General Motors 2011 Annual Report Download - page 27

GENERAL MOTORS COMPANY AND SUBSIDIARIES
GM
The most significant element of our Automotive cost of sales is material cost which makes up approximately two-thirds of the total
amount. The remaining portion includes labor costs, depreciation and amortization, engineering, and policy, warranty and recall campaigns.
In the year ended December 31, 2011 Automotive cost of sales increased by $11.6 billion (or 9.8%), in line with Total net sales and
revenue, due primarily to: (1) increased costs related to wholesale volume increases of $6.3 billion; (2) net foreign currency
translation, remeasurement and transaction losses of $2.4 billion due to the strengthening of major currencies against the U.S. Dollar;
(3) unfavorable vehicle mix of $2.3 billion; (4) increased material, freight and manufacturing costs of $1.7 billion due to higher
commodity prices and to support new vehicle launches; (5) increased costs of $0.8 billion related to powertrain and parts sales;
(6) increased engineering costs of $0.7 billion to support new product development; (7) revisions to restructuring reserves of $0.4
billion related to higher than planned employee utilization in 2010 which did not recur in 2011; and (8) increased costs of $0.3 billion
due to the acquisition of GMS; partially offset by (9) decreased costs of $0.9 billion due to the sale of Nexteer in November 2010;
(10) decreased depreciation and amortization expense of $0.8 billion related to the amortization of technology intangibles and
impairment charges for long-lived assets; (11) a gain of $0.7 billion related to the settlement of the HCT in 2011; (12) decreased
restructuring charges of $0.5 billion related to our European operations; and (13) increased net pension and OPEB income of
$0.3 billion due to plan remeasurements.
In the year ended December 31, 2010 Automotive cost of sales included: (1) net restructuring charges of $0.6 billion; (2) net
foreign currency translation and remeasurement losses of $0.4 billion; (3) charges of $0.2 billion for a recall campaign on windshield
fluid heaters; and (4) impairment charges related to long-lived assets of $0.2 billion; partially offset by (5) net foreign currency
transaction gains of $0.2 billion.
In the period July 10, 2009 through December 31, 2009 Automotive cost of sales included: (1) a settlement loss of $2.6 billion
related to the termination of our UAW hourly retiree medical plan; (2) net foreign currency translation and remeasurement losses of
$0.8 billion; partially offset by (3) favorable adjustments of $1.3 billion due to the sell through of inventory acquired from Old GM at
July 10, 2009; and (4) net foreign currency transaction gains of $0.1 billion.
As required under U.S. GAAP, the acquired inventory from Old GM on July 10, 2009 was recorded at fair value as of the
acquisition date using a market participant approach, which for work in process and finished goods inventory considered the estimated
selling price of the inventory less the costs a market participant would incur to complete, sell and dispose of the inventory, which may
be different than our costs, and the profit margin required for its completion and disposal effort.
Old GM
In the period January 1, 2009 through July 9, 2009 Automotive cost of sales included: (1) incremental depreciation charges of $2.8
billion; (2) net restructuring charges of $1.6 billion; (3) a curtailment loss of $1.4 billion upon the interim remeasurement of the U.S.
hourly defined benefit pension plans; (4) charges of $0.8 billion related to the deconsolidation of Saab Automobile AB (Saab); (5) net
foreign currency remeasurement losses of $0.7 billion; (6) impairment charges related to long-lived assets of $0.6 billion;
(7) derivative losses of $0.5 billion related to commodity and foreign currency exchange derivatives; (8) net foreign currency
transaction losses of $0.3 billion; and (9) charges of $0.3 billion related to obligations associated with various Delphi agreements.
In the period January 1, 2009 through July 9, 2009 negative gross margin reflected sales volumes at historically low levels and
Automotive cost of sales, including costs that are fixed in nature, exceeding Total net sales and revenue.
Automotive Selling, General and Administrative Expense
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
Year Ended
2011 vs. 2010
Change
Amount %
Automotive selling, general and administrative
expense .............................. $12,105 $11,446 $6,006 $6,161 $659 5.8%
General Motors Company 2011 Annual Report 25