General Motors 2010 Annual Report Download - page 125

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations
General Motors Company was formed by the United States Department of the Treasury (UST) in 2009 originally as a Delaware
limited liability company, Vehicle Acquisition Holdings LLC, and subsequently converted to a Delaware corporation, NGMCO, Inc.
This company, which on July 10, 2009 acquired substantially all of the assets and assumed certain liabilities of General Motors
Corporation (363 Sale) and changed its name to General Motors Company, is sometimes referred to in these consolidated financial
statements for the periods on or subsequent to July 10, 2009 as “we,” “our,” “us,” “ourselves,” the “Company,” “General Motors,” or
“GM,” and is the successor entity solely for accounting and financial reporting purposes (Successor). General Motors Corporation is
sometimes referred to in these consolidated financial statements, for the periods on or before July 9, 2009, as “Old GM.” Prior to
July 10, 2009 Old GM operated the business of the Company, and pursuant to the agreement with the Securities and Exchange
Commission (SEC), as described in a no-action letter issued to Old GM by the SEC Staff on July 9, 2009 regarding our filing
requirements and those of Motors Liquidation Company (MLC), the accompanying consolidated financial statements include the
financial statements and related information of Old GM as it is our predecessor entity solely for accounting and financial reporting
purposes (Predecessor). On July 10, 2009 in connection with the 363 Sale, General Motors Corporation changed its name to Motors
Liquidation Company, which is sometimes referred to in these consolidated financial statements for the periods on or after July 10,
2009 as “MLC.” MLC continues to exist as a distinct legal entity for the sole purpose of liquidating its remaining assets and liabilities.
On October 1, 2010 we acquired 100% of the outstanding equity interests of AmeriCredit Corp. (AmeriCredit), an automotive
finance company which we subsequently renamed General Motors Financial Company, Inc. (GM Financial).
We develop, produce and market cars, trucks and parts worldwide. We also conduct finance operations through GM Financial.
These financing operations consist principally of financing automobile purchases and leases for retail customers.
We analyze the results of our business through our five segments, which are GM North America (GMNA), GM Europe (GME),
GM International Operations (GMIO), GM South America (GMSA) and GM Financial. Nonsegment operations are classified as
Corporate. Corporate includes investments in Ally Financial, Inc. (Ally Financial) (formerly GMAC Inc.), certain centrally recorded
income and costs, such as interest, income taxes and corporate expenditures, certain nonsegment specific revenues and expenses,
including costs related to the Delphi Benefit Guarantee Agreements (as subsequently defined in Note 20) and a portfolio of
automotive retail leases.
We own a 9.9% equity interest in Ally Financial, which is accounted for as a cost method investment because we cannot exercise
significant influence. Ally Financial provides a broad range of financial services, including consumer vehicle financing, automotive
dealership and other commercial financing, residential mortgage services, and automobile service contracts.
Note 2. Chapter 11 Proceedings and the 363 Sale
Background
Over time as Old GM’s market share declined in North America, Old GM needed to continually restructure its business operations
to reduce cost and excess capacity. Legacy labor costs and obligations and capacity in its dealer network made Old GM less
competitive than new entrants into the U.S. market. These factors continued to strain Old GM’s liquidity. In 2005 Old GM incurred
significant losses from operations and from restructuring activities such as providing support to Delphi Corporation (Delphi) and other
efforts intended to reduce operating costs. Old GM managed its liquidity during this time through a series of cost reduction initiatives,
capital markets transactions and sales of assets. However, the global credit market crisis had a dramatic effect on Old GM and the
automotive industry. In the second half of 2008, the increased turmoil in the mortgage and overall credit markets (particularly the lack
of financing for buyers or lessees of vehicles), the continued reductions in U.S. housing values, the volatility in the price of oil,
recessions in the U.S. and Western Europe and the slowdown of economic growth in the rest of the world created a substantially more
difficult business environment. The ability to execute capital markets transactions or sales of assets was extremely limited, vehicle
sales in North America and Western Europe contracted severely, and the pace of vehicle sales in the rest of the world slowed. Old
GM’s liquidity position, as well as its operating performance, were negatively affected by these economic and industry conditions and
by other financial and business factors, many of which were beyond its control.
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