10-Q 1 gmf930201710-q.htm 10-Q Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________________ 
FORM 10-Q
(Mark One)
ý
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017
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 1-10667
______________________________________________ 
General Motors Financial Company, Inc.
(Exact name of registrant as specified in its charter)
State of Texas
 
75-2291093
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
801 Cherry Street, Suite 3500, Fort Worth, Texas 76102
(Address of principal executive offices, including Zip Code)
(817) 302-7000
(Registrant’s telephone number, including area code) 
Not applicable
(Former name, former address and former fiscal year, if changed since last report) 
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  Q    No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  Q    No  o
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
o
Accelerated filer
o
Non-accelerated filer (Do not check if a smaller reporting company)
ý
Smaller reporting company
o
Emerging growth company
o
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  Q 
As of October 23, 2017, there were 5,050,000 shares of the registrant’s common stock, par value $0.0001 per share, outstanding. All of the registrant’s common stock is owned by General Motors Holdings LLC.





INDEX
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
       PART II
 
 


GENERAL MOTORS FINANCIAL COMPANY, INC.

PART I
Item 1. Condensed Consolidated Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except per share amounts) (Unaudited)
 
September 30, 2017
 
December 31, 2016
ASSETS
 
 
 
Cash and cash equivalents
$
3,976

 
$
2,815

Finance receivables, net (Note 4; Note 8 VIEs)
40,864

 
33,475

Leased vehicles, net (Note 5; Note 8 VIEs)
41,775

 
34,342

Goodwill
1,201

 
1,196

Equity in net assets of non-consolidated affiliate (Note 6)
1,119

 
944

Related party receivables (Note 3)
339

 
347

Other assets (Note 8 VIEs)
4,767

 
3,695

Assets held for sale (Note 2)
12,094

 
10,951

Total assets
$
106,135

 
$
87,765

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Liabilities
 
 
 
Secured debt (Note 7; Note 8 VIEs)
$
40,775

 
$
35,087

Unsecured debt (Note 7)
38,263

 
29,476

Deferred income
3,066

 
2,355

Related party payables (Note 3)
253

 
320

Other liabilities
2,449

 
2,141

Liabilities held for sale (Note 2)
10,858

 
9,693

Total liabilities
95,664

 
79,072

Commitments and contingencies (Note 10)

 

Shareholders' equity
 
 
 
Common stock, $0.0001 par value per share, 10,000,000 shares authorized and 5,050,000 shares issued (Note 11)

 

Preferred stock, $0.01 par value per share, 250,000,000 shares authorized and 1,000,000 shares issued (Note 11)

 

Additional paid-in capital
7,514

 
6,505

Accumulated other comprehensive loss (Note 14)
(935
)
 
(1,238
)
Retained earnings
3,892

 
3,426

Total shareholders' equity
10,471

 
8,693

Total liabilities and shareholders' equity
$
106,135

 
$
87,765

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions) (Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Revenue
 
 
 
 
 
 
 
Finance charge income
$
837

 
$
721

 
$
2,401

 
$
2,110

Leased vehicle income
2,244

 
1,582

 
6,282

 
4,144

Other income
80

 
57

 
216

 
175

Total revenue
3,161

 
2,360

 
8,899

 
6,429

Costs and expenses
 
 
 
 
 
 
 
Salaries and benefits
224

 
195

 
621

 
536

Other operating expenses
122

 
132

 
388

 
360

Total operating expenses
346

 
327

 
1,009

 
896

Leased vehicle expenses
1,670

 
1,197

 
4,648

 
3,148

Provision for loan losses
204

 
167

 
573

 
501

Interest expense
672

 
511

 
1,903

 
1,393

Total costs and expenses
2,892

 
2,202

 
8,133

 
5,938

Equity income (Note 6)
41

 
36

 
129

 
109

Income from continuing operations before income taxes
310

 
194

 
895

 
600

Income tax provision (Note 12)
124

 
60

 
260

 
185

Income from continuing operations
186

 
134

 
635

 
415

Income (loss) from discontinued operations, net of tax (Note 2)
16

 
13

 
(169
)
 
85

Net income
$
202

 
$
147

 
$
466

 
$
500

 
 
 
 
 
 
 
 
Net income attributable to common shareholder
$
200

 
$
147

 
$
464

 
$
500

 
 
 
 
 
 
 
 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions) (Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Net income
$
202

 
$
147

 
$
466

 
$
500

Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Unrealized loss on cash flow hedges, net of income tax benefit of $2, $1, $10 and $3
(3
)
 
(1
)
 
(14
)
 
(5
)
Defined benefit plans, net of income tax

 

 
(1
)
 

Foreign currency translation adjustment, net of income tax expense of $21, $0, $30 and $0
120

 
(10
)
 
318

 
60

Other comprehensive income (loss), net of tax
117

 
(11
)
 
303

 
55

Comprehensive income
$
319

 
$
136

 
$
769

 
$
555


The accompanying notes are an integral part of these condensed consolidated financial statements.


2

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions) (Unaudited)
 
Nine Months Ended September 30,
 
2017
 
2016
Net cash provided by operating activities - continuing operations
$
4,795

 
$
3,566

Net cash provided by operating activities - discontinued operations
243

 
290

Net cash provided by operating activities
5,038

 
3,856

Cash flows from investing activities
 
 
 
Purchases of retail finance receivables, net
(15,267
)
 
(10,408
)
Principal collections and recoveries on retail finance receivables
9,410

 
7,368

Net funding of commercial finance receivables
(1,557
)
 
(1,145
)
Purchases of leased vehicles, net
(14,809
)
 
(14,939
)
Proceeds from termination of leased vehicles
4,649

 
1,799

Other investing activities
(65
)
 
(59
)
Net cash used in investing activities - continuing operations
(17,639
)
 
(17,384
)
Net cash used in investing activities - discontinued operations
(468
)
 
(949
)
Net cash used in investing activities
(18,107
)
 
(18,333
)
Cash flows from financing activities
 
 
 
