintiff Dealers for repayment of the wind-down payments made to them by GM Canada as well as for other relief. All parties have filed notices of appeal. The appeals and cross appeals were heard by the Ontario Court of Appeal in January 2017.

GM Korea Wage Litigation Commencing on or about September 29, 2010 current and former hourly employees of GM Korea Company (GM Korea) filed eight separate group actions in the Incheon District Court in Incheon, Korea. The cases, which in aggregate involve more than 10,000 employees, allege that GM Korea failed to include bonuses and certain allowances in its calculation of Ordinary Wages due under the Presidential Decree of the Korean Labor Standards Act. On November 23, 2012 the Seoul High Court (an intermediate level appellate court) affirmed a decision of the Incheon District Court in a case involving five GM Korea employees which was contrary to GM Korea's position. GM Korea appealed to the Supreme Court of the Republic of Korea (Supreme Court). On May 29, 2014 the Supreme Court remanded the case to the Seoul High Court for consideration consistent with earlier Supreme Court precedent holding that while fixed bonuses should be included in the calculation of Ordinary Wages, claims for retroactive application of this rule would be barred under certain circumstances. On reconsideration, the Seoul High Court held in GM Korea's favor on October 30, 2015, after which the plaintiffs appealed to the Supreme Court. In July 2014 GM Korea and its labor union also agreed to include bonuses and certain allowances in Ordinary Wages retroactive to March 1, 2014. Therefore our accrual related to these cases was reclassified from a contingent liability to the Pensions liability. We estimate our reasonably possible loss in excess of amounts accrued to be 611 billion South Korean Won (equivalent to $506 million) at December 31, 2016, which relates to periods before March 1, 2014. We are also party to litigation with current and former salaried employees over allegations relating to Ordinary Wages regulation. On November 26 and 27, 2015 the Supreme Court remanded two salary cases to the Seoul High Court for a review of the merits. At December 31, 2016 we identified a reasonably possible loss for salary cases in excess of the amounts accrued to be 186 billion South Korean Won (equivalent to $154 million). Both the scope of claims asserted and GM Korea's assessment of any or all of the individual claim elements may change if new information becomes available. These cases are currently pending before various courts in Korea.

Other Litigation-Related Liability and Tax Administrative Matters Various other legal actions, governmental investigations, claims and proceedings are pending against us or our related companies or joint ventures, including matters arising out of alleged product defects; employment-related matters; governmental regulations relating to product and workplace safety, emissions and fuel economy; product warranties; financial services; dealer, supplier and other contractual relationships; government regulations relating to payments to foreign companies; government regulations relating to competition issues; tax-related matters not subject to the provision of ASC 740, Income Taxes (indirect tax-related matters); and environmental protection laws, including laws regulating air emissions, water discharges, waste management and environmental remediation. We believe that appropriate accruals have been established for losses that are probable and can be reasonably estimated. It is possible that the resolution of one or more of these matters could exceed the amounts accrued in an amount that could be material to our results of operations.

Indirect tax-related matters are being litigated globally pertaining to value added taxes, customs, duties, sales, property taxes and other non-income tax related tax exposures. The various non-U.S. labor-related matters include claims from current and former employees related to alleged unpaid wage, benefit, severance and other compensation matters. Certain South American administrative proceedings are indirect tax-related and may require that we deposit funds in escrow or provide an alternative form of security which may range from $200 million to $600 million at December 31, 2016. Some of the matters may involve compensatory, punitive or other treble damage claims, environmental remediation programs or sanctions that, if granted, could require us to pay damages or make other expenditures in amounts that could not be reasonably estimated at December 31, 2016. We believe that appropriate accruals have been established for losses that are probable and can be reasonably estimated. For indirect tax-related matters we estimate our reasonably possible loss in excess of amounts accrued to be up to approximately $1.1 billion at December 31, 2016.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Takata Matters On May 4, 2016 NHTSA issued an amended consent order requiring Takata to file DIRs for previously unrecalled front airbag inflators that contain an ammonium nitrate-based propellant without a moisture absorbing desiccant on a multi-year, risk-based schedule through 2019 impacting tens of millions of vehicles produced by numerous automotive manufacturers. NHTSA concluded that the likely root cause of the rupturing of the airbag inflators is a function of time, temperature cycling and environmental moisture. On May 16, 2016 Takata issued its first DIR in connection with the amended consent order, and on January 3, 2017, Takata issued its second set of DIRs.

Although we do not believe there is a safety defect at this time in any GM vehicles within scope of the Takata DIR, in cooperation with NHTSA we filed Preliminary DIRs on May 27, 2016, updated as of June 13, 2016, covering 2.5 million of certain of our GMT900 vehicles, which are full-size pick-up trucks and SUVs. On November 15, 2016 we filed a petition for inconsequentiality and request for deferral of determination regarding certain GMT900 vehicles equipped with Takata inflators. On November 28, 2016 NHTSA granted GM's deferral request in connection with this petition. The deferral provides GM until August 31, 2017 to present evidence and analysis that our vehicles do not pose an unreasonable risk to motor vehicle safety. We believe that this timeline will permit us to complete our testing of the relevant non-desiccated Takata inflators in GMT900 vehicles and to prove to NHTSA that the inflators in these vehicles do not present an unreasonable risk to safety and that no repair will ultimately be required.

