General Motors 2010 Annual Report Download - page 36

GENERAL MOTORS COMPANY AND SUBSIDIARIES
The Series A Preferred Stock was previously classified as temporary equity because the holders of the Series A Preferred Stock, as
a class, owned greater than 50% of our common stock and therefore had the ability to exert control, through its power to vote for the
election of our directors, over various matters, which could have included compelling us to redeem the Series A Preferred Stock in
2014 or later. In December 2010 we purchased the 84 million shares of Series A Preferred Stock held by the UST. Since the
remaining holders of our Series A Preferred Stock, Canada Holdings and the New VEBA, do not own a majority of our common stock
and therefore do not have the ability to exert control, through the power to vote for the election of our directors, over various matters,
including compelling us to redeem the Series A Preferred Stock when it becomes callable by us on or after December 31, 2014, our
classification of the Series A Preferred Stock as temporary equity is no longer appropriate. Upon the purchase of the Series A
Preferred Stock held by the UST, the Series A Preferred Stock held by Canada Holdings and the New VEBA was reclassified to
permanent equity at its carrying amount of $5.5 billion. Refer to Note 29 to our consolidated financial statements for additional
information on the purchase of shares of Series A Preferred Stock.
Warrants
The first tranche of warrants issued to MLC is exercisable at any time prior to July 10, 2016, with an exercise price of $10.00 per
share. The second tranche of warrants issued to MLC is exercisable at any time prior to July 10, 2019, with an exercise price of
$18.33 per share. The warrant issued to the New VEBA is exercisable at any time prior to December 31, 2015, with an exercise price
of $42.31 per share. The number of shares of our common stock underlying each of the warrants issued to MLC and the New VEBA
and the per share exercise price are subject to adjustment as a result of certain events, including stock splits, reverse stock splits and
stock dividends.
Additional Modifications to Pension and Other Postretirement Plans Contingent upon Completion of the 363 Sale
We modified the U.S. hourly pension plan, the U.S. executive retirement plan, the U.S. salaried life plan, the non-UAW hourly
retiree medical plan and the U.S. hourly life plan. These modifications became effective upon the completion of the 363 Sale. The key
modifications were:
• Elimination of the post-age-65 benefits and placing a cap on pre-age-65 benefits in the non-UAW hourly retiree medical plan;
• Capping the life benefit for non-UAW retirees and future retirees at $10,000 in the U.S. hourly life plan;
• Capping the life benefit for existing salaried retirees at $10,000, reduced the retiree benefit for future salaried retirees and
eliminated the executive benefit for the U.S. salaried life plan;
• Elimination of a portion of nonqualified benefits in the U.S. executive retirement plan; and
• Elimination of the flat monthly special lifetime benefit of $66.70 that was to commence on January 1, 2010 for the U.S. hourly
pension plan.
Accounting for the Effects of the Chapter 11 Proceedings and the 363 Sale
Chapter 11 Proceedings
ASC 852 is applicable to entities operating under Chapter 11 of the Bankruptcy Code. ASC 852 generally does not affect the
application of U.S. GAAP that we and Old GM followed to prepare the consolidated financial statements, but it does require specific
disclosures for transactions and events that were directly related to the Chapter 11 Proceedings and transactions and events that
resulted from ongoing operations.
Old GM prepared its consolidated financial statements in accordance with the guidance in ASC 852 in the period June 1, 2009
through July 9, 2009. Revenues, expenses, realized gains and losses, and provisions for losses directly related to the Chapter 11
34 General Motors Company 2010 Annual Report