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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 10-K/A
X ANNUAL REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-143
GENERAL MOTORS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
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)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (313)-556-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
*COMMON, $1 2/3 PAR VALUE (752,651,957 SHARES OUTSTANDING AS OF FEBRUARY 28,
1995)........................................................................... NEW YORK STOCK EXCHANGE, INC.
CLASS E COMMON, $0.10 PAR VALUE (262,999,707 SHARES OUTSTANDING AS OF FEBRUARY 28,
1995)........................................................................... NEW YORK STOCK EXCHANGE, INC.
CLASS H COMMON, $0.10 PAR VALUE (94,528,112 SHARES OUTSTANDING AS OF FEBRUARY 28,
1995)........................................................................... NEW YORK STOCK EXCHANGE, INC.
PREFERENCE, $0.10 PAR VALUE, SERIES B 9 1/8% DEPOSITARY SHARES, STATED VALUE $25
PER SHARE, DIVIDENDS CUMULATIVE (44,300,000 DEPOSITARY SHARES OUTSTANDING AS OF
FEBRUARY 28, 1995).............................................................. NEW YORK STOCK EXCHANGE, INC.
PREFERENCE, $0.10 PAR VALUE, SERIES C DEPOSITARY SHARES, CONVERTIBLE INTO CLASS E
COMMON STOCK, LIQUIDATION PREFERENCE $50 PER SHARE, DIVIDENDS CUMULATIVE
(31,880,600 DEPOSITARY SHARES OUTSTANDING AS OF FEBRUARY 28, 1995).............. NEW YORK STOCK EXCHANGE, INC.
PREFERENCE, $0.10 PAR VALUE, SERIES D 7.92% DEPOSITARY SHARES, STATED VALUE $25
PER SHARE, DIVIDENDS CUMULATIVE (15,700,000 DEPOSITARY SHARES OUTSTANDING AS OF
FEBRUARY 28, 1995).............................................................. NEW YORK STOCK EXCHANGE, INC.
PREFERENCE, $0.10 PAR VALUE, SERIES G 9.12% DEPOSITARY SHARES, STATED VALUE $25
PER SHARE, DIVIDENDS CUMULATIVE (23,000,000 DEPOSITARY SHARES OUTSTANDING AS OF
FEBRUARY 28, 1995).............................................................. NEW YORK STOCK EXCHANGE, INC.
$500,000,000 8 1/8% DEBENTURES DUE APRIL 15, 2016................................. NEW YORK STOCK EXCHANGE, INC.
</TABLE>
*ALSO LISTED ON THE CHICAGO STOCK EXCHANGE, INC., PACIFIC STOCK EXCHANGE, INC.,
AND PHILADELPHIA STOCK EXCHANGE, INC.
NOTE: THE $1 2/3 PAR VALUE COMMON STOCK OF THE REGISTRANT IS ALSO LISTED FOR
TRADING ON:
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<S> <C>
MONTREAL STOCK EXCHANGE................................. MONTREAL, QUEBEC, CANADA
TORONTO STOCK EXCHANGE.................................. TORONTO, ONTARIO, CANADA
BORSE FRANKFURT AM MAIN................................. FRANKFORT ON THE MAIN, GERMANY
BORSE DUSSELDORF........................................ DUSSELDORF, GERMANY
BOURSE DE BRUXELLES..................................... BRUSSELS, BELGIUM
COURTIERS EN VALEURS MOBILIERES......................... PARIS, FRANCE
THE STOCK EXCHANGE, LONDON.............................. LONDON, ENGLAND
</TABLE>
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 .
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. (X)
THE AGGREGATE MARKET VALUE (BASED UPON THE AVERAGE OF THE HIGHEST AND
LOWEST SALES PRICES ON THE COMPOSITE TAPE ON FEBRUARY 28, 1995) OF GENERAL
MOTORS CORPORATION $1 2/3 PAR VALUE, CLASS E, AND CLASS H COMMON STOCKS HELD BY
NONAFFILIATES ON FEBRUARY 28, 1995 WAS APPROXIMATELY $32,059.7 MILLION, $9,862.1
MILLION, AND $3,539.4 MILLION, RESPECTIVELY.
DOCUMENTS INCORPORATED BY REFERENCE:
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<CAPTION>
PART AND ITEM NUMBER OF FORM
10-K
DOCUMENT INTO WHICH INCORPORATED
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<S> <C>
GENERAL MOTORS NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 26, 1995.................... PART III, ITEMS 10 THROUGH 13
</TABLE>
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<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-K/A
AMENDMENT TO REPORT
FILED PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
GENERAL MOTORS CORPORATION
-------------------------------------------------
(Exact name of registrant as specified in charter)
AMENDMENT NO. 2
The undersigned registrant hereby amends its 1994 Annual Report
on Form 10-K to correct typographical errors as follows:
Page Paragraph Sentence Correction
---- --------- -------- ---------------------------
II-61 4 6 (last) Cash used/provided in
investing activities of
$4,162.6 million in 1993 and
$2,465.0 million in 1992
should read $4,162.6 million
in 1992 and $2,465.0 million
in 1993.
IV-6 Per Share Data Cumulative effect of
accounting change at January
1, 1994 of blank for $1-2/3
par value common stock and
blank for Class E common
stock should read (1.05) and
dash, respectively.
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 hereunto duly authorized.
GENERAL MOTORS CORPORATION
--------------------------
(Registrant)
Date March 24, 1995 By /s/ Wallace W. Creek
-------------- -------------------------------
(Wallace W. Creek, Comptroller)
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<PAGE> 3
PART I
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
THE CORPORATION
General Motors Corporation, incorporated in 1916 under the laws of the
State of Delaware, is hereinafter sometimes referred to as the "Registrant" or
the "Corporation" and, together with its subsidiaries, is hereinafter sometimes
referred to as "General Motors" or "GM."
ITEM 1. BUSINESS
GENERAL
The following information is incorporated herein by reference to the
indicated pages in Part II:
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ITEM PAGE
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Worldwide Wholesale Sales.............................................. II-51
Employment and Payrolls................................................ II-53
Note 18 of Notes to Financial Statements (Segment Reporting)........... II-35
</TABLE>
While the major portion of the Corporation's operations is derived from the
automotive products industry segment, GM also has financing and insurance
operations and produces products and provides services in other industry
segments. The automotive products segment consists of the design, manufacture,
assembly, and sale of automobiles, trucks, and related parts and accessories.
The financing and insurance operations assist in the merchandising of General
Motors' products as well as other products. General Motors Acceptance
Corporation (GMAC) and its subsidiaries offer financial services and certain
types of insurance to dealers and customers. In addition, GMAC and its
subsidiaries are engaged in mortgage banking and investment services. The other
products segment consists of military vehicles, radar and weapon control
systems, guided missile systems, and defense and commercial satellites; the
design, installation, and operation of business information and
telecommunication systems; as well as the design, development, and manufacture
of locomotives.
Substantially all of the products in the automotive segment are marketed
through retail dealers and through distributors and jobbers in the United States
and Canada and through distributors and dealers overseas. At December 31, 1994,
there were approximately 9,200 General Motors motor vehicle dealers in the
United States, 900 in other North America (Canada and Mexico), and approximately
5,500 outlets overseas.
BACKLOG OF ORDERS
Shipments of General Motors' automotive products are made as promptly as
possible after receipt of firm sales orders; therefore, no significant backlog
of unfilled orders accumulates. GM Hughes Electronics Corporation had a $13.2
billion and $13.4 billion backlog of defense and commercial contracts at the end
of 1994 and 1993, respectively.
RAW MATERIALS AND SERVICES
General Motors purchases materials, parts, supplies, freight
transportation, energy, and other services from numerous unaffiliated firms.
Interruptions in production or delivery of these goods or services could
adversely affect General Motors.
COMPETITIVE POSITION
General Motors' principal competitors in passenger cars and trucks in the
United States and Canada include Ford Motor Company, Chrysler Corporation,
Toyota Corporation, Nissan Motor Corporation, Ltd., Honda Motor Company, Ltd.,
Mazda Motor Corporation, Mitsubishi Motors Corporation, Fuji Heavy Industries,
Ltd. (Subaru), Volkswagen A.G., Hyundai Motor Company, Ltd., Daimler-Benz A.G.
(Mercedes), Bayerische Motoren Werke AG (BMW), and Volvo AB. All but Volkswagen
and Daimler-Benz currently operate vehicle manufacturing facilities in the
United States or Canada although Mercedes has
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announced plans to build an assembly plant in the United States. Toyota and GM
operate the New United Motor Manufacturing, Inc. facility in Fremont, California
as a joint venture which currently builds passenger cars and light-duty trucks.
Worldwide wholesale unit sales of General Motors passenger cars and trucks
during the three years ended December 31, 1994 are summarized in Management's
Discussion and Analysis in Part II.
Total industry new motor vehicle (passenger cars, trucks, and buses)
registrations of domestic and foreign makes and General Motors' competitive
position during the three years ended December 31, 1994 were as follows:
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1994(1) 1993 1992
------- ------ ------
(UNITS IN THOUSANDS)
<S> <C> <C> <C>
Total industry registrations
In the United States............................... 15,257 13,941 12,867
In other North America(2).......................... 1,838 1,778 1,881
In other countries................................. 31,802 30,806 31,288
------- ------ ------
Total industry registrations -- all countries........ 48,897 46,525 46,036
======= ====== ======
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<TABLE>
<CAPTION>
1994(1) 1993 1992
------- ---- ----
(PERCENT OF TOTAL INDUSTRY)
<S> <C> <C> <C>
General Motors' registrations
In the United States............................... 33% 33% 34%
In other North America(2).......................... 28 27 27
In other countries................................. 9 9 9
Total General Motors' registrations -- all
countries.......................................... 17 18 18
</TABLE>
-------------------------
(1) Preliminary
(2) Includes Canada and Mexico.
The above information on registrations of new cars, trucks, and buses was
obtained from outside sources and that pertaining to General Motors'
registrations includes units which are manufactured overseas by other companies
and which are imported and sold by General Motors and affiliates.
RESEARCH AND DEVELOPMENT
In 1994, General Motors spent $7,035.8 million for research, manufacturing
engineering, product engineering, and development activities related primarily
to the development of new products or services or the improvement of existing
products or services, including activities related to vehicle emissions control,
improved fuel economy, and the safety of persons using General Motors products.
In addition, $1,495.7 million was spent for customer-sponsored activities, the
majority of which were government related. Comparable data for 1993 were
$6,029.9 million for company-sponsored activities and $1,340.3 million for
customer-sponsored activities and for 1992, $5,916.9 million and $1,185.5
million, respectively.
ENVIRONMENTAL MATTERS
Automotive Emissions Control
Both the Federal and California governments currently impose stringent
emission control requirements on motor vehicles sold in their respective
jurisdictions. These requirements include pre-production testing of vehicles,
testing of vehicles after assembly, the imposition of emission defect and
performance warranties, and the obligation to recall and repair customer-owned
vehicles determined to be non-compliant with emissions requirements.
Both the U.S. Environmental Protection Agency (EPA) and the California Air
Resources Board (CARB) continue to place great emphasis on compliance testing of
customer-owned vehicles. Failure to comply with the emission standards or
defective emission control hardware discovered during such testing can
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lead to substantial cost for General Motors related to emissions recalls. New
CARB and Federal requirements will increase the time and mileage over which
manufacturers are responsible for a vehicle's emission performance.
Both the EPA and the CARB emission requirements will become even more
stringent in the future. A new tier of exhaust emission standards for cars and
light-duty trucks, the "Tier 1" standards began phasing in for California
vehicles in the 1993 model year and for Federal vehicles in the 1994 model year.
The phase-in of these "Tier 1" standards will be completed by the 1997 model
year.
In addition to the Tier 1 standards is the CARB Low Emission Vehicle (LEV)
Program that begins with the 1994 model year and defines requirements through
model year 2003 and beyond. This program sets even more stringent exhaust
emission standards for cars and trucks sold in California. General Motors will
have to meet the LEV Program requirements by marketing a mix of vehicles
complying with the Tier 1 standards, Transitional Low Emission Vehicles (TLEVs),
Low Emission Vehicles (LEVs), Ultra-Low Emission Vehicles (ULEVs), or Zero
Emission Vehicles (ZEVs). From model years 1998 to 2000, 2% of cars and small
light-duty trucks (up to 3,750 lb Loaded Vehicle Weight) sold in California must
be ZEVs. This requirement increases to 5% in 2001 and 10% in 2003 and
thereafter.
The Clean Air Act permits states that have areas with air quality problems
to adopt the California car and truck emission standards in lieu of the Federal
requirements and two states (New York and Massachusetts) have done so. In
addition, the Ozone Transport Commission, representing twelve Northeast states
and the District of Columbia, asked the EPA to impose the California LEV program
requirements throughout the Northeast Ozone Transport Region (OTR). The EPA
granted this request on January 24, 1995. This could mean that vehicles designed
for the California LEV program, including ZEVs, would have to be offered for
sale in that region of the country.
In addition to the above-mentioned exhaust emission programs, onboard
diagnostic (OBD) devices, far more complex than those currently used to diagnose
problems with emission control systems, will be required both Federally and in
California effective with the 1996 model year. This new system has the potential
of increasing warranty costs and the chance for recall.
New evaporative emission control requirements for cars and trucks begin
phasing in with the 1995 model year in California and the 1996 model year
Federally. Systems will need to be further modified to accommodate Federal
onboard refueling vapor recovery (ORVR) control standards. ORVR phases in on
passenger cars in the 1998 through 2000 model years and on light-duty trucks in
the 2001 through 2006 model years.
Industrial Environmental Control
General Motors is subject to various laws relating to the protection of the
environment, and is in various stages of investigation or remediation for sites
where contamination has been alleged. GM has recorded an accrued liability of
$694 million at December 31, 1994 and $659 million at December 31, 1993 for
worldwide environmental cleanup as summarized below:
- GM has been identified as a potentially responsible party at sites
identified by the EPA and state regulatory agencies for cleanup under the
Comprehensive Environmental Response, Compensation, and Liability Act
(CERCLA) and similar state statutes. GM voluntarily and actively
participates in cleanup activity where such involvement is verified. The
foreseeable total liability for 1995 and beyond for sites involving GM is
estimated to be $223 million, which was recorded at December 31, 1994. This
compares to $231 million at December 31, 1993.
- For closed or closing plants owned by the Corporation, an estimated
liability for environmental cleanup is typically recognized at the time the
closure decision is made for actions which are not specifically required by
regulations or government action but which serve to minimize future
liability. Such liability, which is based on an environmental assessment of
the plant property, is estimated at $141 million, which was recorded at
December 31, 1994. This compares to $187 million at December 31, 1993.
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- GM is involved in cleanup actions at additional locations worldwide
with a foreseeable liability of approximately $330 million, which was
recorded at December 31, 1994. This compares to $241 million at December
31, 1993.
Various state and Federal regulations require an owner/operator of
hazardous waste management facilities to demonstrate annually that it can
provide funds for closure and post-closure care of its hazardous waste
management facilities (HWMFs). In most instances, GM demonstrates its financial
liability by meeting a financial test established by the various regulations. In
some cases, financial instruments must be used to comply with the financial
assurance requirements. As of December 31, 1994, GM's financial assurance
requirement to cover total closure, post-closure, and mandated liability
coverage totaled $151.9 million ($124.9 million closure and post-closure costs
and $27 million aggregated liability) for the HWMFs owned and/or operated by the
Corporation. These costs will be incurred only when an HWMF is closed and only
for the amount covered for the individual HWMF. The annual inflator used by the
EPA is projected to be 1.53% for 1994 (this is applied to the closure and
post-closure costs); therefore, the total financial assurance for 1995 to cover
the closure and post-closure cost amounts is estimated to be approximately
$126.8 million.
Nuclear Regulatory Commission rules require the GM Technical Center
Research Laboratories to demonstrate financial assurance for decommissioning
certain licensed facilities in the amount of $155,440. The intent of this rule
is to ensure that decommissioning will be accomplished in a safe and timely
manner and that licensees will provide adequate funds to cover all costs
associated with decommissioning.
The capital cost impact of the Clean Air Act Amendments of 1990 on GM
stationary sources will depend on the specific requirements of new state and
Federal regulations which must be developed and implemented over the next 10
years. These regulations include operating permit programs, nitrogen oxide
control programs, chloro-fluoro-carbon phase out, and hazardous air pollutant
control programs. The estimated cost of these programs over the next 10-15 years
is approximately $1 billion. Annual operating permit emission fees will be
approximately $9 million, and the fees are expected to be fully effective in
1995.
Expenditures by General Motors in the United States for industrial
environmental control facilities during the three years ended December 31, 1994
were (in millions): 1994-$118; 1993-$186; and 1992-$150. The Corporation
currently estimates that future expenditures for industrial environmental
control facilities through 1998 will be (in millions): 1995-$181; 1996-$114;
1997-$89; and 1998-$67. Specific environmental expenses are difficult to isolate
since expenditures may be made for more than one purpose, making precise
classification difficult.
Vehicular Noise Control
The Federal Truck Regulation preempts all state/local noise regulations for
trucks over 10,000 lb Gross Vehicle Weight Rating (GVWR). All jurisdictions
regulating noise levels of school buses which are built on medium-duty truck
chassis have adopted standards compatible with Federal regulations for
medium-duty trucks. The Federal Truck Regulations contain label and owner's
manual requirements.
Passenger cars and light-duty trucks are subject to state and local motor
vehicle noise regulations. The current standard for vehicles in these classes,
80 dB as measured at 50 feet, has been in effect since 1975. Since the end of
1991, manufacturers have the option of meeting the 80 dB light vehicle standard
using the test protocol for vehicle exports as measured at 25 feet. This option
must be renewed with some state/local jurisdictions beginning with the 1997
model year. Future implementation of more stringent exhaust emission regulations
and more stringent fuel economy regulations will require an assessment of
increased costs of noise control.
Safety Affairs and Regulations
Expenditures to maintain the operational safety, occupant protection, and
vehicle theft deterrence capability of new GM models continue. These
expenditures include amounts for the study of alternative approaches for meeting
the needs of all three areas.
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A final rule allowing use of Daytime Running Lights (DRL) as an option was
issued by the National Highway Traffic Safety Administration (NHTSA). As a
result, GM has announced its intent to provide DRL starting in 1995 on selected
models. It is believed that this feature will enhance the overall crash
avoidance capability of GM vehicles thus reducing crashes and increasing product
sales.
GM is meeting the government requirement for passive restraints by
selectively installing automatic lap/shoulder belts or driver supplemental
inflatable restraints (air bags) on all passenger cars. The driver-side air bag
concept has been approved for all remaining passenger cars, light-duty trucks,
and vans during the 1994 through 1997 model years. Current plans call for a
phase-in of the passenger-side air bag in these same cars from the 1994 through
1999 model years.
A new government requirement for passenger car side impact protection was
issued in 1990 affecting future model year cars. A phase-in of the new
requirement began September 1, 1993. The NHTSA proposed that new dynamic side
impact protection requirements be applied to light-duty trucks and vans. If a
final rule which is similar to the proposal is promulgated, side structure and
interior trim designs of future models will be affected.
Regarding GM light-duty trucks and vans, a final rule required center
high-mounted stop lamps by September 1, 1993. Also, head restraints are now
required on all light-duty trucks and vans.
A final rule covering roof crush resistance has also been issued by the
NHTSA for light-duty trucks and vans that is more stringent than for passenger
cars. This rule addresses vehicles with a GVWR less than or equal to 6,000 lb
and was effective September 1, 1994.
A final rule has been issued by NHTSA that extends the passenger car
automatic restraint requirements to light-duty trucks and vans on a phased-in
basis beginning September 1, 1994.
Lastly, a final rule has been issued by NHTSA that will require air bags be
the only means used to meet the automatic restraint requirements for passenger
cars and light-duty trucks and vans on a phased-in basis beginning September 1,
1996.
The NHTSA currently is considering the effects of fuel system crash
integrity requirements of the Federal Motor Vehicle Safety Standard (FMVSS)
(301). If any of the considerations ultimately are adopted as final rules, some
undetermined redesign, cost, and weight increase could be expected for most of
GM's vehicles. See Item 3, Legal Proceedings, Other Matters.
With the passage of the Anti-Car Theft Act of 1992, implementation costs
for the 1993 calendar year affected approximately 22 passenger car assembly
plants and 9 light-duty truck plants. For the affected truck plants, the major
expenditures were for new label printer installations and additional stamping
equipment. Both passenger car and truck plants affected will probably require
some extra tooling to accommodate full VIN-stamping on the frame of each vehicle
and noise-pollution reduction facilities to alleviate noise associated with
VIN-stamping operations.
A bill has been introduced into Congress by Representative Danforth that
would change the current Federal bumper impact requirement from 2.5 mph to 5
mph. The bill also calls for labeling that would define bumper performance. This
bill may have an effect on future GM products that are designed to meet the
existing FMVSS requirements. Additionally, performance labeling may cause
additional testing that will lead to increased costs. This legislation also
proposes to extend the requirement to minivans.
AUTOMOTIVE FUEL ECONOMY
The Energy Policy and Conservation Act passed in 1975 provided for
production-weighted average fuel economy standards for passenger cars for 1978
and thereafter. Based on EPA combined city-highway test data, the General Motors
1994 model year domestic passenger car fleet is projected to attain a Corporate
Average Fuel Economy (CAFE) of 27.4 miles per gallon (mpg) versus the standard
of 27.5 mpg. The CAFE estimate for 1995 model year passenger cars is projected
at 27.2 mpg versus the standard of 27.5 mpg. The projected shortfalls for 1993
through 1995 will be offset by credits projected to be earned in future model
years.
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Fuel economy standards for light-duty trucks became effective in 1979.
General Motors' CAFE fleet average for the 1994 model year is projected to be
19.9 mpg versus the standard of 20.5 mpg. For the 1995 model year, GM's truck
CAFE is projected to be 20.0 mpg versus a standard of 20.6 mpg. The shortfall
for 1994 will be partially offset by credits earned in 1991 and 1992. It is
expected that the remaining 1994 shortfall and the 1995 shortfall will be offset
by credits from future model years. However, the exact amount cannot be
determined because standards have not been set beyond 1997.
GM's ability to meet increased CAFE standards is contingent on various
future economic, consumer, legislative, and regulatory factors that GM cannot
control and cannot predict with certainty. If GM could not comply with any new
CAFE standards, GM could be subject to sizable civil penalties and could have to
close plants or severely restrict product offerings to remain in compliance.
SEASONAL NATURE OF BUSINESS
In the automotive business, there are retail sales fluctuations of a
seasonal nature, so that production varies from month to month. In addition, the
changeover period related to the annual new model introduction has traditionally
occurred in the third quarter of each year. For this reason, third quarter
operating results are, in general, less favorable than those in the other three
quarters of the year, depending on the magnitude of the changeover needed to
commence production of new models incorporating, for example, design
modifications related to more fuel-efficient vehicle packaging, stricter
government standards for safety and emission controls, and consumer-oriented
improvements in performance, comfort, convenience, and style.
SEGMENT REPORTING DATA
Industry segment and geographic segment data for 1994, 1993, and 1992 are
summarized in Note 18 of Notes to Financial Statements in Part II.
******
The Registrant makes no attempt herein to predict the future trend of its
business and earnings or the effect thereon of the results of changes in general
economic, industrial, regulatory, and international conditions.
ITEM 2. PROPERTIES
The Corporation, excluding General Motors Acceptance Corporation, has 295
locations operating in 37 states and 171 cities in the United States. Of these,
25 are engaged in the final assembly of GM cars and trucks; 26 are service parts
operations responsible for distribution or warehousing; 13 are associated with
Electronic Data Systems Corporation as large information processing centers; 36
major plants, offices, and research facilities relate to the operations of
Hughes Aircraft Company; and the remainder are offices or involved primarily in
the testing of vehicles or the manufacture of automotive components and power
products. In addition, the Corporation has 20 locations in Canada and assembly,
manufacturing, distribution, or warehousing operations in 51 other countries,
including equity interests in associated companies which conduct assembly,
manufacturing, or distribution operations. The major facilities outside the
United States and Canada, which are principally vehicle manufacturing and
assembly operations, are located in Germany, the United Kingdom, Brazil, Mexico,
Austria, Belgium, and Spain.
Most facilities are owned by the Corporation or its subsidiaries. Leased
properties consist primarily of warehouses and administration, engineering, and
sales offices. The leases for warehouses generally provide for an initial period
of five years and contain renewal options. Leases for sales offices are
generally for shorter periods.
Properties of the Registrant and its subsidiaries include facilities which,
in the opinion of management, are suitable and adequate for the manufacture,
assembly, and distribution of their products.
Additional information regarding worldwide expenditures for plants and
equipment is presented under Management's Discussion and Analysis in Part II.
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ITEM 3. LEGAL PROCEEDINGS
Material pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Corporation is a party as of December
31, 1994 are summarized on the following pages. Reference should also be made to
Note 21 of notes to financial statements in Part II.
ENVIRONMENTAL MATTERS
On February 19, 1991, a complaint was filed in the Superior Court of
Connecticut by the Connecticut Commissioner of Environmental Protection alleging
that the plant in Bristol, Connecticut operated by GM's Delco Moraine NDH
Division (now part of the Delco Chassis Division) had violated Connecticut's
hazardous waste regulations in connection with its inspection, recordkeeping,
and remediation of a spill of chromic acid at the plant site. The complaint
seeks penalties of up to $25,000 per day for a period commencing sometime prior
to April 1989 and running through November 1990. GM contends that its
inspection, recordkeeping, and remediation practices in relation to the spill
complied with applicable rules and regulations.
* *
On March 12, 1991, the Region II office of the Environmental Protection
Agency (EPA) issued a Civil Administrative Complaint alleging that the plant
operated by GM's Central Foundry Division (now part of the GM Powertrain
Division) in Massena, New York had improperly disposed of polychlorinated
biphenyl contaminated sludge during the period February 1984 through October
1987. The complaint seeks a fine of $14,176,000. GM believes that its disposal
practices at Massena were in general compliance with applicable rules and
regulations.
* *
On March 1, 1993, the U.S. EPA Region V issued a civil administrative
complaint alleging that stormwater from the Chevrolet-Pontiac-GM of Canada
Group's Pontiac Fiero plant in Pontiac, Michigan exceeded the facility's
National Pollutant Discharge System Permit from May 1989 through May 1992. The
EPA complaint, as amended, cites the Corporation for 94 exceedances of copper,
lead, and zinc and is seeking $125,000 in penalties. There has been no
production at the Fiero Plant since August 1988. The Corporation believes that
the very low concentrations of metals found in the stormwater during the
specified time period occurred as a result of acid rain dissolving metal from
the gutters and roof. General Motors is contesting the allegations and has
requested a hearing.
* *
On March 26, 1993, the Region V office of the EPA issued a Civil
Administration Complaint against the Corporation alleging that 65 petroleum and
hazardous substance underground storage tanks (USTs) which it has operated at
its Technical Center in Warren, Michigan have been in violation of certain of
the EPA UST regulations. The EPA has proposed a civil penalty of $267,447. Based
upon its current evaluation of this matter, General Motors believes that the
operations cited by the EPA's complaint have been and remain in substantial
compliance with applicable UST regulations.
* *
In March 1993, the Michigan Department of National Resources (MDNR)
notified the Corporation's Powertrain Division (PD) that MDNR was making a
referral to the Michigan Attorney General for resolution of allegations by MDNR
that a PD facility in Saginaw, Michigan had failed to conduct a timely
environmental investigation to MDNR's satisfaction of a landfill and certain
other areas at the facility's property, and that PD's on-site water recycling
basins were improperly discharging contaminants to the groundwater and the
Saginaw River.
* *
I-7
<PAGE> 10
On June 28, 1994, the Attorney General for the State of Michigan, on behalf
of the Michigan Department of Natural Resources (DNR), filed a complaint in
Circuit Court of the 30th Judicial Circuit in Ingham County, Michigan alleging
that several of GM's plants released polychlorinated biphenyls (commonly
referred to as "PCBs") into the Saginaw River thereby causing damage to natural
resources in the river and Saginaw Bay. The complaint also named the City of
Saginaw and Bay City as defendants. The State has not asserted that it is
seeking fines or penalties and no amount is specified in the complaint as
damages, but the State is seeking reimbursement of all its past and future
response costs, including enforcement costs, and natural resource damages
relating to the Saginaw River and Bay. In this regard, representatives of the
State have indicated that the State will be seeking "tens of millions of
dollars" in damages as well as several million dollars in past response costs.
GM is currently in discussions with representatives of the Michigan Attorney
General and the DNR regarding this matter.
GM has also been advised that the U.S. Department of Interior ("DOI") may
be conducting an investigation of these matters and any related damage to the
environment, and that DOI may pursue independent claims against GM, the City of
Saginaw and Bay City.
* *
On November 25, 1994, GM was notified that the U.S. EPA has requested that
the U.S. Department of Justice (DOJ) commence a civil action against GM for
injunctive relief and civil penalties for alleged violation of vehicle emissions
standards and certification procedures under the Clean Air Act with respect to
several recent model year vehicles and engines produced by GM's North American
Automotive Operations (NAO). No claim has been filed and GM and DOJ/EPA have
agreed to toll the running of any deadlines for filing claims through February
12, 1995 in order to avoid litigation and promote opportunities for settlement.
DOJ/EPA have not specified the nature of any injunctive relief for the amount of
civil penalties the government might seek. GM believes that the subject vehicles
and engines were produced in compliance with the Clean Air Act.
* *
OTHER MATTERS
Two suits, denominated by plaintiffs as class actions, were filed in
Delaware Chancery Court, Stephen A. Solomon v. General Motors Corporation, et
al., on May 13, 1994 and TRV Holding Company v. General Motors Corporation, et
al., on May 18, 1994. Both actions purport to be brought on behalf of holders of
Class E common stock against the Corporation and its directors. The complaints
make essentially the same allegations, namely, that defendants have breached and
are continuing to breach their fiduciary duties to holders of Class E common
stock by, among other things, planning and announcing a contribution of Class E
common stock to the Corporation's U.S. Hourly-Rate Pension Plan, which plan and
announcement were allegedly made for the purpose of -- setting the stage for
GM's disposition of Electronic Data Systems Corporation (EDS) assets in a manner
which will deprive holders of Class E common stock of the full value of their
shares, and -- artificially capping the market price of Class E common stock to
limit the price to be paid to holders of Class E common stock in connection with
plaintiff's alleged design on behalf of GM to either sell EDS assets or tender
for Class E common stock. The complaints seek monetary damages and an injunction
to enjoin GM from contributing Class E common stock to its U.S. Hourly-Rate
Pension Plan. The contribution of Class E common stock to GM's U.S. Hourly-Rate
Pension Plan is described by GM under Item 2 of its Quarterly Report on Form
10-Q for the quarterly period ended June 30, 1994. GM believes the suits are
without merit, intends to defend them vigorously, and does not believe that they
will materially interfere with the Corporation's plan to complete the
contribution of Class E common stock.
* *
I-8
<PAGE> 11
U.S. Government contracts held by the Corporation and its subsidiaries are
subject to termination by the U.S. Government either for its convenience or for
default by the contractor. The costs recovered for terminations for convenience
do not always fully reimburse the contractor, and the profit or fee received by
the contractor may be lower than that which it had expected for the portion of
the contract performed. In cases of termination for default, normal contract
remedies generally apply. In addition, the U.S. Government has broad discretion
to suspend or debar a contractor from engaging in new government business,
including discretion as to the period of suspension and activities affected. A
contractor may be debarred based on a conviction or civil judgment involving
certain offenses, including fraud in connection with obtaining or performing a
public contract, or subcontract thereunder, and may be suspended if indicted for
such an offense or if there is other adequate evidence that such an offense has
been committed. Like other government contractors, GM and its subsidiaries are
subject to civil audits and criminal investigations relating to their
contracting activity.
* *
In September 1973, Hughes Aircraft Company (Hughes) filed suit against the
U.S. Government in the U.S. Court of Claims seeking reasonable and entire
compensation for the unauthorized manufacture or use by the United States of the
invention claimed in a Hughes patent (the "Williams Patent") covering "Velocity
Control and Orientation of a Spin Stabilized Body," principally satellites. In
late 1983, the United States Court of Appeals for the Federal Circuit (the U.S.
Court with appellate jurisdiction for patent cases) ruled that the Williams
Patent was valid and that the Government had infringed that patent. The
compensation which Hughes is entitled to recover as a result of the Government's
infringement is now being determined by the U.S. Court of Claims, as well as
whether additional U.S. Government satellites also infringe.
The trial concluded in December 1988. Hughes contends that its recovery
should be calculated in accordance with either of two methods for computing
delay compensation and introduced evidence to support an award of approximately
$4.8 billion or $1.5 billion depending upon the methods used. The Government
sought to demonstrate to the Court that any damages awarded to Hughes in this
case should not exceed $20-30 million. In August 1993, the Court determined that
approximately $4 billion in satellite purchases infringed the patent. On June
17, 1994, the Court issued a decision awarding Hughes damages of $114 million.
Hughes believes that the record supports a higher royalty rate, and,
accordingly, on August 3, 1994 filed a notice of appeal pursuant to which Hughes
will be seeking a higher award. Hughes is unable to estimate the duration of
these appeal efforts.
* *
On August 21, 1992, EDS filed a breach of contract suit against the State
of Florida (the "State") in the Circuit Court of the Second Judicial Circuit in
Leon County, Florida, seeking recovery under various counts of more than $46
million in payment for unpaid computer equipment and information technology
services. The suit arises out of a 1989 contract entered into between EDS and
the Department of Health and Rehabilitative Services ("DHRS") of the State of
Florida under which EDS had agreed to provide an information management system
to the DHRS that would integrate its offices and computer programs statewide.
EDS completed the system and turned it over to the Department in May 1992. On
September 21, 1993, the State filed an Answer and Counterclaims, alleging
principally breach of contract and breach of warranty. Under various counts, the
State is requesting approximately $90 million in damages and approximately $140
million in indemnification for potential liability of the State to the Federal
government. EDS and the State have agreed to resolve this matter through a final
and binding Alternative Dispute Resolution process (ADR) which commenced on
January 5, 1995. The ADR judge will make recommendations to the Circuit Court
with respect to the final judgment that should be entered. Other than submitting
exceptions to the Circuit Court prior to its consideration and adoption of the
recommendations, there is no appeal. The parties have submitted motions for
summary judgment to the ADR judge and, at this point, the ADR judge has
recommended that summary judgments in the amount of approximately $27.5 million
be awarded to EDS. Although the Circuit Court has refused to enter final
judgment on these claims before the entire matter is
I-9
<PAGE> 12
resolved, it noted that DHRS had not filed exceptions to the recommendations and
therefore entry of judgment on these claims appears likely.
EDS management believes that it has strong and meritorious defenses to any
counterclaims which the State may assert and intends to defend itself vigorously
while continuing to pursue recovery against the State under the claims which it
has filed.
* *
Several actions seeking compensatory and punitive damages in unspecified
amounts have been filed against Hughes by plaintiffs alleging that they suffered
injuries as a result of the migration into the Tucson, Arizona water supply of
toxic substances that were disposed of at a facility owned by the United States
Government which Hughes operates under a contract with the U.S. Air Force. These
actions include a class action filed in Arizona State Court, Cordova v. Hughes
Aircraft Company (formerly Bahrs, et al. v. Hughes Aircraft Company, et al.
