l:\secfiles\10-Q\1stqtr94\mar_94.doc 21
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
- - ---
ACT OF 1934
For the quarterly period ended March 31, 1994
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
- - ---
ACT OF 1934
For the transition period from to
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Commission file number 1-143
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GENERAL MOTORS CORPORATION
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(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 38-0572515
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
767 Fifth Avenue, New York, New York 10153-0075
3044 West Grand Boulevard, Detroit, Michigan 48202-3091
- - -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313)-556-5000
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
--- ---
As of March 31, 1994, there were outstanding 727,931,585 shares of
the issuer's $1-2/3 par value common stock, 259,346,112 shares of Class E
$0.10 par value common stock, and 91,073,827 shares of Class H $0.10 par value
common stock.
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GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Index
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Statement of Consolidated Operations 3
Consolidated Balance Sheet 5
Condensed Statement of Consolidated Cash Flows 7
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis 11
Part II - Other Information
Item 1. Legal Proceedings 26
Item 6. Exhibits and Reports on Form 8-K 26
Signatures 27
Exhibit 11 Computation of Earnings Per Share Attributable
to Common Stocks for the Three Months Ended
March 31, 1994 and 1993 28
Exhibit 12 Computation of Ratios of Earnings to Fixed Charges for
the Three Months Ended March 31, 1994 and 1993 30
Exhibit 99(a) Electronic Data Systems Corporation and Subsidiaries
Consolidated Financial Statements and Management's Discussion
and Analysis 31
(b) GM Hughes Electronics Corporation and Subsidiaries
Consolidated Financial Statements and Management's Discussion
and Analysis 37
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GENERAL MOTORS CORPORATION PART I
AND SUBSIDIARIES ITEM 1. FINANCIAL STATEMENTS
STATEMENT OF CONSOLIDATED OPERATIONS
Three Months Ended
March 31,
--------------------
1994 1993
--------------------
(Dollars in Millions)
Net Sales and Revenues
Manufactured products $32,798.3 $30,167.5
Financial services 2,162.9 2,267.8
Computer systems services 1,375.5 1,213.9
Other income (Note 1) 1,158.7 915.0
-------- --------
Total Net Sales and Revenues 37,495.4 34,564.2
-------- --------
Costs and Expenses
Cost of sales and other
operating charges, exclusive
of items listed below 28,004.1 26,862.0
Selling, general, and
administrative expenses 2,704.6 2,726.2
Interest expense 1,202.0 1,535.5
Depreciation of real estate,
plants, and equipment 1,696.4 1,580.3
Amortization of special tools 761.0 636.2
Amortization of intangible
assets 63.9 74.2
Other deductions (Note 1) 611.3 219.4
-------- --------
Total Costs and Expenses 35,043.3 33,633.8
-------- --------
Income before Income Taxes 2,452.1 930.4
United States, foreign, and
other income taxes 840.3 417.2
-------- --------
Income before cumulative
effect of accounting change 1,611.8 513.2
Cumulative effect of accounting
change (Note 3) (758.1) -
-------- --------
Net Income 853.7 513.2
Dividends on preferred and
preference stocks 86.8 94.2
-------- --------
Income on Common Stocks $766.9 $419.0
======== ========
Certain 1993 amounts were reclassified to conform with 1994 classifications.
Reference should be made to the Notes to Financial Statements.
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GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Three Months Ended
March 31,
------------------
1994 1993
------------------
(Dollars in Millions
Except
Per Share Amounts)
Earnings Attributable to
Common Stocks (Note 5)
$1-2/3 par value before cumulative
effect of accounting change $1,362.1 $300.5
Cumulative effect of accounting change (Note 3) (751.3) -
------- -----
Net earnings attributable
to $1-2/3 par value $610.8 $300.5
------- -----
Net earnings attributable to Class E $92.1 $74.1
------- -----
Class H before cumulative effect
of accounting change $70.8 $44.4
Cumulative effect of accounting change (Note 3) (6.8) -
------- -----
Net earnings attributable
to Class H $64.0 $44.4
------- -----
Average number of shares of common stocks
outstanding (in millions)
$1-2/3 par value 725.3 707.4
Class E 257.9 234.7
Class H 90.6 93.9
Earnings Per Share Attributable
to Common Stocks (Note 5)
$1-2/3 par value before cumulative
effect of accounting change $1.86 $0.42
Cumulative effect of accounting change
(Note 3) (1.05) -
---- ----
Net earnings attributable to
$1-2/3 par value $0.81 $0.42
---- ----
Net earnings attributable to Class E $0.36 $0.32
---- ----
Class H before cumulative effect of
accounting change $0.78 $0.47
Cumulative effect of accounting change
(Note 3) (0.08) -
---- ----
Net earnings attributable to
Class H $0.70 $0.47
---- ----
Cash Dividends Per Share of Common
Stocks (Note 5)
$1-2/3 par value $0.20 $0.20
Class E $0.12 $0.10
Class H $0.20 $0.18
Reference should be made to the Notes to Financial Statements.
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GENERAL MOTORS CORPORATION
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
March 31, Dec. 31, March 31,
ASSETS 1994 1993 1993
- - -----------------------------------------------------------------------------
(Dollars in Millions)
Cash and cash equivalents $10,710.0 $13,790.5 $15,034.5
Other marketable securities 4,756.0 4,172.2 4,036.3
--------- --------- ---------
Total cash and marketable securities 15,466.0 17,962.7 19,070.8
--------- --------- ---------
Finance receivables - net 54,104.7 53,874.7 61,968.8
--------- --------- ---------
Accounts and notes receivable (less
allowances) 8,118.4 6,389.2 6,974.3
--------- --------- ---------
Inventories (less allowances) (Note 6) 9,499.8 8,615.1 9,347.9
--------- --------- ---------
Contracts in process (less advances and
progress payments) 2,540.5 2,376.8 2,372.6
--------- --------- ---------
Net equipment on operating leases (less
accumulated depreciation) 14,444.0 13,095.3 11,620.7
--------- --------- ---------
Deferred income taxes 21,233.5 20,798.1 18,520.7
--------- --------- ---------
Other assets (less allowances) 19,693.8 17,757.3 15,062.5
--------- --------- ---------
Property
Real estate, plants, and equipment-at cost 67,456.8 67,966.4 68,985.8
Less accumulated depreciation 41,639.0 41,725.5 42,020.1
--------- --------- ---------
Net real estate, plants, and equipment 25,817.8 26,240.9 26,965.7
Special tools - at cost (less amortization) 7,727.5 7,983.9 7,993.8
--------- --------- ---------
Total property 33,545.3 34,224.8 34,959.5
--------- --------- ---------
Intangible assets - at cost (less
amortization) 13,081.6 13,106.9 9,398.0
--------- --------- ---------
Total Assets $191,727.6 $188,200.9 $189,295.8
========= ========= =========
Certain March 1993 amounts were reclassified to conform with 1994
classifications.
Reference should be made to the Notes to Financial Statements.
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GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
March 31, Dec. 31, March 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993 1993
- - -----------------------------------------------------------------------------
(Dollars in Millions Except
Per Share Amounts)
Liabilities
Accounts payable $10,577.4 $10,276.5 $9,775.1
Notes and loans payable 70,268.9 70,441.2 78,787.2
United States, foreign, and other income
taxes - deferred and payable 3,187.4 2,409.3 3,319.4
Postretirement benefits other than
pensions (Note 4) 38,063.2 37,920.0 36,172.5
Pensions 21,976.4 22,631.6 14,040.1
Other liabilities and deferred credits 40,267.8 38,474.8 40,146.1
--------- --------- ---------
Total Liabilities 184,341.1 182,153.4 182,240.4
--------- --------- ---------
Stocks Subject to Repurchase (Note 7) 450.0 450.0 450.0
--------- --------- ---------
Stockholders' Equity
Preferred stocks ($5.00 series, $153.0,
and $3.75 series, $81.4, in March 1993) - - 234.4
Preference stocks (E $0.10 series, $0.3 in
March 1993; Series A Conversion, $1.8;
Series B 9-1/8% Depositary Shares, $1.1;
Series C Depositary Shares, $0.3; Series
D 7.92% Depositary Shares, $0.4; and
Series G 9.12% Depositary Shares, $0.6 in
March 1994, December 1993, and March 1993) 4.2 4.2 4.5
Common stocks
$1-2/3 par value (issued, 727,990,373,
720,105,471, and 709,110,434 shares) 1,213.3 1,200.2 1,181.9
Class E (issued, 265,732,085, 263,089,320,
and 243,878,258 shares) 26.6 26.3 24.4
Class H (issued, 76,702,102, 75,705,433,
and 71,342,863 shares) 7.7 7.6 7.1
Capital surplus (principally additional
paid-in capital) 12,558.2 12,003.4 11,146.9
Accumulated deficit (Note 8) (1,430.2) (2,002.9) (3,117.4)
--------- --------- ---------
Subtotal 12,379.8 11,238.8 9,481.8
Minimum pension liability adjustment (5,311.2) (5,311.2) (2,925.3)
Accumulated foreign currency translation
adjustments and net unrealized gains
(losses) on certain investments in debt
and equity securities (Notes 3 and 9) (132.1) (330.1) 48.9
--------- --------- ---------
Total Stockholders' Equity 6,936.5 5,597.5 6,605.4
--------- --------- ---------
Total Liabilities and Stockholders' Equity $191,727.6 $188,200.9 $189,295.8
========= ========= =========
Certain March 1993 amounts were reclassified to conform with 1994
classifications.
Reference should be made to the Notes to Financial Statements.
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GENERAL MOTORS CORPORATION
AND SUBSIDIARIES CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
Three Months Ended
March 31,
---------------------
1994 1993
----------------------
(Dollars in Millions)
Net Cash Provided by Operating Activities $538.5 $5,660.2
-------- --------
Cash Flows from Investing Activities
Expenditures for real estate, plants, and
equipment (733.5) (710.5)
Expenditures for special tools (467.9) (651.6)
Other 440.7 58.4
Change in other investing assets
Investments in other marketable securities -
acquisitions (3,971.2) (3,840.4)
Investments in other marketable securities -
liquidations 3,391.5 3,838.4
Finance receivables - acquisitions (38,749.1) (35,499.0)
Finance receivables - liquidations 37,042.9 36,756.5
Finance receivables - other 65.6 (993.6)
Proceeds from sales of finance receivables 1,376.4 4,602.8
Operating leases - net (2,056.4) (863.3)
-------- --------
Net Cash Provided by (Used in)
Investing Activities (3,661.0) 2,697.7
-------- --------
Cash Flows from Financing Activities
Net decrease in short-term loans payable (545.0) (3,799.6)
Increase in long-term debt 4,326.6 3,790.5
Decrease in long-term debt (4,006.6) (3,877.7)
Cash dividends paid to stockholders (281.0) (276.4)
Other 557.2 (236.2)
-------- --------
Net Cash Provided by (Used in)
Financing Activities 51.2 (4,399.4)
-------- --------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents (9.2) (2.6)
-------- --------
Net increase (decrease) in cash and cash equivalents (3,080.5) 3,955.9
Cash and cash equivalents at beginning of
the period 13,790.5 11,078.6
-------- --------
Cash and cash equivalents at end of the period $10,710.0 $15,034.5
======== ========
Certain 1993 amounts were reclassified to conform with 1994 classifications.
Reference should be made to the Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
In the opinion of management, the interim financial statements reflect all
adjustments, consisting of only normal recurring items (with the exception of
the accounting changes in 1994 to adopt Statement of Financial Accounting
Standards (SFAS) No. 112, Employers' Accounting for Postemployment Benefits,
SFAS No. 114, Accounting by Creditors for Impairment of a Loan, and SFAS No.
115, Accounting for Certain Investments in Debt and Equity Securities, as
described in Note 3), which are necessary for a fair presentation of the
results for the interim periods presented. The results for interim periods
are not necessarily indicative of results which may be expected for any other
interim period or for the full year. These financial statements should be
read in conjunction with the consolidated financial statements, the
significant accounting policies, and the other notes to the consolidated
financial statements included in the Corporation's 1993 Annual Report to the
SEC on Form 10-K.
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<PAGE>8
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Note 1.
Other income and other deductions consist of:
Three Months
------------------
1994 1993
-------- --------
(Dollars in Millions)
Other Income
Insurance premiums $212.8 $190.6
Interest 319.5 374.2
Equity in losses of associates, net (25.6) (114.3)
Claims, commissions, and grants 101.5 52.4
Gain on the sale of finance receivables - 173.9
Mortgage servicing revenue 58.8 74.3
Other * 491.7 163.9
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Total Other Income $1,158.7 $915.0
======= =====
Other Deductions
Insurance losses and loss adjustment
expenses $163.4 $149.2
Provision for financing losses 64.1 57.0
Other * 383.8 13.2
------- -----
Total Other Deductions $611.3 $219.4
======= =====
*Other includes gains and losses on the sale of assets. The net impact of
these sales of assets was not material.
Note 2.
