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þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the year ended December 31, 2006 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
STATE OF DELAWARE (State or other jurisdiction of Incorporation or Organization) | 38-0572515 (I.R.S. Employer Identification No.) | |
300 Renaissance Center, Detroit, Michigan (Address of Principal Executive Offices) | 48265-3000 (Zip Code) |
Name of Each Exchange on | ||
Title of Each Class | which Registered | |
Common, $12/3 par value | New York Stock Exchange, Inc. |
Bourse de Bruxelles | Brussels, Belgium | |
Euronext Paris | Paris, France | |
The London Stock Exchange | London, England |
Part and Item Number ofForm 10-K | ||
Document | into which Incorporated | |
General Motors Notice of Annual Meeting of Stockholders and Proxy Statement for the Annual Meeting of Stockholders to be held June 5, 2007 | Part III, Items 10 through 14 |
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Retained Earnings | ||||||||||||||||||||
Net Income (Loss) | at January 1, | |||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2002 | ||||||||||||||||
Previously reported | $ | (10,567 | ) | $ | 2,804 | $ | 3,859 | $ | 1,574 | $ | 9,223 | |||||||||
Pre-tax adjustments: | ||||||||||||||||||||
Derivatives and hedge accounting | 89 | (40 | ) | (213 | ) | 545 | (335 | ) | ||||||||||||
Other out-of-period | 118 | (272 | ) | (263 | ) | (138 | ) | (339 | ) | |||||||||||
Total pre-tax adjustments | 207 | (312 | ) | (476 | ) | 407 | (674 | ) | ||||||||||||
Tax effects — provision/(benefit) | 22 | (207 | ) | (202 | ) | 168 | (119 | ) | ||||||||||||
Total of above adjustments, net of tax | 185 | (105 | ) | (274 | ) | 239 | (555 | ) | ||||||||||||
Deferred income taxes | (35 | ) | 2 | (60 | ) | (78 | ) | 1,280 | ||||||||||||
Net after-tax adjustments | 150 | (103 | ) | (334 | ) | 161 | 725 | |||||||||||||
As Restated | $ | (10,417 | ) | $ | 2,701 | $ | 3,525 | $ | 1,735 | $ | 9,948 | |||||||||
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2005 | 2004 | 2003 | 2002 | |||||||||||||
Basic earnings (loss) per share: | ||||||||||||||||
Continuing operations, as reported | $ | (18.50 | ) | $ | 4.97 | $ | 5.17 | $ | 3.24 | |||||||
Adjustments | 0.27 | (0.19 | ) | (.60 | ) | .28 | ||||||||||
Continuing operations, as restated | (18.23 | ) | 4.78 | 4.57 | 3.52 | |||||||||||
Discontinued operations | — | — | 2.14 | (0.16 | ) | |||||||||||
Cumulative effect of a change in accounting principle | (0.19 | ) | — | — | — | |||||||||||
Earnings (loss) per share, as restated | $ | (18.42 | ) | $ | 4.78 | $ | 6.71 | $ | 3.36 | |||||||
Diluted earnings (loss) per share: | ||||||||||||||||
Continuing operations, as reported | $ | (18.50 | ) | $ | 4.94 | $ | 5.09 | $ | 3.23 | |||||||
Adjustments | 0.27 | (0.18 | ) | (0.58 | ) | 0.28 | ||||||||||
Continuing operations, as restated | (18.23 | ) | 4.76 | 4.51 | 3.51 | |||||||||||
Discontinued operations | — | — | 2.11 | (0.16 | ) | |||||||||||
Cumulative effect of a change in accounting principle | (0.19 | ) | — | — | — | |||||||||||
Earnings (loss) per share, as restated | $ | (18.42 | ) | $ | 4.76 | $ | 6.62 | $ | 3.35 | |||||||
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Item 1. | Business |
• Chevrolet | • Buick | • Saab | • GMC | |||
• Pontiac | • Cadillac | • Hummer | • Saturn |
• Opel | • Saab | • GMC | • Hummer | |||
• Vauxhall | • Buick | • Cadillac | • Isuzu | |||
• Holden | • Chevrolet | • Daewoo |
• Pontiac | • Wuling | • Chevrolet | • Buick | |||
• Suzuki | • Daewoo | • Cadillac | • Holden |
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Item 1. | Business — (continued) |
Item | Page(s) | |
Employment and Payrolls | 18-19 | |
Production Volumes | 58-64 | |
Segment Reporting (Note 27 to the Consolidated Financial Statements) | 178-182 |
Vehicle Unit Sales(1) | ||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||||||||||||||
GM as | GM as | GM as | ||||||||||||||||||||||||||||||||||
a % of | a % of | a % of | ||||||||||||||||||||||||||||||||||
Industry | GM | Industry | Industry | GM | Industry | Industry | GM | Industry | ||||||||||||||||||||||||||||
(Units in thousands) | ||||||||||||||||||||||||||||||||||||
United States | ||||||||||||||||||||||||||||||||||||
Cars | ||||||||||||||||||||||||||||||||||||
Small | 2,506 | 426 | 17.0% | 2,370 | 490 | 20.7% | 2,256 | 456 | 20.2% | |||||||||||||||||||||||||||
Midsize | 3,706 | 946 | 25.5% | 3,740 | 1,007 | 26.9% | 3,714 | 1,190 | 32.0% | |||||||||||||||||||||||||||
Sport | 436 | 80 | 18.3% | 424 | 58 | 13.6% | 403 | 59 | 14.6% | |||||||||||||||||||||||||||
Luxury | 1,206 | 173 | 14.4% | 1,208 | 197 | 16.3% | 1,190 | 180 | 15.2% | |||||||||||||||||||||||||||
Total cars | 7,854 | 1,625 | 20.7% | 7,742 | 1,752 | 22.6% | 7,563 | 1,885 | 24.9% | |||||||||||||||||||||||||||
Trucks | ||||||||||||||||||||||||||||||||||||
Pickups | 2,874 | 1,022 | 35.6% | 3,201 | 1,163 | 36.3% | 3,198 | 1,133 | 35.4% | |||||||||||||||||||||||||||
Vans | 1,326 | 245 | 18.5% | 1,468 | 328 | 22.4% | 1,456 | 313 | 21.5% | |||||||||||||||||||||||||||
Utilities | 4,505 | 1,174 | 26.0% | 4,586 | 1,212 | 26.4% | 4,693 | 1,324 | 28.2% | |||||||||||||||||||||||||||
Medium Duty | 501 | 59 | 11.8% | 459 | 63 | 13.8% | 392 | 52 | 13.2% | |||||||||||||||||||||||||||
Total trucks | 9,206 | 2,500 | 27.1% | 9,714 | 2,766 | 28.5% | 9,739 | 2,822 | 29.0% | |||||||||||||||||||||||||||
Total United States | 17,060 | 4,125 | 24.2% | 17,456 | 4,518 | 25.9% | 17,302 | 4,707 | 27.2% | |||||||||||||||||||||||||||
Canada, Mexico, and Other | 3,131 | 682 | 21.8% | 3,090 | 728 | 23.5% | 2,977 | 700 | 23.5% | |||||||||||||||||||||||||||
Total GMNA | 20,191 | 4,807 | 23.8% | 20,546 | 5,246 | 25.5% | 20,279 | 5,407 | 26.7% | |||||||||||||||||||||||||||
GME | 21,763 | 2,003 | 9.2% | 21,079 | 1,984 | 9.4% | 20,778 | 1,956 | 9.4% | |||||||||||||||||||||||||||
GMLAAM | 6,076 | 1,035 | 17.0% | 5,242 | 882 | 16.8% | 4,605 | 740 | 16.1% | |||||||||||||||||||||||||||
GMAP | 19,485 | 1,253 | 6.4% | 18,287 | 1,065 | 5.8% | 17,160 | 887 | 5.2% | |||||||||||||||||||||||||||
Total Worldwide | 67,515 | 9,098 | 13.5% | 65,154 | 9,177 | 14.1% | 62,822 | 8,990 | 14.3% | |||||||||||||||||||||||||||
(1) | GM’s vehicle unit sales primarily represent vehicles manufactured by GM, sold under a GM brand, or sold through a GM-owned distribution network. Consistent with industry practice, vehicle unit sales information includes estimates of sales in certain countries where public reporting is not legally required or otherwise available on a consistent basis. |
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Item 1. | Business — (continued) |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Units in thousands) | ||||||||||||
GMNA | 1,270 | 1,334 | 1,315 | |||||||||
GME | 792 | 814 | 730 | |||||||||
GMLAAM | 289 | 259 | 206 | |||||||||
GMAP | 227 | 217 | 183 | |||||||||
Total fleet units | 2,578 | 2,624 | 2,434 | |||||||||
Daily rental units | 1,027 | 1,149 | 1,127 | |||||||||
Other fleet units | 1,551 | 1,475 | 1,307 | |||||||||
Total fleet units | 2,578 | 2,624 | 2,434 | |||||||||
Fleet unit sales as a percentage of total vehicle unit sales | ||||||||||||
Cars | 33.9 | % | 35.2 | % | 33.7 | % | ||||||
Trucks | 20.5 | % | 19.6 | % | 17.9 | % | ||||||
Total | 28.3 | % | 28.6 | % | 27.1 | % |
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Item 1. | Business — (continued) |
As of December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
GMNA | 8,096 | 8,440 | 8,661 | |||||||||
GME | 10,459 | 10,200 | 9,522 | |||||||||
GMLAAM | 1,681 | 1,671 | 1,679 | |||||||||
GMAP | 3,649 | 3,329 | 2,788 | |||||||||
Total Worldwide | 23,885 | 23,640 | 22,650 | |||||||||
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Item 1. | Business — (continued) |
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Item 1. | Business — (continued) |
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Item 1. | Business — (continued) |
• Mini Vehicles | • Rear-Wheel-Drive (RWD) Vehicles | |
• Small Vehicles | • Luxury RWD Vehicles | |
• Compact Vehicles | • Compact Crossover Vehicles | |
• Midsize Vehicles | • Midsize Trucks |
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Item 1. | Business — (continued) |
2006 | 2005 | |||||||
GM | 24.2 | % | 25.9 | % | ||||
Ford | 17.1 | % | 18.2 | % | ||||
DaimlerChrysler | 14.9 | % | 15.3 | % | ||||
Toyota Corporation (Toyota) | 14.9 | % | 13.0 | % | ||||
Honda Motor Company, Ltd. (Honda) | 8.8 | % | 8.4 | % | ||||
Nissan Motor Corporation, Ltd. (Nissan) | 6.0 | % | 6.2 | % |
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Item 1. | Business — (continued) |
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Item 1. | Business — (continued) |
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Item 1. | Business — (continued) |
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Item 1. | Business — (continued) |
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Item 1. | Business — (continued) |
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Item 1. | Business — (continued) |
2006 | 2005 | 2004 | ||||||||||
GMNA | 152 | 173 | 181 | |||||||||
GME | 60 | 63 | 61 | |||||||||
GMLAAM | 32 | 31 | 29 | |||||||||
GMAP | 34 | 31 | 15 | |||||||||
GMAC(1) | — | 34 | 34 | |||||||||
Other | 2 | 3 | 4 | |||||||||
Total | 280 | 335 | 324 | |||||||||
(1) | Amounts for 2006 exclude GMAC employees, who were removed from the consolidated payroll as a result of the GMAC Transaction in November 2006. |
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Item 1. | Business — (concluded) |
2006 | 2005 | 2004 | ||||||||||
Worldwide payrolls (billions) | $ | 22.3 | $ | 21.5 | $ | 21.5 | ||||||
U.S. hourly payrolls (in billions)(1) | $ | 8.5 | $ | 8.0 | $ | 8.7 | ||||||
Average U.S. hourly labor cost per active hour worked(2)(3) | $ | 73.26 | $ | 81.18 | $ | 73.73 |
(1) | Includes employees “at work” (excludes laid-off employees receiving benefits). | |
(2) | Includes U.S. hourly wages and benefits divided by the number of hours worked. | |
(3) | Cost of an hour including all expenses associated with the national Special Attrition Program (SAP) is $110.33 in 2006. |
Item 1A. | Risk Factors |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
• | Require us to dedicate a significant portion of our cash flow from operations to the payment of principal of, and interest on, our indebtedness, which will reduce the funds available for other purposes such as product development; | |
• | Make us more vulnerable to adverse economic and industry conditions; | |
• | Limit our ability to withstand competitive pressures; and | |
• | Reduce our flexibility in responding to changing business and economic conditions. |
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Item 1A. | Risk Factors — (continued) |
• | Multiple foreign regulatory requirements that are subject to change, including foreign regulations restricting our ability to sell our products in those countries; | |
• | Differing local product preferences and product requirements; | |
• | Difficulty in establishing and maintaining robust oversight over foreign operations; | |
• | Differing labor regulations; | |
• | Consequences from changes in tax laws; | |
• | Foreign state takeovers of our manufacturing facilities in those countries; and | |
• | Political and economic instability, natural calamities, war and terrorism. |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
• | Rising interest rates will increase its cost of funds. | |
• | Rising interest rates may reduce its consumer automotive financing volume by influencing consumers to pay cash for vehicle purchases, instead of financing them. | |
• | Rising interest rates generally reduce GMAC’s residential mortgage loan production as borrowers become less likely to refinance and the costs associated with acquiring a new home become more expensive. | |
• | Rising interest rates will generally reduce the value of mortgage and automotive financing loans and contracts and retained interests and fixed income securities held in GMAC’s investment portfolio. |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (continued) |
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Item 1A. | Risk Factors — (concluded) |
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
• Germany | • Australia | • China | • South Korea | |||
• United Kingdom | • Sweden | • Thailand | • South Africa | |||
• Brazil | • Belgium | • Argentina | • India | |||
• Mexico | • Spain | • Poland |
Item 3. | Legal Proceedings |
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Item 3. | Legal Proceedings — (continued) |
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Item 3. | Legal Proceedings — (continued) |
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Item 3. | Legal Proceedings — (continued) |
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Item 3. | Legal Proceedings — (continued) |
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Item 3. | Legal Proceedings — (continued) |
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Item 3. | Legal Proceedings — (continued) |
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Item 3. | Legal Proceedings — (concluded) |
Item 4. | Submission of Matters to a Vote of Security Holders |
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Name and (Age) | Positions and Offices | |
G. Richard Wagoner, Jr. (54) | Chairman and Chief Executive Officer | |
Frederick A. Henderson (48) | Vice Chairman and Chief Financial Officer | |
Robert A. Lutz (75) | Vice Chairman, Global Product Development | |
Thomas A. Gottschalk (64) | Executive Vice President, Law and Public Policy | |
Bo I. Andersson (51) | Vice President, Global Purchasing and Supply Chain | |
Kathleen S. Barclay (51) | Vice President, Global Human Resources | |
Walter G. Borst (45) | Treasurer | |
Lawrence D. Burns (55) | Vice President, Research & Development and Strategic Planning | |
Troy A. Clarke (51) | Group Vice President and President, North America | |
Gary L. Cowger (59) | Group Vice President, Global Manufacturing and Labor Relations | |
Nicholas S. Cyprus (53) | Controller and Chief Accounting Officer | |
Carl-Peter Forster (52) | Group Vice President and President, GM Europe | |
Steven J. Harris (61) | Vice President, Global Communications | |
Maureen Kempston-Darkes (58) | Group Vice President and President, GM Latin America, Africa and Middle East | |
Robert S. Osborne (52) | Group Vice President and General Counsel | |
David N. Reilly (57) | Group Vice President and President, GM Asia Pacific | |
Thomas G. Stephens (58) | Group Vice President, GM Powertrain | |
Ralph J. Szygenda (58) | Group Vice President and Chief Information Officer |
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Item 4A. | Executive Officers of the Registrant — (concluded) |
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GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Item 5. | Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities |
2006 Quarters | ||||||||||||||||||
1st | 2nd | 3rd | 4th | |||||||||||||||
Cash dividends per share of common stock $12/3 par value | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | ||||||||||
Price range of common stock $12/3 par value(1): | High | $ | 24.60 | $ | 30.56 | $ | 33.64 | $ | 36.56 | |||||||||
Low | $ | 18.47 | $ | 19.00 | $ | 27.12 | $ | 28.49 |
2005 Quarters | ||||||||||||||||||
1st | 2nd | 3rd | 4th | |||||||||||||||
Cash dividends per share of common stock $12/3 par value | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 | ||||||||||
Price range of common stock $12/3 par value(1): | High | $ | 40.80 | $ | 36.65 | $ | 37.70 | $ | 31.50 | |||||||||
Low | $ | 27.98 | $ | 24.67 | $ | 30.21 | $ | 18.33 |
(1) | New York Stock Exchange composite interday prices as listed in the price history database available atwww.NYSEnet.com. |
Number of Securities | Number of Securities | |||||||||||
to be Issued Upon | Weighted Average | Remaining Available for | ||||||||||
Exercise of | Exercise Price of | Future Issuance Under | ||||||||||
Outstanding Options, | Outstanding Options, | Equity Compensation | ||||||||||
Plan Category | Warrants and Rights | Warrants and Rights | Plans(1) | |||||||||
Equity compensation plans approved by security holders: | ||||||||||||
General Motors Amended Stock Incentive Plan (GMSIP) | 81,655,178 | $ | 52.41 | 4,885,385 | ||||||||
Equity compensation plans not approved by security holders(2): | ||||||||||||
General Motors 1998 Salaried Stock Option Plan (GMSSOP) | 26,583,895 | $ | 55.23 | — | ||||||||
Total | 108,239,073 | $ | 53.10 | 4,885,385 | ||||||||
(1) | Excludes securities reflected in the first column, “Number of securities to be issued upon exercise of outstanding options, warrants and rights.” |
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Item 5. | Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities — (concluded) |
(2) | All equity compensation plans except the GMSSOP were approved by the stockholders. The GMSSOP was adopted by the board of directors in 1998 and expires December 31, 2007. The purpose of the plans is to recognize the importance and contribution of GM employees in the creation of stockholder value, to further align compensation with business success, and to provide employees with the opportunity for long-term capital accumulation through the grant of options to acquire shares of GM’s common stock. |
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Item 6. | Selected Financial Data |
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||||||||||||||||||
Previously | Previously | Previously | Previously | |||||||||||||||||||||||||||||||||
Reported | Reported | Restated(1) | Reported | Restated(1) | Reported | Restated(1) | Reported | Restated(1) | ||||||||||||||||||||||||||||
(Dollars in millions except per share amounts) | ||||||||||||||||||||||||||||||||||||
Total net sales and revenues(2) | $ | 207,349 | $ | 191,184 | $ | 194,655 | $ | 191,909 | $ | 195,351 | $ | 183,255 | $ | 186,065 | $ | 176,723 | $ | 179,292 | ||||||||||||||||||
Income (loss) from continuing operations | $ | (1,978 | ) | $ | (10,458 | ) | $ | (10,308 | ) | $ | 2,804 | $ | 2,701 | $ | 2,899 | $ | 2,565 | $ | 1,813 | $ | 1,974 | |||||||||||||||
(Loss) from discontinued operations(3) | — | — | — | — | — | (219 | ) | (219 | ) | (239 | ) | (239 | ) | |||||||||||||||||||||||
Gain from sale of discontinued operations(3) | — | — | — | — | — | 1,179 | 1,179 | — | — | |||||||||||||||||||||||||||
Cumulative effect of a change in accounting principle(4) | — | (109 | ) | (109 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
Net income (loss)(5) | $ | (1,978 | ) | $ | (10,567 | ) | $ | (10,417 | ) | $ | 2,804 | $ | 2,701 | $ | 3,859 | $ | 3,525 | $ | 1,574 | $ | 1,735 | |||||||||||||||
$12/3 par value common stock | ||||||||||||||||||||||||||||||||||||
Basic earnings (loss) per share from continuing operations before cumulative effect of accounting change | $ | (3.50 | ) | $ | (18.50 | ) | $ | (18.23 | ) | $ | 4.97 | $ | 4.78 | $ | 5.17 | $ | 4.57 | $ | 3.24 | $ | 3.52 | |||||||||||||||
Basic earnings (loss) per share from discontinued operations(3) | — | — | — | — | — | 2.14 | 2.14 | (0.16 | ) | (0.16 | ) | |||||||||||||||||||||||||
Basic (loss) per share from cumulative effect of a change in accounting principle(4) | — | (0.19 | ) | (0.19 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
Basic earnings per share | $ | (3.50 | ) | $ | (18.69 | ) | $ | (18.42 | ) | $ | 4.97 | $ | 4.78 | $ | 7.31 | $ | 6.71 | $ | 3.08 | $ | 3.36 | |||||||||||||||
Diluted earnings (loss) per share from continuing operations before cumulative effect of accounting change | $ | (3.50 | ) | $ | (18.50 | ) | $ | (18.23 | ) | $ | 4.94 | $ | 4.76 | $ | 5.09 | $ | 4.51 | $ | 3.23 | $ | 3.51 | |||||||||||||||
Diluted earnings (loss) per share from discontinued operations(3) | — | — | — | — | — | 2.11 | 2.11 | (0.16 | ) | (0.16 | ) | |||||||||||||||||||||||||
Diluted (loss) per share from cumulative effect of accounting change(4) | — | (0.19 | ) | (0.19 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
Diluted earnings per share | $ | (3.50 | ) | $ | (18.69 | ) | $ | (18.42 | ) | $ | 4.94 | $ | 4.76 | $ | 7.20 | $ | 6.62 | $ | 3.07 | $ | 3.35 | |||||||||||||||
GM’s Class H common stock(3) | ||||||||||||||||||||||||||||||||||||
Basic earnings (loss) per share from discontinued operations | — | — | — | — | — | $ | (0.22 | ) | $ | (0.22 | ) | $ | (0.21 | ) | $ | (0.21 | ) | |||||||||||||||||||
Diluted earnings (loss) per share from discontinued operations | — | — | — | — | — | $ | (0.22 | ) | $ | (0.22 | ) | $ | (0.21 | ) | $ | (0.21 | ) | |||||||||||||||||||
Cash dividends declared per share(6) | $ | 1.00 | $ | 2.00 | $ | 2.00 | $ | 2.00 | $ | 2.00 | $ | 2.00 | $ | 2.00 | $ | 2.00 | $ | 2.00 | ||||||||||||||||||
Total assets(7) | $ | 186,192 | $ | 476,078 | $ | 474,156 | $ | 479,921 | $ | 480,660 | $ | 448,819 | $ | 448,813 | $ | 369,346 | $ | 369,531 | ||||||||||||||||||
Notes and loans payable(7) | $ | 48,171 | $ | 285,750 | $ | 287,715 | $ | 300,279 | $ | 301,965 | $ | 271,756 | $ | 273,250 | $ | 200,168 | $ | 201,093 | ||||||||||||||||||
Stockholders’ equity (deficit)(8) | $ | (5,441 | ) | $ | 14,597 | $ | 14,653 | $ | 27,360 | $ | 27,880 | $ | 24,903 | $ | 24,876 | $ | 6,412 | $ | 6,637 |
(1) | As previously disclosed in Current Reports onForms 8-K filed February 16, 2007 and January 26, 2007, GM has restated its consolidated financial statements and financial information to correct its accounting for certain derivative instruments and deferred income taxes. In addition, GM has recorded other accounting adjustments that were previously not recorded in the proper period. Refer to Note 2 to the Consolidated Financial Statements |
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Item 6. | Selected Financial Data (concluded) |
for further information relating to the restatement. The following table sets forth a reconciliation of previously reported and restated net income (loss) and retained earnings as of the dates and for the periods shown. |
Net Income (Loss) | Retained Earnings | |||||||||||||||||||
2005 | 2004 | 2003 | 2002 | at January 1, 2002 | ||||||||||||||||
Previously reported | $ | (10,567 | ) | $ | 2,804 | $ | 3,859 | $ | 1,574 | $ | 9,223 | |||||||||
Pre-tax adjustments: | ||||||||||||||||||||
Derivatives and hedge accounting | 89 | (40 | ) | (213 | ) | 545 | (335 | ) | ||||||||||||
Otherout-of-period | 118 | (272 | ) | (263 | ) | (138 | ) | (339 | ) | |||||||||||
Total pre-tax adjustments | 207 | (312 | ) | (476 | ) | 407 | (674 | ) | ||||||||||||
Tax effects — provision/(benefit) | 22 | (207 | ) | (202 | ) | 168 | (119 | ) | ||||||||||||
Total of above adjustments, net of tax | 185 | (105 | ) | (274 | ) | 239 | (555 | ) | ||||||||||||
Deferred income taxes adjustments | (35 | ) | 2 | (60 | ) | (78 | ) | 1,280 | ||||||||||||
Net after-tax adjustments | 150 | (103 | ) | (334 | ) | 161 | 725 | |||||||||||||
Restated | $ | (10,417 | ) | $ | 2,701 | $ | 3,525 | $ | 1,735 | $ | 9,948 | |||||||||
(2) | To comply with EITF00-10,Accounting for Shipping and Handling Fees and Costs, in 2006 GM reclassified shipping and handling costs incurred to transport product to its customers. This reclassification increased Automotive sales and Automotive cost of sales for the 2005, 2004, 2003, and 2002 years in the amount of $3.6 billion, $3.6 billion, $3.1 billion, and $2.8 billion, respectively. The reclassification did not impact net income (loss), or earnings (loss) per share. | |
(3) | Effective December 22, 2003, GM split off Hughes by distributing Hughes common stock to the holders of GM Class H common stock in exchange for all outstanding shares of GM Class H common stock. Simultaneously, GM sold its 19.8% retained economic interest in Hughes to News Corporation in exchange for cash and News Corporation Preferred American Depository Shares. All shares of GM Class H common stock were then cancelled. GM recorded a net gain of $1.2 billion from the sale in 2003, and net losses from discontinued operations of Hughes were $219 million and $239 million in 2003 and 2002, respectively. | |
(4) | As of December 31, 2005, GM recorded an asset retirement obligation of $181 million in accordance with the requirements of FASB Interpretation No. (FIN) 47, “Accounting for Conditional Asset Retirement Obligations.” The cumulative effect on net loss, net of related income tax effects, of recording the asset retirement obligations was $109 million or $0.19 per share on a diluted basis. | |
(5) | Effective January 1, 2003, GM began expensing the fair market value of newly granted stock options and other stock-based compensation awards issued to employees to conform to SFAS No. 123, “Accounting for Stock-Based Compensation.” Effective July 1, 2003, GM began consolidating certain variable interest entities to conform to FIN 46(R), “Consolidation of Variable Interest Entities.” | |
(6) | In February 2006, GM’s board of directors reduced the quarterly dividend on common stock from $0.50 per share to $0.25 per share. | |
(7) | In November 2006, GM sold a 51% controlling ownership interest in GMAC, resulting in a significant decrease in total consolidated assets and notes and loans payable. | |
(8) | As of December 31, 2006, GM recognized the funded status of its benefit plans on its consolidated balance sheet with an offsetting adjustment to accumulated other comprehensive income (loss) in stockholders’ equity (deficit) of $16.9 billion in accordance with the adoption of SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans.” |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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• | Continue to execute the North America turnaround plan; | |
• | Grow aggressively in emerging markets; | |
• | Continue to drive the benefits of managing the business globally; | |
• | Continue development and implementation of GM’s advanced propulsion strategy; and | |
• | Improve business results. |
• | Product Excellence | |
• | Revitalize Sales and Marketing Strategy | |
• | Accelerate Cost Reductions and Quality Improvements; and | |
• | Address Health Care/Legacy Cost Burden |
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Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Total net sales and revenues | $ | 207,349 | $ | 194,655 | $ | 195,351 | ||||||
Income (loss) before income tax (expense) benefit | (4,947 | ) | (16,740 | ) | 855 | |||||||
Income tax (expense) benefit | 2,785 | 5,870 | 1,126 | |||||||||
Equity income (loss) and minority interests | 184 | 562 | 720 | |||||||||
Income (loss) before cumulative effect of a change in accounting principle | $ | (1,978 | ) | $ | (10,308 | ) | $ | 2,701 | ||||
Cumulative effect of a change in accounting principle | — | (109 | ) | — | ||||||||
Net income (loss) | $ | (1,978 | ) | $ | (10,417 | ) | $ | 2,701 |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Total Automotive net sales and revenues | $ | 173,089 | $ | 160,197 | $ | 162,369 | ||||||
Automotive cost of sales | (164,839 | ) | (158,164 | ) | (150,360 | ) | ||||||
Selling, general & administrative expenses | (13,218 | ) | (12,758 | ) | (11,486 | ) | ||||||
Income (loss), before income tax expense (benefit) | (5,665 | ) | (13,223 | ) | (551 | ) | ||||||
Income tax (expense) benefit | 2,310 | 2,775 | 1,177 | |||||||||
Equity income (loss) and minority interests | 187 | 484 | 744 | |||||||||
Net income (loss) before cumulative effect of a change in accounting principle | (3,168 | ) | (9,964 | ) | 1,370 | |||||||
Cumulative effect of a change in accounting principle | — | (109 | ) | — | ||||||||
Net income (loss) | $ | (3,168 | ) | $ | (10,073 | ) | $ | 1,370 | ||||
(Volume in thousands) | ||||||||||||
GM production volume | 9,181 | 9,051 | 9,098 | |||||||||
Vehicle unit sales industry | 67,515 | 65,154 | 62,822 | |||||||||
GM global automotive market share | 13.5 | % | 14.1 | % | 14.3 | % |
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Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in billions) | ||||||||||||
Automotive net sales and revenues | $ | 173 | $ | 160 | $ | 162 | ||||||
Contribution costs(a) | $ | (119 | ) | $ | (110 | ) | $ | (108 | ) | |||
Structural costs(b) | $ | (52 | ) | $ | (55 | ) | $ | (52 | ) | |||
Impairment and restructuring charges(c) | $ | (7 | ) | $ | (5 | ) | $ | (1 | ) |
(a) | Contribution costs are expenses that are considered by GM to be variable with production. The amount of contribution costs included in cost of sales is $118 billion, $109 billion, and $107 billion in 2006, 2005, and 2004, respectively, and those costs are comprised of material cost, freight, and policy and warranty expenses. The amount of contribution costs included in selling, general, and administrative expenses is $1 billion in each of 2006, 2005, and 2004, and those costs are related to advertising expense. | |
(b) | Structural costs are expenses that do not generally vary with production and are recorded in both cost of sales and selling, general, and administrative expenses, such as costs of manufacturing labor, pension/OPEB, engineering expense, and marketing related costs. Certain costs related to restructuring and impairments that are included in cost of sales are also excluded from structural costs. The amount of structural costs included in cost of sales is $40 billion, $44 billion, and $42 billion in 2006, 2005, and 2004, respectively, and the amount of structural costs included in selling, general and administrative expenses is approximately $12 billion, $11 billion, and $10 billion in 2006, 2005, and 2004, respectively, | |
(c) | The amount of impairment and restructuring charges included in cost of sales is $7 billion, $5 billion, and $1 billion in 2006, 2005, and 2004, respectively. |
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• | Approximately $7 billion due to vehicle mix and pricing, resulting from changes to GM’s vehicle portfolio including new fullsize utilities in North America. | |
• | Approximately $2 billion due to increased production volume globally | |
• | Approximately $2 billion due to the consolidation of GM Daewoo on June 30, 2005, providing a full year of revenue reported in 2006 as compared to a half year reported in 2005. | |
• | Approximately $2 billion due to the impact of foreign exchange rates, primarily the Canadian Dollar, Euro, U.K. Pound, Swedish Krona, Brazilian Real, and Korean Won versus the U.S. Dollar. |
• | GMNA pension and OPEB costs were reduced by $2.8 billion largely as a result of the UAW Health Care Settlement Agreement, the hourly accelerated attrition program, and changes to salaried pension and health care benefit plans. | |
• | GMNA manufacturing costs were reduced by $1.0 billion as total labor costs were lowered as employees retired or left GM under the accelerated attrition program offered to hourly employees represented by the |
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Structural Costs — (concluded) |
UAW and IUE/CWA. Approximately 34,400 GM hourly employees agreed to participate in the program and have retired or left the company as of January 1, 2007. |
• | Other Automotive costs were lower due to reduction in various administrative costs and in global engineering, where costs were lower as GM increasingly leveraged global vehicle development and architectures. |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in billions) | ||||||||||||
UAW Attrition Agreement | $ | 6.4 | $ | — | $ | — | ||||||
Vehicle impairments | 0.5 | 1.2 | 0.6 | |||||||||
Facility impairments | 0.2 | 0.9 | 0.2 | |||||||||
Restructuring initiatives | (0.4 | ) | 3.1 | — | ||||||||
Other | 0.2 | — | — | |||||||||
Total | $ | 6.9 | $ | 5.2 | $ | 0.8 | ||||||
• | $6.4 billion net charge related to the program under the UAW Attrition Agreement (UAW Attrition Program), primarily for payments to employees (approximately $2.1 billion) and for the curtailment charges associated with GM’s U.S. hourly pension, OPEB, and extended disability plans as a result of the UAW Attrition Program (approximately $4.3 billion). | |
• | Approximately $0.4 billion of impairment charges related to the write-down of product-specific assets, primarily at GMNA. | |
• | Approximately $0.1 billion of impairment charges related to the write-down of plant facilities at GME. | |
• | Approximately $0.6 billion for various restructuring and other matters. Of this total, approximately $0.4 billion was incurred at GME, with additional charges recorded at the other regions. A favorable revision to the reserve recorded in the fourth quarter of 2005 related to North American plant capacity actions (approximately $1.0 billion), primarily attributable to the impact of the UAW Attrition Program. This is more fully discussed below in“GM-UAW-Delphi Special Attrition Program Agreement”. | |
• | Approximately $0.2 billion taken in conjunction with cessation of production at a previously divested business. |
• | Approximately $1.2 billion for impairment charges related to the write-down of product-specific assets, of which $0.7 billion was at GMNA, $0.3 billion was at GME, with additional charges taken at GMLAAM and GMAP. | |
• | Approximately $0.8 billion of impairment charges related to the write-down of plant facilities at GMNA. |
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• | Approximately $3.1 billion associated with restructuring initiatives. Of this, approximately $2.0 billion was incurred at GMNA, including $1.8 billion for employee related costs in connection with the restructuring initiatives announced in the fourth quarter of 2005, and approximately $0.2 billion associated with a voluntary early retirement program and other separation programs related to the U.S. salaried workforce. GME recognized separation and contract cancellation charges of $1.1 billion, mainly related to the restructuring plan announced in the fourth quarter of 2004. In addition, GMAP recognized separation costs related to restructuring activities at GM Holden Australia. |
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charges — (concluded)
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
GMNA: | ||||||||||||
Total net sales and revenues | $ | 109,779 | $ | 105,640 | $ | 115,321 | ||||||
Income (loss) before income tax expense (benefit) | $ | (6,903 | ) | $ | (10,583 | ) | $ | 725 | ||||
Income tax (expense) benefit | 2,243 | 2,480 | 600 | |||||||||
Equity income (loss) and minority interest | 41 | (47 | ) | 32 | ||||||||
Net income (loss) before cumulative effect of a change in accounting principle | (4,619 | ) | (8,150 | ) | 1,357 | |||||||
Cumulative effect of a change in accounting principle | — | (83 | ) | — | ||||||||
Net income (loss) | $ | (4,619 | ) | $ | (8,233 | ) | $ | 1,357 | ||||
Net margin | (4.2 | )% | (7.8 | )% | 1.2 | % | ||||||
(Volume in thousands) | ||||||||||||
Production volume | ||||||||||||
Cars | 1,822 | 1,834 | 1,997 | |||||||||
Trucks | �� | 2,827 | 3,022 | 3,223 | ||||||||
Total GMNA | 4,649 | 4,856 | 5,220 | |||||||||
Vehicle unit sales | ||||||||||||
Industry — North America | 20,191 | 20,546 | 20,279 | |||||||||
GM as a percentage of industry | 23.8 | % | 25.5 | % | 26.7 | % | ||||||
Industry — U.S. | 17,060 | 17,456 | 17,302 | |||||||||
GM as a percentage of industry | 24.2 | % | 25.9 | % | 27.2 | % | ||||||
GM cars | 20.7 | % | 22.6 | % | 24.9 | % | ||||||
GM trucks | 27.1 | % | 28.5 | % | 29.0 | % |
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• | Pension and OPEB costs decreased by $2.8 billion largely as a result of the UAW Health Care Settlement Agreement which reduced hourly OPEB costs, the impact of the UAW Attrition Program, and the effects of the changes in salaried retiree benefits plans announced in the first quarter of 2006. | |
• | Other costs decreased by approximately $2.5 billion due to a reduction in advertising and sales promotion expenses, more efficient engineering spending, and lower product warranty and recall costs as a result of improved vehicle quality. In addition, GMNA’s product liability reserve decreased by approximately $0.1 billion, after including a charge for “incurred but not reported” asbestos liabilities of approximately $0.1 billion. | |
• | Manufacturing related structural costs decreased by $1.0 billion, as a result of the UAW Attrition Program under which approximately 34,400 GM hourly employees have retired or left GM by January 1, 2007. | |
• | Favorable product mix resulted in increased earnings of approximately $0.4 billion due primarily to the launch of the new full-size utilities. | |
• | The sale of the Mesa, Arizona Proving Grounds resulted in a $270 million gain in 2006. | |
• | In connection with the GMAC Transaction in the fourth quarter of 2006, GM reduced its lease residual and risk sharing support expense by approximately $0.2 billion because negotiated payments for lease residual and risk sharing support were lower than the previously recorded liabilities. | |
• | Production volume decreases of 4.3% attributable to GMNA’s market share decline and the reduction in sales to daily rental businesses by approximately 75,000 units, resulted in a decrease in earnings of approximately $1.0 billion. |
GMNA Restructuring and Impairment Charges | ||||||||
2006 | 2005 | |||||||
($ billions) | ||||||||
UAW Attrition Agreement | $ | 6.4 | $ | — | ||||
Vehicle Impairments | 0.5 | 0.7 | ||||||
Facility Impairments | — | 0.8 | ||||||
Adjustment to 2005 Capacity Reserve and Other Restructuring Initiatives | (0.9 | ) | 2.0 | |||||
Other | 0.2 | — | ||||||
Total | $ | 6.2 | $ | 3.5 | ||||
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• | Unfavorable product mix adversely affected earnings by approximately $2.7 billion due primarily to reduced demand for GMNA’s large utility vehicles which were reaching the end of their product life cycle, as well as declines in sales of higher margin large cars. | |
• | Production volume decreases of 7% attributable to GMNA market share decline and a significant reduction in dealer inventories accounted for a decrease in earnings of approximately $2.5 billion. | |
• | Unfavorable material costs after factoring in the cost of government mandated product improvements accounted for a decrease in earnings of approximately $0.9 billion. | |
• | Increased health care expenses primarily due to the recognition of OPEB net actuarial losses, caused by escalating health-care cost trends and falling discount rates in the United States, accounted for a decrease in income of approximately $0.7 billion. These 2005 health-care cost increases do not reflect new health-care initiatives with the UAW and salaried employees and retirees, which will benefit subsequent years. | |
• | Other factors resulted in a decrease in earnings of approximately $0.9 billion. The largest of these relates to increased advertising and sales promotion costs resulting from further efforts to increase product awareness. | |
• | In 2004 GMNA recognized a gain on sale of XM Satellite Radio Holdings stock of approximately $200 million. | |
• | In addition to the above, there were restructuring and impairment charges of approximately $3.6 billion in 2005, as compared to $0.3 billion in 2004. The table below provides further information regarding these charges. |
GMNA Restructuring and Impairment Charges | ||||||||
2005 | 2004 | |||||||
($ billions) | ||||||||
Vehicle Impairments | $ | 0.7 | $ | 0.1 | ||||
Facility Impairments | 0.8 | 0.2 | ||||||
Restructuring Initiatives | 2.0 | — | ||||||
Total | $ | 3.5 | $ | 0.3 | ||||
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Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Total net sales and revenues | $ | 33,193 | $ | 31,892 | $ | 31,196 | ||||||
(Loss) before income tax expense (benefit) | $ | (312 | ) | $ | (1,794 | ) | $ | (1,424 | ) | |||
Income tax (expense) benefit | 72 | 734 | 599 | |||||||||
Equity income (loss) and minority interests | 15 | 53 | 57 | |||||||||
Net (loss) before cumulative effect of a change in accounting principle | (225 | ) | (1,007 | ) | (768 | ) | ||||||
Cumulative effect of a change in accounting principle | — | (21 | ) | — | ||||||||
Net income (loss) | $ | (225 | ) | $ | (1,028 | ) | $ | (768 | ) | |||
Net margin | (0.7 | )% | (3.2 | )% | (2.5 | )% | ||||||
(Volume in thousands) | ||||||||||||
Production volume | 1,806 | 1,858 | 1,829 | |||||||||
Vehicle unit sales | ||||||||||||
Industry | 21,763 | 21,079 | 20,778 | |||||||||