Takata filed a second set of equipment DIRs on January 3, 2017 and we filed a second set of Preliminary DIRs for certain GMT900 vehicles on January 10, 2017. These January 2017 DIRs are consistent with GM’s May 2016 DIRs. On the same day, we also filed a second petition for inconsequentiality and deferral of decision with respect to the vehicles subject to our January 2017 DIRs. On January 18, 2017, NHTSA consolidated our first and second petitions for inconsequentiality and will rule on both at the same time.

We believe these vehicles are currently performing as designed and ongoing testing continues to support the belief that the vehicles' unique design and integration mitigates against inflator degradation. We believe that the results of further testing and analysis will demonstrate that the vehicles do not present an unreasonable risk to safety and that no repair will ultimately be required. Accordingly, no warranty provision has been made for any repair associated with our vehicles subject to the Preliminary DIRs and amended consent order. However, in the event we are ultimately obligated to repair the inflators in these vehicles, we estimate a reasonably possible cost of up to $880 million for the 6.9 million vehicles subject to either the Preliminary DIRs or future Takata DIRs under the amended consent order.

Through January 27, 2017 we were aware of one putative class action pending against GM in federal court in the U.S., one putative class action in Mexico and seven putative class actions pending in various Provincial Courts in Canada arising out of allegations that airbag inflators manufactured by Takata are defective. In addition, the New Mexico Attorney General has initiated litigation against Takata and numerous automotive manufacturers, including GM. At this early stage of these proceedings, we are unable to provide an evaluation of the likelihood that a loss will be incurred or an estimate of the amounts or range of possible loss.

Product Liability With respect to product liability claims (other than claims relating to the ignition switch recalls discussed above) involving our and General Motors Corporation products, we believe that any judgment against us for actual damages will be adequately covered by our recorded accruals and, where applicable, excess liability insurance coverage. In addition we indemnify dealers for certain product liability related claims including products sold by General Motors Corporation's dealers. At December 31, 2016 and 2015 liabilities of $656 million and $712 million were recorded in Accrued liabilities and Other liabilities 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. In light of vehicle recalls in recent years it is reasonably possible that our accruals for product liability claims may increase in future periods in material amounts, although we cannot estimate a reasonable range of incremental loss based on currently available information.

Guarantees We enter into indemnification agreements for liability claims involving products manufactured primarily by certain joint ventures. We also provide vehicle repurchase guarantees and payment guarantees on commercial loans outstanding with third parties such as dealers. These guarantees terminate in years ranging from 2017 to 2031 or upon the occurrence of specific events or are ongoing. We believe that the related potential costs incurred are adequately covered and our recorded accruals are insignificant. The maximum liability, calculated as future undiscounted payments, was $4.4 billion and $2.6 billion for these guarantees at December 31, 2016 and 2015, the majority of which relate to the indemnification agreements.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

In some instances certain assets of the party whose debt or performance we have guaranteed may offset, to some degree, the amount of certain guarantees. Our payables to the party whose debt or performance we have guaranteed may also reduce the amount of certain guarantees. If vehicles are required to be repurchased under vehicle repurchase obligations, the total exposure would be reduced to the extent vehicles are able to be resold to another dealer.

We periodically enter into agreements that incorporate indemnification provisions in the normal course of business. It is not possible to estimate our maximum exposure under these indemnifications or guarantees due to the conditional nature of these obligations. Insignificant amounts have been recorded for such obligations as the majority of them are not probable or estimable at this time and the fair value of the guarantees at issuance was insignificant.

Credit Cards Credit card programs offer rebates that can be applied primarily against the purchase or lease of our vehicles. At December 31, 2016 and 2015, our redemption liability was insignificant, our deferred revenue was $286 million and $258 million, and qualified cardholders had rebates available, net of deferred program revenue, of $1.9 billion and $2.0 billion. Our redemption liability and deferred revenue are recorded in Accrued liabilities and Other liabilities.

Noncancelable Operating Leases The following table summarizes our minimum commitments under noncancelable operating leases having initial terms in excess of one year, primarily for property:

	2017				2018				2019				2020				2021				Thereafter
Minimum commitments(a)	$	294			$	280			$	249			$	196			$	166			$	482
Sublease income	(62		)		(61		)		(57		)		(45		)		(39		)		(210		)
Net minimum commitments	$	232			$	219			$	192			$	151			$	127			$	272

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(a)	Certain leases contain escalation clauses and renewal or purchase options.

Rental expense under operating leases was $308 million, $357 million and $444 million in the years ended December 31, 2016, 2015 and 2014.

