UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________________

FORM 10-Q

(Mark One)



ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2018~~2019



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)



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)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each Exchange on which registered
5.250% Senior Notes due 2026	GM/26	New York Stock Exchange

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 every Interactive Data File required to be submitted 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 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, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	o	Accelerated filer	o	Non-accelerated filer	ý	Smaller reporting 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. 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 30, 2018,~~July 31, 2019, there were 5,050,000 shares of the registrant’s common stock, par value $0.0001 per share, outstanding. All shares of the registrant’s common stock are owned by General Motors Holdings LLC, a wholly-owned subsidiary of General Motors Company.

The registrant is a wholly-owned subsidiary of General Motors Company and meets the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and is therefore filing this Quarterly Report on Form 10-Q with a reduced disclosure format as permitted by Instruction H(2).

INDEX



		Page
PART I
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets (Unaudited)	1
	Condensed Consolidated Statements of Income ~~and~~(Unaudited)	2
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)	2
	Condensed Consolidated Statements of Shareholders' Equity (Unaudited)	3
	Condensed Consolidated Statements of Cash Flows (Unaudited)	34
	Notes to Condensed Consolidated Financial Statements	45
	Note 1. Summary of Significant Accounting Policies	45
	Note 2. Related Party Transactions	56
	Note 3. Finance Receivables	78
	Note 4. Leased Vehicles	910
	Note 5. Equity in Net Assets of Non-consolidated Affiliates	910
	Note 6. Debt	1011
	Note 7. Variable Interest Entities	11
	Note 8. Derivative Financial Instruments and Hedging Activities	1213
	Note 9. Commitments and Contingencies	1415
	Note 10. Shareholders' Equity	1516
	Note 11. Income Taxes	1617
	Note 12. ~~Discontinued Operations~~	16
	~~Note 13.~~ Segment Reporting	17
	Note ~~14.~~13. Regulatory Capital and Other Regulatory Matters	18
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27
PART II
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 6.	Exhibits	29
	Signatures	30

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

PART I

Item 1. Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(Inin millions, except per share amounts) ~~(Unaudited)~~(unaudited)


	September 30, 2018			December 31, 2017			June 30, 2019				December 31, 2018
ASSETS
Cash and cash equivalents	$	4,546		$	4,265		$	3,594		��	$	4,883
Finance receivables, net (Note 3; Note 7 VIEs)	48,080			42,172			54,788				52,512
Leased vehicles, net (Note 4; Note 7 VIEs)	44,128			42,882			42,938				43,559
Goodwill	1,187			1,197			1,188				1,186
Equity in net assets of non-consolidated affiliates (Note 5)	1,308			1,187			1,446				1,355
Related party receivables (Note 2)	738			309			710				729
Other assets (Note 7 VIEs)	5,594			5,003			6,162				5,696
Total assets	$	105,581		$	97,015		$	110,826			$	109,920
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Secured debt (Note 6; Note 7 VIEs)	$	39,722		$	39,887		$	41,047			$	42,835
Unsecured debt (Note 6)	46,655			40,830			50,067				48,153
Deferred income	3,583			3,221			3,695				3,605
Related party payables (Note 2)	89			92			71				63
Other liabilities	3,680			2,691			3,561				3,605
Total liabilities	93,729			86,721			98,441				98,261
Commitments and contingencies (Note 9)
Shareholders' equity (Note 10)
Shareholders' equity (Note 10)
Common stock, $0.0001 par value per share	—			—			—				—
Preferred stock, $0.01 par value per share	—			—			—				—
Additional paid-in capital	8,052			7,525			8,077				8,058
Accumulated other comprehensive loss	(970		)	(768		)	(1,034		)		(1,066		)
Retained earnings	4,770			3,537			5,342				4,667
Total shareholders' equity	11,852			10,294			12,385				11,659
Total liabilities and shareholders' equity	$	105,581		$	97,015		$	110,826			$	109,920

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

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Inin millions) ~~(Unaudited)~~(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017			2019		2018		2019		2018
Revenue
Finance charge income	$	917	$	837	$	2,667	$	2,401		$	1,008	$	884	$	1,995	$	1,750
Leased vehicle income	2,501		2,244		7,445		6,282			2,512		2,497		5,021		4,944
Other income	100		80		305		216			119		107		243		205
Total revenue	3,518		3,161		10,417		8,899			3,639		3,488		7,259		6,899
Costs and expenses
Salaries and benefits	239		224		683		621
Other operating expenses	130		122		433		388
Total operating expenses	369		346		1,116		1,009
Operating expenses										377		382		747		747
Leased vehicle expenses	1,677		1,670		5,148		4,648			1,637		1,684		3,451		3,471
Provision for loan losses (Note 3)	180		204		444		573			179		128		354		264
Interest expense	838		672		2,373		1,903			952		803		1,899		1,535
Total costs and expenses	3,064		2,892		9,081		8,133			3,145		2,997		6,451		6,017
Equity income (Note 5)	44		41		141		129			42		45		87		97
Income from continuing operations before income taxes	498		310		1,477		895
Income before income taxes										536		536		895		979
Income tax provision (Note 11)	57		124		225		260			133		94		221		168
Income from continuing operations	441		186		1,252		635
Income (loss) from discontinued operations, net of tax (Note 12)	—		16		—		(169		)
Net income	$	441	$	202	$	1,252	$	466		403		442		674		811

Less: cumulative dividends on preferred stock										22		15		45		29
Net income attributable to common shareholder	$	426	$	200	$	1,208	$	464		$	381	$	427	$	629	$	782

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Inin millions) ~~(Unaudited)~~(unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Net income	$	441		$	202		$	1,252		$	466		$	403		$	442		$	674		$	811
Other comprehensive (loss) income, net of tax (Note 10)
Unrealized gain (loss) on cash flow hedges, net of income tax (expense) benefit of $(2), $2, $(1) and $10	1			(3		)	19			(14		)
Defined benefit plans, net of income tax	—			—			—			(1		)
Foreign currency translation adjustment, net of income tax benefit (expense) of $0, $(21), $1 and $(30)	(35		)	120			(221		)	318
Unrealized (loss) gain on hedges, net of income tax benefit of $6, $1, $11 and $1													(18		)	17			(33		)	18
Foreign currency translation adjustment, net of income tax expense (benefit) of $0, $0, $0 and $(1)													8			(245		)	65			(186		)
Other comprehensive (loss) income, net of tax	(34		)	117			(202		)	303			(10		)	(228		)	32			(168		)
Comprehensive income	$	407		$	319		$	1,050		$	769		$	393		$	214		$	706		$	643

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

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~SHAREHOLDERS' EQUITY

(Inin millions) ~~(Unaudited)~~(unaudited)

Nine Months Ended September 30,
2018 2017
Cash flows from operating activities
Net cash provided by operating activities - continuing operations $ 5,308
$ 4,795
Net cash provided by operating activities - discontinued operations —
243
Net cash provided by operating activities 5,308
5,038
Cash flows from investing activities
Purchases of retail finance receivables, net (17,794 ) (15,267 )
Principal collections and recoveries on retail finance receivables 12,010
9,410
Net funding of commercial finance receivables (886 ) (1,557 )
Purchases of leased vehicles, net (13,051 ) (14,809 )
Proceeds from termination of leased vehicles 8,094
4,649
Other investing activities (100 ) (65 )
Net cash used in investing activities - continuing operations (11,727 ) (17,639 )
Net cash used in investing activities - discontinued operations —
(468 )
Net cash used in investing activities (11,727 ) (18,107 )
Cash flows from financing activities
Net change in debt (original maturities less than three months) 1,563
(305 )
Borrowings and issuances of secured debt 18,541
26,731
Payments on secured debt (18,710 ) (20,905 )
Borrowings and issuances of unsecured debt 9,552
12,626
Payments on unsecured debt (4,423 ) (4,375 )
Debt issuance costs (118 ) (131 )
Proceeds from issuance of preferred stock 492
985
Dividends paid (59 ) —
Net cash provided by financing activities - continuing operations 6,838
14,626
Net cash provided by financing activities - discontinued operations —
63
Net cash provided by financing activities 6,838
14,689
Net increase in cash, cash equivalents and restricted cash 419
1,620
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash (56 ) 112
Cash, cash equivalents and restricted cash at beginning of period 6,567
5,302
Cash, cash equivalents and restricted cash at end of period $ 6,930
$ 7,034
Cash, cash equivalents and restricted cash from continuing operations at end of period $ 6,930
$ 6,469
Cash, cash equivalents and restricted cash from discontinued operations at end of period $ —
$ 565

~~The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheet:~~

September 30, 2018
Cash and cash equivalents $ 4,546
Restricted cash included in other assets 2,384
Total $ 6,930



	Common Stock		Preferred Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Loss			Retained Earnings			Total Equity
Balance at January 1, 2018	$	—	$	—	$	7,525	$	(768	)	$	3,537		$	10,294
Adoption of accounting standards	—		—		—		—			40			40
Net income	—		—		—		—			369			369
Other comprehensive income	—		—		—		60			—			60
Stock based compensation	—		—		16		—			—			16
Dividends paid	—		—		—		—			(30		)	(30		)
Other	—		—		—		—			(1		)	(1		)
Balance at March 31, 2018	—		—		7,541		(708		)	3,915			10,748
Net income	—		—		—		—			442			442
Other comprehensive loss	—		—		—		(228		)	—			(228		)
Stock based compensation	—		—		13		—			—			13
Other	—		—		—		—			1			1
Balance at June 30, 2018	$	—	$	—	$	7,554	$	(936	)	$	4,358		$	10,976

Balance at January 1, 2019	$	—	$	—	$	8,058	$	(1,066	)	$	4,667		$	11,659
Net income	—		—		—		—			271			271
Other comprehensive income	—		—		—		42			—			42
Stock based compensation	—		—		11		—			—			11
Other	—		—		—		—			1			1
Balance at March 31, 2019	—		—		8,069		(1,024		)	4,939			11,984
Net income	—		—		—		—			403			403
Other comprehensive loss	—		—		—		(10		)	—			(10		)
Stock based compensation	—		—		8		—			—			8
Balance at June 30, 2019	$	—	$	—	$	8,077	$	(1,034	)	$	5,342		$	12,385

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

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions) (unaudited)



	Six Months Ended June 30,
	2019			2018
Cash flows from operating activities
Net cash provided by operating activities	$	4,293		$	3,565
Cash flows from investing activities
Purchases of retail finance receivables, net	(14,450		)	(11,119		)
Principal collections and recoveries on retail finance receivables	12,096			7,593
Net funding of commercial finance receivables	(220		)	(516		)
Purchases of leased vehicles, net	(8,189		)	(9,122		)
Proceeds from termination of leased vehicles	6,444			5,303
Other investing activities	(30		)	(34		)
Net cash used in investing activities	(4,349		)	(7,895		)
Cash flows from financing activities
Net change in debt (original maturities less than three months)	243			695
Borrowings and issuances of secured debt	12,857			12,405
Payments on secured debt	(14,743		)	(13,135		)
Borrowings and issuances of unsecured debt	6,668			8,431
Payments on unsecured debt	(5,659		)	(3,783		)
Debt issuance costs	(78		)	(92		)
Dividends paid	(46		)	(30		)
Net cash (used in) provided by financing activities	(758		)	4,491
Net (decrease) increase in cash, cash equivalents and restricted cash	(814		)	161
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	22			(60		)
Cash, cash equivalents and restricted cash at beginning of period	7,443			6,567
Cash, cash equivalents and restricted cash at end of period	$	6,651		$	6,668

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheet:



	June 30, 2019
Cash and cash equivalents	$	3,594
Restricted cash included in other assets	3,057
Total	$	6,651

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

Table of Contents

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 entities (SPEs) utilized in secured financing transactions, which are considered variable interest entities (VIEs). All intercompany ~~transactions~~balances and ~~accounts~~transactions have been eliminated in consolidation.

On October 31, 2017, we completed the sale of certain of our European subsidiaries and branches (collectively, our European Operations) to Banque PSA Finance S.A. and BNP Paribas Personal Finance S.A. (BNP Paribas). Our European Operations are presented as discontinued operations in our condensed consolidated financial statements for the three and nine months ended September 30, 2017. Refer to ~~Note 12~~ for additional details regarding our disposal of these operations. Unless otherwise indicated, information in these notes to the condensed consolidated financial statements relates to our continuing operations.

The ~~condensed~~ consolidated financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles (GAAP) in the U.S. These 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 for the fiscal year ended December 31, ~~2017,~~2018, as filed with the Securities and Exchange Commission (SEC) on February 6, ~~2018 (2017~~2019 (2018 Form 10–K). Except as otherwise specified, dollar amounts presented within tables are stated in millions.

