þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the year ended December 31, 2007 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to | ||
Commission file number 1-143 |
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, $1 2/3 par value | New York Stock Exchange, Inc. |
Bourse de Bruxelles | Brussels, Belgium | |
Euronext Paris | Paris, France |
Part and Item Number of Form 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 3, 2008 | Part III, Items 10 through 14 |
Item 1. | Business |
• Chevrolet | • Buick | • Saab | • GMC | |||
• Pontiac | • Cadillac | • HUMMER | • Saturn |
• Opel | • Saab | • GMC | • HUMMER | |||
• Vauxhall | • Buick | • Cadillac | • Isuzu | |||
• Holden | • Chevrolet | • Daewoo | • Suzuki |
• Pontiac | • Wuling | • Chevrolet | • Buick | |||
• Suzuki | • Daewoo | • Cadillac | • Holden |
Item | Page(s) | |||
Employment | 15 | |||
Production Volumes | 54 - 67 | |||
Segment Reporting (Note 29 to the consolidated financial statements) | 181 |
Vehicle Unit Sales(a) | ||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||
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 | 2,748 | 381 | 13.9% | 2,617 | 426 | 16.3% | 2,478 | 490 | 19.8% | |||||||||||||||||||||||||||
Midsize | 3,410 | 884 | 25.9% | 3,595 | 946 | 26.3% | 3,632 | 1,007 | 27.7% | |||||||||||||||||||||||||||
Sport | 345 | 66 | 19.1% | 436 | 80 | 18.3% | 424 | 58 | 13.6% | |||||||||||||||||||||||||||
Luxury | 1,169 | 158 | 13.6% | 1,206 | 173 | 14.4% | 1,208 | 197 | 16.3% | |||||||||||||||||||||||||||
Total cars | 7,672 | 1,489 | 19.4% | 7,854 | 1,625 | 20.7% | 7,742 | 1,752 | 22.6% | |||||||||||||||||||||||||||
Trucks | ||||||||||||||||||||||||||||||||||||
Pickups | 2,710 | 979 | 36.1% | 2,874 | 1,022 | 35.6% | 3,201 | 1,163 | 36.3% | |||||||||||||||||||||||||||
Vans | 1,119 | 219 | 19.6% | 1,326 | 245 | 18.5% | 1,468 | 328 | 22.4% | |||||||||||||||||||||||||||
Utilities | 4,651 | 1,136 | 24.4% | 4,505 | 1,174 | 26.0% | 4,586 | 1,212 | 26.4% | |||||||||||||||||||||||||||
Medium Duty | 322 | 44 | 13.6% | 501 | 59 | 11.8% | 459 | 63 | 13.8% | |||||||||||||||||||||||||||
Total trucks | 8,802 | 2,378 | 27.0% | 9,206 | 2,500 | 27.1% | 9,714 | 2,766 | 28.5% | |||||||||||||||||||||||||||
Total United States | 16,474 | 3,867 | 23.5% | 17,060 | 4,125 | 24.2% | 17,456 | 4,518 | 25.9% | |||||||||||||||||||||||||||
Canada, Mexico, and Other | 3,118 | 649 | 20.8% | 3,131 | 682 | 21.8% | 3,111 | 730 | 23.5% | |||||||||||||||||||||||||||
Total GMNA | 19,592 | 4,516 | 23.0% | 20,191 | 4,807 | 23.8% | 20,567 | 5,248 | 25.5% | |||||||||||||||||||||||||||
GME | 23,069 | 2,182 | 9.5% | 21,876 | 2,003 | 9.2% | 21,092 | 1,984 | 9.4% | |||||||||||||||||||||||||||
GMLAAM | 7,181 | 1,236 | 17.2% | 6,104 | 1,035 | 17.0% | 5,310 | 883 | 16.6% | |||||||||||||||||||||||||||
GMAP | 20,808 | 1,436 | 6.9% | 19,231 | 1,248 | 6.5% | 18,115 | 1,064 | 5.9% | |||||||||||||||||||||||||||
Total Worldwide (b) | 70,649 | 9,370 | 13.3% | 67,401 | 9,093 | 13.5% | 65,084 | 9,179 | 14.1% | |||||||||||||||||||||||||||
2
Vehicle Unit Sales(a) | ||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||
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 | 16,474 | 3,867 | 23.5% | 17,060 | 4,125 | 24.2% | 17,456 | 4,518 | 25.9% | |||||||||||||||||||||||||||
Canada | 1,691 | 404 | 23.9% | 1,666 | 421 | 25.3% | 1,630 | 456 | 28.0% | |||||||||||||||||||||||||||
Mexico | 1,146 | 230 | 20.1% | 1,179 | 245 | 20.8% | 1,164 | 250 | 21.5% | |||||||||||||||||||||||||||
Other | 281 | 15 | 5.4% | 286 | 16 | 5.5% | 317 | 24 | 7.6% | |||||||||||||||||||||||||||
Total GMNA | 19,592 | 4,516 | 23.0% | 20,191 | 4,807 | 23.8% | 20,567 | 5,248 | 25.5% | |||||||||||||||||||||||||||
United Kingdom | 2,800 | 427 | 15.2% | 2,734 | 391 | 14.3% | 2,828 | 416 | 14.7% | |||||||||||||||||||||||||||
Germany | 3,483 | 330 | 9.5% | 3,772 | 380 | 10.1% | 3,615 | 389 | 10.8% | |||||||||||||||||||||||||||
Russia | 2,709 | 259 | 9.6% | 2,028 | 133 | 6.5% | 1,655 | 76 | 4.6% | |||||||||||||||||||||||||||
Spain | 1,939 | 170 | 8.8% | 1,953 | 183 | 9.4% | 1,959 | 180 | 9.2% | |||||||||||||||||||||||||||
France | 2,586 | 125 | 4.8% | 2,499 | 123 | 4.9% | 2,548 | 131 | 5.1% | |||||||||||||||||||||||||||
Other | 9,552 | 871 | 9.1% | 8,890 | 793 | 8.9% | 8,487 | 792 | 9.3% | |||||||||||||||||||||||||||
Total GME | 23,069 | 2,182 | 9.5% | 21,876 | 2,003 | 9.2% | 21,092 | 1,984 | 9.4% | |||||||||||||||||||||||||||
China | 8,549 | 1,032 | 12.1% | 7,102 | 871 | 12.3% | 5,747 | 664 | 11.6% | |||||||||||||||||||||||||||
Australia | 1,050 | 149 | 14.2% | 963 | 148 | 15.4% | 988 | 176 | 17.8% | |||||||||||||||||||||||||||
South Korea | 1,271 | 131 | 10.3% | 1,202 | 129 | 10.7% | 1,171 | 108 | 9.2% | |||||||||||||||||||||||||||
Other | 9,938 | 124 | 1.2% | 9,964 | 100 | 1.0% | 10,209 | 116 | 1.1% | |||||||||||||||||||||||||||
Total GMAP | 20,808 | 1,436 | 6.9% | 19,231 | 1,248 | 6.5% | 18,115 | 1,064 | 5.9% | |||||||||||||||||||||||||||
Brazil | 2,463 | 499 | 20.3% | 1,928 | 410 | 21.3% | 1,715 | 365 | 21.3% | |||||||||||||||||||||||||||
Argentina | 573 | 92 | 16.1% | 454 | 75 | 16.5% | 390 | 70 | 17.8% | |||||||||||||||||||||||||||
Venezuela | 491 | 151 | 30.8% | 343 | 92 | 26.7% | 228 | 65 | 28.6% | |||||||||||||||||||||||||||
Colombia | 251 | 93 | 36.9% | 192 | 74 | 38.6% | 143 | 54 | 37.6% | |||||||||||||||||||||||||||
Other | 3,403 | 401 | 11.8% | 3,187 | 384 | 12.0% | 2,834 | 329 | 11.6% | |||||||||||||||||||||||||||
Total GMLAAM | 7,181 | 1,236 | 17.2% | 6,104 | 1,035 | 17.0% | 5,310 | 883 | 16.6% | |||||||||||||||||||||||||||
Total Worldwide (b) | 70,649 | 9,370 | 13.3% | 67,401 | 9,093 | 13.5% | 65,084 | 9,179 | 14.1% | |||||||||||||||||||||||||||
(a) | Our vehicle unit sales primarily represent vehicles we manufacture, sell under a GM brand or through a GM-owned distribution network. Under a contractual agreement with SGMW we also report SGMW global sales as part of our global market share. Consistent with industry practice, vehicle unit sales information includes estimates of industry sales in certain countries where public reporting is not legally required or otherwise available on a consistent basis. | |
(b) | Total Worldwide may include rounding differences. |
3
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Units in thousands) | ||||||||||||
GMNA | 1,152 | 1,270 | 1,334 | |||||||||
GME | 833 | 792 | 814 | |||||||||
GMLAAM | 362 | 289 | 259 | |||||||||
GMAP | 229 | 227 | 217 | |||||||||
Total fleet units | 2,576 | 2,578 | 2,624 | |||||||||
Daily rental units | 950 | 1,027 | 1,149 | |||||||||
Other fleet units | 1,626 | 1,551 | 1,475 | |||||||||
Total fleet units | 2,576 | 2,578 | 2,624 | |||||||||
Fleet unit sales as a percentage of total vehicle unit sales | ||||||||||||
Cars | 32.9% | 33.9% | 35.2% | |||||||||
Trucks | 19.5% | 20.5% | 19.6% | |||||||||
Total | 27.5% | 28.3% | 28.6% |
4
As of December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
GMNA | 7,835 | 8,096 | 8,440 | |||||||||
GME | 8,902 | 8,802 | 8,557 | |||||||||
GMLAAM | 1,763 | 1,681 | 1,671 | |||||||||
GMAP | 3,387 | 3,649 | 3,329 | |||||||||
Total Worldwide | 21,887 | 22,228 | 21,997 | |||||||||
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6
• Mini Vehicles | • Rear-Wheel-Drive (RWD) Vehicles | |
• Small Vehicles | • Luxury RWD Vehicles | |
• Compact Vehicles | • Compact Crossover Vehicles | |
• Midsize Vehicles | • Midsize Trucks |
7
2007 | 2006 | |||||||
GM | 23.5% | 24.2% | ||||||
Toyota | 15.9% | 14.9% | ||||||
Ford | 15.6% | 17.1% | ||||||
Chrysler | 12.6% | 12.6% | ||||||
Honda | 9.4% | 8.8% | ||||||
Nissan | 6.5% | 6.0% |
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2007 | 2006 | 2005 | ||||||||||
(In thousands) | ||||||||||||
GMNA | 139 | 152 | 173 | |||||||||
GME | 57 | 60 | 63 | |||||||||
GMLAAM | 34 | 32 | 31 | |||||||||
GMAP | 34 | 34 | 31 | |||||||||
GMAC(a) | — | — | 34 | |||||||||
Other | 2 | 2 | 3 | |||||||||
Total | 266 | 280 | 335 | |||||||||
(a) | Amounts for 2007 and 2006 exclude GMAC employees, who were removed from the consolidated payroll as a result of the GMAC Transaction in November 2006. |
15
Name and (Age) | Positions and Offices | |
G. Richard Wagoner, Jr. (54) | Chairman and Chief Executive Officer | |
Frederick A. Henderson (49) | Vice Chairman and Chief Financial Officer | |
Robert A. Lutz (75) | Vice Chairman, Global Product Development | |
Bo I. Andersson (52) | Group Vice President, Global Purchasing and Supply Chain | |
Kathleen S. Barclay (52) | Vice President, Global Human Resources | |
Walter G. Borst (46) | Treasurer | |
Lawrence D. Burns (56) | Vice President, Research & Development and Strategic Planning | |
Troy A. Clarke (52) | Group Vice President and President, North America | |
Gary L. Cowger (60) | Group Vice President, Global Manufacturing and Labor Relations | |
Nicholas S. Cyprus (54) | Controller and Chief Accounting Officer | |
Carl-Peter Forster (53) | Group Vice President and President, GM Europe | |
Steven J. Harris (62) | Vice President, Global Communications | |
Maureen Kempston-Darkes (59) | Group Vice President and President, GM Latin America, Africa and Middle East | |
Robert S. Osborne (53) | Group Vice President and General Counsel | |
David N. Reilly (58) | Group Vice President and President, GM Asia Pacific | |
Thomas G. Stephens (59) | Group Vice President, GM Powertrain and Global Quality | |
Ralph J. Szygenda (59) | Group Vice President and Chief Information Officer | |
Ray G. Young (46) | Group Vice President, Finance |
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• | Require us to dedicate a significant portion of our cash flow from operations to the payment of principal 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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• | 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, as opposed to financing, vehicle purchases. | |
• | Rising interest rates generally reduce its residential mortgage loan production as borrowers become less likely to refinance, and the costs associated with acquiring a new home becomes 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 its investment portfolio. |
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• | multiple foreign regulatory requirements that are subject to change; | |
• | differing local product preferences and product requirements; | |
• | fluctuations in foreign currency exchange rates and interest rates; | |
• | difficulty in establishing, staffing, and managing foreign operations; | |
• | differing labor regulations; | |
• | consequences from changes in tax laws; and | |
• | political and economic instability, natural calamities, war, and terrorism. |
31
• | A significant and sustained increase in gasoline prices could decrease new and used vehicle purchases, thereby reducing the demand for automotive retail and wholesale financing. | |
• | A general decline in residential home prices in the United States could negatively affect the value of GMAC’s mortgage loans held for investment and sale and GMAC’s retained interests in securitized mortgage loans. Such a decrease could also restrict GMAC’s ability to originate, sell or securitize mortgage loans and impact the repayment of advances under its warehouse loans. | |
• | An increase in automotive labor rates or parts prices could negatively affect the value of GMAC’s automotive extended service contracts. |
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• Argentina | • China | • India | • South Africa | • United Kingdom | ||||
• Australia | • Colombia | • Kenya | • South Korea | • Venezuela | ||||
• Belgium | • Ecuador | • Mexico | • Spain | • Vietnam | ||||
• Brazil | • Egypt | • Poland | • Sweden | |||||
• Chile | • Germany | • Russia | • Thailand |
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Item 5. | Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities |
2007 Quarters | ||||||||||||||||||
1st | 2nd | 3rd | 4th | |||||||||||||||
Cash dividends per share of Common Stock | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | ||||||||||
Price range of Common Stock (a): | High | $ | 37.24 | $ | 38.66 | $ | 38.27 | $ | 43.20 | |||||||||
Low | $ | 28.81 | $ | 28.86 | $ | 29.10 | $ | 24.50 |
2006 Quarters | ||||||||||||||||||
1st | 2nd | 3rd | 4th | |||||||||||||||
Cash dividends per share of Common Stock | $ | 0.25 | $ | 0.25 | $ | 0.25 | $ | 0.25 | ||||||||||
Price range of Common Stock (a): | High | $ | 24.60 | $ | 30.56 | $ | 33.64 | $ | 36.56 | |||||||||
Low | $ | 18.47 | $ | 19.00 | $ | 27.12 | $ | 28.49 |
(a) | 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(a) | |||||||||
Equity compensation plans approved by security holders: | ||||||||||||
General Motors 2007 Long Term Incentive Plan (2007 GMLTIP) and the 2002 General Motors Stock Incentive Plan (GMSIP) | 78,465,995 | $ | 52.09 | 16,285,773 | ||||||||
Equity compensation plans not approved by security holders (b): | ||||||||||||
General Motors 1998 Salaried Stock Option Plan (GMSSOP) | 24,789,948 | $ | 54.87 | — | ||||||||
Total | 103,255,943 | $ | 52.76 | 16,285,773 | ||||||||
(a) | Excludes securities reflected in the first column, “Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights.” | |
(b) | All equity compensation plans except the GMSSOP were approved by the stockholders. The GMSSOP was adopted by the Board of Directors in 1998 and expired on December 31, 2007. The purpose of the plans is to recognize the importance and contribution of our 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 our Common Stock. |
45
Years Ended December 31, | ||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003(a) | ||||||||||||||||
(Dollars in millions except per share amounts) | ||||||||||||||||||||
Total net sales and revenues (d) | $ | 181,122 | $ | 205,601 | $ | 193,050 | $ | 192,917 | $ | 184,152 | ||||||||||
Income (loss) from continuing operations | $ | (43,297 | ) | $ | (2,423 | ) | $ | (10,621 | ) | $ | 2,415 | $ | 2,450 | |||||||
Income (loss) from discontinued operations (a, b) | 256 | 445 | 313 | 286 | (104 | ) | ||||||||||||||
Gain from sale of discontinued operations (a, b) | 4,309 | — | — | — | 1,179 | |||||||||||||||
Cumulative effect of a change in accounting principle (c) | — | — | (109 | ) | — | — | ||||||||||||||
Net income (loss) | $ | (38,732 | ) | $ | (1,978 | ) | $ | (10,417 | ) | $ | 2,701 | $ | 3,525 | |||||||
$1 2/3 par value common stock: | ||||||||||||||||||||
Basic earnings (loss) per share from continuing operations before cumulative effect of accounting change | $ | (76.52 | ) | $ | (4.29 | ) | $ | (18.78 | ) | $ | 4.27 | $ | 4.37 | |||||||
Basic earnings per share from discontinued operations (a, b) | 8.07 | 0.79 | 0.55 | 0.51 | 2.34 | |||||||||||||||
Basic loss per share from cumulative effect of a change in accounting principle (c) | — | — | (0.19 | ) | — | — | ||||||||||||||
Basic earnings (loss) per share | $ | (68.45 | ) | $ | (3.50 | ) | $ | (18.42 | ) | $ | 4.78 | $ | 6.71 | |||||||
Diluted earnings (loss) per share from continuing operations before cumulative effect of accounting change | $ | (76.52 | ) | $ | (4.29 | ) | $ | (18.78 | ) | $ | 4.26 | $ | 4.30 | |||||||
Diluted earnings (loss) per share from discontinued operations (a, b) | 8.07 | 0.79 | 0.55 | 0.50 | 2.31 | |||||||||||||||
Diluted loss per share from cumulative effect of accounting change (c) | — | — | (0.19 | ) | — | — | ||||||||||||||
Diluted earnings (loss) per share | $ | (68.45 | ) | $ | (3.50 | ) | $ | (18.42 | ) | $ | 4.76 | $ | 6.61 | |||||||
Class H common stock: | ||||||||||||||||||||
Basic loss per share from discontinued operations (a) | $ | — | $ | — | $ | — | $ | — | $ | (0.22 | ) | |||||||||
Diluted loss per share from discontinued operations (a) | $ | — | $ | — | $ | — | $ | — | $ | (0.22 | ) | |||||||||
Cash dividends declared per share | $ | 1.00 | $ | 1.00 | $ | 2.00 | $ | 2.00 | $ | 2.00 | ||||||||||
Total assets (d) | $ | 148,883 | $ | 186,304 | $ | 474,268 | $ | 480,772 | $ | 448,925 | ||||||||||
Notes and loans payable (d) | $ | 44,339 | $ | 48,171 | $ | 287,715 | $ | 301,965 | $ | 273,250 | ||||||||||
Stockholders’ equity (deficit) (e, f, g) | $ | (37,094 | ) | $ | (5,652 | ) | $ | 14,442 | $ | 27,669 | $ | 24,665 |
(a) | Effective December 22, 2003, we split off Hughes Electronics Corporation (Hughes) by distributing Hughes common stock to the holders of Class H common stock in exchange for all outstanding shares of Class H common stock. Simultaneously, we sold our 19.8% retained economic interest in Hughes to News Corporation in exchange for cash and News Corporation Preferred American Depository Shares. All shares of Class H common stock were then cancelled. We recorded a net gain of $1.2 billion from the sale in 2003, and net losses from discontinued operations of Hughes were $219 million in 2003. |
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(b) | In August 2007, we completed the sale of the commercial and military operations of our Allison business. The results of operations, cash flows and the 2007 gain on sale of Allison have been reported as discontinued operations for all periods presented. | |
(c) | As of December 31, 2005, we recorded an asset retirement obligation of $181 million in accordance with the requirements of Financial Accounting Standards Board (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. | |
(d) | In November 2006, we sold a 51% controlling ownership interest in General Motors Acceptance Corporation (GMAC), resulting in a significant decrease in total consolidated net sales and revenues, assets and notes and loans payable. | |
(e) | As of December 31, 2006, we recognized the funded status of our benefit plans on our 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” (SFAS No. 158). | |
(f) | As of January 1, 2007, we recorded a decrease to Retained earnings of $425 million and an increase of $1.2 billion to Accumulated other comprehensive income in connection with the early adoption of the measurement provisions of SFAS No. 158. | |
(g) | As of January 1, 2007, we recorded an increase to Retained earnings of $137 million with a corresponding decrease to our liability for uncertain tax positions in accordance with FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Automotive Industry |
2007 Overview |
• | Consolidated net sales and revenues declined by 11.9%, reflecting the de-consolidation of GMAC following the GMAC Transaction in November 2006; | |
• | Automotive revenues increased 3.9%; | |
• | 2007 net loss of $38.7 billion ($68.45 per diluted share) includes valuation allowances recorded against our net deferred tax assets in the U.S., Canada and Germany of $39 billion; | |
• | Sold our Allison Transmission (Allison) business for $5.4 billion in cash proceeds resulting in a gain of $4.3 billion; | |
• | Results reflect a $1.2 billion loss on our 49% interest in GMAC; |
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• | Signed 2007 National Agreement that we anticipate will support our structural cost reduction plans; | |
• | Achieved structural cost reduction target in North American turnaround plan; and | |
• | Continued progress on finalization of our support for Delphi Corporation (Delphi) in emerging from bankruptcy proceedings. |
2008 Priorities |
• | Continue to execute great products; | |
• | Build strong brands and distribution channels; | |
• | Execute additional cost reduction initiatives; | |
• | Grow aggressively in emerging markets; | |
• | Continue development and implementation of our advanced propulsion strategy; and | |
• | Drive the benefits of managing the business globally. |
Continue to Execute Great Products |
Build Strong Brands and Distribution Channels |
Execute Additional Cost Reduction Initiatives. |
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Grow Aggressively in Emerging Markets. |
Continue to Develop and Implement our Advanced Propulsion Strategy. |
Drive the Benefits of Managing the Business Globally. |
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2007 vs. 2006 Change | 2006 vs. 2005 Change | |||||||||||||||||||||||||||
2007 | 2006 | 2005 | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
Net sales and revenue: | ||||||||||||||||||||||||||||
Automotive sales | $ | 178,199 | $ | 171,179 | $ | 158,623 | $ | 7,020 | 4.1% | $ | 12,556 | 7.9% | ||||||||||||||||
Financial services and insurance revenues | 2,923 | 34,422 | 34,427 | (31,499 | ) | 91.5% | (5 | ) | — | |||||||||||||||||||
Total net sales and revenues | 181,122 | 205,601 | 193,050 | (24,479 | ) | 11.9% | 12,551 | 6.5% | ||||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||||||
Automotive cost of sales | 166,259 | 163,742 | 158,254 | 2,517 | 1.5% | 5,488 | 3.5% | |||||||||||||||||||||
Selling, general and administrative expense | 14,412 | 13,650 | 13,003 | 762 | 5.6% | 647 | 5% | |||||||||||||||||||||
Financial services and insurance expense | 2,742 | 29,794 | 30,813 | (27,052 | ) | 90.8% | (1,019 | ) | 3.3% | |||||||||||||||||||
Other expenses | 2,099 | 4,238 | 7,024 | (2,139 | ) | 50.5% | (2,786 | ) | 39.7% | |||||||||||||||||||
Operating loss | (4,390 | ) | (5,823 | ) | (16,044 | ) | 1,433 | 24.6% | 10,221 | 63.7% | ||||||||||||||||||
Equity in loss of GMAC LLC | (1,245 | ) | (5 | ) | — | (1,240 | ) | n.m. | (5 | ) | — | |||||||||||||||||
Automotive interest and other income (expense) | (618 | ) | 170 | (1,185 | ) | (788 | ) | n.m. | 1,355 | 114.3% | ||||||||||||||||||
Loss from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | (6,253 | ) | (5,658 | ) | (17,229 | ) | (595 | ) | 10.5% | 11,571 | 67.2% | |||||||||||||||||
Income tax expense (benefit) | 37,162 | (3,046 | ) | (6,046 | ) | 40,208 | n.m. | 3,000 | 49.6% | |||||||||||||||||||
Equity income, net of tax | 524 | 513 | 610 | 11 | 2.1% | (97 | ) | 15.9% | ||||||||||||||||||||
Minority interests, net of tax | (406 | ) | (324 | ) | (48 | ) | (82 | ) | 25.3% | (276 | ) | n.m. | ||||||||||||||||
Loss from continuing operations before cumulative effect of a change in accounting principle | (43,297 | ) | (2,423 | ) | (10,621 | ) | (40,874 | ) | n.m. | 8,198 | 77.2% | |||||||||||||||||
Income from discontinued operations, net of tax | 256 | 445 | 313 | (189 | ) | 42.5% | 132 | 42.2% | ||||||||||||||||||||
Gain on sale of discontinued operations, net of tax | 4,309 | — | — | 4,309 | n.m. | — | — | |||||||||||||||||||||
Loss before cumulative effect of a change in accounting principle | (38,732 | ) | (1,978 | ) | (10,308 | ) | (36,754 | ) | n.m. | 8,330 | 80.8% | |||||||||||||||||
Cumulative effect of a change in accounting principle | — | — | (109 | ) | — | — | 109 | n.m. | ||||||||||||||||||||
Net loss | $ | (38,732 | ) | $ | (1,978 | ) | $ | (10,417 | ) | $ | (36,754 | ) | n.m. | $ | 8,439 | 81% | ||||||||||||
Automotive cost of sales rate | 93.3% | 95.7% | 99.8% | (2.4 | )% | n.m. | (4.1 | )% | n.m. | |||||||||||||||||||
Net margin from continuing operations before cumulative effect of a change in accounting principle | (23.9 | )% | (1.2 | )% | (5.5 | )% | (22.7 | )% | n.m. | 4.3% | n.m. |
51
2007 Compared to 2006 |
2006 Compared to 2005 |
Deferred income taxes |
Accounts and notes receivable, net |
52
Inventories |
Financing equipment on operating leases, net |
Automotive accounts payable (principally trade) |
Financing debt |
Financing other liabilities and deferred income taxes |
53
2007 vs. 2006 Change | 2006 vs. 2005 Change | |||||||||||||||||||||||||||
2007 | 2006 | 2005 | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Total net sales and revenue | $ | 178,199 | $ | 171,435 | $ | 158,879 | $ | 6,764 | 3.9 | % | $ | 12,556 | 7.9 | % | ||||||||||||||
Automotive cost of sales | 165,632 | 164,107 | 157,531 | 1,525 | .9 | % | 6,576 | 4.2 | % | |||||||||||||||||||
Selling, general and administrative expense | 13,590 | 12,965 | 12,560 | 625 | 4.8 | % | 405 | 3.2 | % | |||||||||||||||||||
Other expenses | — | — | 812 | — | — | (812 | ) | n.m. | ||||||||||||||||||||
Operating loss | (1,023 | ) | (5,637 | ) | (12,024 | ) | 4,614 | 81.9 | % | 6,387 | 53.1 | % | ||||||||||||||||
Automotive interest and other income (expense) | (961 | ) | (698 | ) | (1,688 | ) | (263 | ) | 37.7 | % | 990 | 58.6 | % | |||||||||||||||
Loss from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | (1,984 | ) | (6,335 | ) | (13,712 | ) | 4,351 | 68.7 | % | 7,377 | 53.8 | % | ||||||||||||||||
Equity income, net of tax | 522 | 521 | 596 | 1 | .2 | % | (75 | ) | 12.6 | % | ||||||||||||||||||
Minority interests, net of tax | (406 | ) | (334 | ) | (112 | ) | (72 | ) | 21.6 | % | (222 | ) | 198.2 | % | ||||||||||||||
Loss from continuing operations before income taxes | $ | (1,868 | ) | $ | (6,148 | ) | $ | (13,228 | ) | $ | 4,280 | 69.6 | % | $ | 7,080 | 53.5 | % | |||||||||||
Cumulative effect of a change in accounting principle | $ | — | $ | — | $ | (109 | ) | $ | — | $ | — | $ | 109 | n.m. | ||||||||||||||
Income from discontinued operations, net of tax | $ | 256 | $ | $445 | $ | 313 | $ | (189 | ) | 42.5 | % | $ | 132 | 42.2 | % | |||||||||||||
Gain on sale of discontinued operations, net of tax | $ | 4,309 | $ | — | $ | — | $ | 4,309 | n.m. | $ | — | — | ||||||||||||||||
Automotive cost of sales rate | 92.9 | % | 95.7 | % | 99.2 | % | (2.8 | )% | n.m. | (3.5 | )% | n.m. | ||||||||||||||||
Net margin from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | (1.1 | )% | (3.7 | )% | (8.6 | )% | 2.6 | % | n.m. | 4.9 | % | n.m. | ||||||||||||||||
(Volume in thousands) | ||||||||||||||||||||||||||||
Production Volume (a) | 9,286 | 9,181 | 9,051 | 105 | 1.1 | % | 130 | 1.4 | % | |||||||||||||||||||
Vehicle Unit Sales (b): | ||||||||||||||||||||||||||||
Industry | 70,649 | 67,401 | 65,084 | 3,248 | 4.8 | % | 2,317 | 3.6 | % | |||||||||||||||||||
GM | 9,370 | 9,093 | 9,179 | 277 | 3 | % | (86 | ) | (.9 | )% | ||||||||||||||||||
GM market share — Worldwide | 13.3 | % | 13.5 | % | 14.1 | % | (.2 | )% | n.m. | (.6 | )% | n.m. |
(a) | Production volume represents the number of vehicles manufactured by our assembly facilities and also includes vehicles produced by certain joint ventures. | |
(b) | Vehicle unit sales primarily represent sales to the ultimate customer. |
2007 Compared to 2006 |
Industry Global Vehicle Sales |
GM Global Vehicle Sales |
54
Total Net Sales and Revenue |
Automotive Cost of Sales |
Selling, General and Administrative Expense |
Automotive Interest and Other Income (Expense) |
Equity Income, Net of Tax |
Minority Interests, Net of Tax |
Income from Discontinued Operations, net of taxes |
2006 Compared to 2005 |
Industry Global Vehicle Sales |
55
Global Vehicle Sales |
Total Net Sales and Revenue |
Automotive Cost of Sales |
Selling, General and Administrative Expense |
Other Expenses |
Automotive Interest and Other Income (Expense) |
Equity Income, net of tax |
Minority Interests, net of tax |
Cumulative Effect of a Change in Accounting Principle |
56
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in billions) | ||||||||||||
Automotive net sales and revenues | $ | 178 | $ | 171 | $ | 159 | ||||||
Contribution costs (a) | $ | 124 | $ | 119 | $ | 110 | ||||||
Structural costs (b) | $ | 53 | $ | 51 | $ | 55 | ||||||
Impairment, restructuring and other charges (c) | $ | 2 | $ | 7 | $ | 5 |
(a) | Contribution costs are expenses that we consider to be variable with production. The amount of contribution costs included in Automotive cost of sales was $123 billion, $118 billion and $109 billion in 2007, 2006 and 2005, respectively, and those costs were comprised of material cost, freight and policy and warranty expenses. The amount of contribution costs classified in Selling, general and administrative expenses was $1 billion in 2007, 2006 and 2005 and these costs were incurred primarily in connection with our dealer advertising programs. | |
(b) | Structural costs are expenses that do not generally vary with production and are recorded in both Automotive cost of sales and Selling, general and administrative expense. Such costs include manufacturing labor, pension and other postretirement employee benefits (OPEB) costs, engineering expense and marketing related costs. Certain costs related to restructuring and impairments that are included in Automotive cost of sales are also excluded from structural costs. The amount of structural costs included in Automotive cost of sales was $40 billion, $39 billion and $44 billion in 2007, 2006 and 2005, respectively, and the amount of structural costs included in Selling, general and administrative expense was $13 billion, $12 billion and $11 billion in 2007, 2006 and 2005, respectively. | |
(c) | Impairment, restructuring and other charges are included in Automotive cost of sales. |
57
Contribution Costs |
Structural Costs |
Impairment, Restructuring and Other Charges |
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
2006 UAW Attrition Program | $ | — | $ | 6,385 | $ | — | ||||||
Restructuring initiatives | 918 | (412 | ) | 3,183 | ||||||||
Asset impairments | 279 | 686 | 2,052 | |||||||||
Change in amortization period for pension prior service costs | 1,310 | — | — | |||||||||
Other | (85 | ) | 188 | — | ||||||||
Total | $ | 2,422 | $ | 6,847 | $ | 5,235 | ||||||
• | $918 million of total charges for restructuring initiatives as follows: GMNA, $290 million; GME, $579 million; GMAP, $49 million. | |
• | $265 million for product-specific asset impairments at GMNA and $14 million at GMAP. | |
• | $1.3 billion of additional pension expense at GMNA related to the accelerated recognition of unamortized prior service cost. | |
• | Adjustment of $85 million in conjunction with cessation of production at a previously divested business. |
58
• | $6.4 billion net charge related to the program under the UAW Attrition Program primarily for payments to employees of $2.1 billion and for the curtailment charges associated with our U.S. hourly pension, OPEB, and extended disability plans as a result of the 2006 UAW Attrition Program of $4.3 billion. | |
• | Net reduction of $412 million for various restructuring and other matters. GMNA recorded favorable revisions of $1.1 billion to the reserves recorded in the fourth quarter of 2005 related to plant capacity actions, as a result of the favorable effects of the 2006 UAW Attrition Program and to the reserve for postemployment benefits, primarily due to higher than anticipated headcount reductions associated with plant idling activities. This was partially offset by other charges for restructuring initiatives of $146 million at GMNA, $437 million at GME, $43 million at GMLAAM and $16 million at GMAP. | |
• | $405 million for product-specific asset impairment charges at GMNA, $60 million at GME and $61 million at GMAP, as well as impairment charges of $70 million and $89 million for the write-down of plant facilities at GMNA and GME, respectively. | |
• | $224 million recorded in conjunction with cessation of production at a previously divested business, partially offset by a $36 million adjustment related to the sale of the majority of our investment in Suzuki. |
• | $3.2 billion associated with restructuring initiatives. Of this, $2.1 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 $222 million associated with a voluntary salaried 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 of $55 million related to restructuring activities at GM Holden in Australia. | |