Note 16. Income Taxes

	Years Ended December 31,
	2016				2015				2014
U.S. income	$	8,943			$	5,594			$	1,683
Non-U.S. income (loss)	459				(70		)		469
Income before income taxes and equity income	$	9,402			$	5,524			$	2,152

	Years Ended December 31,
	2016				2015				2014
Current income tax expense (benefit)
U.S. federal	$	(126	)		$	5			$	(23	)
U.S. state and local	38				(5		)		154
Non-U.S.	618				860				671
Total current income tax expense	530				860				802
Deferred income tax expense (benefit)
U.S. federal	1,372				1,001				(581		)
U.S. state and local	223				199				(60		)
Non-U.S.	291				(3,957		)		67
Total deferred income tax expense (benefit)	1,886				(2,757		)		(574		)
Total income tax expense (benefit)	$	2,416			$	(1,897	)		$	228

Provisions are made for estimated U.S. and non-U.S. income taxes, less available tax credits and deductions, which may be incurred on the remittance of our basis differences in investments in foreign subsidiaries and corporate joint ventures not deemed

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

to be indefinitely reinvested. Taxes have not been provided on basis differences in investments primarily as a result of earnings in foreign subsidiaries which are deemed indefinitely reinvested of $2.4 billion and $2.8 billion at December 31, 2016 and 2015. Additional basis differences related to investments in nonconsolidated China JVs exist of $4.1 billion at December 31, 2016 and 2015 as a result of fresh-start reporting. Quantification of the deferred tax liability, if any, associated with indefinitely reinvested basis differences is not practicable. The non-U.S. deferred income tax benefit in the year ended December 31, 2015 relates primarily to the release of valuation allowances in GME.

	Years Ended December 31,
	2016				2015				2014
Income tax expense at U.S. federal statutory income tax rate	$	3,291			$	1,933			$	753
State and local tax expense	144				115				73
Non-U.S. income taxed at other than 35%	(125		)		(28		)		(72		)
U.S. tax on Non-U.S. income	(1,026		)		(417		)		(8		)
Change in valuation allowances	(103		)		(3,666		)		(402		)
Change in tax laws	147				29				602
Research and manufacturing incentives	177				(367		)		(279		)
Goodwill impairment	—				—				41
Settlements of prior year tax matters	(46		)		—				(275		)
Realization of basis differences in affiliates	(94		)		—				(256		)
Foreign currency remeasurement	(2		)		209				124
Financial penalty under the DPA(a)	—				315				—
Other adjustments	53				(20		)		(73		)
Total income tax expense (benefit)	$	2,416			$	(1,897	)		$	228

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(a)	Refer to Note 15 for additional information on the DPA.

Deferred Income Tax Assets and Liabilities Deferred income tax assets and liabilities at December 31, 2016 and 2015 reflect the effect of temporary differences between amounts of assets, liabilities and equity for financial reporting purposes and the bases of such assets, liabilities and equity as measured based on tax laws, as well as tax loss and tax credit carryforwards. The following table summarizes the components of temporary differences and carryforwards that give rise to deferred tax assets and liabilities:

	December 31, 2016				December 31, 2015
Deferred tax assets
Postretirement benefits other than pensions	$	2,720			$	2,712
Pension and other employee benefit plans	5,701				6,502
Warranties, dealer and customer allowances, claims and discounts(a)	8,102				6,725
Property, plants and equipment	756				1,981
U.S. capitalized research expenditures	6,127				7,413
U.S. operating loss and tax credit carryforwards(b)	8,987				8,623
Non-U.S. operating loss and tax credit carryforwards(c)	5,621				5,826
Miscellaneous(a)	1,950				2,086
Total deferred tax assets before valuation allowances	39,964				41,868
Less: valuation allowances	(4,644		)		(5,021		)
Total deferred tax assets	35,320				36,847
Deferred tax liabilities
Intangible assets	732				590
Net deferred tax assets	$	34,588			$	36,257

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

(a)	At December 31, 2015 deferred tax assets related to certain sales incentives were reclassified from Miscellaneous to Warranties, dealer and customer allowances, claims and discounts to conform to the current period presentation.

(b)	At December 31, 2016 U.S. operating loss and tax credit carryforwards of $8.7 billion expire by 2036 if not utilized and the remaining balance of $0.3 billion may be carried forward indefinitely.

(c)	At December 31, 2016 Non-U.S. operating loss and tax credit carryforwards of $1.3 billion expire by 2036 if not utilized and the remaining balance of $4.3 billion may be carried forward indefinitely.

Valuation Allowances At December 31, 2016 valuation allowances against deferred tax assets of $4.6 billion were comprised of cumulative losses and tax credits, primarily in GME, South Korea and certain U.S. states.

At December 31, 2015 as a result of business restructuring and improving profitability in certain European businesses evidenced by three years of adjusted cumulative earnings and the completion of our near- and medium-term business plans in the three months ended December 31, 2015 that forecast continuing improvement in profitability, we determined that it was more likely than not that our future earnings will be sufficient to realize the deferred tax assets in these European businesses. Accordingly we reversed $3.9 billion of GME's valuation allowances resulting in an income tax benefit.