Net change in debt (original maturities less than three months)
(305
)
 
(301
)
Borrowings and issuance of secured debt
26,731

 
18,420

Payments on secured debt
(20,905
)
 
(12,525
)
Borrowings and issuance of unsecured debt
12,626

 
10,358

Payments on unsecured debt
(4,375
)
 
(2,345
)
Debt issuance costs
(131
)
 
(112
)
Proceeds from issuance of preferred stock
985

 

Net cash provided by financing activities - continuing operations
14,626

 
13,495

Net cash provided by financing activities - discontinued operations
63

 
601

Net cash provided by financing activities
14,689

 
14,096

Net increase (decrease) in cash, cash equivalents and restricted cash
1,620

 
(381
)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
112

 
22

Cash, cash equivalents and restricted cash at beginning of period
5,302

 
5,002

Cash, cash equivalents and restricted cash at end of period
$
7,034

 
$
4,643

Cash, cash equivalents and restricted cash from continuing operations at end of period
$
6,469

 
$
3,918

Cash, cash equivalents and restricted cash from discontinued operations at end of period
$
565

 
$
725

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheet:
 
September 30, 2017
Cash and cash equivalents
$
3,976

Restricted cash included in other assets
2,493

Total
$
6,469

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Basis of Presentation The condensed consolidated financial statements include our accounts and the accounts of our consolidated subsidiaries, including certain special-purpose financing entities utilized in secured financing transactions, which are considered variable interest entities (VIEs). We consolidate certain operating entities that provide auto finance and financial services, which we do not control through a majority voting interest. We manage these entities and maintain a controlling financial interest in them and are exposed to the risks of ownership through contractual arrangements. The majority voting interests in these entities are indirectly wholly-owned by our parent, General Motors Company (GM). All intercompany transactions and balances have been eliminated in consolidation.
Our operations in Europe are presented as discontinued operations, and the related assets and liabilities are presented as held for sale in our condensed consolidated financial statements for all periods presented. Unless otherwise indicated, information in these notes to the condensed consolidated financial statements relates to continuing operations. Refer to Note 2 - "Discontinued Operations" for additional details regarding our planned disposal of these operations.
The condensed consolidated financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles (GAAP) in the United States of America. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements that are included in our Annual Report on Form 10-K filed on February 7, 2017 (Form 10-K). Except as otherwise specified, dollar amounts presented within tables are stated in millions.
The condensed consolidated financial statements at September 30, 2017, and for the three and nine months ended September 30, 2017 and 2016, are unaudited and, in management’s opinion, 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. The results for interim periods are not necessarily indicative of results for a full year.
In August 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" (ASU 2017-12), which simplifies the application of hedge accounting and more closely aligns hedge accounting with companies' risk management strategies thereby making more hedging strategies eligible for hedge accounting. ASU 2017-12 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. ASU 2017-12 requires a cumulative-effect adjustment for certain items upon adoption. We are currently evaluating the impact the adoption of ASU 2017-12 will have on our consolidated financial statements.
Segment Information We are the wholly-owned captive finance subsidiary of GM. We offer substantially similar products and services throughout many different regions, subject to local regulations and market conditions. We evaluate our business in two operating segments. The North America Segment includes our operations in the U.S. and Canada. The International Segment includes our operations in Brazil, Chile, Colombia, Mexico and Peru as well as our equity investment in SAIC-GMAC Automotive Finance Company Limited (SAIC-GMAC), a joint venture that conducts auto finance operations in China.
Note 2. Discontinued Operations
On March 5, 2017, General Motors Holdings LLC, a wholly-owned subsidiary of GM and our parent, entered into a Master Agreement (the Agreement) with Peugeot S.A. Pursuant to the Agreement, Peugeot S.A. acquired on July 31, 2017 GM’s Opel and Vauxhall businesses and certain other assets in Europe (the Opel/Vauxhall Business) and will acquire, together with a financial partner, certain of our European financial subsidiaries and branches (collectively, our European Operations and, together with Opel/Vauxhall Business, GM's European Business). The transfer of our European Operations is expected to close by the end of the year subject to the receipt of the necessary regulatory approvals and satisfaction of other closing conditions.
The net consideration to be paid for our European Operations will be 0.8 times their book value at closing. Based on exchange rates at September 30, 2017, we estimate the net consideration will be approximately $1.1 billion, and we currently expect to recognize a disposal loss of approximately $500 million, subject to foreign currency fluctuations, which have had a favorable impact on the estimated loss. The purchase price is subject to certain adjustments as provided in the Agreement. During the nine months ended September 30, 2017, we recognized a portion of the disposal loss in accordance with ASC 360 - "Property, Plant and Equipment." We expect to recognize the remainder of the disposal loss at the closing of the transaction.

4

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the assets and liabilities held for sale:
 
September 30, 2017
 
December 31, 2016
ASSETS
 
 
 
Cash and cash equivalents
$
242

 
$
386

Finance receivables, net
11,303

 
9,715

Related party receivables

 
163

Other assets
549

 
687

Total assets held for sale
$
12,094

 
$
10,951

LIABILITIES
 
 
 
Secured debt
$
4,872

 
$
4,183

Unsecured debt
5,469

 
5,130

Related party payables

 
80

Other liabilities
517

 
300

Total liabilities held for sale
$
10,858

 
$
9,693

The following table summarizes the results of operations for the discontinued operations:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Total revenue
$
148

 
$
138

 
$
422

 
$
436

Interest expense
24

 
30

 
70

 
112

Other expenses
75

 
74

 
231

 
205

Total costs and expenses
99

 
104

 
301

 
317

Income from discontinued operations before income taxes
49

 
34

 
121

 
119

Loss on sale of discontinued operations before income taxes
38

 

 
374

 

Income (loss) from discontinued operations before income taxes
11

 
34

 
(253
)
 
119

Income tax (benefit) provision
(5
)
 
21

 
(84
)
 
34

Income (loss) from discontinued operations, net of tax
$
16

 
$
13

 
$
(169
)
 
$
85

Note 3. Related Party Transactions
We offer loan and lease finance products through GM-franchised dealers to customers purchasing new vehicles manufactured by GM and certain used vehicles and make commercial loans directly to GM-franchised dealers and their affiliates. We also offer commercial loans to dealers that are consolidated by GM and those balances are included in our finance receivables, net.
Under subvention programs, GM makes cash payments to us for offering incentivized rates and structures on retail loan and lease finance products. In addition, GM makes payments to us to cover certain interest payments on commercial loans.
In March 2017, we executed an agreement to purchase certain program vehicles from Maven Drive LLC (Maven), a wholly-owned subsidiary of GM. We simultaneously leased these vehicles to Maven for use in their ride-sharing arrangements. We account for these leases as direct-financing leases, which are included in our finance receivables, net.

