General Motors 2011 Annual Report Download - page 17

GENERAL MOTORS COMPANY AND SUBSIDIARIES
(b) Refer to Note 25 to our consolidated financial statements for a description of the Series A Preferred Stock.
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. Refer to
Note 18 to our consolidated financial statements for a description of the changes to these plans.
Accounting for the Effects of the Chapter 11 Proceedings and the 363 Sale
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 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
Proceedings were recorded in Reorganization gains, net. Reorganization gains, net do not constitute an element of operating loss due
to their nature and due to the requirement that they be reported separately. Cash amounts provided by or used in the Chapter 11
Proceedings are separately disclosed in the statement of cash flows.
Effect of Fresh-Start Reporting
The application of fresh-start reporting significantly affected certain assets, liabilities and expenses. As a result, certain financial
information at and for any period after July 10, 2009 is not comparable to Old GM’s financial information. Therefore, we did not
combine certain financial information in the period July 10, 2009 through December 31, 2009 with Old GM’s financial information in
the period January 1, 2009 through July 9, 2009 for comparison to other periods. For the purpose of the following discussion, we have
combined our Total net sales and revenue in the period July 10, 2009 through December 31, 2009 with Old GM’s Total net sales and
revenue in the period January 1, 2009 through July 9, 2009. Total net sales and revenue was not significantly affected by fresh-start
reporting and therefore we combined Automotive Total net sales and revenue data comparing the Total net sales and revenue between
years presented.
Total net sales and revenue is primarily comprised of revenue generated from the sales of vehicles, in addition to revenue from
OnStar, our customer subscription service, vehicle sales accounted for as operating leases, sales of parts and accessories and GM
Financial’s loan purchasing and servicing activities.
Automotive cost of sales is primarily comprised of material, labor, manufacturing overhead, freight, foreign currency transaction
and translation gains and losses, product engineering, design and development expenses, depreciation and amortization, policy and
warranty costs, postemployment benefit costs, and separation and impairment charges. Prior to our application of fresh-start reporting
on July 10, 2009, Automotive cost of sales also included gains and losses on derivative instruments. Effective July 10, 2009 gains and
losses related to all nondesignated derivatives are recorded in Interest income and other non-operating income, net.
Automotive selling, general and administrative expense is primarily comprised of costs related to the advertising, selling and
promotion of products, support services, including central office expenses, labor and benefit expenses for employees not considered
part of the manufacturing process, consulting costs, rental expense for offices, bad debt expense and non-income based state and local
taxes.
Focus on Chinese Market
We view the Chinese market, the fastest growing global market by volume of vehicles sold, as important to our global growth
strategy and are employing a multi-brand strategy, led by our Buick and Chevrolet brands. In the coming years, we plan to
General Motors Company 2011 Annual Report 15