Uncertain Tax Positions The following table summarizes activity of the total amounts of unrecognized tax benefits:

	Years Ended December 31,
	2016				2015				2014
Beginning balance	$	1,385			$	1,877			$	2,530
Additions to current year tax positions	49				54				184
Additions to prior years' tax positions	97				115				149
Reductions to prior years' tax positions	(193		)		(378		)		(603		)
Reductions in tax positions due to lapse of statutory limitations	(108		)		(201		)		(164		)
Settlements	(1		)		(3		)		(138		)
Other	(7		)		(79		)		(81		)
Ending balance	$	1,222			$	1,385			$	1,877

At December 31, 2016 and 2015 there were $712 million and $896 million of unrecognized tax benefits that if recognized would favorably affect our effective tax rate in the future. In the years ended December 31, 2016, 2015 and 2014 income tax related interest and penalties were insignificant. At December 31, 2016 and 2015 we had liabilities of $172 million and $183 million for income tax related interest and penalties.

At December 31, 2016 it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits in the next twelve months.

Other Matters Income tax returns are filed in multiple jurisdictions and are subject to examination by taxing authorities throughout the world. We have open tax years from 2006 to 2016 with various significant tax jurisdictions. Tax authorities may have the ability to review and adjust net operating loss or tax credit carryforwards that were generated prior to these periods if utilized in an open tax year. These open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the sustainability of income tax credits for a given audit cycle. Given the global nature of our operations there is a risk that transfer pricing disputes may arise.

We have net operating loss carryforwards in Germany through November 30, 2009 that, as a result of reorganizations that took place in 2008 and 2009, were not recorded as deferred tax assets. Depending on the outcome of pending European court decisions these loss carryforwards may be available to reduce future taxable income in Germany.

Note 17. Restructuring and Other Initiatives

We have executed various restructuring and other initiatives and we plan to execute additional initiatives in the future, if necessary, to align manufacturing capacity and other costs with prevailing global automotive production and to improve the utilization of remaining facilities. To the extent these programs involve voluntary separations, no liabilities are generally recorded until offers to employees are accepted. If employees are involuntarily terminated, a liability is generally recorded at the communication date.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Related charges are recorded in Automotive cost of sales and Automotive selling, general and administrative expense. The following table summarizes the reserves and charges related to restructuring and other initiatives, including postemployment benefit reserves and charges:

	Years Ended December 31,
	2016				2015				2014
Balance at beginning of period	$	581			$	1,378			$	1,349
Additions, interest accretion and other	456				566				1,013
Payments	(649		)		(883		)		(862		)
Revisions to estimates and effect of foreign currency	(38		)		(480		)		(122		)
Balance at end of period(a)	$	350			$	581			$	1,378

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(a)	Included temporary layoff benefits of $354 million at December 31, 2014 for GMNA.

In the year ended December 31, 2016 restructuring and other initiatives related primarily to charges of $240 million at GMNA related to the cash severance incentive program to qualified U.S. hourly employees under our 2015 labor agreement with the UAW, and separation and other programs in Australia, Korea and India and the withdrawal of the Chevrolet brand from Europe which had costs of $110 million, a total cost since inception in 2013 of $805 million and affected a total of approximately 4,510 employees in GMIO through December 31, 2016. We expect to complete these previously announced programs in GMIO in 2017 and incur additional restructuring and other charges related to these programs of approximately $65 million.

In the year ended December 31, 2015 restructuring and other initiatives related primarily to the reversal of the U.S. Supplemental Unemployment Benefit Plan accrual for temporary layoff benefits of $317 million resulting from a plan amendment in the 2015 UAW Agreement at GMNA and the separation and other programs in Australia, Korea, Thailand, Indonesia and India and the withdrawal of the Chevrolet brand from Europe which had costs incurred of $208 million, a total cost since inception of $722 million and affected a total of approximately 5,490 employees in GMIO through December 31, 2015.

In the year ended December 31, 2014 restructuring and other initiatives related primarily to the termination of all vehicle and transmission production at our Bochum, Germany facility completed in December 2014 which had costs incurred of $620 million and a total cost since inception of $841 million at GME through December 31, 2014 and the separation programs in Australia and Korea, the withdrawal of the Chevrolet brand from Europe and the cessation of manufacturing in Australia which had costs incurred of $193 million and a total cost since inception of $514 million at GMIO through December 31, 2014.

Exit of Russia In March 2015 we announced plans to exit Russia and ceased manufacturing, eliminated Opel brand distribution and reduced Chevrolet brand distribution in the year ended December 31, 2015. This decision impacted 300 dealers and distributors and 1,130 employees. As a result we recorded pre-tax charges of $443 million at GME and GMIO through December 31, 2015, net of noncontrolling interests of $56 million.

