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EX-32.1 - EXHIBIT 32.1 OFFICERS' CERTIFICATIONS OF PERIODIC REPORT PURSUANT TO SECTION 906 - General Motors Financial Company, Inc.acfexhibit321q12015.htm
EX-31.1 - EXHIBIT 31.1 OFFICERS' CERTIFICATIONS OF PERIODIC REPORT PURSUANT TO SECTION 302 - General Motors Financial Company, Inc.acfexhibit311q12015.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________________ 
FORM 10-Q
(Mark One)
ý
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
OR
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period ________________ 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  Q    No  o
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 405 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  Q    No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer"; "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
ý
Smaller Reporting Company
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  o    No  Q 
As of April 23, 2015, there were 505 shares of the registrant’s common stock, par value $1.00 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 CONSOLIDATED FINANCIAL STATEMENTS
GENERAL MOTORS FINANCIAL COMPANY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except per share amounts) 
(Unaudited)
 
 
March 31, 2015
 
December 31, 2014
Assets
 
 
 
 
Cash and cash equivalents
 
$
2,121

 
$
2,974

Finance receivables, net (Note 3; Note 8 VIEs)
 
32,470

 
33,000

Leased vehicles, net (Note 4; Note 8 VIEs)
 
8,939

 
7,060

Restricted cash (Note 5; Note 8 VIEs)
 
1,849

 
2,071

Goodwill
 
1,243

 
1,244

Equity in net assets of non-consolidated affiliates (Note 6)
 
929

 

Property and equipment, net of accumulated depreciation of $66 and $59
 
176

 
172

Deferred income taxes
 
283

 
341

Related party receivables
 
437

 
384

Other assets
 
899

 
478

Total assets
 
$
49,346

 
$
47,724

Liabilities and Shareholder's Equity
 
 
 
 
Liabilities:
 
 
 
 
Secured debt (Note 7; Note 8 VIEs)
 
$
24,693

 
$
25,214

Unsecured debt (Note 7)
 
14,432

 
12,217

Accounts payable and accrued expenses
 
970

 
1,002

Deferred income
 
546

 
392

Deferred income taxes
 
48

 
20

Taxes payable
 
205

 
234

Related party taxes payable
 
636

 
636

Related party payables
 
450

 
433

Other liabilities
 
163

 
184

Total liabilities
 
42,143

 
40,332

Commitments and contingencies (Note 11)
 

 

Shareholder's equity:
 
 
 
 
Common stock, $1.00 par value per share, 1,000 shares authorized and 505 shares issued
 

 

Additional paid-in capital
 
5,805

 
5,799

Accumulated other comprehensive loss (Note 14)
 
(779
)
 
(433
)
Retained earnings
 
2,177

 
2,026

Total shareholder's equity
 
7,203

 
7,392

Total liabilities and shareholder's equity
 
$
49,346

 
$
47,724

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

1


GENERAL MOTORS FINANCIAL COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In millions) 
(Unaudited)
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Revenue
 
 
 
 
Finance charge income
 
$
854

 
$
830

Leased vehicle income
 
431

 
200

Other income
 
69

 
67

Total revenue
 
1,354

 
1,097

Costs and expenses
 
 
 
 
Salaries and benefits
 
165

 
136

Other operating expenses
 
141

 
133

Total operating expenses
 
306

 
269

Leased vehicle expenses
 
327

 
156

Provision for loan losses
 
155

 
135

Interest expense
 
380

 
315

Total costs and expenses
 
1,168

 
875

Equity income (Note 6)
 
28

 

Income before income taxes
 
214

 
222

Income tax provision
 
64

 
77

Net income
 
150

 
145

Other comprehensive (loss) income
 
 
 
 
Defined benefit plans, net
 
1

 

Foreign currency translation adjustment
 
(347
)
 
5

Other comprehensive (loss) income, net
 
(346
)
 
5

Comprehensive (loss) income
 
$
(196
)
 
$
150

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


2


GENERAL MOTORS FINANCIAL COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Net cash provided by operating activities
 
$
545

 
$
386

Cash flows from investing activities:
 
 
 
 
Purchases of consumer finance receivables, net
 
(4,065
)
 
(3,320
)
Principal collections and recoveries on consumer finance receivables
 
2,814

 
2,617

Net collections (funding) of commercial finance receivables
 
54

 
(255
)
Purchases of leased vehicles, net
 
(2,319
)
 
(628
)
Proceeds from termination of leased vehicles
 
185

 
123

Acquisition of equity interest
 
(1,049
)
 

Purchases of property and equipment
 
(17
)
 
(7
)
Change in restricted cash
 
(154
)
 
(147
)
Change in other assets
 
6

 

Net cash used in investing activities
 
(4,545
)
 
(1,617
)
Cash flows from financing activities:
 
 
 
 
Net change in debt (original maturities less than three months)
 
198

 
451

Borrowings and issuance of secured debt
 
2,889

 
5,070

Payments on secured debt
 
(2,748
)
 
(4,238
)
Borrowings and issuance of unsecured debt
 
3,258

 
390

Payments on unsecured debt
 
(308
)
 
(330
)
Debt issuance costs
 
(41
)
 
(23
)
Net cash provided by financing activities
 
3,248

 
1,320

Net (decrease) increase in cash and cash equivalents
 
(752
)
 
89

Effect of foreign exchange rate changes on cash and cash equivalents
 
(101
)
 
(1
)
Cash and cash equivalents at beginning of period
 
2,974

 
1,074

Cash and cash equivalents at end of period
 
$
2,121

 
$
1,162

Supplemental cash flow information:
 
 
 
 
Subvention receivable from GM
 
$
252

 
$
111

Commercial loan funding payable to GM
 
$
425

 
$
462

Sale of equity interest in SAIC-GMAC
 
$
125

 
$

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

3


GENERAL MOTORS FINANCIAL COMPANY, INC.
Notes to Condensed Consolidated Financial Statements