5

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

We have related party payables due to GM, primarily for commercial finance receivables originated but not yet funded. These payables typically settle within 30 days. The following tables present related party transactions:
Balance Sheet Data
September 30, 2017
 
December 31, 2016
Commercial finance receivables, net due from dealers consolidated by GM(a)
$
349

 
$
347

Direct-financing lease receivables from Maven(a)
$
96

 
$

Subvention receivable(b)
$
338

 
$
347

Commercial loan funding payable(c)
$
251

 
$
320

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Income Statement Data
2017
 
2016
 
2017
 
2016
Interest subvention earned on retail finance receivables(d)
$
115

 
$
90

 
$
319

 
$
245

Interest subvention earned on commercial finance receivables(d)
$
14

 
$
13

 
$
42

 
$
35

Leased vehicle subvention earned(e)
$
786

 
$
591

 
$
2,246

 
$
1,588

_________________
(a)
Included in finance receivables, net.
(b)
Included in related party receivables. We received subvention payments from GM of $1.1 billion and $1.0 billion for the three months ended September 30, 2017 and 2016, and $3.3 billion and $3.2 billion for the nine months ended September 30, 2017 and 2016.
(c)
Included in related party payables.
(d)
Included in finance charge income.
(e)
Included as a reduction to leased vehicle expenses.
Under our support agreement with GM (the Support Agreement), if our earning assets leverage ratio at the end of any calendar quarter exceeds the applicable threshold set in the Support Agreement, we may require GM to provide funding sufficient to bring our earning assets leverage ratio to within the applicable threshold. In determining our earning assets leverage ratio (net earning assets divided by adjusted equity) under the Support Agreement, net earning assets means our finance receivables, net, plus leased vehicles, net, and adjusted equity means our equity, net of goodwill and inclusive of outstanding junior subordinated debt, as each may be adjusted for derivative accounting from time to time. 
Additionally, the Support Agreement provides that GM will own all of our outstanding voting shares as long as we have any unsecured debt securities outstanding and that GM will use commercially reasonable efforts to ensure that we will continue to be designated as a subsidiary borrower of up to $4.0 billion under GM’s corporate revolving credit facilities. We have the ability to borrow up to $1.0 billion under GM's three-year, $4.0 billion unsecured revolving credit facility and $3.0 billion under GM's five-year, $10.5 billion unsecured revolving credit facility, subject to available capacity. GM also agreed to certain provisions in the Support Agreement intended to ensure that we maintain adequate access to liquidity. Pursuant to these provisions, GM provided us with a $1.0 billion junior subordinated unsecured intercompany revolving credit facility (the Junior Subordinated Revolving Credit Facility).
We are included in GM's consolidated U.S. federal income tax returns. For taxable income we recognize in any period beginning on or after October 1, 2010, we are obligated to pay GM for our share of the consolidated U.S. federal and certain state tax liabilities. Amounts owed to GM for income taxes are accrued and recorded as a related party payable. At September 30, 2017 and December 31, 2016, there are no related party taxes payable to GM due to our taxable loss position.  

6

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 4. Finance Receivables
 
September 30, 2017
 
December 31, 2016

Retail finance receivables
 
 
 
Retail finance receivables, collectively evaluated for impairment, net of fees
$
30,147

 
$
24,480

Retail finance receivables, individually evaluated for impairment, net of fees
2,170

 
1,920

Total retail finance receivables, net of fees(a)
32,317

 
26,400

Less: allowance for loan losses - collective
(571
)
 
(489
)
Less: allowance for loan losses - specific
(328
)
 
(276
)
Total retail finance receivables, net
31,418

 
25,635

Commercial finance receivables
 
 
 
Commercial finance receivables, collectively evaluated for impairment, net of fees
9,468

 
7,853

Commercial finance receivables, individually evaluated for impairment, net of fees
27

 
27

Total commercial finance receivables, net of fees
9,495

 
7,880

Less: allowance for loan losses - collective
(46
)
 
(36
)
Less: allowance for loan losses - specific
(3
)
 
(4
)
Total commercial finance receivables, net
9,446

 
7,840

Total finance receivables, net
$
40,864

 
$
33,475

Fair value of finance receivables
$
40,957

 
$
33,528

________________
(a) Net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $282 million and $178 million at September 30, 2017 and December 31, 2016.
We estimate the fair value of retail finance receivables using observable and unobservable Level 3 inputs within a cash flow model. The inputs reflect assumptions regarding expected prepayments, deferrals, delinquencies, recoveries and charge-offs of the loans within the portfolio. The cash flow model produces an estimated amortization schedule of the finance receivables. The projected cash flows are then discounted to derive the fair value of the portfolio. Macroeconomic factors could affect the credit performance of the portfolio and, therefore, could potentially affect the assumptions used in our cash flow model. A substantial majority of our commercial finance receivables have variable interest rates. The carrying amount, a Level 2 input, is considered to be a reasonable estimate of fair value.
Retail Finance Receivables
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Allowance for retail loan losses beginning balance
$
844

 
$
790

 
$
765

 
$
713

Provision for loan losses
204

 
164

 
563

 
497

Charge-offs
(286
)
 
(284
)
 
(856
)
 