The condensed consolidated financial statements at ~~September~~June 30, ~~2018,~~2019, and for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017,~~2018, are unaudited and, in management’s opinion, include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations. The results for interim periods are not necessarily indicative of results for a full year. The condensed consolidated balance sheet at December 31, ~~2017~~2018 was derived from audited annual financial statements.

Segment Information We are the wholly-owned captive finance subsidiary of General Motors Company (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: North America (the North America Segment) and International (the International Segment). Our North America Segment includes operations in the U.S. and Canada. Our International Segment includes operations in Brazil, Chile, Colombia, Mexico and Peru, as well as our equity investments in joint ventures in China.

Recently Adopted Accounting Standards

Effective January 1, ~~2018,~~2019, we adopted ASU ~~2014-09, “Revenue from Contracts with Customers” as amended, as incorporated into Accounting Standards Codification (ASC) 606,~~2016-02, "Leases" (ASU 2016-02) using the optional transition method, resulting in the recognition of right of use assets of $129 million, included in other assets, and lease obligations of $144 million, included in other liabilities on ~~a modified retrospective basis by recognizing a cumulative effect adjustment~~our condensed consolidated balance sheet related to our existing operating leases at January 1, 2019. We elected to apply the package of ~~$33 million as an increase to~~practical expedients permitted under the ~~opening balance of retained earnings. Under~~transition guidance in the new standard, ~~commission revenue~~which allowed us to carry forward our historical lease classification. The accounting for finance leases and ~~expenses related~~leases where we are lessor remained substantially unchanged. The application of ASU 2016-02 had no impact on our condensed consolidated statement of income or condensed consolidated statement of cash flows.

The following table summarizes our minimum commitments under noncancelable operating leases having initial terms in excess of one year as of December 31, 2018:



	Years Ending December 31,
	2019		2020		2021		2022		2023		Thereafter		Total
Minimum commitments	$	27	$	26	$	25	$	23	$	19	$	47	$	167

Refer to ~~certain retail finance receivables that were previously recognized~~Note 9 for information on our operating leases as ~~earned or incurred ratably~~of June 30, 2019.

As lessor, we have investments in leased vehicles recorded as operating leases. Leased vehicles consist of automobiles leased to customers and are carried at amortized cost less unearned manufacturer subvention payments, which are received up front. Depreciation expense is recorded on a straight-line basis over the term of the ~~related receivables will now be recognized~~lease agreement to the estimated residual value. Manufacturer subvention is earned on a straight-line basis as a reduction to depreciation expense.

Generally, the lessee may purchase the leased vehicle at the maturity of the lease by paying the purchase price stated in ~~full~~the lease agreement, which equals the contract residual value determined at ~~the~~ origination of the ~~receivables.~~

Effective January 1, 2018, we adopted ASU 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". ASU 2018-02 provideslease, plus any fees and all other amounts owed under the ~~option~~lease. If the lessee decides not to ~~reclassify stranded tax effects related~~purchase the leased vehicle, the lessee must return it to a dealer by the lease's scheduled lease maturity date. Extensions may be granted to the ~~U.S. Tax Cuts and Jobs Act of 2017 (the Tax Act) in accumulated other comprehensive income~~lessee for up to ~~retained earnings. The cumulative effect~~six months. If the lessee extends the maturity date on their lease agreement, the lessee is responsible for additional monthly payments until the leased vehicle is returned or purchased. Since the lessee is not obligated to purchase the vehicle at the end of the ~~adjustments~~contract, we are exposed to a risk of loss to the ~~opening balance of retained earnings for~~extent the ~~adopted standard was insignificant.~~

~~Effective January 1, 2018, we adopted ASU 2017-12, "Derivatives and Hedging (Topic 815), Targeted Improvements~~customer returns the vehicle prior to ~~Accounting for Hedging Activities", on a modified retrospective basis, which is intended to facilitate financial reporting that more closely reflects risk management activities and simplifies~~or at the application of hedge accounting. Changes to the new guidance include expanded disclosures regarding the types of risk management strategies eligible for hedge accounting, simplifying the documentation and effectiveness assessment requirements, changing how ineffectiveness is measured, and changing the presentation and disclosure requirements for hedge accounting activities. The cumulative effectend of the ~~adjustments to~~lease term and the ~~opening balance of retained earnings for the adopted standard was insignificant.~~

~~The following change to our derivative accounting policy became effective upon adoption of ASU 2017-12:~~

Certain interest rate swap and foreign currency swap agreements have been designated as cash flow hedges. The risk being hedged is the foreign currency and interest rate risk related to forecasted transactions. If the contract has been designated as a cash flow hedge, the change in the fair value of the ~~cash flow hedge~~vehicle is ~~deferred in accumulated other comprehensive loss and is recognized in interest, operating and other expenses along with~~lower than the ~~earnings effect~~residual value estimated at inception of the ~~hedged item when~~lease.

We estimate the ~~hedged item affects earnings.~~expected residual value based on third party data which considers various data points and assumptions including recent auction values, the expected future volume of returning leased vehicles, used vehicle prices, manufacturer incentive programs and fuel prices. Changes in the expected residual value result in increased or decreased depreciation of the leased asset

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~Changes in~~over the remaining term of the lease. Upon disposition, a gain or loss is recorded for any difference between the net book value of the lease and the proceeds from the disposition of the asset, including any insurance proceeds. Under the accounting for impairment or disposal of long-lived assets, vehicles on operating leases are evaluated by asset group for impairment. We aggregate leased vehicles into asset groups based on make, year and model. When asset group indicators of impairment exist and aggregate future cash flows from the operating lease, including the expected realizable fair value of ~~amounts excluded from~~ the ~~assessment of effectiveness are recorded currently in earnings and are presented in~~leased assets at the ~~same income statement line as the earnings effect~~end of the ~~hedged item.~~lease, are less than the book value of the lease asset group, an immediate impairment write-down is recognized if the difference is deemed not recoverable.

Accounting Standards Not Yet Adopted

In ~~February~~June 2016 the Financial Accounting Standards Board issued ASU 2016-02, "Leases", which requires us, as the lessee, to recognize most leases on the balance sheet, thereby resulting in the recognition of the right to use assets and lease obligations for those leases currently classified as operating leases. The accounting for leases where we are the lessor remains largely unchanged. We are continuing to assess the impact of ASU 2016-02 and refine our processes to permit adoption on January 1, 2019. We plan to elect the optional transition method as well as the package of practical expedients upon adoption. We expect the primary impact to our consolidated financial position upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases on our consolidated balance sheets resulting in the recording of right of use assets and lease obligations. Our minimum commitments under noncancelable operating leases are not significantly different than those disclosed in our 2017 Form 10-K.

~~In June 2016 the FASB~~ issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), which requires entities to use a new impairment model based on current expected credit losses (CECL) rather than incurred losses. We plan to adopt ASU 2016-13 on January 1, 2020 on a modified retrospective basis, which will result in an increase to our allowance for credit losses and a decrease to retained earnings as of the adoption date.

We are ~~completing a cross-functional implementation project to adjust~~currently testing and refining our risk forecasting models, assumption review processes, corporate governance controls and accounting and financial reporting for our implementation of this standard. Estimated credit losses under CECL will consider relevant information about past events, current conditions and reasonable and supportable forecasts that affect the collectibility of the reported amount, resulting in recognition of lifetime expected credit losses upon loan origination. We expect that our allowance for credit losses will increase under CECL, though the amount of the increase is heavily dependent on the volume, credit mix and seasoning of our loan ~~portfolio outstanding at the time of the adoption.~~portfolio.

Note 2. Related Party Transactions

We offer loan and lease finance products through GM-franchised dealers to customers purchasing new vehicles manufactured by GM and certain used vehicles 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 cash payments to us to cover ~~certain~~ interest payments on certain commercial loans. ~~The balance in subvention receivable increased from December 31, 2017 due to a re-timing of cash payments from GM.~~

We purchase certain program vehicles from GM subsidiaries. We simultaneously lease these vehicles to those subsidiaries for use primarily in their ~~ride-sharing~~vehicle-sharing arrangements. We account for these leases as ~~direct-financing~~direct-finance leases, sales-type leases or loans depending on the origin of the asset, all of which are included in our finance receivables, net.

We periodically purchase finance receivables from other GM subsidiaries for vehicles sold to rental car companies and for vehicles sold to certain dealerships. During the ~~nine~~six months ended ~~September~~June 30, 2019 and 2018, we purchased ~~$371~~$442 million and $280 million of these receivables from ~~GM.~~GM, which are included in our finance receivables, net.

We have related party payables due to GM, primarily for commercial finance receivables originated but not yet funded.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following tables present related party transactions:


Balance Sheet Data	September 30, 2018		December 31, 2017		June 30, 2019		December 31, 2018
Commercial finance receivables, net due from dealers consolidated by GM^(a)	$	437	$	355	$	491	$	445
Direct-financing lease receivables from GM subsidiaries^(a)	$	125	$	88
Finance receivables from GM subsidiaries^(a)					$	108	$	134
Subvention receivable^(b)	$	735	$	306	$	705	$	727
Commercial loan funding payable^(c)	$	86	$	90	$	66	$	61


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
Income Statement Data	2018		2017		2018		2017		2019		2018		2019		2018
Interest subvention earned on retail finance receivables^(d)	$	125	$	115	$	359	$	319	$	133	$	122	$	264	$	234
Interest subvention earned on commercial finance receivables^(d)	$	17	$	14	$	50	$	42	$	14	$	15	$	31	$	33
Leased vehicle subvention earned^(e)	$	827	$	786	$	2,438	$	2,246	$	818	$	813	$	1,653	$	1,611

_________________


(a)	Included in finance receivables, net.


(b)	Included in related party receivables. We received subvention payments from GM of $0.9 billion and $1.1 billion for ~~both~~ the three months ended ~~September~~June 30, 2019 and 2018 and ~~2017, and $2.8~~$2.0 billion and ~~$3.3~~$1.7 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017.~~2018.


(c)	Included in related party payables.


(d)	Included in finance charge income.


(e)	Included as a reduction to leased vehicle expenses.

Under the support agreement with GM (the 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. GM also agrees to certain provisions in the Support Agreement intended to ensure that we maintain adequate access to liquidity. Pursuant to these provisions, GM provides us with a $1.0 billion junior subordinated unsecured intercompany revolving credit facility (the Junior Subordinated Revolving Credit Facility), and GM agrees to use commercially reasonable efforts to ensure that we will continue to be designated as a subsidiary borrower under GM's corporate revolving credit facilities.

OnIn April ~~18, 2018,~~2019, GM ~~amended and restated its revolving credit facilities, consisting of a three-year, $4.0 billion facility and a five-year, $10.5 billion facility, and added a~~renewed the 364-day, $2.0 billion facility (the GM Revolving 364-Day Credit Facility)~~. Also on April 18, 2018, we and GM amended the Support Agreement to, among other things, allow~~ for ~~irrevocable and~~an additional 364-day term. This facility has been allocated for exclusive access by us ~~of no less than $2.0 billion of the GM Revolving 364-Day Credit Facility to support our liquidity.~~since April 2018. At ~~September~~June 30, ~~2018,~~2019, we had no amounts borrowed under ~~these~~any of the GM facilities.

We are included in GM's consolidated U.S. federal income tax returns and certain U.S. state returns, and we are obligated to pay GM for our share of these tax liabilities. Amounts owed to GM for income taxes are accrued and recorded as a related party payable. At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, there are no related party taxes payable to GM.

~~On October 26, 2018, our Board of Directors declared a $375 million dividend on our common stock, which was paid to General Motors Holdings LLC on October 30, 2018.~~

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 3. Finance Receivables


	September 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
Retail finance receivables
Retail finance receivables, collectively evaluated for impairment, net of fees	$	35,567		$	30,574		$	40,345		$	38,354
Retail finance receivables, individually evaluated for impairment, net of fees	2,308			2,228			2,354			2,348
Total retail finance receivables, net of fees^(a)	37,875			32,802			42,699			40,702
Less: allowance for loan losses - collective	(522		)	(561		)	(540		)	(523		)
Less: allowance for loan losses - specific	(317		)	(328		)	(341		)	(321		)
Total retail finance receivables, net	37,036			31,913			41,818			39,858
Commercial finance receivables
Commercial finance receivables, collectively evaluated for impairment, net of fees	11,038			10,290			12,997			12,680
Commercial finance receivables, individually evaluated for impairment, net of fees	67			22			49			41
Total commercial finance receivables, net of fees(b)	11,105			10,312			13,046			12,721
Less: allowance for loan losses - collective	(53		)	(50		)	(65		)	(63		)
Less: allowance for loan losses - specific	(8		)	(3		)	(11		)	(4		)
Total commercial finance receivables, net	11,044			10,259			12,970			12,654
Total finance receivables, net	$	48,080		$	42,172		$	54,788		$	52,512
Fair value utilizing Level 2 inputs	$	11,044		10,259			$	12,970		$	12,654
Fair value utilizing Level 3 inputs	$	36,676		$	31,919		$	42,158		$	39,564

________________

(a) Net of unearned income, unamortized premiums and discounts, and deferred fees and costs of ~~$104~~$44 million and ~~$228~~$53 million at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~2018.

