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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 10-K
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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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)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (313)-556-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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*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.
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*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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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
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INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS, AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS
FOR THE PAST 90 DAYS. YES X . NO .
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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PART AND ITEM NUMBER OF FORM
10-K
DOCUMENT INTO WHICH INCORPORATED
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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
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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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Worldwide Wholesale Sales.............................................. II-51
Employment and Payrolls................................................ II-53
Note 18 of Notes to Financial Statements (Segment Reporting)........... II-35
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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
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(UNITS IN THOUSANDS)
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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
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Total industry registrations -- all countries........ 48,897 46,525 46,036
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1994(1) 1993 1992
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(PERCENT OF TOTAL INDUSTRY)
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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
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(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.
* *
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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> 10
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> 11
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> 12
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> 13
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> 14
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> 15
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> 16
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> 17
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> 18
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> 19
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> 20
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> 21
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> 22
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> 23
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> 24
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> 25
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> 26
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> 27
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> 28
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> 29
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> 30
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> 31
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> 32
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> 33
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> 34
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> 35
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> 36
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> 37
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> 38
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> 39
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> 40
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> 41
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> 42
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> 43
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> 44
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> 45
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> 46
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> 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>
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> 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>
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> 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>
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> 50
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> 51
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> 52
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> 53
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> 54
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> 55
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> 56
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> 57
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> 58
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> 59
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> 60
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> 61
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> 62
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> 63
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> 64
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> 65
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> 66
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> 67
<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> 68
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> 69
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> 70
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> 71
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> 72
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
II-58
<PAGE> 73
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.
II-59
<PAGE> 74
<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.
II-60
<PAGE> 75
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 1993, compared to net cash
provided by investing activities of $2,465.0 million in 1992.
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.
II-61
<PAGE> 76
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> 77
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> 78
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> 79
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> 80
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> 81
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> 82
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> 83
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> 84
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> 85
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> 86
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> 87
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> 88
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> 89
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. PAGE NO.
- --------- ---------------
<S> <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> 90
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE NO.
- --------- ---------------
<S> <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> 91
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> 92
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> 93
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 10(a)
Supplemental
Agreement
Covering
PENSION PLAN
EXHIBIT A
TO
AGREEMENT
BETWEEN
GENERAL MOTORS CORPORATION
AND
UAW
DATED
OCTOBER 24, 1993
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Index to Exhibit A and Exhibit A-1 (ii)
Exhibit A -- Supplemental Agreement
Between General Motors
Corporation and the UAW
(Pension Plan) (1)
Exhibit A-1 -- The General Motors
Hourly-Rate Employees
Pension Plan 1
</TABLE>
(i)
<PAGE> 3
INDEX TO
EXHIBIT A -- SUPPLEMENTAL AGREEMENT BETWEEN
GENERAL MOTORS CORPORATION
AND THE UAW (PENSION PLAN)
EXHIBIT A-1 -- THE GENERAL MOTORS HOURLY-RATE
EMPLOYEES PENSION PLAN
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Actuary:
Appointment of (3)
Certification by (3)
Administration, General (11), 50-51
Amendment, Provision for (2), 60-61
Appendix A -- Benefit Class Codes 69-70
Appendix B -- Foundry Jobs 71-76
Appendix C -- Asbestos Jobs 77
Approval of Plan
(See "Plan, Approval of")
Asbestos Jobs:
Definition of 77
Asbestos Service,
Credited Service for 46
Base Hourly Rate 66-67
Basic Benefit 67
Basic Benefit Applicable to:
Benefits Commencing Prior to
October 1, 1993 19-22, 26-28
Deferred Pensions 54-57
Early Retirement 6-9
ERISA Minimum 8
Normal Retirement 6
Total and Permanent Disability
Retirement 6
Benefit Class Code 69-70
Board of Administration:
Applicability of 3(c) Agreement (10)-(11)
Appointment of Members (5)
</TABLE>
(ii)
<PAGE> 4
INDEX--CONT'D.
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Functions (9)-(11)
Information Furnished by Corporation (6)-(9)
Liability Members (11)
Pay and Expenses of Members (6)
Retroactive Adjustments (9)
Time of Meeting (6)
Voting (6)
Chairperson, Impartial:
Appointment of (9)-(10)
Compensation of (10)
Term of Office (10)
Voting (10)
Contributions:
General Provisions (3)-(5), 48-49
Service, Current (3)
Service, Prior (4)
Time of Payment (3)-(5)
Credited Service, Subsequent to
Effective Date of Plan:
Computation 34-40
During Layoff or Disability Leave 35-36, 38-39
Limitation of 39-40
Military Service 37
Occupational Disability Absences 36-37
Prior Service as Salaried Employee 37
Reinstatement of 40
Credited Service, Asbestos 46
Credited Service, Credit Union (12)
Credited Service, Equal to Seniority 40
Credited Service, Foreign Subsidiary 41
Credited Service, Foundry (14), 41-43
Credited Service, Loss of 40
Credited Service, Reinstatement of 40
Credited Service, Union Leaves of
Absence (12)
</TABLE>
(iii)
<PAGE> 5
INDEX--CONT'D.
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Deduction For:
Benefit Plan(s) Overpayments 59
Dependent Life Insurance 58
Income Tax 58
Medical Expense Coverage 58
Optional Life Insurance 58
Union Dues (13)-(14)
Deferred Pension:
Benefits, Determination of 54-57
Eligibility 54
If Reemployed 56-57
Minimum Vesting Standards-ERISA 43-46
Definitions 64-68
Dependent Life Insurance 58
Discharged Employee 9, 13
Disciplinary Action
(See "Employment Rights")
Duration of Agreement (15)
Employee, Definition of 64-65
Employment Rights (12)-(13), 59
Establishment of Fund (3)
Establishment of Plan
(See "Plan, Establishment of")
Federal Social Security Benefit:
Definition of 66
Fiduciary, Named-ERISA 60
Financing (3)-(5), 48-49
Foundry Jobs:
Designation of 71-76
Foundry Service, Credited Service for 41-43
Guaranteed Income Stream Benefits 53
Grievance Procedure:
Non-Applicability of (11)-(12)
</TABLE>
(iv)
<PAGE> 6
INDEX--CONT'D.
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Income Tax (See "Plan, Approval of:
Internal Revenue Service")
Insurance Company or Trustee:
Definition of 65
Designation of (3)
Insured Fund, Definition of 66
Layoff or Disability Absence:
Credited Service During 35-36, 38-39
Leaves of Absence:
Union (12)
Military Service 37
Letter Agreements 87-95
Liability of Corporation (5), 48-50
Limitation of Benefits 60
Lump-Sum Payment 90-91
Medical Expense Benefit Coverages 58
Merger or Consolidation-ERISA 64
Military Service, Credited Service for 37
Modification, Provision for (1)-(2), 60-61
Optional Life Insurance 58
Pension Fund, Definition of 66
Pension Payments:
General Provisions 51-54
Non-Alienation of 57-59
To Persons Other Than Pensioners 53
Plan, Approval of:
Board of Directors (1)-(3), 60
Internal Revenue Service (1)-(2), 59
Plan, Duration of (15)
Plan, Establishment of (1)-(3), 3-4
Plan, Termination of 61-64
</TABLE>
(v)
<PAGE> 7
INDEX--CONT'D.
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Pre-Retirement Survivor Coverage-REA:
Duration 32-33
Effective Date 32-33
Eligibility 32-34
Payment 32-33
Qualified Domestic Relations Order-REA 9, 27, 33, 57
Reemployment (13), 40, 52-53, 66
Retirement, Early:
Benefit Options 4
Benefits, Determination of 6-9
Benefits, Payment of 51-54
Benefits, Redetermination of 7
Eligibility 4
Mutual Retirement Standards 78-79
Reduction for Age 7
Retirement, General (12)-(13)
Retirement, Normal:
Benefits, Determination of 6
Benefits, Payment of 51-54
Eligibility 4
Retirement, Total and Permanent Disability:
Benefits, Determination of 6
Benefits, Payment of 51-54
Disability, Determination of 5
Eligibility 5, 51, 57
Recovery From (12)-(13), 5, 17, 52-53
Seniority (See "Credited Service")
Seniority, Definition of 66
Seniority, Equal to Credited Service 40
Social Security Benefits:
Redeterminations for 47
Special Benefit 18-19
Standards for Application of Provisions
for Mutually Satisfactory Retirement 78-79
Statement of Intent-Representation 80-85
</TABLE>
(vi)
<PAGE> 8
INDEX--CONT'D.
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Supplement, Early Retirement:
Benefits, Determination 13-14, 16-17
Earnings Limitation 17
Eligibility (13), 13-14
Limitation of 70% of Final Pay 18
Payment of 14, 51-54
Penalty Against 16-17
Recovery if Overpaid 17
Redetermination if Commenced
Prior to October 1, 1993 25
Waiver of Earnings Limitation,
Mutual Retirement 17
Supplement, Interim:
Benefits, Determination of 14-15
Earnings Limitation 17
Eligibility (13), 13-14
Limitation of 70% of Final Pay 18
Payment of 15, 51-54
Penalty Against 16-17
Recovery if Overpaid 17
Redetermination if Commenced
Prior to October 1, 1993 25
Supplemental Pension Agreement:
Conflicts With Plan (1)
Date of (1)
Duration of (15)
Parties to (16)-(17)
Surviving Spouse Benefits:
After Employee's Retirement 9-13
Before Employee's Retirement 12-13
Cancellation Because of Death
or Divorce 9-10, 26
Effective Date 10-11
Election to Receive Full Amount
of Future Increases 26-27
Joint and Survivor-ERISA 28-31
Reduction of Basic Benefit 11-12
Rejection of Coverage 10-11, 29
Special Survivor Option 26
</TABLE>
(vii)
<PAGE> 9
INDEX--CONT'D.
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Spouse Consent 10-11, 29
Upon Marriage or Remarriage
After Retirement 27-28
Temporary Benefit Applicable to:
Benefits Commencing Prior to
October 1, 1993 22-24
Early Retirement 8-9
Total and Permanent Disability
Retirement 8
Termination of Plan
(See "Plan, Termination of")
Trust Fund:
Definition of 66
Establishment of (3), 48-49
Irrevocability of 50
Trustee, Duties of (3)
Trustee or Insurance Company:
Definition of 65
Designation of (3)
Union Dues, Deduction of (13)-(14)
Vesting (See "Deterred Pension")
Wage Inequity Adjustments 21
Widow's Benefits
(See "Surviving Spouse Benefits")
Workers Compensation:
Deductions for Receipt of 47-48, 89
</TABLE>
(viii)
<PAGE> 10
EXHIBIT A
SUPPLEMENTAL
AGREEMENT
(PENSION PLAN)
<PAGE> 11
A, Sect.1
SUPPLEMENTAL AGREEMENT
(PENSION PLAN)
On this 24th day of October, 1993, General Motors Corporation, hereinafter
referred to as the Corporation, and the International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America, hereinafter referred
to as the Union, on behalf of the employees covered by the collective
bargaining agreement of which this Supplemental Agreement becomes a part, agree
as follows:
SECTION 1. ESTABLISHMENT OF PLAN
Subject to the approval of its Board of Directors, the Corporation will
establish an amended pension plan, hereinafter referred to as the Plan, a copy
of which is attached hereto as Exhibit A-1 and made a part of this agreement to
the extent applicable to the employees represented by the Union and covered by
this agreement as if fully set out herein, modified and supplemented, however,
by the provisions hereinafter. In the event of any conflict between the
provisions of the Plan and the provisions of this agreement, the provisions of
this agreement will supersede the provisions of the Plan to the extent
necessary to eliminate such conflict.
The Plan, as set forth in Exhibit A-1, and the Plan as it may be modified and
supplemented by superseding provisions of this agreement, as above provided,
are both contingent upon and subject to obtaining and retaining such approval
of the Commissioner of Internal Revenue as the Corporation may find necessary
to establish the deductibility under Section 404 of the Internal Revenue Code
for income tax purposes of any and all contributions made by the Corporation to
both plans and to establish the plans and related trust as being qualified and
tax exempt under Sections 401 and 501(a) or other applicable provisions of the
Internal
(1)
<PAGE> 12
A, Sect. 1
Revenue Code. Any modification or amendment of either the Plan, or the Plan as
modified and supplemented by this agreement, may be made retroactively by the
Corporation with the consent of the Union, if necessary or appropriate, to
qualify or maintain the Plan as a plan and trust meeting the requirements of
Sections 401 and 501(a) of the Internal Revenue Code, as now in effect or
hereafter amended, or any other applicable provisions of the federal tax laws,
as now in effect or hereafter amended or adopted, and the regulations issued
thereunder, provided that pension benefits under the Plan are not diminished.
Until the Plan is approved by the Corporation's Board of Directors and by the
Commissioner of Internal Revenue, all as hereinbefore provided, the benefits
payable shall be only those determined under the Plan as constituted prior to
October 1, 1993; provided, however, that following approval by its Board of
Directors and its receipt of the favorable ruling from the Commissioner of
Internal Revenue as set forth above, the Corporation or the trustee will pay to
retired employees and surviving spouses any excess amounts equal to the
difference between the monthly pension calculated in accordance with the terms
of the Plan, attached hereto as Exhibit A-1, and the monthly pension paid or
payable in accordance with the terms of the Pension Plan which was attached as
Exhibit A-1 to the Supplemental Agreement (Pension Plan) between the Parties
dated September 17, 1990. Any such excess amounts payable for months prior to
the receipt of the aforementioned Board of Directors and the Commissioner of
Internal Revenue approvals, shall be payable the first of the month following
the date upon which the last of these two approvals is received by the
Corporation, and any such amounts payable thereafter shall be paid on the first
of the month at the same time as the related pension is paid.
In the event that the Plan is disapproved by the Board
(2)
<PAGE> 13
A, Sect. 1
of Directors of the Corporation, the Corporation within thirty days after any
such disapproval will give written notice thereof to the Union and this
agreement shall thereupon have no force or effect. In that event the matters
covered by this agreement shall be the subject of further negotiation between
the Corporation and the Union.
SECTION 2. FINANCING
(a) A trustee or an insurance company, or both, shall be designated by the
Corporation, and a trust agreement or contract, or both, executed between the
Corporation and such trustee or insurance company, or both, under the terms of
which a pension fund or insured fund, shall be established to receive and hold
contributions payable by the Corporation, interest, and other income, and to
pay the pensions and supplements provided by the Plan.
(b) The Corporation agrees to pay over irrevocably to the trustee or
insurance company during the period of this agreement, contributions or
payments for the Plan equal to the sum of (i) and (ii) below as determined and
certified as of each anniversary of the effective date of the Plan by one or
more actuaries chosen by, but independent of, the Corporation, and qualified
through Fellowship in the Society of Actuaries and enrollment with the Joint
Board for Enrollment of Actuaries (hereinafter referred to as the Actuary).
Such contributions or payments for any year may be made not later than the date
on which such contributions are required by law to be made for the purpose of
crediting such contributions to such year under the minimum funding standards
of the Employee Retirement Income Security Act of 1974:
(i) the annual "current service" or "normal cost" contribution
attributable to a year's cost accruals in respect of assumed continuous service
after each such anniversary date, and
(3)
<PAGE> 14
A, Sect. 2 (b)(ii)
(ii) the "prior service contribution" computed as that part of the present
value, at each such anniversary date, of the prospective pensions payable under
the Plan for employees, pensioners and former employees who are entitled to a
deferred pension then covered by the Plan which is in excess of:
(aa) the value of the trust fund, as then comprised of any contracts
and total other assets, invested and uninvested, such total assets being valued
on a basis at least equal to the total cost thereof, plus
(bb) the then present value of the prospective "current service" or
"normal cost" contributions determined by the Actuary in accordance with (i)
above,
such excess part being amortized according to the following schedule:
(1) in respect of the portion of such excess part attributable to
the level of benefits in effect prior to October 1, 1979 - the fifty-ninth
anniversary of the Corporation's pension plan (October 1, 2009), and
(2) in respect of the portion of such excess part attributable to
the increase in the level of benefits established by amendments to the
Corporation's pension plan effective on or after October 1, 1979 - the
thirtieth anniversary of the date on which such increase in the level of
benefits becomes effective.
(c) The Corporation may contribute or pay additional amounts to the
trustee or insurance company, or both, under (b) above in any year without such
additional amounts being construed to reduce any thirty-year period for the
completion of the "prior service contributions" of subsection (b)(ii) above.
If the Corporation has contributed any such additional amounts prior to any
anniversary date of the Corporation's pension plan or shall contribute any
(4)
<PAGE> 15
A, Sect. 2 (c)
such additional amounts prior to any anniversary date of the Plan falling
within the duration of this agreement, the Corporation may as of such
anniversary, contribute a lesser amount than otherwise determined by (b) above
for such anniversary, provided that the value of any contracts and total other
assets as valued in accordance with (b)(ii)(aa) above at such anniversary shall
not be less than the amount estimated by the Actuary to be the value as if
contributions and payments up to and including such anniversary date had been
made as provided in (b) above and no additional amounts had been contributed or
paid prior to such anniversary.
(d) The Corporation by payment of the contributions or amounts as
hereinbefore provided in this section shall be relieved of any further
liability, and pensions and supplements shall be payable only from the trust
fund or the insured fund or both.
SECTION 3. ADMINISTRATION
(a) Board of Administration
(1) There shall be established a central Board of Administration
hereinafter referred to as the Board, composed of six members, three appointed
by the Corporation and three by the Union. Each member of the Board shall have
an alternate. In the event a member is absent from a meeting of the Board, the
alternate may attend and when in attendance shall exercise the duties of the
member. Either the Corporation or the Union at any time may remove a member or
alternate appointed by it and may appoint a member or alternate to fill any
vacancy among members or alternates appointed by it.
No person shall act as a member of the Board of Administration or as
an alternate for such member unless notice of the appointment has been given in
writing by the party making the appointment to the other party.
(5)
<PAGE> 16
A, Sect. 3 (a)(2)
(2) The Board shall meet at such times and for such periods for the
transaction of necessary business as may be mutually agreed upon by its
members.
(3) To constitute a quorum for the transaction of business, the
presence of four members of the Board shall be required. At all meetings of
the Board, the member or members present appointed by the Corporation shall
have in the aggregate a total of one vote to be cast on behalf of the
Corporation, and the member or members present appointed by the Union shall
have in the aggregate a total of one vote to be cast on behalf of the Union.
(4) The compensation and expenses of the Corporation members will be
paid by the Corporation and the compensation and expenses of the Union members
will be paid by the Union and no part of such compensation or expenses will be
paid from the trust fund.
(5) The Corporation shall cause to be furnished to the Board of
Administration annually:
(i) A statement as of each anniversary date of the Plan showing in
summary form the value of the assets which comprise such fund by general
categories of investment, such value being determined on a basis at least equal
to the total cost thereof for each such category.
(ii) Such information as to age, sex and service of hourly-rate
employees of the Corporation as a whole in the United States and as to the
number of pensioners and amount of pensions and supplements by age groups, as
the Board may reasonably require, but in no event shall the Corporation be
required to furnish the Board with any data not furnished by the Corporation to
the Actuary.
(6)
<PAGE> 17
A, Sect. 3 (a)(5)(iii)
(iii) A report, prepared by the Actuary, in respect of each year's
actuarial valuation of the Plan, setting out the following:
(a) the amount of the normal cost contribution and the amount
of the payment toward amortization of the actuarial deficiency required in
accordance with Section 2(b) hereof.
(b) a statement of the method and the assumptions, such as the
interest rate, mortality rates, withdrawal rates, retirement rates, average
benefit unit and assumptions used with respect to the survivor benefit, adopted
for the valuation for the purposes of Section 2(b) hereof.
(c) the amount, as of each anniversary date, of the gross
actuarial deficiency, determined in accordance with Section 2(b) hereof as the
present value of the prospective pensions payable under the Plan less the then
present value of the prospective normal cost contributions, if any, for (1)
retired employees, (2) employees who have separated with retention of deferred
pensions, (3) non-retired and non-separated employees, and (4) total.
(d) the amount of assets used in the actuarial valuation,
together with a reconciliation of the amount of such assets with the amount
used in the preceding valuation.
(e) the amount of the net (unfunded) actuarial deficiency.
(f) the amount by which the value of the trust fund exceeded
the amount then required by Section 2(b) hereof to be in such fund.
(g) the extent to which the trust fund assets as of the
valuation date would be sufficient to cover the pension liabilities, as
determined in accordance with SFAS 87.
(7)
<PAGE> 18
A, Sect. 3 (a)(5)(iv)
(iv) A statement, certified by the Actuary, that the amount of the
trust fund is or is not less than the amount then required by Section 2(b)
hereof to be in such fund.
(v) A statement setting forth:
(aa) The value of the trust fund computed on the basis of
market value as of the previous anniversary date of the Plan.
(bb) Additions during Plan year:
(i) payments by General Motors into the fund
(ii) interest and dividends received by the fund
(iii) net investment gains, and
(iv) total additions.
(cc) Pension payments and supplements to retired employees and
surviving spouses during Plan year.
(dd) The value of the trust fund computed on the basis of
market value as of the anniversary date of the Plan for the year for which the
statement is being submitted.
(vi) A schedule setting forth as of March 31 of each year:
(aa) the amount of investment of the pension fund in
residential real estate mortgages, by type, in communities with General Motors
plants and in other communities,
(bb) the amount invested in such residential real estate
mortgages during the preceding year in comparison with total new money
investments during that year, and
(8)
<PAGE> 19
A, Sect. 3 (a)(5)(vi)(cc)
(cc) a description of such residential mortgages in which
funds were invested during the preceding year, by type, separately by plant
city areas and in total for other areas.
(vii) A copy of Form 5500 reports and attendant schedules for the
Plan will be furnished as soon as practicable after General Motors has filed
such report with the Internal Revenue Service.
(6) The Board of Administration shall have no power to add to or
subtract from or modify any of the terms of this agreement or the Plan, nor to
change or add to any benefit provided by said agreement or Plan, nor to waive
or fail to apply any requirement of eligibility for a benefit under said
agreement or Plan.
(7) Any case referred to the Board of Administration on which it has
no power to rule shall be referred back to the parties without ruling.
(8) No ruling or decision of the Board of Administration in one case
shall create a basis for a retroactive adjustment in any other case prior to
the date of written filing of each such specific claim.
(9) There shall be no appeal from any ruling by the Board which is
within its authority. Each such ruling shall be final and binding on the Union
and its members, the employee or employees involved, and on the Corporation,
subject only to the arbitrary and capricious standard of judicial review.
The Union will discourage any attempt of its members and will not
encourage or cooperate with any of its members, in any appeal to any Court or
Administrative Board or Agency from a ruling of the Board of Administration.
(b) IMPARTIAL CHAIRPERSON
(1) The Corporation and the Union shall mutually
(9)
<PAGE> 20
A, Sect. 3 (b)(1)
agree upon and select an Impartial Chairperson, who shall serve until requested
in writing to resign by three Board members.
(2) The Impartial Chairperson will not be counted for the purpose of a
quorum, and will vote only in case of a failure of the Corporation and the
Union by vote through their representatives on the Board to agree upon a matter
which is properly before the Board and within the Board's authority to
determine; provided that the Impartial Chairperson may vote only on matters
involving the processing of individual cases, not on the development of
procedures.
(3) The fees and expenses of the Impartial Chairperson will be paid
one-half by the Corporation and one-half by the Union.
(c) As soon as possible after the effective date of this agreement, the
Union and Corporation members of the Board of Administration shall work out
matters such as but not limited to: (1) procedures for establishing Local
Pension Committees at the Divisions or plants involved; (2) the authority and
duties of such Local Pension Committees; (3) the procedures for reviewing
applications for pensions; (4) the handling of complaints regarding the
determination of age, service credits, and computation of benefits; (5)
procedures for making appeals to the Board; (6) means of verifying service
credits to which employees are entitled under the Plan; (7) methods of
furnishing information to employees regarding past and future service credits;
(8) the amount of time the Union members of the local committees may be
permitted to leave their work to attend meetings of the Local Pension
Committees; (9) how disputes over total and permanent disability claims will be
handled, including disputes, if any, with respect to whether a disabled
pensioner engages in gainful employment; (10) the review of pertinent
information about the Plan
(10)
<PAGE> 21
A, Sect. 3 (c)
for dissemination to employees; (11) how pension payments will be authorized by
the Board. All such matters shall be consistent with all other provisions of
the Plan and this agreement. The working out of the procedures outlined in
this section shall be the responsibility of the Corporation and Union members
of the Board, and the Impartial Chairperson shall have no power to decide any
question with respect thereto.
The provisions of Agreement Implementing Section 3(c) of the Supplemental
Agreement, Pension Plan, dated October 14, 1988 which were established by the
Board pursuant to the foregoing are incorporated herein by reference and are a
part hereof and effective with respect to the administration of the Plan as
fully as if set out herein at length.
(d) Except as provided otherwise in this agreement, the general
administration of the provisions of the Plan shall be the responsibility of the
Corporation.
(e) The Board and any member of the Board, or the Local Pension Committees
or any member of the Local Pension Committees, shall be entitled to rely upon
the correctness of any information furnished by the Union or the Corporation.
Neither the Board nor any of its members, nor the Local Pension Committees nor
any of its members, nor the Union nor any officer or other representative of
the Union, nor the Corporation nor any officer or other representative of the
Corporation shall be liable because of any act, or failure to act, on the part
of the Board or any of its members, or the Local Pension Committees or any of
its members or any person, except that nothing herein shall be deemed to
relieve any such individual from any liability for the individual's own fraud
or bad faith.
(f) No matter respecting the Plan as modified and supplemented by this
agreement or any difference arising thereunder shall be subject to the
grievance procedure established in the collective bargaining
(11)
<PAGE> 22
A, Sect. 3 (f)
agreement between the Corporation and the Union, except as expressly provided
in Paragraph (46) of such collective bargaining agreement.
(g) Credited service shall be granted an employee who is absent from work
pursuant to Paragraph 24 of the National Agreement, or on a leave of absence
under Paragraph 109 of the National Agreement if the leave was granted for the
purpose of permitting the employee to engage in the business of or to work for
the Local Union, or if the leave was granted under Paragraph 109(a) of the
National Agreement for the purpose of permitting the employee to engage in the
business of or to work for the International Union while on such leave (an
employee on leave under the National Agreement solely to permit the employee to
be Manager of the credit union sponsored by the Local Union shall be included
hereunder, but only with respect to any period while serving in such capacity
while on such leave).
An employee eligible for credited service under this section shall be
credited with up to 40 hours for each calendar week since October 1, 1950 while
on such leave, including compensated hours, provided the employee meets the
requirements of the leave; but in no event shall the employee be credited with
more than 1700 hours, including compensated hours, in any calendar year.
SECTION 4. EFFECT OF RETIREMENT ON EMPLOYMENT STATUS AND SENIORITY
(a) An employee who retires or is retired under the terms of the Plan
shall cease to be an employee and shall have seniority canceled.
(b) An employee who has been retired on a total and permanent disability
pension and who thereby has broken seniority in accordance with subsection (a)
(12)
<PAGE> 23
A, Sect. 4 (b)
above, but, who recovers and has such pension discontinued, shall have
seniority reinstated as though such employee had been on a sick leave of
absence during the period of such disability retirement, provided, however, if
the period of disability retirement was for a period longer than the seniority
the employee had at the date of retirement, the employee shall, upon the
discontinuance of such disability pension, be given seniority equal to the
amount of seniority at the date of such retirement.
(c) If an employee retired for reasons other than total and permanent
disability, who has lost seniority in accordance with subsection (a) above, is
rehired, such employee will have the status of a new employee.
SECTION 5. SUPPLEMENTS
Notwithstanding any other provisions of the Plan, an employee who retires with
benefits payable commencing on or after October 1, 1993 while on an approved
leave of absence requested by the International Union to permit such employee
to engage in the business of or to work for the International Union, shall not
be prevented from receiving benefits under Section 6 of Article II of the Plan
solely because the last day worked for the Corporation was not within five
years of the date the employee's pension benefits commence.
SECTION 6. DEDUCTION OF UNION DUES
(a) Notwithstanding any other provisions of the Plan, any retired employee
entitled to receive a pension or supplement may, pursuant to the retired
employee's written authorization and direction acceptable to the Corporation,
authorize the deduction of monthly Union dues from any monthly pension or
supplement otherwise payable and direct that such dues be remitted to the
Union.
(13)
<PAGE> 24
A, Sect. 6 (b)
(b) An authorization to deduct said monthly Union dues shall become
effective as of the first of the second month following the month in which the
Corporation receives such authorization from the Union, and shall remain in
full force and effect until revoked by the retired employee's written notice
given to the Corporation, except that during any period when there is not in
effect a written collective bargaining agreement or supplement thereto between
the Corporation and the Union which permits or provides for the deduction of
Union dues from monthly pension benefits payable to a retired employee, such
assignment, authorization and direction, if otherwise in effect, shall
automatically be suspended for the duration of such period only.
(c) The Union shall indemnify and hold harmless the Corporation against
any and all liability, including reasonable attorney's fees, that may arise by
reason of the Corporation's compliance with this Section 6.
(d) This Section 6 shall be of no force or effect during any month for
which less than one thousand such authorizations are in effect.
SECTION 7. FOUNDRY JOBS
Any job classification put into effect after September 14, 1973 at a plant
identified in Appendix B of the Plan, shall be designated by written agreement
between the parties as a foundry job if such classification (a) supersedes or
replaces a job classification previously designated as a foundry job for such
plant, and (b) becomes applicable to employees who perform substantially the
same work as had been performed by employees while on a job classification
previously designated as a foundry job for such plant.
(14)
<PAGE> 25
A, Sect. 8
SECTION 8. DURATION OF AGREEMENT
This agreement and Plan shall continue in effect until the termination of the
collective bargaining agreement of which this is a part.
In witness hereof, the parties hereto have caused this agreement to be executed
the day and year first above written.
(15)
<PAGE> 26
INTERNATIONAL GENERAL MOTORS
UNION, UAW CORPORATION
OWEN BIEBER JOHN F. SMITH, JR.
STEPHEN P. YOKICH WILLIAM E. HOGLUND
RICHARD MONCZKA GERALD A. KNECHTEL
CAL RAPSON FREDERICK R. CURD, JR.
HENDERSON SLAUGHTER JAMES E. PRYCE
RICHARD SHOEMAKER BARBARA J. MAHONE
BILL APPLE DEAN W. MUNGER
LEON BLACKWELL LARRY E. KNOX
L.E. BUNCH RALPH E. HANDLEY
MIKE GRACEY THOMAS E. UTTER
LARRY STEVENS ARTHUR R. SCHWARTZ
KARLA SWIFT EDWARD V. SABISKY
TOM WEEKLEY MARTINA HUND-MEJEAN
GEORGE BRODEUR RODERICK D. GILLUM
BILL CAPSHAW DOUGLAS B. VANBROCKLIN, M.D.
BOB FARLEY ROWLAND L. AUSTIN
JIM JACKSON JOHN H. BERRY III
DICK JONES E. PRESTON BOLDEN
RICK LYONS RICHARD L. BREWER
JUDY MURPHY THOMAS J. BENNETT
HERSCHEL NIX KEVIN M. BUTLER
PEGGY PERSON WILLIAM L. COWELL
BILL RENO PRESTON M. CRABILL
WILLIE WILLIAMS RALPH E. DEEDS, JR.
RON BAUG H. STEPHEN DOYLE
ESTHER CAMPBELL JOHN J. FLAHARTY
ROBERT EVANS DONALD E. FRAZIER
DARWYN JONES KENNETH D. GALLINGER
MARK HAWKINS THOMAS A. GAWEL
DANNY LACK STEVEN L. GEBBIA
KEN LAUBERT ALLEN J. GREEN
DICK LONG TERRY J. MCDOUGALL
BILL SCRASE RONALD E. NEWTON
LEON SKUDLAREK DANIEL J. OSBORNE
JIM STEVENS ALICE M. OSBURN
RAY ALLEN RODNEY O'NEAL
PAUL ALLMAND GARY N. PHELEY
TOM AMENO BERNARD J. QUICK
ROGER ANCLAM MICHAEL A. TAUBITZ
JEANNIE ANDERSON RANDY J. THAYER
JIM BEARDSLEY JAMES R. RHADIGAN
(16)
<PAGE> 27
INTERNATIONAL GENERAL MOTORS
UNION, UAW CORPORATION
CHARLIE BEST PAUL J. SCHNOBRICK
RON BIEBER JEFFREY E. SMITH
BILLIE BOLLER RICHARD M. STIFTER
BOB BREECE ALAN H. STROHMAIER
JACK BROWN JAY C. WILBER
BENNIE BURGESS DONALD G. WINE
REBECCA CABREROS GERALD J. WINTER
SCOTT CAMPBELL ELIZABETH M. AZONI
BUD CARROLL JAMES F. BALL
MIKE CAVANAUGH W. GARY BRYANT
JOHN CHILDERS MAGDALENA T. CHAVEZ
JOHN G. CLARK LEE M. CRAWFORD
JOHN J. CLARK CAROLE G. DAVEY
RUFUS COLEMAN KEVIN B. DUFF
JERRY COVILLE JEFFREY L. FELTEN
HAROLD COX MICHAEL S. FLIGSTEIN
SHELLEY CZEIZLER GALE P. FRAZEE
DICK DANJIN CHRISTINE A. GASICIEL
M.L. DOUGLAS SANDRA E. GERNHART
GREG FEDAK JENNIE F. HART
JOHN FEDEWA JOHN B. HULETT III
MARK FIEDLER KENNETH A. HULIK
CHUCK GAYNEY BETTY SUE JONES
RAY GIBSON ANTHONY KLEMER
DAN GINGERICH JAMES W. LALONDE
LARRY GONTKO CHARLES H. MATTHEWS
MOSES GREEN MARK R. MCCARTHY
MIKE GRIMES DELORES J. MCFARLAND
LESLIE HALLIBURTON JEAN L. ROSE
TOM HENRY CHARLES E. RUCKER
MOHAMMED ISA LARRY D. SHACK
SAM ISAAC MICHAEL W. TAYLOR
LARRY JOLLY BERNARD G. WEBER
DAVID KOEPCKE JANICE M. WHITEHOUSE
CHRIS MANNING JOSEPH D. WINGER
FAYE MCAFEE
RICK MCKIDDY
STEVE MCLIMANS
PAUL MITCHELL
CLAYTON MOLL
CARLENA MURDY
(17)
<PAGE> 28
INTERNATIONAL GENERAL MOTORS
UNION, UAW CORPORATION
RON MURRAY
WILBERT NEAL
DON NEWTON
TONY ORTIZ
ED PARKER
LINDA PATTON
CARL PEDERSEN
TOM RICHARDSON
TOM ROBINSON
RICHARD RUPPERT
DON SARKESIAN
JOEL SAWYER
LOU SCHULTZ
LEONARD SCHWARTZ
HAROLD SHELTON
JIM SHROAT
DARRELL SMITH
LAWRENCE SMITH
JOE SPRING
RICHARD STALINSKI
CINDY SUEMNICK
LARRY SZUMAL
KEN TERRY
JIM TITSWORTH
LIBBY TOMASKO
LULA TRICE
TOM WALSH
JIM YAKLIN
AL YELLE
ED YONAN
(18)
<PAGE> 29
EXHIBIT A-1
THE GENERAL MOTORS
HOURLY-RATE EMPLOYEES
PENSION PLAN
1
<PAGE> 30
[INTENTIONALLY LEFT BLANK]
2
<PAGE> 31
Art. I
ARTICLE I
ESTABLISHMENT OF THE PLAN
General Motors Corporation on behalf of itself and its Divisions and as agent
for certain of its directly or indirectly wholly-owned and substantially
wholly-owned domestic subsidiaries in accordance with I.R.C. Section 414(b),
(c), and (m) will establish, subject to the approval of its Board of Directors,
a pension fund either by a trust agreement with a trustee or trustees or by
contract with an insurance company or insurance companies, or both, and with
respect thereto shall make such payments or contributions as will be sufficient
to maintain the fund on a sound actuarial basis as well as to pay expenses
incident to the operation and management of the Plan.
Except as expressly provided in Sections 6, 7, and 8 of Article II and as
provided in Article VII and Article IX, the provisions set forth in this Plan
are applicable only to employees with seniority on or after October 1, 1993.
Employees retired with benefits commencing prior to such date or separated
prior to such date, or eligible surviving spouses of such employees, shall be
entitled to the benefits, if any, under the Plan as it existed immediately
prior to such date.
Notwithstanding the paragraph immediately above, employees who retired with
benefits commencing after September 14, 1993 and prior to October 1, 1993
pursuant to the provisions of Article II of the Plan, shall be considered for
purposes of Article II herein as having retired with benefits payable
commencing on or after October 1, 1993; the surviving spouse of any employee
who died after September 14, 1993 and prior to October 1, 1993, who is
otherwise eligible for monthly benefits under the Plan, shall be considered
entitled to monthly benefits pursuant to Section 5 of Article II herein; and
any such employees shall be
3
<PAGE> 32
Art. I
considered eligible for credited service under Article III herein.
ARTICLE II
ELIGIBILITY FOR RETIREMENT
AND AMOUNT OF PENSIONS
SECTION 1. NORMAL RETIREMENT
Any employee who shall have attained the age of 65, shall have completed one or
more years of credited service as provided in Article III and shall cease
active service, shall be entitled to receive a pension.
SECTION 2. EARLY RETIREMENT
(a) (1) An employee who has attained age 60 but not age 65, and who
has 10 or more years of credited service, may retire at the option of the
employee.
(2) An employee who has attained age 55 but not age 60, and
whose combined years of age and years of credited service (to the nearest 1/12
in each case) shall total 85 or more, may retire at the option of the employee.
(3) An employee who has 30 or more years of credited service
may retire at the option of the employee.
(b) an employee who has attained age 55 (age 50 for an employee who
is laid off on or after october 1, 1984 as a result of a plant closing where no
other general motors plants are in the same geographical area) but not age 65
and who has 10 or more years of credited service may be retired under mutually
satisfactory conditions as set forth hereinafter in the standards applicable to
such retirement.
4
<PAGE> 33
Art. II, 3
SECTION 3. TOTAL AND PERMANENT DISABILITY RETIREMENT
(a) An employee who is totally and permanently disabled prior to attaining
age 65, and has at least 10 years of credited service, shall be eligible for a
disability pension as hereinafter provided.
(b) An employee shall be deemed to be totally and permanently disabled
only if the employee is not engaged in regular employment or occupation for
remuneration or profit and on the basis of medical evidence satisfactory to the
Corporation the employee is found to be wholly and permanently prevented from
engaging in regular employment or occupation with the Corporation at the plant
or plants where the employee has seniority for remuneration or profit as a
result of bodily injury or disease, either occupational or nonoccupational in
cause, but excluding disabilities resulting from service in the armed forces of
any country unless the employee becomes totally and permanently disabled after
accumulating at least 5 years of seniority following separation from service in
the armed forces.
(c) Any disability pensioner may be required to submit to medical
examination at any time during retirement prior to age 65, but not more often
than semi-annually, to determine whether the pensioner is eligible for
continuance of the disability pension. If on the basis of such examination it
is found that the pensioner is no longer disabled or if the pensioner engages
in gainful employment, except for purposes of rehabilitation as determined by
the Corporation, the pensioner will be deemed recovered and such disability
pension will cease. In the event the disability pensioner refuses to submit to
medical examination the pension will be discontinued until the pensioner is
examined.
5
<PAGE> 34
Art. II, 4
SECTION 4. AMOUNT OF PENSIONS
(a) (1) The monthly pension payable to an employee retired pursuant to the
provisions of Sections 1, 2, or 3 of this Article II with benefits payable
commencing on or after October 1, 1993 shall be a basic benefit for each year
of credited service that the employee had at the date of retirement, determined
by the applicable Benefit Class Code and based on the month for which payment
is being made as set forth in the table immediately following:
<TABLE>
<CAPTION>
Basic Benefit Rate Per Year
of Credited Service
For Months Commencing
Retirement With Benefit 10-1-93 10-1-94 10-1-95
Benefits Payable Class through through and
Commencing Code 9-1-94 9-1-95 After
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
$ $ $
- - -
OCTOBER 1, 1993 A 32.50 33.50 34.70
and After B 32.75 33.75 34.95
C 33.00 34.00 35.20
D 33.25 34.25 35.45
</TABLE>
(2) The monthly pension benefit payable to an employee who retires at
the employee's option at a date selected by the employee shall be multiplied by
a percentage as set forth in the following table:
6
<PAGE> 35
Art. II, 4(a)(2)
<TABLE>
<CAPTION>
Age When
Pension Commences Percentage*
- -----------------------------------------------
<C> <C>
42 21.0%
43 22.6
44 24.3
45 26.1
46 28.2
47 30.4
48 32.8
49 35.4
50 38.3
51 41.5
52 45.0
53 48.9
54 53.2
55 57.9
56 63.5
57 69.4
58 75.2
59 80.8
60 86.7
61 93.3
62 or over 100.0
</TABLE>
*Prorated for intermediate ages computed on the basis of the number of complete
calendar months by which the employee is under the age attained at the
employee's next birthday.
If an employee:
(i) with 30 or more years of credited service retires at the
employee's option, or
(ii) whose combined years of age and years of credited service (to the
nearest 1/12 in each case) shall total 85 or more retires at the employee's
option,
the monthly basic benefits otherwise payable to such employee after age 62 and
one month shall be redetermined without any such reduction.
7
<PAGE> 36
Art. II, 4(a)(3)
(3) The basic benefit payable in any month will not be reduced below
an amount which results in the early retirement supplement paid to a
participant in such month, under Article II, Section 6(a)(1), exceeding the old
age insurance benefits, unreduced on account of age, payable under Title II of
the Social Security Act, as amended.
(b) A temporary benefit for each year of credited service up to 30 shall
be payable in addition to the monthly basic pension payable to an employee
retired under mutually satisfactory conditions, or totally and permanently
disabled pursuant to Section 2(b) or Section 3 above, as set forth in the table
immediately following:
<TABLE>
<CAPTION>
Monthly Temporary
Benefit Amount
Retirees With Per Year of
Benefits Payable Credited
Commencing Service Maximum
- ----------------------------------------------------------
<S> <C> <C>
October 1, 1993 $ $
Through
September 1, 1994 31.00 930.00
October 1, 1994
through 31.95 958.50
September 1, 1995
October 1, 1995
and After 33.10 993.00
</TABLE>
8
<PAGE> 37
Art. II, 4(c)
(c) The monthly temporary benefit determined in (b) above shall be payable
until age 62 and one month, or until the age at which the employee becomes or
could have become eligible for a Federal Social Security benefit for disability
or an unreduced Federal Social Security benefit for age. At such age the
temporary benefit shall cease to be payable.