Financial data of General Motors Acceptance Corporation (GMAC) and its
subsidiaries were as follows:
Three Months
------------------
1994 1993
-------- --------
(Dollars in Millions)
Net financing revenue and other $1,155.2 $1,267.0
Net income including unfavorable
cumulative effect of accounting
change of $7.4 million in
three months 1994 $217.5 $284.1
Cash dividends paid to GM $250.0 $250.0
Note 3.
Effective January 1, 1994, the Corporation adopted SFAS No. 112, Employers'
Accounting for Postemployment Benefits. The Standard requires accrual of the
costs of benefits provided to former or inactive employees after employment,
but before retirement. The unfavorable cumulative effect of adopting this
Standard was $1,220.1 million ($758.1 million after tax), or $751.3 million
($1.05 per share) attributable to $1-2/3 par value common stock and $6.8
million ($0.08 per share) attributable to GM Class H common stock. The effect
at Electronic Data Systems Corporation is not material and there is no effect
on GM Class E common stock earnings. The non-cash charge is primarily related
to GM's extended-disability benefit program in the U.S. which, under the new
accounting Standard, will be accrued on a service-driven basis. The ongoing
effect in subsequent periods is not expected to be material.
The Corporation also adopted SFAS No. 114, Accounting by Creditors for
Impairment of a Loan, effective January 1, 1994. SFAS No. 114 requires a
creditor to evaluate the collectibility of both contractual interest and
principal of all receivables when assessing the need for a loss accrual.
There was no impact on the consolidated financial position or results of
operations as a result of adoption. The Corporation's loans primarily consist
of large groups of smaller-balance homogeneous loans which are collectively
evaluated for impairment and to which this Standard does not apply. However,
certain loans of the Corporation affected by this Standard are currently
carried at the lower of book value or the fair value of the collateral. The
total of such loans at March 31, 1994 was $263.2 million net of a $187.4
million valuation reserve.
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<PAGE>9
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Also effective January 1, 1994, the Corporation adopted SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities, which
resulted in a $241.0 million after-tax increase in Stockholders' Equity. This
Standard requires the recording at fair value of debt securities which are not
expected to be held to maturity and equity securities which have a readily
determinable fair value. The primary effect of this Standard for the
Corporation relates to debt securities held by Motors Insurance Corporation
and certain equity securities. The ongoing effect on the first quarter of
1994 resulted in a $100.7 million after-tax decrease in Stockholders' Equity.
Note 4.
The Corporation has disclosed in the financial statements certain amounts
associated with estimated future postretirement benefits other than pensions
and characterized such amounts as "accumulated postretirement benefit
obligations", "liabilities", or "obligations". Notwithstanding the recording
of such amounts and the use of these terms, the Corporation does not admit or
otherwise acknowledge that such amounts or existing postretirement benefit
plans of the Corporation (other than pensions) represent legally enforceable
liabilities of the Corporation.
Note 5.
Earnings per share attributable to common stocks have been determined based
on the relative amounts available for the payment of dividends to holders of
$1-2/3 par value, Class E, and Class H common stocks. The allocation of
earnings attributable to such common stocks and the calculation of the related
amounts per share are computed by considering the weighted average number of
common shares outstanding and common stock equivalents, to the extent the
effect of such equivalents is not antidilutive. Operations of the incentive
plans and the assumed exercise of stock options do not have a material
dilutive effect on earnings per share at this time.
Dividends on the $1-2/3 par value common stock are declared out of the
earnings of GM and its subsidiaries, excluding the Available Separate
Consolidated Net Income of EDS and GMHE. Dividends on the Class E and Class H
common stocks are declared out of the Available Separate Consolidated Net
Income of EDS and GMHE, respectively, since the acquisition by GM.
The Available Separate Consolidated Net Income of EDS and GMHE is determined
quarterly and is equal to the separate consolidated net income of EDS and
GMHE, respectively, excluding the effects of purchase accounting adjustments
arising at the time of acquisition, multiplied by a fraction, the numerator of
which is the weighted average number of shares of Class E or Class H common
stock outstanding during the period and the denominator of which was 481.2
million shares for Class E and 399.9 million shares for Class H during the
first quarter of 1994. Comparable denominators for the first quarter of 1993
were 479.7 million shares for Class E and 399.9 million shares for Class H.
The denominators used in determining the Available Separate Consolidated Net
Income of EDS and GMHE are adjusted as deemed appropriate by the Board of
Directors to reflect subdivisions or combinations of the Class E and Class H
common stocks and to reflect certain transfers of capital to or from EDS and
GMHE. In this regard, the Board has generally caused the denominators to
decrease as shares are purchased by EDS or GMHE, and to increase as such
shares are used, at EDS or GMHE expense, for EDS or GMHE employee benefit
plans or acquisitions.
Dividends may be paid on common stocks only when, as, and if declared by the
Board of Directors in its sole discretion. The Board's policy with respect to
$1-2/3 par value common stock is to distribute dividends based on the outlook
and the indicated capital needs of the business. The current policy of the
Board with respect to the Class E and Class H common stocks is to pay cash
dividends approximately equal to 30% and 35% of the Available Separate
Consolidated Net Income of EDS and GMHE, respectively, for the prior year.
Notwithstanding the current dividend policy, the Board of Directors declared a
dividend on the Class H common stock for each of the quarters of 1993, which
was more than 35% of the Available Separate Consolidated Net Income of GMHE
for the prior year.
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<PAGE>10
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Note 6.
Major classes of inventories are as follows:
March 31, Dec. 31, March 31,
1994 1993 1993
--------- -------- ---------
(Dollars in Millions)
Productive material, work in process,
and supplies $5,087.3 $4,671.9 $4,882.6
Finished product, service parts, etc. 4,412.5 3,943.2 4,465.3
------- ------- -------
Total inventories (less allowances) $9,499.8 $8,615.1 $9,347.9
======= ======= =======
Note 7.
Stocks Subject to Repurchase at March 31, 1994 consist of 15 million shares
of Class H common stock subject to put options issued to the Howard Hughes
Medical Institute and exercisable under most circumstances at $30 per share on
March 1, 1995. The Corporation holds an option to call the Institute's shares
until February 28, 1995 at $37.50 per share.
Note 8.
At March 31, 1994, December 31, 1993, and March 31, 1993, consolidated net
income retained for use in the business (accumulated deficit) attributable to
the common stocks was as follows:
March 31, Dec. 31, March 31,
1994 1993 1993
---------- ---------- ----------
(Dollars in Millions)
$1-2/3 par value ($3,614.5) ($4,080.1) ($4,862.0)
Class E 1,405.5 1,344.3 1,125.0
Class H 778.8 732.9 619.6
------- ------- -------
Total ($1,430.2) ($2,002.9) ($3,117.4)
======= ======= =======
The Corporation's capital surplus less accumulated deficit at March 31,
1994, December 31, 1993, and March 31, 1993, as allocated pursuant to GM's
Certificate of Incorporation, was as follows:
March 31, Dec. 31, March 31,
1994 1993 1993
--------- -------- ---------
(Dollars in Millions)
$1-2/3 par value $5,757.7 $4,870.0 $3,737.4
Class E 3,398.6 3,243.8 2,657.9
Class H 1,971.7 1,886.7 1,634.2
-------- -------- -------
Total $11,128.0 $10,000.5 $8,029.5
======== ======== =======
However, consistent with Delaware law, which governs the amount legally
available for the payment of dividends on the Corporation's common stock, the
Board of Directors has determined that such amount is materially higher than
the Corporation's capital surplus less accumulated deficit.
Note 9.
At March 31, 1994, December 31, 1993, and March 31, 1993, accumulated
foreign currency translation adjustments were ($417.1) million, ($494.4)
million, and ($161.5) million, respectively, and net unrealized gains on
marketable equity securities of General Motors' insurance subsidiaries
amounted to $144.7 million, $164.3 million, and $210.4 million, respectively.
In addition, the favorable cumulative effect of adopting SFAS No. 115
effective January 1, 1994 was $241.0 million and the unrealized loss incurred
during the three months ended March 31, 1994 was $100.7 million.
Note 10.
The Corporation and its subsidiaries are subject to potential liability
under government regulations and various claims and legal actions which are
pending or may be asserted against them. Some of the pending actions purport
to be class actions. The aggregate ultimate liability of the Corporation and
its subsidiaries under these government regulations, and under these claims
and actions, was not determinable at March 31, 1994. In the opinion of
management, such liability is not expected to have a material adverse effect
on the Corporation's consolidated operations or financial position.
* * * * *
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<PAGE>11
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
The following management's discussion and analysis should be read in
conjunction with the management's discussion and analysis included in the
Corporation's 1993 Annual Report to the SEC on Form 10-K. The competitive
position and environmental matters discussions included in Part I, Item 1 of
the 1993 Form 10-K are specifically incorporated by reference herein.
General Motors Corporation reported 1994 first quarter consolidated net
income of $853.7 million, or $0.81 per share of $1-2/3 par value common stock.
The results include the one-time unfavorable effect of a previously announced
mandatory accounting change. Excluding the negative impact of the non-cash
$758.1 million after-tax charge, or $1.05 per share of $1-2/3 par value common
stock, resulting from the adoption of Statement of Financial Accounting
Standards (SFAS) No. 112, Employers' Accounting for Postemployment Benefits,
GM's consolidated net income in the first quarter of 1994 totaled $1,611.8
million, or $1.86 per share of $1-2/3 par value common stock. The $758.1
million after-tax charge is composed of $707.7 million at GM's North American
Automotive Operations (NAO), $30.4 million at GM Hughes Electronics
Corporation (GMHE), and $20.0 million at other GM operations. In the first
quarter of 1993, GM reported consolidated net income of $513.2 million, or
$0.42 per share of $1-2/3 par value common stock.
GM's sales and revenues totaled $37,495.4 million in the first quarter of
1994, an increase of 8.5% compared with the first quarter of 1993. Gross
profit margin -- with General Motors Acceptance Corporation (GMAC) on an
equity basis -- was 18.2%, compared with 14.6% in the comparable period last
year. The net profit margin, before the accounting change, was 4.7% in the
first quarter of 1994, compared with 1.6% in the first quarter last year.
Overall, GM's performance in the first quarter was strong, reflecting
continued cost-reduction efforts, improved productivity and a strong vehicle
market. The performance clearly demonstrates that the continued
implementation of GM's plan to rebuild its financial strength is progressing
well, but GM realizes that it is not finished. As global industry sales
continued to rebound in the first quarter, GM ranked number one in deliveries
to North American dealers. GM was number two in new car registrations in
Europe, and in Latin America it was number one in trucks and number two in all
vehicles.
After preference stock dividend payments and the apportionment of earnings
attributable to GM Class E and Class H common stocks, the income attributable
to $1-2/3 par value common stock in the 1994 first quarter including the
accounting change amounted to $610.8 million or $0.81 per share, compared with
first quarter 1993 income of $300.5 million or $0.42 per share. Excluding the
accounting change, 1994 first quarter earnings improved $1,061.6 million
($1.44 per share) over the 1993 quarter.
First quarter 1994 worldwide wholesale vehicle sales totaled 2,080,000 units
as shown in the following table, 5.0% more than the 1993 first quarter level
of 1,981,000 units, reflecting higher sales in all regions.
Three Months
--------------
Worldwide Wholesale Sales 1993 1992
----- -----
(Units in Thousands)
United States
Cars 789 740
Trucks 496 478
----- -----
Total United States 1,285 1,218
Other North America 153 131
----- -----
Total North America 1,438 1,349
Overseas 642 632
----- -----
Total All Sources 2,080 1,981
===== =====
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<PAGE>12
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Following are highlights of 1994 first-quarter financial performance by GM's
major business sectors:
Three Months Ended
March 31,
-------------------
Major Business Sector Results 1994 1993(1)
- - ----------------------------- ------- ----
(Dollars in Millions)
North American Automotive Operations (NAO)
Income (Loss) Before
Accounting Change $511 ($170)
Cumulative Effect of
Accounting Change (708) -
----- ---
NAO Loss (197) (170)
----- ---
International Automotive Operations
Income 425 141
----- ---
GMAC
Income Before Accounting
Change 224 284
Cumulative Effect of
Accounting Change (7) -
----- ---
GMAC Income 217 284
----- ---
EDS Earnings 172 151
----- ---
GMHE
Earnings Before Accounting
Change 312 189
Cummulative Effect of
Accounting Change (30) -
----- ---
GMHE Earnings 282 189
----- ---
Other (2)
Loss Before Accounting
Change (32) (82)
Cumulative Effect of
Accounting Change (13) -
----- ---
Other Loss (45)
(82)
----- ---
Consolidated Net Income (CNI) $854 $513
===== ===
CNI Before Accounting Change $1,612 $513
===== ===
(1) Certain amounts for 1993 were reclassified to conform with sector
structure.
(2) Includes Power Products and Defense and purchase accounting adjustments.
In the first quarter of 1994, NAO reported a net loss of $197.1 million,
including the effect of the SFAS No. 112 accounting change. Excluding the one-
time $707.7 million after-tax impact to NAO resulting from the adoption of the
SFAS No. 112 accounting change, NAO reported net income of $510.6 million for
the first quarter. This compares with a loss of $169.7 million in the first
quarter of 1993. NAO's net margin before the accounting change was 2.1% in
the first quarter of 1994, compared with a loss of 0.8% in the prior year
period.
