Edgar Filing: General Motors Co

GM Q1 2015

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549-1004

Form 10-Q



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015



¨	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 001-34960

GENERAL MOTORS COMPANY

(Exact Name of Registrant as Specified in its Charter)



STATE OF DELAWARE	27-0756180
(State or other jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

300 Renaissance Center, Detroit, Michigan	48265-3000
(Address of Principal Executive Offices)	(Zip Code)

(313) 556-5000

(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 þ No ¨

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 þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

As of April 16, 2015 the number of shares outstanding of common stock was 1,607,207,691 shares.

Website Access to Company's Reports

General Motors Company's internet website address is www.gm.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are available free of charge through our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission.

INDEX



			Page
PART I
Item 1.	Condensed Consolidated Financial Statements		1
	Condensed Consolidated Income Statements (Unaudited)		1
	Condensed Consolidated Statements of Comprehensive Income (Unaudited)		2
	Condensed Consolidated Balance Sheets (Unaudited)		3
	Condensed Consolidated Statements of Equity (Unaudited)		4
	Condensed Consolidated Statements of Cash Flows (Unaudited)		5
	Notes to Condensed Consolidated Financial Statements		6
	Note 1.	Nature of Operations and Basis of Presentation	6
	Note 2.	Marketable Securities	6
	Note 3.	GM Financial Receivables, net	7
	Note 4.	Inventories	9
	Note 5.	Equity in Net Assets of Nonconsolidated Affiliates	9
	Note 6.	Variable Interest Entities	10
	Note 7.	Short-Term and Long-Term Debt	11
	Note 8.	Product Warranty and Related Liabilities	12
	Note 9.	Pensions and Other Postretirement Benefits	12
	Note 10.	Commitments and Contingencies	13
	Note 11.	Income Taxes	18
	Note 12.	Restructuring and Other Initiatives	18
	Note 13.	Stockholders' Equity	19
	Note 14.	Earnings Per Share	20
	Note 15.	Segment Reporting	21
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		40
Item 4.	Controls and Procedures		40
PART II
Item 1.	Legal Proceedings		42
Item 1A.	Risk Factors		42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 6.	Exhibits		43
Signature			44

Table of Contents

GENERAL MOTORS COMPANY AND SUBSIDIARIES

PART I

Item 1. Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED INCOME STATEMENTS

(In millions, except per share amounts)

(Unaudited)



	Three Months Ended
	March 31, 2015		March 31, 2014
Net sales and revenue
Automotive	$	34,364	$	36,315
GM Financial	1,348		1,093
Total net sales and revenue	35,712		37,408
Costs and expenses
Automotive cost of sales (Note 8)	30,674		34,127
GM Financial interest, operating and other expenses	1,168		875
Automotive selling, general and administrative expense	3,117		2,941
Total costs and expenses	34,959		37,943
Operating income (loss)	753		(535		)
Automotive interest expense	110		103
Interest income and other non-operating income, net	241		89
Equity income (Note 5)	553		605
Income before income taxes	1,437		56
Income tax expense (benefit) (Note 11)	529		(224		)
Net income	908		280
Net (income) loss attributable to noncontrolling interests	37		(67		)
Net income attributable to stockholders	$	945	$	213

Net income attributable to common stockholders	$	945	$	125

Earnings per share (Note 14)
Basic
Basic earnings per common share	$	0.58	$	0.08
Weighted-average common shares outstanding	1,617		1,587
Diluted
Diluted earnings per common share	$	0.56	$	0.06
Weighted-average common shares outstanding	1,686		1,691

Dividends declared per common share	$	0.30	$	0.30

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)



	Three Months Ended
	March 31, 2015		March 31, 2014
Net income	$	908	$	280
Other comprehensive income (loss), net of tax (Note 13)
Foreign currency translation adjustments	192		(98		)
Unrealized gains on securities, net	5		3
Defined benefit plans, net	554		67
Other comprehensive income (loss), net of tax	751		(28		)
Comprehensive income	1,659		252
Comprehensive (income) loss attributable to noncontrolling interests	28		(64		)
Comprehensive income attributable to stockholders	$	1,687	$	188

Reference should be made to the notes to condensed consolidated financial statements.

Table of Contents

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share amounts)

(Unaudited)



	March 31, 2015			December 31, 2014
ASSETS
Current Assets
Cash and cash equivalents	$	15,776		$	18,954
Marketable securities (Note 2)	8,409			9,222
Restricted cash and marketable securities (Note 2; Note 6 at VIEs)	1,414			1,338
Accounts and notes receivable (net of allowance of $321 and $340)	11,569			9,078
GM Financial receivables, net (Note 3; Note 6 at VIEs)	16,127			16,528
Inventories (Note 4)	14,051			13,642
Equipment on operating leases, net	4,563			3,564
Deferred income taxes	9,704			9,760
Other current assets	1,618			1,584
Total current assets	83,231			83,670
Non-current Assets
Restricted cash and marketable securities (Note 2; Note 6 at VIEs)	625			935
GM Financial receivables, net (Note 3; Note 6 at VIEs)	16,180			16,006
Equity in net assets of nonconsolidated affiliates (Note 5)	9,756			8,350
Property, net	27,755			27,743
Goodwill and intangible assets, net	6,297			6,410
GM Financial equipment on operating leases, net (Note 6 at VIEs)	8,939			7,060
Deferred income taxes	24,782			25,414
Other assets	2,353			2,089
Total non-current assets	96,687			94,007
Total Assets	$	179,918		$	177,677
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable (principally trade)	$	25,187		$	22,529
Short-term debt and current portion of long-term debt (Note 7)
Automotive	411			500
GM Financial (Note 6 at VIEs)	13,940			14,488
Accrued liabilities	27,804			28,184
Total current liabilities	67,342			65,701
Non-current Liabilities
Long-term debt (Note 7)
Automotive	8,722			8,910
GM Financial (Note 6 at VIEs)	25,185			22,943
Postretirement benefits other than pensions (Note 9)	6,089			6,229
Pensions (Note 9)	22,206			23,788
Other liabilities	13,551			14,082
Total non-current liabilities	75,753			75,952
Total Liabilities	143,095			141,653
Commitments and contingencies (Note 10)
Equity (Note 13)
Common stock, $0.01 par value	16			16
Additional paid-in capital	28,819			28,937
Retained earnings	14,825			14,577
Accumulated other comprehensive loss	(7,331		)	(8,073		)
Total stockholders’ equity	36,329			35,457
Noncontrolling interests	494			567
Total Equity	36,823			36,024
Total Liabilities and Equity	$	179,918		$	177,677

Reference should be made to the notes to condensed consolidated financial statements.

Table of Contents

GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(In millions)

(Unaudited)



	Series A Preferred Stock		Common Stockholders’											Noncontrolling Interests			Total Equity
	Series A Preferred Stock		Common Stock		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
Balance at January 1, 2014	$	3,109	$	15	$	28,780		$	13,816		$	(3,113	)	$	567		$	43,174
Net income	—		—		—			213			—			67			280
Other comprehensive loss	—		—		—			—			(25		)	(3		)	(28		)
Exercise of common stock warrants	—		1		9			—			—			—			10
Stock based compensation	—		—		(11		)	(3		)	—			—			(14		)
Cash dividends paid on common stock	—		—		—			(481		)	—			—			(481		)
Cash dividends paid on Series A preferred stock	—		—		—			(88		)	—			—			(88		)
Dividends declared or paid to noncontrolling interests	—		—		—			—			—			(30		)	(30		)
Other	—		—		—			—			—			17			17
Balance at March 31, 2014	$	3,109	$	16	$	28,778		$	13,457		$	(3,138	)	$	618		$	42,840

