Add
GM to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| GM > SEC Filings for GM > Form 10-Q on 3-May-2012 | All Recent SEC Filings |
3-May-2012
Quarterly Report
General Motors Company is sometimes referred to in this Quarterly Report on Form 10-Q as "we," "our," "us," "ourselves," the "Company," "General Motors" or "GM."
Presentation and Estimates
Basis of Presentation
This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying condensed consolidated financial statements and the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011 (2011 Form 10-K), as filed with the Securities and Exchange Commission (SEC).
We analyze the results of our business through our five segments: GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO), GM South America (GMSA) and General Motors Financial Company, Inc. (GM Financial). Nonsegment operations are classified as Corporate. Corporate includes investments in Ally Financial, Inc. (Ally Financial), certain centrally recorded income and costs, such as interest, income taxes and corporate expenditures and certain nonsegment specific revenues and expenses.
Consistent with industry practice, market share information includes estimates of industry sales in certain countries where public reporting is not legally required or otherwise available on a consistent basis.
Supplemental Consolidating Information
We are providing supplemental consolidating information in order to provide more transparency into the financial position, operating results and cash flows of our two businesses, Automotive and GM Financial.
Use of Estimates in the Preparation of the Financial Statements
The condensed consolidated financial statements are prepared in conformity with U.S. GAAP, which requires the use of estimates, judgments and assumptions that affect the amounts of assets and liabilities at the reporting date and the amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and the resulting balances are reasonable; however, due to the inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.
Change in Presentation of Financial Statements
In 2012 we changed the presentation of our condensed consolidated balance sheet, condensed consolidated statements of cash flows and certain footnotes to classify the assets and liabilities of GM Financial as current or non-current and to combine line items which were either of a related nature or not individually material. We have made corresponding reclassifications to the comparable information for all periods presented.
Overview
Automotive
Our vision is to design, build and sell the world's best vehicles. We offer a global vehicle portfolio of cars, crossovers and trucks. We are committed to leadership in vehicle design, quality, reliability, telematics and infotainment and safety, as well as to developing key energy efficiency, energy diversity and advanced propulsion technologies, including electric vehicles with range extending capabilities such as the Chevrolet Volt. Our business is diversified across products and geographic markets. We meet the local sales and service needs of our retail and fleet customers with a global network of independent dealers. In the three months ended March 31, 2012 73.3% of our vehicle sales volume was generated outside the U.S., including 46.7% from emerging markets, such as Brazil, Russia, India and China (collectively BRIC), which have recently experienced the industry's highest volume growth.
Our automotive business is organized into four geographically-based segments:
• GMNA, with sales, manufacturing and distribution operations in the U.S., Canada and Mexico and sales and distribution operations in Central America and the Caribbean, represented 30.9% of our vehicle sales volume in the three months ended March 31, 2012 and we had the largest market share in this market at 16.7%.
• GME has sales, manufacturing and distribution operations across Western and Central Europe. GME's vehicle sales volume, which in addition to Western and Central Europe, includes Eastern Europe (including Russia and the other members of the Commonwealth of Independent States among others) represented 17.5% of our vehicle sales volume in the three months ended March 31, 2012. In the three months ended March 31, 2012 we estimate we had the number four market share in this market at 8.2%. GMIO distributes Chevrolet brand vehicles which, when sold in Europe, are included in GME vehicle sales volume and market share data.
• GMIO has sales, manufacturing and distribution operations in Asia-Pacific, Eastern Europe (including Russia and the other members of the Commonwealth of Independent States among others), Africa and the Middle East. GMIO's vehicle sales volume, which includes Asia-Pacific, Africa and the Middle East is our largest segment by vehicle sales volume. GMIO represented 40.7% of our global vehicle sales volume, including sales through our joint ventures, in the three months ended March 31, 2012. In the three months ended March 31, 2012 we estimate we had the number two market share in this market at 9.4% and the number one market share in China. In the three months ended March 31, 2012 GMIO derived 80.3% of its vehicle sales volume from China. GMIO records the financial results of Chevrolet brand vehicles that it distributes and sells in Europe.
• GMSA, with sales, manufacturing, distribution and financing operations in Brazil, Argentina, Colombia, Ecuador and Venezuela as well as sales and distribution operations in Bolivia, Chile, Paraguay, Peru and Uruguay, represented 10.9% of our vehicle sales volume in the three months ended March 31, 2012. In the three months ended March 31, 2012 we estimate we had the largest market share in this market at 18.4%. We had the number three market share in Brazil. In the three months ended March 31, 2012 GMSA derived 54.9% of its vehicle sales volume from Brazil.