GM as a percentage of industry | 9.2 | % | 9.4 | % | 9.4 | % | ||||||
GM market share — Germany | 10.1 | % | 10.8 | % | 10.6 | % | ||||||
GM market share — United Kingdom | 14.3 | % | 14.7 | % | 13.9 | % |
• | Improvement in operating performance of $0.8 billion — Material cost performance and structural cost performance resulting from the implementation of the restructuring plan, along with improved pricing, which more than offset volume declines and additional cost related to product upgrades. | |
• | Lower restructuring and impairment charges of $0.7 billion — Restructuring and impairment charges for 2006 totaled $586 million compared to $1,330 million in 2005. The 2006 charges included impairment charges of $149 million, of which $89 million related to the closure of GM’s Portugal assembly plant and $60 million related to product specific assets. Separations and contract cancellations totaled $437 million, mostly related to the closure of GM’s Portugal assembly plant, a shift reduction in GM’s Ellesmere Port assembly plant, and the restructuring plan announced in the fourth quarter of 2004. The charges for 2005 comprehended separations and contract cancellation costs of $1.1 billion, mainly related to the restructuring plan announced in the fourth quarter of 2004, but also included costs related to the dissolution of the |
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GM Europe — (concluded) |
Powertrain joint venture with Fiat S.p.A. (Fiat) and other contract cancellations of $59 million, and a charge for product specific asset impairments of $262 million. |
• | Higher restructuring and impairment charges of $1.0 billion — Restructuring and impairment charges for 2005 of $1.3 billion compared to $372 million in 2004. The charges for 2005 comprehended separations and contract cancellation costs of $1.1 billion, mainly related to the restructuring plan announced in the fourth quarter of 2004, but also included costs related to the dissolution of the Powertrain joint venture with Fiat, and other contract cancellation costs of $59 million, and a charge for product specific asset impairments of $262 million. The charges for 2004 consisted of product specific asset impairments. | |
• | Improvement in operating performance of $0.6 billion — Primarily favorable mix together with material cost performance and structural cost performance resulting from the implementation of the above-mentioned restructuring plan, more than compensated for volume declines and negative pricing. |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Total net sales and revenues | $ | 14,618 | $ | 11,844 | $ | 8,877 | ||||||
Income before income tax expense | $ | 527 | $ | 43 | $ | 94 | ||||||
Income tax (expense) benefit | (28 | ) | (611 | ) | (33 | ) | ||||||
Equity income (loss) and minority interests | (9 | ) | 4 | (11 | ) | |||||||
Net income (loss) before cumulative effect of a change in accounting principle | 490 | (564 | ) | 50 | ||||||||
Cumulative effect of a change in accounting principle | — | (2 | ) | — | ||||||||
Net income (loss) | $ | 490 | $ | (566 | ) | $ | 50 | |||||
Net margin | 3.4 | % | (4.8 | )% | 0.6 | % | ||||||
(Volume in thousands) | ||||||||||||
Production volume | 830 | 775 | 716 | |||||||||
Vehicle unit sales | 1,035 | 882 | 740 | |||||||||
Industry | 6,076 | 5,242 | 4,605 | |||||||||
GM as a percentage of industry | 17.0 | % | 16.8 | % | 16.1 | % | ||||||
GM market share — Brazil | 21.3 | % | 21.3 | % | 23.1 | % |
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• | Higher production volumes and improved product mix contributed approximately $0.4 billion | |
• | Favorable pricing contributed approximately $0.3 billion | |
• | A reduction from 2005 to 2006 of approximately $0.1 billion in restructuring and impairment charges | |
• | Unfavorable foreign exchange of approximately $0.2 billion | |
• | Other unfavorable factors totaling about $0.1 billion |
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Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Total net sales and revenues | $ | 15,499 | $ | 10,821 | $ | 6,975 | ||||||
Income (loss) before income tax expense (benefit) | $ | 1,023 | $ | (889 | ) | $ | 54 | |||||
Income tax (expense) benefit | 23 | 172 | 11 | |||||||||
Equity income (loss) and minority interests | 140 | 474 | 666 | |||||||||
Net income (loss) before cumulative effect of a change in accounting principle | 1,186 | (243 | ) | 731 | ||||||||
Cumulative effect of a change in accounting principle | — | $ | (3 | ) | — | |||||||
GMAP net income (loss) | $ | 1,186 | $ | (246 | ) | $ | 731 | |||||
GMAP net margin | 7.7 | % | (2.3 | )% | 10.5 | % | ||||||
(Volume in thousands) | ||||||||||||
Production volume(1) | 1,896 | 1,562 | 1,333 | |||||||||
Vehicle unit sales(2)(3) | 1,253 | 1,065 | 887 | |||||||||
Industry | 19,485 | 18,287 | 17,160 | |||||||||
GM as a percentage of industry | 6.4 | % | 5.8 | % | 5.2 | % | ||||||
GM market share — Australia | 15.4 | % | 17.8 | % | 19.4 | % | ||||||
GM market share — China(3) | 11.8 | % | 11.2 | % | 9.4 | % |
(1) | 2006, 2005 and 2004 calendar years include GM Daewoo and Wuling joint venture production | |
(2) | Includes GM Daewoo and Wuling joint venture sales for 2006, 2005, and 2004. | |
(3) | Includes Wuling joint venture sales due to GM equity position and local ownership requirements. |
• | The write-down to fair market value of GM’s investment in FHI resulted in a loss of $735 million in 2005. | |
• | In 2006, GM sold approximately 85% of its investment in Suzuki, resulting in a gain of $666 million. | |
• | GM also sold its remaining interest in Isuzu for a gain of $311 million in 2006. | |
• | Improved performance of approximately $200 million at GM Daewoo on a fully consolidated basis, resulting from increased volume and improved material cost performance, partially offset by unfavorable foreign exchange and interest. | |
• | In addition, restructuring and impairment charges were $42 million less in 2006 versus 2005. |
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GM Asia Pacific — (concluded) |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Total net sales, revenues and eliminations | $ | (162 | ) | $ | 31 | $ | 972 | |||||
(Loss) before income tax expense (benefit) | $ | (1,152 | ) | $ | (6,916 | ) | $ | (2,821 | ) | |||
Income tax (expense) benefit | 1,310 | 4,288 | 1,292 | |||||||||
Equity income (loss) and minority interests | 3 | 27 | (16 | ) | ||||||||
Net income (loss) before cumulative effect of a change in accounting principle | 161 | (2,601 | ) | (1,545 | ) | |||||||
Cumulative effect of a change in accounting principle | — | — | — | |||||||||
Net income (loss) | $ | 161 | $ | (2,601 | ) | $ | (1,545 | ) |
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Years Ended December 31, | ||||||||||||||||
FIO Results of Operations | 2006 | 2005 | 2004 | |||||||||||||
(Dollars in millions) | ||||||||||||||||
FIO | FIO | FIO | ||||||||||||||
GMAC: | GMAC(a) | GMAC(c) | ||||||||||||||
Automotive Finance Operations | $ | 1,151 | $ | 1,174 | $ | 880 | $ | 1,341 | ||||||||
ResCap | 827 | 705 | 1,021 | 904 | ||||||||||||
Insurance Operations | 1,079 | 1,127 | 417 | 329 | ||||||||||||
Other/eliminations | (882 | ) | (881 | ) | (38 | ) | 320 | |||||||||
Net Income | $ | 2,175 | $ | 2,125 | $ | 2,280 | $ | 2,894 | ||||||||
Equity loss for GMAC(b) | (5 | ) | ||||||||||||||
Preferred Dividends | 9 | |||||||||||||||
Other Financing | (1,150 | ) | (23 | ) | (18 | ) | ||||||||||
Total FIO Net Income | $ | 1,029 | $ | 2,125 | $ | 2,257 | $ | 2,876 | ||||||||
(a) | GMAC segment data as reported by GM line of business are GMAC’s results of operations for 11 months ended November 30, 2006. | |
(b) | This represents GM’s share of GMAC’s loss for one month (December) following the sale of GMAC using the equity method. | |
(c) | This represents GMAC’s reported results for the year ended December 31, 2006. |
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• | Product Excellence | |
• | Revitalize Sales and Marketing Strategy | |
• | Accelerate Cost Reductions and Quality Improvements; and | |
• | Address Health Care/Legacy Cost Burden |
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• | Strong long-term services agreement between GM and GMAC — As part of the transaction, GM and GMAC entered into a number of agreements that were intended to continue the mutually-beneficial global relationship between GM and GMAC. These agreements, in substance, were consistent with the existing and historical practices between GM and GMAC, including requiring GMAC to continue to allocate capital to automotive financing, thereby continuing to provide critical financing support to a significant share of GM’s global sales. While GMAC retains the right to make individual credit decisions, GMAC has committed to fund a broad spectrum of customers and dealers consistent with historical practice in the relevant jurisdictions. Subject to GMAC’s fulfillment of certain conditions, GM has granted GMAC exclusivity for GM products in specified markets around the world for U.S., Canadian, and international GM-sponsored retail, lease and dealer marketing incentives, with the exception of Saturn branded products. |
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• | Improved Liquidity — GM received significant cash proceeds at the closing to bolster GM’s liquidity, strengthening GM’s balance sheet and funding the turnaround plan. | |
• | Enhanced stockholder value through a stronger GMAC — GM retained a 49% Common Membership Interest in GMAC, and will be able to continue to participate in GMAC’s strong profitability levels. | |
• | Delinkage of GMAC’s credit rating from GM — In pursuing the sale of a majority interest in GMAC, GM expected that the introduction of a new controlling investor for GMAC, new capital at GMAC, and significantly reduced intercompany exposures to GM would provide GMAC with a solid foundation to improve its current credit rating, and de-link the GMAC credit ratings from GM. Following the sale, in December 2006 Fitch Ratings (Fitch) and Standard & Poor’s (S&P) both raised GMAC’s credit rating one notch, although it remains below investment grade. |
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Automotive and Other | Financing and Insurance | |||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||
(As restated) | (As restated) | |||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||
Net income (loss) | $ | (3,007 | ) | $ | (12,674 | ) | $ | (175 | ) | $ | 1,029 | $ | 2,257 | $ | 2,876 | |||||||||
Cumulative effect of a change in accounting principle | — | 109 | — | — | — | — | ||||||||||||||||||
Adjustments to reconcile net income (loss) before cumulative effect of a change in accounting principle to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation, impairments and amortization expense | 8,159 | 10,101 | 8,679 | 2,791 | 5,696 | 5,523 | ||||||||||||||||||
Mortgage servicing rights and premium amortization | — | — | — | 1,021 | 1,142 | 1,675 | ||||||||||||||||||
Goodwill impairment - GMAC | — | — | — | 828 | 712 | — | ||||||||||||||||||
Delphi Benefit Guarantee | 500 | 5,500 | — | — | — | — | ||||||||||||||||||
Loss on sale of 51% interest in GMAC | — | — | — | 2,910 | — | — | ||||||||||||||||||
Provision for credit losses | — | — | — | 1,799 | 1,074 | 1,944 | ||||||||||||||||||
Net gains on sale of finance receivables | — | — | — | (1,256 | ) | (1,741 | ) | (1,332 | ) | |||||||||||||||
Net gains on investment securities | — | — | — | (1,006 | ) | (104 | ) | (52 | ) | |||||||||||||||
Postretirement benefits other than pensions, net of payments and VEBA contributions/withdrawals | 2,840 | 4,717 | (8,048 | ) | 1 | 38 | 14 | |||||||||||||||||
Pension expense, net of contributions | 3,611 | 1,408 | 1,174 | 23 | 14 | 34 | ||||||||||||||||||
Net change in mortgage loans | — | — | — | (21,578 | ) | (29,119 | ) | (2,312 | ) | |||||||||||||||
Net change in mortgage securities | — | — | — | 427 | (1,155 | ) | 614 | |||||||||||||||||
Change in other investments and miscellaneous assets | 588 | 141 | (1 | ) | (1,058 | ) | (826 | ) | 105 | |||||||||||||||
Change in other operating assets and liabilities, net of acquisitions and disposals | (8,499 | ) | (10,986 | ) | (316 | ) | (4,109 | ) | 4,188 | (1,438 | ) | |||||||||||||
Other | 1,365 | 1,720 | (95 | ) | 862 | 932 | 487 | |||||||||||||||||
Net cash provided by (used in) operating activities | $ | 5,557 | $ | 36 | $ | 1,218 | $ | (17,316 | ) | $ | (16,892 | ) | $ | 8,138 |
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Automotive and Other | Financing and Insurance | |||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||
(As restated) | (As restated) | |||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Liquidity and Capital Resources — (concluded) | ||||||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Expenditures for property | $ | (7,531 | ) | $ | (7,896 | ) | $ | (7,284 | ) | $ | (402 | ) | $ | (283 | ) | $ | (469 | ) | ||||||
Investments in marketable securities, acquisitions | (149 | ) | (2,616 | ) | (2,209 | ) | (25,381 | ) | (19,184 | ) | (13,069 | ) | ||||||||||||
Investments in marketable securities, liquidations | 1,727 | 7,663 | 4,609 | 26,822 | 14,874 | 11,302 | ||||||||||||||||||
Net change in mortgage servicing rights | — | — | — | (61 | ) | (267 | ) | (326 | ) | |||||||||||||||
Increase in finance receivables | — | — | — | (1,160 | ) | (6,582 | ) | (38,673 | ) | |||||||||||||||
Proceeds from sale of finance receivables | — | — | — | 18,374 | 31,652 | 23,385 | ||||||||||||||||||
Proceeds from the sale of 51% interest in GMAC LLC | 7,353 | — | — | — | — | — | ||||||||||||||||||
Proceeds from sale of business units/equity investments | 1,968 | 846 | — | 8,538 | — | — | ||||||||||||||||||
Operating leases, acquisitions | — | — | — | (17,070 | ) | (15,496 | ) | (14,324 | ) | |||||||||||||||
Operating leases, liquidations | — | — | — | 7,039 | 5,362 | 7,696 | ||||||||||||||||||
Net investing activity with Financing and Insurance Operations | 3,354 | 2,500 | 1,500 | — | — | — | ||||||||||||||||||
Investments in companies, net of cash acquired | (20 | ) | 1,357 | (48 | ) | (337 | ) | (2 | ) | (12 | ) | |||||||||||||
Other | (353 | ) | 640 | 882 | 338 | (1,503 | ) | 477 | ||||||||||||||||
Net cash provided by (used in) investing activities | 6,349 | 2,494 | (2,550 | ) | 16,700 | 8,571 | (24,013 | ) | ||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Net increase (decrease) in loans payable | (256 | ) | (177 | ) | (803 | ) | 7,289 | (9,949 | ) | 2,995 | ||||||||||||||
Long-term debt, borrowings | 1,937 | 386 | 758 | 77,629 | 77,890 | 72,753 | ||||||||||||||||||
Long-term debt, repayments | (97 | ) | (46 | ) | (79 | ) | (92,193 | ) | (69,520 | ) | (57,743 | ) | ||||||||||||
Net financing activity with Automotive and Other Operations | — | — | — | (3,354 | ) | (2,500 | ) | (1,500 | ) | |||||||||||||||
Cash dividends paid to stockholders | (563 | ) | (1,134 | ) | (1,129 | ) | — | — | — | |||||||||||||||
Other | — | — | — | 2,487 | 6,030 | 4,723 | ||||||||||||||||||
Net cash (used in) provided by financing activities | 1,021 | (971 | ) | (1,253 | ) | (8,142 | ) | 1,951 | 21,228 | |||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 189 | (40 | ) | 375 | 176 | (45 | ) | 296 | ||||||||||||||||
Net transactions with Automotive Other/Financing Insurance | (4,529 | ) | 520 | 934 | 4,529 | (520 | ) | (934 | ) | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | 8,587 | 2,039 | (1,276 | ) | (4,053 | ) | (6,935 | ) | 4,715 | |||||||||||||||
Cash and cash equivalents retained by GMAC LLC upon disposal | — | — | — | (11,137 | ) | — | — | |||||||||||||||||
Cash and cash equivalents reclassified to Assets Held for Sale | — | — | — | — | (371 | ) | — | |||||||||||||||||
Cash and cash equivalents at beginning of the year | 15,187 | 13,148 | 14,424 | 15,539 | 22,845 | 18,130 | ||||||||||||||||||
Cash and cash equivalents at end of the year | $ | 23,774 | $ | 15,187 | $ | 13,148 | $ | 349 | $ | 15,539 | $ | 22,845 | ||||||||||||
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Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in billions) | ||||||||||||
Cash and cash equivalents | $ | 23.8 | $ | 15.2 | $ | 13.1 | ||||||
Marketable securities | 0.1 | 1.4 | 6.7 | |||||||||
Readily-available assets of VEBA trusts | 2.5 | 3.8 | 3.5 | |||||||||
Available Liquidity | $ | 26.4 | $ | 20.4 | $ | 23.3 | ||||||
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Rating Agency | Senior Unsecured Debt | Outlook | Commercial Paper | |||
DBRS | B | Negative | R-5 | |||
Fitch | B | Rating Watch Negative | Withdrawn | |||
Moody’s | Caa1 | Negative | Not Prime | |||
S&P | B- | Negative | B-3 |
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2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
U.S. hourly and salaried | $ | 2 | $ | — | $ | — | ||||||
Other U.S. | 78 | 125 | 117 | |||||||||
Non-U.S. | 889 | 708 | 802 |
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Pension Benefits* | ||||||||||||||||
Primary | Other Benefits | |||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | |||||||||||||
(Dollars in millions) | ||||||||||||||||
2007 | $ | 7,270 | $ | 956 | $ | 3,751 | $ | 146 | ||||||||
2008 | 7,142 | 1,027 | 3,895 | 157 | ||||||||||||
2009 | 7,037 | 1,056 | 4,035 | 167 | ||||||||||||
2010 | 6,959 | 1,097 | 4,161 | 177 | ||||||||||||
2011 | 6,890 | 1,140 | 4,254 | 187 |
* | Benefits for most U.S. pension plans and certain non-U.S. pension plans are paid out of plan assets rather than cash. |
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December 31 | ||||||||
2006 | 2005 | |||||||
(Dollars in millions) | ||||||||
Assets leased under operating leases | $ | 2,248 | $ | 2,430 | ||||
Trade receivables sold* | 309 | 708 | ||||||
Total | $ | 2,557 | $ | 3,138 | ||||
* | As of December 31, 2005, additional off-balance sheet trade receivables sold to GMAC were $525 million. |
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Payments Due by Period | ||||||||||||||||||||
2007 | 2008-2009 | 2010-2011 | 2012 and after | Total | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Debt | $ | 5,585 | $ | 2,416 | $ | 1,745 | $ | 27,375 | $ | 37,121 | ||||||||||
Capital lease obligations | 229 | 1,134 | 181 | 380 | 1,924 | |||||||||||||||
Operating lease obligations | 535 | 890 | 770 | 788 | 2,983 | |||||||||||||||
Contractual commitments for capital expenditures | 644 | 59 | 5 | 4 | 712 | |||||||||||||||
Other contractual commitments: | ||||||||||||||||||||
Postretirement benefits(1) | 4,144 | 5,610 | 6,582 | — | 16,336 | |||||||||||||||
Less: VEBA assets(2) | (4,144 | ) | (5,610 | ) | (6,582 | ) | — | (16,336 | ) | |||||||||||
Net post retirement benefits | — | — | — | — | — | |||||||||||||||
Material | 1,858 | 2,620 | 1,222 | 375 | 6,075 | |||||||||||||||
Information technology | 1,065 | 98 | 1 | — | 1,164 | |||||||||||||||
Marketing | 1,438 | 719 | 394 | 36 | 2,587 | |||||||||||||||
Facilities | 465 | 549 | 169 | 81 | 1,264 | |||||||||||||||
Rental car repurchases | 6,353 | 5 | — | — | 6,358 | |||||||||||||||
Policy, product warranty and recall campaigns liability | 4,417 | 4,094 | 508 | 45 | 9,064 | |||||||||||||||
Total contractual commitments | $ | 22,589 | $ | 12,584 | $ | 4,995 | $ | 29,084 | $ | 69,252 | ||||||||||
Remaining balance postretirement benefits | $ | 723 | $ | 2,641 | $ | 3,192 | $ | 45,113 | $ | 51,669 | ||||||||||
Less: VEBA assets(2) | (543 | ) | — | — | — | (543 | ) | |||||||||||||
Net | $ | 180 | $ | 2,641 | $ | 3,192 | $ | 45,113 | $ | 51,126 | ||||||||||
(1) | Amounts include postretirement benefits under the current contractual labor agreements in North America. The remainder of the estimated liability, for benefits beyond the current labor agreement and for essentially all salaried employees, is classified under remaining balance of postretirement benefits. These obligations are not contractual. | |
(2) | Total VEBA assets were allocated based on projected spending requirements. Amount includes $0.1 billion VEBA withdrawal in the fourth quarter of 2006. |
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• | Discount rates. Beginning with the 2005 year-end valuations, GM estimates the discount rate for its U.S. pension and OPEB obligations using an iterative process based on a hypothetical investment in a portfolio of high-quality bonds (rated AA or higher by a recognized rating agency) and a hypothetical reinvestment of the proceeds of such bonds upon maturity (at forward rates derived from a yield curve) until its U.S. pension and OPEB obligations are fully defeased. GM incorporates this reinvestment component into its methodology because it is not feasible, in light of the magnitude and time horizon over which its U.S. pension and OPEB obligations extend, to accomplish full defeasance through direct cash flows from an actual set of bonds selected at any given measurement date. This improved methodology, considered a change in estimate, was developed during 2005 and was adopted because it was deemed superior to the previously available algorithms for estimating assumed discount rates. In particular, this approach permits a better match of future cash outflows related to benefit payments with future cash inflows associated with bond coupons and maturities. |
• | Health care cost trend rate. Our health-care cost trend rate is based on historical retiree cost data, near term health care outlook, including appropriate cost control measures implemented by GM, and industry benchmarks and surveys. | |
• | Expected return on plan assets. Our expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risks (standard deviations), and correlations of returns among the asset classes that comprise the plans’ asset mix. While the studies give appropriate consideration to recent plan performance and historical returns, the assumptions are primarily long-term, prospective rates of return. | |
• | Mortality rates. Mortality rates are based on actual and projected plan experience. | |
• | Retirement rates. Retirement rates are based on actual and projected plan experience. | |
• | Rate of compensation increase. The rate of compensation increase for final pay plans reflects our long-term actual experience and our outlook, including contractually agreed upon wage rate increases for represented hourly employees. |
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Effect on 2007 | Effect on | |||||||
Pre-Tax | December 31, 2006 | |||||||
Change in Assumption | Pension Expense | PBO | ||||||
25 basis point decrease in discount rate | +$ | 110 million | +$ | 2.0 billion | ||||
25 basis point increase in discount rate | −$ | 110 million | −$ | 2.0 billion | ||||
25 basis point decrease in expected return on assets | +$ | 230 million | — | |||||
25 basis point increase in expected return on assets | −$ | 230 million | — |
Effect on | ||||||||
Effect on 2007 | December 31, 2006 | |||||||
Change in Assumption | Pre-Tax OPEB Expense | APBO | ||||||
25 basis point decrease in discount rate | +$ | 107 million | +$ | 1.8 billion | ||||
25 basis point increase in discount rate | −$ | 102 million | −$ | 1.7 billion |
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• | The ability of GM to realize production efficiencies, to achieve reductions in costs as a result of the turnaround restructuring and health care cost reductions and to implement capital expenditures at levels and times planned by management; | |
• | The pace of product introductions; | |
• | Market acceptance of the Corporation’s new products; |
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• | Significant changes in the competitive environment and the effect of competition in the Corporation’s markets, including on the Corporation’s pricing policies; | |
• | Our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; | |
• | Changes in the existing, or the adoption of new, laws, regulations, policies, or other activities of governments, agencies, and similar organizations where such actions may affect the production, licensing, distribution, or sale of our products, the cost thereof or applicable tax rates; | |
• | Costs and risks associated with litigation; | |
• | The final results of investigations and inquiries by the SEC and other governmental agencies; | |
• | Changes in our accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, including the range of estimates for the Delphi pension benefit guarantees, which could result in an impact on earnings; | |
• | Changes in relations with unions and employees/retirees and the legal interpretations of the agreements with those unions with regard to employees/retirees; | |
• | Negotiations and bankruptcy court actions with respect to Delphi’s obligations to GM, negotiations with respect to GM’s obligations under the pension benefit guarantees to Delphi employees, and GM’s ability to recover any indemnity claims against Delphi; | |
• | Labor strikes or work stoppages at GM or its key suppliers such as Delphi or financial difficulties at GM’s key suppliers such as Delphi; | |
• | Additional credit rating downgrades and the effects thereof; | |
• | Shortages of and price increases for fuel; and | |
• | Changes in economic conditions, commodity prices, currency exchange rates, or political stability in the markets in which we operate. |
• | Factors affecting results of operations and financial condition such as credit ratings, adequate access to the market, changes in the residual value of off-lease vehicles, changes in U.S. government-sponsored mortgage programs, disruptions in the markets in which its mortgage subsidiaries operate, and changes in its contractual servicing rights; | |
• | Significant changes in the competitive environment and the effect of competition in the GMAC’s markets, including on the GMAC’s pricing policies; | |
• | Its ability to maintain adequate financing sources; | |
• | Its ability to maintain an appropriate level of debt; | |
• | Restrictions on ResCap’s ability to pay dividends and prepay subordinated debt obligations to GMAC; | |
• | Changes in the residual value of off-lease vehicles; | |
• | Changes in U.S. government-sponsored mortgage programs or disruptions in the markets in which GMAC’s mortgage subsidiaries operate; | |
• | Changes in its contractual servicing rights; | |
• | Costs and risks associated with litigation; |
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• | Changes in GMAC’s accounting assumptions that may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; | |
• | Changes in the credit ratings of GMAC or GM; | |
• | The threat of natural calamities; | |
• | Changes in economic conditions, currency exchange rates, or political stability in the markets in which it operates; and | |
• | Changes in the existing, or the adoption of new, laws, regulations, policies, or other activities of governments, agencies and similar organizations. |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
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Item 8. | Financial Statements and Supplementary Data |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(As restated, | (As restated, | |||||||||||
see Note 2) | see Note 2) | |||||||||||
Net sales and revenues | ||||||||||||
Automotive sales | $ | 172,927 | $ | 160,228 | $ | 163,341 | ||||||
Financial services and insurance revenues | 34,422 | 34,427 | 32,010 | |||||||||
Total net sales and revenues | 207,349 | 194,655 | 195,351 | |||||||||
Costs and expenses | ||||||||||||
Automotive cost of sales | 164,682 | 158,887 | 152,115 | |||||||||
Selling, general, and administrative expenses | 25,081 | 27,513 | 25,969 | |||||||||
Interest expense | 16,945 | 15,607 | 11,913 | |||||||||
Provisions for credit and insurance losses related to financing and insurance operations | 4,071 | 3,430 | 4,315 | |||||||||
Other expenses | 4,238 | 7,024 | 1,584 | |||||||||
Total costs and expenses | 215,017 | 212,461 | 195,896 | |||||||||
Operating loss | (7,668 | ) | (17,806 | ) | (545 | ) | ||||||
Automotive interest income and other non-operating income, net | 2,721 | 1,066 | 1,400 | |||||||||
Income (loss) before income taxes, equity income (loss) and minority interests and cumulative effect of a change in accounting principle | (4,947 | ) | (16,740 | ) | 855 | |||||||
Income tax benefit | (2,785 | ) | (5,870 | ) | (1,126 | ) | ||||||
Equity income (loss) and minority interests, net of tax | 184 | 562 | 720 | |||||||||
Income (loss) before cumulative effect of a change in accounting principle | (1,978 | ) | (10,308 | ) | 2,701 | |||||||
Cumulative effect of a change in accounting principle | — | (109 | ) | — | ||||||||
Net income (loss) | $ | (1,978 | ) | $ | (10,417 | ) | $ | 2,701 | ||||
Basic earnings (loss) per share | ||||||||||||
Earnings (loss) before cumulative effect of a change in accounting principle | $ | (3.50 | ) | $ | (18.23 | ) | $ | 4.78 | ||||
Cumulative effect of a change in accounting principle | — | (0.19 | ) | — | ||||||||
Earnings (loss) per share, basic | $ | (3.50 | ) | $ | (18.42 | ) | $ | 4.78 | ||||
Weighted average common shares outstanding, basic (millions) | 566 | 565 | 565 | |||||||||
Diluted earnings (loss) per share | ||||||||||||
Earnings (loss) before cumulative effect of a change in accounting principle | $ | (3.50 | ) | $ | (18.23 | ) | $ | 4.76 | ||||
Cumulative effect of a change in accounting principle | — | (0.19 | ) | — | ||||||||
Earnings (loss) per share, diluted | $ | (3.50 | ) | $ | (18.42 | ) | $ | 4.76 | ||||
Weighted average common shares outstanding, diluted (millions) | 566 | 565 | 567 | |||||||||
Cash dividends per share | $ | 1.00 | $ | 2.00 | $ | 2.00 | ||||||
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December 31, | ||||||||
2006 | 2005 | |||||||
(As restated, | ||||||||
see Note 2) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 23,774 | $ | 15,187 | ||||
Marketable securities | 138 | 1,416 | ||||||
Total cash and marketable securities | 23,912 | 16,603 | ||||||
Accounts and notes receivable, net | 8,216 | 5,917 | ||||||
Inventories | 13,921 | 13,862 | ||||||
Equipment on operating leases, net | 6,125 | 6,993 | ||||||
Deferred income taxes and other current assets | 11,957 | 8,982 | ||||||
Total current assets | 64,131 | 52,357 | ||||||
Financing and Insurance Operations Assets | ||||||||
Cash and cash equivalents | 349 | 15,539 | ||||||
Investments in securities | 188 | 18,310 | ||||||
Finance receivables, net | — | 180,849 | ||||||
Loans held for sale | — | 21,865 | ||||||
Assets held for sale | — | 19,030 | ||||||
Equipment on operating leases, net | 11,794 | 31,194 | ||||||
Equity in net assets of GMAC LLC | 7,523 | — | ||||||
Other assets | 2,269 | 25,157 | ||||||
Total Financing and Insurance Operations assets | 22,123 | 311,944 | ||||||
Non-Current Assets | ||||||||
Equity in net assets of nonconsolidated affiliates | 1,969 | 3,242 | ||||||
Property, net | 41,934 | 38,543 | ||||||
Intangible assets, net | 1,118 | 1,869 | ||||||
Deferred income taxes | 32,967 | 23,761 | ||||||
Prepaid pension | 17,366 | 37,576 | ||||||
Other assets | 4,584 | 4,864 | ||||||
Total non-current assets | 99,938 | 109,855 | ||||||
Total assets | $ | 186,192 | $ | 474,156 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
Current Liabilities | ||||||||
Accounts payable (principally trade) | $ | 26,931 | $ | 26,402 | ||||
Short-term borrowings and current portion of long-term debt | 5,666 | 1,627 | ||||||
Accrued expenses | 35,225 | 42,697 | ||||||
Total current liabilities | 67,822 | 70,726 | ||||||
Financing and Insurance Operations Liabilities | ||||||||
Accounts payable | 1,214 | 3,731 | ||||||
Liabilities related to assets held for sale | — | 10,941 | ||||||
Debt | 9,438 | 253,508 | ||||||
Other liabilities and deferred income taxes | 925 | 26,325 | ||||||
Total Financing and Insurance Operations liabilities | 11,577 | 294,505 | ||||||
Non-Current Liabilities | ||||||||
Long-term debt | 33,067 | 32,580 | ||||||
Postretirement benefits other than pensions | 50,086 | 28,990 | ||||||
Pensions | 11,934 | 11,225 | ||||||
Other liabilities and deferred income taxes | 15,957 | 20,430 | ||||||
Total non-current liabilities | 111,044 | 93,225 | ||||||
Total liabilities | 190,443 | 458,456 | ||||||
Commitments and contingencies (Note 20) | ||||||||
Minority interests | 1,190 | 1,047 | ||||||
Stockholders’ Equity (Deficit) | ||||||||
Preferred stock, no par value, authorized 6,000,000, no shares issued and outstanding | — | — | ||||||
$12/3 par value common stock (2,000,000,000 shares authorized, 756,637,541 and 565,670,254 shares issued and outstanding at December 31, 2006, respectively, and 756,637,541 and 565,518,106 at December 31, 2005, respectively) | 943 | 943 | ||||||
Capital surplus (principally additional paid-in capital) | 15,336 | 15,285 | ||||||
Retained earnings | 406 | 2,960 | ||||||
Accumulated other comprehensive (loss) | (22,126 | ) | (4,535 | ) | ||||
Total stockholders’ equity (deficit) | (5,441 | ) | 14,653 | |||||
Total liabilities, minority interests, and stockholders’ equity (deficit) | $ | 186,192 | $ | 474,156 | ||||
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For the Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(As restated, | (As restated, | |||||||||||
see note 2) | see note 2) | |||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | (1,978 | ) | $ | (10,417 | ) | $ | 2,701 | ||||
Cumulative effect of a change in accounting principle | — | 109 | — | |||||||||
Adjustments to reconcile income (loss) before cumulative effect of a change in accounting principle to net cash provided by (used in) operating activities: | ||||||||||||
Depreciation, impairments, and amortization expense | 10,950 | 15,797 | 14,202 | |||||||||
Mortgages: servicing rights and premium amortization | 1,021 | 1,142 | 1,675 | |||||||||
Goodwill impairment — GMAC | 828 | 712 | — | |||||||||
Delphi benefit guarantee | 500 | 5,500 | — | |||||||||
Loss on sale of 51% interest in GMAC | 2,910 | — | — | |||||||||
Provision for credit financing losses | 1,799 | 1,074 | 1,944 | |||||||||
Net gains on sale of credit receivables | (1,256 | ) | (1,741 | ) | (1,332 | ) | ||||||
Net gains on sale of investment securities | (1,006 | ) | (104 | ) | (52 | ) | ||||||
Other postretirement employee benefit (OPEB) expense | 3,582 | 5,671 | 4,558 | |||||||||
OPEB payments | (3,802 | ) | (4,084 | ) | (3,974 | ) | ||||||
VEBA/401(h) withdrawals | 3,061 | 3,168 | (8,618 | ) | ||||||||
Pension expense | 4,928 | 2,519 | 2,456 | |||||||||
Pension contributions | (969 | ) | (833 | ) | (919 | ) | ||||||
Retiree lump sum and vehicle voucher expense, net of payments | (325 | ) | (264 | ) | (329 | ) | ||||||
Net change in mortgage loans | (21,578 | ) | (29,119 | ) | (2,312 | ) | ||||||
Net change in mortgage securities | 427 | (1,155 | ) | 614 | ||||||||
Change in other investments and miscellaneous assets | (470 | ) | (685 | ) | 104 | |||||||
Changes in assets and liabilities, net of acquisitions and disposals | (12,608 | ) | (6,798 | ) | (1,754 | ) | ||||||
Other | 2,227 | 2,652 | 392 | |||||||||
Net cash provided by (used in) operating activities | (11,759 | ) | (16,856 | ) | 9,356 | |||||||
Cash flows from investing activities | ||||||||||||
Expenditures for property | (7,933 | ) | (8,179 | ) | (7,753 | ) | ||||||
Investments in marketable securities, acquisitions | (25,530 | ) | (21,800 | ) | (15,278 | ) | ||||||
Investments in marketable securities, liquidations | 28,549 | 22,537 | 15,911 | |||||||||
Net change in mortgage servicing rights | (61 | ) | (267 | ) | (326 | ) | ||||||
Increase in finance receivables | (1,160 | ) | (6,582 | ) | (38,673 | ) | ||||||
Proceeds from sale of finance receivables | 18,374 | 31,652 | 23,385 | |||||||||
Proceeds from sale of 51% interest in GMAC | 7,353 | — | — | |||||||||
Proceeds from sale of business units/equity investments | 10,506 | 846 | — | |||||||||
Operating leases, acquisitions | (17,070 | ) | (15,496 | ) | (14,324 | ) | ||||||
Operating leases, liquidations | 7,039 | 5,362 | 7,696 | |||||||||
Investments in companies, net of cash acquired | (357 | ) | 1,355 | (60 | ) | |||||||
Other | (15 | ) | (863 | ) | 1,359 | |||||||
Net cash provided by (used in) investing activities | 19,695 | 8,565 | (28,063 | ) | ||||||||
Cash flows from financing activities | ||||||||||||
Net increase (decrease) in short-term borrowings | 7,033 | (10,126 | ) | 2,192 | ||||||||
Borrowings of long-term debt | 79,566 | 78,276 | 73,511 | |||||||||
Payments made on long-term debt | (92,290 | ) | (69,566 | ) | (57,822 | ) | ||||||
Cash dividends paid to stockholders | (563 | ) | (1,134 | ) | (1,129 | ) | ||||||
Other | 2,487 | 6,030 | 4,723 | |||||||||
Net cash provided by (used in) financing activities | (3,767 | ) | 3,480 | 21,475 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 365 | (85 | ) | 671 | ||||||||
Net increase (decrease) in cash and cash equivalents | 4,534 | (4,896 | ) | 3,439 | ||||||||
Cash and cash equivalents reclassified to assets held for sale | — | (371 | ) | — | ||||||||
Cash and cash equivalents retained by GMAC LLC upon disposal | (11,137 | ) | — | — | ||||||||
Cash and cash equivalents at beginning of the year | 30,726 | 35,993 | 32,554 | |||||||||
Cash and cash equivalents at end of the year | $ | 24,123 | $ | 30,726 | $ | 35,993 | ||||||
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2006, 2005, AND 2004
(Dollars in millions)
Accumulated | ||||||||||||||||||||||||||||
Retained | Other | Total | ||||||||||||||||||||||||||
Shares of | Comprehensive | Earnings | Comprehensive | Stockholders’ | ||||||||||||||||||||||||
Common | Capital | Capital | Income | (Accumulated | Income | Equity | ||||||||||||||||||||||
Stock | Stock | Surplus | (Loss) | Deficit) | (Loss) | (Deficit) | ||||||||||||||||||||||
Balance January 1, 2004, as previously reported | 562 | $ | 937 | $ | 15,185 | $ | 12,387 | $ | (3,606 | ) | $ | 24,903 | ||||||||||||||||
Prior period adjustments (see Note 2) | — | — | — | 552 | (579 | ) | (27 | ) | ||||||||||||||||||||
Balance January 1, 2004, as restated | 562 | $ | 937 | $ | 15,185 | $ | 12,939 | (4,185 | ) | $ | 24,876 | |||||||||||||||||
Net income | — | — | — | $ | 2,701 | 2,701 | — | 2,701 | ||||||||||||||||||||
Other comprehensive income (loss): | — | |||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 1,277 | — | — | — | |||||||||||||||||||||
Unrealized gains on derivatives | — | — | — | 463 | — | — | — | |||||||||||||||||||||
Unrealized gains on securities | — | — | — | 202 | — | — | — | |||||||||||||||||||||
Minimum pension liability adjustment | — | — | — | (571 | ) | — | — | |||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | 1,371 | — | 1,371 | 1,371 | |||||||||||||||||||||
Comprehensive income (loss) | $ | 4,072 | — | |||||||||||||||||||||||||
Stock options | 3 | 5 | 56 | — | 61 | |||||||||||||||||||||||
Cash dividends paid | — | — | — | (1,129 | ) | $ | — | (1,129 | ) | |||||||||||||||||||
Balance December 31, 2004, as restated | 565 | $ | 942 | $ | 15,241 | $ | 14,511 | $ | (2,814 | ) | $ | 27,880 | ||||||||||||||||
Net (loss) | — | — | — | $ | (10,417 | ) | (10,417 | ) | — | (10,417 | ) | |||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | (929 | ) | — | — | — | ||||||||||||||||||||
Unrealized gains on derivatives | — | — | — | 33 | — | — | — | |||||||||||||||||||||
Unrealized (loss) on securities | — | — | — | (67 | ) | — | — | — | ||||||||||||||||||||
Minimum pension liability adjustment | — | — | — | (758 | ) | — | — | |||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | (1,721 | ) | — | (1,721 | ) | (1,721 | ) | ||||||||||||||||||
Comprehensive income (loss) | $ | (12,138 | ) | — | ||||||||||||||||||||||||
Stock options | 1 | 1 | 44 | — | — | 45 | ||||||||||||||||||||||
Cash dividends paid | — | — | — | (1,134 | ) | — | (1,134 | ) | ||||||||||||||||||||
Balance December 31, 2005, as restated | 566 | $ | 943 | $ | 15,285 | $ | 2,960 | $ | (4,535 | ) | $ | 14,653 | ||||||||||||||||
Net (loss) | — | — | — | $ | (1,978 | ) | (1,978 | ) | — | (1,978 | ) | |||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 175 | — | — | — | |||||||||||||||||||||
Unrealized (loss) on derivatives | — | — | — | (249 | ) | — | — | — | ||||||||||||||||||||
Unrealized (loss) on securities | — | — | — | (504 | ) | — | — | — | ||||||||||||||||||||
Minimum pension liability adjustment | — | — | — | (67 | ) | — | ||||||||||||||||||||||
Other comprehensive income (loss) | — | — | — | (645 | ) | (645 | ) | (645 | ) | |||||||||||||||||||
Comprehensive income (loss) | $ | (2,623 | ) | |||||||||||||||||||||||||
