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8-K/A - FORM 8-K/A - General Motors Financial Company, Inc.d644727d8ka.htm
EX-99.1 - EX-99.1 - General Motors Financial Company, Inc.d644727dex991.htm
EX-99.2 - EX-99.2 - General Motors Financial Company, Inc.d644727dex992.htm

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On November 21, 2012, General Motors Financial Company, Inc. (“GM Financial”) and Ally Financial Inc. (“Ally”) announced agreements to acquire Ally’s auto finance and financial services operations in Europe and Latin America and its non-controlling 40% equity interest in GMAC-SAIC Automotive Finance Company Limited (“GMAC-SAIC”), which conducts auto finance and financial services business in China (collectively, the “International Operations”).

On April 1, 2013, GM Financial and Ally completed a transaction under which GM Financial acquired Ally’s equity interests in its top-level holding companies that comprise substantially all of Ally’s auto finance and financial services business in Europe other than in France and Portugal and in Latin America other than Brazil, pursuant to the Purchase and Sale Agreement entered into on November 21, 2012, as subsequently amended and restated on February 22, 2013 (the “PSA”). The purchase price was approximately $2.4 billion.

On May 14, 2013, GM Financial issued and sold $1.0 billion in aggregate principal amount of 2.75% Senior Notes due 2016 (the “2016 Notes”), $750 million in aggregate principal amount of 3.25% Senior Notes due 2018 (the “2018 Notes”) and $750 million in aggregate principal amount of 4.25% Senior Notes due 2023 (the “2023 Notes” and, together with the 2016 Notes and the 2018 Notes, the “Notes”).

On June 3, 2013, GM Financial and Ally completed a transaction under which GM Financial acquired, effective as of June 1, 2013, Ally’s equity interests in its companies that comprise Ally’s auto finance and financial services business in France and Portugal (together, with Ally businesses acquired on April 1, 2013, the “Previously Acquired International Operations”), pursuant to the PSA. The purchase price was approximately $150 million.

On October 1, 2013, GM Financial and Ally completed a transaction under which GM Financial acquired Ally’s equity interests in its companies that comprise Ally’s auto finance and financial services business in Brazil. The auto finance and financial services business acquired in Brazil are referred to in this Unaudited Pro Forma Condensed Combined Financial Information section as the “Brazil International Operations.” The purchase price, based on preliminary closing Net Assets Statement, was approximately $0.7 billion, subject to possible adjustments provided in the PSA.

As of October 1, 2013, the acquisition of GM Financial of Ally’s non-controlling 40% equity interest in GMAC-SAIC is expected to be completed in 2014 or as soon as practicable thereafter. The non-controlling 40% equity interest in GMAC-SAIC is referred to in this Unaudited Pro Forma Condensed Combined Financial Information section as the “China International Operations.”

GM Financial is the wholly-owned captive finance subsidiary of General Motors Company (“GM”). Ally has historically provided a majority of the financing for GM’s dealers and a significant portion of the financing for its customers in the U.S. and Canada and other major international markets where it operates including through the operations that are the subject of the transactions described herein. Historically, Ally has been GM’s primary financing partner for incentivized retail financing programs in its major markets. The purchase price was determined based on arm’s length negotiations.

The pro forma financial information set forth herein gives effect to the following events (collectively, the “Transactions”):

 

  1) The consummation of the Previously Acquired International Operations, which occurred on April 1, 2013 and June 1, 2013;

 

  2) The consummation of the acquisition of Ally’s auto finance and financial services business in Brazil;

 

  3) The repayment of certain assumed debt obligations in the amount of $1.4 billion, which occurred in April 2013 and June 2013 subsequent to the closings of the Previously Acquired International Operations that occurred on April 1, 2013 and June 1, 2013; and

 

  4) The issuance of the Notes.

The unaudited pro forma condensed combined balance sheet gives effect to these events as if they had occurred on September 30, 2013. The unaudited pro forma condensed combined statements of income give effect to these events as if they had occurred on January 1, 2012.