(d) An employee who is discharged for cause after such employee is
eligible to retire at the employee's option under Section 2(a) of this Article
II shall be entitled to the benefits provided under Section 4(a) of this
Article II.
(e) The amount of any monthly pension benefit otherwise payable to the
employee at retirement, or earlier commencement, will be reduced by the value
of any past and future benefits paid or payable to any alternate payee(s) under
a Qualified Domestic Relations Order within the meaning of I.R.C. Section
414(p).
The actuarial value will be used to determine any amount to be paid to any
such payee(s), if applicable, and the remaining benefit entitlement of the
employee.
SECTION 5. PENSION BENEFITS TO EMPLOYEE'S SURVIVING SPOUSE
(a) In lieu of the monthly basic benefit otherwise payable, an employee
who retires or is retired pursuant to the normal, early or total and permanent
disability retirement provisions of this Article II, or who breaks seniority
and is eligible for a deferred pension pursuant to the provisions of Section 2
of Article VII hereof, shall be deemed to have elected automatically a reduced
amount of monthly basic benefit to provide that, if the designated spouse shall
be living at the employee's death after such election shall have become
effective, a survivor benefit shall immediately be payable to such spouse
commencing on the first of the month following the employee's death and such
survivor
9
<PAGE> 38
Art. II, 5(a)
benefit shall be payable during the spouse's further lifetime. In the event
such spouse predeceases such employee, or they are divorced by court decree and
a Qualified Domestic Relations Order within the meaning of I.R.C. Section
414(p) does not provide to the contrary, such employee may cancel the survivor
benefit election and have the monthly basic pension benefit restored to the
amount payable without such election, effective the first day of the third
month (for cancellations on and after January 1, 1994, due to the death of the
designated spouse, restoration of the monthly basic pension benefit will be
effective the first day of the month) following the month in which the
Corporation receives (i) evidence satisfactory to the Corporation of the
spouse's death, or (ii) such employee's written revocation of the election
because of divorce, on a form approved by the Corporation and accompanied by
evidence satisfactory to the Corporation of a final decree of divorce.
The automatic election provided in this subsection (a) shall become
effective on the later of (i) the commencement date of the employee's monthly
pension benefit, (ii) the first day of the month following the month in which
the employee attains age 55 (except that this item (ii) shall not apply to an
employee with 30 or more years of credited service or to an employee who
retires with benefits payable prior to age 55 pursuant to Section 2(b) of this
Article II), or (iii) the first day of the month following the month in which
the employee has been married one year if married when the election would
otherwise become effective but such marriage has been in effect less than one
year at that date.
An employee may prevent the automatic election provided in this subsection
(a) during the 90-day period prior to the effective date of such automatic
election by executing a specific written rejection of such election, which
includes the written consent of the
10
<PAGE> 39
Art. II, 5(a)
employee's spouse witnessed by the plan representative or a notary public, on a
form approved by the Corporation and filing it with the Corporation.
Information regarding this coverage is included in the summary plan
description, which will be provided to each employee. Within a reasonable
period prior to the annuity starting date, each participant shall be provided a
written explanation of: (i) the terms and conditions of the surviving spouse
coverage; (ii) the participant's right to make and the effect of an election to
waive the surviving spouse coverage; (iii) the rights of the participant's
spouse; and (iv) the right to make and the effect of revocation of a previous
selection to waive the surviving spouse coverage.
(b) The beneficiary of a survivor benefit election shall be only the
person who is the employee's spouse at such time and who has been such spouse
for at least one year immediately prior to the effective date of such election.
(c) A survivor benefit election shall be revoked automatically upon the
death of the employee or the designated spouse, or both, prior to the effective
date of the election.
(d) A survivor benefit election shall be irrevocable at and after its
effective date if the employee and the designated spouse shall be living at
such date, except as otherwise provided in Section 5(a) of this Article II.
(e) For an employee who makes a survivor benefit election or who is deemed
to have made such election under this Section 5, the reduced amount of the
monthly basic benefit referred to in (a) above shall be equal to an amount
determined by multiplying the monthly basic benefit otherwise payable to the
employee by 95% if the employee's age and the eligible spouse's age are the
same; except that, in the case of an employee whose basic benefits are subject
to
11
<PAGE> 40
Art. II, 5(e)
redetermination at age 62 and one month the amount of reduction in the monthly
basic benefit before such age for the survivor benefit election shall be based
on the monthly basic benefit payable to such employee after age 62 and one
month. Such percentage shall be increased by one-half of one percent (1/2%)
(up to a maximum of 100%) for each 12 months in excess of five (5) years that
the spouse's age exceeds the employee's age and shall be decreased by one-half
of one percent (1/2%) for each 12 months in excess of five (5) years that the
spouse's age is less than the employee's age.
(f) The survivor benefit payable to the surviving spouse of a retired
employee who has completed an election or who is deemed to have made an
election under this Section 5, and who dies after such election becomes
effective, shall be a monthly benefit for the further lifetime of such
surviving spouse equal to 60% of the reduced amount of such employee's monthly
basic benefit as determined in (e) above; except that the survivor benefit
payable to the surviving spouse of an employee whose basic benefits are subject
to redetermination at age 62 and one month pursuant to Section 4(a) of this
Article II, shall be based on the monthly basic benefit payable to such
employee after age 62 and one month.
(g) The surviving spouse of an employee
(i) who dies on or after attaining age 65, or on or after attaining
age 55 and after the employee is eligible to retire at the employee's option
under Section 2(a)(1) or 2(a)(2) of this Article II, or at any age with 30 or
more years of credited service, but before the first day of the month following
the date on which the employee retires or before the commencement date of the
employee's monthly pension in the case of an employee who retires and defers
the receipt of the monthly pension, and
12
<PAGE> 41
Art. II, 5(g)(ii)
(ii) who, if the employee had retired at the date of death, would have
been eligible for the election under subsection (a) of this Section 5,
shall immediately be entitled to a monthly benefit during the spouse's
lifetime, terminating with the last monthly payment before the spouse's death.
The monthly benefit payable to the surviving spouse shall be the amount such
spouse would have been entitled to receive under subsection (f) of this Section
5, if the employee had retired on the date of death under Sections 1, 2(a)(1),
2(a)(2) or 2(a)(3), whichever is applicable, of this Article II with benefits
commencing the first of the following month and had effectively made the
election under subsection (a) of this Section 5.
(h) The death of an otherwise eligible employee who has retired under
Section 3 of this Article II, occurring on or after attaining age 55, but
before the first day of the month following the date of death, shall not
disqualify an otherwise eligible surviving spouse from receiving a benefit
hereunder.
SECTION 6. SUPPLEMENTS
(a) An employee who retires under Section 2 (other than an employee
referred to in Section 4(d) of this Article II, unless the Corporation or an
Impartial Umpire under an applicable collective bargaining agreement determines
the discharge should not result in the employee being ineligible for benefits
under this Section 6), or Section 3 of this Article II, and who files an
application for a pension within five years of the last day worked for the
Corporation and who agrees to restrict participation in the work force before
age 62 and one month as provided in (e) below will receive, in addition to the
pension, certain supplements as set forth below:
(1) If the employee retires under Section 2 or Section 3 of this
Article II with 30 or more years of
13
<PAGE> 42
Art. II, 6(a)(1)
credited service at the date of retirement, such employee shall be entitled to
a monthly early retirement supplement until age 62 and one month in an amount
which when added to the monthly pension under this Plan will equal the amount
of total monthly benefit provided in the table set forth below, subject to
subsequent provisions of this Section 6:
<TABLE>
<CAPTION>
Total Monthly Benefit Rate
For Determining Monthly
Early Retirement Supplement
Prior to Age 62 and One Month
For Retirements With
30 or More Years
of Credited Service
Retirement 10-1-93 10-1-94 10-1-95
With Benefits through through and
Payable 9-1-94 9-1-95 After
Commencing
- ------------------------------------------------------------------
<S> <C> <C> <C>
October 1, $ $ $
1993
and After 1,900 1,960 2,030
</TABLE>
(2) If the employee retires at the employee's option after attaining
age 55 with benefits payable commencing on or after October 1, 1993 with less
than 30 years of credited service, such employee shall be entitled to a monthly
interim supplement until the attainment of age 62 and one month equal to the
amount provided immediately below for each year of credited service that such
employee had at the date of retirement, subject to the provisions of (b), (e)
and (g) of this Section 6:
14
<PAGE> 43
Art. II, 6(a)(2)
<TABLE>
<CAPTION>
Monthly Amount* and Effective Date
of Interim Supplement
Payable Prior to Age 62 and One Month
for Each Year of Credited Service
Retired With Benefits Payable
Commencing on or After
October 1, 1993
Age at 10-1-93 10-1-94 10-1-95
Retirement through through and
9-1-94 9-1-95 After
- -------------------------------------------------------------------
<S> <C> <C> <C>
$ $ $
55 13.65 14.05 14.55
56 16.05 16.55 17.15
57 19.45 20.05 20.80
58 22.80 23.50 24.35
59 25.50 26.25 27.20
60 29.45 30.35 31.45
61 29.45 30.35 31.45
</TABLE>
*Prorated for intermediate ages computed on the basis of the number of
complete calendar months by which the employee is under the age attained at
the employee's next birthday.
(b) The early retirement supplement under provision (a)(1) of this Section
6 for an employee who retires at the employee's option shall be calculated
assuming that the basic pension commences immediately after retirement, and
such early retirement supplement and the interim supplement under provision
(a)(2) of this Section 6 shall be reduced for any month prior to age 62 and one
month, for which the employee becomes or could have become eligible for a
Federal Social Security benefit, by an amount equal to the amount of the
temporary benefit to which the employee would have been entitled if retired
under Section 2(b) of this Article II.
15
<PAGE> 44
Art. II, 6(c)
(c) The early retirement supplement under provision (a)(1) of this Section
6 for an employee who retires under Section 2(b) or Section 3 of this Article
II shall be calculated on the assumption that the employee will receive a
temporary benefit until age 62 and one month, even if such temporary benefit is
not received by the employee until such age because of entitlement to Social
Security Benefits.
(d) The early retirement supplement under provision (a)(1) of this Section
6 for an employee who does not prevent the automatic election of the surviving
spouse coverage provided under Section 5 of this Article II shall be calculated
on the basis of the monthly pension the employee would have received if the
employee had prevented such automatic election.
(e) Any of the supplements to which an employee is entitled shall commence
on the first day of the month following the date on which the employee retires
and shall be payable monthly thereafter until and including the first day of
the month in which the employee (1) dies, (2) has the pension cease for any
other reason, (3) is reemployed by the Corporation, or (4) attains age 62 and
one month, whichever occurs first. However, if an employee entitled to receive
a supplement has earnings after retirement in excess of the following annual
earnings limitation in any calendar year before the attainment of age 62 and
one month, such earnings being defined for this purpose as the type counted for
the earnings test under the Federal Social Security Act or the corresponding
type in any future Federal legislation amending, superseding, supplementing or
incorporating the Federal Social Security Act, a penalty equal to double the
amount by which such earnings exceed the amount permitted shall be charged
against each succeeding monthly supplement which the employee would otherwise
be entitled to receive until the full amount of such penalty
16
<PAGE> 45
Art. II, 6(e)
is satisfied, it being understood that penalties and charges herein shall be
cumulative if appropriate:
<TABLE>
<CAPTION>
Annual Earnings Limitation
Calendar Year Amount
- ------------- --------------------------
<S> <C>
$
1993 15,000
1994 15,500
1995 15,500
1996 15,500
</TABLE>
An employee receiving a monthly early retirement supplement or interim
supplement may be required to certify whether such employee's annual earnings
have been in excess of the permitted amount and to furnish verification of the
amount of such earnings. Unless repaid by the employee in a lump sum, any
overpayments of a supplement made after an employee incurred a penalty because
of excess earnings in accordance with the preceding paragraph shall be deducted
from future monthly benefits payable to the employee under this Pension Plan.
The annual earnings limitation provisions of this subsection (e) shall not
be applicable to any mutually satisfactory retirement with benefits payable
commencing on or after October 1, 1993 and prior to September 14, 1996.
(f) If a retired employee has been receiving a pension under Section 3 of
this Article II and has been receiving a supplement and, on the basis of
medical evidence satisfactory to the Corporation, it is found that such
employee is no longer totally and permanently disabled and seniority is
restored, or if such employee is reemployed by the Corporation, such employee
shall not thereby forfeit any right thereafter to receive a supplement if such
employee thereafter retires under this Pension Plan.
17
<PAGE> 46
Art. II, 6(g)
(g) If the total of the employee's monthly pension under this Pension Plan
and the monthly early retirement supplement or interim supplement receivable as
computed above would exceed 70% of the employee's final base pay, such monthly
supplement (but not the monthly pension) shall be reduced to the extent
required so that such monthly pension plus the supplement will equal 70% of the
employee's final base pay. For this purpose, an employee's final base pay
shall mean 173 1/3 times the employee's Base Hourly Rate as defined in Article
X.
SECTION 7. SPECIAL BENEFIT
(a) A retired employee, or a surviving spouse, (i) age 65 or older, or
(ii) under age 65 and enrolled in the voluntary "Medicare" coverage that is
available under the Federal Social Security Act by making contributions (in
either case excluding the spouse of a former employee who received a deferred
vested pension benefit under Article VII of the Plan), who is receiving a
monthly benefit under Article II of the Plan which commenced prior to October
1, 1979, subject to (d) below, shall receive a monthly special benefit equal to
the lesser of the generally applicable "Medicare" Part B premium in effect as
of the dates below, or:
(i) $38.50 for months commencing on or after January 1, 1993,
(ii) $41.10 for months commencing on or after January 1, 1994,
(iii) $46.10 for months commencing on or after January 1, 1995,
(iv) $51.60 for months commencing on or after January 1, 1996.
(b) In no event shall such payment commence prior to the first day of the
month following the earlier of (i) the month during which age 65 is attained,
or (ii) for
18
<PAGE> 47
Art. II, 7(b)
enrollments effective prior to October 1, 1993 receipt by the Corporation of
application on a form provided for this purpose from an otherwise eligible
individual under age 65; except that, with respect to an otherwise eligible
individual under age 65, payment shall commence with the first month of such
enrollment, but in no event prior to October 1, 1979.
(c) Not more than one such payment shall be made to any individual for any
one month. No such payment shall be made to any individual under age 65 for
any month such individual is not enrolled for such voluntary "Medicare"
coverage. No such payment shall be made under this Plan to any individual who
retires with benefits payable commencing on or after October 1, 1979.
(d) The special benefit payable to an individual who is not enrolled in
"Medicare" Part B as of October 1, 1990, but who was receiving a special
benefit, is limited to $28.00 per month. Such an individual will become
entitled to the schedule of payments in subsection (a) above, upon proof of
enrollment in "Medicare" Part B. Thereafter, continued receipt of a special
benefit will be contingent on maintenance of "Medicare" Part B enrollment.
(e) For an individual enrolled in "Medicare"
Part B as of October 1, 1990, or who first becomes eligible for "Medicare" Part
B on or after October 1, 1990, receipt of a special benefit on and after
January 1, 1991 is contingent upon continued enrollment in "Medicare" Part B.
SECTION 8. BENEFITS FOR EMPLOYEES WHO RETIRED WITH BENEFITS PAYABLE
COMMENCING PRIOR TO OCTOBER 1, 1993
An employee who retired under Article II of the Plan with benefits payable
commencing prior to October 1, 1993, or the eligible surviving spouse of such
an employee, shall be entitled to the benefits, if any,
19
<PAGE> 48
Art. II, 8
under the Plan as it existed immediately prior to such date, except that
(a) (1) Benefits payable to such retired employees or surviving spouses
shall be increased to the extent necessary to provide monthly benefits equal to
the benefits which would have been payable had the basic pension benefits
payable to the employee after age 65 been based on the following table:
<TABLE>
<CAPTION>
Basic Benefit Rate
Per Year of
Credited Service
Retirement For Months
With Benefits Benefit Commencing
Payable Class October 1, 1993
Commencing Code and After
------------- -------- ---------------
<S> <C> <C>
Prior to $
October 1, 1979 N/A 21.00*
October 1, 1979 A 22.25
through B 22.50
September 1, 1980 C 22.75
D 23.00
October 1, 1980 A 22.35
through B 22.60
September 1, 1981 C 22.85
D 23.10
October 1, 1981 A 22.45
through B 22.70
September 1, 1984 C 22.95
D 23.20
October 1, 1984 A 25.10
through B 25.35
September 1, 1985 C 25.60
D 25.85
October 1, 1985 A 25.20
through B 25.45
September 1, 1986 C 25.70
D 25.95
October 1, 1986 A 25.30
through B 25.55
September 1, 1987 C 25.80
D 26.05
</TABLE>
*Including, if applicable, $1.00 waived for election of a special survivor
option.
(Continued On Next Page)
20
<PAGE> 49
Art. II, 8(a)(1)
(Continued From Preceding Page)
<TABLE>
<CAPTION>
Basic Benefit Rate
Per Year of
Credited Service
Retirement For Months
With Benefits Benefit Commencing
Payable Class October 1, 1993
Commencing Code and After
------------- -------- ---------------
<S> <C> <C>
$
October 1, 1987 A 28.30
through B 28.55
September 1, 1988 C 28.80
D 29.05
October 1, 1988 A 28.40
through B 28.65
September 1, 1989 C 28.90
D 29.15
October 1, 1989 A 28.50
through B 28.75
September 1, 1990 C 29.00
D 29.25
October 1, 1990 A 31.70
and prior to B 31.95
October 1, 1993 C 32.20
D 32.45
</TABLE>
(2) Benefits payable to employees retired on and after October 1, 1973,
shall be based on the Benefit Class Code applicable to the employee, determined
as though the maximum base hourly rate of the employee's job classification had
included the amount of any wage inequity adjustment made applicable to such job
classification on or after September 14, 1973, and prior to the employee's loss
of seniority.
21
<PAGE> 50
(3) If an employee whose monthly basic benefit otherwise would have
been redetermined at age 62 attains age 62 on or after March 1, 1982, such
redetermination shall be effective at age 62 and one month.
(b) Any temporary benefits payable to such retired employees until age
65 if retired with benefits payable commencing before March 1, 1974, or age 62
if retired with benefits payable commencing on or after March 1, 1974 or age 62
and one month for a retired employee who attains age 62 on or after March 1,
1982, or in any case, if earlier, until the age at which the employee becomes
or could have become eligible for a Federal Social Security benefit for
disability or an unreduced Federal Social Security benefit for age shall be
increased to the extent necessary to provide monthly temporary benefits equal
to the temporary benefits which would have been payable had the temporary
benefits payable to the employee prior to such age 65 (or age 62 or age 62 and
one month) or earlier age been based on the following:
22
<PAGE> 51
Art. II, 8(b)
<TABLE>
<CAPTION>
Retires With Monthly Temporary Benefit Amount*
Benefits Payable Per Year of
Commencing Credited Service Maximum
- ---------------- ---------------- -------
<S> <C> <C>
$ $
Prior to
September 1, 1964 12.50 325.00
Setember 1, 1964
and prior to
October 1, 1967 13.00 325.00
October 1, 1967
and prior to
October 1, 1970 13.25 331.25
October 1, 1970
and prior to
March 1, 1974 13.75 343.75
March 1, 1974
and prior to
October 1, 1976 14.75 368.75
October 1, 1976
and prior to
October 1, 1978 15.25 381.25
October 1, 1978
and prior to
October 1, 1979 16.25 406.25
October 1, 1979
and prior to
October 1, 1980 17.25 431.25
October 1, 1980
and prior to
October 1, 1981 18.25 456.25
October 1, 1981
and prior to
January 1, 1983 19.25 481.25
</TABLE>
* Benefit payable for months commencing October 1, 1993.
(Continued On Next Page)
23
<PAGE> 52
Art. II, 8(b)
(Continued From Preceding Page)
<TABLE>
<CAPTION>
Retires With Monthly Temporary Benefit Amount*
Benefits Payable Per Year of
Commencing Credited Service Maximum
---------------- ---------------- -------
<S> <C> <C>
January 1, 1983 $ $
and prior to
October 1, 1985 19.25 577.50
October 1, 1985
and prior to
October 1, 1986 20.25 607.50
October 1, 1986
and prior to
October 1, 1987 21.25 637.50
October 1, 1987
and prior to
October 1, 1988 21.45 643.50
October 1, 1988
and prior to
October 1, 1989 22.55 676.50
October 1, 1989
and prior to
October 1, 1990 23.65 709.50
October 1, 1990
and prior to
October 1, 1991 26.00 780.00
October 1, 1991
and prior to
October 1, 1992 28.20 846.00
October 1, 1992
and prior to
October 1, 1993 30.30 909.00
</TABLE>
* Benefit payable for months commencing October 1, 1993.
24
<PAGE> 53
Art. II, 8(c)(1)
(c) (1) An employee who retired under Article II of this Plan with 30 or
more years of credited service who is receiving a monthly supplement which
commenced prior to October 1, 1993 shall receive an increase to such monthly
supplement as follows:
<TABLE>
<CAPTION>
Amount of Increase*
Payable to Payable Between
Effective Date Age 62 Ages 62 and
of Increase and One Month One Month-64
- -------------- ------------- ----------------
<S> <C> <C>
$ $
October 1, 1993 60.00 30.00
</TABLE>
The amount of any monthly supplement payable to an employee who retired
under Article II of the Plan with benefits commencing prior to October 1, 1993
shall be redetermined to the amount of supplement which would have been payable
had the applicable benefit rates set forth in this Section 8 been in effect
when such employee's benefits commenced. If such retired employee is entitled
as of October 1, 1993 to receive Social Security benefits, and became so
entitled before October 1, 1993, any increase in the rate of temporary pension
provided in provision (b) of this Section 8 shall not be considered in
redetermining the supplement until the retired employee ceases to be so
entitled.
(2) An employee who retired under Article II of this Plan at the
employee's option after attaining age 55 with less than 30 years of credited
service who is receiving an interim supplement which commenced prior to October
1, 1993 shall receive, for months commencing on and after October 1, 1993, an
increase to such interim supplement, as follows:
25
<PAGE> 54
Art. II, 8(c)(2)
<TABLE>
<CAPTION>
Age at Monthly Increase Per Year
Retirement of Credited Service
- ---------- -------------------------
<S> <C>
$
55 0.45
56 0.50
57 0.65
58 0.75
59 0.80
60 0.95
61 0.95
</TABLE>
(d) The survivor benefit payable to the surviving spouse of a retired
employee who has completed an election of a special survivor option and who
dies after such election becomes effective, shall be a monthly benefit for the
further lifetime of such surviving spouse equal to $9.55 for each year of
credited service that such retired employee had at the date of retirement, with
respect to benefits payable for any month commencing on or after October 1,
1993.
(e) An employee who retired under Article II of the Plan, or who is
eligible for a deferred pension pursuant to the provisions of Section 2 of
Article VII of the Plan, and who has surviving spouse coverage in effect but
whose designated spouse predeceases the employee, may have the monthly basic
pension benefit restored to the amount payable without such coverage, effective
the first day of the third month (for restorations on and after January 1,
1994, restoration of the monthly basic pension benefit will be effective the
first day of the month) following the month in which the Corporation receives
evidence satisfactory to the Corporation of the spouse's death.
(f) In lieu of receiving a reduced amount of any increase in benefits
otherwise payable under this
26
<PAGE> 55
Art. II, 8(f)
Section 8 on or after April 1, 1971 in order to provide an increase in the
amount of survivor benefit otherwise payable, an employee who retired under
Article II of the Plan with benefits payable commencing prior to November 23,
1970, who is divorced by court decree, and for whom the terms of a Qualified
Domestic Relations Order within the meaning of I.R.C. Section 414(p) do not
expressly prohibit cancellation of the survivor annuity, from the employee's
designated spouse for whom survivor benefit coverage is in effect, may elect to
receive the full amount of such increase. To make such election the employee
must complete a form approved by the Corporation and file it with the
Corporation, accompanied by evidence satisfactory to the Corporation of a final
decree of divorce, in which case such election shall become effective with
respect to benefits falling due for months commencing on the first day of the
third month following the month in which the Corporation receives such
completed election form and final decree of divorce.
(g) An employee who retired or retires under Article II of the Plan with
benefits payable commencing on or after January 1, 1962, who marries, or
remarries, subsequent to the earliest date survivor benefit coverage was in
effect, or was not in effect on such date solely because the retired employee
was not then married, may elect, or re-elect, survivor benefit coverage. Any
such coverage, and the benefits thereunder, shall be provided under the terms
and conditions of the Plan in effect at the time of the employee's retirement.
Such coverage shall become effective on the first day of the third month
following the month in which the Corporation receives a completed election
form, but in no event before the first day of the month following the month in
which the retired employee has been married one year.
No election provided hereunder shall become effective under any
circumstance for any retired
27
<PAGE> 56
Art. II, 8(g)
employee whose completed election form is received by the Corporation after the
first day of the month in which the retired employee has been married one year.
This subsection (g) also shall be applicable to an employee retired with
benefits payable commencing on or after October 1, 1993.
(h) Monthly benefits payable under this Section 8 on and after October 1,
1993 shall not be limited by the 70% benefit limitation in Section 6(g) of this
Article II.
(i) The monthly amount of any lifetime supplement payable to an employee
retired with benefits payable commencing on or after March 1, 1974 with 30 or
more years of credited service shall be $35.00.
(j) The monthly amount of any age-service supplement payable to an
employee retired with benefits payable commencing on or after March 1, 1974
with less than 30 years of credited service but after attaining age 62 and one
month shall be $1 for each year of credited service reduced by 1/36th for each
complete calendar month that the employee is under age 65 at the date of
retirement.
SECTION 9. EMPLOYEES NOT ACTIVELY AT WORK
The absence of an employee from active work at the time such employee would be
eligible to retire under the Plan shall not preclude the employee's retirement
without return to active work.
SECTION 10. JOINT AND SURVIVOR COVERAGE
(a) In lieu of the monthly basic benefit otherwise payable, an employee
who retires pursuant to the provisions of Section 3 of this Article II who is
under age 55 and has less than 30 years of credited service shall be deemed to
have elected automatically a reduced
28
<PAGE> 57
Art. II, 10(a)
amount of monthly basic benefit, up to and including the month in which the
retired employee dies or attains age 55, whichever occurs first, and a monthly
survivor's benefit, beginning on the first day of the month after the retired
employee would have reached age 55 shall be payable to the designated spouse
during the further lifetime of the spouse.
(b) This automatic election shall be deemed to have been made at the time
the employee shall apply or shall have applied for a disability pension benefit
(with the election being effective the first day of the month for which the
first benefit under the Plan is payable).
(c) The automatic election provided in this Section 10 shall be applicable
only with respect to a spouse to whom the employee is married on the date of
such election and only if the retired employee and the spouse shall have been
married throughout the one-year period ending on the date of the retired
employee's death.
(d) An employee may prevent the automatic election provided in this
Section 10 during the 90-day period prior to the effective date as set forth in
subsection (b) of this Section 10, by specific written rejection which includes
the written consent of the spouse witnessed by the plan representative or a
notary public on a form approved by the Corporation.
(e) In any event, the election shall automatically be canceled:
(i) if the employee's disability retirement status terminates other than
by death prior to the first day of the month after the retired employee attains
age 55, or
(ii) if the retired employee survives on a disability retirement status
until the first day of the month after the attainment of age 55, at which time
the coverage described in Section 5 of this Article II becomes applicable.
29
<PAGE> 58
Art. II, 10(f)
(f) The amount of the monthly basic benefit payable to an employee deemed
to have made the election provided hereunder shall be determined by reducing
actuarially the amount of such benefit for the cost of the survivor benefit
payable in the event of the retired employee's death before the first of the
month following the attainment of age 55. The actuarial reduction shall be
based on the age of the retired employee and the spouse (the age of each being
determined as their age at the birthday nearer the date on which the benefits
commence) and shall reflect the higher mortality associated with being
disabled. Reduction factors at selected ages for disability survivor coverage
before age 55 are set forth in the following table:
<TABLE>
<CAPTION>
Age Difference Between
Disabled Employee and Spouse
Age of Spouse Is:
Employee
When 10 5 5 10
Benefits Years Years Same Years Years
Commence Younger Younger Age Older Older
- ------------------------------------------------------
<S> <C> <C> <C> <C> <C>
% % % % %
30 8.6 8.1 7.5 6.7 5.9
35 10.4 9.9 9.2 8.3 7.2
40 12.5 11.8 11.0 10.0 8.8
45 14.3 13.5 12.7 11.6 10.3
50 13.9 13.2 12.4 11.4 10.2
51 13.1 12.5 11.7 10.8 9.7
52 10.4 9.9 9.3 8.6 7.7
53 3.4 3.2 3.0 2.8 2.5
54 3.4 3.3 3.1 2.8 2.5
</TABLE>
NOTE: Actuarial reduction factors for ages not shown will be calculated on
the same basis as the factors shown.
30
<PAGE> 59
Art. II, 10(g)
(g) The amount of the monthly benefit payable to the surviving spouse of a
retired employee deemed to have made the election specified hereunder shall be
50% of the amount of the monthly basic benefit payable to the retired employee
after the reduction provided in subsection (f) of this Section 10.
(h) Anything in the Plan to the contrary notwithstanding, if the
designated spouse of a retired employee deemed to have made the election
provided hereunder shall predecease such retired employee, or they are divorced
by court decree and a Qualified Domestic Relations Order within the meaning of
I.R.C. Section 414(p) does not provide to the contrary, the monthly basic
benefit of such retired employee shall be restored to the amount payable
without such election, effective the first day of the third month (for
restorations on and after January 1, 1994, due to the death of the designated
spouse, restoration of the monthly basic pension benefit will be effective the
first day of the month) following the month in which the Corporation receives
evidence satisfactory to the Corporation of the spouse's death or divorce.
(i) No benefit shall be payable under this Section 10 for any month for
which benefits are payable under Article II, Section 5(h) or Section 11 of this
Plan.
(j) Information regarding this coverage is included in the summary plan
description, which will be provided to each employee. Within a reasonable
period prior to the annuity starting date, each participant shall be provided a
written explanation of: (i) the terms and conditions of the surviving spouse
coverage; (ii) the participant's right to make and the effect of an election to
waive the surviving spouse coverage; (iii) the rights of the participant's
spouse; and (iv) the right to make and the effect of a revocation of a previous
selection to waive the surviving spouse coverage.
31
<PAGE> 60
Art. II, 11
SECTION 11. PRE-RETIREMENT SURVIVOR COVERAGE TO COMPLY WITH THE RETIREMENT
EQUITY ACT OF 1984
(a) An employee who:
(i) has either 5 or more years of credited service, or 5 years of
"service" as provided under Article III, Section 6, or
(ii) breaks seniority on or after October 1, 1993 and who is eligible
for a deferred pension under Article VII, Section 2,
and in either case is not eligible for the survivor benefit coverage
provided under Section 5 of this Article II, shall have the pre-retirement
survivor coverage described herein.
Such coverage shall remain in full force and effect until the date on
which the employee or former employee becomes eligible for the survivor benefit
coverage provided under Article II, Section 5, at which time the pre-retirement
survivor coverage described herein shall cease to be effective.
In the event the employee or former employee predeceases the designated
spouse while the pre-retirement survivor coverage provided hereunder is in
effect, the designated spouse shall be eligible, during the further lifetime of
such spouse, for a monthly benefit commencing on the first of the month
following the month in which the employee or former employee would have become
eligible to retire at the option of the employee.
The amount of any such monthly survivor benefit shall be determined by the
basic benefit rate in effect for the employee on the date of death of such
employee, or the date seniority broke for a former employee.
(b) The survivor coverage provided hereunder for an employee or former
employee shall be effective on
32
<PAGE> 61
Art. II, 11(b)
the date the employee or former employee attains 5 years of credited service or
"service" as provided under Article III, Section 6.
(c) The survivor coverage provided hereunder shall be effective with
respect to a spouse to whom the employee or former employee is married, but
only if the couple shall have been married throughout the one-year period
ending on the date of the employee's or former employee's death.
(d) Subsections (b) and (c) notwithstanding, if an employee or former
employee marries or remarries, such coverage shall be in effect in favor of the
spouse upon such marriage or remarriage, unless, in the case of remarriage, a
Qualified Domestic Relations Order within the meaning of I.R.C. Section 414(p)
requires such coverage to remain in effect for the former spouse. The
effective date of any such coverage shall be in accordance with subsection (c)
of this Section 11.
(e) In the event of divorce, the employee or former employee can revoke
the coverage provided hereunder without spousal consent, unless a Qualified
Domestic Relations Order within the meaning of I.R.C. Section 414(p) provides
to the contrary.
(f) The coverage provided hereunder shall be canceled automatically on the
date when any employee or former employee becomes eligible for the survivor
coverage provided under the provisions of Article II, Section 5 of the Plan.
(g) The monthly benefit amount payable hereunder to any eligible surviving
spouse shall be 50% of the monthly amount of the basic benefit as determined in
Article VII, Section 2(b) otherwise payable at the (i) date of death to the
employee, or (ii) date seniority broke for a former employee, after any
reduction provided in Section 2(c) of Article VII.
33
<PAGE> 62
Art. II, 11(h)
(h) No benefit shall be payable under this Section 11 for any month for
which benefits are payable under Article II, Section 5 or Section 10 of this
Plan.
(i) Information regarding the coverage provided hereunder is included in
the summary plan description, which will be provided to each employee covered
by the Pension Plan, in accordance with The Employee Retirement Income Security
Act (ERISA).
(j) The pre-retirement survivor coverage provided hereunder will apply to
eligible employees and former employees separated from service:
(1) whose last day worked for the Corporation was on or after October
1, 1976, and
(2) who have entitlement to but have not commenced receipt of deferred
vested benefits, and
(3) who were alive as of August 23, 1984.
ARTICLE III
CREDITED SERVICE
SECTION 1. CREDITED SERVICE SUBSEQUENT TO OCTOBER 1, 1950
(a) (1) Credited service shall be computed for each calendar year for each
employee on the basis of total hours compensated by any plant or Division of
the Corporation during such calendar year while the employee has unbroken
seniority. Employment while covered under The GM Special Pension Plan shall
not be credited hereunder, except for an employee with seniority on March 1,
1988, who has not received a cash payment representing such employee's accrued
benefit under The GM Special Pension Plan. Any calendar year in which the
employee has 1700 or more compensated hours shall be counted a full
34
<PAGE> 63
Art. III, 1(a)(1)
calendar year. Where the employee's total hours compensated during a calendar
year are less than 1700 hours, a proportionate credit shall be given to the
nearest 1/10 of a year.
(2) For the purpose of computing credited service, hours of pay at
premium rate shall be computed as straight time hours.
(b) For the purpose of computing compensated hours under subsection (a) of
this Section 1:
(1) An employee with seniority on or after January 1, 1968 who is
absent from work during any calendar year thereafter because of layoff or while
on a Corporation approved sick leave, shall be credited with 40 hours for each
complete calendar week of such absence during such year in addition to any
other hours credited, provided that such employee shall have received pay from
the Corporation during that year for at least 170 hours, and provided further
that if such absence commences in calendar year 1970 or later, and such layoff
or sick leave continues into the following year, the employee shall be credited
with 40 hours for each complete calendar week of absence in the following year,
not to exceed 1530 hours of credit for all such absence related to receipt of
such pay from the Corporation in the first year.
An employee who is recalled from permanent layoff and returns to work
on or after October 1, 1993 shall become eligible for the 1530 hours of credit
hereunder, applicable during a sick leave or layoff, on the later of: (1)
receipt of pay from the Corporation for at least 170 hours, or (2) the day next
following the 12th week of pay from one or more GM plants within a calendar
year. If the employee receives pay from the Corporation for 170 or more hours
prior to the 12th week in (2) immediately above, the employee shall become
eligible for "bank" hours equal to the
35
<PAGE> 64
Art. III, 1(b)(1)
number of hours worked since recall, plus any "bank" hours to which the
employee was entitled immediately before such return to work, but in no case to
exceed 1530 hours.
An employee who returns to work on or after October 1, 1979 and
receives pay for a period of less than 170 hours and who thereafter returns to
such layoff or sick leave, shall not be disqualified, solely because of the
receipt of such pay, from receiving any such credit for which the employee
otherwise would be eligible hereunder. For the purposes of this subsection
only, an employee who is laid off subsequent to October 1, 1979 and whose first
day of absence due to such layoff is the first regularly scheduled work day in
the January next following the last day worked shall be deemed to have been
laid off on December 31 of the year in which the employee last worked. A
part-time employee shall be credited for any week of such absence in the same
percentage relationship as such employee's regular part-time schedule is to 40
hours.
An employee who (i) is at work on or after October 1, 1993; (ii) has
10 or more years of seniority at time of layoff commencing on or after October
1, 1993; (iii) while on such layoff has received the maximum of 1530 hours of
credit for periods of absence due to layoff or Corporation approved sick leave
in accordance with the preceding paragraph of this Section 1(b)(1); and (iv)
continues thereafter to be absent due to such layoff shall be credited with 40
hours for each complete calendar week of absence due to such layoff up to a
maximum of 1700 hours of credit.
(2) An employee who is absent from work because of occupational injury
or disease incurred in the course of such employee's employment with the
Corporation, and on account of such absence receives
36
<PAGE> 65
Art. III, 1(b)(2)
Workers Compensation while on Corporation approved leave of absence shall be
credited with 40 hours for each complete calendar week of such absence after
September 1, 1961.
(c) Any salaried employee transferred to an hourly-rate job who thereby
becomes an employee covered by the Plan shall have credited to the nearest 1/10
year any credited service the employee had as of the date of such transfer
under any Corporation retirement plan for salaried employees.
(d) If an employee who retired is rehired, such employee may accumulate
additional credited service by reason of such reemployment.
(e) For the purpose of computing compensated hours under subsection (a) of
this Section 1:
(1) An employee who after October 1, 1950 and prior to June 1, 1955
was absent from work because such employee entered into active service in the
armed forces of the United States and who was given a Corporation approved
leave of absence for such period shall be credited with the number of hours
that the employee would have been scheduled to work during such absence.
(2) An employee, who on or after June 1, 1955 was or is absent from
work to enter into (or remain in) active service in the armed forces of the
United States and for that reason was or is given a Corporation approved leave
of absence, shall be credited with 40 hours for each complete calendar week
while on such leave; provided, however, that credited service based on such
hours shall not exceed four years (including credited service, if any, granted
under subsection (e)(1) of this Section 1), or such longer period during which
the employee has reemployment rights pursuant to any Federal law, and provided,
further, that the employee is reemployed in accordance
37
<PAGE> 66
Art. III 1(e)(2)
with the terms of such leave of absence or, if reemployed by the Corporation at
a location other than the location from which the leave was granted, within 90
days from the date of discharge from the armed forces.
(f) Any employee hired on an hourly-rate job by a plant or Division of the
Corporation, who has credited service under any Corporation retirement plan for
salaried employees or who has lost credited service under any such plan, shall,
upon making proper application, have such service credited to the nearest 1/10
year; provided that the employee acquires or acquired seniority following the
loss of such credited service.
(g) If a former salaried employee who is entitled to a deferred retirement
benefit under Part A of the General Motors Retirement Program for Salaried
Employees is reemployed by the Corporation and acquires seniority prior to the
commencement of such deferred retirement benefit, such employee shall, upon
making proper application, have reinstated, in lieu of the deferred retirement
benefit, the credited service lost at the time the employee became entitled to
such deferred retirement benefit.
(h) An employee with at least five years of seniority:
(1) on January 1, 1968 who was absent from work because of layoff
during any calendar year after December 31, 1955 and before January 1, 1963, or
(2) on December 10, 1973 who was absent from work because of layoff
during any calendar year after December 31, 1950 and before January 1, 1956, or
(3) on October 1, 1979 who was absent from work because of layoff
during any calendar year after December 31, 1962 and before January 1, 1968, or
38
<PAGE> 67
Art. III, 1(h)(4)
(4) on October 1, 1984 who was absent from work because of layoff
during any calendar year after December 31, 1978 and before January 1, 1984, or
(5) on October 1, 1993 who was absent from work because of layoff
during any calendar year after December 31, 1973 and before January 1, 1977
shall be credited with 40 hours for each complete calendar week of
such absence, not previously credited under this Section 1, during which the
employee had seniority multiplied by a percentage as set forth in the following
table:
<TABLE>
<CAPTION>
Employee's Seniority
on January 1, 1968
in the Case of (1)
Above or
December 10, 1973
in the Case of (2) Above
or October 1, 1979
in the Case of (3) Above
or October 1, 1984
in the Case of (4) Above
or October 1, 1993
in the Case of (5) Above %
---------------------------------------------
<S> <C>
20 years or more 100
15 years but less than 20 years 75
10 years but less than 15 years 50
5 years but less than 10 years 25
</TABLE>
provided that the employee makes proper application.
(i) In no event shall any employee be credited with more than 1700 hours,
including compensated hours, in any calendar year. No employee shall be
credited with any service after retirement. There shall be no duplication of
credited service under the Plan. Not
39
<PAGE> 68
Art. III, 1(i)
more than one year of credited service shall be credited to any employee in any
calendar year, except as otherwise provided in Section 5 of this Article III
with respect to foundry service.
(j) Notwithstanding any other Section of this Article III, in the case of
an employee who shall retire on or after October 1, 1990, the employee's
credited service for the period before January 1, 1966 shall not be less than
the employee's seniority as of December 31, 1965 as determined under the
Collective Bargaining Agreement.
SECTION 2. LOSS OF CREDITED SERVICE
An employee will lose all credited service for purposes of this Plan:
(a) if the employee quits,
(b) if the employee is discharged or released,
(c) if the employee's seniority is broken for any other reason.
SECTION 3. REINSTATEMENT OF CREDITED SERVICE
(a) Any employee with seniority on or after October 1, 1993 who breaks
seniority and thereby loses or has lost credited service under Section 2 of
this Article III and then is or was later reemployed by any plant or Division
of the Corporation shall, upon making proper application, have such credited
service reinstated provided the employee subsequently acquires or acquired
seniority.
(b) Any employee retired under the provisions of this plan who
subsequently has seniority reinstated, will have credited service at the time
of retirement reinstated.