• | $2.1 billion for product-specific asset impairment charges, of which $689 million was at GMNA, $262 million was at GME, $150 million at GMLAAM and $64 million at GMAP related to the write-down of product-specific assets. Also includes $887 million of impairment charges related to the write-down of plant facilities at GMNA. |
59
2007 vs. 2006 Change | 2006 vs. 2005 Change | |||||||||||||||||||||||||||
2007 | 2006 | 2005 | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Total net sales and revenue | $ | 112,448 | $ | 116,653 | $ | 111,376 | $ | (4,205 | ) | 3.6% | $ | 5,277 | 4.7% | |||||||||||||||
Automotive cost of sales | 106,097 | 114,373 | 112,088 | (8,276 | ) | 7.2% | 2,285 | 2.0% | ||||||||||||||||||||
Selling, general and administrative expense | 8,316 | 8,456 | 8,770 | (140 | ) | 1.7% | (314 | ) | 3.6% | |||||||||||||||||||
Operating loss | (1,965 | ) | (6,176 | ) | (9,482 | ) | 4,211 | 68.2% | 3,306 | 34.9% | ||||||||||||||||||
Automotive interest and other income (expense) | (1,325 | ) | (1,399 | ) | (1,539 | ) | 74 | 5.3% | 140 | 9.1% | ||||||||||||||||||
Loss from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | (3,290 | ) | (7,575 | ) | (11,021 | ) | 4,285 | 56.6% | 3,446 | 31.3% | ||||||||||||||||||
Equity income (loss), net of tax | 22 | 104 | (48 | ) | (82 | ) | 78.8% | 152 | n.m. | |||||||||||||||||||
Minority interests, net of tax | (46 | ) | (63 | ) | 1 | 17 | 27.0% | (64 | ) | n.m. | ||||||||||||||||||
Loss from continuing operations before income taxes | $ | (3,314 | ) | $ | (7,534 | ) | $ | (11,068 | ) | $ | 4,220 | 56.0% | $ | 3,534 | 31.9% | |||||||||||||
Cumulative effect of a change in accounting principle | $ | — | $ | — | $ | (83 | ) | $ | — | n.m. | $ | 83 | n.m. | |||||||||||||||
Income from discontinued operations, net of tax | $ | 256 | $ | 445 | $ | 313 | $ | (189 | ) | 42.5% | $ | 132 | 42.2% | |||||||||||||||
Gain on sale of discontinued operations, net of tax | $ | 4,309 | $ | — | $ | — | $ | 4,309 | n.m. | $ | — | n.m. | ||||||||||||||||
Automotive cost of sales rate | 94.4% | 98.0% | 100.6% | (3.6)% | n.m. | (2.6)% | n.m. | |||||||||||||||||||||
Net margin from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | (2.9)% | (6.5)% | (9.9)% | 3.6% | n.m. | 3.4% | n.m. | |||||||||||||||||||||
(Volume in thousands) | ||||||||||||||||||||||||||||
Production Volume (a): | ||||||||||||||||||||||||||||
Cars | 1,526 | 1,821 | 1,834 | (295 | ) | (16.2)% | (13 | ) | (0.7)% | |||||||||||||||||||
Trucks | 2,741 | 2,828 | 3,022 | (87 | ) | (3.1)% | (194 | ) | (6.4)% | |||||||||||||||||||
Total | 4,267 | 4,649 | 4,856 | (382 | ) | (8.2)% | (207 | ) | (4.3)% | |||||||||||||||||||
Vehicle Unit Sales (b): | ||||||||||||||||||||||||||||
Industry — North America | 19,592 | 20,191 | 20,567 | (599 | ) | (3.0)% | (376 | ) | (1.8)% | |||||||||||||||||||
GMNA | 4,516 | 4,807 | 5,248 | (291 | ) | (6.1)% | (441 | ) | (8.4)% | |||||||||||||||||||
GM market share — North America | 23.0% | 23.8% | 25.5% | (0.8)% | n.m. | (1.7)% | n.m. | |||||||||||||||||||||
Industry — U.S. | 16,474 | 17,060 | 17,456 | (586 | ) | (3.4)% | (396 | ) | (2.3)% | |||||||||||||||||||
GM market share — U.S. industry | 23.5% | 24.2% | 25.9% | (0.7)% | n.m. | (1.7)% | n.m. | |||||||||||||||||||||
GM cars market share — U.S. industry | 19.4% | 20.7% | 22.6% | (1.3)% | n.m. | (1.9)% | n.m. | |||||||||||||||||||||
GM trucks market share — U.S. industry | 27.0% | 27.1% | 28.5% | (0.1)% | n.m. | (1.4)% | n.m. |
(a) | Production volume represents the number of vehicles manufactured by our assembly facilities and also includes vehicles produced by certain joint ventures. | |
(b) | Vehicle unit sales primarily represent sales to the ultimate customer. |
2007 Compared to 2006 |
Industry Vehicle Sales |
60
Total Net Sales and Revenue |
Automotive Cost of Sales |
Selling, General and Administrative Expense |
Automotive Interest and Other Income (Expense) |
Equity Income (Loss), net of tax |
Income from Discontinued Operations, net of tax |
61
2006 Compared to 2005 |
Industry Vehicle Sales |
Total Net Sales and Revenue |
Automotive Cost of Sales |
Selling, General and Administrative Expense |
Automotive Interest and Other Income (Expense) |
Equity Income (Loss), net of taxes |
62
2007 vs. 2006 Change | 2006 vs. 2005 Change | |||||||||||||||||||||||||||
2007 | 2006 | 2005 | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Total net sales and revenue | $ | 37,397 | $ | 33,278 | $ | 31,942 | $ | 4,119 | 12.4% | $ | 1,336 | 4.2% | ||||||||||||||||
Automotive cost of sales | 35,254 | 30,868 | 31,202 | 4,386 | 14.2% | (334 | ) | 1.1% | ||||||||||||||||||||
Selling, general and administrative expense | 2,781 | 2,600 | 2,406 | 181 | 7.0% | 194 | 8.1% | |||||||||||||||||||||
Operating loss | (638 | ) | (190 | ) | (1,666 | ) | (448 | ) | n.m. | 1,476 | 88.6% | |||||||||||||||||
Automotive interest and other income (expense) | 97 | (122 | ) | (128 | ) | 219 | 179.5% | 6 | 4.7% | |||||||||||||||||||
Loss from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | (541 | ) | (312 | ) | (1,794 | ) | (229 | ) | 73.4% | 1,482 | 82.6% | |||||||||||||||||
Equity income, net of tax | 44 | 36 | 102 | 8 | 22.2% | (66 | ) | 64.7% | ||||||||||||||||||||
Minority interests, net of tax | (27 | ) | (21 | ) | (49 | ) | (6 | ) | 28.6% | 28 | 57.1% | |||||||||||||||||
Loss from continuing operations before income taxes | $ | (524 | ) | $ | (297 | ) | $ | (1,741 | ) | $ | (227 | ) | 76.4% | $ | 1,444 | 82.9% | ||||||||||||
Cumulative effect of a change in accounting principle | $ | — | $ | — | $ | (21 | ) | $ | — | — | $ | 21 | n.m. | |||||||||||||||
Automotive cost of sales rate | 94.3% | 92.8% | 97.7% | 1.5% | n.m. | (4.9)% | n.m. | |||||||||||||||||||||
Net margin from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | (1.4)% | (.9)% | (5.6)% | (.5)% | n.m. | 4.7% | n.m. | |||||||||||||||||||||
(Volume in thousands) | ||||||||||||||||||||||||||||
Production Volume (a) | 1,828 | 1,806 | 1,858 | 22 | 1.2% | (52 | ) | (2.8)% | ||||||||||||||||||||
Vehicle Unit Sales (b): | ||||||||||||||||||||||||||||
Industry — Europe | 23,069 | 21,876 | 21,092 | 1,193 | 5.5% | 784 | 3.7% | |||||||||||||||||||||
GM Europe | 2,182 | 2,003 | 1,984 | 179 | 8.9% | 19 | 1.0% | |||||||||||||||||||||
GM market share — Europe | 9.5% | 9.2% | 9.4% | .3% | n.m. | (.2)% | n.m. | |||||||||||||||||||||
GM market share — Germany | 9.5% | 10.1% | 10.8% | (.6)% | n.m. | (.7)% | n.m. | |||||||||||||||||||||
GM market share — United Kingdom | 15.2% | 14.3% | 14.7% | .9% | n.m. | (.4)% | n.m. | |||||||||||||||||||||
GM market share — Russia | 9.6% | 6.5% | 4.6% | 3.1% | n.m. | 1.9% | n.m. |
(a) | Production volume represents the number of vehicles manufactured by our assembly facilities and also includes vehicles produced by certain joint ventures. | |
(b) | Vehicle unit sales primarily represent sales to the ultimate customer, including unit sales of Chevrolet brand products in the region. The financial results from sales of Chevrolet brand products are reported as part of GMAP as those units are sold by GM Daewoo. |
2007 Compared to 2006 |
Industry Vehicle Sales |
Total Net Sales and Revenue |
63
Automotive Cost of Sales |
Selling, General, and Administrative Expense |
Automotive Interest and Other Income (Expense) |
2006 Compared to 2005 |
Industry Vehicle Sales |
Total Net Sales and Revenue |
Automotive Cost of Sales |
Selling, General, and Administrative Expense |
64
Equity Income, net of tax |
2007 vs. 2006 Change | 2006 vs. 2005 Change | |||||||||||||||||||||||||||
2007 | 2006 | 2005 | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Total net sales and revenue | $ | 18,894 | $ | 14,627 | $ | 11,851 | $ | 4,267 | 29.2% | $ | 2,776 | 23.4% | ||||||||||||||||
Automotive cost of sales | 16,776 | 13,305 | 11,077 | 3,471 | 26.1% | 2,228 | 20.1% | |||||||||||||||||||||
Selling, general and administrative expense | 1,009 | 764 | 623 | 245 | 32.1% | 141 | 22.6% | |||||||||||||||||||||
Operating income | 1,109 | 558 | 151 | 551 | 98.7% | 407 | n.m. | |||||||||||||||||||||
Automotive interest and other income (expense) | 240 | (31 | ) | (108 | ) | 271 | n.m. | 77 | 71.3% | |||||||||||||||||||
Income from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | 1,349 | 527 | 43 | 822 | 156.0% | 484 | n.m. | |||||||||||||||||||||
Equity income, net of tax | 31 | 16 | 15 | 15 | 93.8% | 1 | 6.7% | |||||||||||||||||||||
Minority interests, net of tax | (32 | ) | (25 | ) | (11 | ) | (7 | ) | 28.0% | (14 | ) | 127.3% | ||||||||||||||||
Income from continuing operations before income taxes | $ | 1,348 | $ | 518 | $ | 47 | $ | 830 | 160.2% | $ | 471 | n.m. | ||||||||||||||||
Cumulative effect of a change in accounting principle | $ | — | $ | — | $ | (2 | ) | $ | — | 0.0% | $ | 2 | n.m. | |||||||||||||||
Automotive cost of sales rate | 88.8% | 91.0% | 93.5% | (2.2)% | n.m. | (2.5)% | n.m. | |||||||||||||||||||||
Net margin from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | 7.1% | 3.6% | 0.4% | 3.5% | n.m. | 3.2% | n.m. | |||||||||||||||||||||
(Volume in thousands) | ||||||||||||||||||||||||||||
Production Volume(a) | 960 | 830 | 775 | 130 | 15.7% | 55 | 7.1% | |||||||||||||||||||||
Vehicle Unit Sales(b): | ||||||||||||||||||||||||||||
Industry — LAAM | 7,181 | 6,104 | 5,310 | 1,077 | 17.7% | 794 | 15.0% | |||||||||||||||||||||
GMLAAM | 1,236 | 1,035 | 883 | 201 | 19.4% | 152 | 17.2% | |||||||||||||||||||||
GM market share — LAAM | 17.2% | 17.0% | 16.6% | 0.2% | n.m. | 0.4% | n.m. | |||||||||||||||||||||
GM market share — Brazil | 20.3% | 21.3% | 21.3% | (1.0)% | n.m. | 0.0% | n.m. |
(a) | Production volume represents the number of vehicles manufactured by our assembly facilities and also includes vehicles produced by certain joint ventures. | |
(b) | Vehicle unit sales primarily represent sales to the ultimate customer. |
2007 Compared to 2006 |
Industry Vehicle Sales |
Total Net Sales and Revenue |
65
Automotive Cost of Sales |
Selling, General and Administrative Expense |
Automotive Interest and Other Income (Expense) |
2006 Compared to 2005 |
Industry Vehicle Sales |
Total Net Sales and Revenue |
Automotive Cost of Sales |
Selling, General and Administrative Expense |
66
Automotive Interest and Other Income (Expense) |
2007 vs. 2006 Change | 2006 vs. 2005 Change | |||||||||||||||||||||||||||
2007 | 2006 | 2005 | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Total net sales and revenue | $ | 21,003 | $ | 15,532 | $ | 10,846 | $ | 5,471 | 35.2% | $ | 4,686 | 43.2% | ||||||||||||||||
Automotive cost of sales | 19,004 | 14,182 | 10,249 | 4,822 | 34.0% | 3,933 | 38.4% | |||||||||||||||||||||
Selling, general and administrative expense | 1,473 | 1,145 | 761 | 328 | 28.6% | 384 | 50.5% | |||||||||||||||||||||
Other expense | — | — | 812 | — | 0.0% | (812 | ) | 100.0% | ||||||||||||||||||||
Operating income (loss) | 526 | 205 | (976 | ) | 321 | 156.6% | 1,181 | 121.0% | ||||||||||||||||||||
Automotive interest and other income | 31 | 854 | 87 | (823 | ) | 96.4% | 767 | n.m. | ||||||||||||||||||||
Income (loss) from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | 557 | 1,059 | (889 | ) | (502 | ) | 47.4% | 1,948 | n.m. | |||||||||||||||||||
Equity income, net of tax | 425 | 365 | 527 | 60 | 16.4% | (162 | ) | 30.7% | ||||||||||||||||||||
Minority interests, net of tax | (301 | ) | (225 | ) | (53 | ) | (76 | ) | 33.8% | (172 | ) | n.m. | ||||||||||||||||
Income (loss) from continuing operations before income tax | $ | 681 | $ | 1,199 | $ | (415 | ) | $ | (518 | ) | 43.2% | $ | 1,614 | n.m. | ||||||||||||||
Cumulative effect of a change in accounting principle | $ | — | $ | — | $ | (3 | ) | $ | — | 0.0% | $ | 3 | n.m. | |||||||||||||||
Automotive cost of sales rate | 90.5% | 91.3% | 94.5% | (0.8)% | n.m. | (3.2)% | n.m. | |||||||||||||||||||||
Net margin from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | 2.7% | 6.8% | (8.2)% | (4.1)% | n.m. | 15.0% | n.m. | |||||||||||||||||||||
(Volume in thousands) | ||||||||||||||||||||||||||||
Production Volume (a)(b) | 2,231 | 1,896 | 1,562 | 335 | 17.7% | 334 | 21.4% | |||||||||||||||||||||
Vehicle Unit Sales (a)(c): | ||||||||||||||||||||||||||||
Industry — Asia Pacific | 20,808 | 19,231 | 18,115 | 1,577 | 8.2% | 1,116 | 6.2% | |||||||||||||||||||||
GMAP | 1,436 | 1,248 | 1,064 | 188 | 15.1% | 184 | 17.3% | |||||||||||||||||||||
GM market share — Asia Pacific (d) | 6.9% | 6.5% | 5.9% | 0.4% | n.m. | 0.6% | n.m. | |||||||||||||||||||||
GM market share — Australia | 14.2% | 15.4% | 17.8% | (1.2)% | n.m. | (2.4)% | n.m. | |||||||||||||||||||||
GM market share — China (d) | 12.1% | 12.3% | 11.6% | (0.2)% | n.m. | 0.7% | n.m. |
(a) | Includes GM Daewoo, Shanghai GM and SAIC-GM-Wuling Automobile Co., Ltd. (SGMW) joint venture production/sales. We own 34% of SGMW and under the joint venture agreement have significant rights as a member as well as the contractual right to report SGMW global sales as part of our global market share. | |
(b) | Production volume represents the number of vehicles manufactured by our assembly facilities and also includes vehicles produced by certain joint ventures. | |
(c) | Vehicle unit sales primarily represent sales to the ultimate customer. | |
(d) | Includes SGMW joint venture sales. |
2007 Compared to 2006 |
Industry Vehicle Sales |
67
Total Net Sales and Revenue |
Automotive Cost of Sales |
Selling, General and Administrative Expense |
Automotive Interest and Other Income |
Equity Income, net of tax |
Minority Interests, net of tax |
68
2006 Compared to 2005 |
Industry Vehicle Sales |
Consolidation of GM Daewoo |
Other Expense |
Automotive Interest and Other Income |
Equity Income, net of tax |
2007 Compared to 2006 |
69
2006 Compared to 2005 |
70
2007 vs. 2006 Change | 2006 vs. 2005 Change | |||||||||||||||||||||||||||
2007 | 2006 | 2005 | Amount | Percentage | Amount | Percentage | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Total net sales and revenues | $ | — | $ | (256 | ) | $ | (256 | ) | $ | 256 | 100% | $ | — | — | ||||||||||||||
Automotive cost of sales | 627 | (365 | ) | 723 | 992 | n.m. | (1,088 | ) | 150.5% | |||||||||||||||||||
Selling, general and administrative expense | 822 | 685 | 443 | 137 | 20% | 242 | 54.6% | |||||||||||||||||||||
Other expense | 2,354 | 1,065 | 5,997 | 1,289 | 121% | (4,932 | ) | 82.2% | ||||||||||||||||||||
Operating loss | (3,803 | ) | (1,641 | ) | (7,419 | ) | (2,162 | ) | 131.7% | 5,778 | 77.9% | |||||||||||||||||
Automotive interest and other income (expense) | 184 | 453 | 503 | (269 | ) | 59.4% | (50 | ) | 9.9% | |||||||||||||||||||
Loss from continuing operations before income taxes, equity income and minority interests and cumulative effect of a change in accounting principle | (3,619 | ) | (1,188 | ) | (6,916 | ) | (2,431 | ) | n.m. | 5,728 | 82.8% | |||||||||||||||||
Income tax expense (benefit) | 37,129 | (3,881 | ) | (7,239 | ) | 41,010 | n.m. | 3,358 | 46.4% | |||||||||||||||||||
Equity income, net of tax | 2 | 3 | 20 | (1 | ) | 33.3% | (17 | ) | 85.0% | |||||||||||||||||||
Minority interests, net of tax | 12 | — | 7 | 12 | — | (7 | ) | 100.0% | ||||||||||||||||||||
Net income (loss) | $ | (40,734 | ) | $ | 2,696 | $ | 350 | $ | (43,430 | ) | n.m. | $ | 2,346 | 670.3% | ||||||||||||||
71
2007 Compared to 2006 |
2006 Compared to 2005 |
North American Turnaround Plan |
72
• | Product excellence; | |
• | Revitalizing sales and marketing strategy; | |
• | Accelerating cost reductions and quality improvements; and | |
• | Addressing health care/legacy cost burden. |
Product Excellence. |
Revitalize Sales and Marketing Strategy. |
Accelerate Cost Reductions and Quality Improvements. |
73
Address Health Care/Legacy Cost Burden. |
74
Near-Term Market Challenges |
2007 National Agreement |
75
76
Delphi Bankruptcy |
Background |
Labor Settlement |
77
Warranty Claims Settlement |
Delphi POR and Delphi — GM Settlement Agreements |
78
Risks if Delphi POR is Not Consummated |
79
GM Contingent Liability |
80
• | Strong long-term services agreement between us and GMAC — As part of the transaction, we entered into a number of agreements with GMAC that were intended to continue the mutually-beneficial global relationship between us and GMAC. These agreements, in substance, were consistent with the existing and historical practices between GMAC and us, including requiring GMAC to continue to allocate capital to automotive financing, thereby continuing to provide critical financing support to a significant share of our global sales. While GMAC retains the right to make individual credit decisions, GMAC has committed to fund a broad spectrum of our customers and dealers consistent with historical practice in the relevant jurisdictions. Subject to GMAC’s fulfillment of certain conditions, we have granted GMAC exclusivity for our 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. | |
• | Improved liquidity — We received significant cash proceeds at the closing to bolster our liquidity, strengthening our balance sheet and funding the turnaround plan. | |
• | Enhanced stockholder value through a stronger GMAC — We retained a 49% Common Membership Interest in GMAC, and will be able to continue to participate in GMAC’s financial results. |
81
• | Delinkage of GMAC’s credit rating from ours — In pursuing the sale of a majority interest in GMAC, we expected that the introduction of a new controlling investor for GMAC, new capital at GMAC and significantly reduced intercompany exposures to us would provide GMAC with a solid foundation to improve its current credit rating, and de-link the GMAC credit ratings from us. |
• | The instability of the global credit and mortgage markets and the effect of this on GMAC’s Residential Capital, LLC (ResCap) subsidiary as well as its automotive finance, insurance and other operations; | |
• | The deteriorating conditions in the residential and home building markets, including significant changes in the mortgage secondary market, tightening underwriting guidelines and reduced product offerings; | |
• | Recent credit downgrades of GMAC and ResCap and the effect on their ability to raise capital necessary on acceptable terms; and | |
• | Effect of the expected near-term automotive market conditions on GMAC’s automotive finance operations. |
Investigations |
82
Automotive and Other | Financing and Insurance | |||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||
2007 | 2006 | 2005 | 2007 | 2006 | 2005 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||
Net income (loss) | $ | (38,037 | ) | $ | (3,007 | ) | $ | (12,674 | ) | $ | (695 | ) | $ | 1,029 | $ | 2,257 | ||||||||
Less income from discontinued operations | 4,565 | 445 | 313 | — | — | — | ||||||||||||||||||
Less cumulative effect of a change in accounting principle | — | — | (109 | ) | — | — | — | |||||||||||||||||
Income (loss) from continuing operations | (42,602 | ) | (3,452 | ) | (12,878 | ) | (695 | ) | 1,029 | 2,257 | ||||||||||||||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) continuing operating activities: | ||||||||||||||||||||||||
Depreciation, impairment and amortization expense | 8,254 | 8,094 | 10,036 | 1,259 | 2,791 | 5,696 | ||||||||||||||||||
Mortgage servicing rights and premium amortization | — | — | — | — | 1,021 | 1,142 | ||||||||||||||||||
Goodwill impairment — GMAC | — | — | — | — | 828 | 712 | ||||||||||||||||||
Delphi charge | 1,547 | 500 | 5,500 | — | — | — | ||||||||||||||||||
Loss on sale of 51% interest in GMAC | — | — | — | — | 2,910 | — | ||||||||||||||||||
Provision for credit financing losses | — | — | — | — | 1,799 | 1,074 | ||||||||||||||||||
Net gains on sale of credit receivables | — | — | — | — | (1,256 | ) | (1,741 | ) | ||||||||||||||||
Net gains on sale of investment securities | — | — | — | — | (1,006 | ) | (104 | ) | ||||||||||||||||
Other postretirement employee benefit (OPEB) expense | 2,362 | 3,523 | 5,558 | — | 44 | 92 | ||||||||||||||||||
OPEB payments | (3,751 | ) | (3,759 | ) | (4,030 | ) | — | (43 | ) | (54 | ) | |||||||||||||
VEBA/401(h) withdrawals | 1,694 | 3,061 | 3,168 | — | — | — | ||||||||||||||||||
Pension expense | 1,799 | 4,888 | 2,433 | — | 23 | 62 | ||||||||||||||||||
Pension contributions | (937 | ) | (1,032 | ) | (785 | ) | — | — | (48 | ) | ||||||||||||||
Retiree lump sum and vehicle voucher expense, net of payments | — | (325 | ) | (264 | ) | — | — | — | ||||||||||||||||
Net change in mortgage loans | — | — | — | — | (21,578 | ) | (29,119 | ) | ||||||||||||||||
Net change in mortgage securities | — | — | — | — | 427 | (1,155 | ) | |||||||||||||||||
Provisions for deferred taxes | 36,956 | (5,002 | ) | (7,924 | ) | 21 | 836 | 1,193 | ||||||||||||||||
Change in other investments and miscellaneous assets | (202 | ) | 581 | 136 | 865 | (1,058 | ) | (826 | ) | |||||||||||||||
Change in other operating assets and liabilities, net of acquisitions and disposals | (2,800 | ) | (3,567 | ) | (2,975 | ) | (612 | ) | (4,945 | ) | 2,995 | |||||||||||||
Other | 3,099 | 1,456 | 1,747 | 1,250 | 862 | 932 | ||||||||||||||||||
Net cash provided by (used in) continuing operating activities | 5,419 | 4,966 | (278 | ) | 2,088 | (17,316 | ) | (16,892 | ) | |||||||||||||||
Cash provided by discontinued operating activities | 224 | 591 | 314 | — | — | — | ||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 5,643 | $ | 5,557 | $ | 36 | $ | 2,088 | $ | (17,316 | ) | $ | (16,892 | ) |
83
Automotive and Other | Financing and Insurance | |||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||
2007 | 2006 | 2005 | 2007 | 2006 | 2005 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Expenditures for property | $ | (7,538 | ) | $ | (7,500 | ) | $ | (7,858 | ) | $ | (4 | ) | $ | (402 | ) | $ | (283 | ) | ||||||
Investments in marketable securities, acquisitions | (10,098 | ) | (2,681 | ) | (8,295 | ) | (57 | ) | (25,381 | ) | (19,184 | ) | ||||||||||||
Investments in marketable securities, liquidations | 8,080 | 4,259 | 13,342 | 39 | 26,822 | 14,874 | ||||||||||||||||||
Net change in mortgage servicing rights | — | — | — | — | (61 | ) | (267 | ) | ||||||||||||||||
Increase in finance receivables | — | — | — | — | (1,160 | ) | (6,582 | ) | ||||||||||||||||
Proceeds from sale of finance receivables | — | — | — | — | 18,374 | 31,652 | ||||||||||||||||||
Proceeds from the sale of 51% interest in GMAC | — | 7,353 | — | — | — | — | ||||||||||||||||||
Proceeds from sale of discontinued operations | 5,354 | — | — | — | — | — | ||||||||||||||||||
Proceeds from sale of business units/equity investments | — | 1,968 | 846 | — | 8,538 | — | ||||||||||||||||||
Operating leases, acquisitions | — | — | — | — | (17,070 | ) | (15,496 | ) | ||||||||||||||||
Operating leases, liquidations | — | — | — | 3,165 | 7,039 | 5,362 | ||||||||||||||||||
Net investing activity with Financing and Insurance Operations | 944 | 3,354 | 2,500 | — | — | — | ||||||||||||||||||
Capital contribution to GMAC LLC | (1,022 | ) | — | — | — | — | — | |||||||||||||||||
Investments in companies, net of cash acquired | (46 | ) | (20 | ) | 1,357 | — | (337 | ) | (2 | ) | ||||||||||||||
Other | 374 | (353 | ) | 640 | 15 | 338 | (1,503 | ) | ||||||||||||||||
Net cash provided by (used in) continuing investing activities | (3,952 | ) | 6,380 | 2,532 | 3,158 | 16,700 | 8,571 | |||||||||||||||||
Cash used in discontinued investing activities | (22 | ) | (31 | ) | (38 | ) | — | — | — | |||||||||||||||
Net cash provided by (used in) investing activities | (3,974 | ) | 6,349 | 2,494 | 3,158 | 16,700 | 8,571 | |||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Net increase (decrease) in short-term borrowings | (1,297 | ) | (259 | ) | (176 | ) | (4,452 | ) | 7,289 | (9,949 | ) | |||||||||||||
Borrowings of long-term debt | 2,131 | 1,937 | 386 | — | 77,629 | 77,890 | ||||||||||||||||||
Payments made on long-term debt | (1,403 | ) | (97 | ) | (46 | ) | — | (92,193 | ) | (69,520 | ) | |||||||||||||
Net financing activity with Automotive and Other Operations | — | — | — | (944 | ) | (3,354 | ) | (2,500 | ) | |||||||||||||||
Cash dividends paid to stockholders | (567 | ) | (563 | ) | (1,134 | ) | — | — | — | |||||||||||||||
Other | — | — | — | — | 2,487 | 6,030 | ||||||||||||||||||
Net cash provided by (used in) continuing financing activities | (1,136 | ) | 1,018 | (970 | ) | (5,396 | ) | (8,142 | ) | 1,951 | ||||||||||||||
Cash provided by (used in) discontinued financing activities | (5 | ) | 3 | (1 | ) | — | — | — | ||||||||||||||||
Net cash provided by (used in) financing activities | (1,141 | ) | 1,021 | (971 | ) | (5,396 | ) | (8,142 | ) | 1,951 | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 316 | 189 | (40 | ) | — | 176 | (45 | ) | ||||||||||||||||
Net transactions with Automotive Other/Financing Insurance | (69 | ) | (4,529 | ) | 520 | 69 | 4,529 | (520 | ) | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | 775 | 8,587 | 2,039 | (81 | ) | (4,053 | ) | (6,935 | ) | |||||||||||||||
Cash and cash equivalents retained by GMAC LLC upon disposal | — | — | — | — | (11,137 | ) | — | |||||||||||||||||
Cash and cash equivalents of held for sale operations | — | — | — | — | — | (371 | ) | |||||||||||||||||
Cash and cash equivalents at beginning of the year | 23,774 | 15,187 | 13,148 | 349 | 15,539 | 22,845 | ||||||||||||||||||
Cash and cash equivalents at end of the year | $ | 24,549 | $ | 23,774 | $ | 15,187 | $ | 268 | $ | 349 | $ | 15,539 | ||||||||||||
84
Available Liquidity |
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in billions) | ||||||||||||
Cash and cash equivalents | $ | 24.6 | $ | 23.8 | $ | 15.2 | ||||||
Marketable securities | 2.1 | .1 | 1.4 | |||||||||
Readily-available assets of VEBA trusts | .6 | 2.5 | 3.8 | |||||||||
Available Liquidity | $ | 27.3 | $ | 26.4 | $ | 20.4 | ||||||
85
Cash Flow |
86
Debt |
87
Net Debt |
88
Rating Agency | Corporate | Secured | Senior Unsecured | Outlook | ||||||
DBRS | B (high) | Not Rated | B | Stable | ||||||
Fitch | B | BB | B- | Negative | ||||||
Moody’s | B3 | Ba3 | Caa1 | Stable | ||||||
S&P | B | BB- | B- | Stable |
89
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
U.S. hourly and salaried | $ | — | $ | 2 | $ | — | ||||||
Other U.S. | $ | 89 | $ | 78 | $ | 125 | ||||||
Non-U.S. | $ | 848 | $ | 889 | $ | 708 |
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
U.S. hourly and salaried | $ | 20.0 | $ | 17.2 | ||||
U.S. nonqualified | (1.2 | ) | (1.2 | ) | ||||
Total | $ | 18.8 | $ | 16.0 | ||||
Pension Benefits(a) | Other Benefits(b) | |||||||||||||||
U.S. Plans | Non-U.S. Plans | U.S. Plans | Non-U.S. Plans | |||||||||||||
(Dollars in millions) | ||||||||||||||||
2008 | $ | 7,665 | $ | 1,357 | $ | 3,845 | $ | 195 | ||||||||
2009 | $ | 7,604 | $ | 1,375 | $ | 3,981 | $ | 208 | ||||||||
2010 | $ | 7,518 | $ | 1,414 | $ | 4,121 | $ | 219 | ||||||||
2011 | $ | 7,392 | $ | 1,451 | $ | 4,234 | $ | 232 | ||||||||
2012 | $ | 7,168 | $ | 1,481 | $ | 4,309 | $ | 244 | ||||||||
2013 – 2017 | $ | 34,462 | $ | 8,071 | $ | 22,161 | $ | 1,408 |
(a) | Benefits for most U.S. pension plans and certainnon-U.S. pension plans are paid out of plan assets rather than our assets. | |
(b) | Benefit payments presented in this table do not reflect changes which will result from the implementation of the Settlement Agreement. |
90
December 31 | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Assets leased under operating leases | $ | 2,164 | $ | 2,248 | ||||
Trade receivables sold | 87 | 309 | ||||||
Total | $ | 2,251 | $ | 2,557 | ||||
91
Payments Due by Period | ||||||||||||||||||||
2008 | 2009-2010 | 2011-2012 | 2013 and after | Total | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Debt (a) | $ | 7,929 | $ | 6,498 | $ | 5,861 | $ | 65,988 | $ | 86,276 | ||||||||||
Capital lease obligations (a) | 480 | 349 | 240 | 637 | 1,706 | |||||||||||||||
Operating lease obligations | 501 | 932 | 670 | 551 | 2,654 | |||||||||||||||
Contractual commitments for capital expenditures | 771 | 227 | — | — | 998 | |||||||||||||||
Other contractual commitments: | ||||||||||||||||||||
Postretirement benefits (b) | 3,338 | 6,802 | 4,814 | — | 14,954 | |||||||||||||||
Less: VEBA assets (c) | (3,338 | ) | (6,802 | ) | (4,814 | ) | — | (14,954 | ) | |||||||||||
Net post retirement benefits | — | — | — | — | — | |||||||||||||||
Material | 2,113 | 3,208 | 2,344 | 330 | 7,995 | |||||||||||||||
Information technology | 1,012 | 906 | 100 | 6 | 2,024 | |||||||||||||||
Marketing | 1,034 | 484 | 165 | 43 | 1,726 | |||||||||||||||
Facilities | 447 | 402 | 92 | 26 | 967 | |||||||||||||||
Rental car repurchases | 5,037 | — | — | — | 5,037 | |||||||||||||||
Policy, product warranty and recall campaigns liability | 4,655 | 3,531 | 1,173 | 256 | 9,615 | |||||||||||||||
Total contractual commitments | $ | 23,979 | $ | 16,537 | $ | 10,645 | $ | 67,837 | $ | 118,998 | ||||||||||
Remaining balance postretirement benefits | $ | 728 | $ | 1,772 | $ | 5,248 | $ | 41,311 | $ | 49,059 | ||||||||||
Less: VEBA assets (c) | (728 | ) | (621 | ) | — | — | (1,349 | ) | ||||||||||||
Net | $ | — | $ | 1,151 | $ | 5,248 | $ | 41,311 | $ | 47,710 | ||||||||||
(a) | Amounts include interest payments based on contractual terms and current interest rates on our debt and capital lease obligations. | |
(b) | 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. Any amounts that would be required or reduced in accordance with the Settlement Agreement, when approved, have been excluded from the table. | |
(c) | Total VEBA assets were allocated based on projected spending requirements. VEBA asset allocations do not reflect the impact of the Settlement Agreement which has not yet been approved by the court. |
92
See Note 15 | ||||||||
December 31, | ||||||||
Impact on 2008 | 2007 | |||||||
Pension Expense | Impact on PBO | |||||||
25 basis point decrease in discount rate | +$ | 110 million | +$ | 1.9 billion | ||||
25 basis point increase in discount rate | −110 million | −$ | 1.9 billion | |||||
25 basis point decrease in expected return on assets | +$ | 240 million | — | |||||
25 basis point increase in expected return on assets | −240 million | — |
93
December 31, | ||||||||
Assumed Health-Care Trend Rates at December 31 | 2007 | 2006 | ||||||
Initial health-care cost trend rate | 8.2 | % | 9.0 | % | ||||
Ultimate health-care cost trend rate | 5.0 | % | 5.0 | % | ||||
Number of years to ultimate trend rate | 6 | 6 |
Effect on | ||||||||
December 31, | ||||||||
Effect on 2008 OPEB | 2007 | |||||||
Change in Assumption | Expense | APBO | ||||||
25 basis point decrease in discount rate | + $ | 103 million | + $ | 1.6 billion | ||||
25 basis point increase in discount rate | −$ | 103 million | −$ | 1.5 billion |
94
Deferred Taxes |
• | Future reversals of existing taxable temporary differences; | |
• | Future taxable income exclusive of reversing temporary differences and carryforwards; | |
• | Taxable income in prior carryback years; and | |
• | Tax-planning strategies. |
• | The possibility for continued or increasing price competition in the highly competitive U.S. market. This was seen in the external market in the third quarter of 2007 when a competitor introduced its new fullsize trucks and offered customer incentives to gain market share. Accordingly, we increased customer incentives on our recently launched fullsize trucks, which were not previously anticipated; | |
• | Continued high fuel prices and the possible effect that may have on consumer preferences related to our most profitable products, fullsize trucks and utility vehicles; | |
