General Motors Financial Company, Inc. - FORM 10-Q

General Motors Financial Company, Inc. - FORM 10-Q - May 6, 2011

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General Motors Financial Company, Inc. Reports

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EX-31.1 - OFFICERS' CERTIFICATIONS PURSUANT TO SECTION 302 - General Motors Financial Company, Inc.	dex311.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-10667

General Motors Financial Company, Inc.

(Exact name of registrant as specified in its charter)

Texas

75-2291093

(State or other jurisdiction of

Incorporation or organization)

(I.R.S. Employer

Identification No.)

801 Cherry Street, Suite 3500, Fort Worth, Texas 76102

(Address of principal executive offices, including Zip Code)

(817) 302-7000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No ¨

(Note: As a voluntary filer, not subject to the filing requirements, the registrant filed all reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 105 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

As of May 6, 2011, there were 500 shares of the registrant’s common stock, par value $0.01 per share, outstanding. All of the registrant’s common stock is owned by General Motors Holdings, LLC.

GENERAL MOTORS FINANCIAL COMPANY, INC.

INDEX TO FORM 10-Q


			Page

Part I. FINANCIAL INFORMATION

	Item 1.	CONDENSED FINANCIAL STATEMENTS (UNAUDITED)		3

		Consolidated Balance Sheets – March 31, 2011 and December 31, 2010		3

		Consolidated Statements of Income and Comprehensive Income – Three Months Ended March 31, 2011 (Successor) and 2010 (Predecessor)		4

		Consolidated Statements of Cash Flows – Three Months Ended March 31, 2011 (Successor) and 2010 (Predecessor)		5

		Notes to Consolidated Financial Statements		6

	Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		34

	Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		55

	Item 4.	CONTROLS AND PROCEDURES		56

Part II. OTHER INFORMATION

	Item 1.	LEGAL PROCEEDINGS		56

	Item 1A.	RISK FACTORS		58

	Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		58

	Item 3.	DEFAULTS UPON SENIOR SECURITIES		58

	Item 4.	REMOVED AND RESERVED		58

	Item 5.	OTHER INFORMATION		58

	Item 6.	EXHIBITS		58

SIGNATURE				59

Part I. FINANCIAL INFORMATION

Item 1.

CONDENSED FINANCIAL STATEMENTS

GENERAL MOTORS FINANCIAL COMPANY, INC.

Consolidated Balance Sheets

(Unaudited, Dollars in Thousands)


	Successor
	March 31, 2011		December 31, 2010
Assets
Cash and cash equivalents	$	333,183	$	194,554
Finance receivables, net		8,276,473		8,197,324
Restricted cash – securitization notes payable		1,003,455		926,082
Restricted cash – credit facilities		151,131		131,438
Property and equipment, net		44,673		47,290
Leased vehicles, net		316,425		46,780
Deferred income taxes		161,886		140,523
Goodwill		1,112,284		1,112,284
Intercompany subvention receivable		71,278		8,149
Other assets		139,420		114,314


Total assets	$	11,610,208	$	10,918,738


Liabilities and Shareholder’s Equity
Liabilities:
Credit facilities	$	1,411,884	$	831,802
Securitization notes payable		6,061,281		6,128,217
Senior notes		69,962		70,054
Convertible senior notes		1,446		1,446
Accounts payable and accrued expenses		122,945		97,169
Taxes payable		177,823		160,712
Intercompany taxes payable		97,031		42,214
Interest rate swap agreements		33,767		46,797
Other liabilities		21,851		10,219


Total liabilities		7,997,990		7,388,630


Commitments and contingencies (Note 8)

Shareholder’s equity:
Common stock, $.01 par value per share, 500 shares authorized and issued
Additional paid-in capital		3,456,842		3,453,917
Accumulated other comprehensive income		3,505		1,558
Retained earnings		151,871		74,633


Total shareholder’s equity		3,612,218		3,530,108


Total liabilities and shareholder’s equity	$	11,610,208	$	10,918,738

The accompanying notes are an integral part of these consolidated financial statements.

GENERAL MOTORS FINANCIAL COMPANY, INC.

Consolidated Statements of Income and Comprehensive Income

(Unaudited, Dollars in Thousands, Except Per Share Data)


	Successor			Predecessor
	Three Months Ended March 31, 2011			Three Months Ended March 31, 2010
Revenue
Finance charge income	$	267,846		$	339,892
Other income		27,321			21,213

		295,167			361,105


Costs and expenses
Operating expenses		76,406			75,215
Leased vehicles expenses		8,484			8,688
Provision for loan losses		39,424			74,583
Interest expense		40,617			106,584
Restructuring charges, net					220

		164,931			265,290


Income before income taxes		130,236			95,815

Income tax provision		52,998			32,609


Net income		77,238			63,206


Other comprehensive income
Unrealized gains on cash flow hedges		1,162			9,744
Foreign currency translation adjustment		1,211			2,788
Income tax provision		(426	)		(4,553	)


Other comprehensive income		1,947			7,979


Comprehensive income	$	79,185		$	71,185


Earnings per share
Basic		(a	)	$	0.47

Diluted		(a	)	$	0.45


Weighted average shares
Basic		(a	)		134,053,846

Diluted		(a	)		139,231,152

(a)

As a result of the Merger, our common stock is no longer publicly traded and earnings per share is no longer required.

The accompanying notes are an integral part of these consolidated financial statements.

GENERAL MOTORS FINANCIAL COMPANY, INC.

Consolidated Statements of Cash Flows

(Unaudited, in Thousands)


	Successor			Predecessor
	Three Months Ended March 31, 2011			Three Months Ended March 31, 2010
Cash flows from operating activities
Net income	$	77,238		$	63,206
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		17,868			18,351
Accretion and amortization of loan and leasing fees		(2,936	)		717
Amortization of finance receivables premium		67,927
Amortization of debt discount		(23,117	)
Provision for loan losses		39,424			74,583
Deferred income taxes		(21,789	)		(68,794	)
Stock-based compensation expense		2,925			4,604
Non-cash interest charges on convertible debt					5,434
Other		(8,844	)		(8,384	)
Changes in assets and liabilities:
Other assets		11,521			40,358
Accounts payable and accrued expenses		(12,765	)		59,202
Taxes payable		17,117			2,301
Intercompany taxes payable		54,817

Net cash provided by operating activities		219,386			191,578

Cash flows from investing activities:
Purchases of receivables		(1,134,782	)		(610,643	)
Principal collections and recoveries on receivables		954,291			952,548
Purchases of leased vehicles		(320,206	)
Proceeds from termination of leased vehicles		12,880
Sales (purchases) of property and equipment		11			(352	)
Change in restricted cash – securitization notes payable		(77,373	)		(139,144	)
Change in restricted cash – credit facilities		(19,693	)		(25,045	)
Change in other assets		(13,831	)		19,644

Net cash (used) provided by investing activities		(598,703	)		197,008

Cash flows from financing activities:
Borrowings on credit facilities		1,196,521			100,000
Payments on credit facilities		(615,510	)		(151,790	)
Issuance of securitization notes payable		800,000			800,000
Payments on securitization notes payable		(845,058	)		(929,064	)
Debt issuance costs		(17,809	)		(16,041	)
Retirement of debt					(20,425	)
Proceeds from issuance of common stock					5,929
Other net changes					466

Net cash provided (used) by financing activities		518,144			(210,925	)

Net increase in cash and cash equivalents		138,827			177,661
Effect of Canadian exchange rate changes on cash and cash equivalents		(198	)		24
Cash and cash equivalents at beginning of period		194,554			319,644

Cash and cash equivalents at end of period	$	333,183		$	497,329

The accompanying notes are an integral part of these consolidated financial statements.

GENERAL MOTORS FINANCIAL COMPANY, INC.

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Merger

On October 1, 2010, pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of July 21, 2010, with General Motors Holdings LLC (“GM Holdings”), a Delaware limited liability company and a wholly owned subsidiary of General Motors Company (“GM”), and Goalie Texas Holdco Inc., a Texas corporation and a direct wholly owned subsidiary of GM Holdings (“Merger Sub”), GM Holdings completed its acquisition of AmeriCredit Corp. via the merger of Merger Sub with and into AmeriCredit Corp. (the “Merger”), with AmeriCredit Corp. continuing as the surviving company in the Merger and becoming a wholly-owned subsidiary of GM Holdings. After the Merger, AmeriCredit Corp. was renamed General Motors Financial Company, Inc.

On December 9, 2010, we changed our fiscal year end to December 31 from June 30. We made this change to align our financial reporting period, as well as our annual planning and budgeting process, with the GM business cycle.

The accompanying condensed consolidated statements of income and comprehensive income and cash flows are presented for two periods: three months ended March 31, 2011 (“Successor”) and three months ended March 31, 2010 (“Predecessor”), which relate to periods after and before the Merger, respectively. The consolidated financial statements of the Predecessor have been prepared on the same basis as the audited financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2010. The consolidated financial statements of the Successor reflect a change in basis from the application of “purchase accounting” and have been prepared on the same basis as the audited financial statements included in our Transition Report on Form 10-K for the six month period ended December 31, 2010.

Basis of Presentation

The consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries, including certain special purpose financing trusts utilized in securitization transactions (“Trusts”) which are considered variable interest entities (“VIE’s”). All intercompany transactions and accounts have been eliminated in consolidation.

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States of America requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements and the amount of revenue and costs and expenses during the reporting periods. Actual results could differ from those estimates and those differences may be material. These

estimates include, among other things, the determination of the allowance for loan losses on finance receivables, income taxes and the fair value of finance receivables.

The consolidated financial statements as of March 31, 2011, and for the three months ended March 31, 2011 and 2010, are unaudited, and in management’s opinion include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such interim periods. Certain prior year amounts have been reclassified to conform to the current year presentation. The results for interim periods are not necessarily indicative of results for a full year.

The interim period consolidated financial statements, including the notes thereto, are condensed and do not include all disclosures required by GAAP in the United States of America. These interim period financial statements should be read in conjunction with our consolidated financial statements that are included in the Transition Report on Form 10-K filed on March 1, 2011.

The Merger has been accounted for under the purchase method of accounting, whereby the total purchase price of the transaction was allocated to our identifiable tangible and intangible assets acquired and liabilities assumed based on their fair values, and the excess of the purchase price over the fair value of net assets acquired was recorded as goodwill. The allocation resulted in a significant amount of goodwill, an increase in the carrying value of net finance receivables, medium term note facility payable, Wachovia funding facilities payable, securitization notes payable, deferred tax assets and uncertain tax positions, as well as new identifiable intangible assets.

Correction of Statement of Cash Flows

We corrected the presentation of borrowings on (payments on) credit facilities for the 2010 period presented. Related amounts had previously been presented on a net basis, rather than on a gross basis in accordance with Accounting Standards Codification (“ASC”) 230. The correction had no effect on net cash used in financing activities, the net increase in cash and cash equivalents or end of period cash and cash equivalents.

The following disclosure presents the corrected amounts intended to be reflected in our Annual Report on Form 10-K for the period ending December 31, 2011 when filed (in thousands):


	Successor			Predecessor
	Period From October 1, 2010 Through			Period From July 1, 2010 Through
	Period From October 1, 2010 Through			Period From July 1, 2010 Through			For the Year Ended June 30,
	December 31, 2010			September 30, 2010			2010			2009
As reported:
Net change in credit facilities	$	212,032		$	(68,030	)	$	(1,031,187	)	$	(1,278,117	)
As corrected:
Borrowings on credit facilities		468,394			484,921			775,665			3,657,240
Repayments on credit facilities		(256,362	)		(552,951	)		(1,806,852	)		(4,935,357	)

Subsequent Events

On April 1, 2011, we acquired FinanciaLinx Corporation (“FinanciaLinx”), an independent auto lease provider in Canada. FinanciaLinx provides leasing programs to General Motors and other manufacturers through manufacturer subvention programs.

Related Party Transactions

We offer loan and lease finance products through GM dealers to consumers purchasing new and certain used vehicles manufactured by GM. GM makes cash payments to us for offering incentived rates and structures on these loans and lease finance products under a subvention program with GM. As of March 31, 2011, we have an intercompany subvention receivable from GM in the amount of $71.3 million, representing payments due from GM under the subvention program.

