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8-K - 8-K - General Motors Financial Company, Inc.d783215d8k.htm
EX-99.1 - EX-99.1 - General Motors Financial Company, Inc.d783215dex991.htm

Exhibit 99.2

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. 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 (together, with Ally businesses acquired on April 1, 2013, and June 3, 2013, the “Previously Acquired International Operations”), pursuant to the PSA. The purchase price was approximately $700 million.

As of September 9, 2014, the acquisition of the non-controlling 40% equity interest in GMAC-SAIC is expected to be completed, subject to certain regulatory and other approvals, in 2014 or as soon as practicable thereafter. The non-controlling 40% equity interest in GMAC-SAIC to be acquired 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, June 1, 2013, and October 1, 2013;

 

  2) The consummation of the probable future acquisition of Ally’s non-controlling 40% interest in GMAC-SAIC, partially funded by a capital contribution from GM of $0.7 billion;

 

  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 certain 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 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 June 30, 2014. Refer to the section entitled “Notes to Unaudited Pro Forma Condensed Combined Financial Information.”

The unaudited pro forma condensed combined balance sheet includes certain pro forma adjustments to reflect the estimated impact of the consummation of the probable future acquisition of Ally’s non-controlling

 

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40% interest in GMAC-SAIC, assuming this acquisition occurred on June 30, 2014. There are no pro forma adjustments related to the acquisitions of the Previously Acquired International Operations and issuance of the Notes, as these transactions were consummated prior to June 30, 2014 and the effects of these transactions are reflected in the historical balance sheet as of June 30, 2014 included within GM Financial’s Form 10-Q for the corresponding period.

The unaudited pro forma condensed combined statements of income for the year ended December 31, 2013 and the six months ended June 30, 2014 includes certain pro forma adjustments to reflect the impact of the consummated acquisitions of the Previously Acquired International Operations, the issuance of the Notes, and the consummation of the probable future acquisition of Ally’s non-controlling 40% interest in GMAC-SAIC, assuming these transactions occurred on January 1, 2013, to the extent the impact of the acquisitions of the Previously Acquired International Operations and issuance of the Notes have not been reflected in the historical statement of income for the year ended December 31, 2013 and the six months ended June 30, 2014 included within GM Financial’s Form 10-K and Form 10-Q for the corresponding periods, respectively.

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. Adjustments and amounts reflected within the unaudited pro forma condensed combined financial information related to the China 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 probable future acquisition of Ally’s non-controlling 40% interest in GMAC-SAIC.

The unaudited pro forma condensed combined financial information:

 

    do not purport to represent what the consolidated results of operations actually would have been if the Transactions had occurred on January 1, 2013 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 June 30, 2014 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.

 

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General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of June 30, 2014

The following preliminary unaudited pro forma condensed combined balance sheet combines the historical balance sheets of the China International Operations and GM Financial on an acquisition accounting basis assuming that the acquisition of the China International Operations was completed on June 30, 2014.

 

(In millions)    GM Financial      International
Operations,
Reclassified
(Note 5)
     Purchase
Accounting
and Other
Adjustments
         Pro Forma
Combined
 

Assets

             

Cash and cash equivalents

   $ 1,412      $ —        $ (289 )   A    $ 1,120  
           (3 )   B   

Finance receivables, net

     31,545        —          —            31,545  

Restricted cash

     2,205        —          —            2,205  

Property and equipment, net

     150        —          —            150  

Investment in equity method investee

     —          574        415     C      989  

Leased vehicles, net

     4,748        —          —            4,748  

Deferred income taxes

     433        —          —            433  

Goodwill

     1,245        —          —            1,245  

Related party receivables

     185        —          —            185  

Other assets

     436        —          —            436  
  

 

 

    

 

 

    

 

 

      

 

 

 

Total assets

   $ 42,359      $ 574      $ 123        $ 43,056  
  

 

 

    

 

 

    

 

 

      

 

 

 

Liabilities and Shareholder’s Equity

             

Liabilities:

             