Automotive Financing - GM Financial
GM Financial specializes in purchasing retail automobile installment sales contracts originated by GM and non-GM franchised and select independent dealers in connection with the sale of used and new automobiles. GM Financial also offers lease products through GM dealerships in connection with the sale of used and new automobiles that target customers with sub-prime and prime credit bureau scores. GM Financial primarily generates revenue and cash flows through the purchase, retention, subsequent securitization and servicing of finance receivables. To fund the acquisition of receivables prior to securitization, GM Financial uses available cash and borrowings under its credit facilities. GM Financial earns finance charge income on finance receivables and pays interest expense on borrowings under its credit facilities. GM Financial periodically transfers receivables to securitization trusts that issue asset-backed securities to investors. The securitization trusts are special purpose entities that are also variable interest entities that meet the requirements to be consolidated in the financial statements.
Focus on Chinese Market
We view the Chinese market, the fastest growing global market by volume of vehicles sold, as important to our global growth strategy and are employing a multi-brand strategy, led by our Buick and Chevrolet brands. In the coming years, we plan to increasingly leverage our global architectures to increase the number of nameplates under the Buick, Chevrolet and Cadillac brands in China and continue to grow our business under the Baojun, Jiefang and Wuling brands. We operate in Chinese markets through a number of joint ventures and maintaining good relations with our joint ventures partners, which are affiliated with the Chinese government, is an important part of our China growth strategy.
Refer to Note 8 to our condensed consolidated financial statements for our direct ownership interests in our Chinese joint ventures, collectively referred to as China JVs.
The following tables summarize certain key operational and financial data for the China JVs (dollars in millions, vehicles in thousands):
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Three Months Ended March 31,
2012 2011
Total wholesale vehicles(a) 756 686
Market share(b) 15.1 % 13.6 %
Total net sales and revenue $ 8,693 $ 7,859
Net income $ 887 $ 944
__________
|
(b) Market share for China market.
March 31, 2012 December 31, 2011
Cash and cash equivalents $ 5,839 $ 4,679
Debt $ 115 $ 106
|
Automotive Financing Strategy
Our automotive financing strategy centers around ensuring that our dealers and customers have consistently available, transparent and competitive financing options throughout the business and credit cycles.
Historically Ally Financial has provided a majority of the financing for our dealers and a significant portion of the financing for our customers in the U.S., Canada and other major international markets where we operate. Ally Financial continues to provide the majority of the financing needs of our dealers and customers.
We utilize GM Financial to further bolster our offerings in the leasing and sub-prime financing segments in the U.S. and Canada. We believe that by having our own capabilities in key segments of the market we will be able to achieve more competition and better service from the market, while ensuring certainty of availability through the business cycles.
In April 2011 GM Financial began originating leases for our customers in Canada via FinanciaLinx Corporation. Given the importance of leasing and the current lack of availability of leasing offerings to our customers in the Canadian market (due to regulatory restrictions preventing banks and bank holding companies from offering leasing in Canada), we believe having a captive financing offering in Canada is important to our business.
In January 2012 in order to increase our competitiveness and benefit from increased financing sources, we entered into an arrangement with a bank to provide incentivized retail financing in the western region of the U.S.
We will continue to expand the business of GM Financial in targeted areas that we view as strategic and to otherwise evaluate opportunities in specific segments of the automotive financing market, both in the U.S. and internationally. We expect any expansion of GM Financial or any arrangements with other financing providers will complement our important relationship with Ally Financial.
Alliance with Peugeot S.A.
In February 2012 we entered into an agreement with Peugeot S.A. (PSA) to create a long-term and broad-scale global strategic alliance that is expected to leverage the combined strengths and capabilities of the two companies, contribute to our profitability and improve our competitiveness in Europe. In connection with the alliance we acquired a seven percent equity stake in PSA for $0.4 billion. The alliance is structured around two main pillars: the sharing of vehicle platforms, components and modules and the creation of a global purchasing joint venture for the sourcing of commodities, components and other goods and services. The implementation of the strategic alliance is subject to the execution of various definitive agreements which will outline the terms of the joint business activities.
Restructuring Activities
We have previously executed various restructuring and other initiatives, and we plan to execute additional initiatives in the future, if necessary, in order to align manufacturing capacity and other costs with prevailing global automotive production and to
improve the utilization of remaining facilities.