Balance at January 1, 2015			$	16	$	28,937		$	14,577		$	(8,073	)	$	567		$	36,024
Net income			—		—			945			—			(37		)	908
Other comprehensive income			—		—			—			742			9			751
Purchase of common stock			—		(168		)	(207		)	—			—			(375		)
Exercise of common stock warrants			—		39			—			—			—			39
Stock based compensation			—		11			(5		)	—			—			6
Cash dividends paid on common stock			—		—			(485		)	—			—			(485		)
Dividends declared or paid to noncontrolling interests			—		—			—			—			(47		)	(47		)
Other			—		—			—			—			2			2
Balance at March 31, 2015			$	16	$	28,819		$	14,825		$	(7,331	)	$	494		$	36,823

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



	Three Months Ended
	March 31, 2015			March 31, 2014
Net cash provided by operating activities	$	375		$	1,976
Cash flows from investing activities
Expenditures for property	(1,684		)	(1,759		)
Available-for-sale marketable securities, acquisitions	(1,634		)	(891		)
Trading marketable securities, acquisitions	(522		)	(302		)
Available-for-sale marketable securities, liquidations	2,467			1,055
Trading marketable securities, liquidations	386			332
Acquisition of companies/investments, net of cash acquired	(1,051		)	—
Increase in restricted cash and marketable securities	(221		)	(281		)
Decrease in restricted cash and marketable securities	68			159
Purchases of finance receivables	(4,067		)	(3,300		)
Principal collections and recoveries on finance receivables	2,814			2,639
Purchases of leased vehicles, net	(2,252		)	(620		)
Proceeds from termination of leased vehicles	185			123
Other investing activities	43			8
Net cash used in investing activities	(5,468		)	(2,837		)
Cash flows from financing activities
Net increase in short-term debt	98			384
Proceeds from issuance of debt (original maturities greater than three months)	6,155			5,683
Payments on debt (original maturities greater than three months)	(3,109		)	(4,764		)
Payments to purchase stock	(300		)	—
Dividends paid	(488		)	(571		)
Other financing activities	3			(14		)
Net cash provided by financing activities	2,359			718
Effect of exchange rate changes on cash and cash equivalents	(444		)	(452		)
Net decrease in cash and cash equivalents	(3,178		)	(595		)
Cash and cash equivalents at beginning of period	18,954			20,021
Cash and cash equivalents at end of period	$	15,776		$	19,426
Supplemental cash flow information:
Non-cash property additions	$	1,649		$	1,485

Reference should be made to the notes to condensed consolidated financial statements.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Operations and Basis of Presentation

General Motors Company is sometimes referred to in this Quarterly Report on Form 10-Q as “we,” “our,” “us,” “ourselves,” the “Company,” “General Motors,” or “GM.” We design, build and sell cars, trucks and automobile parts worldwide. We also provide automotive financing services through General Motors Financial Company, Inc. (GM Financial). We analyze the results of our business through the following segments: GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO), GM South America (GMSA) and GM Financial. Nonsegment operations are classified as Corporate. Corporate includes certain centrally recorded income and costs, such as interest, income taxes and corporate expenditures and certain nonsegment specific revenues and expenses.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information. Accordingly they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The accompanying condensed consolidated financial statements include all adjustments, composed of normal recurring adjustments and transactions or events discretely impacting the interim periods, considered necessary by management to fairly state our results of operations, financial position and cash flows. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2014 Form 10-K as filed with the SEC.

Accounting Standards Not Yet Adopted

In May 2014 the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, “Revenue from Contracts with Customers” (ASU 2014-09) which requires companies to recognize revenue when a customer obtains control rather than when companies have transferred substantially all risks and rewards of a good or service. This update is effective for annual reporting periods beginning on or after December 15, 2016 and interim periods therein and requires expanded disclosures. We are currently assessing the impact the adoption of ASU 2014-09 will have on our consolidated financial statements.

Note 2. Marketable Securities

The following table summarizes the fair value of marketable securities which approximates cost (dollars in millions):

Table of Contents

GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)



	Fair Value Level	March 31, 2015		December 31, 2014
Cash and cash equivalents
Available-for-sale securities
U.S. government and agencies	2	$	673	$	1,600
Sovereign debt	2	313		774
Money market funds	1	1,439		2,480
Corporate debt	2	6,157		6,036
Total available-for-sale securities		8,582		10,890
Trading securities – sovereign and corporate debt	2	207		431
Total marketable securities classified as cash equivalents		8,789		11,321
Cash, cash equivalents and time deposits		6,987		7,633
Total cash and cash equivalents		$	15,776	$	18,954
Marketable securities
Available-for-sale securities
U.S. government and agencies	2	$	5,021	$	5,957
Corporate debt	2	2,103		1,998
Total available-for-sale securities		7,124		7,955
Trading securities – sovereign debt	2	1,285		1,267
Total marketable securities		$	8,409	$	9,222
Restricted cash and marketable securities
Available-for-sale securities, primarily money market funds	1	$	1,515	$	1,427
Restricted cash, cash equivalents and time deposits		524		846
Total restricted cash and marketable securities		$	2,039	$	2,273

Sales proceeds from investments classified as available-for-sale and sold prior to maturity were $1.4 billion and $736 million in the three months ended March 31, 2015 and 2014. Cumulative unrealized gains and losses on available-for-sale securities were insignificant at March 31, 2015 and December 31, 2014 and net unrealized gains and losses on trading securities were insignificant in the three months ended March 31, 2015 and 2014.

The following table summarizes the fair value of investments classified as available-for-sale, which approximates amortized cost, by contractual maturity at March 31, 2015 (dollars in millions):



	March 31, 2015
Due in one year or less	$	12,300
Due after one year through five years	1,995
Total contractual maturities of available-for-sale securities	$	14,295

Note 3. GM Financial Receivables, net

The following table summarizes the components of GM Financial receivables, net (dollars in millions):



	March 31, 2015									December 31, 2014
	Consumer			Commercial			Total			Consumer			Commercial			Total
Finance receivables	$	25,591		$	7,444		$	33,035		$	25,623		$	7,606		$	33,229
Less: allowance for loan losses	(692		)	(36		)	(728		)	(655		)	(40		)	(695		)
GM Financial receivables, net	$	24,899		$	7,408		$	32,307		$	24,968		$	7,566		$	32,534

Fair value of GM Financial receivables, net							$	32,778								$	33,106

Allowance for loan losses classified as current at March 31, 2015 and December 31, 2014 were $569 million and $529 million.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

GM Financial determines the fair value of consumer finance receivables using observable and unobservable inputs within a cash flow model, a Level 3 input. 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 which is the basis for the calculation of the series of cash flows that derive the fair value of the portfolio. The series of cash flows is calculated and discounted using a weighted-average cost of capital or current interest rates. The weighted-average cost of capital uses debt and equity percentages, an unobservable cost of equity and an observable cost of debt based on companies with a similar credit rating and maturity profile as the portfolio. Macroeconomic factors could affect the credit performance of the portfolio and therefore could potentially affect the assumptions used in GM Financial's cash flow model. A substantial majority of commercial finance receivables have variable interest rates and maturities of one year or less. Therefore the carrying amount is considered to be a reasonable estimate of fair value.

The following table summarizes activity for the allowance for loan losses on finance receivables (dollars in millions):



	Three Months Ended
	March 31, 2015			March 31, 2014
Balance at beginning of period	$	695		$	548
Provision for loan losses	155			135
Charge-offs	(234		)	(224		)
Recoveries	124			127
Effect of foreign currency	(12		)	—
Balance at end of period	$	728		$	586

The activity of the allowance for commercial loan losses was insignificant in the three months ended March 31, 2015 and 2014.

Credit Quality

Consumer Finance Receivables

GM Financial uses proprietary scoring systems in its 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 scores) and contract characteristics. In addition to GM Financial's proprietary scoring systems GM Financial considers other individual consumer factors such as employment history, financial stability and capacity to pay. Subsequent to origination GM Financial reviews the credit quality of retail receivables based on customer payment activity. At the time of loan origination substantially all of GM Financial's international consumers were considered to be prime credit quality. At March 31, 2015 and December 31, 2014, 77% and 83% of the consumer finance receivables in North America were from consumers with sub-prime credit scores, which are defined as FICO scores of less than 620 at the time of loan origination.