(826
)
Recoveries
135

 
128

 
420

 
403

Foreign currency translation
2

 
(2
)
 
7

 
9

Allowance for retail loan losses ending balance
$
899

 
$
796

 
$
899

 
$
796



7

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Retail Credit Quality Our retail finance receivables portfolio includes loans made to consumers and businesses to finance the purchase of vehicles for personal and commercial use. We use proprietary scoring systems in the underwriting process that measure the credit quality of the receivables using several factors, such as credit bureau information, consumer credit risk scores (e.g. FICO score or its equivalent), and contract characteristics. We also consider other factors, such as employment history, financial stability and capacity to pay. In North America, while we historically focused on consumers with lower than prime credit scores, we have expanded our prime lending programs. A summary of the credit risk profile by FICO score band or equivalent scores, determined at origination, of the retail finance receivables in North America is as follows:
 
September 30, 2017
 
December 31, 2016
 
Amount
 
Percent
 
Amount
 
Percent
Prime - FICO Score 680 and greater
$
12,332

 
45.7
%
 
$
7,923

 
36.4
%
Near-prime - FICO Score 620 to 679
4,194

 
15.6

 
3,468

 
15.9

Sub-prime - FICO Score less than 620
10,443

 
38.7

 
10,395

 
47.7

Balance at end of period
$
26,969

 
100.0
%
 
$
21,786

 
100.0
%
In addition, we review the credit quality of our retail finance receivables based on customer payment activity. A retail account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. Retail finance receivables are collateralized by vehicle titles and, subject to local laws, we generally have the right to repossess the vehicle in the event the customer defaults on the payment terms of the contract. The following is a consolidated summary of the contractual amounts of delinquent retail finance receivables, which is not significantly different than the recorded investment for such receivables.
 
September 30, 2017
 
September 30, 2016
 
Amount
 
Percent of Contractual Amount Due
 
Amount
 
Percent of Contractual Amount Due
31 - 60 days
$
1,176

 
3.6
%
 
$
1,112

 
4.4
%
Greater than 60 days
521

 
1.6

 
491

 
1.9

Total finance receivables more than 30 days delinquent
1,697

 
5.2

 
1,603

 
6.3

In repossession
55

 
0.2

 
57

 
0.2

Total finance receivables more than 30 days delinquent or in repossession
$
1,752

 
5.4
%
 
$
1,660

 
6.5
%
At September 30, 2017 and December 31, 2016, the accrual of finance charge income had been suspended on retail finance receivables with contractual amounts due of $797 million and $798 million.
Impaired Retail Finance Receivables - TDRs Retail finance receivables that become classified as troubled debt restructurings (TDRs) are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. Accounts that become classified as TDRs because of a payment deferral accrue interest at the contractual rate and an additional fee is collected (where permitted) at each time of deferral and recorded as a reduction of accrued interest. No interest or fees are forgiven on a payment deferral to a customer; therefore, there are no additional financial effects of deferred loans becoming classified as TDRs. Accounts in the U.S. in Chapter 13 bankruptcy would have already been placed on non-accrual; therefore, there are no additional financial effects from these loans becoming classified as TDRs. Finance charge income from loans classified as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs.

8

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The outstanding recorded investment for retail finance receivables that are considered to be TDRs and the related allowance is presented below:
 
September 30, 2017
 
December 31, 2016
Outstanding recorded investment
$
2,170

 
$
1,920

Less: allowance for loan losses
(328
)
 
(276
)
Outstanding recorded investment, net of allowance
$
1,842

 
$
1,644

Unpaid principal balance
$
2,210

 
$
1,967

Additional information about loans classified as TDRs is presented below:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Average outstanding recorded investment
$
2,091

 
$
1,785

 
$
2,045

 
$
1,725

Finance charge income recognized
$
56

 
$
55

 
$
173

 
$
156

Number of loans classified as TDRs during the period
23,015

 
18,548

 
56,853

 
49,327

Recorded investment of loans classified as TDRs during the period
$
407

 
$
315

 
$
997

 
$
846

The unpaid principal balance, net of recoveries, of loans that were charged off during the reporting period and were within 12 months of being modified as a TDR were insignificant for the three and nine months ended September 30, 2017 and 2016.
Commercial Finance Receivables
Commercial Credit Quality Our commercial finance receivables consist of dealer financings, primarily for inventory purchases. A proprietary model is used to assign a risk rating to each dealer. We perform periodic credit reviews of each dealership and adjust the dealership's risk rating, if necessary. Dealers in Group VI are subject to additional restrictions on funding, including suspension of lines of credit and liquidation of assets. The following table summarizes the credit risk profile by dealer risk rating of commercial finance receivables: 
 
 
 
September 30, 2017
 
December 31, 2016
 
 
 
Amount
 
Percent
 
Amount
 
Percent
Group I
-
Dealers with superior financial metrics
$
1,547

 
16.3
%
 
$
1,389

 
17.6
%
Group II
-
Dealers with strong financial metrics
3,565

 
37.5

 
2,661

 
33.8

Group III
-
Dealers with fair financial metrics
3,112

 
32.8

 
2,775

 
35.2

Group IV
-
Dealers with weak financial metrics
931

 
9.8

 
631

 
8.0

Group V
-
Dealers warranting special mention due to elevated risks
238

 
2.5

 
334

 
4.2

Group VI
-
Dealers with loans classified as substandard, doubtful or impaired
102

 
1.1

 
90

 
1.2

Balance at end of period
$
9,495

 
100.0
%
 
$
7,880

 
100.0
%
At September 30, 2017 and December 31, 2016, substantially all of our commercial finance receivables were current with respect to payment status. Commercial finance receivables on non-accrual status were insignificant, and none were classified as TDRs. Activity in the allowance for commercial loan losses was insignificant for the three and nine months ended September 30, 2017 and 2016.