Retail Finance Receivables Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Allowance for retail loan losses beginning balance $ 815
$ 844
$ 889
$ 765
Provision for loan losses 176
204
434
563
Charge-offs (285 ) (286 ) (878 ) (856 )
Recoveries 130
135
398
420
Foreign currency translation 3
2
(4 ) 7
Allowance for retail loan losses ending balance $ 839
$ 899
$ 839
$ 899

(b) Net of dealer cash management balances of $1.1 billion and $922 million at June 30, 2019 and December 31, 2018.

Rollforward of Allowance for Retail ~~Credit Quality~~Loan Losses Our retail finance receivables portfolio includes loans made to consumers and businesses to finance the purchase of vehicles for personal and commercial use. 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 or its equivalent), and contract characteristics. We also consider other factors, such as employment history, financial stability and capacity to pay. A summary of the ~~credit risk profile by FICO or equivalent scores, determined at origination, of~~activity in the allowance for retail ~~finance receivables~~loan losses is as follows:

September 30, 2018 December 31, 2017
Amount Percent Amount Percent
Prime - FICO Score 680 and greater $ 21,765
57.5 % $ 16,892
51.5 %
Near-prime - FICO Score 620 to 679 5,879
15.5
5,226
15.9
Sub-prime - FICO Score less than 620 10,231
27.0
10,684
32.6
Balance at end of period $ 37,875
100.0 % $ 32,802
100.0 %



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Allowance for retail loan losses beginning balance	$	862		$	858		$	844		$	889
Provision for loan losses	165			123			343			258
Charge-offs	(279		)	(298		)	(586		)	(593		)
Recoveries	132			145			277			268
Foreign currency translation	1			(13		)	3			(7		)
Allowance for retail loan losses ending balance	$	881		$	815		$	881		$	815

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~In addition, we~~Retail Credit QualityOur retail finance receivables portfolio includes loans made to consumers and businesses to finance the purchase of vehicles for personal and commercial use. 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 for such ~~receivables.~~receivables:


	September 30, 2018				September 30, 2017				June 30, 2019				June 30, 2018
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
31 - 60 days	$	1,302	3.4	%	$	1,176	3.6	%	$	1,083	2.5	%	$	1,178	3.3	%
Greater than 60 days	498		1.3		521		1.6		498		1.2		462		1.3
Total finance receivables more than 30 days delinquent	1,800		4.7		1,697		5.2		1,581		3.7		1,640		4.6
In repossession	53		0.2		55		0.2		48		0.1		57		0.1
Total finance receivables more than 30 days delinquent or in repossession	$	1,853	4.9	%	$	1,752	5.4	%	$	1,629	3.8	%	$	1,697	4.7	%

At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the accrual of finance charge income had been suspended on retail finance receivables with contractual amounts due of ~~$847~~$838 million and ~~$778~~$888 million.

Impaired Retail Finance Receivables - TDRsRetail finance receivables that become classified as troubled debt restructurings (TDRs) are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. 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.

The outstanding recorded investment for retail finance receivables that are considered to be TDRs and the related allowance is presented below:


	September 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
Outstanding recorded investment	$	2,308		$	2,228		$	2,354		$	2,348
Less: allowance for loan losses	(317		)	(328		)	(341		)	(321		)
Outstanding recorded investment, net of allowance	$	1,991		$	1,900		$	2,013		$	2,027
Unpaid principal balance	$	2,341		$	2,266		$	2,382		$	2,379

Additional information about loans classified as TDRs is presented below:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Average outstanding recorded investment	$	2,293	$	2,091	$	2,268	$	2,045	$	2,344	$	2,238	$	2,351	$	2,253
Finance charge income recognized	$	59	$	56	$	185	$	173	$	63	$	62	$	131	$	126
Number of loans classified as TDRs during the period	17,924		23,015		51,020		56,853		17,407		19,662		33,939		33,096
Recorded investment of loans classified as TDRs during the period	$	319	$	407	$	932	$	997	$	318	$	360	$	626	$	613

The unpaid principal ~~balances,~~balance, net of recoveries, of loans ~~that were~~ charged off during the reporting period ~~and were~~ within 12 months of being modified as a TDR ~~were~~was insignificant for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017.~~2018.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

~~Commercial Finance Receivables~~

Commercial Credit QualityOur commercial finance receivables consist of dealer financings, primarily for inventory purchases. Proprietary models are used to assign a risk rating to each dealer. We perform periodic credit reviews of each dealership and adjust the dealership's risk rating, if necessary. Dealers in Group VI are subject to additional restrictions on funding, including suspension of lines of credit and liquidation of assets. The following table summarizes the credit risk profile by dealer risk rating of commercial finance receivables:


			September 30, 2018				December 31, 2017						June 30, 2019				December 31, 2018
			Amount		Percent		Amount		Percent				Amount		Percent		Amount		Percent
Group I	-	Dealers with superior financial metrics	$	2,109	19.0	%	$	1,915	18.6	%	-	Dealers with superior financial metrics	$	1,939	14.9	%	$	2,192	17.2	%
Group II	-	Dealers with strong financial metrics	3,989		35.9		3,584		34.7		-	Dealers with strong financial metrics	5,241		40.2		4,500		35.4
Group III	-	Dealers with fair financial metrics	3,413		30.7		3,424		33.2		-	Dealers with fair financial metrics	4,108		31.5		4,292		33.7
Group IV	-	Dealers with weak financial metrics	1,021		9.2		1,048		10.2		-	Dealers with weak financial metrics	1,229		9.4		1,205		9.5
Group V	-	Dealers warranting special mention due to elevated risks	466		4.2		260		2.5		-	Dealers warranting special mention due to elevated risks	419		3.2		449		3.5
Group VI	-	Dealers with loans classified as substandard, doubtful or impaired	107		1.0		81		0.8		-	Dealers with loans classified as substandard, doubtful or impaired	110		0.8		83		0.7
Balance at end of period	Balance at end of period		$	11,105	100.0	%	$	10,312	100.0	%	Balance at end of period		$	13,046	100.0	%	$	12,721	100.0	%

At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, substantially all of our commercial finance receivables were current with respect to payment status. Commercial finance receivables on non-accrual status were insignificant, and none were classified as TDRs. Activity in the allowance for commercial loan losses was insignificant for the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017.~~2018.

Note 4. Leased Vehicles


	September 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
Leased vehicles	$	65,233		$	62,203		$	64,361		$	64,928
Manufacturer subvention	(9,952		)	(9,468		)	(9,896		)	(9,934		)
	55,281			52,735
Net capitalized cost							54,465			54,994
Less: accumulated depreciation	(11,153		)	(9,853		)	(11,527		)	(11,435		)
Leased vehicles, net	$	44,128		$	42,882		$	42,938		$	43,559

The following table summarizes ~~minimum rental~~lease payments due to us as lessor under operating leases at ~~September~~June 30, ~~2018:~~2019:

Years Ending December 31,
2018 2019 2020 2021 2022 Thereafter Total
Minimum rental payments under operating leases $ 1,882
$ 6,260
$ 3,570
$ 1,077
$ 97
$ 6
$ 12,892



	Years Ending December 31,
	2019		2020		2021		2022		2023		Thereafter		Total
Lease payments under operating leases	$	3,610	$	5,396	$	2,817	$	629	$	40	$	1	$	12,493

Note 5. Equity in Net Assets of Non-consolidated Affiliates

We use the equity method to account for our equity interest in joint ventures. The income of these joint ventures is not consolidated into our financial statements; rather, our proportionate share of the earnings is reflected as equity income.

~~On August 9,~~There have been no significant ownership changes in our joint ventures since December 31, 2018. The following table presents certain aggregated operating data of our joint ventures:



	Three Months Ended June 30,				Six Months Ended June 30,
Summarized Operating Data	2019		2018		2019		2018
Finance charge income	$	344	$	315	$	694	$	622
Income before income taxes	$	161	$	171	$	331	$	369
Net income	$	121	$	129	$	248	$	277

At June 30, 2019 and December 31, 2018, we ~~made a $51~~had undistributed earnings of $585 million ~~capital investment representing a 35% equity interest in the newly-formed joint venture SAIC-GMF Leasing Co. Ltd., which was established~~and $498 million related to ~~conduct auto leasing operations in China.~~our non-consolidated affiliates.

910

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

We hold a 35% equity interest in SAIC-GMAC Automotive Finance Company Limited (SAIC-GMAC), which conducts auto finance operations in China. The following table presents summarized operating data related to SAIC-GMAC. This data represents that of the entire entity and not our proportionate share:

Three Months Ended September 30, Nine Months Ended September 30,
Summarized Operating Data 2018 2017 2018 2017
Finance charge income $ 305
$ 261
$ 927
$ 775
Provision for loan losses $ 4
$ 2
$ 13
$ (9 )
Interest expense $ 127
$ 83
$ 383
$ 241
Income before income taxes $ 168
$ 157
$ 537
$ 490
Net income $ 126
$ 118
$ 403
$ 368

During the nine months ended September 30, 2018 and 2017, there were no dividends received from SAIC-GMAC. At September 30, 2018 and December 31, 2017, we had undistributed earnings of $456 million and $315 million related to SAIC-GMAC.

Note 6. Debt


	September 30, 2018				December 31, 2017				June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Secured debt
Revolving credit facilities	$	2,327	$	2,331	$	4,694	$	4,713	$	2,280	$	2,286	$	3,410	$	3,413
Securitization notes payable	37,395		37,348		35,193		35,235		38,767		38,987		39,425		39,422
Total secured debt	39,722		39,679		39,887		39,948		41,047		41,273		42,835		42,835
Unsecured debt
Senior notes	41,004		41,417		36,820		37,969		44,864		46,251		42,611		42,015
Credit facilities	2,118		2,114		2,368		2,375		1,785		1,783		2,157		2,151
Other unsecured debt	3,533		3,531		1,642		1,645		3,418		3,420		3,385		3,390
Total unsecured debt	46,655		47,062		40,830		41,989		50,067		51,454		48,153		47,556
Total secured and unsecured debt	$	86,377	$	86,741	$	80,717	$	81,937	$	91,114	$	92,727	$	90,988	$	90,391
Fair value utilizing Level 2 inputs			$	84,693			$	79,623			$	90,699			$	88,305
Fair value utilizing Level 3 inputs			$	2,048			$	2,314			$	2,028			$	2,086

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 7 for further discussion.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we entered into new ~~credit facilities~~ or renewed credit facilities with a total net additional borrowing capacity of ~~$345~~$150 million, and we issued ~~$16.3~~$10.4 billion in aggregate principal amount of securitization notes payable with an initial weighted average interest rate of ~~2.89%~~2.98% and legal final maturity dates ranging from 2022 to 2026.

Unsecured Debt During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we issued ~~$7.2~~$5.4 billion in aggregate principal amount of senior notes with an initial weighted average interest rate of ~~3.17%~~4.20% and maturity dates ranging from ~~2020~~2021 to ~~2028.~~2029.

~~During the nine months ended September 30, 2018, we launched an unsecured commercial paper notes program in the U.S. At September 30, 2018, the~~The principal amount outstanding of our commercial paper in the U.S. was ~~$1.5 billion.~~$1.0 billion and $1.2 billion at June 30, 2019 and December 31, 2018.

General Motors Financial Company, Inc. is the sole guarantor of its subsidiaries' unsecured debt obligations for which a guarantee is provided.

Compliance with Debt Covenants Several of 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 debt obligations contain covenants including limitations on our ability to incur certain liens. At ~~September~~June 30, ~~2018,~~2019, we were in compliance with these debt covenants.