While NAO's net margin is improving, it is short of the superior margins GM
is looking for in a strong sales environment. NAO's performance shows it is
on track to meet the 1994 objective for North American Operations -- to be
profitable at the net income level.
- 12 -
<PAGE>13
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
GM's share of the total U.S. vehicle market in the first quarter of 1994 was
33.5%, compared with 33.1% in the first quarter of 1993. GM's share of total
U.S. car deliveries was 35.1% in the first quarter, compared with 34.1% in the
previous year's first quarter. Capped by the strongest March truck sales
period in the Corporation's history, GM truck deliveries in the United States
during the first quarter marked the best-ever calendar-year start for GM
trucks. Even with this record performance, the Corporation's share of truck
deliveries was 31.2% compared with 31.6% in the same period last year,
primarily due to capacity constraints. GM set a record in Mexico for total
wholesale sales in the first quarter of 1994 with a 24% increase over the same
period of 1993. Total retail sales in Mexico were up 18.1% with market
penetration reaching 20.5%.
Period to period, earnings increased significantly in GM's international
automotive operations. Net income totaled $425.2 million in the first quarter
of 1994, compared with 1993's first quarter earnings of $140.6 million. The
results reflected continued strong results in Latin America and improved
profitability in Europe, as period-to-period income more than doubled in each
region. International automotive operations' net margin was 6.8% in the 1994
first quarter period, an improvement of 4.6 percentage points from the 2.2%
net margin in the year ago period.
GM's car and truck market share in Europe increased to 12.4% in the first
quarter of 1994, compared with 11.7% in the first quarter last year. GM's
Opel/Vauxhall models remained in the number one position in the Western
European car market with a market share of 12.5%. Especially successful was
the new Corsa, which has become a trendsetter in the small car market.
Designed and engineered in Germany, and adapted for markets around the world,
the Corsa is built in Germany, Spain, and Brazil, and sold throughout Europe
and Latin America, as well as in China, Mexico, Thailand, and Australia.
Production is scheduled to begin this fall of the new Opel/Vauxhall Tigra
compact coupe. It will be launched internationally in October at the Paris
Motor Show.
GM's market share in Latin America was 17.9% in the first quarter as
industry sales in that region continued at a record pace. In Brazil, where
total first quarter GM vehicle sales were up 25%, all of this year's Corsa
production is sold out and thousands of people have their names on lists
waiting to buy. More important, GM has attained the leadership position in
customer satisfaction for both cars and trucks.
GMAC reported first quarter 1994 earnings of $217.5 million, compared with
$206.8 million earned in the fourth quarter of 1993. First quarter 1993
earnings were $284.1 million. GMAC's first quarter 1994 earnings reflect
efforts initiated in late 1992 to reduce asset levels in order to assure a
strong liquidity position following credit-rating-agency downgrades for
General Motors and GMAC. During 1993, however, GMAC's liquidity position
improved significantly putting GMAC in a stronger position to grow its
business and support GM dealer marketing efforts in today's strong sales
environment. The 1994 results also reflect the nonrecurrence of gains from
sales of retail finance receivables.
Electronic Data Systems Corporation (EDS) reported record earnings for the
first quarter of 1994, with net income totaling $171.7 million, or $0.36 per
share of GM Class E common stock. That compares with earnings of $151.4
million, or $0.32 per share of Class E common stock, in the first quarter of
1993. EDS continued to show increased revenue growth in new markets and
strong performance in its existing businesses in the first quarter of 1994.
Revenue from non-GM sources was $1,397.6 million, comprising 62.4% of total
EDS revenue during the period.
- 13 -
<PAGE>14
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
GMHE earned $282.1 million in the first quarter of 1994, or $0.70 per share
of GM Class H common stock. Excluding the effect of the SFAS No. 112
accounting change, the first quarter 1994 earnings were $312.5 million, or
$0.78 per share of Class H common stock -- 65.1% more than the 1993 first
quarter earnings of $189.3 million, or $0.47 per share of Class H common
stock. Revenues increased 12.8% over the year-ago period. The Automotive
Electronics, Telecommunications and Space, and Defense Electronics business
segments all contributed to GMHE's revenue and earnings increases.
As detailed in the table below, first quarter 1994 worldwide employment
averaged 688,000 men and women, a 6.0% decrease from the 732,000 in the first
quarter of 1993. Worldwide payrolls were $7,826.5 million, compared with
$7,459.9 million in the comparable 1993 period.
Three Months
-------------
1994 1993
---- ----
(in thousands)
Average Worldwide Employment
GM (excluding units listed below) 516 548
GMAC 19 19
EDS 70 72
GMHE 77 87
NCRS 6 6
--- ---
Average Number of Employees 688 732
=== ===
Selling, general, and administrative expenses, with GMAC on an equity basis,
in the first quarter of 1994 of $2,365.4 million were $56.8 million above the
first quarter 1993 amounts. On a percent of sales basis, selling, general,
and administrative expenses were 6.9% in the first quarter of 1994, down from
7.3% in the first quarter of 1993.
General Motors Acceptance Corporation
GMAC serves the financing and insurance needs of GM customers. The GMAC
First Quarter 1994 Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission is hereby incorporated by reference.
Consolidated net income from GMAC financing and Motors Insurance Corporation
insurance operations totaled $217.5 million for the first quarter of 1994,
compared with $284.1 million earned in the first quarter of 1993. First
quarter earnings in 1994 reflect an unfavorable charge of $7.4 million related
to the cumulative effect on income resulting from the implementation of SFAS
No. 112.
Net income from financing operations, including mortgage results, totaled
$192.8 million for the first quarter of 1994, $57.5 million below the same
period last year, excluding the impact of SFAS No. 112. The decrease was due
to a decline in asset levels and nonrecurrence of gains on receivable sales.
During the first quarter of 1994, GMAC financed or leased worldwide 542,000
new passenger cars and trucks, an increase of 35% from the comparable 1993
period. In the United States, GMAC financed or leased 399,000 new vehicles
during the first quarter of 1994, 122,000 more than during the first quarter
of 1993. During the first quarter of 1994, GMAC financed 30% of new General
Motors products delivered in the U.S. during this period, a 5 percentage point
increase from the same period last year. The increase in retail and lease
unit financing and penetration reflects curtailment of the Company's early
1993 program to reduce volume to address potential liquidity concerns.
Outside the United States, GMAC financed or leased 143,000 new vehicles in the
first quarter of 1994, up 19,000 units from the first quarter of 1993. An
increase in retail volume outside of North America accounted for the majority
of the year-to-year increase.
- 14 -
<PAGE>15
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Net income from insurance operations, excluding the impact of SFAS No. 112,
was $32.1 million for the first quarter of 1994, a $1.7 million decrease as
compared to the first quarter of 1993. The decline in net income reflects
lower capital gains which more than offset improved commercial lines
underwriting results.
Financing revenue totaled $2,163.0 million for the first quarter of 1994,
$104.8 million less than the amounts recorded in the comparable 1993 period.
The decrease is primarily attributable to lower earning rates, partially
offset by an increase in leasing revenues resulting from continued growth in
operating lease activity. As a result of the lower level of interest rates in
the United States as well as the lower level of total borrowings, interest and
discount expense totaled $1,010.0 million for the first quarter of 1994, a
decrease of 22% from the comparable period in 1993. The average cost of funds
worldwide for the first quarter declined to 6.52%, a decrease of 49 basis
points from a year ago. Total borrowing costs for United States operations
averaged 6.25% for the first quarter compared with 6.54% for 1993.
Other income, including gains on and servicing fees and other income related
to sold finance receivables, amounted to $411.5 million in the first quarter
of 1994. This compared with $653.0 million in the comparable 1993 period.
The decrease primarily reflects the nonrecurrence of gains on the sales of
retail finance receivables during the current period. Other operating
expenses, including salaries and benefits and insurance losses and loss
adjustment expenses, totaled $712.0 million for the first quarter of 1994,
$18.5 million lower than a year ago. The decrease is primarily attributable
to lower losses incurred on commercial lines.
The provision for losses on finance receivables, including both retained and
sold receivables, totaled $64.1 million for the first quarter of 1994,
compared to $57.0 million in the same period of 1993, reflecting increased
retail volume levels in the 1994 period. Total chargeoffs for the first
quarter of 1994 were $88.8 million compared to $121.5 million in the first
quarter of 1993. Retail losses were 0.54% of total serviced assets during the
first quarter of 1994 (including off-balance-sheet sold receivables), as
compared to 0.72% for the same period last year.
GMAC's consolidated assets totaled $81,630.8 million at March 31, 1994,
compared to $80,750.8 million and $89,867.6 million at December 31, 1993 and
March 31, 1993, respectively. Consolidated earning assets totaled $77,300.9
million at March 31, 1994, compared to $74,783.8 million and $80,548.0 million
at December 31, 1993 and March 31, 1993, respectively. The decrease from the
first quarter of 1993 compared to 1994 is a result of a net decrease in
dealers' wholesale financing, primarily reflecting lower dealer stock levels
in North America, partially offset by an increase in operating lease assets.
Wholesale receivables financed by GMAC, primarily dealer vehicle
inventories, were $18,901.1 million at March 31, 1994, compared to $20,673.6
million at December 31, 1993 and $14,076.3 million at March 31, 1993.
Wholesale receivables financed in the first quarter of 1994, as compared to
the asset levels at March 31, 1993, reflects the resumption by GMAC of dealer
wholesale inventory previously financed by General Motors, partially offset by
lower levels of dealer inventory in addition to sales of wholesale
receivables.
Operating lease assets, net of depreciation, offered principally under the
GMAC SmartLease program, increased to $12,635.0 million at the end of the
first quarter in 1994 from $11,363.5 million and $10,101.3 million at December
31, 1993 and March 31, 1993, respectively. The increase primarily reflects
growth in the U.S. and Canadian markets, driven by increasing consumer
acceptance of leasing and enhanced manufacturer's subvented programs to
capitalize on the trends.
- 15-
<PAGE>16
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
GMAC's total borrowings were $62,430.8 million at March 31, 1994, compared
with $70,712.9 million at the comparable date in 1993 and $62,773.2 million at
December 31, 1993. Approximately 82% represented funding for operations in
the United States, with the remaining 18% of borrowings being split equally
between Canada, Germany, and other countries. Total short-term notes
worldwide at March 31, 1994 amounted to $18,930.2 million, up from $17,733.8
million at December 31, 1993 and $17,856.0 million at March 31, 1993.
Summary Financial Data - GMAC
Condensed GMAC Consolidated Three Months Ended
Statement of Income March 31,
-----------------
1994 1993
-----------------
(Dollars in Millions)
Financing Revenue
Retail and lease financing $737.3 $988.5
Leasing 1,052.3 940.7
Wholesale and term loans 373.4 338.6
------- -------
Total financing revenue 2,163.0 2,267.8
Interest and discount 1,010.0 1,300.0
Depreciation on operating leases 688.7 627.4
------- -------
Net financing revenue 464.3 340.4
Insurance premiums earned 279.4 273.6
Other income 411.5 653.0
------- -------
Net Financing Revenue and Other 1,155.2 1,267.0
Expenses 794.8 814.3
------- -------
Income before income taxes 360.4 452.7
Income taxes 135.5 168.6
------- -------
Income before cumulative effect of
accounting change 224.9 284.1
Cumulative effect of accounting change (7.4)* -
------- -------
Net Income $217.5 $284.1
======= =======
*Effective January 1, 1994, GMAC adopted SFAS No. 112.
Certain amounts for 1993 have been reclassified to conform with 1994
classifications.
- 16 -
<PAGE>17
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Condensed GMAC Consolidated Balance Sheet March 31, Dec. 31, March 31,
1994 1993 1993
--------- -------- ---------
(Dollars in Millions)
Cash and cash equivalents $2,386.0 $4,028.1 $7,282.6
Investments in securities 3,533.4 3,449.7 3,394.5
Finance receivables - net 54,430.4 54,134.8 51,572.0
Receivables - General Motors Corporation 1,414.4 1,355.5 11,281.7
Other assets 19,866.6 17,782.7 16,336.8
-------- -------- ---------
Total Assets $81,630.8 $80,750.8 $89,867.6
======== ======== =========
Short-term debt $34,551.8 $35,084.4 $38,861.2
Accounts payable and other liabilities
(including GM and affiliates - $3,129.7,
$2,487.5, and $2,604.7) 11,361.6 10,125.3 10,898.6
Long-term debt 27,879.0 27,688.8 31,851.7
Stockholder's equity 7,838.4 7,852.3 8,256.1
-------- -------- ---------
Total Liabilities and
Stockholder's Equity $81,630.8 $80,750.8 $89,867.6
======== ======== =========
Certain amounts for March 1993 have been reclassified to conform with 1994
classifications.
