General Motors 2014 Annual Report Download - page 34

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
In the year ending December 31, 2015 we expect an increase in EBIT-adjusted and EBIT-adjusted margins due primarily to: (1) a
slight improvement in market share primarily in Brazil; (2) improved product and country mix; and (3) improved pricing; partially
offset by (4) higher marketing, labor, material and logistics costs. Continued foreign currency volatility will also affect our results in
2015.
Corporate
On December 31, 2014 we redeemed all of our shares of Series A Preferred Stock outstanding at a redemption price equal to the
aggregate liquidation amount, including accumulated dividends, of $3.9 billion. The difference of $0.8 billion between the carrying
amount and the consideration paid was recorded as a reduction to Net income attributable to common stockholders.
At December 31, 2014 our European businesses had deferred tax asset valuation allowances of $4.9 billion. As a result of the
changes in our European operating structure and improving financial performance in certain jurisdictions, we are experiencing
positive evidence trends in certain operations. If these operations generate profits and taxable income in the future, it is reasonably
possible our conclusion regarding the need for full valuation allowances could change, resulting in the reversal of significant portions
of the valuation allowances. In the quarter in which significant valuation allowances are reversed, we will record a material tax benefit
reflecting the reversal, which could result in lower than expected or negative effective tax rate for both the quarter and full year.
Automotive Financing — GM Financial Summary and Outlook
GM Financial is currently seeking to expand its prime lending programs in North America and anticipates that prime lending will
become an increasing percentage of the consumer portfolio balance over time. We believe that offering a comprehensive suite of
financing products will generate incremental sales of our vehicles, drive incremental GM Financial earnings and help support our
sales throughout economic cycles. GM Financial completed the acquisitions of Ally Financial’s automotive finance and financial
services businesses in Europe and Latin America during 2013. On January 2, 2015 GM Financial completed its acquisition of Ally
Financial’s 40% equity interest in SAIC-GMAC Automotive Finance Company Limited (SAIC-GMAC) in China. The aggregate
purchase price was approximately $1.0 billion, subject to certain post-closing adjustments. Also on January 2, 2015 GM Financial
sold a 5% equity interest in SAIC-GMAC to Shanghai Automotive Group Finance Company Ltd. (SAICFC), a current shareholder of
SAIC-GMAC, for proceeds of approximately $120 million, subject to certain post-closing adjustments. As a result of these
transactions GM indirectly owns 45% of SAIC-GMAC.
In January 2015 we announced GM Financial will become the exclusive U.S. lease provider for Buick-GMC dealers in February
2015 and is targeting March 2015 for Cadillac dealers. U.S. lease exclusivity with Chevrolet dealers is under consideration.
In the year ending December 31, 2015 we expect income before income taxes-adjusted to remain consistent with 2014 because our
near-term financial results will be impacted by additional provisions on loan losses and interest expense resulting from the growth of
the business.
Consolidated Results
We review changes in our results of operations under four categories: volume, mix, price and other. Volume measures the impact of
changes in wholesale vehicle volumes driven by industry volume, market share and changes in dealer stock levels. Mix measures the
impact of changes to the regional portfolio due to product, model, trim, country and option penetration in current year wholesale
vehicle volumes. Price measures the impact of changes related to Manufacturer’s Suggested Retail Price and various sales allowances.
Other includes primarily: (1) material and freight; (2) costs including manufacturing, engineering, advertising, administrative and
selling and policy and warranty expense; (3) foreign exchange; and (4) non-vehicle related automotive revenues and costs as well as
equity income or loss from our nonconsolidated affiliates.
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