The unaudited pro forma condensed combined financial information included herein is derived from the historical financial statements of GM Financial and the International Operations and include adjustments which give effect to events that are (i) directly attributable to the Transactions, (ii) expected to have continued impact on GM Financial, (iii) factually supportable, and (iv) not reflected in the historical financial statements as of and for the period ended September 30, 2013. Refer to the section entitled “Notes to Unaudited Pro Forma Condensed Combined Financial Statements.”

The unaudited pro forma condensed combined balance sheet includes certain pro forma adjustments to reflect the estimated impact of the consummation of the acquisition of Ally’s auto finance and financial services business in Brazil, assuming this acquisition occurred on September 30, 2013. There are no pro forma adjustments related to the acquisitions of the Previously Acquired International Operations, as these acquisitions were consummated prior to September 30, 2013 and the effects of these acquisitions are reflected in the historical balance sheet as of September 30, 2013 included within GM Financial’s Form 10-Q for the corresponding period.

The unaudited pro forma condensed combined statement of income for the year ended December 31, 2012 include certain pro forma adjustments to reflect the impact of the consummated acquisitions of the Previously Acquired International Operations and the consummation of the acquisition of Ally’s auto finance and financial services business in Brazil, assuming these acquisitions occurred on January 1, 2012.

The unaudited pro forma condensed combined statement of income for the nine months ended September 30, 2013 includes certain pro forma adjustments to reflect the impact of the consummated acquisitions of the Previously Acquired International Operations and the consummation of the acquisition of Ally’s auto finance and financial services business in Brazil, assuming these acquisitions occurred on January 1, 2012, to the extent the impact of the acquisitions of the Previously Acquired International Operations have not been reflected in the historical statement of income for the nine months ended September 30, 2013 included within GM Financial’s Form 10-Q for the corresponding period.

GM Financial has not finalized its purchase price allocation with respect to the Previously Acquired International Operations’ assets acquired and liabilities assumed at their fair values, as disclosed in Note 2 to the unaudited condensed financial statements included in GM Financial’s most recent Form 10-Q. Adjustments and amounts reflected within the unaudited pro forma condensed combined financial information related to the Brazil International Operations are management’s estimates based on available information. Accordingly, as described in Note 2 below, the unaudited pro forma condensed combined financial statements include preliminary allocations of the purchase price to reflect the estimated fair values of certain assets and liabilities expected to be acquired in connection with the consummation of the acquisition of Ally’s auto finance and financial services business in Brazil.

The unaudited pro forma condensed combined financial statements:

 

    do not purport to represent what the consolidated results of operations actually would have been if the Transactions had occurred on January 1, 2012 or what those results will be for any future periods or what the consolidated balance sheet would have been if the Transactions had occurred on September 30, 2013 or what the consolidated balance sheet will be on any future date; and

 

    have not been adjusted to reflect any matters not directly attributable to implementing the acquisition of the International Operations. No adjustments, therefore, have been made for actions, such as any of GM Financial’s integration plans related to the International Operations. In connection with the plan to integrate the International Operations, GM Financial anticipates that non-recurring charges, such as costs associated with systems implementation and other costs related to exit or disposal activities, could be incurred. These charges could affect the results of operations of GM Financial in the period in which they are recorded. The unaudited pro forma condensed combined financial statements do not include the effects of the costs associated with any restructuring or integration activities resulting from the acquisition of the International Operations, as they are non-recurring in nature and were not determinable at the time that the unaudited pro forma condensed combined financial statements were prepared.


General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of September 30, 2013

The following preliminary unaudited pro forma condensed combined balance sheet combines the historical balance sheets of the Brazil International Operations and GM Financial on an acquisition accounting basis assuming that the acquisition of the Brazil International Operations was completed on September 30, 2013.

