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8-K - FORM 8-K - General Motors Financial Company, Inc.d414039d8k.htm

EXHIBIT 99.1

GENERAL MOTORS FINANCIAL COMPANY, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On March 5, 2017, General Motors Holdings LLC (the “Seller”), a wholly owned subsidiary of General Motors Company (the “Parent”) and the parent of General Motors Financial Company, Inc. (the “Company”), entered into a Master Agreement (the “Agreement”) with Peugeot S.A. (the “Purchaser”). Pursuant to the Agreement, the Purchaser will acquire, together with a financial partner, the Seller’s European financial subsidiaries and branches (collectively, the “European Operations”), as well as the Parent’s Opel and Vauxhall businesses and certain other assets in Europe (the “Opel/Vauxhall Business” and, together with the European Operations, the “Transferred Business”).

The net consideration to be paid for the European Operations will be 0.8 times their book value at closing, which the Company estimates will be approximately $1 billion, denominated in Euros. The purchase price is subject to certain adjustments as provided in the Agreement. The Company expects to recognize a disposal loss of up to $700 million based on current foreign currency exchange rates.

The transfer of the Transferred Business is subject to the satisfaction of various closing conditions, including receipt of necessary antitrust, financial and other regulatory approvals, the reorganization of the Transferred Business, including pension plans in the United Kingdom, the completion of the contribution or sale by Adam Opel GmbH of its assets and liabilities to a subsidiary, the transfer of GMAC UK plc’s interest in SAIC-GMAC Automotive Finance Company Limited to the Company or an alternate entity designated by the Seller, unless either party elects to close without completion of the transfer, and the continued accuracy, subject to certain exceptions, at closing of certain of the Seller’s representations and warranties. There can be no assurance that all required governmental consents or clearances will be obtained or that the other closing conditions will be satisfied. The transfer of the Opel/Vauxhall Business is expected to close by the end of 2017 and the transfer of the European Operations is expected to close as soon as practicable after the receipt of necessary antitrust, financial and other regulatory approvals, which may be after the transfer of the Opel/Vauxhall Business, but not before. The transfer of the European Operations will not occur unless the transfer of the Opel/Vauxhall Business occurs.

The Agreement contains certain termination rights for both the Seller and the Purchaser, including if certain closing conditions with respect to the transfer of the Opel/Vauxhall Business have not been satisfied on or before June 1, 2018.

The Seller and the Purchaser have each made customary representations, warranties and covenants in the Agreement, including, among others, covenants by the Seller to conduct the Opel/Vauxhall Business and the business of the European Operations in the ordinary course between the execution of the Agreement and the consummation of the transaction.

The following unaudited pro forma condensed consolidated balance sheet of the Company as of March 31, 2017 is presented as if the sale of the European Operations, as described in the notes to these unaudited pro forma condensed consolidated financial statements, had occurred at March 31, 2017. The unaudited pro forma condensed consolidated statements of income for the three months ended March 31, 2017 and for each of the years ended December 31, 2016, 2015 and 2014, are presented as if such events had occurred on January 1, 2014. The unaudited pro forma condensed consolidated financial statements are based on the historical financial statements of the Company for each period presented and in the opinion of the Company’s management, all adjustments and disclosures necessary for a fair presentation of the pro forma data have been made.


These unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and are not necessarily indicative of the results of operations or financial condition that would have been achieved had the sale of the European Operations and related events been completed as of the dates indicated or of the results that may be obtained in the future. These unaudited pro forma condensed consolidated financial statements and the notes thereto should be read together with the following:

 

  The Company’s audited consolidated financial statements and the notes thereto as of and for the three year period ended December 31, 2016, and Management’s Discussion and Analysis included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016; and

 

  The Company’s unaudited condensed consolidated financial statements and the notes thereto as of and for the three months ended March 31, 2017, and Management’s Discussion and Analysis included in the Company’s Quarterly Report on Form 10-Q for the three months ended March 31, 2017.