Recent Accounting Pronouncements

In April 2011, Accounting Standards Update (“ASU”) (“2011-02”), A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring was issued effective for interim and annual periods beginning on or after June 15, 2011. ASU 2011-02 provides evaluation criteria for whether a restructuring constitutes a troubled debt restructuring. Additional disclosures around the nature and extent of modified finance receivables and their effect on the allowance for loan losses may be required under ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses for finance receivables meeting the definition of a troubled debt restructuring in ASU 2011-02. We do not anticipate the adoption of ASU 2011-02 to have an impact on our consolidated financial position, results of operations or cash flows.

NOTE 2 – FINANCE RECEIVABLES

Finance receivables consist of the following (in thousands):


	Successor
	March 31, 2011			December 31, 2010
Pre-acquisition finance receivables	$	6,744,752		$	7,724,188
Post-acquisition finance receivables		2,004,813			923,713

		8,749,565			8,647,901
Add finance receivables premium		355,629			423,556
Less non-accretable discount:
Pre-acquisition finance receivables		(763,306	)		(847,781	)
Less allowance for loan losses:
Post-acquisition finance receivables		(65,415	)		(26,352	)

	$	8,276,473		$	8,197,324

A summary of our finance receivables is as follows (in thousands):


	Successor			Predecessor
	Three Months Ended March 31, 2011			Three Months Ended March 31, 2010
Balance at beginning of period	$	8,647,901		$	9,304,976
Loans purchased		1,137,921			623,855
Charge-offs		(183,637	)		(314,152	)
Principal collections and other		(852,620	)		(804,305	)

Balance at end of period	$	8,749,565		$	8,810,374

Finance receivables are collateralized by vehicle titles and we have the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract.

The accrual of finance charge income has been suspended on $354.5 million and $491.4 million of delinquent finance receivables as of March 31, 2011 and December 31, 2010, respectively.

Finance contracts are purchased by us from auto dealers without recourse, and accordingly, the dealer generally has no liability to us if the consumer defaults on the contract. Depending upon the contract structure and consumer credit attributes, we may pay dealers a participation fee or we may charge dealers a non-refundable acquisition fee when purchasing individual finance contracts. We record the amortization of participation fees and accretion of acquisition fees to finance charge income using the effective interest method.

A summary of the finance receivables premium is as follows (in thousands):


	Successor
	Three Months Ended March 31, 2011
Balance at beginning of period	$	423,556
Accretion of premium		(67,927	)

Balance at end of period	$	355,629

A summary of the non-accretable discount is as follows (in thousands):


	Successor
	Three Months Ended March 31, 2011
Balance at beginning of period	$	847,781
Charge-offs		(181,828	)
Recoveries		97,353

Balance at end of period	$	763,306

A summary of the allowance for loan losses is as follows (in thousands):


	Successor			Predecessor
	Three Months Ended March 31, 2011			Three Months Ended March 31, 2010
Balance at beginning of period	$	26,352		$	717,059
Provision for loan losses		39,424			74,583
Charge-offs		(1,809	)		(314,152	)
Recoveries		1,448			145,759

Balance at end of period	$	65,415		$	623,249

Credit Risk

A summary of the credit risk profile by FICO score band of the finance receivables, determined at origination, is as follows (in thousands):


	Successor
	March 31, 2011		December 31, 2010
FICO Score less than 540	$	1,476,829	$	1,328,011
FICO Score 540 to 599		3,550,949		3,395,736
FICO Score 600 to 659		2,680,972		2,757,771
FICO Score greater than 660		1,040,815		1,166,383

Balance at end of period	$	8,749,565	$	8,647,901

Delinquency

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. The following is a summary of finance receivables that are (i) more than 30 days delinquent, but not yet in repossession, and (ii) in repossession, but not yet charged off (dollars in thousands):


	Successor					Predecessor
	March 31, 2011					March 31, 2010
	Amount		Percent			Amount		Percent
Delinquent contracts:
31 to 60 days	$	332,746		3.8	%	$	472,206		5.3	%
Greater-than-60 days		135,081		1.5			190,911		2.2

		467,827		5.3			663,117		7.5
In repossession		26,601		0.3			42,123		0.5

	$	494,428		5.6	%	$	705,240		8.0	%

NOTE 3 – SECURITIZATIONS

A summary of our securitization activity and cash flows from special purpose entities used for securitizations is as follows (in thousands):


	Successor		Predecessor
	Three Months Ended March 31, 2011		Three Months Ended March 31, 2010
Receivables securitized	$	848,810	$	927,758
Net proceeds from securitization		800,000		800,000
Servicing fees ^(a)		48,924		48,312
Distributions		143,168		112,697

(a)

Cash flows received for servicing securitizations consolidated as VIE’s are included in finance charge income on the consolidated statements of income and comprehensive income.

We retain servicing responsibilities for receivables transferred to the Trusts. Included in finance charge income is a monthly base servicing fee earned on the outstanding principal balance of our securitized receivables and supplemental fees (such as late charges) for servicing the receivables.

As of March 31, 2011 and December 31, 2010, respectively, we were servicing $7.0 billion and $7.2 billion of finance receivables that have been transferred to securitization Trusts.

NOTE 4 – CREDIT FACILITIES

Amounts outstanding under our credit facilities are as follows (in thousands):


	Successor
	March 31, 2011		December 31, 2010
Syndicated warehouse facility	$	826,859	$	278,006
Medium term note facility		438,977		490,126
Lease warehouse facility – U.S.		94,845
Wachovia funding facilities		51,203		63,670

	$	1,411,884	$	831,802

Further detail regarding terms and availability of the credit facilities as of March 31, 2011, follows (in thousands):


Facility	Facility Amount		Advances Outstanding		Assets Pledged ⁽^f⁾		Restricted Cash Pledged ⁽^g⁾
Syndicated warehouse facility ^(a)	$	2,000,000	$	826,859	$	1,090,959	$	21,821
Lease warehouse facility – U.S. ^(b)		600,000		94,845		188,411
GM revolving credit facility ⁽^c⁾		300,000
Medium term note facility ⁽^d⁾				438,977		477,603		84,768
Wachovia funding facilities ⁽^e⁾				51,203

			$	1,411,884	$	1,756,973	$	106,589

(a)

In May 2012 when the revolving period ends and if the facility is not renewed, the outstanding balance will be repaid over time based on the amortization of the receivables pledged until May 2013 when the remaining balance will be due and payable.

(b)

On January 31, 2011, we entered into a $600 million lease warehouse facility for lease originations in the U.S. In January 2012, when the revolving period ends and if the facility is not renewed, the outstanding balance will be repaid over time based on the amortization of the leased assets pledged until July 2017 when any remaining amount outstanding will be due and payable.

(c)

On March 31, 2011, we renewed the unsecured revolving credit facility with GM Holdings, with a maturity date of September 30, 2011.

(d)

The revolving period under this facility ended in October 2009, and the outstanding debt balance will be repaid over time based on the amortization of the receivables pledged until October 2016 when any remaining amount outstanding will be due and payable.

(e)

Advances under the Wachovia funding facilities are currently secured by $53.1 million of asset-backed securities issued in the AmeriCredit Automobile Receivables Trust (“AMCAR”) 2008-1 securitization transaction. These facilities are amortizing in accordance with the underlying securitization transaction.

(f)

Borrowings on the warehouse facilities are collateralized by finance receivables, while borrowings on the lease warehouse facility are collateralized by leased assets.

(g)

These amounts do not include cash collected on finance receivables and leased assets pledged of $44.5 million which is also included in restricted cash – credit facilities on the consolidated balance sheets.

Our syndicated warehouse, lease warehouse and medium term note facilities are administered by agents on behalf of institutionally managed commercial paper or medium term note conduits. Under these funding agreements, we transfer finance receivables or leased assets to our special purpose finance subsidiaries. These subsidiaries, in turn, issue notes to the agents, collateralized by such assets and cash. The agents provide funding under the notes to the subsidiaries pursuant to an advance formula, and the subsidiaries forward the funds to us in consideration for the transfer of assets. While these subsidiaries are included in our consolidated financial statements, these subsidiaries are separate legal entities and the finance receivables, leased assets and other assets held by these subsidiaries are legally owned by these subsidiaries and are not available to our creditors or our other subsidiaries. Advances under the funding agreements generally bear interest at commercial paper, London Interbank Offered Rates (“LIBOR”) or prime rates plus a credit spread and specified fees depending upon the source of funds provided by the agents. In the syndicated warehouse and the medium term note facilities we are required to hold certain funds in restricted cash accounts to provide additional collateral for borrowings under these credit facilities.

Our credit facilities, other than the GM revolving credit facility, contain various covenants requiring minimum financial ratios, asset quality and portfolio performance ratios (portfolio net loss and delinquency ratios, and pool level cumulative net loss ratios) as well as limits on deferment levels. Failure to meet any of these covenants could result in an event of default under these agreements. If an event of default occurs under these agreements, the lenders could elect to declare all amounts outstanding under these agreements to be immediately due and payable, enforce their interests against collateral pledged under these agreements, restrict our ability to obtain additional borrowings under these agreements and/or remove us as servicer. As of March 31, 2011, we were in compliance with all covenants in our credit facilities.

The following table presents the average amount outstanding, the weighted average interest rate and maximum amount outstanding on the syndicated warehouse and lease warehouse facilities during the three months ended March 31, 2011 (dollars in millions):


Facility Type	Weighted Average Interest Rate			Average Amount Outstanding		Maximum Amount Outstanding
Syndicated warehouse facility		1.65	%	$	358.5	$	826.9
Lease warehouse facility – U.S.		1.68	%		17.9		94.8

On February 17, 2011, we extended the maturity date of the syndicated warehouse facility to May 2012 and increased the borrowing capacity to $2.0 billion from $1.3 billion.

Debt issuance costs are amortized to interest expense over the expected term of the credit facilities. Unamortized costs of $12.2 million and $0.1 million as of March 31, 2011 and December 31, 2010, respectively, are included in other assets.

NOTE 5 – SECURITIZATION NOTES PAYABLE

Securitization notes payable represents debt issued by us in securitization transactions. In connection with the Merger, we recorded a purchase accounting premium that is being amortized to interest expense over the expected term of the notes. At March 31, 2011, unamortized purchase accounting premium of $85.3 million is included in securitization notes payable. Debt issuance costs of $6.5 million and $3.8 million, as of March 31, 2011 and December 31, 2010, respectively, which are included in other assets, are amortized to interest expense over the expected term of securitization notes payable.

Securitization notes payable as of March 31, 2011, consists of the following (dollars in thousands):


Transaction	Maturity Date ^(c)	Original Note Amount		Original Weighted Average Interest Rate			Receivables Pledged		Note Balance at March 31, 2011
2006-1	May 2013	$	945,000		5.3	%	$	50,234	$	39,944
2006-R-M	January 2014		1,200,000		5.4	%		152,593		140,196
2006-A-F	September 2013		1,350,000		5.6	%		124,435		115,597
2006-B-G	September 2013		1,200,000		5.2	%		144,675		134,693
2007-A-X	October 2013		1,200,000		5.2	%		186,353		173,271
2007-B-F	December 2013		1,500,000		5.2	%		280,292		260,702
2007-1	March 2016		1,000,000		5.4	%		156,639		162,156
2007-C-M	April 2014		1,500,000		5.5	%		342,447		318,936
2007-D-F	June 2014		1,000,000		5.5	%		250,625		232,681
2007-2-M	March 2016		1,000,000		5.3	%		236,450		231,219
2008-A-F	October 2014		750,000		6.0	%		289,762		233,994
2008-1 ^(a)	January 2015		500,000		8.7	%		242,423		55,841
2008-2	April 2015		500,000		10.5	%		258,006		115,353
2009-1	January 2016		725,000		7.5	%		475,515		327,198
2009-1 (APART)	July 2017		227,493		2.7	%		154,758		114,894
2010-1	July 2017		600,000		3.7	%		451,751		374,525
2010-A	July 2017		200,000		3.1	%		175,065		139,903
2010-2	June 2016		600,000		3.8	%		462,588		421,018
2010-B	November 2017		200,000		2.2	%		197,369		158,810
2010-3	January 2018		850,000		2.5	%		824,830		725,738
2010-4	November 2016		700,000		2.5	%		640,289		599,476
2011-1	February 2017		800,000		2.5	%		807,258		769,771
BV2005-LJ-2 ^(b)(d)	February 2014		185,596		4.6	%		5,778		4,784
BV2005-3 ^(b)	June 2014		220,107		5.1	%		10,858		11,671
LB2006-B ^(b)	September 2013		500,000		5.2	%		44,872		47,083
LB2007-A	January 2014		486,000		5.0	%		67,834		66,560

		$	19,939,196				$	7,033,699	$	5,976,014

Purchase accounting premium										85,267

Total									$	6,061,281

(a)

Note balance does not include $53.1 million of asset-backed securities pledged to the Wachovia funding facilities.