Note 1.
Summary of Significant Accounting Policies
Basis of Presentation
The condensed consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries, including certain special-purpose financing entities utilized in secured financing transactions, which are considered variable interest entities ("VIEs"). All intercompany transactions and balances have been eliminated in consolidation.
The interim period consolidated financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles ("GAAP") in the United States of America. These interim period condensed consolidated financial statements should be read in conjunction with the consolidated financial statements that are included in our Annual Report on Form 10-K filed on February 4, 2015 ("Form 10-K"). Certain prior periods amounts were reclassified to conform to our current year presentation.
The condensed consolidated financial statements at March 31, 2015, and for the three months ended March 31, 2015 and 2014, are unaudited and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for such interim periods. The results for interim periods are not necessarily indicative of results for a full year.
Subsequent to the issuance of our condensed consolidated financial statements as of and for the three months ended March 31, 2014, we identified items not properly classified in the condensed consolidated statements of cash flows. The adjustments to previously reported amounts within the condensed consolidated statement of cash flows, which had no impact on cash and cash equivalents at March 31, 2014, had a net effect of decreasing net cash provided by operating activities by $79 million and decreasing net cash used in investing activities by $79 million, and were principally related to net funding of commercial finance receivables. 
Segment Information
We offer substantially similar products and services throughout many different regions, subject to local regulations and market conditions. We evaluate our business in two operating segments: North America (the "North America Segment") and international (the "International Segment"). The North America Segment includes our operations in the U.S. and Canada. The International Segment includes our operations in all other countries. For additional financial information regarding our business segments, see Note 13 - "Segment Reporting."
Related Party Transactions
We are the wholly-owned captive finance subsidiary of General Motors Company ("GM"). We offer loan and lease finance products through GM-franchised dealers to consumers purchasing new and certain used vehicles manufactured by GM and make commercial loans directly to GM-franchised dealers and their affiliates. Under subvention programs, GM makes cash payments to us for offering incentivized rates and structures on consumer loan and lease finance products. In addition, GM makes payments to us to cover certain interest payments on commercial loans. At March 31, 2015 and December 31, 2014, we had related party receivables from GM in the amount of $437 million and $384 million, primarily related to subvention.
At March 31, 2015 and December 31, 2014 we had $164 million and $176 million in commercial loans outstanding to dealers that are consolidated by GM. Prior to January 1, 2015, we provided financing to certain GM subsidiaries through factoring and other wholesale financing arrangements. At December 31, 2014, $289 million was outstanding under such arrangements, and was included in commercial finance receivables. No amounts were outstanding at March 31, 2015. At March 31, 2015 and December 31, 2014, we had $450 million and $433 million of related party payables due to GM, primarily for commercial finance receivables originated but not yet funded. These payables typically settle within 30 days.
We have a tax sharing agreement with GM for our U.S. operations. Under our tax sharing arrangement with GM, payments related to our U.S. operations for the tax years 2012 through 2014 were deferred for four years from their original due date. At March 31, 2015 and December 31, 2014, we have recorded related party taxes payable to GM in the amount of $636 million.
We have a Support Agreement with GM (the “Support Agreement”), which provides that, if our earning assets leverage at the end of any calendar quarter is higher than thresholds set in the Support Agreement, we may require GM to provide funding sufficient to bring our earning assets leverage to within the appropriate threshold. In determining our earning assets leverage (net earning assets divided by adjusted equity) under the Support Agreement, net earning assets means our finance receivables, net, plus leased

4


vehicles, net, and adjusted equity means our equity, net of goodwill and inclusive of outstanding junior subordinated debt, as each may be adjusted for derivative accounting from time to time. At March 31, 2015, our earning assets leverage ratio was 6.9, which is below the applicable ratio of 8.0.
Additionally, the Support Agreement provides that GM will own all of our outstanding voting shares as long as we have any unsecured debt securities outstanding and that GM will use its commercially reasonable efforts to ensure that we will continue to be designated as a subsidiary borrower on $4.0 billion under GM’s corporate revolving credit facilities. GM also agreed to certain provisions intended to ensure that we maintain adequate access to liquidity. Pursuant to these provisions, GM provided us with a $1.0 billion unsecured intercompany revolving credit facility (the “Junior Subordinated Revolving Credit Facility”). There were no advances outstanding under the Junior Subordinated Revolving Credit Facility at March 31, 2015 or December 31, 2014.
Accounting Standards Not Yet Adopted
In May 2014 the Financial Accounting Standards Board issued ASU 2014-09, “Revenue Recognition - Revenue from Contracts with Customers” ("ASU 2014-09") that requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service. This update is effective for annual reporting periods beginning on or after December 15, 2016 and interim periods therein and requires expanded disclosures. We are currently assessing the impact that the adoption of ASU 2014-09 will have on our consolidated financial statements.
In April 2015 the Financial Accounting Standards Board issued ASU 2015-03, “Interest - Imputation of Interest” ("ASU 2015-03") that requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This update is effective for annual reporting periods beginning on or after December 15, 2015 and interim periods within fiscal years beginning after December 15, 2016. We are currently assessing the impact that the adoption of ASU 2015-03 will have on our consolidated financial statements.
Note 2.    Acquisition of Ally Financial International Operations
In November 2012, we entered into a definitive agreement with Ally Financial to acquire the outstanding equity interests in the top-level holding companies of its automotive finance and financial services operations in Europe and Latin America and a separate agreement to acquire Ally Financial's non-controlling equity interest in SAIC-GMAC Automotive Finance Company Limited ("SAIC-GMAC"), which conducts auto finance operations in China.
During 2013, we completed the acquisition of Ally Financial's European and Latin American auto finance and financial services operations. The aggregate consideration for these acquisitions was $3.3 billion. In addition, we repaid debt of $1.4 billion that was assumed as part of the acquisitions. We recorded the fair value of the assets acquired and liabilities assumed on the acquisition date.
On January 2, 2015, we completed the acquisition of Ally Financial's 40% equity interest in SAIC-GMAC. The aggregate purchase price was $1.0 billion. Also on January 2, 2015, we sold a 5% equity interest in SAIC-GMAC to Shanghai Automotive Group Finance Company Ltd. (“SAIC FC”), a current shareholder of SAIC-GMAC, for proceeds of $125 million. As a result of these transactions, we own a 35% equity interest in SAIC-GMAC. We account for our ownership interest in SAIC-GMAC using the equity method of accounting. The difference between the carrying amount in our investment and our share of the underlying net assets of SAIC-GMAC was $371 million, which was primarily related to goodwill. We determined the acquisition date fair values of the identifiable assets acquired and liabilities assumed in accordance with ASC 805 Business Combinations.
Income resulting from the equity investment in SAIC-GMAC is included in our results beginning January 2, 2015. Equity income from SAIC-GMAC recorded in the three months ended March 31, 2015 was $28 million. If the acquisition had occurred on January 1, 2014, our net income for the three months ended March 31, 2014 would have been $174 million.