• | Uncertainty over the effect on our cost structure from more stringent U.S. fuel economy and global emissions standards which may require us to sell a significant volume of alternative fuel vehicles across our portfolio; | |
• | Uncertainty as to the future operating results of GMAC’s Residential Capital, LLC mortgage business; and | |
• | Acceleration of tax deductions for OPEB liabilities as compared to prior expectations due to changes associated with the Settlement Agreement. |
95
Valuation of Vehicle Operating Leases and Lease Residuals |
96
Accounting Standards Not Yet Adopted |
97
98
• | Our ability 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 and development of technology associated with the products; | |
• | Market acceptance of our new products; | |
• | Significant changes in the competitive environment and the effect of competition in our markets, including on our 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 the ability of GMAC to make distributions on the Preferred Membership Interests held by us; | |
• | Changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, including the estimates for the Delphi pension benefit guarantees, which could result in an impact on earnings; | |
• | Negotiations and bankruptcy court actions with respect to Delphi’s obligations to us and our obligations to Delphi, negotiations with respect to our obligations under the benefit guarantees to Delphi employees and our ability to recover any indemnity claims against Delphi; | |
• | Labor strikes or work stoppages at our facilities or our key suppliers such as Delphi or financial difficulties at our key suppliers such as Delphi; | |
• | Additional credit rating downgrades and the effects thereof; | |
• | Changes in relations with unions and employees/retirees and the legal interpretations of the agreements with those unions with regard to employees/retirees, including the negotiation of new collective bargaining agreements with unions representing our employees in the United States other than the UAW; | |
• | Completion of the final settlement with the UAW and UAW retirees, including obtaining court approval in a form acceptable to us, the UAW, and class counsel; treatment of the terms of the 2007 National Agreement pursuant to the Settlement Agreement in a form acceptable to us, the UAW and class counsel; our completion of discussions with the staff of the SEC regarding accounting treatment with respect to the New VEBA and the Post-Retirement Medical Benefits for the Covered Group as set forth in the Settlement Agreement, on a basis reasonably satisfactory to us; and as applicable, a determination by us that the New VEBA satisfies the requirements of section 302(c)(5) of the Labor-Management Relations Act of 1947, as amended (LMRA), as well as bank and other regulatory approval; | |
• | 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. |
99
• | Rating agencies may downgrade their ratings for GMAC or ResCap in the future, which would adversely affect GMAC’s ability to raise capital in the debt markets at attractive rates and increase the interest that it pays on its outstanding publicly traded notes, which could have a material adverse effect on its results of operations and financial condition; | |
• | GMAC’s business requires substantial capital, and if it is unable to maintain adequate financing sources, its profitability and financial condition will suffer and jeopardize its ability to continue operations; | |
• | The profitability and financial condition of its operations are dependent upon our operations, and it has substantial credit exposure to us; | |
• | Recent developments in the residential mortgage market, especially in the nonprime sector, may adversely affect GMAC’s revenues, profitability and financial condition; | |
• | The worldwide financial services industry is highly competitive. If GMAC is unable to compete successfully or if there is increased competition in the automotive financing, mortgageand/or insurance markets or generally in the markets for securitizations or asset sales, its margins could be materially adversely affected; | |
• | Significant changes in the competitive environment and the effect of competition in GMAC’s markets, including on GMAC’s pricing policies; | |
• | Restrictions on the ability of GMAC’s residential mortgage subsidiary 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 GMAC’s contractual servicing rights; | |
• | Costs and risks associated with litigation; | |
• | 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; | |
• | 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. |
100
Foreign Exchange Rate Risk |
Interest Rate Risk |
Commodity Price Risk |
101
(1) | Controls over the period-end financial reporting process were not effective. | |
(2) | Controls to ensure the consolidated financial statements comply with SFAS No. 109,Accounting for Income Taxes,were not effective. | |
(3) | Controls over the accounting for employee benefit arrangements were not effective. |
102
103
General Motors Corporation, its Directors, and Stockholders:
104
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Net sales and revenue | ||||||||||||
Automotive sales | $ | 178,199 | $ | 171,179 | $ | 158,623 | ||||||
Financial services and insurance revenue | 2,923 | 34,422 | 34,427 | |||||||||
Total net sales and revenue | 181,122 | 205,601 | 193,050 | |||||||||
Costs and expenses | ||||||||||||
Automotive cost of sales | 166,259 | 163,742 | 158,254 | |||||||||
Selling, general and administrative expense | 14,412 | 13,650 | 13,003 | |||||||||
Financial services and insurance expense | 2,742 | 29,794 | 30,813 | |||||||||
Other expenses | 2,099 | 4,238 | 7,024 | |||||||||
Total costs and expenses | 185,512 | 211,424 | 209,094 | |||||||||
Operating loss | (4,390 | ) | (5,823 | ) | (16,044 | ) | ||||||
Equity in loss of GMAC LLC | (1,245 | ) | (5 | ) | — | |||||||
Automotive and other interest expense | (2,902 | ) | (2,642 | ) | (2,534 | ) | ||||||
Automotive interest income and other non-operating income | 2,284 | 2,812 | 1,349 | |||||||||
Loss from continuing operations before income taxes, equity income, minority interests and cumulative effect of a change in accounting principle | (6,253 | ) | (5,658 | ) | (17,229 | ) | ||||||
Income tax expense (benefit) | 37,162 | (3,046 | ) | (6,046 | ) | |||||||
Equity income, net of tax | 524 | 513 | 610 | |||||||||
Minority interests, net of tax | (406 | ) | (324 | ) | (48 | ) | ||||||
Loss from continuing operations | (43,297 | ) | (2,423 | ) | (10,621 | ) | ||||||
Discontinued operations (Note 3) | ||||||||||||
Income from discontinued operations, net of tax | 256 | 445 | 313 | |||||||||
Gain on sale of discontinued operations, net of tax | 4,309 | — | — | |||||||||
Income from discontinued operations | 4,565 | 445 | 313 | |||||||||
Loss before cumulative effect of a change in accounting principle | (38,732 | ) | (1,978 | ) | (10,308 | ) | ||||||
Cumulative effect of a change in accounting principle | — | — | (109 | ) | ||||||||
Net loss | $ | (38,732 | ) | $ | (1,978 | ) | $ | (10,417 | ) | |||
Earnings (loss) per share, basic and diluted | ||||||||||||
Continuing operations | $ | (76.52 | ) | $ | (4.29 | ) | $ | (18.78 | ) | |||
Discontinued operations | 8.07 | 0.79 | 0.55 | |||||||||
Cumulative effect of a change in accounting principle | — | — | (0.19 | ) | ||||||||
Total | $ | (68.45 | ) | $ | (3.50 | ) | $ | (18.42 | ) | |||
Weighted average common shares outstanding, basic and diluted (millions) | 566 | 566 | 565 | |||||||||
Cash dividends per share | $ | 1.00 | $ | 1.00 | $ | 2.00 | ||||||
105
December 31, | ||||||||
2007 | 2006 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 24,549 | $ | 23,774 | ||||
Marketable securities | 2,139 | 138 | ||||||
Total cash and marketable securities | 26,688 | 23,912 | ||||||
Accounts and notes receivable, net | 9,659 | 8,216 | ||||||
Inventories | 14,939 | 13,921 | ||||||
Equipment on operating leases, net | 5,283 | 6,125 | ||||||
Other current assets and deferred income taxes | 3,566 | 12,982 | ||||||
Total current assets | 60,135 | 65,156 | ||||||
Financing and Insurance Operations Assets | ||||||||
Cash and cash equivalents | 268 | 349 | ||||||
Investments in securities | 215 | 188 | ||||||
Equipment on operating leases, net | 6,712 | 11,794 | ||||||
Equity in net assets of GMAC LLC | 7,079 | 7,523 | ||||||
Other assets | 2,715 | 2,269 | ||||||
Total Financing and Insurance Operations assets | 16,989 | 22,123 | ||||||
Non-Current Assets | ||||||||
Equity in net assets of nonconsolidated affiliates | 1,919 | 1,969 | ||||||
Property, net | 43,017 | 41,934 | ||||||
Goodwill and intangible assets, net | 1,066 | 1,118 | ||||||
Deferred income taxes | 2,116 | 33,079 | ||||||
Prepaid pension | 20,175 | 17,366 | ||||||
Other assets | 3,466 | 3,559 | ||||||
Total non-current assets | 71,759 | 99,025 | ||||||
Total assets | $ | 148,883 | $ | 186,304 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable (principally trade) | $ | 29,439 | $ | 26,931 | ||||
Short-term borrowings and current portion of long-term debt | 6,047 | 5,666 | ||||||
Accrued expenses | 34,822 | 34,120 | ||||||
Total current liabilities | 70,308 | 66,717 | ||||||
Financing and Insurance Operations Liabilities | ||||||||
Accounts payable | 30 | 192 | ||||||
Debt | 4,908 | 9,438 | ||||||
Other liabilities and deferred income taxes | 875 | 1,947 | ||||||
Total Financing and Insurance Operations liabilities | 5,813 | 11,577 | ||||||
Non-Current Liabilities | ||||||||
Long-term debt | 33,384 | 33,067 | ||||||
Postretirement benefits other than pensions | 47,375 | 50,409 | ||||||
Pensions | 11,381 | 11,934 | ||||||
Other liabilities and deferred income taxes | 16,102 | 17,062 | ||||||
Total non-current liabilities | 108,242 | 112,472 | ||||||
Total liabilities | 184,363 | 190,766 | ||||||
Commitments and contingencies (Note 17) | ||||||||
Minority interests | 1,614 | 1,190 | ||||||
Stockholders’ Deficit | ||||||||
Preferred stock, no par value, authorized 6,000,000, no shares issued and outstanding | — | — | ||||||
$1 2/3 par value common stock (2,000,000,000 shares authorized, 756,637,541 and 566,059,249 shares issued and outstanding at December 31, 2007, respectively, and 756,637,541 and 565,670,254 shares issued and outstanding at December 31, 2006, respectively) | 943 | 943 | ||||||
Capital surplus (principally additional paid-in capital) | 15,319 | 15,336 | ||||||
Retained earnings (deficit) | (39,392 | ) | 195 | |||||
Accumulated other comprehensive loss | (13,964 | ) | (22,126 | ) | ||||
Total stockholders’ deficit | (37,094 | ) | (5,652 | ) | ||||
Total liabilities, minority interests, and stockholders’ deficit | $ | 148,883 | $ | 186,304 | ||||
106
For The Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Cash flows from operating activities | ||||||||||||
Net loss | $ | (38,732 | ) | $ | (1,978 | ) | $ | (10,417 | ) | |||
Less income from discontinued operations | 4,565 | 445 | 313 | |||||||||
Less cumulative effect of a change in accounting principle | — | — | (109 | ) | ||||||||
Loss from continuing operations | (43,297 | ) | (2,423 | ) | (10,621 | ) | ||||||
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) continuing operating activities: | �� | |||||||||||
Depreciation, impairments and amortization expense | 9,513 | 10,885 | 15,732 | |||||||||
Mortgage servicing rights and premium amortization | — | 1,021 | 1,142 | |||||||||
Goodwill impairment — GMAC | — | 828 | 712 | |||||||||
Delphi charge | 1,547 | 500 | 5,500 | |||||||||
Loss on sale of 51% interest in GMAC | — | 2,910 | — | |||||||||
Provision for credit financing losses | — | 1,799 | 1,074 | |||||||||
Net gains on sale of credit receivables | — | (1,256 | ) | (1,741 | ) | |||||||
Net gains on sale of investment securities | — | (1,006 | ) | (104 | ) | |||||||
Other postretirement employee benefit (OPEB) expense | 2,362 | 3,567 | 5,650 | |||||||||
OPEB payments | (3,751 | ) | (3,802 | ) | (4,084 | ) | ||||||
VEBA/401(h) withdrawals | 1,694 | 3,061 | 3,168 | |||||||||
Pension expense | 1,799 | 4,911 | 2,495 | |||||||||
Pension contributions | (937 | ) | (1,032 | ) | (833 | ) | ||||||
Retiree lump sum and vehicle voucher expense, net of payments | — | (325 | ) | (264 | ) | |||||||
Net change in mortgage loans | — | (21,578 | ) | (29,119 | ) | |||||||
Net change in mortgage securities | — | 427 | (1,155 | ) | ||||||||
Provisions for deferred taxes | 36,977 | (4,166 | ) | (6,731 | ) | |||||||
Change in other investments and miscellaneous assets | 663 | (477 | ) | (690 | ) | |||||||
Change in other operating assets and liabilities, net of acquisitions and disposals | (3,412 | ) | (8,512 | ) | 20 | |||||||
Other | 4,349 | 2,318 | 2,679 | |||||||||
Net cash provided by (used in) continuing operating activities | 7,507 | (12,350 | ) | (17,170 | ) | |||||||
Cash provided by discontinued operating activities | 224 | 591 | 314 | |||||||||
Net cash provided by (used in) operating activities | $ | 7,731 | $ | (11,759 | ) | $ | (16,856 | ) |
107
For The Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Cash flows from investing activities | ||||||||||||
Expenditures for property | $ | (7,542 | ) | $ | (7,902 | ) | $ | (8,141 | ) | |||
Investments in marketable securities, acquisitions | (10,155 | ) | (28,062 | ) | (27,479 | ) | ||||||
Investments in marketable securities, liquidations | 8,119 | 31,081 | 28,216 | |||||||||
Net change in mortgage servicing rights | — | (61 | ) | (267 | ) | |||||||
Increase in finance receivables | — | (1,160 | ) | (6,582 | ) | |||||||
Proceeds from sale of finance receivables | — | 18,374 | 31,652 | |||||||||
Proceeds from sale of 51% interest in GMAC | — | 7,353 | — | |||||||||
Proceeds from sale of discontinued operations | 5,354 | — | — | |||||||||
Proceeds from sale of business units/equity investments | — | 10,506 | 846 | |||||||||
Operating leases, acquisitions | — | (17,070 | ) | (15,496 | ) | |||||||
Operating leases, liquidations | 3,165 | 7,039 | 5,362 | |||||||||
Capital contribution to GMAC LLC | (1,022 | ) | — | — | ||||||||
Investments in companies, net of cash acquired | (46 | ) | (357 | ) | 1,355 | |||||||
Other | 389 | (15 | ) | (863 | ) | |||||||
Net cash provided by (used in) continuing investing activities | (1,738 | ) | 19,726 | 8,603 | ||||||||
Cash used in discontinued investing activities | (22 | ) | (31 | ) | (38 | ) | ||||||
Net cash provided by (used in) investing activities | (1,760 | ) | 19,695 | 8,565 | ||||||||
Cash flows from financing activities | ||||||||||||
Net increase (decrease) in short-term borrowings | (5,749 | ) | 7,030 | (10,125 | ) | |||||||
Borrowings of long-term debt | 2,131 | 79,566 | 78,276 | |||||||||
Payments made on long-term debt | (1,403 | ) | (92,290 | ) | (69,566 | ) | ||||||
Cash dividends paid to stockholders | (567 | ) | (563 | ) | (1,134 | ) | ||||||
Other | — | 2,487 | 6,030 | |||||||||
Net cash provided by (used in) continuing financing activities | (5,588 | ) | (3,770 | ) | 3,481 | |||||||
Cash provided by (used in) discontinued financing activities | (5 | ) | 3 | (1 | ) | |||||||
Net cash provided by (used in) financing activities | (5,593 | ) | (3,767 | ) | 3,480 | |||||||
Effect of exchange rate changes on cash and cash equivalents | 316 | 365 | (85 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | 694 | 4,534 | (4,896 | ) | ||||||||
Cash and cash equivalents retained by GMAC LLC upon disposal | — | (11,137 | ) | — | ||||||||
Cash and cash equivalents of held for sale operations | — | — | (371 | ) | ||||||||
Cash and cash equivalents at beginning of the year | 24,123 | 30,726 | 35,993 | |||||||||
Cash and cash equivalents at end of the year | $ | 24,817 | $ | 24,123 | $ | 30,726 | ||||||
108
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2007, 2006, AND 2005
(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, 2005 | 565 | $ | 942 | $ | 15,241 | $ | 14,511 | $ | (2,814 | ) | $ | 27,880 | ||||||||||||||||
Prior period adjustment (Note 15) | — | — | — | (211 | ) | — | (211 | ) | ||||||||||||||||||||
Balance January 1, 2005, as restated | 565 | 942 | 15,241 | 14,300 | (2,814 | ) | 27,669 | |||||||||||||||||||||
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 loss | — | — | — | (1,721 | ) | — | (1,721 | ) | (1,721 | ) | ||||||||||||||||||
Comprehensive 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 | 2,749 | (4,535 | ) | 14,442 | |||||||||||||||||||||
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 loss | — | — | — | (645 | ) | (645 | ) | (645 | ) | |||||||||||||||||||
Comprehensive loss | $ | (2,623 | ) | |||||||||||||||||||||||||
Cumulative effect of a change in accounting principle — adoption of SFAS 158, net of tax | — | — | — | — | (16,946 | ) | (16,946 | ) | ||||||||||||||||||||
Stock options | — | — | 51 | — | — | 51 | ||||||||||||||||||||||
Cumulative effect of a change in accounting principle — adoption of SFAS 156, net of tax | — | — | — | (13 | ) | — | (13 | ) | ||||||||||||||||||||
Cash dividends paid | — | — | — | (563 | ) | — | (563 | ) | ||||||||||||||||||||
Balance December 31, 2006, as restated | 566 | 943 | 15,336 | 195 | (22,126 | ) | (5,652 | ) | ||||||||||||||||||||
Net loss | — | — | — | $ | (38,732 | ) | (38,732 | ) | — | (38,732 | ) | |||||||||||||||||
Other comprehensive income (loss): | ||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 1,000 | — | — | — | |||||||||||||||||||||
Unrealized loss on derivatives | — | — | — | (38 | ) | — | — | — | ||||||||||||||||||||
Unrealized loss on securities | — | — | — | (17 | ) | — | — | — | ||||||||||||||||||||
Defined benefit plans, net (Note 24) | — | — | — | 6,064 | — | — | — | |||||||||||||||||||||
Other comprehensive income | — | — | — | 7,009 | — | 7,009 | 7,009 | |||||||||||||||||||||
Comprehensive loss | $ | (31,723 | ) | |||||||||||||||||||||||||
Effects of accounting change regarding pension plans and OPEB plans measurement dates pursuant to SFAS No. 158, net of tax | — | — | — | (425 | ) | 1,153 | 728 | |||||||||||||||||||||
Cumulative effect of a change in accounting principle — adoption of FIN 48, net of tax | — | — | — | 137 | — | 137 | ||||||||||||||||||||||
Stock options | — | — | 55 | — | — | 55 | ||||||||||||||||||||||
Conversion of GMAC Preferred Membership Interest (Note 8) | — | — | 27 | — | — | 27 | ||||||||||||||||||||||
Cash dividends paid | — | — | — | (567 | ) | — | (567 | ) | ||||||||||||||||||||
Purchase of convertible note hedge (Note 14) | — | — | (99 | ) | — | — | (99 | ) | ||||||||||||||||||||
Balance December 31, 2007 | 566 | $ | 943 | $ | 15,319 | $ | (39,392 | ) | $ | (13,964 | ) | $ | (37,094 | ) | ||||||||||||||
109
Principles of Consolidation |
Change in Presentation of Financial Statements |
Use of Estimates in the Preparation of the Financial Statements |
Revenue Recognition |
Automotive Sales |
110
Financial Services and Insurance Revenues |
Advertising |
Research and Development Expenditures |
Property, net |
111
Special Tools |
Goodwill and Intangible Assets |
Valuation of Long-Lived Assets |
Valuation of Equity Method Investments |
Equipment on Operating Leases, net |
112
Foreign Currency Transactions and Translation |
Policy and Warranty |
Recall Campaigns |
Environmental Costs |
113
Cash Equivalents |
Marketable Securities |
Derivative Instruments |
Accounting for Income Taxes |
Accounting for Early Retirement Programs |
114
Accounting for Extended Disability Benefits |
Labor Force |
115
Accounting for Servicing of Financial Assets |
Accounting for Conditional Asset Retirement Obligations |
Net loss, as reported | $ | (10,417 | ) | |
Add: FIN 47 cumulative effect, net of tax | 109 | |||
Less: FIN 47 depreciation and accretion expense, net of tax | (16 | ) | ||
Pro forma net loss | $ | (10,324 | ) | |
Loss per share, basic and diluted, as reported | $ | (18.42 | ) | |
Pro forma loss per share | $ | (18.26 | ) | |
Pro forma asset retirement obligation — net, as of year-end | $ | 181 | ||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Asset retirement obligations as of January 1 | $ | 193 | $ | 181 | ||||
Accretion expense | 22 | 18 | ||||||
Liabilities incurred | 43 | 5 | ||||||
Liabilities settled or disposed | (40 | ) | (9 | ) | ||||
Effect of foreign currency | 4 | — | ||||||
Revisions to estimates | — | (2 | ) | |||||
Asset retirement obligations as of December 31 | $ | 222 | $ | 193 | ||||
116
Accounting for Uncertainty in Income Taxes |
Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans |
Fair Value Measurements |
Fair Value Option for Financial Assets and Financial Liabilities |
117
Accounting for Nonrefundable Payments for Goods or Services to Be Used in Future Research and Development Activities |
Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards |
Business Combinations |
Noncontrolling Interests in Consolidated Financial Statements |
118
Note 3. | Acquisition and Disposal of Businesses |
Sale of Allison Transmission Business |
Year Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Net sales | $ | 1,225 | $ | 2,142 | $ | 1,750 | ||||||
Income from discontinued operations before income taxes | $ | 404 | $ | 706 | $ | 489 | ||||||
Income tax provision | $ | 148 | $ | 261 | $ | 176 | ||||||
Income from discontinued operations, net of tax | $ | 256 | $ | 445 | $ | 313 | ||||||
Gain on sale of discontinued operations, net of tax | $ | 4,309 | $ | — | $ | — |
Sale of 51% Controlling Interest in GMAC |
119
120
Sale of GMAC Commercial Mortgage |
Sale of Electro-Motive Division |
Acquisition of GM Daewoo Auto & Technology Company |
Note 4. | Marketable Securities |
121
December 31, 2007 | December 31, 2006 | |||||||||||||||||||||||||||||||
Unrealized | Fair | Unrealized | Fair | |||||||||||||||||||||||||||||
Cost | Gains | Losses | Value | Cost | Gains | Losses | Value | |||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Automotive | ||||||||||||||||||||||||||||||||
Available for sale: | ||||||||||||||||||||||||||||||||
Corporate debt securities and other | $ | 1,278 | $ | 3 | $ | 9 | $ | 1,272 | $ | 122 | $ | — | $ | — | $ | 122 | ||||||||||||||||
United States government and agencies | 559 | 12 | — | 571 | 13 | — | — | 13 | ||||||||||||||||||||||||
Mortgage-backed securities | 296 | 2 | 2 | 296 | 3 | — | — | 3 | ||||||||||||||||||||||||
Total Automotive | 2,133 | 17 | 11 | 2,139 | 138 | — | — | 138 | ||||||||||||||||||||||||
Financing and Insurance Operations | ||||||||||||||||||||||||||||||||
Available for sale: | ||||||||||||||||||||||||||||||||
United States government and agencies | 1 | — | — | 1 | — | — | — | — | ||||||||||||||||||||||||
Foreign government securities | 20 | 1 | — | 21 | — | — | — | — | ||||||||||||||||||||||||
Mortgage and asset-backed securities | 33 | — | — | 33 | — | — | — | — | ||||||||||||||||||||||||
Corporate debt securities and other | 74 | 2 | 1 | 75 | 98 | — | 4 | 94 | ||||||||||||||||||||||||
Subtotal | 128 | 3 | 1 | 130 | 98 | — | 4 | 94 | ||||||||||||||||||||||||
Mortgage-backed securities held-to-maturity | 84 | 1 | — | 85 | 93 | 1 | — | 94 | ||||||||||||||||||||||||
Total Financing and Insurance Operations | 212 | 4 | 1 | 215 | 191 | 1 | 4 | 188 | ||||||||||||||||||||||||
Total consolidated | $ | 2,345 | $ | 21 | $ | 12 | $ | 2,354 | $ | 329 | $ | 1 | $ | 4 | $ | 326 | ||||||||||||||||
Automotive | Financing and Insurance | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Contractual Maturity | Cost | Value | Cost | Value | ||||||||||||
(Dollars in millions) | ||||||||||||||||
1 year | $ | 875 | $ | 874 | $ | 16 | $ | 17 | ||||||||
2-5 years | 878 | 880 | 14 | 14 | ||||||||||||
6-10 years | 126 | 131 | 36 | 37 | ||||||||||||
11 years and thereafter | 254 | 254 | 62 | 62 | ||||||||||||
Total | $ | 2,133 | $ | 2,139 | $ | 128 | $ | 130 | ||||||||
122
December 31, 2007 | ||||||||||||||||
Less than 12 Months | 12 Months or Longer | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Automotive | ||||||||||||||||
Corporate debt securities and other | $ | 483 | $ | 9 | $ | 3 | $ | — | ||||||||
Mortgage-backed securities | 88 | 2 | — | — | ||||||||||||
Total | $ | 571 | $ | 11 | $ | 3 | $ | — | ||||||||
December 31, 2007 | ||||||||||||||||
Less than 12 Months | 12 Months or Longer | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Financing and Insurance Operations | ||||||||||||||||
Corporate debt securities and other | $ | 1 | $ | — | $ | 31 | $1 | |||||||||
Total | $ | 1 | $ | — | $ | 31 | $1 | |||||||||
December 31, 2006 | ||||||||
Less than 12 Months | ||||||||
Fair Value | Unrealized Losses | |||||||
(Dollars in millions) | ||||||||
Financing and Insurance Operations | ||||||||
Corporate debt securities and other | $ | 94 | $ | 4 | ||||
Total | $ | 94 | $ | 4 | ||||
Note 5. | Finance Receivables and Securitizations |
123
Securitizations of Finance Receivables and Mortgage Loans |
124
Eleven Months Ended November 30, 2006 | ||||||||||||
Retail | ||||||||||||
Finance | Wholesale | Mortgage | ||||||||||
Receivables | Loans | Residential | ||||||||||
(Dollars in millions) | ||||||||||||
Pre-tax gains 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 | ) |
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 | ) | $ | — | $ | — |
125
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, high loan-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 Periods | ||||||||
Ended December 31,(a) | ||||||||
2006(b) | 2005 | |||||||
Retail automotive | 0.7% | 0.6% | ||||||
Residential mortgage | 0.0-12.8% | 0.0-16.9% | ||||||
Commercial mortgage | — | 0.0-3.4% | ||||||
Commercial investment securities | — | 0.0-6.7% |
(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. |
126
Note 6. | Inventories |
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Productive material, work in process, and supplies | $ | 6,267 | $ | 5,810 | ||||
Finished product, including service parts, etc. | 10,095 | 9,619 | ||||||
Total inventories at FIFO | 16,362 | 15,429 | ||||||
Less LIFO allowance | (1,423 | ) | (1,508 | ) | ||||
Total automotive inventories, less allowances | 14,939 | 13,921 | ||||||
FIO off-lease vehicles, included in FIO Other assets | 254 | 185 | ||||||
Total consolidated inventories, less allowances | $ | 15,193 | $ | 14,106 | ||||
Note 7. | Equipment on Operating Leases, net |
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Automotive | ||||||||
Equipment on operating leases | $ | 5,798 | $ | 6,629 | ||||
Less accumulated depreciation | (515 | ) | (504 | ) | ||||
Net book value | 5,283 | 6,125 | ||||||
Financing and Insurance Operations | ||||||||
Equipment on operating leases | 9,313 | 14,909 | ||||||
Less accumulated depreciation | (2,601 | ) | (3,115 | ) | ||||
Net book value | 6,712 | 11,794 | ||||||
Total consolidated net book value | $ | 11,995 | $ | 17,919 | ||||
127
Note 8. | Investment in Nonconsolidated Affiliates |
• | GMAC (49% at December 31, 2007 and 2006) | |
• | Shanghai General Motors Co., Ltd (50% at December 31, 2007, 2006 and 2005) | |
• | SAIC-GM-Wuling Automobile Co., Ltd (34% at December 31, 2007, 2006 and 2005) | |
• | Suzuki (20.4% at December 31, 2005) |
Year Ended | ||||
December 31, | ||||
2007 | ||||
(Dollars in millions) | ||||
Total financing revenue | $ | 21,187 | ||
Interest expense | $ | 14,776 | ||
Depreciation expense on operating lease assets | $ | 4,915 | ||
Total other revenue | $ | 10,303 | ||
Total non interest expense | $ | 10,645 | ||
Loss before income tax expense | $ | (1,942 | ) | |
Income tax expense | $ | 390 | ||
Net loss | $ | (2,332 | ) |
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Loans held for sale | $ | 20,559 | $ | 27,718 | ||||
Total finance receivables and loans, net | $ | 124,759 | $ | 170,870 | ||||
Investment in operating leases, net | $ | 32,348 | $ | 24,184 | ||||
Other assets | $ | 27,026 | $ | 23,496 | ||||
Total assets | $ | 247,710 | $ | 287,439 | ||||
Total debt | $ | 193,148 | $ | 236,985 | ||||
Accrued expenses and deposits and other liabilities | $ | 27,484 | $ | 22,659 | ||||
Total liabilities | $ | 232,145 | $ | 270,875 | ||||
Redeemable preferred membership interests | $ | — | $ | 2,195 | ||||
Total equity | $ | 15,565 | $ | 14,369 | ||||
Total liabilities, preferred interests and equity | $ | 247,710 | $ | 287,439 |
128
• | The instability of the global credit and mortgage markets and its effect on GMAC’s Residential Capital, LLC (ResCap) subsidiary as well as its automotive finance, insurance and other operations; | |
• | The deteriorating conditions in the residential and home building markets, including significant changes in the mortgage secondary market, tightening underwriting guidelines and reduced product offerings; | |
• | Recent credit downgrades of GMAC and ResCap and the effect on their ability to raise capital necessary on acceptable terms; and | |
• | Effect of the expected near-term automotive market conditions on GMAC’s automotive finance operations. |
129
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Book value of our investments in affiliates | $ | 811 | $ | 851 | $ | 2,398 | ||||||
Our share of affiliates’ net income | $ | 382 | $ | 327 | $ | 475 | ||||||
Total assets of significant affiliates | $ | 6,441 | $ | 4,828 | $ | 19,419 | ||||||
Total liabilities of significant affiliates | $ | 4,096 | $ | 2,951 | $ | 9,646 |
Investment in Suzuki |
Investment in Fuji Heavy Industries (FHI) |
Estimated | ||||||||||||
Useful Lives | December 31, | |||||||||||
(Years) | 2007 | 2006 | ||||||||||
(Dollars in millions) | ||||||||||||
Automotive | ||||||||||||
Land | — | $ | 1,222 | $ | 1,235 | |||||||
Buildings and land improvements | 2-40 | 19,127 | 18,535 | |||||||||
Machinery and equipment | 3-30 | 51,687 | 51,017 | |||||||||
Construction in progress | — | 4,439 | 3,396 | |||||||||
Real estate, plants, and equipment | 76,475 | 74,183 | ||||||||||
Less accumulated depreciation | (44,474 | ) | (43,440 | ) | ||||||||
Real estate, plants, and equipment — net | 32,001 | 30,743 | ||||||||||
Special tools — net | 1-10 | 11,016 | 11,191 | |||||||||
Total property — net | $ | 43,017 | $ | 41,934 | ||||||||
130
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Automotive | ||||||||||||
Depreciation and impairment | $ | 4,937 | $ | 4,575 | $ | 5,470 | ||||||
Amortization and impairment of special tools | 3,243 | 3,450 | 4,498 | |||||||||
Amortization of intangible assets | 74 | 69 | 68 | |||||||||
Total | 8,254 | 8,094 | 10,036 | |||||||||
Financing and Insurance Operations | ||||||||||||
Depreciation (a) | 1,259 | 2,776 | 5,680 | |||||||||
Amortization of intangible assets | — | 15 | 16 | |||||||||
Total | 1,259 | 2,791 | 5,696 | |||||||||
Total consolidated depreciation, impairment and amortization | $ | 9,513 | $ | 10,885 | $ | 15,732 | ||||||
(a) | Depreciation of property held by GMAC was ceased in April 2006 at the time the assets were classified as held for sale. |
Gross Carrying | Accumulated | Net Carrying | ||||||||||
Amount | Amortization | Amount | ||||||||||
(Dollars in millions) | ||||||||||||
December 31, 2007 | ||||||||||||
Amortizable intangible assets: | ||||||||||||
Patents and intellectual property rights | $ | 570 | $ | 240 | $ | 330 | ||||||
Indefinite-lived intangible assets: | ||||||||||||
Goodwill | 736 | |||||||||||
Total goodwill and intangible assets | $ | 1,066 | ||||||||||
December 31, 2006 | ||||||||||||
Amortizable intangible assets: | ||||||||||||
Patents and intellectual property rights | $ | 488 | $ | 169 | $ | 319 | ||||||
Indefinite-lived intangible assets: | ||||||||||||