(Super. Ct. Pima County)), an individual action filed on behalf of approximately
500 plaintiffs in Federal District Court in Arizona, Yslaja v. Hughes Aircraft
Company (formerly Acevedo, et al. v. Hughes Aircraft Company), and a class
action filed in Federal District Court in Arizona, Lanier v. Hughes Aircraft
Company. Other governmental and private entities are known to have also been the
source of toxic substances which may have migrated into the Tucson water supply.
Hughes believes that it has strong defenses to the claims asserted against it
and that it may have claims for contribution against the other entities.
The facts alleged in these cases are similar to the facts alleged in the
previously reported action entitled Valenzuela v. Hughes Aircraft Company. As
previously reported, the Valenzuela action was settled pursuant to an agreement
under which Hughes' principal insurers provided $70.7 million and Hughes
provided $13.8 million. At the time of such settlement, Hughes and its insurers
were litigating in the United States District Court in Arizona their respective
ultimate liability to one another for the amounts paid in the Valenzuela
settlement. This litigation, entitled Smith, et al. v. Hughes Aircraft Company,
was commenced in 1988 by various insurers seeking a declaratory judgment that
the Valenzuela claims are not covered under the terms of the insurance policies
issued to Hughes. These insurers have taken a similar position with respect to
the more recently filed actions. In September 1991, the Smith court entered
summary judgment in favor of Hughes' insurers who issued policies from 1971 to
1985, based upon "pollution exclusions" contained in those policies. In
September 1992, the Smith court entered summary judgment in favor of Hughes'
pre-1971 insurers based upon findings and conclusions that could have been
adverse to Hughes with respect to other claims and proceedings. Hughes appealed
these rulings to the Ninth Circuit Court of Appeals. In November 1993, the Ninth
Circuit affirmed in substantial part the District Court's summary judgment on
the "pollution exclusion" policies, but reversed the District Court's summary
judgment on pre-1971 policies. The Ninth Circuit remanded the case for further
proceedings in the District Court.
Contracts under which Hughes has operated the Air Force facility contain
provisions under which indemnification from the Air Force may be provided for
certain liabilities which Hughes may incur in connection with its operation of
the facility to the extent such liabilities are not covered by insurance. Hughes
intends to prosecute all appropriate claims it may have for insurance coverage
and, if necessary, to pursue all appropriate claims for indemnification or
contribution relating to the actions described above.
* *
In December 1992, the National Highway Traffic Safety Administration
(NHTSA) of the U.S. Department of Transportation (DOT), granting a petition
previously filed by the Center for Auto Safety and Public Citizen, opened an
investigation to determine whether 1973-1987 model Chevrolet and GMC full-size
pickup trucks contain a safety defect resulting in an unreasonably high
incidence of fuel-fed fires in side impact collisions. NHTSA emphasized then and
has repeated that granting the petition does not indicate that the agency has
determined that a safety-related defect exists in these vehicles.
I-10
<PAGE> 13
On April 9, 1993, NHTSA made an informal request of GM that it voluntarily
conduct a safety-related recall campaign on the vehicles. Although in its April
9, 1993 letter, NHTSA stated that its Office of Defects Investigation "believes
that GM's fuel tank system in the subject vehicles contains a defect that
relates to motor vehicle safety", it nevertheless stated that "this
recommendation to conduct a safety recall does not reflect a formal conclusion
by the agency, . . . should not be confused with an Initial or Final
Determination of a safety defect pursuant to . . . the National Traffic and
Motor Vehicle Safety Act, . . . (and) should (not) be confused with a recall
order . . . " A recall order can only be issued by the agency if it makes a
Final Determination (which it has not done in this case) that a defect exists
which presents an unreasonable risk to motor vehicle safety.
On April 30, 1993, in a written response to NHTSA's letter of April 9,
1993, General Motors stated that based upon its evaluation of the data which
NHTSA had then made available to GM as having been the basis for requesting the
voluntary recall in its letter, General Motors continued to believe that its
1973-1987 pickup trucks are neither defective nor present an unreasonable risk,
and that consequently no safety recall of such trucks is warranted. General
Motors stated that it remained strongly of this view, and intended to press its
position vigorously while continuing to cooperate with NHTSA's investigative
efforts.
On October 17, 1994, the Secretary of Transportation, Federico Pena, (the
Secretary), announced his initial decision that a safety-related defect exists
in 1971-91 GM C/K pickup trucks having side-mounted fuel tanks. In his
announcement, it was indicated that his final decision as to whether a
safety-related defect exists or to close the investigation, would be made after
a public meeting scheduled for December 6, 1994. In an October 31, 1994 letter
to DOT, GM offered to treat the Secretary's October 17 decision as his final
decision and order for the purposes of allowing DOT to proceed directly and
promptly to Federal court, in order that the matter might be resolved in a
judicial forum.
On November 17, 1994, General Motors filed suit against the Secretary, DOT,
and NHTSA in the U.S. District Court for the Eastern District of Michigan. In
that action, GM requested a declaratory judgment and injunctive relief vacating
the Secretary's initial decision of October 17, 1994 (that the C/K pickup trucks
contain a defect related to motor vehicle safety) and enjoining the defendants
from taking any further action to compel a recall of the C/K pickup trucks.
On December 2, 1994, the Secretary announced that a comprehensive
settlement had been agreed to between the Government and General Motors with
respect to the Government investigation, the Government attempt to compel a GM
recall of the C/K pickup trucks, and the suit filed by General Motors on
November 17, 1994. Under this settlement, both General Motors and the Government
commit to provide funding for certain national highway safety programs.
Specifically, General Motors will fund over $51 million and the Government an
additional $27 million toward certain highway safety programs during the next
five years. The settlement agreement further provides that the Government's C/K
pickup truck investigation will be closed, recall efforts terminated, and GM's
lawsuit dismissed.
General Motors will continue to cooperate with the Government in its
efforts to enhance the applicable Federal safety standard for vehicle fuel
system integrity. GM presently plans to make its expenditures pursuant to the
settlement in research (focusing on fire safety, burn and trauma injuries,
driver impairment, and crash dummies) and in the areas of public education,
computer modeling, and child safety seats.
Throughout the investigation and settlement, GM has consistently maintained
that there is no basis for a determination by the Secretary of Transportation or
any other party that the trucks' side-mounted fuel tanks are in violation of
Federal safety standards or that a safety-related defect exists with respect to
such tanks. GM remains prepared to defend the safety of the trucks in any court.
There are also pending individual product liability claims and lawsuits
involving allegations of defects in the design of such vehicles resulting in
fuel-fed fires following side impact collisions. GM intends to defend these
cases vigorously.
In addition to the NHTSA investigation and the product liability cases, 38
class actions were filed in state and Federal courts against the Corporation,
claiming that 1973-1987 model Chevrolet and GMC full-size pickup trucks are
defective because their fuel tanks are mounted below the cab and outside the
frame rails. 24
I-11
<PAGE> 14
Federal court class actions were transferred to the Federal court in
Philadelphia, Pennsylvania by the Judicial Panel on Multidistrict Litigation. In
these actions, plaintiffs claimed that the fuel tank locations make the vehicles
unreasonably susceptible to fuel-fed fires following side impact collisions.
Plaintiffs alleged breach of contract and warranty, negligence, fraud, and
negligent misrepresentation, as well as violation of various state consumer
protection laws. The lawsuits seek compensatory and punitive damages and
injunctions requiring notice to owners, repairs, retrofitting, and
"disgorgement" of revenues.
In July 1993, a nationwide class action settlement of the C/K pickup truck
class actions was submitted to the Pennsylvania Federal court and a state court
in Texas. After notice of the proposed settlement was sent to 6.3 million
registered owners, the Pennsylvania and Texas courts held hearings to determine
if the settlement was fair, reasonable and adequate. Both courts subsequently
entered orders giving final approval of the settlement. Certain objectors filed
appeals of those approvals to the U.S. Third Circuit Court of Appeals and a
Texas State Court of Appeals. The Texas Court of Appeals in Texarkana on June
22, 1994 reversed the approval of the settlement affecting Texas residents. GM
appealed that reversal before the Texas Supreme Court and that Court granted
leave to proceed with the appeal. GM believes that it has a sound basis for
prevailing in its appeal.
The Philadelphia Federal Court approval of substantially the same
settlement is on appeal in the U.S. Third Circuit Court of Appeals and after
argument before the Court of Appeals for the Third Circuit in August of 1994,
that appeal is still pending.
Additionally, on October 14, 1993, Crowder, et al v. General Motors
Corporation was filed as a purported class action in the Federal court in
Dallas, Texas on behalf of owners of full-size pickup trucks and chassis cabs
covered by the class action settlements who elected to be excluded from the
settlements or purchased their trucks used after July 19, 1993. the allegations
are essentially the same as those made in the other class actions. No
determination has been made that the case may proceed as a class action. GM
intends to vigorously defend the case and oppose certification of a class.
The settlement provides for owners of 1973-1986 model C/K and 1987-1991 R/V
pickup trucks and chassis cabs as of July 19, 1993, the date the settlement was
announced, to receive $1,000 Certificates from General Motors which may be used
in connection with the purchase of any new GMC Truck or Chevrolet light-duty
truck. The Certificates can be used in combination with other GM and GMAC
incentive programs during the 15-month period after eligible owners are notified
of the procedures for obtaining their Certificates. The Certificates are
redeemable by the eligible owner or immediate family members residing at the
same address. Within the original redemption period, Certificates also can be
transferred at face value with the truck. Original Certificate holders also can
elect to exchange the $1,000 Certificate for a non-transferable $500 Certificate
issuable in the name of another person, such certificate being redeemable only
toward the purchase of a new C/K pickup truck, and not being usable in
combination with other incentives offered by GM or GMAC. Both the $1,000 and
$500 Certificates can only be used at authorized Chevrolet and GMC Truck dealers
and cannot be redeemed for cash or any other consideration. The Corporation
believes that the settlement will not have a material adverse impact on its
operations or financial condition.
* *
On June 1, 1994, the Corporation was informed by prosecutors with the U.S.
Department of Justice ("DOJ") that the Corporation's wholly-owned subsidiary,
Delco Electronics Corporation ("Delco Electronics"), is a target for criminal
prosecution and subject to civil suit in connection with allegations that Delco
Electronics is responsible for the transportation of hazardous wastes from its
Maquiladora plant in Reynosa, Mexico into the United States. The related
Government investigation is focused on four shipments of recyclable waste
solvents during the period 1987-1990 which allegedly violated the U.S. Resource
Conservation and Recovery Act ("RCRA") and the treaty with Mexico which
established the Maquiladora industry. Representatives of the DOJ have not
indicated what fines, penalties, or other damages they may seek to recover in
their continued pursuit of this matter. Based on its own investigation, Delco
Electronics believes it has strong defenses to any criminal prosecution and will
defend itself vigorously.
* *
I-12
<PAGE> 15
On October 24, 1994, a jury sitting in two cases consolidated for trial in
the California Superior Court for the County of Los Angeles, both of which cases
had been brought by individual plaintiffs, Jeffrey Lane v. Hughes Aircraft
Company and David Villalpando v. Hughes Aircraft Company, rendered verdicts
resulting in an aggregate award against Hughes in the amount of $89.5 million.
$80 million of the award was for punitive damages and the remainder was for
emotional distress and lost wages and benefits. One plaintiff alleged racial
discrimination by Hughes with respect to pay and promotion, and both plaintiffs
alleged retaliation by Hughes. Hughes vigorously denied plaintiffs' allegations.
On December 15, 1994, Superior Court Judge Malcolm H. Mackey granted Hughes'
motion for judgment in its favor notwithstanding the verdict, overturning the
entire $89.5 million judgment against Hughes. The court also granted Hughes'
alternative motion for an order for a new trial in the event that a court of
appeals reverses Judge Mackey's ruling in favor of Hughes.
* *
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable (N/A).
* * *
I-13
<PAGE> 16
PART II
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
10-K ITEM PAGE (AND CAPTION) IN PART II
--------- ------------------------------
<S> <C> <C>
5. Market for Registrant's Common Equity and
Related Stockholder Matters
(a) Market information....................... II-45 -- Selected Quarterly Data
(b) Approximate number of holders of
common stocks........................... II-45 -- Selected Quarterly Data
(c) Dividends
(1) History............................. II-45 -- Selected Quarterly Data
(2) Policy.............................. II-22 -- Dividends on Common Stocks
6. Selected Financial Data........................ II-47 -- Selected Financial Data
7. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... II-50 -- Management's Discussion and
Analysis
8. Financial Statements and Supplementary Data.... II-2 -- Responsibilities for Consolidated
Financial Statements
II-3 -- Independent Auditors' Report
II-4 -- Statement of Consolidated
Operations for the Years Ended December
31, 1994, 1993, and 1992
II-5 -- Consolidated Balance Sheet,
December 31, 1994 and 1993
II-6 -- Statement of Consolidated Cash
Flows for the Years Ended December 3l,
1994, 1993, and 1992
II-8 -- Notes to Financial Statements
II-44 -- Selected Quarterly Data
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure....... None
</TABLE>
II-1
<PAGE> 17
RESPONSIBILITIES FOR CONSOLIDATED FINANCIAL STATEMENTS
The following consolidated financial statements of General Motors
Corporation and subsidiaries were prepared by management which is responsible
for their integrity and objectivity. The statements have been prepared in
conformity with generally accepted accounting principles and, as such, include
amounts based on judgments of management. Financial information elsewhere in
Part II is consistent with that in the consolidated financial statements.
Management is further responsible for maintaining a system of internal
accounting controls, designed to provide reasonable assurance that the books and
records reflect the transactions of the companies and that its established
policies and procedures are carefully followed. From a stockholder's point of
view, perhaps the most important feature in the system of control is that it is
continually reviewed for its effectiveness and is augmented by written policies
and guidelines, the careful selection and training of qualified personnel, and a
strong program of internal audit.
Deloitte & Touche LLP, an independent auditing firm, is engaged to audit
the consolidated financial statements of General Motors Corporation and its
subsidiaries and issue reports thereon. The audit is conducted in accordance
with generally accepted auditing standards which comprehend the consideration of
internal accounting controls and tests of transactions to the extent necessary
to form an independent opinion on the financial statements prepared by
management. The Independent Auditors' Report appears on the next page.
The Board of Directors, through the Audit Committee (composed entirely of
non-employee Directors), is responsible for assuring that management fulfills
its responsibilities in the preparation of the consolidated financial
statements. The Committee selects the independent auditors annually in advance
of the Annual Meeting of Stockholders and submits the selection for ratification
at the Meeting. In addition, the Committee reviews the scope of the audits and
the accounting principles being applied in financial reporting. The independent
auditors, representatives of management, and the internal auditors meet
regularly (separately and jointly) with the Committee to review the activities
of each, to ensure that each is properly discharging its responsibilities, and
to assess the effectiveness of the system of internal accounting controls. It is
management's conclusion that the system of internal accounting controls at
December 31, 1994 provides reasonable assurance that the books and records
reflect the transactions of the companies and that its established policies and
procedures are complied with. To ensure complete independence, Deloitte & Touche
LLP has full and free access to meet with the Committee, without management
representatives present, to discuss the results of the audit, the adequacy of
internal accounting controls, and the quality of the financial reporting.
<TABLE>
<S> <C>
/s/ John F. Smith, Jr. /s/ J. Michael Losh
--------------------------------------------- ---------------------------------------------
John F. Smith, Jr. J. Michael Losh
Chief Executive Officer and President Chief Financial Officer
</TABLE>
II-2
<PAGE> 18
INDEPENDENT AUDITORS' REPORT
General Motors Corporation,
its Directors, and Stockholders:
We have audited the Consolidated Balance Sheets of General Motors
Corporation and subsidiaries as of December 31, 1994 and 1993 and the related
Statements of Consolidated Operations and Consolidated Cash Flows for each of
the three years in the period ended December 31, 1994. Our audits also included
the financial statement schedule listed at Item 14. These financial statements
and financial statement schedule are the responsibility of the Corporation's
management. Our responsibility is to express an opinion on these financial
statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of General Motors Corporation and subsidiaries
at December 31, 1994 and 1993 and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994 in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
As discussed in Note 1 to the financial statements, effective January 1,
1994 the Corporation changed its methods of accounting for postemployment
benefits and certain investments in debt and equity securities. Also, as
discussed in Notes 1 and 5 to the financial statements, effective January 1,
1992 the Corporation changed its method of accounting for postretirement
benefits other than pensions and its revenue recognition policy for a
subsidiary.
/s/ DELOITTE & TOUCHE LLP
------------------------------------------------------
DELOITTE & TOUCHE LLP
Detroit, Michigan
January 30, 1995
II-3
<PAGE> 19
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1993 1992
---------- ---------- ----------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net Sales and Revenues (Note 1)
Manufactured products...................................... $134,759.8 $119,686.3 $113,323.9
Financial services......................................... 9,418.8 8,752.0 10,402.1
Computer systems services.................................. 6,412.9 5,183.6 4,806.7
Other income (Note 2)...................................... 4,359.7 4,597.6 3,709.5
---------- ---------- ----------
Total Net Sales and Revenues.......................... 154,951.2 138,219.5 132,242.2
---------- ---------- ----------
Costs and Expenses
Cost of sales and other operating charges, exclusive of
items listed below....................................... 117,220.5 106,421.9 105,248.4
Selling, general, and administrative expenses.............. 12,233.7 11,531.9 11,232.2
Interest expense (Note 15)................................. 5,431.9 5,673.7 7,096.8
Depreciation of real estate, plants, and equipment
(Note 1)................................................. 7,124.4 6,576.3 6,144.8
Amortization of special tools (Note 1)..................... 2,900.7 2,535.3 2,504.0
Amortization of intangible assets (Notes 1 and 14)......... 226.2 330.4 310.2
Other deductions (Note 2).................................. 1,460.5 1,624.7 1,801.9
Special provision for scheduled plant closings and other
restructurings (Note 6).................................. -- 950.0 1,237.0
---------- ---------- ----------
Total Costs and Expenses.............................. 146,597.9 135,644.2 135,575.3
---------- ---------- ----------
Income (Loss) before Income Taxes.......................... 8,353.3 2,575.3 (3,333.1)
United States, foreign, and other income taxes (credit)
(Note 8)................................................. 2,694.6 109.5 (712.5)
---------- ---------- ----------
Income (Loss) before cumulative effect of accounting
changes.................................................. 5,658.7 2,465.8 (2,620.6)
Cumulative effect of accounting changes (Notes 1 and 5).... (758.1) -- (20,877.7)
---------- ---------- ----------
Net Income (Loss).......................................... 4,900.6 2,465.8 (23,498.3)
Dividends and accumulation of redemption value on
preferred and preference stocks (Note 17)................ 320.7 356.8 306.3
---------- ---------- ----------
Income (Loss) on Common Stocks............................. $ 4,579.9 $ 2,109.0 $(23,804.6)
========== ========== ==========
Earnings (Loss) Attributable to Common Stocks
$1 2/3 par value before cumulative effect of accounting
changes............................................... $ 4,645.2 $ 1,537.3 $ (3,220.6)
Cumulative effect of accounting changes (Notes 1
and 5)................................................ (751.3) -- (20,720.1)
---------- ---------- ----------
Net earnings (loss) attributable to $1 2/3 par value..... $ 3,893.9 $ 1,537.3 $(23,940.7)
========== ========== ==========
Net earnings attributable to Class E..................... $ 444.4 $ 367.2 $ 278.4
========== ========== ==========
Class H before cumulative effect of accounting changes... $ 248.4 $ 204.5 $ 15.3
Cumulative effect of accounting changes (Notes 1 and
5).................................................... (6.8) -- (157.6)
---------- ---------- ----------
Net earnings (loss) attributable to Class H.............. $ 241.6 $ 204.5 $ (142.3)
========== ========== ==========
Average number of shares of common stocks outstanding
(in millions)
$1 2/3 par value......................................... 741.3 710.2 670.5
Class E.................................................. 260.3 243.0 209.1
Class H.................................................. 92.1 88.6 75.3
Earnings (Loss) Per Share Attributable to Common Stocks
(Note 9)
$1 2/3 par value before cumulative effect of accounting
changes............................................... $ 6.20 $ 2.13 $ (4.85)
Cumulative effect of accounting changes (Notes 1 and
5).................................................... (1.05) -- (33.43)
---------- ---------- ----------
Net earnings (loss) attributable to $1 2/3 par value..... $ 5.15 $ 2.13 $ (38.28)
========== ========== ==========
Net earnings attributable to Class E..................... $ 1.71 $ 1.51 $ 1.33
========== ========== ==========
Class H before cumulative effect of accounting changes... $ 2.70 $ 2.30 $ (0.11)
Cumulative effect of accounting changes (Notes 1 and
5).................................................... (0.08) -- (2.18)
---------- ---------- ----------
Net earnings (loss) attributable to Class H.............. $ 2.62 $ 2.30 $ (2.29)
========== ========== ==========
</TABLE>
Reference should be made to the Notes to Financial Statements.
II-4
<PAGE> 20
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1994 1993
---------- ----------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Cash and cash equivalents (Note 1).......................................... $ 10,939.0 $ 13,790.5
Other marketable securities................................................. 5,136.6 4,172.2
---------- ----------
Total cash and marketable securities.................................... 16,075.6 17,962.7
---------- ----------
Finance receivables -- net (Note 10)........................................ 54,077.3 53,874.7
Accounts and notes receivable (less allowances)............................. 8,977.8 6,389.2
Inventories (less allowances) (Note 12)..................................... 10,127.8 8,615.1
Contracts in process (less advances and progress payments of $2,311.2 and
$2,739.2) (Note 1)........................................................ 2,265.4 2,376.8
Net equipment on operating leases (less accumulated depreciation of $5,374.7
and $4,579.6)............................................................. 20,061.6 13,095.3
Deferred income taxes (Note 8).............................................. 19,693.3 20,798.1
Other assets (less allowances).............................................. 20,625.5 17,757.3
Property (Note 1)
Real estate, plants, and equipment -- at cost (Note 13)................... 69,807.9 67,966.4
Less accumulated depreciation............................................. 42,586.4 41,725.5
Net real estate, plants, and equipment.................................. 27,221.5 26,240.9
Special tools -- at cost (less amortization).............................. 7,559.1 7,983.9
---------- ----------
Total property........................................................ 34,780.6 34,224.8
---------- ----------
Intangible assets -- at cost (less amortization) (Notes 1 and 14)........... 11,913.8 13,106.9
---------- ----------
Total Assets.......................................................... $198,598.7 $188,200.9
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable (principally trade)........................................ $ 11,635.0 $ 10,276.5
Notes and loans payable (Note 15)........................................... 73,730.2 70,441.2
United States, foreign, and other income taxes -- deferred and payable (Note
8)........................................................................ 2,721.0 2,409.3
Postretirement benefits other than pensions (Note 5)........................ 40,018.2 37,920.0
Pensions (Note 4)........................................................... 14,353.2 22,631.6
Other liabilities and deferred credits (Note 16)............................ 42,867.3 38,474.8
---------- ----------
Total Liabilities..................................................... 185,324.9 182,153.4
---------- ----------
Stocks Subject to Repurchase (Note 17)...................................... 450.0 450.0
---------- ----------
Stockholders' Equity (Notes 3 and 17)
Preference stocks........................................................... 2.4 4.2
Common stocks
$1 2/3 par value (issued, 754,345,782 and 720,105,471 shares)............. 1,257.2 1,200.2
Class E (issued, 268,125,255 and 263,089,320 shares)...................... 26.8 26.3
Class H (issued, 78,720,022 and 75,705,433 shares)........................ 7.9 7.6
Capital surplus (principally additional paid-in capital).................... 13,149.4 12,003.4
Net income retained for use in the business (accumulated deficit)........... 1,785.8 (2,002.9)
---------- ----------
Subtotal.............................................................. 16,229.5 11,238.8
Minimum pension liability adjustment (Note 4)............................... (3,548.4) (5,311.2)
Accumulated foreign currency translation adjustments........................ (100.4) (494.4)
Net unrealized gains on investments in certain debt and equity securities
(Note 1).................................................................. 243.1 164.3
---------- ----------
Total Stockholders' Equity............................................ 12,823.8 5,597.5
---------- ----------
Total Liabilities and Stockholders' Equity............................ $198,598.7 $188,200.9
========== ==========
</TABLE>
Reference should be made to the Notes to Financial Statements.
II-5
<PAGE> 21
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash Flows from Operating Activities
Income (Loss) before cumulative effect of accounting
changes................................................ $ 5,658.7 $ 2,465.8 $(2,620.6)
Adjustments to reconcile income (loss) before cumulative
effect of accounting changes to net cash provided by
operating activities
Depreciation of real estate, plants, and equipment..... 3,688.7 3,682.7 3,646.3
Depreciation of equipment on operating leases.......... 3,435.7 2,893.6 2,498.5
Amortization of special tools.......................... 2,900.7 2,535.3 2,504.0
Amortization of intangible assets...................... 226.2 330.4 310.2
Amortization of discount and issuance costs on debt
issues............................................... 71.3 90.5 118.1
Provision for financing losses......................... 177.3 300.8 371.0
Special provision for scheduled plant closings and
other restructurings................................. -- 950.0 1,237.0
Provision for inventory allowances..................... 53.1 44.1 28.5
Pension expense, net of cash contributions............. (5,096.1) (1,548.2) 273.4
Pre-tax (gain) loss on sales of various assets......... (17.6) 305.6 (162.8)
Write-down of investment in National Car Rental System
Inc.................................................. -- -- 813.2
Provision for ongoing postretirement benefits other
than pensions, net of cash payments.................. 2,252.6 2,396.7 2,198.8
Origination and purchase of mortgage loans............. (10,135.7) (21,583.7) (17,232.9)
Proceeds on sale of mortgage loans..................... 10,719.2 22,309.5 16,859.0
Change in other investments, miscellaneous assets,
deferred credits, etc................................ (1,628.2) 340.2 (523.4)
Change in other operating assets and liabilities
Accounts receivable.................................. (2,582.1) (480.9) 34.7
Inventories*......................................... (1,750.3) 240.3 886.4
Prepaid expenses and other deferred charges.......... (725.5) 60.2 (399.3)
Deferred taxes and income taxes payable*............. 903.8 (1,512.8) (2,131.8)
Other liabilities*................................... 2,683.5 (189.3) 1,181.3
Other*............................................... 1,113.4 1,115.6 (123.4)
--------- --------- ---------
Net Cash Provided by Operating Activities................... $11,948.7 $14,746.4 $ 9,766.2
--------- --------- ---------
</TABLE>
-------------------------
Certain amounts for 1993 and 1992 have been reclassified to conform with 1994
classifications.
* Excluding effect of accounting changes.
Reference should be made to the Notes to Financial Statements.
II-6
<PAGE> 22
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS -- CONCLUDED
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1994 1993 1992
----------- ----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash Flows from Investing Activities
Investment in companies, net of cash acquired....... $ (246.6) $ (232.4) $ (134.7)
Expenditures for real estate, plants, and
equipment........................................ (4,883.7) (3,822.1) (4,336.7)
Expenditures for special tools...................... (2,341.4) (2,648.6) (2,252.9)
Proceeds from disposals of real estate, plants, and
equipment........................................ 351.0 534.9 229.0
Proceeds from sale and leaseback of capital
assets........................................... -- -- 654.9
Proceeds from the sale of various assets............ 518.4 231.5 162.8
Change in other investing assets
Investments in other marketable securities --
acquisitions................................... (14,482.3) (13,545.4) (14,408.8)
Investments in other marketable securities --
liquidations................................... 13,906.0 13,377.0 14,129.3
Finance receivables -- acquisitions.............. (156,579.8) (103,396.3) (120,829.8)
Finance receivables -- liquidations.............. 137,598.4 92,808.6 119,453.1
Finance receivables -- other..................... 610.6 8,528.3 1,895.5
Proceeds from sales of finance receivables....... 18,800.0 13,072.2 11,201.8
Notes receivable................................. 101.9 (102.3) 2.0
Operating leases -- net.......................... (10,239.8) (4,887.7) (4,222.7)
Other............................................ (612.5) 449.1 224.7
----------- ----------- -----------
Net Cash Provided by (Used in) Investing Activities... (17,499.8) 366.8 1,767.5
----------- ----------- -----------
Cash Flows from Financing Activities
Net increase (decrease) in short-term loans
payable.......................................... 3,877.7 (4,278.3) (11,512.1)
Increase in long-term debt.......................... 12,997.4 9,634.7 18,886.4
Decrease in long-term debt.......................... (14,259.9) (17,029.6) (17,907.0)
Redemption of Series H preference stocks............ -- -- (243.9)
Redemption of Howard Hughes Medical Institute
put options...................................... -- (315.0) (300.0)
Repurchases of common and preferred stocks.......... -- (265.6) (7.2)
Proceeds from issuing common and preference
stocks........................................... 1,184.9 860.2 5,555.7
Cash dividends paid to stockholders................. (1,111.9) (1,083.9) (1,376.8)
----------- ----------- -----------
Net Cash Provided by (Used in) Financing Activities... 2,688.2 (12,477.5) (6,904.9)
----------- ----------- -----------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents......................................... 11.4 76.2 58.1
----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents......................................... (2,851.5) 2,711.9 4,686.9
Cash and cash equivalents at beginning of the year.... 13,790.5 11,078.6 6,391.7
----------- ----------- -----------
Cash and cash equivalents at end of the year.......... $ 10,939.0 $ 13,790.5 $ 11,078.6
========== ========== ==========
</TABLE>
-------------------------
Certain amounts for 1993 and 1992 have been reclassified to conform with 1994
classifications.
Reference should be made to the Notes to Financial Statements.
II-7
<PAGE> 23
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of General
Motors Corporation (General Motors, GM, or the Corporation) and domestic and
foreign subsidiaries which are more than 50% owned. During 1992, the Corporation
obtained a majority interest in National Car Rental System Inc. (NCRS). The
accounts of NCRS were consolidated effective December 31, 1992. General Motors'
share of earnings or losses of associates in which at least 20% of the voting
securities is owned is included in consolidated operating results under the
equity method of accounting (see Note 2).
REVENUE RECOGNITION
Sales are generally recorded by the Corporation when products are shipped
to independent dealers. Provisions for normal dealer sales incentives, returns
and allowances, and GM Card rebates are made at the time of vehicle sale. Costs
related to special sales incentive programs are recognized as reductions to
sales when determinable.
Certain sales under long-term contracts, primarily in the defense business,
are recorded using the percentage-of-completion (cost-to-cost) method of
accounting. Effective January 1, 1992, Hughes Aircraft Company (Hughes) changed
its revenue recognition policy for certain commercial businesses from the cost-
to-cost method commonly followed by defense contractors to the units-of-delivery
method which is more appropriate for a commercial business. The unfavorable
cumulative effect of this change was $40.0 million, or $0.05 per share of $1 2/3
par value and $0.10 per share of Class H common stock.
Profits expected to be realized on contracts are based on the Corporation's
estimates of total sales value and costs at completion. These estimates are
reviewed and revised periodically throughout the lives of the contracts, and
adjustments to profits resulting from such revisions are recorded in the
accounting period in which the revisions are made. Estimated losses on contracts
are recorded in the period in which they are identified.
In the case of finance receivables in which the face amount includes the
finance charge (principally retail financing), earnings are recorded in income
over the terms of the receivables using the interest method. On finance
receivables in which the face amount represents the principal (principally
wholesale, interest-bearing financing, and fleet leasing), the interest is taken
into income as earned. Certain loan origination costs are deferred and amortized
to financing revenue over the life of the related loans using the interest
method.
Insurance premiums are earned on a basis related to coverage provided over
the terms of the policies. Commission costs and premium taxes incurred in
acquiring new business are deferred and amortized over the terms of the related
policies on the same basis as premiums are earned. Acquisition costs associated
with direct mail programs are amortized over a three year period. The liability
for losses and claims includes a provision for unreported losses, based on past
experience, net of the estimated salvage and subrogation recoverable.
ALLOWANCE FOR FINANCING LOSSES
An allowance for credit losses is generally established during the period
in which receivables are acquired and is maintained in amounts considered by
management to be appropriate in relation to receivables outstanding.
Losses arising from repossession of the collateral supporting doubtful
accounts are recognized upon repossession of the collateral. Repossessed
collateral is recorded at estimated realizable value in other assets and
adjustments to the related valuation allowance are included in operating
expense. Where repossession has
II-8
<PAGE> 24
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
not been effected, losses are charged off as soon as it is determined that the
collateral cannot be repossessed, generally not more than 150 days after
default.
Nonretail finance receivables are reduced to the estimated fair value of
collateral when determined to be impaired or uncollectible.
CASH AND CASH EQUIVALENTS
Cash equivalents are defined as short-term, highly liquid investments with
original maturities of 90 days or less.
Supplemental disclosure of cash flow information is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash paid during the years for
Interest..................................................... $5,499.3 $5,938.0 $7,410.4
Income taxes................................................. 2,045.8 1,545.7 1,608.5
</TABLE>
With respect to noncash transactions, 18.8 million and 15.2 million shares
of $1 2/3 par value common stock were contributed to the U.S. pension plans in
1993 and 1992, respectively, and 21.5 million shares of Class H common stock
were issued to General Dynamics Corporation (GD) for the purchase of its missile
business in 1992. The 1993 contribution of $1 2/3 par value shares consisted of
shares sold to the Corporation from individual employee accounts in various
stock savings plans of the Corporation. Also, the Corporation entered capital
lease agreements totaling $25.0 million, $13.7 million, and $76.0 million, in
1994, 1993, and 1992, respectively.
CONTRACTS IN PROCESS
Contracts in process are stated at costs incurred plus estimated profit,
less amounts billed to customers and advances and progress payments applied.
Engineering, tooling, manufacturing, and applicable overhead costs, including
administrative, research and development, and selling expenses, are charged to
costs and expenses when incurred. Under certain contracts with the U.S.
Government, progress payments are received based on costs incurred on the
respective contracts. Title to the inventories related to such contracts
(included in contracts in process) vests with the U.S. Government.
DEPRECIATION AND AMORTIZATION
Depreciation is provided based on estimated useful lives of groups of
property generally using accelerated methods, which accumulate depreciation of
approximately two-thirds of the depreciable cost during the first half of the
estimated useful lives.
The cost of each leasehold improvement is amortized over the period of the
lease or the life of the property, whichever is shorter, with the amortization
applied directly to the asset account and charged to costs and expenses.
Depreciation on capitalized leases with a term of five years or less is provided
using the straight-line method; leases with a term in excess of five years are
depreciated using the foregoing accelerated methods.
Expenditures for special tools are amortized over their estimated useful
lives. Amortization is applied directly to the asset account. Replacement of
special tools for reasons other than changes in products is charged directly to
cost of sales.
General Motors Acceptance Corporation (GMAC) provides for depreciation of
vehicles and other equipment on operating leases or in company use generally on
a straight-line basis. The difference between the
II-9
<PAGE> 25
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
net book value and the proceeds of sale or salvage on items disposed of is
included in income as a charge against or credit to the provision for
depreciation.