9

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 5. Leased Vehicles
 
September 30, 2017
 
December 31, 2016
Leased vehicles
$
60,112

 
$
48,340

Manufacturer subvention
(9,265
)
 
(7,686
)
 
50,847

 
40,654

Less: accumulated depreciation
(9,072
)
 
(6,312
)
Leased vehicles, net
$
41,775

 
$
34,342

The following table summarizes minimum rental payments due to us as lessor under operating leases:
 
Years Ending December 31,
 
2017
 
2018
 
2019
 
2020
 
2021
Minimum rental payments under operating leases
$
1,800

 
$
6,256

 
$
3,861

 
$
1,182

 
$
110

Note 6. Equity in Net Assets of Non-consolidated Affiliate
We use the equity method to account for our equity interest in SAIC-GMAC, a joint venture that conducts auto finance operations in China. The income of SAIC-GMAC is not consolidated into our financial statements; rather, our proportionate share of the earnings is reflected as equity income.
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Summarized Operating Data(a)
2017
 
2016
 
2017
 
2016
Finance charge income
$
261

 
$
229

 
$
775

 
$
700

Provision for loan losses
$
2

 
$
7

 
$
(9
)
 
$
21

Interest expense
$
83

 
$
65

 
$
241

 
$
192

Income before income taxes
$
157

 
$
137

 
$
490

 
$
411

Net income
$
118

 
$
103

 
$
368

 
$
308

 _________________
(a)
This data represents that of the entire entity and not our 35% proportionate share.
There were no dividends received from SAIC-GMAC during the nine months ended September 30, 2017. We received dividends from SAIC-GMAC of $129 million during the nine months ended September 30, 2016. At September 30, 2017 and December 31, 2016 we had undistributed earnings of $271 million and $142 million related to SAIC-GMAC.
Note 7. Debt
 
September 30, 2017
 
December 31, 2016
 
Carrying Amount
 
Fair Value
 
Carrying Amount
 
Fair Value
Secured debt
 
 
 
 
 
 
 
Revolving credit facilities
$
4,751

 
$
4,769

 
$
8,503

 
$
8,498

Securitization notes payable
36,024

 
36,120

 
26,584

 
26,664

Total secured debt
40,775

 
40,889

 
35,087

 
35,162

Unsecured debt
 
 
 
 
 
 
 
Senior notes
34,794

 
35,927

 
26,737

 
27,304

Credit facilities
2,162

 
2,174

 
1,961

 
1,961

Other unsecured debt
1,307

 
1,310

 
778

 
780

Total unsecured debt
38,263

 
39,411

 
29,476

 
30,045

Total secured and unsecured debt
$
79,038

 
$
80,300

 
$
64,563

 
$
65,207

Fair value utilizing Level 2 inputs
 
 
$
78,293

 
 
 
$
62,951

Fair value utilizing Level 3 inputs
 
 
$
2,007

 
 
 
$
2,256



10

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The fair value of our debt measured utilizing Level 2 inputs was based on quoted market prices for identical instruments and if unavailable, quoted market prices of similar instruments. For debt with original maturity or revolving period of eighteen months or less par value is considered to be a reasonable estimate of fair value. The fair value of our debt measured utilizing Level 3 inputs was based on the discounted future net cash flows expected to be settled using current risk-adjusted rates.
Secured Debt Most of the secured debt was issued by VIEs and is repayable only from proceeds related to the underlying pledged assets. Refer to Note 8 - "Variable Interest Entities" for further discussion.
During the nine months ended September 30, 2017, we entered into new credit facilities or renewed credit facilities with a total net additional borrowing capacity of $1.7 billion, and we issued $18.8 billion in aggregate principal amount of securitization notes payable with an initial weighted average interest rate of 2.09% and legal final maturity dates ranging from 2019 to 2025.
Unsecured Debt During the nine months ended September 30, 2017, we issued $10.6 billion in aggregate principal amount of senior notes with an initial weighted average interest rate of 2.87% and maturity dates ranging from 2019 to 2027.
All of these notes are guaranteed by AmeriCredit Financial Services, Inc. (AFSI), our primary U.S. operating subsidiary, and $407 million in senior notes issued by subsidiaries in Canada and Mexico are also guaranteed by General Motors Financial Company, Inc.
Compliance with Debt Covenants Several of our revolving credit facilities require compliance with certain financial and operational covenants as well as regular reporting to lenders, including providing certain subsidiary financial statements. Certain of our secured debt agreements also contain various covenants, including maintaining portfolio performance ratios as well as limits on deferment levels. Our unsecured senior notes contain covenants including limitations on our ability to incur certain liens. At September 30, 2017, we were in compliance with our debt covenants.
Note 8. Variable Interest Entities
Securitizations and Credit Facilities The following table summarizes the assets and liabilities related to our consolidated VIEs:
 
September 30, 2017
 
December 31, 2016
Restricted cash(a)
$
2,291

 
$
1,780

Finance receivables, net of fees
$
26,451

 
$
24,644

Lease related assets
$
23,751

 
$
19,341

Secured debt
$
40,188

 
$
34,185

_______________
(a) Included in other assets in the condensed consolidated balance sheets.
These amounts are related to securitization and credit facilities held by consolidated VIEs. Our continuing involvement with these VIEs consists of servicing assets held by the entities and holding residual interests in the entities. We have determined that we are the primary beneficiary of each VIE because we hold both (i) the power to direct the activities of the VIEs that most significantly impact the VIEs' economic performance and (ii) the obligation to absorb losses from and the right to receive benefits of the VIEs that could potentially be significant to the VIEs. We are not required, and do not currently intend, to provide any additional financial support to these VIEs. Liabilities recognized as a result of consolidating these entities generally do not represent claims against us or our other subsidiaries and assets recognized generally are for the benefit of these entities operations and cannot be used to satisfy our or our other subsidiaries' obligations.