Three Months Ended
Condensed GMAC Consolidated Statement of Cash Flows March 31,
--------------------
1994 1993
--------------------
(Dollars in Millions)
Net Cash Provided by Operating Activities $2,139.6 $2,245.7
-------- --------
Cash Flows from Investing Activities
Finance receivables-acquisitions (38,749.1) (35,499.0)
-liquidations 37,042.9 36,756.5
Notes receivable from General Motors Corporation (58.9) 281.5
Operating leases-acquisitions (2,647.1) (1,512.8)
-liquidations 715.2 643.0
Investments in securities-acquisitions (3,025.9) (3,256.5)
-liquidations 2,958.6 3,099.2
Proceeds from sales of receivables 1,376.4 4,602.8
Due and deferred from receivable sales (973.1) (231.3)
Other 213.9 449.2
-------- --------
Net Cash Provided by (Used in) Investing Activities (3,147.1) 5,332.6
-------- --------
Cash Flows from Financing Activities
Debt with original maturities 90 days and over
-proceeds 14,415.7 9,723.3
-liquidations (15,353.2) (13,241.7)
Debt with original maturities less than 90 days
-net change 554.8 (390.3)
Cash dividends paid to GM (250.0) (250.0)
-------- --------
Net Cash Used in Financing Activities (632.7) (4,158.7)
-------- --------
Effect of exchange rate changes on cash and
cash equivalents (1.9) (8.1)
-------- --------
Net increase (decrease) in cash and cash equivalents (1,642.1) 3,411.5
Cash and cash equivalents at beginning of the period 4,028.1 3,871.1
-------- --------
Cash and cash equivalents at end of the period $2,386.0 $7,282.6
======== ========
Certain amounts for 1993 have been reclassified to conform with 1994
classifications.
- 17 -
<PAGE>18
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Electronic Data Systems Corporation
Earnings per share attributable to GM Class E common stock are based on
the Available Separate Consolidated Net Income of EDS as described in Note 5
to the Financial Statements. Reference should be made to EDS' Management's
Discussion and Analysis in Exhibit 99(a) which is incorporated herein by
reference.
EDS financial statements do not include the amortization of the $2,179.5
million initial cost to GM of EDS customer contracts, computer software
programs, and other intangible assets, including goodwill, arising from the
acquisition of EDS by GM in 1984. This cost, plus the $343.2 million cost of
contingent notes purchased in 1986, less certain income tax benefits, was
assigned principally to intangible assets, including goodwill, and is being
amortized by GM over the estimated useful lives of the assets acquired. The
costs assigned to customer contracts and computer software programs were fully
amortized prior to 1992. Such amortization is charged against Other Sector
income.
Summary Financial Data - EDS Three Months Ended
March 31,
------------------
1994 1993
------------------
(Dollars in Millions
Except
Per Share Amounts)
Revenues
Systems and other contracts
GM and affiliates $841.7 $845.9
Outside customers 1,375.5 1,213.9
Interest and other income 22.1 13.4
------- --------
Total Revenues 2,239.3 2,073.2
Costs and Expenses 1,971.0 1,836.6
Income Taxes 96.6 85.2
------- --------
Separate Consolidated Net Income $171.7 $151.4
======= ========
Available Separate Consolidated Net Income*
Average number of shares of Class E common stock
outstanding (in millions) (Numerator) 257.9 234.7
Class E dividend base (in millions)
(Denominator) 481.2 479.7
Available Separate Consolidated
Net Income $92.1 $74.1
===== =====
Earnings Attributable to Class E
Common Stock on a Per Share Basis $0.36 $0.32
==== ====
Cash dividends per share of Class E
common stock $0.12 $0.10
==== ====
* Available Separate Consolidated Net Income is determined quarterly.
- 18 -
<PAGE>19
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
GM Hughes Electronics Corporation
Earnings per share attributable to GM Class H common stock are based on
the Available Separate Consolidated Net Income of GMHE as described in Note 5
to the Financial Statements. Reference should be made to GMHE's Management's
Discussion and Analysis in Exhibit 99(b) which is incorporated herein by
reference.
Summary Financial Data - GMHE Three Months Ended
March 31,
------------------
1994 1993
------------------
(Dollars in Millions
Except
Per Share Amounts)
Revenues
Net sales
Outside customers $2,300.9 $2,109.9
GM and affiliates 1,259.9 1,059.7
Other income-net 26.5 11.6
------- -------
Total Revenues 3,587.3 3,181.2
Costs and Expenses 3,110.0 2,901.8
Income Taxes 195.8 121.1
------- -------
Income before cumulative
effect of accounting change 281.5 158.3
Cumulative effect of accounting
change (30.4)(1) -
------- -------
Net Income 251.1 158.3
Adjustment to exclude the effect
of GM purchase accounting
adjustments related to Hughes(2) 31.0 31.0
------- -------
Earnings Used for
Computation of Available Separate
Consolidated Net Income $282.1 $189.3
======= =======
Available Separate Consolidated
Net Income (3)
Average number of shares of Class H
common stock outstanding
(in millions) (Numerator) 90.6 93.9
Class H dividend base (in millions)
(Denominator) 399.9 399.9
Available Separate Consolidated
Net Income $64.0 $44.4
===== =====
Earnings Attributable to Class H
Common Stock on a Per Share Basis
Before cumulative effect of
accounting change $0.78 $0.47
Cumulative effect of accounting
change (0.08)(1) -
---- ----
Net earnings attributable
to Class H common stock $0.70 $0.47
==== ====
Cash dividends per share of Class H
common stock $0.20 $0.18
==== ====
(1) Effective January 1, 1994, GMHE adopted SFAS No. 112 ($30.4 million or
$0.08 per share).
(2) Amortization of intangible assets arising from GM's acquisition of
Hughes.
(3) Available Separate Consolidated Net Income is determined quarterly.
- 19 -
<PAGE>20
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Liquidity and Capital Resources
Cash and cash equivalents, including GMAC, at March 31, 1994 amounted to
$10,710.0 million compared with $13,790.5 million at December 31, 1993 and
$15,034.5 million at March 31, 1993. The decrease in 1994 was due to an
excess of net cash used in investing activities over the net cash provided by
operating and financing activities. Net cash provided by operating activities
was $538.5 million in the three months of 1994, compared to $5,660.2 million
in the 1993 period, reflecting principally the cash contribution to the U.S.
pension plans, purchases of mortgage loans, and the increase in accounts
receivable and inventories, partially offset by the income before cumulative
effect of accounting change in 1994.
Net cash used in investing activities amounted to $3,661.0 million in 1994
primarily due to capital expenditures and the increase in equipment on
operating leases. Net cash provided by investing activities amounted to
$2,697.7 million in 1993 primarily due to the net reduction in finance
receivables (resulting primarily from sales of finance receivables) exceeding
capital expenditures and the increase in equipment on operating leases. Total
capital expenditures were $1,201.4 million in the three months of 1994
compared with $1,362.1 million in the 1993 period. Net cash provided by
financing activities of $51.2 million in the 1994 three-month period reflected
the $557.2 million proceeds from issuing common stock and a $320.0 million net
increase in long-term debt exceeding the net decrease in short-term loans
payable and cash dividends paid to stockholders. Net cash used in financing
activities of $4,399.4 million in the 1993 period primarily reflected the net
decrease in short-term loans payable of $3,799.6 million.
During the three months of 1994, notes and loans payable decreased $172.3
million to $70,268.9 million at March 31, 1994 from a balance of $70,441.2
million at December 31, 1993 reflecting a net decrease in short-term loans
payable exceeding a net increase in long-term debt. GM's fully consolidated
ratio of debt to stockholders' equity (excluding stocks subject to repurchase)
was 10.13 to 1 at March 31, 1994 compared to 12.58 to 1 at December 31, 1993
and 11.93 to 1 at March 31, 1993.
On April 19, 1994, Standard & Poor's Corporation (S&P) revised its ratings
outlook from negative to positive and reaffirmed its ratings of General Motors
Corporation and related entities. S&P currently rates the senior debt of GM,
GMAC, and GMHE as BBB+. The commercial paper of GMAC, GMHE, and EDS is
currently rated A-2. GM's preference stock is rated BBB.
A security rating is not a recommendation to buy, sell, or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each rating should be evaluated independently of any
other rating.
The Corporation's cash position remained strong and significantly above
debt levels. With GMAC on an equity basis, cash and marketable securities
totaled $9,546.6 million at the end of the first quarter, even following a
$1.9 billion cash contribution to GM's U.S. pension plans during the quarter,
compared with $10,485.0 million at December 31, 1993, and $8,393.7 million at
March 31, 1993. GM's cash position continues to strengthen and GM plans to
maintain all-important future product programs utilizing improved capital-
spending efficiencies, while at the same time improving the balance sheet.
Ongoing financial objectives include: restoring profitability to North
American Operations, reducing GM's unfunded pension liability, containing
health-care costs and improving GM's credit ratings.
GM and certain of its subsidiaries and affiliates maintain various
syndicated bank credit facilities which in aggregate provide $26.8 billion of
committed credit availability. Of this amount, $3.0 billion is directly
available to the Corporation and the remainder is available to GMAC and its
subsidiaries and affiliates and other GM subsidiaries and affiliates
worldwide.
- 20 -
<PAGE>21
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
The Corporation's policy is to distribute dividends on its $1-2/3 par
value common stock based on the outlook and indicated capital needs of the
business. With respect to Class E and Class H common stocks, the
Corporation's current policy is to pay aggregate annual cash dividends
approximately equal to 30% and 35% of the Available Separate Consolidated Net
Income of EDS and GMHE, respectively, for the prior year. In February 1994,
the Board of Directors increased the quarterly dividends on Class E common
stock from $0.10 per share to $0.12 per share and on Class H common stock from
$0.18 per share to $0.20 per share. Notwithstanding the current dividend
policy, the Board of Directors declared a dividend on the Class H Common Stock
of $0.18 per share for each of the quarters of 1993, which was more than 35%
of the Available Separate Consolidated Net Loss of GMHE for 1992.
A first quarter cash dividend on $1-2/3 par value common stock of $0.20
per share was paid on March 10, 1994. On May 2, 1994, the Board of Directors
declared a cash dividend of $0.20 per share on $1-2/3 par value common stock
for the second quarter of 1994 payable June 10, 1994. The dividend continues
the level established in the fourth quarter of 1992, and brings 1994 cash
dividends to $0.40 per share, the same as in 1993.
A first quarter cash dividend on Class E common stock of $0.12 per share
was paid on March 10, 1994. On May 2, 1994, the Board of Directors also
declared a cash dividend of $0.12 per share on Class E common stock payable
June 10, 1994. This continues the level established in the first quarter of
1994 and brings 1994 cash dividends to $0.24 per share compared with $0.20 per
share in 1993.
A first quarter cash dividend on Class H common stock of $0.20 per share
was paid on March 10, 1994. On May 2, 1994, the Board of Directors also
declared a cash dividend of $0.20 per share on Class H common stock payable
June 10, 1994. This continues the level in effect since the first quarter of
1994 and brings 1994 cash dividends to $0.40 per share, compared with $0.36
per share in 1993.
Book value per share of $1-2/3 par value common stock increased to $3.30
at the end of the 1994 first quarter from $1.65 at the end of 1993. Book
value per share of Class E common stock increased to $0.42 from $0.21 at the
end of 1993 and book value per share of Class H common stock increased to
$1.65 from $0.83 at the end of 1993.
Under SFAS No. 87, Employers' Accounting for Pensions, any year-to-year
movement in the rate of interest on long-term, high-quality corporate bonds
necessitates a change in the discount rate used to calculate the actuarial
present value of the plans' obligations. This annual requirement to reset the
discount rate in line with movements in market interest rates can result in
considerable volatility of the discount rate and consequently in the amount of
the plans' obligations under SFAS No. 87. The measurement date on which the
Corporation's year-end funded status is based is October 1 for its principal
U. S. plans. The Corporation's worldwide unfunded pension liability at
December 31, 1993, as calculated under SFAS No. 87, increased by a net of $8.3
billion, from $14.0 billion at December 31, 1992 to $22.3 billion. The single
largest cause of this increase in GM's unfunded liability was the general
decline in long-term interest rates which in the U.S. were at their lowest
level in approximately 20 years. The approximate 90 basis point increase in
long-term interest rates in the U.S. which has occurred since the last
measurement date of GM's pension plans and March 31, 1994, if maintained,
would decrease GM's reported unfunded pension liabilities at year-end 1994 by
about $5 billion. The actual return on pension investments during the year
also impacts the unfunded pension liability.
Assuming the foregoing estimated decrease in the unfunded liability
occurs, the Corporation estimates that its minimum pension liability
adjustment to stockholders' equity would decrease by about $1.6 billion at
- 21 -
<PAGE>22
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
December 31, 1994, from the $5.3 billion adjustment reported at year-end 1993
to approximately $3.7 billion. In addition, long-term interest rates have
increased further (roughly, an additional 45 basis points) since March 31,
1994. The trend of rising interest rates indicates that further reductions in
GM's unfunded pension liability and adjustment to stockholders' equity may be
reported at year-end 1994.