PRODUCT-RELATED EXPENSES
Expenditures for advertising and sales promotion and for other
product-related expenses are charged to costs and expenses as incurred;
provisions for estimated costs related to product warranty are made at the time
the products are sold. Expenditures for advertising amounted to $2,805.9 million
in 1994, $2,574.4 million in 1993, and $2,414.1 million in 1992. Expenditures
for research and development are charged to expenses as incurred and amounted to
$7,035.8 million in 1994, $6,029.9 million in 1993, and $5,916.9 million in
1992.
FOREIGN CURRENCY TRANSLATION
Exchange and translation gains (losses) on an after-tax basis included in
consolidated operating results in 1994, 1993, and 1992 amounted to $206.9
million, $189.0 million, and ($169.0) million, respectively.
INTANGIBLE ASSETS
The Corporation periodically evaluates the recoverability of goodwill and
other intangible assets, by assessing whether the unamortized intangible asset
can be recovered over its remaining life through cash flows generated by
underlying tangible assets.
FINANCIAL INSTRUMENTS
The Corporation is party to a variety of foreign exchange and interest rate
forward contracts and options entered into in connection with GM and its
consolidated subsidiaries' management of its exposure to fluctuations in foreign
exchange rates and interest rates.
Foreign exchange forward contracts are accounted for as hedges to the
extent they are designated as, and are effective as, hedges of firm foreign
currency commitments. Other such foreign exchange contracts and options are
marked to market on a current basis.
Interest rate forward contracts used to hedge an underlying debt obligation
are not marked to market, but are used to adjust interest expense recognized
over the life of the underlying debt agreement. Gains and losses from terminated
contracts are deferred and amortized over the remaining period of the original
swap. Open interest rate forward contracts are reviewed regularly to ensure that
they remain effective. Written options (including swaptions and interest rate
caps and collars) are marked to market on a current basis.
The Corporation also enters into commodity forward contracts and options
contracts. Since the Corporation has the discretion to settle these transactions
either in cash or by taking physical delivery, these contracts are not
considered financial instruments. Commodity forward contracts and options are
accounted for as hedges to the extent they are designated as, and are effective
as, hedges of firm or anticipated commodity purchase contracts.
ENVIRONMENTAL LIABILITIES
The Corporation recognizes environmental liabilities when a loss is
probable and can be reasonably estimated. Such obligations are generally not
subject to insurance coverage.
Each environmental obligation is estimated by engineering and legal
specialists within the Corporation based on current law and existing
technologies. Such estimates are based primarily upon the estimated cost of
investigation and remediation required and the likelihood that other potentially
responsible parties (PRPs) will be able to fulfill their commitments at the
sites where the Corporation may be jointly and severally liable.
II-10
<PAGE> 26
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
At sites being addressed under the U.S. Comprehensive Environmental Response,
Compensation, and Liability Act or similar state laws (the "Superfund Sites"),
the Corporation typically recognizes an estimated liability once it has been
named as a PRP and has determined that such estimated liability is probable. The
Superfund Sites are primarily multi-PRP sites not owned or operated by the
Corporation. For the Corporation's operating plants, an estimated liability is
typically recognized either upon completion of an environmental assessment or
when the Corporation proposes an agreement with the appropriate regulatory
agency to take action at a site. For closed or closing plants owned by the
Corporation and properties being sold, an estimated liability is typically
recognized at the time the closure decision is made or sale is recorded and is
based on an environmental assessment of the plant property.
The Corporation periodically evaluates and revises estimates for
environmental obligations based on expenditures against established reserves and
the availability of additional information.
ACCOUNTING CHANGES
GMAC adopted Statement of Financial Accounting Standards (SFAS) No. 113,
Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration
Contracts, effective January 1, 1993 and the resulting increase in the
Corporation's assets and liabilities was not material.
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,
determined on a discounted basis, 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 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 was not
material in 1994 and is not expected to be material in subsequent periods.
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. Unrealized gains and losses resulting from changes in fair value are
included as a separate component of Stockholders' Equity. The primary effect of
this Standard for the Corporation relates to debt securities held by Motors
Insurance Corporation and certain equity securities. The ongoing 1994 effect was
a $121.2 million decrease in Stockholders' Equity. Marketable securities, other
than certain securities held by GMAC and its subsidiaries (and described in Note
11), are considered available for sale; $869.4 million mature within one year,
$248.2 million mature in two to five years, and a substantial amount of the
remaining $127.4 million matures after 10 years.
II-11
<PAGE> 27
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
NOTE 2. OTHER INCOME AND OTHER DEDUCTIONS
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Other Income
Insurance premiums........................................... $ 873.8 $ 799.3 $ 768.9
Nonfinancing interest........................................ 1,507.7 1,886.2 1,839.7
Equity in earnings (losses) of associates, net............... 205.5 (172.5) (508.3)
Gain on the sale of Daewoo Motor Co.......................... -- -- 162.8
Claims, commissions, and grants.............................. 467.4 489.7 328.2
Gain on the sale of finance receivables...................... 30.8 436.4 588.8
Revenue from mortgage operations............................. 208.5 349.5 318.8
Other........................................................ 1,066.0 809.0 210.6
-------- -------- --------
Total other income...................................... $4,359.7 $4,597.6 $3,709.5
======= ======= =======
Other Deductions
Insurance losses and loss adjustment expenses................ $ 749.7 $ 614.4 $ 587.3
Provision for financing losses............................... 177.3 300.8 371.0
Write-down of investment in NCRS............................. -- -- 813.2
Loss on the sale of Allison Gas Turbine Division............. -- 305.6 --
Other........................................................ 533.5 403.9 30.4
-------- -------- --------
Total other deductions.................................. $1,460.5 $1,624.7 $1,801.9
======= ======= =======
</TABLE>
NOTE 3. STOCK AND OTHER INCENTIVE PLANS
The Corporation's incentive plans consist of the General Motors Amended
1987 Stock Incentive Plan (the "GMSIP"), the General Motors 1992 Performance
Achievement Plan (the "GMPAP"), the 1984 Electronic Data Systems Corporation
Stock Incentive Plan (the "EDS Plan"), and the GM Hughes Electronics Corporation
Incentive Plan (the "GMHE Plan"). The GMSIP and GMPAP plans are administered by
the Executive Compensation Committee of the Board of Directors (the
"Committee").
Under the GMSIP, 39.8 million shares of $1 2/3 par value, 12.2 million
shares of Class E, and 5.9 million shares of Class H common stock may be granted
from June 1, 1992 through May 31, 1997 of which 24.8 million, 12.1 million, and
5.4 million shares, respectively, may still be granted at December 31, 1994.
Option prices are 100% of fair market value on the dates of grant, and the
options generally expire 10 years from the dates of grant, subject to earlier
termination under certain conditions.
Under the EDS Plan, EDS may grant shares and rights or options to acquire
up to 160 million shares of Class E common stock during the 10 year life
(extended an additional 10 years in 1994) of the EDS Plan of which 99.6 million
shares may still be granted at December 31, 1994. No options were outstanding as
of December 31, 1994, 1993, or 1992. Under the EDS Plan, approximately 48.6
million shares of Class E common stock have also been granted to key employees
at stock prices up to $0.025 per share. Such shares generally vest over a
10-year period from the date of grant. Approximately 17.4 million shares were
not yet vested at December 31, 1994.
Under the GMHE Plan, GMHE may grant shares, rights, or options to acquire
up to 20 million shares of Class H common stock through May 31, 1997 (extended
an additional two years in 1995) of which 5.5 million shares may still be
granted at December 31, 1994. Option prices are 100% of fair market value on the
dates of grant, and the options generally expire 10 years from the dates of
grant, subject to earlier termination under certain conditions.
II-12
<PAGE> 28
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Changes in the status of outstanding options under the GMSIP and GMHE Plan
were as follows:
<TABLE>
<CAPTION>
GMSIP OPTION SHARES UNDER
$1 2/3 PAR VALUE COMMON PRICES OPTION
----------------------- ------------- ------------
<S> <C> <C>
Outstanding at January 1, 1992.................................... $19.13-$48.07 17,829,132
Granted........................................................... 37.32- 37.75 5,302,140
Exercised......................................................... 19.13- 41.50 (197,851)
Terminated........................................................ 19.13- 48.07 (864,675)
------------- ------------
Outstanding at December 31, 1992.................................. 33.97- 48.07 22,068,746
Granted........................................................... 33.88- 44.00 5,526,855
Exercised......................................................... 33.97- 48.07 (4,303,326)
Terminated........................................................ 33.88- 48.07 (531,218)
------------- ------------
Outstanding at December 31, 1993.................................. 33.88- 48.07 22,761,057
Granted........................................................... 37.32- 59.07 6,159,395
Exercised......................................................... 33.88- 48.07 (3,305,513)
Terminated........................................................ 33.88- 59.07 (340,161)
------------- ------------
Outstanding at December 31, 1994.................................. $33.88-$59.07 25,274,778
============= ===========
Memo:
Options exercisable at December 31, 1994.......................... -- 16,962,654
============= ===========
GMHE PLAN
CLASS H COMMON
--------------
Outstanding at January 1, 1992.................................... $17.07-$30.25 5,061,209
Granted........................................................... 23.63- 25.38 1,927,860
Exercised......................................................... 17.07- 24.35 (136,764)
Terminated........................................................ 17.07- 30.25 (335,550)
------------- ------------
Outstanding at December 31, 1992.................................. 17.07- 30.25 6,516,755
Granted........................................................... 28.00- 28.56 2,027,260
Exercised......................................................... 17.07- 30.25 (1,960,162)
Terminated........................................................ 17.07- 30.25 (217,845)
------------- ------------
Outstanding at December 31, 1993.................................. 17.07- 30.25 6,366,008
Granted........................................................... 36.75 1,612,640
Exercised......................................................... 17.07- 30.25 (712,107)
Terminated........................................................ 17.07- 36.75 (202,220)
------------- ------------
Outstanding at December 31, 1994.................................. $17.07-$36.75 7,064,321
============= ===========
Memo:
Options exercisable at December 31, 1994.......................... -- 4,739,664
============= ===========
</TABLE>
NOTE 4. PENSIONS
The Corporation and its subsidiaries have a number of defined benefit
pension plans covering substantially all employees. Plans covering U.S. and
Canadian represented employees generally provide benefits of negotiated stated
amounts for each year of service as well as significant supplemental benefits
for employees who retire with 30 years of service before normal retirement age.
The benefits provided by the plans covering its U.S. and Canadian salaried
employees, and employees in certain foreign locations, are generally based on
years of service and the employee's salary history. The Corporation and its
subsidiaries also have certain
II-13
<PAGE> 29
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
nonqualified pension plans covering executives which are based on targeted wage
replacement percentages and are unfunded.
The measurement date used for the Corporation's principal U.S. plans has
been changed from October 1 to December 31, primarily to align the measurement
date with the year-end financial statement date. The impact of this change on
the Corporation's 1994 net income and Stockholders' Equity was not material.
Measurement dates used for the Corporation's other U.S. plans are October 1 for
EDS plans, and December 1 for Hughes' plans. For non-U.S. plans, the measurement
dates used are October 1 for certain foreign plans and December 1 for Canadian
plans.
Plan assets are primarily invested in U.S. Government obligations, equity
and fixed income securities, commingled pension trust funds, insurance
contracts, and GM $1 2/3 par value and Class E common stock (valued as of the
1994 measurement date at $1,213.9 million and $1,024.6 million, respectively).
The Corporation's funding policy with respect to its qualified plans is to
contribute annually not less than the minimum required by applicable law and
regulation. The Corporation made pension contributions to the U.S. plans of
$7,655.6 million in 1994, $4,387.9 million in 1993, and $1,365.2 million in
1992.
Total pension expense of the Corporation and its subsidiaries amounted to
$3,677.4 million in 1994, $2,684.9 million in 1993, and $1,981.5 million in
1992. Programs for early retirement were offered to certain employees during
1994, 1993, and 1992. The pension related cost of these programs was $88.9
million, $659.3 million, and $564.1 million, respectively, of which $88.9
million, $229.4 million, and $359.5 million was expensed during 1994, 1993, and
1992, respectively. In 1993, the remainder was charged against certain training
fund accruals, based upon an agreement with represented hourly employees, and in
1992, the remainder was charged against the restructuring reserve.
Net periodic pension cost and total pension expense for 1994, 1993, and
1992 of U.S. plans and plans of subsidiaries outside the United States included
the components shown in the tables below and on the following page.
<TABLE>
<CAPTION>
U.S. PLANS NON-U.S. PLANS
---------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
1994
Benefits earned during the year..................................... $ 1,207.0 $ 223.7
Interest accrued on benefits earned in prior years.................. 4,466.6 617.7
Return on assets
-- Actual gain.................................................... (1,161.3) (105.0)
-- Plus deferred loss............................................. (3,312.0) (285.2)
Net amortization.................................................... 1,323.5 174.0
---------- --------------
Net periodic pension cost........................................... 2,523.8 625.2
Termination, curtailment, and settlement benefits................... 399.6 61.4
Other-primarily minor pension plans................................. 12.9 54.5
---------- --------------
Total pension expense........................................ $ 2,936.3 $ 741.1
======== ===========
</TABLE>
II-14
<PAGE> 30
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
U.S. PLANS NON-U.S. PLANS
---------- --------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
1993
Benefits earned during the year..................................... $ 939.9 $133.1
Interest accrued on benefits earned in prior years.................. 4,258.9 473.9
Return on assets
-- Actual gain.................................................... (7,159.0) (775.6)
-- Less deferred gain............................................. 3,329.1 453.1
Net amortization.................................................... 647.7 67.7
---------- -------
Net periodic pension cost........................................... 2,016.6 352.2
Termination, curtailment, and settlement benefits................... 202.8 26.6
Other-primarily minor pension plans................................. 12.1 74.6
---------- -------
Total pension expense........................................ $2,231.5 $453.4
======== ===========
1992
Benefits earned during the year..................................... $ 859.9 $135.1
Interest accrued on benefits earned in prior years.................. 4,089.9 469.2
Return on assets
-- Actual gain.................................................... (2,770.9) (147.6)
-- Plus deferred loss............................................. (1,320.9) (217.0)
Net amortization.................................................... 403.9 39.0
---------- -------
Net periodic pension cost........................................... 1,261.9 278.7
Termination, curtailment, and settlement benefits................... 332.9 26.6
Other-primarily minor pension plans................................. (0.1) 81.5
---------- -------
Total pension expense........................................ $1,594.7 $386.8
======== ===========
</TABLE>
II-15
<PAGE> 31
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
The following tables reconcile the funded status of the Corporation's U.S.
and non-U.S. plans for which SFAS No. 87, Employers' Accounting for Pensions,
has been adopted with amounts recognized in the Corporation's Consolidated
Balance Sheet at December 31, 1994 and 1993.
<TABLE>
<CAPTION>
1994 1993
----------------------- -----------------------
ASSETS ACCUM. ASSETS ACCUM.
EXCEED BENEFITS EXCEED BENEFITS
ACCUM. EXCEED ACCUM. EXCEED
BENEFITS ASSETS BENEFITS ASSETS
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
U.S. PLANS
Actuarial present value of benefits based on
service to date and present pay levels
Vested........................................ $20,631.9 $ 28,799.4 $23,137.6 $ 30,991.6
Nonvested..................................... 1,654.7 6,488.0 1,392.2 7,503.8
--------- ---------- --------- ----------
Accumulated benefit obligation.................. 22,286.6 35,287.4 24,529.8 38,495.4
Additional amounts related to projected pay
increases..................................... 1,985.5 192.4 2,189.8 213.0
--------- ---------- --------- ----------
Total projected benefit obligation (PBO) based
on service to date............................ 24,272.1 35,479.8 26,719.6 38,708.4
Plan assets at fair value....................... 25,827.9 24,579.7 27,323.5 19,626.4
--------- ---------- --------- ----------
PBO (in excess of) less than plan assets........ 1,555.8 (10,900.1) 603.9 (19,082.0)
Unamortized net amount resulting from changes in
plan experience and actuarial assumptions..... 4,180.1 5,567.4 5,174.7 7,887.8
Unamortized prior service cost.................. 1,357.5 5,887.2 1,396.1 6,373.5
Unamortized net obligation (asset) at date of
adoption...................................... (1,035.7) 624.3 (1,170.3) 944.1
Adjustment for unfunded pension liabilities..... -- (11,886.5) -- (14,992.4)
--------- ---------- --------- ----------
Net prepaid pension cost (accrued liability)
recognized in the Consolidated Balance
Sheet......................................... $ 6,057.7 $(10,707.7) $ 6,004.4 $(18,869.0)
======== ========= ======== =========
NON-U.S. PLANS
Actuarial present value of benefits based on
service to date and present pay levels
Vested........................................ $ 1,945.8 $ 4,535.9 $ 1,354.2 $ 5,558.0
Nonvested..................................... 68.8 148.0 56.1 234.7
--------- ---------- --------- ----------
Accumulated benefit obligation.................. 2,014.6 4,683.9 1,410.3 5,792.7
Additional amounts related to projected pay
increases..................................... 316.6 425.4 132.0 526.4
--------- ---------- --------- ----------
Total PBO based on service to date.............. 2,331.2 5,109.3 1,542.3 6,319.1
Plan assets at fair value....................... 2,673.3 1,543.1 1,661.4 2,414.3
--------- ---------- --------- ----------
PBO (in excess of) less than plan assets........ 342.1 (3,566.2) 119.1 (3,904.8)
Unamortized net amount resulting from changes in
plan experience and actuarial assumptions..... 455.4 394.7 510.9 1,318.7
Unamortized prior service cost.................. 192.1 962.1 146.4 1,154.0
Unamortized net obligation (asset) at date of
adoption...................................... (218.6) 229.9 (192.6) 137.2
Adjustment for unfunded pension liabilities..... -- (1,206.7) -- (2,112.7)
--------- ---------- --------- ----------
Net prepaid pension cost (accrued liability)
recognized in the Consolidated Balance
Sheet......................................... $ 771.0 $ (3,186.2) $ 583.8 $ (3,407.6)
======== ========= ======== =========
</TABLE>
II-16
<PAGE> 32
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
The assumptions for non-U.S. plans were developed on a basis consistent
with that for U.S. plans, adjusted to reflect prevailing economic conditions and
interest rate environments. Assumptions used to determine the pension expense
and the actuarial value of the PBO were:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1994 1993
---- ----
<S> <C> <C>
Weighted average discount rate
U.S. plans.................................................................... 8.5% 7.1%
Non-U.S. plans................................................................ 9.0 8.0
Rate of increase in future compensation levels*
U.S. plans.................................................................... 5.2 5.2
Non-U.S. plans................................................................ 4.8 5.0
Expected long-term rate of return on plan assets
U.S. plans.................................................................... 10.0 10.1
Non-U.S. plans................................................................ 9.8 10.0
</TABLE>
-------------------------
* Benefits under the hourly plans are generally not based on wages and therefore
no benefit escalation beyond existing negotiated or anticipated increases was
included.
NOTE 5. OTHER POSTRETIREMENT BENEFITS
The Corporation and certain of its domestic subsidiaries maintain hourly
and salaried benefit plans that provide postretirement medical, dental, vision,
and life insurance to retirees and eligible dependents. These benefits are
funded as incurred from the general assets of the Corporation. Effective January
1, 1992, the Corporation adopted SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions. This Statement requires that the
cost of such benefits be recognized in the financial statements during the
period employees provide service to the Corporation. The Corporation's previous
practice was to recognize the cost of such postretirement benefits when incurred
(i.e., pay-as-you-go method). The medical, dental, vision, and life insurance
costs for active employees during active service are not covered by this
Standard and are charged directly to expense on a pay-as-you-go basis.
The cumulative effect of this accounting change as of January 1, 1992 was
$33,116.1 million, or $20,837.7 million after-tax ($33.38 per share of $1 2/3
par value and $2.08 per share of Class H common stock). The incremental ongoing
effect in 1992 of this accounting change was to increase the loss before
cumulative effect of accounting changes by $2,198.8 million, or $1,384.2 million
after-tax ($2.05 per share of $1 2/3 par value and $0.11 per share of Class H
common stock). The incremental ongoing effect in 1993 reduced net income by
$1,486.8 million after-tax ($2.08 per share of $1 2/3 par value and $0.14 per
share of Class H common stock). The incremental ongoing effect in 1994 reduced
net income by $1,398.6 million after-tax ($1.87 per share of $1 2/3 par value
and $0.15 per share of Class H common stock).
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.
At the date of adoption, the substantive terms of such plans were generally
consistent with the written plan provisions, except that the substantive plan
included certain adjustments to the deductibles, co-pays, and premiums paid by
salaried employees, which the Corporation implemented in 1992.
II-17
<PAGE> 33
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Certain of the Corporation's subsidiaries outside of the U.S. have
postretirement plans, although most participants are covered by government
sponsored or administered programs, and the postretirement cost of such programs
generally is not significant to the Corporation.
The total non-pension postretirement benefit cost to the Corporation and
its subsidiaries, other than the cumulative effect of adopting SFAS No. 106,
amounted to $4,122.3 million in 1994, $4,163.4 million in 1993, and $3,700.7
million in 1992, and included the components set forth as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Benefits earned during the year................................ $ 955.4 $ 811.5 $ 717.9
Interest accrued on benefits earned in prior years............. 3,114.2 3,177.5 2,982.8
Termination, curtailment, and settlement benefits.............. (233.0) 174.4 --
Amortization of net actuarial losses........................... 407.4 -- --
Amortization of prior service costs due to plan changes........ (121.7) -- --
-------- -------- --------
Total non-pension postretirement benefit cost................ $4,122.3 $4,163.4 $3,700.7
======= ======= =======
</TABLE>
The table below displays the components of the Corporation's postretirement
benefit plans with the obligation recognized in the Consolidated Balance Sheet
at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1993
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO) attributable to
Current retirees..................................................... $21,562.3 $24,133.2
Fully eligible active plan participants.............................. 3,984.7 3,913.3
Other active plan participants....................................... 11,196.1 17,577.1
--------- ---------
APBO................................................................... 36,743.1 45,623.6
Unamortized prior service costs due to plan changes.................... 958.3 1,080.0
Unamortized net amount resulting from changes in plan experience and
actuarial assumptions................................................ 2,316.8 (8,783.6)
--------- ---------
Net obligation recognized in the Consolidated Balance Sheet............ $40,018.2 $37,920.0
======== ========
</TABLE>
The following table summarizes the principal assumptions used in
determining the actuarial value of the APBO:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1994 1993
---- ----
<S> <C> <C>
Weighted average discount rate................................................ 8.8 % 7.0%
Weighted average rate of increase in future compensation levels related to
pay-related life insurance.................................................. 4.2 % 4.2%
Base weighted average health-care cost trend rate (a):
1994........................................................................ 9.12%
1995........................................................................ 8.7 %
Ultimate sustained weighted average health-care cost trend rate in 2006 (b)... 5.5 % 5.5%
</TABLE>
-------------------------
(a) Current year trend rate assumed at beginning of year is adjusted to actual
in determining year-end obligations.
(b) Rate decreases on a linear basis through 2002, reaches an ultimate weighted
average trend rate in 2006.
II-18
<PAGE> 34
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
The following decreases would result from a one percentage point increase
in the weighted average discount rate:
<TABLE>
<CAPTION>
1994 1993
------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
APBO..................................................................... $3,800 $5,500
</TABLE>
The following increases would result from a one percentage point increase
in the weighted average health-care cost trend rates:
<TABLE>
<CAPTION>
1994 1993
------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
APBO..................................................................... $3,950 $5,700
Service and interest components of postretirement expense................ $ 600 $ 550
</TABLE>
NOTE 6. SPECIAL PROVISION FOR SCHEDULED PLANT CLOSINGS AND OTHER RESTRUCTURINGS
The 1993 operating results included a pre-tax increase of $950.0 million to
the Corporation's previously announced plant closing reserve ($589.0 million
after taxes, or $0.83 per share of $1 2/3 par value common stock). The increase
in the reserve resulted from changes in assumptions, primarily regarding the
amount and duration of job security and supplemental unemployment benefits
expected to be paid to employees, given the terms of the Corporation's
collective bargaining agreements, which mainly include payments for employee job
security, and facility holding costs.
The 1992 operating results included a special restructuring charge of
$1,237.0 million ($749.4 million after taxes, or $0.97 per share of $1 2/3 par
value common stock and $1.87 per share of Class H common stock) primarily
attributable to redundant facilities and related employment costs at Hughes. The
special charge comprehends a reduction of Hughes worldwide employment, a major
facilities consolidation, and a re-evaluation of certain business lines that no
longer meet Hughes' strategic objectives.
During 1994, 1993, and 1992, a net of $727.1 million, $1,127.2 million, and
$974.3 million, respectively, was charged against these reserves, primarily
related to employee job security costs. In addition, in 1994 and 1993 the GMHE
restructuring reserve was increased by $35 million and $78 million,
respectively, primarily due to changes in the estimated loss on disposition of
two subsidiaries. In 1994, the reserve was decreased to reflect the discounting
of only the postemployment benefits portion of the reserve due to the
Corporation's use of discounting in its method of adoption of SFAS No. 112. At
December 31, 1994, the discount was $401.9 million.
NOTE 7. PROFIT SHARING PLANS
The profit sharing formula provides a range of percentage payouts when the
Corporation's manufacturing, wholesale marketing, defense, electronics, and
computer service operations U.S. income before income taxes with the financing
and insurance operations reflected on an equity basis exceeds various minimum
annual returns on U.S. sales and revenues. Both the percentage payout and the
minimum returns are as agreed to by the Corporation and eligible U.S. employees.
GM's 1994 pre-tax income from U.S. operations will result in a profit sharing
payout of approximately $185 million. GM's pre-tax losses from U.S. operations
in 1993 and 1992 precluded a payment under the profit sharing formula.
II-19
<PAGE> 35
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
NOTE 8. UNITED STATES, FOREIGN, AND OTHER INCOME TAXES -- DEFERRED AND PAYABLE
<TABLE>
<CAPTION>
1994 1993 1992
-------- ------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Taxes estimated to be payable (refundable) currently
U.S. Federal................................................. $ 544.7 ($230.5) $ 183.7
Foreign...................................................... 1,029.9 783.8 1,593.0
U.S. state and local......................................... 69.7 188.9 85.8
-------- ------- ---------
Total..................................................... 1,644.3 742.2 1,862.5
-------- ------- ---------
Deferred tax (benefits) liabilities -- net
U.S. Federal................................................. 576.0 (86.2) (2,313.6)
Increase in U. S. corporate income tax rate.................. -- (444.3) --
Foreign...................................................... 421.7 (28.3) 60.8
U.S. state and local......................................... 108.5 (5.3) (224.9)
-------- ------- ---------
Total..................................................... 1,106.2 (564.1) (2,477.7)
-------- ------- ---------
Investment tax credits amortized -- net
U.S. Federal................................................. (48.1) (58.6) (72.5)
Foreign...................................................... (7.8) (10.0) (24.8)
-------- ------- ---------
Total..................................................... (55.9) (68.6) (97.3)
-------- ------- ---------
Total taxes (credit).................................... $2,694.6* $ 109.5 $ (712.5)*
======== ======= =========
</TABLE>
-------------------------
*Excluding effect of accounting changes.
Deferred income tax assets and liabilities for 1994 and 1993 reflect the
impact of temporary differences between amounts of assets and liabilities for
financial reporting purposes and the bases of such assets and liabilities as
measured by tax laws. The net deferred tax asset in the U.S. was $18,171.0
million and $19,165.5 million at December 31, 1994 and 1993, respectively.
Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities at December 31, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1994 DEFERRED TAX 1993 DEFERRED TAX
------------------------ ------------------------
ASSETS LIABILITIES ASSETS LIABILITIES
--------- ----------- --------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Postretirement benefits other than pensions....... $15,184.7 $ -- $14,330.7 $ --
Depreciation...................................... 465.3 4,915.6 442.7 4,477.7
Sales and product allowances...................... 1,615.2 241.3 1,887.1 367.7
Policy and warranty............................... 2,041.9 -- 2,165.0 --
Benefit plans..................................... 1,606.3 3,757.4 1,204.3 2,623.0
Lease transactions................................ -- 2,321.3 -- 1,704.7
Alternative minimum tax........................... 939.3 -- 638.8 --
Minimum pension liability adjustment.............. 2,213.4 -- 3,209.2 --
Capitalized research and experimentation.......... 780.3 -- 884.7 --
Special provision for scheduled plant closings and
other restructurings............................ 1,807.4 -- 2,206.3 --
Profits on long-term contracts.................... 387.7 632.4 -- 543.3
U.S. state NOL carryforward....................... 314.2 -- 301.2 --
Financing losses.................................. 253.2 -- 332.5 --
Tax on unremitted profits......................... -- 353.1 -- 399.8
Miscellaneous foreign............................. 1,422.2 638.3 638.9 180.8
All other......................................... 4,721.6 2,681.7 4,712.9 2,815.5
--------- ----------- --------- -----------
Subtotal........................................ 33,752.7 15,541.1 32,954.3 13,112.5
Valuation allowance............................... (1,074.4) -- (1,027.6) --
--------- ----------- --------- -----------
Total deferred taxes......................... $32,678.3 $ 15,541.1 $31,926.7 $ 13,112.5
========= ========== ========= ==========
</TABLE>
Certain amounts for 1993 have been reclassified to conform with 1994
classifications.
II-20
<PAGE> 36
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Provisions are made for estimated U.S. and foreign income taxes, less
available tax credits and deductions, which may be incurred on the remittance of
the Corporation's share of subsidiaries' undistributed earnings not deemed to be
permanently invested. Taxes have not been provided on foreign subsidiaries'
earnings which are deemed essentially permanently reinvested of approximately
$5.8 billion at December 31, 1994 and 1993. Quantification of the deferred tax
liability, if any, associated with permanently reinvested earnings is not
practicable.
Income (Loss) before income taxes included the following components:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
U.S. income (loss)................................... $3,152.1 $ (512.7) $(6,767.3)
Foreign income....................................... 5,201.2 3,088.0 3,434.2
-------- -------- ---------
Total........................................... $8,353.3 $2,575.3 $(3,333.1)
======== ======== =========
</TABLE>
The consolidated income tax (credit) was different than the amount computed
using the U.S. statutory income tax rate for the reasons set forth in the table
below:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Expected tax (credit) at U.S. statutory income tax
rate(1)............................................ $2,923.7 $ 901.4 $(1,133.3)
U.S. state and local income taxes.................... 130.8 129.7 (154.7)
Deferred tax impact of Federal rate increase......... -- (444.3 ) --
Investment tax credits amortized..................... (62.2) (77.1 ) (98.0)
NCRS charge -- primarily goodwill.................... -- -- 208.9
U.S. tax effect of foreign earnings and dividends.... 126.5 80.9 229.9
Foreign rates other than 35%/34%(1).................. (453.6) (433.4 ) 214.6
Taxes on unremitted earnings of subsidiaries......... 123.5 54.3 42.3
Equity effect in pre-tax income...................... (71.9) 60.4 172.8
Other adjustments.................................... (22.2) (162.4 ) (195.0)
-------- -------- ---------
Consolidated income tax (credit)................ $2,694.6(2) $ 109.5 $ (712.5)(2)
======== ======= =========
</TABLE>
-------------------------
(1) 35% in 1994 and 1993 and 34% in 1992.
(2) Excluding effect of accounting changes.
II-21
<PAGE> 37
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
NOTE 9. EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO AND DIVIDENDS ON COMMON STOCKS
Earnings (Loss) 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 (loss) 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 (Loss) of EDS and GMHE. Dividends on the Class E and
Class H common stocks are declared out of the Available Separate Consolidated
Net Income (Loss) of EDS and GMHE, respectively, earned since the acquisition by
GM.
The Available Separate Consolidated Net Income (Loss) of EDS and GMHE is
determined quarterly and is equal to the separate consolidated net income (loss)
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 a number equal to the weighted average number of shares of
Class E or Class H common stock outstanding during the period and the
denominator of which was 481.7 million for Class E stock and 399.9 million for
Class H stock during the fourth quarter of 1994. Comparable denominators for the
fourth quarters of 1993 and 1992 were 480.6 million and 479.3 million,
respectively, for Class E stock and 399.9 million for Class H stock in the
fourth quarters of both years.
The denominators used in determining the Available Separate Consolidated
Net Income (Loss) 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. The Board's discretion to make such adjustments is limited by criteria
set forth in GM's Certificate of Incorporation. 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 1994, 1993, and 1992, which exceeded
35% of the Available Separate Consolidated Net Income (Loss) of GMHE for the
preceding year (excluding the effect of the $749.4 million after-tax special
restructuring charge at Hughes in 1992).
For the purpose of determining earnings (loss) per share and amounts
available for dividends on common stocks, the amortization of intangible assets
arising from the acquisitions of Hughes and EDS is charged against earnings
(loss) attributable to $1 2/3 par value common stock. The resulting effect on
the 1994, 1993, and 1992 earnings (loss) attributable to $1 2/3 par value common
stock was a net credit (charge) of $112.8 million, $149.8 million, and ($827.0)
million, respectively, for the Hughes acquisition and $56.0 million, $39.2
million, and $61.5 million, respectively, for the EDS acquisition. Such amounts
consist of the amortization of the intangible assets arising from the
acquisitions, the profit on intercompany transactions, and the earnings (loss)
of GMHE or EDS attributable to $1 2/3 par value common stock.
II-22
<PAGE> 38
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
NOTE 10. FINANCE RECEIVABLES -- NET
The composition of finance receivables outstanding at December 31, 1994 and
1993 is summarized as follows:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
U.S.
Retail............................................................... $23,486.8 $22,322.2
Wholesale............................................................ 14,560.9 16,663.5
Leasing and lease financing.......................................... 1,613.4 2,372.1
Term loans to dealers and others..................................... 3,670.0 3,902.1
--------- ---------
Total U.S....................................................... 43,331.1 45,259.9
--------- ---------
Canada, Mexico, and International
Retail............................................................... 7,747.9 6,846.4
Wholesale............................................................ 4,850.6 3,832.3
Leasing and lease financing.......................................... 1,666.7 1,491.3
Term loans to dealers and others..................................... 484.2 387.9
--------- ---------
Total Canada, Mexico, and International......................... 14,749.4 12,557.9
--------- ---------
Total finance receivables.............................................. 58,080.5 57,817.8
Less -- Unearned income................................................ (3,309.9) (3,195.1)
Allowance for financing losses................................... (693.3) (748.0)
--------- ---------
Total finance receivables -- net................................. $54,077.3 $53,874.7
======== ========
</TABLE>
Retail, lease financing, and leasing receivable installments past due over
30 days amounted to $28.5 million and $79.2 million at December 31, 1994 and
1993, respectively. Installments on term loans to dealers and others past due
over 30 days aggregated $70.7 million at December 31, 1994 and $82.0 million at
December 31, 1993.
The aggregate amount of total finance receivables maturing in each of the
five years following December 31, 1994 is as follows: 1995-$34,453.1 million;
1996-$10,670.7 million; 1997-$7,361.2 million; 1998-$3,873.8 million;
1999-$1,531.4 million; and 2000 and thereafter-$190.3 million.