40
<PAGE> 69
Art. III, 4
SECTION 4. SERVICE WITH A FOREIGN SUBSIDIARY
An employee with seniority on or after October 1, 1993 whose employment as an
hourly or salaried employee with a directly or indirectly wholly-owned or
substantially wholly-owned foreign subsidiary of General Motors Corporation has
been terminated other than by retirement, shall be granted credited service
under this Plan for any periods of active service with such foreign subsidiary
or, if greater, the amount of service credited to such employee under any
pension or retirement plan of the foreign subsidiary at the time of
termination, provided such service was prior to the most recent period of
active service credited under this Plan.
Any monthly benefits payable under this Plan to a retired employee who has
received credited service under this Section 4 will be reduced by an amount
equivalent to the total of any monthly benefits that could be payable to such
employee under any retirement plan to which the foreign subsidiary has
contributed, excluding, however, any such plan or any portion of any such plan
providing retirement benefits purchased solely by voluntary employee
contributions. Any survivor's benefits payable under this Plan to a survivor
of such an employee shall be subject to similar reduction by monthly survivor's
benefits payable under any plan to which the foreign subsidiary has
contributed.
SECTION 5. FOUNDRY SERVICE
An employee with seniority on or after October 1, 1993 who at retirement has
over 10 years of credited service which such employee accrued while employed on
certain foundry job classifications as set forth in Appendix B, shall receive
additional credited service related thereto. Total credited service for any
such employee who retires with benefits payable
41
<PAGE> 70
Art. III, 5
commencing on or after October 1, 1975 shall be the sum of (i) credited service
otherwise credited to the employee, and (ii) any such additional credited
service which shall be credited to the employee in accordance with the
following table:
<TABLE>
<CAPTION>
Years of Credited Service Additional
Credited on Credited
Foundry Jobs Service
------------------------- ----------
<S> <C>
For years 1 through 10 0
For years 10.1 through 25 33-1/3%
For years over 25 20%
</TABLE>
If any such employee is continuously employed exclusively on such foundry jobs
in a calendar year, such additional credited service shall apply to any
credited service otherwise credited to the employee for such year. If any such
employee (i) is not continuously employed in a calendar year, or (ii) is
employed on other than such foundry jobs in such year, such additional credited
service shall apply to any credited service otherwise credited to the employee
for such year in accordance with the following table:
<TABLE>
<CAPTION>
If Credited Service Additional Credited Service
Otherwise Applies to Such Year Only if Employee
Credited to Spent Following Minimum Number of
Employee For Complete Calendar Weeks on
Calendar Year is Foundry Jobs During Such Year
------------------- -------------------------------------
<S> <C>
1.0 (year) 26
.9 23
.8 21
.7 18
.6 16
.5 13
.4 10
.3 8
.2 5
.1 3
</TABLE>
42
<PAGE> 71
Art. III, 5
No additional credited service shall be granted for any calendar year in which
any such employee spends less than the minimum required number of complete
calendar weeks on such foundry jobs, as indicated above.
If any such employee is on such foundry job at the commencement of a layoff or
approved leave of absence, such additional credited service shall apply to any
credited service otherwise credited to the employee while on such layoff or
approved leave of absence.
SECTION 6. HOURS, YEARS AND BREAKS IN SERVICE TO COMPLY WITH THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974
(a) An employee who breaks seniority on or after October 1, 1976 who would
be eligible for a deferred pension under Article VII, Section 2, except solely
for the fact that the employee does not have at least 5 years of credited
service under the foregoing Sections of this Article III, shall be eligible for
a deferred pension under the provisions of Article VII, Section 2 if, at the
time the employee breaks seniority, such employee has 5 years of service solely
as determined under this Section 6.
(b) The monthly amount of any such deferred pension shall be based solely
on the credited service that the employee had under the foregoing Sections of
this Article III when the employee broke seniority.
(c) No employee shall be eligible to be covered under this Section 6 until
such employee (i) attains age 21, or (ii) completes 1 year of service under
this Section 6, whichever is later. Rehired employees shall participate
immediately.
(d) An employee shall complete 1 year of service when such employee
completes 750 hours of service
43
<PAGE> 72
Art. III, 6(d)
in the 12 consecutive month period beginning with the employment commencement
date. If an employee fails to complete 750 hours of service in such period,
such employee shall complete 1 year of service in the first 12 consecutive
month period thereafter in which the employee completes 750 hours of service,
measured from each succeeding anniversary of the employment commencement date.
Thereafter, an employee shall complete 1 year of service during each 12
consecutive month period in which such employee completes 750 hours of service,
measured from the anniversary of the employment commencement date. A year of
service under this Section 6 shall include service (i) with affiliated group
members accrued subsequent to acquisition, (ii) rendered to the Corporation as
a former leased employee (but only upon employee application, supported by
substantiation satisfactory to the Corporation of such service), and (iii)
rendered to the Corporation as a salaried employee in accordance with I.R.C.
Section 414(b), (c), (m), (n), and (o).
(e) An employee who satisfies the eligibility requirements of this Section
6, and who is otherwise entitled to participate in the Plan, shall commence
participation under this Section 6 if the employee satisfies such requirements
(i) between April 1 and September 30; on the first day of the plan year
beginning after the date on which such requirements are satisfied, or (ii)
between October 1 and March 31; on the first day of the plan year that includes
the date such requirements are satisfied, but in no event shall any employee
participate hereunder if such employee breaks seniority prior to such
commencement date.
(f) An employee shall complete an hour of service under this Section 6 for
each hour paid by the Corporation for working or for having been entitled to
work. Any hours for which an employee receives pay for having been entitled to
work, irrespective of
44
<PAGE> 73
Art. III, 6(f)
mitigation of damages, shall be credited to the period or periods so entitled,
rather than to the period in which such pay is received. There shall be no
duplication of any hours of service under this Section 6.
(g) Solely for purposes of determining years of service for vesting under
this Section 6, all of the employee's years of service shall be taken into
account except the following: (i) years of service before age 18 (age 22 prior
to October 1, 1985); (ii) years of service before January 1, 1971, unless the
employee has at least 3 years of service after December 31, 1970; (iii) years
of service prior to any 1-year break in service as defined herein, until the
employee completes a year of service after such break; (iv) for non-vested
participants under this section, years of service prior to any 1-year break in
service if the number of such consecutive breaks equals or exceeds the
aggregate number of years of service prior to such break, for a non-vested
participant at work on or after October 1, 1985, years of service prior to any
1-year break in service if the number of such consecutive breaks equals or
exceeds the greater of 5, or the aggregate number of years of service prior to
such break (such aggregate number of years of service before such break shall
not include any years of service not required to be taken into account under
this Section 6 by reason of any prior break in service); (v) years of service
before October 1, 1976, if such service would have been disregarded under rules
of the Plan as in effect on October 1, 1976, regarding breaks in service; and
(vi) any year in which the employee completes less than 750 hours of service.
(h) An employee shall incur a 1-year break in service under this Section 6
in any 12 consecutive month period during which the employee does not complete
more than 375 hours of service, measured from the anniversary of the employment
commencement date. Solely for purposes of
45
<PAGE> 74
Art. III, 6(h)
determining whether an employee has incurred such 1-year break in service, in
addition to hours worked which are paid by the Corporation, any hours which an
employee does not work but for which such employee is paid by the Corporation
for vacation, sickness or disability, or is entitled to be so paid, directly or
indirectly, shall be taken into consideration. For any absence from work
commencing on and after October 1, 1985 by reason of pregnancy of the
individual, childbirth, placement of a child related to an adoption, or for
child care purposes immediately following such birth or placement or for any
absence from work commencing on and after October 1, 1993 for any reason that
qualifies an employee for a leave under the Family and Medical Leave Act of
1993, the employee shall be credited with the hours of work for which such
employee otherwise would have been scheduled, or, if unable to determine such
scheduled hours, 8 hours for each work day of such absence, not to exceed a
total of 501 hours for any such absence. Such hours shall be credited in the
year in which the absence commences if necessary to prevent incurring a 1-year
break in service, otherwise such hours shall be credited in the immediately
following year.
SECTION 7. ASBESTOS SERVICE
An employee with seniority on or after October 1, 1993 who at retirement has
over 10 years of credited service which was accrued while employed on certain
asbestos job classifications as set forth in Appendix C, shall receive
additional credited service related thereto in the same manner as set forth in
Section 5 of this Article III.
46
<PAGE> 75
Art. IV
ARTICLE IV
REDETERMINATIONS ON ACCOUNT OF
SOCIAL LEGISLATION
SECTION 1. REDETERMINATIONS FOR FEDERAL SOCIAL SECURITY BENEFITS FOR AGE OR
DISABILITY
(a) The benefits payable for age or disability under the Federal Social
Security Act, as amended, as now in effect, or as hereafter amended, which are
referred to in the determination of pensions under Article II shall be included
in such determination even though the employee either does not apply for, or
loses part or all of such payments through delay in applying for them, by
entering into covered employment, or otherwise.
(b) Old age benefit payments or disability benefit payments, other than
those payable on a basis of "need" or because of military service, under any
future federal legislation, amending, superseding, supplementing, or
incorporating the Federal Social Security Act, as amended, or benefits provided
therein, shall be considered as benefits for age or disability under the
Federal Social Security Act for the purposes of the Plan.
(c) If an employee is eligible for a Federal Social Security benefit for
disability or an unreduced Federal Social Security benefit for age at the time
of retirement or thereafter, such employee shall provide the Corporation with
evidence of the effective date of entitlement to such benefit.
SECTION 2. DEDUCTIONS FOR WORKERS COMPENSATION
In determining the monthly benefits payable under this Plan, a deduction shall
be made unless prohibited by law, equivalent to all or any part of Workers
47
<PAGE> 76
Art. IV, 2
Compensation (including compromise or redemption settlements) payable to such
employee by reason of any law of the United States, or any political
subdivision thereof, which has been or shall be enacted, provided that such
deductions shall be to the extent that such Workers Compensation has been
provided by premiums, taxes or other payments paid by or at the expense of the
Corporation, except that no deduction shall be made for the following:
(a) Workers Compensation payments specifically allocated for
hospitalization or medical expense, fixed statutory payments for the loss of
any bodily member, or 100% loss of use of any bodily member, or payments for
loss of industrial vision.
(b) Compromise or redemption settlements payable prior to the date monthly
pension benefits first become payable.
(c) Workers Compensation payments paid under a claim filed not later than
two years after the breaking of seniority.
ARTICLE V
FINANCING
SECTION 1. TRUST FUND
The Corporation shall execute a trust agreement with a trustee or trustees
selected by the Corporation to manage and operate the pension fund and to
receive, hold and disburse such contributions, interest and other income as may
be necessary to pay such of the pensions and supplements or portions thereof
under this Plan as are not provided for by an insured fund. The Corporation
may establish an insured fund with such
48
<PAGE> 77
Art. V, 1
insurance company or companies as it may select for the payment of such of the
pension and supplements or portions thereof under this Plan as are not provided
for in a trusteed fund.
The Corporation will determine the form and terms of any such trust agreement
which may authorize the inclusion of obligations and stock (common and
preferred) of the Corporation and its wholly-owned subsidiaries among the
investments of the pension fund provided for by such trust agreement; may
utilize any investment manager as defined under the Employee Retirement Income
Security Act of 1974 or regulations thereunder; may modify any such trust
agreement from time to time to accomplish the purposes of this Plan; may remove
any trustee, and select any successor trustee; and select and change insurance
companies.
SECTION 2. CONTRIBUTIONS
(a) The Corporation, subject to Article IX, Section 1, shall make such
contributions to the trustee or pay such premiums under any insured contract
for the purposes of providing pensions and supplements under the Plan as shall
be required under accepted actuarial principles and Title I of the Employee
Retirement Income Security Act of 1974 to maintain the Plan and pension or
insured fund in a sound condition and shall pay for expenses incident to the
operation and management of the Plan.
(b) The Corporation may charge to the fund expenses necessary for the
proper administration of the Plan and investment of the funds, including the
direct cost of benefit administration performed by, or on behalf of, the
Corporation for the Plan, and Pension Benefit Guaranty Corporation premiums for
participants.
(c) No employee shall be required to make any contributions to the Plan.
49
<PAGE> 78
Art. V, 3
SECTION 3. IRREVOCABILITY
(a) The Corporation shall have no right, title or interest in the
contributions made by it to the trustee and no part of the pension or insured
fund shall revert to the Corporation, except that after satisfaction of all
liabilities of the Plan as set forth in Article IX, such contributions as may
have been made by the Corporation as the result of overpayments may revert to
the Corporation.
(b) The pension benefits and supplements of the Plan shall be only such as
can be provided by the assets of the pension fund or by any insured fund and
there shall be no liability or obligation on the part of the Corporation to
make any further contributions to the trustee or insurance company in event of
termination of the Plan. No liability for the payment of pension benefits or
supplements under the Plan shall be imposed upon the Corporation, the Officers,
Directors or Stockholders of the Corporation, except as otherwise may be
required by the Employee Retirement Income Security Act of 1974.
ARTICLE VI
ADMINISTRATION
SECTION 1.
The Corporation shall be responsible for the general administration of the Plan
and for carrying out the provisions thereof.
SECTION 2.
(a) The Corporation shall have all such powers as may be necessary to
carry out the provisions of the Plan except as the powers and duties of the
Corporation may be modified by any collective bargaining agreement.
50
<PAGE> 79
Art. VI 2(b)
(b) Subject to the limitations of (a) above, the Corporation may from time
to time establish rules for the administration of the Plan and the transaction
of the Plan's business.
(c) In making any such determination or rule, the Corporation shall pursue
uniform policies and shall not discriminate in favor of, or against any
employee or group of employees.
ARTICLE VII
PENSION BENEFITS AND SUPPLEMENTS
SECTION 1. PENSION AND SUPPLEMENT PAYMENTS
(a) (1) Pensions and supplements shall be paid monthly.
(2) The first monthly payment of an employee's pension other than for
total and permanent disability shall become payable with the employee's consent
on the first day of the month following the month in which the employee
actually retires, and the pension shall be payable monthly thereafter.
(3) Total and permanent disability pension shall be payable monthly
during the continuance of total and permanent disability and while the
pensioner otherwise remains eligible for such benefits. Such payments shall
begin the later of:
(i) the first day of the month which includes the date the
required proof of disability is received by the Corporation, or
(ii) the first day of the month which includes the date the
employee has been continuously and totally disabled for a period of 5 months.
Successive periods of absence due to the same disability as that upon
which claim for total and
51
<PAGE> 80
Art. VII, 1(a)(3)(ii)
permanent disability pension is based and aggregating at least five months will
be considered the same as one continuous absence provided that the aggregate
will not include any such absence which precedes the last day at work by more
than one year, or
(iii) the first day of the third month following the date the
required proof of disability is received by the Corporation, or
(iv) the first day of the third month following determination
by the impartial clinic that the employee is totally and permanently disabled.
These subsections (iii) and (iv) shall not be applicable (a) if the
employee dies prior to such date, or (b) where Extended Disability Benefits are
less than the benefits payable under this Plan.
(4) A supplement for an employee shall be payable in the manner
provided in Section 6 of Article II.
(5) Pension and supplement payments shall not be payable with respect
to any period for which weekly sickness and accident benefits are payable to
the employee under any plan to which the Corporation has contributed. If such
sickness and accident benefits during any month are payable for a period of
less than 4-1/3 weeks, the sum of the monthly pension benefit (excluding any
special benefit) and supplement payable for that month shall be reduced by the
percentage which such period of sickness and accident benefits is of 4-1/3
weeks.
(b) A pensioner who is reemployed by the Corporation shall cease to
receive, during such reemployment, any monthly pension benefits to which the
pensioner might otherwise be entitled. Any such reemployed pensioner will have
credited service at the time of retirement reinstated. A reemployed
52
<PAGE> 81
Art. VII, 1(b)
pensioner shall accrue additional credited service as a result of such
employment and the monthly pension benefits of such pensioner shall be adjusted
with regard to such employment upon subsequent cessation of active service.
(c) In the event that it shall be found that any pensioner or surviving
spouse to whom a pension or survivor benefit is payable is unable to care for
the affairs of such pensioner or surviving spouse because of illness or
accident, any monthly pension payment and supplement or survivor benefit due
(unless prior claim therefor shall have been made by a duly qualified guardian
or other legal representative) may be paid to the spouse, parent, brother,
sister or other person or party (including private or public institutions)
deemed by the Corporation to have incurred expense for such pensioner otherwise
entitled to payment. Any such payment shall be a payment for the account of
the pensioner and shall be a complete discharge of any liability of the Plan
therefor.
(d) In order to retire under the Plan, an employee must have unbroken
seniority at the time of retirement except that a person who is eligible for
benefits under the Guaranteed Income Stream Benefit Program and is not
receiving deferred pension benefits under this Plan shall not be precluded from
retiring without return to employment even though such person shall have
incurred a break in seniority while on continuous layoff from the Corporation.
A person who, while eligible to retire, receives (i) a benefit payment
pursuant to Attachment A of Appendix K of the Collective Bargaining Agreement
or Article IV of the Supplemental Unemployment Benefit Plan, or (ii) a GIS
Redemption Payment under the Guaranteed Income Stream Benefit Program, shall
not be eligible to retire under any of the provisions of this Plan for the
period described in such agreements, plans
53
<PAGE> 82
Art. VII, 1(d)
or programs, commencing with the date such person terminates employment or
breaks seniority pursuant to the terms of such agreements, plans or programs.
(e) Notwithstanding any other provision of this Section 1, an employee
attaining age 70-1/2 on and after October 1, 1993, will commence monthly
receipt of accrued benefits under this Plan, beginning April 1 of the calendar
year immediately following the year the employee attains or attained age
70-1/2. An employee attaining age 70-1/2 shall have the monthly payment based
on such employee's pension benefit accrual as of December 31 of the year in
which age 70-1/2 is attained. The actuarial value of the sum of all cash
distributions received by any otherwise eligible employee prior to such
employee's actual retirement under this Plan will be used as an offset from any
additional benefit accrual that might otherwise have been payable to such
employee as a result of working for the Corporation.
SECTION 2. RETENTION OF DEFERRED PENSION IF SEPARATED
(a) Any employee who loses accumulated credited service under the
provisions of Article III, Section 2 shall be eligible for a deferred pension
if such employee is not retired and eligible for pension benefits pursuant to
Article II, and provided the credited service of such employee at separation is
at least 5 years, or such employee satisfies the "service" requirements of
Article III, Section 6.
(b) The monthly amount of such deferred pension for an employee breaking
seniority on or after October 1, 1993 shall be a basic benefit for each year of
credited service that such employee had when such employee broke seniority,
determined by such employee's Benefit Class Code when such employee broke
seniority as set forth in the table immediately following:
54
<PAGE> 83
Art. VII, 2(b)
<TABLE>
<CAPTION>
Benefit Basic
Date Class Benefit
Seniority Broke Code Rate
$
--------------- ------- -------
<S> <C> <C>
On October 1, 1993 A 32.50
through B 32.75
September 30, 1994 C 33.00
D 33.25
On October 1, 1994 A 33.50
through B 33.75
September 30, 1995 C 34.00
D 34.25
October 1, 1995 A 34.70
and After B 34.95
C 35.20
D 35.45
</TABLE>
(c) A former employee who is eligible for a deferred pension may at the
election of such former employee receive
(1) a monthly pension commencing at or after age 65 determined in
accordance with subsection (b) of this Section 2, or
(2) a monthly pension commencing after age 60 and prior to age 65
determined in accordance with subsection (b) of this Section 2, such pension
being reduced by 6/10 of 1 percent for each complete calendar month by which
such former employee is under the age of 65 at the date the deferred pension
commences, or
(3) a monthly pension commencing after age 55 and prior to age 60 for
a former employee who breaks seniority on or after October 1, 1976, determined
in accordance with subsection (b) of this Section 2. Such pension shall be
multiplied by a percentage as set forth in the following table:
55
<PAGE> 84
Art. VII, 2(c)(3)
<TABLE>
<CAPTION>
Age When
Pension Commences Percentage*
%
<S> <C>
55 42.8
56 46.8
57 51.2
58 55.5
59 59.6
60 64.0
</TABLE>
*Prorated for intermediate ages computed on the basis of the number of complete
calendar months by which the employee is under the age attained at the
employee's next birthday.
(d) The deferred pension shall be payable commencing the later of the
first day of the month following the month (i) in which such employee attains
the applicable age set forth in Section 2(c) of this Article VII, or (ii)
during which the Corporation receives a written request from such former
employee; provided that such written request shall be valid and effective only
if it is filed with the Corporation not earlier than 60 days prior to the date
such former employee first becomes eligible for such benefit, and, for such
employee who broke seniority prior to October 1, 1976, not later than the 70th
birthday, otherwise no deferred vested pension benefit shall be payable at any
time.
(e) If, prior to the commencement of deferred pension benefits, an
employee is reemployed by the Corporation and: (1) acquires seniority, or (2)
is reemployed by, and works for, the Corporation at the plant where such
employee worked immediately prior to the loss of credited service, or (3) dies
after having qualified for a deferred pension in accordance with this Section
2, such employee shall, in lieu thereof, have reinstated the credited service
in effect when
56
<PAGE> 85
Art. VII, 2(e)
such deferred pension was granted; provided that if an employee with 10 or more
years of credited service
(1) is reemployed by, and works for, the Corporation within 36 months
of the date credited service was lost under Article III, Section 2, and
(2) becomes disabled while employed by the Corporation prior to
acquiring 5 months of seniority, and such disability is continuous for a period
of 5 months during which the employee makes proper application and submits
medical evidence satisfactory to the Corporation that such employee is totally
and permanently disabled as set forth in Section 3 of Article II,
such employee will be deemed eligible for a disability pension under
Section 3 of Article II, and such pension will be payable pursuant to Section 1
of Article VII, as though such employee had been an employee with seniority
throughout such disability period.
(f) The amount of any monthly pension benefit otherwise payable to a
former employee eligible for a deferred pension will be reduced by the value of
any past and future benefits paid or payable to any alternate payee(s) under a
Qualified Domestic Relations Order within the meaning of I.R.C. Section 414(p).
The actuarial value will be used to determine any amount to be paid to
any such payee(s), if applicable, and the remaining benefit entitlement of the
employee.
SECTION 3. NON-ALIENATION OF BENEFITS
The pension fund shall not in any manner be liable for or subject to the debts
or liability of any employee, separated employee, retired employee, pensioner
or surviving spouse. No right, benefit, pension or supplement at any time
under the Plan shall be subject in any manner to alienation, sale, transfer,
assignment, pledge or encumbrances of any kind except in accord
57
<PAGE> 86
Art. VII, 3
with provisions of a Qualified Domestic Relations Order within the meaning of
I.R.C. Section 414(p). If any person shall attempt to, or shall, alienate,
sell, transfer, assign, pledge or otherwise encumber accrued rights, benefits,
pensions or supplements under the Plan or any part thereof, or if by reason of
bankruptcy or other event happening at any time such benefits would otherwise
be received or enjoyed by anyone else, the Corporation may terminate the
interest of such employee, pensioner or surviving spouse in any such benefit
and instruct the trustee to hold or apply it to or for the benefit of such
employee, pensioner or surviving spouse, spouse, children or other dependents,
or any of them as the Corporation may instruct; provided, however, that any
pensioner, or surviving spouse, entitled to a monthly benefit under the Plan:
(a) who elects Blue Cross, Blue Shield, or equivalent coverage, made
available under the General Motors Health Care Program for Hourly Employees
may, insofar as it is consistent with the regulations governing the plans
providing such coverage, participate in such coverage and have deducted from
the monthly pension, pursuant to authorization and direction acceptable to the
Corporation, the required contribution for such coverage.
(b) will have Federal and state income tax withheld pursuant to Federal
and state statutes or regulations unless, only with respect to Federal income
tax, elected otherwise by submitting to the Corporation authorization and
direction acceptable to the Corporation.
(c) who elects optional or dependent life insurance coverage(s) made
available under the General Motors Life and Disability Benefits Program for
Hourly Employees may have deducted from the monthly pension, pursuant to
authorization and direction, acceptable to the Corporation, the required
contribution(s) for such coverage(s).
58
<PAGE> 87
Art. VII, 3(d)
(d) may have amounts of not less than $40.00, but in no event more than
10% of the retired employee's monthly pension, withheld to repay any
outstanding overpayment owing to any benefit plan of the Corporation, pursuant
to written authorization and direction acceptable to the Corporation.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 1. NO ENLARGEMENT OF EMPLOYMENT RIGHTS
The Corporation's rights to discipline or discharge employees shall not be
affected by reason of any of the provisions of the Plan.
SECTION 2. INTERNAL REVENUE SERVICE APPROVAL
This Plan as amended is contingent upon and subject to obtaining and retaining
such approval of the Commissioner of Internal Revenue as may be necessary to
establish the deductibility under Section 404 of the Internal Revenue Code for
income tax purposes of any and all contributions made by the Corporation to
this Plan and to establish this Plan and related trust as being qualified and
tax exempt under Sections 401 and 501(a) or other applicable provisions of the
Internal Revenue Code. Any modification or amendment of the Plan may be made
retroactively, if necessary or appropriate, to qualify or maintain the Plan as
a plan and trust meeting the requirements of Sections 401 and 501(a) of the
Internal Revenue Code, as now in effect or hereafter amended, or any other
applicable provisions of the federal tax laws, as now in effect or hereafter
amended or adopted, and the regulations issued thereunder.
59
<PAGE> 88
Art. VIII, 3
SECTION 3. CORPORATION BOARD OF DIRECTORS APPROVAL
Continuation of the Plan as amended in 1993 is contingent upon obtaining the
approval of the Corporation's Board of Directors not later than June 1, 1994.
SECTION 4. NAMED FIDUCIARY
The Finance Committee of the Corporation's Board of Directors shall be the
Named Fiduciary with respect to the Plan. The Finance Committee may delegate
to various officers, employees and committees of the Corporation authority to
carry out such of its responsibilities as it deems proper to the extent
permitted by the Employee Retirement Income Security Act of 1974.
SECTION 5. LIMITATION OF BENEFITS
No benefits paid from this Plan will exceed the limits of Section 415 of the
Internal Revenue Code.
ARTICLE IX
AMENDMENT AND TERMINATION
SECTION 1. AMENDMENT
The Corporation reserves the right to amend, modify, suspend or terminate the
Plan by action of its Board of Directors, provided, however, that no such
action shall alter the Plan or its operation, except as may be required by the
Internal Revenue Service for the purpose of meeting the conditions for
qualification and tax deduction under Sections 401, 404, and 501(a) of the
Internal Revenue Code, in respect of employees who are represented under a
collective bargaining agreement in contravention of the provisions of any such
agreement pertaining to pension benefits and
60
<PAGE> 89
Art. IX, 1
supplements as long as any such agreement is in effect. Except as provided in
Article V, Section 3, no such action shall operate to recapture for the
Corporation any contributions previously made to the trustee or insurance
company under the Plan, nor, except to the extent necessary to meet the
requirements of the Internal Revenue Service or any other governmental
authority, to affect adversely the pensions or supplements of employees already
retired or the trust fund or insured fund then securing such pensions and
supplements.
SECTION 2. TERMINATION OF PLAN
(a) If the Corporation, in accordance with Section 1 of this Article IX,
or the Pension Benefit Guaranty Corporation terminates the Plan, the amount of
the assets, which are available to provide benefits, and which are held by the
trustee as of the termination date, shall be allocated, after deducting
expenses for administration or liquidation, in the following manner and order
to the extent of the sufficiency of such assets:
(1) First, in the case of benefits payable as an annuity:
(i) In the case of the benefit of a participant or beneficiary
which was in pay status as of the beginning of the 3-year period ending on the
termination date of the Plan, to each such benefit, based on the provisions of
the Plan (as in effect during the 5-year period ending on such date) under
which such benefit would be the least;
(ii) In the case of a participant's or beneficiary's benefit
(other than a benefit described in subsection (a)(1)(i)) which would have been
in pay status as of the beginning of such 3-year period if the participant had
retired prior to the beginning of the 3-year period and if benefits had
commenced (in the
61
<PAGE> 90
Art. IX, 2(a)(1)(ii)
normal form of annuity under the Plan) as of the beginning of such period, to
each such benefit based on the provisions of the Plan (as in effect during the
5-year period ending on such date) under which such benefit would be the least.
For purposes of subsection (a)(1)(i), the lowest benefit in pay status
during a 3-year period shall be considered the benefit in pay status for such
period.
(2) Second, to all other benefits (if any) of individuals under the
Plan which are guaranteed under the plan termination insurance provisions of
the Employee Retirement Income Security Act of 1974 determined without regard
to Section 4022B(a) of said Act.
(3) Third, to all other nonforfeitable benefits under the Plan.
(4) Fourth, to all other benefits under the Plan.
(b) (1) The amount allocated under any of the preceding subsections of
this Section 2 with respect to any benefit shall be properly adjusted for any
allocation of assets with respect to that benefit under a prior subsection of
this Section 2.
(2) If the assets available for allocation under subsections (a)(1)
and (a)(2) are insufficient to satisfy in full the benefits of all individuals
which are described in such subsections, the assets shall be allocated pro rata
among such individuals on the basis of the present value (as of the termination
date) of their respective benefits described in such subsections.
(3) If the assets available for allocation under subsection (a)(3) are
not sufficient to satisfy in full the benefits of individuals described
therein:
(i) Except as provided in subsection (b)(3)(ii), the assets shall
be allocated to the benefits of
62
<PAGE> 91
Art. IX, 2(b)(3)(i)
individuals described in subsection (a)(3) on the basis of the benefits of
individuals which would have been described in subsection (a)(3) under the Plan
as in effect at the beginning of the 5-year period ending on the date of the
Plan's termination.
(ii) If the assets available for allocation under subsection
(b)(3)(i) are sufficient to satisfy in full the benefits described therein
(without regard to this subsection (b)(3)(ii)), then for purposes of subsection
(b)(3)(i), benefits of individuals described therein shall be determined on the
basis of the Plan as amended by the most recent Plan amendment effective during
such 5-year period under which the assets available for allocation are
sufficient to satisfy in full the benefits of individuals described in
subsection (b)(3)(i) and any assets remaining to be allocated under such
subsection shall be allocated under subsection (b)(3)(i) on the basis of the
Plan as amended by the next succeeding Plan amendment effective during such
period.
(c) If the Secretary of the Treasury determines that the allocation made
pursuant to this Section 2 results in discrimination prohibited by Section
401(a)(4) of the Internal Revenue Code of 1986, or as may be subsequently
amended, then, if required to prevent the disqualification of the plan (or any
trust under the plan) under Section 401(a) or 403(a) of such Code the assets
allocated shall be reallocated to the extent necessary to avoid such
discrimination.
(d) In the event of termination or partial termination of the Plan, the
right of all affected employees to benefits accrued to the date of such
termination, partial termination or discontinuance, to the extent funded as of
such date, are nonforfeitable.
(e) Anything in the Plan to the contrary notwithstanding, it shall not be
possible at any time prior to the satisfaction of all liabilities with respect
to
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<PAGE> 92
Art. IX, 2(e)
employees under the plan for any part of the corpus or income of the Pension
Fund to be used for, or diverted to purposes other than the exclusive benefit
of employees. After satisfaction of all liabilities to participants and
beneficiaries under the Plan, any residual assets of the Pension Fund will be
distributed to the Corporation if the distribution does not contravene any
applicable provision of law.
SECTION 3. MERGER OR CONSOLIDATION
In the case of any merger or consolidation with, or transfer of assets or
liabilities to, any other plan after September 2, 1974, each participant in the
Plan would, if the Plan then terminated, receive a benefit immediately after
the merger, consolidation, or transfer which is equal to or greater than the
benefit the participant would have been entitled to receive immediately before
the merger, consolidation, or transfer, if the Plan had then terminated.
ARTICLE X
DEFINITIONS
1. EMPLOYEE
(a) Any person regularly employed in the United States by the Corporation
or by a wholly-owned or substantially wholly-owned domestic subsidiary in
accordance with I.R.C. Section 414(b), (c), and (m) thereof, including:
(1) hourly-rate persons employed on a full time basis;
(2) hourly-rate persons on incentive pay plans;
(3) students from educational institutions who are enrolled in
cooperative training courses on hourly rate;
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<PAGE> 93
Art. X, 1(a)(4)
(4) part-time hourly-rate employees who, on a regular and continuing
basis, perform jobs having definitely established working hours, but the
complete performance of which requires fewer hours of work than the regular
work week, provided such employees work one-half or more of the employing
unit's regular work week;
(5) hourly-rate employees of Delco Electronics Corporation (DEC);
(6) represented employees of the Saturn Corporation who have made a
positive election to participate in the GM Plan pursuant to the Memorandum of
Agreement dated October 16, 1993.
(b) The term "employee" shall not include:
(1) temporary employees;
(2) part-time employees, who work less than one-half of the employing
unit's work week;
(3) employees represented by a labor organization which has not signed
an agreement making this Plan applicable to such employees;
(4) employees of any directly or indirectly wholly-owned or
substantially wholly-owned subsidiary of the Corporation acquired or formed by
the Corporation on or after January 1, 1984, except as provided under (a)(6)
above;
(5) leased employees as defined under Section 414(n) of the Internal
Revenue Code.
2. TRUSTEE OR INSURANCE COMPANY
The bank or banks, trust or insurance company or companies or any combination
thereof designated by a trust agreement or contract as the medium for financing
the Plan.
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<PAGE> 94
Art. X, 3
3. SENIORITY
Seniority means the period following the most recent date of hire by the
Corporation and subsequent to which there has been no loss of credited service
(as loss of credited service is defined in the Plan), or if the employee is
represented under a collective bargaining agreement seniority will be as
defined in such agreement. An employee who is rehired on or after October 1,
1984, and thereby has the pension discontinued, but does not have seniority
reinstated, shall be deemed, solely to satisfy purposes of The General Motors
Hourly-Rate Employees Pension Plan, to have seniority while so employed.
4. FEDERAL SOCIAL SECURITY BENEFIT
A Federal Social Security benefit for disability or an unreduced Federal Social
Security benefit for age means a benefit determined and payable under Title II
of the Federal Social Security Act, as now in effect or as hereafter amended,
without any reduction being made therefrom based on the age of the recipient.
5. TRUST FUND; PENSION FUND; INSURED FUND
The General Motors Hourly-Rate Employees Pension Plan fund established by
payments made by the Corporation in accordance with Article V herein. Such
fund therein called the trust fund shall be comprised of either a pension fund
or insured fund, or a combination thereof.
6. BASE HOURLY RATE
For the purpose referred to in Section 6(g) of Article II of this Plan only,
Base Hourly Rate shall be the higher of:
(a) the employee's highest straight-time hourly rate, or
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Art. X, 6(b)
(b) for an employee who worked on incentive or piece work in at least 4
pay periods, the employee's average earned straight-time hourly rate for the
first 4 pay periods (or, if higher, for the last 4 pay periods) for which such
employee had any incentive earnings (provided, however, that if the employee
worked in less than 4 pay periods but during each such pay period worked, such
employee worked on incentive or piece work, the employee's average earned
straight-time hourly rate for such pay periods worked shall be used)
during the last 13 consecutive pay periods ending with the pay period which
includes the last day worked, plus any cost-of-living allowance in effect with
respect to the employee's last day worked for the Corporation.
7. BASIC BENEFIT
The monthly benefit payable under the Plan for the lifetime of a retired or
separated employee, including a benefit reduced by a percentage because of
early retirement. The term "basic benefit" shall not include any temporary
benefit, special benefit, or supplement payable under the Plan.
8. AGE 62 AND ONE MONTH
"Age 62 and one month" means age 62 and one month except that for purposes of
determining the month for which the temporary benefit provided in Article II,
Section 4 and the early retirement and interim supplements provided in Article
II, Section 6 shall cease and the month for which the basic benefit is
redetermined in accordance with Article II, Section 4, it shall mean age 62 if
both a temporary benefit, early retirement supplement, or interim supplement
under the Plan and a benefit under the Federal Social Security Act could
otherwise be payable.
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<PAGE> 96
Art. X, 9
9. ACTUARIAL VALUE
The actuarial value as of any determination date shall be calculated on the
basis of the UP-84 mortality table and the applicable interest rate used by the
Pension Benefit Guaranty Corporation (PBGC) as of the first day of the plan
year preceding the determination date.
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<PAGE> 97
Appendix A
APPENDIX A
(HOURLY-RATE EMPLOYEES PENSION PLAN)
A Benefit Class Code for the sole purpose of this Plan is hereby established
for each job classification in effect on September 14, 1993 on the basis of the
maximum base hourly rate (which term as used herein shall include incentive
earnings unless otherwise noted) applicable to the job classification on that
date, as follows:
<TABLE>
<CAPTION>
For Job Classifications Benefit
Having a Maximum Class
Base Hourly Rate of Code
<S> <C> <C>
On or after Less than $16.16 A
September 14, 1993 $16.16 but less than $16.38 B
but prior to $16.38 but less than $17.31 C
October 24, 1993 $17.31 and over D
On or after Less than $17.98 A
October 24, 1993 $17.98 but less than $18.21 B
$18.21 but less than $19.17 C
$19.17 and over D
</TABLE>
(1) The Benefit Class Code applicable to an employee is the Benefit Class
Code for the job classification held by the employee for the greatest number of
calendar days during the 24 consecutive months immediately preceding the last
day worked.
(2) The Benefit Class Code to be established for any new job
classification put into effect after September 14, 1993 shall be whichever
Benefit Class Code is applicable to other job classifications having the same
maximum base hourly rate on the date that such new job classification is put
into effect. With respect to a job classification that was obsolete as of
September 14, 1993 a hypothetical maximum base hourly rate applicable thereto
shall be determined by increasing the maximum base hourly rate for that job
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<PAGE> 98
Appendix A(2)
classification at the time of its discontinuance to the extent necessary so as
to give effect to general wage increases (including cost-of-living allowance
transfers) that have occurred since such discontinuance, and the Benefit Class
Code for such classification so derived shall be whichever Benefit Class Code
herein is applicable to other job classifications having the same maximum base
hourly rate on that date.
(3) For purposes hereof, the maximum base hourly rate of a job
classification paid on a day-work basis at any plant or facility shall be the
maximum straight-time hourly rate for that job classification at such plant or
facility (excluding any cost-of-living allowance and premiums).
(4) The maximum base hourly rate of a job classification in effect on
September 6, 1967 and paid under an incentive method of pay at any plant or
facility shall be the average straight-time hourly earned rate (including
incentive earnings and any wage increases and cost-of-living allowance
transfers which, as of September 6, 1967, were not factored in the base rate of
the job classification but excluding any cost-of-living allowance and premiums)
for all hours worked by all employees in that job classification at such plant
or facility for the period beginning September 5, 1966, and ending September 3,
1967, plus any wage increases and cost-of-living allowance transfers effective
for that job classification subsequent to September 6, 1967.
In the event an employee is transferred to a job which results in a lower basic
benefit rate, such employee's vested pension benefit, if any, shall not be less
than the amount of such employee's accrued pension benefit on the date of such
transfer to such job.
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<PAGE> 99
Appendix B
For the sole purpose of Article III, Section 5 of the Plan, all approved job
classifications set forth in the Local Wage Agreements as of September 14, 1973
of the Central Foundry Plants (currently GM Powertrain) - Danville, Illinois,
Defiance, Ohio, Malleable Iron and Grey Iron, Saginaw, Michigan, are designated
foundry jobs at the respective plant locations except for those job
classifications listed herein for each such respective plant location. No
other job classifications shall be designated foundry jobs.
GM POWERTRAIN, DANVILLE, ILLINOIS
Bulldozer, Operator
Bus Person
Cashier
Cook
Crane Operator, Locomotive
Crane Operator-Yard & Bridge
Driver - Licensed Trucks - Tractor & Trailer
End Loader Operator
Kardex Clerk
Kitchen Help
Pattern & Maintenance Clerk
Pattern Storage and Transport
Salvage Reclaimer
Scrap Cutter - Torch
Shipping Clerk
Sprue Crane Hook Up
Stock Room Clerk
Stock Room and Receiving
Warehouse Attendant
Window Washer
Yard Labor
Yard Switchperson
Garage Mechanic
Machinist
Pattern Maker, Wood & Metal
Power House Operator
71
<PAGE> 100
Appendix B
GM POWERTRAIN, DEFIANCE, OHIO
Bus Person
Cashier
Clerk - Pattern and/or Maintenance
Cook
Crane Operator - Locomotive
Dispatcher - Materials
Driver - Licensed Trucks - Tractor
and Trailer - Semi
Heavy Equipment Operator
Inspection Department - Inspection
(Special Assignment)
Kitchen Help
Locomotive Operator
Safety Equipment Repair
Salvage Reclaimer
(2) Shipping Clerk
Yard Labor
Blacksmith
Casting Layout
(3) Garage Mechanic
(1) Machinist
Pattern Maker - Leader
Pattern Maker - Wood & Metal
Shift Operating Engineer
Tool Grinder
(1) Designated as a foundry job only for those employees so classified
who work in Plant 2, 816 Department.
(2) Designated as a foundry job only for those employees so classified
who work in Plant #1, 539 Department.
(3) Designated as a foundry job only for those employees so classified
who work in Plant #2 816 Department, Battery Charge Area.
72
<PAGE> 101
Appendix B
GM POWERTRAIN MALLEABLE IRON PLANT,
SAGINAW, MICHIGAN
Bull Dozer Operator
Bus Person
Cashier
Clerk - Pattern and Maintenance
Cook
Crane Operators - Locomotive
Driver-Licensed Trucks, Tractor,
and Trailer
Kitchen Help
Salvage Reclaimer
Stock Room and Receiving
Yard Labor
Blacksmith
Core and/or Mold Maker - Experimental -
Bench & Floor
Garage Mechanic
Inspector - Layout
Machinist - Maintenance
Machinist - Miscellaneous
(1) Machinist - Pattern
Pattern Maker - Leader
Pattern Maker - Wood and Metal
Power House Operator
(1) Designated as a foundry job only for those employees so classified
who work in Department 16.