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

Note 7. Variable Interest Entities

Securitizations and Credit Facilities The following table summarizes the assets and liabilities related to our consolidated VIEs:


	September 30, 2018		December 31, 2017		June 30, 2019		December 31, 2018
Restricted cash^(a)	$	2,220	$	2,267	$	2,588	$	2,380
Finance receivables, net of fees	$	29,920	$	28,364	$	32,680	$	32,626
Lease related assets	$	21,252	$	22,222	$	19,404	$	21,781
Secured debt	$	39,478	$	39,328	$	40,845	$	42,504

_______________

(a) Included in other assets.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 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 other subsidiaries' obligations.

1112

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 8. Derivative Financial Instruments and Hedging Activities

We are exposed to certain risks arising from both our business operations and economic conditions. We manage economic risks, including interest rate ~~liquidity, and credit~~ risk, primarily by managing the amount, sources, and duration of our assets and liabilities and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our borrowings.

Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates. We primarily finance our earning assets with debt in the same currency to minimize the impact to earnings from our exposure to fluctuations in exchange rates. When we use a different currency, these fluctuations may impact the value of our cash receipts and payments in terms of our functional currency. We enter into derivative financial instruments to protect the value or fix the amount of certain assets and liabilities in terms of the relevant functional currency. The table below presents the gross amounts of fair value of our derivative instruments and the associated notional amounts:


	September 30, 2018						December 31, 2017						June 30, 2019						December 31, 2018
	Notional		Fair Value of Assets^(a)		Fair Value of Liabilities^(a)		Notional		Fair Value of Assets^(a)		Fair Value of Liabilities^(a)		Notional		Fair Value of Assets^(a)		Fair Value of Liabilities^(a)		Notional		Fair Value of Assets^(a)		Fair Value of Liabilities^(a)
Derivatives designated as hedges
Fair value hedges
Interest rate contracts	$	10,510	$	5	$	510	$	11,110	$	2	$	290
Interest rate swaps													$	13,046	$	353	$	38	$	9,533	$	42	$	231
Foreign currency swaps													1,822		37		61		1,829		37		60
Cash flow hedges
Interest rate contracts	905		10		—		2,177		15		—
Interest rate swaps													504		2		2		768		8		—
Foreign currency swaps	2,108		71		27		1,574		103		—		3,317		30		104		2,075		43		58
Derivatives not designated as hedges
Interest rate contracts	93,162		551		670		81,938		329		207		88,912		240		378		99,666		372		520
Foreign currency swaps	1,858		58		48		1,201		104		—
Total^(b)	$	108,543	$	695	$	1,255	$	98,000	$	553	$	497	$	107,601	$	662	$	583	$	113,871	$	502	$	869

_________________

(a)

The gross amounts of the fair value of our assets and liabilities are included in other assets and other liabilities, respectively. Amounts accrued for interest payments in a net receivable position are included in other assets. Amounts accrued for interest payments in a net payable position are included in other liabilities. All our derivatives are categorized within Level 2 of the fair value hierarchy. 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.

(b)

We primarily enter into ~~derivatives contracts~~derivative instruments through AmeriCredit Financial Services, Inc. (AFSI); however, our SPEs may also be parties to derivative ~~transactions.~~instruments. Agreements between AFSI and its derivative counterparties include rights of setoff for positions with offsetting values or for collateral held or posted. At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the fair value of assets and liabilities available for offset was ~~$459~~$353 million and ~~$284~~$320 million. At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we held ~~$55~~$162 million and ~~$25~~$30 million and posted ~~$718~~$140 million and ~~$299~~$451 million of collateral available for netting.

~~As of September 30, 2018, the~~The following amounts were recorded in the condensed consolidated balance sheet related to items designated and qualifying as hedged items in fair value hedging relationships:

September 30, 2018
Carrying Amount of Hedged Items
Cumulative Amount of Fair Value Hedging Adjustments^(a)
Unsecured debt $ 15,363
$ 735



	Carrying Amount of Hedged Items				Cumulative Amount of Fair Value Hedging Adjustments^(a)
	June 30, 2019		December 31, 2018		June 30, 2019			December 31, 2018
Unsecured debt	$	20,545	$	17,923	$	(57	)	$	459

_________________


(a)	Includes ~~$178~~$208 million and $247 million at June 30, 2019 and December 31, 2018 of adjustments remaining on hedged items for which hedge accounting has been discontinued.

1213

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The table below presents the effect of our derivative financial instruments in the condensed consolidated statements of ~~income for the three and nine months ended September 30, 2018:~~income:


													Income (Losses) Recognized In Income
	Income (Losses) Recognized In Income												Three Months Ended June 30,												Six Months Ended June 30,
	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018						2019						2018						2019						2018
	Interest Expense^(a)			Other Operating Expenses^(b)			Interest Expense^(a)			Other Operating Expenses^(b)			Interest Expense^(a)			Operating Expenses^(b)			Interest Expense^(a)			Operating Expenses^(b)			Interest Expense^(a)			Operating Expenses^(b)			Interest Expense^(a)			Operating Expenses^(b)
Fair value hedges
Hedged items	$	68		$	—		$	345		$	—
Interest rate contracts	(73		)	—			(359		)	—
Hedged items - interest rate swaps													$	(313	)	$	—		$	69		$	—		$	(523	)	$	—		$	277		$	—
Interest rate swaps													285			—			(76		)	—			466			—			(286		)	—
Hedged items - foreign currency swaps													—			(25		)	—			—			—			7			—			—
Foreign currency swaps													(15		)	27			—			—			(31		)	(4		)	—			—
Cash flow hedges
Interest rate contracts	4			—			11			—
Foreign currency contracts	(14		)	(23		)	(36		)	(91		)
Interest rate swaps													1			—			3			—			4			—			7			—
Foreign currency swaps													(21		)	18			(13		)	(92		)	(39		)	(15		)	(22		)	(68		)
Derivatives not designated as hedges
Interest rate contracts	(7		)	—			(2		)	—			(5		)	—			(1		)	—			(10		)	—			5			—
Foreign currency contracts	(15		)	(5		)	(35		)	(92		)
Foreign currency swaps													—			—			(13		)	(109		)	—			—			(20		)	(87		)
Total	$	(37	)	$	(28	)	$	(76	)	$	(183	)	$	(68	)	$	20		$	(31	)	$	(201	)	$	(133	)	$	(12	)	$	(39	)	$	(155	)

_________________


(a)	Total interest expense was ~~$838~~$952 million and ~~$2.4~~$803 million for the three months ended June 30, 2019 and 2018 and $1.9 billion and $1.5 billion for the ~~three and nine~~six months ended ~~September~~June 30, 2019 and 2018.


(b)	Activity is offset by translation activity also recorded in ~~other~~ operating expenses related to foreign currency-denominated loans. Total ~~other~~ operating ~~expense was $130~~expenses were $377 million and ~~$433~~$382 million for the three ~~and nine~~ months ended ~~September~~June 30, ~~2018.~~

~~The table below presents the effect of our derivative financial instruments in the condensed consolidated statements of income for the three and nine months ended September 30, 2017:~~

Income (Losses) Recognized In Income
Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
Fair value hedges
Interest rate contracts^(a)(b)
$ 9
$ 38
Cash flow hedges
Interest rate contracts^(a)
2
1
Foreign currency contracts^(c)
44
99
Derivatives not designated as hedges
Interest rate contracts^(a)
16
7
Foreign currency contracts^(c)(d)
37
72
Total $ 108
$ 217

~~_________________~~


~~(a)~~	~~Recognized in earnings as interest expense.~~


~~(b)~~	~~Includes hedge ineffectiveness which reflects~~2019 and 2018 and $747 million for both the ~~net change in the fair value of interest rate contracts offset by the change in fair value of hedged debt attributable to the hedged risk.~~


~~(c)~~	~~Recognized in earnings as other operating expenses~~six months ended June 30, 2019 and ~~interest expense.~~


~~(d)~~	~~Activity is partially offset by translation activity (included in other operating expenses) related to foreign currency-denominated loans.~~2018.

1314

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Gains (Losses) Recognized In
Accumulated Other Comprehensive Loss
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
Cash flow hedges
Interest rate contracts $ —
$ —
$ 5
$ 1
Foreign currency contracts (10 ) 24
(50 ) 45
Total $ (10 ) $ 24
$ (45 ) $ 46
The tables below present the effect of our derivative financial instruments in the condensed consolidated statements of comprehensive income:


	(Gains) Losses Reclassified From Accumulated Other Comprehensive Loss Into Income^(a)												Gains (Losses) Recognized In Accumulated Other Comprehensive Loss
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Fair value hedges
Foreign currency swaps													$	(9	)	$	—		$	(20	)	$	—
Cash flow hedges
Interest rate contracts	$	(2	)	$	(1	)	$	(5	)	$	—
Foreign currency contracts	13			(26		)	69			(60		)
Interest rate swaps													(2		)	1			(2		)	5
Foreign currency swaps													(19		)	(58		)	(71		)	(40		)
Total	$	11		$	(27	)	$	64		$	(60	)	$	(30	)	$	(57	)	$	(93	)	$	(35	)



	(Gains) Losses Reclassified From Accumulated Other Comprehensive Loss Into Income^(a)(b)
	Three Months Ended June 30,					Six Months Ended June 30,
	2019			2018		2019			2018
Fair value hedges
Foreign currency swaps	$	11		$	—	$	22		$	—
Cash flow hedges
Interest rate swaps	(1		)	—		(3		)	(3		)
Foreign currency swaps	2			74		41			56
Total	$	12		$	74	$	60		$	53

_________________


(a)	All amounts reclassified from accumulated other comprehensive loss were recorded to interest expense.


(b)	During the next twelve months, we estimate $14 million will be reclassified into pretax earnings from derivatives designated for hedge accounting.

Note 9. Commitments and Contingencies

Operating LeasesOur lease obligations consist primarily of real estate office space. Certain leases contain escalation clauses and renewal options, and generally our leases have no residual value guarantees or material covenants. We exclude from our balance sheet leases with a term equal to one year or less and do not separate non-lease components from our real estate leases. Rent expense under operating leases was $13 million and $18 million for the three and six months ended June 30, 2019. At June 30, 2019, operating lease right of use assets, included in other assets, were $138 million and operating lease liabilities, included in other liabilities, were $159 million. Operating lease right of use assets obtained in exchange for lease obligations were $27 million in the six months ended June 30, 2019. As of June 30, 2019, our undiscounted future lease obligations related to operating leases having initial terms in excess of one year are $14 million for the six months ended December 31, 2019 and $27 million, $26 million, $24 million, $20 million and $78 million for the years 2020, 2021, 2022, 2023 and thereafter. The weighted average discount rate is 4.4% and the weighted average remaining lease term is 8.0 years as of June 30, 2019. Imputed interest for operating leases and variable lease costs were insignificant for the three and six months ended June 30, 2019.

Guarantees of Indebtedness At ~~September~~both June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, we guaranteed approximately ~~$1.2 billion and $2.0~~$1.1 billion in aggregate principal amount of Euro Medium Term Notes issued by General Motors Financial International B.V., our former subsidiary, pursuant to our Euro Medium Term Note Programme. Subject to the terms and conditions of a letter agreement with BNP Paribas in connection with the sale of certain of our European Operations, BNP Paribas will reimburse us for any amount that we may pay under any such guarantees.

Legal Proceedings We are subject to various pending and potential legal and regulatory proceedings in the ordinary course of business, including litigation, arbitration, claims, investigations, examinations, subpoenas and enforcement proceedings. Some litigation against us could take the form of class actions. The outcome of these proceedings is inherently uncertain, and thus we cannot confidently predict how or when proceedings will be resolved. An adverse outcome in one or more of these proceedings could result in substantial damages, settlements, fines, penalties, diminished income or reputational harm. We identify below the material proceedings in connection with which we believe a material loss is reasonably possible or probable.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In accordance with the current accounting standards for loss contingencies, we establish reserves for legal matters when it is probable that a loss associated with the matter has been incurred and the amount of the loss can be reasonably estimated. The actual costs of resolving legal matters may be higher or lower than any amounts reserved for these matters. At ~~September~~June 30, ~~2018,~~2019, we estimated our reasonably possible legal exposure for unfavorable outcomes is up to ~~$70~~$67 million, and we have accrued ~~$17~~$23 million.

In 2014 and 2015, we were served with investigative subpoenas from various state attorneys general and other governmental offices to produce documents and data relating to our automobile loan and lease business and securitization of loans and leases. We believe that we have cooperated fully with all reasonable requests for information. We are currently unable to estimate any reasonably possible loss or range of loss that may result from these investigations.

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 ~~$13~~$14 million as of ~~September~~ June 30, ~~2018~~.2019.