The following table presents an analysis of the allowance for financing
losses for 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
------- -------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Allowance for financing losses at beginning of the year................... $ 748.0 $ 817.0
------- -------
Charge-offs
U.S..................................................................... (310.7) (365.3)
Other countries......................................................... (50.3) (72.6)
------- -------
Total charge-offs......................................................... (361.0) (437.9)
Recoveries and other...................................................... 116.0 74.5
Transfers to other nonearning assets...................................... -- (40.2)
Transfers from sold receivables allowance................................. 13.0 33.8
Provisions charged to income.............................................. 177.3 300.8
------- -------
Allowance for financing losses at end of the year......................... $ 693.3 $ 748.0
======= =======
</TABLE>
II-23
<PAGE> 39
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
GMAC sold finance receivables through special purpose subsidiaries. These
subsidiaries generally retain a subordinated investment of no greater than 9% of
the total receivables pool and market the remaining portion. These subordinated
investments absorb losses related to sold receivables to the extent that such
losses are greater than the excess cash flows from those receivables and cash
reserves related to the sale transaction. Pre-tax gains relating to such sales
recorded in Other Income (excluding limited recourse loss provisions which
generally have been provided at the time the contracts were originally acquired)
amounted to $30.8 million in 1994, $436.4 million in 1993, and $588.8 million in
1992. GMAC continues to service these receivables for a fee. GMAC's retail
finance receivable servicing portfolio amounted to $9.9 billion, $14.9 billion,
and $10.9 billion at December 31, 1994, 1993, and 1992, respectively.
During 1994, GMAC completed its first wholesale receivable sale which
included floating rate term notes sold to the public and floating rate
subordinated certificates and a floating rate revolving note privately placed.
Wholesale receivable sales resulted in a decrease in outstandings of $2.6
billion which comprised GMAC's wholesale finance servicing portfolio at December
31, 1994. The certificates, when taken together with the reserve fund, provide
credit support for the notes.
NOTE 11. GENERAL MOTORS ACCEPTANCE CORPORATION AND SUBSIDIARIES
CONDENSED GMAC CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents............................................. $ 1,339.5 $ 4,028.1
Investments in securities............................................. 3,891.7 3,449.7
Finance receivables -- net............................................ 54,625.1 54,134.8
Net investment in operating leases.................................... 17,809.2 11,363.5
Receivables -- General Motors Corporation............................. 1,080.5 1,355.5
Other assets.......................................................... 6,791.4 6,419.2
--------- ---------
Total Assets..................................................... $85,537.4 $80,750.8
======== ========
Short-term debt....................................................... $35,114.8 $35,084.4
Accounts payable and other liabilities (including GM and affiliates --
$1,867.3 and $2,487.5).............................................. 10,989.3 10,125.3
Long-term debt........................................................ 31,539.6 27,688.8
Stockholder's equity.................................................. 7,893.7 7,852.3
--------- ---------
Total Liabilities and Stockholder's Equity....................... $85,537.4 $80,750.8
======== ========
</TABLE>
II-24
<PAGE> 40
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
CONDENSED GMAC CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Financing Revenue
Retail and lease financing.................................... $ 2,955.0 $ 3,673.4 $ 5,507.0
Leasing....................................................... 4,855.7 3,870.9 3,527.9
Wholesale and term loans...................................... 1,608.1 1,207.7 1,367.2
--------- --------- ---------
Total financing revenue......................................... 9,418.8 8,752.0 10,402.1
Interest and discount........................................... 4,230.9 4,721.2 5,828.6
Depreciation on operating leases................................ 3,233.8 2,702.0 2,429.6
--------- --------- ---------
Net financing revenue........................................... 1,954.1 1,328.8 2,143.9
Insurance premiums earned....................................... 1,127.6 1,107.2 1,159.7
Other income.................................................... 1,598.6 2,624.3 2,177.5
--------- --------- ---------
Net Financing Revenue and Other................................. 4,680.3 5,060.3 5,481.1
Expenses........................................................ 3,240.5 3,487.5 3,380.1
--------- --------- ---------
Income before income taxes...................................... 1,439.8 1,572.8 2,101.0
Income taxes.................................................... 512.7 591.7 882.3
--------- --------- ---------
Income before cumulative effect of accounting changes........... 927.1 981.1 1,218.7
Cumulative effect of accounting changes......................... (7.4)* -- (282.6)*
--------- --------- ---------
Net Income...................................................... $ 919.7 $ 981.1 $ 936.1
========= ========= =========
Cash dividends paid to GM....................................... $ 875.0 $ 1,250.0 $ 1,100.0
========= ========= =========
</TABLE>
-------------------------
*GMAC adopted SFAS No. 112 effective January 1, 1994 and SFAS No. 106 effective
January 1, 1992.
CONDENSED GMAC CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Net cash provided by operating activities....................... $ 4,735.8 $ 4,901.8 $ 5,166.8
----------- ----------- -----------
Cash flows from investing activities
Finance receivables -- acquisitions............................. (156,579.8) (103,396.3) (120,829.8)
liquidations............................. 137,598.4 92,808.6 119,453.1
Notes receivable from General Motors Corporation................ 275.0 10,207.7 2,303.0
Operating leases -- acquisitions................................ (13,086.8) (6,971.3) (6,182.8)
liquidations................................ 3,569.5 2,572.7 1,912.7
Investments in securities -- acquisitions....................... (11,715.3) (10,976.1) (9,714.8)
liquidations....................... 11,495.2 10,676.7 9,717.7
Proceeds from sales of receivables.............................. 18,800.0 13,072.2 11,201.8
Due and deferred from receivable sales.......................... 322.9 (618.4) (854.3)
Other........................................................... (612.5) 449.1 224.7
----------- ----------- -----------
Net cash provided by (used in) investing activities............. (9,933.4) 7,824.9 7,231.3
----------- ----------- -----------
Cash flows from financing activities
Debt with original maturities 90 days and over -- proceeds...... 46,348.0 38,577.4 50,507.6
liquidations.. (46,541.3) (45,148.0) (54,475.9)
Debt with original maturities less than 90 days -- net change... 3,540.8 (4,744.0) (5,866.1)
Cash dividends paid to GM....................................... (875.0) (1,250.0) (1,100.0)
Proceeds from issuance of stock to GM........................... 35.0 -- --
----------- ----------- -----------
Net cash provided by (used in) financing activities............. 2,507.5 (12,564.6) (10,934.4)
----------- ----------- -----------
Effect of exchange rate changes on cash and cash equivalents.... 1.5 (5.1) (5.1)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents............ (2,688.6) 157.0 1,458.6
Cash and cash equivalents at beginning of the year.............. 4,028.1 3,871.1 2,412.5
----------- ----------- -----------
Cash and cash equivalents at end of the year.................... $ 1,339.5 $ 4,028.1 $ 3,871.1
=========== =========== ===========
Supplementary cash flow information
Interest paid................................................. $ 4,223.7 $ 4,819.1 $ 5,824.0
Income taxes paid (refundable)................................ $ (16.0) $ 430.5 $ 541.8
</TABLE>
II-25
<PAGE> 41
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
INVESTMENTS IN SECURITIES
As a result of GMAC's adoption of SFAS No. 115, GMAC's bonds, notes,
certificates of deposit, other investments, and preferred stocks with mandatory
redemption terms are carried at market value. In prior years, these investments
were carried at amortized cost. Equity securities are carried at market (fair)
value for both years.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
---------------------------------------------------
FAIR UNREALIZED UNREALIZED
TYPE OF SECURITY COST VALUE GAINS LOSSES
-------------------------------------------------- -------- -------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Bonds, notes, and other securities
United States Government and governmental
agencies and authorities..................... $ 298.5 $ 285.0 $ 0.3 $ (13.8)
States, municipalities, and political
subdivisions................................. 1,813.3 1,747.4 38.0 (103.9)
Other........................................... 1,417.0 1,387.3 4.2 (33.9)
-------- -------- ---------- ----------
Total debt securities............................. 3,528.8 3,419.7 42.5 (151.6)
Equity securities................................. 280.9 472.0 203.2 (12.1)
-------- -------- ---------- ----------
Total investments in securities................... $3,809.7 $3,891.7 $245.7 $ (163.7)
======= ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1993
---------------------------------------------------
<S> <C> <C> <C> <C>
Bonds, notes, and other securities
United States Government and governmental
agencies and authorities..................... $ 195.1 $ 206.3 $ 11.4 $ (0.2)
States, municipalities, and political
subdivisions................................. 1,997.7 2,137.6 146.2 (6.3)
Other........................................... 735.9 781.0 48.3 (3.2)
-------- -------- ---------- ----------
Total debt securities............................. 2,928.7 3,124.9 205.9 (9.7)
Equity securities................................. 266.2 521.0 270.9 (16.1)
-------- -------- ---------- ----------
Total investments in securities................... $3,194.9 $3,645.9 $476.8 $ (25.8)
======= ======= ======== ========
</TABLE>
The distribution of maturities of GMAC's debt securities at December 31,
1994 and 1993 is summarized below:
<TABLE>
<CAPTION>
1994 1993
--------------------- ---------------------
FAIR FAIR
MATURITY COST VALUE COST VALUE
-------------------------------------------------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Due in one year or less........................... $ 177.6 $ 179.0 $ 168.0 $ 173.5
Due after one year through five years............. 637.9 631.5 621.6 663.7
Due after five years through 10 years............. 997.9 968.8 876.6 931.8
Due after 10 years................................ 1,094.3 1,027.4 1,080.0 1,162.2
Mortgage-backed securities........................ 621.1 613.0 182.5 193.7
-------- -------- -------- --------
Total debt securities............................. $3,528.8 $3,419.7 $2,928.7 $3,124.9
======= ======= ======= =======
</TABLE>
Proceeds from the sale of debt securities amounted to $1,036.4 million in
1994, $2,093.4 million in 1993, and $1,690.3 million in 1992. Gross realized
gains amounted to $15.0 million in 1994, $58.6 million in 1993, and $54.7
million in 1992. Gross realized losses amounted to $18.9 million in 1994, $13.3
million in 1993, and $5.4 million in 1992.
II-26
<PAGE> 42
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Proceeds from the sale of equity securities amounted to $185.1 million in
1994, $258.6 million in 1993, and $232.4 million in 1992. Gross realized gains
amounted to $80.5 million in 1994, $160.5 million in 1993, and $79.3 million in
1992. Gross realized losses amounted to $11.9 million in 1994, $2.3 million in
1993, and $6.3 million in 1992.
NOTE 12. INVENTORIES
MAJOR CLASSES OF INVENTORIES
<TABLE>
<CAPTION>
1994 1993
--------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Productive material, work in process, and supplies...................... $ 5,478.3 $4,671.9
Finished product, service parts, etc. .................................. 4,649.5 3,943.2
--------- --------
Total................................................................. $10,127.8 $8,615.1
======== =======
Memo: Increase in LIFO inventories if valued at first-in, first-out
(FIFO)............................................................ $ 2,535.9 $2,519.0
======== =======
</TABLE>
Inventories are stated generally at cost, which is not in excess of market.
The cost of substantially all U.S. inventories other than the inventories of
Saturn Corporation (Saturn) and GMHE is determined by the last-in, first-out
(LIFO) method. The cost of non-U.S., Saturn, and GMHE inventories is determined
generally by FIFO or average cost methods.
As a result of decreases in U.S. inventories, certain inventory quantities
carried at lower LIFO costs prevailing in prior years, as compared with the
costs of current purchases, were liquidated in 1993 and 1992. These inventory
adjustments improved pre-tax operating results by approximately $134.4 million
in 1993, primarily from the sale of the Allison Gas Turbine Division, and $294.7
million in 1992.
NOTE 13. REAL ESTATE, PLANTS, AND EQUIPMENT
<TABLE>
<CAPTION>
ESTIMATED USEFUL
LIVES (YEARS) 1994 1993
---------------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Real estate, plants, and equipment
Land................................................... -- $ 799.1 $ 806.8
Land improvements...................................... 20-31 1,849.7 1,830.9
Leasehold improvements -- less amortization............ 8-10 306.8 281.3
Buildings.............................................. 29-40 13,651.6 13,577.0
Machinery and equipment................................ 5-27 43,890.2 43,816.7
Furniture and office equipment......................... 8-20 5,306.7 4,453.1
Capitalized leases..................................... 5-40 1,199.7 1,135.8
Construction in progress............................... -- 2,804.1 2,064.8
--------- ---------
Total............................................... $69,807.9 $67,966.4
======== ========
</TABLE>
The lease payments to be received relate to equipment on operating leases
maturing in each of the five years following December 31, 1994 and are as
follows: 1995-$4,988.8 million; 1996-$3,267.2 million; 1997-$1,415.5 million;
1998-$229.9 million; and 1999-$99.4 million.
II-27
<PAGE> 43
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
NOTE 14. INTANGIBLE ASSETS
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Pensions (Note 4)...................................................... $ 7,373.8 $ 8,627.0
Purchased mortgage servicing rights.................................... 222.3 194.9
Acquisition of Hughes.................................................. 3,005.2 3,129.1
Goodwill relating to all other acquisitions............................ 1,214.1 1,040.5
All Other.............................................................. 98.4 115.4
--------- ---------
Total............................................................. $11,913.8 $13,106.9
======== ========
</TABLE>
Purchased mortgage servicing rights are being amortized over periods that
generally match future net mortgage servicing revenues.
Intangible assets arising from the acquisition of Hughes relate to patents
and related technology and other intangible assets which were originally
recorded in 1985 and are principally being amortized over 40 years.
Goodwill resulting from other past acquisitions is being amortized over
periods of eight to 40 years. Certain purchased software is being amortized over
five to eight years.
In 1992, GMHE acquired the missile business of General Dynamics Corporation
in exchange for 21.5 million shares of Class H common stock and cash of $62.8
million. The acquisition was accounted for as a purchase and, accordingly, the
operating results of such operations have been consolidated since the
acquisition date. The excess of the purchase price over the fair value of the
acquired net assets, and the pro forma effect on 1992 operating results, were
not material.
NOTE 15. NOTES AND LOANS PAYABLE
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
INTEREST RATE(1) 1994 1993
---------------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Notes, loans, and debentures
Payable within one year
Current portion of long-term debt.................. 8.1% $ 8,381.8 $13,580.8
Commercial paper(2)................................ 6.1% 18,644.4 14,521.1
All other(2)....................................... 6.5% 9,213.9 8,493.6
Payable beyond one year
1995............................................. -- -- 7,958.9
1996............................................. 7.2% 11,953.4 7,972.5
1997............................................. 7.0% 10,158.8 6,168.9
1998............................................. 6.8% 2,795.6 1,875.1
1999............................................. 7.5% 4,151.2 2,121.6
2000 and after 8.5% 9,367.6 8,639.3
Unamortized discount.................................. (936.5) (890.6)
--------- ---------
Total......................................... $73,730.2 $70,441.2
======== ========
</TABLE>
-------------------------
(1) The weighted average interest rate includes the impact of interest rate swap
agreements.
(2) The weighted average interest rate for commercial paper and all other
short-term borrowings was 3.6% and 4.9%, respectively, at December 31, 1993.
II-28
<PAGE> 44
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
After consideration of foreign currency swaps, the above 1994 maturities,
payable beyond one year, include $6.7 billion in currencies other than the U.S.
Dollar, primarily the Canadian Dollar ($1.9 billion) and German Mark ($2.1
billion).
At December 31, 1994 and 1993, Notes and Loans Payable include $62.0
billion and $62.8 billion of obligations with fixed rates, and $11.7 billion and
$7.6 billion of obligations with variable interest rates (predominantly based on
the London Interbank Offering Rate or LIBOR), after considering the impact of
interest rate swap agreements.
To achieve its desired balance between fixed and variable rate debt, the
Corporation has entered into interest rate swap, interest rate cap, interest
rate collar, and swaption agreements. The notional amounts of such agreements as
of December 31, 1994 were approximately $5,482 million ($4,195 million pay
variable and $1,287 million pay fixed), $440 million, $50 million, and $741
million, respectively. The notional amounts of such agreements as of December
31, 1993 were approximately $4,709 million ($3,471 million pay variable and
$1,238 million pay fixed), $790 million, zero, and $1,191 million, respectively.
The Corporation and certain of its subsidiaries maintain or otherwise have
available to them through asset securitization programs various syndicated bank
credit facilities which in aggregate provide $25.9 billion of committed bank
credit availability. The terms of the facilities range from one to five years,
with a weighted average term of approximately three years. Facility and
commitment fees on the syndicated credit facilities average 0.16% per annum over
the term of the various agreements based on the Corporation's current credit
rating. The facilities contain certain covenants. The Corporation and its
subsidiaries were in compliance with these covenants at December 31, 1994.
The Corporation and its subsidiaries maintain other bank lines of credit,
some of which are supported by bank commitment fees and compensating balances.
Compensating balances, which are not subject to withdrawal restrictions, are
maintained at a level required to provide the same income that a fee would
generate. Total commitment and facilities fees incurred by the Corporation
amounted to $49.3 million in 1994, $44.5 million in 1993, and $28.5 million in
1992. Total compensating balances maintained by the Corporation in lieu of
commitment fees averaged $23.5 million in 1994 and $87.2 million in 1993.
At December 31, 1994, unused short-term credit facilities totaled
approximately $18.5 billion and unused long-term credit facilities totaled
approximately $19.2 billion.
Total interest cost incurred in 1994, 1993, and 1992 amounted to $5,465.8
million, $5,717.8 million, and $7,140.4 million, respectively, of which $33.9
million, $44.1 million, and $43.6 million, related to certain real estate,
plants, and equipment acquired in those years, was capitalized.
II-29
<PAGE> 45
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
NOTE 16. OTHER LIABILITIES AND DEFERRED CREDITS
<TABLE>
<CAPTION>
1994 1993
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Employee benefits...................................................... $ 4,630.8 $ 2,597.7
Warranties, dealer and customer allowances, claims, discounts, etc..... 13,290.2 12,552.1
Taxes, other than income taxes......................................... 1,569.8 1,433.4
Payrolls............................................................... 1,844.4 1,976.7
Unpaid insurance losses, loss adjustment expenses, and unearned
insurance premiums................................................... 2,985.6 2,906.8
Plant closings and other restructurings reserve (excludes
environmental)....................................................... 3,103.6 4,151.7
Interest............................................................... 3,023.2 2,699.4
Deferred credits....................................................... 1,666.3 1,228.5
Governmental and other contract related................................ 777.8 802.6
Environmental cleanup.................................................. 693.7 659.3
Industrial Development Bonds........................................... 632.9 619.7
Other.................................................................. 8,649.0 6,846.9
--------- ---------
Total............................................................. $42,867.3 $38,474.8
========= =========
</TABLE>
Certain amounts for 1993 have been reclassified to conform with 1994
classifications.
NOTE 17. STOCKHOLDERS' EQUITY
In June 1994, General Motors converted all 17,825,000 outstanding shares of
its Series A Conversion Preference Stock (Preference Equity Redemption
Cumulative Stock or PERCS) into shares of GM $1 2/3 par value common stock. GM
originally issued this stock in June 1991 at a price of $41.375 per share.
Holders of the Preference Stock received 0.992435 shares of GM $1 2/3 par value
common stock for each share of Preference Stock called for conversion, plus
$0.1655 in cash in payment of the accrued and unpaid dividend (covering the June
1 to June 18 period). Fractional shares of GM $1 2/3 par value common stock were
paid in cash. A total of 17.7 million shares of GM $1 2/3 par value common stock
was issued in this conversion.
Holders of Series C Depositary Shares are entitled to receive cumulative
preferential dividends from the date of issue at the quarterly rate of $0.8125
per share. The Series C Depositary Shares are convertible at any time at the
option of the holder into shares of Class E common stock. Commencing in February
1996, GM may, at its option, call any or all of the outstanding Series C
Depositary Shares, at specified prices declining to $50 per share in 2002 and
thereafter, payable in cash, in shares of $1 2/3 par value common stock, or in a
specified combination thereof.
Holders of $1 2/3 par value, Class E, and Class H common stocks are
entitled to one, one-eighth, and one-half vote per share, respectively, on all
matters submitted to the stockholders for a vote. The liquidation rights of
common stockholders are based on per-share liquidation units of the various
classes and are subject to certain adjustments if outstanding common stock is
subdivided, by stock split or otherwise, or if shares of one class of common
stock are issued as a dividend to holders of another class of common stock. At
December 31, 1994, each share of $1 2/3 par value, Class E, and Class H common
stocks was entitled to a liquidation unit of the same as the vote per share.
Holders of GM Class E and Class H common stock have no direct rights in the
equity or assets of EDS or GMHE, but rather have rights in the equity and assets
of GM (which includes 100% of the stock of EDS and GMHE).
GM's Certificate of Incorporation provides, generally, that if at any time
GM should sell, liquidate, or otherwise dispose of substantially all of EDS,
Hughes, or the other business of GMHE, shares of the Corporation's $1 2/3 par
value common stock will automatically be exchanged for Class E or Class H common
stock, respectively.
II-30
<PAGE> 46
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
After December 31, 1994 or December 31, 1995, the Board of Directors may
exchange $1 2/3 par value common stock for Class E or Class H common stock,
respectively, if the Board has declared and paid certain minimum cash dividends
during each of the last five years preceding the exchange.
In the event any of the aforementioned exchanges were to occur, the GM
Certificate of Incorporation provides that the Class E or Class H common
stockholders would receive $1 2/3 par value common stock having a market value
at the time of the exchange equal to 120% of the market value of the Class E or
Class H common stock exchanged.
At December 31, 1994, the Corporation's capital surplus plus net income
retained for use in the business (less accumulated deficit) was $9,013.8
million, $3,752.1 million, and $2,169.3 million on $1 2/3 par value, Class E,
and Class H common stocks, respectively, as allocated pursuant to GM's
Certificate of Incorporation. 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 plus net
income retained for use in the business (less accumulated deficit).
Stocks subject to repurchase include $450.0 million at December 31, 1994
and 1993, related to Class H common stock subject to put options by the Howard
Hughes Medical Institute (the "Institute"). The Institute has put options for
its Class H common stock holdings exercisable at $30 per share on March 1, 1995
for 15 million shares. The Corporation holds an option to call the Institute's
shares until February 28, 1995 at a call price of $37.50 per share.
During 1992, certain redeemable Series H preference stocks totaling $243.9
million were redeemed by the holders of such securities.
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Capital Stock
Preferred Stock, without par value, cumulative dividends
(authorized, 6,000,000 shares)
$5.00 series, stated value $100 per share, redeemable
at Corporation option at $120 per share
Outstanding at beginning of the year................. $ -- $ 153.0 $ 153.0
Redeemed by the Corporation during the year.......... -- (153.0) --
--------- --------- ---------
Outstanding at end of the year (1,530,194 shares in
1992)............................................. -- -- 153.0
--------- --------- ---------
$3.75 series, stated value $100 per share, redeemable
at Corporation option at $100 per share
Outstanding at beginning of the year................. -- 81.4 81.4
Redeemed by the Corporation during the year.......... -- (81.4) --
--------- --------- ---------
Outstanding at end of the year (814,100 shares in
1992)............................................. -- -- 81.4
--------- --------- ---------
Preference Stock, $0.10 par value (authorized, 100,000,000
shares)
E series, convertible one-for-four at fixed dates into
Class E Common Stock
Issued at beginning of the year...................... -- 0.3 1.0
Redeemed by the Corporation (301 shares in 1993)..... -- -- --
Converted into shares of Class E Common Stock........ -- (0.3) (0.7)
--------- --------- ---------
Issued at end of the year (3,250,906 E-I Series
shares in 1992)................................... -- -- 0.3
--------- --------- ---------
</TABLE>
II-31
<PAGE> 47
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Series A Conversion, mandatorily convertible
one-for-one on July 1, 1994 into $1 2/3 par value
common stock
Issued at beginning of the year (17,825,000
shares)........................................... $ 1.8 $ 1.8 $ 1.8
Converted into shares of $1 2/3 par value common
stock (17,825,000 shares)......................... (1.8) -- --
--------- --------- ---------
Issued at end of the year (17,825,000 shares in 1993
and 1992)......................................... -- 1.8 1.8
--------- --------- ---------
Series B 9 1/8% Depositary Shares, stated value $25 per
share, redeemable at Corporation option on or after
January 1, 1999 -- issued at end of the year
(44,300,000 shares, equivalent to 11,075,000 shares
of nonconvertible Series B 9 1/8% Preference Stock,
stated value $100 per share)......................... 1.1 1.1 1.1
--------- --------- ---------
Series C Depositary Shares, liquidation preference $50
per share, convertible one for 1.4078 into Class E
Common Stock, callable at Corporation option on or
after February 19, 1996 -- issued during 1992 and
issued at end of the year (31,880,600 shares,
equivalent to 3,188,060 shares of Series C
Convertible Preference Stock)........................ 0.3 0.3 0.3
--------- --------- ---------
Series D 7.92% Depositary Shares, stated value $25 per
share, redeemable at Corporation option on or after
August 1, 1999 -- issued during 1992 and issued at
end of the year (15,700,000 shares, equivalent to
3,925,000 shares of Series D 7.92% Preference
Stock)............................................... 0.4 0.4 0.4
--------- --------- ---------
Series G 9.12% Depositary Shares, stated value $25 per
share, redeemable at Corporation option on or after
January 1, 2001 -- issued during 1992 and issued at
end of the year (23,000,000 shares, equivalent to
5,750,000 shares of Series G 9.12% Preference
Stock)............................................... 0.6 0.6 0.6
--------- --------- ---------
Common Stock, $1 2/3 par value (authorized, 2,000,000,000
shares)
Issued at beginning of the year (720,105,471 shares in
1994)................................................ 1,200.2 1,178.1 1,034.9
Issued in a public offering (57,000,000 shares)........ -- -- 95.0
Issued during the year (16,568,663 shares in 1994)..... 27.6 22.1 48.2
Series A conversion (17,671,648 shares in 1994)........ 29.4 -- --
--------- --------- ---------
Issued at end of the year (754,345,782 shares in 1994,
720,105,471 in 1993, and 706,831,567 in 1992)........ 1,257.2 1,200.2 1,178.1
--------- --------- ---------
Class E Common Stock, $0.10 par value (authorized,
1,000,000,000 shares)
Issued at beginning of the year (263,089,320 shares in
1994)................................................ 26.3 24.2 10.4
Issued during the year (5,035,935 shares in 1994)...... 0.5 2.1 3.4
Two-for-one stock split in the form of 100% stock
dividend (104,509,016 shares)........................ -- -- 10.4
--------- --------- ---------
Issued at end of the year (268,125,255 shares in 1994,
263,089,320 in 1993, and 242,168,653 in 1992)........ $ 26.8 $ 26.3 $ 24.2
--------- --------- ---------
</TABLE>
II-32
<PAGE> 48
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Class H Common Stock, $0.10 par value (authorized,
600,000,000 shares)
Issued at beginning of the year (75,705,433 shares in
1994)................................................ $ 7.6 $ 7.0 $ 3.8
Issued during the year (3,014,881 shares in 1994)...... 0.3 0.6 3.3
Reclassification of shares subject to repurchase from
the Howard Hughes Medical Institute.................. -- -- (0.1)
Reacquired on the open market (292 shares in 1994)..... -- -- --
--------- --------- ---------
Issued at end of the year (78,720,022 shares in 1994,
75,705,433 in 1993, and 70,240,927 in 1992).......... 7.9 7.6 7.0
--------- --------- ---------
Total capital stock at end of the year............... $ 1,294.3 $ 1,238.3 $ 1,448.2
========= ========= =========
Capital Surplus (principally additional paid-in capital)
Balance at beginning of the year.......................... $12,003.4 $10,971.2 $ 4,710.4
Preference stock -- amounts in excess of par value of
Depositary shares issued............................... -- -- 2,496.8
Series E shares converted.............................. -- (171.2) (343.6)
Series A shares converted.............................. (720.5) -- --
$1 2/3 par value common stock -- amounts in excess of par
value of
Shares issued.......................................... 870.2 612.6 2,956.5
Series A shares converted.............................. 692.8 -- --
Class E Common Stock
Amounts in excess of par value of
Series E shares converted............................ -- 170.2 335.6
Shares issued during the year........................ 188.7 257.2 265.8
Amount transferred to Class E Common Stock -- 100%
stock dividend....................................... -- -- (10.4)
Class H Common Stock
Repurchase price in excess of par value
Shares reacquired on the open market................. -- (0.6) (7.2)
Reclassification of shares subject to repurchase from
the Institute..................................... -- -- (15.0)
Amounts in excess of par value of shares issued........ 114.8 164.0 582.3
--------- --------- ---------
Balance at end of the year........................ $13,149.4 $12,003.4 $10,971.2
========= ========= =========
Net Income Retained for Use in the Business (Accumulated
Deficit)
Balance at beginning of the year.......................... $(2,002.9) $(3,354.2) $21,525.2
--------- --------- ---------
Income (Loss) before cumulative effect of accounting
changes................................................ 5,658.7 2,465.8 (2,660.6)
Cumulative effect of adopting SFAS Nos. 112 and 106,
respectively........................................... (758.1) -- (20,837.7)
--------- --------- ---------
Net income (loss)......................................... 4,900.6 2,465.8 (23,498.3)
--------- --------- ---------
Total................................................ $ 2,897.7 $ (888.4) $(1,973.1)
--------- --------- ---------
</TABLE>
II-33
<PAGE> 49
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Cash dividends
Preferred Stock, $5.00 series, $1.68 per share in 1993
and $5.00 in 1992.................................... $ -- $ 2.6 $ 7.7
Preferred Stock, $3.75 series, $1.26 per share in 1993
and $3.75 in 1992.................................... -- 1.0 3.0
Preference Stock, E-I series, $1.42 per share in 1993
and $2.86 in 1992.................................... -- 4.6 9.3
Preference Stock, E-II series, $2.15 per share in
1992................................................. -- -- 7.0
Preference Stock, E-III series, $1.08 per share in
1992................................................. -- -- 3.5
Preference Stock, H series, $1.08 per share in 1992.... -- -- 3.5
Preference Stock, Series A Conversion, $1.66 per share
in 1994 and $3.31 in 1993 and 1992................... 32.5 59.0 59.0
Depositary Shares, Series B, $2.28 per share in 1994
and 1993 and $2.38 in 1992........................... 101.1 101.1 105.3
Depositary Shares, Series C, $3.25 per share in 1994
and 1993 and $2.82 in 1992........................... 103.6 103.6 89.8
Depositary Shares, Series D, $1.98 per share in 1994
and 1993 and $0.89 in 1992........................... 31.1 31.1 13.9
Depositary Shares, Series G, $2.28 per share in 1994
and $2.34 per share in 1993.......................... 52.4 53.8 --
$1 2/3 par value common stock, $0.80 per share in 1994
and 1993 and $1.40 in 1992........................... 592.6 565.8 945.4
Class E Common Stock, $0.48 per share in 1994, $0.40 in
1993, and $0.36 in 1992.............................. 124.8 97.2 76.1
Class H Common Stock, $0.80 per share in 1994 and $0.72
in 1993 and 1992..................................... 73.8 64.1 53.3
--------- --------- ---------
Total cash dividends................................. 1,111.9 1,083.9 1,376.8
--------- --------- ---------
Less accumulation of redemption value of Series H
preference stock....................................... -- -- 4.3
--------- --------- ---------
Less redemption price of preferred stock in excess of
stated value........................................... -- 30.6 --
--------- --------- ---------
Balance at end of the year........................ $ 1,785.8 $(2,002.9) $(3,354.2)
========= ========= =========
Minimum Pension Liability Adjustment (Note 4)
Balance at beginning of the year.......................... $(5,311.2) $(2,925.3) $ (936.8)
Change during the year.................................... 1,762.8 (2,385.9) (1,988.5)
--------- --------- ---------
Balance at end of the year........................ $(3,548.4) $(5,311.2) $(2,925.3)
========= ========= =========
Accumulated Foreign Currency Translation Adjustments
Balance at beginning of the year.......................... $ (494.4) $ (155.9) $ 467.4
Changes during the year................................... 394.0 (338.5) (623.3)
--------- --------- ---------
Balance at end of the year........................ $ (100.4) $ (494.4) $ (155.9)
========= ========= =========
Net Unrealized Gains (Losses) on Investments in Certain Debt
and Equity Securities Balance at beginning of the year.... $ 164.3 $ 241.6 $ 274.0
Cumulative effect of adopting SFAS No. 115................ 241.0 -- --
Changes during the year................................... (162.2) (77.3) (32.4)
--------- --------- ---------
Balance at end of the year........................ $ 243.1 $ 164.3 $ 241.6
========= ========= =========
Total Stockholders' Equity.................................. $12,823.8 $ 5,597.5 $ 6,225.6
========= ========= =========
</TABLE>
II-34
<PAGE> 50
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Memo:
Retained earnings (accumulated deficit) attributable to:
$1 2/3 par value Common Stock........................... $ (778.8) $(4,080.1) $(5,021.0)
Class E Common Stock.................................... 1,663.9 1,344.3 1,074.3
Class H Common Stock.................................... 900.7 732.9 592.5
--------- --------- ---------
Total.............................................. $ 1,785.8 $(2,002.9) $(3,354.2)
========== ========== ==========
</TABLE>
NOTE 18. SEGMENT REPORTING
INDUSTRY SEGMENTS
While the major portion of the Corporation's operations is derived from the
automotive products industry segment, GM also has financing and insurance
operations and produces products and provides services in other industry
segments. The automotive products segment consists of the design, manufacture,
assembly, and sale of automobiles, trucks, and related parts and accessories.
The financing and insurance operations assist in the merchandising of General
Motors' products as well as other products. GMAC and its subsidiaries offer
financial services and certain types of insurance to dealers and customers. In
addition, GMAC and its subsidiaries are engaged in mortgage banking and
investment services. The other products segment consists of military vehicles,
radar and weapon control systems, guided missile systems, and defense and
commercial satellites; the design, installation, and operation of business
information and telecommunication systems; as well as the design, development,
and manufacture of locomotives. Because of the high degree of integration,
substantial interdivisional and intersegment transfers of materials and services
are made. Intersegment sales and revenues are made at negotiated selling prices.
Substantially all of the products in the automotive segment are marketed
through retail dealers and through distributors and jobbers in the United
States, other North America (Canada and Mexico), and through distributors and
dealers overseas.
Information concerning operations by industry segment follows:
<TABLE>
<CAPTION>
FINANCING &
AUTOMOTIVE INSURANCE OTHER
PRODUCTS OPERATIONS PRODUCTS TOTAL
---------- ------------- --------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
1994
Net Sales and Revenues
Outside............................................ $123,253.4 $ 9,418.8 $17,919.3 $150,591.5
Intersegment....................................... 416.9 -- 3,547.2 --
---------- ------------- --------- ----------
Total............................................ $123,670.3 $ 9,418.8 $21,466.5 $150,591.5(1)
---------- ------------- --------- ----------
Operating Profit..................................... $ 6,116.0 N/A(2) $ 2,105.3 $ 8,221.3
---------- ------------- --------- ----------
Identifiable Assets at Year-End...................... $ 88,064.5 $84,554.6 $23,076.5 $195,695.6
---------- ------------- --------- ----------
Depreciation and Amortization........................ $ 5,655.2 $ 3,301.5 $ 1,294.6 $ 10,251.3
---------- ------------- --------- ----------
Capital Expenditures................................. $ 5,545.4 $ 132.8 $ 1,546.9 $ 7,225.1
========== ============ ========= ==========
1993
Net Sales and Revenues
Outside............................................ $107,908.5 $ 8,752.0 $16,961.4 $133,621.9
Intersegment....................................... 118.7 -- 3,323.9 --
---------- ------------- --------- ----------
Total............................................ $108,027.2 $ 8,752.0 $20,285.3 $133,621.9(1)
---------- ------------- --------- ----------
Operating Profit..................................... $ 1,625.7 N/A(2) $ 904.7 $ 2,530.4
---------- ------------- --------- ----------
Identifiable Assets at Year-End...................... $ 81,009.0 $79,352.3 $23,753.8 $184,115.1
---------- ------------- --------- ----------
Depreciation and Amortization........................ $ 5,281.9 $ 2,892.6 $ 1,267.5 $ 9,442.0
---------- ------------- --------- ----------
Capital Expenditures................................. $ 5,164.8 $ 118.5 $ 1,187.4 $ 6,470.7
========== ============ ========= ==========
</TABLE>
-------------------------
(1) After elimination of intersegment transactions.