Goodwill | 799 | |||||||||||
Total goodwill and intangible assets | $ | 1,118 | ||||||||||
131
Total | ||||||||||||||||||||
GMNA | GME | Auto | GMAC(b) | Total | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Balance as of January 1, 2006 | $ | 324 | $ | 433 | $ | 757 | $ | 2,446 | $ | 3,203 | ||||||||||
Goodwill acquired during the period (a) | — | — | — | 151 | 151 | |||||||||||||||
Impairment | — | — | — | (828 | ) | (828 | ) | |||||||||||||
GMAC divestiture (c) | — | — | — | (1,827 | ) | (1,827 | ) | |||||||||||||
Effect of foreign currency translation and other | (25 | ) | 67 | 42 | 58 | 100 | ||||||||||||||
Balance as of December 31, 2006 | 299 | 500 | 799 | — | 799 | |||||||||||||||
Goodwill acquired during the period | — | 28 | 28 | — | 28 | |||||||||||||||
Allison divestiture (d) | (66 | ) | — | (66 | ) | — | (66 | ) | ||||||||||||
Effect of foreign currency translation and other | (60 | ) | 35 | (25 | ) | — | (25 | ) | ||||||||||||
Balance as of December 31, 2007 | $ | 173 | $ | 563 | $ | 736 | $ | — | $ | 736 | ||||||||||
(a) | During 2006, GMAC recorded goodwill of $151 million primarily as a result of the purchase of a regional insurance company. | |
(b) | With the changes in key personnel in the Commercial Finance business, GMAC initiated a goodwill impairment test, in accordance with 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 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. | |
(c) | In November 2006, we completed the sale of a 51% controlling interest in GMAC (Refer to Note 3). | |
(d) | In August 2007, we completed the sale of Allison which resulted in the disposition of goodwill based on the relative fair value of Allison (Refer to Note 3). |
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Automotive | ||||||||
Derivative assets | $ | 595 | $ | 1,055 | ||||
Restricted cash | 938 | 879 | ||||||
Other | 1,933 | 1,625 | ||||||
Total other assets | 3,466 | 3,559 | ||||||
Financing and Insurance Operations | ||||||||
Investment in GMAC Preferred Membership Interests | 1,046 | 1,601 | ||||||
Inventory | 254 | 185 | ||||||
Restricted cash held for securitization trusts | 1,107 | 1,143 | ||||||
Other | 308 | (660 | ) | |||||
Total other assets | 2,715 | 2,269 | ||||||
Total consolidated other assets | $ | 6,181 | $ | 5,828 | ||||
132
133
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Automotive — Current | ||||||||
Dealer and customer allowances, claims and discounts | $ | 10,631 | $ | 10,057 | ||||
Deposits from rental car companies | 7,758 | 9,112 | ||||||
Deferred revenue | 1,242 | 906 | ||||||
Policy, product warranty, and recall campaigns | 4,655 | 4,389 | ||||||
Delphi contingent liability | 924 | — | ||||||
Payrolls and employee benefits excluding postemployment benefits | 2,146 | 2,116 | ||||||
Self-insurance reserves | 351 | 361 | ||||||
Taxes | 1,421 | 1,761 | ||||||
Derivative liability | 587 | 462 | ||||||
Postemployment benefits — plant idling | 476 | 956 | ||||||
Postemployment benefits — extended disability benefits | 122 | 146 | ||||||
Interest | 812 | 827 | ||||||
Pensions | 446 | 335 | ||||||
Postretirement benefits | 335 | 275 | ||||||
Deferred income taxes | 116 | 11 | ||||||
Other | 2,800 | 2,406 | ||||||
Total accrued expenses | $ | 34,822 | $ | 34,120 | ||||
Automotive — Noncurrent | ||||||||
Deferred revenue | $ | 1,933 | $ | 2,109 | ||||
Policy, product warranty, and recall campaigns | 4,960 | 4,675 | ||||||
Delphi contingent liability | 1,870 | 1,451 | ||||||
Payrolls and employee benefits excluding postemployment benefits | 2,082 | 1,897 | ||||||
Self-insurance reserves | 1,483 | 1,557 | ||||||
Derivative liability | 264 | 454 | ||||||
Postemployment benefits — plant idling | 382 | 313 | ||||||
Postemployment benefits — extended disability benefits | 631 | 849 | ||||||
Deferred income taxes | 1,034 | 722 | ||||||
Other | 1,463 | 3,035 | ||||||
Total other liabilities and deferred income taxes | $ | 16,102 | $ | 17,062 | ||||
134
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Financing and Insurance Operations | ||||||||
Unpaid insurance losses, loss adjustment expenses, and unearned insurance premiums | $ | — | $ | 125 | ||||
Interest | 23 | 46 | ||||||
Interest rate derivatives | 6 | 2 | ||||||
GMAC capital contribution | — | 1,022 | ||||||
Other | 846 | 752 | ||||||
Total other liabilities and deferred income taxes | $ | 875 | $ | 1,947 | ||||
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Balance at January 1 | $ | 9,064 | $ | 9,135 | ||||
Payments | (4,539 | ) | (4,463 | ) | ||||
Increase in liability (warranties issued during period) | 5,135 | 4,517 | ||||||
Adjustments to liability (pre-existing warranties) | (165 | ) | (570 | ) | ||||
Effect of foreign currency translation | 223 | 445 | ||||||
Liabilities transferred in the sale of Allison (Note 3) | (103 | ) | — | |||||
Balance at December 31 | $ | 9,615 | $ | 9,064 | ||||
Short-Term Borrowings |
135
Long-term debt |
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Unsecured bonds | $ | 16,127 | $ | 16,119 | ||||
Contingent convertible debt | 8,440 | 8,050 | ||||||
Foreign-currency-denominated bonds | 4,875 | 4,479 | ||||||
Other long-term debt | 5,779 | 6,824 | ||||||
Total debt | 35,221 | 35,472 | ||||||
Less current portion of long-term debt | (1,893 | ) | (2,341 | ) | ||||
Fair value adjustment (a) | 56 | (64 | ) | |||||
Total long-term debt | $ | 33,384 | $ | 33,067 | ||||
(a) | To adjust hedged fixed rate debt for fair value changes attributable to the hedged risk in accordance with SFAS No. 133, “Accounting for Derivatives and Hedging Activities” (SFAS No. 133). |
136
• | If the closing sale price of our 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 our 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, Series C on or after July 20, 2010; or | |
• | For Series D, anytime from March 1, 2009 to the second business day immediately preceding the maturity date. The Series D mature June 1, 2009; or | |
• | Upon the occurrence of specified corporate events. |
• | If the investor exercises their right to require us 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. |
137
138
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Short-term debt: | ||||||||
Bank loans and overdrafts | $ | 10 | $ | 23 | ||||
Long-term debt: | ||||||||
Secured debt | 4,863 | 8,944 | ||||||
Related party — GMAC | 35 | 471 | ||||||
Total debt | $ | 4,908 | $ | 9,438 | ||||
Defined Benefit Pension Plans |
139
Defined Contribution Plans |
Other Postretirement Benefit Plans |
140
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Changes in Benefit Obligation | ||||||||
Benefit obligation at beginning of year | $ | 2,805 | $ | — | ||||
SFAS No. 158 measurement date adjustment | 20 | — | ||||||
Interest cost | 69 | 56 | ||||||
Amendments | — | 2,876 | ||||||
Actuarial (gains)/losses | 166 | 7 | ||||||
Benefits paid | (580 | ) | (119 | ) | ||||
Other | 286 | (15 | ) | |||||
Benefit obligation at end of year | $ | 2,766 | $ | 2,805 | ||||
Changes in Plan Assets | ||||||||
Fair value of plan assets at beginning of year | $ | 914 | $ | — | ||||
Contributions | 1,000 | 1,000 | ||||||
Wage deferral contributions | 286 | 4 | ||||||
Benefits paid | (580 | ) | (119 | ) | ||||
Actual return on plan assets | 109 | 29 | ||||||
Fair value of plan assets at end of year | $ | 1,729 | $ | 914 | ||||
141
Prior to | ||||||||||||
Application of | After Application | |||||||||||
SFAS No. 158 | Adjustments | of SFAS No. 158 | ||||||||||
(Dollars in millions) | ||||||||||||
Other current assets and deferred income taxes | $ | 2,147 | $ | 10,835 | $ | 12,982 | ||||||
Goodwill and intangible assets, net | $ | 1,578 | $ | (460 | ) | $ | 1,118 | |||||
Prepaid pension | $ | 33,949 | $ | (16,583 | ) | $ | 17,366 | |||||
Total assets | $ | 192,512 | $ | (6,208 | ) | $ | 186,304 | |||||
Accrued expenses | $ | 37,737 | $ | (3,617 | ) | $ | 34,120 | |||||
Postretirement benefits other than pensions | $ | 36,373 | $ | 14,036 | $ | 50,409 | ||||||
Pensions | $ | 11,541 | $ | 393 | $ | 11,934 | ||||||
Other liabilities and deferred income taxes | $ | 17,136 | $ | (74 | ) | $ | 17,062 | |||||
Total liabilities | $ | 180,028 | $ | 10,738 | $ | 190,766 | ||||||
Accumulated other comprehensive loss | $ | (5,180 | ) | $ | (16,946 | ) | $ | (22,126 | ) | |||
Total stockholders’ equity (deficit) | $ | 11,294 | $ | (16,946 | ) | $ | (5,652 | ) | ||||
Total liabilities, minority interests and stockholders’ equity (deficit) | $ | 192,512 | $ | (6,208 | ) | $ | 186,304 |
2007 |
142
143
2006 |
144
U.S. Plans | Non-U.S. Plans | Non-U.S. | ||||||||||||||||||||||||||||||
Pension Benefits | Pension Benefits | U.S. Other Benefits* | Other Benefits* | |||||||||||||||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Change in benefit obligations | ||||||||||||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 85,422 | $ | 89,133 | $ | 22,538 | $ | 20,850 | $ | 64,584 | $ | 81,467 | $ | 3,744 | $ | 3,797 | ||||||||||||||||
SFAS 158 measurement date adjustment | — | — | (539 | ) | — | 238 | — | — | — | |||||||||||||||||||||||
Service cost | 627 | 727 | 486 | 484 | 370 | 551 | 45 | 53 | ||||||||||||||||||||||||
Interest cost | 4,931 | 4,965 | 1,143 | 967 | 3,609 | 3,929 | 199 | 190 | ||||||||||||||||||||||||
Plan participants’ contributions | — | 19 | 29 | 30 | 354 | 129 | — | — | ||||||||||||||||||||||||
Amendments | 3,635 | (1,960 | ) | 75 | (669 | ) | (1,338 | ) | (15,091 | ) | (66 | ) | — | |||||||||||||||||||
Actuarial (gains) losses | (2,452 | ) | (3,682 | ) | (1,486 | ) | 524 | (3,225 | ) | (6,468 | ) | (133 | ) | (145 | ) | |||||||||||||||||
Benefits paid | (7,574 | ) | (7,013 | ) | (1,287 | ) | (1,049 | ) | (4,753 | ) | (4,188 | ) | (147 | ) | (133 | ) | ||||||||||||||||
Medicare Part D receipts | — | — | — | — | 215 | 243 | — | — | ||||||||||||||||||||||||
Exchange rate movements | — | — | 2,736 | 1,250 | — | — | 666 | 4 | ||||||||||||||||||||||||
Curtailments, settlements, and other | 688 | 3,233 | 58 | 151 | (351 | ) | 4,012 | 2 | (22 | ) | ||||||||||||||||||||||
Benefit obligation at end of year | 85,277 | 85,422 | 23,753 | 22,538 | 59,703 | 64,584 | 4,310 | 3,744 | ||||||||||||||||||||||||
145
U.S. Plans | Non-U.S. Plans | Non-U.S. | ||||||||||||||||||||||||||||||
Pension Benefits | Pension Benefits | U.S. Other Benefits* | Other Benefits* | |||||||||||||||||||||||||||||
2007 | 2006 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | |||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Change in plan assets | ||||||||||||||||||||||||||||||||
Fair value of plan assets at beginning of year | 101,392 | 95,250 | 11,506 | 10,063 | 16,939 | 20,282 | — | — | ||||||||||||||||||||||||
SFAS 158 measurement date adjustment | — | — | 277 | — | 110 | — | — | — | ||||||||||||||||||||||||
Actual return on plan assets | 10,073 | 13,384 | 492 | 1,280 | 1,183 | 1,834 | — | — | ||||||||||||||||||||||||
Employer contributions | 89 | 80 | 848 | 810 | 2,470 | (1,118 | ) | 147 | 133 | |||||||||||||||||||||||
Plan participants’ contributions | — | 19 | 29 | 30 | 354 | 129 | — | — | ||||||||||||||||||||||||
Benefits paid | (7,574 | ) | (7,013 | ) | (1,287 | ) | (1,049 | ) | (4,753 | ) | (4,188 | ) | (147 | ) | (133 | ) | ||||||||||||||||
Exchange rate movements | — | — | 1,507 | 435 | — | — | — | — | ||||||||||||||||||||||||
Curtailments, settlements, and other | 90 | (328 | ) | (64 | ) | (63 | ) | — | — | — | — | |||||||||||||||||||||
Fair value of plan assets at end of year | 104,070 | 101,392 | 13,308 | 11,506 | 16,303 | 16,939 | — | — | ||||||||||||||||||||||||
Funded status(a) | 18,793 | 15,970 | (10,445 | ) | (11,032 | ) | (43,400 | ) | (47,645 | ) | (4,310 | ) | (3,744 | ) | ||||||||||||||||||
Employer contributions/withdrawals in fourth quarter | — | — | — | 142 | — | (60 | ) | — | — | |||||||||||||||||||||||
Benefits paid in fourth quarter | — | — | — | — | — | 765 | — | — | ||||||||||||||||||||||||
Curtailments and settlements in fourth quarter | — | �� | — | 17 | — | — | — | — | ||||||||||||||||||||||||
Net amount recognized | $ | 18,793 | $ | 15,970 | $ | (10,445 | ) | $ | (10,873 | ) | $ | (43,400 | ) | $ | (46,940 | ) | $ | (4,310 | ) | $ | (3,744 | ) | ||||||||||
Noncurrent asset | $ | 19,984 | $ | 17,150 | $ | 191 | $ | 216 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Current liability | (85 | ) | (85 | ) | (361 | ) | (250 | ) | (168 | ) | (134 | ) | (167 | ) | (141 | ) | ||||||||||||||||
Noncurrent liability | (1,106 | ) | (1,095 | ) | (10,275 | ) | (10,839 | ) | (43,232 | ) | (46,806 | ) | (4,143 | ) | (3,603 | ) | ||||||||||||||||
$ | 18,793 | $ | 15,970 | $ | (10,445 | ) | $ | (10,873 | ) | $ | (43,400 | ) | $ | (46,940 | ) | $ | (4,310 | ) | $ | (3,744 | ) | |||||||||||
Amounts recognized in accumulated other comprehensive income consist of: | ||||||||||||||||||||||||||||||||
Net actuarial loss | $ | 10,180 | $ | 15,483 | $ | 4,981 | $ | 6,478 | $ | 16,425 | $ | 21,957 | $ | 1,418 | $ | 1,406 | ||||||||||||||||
Net prior service cost (credit) | 2,617 | 1,165 | 81 | 13 | (11,277 | ) | (12,450 | ) | (563 | ) | (501 | ) | ||||||||||||||||||||
Transition obligation | — | — | 17 | 25 | — | — | — | — | ||||||||||||||||||||||||
$ | 12,797 | $ | 16,648 | $ | 5,079 | $ | 6,516 | $ | 5,148 | $ | 9,507 | $ | 855 | $ | 905 | |||||||||||||||||
* | Table does not include extended disability plans with a total APBO of $701 million at December 31, 2007 and $866 million at December 31, 2006. |
U.S. Plans | Non-U.S. Plans | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Accumulated Benefit Obligation | $ | 85,226 | $ | 85,422 | $ | 23,179 | $ | 21,926 | ||||||||
Plans with ABO in excess of plan assets | ||||||||||||||||
ABO | $ | 1,189 | $ | 1,180 | $ | 22,390 | $ | 21,429 | ||||||||
Fair value of plan assets | $ | — | $ | — | $ | 12,351 | $ | 10,769 | ||||||||
Plans with PBO in excess of plan assets | ||||||||||||||||
PBO | $ | 1,191 | $ | 1,180 | $ | 23,380 | $ | 22,270 | ||||||||
Fair value of plan assets | $ | — | $ | — | $ | 12,941 | $ | 11,155 |
146
Non-U.S. Plans | Non-U.S. | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. Plans Pension Benefits | Pension Benefits | U.S. Other Benefits* | Other Benefits* | |||||||||||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | 2007 | 2006 | 2005 | |||||||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
Components of expense | ||||||||||||||||||||||||||||||||||||||||||||||||
Service cost | $ | 627 | $ | 727 | $ | 1,117 | $ | 486 | $ | 484 | $ | 345 | $ | 370 | $ | 551 | $ | 702 | $ | 45 | $ | 53 | $ | 50 | ||||||||||||||||||||||||
Interest cost | 4,931 | 4,965 | 4,883 | 1,143 | 967 | 965 | 3,609 | 3,929 | 4,107 | 199 | 190 | 218 | ||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (7,983 | ) | (8,167 | ) | (7,898 | ) | (984 | ) | (842 | ) | (740 | ) | (1,400 | ) | (1,593 | ) | (1,684 | ) | — | — | — | |||||||||||||||||||||||||||
Amortization of prior service cost (credit) | 2,167 | 785 | 1,164 | 32 | 78 | 102 | (1,830 | ) | (1,071 | ) | (70 | ) | (86 | ) | (82 | ) | 8 | |||||||||||||||||||||||||||||||
Amortization of transition obligation | — | — | — | 8 | 7 | 6 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Recognized net actuarial loss | 764 | 1,126 | 2,065 | 407 | 399 | 281 | 1,352 | 1,986 | 2,250 | 122 | 133 | 88 | ||||||||||||||||||||||||||||||||||||
Curtailments, settlements, and other losses (gains) | 75 | 4,260 | 115 | 156 | 139 | 114 | (213 | ) | (505 | ) | — | (17 | ) | (9 | ) | 2 | ||||||||||||||||||||||||||||||||
Divestiture of Allison(c) | (30 | ) | (17 | ) | (24 | ) | — | — | — | 211 | (15 | ) | (21 | ) | — | — | — | |||||||||||||||||||||||||||||||
Net expense | $ | 551 | $ | 3,679 | $ | 1,422 | $ | 1,248 | $ | 1,232 | $ | 1,073 | $ | 2,099 | $ | 3,282 | $ | 5,284 | $ | 263 | $ | 285 | $ | 366 | ||||||||||||||||||||||||
Weighted-average assumptions used to determine benefit obligations at December 31(a) | ||||||||||||||||||||||||||||||||||||||||||||||||
Discount rate | 6.35 | % | 5.90 | % | 5.70 | % | 5.72 | % | 4.76 | % | 4.72 | % | 6.35 | % | 5.90 | % | 5.45 | % | 5.75 | % | 5.00 | % | 5.00 | % | ||||||||||||||||||||||||
Rate of compensation increase | 5.25 | % | 5.00 | % | 4.90 | % | 3.60 | % | 3.00 | % | 3.10 | % | 3.30 | % | 4.60 | % | 4.20 | % | 4.00 | % | 4.00 | % | 4.00 | % | ||||||||||||||||||||||||
Weighted-average assumptions used to determine net expense for years ended December 31(b) | ||||||||||||||||||||||||||||||||||||||||||||||||
Discount rate | 5.97 | % | 5.70 | % | 5.60 | % | 4.97 | % | 4.72 | % | 5.61 | % | 5.90 | % | 5.45 | % | 5.75 | % | 5.00 | % | 5.00 | % | 6.00 | % | ||||||||||||||||||||||||
Expected return on plan assets | 8.50 | % | 9.00 | % | 9.00 | % | 7.85 | % | 8.40 | % | 8.50 | % | 8.40 | % | 8.80 | % | 8.80 | % | — | — | — | |||||||||||||||||||||||||||
Rate of compensation increase | 5.00 | % | 4.90 | % | 5.00 | % | 3.46 | % | 3.10 | % | 3.20 | % | 4.60 | % | 4.20 | % | 3.90 | % | 4.00 | % | 4.00 | % | 4.00 | % |
* | Table does not include extended disability plans with a total net expense of $63 million, $105 million and $79 million in 2007, 2006 and 2005, respectively (excluding curtailments), as the amounts are not material. | |
(a) | Determined as of end of year. | |
(b) | Determined as of beginning of year and updated for remeasurements. Appropriate discount rates were used during 2007 to measure the effects of curtailments and plan amendments on various plans. | |
(c) | As a result of the Allison divestiture, we recorded an adjustment to the unamortized prior service cost of our U.S. hourly and salaried defined benefit pension plans of $18 million and our U.S. hourly and salaried OPEB plans of $223 million. Those adjustments were included in the determination of the gain recognized on the sale of Allison. The net periodic pension and OPEB benefit expenses related to Allison were reported as a component of discontinued operations. |
U.S. Plans | Non-U.S. Plans | U.S. | Non-U.S. | |||||||||||||
Pension Benefits | Pension Benefits | Other Benefits | Other Benefits | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Amortization of prior service cost (credit) | $ | 841 | $ | 40 | $ | (1,861 | ) | $ | (92 | ) | ||||||
Amortization of transition obligation | — | 7 | — | — | ||||||||||||
Recognized net actuarial loss | 263 | 282 | 747 | 102 | ||||||||||||
$ | 1,104 | $ | 329 | $ | (1,114 | ) | $ | 10 | ||||||||
147
Discount Rate |
Health Care Trend Rate |
December 31, | ||||||||
Assumed Health-Care Trend Rates | 2007 | 2006 | ||||||
Initial health-care cost trend rate | 8 | .2% | 9 | .0% | ||||
Ultimate health-care cost trend rate | 5 | .0% | 5 | .0% | ||||
Number of years to ultimate trend rate | 6 | 6 |
Long-term Rate of Return on Plan Assets |
148
Plan Assets | ||||||||||||||||||||||||
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 | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
Equity securities | 26 | % | 38 | % | 62 | % | 60 | % | 53 | % | 54 | % | ||||||||||||
Debt securities | 52 | % | 43 | % | 25 | % | 31 | % | 25 | % | 28 | % | ||||||||||||
Real estate | 9 | % | 8 | % | 10 | % | 9 | % | 4 | % | 4 | % | ||||||||||||
Other | 13 | % | 11 | % | 3 | % | 0 | % | 18 | % | 14 | % | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
U.S. hourly and salaried | $ | — | $ | 2 | $ | — | ||||||
Other U.S. | $ | 89 | $ | 78 | $ | 125 | ||||||
Non-U.S. | $ | 848 | $ | 889 | $ | 708 |
149
Non-U.S. Other | ||||||||||||||||||||
Pension Benefits(a) | U.S. Other Benefits(b) | Benefits | ||||||||||||||||||
Non- | Gross Benefit | Gross Medicare | Gross Benefit | |||||||||||||||||
U.S. Plans | U.S. Plans | Payments | Part D Receipts | Payments | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
2008 | $ | 7,665 | $ | 1,357 | $ | 4,064 | $ | 219 | $ | 195 | ||||||||||
2009 | $ | 7,604 | $ | 1,375 | $ | 4,219 | $ | 238 | $ | 208 | ||||||||||
2010 | $ | 7,518 | $ | 1,414 | $ | 4,381 | $ | 260 | $ | 219 | ||||||||||
2011 | $ | 7,392 | $ | 1,451 | $ | 4,514 | $ | 280 | $ | 232 | ||||||||||
2012 | $ | 7,168 | $ | 1,481 | $ | 4,609 | $ | 300 | $ | 244 | ||||||||||
2013-2017 | $ | 34,462 | $ | 8,071 | $ | 23,920 | $ | 1,759 | $ | 1,408 |
(a) | Benefits for most U.S. pension plans and certainnon-U.S. pension plans are paid out of plan assets rather than our cash. | |
(b) | U.S. Other Benefit payments exclude any amounts that would be required under the Settlement Agreement when approved. |
Cash Flow Hedges |
150
Fair Value Hedges |
Net Investment Hedges |
151
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Beginning of year net unrealized gain (loss) on derivatives | $ | 359 | $ | 608 | ||||
Change in fair value | 140 | 515 | ||||||
Reclassification to earnings | (178 | ) | (764 | ) | ||||
End of year net unrealized gain on derivatives | $ | 321 | $ | 359 | ||||
Commitments |
2013 | ||||||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | 2012 | and after | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Minimum commitments | $ | 719 | $ | 683 | $ | 662 | $ | 565 | $ | 500 | $ | 2,731 | ||||||||||||
Sublease income | (218 | ) | (212 | ) | (201 | ) | (199 | ) | (196 | ) | (2,180 | ) | ||||||||||||
Net minimum commitments | $ | 501 | $ | 471 | $ | 461 | $ | 366 | $ | 304 | $ | 551 | ||||||||||||
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Current liabilities: | ||||||||
Other accrued liabilities | $ | 214 | $ | 141 | ||||
Other liabilities and credits: | ||||||||
Deferred revenue | $ | 532 | $ | 547 |
Guarantees |
152
Environmental |
153
Asbestos Claims |
(1) | A third-party forecast of the projected incidence of malignant asbestos related disease likely to occur in the general population of individuals occupationally exposed to asbestos; | |
(2) | Data concerning claims filed against us and resolved, amounts paid, and the nature of the asbestos related disease or condition asserted during approximately the last four years (Asbestos Claims Experience); | |
(3) | The estimated rate of asbestos related claims likely to be asserted against us in the future based on our Asbestos Claims Experience and the projected incidence of asbestos related disease in the general population of individuals occupationally exposed to asbestos; | |
(4) | The estimated rate of dismissal of claims by disease type based on our Asbestos Claims Experience; and | |
(5) | The estimated indemnity value of the projected claims based on our Asbestos Claims Experience, adjusted for inflation. |
154
Contingent Matters — Litigation |
Delphi Corporation |
155
• | reimburse Delphi for its costs to provide OPEB to certain of Delphi’s hourly retirees from and after January 1, 2007 through the date that Delphi ceases to provide such benefits; | |
• | reimburse Delphi for the “normal cost” of credited service in Delphi’s pension plan between January 1, 2007 and the date its pension plans are frozen; | |
• | assume $1.5 billion of net pension obligations of Delphi and Delphi providing us a $1.5 billion note receivable; | |
• | reimburse Delphi for all retirement incentives and half of the buy-out payments made pursuant to the various attrition program provisions and to reimburse certain U.S. hourly buydown payments made to hourly employees of Delphi; | |
• | award future product programs to Delphi and provide Delphi with ongoing preferential sourcing for other product programs, with Delphi re-pricing existing and awarded business; | |
• | reimburse certain U.S. hourly labor costs incurred to produce systems, components and parts for us from October 1, 2006 through September 14, 2015 at certain U.S. facilities owned or to be divested by Delphi (Labor Cost Subsidy); | |
• | reimburse Delphi’s cash flow deficiency attributable to production at certain U.S. facilities that continue to produce systems, components and parts for us until the facilities are either closed or sold by Delphi (Production Cash Burn Support); and | |
• | guarantee a minimum recovery of the net working capital that Delphi has invested in certain businesses held for sale. |
156
Benefit Guarantees Related to Divested Plants |
157
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
U.S. loss | $ | (9,355 | ) | $ | (5,917 | ) | $ | (16,491 | ) | |||
Non-U.S. income (loss) | 3,102 | 259 | (738 | ) | ||||||||
Total | $ | (6,253 | ) | $ | (5,658 | ) | $ | (17,229 | ) | |||
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Current income tax expense (benefit): | ||||||||||||
U.S. federal | $ | (131 | ) | $ | — | $ | (147 | ) | ||||
Non-U.S. | 295 | 1,099 | 834 | |||||||||
U.S. state and local | 21 | 21 | (2 | ) | ||||||||
Total current | 185 | 1,120 | 685 | |||||||||
Deferred income tax expense (benefit): | ||||||||||||
U.S. federal | 32,357 | (2,719 | ) | (7,025 | ) | |||||||
Non-U.S. | 5,064 | (1,201 | ) | (656 | ) | |||||||
U.S. state and local | (444 | ) | (246 | ) | 950 | |||||||
Total deferred | 36,977 | (4,166 | ) | (6,731 | ) | |||||||
Total income tax expense (benefit) | $ | 37,162 | $ | (3,046 | ) | $ | (6,046 | ) | ||||
158
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Tax at U.S. federal statutory income tax rate | $ | (2,189 | ) | $ | (1,978 | ) | $ | (6,031 | ) | |||
State and local tax expense | (275 | ) | (147 | ) | (616 | ) | ||||||
Foreign income taxed at rates other than 35% | 149 | (499 | ) | (775 | ) | |||||||
Taxes on unremitted earnings of subsidiaries | (135 | ) | (124 | ) | (100 | ) | ||||||
Other tax credits | (86 | ) | (115 | ) | (69 | ) | ||||||
Settlement of prior year tax matters | — | (160 | ) | (515 | ) | |||||||
Change in valuation allowance (a) | 38,892 | 239 | 2,780 | |||||||||
Change in statutory tax rates (b) | 885 | (27 | ) | — | ||||||||
Tax effects of foreign reorganizations | 269 | 96 | (84 | ) | ||||||||
Medicare prescription drug benefit | (199 | ) | (348 | ) | (324 | ) | ||||||
Other adjustments | (149 | ) | 17 | (312 | ) | |||||||
Total income tax expense (benefit) | $ | 37,162 | $ | (3,046 | ) | $ | (6,046 | ) | ||||
(a) | See discussion related to valuation allowances on certain deferred tax assets below. | |
(b) | Changes in the tax laws of two jurisdictions in 2007 had a significant impact on our consolidated financial statements as follows: |
• | In December 2007, the Canadian government enacted legislation to reduce its combined statutory corporate tax rates by 3.5% in addition to a .5% rate reduction enacted in June 2007. The combined 4% reduction will be phased in gradually over a period of five years beginning in 2008. The impact of this change was a reduction in the carrying amount of our Canadian deferred tax assets of $376 million as of December 31, 2007. The valuation allowance discussed below has been adjusted to reflect this change in statutory rates. | |
• | In July 2007, the German Parliament passed legislation to lower its statutory corporate tax rate. The President signed the legislation into law on August 14, 2007. This new law reduces by approximately 9%, effective as of January 1, 2008, the combined German business tax rate, which consists of the corporate tax rate, the local trade tax rate, and the solidarity levy tax rate. The impact of this change was a reduction in the carrying amount of our German deferred tax assets of $475 million, which is included in the charge related to the valuation allowance discussed below. |
159
December 31, | ||||||||||||||||
2007 | 2006 | |||||||||||||||
Deferred Tax | Deferred Tax | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Postretirement benefits other than pensions | $ | 17,726 | $ | — | $ | 18,721 | $ | — | ||||||||
Pension and other employee benefit plans | 2,582 | 6,618 | 5,044 | 6,137 | ||||||||||||
Warranties, dealer and customer allowances, claims and discounts | 4,148 | 54 | 4,070 | 47 | ||||||||||||
Depreciation and amortization | 7,108 | 4,536 | 6,098 | 2,008 | ||||||||||||
Tax carryforwards | 14,148 | — | 13,293 | — | ||||||||||||
Lease transactions | — | 136 | — | 199 | ||||||||||||
Miscellaneous U.S. | 7,799 | 1,556 | 8,240 | 2,194 | ||||||||||||
Miscellaneousnon-U.S. | 2,598 | 37 | 2,992 | 40 | ||||||||||||
Subtotal | 56,109 | 12,937 | 58,458 | 10,625 | ||||||||||||
Valuation allowances | (42,489 | ) | — | (6,523 | ) | — | ||||||||||
Total deferred taxes | 13,620 | $ | 12,937 | 51,935 | $ | 10,625 | ||||||||||
Net deferred tax assets | $ | 683 | $ | 41,310 | ||||||||||||
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Current deferred tax assets | $ | 493 | $ | 10,293 | ||||
Current deferred tax liabilities | (116 | ) | (9 | ) | ||||
Non-current deferred tax assets | 1,340 | 31,751 | ||||||
Non-current deferred tax liabilities | (1,034 | ) | (725 | ) | ||||
Total | $ | 683 | $ | 41,310 | ||||
Expiration Dates | Amounts | |||||||
(Dollars in millions) | ||||||||
U.S. federal and state net operating loss carryforwards | 2024-2027 | $ | 5,297 | |||||
Non-U.S. net operating loss carryforwards | Indefinite | 2,406 | ||||||
Non-U.S. net operating loss carryforwards | 2008-2026 | 1,648 | ||||||
U.S. alternative minimum tax credit | Indefinite | 694 | ||||||
U.S. general business credits(a) | 2008-2027 | 1,514 | ||||||
U.S. foreign tax credits | 2010-2017 | 2,589 | ||||||
Total | $ | 14,148 | ||||||
(a) | The general business credits principally consist of research and experimentation credits. |
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• | Future reversals of existing taxable temporary differences; | |
• | Future taxable income exclusive of reversing temporary differences and carryforwards; | |
• | Taxable income in prior carryback years; and | |
• | Tax-planning strategies. |
December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Balance at January 1 | $ | 6,523 | $ | 6,284 | $ | 3,504 | ||||||
Additions (Reversals): | ||||||||||||
U.S. | 31,353 | 250 | 1,425 | |||||||||
Canada | 2,435 | — | — | |||||||||
Germany | 1,927 | — | — | |||||||||
Poland | 94 | 6 | 538 | |||||||||
Sweden | 91 | 73 | 109 | |||||||||
Spain | 31 | — | — | |||||||||
Brazil | 16 | (48 | ) | 617 | ||||||||
South Korea | — | (211 | ) | 16 | ||||||||
Other | 19 | 169 | 75 | |||||||||
Balance at December 31 | $ | 42,489 | $ | 6,523 | $ | 6,284 | ||||||
• | The possibility for continued or increasing price competition in the highly competitive U.S. market. This was seen in the external market in the third quarter of 2007 when a competitor introduced its new fullsize trucks and offered customer incentives to gain market share. Accordingly, we increased customer incentives on our recently launched fullsize trucks, which were not previously anticipated; | |
• | Continued high fuel prices and the possible effect that may have on consumer preferences related to our most profitable products, fullsize trucks and utility vehicles; |
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• | Uncertainty over the effect on our cost structure from more stringent U.S. fuel economy and global emissions standards which may require us to sell a significant volume of alternative fuel vehicles across our portfolio; | |
• | Uncertainty as to the future operating results of GMAC’s Residential Capital, LLC mortgage business, and | |
• | Acceleration of tax deductions for OPEB liabilities as compared to prior expectations due to changes associated with the Settlement Agreement. |
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Balance at January 1, 2007 | $ | 2,717 | ||
Additions to tax positions recorded during the current year | 274 | |||
Additions to tax positions recorded during prior years | 454 | |||