Adjustment to initially apply SFAS No. 158, net of income tax | — | — | — | — | (16,946 | ) | (16,946 | ) | ||||||||||||||||||||
Stock options | — | — | 51 | — | 51 | |||||||||||||||||||||||
Cumulative effect of a change in accounting principle — adoption of SFAS No. 156, net of tax | — | — | — | (13 | ) | (13 | ) | |||||||||||||||||||||
Cash dividends paid | — | — | — | (563 | ) | (563 | ) | |||||||||||||||||||||
Balance December 31, 2006 | 566 | $ | 943 | $ | 15,336 | $ | 406 | $ | (22,126 | ) | $ | (5,441 | ) | |||||||||||||||
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Note 1. | Nature of Operations |
Note 2. | Restatement of Previously Issued Consolidated Financial Statements |
Net Income (Loss) | Retained Earnings at | |||||||||||
2005 | 2004 | January 1, 2004 | ||||||||||
As previously reported | $ | (10,567 | ) | $ | 2,804 | $ | 12,387 | |||||
Pre-tax adjustments: | ||||||||||||
Derivative and hedge accounting adjustments | ||||||||||||
Commodity Contracts | ||||||||||||
“Normal purchases and normal sales” scope exception for certain commodity contracts | 111 | 65 | (4 | ) | ||||||||
Hedge accounting related to commodity cash flow hedges | 120 | 247 | 25 | |||||||||
Foreign Exchange Contracts | ||||||||||||
Hedge accounting related to foreign currency cash flow and net investment hedges | 114 | (209 | ) | (112 | ) | |||||||
Interest Rate Contracts | ||||||||||||
Hedge accounting related to certain debt investments | (256 | ) | (143 | ) | 88 | |||||||
Total derivative and hedge accounting adjustments | 89 | (40 | ) | (3 | ) | |||||||
Otherout-of-period adjustments | 118 | (272 | ) | (740 | ) | |||||||
Total pre-tax adjustments | 207 | (312 | ) | (743 | ) | |||||||
Tax effects — provision/(benefit) | 22 | (207 | ) | (153 | ) | |||||||
Total of above adjustments, net of tax | 185 | (105 | ) | (590 | ) | |||||||
Deferred income tax adjustments | (35 | ) | 2 | 1,142 | ||||||||
Net after-tax adjustments | 150 | (103 | ) | 552 | ||||||||
As restated | $ | (10,417 | ) | $ | 2,701 | $ | 12,939 | |||||
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Note 2. | Restatement of Previously Issued Consolidated Financial Statements — (continued) |
2005 | 2004 | |||||||
Basic earnings (loss) per share: | ||||||||
Earnings (loss) before cumulative effect of a change in accounting principle, as reported | $ | (18.50 | ) | $ | 4.97 | |||
Adjustments | 0.27 | (0.19 | ) | |||||
Earnings (loss) before cumulative effect of a change in accounting principle, as restated | (18.23 | ) | 4.78 | |||||
Cumulative effect of a change in accounting principle | (0.19 | ) | – | |||||
Earnings (loss) per share, as restated | ($ | 18.42 | ) | $ | 4.78 | |||
Diluted earnings (loss) per share: | ||||||||
Earnings (loss) before cumulative effect of a change in accounting principle, as reported | $ | (18.50 | ) | $ | 4.94 | |||
Adjustments | 0.27 | (0.18 | ) | |||||
Earnings (loss) before cumulative effect of a change in accounting principle, as restated | (18.23 | ) | 4.76 | |||||
Cumulative effect of a change in accounting principle | (0.19 | ) | – | |||||
Earnings (loss) per share, as restated | $ | (18.42 | ) | $ | 4.76 | |||
104
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Note 2. | Restatement of Previously Issued Consolidated Financial Statements — (continued) |
105
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Note 2. | Restatement of Previously Issued Consolidated Financial Statements — (continued) |
106
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Note 2. | Restatement of Previously Issued Consolidated Financial Statements — (concluded) |
107
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(Dollars in millions)
For the Years Ended December 31, | ||||||||||||||||
2005 | 2004 | |||||||||||||||
Previously | Previously | |||||||||||||||
Reported | Restated | Reported | Restated | |||||||||||||
Net sales and revenues | ||||||||||||||||
Automotive sales | $ | 156,801 | $ | 160,228 | $ | 159,937 | $ | 163,341 | ||||||||
Financial services and insurance revenues | 34,383 | 34,427 | 31,972 | 32,010 | ||||||||||||
Total net sales and revenues | 191,184 | 194,655 | 191,909 | 195,351 | ||||||||||||
Costs and expenses | ||||||||||||||||
Automotive cost of sales | 155,863 | 158,887 | 148,642 | 152,115 | ||||||||||||
Selling, general and administrative expenses | 27,440 | 27,513 | 25,810 | 25,969 | ||||||||||||
Interest expense | 15,768 | 15,607 | 11,980 | 11,913 | ||||||||||||
Provisions for credit and insurance losses related to financing and insurance operations | 3,440 | 3,430 | 4,315 | 4,315 | ||||||||||||
Other expenses | 7,024 | 7,024 | 1,584 | 1,584 | ||||||||||||
Total costs and expenses | 209,535 | 212,461 | 192,331 | 195,896 | ||||||||||||
Operating (loss) | (18,351 | ) | (17,806 | ) | (422 | ) | (545 | ) | ||||||||
Automotive interest income and other non-operating income, net | $ | 1,420 | $ | 1,066 | $ | 1,608 | $ | 1,400 | ||||||||
Income (loss) before income taxes, equity income (loss) and minority interests and cumulative effect of a change in accounting principle | (16,931 | ) | (16,740 | ) | 1,186 | 855 | ||||||||||
Income tax (benefit) | (5,878 | ) | (5,870 | ) | (916 | ) | (1,126 | ) | ||||||||
Equity income (loss) and minority interests, net of tax | 595 | 562 | 702 | 720 | ||||||||||||
Income (loss) before cumulative effect of a change in accounting principle | (10,458 | ) | (10,308 | ) | 2,804 | 2,701 | ||||||||||
Cumulative effect of a change in accounting principle | (109 | ) | (109 | ) | – | – | ||||||||||
Net income (loss) | $ | (10,567 | ) | $ | (10,417 | ) | $ | 2,804 | $ | 2,701 | ||||||
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(Dollars in millions)
December 31, 2005 | ||||||||
Previously | ||||||||
Reported | Restated | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 15,187 | $ | 15,187 | ||||
Marketable securities | 1,416 | 1,416 | ||||||
Total cash and marketable securities | 16,603 | 16,603 | ||||||
Accounts and notes receivable, net | 7,758 | 5,917 | ||||||
Inventories | 13,851 | 13,862 | ||||||
Equipment on operating leases, net | 6,993 | 6,993 | ||||||
Deferred income taxes and other current assets | 8,877 | 8,982 | ||||||
Total current assets | 54,082 | 52,357 | ||||||
Financing and Insurance Operations Assets | ||||||||
Cash and cash equivalents | 15,539 | 15,539 | ||||||
Investments in securities | 18,310 | 18,310 | ||||||
Finance receivables, net | 180,793 | 180,849 | ||||||
Loans held for sale | 21,865 | 21,865 | ||||||
Assets held for sale | 19,030 | 19,030 | ||||||
Equipment on operating leases, net | 31,194 | 31,194 | ||||||
Other assets | 27,694 | 25,157 | ||||||
Total Financing and Insurance Operations assets | 314,425 | 311,944 | ||||||
Non-Current Assets | ||||||||
Equity in net assets of nonconsolidated affiliates | 3,291 | 3,242 | ||||||
Property, net | 38,466 | 38,543 | ||||||
Intangible assets, net | 1,862 | 1,869 | ||||||
Deferred income taxes | 22,849 | 23,761 | ||||||
Prepaid pension | 37,690 | 37,576 | ||||||
Other assets | 3,413 | 4,864 | ||||||
Total non-current assets | 107,571 | 109,855 | ||||||
Total Assets | $ | 476,078 | $ | 474,156 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable (principally trade) | $ | 26,182 | $ | 26,402 | ||||
Short-term borrowings and current portion of long-term debt | 1,519 | 1,627 | ||||||
Accrued expenses | 42,665 | 42,697 | ||||||
Total current liabilities | 70,366 | 70,726 | ||||||
Finance and Insurance Operations Liabilities | ||||||||
Accounts payable | 3,731 | 3,731 | ||||||
Liabilities related to assets held for sale | 10,941 | 10,941 | ||||||
Debt | 253,217 | 253,508 | ||||||
Other liabilities and deferred income taxes | 28,946 | 26,325 | ||||||
Total Financing and Insurance Operations liabilities | 296,835 | 294,505 | ||||||
Non-Current Liabilities | ||||||||
Long-term debt | 31,014 | 32,580 | ||||||
Postretirement benefits other than pensions | 28,990 | 28,990 | ||||||
Pensions | 11,214 | 11,225 | ||||||
Other liabilities and deferred income taxes | 22,023 | 20,430 | ||||||
Total non-current liabilities | 93,241 | 93,225 | ||||||
Total liabilities | 460,442 | 458,456 | ||||||
Commitments and contingencies (Note 20) | ||||||||
Minority interests | 1,039 | 1,047 | ||||||
Stockholders’ Equity | ||||||||
Preferred stock, no par value, authorized 6,000,000, no shares issued and outstanding | — | — | ||||||
$12/3 par value common stock (2,000,000,000 shares authorized, 756,637,541 and 565,518,106 shares issued and outstanding, respectively, at December 31, 2005) | 943 | 943 | ||||||
Capital surplus (principally additional paid-in capital) | 15,285 | 15,285 | ||||||
Retained earnings | 2,361 | 2,960 | ||||||
Accumulated other comprehensive (loss) | (3,992 | ) | (4,535 | ) | ||||
Total stockholders’ equity | 14,597 | 14,653 | ||||||
Total liabilities, minority interest, and stockholders’ equity | $ | 476,078 | $ | 474,156 | ||||
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(Dollars in millions)
For the Years Ended December 31, | ||||||||||||||||
2005 | 2004 | |||||||||||||||
Previously | Previously | |||||||||||||||
Reported | Restated | Reported | Restated | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income (loss) | $ | (10,458 | ) | $ | (10,417 | ) | $ | 2,804 | $ | 2,701 | ||||||
Cumulative effect of a change in accounting principle | — | 109 | — | — | ||||||||||||
Adjustments to reconcile income (loss) before cumulative effect of a change in accounting principle to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation, impairment, and amortization expense | 15,769 | 15,797 | 14,152 | 14,202 | ||||||||||||
Mortgage servicing rights and premium amortization | 1,142 | 1,142 | 1,675 | 1,675 | ||||||||||||
Goodwill impairment | 712 | 712 | — | — | ||||||||||||
Delphi benefit guarantee | 5,500 | 5,500 | — | — | ||||||||||||
Provision for credit financing losses | 1,085 | 1,074 | 1,944 | 1,944 | ||||||||||||
Net gains on sale of finance receivables | (1,695 | ) | (1,741 | ) | (1,312 | ) | (1,332 | ) | ||||||||
Net gains on sale of investment securities | (104 | ) | (104 | ) | (52 | ) | (52 | ) | ||||||||
Other postretirement employee benefit (OPEB) expense | 5,671 | 5,671 | 4,558 | 4,558 | ||||||||||||
OPEB payments | (4,084 | ) | (4,084 | ) | (3,974 | ) | (3,974 | ) | ||||||||
VEBA/401(h) withdrawals | 3,168 | 3,168 | (8,618 | ) | (8,618 | ) | ||||||||||
Pension expense | 2,496 | 2,519 | 2,456 | 2,456 | ||||||||||||
Pension contributions | (833 | ) | (833 | ) | (919 | ) | (919 | ) | ||||||||
Retiree lump sum and vehicle voucher expense, net of payments | (264 | ) | (264 | ) | (329 | ) | (329 | ) | ||||||||
Net change in mortgage loans | (29,119 | ) | (29,119 | ) | (2,312 | ) | (2,312 | ) | ||||||||
Net change in mortgage securities | (1,155 | ) | (1,155 | ) | 614 | 614 | ||||||||||
Change in other investments and miscellaneous assets | (653 | ) | (685 | ) | 83 | 104 | ||||||||||
Changes in assets and liabilities, net of acquisitions and disposals | (6,683 | ) | (6,798 | ) | (1,644 | ) | (1,754 | ) | ||||||||
Other | 2,649 | 2,652 | 230 | 392 | ||||||||||||
Net cash provided by (used in) operating activities | (16,856 | ) | (16,856 | ) | 9,356 | 9,356 | ||||||||||
Cash flows from investing activities | ||||||||||||||||
Expenditures for property | (8,179 | ) | (8,179 | ) | (7,753 | ) | (7,753 | ) | ||||||||
Investments in marketable securities, acquisitions | (21,800 | ) | (21,800 | ) | (15,278 | ) | (15,278 | ) | ||||||||
Investments in marketable securities, liquidations | 22,537 | 22,537 | 15,911 | 15,911 | ||||||||||||
Net change in mortgage servicing rights | (267 | ) | (267 | ) | (326 | ) | (326 | ) | ||||||||
Increase in finance receivables | (6,582 | ) | (6,582 | ) | (38,673 | ) | (38,673 | ) | ||||||||
Proceeds from sale of finance receivables | 31,652 | 31,652 | 23,385 | 23,385 | ||||||||||||
Proceeds from sale of business units/equity investments | 846 | 846 | — | — | ||||||||||||
Operating leases, acquisitions | (15,496 | ) | (15,496 | ) | (14,324 | ) | (14,324 | ) | ||||||||
Operating leases, liquidations | 5,362 | 5,362 | 7,696 | 7,696 | ||||||||||||
Investments in companies, net of cash acquired | 1,355 | 1,355 | (60 | ) | (60 | ) | ||||||||||
Other | (863 | ) | (863 | ) | 1,359 | 1,359 | ||||||||||
Net cash provided by (used in) investing activities | 8,565 | 8,565 | (28,063 | ) | (28,063 | ) | ||||||||||
Cash flows from financing activities | ||||||||||||||||
Net increase (decrease) in short-term borrowings | (10,126 | ) | (10,126 | ) | 2,192 | 2,192 | ||||||||||
Borrowings of long-term debt | 78,276 | 78,276 | 73,511 | 73,511 | ||||||||||||
Payments made on long-term debt | (69,566 | ) | (69,566 | ) | (57,822 | ) | (57,822 | ) | ||||||||
Cash dividends paid to stockholders | (1,134 | ) | (1,134 | ) | (1,129 | ) | (1,129 | ) | ||||||||
Other | 6,030 | 6,030 | 4,723 | 4,723 | ||||||||||||
Net cash provided by (used in) financing activities | 3,480 | 3,480 | 21,475 | 21,475 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (85 | ) | (85 | ) | 671 | 671 | ||||||||||
Net increase (decrease) in cash and cash equivalents | (4,896 | ) | (4,896 | ) | 3,439 | 3,439 | ||||||||||
Cash and cash equivalents reclassified to assets held for sale | (371 | ) | (371 | ) | — | — | ||||||||||
Cash and cash equivalents at beginning of the year | 35,993 | 35,993 | 32,554 | 32,554 | ||||||||||||
Cash and cash equivalents at end of the year | $ | 30,726 | $ | 30,726 | $ | 35,993 | $ | 35,993 | ||||||||
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Note 3. | Significant Accounting Policies |
111
Table of Contents
Note 3. | Significant Accounting Policies — (continued) |
112
Table of Contents
Note 3. | Significant Accounting Policies — (continued) |
113
Table of Contents
Note 3. | Significant Accounting Policies — (continued) |
114
Table of Contents
Note 3. | Significant Accounting Policies — (continued) |
115
Table of Contents
Note 3. | Significant Accounting Policies — (continued) |
116
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Note 3. | Significant Accounting Policies — (continued) |
2005 | 2004 | |||||||
(Dollars in millions except per share amounts) | ||||||||
Net income (loss) as restated | $ | (10,417 | ) | $ | 2,701 | |||
Add: FIN 47 cumulative effect, net of tax | 109 | — | ||||||
Less: FIN 47 depreciation and accretion expense, net of tax | (16 | ) | (14 | ) | ||||
Pro forma net income (loss) | $ | (10,324 | ) | $ | 2,687 | |||
Earnings (loss) per share | ||||||||
Basic: As restated | $ | (18.42 | ) | $ | 4.78 | |||
Pro forma | $ | (18.26 | ) | $ | 4.76 | |||
Diluted: As restated | $ | (18.42 | ) | $ | 4.76 | |||
Pro forma | $ | (18.26 | ) | $ | 4.74 | |||
Pro forma asset retirement obligation — net, as of year-end | $ | 181 | $ | 159 | ||||
2006 | 2005 | |||||||
(Dollars in millions) | ||||||||
Asset retirement obligations as of January 1 | $ | 181 | $ | — | ||||
Accretion expense | 18 | — | ||||||
Liabilities incurred, including adoption of FIN 47 | 5 | 181 | ||||||
Liabilities settled or disposed | (9 | ) | — | |||||
Revisions to estimates | (2 | ) | — | |||||
Asset retirement obligations as of December 31 | $ | 193 | $ | 181 | ||||
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Note 3. | Significant Accounting Policies — (continued) |
2004 | ||||
Net income (loss) | $ | 2,701 | ||
Add: stock-based compensation expense, included in reported net income, net of related tax effects | 38 | |||
Deduct: total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects | (52 | ) | ||
Pro forma net income | $ | 2,687 | ||
Basic earnings per share | ||||
– as reported | $ | 4.78 | ||
– pro forma | $ | 4.75 | ||
Diluted earnings per share | ||||
– as reported | $ | 4.76 | ||
– pro forma | $ | 4.74 |
118
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Note 3. | Significant Accounting Policies — (continued) |
119
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Note 3. | Significant Accounting Policies — (concluded) |
Note 4. | Acquisition and Disposal of Businesses |
120
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Note 4. | Acquisition and Disposal of Businesses — (continued) |
121
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Note 4. | Acquisition and Disposal of Businesses — (concluded) |
Note 5. | Impairments, Restructuring and Other Initiatives |
122
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Note 5. | Impairments, Restructuring and Other Initiatives — (continued) |
Note 6. | GMNA Postemployment Benefit Costs |
123
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Note 6. | GMNA Postemployment Benefit Costs — (continued) |
124
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Note 6. | GMNA Postemployment Benefit Costs — (concluded) |
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Beginning balance | $ | 2,012 | $ | 237 | $ | 384 | ||||||
Additions | 2,212 | 1,891 | — | |||||||||
Interest accretion | 31 | 12 | 19 | |||||||||
Payments | (1,834 | ) | (91 | ) | (151 | ) | ||||||
Adjustments | (1,152 | ) | (37 | ) | (15 | ) | ||||||
Ending balance | $ | 1,269 | $ | 2,012 | $ | 237 | ||||||
Note 7. | Investment in Nonconsolidated Affiliates |
125
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Note 7. | Investment in Nonconsolidated Affiliates — (continued) |
United | South | |||||||||||||||||||
States | Italy | Japan | China | Korea | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
2006 | ||||||||||||||||||||
Book value of GM’s investments in affiliates | $ | 7,523 | NA | NA | $ | 851 | NA | |||||||||||||
GM’s share of affiliates’ net income (loss) | (5 | ) | NA | $ | 21 | $ | 306 | NA | ||||||||||||
Total assets of significant affiliates | 287,439 | NA | NA | $ | 4,828 | NA | ||||||||||||||
Total liabilities of significant affiliates | 270,875 | NA | NA | $ | 2,951 | NA | ||||||||||||||
2005 | ||||||||||||||||||||
Book value of GM’s investments in affiliates | NA | NA | $ | 1,576 | $ | 822 | NA | |||||||||||||
GM’s share of affiliates’ net income (loss) | NA | $ | 32 | $ | 183 | $ | 302 | $ | 17 | |||||||||||
Total assets of significant affiliates | NA | NA | $ | 15,507 | $ | 3,912 | NA | |||||||||||||
Total liabilities of significant affiliates | NA | NA | $ | 7,467 | $ | 2,179 | NA | |||||||||||||
2004 | ||||||||||||||||||||
Book value of GM’s investments in affiliates | NA | $ | 1,293 | $ | 3,174 | $ | 1,084 | $ | 193 | |||||||||||
GM’s share of affiliates’ net income (loss) | NA | $ | 86 | $ | 255 | $ | 432 | $ | (35 | ) | ||||||||||
Total assets of significant affiliates | NA | $ | 8,616 | $ | 30,582 | $ | 3,438 | $ | 5,288 | |||||||||||
Total liabilities of significant affiliates | NA | $ | 5,539 | $ | 17,417 | $ | 1,592 | $ | 4,447 |
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Note 7. | Investment in Nonconsolidated Affiliates — (concluded) |
• | FGP joint venture company was dissolved and GM regained complete ownership of all GM assets originally contributed. | |
• | GM would retain co-ownership with Fiat of the key powertrain intellectual property, including SDE and JTD diesel engines and the M20-32 six-speed manual transmission; | |
• | GM would hold a 50% interest in Fiat GM Powertrain Polska, a joint venture limited to operating the powertrain manufacturing plant in Bielsko-Biala, Poland, which currently produces the 1.3 liter SDE diesel engine; | |
• | The companies will continue to supply each other with powertrains under long-term contracts, which provide considerable ongoing savings; |
Note 8. | Marketable Securities |
127
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Note 8. | Marketable Securities — (continued) |
December 31, 2006 | December 31, 2005 | |||||||||||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||||||||||||
Cost | Gains | Losses | Value | Cost | Gains | Losses | Value | |||||||||||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||||||||
Corporate debt securities and other | $ | 122 | $ | — | $ | — | $ | 122 | $ | 741 | $ | — | $ | 13 | $ | 728 | ||||||||||||||||
United States government and agencies | 13 | — | — | 13 | 455 | — | 5 | 450 | ||||||||||||||||||||||||
Mortgage-backed securities | 3 | — | — | 3 | 243 | — | 5 | 238 | ||||||||||||||||||||||||
Total | $ | 138 | $ | — | $ | — | $ | 138 | $ | 1,439 | $ | — | $ | 23 | $ | 1,416 | ||||||||||||||||
Financing and Insurance Operations: | ||||||||||||||||||||||||||||||||
Mortgage-backed securities held for trading purposes | $ | — | $ | — | $ | — | $ | — | $ | 3,766 | $ | 131 | $ | — | $ | 3,897 | ||||||||||||||||
Available-for-sale | ||||||||||||||||||||||||||||||||
United States government and agencies | 93 | 1 | — | 94 | 2,945 | 5 | 46 | 2,904 | ||||||||||||||||||||||||
States and municipalities | — | — | — | — | 863 | 27 | 1 | 889 | ||||||||||||||||||||||||
Foreign government securities | — | — | — | — | 844 | 11 | 2 | 853 | ||||||||||||||||||||||||
Mortgage and asset-backed securities | — | — | — | — | 1,216 | 29 | 5 | 1,240 | ||||||||||||||||||||||||
Corporate debt securities and other | 98 | — | 4 | 94 | 6,136 | 43 | 35 | 6,144 | ||||||||||||||||||||||||
Subtotal | $ | 191 | $ | 1 | $ | 4 | $ | 188 | $ | 12,004 | $ | 115 | $ | 89 | $ | 12,030 | ||||||||||||||||
Equity securities | — | — | — | — | 1,510 | 874 | 17 | 2,367 | ||||||||||||||||||||||||
Mortgage-backed securitiesheld-to-maturity | — | — | — | — | 16 | — | — | 16 | ||||||||||||||||||||||||
Total | $ | 191 | $ | 1 | $ | 4 | $ | 188 | $ | 17,296 | $ | 1,120 | $ | 106 | $ | 18,310 | ||||||||||||||||
Total consolidated | $ | 329 | $ | 1 | $ | 4 | $ | 326 | $ | 18,735 | $ | 1,120 | $ | 129 | $ | 19,726 | ||||||||||||||||
Financing and Insurance | ||||||||||||||||
Available-for-Sale | Available-for-Sale | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Contractual Maturity | Cost | Value | Cost | Value | ||||||||||||
1 year | $ | 116 | $ | 116 | $ | 191 | $ | 188 | ||||||||
2-5 years | 22 | 22 | — | — | ||||||||||||
6-10 years | — | — | — | — | ||||||||||||
11 years and later | — | — | — | — | ||||||||||||
Total | $ | 138 | $ | 138 | $ | 191 | $ | 188 | ||||||||
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Note 8. | Marketable Securities — (concluded) |
December 31, 2006 | ||||||||||||||||
Less than 12 Months | ||||||||||||||||
Fair Value | Unrealized Losses | |||||||||||||||
(Dollars in millions) | ||||||||||||||||
Financing and Insurance Operations | ||||||||||||||||
Available for sale securities: | ||||||||||||||||
Corporate debt securities and other | $ | 94 | $ | 4 | ||||||||||||
Total available-for-sale securities | $ | 94 | $ | 4 | ||||||||||||
December 31, 2005 | ||||||||||||||||
Less than 12 Months | 12 Months or Longer | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Available for sale securities: | ||||||||||||||||
Corporate debt securities and other | $ | 201 | $ | 3 | $ | 370 | $ | 10 | ||||||||
U.S. government and agencies | 289 | 2 | 84 | 3 | ||||||||||||
Mortgage backed securities | 153 | 3 | 65 | 2 | ||||||||||||
Total | $ | 643 | $ | 8 | $ | 519 | $ | 15 | ||||||||
Financing and Insurance Operations | ||||||||||||||||
Available for sale securities: | ||||||||||||||||
Debt securities: | ||||||||||||||||
United States government and agencies | $ | 1,590 | $ | 32 | $ | 520 | $ | 15 | ||||||||
States and political subdivisions | 79 | 1 | — | — | ||||||||||||
Foreign government securities | 179 | 1 | — | — | ||||||||||||
Residential mortgage-backed securities | 36 | 1 | 76 | 2 | ||||||||||||
Interest-only strips | 81 | 3 | — | — | ||||||||||||
Corporate debt securities | 1,865 | 20 | 331 | 10 | ||||||||||||
Other | 175 | 3 | 21 | 1 | ||||||||||||
Total debt securities | 4,005 | 61 | 948 | 28 | ||||||||||||
Equity securities | 137 | 15 | 19 | 2 | ||||||||||||
Total available for sale securities | $ | 4,142 | $ | 76 | $ | 967 | $ | 30 | ||||||||
Total held to maturity securities | $ | — | $ | — | $ | — | $ | — | ||||||||
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Note 9. | Variable Interest Entities |
130
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Note 9. | Variable Interest Entities — (continued) |
131
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Note 9. | Variable Interest Entities — (concluded) |
Note 10. | Finance Receivables and Securitizations |
132
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Note 10. | Finance Receivables and Securitizations — (continued) |
(in millions) | ||||||
Consumer: | ||||||
Retail automotive | $ | 71,477 | ||||
Residential mortgages | 68,959 | |||||
Total consumer | 140,436 | |||||
Commercial: | ||||||
Automotive: | ||||||
Wholesale | 19,641 | |||||
Leasing and lease financing | 1,228 | |||||
Term loans to dealers and others | 2,973 | |||||
Commercial and industrial | 16,936 | |||||
Commercial real estate: | ||||||
Commercial mortgage(1) | 43 | |||||
Real estate construction | 2,677 | |||||
Total commercial | 43,498 | |||||
Total finance receivables and loans | 183,934 | |||||
Allowance for financing losses | (3,085 | ) | ||||
Total consolidated finance receivables, net (2) | $ | 180,849 | ||||
(1) | At December 31, 2005, $3.0 billion ($2.1 billion domestic and $949 million foreign) in GMAC Commercial Mortgage’s finance receivables and loans were transferred to held for sale on the Consolidated Balance Sheet. | |
(2) | Net of unearned income of $5.9 billion at December 31, 2005. |
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Note 10. | Finance Receivables and Securitizations — (continued) |
134
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Note 10. | Finance Receivables and Securitizations — (continued) |
Eleven Months Ended November 30, 2006 | ||||||||||||||||
Retail | ||||||||||||||||
Finance | Wholesale | Mortgage Loans | ||||||||||||||
Receivables | Loans | Residential | Commercial | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Pre-tax gains (losses) on securitizations | $ | — | $ | 551 | $ | 731 | — | |||||||||
Cash inflow information: | ||||||||||||||||
Proceeds from new securitizations | 3,315 | — | 56,510 | — | ||||||||||||
Servicing fees received | — | 166 | 435 | — | ||||||||||||
Other cash flows received on retained interests | 308 | 28 | 534 | — | ||||||||||||
Proceeds from collections reinvested in revolving securitizations | — | 89,385 | — | — | ||||||||||||
Repayments of servicing advances | 3 | — | 1,065 | — | ||||||||||||
Cash outflow information: | ||||||||||||||||
Servicing advances | 48 | — | (1,125 | ) | — | |||||||||||
Purchase obligations and options: | ||||||||||||||||
Mortgage loans under conditional call option | — | — | (20 | ) | — | |||||||||||
Representations and warranties obligations | — | — | (37 | ) | — | |||||||||||
Administrator or servicer actions | 5 | — | (56 | ) | — | |||||||||||
Asset performance conditional calls | — | — | (47 | ) | — | |||||||||||
Clean-up calls | (242 | ) | — | (1,099 | ) | — |
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Note 10. | Finance Receivables and Securitizations — (continued) |
Year Ended December 31, 2005 | ||||||||||||||||||||
Retail | Commercial | |||||||||||||||||||
Finance | Wholesale | Mortgage Loans | Mortgage | |||||||||||||||||
Receivables | Loans | Residential | Commercial | Securities | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Pre-tax gains (losses) on securitizations | $ | (2 | ) | $ | 543 | $ | 513 | $ | 68 | $ | 8 | |||||||||
Cash inflow information: | ||||||||||||||||||||
Proceeds from new securitizations | 4,874 | 7,705 | 41,987 | 3,990 | 741 | |||||||||||||||
Servicing fees received | 65 | 179 | 245 | 21 | — | |||||||||||||||
Other cash flows received on retained interests | 249 | 503 | 583 | 262 | 42 | |||||||||||||||
Proceeds from collections reinvested in revolving securitizations | — | 102,306 | — | — | — | |||||||||||||||
Repayments of servicing advances | 43 | — | 1,115 | 198 | — | |||||||||||||||
Cash outflow information: | ||||||||||||||||||||
Servicing advances | (46 | ) | — | (1,163 | ) | (188 | ) | — | ||||||||||||
Purchase obligations and options: | ||||||||||||||||||||
Mortgage loans under conditional call option | — | — | (9 | ) | — | — | ||||||||||||||
Representations and warranties obligations | — | — | (29 | ) | — | — | ||||||||||||||
Administrator or servicer actions | (76 | ) | — | — | — | — | ||||||||||||||
Asset performance conditional calls | — | — | (99 | ) | — | — | ||||||||||||||
Clean-up calls | (715 | ) | — | (2,202 | ) | — | — |
Year Ended December 31, 2004 | ||||||||||||||||||||
Retail | Commercial | |||||||||||||||||||
Finance | Wholesale | Mortgage Loans | Mortgage | |||||||||||||||||
Receivables | Loans | Residential | Commercial | Securities | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Pre-tax gains on securitizations | $ | 9 | $ | 497 | $ | 602 | $ | 54 | $ | 11 | ||||||||||
Cash inflow information: | ||||||||||||||||||||
Proceeds from new securitizations | 1,824 | 9,188 | 29,412 | 2,108 | 935 | |||||||||||||||
Servicing fees received | 105 | 174 | 208 | 20 | — | |||||||||||||||
Other cash flows received on retained interests | 340 | 808 | 729 | 216 | 68 | |||||||||||||||
Proceeds from collections reinvested in revolving securitizations | — | 91,360 | — | — | — | |||||||||||||||
Repayments of servicing advances | 75 | — | 947 | 147 | — | |||||||||||||||
Cash outflow information: | ||||||||||||||||||||
Servicing advances | (64 | ) | — | (1,035 | ) | (169 | ) | — | ||||||||||||
Purchase obligations and options: | ||||||||||||||||||||
Mortgage loans under conditional call option | — | — | (22 | ) | — | — | ||||||||||||||
Representations and warranties obligations | (1 | ) | — | (66 | ) | — | — | |||||||||||||
Administrator or servicer actions | (75 | ) | — | — | — | — | ||||||||||||||
Asset performance conditional calls | — | — | (137 | ) | — | — | ||||||||||||||
Clean-up calls | (269 | ) | — | (3,797 | ) | — | — |
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Note 10. | Finance Receivables and Securitizations — (continued) |
Eleven Months | ||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||
November 30, 2006 | Year Ended December 31, 2005 | |||||||||||||||||||||||
Retail | Residential | Retail | ||||||||||||||||||||||
Finance | Mortgage | Finance | Mortgage Loans | Commercial | ||||||||||||||||||||
Receivables | Loans | Receivables | Residential | Mortgage | ||||||||||||||||||||
(a) | (b) | (a) | (b) | Commercial | Securities | |||||||||||||||||||
Key assumptions(c) (rates per annum): | ||||||||||||||||||||||||
Annual prepayment rate(d) | 0.9-1.7 | % | 0.0-90.0 | % | 0.9-1.2 | % | 0.0-60.0 | % | 0.0-50.0 | % | 0.0 | % | ||||||||||||
Weighted average life (in years) | 1.4-1.5 | 1.1-7.2 | 1.6-1.7 | 1.1-8.5 | 0.3-8.6 | 5.9-9.9 | ||||||||||||||||||
Expected credit losses | 0.4-1.0 | 0.0-18.3 | 0.4-1.6 | 0.0-4.9 | 0.0 | 0.0 | ||||||||||||||||||
Discount rate | 9.5-16.0 | % | 7.0-25.0 | % | 9.5-15.0 | % | 6.5-21.4 | % | 4.2-10.7 | % | 10.0-12.0 | % |
(a) | The fair value of retained interests in wholesale securitizations approximates cost because of the short-term and floating rate nature of wholesale loans. | |
(b) | Included within residential mortgage loans are home equity loans and lines, highloan-to-value loans, and residential first and second mortgage loans. | |
(c) | The assumptions used to measure the expected yield on variable rate retained interests are based on a benchmark interest rate yield curve plus a contractual spread, as appropriate. The actual yield curve utilized varies depending on the specific retained interests. | |
(d) | Based on the weighted average maturity for finance receivables and constant prepayment rate for mortgage loans and commercial mortgage securities. |
Loans Securitized in Years | ||||||||||||
Ended December 31,(a) | ||||||||||||
2006(b) | 2005 | 2004 | ||||||||||
Retail automotive | 0.7 | % | 0.6 | % | 0.4 | % | ||||||
Residential mortgage | 0.0-12.8 | % | 0.0-16.9 | % | 0.0-26.1 | % | ||||||
Commercial mortgage | — | 0.0-3.4 | % | 0.0-4.2 | % | |||||||
Commercial investment securities | — | 0.0-6.7 | % | 0.0-39.5 | % |
(a) | Static pool losses not applicable to wholesale finance receivable securitizations because of their short-term nature. | |
(b) | Represents eleven months ended November 30, 2006. |
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Note 10. | Finance Receivables and Securitizations — (concluded) |
Amount | ||||||||||||
Total Finance | 60 Days | Net | ||||||||||
Receivables | or More | Credit | ||||||||||
and Loans | Past Due | Losses | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2005 | 2005 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Retail automotive | $ | 77,222 | $ | 892 | $ | 867 | ||||||
Residential mortgage | 167,584 | 8,682 | 885 | |||||||||
Total consumer | 244,806 | 9,574 | 1,752 | |||||||||
Wholesale | 41,994 | 73 | 4 | |||||||||
Commercial mortgage | 43 | — | 4 | |||||||||
Other automotive and commercial | 23,996 | 575 | 33 | |||||||||
Total commercial(a) | 66,033 | 648 | 41 | |||||||||
Total managed portfolio(b) | 310,839 | $ | 10,222 | $ | 1,793 | |||||||
Securitized finance receivables and loans | (103,947 | ) | ||||||||||
Loans held for sale (unpaid principal) | (21,882 | ) | ||||||||||
Total finance receivables and loans | $ | 185,010 | ||||||||||
(a) | At December 31, 2005, excludes $26.3 billion of managed assets of GMAC’s Commercial Mortgage business. | |
(b) | Managed portfolio represent finance receivables and loans on the balance sheet or that have been securitized, excluding securitized finance receivables and loans that GMAC continues to service but has no other continuing involvement (i.e., in which GMAC retains an interest or risk of loss in the underlying receivables). |
Note 11. | Inventories |
December 31, | ||||||||
2006 | 2005 | |||||||
(Dollars in millions) | ||||||||
Productive material, work in process, and supplies | $ | 5,810 | $ | 5,512 | ||||
Finished product, service parts, etc. | 9,619 | 9,875 | ||||||
Total inventories at FIFO | 15,429 | 15,387 | ||||||
Less LIFO allowance | (1,508 | ) | (1,525 | ) | ||||
Total inventories, less allowances | 13,921 | 13,862 | ||||||
FIO Off-lease vehicles | 185 | 503 | ||||||
Total consolidated inventories, less allowances | $ | 14,106 | $ | 14,365 | ||||
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Note 11. | Inventories — (concluded) |
Note 12. | Equipment on Operating Leases |
December 31, | ||||||||
2006 | 2005 | |||||||
(Dollars in millions) | ||||||||
Equipment on operating leases | $ | 6,629 | $ | 7,629 | ||||
Less accumulated depreciation | (504 | ) | (636 | ) | ||||
Net book value | $ | 6,125 | $ | 6,993 | ||||
Financing and Insurance Operations | ||||||||
Equipment on operating leases | $ | 14,909 | $ | 39,675 | ||||
Less accumulated depreciation | (3,115 | ) | (8,481 | ) | ||||
Net book value | 11,794 | 31,194 | ||||||
Total consolidated net book value | $ | 17,919 | $ | 38,187 | ||||
Note 13. | Income Taxes |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
U.S. income (loss) | $ | (5,203 | ) | $ | (16,028 | ) | $ | (123 | ) | |||
Foreign income (loss) | 256 | (712 | ) | 978 | ||||||||
Total | $ | (4,947 | ) | $ | (16,740 | ) | $ | 855 | ||||
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Note 13. | Income Taxes — (continued) |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Income taxes estimated to be payable currently | ||||||||||||
U.S. federal | $ | — | $ | (147 | ) | $ | (282 | ) | ||||
Foreign | 1,096 | 842 | 1,018 | |||||||||
U.S. state and local | 21 | (2 | ) | 36 | ||||||||
Total payable currently | 1,117 | 693 | 772 | |||||||||
Deferred income tax expense (credit) — net | ||||||||||||
U.S. federal | (2,498 | ) | (6,883 | ) | (644 | ) | ||||||
Foreign | (1,201 | ) | (655 | ) | (1,232 | ) | ||||||
U.S. state and local | (203 | ) | 975 | (22 | ) | |||||||
Total deferred | (3,902 | ) | (6,563 | ) | (1,898 | ) | ||||||
Total income taxes | $ | (2,785 | ) | $ | (5,870 | ) | $ | (1,126 | ) | |||
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Note 13. | Income Taxes — (continued) |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Tax at U.S. federal statutory income tax rate | $ | (1,731 | ) | $ | (5,859 | ) | $ | 299 | ||||
State and local tax expense | (119 | ) | (600 | ) | (952 | ) | ||||||
Foreign income taxed at rates other than 35% | (525 | ) | (776 | ) | (631 | ) | ||||||
Taxes on unremitted earnings of subsidiaries | (124 | ) | (100 | ) | (262 | ) | ||||||
Other tax credits | (115 | ) | (69 | ) | (41 | ) | ||||||
Settlement of prior year tax matters | (160 | ) | (515 | ) | (191 | ) | ||||||
Change in valuation allowance | 239 | 2,780 | 1,553 | |||||||||
ESOP dividend deduction(1) | (23 | ) | (52 | ) | (53 | ) | ||||||
Tax effects of foreign reorganizations | 96 | (84 | ) | (483 | ) | |||||||
Medicare prescription drug benefit | (352 | ) | (325 | ) | (211 | ) | ||||||
Loss carryforward related to investment write-down | — | — | (168 | ) | ||||||||
Other adjustments | 29 | (270 | ) | 14 | ||||||||
Total income tax (benefit) expense | $ | (2,785 | ) | $ | (5,870 | ) | $ | (1,126 | ) | |||
(1) | Deduction for dividends paid on GM $12/3 par value common stock held under the employee stock ownership portion of the GM Savings Plans, pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001. |
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Note 13. | Income Taxes — (continued) |
December 31, | ||||||||||||||||
2006 | 2005 | |||||||||||||||
Deferred Tax | Deferred Tax | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Postretirement benefits other than pensions | $ | 18,609 | $ | — | $ | 12,757 | $ | — | ||||||||
Pension and other employee benefit plans | 5,044 | 6,137 | 3,807 | 12,985 | ||||||||||||
Warranties, dealer and customer allowances, claims, and discounts | 4,070 | 47 | 6,739 | 52 | ||||||||||||
Depreciation and amortization | 6,098 | 2,008 | 5,713 | 2,584 | ||||||||||||
Tax carryforwards | 13,293 | — | 12,139 | — | ||||||||||||
Lease transactions | — | 199 | — | 4,351 | ||||||||||||
Miscellaneous foreign | 2,992 | 40 | 4,580 | 371 | ||||||||||||
Other | 8,240 | 2,194 | 10,922 | 3,677 | ||||||||||||
Subtotal | 58,346 | 10,625 | 56,657 | 24,020 | ||||||||||||
Valuation allowances | (6,523 | ) | — | (6,284 | ) | — | ||||||||||
Total deferred taxes | $ | 51,823 | $ | 10,625 | $ | 50,373 | $ | 24,020 | ||||||||
Net deferred tax assets | $ | 41,198 | $ | 26,353 | ||||||||||||
December 31, | ||||||||
2006 | 2005 | |||||||
(Dollars in millions) | ||||||||
Current deferred tax assets | $ | 10,293 | $ | 7,073 | ||||
Current deferred tax liabilities | (9 | ) | (1,208 | ) | ||||
Non-current deferred tax assets | 31,639 | 21,206 | ||||||
Non-current deferred tax liabilities | (725 | ) | (718 | ) | ||||
Total | $ | 41,198 | $ | 26,353 | ||||
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Note 13. | Income Taxes — (continued) |
Statutory | ||||||||||||
Operating Loss | ||||||||||||
Jurisdiction | 2006 | 2005 | Carryforward Period | |||||||||
United States | $ | 34,824 | $ | 23,010 | 20 years/Unlimited | |||||||
Canada | 3,068 | 2,675 | 20 years/Unlimited | |||||||||
Germany | 2,496 | 2,034 | Unlimited | |||||||||
United Kingdom | 215 | 299 | Unlimited | |||||||||
Spain | 220 | 230 | 15 years | |||||||||
Total | $ | 40,823 | $ | 28,248 | ||||||||
December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Beginning Balance | $ | 6,284 | $ | 3,504 | $ | 1,951 | ||||||
Additions/(Utilization): | ||||||||||||
U.S. State & Local | 250 | 1,425 | 977 | |||||||||
Poland | 6 | 538 | — | |||||||||
Sweden | 73 | 109 | 155 | |||||||||
Brazil | (48 | ) | 617 | — | ||||||||
Korea | (211 | ) | 16 | 66 | ||||||||
Other | 169 | 75 | 355 | |||||||||
Ending Balance | $ | 6,523 | $ | 6,284 | $ | 3,504 | ||||||
• | The launch of new sport utility vehicles and fullsize pickup trucks beginning in 2006, which are expected to produce substantially higher revenues and profits than the predecessor models in these segments in 2006; | |
• | Reductions of GMNA’s cost structure as a result of the implementation of its restructuring plan; and |
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Note 13. | Income Taxes — (concluded) |
• | Participation in anticipated GMAC earnings in the United States |
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Note 14. | Property — Net |
Estimated | ||||||||||||
Useful Lives | December 31, | |||||||||||
(Years) | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Land | — | $ | 1,235 | $ | 1,222 | |||||||
Buildings and land improvements | 2-40 | 18,535 | 16,278 | |||||||||
Machinery and equipment | 3-30 | 51,017 | 48,344 | |||||||||