(2) Financing and Insurance Operations do not report Operating Profit.
II-35
<PAGE> 51
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
FINANCING &
AUTOMOTIVE INSURANCE OTHER
PRODUCTS OPERATIONS PRODUCTS TOTAL
---------- ------------- --------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
1992
Net Sales and Revenues
Outside............................................ $102,813.9 $10,402.1 $15,316.7 $128,532.7
Intersegment....................................... 191.0 -- 3,349.4 --
---------- --------- --------- ----------
Total............................................ $103,004.9 $10,402.1 $18,666.1 $128,532.7(1)
---------- --------- --------- ----------
Operating Profit (Loss).............................. $ (3,360.1) N/A(2) $ 122.7 $ (3,237.4)
---------- --------- --------- ----------
Identifiable Assets at Year-End...................... $ 83,504.6 $81,422.0 $23,948.1 $188,874.7
---------- --------- --------- ----------
Depreciation and Amortization........................ $ 5,209.1 $ 2,595.5 $ 1,154.4 $ 8,959.0
---------- --------- --------- ----------
Capital Expenditures................................. $ 5,349.1 $ 149.7 $ 1,090.8 $ 6,589.6
========== ========= ========= ==========
</TABLE>
-------------------------
(1) After elimination of intersegment transactions.
(2) Financing and Insurance Operations do not report Operating Profit.
A reconciliation of outside net sales and revenues to Total Net Sales and
Revenues and of operating profit (loss) to Income (Loss) before Income Taxes
detailed in the Statement of Consolidated Operations and a reconciliation of
identifiable assets to Total Assets displayed in the Consolidated Balance Sheet
follow:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Outside Net Sales and Revenues reported on the prior page
and above.............................................. $150,591.5 $133,621.9 $128,532.7
Other Income............................................. 4,359.7 4,597.6 3,709.5
---------- ---------- ----------
Total Net Sales and Revenues...................... $154,951.2 $138,219.5 $132,242.2
========== ========== ==========
Total Operating Profit (Loss) reported on the prior page
and above.............................................. $ 8,221.3 $ 2,530.4 $ (3,237.4)
Financing and Insurance Operations....................... 1,439.8 1,572.8 2,101.0
Other Corporate Income and Expenses Less Intersegment
Transactions........................................... (1,307.8) (1,527.9) (2,196.7)
---------- ---------- ----------
Income (Loss) before Income Taxes................. $ 8,353.3 $ 2,575.3 $ (3,333.1)
========== ========== ==========
Identifiable Assets reported on the prior page and
above.................................................. $195,695.6 $184,115.1 $188,874.7
Corporate Assets......................................... 5,648.2 7,207.9 4,588.6
Eliminations............................................. (2,745.1) (3,122.1) (3,267.3)
---------- ---------- ----------
Total Assets...................................... $198,598.7 $188,200.9 $190,196.0
========== ========== ==========
</TABLE>
GEOGRAPHIC SEGMENTS
Net sales and revenues, net income (loss) before cumulative effect of
accounting changes, net income (loss), total and net assets, and average number
of employees in the U.S., Other North America (Canada and Mexico), and in
locations outside North America are summarized on the next page. Net income
(loss) before cumulative effect of accounting changes and net income (loss) are
after provisions for deferred income taxes applicable to that portion of the
undistributed earnings deemed to be not permanently invested, less available tax
credits and deductions, and appropriate consolidating adjustments. Interarea
sales and revenues are made at negotiated selling prices. Average number of
employees for 1992 does not include NCRS employees.
II-36
<PAGE> 52
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
OTHER
UNITED NORTH LATIN ALL
STATES AMERICA EUROPE AMERICA OTHER TOTAL*
---------- --------- --------- -------- -------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
1994
Net Sales and Revenues
Outside (excluding GMAC)................ $101,185.6 $ 8,376.7 $24,849.5 $5,304.6 $1,456.4 $141,172.8
GMAC and related operations............. 6,531.2 781.0 1,894.2 57.2 155.2 9,418.8
Other income............................ 3,193.5 177.7 483.5 354.8 150.1 4,359.6
---------- --------- --------- -------- -------- ----------
Subtotal outside.................... 110,910.3 9,335.4 27,227.2 5,716.6 1,761.7 154,951.2
Interarea............................... 11,476.9 13,607.4 753.7 90.2 59.2 --
---------- --------- --------- -------- -------- ----------
Total............................... $122,387.2 $22,942.8 $27,980.9 $5,806.8 $1,820.9 $154,951.2
========== ========= ========= ======== ======== ==========
Income Before Cumulative Effect of
Accounting Change....................... $ 2,075.5 $ 1,177.3 $ 1,337.1 $ 828.5 $ 256.9 $ 5,658.7
---------- --------- --------- -------- -------- ----------
Net Income................................ $ 1,361.9 $ 1,132.8 $ 1,337.1 $ 828.5 $ 256.9 $ 4,900.6
---------- --------- --------- -------- -------- ----------
Total Assets.............................. $154,175.7 $13,765.9 $29,523.6 $4,023.6 $3,463.4 $198,598.7
---------- --------- --------- -------- -------- ----------
Net Assets................................ $ (1,178.2) $ 4,724.0 $ 6,719.3 $2,178.2 $1,065.3 $ 12,823.8
---------- --------- --------- -------- -------- ----------
Average Number of Employees
(in thousands).......................... 433 101 126 27 6 693
========== ========= ========= ======== ======== ==========
1993
Net Sales and Revenues
Outside (excluding GMAC)................ $ 89,868.0 $ 7,311.5 $21,847.3 $4,595.0 $1,248.1 $124,869.9
GMAC and related operations............. 5,921.7 682.0 1,947.6 52.5 148.2 8,752.0
Other income............................ 3,783.5 210.0 345.2 191.3 67.6 4,597.6
---------- --------- --------- -------- -------- ----------
Subtotal outside.................... 99,573.2 8,203.5 24,140.1 4,838.8 1,463.9 138,219.5
Interarea............................... 10,094.7 13,416.4 433.9 166.9 30.8 --
---------- --------- --------- -------- -------- ----------
Total............................... $109,667.9 $21,619.9 $24,574.0 $5,005.7 $1,494.7 $138,219.5
========== ========= ========= ======== ======== ==========
Net Income................................ $ 190.1 $ 680.8 $ 604.7 $ 798.0 $ 160.4 $ 2,465.8
---------- --------- --------- -------- -------- ----------
Total Assets.............................. $151,343.5 $10,963.7 $23,395.0 $3,113.4 $2,672.8 $188,200.9
---------- --------- --------- -------- -------- ----------
Net Assets................................ $ (7,315.6) $ 4,516.3 $ 5,967.3 $2,054.9 $1,001.2 $ 5,597.5
---------- --------- --------- -------- -------- ----------
Average Number of Employees
(in thousands).......................... 448 99 131 27 6 711
========== ========= ========= ======== ======== ==========
1992
Net Sales and Revenues
Outside (excluding GMAC)................ $ 79,783.4 $ 7,509.0 $26,291.9 $3,310.5 $1,235.8 $118,130.6
GMAC and related operations............. 7,306.2 852.4 2,021.0 43.5 179.0 10,402.1
Other income............................ 3,153.9 188.8 124.3 107.9 134.6 3,709.5
---------- --------- --------- -------- -------- ----------
Subtotal outside.................... 90,243.5 8,550.2 28,437.2 3,461.9 1,549.4 132,242.2
Interarea............................... 9,925.1 11,699.6 400.0 146.3 122.4 --
---------- --------- --------- -------- -------- ----------
Total............................... $100,168.6 $20,249.8 $28,837.2 $3,608.2 $1,671.8 $132,242.2
========== ========= ========= ======== ======== ==========
Income (Loss) Before Cumulative Effect of
Accounting Changes...................... $ (4,885.7) $ 547.4 $ 1,340.2 $ 209.5 $ 193.3 $ (2,620.6)
---------- --------- --------- -------- -------- ----------
Net Income (Loss)......................... $(25,377.5) $ 168.8 $ 1,332.9 $ 209.5 $ 193.3 $(23,498.3)
---------- --------- --------- -------- -------- ----------
Total Assets.............................. $148,378.0 $12,851.0 $26,097.8 $2,939.3 $2,584.1 $190,196.0
---------- --------- --------- -------- -------- ----------
Net Assets................................ $ (5,686.9) $ 3,890.9 $ 5,529.7 $1,721.6 $ 917.0 $ 6,225.6
---------- --------- --------- -------- -------- ----------
Average Number of Employees
(in thousands).......................... 478 98 141 26 7 750
========== ========= ========= ======== ======== ==========
</TABLE>
-------------------------
* After elimination of interarea transactions.
II-37
<PAGE> 53
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
NOTE 19. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Corporation (or GM, which for purposes of this note shall be deemed to
include its consolidated subsidiaries) is a party to financial instruments with
off-balance-sheet risk which it uses in the normal course of business to reduce
its exposure to fluctuations in interest rates, and foreign exchange rates, and
to meet the financing needs of its customers.
The primary classes of derivatives used by the Corporation are foreign
exchange-forward contracts and options, interest rate forward contracts and
options, and forward contracts to purchase or sell mortgages or mortgage-backed
securities. Those instruments involve, to varying degrees, elements of credit
risk in the event a counter-party should default and market risk as the
instruments are subject to rate and price fluctuations. Credit risk is managed
through the approval of and periodic monitoring of financially sound
counterparties.
Since virtually all derivative transactions are entered into to hedge
underlying business exposures, market risk in these instruments is largely
offset by equal and opposite movements in the underlying exposure. Cash receipts
or payments on these contracts normally occur at maturity, or for interest rate
swap agreements, at periodic contractually defined intervals.
FOREIGN EXCHANGE-FORWARD CONTRACTS AND OPTIONS
Foreign exchange-forward contracts are legal agreements between two parties
to purchase and sell a foreign currency, for a price specified at the contract
date, with delivery and settlement in the future.
GM is an international corporation with operations in over 50 countries. GM
has foreign currency exposures at these operations related to buying, selling,
and financing in currencies other than the local currency. GM's most significant
foreign currency exposures relate to major North American countries (Canada and
Mexico), Western European countries (primarily Germany, United Kingdom, Spain,
Belgium, and France), Japan, and Brazil. The magnitude of these exposures
significantly varies over time depending upon the strength of local automotive
markets and sourcing decisions.
GM enters into agreements to manage certain foreign exchange exposures in
accordance with established policy guidelines. These agreements primarily hedge
debt, firm commitments and anticipated transactions involving vehicles,
components and fixed assets and subsidiary dividends. As a general practice, GM
has not hedged the foreign exchange exposure related either to the translation
of overseas earnings into U.S. dollars or the translation of overseas equity
positions back to U.S. dollars. GM uses foreign exchange-forward contracts,
purchases foreign exchange options, and may from time to time write options.
Cross currency swaps are included in this category and relate to interest rate
swaps in which the underlying notional principal amounts are in different
currencies.
At December 31, 1994 and 1993, the Corporation held foreign
exchange-forward contracts of approximately $9,030 million and $12,407 million
(including cross-currency swaps of $1,161 million and $1,951 million),
respectively. At December 31, 1994 and 1993, the Corporation had entered into
foreign exchange options of approximately $1,537 million and $2,144 million,
respectively. Deferred hedging gains on outstanding contracts hedging firm
commitments to purchase inventory or fixed assets totaled $12 million at
December 31, 1994. Such amounts are deferred and will be included in the cost of
such assets when purchased, to be recognized in operations as part of the basis
of these assets. All other foreign exchange-forward contracts and options are
marked to market, and recognized with other gains or losses on foreign exchange
transactions in the Statement of Consolidated Operations. The Corporation's firm
commitments typically extend for periods of up to 12 months but can extend for
periods up to 36 months.
II-38
<PAGE> 54
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
INTEREST RATE FORWARD CONTRACTS AND OPTIONS
The Corporation's financing and cash management activities subject it to
market risk from exposure to changes in interest rates. To manage these
exposures, the Corporation has entered into various financial instrument
transactions. The Corporation's objective of entering into these transactions is
to maintain the desired level of exposure to the risk of interest rate
fluctuations and minimize interest expense. To achieve this objective, the
Corporation will at times use written options.
In a limited number of cases, GMAC swaps, matched to specific portfolios of
wholesale assets or debt, are executed on a portfolio basis to achieve specific
interest rate management objectives. The differential paid or received on such
swaps is recorded as an adjustment to interest expense or income over the term
of the underlying debt agreement or matched portfolio.
Interest rate forward contracts are contractual agreements between the
Corporation and another party to exchange fixed and floating interest rate
payments periodically over the life of the agreements without the exchange of
underlying principal amounts. Interest rate options such as interest rate caps,
floors, or swaptions generally permit but do not require the purchaser of the
option to exchange interest payments in the future. At December 31, 1994 and
1993, the total notional amount of such agreements with off-balance-sheet risk
was approximately $14,080 million and $10,984 million, respectively.
Interest rate forward contracts used to hedge an underlying debt obligation
are not marked to market, but are used to adjust interest expense recognized
over the life of the underlying debt agreement. Written options including those
embedded in interest rate forward agreements, written interest rate caps,
written swaptions, and interest rate forward contracts that do not meet
settlement accounting criteria are marked to market with related gains and
losses recognized in income on a current basis. Gains (losses) on terminated
swap contracts are deferred and recognized as a yield adjustment on the
underlying debt; such unamortized gains (losses) totaled approximately ($24)
million and $8 million at December 31, 1994 and 1993, respectively.
MORTGAGE CONTRACTS
The Corporation has also entered contracts to purchase and sell mortgages
at specific future dates and has entered certain exchange traded futures
contracts in order to reduce exposure to interest rate risk. At December 31,
1994 and 1993, mandatory delivery contracts with investors totaled $694 million
and $2,139 million, respectively, and commitments to purchase/fund first
mortgage loans at fixed prices and/or mortgage-backed securities totaled $690
million and $1,796 million, respectively. The Corporation's exchange traded
futures contracts, which are used to hedge the funding of adjustable rate
mortgage loans and mortgage backed securities inventory, mature in the first
three quarters of 1995 in notional amounts of approximately $1.2 billion, $2.1
billion, and $1.1 billion, respectively.
Gains and losses on derivatives, including exchange traded futures, used to
hedge interest rate risk associated with rate locked funding commitments and
mortgages held for resale are deferred, and considered in the reporting of the
underlying mortgages on a lower of cost or market basis. Deferred gains amounted
to $2.7 million as of December 31, 1994. Gains and losses on contracts used to
reduce interest rate exposure on mortgage backed securities are recognized in
the current period. Derivatives used to hedge purchased mortgage servicing
rights and loans held for investment have notional values of $482 million and
$461 million at December 31, 1994 and 1993, respectively; gains and losses on
such contracts are deferred against the basis of the underlying assets.
UNUSED LINES OF CREDIT
The Corporation grants revolving lines of credit to dealers; unused amounts
under these lines were $400 million at December 31, 1994 and $301 million at
December 31, 1993. Commitments supported by collateral,
II-39
<PAGE> 55
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
generally dealer inventories and real estate, were approximately 52% and 44%,
respectively, of the total commitments at December 31, 1994 and 1993. Since many
of the commitments are expected to expire without use, total committed amounts
do not necessarily represent the Corporation's future liquidity requirements.
CREDIT RISK
The forward contracts, options, and lines of credit previously discussed
contain an element of risk that the counterparties may be unable to meet the
terms of the agreements. However, the Corporation minimizes such risk exposure
for forward contracts and options by limiting the counterparties to major
international banks and financial institutions. Management also reduces its
credit risk for unused lines of credit by applying the same credit policies in
making commitments as it does for extending loans. Management does not expect to
record any losses as a result of counterparty default. The Corporation does not
require or place collateral for these financial instruments, except for the
lines of credit.
General Motors has business activities with customers, dealers, and
associates around the world, and its receivables from and guarantees to such
parties are well diversified and, in many cases, secured by collateral.
Consequently, in management's opinion, no significant concentration of credit
risk exists for the Corporation.
NOTE 20. FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with the requirements of SFAS No. 107, Disclosures about Fair
Value of Financial Instruments and SFAS No. 119, Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments, the Corporation
has provided the following fair value estimates and information about valuation
methodologies. The estimated fair value amounts have been determined using
available market information or other appropriate valuation methodologies.
However, considerable judgment is required in interpreting market data to
develop estimates of fair value, so the estimates are not necessarily indicative
of the amounts that could be realized or would be paid in a current market
exchange. The effect of using different market assumptions and/or estimation
methodologies may be material to the estimated fair value amounts.
Fair value information presented herein is based on information available
at December 31, 1994 and 1993. Although management is not aware of any factors
that would significantly affect the estimated fair value amounts, such amounts
have not been updated since those dates and, therefore, the current estimates of
fair value at dates subsequent to December 31, 1994 and 1993 may differ
significantly from these amounts. The
II-40
<PAGE> 56
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
estimated fair value of financial instruments held by the Corporation and its
subsidiaries, for which is it practicable to estimate that value, were as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
------------------------ ------------------------
BOOK FAIR BOOK FAIR
VALUE VALUE VALUE VALUE
---------- ---------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Assets
Cash and Marketable Securities.............. $ 16,075.6 $ 16,075.6 $ 17,962.7 $ 18,169.4
Finance Receivables -- net.................. 54,048.4 53,869.8 53,848.8 54,620.4
Accounts and Notes Receivable -- net........ 8,742.5 8,742.5 6,340.5 6,340.5
Other Assets................................ 4,341.7 4,551.5 3,368.0 3,847.3
Liabilities
Accounts Payable............................ (11,635.0) (11,635.0) (10,276.5) (10,276.5)
Notes and Loans Payable
Payable within one year.................. (36,108.5) (36,097.4) (36,534.0) (36,732.2)
Payable beyond one year.................. (37,621.7) (38,138.9) (33,907.2) (35,853.4)
Other Liabilities........................... (632.9) (622.8) (619.7) (627.8)
Stocks Subject to Repurchase................ (450.0) (445.4) (450.0) (429.0)
</TABLE>
The prior table excludes the book value and fair value of financial
instrument derivatives which are as follows:
<TABLE>
<CAPTION>
FAIR VALUE OF OPEN CONTRACTS (1) AT:
----------------------------------------------
DECEMBER 31, 1994 DECEMBER 31, 1993
--------------------- ---------------------
ASSET LIABILITY ASSET LIABILITY
POSITION POSITION POSITION POSITION
-------- --------- -------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Foreign Exchange-Forward Contracts(2)...................... $241 $ (63) $ 54 $ (52)
Foreign Exchange Options................................... 2 (1) 12 (11)
Interest Rate Forward Contracts............................ 48 (296) 179 (141)
Interest Rate Options...................................... -- (126) -- (69)
Mortgage Contracts......................................... -- (7) 10 (8)
</TABLE>
-------------------------
(1) The related asset (liability) recorded on the balance sheet for foreign
exchange-forward contracts, foreign exchange options, interest rate forward
contracts, and interest rate options totaled ($1) million, $1 million, ($10)
million, and ($123) million, respectively, at December 31, 1994. There was
no related carrying value recorded for mortgage contracts at December 31,
1994.
(2) Foreign exchange contracts include certain derivatives with both foreign
exchange and interest rate exposures which had a fair value of $77 million
at December 31, 1994 and $6 million at December 31, 1993.
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:
CASH AND MARKETABLE SECURITIES
As a result of GM's January 1, 1994 adoption of SFAS No. 115, certain
marketable securities previously recorded at amortized cost are recorded at fair
value in 1994. For cash equivalents and marketable securities, fair value is
determined principally based on quoted market prices.
II-41
<PAGE> 57
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
FINANCE RECEIVABLES
The fair value is estimated by discounting the future cash flows using
applicable spreads to approximate current rates applicable to each category of
finance receivables. The carrying value of wholesale receivables and other
receivables whose interest rates adjust on a short-term basis with applicable
market indices (generally the prime rate) are assumed to approximate fair value
either due to their short maturities or due to the interest rate adjustment
feature.
ACCOUNTS AND NOTES RECEIVABLE AND ACCOUNTS PAYABLE
For receivables and payables with short maturities, the book values
approximate market value.
OTHER ASSETS AND OTHER LIABILITIES
Other assets reported at December 31, 1994 and 1993 include various
financial instruments (e.g., long-term receivables and certain investments)
having a fair value based on discounted cash flows, market quotations, and other
appropriate valuation techniques. The fair values of retained subordinated
interests in trusts and excess servicing assets (net of deferred costs) are
derived by discounting expected cash flows using current market rates. Estimated
values of Industrial Development Bonds, included in Other Liabilities and
Deferred Credits, are based on quoted market prices for the same or similar
issues.
NOTES AND LOANS PAYABLE
The fair value of the debt payable within one year is determined by using
quoted market prices, if available, or calculating the estimated value of each
bank loan, note, or debenture in the portfolio at the applicable rate in effect.
Commercial paper, master notes, and demand notes have an original term of less
than 90 days and, therefore, the carrying amount of these liabilities is
considered fair value. Debt payable beyond one year has an estimated fair value
based on quoted market prices for the same or similar issues or based on the
current rates offered to the Corporation for debt of similar remaining
maturities.
STOCKS SUBJECT TO REPURCHASE
At December 31, 1994 and 1993, the fair value of the Corporation's stock
repurchase obligation is based on discounted cash flows assuming redemption by
the Institute at the specified exercise date. At the closing Class H common
stock price at December 31, 1994 and 1993, the shares subject to repurchase
would be valued at $523 million and $585 million, respectively.
FOREIGN EXCHANGE-FORWARD CONTRACTS AND OPTIONS
The fair value of foreign exchange-forward contracts is estimated by
obtaining quotes for futures contracts with similar terms, adjusted where
necessary for maturity differences. The fair value of foreign exchange options
is estimated using active exchange quotations for most options, and pricing
models for illiquid options.
INTEREST RATE FORWARD CONTRACTS AND OPTIONS
The fair value of interest rate forward contracts, including contracts with
optionality, is estimated using pricing models based upon current market
interest rates. Exchange traded futures are valued at quoted market prices.
II-42
<PAGE> 58
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS -- CONCLUDED
MORTGAGE CONTRACTS
The fair value of such contracts is estimated based upon the amount that
would be received or paid to terminate the contracts based on market prices of
similar financial instruments and current rates for mortgage loans.
UNUSED LINES OF CREDIT
Because loans extended under these commitments are at market interest
rates, there is no significant fair value position related to the outstanding
commitments.
NOTE 21. COMMITMENTS AND CONTINGENT LIABILITIES
Minimum future commitments under operating leases having noncancellable
lease terms in excess of one year, primarily for real property, aggregating
$6,296.6 million, are payable $886.1 million in 1995, $702.8 million in 1996,
$588.5 million in 1997, $537.5 million in 1998, $504.4 million in 1999, and
$3,077.3 million in 2000 and thereafter. Certain of the leases contain
escalation clauses and renewal or purchase options. Rental expenses under
operating leases were $1,340.7 million in 1994, $1,343.1 million in 1993, and
$1,338.4 million in 1992.
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 December 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.
* * *
II-43
<PAGE> 59
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION
SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1994 QUARTERS
------------------------------------------------------
1ST 2ND 3RD 4TH
--------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales and revenues..................... $37,495.4 $40,392.2 $34,510.3 $42,553.3
======== ======== ======== ========
Income before income taxes................. $ 2,452.1 $ 3,086.2 $ 453.6 $ 2,361.4
U.S. foreign, and other income taxes
(credit)................................. 840.3 1,163.4 (98.4)(1) 789.3
--------- --------- --------- ---------
Income before cumulative effect of
accounting change........................ 1,611.8 1,922.8 552.0 1,572.1
Cumulative effect of accounting change..... (758.1)(2) -- -- --
--------- --------- --------- ---------
Net income................................. 853.7 1,922.8 552.0 1,572.1
Dividends on preferred and preference
stocks................................... 86.8 89.7 72.1 72.1
--------- --------- --------- ---------
Income on common stocks.................... $ 766.9 $ 1,833.1 $ 479.9 $ 1,500.0
======== ======== ======== ========
Earnings attributable to common stocks
$1 2/3 par value before cumulative effect
of accounting change.................. $ 1,362.1 $ 1,665.3 $ 306.0 $ 1,311.8
Cumulative effect of accounting change... (751.3)(2) -- -- --
--------- --------- --------- ---------
Net earnings attributable to $1 2/3 par
value................................. $ 610.8 $ 1,665.3 $ 306.0 $ 1,311.8
======== ======== ======== ========
Net earnings attributable to Class E..... $ 92.1 $ 106.5 $ 117.3 $ 128.5
======== ======== ======== ========
Class H before cumulative effect of
accounting change..................... $ 70.8 $ 61.3 $ 56.6 $ 59.7
Cumulative effect of accounting change... (6.8)(2) -- -- --
--------- --------- --------- ---------
Net earnings attributable to Class H..... $ 64.0 $ 61.3 $ 56.6 $ 59.7
======== ======== ======== ========
</TABLE>
-------------------------
(1) The income tax credit in the third quarter of 1994 is primarily a function
of the low level of pre-tax income, a low effective tax rate for foreign
operations, and a favorable adjustment related to book tax accruals which
had been established in prior years.
(2) Effective January 1, 1994, the Corporation adopted SFAS No. 112. The
unfavorable cumulative effect of adopting SFAS No. 112 was $758.1 million,
or $751.3 million attributable to $1 2/3 par value common stock and $6.8
million attributable to Class H common stock.
II-44
<PAGE> 60
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION -- CONTINUED
<TABLE>
<CAPTION>
1994 QUARTERS
--------------------------------------
1ST 2ND 3RD 4TH
------ ------ ------ ------
<S> <C> <C> <C> <C>
Average number of shares of common stocks outstanding (in
millions)
$1 2/3 par value........................................ 725.3 733.1 752.7 753.7
Class E................................................. 257.9 260.1 261.2 261.9
Class H................................................. 90.6 91.7 92.7 93.3
Earnings per share attributable to common stocks
$1 2/3 par value before cumulative effect of accounting
change............................................... $ 1.86 $ 2.23 $ 0.40 $ 1.74
Cumulative effect of accounting change.................. (1.05)(1) -- -- --
------ ------ ------ ------
Net income attributable to $1 2/3 par value............. $ 0.81 $ 2.23 $ 0.40 $ 1.74
====== ====== ====== ======
Net earnings attributable to Class E.................... $ 0.36 $ 0.41 $ 0.45 $ 0.49
====== ====== ====== ======
Class H before cumulative effect of accounting change... $ 0.78 $ 0.67 $ 0.61 $ 0.64
Cumulative effect of accounting change.................. (0.08)(1) -- -- --
------ ------ ------ ------
Net earnings attributable to Class H.................... $ 0.70 $ 0.67 $ 0.61 $ 0.64
====== ====== ====== ======
Cash dividends per share of common stocks
$1 2/3 par value........................................ $ 0.20 $ 0.20 $ 0.20 $ 0.20
Class E................................................. 0.12 0.12 0.12 0.12
Class H................................................. 0.20 0.20 0.20 0.20
Price range of common stocks
$1 2/3 par value (2): High.............................. $65.38 $60.13 $53.38 $48.38
Low................................. 52.00 49.75 46.25 36.13
Class E (2): High....................................... 36.88 38.00 38.50 39.50
Low........................................ 27.50 32.88 33.00 34.75
Class H (2): High....................................... 40.38 38.75 38.00 37.75
Low........................................ 32.63 31.75 34.63 31.00
</TABLE>
-------------------------
(1) Includes unfavorable effect of adoption of SFAS No. 112 of $1.05 per share
of $1 2/3 par value and $0.08 per share of Class H common stock.
(2) The principal market is the New York Stock Exchange and prices are based on
the Composite Tape. $1 2/3 par value common stock is also listed on the
Chicago, Pacific, and Philadelphia stock exchanges. As of December 31, 1994,
there were 781,909 holders of record of $1 2/3 par value common stock,
354,297 holders of record of Class E, and 394,957 holders of record of Class
H common stock.
II-45
<PAGE> 61
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION -- CONTINUED
<TABLE>
<CAPTION>
1993 QUARTERS
--------------------------------------------------
1ST 2ND 3RD 4TH
--------- --------- --------- ---------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales and revenues.......................... $34,564.2 $36,250.1 $30,137.5 $37,267.7
========= ========= ========= =========
Income (Loss) before income taxes............... $ 930.4 $ 1,532.5 $ (989.7) $ 1,102.1
U.S. foreign, and other income taxes (credit)... 417.2 643.4 (876.8)(1) (74.3)(2)
--------- --------- --------- ---------
Net income (loss)............................... 513.2 889.1 (112.9)(3) 1,176.4(4)
Dividends on preferred and preference stocks.... 94.2 89.0 86.8 86.8
--------- --------- --------- ---------
Income (Loss) on common stocks.................. $ 419.0 $ 800.1 $ (199.7) $ 1,089.6
========= ========= ========= =========
Earnings (Loss) attributable to common stocks
Net earnings (loss) attributable to $1 2/3 par
value...................................... $ 300.5 $ 662.4 $ (347.0) $ 921.4
Net earnings attributable to Class E.......... $ 74.1 $ 87.7 $ 98.4 $ 107.0
Net earnings attributable to Class H.......... $ 44.4 $ 50.0 $ 48.9 $ 61.2
Average number of shares of common stocks
outstanding (in millions)
$1 2/3 par value.............................. 707.4 707.9 709.6 715.7
Class E....................................... 234.7 236.7 246.6 253.5
Class H....................................... 93.9 86.0 87.4 88.7
Earnings (Loss) per share attributable to common
stocks
Net earnings (loss) attributable to $1 2/3 par
value...................................... $ 0.42 $ 0.92 ($ 0.49)(5) $ 1.28(5)
Net earnings attributable to Class E.......... $ 0.32 $ 0.37 $ 0.40 $ 0.42
Net earnings attributable to Class H.......... $ 0.47 $ 0.58 $ 0.56 $ 0.69
Cash dividends per share of common stocks $1 2/3
par value..................................... $ 0.20 $ 0.20 $ 0.20 $ 0.20
Class E....................................... 0.10 0.10 0.10 0.10
Class H....................................... 0.18 0.18 0.18 0.18
Price range of common stocks
$1 2/3 par value: High........................ $ 41.25 $ 44.88 $ 49.75 $ 57.13
Low......................... 32.00 36.38 41.63 42.00
Class E: High................................. 35.88 33.38 32.50 31.13
Low.................................. 27.63 28.25 26.00 26.50
Class H: High................................. 27.50 33.00 38.00 42.38
Low.................................. 22.88 23.38 30.50 34.50
</TABLE>
-------------------------
(1) Includes a deferred tax benefit of $444.3 million related to an increase in
the U.S. corporate income tax rate.
(2) The effective income tax rate in the fourth quarter of 1993 reflects
benefits related to foreign tax credits and taxes on foreign income.
(3) Includes a special restructuring charge of $589.0 million.
(4) Includes a charge of $189.5 million related to the sale of AGT.
(5) Includes favorable (unfavorable) effects on earnings per share of: third
quarter 1993 -- 1% U.S. corporate income tax increase of $0.64, increase to
the plant-closing reserve of ($0.83), and labor contract-related costs of
($0.20) per share of $1 2/3 par value common stock; and fourth quarter 1993
-- loss on the sale of AGT of ($0.27) per share of $1 2/3 par value common
stock.
II-46
<PAGE> 62
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION -- CONTINUED
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net sales and revenues............................... $154,951.2 $138,219.5 $132,242.2
Income (Loss) before income taxes.................... $ 8,353.3 $ 2,575.3 $ (3,333.1)
% of sales and revenues.............................. 5.4% 1.9% (2.5)%
========= ========= =========
Net income (loss).................................... $ 4,900.6 $ 2,465.8 $(23,498.3)
Income (Loss) on common stocks....................... $ 4,579.9 $ 2,109.0 $(23,804.6)
Rate of return on average common stockholders'
equity............................................. 79.9%* 104.2%* (169.3)%*
========= ========= =========
$1 2/3 par value common stock
Earnings (Loss) attributable to.................... $ 3,893.9 $ 1,537.3 $(23,940.7)
Cash dividends..................................... 592.6 565.8 945.4
---------- ---------- ----------
Net income retained (loss accumulated)............. $ 3,301.3 $ 971.5 $(24,886.1)
========= ========= =========
Earnings (Loss) per share.......................... $ 5.15 $ 2.13 $ (38.28)
Cash dividends per share........................... 0.80 0.80 1.40
---------- ---------- ----------
Net income retained (loss accumulated) per share... $ 4.35 $ 1.33 $ (39.68)
========= ========= =========
Class E common stock
Earnings attributable to........................... $ 444.4 $ 367.2 $ 278.4
Cash dividends..................................... 124.8 97.2 76.1
---------- ---------- ----------
Net income retained................................ $ 319.6 $ 270.0 $ 202.3
========= ========= =========
Earnings per share................................. $ 1.71 $ 1.51 $ 1.33
Cash dividends per share........................... 0.48 0.40 0.36
---------- ---------- ----------
Net income retained per share........................ $ 1.23 $ 1.11 $ 0.97
========= ========= =========
Class H common stock
Earnings (Loss) attributable to.................... $ 241.6 $ 204.5 $ (142.3)
Cash dividends..................................... 73.8 64.1 53.3
---------- ---------- ----------
Net income retained (loss accumulated)............. $ 167.8 $ 140.4 $ (195.6)
========= ========= =========
Earnings (Loss) per share.......................... $ 2.62 $ 2.30 $ (2.29)
Cash dividends per share........................... 0.80 0.72 0.72
---------- ---------- ----------
Net income retained (loss accumulated) per share... $ 1.82 $ 1.58 $ (3.01)
========= ========= =========
</TABLE>
-------------------------
* The large negative return in 1992 and the high returns in 1993 and 1994
reflect the adoption of SFAS No. 106 and its impact on lowering average common
stockholders' equity.
The Corporation adopted SFAS No. 112, Employers' Accounting for
Postemployment Benefits, effective January 1, 1994. The unfavorable cumulative
effect of adopting SFAS No. 112 was $751.3 million or $1.05 per share of $1 2/3
par value and $6.8 million or $0.08 per share of Class H common stock.
The Corporation adopted SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions, effective January 1, 1992. The
unfavorable cumulative effect of adopting SFAS No. 106 was $20,687.3 million or
$33.38 per share of $1 2/3 par value and $150.4 million or $2.08 per share of
Class H common stock. Also effective January 1, 1992, Hughes changed its revenue
recognition policy for certain commercial businesses. The unfavorable effect of
this change on 1992 earnings was $32.8 million or $0.05 per share of $1 2/3 par
value and $7.2 million or $0.10 per share of Class H common stock.