Secured debt

   $ 25,006      $ —        $ —          $ 25,006  

Unsecured debt

     7,596        —          —            7,596  

Accounts payable and accrued expenses

     984        —          —            984  

Deferred income

     249        —          —            249  

Deferred income taxes

     12        —          —            12  

Taxes payable

     293        —          —            293  

Related party taxes payable

     891        —          —            891  

Related party payable

     432        —          —            432  

Other liabilities

     229        —          —            229  
  

 

 

    

 

 

    

 

 

      

 

 

 

Total liabilities

     35,692        —          —            35,692  
  

 

 

    

 

 

    

 

 

      

 

 

 

Shareholder’s Equity:

             

Additional paid-in capital

     4,793        536        (536 )   D      5,493  
           700     E   

Accumulated other comprehensive income/(loss)

     65        38        (38 )   F      65  

Retained earnings

     1,809           (3 )   B      1,806  
  

 

 

    

 

 

    

 

 

      

 

 

 

Total shareholder’s equity

     6,667        574        123          7,364  
  

 

 

    

 

 

    

 

 

      

 

 

 

Total liabilities and shareholder’s equity

   $ 42,359      $ 574      $ 123        $ 43,056  
  

 

 

    

 

 

    

 

 

      

 

 

 

See accompanying notes to unaudited pro forma condensed combined financial information

 

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General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Combined Statement of Income

For the Year Ended December 31, 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, 2013.

 

(In millions)    GM Financial      International
Operations,
Reclassified
(Note 5)
     Purchase
Accounting
and Other
Adjustments
         Pro Forma
Combined
 

Revenue

             

Finance charge income

   $ 2,563      $ 716      $ 48     G    $ 3,327  

Leased vehicle income

     595        1        —            596  

Other income

     186        96        18     H      300  
  

 

 

    

 

 

    

 

 

      

 

 

 
     3,344        813        66          4,223  
  

 

 

    

 

 

    

 

 

      

 

 

 

Costs and expenses

             

Salaries and benefits

     448        58        —            506  

Other operating expenses

     322        140        19     I      481  
  

 

 

    

 

 

    

 

 

      

 

 

 

Total operating expenses

     770        198        19          987  

Leased vehicle expenses

     453        1             454  

Provision for loan losses

     475        71        87     G      633  

Interest expense

     721        412        14     J      1,160  
           (4 )   K   
           12     L   
           5     M   

Acquisition and integration expenses

     42        —          (42 )   N      —    
  

 

 

    

 

 

    

 

 

      

 

 

 
     2,461        682        91          3,234  

Income before income taxes

     883        131        (25 )        989  

Income tax provision (credit)

     317        43        (9 )   O      351  

Equity method investee income, net of taxes

     —          118        —            118  
  

 

 

    

 

 

    

 

 

      

 

 

 

Net income

   $ 566      $ 206      $ (16 )      $ 756  
  

 

 

    

 

 

    

 

 

      

 

 

 

See accompanying notes to unaudited pro forma condensed combined financial information

 

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General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Combined Statement of Income

For the Six Months Ended June 30, 2014

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, 2013.

 

(In millions)    GM Financial      International
Operations,
Reclassified
(Note 5)
    Purchase
Accounting
and Other
Adjustments
         Pro Forma
Combined
 

Revenue

            

Finance charge income

   $ 1,712      $ —       $ 3     G    $ 1,715  

Leased vehicle income

     438        —         —            438  

Other income

     138        —         (4 )   H      134  
  

 

 

    

 

 

   

 

 

      

 

 

 
     2,288        —         (1 )        2,287  

Costs and expenses

            

Salaries and benefits

     290        —         —            290  

Other operating expenses

     259        2       (11 )   I      250  
  

 

 

    

 

 

   

 

 

      

 

 

 

Total operating expenses

     549        2       (11 )        540  

Leased vehicle expenses

     335        —         —            335  

Provision for loan losses

     248        —         —            248  

Interest expense

     669        —         (2 )   K      664  
          (2 )   L   
          (1 )   M   
  

 

 

    

 

 

   

 

 

      

 

 

 
     1,801        2       (16 )        1,787  

Income before income taxes

     487        (2 )     15          500   

Income tax provision (credit)

     167        —         5     O      172  

Equity method investee income, net of taxes

     —          66       —            66  
  

 

