Document

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549-1004

Form 10-Q



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

For the quarterly period ended September 30, 2019



☐	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 001-34960

GENERAL MOTORS COMPANY

(Exact name of registrant as specified in its charter)

Delaware

27-0756180

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

300 Renaissance Center,

Detroit,

Michigan

48265

-3000

(Address of principal executive offices)

(Zip Code)

(313) 667-1500

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	GM	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 15, 2019 there were 1,428,784,056 shares of common stock outstanding.

INDEX



			Page
PART I
Item 1.	Condensed Consolidated Financial Statements		1
	Condensed Consolidated Income Statements (Unaudited)		1
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)		1
	Condensed Consolidated Balance Sheets (Unaudited)		2
	Condensed Consolidated Statements of Cash Flows (Unaudited)		3
	Condensed Consolidated Statements of Equity (Unaudited)		4
	Notes to Condensed Consolidated Financial Statements		5
	Note 1.	Nature of Operations and Basis of Presentation	5
	Note 2.	Revenue	6
	Note 3.	Marketable and Other Securities	8
	Note 4.	GM Financial Receivables and Transactions	9
	Note 5.	Inventories	11
	Note 6.	Equipment on Operating Leases	11
	Note 7.	Equity in Net Assets of Nonconsolidated Affiliates	11
	Note 8.	Variable Interest Entities	12
	Note 9.	Debt	12
	Note 10.	Derivative Financial Instruments	13
	Note 11.	Product Warranty and Related Liabilities	15
	Note 12.	Pensions and Other Postretirement Benefits	15
	Note 13.	Commitments and Contingencies	16
	Note 14.	Income Taxes	20
	Note 15.	Restructuring and Other Initiatives	21
	Note 16.	Stockholders' Equity and Noncontrolling Interests	21
	Note 17.	Earnings Per Share	24
	Note 18.	Discontinued Operations	24
	Note 19.	Segment Reporting	25
	Note 20.	Subsequent Event	27
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		46
Item 4.	Controls and Procedures		46
PART II
Item 1.	Legal Proceedings		47
Item 1A.	Risk Factors		47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		47
Item 6.	Exhibits		48
Signature			49

Table of Contents

GENERAL MOTORS COMPANY AND SUBSIDIARIES

PART I

Item 1. Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)



	Three Months Ended				Nine Months Ended
	September 30, 2019		September 30, 2018		September 30, 2019		September 30, 2018
Net sales and revenue
Automotive	$	31,817	$	32,276	$	95,503	$	98,242
GM Financial	3,656		3,515		10,908		10,408
Total net sales and revenue (Note 2)	35,473		35,791		106,411		108,650
Costs and expenses
Automotive and other cost of sales	28,174		28,533		84,730		88,788
GM Financial interest, operating and other expenses	2,987		3,064		9,437		9,074
Automotive and other selling, general and administrative expense	2,008		2,584		6,209		7,172
Total costs and expenses	33,169		34,181		100,376		105,034
Operating income	2,304		1,610		6,035		3,616
Automotive interest expense	206		161		582		470
Interest income and other non-operating income, net	169		651		1,338		2,130
Equity income (Note 7)	315		530		1,000		1,815
Income before income taxes	2,582		2,630		7,791		7,091
Income tax expense (Note 14)	271		100		932		1,085
Income from continuing operations	2,311		2,530		6,859		6,006
Loss from discontinued operations, net of tax (Note 18)	—		—		—		70
Net income	2,311		2,530		6,859		5,936
Net loss attributable to noncontrolling interests	40		4		67		34
Net income attributable to stockholders	$	2,351	$	2,534	$	6,926	$	5,970

Net income attributable to common stockholders	$	2,313	$	2,503	$	6,813	$	5,910

Earnings per share (Note 17)
Basic earnings per common share – continuing operations	$	1.62	$	1.77	$	4.79	$	4.24
Basic loss per common share – discontinued operations	$	—	$	—	$	—	$	0.05

Basic earnings per common share	$	1.62	$	1.77	$	4.79	$	4.19
Weighted-average common shares outstanding – basic	1,428		1,412		1,422		1,410

Diluted earnings per common share – continuing operations	$	1.60	$	1.75	$	4.74	$	4.18
Diluted loss per common share – discontinued operations	$	—	$	—	$	—	$	0.05

