Ally Bank 2012 Annual Report Download - page 159

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17. Accrued Expenses and Other Liabilities
The components of accrued expenses and other liabilities were as follows.
December 31, ($ in millions) 2012 2011
Fair value of derivative contracts in payable position $ 2,468 $ 5,367
Collateral received from counterparties 941 1,410
Accrual related to ResCap Bankruptcy and deconsolidation (a) 750 —
Accounts payable 565 1,178
Employee compensation and benefits 494 649
Reserves for insurance losses and loss adjustment expenses 341 580
Reserve for mortgage representation and warranty obligation 105 825
Deferred revenue 97 86
Non-income tax payable 15 296
Deferred income tax liability 6111
GM payable, net 1228
Current income tax payable 1200
Loan repurchases liabilities —2,387
Other liabilities 801 1,347
Total accrued expenses and other liabilities $ 6,585 $ 14,664
(a) Refer to Note 1 for more information regarding the Debtors' bankruptcy, deconsolidation, and this accrual.
18. Equity
Common Stock
Our common stock has a par value of $0.01 and there are 2,021,384 shares authorized for issuance. Our common stock is not registered
with the Securities and Exchange Commission, and there is no established trading market for the shares. Treasury holds 73.78% of Ally
common stock. The following table presents changes in the number of shares issued and outstanding.
(in shares) 2012 2011 2010
Common stock
January 1, 1,330,970 1,330,970 799,120
New issuances
Conversion of Series F-2 Preferred Stock (a) —— 531,850
December 31, 1,330,970 1,330,970 1,330,970
(a) On December 30, 2010, 110,000,000 shares of Series F-2 Preferred Stock owned by Treasury were converted into 531,850 shares of Ally common stock.
Preferred Stock
Series F-2 Mandatorily Convertible Preferred Stock held by U.S. Department of Treasury
On December 30, 2009, Ally entered into a Securities Purchase and Exchange Agreement (the Purchase Agreement) with Treasury,
pursuant to which a series of transactions occurred resulting in Treasury acquiring 228,750,000 shares of Ally's newly issued Fixed Rate
Cumulative Mandatorily Convertible Preferred Stock, Series F-2 (the New MCP), with a total liquidation preference of $11.4 billion. On
December 30, 2010, Treasury converted 110,000,000 shares of the New MCP into 531,850 shares of Ally common stock. The conversion
occurred at an agreed upon rate that exceeded the initial conversion rate as defined in Exhibit H to the Ally Certificate of Incorporation. The
fair value of the additional shares was approximately $586 million and represented an inducement. The fair value of the additional common
shares issued to Treasury was determined using a combination of valuation techniques consistent with the market approach (Level 3 fair value
inputs). The market approach we used to estimate the fair value of our common stock incorporated a combination of the tangible equity and
earnings multiples from comparable publicly traded companies deemed similar to Ally (and its operating segments) and by observing
comparable transactions in the marketplace. We also considered the implied valuation of our common stock based on the December 30, 2010,
conversion with Treasury.
In connection with the conversion, the New MCP Certificate of Designation was amended to require us to deliver additional shares to the
New MCP holders upon occurrence of certain specified events. The fair value associated with this provision was $30 million and was
reflected in the New MCP balance at December 31, 2010. The fair value of the provision was determined utilizing an option pricing model
using inputs and assumptions that management believes a willing market participant would use in estimating fair value (a Level 3 fair value
input).
Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10-K