Reductions to tax positions recorded during prior years | (602 | ) | ||
Reductions in tax positions due to lapse of statutory limitations | (75 | ) | ||
Other | (14 | ) | ||
Balance at December 31, 2007 | $ | 2,754 | ||
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December 31, | ||||||||||||||||
2007 | 2006 | |||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Automotive | ||||||||||||||||
Assets | ||||||||||||||||
Derivative assets | $ | 1,567 | $ | 1,567 | $ | 2,080 | $ | 2,080 | ||||||||
Liabilities | ||||||||||||||||
Long-term debt (a) | $ | 33,384 | $ | 25,940 | $ | 33,067 | $ | 28,877 | ||||||||
Derivative liabilities | $ | 851 | $ | 851 | $ | 916 | $ | 916 | ||||||||
Financing and Insurance Operations | ||||||||||||||||
Assets | ||||||||||||||||
Derivative assets | $ | 2 | $ | 2 | $ | 35 | $ | 35 | ||||||||
Other assets (b) | $ | 1,046 | $ | 933 | $ | 1,601 | $ | 1,601 | ||||||||
Liabilities | ||||||||||||||||
Debt (a) | $ | 4,908 | $ | 4,918 | $ | 9,438 | $ | 9,438 | ||||||||
Derivative liabilities | $ | 6 | $ | 6 | $ | 2 | $ | 2 |
(a) | 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 us 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. | |
(b) | 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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2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Balance at January 1 | $ | 1,269 | $ | 2,012 | $ | 237 | ||||||
Additions | 364 | 2,212 | 1,891 | |||||||||
Interest accretion | 21 | 31 | 12 | |||||||||
Payments | (792 | ) | (1,834 | ) | (91 | ) | ||||||
Adjustments | (4 | ) | (1,152 | ) | (37 | ) | ||||||
Balance at December 31 | $ | 858 | $ | 1,269 | $ | 2,012 | ||||||
Note 21. | Restructuring and Other Initiatives |
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Year Ended December 31, | ||||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Automotive Operations: | ||||||||||||||||||||
GMNA | $ | 9 | $ | 115 | $ | 222 | ||||||||||||||
GME | 579 | 437 | 1,068 | |||||||||||||||||
GMLAAM | 18 | 43 | — | |||||||||||||||||
GMAP | 49 | 16 | 65 | |||||||||||||||||
Total Automotive Operations | 655 | 611 | 1,355 | |||||||||||||||||
Financing and Insurance Operations | — | — | — | |||||||||||||||||
Corporate and Other | — | — | 13 | |||||||||||||||||
Total restructuring charges | $ | 655 | $ | 611 | $ | 1,368 | ||||||||||||||
Corporate and | ||||||||||||||||||||||||
GMNA | GME | GMLAAM | GMAP | Other | Total | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Separation costs | $ | 9 | $ | 579 | $ | 18 | $ | 49 | $ | — | $ | 655 | ||||||||||||
Contract termination costs | — | — | — | — | — | — | ||||||||||||||||||
Total restructuring charges | $ | 9 | $ | 579 | $ | 18 | $ | 49 | $ | — | $ | 655 | ||||||||||||
• | Charges of $162 million, primarily related to early retirement programs, along with additional minor separations under other current programs in Germany. Approximately 4,600 employees will leave under early retirement programs in Germany through 2013. The total remaining cost for the early retirements will be recognized over the remaining service period of the employees. | |
• | During the second quarter of 2007, we announced additional separation programs at the Antwerp, Belgium facility. These programs impact 1,900 employees, who will leave through July 2008, and have total estimated costs of $430 million. Of this amount, $353 million was recorded in 2007 in connection with these separation programs. The remaining cost of the Antwerp, Belgium program will be recognized over the remaining service period of the employees through July 2008. | |
• | The remaining $64 million in separation charges relates to initiatives announced in 2006. These include separations in Sweden and the United Kingdom and the closure of our Portugal assembly plant. |
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Corporate and | ||||||||||||||||||||||||
GMNA | GME | GMLAAM | GMAP | Other | Total | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Separation costs | $ | 115 | $ | 408 | $ | 43 | $ | 16 | $ | — | $ | 582 | ||||||||||||
Contract termination costs | — | 29 | — | — | — | 29 | ||||||||||||||||||
Total restructuring charges | $ | 115 | $ | 437 | $ | 43 | $ | 16 | $ | — | $ | 611 | ||||||||||||
• | We announced our European operations restructuring initiative in the fourth quarter of 2004. The European restructuring initiative targeted a total reduction of 12,000 employees from 2005 to 2007 through separation programs, early retirements, and selected outsourcing initiatives. GME recorded charges of $184 million in 2006 for activities related to the European restructuring initiative announced in 2004. | |
• | In the third quarter of 2006, we announced the closure of our Azambuja, Portugal assembly plant and the transfer of its production to a lower cost facility in Zaragoza, Spain. The Portugal plant ceased production in December 2006, resulting in a total separation of 1,100 employees. GME recorded separation charges of $53 million and contract cancellation charges of $26 million for this closure. | |
• | In May 2006, we announced the reduction of one shift at the Ellesmere Port plant in the United Kingdom in order to reduce costs and improve competitiveness. This shift reduction was achieved primarily through the offering of a voluntary separation package and reduced the work force in the U.K. by 1,200 employees by the end of 2006. GME recorded separation charges of $131 million and contract cancellation charges of $3 million during 2006 for the shift reduction at Ellesmere Port. | |
• | New separation programs for Belgium, the United Kingdom and Sweden were announced in the fourth quarter of 2006. GME recorded $32 million in restructuring charges for these programs related to the separation of 280 employees, primarily in Sweden. In addition, GME also recorded a charge of $8 million for an early retirement program announced in the fourth quarter of 2006 in Germany. We recognize the cost over the remaining service period of each employee. |
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Corporate and | ||||||||||||||||||||||||
GMNA | GME | GMLAAM | GMAP | Other | Total | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Separation costs | $ | 222 | $ | 1,009 | $ | — | $ | 65 | $ | 13 | $ | 1,309 | ||||||||||||
Contract termination costs | — | 59 | — | — | — | 59 | ||||||||||||||||||
Total restructuring charges | $ | 222 | $ | 1,068 | $ | — | $ | 65 | $ | 13 | $ | 1,368 | ||||||||||||
Year Ended December 31, | ||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||
(Dollars in millions) | ||||||||||||||||
Goodwill impairments | $ | — | $ | 828 | $ | 712 | ||||||||||
Long-lived asset impairments related to restructuring initiatives | — | 89 | 700 | |||||||||||||
Other long-lived asset impairments | 259 | 596 | 1,353 | |||||||||||||
Total | $ | 259 | $ | 1,513 | $ | 2,765 | ||||||||||
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Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Loss on sale of 51% interest in GMAC (Note 3) | $ | — | $ | 2,910 | $ | — | ||||||
FHI impairment loss (Note 8) | — | — | 812 | |||||||||
Delphi contingent exposure (Note 17) | 1,547 | 500 | 5,500 | |||||||||
Pension benefits for certain current and future retirees of Delphi (Note 15) | 552 | — | — | |||||||||
Goodwill impairment — GMAC (Note 10) | — | 828 | 712 | |||||||||
Total other expenses | $ | 2,099 | $ | 4,238 | $ | 7,024 | ||||||
Common Stock |
Preferred Stock |
Accumulated Other Comprehensive Income (Loss) |
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Foreign currency translation adjustments | $ | (965 | ) | $ | (1,965 | ) | $ | (2,140 | ) | |||
Net unrealized gain on derivatives | 321 | 359 | 608 | |||||||||
Net unrealized gain on securities | 265 | 282 | 786 | |||||||||
Defined benefit plans | (13,585 | ) | (20,802 | ) | — | |||||||
Minimum pension liability adjustment | — | — | (3,789 | ) | ||||||||
Accumulated other comprehensive income (loss) | $ | (13,964 | ) | $ | (22,126 | ) | $ | (4,535 | ) | |||
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Other Comprehensive Income |
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||
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 | $ | 769 | $ | (231 | ) | $ | 1,000 | $ | 370 | $ | 195 | $ | 175 | $ | (975 | ) | $ | (46 | ) | $ | (929 | ) | ||||||||||||||
Unrealized gain on securities: | ||||||||||||||||||||||||||||||||||||
Unrealized holding gains (losses) | (23 | ) | (6 | ) | (17 | ) | 196 | 69 | 127 | 146 | 51 | 95 | ||||||||||||||||||||||||
Reclassification adjustment | — | — | — | (971 | ) | (340 | ) | (631 | ) | (249 | ) | (87 | ) | (162 | ) | |||||||||||||||||||||
Net unrealized gain (loss) | (23 | ) | (6 | ) | (17 | ) | (775 | ) | (271 | ) | (504 | ) | (103 | ) | (36 | ) | (67 | ) | ||||||||||||||||||
Defined benefit plans: | ||||||||||||||||||||||||||||||||||||
Prior service cost from plan amendments | (2,813 | ) | (700 | ) | (2,113 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Less: amortization of prior service cost included in net periodic benefit cost | (5 | ) | 52 | (57 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||
Net prior service cost | (2,818 | ) | (648 | ) | (2,170 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Actuarial gains (losses) from plan measurements | 8,910 | 2,066 | 6,844 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Less: amortization of actuarial loss included in net periodic benefit cost | 1,723 | 331 | 1,392 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net actuarial amounts | 10,633 | 2,397 | 8,236 | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net transition asset (obligation) from plan initiations | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Less: amortization of transition asset / obligation included in net periodic benefit cost | 2 | 4 | (2 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||
Net transition amounts | 2 | 4 | (2 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||
Defined benefit plans, net | 7,817 | 1,753 | 6,064 | (103 | ) | (36 | ) | (67 | ) | (1,166 | ) | (408 | ) | (758 | ) | |||||||||||||||||||||
Net unrealized gain (loss) on derivatives | (74 | ) | (36 | ) | (38 | ) | (383 | ) | (134 | ) | (249 | ) | 51 | 18 | 33 | |||||||||||||||||||||
Other comprehensive income (loss) | $ | 8,489 | $ | 1,480 | $ | 7,009 | $ | (891 | ) | $ | (246 | ) | $ | (645 | ) | $ | (2,193 | ) | $ | (472 | ) | $ | (1,721 | ) | ||||||||||||
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Stock Options |
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2007 | 2006 | 2005 | ||||||||||
GMSIP | GMSIP | GMSIP | ||||||||||
Interest rate | 4 | .98% | 4 | .66% | 3 | .80% | ||||||
Expected life (years) | 6 | .0 | 6 | .0 | 6 | .0 | ||||||
Expected volatility | 35 | .80% | 47 | .90% | 32 | .50% | ||||||
Dividend yield | 3 | .43% | 4 | .71% | 5 | .50% |
2007 | 2006 | 2005 | ||||||||||
Interest rate | 4 | .98% | 4 | .63% | 3 | .74% | ||||||
Expected life (years) | 6 | .0 | 6 | .0 | 6 | .0 | ||||||
Expected volatility | 35 | .80% | 48 | .40% | 32 | .40% | ||||||
Dividend yield | 3 | .44% | 4 | .78% | 5 | .50% |
2007 GMLTIP (formerly GMSIP) | ||||||||||||||||
Common Stock | ||||||||||||||||
Weighted | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Shares Under | Exercise | Contractual | Intrinsic | |||||||||||||
Option | Price | Term | Value | |||||||||||||
Options outstanding at January 1, 2007 | 81,655,278 | $ | 52.41 | |||||||||||||
Granted | 2,786,920 | $ | 29.12 | |||||||||||||
Exercised | (252,570 | ) | $ | 25.36 | ||||||||||||
Forfeited or expired | (5,723,633 | ) | $ | 45.43 | ||||||||||||
Options outstanding at December 31, 2007 | 78,465,995 | $ | 52.09 | 4.0 | $ | 9,769,953 | ||||||||||
Options expected to vest at December 31, 2007 | 6,534,957 | $ | 29.53 | 8.2 | $ | 6,566,701 | ||||||||||
Options vested and exercisable at December 31, 2007 | 71,513,914 | $ | 54.28 | 3.6 | $ | — | ||||||||||
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GMSSOP | ||||||||||||||||
Common Stock | ||||||||||||||||
Weighted | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Shares Under | Exercise | Contractual | Intrinsic | |||||||||||||
Option | Price | Term | Value | |||||||||||||
Options outstanding at January 1, 2007 | 26,583,895 | $ | 55.23 | |||||||||||||
Granted | — | — | ||||||||||||||
Exercised | (17,771 | ) | $ | 40.05 | ||||||||||||
Forfeited or expired | (1,776,176 | ) | $ | 60.41 | ||||||||||||
Options outstanding at December 31, 2007 | 24,789,948 | $ | 54.87 | 3.3 | — | |||||||||||
Options vested and exercisable at December 31, 2007 | 24,789,948 | $ | 54.87 | 3.3 | — | |||||||||||
Weighted- | ||||||||
Average | ||||||||
Grant-Date | ||||||||
Shares | Fair Value | |||||||
Nonvested at January 1, 2007 | 10,093,967 | $ | 8.57 | |||||
Granted | 2,786,920 | 8.76 | ||||||
Vested | (5,799,594 | ) | 9.58 | |||||
Forfeited | (129,212 | ) | 7.91 | |||||
Nonvested at December 31, 2007 | 6,952,081 | $ | 7.82 | |||||
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Weighted-Average | ||||||||
Grant Date | ||||||||
Shares | Fair Value | |||||||
(In millions) | ||||||||
2005 | 1.8 | $ | 36.37 | |||||
2006 | 2.2 | $ | 24.81 | |||||
2007 | 1.7 | $ | 33.70 | |||||
Total outstanding at December 31, 2007 | 5.7 | |||||||
2007 | 2006 | 2005 | ||||||||||
Expected volatility | 47 | .66% | 48 | .38% | 45 | .96% | ||||||
Expected dividends | N/A | N/A | N/A | |||||||||
Expected term (years) | 2 | .0 | 1 | .0 | — | |||||||
Risk-free interest rate | 3 | .83% | 4 | .03% | 4 | .54% |
175
176
177
December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Assets: | ||||||||
Accounts and notes receivable (a) | $ | 1,285 | $ | 678 | ||||
Other assets (b) | $ | 30 | $ | 18 | ||||
Liabilities: | ||||||||
Accounts payable (c) | $ | 548 | $ | 694 | ||||
Short-term borrowings and current portion of long-term debt (d)(e) | $ | 2,802 | $ | 3,175 | ||||
Accrued expenses (f) | $ | 50 | $ | 1,051 | ||||
Long-term debt (g) | $ | 119 | $ | 445 |
(a) | Represents wholesale settlements due from GMAC, as well as amounts owed by GMAC with respect to the Equipment on operating leases transferred to us, and the exclusivity fee and royalty arrangement as discussed above. | |
(b) | Primarily represents distributions due from GMAC on our Preferred Membership Interests. | |
(c) | Represents amounts accrued for interest rate support, capitalized cost reduction, residual support and lease pull-ahead programs and the risk sharing arrangement. | |
(d) | Represents wholesale financing, sales of receivable transactions and the short-term portion of term loans provided to certain dealerships wholly-owned by us or in which we have an equity interest. In addition, it includes borrowing arrangements with Adam Opel and arrangements related to GMAC’s funding of our company-owned vehicles, rental car vehicles awaiting sale at auction and funding of the sale of our vehicles in which we retain title while the vehicles are consigned to GMAC or dealers, primarily in the United Kingdom. Our financing remains outstanding until the title is transferred to the dealers. This amount also includes the short- |
178
term portion of a note provided to our wholly-owned subsidiary holding debt related to the Equipment on operating leases transferred to us from GMAC. | ||
(e) | At December 31, 2006, this amount included a note related to the overpayment of $317 million of income taxes by GMAC. These taxes were refunded to GMAC during December 2007. | |
(f) | Primarily represents interest accrued on the transactions in (d) above. At December 31, 2006, this amount also included the $1 billion capital contribution that we owed GMAC to restore its adjusted tangible equity balance to the contractually required amount due to the decrease in adjusted tangible equity balance of GMAC as of November 30 2006. | |
(g) | Primarily represents the long-term portion of term loans and a note payable with respect to the Equipment on operating leases transferred to us mentioned in (d) above. |
Period Ended December 31, | ||||||||
2007 | 2006 | |||||||
(Dollars in millions) | ||||||||
Net sales and revenues (a) | $ | (4,323 | ) | $ | (63 | ) | ||
Cost of sales and other expenses (b) | $ | 590 | $ | 55 | ||||
Automotive interest income and other non-operating income (c) | $ | 433 | $ | 20 | ||||
Interest expense (d) | $ | 229 | $ | 22 | ||||
Servicing expense (e) | $ | 167 | $ | 18 | ||||
Derivatives (f) | $ | 19 | $ | 6 |
(a) | Primarily represents the reduction in net sales and revenues for marketing incentives on vehicles which are sold to customers or dealers and financed by GMAC. This includes the estimated 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. This amount is offset by net sales for vehicles sold to GMAC for employee and governmental lease programs and third party resale purposes. | |
(b) | Primarily represents cost of sales on the sale of vehicles to GMAC for employee and governmental lease programs and third party resale purposes. Also includes miscellaneous expenses on services performed for us by GMAC. | |
(c) | Represents income on our Preferred Membership Interests in GMAC, exclusivity and royalty fee income and reimbursements by GMAC for certain services we provided. Included in this amount is rental income related to GMAC’s primary executive and administrative offices located in the Renaissance Center in Detroit, Michigan. The lease agreement expires on November 30, 2016. | |
(d) | Represents interest incurred on term loans, notes payable and wholesale settlements. | |
(e) | Represents servicing fees paid to GMAC on the automotive leases we retained. | |
(f) | Represents gains recognized in connection with a derivative transaction entered into with GMAC as the counterparty. |
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Note 28: | Supplementary Quarterly Financial Information (Unaudited) |
Quarters | ||||||||||||||||
1st | 2nd | 3rd | 4th | |||||||||||||
(Dollars in millions, except per share amounts) | ||||||||||||||||
2007 | ||||||||||||||||
Net sales and revenue | $ | 43,387 | $ | 46,844 | $ | 43,806 | $ | 47,085 | ||||||||
Income (loss) from continuing operations | $ | (42 | ) | $ | 784 | $ | (42,512 | ) | $ | (1,527 | ) | |||||
Income from discontinued operations | $ | 104 | $ | 107 | $ | 3,549 | $ | 805 | ||||||||
Net income (loss) | $ | 62 | $ | 891 | $ | (38,963 | ) | $ | (722 | ) | ||||||
Basic earnings (loss) per share | ||||||||||||||||
Continuing operations | $ | (0.07 | ) | $ | 1.38 | $ | (75.12 | ) | $ | (2.70 | ) | |||||
Discontinued operations | 0.18 | 0.19 | 6.27 | 1.42 | ||||||||||||
Total | $ | 0.11 | $ | 1.57 | $ | (68.85 | ) | $ | (1.28 | ) | ||||||
Diluted earnings (loss) per share | ||||||||||||||||
Continuing operations | $ | (0.07 | ) | $ | 1.37 | $ | (75.12 | ) | $ | (2.70 | ) | |||||
Discontinued operations | 0.18 | 0.19 | 6.27 | 1.42 | ||||||||||||
Total | $ | 0.11 | $ | 1.56 | $ | (68.85 | ) | $ | (1.28 | ) | ||||||
2006 | ||||||||||||||||
Total net sales and revenue | $ | 51,930 | $ | 54,018 | $ | 48,850 | $ | 50,803 | ||||||||
Income (loss) from continuing operations | $ | 493 | $ | (3,494 | ) | $ | (277 | ) | $ | 855 | ||||||
Income from discontinued operations | $ | 109 | $ | 111 | $ | 130 | $ | 95 | ||||||||
Net income (loss) | $ | 602 | $ | (3,383 | ) | $ | (147 | ) | $ | 950 | ||||||
Basic earnings (loss) per share | ||||||||||||||||
Continuing operations | $ | 0.87 | $ | (6.18 | ) | $ | (0.49 | ) | $ | 1.51 | ||||||
Discontinued operations | 0.19 | 0.20 | 0.23 | 0.17 | ||||||||||||
Total | $ | 1.06 | $ | (5.98 | ) | $ | (0.26 | ) | $ | 1.68 | ||||||
Diluted earnings (loss) per share | ||||||||||||||||
Continuing operations | $ | 0.87 | $ | (6.18 | ) | $ | (0.49 | ) | $ | 1.50 | ||||||
Discontinued operations | 0.19 | 0.20 | 0.23 | 0.17 | ||||||||||||
Total | $ | 1.06 | $ | (5.98 | ) | $ | (0.26 | ) | $ | 1.67 | ||||||
• | Charges of $39 billion related to establishing valuation allowances against our net deferred tax assets in the U.S., Canada and Germany. |
• | Expenses of $622 million related to amendment of the GM-Delphi Settlement Agreements, support of Delphi’s disposition of businesses and retiree healthcare and other expenses. | |
• | Expenses of $552 million related to pension benefit increases pursuant to the 2007 National Agreement. | |
• | Income tax expense on the sale of Allison, net of purchase price and other adjustments, in the amount of $805 million was reallocated between discontinued operations, continuing operations and Other comprehensive income. |
180
• | Charges of $6.5 billion related to the UAW Special Attrition program. |
• | Other income of $270 million resulting from the sale of our providing ground in Mesa, Arizona. | |
• | Adjustments of $1.1 billion to previously recorded estimates relating to the sale of GMAC. |
Note 29. | Segment Reporting |
181
Total | ||||||||||||||||||||||||||||||||||||||||||||||||
GM | Auto | Total | Corporate | Excluding | Other | Total | ||||||||||||||||||||||||||||||||||||||||||
GMNA | GME | LAAM | GMAP | Eliminations | GMA | & Other(a) | FIO | GMAC(c) | Financing(b) | FIO | Total | |||||||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
As of and for the year ended December 31, 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||
Automotive sales | ||||||||||||||||||||||||||||||||||||||||||||||||
External customers | $ | 109,024 | $ | 35,481 | $ | 18,326 | $ | 15,368 | $ | — | $ | 178,199 | $ | — | $ | 178,199 | $ | — | $ | — | $ | — | $ | 178,199 | ||||||||||||||||||||||||
Inter-segment | 3,424 | 1,916 | 568 | 5,635 | (11,543 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Total automotive sales | 112,448 | 37,397 | 18,894 | 21,003 | (11,543 | ) | 178,199 | — | 178,199 | — | — | — | 178,199 | |||||||||||||||||||||||||||||||||||
Financial services and insurance revenues | — | — | — | — | — | — | — | — | — | 2,923 | 2,923 | 2,923 | ||||||||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 112,448 | $ | 37,397 | $ | 18,894 | $ | 21,003 | $ | (11,543 | ) | $ | 178,199 | $ | — | $ | 178,199 | $ | — | $ | 2,923 | $ | 2,923 | $ | 181,122 | |||||||||||||||||||||||
Depreciation, amortization and impairment | $ | 5,612 | $ | 1,679 | $ | 302 | $ | 576 | $ | 48 | $ | 8,217 | $ | 37 | $ | 8,254 | $ | — | $ | 1,259 | $ | 1,259 | $ | 9,513 | ||||||||||||||||||||||||
Equity in loss of GMAC | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (1,245 | ) | $ | — | $ | (1,245 | ) | $ | (1,245 | ) | |||||||||||||||||||||
Interest income | $ | 1,174 | $ | 694 | $ | 164 | $ | 163 | $ | 2 | $ | 2,197 | $ | (969 | ) | $ | 1,228 | $ | — | $ | 88 | $ | 88 | $ | 1,316 | |||||||||||||||||||||||
Interest expense | $ | 2,936 | $ | 727 | $ | (4 | ) | $ | 236 | $ | 10 | $ | 3,905 | $ | (1,003 | ) | $ | 2,902 | $ | — | $ | 405 | $ | 405 | $ | 3,307 | ||||||||||||||||||||||
Income (loss) from continuing operations before income taxes, equity income, minority interests and cumulative effect of a change in accounting principle | $ | (3,290 | ) | $ | (541 | ) | $ | 1,349 | $ | 557 | $ | (59 | ) | $ | (1,984 | ) | $ | (3,619 | ) | $ | (5,603 | ) | $ | (1,147 | ) | $ | 497 | $ | (650 | ) | $ | (6,253 | ) | |||||||||||||||
Equity income (loss), net of tax | 22 | 44 | 31 | 425 | — | 522 | 2 | 524 | — | — | — | 524 | ||||||||||||||||||||||||||||||||||||
Minority interests, net of tax | (46 | ) | (27 | ) | (32 | ) | (301 | ) | — | (406 | ) | 12 | (394 | ) | — | (12 | ) | (12 | ) | (406 | ) | |||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | (3,314 | ) | $ | (524 | ) | $ | 1,348 | $ | 681 | $ | (59 | ) | $ | (1,868 | ) | $ | (3,605 | ) | $ | (5,473 | ) | $ | (1,147 | ) | $ | 485 | $ | (662 | ) | $ | (6,135 | ) | |||||||||||||||
Income from discontinued operations, net of tax | $ | 256 | $ | — | $ | — | $ | — | $ | — | $ | 256 | $ | — | $ | 256 | $ | — | $ | — | $ | — | $ | 256 | ||||||||||||||||||||||||
Gain on sale of discontinued operations, net of tax | $ | 4,309 | $ | — | $ | — | $ | — | $ | — | $ | 4,309 | $ | — | $ | 4,309 | $ | — | $ | — | $ | — | $ | 4,309 | ||||||||||||||||||||||||
Investments in nonconsolidated affiliates | $ | 269 | $ | 476 | $ | 57 | $ | 1,081 | $ | — | $ | 1,883 | $ | 36 | $ | 1,919 | $ | 7,079 | $ | — | $ | 7,079 | $ | 8,998 | ||||||||||||||||||||||||
Total assets | $ | 95,433 | $ | 25,201 | $ | 7,733 | $ | 15,567 | $ | (11,313 | ) | $ | 132,621 | $ | (727 | ) | $ | 131,894 | $ | 12,339 | $ | 4,650 | $ | 16,989 | $ | 148,883 | ||||||||||||||||||||||
Goodwill | $ | 173 | $ | 563 | $ | — | $ | — | $ | — | $ | 736 | $ | — | $ | 736 | $ | — | $ | — | $ | — | $ | 736 | ||||||||||||||||||||||||
Expenditures for property | $ | 4,988 | $ | 1,311 | $ | 220 | $ | 899 | $ | 41 | $ | 7,459 | $ | 79 | $ | 7,538 | $ | — | $ | 4 | $ | 4 | $ | 7,542 |
182
Total | ||||||||||||||||||||||||||||||||||||||||||||||||
GM | Auto | Total | Corporate | Excluding | Other | Total | ||||||||||||||||||||||||||||||||||||||||||
GMNA | GME | LAAM | GMAP | Eliminations | GMA | & Other(a) | FIO | GMAC(c) | Financing(b) | FIO | Total | |||||||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
As of and for the year ended December 31, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||
Automotive sales | ||||||||||||||||||||||||||||||||||||||||||||||||
External customers | $ | 113,976 | $ | 31,490 | $ | 14,024 | $ | 11,945 | $ | — | $ | 171,435 | $ | (256 | ) | $ | 171,179 | $ | — | $ | — | $ | — | $ | 171,179 | |||||||||||||||||||||||
Inter-segment | 2,677 | 1,788 | 603 | 3,587 | (8,655 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Total automotive sales | 116,653 | 33,278 | 14,627 | 15,532 | (8,655 | ) | 171,435 | (256 | ) | 171,179 | — | — | — | 171,179 | ||||||||||||||||||||||||||||||||||
Financial services and insurance revenues | — | — | — | — | — | — | — | — | 33,629 | 793 | 34,422 | 34,422 | ||||||||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 116,653 | $ | 33,278 | $ | 14,627 | $ | 15,532 | $ | (8,655 | ) | $ | 171,435 | $ | (256 | ) | $ | 171,179 | $ | 33,629 | $ | 793 | $ | 34,422 | $ | 205,601 | ||||||||||||||||||||||
Depreciation, amortization and impairment | $ | 5,691 | $ | 1,634 | $ | 227 | $ | 483 | $ | 37 | $ | 8,072 | $ | 22 | $ | 8,094 | $ | 5,252 | $ | (2,461 | ) | $ | 2,791 | $ | 10,885 | |||||||||||||||||||||||
Interest income | $ | 1,350 | $ | 533 | $ | 87 | $ | 122 | $ | 1 | $ | 2,093 | $ | (1,375 | ) | $ | 718 | $ | 2,332 | $ | (480 | ) | $ | 1,852 | $ | 2,570 | ||||||||||||||||||||||
Interest expense | $ | 3,283 | $ | 664 | $ | 158 | $ | 222 | $ | — | $ | 4,327 | $ | (1,685 | ) | $ | 2,642 | $ | 14,196 | $ | 105 | $ | 14,301 | $ | 16,943 | |||||||||||||||||||||||
Income (loss) from continuing operations before income taxes, equity income, minority interests and cumulative effect of a change in accounting principle | $ | (7,575 | ) | $ | (312 | ) | $ | 527 | $ | 1,059 | $ | (34 | ) | $ | (6,335 | ) | $ | (1,188 | ) | $ | (7,523 | ) | $ | 2,242 | $ | (377 | ) | $ | 1,865 | $ | (5,658 | ) | ||||||||||||||||
Equity income (loss), net of tax | 104 | 36 | 16 | 365 | — | 521 | 3 | 524 | (11 | ) | — | (11 | ) | 513 | ||||||||||||||||||||||||||||||||||
Minority interests, net of tax | (63 | ) | (21 | ) | (25 | ) | (225 | ) | — | (334 | ) | — | (334 | ) | 10 | — | 10 | (324 | ) | |||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | (7,534 | ) | $ | (297 | ) | $ | 518 | $ | 1,199 | $ | (34 | ) | $ | (6,148 | ) | $ | (1,185 | ) | $ | (7,333 | ) | $ | 2,241 | $ | (377 | ) | $ | 1,864 | $ | (5,469 | ) | ||||||||||||||||
Income from discontinued operations, net of tax | $ | 445 | $ | — | $ | — | $ | — | $ | — | $ | 445 | $ | — | $ | 445 | $ | — | $ | — | $ | — | $ | 445 | ||||||||||||||||||||||||
Investments in nonconsolidated affiliates | $ | 295 | $ | 408 | $ | 132 | $ | 1,100 | $ | — | $ | 1,935 | $ | 34 | $ | 1,969 | $ | 7,523 | $ | — | $ | 7,523 | $ | 9,492 | ||||||||||||||||||||||||
Total assets | $ | 126,478 | $ | 26,610 | $ | 4,202 | $ | 13,273 | $ | (7,819 | ) | $ | 162,744 | $ | 1,437 | $ | 164,181 | $ | 13,050 | $ | 9,073 | $ | 22,123 | $ | 186,304 | |||||||||||||||||||||||
Goodwill | $ | 299 | $ | 500 | $ | — | $ | — | $ | — | $ | 799 | $ | — | $ | 799 | $ | — | $ | — | $ | — | $ | 799 | ||||||||||||||||||||||||
Expenditures for property | $ | 5,017 | $ | 1,103 | $ | 279 | $ | 1,030 | $ | — | $ | 7,429 | $ | 71 | $ | 7,500 | $ | 401 | $ | 1 | $ | 402 | $ | 7,902 |
183
Total | ||||||||||||||||||||||||||||||||||||||||||||||||
GM | Auto | Total | Corporate & | Excluding | Other | Total | ||||||||||||||||||||||||||||||||||||||||||
GMNA | GME | LAAM | GMAP | Eliminations | GMA | Other(a) | FIO | GMAC | Financing(b) | FIO | Total | |||||||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||||||||
As of and for the year ended December 31, 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
Automotive sales | ||||||||||||||||||||||||||||||||||||||||||||||||
External customers | $ | 108,724 | $ | 30,223 | $ | 11,136 | $ | 8,796 | $ | — | $ | 158,879 | $ | (256 | ) | $ | 158,623 | $ | — | $ | — | $ | — | $ | 158,623 | |||||||||||||||||||||||
Inter-segment | 2,652 | 1,719 | 715 | 2,050 | (7,136 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Total automotive sales | 111,376 | 31,942 | 11,851 | 10,846 | (7,136 | ) | 158,879 | (256 | ) | 158,623 | — | — | — | 158,623 | ||||||||||||||||||||||||||||||||||
Financial services and insurance revenues | — | — | — | — | — | — | — | — | 34,081 | 346 | 34,427 | 34,427 | ||||||||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 111,376 | $ | 31,942 | $ | 11,851 | $ | 10,846 | $ | (7,136 | ) | $ | 158,879 | $ | (256 | ) | $ | 158,623 | $ | 34,081 | $ | 346 | $ | 34,427 | $ | 193,050 | ||||||||||||||||||||||
Depreciation, amortization and impairment | $ | 7,528 | $ | 1,788 | $ | 325 | $ | 379 | $ | — | $ | 10,020 | $ | 16 | $ | 10,036 | $ | 5,548 | $ | 148 | $ | 5,696 | $ | 15,732 | ||||||||||||||||||||||||
Interest income | $ | 1,329 | $ | 420 | $ | 57 | $ | 47 | $ | — | $ | 1,853 | $ | (1,329 | ) | $ | 524 | $ | 2,185 | $ | (514 | ) | $ | 1,671 | $ | 2,195 | ||||||||||||||||||||||
Interest expense | $ | 3,168 | $ | 555 | $ | 197 | $ | 107 | $ | — | $ | 4,027 | $ | (1,493 | ) | $ | 2,534 | $ | 13,106 | $ | (35 | ) | $ | 13,071 | $ | 15,605 | ||||||||||||||||||||||
Income (loss) from continuing operations before income taxes, equity income, minority interests and cumulative effect of a change in accounting principle | $ | (11,021 | ) | $ | (1,794 | ) | $ | 43 | $ | (889 | ) | $ | (51 | ) | $ | (13,712 | ) | $ | (6,916 | ) | $ | (20,628 | ) | $ | 3,426 | $ | (27 | ) | $ | 3,399 | $ | (17,229 | ) | |||||||||||||||
Equity income (loss), net of tax | (48 | ) | 102 | 15 | 527 | — | 596 | 20 | 616 | (6 | ) | — | (6 | ) | 610 | |||||||||||||||||||||||||||||||||
Minority interests, net of tax | 1 | (49 | ) | (11 | ) | (53 | ) | — | (112 | ) | 7 | (105 | ) | 57 | — | 57 | (48 | ) | ||||||||||||||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | (11,068 | ) | $ | (1,741 | ) | $ | 47 | $ | (415 | ) | $ | (51 | ) | $ | (13,228 | ) | $ | (6,889 | ) | $ | (20,117 | ) | $ | 3,477 | $ | (27 | ) | $ | 3,450 | $ | (16,667 | ) | |||||||||||||||
Income from discontinued operations, net of tax | $ | 313 | $ | — | $ | — | $ | — | $ | — | $ | 313 | $ | — | $ | 313 | $ | — | $ | — | $ | — | $ | 313 | ||||||||||||||||||||||||