On May 11, 1994, the Corporation reached an agreement with the Pension
Benefit Guaranty Corporation (PBGC) which could lead to incremental cash and
stock contributions of approximately $10 billion to its U.S. hourly pension
plan in the near term. The funding proposal includes $4 billion in cash plus
a contribution of approximately 177 million shares of Class E common stock.
At the May 10 NYSE closing price of $35.25, 177 million shares of Class E
common stock would have a value of $6.2 billion. GM has already satisfied its
1994 Employee Retirement Income Security Act (ERISA) minimum funding
obligation with a cash contribution of $1.9 billion to its U.S. hourly pension
plan in the first quarter of 1994. The funding proposal would be in addition
to this ERISA minimum contribution.
GM's ability to make the contribution as planned is contingent upon
receiving approval from the U.S. Department of Labor (DOL), and other
conditions. GM expects to file its application with the DOL shortly. Under
the terms of the agreement with the PBGC, GM will defer the use of funding
credits that would result from the incremental cash and stock contributions.
Consequently, GM will continue to make regular cash contributions to its
pension plans over the next several years. The PBGC agreement also provides
flexibility to GM by granting a release of EDS from liability, if any, to the
PBGC under GM's U.S. pension plans in the event EDS were to leave the GM
corporate group under certain circumstances. In addition, GM will seek relief
from the excise tax that can apply when large contributions are made to
pension plans. The PBGC reform bill (HR3396) proposes this relief. If GM
obtains the necessary government approval, the stock contribution would
require approval by the GM Board of Directors. No assurances can be given at
this time that the approvals will be obtained.
In a related development, U.S. Trust Company of New York has been selected
to serve as the hourly plan's independent trustee with respect to the Class E
stock contribution. In this capacity, U.S. Trust has responsibility for the
acceptance, valuation and management of the stock contribution.
The increase in long-term interest rates described above similarly impacts
the calculation of the Corporation's postretirement health care obligations
under SFAS No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions. The 90 basis point increase in long-term corporate bond rates
that had occurred during the last six months would decrease GM's accumulated
postretirement benefit obligation, which was $45.6 billion at December 31,
1993, by approximately $5.0 billion. Further, any change in the accumulated
postretirement benefit obligation would have no impact on GM's stockholders'
equity in 1994 and no cash impact. Although the same interest rate factors
affect the accounting liabilities for pensions and other postretirement
benefits, the estimated decrease related to SFAS No. 106 could also be
affected by the Clinton Administration's announced initiatives to reform
health care. The Corporation has expressed support for a comprehensive reform
program which would provide affordable insurance coverage for everyone;
control the rate of cost increase; spread costs fairly across the economy; and
assure uniform quality health care throughout the system. The impact of
national health care reform on the Corporation's health care liability cannot
be reasonably estimated until such time as program parameters are finalized.
Neither the estimated decrease in the Corporation's unfunded pension
obligations under SFAS No. 87 nor the estimated decrease in the Corporation's
postretirement obligations under SFAS No. 106 would have an impact on the
earnings to be reported by the Corporation for 1994. However, in accordance
with applicable accounting standards, any change in these obligations would
impact the Corporation's 1995 and subsequent years' earnings as non-cash
increases/decreases in pension and other postretirement benefit expense.
- 22 -
<PAGE>23
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
GENERAL MOTORS OPERATIONS WITH GMAC ON AN EQUITY BASIS
In order to facilitate analysis, the following financial statements
present financial data for the Corporation's manufacturing, wholesale
marketing, defense, electronics, and computer service operations with the
financing and insurance operations reflected on an equity basis. This is the
same basis and format used in years prior to GM's adoption of SFAS No. 94,
Consolidation of All Majority-owned Subsidiaries.
Statement of
Consolidated Operations Three Months Ended
With GMAC on an Equity Basis March 31,
--------------------
1994 1993
--------------------
(Dollars in Millions)
Net Sales and Revenues (1)
Manufactured products $32,836.1 $30,193.1
Computer systems services 1,444.6 1,279.6
-------- --------
Total Net Sales and Revenues 34,280.7 31,472.7
-------- --------
Costs and Expenses
Cost of sales and other operating
charges, exclusive of items
listed below 28,039.5 26,883.4
Selling, general, and
administrative expenses 2,365.4 2,308.6
Depreciation of real estate, plants, and
equipment 936.3 941.9
Amortization of special tools 761.0 636.2
Amortization of intangible assets 45.2 47.4
-------- --------
Total Costs and Expenses 32,147.4 30,817.5
-------- --------
Operating Income 2,133.3 655.2
Other income less income
deductions - net 199.1 322.0
Interest expense (215.1) (385.1)
-------- --------
Income before Income Taxes 2,117.3 592.1
Income taxes 704.8 248.7
-------- --------
Income after Income Taxes 1,412.5 343.4
Earnings of nonconsolidated
affiliates 191.9 169.8
-------- --------
Income before cumulative
effect of accounting change 1,604.4 513.2
Cumulative effect of accounting
change (2) (750.7) -
-------- --------
Net Income $853.7 $513.2
======== ========
Certain 1993 amounts were reclassified to conform with 1994 classifications.
(1) Includes sales to nonconsolidated affiliates of $289.8 million and $253.7
million, respectively, including $69.1 million and $65.7 million in
computer systems services revenues.
(2) Effective January 1, 1994, the Corporation adopted SFAS No. 112,
Employers' Accounting for Postemployment Benefits. Not included is the
unfavorable cumulative effect on GMAC earnings of $7.4 million of adopting
SFAS No. 112 because the cumulative effect is included in earnings of
nonconsolidated affiliates.
- 23 -
<PAGE>24
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet
With GMAC on an Equity Basis March 31, Dec. 31, March 31,
ASSETS 1994 1993 1993
-----------------------------------
(Dollars in Millions)
Current Assets
Cash and cash equivalents $8,324.1 $9,762.5 $7,751.9
Other marketable securities 1,222.5 722.5 641.8
--------- --------- ---------
Total cash and marketable securities 9,546.6 10,485.0 8,393.7
Accounts and notes receivable
Trade 6,813.0 5,563.1 16,489.4
Nonconsolidated affiliates 3,642.1 2,955.2 3,101.5
Inventories 9,499.8 8,615.1 9,347.9
Contracts in process 2,540.5 2,376.8 2,372.6
Prepaid expenses and deferred
income taxes 8,516.5 8,036.3 7,232.4
--------- --------- ---------
Total Current Assets 40,558.5 38,031.5 46,937.5
Equity in Net Assets of
Nonconsolidated Affiliates 8,662.7 8,638.5 9,189.6
Deferred Income Taxes 15,307.9 14,874.1 13,416.4
Other Investments and Miscellaneous
Assets 13,268.1 12,586.4 9,567.3
Property - Net 33,436.1 34,103.9 34,851.8
Intangible Assets 12,743.6 12,746.1 8,954.1
--------- --------- ---------
Total Assets $123,976.9 $120,980.5 $122,916.7
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $9,852.9 $9,546.5 $8,908.4
Loans payable 1,287.0 1,449.6 1,242.3
Income taxes payable 1,006.5 389.9 888.0
Accrued liabilities and deferred
income taxes (including current
portion of postretirement benefits
other than pensions) 23,274.4 23,823.3 23,964.1
Stocks subject to repurchase 450.0 - -
--------- --------- ---------
Total Current Liabilities 35,870.8 35,209.3 35,002.8
Long-Term Debt 6,551.1 6,218.4 6,832.0
Payable to GMAC* 1,414.4 1,355.5 11,281.7
Capitalized Leases 160.5 165.2 192.2
Postretirement Benefits Other Than
Pensions 35,566.3 35,423.6 33,760.4
Pensions 19,973.2 20,583.3 12,353.8
Other Liabilities and Deferred
Income Taxes 16,248.7 14,739.7 15,037.9
Deferred Credits 1,255.4 1,238.0 1,400.5
Stocks Subject to Repurchase - 450.0 450.0
Stockholders' Equity 6,936.5 5,597.5 6,605.4
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $123,976.9 $120,980.5 $122,916.7
========= ========= =========
Certain March 1993 amounts were reclassified to conform with 1994
classifications.
* Reference should be made to the note on the next page.
- 24 -
<PAGE>25
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
* During 1986 through 1993, for marketing and financial reasons, GM assumed
part of the dealer inventory financing previously provided by GMAC. Primarily
to support these receivables, GM entered into a financing agreement with GMAC
which provided that GMAC would extend loans to GM up to a maximum of $17
billion which would bear interest at floating market rates. GMAC serviced
these receivables for GM for a fee. This financing agreement ensured that
GMAC's ongoing funding activities would continue, and returned to GMAC the
approximate amount of interest and fees it would have earned had it retained
the dealer inventory financing business. As of December 1, 1993, GMAC resumed
the financing of wholesale receivables and the amounts previously borrowed
under this agreement with GMAC were repaid. This financing agreement has been
terminated.
Condensed Statement of Consolidated Cash Flows Three Months Ended
With GMAC on an Equity Basis March 31,
-------------------
1994 1993
-------------------
(Dollars in Millions)
Net Cash Provided by (Used in) Operating Activities ($610.8) $3,970.2
------- -------
Cash Flows from Investing Activities
Expenditures for real estate, plants,
and equipment (705.0) (689.6)
Expenditures for special tools (467.9) (651.6)
Change in other investing assets
Investments in other marketable
securities - acquisitions (941.3) (576.8)
Investments in other marketable
securities - liquidations 441.3 688.2
Finance receivables - (1,512.4)
Other 347.4 84.2
------- -------
Net Cash Used in Investing Activities (1,325.5) (2,658.0)
------- -------
Cash Flows from Financing Activities
Increase in long-term debt 364.5 654.5
Decrease in long-term debt (31.8) (679.0)
Net increase (decrease) in payable to GMAC 58.9 (281.5)
Proceeds from issuing common stocks 557.2 79.0
Cash dividends paid to stockholders (281.0) (276.4)
Other (162.6) (270.0)
------- -------
Net Cash Provided by (Used in)
Financing Activities 505.2 (773.4)
------- -------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents (7.3) 5.5
------- -------
Net increase (decrease) in cash and
cash equivalents (1,438.4) 544.3
Cash and cash equivalents at beginning of
the period 9,762.5 7,207.6
------- -------
Cash and cash equivalents at end of the period $8,324.1 $7,751.9
======= =======
Certain 1993 amounts were reclassified to conform with 1994 classifications.
* * * * * * * *
- 25 -
<PAGE>26
GENERAL MOTORS CORPORATION PART II
AND SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS
Material pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Corporation became, or was, a party
during the quarter ended March 31, 1994 are summarized below.
Other Matter
With respect to the previously reported matter wherein Jerome Lemelson
filed a patent infringement suit against General Motors Corporation, Ford
Motor Company, and Chrysler Corporation on August 7, 1992 in the United States
District Court for the District of Nevada, the "standstill" agreement entered
into between Lemelson and General Motors has resulted in all claims between
Lemelson and GM being dismissed with prejudice on March 21, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
Exhibit Number Exhibit Name Page No.
- - -------------- ---------------------------------------------- --------
11 Computation of Earnings Per Share
Attributable to Common Stocks for the
Three Months Ended March 31,
1994 and 1993. 28
12 Computation of Ratios of Earnings to Fixed
Charges for the Three Months Ended March 31,
1994 and 1993. 30
99(a) Electronic Data Systems Corporation and
Subsidiaries Consolidated Financial
Statements and Management's Discussion
and Analysis. 31
(b) GM Hughes Electronics Corporation and
Subsidiaries Consolidated Financial
Statements and Management's Discussion
and Analysis. 37
(b) REPORTS ON FORM 8-K.
One report on Form 8-K, dated December 6, 1993, was filed during the
quarter ended March 31, 1994 reporting amendments to the By-Laws under Item 7,
Exhibits.
* * * * * *
- 26 -
<PAGE>27
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENERAL MOTORS CORPORATION
--------------------------------
(Registrant)
By
s/Leon J. Krain
--------------------------------
Date May 13, 1994 (Leon J. Krain, Vice President
- - -----------------
and Group Executive)
By
s/Wallace W. Creek
--------------------------------
Date May 13, 1994 (Wallace W. Creek, Comptroller)
- - -----------------
- 27 -
l:\secfiles\10_Q\1stqtr94\exhib_11.doc2
<PAGE>1
GENERAL MOTORS CORPORATION EXHIBIT 11
AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS
Three Months Ended
March 31, 1994
-----------------------------
$1-2/3
Par Value Class E Class H
Common Common Common
Stock Stock Stock
--------- ------- -------
(Dollars in Millions Except
Per Share Amounts)
Net income attributable to stocks (before
cumulative effect of accounting change) $1,448.9 $92.1 $70.8
Dividends on preference stocks 86.8 - -
------- ---- ----
Earnings attributable to common stocks 1,362.1 92.1 70.8
Dividends on common stocks 145.2 30.9 18.1
------- ---- ----
Undistributed earnings 1,216.9 61.2 52.7
Adjustments
Change in earnings attributable to each
class of common stock related to the
assumed exercise of stock options * (1.3) - 1.3
Dividends on assumed common stock
transactions (1.5) - (0.3)
------- ---- ----
Adjusted earnings attributable to
common stocks $1,214.1 $61.2 $53.7
======= ==== ====
Weighted average shares outstanding
(in millions) 725.3 257.9 90.6
Adjustments
Assumed exercise of dilutive stock options* 7.3 - 1.6
----- ----- ----
Adjusted weighted average shares outstanding 732.6 257.9 92.2
===== ===== ====
Per Share Data
Earnings per share attributable to
undistributed earnings on common stocks
(before cumulative effect of accounting change) $1.66 $0.24 $0.58
Cumulative effect of accounting change
at January 1, 1994 (1.05) - (0.08)
Dividends 0.20 0.12 0.20
---- ---- ----
Earnings per share attributable to
common stocks $0.81 $0.36 $0.70
==== ==== ====
Note: The difference between fully diluted and primary earnings per share is
immaterial.