(b)

Transactions relate to securitization Trusts acquired by us.

(c)

Maturity date represents final legal maturity of securitization notes payable. Securitization notes payable are expected to be paid based on amortization of the finance receivables pledged to the Trusts.

(d)

Note balance does not include $1.4 million of asset-backed securities repurchased and retained by us.

At the time of securitization of finance receivables, we are required to pledge assets equal to a specified percentage of the securitization pool to support the securitization transaction. Typically, the assets pledged consist of cash deposited to a restricted account and additional receivables delivered to the Trust, which create overcollateralization. The securitization transactions require the percentage of assets pledged to support the transaction to increase until a specified level is attained. Excess cash flows generated by the Trusts are added to the restricted cash account or used to pay down outstanding debt in the Trusts, creating overcollateralization until the targeted percentage level of assets has been reached. Once the targeted percentage level of assets is reached and maintained, excess cash flows generated by the Trusts are distributed to us. Additionally, as the balance of the securitization pool declines, the amount of pledged assets needed to maintain the required percentage level is reduced. Assets in excess of the required percentage are also distributed to us.

With respect to our securitization transactions covered by a financial guaranty insurance policy, agreements with the insurers provide that if portfolio performance ratios (delinquency, cumulative default or cumulative net loss) in a Trust’s pool of receivables exceed certain targets, the specified credit enhancement levels would be increased. We have exceeded these ratios in several AMCAR and Long Beach Acceptance Corporation (“LBAC”) securitizations. Excess cash flows from these Trusts have been or are being used to build higher credit enhancement in each respective Trust instead of being distributed to us. We do not expect the trapping of excess cash flows from these Trusts to have a material adverse impact to our liquidity.

Agreements with our financial guaranty insurance providers contain additional specified targeted portfolio performance ratios that are higher than those described in the preceding paragraph. If, at any measurement date, the targeted portfolio performance ratios with respect to any insured Trust were to exceed these higher levels, provisions of the agreements permit our financial guaranty insurance providers to declare the occurrence of an event of default and terminate our servicing rights to the receivables transferred to that Trust. As of March 31, 2011, no such servicing right termination events have occurred with respect to any of the Trusts formed by us.

NOTE 6 – DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

Interest rate caps, swaps and foreign currency contracts consist of the following (in thousands):


	Successor
	March 31, 2011				December 31, 2010
	Notional		Fair Value		Notional		Fair Value
Assets

Interest rate swaps ^(a)	$	1,005,377	$	17,713	$	1,227,305	$	23,058
Interest rate caps ^(a)		1,549,692		19,220		946,353		7,899

Total assets	$	2,555,069	$	36,933	$	2,173,658	$	30,957

Liabilities

Interest rate swaps	$	1,005,377	$	33,767	$	1,227,305	$	46,797
Interest rate caps ^(b)		1,465,477		19,539		831,848		8,094
Foreign currency contracts ^(b)(c)		40,690		2,312		48,595		2,125

Total liabilities	$	2,511,544	$	55,618	$	2,107,748	$	57,016

(a)

Included in other assets on the consolidated balance sheets.

(b)

Included in other liabilities on the consolidated balance sheets.

(c)

Notional has been translated from Canadian dollars to U.S. dollars at the period end rate.

Interest rate swap agreements designated as hedges had unrealized gains of $0.8 million and losses of $0.4 million included in accumulated other comprehensive income as of March 31, 2011 and December 31, 2010, respectively. The ineffectiveness related to the interest rate swap agreements was $0.9 million for the three months ended March 31, 2011 and immaterial for the three months ended March 31, 2010, respectively. We estimate approximately $0.4 million of unrealized gains included in accumulated other comprehensive income will be reclassified into earnings within the next twelve months.

Interest rate swap agreements not designated as hedges had a change in fair value which resulted in losses of $0.1 million and gains of $3.9 million for the three months ended March 31, 2011 and 2010, included in interest expense on the consolidated statements of income and comprehensive income, respectively.

Under the terms of our derivative financial instruments, we are required to pledge certain funds to be held in restricted cash accounts as collateral for the outstanding derivative transactions. As of March 31, 2011, and December 31, 2010, these restricted cash accounts totaled $37.1 million and $32.7 million, respectively, and are included in other assets on the consolidated balance sheets.

The following tables present information on the effect of derivative instruments on the consolidated statements of income and comprehensive income (in thousands):


	(Losses) Income Recognized In Income
	Successor			Predecessor
	Three Months Ended March 31, 2011			Three Months Ended March 31, 2010
Non-Designated hedges:
Interest rate contracts ^(a)	$	(208	)	$	4,114
Foreign currency contracts ^(b)		(187	)		280

Total	$	(395	)	$	4,394

Designated hedges:
Interest rate contracts ^(a)	$	(889	)	$	421


	Income (Losses) Recognized in Accumulated Other Comprehensive Income
	Successor			Predecessor
	Three Months Ended March 31, 2011			Three Months Ended March 31, 2010
Designated hedges:
Interest rate contracts	$	884		$	(9,493	)


	Losses Reclassified From Accumulated Other Comprehensive Income into Income
	Successor			Predecessor
	Three Months Ended March 31, 2011			Three Months Ended March 31, 2010
Designated hedges:
Interest rate contracts ^(a)	$	(278	)	$	(19,237	)

(a)

(Losses) income recognized in income are included in interest expense.

(b)

(Losses) income recognized in income are included in operating expenses.

NOTE 7 – FAIR VALUES OF ASSETS AND LIABILITIES

ASC 820 provides a framework for measuring fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Fair value measurement requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs and also establishes a fair value hierarchy which prioritizes the valuation inputs into three broad levels.

There are three general valuation techniques that may be used to measure fair value, as described below:

(i)

Market approach – Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;

(ii)

Cost approach – Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and

(iii)

Income approach – Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.

Assets and liabilities itemized below were measured at fair value on a recurring basis:


	Successor
	March 31, 2011 (in thousands)
	Fair Value Measurements Using
	Level 1		Level 2		Level 3
	Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Assets/ Liabilities At Fair Value
Assets
Money market funds ^(i)(a)	$	1,351,880					$	1,351,880
Derivatives not designated as hedging instruments:
Interest rate caps ⁽ⁱ⁾			$	19,220				19,220
Interest rate swaps ⁽ⁱⁱⁱ⁾					$	17,713		17,713

Total assets	$	1,351,880	$	19,220	$	17,713	$	1,388,813

Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps ⁽ⁱⁱⁱ⁾					$	33,767	$	33,767
Derivatives not designated as hedging instruments:
Interest rate caps ⁽ⁱ⁾			$	19,539				19,539
Foreign currency contracts ⁽ⁱ⁾				2,312				2,312

Total liabilities	$		$	21,851	$	33,767	$	55,618

(a)

Excludes cash in banks and cash invested in Guaranteed Investment Contracts of $182.7 million.


	Successor
	December 31, 2010 (in thousands)
	Fair Value Measurements Using
	Level 1		Level 2		Level 3
	Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Assets/ Liabilities At Fair Value
Assets
Money market funds ^{(i) (a)}	$	1,118,489					$	1,118,489
Derivatives not designated as hedging instruments:
Interest rate caps ⁽ⁱ⁾			$	7,899				7,899
Interest rate swaps ⁽ⁱⁱⁱ⁾					$	23,058		23,058

Total assets	$	1,118,489	$	7,899	$	23,058	$	1,149,446

Liabilities
Derivatives designated as hedging instruments:
Interest rate swaps ⁽ⁱⁱⁱ⁾					$	46,797	$	46,797
Derivatives not designated as hedging instruments:
Interest rate caps ⁽ⁱ⁾			$	8,094				8,094
Foreign currency contracts ⁽ⁱ⁾				2,125				2,125

Total liabilities	$		$	10,219	$	46,797	$	57,016

(a)

Excludes cash in banks and cash invested in Guaranteed Investment Contracts of $166.5 million.

Financial instruments are considered Level 1 when quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Financial instruments are considered Level 2 when inputs other than quoted prices are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Financial instruments are considered Level 3 when their values are determined using price models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 financial instruments also include those for which the determination of fair value requires significant management judgment or estimation. A brief description of the valuation techniques used for our Level 3 assets and liabilities is provided below.

The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2011 (Successor) (in thousands):


	Assets			Liabilities
	Interest Rate Swap Agreements			Interest Rate Swap Agreements
Balance at January 1, 2011	$	23,058		$	(46,797	)
Total realized and unrealized gains
Included in earnings		(85	)		(889	)
Included in other comprehensive income					884
Settlements		(5,260	)		13,035

Balance at March 31, 2011	$	17,713		$	(33,767	)


	Assets						Liabilities
	Interest Rate Swap Agreements			Investment in Money Market Fund			Interest Rate Swap Agreements
Balance at January 1, 2010	$	26,637		$	5,764		$	(98,513	)
Total realized and unrealized gains
Included in earnings		3,936			2,020			421
Included in other comprehensive income								(9,493	)
Settlements		(3,258	)		(7,784	)		23,639

Balance at March 31, 2010	$	27,315		$			$	(83,946	)

Derivatives

The fair values of our interest rate caps and foreign currency contracts are valued based on quoted market prices received from bank counterparties and are classified as Level 2.

Our interest rate swaps are not exchange traded but instead trade in over-the-counter markets where quoted market prices are not readily available. The fair value of derivatives is derived using models that use primarily market observable inputs, such as interest rate yield curves and credit curves. Any derivative fair value measurements using significant assumptions that are unobservable are classified as Level 3, which include interest rate swaps whose remaining terms extend beyond market observable interest rate yield curves. The impacts of the derivative liabilities for our and the counterparties’ non-performance risk to the derivative trades is considered when measuring the fair value of derivative liabilities.

NOTE 8 – COMMITMENTS AND CONTINGENCIES

Guarantees of Indebtedness

The payments of principal and interest on our senior notes and convertible senior notes are guaranteed by certain of our subsidiaries. The par value of the senior notes and convertible senior notes was $69.8 million as of March 31, 2011 and December 31, 2010, respectively. See guarantor consolidating financial statements in Note 13.

Limited Corporate Guarantees of Indebtedness

We guarantee the timely payment of interest and ultimate payment of principal on the Class B and Class C asset-backed securities issued in our AMCAR 2008-2 securitization transaction, up to a maximum of $50.0 million in the aggregate.

Legal Proceedings

As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against us could take the form of class action complaints by consumers and/or former shareholders. As the assignee of finance contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages. We believe that we have taken prudent steps to address and mitigate the litigation risks associated with our business activities. However, any adverse resolution of litigation pending or threatened against us could have a material adverse affect on our financial condition, results of operations and cash flows.

On July 21, 2010, we entered into the Merger Agreement. The following litigation is continuing with respect to the Merger:

On July 27, 2010, an action styled Robert Hatfield, Derivatively on behalf of AmeriCredit Corp. vs. Clifton H. Morris, Jr., Daniel E. Berce, John Clay, Ian M. Cumming, A.R. Dike, James H. Greer, Douglas K. Higgins, Kenneth H. Jones, Jr., Robert B. Sturges, Justin R. Wheeler, General Motors Holdings LLC and General Motors Company, Defendants, and AmeriCredit Corp., Nominal Defendant, was filed in the District Court of Tarrant County, Texas, Cause No. 017 246937 10 (the “Hatfield Case”). In the Hatfield Case, the plaintiff alleges, among other allegations, that the individual defendants, who are or were members of our Board of Directors, breached their fiduciary duties with regards to the transaction between us and GM Holdings. Among other relief, the complaint sought to enjoin the closing of the transaction, and seeks to require us to rescind the transaction and the recovery of attorney fees and expenses.