5


Note 3.
Finance Receivables
Our pre-acquisition and post-acquisition consumer finance portfolios are now reported on a combined basis, due to the diminished size of the pre-acquisition portfolio, which was $344 million at March 31, 2015.
The finance receivables portfolio consists of the following (in millions): 
 
 
March 31, 2015
 
December 31, 2014
 
 
North
America
 
International
 
Total
 
North
America
 
International
 
Total
Consumer
 
 
 
 
 
 
 
 
 
 
 
 
Consumer finance receivables, collectively evaluated for impairment, net of fees(a)
 
$
13,000

 
$
11,297

 
$
24,297

 
$
12,127

 
$
12,262

 
$
24,389

Consumer finance receivables, individually evaluated for impairment, net of fees
 
1,294

 

 
1,294

 
1,234

 

 
1,234

Total consumer finance receivables(b)
 
14,294

 
11,297

 
25,591

 
13,361

 
12,262

 
25,623

Less: allowance for loan losses - collective
 
(441
)
 
(87
)
 
(528
)
 
(405
)
 
(78
)
 
(483
)
Less: allowance for loan losses - specific
 
(164
)
 

 
(164
)
 
(172
)
 

 
(172
)
Total consumer finance receivables, net
 
13,689

 
11,210

 
24,899

 
12,784

 
12,184

 
24,968

Commercial
 
 
 
 
 
 
 
 
 
 
 
 
Commercial finance receivables, collectively evaluated for impairment, net of fees
 
3,260

 
4,278

 
7,538

 
3,180

 
4,803

 
7,983

Commercial finance receivables, individually evaluated for impairment, net of fees
 

 
69

 
69

 

 
89

 
89

Total commercial finance receivables
 
3,260

 
4,347

 
7,607

 
3,180

 
4,892

 
8,072

Less: allowance for loan losses - collective
 
(20
)
 
(11
)
 
(31
)
 
(21
)
 
(14
)
 
(35
)
Less: allowance for loan losses - specific
 

 
(5
)
 
(5
)
 

 
(5
)
 
(5
)
Total commercial finance receivables, net
 
3,240

 
4,331

 
7,571

 
3,159

 
4,873

 
8,032

Total finance receivables, net
 
$
16,929

 
$
15,541

 
$
32,470

 
$
15,943

 
$
17,057

 
$
33,000

________________
(a) Amounts reported for International include $1.0 billion of direct-financing leases at March 31, 2015 and December 31, 2014.
(b) Net of unamortized premiums and discounts, and deferred fees and costs of $191 million and $245 million at March 31, 2015 and December 31, 2014.
Consumer Finance Receivables
Following is a summary of activity in our consumer finance receivables portfolio (in millions): 
 
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
North America
 
International
 
Total
 
North America
 
International
 
Total
Consumer finance receivables, net of fees - beginning of period
 
$
13,361

 
$
12,262

 
$
25,623

 
$
11,388

 
$
11,742

 
$
23,130

Loans purchased
 
2,273

 
1,805

 
4,078

 
1,364

 
2,048

 
3,412

Principal collections and other
 
(1,134
)
 
(1,459
)
 
(2,593
)
 
(1,003
)
 
(1,464
)
 
(2,467
)
Charge-offs
 
(200
)
 
(34
)
 
(234
)
 
(192
)
 
(32
)
 
(224
)
Foreign currency translation
 
(6
)
 
(1,277
)
 
(1,283
)
 
(1
)
 
174

 
173

Balance at end of period
 
$
14,294

 
$
11,297

 
$
25,591

 
$
11,556

 
$
12,468

 
$
24,024


6


A summary of the activity in the allowance for consumer loan losses is as follows (in millions):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
North America
 
International
 
Total
 
North America
 
International
 
Total
Balance at beginning of period
 
$
577

 
$
78

 
$
655

 
$
468

 
$
29

 
$
497

Provision for loan losses
 
118

 
39

 
157

 
104

 
33

 
137

Charge-offs
 
(200
)
 
(34
)
 
(234
)
 
(192
)
 
(32
)
 
(224
)
Recoveries
 
110

 
12

 
122

 
111

 
16

 
127

Foreign currency translation
 

 
(8
)
 
(8
)
 

 

 

Balance at end of period
 
$
605

 
$
87

 
$
692

 
$
491

 
$
46

 
$
537

Consumer Credit Quality
We use proprietary scoring systems in the underwriting process that measure the credit quality of the receivables using several factors, such as credit bureau information, consumer credit risk scores (e.g. FICO score), and contract characteristics. In addition to our proprietary scoring system, we consider other individual consumer factors, such as employment history, financial stability, and capacity to pay. At the time of loan origination, substantially all of our international consumers have the equivalent of prime credit scores. In the North America Segment, while we historically focused on consumers with lower than prime credit scores, we are seeking to expand our prime lending programs. A summary of the credit risk profile by FICO score band, determined at origination, of the consumer finance receivables in the North America Segment is as follows (dollars in millions):
 
 
March 31, 2015
 
December 31, 2014
 
 
Amount
 
Percent
 
Amount
 
Percent
Prime - FICO Score 680 and greater
 
$
1,161

 
8.1
%
 
$
596

 
4.4
%
Near Prime - FICO Score 620 to 679
 
2,138

 
15.0

 
1,691

 
12.7

Sub-prime - FICO Score less than 620
 
10,995

 
76.9

 
11,074

 
82.9

Balance at end of period
 
$
14,294

 
100.0
%
 
$
13,361

 
100.0
%
In addition we review the credit quality of all of our consumer finance receivables based on consumer payment activity. A consumer account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. Consumer finance receivables are collateralized by vehicle titles and, subject to local laws, we generally have the right to repossess the vehicle in the event the consumer defaults on the payment terms of the contract. The following is a summary of the contractual amounts of delinquent consumer finance receivables, which is not significantly different than recorded investment, that are (i) more than 30 days delinquent, but not yet in repossession and (ii) in repossession, but not yet charged off (dollars in millions): 
 
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
North America
 
International
 
Total
 
Percent of Contractual Amount Due
 
North America
 
International
 
Total
 
Percent of Contractual Amount Due
31 - 60 days
 
$
767

 
$
113

 
$
880

 
3.4
%
 
$
579

 
$
138

 
$
717

 
3.1
%
Greater than 60 days
 
259

 
98

 
357

 
1.4

 
210

 
126

 
336

 
1.4

 
 
1,026

 
211

 
1,237

 
4.8

 
789

 
264

 
1,053

 
4.5

In repossession
 
34

 
8

 
42

 
0.2

 
33

 
5

 
38

 
0.1

 
 
$
1,060

 
$
219

 
$
1,279

 
5.0
%
 
$
822

 
$
269

 
$
1,091

 
4.6
%
The accrual of finance charge income has been suspended on $581 million and $682 million of consumer finance receivables (based on contractual amount due) at March 31, 2015 and December 31, 2014.