Construction in progress | — | 3,396 | 4,099 | |||||||||
Real estate, plants, and equipment | 74,183 | 69,943 | ||||||||||
Less accumulated depreciation | (43,440 | ) | (41,627 | ) | ||||||||
Real estate, plants, and equipment — net | 30,743 | 28,316 | ||||||||||
Special tools — net | 1-10 | 11,191 | 10,227 | |||||||||
Total property — net | 41,934 | 38,543 | ||||||||||
Financing and Insurance Operations | ||||||||||||
Equipment and other | 2-10 | 19 | 2,902 | |||||||||
Less accumulated depreciation | (10 | ) | (1,154 | ) | ||||||||
Total property — net | 9 | 1,748 | ||||||||||
Total consolidated property — net | $ | 41,943 | $ | 40,291 | ||||||||
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Depreciation and impairments | $ | 4,622 | $ | 5,517 | $ | 5,078 | ||||||
Amortization and impairment of special tools | 3,468 | 4,516 | 3,562 | |||||||||
Amortization of intangible assets | 69 | 68 | 39 | |||||||||
Total | 8,159 | 10,101 | 8,679 | |||||||||
Financing and Insurance Operations | ||||||||||||
Depreciation(a) | 2,776 | 5,680 | 5,512 | |||||||||
Amortization of intangible assets | 15 | 16 | 11 | |||||||||
Total | 2,791 | 5,696 | 5,523 | |||||||||
Total consolidated depreciation, impairments and amortization | $ | 10,950 | $ | 15,797 | $ | 14,202 | ||||||
(a) | Depreciation of property held by GMAC was ceased in April 2006 at the time the assets were classified as held for sale. |
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Note 15. | Goodwill and Intangible Assets |
Gross Carrying | Accumulated | Net Carrying | ||||||||||
Amount | Amortization | Amount | ||||||||||
(Dollars in millions) | ||||||||||||
December 31, 2006 | ||||||||||||
Amortizing intangible assets: | ||||||||||||
Patents and intellectual property rights | $ | 488 | $ | 169 | $ | 319 | ||||||
Non-amortizing intangible assets: | ||||||||||||
Goodwill | 799 | |||||||||||
Total goodwill and intangible assets | $ | 1,118 | ||||||||||
December 31, 2005 | ||||||||||||
Amortizing intangible assets: | ||||||||||||
Patents and intellectual property rights | $ | 488 | $ | 119 | $ | 369 | ||||||
Non-amortizing intangible assets: | ||||||||||||
Goodwill | 757 | |||||||||||
Prepaid pension asset | 743 | |||||||||||
Total goodwill and intangible assets | $ | 1,869 | ||||||||||
Financing and Insurance Operations | ||||||||||||
Amortizing intangible assets: | ||||||||||||
Customer lists and contracts | $ | 57 | $ | 41 | $ | 16 | ||||||
Trademarks and other | 35 | 20 | 15 | |||||||||
Total | $ | 92 | $ | 61 | $ | 31 | ||||||
Non-amortizing intangible assets: | ||||||||||||
Goodwill | 2,446 | |||||||||||
Total goodwill and intangible assets (Note 16) | 2,477 | |||||||||||
Total consolidated goodwill and intangible assets | $ | 4,346 | ||||||||||
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Note 15. | Goodwill and Intangible Assets — (concluded) |
Total | ||||||||||||||||||||
GMNA | GME | Auto | GMAC | Total | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Balance as of December 31, 2004 | $ | 154 | $ | 446 | $ | 600 | $ | 3,274 | $ | 3,874 | ||||||||||
Goodwill acquired during the period | 238 | — | 238 | 22 | 260 | |||||||||||||||
Impairment(1) | — | — | — | (712 | ) | (712 | ) | |||||||||||||
Reclassification of Commercial Mortgage goodwill to assets held for sale(2) | — | — | — | (59 | ) | (59 | ) | |||||||||||||
Effect of foreign currency translation and other | (9 | ) | (72 | ) | (81 | ) | (79 | ) | (160 | ) | ||||||||||
Balance as of December 31, 2005 | 383 | 374 | 757 | 2,446 | 3,203 | |||||||||||||||
Goodwill acquired during the period(3) | — | — | — | 151 | 151 | |||||||||||||||
Impairment(4) | (25 | ) | — | (25 | ) | (828 | ) | (853 | ) | |||||||||||
Transfer of business unit | (59 | ) | 59 | — | — | — | ||||||||||||||
GMAC divestiture(5) | — | — | — | (1,827 | ) | (1,827 | ) | |||||||||||||
Effect of foreign currency translation and other | — | 67 | 67 | 58 | 125 | |||||||||||||||
Balance as of December 31, 2006 | $ | 299 | $ | 500 | $ | 799 | $ | — | $ | 799 | ||||||||||
(1) | In 2005, GMAC recorded an impairment charge of $712 million, related to the goodwill in its commercial mortgage business. | |
(2) | At December 31, 2005, $59 million of GMAC’s Commercial Mortgage goodwill was reclassified to assets held for sale. | |
(3) | During 2006, GMAC recorded goodwill of $151 million primarily as a result of the purchase of a regional insurance company. | |
(4) | With the changes in key personnel in the Commercial Finance business, GMAC initiated a goodwill impairment test, in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS No. 142), outside of the annual goodwill impairment testing period. A thorough review of the business by the new leadership, with a particular focus on long-term strategy, was performed. As a result of the review, the operating divisions were reorganized, and the decision was made to implement a different exit strategy for the workout portfolio and to exit product lines with lower returns. These decisions had a significant impact on expected asset levels and growth rate assumptions used to estimate the fair value of the business. In particular, the analysis performed during the third quarter of 2006 incorporates management’s decision to discontinue activity in the equipment finance business, which had a portfolio of over $1 billion, representing approximately 20% of Commercial Finance business average assets outstanding during 2006. The fair value of the Commercial Finance business was determined using an internally developed discounted cash flow analysis based on five year projected net income and a market driven terminal value multiple. Based upon the results of the assessment, an impairment charge of $828 million was recorded in 2006. | |
(5) | On November 30, 2006, GM completed the sale of a 51% controlling interest in GMAC (See Note 4). |
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Note 16. | Other Assets |
December 31, | ||||||||
2006 | 2005 | |||||||
(Dollars in millions) | ||||||||
Derivative assets | $ | 2,080 | $ | 1,938 | ||||
Other | 2,504 | 2,926 | ||||||
Total other assets | $ | 4,584 | 4,864 | |||||
Financing and Insurance Operations | ||||||||
Mortgage servicing rights | $ | — | $ | 4,015 | ||||
Premiums and other insurance receivables | — | 1,873 | ||||||
Deferred policy acquisition costs | — | 1,696 | ||||||
Derivative assets | — | 3,000 | ||||||
Intangible assets | — | 2,477 | ||||||
Investment in GMAC Preferred Membership Interests (Note 7) | 1,601 | — | ||||||
Property | 9 | 1,748 | ||||||
Cash deposits held for securitization trusts | 709 | 2,907 | ||||||
Restricted cash collections for securitization trusts | 434 | 1,871 | ||||||
Other | (484 | ) | 5,570 | |||||
Total other assets | $ | 2,269 | $ | 25,157 | ||||
Total consolidated other assets | $ | 6,853 | $ | 30,021 | ||||
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Note 17. | Accrued Expenses, Other Liabilities, and Deferred Income Taxes |
December 31, | ||||||||
2006 | 2005 | |||||||
(Dollars in millions) | ||||||||
Dealer and customer allowances, claims and discounts | $ | 10,142 | $ | 11,593 | ||||
Deferred revenue and deposits from rental car companies | 12,127 | 13,527 | ||||||
Policy, product warranty, and recall campaigns | 9,064 | 9,135 | ||||||
Delphi contingent liability | 1,451 | 5,500 | ||||||
Payrolls and employee benefits excluding postemployment benefits | 4,013 | 3,970 | ||||||
Self-insurance reserves | 1,922 | 1,827 | ||||||
Taxes | 1,761 | 2,430 | ||||||
Postemployment benefits — plant idling | 1,269 | 2,012 | ||||||
Postretirement benefits other than pensions | 275 | 4,154 | ||||||
Other | 9,158 | 8,979 | ||||||
Total accrued expenses, other liabilities, and deferred income taxes | $ | 51,182 | $ | 63,127 | ||||
Current | $ | 35,225 | $ | 42,697 | ||||
Non-current | 15,957 | 20,430 | ||||||
Total accrued expenses, other liabilities, and deferred income taxes | $ | 51,182 | $ | 63,127 | ||||
Financing and Insurance Operations | ||||||||
Unpaid insurance losses, loss adjustment expenses, and unearned insurance premiums | $ | 125 | $ | 7,588 | ||||
Interest | 46 | 3,057 | ||||||
Deposits | — | 8,367 | ||||||
Interest rate derivatives | 2 | 2,224 | ||||||
Deferred income taxes | — | 1,184 | ||||||
Other | 752 | 3,905 | ||||||
Total other liabilities and deferred income taxes | $ | 925 | $ | 26,325 | ||||
December 31, | ||||||||
2006 | 2005 | |||||||
(Dollars in millions) | ||||||||
Beginning balance | $ | 9,135 | $ | 9,315 | ||||
Payments | (4,463 | ) | (4,696 | ) | ||||
Increase in liability (warranties issued during period) | 4,517 | 5,159 | ||||||
Adjustments to liability (pre-existing warranties) | (570 | ) | (371 | ) | ||||
Effect of foreign currency translation | 445 | (272 | ) | |||||
Ending balance | $ | 9,064 | $ | 9,135 | ||||
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Note 18. | Short-Term Borrowings and Long-Term Debt |
December 31, | ||||||||
2006 | 2005 | |||||||
Unsecured bonds | $ | 16,119 | $ | 16,406 | ||||
Convertible bonds | 8,050 | 8,050 | ||||||
Foreign-currency-denominated bonds | 4,479 | 3,996 | ||||||
Other long-term debt | 6,824 | 4,783 | ||||||
Total debt | 35,472 | 33,235 | ||||||
Less current portion of long-term debt | (2,341 | ) | (672 | ) | ||||
Fair value adjustment(a) | (64 | ) | 17 | |||||
Total long-term debt | $ | 33,067 | $ | 32,580 | ||||
(a) | To adjust hedged fixed rate debt for fair value changes attributable to the hedged risk in accordance with SFAS No. 133. |
• | If the closing sale price of GM’s $12/3 par value common stock exceeds 120% of the conversion price for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter; or | |
• | If during the five business day period after any nine consecutive trading day period in which the trading price of the debentures for each day of such period was less than 95% of the product of the closing sale price of |
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Note 18. | Short-Term Borrowings and Long-Term Debt — (continued) |
GM’s $12/3 par value common stock multiplied by the number of shares issuable upon conversion of $25.00 principal amount of the debentures; or |
• | If the debentures have been called for redemption (Series A on or after March 6, 2007, Series B on or after March 6, 2009 and Series C on or after July 20, 2010); or |
• | If the investor exercises its right to require GM to repurchase all or a portion of the debentures on the specified repurchase dates for each security (Series A: March 6, 2007, 2012, 2017, 2022, or 2027; Series B: March 6, 2014, 2019, 2024, or 2029; Series C: July 15, 2018, 2023 or 2028) or, if any of those days is not a business day, the next succeeding business day. |
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Note 18. | Short-Term Borrowings and Long-Term Debt — (concluded) |
December 31, | ||||||||
2006 | 2005 | |||||||
Short-term debt: | ||||||||
Commercial paper | $ | — | $ | 528 | ||||
Demand notes | — | 6,047 | ||||||
Bank loans and overdrafts | 23 | 6,652 | ||||||
Repurchase agreements and other | — | 27,744 | ||||||
Long-term debt: | ||||||||
Senior indebtedness | — | 212,537 | ||||||
Related party — GMAC | 472 | — | ||||||
Secured debt | 8,943 | — | ||||||
Total debt | $ | 9,438 | $ | 253,508 | ||||
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Note 19. | Pensions and Other Postretirement Benefits |
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Note 19. | Pensions and Other Postretirement Benefits — (continued) |
Prior to | After Application | |||||||||||
Application of SFAS No. 158 | Adjustments | of SFAS No. 158 | ||||||||||
(Dollars in millions) | ||||||||||||
Deferred income taxes and other current assets | $ | 1,122 | $ | 10,835 | $ | 11,957 | ||||||
Intangible assets, net | 1,578 | (460 | ) | 1,118 | ||||||||
Prepaid pension | 33,949 | (16,583 | ) | 17,366 | ||||||||
Total assets | 192,400 | (6,208 | ) | 186,192 | ||||||||
Accrued expenses | 38,842 | (3,617 | ) | 35,225 | ||||||||
Postretirement benefits other than pensions | 36,050 | 14,036 | 50,086 | |||||||||
Pensions | 11,541 | 393 | 11,934 | |||||||||
Other liabilities and deferred income taxes | 16,031 | (74 | ) | 15,957 | ||||||||
Total liabilities | 179,705 | 10,738 | 190,443 | |||||||||
Accumulated other comprehensive loss | (5,108 | ) | (16,946 | ) | (22,126 | ) | ||||||
Total stockholders’ equity | 11,505 | (16,946 | ) | (5,441 | ) | |||||||
Total liabilities, minority interests and stockholders’ equity | $ | 192,400 | $ | (6,208 | ) | $ | 186,192 |
December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
U.S. hourly and salaried | $ | 2 | $ | — | $ | — | ||||||
Other U.S. | 78 | 125 | 117 | |||||||||
Non-U.S. | 889 | 708 | 802 |
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Note 19. | Pensions and Other Postretirement Benefits — (continued) |
U.S. Plans | Non-U.S. Plans | Non-U.S. | ||||||||||||||||||||||||||||||
Pension Benefits | Pension Benefits | U.S. Other Benefits* | Other Benefits* | |||||||||||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | |||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Change in benefit obligations | ||||||||||||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 89,133 | $ | 90,760 | $ | 20,850 | $ | 18,056 | $ | 81,181 | $ | 73,772 | $ | 3,760 | $ | 3,702 | ||||||||||||||||
Service cost | 727 | 1,117 | 484 | 345 | 551 | 702 | 53 | 50 | ||||||||||||||||||||||||
Interest cost | 4,965 | 4,883 | 967 | 965 | 3,929 | 4,107 | 190 | 218 | ||||||||||||||||||||||||
Plan participants’ contributions | 19 | 22 | 30 | 27 | 129 | 88 | — | 1 | ||||||||||||||||||||||||
Amendments | (1,960 | ) | (65 | ) | (669 | ) | 113 | (15,091 | ) | — | — | — | ||||||||||||||||||||
Actuarial (gains) losses | (3,682 | ) | (975 | ) | 524 | 2,233 | (6,468 | ) | 6,720 | (145 | ) | (200 | ) | |||||||||||||||||||
Benefits paid | (7,013 | ) | (6,695 | ) | (1,049 | ) | (922 | ) | (3,945 | ) | (4,208 | ) | (133 | ) | (118 | ) | ||||||||||||||||
Exchange rate movements | — | — | 1,250 | (942 | ) | — | — | — | — | |||||||||||||||||||||||
Curtailments, settlements, and other | 3,233 | 86 | 151 | 975 | 4,012 | — | (18 | ) | 107 | |||||||||||||||||||||||
Benefit obligation at end of year | 85,422 | 89,133 | 22,538 | 20,850 | 64,298 | 81,181 | 3,707 | 3,760 | ||||||||||||||||||||||||
Change in plan assets | ||||||||||||||||||||||||||||||||
Fair value of plan assets at beginning of year | 95,250 | 90,886 | 10,063 | 9,023 | 20,282 | 16,016 | — | — | ||||||||||||||||||||||||
Actual return on plan assets | 13,384 | 10,924 | 1,280 | 1,382 | 1,834 | 2,258 | — | — | ||||||||||||||||||||||||
Employer contributions | 80 | 125 | 810 | 645 | (5,177 | ) | 2,008 | — | — | |||||||||||||||||||||||
Plan participants’ contributions | 19 | 22 | 30 | 27 | — | — | — | — | ||||||||||||||||||||||||
Benefits paid | (7,013 | ) | (6,695 | ) | (1,049 | ) | (922 | ) | — | — | — | — | ||||||||||||||||||||
Exchange rate movements | — | — | 435 | (119 | ) | — | — | — | — | |||||||||||||||||||||||
Curtailments, settlements, and other | (328 | ) | (12 | ) | (63 | ) | 27 | — | — | — | — | |||||||||||||||||||||
Fair value of plan assets at end of year | 101,392 | 95,250 | 11,506 | 10,063 | 16,939 | 20,282 | — | — | ||||||||||||||||||||||||
Funded status(1) | 15,970 | 6,117 | (11,032 | ) | (10,787 | ) | (47,359 | ) | (60,899 | ) | (3,707 | ) | (3,760 | ) | ||||||||||||||||||
Unrecognized actuarial loss | — | 25,538 | — | 6,554 | — | 30,592 | — | 1,698 | ||||||||||||||||||||||||
Unrecognized prior service cost (credit) | — | 4,616 | — | 770 | — | (714 | ) | — | (584 | ) | ||||||||||||||||||||||
Unrecognized transition obligation | — | — | — | 28 | — | — | — | — | ||||||||||||||||||||||||
Employer contributions/withdrawals in fourth quarter | — | — | 142 | 63 | (60 | ) | (1,176 | ) | — | — | ||||||||||||||||||||||
Benefits paid in fourth quarter | — | — | — | — | 765 | 846 | — | — | ||||||||||||||||||||||||
Curtailments and settlements in fourth quarter | — | — | 17 | — | — | — | — | — | ||||||||||||||||||||||||
Net amount recognized | $ | 15,970 | $ | 36,271 | $ | (10,873 | ) | $ | (3,372 | ) | $ | (46,654 | ) | $ | (31,351 | ) | $ | (3,707 | ) | $ | (2,646 | ) | ||||||||||
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U.S. Plans | Non-U.S. Plans | Non-U.S. | ||||||||||||||||||||||||||||||
Pension Benefits | Pension Benefits | U.S. Other Benefits* | Other Benefits* | |||||||||||||||||||||||||||||
2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | |||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Note 19. Pensions and Other Postretirement Benefits — (continued) | ||||||||||||||||||||||||||||||||
Amounts recognized in the consolidated balance sheet consist of: | ||||||||||||||||||||||||||||||||
Prepaid benefit cost | $ | 37,280 | $ | 296 | $ | — | $ | — | ||||||||||||||||||||||||
Accrued benefit liability | (1,177 | ) | (10,138 | ) | (31,351 | ) | (2,646 | ) | ||||||||||||||||||||||||
Intangible asset | — | 743 | — | — | ||||||||||||||||||||||||||||
Accumulated other comprehensive income | 168 | 5,727 | — | — | ||||||||||||||||||||||||||||
Net amount recognized | $ | 36,271 | $ | (3,372 | ) | $ | (31,351 | ) | $ | (2,646 | ) | |||||||||||||||||||||
Noncurrent Asset | $ | 17,150 | $ | 216 | $ | — | $ | — | ||||||||||||||||||||||||
Current liability | (85 | ) | (250 | ) | (134 | ) | (141 | ) | ||||||||||||||||||||||||
Noncurrent liability | (1,095 | ) | (10,839 | ) | (46,520 | ) | (3,566 | ) | ||||||||||||||||||||||||
$ | 15,970 | $ | (10,873 | ) | $ | (46,654 | ) | $ | (3,707 | ) | ||||||||||||||||||||||
Amounts recognized in accumulated other comprehensive income consist of: | ||||||||||||||||||||||||||||||||
Net actuarial loss | $ | 15,483 | $ | 6,478 | $ | 21,957 | $ | 1,406 | ||||||||||||||||||||||||
Net prior service cost (credit) | 1,165 | 13 | (12,450 | ) | (501 | ) | ||||||||||||||||||||||||||
Transition obligation (asset) | — | 25 | — | — | ||||||||||||||||||||||||||||
$ | 16,648 | $ | 6,516 | $ | 9,507 | $ | 905 | |||||||||||||||||||||||||
* | Table does not include extended disability plans with a total APBO of $866 million at December 31, 2006 and $1.1 billion at December 31, 2005 due to materiality. |
(1) | Includes overfunded status of the combined U.S. hourly and salaried pension plans of $17.1 billion and $7.5 billion as of December 31, 2006 and 2005. |
U.S. Plans | Non-U.S. Plans | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Accumulated Benefit Obligation | $ | 85,422 | $ | 86,885 | $ | 21,926 | $ | 19,923 | ||||||||
Plans with ABO in excess of plan assets | ||||||||||||||||
ABO | $ | 1,180 | $ | 1,207 | $ | 21,429 | $ | 19,441 | ||||||||
Fair value of plan assets | — | 30 | 10,769 | 9,387 | ||||||||||||
Plans with PBO in excess of plan assets | ||||||||||||||||
PBO | $ | 1,180 | $ | 1,703 | $ | 22,270 | $ | 20,724 | ||||||||
Fair value of plan assets | — | 295 | 11,155 | 9,759 |
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Note 19. | Pensions and Other Postretirement Benefits — (continued) |
Non-U.S. Plans | Non-U.S. | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. Plans Pension Benefits | Pension Benefits | U.S. Other Benefits* | Other Benefits* | |||||||||||||||||||||||||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | 2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
Components of expense | ||||||||||||||||||||||||||||||||||||||||||||||||
Service cost | $ | 727 | $ | 1,117 | $ | 1,097 | $ | 484 | $ | 345 | $ | 247 | $ | 551 | $ | 702 | $ | 566 | $ | 53 | $ | 50 | $ | 39 | ||||||||||||||||||||||||
Interest cost | 4,965 | 4,883 | 5,050 | 966 | 965 | 892 | 3,929 | 4,107 | 3,726 | 190 | 218 | 201 | ||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (8,167 | ) | (7,898 | ) | (7,823 | ) | (842 | ) | (740 | ) | (669 | ) | (1,593 | ) | (1,684 | ) | (1,095 | ) | — | — | — | |||||||||||||||||||||||||||
Amortization of prior service cost (credit) | 785 | 1,164 | 1,279 | 78 | 102 | 93 | (1,071 | ) | (70 | ) | (87 | ) | (82 | ) | 8 | 8 | ||||||||||||||||||||||||||||||||
Amortization of transition obligation/(asset) | — | — | — | 7 | 6 | 7 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Recognized net actuarial loss | 1,126 | 2,065 | 1,857 | 399 | 281 | 188 | 1,986 | 2,250 | 1,138 | 133 | 88 | 62 | ||||||||||||||||||||||||||||||||||||
Curtailments, settlements, and other | 4,260 | 115 | 34 | 140 | 114 | 204 | (505 | ) | — | — | (9 | ) | 2 | — | ||||||||||||||||||||||||||||||||||
Net expense | $ | 3,696 | $ | 1,446 | $ | 1,494 | $ | 1,232 | $ | 1,073 | $ | 962 | $ | 3,297 | $ | 5,305 | $ | 4,248 | $ | 285 | $ | 366 | $ | 310 | ||||||||||||||||||||||||
Weighted-average assumptions used to determine benefit obligations at December 31(1) | ||||||||||||||||||||||||||||||||||||||||||||||||
Discount rate | 5.90 | % | 5.70 | % | 5.60 | % | 4.76 | % | 4.72 | % | 5.61 | % | 5.90 | % | 5.45 | % | 5.75 | % | 5.00 | % | 5.00 | % | 6.00 | % | ||||||||||||||||||||||||
Rate of compensation increase | 5.00 | % | 4.9 | % | 5.0 | % | 3.0 | % | 3.1 | % | 3.2 | % | 4.6 | % | 4.2 | % | 3.9 | % | 4.0 | % | 4.0 | % | 4.0 | % | ||||||||||||||||||||||||
Weighted-average assumptions used to determine net expense for years ended December 31(2) | ||||||||||||||||||||||||||||||||||||||||||||||||
Discount rate | 5.70 | % | 5.60 | % | 6.00 | % | 4.72 | % | 5.61 | % | 6.12 | % | 5.45 | % | 5.75 | % | 6.25 | % | 5.00 | % | 6.00 | % | 6.75 | % | ||||||||||||||||||||||||
Expected return on plan assets | 9.0 | % | 9.0 | % | 9.0 | % | 8.4 | % | 8.5 | % | 8.4 | % | 8.8 | % | 8.8 | % | 8.0 | % | — | — | — | |||||||||||||||||||||||||||
Rate of compensation increase | 4.9 | % | 5.0 | % | 5.0 | % | 3.1 | % | 3.2 | % | 3.4 | % | 4.2 | % | 3.9 | % | 4.2 | % | 4.0 | % | 4.0 | % | 4.0 | % |
* | Table does not include extended disability plans with a total net expense of $105 million (excluding curtailments) in 2006, $79 million in 2005, and $64 million in 2004 due to materiality. |
(1) | Determined as of end of year. |
(2) | Determined as of beginning of year. Appropriate discount rates were used during 2006 to measure the effects of curtailments and plan amendments on various plans. |
U.S. Plans | Non-U.S. Plans | U.S. | Non-U.S. | |||||||||||||
Pension Benefits | Pension Benefits | Other Benefits | Other Benefits | |||||||||||||
Amortization of prior service cost (credit) | $ | 519 | $ | 27 | $ | (1,845 | ) | $ | (82 | ) | ||||||
Amortization of transition obligation (asset) | — | 7 | — | — | ||||||||||||
Recognized net actuarial loss (gain) | 810 | 329 | 1,357 | 115 | ||||||||||||
$ | 1,329 | $ | 363 | $ | (488 | ) | $ | 33 | ||||||||
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Note 19. | Pensions and Other Postretirement Benefits — (continued) |
158
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Note 19. | Pensions and Other Postretirement Benefits — (continued) |
Changes in Benefit Obligation | ||||
Benefit obligation at beginning of year | $ | — | ||
Interest cost | 56 | |||
Amendments | 2,876 | |||
Actuarial (gains)/losses | 7 | |||
Benefits paid | (119 | ) | ||
Other | (15 | ) | ||
Benefit obligation at end of year | $ | 2,805 | ||
Changes in Plan Assets | ||||
Fair value at beginning of year | $ | — | ||
GM contributions | 1,000 | |||
Wage deferral contributions | 4 | |||
Mitigation payments on behalf of GM retirees | (119 | ) | ||
Actual return on plan assets | 29 | |||
Fair value at end of year | $ | 914 | ||
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Note 19. | Pensions and Other Postretirement Benefits — (continued) |
December 31, | ||||||||
Assumed Health-Care Trend Rates at December 31 | 2006 | 2005 | ||||||
Initial Health-care Cost Trend Rate | 9.0 | % | 10.0 | % | ||||
Ultimate Health-care Cost Trend Rate | 5.0 | % | 5.0 | % | ||||
Number of Years to Ultimate Trend Rate | 6 | 6 |
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Note 19. | Pensions and Other Postretirement Benefits — (continued) |
161
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Plan Assets | ||||||||||||||||||||||||
Primary | ||||||||||||||||||||||||
Plan Assets | Non-U.S. | |||||||||||||||||||||||
U.S. Pension | Pension | |||||||||||||||||||||||
Plans Actual | Plans Actual | Plan Assets OPEB | ||||||||||||||||||||||
Percentage of | Percentage of | Actual Percentage of | ||||||||||||||||||||||
Plan Assets | Plan Assets | Plan Assets | ||||||||||||||||||||||
Asset Category | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||
Equity Securities | 38 | % | 47 | % | 60 | % | 61 | % | 54 | % | 52 | % | ||||||||||||
Debt Securities | 43 | % | 32 | % | 31 | % | 31 | % | 28 | % | 31 | % | ||||||||||||
Real Estate | 8 | % | 7 | % | 9 | % | 8 | % | 4 | % | 3 | % | ||||||||||||
Other | 11 | % | 14 | % | 0 | % | 0 | % | 14 | % | 14 | % | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
Pension Benefits* | Other Benefits | Non-U.S. Other Benefits | ||||||||||||||||||||||
Primary Non- | Gross Benefit | Gross Medicare | Gross Benefit | Gross Medicare | ||||||||||||||||||||
U.S. Plans | U.S. Plans | Payments | Part D Receipts | Payments | Part D Receipts | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
2007 | 7,270 | 956 | 3,994 | 243 | 146 | — | ||||||||||||||||||
2008 | 7,142 | 1,027 | 4,163 | 268 | 157 | — | ||||||||||||||||||
2009 | 7,037 | 1,056 | 4,327 | 292 | 167 | — | ||||||||||||||||||
2010 | 6,959 | 1,097 | 4,475 | 314 | 177 | — | ||||||||||||||||||
2011 | 6,890 | 1,140 | 4,589 | 335 | 187 | — | ||||||||||||||||||
2012-2016 | $ | 33,356 | $ | 6,161 | $ | 24,050 | $ | 1,966 | $ | 1,087 | — |
* | Benefits for most U.S. pension plans and certain non-U.S. pension plans are paid out of plan assets rather than cash. |
Note 20. | Commitments and Contingent Matters |
2012 | ||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | and thereafter | |||||||||||||||||||
Minimum commitments | $ | 257 | $ | 748 | $ | 440 | 141 | $ | 94 | $ | 824 | |||||||||||||
Sublease income | (28 | ) | (27 | ) | (27 | ) | (27 | ) | (27 | ) | (444 | ) | ||||||||||||
Net minimum commitments | $ | 229 | $ | 721 | $ | 413 | $ | 114 | $ | 67 | $ | 380 | ||||||||||||
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Note 20. | Commitments and Contingent Matters — (continued) |
2012 | ||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | and after | |||||||||||||||||||
Minimum commitments | $ | 765 | $ | 678 | $ | 651 | $ | 642 | $ | 553 | $ | 3,081 | ||||||||||||
Sublease income | (230 | ) | (222 | ) | (217 | ) | (213 | ) | (212 | ) | (2,293 | ) | ||||||||||||
Net minimum commitments | $ | 535 | $ | 456 | $ | 434 | $ | 429 | $ | 341 | $ | 788 | ||||||||||||
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Note 20. | Commitments and Contingent Matters — (continued) |
164
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Note 20. | Commitments and Contingent Matters — (continued) |
165
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Note 20. | Commitments and Contingent Matters — (continued) |
166
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Note 20. | Commitments and Contingent Matters — (concluded) |
167
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Note 20. | Commitments and Contingent Matters — (concluded) |
Note 21. | Stockholders’ Equity |
December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Foreign currency translation adjustments | $ | (1,965 | ) | $ | (2,140 | ) | $ | (1,211 | ) | |||
Net unrealized gain on derivatives | 359 | 608 | 575 | |||||||||
Net unrealized gain on securities | 282 | 786 | 853 | |||||||||
Defined benefit plans | (20,802 | ) | — | — | ||||||||
Minimum pension liability adjustment | — | (3,789 | ) | (3,031 | ) | |||||||
Accumulated other comprehensive income (loss) | $ | (22,126 | ) | $ | (4,535 | ) | $ | (2,814 | ) | |||
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Note 21. | Stockholders’ Equity — (concluded) |
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||
2006 | 2005 | 2004 | ||||||||||||||||||||||||||||||||||
Tax | Tax | Tax | ||||||||||||||||||||||||||||||||||
Pre-tax | Expense | Net | Pre-tax | Expense | Net | Pre-tax | Expense | Net | ||||||||||||||||||||||||||||
Amount | (Credit) | Amount | Amount | (Credit) | Amount | Amount | (Credit) | Amount | ||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | $ | 370 | $ | 195 | $ | 175 | $ | (975 | ) | $ | (46 | ) | $ | (929 | ) | $ | 1,192 | $ | (85 | ) | $ | 1,277 | ||||||||||||||
Unrealized gain on securities: | ||||||||||||||||||||||||||||||||||||
Unrealized holding gain (loss) | 196 | 69 | 127 | 146 | 51 | 95 | 378 | 132 | 246 | |||||||||||||||||||||||||||
Reclassification adjustment | (971 | ) | (340 | ) | (631 | ) | (249 | ) | (87 | ) | (162 | ) | (67 | ) | (23 | ) | (44 | ) | ||||||||||||||||||
Net unrealized gain (loss) | (775 | ) | (271 | ) | (504 | ) | (103 | ) | (36 | ) | (67 | ) | 311 | 109 | 202 | |||||||||||||||||||||
Minimum pension liability adjustment | (103 | ) | (36 | ) | (67 | ) | (1,166 | ) | (408 | ) | (758 | ) | (878 | ) | (307 | ) | (571 | ) | ||||||||||||||||||
Net unrealized gain (loss) on derivatives | (383 | ) | (134 | ) | (249 | ) | 51 | 18 | 33 | 712 | 249 | 463 | ||||||||||||||||||||||||
Other comprehensive income (loss) | $ | (891 | ) | $ | (246 | ) | $ | (645 | ) | $ | (2,193 | ) | $ | (472 | ) | $ | (1,721 | ) | $ | 1,337 | $ | (34 | ) | $ | 1,371 | |||||||||||
Note 22. | Earnings (Loss) Per Share |
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Per Share | ||||||||||||
Income (loss) | Shares | Amount | ||||||||||
Year ended December 31, 2006 | ||||||||||||
Basic EPS | ||||||||||||
Income (loss) before cumulative effect of a change in accounting principle attributable to common stock | $ | (1,978 | ) | 566 | $ | (3.50 | ) | |||||
Effect of Dilutive Securities | ||||||||||||
Assumed exercise of dilutive stock options | — | — | — | |||||||||
Diluted EPS | ||||||||||||
Adjusted income (loss) attributable to common stock | $ | (1,978 | ) | 566 | $ | (3.50 | ) | |||||
Year ended December 31, 2005 | ||||||||||||
Basic EPS | ||||||||||||
Income (loss) before cumulative effect of a change in accounting principle attributable to common stock | $ | (10,308 | ) | 566 | $ | (18.23 | ) | |||||
Effect of Dilutive Securities | ||||||||||||
Assumed exercise of dilutive stock options | — | — | — | |||||||||
Diluted EPS | ||||||||||||
Adjusted income (loss) attributable to common stock | $ | (10,308 | ) | 566 | $ | (18.23 | ) | |||||
Year ended December 31, 2004 | ||||||||||||
Basic EPS | ||||||||||||
Income before cumulative effect of a change in accounting principle attributable to common stock | $ | 2,701 | 565 | $ | 4.78 | |||||||
Effect of Dilutive Securities | ||||||||||||
Assumed exercise of dilutive stock options | — | 2 | (.02 | ) | ||||||||
Diluted EPS | ||||||||||||
Adjusted income attributable to common stock | $ | 2,701 | 567 | $ | 4.76 | |||||||
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Note 23. | Derivative Financial Instruments and Risk Management |
171
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Note 23. | Derivative Financial Instruments and Risk Management — (concluded) |
172
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Note 24. | Fair Value of Financial Instruments — (concluded) |
December 31, | ||||||||||||||||
2006 | 2005 | |||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | |||||||||||||
Assets | ||||||||||||||||
Derivative assets | $ | 2,080 | $ | 2,080 | $ | 1,938 | $ | 1,938 | ||||||||
Liabilities | ||||||||||||||||
Long-term debt(1) | $ | 33,067 | $ | 28,877 | $ | 32,580 | $ | 25,447 | ||||||||
Derivative liabilities | $ | 916 | $ | 916 | $ | 859 | $ | 859 | ||||||||
Financing and Insurance Operations | ||||||||||||||||
Assets | ||||||||||||||||
Finance receivables — net(2) | $ | — | $ | — | $ | 180,849 | $ | 181,146 | ||||||||
Derivative assets | $ | 35 | $ | 35 | $ | 3,000 | $ | 3,000 | ||||||||
Loans held for sale(3) | $ | — | $ | — | $ | 21,865 | $ | 21,934 | ||||||||
Other assets(4) | $ | 1,601 | $ | 1,601 | $ | — | $ | — | ||||||||
Liabilities | ||||||||||||||||
Debt(1) | $ | 9,438 | $ | 9,438 | $ | 253,508 | $ | 245,247 | ||||||||
Derivative liabilities | $ | 2 | $ | 2 | $ | 2,444 | $ | 2,444 | ||||||||
Other liabilities | $ | — | $ | — | $ | 5,930 | $ | 5,930 |
(1) | Long-term debt has an estimated fair value based on quoted market prices for the same or similar issues or based on the current rates offered to GM for debt of similar remaining maturities. Estimated values of Industrial Development Bonds, included in long-term debt, were based on quoted market prices for the same or similar issues. | |
(2) | The fair value was estimated by discounting the future cash flows using applicable spreads to approximate current rates applicable to each category of the receivables. | |
(3) | The fair value of loans held for sale is based upon actual prices on recent sales of loans and securities to investors and projected prices obtained through investor indications considering interest rates, loan type and credit quality. | |
(4) | The fair value of the GMAC Preferred Membership Interest was estimated by discounting the future cash flows considering dividend rate, interest rate, and credit spreads. |
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Note 25. | Stock Incentive Plans — (continued) |
2006 | 2005 | 2004 | ||||||||||||||||||||||
GM | GM | GM | GM | GM | GM | |||||||||||||||||||
SIP | SSOP | SIP | SSOP | SIP | SSOP | |||||||||||||||||||
Interest rate | 4.66 | % | — | % | 3.8 | % | — | % | 3.1 | % | 3.1 | % | ||||||||||||
Expected life (years) | 6.0 | — | 6.0 | — | 5.0 | 5.0 | ||||||||||||||||||
Expected volatility | 47.9 | % | — | % | 32.5 | % | — | % | 33.9 | % | 33.9 | % | ||||||||||||
Dividend yield | 4.7 | % | — | % | 5.5 | % | — | % | 3.7 | % | 3.7 | % |
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Note 25. | Stock Incentive Plans — (continued) |
2006 | 2005 | 2004 | ||||||||||
Interest rate | 4.63 | % | 3.74 | % | 3.06 | % | ||||||
Expected life (years) | 6.0 | 6.0 | 5.0 | |||||||||
Expected volatility | 48.4 | % | 32.4 | % | 33.9 | % | ||||||
Dividend yield | 4.78 | % | 5.50 | % | 3.71 | % |
GMSIP | ||||||||||||||||
$12/3 Par Value Common | ||||||||||||||||
Weighted | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Shares Under | Exercise | Contractual | Intrinsic | |||||||||||||
Option | Price | Term | Value | |||||||||||||
Options outstanding at January 1, 2006 | 84,130,586 | $ | 53.11 | |||||||||||||
Granted | 2,841,686 | $ | 21.33 | |||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited or expired | 5,317,094 | $ | 46.78 | |||||||||||||
Options outstanding at December 31, 2006 | 81,655,178 | $ | 52.41 | 4.6 | $ | 26,324,061 | ||||||||||
Options exercisable at December 31, 2006 | 71,561,211 | $ | 54.67 | 4.1 | $ | 30,805 | ||||||||||
GMSSOP | ||||||||||||||||
$12/3 Par Value Common | ||||||||||||||||
Weighted | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Shares Under | Exercise | Contractual | Intrinsic | |||||||||||||
Option | Price | Term | Value | |||||||||||||
Options outstanding at January 1, 2006 | 27,213,635 | $ | 55.19 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | — | — | ||||||||||||||
Forfeited or expired | 629,740 | $ | 53.64 | |||||||||||||
Options outstanding at December 31, 2006 | 26,583,895 | $ | 55.23 | 4.3 | — | |||||||||||
Options exercisable at December 31, 2006 | 26,583,895 | $ | 55.23 | 4.3 | — | |||||||||||
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Note 25. | Stock Incentive Plans — (continued) |
Weighted- | ||||||||
Average | ||||||||
Grant-Date | ||||||||
Shares | Fair Value | |||||||
Nonvested at January 1, 2006 | 15,923,106 | $ | 9.28 | |||||
Granted | 2,841,686 | 7.19 | ||||||
Vested | 8,431,121 | 9.44 | ||||||
Forfeited | 239,704 | 8.61 | ||||||
Nonvested at December 31, 2006 | 10,093,967 | $ | 8.57 | |||||
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Note 25. | Stock Incentive Plans — (concluded) |
2006 | 2005 | |||||||
Expected volatility | 38.1 | % | 37.6 | % | ||||
Expected dividends | N/A | N/A | ||||||
Expected term (years) | 2.0 | 1.0 | ||||||
Risk-free interest rate | 5.24 | % | 5.13 | % |
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Note 26. | Supplemental Information for Statements of Cash Flows |
Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Restated | ||||||||||||
(Dollars in millions) | ||||||||||||
Increase (decrease) in other operating assets and liabilities were as follows: | ||||||||||||
Accounts receivable | $ | (242 | ) | $ | 63 | $ | (268 | ) | ||||
Other receivables | (2,983 | ) | 4,092 | 419 | ||||||||
Prepaid expenses and other deferred charges | 303 | (83 | ) | 42 | ||||||||
Inventories | 377 | (1,464 | ) | (140 | ) | |||||||
Other assets | (173 | ) | (32 | ) | (153 | ) | ||||||
Accounts payable | 418 | (122 | ) | 2,434 | ||||||||
Deferred taxes and income taxes payable | (4,241 | ) | (6,386 | ) | (1,145 | ) | ||||||
Accrued expenses and other liabilities | (5,892 | ) | (793 | ) | (1,783 | ) | ||||||
Fleet rental — acquisitions | (8,701 | ) | (9,452 | ) | (7,846 | ) | ||||||
Fleet rental — liquidations | 8,526 | 7,379 | 6,686 | |||||||||
Total | $ | (12,608 | ) | $ | (6,798 | ) | $ | (1,754 | ) | |||
Cash paid for interest | $ | 17,415 | $ | 15,815 | $ | 11,395 |
Note 27. | Segment Reporting |
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GM | Total | Other | Total | Corporate | ||||||||||||||||||||||||||||||||||||
GMNA | GME | LAAM | GMAP | GMA | GMAC(c) | Financing(d) | Financing | & Other | Total | |||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||||||||||||||||||
Automotive sales | ||||||||||||||||||||||||||||||||||||||||
External customers | $ | 115,756 | $ | 31,405 | $ | 14,015 | $ | 11,912 | $ | 173,088 | $ | — | $ | — | $ | — | $ | (161 | ) | $ | 172,927 | |||||||||||||||||||
Intersegment | (5,977 | ) | 1,788 | 603 | 3,587 | 1 | — | — | — | (1 | ) | — | ||||||||||||||||||||||||||||
Total automotive sales | 109,779 | 33,193 | 14,618 | 15,499 | 173,089 | — | — | — | (162 | ) | 172,927 | |||||||||||||||||||||||||||||
Financial services and insurance revenues | — | — | — | — | — | 33,629 | 793 | 34,422 | — | 34,422 | ||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 109,779 | $ | 33,193 | $ | 14,618 | $ | 15,499 | $ | 173,089 | $ | 33,629 | $ | 793 | $ | 34,422 | $ | (162 | ) | $ | 207,349 | |||||||||||||||||||
Automotive cost of sales | $ | 106,575 | $ | 30,783 | $ | 13,296 | $ | 14,185 | $ | 164,839 | $ | — | $ | — | $ | — | $ | (157 | ) | $ | 164,682 | |||||||||||||||||||
Selling, general and administrative expense | $ | 8,709 | $ | 2,600 | $ | 764 | $ | 1,145 | $ | 13,218 | $ | 12,702 | $ | (1,524 | ) | $ | 11,178 | $ | 685 | $ | 25,081 | |||||||||||||||||||
Depreciation and amortization | $ | 5,793 | $ | 1,634 | $ | 227 | $ | 483 | $ | 8,137 | $ | 5,252 | $ | (2,461 | ) | $ | 2,791 | $ | 22 | $ | 10,950 | |||||||||||||||||||
Interest income | $ | 1,353 | $ | 533 | $ | 87 | $ | 122 | $ | 2,095 | $ | 2,332 | $ | (480 | ) | $ | 1,852 | $ | (1,374 | ) | $ | 2,573 | ||||||||||||||||||
Interest expense | $ | 3,285 | $ | 664 | $ | 158 | $ | 222 | $ | 4,329 | $ | 14,196 | $ | 105 | $ | 14,301 | $ | (1,685 | ) | $ | 16,945 | |||||||||||||||||||
Income tax expense (benefit) | $ | (2,243 | ) | $ | (72 | ) | $ | 28 | $ | (23 | ) | $ | (2,310 | ) | $ | 62 | $ | 773 | $ | 835 | $ | (1,310 | ) | $ | (2,785 | ) | ||||||||||||||
Earnings (losses) of nonconsolidated affiliates | $ | 104 | $ | 36 | $ | 16 | $ | 365 | $ | 521 | $ | (16 | ) | $ | — | $ | (16 | ) | $ | 3 | $ | 508 | ||||||||||||||||||
Net income (loss)(b) | $ | (4,619 | ) | $ | (225 | ) | $ | 490 | $ | 1,186 | $ | (3,168 | ) | $ | 2,179 | $ | (1,150 | ) | $ | 1,029 | $ | 161 | $ | (1,978 | ) | |||||||||||||||
Investments in nonconsolidated affiliates | $ | 295 | $ | 408 | $ | 132 | $ | 1,100 | $ | 1,935 | $ | 7,523 | $ | — | $ | 7,523 | $ | 34 | $ | 9,492 | ||||||||||||||||||||
Segment assets | $ | 118,573 | $ | 26,610 | $ | 4,202 | $ | 13,285 | $ | 162,670 | $ | 13,050 | $ | 9,073 | $ | 22,123 | $ | 1,399 | $ | 186,192 | ||||||||||||||||||||
Goodwill | $ | 299 | $ | 500 | $ | — | $ | — | $ | 799 | $ | — | $ | — | $ | — | $ | — | $ | 799 | ||||||||||||||||||||
Expenditures for property | $ | 5,048 | $ | 1,103 | $ | 279 | $ | 1,030 | $ | 7,460 | $ | 401 | $ | 1 | $ | 402 | $ | 71 | $ | 7,933 |
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GM | Total | Other | Total | Corporate | ||||||||||||||||||||||||||||||||||||
GMNA | GME | LAAM | GMAP | GMA | GMAC(c) | Financing(d) | Financing | & Other | Total | |||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||
2005 | ||||||||||||||||||||||||||||||||||||||||