 

(In millions)    GM Financial      Combined
International
Operations,
Reclassified

(Note 5)
    

Less:

China

International

Operations,

Reclassified

    

Subtotal:

GM Financial

and Acquired

International

Operations,

Reclassified

     Purchase
Accounting
and Other
Adjustments
         Pro Forma
Combined
 

Assets

                   

Cash and cash equivalents

   $ 1,756       $ 168            1,924       $ (663   A    $ 1,257   
                 (4   B   

Finance receivables, net

     23,867         4,214            28,081         (77   C      28,004   

Restricted cash

     1,371         54            1,425              1,425   

Property and equipment, net

     124         4            128              128   

Investment in equity method investee

        483         483         0           

Leased vehicles, net

     3,100               3,100              3,100   

Deferred income taxes

     69         275            344         37      D      381   

Goodwill

     1,156               1,156         118      E      1,274   

Related party receivables

     111               111              111   

Other assets

     330         523            853         33      F      787   
                 (4   G   
                 (95   H   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Total assets

   $ 31,884       $ 5,721         483         37,122       $ (655      $ 36,467   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Liabilities and Shareholder’s Equity

                   

Liabilities:

                   

Secured debt

   $ 18,447       $ 2,271            20,718       $ (22   I    $ 20,696   

Unsecured debt

     5,228         1,705            6,933         (19   J      6,914   

Accounts payable and accrued expenses

     594         388            982              982   

Deferred income

     157               157              157   

Deferred income taxes

     64               64              64   

Taxes payable

     126         217            343              343   

Related party taxes payable

     598               598              598   

Other liabilities

     153               153              153   

Related party payable

     357         47            404              404   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Total liabilities

     25,724         4,628            30,352         (41        30,311   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Shareholder’s Equity

                   

Additional paid-in capital

     4,765         1,060         442         5,383         (618   K      4,765   

Accumulated other comprehensive income/loss

     27         33         41         19         8      L      27   

Retained earnings

     1,368               1,368         (4   B      1,364   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Total shareholder’s equity

     6,160         1,093         483         6,770         (614        6,156   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Total liabilities and shareholder’s equity

   $ 31,884       $ 5,721         483         37,122       $ (655      $ 36,467   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

See accompanying notes to unaudited pro forma condensed combined financial statements


General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Combined Statement of Income

For the Year Ended December 31, 2012

The following preliminary unaudited pro forma condensed combined statement of income combines the historical statements of income of the International Operations and GM Financial on an acquisition accounting basis assuming that the Transactions were completed on January 1, 2012.

 

(In millions)    GM Financial      Combined
International
Operations,
Reclassified*

(Note 5)
    

Less:

China

International

Operations,

Reclassified

    

Subtotal:

GM Financial

and Acquired

International

Operations,

Reclassified

     Purchase
Accounting
and Other
Adjustments
         Pro Forma
Combined
 

Revenue

                   

Finance charge income

   $ 1,594       $ 1,515            3,109       $ 142      C    $ 3,251   

Leased vehicle income

     289         24            313              313   

Other income

     77         201            278         26     H      304   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 
     1,960         1,740            3,700         168           3,868   

Costs and expenses

                   

Operating expenses

     398         558            956         29      F      985   

Leased vehicle expenses

     211         23            234              234   

Provision for loan losses

     304         86            390         136      C      526   

Interest expense

     283         757            1,040         19      M      1,076   
                 (21   G   
                 24      I   
                 14      J   

Acquisition expenses

     20               20         (20   N   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 
     1,216         1,424            2,640         181           2,821   

Income before income taxes

     744         316            1,060         (13        1,047   

Income tax provision

     281         45            326         (4   O      322   

Equity method investee income, net of taxes

        96         96         0         0          0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Net income

   $ 463       $ 367         96         734       $ (9      $ 725   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

* International Operations, Reclassified includes Ally’s auto finance and financial services operations in Europe and Latin America and its non-controlling 40% equity interest in GMAC-SAIC

See accompanying notes to unaudited pro forma condensed combined financial statements


General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Combined Statement of Income

For the Nine Months Ended September 30, 2013

The following preliminary unaudited pro forma condensed combined statement of income combines the historical statements of income of the International Operations and GM Financial on an acquisition accounting basis assuming that the Transactions were completed on January 1, 2012.

