UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________________
FORM 10-Q
(Mark One)
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| | |
ý | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2016March 31, 2017
OR
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| | |
o | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________ to ________________
Commission file number 1-10667
______________________________________________
General Motors Financial Company, Inc.
(Exact name of registrant as specified in its charter)
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| | |
State of 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)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
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 (§ 232.405 of this chapter)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, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer"filer," "smaller reporting company," and "smaller reporting"emerging growth company" in Rule 12b-2 of the Exchange Act.
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| | | | | | | | | |
Large accelerated filer | o | Accelerated filer | o | Non-accelerated filer (Do not check if a smaller reporting company) | ý | Smaller Reporting Companyreporting company | o | Emerging growth company | o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes o No o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No Q
As of October 24, 2016,April 27, 2017, 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.
INDEX
GENERAL MOTORS FINANCIAL COMPANY, INC.
PART I
Item 1. Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share amounts)Dollars in millions) (Unaudited)
| | | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
ASSETS | | | | | | |
Cash and cash equivalents | $ | 2,588 |
| | $ | 3,061 |
| $ | 2,694 |
| | $ | 3,201 |
|
| 41,132 |
| | 36,781 |
| |
| 31,775 |
| | 20,172 |
| |
| 2,055 |
| | 1,941 |
| |
| | 46,910 |
| | 43,190 |
|
| | 37,302 |
| | 34,526 |
|
Goodwill | 1,198 |
| | 1,189 |
| 1,200 |
| | 1,196 |
|
Equity in net assets of non-consolidated affiliates (Note 6) | 940 |
| | 986 |
| 998 |
| | 944 |
|
Property and equipment, net of accumulated depreciation of $121 and $91 | 253 |
| | 219 |
| |
Property and equipment, net of accumulated depreciation of $147 and $127 | | 291 |
| | 279 |
|
Deferred income taxes | 310 |
| | 231 |
| 284 |
| | 274 |
|
Related party receivables (Note 2) | 850 |
| | 573 |
| |
Other assets | 1,010 |
| | 751 |
| |
Related party receivables (Note 3) | | 617 |
| | 510 |
|
| | 4,244 |
| | 3,645 |
|
Total assets | $ | 82,111 |
| | $ | 65,904 |
| $ | 94,540 |
| | $ | 87,765 |
|
LIABILITIES AND SHAREHOLDER'S EQUITY | | | | | | |
Liabilities | | | | | | |
| $ | 35,237 |
| | $ | 30,689 |
| $ | 42,579 |
| | $ | 39,270 |
|
| 33,526 |
| | 23,657 |
| 37,370 |
| | 34,606 |
|
Accounts payable and accrued expenses | 1,419 |
| | 1,218 |
| 1,501 |
| | 1,474 |
|
Deferred income | 2,226 |
| | 1,454 |
| 2,588 |
| | 2,365 |
|
Deferred income taxes | 299 |
| | 129 |
| 259 |
| | 220 |
|
Related party payables (Note 2) | 407 |
| | 362 |
| |
Related party payables (Note 3) | | 448 |
| | 400 |
|
Other liabilities | 379 |
| | 343 |
| 803 |
| | 737 |
|
Total liabilities | 73,493 |
| | 57,852 |
| 85,548 |
| | 79,072 |
|
Commitments and contingencies (Note 10) |
| |
|
| |
|
Shareholder's equity | | | | | | |
Common stock, $1.00 par value per share, 1,000 shares authorized and 505 shares issued | — |
| | — |
| — |
| | — |
|
Additional paid-in capital | 6,495 |
| | 6,484 |
| 6,512 |
| | 6,505 |
|
Accumulated other comprehensive loss (Note 13) | (1,049 | ) | | (1,104 | ) | (1,148 | ) | | (1,238 | ) |
Retained earnings | 3,172 |
| | 2,672 |
| 3,628 |
| | 3,426 |
|
Total shareholder's equity | 8,618 |
| | 8,052 |
| 8,992 |
| | 8,693 |
|
Total liabilities and shareholder's equity | $ | 82,111 |
| | $ | 65,904 |
| $ | 94,540 |
| | $ | 87,765 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
GENERAL MOTORS FINANCIAL COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In millions) (Unaudited)
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | Three Months Ended March 31, |
| 2016 | | 2015 | | 2016 | | 2015 | 2017 | | 2016 |
Revenue | | | | | | | | | | |
Finance charge income | $ | 837 |
| | $ | 842 |
| | $ | 2,481 |
| | $ | 2,544 |
| $ | 862 |
| | $ | 818 |
|
Leased vehicle income | 1,590 |
| | 797 |
| | 4,164 |
| | 1,827 |
| 1,942 |
| | 1,184 |
|
Other income | 72 |
| | 68 |
| | 221 |
| | 205 |
| 75 |
| | 73 |
|
Total revenue | 2,499 |
| | 1,707 |
| | 6,866 |
| | 4,576 |
| 2,879 |
| | 2,075 |
|
Costs and expenses | | | | | | | | | | |
Salaries and benefits | 223 |
| | 185 |
| | 619 |
| | 531 |
| 229 |
| | 193 |
|
Other operating expenses | 169 |
| | 135 |
| | 450 |
| | 414 |
| 163 |
| | 141 |
|
Total operating expenses | 392 |
| | 320 |
| | 1,069 |
| | 945 |
| 392 |
| | 334 |
|
Leased vehicle expenses | 1,202 |
| | 629 |
| | 3,163 |
| | 1,423 |
| 1,438 |
| | 893 |
|
Provision for loan losses | 172 |
| | 144 |
| | 519 |
| | 440 |
| 217 |
| | 196 |
|
Interest expense | 541 |
| | 412 |
| | 1,505 |
| | 1,183 |
| 619 |
| | 463 |
|
Total costs and expenses | 2,307 |
| | 1,505 |
| | 6,256 |
| | 3,991 |
| 2,666 |
| | 1,886 |
|
| 36 |
| | 29 |
| | 109 |
| | 85 |
| 47 |
| | 36 |
|
Income before income taxes | 228 |
| | 231 |
| | 719 |
| | 670 |
| 260 |
| | 225 |
|
| 81 |
| | 52 |
| | 219 |
| | 155 |
| 58 |
| | 61 |
|
Net income | 147 |
| | 179 |
| | 500 |
| | 515 |
| 202 |
| | 164 |
|
Other comprehensive (loss) income, net of tax | | | | | | | | |
Unrealized loss on cash flow hedges | (1 | ) | | — |
| | (5 | ) | | — |
| |
Defined benefit plans | — |
| | — |
| | — |
| | 1 |
| |
Foreign currency translation adjustment | (10 | ) | | (282 | ) | | 60 |
| | (524 | ) | |
Other comprehensive (loss) income, net of tax | (11 | ) | | (282 | ) | | 55 |
| | (523 | ) | |
Comprehensive income (loss) | $ | 136 |
| | $ | (103 | ) | | $ | 555 |
| | $ | (8 | ) | |
Other comprehensive income, net of tax | | | | |
Unrealized (loss) income on cash flow hedges, net of income tax benefit of $3 | | (4 | ) | | — |
|
Defined benefit plans, net of income tax | | — |
| | (1 | ) |
Foreign currency translation adjustment, net of income tax expense of $4 and $0 | | 94 |
| | 153 |
|
Other comprehensive income, net of tax | | 90 |
| | 152 |
|
Comprehensive income | | $ | 292 |
| | $ | 316 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
GENERAL MOTORS FINANCIAL COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions) (Unaudited)
| | | Nine Months Ended September 30, | Three Months Ended March 31, |
| 2016 | | 2015 | 2017 | | 2016 |
Net cash provided by operating activities | $ | 3,856 |
| | $ | 2,167 |
| $ | 1,416 |
| | $ | 1,158 |
|
Cash flows from investing activities | | | | | | |
Purchases of retail finance receivables, net | (13,252 | ) | | (13,099 | ) | (6,401 | ) | | (4,165 | ) |
Principal collections and recoveries on retail finance receivables | 9,904 |
| | 8,718 |
| 3,595 |
| | 3,271 |
|
Net funding of commercial finance receivables | (1,682 | ) | | (179 | ) | (541 | ) | | (1,024 | ) |
Purchases of leased vehicles, net | (15,030 | ) | | (11,258 | ) | (4,794 | ) | | (5,158 | ) |
Proceeds from termination of leased vehicles | 1,801 |
| | 662 |
| 1,082 |
| | 481 |
|
Acquisition of international operations | — |
| | (1,049 | ) | |
Disposition of equity interest | — |
| | 125 |
| |
Purchases of property and equipment | (71 | ) | | (64 | ) | (24 | ) | | (20 | ) |
Change in restricted cash | (123 | ) | | (236 | ) | |
Other investing activities | (3 | ) | | 24 |
| — |
| | 1 |
|
Net cash used in investing activities | (18,456 | ) | | (16,356 | ) | (7,083 | ) | | (6,614 | ) |
Cash flows from financing activities | | | | | | |
Net change in debt (original maturities less than three months) | 497 |
| | 539 |
| (268 | ) | | 757 |
|
Borrowings and issuance of secured debt | 19,404 |
| | 15,095 |
| 8,361 |
| | 7,054 |
|
Payments on secured debt | (14,599 | ) | | (10,903 | ) | (4,805 | ) | | (5,251 | ) |
Borrowings and issuance of unsecured debt | 11,299 |
| | 9,559 |
| 2,968 |
| | 3,131 |
|
Payments on unsecured debt | (2,386 | ) | | (1,195 | ) | (574 | ) | | (241 | ) |
Debt issuance costs | (119 | ) | | (124 | ) | (27 | ) | | (26 | ) |
Net cash provided by financing activities | 14,096 |
| | 12,971 |
| 5,655 |
| | 5,424 |
|
Net decrease in cash and cash equivalents | (504 | ) | | (1,218 | ) | |
Effect of foreign exchange rate changes on cash and cash equivalents | 31 |
| | (154 | ) | |
Cash and cash equivalents at beginning of period | 3,061 |
| | 2,974 |
| |
Cash and cash equivalents at end of period | $ | 2,588 |
| | $ | 1,602 |
| |
Net decrease in cash, cash equivalents and restricted cash | | (12 | ) | | (32 | ) |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | | 37 |
| | 58 |
|
Cash, cash equivalents and restricted cash at beginning of period | | 5,302 |
| | 5,002 |
|
Cash, cash equivalents and restricted cash at end of period | | $ | 5,327 |
| | $ | 5,028 |
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheet:
|
| | | |
| March 31, 2017 |
Cash and cash equivalents | $ | 2,694 |
|
Restricted cash included in other assets | 2,633 |
|
Total | $ | 5,327 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
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 consolidated subsidiaries, including certain special-purpose financing entities utilized in secured financing transactions, which are considered variable interest entities ("VIEs")(VIEs). All intercompany transactions and balances have been eliminated in consolidation.
The interim period condensed consolidated financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles ("GAAP")(GAAP) in the United States of America. These interim period condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements that are included in our Annual Report on Form 10-K filed on February 3, 2016 ("Form 10-K")7, 2017 (Form 10-K). Except as otherwise specified, dollar amounts presented within tables are stated in millions.
The condensed consolidated financial statements at September 30, 2016,March 31, 2017, and for the three and nine months ended September 30,March 31, 2017 and 2016, and 2015, 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.
Segment Information We are the wholly-owned captive finance subsidiary of General Motors Company ("GM")(GM). 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 includes our operations in the U.S. and Canada. The International Segment includes our operations in all other countries.
Recently Issued Accounting Standards Not Yet AdoptedIn February 2016Note 2. Disposition of Business
On March 5, 2017, General Motors Holdings LLC, a wholly-owned subsidiary of GM and our parent, entered into a Master Agreement (the Agreement) with Peugeot, S.A. (PSA Group) pursuant to which PSA Group will acquire GM's Opel and Vauxhall businesses and certain other assets in Europe (the Opel/Vauxhall Business) and certain of our European subsidiaries and branches (European Operations, together with the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update 2016-02, “Leases” (ASU 2016-02),Opel/Vauxhall Business, the Transferred Business).
The net consideration to be paid for our European Operations will be 0.8 times their book value at closing, which requireswe estimate will be approximately $1 billion, denominated in Euros. The purchase price is subject to certain adjustments as provided in the lesseeAgreement. We expect to recognize most leases ona disposal loss of approximately $700 million to $800 million at closing.
The transfer of the balance sheet thereby resulting inOpel/Vauxhall Business is expected to close by the recognitionend of lease assets2017 and liabilities for those leases currently classifiedthe transfer of our European Operations is expected to close as operating leases.soon as practicable after the receipt of the necessary antitrust, financial and other regulatory approvals, which may be after the transfer of the Opel/Vauxhall Business, but not before. The accounting for lessors is largely unchanged. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018 with early adoption permitted. We are currently assessingtransfer of our European Operations will not occur unless the impacttransfer of the adoption of ASU 2016-02 will have on our consolidated financial statements.
In June 2016 the FASB issued Accounting Standard Update 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires entities to use a current expected credit loss ("CECL") model which is a new impairment model based on expected losses rather than incurred losses. Under this model an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost. The entity's estimate would consider relevant information about past events, current conditions, and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses upon loan origination. ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted for annual reporting periods beginning after December 15, 2018. We are currently assessing the impact the adoption of ASU 2016-13 will have on our consolidated financial statements.Opel/Vauxhall Business occurs.
Note 2.3. Related Party Transactions
We offer loan and lease finance products through GM-franchised dealers to customers purchasing new and certain used vehicles manufactured by GM and make commercial loans directly to GM-franchised dealers and their affiliates. We also offer commercial loans to dealers that are consolidated by GM and those balances are included in our finance receivables, net.
Under subvention programs, GM makes cash payments to us for offering incentivized rates and structures on retail loan and lease finance products. In addition, GM makes payments to us to cover certain interest payments on commercial loans. We also provide funding under lines of credit to GM,GM.
In March 2017, we executed an agreement to purchase certain program vehicles from Maven Drive LLC (Maven), a wholly-owned subsidiary of GM. We simultaneously leased these vehicles to Maven for use in their ride-sharing arrangements. We account for these leases as direct-finance leases, which are included in our net funding of commercial finance receivables, on the condensed consolidated statements of cash flows.net.
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
We have related party payables due to GM, primarily for commercial finance receivables originated but not yet funded. These payables typically settle within 30 days. The following tables present related party transactions:
| | Balance Sheet Data | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
Commercial finance receivables, net due from dealers consolidated by GM(a) | $ | 338 |
| | $ | 229 |
| $ | 339 |
| | $ | 401 |
|
Direct-finance lease receivables from Maven(a) | | $ | 128 |
| | $ | — |
|
Advances drawn on lines of credit due from GM(b) | $ | 466 |
| | $ | 190 |
| $ | 145 |
| | $ | 137 |
|
Subvention receivable(c) | $ | 384 |
| | $ | 383 |
| $ | 471 |
| | $ | 373 |
|
Commercial loan funding payable(d) | $ | 399 |
| | $ | 351 |
| $ | 438 |
| | $ | 389 |
|
Junior Subordinated Revolving Credit Facility(e) | $ | 415 |
| | $ | — |
| |
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
Income Statement Data | 2016 | | 2015 | | 2016 | | 2015 |
Interest subvention earned(f) | $ | 119 |
| | $ | 89 |
| | $ | 331 |
| | $ | 252 |
|
Leased vehicle subvention earned(g) | $ | 593 |
| | $ | 294 |
| | $ | 1,592 |
| | $ | 626 |
|
|
| | | | | | | |
| Three Months Ended March 31, |
Income Statement Data | 2017 | | 2016 |
Interest subvention earned on retail finance receivables and leases(e) | $ | 111 |
| | $ | 103 |
|
Interest subvention earned on commercial finance receivables(e) | $ | 40 |
| | $ | 40 |
|
Leased vehicle subvention earned(f) | $ | 709 |
| | $ | 459 |
|
_________________
| |
(a) | Included in finance receivables, net. |
| |
(b) | Included in related party receivables. |
| |
(c) | Included in related party receivables. We received subvention payments from GM of $1.0 billion and $1.2 billion for the three months ended September 30, 2016March 31, 2017 and 2015 and$3.2 billion and $2.5 billion for the nine months ended September 30, 2016 and 2015. 2016. |
| |
(d) | Included in related party payables. |
| |
(e) | Included in unsecured debt. |
| |
(f) | Included in finance charge income. |
| |
(g)(f) | Included as a reduction to leased vehicle expenses. |
Under our support agreement with GM (the “Support Agreement”)Support Agreement), if our earning assets leverage ratio at the end of any calendar quarter exceeds the applicable threshold set in the Support Agreement, we may require GM to provide funding sufficient to bring our earning assets leverage ratio to within the applicable threshold. In determining our earning assets leverage ratio (net earning assets divided by adjusted equity) under the Support Agreement, net earning assets means our finance receivables, net, plus leased 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.
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 of up to $4.0 billion under GM’s corporate revolving credit facilities, which were amended in May 2016. These amendments increased GM's borrowing capacity on its corporate revolving credit facilities from $12.5 billion to $14.5 billion.facilities. We have the ability to borrow up to $1.0 billion under GM's three-year, $4.0 billion unsecured revolving credit facility and $3.0 billion under GM's five-year, $10.5 billion unsecured revolving credit facility, subject to available capacity. GM also agreed to certain provisions in the Support Agreement intended to ensure that we maintain adequate access to liquidity. Pursuant to these provisions, GM provided us with a $1.0 billion junior subordinated unsecured intercompany revolving credit facility (the "JuniorJunior Subordinated Revolving Credit Facility")Facility).
Since October 1, 2010, we have beenWe are included in GM's consolidated U.S. federal income tax returns. For taxable income we recognize in any period beginning on or after October 1, 2010, we are obligated to pay GM for our share of the consolidated U.S. federal and certain state tax liabilities. Amounts owed to GM for income taxes are accrued and recorded as a related party payable. At September 30, 2016March 31, 2017 and December 31, 2015,2016, there are no related party taxes payable to GM due to our taxable loss position.
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 3.4. Finance Receivables
| | | September 30, 2016 | | December 31, 2015 |
| March 31, 2017 | | December 31, 2016 |
|
Retail finance receivables | | | | | | |
Retail finance receivables, collectively evaluated for impairment, net of fees(a) | $ | 30,408 |
| | $ | 27,512 |
| $ | 34,047 |
| | $ | 30,989 |
|
Retail finance receivables, individually evaluated for impairment, net of fees | 1,838 |
| | 1,612 |
| 1,957 |
| | 1,921 |
|
Total retail finance receivables(b) | 32,246 |
| | 29,124 |
| |
Total retail finance receivables, net of fees(b) | | 36,004 |
| | 32,910 |
|
Less: allowance for loan losses - collective | (566 | ) | | (515 | ) | (568 | ) | | (517 | ) |
Less: allowance for loan losses - specific | (256 | ) | | (220 | ) | (284 | ) | | (276 | ) |
Total retail finance receivables, net | 31,424 |
| | 28,389 |
| 35,152 |
| | 32,117 |
|
Commercial finance receivables | | | | | | |
Commercial finance receivables, collectively evaluated for impairment, net of fees | 9,704 |
| | 8,357 |
| 11,725 |
| | 11,053 |
|
Commercial finance receivables, individually evaluated for impairment, net of fees | 56 |
| | 82 |
| 87 |
| | 70 |
|
Total commercial finance receivables | 9,760 |
| | 8,439 |
| |
Total commercial finance receivables, net of fees | | 11,812 |
| | 11,123 |
|
Less: allowance for loan losses - collective | (46 | ) | | (38 | ) | (46 | ) | | (43 | ) |
Less: allowance for loan losses - specific | (6 | ) | | (9 | ) | (8 | ) | | (7 | ) |
Total commercial finance receivables, net | 9,708 |
| | 8,392 |
| 11,758 |
| | 11,073 |
|
Total finance receivables, net | $ | 41,132 |
| | $ | 36,781 |
| $ | 46,910 |
| | $ | 43,190 |
|
Fair value of finance receivables | $ | 41,530 |
| | $ | 36,937 |
| $ | 46,722 |
| | $ | 43,140 |
|
________________(a) Includes $1.6 billion and $1.3 billion and $1.1 billion of direct-financingdirect-finance leases at September 30, 2016March 31, 2017 and December 31, 2015.2016.
(b) Net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $200$199 million and $179$191 million at September 30, 2016March 31, 2017 and December 31, 2015.2016.