Automotive sales | ||||||||||||||||||||||||||||||||||||||||
External customers | $ | 110,121 | $ | 30,173 | $ | 11,129 | $ | 8,771 | $ | 160,194 | $ | — | $ | — | $ | — | $ | 34 | $ | 160,228 | ||||||||||||||||||||
Intersegment | (4,481 | ) | 1,719 | 715 | 2,050 | 3 | — | — | — | (3 | ) | — | ||||||||||||||||||||||||||||
Total automotive sales(a) | 105,640 | 31,892 | 11,844 | 10,821 | 160,197 | — | — | — | 31 | 160,228 | ||||||||||||||||||||||||||||||
Financial services and insurance revenues | — | — | — | — | — | 34,081 | 346 | 34,427 | — | 34,427 | ||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 105,640 | $ | 31,892 | $ | 11,844 | $ | 10,821 | $ | 160,197 | $ | 34,081 | $ | 346 | $ | 34,427 | $ | 31 | $ | 194,655 | ||||||||||||||||||||
Automotive cost of sales | $ | 105,718 | $ | 31,152 | $ | 11,070 | $ | 10,224 | $ | 158,164 | $ | — | $ | — | $ | — | $ | 723 | $ | 158,887 | ||||||||||||||||||||
Selling, general and administrative expense | $ | 8,968 | $ | 2,406 | $ | 623 | $ | 761 | $ | 12,758 | $ | 13,407 | $ | 905 | $ | 14,312 | $ | 443 | $ | 27,513 | ||||||||||||||||||||
Depreciation and amortization | $ | 7,593 | $ | 1,788 | $ | 325 | $ | 379 | $ | 10,085 | $ | 5,548 | $ | 148 | $ | 5,696 | $ | 16 | $ | 15,797 | ||||||||||||||||||||
Interest income | $ | 1,333 | $ | 420 | $ | 57 | $ | 47 | $ | 1,857 | $ | 2,185 | $ | (514 | ) | $ | 1,671 | $ | (1,329 | ) | $ | 2,199 | ||||||||||||||||||
Interest expense | $ | 3,170 | $ | 555 | $ | 197 | $ | 107 | $ | 4,029 | $ | 13,106 | $ | (35 | ) | $ | 13,071 | $ | (1,493 | ) | $ | 15,607 | ||||||||||||||||||
Income tax expense (benefit) | $ | (2,480 | ) | $ | (734 | ) | $ | 611 | $ | (172 | ) | $ | (2,775 | ) | $ | 1,197 | $ | (4 | ) | $ | 1,193 | $ | (4,288 | ) | $ | (5,870 | ) | |||||||||||||
Earnings (losses) of nonconsolidated affiliates | $ | (48 | ) | $ | 102 | $ | 15 | $ | 527 | $ | 596 | $ | (6 | ) | $ | — | $ | (6 | ) | $ | 20 | $ | 610 | |||||||||||||||||
Income (loss) before cumulative effect of accounting change | $ | (8,150 | ) | $ | (1,007 | ) | $ | (564 | ) | $ | (243 | ) | $ | (9,964 | ) | $ | 2,280 | $ | (23 | ) | $ | 2,257 | $ | (2,601 | ) | $ | (10,308 | ) | ||||||||||||
Net income (loss) | $ | (8,233 | ) | $ | (1,028 | ) | $ | (566 | ) | $ | (246 | ) | $ | (10,073 | ) | $ | 2,280 | $ | (23 | ) | $ | 2,257 | $ | (2,601 | ) | $ | (10,417 | ) | ||||||||||||
Investments in nonconsolidated affiliates | $ | 18 | $ | 359 | $ | 155 | $ | 2,590 | $ | 3,122 | $ | 308 | $ | (308 | ) | $ | — | $ | 120 | $ | 3,242 | |||||||||||||||||||
Segment assets | $ | 126,472 | $ | 21,069 | $ | 4,340 | $ | 10,138 | $ | 162,019 | $ | 320,557 | $ | (8,613 | ) | $ | 311,944 | $ | 193 | $ | 474,156 | |||||||||||||||||||
Goodwill | $ | 383 | $ | 374 | $ | — | $ | — | $ | 757 | $ | 2,446 | $ | — | $ | 2,446 | $ | — | $ | 3,203 | ||||||||||||||||||||
Expenditures for property | $ | 5,418 | $ | 1,396 | $ | 229 | $ | 839 | $ | 7,882 | $ | 279 | $ | 4 | $ | 283 | $ | 14 | $ | 8,179 |
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GM | Total | Other | Total | Corporate | ||||||||||||||||||||||||||||||||||||
GMNA | GME | LAAM | GMAP | GMA | GMAC(c) | Financing(d) | Financing | & Other | Total | |||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||
2004 | ||||||||||||||||||||||||||||||||||||||||
Automotive sales | ||||||||||||||||||||||||||||||||||||||||
External customers | $ | 118,132 | $ | 29,957 | $ | 8,204 | $ | 6,072 | $ | 162,365 | $ | — | $ | — | $ | — | $ | 976 | $ | 163,341 | ||||||||||||||||||||
Intersegment | (2,811 | ) | 1,239 | 673 | 903 | 4 | — | — | — | (4 | ) | — | ||||||||||||||||||||||||||||
Total automotive sales(a) | 115,321 | 31,196 | 8,877 | 6,975 | 162,369 | — | — | — | 972 | 163,341 | ||||||||||||||||||||||||||||||
Financial services and insurance revenues | — | — | — | — | — | 31,225 | 785 | 32,010 | — | 32,010 | ||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 115,321 | $ | 31,196 | $ | 8,877 | $ | 6,975 | $ | 162,369 | $ | 31,225 | $ | 785 | $ | 32,010 | $ | 972 | $ | 195,351 | ||||||||||||||||||||
Automotive cost of sales | $ | 105,585 | $ | 30,145 | $ | 8,244 | $ | 6,386 | $ | 150,360 | $ | — | $ | — | $ | — | $ | 1,755 | $ | 152,115 | ||||||||||||||||||||
Selling, general and administrative expense | $ | 7,891 | $ | 2,486 | $ | 514 | $ | 595 | $ | 11,486 | $ | 12,988 | $ | 1,128 | $ | 14,116 | $ | 367 | $ | 25,969 | ||||||||||||||||||||
Depreciation and amortization | $ | 6,389 | $ | 1,821 | $ | 195 | $ | 235 | $ | 8,640 | $ | 5,299 | $ | 224 | $ | 5,523 | $ | 39 | $ | 14,202 | ||||||||||||||||||||
Interest income | $ | 1,016 | $ | 402 | $ | 20 | $ | 13 | $ | 1,451 | $ | 1,117 | $ | (310 | ) | $ | 807 | $ | (843 | ) | $ | 1,415 | ||||||||||||||||||
Interest expense | $ | 2,734 | $ | 415 | $ | 74 | $ | 21 | $ | 3,244 | $ | 9,659 | $ | (34 | ) | $ | 9,625 | $ | (956 | ) | $ | 11,913 | ||||||||||||||||||
Income tax expense (benefit) | $ | (600 | ) | $ | (599 | ) | $ | 33 | $ | (11 | ) | $ | (1,177 | ) | $ | 1,362 | $ | (19 | ) | $ | 1,343 | $ | (1,292 | ) | $ | (1,126 | ) | |||||||||||||
Earnings (losses) of nonconsolidated affiliates | $ | 58 | $ | 102 | $ | (3 | ) | $ | 666 | $ | 823 | $ | (6 | ) | $ | — | $ | (6 | ) | $ | (16 | ) | $ | 801 | ||||||||||||||||
Net income (loss) | $ | 1,357 | $ | (768 | ) | $ | 50 | $ | 731 | $ | 1,370 | $ | 2,894 | $ | (18 | ) | $ | 2,876 | $ | (1,545 | ) | $ | 2,701 | |||||||||||||||||
Investments in nonconsolidated affiliates | $ | 458 | $ | 1,476 | $ | 276 | $ | 4,541 | $ | 6,751 | $ | 179 | $ | (179 | ) | $ | — | $ | 1 | $ | 6,752 | |||||||||||||||||||
Segment assets(a) | $ | 127,031 | $ | 26,628 | $ | 3,823 | $ | 5,054 | $ | 162,536 | $ | 324,042 | $ | (3,839 | ) | $ | 320,203 | $ | (2,079 | ) | $ | 480,660 | ||||||||||||||||||
Goodwill | $ | 154 | $ | 446 | $ | — | $ | — | $ | 600 | $ | 3,274 | $ | — | $ | 3,274 | $ | — | $ | 3,874 | ||||||||||||||||||||
Expenditures for property | $ | 5,163 | $ | 1,331 | $ | 158 | $ | 496 | $ | 7,148 | $ | 470 | $ | (1 | ) | $ | 469 | $ | 136 | $ | 7,753 |
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(a) | Effective January 1, 2006, four powertrain entities were transferred from GMNA to GME for management reporting purposes. Accordingly, 2005 amounts have been revised for comparability by reclassifying $466 million of revenue, $99 million of net income, and $221 million of segment assets from GMNA to GME. For 2004, amounts have been revised by reclassifying $667 million of revenue, $124 million of net income, and $10 million of segment assets from GMNA to GME. | |
(b) | In 2006, GM recognized a non-cash impairment charge of $2.9 billion in connection with the sale of a controlling interest in GMAC which is reflected in the column “Other Financing.” Refer to Note 4. | |
(c) | GM sold a 51% ownership interest in GMAC in November 2006. The remaining 49% ownership interest held by GM is accounted for under the equity method, and GM’s investment is included in GMAC’s segment assets. | |
(d) | Other Financing includes the elimination of net receivables from total assets in Auto & Other. Receivables eliminated were $4.1 billion, $4.5 billion, and $2.4 billion at December 31, 2006, 2005, and 2004, respectively. |
2006 | 2005 | 2004 | ||||||||||||||||||||||
Net | Long | Net | Long | Net | Long | |||||||||||||||||||
Sales & | Lived | Sales & | Lived | Sales & | Lived | |||||||||||||||||||
�� | Revenues | Assets(1) | Revenues | Assets(1) | Revenues | Assets(1) | ||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
North America | ||||||||||||||||||||||||
United States | $ | 129,041 | $ | 39,434 | $ | 124,615 | $ | 49,619 | $ | 132,612 | $ | 46,810 | ||||||||||||
Canada and Mexico | 19,979 | 4,906 | 16,769 | 12,739 | 15,484 | 10,442 | ||||||||||||||||||
Total North America | 149,020 | 44,340 | 141,384 | 62,358 | 148,096 | 57,252 | ||||||||||||||||||
Europe | ||||||||||||||||||||||||
France | 2,411 | 284 | 2,612 | 333 | 2,669 | 262 | ||||||||||||||||||
Germany | 7,687 | 3,651 | 7,384 | 4,090 | 6,710 | 4,479 | ||||||||||||||||||
Spain | 2,866 | 1,364 | 2,847 | 1,182 | 2,661 | 1,181 | ||||||||||||||||||
United Kingdom | 7,975 | 1,143 | 7,859 | 1,958 | 7,563 | 2,273 | ||||||||||||||||||
Other | 13,407 | 3,583 | 12,834 | 3,794 | 13,538 | 3,811 | ||||||||||||||||||
Total Europe | 34,346 | 10,025 | 33,536 | 11,357 | 33,141 | 12,006 | ||||||||||||||||||
Latin America | ||||||||||||||||||||||||
Brazil | 4,961 | 882 | 3,813 | 784 | 2,987 | 609 | ||||||||||||||||||
Other Latin America | 4,768 | 159 | 3,829 | 162 | 2,696 | 180 | ||||||||||||||||||
Total Latin America | 9,729 | 1,041 | 7,642 | 946 | 5,683 | 789 | ||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||
Australia | 301 | 18 | 357 | 0 | 381 | 0 | ||||||||||||||||||
Korea | 7,550 | 2,154 | 2,861 | 1,523 | 0 | 0 | ||||||||||||||||||
Other Asia Pacific | 3,353 | 2,126 | 5,362 | 1,981 | 5,823 | 1,957 | ||||||||||||||||||
Total Asia Pacific | 11,204 | 4,298 | 8,580 | 3,504 | 6,204 | 1,957 | ||||||||||||||||||
All Other | 3,050 | 158 | 3,513 | 313 | 2,227 | 1,333 | ||||||||||||||||||
Total | $ | 207,349 | $ | 59,862 | $ | 194,655 | $ | 78,478 | $ | 195,351 | $ | 73,337 | ||||||||||||
(1) | Consists of property (Note 14), and equipment on operating leases (Note 12), net of accumulated depreciation. |
Note 28. | Transactions with GMAC |
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December 31, | ||||
2006 | ||||
Assets: | ||||
Accounts and notes receivable(a) | $ | 676 | ||
Other assets(b) | 20 | |||
Liabilities: | ||||
Accounts payable(c) | 1,716 | |||
Loans payable(d) | 2,901 | |||
Accrued expenses(e) | 29 | |||
Long-term debt(f) | 445 |
(a) | Represents wholesale settlements due from GMAC, as well as amounts owing by GMAC with respect to the operating lease assets transferred to GM. | |
(b) | Represents mainly Preferred Membership Interest distributions due from GMAC. | |
(c) | Represents the approximately $1.0 billion capital contribution to GMAC to restore its adjusted tangible equity balance to the contractually required amount of $14.4 billion, due to the decrease in the adjusted tangible equity balance of GMAC as of November 30, 2006. | |
(d) | Represents wholesale financing, sales of receivable transactions, and the short term portion of term loans provided to certain dealerships wholly owned by GM or in which GM has an equity interest. In addition, includes borrowing arrangements with Adam Opel and arrangements related to GMAC’s funding of GM company-owned vehicles, rental car vehicles awaiting sale at auction, and funding of the sale of GM vehicles in which GM retains title while the vehicles are consigned to GMAC or dealers in the United Kingdom. The financing to GM remains outstanding until the title is transferred to the dealers. Also includes the short term portion of a note provided to a wholly owned subsidiary of GM holding debt related to the operating leases transferred to GM. | |
(e) | Represents mainly interest accrued on the transactions in (d) above. | |
(f) | Represents the long term portion of term loans and a note payable in respect of the operating leases transferred to GM mentioned in (d) above. |
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Net sales and revenues(a) | $ | (104 | ) | |
Automotive interest income and other non-operating income(b) | 20 | |||
Cost of sales and other expenses | 1 | |||
Interest expense(c) | 22 | |||
Servicing expense(d) | 18 | |||
Derivatives(e) | 6 |
(a) | Represents the reduction in net sales and revenues related to the amount of residual support accrued under the residual support and risk sharing programs, rate support under the interest rate support programs, operating lease and finance receivable capitalized cost reduction incentives paid to GMAC to reduce the capitalized cost in automotive lease contracts and retail automotive contracts, and costs under lease pull-ahead programs. GM sponsors lease pull-ahead programs, by which consumers are encouraged to terminate lease contracts early in conjunction with the acquisition of a new GM vehicle, with the customer’s remaining payment obligation waived. For certain programs, GM compensates GMAC for the waived payments, adjusted for the remarketing results associated with the underlying vehicle. | |
(b) | Represents Preferred Membership Interest distributions and payments to GM for services and rent. | |
(c) | Represents interest on term loans, notes payable and wholesale settlements. The settlement terms related to the wholesale financing of certain GM products are at shipment date. To the extent that wholesale settlements with GM are made prior to the expiration of transit, GM pays interest to GMAC. | |
(d) | Represents servicing fee paid to GMAC related to the automotive leases distributed to GM prior to the closing of the GMAC sale transaction. | |
(e) | Represents the loss related to a derivative transaction entered into with GMAC as counterparty. |
Note 29. | Other Expenses |
For the Year Ended | ||||||||||||
December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
(Dollars in millions) | ||||||||||||
Loss on controlling interest of GMAC (see Note 4) | $ | 2,910 | $ | — | $ | — | ||||||
FHI impairment loss (see Note 7) | — | 812 | — | |||||||||
Delphi contingent exposure (see Note 20) | 500 | 5,500 | — | |||||||||
Goodwill impairment — GMAC (see Note 15) | 828 | 712 | — | |||||||||
Fiat settlement/writedown (see Note 7) | — | — | 1,584 | |||||||||
Total other expenses | $ | 4,238 | $ | 7,024 | $ | 1,584 | ||||||
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Note 30: | Supplementary Quarterly Financial Information (Unaudited) |
Quarters | ||||||||||||||||||||||||||||
1st(2) | 2nd(2) | 3rd(2) | 4th(2)(3) | |||||||||||||||||||||||||
Previously | Previously | Previously | ||||||||||||||||||||||||||
Reported(1) | Restated | Reported(1) | Restated | Reported(1) | Restated | Reported | ||||||||||||||||||||||
(Dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||||||
Total net sales and revenue | $ | 51,397 | $ | 52,376 | $ | 53,378 | $ | 54,464 | $ | 48,465 | $ | 49,300 | $ | 51,209 | ||||||||||||||
Operating income (loss) | $ | (276 | ) | $ | (47 | ) | $ | (6,219 | ) | $ | (6,184 | ) | $ | (1,322 | ) | $ | (1,305 | ) | $ | (132 | ) | |||||||
Income (loss) from continuing operations | $ | 445 | $ | 602 | $ | (3,379 | ) | $ | (3,383 | ) | $ | (91 | ) | $ | (147 | ) | $ | 950 | ||||||||||
Net income (loss) | $ | 445 | $ | 602 | $ | (3,379 | ) | $ | (3,383 | ) | $ | (91 | ) | $ | (147 | ) | $ | 950 | ||||||||||
Basic earnings (loss) per share from continuing operations | $ | 0.79 | $ | 1.06 | $ | (5.97 | ) | $ | (5.98 | ) | $ | (0.16 | ) | $ | (0.26 | ) | $ | 1.68 | ||||||||||
Diluted earnings (loss) per share from continuing operations | $ | 0.78 | $ | 1.06 | $ | (5.97 | ) | $ | (5.98 | ) | $ | (0.16 | ) | $ | (0.26 | ) | $ | 1.68 |
Quarters | ||||||||||||||||||||||||||||||||
1st(4) | 2nd(4) | 3rd(4) | 4th(4)(5) | |||||||||||||||||||||||||||||
Previously | Previously | Previously | ||||||||||||||||||||||||||||||
Reported(1) | Restated | Reported(1) | Restated | Reported(1) | Restated | Reported | Restated | |||||||||||||||||||||||||
(Dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||||||
2005 | ||||||||||||||||||||||||||||||||
Total net sales and revenue | $ | 45,458 | $ | 46,286 | $ | 48,168 | $ | 48,990 | $ | 46,835 | $ | 47,727 | $ | 50,723 | $ | 51,652 | ||||||||||||||||
Operating income (loss) | $ | (2,609 | ) | $ | (2,523 | ) | $ | (1,706 | ) | $ | (1,522 | ) | $ | (3,218 | ) | $ | (3,095 | ) | $ | (10,818 | ) | $ | (10,666 | ) | ||||||||
Income (loss) from continuing operations | $ | (1,253 | ) | $ | (1,250 | ) | $ | (987 | ) | $ | (917 | ) | $ | (1,664 | ) | $ | (1,673 | ) | $ | (6,554 | ) | $ | (6,468 | ) | ||||||||
Cumulative effect of a change in accounting principle | — | — | — | — | — | — | (109 | ) | (109 | ) | ||||||||||||||||||||||
Net income (loss) | $ | (1,253 | ) | $ | (1,250 | ) | $ | (987 | ) | $ | (917 | ) | $ | (1,664 | ) | $ | (1,673 | ) | $ | (6,663 | ) | (6,577 | ) | |||||||||
Basic earnings (loss) per share from continuing operations | $ | (2.22 | ) | $ | (2.21 | ) | $ | (1.75 | ) | $ | (1.62 | ) | $ | (2.94 | ) | $ | (2.96 | ) | $ | (11.59 | ) | $ | (11.44 | ) | ||||||||
Cumulative effect of a change in accounting principle | — | — | — | — | — | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||||||
Total | $ | (2.22 | ) | $ | (2.21 | ) | $ | (1.75 | ) | $ | (1.62 | ) | $ | (2.94 | ) | $ | (2.96 | ) | $ | (11.78 | ) | $ | (11.63 | ) | ||||||||
Diluted earnings (loss) per share from continuing operations | $ | (2.22 | ) | $ | (2.21 | ) | $ | (1.75 | ) | $ | (1.62 | ) | $ | (2.94 | ) | $ | (2.96 | ) | $ | (11.59 | ) | $ | (11.44 | ) | ||||||||
Cumulative effect of a change in accounting principle | — | — | — | — | — | — | (0.19 | ) | (0.19 | ) | ||||||||||||||||||||||
Total | $ | (2.22 | ) | $ | (2.21 | ) | $ | (1.75 | ) | $ | (1.62 | ) | $ | (2.94 | ) | $ | (2.96 | ) | (11.78 | ) | $ | (11.63 | ) | |||||||||
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Quarters | ||||||||||||||||||||||||
March 31 | June 30 | September 30 | ||||||||||||||||||||||
Previously | Previously | Previously | ||||||||||||||||||||||
Reported(1) | Restated | Reported(1) | Restated | Reported(1) | Restated | |||||||||||||||||||
(Dollars in millions except per share amounts) | ||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||
Net sales and revenue | ||||||||||||||||||||||||
Automotive sales | $ | 42,542 | $ | 43,529 | $ | 44,311 | $ | 45,377 | $ | 39,101 | $ | 40,020 | ||||||||||||
Financial services and insurance revenue | 8,855 | 8,847 | 9,067 | 9,087 | 9,364 | 9,280 | ||||||||||||||||||
Total net sales and revenue | $ | 51,397 | $ | 52,376 | $ | 53,378 | $ | 54,464 | $ | 48,465 | $ | 49,300 | ||||||||||||
Costs and expenses | ||||||||||||||||||||||||
Automotive costs and expenses | 39,514 | 40,073 | 46,851 | 47,737 | 36,720 | 37,467 | ||||||||||||||||||
Selling, general and administrative expenses | 7,198 | 7,152 | 6,069 | 6,077 | 5,708 | 5,701 | ||||||||||||||||||
Interest expense | 4,229 | 4,435 | 4,531 | 4,705 | 4,850 | 4,411 | ||||||||||||||||||
Provisions for financing and insurance operations for credit and insurance losses | 732 | 763 | 938 | 921 | 1,066 | 1,083 | ||||||||||||||||||
Other expense | — | — | 1,208 | 1,208 | 1,443 | 1,943 | ||||||||||||||||||
Total costs and expenses | 51,673 | 52,423 | 59,597 | 60,648 | 49,787 | 50,605 | ||||||||||||||||||
Operating income (loss) | (276 | ) | (47 | ) | (6,219 | ) | (6,184 | ) | (1,322 | ) | (1,305 | ) | ||||||||||||
Automotive interest income and other non-operating income/(expense), net | 848 | 798 | 1,017 | 991 | 423 | 308 | ||||||||||||||||||
Income/(loss) before income tax (benefit) expense, equity income (loss) and minority interest | 572 | 751 | (5,202 | ) | (5,193 | ) | (899 | ) | (997 | ) | ||||||||||||||
Tax (benefit) expense | 194 | 232 | (1,655 | ) | (1,651 | ) | (867 | ) | (899 | ) | ||||||||||||||
Equity income (loss) and minority interest | 67 | 83 | 168 | 159 | (59 | ) | (49 | ) | ||||||||||||||||
Net income (loss) | $ | 445 | $ | 602 | $ | (3,379 | ) | $ | (3,383 | ) | $ | (91 | ) | $ | (147 | ) | ||||||||
Income (loss) per share attributable to common stock, basic | $ | 0.79 | $ | 1.06 | $ | (5.97 | ) | $ | (5.98 | ) | $ | (0.16 | ) | $ | (0.26 | ) | ||||||||
Cash dividends per share | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | ||||||||||||
Weighted average common shares outstanding, basic (millions) | 566 | 566 | 566 | 566 | 566 | 566 | ||||||||||||||||||
Income (loss) per share attributable to common stock, diluted | $ | 0.78 | $ | 1.06 | $ | (5.97 | ) | $ | (5.98 | ) | $ | (0.16 | ) | $ | (0.26 | ) | ||||||||
Weighted average common shares outstanding, diluted (millions) | 569 | 569 | 566 | 566 | 566 | 566 |
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Quarters | ||||||||||||||||||||||||
March 31 | June 30 | September 30 | ||||||||||||||||||||||
Previously | Previously | Previously | ||||||||||||||||||||||
Reported(1) | Restated | Reported(1) | Restated | Reported(1) | Restated | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current Assets | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 17,427 | $ | 17,427 | $ | 19,997 | 19,997 | $ | 17,802 | $ | 17,802 | |||||||||||||
Marketable securities | 1,396 | 1,396 | 115 | 115 | 107 | 107 | ||||||||||||||||||
Total cash and marketable securities | 18,823 | 18,823 | 20,112 | 20,112 | 17,909 | 17,909 | ||||||||||||||||||
Accounts and notes receivable (less allowances) | 9,440 | 6,966 | 10,302 | 7,572 | 9,022 | 6,855 | ||||||||||||||||||
Inventories (less allowances) | 14,862 | 14,867 | 14,449 | 14,496 | 14,825 | 14,822 | ||||||||||||||||||
Net equipment on operating leases (less accumulated depreciation) | 7,217 | 7,217 | 6,892 | 6,891 | 6,569 | 6,569 | ||||||||||||||||||
Deferred income taxes and other current assets | 10,032 | 10,139 | 10,260 | 10,376 | 10,698 | 10,813 | ||||||||||||||||||
Total current assets | 60,374 | 58,012 | 62,015 | 59,447 | 59,023 | 56,968 | ||||||||||||||||||
Financing and insurance operations | ||||||||||||||||||||||||
Cash and cash equivalents | 17,441 | 17,441 | 2,848 | 2,848 | 3,089 | 3,089 | ||||||||||||||||||
Investments in securities | 18,443 | 18,443 | 199 | 199 | 80 | 80 | ||||||||||||||||||
Finance receivables, net | 180,161 | 180,173 | 4,284 | 4,284 | 117 | 117 | ||||||||||||||||||
Loans held for sale | 18,171 | 18,171 | — | — | — | — | ||||||||||||||||||
Assets held for sale (less allowances) | — | — | 274,294 | 274,267 | 282,955 | 282,847 | ||||||||||||||||||
Net equipment on operating leases (less accumulated depreciation) | 32,570 | 32,570 | 16,533 | 16,533 | 13,325 | 13,325 | ||||||||||||||||||
Other assets | 31,608 | 28,996 | 3,925 | 1,374 | 4,181 | 1,630 | ||||||||||||||||||
Total financing and insurance operations assets | 298,394 | 295,794 | 302,083 | 299,505 | 303,747 | 301,088 | ||||||||||||||||||
Non-current assets | ||||||||||||||||||||||||
Equity in net assets of unconsolidated Affiliates | 1,830 | 1,789 | 1,901 | 1,856 | 2,030 | 1,991 | ||||||||||||||||||
Property, net | 38,457 | 38,551 | 38,535 | 38,639 | 38,893 | 38,959 | ||||||||||||||||||
Intangible assets, net | 1,851 | 1,855 | 1,662 | 1,663 | 1,649 | 1,649 | ||||||||||||||||||
Deferred income taxes | 21,034 | 22,387 | 23,083 | 24,382 | 23,496 | 24,860 | ||||||||||||||||||
Prepaid pension | 37,592 | 37,478 | 37,594 | 37,480 | 37,805 | 37,691 | ||||||||||||||||||
Other assets | 4,132 | 6,273 | 3,633 | 6,019 | 2,935 | 4,717 | ||||||||||||||||||
Total non-current assets | 104,896 | 108,333 | 106,408 | 110,039 | 106,808 | 109,867 | ||||||||||||||||||
Total Assets | $ | 463,664 | $ | 462,139 | $ | 470,506 | $ | 468,991 | $ | 469,578 | $ | 467,923 | ||||||||||||
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Quarters | ||||||||||||||||||||||||
March 31 | June 30 | September 30 | ||||||||||||||||||||||
Previously | Previously | Previously | ||||||||||||||||||||||
Reported(1) | Restated | Reported(1) | Restated | Reported(1) | Restated | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
2006 | ||||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||
Accounts payable (principally trade) | $ | 26,614 | $ | 26,872 | $ | 27,674 | $ | 27,930 | $ | 27,113 | $ | 27,318 | ||||||||||||
Loans payable | 1,207 | 1,294 | 1,254 | 1,340 | 1,346 | 1,436 | ||||||||||||||||||
Accrued expenses | 43,317 | 43,424 | 48,441 | 48,516 | 40,183 | 40,235 | ||||||||||||||||||
Total current liabilities | 71,138 | 71,590 | 77,369 | 77,786 | 68,642 | 68,989 | ||||||||||||||||||
Finance and Insurance Operations | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Accounts payable | 3,596 | 3,596 | 23 | 23 | 32 | 32 | ||||||||||||||||||
Liabilities related to assets held for sale | — | — | 267,551 | 267,925 | 272,725 | 272,869 | ||||||||||||||||||
Debt | 244,779 | 245,260 | 12,849 | 12,849 | 10,073 | 10,073 | ||||||||||||||||||
Other liabilities and deferred income taxes | 31,924 | 29,136 | 4,804 | 2,255 | 4,762 | 2,211 | ||||||||||||||||||
Total Financing and Insurance Operations Liabilities | 280,299 | 277,992 | 285,227 | 283,052 | 287,592 | 285,185 | ||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||||||
Long-term debt | 31,021 | 32,612 | 31,275 | 32,946 | 31,414 | 33,118 | ||||||||||||||||||
Postretirement benefits other than pensions | 31,431 | 31,431 | 30,668 | 30,668 | 34,211 | 34,211 | ||||||||||||||||||
Pensions | 11,576 | 11,576 | 11,502 | 11,498 | 15,937 | 15,937 | ||||||||||||||||||
Other liabilities and deferred income taxes | 21,699 | 20,084 | 21,744 | 20,014 | 19,426 | 17,714 | ||||||||||||||||||
Total non-current liabilities | 95,727 | 95,703 | 95,189 | 95,126 | 100,988 | 100,980 | ||||||||||||||||||
Total Liabilities | 447,164 | 445,285 | 457,785 | 455,964 | 457,222 | 455,154 | ||||||||||||||||||
Minority interest | 1,075 | 1,075 | 1,081 | 1,084 | 1,212 | 1,210 | ||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||
$12/3 par value common stock (outstanding, 565,559,329; 565,607,779; and 565,611,157 shares) | 943 | 943 | 943 | 943 | 943 | 943 | ||||||||||||||||||
Capital surplus (principally additionalpaid-in-capital) | 15,296 | 15,296 | 15,306 | 15,306 | 15,316 | 15,316 | ||||||||||||||||||
Retained earnings (accumulated deficit) | 2,652 | 3,408 | (869 | ) | (117 | ) | (1,101 | ) | (405 | ) | ||||||||||||||
Accumulated other comprehensive income (loss) | (3,466 | ) | (3,868 | ) | (3,740 | ) | (4,189 | ) | (4,014 | ) | (4,295 | ) | ||||||||||||
Total stockholders’ equity | 15,425 | 15,779 | 11,640 | 11,943 | 11,144 | 11,559 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 463,664 | 462,139 | $ | 470,506 | $ | 468,991 | $ | 469,578 | $ | 467,923 | |||||||||||||
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Quarters | ||||||||||||||||||||||||
March 31 | June 30 | September 30 | ||||||||||||||||||||||
Previously | Previously | Previously | ||||||||||||||||||||||
Reported(1) | Restated | Reported(1) | Restated | Reported(1) | Restated | |||||||||||||||||||
(In millions, except per share amounts) | ||||||||||||||||||||||||
2005 | ||||||||||||||||||||||||
Net sales and revenue | ||||||||||||||||||||||||
Automotive sales | $ | 36,988 | $ | 37,793 | $ | 39,877 | $ | 40,686 | $ | 38,016 | $ | 38,921 | ||||||||||||
Financial services and insurance revenue | 8,470 | 8,493 | 8,291 | 8,304 | 8,819 | 8,806 | ||||||||||||||||||
Total net sales and revenue | $ | 45,458 | $ | 46,286 | $ | 48,168 | $ | 48,990 | $ | 46,835 | $ | 47,727 | ||||||||||||
Costs and expenses | ||||||||||||||||||||||||
Automotive costs and expenses | 37,146 | 37,781 | 37,908 | 38,848 | 38,130 | 38,919 | ||||||||||||||||||
Selling, general and administrative expenses | 6,324 | 6,353 | 6,645 | 6,644 | 6,886 | 6,854 | ||||||||||||||||||
Interest expense | 3,679 | 3,773 | 3,712 | 3,395 | 4,059 | 4,071 | ||||||||||||||||||
Provisions for financing and insurance operations for credit and insurance losses | 918 | 902 | 797 | 813 | 978 | 978 | ||||||||||||||||||
Other expense | — | — | 812 | 812 | — | — | ||||||||||||||||||
Total costs and expenses | 48,067 | 48,809 | 49,874 | 50,512 | 50,053 | 50,822 | ||||||||||||||||||
Operating income (loss) | (2,609 | ) | (2,523 | ) | (1,706 | ) | (1,522 | ) | (3,218 | ) | (3,095 | ) | ||||||||||||
Automotive interest income and other non-operating income/(expense), net | 315 | 227 | 301 | 231 | 347 | 210 | ||||||||||||||||||
Income (loss) before income tax (benefit) expense, equity income (loss) and minority interest | (2,294 | ) | (2,296 | ) | (1,405 | ) | (1,291 | ) | (2,871 | ) | (2,885 | ) | ||||||||||||
Tax (benefit) expense | (972 | ) | (982 | ) | (245 | ) | (205 | ) | (1,107 | ) | (1,116 | ) | ||||||||||||
Equity income (loss) and minority interest | 69 | 64 | 173 | 169 | 100 | 96 | ||||||||||||||||||
Net income (loss) | $ | (1,253 | ) | $ | (1,250 | ) | $ | (987 | ) | $ | (917 | ) | $ | (1,664 | ) | $ | (1,673 | ) | ||||||
Income (loss) per share attributable to common stock, basic and diluted | $ | (2.22 | ) | $ | (2.21 | ) | $ | (1.75 | ) | $ | (1.62 | ) | $ | (2.94 | ) | $ | (2.96 | ) | ||||||
Cash dividends per share | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 | ||||||||||||
Weighted average common shares outstanding, basic and diluted (millions) | 565 | 565 | 565 | 565 | 566 | 566 |
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Quarters | ||||||||||||||||||||||||
March 31 | June 30 | September 30 | ||||||||||||||||||||||
Previously | Previously | Previously | ||||||||||||||||||||||
Reported(1) | Restated | Reported(1) | Restated | Reported(1) | Restated | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
2005 | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current Assets | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 10,205 | $ | 10,205 | $ | 12,445 | $ | 12,445 | $ | 13,695 | $ | 13,695 | ||||||||||||
Marketable securities | 5,447 | 5,447 | 3,629 | 3,629 | 1,437 | 1,437 | ||||||||||||||||||
Total cash and marketable securities | 15,652 | 15,652 | 16,074 | 16,074 | 15,132 | 15,132 | ||||||||||||||||||
Accounts and notes receivable (less allowances) | 6,493 | 5,096 | 8,087 | 6,708 | 7,800 | 6,153 | ||||||||||||||||||
Inventories (less allowances) | 12,736 | 12,753 | 12,818 | 12,827 | 13,755 | 13,764 | ||||||||||||||||||
Net equipment on operating leases (less accumulated depreciation) | 6,329 | 6,329 | 6,723 | 6,723 | 7,302 | 7,302 | ||||||||||||||||||
Deferred income taxes and other current assets | 10,975 | 10,971 | 10,516 | 10,513 | 9,778 | 9,775 | ||||||||||||||||||
Total current assets | 52,185 | 50,801 | 54,218 | 52,845 | 53,767 | 52,126 | ||||||||||||||||||
Financing and insurance operations | ||||||||||||||||||||||||
Cash and cash equivalents | 16,184 | 16,184 | 19,816 | 19,816 | 21,394 | 21,394 | ||||||||||||||||||
Investments in securities | 20,809 | 20,809 | 19,384 | 19,384 | 16,575 | 16,575 | ||||||||||||||||||
Finance receivables, net | 190,646 | 190,684 | 178,137 | 178,179 | 177,082 | 177,110 | ||||||||||||||||||
Loans held for sale | 22,569 | 22,569 | 26,903 | 26,903 | 17,581 | 17,581 | ||||||||||||||||||
Assets held for sale (less allowances) | — | — | — | — | 18,748 | 18,748 | ||||||||||||||||||
Net equipment on operating leases (less accumulated depreciation) | 28,042 | 28,042 | 29,353 | 29,353 | 30,670 | 30,670 | ||||||||||||||||||
Other assets | 34,849 | 32,200 | 33,228 | 30,625 | 27,975 | 25,390 | ||||||||||||||||||
Total financing and insurance operations assets | 313,099 | 310,488 | 306,821 | 304,260 | 310,025 | 307,468 | ||||||||||||||||||
Non-current assets | ||||||||||||||||||||||||
Equity in net assets of unconsolidated affiliates | 6,500 | 6,473 | 4,156 | 4,124 | 4,260 | 4,222 | ||||||||||||||||||
Property, net | 36,265 | 36,363 | 38,480 | 38,578 | 37,860 | 37,958 | ||||||||||||||||||
Intangible assets, net | 1,550 | 1,550 | 1,658 | 1,658 | 1,674 | 1,674 | ||||||||||||||||||
Deferred income taxes | 18,093 | 19,413 | 19,253 | 20,569 | 20,731 | 22,041 | ||||||||||||||||||
Prepaid pension | 38,576 | 38,576 | 38,255 | 38,255 | 37,949 | 37,949 | ||||||||||||||||||
Other assets | 1,829 | 2,775 | 3,160 | 4,061 | 3,152 | 4,353 | ||||||||||||||||||
Total non-current assets | 102,813 | 105,150 | 104,962 | 107,245 | 105,626 | 108,197 | ||||||||||||||||||
Total Assets | $ | 468,097 | $ | 466,439 | $ | 466,001 | $ | 464,350 | $ | 469,418 | $ | 467,791 | ||||||||||||
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Quarters | ||||||||||||||||||||||||
March 31 | June 30 | September 30 | ||||||||||||||||||||||
Previously | Previously | Previously | ||||||||||||||||||||||
Reported(1) | Restated | Reported(1) | Restated | Reported(1) | Restated | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
2005 | ||||||||||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||
Accounts payable (principally trade) | $ | 24,168 | $ | 24,356 | $ | 25,361 | $ | 25,508 | $ | 26,784 | $ | 26,942 | ||||||||||||
Loans payable | 2,446 | 2,515 | 1,563 | 1,652 | 1,509 | 1,597 | ||||||||||||||||||
Accrued expenses | 44,544 | 44,624 | 44,517 | 44,592 | 43,280 | 43,351 | ||||||||||||||||||
Total current liabilities | 71,158 | 71,495 | 71,441 | 71,752 | 71,573 | 71,890 | ||||||||||||||||||
Finance and Insurance Operations Liabilities | ||||||||||||||||||||||||
Accounts payable | 4,351 | 4,351 | 3,333 | 3,333 | 3,102 | 3,102 | ||||||||||||||||||
Liabilities related to assets held for sale | — | — | — | — | 12,319 | 12,319 | ||||||||||||||||||
Debt | 259,506 | 259,742 | 251,015 | 251,022 | 245,794 | 245,968 | ||||||||||||||||||
Other liabilities and deferred income taxes | 28,814 | 26,120 | 32,473 | 29,902 | 29,298 | 26,646 | ||||||||||||||||||
Total Financing and Insurance Operations Liabilities | 292,671 | 290,213 | 286,821 | 284,257 | 290,513 | 288,035 | ||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||||||
Long-term debt | 29,879 | 30,895 | 31,043 | 32,118 | 30,929 | 32,021 | ||||||||||||||||||
Postretirement benefits other than pensions | 23,754 | 23,754 | 25,882 | 25,882 | 27,445 | 27,445 | ||||||||||||||||||
Pensions | 9,204 | 9,215 | 9,619 | 9,630 | 9,877 | 9,888 | ||||||||||||||||||
Other liabilities and deferred income taxes | 15,924 | 14,870 | 16,447 | 15,314 | 16,273 | 15,123 | ||||||||||||||||||
Total non-current liabilities | 78,761 | 78,734 | 82,991 | 82,944 | 84,524 | 84,477 | ||||||||||||||||||
Total Liabilities | 442,590 | 440,442 | 441,253 | 438,953 | 446,610 | 444,402 | ||||||||||||||||||
Minority interest | 416 | 416 | 902 | 902 | 829 | 829 | ||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||
$1 2/3 par value common stock (outstanding, 565,470,511; 565,503,422; and 565,504,852 shares) | 942 | 942 | 943 | 943 | 943 | 943 | ||||||||||||||||||
Capital surplus (principally additionalpaid-in-capital) | 15,234 | 15,234 | 15,255 | 15,255 | 15,281 | 15,281 | ||||||||||||||||||
Retained earnings | 12,526 | 12,978 | 11,252 | 11,774 | 9,295 | 9,808 | ||||||||||||||||||
Accumulated other comprehensive income (loss) | (3,611 | ) | (3,573 | ) | (3,604 | ) | (3,477 | ) | (3,540 | ) | (3,472 | ) | ||||||||||||
Total stockholders’ equity | 25,091 | 25,581 | 23,846 | 24,495 | 21,979 | 22,560 | ||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 468,097 | $ | 466,439 | $ | 466,001 | $ | 464,350 | $ | 469,418 | $ | 467,791 | ||||||||||||
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(1) | As reported in the Corporation’sForm 10-Q for the applicable periods then ended. | |
(2) | GM previously disclosed that it would restate its consolidated financial statements to correct its accounting for (1) certain derivative transactions under SFAS No. 133, (2) deferred income taxes under SFAS No. 109, and (3) other various adjustments. The restatement effects for the first three quarters of 2006 are summarized below. This restatement did not affect cash flows. |
2006 Quarters | ||||||||||||
1st | 2nd | 3rd | ||||||||||
Net income (loss), as previously reported | $ | 445 | $ | (3,379 | ) | $ | (91 | ) | ||||
Pre-tax adjustments: | ||||||||||||
Derivatives and hedge accounting(a) | 274 | (138 | ) | 61 | ||||||||
Unemployment benefit payments(a) | (50 | ) | — | — | ||||||||
Development costs(a) | 57 | — | — | |||||||||
Advertising expenses(a) | (35 | ) | (5 | ) | 17 | |||||||
Gain on sale of equity method investment(b) | 36 | — | — | |||||||||
Employee-related costs(c) | (52 | ) | 80 | (52 | ) | |||||||
Impairment of long-lived assets(a) | 10 | (1 | ) | (42 | ) | |||||||
Other adjustments(d) | (46 | ) | 57 | (49 | ) | |||||||
Total pre-tax adjustments | 194 | (7 | ) | (65 | ) | |||||||
Tax effects — provision/(benefit) | 37 | (3 | ) | (9 | ) | |||||||
Total of above adjustments, net of tax | 157 | (4 | ) | (56 | ) | |||||||
Net income (loss), as restated | $ | 602 | $ | (3,383 | ) | $ | (147 | ) | ||||
(a) | Refer to Note 2 to the Consolidated Financial Statements for background related to these adjustments. | |
(b) | GM erroneously determined its gain on the sale of a portion of an equity method investment. | |
(c) | GM erroneously recorded employee-related costs related to the Special Attrition Program (See Note 19 to the Consolidated Financial Statements) and restructuring activities at GME (See Note 5 to the Consolidated Financial Statements). The adjustments were recorded to correct Automotive cost of sales in each quarterly period shown above. | |
(d) | Subsequent to the completion of our previously filed consolidated financial statements for each period being restated, we identified adjustments that should have been recorded in these earlier periods. Upon identification, we determined these adjustments to be immaterial, individually and in the aggregate, to our previously filed consolidated financial statements, and recorded these out-of-period adjustments in the periods in which they were identified. Due to the adjustments that required a restatement of our previously filed consolidated financial statements, we are also reversing theseout-of-period adjustments and recording them in the proper periods. | |
In addition to the above adjustments, to comply with EITF00-10, “Accounting for Shipping and Handling Fees and Costs”, in 2006 GM reclassified shipping and handling costs incurred to transport product to its customers. The correction for this reclassification increased Automotive sales and Automotive cost of sales for the first, second and third quarters in the year ended December 31, 2006 in the amount of $1.0 billion, $1.1 billion, and $900 million, respectively. This correction did not affect net income (loss) or earnings (loss) per share. | ||
(3) | Fourth quarter 2006 results include the following after-tax items: |
• | A gain of $175 million related to the sale of the desert proving grounds in Mesa, Arizona. |
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• | A charge of $111 million for severance costs associated with a previously announced restructuring plan at GME. | |
• | A charge of $53 million associated with plant and product impairments and separation costs at GM Holden. | |
• | Gains of approximately $712 million associated with pension/OPEB curtailment related to GMAC salaried employees no longer receiving credited service under the GM benefit plans and sales of marketable securities held by GMAC’s insurance business. | |
• | A gain of $208 million related to the settlement of residual support and risk sharing obligations as part of the GMAC Transaction on existing leases at May 1, 2006 and on new lease originations subsequent to this date. See Note 4. |
(4) | The restatement effects for the quarterly results of 2005 are summarized below. This restatement did not affect cash flows. |
2005 Quarters | ||||||||||||||||
1st | 2nd | 3rd | 4th | |||||||||||||
Net income (loss), as previously reported | $ | (1,253 | ) | $ | (987 | ) | $ | (1,664 | ) | $ | (6,663 | ) | ||||
Pre-tax adjustments: | ||||||||||||||||
Derivatives and hedge accounting(a) | (80 | ) | (12 | ) | (26 | ) | 207 | |||||||||
Available-for-sale securities(a) | 68 | 98 | (8 | ) | — | |||||||||||
Unemployment benefit payments(a) | — | — | — | 50 | ||||||||||||
Utility accruals(b) | (5 | ) | 20 | (5 | ) | (25 | ) | |||||||||
Other adjustments(c) | 10 | 3 | 21 | (172 | ) | |||||||||||
Total pre-tax adjustments | (7 | ) | 109 | (18 | ) | 60 | ||||||||||
Tax effects — provision/(benefit) | (10 | ) | 39 | (9 | ) | 2 | ||||||||||
Total of above adjustments, net of tax | 3 | 70 | (9 | ) | 58 | |||||||||||
Income tax adjustment(d) | — | — | — | 28 | ||||||||||||
Net after-tax adjustments | 3 | 70 | (9 | ) | 86 | |||||||||||
Net income (loss), as restated | $ | (1,250 | ) | $ | (917 | ) | $ | (1,673 | ) | $ | (6,577 | ) | ||||
(a) | Refer to Note 2 to the Consolidated Financial Statements for background related to these adjustments. | |
(b) | GM erroneously recorded its utility-related accruals in the improper periods. The adjustment was recorded to correct Automotive cost of sales in each quarterly period shown above. | |
(c) | Subsequent to the completion of our previously filed consolidated financial statements for each period being restated, we identified adjustments that should have been recorded in these earlier periods. Upon identification, we determined these adjustments to be immaterial, individually and in the aggregate, to our previously filed consolidated financial statements, and recorded these out of period adjustments in the periods in which they were identified. Due to the adjustments that required a restatement of our previously filed consolidated financial statements, we are also reversing theseout-of-period adjustments and recording them in the proper periods. | |