Investments in nonconsolidated affiliates | $ | 18 | $ | 359 | $ | 155 | $ | 2,590 | $ | — | $ | 3,122 | $ | 120 | $ | 3,242 | $ | 308 | $ | (308 | ) | $ | — | $ | 3,242 | |||||||||||||||||||||||
Total assets | $ | 133,277 | $ | 21,069 | $ | 4,340 | $ | 10,138 | $ | (6,718 | ) | $ | 162,106 | $ | 218 | $ | 162,324 | $ | 320,557 | $ | (8,613 | ) | $ | 311,944 | $ | 474,268 | ||||||||||||||||||||||
Goodwill | $ | 324 | $ | 433 | $ | — | $ | — | $ | — | $ | 757 | $ | — | $ | 757 | $ | 2,446 | $ | — | $ | 2,446 | $ | 3,203 | ||||||||||||||||||||||||
Expenditures for property | $ | 5,380 | $ | 1,396 | $ | 229 | $ | 839 | $ | — | $ | 7,844 | $ | 14 | $ | 7,858 | $ | 279 | $ | 4 | $ | 283 | $ | 8,141 |
184
2007 | 2006 | 2005 | ||||||||||||||||||||||||||
Net | Long | Net | Long | Net | Long | |||||||||||||||||||||||
Sales & | Lived | Sales & | Lived | Sales & | Lived | |||||||||||||||||||||||
Revenues | Assets(d) | Revenues | Assets(d) | Revenues | Assets(d) | |||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
North America | ||||||||||||||||||||||||||||
U.S. | $ | 100,545 | $ | 32,293 | $ | 127,260 | $ | 39,434 | $ | 123,215 | $ | 49,619 | ||||||||||||||||
Canada and Mexico | 14,758 | 5,772 | 19,979 | 4,906 | 16,769 | 12,739 | ||||||||||||||||||||||
Total North America | 115,303 | 38,065 | 147,239 | 44,340 | 139,984 | 62,358 | ||||||||||||||||||||||
Europe | ||||||||||||||||||||||||||||
France | 2,699 | 309 | 2,411 | 284 | 2,612 | 333 | ||||||||||||||||||||||
Germany | 6,147 | 4,172 | 7,687 | 3,651 | 7,384 | 4,090 | ||||||||||||||||||||||
Italy | 3,671 | 256 | 2,883 | 78 | 2,971 | 40 | ||||||||||||||||||||||
Spain | 2,911 | 1,359 | 2,866 | 1,364 | 2,847 | 1,182 | ||||||||||||||||||||||
Sweden | 2,330 | 1,207 | 2,229 | 1,255 | 2,161 | 1,139 | ||||||||||||||||||||||
United Kingdom | 7,869 | 1,214 | 7,975 | 1,143 | 7,859 | 1,958 | ||||||||||||||||||||||
Other | 9,789 | 2,347 | 8,380 | 2,250 | 7,752 | 2,615 | ||||||||||||||||||||||
Total Europe | 35,416 | 10,864 | 34,431 | 10,025 | 33,586 | 11,357 | ||||||||||||||||||||||
Latin America | ||||||||||||||||||||||||||||
Brazil | 6,477 | 1,026 | 4,961 | 882 | 3,813 | 784 | ||||||||||||||||||||||
Other Latin America | 6,875 | 193 | 4,777 | 159 | 3,836 | 162 | ||||||||||||||||||||||
Total Latin America | 13,352 | 1,219 | 9,738 | 1,041 | 7,649 | 946 | ||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||||
Australia | 397 | 10 | 301 | 18 | 357 | — | ||||||||||||||||||||||
Korea | 9,178 | 2,443 | 7,550 | 2,154 | 2,861 | 1,523 | ||||||||||||||||||||||
Other Asia Pacific | 6,058 | 2,185 | 3,386 | 2,126 | 5,387 | 1,981 | ||||||||||||||||||||||
Total Asia Pacific | 15,633 | 4,638 | 11,237 | 4,298 | 8,605 | 3,504 | ||||||||||||||||||||||
All Other | 1,418 | 239 | 2,956 | 158 | 3,226 | 313 | ||||||||||||||||||||||
Total | $ | 181,122 | $ | 55,025 | $ | 205,601 | $ | 59,862 | $ | 193,050 | $ | 78,478 | ||||||||||||||||
2007 | 2006 | 2005 | ||||||||||||||||||||||
Net | Long | Net | Long | Net | Long | |||||||||||||||||||
Sales & | Lived | Sales & | Lived | Sales & | Lived | |||||||||||||||||||
Revenues | Assets(d) | Revenues | Assets(d) | Revenues | Assets(d) | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
U.S. | $ | 100,545 | $ | 32,293 | $ | 127,260 | $ | 39,434 | $ | 123,215 | $ | 49,619 | ||||||||||||
Non-U.S. | 80,577 | 22,732 | 78,341 | 20,428 | 69,835 | 28,859 | ||||||||||||||||||
Total | $ | 181,122 | $ | 55,025 | $ | 205,601 | $ | 59,862 | $ | 193,050 | $ | 78,478 | ||||||||||||
(a) | Corporate and Other includes charges of $1.5 billion, $.5 billion and $5.5 billion for 2007, 2006 and 2005, respectively, related to the Benefit Guarantee Agreements and the restructuring of Delphi’s operations. In addition, Corporate and Other includes $552 million in 2007 related to pension benefit increases granted to Delphi employees and retirees/surviving spouses as part of the 2007 National Agreement. | |
(b) | In 2006, we 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 Other Financing. Refer to Note 3. Other Financing also includes the elimination of net receivables from total assets. Receivables eliminated at December 31, 2007, 2006 and 2005 were $4.2 billion, $4.1 billion and $4.5 billion, respectively. |
185
(c) | We sold a 51% ownership interest in GMAC in November 2006. The remaining 49% ownership interest is accounted for using the equity method and is included in GMAC’s segment assets. Refer to Notes 8 and 27 for summarized financial information of GMAC for the year ended December 31, 2007 and the month of December 2006. | |
(d) | Primarily consists of property and Equipment on operating leases, net. Refer to Notes 7 and 9. |
Note 30. | Supplemental Information for Consolidated Statements of Cash Flows |
Years Ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Dollars in millions) | ||||||||||||
Increase (decrease) in other operating assets and liabilities is as follows: | ||||||||||||
Accounts receivable | $ | (1,035 | ) | $ | (231 | ) | $ | 83 | ||||
Other receivables | 214 | (2,982 | ) | 4,091 | ||||||||
Prepaid expenses and other deferred charges | (649 | ) | 294 | (95 | ) | |||||||
Inventories | (699 | ) | 384 | (1,444 | ) | |||||||
Other assets | (80 | ) | (173 | ) | (32 | ) | ||||||
Accounts payable | 1,119 | 367 | (80 | ) | ||||||||
Deferred taxes and income taxes payable | (1,311 | ) | (75 | ) | 345 | |||||||
Accrued expenses and other liabilities | (851 | ) | (5,921 | ) | (775 | ) | ||||||
Fleet rental — acquisitions | (6,443 | ) | (8,701 | ) | (9,452 | ) | ||||||
Fleet rental — liquidations | 6,323 | 8,526 | 7,379 | |||||||||
Total | $ | (3,412 | ) | $ | (8,512 | ) | $ | 20 | ||||
Cash paid for interest | $ | 3,346 | $ | 17,415 | $ | 15,815 | ||||||
Note 31: | Subsequent Event |
186
Item 9. | Changes in and disagreements with accountants on accounting and financial disclosure |
Item 9A. | Controls and Procedures |
187
188
189
/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 | |
February 28, 2008 | February 28, 2008 |
Item 9B. | Other Information |
190
Item 10. | Directors and Executive Officers of the Registrant — Code of Ethics |
191
ITEM 15. | Exhibits and Financial Statement Schedule |
2. | Financial Statement Schedule II — Valuation and Qualifying Accounts |
3. | Consolidated Financial Statements of GMAC LLC and subsidiaries as of December 31, 2007 and 2006 and for each of the three years in the period ended December 31, 2007. |
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 on Form 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 on Form 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) to Form S-3 Registration Statement No. 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 to Form S-3 Registration Statement No. 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 on Form 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 on Form 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 on Form 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 on Form 8-K of General Motors Corporation filed November 10, 2004. | |
(4)(b)(vi) | Indenture, dated as of January 8, 2008, between General Motors Corporation and The Bank of New York, as Trustee, incorporated herein by reference to Exhibit 10.3 to the Current Report on Form 8-K of General Motors Corporation filed February 25, 2008. | |
(4)(b)(vii) | First Supplemental Indenture, dated as of February 22, 2008 between General Motors Corporation and The Bank of New York, as Trustee, incorporated herein by reference to Exhibit 10.4 to the Current Report on Form 8-K of General Motors Corporation filed February 25, 2008. |
192
ITEM 15. | Exhibits and Financial Statement Schedule — (continued) |
(4)(b)(viii)† | Subordinated Indenture, dated as of January 8, 2008, between General Motors Corporation and The Bank of New York, as Trustee. | |
(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 on Form 10-Q filed August 8, 2006. | |
(10)(a) | 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 on Form 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(b) | 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 on Form 8-K of General Motors Corporation filed November 30, 2006. | |
(10)(c) | General Motors 2002 Annual Incentive Plan, as amended. Incorporated herein by reference to Exhibit 10(b) to the Annual Report on Form 10-K of General Motors Corporation filed March 14, 2007. . | |
(10)(d) | General Motors 2002 Stock Incentive Plan, as amended. Incorporated herein by reference to Exhibit 10(c) to the Annual Report on Form 10-K of General Motors Corporation filed March 14, 2007. | |
(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)(f)* | 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 on Form 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(g)* | Compensation Statement for G.R. Wagoner, Jr. commencing January 1, 2003, incorporated herein by reference to Exhibit 10(h) to the Annual Report on Form 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(h)* | Compensation Statement for Frederick A. Henderson commencing January 1, 2006, incorporated herein by reference to Exhibit 10(j) to the Annual Report on Form 10-K of General Motors Corporation filed March 14, 2007. | |
(10)(i)* | Compensation Statement for Robert A. Lutz commencing January 1, 2003, incorporated herein by reference to Exhibit 10(j) to the Annual Report on Form 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(j)* | Compensation Statement for G.L. Cowger commencing February 1, 2004, incorporated herein by reference to Exhibit 10(k) to the Annual Report on Form 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(k)* | Description of Executive and Board Compensation Reductions, incorporated herein by reference to Exhibit 10(o) to the Annual Report on Form 10-K of General Motors Corporation filed March 28, 2006. | |
(10)(l)* | Deferred Compensation Plan for Executive Employees, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K of General Motors Corporation filed December 8, 2006. | |
(10)(m)† | Settlement Agreement, dated as of February 21, 2008, by and among General Motors Corporation, the International Union, United Automobile, Aerospace and Agricultural Workers of America and the class representatives in the class action case filed against General Motors Corporation on September 26, 2007 by the UAW and putative class representatives of GM-UAW. | |
(10)(n)† | General Motors 2002 Long-Term Incentive Plan, as amended. | |
(10)(o)† | General Motors 2007 Long-Term Incentive Plan, as amended. | |
(10)(p)† | Amended General Motors Corporation 2006 Cash-Based Restricted Stock Unit Plan, as amended October 1, 2007. | |
(10)(q)† | General Motors Corporation 2007 Cash-Based Restricted Stock Unit Plan, as amended October 1, 2007. | |
(10)(r)† | General Motors Corporation Compensation Plan for Non-Employee Directors, as amended December 4, 2007. |
193
ITEM 15. | Exhibits and Financial Statement Schedule — (continued) |
(10)(s)† | General Motors Corporation 2007 Annual Incentive Plan, as amended October 1, 2007. | |
(10)(t)† | General Motors Corporation Deferred Compensation Plan, as amended October 1, 2007. |
193.1
ITEM 15. | Exhibits and Financial Statement Schedule — (continued) |
(10)(u)† | General Motors Executive Retirement Plan, as amended. | |
(10)(v)† | Form of Compensation Statement. | |
(10)(w)† | Form of Restricted Stock Unit Grant Award. | |
(10)(x)† | Form of Special Cash-based RSU Grant for March 2007 Award. | |
(10)(y)† | Form of Special RSU Grant for March 2007 Award. | |
(10)(z) | General Motors Corporation $4,372,500,000 principal amount of 6.75% Series U Convertible Senior Debentures due December 31, 2012, dated February 22, 2008, incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K of General Motors dated February 25, 2008. | |
(12)† | Computation of Ratios of Earnings to Fixed Charges for the Years Ended December 31, 2007, 2006, 2005, 2004 and 2003. | |
(21)† | Subsidiaries of the Registrant as of December 31, 2007. | |
(23.1)† | Consent of Independent Registered Public Accounting Firm. | |
(23.2)† | Consent of Hamilton, Rabinovitz & Associates, Inc. | |
(24)† | Power of Attorney for Directors of General Motors Corporation | |
(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. |
194
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, 2007 | ||||||||||||||||||||
Allowances Deducted from Assets | ||||||||||||||||||||
Allowance for credit losses | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Accounts and notes receivable (for doubtful receivables) | 397 | — | 11 | 70 | 338 | |||||||||||||||
Inventories (principally for obsolescence of service parts) | 532 | — | — | 76 | 456 | |||||||||||||||
Other investments and miscellaneous assets (receivables and other) | 17 | — | — | 3 | 14 | |||||||||||||||
Miscellaneous allowances (mortgage and other) | — | — | — | — | ||||||||||||||||
For the Year Ended December 31, 2006 | ||||||||||||||||||||
Allowances Deducted from Assets | ||||||||||||||||||||
Allowance for credit losses | $ | 3,085 | $ | 1,799 | $ | — | $ | 4,884 | (a) | $ | — | |||||||||
Accounts and notes receivable (for doubtful receivables) | 353 | 56 | — | 12 | 397 | |||||||||||||||
Inventories (principally for obsolescence of service parts) | 411 | 121 | — | — | 532 | |||||||||||||||
Other investments and miscellaneous assets (receivables and other) | 17 | — | — | — | 17 | |||||||||||||||
Miscellaneous allowances (mortgage and other) | 84 | 62 | 146 | (a) | — | |||||||||||||||
For the Year Ended December 31, 2005 | ||||||||||||||||||||
Allowances Deducted from Assets | ||||||||||||||||||||
Allowance for credit losses | $ | 3,402 | $ | 1,074 | $ | — | $ | 1,391 | $ | 3,085 | ||||||||||
Accounts and notes receivable (for doubtful receivables) | 318 | 73 | — | 38 | 353 | |||||||||||||||
Inventories (principally for obsolescence of service parts) | 340 | 71 | — | — | 411 | |||||||||||||||
Other investments and miscellaneous assets (receivables and other) | 10 | — | 7 | — | 17 | |||||||||||||||
Miscellaneous allowances (mortgage and other) | 161 | 25 | 21 | 123 | 84 |
(a) | 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 $123 million, respectively. |
195
February 27, 2008
196
Year ended December 31,($ in millions) | 2007 | 2006 | 2005 | |||||||||
Revenue | ||||||||||||
Consumer | $9,469 | $10,472 | $9,943 | |||||||||
Commercial | 2,947 | 3,112 | 2,685 | |||||||||
Loans held for sale | 1,557 | 1,777 | 1,652 | |||||||||
Operating leases | 7,214 | 7,742 | 7,032 | |||||||||
Total financing revenue | 21,187 | 23,103 | 21,312 | |||||||||
Interest expense | 14,776 | 15,560 | 13,106 | |||||||||
Depreciation expense on operating lease assets | 4,915 | 5,341 | 5,244 | |||||||||
Net financing revenue | 1,496 | 2,202 | 2,962 | |||||||||
Other revenue | ||||||||||||
Servicing fees | 2,193 | 1,893 | 1,730 | |||||||||
Amortization and impairment of servicing rights | — | (23 | ) | (869 | ) | |||||||
Servicing asset valuation and hedge activities, net | (544 | ) | (1,100 | ) | 61 | |||||||
Insurance premiums and service revenue earned | 4,378 | 4,183 | 3,762 | |||||||||
Gain on sale of loans, net | 508 | 1,470 | 1,656 | |||||||||
Investment income | 473 | 2,143 | 1,216 | |||||||||
Gains on sale of equity-method investments, net | — | 411 | — | |||||||||
Other income | 3,295 | 3,643 | 4,399 | |||||||||
Total other revenue | 10,303 | 12,620 | 11,955 | |||||||||
Total net revenue | 11,799 | 14,822 | 14,917 | |||||||||
Provision for credit losses | 3,096 | 2,000 | 1,074 | |||||||||
Noninterest expense | ||||||||||||
Compensation and benefits expense | 2,453 | 2,558 | 3,163 | |||||||||
Insurance losses and loss adjustment expenses | 2,451 | 2,420 | 2,355 | |||||||||
Other operating expenses | 5,286 | 4,776 | 4,134 | |||||||||
Impairment of goodwill and other intangible assets | 455 | 840 | 712 | |||||||||
Total noninterest expense | 10,645 | 10,594 | 10,364 | |||||||||
Income (loss) before income tax expense | (1,942 | ) | 2,228 | 3,479 | ||||||||
Income tax expense | 390 | 103 | 1,197 | |||||||||
Net income (loss) | ($2,332 | ) | $2,125 | $2,282 | ||||||||
197
December 31,($ in millions) | 2007 | 2006 | ||||||
Assets | ||||||||
Cash and cash equivalents | $17,677 | $15,459 | ||||||
Investment securities | 16,740 | 16,791 | ||||||
Loans held for sale | 20,559 | 27,718 | ||||||
Finance receivables and loans, net of unearned income | ||||||||
Consumer | 87,769 | 130,542 | ||||||
Commercial | 39,745 | 43,904 | ||||||
Allowance for credit losses | (2,755 | ) | (3,576 | ) | ||||
Total finance receivables and loans, net | 124,759 | 170,870 | ||||||
Investment in operating leases, net | 32,348 | 24,184 | ||||||
Notes receivable from General Motors | 1,868 | 1,975 | ||||||
Mortgage servicing rights | 4,703 | 4,930 | ||||||
Premiums and other insurance receivables | 2,030 | 2,016 | ||||||
Other assets | 27,026 | 23,496 | ||||||
Total assets | $247,710 | $287,439 | ||||||
Liabilities | ||||||||
Debt | ||||||||
Unsecured | $102,339 | $113,500 | ||||||
Secured | 90,809 | 123,485 | ||||||
Total debt | 193,148 | 236,985 | ||||||
Interest payable | 2,253 | 2,592 | ||||||
Unearned insurance premiums and service revenue | 4,921 | 5,002 | ||||||
Reserves for insurance losses and loss adjustment expenses | 3,089 | 2,630 | ||||||
Deposit liabilities | 15,281 | 11,854 | ||||||
Accrued expenses and other liabilities | 12,203 | 10,805 | ||||||
Deferred income taxes | 1,250 | 1,007 | ||||||
Total liabilities | 232,145 | 270,875 | ||||||
Preferred interests | — | 2,195 | ||||||
Equity | ||||||||
Members’ interest | 8,912 | 6,711 | ||||||
Preferred interests | 1,052 | — | ||||||
Retained earnings | 4,649 | 7,173 | ||||||
Accumulated other comprehensive income | 952 | 485 | ||||||
Total equity | 15,565 | 14,369 | ||||||
Total liabilities, preferred interests, and equity | $247,710 | $287,439 | ||||||
198
Common | ||||||||||||||||||||||||||||
stock | Accumulated | |||||||||||||||||||||||||||
and | other | |||||||||||||||||||||||||||
paid-in | Members’ | Preferred | Retained | comprehensive | Total | Comprehensive | ||||||||||||||||||||||
($ in millions) | capital | interest | interests | earnings | income (loss) | equity | income (loss) | |||||||||||||||||||||
Balance at December 31, 2004 | $5,760 | $— | $— | $15,508 | $1,168 | $22,436 | ||||||||||||||||||||||
Net income | 2,282 | 2,282 | $2,282 | |||||||||||||||||||||||||
Dividends | (2,500 | ) | (2,500 | ) | ||||||||||||||||||||||||
Repurchase transaction (a) | (195 | ) | (195 | ) | ||||||||||||||||||||||||
Other comprehensive loss | (338 | ) | (338 | ) | (338 | ) | ||||||||||||||||||||||
Balance at December 31, 2005 | 5,760 | — | — | 15,095 | 830 | 21,685 | 1,944 | |||||||||||||||||||||
Conversion of common stock to members’ interest on July 20, 2006 | (5,760 | ) | 5,760 | |||||||||||||||||||||||||
Capital contributions | 951 | 951 | ||||||||||||||||||||||||||
Net income | 2,125 | 2,125 | 2,125 | |||||||||||||||||||||||||
Dividends | (9,739 | ) | (9,739 | ) | ||||||||||||||||||||||||
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 | |||||||||||||||||||||||||
Other comprehensive loss | (362 | ) | (362 | ) | (362 | ) | ||||||||||||||||||||||
Balance at December 31, 2006 | — | 6,711 | — | 7,173 | 485 | 14,369 | 1,767 | |||||||||||||||||||||
Conversion of preferred membership interests | 1,121 | 1,052 | 2,173 | |||||||||||||||||||||||||
Capital contributions | 1,080 | 1,080 | ||||||||||||||||||||||||||
Net loss | (2,332 | ) | (2,332 | ) | (2,332 | ) | ||||||||||||||||||||||
Preferred interests dividends | (192 | ) | (192 | ) | ||||||||||||||||||||||||
Other comprehensive income | 450 | 450 | 450 | |||||||||||||||||||||||||
Cumulative effect of a | ||||||||||||||||||||||||||||
change in accounting principle, net of tax: | ||||||||||||||||||||||||||||
Adoption of Financial Accounting Standards Board Statement No. 158 | 17 | 17 | ||||||||||||||||||||||||||
Balance at December 31, 2007 | $— | $8,912 | $1,052 | $4,649 | $952 | $15,565 | ($1,882 | ) | ||||||||||||||||||||
(a) | In October 2005, we repurchased operating lease assets and related deferred tax liabilities from GM. Refer to Note 19 to the Consolidated Financial Statements for further detail. |
199
Year ended December 31,($ in millions) | 2007 | 2006 | 2005 | |||||||||||
Operating activities | ||||||||||||||
Net income (loss) | ($2,332 | ) | $2,125 | $2,282 | ||||||||||
Reconciliation of net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||
Depreciation and amortization | 5,937 | 6,459 | 5,964 | |||||||||||
Goodwill impairment | 455 | 840 | 712 | |||||||||||
Amortization and valuation adjustments of mortgage servicing rights | 1,260 | 843 | 782 | |||||||||||
Provision for credit losses | 3,096 | 2,000 | 1,074 | |||||||||||
Gain on sale of loans, net | (508 | ) | (1,470 | ) | (1,741 | ) | ||||||||
Net losses (gains) on investment securities | 737 | (1,005 | ) | (104 | ) | |||||||||
Capitalized interest income | — | — | (23 | ) | ||||||||||
Net change in: | ||||||||||||||
Trading securities | 628 | 370 | (1,155 | ) | ||||||||||
Loans held for sale (a) | (6,956 | ) | (19,346 | ) | (29,119 | ) | ||||||||
Deferred income taxes | 95 | (1,346 | ) | 351 | ||||||||||
Interest payable | (332 | ) | (470 | ) | (290 | ) | ||||||||
Other assets | (121 | ) | (2,340 | ) | (2,446 | ) | ||||||||
Other liabilities | 686 | (1,067 | ) | 45 | ||||||||||
Other, net | (1,185 | ) | (287 | ) | 568 | |||||||||
Net cash provided by (used in) operating activities | 1,460 | (14,694 | ) | (23,100 | ) | |||||||||
Investing activities | ||||||||||||||
Purchases of available-for-sale securities | (16,682 | ) | (28,184 | ) | (19,165 | ) | ||||||||
Proceeds from sales of available-for-sale securities | 8,049 | 6,628 | 5,721 | |||||||||||
Proceeds from maturities of available-for-sale securities | 8,080 | 23,147 | 8,887 | |||||||||||
Net increase in finance receivables and loans | (41,972 | ) | (94,869 | ) | (96,028 | ) | ||||||||
Proceeds from sales of finance receivables and loans | 70,903 | 117,830 | 125,836 | |||||||||||
Purchases of operating lease assets | (17,268 | ) | (18,190 | ) | (15,496 | ) | ||||||||
Disposals of operating lease assets | 5,472 | 7,303 | 5,164 | |||||||||||
Change in notes receivable from GM | 138 | 1,660 | 1,053 | |||||||||||
Sales (purchases) of mortgage servicing rights, net | 561 | (61 | ) | (267 | ) | |||||||||
Acquisitions of subsidiaries, net of cash acquired | (209 | ) | (340 | ) | (2 | ) | ||||||||
Proceeds from sale of business units, net | 15 | 8,537 | — | |||||||||||
Settlement of residual support and risk-sharing obligations with GM | — | 1,357 | — | |||||||||||
Other, net (b) | 1,157 | (21 | ) | (1,549 | ) | |||||||||
Net cash provided by investing activities | 18,244 | 24,797 | 14,154 | |||||||||||
200
Year ended December 31,($ in millions) | 2007 | 2006 | 2005 | |||||||||||
Financing activities | ||||||||||||||
Net change in short-term debt | (9,248 | ) | 2,665 | (9,970 | ) | |||||||||
Proceeds from issuance of long-term debt | 70,230 | 88,180 | 77,890 | |||||||||||
Repayments of long-term debt | (82,134 | ) | (100,840 | ) | (69,520 | ) | ||||||||
Dividends paid | (179 | ) | (4,755 | ) | (2,500 | ) | ||||||||
Proceeds from issuance of preferred interests | — | 1,900 | — | |||||||||||
Other, net (c) | 3,753 | 2,259 | 6,168 | |||||||||||
Net cash (used in) provided by financing activities | (17,578 | ) | (10,591 | ) | 2,068 | |||||||||
Effect of exchange-rate changes on cash and cash equivalents | 92 | 152 | (45 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | 2,218 | (336 | ) | (6,923 | ) | |||||||||
Cash and cash equivalents at beginning of year | 15,459 | 15,795 | 22,718 | |||||||||||
Cash and cash equivalents at end of year (d) | $17,677 | $15,459 | $15,795 | |||||||||||
Supplemental disclosures | ||||||||||||||
Cash paid for: | ||||||||||||||
Interest | $14,871 | $15,889 | $13,025 | |||||||||||
Income taxes | 481 | 1,087 | 1,339 | |||||||||||
Noncash items: | ||||||||||||||
Increase (decrease) in equity (e) | 2,173 | — | (195 | ) | ||||||||||
Loans held for sale transferred to finance receivables and loans | 13,834 | 14,549 | 20,084 | |||||||||||
Finance receivables and loans transferred to loans held for sale | 8,181 | 3,889 | 3,904 | |||||||||||
Finance receivables and loans transferred to other assets | 2,976 | 1,771 | 1,017 | |||||||||||
Trading securities transferred to available-for-sale | — | — | 257 | |||||||||||
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 | 56 | 951 | — | |||||||||||
Noncash dividends paid to GM relating to GMAC sale (f) | — | 4,984 | — | |||||||||||
Proceeds from sales and repayments of mortgage loans held for investment originally designated as held for sale | 6,790 | 7,562 | 2,063 | |||||||||||
Liabilities assumed through acquisition | 1,030 | 342 | — | |||||||||||
Deconsolidation of loans, net | 25,856 | — | — | |||||||||||
Deconsolidation of collateralized borrowings | 26,599 | — | — | |||||||||||
(a) | Includes origination of mortgage servicing rights of $1.6 billion, $1.7 billion, and $1.3 billion for 2007, 2006, and 2005, respectively. | |
(b) | Includes securities lending transactions where cash collateral is received and a corresponding liability is recorded, both of which are presented in investing activities in the amount of $856 million and $445 million for 2007 and 2006, respectively. | |
(c) | 2007 includes a $1 billion capital contribution from General Motors pursuant to the sale of 51% of GMAC to FIM Holdings LLC. | |
(d) | 2005 includes $371 million of cash and cash equivalents classified as assets held for sale. | |
(e) | Represents conversion of preferred membership interests in 2007. Represents the repurchase of operating lease assets and related deferred tax liabilities from GM in 2005. | |
(f) | Further described in Note 19 to the Consolidated Financial Statements. |
201
202
203
204
205
206
207
208
209
210
211
212
2007 | 2006 | 2005 | ||||||||||||||||||||||||
Year ended December 31,($ in millions) | Written | Earned | Written | Earned | Written | Earned | ||||||||||||||||||||
Insurance premiums | ||||||||||||||||||||||||||
Direct | $2,726 | $2,810 | $2,575 | $2,733 | $2,493 | $2,644 | ||||||||||||||||||||
Assumed | 671 | 675 | 696 | 693 | 634 | 595 | ||||||||||||||||||||
Gross insurance premiums | 3,397 | 3,485 | 3,271 | 3,426 | 3,127 | 3,239 | ||||||||||||||||||||
Ceded | (452 | ) | (460 | ) | (451 | ) | (450 | ) | (401 | ) | (387 | ) | ||||||||||||||
Net insurance premiums | 2,945 | 3,025 | 2,820 | 2,976 | 2,726 | 2,852 | ||||||||||||||||||||
Service revenue | 1,134 | 1,353 | 1,215 | 1,207 | 1,345 | 910 | ||||||||||||||||||||
Insurance premiums and service revenue written and earned | $4,079 | $4,378 | $4,035 | $4,183 | $4,071 | $3,762 | ||||||||||||||||||||
213
Year ended December 31,($ in millions) | 2007 | 2006 | 2005 | |||||||||||
Real estate services | $218 | $593 | $712 | |||||||||||
Interest and service fees on transactions with GM (a) | 326 | 576 | 568 | |||||||||||
Interest on cash equivalents | 449 | 489 | 480 | |||||||||||
Other interest revenue | 581 | 536 | 450 | |||||||||||
Gain on extinguishment of debt | 563 | — | — | |||||||||||
Full-service leasing fees | 332 | 280 | 170 | |||||||||||
Late charges and other administrative fees | 177 | 164 | 164 | |||||||||||
Mortgage processing fees and other mortgage income | 96 | 136 | 461 | |||||||||||
Interest on restricted cash deposits | 145 | 119 | 102 | |||||||||||
Real estate and other investments | 74 | 106 | 157 | |||||||||||
Insurance service fees | 154 | 131 | 111 | |||||||||||
Factoring commissions | 55 | 60 | 74 | |||||||||||
Specialty lending fees | 39 | 57 | 59 | |||||||||||
Fair value adjustment on certain derivatives (b) | 100 | 6 | (36 | ) | ||||||||||
Other | (14 | ) | 390 | 927 | ||||||||||
Total other income | $3,295 | $3,643 | $4,399 | |||||||||||
(a) | Refer to Note 19 for a description of transactions with GM. | |
(b) | Refer to Note 16 for a description of our derivative instruments and hedging activities. |
Year ended December 31,($ in millions) | 2007 | 2006 | 2005 | |||||||||||
Insurance commissions | $947 | $898 | $901 | |||||||||||
Technology and communications expense | 655 | 573 | 591 | |||||||||||
Professional services | 451 | 493 | 452 | |||||||||||
Advertising and marketing | 282 | 363 | 359 | |||||||||||
Mortgage representation and warranty obligation | 256 | 66 | (13 | ) | ||||||||||
Premises and equipment depreciation | 196 | 253 | 288 | |||||||||||
Rent and storage | 227 | 243 | 272 | |||||||||||
Full-service leasing vehicle maintenance costs | 298 | 257 | 236 | |||||||||||
Lease and loan administration | 208 | 222 | 196 | |||||||||||
Auto remarketing and repossession | 220 | 288 | 187 | |||||||||||
Restructuring expenses | 134 | — | — | |||||||||||
Operating lease disposal loss (gain) | 27 | 29 | (304 | ) | ||||||||||
Other | 1,385 | 1,091 | 969 | |||||||||||
Total other operating expenses | $5,286 | $4,776 | $4,134 | |||||||||||
214
2007 | 2006 | |||||||||||||||||||||||||||||||
Gross | Gross | |||||||||||||||||||||||||||||||
unrealized | Fair | unrealized | Fair | |||||||||||||||||||||||||||||
December 31,($ in millions) | Cost | gains | losses | value | Cost | gains | losses | value | ||||||||||||||||||||||||
Available-for-sale securities | ||||||||||||||||||||||||||||||||
Debt securities | ||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies | $1,687 | $30 | ($1 | ) | $1,716 | $3,173 | $3 | ($19 | ) | $3,157 | ||||||||||||||||||||||
States and political subdivisions | 695 | 23 | (3 | ) | 715 | 734 | 23 | (1 | ) | 756 | ||||||||||||||||||||||
Foreign government securities | 795 | 7 | (2 | ) | 800 | 809 | 6 | (5 | ) | 810 | ||||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||||||||||||||
Residential | 230 | 1 | — | 231 | 185 | — | (2 | ) | 183 | |||||||||||||||||||||||
Commercial | 18 | — | — | 18 | 26 | — | — | 26 | ||||||||||||||||||||||||
Asset-backed securities | 1,412 | 1 | (1 | ) | 1,412 | 1,735 | 2 | — | 1,737 | |||||||||||||||||||||||
Interest-only strips | 11 | 7 | — | 18 | 43 | 10 | — | 53 | ||||||||||||||||||||||||
Corporate debt securities | 6,548 | 24 | (84 | ) | 6,488 | 3,713 | 18 | (32 | ) | 3,699 | ||||||||||||||||||||||
Other | 1,532 | 4 | (10 | ) | 1,526 | 994 | 9 | (3 | ) | 1,000 | ||||||||||||||||||||||
Total debt securities (a) | 12,928 | 97 | (101 | ) | 12,924 | 11,412 | 71 | (62 | ) | 11,421 | ||||||||||||||||||||||
Equity securities | 475 | 185 | (22 | ) | 638 | 418 | 161 | (5 | ) | 574 | ||||||||||||||||||||||
Total available-for-sale securities | $13,403 | $282 | ($123 | ) | $13,562 | $11,830 | $232 | ($67 | ) | $11,995 | ||||||||||||||||||||||
Held-to-maturity securities | ||||||||||||||||||||||||||||||||
Total held-to-maturity securities | $3 | $— | $— | $3 | $12 | $— | $— | $12 | ||||||||||||||||||||||||
(a) | In connection with certain borrowings and letters of credit relating to certain assumed reinsurance contracts, $162 million and $194 million of primarily U.S. Treasury securities were pledged as collateral as of December 31, 2007 and 2006, respectively. |
215
December 31,($ in millions) | 2007 | 2006 | ||||||
Trading securities | ||||||||
Fair value | ||||||||
U.S. Treasury Securities | $257 | $401 | ||||||
Mortgage-backed securities | ||||||||
Residential | 924 | 1,748 | ||||||
Commercial | 6 | — | ||||||
Mortgage residual interests | 686 | 1,019 | ||||||
Asset-backed securities | 469 | 19 | ||||||
Interest-only strips | 771 | 572 | ||||||