On August 6, 2010, an action styled Carla Butler, Derivatively on behalf of AmeriCredit Corp., Plaintiff vs. Clifton H. Morris, Jr., Daniel E. Berce, John Clay, Ian M. Cumming, A.R. Dike, James H. Greer, Douglas K. Higgins, Kenneth H. Jones, Jr., Robert B. Sturges, Justin R. Wheeler, General Motors Holdings LLC and General Motors Company, Defendants, and AmeriCredit Corp., Nominal Defendant, was filed in the District Court of Tarrant County, Texas, Cause No. 67 247227-10 (the “Butler Case”). In the Butler Case, like the Hatfield Case, the complaint alleges that our individual officers and certain current and former directors breached their fiduciary duties. Among other relief, the complaint sought to rescind the transaction and enjoin its consummation and also seeks an award of plaintiff costs and disbursements including attorneys’ and expert fees.

The Hatfield Case and the Butler Case have been consolidated for handling and the consolidated complaints were amended to seek damages. On January 7, 2011, the defendants filed a motion to dismiss the complaints, based on the court’s lack of subject matter jurisdiction over the consolidated case. On April 6, 2011, the Court entered an order granting the defendants’ motion and ordered that the consolidated case be dismissed with prejudice. The order of dismissal is subject to appeal.

NOTE 9 – INCOME TAXES

We had unrecognized tax benefits of $140.7 million and $127.6 million at March 31, 2011 and December 31, 2010, respectively. The amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate is $23.1 million and $21.4 million at March 31, 2011 and December 31, 2010, respectively, which includes the federal benefit of state taxes.

At March 31, 2011, we believe that it is reasonably possible that the balance of the gross unrecognized tax benefits could decrease by $0.3 million to $66.6 million in the next twelve months due to ongoing activities with various taxing jurisdictions that we expect may give rise to settlements or the expiration of statutes of limitations. We continually evaluate expiring statutes of limitations, audits, proposed settlements, changes in tax laws and new authoritative rulings.

We recognize accrued interest and penalties associated with uncertain tax positions as part of the income tax provision. As of January 1, 2011, accrued interest and penalties associated with uncertain tax positions were $18.9 million and $9.1 million, respectively. During the three months ended March 31, 2011, we accrued an additional $3.2 million in potential interest and accrued an additional $0.2 million in potential penalties associated with uncertain tax positions.

We file income tax returns in the U.S. and various state, local, and foreign jurisdictions. For the three months ended December 31, 2010, we were included in GM’s consolidated U.S. federal income tax return and will continue to be included in subsequent year returns filed by GM. Similarly, we will also file unitary, combined or consolidated state and local tax returns with GM in certain jurisdictions. In some taxing jurisdictions where filing a separate income tax return is mandated, we will continue to file separately. Our predecessor consolidated federal income tax returns for fiscal 2006, 2007, 2008 and 2009 are under audit by the Internal Revenue Service (“IRS”). Our predecessor federal income tax returns prior to fiscal 2006 are closed. Foreign and state jurisdictions have statutes of limitations that generally range from three to five years. Certain of our predecessor tax returns are currently under examination in various state tax jurisdictions.

In the event we recognize taxable income in any period beginning on or after October 1, 2010, we would be obligated to pay GM for our separate federal or state tax liabilities. Likewise, GM is obligated to reimburse us for the tax effects of net operating losses to the extent such losses are carried back by us to a period beginning on or after October 1, 2010, determined as if we had filed separate income tax returns. Amounts owed to or from GM for income tax are accrued and recorded as an intercompany payable or receivable. Under our tax sharing arrangement with GM, payments for the tax years 2010 through 2013 are deferred for three years from their original due date. The total amount of deferral is not to exceed $650 million. Any difference between the amounts to be paid or received under our tax sharing arrangement with GM and our separate return basis used for financial reporting purposes is reported in our consolidated financial statements as additional paid-in capital. As of March 31, 2011, we have recorded an intercompany taxes payable to GM in the amount of $97.0 million, representing the tax effects of income earned subsequent to the Merger.

Our effective income tax rate was 40.7% and 34.0% for the three months ended March 31, 2011 and 2010, respectively. The effective tax rate for the three months ended March 31, 2011 was impacted by adjustments to prior year tax positions and adjustments to deferred tax balances.

NOTE 10 – EARNINGS PER SHARE – Predecessor

A reconciliation of weighted average shares used to compute basic and diluted earnings per share is as follows (dollars in thousands, except per share data):


	Predecessor
	Three Months Ended March 31, 2010
Net income	$	63,206


Basic weighted average shares		134,053,846

Incremental shares resulting from assumed conversions:
Stock-based compensation and warrants		5,177,306

Diluted weighted average shares		139,231,152


Earnings per share:
Basic	$	0.47

Diluted	$	0.45

As a result of the Merger, our stock is no longer publicly traded and earnings per share is no longer required.

Basic earnings per share was computed by dividing net income by weighted average shares outstanding.

Diluted earnings per share was computed by dividing net income by the weighted average shares and assumed incremental shares. The treasury stock method was used to compute the assumed incremental shares related to our outstanding stock-based compensation and warrants. The average market prices for the periods were used to determine the number of incremental shares. Options to purchase approximately 0.6 million shares of common stock were not included in the computation of diluted earnings per share because the option exercise price was greater than the average market price of the common shares. Warrants to purchase approximately 18.8 million shares of common stock were not included in the computation of diluted earnings per share because the exercise price was greater than the average market price of the common shares.

NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Accounting Standards Board (“FASB”) guidance regarding disclosures about fair value of financial instruments requires disclosure of fair value information about financial instruments, whether recognized or not in our consolidated balance sheets. Fair values are based on estimates using present value or other valuation techniques in cases where quoted market prices are not available. Those techniques are significantly affected by the assumptions used, including the discount rate and the estimated timing and amount of future cash flows. Therefore, the estimates of fair value may differ substantially from amounts that ultimately may be realized or paid at settlement or maturity of the financial instruments and those differences may

be material. Disclosures about fair value of financial instruments exclude certain financial instruments and all non-financial instruments from our disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of our Company.

Estimated fair values, carrying values and various methods and assumptions used in valuing our financial instruments are set forth below (in thousands):


			Successor
			March 31, 2011				December 31, 2010
			Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets:
Cash and cash equivalents	(a	)	$	333,183	$	333,183	$	194,554	$	194,554
Finance receivables, net	(b	)		8,276,473		8,342,313		8,197,324	$	8,185,854
Restricted cash – securitization notes payable	(a	)		1,003,455		1,003,455		926,082		926,082
Restricted cash – credit facilities	(a	)		151,131		151,131		131,438		131,438
Restricted cash – other	(a	)		46,807		46,807		32,920		32,920
Interest rate swap agreements	(d	)		17,713		17,713		23,058		23,058
Interest rate cap agreements purchased	(d	)		19,220		19,220		7,899		7,899
Financial liabilities:
Syndicated and lease warehouse facilities	(c	)		921,704		921,704		278,006		278,006
Medium term note facility and Wachovia funding facilities	(d	)		490,180		490,130		553,796		554,048
Securitization notes payable	(d	)		6,061,281		6,075,470		6,128,217		6,106,963
Senior notes	(d	)		69,962		71,899		70,054		71,472
Convertible senior notes	(d	)		1,446		1,446		1,446		1,447
Interest rate swap agreements	(d	)		33,767		33,767		46,797		46,797
Interest rate cap agreements sold	(d	)		19,539		19,539		8,094		8,094
Foreign currency contracts	(d	)		2,312		2,312		2,125		2,125

(a)

The carrying value of cash and cash equivalents, restricted cash – securitization notes payable, restricted cash – credit facilities and restricted cash – other is considered to be a reasonable estimate of fair value since these investments bear interest at market rates and have maturities of less than 90 days.

(b)

The fair value of the finance receivables is estimated based upon forecasted cash flows on the receivables discounted using a pre-tax weighted average cost of capital. The forecast includes among other things items such as prepayment, defaults, recoveries and fee income assumptions.

(c)

The syndicated and lease warehouse facilities have variable rates of interest and maturities of approximately one year. Therefore, carrying value is considered to be a reasonable estimate of fair value.

(d)

The fair values of the interest rate cap and swap agreements, medium term note facility and Wachovia funding facilities, securitization notes payable, senior notes, convertible senior notes and foreign currency contracts are based on quoted market prices, when available. If quoted market prices are not available, the market value is estimated by discounting future net cash flows expected to be settled using a current risk-adjusted rate.

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION

Cash payments for interest costs and income taxes consist of the following (in thousands):


	Successor		Predecessor
	Three Months Ended March 31, 2011		Three Months Ended March 31, 2010
Interest costs (none capitalized)	$	77,527	$	119,507
Income taxes		575		87,971

We received $81.2 million in income tax refunds in the three months ended March 31, 2010.

We had a non-cash investing activity as the result of the receivable from the GM subvention program for the three months ended March 31, 2011 of $71.3 million.

NOTE 13 – GUARANTOR CONSOLIDATING FINANCIAL STATEMENTS

The payment of principal and interest on our senior notes and convertible senior notes are guaranteed by certain of our subsidiaries (the “Subsidiary Guarantors”). The separate financial statements of the Subsidiary Guarantors are not included herein because the Subsidiary Guarantors are our wholly-owned consolidated subsidiaries and are jointly, severally, fully and unconditionally liable for the obligations represented by the senior notes and convertible senior notes. We believe that the consolidating financial information for General Motors Financial Company, Inc., the combined Subsidiary Guarantors and the combined Non-Guarantor Subsidiaries provide information that is more meaningful in understanding the financial position of the Subsidiary Guarantors than separate financial statements of the Subsidiary Guarantors.

The consolidating financial statements present consolidating financial data for (i) General Motors Financial Company, Inc. (on a parent only basis), (ii) the combined Subsidiary Guarantors, (iii) the combined Non-Guarantor Subsidiaries, (iv) an elimination column for adjustments to arrive at the information for the parent company and our subsidiaries on a consolidated basis and (v) the parent company and our subsidiaries on a consolidated basis.

Investments in subsidiaries are accounted for by the parent company using the equity method for purposes of this presentation. Results of operations of subsidiaries are therefore reflected in the parent company’s investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions.