We estimate the fair value of retail finance receivables using observable and unobservable Level 3 inputs within a cash flow model. The 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 receivables. The projected cash flows are then discounted to derive the fair value of the portfolio. Macroeconomic factors could affect the credit performance of the portfolio and, therefore, could potentially affect the assumptions used in our cash flow model. A substantial majority of our commercial finance receivables have variable interest rates and maturities of one year or less. Therefore, therates. The carrying amount, a Level 2 input, is considered to be a reasonable estimate of fair value.
|
| | | | | | | |
Retail Finance Receivables | Nine Months Ended September 30, |
| 2016 | | 2015 |
Retail finance receivables beginning balance | $ | 29,124 |
| | $ | 25,623 |
|
Purchases of retail finance receivables | 13,397 |
| | 13,107 |
|
Principal collections and other | (9,479 | ) | | (8,136 | ) |
Charge-offs | (853 | ) | | (710 | ) |
Foreign currency translation | 57 |
| | (1,897 | ) |
Retail finance receivables ending balance | $ | 32,246 |
| | $ | 27,987 |
|
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | |
Retail Finance Receivables | | Three Months Ended March 31, |
| 2016 | | 2015 | | 2016 | | 2015 | 2017 | | 2016 |
Allowance for retail loan losses beginning balance | $ | 814 |
| | $ | 721 |
| | $ | 735 |
| | $ | 655 |
| $ | 793 |
| | $ | 735 |
|
Provision for loan losses | 170 |
| | 141 |
| | 515 |
| | 437 |
| 213 |
| | 197 |
|
Charge-offs | (294 | ) | | (256 | ) | | (853 | ) | | (710 | ) | (307 | ) | | (293 | ) |
Recoveries | 134 |
| | 124 |
| | 417 |
| | 357 |
| 147 |
| | 150 |
|
Foreign currency translation | (2 | ) | | (12 | ) | | 8 |
| | (21 | ) | 6 |
| | 7 |
|
Allowance for retail loan losses ending balance | $ | 822 |
| | $ | 718 |
| | $ | 822 |
| | $ | 718 |
| $ | 852 |
| | $ | 796 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Retail 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)score or its equivalent), and contract characteristics. We also consider other factors, such as employment history, financial stability and capacity to pay. At the time of loan origination, substantially all of our internationalInternational Segment customers 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 have expanded our prime lending programs. A summary of the credit risk profile by FICO score band or equivalent scores, determined at origination, of the retail finance receivables in the North America Segment is as follows:
| | | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
| Amount | | Percent | | Amount | | Percent | Amount | | Percent | | Amount | | Percent |
Prime - FICO Score 680 and greater | $ | 6,902 |
| | 33.2 | % | | $ | 4,418 |
| | 24.4 | % | $ | 10,062 |
| | 41.3 | % | | $ | 7,923 |
| | 36.4 | % |
Near-prime - FICO Score 620 to 679 | 3,305 |
| | 15.9 |
| | 2,890 |
| | 15.9 |
| 3,742 |
| | 15.4 |
| | 3,468 |
| | 15.9 |
|
Sub-prime - FICO Score less than 620 | 10,559 |
| | 50.9 |
| | 10,840 |
| | 59.7 |
| 10,550 |
| | 43.3 |
| | 10,395 |
| | 47.7 |
|
Balance at end of period | $ | 20,766 |
| | 100.0 | % | | $ | 18,148 |
| | 100.0 | % | $ | 24,354 |
| | 100.0 | % | | $ | 21,786 |
| | 100.0 | % |
In addition, we review the credit quality of our retail finance receivables based on customer payment activity. A retail account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. Retail 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 customer defaults on the payment terms of the contract.
The following is a consolidated summary of the contractual amounts of delinquent retail finance receivables, which is not significantly different than the recorded investment that are (i) more than 30 days delinquent, but not yet in repossession, and (ii) in repossession, but not yet charged off: for such receivables.
| | | September 30, 2016 | | September 30, 2015 | March 31, 2017 | | March 31, 2016 |
| Total | | Percent of Contractual Amount Due | | Total | | Percent of Contractual Amount Due | Total | | Percent of Contractual Amount Due | | Total | | Percent of Contractual Amount Due |
31 - 60 days | $ | 1,127 |
| | 3.5 | % | | $ | 1,137 |
| | 4.0 | % | $ | 1,006 |
| | 2.8 | % | | $ | 963 |
| | 3.1 | % |
Greater than 60 days | 503 |
| | 1.5 |
| | 454 |
| | 1.6 |
| 441 |
| | 1.2 |
| | 421 |
| | 1.4 |
|
Total finance receivables more than 30 days delinquent | 1,630 |
| | 5.0 |
| | 1,591 |
| | 5.6 |
| 1,447 |
| | 4.0 |
| | 1,384 |
| | 4.5 |
|
In repossession | 60 |
| | 0.2 |
| | 53 |
| | 0.2 |
| 51 |
| | 0.1 |
| | 48 |
| | 0.2 |
|
Total finance receivables more than 30 days delinquent or in repossession | $ | 1,690 |
| | 5.2 | % | | $ | 1,644 |
| | 5.8 | % | $ | 1,498 |
| | 4.1 | % | | $ | 1,432 |
| | 4.7 | % |
TheAt March 31, 2017 and December 31, 2016, the accrual of finance charge income hashad been suspended on $816 million and $778 million of retail finance receivables (based onwith contractual amount due) at September 30, 2016amounts due of $711 million and December 31, 2015.$807 million.
Impaired Retail Finance Receivables - TDRs Retail finance receivables that become classified as troubled debt restructurings ("TDRs")(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. Accounts that become classified as TDRs because of a payment deferral 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 the U.S. 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.
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
At September 30, 2016March 31, 2017 and December 31, 2015,2016, the outstanding balance of retail 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. The outstanding recorded investment for retail finance receivables that are considered to be TDRs and the related allowance is presented below:
| | | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
Outstanding recorded investment | $ | 1,837 |
| | $ | 1,612 |
| $ | 1,957 |
| | $ | 1,920 |
|
Less: allowance for loan losses | (256 | ) | | (220 | ) | (284 | ) | | (276 | ) |
Outstanding recorded investment, net of allowance | $ | 1,581 |
| | $ | 1,392 |
| $ | 1,673 |
| | $ | 1,644 |
|
Unpaid principal balance | $ | 1,884 |
| | $ | 1,642 |
| $ | 1,998 |
| | $ | 1,967 |
|
Additional information about loans classified as TDRs is presented below:
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | Three Months Ended March 31, |
| 2016 | | 2015 | | 2016 | | 2015 | 2017 | | 2016 |
Average outstanding recorded investment | $ | 1,785 |
| | $ | 1,403 |
| | $ | 1,725 |
| | $ | 1,361 |
| $ | 1,939 |
| | $ | 1,636 |
|
Finance charge income recognized | $ | 55 |
| | $ | 41 |
| | $ | 156 |
| | $ | 122 |
| $ | 60 |
| | $ | 51 |
|
Number of loans classified as TDRs during the period | 18,548 |
| | 16,122 |
| | 49,327 |
| | 42,246 |
| 16,474 |
| | 14,646 |
|
Recorded investment of loans classified as TDRs during the period | $ | 315 |
| | $ | 270 |
| | $ | 846 |
| | $ | 716 |
| $ | 287 |
| | $ | 254 |
|
A redefault is when an account meets the requirements for evaluation under our charge-off policy. The unpaid principal balance, net of recoveries, of loans that redefaultedwere charged off during the reporting period and were within 12 months of being modified as a TDR waswere insignificant for the three and nine months ended September 30, 2016March 31, 2017 and 2015.2016.
|
| | | | | | | |
Commercial Finance Receivables | Nine Months Ended September 30, |
| 2016 | | 2015 |
Commercial finance receivables beginning balance | $ | 8,439 |
| | $ | 8,072 |
|
Net funding | 1,411 |
| | 292 |
|
Charge-offs | — |
| | — |
|
Foreign currency translation | (90 | ) | | (519 | ) |
Commercial finance receivables ending balance | $ | 9,760 |
| | $ | 7,845 |
|
Commercial Finance Receivables
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 dealers (i.e., Groups III, IV, V and VI) dealers.. We perform aperiodic credit reviewreviews of each dealer at least annuallydealership and adjust the dealer'sdealership's risk rating, if necessary. Dealers in Group VI are subject to additional funding restrictions including suspension of lines of credit and liquidation of assets.
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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 or leased the vehicle inventory. All receivables from the same dealer customer share the same risk rating. A summary ofThe following table summarizes the credit risk profile by dealer risk rating of the commercial finance receivables is as follows:receivables:��
| | | | September 30, 2016 | | December 31, 2015 | | March 31, 2017 | | December 31, 2016 |
| | Amount | | Percent | | Amount | | Percent | | Amount | | Percent | | Amount | | Percent |
Group I | - | Dealers with superior financial metrics | $ | 1,531 |
| | 15.7 | % | | $ | 1,299 |
| | 15.4 | % | - | Dealers with superior financial metrics | $ | 1,664 |
| | 14.1 | % | | $ | 1,596 |
| | 14.3 | % |
Group II | - | Dealers with strong financial metrics | 3,026 |
| | 31.0 |
| | 2,648 |
| | 31.4 |
| - | Dealers with strong financial metrics | 3,804 |
| | 32.2 |
| | 3,445 |
| | 31.0 |
|
Group III | - | Dealers with fair financial metrics | 3,282 |
| | 33.6 |
| | 2,703 |
| | 32.0 |
| - | Dealers with fair financial metrics | 4,171 |
| | 35.3 |
| | 4,039 |
| | 36.3 |
|
Group IV | - | Dealers with weak financial metrics | 1,164 |
| | 11.9 |
| | 1,100 |
| | 13.0 |
| - | Dealers with weak financial metrics | 1,441 |
| | 12.2 |
| | 1,231 |
| | 11.1 |
|
Group V | - | Dealers warranting special mention due to potential weaknesses | 611 |
| | 6.3 |
| | 505 |
| | 6.0 |
| - | Dealers warranting special mention due to potential weaknesses | 548 |
| | 4.6 |
| | 642 |
| | 5.8 |
|
Group VI | - | Dealers with loans classified as substandard, doubtful or impaired | 146 |
| | 1.5 |
| | 184 |
| | 2.2 |
| - | Dealers with loans classified as substandard, doubtful or impaired | 184 |
| | 1.6 |
| | 170 |
| | 1.5 |
|
Ending balance | $ | 9,760 |
| | 100.0 | % | | $ | 8,439 |
| | 100.0 | % | |
Balance at end of period | | Balance at end of period | $ | 11,812 |
| | 100.0 | % | | $ | 11,123 |
| | 100.0 | % |
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
At September 30, 2016March 31, 2017 and December 31, 20152016, 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 and nine months ended September 30, 2016March 31, 2017 and 2015.2016.
Note 4.5. Leased Vehicles
| | | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
Leased vehicles | $ | 44,147 |
| | $ | 27,587 |
| $ | 53,000 |
| | $ | 48,581 |
|
Manufacturer incentives | (7,039 | ) | | (4,582 | ) | |
Manufacturer subvention | | (8,372 | ) | | (7,706 | ) |
| 37,108 |
| | 23,005 |
| 44,628 |
| | 40,875 |
|
Less: accumulated depreciation | (5,333 | ) | | (2,833 | ) | (7,326 | ) | | (6,349 | ) |
Leased vehicles, net | $ | 31,775 |
| | $ | 20,172 |
| $ | 37,302 |
| | $ | 34,526 |
|
The following table summarizes minimum rental payments due to us as lessor under operating leases:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Years Ending December 31, |
| 2016 | | 2017 | | 2018 | | 2019 | | 2020 | | Thereafter | | Total |
Minimum rental payments under operating leases | $ | 1,352 |
| | $ | 5,019 |
| | $ | 3,515 |
| | $ | 1,289 |
| | $ | 102 |
| | $ | 3 |
| | $ | 11,280 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Years Ending December 31, |
| 2017 | | 2018 | | 2019 | | 2020 | | 2021 |
Minimum rental payments under operating leases | $ | 4,654 |
| | $ | 4,878 |
| | $ | 2,494 |
| | $ | 365 |
| | $ | 13 |
|
Note 5. Restricted Cash
|
| | | | | | | |
| September 30, 2016 | | December 31, 2015 |
Revolving credit facilities | $ | 321 |
| | $ | 345 |
|
Securitization notes payable | 1,682 |
| | 1,531 |
|
Other | 52 |
| | 65 |
|
Total restricted cash | $ | 2,055 |
| | $ | 1,941 |
|
Most of the restricted cash is held in variable interest entities, as further discussed in Note 8 - "Variable Interest Entities." Restricted cash for securitization notes payable and revolving credit facilities includes collections from borrowers that have not yet been used for repayment of debt. In addition, this cash includes funds deposited in restricted cash accounts as collateral required to support securitization transactions or to provide additional collateral for borrowings under revolving credit facilities.Note 6. Equity in Net Assets of Non-consolidated Affiliates
We use the equity method to account for our equity interest in SAIC-GMAC Automotive Finance Company Limited ("SAIC-GMAC")(SAIC-GMAC), a joint venture that conducts auto finance operations in China. The income of SAIC-GMAC is not consolidated into our financial statements; rather, our proportionate share of the earnings is reflected as equity income.
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
There were no cash dividends received from SAIC-GMAC during the three months ended March 31, 2017. We received cash dividends from SAIC-GMAC of $129$27 million induring the ninethree months ended September 30,March 31, 2016. At September 30, 2016,March 31, 2017 we had undistributed earnings of $100$189 million related to SAIC-GMAC.
| | | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
| Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
Secured debt | | | | | | | | | | | | | | |
Revolving credit facilities | $ | 7,947 |
| | $ | 7,944 |
| | $ | 7,548 |
| | $ | 7,494 |
| $ | 11,865 |
| | $ | 11,866 |
| | $ | 9,817 |
| | $ | 9,812 |
|
Securitization notes payable | 27,290 |
| | 27,474 |
| | 23,141 |
| | 23,177 |
| 30,714 |
| | 30,814 |
| | 29,453 |
| | 29,545 |
|
Total secured debt | $ | 35,237 |
| | $ | 35,418 |
| | $ | 30,689 |
| | $ | 30,671 |
| $ | 42,579 |
| | $ | 42,680 |
| | $ | 39,270 |
| | $ | 39,357 |
|
Unsecured debt | | | | | | | | | | | | | | |
Senior notes | $ | 27,199 |
| | $ | 28,053 |
| | $ | 18,973 |
| | $ | 19,045 |
| $ | 31,088 |
| | $ | 32,103 |
| | $ | 28,577 |
| | $ | 29,182 |
|
Credit facilities | 3,676 |
| | 3,678 |
| | 2,759 |
| | 2,753 |
| 3,453 |
| | 3,452 |
| | 3,354 |
| | 3,354 |
|
Retail customer deposits | 1,929 |
| | 1,936 |
| | 1,260 |
| | 1,262 |
| 1,913 |
| | 1,917 |
| | 1,895 |
| | 1,902 |
|
Other unsecured debt | 722 |
| | 722 |
| | 665 |
| | 666 |
| 916 |
| | 918 |
| | 780 |
| | 782 |
|
Total unsecured debt | $ | 33,526 |
| | $ | 34,389 |
| | $ | 23,657 |
| | $ | 23,726 |
| $ | 37,370 |
| | $ | 38,390 |
| | $ | 34,606 |
| | $ | 35,220 |
|
Total Secured and Unsecured debt | $ | 68,763 |
| | $ | 69,807 |
| | $ | 54,346 |
| | $ | 54,397 |
| $ | 79,949 |
| | $ | 81,070 |
| | $ | 73,876 |
| | $ | 74,577 |
|
Fair value utilizing Level 2 inputs | | | $ | 64,847 |
| | | | $ | 48,716 |
| | | $ | 77,267 |
| | | | $ | 69,990 |
|
Fair value utilizing Level 3 inputs | | | $ | 4,960 |
| | | | $ | 5,681 |
| | | $ | 3,803 |
| | | | $ | 4,587 |
|
The fair value of our debt measured utilizing Level 2 inputs was based on quoted market prices for identical instruments and if unavailable, quoted market prices of similar instruments. For debt that has terms of one year or less or has been priced within the last six months, the carrying amount or par value is considered to be a reasonable estimate of fair value. The fair value of our debt measured utilizing Level 3 inputs was based on the discounted future net cash flows expected to be settled using current risk-adjusted rates.
Secured Debt Most of the secured debt was issued by variable interest entities, as further discussed in Note 8 - "Variable Interest Entities." This debt is repayable only from proceeds related to the underlying pledged finance receivables and leasing related assets.During the nine months ended September 30, 2016, we entered into new credit facilities or renewed credit facilities with a total additional net borrowing capacity of $3.1 billion, and we issued securitization notes payable of $11.8 billion.
Unsecured DebtIn March 2016, our top-tier holding company issued $2.75 billion in senior notes comprised of $1.5 billion of 4.20% notes due in March 2021 and $1.25 billion of 5.25% notes due in March 2026. All of these notes are guaranteed solely by AmeriCredit Financial Services, Inc. ("AFSI").
In May 2016, our top-tier holding company issued $3.0 billion in senior notes comprised of $1.4 billion of 2.40% notes due in May 2019, $1.2 billion of 3.70% notes due in May 2023 and $400 million of floating rate notes due in May 2019. All of these notes are guaranteed solely by AFSI.
Also in May 2016, one of our European subsidiaries issued €500 million of 1.168% notes under our Euro medium term notes program. These notes are due in May 2020 and are guaranteed by our top-tier holding company and AFSI.
In July 2016, our top-tier holding company issued $2.0 billion of 3.20% senior notes due in July 2021. These notes are guaranteed solely by AFSI.
In September 2016, our top-tier holding company issued €750 million of 0.955% notes under our Euro medium term notes program. These notes are due in September 2023 and are guaranteed solely by AFSI.
Subsequent to September 30, 2016, our top-tier holding company issued $1.75 billion in senior notes comprised of $750 million of 2.35% notes due in October 2019, $750 million of 4.00% notes due in October 2026 and $250 million of floating rate notes due in October 2019. All of these notes are guaranteed solely by AFSI.
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Secured Debt Most of the secured debt was issued by VIEs and is repayable only from proceeds related to the underlying pledged assets. Refer to Note 8 - "Variable Interest Entities" for further discussion. During 2015,the three months ended March 31, 2017, we began acceptingentered into new credit facilities or renewed credit facilities with a total net additional borrowing capacity of $182 million, and we issued securitization notes payable of $4.0 billion.
Unsecured DebtDuring the three months ended March 31, 2017, our top-tier holding company issued $2.5 billion in senior notes comprising:
|
| | | |
| Amount Issued |
3.45% Senior notes due January 2022 | $ | 1,250 |
|
4.35% Senior notes due January 2027 | $ | 750 |
|
Floating rate senior notes due January 2022 | $ | 500 |
|
All of these notes are guaranteed solely by AmeriCredit Financial Services, Inc. (AFSI), our primary U.S. operating subsidiary.
Subsequent to March 31, 2017, our top-tier holding company issued $3.0 billion in senior notes comprised of $1.0 billion of 2.65% notes due in April 2020, $1.25 billion of 3.95% notes due in April 2024 and $750 million of floating rate notes due in April 2020. All of these notes are guaranteed solely by AFSI.
We accept deposits from retail banking customers in Germany. Following is summarized information for our deposits at September 30, 2016March 31, 2017 and December 31, 2015:2016:
| | | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
| Outstanding Balance | | Weighted Average Interest Rate | | Outstanding Balance | | Weighted Average Interest Rate | Outstanding Balance | | Weighted Average Interest Rate | | Outstanding Balance | | Weighted Average Interest Rate |
Overnight deposits | $ | 793 |
| | 0.60 | % | | $ | 555 |
| | 1.00 | % | $ | 788 |
| | 0.40 | % | | $ | 799 |
| | 0.50 | % |
Term deposits -12 months | 466 |
| | 1.07 | % | | 337 |
| | 1.32 | % | |
Term deposits - 12 months | | 417 |
| | 0.84 | % | | 423 |
| | 0.93 | % |
Term deposits - 24 months | 277 |
| | 1.29 | % | | 123 |
| | 1.44 | % | 298 |
| | 1.24 | % | | 281 |
| | 1.26 | % |
Term deposits - 36 months | 393 |
| | 1.52 | % | | 245 |
| | 1.65 | % | 410 |
| | 1.47 | % | | 392 |
| | 1.48 | % |
Total deposits | $ | 1,929 |
| | 1.00 | % | | $ | 1,260 |
| | 1.25 | % | $ | 1,913 |
| | 0.86 | % | | $ | 1,895 |
| | 0.91 | % |
Compliance with Debt Covenants Several of our loan facilities, including our revolving credit facilities require compliance with certain financial and operational covenants as well as regular reporting to lenders, including providing certain subsidiary financial statements. Certain of our secured debt agreements also contain various covenants, including maintaining portfolio performance ratios as well as limits on deferment levels. Our unsecured senior notes contain covenants including limitations on our ability to incur certain liens. At September 30, 2016,March 31, 2017, we were in compliance with these debt covenants.
Note 8. Variable Interest Entities
Securitizations and Credit Facilities
The following table summarizes the assets and liabilities related to our consolidated VIEs:
| | Securitizations and credit facilities | September 30, 2016 | | December 31, 2015 | |
| | March 31, 2017 | | December 31, 2016 |
Restricted cash(a) | $ | 2,003 |
| | $ | 1,876 |
| $ | 2,598 |
| | $ | 2,067 |
|
Finance receivables, net of fees | $ | 24,498 |
| | $ | 24,942 |
| $ | 30,370 |
| | $ | 29,661 |
|
Lease related assets | $ | 18,243 |
| | $ | 11,684 |
| $ | 23,154 |
| | $ | 19,341 |
|
Secured debt | $ | 34,217 |
| | $ | 29,386 |
| $ | 41,671 |
| | $ | 38,244 |
|
_______________
(a) Included in other assets in the condensed consolidated balance sheets.