General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Consolidated Balance Sheet

(dollars in millions)

March 31, 2017

 

     General Motors
Financial
Company, Inc.
Historical
    Adjustments for
Disposition of
European
Operations
    Pro Forma  

Assets

      

Cash and cash equivalents

   $ 2,694     $ 773     $ 3,467  

Finance receivables, net

     46,910       (9,997     36,913  

Leased vehicles, net

     37,302       (211     37,091  

Goodwill

     1,200       —         1,200  

Equity in net assets of non-consolidated affiliates

     998       —         998  

Property and equipment, net

     291       (66     225  

Deferred income taxes

     284       (31     253  

Related party receivables

     617       (191     426  

Other assets

     4,244       (441     3,803  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 94,540     $ (10,164   $ 84,376  
  

 

 

   

 

 

   

 

 

 

Liabilities and shareholder’s equity

      

Liabilities

      

Secured debt

   $ 42,579     $ (4,642   $ 37,937  

Unsecured debt

     37,370       (4,797     32,573  

Accounts payable and accrued expenses

     1,501       (59     1,442  

Deferred income

     2,588       (12     2,576  

Deferred income taxes

     259       1       260  

Related party payables

     448       (136     312  

Other liabilities

     803       (156     647  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     85,548       (9,801     75,747  
  

 

 

   

 

 

   

 

 

 

Shareholder’s equity

      

Common stock, $1.00 par value per share; 1,000 shares authorized and 505 issued

     —         —         —    

Additional paid-in capital

     6,512       —         6,512  

Accumulated other comprehensive loss

     (1,148     334       (814

Retained earnings

     3,628       (697     2,931  
  

 

 

   

 

 

   

 

 

 

Total shareholder’s equity

     8,992       (363     8,629  
  

 

 

   

 

 

   

 

 

 

Total liabilities and shareholder’s equity

   $ 94,540     $ (10,164   $ 84,376  
  

 

 

   

 

 

   

 

 

 

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


General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income

(in millions)

Three Months Ended March 31, 2017

 

     General Motors
Financial
Company, Inc.
Historical
     Adjustments for
Disposition of
European
Operations
    Pro Forma  

Revenue

       

Finance charge income

   $ 862      $ (110   $ 752  

Leased vehicle income

     1,942        (11     1,931  

Other income

     75        (10     65  
  

 

 

    

 

 

   

 

 

 

Total revenue

     2,879        (131     2,748  
  

 

 

    

 

 

   

 

 

 

Costs and expenses

       

Salaries and benefits

     229        (30     199  

Other operating expenses

     163        (31     132  
  

 

 

    

 

 

   

 

 

 

Total operating expenses

     392        (61     331  

Leased vehicle expenses

     1,438        (9     1,429  

Provision for loan losses

     217        (6     211  

Interest expense

     619        (28     591  
  

 

 

    

 

 

   

 

 

 

Total costs and expenses

     2,666        (104     2,562  

Equity income

     47        —         47  
  

 

 

    

 

 

   

 

 

 

Income before income taxes

     260        (27     233  

Income tax provision

     58        (8     50  
  

 

 

    

 

 

   

 

 

 

Net income

   $ 202      $ (19   $ 183  
  

 

 

    

 

 

   

 

 

 

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


General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income

(in millions)

Year Ended December 31, 2016

 

     General Motors
Financial
Company, Inc.
Historical
     Adjustments for
Disposition of
European
Operations
    Pro Forma  

Revenue

       

Finance charge income

   $ 3,329      $ (483   $ 2,846  

Leased vehicle income

     5,925        (29     5,896  

Other income

     304        (62     242  
  

 

 

    

 

 

   

 

 

 

Total revenue

     9,558        (574     8,984  
  

 

 

    

 

 

   

 

 

 

Costs and expenses

       

Salaries and benefits

     853        (118     735  

Other operating expenses

     637        (120     517  
  

 

 

    

 

 

   

 

 

 

Total operating expenses

     1,490        (238     1,252  

Leased vehicle expenses

     4,529        (23     4,506  

Provision for loan losses

     669        (25     644  

Interest expense

     2,108        (139     1,969  
  

 