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. At March 31, 2015 and December 31, 2014 the accrual of finance charge income has been suspended on delinquent consumer finance receivables with contractual amounts due of $581 million and $682 million. The following table summarizes the contractual amount of delinquent contracts, which is not significantly different than the recorded investment of the consumer finance receivables (dollars in millions):



	March 31, 2015				March 31, 2014
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
31-to-60 days delinquent	$	880	3.4	%	$	717	3.1	%
Greater-than-60 days delinquent	357		1.4	%	336		1.4	%
Total finance receivables more than 30 days delinquent	1,237		4.8	%	1,053		4.5	%
In repossession	42		0.2	%	38		0.1	%
Total finance receivables more than 30 days delinquent or in repossession	$	1,279	5.0	%	$	1,091	4.6	%

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Impaired Finance Receivables - Troubled Debt Restructurings

The following table summarizes the outstanding recorded investment for consumer finance receivables that are considered to be troubled debt restructurings and the related allowance (dollars in millions):



	March 31, 2015			December 31, 2014
Outstanding recorded investment	$	1,294		$	1,234
Less: allowance for loan losses	(164		)	(172		)
Outstanding recorded investment, net of allowance	$	1,130		$	1,062

Unpaid principal balance	$	1,319		$	1,255

Commercial Finance Receivables

GM Financial's commercial finance receivables consist of dealer financings, primarily for inventory purchases. A proprietary model is used to assign a risk rating to each dealer. A credit review of each dealer is performed at least annually, and if necessary, the dealer's risk rating is adjusted on the basis of the review. The credit lines for Group VI dealers are typically suspended and no further funding is extended to these dealers. At March 31, 2015 and December 31, 2014 the commercial finance receivables on non-accrual status were insignificant. The following table summarizes the credit risk profile by dealer grouping of the commercial finance receivables (dollars in millions):



	March 31, 2015		December 31, 2014
Group I - Dealers with superior financial metrics	$	954	$	1,050
Group II - Dealers with strong financial metrics	2,100		2,022
Group III - Dealers with fair financial metrics	2,590		2,599
Group IV - Dealers with weak financial metrics	1,095		1,173
Group V - Dealers warranting special mention due to potential weaknesses	514		524
Group VI - Dealers with loans classified as substandard, doubtful or impaired	191		238
	$	7,444	$	7,606

Note 4. Inventories

The following tables summarize the components of Inventories (dollars in millions):



	March 31, 2015
	GMNA		GME		GMIO		GMSA		Total
Total productive material, supplies and work in process	$	3,013	$	738	$	1,275	$	853	$	5,879
Finished product, including service parts	4,098		2,446		933		695		8,172
Total inventories	$	7,111	$	3,184	$	2,208	$	1,548	$	14,051



	December 31, 2014
	GMNA		GME		GMIO		GMSA		Total
Total productive material, supplies and work in process	$	2,592	$	778	$	1,216	$	794	$	5,380
Finished product, including service parts	4,320		2,394		1,026		522		8,262
Total inventories	$	6,912	$	3,172	$	2,242	$	1,316	$	13,642

Note 5. Equity in Net Assets of Nonconsolidated Affiliates

Nonconsolidated affiliates are entities in which an equity ownership interest is maintained and for which the equity method of accounting is used due to the ability to exert significant influence over decisions relating to their operating and financial affairs.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Sales and income of our Automotive China joint ventures (Automotive China JVs) are not consolidated into our financial statements; rather, our proportionate share of the earnings of each joint venture is reflected as Equity income. There have been no significant ownership changes in our Automotive China JVs since December 31, 2014. The following table summarizes information regarding Equity income (dollars in millions):



	Three Months Ended
	March 31, 2015		March 31, 2014
Automotive China JVs	$	519	$	595
Other joint ventures	34		10
Total equity income	$	553	$	605

Dividends received from nonconsolidated affiliates were insignificant in the three months ended March 31, 2015 and 2014. At March 31, 2015 and December 31, 2014 we had undistributed earnings including dividends declared but not received of $2.6 billion and $2.0 billion related to our nonconsolidated affiliates.

On January 2, 2015 GM Financial completed its acquisition of Ally Financial, Inc.'s (Ally Financial) 40% equity interest in SAIC-GMAC Automotive Finance Company Limited (SAIC-GMAC) in China. The aggregate purchase price was $1.0 billion. 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 $125 million. As a result of these transactions GM Financial now owns 35%, SAICFC owns 45% and GM indirectly owns 45% of SAIC-GMAC. GM Financial's share of earnings of SAIC-GMAC is included in the Equity income of Other joint ventures in the table above. The difference between GM Financial's carrying amount of its investment and its share of the underlying net assets of SAIC-GMAC was $371 million at March 31, 2015, which was primarily related to goodwill. The pro forma effect on earnings had this acquisition occurred on January 1, 2014 was not significant.

Transactions with Nonconsolidated Affiliates

Nonconsolidated affiliates are involved in various aspects of the development, production and marketing of cars, trucks and automobile parts. We purchase component parts and vehicles from certain nonconsolidated affiliates for resale to dealers. We also sell component parts and vehicles to certain nonconsolidated affiliates. The following tables summarize transactions with nonconsolidated affiliates (dollars in millions):



	Three Months Ended
	March 31, 2015		March 31, 2014
Automotive sales and revenue	$	452	$	783
Automotive purchases, net	$	53	$	105
Operating cash flows	$	456	$	541



	March 31, 2015		December 31, 2014
Accounts and notes receivable, net	$	636	$	706
Accounts payable	$	205	$	205

Note 6. Variable Interest Entities

Automotive Financing - GM Financial Consolidated Variable Interest Entities (VIEs)

GM Financial uses special purpose entities (SPEs) that are considered VIEs to issue variable funding notes to third party bank-sponsored warehouse facilities or asset-backed securities to investors in securitization transactions. The debt issued by these VIEs is backed by the cash flows related to finance receivables and leasing related assets transferred by GM Financial to the VIEs (Securitized Assets). GM Financial holds variable interests in the VIEs that could potentially be significant to the VIEs. GM Financial determined that they are the primary beneficiary of the SPEs because: (1) the servicing responsibilities for the Securitized Assets give GM Financial the power to direct the activities that most significantly impact the performance of the VIEs; and (2) the variable interests in the VIEs give GM Financial the obligation to absorb losses and the right to receive residual returns that could potentially be significant. The assets and liabilities of the VIEs are included in GM Financial's condensed consolidated

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balance sheets. The following table summarizes the assets and liabilities related to GM Financial's consolidated VIEs (dollars in millions):



	March 31, 2015		December 31, 2014
Restricted cash – current	$	1,265	$	1,110
Restricted cash – non-current	$	561	$	611
GM Financial receivables, net – current	$	11,259	$	11,134
GM Financial receivables, net – non-current	$	10,598	$	11,583
GM Financial equipment on operating leases, net	$	5,401	$	4,595
GM Financial short-term debt and current portion of long-term debt	$	10,735	$	10,502
GM Financial long-term debt	$	12,122	$	12,292

The assets of the VIEs serve as the sole source of repayment for the debt issued by these entities. Investors in the notes issued by the VIEs do not have recourse to GM Financial or its other assets, with the exception of customary representation and warranty repurchase provisions and indemnities that GM Financial provides as the servicer. GM Financial is not required and does not currently intend to provide additional financial support to these SPEs. While these subsidiaries are included in GM Financial's condensed consolidated financial statements, these subsidiaries are separate legal entities and their assets are legally owned by them and are not available to GM Financial's creditors.

Note 7. Short-Term and Long-Term Debt

Automotive

The following table summarizes the carrying amount and fair value of debt (dollars in millions):



	March 31, 2015		December 31, 2014
Carrying amount	$	9,133	$	9,410
Fair value	$	9,761	$	9,799

The fair value of debt includes $7.7 billion and $7.6 billion measured utilizing Level 1 inputs and $2.1 billion and $2.2 billion measured utilizing Level 2 inputs at March 31, 2015 and December 31, 2014. The fair value of debt measured utilizing Level 1 inputs was based on quoted prices in active markets for identical instruments that a market participant can access at the measurement date. The fair value of debt measured utilizing Level 2 inputs was based on a discounted cash flow model using observable inputs. This model utilizes observable inputs such as contractual repayment terms and benchmark yield curves, plus a spread based on our senior unsecured notes that is intended to represent our nonperformance risk. We obtain the benchmark yield curves and yields on unsecured notes from independent sources that are widely used in the financial industry.