7


Impaired Consumer Finance Receivables - TDRs
Consumer finance receivables that become classified as troubled debt restructurings ("TDRs") are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. The financial effects of the accounts that become classified as TDRs result in an impairment charge recorded as part of the provision for loan losses. Accounts that become classified as TDRs because of a payment deferral still accrue interest at the contractual rate and an additional fee is collected (where permitted) at each time of deferral and recorded as a reduction of accrued interest. No interest or fees are forgiven on a payment deferral to a customer; therefore, there are no additional financial effects of deferred loans becoming classified as TDRs. Accounts in Chapter 13 bankruptcy would have already been placed on non-accrual; therefore, there are no additional financial effects from these loans becoming classified as TDRs. Finance charge income from loans classified as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs.
At March 31, 2015 and December 31, 2014, the outstanding balance of consumer finance receivables in the International Segment determined to be TDRs was insignificant; therefore, the following information is presented with regard to the TDRs in the North America Segment only (in millions):
 
 
March 31, 2015
 
December 31, 2014
Outstanding recorded investment
 
$
1,294

 
$
1,234

Less: allowance for loan losses
 
(164
)
 
(172
)
Outstanding recorded investment, net of allowance
 
$
1,130

 
$
1,062

Unpaid principal balance
 
$
1,319

 
$
1,255

Additional information about loans classified as TDRs is presented below (in millions, except for number of loans):
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Average recorded investment
 
$
1,264

 
$
816

Finance charge income recognized
 
$
40

 
$
29

Number of loans classified as TDRs during the period
 
11,752

 
10,127

Recorded investment of loans classified as TDRs during the period
 
$
199

 
$
183

A redefault is when an account meets the requirements for evaluation under our charge-off policy (See Note 1 - "Summary of Significant Accounting Policies" in our Form 10-K for additional information). The unpaid principal balance, net of recoveries, of loans that redefaulted during the reporting period and were within 12 months of being modified as a TDR was insignificant for the three months ended March 31, 2015 and 2014.
Commercial Finance Receivables
Following is a summary of activity in our commercial finance receivables portfolio (in millions): 
 
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
North America
 
International
 
Total
 
North America
 
International
 
Total
Commercial finance receivables, net of fees - beginning of period
 
$
3,180

 
$
4,892

 
$
8,072

 
$
1,975

 
$
4,725

 
$
6,700

Net funding (collections) of commercial finance receivables
 
110

 
(150
)
 
(40
)
 
223

 
154

 
377

Charge-offs
 

 

 

 

 

 

Foreign currency translation
 
(30
)
 
(395
)
 
(425
)
 
(8
)
 
39

 
31

Balance at end of period
 
$
3,260

 
$
4,347

 
$
7,607

 
$
2,190

 
$
4,918

 
$
7,108






8


Commercial Credit Quality
We extend wholesale credit to dealers primarily in the form of approved lines of credit to purchase new vehicles as well as used vehicles. Each commercial lending request is evaluated, taking into consideration the borrower's financial condition and the underlying collateral for the loan. We use proprietary models to assign each dealer a risk rating. These models use historical performance data to identify key factors about a dealer that we consider significant in predicting a dealer's ability to meet its financial obligations. We also consider numerous other financial and qualitative factors including, but not limited to, capitalization and leverage, liquidity and cash flow, profitability and credit history. 
We regularly review our models to confirm the continued business significance and statistical predictability of the factors and update the models to incorporate new factors or other information that improves statistical predictability. In addition, we verify the existence of the assets collateralizing the receivables by physical audits of vehicle inventories, which are performed with increased frequency for higher risk (i.e., Groups III, IV, V and VI) dealers. We perform a credit review of each dealer at least annually and adjust the dealer's risk rating, if necessary. The credit lines for Group VI dealers are typically suspended and no further funding is extended to these dealers. 
Performance of our commercial finance receivables is evaluated based on our internal dealer risk rating analysis, as payment for wholesale receivables is generally not required until the dealer has sold the vehicle inventory. All receivables from the same dealer customer share the same risk rating.
A summary of the credit risk profile by dealer grouping of the commercial finance receivables is as follows (in millions): 
 
 
 
 
March 31, 2015
 
December 31, 2014
Group I
-
Dealers with superior financial metrics
 
$
954

 
$
1,062

Group II
-
Dealers with strong financial metrics
 
2,149

 
2,090

Group III
-
Dealers with fair financial metrics
 
2,690

 
2,856

Group IV
-
Dealers with weak financial metrics
 
1,108

 
1,250

Group V
-
Dealers warranting special mention due to potential weaknesses
 
515

 
559

Group VI
-
Dealers with loans classified as substandard, doubtful or impaired
 
191

 
255

Balance at end of period
 
$
7,607

 
$
8,072

At March 31, 2015 and December 31, 2014 substantially all of our commercial finance receivables were current with respect to payment status and none were classified as TDRs. Activity in the allowance for commercial loan losses was insignificant for the three months ended March 31, 2015 and 2014.
Note 4.
Leased Vehicles
Our operating lease program is offered primarily in the North America Segment. The following information regarding our leased vehicles is presented on a consolidated basis (in millions):
 
 
March 31, 2015
 
December 31, 2014
Leased vehicles
 
$
12,231

 
$
9,747

Manufacturer incentives
 
(1,880
)
 
(1,479
)
 
 
10,351

 
8,268

Less: accumulated depreciation
 
(1,412
)
 
(1,208
)
Leased vehicles, net
 
$
8,939

 
$
7,060

At March 31, 2015 and December 31, 2014, our Canadian subsidiary was servicing $74 million and $110 million of leased vehicles for a third party.
The following table summarizes minimum rental payments due to us as lessor under operating leases (in millions):
 
 
Years Ending December 31,
 
 
2015
 
2016
 
2017
 
2018
 
2019
Minimum rental payments under operating leases
 
$
1,160

 
$
1,365

 
$
923

 
$
214

 
$
13


9


Note 5.    Restricted Cash
The following table summarizes the components of restricted cash (in millions):
 