* The assumed exercise of stock options reflected by these adjustments has
no effect on Class E or Class H common stock earnings per share, because
to the extent that shares of Class E or Class H common stock deemed to be
outstanding would increase, such increased shares would also increase the
numerator of the fraction used to determine Available Separate
Consolidated Net Income.
- 28 -
<PAGE>2
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS
Three Months Ended
March 31, 1993
-----------------------------
$1-2/3
Par Value Class E Class H
Common Common Common
Stock Stock Stock
--------- ------- -------
(Dollars in Millions Except
Per Share Amounts)
Net income attributable to stocks $394.7 $74.1 $44.4
Dividends on preferred and preference stocks 94.2 - -
----- ---- ----
Earnings attributable to common stocks 300.5 74.1 44.4
Dividends on common stocks 141.5 23.4 17.3
----- ---- ----
Undistributed earnings 159.0 50.7 27.1
Adjustments
Add-back dividends on assumed conversion
of preference stocks 2.3 - -
Change in earnings attributable to each
class of common stock related to the
assumed share transactions * (6.4) 4.1 2.3
Dividends on assumed common stock
transactions (0.1) (1.3) (0.8)
----- ---- ----
Adjusted earnings attributable to
common stocks $154.8 $53.5 $28.6
===== ==== ====
Weighted average shares outstanding
(in millions) 707.4 234.7 93.9
Adjustments
Shares issued on assumed conversion of
preference stocks * - 13.0 -
Assumed repurchase of common stock subject
to put options - - 4.0
Assumed exercise of dilutive stock options * 0.8 0.1 0.7
----- ----- ----
Adjusted weighted average shares outstanding 708.2 247.8 98.6
===== ===== ====
Per Share Data
Earnings per share
attributable to undistributed earnings
on common stocks $0.22 $0.22 $0.29
Dividends 0.20 0.10 0.18
---- ---- ----
Earnings per share attributable
to common stocks $0.42 $0.32 $0.47
==== ==== ====
Note: The difference between fully diluted and primary earnings per share is
immaterial.
* The assumed conversion of preference stocks and exercise of stock options
reflected by these adjustments has no effect on Class E or Class H common
stock earnings per share, because to the extent that shares of Class E or
Class H common stock deemed to be outstanding would increase, such
increased shares would also increase the numerator of the fraction used to
determine Available Separate Consolidated Net Income.
- 29 -
l:\secfiles\10_q\1stqtr94\exhib_12.doc1
<PAGE>1
GENERAL MOTORS CORPORATION EXHIBIT 12
AND SUBSIDIARIES COMPUTATION OF RATIOS OF EARNINGS
TO FIXED CHARGES
Three Months Ended
March 31,
--------------------
1994 1993
-------- --------
(Dollars in Millions)
Income before cumulative effect of
accounting change $1,611.8 $513.2
United States, foreign, and other income taxes 840.3 417.2
Equity in losses of associates 36.7 44.5
Amortization of capitalized interest 12.6 13.9
------- -------
Income before income taxes, undistributed
losses of associates, and amortization of
capitalized interest 2,501.4 988.8
------- -------
Fixed charges included in net income
Interest and related charges on debt 1,164.5 1,640.0
Portion of rentals deemed to be interest 106.3 113.2
------- -------
Total fixed charges included in net income 1,270.8 1,753.2
------- -------
Earnings available for fixed charges $3,772.2 $2,742.0
======= =======
Fixed charges
Fixed charges included in net income $1,270.8 $1,753.2
Interest capitalized in the period 9.7 7.3
-------- -------
Total fixed charges $1,280.5 $1,760.5
======= =======
Ratios of earnings to fixed charges 2.95 1.56
==== ====
- 30 -
l:\secfiles\10_q\1stqtr94\exhib99a.doc6
<PAGE>1
EXHIBIT 99(a)
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION AND ANALYSIS
- - ----------------------------------------------------------------------------
Consolidated Statements of Income
Three Months Ended
March 31,
------------------
1994 1993
-------- --------
(in millions except
per share amounts)
Revenues
Systems and other contracts
GM and affiliates $841.7 $845.9
Outside customers 1,375.5 1,213.9
Interest and other income 22.1 13.4
------- -------
Total revenues 2,239.3 2,073.2
------- -------
Costs and expenses
Cost of revenues 1,710.6 1,569.7
Selling, general, and administrative 250.8 257.6
Interest 9.6 9.3
------- -------
Total costs and expenses 1,971.0 1,836.6
------- -------
Income before income taxes 268.3 236.6
Provision for income taxes 96.6 85.2
------- -------
Separate Consolidated Net Income $171.7 $151.4
======= =======
Available Separate Consolidated
Net Income (Note 1)
Average number of shares of GM
Class E common stock outstanding
(in millions) (Numerator) 257.9 234.7
Class E dividend base (in millions)
(Denominator) 481.2 479.7
Available Separate Consolidated Net Income $92.1 $74.1
==== ====
Earnings Attributable to GM Class E
Common Stock on a Per Share Basis
(Note 1) $0.36 $0.32
==== ====
See accompanying notes to consolidated financial statements.
- 31 -
<PAGE>2
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, December 31,
1994 1993
--------- ------------
(in millions)
Assets
Current assets
Cash and cash equivalents $559.7 $383.4
Marketable securities 194.2 224.1
Accounts receivable 1,397.3 1,412.5
Accounts receivable from GM and affiliates 88.1 112.6
Inventories 149.9 130.7
Prepaids and other 275.9 243.5
------- -------
Total current assets 2,665.1 2,506.8
------- -------
Property and equipment, at cost less accumulated
depreciation of $2,502.4 at March 31, 1994
and $2,405.7 at December 31, 1993
Land 122.1 121.6
Buildings and facilities 529.5 532.0
Computer equipment 1,317.9 1,275.5
Other equipment and furniture 184.0 185.6
------- -------
Total property and equipment, net 2,153.5 2,114.7
------- -------
Operating and other assets
Land held for development, at cost 95.8 94.4
Investment in leases and other 1,319.0 1,159.9
Software, goodwill, and other intangibles, net 1,056.2 1,066.3
------- -------
Total operating and other assets 2,471.0 2,320.6
------- -------
Total Assets $7,289.6 $6,942.1
======= =======
Liabilities and Stockholder's Equity
Current liabilities
Accounts payable $364.1 $359.8
Accrued liabilities 1,013.7 996.0
Deferred revenue 421.9 429.7
Income taxes 214.5 202.2
Notes payable 124.1 172.7
------- -------
Total current liabilities 2,138.3 2,160.4
------- -------
Deferred income taxes 679.0 641.5
------- -------
Notes payable 710.4 522.8
------- -------
Stockholder's equity
Common stock, without par value; authorized
1,000.0 shares. Issued and outstanding 481.7
shares at March 31, 1994 and 480.9 shares
at December 31, 1993 446.3 421.2
Retained earnings 3,315.6 3,196.2
------- -------
Total stockholder's equity 3,761.9 3,617.4
------- -------
Total Liabilities and Stockholder's Equity $7,289.6 $6,942.1
======= =======
See accompanying notes to consolidated financial statements.
- 32 -
<PAGE>3
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended
March 31,
------------------
1994 1993
------ ------
(in millions)
Cash Flows from Operating Activities
Net income $171.7 $151.4
----- -----
Adjustments to reconcile net income
to net cash provided by operating
activities (net of effects of
acquired companies)
Depreciation and amortization 160.7 143.6
(Increase) decrease in
accounts receivable 21.9 (36.0)
(Increase) decrease in accounts
receivable from GM and affiliates 25.5 (33.6)
Increase in inventories (18.5) (28.5)
(Increase) decrease in prepaids
and other (33.2) 1.6
Increase (decrease) in accounts
payable and accrued liabilities 5.6 (129.7)
Decrease in deferred revenue (11.5) (11.6)
Increase in income taxes 10.5 8.4
Increase in deferred income taxes 35.6 33.8
----- -----
Total adjustments 196.6 (52.0)
----- -----
Net cash provided by operating activities 368.3 99.4
----- -----
Cash Flows from Investing Activities
Payments for purchase of marketable
securities (38.6) (44.2)
Proceeds from sale of marketable
securities 70.3 33.8
Payments related to land held for
development (1.4) (2.8)
Payments for investment in leases
and other (257.2) (77.0)
Proceeds from investment in leases
and other 96.8 91.1
Payments for purchase of software,
goodwill, and other intangibles (4.8) (16.1)
Payments for purchase of property and
equipment (156.3) (130.6)
Payments related to acquisition
of outside companies, net of cash acquired (0.7) (30.0)
----- -----
Net cash used in investing activities ($291.9) ($175.8)
----- -----
See accompanying notes to consolidated financial statements.
- 33 -
<PAGE>4
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Three Months Ended
March 31,
------------------
1994 1993
------ ------
(in millions)
Cash Flows from Financing Activities
Net increase (decrease) in current
notes payable with maturities less
than 90 days ($43.6) $144.9
Payments on notes payable (32.1) (149.0)
Proceeds from notes payable 205.7 48.9
Proceeds from issuance of common stock 25.1 29.7
Cash dividends paid to GM (57.7) (47.9)
----- -----
Net cash provided by financing
activities 97.4 26.6
----- -----
Effect of Exchange Rate Changes on Cash and
Cash Equivalents 2.5 (5.5)
----- -----
Net Increase (Decrease) in Cash and Cash
Equivalents 176.3 (55.3)
Cash and Cash Equivalents at Beginning
of Period 383.4 421.9
----- -----
Cash and Cash Equivalents at End of Period $559.7 $366.6
===== =====
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
In the opinion of management, the interim consolidated financial statements
reflect all adjustments, consisting of only normal recurring items (with the
exception of the accounting change in 1994 to adopt Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in Debt and
Equity Securities, as described in Note 2), which are necessary for a fair
presentation of the results for the interim periods presented. The results
for interim periods are not necessarily indicative of results which may be
expected for any other interim period or for the full year. These
consolidated financial statements should be read in conjunction with the
consolidated financial statements, the summary of significant accounting
policies, and the other notes to the consolidated financial statements
included in General Motors' 1993 Annual Report to the SEC on Form 10-K.
Note 1.
The consolidated financial statements of EDS do not reflect the purchase
accounting adjustments arising as a result of the acquisition of EDS by GM.
Earnings Attributable to GM Class E Common Stock on a Per Share Basis have
been determined based on the relative amounts available for the payment of
dividends to holders of GM Class E common stock. Holders of GM Class E common
stock have no direct rights in the equity or assets of EDS, but rather have
rights in the equity and assets of GM (which includes 100% of the stock of
EDS). Dividends on the GM Class E common stock are declared out of the
Available Separate Consolidated Net Income of EDS earned since the acquisition
of EDS by GM. The Available Separate Consolidated Net Income of EDS is
determined quarterly and is equal to the separate consolidated net income of
EDS, excluding the effects of purchase accounting adjustments arising from the
acquisition of EDS, multiplied by a fraction, the numerator of which is the
weighted average number of shares of GM Class E common stock outstanding
during the period and the denominator of which was 481.2 million shares during
the first quarter of 1994. The comparable denominator for the first quarter
of 1993 was 479.7 million shares.
- 34 -
<PAGE>5
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
The denominator used in determining the Available Separate Consolidated Net
Income of EDS is adjusted as deemed appropriate by the GM Board of Directors
to reflect subdivisions or combinations of the GM Class E common stock and to
reflect certain transfers of capital to or from EDS. In 1988, EDS initiated a
program to repurchase 11.0 million shares of GM Class E common stock in order
to meet certain future requirements of the Company's employee benefit plans.
The GM Board has generally caused the denominator used in calculating the
Available Separate Consolidated Net Income of EDS to decrease as shares are
purchased and to increase as shares are used for the employee benefit plans.
The current GM Board policy is that the cash dividends on the GM Class E
common stock, when, as, and if declared by the GM Board in its sole
discretion, will equal approximately 30% of the Available Separate
Consolidated Net Income of EDS for the prior year.
Consistent with Delaware law, which governs the amount legally available for
payment of dividends on GM's common stock, the GM Board of Directors has
determined that such amount is materially higher than GM's capital surplus
less accumulated deficit.