Automotive Financing - GM Financial

The following table summarizes the carrying amount and fair value of debt (dollars in millions):



	March 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Secured debt	$	24,693	$	24,717	$	25,214	$	25,228
Unsecured debt	14,432		14,772		12,217		12,479
Total GM Financial debt	$	39,125	$	39,489	$	37,431	$	37,707

The fair value of debt includes $34.3 billion and $32.8 billion measured utilizing Level 2 inputs and $5.2 billion and $4.9 billion measured utilizing Level 3 inputs at March 31, 2015 and December 31, 2014. The fair value of debt measured utilizing Level 2 inputs was based on quoted market prices and if unavailable, quoted market prices of similar securities. For debt that has terms of one year or less or has been priced within the last six months, the carrying amount or par value is considered to be a reasonable

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estimate of fair value. The fair value of 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

Secured debt consists of revolving credit facilities and securitization notes payable. Most of the secured debt was issued by VIEs and is repayable only from proceeds related to the underlying pledged finance receivables and leases. Refer to Note 6 for additional information relating to GM Financial's involvement with VIEs. In the three months ended March 31, 2015 GM Financial issued securitization notes payable of $2.0 billion and entered into new or renewed credit facilities with a total net additional borrowing capacity of $770 million.

Unsecured Debt

Unsecured debt consists of senior notes, credit facilities and other unsecured debt. In January 2015 GM Financial issued $2.25 billion in aggregate principal amount of senior notes comprising $1.0 billion of 3.15% notes due in January 2020, $1.0 billion of 4.0% notes due in January 2025 and $250 million of floating rate notes due in January 2020. In February 2015 GM Financial issued Euro 650 million of 0.85% term notes due in February 2018. All of these notes are guaranteed by GM Financial's principal operating subsidiary.

In April 2015 GM Financial issued $2.4 billion in aggregate principal amount of senior notes comprising $850 million of 2.4% notes due in April 2018, $1.25 billion of 3.45% notes due in April 2022 and $300 million of floating rate notes due in April 2018. The notes are guaranteed by GM Financial's principal operating subsidiary.

Note 8. Product Warranty and Related Liabilities

The following table summarizes activity for policy, product warranty, recall campaigns and courtesy transportation (dollars in millions):



	Three Months Ended
	March 31, 2015			March 31, 2014
Beginning balance	$	9,646		$	7,601
Warranties issued and assumed in period - recall campaigns and courtesy transportation	183			1,386
Warranties issued and assumed in period - policy and product warranty	562			634
Payments	(1,074		)	(769		)
Adjustments to pre-existing warranties	86			(3		)
Effect of foreign currency and other	(161		)	(11		)
Ending balance	$	9,242		$	8,838

In the three months ended March 31, 2014 we recorded charges of approximately $1.3 billion for the recall of approximately 7 million vehicles as described in our 2014 Form 10-K. We had historically accrued estimated costs related to recall campaigns in GMNA when probable and reasonably estimable, which typically occurs once it is determined a specific recall campaign is needed and announced. During the three months ended September 30, 2014 we began accruing the costs for recall campaigns at the time of vehicle sale in GMNA.

Note 9. Pensions and Other Postretirement Benefits

The following table summarizes the components of net periodic pension and other postretirement benefits (OPEB) (income) expense (dollars in millions):

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	Three Months Ended March 31, 2015									Three Months Ended March 31, 2014
	Pension Benefits						Global OPEB Plans			Pension Benefits						Global OPEB Plans
	U.S. Plans			Non-U.S. Plans			Global OPEB Plans			U.S. Plans			Non-U.S. Plans			Global OPEB Plans
Service cost	$	101		$	100		$	6		$	95		$	93		$	5
Interest cost	689			196			60			765			262			68
Expected return on plan assets	(974		)	(203		)	—			(978		)	(219		)	—
Amortization of prior service cost (credit)	(1		)	4			(3		)	(1		)	5			(4		)
Amortization of net actuarial (gains) losses	2			58			8			(23		)	39			2
Curtailments, settlements and other	—			—			—			(2		)	2			—
Net periodic pension and OPEB (income) expense	$	(183	)	$	155		$	71		$	(144	)	$	182		$	71

Note 10. Commitments and Contingencies

The following tables summarize information related to Commitments and contingencies (dollars in millions):



	March 31, 2015				December 31, 2014
	Liability Recorded		Maximum Liability(a)		Liability Recorded		Maximum Liability(a)
Guarantees
Product-related indemnification agreements	$	50	$	2,278	$	51	$	2,458
Third party commercial loans and other obligations	$	38	$	243	$	37	$	197

________


(a)	Calculated as future undiscounted payments.



	Liability Recorded
	March 31, 2015		December 31, 2014
Other litigation-related liability and tax administrative matters	$	862	$	1,000
Product liability	$	767	$	732
Ignition switch recall compensation program	$	350	$	315

Guarantees

We enter into indemnification agreements for liability claims involving products manufactured primarily by certain joint ventures. These guarantees terminate in years ranging from 2020 to 2029 and we believe that the related potential costs incurred are adequately covered by recorded accruals.

We also provide vehicle repurchase guarantees and payment guarantees on commercial loans outstanding with third parties such as dealers. We determined the fair value ascribed to the guarantees at inception and subsequent to inception to be insignificant based on the credit worthiness of the third parties. These guarantees and other obligations expire in 2015 through 2020 or upon the occurrence of specific events or are ongoing.

In some instances certain assets of the party whose debt or performance we have guaranteed may offset, to some degree, the cost of the guarantee. The offset of certain of our payables to guaranteed parties may also offset certain guarantees, if triggered. If vehicles are required to be repurchased under vehicle repurchase obligations, the total exposure would be reduced to the extent vehicles are able to be resold to another dealer.

We periodically enter into agreements that incorporate indemnification provisions in the normal course of business. It is not possible to estimate our maximum exposure under these indemnifications or guarantees due to the conditional nature of these obligations. Insignificant amounts have been recorded for such obligations as the majority of them are not probable or estimable at this time and the fair value of the guarantees at issuance was insignificant.

Other Litigation-Related Liability and Tax Administrative Matters

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Various legal actions, governmental investigations, claims and proceedings are pending against us including matters arising out of alleged product defects; employment-related matters; governmental regulations relating to safety, emissions and fuel economy; product warranties; financial services; dealer, supplier and other contractual relationships; tax-related matters not recorded pursuant to Accounting Standards Codification (ASC) 740, "Income Taxes" (indirect tax-related matters) and environmental matters.

With regard to the litigation matters discussed in the previous paragraph, reserves have been established for matters in which we believe that losses are probable and can be reasonably estimated, the majority of which are associated with indirect tax-related matters as well as non-U.S. labor-related matters. Indirect tax-related matters are being litigated globally pertaining to value added taxes, customs, duties, sales, property taxes and other non-income tax related tax exposures. The various non-U.S. labor-related matters include claims from current and former employees related to alleged unpaid wage, benefit, severance and other compensation matters. Certain South American administrative proceedings are indirect tax-related and may require that we deposit funds in escrow. Escrow deposits may range from $400 million to $600 million. Some of the matters may involve compensatory, punitive or other treble damage claims, environmental remediation programs or sanctions that, if granted, could require us to pay damages or make other expenditures in amounts that could not be reasonably estimated at March 31, 2015. We believe that appropriate accruals have been established for such matters based on information currently available. Reserves for litigation losses are recorded in Accrued liabilities and Other liabilities. Litigation is inherently unpredictable however; and unfavorable resolutions could occur. Accordingly it is possible that an adverse outcome from such proceedings could exceed the amounts accrued in an amount that could be material to our financial condition, results of operations and cash flows in any particular reporting period.