Our 2011 labor agreement with the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America included cash severance incentive programs which were completed at March 31, 2012 for skilled trade U.S. hourly employees. A total of 1,400 skilled trade U.S. hourly employees participated in these programs at a total cost of $0.1 billion and was recorded upon irrevocable acceptances by both parties. Substantially all of the program cost was recorded in the three months ended March 31, 2012.
Benefit Plan Changes
U.S. Salaried Benefit Changes
In January 2012 we amended the U.S. salaried pension plan to cease the accrual of additional benefits effective September 30, 2012. This amendment resulted in a curtailment which decreased the liability and decreased the net actuarial loss component of Accumulated other comprehensive income by $0.3 billion Active plan participants will receive additional contributions in the defined contribution plan starting in October 2012.
Venezuelan Exchange Regulations
Our Venezuelan subsidiaries utilize the U.S. Dollar as their functional currency because of the hyperinflationary status of the Venezuelan economy. The Venezuelan government has introduced foreign exchange control regulations which make it more difficult to convert Bolivar Fuerte (BsF) to U.S. Dollars. These regulations affect our Venezuelan subsidiaries' ability to pay non-BsF denominated obligations that do not qualify to be processed by the Venezuela currency exchange agency at the official exchange rates.
Refer to Note 2 to our condensed consolidated financial statements for additional details regarding amounts pending government approval for settlement and the net assets of our Venezuelan subsidiaries.
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Consolidating Results of Operations
(Dollars in Millions)
Three Months Ended March 31, 2012 Three Months Ended March 31, 2011
Automotive GM Financial Eliminations Consolidated Automotive GM Financial Eliminations Consolidated
Net sales and
revenue
Automotive sales
and revenue $ 37,328 $ - $ - $ 37,328 $ 35,899 $ - $ - $ 35,899
GM Financial
revenue - 431 - 431 - 295 - 295
Total net sales
and revenue 37,328 431 - 37,759 35,899 295 - 36,194
Costs and
expenses
Automotive cost
of sales 32,908 - 2 32,910 31,685 - - 31,685
GM Financial
operating
expenses - 98 - 98 - 76 - 76
GM Financial
interest expense - 63 - 63 - 41 - 41
GM Financial
other expenses - 89 (2 ) 87 - 48 - 48
Automotive
selling, general
and
administrative
expense 2,973 - - 2,973 2,994 - - 2,994
Other automotive
expenses, net 15 - - 15 6 - - 6
Goodwill
impairment
charges 617 - - 617 395 - - 395
Total costs and
expenses 36,513 250 - 36,763 35,080 165 - 35,245
Operating income 815 181 - 996 819 130 - 949
Automotive
interest expense 110 - - 110 149 - - 149
Interest income
and other
non-operating
income, net 275 - - 275 604 - - 604
Loss on
extinguishment
of debt 18 - - 18 - - - -
Income before
income taxes and
equity income 962 181 - 1,143 1,274 130 - 1,404
Income tax
expense 142 74 - 216 66 71 - 137
Equity income,
net of tax and
gain on disposal
of investments 423 - - 423 2,144 - - 2,144
Net income 1,243 107 - 1,350 3,352 59 - 3,411
Net income
attributable to
noncontrolling
interests (35 ) - - (35 ) (45 ) - - (45 )
Net income
attributable to
stockholders $ 1,208 $ 107 $ - $ 1,315 $ 3,307 $ 59 $ - $ 3,366
|
Production and Retail Vehicle Sales Volume
Management believes that production volume and retail vehicle sales data provide meaningful information regarding our automotive operating results. Production volumes manufactured by our assembly facilities are generally aligned with current period net sales and revenue, as we generally recognize revenue upon the release of the vehicle to the carrier responsible for transporting it to a dealer, which is after the completion of production. Retail vehicle sales data, which represents estimated sales to the end customer, including fleets, does not correlate directly to the revenue we recognize during the period. However, retail vehicle sales data is indicative of the underlying demand for our vehicles and is the basis for our market share.
Information relating to our relative position in the global automotive industry is based upon the good faith estimates of management and includes all sales by joint ventures on a total vehicle basis, not based on the percentage of ownership in the joint venture. Market share information is based on retail vehicle sales volume. Worldwide market share and vehicle sales data excludes the markets of Iran, North Korea, Sudan and Syria.