Note 2
EDS adopted SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities, on January 1, 1994. This statement requires that certain
investments in debt and equity securities be classified into one of three
categories: held-to-maturity, available-for-sale, or trading. The
implementation of this Standard had an immaterial effect on the consolidated
financial statements.
* * * * *
Management's Discussion and Analysis
Results of Operations
- - ---------------------
EDS signed $2.2 billion in new business during the period ended March 31,
1994, compared to $1.1 billion in new business during the same period of 1993.
Total revenues rose $166.1 million over the comparable quarter in the prior
year to $2,239.3 million for the quarter ended March 31, 1994. Systems and
other contract revenue for the quarter ended March 31, 1994 included $841.7
million of revenue related to GM contracts.
The growth of non-GM revenue during the first quarter of 1994, when compared
to the corresponding period in 1993, was 13.9%. This growth results from
several new contracts and improved performance of existing contracts.
GM revenue remained relatively flat for the first quarter of 1994, when
compared with the same period in 1993. While it is anticipated that GM will
continue to contribute a significant portion of systems revenue, the
percentage of revenue from GM and subsidiaries will continue to decline as non-
GM revenues continue to increase.
Total costs and expenses as a percentage of systems and other contracts
revenue improved from 89.2% to 88.9% for the quarters ended March 31, 1993 and
1994, respectively. This reflects continued productivity improvement programs
and cost-reduction efforts.
For the quarter ended March 31, 1994, EDS' separate consolidated net income
increased 13.4% to $171.7 million, compared to $151.4 million for the same
period of last year. Earnings per share of GM Class E common stock rose from
$0.32 to $0.36, or 12.5%, for the first quarter of 1994 when compared to the
period ended March 31, 1993. EDS' effective tax rate remained at 36% for the
quarter.
- 35 -
<PAGE>6
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Liquidity and Capital Resources
- - -------------------------------
EDS maintained a strong liquidity and capital structure during the first
quarter. The current ratio improved to 1.25-to-1 at March 31, 1994 from 1.16-
to-1 at December 31, 1993. Return on assets remained relatively flat at 9.7%
compared to 9.9% for the periods ended March 31, 1994 and 1993, respectively.
Return on equity was 18.6% and 19.4% for the first quarters of 1994 and 1993,
respectively. The noncurrent debt-to-capital ratio was 16% at March 31, 1994
and 13% at December 31, 1993. At March 31, 1994, EDS' capital consisted of
$710.4 million in noncurrent notes payable and $3,761.9 million in
stockholder's equity.
Total debt was $834.5 million at March 31, 1994 and represented a 20%
increase from total debt of $695.5 million at December 31, 1993. Debt, which
consists largely of commercial paper, increased primarily to manage working
capital needs. The total debt-to-capital ratio (includes current debt as a
component of capital) was 18.2% at March 31, 1994 and 16.1% at December 31,
1993.
EDS continued to maintain a strong cash position. Overall cash and cash
equivalents increased $176.3 million to $559.7 million from the end of 1993 to
the end of the quarter. Cash provided by operating activities was $368.3
million, an increase of $268.9 million from the first quarter of 1993 to the
first quarter of 1994. This increase principally reflects the timing of
receipts and disbursements. Cash used in investing activities was $291.9 and
$175.8 million for the quarters ended March 31, 1994 and 1993, respectively.
The increased use of cash during the first quarter of 1994 is due to
expenditures supporting the growth of the business. Net cash provided by
financing activities was $97.4 million compared to $26.6 million for the first
quarter of 1994 and 1993, respectively, an increase of $70.8 million due to
the issuance of long-term debt.
During the quarter, EDS made net additions to property and equipment of
$156.9 million and net additions to software, goodwill, and other intangibles
of $10.7 million. EDS paid a cash dividend to GM totaling $57.7 million and
has consistently paid cash dividends since 1974.
* * * * *
- 36 -
l:secfiles\10_q\1stqtr94\exhib99b.doc3
<PAGE>1
EXHIBIT 99(b)
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION AND ANALYSIS
- - -----------------------------------------------------------------------------
Statement of Consolidated Operations and
Available Separate Consolidated Net Income
Three Months Ended
March 31,
------------------
1994 1993
-------- --------
(Dollars in Millions
Except
Per Share Amounts)
Revenues
Net sales
Outside customers $2,300.9 $2,109.9
General Motors and affiliates 1,259.9 1,059.7
Other income - net 26.5 11.6
------- -------
Total Revenues 3,587.3 3,181.2
------- -------
Costs and Expenses
Cost of sales and other operating charges,
exclusive of items listed below 2,768.6 2,490.1
Selling, general, and administrative
expenses 193.6 229.9
Depreciation and amortization 112.8 136.3
Amortization of GM purchase accounting
adjustments related to Hughes 31.0 31.0
Interest expense - net 4.0 14.5
------- -------
Total Costs and Expenses 3,110.0 2,901.8
------- -------
Income before Income Taxes 477.3 279.4
United States, foreign, and other
income taxes 195.8 121.1
------- -------
Income before cumulative effect
of accounting change 281.5 158.3
Cumulative effect of accounting
change (Note 1) (30.4) -
------- -------
Net Income 251.1 158.3
Adjustments to exclude the effect of
GM purchase accounting adjustments
related to Hughes (Note 2) 31.0 31.0
------- -------
Earnings Used for Computation of
Available Separate Consolidated
Net Income $282.1 $189.3
======= =======
Available Separate Consolidated Net Income (Note 2)
Average number of shares of GM
Class H Common Stock outstanding
(in millions) (Numerator) 90.6 93.9
Class H dividend base (in millions)
(Denominator) 399.9 399.9
Available Separate Consolidated
Net Income $64.0 $44.4
==== ====
Earnings Attributable to GM
Class H Common Stock on a
Per Share Basis (Note 2)
Before cumulative effect of
accounting change $0.78 $0.47
Cumulative effect of accounting
change (Note 1) (0.08) -
---- ----
Net earnings attributable to
GM Class H Common Stock $0.70 $0.47
==== ====
Reference should be made to the Notes to Consolidated Financial Statements.
- 37 -
<PAGE>2
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
March 31, December 31,
ASSETS 1994 1993
--------- ------------
(Dollars in Millions
Except Per Share Amount)
Current Assets
Cash and cash equivalents $1,347.2 $1,008.7
Accounts and notes receivable
Trade receivables (less allowances) 700.3 736.7
General Motors and affiliates 235.3 404.1
Contracts in process, less advances and
progress payments 2,540.5 2,376.8
Inventories (less allowances)
Productive material, work in process,
and supplies 1,057.1 957.1
Finished product 110.9 103.3
Prepaid expenses, including deferred income taxes 137.7 127.6
-------- --------
Total Current Assets 6,129.0 5,714.3
Property-Net 2,623.1 2,634.4
Telecommunications and Other Equipment-Net 820.9 767.6
Intangible Assets, net of amortization 3,357.2 3,374.4
Investments and Other Assets, Including Deferred
Income Taxes - principally at cost
(less allowances) 1,588.0 1,626.4
-------- --------
Total Assets $14,518.2 $14,117.1
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable
Outside $951.2 $717.1
General Motors and affiliates 69.5 117.5
Advances on contracts 601.5 660.6
Notes and loans payable 78.6 77.8
United States, foreign, and other income taxes
payable, including deferred income taxes 244.2 102.1
Accrued liabilities 1,779.5 1,874.0
-------- --------
Total Current Liabilities 3,724.5 3,549.1
-------- --------
Long-Term Debt and Capitalized Leases 418.0 416.8
-------- --------
Postretirement Benefits Other Than Pensions (Note 3) 1,469.1 1,446.3
-------- --------
Other Liabilities, Deferred Income Taxes,
and Deferred Credits 1,413.5 1,376.8
-------- --------
Stockholder's Equity
Capital stock (outstanding, 1,000 shares, $0.10
par value) and additional paid-in capital 6,324.2 6,323.1
Net income retained for use in the business 1,309.3 1,138.2
-------- --------
Subtotal 7,633.5 7,461.3
Minimum pension liability adjustment (120.4) (120.4)
Accumulated foreign currency translation
adjustments (20.0) (12.8)
-------- --------
Total Stockholder's Equity 7,493.1 7,328.1
-------- --------
Total Liabilities and Stockholder's Equity $14,518.2 $14,117.1
======== ========
Reference should be made to the Notes to Consolidated Financial Statements.
- 38 -
<PAGE>3
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Condensed Statement of Consolidated Cash Flows
Three Months Ended
March 31,
------------------
1994 1993
------- -------
(Dollars in Millions)
Net Cash Provided by Operating Activities $561.5 $599.6
------- -------
Cash Flows from Investing Activities
Investment in companies, net of cash acquired - (24.1)
Expenditures for property and special tools (104.1) (61.8)
Increase in telecommunications
and other equipment (64.6) (1.3)
Proceeds from disposals of property 15.0 55.5
Other 8.7 10.3
------- -------
Net Cash Used in Investing Activities (145.0) (21.4)
------- -------
Cash Flows from Financing Activities
Net increase (decrease) in notes and
loans payable 0.8 (70.6)
Increase in long-term debt and
capitalized leases 10.4 23.2
Decrease in long-term debt and
capitalized leases (9.2) (14.7)
Cash dividends paid to General Motors (80.0) (72.0)
------- -------
Net Cash Used in Financing Activities (78.0) (134.1)
------- -------
Net increase in cash and cash
equivalents 338.5 444.1
Cash and cash equivalents at beginning
of the period 1,008.7 702.7
------- -------
Cash and cash equivalents at end of the period $1,347.2 $1,146.8
======= =======
Certain amounts for 1993 have been reclassified to conform with 1994
classifications.
Reference should be made to the Notes to Consolidated Financial Statements.
Notes To Consolidated Financial Statements
In the opinion of management, the interim consolidated financial statements
reflect all adjustments, consisting of only normal recurring items (with the
exception of the accounting change in 1994 to adopt Statement of Financial
Accounting Standards (SFAS) No. 112, Employers' Accounting for Postemployment
Benefits, as described in Note 1), which are necessary for a fair presentation
of the results for the interim periods presented. The results for interim
periods are not necessarily indicative of results which may be expected for
any other interim period or for the full year. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements, the summary of significant accounting policies, and the other
notes to the consolidated financial statements included in General Motors'
1993 Annual Report to the SEC on Form 10-K.
Note 1.
Effective January 1, 1994, GMHE adopted SFAS No. 112. The Standard requires
accrual of the costs of benefits provided to former or inactive employees
after employment, but before retirement. The unfavorable cumulative effect of
adopting this Standard was $30.4 million, net of income taxes of $19.2
million, or $0.08 per share of GM Class H common stock. The noncash charge is
primarily related to Delco Electronics' extended-disability benefit program in
the U.S. which, under the new accounting Standard, will be accrued on a
service-driven basis. The ongoing effect was not material.
- 39 -
<PAGE>4
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Note 2.
Earnings attributable to General Motors Class H common stock on a per share
basis have been determined based on the relative amounts available for the
payment of dividends to holders of the GM Class H common stock. Holders of GM
Class H common stock have no direct rights in the equity or assets of GMHE,
but rather have rights in the equity and assets of GM (which includes 100% of
the stock of GMHE). Dividends on the GM Class H common stock are declared by
GM's Board of Directors out of the Available Separate Consolidated Net Income
of GMHE since the acquisition of Hughes by GM. The Available Separate
Consolidated Net Income of GMHE is determined quarterly and is equal to the
separate consolidated net income of GMHE, excluding the effects of GM purchase
accounting adjustments arising from the acquisition of Hughes (Earnings Used
for Computation of Available Separate Consolidated Net Income), multiplied by
a fraction, the numerator of which is the weighted average number of shares of
GM Class H common stock outstanding during the period and the denominator of
which was 399.9 million shares during the first quarter of 1994 and 1993.
The denominator used in determining the Available Separate Consolidated Net
Income of GMHE is adjusted as deemed appropriate by the GM Board of Directors
to reflect subdivisions or combinations of the GM Class H common stock and to
reflect certain transfers of capital to or from GMHE. In this regard, the GM
Board has generally caused the denominator to decrease as shares are purchased
by GMHE and to increase as such shares are used, at GMHE expense, for GHME
employee benefit plans or acquisitions.
Dividends may be paid on GM Class H common stock only when, as, and if
declared by the GM Board of Directors in its sole discretion. The current
policy of the GM Board with respect to GM Class H common stock is to pay cash
dividends approximately equal to 35% of the Available Separate Consolidated
Net Income of GMHE for the prior year. In February 1994, the GM Board
increased the quarterly dividends on Class H common stock from $0.18 per share
to $0.20 per share. Notwithstanding the current dividend policy, the GM Board
declared dividends on the GM Class H Common Stock of $0.18 per share for each
of the quarters of 1993, which was more than 35% of the Available Separate
Consolidated Net Income of GMHE for 1992. The GM Board determined that 1992
Available Separate Consolidated Net Income of GMHE used as a basis for 1993
dividends was calculated without giving effect to the special restructuring
charge at Hughes.