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONSOLIDATING BALANCE SHEET

SUCCESSOR

March 31, 2011

(Unaudited, in Thousands)


	General Motors Financial Company, Inc.		Guarantors		Non- Guarantors			Eliminations			Consolidated
ASSETS

Cash and cash equivalents			$	325,555	$	7,628					$	333,183
Finance receivables, net				191,833		8,084,640						8,276,473
Restricted cash - securitization notes payable						1,003,455						1,003,455
Restricted cash - credit facilities						151,131						151,131
Property and equipment, net	$	220		44,435		18						44,673
Leased vehicles, net				1,129		315,296						316,425
Deferred income taxes		122,240		72,485		(32,839	)					161,886
Goodwill		1,112,284										1,112,284
Intercompany subvention receivable		71,278										71,278
Other assets		459		87,801		51,160						139,420
Due from affiliates		110,062				3,057,750		$	(3,167,812	)
Investment in affiliates		2,539,782		5,231,735		816,551			(8,588,068	)

Total assets	$	3,956,325	$	5,954,973	$	13,454,790		$	(11,755,880	)	$	11,610,208


LIABILITIES AND SHAREHOLDER’S EQUITY

Liabilities:
Credit facilities					$	1,411,884					$	1,411,884
Securitization notes payable						6,061,281						6,061,281
Senior notes	$	69,962										69,962
Convertible senior notes		1,446										1,446
Accounts payable and accrued expenses		3,379	$	63,708		55,858						122,945
Taxes payable		172,289		5,524		10						177,823
Intercompany taxes payable		97,031										97,031
Interest rate swap agreements						33,767						33,767
Other liabilities				21,851								21,851
Due to affiliates				3,167,812				$	(3,167,812	)

Total liabilities		344,107		3,258,895		7,562,800			(3,167,812	)		7,997,990


Shareholder’s equity:
Common stock				150,752					(150,752	)
Additional paid-in capital		3,456,842		75,001		2,405,972			(2,480,973	)		3,456,842
Accumulated other comprehensive income		3,505		4,267		475			(4,742	)		3,505
Retained earnings		151,871		2,466,058		3,485,543			(5,951,601	)		151,871

Total shareholder’s equity		3,612,218		2,696,078		5,891,990			(8,588,068	)		3,612,218


Total liabilities and shareholder’s equity	$	3,956,325	$	5,954,973	$	13,454,790		$	(11,755,880	)	$	11,610,208

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONSOLIDATING BALANCE SHEET

SUCCESSOR

December 31, 2010

(in thousands)


	General Motors Financial Company, Inc.		Guarantors		Non- Guarantors			Eliminations			Consolidated
ASSETS

Cash and cash equivalents			$	187,452	$	7,102					$	194,554
Finance receivables, net				548,506		7,648,818						8,197,324
Restricted cash - securitization notes payable						926,082						926,082
Restricted cash - credit facilities						131,438						131,438
Property and equipment, net	$	2,520		44,751		19						47,290
Leased vehicles, net				1,626		45,154						46,780
Deferred income taxes		109,232		49,333		(18,042	)					140,523
Goodwill		1,112,284										1,112,284
Intercompany subvention receivable		8,149										8,149
Other assets		7,564		79,238		27,512						114,314
Due from affiliates		144,607				2,567,998		$	(2,712,605	)
Investment in affiliates		2,457,613		4,441,736		809,449			(7,708,798	)

Total assets	$	3,841,969	$	5,352,642	$	12,145,530		$	(10,421,403	)	$	10,918,738


LIABILITIES AND SHAREHOLDER’S EQUITY

Liabilities:
Credit facilities					$	831,802					$	831,802
Securitization notes payable						6,128,217						6,128,217
Senior notes	$	70,054										70,054
Convertible senior notes		1,446										1,446
Accounts payable and accrued expenses		42,393	$	14,787		39,989						97,169
Taxes payable		155,754		4,953		5						160,712
Intercompany taxes payable		42,214										42,214
Interest rate swap agreements						46,797						46,797
Other liabilities				10,219								10,219
Due to affiliates				2,712,605				$	(2,712,605	)

Total liabilities		311,861		2,742,564		7,046,810			(2,712,605	)		7,388,630


Shareholder’s equity:
Common stock				90,474					(90,474	)
Additional paid-in capital		3,453,917		75,895		1,695,754			(1,771,649	)		3,453,917
Accumulated other comprehensive income		1,558		54,787		(261	)		(54,526	)		1,558
Retained earnings		74,633		2,388,922		3,403,227			(5,792,149	)		74,633

Total shareholder’s equity		3,530,108		2,610,078		5,098,720			(7,708,798	)		3,530,108


Total liabilities and shareholder’s equity	$	3,841,969	$	5,352,642	$	12,145,530		$	(10,421,403	)	$	10,918,738

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONSOLIDATING STATEMENT OF INCOME

SUCCESSOR

Three Months Ended March 31, 2011

(Unaudited, in Thousands)


	General Motors Financial Company, Inc.			Guarantors			Non- Guarantors		Eliminations			Consolidated

Revenue
Finance charge income				$	(1,209	)	$	269,055				$	267,846
Other income	$	14,261			105,636			149,659	$	(242,235	)		27,321
Equity in income of affiliates		80,045			153,337					(233,382	)


		94,306			257,764			418,714		(475,617	)		295,167


Costs and expenses
Operating expenses		5,602			21,204			49,600					76,406
Leased vehicles expenses					248			8,236					8,484
Provision for loan losses					13,800			25,624					39,424
Interest expense		14,033			117,055			151,764		(242,235	)		40,617


		19,635			152,307			235,224		(242,235	)		164,931


Income before income taxes		74,671			105,457			183,490		(233,382	)		130,236

Income tax (benefit) provision		(2,567	)		25,412			30,153					52,998


Net income	$	77,238		$	80,045		$	153,337	$	(233,382	)	$	77,238

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONSOLIDATING STATEMENT OF INCOME

PREDECESSOR

Three Months Ended March 31, 2010

(Unaudited, in Thousands)


	General Motors Financial Company, Inc.			Guarantors			Non- Guarantors		Eliminations			Consolidated

Revenue
Finance charge income				$	30,092		$	309,800				$	339,892
Other income	$	7,794			110,687			208,017	$	(305,285	)		21,213
Equity in income of affiliates		66,759			96,281					(163,040	)


		74,553			237,060			517,817		(468,325	)		361,105


Costs and expenses
Operating expenses		4,180			20,936			50,099					75,215
Leased vehicles expenses					353			8,335					8,688
Provision for loan losses					46,696			27,887					74,583
Interest expense		10,487			123,791			277,591		(305,285	)		106,584
Restructuring charges, net					220								220


		14,667			191,996			363,912		(305,285	)		265,290


Income before income taxes		59,886			45,064			153,905		(163,040	)		95,815

Income tax (benefit) provision		(3,320	)		(21,695	)		57,624					32,609


Net income	$	63,206		$	66,759		$	96,281	$	(163,040	)	$	63,206

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONSOLIDATING STATEMENT OF CASH FLOWS

SUCCESSOR

Three Months Ended March 31, 2011

(Unaudited, in Thousands)


	General Motors Financial Company, Inc.			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	77,238		$	80,045		$	153,337		$	(233,382	)	$	77,238
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,889			2,372			13,607						17,868
Accretion and amortization of loan fees					202			(3,138	)					(2,936	)
Amortization of finance receivables premium					21,788			46,139						67,927
Amortization of debt discount		(92	)					(23,025	)					(23,117	)
Provision for loan losses					13,800			25,624						39,424
Deferred income taxes		(13,106	)		(23,054	)		14,371						(21,789	)
Stock-based compensation expense		2,925												2,925
Other					5,448			(14,292	)					(8,844	)
Equity in income of affiliates		(80,045	)		(153,337	)					233,382
Changes in assets and liabilities:
Other assets		(57,440	)		11,237			57,724						11,521
Accounts payable and accrued expenses		(39,012	)		28,024			(1,777	)					(12,765	)
Taxes payable		16,535			577			5						17,117
Intercompany taxes payable		54,817												54,817


Net cash (used) provided by operating activities		(36,291	)		(12,898	)		268,575						219,386


Cash flows from investing activities:
Purchases of receivables					(1,134,782	)		(1,464,291	)		1,464,921			(1,134,782	)
Principal collections and recoveries on receivables					(11,959	)		966,250						954,291
Net proceeds from sale of receivables					1,464,291						(1,464,291	)
Purchases of leased vehicles					366			(320,572	)					(320,206	)
Proceeds from termination of leased vehicles								12,880						12,880
Sales (purchases) of property and equipment		1,924			(1,913	)								11
Change in restricted cash - securitization notes payable								(77,373	)					(77,373	)
Change in restricted cash - credit facilities								(19,693	)					(19,693	)
Change in other assets					(13,831	)								(13,831	)
Net change in investment in affiliates		(1,388	)		(711,450	)		(128,846	)		841,684


Net cash provided (used) by investing activities		536			(409,278	)		(1,031,645	)		841,684			(598,703	)


Cash flows from financing activities:
Borrowings on credit facilities								1,196,521						1,196,521
Payments on credit facilities								(615,510	)					(615,510	)
Issuance of securitization notes payable								800,000						800,000
Payments on securitization notes payable								(845,058	)					(845,058	)
Debt issuance costs								(17,809	)					(17,809	)
Net capital contribution to subsidiaries					2,202			710,218			(712,420	)
Net change in due (to) from affiliates		34,544			558,001			(464,766	)		(127,779	)


Net cash provided by financing activities		34,544			560,203			763,596			(840,199	)		518,144


Net (decrease) increase in cash and cash equivalents		(1,211	)		138,027			526			1,485			138,827

Effect of Canadian exchange rate changes on cash and cash equivalents		1,211			76						(1,485	)		(198	)

Cash and cash equivalents at beginning of period					187,452			7,102						194,554


Cash and cash equivalents at end of period	$			$	325,555		$	7,628		$			$	333,183

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONSOLIDATING STATEMENT OF CASH FLOWS

PREDECESSOR

Three Months Ended March 31, 2010

(Unaudited, in Thousands)


	General Motors Financial Company, Inc.			Guarantors			Non- Guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	63,206		$	66,759		$	96,281		$	(163,040	)	$	63,206
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Depreciation and amortization		203			1,924			16,224						18,351
Accretion and amortization of loan fees					714			3						717
Provision for loan losses					46,696			27,887						74,583
Deferred income taxes		(104,527	)		98,280			(62,547	)					(68,794	)
Stock-based compensation expense		4,604												4,604
Non-cash interest charges on convertible debt		5,434												5,434
Other		(283	)		(3,009	)		(5,092	)					(8,384	)
Equity in income of affiliates		(66,759	)		(96,281	)					163,040
Changes in assets and liabilities:
Other assets		(4,709	)		39,567			5,500						40,358
Accounts payable and accrued expenses		89,964			(30,121	)		(641	)					59,202
Taxes payable		2,474			(174	)		1						2,301


Net cash (used) provided by operating activities		(10,393	)		124,355			77,616						191,578


Cash flows from investing activities:
Purchases of receivables					(610,643	)		(838,161	)		838,161			(610,643	)
Principal collections and recoveries on receivables					(13,331	)		965,879						952,548
Net proceeds from sale of receivables					838,161						(838,161	)
Purchases of property and equipment					(352	)								(352	)
Change in restricted cash - securitization notes payable								(139,144	)					(139,144	)
Change in restricted cash - credit facilities								(25,045	)					(25,045	)
Change in other assets					14,192			5,452						19,644
Net change in investment in affiliates		(1,787	)		795,246			(168,460	)		(624,999	)


Net cash (used) provided by investing activities		(1,787	)		1,023,273			(199,479	)		(624,999	)		197,008


Cash flows from financing activities:
Borrowings on credit facilities								100,000						100,000
Payments on credit facilities								(151,790	)					(151,790	)
Issuance of securitization notes payable								800,000						800,000
Payments on securitization notes payable								(929,064	)					(929,064	)
Debt issuance costs		292						(16,333	)					(16,041	)
Retirement of debt		(20,425	)											(20,425	)
Proceeds from issuance of common stock		5,929			(18,541	)		(609,175	)		627,716			5,929
Other net changes		466												466
Net change in due (to) from affiliates		23,129			(950,966	)		927,713			124


Net cash provided (used) by financing activities		9,391			(969,507	)		121,351			627,840			(210,925	)


Net (decrease) increase in cash and cash equivalents		(2,789	)		178,121			(512	)		2,841			177,661

Effect of Canadian exchange rate changes on cash and cash equivalents		2,789			76						(2,841	)		24

Cash and cash equivalents at beginning of period					313,673			5,971						319,644


Cash and cash equivalents at end of period	$			$	491,870		$	5,459		$			$	497,329

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

We are an auto finance company specializing in purchasing retail automobile installment sales contracts originated by franchised and select independent dealers in connection with the sale of used and new automobiles. Additionally, in December 2010, we began offering a lease product in certain geographic markets, through GM franchised dealerships, for consumers purchasing new GM vehicles. We generate revenue and cash flows primarily through the purchase, retention, subsequent securitization and servicing of finance receivables. As used herein, “loans” include auto finance receivables originated by dealers and purchased by us. To fund the acquisition of receivables prior to securitization, we use available cash and borrowings under our credit facilities. We earn finance charge income on the finance receivables and pay interest expense on borrowings under our credit facilities.