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

Note 10. Shareholders' Equity


	September 30, 2018	December 31, 2017	June 30, 2019	December 31, 2018
Common Stock
Number of shares authorized	10,000,000	10,000,000	10,000,000	10,000,000
Number of shares issued and outstanding	5,050,000	5,050,000	5,050,000	5,050,000

~~On October 26, 2018, our Board of Directors declared a $375 million dividend on our common stock, which was paid to General Motors Holdings LLC on October 30, 2018.~~

September 30, 2018 December 31, 2017
Preferred Stock
Number of shares authorized 250,000,000
250,000,000
Number of shares issued and outstanding
Series A 1,000,000
1,000,000
Series B 500,000
—

On September 24, 2018, we issued 500,000 shares, par value $0.01 per share, of Fixed-to-Floating Rate Cumulative Perpetual Preferred Stock, Series B (Series B Preferred Stock), at a liquidation preference of $1,000 per share, for net proceeds of approximately $492 million.

Holders of Series B Preferred Stock are entitled to receive cash dividend payments when, as and if declared by our Board of Directors (or a duly authorized committee of our Board of Directors). Dividends on the Series B Preferred Stock accrue and are payable from September 24, 2018 to, but excluding, September 30, 2028 at a rate of 6.500% per annum, payable semi-annually in arrears on March 30 and September 30 of each year, beginning on March 30, 2019. From and including September 30, 2028, holders of the Series B Preferred Stock will be entitled to receive cash dividend payments at a floating rate equal to the then-applicable three-month U.S. Dollar LIBOR plus a spread of 3.436% per annum, payable quarterly in arrears, on March 30, June 30, September 30 and December 30 of each year. Dividends on the Series B Preferred Stock are cumulative whether or not we have earnings, there are funds legally available for the payment of the dividends or the dividends are authorized or declared.

The Series B Preferred Stock does not have a maturity date. We may, at our option, redeem the shares of Series B Preferred Stock, in whole or in part, at any time on or after September 30, 2028, at a price of $1,000 per share of Series B Preferred Stock plus all accumulated and unpaid dividends to, but excluding, the date of redemption.



	June 30, 2019	December 31, 2018
Preferred Stock
Number of shares authorized	250,000,000	250,000,000
Number of shares issued and outstanding
Fixed-to-Floating Rate Cumulative Perpetual Preferred Stock, Series A (Series A Preferred Stock)	1,000,000	1,000,000
Fixed-to-Floating Rate Cumulative Perpetual Preferred Stock, Series B (Series B Preferred Stock)	500,000	500,000

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, we paid ~~$59~~dividends of $29 million ~~of dividends~~ to holders of record of our ~~5.750% Fixed-to-Floating Rate Cumulative Perpetual~~Series A Preferred Stock, ~~Series A (Series A Preferred Stock). On October 26, 2018, prior~~and $17 million to ~~the declaration~~holders of record of our ~~common stock dividend, our Board~~Series B Preferred Stock. During the six months ended June 30, 2018, we paid dividends of ~~Directors declared a dividend~~$30 million to holders of ~~$28.75 per share, $29 million in the aggregate, on~~record of our Series A Preferred Stock, payable on March 30, 2019 to holders of record as of March 15, 2019 and declared a dividend of $33.58 per share, $17 million in the aggregate, on our Series B Preferred Stock, payable on March 30, 2019 to holders of record as of March 15, 2019. Accordingly, $46 million have been set aside for the payment of these dividends.

Stock.

1516

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the significant components of accumulated other comprehensive loss:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Unrealized gain on cash flow hedges
Unrealized (loss) gain on hedges
Beginning balance	$	34		$	6		$	16		$	17		$	(6	)	$	17		$	9		$	16
Change in value of cash flow hedges, net of tax	1			(3		)	19			(14		)
Change in value of hedges, net of tax													(18		)	17			(33		)	18
Ending balance	35			3			35			3			(24		)	34			(24		)	34
Defined benefit plans
Beginning balance	1			(21		)	1			(20		)	1			1			1			1
Unrealized gain (loss) on subsidiary pension, net of tax	—			—			—			(1		)
Unrealized gain on subsidiary pension, net of tax													—			—			—			—
Ending balance	1			(21		)	1			(21		)	1			1			1			1
Foreign currency translation adjustment
Beginning balance	(971		)	(1,037		)	(785		)	(1,235		)	(1,019		)	(726		)	(1,076		)	(785		)
Translation (loss) gain, net of tax	(35		)	120			(221		)	318
Translation gain (loss), net of tax													8			(245		)	65			(186		)
Ending balance	(1,006		)	(917		)	(1,006		)	(917		)	(1,011		)	(971		)	(1,011		)	(971		)
Total accumulated other comprehensive loss	$	(970	)	$	(935	)	$	(970	)	$	(935	)	$	(1,034	)	$	(936	)	$	(1,034	)	$	(936	)

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.

During the three ~~and nine~~ months ended ~~September~~June 30, 2019 and 2018, income tax expense of ~~$57~~$133 million and ~~$225~~$94 million primarily resulted from tax expense attributable to entities included in our effective tax rate calculation. The increase in income tax expense is due primarily to a reduction in our electrical vehicle tax credit. During the ~~three and nine~~six months ended ~~September~~June 30, ~~2017,~~2019 and 2018, income tax expense of ~~$124~~$221 million and ~~$260~~$168 million primarily resulted from tax expense attributable to entities included in our effective tax rate calculation. The increase in income tax expense is due primarily to a reduction in our electrical vehicle tax credit.

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.

On December 22, 2017, the Tax Act was signed into law. The Tax Act changed many aspects of U.S. corporate income taxation, including the reduction of the corporate income tax rate from 35% to 21%, implementation of a territorial tax system and imposition of a tax on deemed repatriated earnings of foreign subsidiaries. At December 31, 2017, we had not completed our accounting for the tax effects of enactment of the Tax Act; however, we made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. In the three months ended September 30, 2018, we filed our 2017 U.S. federal income tax return and updated our 2017 estimated tax benefit from $240 million to $286 million, primarily related to the remeasurement of transition tax as a result of proposed regulations issued in August 2018 and associated impacts to our deferred tax asset carryforwards.We will continue to assess our provision for income taxes as future guidance is issued, but do not currently anticipate significant revisions will be necessary. Any such revisions will be treated in accordance with the measurement period guidance outlined in Staff Accounting Bulletin No. 118.

~~Note 12. Discontinued Operations~~

On October 31, 2017, we completed the sale of certain of our European Operations to Banque PSA Finance S.A. and BNP Paribas. Refer to Note 2 - "Discontinued Operations" to our consolidated financial statements in our 2017 Form 10-K for further discussion of the terms of the agreement.

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)~~

~~The following table summarizes the results of operations of the European Operations:~~

Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
Total revenue $ 148
$ 422
Interest expense 24
70
Other expenses 75
231
Total costs and expenses 99
301
Income from discontinued operations before income taxes 49
121
Loss on sale of discontinued operations before income taxes 38
374
Income (loss) from discontinued operations before income taxes 11
(253 )
Income tax benefit (5 ) (84 )
Income (loss) from discontinued operations, net of tax $ 16
$ (169 )

Note ~~13.~~12. Segment Reporting

Our chief operating decision maker evaluates the operating results and performance of our business based on our North America and International Segments. The management of each segment is responsible for executing our strategies. ~~As discussed in~~ ~~Note 1~~, our European Operations are presented as discontinued operations and are excluded from our segment results for the three and nine months ended September 30, 2017. These operations were previously included in our International Segment. Key operating data for our operating segments were as follows:

Three Months Ended September 30, 2018
North
America International Total
Total revenue $ 3,217
$ 301
$ 3,518
Operating expenses 273
96
369
Leased vehicle expenses 1,668
9
1,677
Provision for loan losses 146
34
180
Interest expense 715
123
838
Equity income —
44
44
Income from continuing operations before income taxes $ 415
$ 83
$ 498


	Three Months Ended September 30, 2017						Three Months Ended June 30, 2019						Three Months Ended June 30, 2018
	North America		International		Total		North America		International		Total		North America		International		Total
Total revenue	$	2,868	$	293	$	3,161	$	3,332	$	307	$	3,639	$	3,180	$	308	$	3,488
Operating expenses	265		81		346		281		96		377		276		106		382
Leased vehicle expenses	1,662		8		1,670		1,627		10		1,637		1,675		9		1,684
Provision for loan losses	177		27		204		142		37		179		90		38		128
Interest expense	536		136		672		831		121		952		685		118		803
Equity income	—		41		41		—		42		42		—		45		45
Income from continuing operations before income taxes	$	228	$	82	$	310
Income before income taxes							$	451	$	85	$	536	$	454	$	82	$	536

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


	Nine Months Ended September 30, 2018						Six Months Ended June 30, 2019						Six Months Ended June 30, 2018
	North America		International		Total		North America		International		Total		North America		International		Total
Total revenue	$	9,482	$	935	$	10,417	$	6,638	$	621	$	7,259	$	6,265	$	634	$	6,899
Operating expenses	820		296		1,116		557		190		747		547		200		747
Leased vehicle expenses	5,121		27		5,148		3,430		21		3,451		3,453		18		3,471
Provision for loan losses	333		111		444		281		73		354		187		77		264
Interest expense	1,997		376		2,373		1,654		245		1,899		1,282		253		1,535
Equity income	—		141		141		—		87		87		—		97		97
Income from continuing operations before income taxes	$	1,211	$	266	$	1,477
Income before income taxes							$	716	$	179	$	895	$	796	$	183	$	979

Nine Months Ended September 30, 2017
North
America International Total
Total revenue $ 8,042
$ 857
$ 8,899
Operating expenses 766
243
1,009
Leased vehicle expenses 4,631
17
4,648
Provision for loan losses 497
76
573
Interest expense 1,488
415
1,903
Equity income —
129
129
Income from continuing operations before income taxes $ 660
$ 235
$ 895


	September 30, 2018						December 31, 2017						June 30, 2019						December 31, 2018
	North America		International		Total		North America		International		Total		North America		International		Total		North America		International		Total
Finance receivables, net	$	41,477	$	6,603	$	48,080	$	35,436	$	6,736	$	42,172	$	47,984	$	6,804	$	54,788	$	45,711	$	6,801	$	52,512
Leased vehicles, net	$	43,965	$	163	$	44,128	$	42,753	$	129	$	42,882	$	42,770	$	168	$	42,938	$	43,396	$	163	$	43,559
Total assets	$	96,252	$	9,329	$	105,581	$	87,618	$	9,397	$	97,015	$	101,147	$	9,679	$	110,826	$	100,176	$	9,744	$	109,920

Note ~~14.~~13. Regulatory Capital and Other Regulatory Matters

We are required to comply with a wide variety of laws and regulations. Certain of our entities operate in international markets as either banks or regulated finance companies that are subject to regulatory restrictions. These regulatory restrictions, among other things, require that certain of these entities meet 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 ~~$7.5~~$7.7 billion and ~~$7.8~~$7.9 billion at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~2018.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking statements in this ~~MD&A~~Management's Discussion and Analysis of Financial Condition and Results of Operations (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 ~~2017~~2018 Form 10-K for a discussion of these risks and uncertainties.

Basis of Presentation

This ~~Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)~~MD&A should be read in conjunction with the accompanying condensed consolidated financial statements and notes thereto and the audited consolidated financial statements and notes thereto included in our ~~2017~~2018 Form 10-K.

The European Operations are presented as discontinued operations in our condensed consolidated financial statements for the three and nine months ended September 30, 2017. Unless otherwise indicated, information in this report relates to our continuing operations.

Except as otherwise specified, dollar amounts presented within tables are stated in millions. Average balances are calculated using daily balances, where available. Otherwise, average balances are calculated using monthly balances.

Results of Operations

Earnings before taxes for the six months ended June 30, 2019 decreased to $895 million from $979 million for the six months ended June 30, 2018 due primarily to the following:

Retail finance charge income increased $151 million due primarily to an increase in the average balance of the consumer finance receivables portfolio, partially offset by a decrease in effective yield as the portfolio shifts to lower yielding prime loan assets.

Commercial finance charge income increased $94 million due to an increase in the average balance of the commercial finance receivables portfolio as well as increased interest rates on the portfolio.

Leased vehicle income net of leased vehicle expenses increased $97 million due primarily to a higher volume of lease terminations.

Provision expense increased $90 million due primarily to a decrease in the loss confirmation period and an increase in the recovery rate forecast on repossessed vehicles, both of which we recorded in the six months ended June 30, 2018.

Interest expense increased $364 million with $183 million of the increase due to an increase in the average balance of debt outstanding, and $181 million of the increase due to an increase in the effective rate of interest on debt.