 

    

 

 

   

 

 

      

 

 

 

Net income

   $ 320      $ 64     $ 10        $ 394  
  

 

 

    

 

 

   

 

 

      

 

 

 

See accompanying notes to unaudited pro forma condensed combined financial information

 

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General Motors Financial Company, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Information

For the Period Ended June 30, 2014

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

The unaudited pro forma condensed combined financial information for the Transactions includes the unaudited pro forma condensed combined balance sheet as of June 30, 2014, assuming the acquisition of the China International Operations occurred on June 30, 2014 on an acquisition accounting basis. The unaudited condensed combined statement of income for the year ended December 31, 2013 and the six months ended June 30, 2014 assumes that the Transactions occurred on January 1, 2013 on an acquisition accounting basis.

The acquisition of the China International Operations is being accounted for using the acquisition method of accounting; accordingly, GM Financial’s cost to acquire the China International Operations will be allocated to the assets, including identifiable intangible assets, and liabilities of the China 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 June 30, 2014

 

(In millions)    China
International
Operations
 

Total Purchase Price for the China International Operations

   $ 989  

Net Book Value of the China International Operations

     574  

Preliminary Allocation of Purchase Price

  

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

  

Equity method investment

     415  
  

 

 

 

Pre-tax total adjustments

     415  

Deferred income taxes

     —    

After-tax total adjustment

   $ 415  
  

 

 

 

Fair value of net assets acquired

     989  
  

 

 

 

Preliminary goodwill resulting from the acquisition of the China International Operations

   $ —    
  

 

 

 

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

The purchase price for the Previously Acquired International Operations was approximately $3.3 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 is $138 million, but is subject to further adjustment pending the closing of the China International Operations.

Note 2—Basis of Pro Forma Presentation

The unaudited pro forma condensed combined financial information related to the Transactions is included as of June 30, 2014 and for the year and six month periods ended December 31, 2013 and June 30, 2014, 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 June 30, 2014 and for the year and six months ended December 31, 2013 and June 30, 2014, respectively includes preliminary estimated adjustments to record the assets and liabilities of the International Operations at their respective estimated fair

 

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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 September 9, 2014, the acquisition by GM Financial of Ally’s non-controlling 40% equity interest in GMAC-SAIC remained subject to certain regulatory and other 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 gives effect to the probable future acquisition of Ally’s non-controlling 40% interest in GMAC-SAIC.

Note 4—Purchase Accounting and Acquisition Adjustment Descriptions

 

(A) Adjustments to reflect the estimated cash payment of $1.0 billion to acquire the China International Operations as of June 30, 2014, as well as an adjustment to record a $0.7 billion capital contribution from GM.

 

(Dollars in millions)    Amount  

Capital Contribution from GM

   $ 700  

Less: Amount paid to Ally for the China International Operations at closing

     (989 )
  

 

 

 

Net decrease to cash and cash equivalents

     (289 )

 

(B) Adjustments to reflect the payment of incremental transaction costs expected to be incurred in connection with the acquisition of the International Operations.

 

(C) Adjustment totaling approximately $415 million to record the non-controlling equity investment in GMAC-SAIC at fair value as of June 30, 2014. This adjustment reflects the estimated fair value of the equity interest in GMAC-SAIC Automotive Finance Company as of June 30, 2014. This adjustment does not affect the income or loss earned in connection with the equity interest for the six months ended June 30, 2014 or the year ended December 31, 2013. Assumptions utilized in determining the preliminary fair value include estimated future cash flows and discount rates, among others. These assumptions could vary from those used in the final valuation.

 

(D) Adjustment to eliminate the China International Operations’ historical net parent investment.

 

(E) Adjustment to record a $0.7 billion capital contribution from GM Financial’s parent, GM. This contribution will be used to fund the acquisition of the China International Operations. The adjustment does not affect the income statement for the year ended December 31, 2013 or the six months ended June 30, 2014.

 

(F) Adjustment to eliminate the carrying value of the China International Operations’ accumulated other comprehensive income.