 

(In millions)    GM Financial      Combined
International
Operations,
Reclassified*

(Note 5)
    

Less:

China

International

Operations,

Reclassified

    

Subtotal:

GM Financial

and

Acquired

International

Operations,

Reclassified

     Purchase
Accounting
and Other
Adjustments
         Pro Forma
Combined
 

Revenue

                   

Finance charge income

   $ 1,709       $ 714            2,423       $ 47      C    $ 2,470   

Leased vehicle income

     415         1            416              416   

Other income

     119         96            215         13      H      228   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 
     2,243         811            3,054         60           3,114   

Costs and expenses

                   

Salaries and benefits

     313         58            371              371   

Other operating expenses

     189         135            324         (4   F      320   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Total operating expenses

     502         193            695         (4        691   

Leased vehicle expenses

     314         1            315              315   

Provision for loan losses

     311         71            382              382   

Interest expense

     414         392            806         14      M      839   
                 7      G   
                 8      I   
                 4      J   

Acquisition and integration expenses

     29               29         (29   N   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 
     1,570         657            2,227         0           2,227   

Income before income taxes

     673         154            827         60           887   

Income tax provision

     228         56            284         21      O      305   

Equity method investee income, net of taxes

        90         90              
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

Net income

   $ 445       $ 188       $ 90         543       $ 39         $ 582   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

 

 

* International Operations, Reclassified includes Previously Acquired International Operations for the period of 2013 prior to their acquisitions plus Ally’s auto finance and financial services operations in Brazil and its non-controlling 40% equity interest in GMAC-SAIC for the nine months ended September 30, 2013.


General Motors Financial Company, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

For the Period Ended September 30, 2013

Note 1—Preliminary Purchase Accounting Allocation for the Brazil International Operations

The unaudited pro forma condensed combined financial information for the Transactions includes the unaudited pro forma condensed combined balance sheet as of September 30, 2013, assuming the acquisition of the Brazil International Operations occurred on September 30, 2013 on an acquisition accounting basis. The unaudited condensed combined statement of income for the year ended December 31, 2012 and the nine months ended September 30, 2013 assumes that the Transactions occurred on January 1, 2012 on an acquisition accounting basis.

The acquisition of the Brazil International Operations is being accounted for using the acquisition method of accounting; accordingly, GM Financial’s cost to acquire the Brazil International Operations will be allocated to the assets, including identifiable intangible assets, and liabilities of the Brazil International Operations at their respective estimated fair values as of acquisition date. The table below reflects the preliminary allocation of purchase price to the acquired assets and liabilities based on preliminary estimates of fair value.

Preliminary Purchase Price Allocation

Unaudited Condensed Combined Pro Forma Financial Information—as of September 30, 2013

 

(In millions)    Brazil
International
Operations
 

Total Purchase Price for the Brazil International Operations

   $ 663   

Net Book Value of the Brazil International Operations

     610   

Preliminary Allocation of Purchase Price

  

Pre-tax adjustments to reflect acquired assets and liabilities at fair value

  

Finance receivables, net

     (77

Intangible assets

     33   

Deferred commissions

     (95

Debt issuance costs

     (4

Secured debt

     22   

Unsecured debt

     19   
  

 

 

 

Pre-tax total adjustments

     (102

Deferred income taxes

     37   
  

 

 

 

After-tax total adjustment

   $ (65

Fair value of net assets acquired

     545   
  

 

 

 

Preliminary goodwill resulting from the acquisition of the Brazil International Operations

   $ 118   
  

 

 

 

The final allocation of the purchase price will be determined after completion of the acquisition of all of the China International Operations and final analysis to determine the fair values of the International Operations’ tangible and intangible assets and liabilities.

As disclosed in GM Financial’s Form 10-Q for the period ended September 30, 2013, the purchase price for the Previously Acquired International Operations was approximately $2.6 billion. The purchase price was allocated to the identifiable assets and liabilities assumed based upon their estimated fair values at the date of the acquisitions. The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill in the amount of $48 million, but is subject to further adjustment pending the closing of the China International Operations, as well as any certain potential closing adjustments resulting from the finalization of closing balance sheet audits.