In addition to the above adjustments, to comply with EITF00-10, “Accounting for Shipping and Handling Fees and Costs”, in 2006, GM reclassified shipping and handling costs incurred to transport product to its customers. The correction for this reclassification increased Automotive sales and Automotive cost of sales for the first, second, third, and fourth quarters in the year ended December 31, 2005 in the amount of |
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$850 million, $846 million, $890 million and $1.0 billion, respectively. This correction did not affect net income (loss) or earnings (loss) per share. |
(d) | GM erroneously recorded an adjustment to its income taxes payable as part of the 2005 provision to return reconciliation process. |
(5) | Fourth quarter 2005 results include the following after-tax items: |
• | A charge of $1.7 billion in connection with the North American manufacturing capacity actions announced in November 2005. This charge includes $1.2 billion associated with the hourly employees at the facilities GM is idling and $455 million for the non-cash write-down of property, plants and equipment. | |
• | A charge of $3.6 billion for GM’s contingent exposures relating to Delphi’s Chapter 11 filing, including under the benefit guarantees for certain former GM U.S. hourly employees who transferred to Delphi. | |
• | A gain of $71 million related to the sale of GM’s investment in the common stock of FHI, due to the appreciation of the fair value of such stock after June 30, 2005, the date of the FHI impairment charge. Also in the fourth quarter, GME recorded cancellation charges of $20 million related to FHI, resulting in a net adjustment of $51 million in the fourth quarter. | |
• | Restructuring charges totaling $114 million, as follows: An additional charge related to the GME restructuring plan noted above, of $69 million for approximately 800 additional separations, as well as charges related to previous separations that are required to be amortized over future periods; $38 million at GMAP; and $7 million at Other. | |
• | A charge of $109 million related to the adoption of FIN 47, “Accounting for Conditional Asset Retirement Obligations,” as of December 31, 2005, which was recorded as the cumulative effect of a change in accounting principle. | |
• | A benefit of $49 million related to the effect of changes in Polish tax law at a GM Powertrain joint venture; such amount is included in equity income. | |
• | The recognition of a valuation allowance of $617 million against deferred tax assets at GM do Brasil. |
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Item 9. | Changes in and disagreements with accountants on accounting and financial disclosure |
Item 9A. | Controls and Procedures |
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/s/ G. RICHARD WAGONER, JR. G. Richard Wagoner, Jr. Chairman and Chief Executive Officer | /s/ FREDERICK A. HENDERSON Frederick A. Henderson Vice Chairman and Chief Financial Officer | |
March 14, 2007 | March 14, 2007 |
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• | A new Controller and Corporate Chief Accounting Officer was appointed, effective December 1, 2006. | |
• | A new Chief Accounting Officer (CAO) for GMNA was appointed along with the appointment of six new accounting managers to support GMNA, Global Purchasing Supply Chain, Information Systems and Services, Vehicle Sales, Service and Marketing, Manufacturing related activities, and Powertrain. Also, a new CAO was appointed for Treasury Operations. | |
• | A new Director of Accounting Policy, Research, and SEC Reporting was appointed to manage all SEC related activities including accounting guidance and periodic reporting. | |
• | Management has initiated the Accounting Career Development Program, which is intended to facilitate improvements in the recruitment, training, and development of technical accounting personnel. |
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Item 9B. | Other Information |
Item 10. | Directors and Executive Officers of the Registrant — Code of Ethics |
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ITEM 15. | Exhibits and Financial Statement Schedule |
(a) 1. | All Financial Statements and Supplemental Information |
2. | Financial Statement Schedule II — Valuation and Qualifying Accounts |
3. | Consolidated Financial Statements of GMAC LLC and subsidiaries as of December 31, 2006 and 2005 and for each of the three years ended in the year ended December 31, 2006. |
Exhibits listed below, which have been filed with the SEC pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and which were filed as noted below, are hereby incorporated by reference and made a part of this report with the same effect as filed herewith. |
(3)(i) | Restated Certificate of Incorporation dated March 1, 2004 incorporated herein by reference to Exhibit 3(i) to General Motors Corporation’s Annual Report onForm 10-K filed March 11, 2004. | |
(3)(ii) | Bylaws of General Motors Corporation, as amended, dated October 3, 2006 incorporated herein by reference to Exhibit 3.1 to General Motors Corporation’s Current Report onForm 8-K filed March 9, 2007. | |
(4)(a) | Indenture, dated as of November 15, 1990, between General Motors Corporation and Citibank, N.A., Trustee, incorporated herein by reference to Exhibit Amendment No. 1(a) toForm S-3 Registration StatementNo. 33-41577 filed July 3, 1991. | |
(4)(b)(i) | Indenture, dated as of December 7, 1995, between General Motors Corporation and Citibank, N.A., Trustee, incorporated herein by reference to Exhibit 4(a) to Amendment No. 1 toForm S-3 Registration StatementNo. 33-64229 filed November 14, 1995. | |
(4)(b)(ii) | First Supplemental Indenture, dated as of March 4, 2002, between General Motors Corporation and Citibank, N.A., incorporated herein by reference to Exhibit 2 to the Current Report onForm 8-K of General Motors Corporation filed March 6, 2002. | |
4(b)(iii) | Second Supplemental Indenture, dated as of November 5, 2004, between General Motors Corporation and Citibank, N.A., incorporated herein by reference to Exhibit 4.1 to the Current Report onForm 8-K of General Motors Corporation filed November 10, 2004. | |
4(b)(iv) | Third Supplemental Indenture, dated as of November 5, 2004, between General Motors Corporation and Citibank, N.A. incorporated herein by reference to Exhibit 4.2 to the Current Report onForm 8-K of General Motors Corporation filed November 10, 2004. | |
4(b)(v) | Fourth Supplemental Indenture, dated as of November 5, 2004, between General Motors Corporation and Citibank, N.A., incorporated herein by reference to Exhibit 4.3 to the Current Report onForm 8-K of General Motors Corporation filed November 10, 2004. | |
4(c) | Amended and Restated Credit Agreement, dated July 20, 2006, among General Motors Corporation, General Motors Canada Limited, Saturn Corporation, and a syndicate of lenders, incorporated herein by reference to Exhibit 4 to General Motors Corporation’s Quarterly Report onForm 10-Q filed August 8, 2006. | |
(10) | Agreement, dated as of October 22, 2001, between General Motors Corporation and General Motors Acceptance Corporation, incorporated herein by reference to Exhibit 10 to the Annual Report onForm 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(a) | Agreement, dated as of November 30, 2006, between General Motors Corporation and GMAC LLC, incorporated herein by reference to Exhibit 10.1 to the Current Report onForm 8-K of General Motors Corporation filed November 30, 2006. | |
(10)(b)† | General Motors 2002 Annual Incentive Plan, as amended. | |
(10)(c)† | General Motors 2002 Stock Incentive Plan, as amended. |
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(10)(d)† | General Motors 2002 Long-term Incentive Plan, as amended. | |
10(e)* | Compensation Plan for Nonemployee Directors, incorporated herein by reference to Exhibit A to the Proxy Statement of General Motors Corporation filed April 16, 1997. | |
(10)(h)* | General Motors Company Vehicle Operations — Senior Management Vehicle Program (SMVP) Supplement, revised December 15, 2005, incorporated herein by reference to Exhibit 10(g) to the Annual Report onForm 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(i)* | Compensation Statement for G.R. Wagoner, Jr. commencing January 1, 2003, incorporated herein by reference to Exhibit 10(h) to the Annual Report onForm 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(j)*† | Compensation Statement for Frederick A. Henderson commencing January 1, 2006. | |
(10)(k)* | Compensation Statement for Robert A. Lutz commencing January 1, 2003, incorporated herein by reference to Exhibit 10(j) to the Annual Report onForm 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(l)* | Compensation Statement for G.L. Cowger commencing February 1, 2004, incorporated herein by reference to Exhibit 10(k) to the Annual Report onForm 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(m)* | Compensation Statement for Thomas A. Gottschalk commencing January 1, 2005 and description of retirement program, incorporated herein by reference to Exhibit 10(l) to the Annual Report onForm 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(n)† | General Motors Executive Retirement Plan, effective for retirements on and after January 1, 2007, as amended through January 1, 2007. | |
(10)(o)* | Description of Executive and Board Compensation Reductions, incorporated herein by reference to Exhibit 10(o) to the Annual Report onForm 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(p)* | Deferred Compensation Plan for Executive Employees, incorporated by reference to Exhibit 10.1 to the Current Report onForm 8-K of General Motors Corporation filed December 8, 2006. | |
(10)(q) | Memorandum of Understanding dated October 29, 2005 between the International Union, UAW and General Motors Corporation, incorporated herein by reference to Exhibit 10.1 to the Quarterly Report onForm 10-Q of General Motors Corporation filed May 10, 2006. | |
(10)(r) | UAW-GM-Delphi Special Attrition Program dated March 22, 2006 among the International Union, UAW, General Motors Corporation and Delphi Corporation, incorporated herein by reference to Exhibit 10.1 to the Quarterly Report onForm 10-Q of General Motors Corporation filed May 10, 2006. | |
(12)† | Computation of Ratios of Earnings to Fixed Charges for the Years Ended December 31, 2006, 2005, and 2004. | |
(21)† | Subsidiaries of the Registrant as of December 31, 2006. | |
(23)† | Consent of Independent Registered Public Accounting Firm. | |
(31.1)† | Section 302 Certification of the Chief Executive Officer. | |
(31.2)† | Section 302 Certification of the Chief Financial Officer. | |
(32.1)† | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
(32.2)† | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 15(b) ofForm 10-K. | |
† | Filed herewith. |
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Additions | Additions | |||||||||||||||||||
Balance at | Charged to | Charged to | Balance at | |||||||||||||||||
Beginning | Costs and | Other | End of | |||||||||||||||||
Description | of Year | Expenses | Accounts | Deductions | Year | |||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
For the Year Ended December 31, 2006 | ||||||||||||||||||||
Allowances Deducted from Assets | ||||||||||||||||||||
Allowance for credit losses | $ | 3,085 | $ | 1,799 | $ | — | $ | 4,884 | (d) | $ | — | |||||||||
Accounts and notes receivable (for doubtful receivables) | 353 | 56 | — | 12 | 397 | |||||||||||||||
Inventories (principally for obsolescence of service parts) | 411 | 121 | (c) | — | — | 532 | ||||||||||||||
Other investments and miscellaneous assets (receivables and other) | 17 | — | — | — | 17 | |||||||||||||||
Miscellaneous allowances (mortgage and other) | 84 | 62 | 146 | (d) | — | |||||||||||||||
For the Year Ended December 31, 2005, as restated | ||||||||||||||||||||
Allowances Deducted from Assets | ||||||||||||||||||||
Allowance for credit losses | $ | 3,402 | $ | 1,074 | $ | — | $ | 1,391 | (b) | $ | 3,085 | |||||||||
Accounts and notes receivable (for doubtful receivables) | 318 | 73 | — | 38 | (b) | 353 | ||||||||||||||
Inventories (principally for obsolescence of service parts) | 340 | 71 | (c) | — | — | 411 | ||||||||||||||
Other investments and miscellaneous assets (receivables and other) | 10 | — | 7 | — | 17 | |||||||||||||||
Miscellaneous allowances (mortgage and other) | 161 | 25 | 21 | 123 | 84 | |||||||||||||||
For the Year Ended December 31, 2004, as restated | ||||||||||||||||||||
Allowances Deducted from Assets | ||||||||||||||||||||
Allowance for credit losses | $ | 3,022 | $ | 1,947 | $ | — | $ | 1,567 | (b) | $ | 3,402 | |||||||||
Accounts and notes receivable (for doubtful receivables) | 217 | 122 | 5 | (a) | 26 | (b) | 318 | |||||||||||||
Inventories (principally for obsolescence of service parts) | 393 | — | — | 53 | (c) | 340 | ||||||||||||||
Other investments and miscellaneous assets (receivables and other) | 84 | — | — | 74 | 10 | |||||||||||||||
Miscellaneous allowances (mortgage and other) | 193 | 28 | 163 | 223 | 161 |
Notes: |
(a) | Primarily reflects the recovery of accounts previously written off. | |
(b) | Accounts written off. | |
(c) | Represents net change of inventory allowances. | |
(d) | Primarily reflects allowances removed as a result of sale of 51% controlling interest in GMAC. At the time of the sale GMAC had an allowance for credit loss balance and miscellaneous allowance balance of $3.5 billion and $123 million respectively. |
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March 12, 2007
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2005 | 2004 | |||||||||||
(As restated | (As restated | |||||||||||
Year ended December 31,($ in millions) | 2006 | see Note 1) | see Note 1) | |||||||||
Revenue | ||||||||||||
Consumer | $10,472 | $9,943 | $10,316 | |||||||||
Commercial | 3,112 | 2,685 | 2,177 | |||||||||
Loans held for sale | 1,777 | 1,652 | 1,269 | |||||||||
Operating leases | 7,742 | 7,032 | 6,563 | |||||||||
Total financing revenue | 23,103 | 21,312 | 20,325 | |||||||||
Interest expense | 15,560 | 13,106 | 9,659 | |||||||||
Net financing revenue before provision for credit losses | 7,543 | 8,206 | 10,666 | |||||||||
Provision for credit losses | 2,000 | 1,074 | 1,953 | |||||||||
Net financing revenue | 5,543 | 7,132 | 8,713 | |||||||||
Servicing fees | 1,893 | 1,730 | 1,547 | |||||||||
Amortization and impairment of servicing rights | (23 | ) | (869 | ) | (1,112 | ) | ||||||
Servicing asset valuation and hedge activities, net | (1,100 | ) | 61 | 243 | ||||||||
Net loan servicing income | 770 | 922 | 678 | |||||||||
Insurance premiums and service revenue earned | 4,183 | 3,762 | 3,528 | |||||||||
Gain on sale of mortgage and automotive loans | 1,470 | 1,656 | 1,347 | |||||||||
Investment income | 2,143 | 1,216 | 845 | |||||||||
Gains on sale of equity method investment | 411 | — | — | |||||||||
Other income | 3,643 | 4,399 | 3,470 | |||||||||
Total net financing revenue and other income | 18,163 | 19,087 | 18,581 | |||||||||
Expense | ||||||||||||
Depreciation expense on operating lease assets | 5,341 | 5,244 | 4,828 | |||||||||
Compensation and benefits expense | 2,558 | 3,163 | 2,916 | |||||||||
Insurance losses and loss adjustment expenses | 2,420 | 2,355 | 2,371 | |||||||||
Other operating expenses | 4,776 | 4,134 | 4,210 | |||||||||
Impairment of goodwill and other intangible assets | 840 | 712 | — | |||||||||
Total noninterest expense | 15,935 | 15,608 | 14,325 | |||||||||
Income before income tax expense | 2,228 | 3,479 | 4,256 | |||||||||
Income tax expense | 103 | 1,197 | 1,362 | |||||||||
Net income | $2,125 | $2,282 | $2,894 | |||||||||
Preferred interest accretion to redemption value and dividends | (295 | ) | — | — | ||||||||
Net income available to members | $1,830 | $— | $— | |||||||||
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2005 | ||||||||
(As restated | ||||||||
December 31,($ in millions) | 2006 | see Note 1) | ||||||
Assets | ||||||||
Cash and cash equivalents | $15,459 | $15,424 | ||||||
Investment securities | 16,791 | 18,207 | ||||||
Loans held for sale | 27,718 | 21,865 | ||||||
Assets held for sale | — | 19,030 | ||||||
Finance receivables and loans, net of unearned income | ||||||||
Consumer | 130,542 | 140,436 | ||||||
Commercial | 43,904 | 44,574 | ||||||
Allowance for credit losses | (3,576 | ) | (3,085 | ) | ||||
Total finance receivables and loans, net | 170,870 | 181,925 | ||||||
Investment in operating leases, net | 24,184 | 31,211 | ||||||
Notes receivable from GM | 1,975 | 4,565 | ||||||
Mortgage servicing rights | 4,930 | 4,015 | ||||||
Premiums and other insurance receivables | 2,016 | 1,873 | ||||||
Other assets | 23,496 | 22,442 | ||||||
Total assets | $287,439 | $320,557 | ||||||
Liabilities | ||||||||
Debt | ||||||||
Unsecured | $113,500 | $133,560 | ||||||
Secured | 123,485 | 121,138 | ||||||
Total debt | 236,985 | 254,698 | ||||||
Interest payable | 2,592 | 3,057 | ||||||
Liabilities related to assets held for sale | — | 10,941 | ||||||
Unearned insurance premiums and service revenue | 5,002 | 5,054 | ||||||
Reserves for insurance losses and loss adjustment expenses | 2,630 | 2,534 | ||||||
Accrued expenses and other liabilities | 22,659 | 18,224 | ||||||
Deferred income taxes | 1,007 | 4,364 | ||||||
Total liabilities | 270,875 | 298,872 | ||||||
Preferred interests | 2,195 | — | ||||||
Equity | ||||||||
Common stock and paid-in capital | — | 5,760 | ||||||
Members’ interest | 6,711 | — | ||||||
Retained earnings | 7,173 | 15,095 | ||||||
Accumulated other comprehensive income | 485 | 830 | ||||||
Total equity | 14,369 | 21,685 | ||||||
Total liabilities, preferred interests and equity | $287,439 | $320,557 | ||||||
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Common | Accumulated | |||||||||||||||||||||||
Stock | other | |||||||||||||||||||||||
and paid- | Members’ | Retained | Comprehensive | comprehensive | Total | |||||||||||||||||||
($ in millions) | in capital | interest | earnings | income | income (loss) | equity | ||||||||||||||||||
Balance at December 31, 2003 (As restated see Note 1) | $5,641 | $— | $14,114 | $518 | $20,273 | |||||||||||||||||||
Increase in paid-in capital | 119 | — | — | — | 119 | |||||||||||||||||||
Net income | — | — | 2,894 | $2,894 | — | 2,894 | ||||||||||||||||||
Dividends paid | — | — | (1,500 | ) | — | — | (1,500 | ) | ||||||||||||||||
Other comprehensive income | — | — | — | 650 | 650 | 650 | ||||||||||||||||||
Comprehensive income | $3,544 | |||||||||||||||||||||||
Balance at December 31, 2004 (As restated see Note 1) | $5,760 | $— | $15,508 | $1,168 | $22,436 | |||||||||||||||||||
Net income | — | — | 2,282 | 2,282 | — | 2,282 | ||||||||||||||||||
Dividends paid | — | — | (2,500 | ) | — | — | (2,500 | ) | ||||||||||||||||
Repurchase transaction (a) | — | — | (195 | ) | — | — | (195 | ) | ||||||||||||||||
Other comprehensive loss | — | — | — | (338 | ) | (338 | ) | (338 | ) | |||||||||||||||
Comprehensive income | $1,944 | |||||||||||||||||||||||
Balance at December 31, 2005 (As restated see Note 1) | $5,760 | $— | $15,095 | $830 | $21,685 | |||||||||||||||||||
Conversion of common stock to members’ interest on July 20, 2006 | (5,760 | ) | 5,760 | — | — | — | ||||||||||||||||||
Net income | — | — | 2,125 | 2,125 | — | 2,125 | ||||||||||||||||||
Preferred interest accretion to redemption value and dividends | — | — | (295 | ) | — | — | (295 | ) | ||||||||||||||||
Cumulative effect of a change in accounting principle, net of tax: | ||||||||||||||||||||||||
Transfer of unrealized loss for certain available for sale securities to trading securities | — | — | (17 | ) | — | 17 | — | |||||||||||||||||
Recognize mortgage servicing rights at fair value | — | — | 4 | 4 | — | 4 | ||||||||||||||||||
Dividends | — | — | (9,739 | ) | — | — | (9,739 | ) | ||||||||||||||||
Capital contributions | — | 951 | — | — | — | 951 | ||||||||||||||||||
Other comprehensive loss | — | — | — | (362 | ) | (362 | ) | (362 | ) | |||||||||||||||
Comprehensive income | $1,767 | |||||||||||||||||||||||
Balance at December 31, 2006 | $— | $6,711 | $7,173 | $485 | $14,369 | |||||||||||||||||||
(a) | In October 2005 we repurchased operating lease assets and related deferred tax liabilities from GM. Refer to Note 18 to our Consolidated Financial Statements for further detail. |
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2005 | 2004 | |||||||||||
(As restated | (As restated | |||||||||||
Year ended December 31,($ in millions) | 2006 | see Note 1) | see Note 1) | |||||||||
Operating activities | ||||||||||||
Net income | $2,125 | $2,282 | $2,894 | |||||||||
Reconciliation of net income to net cash (used in) provided by operating activities: | ||||||||||||
Depreciation and amortization | 6,459 | 5,964 | 5,433 | |||||||||
Goodwill impairment | 840 | 712 | — | |||||||||
Amortization and valuation adjustments of mortgage servicing rights | 843 | 782 | 1,384 | |||||||||
Provision for credit losses | 2,000 | 1,074 | 1,953 | |||||||||
Net gains on sales of finance receivables and loans | (1,470 | ) | (1,741 | ) | (1,332 | ) | ||||||
Net gains on investment securities | (1,005 | ) | (104 | ) | (52 | ) | ||||||
Capitalized interest income | — | (23 | ) | (30 | ) | |||||||
Net change in: | ||||||||||||
Trading securities | 370 | (1,155 | ) | 614 | ||||||||
Loans held for sale (a) | (19,346 | ) | (29,119 | ) | (2,312 | ) | ||||||
Deferred income taxes | (1,346 | ) | 351 | (118 | ) | |||||||
Interest payable | (470 | ) | (290 | ) | 311 | |||||||
Other assets | (2,340 | ) | (2,446 | ) | 2,426 | |||||||
Other liabilities | (1,067 | ) | 45 | (2,875 | ) | |||||||
Other, net | (287 | ) | 568 | 1,167 | ||||||||
Net cash (used in) provided by operating activities | (14,694 | ) | (23,100 | ) | 9,463 | |||||||
Investing activities | ||||||||||||
Purchases of available for sale securities | (28,184 | ) | (19,165 | ) | (12,783 | ) | ||||||
Proceeds from sales of available for sale securities | 6,628 | 5,721 | 3,276 | |||||||||
Proceeds from maturities of available for sale securities | 23,147 | 8,887 | 7,250 | |||||||||
Net increase in finance receivables and loans | (94,869 | ) | (96,028 | ) | (125,183 | ) | ||||||
Proceeds from sales of finance receivables and loans | 117,830 | 125,836 | 108,147 | |||||||||
Purchases of operating lease assets | (18,190 | ) | (15,496 | ) | (14,055 | ) | ||||||
Disposals of operating lease assets | 7,303 | 5,164 | 7,668 | |||||||||
Change in notes receivable from GM | 1,660 | 1,053 | (1,635 | ) | ||||||||
Purchases of mortgage servicing rights, net | (61 | ) | (267 | ) | (326 | ) | ||||||
Acquisitions of subsidiaries, net of cash acquired | (340 | ) | (2 | ) | 9 | |||||||
Proceeds from sale of business units, net | 8,537 | — | — | |||||||||
Settlement of residual support and risk sharing obligations with GM | 1,357 | — | — | |||||||||
Other, net | (21 | ) | (1,549 | ) | 260 | |||||||
Net cash provided by (used in) investing activities | 24,797 | 14,154 | (27,372 | ) | ||||||||
Financing activities | ||||||||||||
Net change in short-term debt | 2,665 | (9,970 | ) | 4,123 | ||||||||
Proceeds from issuance of long-term debt | 88,180 | 77,890 | 72,753 | |||||||||
Repayments of long-term debt | (100,840 | ) | (69,520 | ) | (57,743 | ) | ||||||
Other financing activities | 2,259 | 6,168 | 4,723 | |||||||||
Dividends paid | (4,755 | ) | (2,500 | ) | (1,500 | ) | ||||||
Proceeds from issuance of preferred interests | 1,900 | — | — | |||||||||
Net cash (used in) provided by financing activities | (10,591 | ) | 2,068 | 22,356 | ||||||||
Effect of exchange rate changes on cash and cash equivalents | 152 | (45 | ) | 295 | ||||||||
Net (decrease) increase in cash and cash equivalents | (336 | ) | (6,923 | ) | 4,742 | |||||||
Cash and cash equivalents at beginning of year (d) | 15,795 | 22,718 | 17,976 | |||||||||
Cash and cash equivalents at end of year (b) | $15,459 | $15,795 | $22,718 | |||||||||
Supplemental disclosures | ||||||||||||
Cash paid for: | ||||||||||||
Interest | $15,889 | $13,025 | $8,887 | |||||||||
Income taxes | 1,087 | 1,339 | 2,003 | |||||||||
Non-cash items: | ||||||||||||
Finance receivables and loans held for sale (c) | — | — | 6,849 | |||||||||
(Decrease) increase in equity (d) | — | (195 | ) | 119 | ||||||||
Loans held for sale transferred to finance receivables and loans | 14,549 | 20,084 | 4,332 | |||||||||
Finance receivables and loans transferred to loans held for sale | 3,889 | 3,904 | 3,506 | |||||||||
Finance receivables and loans transferred to other assets | 1,771 | 1,017 | 388 | |||||||||
Transfer of investment securities classified as trading to investment securities classified as available for sale | — | 257 | 561 | |||||||||
Various assets and liabilities acquired through consolidation of variable interest entities | — | 325 | — | |||||||||
Available for sale securities transferred to trading securities | 927 | — | — | |||||||||
Capital contributions from GM relating to GMAC sale (e) | 951 | — | — | |||||||||
Non cash dividends paid to GM relating to GMAC sale (e) | 4,984 | — | — | |||||||||
Proceeds from sales and repayments of mortgage loans held for investment originally designated as held for sale | 7,562 | 2,063 | 1,550 | |||||||||
(a) | Includes origination of mortgage servicing rights of $1,732, $1,272 and $1,228 for 2006, 2005 and 2004, respectively. |
(b) | 2005 includes $371 of cash and cash equivalents classified as assets held for sale. Refer to Note 1 to our Consolidated Financial Statements. |
(c) | Represents the consolidation of certain assets related to an accounting change under SFAS 140 in 2004. |
(d) | For 2005 represents the repurchase of operating lease assets and related deferred tax liabilities from GM. For 2004 represents the consolidation of Banco GM under FIN 46R beginning January 1, 2004; in the fourth quarter, we purchased Banco GM. |
(e) | As further described in Note 18 to our Consolidated Financial Statements. |
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Net income for the year ended December 31, | ||||||||
($ in millions) | 2005 | 2004 | ||||||
Previously reported net income | $ | 2,394 | $ | 2,913 | ||||
Elimination of hedge accounting related to certain debt instruments | (256 | ) | (143 | ) | ||||
Other, net | 136 | 52 | ||||||
Total pre-tax adjustments | (120 | ) | (91 | ) | ||||
Related income tax effects | 8 | 72 | ||||||
Restated net income | $ | 2,282 | $ | 2,894 | ||||
% change | (4.7 | ) | (0.7 | ) | ||||
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Adjustment Expenses
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2006 | 2005 | 2004 | ||||||||||||||||||||||
Year ended December 31,($ in millions) | Written | Earned | Written | Earned | Written | Earned | ||||||||||||||||||
Insurance premiums | ||||||||||||||||||||||||
Direct | $2,575 | $2,733 | $2,493 | $2,644 | $2,400 | $2,604 | ||||||||||||||||||
Assumed | 696 | 693 | 634 | 595 | 611 | 630 | ||||||||||||||||||
Gross insurance premiums | 3,271 | 3,426 | 3,127 | 3,239 | 3,011 | 3,234 | ||||||||||||||||||
Ceded | (445 | ) | (450 | ) | (401 | ) | (387 | ) | (348 | ) | (347 | ) | ||||||||||||
Net insurance premiums | 2,826 | 2,976 | 2,726 | 2,852 | 2,663 | 2,887 | ||||||||||||||||||
Service revenue | 1,209 | 1,207 | 1,345 | 910 | 1,319 | 641 | ||||||||||||||||||
Insurance premiums and service revenue written and earned | $4,035 | $4,183 | $4,071 | $3,762 | $3,982 | $3,528 | ||||||||||||||||||
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Year ended December 31,($ in millions) | 2006 | 2005 | 2004 | |||||||||
Real estate services | $593 | $712 | $464 | |||||||||
Interest and service fees on transactions with GM (a) | 576 | 568 | 370 | |||||||||
Interest on cash equivalents | 489 | 480 | 244 | |||||||||
Other interest revenue | 536 | 450 | 297 | |||||||||
Full service leasing fees | 280 | 170 | 153 | |||||||||
Late charges and other administrative fees | 164 | 164 | 164 | |||||||||
Mortgage processing fees | 136 | 461 | 518 | |||||||||
Interest on restricted cash deposits | 119 | 102 | 60 | |||||||||
Insurance service fees | 131 | 111 | 136 | |||||||||
Real estate and other investment income | 106 | 157 | 148 | |||||||||
Factoring commissions | 60 | 74 | 77 | |||||||||
Specialty lending fees | 57 | 59 | 60 | |||||||||
Fair value adjustment on certain derivatives (b) | 6 | (36 | ) | (26 | ) | |||||||
Other | 390 | 927 | 805 | |||||||||
Total other income | $3,643 | $4,399 | $3,470 | |||||||||
(a) | Refer to Note 18 to our Consolidated Financial Statements for a description of transactions with GM. |
(b) | Refer to Note 15 to our Consolidated Financial Statements for a description of our derivative instruments and hedging activities. |
Year ended December 31,($ in millions) | 2006 | 2005 | 2004 | |||||||||
Insurance commissions | $898 | $901 | $928 | |||||||||
Technology and communications expense | 573 | 591 | 569 | |||||||||
Professional services | 493 | 452 | 474 | |||||||||
Advertising and marketing | 363 | 359 | 537 | |||||||||
Premises and equipment depreciation | 253 | 288 | 294 | |||||||||
Rent and storage | 243 | 272 | 253 | |||||||||
Full service leasing vehicle maintenance costs | 257 | 236 | 215 | |||||||||
Lease and loan administration | 222 | 196 | 175 | |||||||||
Auto remarketing and repossession | 288 | 187 | 136 | |||||||||
Operating lease disposal loss (gain) | 29 | (304 | ) | (192 | ) | |||||||
Other | 1,157 | 956 | 821 | |||||||||
Total other operating expenses | $4,776 | $4,134 | $4,210 | |||||||||
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2006 | 2005 | |||||||||||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||||||||||
unrealized | Fair | unrealized | Fair | |||||||||||||||||||||||||||||
December 31,($ in millions) | Cost | gains | losses | value | Cost | gains | losses | value | ||||||||||||||||||||||||
Available for sale securities | ||||||||||||||||||||||||||||||||
Debt securities | ||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies | $3,173 | $3 | ($19 | ) | $3,157 | $2,945 | $5 | ($46 | ) | $2,904 | ||||||||||||||||||||||
States and political subdivisions | 734 | 23 | (1 | ) | 756 | 863 | 27 | (1 | ) | 889 | ||||||||||||||||||||||
Foreign government securities | 809 | 6 | (5 | ) | 810 | 844 | 11 | (2 | ) | 853 | ||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||||
Residential | 185 | — | (2 | ) | 183 | 119 | — | (2 | ) | 117 | ||||||||||||||||||||||
Commercial | 26 | — | — | 26 | 19 | — | — | 19 | ||||||||||||||||||||||||
Asset-backed securities (a) | 1,735 | 2 | — | 1,737 | 956 | — | — | 956 | ||||||||||||||||||||||||
Interest-only strips | 43 | 10 | — | 53 | 122 | 29 | (3 | ) | 148 | |||||||||||||||||||||||
Corporate debt securities | 3,713 | 18 | (32 | ) | 3,699 | 5,124 | 27 | (30 | ) | 5,121 | ||||||||||||||||||||||
Other | 994 | 9 | (3 | ) | 1,000 | 909 | 16 | (5 | ) | 920 | ||||||||||||||||||||||
Total debt securities (b) | 11,412 | 71 | (62 | ) | 11,421 | 11,901 | 115 | (89 | ) | 11,927 | ||||||||||||||||||||||
Equity securities | 418 | 161 | (5 | ) | 574 | 1,510 | 874 | (17 | ) | 2,367 | ||||||||||||||||||||||
Total available for sale securities | $11,830 | $232 | ($67 | ) | $11,995 | $13,411 | $989 | ($106 | ) | $14,294 | ||||||||||||||||||||||
Held-to-maturity securities | ||||||||||||||||||||||||||||||||
Totalheld-to-maturity securities | $12 | $— | $— | $12 | $16 | $— | $— | $16 | ||||||||||||||||||||||||
(a) | Includes approximately $471 of Notes secured by operating lease assets distributed to GM on November 22, 2006. Refer to Note 18 for further discussion. |
(b) | In connection with certain borrowings and letters of credit relating to certain assumed reinsurance contracts $194 and $1,098 of primarily U.S. Treasury securities were pledged as collateral as of December 31, 2006 and 2005, respectively. |
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December 31,($ in millions) | 2006 | 2005 | ||||||
Trading securities | ||||||||
Fair value | ||||||||
U.S. Treasury Securities | $401 | $— | ||||||
Residential mortgage-backed securities | 1,748 | 1,042 | ||||||
Mortgage residual interests | 1,019 | 764 | ||||||
Asset backed securities | 19 | — | ||||||
Interest-only strips | 572 | 265 | ||||||
Principal-only strips | 957 | 651 | ||||||
Debt and other | 68 | 1,175 | ||||||
Total trading securities | $4,784 | $3,897 | ||||||
Net unrealized gains (a) | $118 | $131 | ||||||
Pledged as collateral | $1,524 | $2,697 | ||||||
(a) | Unrealized gains and losses are included in investment income on a current period basis. Net unrealized gains totaled $35 at December 31, 2004. |
Available | Held to | |||||||||||||||
for sale | maturity | |||||||||||||||
December 31, 2006 | Fair | Fair | ||||||||||||||
($ in millions) | Cost | value | Cost | value | ||||||||||||
Due in one year or less | $3,077 | $3,076 | $8 | $8 | ||||||||||||
Due after one year through five years | 4,059 | 4,042 | — | — | ||||||||||||
Due after five years through ten years | 1,923 | 1,926 | — | — | ||||||||||||
Due after ten years | 678 | 691 | 4 | 4 | ||||||||||||
Mortgage-backed securities and interests in securitization trusts | 1,675 | 1,686 | — | — | ||||||||||||
Total securities | $11,412 | $11,421 | $12 | $12 | ||||||||||||
�� | ||||||||||||
Year ended December 31, | ||||||||||||
($ in millions) | 2006 | 2005 | 2004 | |||||||||
Gross realized gains (a) | $1,081 | $186 | $138 | |||||||||
Gross realized losses | (76 | ) | (66 | ) | (49 | ) | ||||||
Net realized gains | $1,005 | $120 | $89 | |||||||||
(a) | Gains realized in 2006 primarily relate to the rebalancing of the investment portfolio at our Insurance operations. |
2006 | 2005 | |||||||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Less than 12 months | 12 months or longer | |||||||||||||||||||||||||||||
Year ended December 31, | Unrealized | Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||||||||
($ in millions) | Fair value | loss | Fair value | loss | Fair value | loss | Fair value | loss | ||||||||||||||||||||||||
Available for sale securities: | ||||||||||||||||||||||||||||||||
Debt securities | ||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies | $858 | ($3 | ) | $919 | ($16 | ) | $1,590 | ($32 | ) | $520 | ($15 | ) | ||||||||||||||||||||
States and political subdivision | 127 | (1 | ) | 29 | — | 79 | (1 | ) | — | — | ||||||||||||||||||||||
Foreign government securities | 338 | (3 | ) | 81 | (2 | ) | 179 | (1 | ) | — | — | |||||||||||||||||||||
Residential mortgage-backed securities | 60 | — | 82 | (2 | ) | 36 | (1 | ) | 76 | (2 | ) | |||||||||||||||||||||
Interest-only strips | — | — | — | — | 81 | (3 | ) | — | — | |||||||||||||||||||||||
Corporate debt securities | 697 | (3 | ) | 1,191 | (29 | ) | 1,865 | (20 | ) | 331 | (10 | ) | ||||||||||||||||||||
Other | 299 | (1 | ) | 107 | (2 | ) | 175 | (3 | ) | 21 | (1 | ) | ||||||||||||||||||||
Total temporarily impaired securities | 2,379 | (11 | ) | 2,409 | (51 | ) | 4,005 | (61 | ) | 948 | (28 | ) | ||||||||||||||||||||
Equity securities | 73 | (4 | ) | 7 | (1 | ) | 137 | (15 | ) | 19 | (2 | ) | ||||||||||||||||||||
Total available for sale securities | $2,452 | ($15 | ) | $2,416 | ($52 | ) | $4,142 | ($76 | ) | $967 | ($30 | ) | ||||||||||||||||||||
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2006 | 2005 | |||||||||||||||||||||||
December 31,($ in millions) | Domestic | Foreign | Total | Domestic | Foreign | Total | ||||||||||||||||||
Consumer | ||||||||||||||||||||||||
Retail automotive | $40,568 | $20,538 | $61,106 | $53,814 | $17,663 | $71,477 | ||||||||||||||||||
Residential mortgages | 65,928 | 3,508 | 69,436 | 65,040 | 3,919 | 68,959 | ||||||||||||||||||
Total consumer | 106,496 | 24,046 | 130,542 | 118,854 | 21,582 | 140,436 | ||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Automotive | ||||||||||||||||||||||||
Wholesale | 12,723 | 7,854 | 20,577 | 13,202 | 7,372 | 20,574 | ||||||||||||||||||
Leasing and lease financing | 326 | 901 | 1,227 | 461 | 767 | 1,228 | ||||||||||||||||||
Term loans to dealers and others | 1,843 | 764 | 2,607 | 2,397 | 719 | 3,116 | ||||||||||||||||||
Commercial and industrial | 14,068 | 2,213 | 16,281 | 14,908 | 2,028 | 16,936 | ||||||||||||||||||
Real estate construction and other | 2,969 | 243 | 3,212 | 2,601 | 119 | 2,720 | ||||||||||||||||||
Total commercial | 31,929 | 11,975 | 43,904 | 33,569 | 11,005 | 44,574 | ||||||||||||||||||
Total finance receivables and loans (a) (b) | $138,425 | $36,021 | $174,446 | $152,423 | $32,587 | $185,010 | ||||||||||||||||||
(a) | Net of unearned income of $5.7 billion and $5.9 billion at December 31, 2006 and 2005, respectively. |
(b) | The aggregate amount of finance receivables and loans maturing in the next five years is as follows: $57,230 in 2007; $18,994 in 2008; $14,974 in 2009; $9,919 in 2010; $6,212 in 2011 and $72,849 in 2012 and thereafter. Prepayments may cause actual maturities to differ from scheduled maturities. |
Year ended December 31, | 2006 | 2005 | 2004 | |||||||||||||||||||||||||||||||||
($ in millions) | Consumer | Commercial | Total | Consumer | Commercial | Total | Consumer | Commercial | Total | |||||||||||||||||||||||||||
Allowance at beginning of year | $2,652 | $433 | $3,085 | $2,931 | $471 | $3,402 | $2,513 | $509 | $3,022 | |||||||||||||||||||||||||||
Provision for credit losses | 1,668 | 332 | 2,000 | 1,006 | 68 | 1,074 | 1,935 | 18 | 1,953 | |||||||||||||||||||||||||||
Charge-offs | ||||||||||||||||||||||||||||||||||||
Domestic | (1,436 | ) | (139 | ) | (1,575 | ) | (1,302 | ) | (45 | ) | (1,347 | ) | (1,469 | ) | (96 | ) | (1,565 | ) | ||||||||||||||||||
Foreign | (182 | ) | (35 | ) | (217 | ) | (194 | ) | (26 | ) | (220 | ) | (269 | ) | (7 | ) | (276 | ) | ||||||||||||||||||
Total charge-offs | (1,618 | ) | (174 | ) | (1,792 | ) | (1,496 | ) | (71 | ) | (1,567 | ) | (1,738 | ) | (103 | ) | (1,841 | ) | ||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||
Domestic | 198 | 14 | 212 | 168 | 9 | 177 | 112 | 10 | 122 | |||||||||||||||||||||||||||
Foreign | 47 | 3 | 50 | 48 | 4 | 52 | 81 | 3 | 84 | |||||||||||||||||||||||||||
Total recoveries | 245 | 17 | 262 | 216 | 13 | 229 | 193 | 13 | 206 | |||||||||||||||||||||||||||
Net charge-offs | (1,373 | ) | (157 | ) | (1,530 | ) | (1,280 | ) | (58 | ) | (1,338 | ) | (1,545 | ) | (90 | ) | (1,635 | ) | ||||||||||||||||||
Transfers to assets held for sale | — | — | — | — | (28 | ) | (28 | ) | — | — | — | |||||||||||||||||||||||||
Impacts of foreign currency translation | 19 | (1 | ) | 18 | (9 | ) | (15 | ) | (24 | ) | 20 | 6 | 26 | |||||||||||||||||||||||
Securitization activity | 3 | — | 3 | 4 | (5 | ) | (1 | ) | 8 | 28 | 36 | |||||||||||||||||||||||||
Allowance at end of year | $2,969 | $607 | $3,576 | $2,652 | $433 | $3,085 | $2,931 | $471 | $3,402 | |||||||||||||||||||||||||||
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December 31,($ in millions) | 2006 | 2005 | ||||||
Impaired loans | $1,975 | $887 | ||||||
Related allowance | 346 | 184 | ||||||
Average balance of impaired loans during the year | 972 | 1,120 | ||||||
December 31,($ in millions) | 2006 | 2005 | 2004 | |||||||||
Consumer | $2,576 | $1,658 | $1,824 | |||||||||
Commercial | — | 680 | 580 | |||||||||
Total outstanding balance | 2,576 | 2,338 | 2,404 | |||||||||
Allowance | (105 | ) | (103 | ) | (99 | ) | ||||||
Total carrying amount | $2,471 | $2,235 | $2,305 | |||||||||
Year ended December 31,($ in millions) | 2006 | 2005 | ||||||
Accretable yield at beginning of year | $52 | $121 | ||||||
Additions | 251 | 285 | ||||||
Accretion | (69 | ) | (131 | ) | ||||
Reclassification from nonaccretable difference | — | 11 | ||||||
Transfers to assets held for sale | — | (155 | ) | |||||
Disposals | (88 | ) | (79 | ) | ||||
Accretable yield at end of year | $146 | $52 | ||||||
Year ended December 31,($ in millions) | 2006 | 2005 | ||||||
Contractually required payments receivable at acquisition: | ||||||||
Consumer | $6,992 | $3,158 | ||||||
Commercial | — | 1,848 | ||||||
Total payments | $6,992 | $5,006 | ||||||
Cash flows expected to be collected at acquisition | $3,155 | $2,333 | ||||||
Basis in acquired loans at acquisition | $2,588 | $1,900 | ||||||
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2006 | ||||||||||||
Retail | ||||||||||||
finance | Wholesale | |||||||||||
Year ended December 31, ($ in millions) | receivables | loans | ResCap | |||||||||
Pre-tax (losses) gains on securitizations | ($51 | ) | $601 | $825 | ||||||||