Through wholly-owned subsidiaries, we periodically transfer receivables to securitization trusts (“Trusts”) that issue asset-backed securities to investors. We retain an interest in these securitization transactions in the form of restricted cash accounts and overcollateralization, whereby more receivables are transferred to the Trusts than the amount of asset-backed securities issued by the Trusts, as well as the estimated future excess cash flows expected to be received by us over the life of the securitization. Excess cash flows result from the difference between the finance charges received from the obligors on the receivables and the interest paid to investors in the asset-backed securities, net of credit losses and expenses.

Excess cash flows from the Trusts are initially utilized to fund credit enhancement requirements in order to attain specific credit ratings for the asset-backed securities issued by the Trusts. Once targeted credit enhancement requirements are reached and maintained, excess cash flows are distributed to us or, in a securitization utilizing a senior subordinated structure, may be used to accelerate the repayment of certain subordinated securities. In addition to excess cash flows, we receive monthly base servicing fees and we collect other fees, such as late charges, as servicer for securitization Trusts. For securitization transactions that involve the purchase of a financial guaranty insurance policy, credit enhancement requirements will increase if specified portfolio performance ratios are exceeded. Excess cash flows otherwise distributable to us from Trusts in which the portfolio performance ratios were exceeded and from other Trusts which may be subject to limited cross-collateralization provisions are accumulated in the Trusts until such higher levels of credit enhancement are reached and maintained. Senior subordinated securitizations typically do not utilize portfolio performance ratios.

Our securitization transactions utilize special purpose entities which are also variable interest entities (“VIE’s”) that meet the requirements to be consolidated in our financial statements. Following a securitization, the finance receivables and the related securitization notes payable remain on the consolidated balance sheets. We recognize finance charge and fee income on the receivables and interest expense on the securities issued in the securitization transaction and record a provision for loan losses to cover probable loan losses on the receivables.

PRESENTATION AND ANALYSIS OF RESULTS

Merger

On October 1, 2010, pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”), dated as of July 21, 2010, with General Motors Holdings LLC (“GM Holdings”), a wholly owned subsidiary of General Motors Company (“GM”), and Goalie Texas Holdco Inc., a direct wholly owned subsidiary of GM Holdings (“Merger Sub”), GM Holdings completed its acquisition of AmeriCredit Corp. via the merger of Merger Sub with and into AmeriCredit Corp. (the “Merger”), with AmeriCredit Corp. continuing as the surviving company in the Merger and becoming a wholly-owned subsidiary of GM Holdings. After the Merger, AmeriCredit Corp. was renamed General Motors Financial Company, Inc.

The accompanying condensed consolidated statements of consolidated income and comprehensive income and cash flows are presented for two periods: three months ended March 31, 2011 (Successor) and three months ended March 31, 2010 (Predecessor), which relate to periods after and before the Merger with GM, respectively. Due to the change in basis resulting from the application of purchase accounting, the results of operations of the Predecessor and Successor are not comparable.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2011 (Successor)

Finance Receivables:

A summary of our finance receivables is as follows (in thousands):


	Successor
	Three Months Ended March 31, 2011
Balance at beginning of period	$	8,647,901
Loans purchased		1,137,921
Charge-offs		(183,637	)
Principal collections and other		(852,620	)


Balance at end of period	$	8,749,565


Average finance receivables	$	8,666,189

The average new loan size was $19,338 for the three months ended March 31, 2011. The average annual percentage rate for finance receivables purchased during the three months ended March 31, 2011 was 15.2%.

Net Margin:

Net margin is the difference between finance charge and other income earned on our receivables and the cost to fund the receivables as well as the cost of debt incurred for general corporate purposes.

Our net margin as reflected on the consolidated statements of income and comprehensive income is as follows (in thousands):


	Successor
	Three Months Ended March 31, 2011
Finance charge income	$	267,846
Other income		27,321
Interest expense		(40,617	)


Net margin	$	254,550

Net margin as a percentage of average finance receivables is as follows:


	Successor
	Three Months Ended March 31, 2011
Finance charge income		12.5	%
Other income		1.3
Interest expense		(1.9	)

Net margin as a percentage of average finance receivables		11.9	%

Revenue:

Finance charge income was $267.8 million for the three months ended March 31, 2011. The effective yield on our finance receivables was 12.5% for the three months ended March 31, 2011. The effective yield represents finance charges and fees taken into earnings during the period as a percentage of average finance receivables and is lower than the contractual rates of our finance contracts due to accretion of finance receivables premium and finance receivables in nonaccrual status.

Other income consists of the following (in thousands):


	Successor
	Three Months Ended March 31, 2011
Leasing income	$	12,067
Investment income		458
Late fees and other income		14,796

	$	27,321

Costs and Expenses:

Operating Expenses

Operating expenses were $76.4 million for the three months ended March 31, 2011. Our operating expenses are predominately related to personnel costs that include base salary and wages, performance incentives and benefits as well as related employment taxes. Personnel costs represented 73.9% of total operating expenses for the three months ended March 31, 2011.

Operating expenses as an annualized percentage of average finance receivables were 3.6% for the three months ended March 31, 2011.

Provision for Loan losses

Provisions for loan losses are charged to operations to bring our allowance for loan losses to a level which management considers adequate to absorb probable credit losses inherent in the portfolio of post-acquisition finance receivables. The provision for loan losses recorded for the three months ended March 31, 2011 reflects inherent losses on receivables originated during the quarter and changes in the amount of inherent losses on post-acquisition receivables originated in prior periods. The provision for loan losses was $39.4 million for the three months ended March 31, 2011. As an annualized percentage of average post-acquisition finance receivables, the provision for loan losses was 1.8% for the three months ended March 31, 2011.

Interest Expense

Interest expense was $40.6 million for the three months ended March 31, 2011. Interest expense was reduced by $22.8 million of amortization of the purchase accounting premium. Average debt outstanding was $7.1 billion for the three months ended March 31, 2011. Our effective rate of interest on our debt was 2.3% for the three months ended March 31, 2011.

Taxes

Our effective income tax rate was 40.7% for the three months ended March 31, 2011. The effective tax rate for the three months ended March 31, 2011 was impacted by adjustments to prior year tax positions and adjustments to deferred tax balances.

Other Comprehensive Income:

Other comprehensive income consisted of the following (in thousands):


	Successor
	Three Months Ended March 31, 2011
Unrealized gains on cash flow hedges	$	1,162
Canadian currency translation adjustment		1,211
Income tax provision		(426	)

	$	1,947

Cash Flow Hedges

Unrealized gains on cash flow hedges consisted of the following (in thousands):


	Successor
	Three Months Ended March 31, 2011
Unrealized gains related to changes in fair value	$	884
Reclassification of net unrealized losses into earnings		278

	$	1,162

Unrealized gains related to changes in fair value for the three months ended March 31, 2011 were due to changes in the fair value of interest rate swap agreements that were designated as cash flow hedges for accounting purposes. The fair value of the interest rate swap agreements fluctuate based upon changes in forward interest rate expectations.

Unrealized gains on cash flow hedges of our floating rate debt are reclassified into earnings when interest rate fluctuations on securitization notes payable or other hedged items affect earnings.

Canadian Currency Translation Adjustment

Canadian currency translation adjustment gains of $1.2 million for the three months ended March 31, 2011 were included in other comprehensive income. The translation adjustment is due to the change in the value of our Canadian dollar denominated assets related to the change in the U.S. dollar to Canadian dollar conversion rates during the three months ended March 31, 2011.

Three Months Ended March 31, 2010 (Predecessor)

Finance Receivables:

A summary of our finance receivables is as follows (in thousands):


	Predecessor
	Three Months Ended March 31, 2010
Balance at beginning of period	$	9,304,976
Loans purchased		623,855
Charge-offs		(314,152	)
Principal collections and other		(804,305	)

Balance at end of period	$	8,810,374

Average finance receivables	$	9,042,982

The average new loan size was $17,912 for the three months ended March 31, 2010. The average annual percentage rate for finance receivables purchased during the three months ended March 31, 2010 was 17.1%.

Net Margin:

Our net margin as reflected on the consolidated statements of income and comprehensive income is as follows (in thousands):


	Predecessor
	Three Months Ended March 31, 2010
Finance charge income	$	339,892
Other income		21,213
Interest expense		(106,584	)

Net margin	$	254,521

Net margin as a percentage of average finance receivables is as follows:


	Predecessor
	Three Months Ended March 31, 2010
Finance charge income		15.2	%
Other income		0.9
Interest expense		(4.7	)

Net margin as a percentage of average finance receivables		11.4	%

Revenue:

Finance charge income was $339.9 million for the three months ended March 31, 2010. The effective yield on our finance receivables was 15.2% for the three months ended March 31, 2010. The effective yield represents finance charges and fees taken into earnings during the period as a percentage of average finance receivables and is lower than the contractual rates of our finance contracts due to finance receivables in nonaccrual status.

Other income consists of the following (in thousands):


	Predecessor
	Three Months Ended March 31, 2010
Leasing income	$	11,026
Investment income		1,056
Late fees and other income		9,131

	$	21,213

Costs and Expenses:

Operating Expenses

Operating expenses were $75.2 million for the three months ended March 31, 2010. Our operating expenses are predominately related to personnel costs that include base salary and wages, performance incentives and benefits as well as related employment taxes. Personnel costs represented 76.9% of total operating expenses for the three months ended March 31, 2010.

Operating expenses as an annualized percentage of average finance receivables were 3.4% for the three months ended March 31, 2010.

Provision for Loan losses

Provisions for loan losses are charged to operations to bring our allowance for loan losses to a level which management considers adequate to absorb probable credit losses inherent in the portfolio of finance receivables. The provision for loan losses recorded for the three months ended March 31, 2010 reflects inherent losses on receivables originated during the quarter and changes in the amount of inherent losses on receivables originated in prior periods. The provision for loan losses was $74.6 million for the three months ended March 31, 2010. As an annualized percentage of average finance receivables, the provision for loan losses was 3.3% for the three months ended March 31, 2010.

Interest Expense

Interest expense was $106.6 million for the three months ended March 31, 2010. Average debt outstanding was $7.6 billion for the three months ended March 31, 2010. Our effective rate of interest on our debt was 5.7% for the three months ended March 31, 2010.

Taxes

Our effective income tax rate was 34.0% for the three months ended March 31, 2010.

Other Comprehensive Income:

Other comprehensive income consisted of the following (in thousands):


	Predecessor
	Three Months Ended March 31, 2010
Unrealized gains on cash flow hedges	$	9,744
Canadian currency translation adjustment		2,788
Income tax provision		(4,553	)

	$	7,979

Cash Flow Hedges

Unrealized gains on cash flow hedges consisted of the following (in thousands):


	Predecessor
	Three Months Ended March 31, 2010
Unrealized losses related to changes in fair value	$	(9,493	)
Reclassification of net unrealized losses into earnings		19,237

	$	9,744

Unrealized losses related to changes in fair value for the three months ended March 31, 2010 were due to changes in the fair value of interest rate swap agreements that were designated as cash flow hedges for accounting purposes. The fair value of the interest rate swap agreements fluctuate based upon changes in forward interest rate expectations.

Unrealized gains on cash flow hedges of our floating rate debt are reclassified into earnings when interest rate fluctuations on securitization notes payable or other hedged items affect earnings.

Canadian Currency Translation Adjustment

Canadian currency translation adjustment gains of $2.8 million for the three months ended March 31, 2010 were included in other comprehensive income. The translation adjustment is due to the change in the value of our Canadian dollar denominated assets related to the change in the U.S. dollar to Canadian dollar conversion rates during the three months ended March 31, 2010.

CREDIT QUALITY

We primarily provide financing in relatively high-risk markets, and, therefore, anticipate a corresponding high level of delinquencies and charge-offs.