Based on preliminary estimates, management believes that upon completion of the acquisition of the China International Operations and finalization of the purchase price allocation, the total goodwill resulting from the acquisition of the International Operations will be between $115 million and $155 million.


Note 2—Basis of Pro Forma Presentation

The unaudited pro forma condensed combined financial information related to the Transactions is included as of September 30, 2013 and for the year and nine month periods ended December 31, 2012 and September 30, 2013, respectively. The acquisition is being accounted for under the purchase method of accounting in accordance with Accounting Standards Codification 805, Business Combinations.

The unaudited pro forma condensed combined financial information as of September 30, 2013 and for the year and nine months ended December 31, 2012 and September 30, 2013, respectively includes preliminary estimated adjustments to record the assets and liabilities of the International Operations at their respective estimated fair values and represents management’s estimates based on available information. Management utilized various valuation methodologies and models which it believes are reasonable. However other market participants could utilize different methodologies and models to arrive at different valuations. The pro forma adjustments included herein may be revised as additional information becomes available and additional analyses are performed. The final allocation of the purchase price will be determined after completion of the acquisition of all of the China International Operations and final analysis to determine the fair values of the International Operations’ tangible and intangible assets and liabilities.

Certain amounts in the historical consolidated financial statements of the International Operations have been reclassified to conform to GM Financial’s classification; refer to Note 5– Reclassification Adjustments for further information.

The unaudited pro forma condensed combined financial information is presented in accordance with the Securities Exchange Act of 1934, as amended, for illustrative purposes only and does not indicate the results of operations or the combined financial position that would have resulted had the Transactions been completed at the beginning for the applicable period presented, nor the impact of possible business model changes as a result of current market conditions which would impact revenues, performance of finance receivables, expense efficiencies, asset dispositions, and other factors.

Additionally, the unaudited pro forma condensed combined financial information is not indicative of the results of operations in future periods or the future financial position of the combined businesses.

Note 3—Transactions Not Completed as of the Date of this Filing

As of October 1, 2013, the acquisition by GM Financial of Ally’s non-controlling 40% equity interest in GMAC-SAIC, remained subject to certain regulatory approvals. These approvals include a new joint venture agreement with the other equity interest holders of GMAC-SAIC and the regulatory approvals of such agreement. We are currently negotiating the agreement and once complete it is expected to take approximately nine months for us to obtain regulatory approvals. The acquisition of the non-controlling 40% equity interest in GMAC-SAIC is expected to be completed in 2014 or as soon as practicable thereafter. The pro forma financial information does not give effect to the acquisition of Ally’s non-controlling 40% equity interest in GMAC-SAIC.

Note 4—Purchase Accounting and Acquisition Adjustment Descriptions

 

(A) Adjustment to reflect the estimated cash payment of $0.7 billion to acquire the Brazil International Operations as of September 30, 2013.
(B) Adjustments to reflect the payment of incremental transaction costs incurred subsequent to September 30, 2013 in connection with the acquisition of the Previously Acquired and Brazil International Operations, respectively.
(C) Adjustments totaling $77 million to record consumer and commercial finance receivables of the Brazil International Operations at their estimated fair values as of September 30, 2013. These adjustments also reflect: (1) an increase to finance charge income of $142 million for the year ended December 31, 2012, comprised of an increase of $93 million for the Brazil International Operations and $49 million for the Previously Acquired International Operations; and (2) an increase to finance charge income of $47 million for the nine months ended September 30, 2013, comprised of an increase of $46 million for the Brazil International Operations and an increase of $1 million for the Previously Acquired International Operations. These adjustments are based on the effective interest rate amortization method. The estimated fair values of the acquired finance receivables were developed by estimating the expected remaining cash flows of the receivables portfolio discounted at estimated market rates for similar loans across the various jurisdictions. In addition, this adjustment increases provision expense by $136 million for the year ended December 31, 2012, comprised of an increase of $91 million for the Brazil International Operations and an increase of $45 million for the Previously Acquired International Operations, to reflect loss recognition associated with the acquired finance receivables with no deterioration in credit quality.
(D) Adjustment to reflect the preliminary estimate of the deferred tax effect of the purchase accounting adjustments utilizing GM Financial’s statutory tax rates ranging from 25%-34% applicable to the jurisdictions in which the purchase accounting adjustments are recorded.