These amounts are related to securitization and credit facilities held by consolidated VIEs. Our continuing involvement with these VIEs consists of servicing assets held by the entities and holding residual interests in the entities. We have determined that we are the primary beneficiary of each VIE because we hold both (i) the power to direct the activities of the VIEs that most significantly impact the VIEs' economic performance and (ii) the obligation to absorb losses from and the right to receive benefits of the VIEs that could potentially be significant to the VIEs. We are not required, and do not currently intend, to provide any
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
additional financial support to these 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.
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. The amounts presented below are stated prior to intercompany eliminations and include amounts related to securitizations and credit facilities held by consolidated VIEs. The following table summarizes the assets and liabilities of these VIEs:
|
| | | | | | | |
| March 31, 2017 | | December 31, 2016 |
Assets(a) | $ | 4,312 |
| | $ | 4,251 |
|
Liabilities(b) | $ | 3,604 |
| | $ | 3,559 |
|
|
| | | | | | | |
| September 30, 2016 | | December 31, 2015 |
Assets(a) | $ | 4,617 |
| | $ | 3,652 |
|
Liabilities(b) | $ | 3,881 |
| | $ | 2,941 |
|
_________________
| |
(a) | Comprised primarily of finance receivables, net of $3.6 billion and $3.2$3.5 billion at September 30, 2016March 31, 2017 and December 31, 2015.2016. |
| |
(b) | Comprised primarily of debt of $2.9$3.0 billion and $2.6$3.0 billion at September 30, 2016March 31, 2017 and December 31, 2015.2016. |
The following table summarizes the revenue and net income of these VIEs:
|
| | | | | | | |
| Three Months Ended March 31, |
| 2017 | | 2016 |
Total revenue | $ | 51 |
| | $ | 47 |
|
Net income | $ | 6 |
| | $ | 7 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table summarizes the revenue and net income of these VIEs:
|
| | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2016 | | 2015 | | 2016 | | 2015 |
Total revenue | $ | 51 |
| | $ | 41 |
| | $ | 159 |
| | $ | 122 |
|
Net income | $ | 4 |
| | $ | 6 |
| | $ | 20 |
| | $ | 25 |
|
Other transfers of finance receivablesUnder certain debt agreements, we transfer finance receivables to entities which we do not control through majority voting interest or through contractual arrangements. These transfers do not meet the criteria to be considered sales under U.S. GAAP; therefore, the finance receivables and the related debt are included in our consolidated financial statements, similar to the treatment of finance receivables and related debt of our consolidated VIEs. Any collections received on the transferred receivables are available only for the repayment of the related debt. At September 30, 2016 and December 31, 2015, $1.2 billion and $1.5 billion in finance receivables had been transferred in secured funding arrangements to third-party banks, to which $1.1 billion and $1.4 billion in secured debt was outstanding.
Note 9. Derivative Financial Instruments and Hedging Activities
| | | | September 30, 2016 | | December 31, 2015 | | March 31, 2017 | | December 31, 2016 |
| Level | | Notional | | Fair Value | | Notional | | Fair Value | Level | | Notional | | Fair Value | | Notional | | Fair Value |
Derivatives designated as hedges | | | | | | | | | | | | | | | | |
Assets | | | | | | | | | | | | | | | | |
Fair value hedges | | | | | | | | | | | | | | | | |
Interest rate swaps(a) | 2 | | $ | 3,450 |
| | $ | 58 |
| | $ | — |
| | $ | — |
| |
Interest rate swaps | | 2 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
Cash flow hedges | | | | | | | | | | | | | | | | |
Interest rate swaps(b) | 3 | | 889 |
| | 1 |
| | — |
| | — |
| |
Interest rate swaps | | 2,3 | | 3,597 |
| | 16 |
| | 3,542 |
| | 12 |
|
Foreign currency swaps(a) | 2 | | 702 |
| | 1 |
| | — |
| | — |
| 2 | | — |
| | — |
| | — |
| | — |
|
Total assets(c)(a) | | $ | 5,041 |
| | $ | 60 |
| | $ | — |
| | $ | — |
| | $ | 3,597 |
| | $ | 16 |
| | $ | 3,542 |
| | $ | 12 |
|
Liabilities | | | | | | | | | | | | | | | | |
Fair value hedges | | | | | | | | | | | | | | | | |
Interest rate swaps(a) | 2 | | $ | 3,500 |
| | $ | 20 |
| | $ | 1,000 |
| | $ | 6 |
| |
Interest rate swaps | | 2 | | $ | 8,950 |
| | $ | 317 |
| | $ | 7,700 |
| | $ | 276 |
|
Cash flow hedges | | | | | | | | | | | | | | | | |
Interest rate swaps(b) | 3 | | 1,870 |
| | 3 |
| | — |
| | — |
| |
Foreign currency swaps(a) | 2 | | 140 |
| | 1 |
| | — |
| | — |
| |
Total liabilities(d) | | $ | 5,510 |
| | $ | 24 |
| | $ | 1,000 |
| | $ | 6 |
| |
Interest rate swaps | | 2,3 | | 717 |
| | 1 |
| | 1,280 |
| | 3 |
|
Foreign currency swaps | | 2 | | 802 |
| | 24 |
| | 791 |
| | 33 |
|
Total liabilities(b) | | | $ | 10,469 |
| | $ | 342 |
| | $ | 9,771 |
| | $ | 312 |
|
Derivatives not designated as hedges | | | | | | | | | | | | | | | | |
Assets | | | | | | | | | | | | | | | | |
Interest rate swaps(b) | 3 | | $ | 5,483 |
| | $ | 22 |
| | $ | 4,122 |
| | $ | 8 |
| |
Interest rate options(a) | 2 | | 8,734 |
| | 8 |
| | 6,327 |
| | 19 |
| |
Foreign currency swaps(a) | 2 | | 1,371 |
| | 71 |
| | 1,460 |
| | 48 |
| |
Interest rate swaps | | 2,3 | | $ | 15,455 |
| | $ | 74 |
| | $ | 8,667 |
| | $ | 55 |
|
Interest rate caps and floors | | 2 | | 13,369 |
| | 33 |
| | 10,469 |
| | 26 |
|
Foreign currency swaps | | 2 | | 617 |
| | 65 |
| | 1,576 |
| | 78 |
|
Total assets(c)(a) | | $ | 15,588 |
| | $ | 101 |
| | $ | 11,909 |
| | $ | 75 |
| | $ | 29,441 |
| | $ | 172 |
| | $ | 20,712 |
| | $ | 159 |
|
Liabilities | | | | | | | | | | | | | | | | |
Interest rate swaps(b) | 3 | | $ | 7,670 |
| | $ | 29 |
| | $ | 8,041 |
| | $ | 24 |
| |
Interest rate options(a) | 2 | | 10,047 |
| | 7 |
| | 5,892 |
| | 19 |
| |
Total liabilities(d) | | $ | 17,717 |
| | $ | 36 |
| | $ | 13,933 |
| | $ | 43 |
| |
Interest rate swaps | | 2,3 | | $ | 14,225 |
| | $ | 55 |
| | $ | 8,337 |
| | $ | 36 |
|
Interest rate caps and floors | | 2 | | 15,101 |
| | 33 |
| | 12,146 |
| | 26 |
|
Foreign currency swaps | | 2 | | 1,412 |
| | 15 |
| | 119 |
| | 2 |
|
Total liabilities(b) | | | $ | 30,738 |
| | $ | 103 |
| | $ | 20,602 |
| | $ | 64 |
|
_________________
| |
(a) | The fair value was derived using the market approach based on observable market inputs including quoted prices of similar instruments and foreign exchange and interest rate forward curves. |
| |
(b) | The fair value was derived using the income approach based on a discounted cash flow model, in which expected cash flowsDerivative assets are discounted using current risk-adjusted rates. |
| |
(c) | Includedincluded in other assets in the condensed consolidated balance sheets. |
| |
(d)(b) | IncludedDerivative liabilities are included in other liabilities in the condensed consolidated balance sheets. Amounts accrued for interest payments in a net receivable position are included in other assets in the condensed consolidated balance sheets. |
The fair value for Level 2 instruments was derived using the market approach based on observable market inputs including quoted prices of similar instruments and foreign exchange and interest rate forward curves. The fair value for Level 3 instruments was derived using the income approach based on a discounted cash flow model, in which expected cash flows are discounted using current risk-adjusted rates. 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, 2017 and 2016.
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
The following table presents information on the gains/(losses) on derivative instruments included in the condensed consolidated statements of income and comprehensive income: |
| | | | | | | |
| Income (Losses) Recognized In Income |
| Three Months Ended March 31, |
| 2017 | | 2016 |
Fair value hedges | | | |
Interest rate contracts(a)(b) | $ | 11 |
| | $ | (6 | ) |
Cash flow hedges | | | |
Interest rate contracts(a) | (2 | ) | | — |
|
Foreign currency contracts(c) | 6 |
| | — |
|
Derivatives not designated as hedges | | | |
Interest rate contracts(a) | (5 | ) | | — |
|
Foreign currency derivatives(c)(d) | (22 | ) | | 69 |
|
Total | $ | (12 | ) | | $ | 63 |
|
|
| | | | | | | | | | | | | | | |
| Income (Losses) Recognized In Income |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2016 | | 2015 | | 2016 | | 2015 |
Fair value hedges | | | | | | | |
Interest rate contracts(a)(b) | $ | 6 |
| | $ | — |
| | $ | 26 |
| | $ | — |
|
Cash flow hedges | | | | | | | |
Interest rate contracts(a) | (2 | ) | | — |
| | (2 | ) | | — |
|
Foreign currency contracts | (1 | ) | | — |
| | (1 | ) | | — |
|
Derivatives not designated as hedges | | | | | | | |
Interest rate contracts(a) | 7 |
| | (13 | ) | | (8 | ) | | (12 | ) |
Foreign currency derivatives(c) | 36 |
| | 28 |
| | 201 |
| | 39 |
|
Total | $ | 46 |
| | $ | 15 |
| | $ | 216 |
| | $ | 27 |
|
|
| | | | | | | |
| Gains (Losses) Recognized In Accumulated Other Comprehensive Loss |
| Three Months Ended March 31, |
| 2017 | | 2016 |
Cash flow hedges | | | |
Interest rate contracts | $ | 2 |
| | $ | — |
|
Foreign currency contracts | (3 | ) | | — |
|
Total | $ | (1 | ) | | $ | — |
|
|
| | | | | | | | | | | | | | | |
| Gains Recognized In Accumulated Other Comprehensive Loss |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2016 | | 2015 | | 2016 | | 2015 |
Cash flow hedges | | | | | | | |
Interest rate contracts(a) | $ | 2 |
| | $ | — |
| | $ | (2 | ) | | $ | — |
|
Foreign currency contracts | — |
| | — |
| | — |
| | — |
|
Total | $ | 2 |
| | $ | — |
| | $ | (2 | ) | | $ | — |
|
| | | Gains Reclassified From Accumulated Other Comprehensive Loss Into Income | Gains (Losses) Reclassified From Accumulated Other Comprehensive Loss Into Income |
| Three Months Ended September 30, | | Nine Months Ended September 30, | Three Months Ended March 31, |
| 2016 | | 2015 | | 2016 | | 2015 | 2017 | | 2016 |
Cash flow hedges | | | | | | | | | | |
Interest rate contracts(a) | $ | 1 |
| | $ | — |
| | $ | 1 |
| | $ | — |
| $ | 1 |
| | $ | — |
|
Foreign currency contracts | (4 | ) | | — |
| | (4 | ) | | — |
| (4 | ) | | — |
|
Total | $ | (3 | ) | | $ | — |
| | $ | (3 | ) | | $ | — |
| $ | (3 | ) | | $ | — |
|
_________________
| |
(a) | Recognized in earnings as interest expense. |
| |
(b) | Includes hedge ineffectiveness which reflects the net change in the fair value of interest rate contracts of $57$26 million and $19$2 million offset by the change in fair value of hedged debt attributable to the hedged risk of $54$27 million and $14$4 million for the three and nine months ended September 30,March 31, 2017 and 2016. |
| |
(c) | Recognized in earnings as other operating expenses and interest expense. |
| |
(d) | Activity is substantiallypartially offset by translation activity (included in other operating expenses) related to foreign currency-denominated loans. |
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 and nine months ended September 30, 2016 and 2015.
Note 10. 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 are guaranteed by our primary U.S. operating subsidiary, AFSI. At September 30, 2016March 31, 2017 and December 31, 2015,2016, the par value of these senior notes was $27.3$31.5 billion and $19.1$29.0 billion. SeeRefer to Note 15 - - "Guarantor"Guarantor Condensed Consolidating Financial Statements" for further discussion. Legal Proceedings As a retail finance company, we are subject to various customer 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
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
litigation against us could take the form of class action complaints by customers 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
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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 September 30, 2016,March 31, 2017, we estimated our reasonably possible legal exposure for unfavorable outcomes of up to $96$112 million, and have accrued $35$37 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 have subsequently been served with additional investigative subpoenas to produce documents from state attorneys general and other governmental offices relating to our retail autoautomobile loan and lease business and securitization of auto loans.automobile loans and leases. These investigations are ongoing and 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. Where there is a reasonable possibility that losses exceeding amounts already recognized may be incurred, our estimate of the additional range of loss is up to $44$37 million.
Note 11. 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.
InDuring the three and nine months ended September 30,March 31, 2017 and 2016, income tax expense of $81$58 million and $219 million primarily resulted from tax expense attributable to entities included in our effective rate calculation. In the three and nine months ended September 30, 2015, income tax expense of $52 million and $155$61 million primarily resulted from tax expense attributable to entities included in our effective tax rate calculation. The increasedecrease in tax expense is due primarily to differencesan increase in U.S. taxation on foreign earnings.
tax credits.
We are included in GM’s consolidated U.S. federal income tax return and for certain states’ income tax returns. Net operating losses and certain tax credits generated by us have been utilized by GM; however, income tax expense and deferred tax balances are presented in these financial statements as if we filed our own tax returns in each jurisdiction.
Note 12. 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 ofand the International Segment. The North America Segment includes our operations in the U.S. and Canada) and theCanada. The International Segment (consisting ofincludes our operations in all other countries).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.
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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. Key financialoperating data for our operating segments were as follows:
| | | Three Months Ended September 30, 2016 | Three Months Ended March 31, 2017 |
| North America | | International | | Corporate | | Eliminations | | Total | North America | | International | | Corporate | | Eliminations | | Total |
Total revenue | $ | 2,092 |
| | $ | 407 |
| | $ | — |
| | $ | — |
| | $ | 2,499 |
| $ | 2,474 |
| | $ | 405 |
| | $ | — |
| | $ | — |
| | $ | 2,879 |
|
Operating expenses | 240 |
| | 152 |
| | — |
| | — |
| | 392 |
| 248 |
| | 144 |
| | — |
| | — |
| | 392 |
|
Leased vehicle expenses | 1,194 |
| | 8 |
| | — |
| | — |
| | 1,202 |
| 1,426 |
| | 12 |
| | — |
| | — |
| | 1,438 |
|
Provision for loan losses | 147 |
| | 25 |
| | — |
| | — |
| | 172 |
| 187 |
| | 30 |
| | — |
| | — |
| | 217 |
|
Interest expense | 383 |
| | 158 |
| | — |
| | — |
| | 541 |
| 455 |
| | 164 |
| | — |
| | — |
| | 619 |
|
Equity income | — |
| | 36 |
| | — |
| | — |
| | 36 |
| — |
| | 47 |
| | — |
| | — |
| | 47 |
|
Income before income taxes | $ | 128 |
| | $ | 100 |
| | $ | — |
| | $ | — |
| | $ | 228 |
| $ | 158 |
| | $ | 102 |
| | $ | — |
| | $ | — |
| | $ | 260 |
|
| | | Three Months Ended September 30, 2015 | Three Months Ended March 31, 2016 |
| North America | | International | | Corporate | | Eliminations | | Total | North America | | International | | Corporate | | Eliminations | | Total |
Total revenue | $ | 1,302 |
| | $ | 405 |
| | $ | 2 |
| | $ | (2 | ) | | $ | 1,707 |
| $ | 1,688 |
| | $ | 387 |
| | $ | (1 | ) | | $ | 1 |
| | $ | 2,075 |
|
Operating expenses | 185 |
| | 135 |
| | — |
| | — |
| | 320 |
| 201 |
| | 133 |
| | — |
| | — |
| | 334 |
|
Leased vehicle expenses | 626 |
| | 3 |
| | — |
| | — |
| | 629 |
| 888 |
| | 5 |
| | — |
| | — |
| | 893 |
|
Provision for loan losses | 106 |
| | 38 |
| | — |
| | — |
| | 144 |
| 177 |
| | 19 |
| | — |
| | — |
| | 196 |
|
Interest expense | 214 |
| | 175 |
| | 25 |
| | (2 | ) | | 412 |
| 305 |
| | 157 |
| | — |
| | 1 |
| | 463 |
|
Equity income | — |
| | 29 |
| | — |
| | — |
| | 29 |
| — |
| | 36 |
| | — |
| | — |
| | 36 |
|
Income (loss) before income taxes | $ | 171 |
| | $ | 83 |
| | $ | (23 | ) | | $ | — |
| | $ | 231 |
| $ | 117 |
| | $ | 109 |
| | $ | (1 | ) | | $ | — |
| | $ | 225 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2016 |
| North America | | International | | Corporate | | Eliminations | | Total |
Total revenue | $ | 5,666 |
| | $ | 1,200 |
| | $ | (1 | ) | | $ | 1 |
| | $ | 6,866 |
|
Operating expenses | 656 |
| | 413 |
| | — |
| | — |
| | 1,069 |
|
Leased vehicle expenses | 3,143 |
| | 20 |
| | — |
| | — |
| | 3,163 |
|
Provision for loan losses | 449 |
| | 70 |
| | — |
| | — |
| | 519 |
|
Interest expense | 1,025 |
| | 479 |
| | — |
| | 1 |
| | 1,505 |
|
Equity income | — |
| | 109 |
| | — |
| | — |
| | 109 |
|
Income (loss) before income taxes | $ | 393 |
| | $ | 327 |
| | $ | (1 | ) | | $ | — |
| | $ | 719 |
|
|
| | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, 2015 |
| North America | | International | | Corporate | | Eliminations | | Total |
Total revenue | $ | 3,293 |
| | $ | 1,283 |
| | $ | 13 |
| | $ | (13 | ) | | $ | 4,576 |
|
Operating expenses | 530 |
| | 415 |
| | — |
| | — |
| | 945 |
|
Leased vehicle expenses | 1,416 |
| | 7 |
| | — |
| | — |
| | 1,423 |
|
Provision for loan losses | 335 |
| | 105 |
| | — |
| | — |
| | 440 |
|
Interest expense | 572 |
| | 564 |
| | 60 |
| | (13 | ) | | 1,183 |
|
Equity income | — |
| | 85 |
| | — |
| | — |
| | 85 |
|
Income (loss) before income taxes | $ | 440 |
| | $ | 277 |
| | $ | (47 | ) | | $ | — |
| | $ | 670 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2017 | | December 31, 2016 |
| North America | | International | | Total | | North America | | International | | Total |
Finance receivables, net | $ | 30,618 |
| | $ | 16,292 |
| | $ | 46,910 |
| | $ | 27,617 |
| | $ | 15,573 |
| | $ | 43,190 |
|
Leased vehicles, net | $ | 37,018 |
| | $ | 284 |
| | $ | 37,302 |
| | $ | 34,284 |
| | $ | 242 |
| | $ | 34,526 |
|
Total assets | $ | 74,793 |
| | $ | 19,747 |
| | $ | 94,540 |
| | $ | 68,656 |
| | $ | 19,109 |
| | $ | 87,765 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
|
| | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2016 | | December 31, 2015 |
| North America | | International | | Total | | North America | | International | | Total |
Finance receivables, net | $ | 25,366 |
| | $ | 15,766 |
| | $ | 41,132 |
| | $ | 21,558 |
| | $ | 15,223 |
| | $ | 36,781 |
|
Leased vehicles, net | $ | 31,570 |
| | $ | 205 |
| | $ | 31,775 |
| | $ | 20,086 |
| | $ | 86 |
| | $ | 20,172 |
|
Total assets | $ | 62,596 |
| | $ | 19,515 |
| | $ | 82,111 |
| | $ | 47,419 |
| | $ | 18,485 |
| | $ | 65,904 |
|
Note 13. Accumulated Other Comprehensive Loss | | | Three Months Ended September 30, | | Nine Months Ended September 30, | Three Months Ended March 31, |
| 2016 | | 2015 | | 2016 | | 2015 | 2017 | | 2016 |
Unrealized loss on cash flow hedge | | | | | | | | |
Unrealized gain on cash flow hedge | | | | |
Beginning balance | $ | (4 | ) | | $ | — |
| | $ | — |
| | $ | — |
| $ | 17 |
| | $ | — |
|
Change in value of cash flow hedge, net of tax | (1 | ) | | — |
| | (5 | ) | | — |
| (4 | ) | | — |
|
Ending balance | (5 | ) | | — |
| | (5 | ) | | — |
| 13 |
| | — |
|
Defined benefit plans | | | | | | | | | | |
Beginning balance | (13 | ) | | (10 | ) | | (13 | ) | | (11 | ) | (20 | ) | | (13 | ) |
Unrealized gain on subsidiary pension, net of tax | — |
| | — |
| | — |
| | 1 |
| |
Unrealized gain (loss) on subsidiary pension, net of tax | | — |
| | (1 | ) |
Ending balance | (13 | ) | | (10 | ) | | (13 | ) | | (10 | ) | (20 | ) | | (14 | ) |
Foreign currency translation adjustment | | | | | | | | | | |
Beginning balance | (1,021 | ) | | (664 | ) | | (1,091 | ) | | (422 | ) | (1,235 | ) | | (1,091 | ) |
Translation (loss) income | (10 | ) | | (282 | ) | | 60 |
| | (524 | ) | |
Translation gain, net of tax | | 94 |
| | 153 |
|
Ending balance | (1,031 | ) | | (946 | ) | | (1,031 | ) | | (946 | ) | (1,141 | ) | | (938 | ) |
Total accumulated other comprehensive loss | $ | (1,049 | ) | | $ | (956 | ) | | $ | (1,049 | ) | | $ | (956 | ) | $ | (1,148 | ) | | $ | (952 | ) |
Note 14. Regulatory Capital
We are required to comply with a wide variety of laws and regulations. Our 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 capital requirements as most recently reported.
