General Motors 2010 Annual Report Download - page 163

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(b) The Finance receivables were recorded at fair value, which was determined using a discounted cash flow approach. The
contractual cash flows were adjusted for estimated prepayments, defaults, recoveries, finance charge income and servicing costs
and discounted using a discount rate commensurate with risks and maturity inherent in the finance contracts. As of the
acquisition date, the contractually required payments receivable was $10.7 billion of which $9.7 billion was expected to be
collected.
(c) The fair value of securitization notes payable and other borrowings was principally determined using quoted market rates.
We recorded goodwill in the amount of $1.3 billion for the excess of consideration paid over the fair value of the individual assets
acquired and liabilities assumed. Goodwill includes $153 million recorded to establish a valuation allowance for deferred tax assets
that was not applicable to GM Financial on a stand-alone basis. All of the goodwill was assigned to the newly formed GM Financial
reporting segment. The goodwill expected to be tax deductible is $159 million and was generated from previous acquisitions by GM
Financial.
The results of operations of GM Financial are included in our results beginning October 1, 2010. The following table summarizes
the actual amounts of revenue and earnings of GM Financial included in our consolidated financial statements for the year ended
December 31, 2010 and the supplemental pro forma revenue and earnings of the combined entity as if the acquisition had occurred on
January 1, 2009 (dollars in millions):
Successor
(Unaudited)
Predecessor
(Unaudited)
GM Financial
amounts included in
results for Year
Ended
December 31, 2010
Pro Forma-Combined Pro Forma-Combined
Year Ended
December 31, 2010
July 10, 2009
Through
December 31, 2009
January 1, 2009
Through
July 9, 2009
Total net sales and revenue ...................... $281 $136,665 $58,215 $ 48,074
Net income (loss) attributable to stockholders ....... $ 90 $ 6,634 $ (4,125) $109,234
The supplemental pro forma information was adjusted to give effect to the tax effected amortization of a premium on finance
receivables and a premium on securitization notes payable and other borrowings, depreciation and amortization related to other assets
and acquisition related costs. The pro forma information should not be considered indicative of the results had the acquisition been
consummated on January 1, 2009, nor are they indicative of future results.
Sale of Nexteer
On November 30, 2010 we completed the sale of Nexteer, a manufacturer of steering components and half-shafts, to Pacific
Century Motors. The sale of the Nexteer business included the global steering business which was acquired in October 2009 as
discussed under Acquisition of Delphi Businesses below. The 2009 acquisition of Nexteer included 22 manufacturing facilities, six
engineering facilities and 14 customer support centers located in North and South America, Europe and Asia.
We received consideration of $426 million in cash and a $39 million promissory note in exchange for 100% of our ownership
interest in Nexteer and recorded a gain of $60 million on the sale which is recorded in Interest income and other non-operating
income, net. Subsequent to the sale, Nexteer became one of our third party suppliers and we remain a significant customer. During
2010 Nexteer recorded revenue of $1.8 billion, of which $939 million were sales to us. During the period from October 6, 2009, the
date of acquisition, to December 31, 2009, Nexteer reported revenue of $453 million, of which $218 million were sales to us. We did
not provide the pro forma financial information because we do not believe the information is material.
General Motors Company 2010 Annual Report 161