Cash inflows: | ||||||||||||
Proceeds from new securitizations | 6,302 | — | 65,687 | |||||||||
Servicing fees received | 65 | 181 | 480 | |||||||||
Other cash flows received on retained interests | 232 | 140 | 587 | |||||||||
Proceeds from collections reinvested in revolving securitizations | — | 96,969 | — | |||||||||
Repayments of servicing advances | 46 | — | 1,199 | |||||||||
Cash outflows: | ||||||||||||
Servicing advances | (51 | ) | — | (1,265 | ) | |||||||
Purchase obligations and options: | ||||||||||||
Mortgage loans under conditional call option | — | — | (20 | ) | ||||||||
Representations and warranties obligations | — | — | (94 | ) | ||||||||
Administrator or servicer actions | (27 | ) | — | (60 | ) | |||||||
Asset performance conditional calls | — | — | (82 | ) | ||||||||
Cleanup calls | (242 | ) | — | (1,055 | ) | |||||||
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2005 | 2004 | |||||||||||||||||||||||||||||||
Retail | Retail | |||||||||||||||||||||||||||||||
Year ended December 31, | finance | Wholesale | finance | Wholesale | ||||||||||||||||||||||||||||
($ in millions) | receivables | loans | ResCap | Other | receivables | loans | ResCap | Other | ||||||||||||||||||||||||
Pre-tax gains (losses) on securitizations | ($2 | ) | $543 | $513 | $76 | $9 | $497 | $602 | $65 | |||||||||||||||||||||||
Cash inflows: | ||||||||||||||||||||||||||||||||
Proceeds from new securitizations | 4,874 | 7,705 | 41,987 | 4,731 | 1,824 | 9,188 | 29,412 | 3,043 | ||||||||||||||||||||||||
Servicing fees received | 65 | 179 | 245 | 21 | 105 | 174 | 208 | 20 | ||||||||||||||||||||||||
Other cash flows received on retained interests | 249 | 503 | 583 | 304 | 340 | 808 | 729 | 284 | ||||||||||||||||||||||||
Proceeds from collections reinvested in revolving securitizations | — | 102,306 | — | — | — | 91,360 | — | — | ||||||||||||||||||||||||
Repayments of servicing advances | 43 | — | 1,115 | 198 | 75 | — | 947 | — | ||||||||||||||||||||||||
Cash outflows: | ||||||||||||||||||||||||||||||||
Servicing advances | (46 | ) | — | (1,163 | ) | (188 | ) | (64 | ) | — | (1,035 | ) | — | |||||||||||||||||||
Purchase obligations and options: | ||||||||||||||||||||||||||||||||
Mortgage loans under conditional call option | — | — | (9 | ) | — | — | — | (22 | ) | — | ||||||||||||||||||||||
Representations and warranties obligations | — | — | (29 | ) | — | (1 | ) | — | (66 | ) | — | |||||||||||||||||||||
Administrator or servicer actions | (76 | ) | — | — | — | (75 | ) | — | — | — | ||||||||||||||||||||||
Asset performance conditional calls | — | — | (99 | ) | — | — | — | (137 | ) | — | ||||||||||||||||||||||
Clean up calls | (715 | ) | — | (2,202 | ) | — | (269 | ) | — | (3,797 | ) | — | ||||||||||||||||||||
Retail | ||||||
finance | ||||||
Year ended December 31, | receivables (a) | ResCap (b) | Other | |||
2006 | ||||||
Key assumptions (d) (rates per annum): | ||||||
Annual prepayment rate (e) | 0.9-1.7% | 0.0-90.0% | (c) | |||
Weighted average life (in years) | 1.4-1.9 | 1.1-10.5 | (c) | |||
Expected credit losses | 0.4-1.0% | 0.0-18.3% | (c) | |||
Discount rate | 9.5-16.0% | 7.0-25.0% | (c) | |||
2005 | ||||||
Key assumptions (d) (rates per annum): | ||||||
Annual prepayment rate (e) | 0.9-1.2% | 0.0-60.0% | 0.0-50.0% | |||
Weighted average life (in years) | 1.6-1.7 | 1.1-8.5 | 0.3-9.9 | |||
Expected credit losses | 0.4-1.6% | 0.0-4.9% | 0.0% | |||
Discount rate | 9.5-15.0% | 6.5-21.4% | 4.2-12.0% | |||
2004 | ||||||
Key assumptions (d) (rates per annum): | ||||||
Annual prepayment rate (e) | 0.9-1.0% | 0.0-51.3% | 0.0-50.0% | |||
Weighted average life (in years) | 1.6-1.8 | 1.1-6.0 | 0.4-17.4 | |||
Expected credit losses | 0.4% | 0.2-10.9% | 0.0-3.1% | |||
Discount rate | 9.5% | 6.5-24.8% | 4.3-15.0% | |||
(a) | The fair value of retained interests in wholesale securitizations approximates cost because of the short-term and floating rate nature of wholesale loans. |
(b) | Included within residential mortgage loans are home equity loans and lines, highloan-to-value loans and residential first and second mortgage loans. |
(c) | Represents the former GMAC Commercial Mortgage, for which we sold approximately 79% of our equity interest on March 23, 2006. |
(d) | The assumptions used to measure the expected yield on variable rate retained interests are based on a benchmark interest rate yield curve plus a contractual spread, as appropriate. The actual yield curve utilized varies depending on the specific retained interests. |
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(e) | Based on the weighted average maturity (WAM) for finance receivables and constant prepayment rate (CPR) for mortgage loans. |
2006 | 2005 | |||||||||
Retail finance | Retail finance | |||||||||
Year ended December 31,($ in millions) | receivables (a) | ResCap | receivables | ResCap | Other | |||||
Carrying value/fair value of retained interests | $355 | $1,420 | $314 | $1,057 | $432 | |||||
Weighted average life (in years) | 0.0-1.3 | 1.0-8.9 | 0.1-1.2 | 1.0-6.2 | 0.0-17.7 | |||||
Annual prepayment rate | 0.8-1.4%WAM | 0.0-90.0%CPR | 0.7-1.2%WAM | 0.0-60.0%CPR | 0.0-50.0%CPR | |||||
Impact of 10% adverse change | ($4) | ($55) | ($1) | ($46) | ($1) | |||||
Impact of 20% adverse change | (7) | (102) | (2) | (82) | (1) | |||||
Loss assumption | 0.4-1.0% (b) | 0.0-12.8% | 0.4% (b) | 0.0-16.9% | 0.0%-6.7% | |||||
Impact of 10% adverse change | ($5) | ($37) | ($2) | ($43) | ($9) | |||||
Impact of 20% adverse change | (10) | (70) | (4) | (81) | (16) | |||||
Discount rate | 9.5-16.0% | 6.5-43.5% | 9.5-12.0% | 6.5-40.0% | 0.1-33.5% | |||||
Impact of 10% adverse change | ($6) | ($51) | ($2) | ($34) | ($14) | |||||
Impact of 20% adverse change | (12) | (94) | (5) | (65) | (27) | |||||
Market rate | (c) | (c) | 3.9-5.1% | (c) | (c) | |||||
Impact of 10% adverse change | ($4) | ($38) | ($7) | ($11) | ($—) | |||||
Impact of 20% adverse change | (9) | (74) | (15) | (26) | (—) | |||||
(a) | The fair value of retained interests in wholesale securitizations approximates cost of $691 because of the short-term and floating rate nature of wholesale receivables. |
(b) | Net of a reserve for expected credit losses totaling $8 and $14 at December 31, 2006 and 2005, respectively. Such amounts are included in the fair value of the retained interests, which are classified as investment securities. |
(c) | Forward benchmark interest rate yield curve plus contractual spread. |
December 31, (a) | 2006 | 2005 | 2004 | |||
Retail automotive | 0.6% | 0.4% | 0.4% | |||
Residential mortgage | 0.0-12.8% | 0.0-16.9% | 0.0-26.1% | |||
Other | (b) | 0.0-6.7% | 0.0-39.5% | |||
(a) | Static pool losses not applicable to wholesale finance receivable securitizations because of their short-term nature. |
(b) | Represents the former commercial mortgage operations, for which we sold approximately 79% of our equity interest on March 23, 2006. |
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Total finance | Amount 60 days or | ||||||||||||||||||||||||
receivables and loans | more past due | Net credit losses | |||||||||||||||||||||||
December 31,($ in millions) | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | |||||||||||||||||||
Retail automotive | $68,348 | $77,222 | $693 | $892 | $707 | $867 | |||||||||||||||||||
Residential mortgage | 217,972 | 167,584 | 15,175 | 8,682 | 981 | 885 | |||||||||||||||||||
Total consumer | 286,320 | 244,806 | 15,868 | 9,574 | 1,688 | 1,752 | |||||||||||||||||||
Wholesale | 40,484 | 41,994 | 66 | 73 | 2 | 4 | |||||||||||||||||||
Commercial mortgage (a) | — | 43 | — | — | 6 | 4 | |||||||||||||||||||
Other automotive and commercial | 23,385 | 23,996 | 1,582 | 575 | 8 | 33 | |||||||||||||||||||
Total commercial | 63,869 | 66,033 | 1,648 | 648 | 16 | 41 | |||||||||||||||||||
Total managed portfolio (b) | 350,189 | 310,839 | $17,516 | $10,222 | $1,704 | $1,793 | |||||||||||||||||||
Securitized finance receivables and loans | (148,009 | ) | (103,947 | ) | |||||||||||||||||||||
Loans held for sale (unpaid principal) | (27,734 | ) | (21,882 | ) | |||||||||||||||||||||
Total finance receivables and loans | $174,446 | $185,010 | |||||||||||||||||||||||
(a) | On March 23, 2006, we sold approximately 79% of our equity interest in Capmark, our commercial mortgage operations. |
(b) | Managed portfolio represents finance receivables and loans on the balance sheet or that have been securitized, excluding securitized finance receivables and loans that we continue to service but have no other continuing involvement (i.e., in which we retain an interest or risk of loss in the underlying receivables). |
December 31,($ in millions) | 2006 | 2005 | ||||||
Vehicles and other equipment, at cost | $30,281 | $39,443 | ||||||
Accumulated depreciation | (6,097 | ) | (8,232 | ) | ||||
Investment in operating leases, net (a) | $24,184 | $31,211 | ||||||
(a) | On November 22, 2006, $12.6 billion of operating lease assets comprised of $15.7 billion of vehicles at cost, net of $3.1 billion of accumulated depreciation were distributed to GM. Refer to Note 18 to our Consolidated Financial Statements for further description of the distribution. |
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Period ended December 31, 2006($ in millions) | Total | |||
Estimated fair value at January 1, 2006 | $4,021 | |||
Additions obtained from sales of financial assets | 1,723 | |||
Additions from purchases of servicing rights | 12 | |||
Changes in fair value: | ||||
Due to changes in valuation inputs or assumptions used in the valuation model | (44 | ) | ||
Other changes in fair value | (782 | ) | ||
Estimated fair value at December 31, 2006 | $4,930 | |||
December 31, 2006($ in millions) | ||
Range of prepayment speeds (constant prepayment rate) | 1.0-43.2% | |
Impact on fair value of 10% adverse change | ($227) | |
Impact on fair value of 20% adverse change | ($413) | |
Range of discount rates | 8.0-14.0% | |
Impact on fair value of 10% adverse change | ($67) | |
Impact on fair value of 20% adverse change | ($132) | |
($ in millions) | Total | |||
Contractual servicing fees, net of guarantee fees and including subservicing | $1,327 | |||
Late fees | 130 | |||
Ancillary fees | 127 | |||
Total | $1,584 | |||
Year ended December 31,($ in millions) | 2005 | 2004 | ||||||
Balance at beginning of year | $4,819 | $4,869 | ||||||
Originations and purchases, net of sales | 1,546 | 1,554 | ||||||
Amortization | (1,106 | ) | (879 | ) | ||||
SFAS 133 hedge valuation adjustments | 86 | (272 | ) | |||||
Transfers to assets held for sale (a) | (632 | ) | — | |||||
Other than temporary impairment | (55 | ) | (453 | ) | ||||
Balance at end of year | $4,658 | $4,819 | ||||||
Valuation allowance | (643 | ) | (929 | ) | ||||
Carrying value at end of year | $4,015 | $3,890 | ||||||
Estimated fair value at end of year | $4,021 | $3,990 | ||||||
(a) | At December 31, 2005, $632 in Capmark mortgage servicing rights, net were transferred to assets held for sale in our Consolidated Balance Sheet. |
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Year ended December 31,($ in millions) | 2005 | 2004 | ||||||
Valuation allowance at beginning of period | $929 | $1,149 | ||||||
Additions (deductions) (a) | (237 | ) | 233 | |||||
Other than temporary impairment | (55 | ) | (453 | ) | ||||
Other | 6 | — | ||||||
Valuation allowance at end of year | $643 | $929 | ||||||
(a) | Changes to the valuation allowance are reflected as a component of amortization and impairment of servicing rights in our Consolidated Statement of Income. |
Year ended December 31,($ in millions) | 2005 | 2004 | ||
Estimated fair value of MSRs | $4,021 | $3,990 | ||
Range of prepayment speeds (constant prepayment rate) | 8.3-28.2% | 2.0-29.8% | ||
Impact on fair value of 10% adverse change | ($183) | ($189) | ||
Impact on fair value of 20% adverse change | ($345) | ($359) | ||
Range of discount rates | 8.0-12.7% | 9.4-12.6% | ||
Impact on fair value of 10% adverse change | ($106) | ($107) | ||
Impact on fair value of 20% adverse change | ($206) | ($207) | ||
December 31,($ in millions) | 2006 | 2005 | ||||||
Prepaid reinsurance premiums | $367 | $359 | ||||||
Reinsurance recoverable on unpaid losses | 876 | 762 | ||||||
Reinsurance recoverable on paid losses (a) | 95 | 87 | ||||||
Premiums receivable (b) | 678 | 665 | ||||||
Total premiums and other insurance receivables | $2,016 | $1,873 | ||||||
(a) | Net of $1 and $1 allowance for uncollectible reinsurance recoverable on paid losses at December 31, 2006 and 2005, respectively. |
(b) | Net of $7 and $8 allowance for uncollectible premiums receivable at December 31, 2006 and 2005, respectively. |
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December 31,($ in millions) | 2006 | 2005 | ||||||
Premises and equipment at cost | $1,645 | $2,899 | ||||||
Accumulated depreciation | (1,067 | ) | (1,145 | ) | ||||
Net premises and equipment | 578 | 1,754 | ||||||
Cash reserve deposits held for securitization trusts (a) | 2,623 | 2,907 | ||||||
Fair value of derivative contracts in receivable position | 2,544 | 3,000 | ||||||
Real estate and other investments (b) | 3,068 | 1,855 | ||||||
Restricted cash collections for securitization trusts (c) | 1,858 | 1,871 | ||||||
Goodwill, net of accumulated amortization | 1,827 | 2,446 | ||||||
Deferred policy acquisition cost | 1,740 | 1,696 | ||||||
Accrued interest and rent receivable | 1,315 | 1,163 | ||||||
Repossessed and foreclosed assets, net | 1,215 | 689 | ||||||
Debt issuance costs | 643 | 726 | ||||||
Servicer advances | 606 | 499 | ||||||
Securities lending | 445 | — | ||||||
Investment in used vehicles held for sale, at lower of cost or market | 423 | 503 | ||||||
Subordinated note receivable | 250 | — | ||||||
Intangible assets, net of accumulated amortization (d) | ||||||||
Customer lists and contracts | 48 | 16 | ||||||
Trademarks and other | 11 | 15 | ||||||
Receivables related to taxes | 9 | 774 | ||||||
Other assets | 4,293 | 2,528 | ||||||
Total other assets | $23,496 | $22,442 | ||||||
(a) | Represents credit enhancement in the form of cash reserves for various securitization transactions we have executed. On November 22, 2006, $710 of cash reserve deposits were transferred to GM as part of a distribution of certain securitized U.S. lease assets. Refer to Note 18 to our Consolidated Financial Statements for further description of the distribution. |
(b) | Includes residential real estate investments of $2 billion and $1.3 billion and related accumulated depreciation of $13 and $9 for years ended December 31, 2006 and 2005, respectively. |
(c) | Represents cash collection from customer payments on securitized receivables. These funds are distributed to investors as the related secured debt matures. |
(d) | Aggregate amortization expense on intangible assets was $16 and $17, including $1 and $8 for Capmark, for the years ended December 31, 2006 and 2005, respectively. Amortization expense is expected to average $10 per year over the next five fiscal years. In addition, during 2006, our Commercial Finance Group had $13 of intangible assets that were deemed impaired and subsequently written off during the third quarter of 2006. |
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North | ||||||||||||||||||||||||
American | International | |||||||||||||||||||||||
($ in millions) | Operations | Operations | ResCap | Insurance | Other | Total | ||||||||||||||||||
Goodwill at beginning of 2005 | $14 | $515 | $455 | $666 | $1,624 | $3,274 | ||||||||||||||||||
Goodwill acquired | — | 3 | 16 | 3 | — | 22 | ||||||||||||||||||
Impairment losses (a) | — | — | — | — | (712 | ) | (712 | ) | ||||||||||||||||
Other | — | — | (4 | ) | — | (18 | ) | (22 | ) | |||||||||||||||
Foreign currency translation effect | — | (14 | ) | (7 | ) | — | (36 | ) | (57 | ) | ||||||||||||||
Transfers to assets held for sale (b) | — | — | — | — | (59 | ) | (59 | ) | ||||||||||||||||
Goodwill at beginning of 2006 | $14 | $504 | $460 | $669 | $799 | $2,446 | ||||||||||||||||||
Goodwill acquired | — | — | 3 | 148 | — | 151 | ||||||||||||||||||
Impairment losses (c) | — | — | — | — | (827 | ) | (827 | ) | ||||||||||||||||
Other | — | 3 | 1 | — | — | 4 | ||||||||||||||||||
Foreign currency translation effect | — | 16 | 7 | 2 | 28 | 53 | ||||||||||||||||||
Goodwill at end of 2006 | $14 | $523 | $471 | $819 | $— | $1,827 | ||||||||||||||||||
(a) | During the fourth quarter of 2005, we completed our goodwill impairment analysis of our Commercial Finance Group (CFG) reporting unit in accordance with SFAS 142. The CFG reporting unit’s goodwill related primarily to its 1999 acquisition of The Bank of New York’s commercial finance business. With the assistance of a third party, management performed an assessment of the fair value of the CFG reporting unit. The fair value of the CFG reporting unit was determined using the average of an internally developed discounted cash flow methodology and a valuation derived from recent market precedent transactions. Based on this assessment, it was determined that indicators of impairment existed as the carrying amount of the CFG reporting unit including goodwill exceeded its fair value. These indicators were largely attributed to current competitive conditions in the industry in which CFG operates, the relative level of liquidity in its market and the CFG reporting unit experiencing declining margins and a more difficult environment for growth than anticipated in previous forecasts. Because the carrying amount of the CFG reporting unit, including goodwill, as a whole exceeded its fair value, management assessed the fair value of the CFG reporting unit’s individual assets, including identifiable intangible assets and liabilities, to derive an implied fair value of the CFG reporting unit’s goodwill. Based on this assessment, we recorded an impairment charge of $648 in the fourth quarter of 2005 as it was determined that the carrying value of the CFG reporting unit’s goodwill was greater than its implied fair value. In addition, other includes impairment losses of $64 related to the former GMAC Commercial Mortgage business. |
(b) | At December 31, 2005, $59 of goodwill in the former GMAC Commercial Mortgage business was transferred to assets held for sale in our Consolidated Balance Sheet. |
(c) | Following attrition of key personnel around the middle of the year, our Commercial Finance reporting unit initiated a goodwill impairment test, in accordance with SFAS 142, outside the normal fourth quarter cycle. A necessary precedent to such test was a thorough review of the business by new leadership, with a particular focus on long-term strategy. As a result of the review the operating divisions were reorganized and the decision was made to implement a different exit strategy for the workout portfolio and to exit product lines with lower returns. These decisions had a significant impact on expected asset levels and growth rate assumptions used to estimate the fair value of the business. In particular, the analysis performed during the third quarter incorporates management’s decision to discontinue activity in the equipment finance business, which had a portfolio of over $1 billion, representing approximately 20% of Commercial Finance business’s average commercial loan portfolio during 2006. Consistent with the prior analysis, the fair value of the Commercial Finance business was determined using an internally developed discounted cash flow analysis based on five-year projected net income and a market driven terminal value multiple. Based upon the results of the assessment, we concluded that the carrying value of goodwill exceeded its fair value, resulting in an impairment loss of $827 during 2006. |
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Weighted | ||||||||||||||||||||||||||||||||
average interest | ||||||||||||||||||||||||||||||||
rates (a) | 2006 | 2005 | ||||||||||||||||||||||||||||||
December 31,($ in millions) | 2006 | 2005 | Domestic | Foreign | Total | Domestic | Foreign | Total | ||||||||||||||||||||||||
Short-term debt | ||||||||||||||||||||||||||||||||
Commercial paper | $742 | $781 | $1,523 | $227 | $297 | $524 | ||||||||||||||||||||||||||
Demand notes | 5,917 | 157 | 6,074 | 5,928 | 119 | 6,047 | ||||||||||||||||||||||||||
Bank loans and overdrafts | 991 | 5,272 | 6,263 | 1,165 | 5,487 | 6,652 | ||||||||||||||||||||||||||
Repurchase agreements and other (b) | 22,506 | 7,232 | 29,738 | 22,330 | 5,954 | 28,284 | ||||||||||||||||||||||||||
Total short-term debt | 5.8% | 4.6% | 30,156 | 13,442 | 43,598 | 29,650 | 11,857 | 41,507 | ||||||||||||||||||||||||
Long-term debt | ||||||||||||||||||||||||||||||||
Senior indebtedness | ||||||||||||||||||||||||||||||||
Due within one year | 5.5% | 4.9% | 20,010 | 15,204 | 35,214 | 31,286 | 10,443 | 41,729 | ||||||||||||||||||||||||
Due after one year | 5.9% | 5.2% | 135,693 | 22,589 | 158,282 | 147,288 | 23,862 | 171,150 | ||||||||||||||||||||||||
Total long-term debt (c) | 5.9% | 5.2% | 155,703 | 37,793 | 193,496 | 178,574 | 34,305 | 212,879 | ||||||||||||||||||||||||
Fair value adjustment (d) | (3 | ) | (106 | ) | (109 | ) | 310 | 2 | 312 | |||||||||||||||||||||||
Total debt | $185,856 | $51,129 | $236,985 | $208,534 | $46,164 | $254,698 | ||||||||||||||||||||||||||
(a) | The weighted average interest rates include the effects of derivative financial instruments designated as hedges of debt. |
(b) | Repurchase agreements consist of secured financing arrangements with third parties at ResCap. Other primarily includes non-bank secured borrowings, as well as Notes payable to GM. Refer to Note 18 to our Consolidated Financial Statements for further details. |
(c) | We have issued warrants to subscribe for up to $300 aggregate principal amount of 6.5% notes due October 15, 2009. The warrants entitle the holder to purchase from us the aggregate principal amount at par plus any accrued interest. The warrants are exercisable up to and including October 15, 2007. In December 2003 and February 2004, $125 of the warrants were exercised each year, resulting in $50 aggregate principal amount of these warrants remaining outstanding. |
(d) | To adjust designated fixed rate debt to fair value in accordance with SFAS 133. |
2006 | 2005 | |||||||||||||||
Related secured | Related secured | |||||||||||||||
December 31,($ in millions) | Assets | debt (a) | Assets | debt (a) | ||||||||||||
Loans held for sale | $22,834 | $20,525 | $16,147 | $12,647 | ||||||||||||
Mortgage assets held for investment and lending receivables | 80,343 | 68,333 | 78,820 | 71,083 | ||||||||||||
Retail automotive finance receivables | 21,320 | 19,098 | 20,427 | 18,888 | ||||||||||||
Investment securities | 3,662 | 4,523 | 3,631 | 4,205 | ||||||||||||
Investment in operating leases, net (b) | 6,851 | 6,456 | 13,136 | 11,707 | ||||||||||||
Real estate investments and other assets | 8,025 | 4,550 | 4,771 | 2,608 | ||||||||||||
Total | $143,035 | $123,485 | $136,932 | $121,138 | ||||||||||||
(a) | Included as part of secured debt are repurchase agreements of $11.5 and $9.9 billion where we have pledged assets, reflected as investment securities, as collateral for approximately the same amount of debt at December 31, 2006 and 2005, respectively. |
(b) | On November 22, 2006, GM assumed $10.1 billion of debt secured by $12.6 billion of net operating lease assets that GMAC distributed to GM. Refer to Note 18 to our Consolidated Financial Statements for further discussion of the distribution. |
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Year ended December 31,($ in millions) | Secured | Unsecured | Total | |||||||||
2007 | $12,391 | $22,823 | $35,214 | |||||||||
2008 | 16,708 | 16,551 | 33,259 | |||||||||
2009 | 6,392 | 11,066 | 17,458 | |||||||||
2010 | 2,058 | 7,908 | 9,966 | |||||||||
2011 | 1,580 | 13,336 | 14,916 | |||||||||
2012 and thereafter | 55,185 | 27,884 | 83,069 | |||||||||
Long-term debt (a) | 94,314 | 99,568 | 193,882 | |||||||||
Unamortized discount | (35 | ) | (351 | ) | (386 | ) | ||||||
Total long-term debt | $94,279 | $99,217 | $193,496 | |||||||||
(a) | Debt issues totaling $14,628 are redeemable at or above par, at our option anytime prior to the scheduled maturity dates, the latest of which is November 2049. |
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Total | Unused | |||||||||||||||||||||||||||||||
Committed | Uncommitted | liquidity | liquidity | |||||||||||||||||||||||||||||
facilities | facilities | facilities | facilities | |||||||||||||||||||||||||||||
December 31,($ in billions) | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | 2006 | 2005 | ||||||||||||||||||||||||
Automotive Finance operations: | ||||||||||||||||||||||||||||||||
Syndicated multicurrency global credit facility (a) | $7.6 | $7.4 | $— | $— | $7.6 | $7.4 | $7.6 | $7.4 | ||||||||||||||||||||||||
ResCap (b) | 3.9 | 3.9 | 1.9 | 0.9 | 5.8 | 4.8 | 2.7 | 2.2 | ||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||||||||
U.S. asset-backed commercial paper liquidity and receivables facilities (c) | 18.3 | 21.5 | — | — | 18.3 | 21.5 | 18.3 | 21.5 | ||||||||||||||||||||||||
Other foreign facilities (d) | 3.3 | 2.9 | 8.8 | 7.5 | 12.1 | 10.4 | 3.1 | 1.7 | ||||||||||||||||||||||||
Total bank liquidity facilities | 33.1 | 35.7 | 10.7 | 8.4 | 43.8 | 44.1 | 31.7 | 32.8 | ||||||||||||||||||||||||
Secured funding facilities | ||||||||||||||||||||||||||||||||
Automotive Finance operations (e) | 36.6 | 28.1 | — | — | 36.6 | 28.1 | 9.8 | 5.6 | ||||||||||||||||||||||||
ResCap (f) | 29.4 | 26.8 | 73.3 | 42.1 | 102.7 | 68.9 | 59.7 | 35.1 | ||||||||||||||||||||||||
Whole loan forward flow agreements | 45.5 | 64.2 | — | — | 45.5 | 64.2 | 45.5 | 64.2 | ||||||||||||||||||||||||
Other (g) | 3.9 | 0.6 | — | — | 3.9 | 0.6 | 2.3 | 0.1 | ||||||||||||||||||||||||
Total secured funding facilities | 115.4 | 119.7 | 73.3 | 42.1 | 188.7 | 161.8 | 117.3 | 105.0 | ||||||||||||||||||||||||
Total | $148.5 | $155.4 | $84.0 | $50.5 | $232.5 | $205.9 | $149.0 | $137.8 | ||||||||||||||||||||||||
(a) | The entire $7.6 is available for use in the U.S., $0.8 is available for use by GMAC (UK) plc and $0.8 is available for use by GMAC International Finance B.V. in Europe. |
(b) | ResCap maintains $3.5 of syndicated bank facilities, consisting of $1.75 syndicated term loan committed through July 2008, an $875 million syndicated line of credit committed through July 2008 and an $875 million syndicated line of credit committed through July 2007. |
(c) | Relates to New Center Asset Trust (NCAT), which is a special purpose entity administered by us for the purpose of funding assets as part of our securitization funding programs. This entity funds assets primarily through the issuance of asset-backed commercial paper and represents an important source of liquidity to us. At December 31, 2006, NCAT had commercial paper outstanding of $9.5, which is not consolidated in the Consolidated Balance Sheet. |
(d) | Consists primarily of credit facilities supporting operations in Canada, Europe, Latin America and Asia-Pacific. |
(e) | In August 2006 we closed a three-year, $10 billion facility with a subsidiary of Citigroup. |
(f) | ResCap’s primary sources of secured financing include whole-loan sales, secured aggregation facilities, asset-backed commercial paper facilities, and repurchase agreements. In addition to the above, ResCap’s collateralized borrowings in securitized trusts totaled $53.3 and $56.1 as of December 31, 2006 and 2005, respectively. |
(g) | Consists primarily of Commercial Finance secured funding facilities. |
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Year ended December 31, | ||||||||||||
($ in millions) | 2006 | 2005 | 2004 | |||||||||
Balance at beginning of year | $2,534 | $2,505 | $2,340 | |||||||||
Reinsurance recoverables | (762 | ) | (775 | ) | (871 | ) | ||||||
Net balance at beginning of year | 1,772 | 1,730 | 1,469 | |||||||||
Net reserves from acquisitions | 80 | — | — | |||||||||
Incurred related to | ||||||||||||
Current year | 2,513 | 2,471 | 2,344 | |||||||||
Prior years (a) | (93 | ) | (116 | ) | 27 | |||||||
Total incurred (b) | 2,420 | 2,355 | 2,371 | |||||||||
Paid related to | ||||||||||||
Current year | (1,723 | ) | (1,682 | ) | (1,567 | ) | ||||||
Prior years | (803 | ) | (619 | ) | (558 | ) | ||||||
Total paid | (2,526 | ) | (2,301 | ) | (2,125 | ) | ||||||
Other (c) | 8 | (12 | ) | 15 | ||||||||
Net balance at end of year (d) | 1,754 | 1,772 | 1,730 | |||||||||
Reinsurance recoverables | 876 | 762 | 775 | |||||||||
Balance at end of year | $2,630 | $2,534 | $2,505 | |||||||||
(a) | Incurred losses and loss adjustment expenses during 2006 and 2005 were reduced by $93 and $116, respectively, as a result of decreases in prior years’ reserve estimates for certain reinsurance and private passenger automobile coverages in both the United States and internationally. In addition, 2006 included the reduction of reserves related to an insurance program transferred to GM. During 2004, incurred losses and loss adjustment expenses included increases to prior years’ reserve estimates, which were based on additional knowledge available to us during 2004. In addition, 2004 also includes $29 related to reinsurance agreements we decided to commute. |
(b) | Reflected net of reinsurance recoveries totaling $306, $342 and $312 for the years ended December 31, 2006, 2005 and 2004, respectively. |
(c) | Effects of exchange rate changes for the years ended December 31, 2006, 2005 and 2004. |
(d) | Includes exposure to asbestos and environmental claims from the reinsurance of general liability, commercial multiple peril, homeowners’ and workers’ compensation claims. Reported claim activity to date has not been significant. Net reserves for loss and loss adjustment expenses for such matters were $5, $6 and $8 at December 31, 2006, 2005 and 2004, respectively. |
December 31,($ in millions) | 2006 | 2005 | ||||||
Deposits | ||||||||
Consumer | $8,200 | $4,574 | ||||||
Commercial | 2,288 | 2,280 | ||||||
Fair value of derivative contracts in payable position | 1,745 | 2,447 | ||||||
Employee compensation and benefits (a) | 540 | 1,574 | ||||||
Mortgage escrow deposits | 1,366 | 1,356 | ||||||
Factored client payables | 813 | 819 | ||||||
Securitization trustee payable | 902 | 703 | ||||||
GM payable, net | 70 | 152 | ||||||
Taxes payable (receivable) | 249 | (169 | ) | |||||
Accounts payable | 1,844 | 2,170 | ||||||
Other liabilities | 4,642 | 2,318 | ||||||
Total accrued expenses and other liabilities | $22,659 | $18,224 | ||||||
(a) | Reduction reflects $801 of liabilities related to U.S. based GM sponsored other postretirement programs assumed by GM as part of the Sales Transactions. |
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• | Debt obligations — Interest rate swaps are used to modify our exposure to interest rate risk by converting fixed rate debt to a floating rate. Generally, individual swaps are designated as hedges of specific debt at the time of issuance with the terms of the swap matching the terms of the underlying debt. As the terms of the swap are designed to match the terms of the debt, a significant portion of our debt obligation hedging relationships receive short-cut treatment under SFAS 133, resulting in the assumption of no hedge ineffectiveness. |
• | Loans held for sale — We use derivative financial instruments to hedge exposure to risk associated with our mortgage loans held for sale. After loans are funded, they are generally sold into the secondary market to various investors, often as mortgage-backed securities sponsored by Fannie Mae, Freddie Mac or Ginnie Mae. Mortgage loans that are not eligible for agency sponsored securitization are sold through public or private securitization transactions or in whole loan sales. The primary risk associated with closed loans awaiting sale is a change in the fair value of the loans due to fluctuations in interest rates. Our primary strategies to protect against this risk are selling loans or mortgage-backed securities forward to investors using mandatory and optional forward commitments and the use of interest rate swaps. Hedge periods are closed daily, representative of daily hedge portfolio rebalancing due to new loan funding and sales. Effectiveness is assessed using historical daily hedge period data. We assess hedge effectiveness employing a statistical-based approach, which must meet thresholds for R-squared, slope, and F-statistic. |
• | Mortgage servicing rights — We enter into a combination of derivative contracts that are economic hedges of the servicing rights associated with groups of similar mortgage loans. These derivatives include interest rate caps and floors, futures options, futures, mortgage-backed security options, interest rate swaps and swaptions. The maturities of these instruments range between six months and twenty years. We have entered into written options on U.S. Treasury futures for notional amounts lower than purchased options on futures. The purchased option coverage is at a strike price less than or equal to the corresponding written option coverage, thereby mitigating our loss exposure. We are required to deposit cash in margin accounts maintained by counterparties for unrealized losses on future contracts. |
• | Off-balance sheet securitization activities — We enter into interest rate swaps to facilitate securitization transactions where the underlying receivables are sold to a non-consolidated qualified special purpose entity (QSPE). As the underlying assets are carried in a non-consolidated entity, the interest rate swaps do not qualify for hedge accounting treatment. |
• | Foreign currency debt — We have elected not to treat currency swaps that are used to convert foreign denominated debt back into the functional currency at a floating rate as hedges for accounting purposes. While these currency swaps are similar to the foreign currency cash flow hedges described in the foregoing, we have not designated them as hedges as the changes in the fair values of the currency swaps are substantially offset by the |
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foreign currency revaluation gains and losses of the underlying debt. |
• | Mortgage related securities — We use interest rate options, futures, swaps, caps and floors to mitigate risk related to mortgage related securities classified as trading. |
• | Callable debt obligations — We enter into cancellable interest rate swaps as economic hedges of certain callable fixed rate debt in connection with our market risk management policy. |
Year ended December 31,($ in millions) | 2006 | 2005 | 2004 | Income statement classification | ||||||||||
Fair value hedge ineffectiveness gain (loss): | ||||||||||||||
Debt obligations | $— | ($2 | ) | $1 | Interest expense | |||||||||
Mortgage servicing rights | — | 57 | 70 | Servicing asset valuation and hedge activities, net | ||||||||||
Loans held for sale | (1 | ) | (29 | ) | (12 | ) | Gain on sale of mortgage and automotive loans, net | |||||||
Cash flow hedges ineffectiveness gain (loss): | ||||||||||||||
Debt obligations | — | 3 | (19 | ) | Interest expense | |||||||||
Economic hedge change in fair value: | ||||||||||||||
Off-balance sheet securitization activities: | ||||||||||||||
Automotive Finance operations | 2 | (36 | ) | (26 | ) | Other income | ||||||||
Mortgage operations | — | 1 | (18 | ) | Other income | |||||||||
Foreign currency debt (a) | 54 | (202 | ) | 44 | Interest expense | |||||||||
Loans held for sale or investment | 35 | 59 | (60 | ) | Gain on sale of mortgage and automotive loans, net | |||||||||
Mortgage servicing rights | (281 | ) | (55 | ) | (7 | ) | Servicing asset valuation and hedge activities, net | |||||||
Mortgage related securities | 3 | (42 | ) | (95 | ) | Investment income | ||||||||
Callable debt obligations | (22 | ) | (240 | ) | (82 | ) | Interest expense | |||||||
Other | 21 | (11 | ) | (18 | ) | Other income, Interest expense, | ||||||||
Other operating expenses | ||||||||||||||
Total loss | ($189 | ) | ($497 | ) | ($222 | ) | ||||||||
(a) | Amount represents the difference between the changes in the fair values of the currency swap, net of the revaluation of the related foreign denominated debt. |
Year ended December 31,($ in millions) | 2006 | 2005 | 2004 | |||||||||
Net gain on fair value hedges excluded from assessment of effectiveness | $— | $59 | $180 | |||||||||
Expected reclassifications from other comprehensive income to earnings (a) | 8 | 12 | (1 | ) | ||||||||
(a) | Estimated to occur over the next 12 months. |
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• | During the second quarter, we approved the freezing of the benefit accrual of a defined benefit retirement plan as of December 31, 2006, covering primarily ResCap employees. No further participant benefits will accrue subsequent to that date and no new entrants will be permitted in the plan. As a result of these developments, a curtailment gain of approximately $43 million was recorded in compensation and benefits expense on our Consolidated Statement of Income. |
• | During the third quarter, GMAC Commercial Finance UK and GMAC Commercial Finance Canada announced intentions to terminate their retirement plans, resulting in a curtailment loss of approximately $9 million expense recorded in compensation and benefits expense on our Consolidated Statement of Income. |
• | During the fourth quarter, we expensed payments to the plans of approximately $48 million to fully fund the GMAC portion of the GM U.K. pension plans. These payments were required as a Section 75 debt obligation under the UK Pension Act of 2004 and were recorded in compensation and benefits expense on our Consolidated Statement of Income. |
• | We transferred to GM the financial liability associated with the GMAC portion of certain GM plans in Canada as of November 30, 2006. |
Year ended December 31,($ in millions) | 2006 | 2005 | ||||||
Benefit obligation | $434 | $443 | ||||||
Fair value of plan assets | 391 | 334 | ||||||
Funded status | (43 | ) | (109 | ) | ||||
Unrecognized net actuarial gain | 16 | 75 | ||||||
Unrecognized prior service cost | 2 | 3 | ||||||
Net transition obligation | — | (1 | ) | |||||
Accrued pension cost | ($25 | ) | ($32 | ) | ||||
Year ended December 31, | 2006 | 2005 | ||||||
Discount rate | 5.47% | 5.71% | ||||||
Expected return on plan assets | 8.48% | 8.61% | ||||||
Rate of compensation increase | 4.40% | 4.66% | ||||||
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Year ended December 31,($ in millions) | 2006 | 2005 | 2004 | |||||||||
Current income tax expense | ||||||||||||
U.S. federal | $1,115 | $620 | $1,452 | |||||||||
Foreign | 432 | 52 | 128 | |||||||||
State and local | 43 | 17 | (43 | ) | ||||||||
Total current expense | 1,590 | 689 | 1,537 | |||||||||
Deferred income tax expense | ||||||||||||
U.S. federal | (396 | ) | 168 | (466 | ) | |||||||
Foreign | (316 | ) | 271 | 142 | ||||||||
State and local | 16 | 69 | 149 | |||||||||
Total deferred (benefit) expense | (696 | ) | 508 | (175 | ) | |||||||
Total income tax expense before change in tax status | 894 | 1,197 | 1,362 | |||||||||
Change in tax status | (791 | ) | — | — | ||||||||
Total income tax expense | $103 | $1,197 | $1,362 | |||||||||
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Year ended December 31, | 2006 | 2005 | 2004 | |||||||||||
Statutory U.S. federal tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||
Change in tax rate resulting from: | ||||||||||||||
State and local income taxes, net of federal income tax benefit | 1.8 | 1.8 | 2.7 | |||||||||||
Tax-exempt income | (0.9 | ) | (1.1 | ) | (0.9 | ) | ||||||||
Foreign income tax rate differential | (5.4 | ) | (1.9 | ) | (1.3 | ) | ||||||||
Goodwill impairment | 7.5 | — | — | |||||||||||
Other (a) | (0.8 | ) | .6 | (3.5 | ) | |||||||||
Effective tax rate before change in tax status | 37.2 | 34.4 | 32.0 | |||||||||||
Effect of tax status change | (35.5 | ) | — | — | ||||||||||
LLC loss not subject to federal or state income taxes | 2.9 | — | — | |||||||||||
Effective tax rate | 4.6 | % | 34.4 | % | 32.0 | % | ||||||||
(a) | In 2004, principally reflects the benefit of favorable settlements with various tax authorities (both U.S. and International), as well as the impact of changes in reserve requirements. |
December 31,($ in millions) | 2006 | 2005 | ||||||
Deferred tax liabilities | ||||||||
Lease transactions | $1,236 | $4,020 | ||||||
Deferred acquisition costs | 560 | 676 | ||||||
Unrealized gains on securities | 54 | 277 | ||||||