 

(G) Adjustments to increase finance charge income of $48 million for the year ended December 31, 2013 and to increase finance charge income of $3 million for the six months ended June 30, 2014, related to the Previously Acquired International Operations. These adjustments are based on the effective interest rate amortization method and gives effect to the income statement to the extent these effects are not recorded in the historical financial statements of GM Financial. In addition, this adjustment increases provision expense by $87 million for the year ended December 31, 2013, to reflect loss recognition associated with the acquired finance receivables with no evidence of credit deterioration at acquisition.

 

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(H) Adjustments to reflect an increase to other income of $18 million for the year ended December 31, 2013 and a decrease to other income of $4 million for the six months ended June 30, 2014 with the total amount due to the write off at acquisition of deferred commissions for a specific product offering within the Previously Acquired International Operations. These adjustments are based on a straight line amortization method and gives effect to the income statement to the extent these effects are not recorded in the historical financial statements of GM Financial.

 

(I) Adjustments to the income statement for the year ended December 31, 2013 include $19 million increase of expected amortization and for the six months ended June 30, 2014 includes $11 million decrease of expected amortization associated with dealer networks and business licenses of the Previously Acquired International Operations, which have estimated useful lives of between one and five years. These adjustments give effect to the income statement to the extent these effects are not recorded in the historical financial statements of GM Financial.

 

(J) Adjustments totaling $14 million to interest expense for the year ended December 31, 2013. This adjustment reflects the interest expense impact of the issuance of the Notes and the repayment of certain debt obligations assumed in connection with acquisition of the 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:

 

(Dollars in millions)    Balance     Interest Rate     December 31, 2013  

Instrument

      

Assumed Indebtedness—April and June Repayments

   $ (1,416 )     5.00 %   $ (19 )

Senior Notes

     2,500       3.35 %     31  

Amortization of issuance costs—Senior Notes

     25       n/a        2  
      

 

 

 

Interest Expense Adjustment

       $ 14  
      

 

 

 

 

(K) Adjustment to reflect a decrease to interest expense of $4 million for the year ended December 31, 2013, and for the six months ended June 30, 2014 include $2 million decrease to interest expense with the total amount due to the Previously Acquired International Operations unamortized debt issuance costs at acquisition. This adjustment is based on the effective interest rate amortization method and gives effect to the income statement to the extent these effects are not recorded in the historical financial statements of GM Financial.

 

(L) Adjustments to reflect an increase to interest expense of $12 million for the year ended December 31, 2013 and for the six months ended June 30, 2014 includes $2 million decrease to interest expense with the total amount due to the Previously Acquired International Operations fair value adjustment for secured debt held at acquisition. These adjustments are based on the effective interest rate amortization method and give effect to the income statement to the extent these effects are not recorded in the historical financial statements of GM Financial.

 

(M) Adjustments to reflect an increase to interest expense by $5 million for the year ended December 31, 2013 and for the six months ended June 30, 2014 includes $1 million decrease to interest expense with the total amount due to the Previously Acquired International Operations fair value adjustment for unsecured debt held at acquisition. These adjustments are based on the effective interest rate amortization method and give effect to the income statement to the extent these effects are not recorded in the historical financial statements of GM Financial.

 

(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.

 

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Note 5—Reclassification Adjustments

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

As of June 30, 2014

 

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

Assets

          

Cash and cash equivalents

   $ 1,412      $ —        $ —       $ —    

Finance receivables, net

     31,545        —          —         —    

Restricted cash

     2,205        —          —         —    

Property and equipment, net

     150        —          —         —    

Investment in equity method investee

        574        —         574  

Leased vehicles, net

     4,748        —          —         —    

Deferred income taxes

     433        —          —         —    

Goodwill

     1,245        —          —         —    

Related party receivables

     185        —          —         —    

Other assets

     436        —          —         —    
  

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 42,359      $ 574      $ —       $ 574  
  

 

 

    

 

 

    

 

 

   

 

 

 

Liabilities and Shareholder’s Equity

          

Liabilities:

          