II-47
<PAGE> 63
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION -- CONTINUED
<TABLE>
<CAPTION>
1991 1990
---------- ----------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Net sales and revenues............................................. $123,108.8 $124,705.1
Loss before income taxes........................................... $ (5,892.3) $ (2,217.1)
% of sales and revenues............................................ (4.8)% (1.8)%
========= =========
Net loss........................................................... $ (4,452.8) $ (1,985.7)
Loss on common stocks.............................................. $ (4,523.2) $ (2,023.9)
Rate of return on average common stockholders' equity.............. (15.9)% (6.1)%
========= =========
$1 2/3 par value common stock
Loss attributable to............................................. $ (4,851.4) $ (2,378.3)
Cash dividends................................................... 983.4 1,804.7
---------- ----------
Loss accumulated................................................. $ (5,834.8) $ (4,183.0)
========= =========
Loss per share................................................... $ (7.97) $ (4.09)
Cash dividends per share......................................... 1.60 3.00
---------- ----------
Loss accumulated per share....................................... $ (9.57) $ (7.09)
========= =========
Class E common stock
Earnings attributable to......................................... $ 223.6 $ 194.4
Cash dividends................................................... 62.5 52.4
---------- ----------
Net income retained.............................................. $ 161.1 $ 142.0
========= =========
Earnings per share*.............................................. $ 1.14 $ 1.04
Cash dividends per share*........................................ 0.32 0.28
---------- ----------
Net income retained per share*................................... $ 0.82 $ 0.76
========= =========
Class H common stock
Earnings attributable to......................................... $ 104.6 $ 160.0
Cash dividends................................................... 54.3 63.4
---------- ----------
Net income retained.............................................. $ 50.3 $ 96.6
========= =========
Earnings per share............................................... $ 1.39 $ 1.82
Cash dividends per share......................................... 0.72 0.72
---------- ----------
Net income retained per share.................................... $ 0.67 $ 1.10
========= =========
</TABLE>
-------------------------
* Adjusted to reflect the two-for-one stock split in the form of a 100% stock
dividend distributed on March 10, 1992.
Effective January 1, 1991, accounting procedures were changed to include in
inventory general purpose spare parts previously charged directly to expense.
The effect of this change on 1991 earnings was a favorable adjustment of $302.7
million or $0.50 per share of $1 2/3 par value and $3.8 million or $0.04 per
share of Class H common stock. Also, the Corporation adopted SFAS No. 109,
Accounting for Income Taxes, effective January 1, 1991. The favorable
(unfavorable) cumulative effect of adopting SFAS No. 109 was $230.5 million or
$0.38 per share of $1 2/3 par value, $(6.1) million or $(0.03) per share of
Class E and $8.3 million or $0.09 per share of Class H common stock.
II-48
<PAGE> 64
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION -- CONCLUDED
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Average number of shares of common stocks outstanding (in
millions)
$1 2/3 par value....................................... 741.3 710.2 670.5
Class E................................................ 260.3 243.0 209.1
Class H................................................ 92.1 88.6 75.3
Cash dividends on capital stocks as a percent of net
income................................................. 22.7% 44.0% N/A
Expenditures for real estate, plants, and equipment...... $ 4,883.7 $ 3,822.1 $ 4,336.7
Expenditures for special tools........................... $ 2,341.4 $ 2,648.6 $ 2,252.9
Cash and marketable securities........................... $ 16,075.6 $ 17,962.7 $ 15,107.7
Working capital (with GMAC on an equity basis)........... $ 700.9 $ 2,822.2 $ 10,938.6
Current ratio (with GMAC on an equity basis)............. 1.02 1.08 1.32
Total assets............................................. $198,598.7 $188,200.9 $190,196.0
Long-term debt and capitalized leases
(with GMAC on an equity basis)......................... $ 6,218.7 $ 6,383.6 $ 7,055.4
</TABLE>
<TABLE>
<CAPTION>
1991 1990
---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Average number of shares of common stocks outstanding
(in millions)
$1 2/3 par value................................................... 614.6 601.5
Class E *.......................................................... 195.3 187.1
Class H............................................................ 73.7 88.1
Cash dividends on capital stocks as a percent of net income.......... N/A N/A
Expenditures for real estate, plants, and equipment.................. $ 4,255.1 $ 4,249.9
Expenditures for special tools....................................... $ 2,956.8 $ 3,155.5
Cash and marketable securities....................................... $ 10,192.4 $ 7,821.4
Working capital (with GMAC on an equity basis)....................... $ 10,807.1 $ 10,915.1
Current ratio (with GMAC on an equity basis)......................... 1.36 1.37
Total assets......................................................... $184,074.6 $180,236.5
Long-term debt and capitalized leases
(with GMAC on an equity basis)..................................... $ 6,699.1 $ 4,923.8
</TABLE>
-------------------------
* Adjusted to reflect the two-for-one stock split in the form of 100% stock
dividends distributed on March 10, 1992.
II-49
<PAGE> 65
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
The following management's discussion and analysis should be read in
conjunction with the competitive position and environmental matters discussions
included in Part I, Item 1, which are specifically incorporated by reference
herein.
General Motors Corporation reported record consolidated net income for 1994
of $4,900.6 million, or $5.15 per share of GM $1 2/3 par value common stock,
including the unfavorable effect of a postemployment benefits accounting change.
The record was reached as a result of positive contributions from all five major
business sectors, including solid profitability in GM's North American
Automotive Operations (NAO). This compares to consolidated net income in 1993 of
$2,465.8 million, or $2.13 per share of $1 2/3 par value common stock, and a net
loss in 1992 of $23,498.3 million, or $38.28 per share of $1 2/3 par value
common stock.
<TABLE>
<CAPTION>
1994
O/(U)
BUSINESS SECTOR RESULTS 1994 1993* 1993
------------------------------------------------------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
NAO................................................... $ 690 $ (872) $1,562
IO.................................................... 1,582 1,115 467
GMAC.................................................. 920 981 (61)
EDS................................................... 822 724 98
GMHE.................................................. 1,049 922 127
Other................................................. (162) (404) 242
------ ------ ------
Total............................................ $4,901 $2,466 $2,435
====== ====== ======
</TABLE>
-------------------------
* Reflects 1994 classifications
GM sales and revenues increased 12.1% to $155.0 billion in 1994 and 4.5% to
$138.2 billion in 1993. Dollar sales and revenues include price adjustments of
$2.5 billion in 1994, $3.6 billion in 1993, and $2.5 billion in 1992. Profit
(loss) margin -- income (loss) as a percent of sales and revenues -- with GMAC
on an equity basis -- has improved 5.7 percentage points since 1992, when GM
reported a net loss margin of 2.2% (excluding the SFAS No. 106 accounting
change). However, the 1994 net profit margin of 3.5% is short of GM's goal of an
average annual net margin of at least 5% over the auto industry business cycle.
Cost of sales and other operating charges as a percent of net sales and
revenues -- with GMAC on an equity basis -- was 82.8% in 1994, 85.0% in 1993,
and 88.9% in 1992. The improvement in 1994 versus 1993 is primarily attributable
to NAO where reduced material costs as a result of global sourcing, improved
manufacturing performance and a reduction in hourly employment despite increased
vehicle production. These favorable items were partially offset by higher
corporate-wide engineering costs to support new model development, as reflected
by the $1.0 billion increase in research and development expenses, and increased
costs of emissions and safety equipment. The improvement in 1993 versus 1992
primarily reflects cost improvements at NAO due to consolidation efforts,
purchasing savings, cost cutting in the automotive components group, a 13%
reduction in vehicle assembly hours, and reductions in both salaried and hourly
headcount.
Special Items
All three years contained certain nonrecurring special items. Results in
1994 included the unfavorable effect of the adoption of Statement of Financial
Accounting Standards (SFAS) No. 112, Employers' Accounting for Postemployment
Benefits, amounting to $758.1 million after-tax, or $1.05 per $1 2/3 par value
share and $0.08 per share of Class H common stock.
The 1993 results included an after-tax increase of $589.0 million in the
Corporation's previously announced plant closing reserve, labor contract-related
costs of $143.8 million after-tax, primarily reflecting
II-50
<PAGE> 66
the recognition of lump-sum payments to retirees to be made in 1995 and 1996,
and an after-tax loss of $189.5 million on the sale of the Allison Gas Turbine
Division (AGT). These unfavorable special items were partially offset by the
$444.3 million favorable impact of the increase in the U.S. corporate income tax
rate. The higher tax rate resulted in a benefit due to the Corporation's
deferred tax asset position.
The results in 1992 were severely affected by the adoption of SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions. The total
unfavorable cumulative effect of this accounting change was $20,837.7 million,
or $33.38 per $1 2/3 par value share and $2.08 per share of Class H common
stock.
Additionally, several other nonrecurring charges to earnings were recorded
during 1992. GM reduced the basis of its investment in National Car Rental
System Inc. (NCRS) resulting in a charge to earnings of $744.1 million after
taxes, or $1.11 per share of $1 2/3 par value common stock. GM also recognized a
$165.1 million after-tax gain on the sale of its equity investment in Daewoo
Motor Co., or $0.25 per share of $1 2/3 par value common stock. The 1992 loss
included a one-time special restructuring charge of $749.4 million after taxes,
or $0.97 per share of $1 2/3 par value common stock and $1.87 per share of Class
H common stock, primarily attributable to redundant facilities and related
employment costs at Hughes Aircraft Company (Hughes).
Also effective January 1, 1992, Hughes changed its revenue recognition
policy for certain commercial businesses from the percentage-of-completion
(cost-to-cost) method to the units-of-delivery method resulting in an
unfavorable effect of $40.0 million, or $0.05 per share of $1 2/3 par value and
$0.10 per share of Class H common stock.
Excluding special items in these years, GM had income of $5,658.7 million
in 1994 and $2,943.8 million in 1993, compared to a loss of $1,292.2 million in
1992. After considering preferred and preference stock dividend payments and the
apportionment of earnings attributable to GM Class E and Class H common stocks,
this represents income per share of $6.20 and $2.79 on $1 2/3 par value common
stock in 1994 and 1993 and a loss per share of $3.02 in 1992.
The following table summarizes these data:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Consolidated Net Income (Loss) as reported................... $4,900.6 $2,465.8 $(23,498.3)
-------- -------- ----------
Add (deduct) net of tax cumulative effect of accounting
changes and special items
Unfavorable cumulative effect of accounting changes
Postemployment benefits............................... 758.1 -- --
Postretirement benefits other than pensions........... -- -- 20,837.7
Hughes revenue recognition policy..................... -- -- 40.0
Special nonrecurring items
Increase in plant closing reserve (GMHE restructuring in
1992)................................................. -- 589.0 749.4
Labor contract-related costs............................ -- 143.8 --
Loss on sale of AGT..................................... -- 189.5 --
Increase in U.S. corporate income tax rate.............. -- (444.3) --
Write-down of investment in NCRS........................ -- -- 744.1
Gain on the sale of Daewoo Motor Co. ................... -- -- (165.1)
-------- -------- ----------
Total cumulative effect of accounting changes and
special items.................................... 758.1 478.0 22,206.1
-------- -------- ----------
Income (Loss) on a comparable basis.......................... $5,658.7 $2,943.8 $ (1,292.2)
======= ======= =========
</TABLE>
Worldwide Wholesale Sales
Worldwide wholesale vehicle sales totaled 8,328,000 units in 1994, up 7.0%
from 1993, reflecting higher sales in all regions. GM unit sales rose 6.1% in
the United States, 9.2% in other North American countries, and 8.2% overseas.
GM's worldwide wholesale sales of cars in 1994 were 5,480,000 units, up 6.0%
from 1993. Truck sales were 2,848,000 units, an 8.9% increase.
II-51
<PAGE> 67
GM reported worldwide wholesale sales of vehicles of 7,785,000 units in
1993, up 1.3% from 1992. GM unit sales rose 7.9% in the United States but
declined 5.2% in other North American countries and 7.9% overseas. GM's
worldwide wholesale sales of cars in 1993 were 5,169,000 units, down 1.1% from
1992. Truck sales were 2,616,000 units, a 6.4% increase.
<TABLE>
<CAPTION>
CARS TRUCKS TOTAL
----------------------- ----------------------- -----------------------
WORLDWIDE WHOLESALE SALES 1994 1993 1992 1994 1993 1992 1994 1993 1992
------------------------------ ----- ----- ----- ----- ----- ----- ----- ----- -----
(UNITS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States................. 3,049 2,953 2,809 1,967 1,776 1,572 5,016 4,729 4,381
Other North America........... 304 285 296 217 192 207 521 477 503
----- ----- ----- ----- ----- ----- ----- ----- -----
Total North America........... 3,353 3,238 3,105 2,184 1,968 1,779 5,537 5,206 4,884
Overseas...................... 2,127 1,931 2,122 664 648 679 2,791 2,579 2,801
----- ----- ----- ----- ----- ----- ----- ----- -----
Total.................... 5,480 5,169 5,227 2,848 2,616 2,458 8,328 7,785 7,685
===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
Vehicle Unit Deliveries of Cars and Trucks Worldwide
<TABLE>
<CAPTION>
1994 1993 1992
------------------------- ------------------------- -------------------------
GM AS GM AS GM AS
A % A % A %
OF OF OF
INDUSTRY GM INDUS. INDUSTRY GM INDUS. INDUSTRY GM INDUS.
-------- ----- ----- -------- ----- ----- -------- ----- -----
(UNITS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States
Cars...................... 8,991 3,079 34.3 % 8,519 2,927 34.4 % 8,215 2,870 34.9 %
Trucks.................... 6,422 1,984 30.9 % 5,682 1,786 31.4 % 4,905 1,580 32.2 %
-------- ----- -------- ----- -------- -----
Total United States.... 15,413* 5,063 32.9 % 14,201* 4,713 33.2 % 13,120* 4,450 33.9 %
Other North America
Canada.................... 1,257 410 32.6 % 1,190 378 31.8 % 1,225 404 33.0 %
Mexico.................... 619 114 18.4 % 607 107 17.6 % 679 121 17.8 %
-------- ----- -------- ----- -------- -----
Total North America.... 17,289 5,587 32.3 % 15,998 5,198 32.5 % 15,024 4,975 33.1 %
-------- ----- -------- ----- -------- -----
International
Europe
Germany................ 3,468 553 15.9 % 3,455 547 15.8 % 4,267 692 16.2 %
United Kingdom......... 2,129 348 16.3 % 1,975 340 17.2 % 1,795 306 17.0 %
Other West Europe...... 7,701 754 9.8 % 7,196 671 9.3 % 9,123 774 8.5 %
-------- ----- -------- ----- -------- -----
Total West Europe.... 13,298 1,655 12.4 % 12,626 1,558 12.3 % 15,185 1,772 11.7 %
Central/East Europe.... 2,274 52 2.3 % 2,949 64 2.2 % 2,345 34 1.4 %
-------- ----- -------- ----- -------- -----
Total Europe......... 15,572 1,707 11.0 % 15,575 1,622 10.4 % 17,530 1,806 10.3 %
-------- ----- -------- ----- -------- -----
Latin America
Brazil................. 1,398 269 19.2 % 1,135 255 22.5 % 772 176 22.8 %
Venezuela.............. 75 22 29.3 % 125 31 24.8 % 131 31 23.7 %
Other Latin American... 1,149 120 10.4 % 1,015 121 11.9 % 844 107 12.7 %
-------- ----- -------- ----- -------- -----
Total Latin
America........... 2,622 411 15.7 % 2,275 407 17.9 % 1,747 314 18.0 %
-------- ----- -------- ----- -------- -----
All Other
Asia/Pacific
Australia............ 616 122 19.8 % 556 102 18.3 % 543 100 18.4 %
Other Asia/Pacific... 11,844 424 3.6 % 11,152 393 3.5 % 10,154 498 4.9 %
-------- ----- -------- ----- -------- -----
Total
Asia/Pacific.... 12,460 546 4.4 % 11,708 495 4.2 % 10,697 598 5.6 %
Africa................. 487 62 12.7 % 518 57 11.0 % 503 54 10.7 %
Middle East............ 661 69 10.4 % 730 72 9.9 % 811 80 9.9 %
-------- ----- -------- ----- -------- -----
Total All Other...... 13,608 677 5.0 % 12,956 624 4.8 % 12,011 732 6.1 %
-------- ----- -------- ----- -------- -----
Total
International... 31,802 2,795 8.8 % 30,806 2,653 8.6 % 31,288 2,852 9.1 %
-------- ----- -------- ----- -------- -----
Total Worldwide............. 49,091 8,382 17.1 % 46,804 7,851 16.8 % 46,312 7,827 16.9 %
====== ===== ====== ===== ====== =====
</TABLE>
-------------------------
* Includes foreign brands of 4,151,000 units, or 26.9%, in 1994, 3,723,000
units, or 26.2%, in 1993, and 3,633,000 units, or 27.7%, in 1992.
II-52
<PAGE> 68
<TABLE>
<CAPTION>
EMPLOYMENT AND PAYROLLS 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Average worldwide employment
GM (excluding units listed below)......................... 516,300 531,700 571,000
GMAC...................................................... 18,000 18,300 19,200
EDS....................................................... 75,400 71,500 70,500
GMHE...................................................... 77,100 83,400 89,300
NCRS...................................................... 6,000 5,900 --
--------- --------- ---------
Average number of employees............................... 692,800 710,800 750,000
========= ========= =========
Worldwide payrolls (in millions)............................ $31,737.3 $29,805.8 $30,340.5
Average U.S. hourly employment(1)(2)........................ 226,800 235,240 256,250
U.S. hourly payrolls(1) (in millions)....................... $13,582.3 $12,438.9 $12,408.2
Average labor cost per active hour worked -- U.S.
hourly(1)................................................. $ 44.23 $ 42.72 $ 42.21
U.S. and Canadian employment at December 31 (including
outside contract personnel, excluding saleable
engineers)(3)
Salaried............................................... 72,800 71,400 79,600
Hourly(4).............................................. 274,400 290,400 316,400
--------- --------- ---------
Total................................................ 347,200 361,800 396,000
========= ========= =========
</TABLE>
-------------------------
(1) Excludes EDS, Hughes, Saturn, and NCRS.
(2) Includes employees "at work" (excludes laid-off employees receiving
benefits).
(3) Excluding GMAC, EDS, GMHE, and NCRS.
(4) Includes employees "on roll" (includes laid-off employees receiving
benefits).
NAO
1994 was a pivotal year in the financial turnaround of NAO. NAO returned to
profitability in 1994 after having incurred four consecutive years of losses.
During 1994, NAO continued its ongoing efforts to improve performance in the
four key areas: profitability, product quality, organizational consolidation,
and cost reduction.
In terms of profitability, NAO reported net income of $690.0 million, an
improvement of $1,562.3 million over 1993. 1994 net income included a one-time
$707.7 million after-tax charge resulting from the adoption of SFAS No. 112.
Excluding this one-time charge, NAO's net income of $1,397.7 million was a
$2,270.0 million improvement over 1993.
Profit improvement was the result of higher vehicle volumes and outside
component sales as well as reduced sales allowance expense, improved
manufacturing performance, and reduced material costs from global sourcing.
These improvements were offset by higher engineering costs to support new model
development, and increased costs of emissions and safety equipment.
NAO's 1993 loss of $872.3 million represented a $4.7 billion improvement
over 1992. This improvement was realized despite a $589.0 million after-tax
increase to the plant closing reserve and labor contract-related costs of $143.8
million after tax.
Due to the strong vehicle market, U.S. 1994 truck deliveries were at an
all-time record high of nearly 2 million units despite capacity constraints
which prevented GM from fully satisfying market demand. Truck deliveries in 1994
increased 198,000 units from 1993. GM's share of U.S. truck deliveries was 30.9%
in 1994, 31.4% in 1993, and 32.2% in 1992.
GM's U.S. passenger car deliveries exceeded the 3 million mark for the
first time in four years, and were up 152,000 units from 1993. The Corporation's
share of U.S. car deliveries was 34.3% in 1994, 34.4% in 1993, and 34.9% in
1992. GM's share of total U.S. vehicle unit deliveries was 32.9% in 1994,
compared to 33.2% in 1993 and 33.9% in 1992.
II-53
<PAGE> 69
Market share for 1994 was adversely affected by disruptions in vehicle
supply due to labor strikes, significant model changes, and capacity constraints
as well as a continuation of the planned reduction in low profit fleet sales.
This planned reduction in low profit fleet sales also reduced 1993 market share.
As a result of GM's reduction in fleet sales and the strong acceptance of GM
product in the marketplace, incentives decreased $1,039 million in 1994 from
1993, and $1,336 million in 1993 from 1992.
During 1994, Delphi Automotive Systems (formerly Automotive Components
Group Worldwide -- renamed in February 1995), while fully participating in
higher NAO vehicle volumes, continued to focus on aggressively growing non-NAO
business worldwide. Delphi non-NAO sales grew by $800 million. In addition,
Delphi obtained several major contracts for new non-NAO business and completed
12 ventures/acquisitions, adding manufacturing capability in such places as
China, Mexico, and Italy.
In terms of product quality, GM continued to stress quality over quantity.
From a quality perspective, internal measures showed that the 1995 model year
start-up was the best ever. In addition, during 1994 GM continued to show an
improvement in customer surveys of overall customer satisfaction with the
purchase experience as well as with overall product satisfaction.
Proceeding with its ongoing organizational consolidation objectives, NAO
combined its three car passenger car platforms and Saturn under two groups: the
Small Car Group comprised of Saturn Corporation and the Lansing Automotive
Division, and the Midsize and Luxury Car Group comprised of the Midsize Car
Division and Cadillac Luxury Car Division. This organizational change enabled
the newly-formed groups to have a clear market-driven focus, retain the
uniqueness of its products and take advantage of NAO-wide economies of scale
facilitated by the use of common parts, processes, and systems throughout the
operations.
NAO continued to consolidate and close selected plants during 1994. These
plant closings were executed as part of NAO's previously announced plan to
reduce its annual capacity to 5.4 million U.S. and Canada passenger cars and
light-duty trucks, while introducing new products which appeal to the growing
trucks market segment. Several steps were taken by Delphi during 1994 so as to
"right-size" the organization and significantly improve cost competitiveness.
Delphi completed the sale of its axle, forge, and propshaft business, motors and
actuators business, light and heavy duty starter motor business, and heavy duty
generator business. These divestitures allowed Delphi to focus resources on core
businesses.
Cost reduction remained a key strategy. NAO continued to achieve
significant savings from its global sourcing and advanced purchasing strategies
during 1994 as well as lean manufacturing and organizational consolidations.
Lean manufacturing is a long-term strategy and is continually modified to
meet changing events and consumer demands. During 1994, NAO achieved progress in
its lean manufacturing target areas while increasing U.S. vehicle production.
Delphi increased its utilization of three shifts and 24 hour manufacturing
operations, and implemented second and third tier wage agreements with some of
its unions.
Balancing plant capacity and plant labor will be an ongoing challenge for
NAO during 1995 and future years. Management intends to continually review its
manufacturing processes and where appropriate realign capacity and selectively
add labor.
Salaried employment in the United States and Canada was 72,800 at the end
of 1994, up from 71,400 at the end of 1993 and down from 79,600 at the end of
1992. Hourly employment in the U.S. and Canada declined to 274,400 at the end of
1994, down from 290,400 at the end of 1993 and 316,400 at the end of 1992.
During 1994, several facilities were divested to Delco Remy America, ITT
Automotive -- Electrical Systems N.A., and American Axle, representing
approximately 12,500 jobs. In December 1992, GM and the United Auto Workers
reached agreement to offer an early retirement incentive plan aimed at reducing
hourly employment. This plan was offered in the first quarter of 1993 and
accepted by 16,500 hourly employees.
Although 1994 was a breakthrough year for NAO, there remains a significant
amount of work to be done in order to achieve the goals set out in the NAO
turnaround plan, and to enable NAO to reach its full potential. In this regard,
NAO Management intends to maintain the momentum in implementing continued
operational and financial improvements in the ensuing years. The turnaround
strategies developed by the
II-54
<PAGE> 70
NAO Management Team aggressively address both short-term and long-term
challenges facing the North American automotive industry. Through implementation
of these strategies, NAO Management and its employees intend to continue the
turnaround of GM's North American Operations and build a successful, dynamic
organization poised to enter the 21st century as a strong competitor in the
automotive market.
International Automotive Operations
GM's International Automotive Operations (IO) recorded a substantial
improvement in profitability in 1994. IO reported income of $1,582.4 million in
1994 versus $1,115.3 million in 1993 and $1,435.5 million in 1992. The 1994
results reflected significant improvements in GM Europe's earnings versus 1993
when vehicle deliveries totaled only 1,622,000 units and the continuation of
strong financial results in GM's Latin American Operations (LAO). IO results in
1993 reflected record sales and profits in LAO and Europe remained profitable
despite an extremely difficult economic climate and low industry vehicle unit
deliveries.
In 1994, the West European car and truck market increased to 13.3 million
units with GM achieving a share of 12.4% compared with 12.3% in 1993 and 11.7%
in 1992.
With an overall 13.2% share of the passenger car market in 1994, GM
maintained its second place among all manufacturers of passenger cars in Western
Europe. However, the technically identical Opel/Vauxhall model series again was
'number one' in the Western European car market for the third consecutive year
with a market share of 12.6%. This marginal fall in the passenger car market
share from the 1993 share of 12.7% reflected a number of factors including
restricted availability of the successful new Omega and its predecessor model in
the first half of the year, total international demand for the Corsa exceeding
capacity, and much of the market growth coming in France where GM has a less
than average share.
During 1993, GM's Western European vehicle unit deliveries declined by
12.1%, although GM increased its car and truck market share to 12.3% from 11.7%
in 1992. Overall passenger car market share increased from 12.7% in 1992 to
13.4% in 1993. Market share increased for Opel/Vauxhall for the fifth straight
year.
Significant further progress was made in a number of markets. In the
Netherlands, Opel was market leader for the 26th consecutive year with a share
of 14.9%, up from 14.1% in 1993. Opel became market leader in Finland and
Hungary, and in Ireland moved up to second place in the market with a best ever
share of 14.9%, compared with 13.9% in 1993. Market leadership was maintained in
Switzerland and Portugal, and in Germany, GM increased its share from 15.8% last
year to 15.9%.
In Sweden, Saab increased its market share from 10.1% in 1993 to 11.5%,
continuing the process of recovery and contributing to the return to a
profit-making position. Worldwide retail sales of the Saab lineup increased
20.5% in 1994 compared with 1993 levels.
GM Europe's profit for the 1994 calendar year showed a significant
improvement over 1993. The improvement was primarily due to strong volume gains,
lower employment-separation program costs, and continued manufacturing- and
material-cost reductions.
LAO's performance once again exceeded all previous vehicle sales. By
capitalizing on industry expansions throughout the region, GM posted all-time
record deliveries of over 411,000 units (up 1.2% vs. 1993). GM's market share
(15.7%), however, was adversely impacted by continued capacity constraints in
Brazil and the timing of GM's start-up in Argentina (not until the third
quarter) -- two of the fastest growing markets. GM do Brasil's sales increased
5.5% from the 1993 level. Sales and earnings records were established in
Colombia, while GM Chile also achieved its second best year in history. Recently
approved capital expenditures, targeted at capacity expansion, will keep LAO
poised for the future and allow it to take advantage of market growth. All this
was accomplished amidst political uncertainty and continued competitive
pressures from Eastern European and Asian entries.
While attaining a 29.6% increase in unit deliveries in 1993 (versus 1992)
to 407,000 units, GM continued to strengthen its financial position in Latin
America by posting record operating profit as well. The region also benefited
from a relatively low effective tax rate in 1993.
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<PAGE> 71
Record 1994 sales in Brazil, Colombia, and Ecuador, combined with
year-to-year increases in Argentina, Bolivia, Chile, and Peru, all contributed
to GM's 15.7% regional market share -- its highest overseas. The region also
experienced a trend toward expanded growth in intra-regional exports brought on
by expanded regional trade pacts. Intra-regional exports were up 15% in 1994
versus 1993.
In the Asia-Pacific region, financial performance continued on a favorable
course. Strong results at GM Holden's Automotive (GMHA) and improved earnings at
Isuzu Motor Limited (Isuzu) more than balanced the substantial business
development costs of expanding GM operations in the region's fast growing
economies. GMHA reported record profits, sparked by the success of its popular
Holden Commodore model. Meanwhile, Isuzu continued with a major financial
turnaround and posted higher profits in 1994. GM's expansion efforts in the
region were bolstered by market share and sales volume increases, especially in
Australia, Taiwan and Thailand. New initiatives included the start of Opel
passenger car assembly in Indonesia and the launch of several new Opel models in
the region. The Opel Corsa continued its trendsetting pattern of worldwide
acceptance with successful launches throughout the Asia-Pacific region,
including Australia where it was introduced as the Holden Barina.
GMAC
General Motors Acceptance Corporation (GMAC) serves the financing and
insurance needs of GM customers. Reference should be made to the condensed GMAC
financial statements included in Note 11 to the Financial Statements. The
Corporation hereby encourages reference to the GMAC 1994 Annual Report on Form
10-K to the Securities and Exchange Commission.
Consolidated net income for GMAC and its subsidiaries totaled $919.7
million in 1994, or $61.4 million and $16.4 million below income reported in
1993 and 1992, respectively. In this regard, 1994 income reflects an unfavorable
first quarter after-tax charge of $7.4 million related to the cumulative effect
on income resulting from the implementation of SFAS No. 112. Also, 1992 income
reflects a cumulative unfavorable adjustment of $282.6 million related to
implementation of SFAS No. 106.
Net income from financing operations, including GMAC Mortgage Group
(GMACMG) results, totaled $809.0 million in 1994 (excluding the $6.8 million
unfavorable impact due to the adoption of SFAS No. 112). 1994 results were
favorable $18.4 million relative to the $790.6 million earned in 1993 and
unfavorable $202.6 million relative to the $1,011.6 million earned in 1992
(excluding the $232.8 million unfavorable impact due to the adoption of SFAS No.
106). The $18.4 million increase from 1993 earnings reflects record earnings
from international operations as well as continued positive credit loss
experience, and a more favorable funding mix in the U.S., resulting from greater
investor confidence in GM and GMAC. The $221.0 million decrease in earnings from
1992 to 1993 is primarily attributable to lower asset levels and tighter net
interest rate margins in North America, partially offset by higher earnings
outside North America.
Consolidated financing revenue totaled $9,418.8 million in 1994, up $666.8
million from 1993 but down $983.3 million from 1992. The increase from 1993 to
1994 is primarily attributable to increases in leasing revenues, resulting from
continued growth in operating lease activity and greater wholesale revenue due
to GMAC's resumption of dealer wholesale inventory financing formerly transacted
by GM. This increase was partially offset by reduced lease financing revenues
due to GM's reduction in fleet sales.
Retail and lease financing revenue, at $2,955.0 million for 1994, was
$718.4 million and $2,552.0 million lower than 1993 and 1992, respectively.
Contributing to these declines were lower asset levels, primarily due to net
asset liquidations through the sale of retail finance receivables since December
1990. Leasing revenue reached $4,855.7 million in 1994, compared to $3,870.9
million in 1993 and $3,527.9 million in 1992, as leasing continues to gain
consumer acceptance. In 1994, wholesale and term loan financing revenue amounted
to $1,608.1 million, compared with $1,207.7 million in 1993 and $1,367.2 million
in 1992, with the increase primarily attributed to the resumption of wholesale
inventory financing as well as greater dealer inventory, partially offset by
sales of wholesale receivables.
Net insurance premiums earned by Motors Insurance Corporation in 1994 were
relatively stable and amounted to $1,127.6 million, compared with $1,107.2
million in 1993 and $1,159.7 million in 1992. Net
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<PAGE> 72
income from insurance operations totaled $118.1 million in 1994 (excluding the
$0.6 million unfavorable impact due to the adoption of SFAS No. 112). These
results compare with $190.5 million in 1993 and $207.1 million in 1992
(excluding the $49.8 million unfavorable impact due to the 1992 adoption of SFAS
No. 106). Income earned in 1994, in comparison to 1993, reflects non-recurring
capital gains recognized in 1993, partially offset by improved underwriting
results in 1994. Insurance operations in 1993 compared unfavorably to 1992, due
to unfavorable underwriting results, which were partially offset by higher
capital gains.
Interest and discount expense decreased to $4,230.9 million in 1994 from
$4,721.2 million reported in 1993 and $5,828.6 million in 1992. The $490.3
million decrease from 1993 is primarily due to a more favorable medium- and
long-term funding mix resulting from increasingly positive perception of GMAC's
financial position by the capital markets. The $1,107.4 million decrease from
1992 to 1993 is due to the more favorable funding mix, a general decrease in
U.S. interest rates, and a lower level of total borrowings.
Total consolidated assets of GMAC at December 31, 1994 were $85,537.4
million, $4,786.6 million above the previous year. Consolidated earning assets,
which comprised $82,074.6 million of the total consolidated assets, increased
$7,290.8 million from 1993 year-end levels. The year-to-year increase can be
largely attributed to an increase in operating lease assets due to the continued
popularity of the SmartLease program.
As shown in the following table, GMAC financed or leased worldwide 1.9
million new passenger cars and trucks during 1994, up 2.0% from 1993 and down
12.4% from 2.2 million units in 1992.
<TABLE>
<CAPTION>
UNITS FINANCED OR LEASED BY GMAC WORLDWIDE 1994 1993 1992
----------------------------------------------------------------------- ----- ----- -----
(UNITS IN THOUSANDS)
<S> <C> <C> <C>
U. S. ................................................................. 1,323 1,371 1,648
Outside the U.S........................................................ 613 527 561
----- ----- -----
Total GMAC...................................................... 1,936 1,898 2,209
===== ===== =====
</TABLE>
GMAC financed or leased 25% of new General Motors products delivered in the
U.S. during 1994, a 3 percentage point decrease from 1993 and an 8 percentage
point decrease from 1992. The decline in penetration of retail delivery
financing reflects continued intense competitive pressures within a robust sales
environment.
Total earning assets of GMAC at December 31, 1993 were down 14.2% from
year-end 1992. The reduced level of earning assets reflects lower financing
levels of new GM cars and trucks in the U.S. in 1993, as well as the sales of
receivables. In the U.S., GMAC financed 28% of new GM vehicles delivered by GM
dealers during 1993, down 5 percentage points from 1992.
As of December 31, 1994, GMAC's total borrowings were $66.7 billion
compared with $62.8 billion at December 31, 1993. Approximately 78.7%
represented funding for operations in the United States. GMAC's total borrowings
at December 31, 1993 decreased 15.8% from the prior year-end. Approximately
80.0% of 1993 borrowing supported United States operations.
GMAC's provisions for loan losses reflect continued favorable loss
experience related to its finance receivables. Based on these continued
improvements, GMAC adjusted its allowances accordingly during 1994, which
resulted in a provision for losses on financing receivables of $177.3 million,
including sold receivables, $123.5 million and $193.7 million lower than 1993
and 1992, respectively. The provision for financing losses amounted to $300.8
million in 1993, a decrease of $70.2 million from 1992, reflecting a lower level
of finance receivables outstanding, and improved year-to-year loss performance.