Production volume includes vehicles produced by certain joint ventures. The joint venture agreements with SGMW and FAW-GM allow for significant rights as a member as well as the contractual right to report SGMW and FAW-GM joint venture production in China. The following table summarizes total production volume (vehicles in thousands):
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Three Months Ended March 31,
2012 2011
GMNA
Cars 321 284
Trucks 541 502
Total GMNA 862 786
GME 292 344
GMIO
Consolidated entities 275 257
Joint ventures
SGMW 386 319
SGM 305 291
FAW-GM 19 15
Other 82 84
Total GMIO 1,067 966
GMSA 203 231
Worldwide 2,424 2,327
|
Vehicle Sales
The following tables summarize total industry sales of new motor vehicles of
domestic and foreign makes and the related competitive position (vehicles in
thousands):
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Vehicle Sales(a)(b)(c)
Three Months Ended March 31,
2012 2011
GM as GM as
a % of a % of
Industry GM Industry Industry GM Industry
GMNA
United States 3,540 608 17.2 % 3,114 593 19.0 %
Canada 371 50 13.5 % 340 51 15.1 %
Mexico 241 44 18.1 % 218 38 17.6 %
Other 71 2 2.2 % 66 2 3.4 %
Total GMNA 4,222 703 16.7 % 3,738 684 18.3 %
GME
United Kingdom 639 70 11.0 % 641 81 12.6 %
Germany 849 64 7.6 % 840 69 8.2 %
Italy 441 33 7.4 % 573 44 7.6 %
Russia 612 56 9.2 % 532 44 8.2 %
Uzbekistan 23 22 93.5 % 25 23 94.1 %
France 624 27 4.4 % 771 37 4.9 %
Spain 230 19 8.3 % 241 21 8.9 %
Other 1,416 106 7.5 % 1,515 114 7.5 %
Total GME 4,834 398 8.2 % 5,137 434 8.4 %
GMIO
China(d) 4,924 745 15.1 % 5,035 686 13.6 %
Australia 260 29 11.1 % 248 30 11.9 %
South Korea 361 32 8.9 % 389 30 7.7 %
Middle East Operations 300 31 10.4 % 272 30 10.9 %
India(d) 1,019 28 2.7 % 909 29 3.1 %
Egypt 43 11 26.1 % 32 9 27.8 %
Other 2,923 52 1.8 % 2,309 40 1.7 %
Total GMIO 9,829 928 9.4 % 9,194 852 9.3 %
GMSA
Brazil 818 137 16.7 % 825 143 17.3 %
Argentina 254 42 16.4 % 233 36 15.4 %
Colombia 81 24 29.4 % 79 26 33.1 %
Venezuela 33 13 38.8 % 26 11 42.3 %
Other 170 34 20.1 % 159 32 20.4 %
Total GMSA 1,357 249 18.4 % 1,321 248 18.8 %
Total Worldwide 20,242 2,278 11.3 % 19,390 2,218 11.4 %
|
GENERAL MOTORS COMPANY AND SUBSIDIARIES
Vehicle Sales(a)(b)(c)
Three Months Ended March 31,
2012 2011
GM as GM as
a % of a % of
Industry GM Industry Industry GM Industry
United States
Cars 1,793 256 14.3 % 1,497 232 15.5 %
Trucks 914 208 22.8 % 814 202 24.8 %
Crossovers 833 144 17.3 % 803 159 19.8 %
Total United States 3,540 608 17.2 % 3,114 593 19.0 %
Canada, Mexico and Other 683 95 13.9 % 624 92 14.7 %
Total GMNA 4,222 703 16.7 % 3,738 684 18.3 %
__________
|
(b) Certain fleet sales that are accounted for as operating leases are included in vehicle sales at the time of delivery to the daily rental car companies.
(c) Vehicle sales data may include rounding differences.
(d) Includes the following joint venture vehicle sales:
Three Months Ended March 31,
2012 2011
Joint venture sales in China
SGM 337 310
SGMW and FAW-GM 407 376
Joint venture sales in India
SAIC GM Investment Limited (HKJV) 28 29
Total Net Sales and Revenue
(Dollars in Millions)
Three Months Ended March 31,
2012 vs. 2011 Change
2012 2011 Amount %
GMNA $ 24,176 $ 22,110 $ 2,066 9.3 %
GME 5,513 6,870 (1,357 ) (19.8 )%
GMIO 6,060 5,208 852 16.4 %
. . .
|
|
|