March 31, 2015
 
December 31, 2014
Revolving credit facilities
$
327

 
$
326

Securitization notes payable - consumer
1,440

 
1,330

Securitization notes payable - commercial
59

 
65

Other
23

 
350

Total restricted cash
$
1,849

 
$
2,071

Restricted cash for securitization notes payable and revolving credit facilities is comprised of funds deposited in restricted cash accounts as collateral required to support securitization transactions or to provide additional collateral for borrowings under revolving credit facilities. Additionally, these funds include monthly collections from borrowers that have not yet been used for repayment of debt.
As of December 31, 2014, other restricted cash was primarily comprised of interest-bearing cash in Brazil held in escrow pending resolution of tax and civil litigation. As of March 31, 2015, these amounts were reclassified to deposits and are included in other assets on the condensed consolidated balance sheet.
Note 6.
Equity in Net Assets of Non-consolidated Affiliates
Non-consolidated affiliates are entities in which an equity ownership interest is maintained and for which the equity method of accounting is used due to the ability to exert significant influence over decisions relating to their operating and financial affairs.
In January 2015, we completed the acquisition of Ally Financial's equity interest in SAIC-GMAC. See Note 2 - "Acquisition of Ally Financial International Operations" for additional information.
The income of SAIC-GMAC is not consolidated into our financial statements; rather, our proportionate share of the earnings is reflected as equity income. At March 31, 2015, we had undistributed earnings of $28 million related to SAIC-GMAC.
Note 7.
Debt
Debt consists of the following (in millions): 
 
 
March 31, 2015
 
December 31, 2014
 
 
North America
 
International
 
Total
 
North America
 
International
 
Total
Secured Debt
 
 
 
 
 
 
 
 
 
 
 


Revolving credit facilities
 
$
1,781

 
$
4,922

 
$
6,703

 
$
1,701

 
$
5,327

 
$
7,028

Securitization notes payable - consumer
 
13,710

 
2,323

 
16,033

 
13,253

 
2,868

 
16,121

Securitization notes payable - commercial
 
500

 
1,457

 
1,957

 
500

 
1,565

 
2,065

Total secured debt
 
$
15,991

 
$
8,702

 
$
24,693

 
$
15,454

 
$
9,760

 
$
25,214

 
 
 
 
 
 
 
 
 
 
 
 
 
Unsecured Debt
 
 
 
 
 
 
 
 
 
 
 

Senior notes
 
$
10,060

 
$
1,234

 
$
11,294

 
$
7,846

 
$
604

 
$
8,450

Credit facilities
 

 
2,459

 
2,459

 

 
2,974

 
2,974

Other unsecured debt
 

 
679

 
679

 

 
793

 
793

Total unsecured debt
 
$
10,060

 
$
4,372

 
$
14,432

 
$
7,846

 
$
4,371

 
$
12,217

Secured Debt
Most of the secured debt was issued by VIEs and is repayable only from proceeds related to the underlying pledged finance receivables and leases. Refer to Note 8 - "Variable Interest Entities" for additional information relating to our involvement with VIEs. During the three months ended March 31, 2015, we issued securitization notes payable of $2.0 billion through securitization transactions, and we entered into new credit facilities or renewed credit facilities with a total additional net borrowing capacity of $770 million.

10


Unsecured Debt
In January 2015, our top-tier holding company issued $2.25 billion in senior notes comprised of $1.0 billion of 3.15% notes due in January 2020, $1.0 billion of 4.0% notes due in January 2025 and $250 million in floating rate notes due in January 2020. All of these notes are guaranteed by our principal operating subsidiary, AmeriCredit Financial Services, Inc. ("AFSI").
In February 2015, a European subsidiary issued €650 million of 0.85% notes under our Euro medium term notes program. These notes are due in February 2018. All of these notes are guaranteed by our top-tier holding company and by AFSI.
Subsequent to March 31, 2015, our top-tier holding company issued an additional $2.4 billion in senior notes comprised of $850 million of 2.4% notes due in April 2018, $1.25 billion of 3.45% notes due in April 2022 and $300 million of floating rate notes are due in April 2018. All of these notes are guaranteed by AFSI.
The International Segment utilizes unsecured credit facilities with banks as well as non-bank funding sources. During the three months ended March 31, 2015, we increased borrowing capacity on unsecured committed credit facilities by $90 million.
Note 8.    Variable Interest Entities
Securitizations and credit facilities
The following table summarizes the assets and liabilities of our consolidated VIEs related to securitization and credit facilities (in millions):
 
 
March 31, 2015
 
December 31, 2014
Restricted cash
 
$
1,826

 
$
1,721

Finance receivables, net
 
$
21,979

 
$
23,109

Leased vehicle assets
 
$
5,401

 
$
4,595

Secured debt
 
$
22,857

 
$
22,794

The assets of the VIEs serve as the sole source of repayment for the debt issued by these entities. Investors in the notes issued by the VIEs do not have recourse to us or our other assets, with the exception of customary representation and warranty repurchase provisions and indemnities we provide as the servicer. We are not required and do not currently intend to provide additional financial support to these VIEs. While these subsidiaries are included in our condensed consolidated financial statements, these subsidiaries are separate legal entities and their assets are legally owned by them and not available to our creditors.
In addition, certain of our special-purpose entities ("SPEs") that issue variable rate debt against fixed rate securitized assets entered into interest rate swap agreements. Under the terms of these swaps, the SPEs are obligated to pay a fixed rate of interest on certain payment dates in exchange for receiving a floating rate of interest on notional amounts equal to the outstanding balance of the secured debt. This arrangement enables the SPEs to mitigate the interest rate risk inherent in issuing variable rate debt that is secured by fixed rate securitized assets, as may be required to maintain ratings on such securitizations. See Note 9 - "Derivative Financial Instruments and Hedging Activities" for further discussion.
Other VIEs
We consolidate certain operating entities that provide auto finance and financial services, which we do not control through a majority voting interest. We manage these entities and maintain a controlling financial interest in them and are exposed to the risks of ownership through contractual arrangements. The majority voting interests in these entities are indirectly wholly-owned by our parent, GM. At March 31, 2015 and December 31, 2014, total assets of these entities were $4.2 billion and $4.5 billion, which were comprised primarily of cash and cash equivalents and finance receivables; and total liabilities were $3.5 billion and $4.0 billion, which were comprised primarily of debt, accounts payable (primarily trade) and accrued liabilities. In the three months ended March 31, 2015 and 2014 total revenue recorded by these entities was $41 million and $58 million, and net income was $11 million and $10 million. These amounts are stated prior to intercompany eliminations and include amounts related to securitization and credit facilities held by consolidated VIEs. Liabilities recognized as a result of consolidating these entities generally do not represent claims against us or our other subsidiaries and assets recognized generally are for the benefit of these entities operations and cannot be used to satisfy our or our subsidiaries obligations.




