General Motors 2011 Annual Report Download - page 58

GENERAL MOTORS COMPANY AND SUBSIDIARIES
our common stock. So long as any share of our Series A Preferred Stock remains outstanding, no dividend or distribution may be
declared or paid on our Series B Preferred Stock unless all accrued and unpaid dividends have been paid on our Series A Preferred
Stock, subject to exceptions, such as dividends on our Series B Preferred Stock solely in shares of our common stock.
The following tables summarize dividends paid on our Series A and B Preferred Stock (dollars in millions):
Successor
Year Ended
December 31, 2011
Year Ended
December 31, 2010
July 10, 2009
Through
December 31, 2009
Series A Preferred Stock (a) ........................................ $621 $810 $349
SeriesBPreferredStock(b) ........................................ 243 —
Total Preferred Stock dividends paid ................................. $864 $810 $349
(a) Does not include the $677 million charge related to the purchase of 84 million shares of Series A Preferred Stock from the UST
in the year ended December 31, 2010. 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 period July 10, 2009 through 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.
(b) Cumulative unpaid dividends on our Series B Preferred Stock was $20 million and $25 million at December 31, 2011 and 2010.
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.
Pensions
The defined benefit pension plans are accounted for on an actuarial basis, which requires the selection of various assumptions,
including an expected rate of return on plan assets and a discount rate. The expected return on U.S. plan assets that is utilized in
determining pension expense is derived from periodic studies, which include a review of asset allocation strategies, anticipated future
long-term performance of individual asset classes, risks using standard deviations and correlations of returns among the asset classes
that comprise the plans’ asset mix. While the studies give appropriate consideration to recent plan performance and historical returns,
the assumptions are primarily long-term, prospective rates of return.
In December 2011 an analysis of the investment policy was completed for the U.S. pension plans considering: (1) our overall
balance sheet derisking strategy; (2) the plans are closed to new participants; and (3) the 2011 UAW negotiations did not increase
pension benefits. Separate long-term strategies were developed for the salaried and hourly U.S. pension plans which represent 35%
and 65% of total U.S. pension plans’ assets. Using an approach which matches plan assets and liability cash flows to minimize risk of
funded status volatility, the expected weighted-average return on assets was reduced from 8.0% at December 31, 2010 to 5.7% for the
56 General Motors Company 2011 Annual Report