(E) Adjustments of $118 million to record preliminary estimate of incremental goodwill as a result of the acquisition of the Brazil International Operations.
(F) Adjustments of $33 million to record intangible assets associated with dealer networks, business licenses, and certain asset servicing rights of the Brazil International Operations. The estimated useful lives of these assets are one to five years. The adjustments to the income statement for the year ended December 31, 2012 include $16 million of expected amortization associated with dealer networks and business licenses of the Previously Acquired International Operations, which also have estimated useful lives of one year. The adjustment to the income statement for the nine months ended September 30, 2013 removes the actual amortization of $8 million associated with the intangible assets of the Previously Acquired International Operations, which was recorded in GM Financial’s historical income statement for the corresponding period, as the balance is fully amortized prior to this period for pro forma purposes and an increase of $4 million associated the intangible assets of the Brazil International Operations.
(G) Adjustments totaling $4 million to write off the Brazil International Operations existing debt issuance costs as of September 30, 2013. These adjustments also reflect: (1) a decrease to interest expense of $21 million for the year ended December 31, 2012, comprised a decrease of $3 million for the Brazil International Operations and $18 million for the Previously Acquired International Operations; and (2) an increase to interest expense of $7 million for the nine months ended September 30, 2013, comprised a decrease of $1 million for the Brazil International Operations and an increase of $8 million for the Previously Acquired International Operations. These adjustments are based on the effective interest rate amortization method.
(H) Adjustments to write off deferred commissions for a specific product offering within the Brazil International Operations. These adjustments also reflect: (1) an increase to other income of $26 million for the year ended December 31, 2012; and (2) an increase to other income of $13 million for the nine months ended September 30, 2013. These adjustments are based on a straight line amortization method.
(I) Adjustments totaling $22 million to record the Brazil International Operations’ secured debt at estimated fair values based on current credit and market interest rates. These adjustments also reflect: (1) an increase to interest expense of $24 million for the year ended December 31, 2012, comprised of $9 million for the Brazil International Operations and $15 million for the Previously Acquired International Operations; and (2) an increase to interest expense of $8 million for the nine months ended September 30, 2013, comprised of $1 million for the Brazil International Operations and $7 million for the Previously Acquired International Operations. These adjustments are based on the effective interest rate amortization method.
(J) Adjustments totaling $19 million to record the Brazil International Operations’ unsecured debt at estimated fair value based on current credit and market interest rates. The impact of this adjustment is to increase interest expense by $14 million and $4 million for the year ended December 31, 2012 and the nine months ended September 30, 2013, respectively. Substantially all of these adjustments to the income statements are related to the impact of the Brazil International Operations. These adjustments are based on the effective interest rate amortization method.
(K) Adjustments to eliminate the Brazil International Operations’ historical net parent investment.
(L) Adjustments to eliminate the carrying value of the Brazil International Operations’ accumulated other comprehensive income.
(M) Adjustments totaling $19 million and $14 million to interest expense for the year ended December 31, 2012 and the nine months ended September 30, 2013, respectively. These adjustments reflect the interest expense impact of the issuance of the Notes and the repayment of certain debt obligations assumed in connection with acquisition of the Previously Acquired International Operations and give effect to the income statement to the extent these effects are not recorded in the historical financial statements of GM Financial. Refer to detail below:

 

                 Incremental Interest  
(Dollars in millions)    Balance     Interest Rate     December 31, 2012     September 30, 2013  

Instrument

        

Assumed Indebtedness—April and June Repayments

   $ (1,416     5.00   $ (71   $ (19

Senior Notes

     2,500        3.35     84        31   

Amortization of issuance costs—Senior Notes

     25        n/a        6        2   
      

 

 

   

 

 

 

Interest Expense Adjustment

       $ 19      $ 14   
      

 

 

   

 

 

 

 

(N) Adjustments to eliminate nonrecurring costs directly relating to the Transactions included in the historical income statements of GM Financial.
(O) Adjustments to record estimated incremental income tax provision utilizing GM Financial’s statutory rate of 35%, recognized as a result of purchase accounting adjustments.