Total assets of our regulated international banks and finance companies were approximately $13.1 billion and $12.6 billion and $11.1 billion at September 30, 2016March 31, 2017 and December 31, 2015.2016.
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 15. 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")Guarantor) and none of our other subsidiaries (the "Non-Guarantor Subsidiaries")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 September 30, 2016March 31, 2017 and December 31, 2015,2016, and for the three and nine months ended September 30,March 31, 2017 and 2016 and 2015 (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.
We determined that a revision was required to correct the classification
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2017
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
ASSETS | | | | | | | | | |
Cash and cash equivalents | $ | — |
| | $ | 2,040 |
| | $ | 654 |
| | $ | — |
| | $ | 2,694 |
|
Finance receivables, net | — |
| | 7,516 |
| | 39,394 |
| | — |
| | 46,910 |
|
Leased vehicles, net | — |
| | — |
| | 37,302 |
| | — |
| | 37,302 |
|
Goodwill | 1,095 |
| | — |
| | 105 |
| | — |
| | 1,200 |
|
Equity in net assets of non-consolidated affiliates | — |
| | — |
| | 998 |
| | — |
| | 998 |
|
Property and equipment, net | — |
| | 163 |
| | 128 |
| | — |
| | 291 |
|
Deferred income taxes | 613 |
| | 75 |
| | 284 |
| | (688 | ) | | 284 |
|
Related party receivables | — |
| | 73 |
| | 544 |
| | — |
| | 617 |
|
Other assets | 3 |
| | 746 |
| | 3,743 |
| | (248 | ) | | 4,244 |
|
Due from affiliates | 26,778 |
| | 15,992 |
| | — |
| | (42,770 | ) | | — |
|
Investment in affiliates | 9,401 |
| | 5,971 |
| | — |
| | (15,372 | ) | | — |
|
Total assets | $ | 37,890 |
| | $ | 32,576 |
| | $ | 83,152 |
| | $ | (59,078 | ) | | $ | 94,540 |
|
LIABILITIES AND SHAREHOLDER'S EQUITY | | | | | | | | | |
Liabilities | | | | | | | | | |
Secured debt | $ | — |
| | $ | — |
| | $ | 42,827 |
| | $ | (248 | ) | | $ | 42,579 |
|
Unsecured debt | 28,573 |
| | — |
| | 8,797 |
| | — |
| | 37,370 |
|
Accounts payable and accrued expenses | 261 |
| | 330 |
| | 910 |
| | — |
| | 1,501 |
|
Deferred income | — |
| | — |
| | 2,588 |
| | — |
| | 2,588 |
|
Deferred income taxes | — |
| | — |
| | 947 |
| | (688 | ) | | 259 |
|
Related party payables | 1 |
| | — |
| | 447 |
| | — |
| | 448 |
|
Other liabilities | 63 |
| | 476 |
| | 264 |
| | — |
| | 803 |
|
Due to affiliates | — |
| | 25,977 |
| | 16,793 |
| | (42,770 | ) | | — |
|
Total liabilities | 28,898 |
| | 26,783 |
| | 73,573 |
| | (43,706 | ) | | 85,548 |
|
Shareholder's equity | | | | | | | | | |
Common stock | — |
| | — |
| | 698 |
| | (698 | ) | | — |
|
Additional paid-in capital | 6,512 |
| | 79 |
| | 4,652 |
| | (4,731 | ) | | 6,512 |
|
Accumulated other comprehensive loss | (1,148 | ) | | (157 | ) | | (1,123 | ) | | 1,280 |
| | (1,148 | ) |
Retained earnings | 3,628 |
| | 5,871 |
| | 5,352 |
| | (11,223 | ) | | 3,628 |
|
Total shareholder's equity | 8,992 |
| | 5,793 |
| | 9,579 |
| | (15,372 | ) | | 8,992 |
|
Total liabilities and shareholder's equity | $ | 37,890 |
| | $ | 32,576 |
| | $ | 83,152 |
| | $ | (59,078 | ) | | $ | 94,540 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING BALANCE SHEET
September 30,December 31, 2016
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
ASSETS | | | | | | | | | |
Cash and cash equivalents | $ | — |
| | $ | 1,692 |
| | $ | 896 |
| | $ | — |
| | $ | 2,588 |
|
Finance receivables, net | — |
| | 7,932 |
| | 33,200 |
| | — |
| | 41,132 |
|
Leased vehicles, net | — |
| | — |
| | 31,775 |
| | — |
| | 31,775 |
|
Restricted cash | — |
| | 19 |
| | 2,036 |
| | — |
| | 2,055 |
|
Goodwill | 1,095 |
| | — |
| | 103 |
| | — |
| | 1,198 |
|
Equity in net assets of non-consolidated affiliates | — |
| | — |
| | 940 |
| | — |
| | 940 |
|
Property and equipment, net | — |
| | 127 |
| | 126 |
| | — |
| | 253 |
|
Deferred income taxes | 422 |
| | — |
| | 265 |
| | (377 | ) | | 310 |
|
Related party receivables | — |
| | 53 |
| | 797 |
| | — |
| | 850 |
|
Other assets | 18 |
| | 311 |
| | 850 |
| | (169 | ) | | 1,010 |
|
Due from affiliates | 23,089 |
| | 14,177 |
| | — |
| | (37,266 | ) | | — |
|
Investment in affiliates | 9,357 |
| | 4,539 |
| | — |
| | (13,896 | ) | | — |
|
Total assets | $ | 33,981 |
| | $ | 28,850 |
| | $ | 70,988 |
| | $ | (51,708 | ) | | $ | 82,111 |
|
LIABILITIES AND SHAREHOLDER'S EQUITY | | | | | | | | | |
Liabilities | | | | | | | | | |
Secured debt | $ | — |
| | $ | — |
| | $ | 35,406 |
| | $ | (169 | ) | | $ | 35,237 |
|
Unsecured debt | 25,085 |
| | — |
| | 8,441 |
| | — |
| | 33,526 |
|
Accounts payable and accrued expenses | 201 |
| | 289 |
| | 929 |
| | — |
| | 1,419 |
|
Deferred income | — |
| | — |
| | 2,226 |
| | — |
| | 2,226 |
|
Deferred income taxes | — |
| | 15 |
| | 661 |
| | (377 | ) | | 299 |
|
Related party payables | — |
| | — |
| | 407 |
| | — |
| | 407 |
|
Other liabilities | 77 |
| | 38 |
| | 264 |
| | — |
| | 379 |
|
Due to affiliates | — |
| | 23,027 |
| | 14,239 |
| | (37,266 | ) | | — |
|
Total liabilities | 25,363 |
| | 23,369 |
| | 62,573 |
| | (37,812 | ) | | 73,493 |
|
Shareholder's equity | | | | | | | | | |
Common stock | — |
| | — |
| | 698 |
| | (698 | ) | | — |
|
Additional paid-in capital | 6,495 |
| | 79 |
| | 3,972 |
| | (4,051 | ) | | 6,495 |
|
Accumulated other comprehensive loss | (1,049 | ) | | (147 | ) | | (1,029 | ) | | 1,176 |
| | (1,049 | ) |
Retained earnings | 3,172 |
| | 5,549 |
| | 4,774 |
| | (10,323 | ) | | 3,172 |
|
Total shareholder's equity | 8,618 |
| | 5,481 |
| | 8,415 |
| | (13,896 | ) | | 8,618 |
|
Total liabilities and shareholder's equity | $ | 33,981 |
| | $ | 28,850 |
| | $ | 70,988 |
| | $ | (51,708 | ) | | $ | 82,111 |
|
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
ASSETS | | | | | | | | | |
Cash and cash equivalents | $ | — |
| | $ | 2,284 |
| | $ | 917 |
| | $ | — |
| | $ | 3,201 |
|
Finance receivables, net | — |
| | 4,969 |
| | 38,221 |
| | — |
| | 43,190 |
|
Leased vehicles, net | — |
| | — |
| | 34,526 |
| | — |
| | 34,526 |
|
Goodwill | 1,095 |
| | — |
| | 101 |
| | — |
| | 1,196 |
|
Equity in net assets of non-consolidated affiliates | — |
| | — |
| | 944 |
| | — |
| | 944 |
|
Property and equipment, net | — |
| | 152 |
| | 127 |
| | — |
| | 279 |
|
Deferred income taxes | 502 |
| | 89 |
| | 274 |
| | (591 | ) | | 274 |
|
Related party receivables | — |
| | 25 |
| | 485 |
| | — |
| | 510 |
|
Other assets | 4 |
| | 643 |
| | 3,167 |
| | (169 | ) | | 3,645 |
|
Due from affiliates | 24,548 |
| | 16,065 |
| | — |
| | (40,613 | ) | | — |
|
Investment in affiliates | 8,986 |
| | 6,445 |
| | — |
| | (15,431 | ) | | — |
|
Total assets | $ | 35,135 |
| | $ | 30,672 |
| | $ | 78,762 |
| | $ | (56,804 | ) | | $ | 87,765 |
|
LIABILITIES AND SHAREHOLDER'S EQUITY | | | | | | | | | |
Liabilities | | | | | | | | | |
Secured debt | $ | — |
| | $ | — |
| | $ | 39,439 |
| | $ | (169 | ) | | $ | 39,270 |
|
Unsecured debt | 26,076 |
| | — |
| | 8,530 |
| | — |
| | 34,606 |
|
Accounts payable and accrued expenses | 302 |
| | 273 |
| | 899 |
| | — |
| | 1,474 |
|
Deferred income | — |
| | — |
| | 2,365 |
| | — |
| | 2,365 |
|
Deferred income taxes | — |
| | — |
| | 811 |
| | (591 | ) | | 220 |
|
Related party payables | 1 |
| | — |
| | 399 |
| | — |
| | 400 |
|
Other liabilities | 63 |
| | 417 |
| | 257 |
| | — |
| | 737 |
|
Due to affiliates | — |
| | 24,437 |
| | 16,176 |
| | (40,613 | ) | | — |
|
Total liabilities | 26,442 |
| | 25,127 |
| | 68,876 |
| | (41,373 | ) | | 79,072 |
|
Shareholder's equity | | | | | | | | | |
Common stock | — |
| | — |
| | 698 |
| | (698 | ) | | — |
|
Additional paid-in capital | 6,505 |
| | 79 |
| | 5,345 |
| | (5,424 | ) | | 6,505 |
|
Accumulated other comprehensive loss | (1,238 | ) | | (161 | ) | | (1,223 | ) | | 1,384 |
| | (1,238 | ) |
Retained earnings | 3,426 |
| | 5,627 |
| | 5,066 |
| | (10,693 | ) | | 3,426 |
|
Total shareholder's equity | 8,693 |
| | 5,545 |
| | 9,886 |
| | (15,431 | ) | | 8,693 |
|
Total liabilities and shareholder's equity | $ | 35,135 |
| | $ | 30,672 |
| | $ | 78,762 |
| | $ | (56,804 | ) | | $ | 87,765 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING BALANCE SHEETSTATEMENT OF INCOME
DecemberThree Months Ended March 31, 20152017
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
ASSETS | | | | | | | | | |
Cash and cash equivalents | $ | — |
| | $ | 2,259 |
| | $ | 802 |
| | $ | — |
| | $ | 3,061 |
|
Finance receivables, net | — |
| | 4,808 |
| | 31,973 |
| | — |
| | 36,781 |
|
Leased vehicles, net | — |
| | — |
| | 20,172 |
| | — |
| | 20,172 |
|
Restricted cash | — |
| | 60 |
| | 1,881 |
| | — |
| | 1,941 |
|
Goodwill | 1,095 |
| | — |
| | 94 |
| | — |
| | 1,189 |
|
Equity in net assets of non-consolidated affiliates | — |
| | — |
| | 986 |
| | — |
| | 986 |
|
Property and equipment, net | — |
| | 41 |
| | 178 |
| | — |
| | 219 |
|
Deferred income taxes | 212 |
| | — |
| | 179 |
| | (160 | ) | | 231 |
|
Related party receivables | — |
| | 27 |
| | 546 |
| | — |
| | 573 |
|
Other assets | 32 |
| | 32 |
| | 687 |
| | — |
| | 751 |
|
Due from affiliates | 15,573 |
| | 7,556 |
| | — |
| | (23,129 | ) | | — |
|
Investment in affiliates | 8,476 |
| | 6,425 |
| | — |
| | (14,901 | ) | | — |
|
Total assets | $ | 25,388 |
| | $ | 21,208 |
| | $ | 57,498 |
| | $ | (38,190 | ) | | $ | 65,904 |
|
LIABILITIES AND SHAREHOLDER'S EQUITY | | | | | | | | | |
Liabilities | | | | | | | | | |
Secured debt | $ | — |
| | $ | — |
| | $ | 30,689 |
| | $ | — |
| | $ | 30,689 |
|
Unsecured debt | 17,087 |
| | — |
| | 6,570 |
| | — |
| | 23,657 |
|
Accounts payable and accrued expenses | 181 |
| | 717 |
| | 320 |
| | — |
| | 1,218 |
|
Deferred income | — |
| | — |
| | 1,454 |
| | — |
| | 1,454 |
|
Deferred income taxes | — |
| | 289 |
| | — |
| | (160 | ) | | 129 |
|
Related party payables | — |
| | — |
| | 362 |
| | — |
| | 362 |
|
Other liabilities | 68 |
| | 34 |
| | 241 |
| | — |
| | 343 |
|
Due to affiliates | — |
| | 15,495 |
| | 7,634 |
| | (23,129 | ) | | — |
|
Total liabilities | 17,336 |
| | 16,535 |
| | 47,270 |
| | (23,289 | ) | | 57,852 |
|
Shareholder's equity | | | | | | | | | |
Common stock | — |
| | — |
| | 698 |
| | (698 | ) | | — |
|
Additional paid-in capital | 6,484 |
| | 79 |
| | 6,490 |
| | (6,569 | ) | | 6,484 |
|
Accumulated other comprehensive loss | (1,104 | ) | | (175 | ) | | (1,095 | ) | | 1,270 |
| | (1,104 | ) |
Retained earnings | 2,672 |
| | 4,769 |
| | 4,135 |
| | (8,904 | ) | | 2,672 |
|
Total shareholder's equity | 8,052 |
| | 4,673 |
| | 10,228 |
| | (14,901 | ) | | 8,052 |
|
Total liabilities and shareholder's equity | $ | 25,388 |
| | $ | 21,208 |
| | $ | 57,498 |
| | $ | (38,190 | ) | | $ | 65,904 |
|
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Revenue | | | | | | | | | |
Finance charge income | $ | — |
| | $ | 95 |
| | $ | 767 |
| | $ | — |
| | $ | 862 |
|
Leased vehicle income | — |
| | — |
| | 1,942 |
| | — |
| | 1,942 |
|
Other income | — |
| | 273 |
| | 1 |
| | (199 | ) | | 75 |
|
Total revenue | — |
| | 368 |
| | 2,710 |
| | (199 | ) | | 2,879 |
|
Costs and expenses | | | | | | | | | |
Salaries and benefits | — |
| | 163 |
| | 66 |
| | — |
| | 229 |
|
Other operating expenses | 7 |
| | 44 |
| | 222 |
| | (110 | ) | | 163 |
|
Total operating expenses | 7 |
| | 207 |
| | 288 |
| | (110 | ) | | 392 |
|
Leased vehicle expenses | — |
| | — |
| | 1,438 |
| | — |
| | 1,438 |
|
Provision for loan losses | — |
| | 73 |
| | 144 |
| | — |
| | 217 |
|
Interest expense | 235 |
| | 33 |
| | 440 |
| | (89 | ) | | 619 |
|
Total costs and expenses | 242 |
| | 313 |
| | 2,310 |
| | (199 | ) | | 2,666 |
|
Equity income | 315 |
| | 215 |
| | 47 |
| | (530 | ) | | 47 |
|
Income before income taxes | 73 |
| | 270 |
| | 447 |
| | (530 | ) | | 260 |
|
Income tax (benefit) provision | (129 | ) | | 26 |
| | 161 |
| | — |
| | 58 |
|
Net income | $ | 202 |
| | $ | 244 |
| | $ | 286 |
| | $ | (530 | ) | | $ | 202 |
|
| | | | | | | | | |
Comprehensive income | $ | 292 |
| | $ | 248 |
| | $ | 386 |
| | $ | (634 | ) | | $ | 292 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 30,March 31, 2016
(Unaudited)
| | | General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated | General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Revenue | | | | | | | | | | | | | | | | | | |
Finance charge income | $ | — |
| | $ | 127 |
| | $ | 710 |
| | $ | — |
| | $ | 837 |
| $ | — |
| | $ | 99 |
| | $ | 719 |
| | $ | — |
| | $ | 818 |
|
Leased vehicle income | — |
| | — |
| | 1,590 |
| | — |
| | 1,590 |
| — |
| | — |
| | 1,184 |
| | — |
| | 1,184 |
|
Other income | — |
| | 213 |
| | 30 |
| | (171 | ) | | 72 |
| (1 | ) | | 205 |
| | 15 |
| | (146 | ) | | 73 |
|
Total revenue | — |
| | 340 |
| | 2,330 |
| | (171 | ) | | 2,499 |
| (1 | ) | | 304 |
| | 1,918 |
| | (146 | ) | | 2,075 |
|
Costs and expenses | | | | | | | | | | | | | | | | | | |
Salaries and benefits | — |
| | 157 |
| | 66 |
| | — |
| | 223 |
| — |
| | 135 |
| | 58 |
| | — |
| | 193 |
|
Other operating expenses | 6 |
| | 54 |
| | 210 |
| | (101 | ) | | 169 |
| (4 | ) | | 68 |
| | 170 |
| | (93 | ) | | 141 |
|
Total operating expenses | 6 |
| | 211 |
| | 276 |
| | (101 | ) | | 392 |
| (4 | ) | | 203 |
| | 228 |
| | (93 | ) | | 334 |
|
Leased vehicle expenses | — |
| | — |
| | 1,202 |
| | — |
| | 1,202 |
| — |
| | — |
| | 893 |
| | — |
| | 893 |
|
Provision for loan losses | — |
| | 102 |
| | 70 |
| | — |
| | 172 |
| — |
| | 103 |
| | 93 |
| | — |
| | 196 |
|
Interest expense | 171 |
| | 54 |
| | 386 |
| | (70 | ) | | 541 |
| 176 |
| | (30 | ) | | 370 |
| | (53 | ) | | 463 |
|
Total costs and expenses | 177 |
| | 367 |
| | 1,934 |
| | (171 | ) | | 2,307 |
| 172 |
| | 276 |
| | 1,584 |
| | (146 | ) | | 1,886 |
|
Equity income | 267 |
| | 202 |
| | 36 |
| | (469 | ) | | 36 |
| 255 |
| | 168 |
| | 36 |
| | (423 | ) | | 36 |
|
Income before income taxes | 90 |
| | 175 |
| | 432 |
| | (469 | ) | | 228 |
| 82 |
| | 196 |
| | 370 |
| | (423 | ) | | 225 |
|
Income tax (benefit) provision | (57 | ) | | (17 | ) | | 155 |
| | — |
| | 81 |
| (82 | ) | | 12 |
| | 131 |
| | — |
| | 61 |
|
Net income | $ | 147 |
| | $ | 192 |
| | $ | 277 |
| | $ | (469 | ) | | $ | 147 |
| $ | 164 |
| | $ | 184 |
| | $ | 239 |
| | $ | (423 | ) | | $ | 164 |
|
| | | | | | | | | | | | | | | | | | |
Comprehensive income | $ | 136 |
| | $ | 183 |
| | $ | 270 |
| | $ | (453 | ) | | $ | 136 |
| $ | 316 |
| | $ | 223 |
| | $ | 398 |
| | $ | (621 | ) | | $ | 316 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING STATEMENT OF INCOMECASH FLOWS
Three Months Ended September 30, 2015March 31, 2017
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Revenue | | | | | | | | | |
Finance charge income | $ | — |
| | $ | 114 |
| | $ | 728 |
| | $ | — |
| | $ | 842 |
|
Leased vehicle income | — |
| | — |
| | 797 |
| | — |
| | 797 |
|
Other income | 2 |
| | 137 |
| | 33 |
| | (104 | ) | | 68 |
|
Total revenue | 2 |
| | 251 |
| | 1,558 |
| | (104 | ) | | 1,707 |
|
Costs and expenses | | | | | | | | | |
Salaries and benefits | — |
| | 79 |
| | 106 |
| | — |
| | 185 |
|
Other operating expenses | 21 |
| | 25 |
| | 150 |
| | (61 | ) | | 135 |
|
Total operating expenses | 21 |
| | 104 |
| | 256 |
| | (61 | ) | | 320 |
|
Leased vehicle expenses | — |
| | — |
| | 629 |
| | — |
| | 629 |
|
Provision for loan losses | — |
| | 112 |
| | 32 |
| | — |
| | 144 |
|
Interest expense | 134 |
| | — |
| | 321 |
| | (43 | ) | | 412 |
|
Total costs and expenses | 155 |
| | 216 |
| | 1,238 |
| | (104 | ) | | 1,505 |
|
Equity income | 255 |
| | 167 |
| | 29 |
| | (422 | ) | | 29 |
|
Income before income taxes | 102 |
| | 202 |
| | 349 |
| | (422 | ) | | 231 |
|
Income tax (benefit) provision | (77 | ) | | 15 |
| | 114 |
| | — |
| | 52 |
|
Net income | $ | 179 |
| | $ | 187 |
| | $ | 235 |
| | $ | (422 | ) | | $ | 179 |
|
| | | | | | | | | |
Comprehensive (loss) income | $ | (103 | ) | | $ | 141 |
| | $ | (47 | ) | | $ | (94 | ) | | $ | (103 | ) |
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net cash (used in) provided by operating activities | $ | (273 | ) | | $ | 103 |
| | $ | 1,586 |
| | $ | — |
| | $ | 1,416 |
|