Diluted earnings per common share	$	1.60	$	1.75	$	4.74	$	4.13
Weighted-average common shares outstanding – diluted	1,442		1,431		1,439		1,431

Dividends declared per common share	$	0.38	$	0.38	$	1.14	$	1.14

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions) (Unaudited)



	Three Months Ended						Nine Months Ended
	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net income	$	2,311		$	2,530		$	6,859		$	5,936
Other comprehensive income (loss), net of tax (Note 16)
Foreign currency translation adjustments and other	(357		)	(209		)	(140		)	(503		)
Defined benefit plans	120			59			162			286
Other comprehensive income (loss), net of tax	(237		)	(150		)	22			(217		)
Comprehensive income	2,074			2,380			6,881			5,719
Comprehensive loss attributable to noncontrolling interests	50			4			87			39
Comprehensive income attributable to stockholders	$	2,124		$	2,384		$	6,968		$	5,758

Reference should be made to the notes to condensed consolidated financial statements.

Table of Contents

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts) (Unaudited)



	September 30, 2019			December 31, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	20,051		$	20,844
Marketable debt securities (Note 3)	6,725			5,966
Accounts and notes receivable, net	6,924			6,549
GM Financial receivables, net (Note 4; Note 8 at VIEs)	28,017			26,850
Inventories (Note 5)	11,797			9,816
Other current assets (Note 3; Note 8 at VIEs)	7,051			5,268
Total current assets	80,565			75,293
Non-current Assets
GM Financial receivables, net (Note 4; Note 8 at VIEs)	25,743			25,083
Equity in net assets of nonconsolidated affiliates (Note 7)	8,496			9,215
Property, net	37,969			38,758
Goodwill and intangible assets, net	5,408			5,579
Equipment on operating leases, net (Note 6; Note 8 at VIEs)	42,527			43,559
Deferred income taxes	23,783			24,082
Other assets (Note 3; Note 8 at VIEs)	7,038			5,770
Total non-current assets	150,964			152,046
Total Assets	$	231,529		$	227,339

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable (principally trade)	$	21,406		$	22,297
Short-term debt and current portion of long-term debt (Note 9)
Automotive	2,890			935
GM Financial (Note 8 at VIEs)	31,884			30,956
Accrued liabilities	28,072			28,049
Total current liabilities	84,252			82,237
Non-current Liabilities
Long-term debt (Note 9)
Automotive	12,448			13,028
GM Financial (Note 8 at VIEs)	57,244			60,032
Postretirement benefits other than pensions (Note 12)	5,301			5,370
Pensions (Note 12)	10,223			11,538
Other liabilities	13,290			12,357
Total non-current liabilities	98,506			102,325
Total Liabilities	182,758			184,562
Commitments and contingencies (Note 13)
Equity (Note 16)
Common stock, $0.01 par value	14			14
Additional paid-in capital	25,928			25,563
Retained earnings	27,609			22,322
Accumulated other comprehensive loss	(8,997		)	(9,039		)
Total stockholders’ equity	44,554			38,860
Noncontrolling interests	4,217			3,917
Total Equity	48,771			42,777
Total Liabilities and Equity	$	231,529		$	227,339

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (Unaudited)



	Nine Months Ended
	September 30, 2019			September 30, 2018
Cash flows from operating activities
Income from continuing operations	$	6,859		$	6,006
Depreciation and impairment of Equipment on operating leases, net	5,573			5,633
Depreciation, amortization and impairment charges on Property, net	5,259			4,390
Foreign currency remeasurement and transaction (gains) losses	(170		)	280
Undistributed earnings of nonconsolidated affiliates, net	243			185
Pension contributions and OPEB payments	(789		)	(1,750		)
Pension and OPEB income, net	(351		)	(940		)
Provision for deferred taxes	234			680
Change in other operating assets and liabilities	(5,310		)	(5,258		)
Net cash provided by operating activities	11,548			9,226
Cash flows from investing activities
Expenditures for property	(4,852		)	(6,562		)
Available-for-sale marketable securities, acquisitions	(3,130		)	(2,313		)
Available-for-sale marketable securities, liquidations	2,587			4,637
Purchases of finance receivables, net	(19,027		)	(17,297		)
Principal collections and recoveries on finance receivables	17,088			11,776
Purchases of leased vehicles, net	(12,488		)	(13,051		)
Proceeds from termination of leased vehicles	9,983			8,094
Other investing activities	148			(25		)
Net cash used in investing activities – continuing operations	(9,691		)	(14,741		)
Net cash provided by investing activities – discontinued operations	—			166
Net cash used in investing activities	(9,691		)	(14,575		)
Cash flows from financing activities
Net increase in short-term debt	756			1,695
Proceeds from issuance of debt (original maturities greater than three months)	27,835			32,801
Payments on debt (original maturities greater than three months)	(29,432		)	(25,408		)
Proceeds from issuance of subsidiary preferred stock	463			1,753
Dividends paid	(1,792		)	(1,690		)
Other financing activities	(175		)	(539		)
Net cash provided by (used in) financing activities	(2,345		)	8,612
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(109		)	(253		)
Net increase (decrease) in cash, cash equivalents and restricted cash	(597		)	3,010
Cash, cash equivalents and restricted cash at beginning of period	23,496			17,848
Cash, cash equivalents and restricted cash at end of period	$	22,899		$	20,858

