General Motors 2011 Annual Report Download - page 112

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Successor
December 31, 2011 December 31, 2010
Financial Position
Accounts and notes receivable, net .................................................. $1,785 $1,618
Accountspayable(principallytrade) ................................................ $ 342 $ 641
Deferredrevenueandcustomerdeposits ............................................. $ 150 $ 9
Successor Predecessor
Year Ended
December 31, 2011
Year Ended
December 31, 2010
July 10, 2009
Through
December 31, 2009
January 1, 2009
Through
July 9, 2009
Cash Flows
Operating .......................................... $3,624 $719 $538 $546
Investing .......................................... $ (27) $ (74) $ (67) $ —
Ally Financial Common and Preferred Stock
GM
On July 10, 2009 we acquired the investment in Ally Financial’s common and preferred stocks in connection with the 363 Sale.
In December 2009 the United States Department of the Treasury (UST) made a capital contribution to Ally Financial of $3.8
billion. The UST also exchanged all of its existing Ally Financial non-convertible preferred stock for mandatory convertible preferred
securities valued at $5.3 billion and converted mandatory convertible preferred securities valued at $3.0 billion into Ally Financial
common stock. These actions resulted in the dilution of our investment in Ally Financial common stock from 24.5% to 16.6%, of
which 6.7% was held directly and 9.9% was held indirectly through an independent trust.
In December 2010 the UST agreed to convert 110 million shares of preferred securities into 532 thousand shares of common stock.
This resulted in the dilution of our investment in Ally Financial common stock from 16.6% to 9.9%, of which 4.0% was held directly
and 5.9% was held indirectly through an independent trust. In May 2011 we transferred the 4.0% of shares we owned directly to the
independent trust. In December 2011, in response to a letter from the trustee requesting that the life of the trust be extended, the
Federal Reserve agreed to extend the trust from December 2011 to December 2013. Pursuant to previous commitments to reduce
influence over and ownership in Ally Financial, the trustee, who is independent of us, has the sole authority to vote and is required to
dispose of all Ally Financial common stock held in the trust by December 24, 2013. We can cause the trustee to return any Ally
Financial common stock to us to hold directly, so long as our directly held voting and total common equity interests remain below
10.0%. At December 31, 2011 and 2010 our equity ownership in Ally Financial was 9.9%.
Fair Value and Impairment of Ally Financial Common and Preferred Stock
We estimated the fair value of Ally Financial common stock using a market approach that applies the average price to tangible
book value multiples of comparable companies to the consolidated Ally Financial tangible book value. The significant inputs used in
our fair value analyses included Ally Financial’s December 31, 2011 and 2010 financial statements, financial statements and price to
tangible book value multiples of comparable companies in the banking and finance industry, and the effects of certain Ally Financial
Shareholder rights described below. The measurement of Ally Financial common stock is a Level 3 fair value measurement.
At December 31, 2011 we determined the carrying amount of our investment in Ally Financial common stock exceeded our
estimate of its fair value. Our current estimate of fair value results from broader macroeconomic uncertainties and volatility in the
financial markets including the eurozone debt crisis, continued heightened risk of recession and concerns about Ally Financial’s
mortgage related operations. Our estimate considered the potential effect of contractual provisions held by the UST who may receive
110 General Motors Company 2011 Annual Report