11


Transfers of finance receivables to non-VIEs
Under certain debt agreements, we transfer finance receivables to third-party banks, which are not considered VIEs.  These transfers do not meet the criteria to be considered sales; therefore, the finance receivables and the related debt are included in our condensed consolidated financial statements.  Any collections received on the transferred receivables are available only for the repayment of the related debt.  At March 31, 2015 and December 31, 2014, $2.0 billion and $2.5 billion in finance receivables had been transferred in secured funding arrangements to third-party banks, to which $1.8 billion and $2.4 billion in secured debt was outstanding.
Note 9.
Derivative Financial Instruments and Hedging Activities
Derivative swap and cap agreements consist of the following (in millions): 
 
 
Fair Value
 
March 31, 2015
 
December 31, 2014
 
 
Level
 
Notional
 
Fair Value
 
Notional
 
Fair Value
Assets
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
(a) 
3
 
$
1,688

 
$
6

 
$
1,652

 
$
6

Interest rate caps
(b) 
2
 
2,082

 
5

 
2,123

 
6

Foreign currency swaps
(b) 
2
 
1,488

 
30

 
1,594

 
4

Total assets
(c) 
 
 
$
5,258

 
$
41

 
$
5,369

 
$
16

Liabilities
 
 
 
 
 
 
 
 
 
 
Interest rate swaps
(a) 
3
 
$
5,114

 
$
35

 
$
5,627

 
$
39

Interest rate caps
(b) 
2
 
1,764

 
4

 
1,804

 
6

Foreign currency swaps
(b) 
2
 
939

 
1

 
1,044

 
1

Total liabilities
(d) 
 
 
$
7,817

 
$
40

 
$
8,475

 
$
46

 _________________
(a)
The fair values of the interest rate swap agreements are estimated by discounting future net cash flows expected to be settled using current risk-adjusted rates.
(b)
The fair values of the interest rate cap agreements and foreign currency swap agreements are based on quoted market prices.
(c)
Included in other assets on the condensed consolidated balance sheets.
(d)
Included in other liabilities on the condensed consolidated balance sheets.
We purchase interest rate cap agreements to limit floating rate exposures on certain of our revolving secured debt. We also utilize interest rate swap agreements to convert floating rate exposures on certain of our revolving debt or on securities issued in securitization transactions to fixed rates, thereby hedging the variability in interest expense paid.
At March 31, 2015, we had loans denominated in foreign currencies to certain of our international entities for the equivalent of $576 million. We purchase foreign currency swaps to hedge against any valuation change in the loans due to changes in foreign exchange rates. In addition, our operations in the U.K. had $550 million in debt denominated in U.S. Dollars outstanding, with a cross-currency swap in place to hedge against any valuation change in the debt due to changes in exchange rates.
The following table presents information on the effect of derivative instruments on the condensed consolidated statements of income and comprehensive income (in millions):
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Non-designated hedges:
 
 
 
 
Interest rate contracts (a)
 
$
(6
)
 
$
(10
)
Foreign currency derivatives (b)
 
69

 
(16
)
 
 
$
63

 
$
(26
)
 _________________
(a)
Losses recognized in earnings are included in interest expense.
(b)
Activity is substantially offset by translation activity (included in operating expenses) related to the foreign currency-denominated loans described above.


12


The activity for interest rate swap agreements measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was insignificant for the three months ended March 31, 2015 and 2014.
Note 10.
Fair Values of Financial Instruments
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. 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 millions):
 
 
 
 
March 31, 2015
 
December 31, 2014
 
 
 Level
 
Carrying
Value
 
Estimated
Fair Value
 
Carrying
Value
 
Estimated
Fair Value
Financial assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
(a) 
1
 
$
2,121

 
$
2,121

 
$
2,974

 
$
2,974

Finance receivables, net
(b) 
3
 
$
32,470

 
$
32,942

 
$
33,000

 
$
33,573

Restricted cash
(a) 
1
 
$
1,849

 
$
1,849

 
$
2,071

 
$
2,071

Financial liabilities:
 
 
 
 
 
 
 
 
 
 
Secured debt
 
 
 
 
 
 
 
 
 
 
North America
(c) 
2
 
$
15,991

 
$
16,045

 
$
15,454

 
$
15,497

International
(d) 
2
 
$
4,417

 
$
4,420

 
$
5,690

 
$
5,694

International
(e) 
3
 
$
4,285

 
$
4,252

 
$
4,070

 
$
4,037

Unsecured debt
 
 
 
 
 
 
 
 
 
 
North America
(f) 
2
 
$
10,060

 
$
10,386

 
$
7,846

 
$
8,092

International
(g) 
2
 
$
3,386

 
$
3,402

 
$
3,496

 
$
3,507

International
(e) 
3
 
$
986

 
$
984

 
$
875

 
$
880

_________________
(a)
Cash and cash equivalents bear interest at market rates; therefore, carrying value is considered to be a reasonable estimate of fair value.
(b)
The fair value of the consumer finance receivables in the North America Segment is estimated based upon forecasted cash flows on the receivables discounted using a pre-tax weighted-average cost of capital. The fair value of the consumer finance receivables in the International Segment is estimated based on forecasted cash flows on the receivables discounted using current origination rates for similar type loans. Commercial finance receivables generally have variable interest rates and maturities of one year or less. Therefore, the carrying value is considered to be a reasonable estimate of fair value.
(c)
Secured debt in the North America Segment is comprised of revolving credit facilities, publicly-issued secured debt, and privately-issued secured debt. For revolving credit facilities with variable rates of interest and terms of one year or less, carrying value is considered to be a reasonable estimate of fair value. The fair value of the publicly and privately issued secured debt is based on quoted market prices, when available. If quoted market prices are not available, the market value is estimated using quoted market prices of similar securities.
(d)
The level 2 secured debt in the International Segment has terms of one year or less, or has been priced within the last six months; therefore, par value is considered to be a reasonable estimate of fair value.
(e)
The fair value of level 3 secured debt and unsecured debt in the International Segment is estimated by discounting future net cash flows expected to be settled using current risk-adjusted rates.
(f)
The fair value of unsecured debt in the North America Segment is based on quoted market prices in thinly-traded markets.
(g)
The fair value of senior notes is based on quoted market prices in thinly-traded markets. The fair value of other unsecured debt in the International Segment has terms of one year or less; therefore, par value is considered to be a reasonable estimate of fair value.
The fair value of our consumer finance receivables is based on observable and unobservable inputs within a discounted cash flow model. Those unobservable inputs reflect assumptions regarding expected prepayments, deferrals, delinquencies, recoveries and charge-offs of the loans within the portfolio. The cash flow model produces an estimated amortization schedule of the finance

