General Motors 2010 Annual Report Download - page 234

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
uncertainties arising because this litigation is at its earliest stages, this amount represents the high end of the range of reasonably
possible liability exposure. Both the scope of claims asserted and GM Daewoo’s assessment of any or all of individual claim elements
may change. This accrual is included in the reserves for non-U.S. labor-related matters.
In July 2008 Old GM reached a tentative settlement of the General Motors Securities Litigation suit and recorded an additional
charge of $277 million, of which $139 million was paid in the year ended December 31, 2008. Also in the year ended December 31,
2008, Old GM recorded $215 million as a reduction to Automotive selling, general and administrative expense associated with
insurance-related indemnification proceeds for previously recorded litigation related costs, including the cost incurred to settle the
General Motors Securities Litigation suit.
GME Planned Spending Guarantee
As part of our Opel/Vauxhall restructuring plan, agreed to with European labor representatives, we have committed to achieve
specified milestones associated with planned spending from 2011 to 2014 on certain product programs. If we fail to accomplish the
requirements set out under the agreement, we will be required to pay certain amounts up to Euro 265 million for each of those years,
and/or interest on those amounts, to our employees. Certain inventory with a carrying amount of $193 million at December 31, 2010
was pledged as collateral under the agreement. Management has the intent and believes it has the ability to meet the requirements
under the agreement.
Asset Retirement Obligations
Conditional asset retirement obligations relate to legal obligations associated with retirement of tangible long-lived assets that result
from acquisition, construction, development, or normal operation of a long-lived asset. An analysis is performed of such obligations
associated with all real property owned or leased, including facilities, warehouses, and offices. Estimates of conditional asset
retirement obligations relate, in the case of owned properties, to costs estimated to be necessary for the legally required removal or
remediation of various regulated materials, primarily asbestos. Asbestos abatement was estimated using site-specific surveys where
available and a per square foot estimate where surveys were unavailable. For leased properties, such obligations relate to the estimated
cost of contractually required property restoration.
Recording conditional asset retirement obligations results in increased fixed asset balances with a corresponding increase to
liabilities. Asset balances, net of accumulated depreciation, of $36 million and $53 million at December 31, 2010 and 2009 are
recorded in Property, net, while the related liabilities are included in Other liabilities. The following table summarizes the activity
related to asset retirement obligations (dollars in millions):
Successor Predecessor
Year Ended
December 31, 2010
July 10, 2009
Through
December 31, 2009
January 1, 2009
Through
July 9, 2009
Beginning balance .................................................. $102 $ 97 $ 237
Accretion expense .................................................. 6 4 12
Liabilities incurred ................................................. 6 21 5
Liabilities settled or disposed ......................................... (12) (9) (2)
Effect of foreign currency translation ................................... 2 3 5
Revisions to estimates ............................................... (1) (14) 1
Reclassified to liabilities subject to compromise (a) ........................ — — (121)
Ending balance .................................................... 103 102 137
Effect of application of fresh-start reporting .............................. — — (40)
Ending balance including effect of application of fresh-start reporting ......... $103 $102 $ 97
(a) Represents the asset retirement obligations associated with assets MLC retained.
232 General Motors Company 2010 Annual Report