11

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 9. Derivative Financial Instruments and Hedging Activities
 
 
 
September 30, 2017
 
December 31, 2016
 
Level
 
Notional
 
Fair Value
 
Notional
 
Fair Value
Derivatives designated as hedges
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
Fair value hedges
 
 
 
 
 
 
 
 
 
Interest rate swaps
2
 
$
3,500

 
$
20

 
$

 
$

Cash flow hedges
 
 
 
 
 
 
 
 
 
Interest rate swaps
2,3
 
2,561

 
12

 
3,070

 
12

Foreign currency swaps
2
 
1,356

 
60

 

 

Total assets(a)
 
 
$
7,417

 
$
92

 
$
3,070

 
$
12

Liabilities
 
 
 
 
 
 
 
 
 
Fair value hedges
 
 
 
 
 
 
 
 
 
Interest rate swaps
2
 
$
7,860

 
$
260

 
$
7,700

 
$
276

Cash flow hedges
 
 
 
 
 
 
 
 
 
Interest rate swaps
2,3
 

 

 
500

 
1

Foreign currency swaps
2
 

 

 
791

 
33

Total liabilities(b)
 
 
$
7,860

 
$
260

 
$
8,991

 
$
310

Derivatives not designated as hedges
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
Interest rate swaps
2,3
 
$
33,218

 
$
123

 
$
7,959

 
$
54

Interest rate caps and floors
2
 
16,810

 
43

 
9,698

 
26

Foreign currency swaps
2
 
1,182

 
85

 

 

Total assets(a)
 
 
$
51,210

 
$
251

 
$
17,657

 
$
80

Liabilities
 
 
 
 
 
 
 
 
 
Interest rate swaps
2,3
 
$
12,823

 
$
59

 
$
6,170

 
$
28

Interest rate caps and floors
2
 
18,467

 
43

 
12,146

 
26

Foreign currency swaps
2
 

 

 

 

Total liabilities(b)
 
 
$
31,290

 
$
102

 
$
18,316

 
$
54

 _________________
(a)
Derivative assets are included in other assets in the condensed consolidated balance sheets.
(b)
Derivative liabilities are included in other liabilities in the condensed consolidated balance sheets. Amounts accrued for interest payments in a net receivable position are included in other assets in the condensed consolidated balance sheets.

The fair value for Level 2 instruments was derived using the market approach based on observable market inputs including quoted prices of similar instruments and foreign exchange and interest rate forward curves. The fair value for Level 3 instruments was derived using the income approach based on a discounted cash flow model, in which expected cash flows are discounted using current risk-adjusted rates. The activity for interest rate swap agreements measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was insignificant for the three and nine months ended September 30, 2017 and 2016.

12

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

 
Income (Losses) Recognized In Income
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Fair value hedges
 
 
 
 
 
 
 
Interest rate contracts(a)(b)
$
9

 
$
6

 
$
38

 
$
26

Cash flow hedges
 
 
 
 
 
 
 
Interest rate contracts(a)
2

 
(1
)
 
1

 
(2
)
Foreign currency contracts(c)
44

 
(1
)
 
99

 
(1
)
Derivatives not designated as hedges
 
 
 
 
 
 
 
Interest rate contracts(a)
16

 
4

 
7

 
7

Foreign currency contracts(c)(d)
37

 

 
72

 

Total
$
108

 
$
8

 
$
217

 
$
30

_________________
(a)
Recognized in earnings as interest expense.
(b)
Includes hedge ineffectiveness which reflects the net change in the fair value of interest rate contracts offset by the change in fair value of hedged debt attributable to the hedged risk.
(c)
Recognized in earnings as other operating expenses and interest expense.
(d)
Activity is partially offset by translation activity (included in other operating expenses) related to foreign currency-denominated loans.
 
Gains (Losses) Recognized In
Accumulated Other Comprehensive Loss
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Cash flow hedges
 
 
 
 
 
 
 
Interest rate contracts
$

 
$
2

 
$
1

 
$
(2
)
Foreign currency contracts
24

 

 
45

 

Total
$
24

 
$
2

 
$
46

 
$
(2
)
 
Gains (Losses) Reclassified From
Accumulated Other Comprehensive Loss Into Income
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Cash flow hedges
 
 
 
 
 
 
 
Interest rate contracts
$
(1
)
 
$
1

 
$

 
$
1

Foreign currency contracts
(26
)
 
(4
)
 
(60
)
 
(4
)
Total
$
(27
)
 
$
(3
)
 
$
(60
)
 
$
(3
)

Note 10. Commitments and Contingencies
Guarantees of Indebtedness The payments of principal and interest on senior notes issued by our top-tier holding company, our primary Canadian operating subsidiary and a European subsidiary are guaranteed by our primary U.S. operating subsidiary, AFSI. At September 30, 2017 and December 31, 2016, the par value of these senior notes was $37.3 billion and $29.0 billion. Refer to Note 16 - "Guarantor Condensed Consolidating Financial Statements" for further discussion.
Legal Proceedings As a finance company, we are subject to various customer claims and litigation seeking damages and statutory penalties based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract, and discriminatory treatment of credit applicants. Some litigation against us could take the form of class action complaints by customers and certain legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We establish reserves for legal claims when payments associated with the claims become probable and the payments can be reasonably estimated. Given the inherent difficulty of predicting the outcome of litigation and regulatory matters, it is generally very difficult to predict what the eventual