Return on average common equity is widely used to measure earnings in relation to invested capital. Our return on average common equity decreased to 13.0% for the four quarters ended June 30, 2019 from 14.7% for the four quarters ended June 30, 2018 due primarily to a higher effective tax rate.

We use return on average tangible common equity (a non-GAAP measure) to measure our contribution to GM's enterprise profitability and cash flow. Our return on average tangible common equity decreased to 14.7% for the four quarters ended June 30, 2019 from 16.8% for the four quarters ended June 30, 2018 due primarily to a higher effective tax rate.

The following table presents our reconciliation of return on average tangible common equity to return on average common equity, the most directly comparable GAAP measure:



	Four Quarters Ended
	June 30, 2019			June 30, 2018
Net income attributable to common shareholder	$	1,351		$	1,163
Plus: loss from discontinued operations, net of tax	—			239
Net income from continuing operations attributable to common shareholder	$	1,351		$	1,402

Average equity	$	11,722		$	10,279
Less: average preferred equity	(1,363		)	(758		)
Average common equity	10,359			9,521
Less: average goodwill	(1,187		)	(1,198		)
Average tangible common equity	$	9,172		$	8,323

Return on average common equity	13.0		%	14.7		%
Return on average tangible common equity	14.7		%	16.8		%

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

Our calculation of this non-GAAP measure may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of this non-GAAP measure has limitations and should not be considered superior to, in isolation from, or as a substitute for, related U.S. GAAP measures. This non-GAAP measure allows investors the opportunity to measure and monitor our performance against our externally communicated targets and evaluate the investment decisions being made by management to improve our return on average tangible common equity. Management uses this measure in its financial, investment and operational decision-making processes, for internal reporting and as part of its forecasting and budgeting processes. For these reasons we believe this non-GAAP measure is useful for our investors.

Three Months Ended ~~September~~June 30, ~~2018~~2019 compared to Three Months Ended ~~September~~June 30, ~~2017~~2018


Average Earning Assets	Three Months Ended September 30,				2018 vs. 2017 Change					Three Months Ended June 30,				2019 vs. 2018
	2018		2017		Amount			Percentage		2019		2018		Amount			Percentage
Average retail finance receivables	$	36,809	$	31,796	$	5,013		15.8	%	$	42,447	$	35,081	$	7,366		21.0	%
Average commercial finance receivables	10,619		9,617		1,002			10.4	%	12,606		10,333		2,273			22.0	%
Average finance receivables	47,428		41,413		6,015			14.5	%	55,053		45,414		9,639			21.2	%
Average leased vehicles, net	44,110		40,789		3,321			8.1	%	42,998		43,805		(807		)	(1.8	)%
Average earning assets	$	91,538	$	82,202	$	9,336		11.4	%	$	98,051	$	89,219	$	8,832		9.9	%

Retail finance receivables purchased	$	6,668	$	4,686	$	1,982		42.3	%	$	7,113	$	6,051	$	1,062		17.6	%
Leased vehicles purchased	$	5,432	$	6,557	$	(1,125	)	(17.2	)%	$	5,911	$	6,201	$	(290	)	(4.7	)%

Average retail finance receivables increased due to ~~the~~a higher volume of new loan originations in excess of principal collections and payoffs. Our retail penetration of GM's retail sales in the U.S. increased to 47.1% for the three months ended June 30, 2019 from 45.4% for three months ended June 30, 2018 due primarily to further alignment with GM and greater dealer engagement. Average commercial finance receivables increased due primarily to an increase in our GM-franchised dealer commercial lending relationships. ~~Average leased~~Leased vehicles ~~net continued to increase as the volume of leases originated exceeded the depreciation and termination of leases. Our penetration of GM's retail sales in North America increased to 47% for~~purchased during the three months ended ~~September~~June 30, ~~2018 from 34% for the corresponding period in 2017, primarily due to further alignment with GM and greater dealer engagement. Leased vehicles purchased~~2019 decreased primarily as a result of a change in GM's retail sales mix.


Revenue	Three Months Ended September 30,						2018 vs. 2017 Change				Three Months Ended June 30,						2019 vs. 2018
	2018			2017			Amount		Percentage		2019			2018			Amount			Percentage
Finance charge income
Retail finance receivables	$	775		$	724		$	51	7.0	%	$	831		$	754		$	77		10.2	%
Commercial finance receivables	$	142		$	113		$	29	25.7	%	$	177		$	130		$	47		36.2	%
Leased vehicle income	$	2,501		$	2,244		$	257	11.5	%	$	2,512		$	2,497		$	15		0.6	%
Other income	$	100		$	80		$	20	25.0	%	$	119		$	107		$	12		11.2	%
Equity income	$	44		$	41		$	3	7.3	%	$	42		$	45		$	(3	)	(6.7	)%
Effective yield - retail finance receivables	8.4		%	9.0		%					7.9		%	8.6		%
Effective yield - commercial finance receivables	5.3		%	4.7		%					5.6		%	5.0		%

Finance charge income on retail finance receivables increased due to growth in the portfolio, partially offset by a decrease in effective yield. The effective yield on our retail finance receivables decreased due primarily to increased lending to borrowers with prime credit. The effective yield represents finance charges, rate subvention 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.

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

Finance charge income on commercial finance receivables increased due to growth in the portfolio, including an increase in the number of dealers in our floorplan program, and an increase in the effective yield resulting from rising benchmark interest rates.

~~The increase in leased vehicle~~Other income ~~reflects the growth of the leased asset portfolio.~~

~~The increase in other income is~~increased due primarily ~~due~~ to an increase in investment income due to ~~rising benchmark~~higher short-term interest rates.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.


Costs and Expenses	Three Months Ended September 30,						2018 vs. 2017 Change					Three Months Ended June 30,						2019 vs. 2018
	2018			2017			Amount			Percentage		2019			2018			Amount			Percentage
Operating expenses	$	369		$	346		$	23		6.6	%	$	377		$	382		$	(5	)	(1.3	)%
Leased vehicle expenses	$	1,677		$	1,670		$	7		0.4	%	$	1,637		$	1,684		$	(47	)	(2.8	)%
Provision for loan losses	$	180		$	204		$	(24	)	(11.8	)%	$	179		$	128		$	51		39.8	%
Interest expense	$	838		$	672		$	166		24.7	%	$	952		$	803		$	149		18.6	%
Average debt outstanding	$	85,591		$	78,953		$	6,638		8.4	%	$	92,529		$	83,714		$	8,815		10.5	%
Effective rate of interest on debt	3.9		%	3.4		%						4.1		%	3.8		%

Operating Expenses ~~The increase in operating expenses relates to the growth in earning assets and investments to support origination and servicing capabilities in the U.S.~~ Operating expenses as an annualized percentage of average earning assets decreased to ~~1.6%~~1.5% for the three months ended June 30, 2019 from 1.7% for the three months ended ~~September~~June 30, 2018, ~~compared to the three months ended September 30, 2017,~~ 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, offset by increased gains on sales of vehicles under terminated leases.

Provision for Loan Losses As an annualized percentage of average retail finance receivables, the provision for retail loan losses ~~decreased~~increased to ~~1.9%~~1.6% for the three months ended ~~September~~June 30, ~~2018~~2019 from ~~2.5%~~1.4% for the three months ended ~~September~~June 30, ~~2017,~~2018, due primarily to ~~a shift~~an increase in ~~the credit mix of the portfolio to a larger percentage of prime loans as well as better than forecasted~~our recovery ~~rates~~rate forecast on repossessed ~~vehicles. The provision for commercial loan losses was insignificant for~~vehicles we recorded in the three months ended ~~September~~June 30, ~~2018 and 2017.~~2018.

Interest Expense Interest expense increased due ~~primarily~~ to an increase in the average debt outstanding resulting from growth in ~~the loan and lease portfolios~~earning assets as well as ~~rising benchmark~~a higher effective rate of interest ~~rates.~~on our debt.

Taxes Our consolidated effective income tax rate ~~decreased to 12.6%~~was 26.9% and 19.1% of income before income taxes and equity income for the three months ended ~~September~~June 30, ~~2018 from 46.1% for the three months ended September 30, 2017.~~2019 and 2018. The ~~decrease~~increase in the effective income tax rate is due primarily to a ~~favorable impact from the U.S.~~reduction in our electrical vehicle tax ~~reform.~~credit.

Other Comprehensive Income (Loss)

Foreign Currency Translation Adjustment Foreign currency translation adjustments included in other comprehensive income (loss) ~~income~~ were ~~$(35)~~$8 million and ~~$120~~$(245) million for the three months ended ~~September~~June 30, ~~2018~~2019 and ~~2017.~~2018. Translation adjustments resulted from changes in the values of our international currency-denominated assets and liabilities as the value of the U.S. Dollar changed in relation to international ~~currencies, particularly~~currencies. The foreign currency translation gain for the three months ended June 30, 2019 was due primarily to changes in the value of the Chinese Yuan Renminbi and the Canadian Dollar. The foreign currency translation loss for the three months ended June 30, 2018 was due primarily to changes in the value of the Brazilian Real, ~~and~~ the Chinese Yuan ~~Renminbi.~~Renminbi, the Mexican Peso and the Canadian Dollar.

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019 compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018


Average Earning Assets	Nine Months Ended September 30,				2018 vs. 2017 Change					Six Months Ended June 30,				2019 vs. 2018
	2018		2017		Amount			Percentage		2019		2018		Amount			Percentage
Average retail finance receivables	$	35,130	$	29,918	$	5,212		17.4	%	$	42,018	$	34,253	$	7,765		22.7	%
Average commercial finance receivables	10,302		8,844		1,458			16.5	%	12,389		10,177		2,212			21.7	%
Average finance receivables	45,432		38,762		6,670			17.2	%	54,407		44,430		9,977			22.5	%
Average leased vehicles, net	43,688		38,282		5,406			14.1	%	43,216		43,498		(282		)	(0.6	)%
Average earning assets	$	89,120	$	77,044	$	12,076		15.7	%	$	97,623	$	87,928	$	9,695		11.0	%

Retail finance receivables purchased	$	17,797	$	15,546	$	2,251		14.5	%	$	14,275	$	11,129	$	3,146		28.3	%
Leased vehicles purchased	$	17,345	$	19,581	$	(2,236	)	(11.4	)%	$	11,121	$	11,913	$	(792	)	(6.6	)%

Average retail finance receivables increased due to ~~the~~a higher volume of new loan originations in excess of principal collections and payoffs. Our retail penetration of GM's retail sales in the U.S. increased to 49.8% for the six months ended June 30, 2019 from 44.9% for the six months ended June 30, 2018 due primarily to further alignment with GM and greater dealer engagement. Average commercial finance receivables increased due primarily to an increase in our GM-franchised dealer commercial lending relationships. ~~Average leased~~Leased vehicles ~~net continued to increase as~~purchased during the ~~volume of leases originated exceeded the depreciation and termination of leases. Our penetration of GM's retail sales in North America increased to 45% for the nine~~six months ended ~~September~~June 30, ~~2018 from 40% for the corresponding period in 2017, primarily due to further alignment with GM and greater dealer engagement. Leased vehicles purchased~~2019 decreased primarily as a result of a change in GM's retail sales mix.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.


Revenue	Nine Months Ended September 30,						2018 vs. 2017 Change				Six Months Ended June 30,						2019 vs. 2018
	2018			2017			Amount		Percentage		2019			2018			Amount			Percentage
Finance charge income
Retail finance receivables	$	2,271		$	2,098		$	173	8.2	%	$	1,647		$	1,496		$	151		10.1	%
Commercial finance receivables	$	396		$	303		$	93	30.7	%	$	348		$	254		$	94		37.0	%
Leased vehicle income	$	7,445		$	6,282		$	1,163	18.5	%	$	5,021		$	4,944		$	77		1.6	%
Other income	$	305		$	216		$	89	41.2	%	$	243		$	205		$	38		18.5	%
Equity income	$	141		$	129		$	12	9.3	%	$	87		$	97		$	(10	)	(10.3	)%
Effective yield - retail finance receivables	8.6		%	9.4		%					7.9		%	8.8		%
Effective yield - commercial finance receivables	5.1		%	4.6		%					5.7		%	5.0		%

~~The increase in leased vehicle~~Other income ~~reflects the growth of the leased asset portfolio.~~

~~The increase in other income is~~increased due primarily to ~~(i) a $45 million~~an increase in investment income due to ~~rising benchmark~~higher short-term interest rates, (ii) a $30 million increase in insurance revenue primarily due to a change in the timing of the recognition of commissions and (iii) $14 million related to the administration of a vehicle purchase program, which is substantially offset in other operating expenses.