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<PAGE> 102
Appendix B
GM POWERTRAIN GREY IRON PLANT,
SAGINAW, MICHIGAN
(1) Attendant - Pattern Storage
Attendant - Pattern Storage - Leader
Clerks - Receiving - (Includes
Inspectors)
Crane Hooker or Signal Person
Crane Operator - Locomotive
Crib Attendant - Maintenance
Crib Attendant - Pattern Shop
Drill Press Operator
Driver - Licensed Passenger Cars
Drivers - Licensed Trucks -
Receiving & Yard
(1) Equipment Operator - Special
(Including Bay City Shovel,
Bull Dozer, Pay Loader
Shovel Operator)
Field Sand Gasoline Locomotive
Operator
Flask Repair - Metal Flask
Flask Repair - Metal Flask - Leader
Gardener
Laborer - Yard - Maintenance - Leader
Labor - Yard - Maintenance -
Railroad Track Repair
Locker Room Attendant
Milling Machine Operator - Driers
(2) Oiler - Machinery, Equipment and Motors
Power House Attendant
Receiving Department - Leader
Salvage - Flash Cutter
Crane Repair - (Also Operates Crane)
Crane Repair - Leader
Die Repair
Flask Welder
Grinder - Cutter
Grinder Operator - Blanchard
Inspector - Layout
74
<PAGE> 103
Appendix B
GM POWERTRAIN GREY IRON PLANT,
SAGINAW, MICHIGAN (CONT'D.)
Machine Repair - Machinist - Maintenance-
Leader
Machine Repair - Machinist - Maintenance
Machine Repair - Machinist - Pattern Shop
Power House - Engineer - Class "B"
Power House - Fireperson
Power House - Repair
Power House - Repair - Leader
Truck Repair - Gas
Truck Repair - Gas - Leader
Truck Repair - Gas and Electric
(3) Welder - Maintenance - Gas & Arc
Welder - Tool and Die
(1) Designated a foundry job only for credited service accrued on and
after July 27, 1987.
(2) Not designated as a foundry job for those employees so classified
who work in Department 32.
(3) Not designated as a foundry job for those employees so classified
who work in Department 30.
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<PAGE> 104
Appendix B
APPENDIX B
Any job classification in effect at a plant specified in Appendix B that was
discontinued at such plant prior to September 14, 1973 shall be designated a
foundry job if the work that was performed by employees on such discontinued
job classification shall conform substantially to work performed at the same
plant by employees on a job classification designated as a foundry job for such
plant.
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<PAGE> 105
Appendix C
APPENDIX C
For the sole purpose of Article III, Section 7 of the Plan, only those job
classifications specifically listed herein, which are set forth in the Local
Wage Agreement in effect as of October 1, 1979 at Delco Moraine Division,
Dayton, Ohio, may be designated asbestos jobs. Such designation as an asbestos
job will apply only to these classifications at the above-specified plant
location under the conditions specifically set forth herein. No other job
classifications shall be designated asbestos jobs.
DELCO MORAINE DIVISION, DAYTON, OHIO
The following job classifications involved
in the blending and processing of raw
asbestos are designated asbestos jobs for
employees so classified who are assigned to
Departments 73M, 515, 523, and 530.
Experimental Lining
Extruding Machine Operator
Janitors
Job Setter
Lining-Grinder
Machine Cleaners
Preform of Disc Brake Linings
Production Heat Treat Linings
Protective Coating Operator
Sensor Riveters
Stock Handler
Weigh and Mix Materials
77
<PAGE> 106
Standards
STANDARDS FOR APPLICATION OF PROVISIONS REGARDING RETIREMENT UNDER MUTUALLY
SATISFACTORY CONDITIONS
GENERAL MOTORS HOURLY-RATE
EMPLOYEES PENSION PLAN
Article II, Section 2(b) of the General Motors Hourly-Rate Employees Pension
Plan provides that an employee may be retired early under mutually satisfactory
conditions providing such employee is otherwise eligible. The following
standards have been adopted by the Corporation as a guide in the application of
this provision.
STANDARDS
A. An employee who is unable to work efficiently by reason of permanent
disability:
The retirement must be in the best interest of the Corporation. It is
also intended to benefit employees who are unable to work efficiently by reason
of permanent disability. It contemplates that the efficiency of operation will
be improved by reason of the retirement which may be the case in any of the
following situations:
(1) The employee is no longer physically or mentally capable of
performing such employee's work in an efficient and satisfactory manner.
(2) The employee, though still capable of performing such employee's
work satisfactorily, is prevented by chronic physical illness or physical
disability (less than total) from working regularly to the extent that
efficiency of operation is interfered with.
(3) The employee's condition, based on medical evidence satisfactory
to the Corporation, is such that,
78
<PAGE> 107
Standards
although able to perform the duties of such employee's job efficiently and
satisfactorily, such employee would thereby be jeopardizing personal health or
that of fellow employees.
(4) The employee is on disability leave or is laid off because such
employee is unable to do the work offered by the Corporation efficiently and
satisfactorily although able to perform efficiently and satisfactorily other
work in the plant to which the employee would have been entitled if such
employee had sufficient seniority, and the employee's condition, based on
medical evidence satisfactory to the Corporation, is expected to be continuous
until normal retirement age.
B. An employee who is laid off:
Retirement under mutually satisfactory conditions will be available to an
employee who is laid off
(i) as a result of a plant closing or discontinuance of operations, or
(ii) whose layoff appears to be permanent,
and in either case has not been offered suitable work by the Corporation
in the same labor market area.
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<PAGE> 108
Statement
STATEMENT OF INTENT
Notwithstanding the provisions of Exhibit A, Section 3(c) of The General Motors
Hourly-Rate Employees Pension Plan; Exhibit D, Articles V and VI of the
Supplemental Unemployment Benefit Plan, and the Items Agreed to by GM-UAW SUB
Board of Administration; and Exhibit E, Section 6(a) of the Guaranteed Income
Stream Benefit Program, which deal with local union representatives for each of
these benefit plan areas, the Corporation and the Union agree as follows:
1. APPOINTMENT OF BENEFIT REPRESENTATIVES
(a) Local union benefit representative(s) and alternate(s) shall be
appointed or removed by the GM Department of the International Union.
Management benefit representative(s) shall be appointed or removed by
management.
(b) Temporary replacement appointments may be made by the local union
President for a minimum of one week and a maximum of four weeks. Replacement
appointments for any absence in excess of four weeks also shall be made by the
GM Department of the International Union. Replacement appointments in
situations when the benefit representative(s) and alternate(s) are both absent
but for less than one week and are on a leave of absence pursuant to the
provisions of Paragraph 109 of the GM-UAW National Agreement may be made by the
local union President. Any problems that may arise under this procedure may be
discussed by the Corporation with the GM Department of the International Union.
(c) A local union benefit representative shall be an employee of the
Corporation having at least one year of seniority, and working at the plant
where, and at the time when, such employee is to serve as such
80
<PAGE> 109
Statement
representative or alternate. No such representative or alternate shall
function until written notice has been given by the GM Department of the
International Union to the Corporation. In the case of temporary appointments,
the notice should be given to local Management with additional copies forwarded
to the GM Department of the International Union and the Corporation.
2. NUMBER OF LOCAL UNION BENEFIT
REPRESENTATIVES
(a) In plants having a total of less than 600 employees, there may be
one local union benefit representative and one alternate.
(b) In plants having a total of 600 but less than 1,200 employees,
there may be two local union benefit representatives and two alternates.
(c) In plants having a total of 1,200 but less than 2,000 employees,
there may be three local union benefit representatives and three alternates.
(d) In plants having a total of 2,000 but less than 5,000 employees,
there may be four local union benefit representatives and three alternates. If
such plants have a total of 1,400 or more employees on the second and third
shifts combined, there may be five local union benefit representatives and two
alternates.
(e) In plants having a total of 5,000 but less than 8,000 employees,
there may be five local union benefit representatives and two alternates.
(f) In plants having a total of 8,000 but less than 10,000 employees,
there may be six local union benefit representatives and two alternates.
(g) In plants having a total of 10,000 or more employees, there may be
seven local union benefit representatives and two alternates.
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<PAGE> 110
Statement
The number of employees as used herein shall include active employees,
employees on sick leave of absence, and employees on temporary layoff.
3. Of the total number of local union benefit representatives and
alternates otherwise available, one or more representatives and alternates may
be assigned to the second shift or third shift so long as the total number of
representatives and alternates set forth in Paragraph 2. above is not exceeded.
4. When plant population changes occur which would increase or decrease
the number of local benefit plan representatives, such population changes must
be in effect for a period of six consecutive months before such adjustment is
made in the number of representatives, unless such population change results
from the discontinuance or addition of a shift or the opening or closing of a
plant. In the event of a cessation of operations, the Corporation, at the
request of the UAW General Motors Department of the International Union, will
provide for the continuance of Benefit Representation. Other situations
involving a sudden significant change in the number of employees at a location
may be discussed by the Corporation and the GM Department of the International
Union.
5. Benefit Plan districts will be established by local mutual agreement.
Only one local union benefit representative will function in a benefit district
and will handle specified benefit plan problems raised by employees within that
district pertaining to the Pension Plan, Life and Disability Benefits Program,
Health Care Program, Supplemental Unemployment Benefit Plan, and Guaranteed
Income Stream Benefit Program agreements. An alternate will be permitted to
function in the absence of a local benefit plan representative on the benefit
plan representative's shift.
6. Any local union benefit representative may function as the member of
the local Pension
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<PAGE> 111
Statement
Committee, as the member of the local Supplemental Unemployment Benefit
Committee, as a member of the Guaranteed Income Stream Benefit Committee or
handle benefit problems under the Life and Disability Benefits Program and the
Health Care Program with respect to employees in such representative's Benefit
Plan district. An alternate may function in the absence of a local union
benefit representative.
7. The time available to a local union benefit representative and
alternate with respect to a Benefit Plan district may not exceed eight (8)
regular working hours of available time in a day.
(a) On a local union benefit representative's regular shift and
without loss of pay, a local union benefit representative(s) may accompany the
management benefit representative for a mutually agreeable joint off-site visit
to a local hospital, an impartial medical opinion clinic or a health
maintenance organization, or other similar type joint ventures, with respect to
benefit plan matters.
(b) A local union benefit representative attending a scheduled
Management-Union Benefit Plan meeting on a shift other than the
representative's regular shift will be paid for time spent in such meeting.
(c) One local union benefit representative attending the local union
retiree chapter meeting will be paid for time spent in such meeting.
(d) The time spent in such local union retiree chapter meetings,
off-site visits or Management-Union Benefit Plan meetings will not result in
additional hours which exceed regularly scheduled shift hours, overtime
premiums or an increase in representation time being furnished as a result of
the representative(s) not working a full shift on the representative's regular
shift.
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<PAGE> 112
Statement
8. The local union benefit representative shall be retained on the shift
to which the representative was assigned when appointed as such representative
regardless of seniority, provided there is a job that is operating on the
representative's assigned shift which the representative is able to perform.
9. The Benefit Plans - Health and Safety office may be used by local
union benefit representatives during their regular working hours:
(a) To confer with retirees, beneficiaries, and surviving spouses who
ask to see a local union benefit representative with respect to legitimate
benefit problems under the Pension Plan, Life and Disability Benefits Program
and Health Care Program Agreements.
(b) If the matter cannot be handled appropriately in or near the
employee's work area, to confer with employees who, during their regular
working hours, ask to see a local union benefit representative with respect to
legitimate benefit problems under the Pension, Life and Disability Benefits,
Health Care, SUB, and GIS Agreements.
(c) To confer with employees who are absent from, or not at work on,
their regular shift and who ask to see a local union benefit representative
with respect to legitimate benefit problems under the Pension, Life and
Disability Benefits, Health Care, SUB, and GIS Agreements.
(d) To write position statements and to complete necessary forms with
respect to a case being appealed to the Pension, SUB, or GIS Boards by an
employee in the local union benefit representative's Benefit Plan district, and
to write appeals with respect to denied life, health care, and disability
claims involving employees within the representative's Benefit Plan district.
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<PAGE> 113
Statement
(e) To file material with respect to the Pension, Life and Disability
Benefits, Health Care, SUB and GIS Agreements.
(f) To make telephone calls with respect to legitimate benefit
problems raised by employees under the Pension, Life and Disability Benefits,
Health Care, SUB, and GIS Agreements.
85
<PAGE> 114
[INTENTIONALLY LEFT BLANK]
86
<PAGE> 115
LETTER
AGREEMENTS
87
<PAGE> 116
[INTENTIONALLY LEFT BLANK]
88
<PAGE> 117
Workers Compensation
GENERAL MOTORS CORPORATION
October 24, 1993
International Union, United Automobile,
Aerospace and Agricultural Implement
Workers of America, UAW
8000 East Jefferson Avenue
Detroit, Michigan 48214
Attention: Mr. Stephen P. Yokich
Vice President and Director
General Motors Department
Dear Mr. Yokich:
This letter of agreement constitutes an amendment to the 1993 GM-UAW Pension
Plan and shall be construed and applied as if it were therein incorporated.
Pursuant to Subsection 354(14) of the Michigan Workers Compensation Act, as
amended, until termination or earlier amendment of the 1993 Collective
Bargaining Agreement, workers compensation for employees shall not be reduced
by disability retirement benefits payable under the Hourly-Rate Employees
Pension Plan.
Very truly yours,
GENERAL MOTORS CORPORATION
Gerald A. Knechtel
Vice President
Accepted and Approved:
INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA, UAW
By: Stephen P. Yokich
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<PAGE> 118
Lump-Sum Payment
GENERAL MOTORS CORPORATION
October 24, 1993
International Union, United Automobile,
Aerospace and Agricultural Implement
Workers of America, UAW
8000 East Jefferson Avenue
Detroit, Michigan 48214
Attention: Mr. Stephen P. Yokich
Vice President and Director
General Motors Department
Dear Mr. Yokich:
During these negotiations the parties agreed upon certain lump-sum payments to
be made to eligible retirees and surviving spouses.
Lump-sum payments would be made, on the basis described below, by Corporation
check or draft paid directly to retired employees and surviving spouses.
1. The following persons will be eligible for lump-sum payments:
(a) employees who retired prior to October 1, 1993 under the terms of
Article II, Sections 1, 2 or 3 of the Plan and who are receiving
benefits from the Plan as of the first of the month for which a
lump-sum payment would be made.
(b) eligible surviving spouses of employees who retired under the
terms of Article II, Sections 1, 2 or 3 of the Plan prior to
October 1, 1993, or surviving spouses eligible for a benefit prior
to September 14, 1993 pursuant to Article II, Section 5(g) of the
Plan (excluding surviving spouses of former employees who broke
seniority and who are eligible for a deferred pension), or
surviving spouses eligible for a benefit
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<PAGE> 119
Lump-Sum Payment
under Article II, Section 8(d) and who are eligible for a pension
benefit from the Plan as of the first of the month for which a
lump-sum payment would be made.
2. Amount of Benefit:
(a) a maximum payment of $570 will be made to retired employees with
thirty or more years of credited service. The payment to
pensioners with less than thirty years of credited service will be
$19 per year of credited service (with a proportional amount for
fractional years) or a minimum payment of $190.
(b) eligible surviving spouses will receive 60% of the amount that
would have been payable to the retired employee under (a) above.
3. Dates of Payment: December 1994 and December 1995.
Please indicate your concurrence in the proposed lump-sum payments arrangement
and other provisions of this letter.
Very truly yours,
GENERAL MOTORS CORPORATION
Gerald A. Knechtel
Vice President
Accepted and Approved:
INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA, UAW
By: Stephen P. Yokich
91
<PAGE> 120
Misc. (Benefits Training and Education)
GENERAL MOTORS CORPORATION
October 24, 1993
International Union, United Automobile
Aerospace and Agricultural Implement
Workers of America, UAW
8000 East Jefferson Avenue
Detroit, MI 48214
Attn: Mr. Stephen P. Yokich
Vice President and Director
General Motors Department
Dear Mr. Yokich:
During these negotiations, the parties renewed their commitment to provide
on-going training programs for Company and Union Benefit Representatives so as
to improve the quality of service provided to hourly employees. The parties
also recognized the importance of communications programs aimed at educating
employees about their benefits.
It was agreed that such training and education programs will be developed
jointly and the cost of developing and implementing such programs properly will
be paid from the National Joint Skill Development and Training Fund as approved
by the Executive Board for Joint Activities. These include, but are not
limited to, the following:
o The annual joint GM-UAW Benefits Training Conference.
o Continuing education program for Union Benefit Representatives
provided by the parties. Such program is expected to be implemented
beginning in 1994 or as soon thereafter as practicable.
o Conduct periodic on-site plant surveys and audits to evaluate training
and education needs to improve employee service.
92
<PAGE> 121
Misc. (Benefits Training and Education)
o Ad hoc training meetings on legal developments or other special needs.
Included also are any travel, lodging and living expenses incurred by Company
and Union representatives in relation to the above. In addition, the Fund will
pay for lost time (eight hours per day base rate plus COLA) of Union Benefit
Representatives attending such programs away from their locations. The Company
will pay for the time (eight hours per day base rate plus COLA) of alternate
Union Benefit Representatives who replace those attending such programs.
Very truly yours,
GENERAL MOTORS CORPORATION
Gerald A. Knechtel
Vice President
Accepted and Approved:
INTERNATIONAL UNION, UNITED AUTOMOBILE,
AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA, UAW
By: Stephen P. Yokich
93
<PAGE> 122
Misc. (Improving Benefits Service Through Technology)
GENERAL MOTORS CORPORATION
October 24, 1993
International Union, United Automobile
Aerospace and Agricultural Implement
Workers of America, UAW
8000 East Jefferson Avenue
Detroit, MI 48214
Attn: Mr. Stephen P. Yokich
Vice President and Director
General Motors Department
Dear Mr. Yokich:
During these negotiations, the parties recognized the need to move ahead with
the development of technological applications to improve the quality of service
provided to hourly employees.
1. The parties recognize the need to provide the necessary tools to Local
Union Benefit Representatives so that they may improve the service
they are providing to hourly employees. Local Union Benefit
Representatives require basic information that can be accessed quickly
in order to confidently and accurately answer many of the questions
they receive. In addition, the removal of benefit administrators from
the plants, has removed a traditional source of specific benefit
information regarding their members which previously had been
available to the Local Union Benefit Representatives. The information
required, as identified by the Union, currently resides in several
data systems which would have to be adapted for use by the Local Union
Benefit Representatives. It would be necessary to incorporate systems
modifications to assure security and to limit access to information
for UAW hourly employees at their particular location.
2. The GM Department of the International UAW and the GM Employee
Benefits activity jointly will develop a proposal covering the
hardware and software requirements associated with this effort. Upon
approval by the Executive Board of
94
<PAGE> 123
Misc. (Improving Benefits Service through Technology)
Joint Activities, the cost of development, installation and training,
will be charged to the National Joint Skill Development and Training
Fund. It is contemplated the required system modifications will be
implemented during 1994 or as soon as practicable.
3. The parties recognize the opportunity for a significant improvement in
service to hourly employees contemplating retirement. Therefore, the
parties agreed to investigate enhancing the current automated pension
estimating application for hourly employees. The cost of these
enhancements will be considered as costs of administration chargeable
to the Pension Plan.
4. The parties also agreed to explore the implementation of a telephone
based annual open enrollment in health care with emphasis on a
paperless system.
5. The parties further agreed to continue to provide hourly employees
with the use of a Voice Response System for inquiry and transactions
in the Personal Savings Plan.
In conclusion, during the term of the new Agreement, the GM Employee Benefits
activity and the GM Department of the International UAW pledge to carefully
consider every opportunity to improve the quality and efficiency in benefits
delivery.
Very truly yours,
GENERAL MOTORS CORPORATION
Gerald A. Knechtel
Vice President
Accepted and Approved:
INTERNATIONAL UNION, UNITED AUTOMOBILE,
AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA, UAW
By: Stephen P. Yokich
95
<PAGE> 1
EXHIBIT 10(b)
GENERAL MOTORS CORPORATION
GENERAL MOTORS RETIREMENT PROGRAM
FOR SALARIED EMPLOYES
(AS AMENDED EFFECTIVE OCTOBER 1, 1990
WITH MODIFICATIONS THROUGH APRIL 1, 1991)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Index to Program (ii)
Eligibility for Retirement 2
Part A -- Non-Contributory Benefits 5
Article I - Benefit Amounts 5
Article II - Credited Service (Applicable to Benefits Under
Part A and Supplementary Benefits Under Part B) 41
Article III - Retention of Deferred Retirement
Benefit if Separated 56
Part B -- Contributory Benefits 59
Article I - Provisions Relating to Primary Benefits
and Supplementary Benefits 59
Article II - Provisions Relating Specifically to
Primary Benefits 77
Article III - Provisions Relating Specifically to
Supplementary Benefits 83
General Provisions 85
Appendix A - Designated Foundry Jobs 147
Appendix B - Designated Asbestos Jobs 151
Appendix C - Benefit Rates and Formula for
GM Salaried Employes in Puerto Rico 152
</TABLE>
(i)
<PAGE> 3
INDEX TO
GENERAL MOTORS RETIREMENT PROGRAM FOR SALARIED EMPLOYES
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Eligibility for Retirement 2-4
PART A -- NON-CONTRIBUTORY BENEFITS
Basic Benefit, Applicable to:
Benefits Commencing Prior to October 1, 1990 33-40
Deferred Retirement 56-58
Early Retirement 7-10
Normal Retirement 5, 6
Total and Permanent Disability Retirement 10
Basic Benefit Amounts 5
Benefit Class Codes 6
Credited Service:
Asbestos Service 55, 151
Compensable Disability Leave 51
Duplication 51
ERISA Service 52-55
Flexible Service 46, 86
Foreign Service 50, 51
Foundry Service 52, 147-150
General 41, 42
Hourly Service 50
Layoff 44, 45
Length of Service 46
Loss of 47, 48
Military Leave 43
Noncompensable Disability Leave 44
Prior to October 1, 1950 42
Reinstatement 48, 49
Subsequent to October 1, 1950 43-46
Temporary Employment 51, 86
Deferred Retirement:
Benefits, Determination of 56-57
Effective Date 58
Eligibility 56
Minimum Vesting Standards -- ERISA 52-55
Pre-Retirement Survivor Coverage -- REA:
Benefits, Determination of 20-22
Duration 20
Effective Date 21
Eligibility 20, 22
Spousal Consent 21
</TABLE>
(ii)
<PAGE> 4
INDEX - CONT'D.
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Qualified Domestic Relations Order 6, 12, 14, 19,
21, 24, 58, 100
Reemployment 48, 65, 94, 95
Retirement, Automatic for Bona Fide Executive:
Benefits, Determination of 5, 10
Benefits, Payment of 93-98
Eligibility 2
Retirement, Early:
Benefits, Determination of 7-10
Benefits, Payment of 93-98
Benefits, Redetermination of Basic 8
Discharge For Cause 10, 26
Eligibility 3
Reductions for Age 7-9
Retirement, Normal:
Benefits, Determination of 5
Benefits, Payment of 93-98
Eligibility 3
Retirement, Total and Permanent Disability:
Benefits, Determination of 10, 11
Benefits, Payment of 93-98
Disability, Determination of 11
Eligibility 4
Recovery From 12, 48
Special Benefit 31, 32
Supplement, Age-Service 40
Supplement, Early Retirement:
Benefits, Determination of 26-30
Earnings Limitation 29, 30
Eligibility 26
Limitation of 70% of Final Pay 30
Payment of 93-98
Penalty Against 29
Recovery if Overpaid 30
Redetermined if Commenced Prior to October 1, 1990 37
</TABLE>
(iii)
<PAGE> 5
INDEX - CONT'D.
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Supplement, Interim:
Benefits, Determination of 28-33
Earnings Limitation 29, 30
Eligibility 27, 28
Employes Retired Prior to October 1, 1990 38
Limitation of 70% of Final Pay 30
Payment of 93-98
Penalty Against 29
Recovery if Overpaid 30
Supplement, Lifetime 40
Surviving Spouse Benefits (Post-Retirement):
After Employe's Retirement 12-19
Automatic Election 12, 13
Cancellation Because of Death or Divorce 12, 13
Effective Date 13
Election to Receive Full Amount of Future Increases 39
Joint and Survivor for Disability -- ERISA 16-19
Joint and Survivor Option 23-26
Reduction of Basic Benefit 14
Special Survivor Option 38, 39
Spousal Consent 17
Upon Marriage or Remarriage 39, 40
Surviving Spouse Benefits (Pre-Retirement):
Before Employe's Retirement 15, 20-22
Cancellation Because of Divorce 21
Effective Date 14, 21
Reduction of Basic Benefit 14, 22
Spousal Consent 21
Temporary Benefits Applicable to:
Benefits Commencing Prior to October 1, 1990 35, 36
Benefits Commencing On or After October 1, 1990 10, 11
Treatment of Certain Employes Under Limited Early Retirement
and Prior Program Provisions 112-114
Vesting (See "Deferred Retirement")
Widow's Benefits (See "Surviving Spouse Benefits")
</TABLE>
(iv)
<PAGE> 6
INDEX - CONT'D.
PART B -- CONTRIBUTORY BENEFITS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Contributions:
Amount of Employe Contributions 66
Annuities 103, 105
Corporation Contributions 101, 102
During Temporary Absence 79, 80
Employes in Puerto Rico 109
Interest Credits 81
Limitation on Years of Employe Contributions 66
Retirement Under Hourly-Rate Pension Plan 82
Separation From Service Prior to Age 60 77, 78
While on Layoff 79, 80
Withdrawal of Contributions 66, 67
Credited Service 59, 60
Death Benefits:
Death of Employe At or After Retirement 73, 74
Death of Employe Prior to Retirement 73
Deferred Retirement:
Eligibility 56, 83
If Reemployed 49
Minimum Vesting Standards -- ERISA 52-55
Retention of Primary Benefits if Separated 77
Retention of Supplementary Benefits if Separated 83
Optional Forms of Retirement Benefits:
Joint and Survivor Option 68
Surviving Spouse Coverage 68-72
Primary Benefits:
Benefits Commencing Prior to October 1, 1990 74-76
Benefits, Determination of 61
Benefits, Payment of 93-98
Continuous Service 90, 91
Contributions 66, 67
Eligibility 59
Retirement Under Electronic Data Systems (EDS)
Pension Plan 83, 126-129
Retirement Under Hourly-Rate Pension Plan 82
Separation From Service Prior to Age 60 77, 78
Qualified Domestic Relations Order 71, 73 74, 100
</TABLE>
(v)
<PAGE> 7
INDEX - CONT'D.
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Retirement, Automatic for Bona Fide Executive:
Benefits, Determination of 61
Benefits, Payment of 93-98
Eligibility 2
Retirement, Early:
Benefits, Determination of 62-64
Benefits, Payment of 93-98
Eligibility 3
Reductions for Age 62-64
Retirement, Normal:
Benefits, Determination of 61
Benefits, Payment of 93-98
Eligibility 3
Retirement, Total and Permanent Disability:
Benefits, Determination of 64
Benefits, Payment of 93-98
Disability, Determination of 11
Eligibility 4
Supplementary Benefits:
Benefits Commencing Prior to October 1, 1990 74-76
Benefits, Determination of 62
Benefits, Payment of 93-98
Eligibility 59-61
Retirement Under Electronic Data Systems (EDS)
Pension Plan 84, 126-129
Retirement Under Hourly-Rate Pension Plan 84
Surviving Spouse Benefits:
Before Employe's Retirement 69-72
Benefits, Determination of 69
Cancellation Because of Death or Divorce 70, 71
Duration of Option 71, 72
Effective Date 71
General Provisions 70
Optional Forms of Benefits 67, 68
Treatment of Certain Employes Under Limited Early Retirement
and Prior Program Provisions 112-114
Vesting (See "Deferred Retirement")
Widow's Benefits (See "Surviving Spouse Benefits")
</TABLE>
(vi)
<PAGE> 8
INDEX - CONT'D.
GENERAL PROVISIONS
(APPLICABLE TO PART A AND PART B)
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
AC Rochester Products Division, Treatment of Certain Employes of 123, 124
Actuarial Value, Definition of 92
Amendment, Provision for 104
Annual Earnings Base 111
Annual Limitation (Internal Revenue Code 415) 134-139
Appeal Procedure for Denied Claims 133
Assignments and Loans 99, 100
Average Monthly Base Salary, Definition of 88, 89
Base Salary, Definition of 88
Commission Employes 85, 110, 111
Continuous Service, Definition of 90, 91
Corporation Contributions 101, 102
Definitions, Program 85-92
Delco Electronics Division, Treatment of Certain Employes of 117
Detroit Diesel Allison Division, Treatment of Certain Employes of 122, 123
Electronic Data Systems (EDS), Treatment of Certain Employes of 126-130
Employes, Definition of 85-87
Federal Income Tax Withholding 100
Federal Social Security Benefit, Definition of 91, 92
Foreign Service, U.S. Employes In 85
Funding Requirements -- ERISA 102
Gender, Definition of 92
General Motors Institute, Treatment of Certain Employes of 116, 117
GM Balance Engineering Operation, Treatment of Certain Employes of 118, 119
GM Building Division/New York, Treatment of Certain Employes of 115, 116
</TABLE>
(vii)
<PAGE> 9
INDEX - CONT'D.
<TABLE>
PAGE NO.
<S> <C>
GM Fanuc Robotics Corporation, Treatment of Certain Employes of 118
GM Industrial Cleaning Technology Center,
Treatment of Certain Employes of 120
Government Employment, Treatment of Employes Returning From 131, 132
Health Care Coverages 100
Hughes Aircraft, Treatment of Certain Employes of 130
Hydra-Matic Division (Muncie Plant), Treatment of Certain Employes of 125
Income Protection Plan 96
Life Insurance 100
Marketing Educational Services Activity, Treatment of
Certain Employes of 121
Named Fiduciary -- ERISA 133
Normal Retirement Age, Definition of 92
Overpayments, Repayment of 100
Plan Administrator 133
President's Executive Interchange Program 131
Program, Termination of 104-107
Retirement Payments:
Conversion of Deferred Vested Benefits to Lump Sum 97, 98
Employment Beyond Age 70-1/2 96, 97
Reemployment by Corporation 94, 95
To Persons Other Than Retirees 96, 99
Saginaw Division's Actuator Products Group,
Treatment of Certain Employes of 119
Salaried Employes Transferred to Hourly Rolls 132
Separate Plans for Employes Who Are Employed Outside U.S 75
State Income Tax Withholding 100
Terex Division, Treatment of Certain Employes of 115
Top-Heavy Plan (Internal Revenue Code 416) 139-145
Truck & Bus Group, Treatment of Certain Employes of 120, 121
Workers Compensation, Deductions for Receipt of 99
</TABLE>
(viii)
<PAGE> 10
GENERAL MOTORS RETIREMENT PROGRAM
FOR SALARIED EMPLOYES
The General Motors Retirement Program for Salaried Employes provides
non-contributory benefits, as described in Part A, which are applicable to all
salaried employes. The Program also provides benefits, as described in Part B,
which are available to employes who contribute under the Program while
eligible. Provisions applicable to both Part A and Part B, including certain
defined terms used throughout the Program, are included in the General
Provisions which immediately follow Part B.
Except as expressly provided in Sections 7, 8 and 9 of Article I of Part A,
Section 7 of Article I of Part B, and Sections 2 and 7 of General Provisions,
the provisions set forth in this Program are applicable only to employes who
retire with benefits payable commencing on or after September 18, 1990, or who
have credited service on or after October 1, 1990. Employes retired with
benefits payable commencing prior to September 18, 1990 or who lost credited
service prior to October 1, 1990, or eligible surviving spouses, contingent
annuitants and beneficiaries of such employes, shall be entitled to the
benefits, if any, under the Program as it existed immediately prior to the
amendments which became effective as of September 18, 1990.
Notwithstanding the paragraph immediately above, the surviving spouse of any
employe who died after September 17, 1990 and prior to October 1, 1990, who is
otherwise eligible for monthly benefits under this Program, shall be considered
entitled to monthly benefits pursuant to Section 5 of Article I of Part A and,
if applicable, Section 5 of Article I of Part B; and any such employe shall be
considered eligible for credited service under Article II of Part A.
1
<PAGE> 11
Sect. 1
ELIGIBILITY FOR RETIREMENT
Any separation from service, other than by death, will be considered, for
purposes of this Program, as a retirement if the separation occurs:
(a) (1) at or after age 55 and prior to age 60 and the
employe has 10 or more years of credited service, or
(2) prior to age 55 and the employe has 30 or more years
of credited service, and the employe's date of hire
is prior to January 1, 1988,
except that an employe to whom this subsection (a) applies who
is separated in a layoff classification will not be considered
a retirement until he loses credited service,
(b) at age 60 or over, or
(c) prior to age 65 because of total and permanent disability and
the employe is eligible to receive total and permanent
disability benefits under Part A.
SECTION 1. AUTOMATIC RETIREMENT FOR BONA FIDE EXECUTIVE AT AGE 65
An employe shall be retired automatically on the first day of the month
coinciding with or next following the employe's attaining age 65 if that
employe is, for the 2-year period immediately before retirement, employed in a
bona fide executive or high policy-making position and whose annual retirement
benefits attributable to Corporation contributions under this Program shall
equal or exceed $44,000.
Such employe may continue in service beyond automatic retirement age only upon
invitation of the Corporation. This invitation requires action by the
Committee of the Board of Directors having jurisdiction over the activity by
which the employe is employed, or by the Board of Directors if the employe is a
member of the Board of Directors. Such invitation to continue work shall not
be for a period of more than one year at a time.
2
<PAGE> 12
Sect. 2
SECTION 2. NORMAL RETIREMENT AT OR AFTER AGE 65
An employe may retire at or after age 65 with one or more years of
credited service.
SECTION 3. RETIREMENT BETWEEN AGES 60 AND 65
An employe may retire voluntarily at or after age 60 and prior to age
65.
SECTION 4. RETIREMENT PRIOR TO AGE 60
(a) An employe who has 10 or more years of credited service and
who is separated from service at or after age 55 and
prior to age 60 for any reason other than death or total and
permanent disability, shall be entitled to retirement benefits
determined under the provisions of this Program which are
applicable to an employe who retires voluntarily.
(b) An employe who (i) is hired prior to January 1, 1988,
(ii) has 30 or more years of credited service, and (iii) is
separated from service prior to age 55 for a neason
other than death or total and permanent disability, shall be
entitled to retirement benefits determined under the provisions
of this Program which are applicable to an employee who retires
voluntarily.
3
<PAGE> 13
Sect. 5
SECTION 5. RETIREMENT PRIOR TO AGE 65 DUE TO TOTAL
AND PERMANENT DISABILITY
An employe who has 10 or more years of credited service may be retired
prior to age 65 for total and permanent disability. An employe shall
be deemed to be totally and permanently disabled only if (i) he is not
engaged in regular employment or occupation for remuneration or
profit, and (ii) on the basis of medical evidence satisfactory
to the Corporation the employe is found to be wholly and permanently
prevented from engaging in regular employment or occupation with the
Corporation at the location where he last worked for remuneration or
profit as a result of bodily injury or disease, either occupational or
non-occupational in cause, but excluding disabilities resulting from
service in the armed forces of any country unless the employe becomes
totally and permanently disabled after he has accumulated at least 5
years of credited service following his separation from service in the
armed forces.
SECTION 6. RETIREMENT UNDER SECTION 11 OF THE GENERAL PROVISIONS
An employe who has 10 or more years of credited service may be retired
prior to age 62 under provisions set forth in Section 11 of the
General Provisions of this Program.
SECTION 7. EMPLOYES NOT IN ACTIVE SERVICE
The absence of an employe (or former employe) from active service at
the time such employe would be (or would have been) eligible to retire
under the Program shall not preclude such employe's retirement without
return to active service, provided that there has been no loss of
credited service.
4
<PAGE> 14
A, Art. I
PART A -- NON-CONTRIBUTORY BENEFITS
ARTICLE I
BENEFIT AMOUNTS
SECTION 1. RETIREMENT AT OR AFTER AGE 65
(a) Any employe who shall have attained the age of 65, shall have
completed one or more years of credited service as provided
in Article II of this Part A, and shall cease active
service shall be entitled to receive a retirement benefit
under this Part A.
(b) The monthly benefit payable to an employe retired pursuant
to the provisions of Section 1(a) of this Article I with
benefits payable commencing on or after October 1, 1990
shall be a basic benefit for each year of credited service
that the employe had at the first of the month coinciding
with or next following the employe's retirement, determined
by his Benefit Class Code in accordance with (c) below and
based on the month for which payment is being made as set
forth in the table immediately following:
<TABLE>
<CAPTION>
Basic Benefit Rate
Per Year of Credited Service
For Months Commencing
Retirement
With Benefits Benefit 10-1-90 10-1-91 10-1-92
Payable Class through through and
Commencing Code 9-1-91 9-1-92 After
<S> <C> <C> <C> <C>
October 1, 1990 A 28.35 29.50 30.70
and B 28.60 29.75 30.95
After C 28.85 30.00 31.20
D 29.10 30.25 31.45
</TABLE>
5
<PAGE> 15
A, Art. I, 1(c)
(c) As set forth below, a Benefit Class Code is established for the
purpose of this Article I for each salaried position on the basis of
the following salaried position levels:
<TABLE>
<CAPTION>
Benefit
Class
Salaried Position Level Code
<S> <C>
1 and 2 A
3 B
4 C
5 and Above D
</TABLE>
The Benefit Class Code applicable to an employe is the Benefit Class
Code for the salaried position level held by the employe for the
greatest number of calendar days during the 24 consecutive months
immediately preceding his last day worked.
In the event an employe is transferred to a lower salaried position
level, which results in a lower Benefit Class Code, such employe's
vested retirement benefit, if any, shall not be less than the amount
of his accrued retirement benefit on the date of such transfer to
such lower salaried position level.
(d) The amount of any monthly retirement benefit otherwise payable to the
employe at retirement, or earlier commencement, will be reduced by the
value of any past and future benefits paid or payable to any alternate
payee(s) under a Qualified Domestic Relations Order within the meaning
of I.R.C. Section 414(p).
The actuarial value will be used to determine any amount to be
paid to any such payee(s), if applicable, and the remaining benefit
entitlement of the employe.
6
<PAGE> 16
A, Art. I, 2
SECTION 2. EARLY RETIREMENT
(a) (1) An employe who retires voluntarily after he has attained age 55
but not age 65 and who has 10 or more years of credited service
shall be entitled to receive a retirement benefit under this
Part A.
(2) An employe who (i) was hired prior to January 1, 1988, (ii)
retires voluntarily before he has attained age 55, and (iii)
has 30 or more years of credited service shall be entitled to
receive a retirement benefit under this Part A.
(b) (1) The monthly basic benefit payable to an employe who retires
voluntarily with benefits payable commencing on or after October
1, 1990 shall be the basic benefit set forth in Section 1(b) of
this Article I but adjusted as set forth in (2) below.
(2) (i) For an employe retired (1) pursuant to Section
2(a)(1) above after he has attained age 60, or (2) after he
has attained age 55 but not age 60 and whose combined years
of age and years of credited service (to the nearest
1/12th in each case) at retirement total 85 or more,
or (3) pursuant to Section 2(a)(2) above and, in the case
of either (2) or (3) of this subparagraph, the employe
was hired prior to January 1, 1988, such benefit shall
commence on the first day of the month coinciding with or
next following his attaining age 62 (or, if later, the
first day of the month coinciding with or next following
his first day of absence because of retirement) or, in lieu
thereof, he may elect to receive the benefit commencing on
the first day of any month coinciding with or following his
first day of absence because of retirement and prior to age
62 in an amount
7
<PAGE> 17
A, Art. I, 2(b)(2)(i)
equal to the benefit payable upon attainment of age 62,
multiplied by a percentage as set forth in the following
table:
<TABLE>
<CAPTION>
Age When Benefit
Commences Percentage*
<S> <C>
42 21.0%
43 22.6
44 24.3
45 26.1
46 28.2
47 30.4
48 32.8
49 35.4
50 38.3
51 41.5
52 45.0
53 48.9
54 53.2
55 57.9
56 63.5
57 69.4
58 75.2
59 80.8
60 86.7
61 93.3
62 or Over 100.0
</TABLE>
* Prorated for intermediate ages computed on the basis of the
number of complete calendar months by which the employe
is under the age he will attain at his next birthday.
If an employe hired prior to January 1, 1988 (i) with 30 or
more years of credited service retires voluntarily, or (ii)
whose combined years of age and years of credited service
(to the nearest 1/12th in each case) at retirement total 85
or more retires voluntarily with benefits payable commencing
on or after October 1, 1990, the monthly basic benefits
otherwise payable to him after age 62 and one month shall be
redetermined without reduction for commencement prior to age
62.
8
<PAGE> 18
A, Art. I, 2(b)(2)(ii)
(ii) For an employe retired pursuant to Section 2(a)(1) above
after he has attained age 55 but not age 60, and whose
combined years of age and years of credited service at
retirement total less than 85, such benefit shall commence
on the first day of the month coinciding with or next
following his attaining age 65, or, in lieu thereof, he may
elect to receive the benefit commencing on the first day of
any month coinciding with or following his first day of
absence because of retirement, in which case the benefit, if
elected to commence prior to age 65, shall be reduced, as
follows:
<TABLE>
<CAPTION>
Age When Benefit
Commences Percentage*
<S> <C>
55 46.0%
56 49.6
57 53.2
58 56.8
59 60.4
60 64.0
61 71.2
62 78.4
63 85.6
64 92.8
65 100.0
</TABLE>
*Prorated for intermediate ages computed on the basis
of the number of complete calendar months by which the
employe is under the age he will attain at his next
birthday.
(iii) The basic benefit payable in any month will not be reduced
below an amount which results in the early retirement
supplement paid to a participant in such month, under
Section 7(a)(1) of this Article I, exceeding the old age
insurance benefits, unreduced on account of age, payable
under Title II of the Social Security Act, as amended.
9
<PAGE> 19
A, Art. I, 2(c)
(c) An employe discharged for cause after such employe is
eligible to retire voluntarily pursuant to Section 2(a) of this
Article I shall be entitled to the benefits provided under
Sections 2(b)(1) and 2(b)(2) of this Article I.
SECTION 3. AUTOMATIC RETIREMENT FOR BONA FIDE EXECUTIVE AT AGE 65
A bona fide executive employe retired on or after his automatic
retirement date and who has one or more years of credited service
shall be entitled to the benefits provided under Section 1 of this
Article I.
SECTION 4. TOTAL AND PERMANENT DISABILITY RETIREMENT
(a) An employe who is totally and permanently disabled
prior to attaining age 65, and has 10 or more years of
credited service, and who retires on or after October 1, 1990,
shall be eligible for a monthly disability retirement benefit as
hereinafter provided:
(i) A monthly basic benefit for each year of credited service
as set forth in Section 1(b) of this Article I and
determined by his Benefit Class Code as set forth in Section
1 (c) of this Article I, and
(ii) A temporary benefit for each year of credited
service, up to 30, as set forth in the table immediately
following:
10
<PAGE> 20
A, Art. I, 4(a)(ii)
<TABLE>
<CAPTION>
Monthly Temporary
Benefit Amount
Retirement With Per Year of
Benefits Payable Credited
Commencing Service Maximum
<S> <C> <C>
$ $
October 1, 1990
through
September 1, 1991 25.00 750.00
October 1, 1991
through
September 1, 1992 27.20 816.00
October 1, 1992
and After 29.30 879.00
</TABLE>
The monthly temporary benefit shall be payable until the
earlier of (1) age 62 and one month, or (2) the age at which
the employe becomes, or could have become, eligible
for a Federal Social Security benefit for disability or an
unreduced Federal Social Security benefit for age. At such
age the temporary benefit shall cease to be payable.