Cash flows from investing activities | | | | | | | | | |
Purchases of retail finance receivables, net | — |
| | (4,920 | ) | | (3,850 | ) | | 2,369 |
| | (6,401 | ) |
Principal collections and recoveries on retail finance receivables | — |
| | 450 |
| | 3,145 |
| | — |
| | 3,595 |
|
Proceeds from transfer of retail finance receivables, net | — |
| | 2,095 |
| | 274 |
| | (2,369 | ) | | — |
|
Net funding of commercial finance receivables | — |
| | (194 | ) | | (347 | ) | | — |
| | (541 | ) |
Purchases of leased vehicles, net | — |
| | — |
| | (4,794 | ) | | — |
| | (4,794 | ) |
Proceeds from termination of leased vehicles | — |
| | — |
| | 1,082 |
| | — |
| | 1,082 |
|
Purchases of property and equipment | — |
| | (19 | ) | | (5 | ) | | — |
| | (24 | ) |
Other investing activities | — |
| | (79 | ) | |
|
| | 79 |
| | — |
|
Net change in due from affiliates | (2,230 | ) | | 80 |
| | — |
| | 2,150 |
| | — |
|
Net change in investment in affiliates | — |
| | 694 |
| | — |
| | (694 | ) | | — |
|
Net cash used in investing activities | (2,230 | ) | | (1,893 | ) | | (4,495 | ) | | 1,535 |
| | (7,083 | ) |
Cash flows from financing activities | | | | | | | | | |
Net change in debt (original maturities less than three months) | 17 |
| | — |
| | (285 | ) | | — |
| | (268 | ) |
Borrowings and issuance of secured debt | — |
| | — |
| | 8,440 |
| | (79 | ) | | 8,361 |
|
Payments on secured debt | — |
| | — |
| | (4,805 | ) | | — |
| | (4,805 | ) |
Borrowings and issuance of unsecured debt | 2,497 |
| | — |
| | 471 |
| | — |
| | 2,968 |
|
Payments on unsecured debt | — |
| | — |
| | (574 | ) | | — |
| | (574 | ) |
Debt issuance costs | (11 | ) | | — |
| | (16 | ) | | — |
| | (27 | ) |
Net capital contributions | — |
| | — |
| | (694 | ) | | 694 |
| | — |
|
Net change in due to affiliates | — |
| | 1,546 |
| | 604 |
| | (2,150 | ) | | — |
|
Net cash provided by financing activities | 2,503 |
| | 1,546 |
| | 3,141 |
| | (1,535 | ) | | 5,655 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash | — |
| | (244 | ) | | 232 |
| | — |
| | (12 | ) |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | — |
| | — |
| | 37 |
| | — |
| | 37 |
|
Cash, cash equivalents and restricted cash at beginning of period | — |
| | 2,284 |
| | 3,018 |
| | — |
| | 5,302 |
|
Cash, cash equivalents and restricted cash at end of period | $ | — |
| | $ | 2,040 |
| | $ | 3,287 |
| | $ | — |
| | $ | 5,327 |
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidating balance sheet:
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Cash and cash equivalents | $ | — |
| | $ | 2,040 |
| | $ | 654 |
| | $ | — |
| | $ | 2,694 |
|
Restricted cash included in other assets | — |
| | — |
| | 2,633 |
| | — |
| | 2,633 |
|
Total | $ | — |
| | $ | 2,040 |
| | $ | 3,287 |
| | $ | — |
| | $ | 5,327 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 30, 2016
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Revenue | | | | | | | | | |
Finance charge income | $ | — |
| | $ | 344 |
| | $ | 2,137 |
| | $ | — |
| | $ | 2,481 |
|
Leased vehicle income | — |
| | — |
| | 4,164 |
| | — |
| | 4,164 |
|
Other income | (1 | ) | | 628 |
| | 74 |
| | (480 | ) | | 221 |
|
Total revenue | (1 | ) | | 972 |
| | 6,375 |
| | (480 | ) | | 6,866 |
|
Costs and expenses | | | | | | | | | |
Salaries and benefits | — |
| | 432 |
| | 187 |
| | — |
| | 619 |
|
Other operating expenses | 2 |
| | 175 |
| | 565 |
| | (292 | ) | | 450 |
|
Total operating expenses | 2 |
| | 607 |
| | 752 |
| | (292 | ) | | 1,069 |
|
Leased vehicle expenses | — |
| | — |
| | 3,163 |
| | — |
| | 3,163 |
|
Provision for loan losses | — |
| | 282 |
| | 237 |
| | — |
| | 519 |
|
Interest expense | 612 |
| | (67 | ) | | 1,148 |
| | (188 | ) | | 1,505 |
|
Total costs and expenses | 614 |
| | 822 |
| | 5,300 |
| | (480 | ) | | 6,256 |
|
Equity income | 858 |
| | 538 |
| | 109 |
| | (1,396 | ) | | 109 |
|
Income before income taxes | 243 |
| | 688 |
| | 1,184 |
| | (1,396 | ) | | 719 |
|
Income tax (benefit) provision | (257 | ) | | 63 |
| | 413 |
| | — |
| | 219 |
|
Net income | $ | 500 |
| | $ | 625 |
| | $ | 771 |
| | $ | (1,396 | ) | | $ | 500 |
|
| | | | | | | | | |
Comprehensive income | $ | 555 |
| | $ | 653 |
| | $ | 837 |
| | $ | (1,490 | ) | | $ | 555 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 30, 2015
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Revenue | | | | | | | | | |
Finance charge income | $ | — |
| | $ | 294 |
| | $ | 2,250 |
| | $ | — |
| | $ | 2,544 |
|
Leased vehicle income | — |
| | — |
| | 1,827 |
| | — |
| | 1,827 |
|
Other income | 13 |
| | 363 |
| | 118 |
| | (289 | ) | | 205 |
|
Total revenue | 13 |
| | 657 |
| | 4,195 |
| | (289 | ) | | 4,576 |
|
Costs and expenses | | | | | | | | | |
Salaries and benefits | — |
| | 245 |
| | 286 |
| | — |
| | 531 |
|
Other operating expenses | 56 |
| | 95 |
| | 453 |
| | (190 | ) | | 414 |
|
Total operating expenses | 56 |
| | 340 |
| | 739 |
| | (190 | ) | | 945 |
|
Leased vehicle expenses | — |
| | — |
| | 1,423 |
| | — |
| | 1,423 |
|
Provision for loan losses | — |
| | 302 |
| | 138 |
| | — |
| | 440 |
|
Interest expense | 342 |
| | 1 |
| | 939 |
| | (99 | ) | | 1,183 |
|
Total costs and expenses | 398 |
| | 643 |
| | 3,239 |
| | (289 | ) | | 3,991 |
|
Equity income | 716 |
| | 452 |
| | 85 |
| | (1,168 | ) | | 85 |
|
Income before income taxes | 331 |
| | 466 |
| | 1,041 |
| | (1,168 | ) | | 670 |
|
Income tax (benefit) provision | (184 | ) | | 6 |
| | 333 |
| | — |
| | 155 |
|
Net income | $ | 515 |
| | $ | 460 |
| | $ | 708 |
| | $ | (1,168 | ) | | $ | 515 |
|
| | | | | | | | | |
Comprehensive (loss) income | $ | (8 | ) | | $ | 370 |
| | $ | 181 |
| | $ | (551 | ) | | $ | (8 | ) |
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NineThree Months Ended September 30,March 31, 2016
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net cash (used in) provided by operating activities | $ | (469 | ) | | $ | (379 | ) | | $ | 4,704 |
| | $ | — |
| | $ | 3,856 |
|
Cash flows from investing activities | | | | | | | | | |
Purchases of retail finance receivables, net | — |
| | (12,676 | ) | | (12,891 | ) | | 12,315 |
| | (13,252 | ) |
Principal collections and recoveries on retail finance receivables | — |
| | 1,274 |
| | 8,630 |
| | — |
| | 9,904 |
|
Proceeds from transfer of retail finance receivables, net | — |
| | 8,232 |
| | 4,083 |
| | (12,315 | ) | | — |
|
Net funding of commercial finance receivables | — |
| | (335 | ) | | (1,347 | ) | | — |
| | (1,682 | ) |
Purchases of leased vehicles, net | — |
| | — |
| | (15,030 | ) | | — |
| | (15,030 | ) |
Proceeds from termination of leased vehicles | — |
| | — |
| | 1,801 |
| | — |
| | 1,801 |
|
Purchases of property and equipment | — |
| | (50 | ) | | (21 | ) | | — |
| | (71 | ) |
Change in restricted cash | — |
| | 41 |
| | (164 | ) | | — |
| | (123 | ) |
Other investing activities |
| | (169 | ) | | (3 | ) | | 169 |
| | (3 | ) |
Net change in due from affiliates | (7,506 | ) | | (6,621 | ) | | — |
| | 14,127 |
| | — |
|
Net change in investment in affiliates | 24 |
| | 2,473 |
| | — |
| | (2,497 | ) | | — |
|
Net cash used in investing activities | (7,482 | ) | | (7,831 | ) | | (14,942 | ) | | 11,799 |
| | (18,456 | ) |
Cash flows from financing activities | | | | | | | | | |
Net change in debt (original maturities less than three months) | 1 |
| | — |
| | 496 |
| | — |
| | 497 |
|
Borrowings and issuance of secured debt | — |
| | — |
| | 19,573 |
| | (169 | ) | | 19,404 |
|
Payments on secured debt | — |
| | — |
| | (14,599 | ) | | — |
| | (14,599 | ) |
Borrowings and issuance of unsecured debt | 8,987 |
| | — |
| | 2,312 |
| | — |
| | 11,299 |
|
Payments on unsecured debt | (1,000 | ) | | — |
| | (1,386 | ) | | — |
| | (2,386 | ) |
Net capital contributions | — |
| | — |
| | (2,497 | ) | | 2,497 |
| | — |
|
Debt issuance costs | (37 | ) | | — |
| | (82 | ) | | — |
| | (119 | ) |
Net change in due to affiliates | — |
| | 7,643 |
| | 6,484 |
| | (14,127 | ) | | — |
|
Net cash provided by financing activities | 7,951 |
| | 7,643 |
| | 10,301 |
| | (11,799 | ) | | 14,096 |
|
Net increase (decrease) in cash and cash equivalents | — |
| | (567 | ) | | 63 |
| | — |
| | (504 | ) |
Effect of foreign exchange rate changes on cash and cash equivalents | — |
| | — |
| | 31 |
| | — |
| | 31 |
|
Cash and cash equivalents at beginning of period | — |
| | 2,259 |
| | 802 |
| | — |
| | 3,061 |
|
Cash and cash equivalents at end of period | $ | — |
| | $ | 1,692 |
| | $ | 896 |
| | $ | — |
| | $ | 2,588 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2015
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net cash (used in) provided by operating activities | $ | (184 | ) | | $ | 314 |
| | $ | 2,037 |
| | $ | — |
| | $ | 2,167 |
|
Cash flows from investing activities | | | | | | | | | |
Purchases of retail finance receivables, net | — |
| | (9,045 | ) | | (11,938 | ) | | 7,884 |
| | (13,099 | ) |
Principal collections and recoveries on retail finance receivables | — |
| | 414 |
| | 8,304 |
| | — |
| | 8,718 |
|
Proceeds from transfer of retail finance receivables, net | — |
| | 6,939 |
| | 945 |
| | (7,884 | ) | | — |
|
Net funding of commercial finance receivables | — |
| | 172 |
| | (351 | ) | | — |
| | (179 | ) |
Purchases of leased vehicles, net | — |
| | — |
| | (11,258 | ) | | — |
| | (11,258 | ) |
Proceeds from termination of leased vehicles | — |
| | — |
| | 662 |
| | — |
| | 662 |
|
Acquisition of international operations | (513 | ) | | (536 | ) | | — |
| | — |
| | (1,049 | ) |
Disposition of equity interest | — |
| | 125 |
| | — |
| | — |
| | 125 |
|
Purchases of property and equipment | — |
| | (22 | ) | | (42 | ) | | — |
| | (64 | ) |
Change in restricted cash | — |
| | (20 | ) | | (216 | ) | | — |
| | (236 | ) |
Other investing activities | — |
| | — |
| | 24 |
| | — |
| | 24 |
|
Net change in due from affiliates | (6,189 | ) | | (3,973 | ) | | — |
| | 10,162 |
| | — |
|
Net change in investment in affiliates | (6 | ) | | (2,644 | ) | | — |
| | 2,650 |
| | — |
|
Net cash used in investing activities | (6,708 | ) | | (8,590 | ) | | (13,870 | ) | | 12,812 |
| | (16,356 | ) |
Cash flows from financing activities | | | | | | | | | |
Net change in debt (original maturities less than three months) | — |
| | — |
| | 539 |
| | — |
| | 539 |
|
Borrowings and issuance of secured debt | — |
| | — |
| | 15,095 |
| | — |
| | 15,095 |
|
Payments on secured debt | — |
| | — |
| | (10,903 | ) | | — |
| | (10,903 | ) |
Borrowings and issuance of unsecured debt | 6,939 |
| | — |
| | 2,620 |
| | — |
| | 9,559 |
|
Payments on unsecured debt | — |
| | — |
| | (1,195 | ) | | — |
| | (1,195 | ) |
Net capital contributions | — |
| | — |
| | 2,650 |
| | (2,650 | ) | | — |
|
Debt issuance costs | (47 | ) | | — |
| | (77 | ) | | — |
| | (124 | ) |
Net change in due to affiliates | — |
| | 6,844 |
| | 3,318 |
| | (10,162 | ) | | — |
|
Net cash provided by financing activities | 6,892 |
| | 6,844 |
| | 12,047 |
| | (12,812 | ) | | 12,971 |
|
Net increase (decrease) in cash and cash equivalents | — |
| | (1,432 | ) | | 214 |
| | — |
| | (1,218 | ) |
Effect of foreign exchange rate changes on cash and cash equivalents | — |
| | — |
| | (154 | ) | | — |
| | (154 | ) |
Cash and cash equivalents at beginning of period | — |
| | 2,266 |
| | 708 |
| | — |
| | 2,974 |
|
Cash and cash equivalents at end of period | $ | — |
| | $ | 834 |
| | $ | 768 |
| | $ | — |
| | $ | 1,602 |
|
|
| | | | | | | | | | | | | | | | | | | |
| General Motors Financial Company, Inc. | | Guarantor | | Non- Guarantors | | Eliminations | | Consolidated |
Net cash (used in) provided by operating activities | $ | (144 | ) | | $ | (537 | ) | | $ | 1,839 |
| | $ | — |
| | $ | 1,158 |
|
Cash flows from investing activities | | | | | | | | | |
Purchases of retail finance receivables, net | — |
| | (4,466 | ) | | (4,388 | ) | | 4,689 |
| | (4,165 | ) |
Principal collections and recoveries on retail finance receivables | — |
| | 359 |
| | 2,912 |
| | — |
| | 3,271 |
|
Proceeds from transfer of retail finance receivables, net | — |
| | 2,866 |
| | 1,823 |
| | (4,689 | ) | | — |
|
Net funding of commercial finance receivables | — |
| | (227 | ) | | (797 | ) | | — |
| | (1,024 | ) |
Purchases of leased vehicles, net | — |
| | — |
| | (5,158 | ) | | — |
| | (5,158 | ) |
Proceeds from termination of leased vehicles | — |
| | — |
| | 481 |
| | — |
| | 481 |
|
Purchases of property and equipment | — |
| | (15 | ) | | (5 | ) | | — |
| | (20 | ) |
Other investing activities | — |
| | (60 | ) | | 1 |
| | 60 |
| | 1 |
|
Net change in due from affiliates | (2,587 | ) | | (1,208 | ) | | — |
| | 3,795 |
| | — |
|
Net change in investment in affiliates | — |
| | 336 |
| | — |
| | (336 | ) | | — |
|
Net cash used in investing activities | (2,587 | ) | | (2,415 | ) | | (5,131 | ) | | 3,519 |
| | (6,614 | ) |
Cash flows from financing activities | | | | | | | | | |
Net change in debt (original maturities less than three months) | — |
| | — |
| | 757 |
| | — |
| | 757 |
|
Borrowings and issuance of secured debt | — |
| | — |
| | 7,114 |
| | (60 | ) | | 7,054 |
|
Payments on secured debt | — |
| | — |
| | (5,251 | ) | | — |
| | (5,251 | ) |
Borrowings and issuance of unsecured debt | 2,744 |
| | — |
| | 387 |
| | — |
| | 3,131 |
|
Payments on unsecured debt | — |
| | — |
| | (241 | ) | | — |
| | (241 | ) |
Debt issuance costs | (13 | ) | | — |
| | (13 | ) | | — |
| | (26 | ) |
Net capital contributions | — |
| | — |
| | (336 | ) | | 336 |
| | — |
|
Net change in due to affiliates | — |
| | 2,732 |
| | 1,063 |
| | (3,795 | ) | | — |
|
Net cash provided by financing activities | 2,731 |
| | 2,732 |
| | 3,480 |
| | (3,519 | ) | | 5,424 |
|
Net increase (decrease) in cash, cash equivalents, and restricted cash | — |
| | (220 | ) | | 188 |
| | — |
| | (32 | ) |
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | — |
| | — |
| | 58 |
| | — |
| | 58 |
|
Cash, cash equivalents and restricted cash at beginning of period | — |
| | 2,319 |
| | 2,683 |
| | — |
| | 5,002 |
|
Cash, cash equivalents and restricted cash at end of period | $ | — |
| | $ | 2,099 |
| | $ | 2,929 |
| | $ | — |
| | $ | 5,028 |
|
GENERAL MOTORS FINANCIAL COMPANY, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Basis of Presentation This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying condensed consolidated financial statements and the audited consolidated financial statements and notes thereto included in our 20152016 Form 10-K.
Forward-looking statements in this MD&A are not guarantees of future performance and may involve risks and uncertainties that could cause actual results to differ materially from those projected. Refer to the "Forward-Looking Statements" section of this MD&A and the "Risk Factors" section of our 20152016 Form 10-K for a discussion of these risks and uncertainties. Except as otherwise specified, dollar amounts presented within tables are stated in millions.
Retail Our retail automobile finance programs in the North America Segment include full credit spectrumfull-spectrum lending and leasing offered through GM-franchised dealers under the "GM Financial" brand. We also offer a sub-prime lending product through non-GM franchisednon-GM-franchised and select independent dealers under the "AmeriCredit" brand. Our sub-prime lending program is designed to serve customers who have limited access to automobile financing through banks and credit unions. Therefore, weWe therefore generally charge higher rates than those charged by banks and credit unions and expect to sustain a higher level of credit losses than on prime lending. We finance new GM vehicles, moderately-priced new vehicles from other manufacturers, and later-model, low mileage used vehicles.
The retail lending and leasing programs in our International Segment focus on financing new GM vehicles and select used vehicles, predominantly for customers with prime credit scores. We also offer finance-relatedfinance and/or car-related insurance products through third parties, such as credit life,payment protection insurance, gap, and extended warranty, coverage.and motor insurance.