Significant Non-cash Investing and Financing Activity
Non-cash property additions – continuing operations	$	3,435		$	4,284

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In millions) (Unaudited)



	Common Stockholders’											Noncontrolling Interests			Total Equity
	Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
Balance at January 1, 2018	$	14	$	25,371		$	17,627		$	(8,011	)	$	1,199		$	36,200
Adoption of accounting standards	—		—			(1,046		)	(98		)	—			(1,144		)
Net income	—		—			1,046			—			(6		)	1,040
Other comprehensive income	—		—			—			28			(1		)	27
Purchase of common stock	—		(44		)	(56		)	—			—			(100		)
Cash dividends paid on common stock	—		—			(536		)	—			—			(536		)
Dividends to noncontrolling interests	—		—			—			—			(30		)	(30		)
Other	—		10			(7		)	—			(2		)	1
Balance at March 31, 2018	14		25,337			17,028			(8,081		)	1,160			35,458
Net income	—		—			2,390			—			(24		)	2,366
Other comprehensive loss	—		—			—			(90		)	(4		)	(94		)
Issuance of preferred stock (Note 16)	—		—			—			—			1,261			1,261
Cash dividends paid on common stock	—		—			(535		)	—			—			(535		)
Dividends to noncontrolling interests	—		—			—			—			(7		)	(7		)
Other	—		128			(10		)	—			69			187
Balance at June 30, 2018	14		25,465			18,873			(8,171		)	2,455			38,636
Net income	—		—			2,534			—			(4		)	2,530
Other comprehensive loss	—		—			—			(150		)	—			(150		)
Issuance of preferred stock (Note 16)	—		—			—			—			492			492
Cash dividends paid on common stock	—		—			(537		)	—			—			(537		)
Dividends to noncontrolling interests	—		—			—			—			(69		)	(69		)
Other	—		38			(5		)	—			(27		)	6
Balance at September 30, 2018	$	14	$	25,503		$	20,865		$	(8,321	)	$	2,847		$	40,908

Balance at January 1, 2019	$	14	$	25,563		$	22,322		$	(9,039	)	$	3,917		$	42,777
Net income	—		—			2,157			—			(12		)	2,145
Other comprehensive income	—		—			—			190			(5		)	185
Stock based compensation	—		95			(6		)	—			—			89
Cash dividends paid on common stock	—		—			(539		)	—			—			(539		)
Dividends to noncontrolling interests	—		—			—			—			(18		)	(18		)
Other	—		3			5			—			(9		)	(1		)
Balance at March 31, 2019	14		25,661			23,939			(8,849		)	3,873			44,638
Net income	—		—			2,418			—			(15		)	2,403
Other comprehensive income	—		—			—			79			(5		)	74
Issuance of preferred stock (Note 16)	—		—			—			—			408			408
Stock based compensation	—		78			(9		)	—			—			69
Cash dividends paid on common stock	—		—			(540		)	—			—			(540		)
Dividends to noncontrolling interests	—		—			—			—			(23		)	(23		)
Other	—		26			(1		)	—			35			60
Balance at June 30, 2019	14		25,765			25,807			(8,770		)	4,273			47,089
Net income	—		—			2,351			—			(40		)	2,311
Other comprehensive loss	—		—			—			(227		)	(10		)	(237		)
Issuance of preferred stock (Note 16)	—		—			—			—			49			49
Stock based compensation	—		90			(6		)	—			—			84
Cash dividends paid on common stock	—		—			(543		)	—			—			(543		)
Dividends to noncontrolling interests	—		—			—			—			(62		)	(62		)
Other	—		73			—			—			7			80
Balance at September 30, 2019	$	14	$	25,928		$	27,609		$	(8,997	)	$	4,217		$	48,771

Reference should be made to the notes to condensed consolidated financial statements.

