General Motors 2012 Annual Report Download - page 87

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
consider inputs such as revenue growth and gross margin assumptions, discount rates, discounts for lack of liquidity, market
capitalization rates, and the selection of comparable companies. As these valuations incorporate significant unobservable inputs they
are classified as Level 3.
Fair value estimates for private investment funds, private equity, private debt, and real estate investments are provided by the
respective investment sponsors or investment advisers and are subsequently reviewed and approved by management. In the event
management concludes a reported NAV or fair value estimate (collectively, external valuation) does not reflect fair value or is not
determined as of the financial reporting measurement date, we will consider whether an adjustment is necessary. In determining
whether an adjustment to the external valuation is required, we will review material factors that could affect the valuation, such as
changes to the composition or performance of the underlying investment(s) or comparable investments, overall market conditions,
expected sale prices for private investments which are probable of being sold in the short term, and other economic factors that may
possibly have a favorable or unfavorable effect on the reported external valuation. We may adjust the external valuation to ensure fair
value as of the balance sheet date.
Derivatives
Exchange traded derivatives, such as options and futures, for which market quotations are readily available, are valued at the last
reported sale price or official closing price on the primary market or exchange on which they are traded and are classified in Level 1.
Over-the-counter derivatives, including but not limited to swaps, swaptions and forwards, which are typically valued through
independent pricing services with observable inputs are generally classified in Level 2. Derivatives classified in Level 3 are typically
valued via the use of pricing models which incorporate significant unobservable inputs, but may also include derivatives which are
valued with the use of significant observable inputs which are not subject to corroboration. The inputs part of the model based
valuations may include extrapolated or model-derived assumptions such as volatilities and yield and credit spread assumptions.
Due to the lack of timely available market information for certain investments in the asset classes described above as well as the
inherent uncertainty of valuation, reported fair values may differ from fair values that would have been used had timely available
market information been available.
Extended Disability Benefits
Estimated extended disability benefits are accrued ratably over the employee’s active service period using measurement provisions
similar to those used to measure our other postretirement benefits (OPEB) obligations. The liability is composed of the future
obligations for income replacement, healthcare costs and life insurance premiums for employees currently disabled and those in the
active workforce who may become disabled. Future disabilities are estimated in the current workforce using actuarial methods based
on historical experience. We record actuarial gains and losses immediately in earnings.
Labor Force
On a worldwide basis, we have a concentration of the workforce working under the guidelines of unionized collective bargaining
agreements. At December 31, 2012 50,000 of our U.S. employees (or 62%) were represented by unions, the majority of which were
represented by the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (UAW). The
current labor contract with the UAW is effective for a four-year term that began in October 2011 and expires in September 2015. The
contract included a $5,000 lump sum payment to each eligible UAW employee in the year ended December 31, 2011 and three
additional lump-sum payments of $1,000 to be paid annually in the years ending December 31, 2012, 2013 and 2014. These lump-
sum payments expected to total $381 million are being amortized over the four-year contract period.
Job Security Programs
Effective with our current labor agreement with the UAW the Job Opportunity Bank Program was eliminated and the Supplemental
Unemployment Benefit (SUB) program and the Transitional Support Program (TSP) were retained. These modified job security
General Motors Company 2012 ANNUAL REPORT84