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

rates.


Costs and Expenses	Nine Months Ended September 30,						2018 vs. 2017 Change					Six Months Ended June 30,						2019 vs. 2018
	2018			2017			Amount			Percentage		2019			2018			Amount			Percentage
Operating expenses	$	1,116		$	1,009		$	107		10.6	%	$	747		$	747		$	—		—	%
Leased vehicle expenses	$	5,148		$	4,648		$	500		10.8	%	$	3,451		$	3,471		$	(20	)	(0.6	)%
Provision for loan losses	$	444		$	573		$	(129	)	(22.5	)%	$	354		$	264		$	90		34.1	%
Interest expense	$	2,373		$	1,903		$	470		24.7	%	$	1,899		$	1,535		$	364		23.7	%
Average debt outstanding	$	83,637		$	73,278		$	10,359		14.1	%	$	92,434		$	82,611		$	9,823		11.9	%
Effective rate of interest on debt	3.8		%	3.5		%						4.1		%	3.7		%

Operating Expenses ~~The increase in operating expenses relates to the growth in earning assets and investments to support origination and servicing capabilities in the U.S.~~ Operating expenses as an annualized percentage of average earning assets decreased to ~~1.7% from 1.8%~~1.5% for the ~~nine~~six months ended ~~September~~June 30, ~~2018, compared to~~2019 from 1.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2018, 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, partially offset by increased gains on sales of vehicles under terminated leases.

Provision for Loan Losses As an annualized percentage of average retail finance receivables, the provision for retail loan losses ~~decreased~~increased to ~~1.7%~~1.6% for the ~~nine~~six months ended ~~September~~June 30, 2019 from 1.5% for the six months ended June 30, 2018, ~~from 2.5% for the nine months ended September 30, 2017,~~ due primarily to ~~a shift in the credit mix of the portfolio to a larger percentage of prime loans as well as better than forecasted recovery rates on repossessed vehicles and~~ a decrease in the loss confirmation ~~period.~~period as well as an increase in our recovery rate forecast on repossessed vehicles, both of which we recorded in the six months ended June 30, 2018. The loss confirmation period, which represents the average amount of time between when a loss event first occurs to when the receivable is charged ~~off. The provision for commercial loan losses was insignificant for~~off, decreased due to a shift in the ~~nine months ended September 30, 2018 and 2017.~~credit mix of the portfolio to a larger percentage of prime loans.

Taxes Our consolidated effective income tax rate ~~decreased to 16.8%~~was 27.4% and 19.0% of income before income taxes and equity income for the ~~nine~~six months ended ~~September~~June 30, ~~2018 from 33.9% for the nine months ended September 30, 2017.~~2019 and 2018. The ~~decrease~~increase in the effective income tax rate is due primarily to a ~~favorable impact from the U.S.~~reduction in our electrical vehicle tax ~~reform.~~credit.

Other Comprehensive Income (Loss)

Foreign Currency Translation Adjustment Foreign currency translation adjustments included in other comprehensive income (loss) ~~income~~ were ~~$(221)~~$65 million and ~~$318~~$(186) million for the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017.~~2018. Translation adjustments resulted from changes in the values of our international currency-denominated assets and liabilities as the value of the U.S. Dollar changed in relation to international ~~currencies, particularly~~currencies. The foreign currency translation gain for the six months ended June 30, 2019 was due primarily to changes in the value of the Canadian Dollar and the Mexican Peso. The foreign currency translation loss for the six months ended June 30, 2018 was due primarily to changes in the value of the Brazilian Real, the Canadian Dollar and the Chinese Yuan Renminbi.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

Earning Asset Quality

Retail Finance Receivables Our retail finance receivables portfolio includes loans made to consumers and businesses to finance the purchase of vehicles for personal and commercial use. A summary of the credit risk profile by FICO score or its equivalent, determined at origination, of the retail finance receivables is as follows:


Retail Finance Receivables	September 30, 2018			December 31, 2017
							June 30, 2019					December 31, 2018
							Amount			Percent		Amount			Percent
Prime - FICO Score 680 and greater							$	26,194		61.4	%	$	24,434		60.0	%
Near-prime - FICO Score 620 to 679							6,544			15.3		6,144			15.1
Sub-prime - FICO Score less than 620							9,961			23.3		10,124			24.9
Retail finance receivables, net of fees	$	37,875		$	32,802		42,699			100.0	%	40,702			100.0	%
Less: allowance for loan losses	(839		)	(889		)	(881		)			(844		)
Retail finance receivables, net	$	37,036		$	31,913		$	41,818				$	39,858
Number of outstanding contracts	2,494,427			2,308,826			2,678,131					2,607,703
Average amount of outstanding contracts (in dollars)^(a)	$	15,184		$	14,207		$	15,944				$	15,608
Allowance for loan losses as a percentage of retail finance receivables, net of fees	2.2		%	2.7		%	2.1		%			2.1		%

_________________


(a)	Average amount of outstanding contracts consists of retail finance receivables, net of fees, divided by number of outstanding contracts.

At September 30, 2018, the allowance for loan losses as a percentage of retail finance receivables, net of fees, decreased from the level at December 31, 2017 due primarily to a decrease in the loss confirmation period as well as an increase in our recovery rate forecast on repossessed vehicles. The loss confirmation period change resulted from a shift in the credit mix of the portfolio to a larger percentage of prime loans. The loss confirmation period represents the average amount of time between when a loss event first occurs to when the receivable is charged off. The recovery rate forecast change reflects stronger than expected wholesale auction values for the nine months ended September 30, 2018.

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

Delinquency The following is a consolidated summary of the contractual amounts of delinquent retail finance receivables:


	September 30, 2018				September 30, 2017				June 30, 2019				June 30, 2018
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
31 - 60 days	$	1,302	3.4	%	$	1,176	3.6	%	$	1,083	2.5	%	$	1,178	3.3	%
Greater than 60 days	498		1.3		521		1.6		498		1.2		462		1.3
Total finance receivables more than 30 days delinquent	1,800		4.7		1,697		5.2		1,581		3.7		1,640		4.6
In repossession	53		0.2		55		0.2		48		0.1		57		0.1
Total finance receivables more than 30 days delinquent or in repossession	$	1,853	4.9	%	$	1,752	5.4	%	$	1,629	3.8	%	$	1,697	4.7	%

~~Overall, delinquency continues to improve~~Delinquency improved due primarily to the continued shift in credit mix to prime credit.

TDRs Refer to Note 3 to our condensed consolidated financial statements for further discussion of TDRs.

Net Charge-offs The following table presents charge-off data with respect to our retail finance receivables portfolio:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Charge-offs	$	285		$	286		$	878		$	856		$	279		$	298		$	586		$	593
Less: recoveries	(130		)	(135		)	(398		)	(420		)	(132		)	(145		)	(277		)	(268		)
Net charge-offs	$	155		$	151		$	480		$	436		$	147		$	153		$	309		$	325
Net charge-offs as an annualized percentage^(a)	1.7		%	1.9		%	1.8		%	1.9		%
Net charge-offs as an annualized percentage of average retail finance receivables													1.4		%	1.7		%	1.5		%	1.9		%

~~_________________~~


~~(a)~~	Net charge-offs as an annualized ~~percentage is calculated as a percentage of average retail finance receivables.~~

~~The recovery rate as a~~ percentage of ~~gross repossession charge-offs in North America was 53.6% and 52.3% for~~average retail finance receivables decreased during the ~~three and nine~~six months ended ~~September~~June 30, 2019 from the corresponding period in 2018, ~~and 51.8% and 52.4% for~~due primarily to the ~~three and nine months ended September 30, 2017.~~shift in the portfolio toward prime credit quality.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.


Commercial Finance Receivables	September 30, 2018			December 31, 2017			June 30, 2019			December 31, 2018
Commercial finance receivables, net of fees	$	11,105		$	10,312		$	13,046		$	12,721
Less: allowance for loan losses	(61		)	(53		)	(76		)	(67		)
Commercial finance receivables, net	$	11,044		$	10,259		$	12,970		$	12,654
Number of dealers	1,682			1,538			1,809			1,750
Average carrying amount per dealer	$	7		$	7		$	7		$	7
Allowance for loan losses as a percentage of commercial finance receivables, net of fees	0.5		%	0.5		%	0.6		%	0.5		%

There were insignificant charge-offs of commercial finance receivables during the three and ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 and ~~2017.~~2018. At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, substantially all of our commercial finance receivables were current with respect to payment status and none were classified as TDRs.

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

Leased Vehicles At ~~September~~June 30, 2019 and 2018, 99.1% and ~~2017,~~ 98.8% ~~and 99.1%~~ of our operating leases were current with respect to payment status.

The following table summarizes the ~~estimated~~ residual value and the number of units included in leased vehicles, net by vehicle type (units in thousands):


	September 30, 2018					December 31, 2017					June 30, 2019					December 31, 2018
	Residual Value		Units	Percentage of Units		Residual Value		Units	Percentage of Units		Residual Value		Units	Percentage of Units		Residual Value		Units	Percentage of Units
Crossovers											$	15,887	961	57.6	%	$	15,057	917	53.8	%
Trucks											7,138		287	17.2		7,299		296	17.4
Cars	$	5,119	399	23.3	%	$	5,701	450	27.2	%	4,137		310	18.6		4,884		379	22.3
Trucks	7,410		300	17.6		7,173		285	17.3
Crossovers	14,796		901	52.7		13,723		818	49.5
SUVs	4,156		110	6.4		3,809		99	6.0		4,007		110	6.6		4,160		111	6.5
Total	$	31,481	1,710	100.0	%	$	30,406	1,652	100.0	%	$	31,169	1,668	100.0	%	$	31,400	1,703	100.0	%

Used vehicle prices ~~have held at similar levels through September~~for the six months ended June 30, ~~2018~~2019 decreased slightly compared to ~~2017.~~the same period in 2018. We ~~anticipate seasonal weakness in~~expect used vehicle prices ~~for the three months ending December 31, 2018, and expect a~~to decrease between 4% and 5% infor the full year 2019 compared to 2018, due primarily to continued increases in the industry supply of used ~~vehicles.~~vehicles as well as increases in our volume of lease terminations.

The following table summarizes additional information for operating leases (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017		2019		2018		2019		2018
Operating leases originated	141		174		450		530		148		160		286		309
Operating leases terminated	130		98		393		242		166		139		321		263
Operating lease vehicles returned^(a)	83		68		269		163		125		92		242		186
Return rate^(b)	64	%	69	%	68	%	67	%
Percentage of lease vehicles returned^(b)									75	%	66	%	75	%	71	%

________________


(a)	Represents the number of vehicles returned to us for remarketing.


(b)	Calculated as the number of operating leases returned divided by the number of operating leases terminated.

Operating leases originated decreased primarily as a result of a change in GM's retail sales mix. Operating leases terminated and operating lease vehicles returned increased due to the ~~growth and~~ maturity of the leased asset portfolio. The return rate can fluctuate based upon the level of used vehicle pricing compared to residual values at lease inception and growth and age of the lease portfolio.

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 credit facilities, 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 credit facilities, interest costs and operating ~~expenses and interest costs.~~expenses.

Typically, our purchase and funding of retail and commercial finance receivables and leased vehicles are financed initially by utilizing cash and borrowings on our secured credit facilities. Subsequently, we typically obtain long-term financing for finance receivables and leased vehicles through securitization transactions and the issuance of unsecured debt.

~~Cash Flow~~ During the nine months ended September 30, 2018, net cash provided by operating activities increased due primarily to an increase in leased vehicle income, partially offset by increased interest expense and increased operating expenses.

During the nine months ended September 30, 2018, net cash used in investing activities decreased due to an increase in proceeds received on terminated leases of $3.4 billion, increased collections and recoveries on retail finance receivables of $2.6 billion, a decrease in purchases of leased vehicles of $1.8 billion and a decrease in net fundings of commercial finance receivables of $0.7 billion, partially offset by an increase in purchases of retail finance receivables of $2.5 billion.

During the nine months ended September 30, 2018, net cash provided by financing activities decreased due primarily to a decrease in borrowings, net of repayments, of $7.2 billion and a decrease in the issuance of preferred stock of $0.5 billion.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

Cash Flow During the six months ended June 30, 2019, net cash provided by operating activities increased due primarily to a decrease in net collateral posted for derivative positions of $0.7 billion as a result of favorable changes in interest rates on our collateralized derivative portfolio.