(iii) Such benefits shall be payable in accordance with Section 2
of the General Provisions to the disability retiree during
the continuance of total and permanent disability.
11
<PAGE> 21
A, Art. I, 4(b)
(b) Any disability retiree may be required to submit to medical
examination at any time during retirement prior to age 65, but not
more often than semi-annually, to determine whether the retiree is
eligible for continuance of the disability retirement benefit. If
on the basis of such examination it is found that the retiree is no
longer disabled or if the retiree engages in gainful employment,
except for purposes of rehabilitation as determined by the
Corporation, the retiree will be deemed recovered and his
disability retirement benefit will cease. In the event the
disability retiree refuses to submit to medical examination, the
retirement benefit will be discontinued until the retiree is
examined.
(c) Notwithstanding the provisions of Section 13(a) of the General
Provisions, the provisions of this Section 4 shall not be
applicable to employes of any wholly-owned or substantially
wholly-owned subsidiary of the Corporation acquired or formed by
the Corporation on or after March 1, 1984 unless specifically
approved by the General Motors Corporation Board of Directors.
SECTION 5. SURVIVING SPOUSE COVERAGE
(a) In lieu of the monthly basic benefit otherwise payable, an employe
who retires or is retired, or who loses credited service and is
eligible for a deferred retirement benefit pursuant to the
provisions of Article III of this Part A, shall be deemed to have
elected automatically a reduced amount of monthly basic benefit to
provide that, if his designated spouse shall be living at his death
after such election shall have become effective, a survivor benefit
shall be payable to such spouse during the spouse's further
lifetime. In the event that such spouse predeceases such employe,
and a Qualified Domestic Relations Order within the meaning of
I.R.C. Section 414(p) does not provide to the contrary, such
employe may cancel the survivor benefit election only with respect
to his monthly basic retirement benefit and have such benefit
restored to the amount payable without such election, effective the
first day of the third month following the month in which the
Corporation receives evidence satisfactory to the Corporation of
the spouse's death.
12
<PAGE> 22
A, Art. I, 5(a)
The automatic election provided in this subsection (a) shall become
effective on the latest of (i) the commencement date of the
employe's monthly basic benefit, (ii) the first day of the month
coinciding with or next following the employe's attainment of age
55 (except that this item (ii) shall not apply to an employe with
30 or more years of credited service who was hired prior to January
1, 1988), or (iii) the first day of the month coinciding with or
next following the date on which the employe has been married one
year if he is married when the election would otherwise become
effective except for the fact that such marriage has been in effect
less than one year at that date; except that, in the case of a bona
fide executive employe who has reached automatic retirement date
but whose basic benefit has not commenced, the effective date of
any such coverage shall be the later of such automatic retirement
date or the date determined in (iii) of this paragraph and the
basic benefit payable to such employe after the effective date
shall be reduced in accordance with the coverage.
An employe may prevent the automatic election provided in this
subsection (a) during the month prior to the effective date by
executing a specific written rejection of such election, which
includes the written consent of his spouse witnessed by the program
representative or a notary public, on a form approved by the
Corporation and filing it with the Corporation. An employe may
revoke a written rejection of this automatic election, without the
consent of the spouse, at any time prior to commencement of
benefits.
Information regarding this coverage is included in the summary plan
description, which will be provided to each employe. Within a
reasonable period prior to the annuity starting date, each
participant shall be provided a written explanation of: (i) the
terms and conditions of the surviving spouse coverage; (ii) the
participant's right to make and the effect of an election to waive
the surviving spouse coverage; (iii) the rights of the
participant's spouse; and (iv) the right to make and the effect of
revocation of a previous selection to waive the surviving spouse
coverage.
13
<PAGE> 23
A, Art. I, 5(b)
(b) The beneficiary of a survivor benefit election under subsection (a)
of this Section 5 shall be only the person who is the employe's
spouse at such time and who has been his spouse for at least one
year immediately prior to the effective date of such election.
(c) Except as provided in subsections (g) and (h) below, a survivor
benefit election shall be revoked automatically upon the death of
the employe or his designated spouse, or both, prior to the
effective date of the election.
(d) Once the election has become effective it cannot be rescinded,
except as otherwise provided under subsection (a) of this Section
5, without the written consent of the Corporation, but subject to
such consent, the employe's right to rescind the election is
contingent on the written consent of the designated spouse. In the
event the employe becomes divorced from such designated spouse, the
employe may cancel such coverage without consent of the spouse
unless a Qualified Domestic Relations Order within the meaning of
I.R.C. Section 414(p) provides to the contrary.
(e) For an employe who does not prevent the automatic election provided
in this Section 5, the reduced amount of his monthly basic benefit
shall be equal to an amount determined by multiplying the monthly
basic benefit payable to the employe by 95%; except that, in the
case of an employe whose monthly basic benefit is subject to
redetermination at age 62 and one month, the amount of reduction in
his monthly basic benefit for the survivor benefit election before
he attains the age at which his monthly benefit is redetermined
shall be based on the monthly benefit payable to such employe after
his monthly benefit is redetermined. Such percentage shall be (i)
increased by one-half of one percent (1/2%) (up to a maximum of
100%) for each 12 months in excess of five (5) years that the
spouse's age exceeds the employe's age, and (ii) decreased by
one-half of one percent (1/2%) for each 12 months in excess of five
(5) years that the spouse's age is less than the employe's age.
14
<PAGE> 24
A, Art. I, 5(f)
(f) The survivor benefit payable to the surviving spouse of a retired
employe who has the automatic election provided in this Section 5,
and who dies after such election becomes effective, shall be a
monthly benefit for the further lifetime of such surviving spouse
equal to 60% of the reduced amount of such employe's monthly basic
benefit; except that the survivor benefit payable to the surviving
spouse of an employe whose monthly basic benefit is subject to
redetermination at age 62 and one month shall be based on the
monthly basic benefit payable to such employe after his monthly
basic benefit is redetermined.
(g) The death of an otherwise eligible employe who has retired under
Section 4 of this Article 1, occurring on or after his attaining
age 55, but before the first day of the month following the date on
which he dies, shall not disqualify an otherwise eligible surviving
spouse from receiving a benefit hereunder.
(h) The surviving spouse of an employe
(1) who dies (i) on or after attaining age 55 with 10 or more
years of credited service, or (ii) at any age with 30 or
more years of credited service and his date of hire is
prior to January 1, 1988, but before the first day of the
month coinciding with or next following the first day of
absence because of retirement (or, if later, the
commencement date of his monthly basic benefit in the case
of an employe who defers the receipt of his monthly benefit
under Section 2(b)(2) of this Article I), who had not
reached his normal retirement date, and
(2) who, if he had retired at the date of his death, would have
been eligible for the election under subsection (a) of this
Section 5,
15
<PAGE> 25
A, Art. I, 5(h)
shall be entitled to a monthly benefit during such spouse's
further lifetime, terminating with the last monthly payment
before such spouse's death. The monthly benefit payable to
the surviving spouse shall be the amount such spouse would
have been entitled to receive under subsection (f) of this
Section 5, if the employe had retired on the date of his
death with benefits payable under Section 1(a) or 2(a),
whichever is applicable, of this Article I commencing the
first of the following month and had effectively made the
election under subsection (a) of this Section 5; provided,
however, that for the sole purpose of this subsection (h),
the benefits which would have been payable to the employe
by reason of such retirement shall be determined on the
basis of the table set forth in Section 2(b)(2)(i) of this
Article I. The surviving spouse of an employe who had been
separated from service in a layoff classification but who
had not lost credited service at the date of his death
shall be entitled to the benefit payable under this
subsection (h), if otherwise eligible.
(i) Joint and survivor coverage for disability retirements
(1) In lieu of the monthly basic benefit otherwise payable, an
employe who retires pursuant to the provisions of Section 4
of this Article I who is under age 55 and (i) has less than
30 years of credited service, or (ii) has 30 or more years
of credited service and was hired on or after January 1,
1988 shall be deemed to have elected automatically a
reduced amount of monthly basic benefit, up to and
including the month in which he dies or attains age 55,
whichever occurs first, and a monthly survivor's benefit,
beginning on the first day of the month after the retired
employe would have reached age 55 if he dies before the
first day of the month after he would have reached age 55,
shall be payable to his designated spouse during the
further lifetime of the spouse.
16
<PAGE> 26
A, Art. I, 5(i)(2)
(2) This automatic election shall be deemed to have been made
at the time the employe shall apply or shall have applied
for a disability retirement benefit (with the election
being effective the first day of the month for which his
first benefit under the Program is payable).
(3) The automatic election provided in this subsection (i)
shall be applicable only with respect to a spouse to whom
the employe is married on the date of such election and
only if the retired employe and his spouse shall have been
married throughout the one-year period ending on the date
of the retired employe's death.
(4) An employe may prevent the automatic election provided in
this subsection (i) at the time such election would
otherwise be deemed to have been made, as set forth in
paragraph (2) of this subsection (i), by specific written
rejection which includes the written consent of his spouse
witnessed by the program representative, or a notary
public, on a form approved by the Corporation. An employe
may revoke a written rejection of this automatic election,
without the consent of the spouse, at any time prior to
commencement of benefits.
(5) In any event, the election shall automatically be cancelled:
(i) if the employe's disability retirement status
terminates other than by death prior to the first
day of the month after the retired employe attains
age 55, or
(ii) if the retired employe survives on a disability
retirement status until the first day of the month
after he attains age 55, at which time the
coverage described in Section 5(a) through (h) of
this Article I becomes applicable.
17
<PAGE> 27
A, Art. I, 5(i)(6)
(6) The amount of the monthly basic benefit payable to an
employe deemed to have made the election provided hereunder
shall be determined by reducing actuarially the amount of
such benefit for the cost of the survivor benefit payable
in the event of the retired employe's death before the
first of the month following the attainment of age 55. The
actuarial reduction shall be based on the age of the
retired employe and his spouse (the age of each being
determined as the age at his or her birthday nearer the
date on which the benefits commence) and shall reflect the
higher mortality associated with being disabled. Reduction
factors at selected ages for disability survivor coverage
before age 55 are set forth in the following table:
<TABLE>
<CAPTION>
Age Difference Between
Age of Disabled Employe and Spouse
Employe Spouse Is:
When 10 5 5 10
Benefits Years Years Same Years Years
Commence Younger Younger Age Older Older
-------- ------- ------- --- ----- -----
<S> <C> <C> <C> <C> <C>
30 8.6% 8.1% 7.5% 6.7% 5.9%
35 10.4 9.9 9.2 8.3 7.2
40 12.5 11.8 11.0 10.0 8.8
45 14.3 13.5 12.7 11.6 10.3
50 13.9 13.2 12.4 11.4 10.2
51 13.1 12.5 11.7 10.8 9.7
52 10.4 9.9 9.3 8.6 7.7
53 3.4 3.2 3.0 2.8 2.5
54 3.4 3.3 3.1 2.8 2.5
</TABLE>
NOTE: Actuarial reduction factors for ages not shown
will be calculated on the same basis as the factors
shown.
18
<PAGE> 28
A, Art. I, 5(i)(7)
(7) The amount of the monthly benefit payable to the surviving
spouse of a retired employe deemed to have made the
election specified hereunder shall be 50% of the amount of
the monthly basic benefit payable to the retired employe
after the reduction provided in paragraph (6) of this
subsection (i).
(8) Anything in the Program to the contrary notwithstanding, if
the designated spouse of a retired employe deemed to have
made the election provided hereunder shall predecease such
retired employe, or they are divorced by a court decree and
a Qualified Domestic Relations Order within the meaning of
I.R.C. Section 414(p) does not provide to the contrary,
such retired employe shall have his monthly basic benefit
restored to the amount payable without such election,
effective the first day of the third month following the
month in which the Corporation receives evidence
satisfactory to the Corporation of the spouse's death or
divorce.
(9) No benefit shall be payable under this subsection (i) for
any month for which benefits are payable under Section
5(a), (h), or (j) of this Article I.
(10) Information regarding this coverage is included in the
summary plan description, which will be provided to each
employe. Within a reasonable period prior to the annuity
starting date, each participant shall be provided a written
explanation of: (i) the terms and conditions of the
surviving spouse coverage; (ii) the participant's right to
make and the effect of an election to waive the surviving
spouse coverage; (iii) the rights of the participant's
spouse; and (iv) the right to make and the effect of a
revocation of a previous selection to waive the surviving
spouse coverage.
19
<PAGE> 29
A, Art. I, 5(j)
(j) Pre-retirement survivor coverage provided under Part A of the
Program to comply with the Retirement Equity Act of 1984
(1) An employe who:
(i) has either 5 or more years of credited service, or 5
years of "service" as provided under Article II,
Section 11, and who is credited with one or more
hours of credited service or "services" accrued on or
after January 1, 1989, or
(ii) loses credited service on or after October 1, 1990
and who is eligible for a deferred retirement benefit
under Article III,
and in either case is not eligible for the regular
surviving spouse coverage provided under subsection (h) of
this Section 5, shall have the pre-retirement survivor
coverage described herein.
Such coverage shall remain in full force and effect until
the date on which the employe or former employe becomes
eligible for the regular surviving spouse coverage provided
under subsection (h) of this Section 5, at which time the
pre-retirement survivor coverage described herein shall
cease to be effective.
In the event the employe or former employe predeceases the
designated spouse while the pre-retirement survivor
coverage provided hereunder is in effect, the designated
spouse shall be eligible, during the further lifetime of
such spouse, for a monthly benefit commencing on the first
of the month following the month in which the employe or
former employe would have become eligible, except for the
fact that he died, to retire at the option of the employe.
20
<PAGE> 30
A, Art. I, 5(j)(1)
The amount of any such monthly survivor benefit shall be
determined by the basic benefit rate in effect for the
employe on the date of death of such employe, or the date
credited service was broken for a former employe.
(2) The survivor coverage provided hereunder for an employe or
former employe shall be effective on the date the employe
or former employe attains 5 years of credited service or
"service" as provided under Article II, Section 11, and
provided that such employe is credited with one hour or
more of credited service or "service" accrued on or after
January 1, 1989.
(3) The survivor coverage provided hereunder shall be effective
with respect to a spouse to whom the employe or former
employe is married, but only if the couple shall have been
married throughout the one-year period ending on the date
of the employe's or former employe's death.
(4) Subsections (j)(2) and (j)(3) notwithstanding, if an employe
or former employe marries or remarries, such coverage shall
be in effect in favor of his spouse upon such marriage or
remarriage, unless, in the case of remarriage, a Qualified
Domestic Relations Order within the meaning of I.R.C.
Section 414(p) requires such coverage to remain in effect
for the former spouse. The effective date of any such
coverage shall be in accordance with item (3) of this
subsection (j).
(5) In the event of divorce, the employe or former employe can
revoke the coverage provided hereunder without spousal
consent, unless a Qualified Domestic Relations Order within
the meaning of I.R.C. Section 414(p) provides to the
contrary.
21
<PAGE> 31
A, Art. I, 5(j)(6)
(6) The coverage provided hereunder shall be canceled
automatically on the date when any employe or former
employe becomes eligible for the regular surviving spouse
coverage provided under the provisions of Article I,
Section 5(h) of the Program.
(7) The monthly benefit amount payable hereunder to any
eligible surviving spouse shall be 50% of the monthly
amount of the basic benefit as determined in Article III
otherwise payable at the (i) date of death to the employe,
or (ii) date credited service broke for a former employe,
after any reduction provided in Article III.
(8) No benefit shall be payable under this subsection (j) for
any month for which benefits are payable under Article I,
Section 5 or Section 6 of Part A of this Program.
(9) Information regarding the coverage provided hereunder is
included in the summary plan description, which will be
provided to each employe covered by the Salaried Retirement
Program, in accordance with The Employee Retirement Income
Security Act (ERISA).
(10) The pre-retirement survivor coverage provided hereunder
will apply to eligible employes and former employes
separated from service:
(a) whose last day worked for the Corporation was on or
after October 1, 1976, and
(b) who have entitlement to but have not commenced
receipt of deferred retirement benefits, and
(c) who are alive as of August 23, 1984.
22
<PAGE> 32
A, Art. I, 6
SECTION 6. JOINT AND SURVIVOR OPTION
(a) In lieu of the monthly basic benefit otherwise payable, an employe
who retires or is retired or who loses credited service and is
eligible for a deferred retirement benefit pursuant to the
provisions of Article III of this Part A, may elect to receive
during his lifetime a reduced amount of monthly basic benefit to
provide that, if the contingent annuitant (who may be any person
designated by the employe) shall be living at his death after such
election shall have become effective, a survivor benefit shall be
payable to such contingent annuitant during the further lifetime of
such contingent annuitant; provided that the employe completes the
election on a form approved by the Corporation and files it with
the Corporation prior to the earlier of:
(1) the time he makes application for a benefit to commence at
or after age 55, or at any age if the employe's date of
hire is prior to January 1, 1988 and he retires with 30 or
more years of credited service, in which case the election
shall become effective on the commencement date of the
employe's monthly basic benefit; or
(2) the month prior to that in which the employe attains age 55
if he attains age 55 while eligible for and receiving a
retirement benefit, in which case the election shall become
effective upon the employe's attainment of age 55.
If married, and the designated contingent annuitant is not the
spouse, the written consent of the spouse on whose behalf the
option otherwise would be in effect, witnessed by the program
representative, or a notary public, on a form approved for this
purpose by the Corporation and filed with the Corporation, will be
required. The written consent of the spouse is limited to a
benefit for the designated alternate beneficiary only.
23
<PAGE> 33
A, Art. I, 6(b)
(b) The death of an otherwise eligible employe who has retired under
Section 4 of this Article I, occurring on or after his attaining
age 55, but before the first day of the month following the date on
which he dies, shall not disqualify an otherwise eligible surviving
spouse from receiving a benefit hereunder.
(c) Except as provided in (b) above, the option shall be revoked
automatically upon the death of the employe or his designated
contingent annuitant, or both, prior to the effective date of the
election.
(d) Once the option has become effective it cannot be rescinded or
changed without the consent of the Corporation, but subject to such
consent, the employe's right is reserved to rescind the election,
except that the written consent of the designated contingent
annuitant is required only if such annuitant is the employe's
spouse. In the event the employe becomes divorced from such
designated spouse, the employe may cancel such option without
consent of the spouse, unless a Qualified Domestic Relations Order
within the meaning of I.R.C. Section 414(p) provides to the
contrary.
(e) The amount of monthly benefit payable to such contingent annuitant
if such contingent annuitant is living at the death of the employe
shall equal any designated percentage, up to a maximum of 100%, of
the employe's reduced monthly basic benefit, except that, in the
case of an employe whose monthly benefit is subject to
redetermination at age 62 and one month, the amount of reduction in
his monthly benefit for the survivor benefit election before he
attains the age at which his monthly benefit is redetermined shall
be based on the monthly benefit payable to such employe after his
monthly benefit is redetermined and the benefit payable to the
contingent annuitant shall be based on the monthly benefit payable
to such employe after his monthly benefit is redetermined.
24
<PAGE> 34
A, Art. I, 6(e)
The amount of monthly benefit shall be determined so that the actuarial value
of the reduced amount of monthly benefit payable to the employe and the
actuarial value of the amount of monthly benefit to be continued to the
designated contingent annuitant is as follows:
<TABLE>
<CAPTION>
Joint and Survivor Option Rate Table
Full Years
Contingent Annuitant Factors to Convert Normal Form of Retirement to
is Older (+) or Younger(-) Joint and Survivor Option for Indicated Percentage
Than Employe Payable to Contingent Annuitant*
-------------------------- --------------------------------------------------
100% 75% 50%
---- --- ---
<S> <C> <C> <C>
+20 95.50 96.00 100.00
+19 95.00 95.50 99.50
+18 94.50 95.00 99.00
+17 94.00 94.50 98.50
+16 93.50 94.00 98.00
+15 93.00 93.50 97.50
+14 92.50 93.00 97.00
+13 92.00 92.50 96.50
+12 91.50 92.00 96.00
+11 91.00 91.50 95.50
+10 90.50 91.00 95.00
+ 9 89.75 90.50 94.50
+ 8 89.00 90.00 94.00
+ 7 88.25 89.50 93.50
+ 6 87.50 89.00 93.00
+ 5 86.75 88.50 92.50
+ 4 86.00 88.00 92.00
+ 3 85.25 87.50 91.50
+ 2 84.50 87.00 91.00
+ 1 83.75 86.50 90.50
0 83.00 86.00 90.00
- 1 82.25 85.50 89.50
- 2 81.50 85.00 89.00
- 3 80.75 84.50 88.50
- 4 80.00 84.00 88.00
- 5 79.25 83.50 87.50
- 6 78.50 83.00 87.00
- 7 77.75 82.50 86.50
- 8 77.00 82.00 86.00
- 9 76.25 81.50 85.50
-10 75.50 81.00 85.00
-11 75.00 80.50 84.50
-12 74.50 80.00 84.00
-13 74.00 79.50 83.50
-14 73.50 79.00 83.00
-15 73.00 78.50 82.50
-16 72.50 78.00 82.00
-17 72.00 77.50 81.50
-18 71.50 77.00 81.00
-19 71.00 76.50 80.50
-20 70.50 76.00 80.00
</TABLE>
*Other whole percentage levels may be elected.
25
<PAGE> 35
A, Art. I, 6(e)
Notwithstanding any of the above, where the contingent
annuitant is other than the employe's spouse, the actuarial
value of the benefit payable to the employe as of his actual
retirement date must be more than 50% of the actuarial value
of the benefit payable to the employe and his contingent
annuitant.
SECTION 7. SUPPLEMENTS
(a) An employe who retires with benefits payable under Section 2 of
this Article I (other than an employe (i) discharged for cause,
(ii) hired on or after January 1, 1988, or (iii) referred to in
Section 2(b)(2)(ii) of this Article I who retires voluntarily after
he has attained age 55 but not age 60 and whose combined years of
age and years of credited service at retirement total less than 85)
or who retires with benefits payable under Section 4 of this
Article I, and who files his application for retirement within five
years of the last day he worked for the Corporation and who agrees
to restrict his participation in the work force as provided in (e)
below will receive, in addition to his retirement benefits, certain
supplements as set forth below:
(1) If the employe retires under Section 2 or 4 of this Article
I with 30 or more years of credited service at the date of
his retirement and his date of hire was prior to January 1,
1988, he shall be entitled to a monthly early retirement
supplement until age 62 and one month in an amount which
when added to his monthly retirement benefit under this
Part A and any supplementary benefits under Part B, prior
to reduction for survivor coverage, will equal the amount
of total monthly benefit applicable to him as provided in
the table set forth below, subject to subsequent provisions
of this Section 7:
26
<PAGE> 36
A, Art. I, 7(a)(1)
<TABLE>
<CAPTION>
Total Monthly Benefit Rate For Determining
Monthly Early Retirement Supplement
For Retirements With
30 or More Years of Credited Service
Retirement
With Benefits 10-1-90 10-1-91 10-1-92
Payable through through and
Commencing 9-1-91 9-1-92 After
-------------- ------- ------- -------
<S> <C> <C> <C>
$ $ $
October 1, 1990
and
After 1,600 1,700 1,800
</TABLE>
(2) If the employe retires voluntarily after attaining age 55 with less
than 30 years of credited service, he shall be entitled to a
monthly interim supplement until he attains age 62 and one month
equal to the amount applicable to him as provided immediately below
for each year of credited service that he had at the date of his
retirement, subject to subsections (b), (e), and (g) of this
Section 7:
<TABLE>
<CAPTION>
Monthly Amount* and Effective Date of Interim Supplement
Payable Prior to Age 62 and One Month
for Each Year of Credited Service
Retired With Benefits Payable Commencing
On or After October 1, 1990
Age at
Retirement 10-1-90 10-1-91 10-1-92
---------- ------- ------- -------
<S> <C> <C> <C>
$ $ $
55 11.00 12.00 12.90
56 12.95 14.10 15.20
57 15.70 17.05 18.40
58 18.40 20.00 21.55
59 20.55 22.40 24.10
60 23.75 25.85 27.85
61 23.75 25.85 27.85
</TABLE>
* Prorated for intermediate ages computed on the basis of the number
of complete calendar months by which the employe is under the age
he will attain at his next birthday.
27
<PAGE> 37
A, Art. I, 7(a)(2)
This provision shall not apply to an employe who has
attained age 55 but not age 60 and whose combined years of
age and years of credited service (to the nearest 1/12th in
each case) at retirement total less than 85.
(3) Any interim supplement described above shall be reduced by
any supplementary benefits payable under Part B of this
Program prior to reduction for survivor coverage.
(b) The early retirement supplement under subsection (a)(1) of this
Section 7 for an employe who retires voluntarily shall be
calculated assuming that his basic benefit commences immediately
after retirement, and such early retirement supplement and the
interim supplement under subsection (a)(2) of this Section 7 shall
be reduced for any month prior to age 62 and one month for which he
becomes or could have become eligible for a Federal Social Security
benefit, by an amount equal to the amount of the temporary benefit
to which he would have been entitled if he had retired under
Section 4 of this Article I.
(c) The early retirement supplement under subsection (a)(1) of this
Section 7 for an employe who retires under Section 4 of this
Article I shall be calculated on the assumption that he will
receive a temporary benefit until age 62 and one month even if such
temporary benefit is not received by the employe until such age
because of his earlier entitlement to Social Security benefits.
(d) The early retirement supplement under subsection (a)(1) of this
Section 7 for an employe who does not prevent the automatic
election of the surviving spouse coverage provided under Section
5(a) of this Article I shall be calculated on the basis of the
monthly retirement benefit he would have received if he had
prevented such automatic election.
28
<PAGE> 38
A, Art. I, 7(e)
(e) Any of the supplements to which an employe is entitled shall
commence on the first day of the month coinciding with or next
following the employe's first day of absence because of retirement
and shall be payable monthly thereafter until and including the
first day of the month in which he dies, or his retirement benefit
ceases for any other reason, or he is reemployed by the
Corporation, or he attains age 62 and one month, whichever occurs
first, provided however, that if an employe entitled to receive a
supplement has earnings after retirement in excess of the following
annual earnings limitation in any calendar year before he attains
age 62 and one month, such earnings being defined for this purpose
as the type counted for the earnings test under the Federal Social
Security Act or the corresponding type in any future Federal
legislation amending, superseding, supplementing or incorporating
the Federal Social Security Act, a penalty equal to double the
amount by which such earnings exceed the amount permitted shall be
charged against each succeeding monthly supplement which he would
otherwise be entitled to receive until the full amount of such
penalty is satisfied, it being understood that penalties and
charges herein shall be cumulative if appropriate:
<TABLE>
<CAPTION>
Calendar Annual Earnings Limitation
Year Amount
-------- --------------------------
<S> <C>
$
1990 10,000
1991 15,000
1992 15,000
1993 15,000
</TABLE>
29
<PAGE> 39
A, Art. I, 7(e)
An employe receiving a monthly early retirement supplement or
interim supplement may be required to certify whether his earnings
have been in excess of the permitted amount and to furnish
verification of the amount of his earnings. Unless repaid by the
employe in a lump sum, any overpayments of a supplement made after
an employe incurred a penalty because of excess earnings in
accordance with the preceding paragraph shall be deducted from
future monthly benefits payable to him under this Part A and under
the supplementary benefit provisions of Part B.
The annual earnings limitation provisions of this subsection (e)
shall not be applicable to any retirement, defined in Section 11 of
the General Provisions, with benefits payable commencing on or
after October 1, 1990 and prior to September 14, 1993.
(f) If a retired employe (i) has been receiving disability retirement
benefits under this Part A and has been receiving a supplement and
on the basis of medical evidence satisfactory to the Corporation it
is found that he is no longer totally and permanently disabled and
his credited service is reinstated, or (ii) is reemployed by the
Corporation, he shall not thereby forfeit any right he may
thereafter have to receive a supplement if he thereafter retires
under this Program.
(g) If the total of the employe's monthly benefits under this Part A
and under the supplementary benefit provisions of Part B and his
monthly early retirement supplement or interim supplement as
computed above would exceed 70% of his final base salary, his
monthly supplement shall be reduced to the extent required so that
such monthly benefits plus his supplement will equal 70% of his
final base salary. For this purpose, an employe's "final base
salary" shall mean his highest monthly base salary rate during the
last three months preceding his last day of work prior to
retirement.
30
<PAGE> 40
A, Art. I, 8
SECTION 8. SPECIAL BENEFIT
(a) A retired employe or a surviving spouse (i) age 65 or older, or
(ii) under age 65 and enrolled in the voluntary "Medicare" coverage
that is available under the Federal Social Security Act by making
contributions (in either case excluding the spouse of a former
employe who received a deferred non-contributory retirement benefit
under the Program), who is receiving a monthly benefit under
Article I of this Part A which commenced prior to October 1, 1979,
subject to (d) below, shall receive a monthly special benefit equal
to:
(1) the lesser of $28.00 or the generally applicable "Medicare"
Part B premium for months commencing on or after January 1,
1990,
(2) the lesser of $31.00 or the generally applicable "Medicare"
Part B premium for months commencing on or after January 1,
1991,
(3) the lesser of $34.00 or the generally applicable "Medicare"
Part B premium for months commencing on or after January 1,
1992, and
(4) the lesser of $38.50 or the generally applicable "Medicare"
Part B premium for months commencing on or after January 1,
1993.
(b) In no event shall such payment commence prior to the first day of
the month coinciding with or next following the earlier of (i) the
month during which age 65 is attained, or (ii) receipt by the
Corporation of application on a form provided for this purpose from
an otherwise eligible individual under age 65; except that, with
respect to an otherwise eligible individual under age 65, payment
shall commence with the first month of such enrollment, but in no
event prior to October 1, 1979.
31
<PAGE> 41
A, Art. I, 8(c)
(c) Not more than one such payment shall be made to any individual for
any one month. No such payment shall be made to any individual
under age 65 for any month such individual is not enrolled for such
voluntary "Medicare" coverage. No such payment shall be made under
this Program to any individual who retires with benefits payable
commencing on or after October 1, 1979.
(d) Effective January 1, 1991, the special benefit payable to an
individual who is not enrolled in "Medicare" Part B as of October
1, 1990, but who (i) was receiving a special benefit, and (ii)
first became entitled to such benefit prior to March 1, 1988, will
be limited to $28.00 per month. Such an individual will become
entitled to the schedule of payments in subsection (a) above, upon
proof of enrollment in "Medicare" Part B. Thereafter, continued
receipt of a special benefit will be contingent on maintenance of
"Medicare" Part B enrollment.
(e) For an individual enrolled in "Medicare" Part B as of March 1,
1988, or who first becomes eligible for "Medicare" Part B on or
after March 1, 1988, receipt of a special benefit on and after
January 1, 1991 is contingent upon continued enrollment in
"Medicare" Part B.
32
<PAGE> 42
A, Art. I, 9
SECTION 9. BENEFITS FOR EMPLOYES WHO RETIRED WITH BENEFITS
PAYABLE COMMENCING PRIOR TO OCTOBER 1, 1990
An employe who retired with benefits payable commencing prior to October 1,
1990, or the eligible surviving spouse or contingent annuitant of such an
employee, shall be entitled to the benefits, if any, under the Program as it
existed immediately prior to such date, except that:
(a) (1) Basic benefits payable under this Part A to such retired employes,
or the benefits payable to surviving spouses or contingent
annuitants in lieu of or related to such basic benefits, shall be
increased to the extent necessary to provide monthly benefits equal
to the benefits which would have been payable had the basic
benefits payable to the employe at and after age 65 been based on
the following table:
<TABLE>
<CAPTION>
Basic Benefit Rate
Per Year of Credited Service
For Months Commencing
Retirement ----------------------------
With Benefits Benefit 10-1-90
Payable Class and
Commencing Code After
----------------------------------------------------------------------------
$
<S> <C> <C>
Prior to
October 1, 1979 N/A 20.00*
October 1, 1979 A 21.25
through B 21.50
September 1, 1980 C 21.75
D 22.00
October 1, 1980 A 21.35
through B 21.60
September 1, 1981 C 21.85
D 22.10
October 1, 1981 A 21.45
through B 21.70
September 1, 1984 C 21.95
D 22.20
</TABLE>
* Including, if applicable, $1.00 waived for election of special survivor
coverage.
(CONTINUED ON NEXT PAGE)
33
<PAGE> 43
A, Art. I, 9(a)(1)
(CONTINUED FROM PRECEDING PAGE)
<TABLE>
<CAPTION>
Basic Benefit Rate
Per Year of Credited Service
For Months Commencing
Retirement ----------------------------
With Benefits Benefit 10-1-90
Payable Class and
Commencing Code After
-----------------------------------------------------------
$
<S> <C> <C>
October 1, 1984 A 24.10
through B 24.35
September 1, 1985 C 24.60
D 24.85
October 1, 1985 A 24.20
through B 24.45
September 1, 1986 C 24.70
D 24.95
October 1, 1986 A 24.30
through B 24.55
September 1, 1987 C 24.80
D 25.05
October 1, 1987 A 27.30
through B 27.55
September 1, 1988 C 27.80
D 28.05
October 1, 1988 A 27.40
through B 27.65
September 1, 1989 C 27.90
D 28.15
October 1, 1989 A 27.50
and prior to B 27.75
October 1, 1990 C 28.00
D 28.25
</TABLE>
(2) If an employee whose monthly basic benefit under this Part A
otherwise would have been redetermined at age 62 attains
age 62 on or after March 1, 1982, such redetermination shall
be effective at age 62 and one month.
34
<PAGE> 44
A, Art. I, 9(b)
(b) Any temporary benefits payable to such retired employes until age 65
if retired with benefits payable commencing before June 1, 1974, or age
62 if retired with benefits payable commencing on or after June 1,
1974, or age 62 and one month for a retired employe who attains age 62
on or after March 1, 1982, or, in any case, if earlier, until the age
at which the employe becomes or could have become eligible for a
Federal Social Security benefit for disability or an unreduced Federal
Social Security benefit for age shall be increased to the extent
necessary to provide monthly temporary benefits equal to the temporary
benefits which would have been payable had the temporary benefits
payable to the employe prior to such age 65 (or age 62 or age 62 and
one month) or earlier age been based on the following:
<TABLE>
<CAPTION>
Monthly Temporary Benefit Amount*
Retires With ------------------------------------
Benefits Payable Per Year of
Commencing Credited Service Maximum
-----------------------------------------------------------------
$ $
<S> <C> <C>
Prior to
September 1, 1964 11.50 300.00
September 1, 1964
and prior to
October 1, 1967 12.00 300.00
October 1, 1967
and prior to
October 1, 1970 12.25 306.25
October 1, 1970
and prior to
June 1, 1974 12.75 318.75
June 1, 1974
and prior to
October 1, 1976 13.75 343.75
October 1, 1976
and prior to
October 1, 1978 14.25 356.25
</TABLE>
* Benefit payable for months commencing October 1, 1990.
(CONTINUED ON NEXT PAGE)
35
<PAGE> 45
A, Art. I, 9(b)
(CONTINUED FROM PRECEDING PAGE)
<TABLE>
<CAPTION>
Monthly Temporary Benefit Amount*
Retires With ----------------------------------
Benefits Payable Per Year of
Commencing Credited Service Maximum
------------------------------------------------------------------
$ $
<S> <C> <C>
October 1, 1978
and prior to
October 1, 1979 15.25 381.25
October 1, 1979
and prior to
October 1, 1980 16.25 406.25
October 1, 1980
and prior to
October 1, 1981 17.25 431.25
October 1, 1981
and prior to
January 1, 1983 18.25 456.25
January 1, 1983
and prior to
October 1, 19a5 18.25 547.50
October 1, 1985
and prior to
October 1, 1986 19.25 577.50
October 1, 1986
and prior to
October 1, 1987 20.25 607.50
October 1, 1987
and prior to
October 1, 1988 20.45 613.50
October 1, 1988
and prior to
October 1, 1989 21.55 646.50
October 1, 1989
and prior to
October 1, 1990 22.65 679.50
</TABLE>
* Benefit payable for months commencing October 1, 1990.
36
<PAGE> 46
A, Art. I, 9(c)(1)
(c) (1) An employe who retired under Article I of this Program with 30 or
more years of credited service who is eligible to receive a monthly
supplement which commenced prior to October 1, 1990 shall receive
an increase to such monthly supplement as follows:
<TABLE>
<CAPTION>
Amount of Increase*
--------------------------------
Payable to Payable Between
Effective Date Age 62 Ages 62 and
of Increase and One Month One Month - 64
---------------------------------------------------
$ $
<S> <C> <C>
October 1, 1990 75.00 37.50
</TABLE>
* This increase will not result in a total monthly
benefit of less than $1,100 for months prior to age
62 and one month, or $550 for months between ages 62
and one month and 64.
The amount of any monthly supplement payable to an employe who
retired under the Program with benefits commencing prior to October
1, 1990 shall be redetermined to the amount of supplement which
would have been payable had the applicable benefit rates set forth
in this Section 9 and referred to in Section 7 of Article I of Part
B been in effect when such employe's benefits commenced. If such
retired employe is entitled as of October 1, 1990 to receive Social
Security benefits, and if he became so entitled before October 1,
1990, the increase in the rate of temporary benefit provided in
subsection (b) of this Section 9 shall not be considered in
redetermining his supplement until he ceases to be so entitled.
37
<PAGE> 47
A, Art. I, 9(c)(2)
(2) An employe who retired voluntarily under Article I of this Program
after attaining age 55 with less than 30 years of credited service
who is eligible to receive a monthly interim supplement which
commenced prior to October 1, 1990 shall receive, for months
commencing on and after October 1, 1990, an increase to such
interim supplement, as follows:
<TABLE>
<CAPTION>
Age at Monthly Increase*
Retirement Per Year of Credited Service
------------------------------------------------
<S> <C>
55 0.55
56 0.65
57 0.80
58 0.95
59 1.05
60 1.20
61 1.20
</TABLE>
* Prorated for intermediate ages computed on the basis of
the number of complete calendar months by which the
employe is under the age he will attain at his next birthday.
(d) The survivor benefit payable to the surviving spouse of a
retired employe who has completed an election of a special
survivor option and who dies after such election becomes effective,
shall be a monthly benefit for the lifetime of such surviving
spouse equal to:
(1) $7.00 for each year of credited service that such retired
employe had at the date of his retirement with respect to
benefits payable for any month commencing October 1, 1990
through September 1, 1991,
38
<PAGE> 48
A, Art. I, 9(d)(2)
(2) $8.00 for each year of credited service that such retired
employe had at the date of his retirement with respect to
benefits payable for any month commencing October 1, 1991
through September 1, 1992, and
(3) $9.00 for each year of credited service that such retired
employe had at the date of his retirement with respect to
benefits payable for any month commencing on or after October
1, 1992.
(e) An employe who retired under the Program or who is eligible for a
deferred retirement benefit pursuant to the provisions of Part A of
the Program, and who has surviving spouse coverage in effect but
whose designated spouse predeceases him, may have his monthly basic
benefit restored to the amount payable without such coverage,
effective the first day of the third month following the month in
which the Corporation receives evidence satisfactory to the
Corporation of the spouse's death.
(f) An employe who retired under the Program and who has a joint and
survivor option, as provided under this Article I, Section 6, in
effect with respect to his Part A benefit but whose designated
contingent annuitant is deceased shall receive the increase in
benefits which otherwise would have been payable to him under this
Section 9 as if he had not elected such option.
(g) An employe who retired or retires under Article I of the Program
with benefits payable commencing on or after January 1, 1962, who
marries, or remarries, subsequent to the earliest date survivor
benefit coverage was in effect, or was not in effect on such date
solely because the retired employe was not then married, may elect,
or re-elect, survivor benefit coverage under Part A. Any such
coverage, and the benefits thereunder, shall be provided under the
terms and conditions of the Program in effect at the time of the
employe's
39
<PAGE> 49
A, Art. I, 9(g)
retirement. Such coverage shall become effective on the first day
of the third month following the month in which the Corporation
receives a completed election form, but in no event before the
first day of the month following the month in which the retired
employe has been married one year.
No election provided hereunder shall become effective under any
circumstance for any retired employe whose completed election form
is received by the Corporation after the first day of the month in
which the retired employe has been married one year.
This subsection (g) also shall be applicable to an employe retired
with benefits payable commencing on or after October 1, 1990.
(h) Monthly benefits payable under this Section 9 on and after October
1, 1990 shall not be limited by the 70% benefit limitation in
Section 7(g) of this Article I.
(i) The monthly amount of any lifetime supplement payable to an
employe retired with benefits payable commencing on or after March
1, 1974 with 30 or more years of credited service shall not exceed
$35.00 when added to the Part B Supplementary benefit payable at
retirement without reduction for survivor coverage.
(j) The monthly amount of any age-service supplement payable to an
employe retired with benefits payable commencing on or after March
1, 1974 with less than 30 years of credited service, but after
attaining age 62 and one month, shall be $1.00 per month per year
of credited service, reduced by 1/36th for each complete calendar
month that the employe was under age 65 at date of retirement and
further reduced by any Part B Supplementary benefit payable at
retirement without reduction for survivor coverage.
