General Motors 2012 Annual Report Download - page 128

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Through these annuity purchase transactions we have settled the remaining obligations of the Retiree Plan in their entirety resulting
in a pre-tax settlement loss of $2.5 billion ($2.1 billion after tax) in Automotive cost of sales. The pre-tax loss is composed of existing
losses in Accumulated other comprehensive loss of $377 million, and the premium paid to the insurance company of $2.1 billion. The
tax benefit of $413 million is composed of the statutory tax benefit of $1.0 billion offset by tax expense of $596 million associated
with the removal of prior period income tax allocations between Accumulated other comprehensive loss and Income tax expense
(benefit).
In 2012 we provided short-term, interest-free, unsecured loans to the Retiree Plan to provide the plan with incremental liquidity to
pay ongoing benefits and administrative costs. In August 2012 we loaned the Retiree Plan $2.0 billion with principal due within 90
days. In the three months ended December 31, 2012 $1.5 billion of the $2.0 billion loan was contributed to the Retiree Plan, $250
million was repaid to us and the remaining $250 million, which had been converted into a new interest-free loan, is due on or before
April 15, 2013. In October 2012 we provided a loan of $180 million to the Retiree Plan that was repaid to us in December 2012. At
December 31, 2012 $160 million of the remaining $250 million loan was deemed a contribution. Amounts loaned to the Retiree Plan
in excess of the ultimate funding requirements will be repaid to us.
Canadian Salaried Defined Benefit Plans
In June 2012 we amended the Canadian salaried pension plan to cease the accrual of additional benefits effective December 31, 2012
and provide active employees a lump-sum distribution option at retirement. The remeasurement, amendments and offsetting curtailment
increased the pension liability by $84 million, and resulted in a net decrease in the pre-tax components of Accumulated other
comprehensive loss comprising net actuarial loss of $58 million, net actuarial curtailment gain of $20 million and prior service cost of
$46 million. Active plan participants will receive additional contributions in the defined contribution plan starting in January 2013.
We also amended the Canadian salaried retiree healthcare plan to eliminate post-65 healthcare benefits for employees retiring on or
after July 1, 2014. In conjunction with this change we amended the plan to offer either a monthly monetary payment or an annual
lump-sum cash payment to a defined contribution plan for health care in lieu of the benefit coverage provisions formerly provided
under the healthcare plan. These amendments decreased the OPEB liability by $28 million and resulted in a net increase in the pre-tax
components of Accumulated other comprehensive loss comprising prior service credit of $51 million and net actuarial loss of $23
million.
Canadian HCT
In October 2011 pursuant to a June 2009 agreement between General Motors of Canada Limited (GMCL) and the CAW an
independent HCT was implemented to provide retiree healthcare benefits to certain active and retired employees. Concurrent with the
implementation of the HCT, GMCL was legally released from all obligations associated with the cost of providing retiree healthcare
benefits to CAW retirees and surviving spouses by the class action process and to CAW active employees as of June 8, 2009. We
accounted for the related termination of CAW hourly retiree healthcare benefits as a settlement and recorded a gain of $749 million in
Automotive cost of sales. The settlement gain represents the difference between the healthcare plan obligation of $3.1 billion (as of
the implementation date) and the fair value of the notes and restricted cash contributed totaling $1.9 billion, and recognition of
Accumulated other comprehensive loss of $414 million.
Other Remeasurements
In March 2012 certain pension plans in GME were remeasured as part of our Goodwill impairment testing, resulting in an increase of
$150 million in the pension liability and a pre-tax increase in the net actuarial loss component of Accumulated other comprehensive loss.
In September 2011 a plan which provides legal services to U.S. hourly employees and retirees was remeasured as a result of our
labor agreement provisions which terminate the plan effective December 31, 2013. The negotiated termination has been accounted for
as a negative plan amendment resulting in a decrease in the OPEB liability and a pre-tax increase of $266 million in the prior service
credit component of Accumulated other comprehensive loss, which is being amortized through December 31, 2013.
General Motors Company 2012 ANNUAL REPORT 125