The discussion in the following paragraphs describes material legal proceedings to which we are a party, other than ordinary routine litigation incidental to our business.

Proceedings Related to Ignition Switch Recall and Other Recalls

In the year ended December 31, 2014 we announced a number of recalls relating to safety, customer satisfaction and other matters. Those recalls included recalls to repair ignition switches that could under certain circumstances unintentionally move from the “run” position to the “accessory” or “off” position with a corresponding loss of power, which could in turn prevent airbags from deploying in the event of a crash.

Through April 20, 2015 we were aware of 108 putative class actions pending against GM in various federal and state trial courts in the U.S. alleging that consumers who purchased or leased vehicles manufactured by GM or General Motors Corporation had been economically harmed by one or more of the recalls announced in 2014 and/or the underlying vehicle conditions associated with those recalls (economic-loss cases). Additionally, through April 20, 2015 we were aware of 21 putative class actions pending in various Provincial Courts in Canada seeking relief similar to that sought in the economic-loss cases in the U.S. In the aggregate these economic-loss cases seek recovery for purported compensatory damages, such as alleged diminution in value of the vehicles, as well as punitive damages and injunctive and other relief.

Through April 20, 2015 we were aware of 144 actions pending in various federal and state trial courts in the U.S. against GM alleging injury or death as a result of defects that may be the subject of recalls announced in 2014 (personal injury cases). In the aggregate these personal injury cases seek recovery for purported compensatory damages, punitive damages and other relief.

Since June 2014 the United States Judicial Panel on Multidistrict Litigation has issued orders from time to time directing that certain pending economic-loss and personal injury federal lawsuits involving alleged faulty ignition switches or other defects that may be related to the recalls announced in the year ended December 31, 2014 be transferred to, and consolidated in, a single federal court, the Southern District of New York (the multidistrict litigation). Through April 20, 2015 192 cases have been transferred to, and consolidated with, the multidistrict litigation.

Because many of the plaintiffs in the actions described in the above paragraphs are suing over the conduct of General Motors Corporation or vehicles manufactured by that entity for liabilities not expressly assumed by GM, we moved to enforce the terms of the July 2009 Sale Order and Injunction issued by the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) to preclude claims from being asserted against us for, among other things, personal injury claims based on pre-sale accidents, any economic-loss claims based on acts or conduct of General Motors Corporation and claims asserting successor liability for obligations owed by General Motors Corporation (successor liability claims). On April 15, 2015 the Bankruptcy Court issued a Decision precluding claims against us based upon pre-sale accidents, claims based upon the acts or conduct by General Motors Corporation and successor liability claims, except for claims asserting liabilities that had been expressly assumed by us

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in the July 2009 Sale Agreement and claims that could be asserted against us only if they were otherwise viable and arose solely out of our own independent post-closing acts and did not in any way rely on acts or conduct by General Motors Corporation. Plaintiffs have indicated that they will appeal the Bankruptcy Court’s decision.

In the putative shareholder class action filed in the United States District Court for the Eastern District of Michigan, the court appointed the New York State Teachers’ Retirement System as the lead plaintiff. On January 15, 2015 New York State Teachers’ Retirement System filed a Consolidated Class Action Complaint against GM and several current and former officers and employees (the Defendants). On behalf of purchasers of GM common stock from November 17, 2010 to July 24, 2014, the Consolidated Class Action Complaint alleges that Defendants made material misstatements and omissions relating to problems with the ignition switch and other matters in SEC filings and other public statements. On March 13, 2015 Defendants filed a motion to dismiss.

With regard to the shareholder derivative actions, the two shareholder derivative actions pending in the United States District Court for the Eastern District of Michigan have been consolidated and all proceedings, including those related to the motion to dismiss we filed in October 2014, remain suspended pending disposition of the parallel action being litigated in Delaware Chancery Court. With regard to that pending litigation in Delaware Chancery Court, the four shareholder derivative actions pending in that court have been consolidated and plaintiffs filed an amended consolidated complaint on October 13, 2014. We filed a motion to dismiss the amended consolidated complaint on December 5, 2014. The motion to dismiss has been taken under advisement by the Court. With regard to the two derivative actions filed in the Circuit Court of Wayne County, Michigan, those actions have been consolidated and remain stayed pending disposition of the federal derivative actions.

In connection with the 2014 recalls, we remain subject to various inquiries, investigations, subpoenas, requests for information and complaints from the U.S. Attorney’s Office for the Southern District of New York, Congress, the SEC, Transport Canada and 50 state attorneys general. We are investigating these matters and believe we are cooperating fully with all requests. Such investigations and discussions could in the future result in the imposition of material damages, fines, civil and criminal penalties and other remedies.

We are currently unable to estimate a range of reasonably possible loss for the lawsuits and investigations because these matters involve significant uncertainties at these early stages. These uncertainties include the legal theory or the nature of the claims as well as the complexity of the facts. Although we cannot estimate a reasonable range of loss based on currently available information, the resolution of these matters could have a material adverse effect on our financial position, results of operations or cash flows.

GMCL Dealers' Claim

On February 12, 2010 a claim was filed in the Ontario Superior Court of Justice against General Motors of Canada Limited (GMCL) on behalf of a purported class of over 200 former GMCL dealers (the Plaintiff Dealers) which had entered into wind-down agreements with GMCL. In May 2009 in the context of the global restructuring of the business and the possibility that GMCL might be required to initiate insolvency proceedings, GMCL offered the Plaintiff Dealers the wind-down agreements to assist with their exit from the GMCL dealer network and to facilitate winding down their operations in an orderly fashion by December 31, 2009 or such other date as GMCL approved but no later than on October 31, 2010. The Plaintiff Dealers allege that the Dealer Sales and Service Agreements were wrongly terminated by GMCL and that GMCL failed to comply with certain disclosure obligations, breached its statutory duty of fair dealing and unlawfully interfered with the Plaintiff Dealers' statutory right to associate in an attempt to coerce the Plaintiff Dealers into accepting the wind-down agreements. The Plaintiff Dealers seek damages and assert that the wind-down agreements are rescindable. The Plaintiff Dealers' initial pleading makes reference to a claim “not exceeding” Canadian Dollar $750 million, without explanation of any specific measure of damages. On March 1, 2011 the court approved certification of a class for the purpose of deciding a number of specifically defined issues including: (1) whether GMCL breached its obligation of "good faith" in offering the wind-down agreements; (2) whether GMCL interfered with the Plaintiff Dealers' rights of free association; (3) whether GMCL was obligated to provide a disclosure statement and/or disclose more specific information regarding its restructuring plans in connection with proffering the wind-down agreements; and (4) assuming liability, whether the Plaintiff Dealers can recover damages in the aggregate (as opposed to proving individual damages). A number of former dealers have opted out of participation in the litigation, leaving 181 dealers in the certified class. Trial of the class issues was completed in the fourth quarter of 2014. We are now awaiting a decision from the Ontario Superior Court. The current prospects for liability are uncertain, but because liability is not deemed probable we have no accrual relating to this litigation. We cannot estimate the range of reasonably possible loss in the event of liability as the case presents a variety of different legal theories, none of which GMCL believes are valid.

UAW Claim

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On April 6, 2010 the International Union, United Automobile, Aerospace and Agriculture Implement Workers of America (UAW) filed suit against us in the U.S. District Court for the Eastern District of Michigan claiming that we breached our obligation to contribute $450 million to the UAW Retiree Medical Benefits Trust. The UAW alleges that we were contractually required to make this contribution pursuant to the UAW-Delphi-GM Memorandum of Understanding Delphi Restructuring dated June 22, 2007. We believe this claim is without merit. On December 10, 2013 the court granted our motion for summary judgment and dismissed the claims asserted by the UAW, holding that the relevant agreement is unambiguous and does not require the payment sought. The UAW has appealed. On October 9, 2014 the United States Court of Appeals for the Sixth Circuit heard oral arguments. We are now awaiting a decision from the United States Court of Appeals for the Sixth Circuit.