40
<PAGE> 50
A, Art. II
ARTICLE II
CREDITED SERVICE
(APPLICABLE TO BENEFITS UNDER PART A
AND SUPPLEMENTARY BENEFITS UNDER PART B)
SECTION 1. GENERAL
(a) For purposes of determining "credited service" as used in this
Program, the word "employment" shall include
(1) all employment prior to an employe's retirement, or termination
of employment, whichever is earlier, whether on salary or
hourly-rate, with the Corporation or its directly or indirectly
wholly-owned or substantially wholly-owned domestic or foreign
subsidiaries in accordance with I.R.C. Section 414(b), (c),
(m), (n), and (o), as well as service with any company
(including service with any directly or indirectly wholly-owned
or substantially wholly-owned subsidiary of such company) of
which substantially all the assets have been acquired by the
Corporation or its subsidiaries, excluding any directly or
indirectly wholly-owned or substantially wholly-owned
subsidiary of the Corporation acquired or formed by the
Corporation on or after March 1, 1984, provided that no
employment prior to date of acquisition with any such directly
or indirectly wholly-owned or substantially wholly-owned
domestic or foreign subsidiary acquired after October 1, 1950
or with any company (including employment with any directly or
indirectly wholly-owned or substantially wholly-owned
subsidiary of such company) of which substantially all the
assets are acquired by the Corporation or its subsidiaries after
October 1, 1950 shall be taken into account for purposes of
determining credited service; and
41
<PAGE> 51
A, Art. II, 1(a)(2)
(2) any period of employment with a company in which General
Motors Corporation held, directly or indirectly, at least 25%
of the common stock, if such employment was immediately
followed by employment commencing prior to October 1, 1950 with
General Motors Corporation or its directly or indirectly
wholly-owned or substantially wholly-owned domestic or foreign
subsidiaries provided the inclusion of such period of
employment is authorized under such rules as may be established
in conformity with the objectives of the Program by the Named
Fiduciary or its delegate.
(b) For the purposes of this Program, credited service is generally
considered automatically broken by a quit or discharge; provided
that if, after a quit or discharge, an employe has been or is
rehired, his credited service shall be reinstated as provided in
Section 4(a) of this Article II. However, the period during which
such employe is absent from service because of such quit or
discharge shall not be included in the calculation of the amount of
credited service, unless the employe was or is absent from service
at the request of, or with the approval of, the Corporation for
the purpose of employment with a company affiliated with the
Corporation and, upon termination of such employment with such
affiliate, returned or returns to the service of the Corporation as
his first employment following his employment with the affiliate.
(c) Credited service (and years of credited service) as used in this
Program shall be computed to the nearest full month and shall be
the sum of the number of years (and months thereof) of (i) credited
service prior to October 1, 1950, and (ii) credited service on or
after October 1, 1950. Provisions regarding credited service prior
to October 1, 1950, are set forth in the General Motors Retirement
Program for Salaried Employes as amended through October 1, 1984.
42
<PAGE> 52
A, Art. II, 2
SECTION 2. CREDITED SERVICE SUBSEQUENT TO OCTOBER 1, 1950
(a) Credited service shall consist of the number of years (to the
nearest 1/12 thereof) represented by:
(1) All periods of regular employment subsequent to October 1,
1950, for which an employe receives compensation. No
credited service shall accrue hereunder for an employe
classified as a Flexible Service employe except as otherwise
provided in subsection (e) of this Section 2.
(2) All periods of absence prior to (i) an employe's retirement, or
(ii) termination of employment, whichever is earlier, under
a compensable Disability Leave of Absence, as defined in
Section 8 of this Article II.
(3) All periods of absence prior to (i) an employe's retirement, or
(ii) termination of employment, whichever is earlier,
under an approved Military Leave of Absence provided the
employe is reemployed in accordance with the terms of such
leave of absence. However, such credited service shall not
exceed four years, or such longer period during which he has
reemployment rights pursuant to any Federal law, and provided,
further, that the employe is reemployed in accordance with the
terms of such leave of absence or, if reemployed by the
Corporation at a location other than the location from which
the leave was granted, within 90 days from the date of his
discharge from the armed forces.
43
<PAGE> 53
A, Art. II, 2(a)(4)
(4) All periods of absence during any calendar year after December
31, 1967 and prior to an employe's retirement under a layoff
or an approved noncompensable Disability Leave of Absence
provided the employe receives compensation for periods totaling
at least one month during such calendar year, and provided
further, that if such layoff or Disability Leave of Absence
commences in a calendar year after December 31, 1969 and
continues after that year, credited service shall be granted
for each calendar month of such absence, not to exceed eleven
months of credit for all such absence related to receipt of
such compensation from the Corporation in the first year. For
the purposes of this subparagraph (a)(4) only, an employe who
is laid off and whose first day of absence due to such layoff
is the first regularly scheduled work day in January shall be
deemed to have been laid off on December 31 of the year in
which he last worked. An employe who returns to work on or
after October 1, 1979 and receives pay for a period of less
than one month and who thereafter returns to such layoff or
Disability Leave of Absence, shall not be disqualified, solely
because of the receipt of such pay, from receiving any such
credit for which he otherwise would be eligible hereunder.
(b) An employe who is at work on or after March 1, 1982, and
(1) is laid off on or after March 1, 1982, and
(2) has 10 or more years of credited service at the time such layoff
commences, and
(3) while on such layoff receives the maximum eleven months of
credited service for absence due to layoff or Disability Leave
of Absence in accordance with subparagraph (a)(4) above, and
44
<PAGE> 54
A, Art. II, 2(b)(4)
(4) thereafter continues to be absent due to such layoff,
shall be granted credited service for each additional month of such
absence, not to exceed a maximum of twelve months of credit.
(c) For an employe who has at least five years of credited service (1)
as of December 31, 1967 and who was absent under a layoff during
any calendar year after December 31, 1955 and prior to January 1,
1963, or (2) as of December 31, 1973 and who was absent under a
layoff during any calendar year after December 31, 1950 and prior to
January 1, 1956, or (3) as of October 1, 1979 and who was absent
under a layoff during any calendar year after December 31, 1962 and
prior to January 1, 1968, or (4) as of October 1, 1984 and who was
absent under a layoff during any calendar month after December 31,
1978 and prior to January 1, 1984, credited service shall be
granted for each calendar month of such absence, not previously
credited under this Section 2 during which such employe remained on
layoff status and retained credited service, the amount of credited
service to be granted per year being the months of such absence in
such year multiplied by a percentage as set forth in the following
table:
<TABLE>
<CAPTION>
Employe's Credited Service on
December 31, 1967 in the Case of (1) Above
or December 31, 1973 in the Case of (2) Above
or October 1, 1979 in the Case of (3) Above
or October 1, 1984 in the Case of (4) Above %
--------------------------------------------------------
<S> <C>
20 years or more 100
15 years but less than 20 years 75
10 years but less than 15 years 50
5 years but less than 10 years 25
</TABLE>
provided that the employe makes proper application.
45
<PAGE> 55
A, Art. II, 2(d)
(d) All periods on an approved leave of absence as provided for in
certain collective bargaining agreements pursuant to policy and
rules as may be established by the Corporation.
(e) All hours worked and compensated while classified as a Flexible
Service employe on and after August 7, 1984, except that no
credited service will accrue prior to the later of:
(1) one year of employment, or
(2) attainment of age 21 (age 25 prior to October 1, 1985).
Credited service during Flexible Service employment will be
based on compensated hours worked and will accumulate only if
the employe works 750 or more hours during the calendar year,
as follows:
<TABLE>
<CAPTION>
Equivalent Months
Compensated Hours of Credited Service
---------------------------------------------------
<S> <C>
Less than 750 None
750 but less than 895 6
895 but less than 1040 7
1040 but less than 1185 8
1185 but less than 1330 9
1330 but less than 1475 10
1475 but less than 1615 11
1615 or more 12
</TABLE>
(f) Notwithstanding any other section of this Article II, in the case
of an employe who shall retire on or after October 1, 1990, the
employe's credited service for the period before January 1, 1966
shall not be less than the employe's length of service as of
December 31, 1965.
46
<PAGE> 56
A, Art. II, 3
SECTION 3. LOSS OF CREDITED SERVICE
Unless otherwise provided by the Named Fiduciary or its delegate,
credited service will be broken, and all prior credited service will
be lost, notwithstanding the provisions of Sections 1 and 2 above, if
the employe:
(a) Quits,
(b) Is discharged for cause,
(c) Is paid a separation allowance because of his refusal to accept a
salaried position or an hourly-rate job in accordance with
Corporation policy,
(d) Is laid off or is given an approved leave of absence (excluding
Military and compensable Disability Leave of Absence) if the period
of continuous absence is one year or more and is equal to or in
excess of the employe's credited service prior to such layoff or
approved leave of absence,
(e) Fails to report for work in accordance with the terms of a Military
or compensable Disability Leave of Absence,
(f) Is given a final release or a mutually satisfactory release, or
(g) Is separated under any classification other than those specifically
covered above.
47
<PAGE> 57
A, Art. II, 3
For the purposes of this Section 3, credited service will not be
broken and prior credited service will not be lost as a result of any
separation if the period following immediately thereafter is a period
during which compensation by the Corporation or its directly or
indirectly wholly-owned or substantially wholly-owned domestic or
foreign subsidiaries was on a commission basis and such period is
followed immediately thereafter by salaried or hourly-rate employment.
However, except as provided in Section 10 of General Provisions, any
such period during which compensation was on a commission basis shall
not be included in the calculation of the amount of credited service.
SECTION 4. REINSTATEMENT OF CREDITED SERVICE
(a) Any employe who loses credited service under the provisions of
Section 3 immediately above and is later reemployed by the
Corporation shall have such credited service reinstated upon making
proper application.
(b) Any employe retired under the total and permanent disability
provisions of this Program who subsequently is deemed recovered and
whose disability benefit then ceases will then have reinstated the
credited service the employe had at the time of disability
retirement, provided the employe is reemployed, or is granted a
leave of absence or otherwise given the status of an inactive
employe, by the Corporation.
(c) Any employe retired under the provisions of this Program, except
total and permanent disability retirement, who subsequently is
reemployed by the Corporation or one of its directly or indirectly
wholly-owned or substantially wholly-owned subsidiaries will then
have reinstated the credited service the employe had at the time of
retirement.
48
<PAGE> 58
A, Art. II, 4(d)
(d) If a former employe who is entitled to a deferred retirement benefit
under Part A and, if applicable, a deferred supplementary
retirement benefit under Part B (or a deferred pension under the
"General Motors Hourly-Rate Employes Pension Plan") is reemployed
by the Corporation prior to the commencement of such deferred
retirement benefits, such employe shall, upon making proper
application, have reinstated, in lieu of such deferred retirement
benefits, the credited service lost at the time the employe became
entitled to such deferred retirement benefits; provided that if an
employe with 10 or more years of credited service
(1) is reemployed by, and works for, the Corporation within 36
months of the date he lost credited service under Section
3 of this Article II, and
(2) becomes disabled while employed by the Corporation for less
than 5 months, and such disability is continuous for a period
of 5 months during which he makes proper application and
submits medical evidence satisfactory to the Corporation that
he is totally and permanently disabled,
he will be deemed eligible for a disability retirement benefit
under Section 4 of Article I of this Part A and such benefit
will be payable pursuant to Section 2 of the General
Provisions of this Program, as though he had been an employe
throughout such disability period.
49
<PAGE> 59
A, Art. II, 5
SECTION 5. CREDITED SERVICE OF EMPLOYES FORMERLY ON THE HOURLY ROLL
Any employe transferred from the hourly roll to the salary roll, or
hired as a salaried employe following the loss of credited service as
an hourly-rate employe, shall, upon making proper application, receive
credit to the nearest 1/10th of a year for his credited service as
recognized under the "General Motors Hourly-Rate Employes Pension
Plan". Employment while covered under The GM Special Pension Plan
shall not be credited hereunder, except for an employe with seniority
on March 1, 1988, who has not received a cash payment representing his
accrued benefit under The Special Pension Plan.
SECTION 6. SERVICE WITH A FOREIGN SUBSIDIARY
An employe whose employment as an hourly or salaried employe with a
directly or indirectly wholly-owned or substantially wholly-owned
foreign subsidiary of General Motors Corporation has been terminated
other than by retirement, shall be granted credited service under this
Program for any periods of active service with such foreign subsidiary
or, if greater, the amount of service credited to such employe under
any pension or retirement plan of the foreign subsidiary at the time
of his termination, excluding any directly or indirectly wholly-owned
or substantially wholly-owned subsidiary of the Corporation acquired
or formed by the Corporation on or after March 1, 1984, provided such
service was prior to his most recent period of active service credited
under this Program.
Any monthly Part A benefits or supplementary benefits under Part B
payable under this Program to a retired employe who has received
credited service under this Section 6 will be reduced by an amount
equivalent to the total of any monthly benefits (or lump-sum payment)
that could be payable to such employe under any
50
<PAGE> 60
A, Art. II, 6
other retirement plan to which the foreign subsidiary has contributed,
excluding, however, any retirement benefits or portion thereof
purchased by employe contributions. Any survivor benefits payable
under this Program to a survivor of such an employe shall be subject
to similar reduction by monthly survivor benefits payable under any
other plan to which the foreign subsidiary has contributed.
SECTION 7. NO DUPLICATION OF CREDITED SERVICE
There shall be no duplication of credited service and no more than a
year's credit will be given for any calendar year except as otherwise
provided in Sections 10 and 12 of this Article II with respect to
foundry and asbestos service.
SECTION 8. COMPENSABLE DISABILITY LEAVE OF ABSENCE
The term "Compensable Disability Leave of Absence" as used herein means
an absence from work because of occupational injury or disease incurred
in the course of employment, and on account of which absence the
employe receives Workers Compensation while on an approved leave of
absence.
SECTION 9. TEMPORARY EMPLOYMENT
A regular employe, with periods of temporary employment prior to the
date he last worked as a regular employe, will be granted credited
service for actual time paid while working on any temporary employment
immediately preceding regular employment.
51
<PAGE> 61
A, Art. II, 10
SECTION 10. FOUNDRY SERVICE
An employe who has credited service on or after October 1, 1990 and who
at retirement has over 10 years of credited service which he accrued
while employed in certain salaried positions in specified foundries as
set forth in Appendix A shall receive additional credited service
related thereto for purposes of this Part A. Total credited service for
any such employe shall be the sum of (i) credited service otherwise
credited to him, and (ii) any such additional credited service which
shall be credited to him in accordance with the following table:
<TABLE>
<CAPTION>
Years of Credited Service Additional
Credited on Foundry Jobs Credited Service
--------------------------------------------------
<S> <C>
For years 1 through 10 0
For 10 years, 1 month through 25 33-1/3%
For years over 25 20%
</TABLE>
SECTION 11. HOURS, YEARS AND BREAKS IN SERVICE TO COMPLY WITH
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
(a) An employe who breaks credited service on or after October 1, 1990
who would be eligible for a deferred benefit under Article III of
this Part A, except solely for the fact that he does not have at
least 5 years of credited service under the foregoing Sections of
this Article II, shall be eligible for a deferred benefit under
the provisions of Article III of this Part A, if at the time the
employe breaks credited service, he has 5 years of service solely
as determined under this Section 11, and provided that such
employe is credited with one hour or more of credited service or
service accrued on or after January 1, 1989.
52
<PAGE> 62
A, Art. II, 11(b)
(b) The monthly amount of any such deferred benefit shall be based
solely on the credited service that the employe had under the
foregoing Sections of this Article II when he broke credited
service.
(c) No employe shall be eligible to be covered under this Section 11
until he (i) attains age 21, or (ii) completes 1 year of service
under this Section 11, whichever is later. Rehired employes shall
participate immediately.
(d) An employe shall complete 1 year of service when he completes 750
hours of service in the 12 consecutive month period beginning with
his employment commencement date. If an employe fails to complete
750 hours of service in such period, he shall complete 1 year of
service in the first 12 consecutive month period thereafter in
which he completes 750 hours of service, measured from each
succeeding anniversary of his employment commencement date.
Thereafter, an employe shall complete 1 year of service during each
12 consecutive month period in which he completes 750 hours of
service, measured from the anniversary of his employment
commencement date. A year of service under this Section 11 shall
include service (i) with affiliated group members accrued
subsequent to acquisition, (ii) rendered to the Corporation as a
former leased employe (but only upon employe application with
substantiation of such service satisfactory to the Corporation),
and (iii) rendered to the Corporation as an hourly-rate employe in
accordance with I.R.C. Section 414(b), (c), (m), (n), and (o).
(e) An employe who satisfies the eligibility requirements of this
Section 11, and who is otherwise entitled to participate in the
Program, shall commence participation under this Section 11 if he
satisfies such requirements (i) between April 1 and September 30;
on the first day of the plan year beginning after the date on
which such requirements are satisfied, or (ii) between
October 1 and March 31; on the first day of the plan year that
includes the date such requirements are satisfied, but in no event
shall any employe participate hereunder if he breaks length of
service prior to such commencement date.
53
<PAGE> 63
A,Art.II,11(f)
(f) An employe shall complete an hour of service under this
Section 11 for each hour for which he is paid by the
Corporation for working or for which he is paid by the
Corporation for having been entitled to work. Any hours for
which an employe receives pay for having been entitled to
work, irrespective of mitigation of damages, shall be credited
to the period or periods he was so entitled, rather than to
the period in which he receives such pay. There shall be no
duplication of any hours of service under this Section 11.
(g) Solely for purposes of determining years of service for
vesting under this Section 11, all of the employe's years of
service shall be taken into account except the following: (i)
years of service before age 18 (age 22 prior to October 1,
1985); (ii) years of service before January 1, 1971, unless
the employe has at least 3 years of service after December 31,
1970; (iii) years of service prior to any 1-year break in
service as defined herein, until the employe completes a year
of service after such break; (iv) for non-vested participants
under this Section 11, years of service prior to any 1-year
break in service if the number of such consecutive breaks
equals or exceeds the aggregate number of years of service
prior to such break, for a non-vested participant at work on
or after October 1, 1985, years of service prior to any 1-year
break in service if the number of such consecutive breaks
equals or exceeds the greater of 5, or the aggregate number of
years prior to such break (such aggregate number of years of
service before such break shall not include any years of
service not required to be taken into account under this
Section 11 by reason of any prior break in service); (v) years
of service before October 1, 1976, if such service would have
been disregarded under rules of the Program as in effect on
October 1, 1976, regarding breaks of service; and (vi) any
year in which the employe completes less than 750 hours of
service.
54
<PAGE> 64
A,Art.II,11(h)
(h) An employe shall incur a 1-year break in service under this
Section 11 in any 12 consecutive month period during which he
does not complete more than 375 hours of service, measured
from the anniversary of his employment commencement date.
Solely for purposes of determining whether an employe has
incurred such 1-year break in service, in addition to hours
worked which are paid by the Corporation, any hours which an
employe does not work but for which he is paid by the
Corporation for vacation, sickness or disability, or is
entitled to be so paid, directly or indirectly, shall be taken
into consideration. For any absence from work commencing on
and after October 1, 1985 by reason of pregnancy of the
individual, childbirth, placement of a child related to an
adoption, or for child care purposes immediately following
such birth or placement, the employe shall be credited with
the hours of work for which he otherwise would have been
scheduled, or, if unable to determine such scheduled hours, 8
hours for each work day of such absence, not to exceed a total
of 501 hours for any such absence. Such hours shall be
credited in the year in which the absence commences if
necessary to prevent incurring a 1-year break in service,
otherwise such hours shall be credited in the immediately
following year.
SECTION 12. ASBESTOS SERVICE
An employe with credited service on or after October 1, 1990 who at
retirement has over 10 years of credited service which was accrued
while employed in certain salaried positions in specified asbestos
operations as set forth in Appendix B shall receive additional
credited service related thereto for purposes of this Part A, in the
same manner as set forth in Section 10 of this Article II.
55
<PAGE> 65
A, Art. III
ARTICLE III
RETENTION OF DEFERRED RETIREMENT BENEFIT IF SEPARATED
(a) Any employe who, on or after October 1, 1990, loses
accumulated credited service under the provisions of Article
II of this Part A shall be eligible for a deferred retirement
benefit under this Part A if such employe is not retired and
eligible for benefits pursuant to Article I of this Part A,
and provided the credited service of such employe at
separation is at least 5 years, or such employe satisfies the
service requirements of Section 11 of Article II of this Part
A, and provided that such employe is credited with one hour or
more of credited service or "service" accrued on or after
January 1, 1989, or such employe has attained the Normal
Retirement Age as defined in Section 1(g) of the General
Provisions.
(b) The monthly amount of any deferred retirement benefit shall be
a basic benefit for each year of credited service, determined
by his Benefit Class Code as set forth in Section 1 (c) of
Article I of this Part A when he lost credited service, as set
forth in the table immediately following:
<TABLE>
<CAPTION>
Date of Loss Benefit Basic
of Class Benefit
Credited Service Code Rate
--------------------------------------------------
$
<S> <C> <C>
October 1, 1990 A 28.35
through B 28.60
September 30, 1991 C 28.85
D 29.10
October 1, 1991 A 29.50
through B 29.75
September 30, 1992 C 30.00
D 30.25
October 1, 1992 A 30.70
and After B 30.95
C 31.20
D 31.45
</TABLE>
56
<PAGE> 66
A, Art. III, (c)
(c) A former employe who is eligible for a deferred retirement
benefit may at the election of such former employe receive
either
(1) a monthly benefit commencing at or after age 65
determined in accordance with subsection (b) above, or
(2) a monthly benefit commencing after age 55 and prior to
age 65 determined in accordance with subsection (b)
above, reduced as follows:
<TABLE>
<CAPTION>
Age When
Benefit Commences Percentage(*)
---------------------------------------
<S> <C>
55 42.8%
56 46.8
57 51.2
58 55.5
59 59.6
60 64.0
61 71.2
62 78.4
63 85.6
64 92.8
65 100.0
</TABLE>
(*) Prorated for intermediate ages computed on the basis of the number of
complete calendar months by which the employe is under the age he will
attain at his next birthday.
57
<PAGE> 67
A, Art. III, (d)
(d) The deferred retirement benefit shall be payable commencing
the first day of the month coinciding with or next following
the employe's attainment of the applicable age set forth in
subsection (c) of this Article III or, if later, the first day
of the month following the month in which the Corporation
receives a written request from such former employe; provided
that such written request shall be valid and effective only if
it is filed with the Corporation not earlier than 60 days
prior to the date such former employe first became eligible
for such benefit, and, for such employe who broke credited
service prior to October 1, 1976, not later than his 70th
birthday, otherwise no deferred retirement benefit shall be
payable at any time.
(e) The amount of any monthly retirement benefit otherwise payable
to a former employe eligible for a deferred retirement benefit
will be reduced by the value of any past and future benefits
paid or payable to any alternate payee(s) under a Qualified
Domestic Relations Order within the meaning of I.R.C. Section
414(p).
The actuarial value will be used to determine any amount to be
paid to any such payee(s), if applicable, and the remaining
benefit entitlement of the employe.
58
<PAGE> 68
B, Art. I
PART B - CONTRIBUTORY BENEFITS
ARTICLE I
PROVISIONS RELATING TO PRIMARY BENEFITS
AND SUPPLEMENTARY BENEFITS
SECTION 1. ELIGIBILITY REQUIREMENTS
(a) FOR PRIMARY BENEFITS
Each salaried employe will be eligible to commence
contributing under Part B on the first day of any month
provided that at the time he commences to contribute all of
the following conditions are met:
(1) Such employe has reached age 21;
(2) Such employe has at least six months of continuous
service; and
(3) Such employe's base salary rate is greater than
$2000 per month.
(b) FOR SUPPLEMENTARY BENEFITS
(1) An employe who has 5 or more years of credited
service as determined under Article II of Part A, or
an employe who satisfies the "service" requirements
of Section 11 of Article II of Part A, or an employe
retired as a normal retirement on or after October 1,
1990, and in any case is eligible to receive benefits
under Part A, shall be entitled to receive
supplementary benefits under this Part B, if
otherwise eligible based upon his average monthly
base salary, for the following periods:
59
<PAGE> 69
B, ART. I,1(b)(1)(i)
(i) any period of credited service prior to
October 1, 1950, provided that on and after
October 1, 1950 the employe contributes at
all times while eligible and does not
withdraw his contributions prior to
termination of employment,
(ii) the continuous period of credited service
during which the employe contributes under
Part B at all times while eligible to do so
and during which he does not withdraw his
contributions prior to termination of
employment, and
(iii) any period, not credited under (i) or (ii)
immediately above, prior to the earliest date
on which the employe was eligible to
contribute or age 30, if later, provided that
such period shall not exceed the number of
years and fractions thereof credited under
(ii) above.
(2) For the purpose of making the computation described
in paragraph (1) immediately above, if the employe:
(i) failed to contribute (aa) while temporarily
absent and receiving salary at a reduced
rate, or (bb) for a period of absence during
which contributions are permitted under
Section 4 of Article II of this Part B, or
(cc) while under age 30, he shall not be
considered to have broken the continuous
period during which he contributed while
eligible,
(ii) withdrew his contributions while on layoff
which did not result in loss of credited
service prior to such layoff, he shall not be
considered to have withdrawn his
contributions prior to termination of
employment, and
60
<PAGE> 70
B, ART. I, 1(b)(2)(iii)
(iii) withdrew his contributions under this Program
while employed by any wholly-owned or
substantially wholly-owned subsidiary whose
employes are excluded from participation
under this Program, the employe will forfeit
any monthly Part B benefits for which he
otherwise would have been eligible at
retirement except as provided under Article
II, Section 1(a)(2) of this Part B.
SECTION 2. RETIREMENT BENEFITS
(a) RETIREMENT AT OR AFTER AGE 65
Retirement benefits, if any, under Part B for an employe who
retires at or after age 65 will commence on the first day of
the month coinciding with or next following the employe's
first day of absence because of retirement.
(1) PRIMARY BENEFITS
The annual rate of primary retirement benefits payable after
retirement under Part B at age 65 or after will be equal to
the sum of
(i) 60% of the total of the employe's own contributions
made prior to July 1, 1977,
(ii) 75% of the total of such contributions made on and
after July 1, 1977 and prior to October 1, 1979, and
(iii) 100% of the total of such contributions made on and
after October 1, 1979.
61
<PAGE> 71
B, ART. I, 2(a)(2)
(2) SUPPLEMENTARY BENEFITS
The monthly supplementary retirement benefits shall be 1% of
the employe's average monthly base salary in excess of the
amount indicated below times the number of years and months of
the employe's credited service, as determined under Article II
of Part A, or as may be adjusted under Section 1 (b) above:
<TABLE>
<CAPTION>
Retirement With Part B Supplementary Benefit
Benefits Payable Based on Average Monthly Base Salary
Commencing In Excess of:
--------------------------------------------------------------
<S> <C>
October 1, 1990 $
through
September 1, 1991 2,910.00
October 1, 1991
through
September 1, 1992 3,025.00
October 1, 1992
and after 3,145.00
(b) RETIREMENT BETWEEN AGES 60 AND 65
</TABLE>
(1) If an employe retires voluntarily at or after age 60
prior to age 62, there shall be payable any
primary and supplementary benefits to which he may
enitled on account of service rendered up to the
of his retirement commencing on the first day of
the month coinciding with or next following his
attaining age 62 or he may elect to receive either
his primary benefit or supplementary benefit, or
both, on a reduced basis commencing on the first day
of any month coinciding with or following his first
day of absence because of retirement and prior to age
62. with such reduction being as set forth in the
table in Part A, Article I, Section 2(b)(2)(i).
62
<PAGE> 72
B, ART. I, 2(b)(2)
(2) An employe discharged for cause at or after age 60
and prior to age 65 shall be entitled to the benefits
described in Section 2(b)(1) above.
(c) RETIREMENT PRIOR TO AGE 60 OTHER THAN FOR TOTAL AND PERMANENT
DISABILITY
(1) If an employe who has 10 or more years of credited
service retires voluntarily (i) at or after age 55
and prior to age 60 and whose combined years of age
and years of credited service (to the nearest 1/12th
in each case) at retirement total 85 or more, or (ii)
prior to age 55 with 30 or more years of credited
service, and in either case was hired prior to
January 1, 1988, he shall be entitled to primary and
supplementary retirement benefits on account of
service rendered up to the date of his retirement
commencing on the first day of the month coinciding
with or next following his attainment of age 62, or
he may elect to receive either his primary benefit or
supplementary benefit, or both, commencing on the
first day of any month coinciding with or following
his first day of absence because of retirement and
prior to age 62 in which case any benefits shall be
reduced from the amount that would otherwise be
payable commencing at age 62 multiplied by a
percentage as set forth in the table in Part A,
Article I, Section 2(b)(2)(i).
(2) If an employe who has 10 or more years of credited
service retires voluntarily at or after age 55 and
prior to age 60 and (i) whose combined years of age
and years of credited service (to the nearest 1/12th
in each case) at retirement total less than 85, or
(ii) who was hired on or after January 1, 1988, he
shall be entitled to primary and supplementary
retirement benefits on account of service rendered up
to the date of his retirement commencing on the first
day of the month coinciding with or next following
his attainment of age 65, or he may
63
<PAGE> 73
B, ART. I, 2(C)(2)
elect to receive either his primary benefit or
supplementary benefit, or both, commencing on the
first day of any month coinciding with or following
his first day of absence because of retirement and
prior to age 65 in which case any benefits shall be
reduced from the amount that otherwise would be
payable commencing at age 65 multiplied by a
percentage as set forth in the table in Part A,
Article I, Section 2(b)(2)(ii).
(3) An employe (i) who has 10 or more years of credited
service and who is discharged for cause at or after
age 55 and prior to age 60, or (ii) who has 30 or
more years of credited service, was hired prior to
January 1, 1988, and who is discharged for cause
prior to age 55, shall be entitled to the benefits
described in Sections 2(c)(1) or 2(c)(2) above,
whichever is applicable.
(d) RETIREMENT PRIOR TO AGE 65 FOR TOTAL AND PERMANENT DISABILITY
If an employe is retired prior to age 65 for total and
permanent disability and commences to receive total and
permanent disability benefits under Part A, any supplementary
benefits to which he may be entitled on account of service
rendered up to the date of his retirement which are payable at
age 65 shall be payable commencing at the same time as
benefits payable under Part A without reduction in amount
because of such earlier commencement. Any primary benefits to
which the employe may be similarly entitled and which are
payable at age 65 shall be payable commencing on the first day
of the month with respect to which the initial benefit payment
is made under Part A without reduction in amount because of
such earlier commencement.
64
<PAGE> 74
B, ART. I, 2(e)
(e) REEMPLOYMENT
If a retired employe who is receiving retirement benefits is
reemployed by the Corporation or one of its directly or
indirectly wholly-owned or substantially wholly-owned domestic
or foreign subsidiaries, payment of his Part B benefits shall
cease and he shall be treated thereafter for the purposes of
this Program as if he had not previously retired, except that:
(1) For the purpose of (aa) the death benefit provisions
of Section 5(c)(4) and 6(a)(1) of this Article I, and
(bb) the provisions of Section 1(a)(2) of Article II
of this Part B relating to the return of an employe's
contributions, and solely with respect to the
employe's contributions made prior to the date his
primary benefits commenced because of retirement, no
interest will be credited on the employe's
contributions for the period during which he received
such primary benefits and upon his reemployment his
contributions will be deemed to have been reduced by
the amount of such primary benefits (but with such
reduction not to exceed the amount of his
contributions plus interest); and
(2) the amount of any death benefit otherwise
subsequently payable under Section 6(a)(2) of this
Article I shall be reduced by an amount equal to the
amount of reduction specified in the preceding item
(1).
65
<PAGE> 75
B, ART. I, 3
SECTION 3. EMPLOYE CONTRIBUTIONS
(a) Each employe participating in Part B for primary benefits will
contribute 1.25% of the amount of his monthly base salary in
excess of $2,000.
(b) An employe may accrue Part B primary benefits for no more than
35 years. In that regard, however, an otherwise eligible
employe who remains at work for GM after contributing for 35
years, may continue to contribute, while otherwise eligible to
do so, except that his contributions made in his earliest
months of Program participation, commencing with the first
month of participation and continuing sequentially thereafter,
shall be used to reduce, on a dollar-for-dollar basis, the
gross amount of each current monthly contribution that
otherwise might be made, as determined by the employe's most
recent monthly base salary. The full amount of all such prior
contributions used in any such reduction will be used to
determine the employe's monthly amount of Part B primary
benefits, but at the updated Part B benefit accrual rate. The
overall effect of the treatment described herein is to limit
to 35 years the period in which any employe may accrue Part B
primary benefits, but to maximize the monthly Part B primary
benefit generated by such contributions.
(c) An employe may continue to contribute from the date he first
becomes eligible until he (1) ceases to be eligible, or (2)
retires, any provisions of the preceding paragraph to the
contrary notwithstanding.
(d) If an employe at any time or for any reason withdraws his
contributions, he shall not be entitled to any primary
retirement benefits under Part B with respect to any period of
service prior to the date of such withdrawal of contributions,
except as otherwise provided in Sections 1(a)(1) abd (2) and
2(c)(2) of Article 11 of this Part B, or in subsections (e)
and (g) of this Section 3.
66
<PAGE> 76
B, ART. I, 3(e)
(e) If an employe with 5 or more years of credited service, as
determined under Article II of Part A, at any time or for any
reason withdraws his contributions, he shall not forfeit any
deferred benefits which are attributable to the Corporation's
contributions made up to the time of such withdrawal of
contributions.
(f) If an employe at any time or for any reason withdraws his
contributions, he shall not be entitled to make any additional
withdrawal of his contributions for a period of two years from
the date of such withdrawal of contributions.
(g) In the event an employe withdraws his contributions under this
Program, he thereafter shall not have any right to repay in a
lump-sum the amount withdrawn. Such employe, if vested, will
be entitled to a Corporation provided benefit which will not
be less than an amount determined under (i) Article III of
Part A, and (ii) this Part B, less an amount attributable to
the employe contributions withdrawn, as may be determined in
accordance with applicable IRS regulations.
SECTION 4. OPTIONAL FORMS OF RETIREMENT BENEFITS
(a) SURVIVING SPOUSE COVERAGE
In lieu of any primary or supplementary benefits otherwise
payable hereunder, an employe who retires or is retired or who
loses credited service and is eligible for a deferred
retirement benefit pursuant to the provisions of Articles II
or III of this Part B, shall be deemed to have elected
automatically a reduced amount of primary and/or supplementary
benefits to provide surviving spouse coverage in accordance
with the provisions of Part A, Article II, Section 5(a)
through (g) of this program. An employe may prevent
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<PAGE> 77
B, ART. I, 4(a)
This automatic election during the month prior to the
effective date by executing a specific written rejection of
such election, which includes the written consent of his
spouse witnessed by the program representative, or a notary
public, on a form approved by the Corporation and filing it
with the Corporation. An employe may revoke a written
rejection of this automatic election, without the consent of
the spouse, at any time prior to commencement of benefits.
(b) JOINT AND SURVIVOR OPTION
Under this option, any person may be designated by the employe
as the contingent annuitant. The amount of monthly benefits
payable to such contingent annuitant if such contingent
annuitant is living at the death of the employe shall equal
any designated percentage, up to a maximum of 100%, of that
portion of the employe's reduced monthly benefits (which are
in lieu of benefits otherwise payable as primary benefits,
supplementary benefits, or both, as the case may be) as to
which the coverage is elected. Benefits hereunder shall be
provided in accordance with the provisions of Part A, Article
I, Section 6 of this Program.
(c) THE SURVIVING SPOUSE OF AN EMPLOYE WHO
(1) dies on or after attaining age 55 with 10 or more
years of credited service, or at any age with 30 or
more years of credited service and his date of hire
was prior to January 1, 1988, but before the first
day of the month coinciding with or next following
the first day of absence because of retirement (or,
if later, the commencement date of his monthly basic
benefit in the case of an employe who defers the
receipt of his monthly benefit under Part A, Article
I, Section 2(b)(2)), and
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<PAGE> 78
B, ART. I, 4(c)(2)
(2) if he had retired at the date of his death, would
have been eligible for the coverage under Part A,
Article I, Section 5(a) of this Program, and
(3) is not covered by the provisions of Section 5 of this
Article I
shall be entitled to any primary or supplementary benefits
otherwise payable in accordance with the provisions of Part
A, Article I, Section 5(h) of this Program.
SECTION 5. BENEFITS FOR SURVIVING SPOUSE IN EVENT OF AN EMPLOYE'S DEATH PRIOR
TO RETIREMENT
(a) ELECTION OF COVERAGE
An employe who is participating for primary benefits under
this Part B shall be deemed to have elected automatically,
subject to all the conditions thereof, to provide, in the
event of an employe's death prior to retirement, a monthly
benefit for the further lifetime of the employe's designated
surviving spouse.
(b) BENEFITS PAYABLE
The monthly benefit payable to such spouse following the
employe's death while this coverage is, or is assumed to be,
in effect shall be an amount equal to 60% of the employe's
accrued primary and supplementary benefits under Part B of
this Program applicable on account of service rendered up to
his date of death which would otherwise have been payable
under this Part B upon retirement of the employe at age 65.
The 60% will be increased by one-quarter of one percent (1/4%)
for each 12 months in excess of five (5) years that the
spouse's age exceeds the employe's age or decreased by
one-quarter of one percent (1/4%) for each 12 months in excess
of five (5) years that the spouse's age is less than the
employe's age.
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<PAGE> 79
B, ART. I, 5(c)
(c) GENERAL PROVISIONS
(1) Payment of the monthly benefit to the surviving
spouse following an employe's death shall be in lieu
of any death benefits otherwise payable to such
spouse under Part B of this Program.
(2) The benefit payable to an eligible surviving spouse
under subsection (b) of this Section 5 shall include
a benefit related to the employe's accrued
supplementary benefit even though the employe's
credited service is less than 5 years on his date of
death.
(3) Payment of the monthly benefit to the surviving
spouse following the employe's death while this
coverage is in effect shall commence on the first day
of the month following the month in which the death
of the employe occurs and shall continue during the
further lifetime of such surviving spouse.
(4) Upon the death of the designated surviving spouse
following the employe's death while this coverage was
in effect, there shall be paid to the beneficiary
designated by the employe (or, if the employe has
designated no beneficiary, to the estate of such
spouse) an amount equal to the excess, if any, of (i)
all of the employe's contributions under this Program
as to which this coverage is applicable plus interest
to the date of the employe's death over (ii) the
total of any amounts paid to such spouse under this
coverage.
(5) No additional contributions under the Program will be
required of an employe by reason of this coverage.
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<PAGE> 80
B, ART. I, 5(d)
(d) EFFECTIVE DATE OF COVERAGE
The effective date of this coverage shall be the first day of
the month coinciding with the employe's commencement of
participation in Part B of this program, except that in the
case of an employe who marries or remarries subsequent to age
21, the effective date of the coverage with respect to the
spouse by such marriage or remarriage shall be the first day
of the month coinciding with or next following the first
anniversary of such marriage or remarriage.
(e) DURATION OF COVERAGE
Once the coverage has become effective it will remain in
effect (and benefits will become payable thereunder to the
designated surviving spouse in the event of the employe's
death) up to but excluding the earliest of the following dates:
(1) the date of the final dissolution of the employe's
marriage other than by the employe's death, unless a
Qualified Domestic Relations order within the meaning
of I.R.C. Section 414(p) provides to the contrary;
(2) the first day of the month coinciding with or next
following the employe's first day of absence because
of retirement, except that in the case of an employe
who retires for total and permanent disability on or
after January 1, 1974 with less than 30 years of
credited service, the coverage may remain in effect
until the first day of the month coinciding with or
next following the employe's attainment of age 55; or
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<PAGE> 81
B, ART. I, 5(e)(3)
(3) the first day of the month coinciding with or next
following 12 successive months from the effective
date of layoff, special leave of absence without pay
or transfer to the hourly rolls, except that in the
case of an employe who has 10 or more years of
credited service, the coverage may remain in effect
until the first day of the month coinciding with or
next following 24 successive months from such
effective date.
(f) ALTERNATIVE COVERAGE
In the event the coverage described in this Section 5 ceases
to be effective, and the employe has 5 or more years of
credited service, or satisfies the "service" requirements of
Section 11 of Article II of Part A, and in either case is
credited with one or more hours of credited service or
"service" accrued on or after January 1, 1989, survivor
coverage as described in, and in accordance with, the
provisions of Part A, Article I, Section 5(j) of this Program,
is provided with respect to any accrued Part B benefits.
SECTION 6. DEATH BENEFITS
(a) Upon the death of the employe or, if later, the death of any
contingent annuitant designated by the employe if either of
the coverages provided under Section 4 of this Article I has
become effective with respect to primary benefits otherwise
payable under this Part B, there shall be paid to the
beneficiary designated by the employe or, if the employe has
designated no beneficiary, to the estate of such employe, an
amount, if any, determined in accordance with the following
items (1) or (2), whichever is applicable:
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<PAGE> 82
B, ART. I, 6(a)(1)
(1) DEATH OF THE EMPLOYE PRIOR TO RETIREMENT -- an amount
equal to the excess of (i) all of the employe's
contributions under this Program plus interest to the
date of the employe's death over (ii) the sum of all
payments, if any, made to the employe, to any such
designated contingent annuitant of benefits under
either of such coverages which are in lieu of primary
benefits otherwise payable under this Part B, and to
any alternate payee subject to a Qualified Domestic
Relations Order within the meaning of I.R.C. Section
414(p).
(2) DEATH OF THE EMPLOYE AT OR AFTER RETIREMENT -- an
amount equal to the greater of:
(i) the total of
(aa) 125% of the employe's contributions
made prior to July 1, 1971 under
Section 3 of Article I of this Part
B (or, if greater, 30 times the
amount of monthly primary retirement
benefits accrued prior to July 1,
1971 that would have been payable
under this Part B if neither of such
coverages with respect to primary
benefits otherwise payable under
this Part B had become effective),
and
(bb) 125% of the employe's contributions
made on and after July 1, 1971 under
Section 3 of Article I of this Part
B (or, if greater, the total of such
contributions plus interest to the
date of the employe's retirement),
or
(ii) all of the employe's contributions under
Section 3 of Article I of this Part B plus
interest to the date of the employe's
retirement,
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<PAGE> 83
B, ART. I, 6(a)(2)
less the sum of all payments, if any, made to
the employe and to any such designated
contingent annuitant of primary benefits
provided under this Part B, or of benefits
under either of such coverages which are in
lieu of primary benefits otherwise payable
under this Part B, and to any alternate payee
subject to a Qualified Domestic Relations
Order within the meaning of Section 414(p).
In the case of an employe whose death occurs
while the coverage set forth in Section 5
above is in effect, the foregoing terms and
provisions of this Section 6 are subject to
and limited by the conditions of such
coverage.
(b) Except as provided in Sections 4 and 5 of this
Article I, which describe optional benefits that may
be related to, or in lieu of, supplementary benefits
under this Part B, no benefit related to an employe's
accrued supplementary benefit is payable following
the death of an employe or retired employe.
SECTION 7. BENEFITS FOR EMPLOYES WHO RETIRED WITH BENEFITS PAYABLE
COMMENCING PRIOR TO OCTOBER 1, 1990
(a) Except as otherwise provided in this Section 7, an employe who
retired with benefits payable commencing prior to October 1,
1990, or the eligible surviving spouse or contingent annuitant
of such an employe, or the eligible surviving spouse of an
employe who died in active service prior to September 18,
1990, with the coverage to provide benefits for his surviving
spouse in effect, shall be entitled to the benefits, if any,
under the Program as it existed immediately prior to the
amendments which became effective as of October 1, 1990.
