General Motors 2015 Annual Report Download - page 37

Table of Contents
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In the year ended December 31, 2014 GMSA had EBIT (loss)-adjusted compared to EBIT-adjusted in the year ended December 31, 2013 due primarily to:
(1) decreased wholesale volumes; and (2) unfavorable Other of $1.0 billion due to unfavorable net foreign currency effect due to the strengthening of the U.S.
Dollar against all currencies across the region; partially offset by (3) favorable vehicle pricing.
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Our Venezuelan subsidiaries' functional currency is the U.S. Dollar because of the hyperinflationary status of the Venezuelan economy.
Effective March 31, 2014 we changed the exchange rate for remeasuring our Venezuelan subsidiaries’ non-U.S. Dollar denominated monetary assets and
liabilities from the Venezuela official exchange rate to the rate determined by an auction process conducted by Venezuela’s Complementary System of
Foreign Currency Administration (SICAD). The devaluation resulted in a charge of $0.4 billion recorded in Automotive cost of sales in the three months
ended March 31, 2014 which was treated as an adjustment for EBIT-adjusted reporting purposes.
In the three months ended June 30, 2015 we changed the exchange rate for remeasuring these monetary assets and liabilities from the SICAD rate to the
Sistema Marginal de Divisas (SIMADI) rate, which was BsF 198 to $1.00 at June 30, 2015. This devaluation resulted in a charge of $0.6 billion recorded in
Automotive cost of sales in the three months ended June 30, 2015 which was treated as an adjustment for EBIT-adjusted reporting purposes. SIMADI is a
third currency exchange mechanism announced by the Venezuelan government in 2015. It is an open system of supply and demand expected to be limited to
a small percentage of total U.S. Dollar transactions using official mechanisms. We believe the SIMADI rate is the most representative rate to be used for
remeasurement, because it is more reflective of economic reality in Venezuela and future transactions, including dividends, at the SICAD rate appear
unlikely.
Due to the adverse movements in the foreign currency exchange rate and the continued weakness in the Venezuelan market we performed recoverability
tests of certain assets, including our real and personal property assets, in the three months ended June 30, 2015. As a result we recorded asset impairment
charges of $0.1 billion in Automotive cost of sales, which were treated as an adjustment for EBIT-adjusted reporting purposes.
We continued to consolidate our Venezuelan subsidiaries because of recent favorable election results, settlements of new debt by the Venezuelan
government, participation in SIMADI currency exchange and vehicle production in the year ended December 31, 2015. Additionally, we expect to have the
ability to continue vehicle production in a limited manner during 2016 and into early 2017. Absent ongoing vehicle production, our Venezuelan
subsidiaries may require additional financial support. At this time no decision has been made whether we will provide further financial support if required.
Despite the significant challenges in Venezuela, this market continues to be important to us. We will continue to monitor developments in Venezuela to
assess whether market restrictions and exchange rate controls evolve such that we no longer maintain a controlling financial interest. If a determination is
made in the future that we no longer maintain control we may incur a charge based on exchange rates at December 31, 2015 of approximately $0.2 billion.
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Total revenue $ 6,454
$ 4,854
$ 3,344
$ 1,600
33.0%
$ 1,510
45.2 %
Provision for loan losses $ 624
$ 604
$ 475
$ 20
3.3%
$ 129
27.2 %
Income before income taxes-adjusted $ 837
$ 803
$ 898
$ 34
4.2%
$ (95)
(10.6)%
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Average debt outstanding $ 44.6
$ 32.2
$ 21.0
$ 12.4
38.5%
$ 11.2
53.3 %
Effective rate of interest paid 3.6%
4.4%
3.4%
(0.8)%
1.0%
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