Principal-only strips | 46 | 957 | ||||||
Debt and other | 16 | 68 | ||||||
Total trading securities | $3,175 | $4,784 | ||||||
Net unrealized (losses) gains (a) | ($635 | ) | $118 | |||||
Pledged as collateral | $752 | $3,681 | ||||||
(a) | Unrealized gains and losses are included in investment income on a current period basis. Net unrealized gains totaled $131 million at December 31, 2005. |
Available- | Held-to- | |||||||||||||||
for-sale | maturity | |||||||||||||||
December 31, 2007 | Fair | Fair | ||||||||||||||
($ in millions) | Cost | value | Cost | value | ||||||||||||
Due in one year or less | $2,943 | $2,962 | $— | $— | ||||||||||||
Due after one year through five years | 5,913 | 5,870 | — | — | ||||||||||||
Due after five years through ten years | 1,999 | 2,002 | — | — | ||||||||||||
Due after ten years | 699 | 707 | — | — | ||||||||||||
Mortgage-backed securities and interests in securitization trusts | 1,374 | 1,383 | 3 | 3 | ||||||||||||
Total securities | $12,928 | $12,924 | $3 | $3 | ||||||||||||
Year ended December 31, | ||||||||||||||
($ in millions) | 2007 | 2006 | 2005 | |||||||||||
Gross realized gains (a) | $253 | $1,081 | $186 | |||||||||||
Gross realized losses | (65 | ) | (76 | ) | (66 | ) | ||||||||
Net realized gains | $188 | $1,005 | $120 | |||||||||||
(a) | Gains realized in 2006 primarily relate to the rebalancing of the investment portfolio at our Insurance operations. |
216
2007 | 2006 | |||||||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Less than 12 months | 12 months or longer | |||||||||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | Unrealized | |||||||||||||||||||||||||||||
($ 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 | $130 | $— | $212 | ($1 | ) | $858 | ($3 | ) | $919 | ($16 | ) | |||||||||||||||||||||
States and political subdivisions | 78 | (1 | ) | 31 | (2 | ) | 127 | (1 | ) | 29 | — | |||||||||||||||||||||
Foreign government securities | 290 | (1 | ) | 51 | (1 | ) | 338 | (3 | ) | 81 | (2 | ) | ||||||||||||||||||||
Residential mortgage-backed securities | 17 | — | 17 | — | 60 | — | 82 | (2 | ) | |||||||||||||||||||||||
Asset-backed securities | — | — | 185 | (1 | ) | — | — | — | — | |||||||||||||||||||||||
Corporate debt securities | 1,000 | (13 | ) | 3,294 | (71 | ) | 697 | (3 | ) | 1,191 | (29 | ) | ||||||||||||||||||||
Other | 519 | (9 | ) | 53 | (1 | ) | 299 | (1 | ) | 107 | (2 | ) | ||||||||||||||||||||
Total temporarily impaired debt securities | 2,034 | (24 | ) | 3,843 | (77 | ) | 2,379 | (11 | ) | 2,409 | (51 | ) | ||||||||||||||||||||
Equity securities | 125 | (19 | ) | 9 | (3 | ) | 73 | (4 | ) | 7 | (1 | ) | ||||||||||||||||||||
Total available-for-sale securities | $2,159 | ($43 | ) | $3,852 | ($80 | ) | $2,452 | ($15 | ) | $2,416 | ($52 | ) | ||||||||||||||||||||
2007 | 2006 | |||||||||||||||||||||||
December 31,($ in millions) | Domestic | Foreign | Total | Domestic | Foreign | Total | ||||||||||||||||||
Consumer | ||||||||||||||||||||||||
Retail automotive | $20,030 | $25,576 | $45,606 | $40,568 | $20,538 | $61,106 | ||||||||||||||||||
Residential mortgages | 34,839 | 7,324 | 42,163 | 65,928 | 3,508 | 69,436 | ||||||||||||||||||
Total consumer | 54,869 | 32,900 | 87,769 | 106,496 | 24,046 | 130,542 | ||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Automotive | ||||||||||||||||||||||||
Wholesale | 14,689 | 8,272 | 22,961 | 12,723 | 7,854 | 20,577 | ||||||||||||||||||
Leasing and lease financing | 296 | 930 | 1,226 | 326 | 901 | 1,227 | ||||||||||||||||||
Term loans to dealers and others | 2,478 | 857 | 3,335 | 1,843 | 764 | 2,607 | ||||||||||||||||||
Commercial and industrial | 6,431 | 2,313 | 8,744 | 14,068 | 2,213 | 16,281 | ||||||||||||||||||
Real estate construction and other | 2,943 | 536 | 3,479 | 2,969 | 243 | 3,212 | ||||||||||||||||||
Total commercial | 26,837 | 12,908 | 39,745 | 31,929 | 11,975 | 43,904 | ||||||||||||||||||
Total finance receivables and loans (a) (b) | $81,706 | $45,808 | $127,514 | $138,425 | $36,021 | $174,446 | ||||||||||||||||||
(a) | Net of unearned income of $4.0 billion and $5.7 billion at December 31, 2007, and 2006, respectively. | |
(b) | The aggregate amount of finance receivables and loans maturing in the next five years is as follows: $46,461 million in 2008; $13,742 million in 2009; $11,232 million in 2010; $7,500 million in 2011; $7,127 million in 2012; and $45,451 million in 2013 and thereafter. Prepayments and charge-offs may cause actual maturities to differ from scheduled maturities. |
217
Year ended December 31, | 2007 | 2006 | 2005 | |||||||||||||||||||||||||||||||||||
($ in millions) | Consumer | Commercial | Total | Consumer | Commercial | Total | Consumer | Commercial | Total | |||||||||||||||||||||||||||||
Allowance at beginning of year | $2,969 | $607 | $3,576 | $2,652 | $433 | $3,085 | $2,931 | $471 | $3,402 | |||||||||||||||||||||||||||||
Provision for credit losses | 2,600 | 496 | 3,096 | 1,668 | 332 | 2,000 | 1,006 | 68 | 1,074 | |||||||||||||||||||||||||||||
Charge-offs | ||||||||||||||||||||||||||||||||||||||
Domestic | (1,956 | ) | (442 | ) | (2,398 | ) | (1,436 | ) | (139 | ) | (1,575 | ) | (1,302 | ) | (45 | ) | (1,347 | ) | ||||||||||||||||||||
Foreign | (219 | ) | (74 | ) | (293 | ) | (182 | ) | (35 | ) | (217 | ) | (194 | ) | (26 | ) | (220 | ) | ||||||||||||||||||||
Total charge-offs | (2,175 | ) | (516 | ) | (2,691 | ) | (1,618 | ) | (174 | ) | (1,792 | ) | (1,496 | ) | (71 | ) | (1,567 | ) | ||||||||||||||||||||
Recoveries | ||||||||||||||||||||||||||||||||||||||
Domestic | 207 | 17 | 224 | 198 | 14 | 212 | 168 | 9 | 177 | |||||||||||||||||||||||||||||
Foreign | 67 | 7 | 74 | 47 | 3 | 50 | 48 | 4 | 52 | |||||||||||||||||||||||||||||
Total recoveries | 274 | 24 | 298 | 245 | 17 | 262 | 216 | 13 | 229 | |||||||||||||||||||||||||||||
Net charge-offs | (1,901 | ) | (492 | ) | (2,393 | ) | (1,373 | ) | (157 | ) | (1,530 | ) | (1,280 | ) | (58 | ) | (1,338 | ) | ||||||||||||||||||||
Reduction of allowance due to deconsolidation (a) | (1,540 | ) | — | (1,540 | ) | — | — | — | — | (28 | ) | (28 | ) | |||||||||||||||||||||||||
Impacts of foreign currency translation | 13 | 3 | 16 | 19 | (1 | ) | 18 | (9 | ) | (15 | ) | (24 | ) | |||||||||||||||||||||||||
Securitization activity | — | — | — | 3 | — | 3 | 4 | (5 | ) | (1 | ) | |||||||||||||||||||||||||||
Allowance at end of year | $2,141 | $614 | $2,755 | $2,969 | $607 | $3,576 | $2,652 | $433 | $3,085 | |||||||||||||||||||||||||||||
(a) | During 2007, ResCap completed the sale of residual cash flows related to a number of on-balance sheet securitizations. ResCap completed the approved actions necessary to cause the securitization trusts to satisfy the qualifying special-purpose entity requirement of SFAS No. 140,Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. The actions resulted in the deconsolidation of various securitization trusts. |
218
December 31,($ in millions) | 2007 | 2006 | ||||||
Impaired loans | $ | 677 | $ | 1,975 | ||||
Related allowance | 333 | 346 | ||||||
Average balance of impaired loans during the year | 544 | 972 | ||||||
December 31,($ in millions) | 2007 | 2006 | 2005 | |||||||||||
Consumer finance receivables | $2,590 | $2,576 | $1,658 | |||||||||||
Allowance | (97 | ) | (105 | ) | (103 | ) | ||||||||
Total carrying amount | $2,493 | $2,471 | $1,555 | |||||||||||
Year ended December 31, | ||||||||||
($ in millions) | 2007 | 2006 | ||||||||
Accretable yield at beginning of year | $146 | $52 | ||||||||
Additions | 58 | 251 | ||||||||
Accretion | (72 | ) | (69 | ) | ||||||
Reclassification from nonaccretable difference | (6 | ) | — | |||||||
Transfers to assets held for sale | — | — | ||||||||
Disposals | (28 | ) | (88 | ) | ||||||
Accretable yield at end of year | $98 | $146 | ||||||||
Year ended December 31, | ||||||||||
($ in millions) | 2007 | 2006 | ||||||||
Contractually required payments receivable at acquisition — consumer | $2,605 | $6,992 | ||||||||
Cash flows expected to be collected at acquisition | 968 | 3,155 | ||||||||
Basis in acquired loans at acquisition | 691 | 2,588 | ||||||||
219
Retail | ||||||
finance | ||||||
Year ended December 31, | receivables (a) | ResCap (b) | Other (c) | |||
2007 | ||||||
Key assumptions (d): | ||||||
Annual prepayment speed (e) | 1.2-1.4% | 0.6-43.4% | ||||
Weighted average life(in years) | 1.8-1.9 | 1.1-14.0 | ||||
Expected credit losses | 1.5-2.1% | 0.0-14.5% | ||||
Discount rate | 16.0-20.0% | 4.3-32.6% | ||||
2006 | ||||||
Key assumptions (d): | ||||||
Annual prepayment speed (e) | 0.9-1.7% | 0.0-90.0% | ||||
Weighted average life(in years) | 1.5-1.8 | 1.1-10.5 | ||||
Expected credit losses | 0.4-0.9% | 0.0-18.3% | ||||
Discount rate | 9.5-16.0% | 7.0-25.0% | ||||
2005 | ||||||
Key assumptions (d): | ||||||
Annual prepayment speed (e) | 0.9-1.1% | 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% | |||
(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, high loan-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. | |
(e) | Based on the weighted average maturity (WAM) for finance receivables and constant prepayment rate (CPR) for mortgage loans. |
220
2007 | ||||||||||||||
Retail | ||||||||||||||
finance | Wholesale | |||||||||||||
Year ended December 31,($ in millions) | receivables | loans | ResCap | |||||||||||
Pretax gains on securitizations | $141 | $511 | $45 | |||||||||||
Cash inflows: | ||||||||||||||
Proceeds from new securitizations | 11,440 | 1,318 | 36,089 | |||||||||||
Servicing fees received | 96 | 157 | 545 | |||||||||||
Other cash flows received on retained interests | 284 | 522 | 401 | |||||||||||
Proceeds from collections reinvested in revolving securitizations | — | 87,985 | 122 | |||||||||||
Repayments of servicing advances | 79 | — | 987 | |||||||||||
Cash outflows: | ||||||||||||||
Servicing advances | (90 | ) | — | (1,023 | ) | |||||||||
Purchase obligations and options: | ||||||||||||||
Mortgage loans under conditional call option | — | — | (147 | ) | ||||||||||
Representations and warranties obligations | — | — | (457 | ) | ||||||||||
Administrator or servicer actions | (39 | ) | — | (54 | ) | |||||||||
Asset performance conditional calls | — | — | (607 | ) | ||||||||||
Cleanup calls | (8 | ) | — | (254 | ) | |||||||||
2006 | 2005 | |||||||||||||||||||||||||||
Retail | Retail | |||||||||||||||||||||||||||
Year ended December 31, | finance | Wholesale | finance | Wholesale | ||||||||||||||||||||||||
($ in millions) | receivables | loans | ResCap | receivables | loans | ResCap | Other (a) | |||||||||||||||||||||
Pretax (losses) gains on securitizations | ($51 | ) | $601 | $825 | ($2 | ) | $543 | $513 | $76 | |||||||||||||||||||
Cash inflows: | ||||||||||||||||||||||||||||
Proceeds from new securitizations | 6,302 | — | 65,687 | 4,874 | 7,705 | 41,987 | 4,731 | |||||||||||||||||||||
Servicing fees received | 65 | 181 | 480 | 65 | 179 | 245 | 21 | |||||||||||||||||||||
Other cash flows received on retained interests | 232 | 140 | 587 | 249 | 503 | 583 | 304 | |||||||||||||||||||||
Proceeds from collections reinvested in revolving securitizations | — | 96,969 | — | — | 102,306 | — | — | |||||||||||||||||||||
Repayments of servicing advances | 46 | — | 1,199 | 43 | — | 1,115 | 198 | |||||||||||||||||||||
Cash outflows: | ||||||||||||||||||||||||||||
Servicing advances | (51 | ) | — | (1,265 | ) | (46 | ) | — | (1,163 | ) | (188 | ) | ||||||||||||||||
Purchase obligations and options: | ||||||||||||||||||||||||||||
Mortgage loans under conditional call option | — | — | (20 | ) | — | — | (9 | ) | — | |||||||||||||||||||
Representations and warranties obligations | — | — | (94 | ) | — | — | (29 | ) | — | |||||||||||||||||||
Administrator or servicer actions | (27 | ) | — | (60 | ) | (76 | ) | — | — | — | ||||||||||||||||||
Asset performance conditional calls | — | — | (82 | ) | — | — | (99 | ) | — | |||||||||||||||||||
Cleanup calls | (242 | ) | — | (1,055 | ) | (715 | ) | — | (2,202 | ) | — | |||||||||||||||||
(a) | Represents the former GMAC Commercial Mortgage for which we sold approximately 79% of our equity interest on March 23, 2006. |
221
2007 | 2006 | |||||||
Retail finance | Retail finance | |||||||
Year ended December 31,($ in millions) | receivables (a) | ResCap | receivables | ResCap | ||||
Carrying value/fair value of retained interests | $1,097 | $912 | $355 | $1,420 | ||||
Weighted average life (in years) | 0.0-1.7 | 1.5-35.5 | 0.0-1.3 | 1.0-8.9 | ||||
Annual prepayment rate | 0.6-1.3%WAM | 0.0-60.7%CPR | 0.8-1.4%WAM | 0.0-90.0%CPR | ||||
Impact of 10% adverse change | ($5) | ($26) | ($4) | ($55) | ||||
Impact of 20% adverse change | (10) | (49) | (7) | (102) | ||||
Loss assumption | 0.3-2.3 (b) | 0.0-38.0% | 0.4-1.0% (b) | 0.0-12.8% | ||||
Impact of 10% adverse change | ($17) | ($47) | ($5) | ($37) | ||||
Impact of 20% adverse change | (33) | (86) | (10) | (70) | ||||
Discount rate | 6.7-25.0% | 4.4-33.9% | 9.5-16.0% | 6.5-43.5% | ||||
Impact of 10% adverse change | ($29) | ($40) | ($6) | ($51) | ||||
Impact of 20% adverse change | (57) | (76) | (12) | (94) | ||||
Market rate | (c) | (c) | (c) | (c) | ||||
Impact of 10% adverse change | ($2) | ($13) | ($4) | ($38) | ||||
Impact of 20% adverse change | (4) | (23) | (9) | (74) | ||||
(a) | The fair value of retained interests in wholesale securitizations approximates cost of $959 million because of the short-term and floating-rate nature of wholesale receivables. | |
(b) | Net of a reserve for expected credit losses totaling $7 million and $8 million at December 31, 2007 and 2006, respectively. These amounts are included in the fair value of the retained interests, which are classified as investment securities. | |
(c) | Forward benchmark interest rate yield curve plus contractual spread. |
December 31, (a) | 2007 | 2006 | 2005 | |||
Retail automotive | 1.1% | 0.6% | 0.4% | |||
Residential mortgage | 0.0-38.0% | 0.0-12.8% | 0.0-16.9% | |||
Other | (b) | (b) | 0.0-6.7% | |||
(a) | Static pool losses not applicable to wholesale finance receivable securitizations because of their short-term nature. | |
(b) | Represents the former commercial mortgage operations, for which we sold approximately 79% of our equity interest on March 23, 2006. |
222
Total finance | Amount 60 days or | |||||||||||||||||||||||
receivables and loans | more past due | Net credit losses | ||||||||||||||||||||||
December 31,($ in millions) | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
Retail automotive | $68,382 | $68,348 | $654 | $693 | $672 | $707 | ||||||||||||||||||
Residential mortgage | 192,579 | 217,972 | 12,360 | 15,175 | 4,302 | 981 | ||||||||||||||||||
Total consumer | 260,961 | 286,320 | 13,014 | 15,868 | 4,974 | 1,688 | ||||||||||||||||||
Wholesale | 40,820 | 40,484 | 54 | 66 | 2 | 2 | ||||||||||||||||||
Commercial mortgage (a) | — | — | — | — | — | 6 | ||||||||||||||||||
Other automotive and commercial | 16,864 | 23,385 | 580 | 1,582 | 388 | 8 | ||||||||||||||||||
Total commercial | 57,684 | 63,869 | 634 | 1,648 | 390 | 16 | ||||||||||||||||||
Total managed portfolio (b) | 318,645 | 350,189 | $13,648 | $17,516 | $5,364 | $1,704 | ||||||||||||||||||
Securitized finance receivables and loans | (170,572 | ) | (148,009 | ) | ||||||||||||||||||||
Loans held for sale (unpaid principal) | (20,559 | ) | (27,734 | ) | ||||||||||||||||||||
Total finance receivables and loans | $127,514 | $174,446 | ||||||||||||||||||||||
(a) | On March 23, 2006, we sold approximately 79% of our equity interest in Capmark, our commercial mortgage operations. | |
(b) | Managed portfolio represents finance receivables and loans on the balance sheet or that have been securitized, excluding securitized finance receivables and loans that we continue to service but have no other continuing involvement (i.e., in which we retain an interest or risk of loss in the underlying receivables). |
December 31, ($ in millions) | 2007 | 2006 | ||||||||
Vehicles and other equipment, at cost | $40,410 | $30,281 | ||||||||
Accumulated depreciation | (8,062 | ) | (6,097 | ) | ||||||
Investment in operating leases, net (a) | $32,348 | $24,184 | ||||||||
(a) | On November 22, 2006, $12.6 billion of operating lease assets consisting of $15.7 billion of vehicles at cost, net of $3.1 billion of accumulated depreciation were distributed to GM. Refer to Note 19 for further description of the distribution. |
223
($ in millions) | 2007 | 2006 | ||||||||
Estimated fair value at January 1, | $4,930 | $4,021 | ||||||||
Additions obtained from sales of financial assets | 1,597 | 1,723 | ||||||||
Additions from purchases of servicing rights | 3 | 12 | ||||||||
Subtractions from disposals | (564 | ) | — | |||||||
Changes in fair value: | ||||||||||
Due to changes in valuation inputs or assumptions used in the valuation model | (687 | ) | (44 | ) | ||||||
Other changes in fair value | (572 | ) | (776 | ) | ||||||
Other changes that affect the balance | (4 | ) | (6 | ) | ||||||
Estimated fair value at December 31, | $4,703 | $4,930 | ||||||||
December 31,($ in millions) | 2007 | 2006 | ||
Range of prepayment speeds (constant prepayment rate) | 0.0-49.1% | 1.0-43.2% | ||
Impact on fair value of 10% adverse change | ($265) | ($227) | ||
Impact on fair value of 20% adverse change | ($501) | ($413) | ||
Range of discount rates | 5.0-29.0% | 8.0-14.0% | ||
Impact on fair value of 10% adverse change | ($66) | ($67) | ||
Impact on fair value of 20% adverse change | ($120) | ($132) | ||
Year ended December 31, | ||||||||
($ in millions) | 2007 | 2006 | ||||||
Contractual servicing fees, net of guarantee fees and including subservicing | $1,517 | $1,327 | ||||||
Late fees | 164 | 130 | ||||||
Ancillary fees | 110 | 127 | ||||||
Total | $1,791 | $1,584 | ||||||
224
December 31,($ in millions) | 2007 | 2006 | ||||||
Prepaid reinsurance premiums | $364 | $367 | ||||||
Reinsurance recoverable on unpaid losses | 893 | 876 | ||||||
Reinsurance recoverable on paid losses (a) | 52 | 95 | ||||||
Premiums receivable (b) | 721 | 678 | ||||||
Total premiums and other insurance receivables | $2,030 | $2,016 | ||||||
(a) | Net of $1 million allowance for uncollectible reinsurance recoverable on paid losses at December 31, 2006. | |
(b) | Net of $9 million and $7 million allowance for uncollectible premiums receivable at December 31, 2007 and 2006, respectively. |
December 31,($ in millions) | 2007 | 2006 | ||||||
Property and equipment at cost | $1,759 | $1,645 | ||||||
Accumulated depreciation | (1,200 | ) | (1,067 | ) | ||||
Net property and equipment | 559 | 578 | ||||||
Cash reserve deposits held for securitization trusts (a) | 3,350 | 2,623 | ||||||
Fair value of derivative contracts in receivable position | 4,448 | 2,544 | ||||||
Real estate and other investments (b) | 2,237 | 3,074 | ||||||
Restricted cash collections for securitization trusts (c) | 2,397 | 1,858 | ||||||
Goodwill | 1,496 | 1,827 | ||||||
Deferred policy acquisition cost | 1,702 | 1,740 | ||||||
Accrued interest and rent receivable | 881 | 1,315 | ||||||
Repossessed and foreclosed assets, net | 1,347 | 1,215 | ||||||
Debt issuance costs | 601 | 643 | ||||||
Servicer advances | 1,847 | 606 | ||||||
Securities lending | 856 | 445 | ||||||
Investment in used vehicles held for sale, at lower of cost or market | 792 | 423 | ||||||
Subordinated note receivable | 250 | 250 | ||||||
Intangible assets, net of accumulated amortization (d) | 93 | 59 | ||||||
Receivables related to taxes | — | 9 | ||||||
Other assets | 4,170 | 4,287 | ||||||
Total other assets | $27,026 | $23,496 | ||||||
(a) | Represents credit enhancement in the form of cash reserves for various securitization transactions we have executed. On November 22, 2006, $710 million of cash reserve deposits were transferred to GM as part of a distribution of certain securitized U.S. lease assets. Refer to Note 19 for further description of the distribution. | |
(b) | Includes residential real estate investments of $1 billion and $2 billion and related accumulated depreciation of $16 million and $13 million for years ended December 31, 2007 and 2006, respectively. | |
(c) | Represents cash collection from customer payments on securitized receivables. These funds are distributed to investors as payments on the related secured debt. | |
(d) | Aggregate amortization expense on intangible assets was $18 million and $16 million, including $1 million for Capmark for the year ended December 31, 2006. Amortization expense is expected to average $12 million per year over the next five fiscal years. In addition, during 2006, our Commercial Finance Group had $13 million of intangible assets that were deemed impaired and subsequently written off during the third quarter of 2006. |
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North | ||||||||||||||||||||||||||
American | International | |||||||||||||||||||||||||
($ in millions) | Operations | Operations | ResCap | Insurance | Other | Total | ||||||||||||||||||||
Goodwill at beginning of 2006 | $14 | $504 | $460 | $669 | $799 | $2,446 | ||||||||||||||||||||
Goodwill acquired | — | — | 3 | 148 | — | 151 | ||||||||||||||||||||
Impairment losses (a) | — | — | — | — | (827 | ) | (827 | ) | ||||||||||||||||||
Other | — | 3 | 1 | — | — | 4 | ||||||||||||||||||||
Foreign currency translation effect | — | 16 | 7 | 2 | 28 | 53 | ||||||||||||||||||||
Goodwill at beginning of 2007 | $14 | $523 | $471 | $819 | $— | $1,827 | ||||||||||||||||||||
Goodwill acquired | — | — | — | 134 | — | 134 | ||||||||||||||||||||
Impairment losses (b) | — | — | (455 | ) | — | — | (455 | ) | ||||||||||||||||||
Other | — | — | (2 | ) | — | 2 | — | |||||||||||||||||||
Foreign currency translation effect | — | 4 | (14 | ) | — | — | (10 | ) | ||||||||||||||||||
Goodwill at end of 2007 | $14 | $527 | $— | $953 | $2 | $1,496 | ||||||||||||||||||||
(a) | Following attrition of key personnel around the middle of 2006, 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 this 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 the carrying value of goodwill exceeded its fair value, resulting in an impairment loss of $827 million during 2006. | |
(b) | During the three months ended September 30, 2007, we initiated an evaluation of goodwill of ResCap for potential impairment in accordance with SFAS 142. This interim test was initiated in light of deteriorating conditions in the residential and home building markets, including significant changes in the mortgage secondary market, tightening underwriting guidelines, reducing product offerings, and recent credit downgrades of ResCap’s unsecured debt obligations. These factors had a significant impact on our view of ResCap’s future expected asset levels and growth rate assumptions. Consistent with prior assessments, the fair value of the ResCap business was determined using an internally developed discounted cash flow methodology. In addition, we took into consideration other relevant indicators of value available in the marketplace such as recent market transactions and trading values of all ResCap goodwill exceeded its fair value, resulting in an impairment loss of $455 million in 2007. |
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Weighted | ||||||||||||||||||||||||||||||||
average interest | ||||||||||||||||||||||||||||||||
rates (a) | 2007 | 2006 | ||||||||||||||||||||||||||||||
December 31,($ in millions) | 2007 | 2006 | Domestic | Foreign | Total | Domestic | Foreign | Total | ||||||||||||||||||||||||
Short-term debt | ||||||||||||||||||||||||||||||||
Commercial paper | $440 | $999 | $1,439 | $742 | $781 | $1,523 | ||||||||||||||||||||||||||
Demand notes | 6,382 | 202 | 6,584 | 5,917 | 157 | 6,074 | ||||||||||||||||||||||||||
Bank loans and overdrafts | 563 | 6,619 | 7,182 | 991 | 5,272 | 6,263 | ||||||||||||||||||||||||||
Repurchase agreements and other (b) | 7,920 | 10,681 | 18,601 | 22,506 | 7,232 | 29,738 | ||||||||||||||||||||||||||
Total short-term debt | 6.6% | 5.8% | 15,305 | 18,501 | 33,806 | 30,156 | 13,442 | 43,598 | ||||||||||||||||||||||||
Long-term debt | ||||||||||||||||||||||||||||||||
Due within one year | 6.1% | 5.5% | 23,356 | 14,173 | 37,529 | 20,010 | 15,204 | 35,214 | ||||||||||||||||||||||||
Due after one year | 6.3% | 5.9% | 95,833 | 25,409 | 121,242 | 135,693 | 22,589 | 158,282 | ||||||||||||||||||||||||
Total long-term debt | 6.3% | 5.9% | 119,189 | 39,582 | 158,771 | 155,703 | 37,793 | 193,496 | ||||||||||||||||||||||||
Fair value adjustment (c) | 592 | (21 | ) | 571 | (3 | ) | (106 | ) | (109 | ) | ||||||||||||||||||||||
Total debt | $135,086 | $58,062 | $193,148 | $185,856 | $51,129 | $236,985 | ||||||||||||||||||||||||||
(a) | The weighted average interest rates include the effects of derivative financial instruments designated as hedges of debt. | |
(b) | Repurchase agreements consist of secured financing arrangements with third parties at ResCap. Other primarily includes nonbank secured borrowings, as well as notes payable to GM. Refer to Note 19 for further details. | |
(c) | To adjust designated fixed-rate debt to fair value in accordance with SFAS 133. |
2007 | 2006 | |||||||||||||||
Related secured | Related secured | |||||||||||||||
December 31,($ in millions) | Assets | debt (a) | Assets | debt (a) | ||||||||||||
Loans held for sale | $10,437 | $6,765 | $22,834 | $20,525 | ||||||||||||
Mortgage assets held for investment and lending receivables | 45,534 | 33,911 | 80,343 | 68,333 | ||||||||||||
Retail automotive finance receivables | 23,079 | 19,094 | 17,802 | 16,439 | ||||||||||||
Wholesale automotive finance receivables | 10,092 | 7,709 | 2,108 | 1,479 | ||||||||||||
Investment securities | 880 | 788 | 3,662 | 4,523 | ||||||||||||
Investment in operating leases, net | 20,107 | 17,926 | 8,258 | 7,636 | ||||||||||||
Real estate investments and other assets | 14,429 | 4,616 | 8,025 | 4,550 | ||||||||||||
Total | $124,558 | $90,809 | $143,032 | $123,485 | ||||||||||||
(a) | Included as part of secured debt are repurchase agreements of $3.6 billion and $11.5 billion where we have pledged assets as collateral for approximately the same amount of debt at December 31, 2007 and 2006, respectively. |
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Year ended December 31,($ in millions) | Secured | Unsecured | Total | |||||||||||
2008 | $19,590 | $17,575 | $37,165 | |||||||||||
2009 | 16,146 | 14,910 | 31,056 | |||||||||||
2010 | 12,636 | 10,066 | 22,702 | |||||||||||
2011 | 2,510 | 13,397 | 15,907 | |||||||||||
2012 | 2,823 | 7,804 | 10,627 | |||||||||||
2013 and thereafter | 19,288 | 22,431 | 41,719 | |||||||||||
Long-term debt (a) | 72,993 | 86,183 | 159,176 | |||||||||||
Unamortized discount | (108 | ) | (297 | ) | (405 | ) | ||||||||
Total long-term debt | $72,885 | $85,886 | $158,771 | |||||||||||
(a) | Debt issues totaling $13,985 million are redeemable at or above par, at our option anytime before the scheduled maturity dates, the latest of which is November 2049. |
Total capacity | Unused capacity | Outstanding | ||||||||||||||||||||||
December 31,($ in billions) | 2007 | 2006 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
Committed unsecured: | ||||||||||||||||||||||||
Automotive Finance operations | $8.9 | $10.2 | $7.0 | $9.1 | $1.9 | $1.1 | ||||||||||||||||||
ResCap | 3.6 | 4.0 | 1.8 | 2.0 | 1.8 | 2.0 | ||||||||||||||||||
Other | 0.2 | 0.3 | 0.2 | 0.3 | — | — | ||||||||||||||||||
Committed secured: | ||||||||||||||||||||||||
Automotive Finance operations | 90.3 | 91.2 | 57.9 | 65.9 | 32.4 | 25.3 | ||||||||||||||||||
ResCap | 33.2 | 29.5 | 17.5 | 7.9 | 15.7 | 21.6 | ||||||||||||||||||
Other | 22.8 | 13.9 | 11.5 | 10.1 | 11.3 | 3.8 | ||||||||||||||||||
Total committed facilities | 159.0 | 149.1 | 95.9 | 95.3 | 63.1 | 53.8 | ||||||||||||||||||
Uncommitted unsecured: | ||||||||||||||||||||||||
Automotive Finance operations | 9.7 | 8.7 | 1.4 | 1.4 | 8.3 | 7.3 | ||||||||||||||||||
ResCap | 0.6 | 1.5 | 0.2 | 0.7 | 0.4 | 0.8 | ||||||||||||||||||
Other | 0.2 | 0.1 | — | — | 0.2 | 0.1 | ||||||||||||||||||
Uncommitted secured: | ||||||||||||||||||||||||
ResCap | 21.6 | 73.3 | 9.5 | 51.9 | 12.1 | 21.4 | ||||||||||||||||||
Total uncommitted facilities | 32.1 | 83.6 | 11.1 | 54.0 | 21.0 | 29.6 | ||||||||||||||||||
Total | $191.1 | $232.7 | $107.0 | $149.3 | $84.1 | $83.4 | ||||||||||||||||||
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13. | Reserves for Insurance Losses and Loss Adjustment Expenses |
Year ended December 31, | ||||||||||||
($ in millions) | 2007 | 2006 | 2005 | |||||||||
Balance at beginning of year | $2,630 | $2,534 | $2,505 | |||||||||
Reinsurance recoverables | (876 | ) | (762 | ) | (775 | ) | ||||||
Net balance at beginning of year | 1,754 | 1,772 | 1,730 | |||||||||
Net reserves from acquisitions | 418 | 80 | — | |||||||||
Incurred related to | ||||||||||||
Current year | 2,522 | 2,513 | 2,471 | |||||||||
Prior years (a) | (71 | ) | (93 | ) | (116 | ) | ||||||
Total incurred (b) | 2,451 | 2,420 | 2,355 | |||||||||
Paid related to | ||||||||||||
Current year | (1,641 | ) | (1,723 | ) | (1,682 | ) | ||||||
Prior years | (808 | ) | (803 | ) | (619 | ) | ||||||
Total paid | (2,449 | ) | (2,526 | ) | (2,301 | ) | ||||||
Other (c) | 22 | 8 | (12 | ) | ||||||||
Net balance at end of year (d) | 2,196 | 1,754 | 1,772 | |||||||||
Reinsurance recoverables | 893 | 876 | 762 | |||||||||
Balance at end of year | $3,089 | $2,630 | $2,534 | |||||||||
(a) | Incurred losses and loss adjustment expenses during 2007 and 2006 were reduced by $71 million and $93 million, respectively, as a result of decreases in prior years’ reserve estimates for private passenger automobile coverages and certain reinsurance coverages assumed in both the United States and internationally, and extended service contracts internationally. In addition, 2006 included a $20 million reduction of reserves related to an insurance program, which was ultimately transferred to GM. | |
(b) | Reflected net of reinsurance recoveries totaling $246 million, $306 million, and $342 million for the years ended December 31, 2007, 2006, and 2005, respectively. | |
(c) | Effects of exchange-rate changes for the years ended December 31, 2007, 2006, and 2005. | |
(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 these matters were $5 million at December 31, 2007 and 2006, and $6 million at December 31, 2005. |
December 31,($ in millions) | 2007 | 2006 | ||||||
Noninterest bearing deposits | $1,570 | $1,366 | ||||||
NOW and money market checking accounts | 3,673 | 1,810 | ||||||
Certificate of deposit | 7,697 | 6,390 | ||||||
Dealer wholesale deposits | 2,300 | 2,213 | ||||||
Dealer term-loan deposits | 41 | 75 | ||||||
Deposit liabilities | $15,281 | $11,854 | ||||||
Year ended December 31,($ in millions) | ||||
2008 | $4,823 | |||
2009 | 1,235 | |||
2010 | 413 | |||
2011 | 115 | |||
2012 | 14 | |||
Total brokered deposits | $6,600 | |||
15. | Accrued Expenses and Other Liabilities |
December 31,($ in millions) | 2007 | 2006 | ||||||
Fair value of derivative contracts in payable position | $1,311 | $1,745 | ||||||
Employee compensation and benefits | 458 | 540 | ||||||
Factored client payables | 770 | 813 | ||||||
Securitization trustee payable | 1,152 | 902 | ||||||
GM payable, net | 513 | 70 | ||||||
Taxes payable | 425 | 249 | ||||||
Accounts payable | 1,970 | 1,844 | ||||||
Deferred revenue | 1,184 | 1,623 | ||||||
Other liabilities | 4,420 | 3,019 | ||||||
Total accrued expenses and other liabilities | $12,203 | $10,805 | ||||||