13

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

outcome will be, and when the matter will be resolved. The actual costs of resolving legal claims may be higher or lower than any amounts reserved for the claims. At September 30, 2017, we estimate our reasonably possible legal exposure for unfavorable outcomes is up to $73 million excluding $38 million related to the discontinued operations. We have accrued $24 million excluding $10 million related to the discontinued operations.
In 2014 and 2015, we were served with investigative subpoenas to produce documents from various state attorneys general and other local governmental offices relating to our automobile loan and lease business and securitization of automobile loans and leases. These investigations are ongoing and could in the future result in the imposition of damages, fines or other civil or criminal penalties. No assurance can be given that the ultimate outcome of the investigations or any resulting proceedings would not materially and adversely affect us or any of our subsidiaries and affiliates.
Other Administrative Tax Matters We accrue non-income tax liabilities for contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. In the event any losses are sustained in excess of accruals, they will be charged against income at that time.
In evaluating indirect tax matters, we take into consideration factors such as our historical experience with matters of similar nature, specific facts and circumstances, and the likelihood of prevailing. We reevaluate and update our accruals as matters progress over time. Where there is a reasonable possibility that losses exceeding amounts already recognized may be incurred, our estimate of the additional range of loss is up to $18 million excluding $18 million related to the discontinued operations.
Note 11. Shareholders' Equity
On September 1, 2017, we executed a 10,000 to 1 stock split of each share of our previously authorized common stock, par value $1.00 per share. Each outstanding share was deemed automatically converted into 10,000 shares of common stock, par value $0.0001 per share.
In September 2017, we issued 1,000,000 shares, par value $0.01 per share, of Fixed-to-Floating Rate Cumulative Perpetual Preferred Stock, Series A, at a liquidation preference $1,000 per share, for net proceeds of $985 million.
For the first 10 years after issuance, holders of the preferred stock will be entitled to receive cash dividend payments at an annual rate of 5.750%, payable semi-annually in arrears on March 30 and September 30 of each year beginning on March 30, 2018. After 10 years, holders of the preferred stock will be entitled to receive cash dividend payments at a floating rate equal to the then applicable three-month U.S. dollar LIBOR plus a spread of 3.598% per annum, payable quarterly in arrears, on March 30, June 30, September 30 and December 30 of each year. Dividends on the preferred stock are cumulative whether or not we have earnings, whether or not there are funds legally available for the payment of the dividends and whether or not the dividends are authorized or declared.
The preferred stock does not have a maturity date. We may, at our option, redeem the shares of preferred stock, in whole or in part, at any time on or after September 30, 2027, at a price of $1,000 per share of preferred stock plus all accumulated and unpaid dividends.
Note 12. Income Taxes
For interim income tax reporting we estimate our annual effective tax rate and apply it to our year-to-date ordinary income. Tax jurisdictions with a projected or year-to-date loss for which a tax benefit cannot be realized are excluded from the annualized effective tax rate. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur.
During the three and nine months ended September 30, 2017, income tax expense of $124 million and $260 million primarily resulted from tax expense attributable to entities included in our effective tax rate calculation. During the three and nine months ended September 30, 2016, income tax expense of $60 million and $185 million primarily resulted from tax expense attributable to entities included in our effective tax rate calculation.
We are included in GM’s consolidated U.S. federal income tax return and for certain states’ income tax returns. Net operating losses and certain tax credits generated by us have been utilized by GM; however, income tax expense and deferred tax balances are presented in these financial statements as if we filed our own tax returns in each jurisdiction.

14

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 13. Segment Reporting

We offer substantially similar products and services throughout many different regions, subject to local regulations and market conditions. We evaluate our business in two operating segments: the North America Segment and the International Segment. The North America Segment includes our operations in the U.S. and Canada. The International Segment includes our operations in Brazil, Chile, Colombia, Mexico and Peru as well as our equity investment in SAIC-GMAC, a joint venture that conducts auto finance operations in China. Our chief operating decision maker evaluates the operating results and performance of our business based on these operating segments. The management of each segment is responsible for executing our strategies. As discussed in Note 2 - "Discontinued Operations," our European Operations are presented as discontinued operations and are excluded from our segment results for all periods presented. These operations were previously included in our International Segment. Key operating data for our operating segments were as follows:
 
Three Months Ended September 30, 2017
 
North
America
 
International
 
Total
Total revenue
$
2,868

 
$
293

 
$
3,161

Operating expenses
265

 
81

 
346

Leased vehicle expenses
1,662

 
8

 
1,670

Provision for loan losses
177

 
27

 
204

Interest expense
536

 
136

 
672

Equity income

 
41

 
41

Income from continuing operations before income taxes
$
228

 
$
82

 
$
310

 
Three Months Ended September 30, 2016
 
North
America
 
International
 
Total
Total revenue
$
2,092

 
$
268

 
$
2,360

Operating expenses
240

 
87

 
327

Leased vehicle expenses
1,194

 
3

 
1,197

Provision for loan losses
147

 
20

 
167

Interest expense
383

 
128

 
511

Equity income

 
36

 
36

Income from continuing operations before income taxes
$
128

 
$
66

 
$
194

 
Nine Months Ended September 30, 2017
 
North
America
 
International
 
Total
Total revenue
$
8,042

 
$
857

 
$
8,899

Operating expenses
766

 
243

 
1,009

Leased vehicle expenses
4,631

 
17

 
4,648

Provision for loan losses
497

 
76

 
573

Interest expense
1,488

 
415

 
1,903

Equity income

 
129

 
129

Income from continuing operations before income taxes
$
660

 
$
235

 
$
895


15

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

 
Nine Months Ended September 30, 2016
 
North
America
 
International
 
Total
Total revenue
$
5,666

 
$
763

 
$
6,429

Operating expenses
656

 
240

 
896

Leased vehicle expenses
3,143

 
5

 
3,148

Provision for loan losses
449

 
52

 
501

Interest expense
1,025

 
368

 
1,393

Equity income

 
109

 
109

Income from continuing operations before income taxes
$
393

 
$
207

 
$
600

 
September 30, 2017
 
December 31, 2016
 
North
America
 
International
 
Total
 
North
America
 
International
 
Total
Finance receivables, net
$
34,225

 
$
6,639

 
$
40,864

 
$
27,617

 
$
5,858

 
$
33,475

Leased vehicles, net
$
41,657

 
$
118

 
$
41,775

 
$
34,284

 
$
58

 
$
34,342

Total assets(a)
$
84,971

 
$
21,164

 
$
106,135

 
$
68,656

 
$
19,109

 
$
87,765

________________
(a) International Segment includes assets held for sale of $12.1 billion and $11.0 billion at September 30, 2017 and December 31, 2016.
Note 14. Accumulated Other Comprehensive Loss
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
Unrealized gain (loss) on cash flow hedges
 
 
 
 
 
 
 
Beginning balance
$
6

 
$
(4
)
 
$
17

 
$

Change in value of cash flow hedges, net of tax
(3
)
 