Table of Contents

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Operations and Basis of Presentation

General Motors Company (sometimes referred to in this Quarterly Report on Form 10-Q as we, our, us, ourselves, the Company, General Motors or GM) designs, builds and sells trucks, crossovers, cars and automobile parts worldwide and is investing in and growing an autonomous vehicle business. We also provide automotive financing services through General Motors Financial Company, Inc. (GM Financial). We analyze the results of our continuing operations through the following operating segments: GM North America (GMNA), GM International Operations (GMIO), GM South America (GMSA), Cruise, and GM Financial. Our GMSA and GMIO operating segments are reported as one, combined international segment, GM International (GMI). Cruise, formerly GM Cruise, is our global segment responsible for the development and commercialization of autonomous vehicle technology. Nonsegment operations and Maven, our ride- and car-sharing business, are classified as Corporate. Corporate includes certain centrally recorded income and costs such as interest, income taxes, corporate expenditures and certain nonsegment-specific revenues and expenses.

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, which consist of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2018 Form 10-K. Except for per share amounts or as otherwise specified, dollar amounts presented within tables are stated in millions. In the three months ended March 31, 2019 we changed the presentation of our condensed consolidated balance sheets to reclassify the current portion of Equipment on operating leases, net to Other current assets and our condensed consolidated statements of cash flows to reclassify Payments to purchase common stock to Other financing activities. We have made corresponding reclassifications to the comparable information for all periods presented.

Principles of Consolidation We consolidate entities that we control due to ownership of a majority voting interest and we consolidate variable interest entities (VIEs) when we are the primary beneficiary. Our share of earnings or losses of nonconsolidated affiliates is included in our consolidated operating results using the equity method of accounting when we are able to exercise significant influence over the operating and financial decisions of the affiliate.

Recently Adopted Accounting Standards Effective January 1, 2019, we adopted Accounting Standards Update (ASU) 2016-02, "Leases" (ASU 2016-02) using the modified retrospective method, resulting in a cumulative-effect adjustment to the opening balance of Retained earnings for an insignificant amount. We recognized $1.0 billion of right of use assets and lease obligations included in Other assets, Accrued liabilities and Other liabilities on our condensed consolidated balance sheet for our existing operating lease portfolio at January 1, 2019. We elected to apply the practical expedient related to land easements, as well as the package of practical expedients permitted under the transition guidance in the new standard, which allowed us to carry forward our historical lease classification. The accounting for our finance leases and leases where we are the lessor remained substantially unchanged. The application of ASU 2016-02 had no impact on our condensed consolidated income statement or condensed consolidated statement of cash flows.

The following table summarizes our minimum commitments under noncancelable operating leases having initial terms in excess of one year, primarily for property, at December 31, 2018 as disclosed in our 2018 Form 10-K:



	Years Ending December 31,
	2019			2020			2021			2022			2023			Thereafter			Total
Minimum commitments(a)	$	296		$	286		$	247		$	180		$	146		$	582		$	1,737
Sublease income	(61		)	(51		)	(44		)	(38		)	(33		)	(129		)	(356		)
Net minimum commitments	$	235		$	235		$	203		$	142		$	113		$	453		$	1,381

_________


(a)	Certain leases contain escalation clauses and renewal or purchase options.

Refer to Note 13 for information on our operating leases at September 30, 2019.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Accounting Standards Not Yet Adopted In June 2016 the Financial Accounting Standards Board issued ASU 2016-13, "Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASU 2016-13), which requires entities to use a new impairment model based on Current Expected Credit Losses (CECL) rather than incurred losses. We plan to adopt ASU 2016-13 on January 1, 2020 on a modified retrospective basis. Estimated credit losses under CECL will consider relevant information about past events, current conditions and reasonable and supportable forecasts that affect the collectibility of the reported amount, resulting in recognition of lifetime expected credit losses upon loan origination. We are currently validating and refining our process for our implementation of ASU 2016-13. Upon adoption, we expect to record an adjustment that will increase our allowance for credit losses between $700 million and $