General Motors 2010 Annual Report Download - page 95

GENERAL MOTORS COMPANY AND SUBSIDIARIES
Three Months
Ended
December 31, 2009
July 10, 2009
Through
September 30, 2009
July 10, 2009
Through
December 31, 2009
Series A Preferred Stock (a) ........................................ $203 $146 $349
(a) 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 2009 UAW Retiree Settlement Agreement. As a result, $105 million
of the $146 million of dividends paid in the three months ended September 30, 2009 and $147 million of the $203 million
dividends paid in the three months ended December 31, 2009 were recorded as a reduction of Postretirement benefits other than
pensions.
Our payment of dividends in the future, if any, will be determined by our Board of Directors and will be paid out of funds legally
available for that purpose.
Critical Accounting Estimates
The consolidated financial statements are prepared in conformity with U.S. GAAP, which require the use of estimates, judgments
and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the
accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in
making estimates actual results could differ from the original estimates, requiring adjustments to these balances in future periods. We
have discussed the development, selection and disclosures of our critical accounting estimates with the Audit Committee of the Board
of Directors, and the Audit Committee has reviewed the disclosures relating to these estimates.
The critical accounting estimates that affect the consolidated financial statements and that use judgments and assumptions are listed
below. In addition, the likelihood that materially different amounts could be reported under varied conditions and assumptions is
discussed.
Fresh-Start Reporting
The Bankruptcy Court did not determine a reorganization value in connection with the 363 Sale. Reorganization value is defined as
the value of our assets without liabilities. In order to apply fresh-start reporting, ASC 852 requires that total postpetition liabilities and
allowed claims be in excess of reorganization value and prepetition stockholders receive less than 50.0% of our common stock. Based
on our estimated reorganization value, we determined that on July 10, 2009 both the criteria of ASC 852 were met and, as a result, we
applied fresh-start reporting.
Our reorganization value was determined using the sum of:
• Our discounted forecast of expected future cash flows from our business subsequent to the 363 Sale, discounted at rates
reflecting perceived business and financial risks;
• The fair value of operating liabilities;
• The fair value of our non-operating assets, primarily our investments in nonconsolidated affiliates and cost method
investments; and
• The amount of cash we maintained at July 10, 2009 that we determined to be in excess of the amount necessary to conduct our
normal business activities.
The sum of the first, third and fourth bullet items equals our Enterprise value.
General Motors Company 2010 Annual Report 93