General Motors 2011 Annual Report Download - page 63

GENERAL MOTORS COMPANY AND SUBSIDIARIES
• Our estimated long-term growth rates; and
• Our estimate of industry sales and our market share.
The valuation methodologies utilized to perform our goodwill impairment testing were consistent with those used in our application
of fresh-start reporting on July 10, 2009 and in any subsequent annual or event-driven impairment tests and utilized Level 3 measures.
The following table summarizes the goodwill balances and key assumptions for each of our more significant reporting units
(excluding GM Financial) utilized in our 2011 and 2010 annual goodwill impairment tests (dollars and volumes in millions):
Goodwill (c) WACC
Long-Term
Growth Rates
Industry Sales (a) Market Share (a)
2011/2012 2014/2015 2011/2012 2014/2015
GMNA
At October 1, 2010 .......................... $26,410 16.5% 1.5% 15.9 20.2 18.5% 18.2%
At October 1, 2011 .......................... $26,395 18.0% 1.5% 16.7 20.1 19.2% 19.2%
GME
At October 1, 2010 .......................... $ 3,096 17.0% 0.5% 18.4 21.3 6.8% 7.6%
At October 1, 2011 .......................... $ 1,246 17.5% 0.5% 19.4 21.7 6.7% 7.0%
GM Korea (b)
At October 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 632 16.0% 3.0% 77.9 91.8 1.2% 1.4%
At October 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 615 15.5% 3.0% 81.0 97.1 1.4% 1.1%
Holden
At October 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 186 14.5% 3.0% 1.0 1.1 12.4% 13.5%
At October 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 188 14.0% 2.0% 1.2 1.3 12.5% 12.6%
GM Mercosur
At October 1, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 120 15.3% 4.7% 4.6 5.4 18.6% 17.0%
At October 1, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . $ 110 14.8% 4.0% 5.1 6.0 18.1% 18.2%
(a) Amounts at October 1, 2010 are for 2011 through 2014 and amounts at October 1, 2011 are for 2012 through 2015.
(b) Industry sales and market share are based on global industry volumes because GM Korea exports vehicles globally.
(c) Goodwill balance is before any adjustments, if any, for goodwill impairments.
The WACCs considered various factors including bond yields, risk premiums and tax rates; the terminal values were determined
using a growth model that applied a reporting unit’s long-term growth rate to its projected cash flows beyond the forecast period; and
industry sales and a market share for each reporting unit included annual estimates through the forecast period. In addition, minimum
operating cash needs that incorporate specific business, economic and regulatory factors giving rise to varying cash needs were
estimated.
With regard to GM Financial with goodwill of $1.3 billion at October 1, 2011, key assumptions impacting our 2011 annual
impairment testing procedures include forecasted asset composition and growth and equity to managed asset retention ratios.
Forecasted equity to managed asset retention ratio by 2014 was 12.5% and held constant thereafter.
Our fair value estimates assume the achievement of the future financial results contemplated in our forecasted cash flows and there
can be no assurance that we will realize that value. The estimates and assumptions used are subject to significant uncertainties, many
of which are beyond our control, and there is no assurance that anticipated financial results will be achieved.
For purposes of our 2011 annual impairment testing procedures, the estimated fair values of our more significant reporting units
exceeded their carrying values by 12.3% for GMNA, 24.7% for Holden, 56.8% for GM Mercosur and 10.3% for GM Financial. In
General Motors Company 2011 Annual Report 61