Electronic Data Systems Corporation
Reference should be made to EDS' Management's Discussion and Analysis in
Exhibit 99(a) which is incorporated herein by reference.
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<PAGE> 73
EDS achieved record earnings for the ninth consecutive year, reflecting
continued strong performance in its existing businesses as well as growth in new
markets. Separate consolidated net income increased 13.5% to $821.9 million in
1994 and 13.9% to $724.0 million in 1993 over $635.5 million in 1992. Earnings
per share attributable to Class E common stock were $1.71 in 1994, up from $1.51
in 1993 and $1.33 in 1992, and are based on the Available Separate Consolidated
Net Income of EDS (described in Note 9 to the Financial Statements).
EDS is a world leader in systems integration and communications services.
Revenues from sources outside GM and its affiliates rose 24.0% in 1994 to
$6,505.2 million and 7.5% in 1993 to $5,238.1 million and comprised 64.7% and
61.2%, respectively, of total EDS revenues. In addition, EDS continued to assist
GM in a variety of re-engineering processes being implemented in the
Corporation's factories and offices.
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. Such
amortization, charged against Other Sector income, was $29.1 million in 1994 and
$34.9 million in 1993 and 1992.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
SUMMARY FINANCIAL DATA -- EDS 1994 1993 1992
-------------------------------------------------------------- --------- -------- --------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues
Systems and other contracts
GM and affiliates........................................... $ 3,547.2 $3,323.7 $3,348.5
Outside customers........................................... 6,412.9 5,183.6 4,806.7
Interest and other income..................................... 92.3 54.5 63.7
--------- -------- --------
Total Revenues................................................ 10,052.4 8,561.8 8,218.9
Costs and Expenses............................................ 8,768.2 7,430.5 7,218.1
Income Taxes.................................................. 462.3 407.3 365.3
--------- -------- --------
Separate Consolidated Net Income.............................. $ 821.9 $ 724.0 $ 635.5
======== ======= =======
Available Separate Consolidated Net Income*
Average number of shares of Class E common stock outstanding
(in millions) (Numerator)................................... 260.3 243.0 209.1
Class E dividend base (in millions)
(Denominator)............................................... 481.7 480.6 479.3
Available Separate Consolidated Net Income.................... $ 444.4 $ 367.2 $ 278.4
======== ======= =======
Earnings Attributable to Class E Common Stock on a Per Share
Basis....................................................... $ 1.71 $ 1.51 $ 1.33
Cash dividends per share of Class E common stock.............. $ 0.48 $ 0.40 $ 0.36
======== ======= =======
</TABLE>
-------------------------
* Available Separate Consolidated Net Income is determined quarterly.
GM Hughes Electronics Corporation
Reference should be made to GMHE's Management's Discussion and Analysis in
Exhibit 99(b) which is incorporated herein by reference.
For the second consecutive year, GMHE reported record earnings and
revenues. Earnings increased 13.8% to $1,049.2 million in 1994 from $921.6
million in 1993. This compares with a loss in 1992 of $921.6 million. Earnings
in 1994 include the unfavorable effect of an accounting change for
postemployment benefits while 1992 included the restructuring charge and
accounting changes for postretirement benefits and
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<PAGE> 74
revenue recognition described previously. Excluding these special items, GMHE
earnings in 1994 and 1992 would have been $1,079.6 million and $699.9 million,
respectively.
Revenues increased 4.3% to $14,099.4 million in 1994 and 9.9% to $13,517.5
million in 1993. Revenue increases in both years were due to continued strength
in the domestic automotive market and increased demand for telecommunications
products and services. The 1992 acquisition of General Dynamics' missile
business also contributed to the 1993 revenue growth, however, lower production
rates and planned terminations on several defense programs resulted in a decline
in defense revenues in 1994.
The improvements in earnings were due primarily to the aforementioned
revenue increases, improved operating margins, and a lower income tax rate in
1994 resulting from the recognition of a capital loss carryforward tax benefit.
The improved operating margins were primarily the result of an aggressive cost
reduction program at Delco Electronics, ongoing efforts to reduce costs across
GMHE's defense businesses, and continued benefits from the consolidation of the
missile business acquired in August 1992. These factors were partially offset in
1994 by operating losses in the in-flight entertainment systems and air traffic
control businesses and increased operating expenses associated with the
commencement of nationwide service in 1994 by DIRECTV(R), GMHE's new
direct-to-home television service.
Results for 1994 include a $35.0 million pre-tax charge for the expected
disposition of a subsidiary. In December 1994, GMHE announced that it had
reached an agreement with CAE Inc. of Toronto, Canada to acquire substantially
all of the assets of its U.S. subsidiary, CAE-Link Corporation, for $155 million
in cash. CAE-Link is an established supplier of simulation, training, and
technical services, primarily to the U.S. military and NASA. The transaction
closed on February 24, 1995.
In July 1993, GMHE sold its 30% ownership interest in the Japan
Communications Satellite Company which resulted in a $89.7 million pre-tax gain.
In December 1993, GMHE sold Hughes Rediffusion Simulation Limited and related
entities which resulted in a pre-tax loss of $55.0 million.
Amounts for 1992 include a $28.0 million pre-tax gain on the sale of assets
to Hughes-JVC Technology Corporation and $35.0 million of pre-tax income from a
patent infringement settlement. In August 1992, GMHE acquired the missile
business of General Dynamics Corporation (GD) for 21.5 million shares of Class H
common stock and cash of $62.8 million. Subsequently, GD sold those shares as
part of a 29.1 million share public offering of Class H common stock. The
remaining 7.6 million shares were issued by GM, and the proceeds were used for
general corporate purposes.
Earnings (Loss) per share attributable to Class H common stock were $2.62
in 1994, $2.30 in 1993, and ($2.29) in 1992, and are based on the Available
Separate Consolidated Net Income (Loss) of GMHE (described in Note 9 to the
Financial Statements).
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
SUMMARY FINANCIAL DATA -- GMHE 1994 1993 1992
------------------------------------------------------------------- --------- --------- ---------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues
Net sales
Outside customers................................................ $ 9,108.7 $ 9,062.8 $ 8,267.6
GM and affiliates................................................ 4,953.6 4,387.4 3,901.4
Other income -- net................................................ 37.1 67.3 128.1
--------- --------- ---------
Total Revenues..................................................... 14,099.4 13,517.5 12,297.1
Costs and Expenses................................................. 12,570.8 12,147.1 12,547.6(1)
Income Taxes (Credit).............................................. 572.8 572.6 (77.2)
--------- --------- ---------
Income (Loss) before cumulative effect of accounting changes....... 955.8 797.8 (173.3)
Cumulative effect of accounting changes(2)......................... (30.4) -- (872.1)
--------- --------- ---------
Net Income (Loss).................................................. 925.4 797.8 (1,045.4)
Adjustments to exclude the effect of GM purchase accounting
adjustments related to Hughes(3)................................. 123.8 123.8 123.8
--------- --------- ---------
Earnings (Loss) Used for Computation of Available Separate
Consolidated Net Income (Loss)................................... $ 1,049.2 $ 921.6 $ (921.6)
========= ========= =========
</TABLE>
-------------------------
(1) Includes one-time $1,237.0 million (after-tax $749.4 million or $1.87 per
share of Class H common stock) restructuring charge primarily attributable
to redundant facilities and related employment costs at Hughes.
(2) Effective January 1, 1994, GMHE adopted SFAS No. 112, Employers' Accounting
for Postemployment Benefits. Effective January 1, 1992, GMHE adopted SFAS
No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, and Hughes changed its revenue recognition policy for certain
commercial businesses from the cost-to-cost method to the units-of-delivery
method.
(3) Amortization of intangible assets arising from GM's acquisition of Hughes.
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<PAGE> 75
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
SUMMARY FINANCIAL DATA -- GMHE 1994 1993 1992
------------------------------- --------- --------- ---------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Available Separate Consolidated Net Income (Loss)(4)
Average number of shares of Class H common stock outstanding (in
millions) (Numerator)............................................ 92.1 88.6 75.3
Class H dividend base (in millions) (Denominator).................. 399.9 399.9 399.9
Available Separate Consolidated Net Income (Loss).................. $ 241.6 $ 204.5 $ (142.3)
========= ========= =========
Earnings (Loss) Attributable to Class H Common Stock on a Per Share
Basis
Before cumulative effect of accounting changes................... $ 2.70 $ 2.30 $ (0.11)
Cumulative effect of accounting changes(2)....................... (0.08) -- (2.18)
--------- --------- ---------
Net earnings (loss) attributable to Class H common stock......... $ 2.62 $ 2.30 $ (2.29)
========= ========= =========
Cash dividends per share of Class H common stock................... $ 0.80 $ 0.72 $ 0.72
</TABLE>
-------------------------
(2) Effective January 1, 1994, GMHE adopted SFAS No. 112, Employers' Accounting
for Postemployment Benefits. Effective January 1, 1992, GMHE adopted SFAS
No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, and Hughes changed its revenue recognition policy for certain
commercial businesses from the cost-to-cost method to the units-of-delivery
method.
(4) Available Separate Consolidated Net Income (Loss) is determined quarterly.
LIQUIDITY AND CAPITAL RESOURCES
The return to overall profitability in 1994 and 1993 resulted in much
stronger cash flow from operations compared with 1992. The Corporation's net
loss in 1992 had adverse effects on cash flows and balance sheet strength during
that period. Despite negative business conditions during that period, GM was
able to meet its funding needs through outside borrowings, sale of finance
receivables, equity issuances, sale of assets, sale and leasebacks, and other
means.
In 1992, GM's earnings were inadequate to cover its fixed charges
(principally interest and related charges on debt), primarily as a result of
losses incurred by NAO. The Corporation is implementing fundamental changes
which it believes are restoring the profitability of those operations and will
enable the Corporation to continue to have earnings sufficient to cover its
fixed charges, as was the case in 1994 and 1993.
Cash Flows
Cash and cash equivalents, including GMAC, were $10,939.0 million at
December 31, 1994, down from $13,790.5 million a year earlier due to net cash
used in investing activities exceeding net cash provided by operating and
financing activities.
Cash and cash equivalents at December 31, 1994 with GMAC on an equity basis
were $9,731.4 million, about the same as $9,762.5 million a year earlier.
Net cash provided by operating activities, including GMAC, was $11,948.7
million in 1994, $14,746.4 million in 1993, and $9,766.2 million in 1992. The
decrease in 1994 reflected pension contributions in excess of pension expense,
increases in accounts receivable, inventories, and other investments and
miscellaneous assets, partially offset by higher net income before the
accounting change, higher income taxes payable, and higher other liabilities.
Net cash provided by operating activities with GMAC on an equity basis was
$8,436.8 million in 1994, $11,406.3 million in 1993, and $6,699.6 million in
1992.
In 1993, the Corporation increased by $950.0 million its existing reserve
for scheduled plant closings, which was established as a result of NAO's
adoption of a plan to realign its annual two-shift capacity to 5.4 million U.S.
and Canadian passenger car and light-duty truck vehicles. The increase in the
reserve resulted from changes in assumptions, primarily regarding the amount and
duration of job security and supplemental unemployment benefits expected to be
paid to employees, given the terms of the Corporation's 1993 collective
bargaining agreements. In 1992, GMHE provided a special restructuring charge of
$1,237.0 million, which comprehended a reduction of Hughes' worldwide
employment, a major facilities consolidation, and the disposition of certain
business lines that no longer met GMHE's strategic objectives.
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<PAGE> 76
At December 31, 1994, the balance in the Corporation's plant closing and
restructuring reserve (excluding environmental) was $3,103.6 million, which
included $2,760.4 million for the NAO plant closings and $343.2 million for the
GMHE restructuring. Approximately $2,435.3 million of the plant closing reserve
is comprised of employee job security and facility costs which, together with
$401.9 million of interest to accrete in the future, will require cash outflows
(see Note 6 to the Financial Statements). Asset writedowns of $325.1 million,
which comprise the remainder of the total, will not require future cash flows.
The future employee job security costs (approximately two-thirds of the future
cash expenditures) will be expended during the period between the closing of the
plants and the time the affected employees are redeployed, retire, or otherwise
terminate their employment. Such spending will primarily occur over the next six
years, generally in a slightly declining pattern. Most of the facility costs
will be expended in varying amounts over the next five years. Cash outflows are
influenced by, among other items, the Corporation's ability to manage its work
force efficiently and effectively and changes in the timing of plant closings.
Approximately $288.2 million of the GMHE restructuring reserve balance,
primarily relating to facilities consolidation, will require future cash
outflows, the predominant portion of which will occur over the next three years.
The balance of the GMHE reserve represents non-cash items.
During 1994, 1993 and 1992, $498.8 million, $599.6 million, and $723.4
million, consisting primarily of job security costs, were charged against the
NAO plant closing reserve. Charges against GMHE's restructuring reserve were
$228.3 million in 1994, predominantly facilities costs, $527.6 million in 1993,
approximately equally split among facilities costs, severance, business
disposition costs, and other, and $250.9 million in 1992, predominantly
facilities costs. In addition, in 1994 and 1993 the GMHE restructuring reserve
was increased by $35 million and $78 million, respectively, primarily due to
changes in the estimated loss on disposition of two subsidiaries.
The Corporation has made substantial progress toward achieving its plan of
realigning NAO's plant capacity and the improved operating results and cash flow
are partly a result of these actions. Further incremental benefits are
anticipated as execution of the plan is completed. GMHE's operating results and
cash flows were favorably affected by cost reductions resulting from the
restructuring but significant further incremental benefits are not anticipated.
Net cash provided by (used in) investing activities, including GMAC, was
($17,499.8)million in 1994, $366.8 million in 1993, and $1,767.5 million in
1992. Net cash used in investing activities in 1994 consisted primarily of
capital expenditures and the net increase in equipment on operating leases,
reflecting the continued acceptance and popularity of the GMAC SmartLease
program. Net cash provided by investing activities in 1993 was primarily due to
the net reduction in finance receivables (resulting from sales of finance
receivables) exceeding capital expenditures and the net increase in equipment on
operating leases. GMAC received $18,800.0 million in 1994, $13,072.2 million in
1993, and $11,201.8 million in 1992 from proceeds from sales of finance
receivables. Such sales, which are an integral element in GMAC's strategy to
minimize liquidity concerns, accelerate the conversion of receivables to cash.
With GMAC on an equity basis, net cash used in investing activities amounted to
$7,720.8 million in 1994 and $4,162.6 million in 1992, compared to net cash
provided by investing activities of $2,465.0 million in 1993.
Net cash provided by financing activities, including GMAC, was $2,688.2
million in 1994 versus net cash used of $12,477.5 million in 1993 and $6,904.9
million in 1992. Net cash provided by financing activities in 1994 primarily
reflected the net increase in short-term loans payable and proceeds from issuing
common stocks, primarily for employee benefit plans, partially offset by a net
decrease in long-term debt and cash dividends paid to stockholders. Net cash
used in financing activities in 1993 primarily reflected the net decrease in
short-term loans payable and a net decrease in long-term debt. Net cash used in
financing activities with GMAC on an equity basis was $757.0 million in 1994 and
$11,397.6 million in 1993, compared to net cash provided by financing activities
of $628.2 million in 1992.
General Motors converted all 17,825,000 outstanding shares of its Series A
Conversion Preference Stock (Preference Equity Redemption Cumulative Stock or
PERCS) into shares of GM $1 2/3 par value common stock on June 18, 1994. A total
of 17.7 million shares of GM $1 2/3 par value common stock was issued in this
conversion.
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<PAGE> 77
In 1993, cash flows from investing and financing activities, with GMAC on
an equity basis, were significantly affected by the discontinuation of GM
financing of certain dealer wholesale receivables and the use of the related
proceeds to retire certain intercompany financing arrangements with GMAC.
In May 1993, GM redeemed all of the $5.00 Series and $3.75 Series of
Preferred Stock for $265.0 million. In authorizing the redemption, the Board of
Directors determined that the action would provide additional financial
flexibility to the Corporation by eliminating certain covenants contained in the
terms of the Preferred Stock.
To help meet its funding needs, GM issued several different series of
preference stock providing aggregate net proceeds of $2,498.1 million in 1992.
In addition, GM raised $2,165.4 million in May 1992 through the issuance in a
public offering of 57.0 million shares of $1 2/3 par value common stock and
$129.4 million in October 1992 from the issuance of 7.6 million Class H shares.
The 7.6 million Class H shares were in addition to the 21.5 million Class H
shares issued to finance the acquisition of GD's missile business.
Health Care Expense and Other Postretirement Benefits
The adoption of SFAS No. 106 had no effect on cash flow since the
Corporation continues its practice of paying postretirement benefits (other than
pensions) when incurred. Nonetheless, General Motors is committed to reducing
the burden of continuing health care cost increases.
As described in Note 5 to the Financial Statements, SFAS No. 106 requires
the cost of postretirement medical, dental, vision, and life insurance to
retirees and eligible dependents to be recognized in the financial statements
during the period employees provide services to the Corporation. Costs for
medical, dental, vision, and life insurance claims provided to employees during
active service are expensed as incurred (pay-as-you-go) and are not covered by
this Standard. The following table sets forth the components of GM's 1994 SFAS
No. 106 expense and GM's 1994 U.S. health care cost and cash expenditures
(excluding EDS and Hughes, but including GMAC and Delco Electronics):
<TABLE>
<CAPTION>
SFAS NO. 106 HEALTH PAY-AS-YOU-GO
EXPENSE CARE COST COST*
------------ --------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
GM U.S. Operations Health Care --
SFAS No. 106 Expense.................................. $3,564 $ 3,564 $ --
Retired Employees
Pay-As-You-Go...................................... -- -- 1,616
Active Employees
Pay-As-You-Go...................................... -- 1,845 1,845
------ ------- -------
Total Health Care....................................... 3,564 $ 5,409 $ 3,461
======= =======
SFAS No. 106 Ongoing Expense
Life Insurance........................................ 402
Other Subsidiaries -- Health Care and Life
Insurance.......................................... 156
------
Total SFAS No. 106...................................... $4,122
======
</TABLE>
-------------------------
* Pay-as-you-go amounts for 1993 were $1,578 million for retirees, $1,885
million for active employees and $3,463 million in total.
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.
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<PAGE> 78
GM Card
GM is the sponsor of a credit card program, entitled the GM Card program,
introduced in the U.S. in September 1992 and subsequently in Canada and the
United Kingdom. A cardholder's use of the card generates entitlements to rebates
which can be used solely in connection with the cardholder's purchase or lease
of a new GM vehicle.
As the sponsor of the GM Card program, neither GM nor GMAC provide consumer
credit. GM is using the program as a marketing strategy to strengthen brand
loyalty and to ultimately increase product sales. Independent banks issue the GM
Card and are responsible for evaluating, extending, and funding credit to the
cardholders, and are fully responsible for any credit card losses with no
recourse against GM.
GM Card rebates accumulate at a rate equal to 5% of all spending for goods
or services charged to the GM Card up to a maximum rebate amount of $500 per
year on the Blue Card and $1,000 per year on the Gold Card. Additional rebates
may be earned when the GM Card is used to make purchases from non-bank marketing
partners. The rebates, which expire in 7 years, may be applied over and above
all sales allowances in the market at the time of vehicle purchase or lease. GM
is solely responsible to cardholders for rebates. Provisions for GM Card rebates
are recorded as reductions in revenue at the time of vehicle sale. GM has the
right to prospectively modify the plan.
Rebates redeemed during 1994, 1993, and 1992 were $149.8 million, $33.6
million, and $0.4 million, respectively. Cardholder rebates available for future
redemption when the cardholder purchases or leases a new GM vehicle amounted to
$1.6 billion (net of deferred program income) at December 31, 1994. At the time
the rebate is redeemed, income on the vehicle sale is recognized, and the
Corporation anticipates that profits from incremental sales resulting from the
GM Card program along with deferred program income will more than offset future
rebate costs associated with the GM Card.
Debt Changes
GM and certain of its subsidiaries maintain or otherwise have available to
them through asset securitization programs various syndicated bank credit
facilities which in aggregate provide $25.9 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
other GM subsidiaries worldwide. At year-end 1994, unused short-term credit
facilities totaled approximately $18.5 billion and unused long-term credit
facilities totaled approximately $19.2 billion, compared with $14.7 billion and
$18.2 billion, respectively, at the end of 1993.
During 1994, notes and loans payable of GM and its subsidiaries including
GMAC (as detailed in Note 15 to the Financial Statements) increased 4.7% to
$73,730.2 million at year-end from $70,441.2 million at December 31, 1993.
During 1993, notes and loans payable decreased 14.7%. GM's fully consolidated
ratio of debt to stockholders' equity (excluding stocks subject to repurchase)
was 5.75 to 1 at December 31, 1994 and 12.58 to 1 a year earlier.
Long-term debt of GM and its subsidiaries with GMAC on an equity basis was
$6,082.3 million at the end of 1994, a decrease of $136.1 million during the
year. The ratio of long-term debt to the total of long-term debt and
stockholders' equity (with GMAC on an equity basis and excluding stocks subject
to repurchase) was 32.2% at December 31, 1994 and 52.6% at December 31, 1993.
The ratio of long-term debt and short-term loans payable to the total of this
debt and stockholders' equity (with GMAC on an equity basis and excluding stocks
subject to repurchase) was 35.6% at the end of 1994 and 57.8% at the end of
1993.
Derivative Financial Instruments
GM is an international corporation with operations in over 50 countries in
the world which naturally exposes the Corporation to a variety of financial
risks. These financial risks are principally the effects of movements in foreign
exchange rates on transactions not denominated in U.S. dollars, and, to a lesser
extent, changes in interest rates on its net cost of borrowings. In addition,
the Corporation is hedging its use of metals in the physical and financial
commodities markets. The impact of such financial exposures on the
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<PAGE> 79
Corporation's annual income is relatively small compared with the impact of
changes in vehicle sales volumes and operating margins. These financial
exposures are monitored and managed in accordance with Corporate policies and
procedures.
With respect to foreign exchange, GM has foreign exchange exposures at many
of its domestic and foreign operations related to buying, selling, and financing
in currencies other than the local currency. GM's most significant foreign
currency exposures relate to major North American countries (Canada and Mexico),
Western European countries (primarily Germany, United Kingdom, Spain, Belgium,
and France), Japan, and Brazil. The magnitude of these exposures varies
significantly over time depending upon the strength of local automotive markets
and sourcing decisions. GM and its subsidiaries enter into agreements to manage
certain foreign exchange exposures primarily to hedge transaction risks. As a
general practice, GM has not hedged the foreign exchange exposure related to
either the translation of overseas earnings into U.S. dollars or the translation
of overseas equity positions back to U.S. dollars.
The Corporation manages its market risk from exposure to changes in
interest rates through various interest rate forward contracts and options both
on its financing assets and debt. At December 31, 1994 and 1993, the total
notional amount of such financial instruments was approximately $14 billion and
$11 billion, respectively. The $3 billion increase in notional amount relates to
GMAC, and its use of such instruments in the normal course of business to offset
a companion asset or funding position as well as to adjust the fixed/floating
nature of its funding position. The increase does not reflect any change in
underlying approach or philosophy by the Corporation.
With respect to interest rates, in 1994 interest rates rose worldwide with
U.S. interest rates essentially leading the trend. The Corporation raises most
of its financing in the U.S. However, 1994 borrowing costs declined, reflecting
a more favorable funding mix at GMAC resulting from reduced medium- and
long-term cost of funds as well as an increasingly positive perception by the
capital markets.
Additional information regarding GM's accounting policies for and use of
derivative financial instruments is contained in Notes 1, 15, 19 and 20 to the
Financial Statements.
Security Ratings
Debt ratings by the various rating agencies reflect each agency's opinion
of the ability of issuers to repay debt obligations punctually. Lower ratings
generally result in higher borrowing costs. 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.
<TABLE>
<CAPTION>
CURRENT SECURITY RATINGS
GENERAL MOTORS, GMAC, AND GMHE:
-------------------------------------
LONG-TERM COMMERCIAL PREFERENCE
DEBT PAPER* STOCK
--------- ---------- ----------
<S> <C> <C> <C>
Standard & Poor's.............................. BBB+ A-2 BBB
Moody's........................................ Baa1 Prime-2 baa3
Fitch Investors................................ A- F-1 BBB+
Duff & Phelps.................................. A- D-1 BBB+
</TABLE>
-------------------------
* EDS commercial paper is rated Prime-1 by Moody's.
In February 1993, Standard & Poor's Corporation (S&P) revised the long-term
debt, commercial paper and preference stock ratings of GM, GMAC, GMHE, and EDS.
GM's, GMAC's, and GMHE's S&P ratings were lowered from A- to BBB+ for senior
debt, eighth highest within the 10 investment grade ratings available from S&P
for long-term debt, based on a determination of adequate capacity to pay
interest and repay principal. S&P lowered GMAC's, EDS', and GMHE's ratings from
A-1 to A-2 for commercial paper, third highest within the four investment grade
ratings available from S&P for commercial paper, indicating strong capacity for
timely payment determined by significant safety characteristics. The rating on
GM's preference stock was lowered from BBB+ to BBB (the ninth highest within the
10 S&P investment grade ratings).
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<PAGE> 80
In October 1993, at the time of GM's labor contract settlement, S&P revised
its ratings outlook from stable to negative. In April 1994, S&P revised its
ratings outlook from negative to positive.
In November 1992, Moody's Investors Service, Inc. lowered its rating of
senior debt of GM, GMAC, and GMHE to Baa1 from A2, eighth highest within the 10
investment grade ratings available from Moody's for long-term debt, reflecting
adequate protection of present interest payments and principal. Concurrently,
Moody's lowered its rating of GMAC and GMHE commercial paper from Prime-1, the
highest of three investment grade ratings available from Moody's for commercial
paper, to Prime-2, indicating a strong ability for repayment based on sound
earnings trends and coverage ratios, appropriate capitalization characteristics,
and adequate maintenance of alternative liquidity. Moody's affirmed the Prime-1
rating of EDS commercial paper. In addition, the rating of GM preference stock
was lowered to baa3 (the 10th highest of 10 investment grade ratings) from a3.
Moody's cited GM's continued net losses in North America as the basis for its
action.
In addition, substantially all of the short-, medium-, and long-term debt
issued by GMAC and the senior debt of GM is rated by Fitch Investors Service,
Inc. (Fitch) and Duff & Phelps Credit Rating Co. (D&P). The senior debt of GM
and GMAC is rated A- by both agencies, seventh highest within the 10 investment
grade ratings available. Fitch's A- rating is assigned to bonds considered to be
of high credit quality, with the obligor's ability to pay interest and repay
principal considered to be strong. D&P's A- rating indicates adequate likelihood
of timely payment of principal and interest.
GMAC commercial paper has received ratings of F-1 by Fitch, the second
highest of four investment grade ratings available which is assigned to
short-term issues which possess a very strong credit quality based primarily on
the existence of liquidity necessary to meet the obligation in a timely manner.
GMAC's commercial paper is rated D-1 by D&P, the second highest of five
investment grade ratings available which signifies a very high certainty of
timely payment based on excellent liquidity factors and good fundamental
protection factors.
GM's preference shares are rated BBB+ by Fitch and D&P, the eighth highest
of 10 investment grade ratings available. Preference issues assigned this rating
by Fitch are considered reasonably safe but lack the projections of the "A" to
"AAA" categories. This rating signifies that current results should be watched
for possible signs of deterioration. Preference stock assigned this rating by
D&P has below average projection factors but is still considered sufficient for
prudent investment.
Despite the current ratings by Moody's and S&P, GM management believes that
GM and GMAC remain highly liquid, retain good access to the capital markets, and
maintain extensive bank credit facilities. GM management believes that NAO's
return to profitability should favorably impact the Corporation's credit ratings
over time.
Capital Spending
Worldwide capital expenditures, excluding GMAC, were $7.1 billion in 1994
and $6.4 billion in 1993 and 1992. Expenditures in 1994 were devoted primarily
to product development in continued support of the Corporation's programs to
improve vehicle quality, performance, and styling. GMAC's capital expenditures
were approximately $133.0 million in 1994, $118.5 million in 1993, and $149.7
million in 1992.
Of the 1994 worldwide expenditures for real estate, plants, and equipment,
approximately 70% were in the United States (71% in 1993 and 56% in 1992), 10%
in other North America (5% in 1993 and 3% in 1992), and 20% overseas (24% in
1993 and 41% in 1992).
Commitments for capital spending, including special tools, were $4.2
billion at December 31, 1994. Capital expenditures for 1995 are estimated to be
approximately $8.5 billion.
Dividend Policy
GM'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. At the
November 1992 meeting of the General Motors Board of
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<PAGE> 81
Directors, the quarterly dividend on the $1 2/3 par value common stock was
reduced from $0.40 per share to $0.20 per share to conserve cash and strengthen
GM's competitive position.
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 1995, the Board of Directors
increased the quarterly dividends on Class E common stock from $0.12 per share
to $0.13 per share and on Class H common stock from $0.20 per share to $0.23 per
share.
Notwithstanding the current dividend policy, the dividends paid on the
Class H common stock for each of the quarters of 1994, 1993, and 1992 exceeded
35% of the Available Separate Consolidated Net Income of GMHE for the preceding
year (excluding the effect of the $749.4 million after-tax special restructuring
charge at Hughes in 1992).
At December 31, 1994, the Corporation's capital surplus plus net income
retained for use in the business was $9,013.8 million, $3,752.1 million, and
$2,169.3 million on $1 2/3 par value, Class E, and Class H common stocks,
respectively, as allocated pursuant to GM's Certificate of Incorporation.
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 plus net income retained for use in the business.
Book Value
Book value per share of $1 2/3 par value common stock was $11.18 at the end
of 1994, versus $1.65 a year earlier and $1.98 at the end of 1992. Book value
per share of Class E common stock increased to $1.43 from $0.21 and $0.25 at the
end of 1993 and 1992, respectively. Book value per share of Class H common stock
increased to $5.59 from $0.83 and $0.99 at the end of 1993 and 1992,
respectively.
Deferred Taxes
The Corporation's Consolidated Balance Sheet at December 31, 1994 includes
a deferred tax asset of approximately $18.2 billion related to net future
deductible temporary differences (see Note 8 to the Financial Statements) in the
U.S. of which approximately $14.9 billion relates to the obligation for
postretirement benefits other than pensions. The Corporation believes it is
likely that such benefits will be realized through the reduction of future
taxable income.
Management has carefully considered various factors in assessing the
probability of realizing these deferred tax benefits including:
- Recent operating results of GMAC, EDS, and GMHE, which collectively
generated U.S. pre-tax income of approximately $3.3 billion, $3.4 billion,
and $2.3 billion in 1994, 1993, and 1992, respectively.
- Substantial improvement in the operating results of U.S. automotive
operations over the most recent three year period and overall financial
forecasts of book and taxable income for the 1995-1999 period. Improvements
are expected by balancing plant capacity per the plant closing plan,
reducing material costs through global sourcing, increasing efficiency
through lean manufacturing, and reducing low profit fleet sales.
- The ability to utilize tax planning, such as capitalization of
research and experimentation costs for tax purposes, so that the
Corporation does not have, and does not expect to generate in the near
future, any significant U.S. Federal tax net operating loss carryforwards.
- The extended period of time over which the tax benefits can be
utilized. Postretirement benefits become tax deductions over periods up to
50 years.
- The fact that the Corporation has never lost deferred Federal tax
benefits due to the expiration of a U.S. net operating loss carryforward.
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<PAGE> 82
For illustrative purposes, the Corporation estimates that it will require
approximately $19.5 billion in U.S. taxable income over the next five years to
realize the recorded deferred tax benefit from temporary differences between
book and taxable income that are expected to impact taxable income over the
five-year period. The Corporation expects to realize the related deferred tax
benefit of $6.8 billion. This expectation is based on improved operating results
in the U.S., available tax planning, and the recurring nature of many temporary
differences between book and taxable income. (Examples of temporary differences
expected to recur in future periods are product warranty and sales incentive
expenses which will generate additional deferred tax assets, thereby offsetting
the realization of previously recorded deferred tax assets related to these
items.)
As shown in the table below which provides a reconciliation of the
Corporation's pre-tax book U.S. income (loss) and taxable U.S. income (loss),
U.S. taxable income is estimated at $1.7 billion for 1994. Foreign income
taxable in the U.S. includes dividends from foreign operations which totaled
approximately $1.1 billion, $6.2 billion and $0.6 billion in 1994, 1993, and
1992, respectively. The increase in dividends in 1993 was effected as part of
GM's tax planning and global cash management initiatives.
The estimated decrease in 1994 taxable income from temporary differences
compared to prior years is driven by the significant pension contributions
during 1994.
<TABLE>
<CAPTION>
RECONCILIATION OF BOOK INCOME TO TAXABLE INCOME 1994 1993 1992
----------------------------------------------------------- --------- -------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Pre-tax U.S. income (loss) from all sources................ $ 3,152.1 $ (512.7) $(6,767.3)
Foreign income taxable in the U.S.......................... 1,779.0* 6,438.0 584.0
Temporary differences...................................... (3,342.2)* 1,332.7 3,759.9
Other -- including goodwill and other non-deductible
expenses................................................. 80.1* 465.8 581.5
--------- -------- ---------
U.S. taxable income (loss)............................... $ 1,669.0* $7,723.8 $(1,841.9)
======== ======= ========
</TABLE>
-------------------------
*Estimated amounts
The effect of U.S. taxable income in 1993 was substantially offset by the
use of foreign tax credits and a similar result is expected for 1994. The
taxable loss in 1992 was carried back to prior years.
Pensions
At year-end 1994, GM's total unfunded pension position decreased to $12.6
billion ($9.4 billion U.S. and $3.2 billion non-U.S.) from $22.3 billion a year
ago. Major factors contributing to this decrease were greater than legally
required contributions and the increase in interest rates which resulted in
higher discount rates used to compute the projected benefit obligation of the
plans. Under current pension accounting standards, each year end the Corporation
is required to change its discount rate to the then long-term bond rate to
determine the annual funded status. Total worldwide pension contributions for
the 1994 calendar year totaled $8.2 billion.
GM's Board of Directors has approved a plan with the long-term goal that
its principal U.S. plans be fully funded on an ongoing economic basis by year
end 1996. In measuring its pension obligations for the purpose of developing
this long-term pension funding plan, the Corporation uses a stable long-term
rate of return (i.e., 10%) that it expects to achieve over time on the
investment of plan assets.
To meet this goal, the Corporation contributed $7.7 billion in cash to its
U.S. pension plans in the 1994 calendar year, $5.8 billion more than was
required by law. After satisfying 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 Corporation
made cash contributions of $3.3 billion and $2.5 billion to its U.S. pension
plans in the third and fourth quarters of 1994, respectively. The Corporation
has made further cash contributions of $1.8 billion to its U.S. pension plans in
the first quarter of 1995 and expects to make additional contributions as it
seeks to meet the long-term funding plan described above.
