General Motors 2014 Annual Report Download - page 26

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES
The accompanying Letter to Stockholders includes earnings before interest and taxes adjusted for special items (EBIT-adjusted) and Adjusted
automotive free cash flow which are not prepared in accordance with Accounting Principles Generally Accepted in the United States of America (U.S.
GAAP) and have not been audited or reviewed by GM’s independent auditors. EBIT-adjusted and Adjusted automotive free cash flow are considered
non-GAAP measures.
Management believes these non-GAAP measures provide meaningful supplemental information regarding GM’s operating results and liquidity
because they exclude amounts that management does not consider when assessing and measuring operational and financial performance.
Management believes these measures allow it to readily view operating trends, perform analytical comparisons and benchmark performance
between periods and among geographic regions. GM believes these non-GAAP measures are useful in allowing for greater transparency of GM’s
core operations and they are therefore used by management in its financial and operational decision-making.
While management believes that these non-GAAP measures provide useful information, they are not operating measures under U.S. GAAP, and
there are limitations associated with their use. GM’s calculation of these non-GAAP measures may not be completely comparable to similarly titled
measures of other companies due to potential differences between companies in their method of calculation. As a result, the use of these non-GAAP
measures has limitations and should not be considered in isolation from, or as a substitute for, other measures such as Net income or Net income
attributable to common stockholders. Due to these limitations, these non-GAAP measures are used as a supplement to U.S. GAAP measures.
The following table summarizes the reconciliation of EBIT-adjusted to its most comparable U.S. GAAP measure (dollars in millions):
(a) GM’s automotive operations’ interest income and interest expense are
recorded centrally in Corporate.
(b) GM Financial amounts represent income before income taxes.
In the year ended December 31, 2013, adjustments to automotive free cash flow
included the following:
• Accrued interest on the prepayment of the Health Care Trust notes
of $154 million;
• Pension contributions of $71 million related to the previously announced
annuitization of the U.S. salaried pension plan.
In the year ended December 31, 2014, adjustments to automotive free cash flow
included the following:
• Pension contributions of $53 million related to the previously announced
annuitization of the U.S. salaried pension plan.
In the year ended December 31, 2013, special items for EBIT-adjusted included
the following:
• Impairment charges of property and intangible assets of $774 million in GMIO;
• Costs related to our plans to cease mainstream distribution of Chevrolet brand
in Europe of $621 million in GMIO, and $15 million in GM Financial;
• Gain related to reversal of GM Korea wage litigation accrual of $577 million in
GMIO;
• Gain on sale of equity investment in Ally Financial of $483 million in Corporate;
• Goodwill impairment charges of $442 million in GMIO;
• Venezuela currency devaluation loss of $162 million in GMSA;
• Gain on sale of equity investment in PSA of $152 million in GME;
• Noncontrolling interests related to redemption of the GM Korea mandatorily
redeemable preferred shares of $67 million in GMIO;
• Pension settlement charges of $56 million in GMNA;
• Charges related to PSA product development agreement of $49 million
in GMNA; and
• Income related to various insurance recoveries of $35 million.
In the year ended December 31, 2014, special items for EBIT-adjusted included
the following:
• Catch-up adjustment related to the change in estimate for recall campaigns
of $874 million in GMNA;
• Venezuela currency devaluation loss of $419 million in GMSA;
• Charge related to the funding of the ignition switch recall compensation
program of $400 million in Corporate;
• Asset impairment charges in Russian subsidiaries of $245 million in GME;
• Asset impairment charges in Thailand subsidiary of $158 million in GMIO;
• Goodwill impairment charges of $120 million in GMSA;
• Charges related to flood damage, net of insurance recoveries,
of $101 million in GMNA; and
• Other charges of $10 million.
2013 2014
OPERATING SEGMENTS
GMNA(a) $ 7,461 $ 6,603
GME(a) (869 (1,369
GMIO(a) 1,255 1,222
GMSA(a) 327 (180
GM Financial(b) 898 803
Total operating segments(b) 9,072 7,079
Corporate and eliminations (494 (585
EBIT-ADJUSTED (B) 8,578 6,494
Special items (805 (2,327
Automotive interest income 246 211
Automotive interest expense (334 (403
Gain (loss) on extinguishment of debt (212 202
Net income (loss) attributable to noncontrolling interests (15 69
Income Before Income Taxes $ 7,458 $ 4,246
) )
)
) )
) )
) )
)
)
GMIO;