Acquisition of Businesses (Notes)

9 Months Ended

Sep. 30, 2013

Acquisition of Businesses [Abstract]

Business Combination Disclosure [Text Block]

Acquisition of Ally Financial Inc. International Operations

In November 2012, we entered into a definitive agreement with Ally Financial to acquire 100% of the outstanding equity interests in the top level holding companies of its automotive finance and financial services operations in Europe and Latin America and a separate agreement to acquire Ally Financial's non-controlling equity interest in GMAC-SAIC, which conducts auto finance operations in China.

On April 1, 2013, we completed the acquisition of Ally Financial's European and Latin American automotive finance operations except for France, Portugal and Brazil, and on June 1, 2013, we completed the acquisition of Ally Financial's automotive finance operations in France and Portugal. The aggregate consideration for these acquisitions was $2.6 billion, subject to certain closing adjustments, of which $65 million, which had been withheld as contingent consideration, was paid upon the closing of the acquisition of Ally Financial's Brazilian auto finance and financial services operations described below. In addition, we repaid debt of $1.4 billion that was assumed as part of the acquisitions. We recorded the fair value of the assets acquired and liabilities assumed on the acquisition dates.

On October 1, 2013, we completed the acquisition of Ally Financial's auto finance operations in Brazil for consideration of $611 million, subject to certain closing adjustments. See Note 16 - "Subsequent Event" for further discussion. In addition we paid $65 million in contingent consideration related to our previous acquisitions.

Our acquisition of Ally Financial's equity interest in GMAC-SAIC is subject to certain regulatory and other approvals, and is expected to close in 2014. We expect to pay approximately $900 million to close this acquisition, subject to certain closing adjustments.

The international operations were formerly a part of General Motors Acceptance Corporation, the former captive finance subsidiary of GM, and due to this longstanding relationship, the majority of the international operations business is related to GM and its dealer network. With the acquisition of the international operations, we have expanded to become a global captive finance company, and expect to realize numerous strategic benefits, including increased finance penetration resulting from a broadened relationship with GM, geographic diversification of our customer base and transition of our business into a full-spectrum credit platform.

The acquisition of the international operations has been accounted for as a business combination, whereby the purchase price of the transaction was allocated to the identifiable assets and liabilities assumed based upon their fair values. The estimates of the fair values recorded were determined based on fair value measurement principles (see Note 9 - "Fair Values of Assets and Liabilities" for further discussion) and reflect significant assumptions and judgments. Material valuation inputs for finance receivables included adjustments to monthly principal and interest cash flows for prepayments and credit loss expectations; and discount rates developed based on the relative risk of the cash flows which considered loan type, market rates as of our valuation date, credit loss expectations and capital structure. Material valuation inputs for debt included discount rates developed based on the relative risk of the contractual cash flows, taking into consideration market rates and liquidity expectations for each country. Certain assumptions and judgments that were considered to be appropriate at the applicable acquisition date may prove to be incorrect if market conditions change.

The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill, which is primarily attributed to the value of the incremental GM business expected. The preliminary goodwill amount is $48 million, but is subject to further adjustment pending the closing of our acquisition of the remaining international operations as well as any potential adjustments resulting from the finalization of the valuation of the acquired assets and assumed liabilities. Valuations and assumptions pertaining to income taxes are subject to change as additional information is obtained during the measurement period. We will assign the goodwill to reporting units, which will be determined upon completion of the remaining acquisitions. The goodwill will not be deductible for tax purposes.

The following table summarizes the aggregate consideration and the assets acquired and liabilities assumed at the acquisition dates (in millions):

	Acquired International Operations
Cash	$	440
Restricted cash	525
Finance receivables	10,969
Other assets, including identifiable intangible assets	263
Secured and unsecured debt	(8,926		)
Other liabilities	(722		)
Identifiable net assets acquired	2,549
Goodwill resulting from the acquisitions	48
Aggregate consideration	$	2,597

The following table provides information related to finance receivables acquired which had no deterioration in credit quality as of the applicable acquisition dates (in millions):

	Consumer (a)		Commercial
Contractually required payments receivable	$	7,168	$	4,067
Cash flows not expected to be collected	$	152	$	18
Fair value	$	6,378	$	3,990

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(a) Certain amounts in this table have been updated as a result of the finalization of acquisition accounting adjustments, including a determination that certain consumer finance receivables acquired should be reclassified from receivables with credit impairment to receivables with no deterioration in credit quality. Accordingly, contractually required payments receivable, cash flows not expected to be collected and fair value of $1.2 billion, $0.1 billion and $1.0 billion were reclassified from consumer finance receivables acquired which had deterioration in credit quality. This reclassification had no material effect on the condensed consolidated balance sheet as of September 30, 2013 or condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2013.

The results of operations of the international operations are included in our results beginning April 1, 2013, except for the results of the operations in Portugal and France, which are included in our results beginning June 1, 2013. The following table summarizes the actual amounts of revenue and earnings of the international operations included in our condensed consolidated financial statements for the three and nine months ended September 30, 2013 and the supplemental pro forma revenue and earnings of the combined entity for the three and nine months ended September 30, 2013 and 2012, as if the acquisitions had occurred on January 1, 2012 (in millions).

	International Operations Amounts Included in Results				Supplemental Pro Forma - Combined
					Three Months Ended				Nine Months Ended
	Three Months Ended		Nine Months Ended		September 30,
	September 30, 2013				2013		2012		2013		2012
Total revenue	$	245	$	493	$	888	$	759	$	2,503	$	2,225
Net income	$	50	$	104	$	172	$	157	$	495	$	530