Note 18. Interest Income and Other Non-Operating Income

	Years Ended December 31,
	2016				2015				2014
Interest income	$	185			$	169			$	211
Foreign currency transaction and remeasurement gains	3				297				378
Other	241				155				234
Total interest income and other non-operating income, net	$	429			$	621			$	823

Note 19. Stockholders’ Equity and Noncontrolling Interests

Preferred and Common Stock We have 2.0 billion shares of preferred stock and 5.0 billion shares of common stock authorized for issuance. At December 31, 2016 and 2015 we had 1.5 billion shares of common stock issued and outstanding.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Common Stock Holders of our common stock are entitled to dividends at the sole discretion of our Board of Directors. Our dividends declared per common share were $1.52, $1.38 and $1.20 and our total dividends paid on common stock were $2.3 billion, $2.2 billion and $1.9 billion for the years ended December 31, 2016, 2015 and 2014. Holders of common stock are entitled to one vote per share on all matters submitted to our stockholders for a vote. The liquidation rights of holders of our common stock are secondary to the payment or provision for payment of all our debts and liabilities and to holders of our preferred stock, if any such shares are then outstanding.

In the years ended December 31, 2016 and 2015 we purchased 77 million and 102 million shares of our outstanding common stock for $2.5 billion and $3.5 billion as part of the common stock repurchase program announced in March 2015, which our Board of Directors increased and extended in January 2016 and January 2017.

Warrants At December 31, 2015 the number of warrants outstanding was 70 million consisting of two tranches of warrants that we issued in July 2009. The first tranche expired on July 10, 2016. The second tranche is exercisable at any time prior to July 10, 2019 at an exercise price of $18.33 per share. We had 42 million of these warrants outstanding at December 31, 2016.

Series A Preferred Stock In December 2014 we redeemed all of the remaining outstanding shares of our Series A Preferred Stock at a price equal to the aggregate liquidation amount, including accumulated dividends, of $3.9 billion, which reduced Net income attributable to common stockholders by $809 million.

The following table summarizes the significant components of Accumulated other comprehensive loss:

	Years Ended December 31,
	2016				2015				2014
Foreign Currency Translation Adjustments
Balance at beginning of period	$	(2,034	)		$	(1,064	)		$	(614	)
Other comprehensive loss before reclassification adjustment, net of tax(a)	(375		)		(1,153		)		(475		)
Reclassification adjustment, net of tax(a)(b)	(4		)		198				2
Other comprehensive loss, net of tax(a)	(379		)		(955		)		(473		)
Other comprehensive income (loss) attributable to noncontrolling interests, net of tax(a)	58				(15		)		23
Balance at end of period	$	(2,355	)		$	(2,034	)		$	(1,064	)
Defined Benefit Plans
Balance at beginning of period	$	(5,999	)		$	(7,006	)		$	(2,501	)
Other comprehensive income (loss) before reclassification adjustment	(1,546		)		817				(6,477		)
Tax expense (benefit)	(459		)		41				(1,854		)
Other comprehensive income (loss) before reclassification adjustment, net of tax	(1,087		)		776				(4,623		)
Reclassification adjustment, net of tax(a)(c)	118				235				118
Other comprehensive income (loss), net of tax	(969		)		1,011				(4,505		)
Other comprehensive loss attributable to noncontrolling interests, net of tax(a)	—				(4		)		—
Balance at end of period	$	(6,968	)		$	(5,999	)		$	(7,006	)

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(a)	The income tax effect was insignificant in the years ended December 31, 2016, 2015 and 2014.

(b)	Related to the Russia exit in the year ended December 31, 2015. Included in Automotive cost of sales. Refer to Note 17 for additional information.

(c)	Included in the computation of net periodic pension and OPEB (income) expense. Refer to Note 14 for additional information.

Note 20. Earnings Per Share

Basic and diluted earnings per share are computed by dividing Net income attributable to common stockholders by the weighted-average common shares outstanding in the period. Diluted earnings per share is computed by giving effect to all potentially dilutive securities that are outstanding.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	Years Ended December 31,
	2016				2015				2014
Basic earnings per share
Net income attributable to stockholders	$	9,427			$	9,687			$	3,949
Less: cumulative dividends on preferred stock and charge related to redemption and purchase of preferred stock									(1,145		)
Net income attributable to common stockholders	$	9,427			$	9,687			$	2,804
Weighted-average common shares outstanding	1,540				1,586				1,605
Basic earnings per common share	$	6.12			$	6.11			$	1.75
Diluted earnings per share
Net income attributable to common stockholders – diluted	$	9,427			$	9,686			$	2,786
Weighted-average common shares outstanding – basic	1,540				1,586				1,605
Dilutive effect of warrants and awards under stock incentive plans	30				54				82
Weighted-average common shares outstanding – diluted	1,570				1,640				1,687
Diluted earnings per common share	$	6.00			$	5.91			$	1.65
Potentially dilutive securities(a)	—				72				46

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(a)	Potentially dilutive securities attributable to outstanding warrants and stock options were excluded from the computation of diluted earnings per share because the securities would have had an antidilutive effect.

Note 21. Stock Incentive Plans

We grant to certain employees RSUs, RSAs, PSUs and stock options (collectively, stock incentive awards) under our 2016 Equity Incentive Plan, our 2014 Long-Term Incentive Plan and, prior to our 2014 Long-Term Incentive Plan, RSUs under our 2009 Long-Term Incentive Plan. Shares awarded under the plans are subject to forfeiture if the participant leaves the company for reasons other than those permitted under the plans such as retirement, death or disability.