We have expanded our leasing and prime lending programs through GM-franchised dealerships in North America;the U.S.; therefore, leasing and prime lending have become a larger percentage of our originations and retail portfolio balance. We have been the exclusive subvented lease provider for GM in the U.S. since April 2015 and the exclusive subvented loan provider for GM in the U.S. since January 2016. We define prime lending as lending to customers with FICO scores or equivalents of 680 and greater, near-prime lending as lending to customers with FICO scores or equivalents of 620 to 679, and sub-prime lending as lending to customers with FICO scores or equivalents of less than 620. The following table presents our retail loan and lease originations in the North America Segment by FICO score band or equivalents:
|
| | | | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2016 | | 2015 |
| Amount | | Percentage | | Amount | | Percentage |
Prime - FICO Score 680 and greater | $ | 19,330 |
| | 69.6 | % | | $ | 14,278 |
| | 62.5 | % |
Near-prime - FICO Score 620 to 679 | 3,606 |
| | 13.0 |
| | 3,580 |
| | 15.7 |
|
Sub-prime - FICO Score less than 620 | 4,829 |
| | 17.4 |
| | 4,967 |
| | 21.8 |
|
Total originations | $ | 27,765 |
| | 100.0 | % | | $ | 22,825 |
| | 100.0 | % |
|
| | | | | | | | | | | | | |
| Three Months Ended March 31, |
| 2017 | | 2016 |
| Amount | | Percentage | | Amount | | Percentage |
Prime | $ | 8,253 |
| | 74.5 | % | | $ | 6,347 |
| | 68.3 | % |
Near-prime | 1,245 |
| | 11.2 |
| | 1,241 |
| | 13.3 |
|
Sub-prime | 1,579 |
| | 14.3 |
| | 1,712 |
| | 18.4 |
|
Total originations | $ | 11,077 |
| | 100.0 | % | | $ | 9,300 |
| | 100.0 | % |
The following table summarizes the residual value as well as the number of vehicles, by type that areunits included in Note 4 - "Leased Vehicles" to the condensed consolidated financial statements, of which the North America Segment accounted for approximately 99% at September 30, 2016 and 2015:leased vehicles, net by vehicle type (units in thousands): | | | September 30, 2016 | | September 30, 2015 | March 31, 2017 | | December 31, 2016 |
| Number | | Percentage | | Number | | Percentage | Residual Value | | Units | | Percentage | | Residual Value | | Units | | Percentage |
Cars | 407,236 |
| | 33.4 | % | | 234,435 |
| | 35.1 | % | $ | 5,738 |
| | 455 |
| | 31.4 | % | | $ | 5,341 |
| | 430 |
| | 32.2 | % |
Trucks | 207,199 |
| | 17.0 |
| | 97,656 |
| | 14.7 |
| 5,669 |
| | 239 |
| | 16.5 |
| | 5,236 |
| | 224 |
| | 16.8 |
|
Crossovers | 605,780 |
| | 49.6 |
| | 334,493 |
| | 50.2 |
| |
CUVs | | 11,437 |
| | 675 |
| | 46.5 |
| | 10,366 |
| | 606 |
| | 45.4 |
|
SUVs | | 3,060 |
| | 82 |
| | 5.6 |
| | 2,791 |
| | 75 |
| | 5.6 |
|
Total | 1,220,215 |
| | 100.0 | % | | 666,584 |
| | 100.0 | % | $ | 25,904 |
| | 1,451 |
| | 100.0 | % | | $ | 23,734 |
| | 1,335 |
| | 100.0 | % |
We expect used car prices to decline approximately 7% during 2017 as compared to 2016 and expect potential further moderation in 2018 due primarily to an increased supply of used vehicles. We are currently experiencing weaker residual values, especially in the crossover segment. We continue to expect pre-tax income to double from 2014 earnings of $815 million once full captive penetration levels are achieved.
GENERAL MOTORS FINANCIAL COMPANY, INC.
The following table summarizes additional information for North America operating leases:leases (in thousands):
|
| | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
| 2016 | | 2015 | | 2016 | | 2015 |
Operating leases originated (a) | 160,147 |
| | 170,164 |
| | 516,016 |
| | 404,016 |
|
Operating leases terminated (b) | 36,511 |
| | 15,786 |
| | 94,294 |
| | 41,710 |
|
Operating lease vehicles returned (c) | 17,427 |
| | 5,618 |
| | 44,409 |
| | 15,905 |
|
Return rate (d) | 48 | % | | 36 | % | | 47 | % | | 38 | % |
|
| | | | | |
| Three Months Ended March 31, |
| 2017 | | 2016 |
Operating leases originated(a) | 174 |
| | 187 |
|
Operating leases terminated(b) | 59 |
| | 26 |
|
Operating lease vehicles returned(c) | 38 |
| | 13 |
|
Return rate(d) | 64 | % | | 48 | % |
________________
| |
(a) | Operating leases originated represents the number of operating leases we purchase during a given period. Since early 2015, operating leases originated increased due to the implementation of our exclusive subvention arrangement with GM. |
| |
(b) | Operating leases terminated represents the number of vehicles for which the lease has ended during a given period. Operating leases terminated increased due to the growth of the lease portfolio. |
| |
(c) | Operating lease vehicles returned represents the number of vehicles returned to us for remarketing at the end of the lease term. Operating lease vehicles returned increased due to the growth of the lease portfolio. |
| |
(d) | Return rates are calculated as the number of operating leased vehiclesleases returned divided by the number of operating leases terminated. Due to the age and size of our lease portfolio, the current return rates are lower than we expect them to become as our lease portfolio grows and matures. |
Operating leases terminated and operating lease vehicles returned increased due to the growth and maturity of the lease portfolio. Due to the current age and size of our lease portfolio, the current return rate is lower than we expect it to be in future periods as our lease portfolio grows and matures.
Commercial Our commercial lending program isprograms are offered primarily to our GM-franchised dealer customers and their affiliates. Commercial lending products consist ofinclude floorplan financing, also known as wholesale or inventory financing, which is lending to finance vehicle inventory, as well as dealer loans, which are loans to finance improvements to dealership facilities, to provide working capital, and to purchase and/or finance dealership real estate. Other commercial products include primarilyfinancing for parts and accessories, dealer fleet financingfleets and storage center financing.centers.
We establish new and used vehicle inventory credit lines at the time of dealer account acquisition, subject to revision as part of subsequent credit reviews. The maximum availability on these credit lines is based upon a dealer’s monthly vehicle sales rate and financial strength at the time of account acquisition or periodic review, as applicable. At times, a dealer’s vehicle inventory needs may exceed its credit line availability for a number of reasons, such as seasonal factory build-out, planned marketing events, reductions in sales, or other business and seasonal factors. When a dealer's needs require that its outstanding balance be allowed to exceed the maximum availability under its credit line(s), we may accept a temporary overline situation, reallocate credit amounts among existing lines, temporarily or permanently increase the dealer's credit line(s), or suspend the dealer's credit lines(s). The action we take depends on communications with the dealer, analysis of the dealer's financial condition and the underlying cause of the need for the overline.
FinancingWe primarily finance our loan, lease and commercial originationsorigination volume through the use of our secured and unsecured credit facilities, through public and private securitization transactions where such markets are developed, through the issuance of unsecured debt in the public markets and by accepting deposits from retail banking customers in Germany. Generally, we seek to fund our operations through local sources of funding to minimize currency and country risk. Werisk, although we may issue debt globally in order to enhance investorfunding source diversification and support financing needs for North America.the U.S. As such, the mix of funding sources varies from country to country, based on the characteristics of our earning assets and the relative development of the capital markets in each country. Our operations in the U.S., Canada, Latin America and China are generally funded locally. Our European operations obtain most of their funding from local sources and also borrow funds from affiliated companies. We actively monitor the capital markets and seek to optimize our mix of funding sources and our cost of funds.
PSA Transaction On March 5, 2017, GM through a wholly-owned subsidiary (the Seller), entered into a Master Agreement with Peugeot, S.A. (PSA Group) pursuant to which PSA Group will acquire GM's Opel and Vauxhall businesses and certain other assets in Europe (the Opel/Vauxhall Business) and certain of our European subsidiaries and branches (European Operations, together with the Opel/Vauxhall Business, the Transferred Business), as described in Note 2 - "Disposition of Business" to our condensed consolidated financial statements. The net consideration to be paid for our European Operations will be 0.8 times their book value at closing, which we estimate will be approximately $1 billion, denominated in Euros. The purchase price is subject to certain adjustments as provided in the Agreement. We expect to recognize a disposal loss of approximately $700 million to $800 million at closing.
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 AG of its assets and liabilities to a subsidiary, the transfer of GMAC UK plc’s interest in SAIC-GMAC Automotive Finance Company Limited to us 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 our 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 our European Operations will not occur unless the transfer of the Opel/Vauxhall Business occurs.
GENERAL MOTORS FINANCIAL COMPANY, INC.
Our principal focus is on expanding our business in the U.S. to reach full captive penetration levels; therefore, we do not expect that the sale of our European Operations will have a material adverse effect on our consolidated results of operations, financial condition, liquidity or financing strategies, including the mix of secured and unsecured debt issuances. We also do not expect that sale of our European Operations will result in a material increase in our ratio of total debt to total equity or our earning assets leverage ratio as calculated under our Support Agreement with GM. Due to the size of the prime retail loan portfolio held by our European Operations, we expect that, for a period of time following the sale, retail operating leases will make up a greater percentage of our earning assets than they have historically. As our U.S. operations increase purchases of prime retail loans, we expect that our earning asset mix will return to more recent historical levels. We may make a special dividend over time to GM following the completion of the sale.
RESULTS OF OPERATIONSResults of Operations
In our tabular presentation of the changes in results between financial periods, we provide the following information: (i) the amount of change excluding the impact of foreign currency translation (“FX”); (ii) the amount of the impact of foreign currency translation; and (iii) the total change. The amount of the impact of foreign currency translation wasis derived by translating current year results at the average of prior year exchange rates, and wasis driven by the appreciation ofchange in the U.S. Dollar against the currencies used by our foreign operations. We believe the amount of change excluding the foreign currency translation impact facilitates a better comparison of results. In our discussion below, we discuss changes in relevant items excluding any foreign currency translation impact. Average balances are calculated using daily balances, where available. Otherwise average balances are calculated using monthly ending balances.
In June 2016, the United Kingdom ("U.K.") completed its referendum on continued membership in the European Union and voted to leave. This result did not have a material impact on the results of operations for the three or nine months ended September 30, 2016; however, this result has adversely impacted the British Pound and the uncertainty has put strain on the U.K. automotive industry. If current post-referendum market conditions are sustained for an extended period of time, it could have an impact on the results of our operations, which we do not expect to be material for the remainder of 2016.
GENERAL MOTORS FINANCIAL COMPANY, INC.
Three Months Ended September 30, 2016March 31, 2017 compared to Three Months Ended September 30, 2015March 31, 2016
Average Earning Assets:Assets
| | | Three Months Ended September 30, | | | | | | | | | Three Months Ended March 31, | | | | | | | | |
| 2016 | | 2015 | | 2016 vs. 2015 | 2017 | | 2016 | | 2017 vs. 2016 |
| North America | | International(a) | | Total | | North America | | International(a) | | Total | | Change excluding FX | | FX | | Total change | | % | North America | | International | | Total | | North America | | International | | Total | | Change excluding FX | | FX | | Total change | | % |
Average retail finance receivables | $ | 20,088 |
| | $ | 11,425 |
| | $ | 31,513 |
| | $ | 16,435 |
| | $ | 11,396 |
| | $ | 27,831 |
| | $ | 4,261 |
| | $ | (579 | ) | | $ | 3,682 |
| | 13.2 | % | $ | 22,698 |
| | $ | 11,395 |
| | $ | 34,093 |
| | $ | 18,622 |
| | $ | 10,963 |
| | $ | 29,585 |
| | $ | 4,837 |
| | $ | (329 | ) | | $ | 4,508 |
| | 15.2 | % |
Average commercial finance receivables | 5,005 |
| | 4,424 |
| | 9,429 |
| | 3,475 |
| | 4,258 |
| | 7,733 |
| | 1,982 |
| | (286 | ) | | 1,696 |
| | 21.9 | % | 6,635 |
| | 4,533 |
| | 11,168 |
| | 4,109 |
| | 4,510 |
| | 8,619 |
| | 2,761 |
| | (212 | ) | | 2,549 |
| | 29.6 | % |
Average finance receivables | 25,093 |
| | 15,849 |
| | 40,942 |
| | 19,910 |
| | 15,654 |
| | 35,564 |
| | 6,243 |
| | (865 | ) | | 5,378 |
| | 15.1 | % | 29,333 |
| | 15,928 |
| | 45,261 |
| | 22,731 |
| | 15,473 |
| | 38,204 |
| | 7,598 |
| | (541 | ) | | 7,057 |
| | 18.5 | % |
Average leased vehicles, net | 29,934 |
| | 186 |
| | 30,120 |
| | 14,875 |
| | 66 |
| | 14,941 |
| | 15,188 |
| | (9 | ) | | 15,179 |
| | 101.6 | % | 35,687 |
| | 262 |
| | 35,949 |
| | 22,190 |
| | 97 |
| | 22,287 |
| | 13,627 |
| | 35 |
| | 13,662 |
| | 61.3 | % |
Average earning assets | $ | 55,027 |
| | $ | 16,035 |
| | $ | 71,062 |
| | $ | 34,785 |
| | $ | 15,720 |
| | $ | 50,505 |
| | $ | 21,431 |
| | $ | (874 | ) | | $ | 20,557 |
| | 40.7 | % | $ | 65,020 |
| | $ | 16,190 |
| | $ | 81,210 |
| | $ | 44,921 |
| | $ | 15,570 |
| | $ | 60,491 |
| | $ | 21,225 |
| | $ | (506 | ) | | $ | 20,719 |
| | 34.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Retail finance receivables purchased | $ | 3,360 |
| | $ | 1,698 |
| | $ | 5,058 |
| | $ | 3,155 |
| | $ | 1,586 |
| | $ | 4,741 |
| | $ | 442 |
| | $ | (125 | ) | | $ | 317 |
| | 6.7 | % | $ | 4,817 |
| | $ | 1,697 |
| | $ | 6,514 |
| | $ | 2,580 |
| | $ | 1,563 |
| | $ | 4,143 |
| | $ | 2,441 |
| | $ | (70 | ) | | $ | 2,371 |
| | 57.2 | % |
Average new retail loan size (in dollars) | $ | 29,030 |
| | $ | 11,442 |
| | | | $ | 27,744 |
| | $ | 11,488 |
| | | | | | | | | | | $ | 27,095 |
| | $ | 11,425 |
| | | | $ | 27,470 |
| | $ | 11,425 |
| | | | | | | | | | |
Leased vehicles purchased | $ | 6,113 |
| | $ | 57 |
| | $ | 6,170 |
| | $ | 6,161 |
| | $ | 19 |
| | $ | 6,180 |
| | $ | (10 | ) | | $ | — |
| | $ | (10 | ) | | (0.2 | )% | $ | 6,260 |
| | $ | 53 |
| | $ | 6,313 |
| | $ | 6,720 |
| | $ | 32 |
| | $ | 6,752 |
| | $ | (443 | ) | | $ | 4 |
| | $ | (439 | ) | | (6.5 | )% |
Average new lease size (in dollars) | $ | 38,171 |
| | $ | 21,915 |
| | | | $ | 36,206 |
| | $ | 19,939 |
| | | | | | | | | | | $ | 36,514 |
| | $ | 21,124 |
| | | | $ | 36,270 |
| | $ | 20,020 |
| | | | | | | | | | |
_________________
| |
(a) | Average balances for the International Segment are calculated using the monthly ending balances. |
Average earning assetsfinance receivables increased in the North America Segment as a result of the continued increase of our share of GM's business in that segment. The increase in average leased vehicles, net primarily resulted from our exclusive lease subvention arrangement in the U.S. with GM, which was implemented on a brand-by-brand basis between February and April 2015.GM.
In the North America Segment, the average annual percentage rate for retail finance receivables purchased during the three months ended September 30, 2016March 31, 2017 decreased to 6.2%6.5% from 6.7%7.7% during the prior period and the average new retail loan size increased. These changes are due primarily to the expansion of our prime lending program and our exclusive loan subvention arrangement in the U.S. with GM, resulting in higher volumes of originations of loans for new vehicles, which typically are for higher amounts and have lower contractual rates due to the rate subvention support provided by GM.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | | | | | | | |
| 2016 | | 2015 | | 2016 vs. 2015 |
| North America | | International | | Total | | North America | | International | | Total | | Change excluding FX | | FX | | Total change | | % |
Finance charge income | | | | | | | | | | | | | | | | | | | |
Retail finance receivables | $ | 459 |
| | $ | 269 |
| | $ | 728 |
| | $ | 463 |
| | $ | 281 |
| | $ | 744 |
| | $ | (13 | ) | | $ | (3 | ) | | $ | (16 | ) | | (2.2 | )% |
Commercial finance receivables | $ | 40 |
| | $ | 69 |
| | $ | 109 |
| | $ | 26 |
| | $ | 72 |
| | $ | 98 |
| | $ | 14 |
| | $ | (3 | ) | | $ | 11 |
| | 11.2 | % |
Leased vehicle income | $ | 1,579 |
| | $ | 11 |
| | $ | 1,590 |
| | $ | 793 |
| | $ | 4 |
| | $ | 797 |
| | $ | 792 |
| | $ | 1 |
| | $ | 793 |
| | 99.5 | % |
Other income | $ | 14 |
| | $ | 58 |
| | $ | 72 |
| | $ | 20 |
| | $ | 48 |
| | $ | 68 |
| | $ | 26 |
| | $ | (22 | ) | | $ | 4 |
| | 5.9 | % |
Effective yield - retail finance receivables | 9.1 | % | | 9.4 | % | | 9.2 | % | | 11.2 | % | | 9.8 | % | | 10.6 | % | | | | | | | | |
Effective yield - commercial finance receivables | 3.2 | % | | 6.2 | % | | 4.6 | % | | 3.0 | % | | 6.7 | % | | 5.0 | % | | | | | | | | |
In the North America Segment, finance charge income on retail finance receivables remained flat for the three months ended September 30, 2016, compared to the three months ended September 30, 2015, as the growth in the portfolio was substantially
GENERAL MOTORS FINANCIAL COMPANY, INC.
Revenue
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | | | | | | | |
| 2017 | | 2016 | | 2017 vs. 2016 |
| North America | | International | | Total | | North America | | International | | Total | | Change excluding FX | | FX | | Total change | | % |
Finance charge income | | | | | | | | | | | | | | | | | | | |
Retail finance receivables | $ | 466 |
| | $ | 269 |
| | $ | 735 |
| | $ | 453 |
| | $ | 260 |
| | $ | 713 |
| | $ | 10 |
| | $ | 12 |
| | $ | 22 |
| | 3.1 | % |
Commercial finance receivables | $ | 55 |
| | $ | 72 |
| | $ | 127 |
| | $ | 32 |
| | $ | 73 |
| | $ | 105 |
| | $ | 23 |
| | $ | (1 | ) | | $ | 22 |
| | 21.0 | % |
Leased vehicle income | $ | 1,926 |
| | $ | 16 |
| | $ | 1,942 |
| | $ | 1,178 |
| | $ | 6 |
| | $ | 1,184 |
| | $ | 754 |
| | $ | 4 |
| | $ | 758 |
| | 64.0 | % |
Other income | $ | 27 |
| | $ | 48 |
| | $ | 75 |
| | $ | 25 |
| | $ | 48 |
| | $ | 73 |
| | $ | — |
| | $ | 2 |
| | $ | 2 |
| | 2.7 | % |
Effective yield - retail finance receivables | 8.3 | % | | 9.6 | % | | 8.7 | % | | 9.8 | % | | 9.5 | % | | 9.7 | % | | | | | | | | |
Effective yield - commercial finance receivables | 3.4 | % | | 6.4 | % | | 4.6 | % | | 3.1 | % | | 6.5 | % | | 4.9 | % | | | | | | | | |
In the North America Segment, finance charge income on retail finance receivables increased slightly for the three months ended March 31, 2017, compared to the three months ended March 31, 2016, due to growth in the portfolio, substantially offset by a decrease in effective yield. The effective yield on our retail finance receivables decreased due primarily to a decrease in the average annual percentage rate on new originations as we have increased our prime lending. The effective yield represents finance charges and fees recorded in earnings during the period as a percentage of average retail finance receivables. The effective yield, as a percentage of average retail finance receivables, is higher than the contractual rates of our auto finance contracts primarily because the effective yield includes, in addition to the contractual rates and fees, the impact of rate subvention provided by GM.
The increase in leased vehicle income reflects the increase in the size of the leased asset portfolio.