During the six months ended June 30, 2019, net cash used in investing activities decreased due primarily to increased collections and recoveries on retail finance receivables of $4.5 billion, an increase in proceeds received on terminated leases of $1.1 billion, a decrease in purchases of leased vehicles of $0.9 billion, and a decrease in funding of commercial finance receivables of $0.3 billion, partially offset by an increase in purchases of retail finance receivables of $3.3 billion.

During the six months ended June 30, 2019, net cash used in financing activities increased due primarily to an increase in payments, net of borrowings of $5.2 billion.


Liquidity	September 30, 2018		December 31, 2017		June 30, 2019		December 31, 2018
Cash and cash equivalents^(a)	$	4,546	$	4,265	$	3,594	$	4,883
Borrowing capacity on unpledged eligible assets	17,396		12,533		20,037		18,048
Borrowing capacity on committed unsecured lines of credit	403		129		435		290
Borrowing capacity on the Junior Subordinated Revolving Credit Facility	1,000		1,000		1,000		1,000
Borrowing capacity on the GM Revolving 364-Day Credit Facility	2,000		—		2,000		2,000
Available liquidity	$	25,345	$	17,927	$	27,066	$	26,221

_________________


(a)	Includes ~~$407~~$430 million and ~~$656~~$503 million in unrestricted cash outside of the U.S. at ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017.~~2018. This cash is considered to be indefinitely invested based on specific plans for reinvestment of these earnings.

During the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, available liquidity increased due primarily to an increase in ~~receivables eligible to be pledged~~borrowing capacity on new and ~~a decrease in advances outstanding on~~renewed secured revolving credit ~~facilities. In addition, we added $2.0 billion in borrowing capacity on~~facilities, resulting from the ~~GM Revolving 364-Day Credit Facility as described below.~~issuance of securitizations and unsecured debt.

~~Our~~The Support Agreement ~~with GM~~ provides that GM will use commercially reasonable efforts to ensure that we will continue to be designated as a subsidiary borrower under GM's unsecured revolving credit facilities. In April ~~2018,~~2019, GM amended and restated its revolving credit facilities, consisting of a three-year, $4.0 billion facility and a five-year, $10.5 billion facility, and added a 364-day, $2.0 billion facility. We have access to the entire $16.5 billion, subject to available capacity, with irrevocable and exclusive access to no less than $2.0 billion ofrenewed the GM Revolving 364-Day Credit Facility ~~to support our liquidity.~~for an additional 364-day term. This facility has been allocated for exclusive access by us since April 2018. At ~~September~~June 30, ~~2018,~~2019, we had no borrowings outstanding under any of these facilities.

Credit Facilities In the normal course of business, in addition to using our available cash, we ~~utilize borrowings~~fund our operations by borrowing under our credit facilities, which may be secured and/or structured as securitizations, or may be ~~unsecured, and we~~unsecured. We repay these borrowings as appropriate under our liquidity management strategy.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

At ~~September~~June 30, ~~2018,~~2019, credit facilities consist of the following:


Facility Type	Facility Amount		Advances Outstanding		Facility Amount		Advances Outstanding
Revolving retail asset-secured facilities^(a)	$	22,158	$	2,051	$	22,639	$	2,007
Revolving commercial asset-secured facilities^(b)	3,987		276		3,983		273
Total secured	26,145		2,327		26,622		2,280
Unsecured committed facilities	449		46		435		—
Unsecured uncommitted facilities^(c)	2,072		2,072		1,785		1,785
Total unsecured	2,521		2,118		2,220		1,785
Junior Subordinated Revolving Credit Facility	1,000		—		1,000		—
GM Revolving 364-Day Credit Facility^(d)	2,000		—		2,000		—
Total	$	31,666	$	4,445	$	31,842	$	4,065

_________________

(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 ~~$105~~$97 million in advances outstanding and ~~$686~~$725 million in unused borrowing capacity on these facilities at ~~September~~June 30, ~~2018.~~2019.


(b)	Includes revolving credit facilities backed by loans to dealers for floorplan financing.


(c)	The financial institutions providing the uncommitted facilities are not contractually obligated to advance funds under them. We had ~~$1.1~~$1.6 billion in unused borrowing capacity on these facilities at ~~September~~June 30, ~~2018.~~


~~(d)~~	~~Does not include $14.5 billion in additional borrowing capacity available to us under GM's unsecured revolving credit facilities.~~2019.

Refer to Note 87 - "Debt" to our consolidated financial statements in our ~~2017~~2018 Form 10-K for further discussion of the terms of our revolving credit facilities.

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

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, 2018			Maturity Date ^(a)			Original Note Issuance ^(b)		Note Balance At June 30, 2019
2014	August 2021	-	March 2022	$	4,100	$	546
2015	May 2020	-	December 2023	$	5,797	1,155			January 2021	-	December 2023	$	5,297	$	626
2016	May 2019	-	September 2024	$	15,405	5,682			March 2021	-	September 2024	$	7,300	1,858
2017	June 2019	-	May 2025	$	22,486	15,331			August 2019	-	May 2025	$	22,344	10,431
2018	March 2022	-	April 2026	$	16,426	14,752			June 2020	-	September 2026	$	23,005	16,429
2019									April 2022	-	November 2026	$	10,426	9,495
Total active securitizations						37,466								38,839
Debt issuance costs						(71		)						(72		)
Total						$	37,395							$	38,767

_________________


(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.


(b)	At historical foreign currency exchange rates at the time of issuance.

Our securitizations utilize ~~SPEs~~special purpose entities which are also ~~VIEs~~variable interest entities that meet the requirements to be consolidated in our financial statements. Refer to Note 7 to our condensed consolidated financial statements for further discussion.

Unsecured Debt We periodically access the unsecured debt capital markets through the issuance of senior unsecured notes. At ~~September~~June 30, ~~2018,~~2019, the aggregate principal amount of our outstanding unsecured senior notes was ~~$41.9~~$45.0 billion.

We issue other unsecured debt through commercial paper offerings and other bank and non-bank funding sources. At ~~September~~June 30, ~~2018,~~2019, we had ~~$3.5~~$3.4 billion of this type of unsecured debt outstanding.

Support Agreement At ~~September~~June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, our earning assets leverage ratio calculated in accordance with the terms of the Support Agreement was ~~8.56x~~8.62x and ~~9.49x,~~9.05x, and the applicable leverage ratio threshold was 11.50x. ~~The earning assets leverage ratio decreased during the nine months ended September 30, 2018 due to growth in earnings and the issuance of preferred stock.~~

~~Dividends on Common Stock~~ In consideration of our level of pre-tax earnings, our increasing penetration of GM retail sales for the nine months ended September 30, 2018 and our decreased leverage ratio at September 30, 2018, our Board of Directors declared a $375 million dividend on our common stock on October 26, 2018. The dividend was paid to General Motors Holdings LLC on October 30, 2018. Following payment of the dividend, our leverage ratio remained below the applicable threshold. Future dividends are payable at the sole discretion of our Board of Directors and will depend on a number of factors including, but not limited to, business and economic conditions, our financial condition, earnings, liquidity requirements and leverage ratio.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

Forward-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 SEC, including our ~~2017~~2018 Form 10-K. 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:

GM's ability to sell new vehicles that we finance in the markets we serve;

the viability of GM-franchised dealers that are commercial loan customers;

changes in the automotive industry that result in a change in demand for vehicles and related vehicle financing;

the sufficiency, availability and cost of sources of financing, including credit facilities, securitization programs and secured and unsecured debt issuances;

our joint ventures in China, which we cannot operate solely for our benefit and over which we have limited control;

the adequacy of our underwriting criteria for loans and leases and the level of net charge-offs, delinquencies and prepayments on the loans and leases we purchase or originate;

the adequacy of our allowance for loan losses on our finance receivables;

the effect, interpretation or application of new or existing laws, regulations, court decisions and accounting pronouncements;

adverse determinations with respect to the application of existing laws, or the results of any audits from tax authorities, as well as changes in tax laws and regulations, supervision, enforcement and licensing across various jurisdictions;

the prices at which used vehicles are sold in the wholesale auction markets;

vehicle return rates, our ability to estimate residual value at the inception of a lease and the residual value performance on vehicles we lease;

interest rate fluctuations and certain related derivatives exposure;

foreign currency exchange rate fluctuations and other risks applicable to our operations outside of the U.S.;

changes to the LIBOR calculation process and potential phasing out of LIBOR;

our ability to effectively manage capital or liquidity consistent with evolving business or operational needs, risk management standards, and regulatory or supervisory requirements;

changes in local, regional, national or international economic, social or political conditions;

our ability to maintain and expand our market share due to competition in the automotive finance industry from a large number of banks, credit unions, independent finance companies and other captive automotive finance subsidiaries;

our ability to secure private customer and employee data or our proprietary information, ~~and~~ manage risks related to security breaches and other disruptions to our networks and ~~systems;~~systems and comply with enterprise data regulations in all key market regions; and

changes in business strategy, including expansion of product lines and credit risk appetite, acquisitions and divestitures.

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 Risk

There have been no material changes in our exposure to market risk since December 31, ~~2017.~~2018. Refer to Item 7A - "Quantitative and Qualitative Disclosures About Market Risk" in our ~~2017~~2018 Form 10-K.

Item 4. Controls and Procedures

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 ~~Securities~~ Exchange Act ~~of 1934, as amended (the Exchange Act)~~ is recorded, processed, summarized and reported

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

within the specified time periods and accumulated and communicated to our management, including our principal executive officer (CEO) and principal financial officer (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~~June 30, ~~2018.~~2019. Based on

~~Table of Contents~~

~~GENERAL MOTORS FINANCIAL COMPANY, INC.~~

this evaluation required by paragraph (b) of Rules 13a-15 orand 15d-15, our CEO and CFO concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~September~~June 30, ~~2018.~~2019.

Changes in Internal Control over Financial Reporting There ~~have not been any~~were no changes in our internal control over financial reporting during the ~~three months~~quarter ended ~~September~~June 30, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings

Refer to Note 9 to our condensed consolidated financial statements for information relating to certain legal proceedings.

Item 1A. Risk Factors

There have been no material changes to the Risk Factors disclosed in our ~~2017~~2018 Form 10-K.

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

Item 6. Exhibits



~~3.1~~4.1	~~Statement~~Thirty–Fifth Supplemental Indenture, dated April 8, 2019, between General Motors Financial Company, Inc. and Wells Fargo Bank, National Association, as trustee, with respect to the 3.550% Senior Notes due 2022, incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8–K, filed on April 8, 2019.	Incorporated by Reference

10.1	Amended and Restated 364–Day Revolving Credit Agreement, dated as of ~~Resolution Establishing the Designation of the Fixed-to-Floating Rate Cumulative Perpetual Preferred Stock, Series B of~~April 16, 2019, among General Motors Company, General Motors Financial Company, Inc., GM Global Treasury Centre, the subsidiary borrowers from time to time parties thereto, the several lenders from time to time parties thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Citibank, N.A., as syndication agent, incorporated herein by reference to Exhibit ~~3.1~~10.1 to the Current Report on Form ~~8-K of General Motors Financial Company, Inc.~~8–K, filed ~~September 24, 2018~~on April 16, 2019.	Incorporated by Reference

31.1	Section 302 Certification of the Chief Executive Officer	Filed Herewith

31.2	Section 302 Certification of the Chief Financial Officer	Filed Herewith

32	Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Furnished Herewith

101.INS	XBRL Instance Document	Filed Herewith

101.SCH	XBRL Taxonomy Extension Schema Document	Filed Herewith

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed Herewith

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed Herewith

101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed Herewith

101.PRE	XBRL Taxonomy Presentation Linkbase Document	Filed Herewith

Table of Contents

GENERAL MOTORS FINANCIAL COMPANY, INC.

SIGNATURES

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.



			General Motors Financial Company, Inc.
			(Registrant)

Date:	~~October 31, 2018~~August 1, 2019	By:	/S/ SUSAN B. SHEFFIELD
			Susan B. Sheffield
			Executive Vice President and
			Chief Financial Officer



	September 30, 2018
	Carrying Amount of Hedged Items		Cumulative Amount of Fair Value Hedging Adjustments^(a)
Unsecured debt	$	15,363	$	735



	Income (Losses) Recognized In Income
	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Fair value hedges
Interest rate contracts^(a)(b)	$	9	$	38
Cash flow hedges
Interest rate contracts^(a)	2		1
Foreign currency contracts^(c)	44		99
Derivatives not designated as hedges
Interest rate contracts^(a)	16		7
Foreign currency contracts^(c)(d)	37		72
Total	$	108	$	217