General Motors 2012 Annual Report Download - page 112

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
measures. Because the fair value of goodwill can be measured only as a residual amount and cannot be determined directly we
calculated the implied goodwill for those reporting units failing Step 1 in the same manner that goodwill is recognized in a business
combination pursuant to Accounting Standards Codification (ASC) 805, “Business Combinations.”
The following table summarizes the goodwill balances and key assumptions utilized for each of our reporting units that required a
Step 2 analysis (dollars and vehicles in millions):
Long-Term
Growth Rates
Industry Volumes (a) Market Share (a)
Goodwill(b) WACC 2011/2012/2013 2015/2016 2011/2012/2013 2015/2016
GMNA — At December 31, 2012 ....................... $26,399 17.5% 1.5% 18.7 20.5 17.8% 18.9%
GME — At January 1, 2011 ............................ $ 3,053 17.0% 0.5% 18.4 22.0 6.6% 7.4%
GME — At March 31, 2011 ............................ $ 1,661 16.5% 0.5% 18.4 22.0 6.6% 7.4%
GME — At October 1, 2011 ........................... $ 1,246 17.5% 0.5% 19.4 21.7 6.7% 7.0%
GME — At December 31, 2011 ......................... $ 1,193 18.5% 0.5% 19.4 22.3 6.3% 6.9%
GME — At March 31, 2012 ............................ $ 594 17.5% 0.5% 19.1 21.9 6.2% 6.3%
GM Korea — At October 1, 2011 (c) ..................... $ 615 15.5% 3.0% 81.0 97.1 1.4% 1.1%
GM Korea — At December 31, 2011 (c) .................. $ 596 15.5% 3.0% 81.0 97.1 1.4% 1.1%
GM Korea — At March 31, 2012 (c) ..................... $ 564 14.8% 3.0% 81.0 97.1 1.4% 1.1%
GM Korea — At June 30, 2012 (c) ...................... $ 523 14.8% 3.0% 81.0 97.1 1.4% 1.1%
GM Korea — At September 30, 2012 (c) ................. $ 540 14.5% 3.0% 82.1 99.8 1.2% 1.2%
GM Korea — At December 31, 2012 (c) .................. $ 481 14.0% 3.0% 85.0 99.7 1.2% 1.2%
Holden — At December 31, 2011 ....................... $ 197 14.0% 2.0% 1.2 1.3 12.5% 12.6%
GM South Africa — At October 1, 2012 .................. $ 38 13.3% 3.5% 0.7 0.9 10.4% 10.0%
(a) GMNA forecast volumes at December 31, 2012 are 2013 through 2016. GME forecast volumes at January 1, 2011 and March 31, 2011
are 2011 through 2015 and are 2012 through 2016 thereafter. GM Korea forecast volumes are 2012 through 2015, except for at
September 30, 2012 which are 2012 through 2016 and December 31, 2012 which are 2013 through 2016. Holden forecast volumes at
December 31, 2011 are 2012 through 2015. GM South Africa forecast volumes at October 1, 2012 are 2012 through 2016.
(b) Represents the balance of Goodwill evaluated for impairment under the Step 2 analysis.
(c) Industry forecast volumes and market share for GM Korea are based on global industry volumes because GM Korea exports
vehicles globally.
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
volumes 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.
During our Step 2 analyses we determined the fair values of these reporting units had not increased sufficiently to give rise to
implied goodwill other than the goodwill arising from the fair value-to-U.S. GAAP differences attributable to those assets and
liabilities that gave rise to goodwill upon application of fresh-start reporting. On the various testing dates noted in the table above, our
Step 2 analyses indicated GMNA’s, GME’s, GM Korea’s, GM South Africa’s and Holden’s implied goodwill was less than their
recorded goodwill; therefore, goodwill was adjusted at the various dates indicated in the table above, except for at June 30, 2012 GM
Korea’s implied goodwill exceeded its recorded goodwill. As such GM Korea’s goodwill was not adjusted at June 30, 2012.
Future goodwill impairments that may be material could be recognized should economic uncertainty continue, our equity price
decline on a sustained basis, global economies enter into another recession and industry growth stagnates, or should we release
deferred tax asset valuation allowances in certain tax jurisdictions. In these circumstances future goodwill impairments would largely
be affected by decreases in the fair value-to-U.S.-GAAP differences that have occurred subsequent to our application of fresh-start
reporting, which in the future would primarily occur upon reversal of our remaining deferred tax asset valuation allowances or a
decline in the fair value of GM Financial. Any declines would have a negative effect on our earnings that could be material.
General Motors Company 2012 ANNUAL REPORT 109