Divestitures and Other Actions

12 Months Ended

Dec. 31, 2011

DISCONTINUED OPERATIONS [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure

DIVESTITURES AND OTHER ACTIONS

We execute divestitures and other business arrangements as part of our fundamental strategy to fund the business efficiently while managing our balance sheet risk. Specific actions we have undertaken are presented below by segment.

We classify disposal groups as held for sale when the sale is probable within one year and the disposal group is available for immediate sale in its present condition. A disposal group is classified as a discontinued operation when the criteria to be classified as held-for-sale have been met and we will not have any significant involvement with the disposal group after the sale. At December 31, 2011 and 2010, there were no assets and liabilities of held-for-sale disposal groups.

We perform an impairment test on a disposal group to be discontinued, held for sale, or otherwise disposed. We estimate fair value under the market approach to approximate the expected proceeds to be received. An impairment charge is recognized when the carrying value of the disposal group exceeds the estimated fair value less transaction costs.

North America Segment

In 2005, we completed the sale of Triad Financial Corporation. We received additional proceeds pursuant to a contractual agreement entered into at the closing of the sale, and recognized an after-tax gain of $2 million in 2009 in Gain on disposal of discontinued operations.

International Segment

In 2011, we recorded foreign currency translation adjustments of $60 million (including $72 million recorded in the fourth quarter of 2011) related to the strategic decision to exit retail and wholesale financing in certain Asia Pacific markets. These adjustments decreased Accumulated other comprehensive income/(loss) (foreign currency translation) and increased our pre-tax income, which was recorded to Other income, net (see Note 15).

At the end of the third quarter of 2009, finance receivables of $911 million that we no longer had the intent to hold for the foreseeable future, or until maturity or payoff, were classified as held for sale. These assets represented the majority of our retail finance receivables in FCA Holdings Limited, our operation in Australia. As a result, we recorded a valuation allowance of $52 million to Other income, net to reflect the receivables at the lower of cost or fair value. The receivables were sold on October 1, 2009.

In 2009, we completed the sale of Primus Leasing Company Limited, our operation in Thailand that offered automotive retail and wholesale financing of Ford, Mazda and Volvo vehicles. As a result of the sale, we recognized a de minimis pre-tax gain in Other income, net.