 

    

 

 

   

 

 

 

Total costs and expenses

     8,796        (425     8,371  

Equity income

     151        —         151  
  

 

 

    

 

 

   

 

 

 

Income before income taxes

     913        (149     764  

Income tax provision

     159        (35     124  
  

 

 

    

 

 

   

 

 

 

Net income

   $ 754      $ (114   $ 640  
  

 

 

    

 

 

   

 

 

 

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


General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income

(in millions)

Year Ended December 31, 2015

 

     General Motors
Financial
Company, Inc.
Historical
     Adjustments for
Disposition of
European
Operations
    Pro Forma  

Revenue

       

Finance charge income

   $ 3,381      $ (526   $ 2,855  

Leased vehicle income

     2,807        (12     2,795  

Other income

     266        (49     217  
  

 

 

    

 

 

   

 

 

 

Total revenue

     6,454        (587     5,867  
  

 

 

    

 

 

   

 

 

 

Costs and expenses

       

Salaries and benefits

     726        (117     609  

Other operating expenses

     567        (125     442  
  

 

 

    

 

 

   

 

 

 

Total operating expenses

     1,293        (242     1,051  

Leased vehicle expenses

     2,200        (9     2,191  

Provision for loan losses

     624        (21     603  

Interest expense

     1,616        (155     1,461  
  

 

 

    

 

 

   

 

 

 

Total costs and expenses

     5,733        (427     5,306  

Equity income

     116        —         116  
  

 

 

    

 

 

   

 

 

 

Income before income taxes

     837        (160     677  

Income tax provision

     191        2       193  
  

 

 

    

 

 

   

 

 

 

Net income

   $ 646      $ (162   $ 484  
  

 

 

    

 

 

   

 

 

 

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


General Motors Financial Company, Inc.

Unaudited Pro Forma Condensed Consolidated Statement of Income

(in millions)

Year Ended December 31, 2014

 

     General Motors
Financial
Company, Inc.
Historical
     Adjustments for
Disposition of
European
Operations
    Pro Forma  

Revenue

       

Finance charge income

   $ 3,475      $ (584   $ 2,891  

Leased vehicle income

     1,090        (4     1,086  

Other income

     289        (41     248  
  

 

 

    

 

 

   

 

 

 

Total revenue

     4,854        (629     4,225  
  

 

 

    

 

 

   

 

 

 

Costs and expenses

       

Salaries and benefits

     614        (119     495  

Other operating expenses

     548        (128     420  
  

 

 

    

 

 

   

 

 

 

Total operating expenses

     1,162        (247     915  

Leased vehicle expenses

     847        (4     843  

Provision for loan losses

     604        (6     598  

Interest expense

     1,426        (246     1,180  
  

 

 

    

 

 

   

 

 

 

Total costs and expenses

     4,039        (503     3,536  

Equity income

     —          —         —    
  

 

 

    

 

 

   

 

 

 

Income before income taxes

     815        (126     689  

Income tax provision

     278        (54     224  
  

 

 

    

 

 

   

 

 

 

Net income

   $ 537      $ (72   $ 465  
  

 

 

    

 

 

   

 

 

 

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


NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Disposition of European Operations

The pro forma adjustments include the reversal of (i) the historical assets and liabilities and results of operations of the European Operations, including the related tax impact and consolidation entries and (ii) certain previously eliminated transactions between the European Operations and subsidiaries of the Company, as a result of the completion of the disposition.

The pro forma adjustments on the condensed consolidated balance sheet also include the expected proceeds and loss on disposal, as well as proceeds from expected dividends to be paid by the European Operations in order to bring their leverage ratio to within targeted levels, as defined in the Agreement. The estimated loss is not included in the pro forma adjustments on the pro forma consolidated statements of income as it is considered to be nonrecurring in nature.

The pro forma adjustments to the condensed consolidated balance sheet do not include adjustments for any dividends that may be paid to by the Company to the Parent following the completion of the disposition.