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<PAGE> 84
B, Art. I, 7(b)
(b) Effective October 1, 1990, the benefits payable under this
Part B to such retired employes or the benefits payable to
retired employes, surviving spouses, and contingent annuitants
in lieu of, or related to, such benefits shall be increased to
the extent necessary to provide monthly Part B benefits equal
to the benefits which would have been payable had the Part B
benefits payable to the employe at or after age 65 been
increased by 0.195% for each complete calendar month of
retirement between October 1, 1987 and October 1, 1990.
(c) In applying the formula described in subsection (b)
immediately above, the following rules shall be used:
(1) the total annual increase in benefits payable to the
employe at or after age 65 as set forth in subsection
(b) shall not exceed 7%;
(2) in the case of an eligible surviving spouse of an
employe who died in active service, the formula shall
be based on the number of complete calendar months
from the date of the employe's death or October 1,
1987, if later, to October 1, 1990.
(d) An employe who retired under the Program with benefits payable
commencing prior to September 18, 1990 and who has survivor
coverage in effect with respect to all, or any part, of his
Part B benefits but whose designated spouse or contingent
annuitant is deceased prior to September 18, 1990, shall
receive the increase in benefits which otherwise would have
been payable to him under this Section 7 on or after September
18, 1990 as if such coverage was not in effect.
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<PAGE> 85
B, Art. I, 7(e)
(e) Notwithstanding any of the foregoing provisions of this
Section 7, an employe who retired voluntarily between ages 55
and 59 with benefits payable commencing prior to September 18,
1990, and whose combined years of age and years of credited
service totaled less than 85, or an employe whose separation
from service prior to age 60 was classified by the Corporation
as a discharge for cause, shall not be eligible for the
increase in benefits provided in this Section 7.
(f) Any early retirement supplement or interim supplement payable
pursuant to Section 7 of Article I of Part A shall be
redetermined taking into account any increase in the
supplementary benefit payable under this Section 7.
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<PAGE> 86
B, Art. II
ARTICLE II
PROVISIONS RELATING SPECIFICALLY TO PRIMARY BENEFITS
SECTION 1. SEPARATION FROM SERVICE PRIOR TO AGE 60
(a) Except as otherwise provided under subsections (b) and (c) of
this Section 1, an employe upon separating from service prior
to age 60 for any reason except death or retirement must
either:
(1) leave his contributions in Part B and receive,
commencing on the first day of the month coinciding
with or next following the employe's attainment of
age 65 (or, on a reduced basis pursuant to paragraph
(c)(2) of Article III of Part A, on the first day of
any month coinciding with or following the employe's
attainment of age 55 and prior to age 65), the
deferred primary retirement benefit which will have
accrued under Part B by his own contributions and, if
he has contributed for at least five years or has 5
or more years of credited service as determined under
Article II of Part A, the Corporation's
contributions; or
(2) elect to have returned to him all of his own
contributions under Section 3 of Article I of this
Part B plus interest to the date of such election
and, if he has 5 or more years of credited service as
determined under Article II of Part A, he will
receive a deferred benefit related to the Corporation
contributions made up to the time of such withdrawal
of contributions, commencing on the first day of the
month coinciding with or next following the employe's
attainment of age 65 (or, on a reduced basis pursuant
to paragraph (c)(2) of Article III of Part A, on the
first day of any month coinciding with or following
the employe's
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<PAGE> 87
B, Art. II, 1(a)(2)
attainment of age 55 and prior to age 65). Any
return of contributions must include the written
consent of his spouse witnessed by a program
representative, or a notary public, on a form
approved by the Corporation and filing it with the
Corporation. Upon any subsequent reemployment, the
employe will be considered as a new employe for
purposes of the provisions of this Part B relating to
primary benefits except as otherwise provided in
Section 2 of this Article II.
(b) An employe who is separated from service in a layoff
classification (1) at or after age 55 with 10 or more years
of credited service, (2) prior to age 55 with 30 or more years
of credited service and whose date of hire was prior to
January 1, 1988, or (3) prior to age 55 with 10 but less than
30 years of credited service at the time of such separation,
provided that his credited service at such time is sufficient
so that he will retain credited service until age 55, will not
be required to make either election described in (a)
immediately above.
(c) An employe who is separated from service and who, as a
consequence of such separation, elected to receive a deferred
primary retirement benefit under Part B as described in
subsection (a)(1) of this Section 1, may reinstate the primary
retirement benefit accrued at the time he made such election
to receive a deferred primary benefit provided that he (1)
contributes under Part B from the date of such reemployment,
and (2) returns to the Corporation any annuity notice or other
certificate of entitlement related to such deferred primary
retirement benefit.
(d) For purposes of Section 6 of Article I of this Part B, an
employe to whom this Section 1 applies (other than such an
employe who elects to have contributions returned with
interest) shall be considered to have retired on the date the
payment of primary benefits commences under this Part B.
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<PAGE> 88
B, Art. II, 2
SECTION 2. TEMPORARY ABSENCE
(a) TEMPORARY ABSENCE BUT RECEIVING FULL SALARY
If an employe is temporarily absent from active duty but is
receiving full salary, his monthly contributions under Part B
will be deducted in the usual way and his retirement benefits
will be accrued just as if he were at work.
(b) TEMPORARY ABSENCE BUT RECEIVING SALARY
AT REDUCED RATE OR NO SALARY
No contributions will be required from an employe who is
temporarily absent and receiving salary at a reduced rate or
no salary, and no primary retirement benefits will be accrued
under this Part B for the period during which no contributions
are made. This will in no way affect retirement benefits
previously accrued. Contributions, if made, shall be upon the
basis you the reduced salary except that contributions, if
made, by an employe on Disability Leave of Absence shall be
upon the basis of the employe's full monthly base salary rate.
(c) LAYOFFS
(1) No contributions will be permitted from an employe
who has been laid off, and no primary retirement
benefits will be accrued under this Part B during the
period of layoff.
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<PAGE> 89
B, Art. II, 2(c)(2)
(2) An employe who is laid off may, at his option, leave
his contributions in the Program, in which event his
primary retirement benefits previously accrued under
this Part B will remain to his credit subject to the
provisions of subsection (4) of this Section 2(c).
If such an employe is thereafter reemployed within a
period of twelve months from the date he is laid off
(24 months in the case of an employe who is laid off
with 10 or more years of credited service), he will
resume contributions under Part B.
(3) If an employe who is laid off and withdraws his
contributions is reemployed within twelve months
after the date he is laid off (24 months in the case
of an employe who is laid off with 10 or more years
of credited service) and elects to contribute under
Part B from the date of such reemployment, he may
then, at his election, return the amount which he had
withdrawn and thereupon become eligible to receive
the primary retirement benefits, covered by
contributions made prior to the date of his layoff,
for which he would have been eligible if he had not
withdrawn his contributions.
(4) If an employe is not rehired within twelve months of
the date he is laid off (24 months in the case of an
employe who is laid off with 10 or more years of
credited service), he will be treated as a retirement
under the Program, or as a separation, with the
rights provided in the "Eligibility for Retirement"
section of this Program or under Section 1 of this
Article II, whichever is applicable.
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<PAGE> 90
B, Art. II, 3
SECTION 3. INTEREST CREDITS
Prior to October 1, 1976, in any case in which interest is payable
under the terms of this Program, such interest will be determined on
the basis of the rates allowed by the Insurance Companies referred to
in Section 6 of General Provisions and will be computed on each
contribution from the July 1st following the date such contribution
was made to the first of the month in which such interest is payable
(but in no event beyond the earlier of the death or retirement of the
employe), and will be compounded annually.
On and after October 1, 1976, contributions shall accrue interest at a
rate of 5%. On and after October 1, 1988, contributions shall accrue
interest at a rate of 120% of the annual Federal mid-term rate in
effect under Section 1274 of the Internal Revenue Code for the first
month of the plan year.
SECTION 4. TREATMENT OF EMPLOYES RETURNING FROM LEAVE OF ABSENCE
OR LAYOFF IN CONNECTION WITH A NATIONAL EMERGENCY
(a) An employe who is granted a Military Leave of Absence, or
other leave of absence in connection with a national
emergency, or who is laid off as a result of declining volume
of business related to such emergency, may be permitted to
contribute and to accrue primary retirement benefits under
Part B in such amounts and for the period for which he would
have been eligible if he had remained actively in the employ
of the Corporation, or one of its subsidiaries, under such
rules as the Named Fiduciary or its delegate may establish,
provided:
(1) the employe returns to work following the termination
of his leave of absence or reenters the employ of the
Corporation, or one of its subsidiaries, within such
period and in accordance with the rules established
by the Named Fiduciary or its delegate; and
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<PAGE> 91
B, Art. II, 4(a)(2)
(2) the employe participates for primary benefits under
Part B, if eligible, upon his return to work
following the termination of his leave of absence or
upon his reemployment by the Corporation or one of
its subsidiaries.
(b) The salary to be used in determining an employe's eligibility
for contributions, and the amount of contribution, under this
Section 4 shall be the base salary of such employe at the time
of his leave of absence or layoff from the Corporation, or one
of its subsidiaries.
(c) The Named Fiduciary or its delegate shall, from time to time,
adopt rules to carry out the provisions of this Section in
conformity with the objectives of this Program.
(d) Notwithstanding the provisions of Section 1(b) of Article I of
this Part B, an employe who may have become eligible to make
contributions in accordance with this Section 4 and who does
not so elect shall be eligible nevertheless for supplementary
retirement benefits under Part B.
SECTION 5. TREATMENT OF FORMER SALARIED EMPLOYES WHO RETIRE UNDER
THE GENERAL MOTORS HOURLY-RATE EMPLOYES PENSION PLAN
An hourly-rate employe who has contributions in Part B of this
Program, and who retires under the provisions of the "General Motors
Hourly-Rate Employes Pension Plan", shall be eligible to receive
primary benefits under this Part B based upon the amount of
contributions to his credit. Solely for the purpose of determining
the basis upon which such primary benefits are payable, such employe
shall be treated as a retirement under this Program on the basis which
most closely corresponds to his retirement under the "General Motors
Hourly-Rate Employes Pension Plan".
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<PAGE> 92
B, Art. II, 6
SECTION 6. TREATMENT OF FORMER SALARIED EMPLOYES WHO RETIRE UNDER
THE ELECTRONIC DATA SYSTEMS (EDS) PENSION PLAN
A salaried employe who has contributions in Part B of this Program,
and who retires under the provisions of the "EDS Pension Plan", shall
be eligible to receive primary benefits under this Part B based upon
the contributions to his credit. Solely for the purpose of
determining the basis upon which any such primary benefits may be
payable, retirements from EDS (i) prior to age 60 will be deemed to be
voluntary, and (ii) at or after age 60 will be deemed to be as
provided under Section 11(b) of the General Provisions.
ARTICLE III
PROVISIONS RELATING SPECIFICALLY
TO SUPPLEMENTARY BENEFITS
SECTION 1. RETENTION OF DEFERRED SUPPLEMENTARY RETIREMENT BENEFITS IF
SEPARATED
An employe who, on or after October 1, 1990, loses accumulated
credited service under the provisions of Article II of Part A, who is
not retired and who is eligible for a deferred retirement benefit
under Article III of Part A shall, subject to the provisions of
Section 1(b) of Article I of this Part B, be entitled to receive
deferred supplementary benefits, with the payment of such benefits to
commence at the same time and under the same provisions as applicable
to his deferred retirement benefit under Part A.
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<PAGE> 93
B, Art. III, 2
SECTION 2. TREATMENT OF FORMER SALARIED EMPLOYES WHO RETIRE UNDER
THE GENERAL MOTORS HOURLY-RATE EMPLOYES PENSION PLAN
An hourly-rate employe with 5 or more years of credited service who
has accrued supplementary benefits under Part B of this Program, and
who retires under the provisions of the "General Motors Hourly-Rate
Employes Pension Plan", shall be eligible to receive supplementary
benefits, if any, as determined in Article I, Section 2(a)(2) of this
Part B, based upon the employe's credited service and average monthly
base salary in effect immediately prior to his transfer to the hourly
payroll. Solely for the purpose of determining the basis upon which
any supplementary benefits may be payable, such employe shall be
treated as a retirement under this Program on the basis which most
closely corresponds to his retirement under the "General Motors
Hourly-Rate Employes Pension Plan".
SECTION 3. TREATMENT OF FORMER SALARIED EMPLOYES WHO RETIRE UNDER
THE EDS PENSION PLAN
A salaried employe with 10 or more years of credited service who has
contributed while eligible, does not withdraw his contributions while
employed by EDS and who retires under the provisions of the "EDS
Pension Plan", shall be eligible to receive any supplementary benefits
for which he may be eligible under this Part B, using his base salary
at EDS and General Motors to determine his "average monthly base
salary." Solely for the purpose of determining the basis upon which
any such supplementary benefits may be payable, retirements from EDS
(i) prior to age 60 will be deemed to be voluntary, and (ii) at or
after age 60 will be deemed to be as provided under Section 11(b) of
the General Provisions.
A salaried employe with less than 10 years of credited service at the
date of his transition to EDS shall not be eligible to receive any
supplementary benefits hereunder, since all of the assets and
liabilities related to any and all supplementary benefits to which any
such employe may have been entitled have been transferred from the
Program Trust to EDS in connection with the transition of certain
General Motors employes to EDS.
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<PAGE> 94
Gen. Pro., 1
GENERAL PROVISIONS
SECTION 1. DEFINITION OF CERTAIN TERMS USED IN THIS PROGRAM
(a) EMPLOYES
(1) Unless the context indicates otherwise, the term
"employes" as used in this Program shall mean salaried
employes of the Corporation and its directly or indirectly
wholly-owned or substantially wholly-owned domestic or foreign
subsidiaries in accordance with I.R.C. Section 414(b), (c),
(m), (n), and (o) (other than such employes while assigned to
operations in Canada after 1970, and employes of any directly
or indirectly wholly-owned or substantially wholly-owned
subsidiary of the Corporation acquired or formed by the
Corporation on or after March 1, 1984, excluding employes of
the Saturn Corporation through December 31, 1991, and employes
of the General Motors Investment Management Corporation) (i)
who are working in the United States, or (ii) who are citizens
of or domiciled in the United States and who have been or may
hereafter be hired in the United States by the Corporation or
its said subsidiaries and who are sent out of the United
States by the Corporation or its said subsidiaries to work in
foreign operations, and whose services, if discontinued, would
be discontinued by recalling said employes to the United
States and terminating their services in the United States
(herein sometimes referred to as United States Employes in
Foreign Service). Employes compensated wholly or in part on a
commission basis shall be regarded as "employes" and may
participate in the Program to the extent and subject to the
conditions set forth in Section 10 of these General Provisions
and other applicable sections of the Program. Employes
classified by the
85
<PAGE> 95
Gen. Pro., 1(a)(1)
Corporation as (i) "part-time employes" -- more than
"half-time" (employes who work one-half or more of the
employing unit's work week), or (ii) "Flexible Service"
employes (employes hired on an indefinite basis who are
regularly scheduled to work between 50% and 80% of the
employing unit's base work week) shall be regarded as
"employes", provided, however, that the provisions of Part A,
Article II, Section 2(e) of this Program shall apply to
"Flexible Service" employes.
Effective October 1, 1990, the term "employes" also shall
include salaried employes of General Motors who are working at
GM operations in Puerto Rico. Certain benefit rates and a
benefit formula applicable solely to such employes, which are,
with respect to such employes, in lieu of the benefit rates
and benefit formula otherwise applicable hereunder, are set
forth in Exhibit C of this Program.
(2) The term "employes" shall not include employes who are
classified as (i) "temporary employes", including per diem
employes, or (ii) "part-time employes" -- less than half-time
(employes who work less than one-half of the employing unit's
work week) -- provided, however, that the provisions of Part
A, Article II, Section 11 of this Program shall apply to each
of these classifications, as may be applicable.
(3) The term "employes" shall not include employes represented by
a labor organization who are covered by a collective
bargaining agreement which incorporates or makes as a part
thereof:
(i) this Program as amended by the collective bargaining
agreement, or
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<PAGE> 96
Gen. Pro., 1(a)(3)(ii)
(ii) a program or plan similar in purpose to this Program,
or
(iii) some other plan or program acknowledged by the
Corporation and the employes' bargaining agent to be
a substitute for, or in lieu of, benefits provided by
this Program, or
(iv) an understanding that this Program shall cease
prospectively to be available, applicable, or
operative with respect to each salaried employe
covered by such agreement.
Such employes shall cease to be eligible for participation in
this Program as of the effective date of, or at such other
time as may be specified in, such collective bargaining
agreement. If such collective bargaining agreement expires or
is terminated, and the employe remains a represented employe,
such employe shall continue to be ineligible for participation
in this Program during the period required to conclude a new
collective bargaining agreement.
(4) The term "employes" shall not include members of the Board of
Directors of General Motors Corporation or its directly or
indirectly wholly-owned or substantially wholly-owned
subsidiaries, or of Committees appointed by any such Board of
Directors, who are not officers or regular employes of the
Corporation or said subsidiaries.
(5) The term "employes" shall not include leased employes as
defined under Section 414(n) of the Internal Revenue Code.
87
<PAGE> 97
Gen. Pro., 1(b)
(b) BASE SALARY
The term "base salary" as used in this Program shall mean the
salary paid for a work week of not more than 40 hours,
exclusive of any other compensation. An employe's annual base
salary is limited to $200,000, as may be adjusted under
applicable Federal regulations.
An employe's base salary for purposes of determining benefits
and contributions paid under this Program shall include salary
election deferrals pursuant to (i) a cash or deferred
arrangement under Section 401(k) of the Internal Revenue Code
as provided under the Corporation's Savings-Stock Purchase
Program for Salaried Employes in the United States, and (ii)
an arrangement under Section 125 of the Internal Revenue Code.
(c) AVERAGE MONTHLY BASE SALARY
(1) The term "average monthly base salary" as used in
this Program shall mean the monthly average of the
employe's base salary for the highest 60 of the 120
months immediately preceding his termination of
employment (including EDS and Hughes Aircraft
employment, where applicable) or his transfer to the
hourly rolls.
(2) For purposes of determining "average monthly base
salary" the following provisions shall apply:
88
<PAGE> 98
Gen. Pro., 1(c)(2)(i)
(i) Base salary as indicated in the table below
shall be used for any month, referred to in
subsection (c)(1) above, preceding
termination of employment, or transfer to the
hourly rolls, for which the employe's full
monthly base salary rate was less than the
amounts as shown below:
<TABLE>
<CAPTION>
Retirement With
Benefits Payable
Commencing Base Salary
---------- -----------
<S> <C> $
October 1, 1990
through
September 1, 1991 2,910.00
October 1, 1991
through
September 1, 1992 3,025.00
October 1, 1992
and
After 3,145.00
</TABLE>
(ii) For any month referred to in subsection
(c)(1) above, preceding termination of
employment, or transfer to the hourly rolls,
for which the employe received base salary at
less than his full monthly base salary rate,
his full monthly base salary rate last
received preceding such month shall be used
for such month.
(iii) For any month referred to in subsection
(c)(1) above, preceding an employe's
termination of employment, or transfer to the
hourly rolls, during which the employe was on
the hourly payroll and subsequent to which
the employe commenced service as a salaried
employe, his monthly base salary rate
immediately following the commencement of
such service as a salaried employe shall be
used for such month.
89
<PAGE> 99
Gen. Pro., 1(d)
(d) CONTINUOUS SERVICE
(APPLICABLE TO PRIMARY BENEFITS UNDER PART B)
(1) The term "continuous service" as used in this Program
shall include all employment, whether on salary or
hourly-rate, with the Corporation and its directly or
indirectly wholly-owned or substantially wholly-owned
domestic or foreign subsidiaries, now owned or
hereafter acquired, as well as service with any
company (including service with any directly or
indirectly wholly-owned or substantially wholly-owned
subsidiary of such company) of which substantially
all the assets have been or are hereafter acquired by
the Corporation or its said subsidiaries.
(2) Any period during which an employe has been or is
absent from service under an approved leave of
absence with pay, as well as any period not in excess
of one month during which an employe has been or is
absent from service under such leave of absence
without pay, will be included in the calculation of
the amount of continuous service. In the case of any
employe absent from service in excess of one month
under an approved leave of absence without pay, the
period during which said employe has been or is
absent from service under such leave shall be
excluded in the calculation of the amount of
continuous service, but his continuous service shall
not be broken. An employe who leaves or has left the
service of the Corporation without a Military leave
of absence to enter the Armed Forces of the United
States or of Canada or to accept employment with the
Government of the United States or with the
Government of Canada and who is rehired after he has
terminated such military or governmental service
within such period and under such rules as the Named
Fiduciary or its delegate has heretofore and may
hereafter establish, shall be treated in the same
manner as an employe who has received an approved
leave of absence without pay.
90
<PAGE> 100
Gen. Pro., 1(d)(3)
(3) For the purposes of this Program if, after a quit or
discharge, an employe has been or is rehired, his
continuous service shall commence from the date of
rehiring.
(4) In cases of employes who have been or are released
and who have not been or are not returned to work
within twelve months from the date of such release,
such employes shall have the same status as if they
had quit.
(5) In cases of employes who have been or are laid off
and who have not been or are not returned to work
within five years (or, if less, a period equal to the
employe's continuous service prior to such layoff)
from the date of such layoff, such employes shall
have the same status as if they had quit.
(e) FEDERAL SOCIAL SECURITY BENEFIT
(1) A Federal Social Security benefit for disability or
an unreduced Federal Social Security benefit for age
means a benefit determined and payable under Title II
of the Federal Social Security Act, as now in effect
or as hereafter amended, without any reduction being
made therein based on the age of the recipient.
(2) Old age benefit payments or disability benefit
payments, other than those payable on a basis of
"need" or because of military service, under any
future Federal legislation amending, superseding,
supplementing, or incorporating the Federal Social
Security Act, as amended, or benefits provided
therein, shall be considered as benefits for age or
disability under the Federal Social Security Act for
purposes of this Program.
91
<PAGE> 101
Gen. Pro., 1(e)(3)
(3) If an employe is eligible for a Federal Social
Security benefit for disability or an unreduced
Federal Social Security benefit for age at the time
of retirement or thereafter, such employe shall
advise the Corporation of the effective date of
entitlement to such benefit.
(f) GENDER
Wherever in this Program a masculine pronoun is used, it shall
be deemed in all instances, where appropriate, to include the
feminine also.
(g) NORMAL RETIREMENT AGE
The normal retirement age for any employe shall be the later
of age 65 or the fifth anniversary of the date the employe
commenced participation in this Program. An employe who shall
cease active service after attaining the normal retirement age
shall be entitled to receive a nonforfeitable retirement
benefit under Article III of Part A, and Section 1 of Articles
II and III of Part B, if applicable.
(h) ACTUARIAL VALUE
The actuarial value as of any determination date shall be
calculated on the basis of the UP-84 mortality table and the
applicable interest rate used by the Pension Benefit Guaranty
Corporation (PBGC) as of the first day of the plan year
preceding the determination date.
92
<PAGE> 102
Gen. Pro., 2
SECTION 2. PAYMENT OF RETIREMENT BENEFITS AND SUPPLEMENTS
(a) (1) Except as otherwise provided in subsection (g) of
this Section 2, retirement benefits and supplements
shall be paid monthly.
(2) Monthly payments of an employe's retirement benefits
other than for total and permanent disability shall
become payable with the employe's consent commencing
on the first day of the month coinciding with or next
following the employe's first day of absence because
of retirement and the benefits shall be payable
monthly thereafter. No such consent shall be
required where the present value of such benefits is
$3,500 or less, as determined in accordance with
I.R.C. Section 411(a)(11).
(3) Total and permanent disability retirement benefits
shall be payable monthly during the continuance of
total and permanent disability and while the retiree
otherwise remains eligible for such benefits. Such
payments shall begin the latest of:
(i) the first day of the month which includes the
date the required proof of disability is
received by the Corporation, or
(ii) the first day of the month which includes the
date the employe has been continuously and
totally disabled for a period of five months,
or
(iii) the first day of the third month following
the date the required proof of disability is
received by the Corporation.
This subsection (iii) shall not be applicable
(a) if the employe dies prior to such date,
or (b) where Extended Disability Benefits are
less than the benefits payable under this
Program.
93
<PAGE> 103
Gen. Pro., 2(a)(3)
Successive periods of absence due to the same
disability as that upon which claim for total and
permanent disability retirement benefits is based and
aggregating at least five months will be considered
the same as one continuous absence provided that the
aggregate will not include any such absence which
precedes the last day at work by more than one year.
(4) Any supplement shall be payable in the manner
provided in Section 7 of Article I of Part A.
(5) Part A benefits and supplementary benefits under Part
B shall not be payable with respect to any period for
which any layoff payments, salary payments, or any
sickness and accident benefits are payable to the
employe by the Corporation or under any plan to which
the Corporation has contributed. For the month in
which the last such layoff payment, salary payment,
or sickness and accident benefit payment is made, the
Part A benefits (excluding any special benefit
payable thereunder) and supplementary benefits under
Part B shall be payable only with respect to that
portion of the month for which no such layoff
payments, salary payments, or sickness and accident
benefits were payable. Any primary benefits payable
under Section 2 of Article I of Part B, and any
special benefit payable under Part A, shall be
payable commencing the first day of the month with
respect to which the initial benefit payment is
payable under Part A.
(b) If a retired employe who is receiving retirement benefits is
reemployed by the Corporation or one of its directly or
indirectly wholly-owned or substantially wholly-owned domestic
subsidiaries, such employe shall cease to receive such
benefits during such reemployment. Such an employe shall
accrue
94
<PAGE> 104
Gen. Pro., 2(b)
additional credited service under this Program or the Program
of the subsidiary where he has been reemployed as a result of
such employment and, if otherwise eligible, shall be permitted
to make contributions. Upon subsequent cessation of active
service, the employe's monthly retirement benefits shall be
adjusted with regard to such employment.
(c) If a retired employe receives a retroactive Social Security
Disability Insurance Benefit (DIB) award resulting from a
Reconsideration or Hearing before an administrative law judge,
the amount of retirement benefits to be repaid will be reduced
by an amount equal to any attorney fees, paid by the retired
employe, associated with the award, provided the retiree makes
such repayment within 30 days of the date, on or after October
1, 1987, he is notified by GM of the amount to be repaid.
This reduction applies only to attorney fees associated with a
successful appeal of a denial of DIB, and includes only that
portion of such fees associated with the period of time the
retired employe was entitled to receive retirement benefits.
Any such reimbursement for any such fees may not exceed 25
percent of the amount of any overpayment as of the first of
the month immediately following the month in which the retiree
is notified by Social Security of his DIB award. Attorney
fees incurred for services received prior to denial of the
initial application for DIB will not reduce the amount of
repayment due.
The above provision is to be coordinated with a similar
provision in the Life and Disability Benefits Program to
ensure the retired employe does not receive credit for more
than the actual amount of eligible attorney fees incurred in
securing the award, and any reduction, as specified above,
first will be taken as a reduction to any overpayment due from
the employe under the Life and Disability Benefits Program.
95
<PAGE> 105
Gen. Pro., 2(d)
(d) In order to retire under this Program, an employe must have
unbroken credited service at the time of his retirement,
except that a person who is eligible for benefits under the
Income Protection Plan and is not receiving deferred
retirement benefits under this Program or the Hourly-Rate
Employes Pension Plan shall not be precluded from retiring
without return to employment, even though he shall have
incurred a break in credited service while on continuous
layoff from the Corporation.
(e) In the event that it shall be found that any retiree,
surviving spouse or contingent annuitant to whom a benefit is
payable is unable to care for his or her affairs because of
illness or accident, any monthly benefit payment and
supplement or survivor benefit due (unless prior claim
therefor shall have been made by a duly qualified guardian or
other legal representative) may be paid to the spouse, parent,
brother, sister, or other person or party (including private
or public institutions) deemed by the Corporation to have
incurred expense for such retiree or survivor otherwise
entitled to payment. Any such payment shall be a payment for
the account of the retiree or survivor and shall be a complete
discharge of any liability of the Program therefor.
(f) Notwithstanding any other provision of this Section 2, an
employe attaining age 70-1/2 on and after January 1, 1988,
will commence monthly receipt of his accrued benefits under
this Program, beginning April 1 of the calendar year
immediately following the year the employe attains or attained
age 70-1/2. No employe shall be eligible to receive any such
payment for any month prior to April, 1990, however, and the
first such monthly payment shall be April 1, 1990. No employe
attaining age 70-1/2 prior to January 1, 1988, shall be
eligible hereunder. An employe attaining age 70-1/2 after
December 31, 1989, shall have his monthly payment based on his
retirement benefit accrual as of December 31 of the year in
which he attains
96
<PAGE> 106
Gen. Pro., 2(f)
age 70-1/2. The actuarial value of the sum of all cash
distributions received by any otherwise eligible employe prior
to his actual retirement under this Program will be used as an
offset from any additional benefit accrual that might
otherwise have been payable to such employe as a result of his
working for the Corporation.
(g) Notwithstanding any other provision of this Section 2, where
the sum of the present value of a former employe's monthly
deferred retirement benefit commencing at age 65 under Part A,
when combined with the present value of any employer provided
monthly deferred retirement benefit commencing at age 65 under
Part B, is $3,500, or less, the total amount of any employer
provided monthly benefit otherwise payable to such former
employe, or to the surviving spouse of such deceased former
employe, will be paid in a single sum. In the case of a
former employe who is not vested in the retirement benefits
described in the preceding sentence, such former employe will
be deemed, upon termination of Program participation, to have
constructively received the total amount of such nonvested
benefit. Where the present value of such benefit is more than
$3,500, an otherwise eligible former employe, or surviving
spouse, will have an option to receive a single-sum payment,
but only with spousal consent, where applicable. Any such
single-sum payment shall be in full and final satisfaction of
any and all benefit entitlement under this Program, and is
irrevocable when paid. Solely for purposes of this subsection
(g), the interest rate to be used in the determination of the
present value of any single sum determined hereunder will be
the Pension Benefit Guaranty Corporation's applicable interest
rates in effect at the beginning of the plan year in which the
single sum is paid. The applicable interest rates shall be
used where the present value of the benefit is not in excess
of $25,000. Where the present value of the benefit based on
applicable interest rates exceeds $25,000, 120% of the
applicable interest rates shall be used, provided the
remaining lump-sum value not be less than $25,000.
97
<PAGE> 107
Gen. Pro., 2(g)
In the event any such former employe who receives a single-sum
payment is subsequently reemployed by the Corporation, he will
be treated as a newly-hired employe, with no entitlement to
the reinstatement of any previous credited service, in
recognition of his earlier receipt of a single-sum payment
representing the present value of the lifetime monthly benefit
otherwise related to all such prior years of service.
Effective October 1, 1989, in lieu of a single-sum payment
which has a present value of more than $3,500, as determined
hereunder, a former employe or surviving spouse may elect to
receive lifetime monthly benefits that are the actuarial
equivalent of such former employe's or surviving spouse's
monthly deferred retirement benefits under Part A and Part B,
if any.
In the event a single-sum payment of $3,500, or less, cannot
be made because the identity or location of the former employe
or surviving spouse cannot be determined after reasonable
efforts to do so have been made, and the payment remains
undeliverable for a period of one year from the date of
mailing of such notification to the last known address of the
former employe, all liability for payment thereof shall
terminate immediately, and the amount of the payment shall be
applied to reduce Corporation contributions to the Program;
provided, however, in the event the identity or location of
the former employe or surviving spouse is subsequently
determined, such payment shall be made in a single sum.
98
<PAGE> 108
Gen. Pro., 3
SECTION 3. DEDUCTIONS FOR WORKERS COMPENSATION
In determining the monthly benefits payable under Part A and any
supplementary benefits payable under Part B of this Program, a
deduction shall be made, unless prohibited by law, equivalent to all
or any part of Workers Compensation (including compromise or
redemption settlements) payable to such employe by reason of any law
of the United States, or any political subdivision thereof, which has
been or shall be enacted, provided that such deductions shall be to
the extent that such Workers Compensation has been provided by
premiums, taxes, or other payments paid by or at the expense of the
Corporation, except that no deduction shall be made for the following:
(a) Workers Compensation payments specifically allocated for
hospitalization or medical expense, fixed statutory payments
for the loss of any bodily member, or 100% loss of use of any
bodily member, or payments for loss of industrial vision.
(b) Compromise or redemption settlements payable prior to the date
monthly retirement benefits first become payable.
SECTION 4. ASSIGNMENTS AND LOANS
(a) No right or interest of any participant or of any beneficiary
of any participant under the Program shall be assignable or
transferable, in whole or in part, either directly or by
operation of law or otherwise, including, but not by way of
limitation, execution, levy, garnishment, attachment, pledge,
bankruptcy or in any other manner, but excluding devolution by
death or mental incompetency, and no right or interest of any
such participant or beneficiary shall be liable for, or
subject to, any obligation or liability of such participant
99
<PAGE> 109
Gen. Pro., 4(a)
or beneficiary except in accord with provisions of a Qualified
Domestic Relations Order within the meaning of I.R.C. Section
414(p); provided, however, that any retired employe or
eligible survivor:
(1) who elects health care coverages or life insurance
made available by General Motors may, insofar as it
is consistent with the regulations governing the
plans providing such coverages, participate in such
coverages and have deducted, pursuant to the retired
employe's or survivor's written authorization and
direction acceptable to the Corporation, the required
contribution for such coverages as it may be
established from time to time,
(2) will have Federal and state income tax withheld
pursuant to Federal and state statutes or regulations
unless, only with respect to Federal income tax,
elected otherwise by submitting to the Corporation
written authorization and direction acceptable to the
Corporation, or
(3) who submits to the Corporation written authorization
and direction acceptable to the Corporation may have
amounts of not less than $40.00 per month, but in no
event more than 10% of the retired employe's monthly
benefit, withheld to repay any outstanding
overpayment owing to any benefit plan of the
Corporation.
(b) An employe may not borrow against his contributions under this
Program at any time.
100
<PAGE> 110
Gen. Pro., 5
SECTION 5. CORPORATION CONTRIBUTIONS
(a) The Corporation intends to pay to the Insurance Companies each
year such contributions as are determined to be required for
the purpose of meeting the cost of primary benefits accrued
prior to January 1, 1985 under Part B, any additional cost of
providing for payment of unreduced primary benefits accrued
prior to January 1, 1985 under Part B prior to age 65, and the
cost of the optional benefits described in Sections 4 and 5 of
Article I of Part B to the extent such optional benefits are
in lieu of, or related to, primary benefits accrued prior to
January 1, 1985 under Part B, to the extent not covered by the
contributions made by the employes prior to January 1, 1985.
(b) While the Corporation does not guarantee to do so, it hopes
and expects to provide, over such period as it may determine,
the cost of the benefits described in Part A, the primary
benefits accrued after December 31, 1984 described in Part B,
to the extent not covered by employe contributions made after
December 31, 1984, and the supplementary benefits described in
Part B (including the optional benefits described in Sections
5, 6, and 9 of Article I of Part A and in Sections 4 and 5 of
Article I of Part B to the extent such optional benefits are
in lieu of, or related to, such benefits), either through
placing funds in a retirement trust or through a contract with
one or more insurance companies, or both. Such funds will
include employe contributions made after January 1, 1985. The
Named Fiduciary may appoint an investment manager or managers,
as defined under the Employee Retirement Income Security Act
of 1974 or regulations thereunder, to manage any assets of the
Program.
101
<PAGE> 111
Gen. Pro., 5(c)
(c) Benefits under Part A, primary benefits accrued after December
31, 1984 under Part B and supplementary benefits under Part B
(including the aforementioned optional benefits) shall be paid
only to the extent that they are provided for by the assets of
such retirement trust or under such contract with one or more
insurance companies, and there shall be no liability or
obligation on the part of the Corporation to make any
contributions to the retirement trust or to the insurance
company or companies. The amounts by which benefits otherwise
payable hereunder are in excess of those provided under the
Program as constituted prior to September 15, 1973 shall not
be paid hereunder if amounts equal to such excess have been
paid directly by the Corporation. No liability for the
payment of benefits under Part A, primary benefits accrued
after December 31, 1984 under Part B or supplementary benefits
under Part B (including the aforementioned optional benefits)
shall be imposed upon the Corporation, the officers,
directors, or stockholders of the Corporation.
(d) The Corporation shall comply with all funding requirements of
the Employee Retirement Income Security Act of 1974 as they
apply to this Program.
(e) The Corporation may charge to the fund expenses necessary for
the proper administration of the Retirement Program and
investment of the funds, including the direct cost of benefit
administration performed by, or on behalf of, the Corporation
for the Retirement Program, the cost of consultant and
actuarial services, and Pension Benefit Guaranty Corporation
premiums for participants.
102
<PAGE> 112
Gen. Pro., 6
SECTION 6. PAYMENT OF CONTRIBUTIONS TO PROVIDE ANNUITIES
(a) Prior to January 1, 1977, contributions of the employes and of
the Corporation for primary benefits (including optional benefits
described in Sections 4 and 5 of Article I of Part B which are in
lieu of, or related to, such primary benefits) were paid over to
the Metropolitan Life Insurance Company, the Aetna Life Insurance
Company, and The Prudential Insurance Company of America as the
considerations for the Corporation's purchase of benefits under
the Group Annuity Contract made with them and effective as of July
1, 1940, and as subsequently amended. Commencing January 1,
1977, the Corporation has made and intends to make contributions
from time to time for addition to and accumulation in an account
to be held by each of the Insurance Companies under the Group
Annuity Contract for providing annuities as described in Section
6(b) below. Such contributions have included contributions made
by employes on and after January 1, 1977 and prior to January 1,
1985.
(b) The annuities which were purchased under the Group Annuity
Contract prior to January 1, 1977 will continue in force on and
after that date, subject to the terms and conditions of the
Group Annuity Contract. When each employe becomes entitled to
receive a primary benefit accrued prior to January 1, 1985 under
Part B, it is the intention of the Corporation to provide an
additional annuity equal to such primary benefit, less any
annuity then in force on the employe's account under the Group
Annuity Contract. Payment of such annuities will be assured by
establishing the appropriate reserves in the account held by each
Insurance Company under the Group Annuity Contract.
103
<PAGE> 113
Gen. Pro., 6(c)
(c) The primary benefits referred to in Part B are those purchased
prior to January 1, 1977 from the Insurance Companies or for
which the appropriate reserves have been established by the
Insurance Companies and which are payable by the Insurance
Companies under the Group Annuity Contract. The Corporation
intends to pay to the Insurance Companies the contributions which
will be accumulated for the purpose of establishing reserves to
provide primary benefits accrued prior to January 1, 1985 when
such benefits are to commence. It is the responsibility of the
Insurance Companies to pay to the employes and the designated
contingent annuitants, surviving spouses, and beneficiaries of
such employes all primary benefits accrued prior to January 1,
1985 resulting from the contributions made by both the employes
and the Corporation for such benefits (including the optional
benefits described in Sections 4 and 5 of Article I of Part B
to the extent such optional benefits are in lieu of, or related
to, primary benefits accrued prior to January 1, 1985 under Part
B) and paid as the considerations for the purchase of such benefits
or allocated by the Insurance Companies as reserves to assure
payment of such benefits.
SECTION 7. AMENDMENT, MODIFICATION, SUSPENSION, OR TERMINATION,
MERGER, CONSOLIDATION, OR TRANSFER OF ASSETS OF PROGRAM
BY CORPORATION
(a) The Corporation reserves the right, by and through its Board of
Directors, to amend, modify, suspend, or terminate the Program in
the future. Absent a written delegation of authority from the
Board of Directors, no one has any authority whatsoever to commit
to the provision of any retirement benefit, or benefit provision,
not otherwise provided expressly under the written terms of this
Program, or to change any eligibility criteria, or any other
provision or criteria of this Program as constituted herein.
104
<PAGE> 114
Gen. Pro., 7(b)(1)
(b) (1) If the Corporation, in accordance with this Section 7, or
the Pension Benefit Guaranty Corporation, partially or
totally terminates the Program, the amount of the assets,
which are available to provide benefits, and which are held
by the trustees and insurance companies as of the
termination date, shall be allocated, after deducting
expenses for administration or liquidation, in the following
manner and order to the extent of the sufficiency of such
assets, and in accordance with any regulations for such
determinations as may be issued by the Pension Benefit
Guaranty Corporation:
(aa) First, to that portion of each individual's accrued benefit
which is derived from the participant's mandatory
contributions.
(bb) Second, in the case of benefits payable as an annuity --
(i) In the case of the benefit of a participant or
beneficiary which was in pay status as of the
beginning of the 3-year period ending on the
termination date of the Program, to each such benefit,
based on the provisions of the Program (as in effect
during the 5-year period ending on such date) under
which such benefit would be the least.
(ii) In the case of a participant's or beneficiary's
benefit (other than a benefit described in subparagraph
(bb)(i) above) which would have been in pay status as
of the beginning of such 3-year period if the
participant had retired prior to the beginning of the
3-year period and if his benefits had commenced (in
the normal form of annuity under the Program) as of
the beginning of such period, to each such benefit
based on the provisions of the Program (as in effect
during the 5-year period ending on such date) under
which such benefit would be the least.
105
<PAGE> 115
Gen. Pro., 7(b)(1)(bb)
For purposes of subparagraph (bb)(i) above, the lowest
benefit in pay status during a 3-year period shall be
considered the benefit in pay status for such period.
(cc) Third, to all other benefits (if any) of individuals
under the Program which are guaranteed under the plan
termination insurance provisions of the Employee Retirement
Income Security Act of 1974 determined without regard to
Section 4022(B)(a) of said Act.
(dd) Fourth, to all other nonforfeitable benefits under the
Program.
(ee) Fifth, to all other benefits under the Program.
(2) (aa) The amount allocated under any of the preceding paragraphs
with respect to any benefit shall be properly adjusted for
any allocation of assets with respect to the benefit under a
prior paragraph of this Section 7.
(bb) If the assets available for allocation under any of
the preceding paragraphs (other than paragraphs
(b)(1)(dd) and (b)(1)(ee)) are insufficient to satisfy in
full the benefits of all individuals which are described in
such paragraphs, the assets shall be allocated pro rata
among such individuals on the basis of the present value
(as of the termination date) of their respective benefits
described in such paragraphs.