GM Korea Wage Litigation

Commencing on or about September 29, 2010 current and former hourly employees of GM Korea Company (GM Korea) filed eight separate group actions in the Incheon District Court in Incheon, Korea. The cases, which in aggregate involve more than 10,000 employees, allege that GM Korea failed to include bonuses and certain allowances in its calculation of Ordinary Wages due under the Presidential Decree of the Korean Labor Standards Act. On November 23, 2012 the Seoul High Court (an intermediate level appellate court) issued a decision affirming a decision of the Incheon District Court in a case involving five GM Korea employees which was contrary to GM Korea's position. GM Korea appealed to the Supreme Court of the Republic of Korea (Supreme Court) and initiated a constitutional challenge to the adverse interpretation of the relevant statute. In December 2013 the Supreme Court rendered a decision in a case involving another company not affiliated with us which addressed many of the issues presented in the cases pending against GM Korea and resolved many of them in a manner which we believe is favorable to GM Korea. In particular, while the Supreme Court held that fixed bonuses should be included in the calculation of Ordinary Wages, it also held that claims for retroactive application of this rule would be barred under certain circumstances. On May 29, 2014 the Supreme Court rendered its decision with respect to the case involving the five GM Korea employees and remanded the case to the Seoul High Court consistent with its December 2013 ruling. In July 2014 GM Korea and its labor union agreed to include bonuses and certain allowances in Ordinary Wages retroactively to March 1, 2014. Therefore our accrual related to these cases was reclassified from a contingent liability to the Pensions liability. We estimate our reasonably possible loss, as defined by ASC 450, “Contingencies,” in excess of amounts accrued to be 568 billion South Korean Won (equivalent to $512 million) at March 31, 2015, which relates to periods before March 1, 2014. We are also party to litigation with current and former salaried employees over allegations relating to Ordinary Wages regulation. At March 31, 2015 we have identified a reasonably possible loss in excess of the amount of our accrual of 168 billion South Korean Won (equivalent to $152 million). Both the scope of claims asserted and GM Korea's assessment of any or all of the individual claim elements may change if new information becomes available. These cases are currently pending before various district courts in Korea and the Supreme Court.

Inventory Management Securities Class Action

On June 29, 2012 a putative securities class action was filed against us and a number of our past and current officers and directors in the United States District Court for the Southern District of New York (George G. Scott v. General Motors Company et al). Purporting to sue on behalf of owners of common stock deriving from our 2010 initial public offering, plaintiff asserts non-fraud prospectus based liability claims under various federal securities statutes alleging that the Company has made false statements about its vehicle inventory controls and production decisions, particularly with respect to full-size trucks. The plaintiff's complaint requests compensatory damages, rescission and litigation costs, fees and disbursements. On November 21, 2012 the court appointed the Teamster's Local 710 Pension Fund as lead plaintiff in the matter. On February 1, 2013 the plaintiff filed an amended complaint. On September 4, 2014 the district court granted our motion to dismiss, and dismissed the case with prejudice. Plaintiff filed an appeal.

GM Financial Subpoena

In connection with an investigation by the U.S. Department of Justice in contemplation of a civil proceeding for potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the Department of Justice in July 2014 served GM Financial with a subpoena directing GM Financial to produce certain documents relating to the origination and securitization of sub-prime automobile loans by GM Financial and its subsidiaries and affiliates since 2007. Among other matters, the subpoena requests information relating to the underwriting criteria used to originate these automobile loans and the representations and warranties relating to those underwriting criteria that were made in connection with the securitization of the automobile loans. GM Financial was subsequently served with additional investigative subpoenas to produce documents from state attorneys general and other governmental offices relating to its sub-prime automotive finance business and securitization of

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sub-prime automobile loans. In October 2014 GM Financial received a document request from the SEC in connection with its investigation into certain practices in sub-prime automobile loan securitization. GM Financial is investigating these matters internally and believes that it is cooperating with all requests. Such investigations could in the future result in the imposition of damages, fines or civil or criminal claims and/or penalties. No assurance can be given that the ultimate outcome of the investigations or any resulting proceedings would not materially and adversely affect GM Financial or any of its subsidiaries and affiliates.

Product Liability

With respect to product liability claims involving our and General Motors Corporation products, we believe that any judgment against us for actual damages will be adequately covered by our recorded accruals and, where applicable, excess liability insurance coverage. In addition we indemnify dealers for certain product liability related claims including products sold by General Motors Corporation's dealers. Liabilities have been recorded in Accrued liabilities and Other liabilities for the expected cost of all known product liability claims plus an estimate of the expected cost for product liability claims that have already been incurred and are expected to be filed in the future for which we are self-insured. In light of vehicle recalls in recent years it is reasonably possible that our accruals for product liability claims may increase in future periods in material amounts, although we cannot estimate a reasonable range of incremental loss based on currently available information.

Ignition Switch Recall Compensation Program

In the three months ended June 30, 2014 we recorded a charge of $400 million as a result of the creation of a compensation program (the Program) for accident victims who died or suffered physical injury (or for their families) as a result of a faulty ignition switch related to the 2.6 million vehicles recalled in the three months ended March 31, 2014. The Program is being administered by an independent program administrator. The independent administrator has established a protocol that defines the eligibility requirements to participate in the Program. There is no cap on the amount of payments that can be made to claimants under the Program.

The amounts recorded for the Program were recorded in Automotive selling, general and administrative expense in Corporate and were treated as an adjustment for earnings before interest and taxes (EBIT)-adjusted reporting purposes. In the three months ended March 31, 2015, based on the Program's claims experience, we increased our accrual by $150 million. The following table summarizes the activity for the Program since its inception (dollars in millions):



	Activity
Balance at April 1, 2014	$	—
Additions	400
Payments	(85		)
Balance at December 31, 2014	315
Additions	150
Payments	(115		)
Balance at March 31, 2015	$	350

Based on currently available information we believe our accrual at March 31, 2015 is adequate to cover the estimated costs under the Program. However, it is reasonably possible that the liability could exceed our recorded amount by $50 million based on total charges recorded of $550 million through March 31, 2015, which would bring the total charge under the Program to $600 million, which is consistent with the range provided at the inception of the Program. The most significant estimates affecting the amount recorded include the number of participants that have eligible claims related to death and physical injury, which also contemplates the severity of injury, the length of hospital stays and related compensation amounts and the number of people who actually elect to participate in the Program. Our estimate is subject to significant uncertainties, as programs of this nature are highly unusual and each eligible claim will have a unique underlying fact pattern. While we do not anticipate material changes to our current estimate, it is possible that material changes could occur if actual eligible claims and the related compensation amounts differ from this estimate.

The Program accepted claims from August 1, 2014 through January 31, 2015 and received a total of 4,342 claims. Payments to eligible claimants began in the three months ended December 31, 2014 and will continue through the end of 2015. Accident victims (or their families) could choose not to participate in the Program and pursue litigation against us. Accident victims (or their families)

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that accept a payment under the Program agree to settle all claims against GM related to the accident. At April 17, 2015 the independent program administrator had determined 244 claims to be eligible for payment under the Program. Remaining claims are either under review, deficient awaiting further documentation or deemed ineligible. We expect the Program to complete its claims review process in the third quarter of 2015. At April 17, 2015 we had paid $208 million to eligible claimants under the Program since its inception.

Other Matters

Brazil Excise Tax Incentive

In October 2012 the Brazilian government issued a decree which increased an excise tax rate by 30 percentage points, but also provided an offsetting tax incentive that requires participating companies to meet certain criteria, such as local investment and fuel efficiency standards. Participating companies that fail to meet the required criteria are subject to clawback provisions and fines. At March 31, 2015 we believe it is reasonably assured that the program requirements will be met based on the current business model and available technologies.

Korea Fuel Economy Certification

In 2014 we determined the certified fuel economy ratings on our Cruze 1.8L gasoline vehicles sold in Korea were incorrect. We re-tested and re-certified the Cruze fuel economy ratings which fell below our prior certification and self-reported this issue to local government authorities. We voluntarily announced a customer compensation program for current and previous Cruze owners and recorded an insignificant charge in the three months ended December 31, 2014.