Costs and Expenses:Expenses
| | | Three Months Ended September 30, | | | | | | | | | Three Months Ended March 31, | | | | | | | | |
| 2016 | | 2015 | | 2016 vs. 2015 | 2017 | | 2016 | | 2017 vs. 2016 |
| North America | | International | | Total | | North America | | International | | Total | | Change excluding FX | | FX | | Total change | | % | North America | | International | | Total | | North America | | International | | Total | | Change excluding FX | | FX | | Total change | | % |
Operating expenses | $ | 240 |
| | $ | 152 |
| | $ | 392 |
| | $ | 185 |
| | $ | 135 |
| | $ | 320 |
| | $ | 75 |
| | $ | (3 | ) | | $ | 72 |
| | 22.5 | % | $ | 248 |
| | $ | 144 |
| | $ | 392 |
| | $ | 201 |
| | $ | 133 |
| | $ | 334 |
| | $ | 58 |
| | $ | — |
| | $ | 58 |
| | 17.4 | % |
Leased vehicle expenses | $ | 1,194 |
| | $ | 8 |
| | $ | 1,202 |
| | $ | 626 |
| | $ | 3 |
| | $ | 629 |
| | $ | 573 |
| | $ | — |
| | $ | 573 |
| | 91.1 | % | $ | 1,426 |
| | $ | 12 |
| | $ | 1,438 |
| | $ | 888 |
| | $ | 5 |
| | $ | 893 |
| | $ | 542 |
| | $ | 3 |
| | $ | 545 |
| | 61.0 | % |
Provision for loan losses | $ | 147 |
| | $ | 25 |
| | $ | 172 |
| | $ | 106 |
| | $ | 38 |
| | $ | 144 |
| | $ | 27 |
| | $ | 1 |
| | $ | 28 |
| | 19.4 | % | $ | 187 |
| | $ | 30 |
| | $ | 217 |
| | $ | 177 |
| | $ | 19 |
| | $ | 196 |
| | $ | 21 |
| | $ | — |
| | $ | 21 |
| | 10.7 | % |
Interest expense(a) | $ | 383 |
| | $ | 158 |
| | $ | 541 |
| | $ | 243 |
| | $ | 169 |
| | $ | 412 |
| | $ | 127 |
| | $ | 2 |
| | $ | 129 |
| | 31.3 | % | $ | 455 |
| | $ | 164 |
| | $ | 619 |
| | $ | 305 |
| | $ | 158 |
| | $ | 463 |
| | $ | 145 |
| | $ | 11 |
| | $ | 156 |
| | 33.7 | % |
Average debt outstanding | $ | 52,205 |
| | $ | 14,097 |
| | $ | 66,302 |
| | $ | 33,341 |
| | $ | 13,378 |
| | $ | 46,719 |
| | $ | 20,208 |
| | $ | (625 | ) | | $ | 19,583 |
| | 41.9 | % | $ | 62,167 |
| | $ | 14,170 |
| | $ | 76,337 |
| | $ | 43,101 |
| | $ | 13,654 |
| | $ | 56,755 |
| | $ | 19,923 |
| | $ | (341 | ) | | $ | 19,582 |
| | 34.5 | % |
Effective rate of interest on debt | 2.9 | % | | 4.5 | % | | 3.2 | % | | 2.9 | % | | 5.0 | % | | 3.5 | % | | | | | | | | | 3.0 | % | | 4.7 | % | | 3.3 | % | | 2.8 | % | | 4.7 | % | | 3.3 | % | | | | | | | | |
(a) Amounts | |
(a) | During 2016, amounts do not reflect allocation of senior note interest expense, and therefore do not reflect allocation of senior note interest expense, and therefore may not agree with amounts presented in Note 12- "Segment Reporting" in our condensed consolidated financial statements in this Form 10-Q. |
Operating Expenses The increase in operating expenses relates to the growth in earning assets and investments to support the prime lending program and enhance lease origination and servicing capabilities in the North America Segment. Operating expenses as an annualized percentage of average earning assets weredecreased to 2.0% from 2.2% and 2.5% for the three months ended September 30,March 31, 2017 and 2016, and 2015.due primarily to efficiency gains achieved through higher earning asset levels.
Leased Vehicle Expenses Leased vehicle expenses, which are primarily comprised of depreciation of leased vehicles, increased due to the growth of the leased asset portfolio.
Provision for Loan Losses The provision for retail loan losses increased due primarily to the growth in the retail finance receivables portfolio. As an annualized percentage of average retail finance receivables, the provision for retail loan losses was 2.1%decreased to 2.5% for the three months ended September 30,March 31, 2017 from 2.7% for the three months ended March 31, 2016, and 2015.due primarily to a
GENERAL MOTORS FINANCIAL COMPANY, INC.
shift in the credit mix of the portfolio to a larger percentage of prime loans. The provision for commercial loan losses was insignificant for the three months ended September 30, 2016March 31, 2017 and 2015.2016.
Interest Expense Interest expense increased due primarily to an increase in the average debt outstanding resulting from growth in the loan and lease portfolios, partially offset by a decrease in the effective rate of interest on debt.portfolios.
Taxes Our consolidated effective income tax rate was 42.2%27.2% and 25.7%32.3% of income before income taxes and equity income for the three months ended September 30, 2016March 31, 2017 and 2015.2016. The increasedecrease in the effective tax rate is due primarily to differencesreduced tax expense attributable to entities included in our effective tax rate calculation and an increase in certain U.S. taxation on foreign earnings.tax credits.
Other Comprehensive Income:Income
Foreign Currency Translation Adjustment Foreign currency translation adjustments included in other comprehensive (loss) income were $(10)$94 million and $(282)$153 million for the three months ended September 30, 2016March 31, 2017 and 2015.2016. Most of the international operations use functional currencies other than the U.S. Dollar. Translation adjustments result from changes in the values of our international currency-denominated assets and liabilities as the value of the U.S. Dollar changes in relation to international currencies.
GENERAL MOTORS FINANCIAL COMPANY, INC.
Nine Months Ended September 30, 2016 compared to Nine Months Ended September 30, 2015
Average Earning Assets:Credit Quality
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, | | | | | | | | |
| 2016 | | 2015 | | 2016 vs. 2015 |
| North America | | International(a) | | Total | | North America | | International(a) | | Total | | Change excluding FX | | FX | | Total change | | % |
Average retail finance receivables | $ | 19,266 |
| | $ | 11,262 |
| | $ | 30,528 |
| | $ | 15,084 |
| | $ | 11,650 |
| | $ | 26,734 |
| | $ | 4,792 |
| | $ | (998 | ) | | $ | 3,794 |
| | 14.2 | % |
Average commercial finance receivables | 4,565 |
| | 4,502 |
| | 9,067 |
| | 3,312 |
| | 4,358 |
| | 7,670 |
| | 1,761 |
| | (364 | ) | | 1,397 |
| | 18.2 | % |
Average finance receivables | 23,831 |
| | 15,764 |
| | 39,595 |
| | 18,396 |
| | 16,008 |
| | 34,404 |
| | 6,553 |
| | (1,362 | ) | | 5,191 |
| | 15.1 | % |
Average leased vehicles, net | 26,104 |
| | 142 |
| | 26,246 |
| | 11,236 |
| | 50 |
| | 11,286 |
| | 15,049 |
| | (89 | ) | | 14,960 |
| | 132.6 | % |
Average earning assets | $ | 49,935 |
| | $ | 15,906 |
| | $ | 65,841 |
| | $ | 29,632 |
| | $ | 16,058 |
| | $ | 45,690 |
| | $ | 21,602 |
| | $ | (1,451 | ) | | $ | 20,151 |
| | 44.1 | % |
| | | | | | | | | | | | | | | | | | | |
Retail finance receivables purchased | $ | 8,485 |
| | $ | 4,912 |
| | $ | 13,397 |
| | $ | 8,070 |
| | $ | 5,037 |
| | $ | 13,107 |
| | $ | 769 |
| | $ | (479 | ) | | $ | 290 |
| | 2.2 | % |
Average new retail loan size (in dollars) | $ | 27,783 |
| | $ | 11,537 |
| | | | $ | 25,874 |
| | $ | 12,129 |
| | | | | | | | | | |
Leased vehicles purchased | $ | 19,280 |
| | $ | 158 |
| | $ | 19,438 |
| | $ | 14,755 |
| | $ | 56 |
| | $ | 14,811 |
| | $ | 4,667 |
| | $ | (40 | ) | | $ | 4,627 |
| | 31.2 | % |
Average new lease size (in dollars) | $ | 37,363 |
| | $ | 22,191 |
| | | | $ | 36,521 |
| | $ | 20,909 |
| | | | | | | | | | |
_________________
| |
(a) | Average balances for the International Segment are calculated using the monthly ending balances. |
Average earning assets increased in the North America Segment as a result of the continued increase of our share of GM's business in that segment. Average earning assets in the International Segment decreased solely due to the impact of foreign currency translation. The increase in average leased vehicles, net primarily resulted from our exclusive lease subvention arrangement in the U.S. with GM, which was implemented on a brand-by-brand basis between February and April 2015.
In the North America Segment, the average annual percentage rate for retail finance receivables purchased during the nine months ended September 30, 2016 decreased to 7.0% from 8.3% during the prior period, and the average new retail loan size increased. These changes are due primarily to the expansion of our prime lending program and our exclusive loan subvention arrangement in the U.S. with GM, resulting in higher volumes of originations of loans for new vehicles, which typically are for higher amounts and have lower contractual rates due to the rate subvention support provided by GM.
Revenue:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, | | | | | | | | |
| 2016 | | 2015 | | 2016 vs. 2015 |
| North America | | International | | Total | | North America | | International | | Total | | Change excluding FX | | FX | | Total change | | % |
Finance charge income | | | | | | | | | | | | | | | | | | | |
Retail finance receivables | $ | 1,362 |
| | $ | 798 |
| | $ | 2,160 |
| | $ | 1,345 |
| | $ | 899 |
| | $ | 2,244 |
| | $ | 9 |
| | $ | (93 | ) | | $ | (84 | ) | | (3.7 | )% |
Commercial finance receivables | $ | 108 |
| | $ | 213 |
| | $ | 321 |
| | $ | 74 |
| | $ | 226 |
| | $ | 300 |
| | $ | 39 |
| | $ | (18 | ) | | $ | 21 |
| | 7.0 | % |
Leased vehicle income | $ | 4,138 |
| | $ | 26 |
| | $ | 4,164 |
| | $ | 1,818 |
| | $ | 9 |
| | $ | 1,827 |
| | $ | 2,355 |
| | $ | (18 | ) | | $ | 2,337 |
| | 127.9 | % |
Other income | $ | 58 |
| | $ | 163 |
| | $ | 221 |
| | $ | 56 |
| | $ | 149 |
| | $ | 205 |
| | $ | 34 |
| | $ | (18 | ) | | $ | 16 |
| | 7.8 | % |
Effective yield - retail finance receivables | 9.4 | % | | 9.5 | % | | 9.5 | % | | 11.9 | % | | 10.3 | % | | 11.2 | % | | | | | | | | |
Effective yield - commercial finance receivables | 3.2 | % | | 6.3 | % | | 4.7 | % | | 3.0 | % | | 6.9 | % | | 5.2 | % | | | | | | | | |
In the North America Segment, finance charge income on retail finance receivables increased slightly for the nine months ended September 30, 2016, compared to the nine months ended September 30, 2015, as the growth in the portfolio was substantially
GENERAL MOTORS FINANCIAL COMPANY, INC.
offset by a decrease in effective yield. The effective yield on our retail finance receivables decreased due primarily to a decrease in the average annual percentage rate on new originations as we have increased our prime lending. The effective yield represents finance charges and fees recorded in earnings during the period as a percentage of average retail finance receivables. The effective yield, as a percentage of average retail finance receivables, is higher than the contractual rates of our auto finance contracts primarily because the effective yield includes, in addition to the contractual rates and fees, the impact of rate subvention provided by GM.
In the International Segment, the effective yield on our retail finance receivables decreased primarily due to asset mix. Assets in higher-yield markets have decreased while assets in lower-yield markets have increased.
The increase in leased vehicle income reflects the increase in the size of the leased asset portfolio.
Costs and Expenses:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 30, | | | | | | | | |
| 2016 | | 2015 | | 2016 vs. 2015 |
| North America | | International | | Total | | North America | | International | | Total | | Change excluding FX | | FX | | Total change | | % |
Operating expenses | $ | 656 |
| | $ | 413 |
| | $ | 1,069 |
| | $ | 530 |
| | $ | 415 |
| | $ | 945 |
| | $ | 155 |
| | $ | (31 | ) | | $ | 124 |
| | 13.1 | % |
Leased vehicle expenses | $ | 3,143 |
| | $ | 20 |
| | $ | 3,163 |
| | $ | 1,416 |
| | $ | 7 |
| | $ | 1,423 |
| | $ | 1,753 |
| | $ | (13 | ) | | $ | 1,740 |
| | 122.3 | % |
Provision for loan losses | $ | 449 |
| | $ | 70 |
| | $ | 519 |
| | $ | 335 |
| | $ | 105 |
| | $ | 440 |
| | $ | 86 |
| | $ | (7 | ) | | $ | 79 |
| | 18.0 | % |
Interest expense(a) | $ | 1,025 |
| | $ | 480 |
| | $ | 1,505 |
| | $ | 645 |
| | $ | 538 |
| | $ | 1,183 |
| | $ | 382 |
| | $ | (60 | ) | | $ | 322 |
| | 27.2 | % |
Average debt outstanding | $ | 47,812 |
| | $ | 13,988 |
| | $ | 61,800 |
| | $ | 28,548 |
| | $ | 13,509 |
| | $ | 42,057 |
| | $ | 20,888 |
| | $ | (1,145 | ) | | $ | 19,743 |
| | 46.9 | % |
Effective rate of interest on debt | 2.9 | % | | 4.6 | % | | 3.3 | % | | 3.0 | % | | 5.3 | % | | 3.8 | % | | | | | | | | |
(a) Amounts do not reflect allocation of senior note interest expense, and therefore may not agree with amounts presented in Note 12 - "Segment Reporting" in our condensed consolidated financial statements in this Form 10-Q.
Operating Expenses The increase in operating expenses relates to the growth in earning assets and investments to support the prime lending program and enhance lease origination and servicing capabilities in the North America Segment. Operating expenses as an annualized percentage of average earning assets were 2.2% and 2.8% for the nine months ended September 30, 2016 and 2015.
Leased Vehicle Expenses Leased vehicle expenses, which are primarily comprised of depreciation of leased vehicles, increased due to the growth of the leased asset portfolio.
Provision for Loan Losses The provision for retail loan losses increased due primarily to the growth in the retail finance receivables portfolio. As an annualized percentage of average retail finance receivables, the provision for retail loan losses was 2.3% and 2.2% for the nine months ended September 30, 2016 and 2015. The provision for commercial loan losses was insignificant for the nine months ended September 30, 2016 and 2015.
Interest Expense Interest expense increased due primarily to an increase in the average debt outstanding resulting from growth in the loan and lease portfolios, partially offset by a decrease in the effective rate of interest on debt.
Taxes Our consolidated effective income tax rate was 35.9% and 26.5% of income before income taxes and equity income for the nine months ended September 30, 2016 and 2015. The increase in the effective tax rate is due primarily to differences in U.S. taxation on foreign earnings.
Other Comprehensive Income:
Foreign Currency Translation Adjustment Foreign currency translation adjustments included in other comprehensive (loss) income were $60 million and $(524) million for nine months ended September 30, 2016 and 2015. Most of the international operations use functional currencies other than the U.S. Dollar. Translation adjustments result from changes in the values of our international currency-denominated assets and liabilities as the value of the U.S. Dollar changes in relation to international currencies.
GENERAL MOTORS FINANCIAL COMPANY, INC.
CREDIT QUALITY
| | Retail Finance Receivables | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
| North America | | International | | Total | | North America | | International | | Total | North America | | International | | Total | | North America | | International | | Total |
Retail finance receivables, net of fees | $ | 20,766 |
| | $ | 11,480 |
| | $ | 32,246 |
| | $ | 18,148 |
| | $ | 10,976 |
| | $ | 29,124 |
| $ | 24,354 |
| | $ | 11,650 |
| | $ | 36,004 |
| | $ | 21,786 |
| | $ | 11,124 |
| | $ | 32,910 |
|
Less: allowance for loan losses | (695 | ) | | (127 | ) | | (822 | ) | | (618 | ) | | (117 | ) | | (735 | ) | (718 | ) | | (134 | ) | | (852 | ) | | (666 | ) | | (127 | ) | | (793 | ) |
Retail finance receivables, net | $ | 20,071 |
| | $ | 11,353 |
| | $ | 31,424 |
| | $ | 17,530 |
| | $ | 10,859 |
| | $ | 28,389 |
| $ | 23,636 |
| | $ | 11,516 |
| | $ | 35,152 |
| | $ | 21,120 |
| | $ | 10,997 |
| | $ | 32,117 |
|
Number of outstanding contracts | 1,058,901 |
| | 1,610,720 |
| | 2,669,621 |
| | 955,094 |
| | 1,563,831 |
| | 2,518,925 |
| 1,199,487 |
| | 1,622,179 |
| | 2,821,666 |
| | 1,097,207 |
| | 1,611,276 |
| | 2,708,483 |
|
Average amount of outstanding contracts (in dollars)(a) | $ | 19,611 |
| | $ | 7,127 |
| | $ | 12,079 |
| | $ | 19,001 |
| | $ | 7,019 |
| | $ | 11,562 |
| $ | 20,304 |
| | $ | 7,182 |
| | $ | 12,760 |
| | $ | 19,856 |
| | $ | 6,904 |
| | $ | 12,151 |
|
Allowance for loan losses as a percentage of retail finance receivables, net of fees | 3.3 | % | | 1.1 | % | | 2.5 | % | | 3.4 | % | | 1.1 | % | | 2.5 | % | 2.9 | % | | 1.2 | % | | 2.4 | % | | 3.1 | % | | 1.1 | % | | 2.4 | % |
_________________
| |
(a) | Average amount of outstanding contracts consists of retail finance receivables, net of fees, divided by number of outstanding contracts. |
At March 31, 2017, the allowance for loan losses for the North America Segment as a percentage of retail finance receivables, net of fees, decreased from the level at December 31, 2016 consistent with the improved credit mix in our portfolio resulting from our expansion of prime lending.
Delinquency The following is a summary of the contractual amounts of delinquent retail finance receivables, which is not materially 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:
| | | September 30, 2016 | | September 30, 2015 | March 31, 2017 | | March 31, 2016 |
| North America | | International | | Total | | Percent of Contractual Amount Due | | North America | | International | | Total | | Percent of Contractual Amount Due | North America | | International | | Total | | Percent of Contractual Amount Due | | North America | | International | | Total | | Percent of Contractual Amount Due |
31 - 60 days | $ | 1,016 |
| | $ | 111 |
| | $ | 1,127 |
| | 3.5 | % | | $ | 1,039 |
| | $ | 98 |
| | $ | 1,137 |
| | 4.0 | % | $ | 883 |
| | $ | 123 |
| | $ | 1,006 |
| | 2.8 | % | | $ | 841 |
| | $ | 122 |
| | $ | 963 |
| | 3.1 | % |
Greater than 60 days | 395 |
| | 108 |
| | 503 |
| | 1.5 |
| | 362 |
| | 92 |
| | 454 |
| | 1.6 |
| 313 |
| | 128 |
| | 441 |
| | 1.2 |
| | 312 |
| | 109 |
| | 421 |
| | 1.4 |
|
Total finance receivables more than 30 days delinquent | 1,411 |
| | 219 |
| | 1,630 |
| | 5.0 |
| | 1,401 |
| | 190 |
| | 1,591 |
| | 5.6 |
| 1,196 |
| | 251 |
| | 1,447 |
| | 4.0 |
| | 1,153 |
| | 231 |
| | 1,384 |
| | 4.5 |
|
In repossession | 52 |
| | 8 |
| | 60 |
| | 0.2 |
| | 47 |
| | 6 |
| | 53 |
| | 0.2 |
| 43 |
| | 8 |
| | 51 |
| | 0.1 |
| | 41 |
| | 7 |
| | 48 |
| | 0.2 |
|
Total finance receivables more than 30 days delinquent or in repossession | $ | 1,463 |
| | $ | 227 |
| | $ | 1,690 |
| | 5.2 | % | | $ | 1,448 |
| | $ | 196 |
| | $ | 1,644 |
| | 5.8 | % | $ | 1,239 |
| | $ | 259 |
| | $ | 1,498 |
| | 4.1 | % | | $ | 1,194 |
| | $ | 238 |
| | $ | 1,432 |
| | 4.7 | % |
GENERAL MOTORS FINANCIAL COMPANY, INC.
Deferrals In accordance with our policies and guidelines in the North America Segment, we, at times, offer payment deferrals to retail customers, whereby the borrower is allowed to move up to two delinquent payments to the end of the loan generally by paying a fee (approximately the interest portion of the payment deferred, except where state law provides for a lesser amount). Our policies and guidelines limit the number and frequency of deferments that may be granted. Additionally, we generally limit the granting of deferments on new accounts until a requisite number of payments have been received. Contracts receiving a payment deferral as an average quarterly percentage of average retail finance receivables outstanding were 5.1%4.3% and 5.9%5.1% for the three months ended September 30, 2016March 31, 2017 and 2015 and 5.1% and 5.9% for the nine months ended September 30, 2016 and 2015.2016. Deferrals in the International Segment are insignificant.
Troubled Debt Restructurings SeeRefer to Note 34 - "Finance Receivables" to our condensed consolidated financial statements in this Form 10-Q for further discussion of TDRs.
GENERAL MOTORS FINANCIAL COMPANY, INC.
