General Motors 2011 Annual Report Download - page 43

GENERAL MOTORS COMPANY AND SUBSIDIARIES
Old GM
In the period January 1, 2009 through July 9, 2009 results included: (1) centrally recorded Reorganization gains, net of $128.2
billion which is more fully discussed in Note 32 to our consolidated financial statements; (2) amortization of discounts related to the
UST Loan Agreement, EDC Loan Facility and DIP Facility of $3.7 billion; (3) a gain of $2.5 billion recorded on the UST’s
conversion of the UST Ally Financial Loan for Class B Common Membership Interests which was partially offset by Old GM’s
proportionate share of Ally Financial’s loss from operations of $1.1 billion; and (4) a gain on extinguishment of debt of $0.9 billion
related to an amendment to Old GM’s U.S. term loan; partially offset by (5) a loss related to the extinguishment of the UST Ally
Financial Loan of $2.0 billion when the UST exercised its option to convert outstanding amounts into shares of Ally Financial’s Class
B Common Membership Interests; (6) interest expense of $0.8 billion on unsecured debt balances; (7) interest expense of $0.4 billion
on the UST Loan Agreement; and (8) interest expense of $0.2 billion on GMIO and GMSA debt.
Liquidity and Capital Resources
Liquidity Overview
We believe that our current level of cash and cash equivalents, marketable securities and availability under our secured revolving
credit facility will be sufficient to meet our liquidity needs. However, we expect to have substantial cash requirements going forward
which we plan to fund through available liquidity and cash flow from operations. Our known material future uses of cash include,
among other possible demands: (1) reinvestment in our business through capital expenditures, engineering and product development
activities; (2) pension contributions and OPEB payments; (3) payments to reduce debt and other long-term obligations; (4) dividend
payments on our Series A and Series B Preferred Shares; and (5) certain South American income and indirect tax-related
administrative proceedings may require that we deposit funds in escrow or make payments which may range up to $0.8 billion.
Our liquidity plans are subject to a number of risks and uncertainties, including those described in the section of this report entitled
“Risk Factors,” some of which are outside our control. Macroeconomic conditions could limit our ability to successfully execute our
business plans and therefore adversely affect our liquidity plans.
Recent Management Initiatives
We continue to monitor and evaluate opportunities to optimize our liquidity position and capital structure in order to strengthen our
balance sheet.
Reduction of Financial Leverage
Reducing our financial leverage remains a key strategic initiative. We continue to evaluate potential repayments of long-term
obligations prior to maturity. Any such repayments may negatively affect our liquidity in the short-term.
In the year ended December 31, 2011 we made prepayments on debt facilities of $1.0 billion held by certain of our foreign
subsidiaries, primarily in GMNA and GMSA. However, our overall debt balances increased to $5.3 billion at December 31, 2011 as
these prepayments were more than offset primarily by the issuance of the HCT notes that were incurred as part of an agreement to
settle certain retiree healthcare obligations and increases to other debt facilities.
We made a voluntary contribution in January 2011 to our U.S. hourly and salaried defined benefit pension plans of 61 million
shares of our common stock valued at $2.2 billion for funding purposes at the time of contribution. The contributed shares qualified as
a plan asset for funding purposes at the time of contribution and as a plan asset valued at $1.9 billion for accounting purposes in July
2011. This contribution was made as part of our continuing efforts to mitigate risk in our balance sheet.
Under wholesale financing arrangements, our U.S. dealers typically borrow money from financial institutions to fund their vehicle
purchases from us. Effective January 2011 we terminated a wholesale advance agreement which provided for accelerated receipt of
General Motors Company 2011 Annual Report 41