The following tables present certain data related to the receivables portfolio (dollars in thousands):


	Successor
	March 31, 2011			December 31, 2010
Pre-acquisition finance receivables	$	6,744,752		$	7,724,188
Finance receivables premium		355,629			423,556
Non-accretable discount		(763,306	)		(847,781	)
Post-acquisition finance receivables		2,004,813			923,713
Allowance for loan losses		(65,415	)		(26,352	)

Receivables, net	$	8,276,473		$	8,197,324

Number of outstanding contracts		751,722			757,148

Average carrying amount of outstanding contract (in dollars)	$	11,639		$	11,422

Allowance for loan losses as a percentage of post-acquisition receivables		3.3	%		2.9	%

Non-accretable discount as a percentage of pre-acquisition receivables		11.3	%		11.0	%

Delinquency

The following is a summary of finance receivables that are (i) more than 30 days delinquent, but not yet in repossession, and (ii) in repossession, but not yet charged off (dollars in thousands):


	Successor					Predecessor
	March 31, 2011					March 31, 2010
	Amount		Percent			Amount		Percent
Delinquent contracts:
31 to 60 days	$	332,746		3.8	%	$	472,206		5.3	%
Greater-than-60 days		135,081		1.5			190,911		2.2

		467,827		5.3			663,117		7.5
In repossession		26,601		0.3			42,123		0.5

	$	494,428		5.6	%	$	705,240		8.0	%

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. Delinquencies in our receivables portfolio may vary from period to period based upon the average age or seasoning of the portfolio, seasonality within the calendar year and economic factors. Due to our target customer base, a relatively high percentage of accounts become delinquent at some point in the life of a loan and there is a high rate of account movement between current and delinquent status in the portfolio.

Delinquencies in finance receivables have generally trended downward since early calendar year 2009 as a result of the favorable credit performance of loans originated since early calendar year 2008 and stabilization of economic conditions.

Deferrals

In accordance with our policies and guidelines, we, at times, offer payment deferrals to consumers whereby the consumer is allowed to move up to two delinquent payments to the end of the loan generally by paying a fee (approximately the interest portion of the payment deferred, except where state law provides for a lesser amount). Our policies and guidelines limit the number and frequency of deferments that may be granted. Additionally, we generally limit the granting of deferments on new accounts until a requisite number of payments have been received. Due to the nature of our customer base and policies and guidelines of the deferral program, approximately 50% to 60% of accounts historically comprising the portfolio receive a deferral at some point in the life of the account.

An account for which all delinquent payments are deferred is classified as current at the time the deferment is granted and therefore is not included as a delinquent account. Thereafter, such account is aged based on the timely payment of future installments in the same manner as any other account.

Contracts receiving a payment deferral as an average quarterly percentage of average finance receivables outstanding were 5.2% and 7.1% for the three months ended March 31, 2011 and 2010, respectively. Deferment levels have generally trended down since early calendar year 2009 as a result of the stabilization of economic conditions.

The following is a summary of deferrals as a percentage of receivables outstanding:


	Successor
	March 31, 2011			December 31, 2010
Never deferred		74.4	%		71.9	%

Deferred:
1-2 times		16.8			18.5
3-4 times		8.7			9.5
Greater than 4 times		0.1			0.1

Total deferred		25.6			28.1

Total		100.0	%		100.0	%

We evaluate the results of our deferment strategies based upon the amount of cash installments that are collected on accounts after they have been deferred versus the extent to which the collateral underlying the deferred accounts has depreciated over the same period of time. Based on this evaluation, we believe that payment deferrals granted according to our policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

Changes in deferment levels do not have a direct impact on the ultimate amount of finance receivables charged off by us. However, the timing of a charge-off may be affected if the previously deferred account ultimately results in a charge-off. To the extent that deferrals impact the ultimate timing of when an account is charged off, historical charge-off ratios and loss confirmation periods used in the determination of the adequacy of our allowance for loan losses are also impacted. Increased use of deferrals may result in a lengthening of the loss confirmation period, which would increase expectations of credit losses inherent in the loan portfolio and therefore increase the allowance for loan losses and related provision for loan losses. Changes in these ratios and periods are considered in determining the appropriate level of allowance for loan losses and related provision for loan losses.

Charge-offs

The following table presents charge-off data with respect to our finance receivables portfolio (dollars in thousands):


	Successor			Predecessor
	Three Months Ended March 31, 2011			Three Months Ended March 31, 2010
Repossession charge-offs	$	191,255		$	324,333
Less: Recoveries		(98,801	)		(145,759	)
Mandatory charge-offs ^(a)		(7,618	)		(10,181	)

Net charge-offs	$	84,836		$	168,393


Net charge-offs as an annualized percentage of average receivables:		4.0	%		7.6	%

Recoveries as a percentage of gross repossession charge-offs:		51.7	%		44.9	%

(a)

Mandatory charge-offs represent accounts 120 days delinquent that are charged off in full with no recovery amounts realized at time of charge-off net of any subsequent recoveries and the net write-down of finance receivables in repossession to the net realizable value of the repossessed vehicle when the repossessed vehicle is legally available for sale.

Net charge-offs as an annualized percentage of average finance receivables outstanding may vary from period to period based upon the average age or seasoning of the portfolio and economic factors. Net charge-offs have generally trended down since early calendar year 2009 as a result of the favorable credit performance of loans originated since early calendar year 2008, stabilization of economic conditions and improved recovery rates on repossessed collateral.

LIQUIDITY AND CAPITAL RESOURCES

General

Our primary sources of cash are finance charge income, servicing fees, distributions from securitization Trusts, borrowings under credit facilities, transfers of finance receivables to Trusts in securitization transactions and collections and recoveries on finance receivables. Our primary uses of cash are purchases of finance receivables and leased assets, repayment of credit facilities and securitization notes payable, funding credit enhancement requirements for securitization transactions and credit facilities and operating expenses.

We used cash of $1,134.8 million and $610.6 million for the purchase of finance receivables during the three months ended March 31, 2011 and 2010, respectively. We used cash of $320.2 million for the purchase of leased assets under our leasing origination platform during the three months ended March 31, 2011. These purchases were funded initially utilizing cash and borrowings on our credit facilities and our strategy is to subsequently obtain long-term financing for finance receivables and leased assets through securitization transactions.

Liquidity

Our available liquidity consisted of the following (in thousands):


	Successor
	March 31, 2011		December 31, 2010
Cash and cash equivalents	$	333,183	$	194,554
Borrowing capacity on unpledged eligible receivables		23,787		272,257
Borrowing capacity on GM revolving credit facility		300,000		300,000
Borrowing capacity on unpledged eligible leased assets		52,541

Total	$	709,511	$	766,811

Credit Facilities

In the normal course of business, in addition to using our available cash, we pledge assets and borrow under our credit facilities to fund our operations and repay these borrowings as appropriate under our cash management strategy.

As of March 31, 2011, credit facilities consisted of the following (in millions):


Facility Type	Facility Amount		Advances Outstanding
Syndicated warehouse facility ^(a)	$	2,000.0	$	826.9
Lease warehouse facility – U.S. ^(b)		600.0		94.8
GM revolving credit facility ⁽^c⁾		300.0
Medium term note facility ⁽^d⁾				439.0
Wachovia funding facilities ⁽^e⁾				51.2

			$	1,411.9

(a)

(b)

(c)

On March 31, 2011, we renewed the unsecured revolving credit facility with GM Holdings, with a maturity date of September 30, 2011.

(d)

(e)

The following table shows the average amount outstanding, the weighted average interest rate and maximum amount outstanding on the syndicated warehouse and lease warehouse facilities during the three months ended March 31, 2011 (dollars in millions):


Facility Type	Weighted Average Interest Rate			Average Amount Outstanding		Maximum Amount Outstanding
Syndicated warehouse facility		1.65	%	$	358.5	$	826.9
Lease warehouse facility – U.S.		1.68	%		17.9		94.8

We are required to hold certain funds in restricted cash accounts to provide additional collateral for borrowings under certain of our facilities. Additionally, our credit facilities, other than the GM revolving credit facility, contain various covenants requiring minimum financial ratios, asset quality and portfolio performance ratios (portfolio net loss and delinquency ratios, and pool level cumulative net loss ratios) as well as limits on deferment levels. Failure to meet any of these covenants could result in an event of default under these agreements. If an event of default occurs under these agreements, the lenders could elect to declare all amounts outstanding under these agreements to be immediately due and payable, enforce their interests against collateral pledged under these agreements, restrict our ability to obtain additional borrowings under these agreements and/or remove us as servicer. As of March 31, 2011, we were in compliance with all covenants in our credit facilities.

On February 17, 2011, we extended the maturity date of the syndicated warehouse facility to May 2012 and increased the borrowing capacity to $2.0 billion from $1.3 billion.

Securitizations

We have completed 74 securitization transactions through March 31, 2011, excluding securitization Trusts entered into by Bay View Acceptance Corporation (“BVAC”) and Long Beach Acceptance Corporation (“LBAC”) prior to their acquisition by us. The proceeds from the transactions were primarily used to repay borrowings outstanding under our credit facilities.

A summary of the active transactions is as follows (in millions):


Transaction	Date		Original Amount		Balance at March 31, 2011
2006-1		March 2006	$	945.0	$	39.9
2006-R-M		May 2006		1,200.0		140.2
2006-A-F		July 2006		1,350.0		115.6
2006-B-G		September 2006		1,200.0		134.7
2007-A-X		January 2007		1,200.0		173.3
2007-B-F		April 2007		1,500.0		260.7
2007-1		May 2007		1,000.0		162.2
2007-C-M		July 2007		1,500.0		318.9
2007-D-F		September 2007		1,000.0		232.7
2007-2-M		October 2007		1,000.0		231.2
2008-A-F		May 2008		750.0		234.0
2008-1 ^(a)		October 2008		500.0		55.8
2008-2		November 2008		500.0		115.3
2009-1		July 2009		725.0		327.2
2009-1 (APART)		October 2009		227.5		114.9
2010-1		February 2010		600.0		374.5
2010-A		March 2010		200.0		139.9
2010-2		May 2010		600.0		421.0
2010-B		August 2010		200.0		158.8
2010-3		September 2010		850.0		725.7
2010-4		November 2010		700.0		599.5
2011-1		January 2011		800.0		769.8
BV2005-LJ-2 ^(b)		July 2005		185.6		4.8
BV2005-3		December 2005		220.1		11.7
LB2006-B		September 2006		500.0		47.1
LB2007-A		March 2007		486.0		66.6

Total active securitizations			$	19,939.2	$	5,976.0

Purchase accounting premium						85.3

					$	6,061.3

(a)

Note balance does not include $53.1 million of asset-backed securities pledged to the Wachovia funding facilities.

(b)

Note balance does not include $1.4 million of asset-backed securities repurchased and retained by us.

Our securitizations utilize special purpose entities which are also VIE’s that meet the requirements to be consolidated in our financial statements. Accordingly, following a securitization, the finance receivables and the related securitization notes payable remain on the consolidated balance sheets. Finance receivables are transferred to a securitization Trust, which is one of our special purpose finance subsidiaries, and the Trusts issue one or more series of asset-backed securities (securitization notes payable). While these Trusts are included in our consolidated financial statements, these Trusts are separate legal entities; thus the finance receivables and other assets held by these Trusts are legally owned by these Trusts, are available to satisfy the related securitization notes payable and are not available to our creditors or our other subsidiaries.

At the time of securitization of finance receivables, we are required to pledge assets equal to a specified percentage of the securitization pool to provide credit enhancement required for specific credit ratings for the asset-backed securities issued by the Trusts. Typically, the assets pledged consist of cash deposited to a restricted account and additional receivables delivered to the Trust, which create overcollateralization. The securitization transactions require the percentage of assets pledged to support the transaction to increase until a specified level is attained. Excess cash flows generated by the Trusts are added to the restricted cash account or used to pay down outstanding debt in the Trusts, creating overcollateralization until the targeted percentage level of assets has been reached. Once the targeted percentage level of assets is reached and maintained, excess cash flows generated by the Trusts are distributed to us. Additionally, as the balance of the securitization pool declines, the amount of pledged assets needed to maintain the required percentage level is reduced. Assets in excess of the required percentage are also distributed to us.