RSU awards granted either cliff vest or ratably vest generally over a three-year service period, as defined in the terms of each award. PSU awards vest at the end of a three-year performance period, based on performance criteria determined by the Executive Compensation Committee of the Board of Directors at the time of award. The number of shares earned may equal, exceed or be less than the targeted number of shares depending on whether the performance criteria are met, surpassed or not met. Stock options granted expire 10 years from the grant date, with two-fifths of the award becoming exercisable approximately 19 months after the date of grant and the remainder vest ratably over the next three years based on the performance of our common stock relative to that of a specified peer group.

In connection with our acquisition described in Note 9, RSAs and PSUs were granted. The RSAs vest ratably, generally over a three-year service period. The PSUs are contingent upon achievement of specific technology and commercialization milestones.

Stock Incentive Awards

	Stock Incentive Awards(a)
	Shares			Weighted-Average Grant Date Fair Value				Weighted-Average Remaining Contractual Term in Years
Units outstanding at January 1, 2016	44.0			$	16.48			3.0
Granted	21.2			$	31.80
Settled	(8.4	)		$	33.18
Forfeited or expired	(1.7	)		$	22.45
Units outstanding at December 31, 2016	55.1			$	19.77			2.5

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(a) Includes the target amount of PSUs.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Total compensation expense related to the above awards was $650 million, $446 million and $245 million in the years ended December 31, 2016, 2015 and 2014.

At December 31, 2016 the total unrecognized compensation expense for nonvested equity awards granted was $323 million. This expense is expected to be recorded over a weighted-average period of 2.4 years. The total fair value of stock incentive awards vested was $325 million, $228 million and $221 million in the years ended December 31, 2016, 2015 and 2014.

Note 22. Supplementary Quarterly Financial Information (Unaudited)

The following tables summarize supplementary quarterly financial information:

	1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
2016
Total net sales and revenue	$	37,265			$	42,372			$	42,825			$	43,918
Automotive gross margin	$	4,606			$	5,663			$	5,556			$	4,691
Net income	$	1,931			$	2,850			$	2,712			$	1,775
Net income attributable to stockholders	$	1,953			$	2,866			$	2,773			$	1,835
Basic earnings per common share	$	1.26			$	1.85			$	1.79			$	1.21
Diluted earnings per common share	$	1.24			$	1.81			$	1.76			$	1.19

	1st Quarter				2nd Quarter				3rd Quarter				4th Quarter
2015
Total net sales and revenue	$	35,712			$	38,180			$	38,843			$	39,621
Automotive gross margin	$	3,690			$	4,073			$	5,082			$	4,756
Net income	$	908			$	1,140			$	1,341			$	6,226
Net income attributable to stockholders	$	945			$	1,117			$	1,359			$	6,266
Basic earnings per common share	$	0.58			$	0.70			$	0.86			$	4.03
Diluted earnings per common share	$	0.56			$	0.67			$	0.84			$	3.92

The three months ended December 31, 2015 included an income tax benefit of $3.9 billion related to the reversal of deferred tax asset valuation allowances at GME, and a gain on extinguishment of debt of $449 million related to unsecured debt in Brazil in GMSA on a pre-tax basis. The three months ended September 30, 2015 included charges for various legal matters of approximately $1.5 billion related to the Ignition Switch Recall in Corporate on a pre-tax basis. The three months ended June 30, 2015 included asset impairment charges of $297 million related to our Thailand subsidiaries in GMIO, and a charge of $604 million for the Venezuela currency devaluation in GMSA, each on a pre-tax basis. The three months ended March 31, 2015 included costs related to the Russia exit of $337 million in GME and $91 million in GMIO and a charge of $150 million for the Ignition Switch Recall compensation program in Corporate, each on a pre-tax basis.

Note 23. Segment Reporting

We analyze the results of our business through the following segments: GMNA, GME, GMIO, GMSA and GM Financial. The chief operating decision maker evaluates the operating results and performance of our automotive segments through earnings before interest and income taxes-adjusted, which is presented net of noncontrolling interests. The chief operating decision maker evaluates GM Financial through earnings before income taxes-adjusted because interest income and interest expense are part of operating results when assessing and measuring the operational and financial performance of the segment. Each segment has a manager responsible for executing our strategies. Our automotive manufacturing operations are integrated within the segments, benefit from broad-based trade agreements and are subject to regulatory requirements. While not all vehicles within a segment are individually profitable on a fully allocated cost basis, those vehicles attract customers to dealer showrooms and help maintain sales volumes for other, more profitable vehicles and contribute towards meeting required fuel efficiency standards. As a result of these and other factors, we do not manage our business on an individual brand or vehicle basis.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Substantially all of the cars, trucks, crossovers and automobile parts produced are marketed through retail dealers in North America and through distributors and dealers outside of North America, the substantial majority of which are independently owned. In addition to the products sold to dealers for consumer retail sales, cars, trucks and crossovers are also sold to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies and governments. Fleet sales are completed through the dealer network and in some cases directly with fleet customers. Retail and fleet customers can obtain a wide range of after-sale vehicle services and products through the dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories and extended service warranties.

