General Motors 2010 Annual Report Download - page 201

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
ours for retiree medical benefits for the class and the covered group arising from any agreement between us and the UAW terminated
at December 31, 2009. Our obligations to the new healthcare plan and the New VEBA are limited to the terms of the settlement
agreement.
At December 31, 2009 we accounted for the termination of our UAW hourly retiree medical plan and Mitigation Plan as a
settlement. The resulting settlement loss of $2.6 billion recorded on December 31, 2009 represented the difference between the sum of
the accrued OPEB liability of $10.6 billion and the existing internal VEBA assets of $12.6 billion, and $25.8 billion representing the
fair value of the consideration transferred on December 31, 2009, including the contribution of the existing internal VEBA assets.
Upon the settlement of the UAW hourly retiree medical plan at December 31, 2009 the VEBA Notes, Series A Preferred Stock,
common stock, and warrants contributed to the New VEBA were recorded at fair value and classified as outstanding debt and equity
instruments.
Prior to December 31, 2009 the 260 million shares of Series A Preferred Stock issued to the New VEBA were not considered
outstanding for accounting purposes due to the terms of the settlement agreement with the UAW. As a result, $105 million of the $146
million of dividends paid on September 15, 2009 and $147 million of the $203 million of dividends paid on December 15, 2009 were
recorded as employer contributions resulting in a reduction of Postretirement benefits other than pensions.
IUE-CWA and USW Settlement Agreement
In September 2009 we entered into a settlement agreement with MLC, The International Union of Electronic, Electrical, Salaried,
Machine and Furniture Workers — Communication Workers of America (IUE-CWA) and United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW). The approved settlement agreement
resulted in remeasurements of the U.S. hourly defined benefit pension plan, the non-UAW hourly retiree healthcare plan and the U.S.
hourly life plan to reflect the terms of the agreement. The settlement agreement was expressly conditioned upon and did not become
effective until approved by the Bankruptcy Court in MLC’s Chapter 11 proceedings, which occurred in November 2009. Several
additional unions representing MLC hourly retirees joined the IUE-CWA and USW settlement agreement with respect to healthcare
and life insurance. The remeasurement of these plans resulted in a decrease in a contingent liability accrual and an offsetting increase
in the PBO or APBO of the benefit plan.
2009 CAW Agreement
In March 2009 Old GM announced that the members of the CAW had ratified an agreement intended to reduce costs in Canada
through introducing co-payments for healthcare benefits, increasing employee healthcare cost sharing, freezing pension benefits and
eliminating cost of living adjustments to pensions for retired hourly workers. The 2009 CAW Agreement was conditioned on Old GM
receiving longer term financial support from the Canadian and Ontario governments and those governments agreed to the terms of a
loan agreement, approved the GMCL viability plan and provided funding to GMCL. The Canadian hourly defined benefit pension
plan was remeasured in June 2009.
The CAW hourly retiree healthcare plan and the CAW retiree life plan were also remeasured in June 2009. Additionally, as a result
of the termination of employees from the former Oshawa, Ontario truck facility, GMCL recorded a curtailment gain associated with
the CAW hourly retiree healthcare plan.
In June 2009 GMCL and the CAW agreed to the terms of an independent HCT to provide retiree healthcare benefits to certain
active and retired employees and it will be implemented when certain preconditions are achieved. Certain of the preconditions have
not been achieved and the HCT is not yet implemented at December 31, 2010. GMCL is obligated to make a payment of CAD $1.0
billion on the HCT implementation date which it will fund out of its CAD $1.0 billion escrow funds, adjusted for the net difference
between the amount of retiree monthly contributions received during the period January 1, 2010 through the HCT implementation
date less the cost of benefits paid for claims incurred by covered employees during this period. GMCL will provide a CAD $800
million note payable to the HCT on the HCT implementation date which will accrue interest at an annual rate of 7.0% with five equal
annual installments of CAD $256 million due December 31 of 2014 through 2018. Concurrent with the implementation of the HCT,
General Motors Company 2010 Annual Report 199