Secured debt

   $ 25,006      $ —        $ —       $ —    

Unsecured debt

     7,596        —          —         —    

Accounts payable and accrued expenses

     984        —          —         —    

Deferred income

     249        —          —         —    

Deferred income taxes

     12        —          —         —    

Taxes payable

     293        —          —         —    

Related party taxes payable

     891        —          —         —    

Related party payable

     432        —          —         —    

Other liabilities

     229        —          —         —    
  

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     35,692        —          —         —    

Shareholder’s equity

          

Parent’s net investment

     —          536        (536 )(1)     —    

Additional paid-in capital

     4,793        —          536 (1)     536  

Accumulated other comprehensive income/loss

     65        38        —         38  

Retained earnings

     1,809        —          —         —    
  

 

 

    

 

 

    

 

 

   

 

 

 

Total shareholder’s equity

     6,667        574        —         574  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities and shareholder’s equity

   $ 42,359      $ 574      $ —       $ 574  
  

 

 

    

 

 

    

 

 

   

 

 

 

Balance Sheet—International Operations Reclassification Adjustment Descriptions:

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

 

(1) Adjustments to reclassify International Operations parent’s net investment category to additional paid-in capital.

 

9


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

For the Year Ended December 31, 2013

 

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

Revenue

         

Finance charge income

   $ 2,563      $ 715     $ 5 (1)   $ 716  
          (4 )(4)     —    

Leased vehicle income

     595        —         1 (1)     1  

Other income

     186        73       2 (1)     96  
          21 (2)  

Other financing revenue and interest income

     —          29       (29 )(1 & 2)     —    

Interest expense on short-term borrowings

     —          (52 )     52 (3)     —    

Interest expense on long-term borrowings

     —          (360 )     360 (3)     —    

Depreciation expense on operating lease assets

     —          (7 )     7 (4)     —    

Income in equity method investee

     —          118       (118 )(5)     —    
  

 

 

    

 

 

   

 

 

   

 

 

 
     3,344        516       297       813  

Costs and expenses

         

Salaries and benefits

     448        58       —         58  

Operating expenses

     322        138       2 (4)     140  

Total operating expenses

     770        196       2       198  

Leased vehicle expenses

     453        —         1 (4)     1  

Provision for loan losses

     475        71       —         71  

Interest expense

     721        —         412 (3)     412  

Acquisition and integration expenses

     42        —         —         —    
  

 

 

    

 

 

   

 

 

   

 

 

 
     2,461        267       415       682  

Income before income taxes

     883        249       (118 )     131  

Income tax provision

     317        43       —         43  

Equity method investee income

        —         118 (5)     118  
  

 

 

    

 

 

   

 

 

   

 

 

 

Net income

   $ 566      $ 206     $ —       $ 206  
  

 

 

    

 

 

   

 

 

   

 

 

 

 

10


For the Six Months Ended June 30, 2014

 

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

Revenue

          

Finance charge income

   $ 1,712      $ —        $ —       $ —    

Leased vehicle income

     438        —          —         —    

Other income

     138        —          —         —    

Other financing revenue and interest income

     —          —          —         —    

Interest expense on short-term borrowings

     —          —          —         —    

Interest expense on long-term borrowings

     —          —          —         —    

Depreciation expense on operating lease assets

     —          —          —         —    

Income in equity method investee

     —          66        (66 )(5)     —    
  

 

 

    

 

 

    

 

 

   

 

 

 
     2,288        66        (66 )     —    

Costs and expenses

          

Salaries and benefits

     290        —          —         —    

Operating expenses

     259        2        —         2  
  

 

 

    

 

 

    

 

 

   

 

 

 

Total operating expenses

     549        2        —         2  

Leased vehicle expenses

     335        —          —         —    

Provision for loan losses

     248        —          —         —    

Interest expense

     669        —          —         —    
  

 

 

    

 

 

    

 

 

   

 

 

 
     1,801        2        —         2  

Income before income taxes

     487        64        (66 )     (2 )

Income tax provision

     167        —          —         —    

Equity method investee income

     —          —          66 (5)     66  
  

 

 

    

 

 

    

 

 

   

 

 

 

Net income

   $ 320      $ 64      $ —       $ 64  
  

 

 

    

 

 

    

 

 

   

 

 

 

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 income on 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.

 

11