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<PAGE> 83
On May 11, 1994, the Corporation reached an agreement with the Pension
Benefit Guaranty Corporation (PBGC) which could lead to incremental stock
contributions to its U.S. hourly pension plan in the near term. The funding
proposal includes $4 billion in cash (already contributed) plus a contribution
of approximately 177 million shares of Class E common stock. Based on the $38.75
per share closing price of Class E common stock on the New York Stock Exchange
on March 1, 1995, a 177 million share contribution of such stock would have a
face market value of approximately $6.8 billion. If and when such stock is
contributed by GM to its U.S. hourly pension plan, the value to be recorded by
GM and the U.S. hourly pension plan will be somewhat less than that reflected by
the per share market price at which it is then trading, as it will be a value
attributed to the entire block of stock by an independent valuation expert (to
be retained by the independent trustee) who will consider, among other things,
the relative size of the block. Given that improvement in the funded status of
GM's U.S. pension plans is a prerequisite to improve the Corporation's credit
rating, increase its financial flexibility, and strengthen its long-term
financial soundness, the Corporation's proposed contribution of its Class E
stock holdings is considered a good use of the Corporation's assets without
impacting EDS' business and customer relationships.
GM's ability to make the contribution as planned is contingent upon
receiving the exemption requested from the U.S. Department of Labor (DOL), and
other conditions. GM filed its application with the DOL. The notice containing a
description of the proposed prohibited transaction exemption and soliciting
comment thereon was published in the Federal Register on November 14, 1994 and
mailed to all participants in the hourly plan. No assurance can be given at this
time that the approvals will be obtained.
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,
under Title IV of ERISA for GM's U.S. pension plans in the event EDS were to
leave the GM controlled group under certain circumstances.
Environmental Matters
The Corporation is subject to various laws relating to the protection of
the environment, and is in various stages of investigation or remediation for
sites where contamination has been alleged.
As disclosed in Note 16 to the Financial Statements, Other Liabilities and
Deferred Credits, the accrued liability for worldwide environmental cleanup was
$693.7 million at December 31, 1994, $659.3 million at December 31, 1993, and
$519.1 million at December 31, 1992. Such amounts are currently believed to be
sufficient. In future periods, new laws or regulations, advances in
technologies, and additional information about the ultimate remedy selected at
new and existing sites, and the Corporation's share of the cost of such
remedies, could significantly change the Corporation's estimates.
Note 1 to the Financial Statements, Significant Accounting Policies,
describes the Corporation's methodology for estimating environmental
liabilities. The process of estimating such liabilities is complex and is
dependent primarily on the existence and quality of historical information and
physical data relating to a contaminated site, the complexity of the site,
uncertainty as to what remedy and technology will be required, the outcome of
discussions with regulatory agencies and other potentially responsible parties
(PRPs) at multi-party sites, the number and financial viability of other PRPs,
and the timing of expenditures.
In 1994, 1993, and 1992, the Corporation expensed $105.7 million, $104.7
million, and $114.0 million, respectively, for environmental cleanup. In
addition, worldwide capital expenditures, as discussed previously, include
$130.5 million, $211.5 million, and $246.9 million in 1994, 1993, and 1992,
respectively, for various environmental matters.
Stocks Subject to Repurchase
On February 15, 1995, GM and the Howard Hughes Medical Institute entered
into an agreement under which GM will assist the Institute in a registered
public offering of approximately 15 million shares of Class H common stock. The
put and call rights described in Note 17 to the Financial Statements expired
unexercised. The Institute will have a new put right with an exercise date on
the earlier of the conclusion of the offering or June 30, 1995. GM will receive
any net proceeds of the offering in excess of $37.50 per share.
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<PAGE> 84
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 WITH GMAC ON AN EQUITY BASIS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1993 1992
---------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Net Sales and Revenues(1)
Manufactured products.................................... $134,888.1 $119,803.2 $113,489.0
Computer systems services................................ 6,687.9 5,449.5 5,082.6
---------- ---------- ----------
Total Net Sales and Revenues............................. 141,576.0 125,252.7 118,571.6
---------- ---------- ----------
Costs and Expenses
Cost of sales and other operating charges, exclusive of
items listed below..................................... 117,290.8 106,497.1 105,423.0
Selling, general, and administrative expenses............ 10,574.7 9,765.7 9,633.6
Depreciation of real estate, plants, and equipment....... 3,868.4 3,824.7 3,670.3
Amortization of special tools............................ 2,900.7 2,535.3 2,504.0
Amortization of intangible assets........................ 180.7 189.3 189.1
Special provision for scheduled plant closings and other
restructurings......................................... -- 950.0 1,237.0
---------- ---------- ----------
Total Costs and Expenses................................. 134,815.3 123,762.1 122,657.0
---------- ---------- ----------
Operating Income (Loss).................................. 6,760.7 1,490.6 (4,085.4)
Other income less income deductions -- net(2)............ 1,251.8 1,195.3 1,046.3
Interest expense......................................... (1,304.5) (1,510.9) (1,886.8)
---------- ---------- ----------
Income (Loss) before Income Taxes........................ 6,708.0 1,175.0 (4,925.9)
Income taxes (credit).................................... 2,181.9 (482.1) (1,594.9)
---------- ---------- ----------
Income (Loss) after Income Taxes......................... 4,526.1 1,657.1 (3,331.0)
Earnings of nonconsolidated affiliates................... 1,125.2 808.7 427.8
---------- ---------- ----------
Income (Loss) before cumulative effect of accounting
changes................................................ 5,651.3 2,465.8 (2,903.2)
Cumulative effect of accounting changes(3)............... (750.7) -- (20,595.1)
---------- ---------- ----------
Net Income (Loss)........................................ $ 4,900.6 $ 2,465.8 $(23,498.3)
========== ========== ==========
</TABLE>
-------------------------
(1) Includes sales to nonconsolidated affiliates of $1,134.1 million in 1994,
$1,059.2 million in 1993, and $984.8 million in 1992, including $275.0
million in computer systems services revenues for 1994, $265.9 million for
1993, and $275.9 million for 1992.
(2) Includes loss on the sale of AGT of $305.6 million in 1993, and the NCRS
charge of $813.2 million and gain on the sale of Daewoo Motor Co. of $162.8
million in 1992.
(3) 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. Effective January 1, 1992, the Corporation adopted SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions. Not
included is the unfavorable cumulative effect on GMAC earnings of $282.6
million of adopting SFAS No. 106 because the cumulative effect is included
in earnings of nonconsolidated affiliates. Also effective January 1, 1992,
Hughes changed its revenue recognition policy as discussed previously.
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<PAGE> 85
CONSOLIDATED BALANCE SHEET WITH GMC ON AN EQUITY BASIS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1994 1993
---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents........................................... $ 9,731.4 $ 9,762.5
Other marketable securities......................................... 1,245.0 722.5
---------- ----------
Total cash and marketable securities........................... 10,976.4 10,485.0
Accounts and notes receivable
Trade............................................................. 7,873.1 5,563.1
Nonconsolidated affiliates........................................ 2,080.4 2,955.2
Inventories......................................................... 10,127.8 8,615.1
Contracts in process................................................ 2,265.4 2,376.8
Prepaid expenses and deferred income taxes.......................... 6,455.6 8,036.3
---------- ----------
Total Current Assets........................................... 39,778.7 38,031.5
Equity in Net Assets of Nonconsolidated Affiliates.................. 9,204.3 8,638.5
Deferred Income Taxes............................................... 16,318.6 14,874.1
Other Investments and Miscellaneous Assets.......................... 14,835.5 12,586.4
Property -- Net..................................................... 34,661.4 34,103.9
Intangible Assets................................................... 11,536.4 12,746.1
---------- ----------
Total Assets................................................... $126,334.9 $120,980.5
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable.................................................... $ 10,905.0 $ 9,546.5
Loans payable....................................................... 993.7 1,449.6
Income taxes payable................................................ 144.7 389.9
Accrued liabilities and deferred income taxes (including current
portion of postretirement benefits other than pensions)........... 26,584.4 23,823.3
Stocks subject to repurchase........................................ 450.0 --
---------- ----------
Total Current Liabilities...................................... 39,077.8 35,209.3
Long-Term Debt...................................................... 6,082.3 6,218.4
Payable to GMAC..................................................... 1,212.5 1,355.5
Capitalized Leases.................................................. 136.4 165.2
Postretirement Benefits Other Than Pensions......................... 37,348.0 35,423.6
Pensions............................................................ 11,223.1 20,583.3
Other Liabilities and Deferred Income Taxes......................... 16,752.2 14,739.7
Deferred Credits.................................................... 1,678.8 1,238.0
Stocks Subject to Repurchase........................................ -- 450.0
Stockholders' Equity................................................ 12,823.8 5,597.5
---------- ----------
Total Liabilities and Stockholders' Equity..................... $126,334.9 $120,980.5
========== ==========
</TABLE>
II-70
<PAGE> 86
STATEMENT OF CONSOLIDATED CASH FLOWS WITH GMAC ON AN EQUITY BASIS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash Flows from Operating Activities Income (Loss) before
cumulative effect of accounting changes.................. $ 5,651.3(1) $ 2,465.8 $(2,903.2)(2)
Adjustments to reconcile income (loss) before cumulative
effect of accounting changes to net cash provided by
operating activities
Depreciation and amortization......................... 6,949.8 6,549.3 6,363.4
Special provision for scheduled plant closings and
other restructurings................................ -- 950.0 1,237.0
Provision for inventory allowances.................... 53.1 44.1 28.5
Pension expense, net of cash contributions............ (5,096.1) (1,548.2) 273.4
Pre-tax (gain) loss on sales of various assets........ (17.6) 305.6 (162.8)
Write-down of investment in National Car Rental System
Inc................................................. -- -- 813.2
Provision for ongoing postretirement benefits other
than pensions, net of cash payments................. 2,204.6 2,355.7 2,170.1
Change in deferred income taxes (3)................... 584.5 (1,345.8) (2,833.5)
Undistributed earnings of nonconsolidated
affiliates.......................................... (204.4) 448.1 724.5
Change in other operating assets and liabilities
Accounts receivable................................. (1,428.7) (106.0) (741.8)
Inventories (3)..................................... (1,750.3) 240.3 886.4
Accounts payable (3)................................ 1,224.0 552.2 (478.8)
Income taxes payable................................ (243.3) (353.1) 245.6
Other liabilities (3)............................... 990.0 (455.9) (754.4)
Other (3)........................................... (480.1) 1,304.2 1,832.0
--------- --------- ---------
Net Cash Provided by Operating Activities.................. $ 8,436.8 $11,406.3 $ 6,699.6
--------- --------- ---------
</TABLE>
-------------------------
(1) Includes the unfavorable cumulative effect on GMAC earnings of $7.4 million
from adopting SFAS No. 112.
(2) Includes the unfavorable cumulative effect on GMAC earnings of $282.6
million from adopting SFAS No. 106.
(3) Excluding effect of accounting changes.
II-71
<PAGE> 87
STATEMENT OF CONSOLIDATED CASH FLOWS WITH GMAC ON AN EQUITY BASIS -- CONCLUDED
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1994 1993 1992
--------- ---------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash Flows from Investing Activities
Investment in companies, net of cash acquired............ $ (246.6) $ (232.4) $ (134.7)
Expenditures for real estate, plants, and equipment...... (4,750.9) (3,703.6) (4,187.0)
Expenditures for special tools........................... (2,341.4) (2,648.6) (2,252.9)
Proceeds from disposals of real estate, plants, and
equipment............................................. 240.9 447.1 120.3
Proceeds from sale and leaseback of capital assets....... -- -- 654.9
Proceeds from the sale of various assets................. 518.4 231.5 162.8
Change in other investing assets
Investments in other marketable securities --
acquisitions........................................ (2,757.0) (2,554.9) (4,676.0)
Investments in other marketable securities --
liquidations........................................ 2,237.0 2,585.6 4,363.0
Notes and finance receivables......................... 101.9 8,811.0 1,718.4
Operating leases -- net............................... (723.1) (470.7) 68.6
--------- ---------- ---------
Net Cash Provided by (Used in) Investing Activities........ (7,720.8) 2,465.0 (4,162.6)
--------- ---------- ---------
Cash Flows from Financing Activities
Net increase (decrease) in loans payable................. (550.9) 252.5 (1,013.4)
Increase in long-term debt............................... 798.7 989.6 3,951.6
Decrease in long-term debt............................... (934.8) (1,627.7) (3,634.8)
Net decrease in payable to GMAC.......................... (143.0) (10,207.7) (2,303.0)
Redemption of Series H preference stocks................. -- -- (243.9)
Redemption of Howard Hughes Medical Institute put
options............................................... -- (315.0) (300.0)
Repurchases of common and preferred stocks............... -- (265.6) (7.2)
Proceeds from issuing common and preference stocks....... 1,184.9 860.2 5,555.7
Cash dividends paid to stockholders...................... (1,111.9) (1,083.9) (1,376.8)
--------- ---------- ---------
Net Cash Provided by (Used in) Financing Activities........ (757.0) (11,397.6) 628.2
--------- ---------- ---------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents.............................................. 9.9 81.2 63.2
--------- ---------- ---------
Net increase (decrease) in cash and cash equivalents....... (31.1) 2,554.9 3,228.4
Cash and cash equivalents at beginning of the year......... 9,762.5 7,207.6 3,979.2
--------- ---------- ---------
Cash and cash equivalents at end of the year............... $ 9,731.4 $ 9,762.5 $ 7,207.6
========= ========== =========
</TABLE>
* * * *
II-72
<PAGE> 88
PART III
ITEMS 10 THROUGH 13
Certain information required by Part III (Items 10 through 13) of this
form, other than the information set forth below, has been omitted because the
Registrant intends to file a definitive proxy statement pursuant to Regulation
14A not later than 120 days after the end of its fiscal year.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names and ages of all executive officers of the Registrant at January
31, 1995 and their positions and offices with the Registrant on that date are as
follows:
<TABLE>
<CAPTION>
NAME AND (AGE) POSITIONS AND OFFICES
------------------------------------------------ -----------------------------------------------
<S> <C>
John F. Smith, Jr. (56)......................... Chief Executive Officer; President; Director;
Member, Finance Committee and Chairman, The
President's Council
J. Michael Losh (48)............................ Executive Vice President; Chief Financial
Officer; Member, The President's Council
G. Richard Wagoner, Jr. (42).................... Executive Vice President; Member, The
President's Council
Louis R. Hughes (46)............................ Executive Vice President; Member, The
President's Council
Harry J. Pearce (52)............................ Executive Vice President; Member, The
President's Council
</TABLE>
There are no family relationships, as defined, between any of the above
executive officers, and there is no arrangement or understanding between any of
the above executive officers and any other person pursuant to which he was
selected as an officer. Each of the above executive officers was elected by the
Board of Directors to hold office until the next annual election of officers and
until his successor is elected and qualified or until his earlier resignation or
removal. The Board of Directors elects the officers in conjunction with each
annual meeting of the stockholders.
Mr. John F. Smith, Jr. has been associated with General Motors since 1961.
He was elected Executive Vice President in charge of International Operations in
1988. Effective August 1990, he was elected Vice Chairman of the Board of
Directors. On April 6, 1992, Mr. Smith was elected President and Chief Operating
Officer. Effective November 1992, he was elected Chief Executive Officer and
President.
Mr. Losh has been associated with General Motors since 1970. In July 1984,
he was elected Vice President of General Motors and General Manager of Pontiac
Division. He was named General Manager of Oldsmobile Division in June 1989.
Effective May 1992, he was elected Group Executive in charge of North American
Vehicle Sales, Service, and Marketing. In July 1994, he was elected Executive
Vice President and Chief Financial Officer of General Motors.
Mr. Wagoner has been associated with General Motors since 1977. He was
elected Vice President in charge of finance for General Motors Europe in June
1989. In July 1991, he was elected President and Managing Director of General
Motors do Brasil. Effective November 1992, he was elected Executive Vice
President and Chief Financial Officer of General Motors. In July 1994, he was
named President of North American Operations.
III-1
<PAGE> 89
Mr. Hughes has been associated with General Motors since 1966. In March
1989, he was elected Chairman and Managing Director of Adam Opel AG. He was
elected President of General Motors Europe and Vice President and Group
Executive of General Motors in April 1992. Effective November 1992, he was
elected Executive Vice President, International Operations of General Motors. In
September 1994, he was named President of International Operations.
Mr. Pearce has been associated with General Motors since 1985. In May 1987,
he was elected Vice President and General Counsel of General Motors. Effective
November 1992, he was elected Executive Vice President of General Motors with
responsibility for the Industry-Government Relations Staff, Environmental
Activities Staff, Electronic Data Systems Corporation and GM Hughes Electronics
Corporation. In July 1994, he assumed responsibility for GM's Strategic Decision
Center, Corporate Communications, Allison Transmission Division, Electro-Motive
Division, Urban and Community Affairs, Executive Compensation and Corporate
Governance, and the Corporate Services Staff. He remained General Counsel
through August 1, 1994.
III-2
<PAGE> 90
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
PAGE NO.
---------------
<S> <C> <C>
(a) 1. All Financial Statements
See Part II
2. Financial Statement Schedule.......................................
General Motors Corporation and Subsidiaries
Schedule II-Allowances for the Years Ended December 31, 1994, 1993,
and 1992.............................................................. IV-3
3. Exhibits (Including Those Incorporated by Reference).
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT
NO.
---------
<S> <C> <C>
(3)(a) Restated Certificate of Incorporation as amended to May 26, 1994,
incorporated by reference to Exhibit 3(i) to the Current Report
on Form 8-K of General Motors Corporation dated May 26, 1994, and
Amendment to Article Fourth of the Certificate of Incorporation
-- Division III -- Preference Stock, by reason of the
Certificates of Designations filed with the Secretary of State of
the State of Delaware on September 14, 1987 and the Certificate
of Decrease filed with the Secretary of State of the State of
Delaware on September 29, 1987 (pertaining to the six series of
Preference Stock contributed to the General Motors pension
trusts), incorporated by reference to Exhibit 19 to the Quarterly
Report on Form 10-Q of General Motors Corporation for the quarter
ended June 30, 1990 in the Form SE of General Motors Corporation
dated August 6, 1990; as further amended by the Certificate of
Designations filed with the Secretary of State of the State of
Delaware on June 28, 1991 (pertaining to Series A Conversion
Preference Stock), incorporated by reference to Exhibit 4(a) to
Form S-8 Registration Statement No. 33-43744 in the Form SE of
General Motors Corporation dated November 1, 1991; as further
amended by the Certificate of Designations filed with the
Secretary of State of the State of Delaware on December 9, 1991
(pertaining to Series B 9 1/8% Preference Stock), incorporated by
reference to Exhibit 4(a) to Form S-3 Registration Statement No.
33-45216 in the Form SE of General Motors Corporation dated
January 27, 1992; as further amended by the Certificate of
Designations filed with the Secretary of State of the State of
Delaware on February 14, 1992 (pertaining to Series C Convertible
Preference Stock), incorporated by reference to Exhibit (3)(a) to
the Annual Report on Form 10-K of General Motors Corporation for
the year ended December 31, 1991 in the Form SE of General Motors
Corporation dated March 20, 1992; as further amended by the
Certificate of Designations filed with the Secretary of State of
the State of Delaware on July 15, 1992 (pertaining to Series D
7.92% Preference Stock), incorporated by reference to Exhibit
3(a)(2) to the Quarterly Report on Form 10-Q of General Motors
Corporation for the quarter ended June 30, 1992 in the Form SE of
General Motors Corporation dated August 10, 1992; and as further
amended by the Certificate of Designations filed with the
Secretary of State of the State of Delaware on December 15, 1992
(pertaining to Series G 9.12% Preference Stock), incorporated by
reference to Exhibit (a) to Form S-3 Registration Statement No.
33-49309 in the Form SE of General Motors Corporation dated
January 25, 1993................................................. N/A
(b) By-Laws as amended to December 5, 1994, incorporated by reference
to Exhibit 3(ii) to the Current Report on Form 8-K of General
Motors Corporation dated December 5, 1994........................ N/A
</TABLE>
IV-1
<PAGE> 91
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE NO.
--------- ---------------
<S> <C> <C>
(4)(a) Form of Indenture relating to the $500,000,000 8 1/8% Debentures
Due April 15, 2016 dated as of April 1, 1986 between General
Motors Corporation and Citibank, N.A., Trustee, incorporated by
reference to Exhibit 4 to Amendment No. 1 to Form S-3
Registration Statement No. 33-4452 and resolutions adopted by the
Special Committee on April 15, 1986, incorporated by reference to
Exhibit 4(a) to the Current Report on Form 8-K of General Motors
Corporation dated April 24, 1986................................. N/A
(b) Form of Indenture relating to the $700,000,000 9 5/8% Notes Due
December 1, 2000 and the $1,400,000,000 Medium-Term Note Program
dated as of November 15, 1990 between General Motors Corporation
and Citibank, N.A., Trustee, incorporated by reference to Exhibit
4(a) to Form S-3 Registration Statement No. 33-37737............. N/A
(c) Instruments defining the rights of holders of nonregistered debt
of the Registrant have been omitted from this exhibit index
because the amount of debt authorized under any such instrument
does not exceed 10% of the total assets of the Registrant and its
subsidiaries. The Registrant agrees to furnish a copy of any such
instrument to the Commission upon request........................ N/A
(10)(a) The General Motors Hourly-Rate Employees Pension Plan............ N/A
(b) General Motors Retirement Program for Salaried Employees......... N/A
(c)* General Motors Amended 1987 Stock Incentive Plan, incorporated by
reference to Exhibit A to the Proxy Statement of General Motors
Corporation dated April 13, 1992................................. N/A
(d)* General Motors Performance Achievement Plan, incorporated by
reference to Exhibit A to the Proxy Statement of General Motors
Corporation dated April 16, 1982................................. N/A
(e)* General Motors 1987 Performance Achievement Plan, incorporated by
reference to Exhibit A to the Proxy Statement of General Motors
Corporation dated April 17, 1987................................. N/A
(f)* General Motors 1992 Performance Achievement Plan, incorporated by
reference to Exhibit A to the Proxy Statement of General Motors
Corporation dated April 13, 1992................................. N/A
(11) Computation of Earnings (Loss) Per Share Attributable to Common
Stocks for the Three Years Ended December 31, 1994............... IV-6
(12) Computation of Ratios of Earnings to Fixed Charges for the Three
Years Ended December 31, 1994.................................... IV-9
(18) Letter from Registrant's Independent Auditors dated January 30,
1995 regarding change in accounting principle.................... IV-10
(21) Subsidiaries of the Registrant as of December 31, 1994........... IV-11
(23) Consents of Independent Auditors................................. IV-20 and IV-22
(99)(a) Electronic Data Systems Corporation and Subsidiaries Consolidated
Financial Statements and Management's Discussion and Analysis.... IV-21
(b) GM Hughes Electronics Corporation and Subsidiaries Consolidated
Financial Statements and Management's Discussion and Analysis.... IV-47
(27) Financial Data Schedule (for SEC information only)............... N/A
</TABLE>
(b) Reports on Form 8-K
One report on Form 8-K, dated December 5, 1994, was filed during the
quarter ended December 31, 1994 reporting amendments to the By-Laws under Item
7, Financial Statements, Pro Forma Financial Information and Exhibits.
* Required to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.
IV-2
<PAGE> 92
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
SCHEDULE II -- ALLOWANCES
<TABLE>
<CAPTION>
ADDITIONS ADDITIONS
BALANCE AT CHARGED TO CHARGED TO
BEGINNING COSTS TO OTHER BALANCE AT
DESCRIPTION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS END OF YEAR
----------------------------------------------- ----------- ----------- ----------- ---------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1994
Allowances Deducted from Assets(a)
Finance receivables (unearned income)........ $ 3,195.1 $ -- $ 2,324.6 $2,209.8 $3,309.9
Accounts and notes receivable (for doubtful
receivables)............................... 222.0 98.8 0.8 77.0(b) 244.6
Inventories (principally for obsolescence of
service parts)............................. 149.3 53.0 -- 24.5(c) 177.8
Other investments and miscellaneous assets
(receivables and other).................... 34.1 -- -- 1.7 32.4
Miscellaneous allowances (insurance and
mortgage).................................. 24.4 28.0 -- 16.7 35.7
----------- ----------- ----------- ---------- ------------
Total Allowances Deducted from Assets.... $ 3,624.9 $ 179.8 $ 2,325.4 $2,329.7 $3,800.4
========== ========== ========== ========== ==========
FOR THE YEAR ENDED DECEMBER 31, 1993
Allowances Deducted from Assets(a)
Finance receivables (unearned income)........ $ 4,215.5 $ -- $ 3,260.4 $4,280.8 $3,195.1
Accounts and notes receivable (for doubtful
receivables)............................... 215.6 106.2 3.1 102.9(b) 222.0
Inventories (principally for obsolescence of
service parts)............................. 141.7 44.1 0.3 36.8(c) 149.3
Other investments and miscellaneous assets
(receivables and other).................... 31.6 4.3 -- 1.8 34.1
Miscellaneous allowances (insurance and
mortgage).................................. 17.8 9.5 -- 2.9 24.4
----------- ----------- ----------- ---------- ------------
Total Allowances Deducted from Assets.... $ 4,622.2 $ 164.1 $ 3,263.8 $4,425.2 $3,624.9
========== ========== ========== ========== ==========
FOR THE YEAR ENDED DECEMBER 31, 1992
Allowances Deducted from Assets(a)
Finance receivables (unearned income)........ $ 6,723.0 $ -- $ 4,189.7 $6,697.2 $4,215.5
Accounts and notes receivable (for doubtful
receivables)............................... 190.6 74.2 2.4 51.6(b) 215.6
Inventories (principally for obsolescence of
service parts)............................. 153.7 28.4 1.5 41.9(c) 141.7
Other investments and miscellaneous assets
(receivables and other).................... 37.8 1.9 -- 8.1 31.6
Miscellaneous allowances (insurance and
mortgage).................................. 6.8 11.6 -- 0.6 17.8
----------- ----------- ----------- ---------- ------------
Total Allowances Deducted from Assets.... $ 7,111.9 $ 116.1 $ 4,193.6 $6,799.4 $4,622.2
========== ========== ========== ========== ==========
</TABLE>
-------------------------
Notes: (a) See analysis of allowance for financing losses in Note 10 to the
Financial Statements.
(b) Accounts written off.
(c) Obsolete parts written off, etc.
Reference should be made to the Notes to Financial Statements.
IV-3
<PAGE> 93
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
GENERAL MOTORS CORPORATION
-----------------------------------
(Registrant)
Date: March 6, 1995 By: /s/ John F. Smith, Jr.
--------------------------------------
(John F. Smith, Jr.
Chief Executive Officer,
President and Director)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on this 6th day of March 1995 by the following
persons on behalf of the Registrant and in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
----------------------------------- -----------------------------------
<S> <C>
/s/ John G. Smale Chairman of the Board of Directors
-----------------------------------
(John G. Smale)
/s/ John F. Smith, Jr. Chief Executive Officer, President
----------------------------------- and Director
(John F. Smith, Jr.)
/s/ J. Michael Losh Executive Vice President and Chief
----------------------------------- Financial Officer
(J. Michael Losh)
Principal
/s/ Leon J. Krain Vice President and Group Executive
-----------------------------------
Financial
(Leon J. Krain)
Officers
/s/ Heidi Kunz Vice President and Treasurer
-----------------------------------
(Heidi Kunz)
/s/ Wallace W. Creek Comptroller
-----------------------------------
Principal
(Wallace W. Creek)
Accounting
/s/ James H. Humphrey Chief Accounting Officer
Officers
-----------------------------------
(James H. Humphrey)
</TABLE>
IV-4
<PAGE> 94
SIGNATURES -- CONCLUDED
<TABLE>
<CAPTION>
SIGNATURE TITLE
----------------------------------- -----------------------------------
<S> <C>
/s/ Anne L. Armstrong Director
-----------------------------------
(Anne L. Armstrong)
/s/ John H. Bryan Director
-----------------------------------
(John H. Bryan)
/s/ Thomas E. Everhart Director
-----------------------------------
(Thomas E. Everhart)
/s/ Charles T. Fisher, III Director
-----------------------------------
(Charles T. Fisher, III)
/s/ J. Willard Marriott, Jr. Director
-----------------------------------
(J. Willard Marriott, Jr.)
/s/ Ann D. McLaughlin Director
-----------------------------------
(Ann D. McLaughlin)
/s/ Paul H. O'Neill Director
-----------------------------------
(Paul H. O'Neill)
/s/ Edmund T. Pratt, Jr. Director
-----------------------------------
(Edmund T. Pratt, Jr.)
/s/ Louis W. Sullivan Director
-----------------------------------
(Louis W. Sullivan)
/s/ Dennis Weatherstone Director
-----------------------------------
(Dennis Weatherstone)
/s/Thomas H. Wyman Director
-----------------------------------
(Thomas H. Wyman)
</TABLE>
IV-5
<PAGE> 1
EXHIBIT 11
COMPUTATION OF EARNINGS (LOSS) PER SHARE
ATTRIBUTABLE TO COMMON STOCKS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
------------------------------------------
$1 2/3 PAR
VALUE COMMON CLASS E CLASS H
STOCK COMMON STOCK COMMON STOCK
------------ ------------ ------------
(DOLLARS IN MILLIONS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Net income attributable to stocks (before cumulative
effect of accounting change)......................... $4,965.9 $444.4 $248.4
Dividends on preference stocks......................... 320.7 -- --
---------- --------- ---------
Earnings attributable to common stocks................. 4,645.2 444.4 248.4
Dividends on common stocks............................. 592.6 124.8 73.8
---------- --------- ---------
Undistributed earnings................................. 4,052.6 319.6 174.6
Adjustments
Add-back dividends on assumed conversion of
preference stock.................................. 32.5 -- --
Change in earnings attributable to each class of
common stock related to the assumed exercise of
stock options*.................................... (5.3) -- 5.3
Dividends on assumed common stock transactions....... (10.4) -- (1.6)
---------- --------- ---------
Adjusted earnings attributable to common stocks........ $4,069.4 $319.6 $178.3
========== ========= =========
Weighted average shares outstanding (in millions)...... 741.3 260.3 92.1
Adjustments
Shares issued on assumed conversion of preference
stock*............................................ 8.2 -- --
Assumed exercise of dilutive stock options*.......... 4.8 -- 2.0
---------- --------- ---------
Adjusted weighted average shares outstanding........... 754.3 260.3 94.1
========== ========= =========
Per Share Data
Earnings per share attributable to undistributed
earnings on common stocks (before cumulative
effect of accounting change)...................... $5.40 $1.23 $1.90
Cumulative effect of accounting change at January 1,
1994................................................. (1.05) -- (0.08)
Dividends.............................................. 0.80 0.48 0.80
Earnings per share attributable to common stocks....... $5.15 $1.71 $2.62
===== ===== =====
</TABLE>
-------------------------
Note: The difference between fully diluted and primary earnings per share is
immaterial.
* The assumed conversion of preference stock 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.
IV-6
<PAGE> 2
COMPUTATION OF EARNINGS (LOSS) PER SHARE
ATTRIBUTABLE TO COMMON STOCKS -- CONTINUED
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
--------------------------------------------
$1 2/3 PAR
VALUE CLASS E CLASS H
COMMON STOCK COMMON STOCK COMMON STOCK
------------ ------------ ------------
(DOLLARS IN MILLIONS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Net income attributable to stocks................... $1,894.1 $367.2 $204.5
Dividends on preferred and preference stocks........ 356.8 -- --
-------- ------- -------
Earnings attributable to common stocks.............. 1,537.3 367.2 204.5
Dividends on common stocks.......................... 565.8 97.2 64.1
-------- ------- -------
Undistributed earnings.............................. 971.5 270.0 140.4
Adjustments
Add-back dividends on assumed conversion of
preference stocks.............................. 4.6 -- --
Change in earnings attributable to each class of
common stock related to the assumed share
transactions*.................................. (10.5) 10.5 --
Attributable to conversion of options*............ (6.6) 0.1 6.5
Dividends on assumed common stock transactions.... (6.1) (2.8) (2.0)
-------- ------- -------
Adjusted earnings attributable to common stocks..... $ 952.9 $277.8 $144.9
======== ======= =======
Weighted average shares outstanding (in millions)... 710.2 243.0 88.6
Adjustments
Shares issued on assumed conversion of preference
stocks*........................................ -- 7.0 --
Assumed exercise of dilutive stock options*....... 7.5 -- 2.8
-------- ------- -------
Adjusted weighted average shares outstanding........ 717.7 250.0 91.4
======== ======= =======
Per Share Data
Earnings per share attributable to undistributed
earnings on common stocks......................... $1.33 $1.11 $1.58
Dividends........................................... 0.80 0.40 0.72
-------- ------- -------
Earnings per share attributable to common stocks.... $2.13 $1.51 $2.30
======== ======= =======
</TABLE>
-------------------------
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.
IV-7
<PAGE> 3
COMPUTATION OF EARNINGS (LOSS) PER SHARE
ATTRIBUTABLE TO COMMON STOCKS -- CONCLUDED
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1992
----------------------------------------------
$1 2/3 PAR
VALUE CLASS E CLASS H
COMMON STOCK COMMON STOCK COMMON STOCK
------------ ------------ ------------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net income (loss) attributable to stocks
(before cumulative effect of accounting
changes).................................... $ (2,914.3) $278.4 $ 15.3
Dividends and accumulation of redemption value
on preferred and preference stocks.......... 306.3 -- --
----------- ------- -------
Earnings (Loss) attributable to common
stocks...................................... (3,220.6) 278.4 15.3
Dividends on common stocks.................... 945.4 76.1 53.3
----------- ------- -------
Undistributed earnings (loss)................. (4,166.0) 202.3 (38.0)
Adjustments
Add-back dividends on assumed conversion of
preference stocks........................ 19.8 -- --
Change in earnings attributable to each
class of common stock related to the
assumed share transactions(1)............ (46.2) 46.2 --
Dividends on assumed common stock
transactions............................. -- (12.5) --
----------- ------- -------
Adjusted earnings (loss) attributable to
common stocks............................... $ (4,192.4) $236.0 (38.0)
=========== ======= =======
Weighted average shares outstanding (in
millions)................................... 670.5 209.1 75.3
Adjustments
Shares issued on assumed conversion of
preference stocks(1)..................... -- 34.8 --
----------- ------- -------
Adjusted weighted average shares
outstanding................................. 670.5 243.9 75.3
=========== ======= =======
Per Share Data
Earnings (Loss) per share attributable to
undistributed earnings (loss) on common
stocks (before cumulative effect of
accounting changes)...................... $(6.25) $0.97 $(0.50)
Cumulative effect of accounting changes at
January 1, 1992............................. (33.43) -- (2.18)
Dividends..................................... 1.40 0.36 0.72
Adjustment.................................... -- -- (0.33)(2)
----------- ------- -------
Earnings (Loss) per share attributable to
common stocks............................... $(38.28) $1.33 $(2.29)
=========== ======= =======
</TABLE>
-------------------------
Note: The difference between fully diluted and primary earnings per share is
immaterial.
(1) 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 (Loss).
(2) The per-share reported loss attributable to Class H common stock of $(2.29)
equals the sum of the separate computations of each of the four quarters,
consistent with the requirements for calculating earnings per share based on
GMHE earnings and the Class H denominator. The calendar year calculation
shown above (based on 1992 weighted average outstanding Class H shares for
the year) requires an adjustment of $(0.33) due to the significant
differences in the average number of shares outstanding in each quarter and
the variations in quarterly earnings.
IV-8