In November 2014 the Korean government released new fuel economy certification guidelines. We are reviewing the impact the new testing guidelines may have on the domestic fuel economy certification ratings of our products.

India Tavera Emissions Compliance

In 2013 we determined there was an emissions compliance issue with certain Tavera models produced in India. We self-reported this issue in the three months ended September 30, 2013 to local government authorities and are continuing to cooperate. We developed a solution, and while the issue was not safety related, we voluntarily recalled the vehicles to serve our customers. We believe our accrual at March 31, 2015 is adequate to cover the estimated costs of the recalled vehicles.

Note 11. Income Taxes

For interim income tax reporting we estimate our annual effective tax rate and apply it to our year to date ordinary income (loss). Tax jurisdictions with a projected or year to date loss for which a tax benefit cannot be realized are excluded. 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.

In the three months ended March 31, 2015 income tax expense of $529 million primarily resulted from tax expense attributable to entities included in our effective tax rate calculation. In the three months ended March 31, 2014 income tax benefit of $224 million primarily resulted from deductions taken for stock investments in non-U.S. affiliates.

Note 12. Restructuring and Other Initiatives

We have executed various restructuring and other initiatives and we plan to execute additional initiatives in the future, if necessary, in order to align manufacturing capacity and other costs with prevailing global automotive production and to improve the utilization of remaining facilities. To the extent these programs involve voluntary separations, no liabilities are generally recorded until offers to employees are accepted. If employees are involuntarily terminated, a liability is generally recorded at the communication date. Related charges are recorded in Automotive cost of sales and Automotive selling, general and administrative expense.

The following tables summarize the reserves related to restructuring and other initiatives and charges by segment, including postemployment benefit reserves and charges (dollars in millions):

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	GMNA			GME			GMIO			GMSA			Total
Balance at January 1, 2015	$	459		$	751		$	166		$	2		$	1,378
Additions, interest accretion and other	9			127			37			11			184
Payments	(19		)	(385		)	(22		)	(11		)	(437		)
Revisions to estimates and effect of foreign currency	(11		)	(53		)	(10		)	—			(74		)
Balance at March 31, 2015(a)	$	438		$	440		$	171		$	2		$	1,051



	GMNA			GME			GMIO			GMSA			Total
Balance at January 1, 2014	$	497		$	503		$	333		$	16		$	1,349
Additions, interest accretion and other	10			191			48			49			298
Payments	(30		)	(106		)	(21		)	(51		)	(208		)
Revisions to estimates and effect of foreign currency	(6		)	2			(2		)	(1		)	(7		)
Balance at March 31, 2014(a)	$	471		$	590		$	358		$	13		$	1,432

________


(a)	The remaining cash payments related to these reserves for restructuring and other initiatives, including temporary layoff benefits of $353 million and $352 million at March 31, 2015 and 2014 for GMNA, primarily relate to postemployment benefits to be paid.

Three Months Ended March 31, 2015

Restructuring and other initiatives primarily related to: (1) the change in our business model in Russia described below; and (2) separation programs in Australia, Korea, Thailand and Indonesia and the withdrawal of the Chevrolet brand from Europe which had a total cost of $551 million and affected a total of 4,220 employees at GMIO through March 31, 2015. We expect to complete these programs in GMIO in 2017 and incur additional restructuring and other charges of $245 million.

Three Months Ended March 31, 2014

Restructuring and other initiatives primarily related to: (1) the termination of all vehicle and transmission production at our Bochum, Germany facility in 2014 which had a total cost of $381 million through March 31, 2014; (2) separation programs in Australia and Korea and programs related to the withdrawal of the Chevrolet brand from Europe which had a total cost of $363 million and had affected a total of 3,350 employees at GMIO through March 31, 2014; and (3) separation programs in Brazil and Venezuela which had a total cost of $149 million at GMSA through March 31, 2014.

Change of Business Model in Russia

In March 2015 we announced plans to change our business model in Russia and will cease manufacturing, eliminate Opel brand distribution and reduce Chevrolet brand distribution by the end of 2015. This decision impacts 300 dealers and distributors and 1,130 employees. As a result we recorded pre-tax charges of $428 million at GME and GMIO in the three months ended March 31, 2015, net of noncontrolling interests of $51 million. These charges included dealer restructuring and other contract cancellation costs of $111 million and employee severance costs of $10 million which are reflected in the table above. The remaining charges for cumulative translation adjustment associated with the substantial liquidation of certain legal entities and other of $177 million, sales incentives and inventory related costs of $128 million and asset impairment charges of $53 million are not included in the table above. We may incur additional charges for exit costs of up to $100 million through 2016.

Note 13. Stockholders' Equity

Preferred and Common Stock

We have 2.0 billion shares of preferred stock and 5.0 billion shares of common stock authorized for issuance. We had 1.6 billion shares of common stock issued and outstanding at March 31, 2015 and December 31, 2014. In December 2014 we redeemed all of the remaining outstanding shares of our Series A preferred stock. In the three months ended March 31, 2015 we purchased 10 million shares of our outstanding common stock for $375 million, of which $300 million was cash settled in the three months ended March 31, 2015, as part of the common stock repurchase program announced in March 2015.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

The following table summarizes dividends paid on our preferred and common stock (dollars in millions):



	Three Months Ended
	March 31, 2015		March 31, 2014
Series A preferred stock			$	88
Common stock	$	485	$	481

Accumulated Other Comprehensive Loss

The following table summarizes the components of Accumulated other comprehensive loss (dollars in millions):



	Three Months Ended
	March 31, 2015			March 31, 2014
Foreign Currency Translation Adjustments
Balance at beginning of period	$	(1,064	)	$	(614	)
Other comprehensive income (loss) before reclassification adjustment, net of tax(a)	22			(98		)
Reclassification adjustment, net of tax(a)(b)	170			—
Other comprehensive income (loss), net of tax	192			(98		)
Other comprehensive income (loss) attributable to noncontrolling interests, net of tax	(9		)	3
Balance at end of period	$	(881	)	$	(709	)
Unrealized Gains and Losses on Securities, Net
Balance at beginning of period	$	(3	)	$	2
Other comprehensive income before reclassification adjustment, net of tax(a)	6			4
Reclassification adjustment, net of tax(a)	(1		)	(1		)
Other comprehensive income, net of tax	5			3
Balance at end of period	$	2		$	5
Defined Benefit Plans, Net
Balance at beginning of period	$	(7,006	)	$	(2,501	)
Other comprehensive loss before reclassification adjustment - prior service cost or credit, net of tax(a)	(3		)	(5		)
Other comprehensive income before reclassification adjustment - actuarial gains or losses, net of tax(a)	491			28
Other comprehensive income before reclassification adjustment, net of tax	488			23
Reclassification adjustment - prior service cost or credit, net of tax(a)(c)	—			15
Reclassification adjustment - actuarial gains or losses, net of tax(a)(c)	66			29
Reclassification adjustment, net of tax(a)	66			44
Other comprehensive income, net of tax	554			67
Balance at end of period	$	(6,452	)	$	(2,434	)

_______


(a)	The income tax effect was insignificant in the three months ended March 31, 2015 and 2014.


(b)	Related to the change of our business model in Russia. Included in Automotive cost of sales. Refer to Note 12 for additional information.


(c)	Included in the computation of net periodic pension and OPEB (income) expense. Refer to Note 9 for additional information.