(1
)
 
(14
)
 
(5
)
Ending balance
3

 
(5
)
 
3

 
(5
)
Defined benefit plans
 
 
 
 
 
 
 
Beginning balance
(21
)
 
(13
)
 
(20
)
 
(13
)
Unrealized gain (loss) on subsidiary pension, net of tax

 

 
(1
)
 

Ending balance
(21
)
 
(13
)
 
(21
)
 
(13
)
Foreign currency translation adjustment
 
 
 
 
 
 
 
Beginning balance
(1,037
)
 
(1,021
)
 
(1,235
)
 
(1,091
)
Translation gain (loss), net of tax
120

 
(10
)
 
318

 
60

Ending balance
(917
)
 
(1,031
)
 
(917
)
 
(1,031
)
Total accumulated other comprehensive loss
$
(935
)
 
$
(1,049
)
 
$
(935
)
 
$
(1,049
)
Note 15. Regulatory Capital and other Regulatory Matters
We are required to comply with a wide variety of laws and regulations. Certain of our entities operate in international markets as either banks or regulated finance companies that are subject to regulatory restrictions. These regulatory restrictions, among other things, require that certain of these entities meet minimum capital requirements and may restrict dividend distributions and ownership of certain assets. We were in compliance with all regulatory capital requirements as most recently reported.
Total assets of our regulated international banks and finance companies were approximately $7.6 billion and $6.9 billion at September 30, 2017 and December 31, 2016.

16

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 16. Guarantor Condensed Consolidating Financial Statements
The payment of principal and interest on senior notes issued by our top-tier holding company is currently guaranteed solely by AFSI (the Guarantor) and none of our other subsidiaries (the Non-Guarantor Subsidiaries). The Guarantor is a 100% owned consolidated subsidiary and is unconditionally liable for the obligations represented by the senior notes. The Guarantor’s guarantee may be released only upon customary circumstances, the terms of which vary by issuance. Customary circumstances include the sale or disposition of all of the Guarantor’s assets or capital stock, the achievement of investment grade rating of the senior notes and legal or covenant defeasance.
The condensed consolidating financial statements present consolidating financial data for (i) General Motors Financial Company, Inc. (on a parent-only basis), (ii) the Guarantor, (iii) the combined Non-Guarantor Subsidiaries and (iv) the parent company and our subsidiaries on a consolidated basis at September 30, 2017 and December 31, 2016, and for the three and nine months ended September 30, 2017 and 2016 (after the elimination of intercompany balances and transactions).
Investments in subsidiaries are accounted for by the parent company using the equity method for purposes of this presentation. Results of operations of subsidiaries are therefore reflected in the parent company's investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions.

17

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2017
(Unaudited)
 
General
Motors
Financial
Company, Inc.
 
Guarantor
 
Non-
Guarantors
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
3,546

 
$
430

 
$

 
$
3,976

Finance receivables, net

 
10,097

 
30,767

 

 
40,864

Leased vehicles, net

 

 
41,775

 

 
41,775

Goodwill
1,095

 

 
106

 

 
1,201

Equity in net assets of non-consolidated affiliate

 

 
1,119

 

 
1,119

Related party receivables

 
38

 
301

 

 
339

Other assets
855

 
1,230

 
3,933

 
(1,251
)
 
4,767

Assets held for sale

 

 
12,095

 
(1
)
 
12,094

Due from affiliates
32,762

 
19,467

 

 
(52,229
)
 

Investment in affiliates
10,177

 
5,610

 

 
(15,787
)
 

Total assets
$
44,889

 
$
39,988

 
$
90,526

 
$
(69,268
)
 
$
106,135

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
Secured debt
$

 
$

 
$
41,177

 
$
(402
)
 
$
40,775

Unsecured debt
34,047

 

 
4,216

 

 
38,263

Deferred income

 

 
3,066

 

 
3,066

Related party payables
2

 

 
251

 

 
253

Other liabilities
369

 
772

 
2,157

 
(849
)
 
2,449

Liabilities held for sale

 

 
10,864

 
(6
)
 
10,858

Due to affiliates

 
32,576

 
19,648

 
(52,224
)
 

Total liabilities
34,418

 
33,348

 
81,379

 
(53,481
)
 
95,664

Shareholders' equity
 
 
 
 
 
 
 
 
 
Common stock

 

 
698

 
(698
)
 

Preferred stock

 

 

 

 

Additional paid-in capital
7,514

 
79

 
3,450

 
(3,529
)
 
7,514

Accumulated other comprehensive loss
(935
)
 
(107
)
 
(874
)
 
981

 
(935
)
Retained earnings
3,892

 
6,668

 
5,873

 
(12,541
)
 
3,892

Total shareholders' equity
10,471

 
6,640

 
9,147

 
(15,787
)
 
10,471

Total liabilities and shareholders' equity
$
44,889

 
$
39,988

 
$
90,526

 
$
(69,268
)
 
$
106,135













18

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2016
(Unaudited)
 
General
Motors
Financial
Company, Inc.
 
Guarantor
 
Non-
Guarantors
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
2,284

 
$
531

 
$

 
$
2,815

Finance receivables, net

 
4,969

 
28,506

 

 
33,475

Leased vehicles, net

 

 
34,342

 

 
34,342

Goodwill
1,095

 

 
101

 

 
1,196

Equity in net assets of non-consolidated affiliate

 

 
944

 

 
944

Related party receivables

 
25

 
322

 

 
347

Other assets
506

 
884

 
3,065

 
(760
)
 
3,695

Assets held for sale

 

 
10,959

 
(8
)
 
10,951

Due from affiliates
24,548

 
16,065

 

 
(40,613
)
 

Investment in affiliates
8,986

 
6,445

 

 
(15,431
)
 

Total assets
$
35,135

 
$
30,672

 
$
78,770

 
$
(56,812
)
 
$
87,765

LIABILITIES AND SHAREHOLDER'S EQUITY
 
 
 
 
 
 
 
 
 
Liabilities