Note 5—Reclassification Adjustments

Unaudited Pro Forma Condensed Combined Balance Sheet: International Operations Reporting Reclassification Adjustments

As of September 30, 2013

 

(In millions)    GM
Financial
     International
Operations
     Reporting
Reclassification
Adjustments
         International
Operations
Reclassified
 

Assets

             

Cash and cash equivalents

   $ 1,756       $ 168            $ 168   

Finance receivables, net

     23,867         4,214              4,214   

Restricted cash

     1,371            54      (1)      54   

Property and equipment, net

     124            4      (2)      4   

Investment in equity method investee

        483              483   

Leased vehicles, net

     3,100              

Deferred income taxes

     69         275              275   

Goodwill

     1,156              

Related party receivables

     111              

Other assets

     330         581         (54   (1)      523   
           (4   (2)   
  

 

 

    

 

 

    

 

 

      

 

 

 

Total assets

   $ 31,884       $ 5,721       $ —           $ 5,721   
  

 

 

    

 

 

    

 

 

      

 

 

 

Liabilities and Shareholder’s Equity

             

Liabilities:

             

Secured debt

   $ 18,447          $ 2,271      (3)    $ 2,271   

Unsecured debt

     5,228            1,705      (3)      1,705   

Short-term borrowings—Third party

      $ 521         (521   (3)   

Long-term debt—Third party

        3,455         (3,455   (3)   

Related party debt with Ally Financial Inc.

             

Interest payable

        116         (116   (4)   

Accounts payable and accrued expenses

     594         536         116      (4)      388   
           (47   (5)   
           (217   (6)   

Deferred income

     157              

Deferred income taxes

     64              

Taxes payable

     126            217      (6)      217   

Related party payable

     357            47      (5)      47   

Related party taxes payable

     598              

Other liabilities

     153              
  

 

 

    

 

 

    

 

 

      

 

 

 

Total liabilities

     25,724         4,628         —             4,628   
  

 

 

    

 

 

    

 

 

      

 

 

 

Shareholder’s equity

             

Parent’s net investment

        1,060         (1,060   (7)   

Additional paid-in capital

     4,765            1,060      (7)      1,060   

Accumulated other comprehensive income/loss

     27         33              33   

Retained earnings

     1,368              
  

 

 

    

 

 

    

 

 

      

 

 

 

Total shareholder’s equity

     6,160         1,093              1,093   
  

 

 

    

 

 

    

 

 

      

 

 

 

Total liabilities and shareholder’s equity

   $ 31,884       $ 5,721       $ —           $ 5,721   
  

 

 

    

 

 

    

 

 

      

 

 

 

See accompanying notes to unaudited pro forma condensed combined financial statements

Balance Sheet—International Operations Reclassification Adjustment Descriptions:

The following reclassifications have been made to the International Operations financial statements in order to conform to the GM Financial presentation:

 

(1) Adjustments to reclassify International Operations restricted cash collections for securitization trusts and cash reserve deposits held-for-securitization trusts to restricted cash—credit facilities.
(2) Adjustments to reclassify International Operations property and equipment, net balances included in other assets to property and equipment, net.
(3) Adjustments to reclassify International Operations debt instruments to secured and unsecured debt.
(4) Adjustments to reclassify International Operations interest payable balance to accounts payable and accrued expenses.


(5) Adjustments to reclassify International Operations payables to GM included in accounts payable and accrued expenses to related party payable.
(6) Adjustments to reclassify International Operations taxes payable included in accounts payable and accrued expenses to taxes payable.
(7) Adjustments to reclassify International Operations parent’s net investment category to additional paid-in capital.