Note 14. Earnings Per Share

Basic and diluted earnings per share are computed by dividing Net income attributable to common stockholders by the weighted-average common shares outstanding in the period. Diluted earnings per share is computed by giving effect to all potentially dilutive securities that are outstanding. The following table summarizes basic and diluted earnings per share (in millions, except for per share amounts):

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)



	Three Months Ended
	March 31, 2015		March 31, 2014
Basic earnings per share
Net income attributable to stockholders	$	945	$	213
Less: cumulative dividends on Series A preferred stock(a)			(88		)
Net income attributable to common stockholders	$	945	$	125

Weighted-average common shares outstanding	1,617		1,587
Basic earnings per common share	$	0.58	$	0.08
Diluted earnings per share
Net income attributable to common stockholders - basic	$	945	$	125
Less: earnings adjustment for dilutive stock compensation rights	—		(17		)
Net income attributable to common stockholders - diluted	$	945	$	108

Weighted-average common shares outstanding - basic	1,617		1,587
Dilutive effect of warrants and restricted stock units (RSUs)	69		104
Weighted-average common shares outstanding - diluted	1,686		1,691

Diluted earnings per common share	$	0.56	$	0.06

________


(a)	Includes earned but undeclared dividends of $15 million on our Series A preferred stock in the three months ended March 31, 2014.

In the three months ended March 31, 2015 and 2014 warrants to purchase 46 million shares were not included in the computation of diluted earnings per share because the warrants' exercise price was greater than the average market price of the common shares.

Note 15. Segment Reporting

We analyze the results of our business through the following segments: GMNA, GME, GMIO, GMSA and GM Financial. The chief operating decision maker evaluates the operating results and performance of our automotive segments through income before interest and income taxes, as adjusted for additional amounts, which is presented net of noncontrolling interests. The chief operating decision maker evaluates GM Financial through income before income taxes-adjusted because he/she believes interest income and interest expense are part of operating results when assessing and measuring the operational and financial performance of the segment. Each segment has a manager responsible for executing our strategies. Our automotive manufacturing operations are integrated within the segments, benefit from broad-based trade agreements and are subject to regulatory requirements, such as Corporate Average Fuel Economy regulations. While not all vehicles within a segment are individually profitable on a fully allocated cost basis, those vehicles are needed in our product mix in order to attract customers to dealer showrooms and to maintain sales volumes for other, more profitable vehicles. Because of these and other factors, we do not manage our business on an individual brand or vehicle basis.

Substantially all of the cars, trucks and parts produced are marketed through retail dealers in North America, and through distributors and dealers outside of North America, the substantial majority of which are independently owned.

In addition to the products sold to dealers for consumer retail sales, cars and trucks are also sold to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies and governments. Fleet sales are completed through the network of dealers and in some cases directly with fleet customers. Retail and fleet customers can obtain a wide range of aftersale vehicle services and products through the dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories and extended service warranties.

GMNA primarily meets the demands of customers in North America with vehicles developed, manufactured and/or marketed under the Buick, Cadillac, Chevrolet and GMC brands. The demands of customers outside North America are primarily met with vehicles developed, manufactured and/or marketed under the Buick, Cadillac, Chevrolet, GMC, Holden, Opel and Vauxhall brands. We also had equity ownership stakes directly or indirectly in entities through various regional subsidiaries, primarily in Asia. These companies design, manufacture and market vehicles under the Alpheon, Baojun, Buick, Cadillac, Chevrolet, Jiefang and Wuling brands.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —— (Continued)

Our automotive operations' interest income and interest expense are recorded centrally in Corporate. Corporate assets consist primarily of cash and cash equivalents, marketable securities and intercompany balances. All intersegment balances and transactions have been eliminated in consolidation.

The following tables summarize key financial information by segment (dollars in millions):



	At and For the Three Months Ended March 31, 2015
	GMNA		GME			GMIO			GMSA			Corporate			Eliminations			Total Automotive			GM Financial		Eliminations			Total
Net sales and revenue	$	24,676	$	4,449		$	3,112		$	2,092		$	35					$	34,364		$	1,354	$	(6	)	$	35,712
Income (loss) before automotive interest and taxes-adjusted	$	2,182	$	(239	)	$	371		$	(214	)	$	(229	)				$	1,871		$	214	$	(3	)	$	2,082
Adjustments(a)	$	32	$	(337	)	$	(92	)	$	—		$	(150	)				$	(547	)	$	—	$	—		(547		)
Automotive interest income																										49
Automotive interest expense																										(110		)
Net loss attributable to noncontrolling interests																										(37		)
Income before income taxes																										$	1,437

Total assets	$	94,868	$	10,099		$	22,991		$	9,071		$	20,401		$	(25,303	)	$	132,127		$	49,478	$	(1,687	)	$	179,918
Depreciation, amortization and impairment of long-lived assets and finite-lived intangible assets	$	1,101	$	121		$	111		$	76		$	4		$	(1	)	$	1,412		$	345	$	—		$	1,757

__________


(a)	Consists of net insurance recoveries related to flood damage of $32 million in GMNA; costs related to the change in our business model in Russia of $337 million in GME and $91 million in GMIO, which is net of non-controlling interests; charge related to the ignition switch recall compensation program of $150 million in Corporate; and other of $1 million.



	At and For the Three Months Ended March 31, 2014
	GMNA		GME			GMIO			GMSA			Corporate			Eliminations			Total Automotive			GM Financial		Eliminations			Total
Net sales and revenue	$	24,404	$	5,620		$	3,230		$	3,025		$	36					$	36,315		$	1,097	$	(4	)	$	37,408
Income (loss) before automotive interest and taxes-adjusted	$	557	$	(284	)	$	252		$	(156	)	$	(123	)				$	246		$	221	$	(1	)	$	466
Adjustments(a)	$	—	$	—		$	(9	)	$	(419	)	$	—					$	(428	)	$	1	$	—		(427		)
Automotive interest income																										53
Automotive interest expense																										(103		)
Net income attributable to noncontrolling interests																										67
Income before income taxes																										$	56

Total assets	$	94,538	$	12,339		$	22,885		$	11,136		$	28,377		$	(33,668	)	$	135,607		$	40,079	$	(2,080	)	$	173,606
Depreciation, amortization and impairment of long-lived assets and finite-lived intangible assets	$	1,092	$	109		$	114		$	101		$	16		$	(1	)	$	1,431		$	176	$	—		$	1,607

__________


(a)	Consists of Venezuela currency devaluation of $419 million in GMSA and other of $8 million.

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GENERAL MOTORS COMPANY AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Basis of Presentation

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying condensed consolidated financial statements and the consolidated financial statements and notes thereto included in our 2014 Form 10-K, as filed with the SEC.

Non-GAAP Measures

Management uses EBIT-adjusted to review the operating results of our automotive segments because it excludes interest income, interest expense and income taxes as well as certain additional adjustments. GM Financial uses income before income taxes-adjusted because management believes interest income and interest expense are part of operating results when assessing and measuring the operational and financial performance of the segment. Examples of adjustments to EBIT and GM Financial's income before income taxes include certain impairment charges related to goodwill, other long-lived assets and investments; certain gains or losses on the settlement/extinguishment of obligations; and gains or losses on the sale of non-core investments. Refer to Note 15 to our condensed consolidated financial statements for our reconciliation of these non-GAAP measures to the most directly comparable financial measure under U.S. GAAP.

Management uses return on invested capital (ROIC) to review investment and capital allocation decisions. We define ROIC as EBIT-adjusted for the trailing four quarters divided by average net assets, which is considered to be the average equity balances adjusted for certain assets and liabilities during the same period.

Management uses adjusted free cash flow to review the liquidity of our automotive operations. We measure adjusted free cash flow as cash flow from operations less capital expenditures adjusted for management actions, primarily related to strengthening our balance sheet, such as accrued interest on prepayments of debt and voluntary contributions to employee benefit plans. Refer to the “Liquidity and Capital Resources” section of MD&A for our reconciliation of this non-GAAP measure to the most directly comparable financial measure under U.S. GAAP.

Management uses these non-GAAP measures in its financial and operational decision making processes, for internal reporting and as part of its forecasting and budgeting processes as they provide additional transparency of our core operations. These measures allow management to view operating trends, perform analytical comparisons and benchmark performance between periods and among geographic regions.

Our calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the 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, related U.S. GAAP measures.

The following table summarizes the reconciliation of ROIC (dollars in billions):



	Four Quarters Ended
	March 31, 2015				March 31, 2014