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16. | Derivative Instruments and Hedging Activities |
• | 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. |
• | Loans held for sale — We use derivative financial instruments to hedge exposure to risk associated with our mortgage and automotive loans held for sale. After |
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mortgage loans are funded, they are generally sold into the secondary market to various investors, often asmortgage-backed securities sponsored by Fannie Mae, Freddie Mac, or Ginnie Mae. Mortgage loans that are not eligible foragency-sponsored securitization are sold through public or private securitization transactions or inwhole-loan sales. Automotive loans are sold through public or private securitization transactions or inwhole-loan sales. The primary risk associated with closed loans awaiting sale is a change in the fair value of the loans attributable to fluctuations in interest rates. Our primary strategies to protect against this risk are selling loans ormortgage-backed securities forward to investors using mandatory and optional forward commitments and the use of interest rate swaps. |
• | Off-balance sheet securitization activities— We enter into interest rate swaps to facilitate securitization transactions where the underlying receivables are sold to a nonconsolidated QSPE. As the underlying assets are carried in a nonconsolidated 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. Although 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 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 callablefixed-rate debt in connection with our market risk management policy. If the hedging relationship does not meet a specified effectiveness assessment threshold, it will be treated as an economic hedge. Prior to May 2007, all cancellable swaps hedging callable debt were treated as economic hedges. |
Year ended December 31, | ||||||||||||||
($ in millions) | 2007 | 2006 | 2005 | Income statement classification | ||||||||||
Fair value hedge ineffectiveness gain (loss): | ||||||||||||||
Debt obligations | $54 | $— | ($2 | ) | Interest expense | |||||||||
Mortgage servicing rights | — | — | 57 | Servicing asset valuation and hedge activities, net | ||||||||||
Loans held for sale | (1 | ) | (1 | ) | (29 | ) | Gain on sale of loans, net | |||||||
Cash flow hedges ineffectiveness gain (loss): | ||||||||||||||
Debt obligations | — | — | 3 | Interest expense | ||||||||||
Economic hedge change in fair value: | ||||||||||||||
Off-balance sheet securitization activities: | ||||||||||||||
Automotive Finance operations | 114 | 2 | (36 | ) | Other income | |||||||||
Mortgage operations | — | — | 1 | Other income | ||||||||||
Foreign currency debt (a) | 33 | 54 | (202 | ) | Interest expense | |||||||||
Loans held for sale or investment | (293 | ) | 35 | 59 | Gain on sale of loans, net | |||||||||
Mortgage servicing rights | 716 | (281 | ) | (55 | ) | Servicing asset valuation and hedge activities, net | ||||||||
Mortgage related securities | (161 | ) | 3 | (42 | ) | Investment income | ||||||||
Callable debt obligations | 49 | (22 | ) | (240 | ) | Interest expense | ||||||||
Other | (37 | ) | 21 | (11 | ) | Other income, Interest expense, Other operating expenses | ||||||||
Net gains (losses) | $474 | ($189 | ) | ($497 | ) | |||||||||
(a) | Amount represents the difference between the changes in the fair values of the currency swap, net of the revaluation of the related foreign denominated debt. |
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Year ended December 31,($ in millions) | 2007 | 2006 | 2005 | |||||||||
Net gain on fair value hedges excluded from assessment of effectiveness | $ | — | $ | — | $ | 59 | ||||||
Expected reclassifications from other comprehensive income to earnings (a) | 2 | 8 | 12 | |||||||||
(a) | Estimated to occur over the next 12 months. |
17. | Pension and Other Postretirement Benefits |
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December 31, 2007 | Pre-SFAS 158 | FAS 158 | Post-SFAS 158 | |||||||||
($ in millions) | adoption | adjustments | adoption | |||||||||
Other assets | $27,005 | $ | 21 | $27,026 | ||||||||
Deferred income taxes | 1,253 | (3 | ) | 1,250 | ||||||||
Accrued expenses and other liabilities | 12,192 | 11 | 12,203 | |||||||||
Accumulated other comprehensive income (net of tax) | 939 | 13 | 952 | |||||||||
Year ended December 31,($ in millions) | 2007 | 2006 | ||||||
Projected benefit obligation | $ | 432 | $434 | |||||
Fair value of plan assets | 426 | 391 | ||||||
Funded status | (6 | ) | (43 | ) | ||||
Unrecognized net actuarial gain | — | 16 | ||||||
Unrecognized prior service cost | — | 2 | ||||||
Net transition obligation | — | — | ||||||
Accrued pension cost | ($6 | ) | ($25 | ) | ||||
Year ended December 31, | 2007 | 2006 | ||||||
Discount rate | 5.60 | % | 5.47 | % | ||||
Expectedlong-term return on plan assets | 8.59 | % | 8.48 | % | ||||
Rate of compensation increase | 3.09 | % | 4.40 | % | ||||
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Year ended December 31,($ in millions) | 2007 | 2006 | 2005 | |||||||||||
Current income tax expense | ||||||||||||||
U.S. federal | $268 | $1,115 | $620 | |||||||||||
Foreign | 114 | 432 | 52 | |||||||||||
State and local | (55 | ) | 43 | 17 | ||||||||||
Total current expense | 327 | 1,590 | 689 | |||||||||||
Deferred income tax expense | ||||||||||||||
U.S. federal | 108 | (396 | ) | 168 | ||||||||||
Foreign | (76 | ) | (316 | ) | 271 | |||||||||
State and local | 31 | 16 | 69 | |||||||||||
Total deferred expense (benefit) | 63 | (696 | ) | 508 | ||||||||||
Total income tax expense before change in tax status | 390 | 894 | 1,197 | |||||||||||
Change in tax status | — | (791 | ) | — | ||||||||||
Total income tax expense | $390 | $103 | $1,197 | |||||||||||
A reconciliation of the statutory U.S. federal income tax rate to our effective tax rate applicable to income and our change in tax status is shown in the following table. | ||||||||||||||
Year ended December 31, | 2007 | 2006 | 2005 | |||||||||||
Statutory U.S. federal tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||
Change in tax rate resulting from: | ||||||||||||||
State and local income taxes, net of federal income tax benefit | — | 1.8 | 1.8 | |||||||||||
Tax-exempt income | 0.5 | (0.9 | ) | (1.1 | ) | |||||||||
Foreign income tax rate differential | (4.5 | ) | (5.4 | ) | (1.9 | ) | ||||||||
Goodwill impairment | (0.4 | ) | 7.5 | — | ||||||||||
Other (a) | 0.1 | (0.8 | ) | 0.6 | ||||||||||
Effective tax rate before change in tax status | 30.7 | 37.2 | 34.4 | |||||||||||
Effect of valuation allowance change | (4.7 | ) | ||||||||||||
Effect of tax status change | — | (35.5 | ) | — | ||||||||||
LLC loss not subject to federal or state income taxes | (46.1 | ) | 2.9 | — | ||||||||||
Effective tax rate | (20.1 | )% | 4.6 | % | 34.4 | % | ||||||||
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December 31,($ in millions) | 2007 | 2006 | ||||||
Deferred tax liabilities | ||||||||
Lease transactions | $ | 1,549 | $ | 1,236 | ||||
Deferred acquisition costs | 560 | 560 | ||||||
Tax on unremitted earnings | 51 | 46 | ||||||
Unrealized gains on securities | 44 | 54 | ||||||
Accumulated translation adjustment | 19 | 8 | ||||||
State and local taxes | 17 | 1 | ||||||
Sales of finance receivables | 8 | 45 | ||||||
Debt issuance costs | 6 | 10 | ||||||
Other | 18 | 82 | ||||||
Gross deferred tax liabilities | 2,272 | 2,042 | ||||||
Deferred tax assets | ||||||||
Unearned insurance premiums | 299 | 317 | ||||||
Tax loss carryforwards | 248 | 156 | ||||||
Provision for credit losses | 191 | 156 | ||||||
Contingency | 141 | 82 | ||||||
Manufacturer incentive payments | 58 | 132 | ||||||
Tax credit carryforwards | 52 | 49 | ||||||
Depreciation | 22 | 5 | ||||||
Postretirement benefits | 15 | 27 | ||||||
Hedging transactions | 9 | 1 | ||||||
Goodwill | 3 | (2) | ||||||
Other | 73 | 112 | ||||||
Gross deferred tax assets | 1,111 | 1,035 | ||||||
Valuation allowance | (89 | ) | — | |||||
Net deferred tax assets | $ | 1,022 | $ | 1,035 | ||||
Net deferred tax liability | $ | 1,250 | $ | 1,007 | ||||
235
($ in millions) | ||||
Balance at January 1, 2007 | $ | 126 | ||
Additions based on tax positions related to the current year | 13 | |||
Additions for tax positions of prior years | 5 | |||
Reductions for tax positions of prior years | (2) | |||
Settlements | (1) | |||
Foreign currency translation adjustments | 14 | |||
Balance at December 31, 2007 | $ | 155 | ||
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December 31,($ in millions) | 2007 | 2006 | ||||||||
Assets: | ||||||||||
Available-for-sale investment in asset-backed security (a) | $35 | $471 | ||||||||
Finance receivables and loans, net of unearned income | ||||||||||
Wholesale auto financing (b) | 717 | 938 | ||||||||
Term loans to dealers (b) | 166 | 207 | ||||||||
Lending receivables (c) | 145 | — | ||||||||
Investment in operating leases, net (d) | 330 | 290 | ||||||||
Notes receivable from GM (e) | 1,868 | 1,975 | ||||||||
Other assets | ||||||||||
Receivable related to taxes due from GM (f) | — | 317 | ||||||||
Subvention receivables (rate and residual support) | 365 | — | ||||||||
Lease pull-ahead receivable | 22 | |||||||||
Other | 60 | 50 | ||||||||
Liabilities: | ||||||||||
Unsecured debt | ||||||||||
Notes payable to GM | 585 | 60 | ||||||||
Accrued expenses and other liabilities | ||||||||||
Wholesale payable | 466 | 499 | ||||||||
Subvention receivables (rate and residual support) | — | (309 | ) | |||||||
Lease pull-ahead receivable | — | (62 | ) | |||||||
Other receivables (payables) | 55 | (100 | ) | |||||||
Preferred interests (g) | — | 2,195 | ||||||||
Equity: | ||||||||||
Dividends to members (h) | — | 9,739 | ||||||||
Preferred interests (g) | 1,052 | — | ||||||||
Conversion of preferred membership interests (g) | 1,121 | — | ||||||||
Capital contributions received (i) | 1,080 | 951 | ||||||||
Preferred interest accretion to redemption value and dividends | 192 | 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 a 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) | Primarily represents loans with various affiliates of FIM Holdings. | |
(d) | Includes vehicles, buildings, and other equipment classified as operating lease assets that are leased to GM-affiliated and FIM Holdings-affiliated entities. | |
(e) | During 2007 and 2006, we have also provided wholesale financing to GM for vehicles, parts, and accessories in which GM retains title while consigned to us or dealers in the UK, Italy, and Germany. 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. Also included in the 2007 balance is the note receivable from GM referenced in (f) below. | |
(f) | In November 2006, GMAC transferred NOL tax receivables to GM for entities converting to an LLC. For all nonconverting entities, the amount was reclassified to deferred income taxes on our Consolidated Balance Sheet. At December 31, 2006, this balance represents a 2006 overpayment of taxes from GMAC to GM under our former tax-sharing arrangement and was included in accrued expenses and other liabilities on our Consolidated Balance Sheet. | |
(g) | During the fourth quarter of 2007, GM and FIM Holdings converted $1.1 billion of preferred membership interest into common equity interests. Refer to Note 1 for further discussion. | |
(h) | Amount includes cash dividends of $4.8 billion and noncash dividends of $4.9 billion in 2006. During the fourth quarter of 2006, in connection with the Sale Transactions, GMAC paid $7.8 billion of dividends to GM, which was composed 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 million; and (vi) other miscellaneous transactions. | |
(i) | During the first quarter of 2007, under the terms of the Sale Transactions, GM made a capital contribution of $1 billion to GMAC. The amount in 2006 was composed of the following: (i) approximately $801 million of liabilities related toU.S.- and Canadian-based, GM-sponsored, other postretirement programs and related deferred tax assets of $302 million; (ii) contingent tax liabilities of $384 million assumed by GM; and (iii) deferred tax assets transferred from GM of $68 million. |
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Year ended December 31,($ in millions) | 2007 | 2006 | 2005 | |||||||||||
Net financing revenue: | ||||||||||||||
GM and affiliates lease residual value support (a) | $1,024 | $749 | $507 | |||||||||||
Wholesale subvention and service fees from GM | 269 | 207 | 159 | |||||||||||
Interest paid on loans from GM | (23 | ) | (50 | ) | (46 | ) | ||||||||
Consumer lease payments from GM (b) | 39 | 74 | 168 | |||||||||||
Insurance premiums earned from GM | 254 | 334 | 384 | |||||||||||
Other income: | ||||||||||||||
Interest on notes receivable from GM and affiliates | 134 | 282 | 300 | |||||||||||
Interest on wholesale settlements (c) | 179 | 183 | 150 | |||||||||||
Revenues from GM leased properties, net | 13 | 93 | 79 | |||||||||||
Derivatives (d) | (6 | ) | (2 | ) | — | |||||||||
Other | 18 | — | — | |||||||||||
Service fee income: | ||||||||||||||
GMAC of Canada operating lease administration (e) | — | — | 18 | |||||||||||
Rental car repurchases held for resale (f) | — | 18 | 22 | |||||||||||
U.S. Automotive operating leases (g) | 26 | 37 | — | |||||||||||
Expense: | ||||||||||||||
Employee retirement plan costs allocated by GM | (1 | ) | 136 | 157 | ||||||||||
Off-lease vehicle selling expense reimbursement (h) | (38 | ) | (29 | ) | (17 | ) | ||||||||
Payments to GM for services, rent, and marketing expenses (i) | 156 | 106 | 131 | |||||||||||
(a) | Represents total amount of residual support and risk sharing paid (or invoiced) under the residual support andrisk-sharing programs and deferred revenue related to the settlement of residual support andrisk-sharing obligations for a portion of the lease portfolio in 2006, 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 wholesale settlements with GM are made before 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) | Represents 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) | We reimburse GM for certain services provided to us. This amount includes rental payments for our primary executive and administrative offices located in the Renaissance Center in Detroit, Michigan, as well as exclusivity and royalty fees. |
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Year ended December 31, | 2007 | 2006 | ||||||
GM and affiliates rate subvented contracts acquired: | ||||||||
North American operations | 85 | % | 90 | % | ||||
International operations (a) | 42 | % | 52 | % | ||||
(a) | The decrease in 2007 is primarily due to a price repositioning in Mexico, which improved the competitiveness of nonsubvented products and increased Mexico’s retail penetration by 2% in comparison with 2006 levels. |
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Unrealized | Cumulative | Accumulated | ||||||||||||||||||
gains (losses) | effect of | other | ||||||||||||||||||
Year ended December 31, | on investment | Translation | Cash flow | SFAS 158 | comprehensive | |||||||||||||||
($ in millions) | securities (a) | adjustments (b) | hedges | adoption | income (loss) | |||||||||||||||
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 | |||||||||||||||
2007 net change | (14 | ) | 490 | (26 | ) | 17 | 467 | |||||||||||||
Balance at December 31, 2007 | $92 | $852 | ($9 | ) | $17 | $952 | ||||||||||||||
(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 tax expense of $11 million, tax benefit of $37 million, and tax benefit $35 million for the years ended December 31, 2007, 2006, and 2005, respectively. |
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Year ended December 31, | ||||||||||||||
($ in millions) | 2007 | 2006 | 2005 | |||||||||||
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 (losses) gains arising during the period, net of taxes (a) | (1 | ) | 204 | (11 | ) | |||||||||
Reclassification adjustment for net gains included in net income, net of taxes (b) | (13 | ) | (652 | ) | (78 | ) | ||||||||
Net change | (14 | ) | (431 | ) | (89 | ) | ||||||||
Cash flow hedges: | ||||||||||||||
Net unrealized (losses) gains on cash flow hedges, net of taxes (c) | (71 | ) | (207 | ) | 45 | |||||||||
Reclassification adjustment for net losses included in net income, net of taxes (d) | 45 | 2 | 1 | |||||||||||
Net change | ($26 | ) | ($205 | ) | $46 | |||||||||
(a) | Net of tax expense of $24 million for 2007, tax expense of $106 million for 2006, and tax benefit of $6 million for 2005. | |
(b) | Net of tax expense of $8 million for 2007, $351 million for 2006, and $42 million for 2005. | |
(c) | Net of tax benefit of $12 million for 2007, tax benefit of $121 million for 2006, and tax expense of $23 million for 2005. | |
(d) | Net of tax benefit of $12 million for 2007, and $1 million for 2006, and 2005. |
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2007 | 2006 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
December 31,($ in millions) | value | value | value | value | ||||||||||||
Financial assets | ||||||||||||||||
Investment securities | $16,740 | $16,740 | $16,791 | $16,791 | ||||||||||||
Loans held for sale | 20,559 | 20,852 | 27,718 | 28,025 | ||||||||||||
Finance receivables and loans, net | 124,759 | 122,378 | 170,870 | 171,076 | ||||||||||||
Notes receivable from GM | 1,868 | 1,868 | 1,975 | 1,975 | ||||||||||||
Derivative assets | 4,448 | 4,448 | 2,544 | 2,544 | ||||||||||||
Financial liabilities | ||||||||||||||||
Debt (a) | 193,547 | 179,400 | 237,338 | 237,733 | ||||||||||||
Deposit liabilities | 12,851 | 13,020 | 9,566 | 9,566 | ||||||||||||
Derivative liabilities | 1,311 | 1,311 | 1,745 | 1,745 | ||||||||||||
(a) | Debt includes deferred interest for zero-coupon bonds of $399 million and $353 million for 2007 and 2006, respectively. |
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Automotive Finance | ||||||||||||||||||||||||
operations (a) | ||||||||||||||||||||||||
North | ||||||||||||||||||||||||
American | International | |||||||||||||||||||||||
Year ended December 31,($ in millions) | operations (b) | operations (c) | ResCap | Insurance | Other (b)(d) | Consolidated | ||||||||||||||||||
2007 | ||||||||||||||||||||||||
Net financing revenue | $90 | $824 | $36 | $— | $546 | $1,496 | ||||||||||||||||||
Other revenue | 3,151 | 890 | 1,640 | 4,902 | (280 | ) | 10,303 | |||||||||||||||||
Total net revenue | 3,241 | 1,714 | 1,676 | 4,902 | 266 | 11,799 | ||||||||||||||||||
Provision for credit losses | 390 | 120 | 2,580 | — | 6 | 3,096 | ||||||||||||||||||
Impairment of goodwill and other intangible assets | — | — | 455 | — | — | 455 | ||||||||||||||||||
Other noninterest expense | 1,642 | 1,090 | 3,023 | 4,235 | 200 | 10,190 | ||||||||||||||||||
Income (loss) before income tax expense | 1,209 | 504 | (4,382 | ) | 667 | 60 | (1,942 | ) | ||||||||||||||||
Income tax expense (benefit) expense | 110 | 118 | (36 | ) | 208 | (10 | ) | 390 | ||||||||||||||||
Net income (loss) | $1,099 | $386 | ($4,346 | ) | $459 | $70 | ($2,332 | ) | ||||||||||||||||
Total assets | $125,235 | $36,129 | $81,260 | $13,770 | ($8,684 | ) | $247,710 | |||||||||||||||||
2006 | ||||||||||||||||||||||||
Net financing revenue | ($291 | ) | $765 | $958 | $— | $770 | $2,202 | |||||||||||||||||
Other revenue | 3,081 | 806 | 3,360 | 5,616 | (243 | ) | 12,620 | |||||||||||||||||
Total net revenue | 2,790 | 1,571 | 4,318 | 5,616 | 527 | 14,822 | ||||||||||||||||||
Provision for credit losses | 425 | 85 | 1,334 | — | 156 | 2,000 | ||||||||||||||||||
Impairment of goodwill and other intangible assets | — | — | — | — | 840 | 840 | ||||||||||||||||||
Other noninterest expense | 1,614 | 1,065 | 2,568 | 3,990 | 517 | 9,754 | ||||||||||||||||||
Income (loss) before income tax expense | 751 | 421 | 416 | 1,626 | (986 | ) | 2,228 | |||||||||||||||||
Income tax expense (benefit) | (184 | ) | 113 | (289 | ) | 499 | (36 | ) | 103 | |||||||||||||||
Net income (loss) | $935 | $308 | $705 | $1,127 | ($950 | ) | $2,125 | |||||||||||||||||
Total assets | $103,506 | $31,097 | $130,569 | $13,424 | $8,843 | $287,439 | ||||||||||||||||||
2005 | ||||||||||||||||||||||||
Net financing revenue | ($419 | ) | $877 | $1,352 | $— | $1,152 | $2,962 | |||||||||||||||||
Other revenue | 3,108 | 809 | 3,508 | 4,259 | 271 | 11,955 | ||||||||||||||||||
Total net revenue | 2,689 | 1,686 | 4,860 | 4,259 | 1,423 | 14,917 | ||||||||||||||||||
Provision for credit losses | 313 | 102 | 626 | — | 33 | 1,074 | ||||||||||||||||||
Impairment of goodwill and other intangible assets | — | — | — | — | 712 | 712 | ||||||||||||||||||
Other noninterest expense | 1,216 | 1,018 | 2,607 | 3,627 | 1,184 | 9,652 | ||||||||||||||||||
Income (loss) before income tax expense | 1,160 | 566 | 1,627 | 632 | (506 | ) | 3,479 | |||||||||||||||||
Income tax expense (benefit) | 415 | 158 | 606 | 215 | (197 | ) | 1,197 | |||||||||||||||||
Net income (loss) | $745 | $408 | $1,021 | $417 | ($309 | ) | 2,282 | |||||||||||||||||
Total assets | $128,868 | $27,285 | $118,608 | $12,624 | $33,172 | $320,557 | ||||||||||||||||||
(a) | North American operations consist of automotive financing in the United States and Canada. 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) | Refer to Note 1 for a description of changes to historical financial data for North American operations and Other operating segment. | |
(c) | Amounts include intrasegment eliminations between the North American operations and International operations. | |
(d) | 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, whereas the 2005 financial results represent Capmark as wholly owned. At December 31, 2007, total assets were $5.3 billion for the Commercial Finance business, and ($14.0) billion in corporate intercompany activity, reclassifications, and eliminations. |
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Long-lived | ||||||||
Year ended December 31,($ in millions) | Revenue (a) | assets (b) | ||||||
2007 | ||||||||
Canada | $522 | $9,861 | ||||||
Europe | 1,177 | 2,725 | ||||||
Latin America | 1,075 | 186 | ||||||
Asia-Pacific | 86 | 238 | ||||||
Total foreign | 2,860 | 13,010 | ||||||
Total domestic | 8,939 | 19,897 | ||||||
Total | $11,799 | $32,907 | ||||||
2006 | ||||||||
Canada | $596 | $8,447 | ||||||
Europe | 1,642 | 2,357 | ||||||
Latin America | 924 | 138 | ||||||
Asia-Pacific | 79 | 201 | ||||||
Total foreign | 3,241 | 11,143 | ||||||
Total domestic | 11,581 | 13,619 | ||||||
Total | $14,822 | $24,762 | ||||||
2005 | ||||||||
Canada | $539 | $7,784 | ||||||
Europe | 1,693 | 2,740 | ||||||
Latin America | 864 | 121 | ||||||
Asia-Pacific | 77 | 201 | ||||||
Total foreign | 3,173 | 10,846 | ||||||
Total domestic | 11,744 | 22,119 | ||||||
Total | $14,917 | $32,965 | ||||||
(a) | Revenue consists of total net financing revenue and other revenue as presented in our Consolidated Statement of Income. | |
(b) | Consists of net operating leases assets and net property and equipment. |
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Cash paid | ||||||||||||||||
Liability | Restructuring | or otherwise | Liability | |||||||||||||
balance at | charges through | settled through | balance at | |||||||||||||
($ in millions) | September 30, 2007 | December 31, 2007 | December 31, 2007 | December 31, 2007 | ||||||||||||
Restructuring charges: | ||||||||||||||||
Employee severance | $— | $66 | ($34 | ) | $32 | |||||||||||
Lease termination | — | 68 | (23 | ) | 45 | |||||||||||
Total restructuring charges | $— | $134 | ($57 | ) | $77 | |||||||||||
2007 | 2006 | |||||||||||||||
Maximum | Carrying value | Maximum | Carrying value | |||||||||||||
December 31,($ in millions) | liability | of liability | liability | of liability | ||||||||||||
Standby letters of credit | $161 | $40 | $191 | $37 | ||||||||||||
Securitization and sales: | ||||||||||||||||
HLTV and international securitizations | 67 | — | 108 | — | ||||||||||||
Agency loan | 6,005 | — | 6,390 | — | ||||||||||||
Guarantees for repayment of third-party debt | 543 | — | 617 | — | ||||||||||||
Repurchase guarantees | 135 | — | 204 | — | ||||||||||||
Nonfinancial guarantees | 211 | — | 233 | — | ||||||||||||
Other guarantees | 185 | 8 | 223 | 4 | ||||||||||||
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2007 | 2006 | |||||||||||||||||||||||
Contract | Gain | Loss | Contract | Gain | Loss | |||||||||||||||||||
December 31,($ in millions) | amount | position | position | amount | position | position | ||||||||||||||||||
Commitments to: | ||||||||||||||||||||||||
Originate/purchase mortgages or securities (a) | $6,464 | $6 | ($22 | ) | $14,248 | $— | ($48 | ) | ||||||||||||||||
Sell mortgages or securities (a) | 11,958 | 6 | (29 | ) | 20,702 | 28 | (1 | ) | ||||||||||||||||
Remit excess cash flows on certain loan portfolios (b) | — | — | — | 5,334 | 39 | — | ||||||||||||||||||
Sell retail automotive receivables (c) | 17,500 | — | — | 21,500 | — | — | ||||||||||||||||||
Provide capital to equity-method investees (d) | 273 | — | — | 278 | — | — | ||||||||||||||||||
Fund construction lending (e) | 127 | — | — | 352 | — | — | ||||||||||||||||||
Unused mortgage lending commitments (f) | 8,063 | — | — | 9,019 | — | — | ||||||||||||||||||
Bank certificates of deposit | 8,116 | — | — | 6,686 | — | — | ||||||||||||||||||
Unused revolving credit line commitments (g) | 6,361 | — | — | 7,381 | — | — | ||||||||||||||||||
(a) | The fair value is estimated using published market information associated with commitments to sell similar instruments. Included as of December 31, 2007 and 2006 are commitments accounted for as derivatives with a contract amount of $18,118 million and $37,082 million, a gain position of $11 million and $28 million, and a loss position of $41 million and $49 million, respectively. | |
(b) | Under certain residential mortgage purchase agreements, we are committed to remitting to its shared execution partners’ cash flows that exceed a required rate of return less credit loss reimbursements to the mortgage originators. This commitment is accounted for as a derivative. | |
(c) | We have entered into agreements with third-party banks to sell automotive retail receivables in which we transfer all credit risk to the purchaser (whole loan sales). | |
(d) | We are committed to lend equity capital to certain private equity funds. The fair value of these commitments is considered in the overall valuation of the underlying assets with which they are associated. | |
(e) | We are committed to fund the completion of the development of certain lots and model homes up to the amount of the agreed upon amount per project. | |
(f) | The fair value of these commitments is considered in the overall valuation of the related assets. | |
(g) | The unused portions of revolving lines of credit reset at prevailing market rates and, as such, approximate market value. |
Year ended December 31,($ in millions) | ||||
2008 | $200 | |||
2009 | 153 | |||
2010 | 124 | |||
2011 | 88 | |||
2012 | 71 | |||
2013 and thereafter | 165 | |||
Total minimum payment required | $801 | |||
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Year ended December 31,($ in millions) | 2007 | 2006 | ||||||||
Balance at beginning of year | $3,161 | $3,159 | ||||||||
Written service contract revenue | 1,134 | 1,215 | ||||||||
Earned service contract revenue | (1,353 | ) | (1,207 | ) | ||||||
Foreign currency translation effect | 5 | (6 | ) | |||||||
Balance at end of year | $2,947 | $3,161 | ||||||||
December 31,($ in millions) | 2007 | 2006 | ||||||
Loans sold with recourse (a) | $249 | $800 | ||||||
Maximum exposure on loans sold with recourse (b): | ||||||||
Full exposure | 127 | 189 | ||||||
Limited exposure | 28 | 58 | ||||||
Total exposure | $155 | $247 | ||||||
(a) | Represents loans sold in the normal course of the securitization process with various forms of representations for early payment defaults. | |
(b) | Maximum recourse exposure is net of amounts reinsured with third parties totaling $1 million and $1 million at December 31, 2007 and 2006, respectively. |
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Unpaid principal | ||||||||||||||||
Loan production | as of | |||||||||||||||
for the year | December 31, | |||||||||||||||
($ in millions) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
Interest only mortgages | $30,058 | $48,335 | $18,218 | $22,416 | ||||||||||||
Option adjustable rate mortgages | 7,595 | 18,308 | 1,695 | 1,955 | ||||||||||||
High loan-to-value (100% or more) mortgages | 5,897 | 8,768 | 5,824 | 11,978 | ||||||||||||
Below market initial rate (teaser) mortgages | 38 | 257 | 1 | 192 | ||||||||||||
• | Interest-only mortgages— Allow interest-only payments for a fixed period. 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 amortizing 30- and15-year payment options, the borrower’s monthly payment is set based on the interest rate, loan balance, and remaining loan term. |
• | High loan-to-value mortgages — Defined as first-lien loans with loan-to-value ratios in excess of 100% or second-lien loans that when combined with the underlying first-lien mortgage loan result in a loan-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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2007($ in millions) | First quarter | Second quarter | Third quarter | Fourth quarter | ||||||||||||
Net financing revenue | $544 | $408 | $390 | $154 | ||||||||||||
Total other revenue | 2,436 | 2,867 | 1,863 | 3,137 | ||||||||||||
Total net revenue | 2,980 | 3,275 | 2,253 | 3,291 | ||||||||||||
Provision for credit losses | 681 | 430 | 964 | 1,021 | ||||||||||||
Impairment of goodwill and other intangible assets | — | — | 455 | — | ||||||||||||
Other noninterest expense | 2,454 | 2,393 | 2,498 | 2,845 | ||||||||||||
Income (loss) before income tax expense | (155 | ) | 452 | (1,664 | ) | (575 | ) | |||||||||
Income tax expense (benefit) | 150 | 159 | (68 | ) | 149 | |||||||||||
Net income (loss) | ($305 | ) | $293 | ($1,596 | ) | ($724 | ) | |||||||||
2006($ in millions) | First quarter | Second quarter | Third quarter | Fourth quarter | ||||||||||||
Net financing revenue | $451 | $397 | $633 | $721 | ||||||||||||
Total other revenue | 2,899 | 3,522 | 3,015 | 3,184 | ||||||||||||
Total net revenue | 3,350 | 3,919 | 3,648 | 3,905 | ||||||||||||
Provision for credit losses | 166 | 268 | 503 | 1,063 | ||||||||||||
Impairment of goodwill and other intangible assets | — | — | 840 | — | ||||||||||||
Other noninterest expense | 2,467 | 2,504 | 2,295 | 2,488 | ||||||||||||
Income (loss) before income tax expense | 717 | 1,147 | 10 | 354 | ||||||||||||
Income tax expense (benefit) | 222 | 360 | 183 | (662 | ) (b) | |||||||||||
Net income (loss) | $495 | $787 | ($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. | |
(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. |
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GENERAL MOTORS CORPORATION (Registrant) | ||||||
Date: February 28, 2008 | ||||||
By: | /s/ G. RICHARD WAGONER, JR. G. Richard Wagoner, Jr. Chairman and Chief Executive Officer |
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/ ERROLL B. DAVIS, JR. (Erroll B. Davis, Jr.) | 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/ KATHRYN V. MARINELLO (Kathryn V. Marinello) | Director | |
/s/ ECKHARD PFEIFFER (Eckhard Pfeiffer) | Director |
255