Sales of finance receivables | 41 | (327 | ) | |||||
State and local taxes | 3 | 118 | ||||||
Mortgage servicing rights | 15 | 857 | ||||||
Debt issuance costs | — | 316 | ||||||
Goodwill | 3 | (102 | ) | |||||
Other | 146 | 189 | ||||||
Gross deferred tax liabilities | 2,058 | 6,024 | ||||||
Deferred tax assets | ||||||||
Unearned insurance premiums | 293 | 297 | ||||||
Tax carryforwards | 206 | 54 | ||||||
Manufacturer incentive payments | 132 | — | ||||||
Provision for credit losses | 91 | 809 | ||||||
Postretirement benefits | 15 | 301 | ||||||
Hedging transactions | 2 | (61 | ) | |||||
Other | 312 | 260 | ||||||
Gross deferred tax assets | 1,051 | 1,660 | ||||||
Net deferred tax liability (a) | $1,007 | $4,364 | ||||||
(a) | GMAC Commercial Mortgage’s net deferred tax asset of $169 million was transferred to liabilities related to assets held for sale in our Consolidated Balance Sheet as of December 31, 2005. |
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December 31,($ in millions) | 2006 | 2005 | ||||||
Assets: | ||||||||
Available for sale investment in asset-backed security (a) | $471 | $— | ||||||
Finance receivables and loans, net of unearned income (b) | ||||||||
Wholesale auto financing | 938 | 1,159 | ||||||
Term loans to dealers | 207 | 207 | ||||||
Investment in operating leases, net (c) | 290 | 286 | ||||||
Notes receivable from GM (d) | 1,975 | 4,565 | ||||||
Other assets | ||||||||
Real estate leases (e) | 28 | 1,005 | ||||||
Receivable related to taxes due from GM (f) | 317 | 690 | ||||||
Other (g) | 22 | — | ||||||
Liabilities: | ||||||||
Unsecured debt | ||||||||
Notes payable to GM | 60 | 1,190 | ||||||
Accrued expenses and other liabilities (h) | ||||||||
Wholesale payable | 499 | 802 | ||||||
Subvention receivables (rate and residual support) | (309 | ) | (133 | ) | ||||
Insurance premium and contract payable (receivable) | 1 | (81 | ) | |||||
Lease pull ahead receivable | (62 | ) | (189 | ) | ||||
Other receivables | (101 | ) | (246 | ) | ||||
Preferred interests (i) | 2,195 | — | ||||||
Equity: | ||||||||
Dividends paid to GM (j) | 9,739 | 2,500 | ||||||
Capital contributions received (k) | 951 | — | ||||||
Preferred interest accretion to redemption value | 295 | — | ||||||
(a) | In November 2006, GMAC retained an investment in a note secured by operating lease assets transferred to GM. As part of the transfer, GMAC provided a note to the trust, a wholly owned subsidiary of GM. The note is classified in Investment Securities on our Consolidated Balance Sheet. | |
(b) | Represents wholesale financing and term loans to certain dealerships wholly owned by GM or in which GM has an interest. | |
(c) | Includes net balance of vehicles, buildings and other equipment classified as operating lease assets that are leased to GM affiliated entities. | |
(d) | Includes borrowing arrangements with GM Opel and arrangements related to our funding of GM company-owned vehicles, rental car vehicles awaiting sale at auction, our funding of the sale of GM vehicles through the use of overseas distributors and amounts related to GM trade supplier finance program. In addition, we provide wholesale financing to GM for vehicles in which GM retains title while the vehicles are consigned to us or dealers in the UK and Italy. The financing to GM remains outstanding until the title is transferred to the dealers. The amount of financing provided to GM under this arrangement varies based on inventory levels. | |
(e) | During 2000 GM entered into a16-year lease arrangement, under which we agreed to fund and capitalize improvements to three Michigan properties leased by GM totaling $1.2 billion. In 2004 the lease arrangement was increased to $1.3 billion. The total construction advances as of December 30, 2005, were $971. On October 31, 2006, these assets were transferred to GM in the form of a non-cash dividend. Subsequently, the lease arrangement was terminated, and no further payments or advances will be made. The balance at December 31, 2006, represents Argonaut dealership leases. | |
(f) | In November 2006, GMAC transferred NOL tax receivables to GM for entities converting to an LLC. For all non-converting entities, the amount was reclassified to deferred income taxes on the Consolidated Balance Sheet. At December 31, 2006, this balance represents an overpayment of taxes and was included in accrued expenses and other liabilities on our Consolidated Balance Sheet. | |
(g) | Represents certain servicing activities related to automotive leases distributed to GM on November 22, 2006. | |
(h) | Includes (receivables) payables from GM as follows: wholesale settlements payable to GM, subvention receivables due from GM and other (receivables) payables due to/from GM, which are included in accrued expenses and other liabilities and debt, respectively. | |
(i) | Represents proceeds from preferred interests issued in November and held by a wholly owned subsidiary of GM of $1,555 and FIM Holdings of $555 and the related accrued dividends of $21 and redemption premium of $64. | |
(j) | Amount includes cash dividends of $4.8 billion and non-cash dividends of $4.9 billion in 2006. During the fourth quarter of 2006 in connection with the Sale Transactions, GMAC made $7.8 billion of dividends to GM which was comprised of the following (i) a cash dividend of $2.7 billion representing a one-time distribution to GM primarily to reflect the increase in GMAC’s equity resulting from the elimination of a portion of our net deferred tax liabilities arising from the conversion of GMAC and certain of our subsidiaries to a limited liability company, (ii) certain assets with respect to automotive leases owned by GMAC and its affiliates having a net book value of approximately $4.0 billion and related deferred tax liabilities of $1.8 billion, (iii) certain Michigan properties with a carrying value of approximately $1.2 billion to GM, (iv) intercompany receivables from GM related to tax attributes of $1.1 billion, (v) net contingent tax assets of $491 and (vi) other miscellaneous transactions. | |
(k) | Amount is comprised of the following (i) approximately $801 of liabilities related to U.S. and Canadian based GM sponsored other postretirement programs and related deferred tax assets of $302, (ii) contingent tax liabilities of $384 assumed by GM and (iii) deferred tax assets transferred from GM of $68. |
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Year ended December 31, | 2006 | 2005 | ||||||||
GM and affiliates rate subvented contracts acquired: | ||||||||||
North American operations (a) | 90 | % | 78 | % | ||||||
International operations | 49 | % | 53 | % | ||||||
(a) | The increase in 2006 is primarily due to the72-hour sale that occurred in July 2006. Contracts were sold at 0% financing for 72 months. |
Year ended December 31,($ in millions) | 2006 | 2005 | 2004 | |||||||||
Net financing revenue: | ||||||||||||
GM and affiliates lease residual value support (a) | $749 | $507 | $560 | |||||||||
Wholesale subvention and service fees from GM | 207 | 159 | 174 | |||||||||
Interest paid on loans from GM | (50 | ) | (46 | ) | (45 | ) | ||||||
Consumer lease payments from GM (b) | 74 | 168 | 348 | |||||||||
Insurance premiums earned from GM | 334 | 384 | 450 | |||||||||
Other income: | ||||||||||||
Interest on notes receivable from GM and affiliates | 282 | 300 | 153 | |||||||||
Interest on wholesale settlements (c) | 183 | 150 | 101 | |||||||||
Revenues from GM leased properties, net | 93 | 79 | 73 | |||||||||
Derivatives (d) | (2 | ) | — | — | ||||||||
Service fee income: | ||||||||||||
GMAC of Canada operating lease administration (e) | — | 18 | 28 | |||||||||
Rental car repurchases held for resale (f) | 18 | 22 | 16 | |||||||||
U.S. Automotive operating leases (g) | 37 | — | — | |||||||||
Expense: | ||||||||||||
Employee retirement plan costs allocated by GM | 136 | 157 | 129 | |||||||||
Off-lease vehicle selling expense reimbursement (h) | (29 | ) | (17 | ) | (51 | ) | ||||||
Payments to GM for services, rent and marketing expenses (i) | 106 | 131 | 281 | |||||||||
(a) | Represents total amount of residual support and risk sharing paid (or invoiced) under the residual support and risk sharing programs and deferred revenue related to the settlement of residual support and risk sharing obligations for a portion of the lease portfolio, as described below. | |
(b) | GM sponsors lease pull-ahead programs whereby consumers are encouraged to terminate lease contracts early in conjunction with the acquisition of a new GM vehicle, with the customer’s remaining payment obligation waived. For certain programs, GM compensates us for the waived payments, adjusted based on the remarketing results associated with the underlying vehicle. | |
(c) | The settlement terms related to the wholesale financing of certain GM products are at shipment date. To the extent that wholesale settlements with GM are made prior to the expiration of transit, we receive interest from GM. | |
(d) | Represents income (loss) related to derivative transactions entered into with GM as counterparty. | |
(e) | GMAC of Canada, Limited administered operating lease receivables on behalf of GM of Canada, Limited (GMCL) and received a servicing fee, which was included in other income. As of October 2005, GMAC of Canada, Limited no longer administers these operating lease receivables. | |
(f) | We receive a servicing fee from GM related to the resale of rental car repurchases. At December 31, 2006, this program was terminated. | |
(g) | Represents servicing income related to automotive leases distributed to GM on November 22, 2006. | |
(h) | An agreement with GM provides for the reimbursement of certain selling expenses incurred by us on off-lease vehicles sold by GM at auction. | |
(i) | GM provides us certain other services and facilities services for which we reimburse them. Included in this amount are rental payments for our primary executive and administrative offices located in the Renaissance Center in Detroit, Michigan. In December 2006 we signed a lease to continue renting the facilities, operating expenses and the associated parking through November 30, 2016. |
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Accumulated | ||||||||||||||||
Unrealized gains (losses) | other | |||||||||||||||
on investment | Translation | Cash flow | comprehensive | |||||||||||||
Year ended December 31,($ in millions) | securities (a) | adjustments (b) | hedges | income (loss) | ||||||||||||
Balance at December 31, 2003 | $548 | $60 | ($90 | ) | $518 | |||||||||||
2004 net change | 78 | 306 | 266 | 650 | ||||||||||||
Balance at December 31, 2004 | 626 | 366 | 176 | 1,168 | ||||||||||||
2005 net change | (89 | ) | (295 | ) | 46 | (338 | ) | |||||||||
Balance at December 31, 2005 | 537 | 71 | 222 | 830 | ||||||||||||
2006 net change | (431 | ) | 291 | (205 | ) | (345 | ) | |||||||||
Balance at December 31, 2006 | $106 | $362 | $17 | $485 | ||||||||||||
(a) | Primarily represents the after-tax difference between the fair value and amortized cost of our available for sale securities portfolio. |
(b) | Includes after-tax gains and losses on foreign currency translation from operations for which the functional currency is other than the U.S. dollar. Net change amounts are net of a tax benefit of $37 and $35 for the years ended December 31, 2006 and 2005, respectively, and tax expense of $104 for the year ended December 31, 2004. |
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Year ended December 31,($ in millions) | 2006 | 2005 | 2004 | |||||||||
Available for sale securities: | ||||||||||||
Cumulative effect of a change in accounting principle, net of taxes: | ||||||||||||
Transfer of unrealized loss for certain available for sale securities | $17 | $— | $— | |||||||||
Net unrealized gains (losses) arising during the period, net of taxes (a) | 204 | (11 | ) | 125 | ||||||||
Reclassification adjustment for net gains included in net income, net of taxes (b) | (652 | ) | (78 | ) | (47 | ) | ||||||
Net change | (431 | ) | (89 | ) | 78 | |||||||
Cash flow hedges: | ||||||||||||
Net unrealized gains (losses) on cash flow hedges, net of taxes (c) | (207 | ) | 45 | 265 | ||||||||
Reclassification adjustment for net losses included in net income, net of taxes (d) | 2 | 1 | 1 | |||||||||
Net change | ($205 | ) | $46 | $266 | ||||||||
(a) | Net of tax expense of $107 for 2006, tax benefit of $6 for 2005 and tax expense of $67 for 2004. |
(b) | Net of tax expense of $351 for 2006, $42 for 2005, and tax benefit of $25 for 2004. |
(c) | Net of tax benefit of $121 for 2006, tax expense of $23 for 2005 and $142 for 2004. |
(d) | Net of tax benefit of $1 for 2006, 2005 and 2004. |
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2006 | 2005 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
December 31,($ in millions) | value | value | value | value | ||||||||||||
Financial assets | ||||||||||||||||
Investment securities | $16,791 | $16,791 | $18,207 | $18,207 | ||||||||||||
Loans held for sale | 27,718 | 28,025 | 21,865 | 21,934 | ||||||||||||
Finance receivables and loans, net | 170,870 | 171,076 | 181,925 | 182,222 | ||||||||||||
Notes receivable from GM | 1,975 | 1,975 | 4,565 | 4,565 | ||||||||||||
Derivative assets | 2,544 | 2,544 | 3,000 | 3,000 | ||||||||||||
Financial liabilities | ||||||||||||||||
Debt (a) | 237,338 | 237,733 | 255,511 | 247,250 | ||||||||||||
Bank deposits and escrows | 9,566 | 9,566 | 5,930 | 5,930 | ||||||||||||
Derivative liabilities | 1,745 | 1,745 | 2,440 | 2,440 | ||||||||||||
(a) | Debt includes deferred interest for zero coupon bonds of $353 and $813 for 2006 and 2005, respectively. |
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Automotive Finance Operations (a) | ||||||||||||||||||||||||
North | ||||||||||||||||||||||||
Year ended December 31, | American | International | ||||||||||||||||||||||
($ in millions) | Operations | Operations (b) | ResCap | Insurance | Other (c) | Consolidated | ||||||||||||||||||
2006 | ||||||||||||||||||||||||
Net financing revenue before provision for credit losses | $4,402 | $1,613 | $958 | $— | $570 | $7,543 | ||||||||||||||||||
Provision for credit losses | (425 | ) | (86 | ) | (1,334 | ) | — | (155 | ) | (2,000 | ) | |||||||||||||
Other revenue | 3,065 | 564 | 3,360 | 5,616 | 15 | 12,620 | ||||||||||||||||||
Total net financing revenue and other income | 7,042 | 2,091 | 2,984 | 5,616 | 430 | 18,163 | ||||||||||||||||||
Impairment of goodwill and other intangible assets | — | — | — | — | 840 | 840 | ||||||||||||||||||
Other noninterest expense | 6,405 | 1,671 | 2,568 | 3,990 | 461 | 15,095 | ||||||||||||||||||
Income (loss) before income tax expense | 637 | 420 | 416 | 1,626 | (871 | ) | 2,228 | |||||||||||||||||
Income tax (benefit) expense | (229 | ) | 112 | (289 | ) | 499 | 10 | 103 | ||||||||||||||||
Net income (loss) | $866 | $308 | $705 | $1,127 | ($881 | ) | $2,125 | |||||||||||||||||
Total assets | $127,822 | $25,588 | $130,569 | $13,424 | ($9,964 | ) | $287,439 | |||||||||||||||||
2005 | ||||||||||||||||||||||||
Net financing revenue before provision for credit losses | $4,216 | $1,563 | $1,352 | $— | $1,075 | $8,206 | ||||||||||||||||||
Provision for credit losses | (313 | ) | (102 | ) | (626 | ) | — | (33 | ) | (1,074 | ) | |||||||||||||
Other revenue | 2,815 | 709 | 3,508 | 4,259 | 664 | 11,955 | ||||||||||||||||||
Total net financing revenue and other income | 6,718 | 2,170 | 4,234 | 4,259 | 1,706 | 19,087 | ||||||||||||||||||
Impairment of goodwill and other intangible assets | — | — | — | — | 712 | 712 | ||||||||||||||||||
Other noninterest expense | 5,987 | 1,604 | 2,607 | 3,627 | 1,071 | 14,896 | ||||||||||||||||||
Income before income tax expense | 731 | 566 | 1,627 | 632 | (77 | ) | 3,479 | |||||||||||||||||
Income tax expense (benefit) | 259 | 158 | 606 | 215 | (41 | ) | 1,197 | |||||||||||||||||
Net income (loss) | $472 | $408 | $1,021 | $417 | ($36 | ) | $2,282 | |||||||||||||||||
Total assets | $165,139 | $27,285 | $118,608 | $12,624 | ($3,099 | ) | $320,557 | |||||||||||||||||
2004 | ||||||||||||||||||||||||
Net financing revenue before provision for credit losses | $5,838 | $1,602 | $2,429 | $— | $797 | $10,666 | ||||||||||||||||||
Provision for credit losses | (814 | ) | (145 | ) | (978 | ) | — | (16 | ) | (1,953 | ) | |||||||||||||
Other revenue | 2,239 | 601 | 2,427 | 3,983 | 618 | 9,868 | ||||||||||||||||||
Total net financing revenue and other income | 7,263 | 2,058 | 3,878 | 3,983 | 1,399 | 18,581 | ||||||||||||||||||
Noninterest expense | 5,972 | 1,491 | 2,371 | 3,497 | 994 | 14,325 | ||||||||||||||||||
Income before income tax expense | 1,291 | 567 | 1,507 | 486 | 405 | 4,256 | ||||||||||||||||||
Income tax expense | 365 | 152 | 603 | 157 | 85 | 1,362 | ||||||||||||||||||
Net income | $926 | $415 | $904 | $329 | $320 | $2,894 | ||||||||||||||||||
Total assets | $192,250 | $31,291 | $93,941 | $11,744 | ($5,184 | ) | $324,042 | |||||||||||||||||
(a) | North American Operations consist of automotive financing in the U.S. and Canada and corporate activities. International Operations consist of automotive financing and full service leasing in all other countries and Puerto Rico through March 31, 2006. Beginning April 1, 2006, Puerto Rico is included in North American Operations. |
(b) | Amounts includesintra-segment eliminations between the North American Operations and International Operations. |
(c) | Represents our Commercial Finance business, Capmark, certain corporate activities and reclassifications and elimination between the reporting segments. The financial results for 2006 reflect our approximately 21% equity interest in Capmark commencing March 23, 2006, while the 2005 financial results represent Capmark as wholly owned. At December 31, 2006, total assets were $5.4 billion for the Commercial Finance business, and ($15.4) billion in reclassifications and eliminations. |
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Long-lived | ||||||||
Year ended December 31,($ in millions) | Revenue (a) | assets (b) | ||||||
2006 | ||||||||
Canada | $2,304 | $8,447 | ||||||
Europe | 2,213 | 2,357 | ||||||
Latin America | 957 | 138 | ||||||
Asia-Pacific | 194 | 201 | ||||||
Total foreign | 5,668 | 11,143 | ||||||
Total domestic | 12,495 | 13,620 | ||||||
Total | $18,163 | $24,763 | ||||||
2005 | ||||||||
Canada | $1,881 | $7,784 | ||||||
Europe | 2,285 | 2,740 | ||||||
Latin America | 947 | 121 | ||||||
Asia-Pacific | 302 | 201 | ||||||
Total foreign | 5,415 | 10,846 | ||||||
Total domestic | 13,672 | 22,119 | ||||||
Total | $19,087 | $32,965 | ||||||
2004 | ||||||||
Canada | $1,552 | $5,908 | ||||||
Europe | 2,127 | 2,193 | ||||||
Latin America | 768 | 86 | ||||||
Asia-Pacific | 309 | 265 | ||||||
Total foreign | 4,756 | 8,452 | ||||||
Total domestic | 13,825 | 19,475 | ||||||
Total | $18,581 | $27,927 | ||||||
(a) | Revenue consists of total net financing revenue and other income as presented in our Consolidated Statement of Income. |
(b) | Consists of net operating leases assets and net property and equipment. |
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2006 | 2005 | |||||||||||||||
Carrying value | Carrying value | |||||||||||||||
December 31,($ in millions) | Maximum liability | of liability | Maximum liability | of liability | ||||||||||||
Agency/construction lending (a) | $— | $— | $847 | $2 | ||||||||||||
Standby letters of credit | 161 | 7 | 135 | 3 | ||||||||||||
Securitization and sales: | ||||||||||||||||
HLTV and international securitizations | 108 | — | 205 | 1 | ||||||||||||
Other (a) | — | — | 2,113 | 19 | ||||||||||||
Agency loan program | 6,390 | — | 6,196 | — | ||||||||||||
Guarantees for repayment of third-party debt | 617 | — | 393 | — | ||||||||||||
Repurchase guarantees | 204 | — | 256 | — | ||||||||||||
Non-financial guarantees | 233 | — | — | — | ||||||||||||
Other guarantees | 223 | 4 | 108 | 3 | ||||||||||||
(a) | On March 23, 2006, GMAC sold approximately 79% of our equity in Capmark and subsequently recorded the remaining balance under the equity method. Prior to the sale, Capmark had a number of guarantees including agency/loan construction lending, agency/loans sold with recourse, and commercial mortgage securitizations. |
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2006 | 2005 | |||||||||||||||||||||||
Contract | Gain | Loss | Contract | Gain | Loss | |||||||||||||||||||
December 31,($ in millions) | amount | position | position | amount | position | position | ||||||||||||||||||
Commitments to: | ||||||||||||||||||||||||
Originate/purchase mortgages or securities (a) | $14,248 | $— | ($48 | ) | $16,560 | $42 | ($4 | ) | ||||||||||||||||
Sell mortgages or securities (a) | 20,702 | 28 | (1 | ) | 11,592 | 4 | (28 | ) | ||||||||||||||||
Remit excess cash flows on certain loan portfolios (b) | 5,334 | 39 | — | 4,305 | — | (39 | ) | |||||||||||||||||
Sell retail automotive receivables (c) | 21,500 | — | — | 33,000 | — | — | ||||||||||||||||||
Provide capital to equity method investees (d) | 278 | — | — | 1,038 | — | — | ||||||||||||||||||
Fund construction lending (e) | 352 | — | — | 2,387 | — | — | ||||||||||||||||||
Unused mortgage lending commitments (f) | 9,019 | — | — | 16,097 | — | — | ||||||||||||||||||
Bank certificates of deposit | 6,686 | — | — | 4,044 | — | — | ||||||||||||||||||
Unused revolving credit line commitments (g) | 7,381 | — | — | 7,390 | — | — | ||||||||||||||||||
(a) | The fair value is estimated using published market information associated with commitments to sell similar instruments. Included as of December 31, 2006 and 2005 are commitments accounted for as derivatives with a contract amount of $37,082 and $25,670, a gain position of $28 and $46 and a loss position of $49 and $32, respectively. |
(b) | Under certain residential mortgage purchase agreements, we are committed to remitting to its shared execution partners’ cash flows that exceed a required rate of return less credit loss reimbursements to the mortgage originators. This commitment is accounted for as a derivative. |
(c) | We have entered into agreements with third-party banks to sell automotive retail receivables in which we transfer all credit risk to the purchaser (whole loan sales). |
(d) | We are committed to lend equity capital to certain private equity funds. The fair value of these commitments is considered in the overall valuation of the underlying assets with which they are associated. |
(e) | We are committed to fund the completion of the development of certain lots and model homes up to the amount of the agreed upon amount per project. |
(f) | The fair value of these commitments is considered in the overall valuation of the related assets. |
(g) | The unused portions of revolving lines of credit reset at prevailing market rates and, as such, approximate market value. |
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Year ended December 31,($ in millions) | ||||
2007 | $207 | |||
2008 | 168 | |||
2009 | 115 | |||
2010 | 90 | |||
2011 | 76 | |||
2012 and thereafter | 212 | |||
Total minimum payment required | $868 | |||
Year ended December 31,($ in millions) | 2006 | 2005 | ||||||
Balance at beginning of year | $3,159 | $2,723 | ||||||
Written service contract revenue | 1,209 | 1,345 | ||||||
Earned service contract revenue | (1,207 | ) | (909 | ) | ||||
Balance at end of year | $3,161 | $3,159 | ||||||
December 31,($ in millions) | 2006 | 2005 | ||||||
Loans sold with recourse | $800 | $5,622 | ||||||
Maximum exposure on loans sold with recourse (a): | ||||||||
Full exposure | 189 | 976 | ||||||
Limited exposure | 58 | 142 | ||||||
Total exposure | $247 | $1,118 | ||||||
(a) | Maximum recourse exposure is net of amounts reinsured with third parties totaling $1 and $1 at December 31, 2006 and 2005, respectively. Loss reserves, included in Accrued expenses and other liabilities on our Consolidated Balance Sheet, related to loans sold with recourse totaled $0 and $11 at December 31, 2006 and 2005, respectively. |
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Unpaid principal | ||||||||||||||||
Loan production | as of | |||||||||||||||
for the year | December 31, | |||||||||||||||
($ in millions) | 2006 | 2005 | 2006 | 2005 | ||||||||||||
Interest only mortgages | $48,335 | $43,298 | $22,416 | $19,361 | ||||||||||||
Option adjustable rate mortgages | 18,308 | 5,077 | 1,955 | 1,114 | ||||||||||||
Highloan-to-value (100% or more) mortgages | 8,768 | 6,610 | 11,978 | 13,364 | ||||||||||||
Below market initial rate (teaser) mortgages | 257 | 537 | 192 | 411 | ||||||||||||
• | Interest-only mortgages — Allow interest-only payments for a fixed period of time. At the end of the interest-only period, the loan payment includes principal payments and increases significantly. The borrower’s new payment, once the loan becomes amortizing (i.e., includes principal payments), will be greater than if the borrower had been making principal payments since the origination of the loan. |
• | Option adjustable rate mortgages — Permit a variety of repayment options. The repayment options include minimum, interest-only, fully amortizing30-year and fully amortizing15-year payments. The minimum payment option sets the monthly payment at the initial interest rate for the first year of the loan. The interest rate resets after the first year, but the borrower can continue to make the minimum payment. The interest-only option sets the monthly payment at the amount of interest due on the loan. If the interest-only option payment would be less than the minimum payment, the interest-only option is not available to the borrower. Under the fully amortizing30-year and15-year payment options, the borrower’s monthly payment is set based on the interest rate, loan balance and remaining loan term. |
• | Highloan-to-value mortgages — Defined as first-lien loans withloan-to-value ratios in excess of 100% or second-lien loans that when combined with the underlying first-lien mortgage loan result in aloan-to-value ratio in excess of 100%. |
• | Below market rate (teaser) mortgages — Contain contractual features that limit the initial interest rate to a below market interest rate for a specified time period with an increase to a market interest rate in a future period. The increase to the market interest rate could result in a significant increase in the borrower’s monthly payment amount. |
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2005 | 2004 | |||||||||||||||
Previously | Previously | |||||||||||||||
Year ended December 31,($ in millions) | reported | Restated | reported | Restated | ||||||||||||
Revenue | ||||||||||||||||
Consumer | $9,945 | $9,943 | $10,332 | $10,316 | ||||||||||||
Commercial | 2,685 | 2,685 | 2,177 | 2,177 | ||||||||||||
Loans held for sale | 1,652 | 1,652 | 1,269 | 1,269 | ||||||||||||
Operating leases | 7,032 | 7,032 | 6,563 | 6,563 | ||||||||||||
Total financing revenue | 21,314 | 21,312 | 20,341 | 20,325 | ||||||||||||
Interest expense | 12,930 | 13,106 | 9,535 | 9,659 | ||||||||||||
Net financing revenue before provision for credit losses | 8,384 | 8,206 | 10,806 | 10,666 | ||||||||||||
Provision for credit losses | 1,085 | 1,074 | 1,953 | 1,953 | ||||||||||||
Net financing revenue | 7,299 | 7,132 | 8,853 | 8,713 | ||||||||||||
Servicing fees | 1,730 | 1,730 | 1,547 | 1,547 | ||||||||||||
Amortization and impairment of servicing rights | (869 | ) | (869 | ) | (1,112 | ) | (1,112 | ) | ||||||||
Servicing asset valuation and hedge activities, net | 61 | 61 | 243 | 243 | ||||||||||||
Net loan servicing income | 922 | 922 | 678 | 678 | ||||||||||||
Insurance premiums and service revenue earned | 3,762 | 3,762 | 3,528 | 3,528 | ||||||||||||
Gain on sale of mortgage and automotive loans, net | 1,656 | 1,656 | 1,347 | 1,347 | ||||||||||||
Investment income | 1,216 | 1,216 | 845 | 845 | ||||||||||||
Other income | 4,352 | 4,399 | 3,416 | 3,470 | ||||||||||||
Total net financing revenue and other income | 19,207 | 19,087 | 18,667 | 18,581 | ||||||||||||
Expense | ||||||||||||||||
Depreciation expense on operating lease assets | 5,244 | 5,244 | 4,828 | 4,828 | ||||||||||||
Compensation and benefits expense | 3,163 | 3,163 | 2,916 | 2,916 | ||||||||||||
Insurance losses and loss adjustment expenses | 2,355 | 2,355 | 2,371 | 2,371 | ||||||||||||
Other operating expenses | 4,134 | 4,134 | 4,205 | 4,210 | ||||||||||||
Impairment of goodwill and other intangible assets | 712 | 712 | — | — | ||||||||||||
Total noninterest expense | 15,608 | 15,608 | 14,320 | 14,325 | ||||||||||||
Income before income tax expense | 3,599 | 3,479 | 4,347 | 4,256 | ||||||||||||
Income tax expense | 1,205 | 1,197 | 1,434 | 1,362 | ||||||||||||
Net income | $2,394 | $2,282 | $2,913 | $2,894 | ||||||||||||
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Previously | ||||||||
December 31, 2005($ in millions) | reported | Restated | ||||||
Assets | ||||||||
Cash and cash equivalents | $15,424 | $15,424 | ||||||
Investment securities | 18,207 | 18,207 | ||||||
Loans held for sale | 21,865 | 21,865 | ||||||
Assets held for sale | 19,030 | 19,030 | ||||||
Finance receivables and loans, net of unearned income | ||||||||
Consumer | 140,411 | 140,436 | ||||||
Commercial | 44,574 | 44,574 | ||||||
Allowance for credit losses | (3,116 | ) | (3,085 | ) | ||||
Total finance receivables and loans, net | 181,869 | 181,925 | ||||||
Investment in operating leases, net | 31,211 | 31,211 | ||||||
Notes receivable from GM | 4,565 | 4,565 | ||||||
Mortgage servicing rights | 4,015 | 4,015 | ||||||
Premiums and other insurance receivables | 1,873 | 1,873 | ||||||
Other assets | 22,457 | 22,442 | ||||||
Total assets | $320,516 | $320,557 | ||||||
Liabilities | ||||||||
Debt | ||||||||
Unsecured | $133,269 | $133,560 | ||||||
Secured | 121,138 | 121,138 | ||||||
Total debt | 254,407 | 254,698 | ||||||
Interest payable | 3,057 | 3,057 | ||||||
Liabilities related to assets held for sale | 10,941 | 10,941 | ||||||
Unearned insurance premiums and service revenue | 5,054 | 5,054 | ||||||
Reserves for insurance losses and loss adjustment expenses | 2,534 | 2,534 | ||||||
Accrued expenses and other liabilities | 18,381 | 18,224 | ||||||
Deferred income taxes | 4,364 | 4,364 | ||||||
Total liabilities | 298,738 | 298,872 | ||||||
Equity | ||||||||
Common stock and paid-in capital | 5,760 | 5,760 | ||||||
Retained earnings | 15,190 | 15,095 | ||||||
Accumulated other comprehensive income | 828 | 830 | ||||||
Total equity | 21,778 | 21,685 | ||||||
Total liabilities and equity | $320,516 | $320,557 | ||||||
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2005 | 2004 | |||||||||||||||
Previously | Previously | |||||||||||||||
Year ended December 31,($ in millions) | reported | Restated | reported | Restated | ||||||||||||
Common stock and paid-in capital | ||||||||||||||||
Balance at beginning of year | $5,760 | $5,760 | $5,641 | $5,641 | ||||||||||||
Increase in paid-in capital | — | — | 119 | 119 | ||||||||||||
Balance at end of year | 5,760 | 5,760 | 5,760 | 5,760 | ||||||||||||
Retained earnings | ||||||||||||||||
Balance at beginning of year | 15,491 | 15,508 | 14,078 | 14,114 | ||||||||||||
Net income | 2,394 | 2,282 | 2,913 | 2,894 | ||||||||||||
Dividends paid | (2,500 | ) | (2,500 | ) | (1,500 | ) | (1,500 | ) | ||||||||
Repurchase transaction | (195 | ) | (195 | ) | — | — | ||||||||||
Balance at end of year | 15,190 | 15,095 | 15,491 | 15,508 | ||||||||||||
Accumulated other comprehensive income (loss) | ||||||||||||||||
Balance at beginning of year | 1,166 | 1,168 | 517 | 518 | ||||||||||||
Other comprehensive (loss) income | (338 | ) | (338 | ) | 649 | 650 | ||||||||||
Balance at end of year | 828 | 830 | 1,166 | 1,168 | ||||||||||||
Total equity | ||||||||||||||||
Balance at beginning of year | 22,417 | 22,436 | 20,236 | 20,273 | ||||||||||||
Increase in paid-in capital | — | — | 119 | 119 | ||||||||||||
Net income | 2,394 | 2,282 | 2,913 | 2,894 | ||||||||||||
Dividends paid | (2,500 | ) | (2,500 | ) | (1,500 | ) | (1,500 | ) | ||||||||
Repurchase transaction | (195 | ) | (195 | ) | — | — | ||||||||||
Other comprehensive (loss) income | (338 | ) | (338 | ) | 649 | 650 | ||||||||||
Total equity at end of year | $21,778 | $21,685 | $22,417 | $22,436 | ||||||||||||
Comprehensive income | ||||||||||||||||
Net income | $2,394 | $2,282 | $2,913 | $2,894 | ||||||||||||
Other comprehensive (loss) income | (338 | ) | (338 | ) | 649 | 650 | ||||||||||
Comprehensive income | $2,056 | $1,944 | $3,562 | $3,544 | ||||||||||||
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2005 | 2004 | |||||||||||||||
Previously | Previously | |||||||||||||||
Year ended December 31, ($ in millions) | reported | Restated | reported | Restated | ||||||||||||
Operating activities | ||||||||||||||||
Net income | $2,394 | $2,282 | $2,913 | $2,894 | ||||||||||||
Reconciliation of net income to net cash (used in) provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 5,964 | 5,964 | 5,433 | 5,433 | ||||||||||||
Goodwill impairment | 712 | 712 | — | — | ||||||||||||
Amortization and valuation adjustments of mortgage servicing rights | 782 | 782 | 1,384 | 1,384 | ||||||||||||
Provision for credit losses | 1,085 | 1,074 | 1,953 | 1,953 | ||||||||||||
Net gains on sales of finance receivables and loans | (1,695 | ) | (1,741 | ) | (1,312 | ) | (1,332 | ) | ||||||||
Net (gains) losses on investment securities | (104 | ) | (104 | ) | (52 | ) | (52 | ) | ||||||||
Capitalized interest income | (23 | ) | (23 | ) | (30 | ) | (30 | ) | ||||||||
Net change in: | ||||||||||||||||
Trading securities | (1,155 | ) | (1,155 | ) | 614 | 614 | ||||||||||
Loans held for sale | (29,119 | ) | (29,119 | ) | (2,312 | ) | (2,312 | ) | ||||||||
Deferred income taxes | 351 | 351 | (118 | ) | (118 | ) | ||||||||||
Interest payable | (290 | ) | (290 | ) | 311 | 311 | ||||||||||
Other assets | (2,366 | ) | (2,446 | ) | 2,468 | 2,426 | ||||||||||
Other liabilities | 49 | 45 | (2,800 | ) | (2,875 | ) | ||||||||||
Other, net | 315 | 568 | 1,011 | 1,167 | ||||||||||||
Net cash (used in) provided by operating activities | (23,100 | ) | (23,100 | ) | 9,463 | 9,463 | ||||||||||
Investing activities | ||||||||||||||||
Purchases of available for sale securities | (19,165 | ) | (19,165 | ) | (12,783 | ) | (12,783 | ) | ||||||||
Proceeds from sales of available for sale securities | 5,721 | 5,721 | 3,276 | 3,276 | ||||||||||||
Proceeds from maturities of available for sale securities | 8,887 | 8,887 | 7,250 | 7,250 | ||||||||||||
Net increase in finance receivables and loans | (96,028 | ) | (96,028 | ) | (125,183 | ) | (125,183 | ) | ||||||||
Proceeds from sales of finance receivables and loans | 125,836 | 125,836 | 108,147 | 108,147 | ||||||||||||
Purchases of operating lease assets | (15,496 | ) | (15,496 | ) | (14,055 | ) | (14,055 | ) | ||||||||
Disposals of operating lease assets | 5,164 | 5,164 | 7,668 | 7,668 | ||||||||||||
Change in notes receivable from GM | 1,053 | 1,053 | (1,635 | ) | (1,635 | ) | ||||||||||
Purchases of mortgage servicing rights, net | (267 | ) | (267 | ) | (326 | ) | (326 | ) | ||||||||
Acquisitions of subsidiaries, net of cash acquired | (2 | ) | (2 | ) | 9 | 9 | ||||||||||
Other, net | (1,549 | ) | (1,549 | ) | 260 | 260 | ||||||||||
Net cash provided by (used in) investing activities | 14,154 | 14,154 | (27,372 | ) | (27,372 | ) | ||||||||||
Financing activities | ||||||||||||||||
Net change in short-term debt | (9,970 | ) | (9,970 | ) | 4,123 | 4,123 | ||||||||||
Proceeds from issuance of long-term debt | 77,890 | 77,890 | 72,753 | 72,753 | ||||||||||||
Repayments of long-term debt | (69,520 | ) | (69,520 | ) | (57,743 | ) | (57,743 | ) | ||||||||
Other financing activities | 6,168 | 6,168 | 4,723 | 4,723 | ||||||||||||
Dividends paid | (2,500 | ) | (2,500 | ) | (1,500 | ) | (1,500 | ) | ||||||||
Net cash provided by financing activities | 2,068 | 2,068 | 22,356 | 22,356 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (45 | ) | (45 | ) | 295 | 295 | ||||||||||
Net (decrease) increase in cash and cash equivalents | (6,923 | ) | (6,923 | ) | 4,742 | 4,742 | ||||||||||
Cash and cash equivalents at beginning of year | 22,718 | 22,718 | 17,976 | 17,976 | ||||||||||||
Cash and cash equivalents at end of year | $15,795 | $15,795 | $22,718 | $22,718 | ||||||||||||
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First quarter | Second quarter | Third quarter | Fourth quarter | |||||||||||||||||||||||||
2006 | Previously | Previously | Previously | |||||||||||||||||||||||||
($ in millions) | reported | Restated | reported | Restated | reported | Restated | ||||||||||||||||||||||
Net financing revenue before provision for credit losses | $2,140 | $1,891 | $1,908 | $1,743 | $1,691 | $2,033 | $1,876 | |||||||||||||||||||||
Provision for credit losses | (135 | ) | (166 | ) | (285 | ) | (268 | ) | (486 | ) | (503 | ) | (1,063 | ) | ||||||||||||||
Other revenue | 2,911 | 2,899 | 3,542 | 3,522 | 3,083 | 3,015 | 3,184 | |||||||||||||||||||||
Total net financing revenue and other income | 4,916 | 4,624 | 5,165 | 4,997 | 4,288 | 4,545 | 3,997 | |||||||||||||||||||||
Noninterest expense | 3,928 | 3,907 | 3,835 | 3,850 | 4,542 | 4,535 | 3,643 | |||||||||||||||||||||
Income (loss) before income tax expense | 988 | 717 | 1,330 | 1,147 | (254 | ) | 10 | 354 | ||||||||||||||||||||
Income tax expense (benefit) | 316 | 222 | 430 | 360 | 70 | 183 | (662 | )(b) | ||||||||||||||||||||
Net income (loss) | $672 | $495 | $900 | $787 | ($324 | )(a) | ($173 | )(a) | $1,016 | |||||||||||||||||||
(a) | Decline in third quarter 2006 net income primarily relates to goodwill impairment taken at our Commercial Finance business. Refer to Note 11 to our Consolidated Financial Statements for further details. |
(b) | Effective November 28, 2006, GMAC, along with certain U.S. subsidiaries, became disregarded or pass-through entities for U.S. federal income tax purposes. Due to our change in tax status, a net deferred tax liability was eliminated through income tax expense totaling $791 million. |
First quarter | Second quarter | Third quarter | Fourth quarter | |||||||||||||||||||||||||||||
2005 | Previously | Previously | Previously | Previously | ||||||||||||||||||||||||||||
($ in millions) | reported | Restated | reported | Restated | reported | Restated | reported | Restated | ||||||||||||||||||||||||
Net financing revenue before provision for credit losses | $2,187 | $2,015 | $2,267 | $2,510 | $2,004 | $1,861 | $1,926 | $1,820 | ||||||||||||||||||||||||
Provision for credit losses | (329 | ) | (313 | ) | (201 | ) | (217 | ) | (385 | ) | (385 | ) | (170 | ) | (159 | ) | ||||||||||||||||
Other revenue | 2,841 | 2,859 | 2,784 | 2,805 | 3,288 | 3,274 | 2,995 | 3,017 | ||||||||||||||||||||||||
Total net financing revenue and other income | 4,699 | 4,561 | 4,850 | 5,098 | 4,907 | 4,750 | 4,751 | 4,678 | ||||||||||||||||||||||||
Noninterest expense | 3,596 | 3,574 | 3,638 | 3,613 | 3,856 | 3,854 | 4,518 | 4,567 | ||||||||||||||||||||||||
Income before income tax expense | 1,103 | 987 | 1,212 | 1,485 | 1,051 | 896 | 233 | 111 | ||||||||||||||||||||||||
Income tax expense (benefit) | 375 | 363 | 396 | 511 | 376 | 324 | 58 | (1 | ) | |||||||||||||||||||||||
Net income | $728 | $624 | $816 | $974 | $675 | $572 | $175 | (a) | $112 | (a) | ||||||||||||||||||||||
(a) | Decline in fourth quarter 2005 net income primarily relates to goodwill impairments taken at our Commercial Finance business and Capmark. Refer to Note 11 to our Consolidated Financial Statements for further details. |
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Signature | Title | |||
/s/ G. RICHARD WAGONER, JR. (G. Richard Wagoner, Jr.) | Chairman and Chief Executive Officer | |||
/s/ FREDERICK A. HENDERSON (Frederick A. Henderson) | Vice Chairman and Chief Financial Officer | |||
/s/ WALTER G. BORST (Walter G. Borst) | Treasurer | |||
/s/ NICK S. CYPRUS (Nick S. Cyprus) | Controller and Chief Accounting Officer | |||
/s/ PERCY BARNEVIK (Percy Barnevik) | Director | |||
/s/ ERSKINE BOWLES (Erskine Bowles) | Director | |||
/s/ JOHN H. BRYAN (John H. Bryan) | Director | |||
/s/ ARMANDO CODINA (Armando Codina) | Director | |||
/s/ GEORGE M.C. FISHER (George M.C. Fisher) | Director | |||
/s/ KAREN KATEN (Karen Katen) | Director |
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Signature | Title | |||
/s/ KENT KRESA (Kent Kresa) | Director | |||
/s/ ELLEN J. KULLMAN (Ellen J. Kullman) | Director | |||
/s/ PHILIP A. LASKAWY (Philip A. Laskawy) | Director | |||
/s/ ECKHARD PFEIFFER (Eckhard Pfeiffer) | Director |
262