Net Charge-offs The following table presents charge-off data with respect to our retail finance receivables portfolio:
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, |
| 2016 | | 2015 |
| North America | | International | | Total | | North America | | International | | Total |
Charge-offs | $ | 253 |
| | $ | 41 |
| | $ | 294 |
| | $ | 221 |
| | $ | 35 |
| | $ | 256 |
|
Less: recoveries | (118 | ) | | (16 | ) | | (134 | ) | | (111 | ) | | (13 | ) | | (124 | ) |
Net charge-offs | $ | 135 |
| | $ | 25 |
| | $ | 160 |
| | $ | 110 |
| | $ | 22 |
| | $ | 132 |
|
Net annualized charge-off percentage(a) | 2.7 | % | | 0.9 | % | | 2.0 | % | | 2.7 | % | | 0.8 | % | | 1.9 | % |
Recovery percentage(b) | 52.3 | % | | | | | | 56.2 | % | | | | |
| | | Nine Months Ended September 30, | Three Months Ended March 31, |
| 2016 | | 2015 | 2017 | | 2016 | |
| North America | | International | | Total | | North America | | International | | Total | North America | | International | | Total | | North America | | International | | Total | |
Charge-offs | $ | 740 |
| | $ | 113 |
| | $ | 853 |
| | $ | 609 |
| | $ | 101 |
| | $ | 710 |
| $ | 266 |
| | $ | 41 |
| | $ | 307 |
| | $ | 259 |
| | $ | 34 |
| | $ | 293 |
| |
Less: recoveries | (378 | ) | | (39 | ) | | (417 | ) | | (321 | ) | | (36 | ) | | (357 | ) | (135 | ) | | (12 | ) | | (147 | ) | | (139 | ) | | (11 | ) | | (150 | ) | |
Net charge-offs | $ | 362 |
| | $ | 74 |
| | $ | 436 |
| | $ | 288 |
| | $ | 65 |
| | $ | 353 |
| $ | 131 |
| | $ | 29 |
| | $ | 160 |
| | $ | 120 |
| | $ | 23 |
| | $ | 143 |
| |
Net annualized charge-off percentage(a) | 2.5 | % | | 0.9 | % | | 1.9 | % | | 2.6 | % | | 0.7 | % | | 1.8 | % | |
Net charge-offs as an annualized percentage(a) | | 2.3 | % | | 1.0 | % | | 1.9 | % | | 2.6 | % | | 0.8 | % | | 1.9 | % | |
Recovery percentage(b) | 53.8 | % | | | | | | 57.5 | % | | | | | 51.6 | % | | | | | | 54.1 | % | | | | | |
_________________
| |
(a) | Net charge-offs as an annualized charge-off percentage is calculated as a percentage of average retail finance receivables. |
| |
(b) | Recovery percentage is a percentage of gross repossession charge-offs. Charge-offs for the International Segment primarily include the write-down of receivables to net realizable value. As a result, a calculation of recoveries as a percentage of gross charge-offs is not meaningful. The decrease in the recovery rate for North America reflects moderation in used car prices, due primarily to an increase in supply. |
| | Commercial Finance Receivables | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
| North America | | International | | Total | | North America | | International | | Total | North America | | International | | Total | | North America | | International | | Total |
Commercial finance receivables, net of fees | $ | 5,328 |
| | $ | 4,432 |
| | $ | 9,760 |
| | $ | 4,051 |
| | $ | 4,388 |
| | $ | 8,439 |
| $ | 7,016 |
| | $ | 4,796 |
| | $ | 11,812 |
| | $ | 6,527 |
| | $ | 4,596 |
| | $ | 11,123 |
|
Less: allowance for loan losses | (33 | ) | | (19 | ) | | (52 | ) | | (23 | ) | | (24 | ) | | (47 | ) | (34 | ) | | (20 | ) | | (54 | ) | | (30 | ) | | (20 | ) | | (50 | ) |
Total commercial finance receivables, net | $ | 5,295 |
| | $ | 4,413 |
| | $ | 9,708 |
| | $ | 4,028 |
| | $ | 4,364 |
| | $ | 8,392 |
| $ | 6,982 |
| | $ | 4,776 |
| | $ | 11,758 |
| | $ | 6,497 |
| | $ | 4,576 |
| | $ | 11,073 |
|
Number of dealers | 745 |
| | 2,143 |
| | 2,888 |
| | 656 |
| | 2,139 |
| | 2,795 |
| 829 |
| | 2,138 |
| | 2,967 |
| | 792 |
| | 2,150 |
| | 2,942 |
|
Average carrying amount per dealer | $ | 7 |
| | $ | 2 |
| | $ | 3 |
| | $ | 6 |
| | $ | 2 |
| | $ | 3 |
| $ | 8 |
| | $ | 2 |
| | $ | 4 |
| | $ | 8 |
| | $ | 2 |
| | $ | 4 |
|
Allowance for loan losses as a percentage of commercial finance receivables, net of fees | 0.6 | % | | 0.4 | % | | 0.5 | % | | 0.6 | % | | 0.5 | % | | 0.6 | % | 0.5 | % | | 0.4 | % | | 0.5 | % | | 0.5 | % | | 0.4 | % | | 0.4 | % |
There were insignificant charge-offs of commercial finance receivables during the three and nine months ended September 30, 2016March 31, 2017 and 2015.none during the three months ended March 31, 2016. At September 30, 2016March 31, 2017 and December 31, 2015,2016, substantially all of our commercial finance receivables were current with respect to payment status and none were classified as TDRs.
Leased Vehicles At September 30,March 31, 2017 and 2016, 99.2% and 2015, 99.1% and 98.4% of our operating leases were current with respect to payment status.
LIQUIDITY AND CAPITAL RESOURCESGENERAL MOTORS FINANCIAL COMPANY, INC.
Liquidity and Capital Resources
General Our primary sources of cash are finance charge income, leasing income and proceeds from the sale of terminated leased vehicles, servicing fees, net distributions from secured debt facilities, including securitizations, secured and unsecured borrowings and collections and recoveries on finance receivables. Our primary uses of cash are purchases of retail finance receivables and leased vehicles, the funding of commercial finance receivables, repayment of secured and unsecured debt, funding credit enhancement requirements in connection with securitizations and secured debtcredit facilities, operating expenses and interest costs.
In the North America Segment, our purchase and funding of retail and commercial finance receivables and leased vehicles are financed initially utilizing cash and borrowings on our secured credit facilities. Subsequently, our strategy is to obtain long-term financing for finance receivables and leased vehicles through securitization transactions and the issuance of unsecured debt.
GENERAL MOTORS FINANCIAL COMPANY, INC.
In the International Segment, our purchase and funding of finance receivables are typically financed with borrowings on secured and unsecured credit facilities. In certain countries where the debt capital and securitization markets are sufficiently developed, such as in Germany and the U.K., we obtain long-term financing through securitization transactions. In addition, we raise unsecured debt in the international capital markets through the issuance of notes under our Euro medium term note program and accept deposits from retail banking customers in Germany.
Cash Flow During the ninethree months ended September 30, 2016,March 31, 2017, net cash provided by operating activities increased due primarily to increased lease vehicle income resulting from growth in the leased vehicle portfolio, partially offset by increased interest expense and increased operating expenses.
During the ninethree months ended September 30, 2016,March 31, 2017, net cash used in investing activities increased compared to the nine months ended September 30, 2015 due to an increase in net purchases of retail finance receivables of $2.2 billion, partially offset by a decrease in purchases of leased vehicles of $3.8 billion and an increase$364 million, a decrease in net fundings of commercial finance receivables of $1.5 billion, partially offset by$483 million, increased collections on retail finance receivables of $1.2 billion,$324 million, and an increase in proceeds received on terminated leases of $1.1 billion and $924 million used for the purchase of our equity interest in SAIC-GMAC in 2015.$601 million.
During the ninethree months ended September 30, 2016,March 31, 2017, net cash provided by financing activities increased compared to the nine months ended September 30, 2015 due primarily to an increase in borrowings, net of repayments, of $1.1 billion.$231 million.
| | Liquidity | September 30, 2016 | | December 31, 2015 | March 31, 2017 | | December 31, 2016 |
Cash and cash equivalents(a) | $ | 2,588 |
| | $ | 3,061 |
| $ | 2,694 |
| | $ | 3,201 |
|
Borrowing capacity on unpledged eligible assets | 11,586 |
| | 9,697 |
| 8,268 |
| | 9,506 |
|
Borrowing capacity on committed unsecured lines of credit | 678 |
| | 904 |
| 421 |
| | 445 |
|
Borrowing capacity on the Junior Subordinated Revolving Credit Facility | 585 |
| | 1,000 |
| 1,000 |
| | 1,000 |
|
Available liquidity | $ | 15,437 |
| | $ | 14,662 |
| $ | 12,383 |
| | $ | 14,152 |
|
_________________
| |
(a) | Includes $839$585 million and $756$839 million in unrestricted cash outside of the U.S. at September 30, 2016March 31, 2017 and December 31, 2015.2016. This cash is considered to be indefinitely invested based on specific plans for reinvestment of these earnings. |
During the ninethree months ended September 30, 2016March 31, 2017, available liquidity increaseddecreased due primarily to additional capacity on new and renewed securedincreased credit facilities, as well as increasedfacility utilization due to asset growth, which lowers borrowing capacity resulting from the issuance of unsecured debt and from increased retail deposits.capacity.
We have the ability to borrow up to $1.0 billion under GM's three-year, $4.0 billion unsecured revolving credit facility and up to $3.0 billion under GM's five-year, $10.5 billion unsecured revolving credit facility, subject to available capacity. Our borrowings under GM's facilities are limited by GM's ability to borrow the entire amount available under the facilities. Therefore, we may be able to borrow up to $4.0 billion in total or may be unable to borrow depending on GM's borrowing activity. If we do borrow under these facilities, we expect such borrowings would be short-term in nature and, except in extraordinary circumstances, would not be used to fund our operating activities in the ordinary course of business. Neither we, nor any of our subsidiaries, guarantee any obligations under these facilities and none of our assets secure these facilities. Liquidity available to us under the GM unsecured revolving credit facilities is not included in the table above. At September 30, 2016March 31, 2017, we had no amounts borrowed under either of GM's unsecured revolving credit facilities.
Credit Facilities In the normal course of business, in addition to using our available cash, we utilize borrowings under our credit facilities, which may be secured and/or structured as securitizations, or may be unsecured, and we repay these borrowings as appropriate under our liquidity management strategy.
GENERAL MOTORS FINANCIAL COMPANY, INC.
At September 30, 2016,March 31, 2017, credit facilities consist of the following:
| | Facility Type | Facility Amount | | Advances Outstanding | | Facility Amount | | Advances Outstanding |
Revolving retail asset-secured facilities(a) | $ | 20,906 |
| | $ | 7,093 |
| | $ | 21,773 |
| | $ | 11,459 |
|
Revolving commercial asset-secured facilities(b) | 4,332 |
| | 854 |
| | 4,312 |
| | 406 |
|
Total secured | 25,238 |
| | 7,947 |
| | 26,085 |
| | 11,865 |
|
Unsecured committed facilities(c) | 1,512 |
| | 834 |
| | 1,370 |
| | 949 |
|
Unsecured uncommitted facilities(d) | 2,427 |
| | 2,427 |
| | 2,504 |
| | 2,504 |
|
Total unsecured | 3,939 |
| | 3,261 |
| | 3,874 |
| | 3,453 |
|
Junior Subordinated Revolving Credit Facility | 1,000 |
| | 415 |
| | 1,000 |
| | — |
|
Total | $ | 30,177 |
| | $ | 11,623 |
| | $ | 30,959 |
| | $ | 15,318 |
|
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(a) | Includes committed and uncommitted revolving credit facilities backed by retail finance receivables and leases. The financial institutions providing the uncommitted facilities are not contractually obligated to advance funds under them. We had $565$270 million in advances outstanding and $720 million in unused borrowing capacity on these facilities at September 30, 2016.March 31, 2017. |
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(b) | Includes revolving credit facilities backed by loans to dealers for floorplan financing. |
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(c) | Does not include $4.0 billion in liquidity available to us under GM's unsecured revolving credit facilities. |
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(d) | The financial institutions providing the uncommitted facilities are not contractually obligated to advance funds under them. We had $1.0$1.2 billion in unused borrowing capacity on these facilities at September 30, 2016.March 31, 2017. |
See
Refer to Note 8 - "Debt" to our consolidated financial statements in our Form 10-K for further discussion of the terms of our revolving credit facilities.
Securitization Notes Payable We periodically finance our retail and commercial finance receivables and leases through public and private term securitization transactions, where the securitization markets are sufficiently developed. A summary of securitization notes payable is as follows:
| | Year of Transaction | Maturity Date(a) | | Original Note Issuance(b) | | Note Balance At September 30, 2016 | | Maturity Date(a) | | Original Note Issuance(b) | | Note Balance At March 31, 2017 |
2012 | November 2019 | - | May 2020 | | $ | 3,500 |
| | $ | 487 |
| | February 2020 | - | May 2020 | | $ | 2,300 |
| | $ | 241 |
|
2013 | July 2020 | - | October 2021 | | $ | 5,655 |
| | 1,231 |
| | July 2020 | - | October 2021 | | $ | 5,058 |
| | 874 |
|
2014 | March 2019 | - | September 2022 | | $ | 10,710 |
| | 4,018 |
| | April 2019 | - | September 2022 | | $ | 10,005 |
| | 2,870 |
|
2015 | July 2019 | - | December 2023 | | $ | 14,348 |
| | 9,966 |
| | July 2019 | - | December 2023 | | $ | 14,348 |
| | 8,125 |
|
2016 | April 2018 | - | June 2024 | | $ | 12,727 |
| | 11,648 |
| | April 2018 | - | November 2024 | | $ | 17,786 |
| | 14,718 |
|
2017 | | | January 2020 | - | February 2025 | | $ | 4,003 |
| | 3,950 |
|
Total active securitizations | | | | 27,350 |
| | | | 30,778 |
|
Debt issuance costs | | | | (60 | ) | | | | (64 | ) |
| | | | $ | 27,290 |
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Total | | | | | $ | 30,714 |
|
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(a) | Maturity dates represent legal final maturity of issued notes. The notes are expected to be paid based on amortization of the finance receivables and leases pledged. |
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(b) | At historical foreign currency exchange rates at the time of issuance. |
Our securitizations utilize special purpose entities which are also VIEs that meet the requirements to be consolidated in our financial statements. SeeRefer to Note 8 - "Variable Interest Entities" to our condensed consolidated financial statements in this Form 10-Q for further discussion. Senior Notes, Retail Customer Deposits and Other Unsecured Debt We periodically access the debt capital markets through the issuance of senior unsecured notes, predominantly from registered shelves in the U.S. and Europe. At September 30, 2016,March 31, 2017, the par value of our outstanding senior notes was $27.3$31.5 billion.
In the International Segment, particularly in Latin America, weWe issue other unsecured debt through commercial paper offerings and other non-bank funding sources.sources primarily in the International Segment. At September 30, 2016March 31, 2017 we had $722$916 million of this type of unsecured debt outstanding. During 2015, we began acceptingWe accept deposits
GENERAL MOTORS FINANCIAL COMPANY, INC.
from retail banking customers in Germany. At September 30, 2016,March 31, 2017, the outstanding balance of these deposits was $1.9 billion, of which 41% were overnight deposits.
GENERAL MOTORS FINANCIAL COMPANY, INC.
Support Agreement In order to maintain our leverage ratio in line with the GM Support Agreement, we borrowed $415 million on the Junior Subordinated Revolving Credit Facility. We expect to repay this borrowing during the fourth quarter of 2016. At September 30, 2016,March 31, 2017, our earning assets leverage ratio was 9.3,10.9, and the applicable ratio was 9.5.11.5.
FORWARD-LOOKING STATEMENTSForward-Looking Statements
This report contains several "forward-looking statements." Forward-looking statements are those that use words such as "believe," "expect," "intend," "plan," "may," "likely," "should," "estimate," "continue," "future" or "anticipate" and other comparable expressions. These words indicate future events and trends. Forward-looking statements are our current views with respect to future events and financial performance. These forward-looking statements are subject to many assumptions, risks and uncertainties that could cause actual results to differ significantly from historical results or from those anticipated by us. The most significant risks are detailed from time to time in our filings and reports with the Securities and Exchange Commission ("SEC")(SEC), including our Annual Report on Form 10-K for the year ended December 31, 2015.2016. It is advisable not to place undue reliance on our forward-looking statements. We undertake no obligation to, and do not, publicly update or revise any forward-looking statements, except as required by federal securities laws, whether as a result of new information, future events or otherwise.
The following factors are among those that may cause actual results to differ materially from historical results or from the forward-looking statements:
changes in general economic and business conditions;
GM's ability to sell new vehicles that we finance in the markets we serve in North America, Latin America, China and Europe, particularly in the U.K. where automobile sales may be negatively impacted due to the passage of the referendum to discontinue its membership in the European Union;
interest rate and currency fluctuations;
our financial condition and liquidity, as well as future cash flows and earnings;
competition;
the effect, interpretation or applicationviability of new or existing laws, regulations, court decisions and accounting pronouncements;GM-franchised dealers that are commercial loan customers;
the availability and cost of sources of financing;
the level of net charge-offs, delinquencies and prepayments on the loans and leases we originate;
vehicle return ratesthe effect, interpretation or application of new or existing laws, regulations, court decisions and the residual value performance on vehicles we lease;
the viability of GM-franchised dealers that are commercial loan customers;accounting pronouncements;
the prices at which used cars are sold in the wholesale auction markets;
vehicle return rates and the residual value performance on vehicles we lease;
interest rate and currency exchange rate fluctuations;
our financial condition and liquidity, as well as future cash flows and earnings;
changes in general economic and business conditions;
competition;
our ability to manage risks related to security breaches and other disruptions to our networks and systems;
changes in business strategy, including expansion of product lines and credit risk appetite, acquisitions and acquisitions.divestitures; and
risks and uncertainties associated with the consummation of the sale of the Transferred Business to the PSA Group, including satisfaction of the closing conditions.
If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKQuantitative and Qualitative Disclosures About Market Risk
There have been no significant changes in our exposure to interest ratemarket risk since December 31, 2015. See2016. Refer to Item 7A - "Quantitative and Qualitative Disclosures About Market Risk" in our 20152016 Form 10-K.
Item 4. CONTROLS AND PROCEDURESControls and Procedures
Evaluation of Disclosure Controls and Procedures We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and accumulated and communicated to our management, including our principal executive officer ("CEO")(CEO) and principal financial officer ("CFO")(CFO), as appropriate to allow timely decisions regarding required disclosure.
Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) at September 30, 2016.March 31, 2017. Based on this
GENERAL MOTORS FINANCIAL COMPANY, INC.
evaluation, required by paragraph (b) of Rule 13a-15 and/or 15d-15, our CEO and CFO concluded that our disclosure controls and procedures were effective at September 30, 2016.as of March 31, 2017.
Changes in Internal Control Over Financial Reporting There were nohave not been any changes made in our internal control over financial reporting during the three months ended September 30, 2016,March 31, 2017, that have materially affected, or are reasonably likely to materially affect, our internal controlscontrol over financial reporting.
GENERAL MOTORS FINANCIAL COMPANY, INC.
PART II
Item 1. Legal Proceedings
See the discussion underRefer to Note 10 -"Commitments and Contingencies" to our condensed consolidated financial statements for information relating to certain legal proceedings.Item 1A. Risk Factors
We face a number of significant risks and uncertainties in connection with our operations. Our business, results of operations and financial condition could be materially adversely affected by these risks factors. There have been no material changes to the risk factorsRisk Factors disclosed in 2015our 2016 Form 10-K.
GENERAL MOTORS FINANCIAL COMPANY, INC.
Item 6. Exhibits
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2.1* | | | | Filed Herewith |
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3.1 | | | | Filed Herewith |
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31.1 | | | | Filed Herewith |
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32.1 | | | | Furnished with this Report |
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101.INS*101.INS | | XBRL Instance Document | | Filed Herewith |
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101.SCH*101.SCH | | XBRL Taxonomy Extension Schema Document | | Filed Herewith |
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101.CAL*101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document | | Filed Herewith |
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101.DEF*101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document | | Filed Herewith |
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101.LAB*101.LAB | | XBRL Taxonomy Extension Label Linkbase Document | | Filed Herewith |
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101.PRE*101.PRE | | XBRL Taxonomy Presentation Linkbase Document | | Filed Herewith |
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* | Submitted electronically with this Report in accordance withThe Company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the provisions of Regulation S-T.Securities and Exchange Commission upon request. |
Instruments defining the rights of holders of certain issues of long-term debt of General Motors Financial Company, Inc. have not been filed as exhibits because the authorized principal amount of any one of such issues does not exceed 10% of the total assets of General Motors Financial Company, Inc. General Motors Financial Company, Inc. will furnish a copy of each such instrument to the SEC upon request.
GENERAL MOTORS FINANCIAL COMPANY, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | | | | General Motors Financial Company, Inc. |
| | | | | (Registrant) |
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Date: | October 25, 2016April 28, 2017 | | By: | | /S/ CHRIS A. CHOATE |
| | | | | (Signature) |
| | | | | Chris A. Choate |
| | | | | Executive Vice President and |
| | | | | Chief Financial Officer |