Unaudited Pro Forma Condensed Combined Income Statement: International Operations Reporting Reclassification Adjustments

For the Year Ended December 31, 2012 

 

(In millions)    GM
Financial
     International
Operations
    Reporting
Reclassification
Adjustments
         International
Operations
Reclassified
 

Revenue

            

Finance charge income

   $ 1,594       $ 1,514      $ 14      (1)    $ 1,515   
          (13   (4)   

Leased vehicle income

     289           24      (1)      24   

Other income

     77         162        8      (1)      201   
          31      (2)   

Interest-bearing cash

        31        (31   (2)   

Operating leases

        46        (46   (1)   

Interest expense on short-term borrowings

        (130     130      (3)   

Interest expense on long-term borrowings

        (627     627      (3)   

Depreciation expense on operating lease assets

        (38     38      (4)   

Income in equity method investee

        96        (96   (5)   
  

 

 

    

 

 

   

 

 

      

 

 

 
     1,960         1,054        686           1,740   

Costs and expenses

            

Operating expenses

     398         403        2      (4)      558   
          153      (6)   

Leased vehicle expenses

     211           23      (4)      23   

Provision for loan losses

     304         86             86   

Interest expense

     283           757      (3)      757   

Acquisition and integration expenses

     20             

Compensation and benefits expense

        153        (153   (6)   
  

 

 

    

 

 

   

 

 

      

 

 

 
     1,216         642        782           1,424   

Income before income taxes

     744         412        (96        316   

Income tax provision

     281         45             45   

Equity method investee income, net of tax

          96      (5)      96   
  

 

 

    

 

 

   

 

 

      

 

 

 

Net income

   $ 463       $ 367      $ —           $ 367   
  

 

 

    

 

 

   

 

 

      

 

 

 

See accompanying notes to unaudited pro forma condensed combined financial statements


For the Nine Months Ended September 30, 2013

 

(In millions)    GM
Financial
     International
Operations
    Reporting
Reclassification
Adjustments
         International
Operations
Reclassified
 

Revenue

            

Finance charge income

   $ 1,709       $ 713      $ 5      (1)    $ 714   
          (4   (4)   

Leased vehicle income

     415           1      (1)      1   

Other income

     119         73        2      (1)      96   
          21      (2)   

Interest-bearing cash

        21        (21   (2)   

Operating leases

        8        (8   (1)   

Interest expense on short-term borrowings

        (52     52      (3)   

Interest expense on long-term borrowings

        (340     340      (3)   

Depreciation expense on operating lease assets

        (7     7      (4)   

Income in equity method investee

        90        (90   (5)   
  

 

 

    

 

 

   

 

 

      

 

 

 
     2,243         506        305           811   

Costs and expenses

            

Salaries and benefits

     313         58             58   

Operating expenses

     189         133        2      (4)      135   
  

 

 

    

 

 

   

 

 

      

 

 

 

Total operating expenses

     502        191        2           193   

Leased vehicle expenses

     314           1      (4)      1   

Provision for loan losses

     311         71             71   

Interest expense

     414           392      (3)      392   

Acquisition and integration expenses

     29             
  

 

 

    

 

 

   

 

 

      

 

 

 
     1,570         262        395           657   

Income before income taxes

     673         244        (90        154   

Income tax provision

     228         56             56   

Equity method investee income

          90      (5)      90   
  

 

 

    

 

 

   

 

 

      

 

 

 

Net income

   $ 445       $ 188      $ —           $ 188   
  

 

 

    

 

 

   

 

 

      

 

 

 

See accompanying notes to unaudited pro forma condensed combined financial statements

Income Statement—International Operations Reclassification Adjustment Descriptions:

The following reclassifications have been made to the International Operations’ financial statements in order to conform to the GM Financial presentation:

 

(1) Adjustments to reclassify International Operations operating leases revenue to finance charge income, leased vehicle income, and other income.
(2) Adjustments to reclassify International Operations interest-bearing cash to other income.
(3) Adjustments to reclassify International Operations interest expense on short-term and long-term borrowings to interest expense.
(4) Adjustments to reclassify International Operations depreciation expense on operating lease assets to finance charge income, leased vehicle expense and operating expense.
(5) Adjustments to reclassify International Operations equity method investee income, net of tax.
(6) Adjustments to reclassify International Operations compensation and benefits expense to operating expenses.