GMNA primarily meets the demands of customers in North America with vehicles developed, manufactured and/or marketed under the Buick, Cadillac, Chevrolet and GMC brands. The demands of customers outside North America are primarily met with vehicles developed, manufactured and/or marketed under the Buick, Cadillac, Chevrolet, GMC, Holden, Opel and Vauxhall brands. We also have equity ownership stakes directly or indirectly in entities through various regional subsidiaries, primarily in Asia. These entities design, manufacture and/or market vehicles under the Baojun, Buick, Cadillac, Chevrolet, Jiefang and Wuling brands.

Our automotive operations' interest income and interest expense, Maven, corporate expenditures including autonomous vehicle-related engineering and other costs and certain nonsegment specific revenues and expenses are recorded centrally in Corporate. Corporate assets consist primarily of cash and cash equivalents, marketable securities, our investment in Lyft, goodwill, intangibles, Maven vehicles and intercompany balances. All intersegment balances and transactions have been eliminated in consolidation. The following tables summarize key financial information by segment:

	At and For the Year Ended December 31, 2016
	GMNA				GME				GMIO				GMSA				Corporate				Eliminations				Total Automotive				GM Financial				Eliminations				Total
Net sales and revenue	$	119,022			$	18,707			$	11,749			$	7,223			$	148							$	156,849			$	9,558			$	(27	)		$	166,380
Earnings (loss) before interest and taxes-adjusted	$	12,047			$	(257	)		$	1,135			$	(374	)		$	(920	)						$	11,631			$	913			$	(14	)		$	12,530
Adjustments(a)	$	—			$	—			$	—			$	—			$	(300	)						$	(300	)		$	—			$	—			(300		)
Automotive interest income																																					185
Automotive interest expense																																					(572		)
Net (loss) attributable to noncontrolling interests																																					(159		)
Income before income taxes																																					11,684
Income tax expense																																					(2,416		)
Net loss attributable to noncontrolling interests																																					159
Net income attributable to stockholders																																					$	9,427
Equity in net assets of nonconsolidated affiliates	$	74			$	—			$	7,976			$	2			$	—			$	—			$	8,052			$	944			$	—			$	8,996
Total assets	$	103,738			$	13,262			$	20,205			$	7,439			$	27,163			$	(36,752	)		$	135,055			$	87,947			$	(1,312	)		$	221,690
Expenditures for property	$	7,333			$	1,151			$	583			$	358			$	12			$	(2	)		$	9,435			$	107			$	—			$	9,542
Depreciation and amortization	$	4,281			$	446			$	439			$	261			$	18			$	(5	)		$	5,440			$	4,712			$	—			$	10,152
Impairment charges	$	66			$	122			$	68			$	—			$	—			$	—			$	256			$	—			$	—			$	256
Equity income	$	160			$	—			$	1,970			$	—			$	1			$	—			$	2,131			$	151			$	—			$	2,282

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(a)	Consists of a net charge of $300 million for legal related matters related to the ignition switch recall.

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	At and For the Year Ended December 31, 2015
	GMNA				GME				GMIO				GMSA				Corporate				Eliminations				Total Automotive				GM Financial				Eliminations				Total
Net sales and revenue	$	106,622			$	18,704			$	12,626			$	7,820			$	150							$	145,922			$	6,454			$	(20	)		$	152,356
Earnings (loss) before interest and taxes-adjusted	$	11,026			$	(813	)		$	1,397			$	(622	)		$	(1,001	)						$	9,987			$	837			$	(10	)		$	10,814
Adjustments(a)	$	47			$	(358	)		$	(383	)		$	(720	)		$	(1,785	)						$	(3,199	)		$	—			$	—			(3,199		)
Automotive interest income																																					169
Automotive interest expense																																					(443		)
Gain on extinguishment of debt																																					449
Net (loss) attributable to noncontrolling interests																																					(72		)
Income before income taxes																																					7,718
Income tax benefit																																					1,897
Net loss attributable to noncontrolling interests																																					72
Net income attributable to stockholders																																					$	9,687
Equity in net assets of nonconsolidated affiliates	$	94			$	6			$	8,113			$	2			$	—			$	—			$	8,215			$	986			$	—			$	9,201
Total assets	$	92,480			$	13,343			$	20,540			$	6,990			$	20,151			$	(24,083	)		$	129,421			$	66,081			$	(1,164	)		$	194,338
Expenditures for property	$	5,688			$	1,070			$	480			$	485			$	66			$	(5	)		$	7,784			$	90			$	—			$	7,874
Depreciation and amortization	$	3,745			$	412			$	436			$	268			$	16			$	(3	)		$	4,874			$	2,297			$	—			$	7,171
Impairment charges	$	370			$	117			$	324			$	35			$	—			$	—			$	846			$	—			$	—			$	846
Equity income	$	20			$	2			$	2,056			$	—			$	—			$	—			$	2,078			$	116			$	—			$	2,194

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(a)

Consists primarily of costs related to the Russia exit of $353 million in GME and $85 million in GMIO, which is net of noncontrolling interests; asset impairment charges of $297 million related to our Thailand subsidiaries in GMIO; Venezuela currency devaluation and asset impairment charges of $720 million in GMSA; charges related to the ignition switch recall including the compensation program of $195 million and various settlements and legal related matters of approximately $1.6 billion in Corporate; and other of $41 million.