13


receivables which is the basis for the calculation of the series of cash flows that derive the fair value of the portfolio. For the North America Segment, the series of cash flows is calculated and discounted using a weighted-average cost of capital using unobservable debt and equity percentages, an unobservable cost of equity and an observable cost of debt based on companies with a similar credit rating and maturity profile. For the International Segment, the series of cash flows is calculated and discounted using current interest rates. Macroeconomic factors could affect the credit performance of our portfolio and therefore could potentially impact the assumptions used in our cash flow model.
Note 11.
Commitments and Contingencies
Guarantees of Indebtedness
The payments of principal and interest on senior notes issued by our top-tier holding company, our primary Canadian operating subsidiary and a European subsidiary under our Euro medium term note program are guaranteed by our primary U.S. operating subsidiary, AFSI. At March 31, 2015 and December 31, 2014, the par value of these senior notes was $11.3 billion and $8.4 billion. See Note 16 - "Guarantor Condensed Consolidating Financial Statements" for further discussion.
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 certain legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We establish reserves for legal claims when payments associated with the claims become probable and the payments can be reasonably estimated. Given the inherent difficulty of predicting the outcome of litigation and regulatory matters, it is generally very difficult to predict what the eventual outcome will be, and when the matter will be resolved. The actual costs of resolving legal claims may be higher or lower than any amounts reserved for the claims. At March 31, 2015, we estimated our reasonably possible legal exposure for unfavorable outcomes to be a range of up to $93 million and have accrued $38 million.
In July 2014, we were served with a subpoena by the U.S. Department of Justice directing us to produce certain documents relating to our and our subsidiaries’ and affiliates’ origination and securitization of sub-prime automobile loans since 2007 in connection with an investigation by the U.S. Department of Justice in contemplation of a civil proceeding for potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Among other matters, the subpoena requests information relating to the underwriting criteria used to originate these automobile loans and the representations and warranties relating to those underwriting criteria that were made in connection with the securitization of the automobile loans. We were subsequently served with additional investigative subpoenas to produce documents from state attorneys general and other governmental offices relating to our sub-prime auto finance business and securitization of sub-prime auto loans. In October 2014, we received a document request from the Securities and Exchange Commission in connection with its investigation into certain practices in sub-prime auto loan securitization.  We are investigating these matters internally and believe that we are cooperating with all requests. Such investigations could in the future result in the imposition of damages, fines or civil or criminal claims and/or penalties. No assurance can be given that the ultimate outcome of the investigations or any resulting proceedings would not materially and adversely affect us or any of our subsidiaries and affiliates.
Other Administrative Tax Matters
We accrue non-income tax liabilities for contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. In the event any losses are sustained in excess of accruals, they will be charged against income at that time.
In evaluating indirect tax matters, we take into consideration factors such as our historical experience with matters of similar nature, specific facts and circumstances, and the likelihood of prevailing. We reevaluate and update our accruals as matters progress over time. It is reasonably possible that some of the matters for which accruals have not been established could be decided unfavorably to us and could require us to make expenditures for which we estimate the aggregate risk to be a range of up to $50 million.

14


Note 12.     Income Taxes

For interim income tax reporting we estimate our annual effective tax rate and apply it to our year-to-date ordinary income. Tax jurisdictions with a projected or year-to-date loss for which a tax benefit cannot be realized are excluded from the annualized effective tax rate. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur.

In the three months ended March 31, 2015 income tax expense of $64 million primarily resulted from tax expense attributable to entities included in our effective tax rate calculation, partially offset by tax benefits related to tax audit settlements in various jurisdictions.  In the three months ended March 31, 2014 income tax expense of $77 million primarily resulted from tax expense attributable to entities included in our effective tax rate calculation.
Note 13.
Segment Reporting

We offer substantially similar products and services throughout many different regions, subject to local regulations and market conditions. We evaluate our business in two operating segments: the North America Segment (consisting of operations in the U.S. and Canada) and the International Segment (consisting of operations in all other countries). Our chief operating decision maker evaluates the operating results and performance of our business based on these operating segments. The management of each segment is responsible for executing our strategies.

For segment reporting purposes only, interest expense related to the senior notes has been allocated based on targeted leverage for each segment. Interest expense in excess of the targeted overall leverage is reflected in the "Corporate" column below. In addition, the interest income on intercompany loans provided to the international operations is presented in the "Corporate" column as revenue.
All inter-segment balances and transactions have been eliminated. Key financial data for our operating segments were as follows (in millions):
 
 
Three Months Ended March 31, 2015
 
 
North
America
 
International
 
Corporate
 
Eliminations
 
Total
Total revenue
 
$
906

 
$
448

 
$
7

 
$
(7
)
 
$
1,354

Operating expenses, including leased vehicle expenses
 
487

 
146

 

 

 
633

Provision for loan losses
 
118

 
37

 

 

 
155

Interest expense
 
165

 
206

 
16

 
(7
)
 
380

Equity income
 

 
28

 

 

 
28

Income before income taxes
 
$
136

 
$
87

 
$
(9
)
 
$

 
$
214


 
 
Three Months Ended March 31, 2014
 
 
North
America
 
International
 
Corporate
 
Eliminations
 
Total
Total revenue
 
$
636

 
$
461

 
$
16

 
$
(16
)
 
$
1,097

Operating expenses, including leased vehicle expenses
 
274

 
151

 

 

 
425

Provision for loan losses
 
103

 
32

 

 

 
135

Interest expense
 
92

 
214

 
25

 
(16
)
 