Since the second half of 2008, we have primarily utilized senior subordinated securitization structures which involve the sale of subordinated asset-backed securities to provide credit enhancement for the senior, or highest rated, asset-backed securities. On April 13, 2011, we closed a $950.0 million senior subordinated securitization transaction, AMCAR 2011-2, that has initial cash deposit and overcollateralization requirements of 7.75% in order to provide credit enhancement for the asset-backed securities sold, including the double-B rated securities which were the lowest rated securities sold. The level of credit enhancement in future senior subordinated securitizations will depend, in part, on the net interest margin, collateral characteristics, and credit performance trends of the receivables transferred, as well as our financial condition, the economic environment and our ability to sell subordinated bonds at rates we consider acceptable.

The second type of securitization structure we have utilized involves the purchase of a financial guaranty insurance policy issued by an insurer. The financial guaranty insurance policies insure the timely payment of interest and the ultimate payment of principal due on the asset-backed securities. We have limited reimbursement obligations to the insurers; however, credit enhancement requirements, including the insurers’ encumbrance of certain restricted cash accounts and subordinated interests in Trusts, provide a source of funds to cover shortfalls in collections and to reimburse the insurers for any claims which may be made under the policies issued with respect to our securitizations. Since our securitization program’s inception, there have been no claims under any insurance policies. We do not anticipate utilizing this structure for the foreseeable future.

Certain cash flows related to securitization transactions were as follows (in millions):


	Successor		Predecessor
	Three Months Ended March 31, 2011		Three Months Ended March 31, 2010

Initial credit enhancement deposits:
Restricted cash	$	17.0	$	18.6
Overcollateralization		48.8		127.8
Distributions		143.2		112.7

The agreements with the insurers of our securitization transactions covered by a financial guaranty insurance policy provide that if portfolio performance ratios (delinquency, cumulative default or cumulative net loss) in a Trust’s pool of receivables exceed certain targets, the specified credit enhancement levels would be increased. We have exceeded certain of these ratios in several AMCAR and LBAC securitizations. Excess cash flows from these Trusts have been or are being used to build higher credit enhancement in each respective Trust instead of being distributed to us. We do not expect the trapping of excess cash flows from these Trusts to have a material adverse impact on our liquidity.

The agreements that we have entered into with our financial guaranty insurance providers in connection with securitization transactions insured by them contain additional specified targeted portfolio performance ratios (delinquency, cumulative default and cumulative net loss) that are higher than the limits referred to above. If, at any measurement date, the targeted portfolio performance ratios with respect to any insured Trust were to exceed these additional levels, provisions of the agreements permit the financial guaranty insurance providers to declare the occurrence of an event of default and take steps to terminate our servicing rights to the receivables sold to that Trust. In addition, the servicing agreements on certain insured securitization Trusts are cross-defaulted so that a default declared under one servicing agreement would allow the financial guaranty insurance provider to terminate our servicing rights under all servicing agreements for securitization Trusts in which they issued a financial guaranty insurance policy. Additionally, if these higher targeted portfolio performance levels were exceeded and the financial guaranty insurance providers elect to declare an event of default, the insurance providers may retain all excess cash generated by other securitization transactions insured by them as additional credit enhancement. This, in turn, could result in defaults under our other securitizations and other material indebtedness, including under our senior note and convertible note indentures. As of March 31, 2011, no such servicing right termination events have occurred with respect to any of the Trusts formed by us.

Recent Accounting Pronouncements

In April 2011, Accounting Standards Update (“ASU”) (“2011-02”), A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring was issued effective for interim and annual periods beginning on or after June 15, 2011. ASU 2011-02 provides evaluation criteria for finance receivables meeting the criteria for whether a restructuring constitutes a troubled debt restructuring. Additional disclosures around the nature and extent of modified finance receivables and their effect on the allowance for loan losses may be required under ASU 2010-20, Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. We do not anticipate the adoption of ASU 2011-02 to have an impact on our consolidated financial position, results of operations or cash flows.

INTEREST RATE RISK

Fluctuations in market interest rates impact our credit facilities and securitization transactions. Our gross interest rate spread, which is the difference between interest earned on our finance receivables and interest paid, is affected by changes in interest rates as a result of our dependence upon the issuance of variable rate securities and the incurrence of variable rate debt to fund our purchases of finance receivables.

Credit Facilities

Finance receivables and leased assets purchased by us and pledged to secure borrowings under our credit facilities bear fixed interest rates or money factors. Amounts borrowed under our credit facilities bear interest at variable rates that are subject to frequent adjustments to reflect prevailing market interest rates. To protect the interest rate spread within each credit facility, our special purpose finance subsidiaries are contractually required to purchase interest rate cap agreements in connection with borrowings under our credit facilities. The purchaser of the interest rate cap agreement pays a premium in return for the right to receive the difference in the interest cost at any time a specified index of market interest rates rises above the stipulated “cap” rate. The purchaser of the interest rate cap agreement bears no obligation or liability if interest rates fall below the “cap” rate. As part of our interest rate risk management strategy and when economically feasible, we may simultaneously sell a corresponding interest rate cap agreement in order to offset the premium paid by our special purpose finance subsidiary to purchase the interest rate cap agreement and thus retain the interest rate risk. The fair value of the interest rate cap agreement purchased by the special purpose finance subsidiary is included in other assets and the fair value of the interest rate cap agreement sold by us is included in other liabilities on our consolidated balance sheets.

Securitizations

The interest rate demanded by investors in our securitization transactions depends on prevailing market interest rates for comparable transactions and the general interest rate environment. We utilize several strategies to minimize the impact of interest rate fluctuations on our gross interest rate margin, including the use of derivative financial instruments and the regular sale or pledging of finance receivables to securitization Trusts.

In our securitization transactions, we transfer fixed rate finance receivables to Trusts that, in turn, sell either fixed rate or floating rate securities to investors. The fixed rates on securities issued by the Trusts are indexed to market interest rate swap spreads for transactions of similar duration or various London Interbank Offered Rates (“LIBOR”) and do not fluctuate during the term of the securitization. The floating rates on securities issued by the Trusts are indexed to LIBOR and fluctuate periodically based on movements in LIBOR. Derivative financial instruments, such as interest rate swap and cap agreements, are used to manage the gross interest rate spread on these transactions. We use interest rate swap agreements to convert the variable rate exposures on securities issued by our securitization Trusts to a fixed rate, thereby locking in the gross interest rate spread to be earned by us over the life of a securitization. Interest rate swap agreements purchased by us do not impact the amount of cash flows to be received by holders of the asset-backed securities issued by the Trusts. The interest rate swap agreements serve to offset the impact of increased or decreased interest paid by the Trusts on floating rate asset-backed securities on the cash flows to be received by us from the Trusts. We utilize such arrangements to modify our net interest sensitivity to levels deemed appropriate based on our risk tolerance. In circumstances where the interest rate risk is deemed to be tolerable, usually if the risk is less than one year in term at inception, we may choose not to hedge potential fluctuations in cash flows due to changes in interest rates. Our special purpose finance subsidiaries are contractually required to purchase a derivative financial instrument to protect the net spread in connection with the issuance of floating rate securities even if we choose not to hedge our future cash flows. Although the interest rate cap agreements are purchased by the Trusts, cash outflows from the Trusts ultimately impact our retained interests in the securitization transactions as cash expended by the securitization Trusts will decrease the ultimate amount of cash to be received by us. Therefore, when economically feasible, we may simultaneously sell a corresponding interest rate cap agreement to offset the premium paid by the Trust to purchase the interest rate cap agreement. The fair value of the interest rate cap agreements purchased by the special purpose finance subsidiaries in connection with securitization transactions are included in other assets and the fair value of the interest rate cap agreements sold by us are included in other liabilities on our consolidated balance sheets. Changes in the fair value of the interest rate cap agreements are reflected in interest expense on our consolidated statements of income and comprehensive income.

We have entered into interest rate swap agreements to hedge the variability in interest payments on eight of our active securitization transactions. Portions of these interest rate swap agreements are designated and qualify as cash flow hedges. The fair value of interest rate swap agreements designated as hedges is included in liabilities on the consolidated balance sheets. Interest rate swap agreements that are not designated as hedges are included in other assets on the consolidated balance sheets.

Management monitors our hedging activities to ensure that the value of derivative financial instruments, their correlation to the contracts being hedged and the amounts being hedged continue to provide effective protection against interest rate risk. However, there can be no assurance that our strategies will be effective in minimizing interest rate risk or that increases in interest rates will not have an adverse effect on our profitability. All transactions are entered into for purposes other than trading.

FORWARD LOOKING STATEMENTS

The preceding Management’s Discussion and Analysis of Financial Condition and Results of Operations section contains several “forward-looking statements.” Forward-looking statements are those that use words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “may,” “likely,” “should,” “estimate,” “continue,” “future” or other comparable expressions. These words indicate future events and trends. Forward-looking statements are our current views with respect to future events and financial performance. These forward-looking statements are subject to many assumptions, risks and uncertainties that could cause actual results to differ significantly from historical results or from those anticipated by us. The most significant risks are detailed from time to time in our filings and reports with the Securities and Exchange Commission (the “Commission”) including our Transition Report on Form 10-K for the six month period ended December 31, 2010. It is advisable not to place undue reliance on our forward-looking statements. We undertake no obligation to, and do not, publicly update or revise any forward-looking statements, except as required by federal securities laws, whether as a result of new information, future events or otherwise.

Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Because our funding strategy is dependent upon the issuance of interest-bearing securities and the incurrence of debt, fluctuations in interest rates impact our profitability. Therefore, we employ various hedging strategies to minimize the risk of interest rate fluctuations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Interest Rate Risk” for additional information regarding such market risks.

Item 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports we file under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Such controls include those designed to ensure that information for disclosure is communicated to management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure.

The CEO and CFO, with the participation of management, have evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2011. Based on their evaluation, they have concluded that the disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There were no changes made in our internal control over financial reporting during the three months ended March 31, 2011, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Limitations Inherent in all Controls

Our management, including the CEO and CFO, recognize that the disclosure controls and internal controls (discussed above) cannot prevent all errors or all attempts at fraud. Any controls system, no matter how well crafted and operated, can only provide reasonable, and not absolute, assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in any control system, no evaluation or implementation of a control system can provide complete assurance that all control issues and all possible instances of fraud have been or will be detected.

Part II. OTHER INFORMATION

Item 1.

LEGAL PROCEEDINGS

principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages. We believe that we have taken prudent steps to address and mitigate the litigation risks associated with our business activities. However, any adverse resolution of litigation pending or threatened against us could have a material adverse affect on our financial condition, results of operations and cash flows.

On July 21, 2010, we entered into the Merger Agreement. The following litigation is continuing with respect to the Merger:

Item 1A.

RISK FACTORS

In addition to the other information set forth in this report, the factors discussed in Part I, Item 1, “Risk Factors” in our Transition Report on Form 10-K for the six month period ended December 31, 2010, should be carefully considered as these risk factors could materially affect our business, financial condition or future results. The risks described in our Transition Report on Form 10-K are not the only risks facing us.

Leased Vehicle Residual Values and Return Rates

We project expected residual values and return volumes of the vehicles we lease. Actual proceeds realized by us upon the sale of returned leased vehicles at lease termination may be lower than the amount projected, which reduces the profitability of the lease transaction to us. Among the factors that can affect the value of returned lease vehicles are the volume of vehicles returned, economic conditions and the quality or perceived quality, safety or reliability of the vehicles. Actual return volumes may be higher than expected and can be influenced by contractual lease end values relative to auction values, marketing programs for new vehicles, and general economic conditions. All of these, alone or in combination, have the potential to adversely affect the profitability of our lease program and financial results.

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not Applicable

Item 3.

DEFAULTS UPON SENIOR SECURITIES

Not Applicable

Item 4.

REMOVED AND RESERVED

Not Applicable

Item 5.

OTHER INFORMATION

Not Applicable

Item 6.

EXHIBITS


31.1		Officers’ Certifications of Periodic Report pursuant to Section 302 of Sarbanes-Oxley Act of 2002

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		General Motors Financial Company, Inc.
		(Registrant)

Date: May 6, 2011	By:	/S/ CHRIS A. CHOATE
		(Signature)
		Chris A. Choate
		Executive Vice President,
		Chief Financial Officer and Treasurer

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller Reporting Company