	At and For the Year Ended December 31, 2014
	GMNA				GME				GMIO				GMSA				Corporate				Eliminations				Total Automotive				GM Financial				Eliminations				Total
Net sales and revenue	$	101,199			$	22,235			$	14,392			$	13,115			$	151							$	151,092			$	4,854			$	(17	)		$	155,929
Earnings (loss) before interest and taxes-adjusted	$	6,603			$	(1,369	)		$	1,222			$	(180	)		$	(580	)						$	5,696			$	803			$	(5	)		$	6,494
Adjustments(a)	$	(975	)		$	(245	)		$	(180	)		$	(539	)		$	(400	)						$	(2,339	)		$	12			$	—			(2,327		)
Automotive interest income																																					211
Automotive interest expense																																					(403		)
Gain on extinguishment of debt																																					202
Net income attributable to noncontrolling interests																																					69
Income before income taxes																																					4,246
Income tax expense																																					(228		)
Net (income) attributable to noncontrolling interests																																					(69		)
Net income attributable to stockholders																																					$	3,949
Equity in net assets of nonconsolidated affiliates	$	88			$	6			$	8,254			$	2			$	—			$	—			$	8,350			$	—			$	—			$	8,350
Total assets	$	92,781			$	10,460			$	22,910			$	10,066			$	24,308			$	(29,041	)		$	131,484			$	47,745			$	(1,918	)		$	177,311
Expenditures for property	$	4,985			$	887			$	681			$	359			$	127			$	—			$	7,039			$	52			$	—			$	7,091
Depreciation and amortization	$	4,122			$	325			$	419			$	383			$	75			$	(4	)		$	5,320			$	918			$	—			$	6,238
Impairment charges, excluding goodwill	$	254			$	302			$	321			$	3			$	—			$	—			$	880			$	—			$	—			$	880
Equity income	$	19			$	(45	)		$	2,120			$	—			$	—			$	—			$	2,094			$	—			$	—			$	2,094

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(a)

Consists of a catch-up adjustment related to the change in estimate for recall campaigns of $874 million in GMNA; asset impairment charges of $245 million related to our Russian subsidiaries in GME; asset impairment charges of $158 million related to our Thailand subsidiary in GMIO; Venezuela currency devaluation charges of $419 million and Goodwill impairment charges of $120 million in GMSA; a charge related to the ignition switch recall compensation program of $400 million in Corporate; and other of $111 million.

Automotive revenue is attributed to geographic areas based on the country in which our subsidiary is located. GM Financial revenue is attributed to the geographic area where the financing is originated. The following table summarizes information concerning principal geographic areas:

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

	At and For the Years Ended December 31,
	2016								2015								2014
	Net Sales & Revenue				Long-Lived Assets				Net Sales & Revenue				Long-Lived Assets				Net Sales & Revenue				Long-Lived Assets
Automotive
U.S.	$	110,848			$	22,241			$	100,008			$	21,091			$	93,559			$	18,813
Non-U.S.	46,001				15,196				45,914				12,742				57,533				12,355
GM Financial
U.S.	7,462				32,506				4,357				18,501				2,549				5,477
Non-U.S.	2,069				2,299				2,077				1,890				2,288				1,755
Total consolidated	$	166,380			$	72,242			$	152,356			$	54,224			$	155,929			$	38,400

No individual country other than the U.S. represented more than 10% of our total Net sales and revenue or Long-lived assets.

Note 24. Supplemental Information for the Consolidated Statements of Cash Flows

The following table summarizes the sources (uses) of cash provided by Change in other operating assets and liabilities and Cash paid for income taxes and interest:

	Years Ended December 31,
2016				2015				2014
Accounts receivable	$	(1,285	)		$	(254	)		$	(1,248	)
Wholesale receivables funded by GM Financial, net	(2,723		)		(1,124		)		(2,000		)
Inventories	(320		)		(1,350		)		(309		)
Automotive equipment on operating leases	492				159				(1,949		)
Change in other assets	(859		)		(668		)		(210		)
Accounts payable	3,469				1,953				19
Income taxes payable	(227		)		60				(145		)
Accrued and other liabilities	1,015				(801		)		6,089
Total	$	(438	)		$	(2,025	)		$	247
Cash paid for income taxes and interest
Cash paid for income taxes	$	757			$	800			$	947
Cash paid for interest (net of amounts capitalized) – Automotive	466				348				301
Cash paid for interest (net of amounts capitalized) – GM Financial	1,857				1,295				1,120
Total cash paid for interest (net of amounts capitalized)	$	2,323			$	1,643			$	1,421

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