315

Income before income taxes
 
$
167

 
$
64

 
$
(9
)
 
$

 
$
222

 
 
March 31, 2015
 
December 31, 2014
 
 
North
America
 
International
 
Total
 
North
America
 
International
 
Total
Finance receivables, net
 
$
16,929

 
$
15,541

 
$
32,470

 
$
15,943

 
$
17,057

 
$
33,000

Total assets
 
$
30,535

 
$
18,811

 
$
49,346

 
$
27,687

 
$
20,037

 
$
47,724


15


Note 14.
Accumulated Other Comprehensive (Loss) Income
A summary of changes in accumulated other comprehensive (loss) income is as follows (in millions):
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Defined benefit plans, net:
 
 
 
 
Balance at beginning of period
 
$
(11
)
 
$
3

Unrealized gain on subsidiary pension
 
1

 

Balance at end of period
 
(10
)
 
3

Foreign currency translation adjustment:
 
 
 
 
Balance at beginning of period
 
(422
)
 
8

Translation (loss) gain
 
(347
)
 
5

Balance at end of period
 
(769
)
 
13

Total accumulated other comprehensive (loss) income
 
$
(779
)
 
$
16

Note 15.
Regulatory Capital
The International Segment includes the operations of certain stand-alone entities that operate in local markets as either banks or regulated finance companies that are subject to regulatory restrictions. These regulatory restrictions, among other things, require that these entities meet certain minimum capital requirements and may restrict dividend distributions and ownership of certain assets. We were in compliance with all regulatory requirements at March 31, 2015. Total assets of our regulated international banks and finance companies were approximately $9.5 billion and $11.4 billion at March 31, 2015 and December 31, 2014.The decrease in assets is primarily due to the effect of foreign currency movements.
Note 16.
Guarantor Condensed Consolidating Financial Statements
The payment of principal and interest on senior notes issued by our top-tier holding company is currently guaranteed solely by AFSI (the "Guarantor") and none of our other subsidiaries (the "Non-Guarantor Subsidiaries"). The Guarantor is a 100% owned consolidated subsidiary and is unconditionally liable for the obligations represented by the senior notes.  The Guarantor’s guarantee may be released only upon customary circumstances, the terms of which vary by issuance.  Customary circumstances include the sale or disposition of all of the Guarantor’s assets or capital stock, the achievement of investment grade rating of the senior notes and legal or covenant defeasance.
The condensed consolidating financial statements present consolidating financial data for (i) General Motors Financial Company, Inc. (on a parent-only basis), (ii) the Guarantor, (iii) the combined Non-Guarantor Subsidiaries and (iv) the parent company and our subsidiaries on a consolidated basis at March 31, 2015 and December 31, 2014, and for the three months ended March 31, 2015 and 2014 (after the elimination of intercompany balances and transactions).
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.

16




GENERAL MOTORS FINANCIAL COMPANY, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2015
(In millions) 
(Unaudited)
 
General
Motors
Financial
Company,
Inc.
 
Guarantor
 
Non-
Guarantors
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
1,444

 
$
677

 
$

 
$
2,121

Finance receivables, net

 
3,845

 
28,625

 

 
32,470

Leased vehicles, net

 

 
8,939

 

 
8,939

Restricted cash

 
13

 
1,836

 

 
1,849

Goodwill
1,095

 

 
148

 

 
1,243

Equity in net assets of non-consolidated affiliates

 

 
929

 

 
929

Property and equipment, net
 
 
31

 
145

 
 
 
176

Deferred income taxes
59

 

 
764

 
(540
)
 
283

Related party receivables

 
18

 
419

 

 
437

Other assets
107

 
170

 
622

 

 
899

Due from affiliates
8,346

 

 

 
(8,346
)
 

Investment in affiliates
8,138

 
3,559

 

 
(11,697
)
 

Total assets
$
17,745

 
$
9,080

 
$
43,104

 
$
(20,583
)
 
$
49,346

Liabilities and Shareholder's Equity
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Secured debt
$

 
$

 
$
24,693

 
$

 
$
24,693

Unsecured debt
9,744

 

 
4,688

 

 
14,432

Accounts payable and accrued expenses
85

 
166

 
719

 

 
970

Deferred income

 

 
546

 

 
546

Deferred income taxes

 
584

 
4

 
(540
)
 
48

Taxes payable
75

 

 
130

 

 
205

Related party taxes payable
636

 

 

 

 
636

Related party payables

 

 
450

 

 
450

Other liabilities
2

 
11

 
150

 

 
163

Due to affiliates

 
4,054

 
4,292

 
(8,346
)
 

Total liabilities
10,542

 
4,815

 
35,672

 
(8,886
)
 
42,143

Shareholder's equity:
 
 
 
 
 
 
 
 
 
Common stock

 

 
688

 
(688
)
 

Additional paid-in capital
5,805

 
79

 
4,054

 
(4,133
)
 
5,805

Accumulated other comprehensive loss
(779
)
 
(122
)
 
(754
)
 
876

 
(779
)
Retained earnings
2,177

 
4,308

 
3,444

 
(7,752
)
 
2,177

Total shareholder's equity
7,203

 
4,265

 
7,432

 
(11,697
)
 
7,203

Total liabilities and shareholder's equity
$
17,745

 
$
9,080

 
$
43,104

 
$
(20,583
)
 
$
49,346




17


GENERAL MOTORS FINANCIAL COMPANY, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2014
(In millions) 
(Unaudited)
 
General
Motors
Financial
Company,
Inc.
 
Guarantor
 
Non-
Guarantors
 
Eliminations
 
Consolidated
Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
2,266

 
$
708

 
$

 
$
2,974

Finance receivables, net

 
2,401

 
30,599

 

 
33,000

Leased vehicles, net

 

 
7,060

 

 
7,060

Restricted cash

 
17

 
2,054

 

 
2,071

Goodwill
1,095

 

 
149

 

 
1,244

Property and equipment, net

 
23

 
149

 

 
172

Deferred income taxes
28

 

 
601

 
(288
)
 
341

Related party receivables

 
11

 
373

 

 
384

Other assets
94

 
18

 
366

 

 
478

Due from affiliates
6,787

 

 
400

 
(7,187
)
 

Investment in affiliates
7,684

 
4,059

 

 
(11,743
)
 

Total assets
$
15,688

 
$
8,795

 
$
42,459

 
$
(19,218
)
 
$
47,724

Liabilities and Shareholder's Equity
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
Secured debt
$