Consistent with Delaware law, which governs the amount legally available for
the payment of dividends on GM's common stock, the GM Board of Directors has
determined that such amount is materially higher than GM's capital surplus
less accumulated deficit.
Note 3.
GMHE has disclosed in the financial statements certain amounts associated
with estimated future postretirement benefits other than pensions and
characterized such amounts as "accumulated postretirement benefit
obligations", "liabilities", or "obligations". Notwithstanding the recording
of such amounts and the use of these terms, GMHE does not admit or otherwise
acknowledge that such amounts or existing postretirement benefit plans of GMHE
(other than pensions) represent legally enforceable liabilities of GMHE.
- 40 -
<PAGE>5
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis*
Results of Operations
- - ---------------------
GMHE reported first quarter earnings, before the effects of purchase
accounting adjustments related to General Motors' acquisition of Hughes, of
$282.1 million. Earnings for the first quarter of 1994, excluding the
unfavorable cumulative effect of an accounting change related to post-
employment benefits of $30.4 million, increased 65.1% to $312.5 million from
$189.3 million in the first quarter of 1993. Earnings per share of GM Class H
common stock, on the same basis, increased a similar percentage to $0.78 from
$0.47 per share in the comparable period of 1993.
Revenues for the period were $3,587.3 million, a 12.8% increase over the
$3,181.2 million recorded in the first quarter of 1993. Costs and expenses as
a percentage of revenues decreased to 85.8% from 90.2% in the first quarter of
1993. Income taxes, excluding the cumulative effect of the accounting change,
were $195.8 million, or 38.5% of income before income taxes, for the quarter
compared with $121.1 million, or 39.0% of income before income taxes, in the
comparable quarter of 1993.
Operating profit was $485.8 million for the first quarter, a 55.1% increase
from the operating profit of $313.3 million reported in the first quarter of
1993. The operating profit margin improved to 13.6% for the quarter, compared
with 9.9% in the same quarter of 1993. Effective with the first quarter of
1994, calculation of the operating profit margin is based on net sales rather
than revenues. First quarter 1993 amounts have been restated on this basis.
The increases in revenues, operating profit, and earnings in the first
quarter are largely the result of volume increases and cost reductions in the
Automotive Electronics, Telecommunications and Space, and Defense Electronics
segments.
The Automotive Electronics segment reported revenues for the quarter of
$1,287.9 million, an increase of 14.6% from revenues of $1,124.2 million for
the same period in 1993. The increase reflects a 5.5% increase in GM vehicles
produced in North America and a 12.4% increase in GMHE-supplied electronic
content in these vehicles, from $740 to $832 per vehicle. Operating profit
increased 45.7% to $223.7 million from $153.5 million for the comparable
period last year reflecting the effects of continued cost reduction
initiatives as well as the increased volume discussed above. These factors
resulted in an increase in the operating profit margin to 17.5% from 13.7% in
the first quarter of 1993.
The Telecommunications and Space segment reported revenues for the quarter
of $599.5 million, an increase of 29.7% from revenues of $462.1 million in the
first quarter of 1993. Operating profit in the first quarter increased to
$113.5 million from $25.2 million in the same period of 1993 and the operating
profit margin increased to 18.8% from 5.5%. These increases reflect an
increase in satellite transponder sales, as well as a decrease in construction
costs for replacement of the first Galaxy I-R satellite that was destroyed in
August 1992 due to failure of the launch vehicle.
The Defense Electronics segment reported revenues of $1,558.3 million, an
increase of 9.2% from revenues of $1,426.7 million for the same period of
1993. Operating profit increased 15.8% to $151.4 million from $130.7 million
in the comparable quarter of 1993 and the operating profit margin improved to
9.9% from 9.2%. The increase in revenues was primarily due to increased
effort on the Peace Shield Air Defense program, F/A-18 flight simulation
training programs, foreign Light Armored Vehicle programs, and a $23 million
settlement of the European Fighter Aircraft radar arbitration. Continuing
cost reduction efforts, combined with the increase in revenues, contributed to
the increase in operating profit and the improvement in the operating profit
margin.
* The following discussion excludes the purchase accounting adjustments
related to General Motors' acquisition of Hughes (see Supplemental Data on
page 42).
- 41 -
<PAGE>6
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Commercial Technologies segment revenues decreased $26.6 million to $141.6
million from $168.2 million in the first quarter of 1993 due primarily to the
sale of Hughes Rediffusion Simulation Limited and related entities in December
1993. Operating profit decreased from $8.6 million in the first quarter of
1993 to a loss of $0.8 million in the first quarter of 1994. The operating
loss reflects a reduction in deliveries of cabin management systems and cable
television signal distribution equipment as well as increased development
costs for new projects.
Liquidity and Capital Resources
- - -------------------------------
Cash and cash equivalents at March 31, 1994 amounted to $1,347.2 million, an
increase of $338.5 million over December 31, 1993. The increase primarily
reflects net cash provided by operating activities of $561.5 million offset by
cash dividends paid to General Motors of $80.0 million, expenditures for
property and special tools of $104.1 million, and the net increase in
telecommunications and other equipment of $64.6 million.
As a measure of liquidity, GMHE's current ratio (ratio of current assets to
current liabilities) has increased to 1.65 at March 31, 1994 from 1.61 at
December 31, 1993.
Capital expenditures, including expenditures for telecommunications and
other equipment, increased $132.9 million from the comparable period in 1993
due primarily to costs related to DIRECTV.
Long-term debt and capitalized leases increased slightly from $416.8 million
at December 31, 1993 to $418.0 million at March 31, 1994. The ratio of long-
term debt to the total of such debt and proforma stockholder's equity improved
to 8.7% at March 31, 1994 from 9.0% at December 31, 1993.
Supplemental Data
The Consolidated Financial Statements reflect the application of purchase
accounting adjustments as described in Note 2 to the Consolidated Financial
Statements. However, as provided in GM's Certificate of Incorporation, the
earnings attributable to GM Class H common stock for purposes of determining
the amount available for the payment of dividends on GM Class H common stock
specifically excludes such adjustments. More specifically, amortization of
purchase accounting adjustments associated with GM's purchase of Hughes was
$31.0 million for the first quarters of 1994 and 1993. Such amounts were
excluded from the earnings available for the payment of dividends on GM Class
H common stock and were charged against the earnings available for the payment
of dividends on GM's $1-2/3 par value stock. Unamortized purchase accounting
adjustments associated with GM's purchase of Hughes were $3,098.1 million at
March 31, 1994 and $3,129.1 million at December 31, 1993.
In order to provide additional analytical data to the users of GMHE's
financial information, supplemental data in the form of unaudited summary pro
forma financial data are provided. Consistent with the basis on which
earnings of GMHE available for the payment of dividends on GM Class H common
stock is determined, the pro forma data exclude the General Motors' purchase
accounting adjustments related to the acquisition of Hughes. Included in the
supplemental data are certain financial ratios which provide measures of
financial returns excluding the impact of purchase accounting adjustments.
The pro forma data are not presented as a measure of GM's total return on its
investment in GMHE.
- 42 -
<PAGE>7
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Summary Pro Forma Financial Data*
Pro Forma Condensed Statement of Consolidated Operations
Three Months Ended
March 31,
------------------
1994 1993
-------- --------
(Dollars in Millions
Except
Per Share Amounts)
Total Revenues $3,587.3 $3,181.2
Total Costs and Expenses 3,079.0 2,870.8
------- -------
Income before Income Taxes 508.3 310.4
United States, foreign, and other
income taxes 195.8 121.1
------- -------
Income before cumulative
effect of accounting change 312.5 189.3
Cumulative effect of accounting change (30.4) -
------- -------
Earnings Used for Computation of
Available Separate Consolidated
Net Income $282.1 $189.3
======= =======
Earnings Attributable to General
Motors Class H Common Stock on a
Per Share Basis
Before cumulative effect of
accounting change $0.78 $0.47
Cumulative effect of accounting change (0.08) -
---- ----
Net earnings attributable to
General Motors Class H Common Stock $0.70 $0.47
==== ====
Pro Forma Condensed Consolidated Balance Sheet
March 31, December 31,
ASSETS 1994 1993
------------ ------------
(Dollars in Millions)
Total Current Assets $6,129.0 $5,714.3
Property - Net 2,623.1 2,634.4
Telecommunications and Other Equipment - Net 820.9 767.6
Intangible Assets, Investments, and Other Assets 1,847.1 1,871.7
-------- --------
Total Assets $11,420.1 $10,988.0
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Total Current Liabilities $3,724.5 $3,549.1
Long-Term Debt and Capitalized Leases 418.0 416.8
Postretirement Benefits Other Than Pensions,
Other Liabilities, Deferred Income Taxes,
and Deferred Credits 2,882.6 2,823.1
Total Stockholder's Equity ** 4,395.0 4,199.0
-------- --------
Total Liabilities and Stockholder's Equity ** $11,420.1 $10,988.0
======== ========
* The summary is unaudited and excludes GM purchase accounting adjustments
related to the acquisition of Hughes.
** General Motors' equity in its wholly-owned subsidiary, GMHE. Holders of
GM Class H common stock have no direct rights in the equity or assets of
GMHE, but rather have rights in the equity and assets of GM (which
includes 100% of the stock of GMHE).
- 43 -
<PAGE>8
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Summary Pro Forma Financial Data*
Pro Forma Selected Segment Data
Three Months Ended
March 31,
-------------------
1994 1993
-------- --------
(Dollars in Millions)
AUTOMOTIVE ELECTRONICS
Revenues
Amount $1,287.9 $1,124.2
As a percentage of GMHE Revenues 35.9% 35.4%
Net Sales $1,280.8 $1,120.4
Operating Profit (1) $223.7 $153.5
Operating Profit Margin(2) 17.5% 13.7%
Depreciation and Amortization $38.6 $37.6
Capital Expenditures $38.5 $17.2
TELECOMMUNICATIONS AND SPACE
Revenues
Amount $599.5 $462.1
As a percentage of GMHE Revenues 16.7% 14.5%
Net Sales $603.7 $459.4
Operating Profit(1) $113.5 $25.2
Operating Profit Margin (2) 18.8% 5.5%
Depreciation and Amortization(3) $27.7 $31.5
Capital Expenditures (4) $119.8 $22.7
DEFENSE ELECTRONICS
Revenues
Amount $1,558.3 $1,426.7
As a percentage of GMHE Revenues 43.4% 44.8%
Net Sales $1,535.2 $1,421.2
Operating Profit(1) $151.4 $130.7
Operating Profit Margin(2) 9.9% 9.2%
Depreciation and Amortization(3) $40.7 $54.7
Capital Expenditures $34.4 $19.4
COMMERCIAL TECHNOLOGIES
Revenues
Amount $141.6 $168.2
As a percentage of GMHE Revenues 4.0% 5.3%
Net Sales $141.1 $168.6
Operating Profit (Loss)(1) ($0.8) $8.6
Operating Profit (Loss) Margin(2) (0.6%) 5.1%
Depreciation and Amortization(3) $5.8 $12.5
Capital Expenditures $3.9 $4.4
CORPORATE
Operating Loss (1) ($2.0) ($4.7)
Certain amounts for 1993 have been reclassified to conform with 1994
classifications.
* The summary is unaudited and excludes GM purchase accounting adjustments
related to the acquisition of Hughes.
(1) Net Sales less Total Costs and Expenses other than Interest Expense.
(2) Operating Profit (Loss) as a percentage of Net Sales.
(3) Excludes amortization arising from purchase accounting adjustments related
to GM's acquisition of Hughes of $2.7 million for Telecommunications and
Space; $25.7 million for Defense Electronics; and $2.6 million for
Commercial Technologies, in 1994 and 1993.
(4) Includes expenditures related to telecommunications and other equipment
amounting to $92.5 and $1.9 million in 1994 and 1993, respectively.
- 44 -
<PAGE>9
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Summary Pro Forma Financial Data*
Pro Forma Selected Financial Data
Three Months Ended
March 31,
--------------------
1994 1993
-------- --------
(Dollars in Millions
Except
Per Share Amounts)
Operating profit $485.8 $313.3
Income before income
taxes and cumulative effect
of accounting change $508.3 $310.4
Earnings used for
computation of available
separate consolidated
net income $282.1(1) $189.3
Average number of GM Class H
dividend base shares (2) 399.9 399.9
Stockholder's Equity $4,395.0(1) $3,686.2
Dividends per share of
GM Class H common stock $0.20 $0.18
Working capital $2,404.5 $1,914.2
Operating profit as a
percent of net sales 13.6% 9.9%
Pre-tax income as a
percent of revenues 14.2% 9.8%
Net income as a
percent of revenues 7.9%(1) 6.0%
* The summary is unaudited and excludes GM purchase accounting adjustments
related to the acquisition of Hughes.
(1) Includes unfavorable cumulative effect of accounting change of $30.4
million.
(2) Class H dividend base shares is used in calculating earnings attributable
to GM Class H common stock on a per share basis. This is not the same as
the average number of GM Class H shares outstanding, which was 90.6
million for the first quarter of 1994 and 93.9 million for the first
quarter of 1993.
* * * * * * *
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