General Motors 2012 Annual Report Download - page 27

GENERAL MOTORS COMPANY AND SUBSIDIARIES
• The profit sharing plan formula is based on GMNA earnings before interest and taxes (EBIT)-adjusted and was effective
beginning with the 2011 plan year. The profit sharing payment is capped at $12,000 per employee per year.
• Cash severance incentive programs which were completed in March 2012. A total of 1,400 skilled trades employees
participated in the program at a total cost of $0.1 billion. Substantially all of the program cost was recorded in the three months
ended March 31, 2012.
• During the four year agreement period we plan to make additional manufacturing investments of more than $2.0 billion to
create or retain more than 6,300 UAW jobs.
Canadian Health Care Trust
In October 2011 pursuant to a June 2009 agreement between General Motors of Canada Limited (GMCL) and the CAW an
independent Canadian Health Care Trust (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 $0.7 billion. Refer to Note 18 to our consolidated financial statements for further details regarding the
implementation of the HCT.
Benefit Plan Changes
U.S. Salaried Defined Benefit Pension Plan
In January 2012 we amended the salaried pension plan to cease the accrual of additional benefits effective September 30, 2012.
This amendment resulted in a curtailment which decreased the pension liability and decreased the net pre-tax actuarial loss component
of Accumulated other comprehensive loss by $0.3 billion. Active plan participants receive additional contributions in the defined
contribution plan starting in October 2012.
In August 2012 the salaried pension plan was amended to divide the plan to create a new legally separate defined benefit plan
primarily for active and terminated vested participants. After the amendment the original salaried pension plan (Retiree Plan) covers
the majority of retirees currently receiving payments. As a result of this amendment a remeasurement of the Retiree Plan on August 1,
2012 increased the pension liability and the net pre-tax actuarial loss component of Accumulated other comprehensive loss by
$0.7 billion, due primarily to a decrease in the discount rate from 4.21% to 3.37% on a weighted-average basis, partially offset by
actual asset returns in excess of expected amounts.
In August 2012 lump-sum distributions of $3.6 billion were made from the Retiree Plan to 12,500 plan participants resulting in a
partial plan settlement necessitating a plan remeasurement for the Retiree Plan on August 31, 2012. The settlement resulted in a pre-
tax loss of $0.1 billion. The effect on our financial condition was insignificant.
In November and December 2012 the Retiree Plan purchased group annuity contracts from an insurance company and paid a total
annuity premium of $25.1 billion and the Retiree Plan settled two other previously guaranteed obligations, with separate insurance
companies, totaling $1.9 billion. These agreements unconditionally and irrevocably guarantee the full payment of all annuity
payments to the participants in the Retiree Plan and assume all investment risk associated with the assets that were delivered as the
annuity contract premiums.
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 $0.4 billion, and the premium paid to the insurance company of $2.1 billion. The
tax benefit of $0.4 billion is composed of the statutory tax benefit of $1.0 billion offset by tax expense of $0.6 billion primarily
associated with the removal of prior period income tax allocations between Accumulated other comprehensive loss and Income tax
expense (benefit). The ongoing annual impact to earnings will be $0.2 billion unfavorable due to a decrease in pension income.
General Motors Company 2012 ANNUAL REPORT24