106
<PAGE> 116
Gen. Pro., 7(b)(2)(cc)
(cc) If the assets available for allocation under paragraph
(b)(1)(dd) are insufficient to satisfy in full the
benefits of individuals described in that paragraph:
(i) Except as provided in subparagraph (b)(2)(cc)(ii)
below, the assets shall be allocated to the
benefits of individuals described in paragraph
(b)(1)(dd) on the basis of the benefits of
individuals which would have been described in such
paragraph (b)(1)(dd) under the Program as in effect at
the beginning of the 5-year period ending on the date
of the Program's termination.
(ii) If the assets available for allocation under
subparagraph (b)(2)(cc)(i) above are sufficient
to satisfy in full the benefits described in such
subparagraph (without regard to this subparagraph),
then for purposes of subparagraph (b)(2)(cc)(i),
benefits of individuals described in such subparagraph
shall be determined on the basis of the Program as
amended by the most recent Program amendment effective
during such 5-year period under which the assets
available for allocation are sufficient to satisfy in
full the benefits of individuals described in
subparagraph (b)(2)(cc)(i) and any assets remaining
to be allocated under such subparagraph shall be
allocated under subparagraph (b)(2)(cc)(i) on the
basis of the Program as amended by the next succeeding
Program amendment effective during such period.
107
<PAGE> 117
Gen. Pro., 7(b)(3)
(3) In the event of any termination or partial termination of the
Program, the right of all affected employes to benefits accrued
to the date of such termination or partial termination, to the
extent funded as of such date, is nonforfeitable.
(4) If any assets of the Program attributable to employe contributions
remain after all liabilities of the Program to participants and
their beneficiaries have been satisfied, such assets shall be
equitably distributed to the employes who made such contributions
(or their beneficiaries) in accordance with their rate of
contributions. Any residual assets of the Program may be
distributed to the Corporation if all liabilities of the Program to
participants and their beneficiaries have been satisfied.
(5) For purposes of this Section 7(b), the term "mandatory
contributions" shall mean amounts contributed to the Program
by a participant which are required as a condition of
participation in the Program, or as a condition of obtaining
benefits under the Program attributable to employer
contributions. For this purpose, the total amount of mandatory
contributions of a participant is the amount of such contributions
reduced (but not below zero) by the sum of the amounts paid or
distributed to him under the Program before its termination.
(6) If the Secretary of the Treasury determines that the
allocation made pursuant to this Section 7 results in
discrimination prohibited by Section 401(a)(4) of the Internal
Revenue Code of 1986, or as it may be subsequently amended, then,
if required to prevent the disqualification of the Program (or
any trust under the Program) under Section 401(a) or 403(a) of
such Code, the assets allocated shall be reallocated to the extent
necessary to avoid such discrimination.
108
<PAGE> 118
Gen. Pro., 7(c)
(c) In the event of any merger or consolidation with, or
transfer of assets or liabilities to, any other plan or
program, each participant in the Program would, if the
Program then terminated, receive a benefit immediately
after the merger, consolidation, or transfer which is at
least equal to the benefit such participant would have
been entitled to receive immediately before the merger,
consolidation, or transfer, if the Program had then
terminated.
SECTION 8. GENERAL MOTORS SALARIED EMPLOYES IN PUERTO RICO
Prior to September 30, 1990, General Motors salaried employes in
Puerto Rico were able to contribute and accrue benefits under the
General Motors Retirement Program for Salaried Employes in Puerto
Rico, subject to the terms and conditions therein prescribed.
Effective October 1, 1990, such Program, as well as all funds related
to it, was merged with this Program. Any benefits accrued under such
Program prior to October 1, 1990, will be paid from this Program.
Effective October 1, 1990, salaried employes in Puerto Rico are covered
by the terms and conditions of this Program, except as otherwise may be
provided with respect to those provisions set forth in Appendix C.
SECTION 9. NON-DUPLICATION OF BENEFITS
Except as provided in Section 6 of Article II of Part A, no employe of
General Motors Corporation or of its said subsidiaries eligible to accrue
benefits under this Program will be eligible to accrue benefits under
any separate plan, nor will any employe, while accruing benefits under
any one plan, be eligible to accrue benefits under any other retirement
or pension plan.
109
<PAGE> 119
Gen. Pro., 10
SECTION 10. PARTICIPATION IN PROGRAM BY EMPLOYES COMPENSATED
WHOLLY OR IN PART ON A COMMISSION BASIS
The provisions set forth in this Section 10 shall be applicable,
notwithstanding any other provision of this Program, to employes who are
compensated wholly on a commission basis and to employes compensated on
a salaried basis but who have periods of employment either prior to or
subsequent to such employment on a salaried basis when compensated
wholly or in part on a commission basis, subject to the reservation
and limitation, however, set forth in the immediately following
sentence. Such provisions shall not be applicable to employes
compensated wholly or in part on a commission basis who are represented
by a labor organization unless such provisions are made applicable to
such employes through understandings between the Corporation and their
collective bargaining representatives.
(a) PART A BENEFITS AND SUPPLEMENTARY BENEFITS UNDER PART B
For purposes of Part A benefits and supplementary benefits under
Part B, credited service of any employe to whom this Section 10
applies shall include periods of employment (and related periods
of absence), when compensated wholly or in part on a commission
basis, provided such periods would otherwise be included in the
determination of credited service under Article II of Part A. For
any employe to whom this Section 10 applies, average monthly base
salary for purposes of Part A benefits and supplementary benefits
under Part B (or base salary for purposes of the computation under
Section 7(g) of Article I of Part A) shall be determined on the
basis of such employe's Annual Earnings Base, as defined below, in
lieu of base salary, for any period included in the computation
during which such employe was compensated wholly or in part on a
commission basis.
110
<PAGE> 120
Gen. Pro., 10(b)
(b) PRIMARY BENEFITS UNDER PART B
For purposes of primary benefits under Part B, any employe to whom
this Section 10 applies shall be eligible to contribute for such
benefits on the basis of such employe's Annual Earnings Base, as
defined below, in lieu of base salary, provided such employe would
otherwise be eligible to so contribute in accordance with the
conditions specified in Section 1(a) of Article I of Part B;
however, for purposes of meeting the service requirement of such
Section 1(a), a period of employment (and related periods of
absence) while compensated wholly or in part on a commission basis
may be taken into account.
(c) ANNUAL EARNINGS BASE
The Annual Earnings Base referred to in this Section 10 shall be
the annual amount, or a pro rata portion thereof with respect to
any period of less than one year, as established for any year
for an employe to whom this Section 10 applies under rules to be
determined from time to time by the Named Fiduciary or its
delegate.
(d) BENEFIT CLASS CODE
For purposes of determining the basic benefit rate under Part
A, the Benefit Class Code applicable to a position held by the
employe to whom this Section 10 applies shall be the Benefit Class
Code "D".
(e) OTHER PROVISIONS
The Named Fiduciary or its delegate shall adopt, from time to
time, other rules to carry out the provisions of this Section 10
in conformity with the objectives of this Program.
111
<PAGE> 121
Gen. Pro., 11
SECTION 11. TREATMENT OF CERTAIN EMPLOYES UNDER LIMITED EARLY
RETIREMENT PROVISIONS AND PRIOR PROGRAM PROVISIONS
Effective September 30, 1987, solely to comply with applicable Federal
law, the following consent-type retirements were eliminated: (i)
Corporation option, (ii) special, (iii) mutually satisfactory, and (iv)
early mutual.
(a) LIMITED EARLY RETIREMENT PROVISIONS
Effective October 1, 1987, pursuant to authority granted by the
Corporation's Board of Directors to the Corporation's Management
Committee, such Committee may, from time-to-time and in its sole
discretion, adopt limited early retirement provisions to provide
retirements (i) during a specified period of time, (ii) at a
specified level of benefits, and (iii) for identified salaried
employes. Any such early retirement provisions that may be
adopted by the Corporation in compliance with the authority
granted earlier by its Board of Directors, are made a part of this
Program as though set out fully herein.
(b) PROVISIONS OF PAST PROGRAMS TO HONOR PRIOR COMMITMENTS
To implement various commitments made, prior to October 1, 1987,
by the Corporation to certain otherwise eligible employes with
respect to the availability to each of them of unreduced
retirement benefits commencing as early as their attainment of
age 55, Program provisions in effect at the time such commitments
were made shall continue to apply to such employes.
The provision immediately above is limited in applicability solely
to otherwise eligible employes from the following units, and any
special conditions relevant to the Corporation commitment to each
such group of employes are shown:
112
<PAGE> 122
Gen. Pro., 11(b)(1)
(1) Employes who were working at facilities which had been announced,
as of August 31, 1987, to be closed or phased-out, as follows:
<TABLE>
<CAPTION>
Division/Unit Facilities
------------- ----------
<S> <C>
Buick-Oldsmobile-Cadillac Cadillac
Chicago
Fleetwood
Flint Body Assembly
Wentzville*
Central Foundry Massena
Pontiac
Saginaw Nodular
Chevrolet-Pontiac-Canada Detroit (Plant #37)
Hamilton
Norwood
Pontiac (G Car)
Detroit Diesel Allison Redford
Romulus
Fisher Guide Elyria
Fort Street
Harrison Buffalo
Inland Livonia
Tecumseh
New Departure-Hyatt Bristol
</TABLE>
*Related to St. Louis Truck & Bus closing.
(CONTINUED ON NEXT PAGE)
113
<PAGE> 123
Gen. Pro., 11(b)(1)
(CONTINUED FROM PRECEDING PAGE)
<TABLE>
<CAPTION>
Division/Unit Facilities
------------- ----------
<S> <C>
Service Parts Operations Baltimore
Bethpage
Buffalo
Burton
Cleveland
Columbus
Dallas
Dallas AC/Delco
Dallas T & C
Houston
LaMirada
Memphis T & C
Newark T & C
New York
North Brunswick AC
Pittsburgh
Pittsburgh T & C
Romulus
Truck & Bus Flint Assembly (Line One)
Pontiac Central Plants
(Heavy & Medium Duty
Trucks & Coach)
St. Louis
</TABLE>
(2) Otherwise eligible employes who are absent at date of retirement
from any unit due to layoff which commenced prior to October 1,
1987, whose age plus credited service totaled 55 or more on the
date of layoff .
(3) Otherwise eligible employes for whom credited service has been
continued as a result of such things as (i) the sale of
operations, (ii) a joint venture, or (iii) other similar-type
transactions, such as acquisitions and mergers, as specifically
set forth in Section 12 of General Provisions.
114
<PAGE> 124
Gen. Pro., 12
SECTION 12. TREATMENT OF CERTAIN EMPLOYES OF
(a) TEREX DIVISION
Notwithstanding any other provision of this Program, in
connection with the sale of Terex Division of the Corporation
to IBH, termination of employment with General Motors Corporation,
other than by death or retirement, shall not be considered a
termination of employment for purposes of this Program with
respect to an employe (i) who on December 31, 1980 was age 40 or
over and had 10 or more years of credited service and whose years
of age plus credited service totaled 55 or more, and (ii) whose
termination of employment with General Motors Corporation occurs
after such employe has been employed by IBH through:
(1) December 31, 1985, or
(2) December 31, 1982, and is terminated by IBH other than as a
discharge (for cause).
(b) GM BUILDING DIVISION/NEW YORK
Notwithstanding any other provision of this Program, in connection
with the transfer of operation of the New York General Motors
Building to Corporate Property Investors, Inc. (CPI),
termination of employment with General Motors Corporation, other
than by death or retirement, shall not be considered a
termination of employment for purposes of this Program with
respect to an employe (i) who on February 28, 1982 had 10 or more
years of credited service and whose years of age plus credited
service totaled 55 or
115
<PAGE> 125
Gen. Pro., 12(b)
more, and (ii) whose termination of employment with General Motors
Corporation occurs after such employe has been employed by CPI
through:
(1) February 28, 1987, or
(2) February 28, 1984, and is terminated by CPI other than as a
discharge (for cause).
For any month in which such employe is employed by CPI, or any
other employer, an employe to whom this Section 12(b) applies who
retires under this Program, shall not be entitled to receive the
temporary benefit that otherwise may be payable under Part A of
this Program.
(c) GENERAL MOTORS INSTITUTE
Notwithstanding any other provision of this Program, in
connection with the reorganization of General Motors Institute
from a subsidiary of General Motors Corporation to an independent
educational facility operated by a successor organization,
termination of employment with General Motors Institute, other than
by death or retirement, shall not be considered a termination of
employment for purposes of this Program until credited service
otherwise breaks under Article II, Section 3(d) of Part A with
respect to an employe (i) who on June 30, 1982 had 10 or more
years of credited service, and (ii) whose termination of
employment with General Motors Institute occurs after such employe
has been employed by the successor organization through:
(1) June 30, 1985, or
(2) a date prior to June 30, 1985, and is terminated by the
successor organization other than as a discharge (for cause).
116
<PAGE> 126
Gen. Pro., 12(c)
The immediately preceding paragraph notwithstanding, termination
of employment with General Motors Institute, other than by death
or retirement, by any employe whose credited service otherwise
would have broken between ages 55 and 60, in accordance with
Article II, Section 3(d) of Part A, shall not be considered a
termination of employment for purposes of this Program until (i)
age 60, or (ii) if earlier, the commencement of monthly benefits
hereunder, at which time credited service shall be broken for
all such employes.
(d) DELCO ELECTRONICS DIVISION
Notwithstanding any other provision of this Program, an employe
who at the request of the Corporation terminated employment with
Delco Electronics Division to accept employment with Tau
Laboratories shall not be considered a termination of
employment for purposes of this Program provided such employe (i)
on his last day worked for Delco Electronics Division had 10 or
more years of credited service and his age plus credited service
totaled 55 or more, and (ii) he remained employed by Tau
Laboratories through:
(1) December 31, 1987, or
(2) December 31, 1984, and is terminated by Tau Laboratories
other than as a discharge (for cause).
For any month in which such employe is employed by Tau
Laboratories, or any other employer, an employe to whom this
Section 12(d) applies who was under age 54 on his last day worked
for Delco Electronics Division and who subsequently retires under
this Program shall not be entitled to receive the temporary benefit
that otherwise may be payable under Part A of this Program.
117
<PAGE> 127
Gen. Pro., 12(e)
(e) GM FANUC ROBOTICS CORPORATION
Notwithstanding any other provision of this Program, in
connection with the formation of GM Fanuc Robotics Corporation
(GMF), a joint venture between General Motors Corporation and
Fujitsu Fanuc Ltd., termination of employment with General Motors
Corporation, other than by death or retirement, shall not be
considered a termination of employment for purposes of this Program
with respect to an employe (i) who on June 30, 1985, had 10 or
more years of credited service and whose years of age plus
credited service totaled 55 or more, and (ii) whose termination of
employment with General Motors Corporation occurs after such
employe has been employed by GMF through:
(1) June 30, 1985, or
(2) a date prior to June 30, 1985, and is terminated by GMF other
than as a discharge (for cause).
(f) GENERAL MOTORS BALANCE ENGINEERING OPERATION
Notwithstanding any other provision of this Program, in connection
with the sale of GM's Balance Engineering Operation to Balance
Engineering Company, termination of employment with General
Motors Corporation, other than by death or retirement, shall not
be considered a termination of employment for purposes of this
Program with respect to an employe (i) who on January 31, 1987 had
10 or more years of credited service and whose years of age plus
credited service totaled 55 or more, and (ii) whose termination
of employment with General Motors Corporation occurs after such
employe has been employed by the Balance Engineering Company
through:
118
<PAGE> 128
Gen. Pro., 12(f)(1)
(1) January 31, 1990, or
(2) a date prior to January 31, 1990, and is terminated by the
Balance Engineering Company other than as a discharge (for
cause).
(g) SAGINAW DIVISION'S ACTUATOR PRODUCTS GROUP
Notwithstanding any other provision of this Program, in connection
with the sale of Saginaw Division's Actuator Products Group to
Thomson Industries, Inc., termination of employment with General
Motors Corporation, other than by death or retirement, shall not
be considered a termination of employment for purposes of this
Program with respect to an employe (i) who on April 30, 1987 had
10 or more years of credited service and whose years of age plus
credited service totaled 55 or more, and (ii) whose termination
of employment with General Motors Corporation occurs after such
employe has been employed by Thomson Industries, Inc., through:
(1) April 30, 1990, or
(2) a date prior to April 30, 1990, and is terminated by Thomson
Industries, Inc., other than as a discharge (for cause).
119
<PAGE> 129
Gen. Pro., 12(h)
(h) GENERAL MOTORS INDUSTRIAL CLEANING TECHNOLOGY CENTER
Notwithstanding any other provision of this Program, in
connection with the joint venture between General Motors
Industrial Cleaning Technology Center (ICTC) and ARA Services,
Inc., (ARA), termination of employment with General Motors
Corporation, other than by death or retirement, shall not be
considered a termination of employment for purposes of this
Program with respect to an employe (i) who on December 31, 1986,
had 10 or more years of credited service and whose years of age
plus credited service totaled 55 or more, and (ii) whose
termination of employment with General Motors Corporation occurs
after such employe has been employed by the GM ICTC-ARA Joint
Venture through:
(1) December 31, 1989, or
(2) a date prior to December 31, 1989, and is terminated by the
GM ICTC-ARA Joint Venture other than as a discharge (for
cause).
(i) TRUCK & BUS GROUP
Notwithstanding any other provision of this Program, in
connection with the heavy duty truck joint venture between
the Corporation's Truck & Bus Group and Volvo-White, termination
of employment with General Motors Corporation, other than by death
or retirement, shall not be considered a termination of employment
for purposes of this Program with respect to an employe (i) who on
August 31, 1987, had 10 or more years of credited service and whose
years of age plus credited service totaled 55 or more, and (ii)
whose termination of employment with General Motors Corporation
occurs after such employe has been employed by the heavy duty
truck joint
120
<PAGE> 130
Gen. Pro., 12(i)
venture between the Corporation's Truck & Bus Group and Volvo-White
through:
(1) August 31, 1990, or
(2) a date prior to August 31, 1990, and is terminated by the
GMC Truck & Bus Group - Volvo-White Heavy Duty Truck Joint
Venture other than as a discharge (for cause).
(j) MARKETING EDUCATIONAL SERVICES ACTIVITY OF THE CUSTOMER SALES AND
SERVICE STAFF
Notwithstanding any other provision of this Program, in
connection with the divestiture of GM's Marketing Educational
Services Activity of the Customer Sales and Service Staff to Sandy
Corporation, termination of employment with General Motors
Corporation, other than by death or retirement, shall not be
considered a termination of employment for purposes of this
Program with respect to an employe (i) who on August 31, 1987,
had 10 or more years of credited service and whose years of age
plus credited service totaled 55 or more, and (ii) whose
termination of employment with General Motors Corporation occurs
after such employe has been employed by the Sandy Corporation
through:
(1) August 31, 1990, or
(2) a date prior to August 31, 1990, and is terminated by the
Sandy Corporation other than as a discharge (for cause).
121
<PAGE> 131
Gen. Pro., 12(k)
(k) DETROIT DIESEL ALLISON DIVISION
Notwithstanding any other provision of this Program, in
connection with the formation of Detroit Diesel Corporation (DDC),
a joint venture between the Detroit Diesel Allison Division and the
Penske Corporation, Inc., an employe who accepts employment with
DDC has been placed on a special leave of absence for up to three
years. During the three-year period which commenced January 1,
1988, any such employe will (i) participate in the DDC Pension Plan,
(ii) not be eligible to accrue credited service under Part A or
continuous service under Part B, and (iii) not be eligible to
contribute under Part B.
All of the Program assets attributable to any Part A and Part B
benefits accrued by any such employe who accepts employment at DDC
have been transferred to DDC. As a result of such transfer of
assets, all prior benefit entitlement, of whatever nature, ceased
hereunder on the date of such transfer, and the total
responsibility and liability therefore has been assumed by DDC,
which has assumed concurrently the sole responsibility to provide
entirely for any retirement benefit entitlement of any such
employe. In the event that any such employe (i) is terminated
by DDC other than for cause, (ii) retires from the Corporation,
or (iii) is reemployed by the Corporation, all within the three
year special leave of absence period, the Corporation will be
responsible for any Part A and Part B benefits which accrued
to any such terminating employe prior to his acceptance of
employment at DDC, concurrent with receipt by the Trustee of
this Program of the full amount of Program assets attributable
to any such rehired employe from DDC. The Sales Agreement
executed earlier between the parties provides that DDC will remain
liable under its pension plan for any benefits attributable to such
a rehired employe's service at DDC during any employment period at
DDC.
122
<PAGE> 132
Gen. Pro., 12(k)
In view of the prior transfer of assets to DDC representing the
full and fair value of any accrued benefit entitlement under this
Program at date of such transfer, in the event that any such
employe who accepts employment at DDC is reemployed by the
Corporation after (i) expiration of the three year leave of
absence period, or (ii) he voluntarily terminates his employment
at DDC within the three year leave of absence period, he will be
treated under this Program as a newly-hired employe, with no
entitlement to any benefits or credited service related to all
such prior participation hereunder.
(l) AC ROCHESTER PRODUCTS DIVISION
Notwithstanding any other provision of this Program, in connection
with the sale of the fuel injection business of the AC Rochester
Products Division, Grand Rapids, to Penske Transportation, Inc.,
and Detroit Diesel Corporation, hereinafter referred to as Diesel
Technology Corporation (DTC), an employe who accepts employment
with DTC has been placed on a special leave of absence for up to
three years. During the three-year period which commenced
November 1, 1988, any such employe will (i) participate in the
DTC Pension Plan, (ii) not be eligible to accrue credited service
under Part A or continuous service under Part B, and (iii) not
be eligible to contribute under Part B.
All of the Program assets attributable to any Part A and Part B
benefits accrued by any such employe who accepts employment at DTC
have been transferred to DTC. As a result of such transfer of
assets, all prior benefit entitlement, of whatever nature, ceased
hereunder on the date of such transfer, and the total
responsibility and liability therefore has been assumed by DTC,
which has assumed concurrently the sole responsibility to provide
entirely for any retirement benefit entitlement of any such
employe. In the
123
<PAGE> 133
Gen. Pro., 12(l)
event that any such employe (i) is terminated by DTC other
than for cause, (ii) retires from the Corporation, or (iii) is
reemployed by the Corporation, all within the three year special
leave of absence period, the Corporation will be responsible for
any Part A and Part B benefits which accrued to any such
terminating employe prior to his acceptance of employment at
DTC, concurrent with receipt by the Trustee of this Program of
the full amount of Program assets attributable to any such
rehired employe from DTC. The Sales Agreement executed earlier
between the parties provides that DTC will remain liable under its
pension plan for any benefits attributable to such a rehired
employe's service at DTC during any employment period at DTC.
In view of the prior transfer of assets to DTC representing the
full and fair value of any accrued benefit entitlement under this
Program at date of such transfer, in the event that any such
employe who accepts employment at DTC is reemployed by the
Corporation after (i) expiration of the three year leave of absence
period, or (ii) he voluntarily terminates his employment at DTC
within the three year leave of absence period, he will be treated
under this Program as a newly-hired employe, with no entitlement
to any benefits or credited service related to all such prior
participation hereunder.
124
<PAGE> 134
Gen. Pro., 12(m)
(m) HYDRA-MATIC DIVISION (MUNCIE PLANT)
Notwithstanding any other provision of this Program, in connection
with the joint venture between the Hydra-Matic Division's Muncie
Plant and Acustar's New Process Gear operations, termination of
employment with General Motors Corporation, other than by death or
retirement, shall not be considered a termination of employment
for purposes of this Program with respect to an employe (i) who on
March 31, 1990, had 10 or more years of credited service and whose
years of age plus credited service totaled 55 or more, and (ii)
whose termination of employment with General Motors Corporation
occurs after such employe has been employed by the Hydra-Matic
Acustar Joint Venture through:
(1) March 31, 1993, or
(2) a date prior to March 31, 1993, and is terminated by the
Hydra-Matic Acustar Joint Venture other than as a discharge
(for cause).
Notwithstanding the above, the benefits payable under this Program
to an employe who transfers to such joint venture will be based on
the benefits which such employe had accrued under this Program
at April 1, 1990, or the date such employe transfers to such
joint venture, if later.
125
<PAGE> 135
Gen. Pro., 13
SECTION 13. TREATMENT OF CERTAIN EMPLOYES OF
(A) ELECTRONIC DATA SYSTEMS (EDS)
(1) In connection with the transition of certain General Motors
employes to EDS, the provisions of Part A, Article II,
Section 3, which otherwise serve to break credited service
under such circumstances, will not apply to any such
transitioning employe who has 10 or more years of credited
service on his last day worked prior to such transition.
However, no additional credited service shall accrue under
this Program for any such transitioning employe.
(2) Each transitioned employe who on the date of transfer to
EDS had completed less than 30 years of credited service,
or whose years of age and years of credited service totaled
less than 85, and who thereafter retires (a) prior to
attaining age 62 and one month with 30 or more years of
combined service with GM and EDS, or (b) between ages 55
and 61 and the total of whose years of age and years of
combined service with GM and EDS equals or exceeds 85,
shall be entitled to receive the following described
benefits, while otherwise eligible:
(a) With respect to any monthly payment falling due prior
to attainment of age 62 and one month, at which time
any such benefit shall cease to be payable, a monthly
Subsidized Early Retirement Benefit, defined as an
amount equal to the Part A normal retirement benefit,
based upon credited service under this Program as of
the earlier of the date of transfer or March 1, 1989,
and the basic benefit rate in effect on March 1, 1989,
actuarially reduced from age 62, in accordance with
Part A, Article I,
126
<PAGE> 136
Gen. Pro., 13(a)(2)(a)
Section 2(b)(2)(i). Such Subsidized Early Retirement
Benefit is reduced by the sum of the following monthly
amounts, each of which shall include any
post-retirement increases granted on benefits accrued
both prior to and subsequent to March 1, 1989:
(i) any Part A basic benefit determined without
regard to this section,
(ii) any Part B benefits accrued after March 1, 1989,
and
(iii) any benefit payable under the EDS Retirement plan
attributable to benefit accruals after
March 1, 1989.
(b) Upon attainment of age 62 and one month, a monthly
Minimum Guaranteed Benefit Amount, determined by
multiplying the credited service under this Program as
of the earlier of the date of transfer or March 1,
1989 by the Part A basic benefit rate in effect on
March 1, 1989, reduced by the sum of the following
monthly amounts, each of which shall include any
post-retirement increases granted on benefits accrued
both prior to and subsequent to March 1, 1989:
(i) any Part A basic benefit determined without
regard to this section,
(ii) any Part B benefits accrued after March 1, 1989,
(iii) any benefit payable under the EDS Retirement Plan
attributable to benefit accruals after
March 1, 1989, and
127
<PAGE> 137
Gen. Pro., 13(a)(2)(b)(iv)
(iv) the total of retirement offsets described in
subsections 2(a)(i), (ii) and (iii) above for any
month prior to the attainment of age 62 and one
month, to the extent such offsets exceed the
amount of the Subsidized Early Retirement
Benefit. Any such excess shall be expressed as a
life annuity commencing at age 62 and one month.
(3) Each transitioned employe who on the date of transfer to EDS had
completed less than 30 years of credited service, and who
thereafter retires prior to age 62 and one month with 30 or more
years of combined service with GM and EDS, shall be entitled to
receive, if otherwise eligible, with respect to any monthly
payment falling due prior to attainment of age 62 and one month,
at which time any such benefit shall cease to be payable, a
monthly Incremental Benefit, as defined hereafter. The
Incremental Benefit shall be $1,400.00, multiplied by the
Service Factor, as defined hereafter, and reduced by the sum of
the following monthly amounts, subsections (b) and (c) of which
shall include any post-retirement increases:
(a) the Subsidized Early Retirement Benefit,
(b) the Part B supplementary benefit, and
(c) the maximum primary Federal Social Security Benefit payable
unreduced because of age.
The Service Factor is a fraction, the numerator of which is
years of credited service under this Program as of the earlier
of the date of transfer to EDS, or March 1, 1989, and the
denominator of which is 30.
128
<PAGE> 138
Gen. Pro., 13(a)(4)
(4) In determining the amount of any benefit payable under the EDS
Retirement Plan attributable to benefit accruals after March 1,
1989, as may be necessary under subsections 2(a)(iii) and
(2)(b)(iii) above, in the event the EDS Retirement Plan fails to
provide such benefit entitlement, any such reduction in benefits
will be deemed to reduce benefits accrued after March 1, 1989,
before reducing the benefits accrued prior to such date.
(5) Payment under this section, if any, shall be made without regard
to whether an otherwise eligible transitioned employe retires
before, on, or after March 1, 1989.
(6) For purposes of determining any benefits payable under
subsections 2(a)(iii), 2(b)(iii), 2(b)(iv) and paragraph 3 of
subsection (a), the basis for actuarial equivalence shall be the
1984 Unisex Pension Mortality Table and eight percent interest.
(7) Notwithstanding the provisions of this Program defining
Eligibility For Retirement, any separation from EDS prior to
attainment of age 55, on or after February 1, 1990, by a
transitioning employe with thirty or more years of combined
service with GM and EDS, will be considered a retirement under
this Program, with benefits payable commencing the first of the
month following the date of such separation. Any benefits that
may be payable hereunder to such an employe will be based solely
upon GM credited service, and will be calculated in accordance
with all of the applicable provisions of this Program. For an
eligible transitioned employe separated (i) from EDS prior to
February 1, 1990, with thirty or more years of combined service
with GM and EDS, and (ii) prior to age 55, benefits will be
payable commencing the first of the
129
<PAGE> 139
Gen. Pro., 13(a)(7)
month following the date of such separation. In any such case,
the monthly amount of Subsidized Early Retirement Benefit, the
Minimum Guaranteed Benefit Amount, and the Incremental Benefit
would be based upon benefit rates in effect at the earlier of
(i) the date of separation, or (ii) March 1, 1989.
(B) HUGHES AIRCRAFT
(1) In connection with the transfer of certain General Motors
employes to Hughes Aircraft, the provisions of Part A, Article
II, Section 3, which otherwise serve to break credited service
under such circumstances, will not apply to any such
transferring employe. However, no additional credited service
shall accrue under this Program for any such transferring
employe for any period while an employe of Hughes Aircraft.
(2) Notwithstanding any other provision of this Program, the
provisions set forth in subparagraphs (2) through (7) of Section
13(a) of the General Provisions immediately above shall likewise
apply to any General Motors employe who transfers to Hughes
Aircraft. In any such case, the term Hughes Aircraft will be
substituted for EDS wherever applicable.
130
<PAGE> 140
Gen. Pro., 14
SECTION 14. TREATMENT OF CERTAIN EMPLOYES
(A) WHO PARTICIPATE IN THE PRESIDENT'S
EXECUTIVE INTERCHANGE PROGRAM
Notwithstanding any other provision of this Program, an employe who
is on an approved special leave of absence in order to participate in
the President's Executive Interchange Program (or a program
comparable in scope and effect as determined by the Corporation)
shall be eligible to participate in this Program during the period of
such leave of absence. Such employe shall be granted credited
service under Part A and continuous service under Part B of this
Program for the period of such leave and shall be eligible to
contribute under Part B of this Program on the basis of his base
salary rate in effect on his last day of work preceding such absence.
For purposes of determining "average monthly base salary", the
monthly base salary rate in effect immediately preceding such leave
of absence shall be used for any month of such leave during the 60
months immediately preceding termination of employment.
(B) WHO RETURN TO THE SERVICE OF THE CORPORATION
AFTER GOVERNMENT SERVICE
Notwithstanding the provisions of the definition of "Continuous
Service" in Section 1 of these General Provisions and the credited
service provisions of Article II of Part A, the continuous service or
the credited service of an employe who left or leaves the service of
the Corporation or one of its subsidiaries without an approved leave
of absence to accept employment with the Government of the United
States or with the Government of Canada, or with a governmental
agency of either of said governments, and who returned or returns to
the service of the Corporation or one of its subsidiaries
131
<PAGE> 141
Gen. Pro., 14(b)
as his first employment following such government employment, shall
not be broken. In no event, however, shall the period during which
such employe is absent from service because of such government
employment be included in the calculation of the amount of continuous
service or credited service.
(C) WHO ARE EMPLOYED BY FOREIGN BUSINESS ENTITIES IN WHICH
THE CORPORATION HAS A SUBSTANTIAL OWNERSHIP INTEREST
Notwithstanding any other provision of this Program, an employe who
at the request of the Corporation accepts an assignment with a
foreign business entity in which the Corporation has a substantial
ownership interest shall be eligible to participate in this Program
during the period of such assignment. Such employe shall be granted
credited service under Part A and continuous service under Part B of
this Program for the period of such assignment and shall be eligible
to contribute under Part B of this Program for the period of such
assignment and shall be eligible to contribute under Part B of this
Program on the basis of his base salary rate that would otherwise be
in effect in the absence of such assignment. Such salary also shall
be used for purposes of determining "average monthly base salary" for
any month of such assignment during the 60 months immediately
preceding termination of employment.
SECTION 15. SALARIED EMPLOYES WHO ARE TRANSFERRED TO THE HOURLY ROLLS
A salaried employe who is transferred to the hourly rolls, and within 6
months of such transfer breaks credited service, shall be eligible to
receive benefits under this Program, but shall not be eligible to receive
retirement benefits under the provisions of the "General Motors
Hourly-Rate Employes Pension Plan".
132
<PAGE> 142
Gen. Pro., 16
SECTION 16. NAMED FIDUCIARY
The Finance Committee of the Corporation's Board of Directors shall be the
Named Fiduciary with respect to this Program. The Finance Committee may
delegate to various officers, employes and committees of the Corporation
authority to carry out such of its responsibilities as it deems
appropriate in order to carry out the proper and effective administration
of this Program.
SECTION 17. PLAN ADMINISTRATOR AND APPEAL PROCEDURE
General Motors Corporation shall be the Plan Administrator. The
Administrator will provide adequate and timely notice in writing to any
participant or beneficiary whose claim for benefits under the Program is
denied, setting forth the specific reasons for such denial. Any denied
claim may be appealed to the Plan Administrator. The request must be made
in writing.
The participant or beneficiary will be given an opportunity for a full and
fair review by the Named Fiduciary or its delegate of the decision of the
Plan Administrator denying the claim. If a participant or beneficiary is
not satisfied with the decision of the Plan Administrator, an appeal may
be filed with the Employe Benefit Plans Committee (EBPC), which has been
delegated the authority necessary to construe, interpret, and administer
the Program. Such an appeal must be filed in writing within sixty (60)
days from the date of the notice from the Plan Administrator denying a
claim for benefits under the Program. The decision of the EBPC shall be
final and binding upon the Corporation and the participant or beneficiary.
133
<PAGE> 143
Gen. Pro., 18
SECTION 18. CERTAIN PROVISIONS REQUIRED TO COMPLY
WITH SECTION 415 OF THE INTERNAL REVENUE CODE
(a) For purposes of this section, the term "Annual Addition" shall mean
the sum, for any Limitation Year, of Corporation contributions and
forfeitures allocated to an employe's account under all defined
contribution plans or programs plus any employe contributions to such
plans or programs and this Program.
(b) For purposes of this section, the term "Limitation Year" shall mean
the twelve month period beginning on December 31 and ending the
following December 30.
(c) For purposes of this section, all defined benefit plans or programs
of the Corporation will be treated as one defined benefit plan or
program and all defined contributions plans or programs will be
treated as one defined contribution plan or program.
(d) For purposes of this section, the term "Compensation" shall mean an
employe's compensation as defined under Section 415(c)(3) of the
Internal Revenue Code and regulations thereunder.
(e) DEFINED CONTRIBUTION PLAN LIMITATION
In no event shall the sum of an employe's Annual Additions exceed the
lesser of $30,000 (or such other amount prescribed by the Secretary
of the Treasury applicable to the Limitation Year) or 25% of such
employe's Compensation for any Limitation Year.
134
<PAGE> 144
Gen. Pro., 18(f)
(F) DEFINED BENEFIT PLAN LIMITATIONS
(1) An employe's annual benefit under the Program (excluding any
benefits attributable to employe contributions) during any
Limitation Year shall not exceed the lesser of (i) 100% of the
employe's average Compensation during his three consecutive
highest paid years of service with the Corporation, or (ii) the
employe's accrued benefit (prior to the application of the
overall limitation of subsection (g)) (aa) for Limitation Years
beginning prior to December 31, 1983, or (bb) for Limitation
Years beginning prior to December 31, 1987, or (cc) $90,000 for
Limitation Years beginning on or after December 31, 1987, or
such other amount prescribed by the Secretary of the Treasury
applicable to the Limitation Year. As a result of an increased
amount prescribed by the Secretary, an annual benefit limited by
this provision in a prior year may be increased with respect to
future payments to the lesser of the increased amount or the
employe's annual benefit without regard to this provision.
(2) Annual benefits will be tested on the basis of an actuarially
equivalent straight life annuity on the employe's life ignoring
benefits not directly related to retirement income or death
benefits payable prior to retirement and also ignoring benefits
payable to the surviving spouse of a retired employe. In the
event that benefits commence before the employe's Social
Security retirement age, the dollar limitation under section
18(f)(1)(ii) shall be adjusted so that it is the actuarial
equivalent of an annual benefit of $90,000, or such other
adjusted amount prescribed by the Secretary of the Treasury,
beginning at such employe's Social Security retirement age. In
the event that benefits
135
<PAGE> 145
Gen. Pro., 18(f)(2)
commence after the employe's Social Security retirement age, the
dollar limitation as described under section 18(f)(1)(ii) shall
be increased actuarially to be the equivalent of an annual
benefit of $90,000, or such other adjusted amount prescribed by
the Secretary of the Treasury, beginning at such employe's
Social Security retirement age.
In the event that benefits commence prior to age 55 for
Limitation Years beginning before December 31, 1983, the benefit
shall be adjusted to the actuarial equivalent of a benefit
commencing at age 55, for purposes of testing the limitation
amount applicable under Section 18(f)(1)(ii) above.
Actuarial adjustments provided for in this subsection (f)(2)
shall be made using an interest rate assumption equal to 5%.
(3) If an employe has less than 10 years of credited service with
the Corporation, the limitation under Section 18(f)(1)(i) with
respect to his benefit as otherwise determined will be
proportionately reduced. If an employe has less than 10 years
of participation in this Program, the limitation under Section
18(f)(1)(ii) with respect to his benefit shall be adjusted by
multiplying such amount by a fraction, the numerator of which is
the employe's years of participation in this Program, and the
denominator of which is ten (10).
136
<PAGE> 146
Gen. Pro., 18(f)(4)
(4) In the case of an employe who had credited service prior to
October 3, 1973, the limitation described in paragraph (1)
preceding shall not be less than his benefit (excluding any
benefit attributable to employe contributions) based on the
terms of the Program as in effect on October 2, 1973 and based
on the continuation of his Compensation at the rate in effect on
October 2, 1973. The limitation applicable to an employe who
broke credited service before October 3, 1973 shall be the
deferred retirement benefit payable to such employe determined
as of the date his credited service was broken.
(5) In the case of an employe who was a participant in this Program
prior to January 1, 1983, the limitation described in Section
18(f)(1)(ii) shall not be less than his accrued benefit as of
December 30, 1983 under the terms and conditions of this Program
as in effect on July 1, 1982.
(g) OVERALL LIMITATION
For any employe who is participating under both this Program and any
defined contribution plans or programs of the Corporation, the
projected benefit for such employe under the defined benefit plans or
programs shall be reduced to the extent necessary to prevent the sum
of the following fractions computed as of the end of any Limitation
Year from exceeding 1.4 for any Limitation Year ending before
December 31, 1983, and 1.0 for any Limitation Year beginning on or
after December 31, 1983.
(1) DEFINED BENEFIT PLAN FRACTION:
The defined benefit plan fraction shall be equal to the ratio of
(i) divided by (ii) below, where:
137
<PAGE> 147
Gen. Pro., 18(g)(1)(i)
(i) equals the projected annual benefit of the employe as of
the close of the Limitation Year under the Corporation's
defined benefit plans or programs less any portion of such
benefits attributable to employe contributions, and
(ii) equals the lesser of 100% of such employe's average
Compensation during his three consecutive highest paid
years of service with the Corporation, multiplied by 1.4 in
determining the fraction applicable in any limitation year
beginning on or after December 31, 1983 or the amount
prescribed by the Secretary of the Treasury applicable to
the Limitation Year as described under Section 18(f)(1)(ii)
of this Program, multiplied by 1.25 In determining the
fraction as applicable in any limitation year beginning on
or after December 31, 1983. This amount shall be adjusted,
if appropriate, to reflect the availability of greater
benefits under the Program as in effect on October 2, 1973
and Compensation as of that date.
(2) DEFINED CONTRIBUTION PLAN FRACTION:
The defined contribution plan fraction shall be equal to the
ratio of (i) divided by (ii) below, where:
(i) equals the sum of the Annual Additions to an employe's
account for each Limitation Year, and
(ii) equals the sum of the defined contribution denominator
increments for that year and all prior Limitation Years.
For each Limitation Year, the defined contribution
denominator increment is
138
<PAGE> 148
Gen. Pro., 18(g)(2)(ii)
the lesser of (a) 1.25 times the dollar limitation for that
year, or (b) 1.4 times the Compensation limitation for that
year.
For any employe who was participating in this Program as of the
last day of the Limitation Year beginning December 31, 1986, as
prescribed in regulations, an amount shall be subtracted from
(2)(i) above so that the sum of this fraction and the defined
benefit plan fraction does not exceed 1.0 For such year.
The Annual Additions for any Limitation Year beginning before
January 1, 1987, shall not be recomputed to treat all employe
contributions as Annual Additions.
SECTION 19. CERTAIN PROVISIONS REQUIRED TO COMPLY
WITH SECTION 416 OF THE INTERNAL REVENUE CODE
In any Plan Year in which the Program is a "Top-Heavy Plan", as defined
in Section 416 of the Internal Revenue Code, the requirements of this
Section are applicable and must be satisfied.
(a) DEFINITIONS
(1) "Cumulative Account" means the sum of an employe's accounts
under a defined contribution plan (for an unaggregated plan), or
under all defined contribution plans included in an Aggregation
Group (for aggregated plans), determined as of the most recent
plan valuation date within a 12-month period ending on the
Determination Date, increased by any contributions due after
such valuation date and before the Determination Date.
139
<PAGE> 149
Gen. Pro., 19(a)(2)
(2) "Cumulative Accrued Benefit" means the sum of benefits under a
defined benefit plan (for an unaggregated plan) or under all
defined benefit plans included in an Aggregation Group (for
aggregated plans), determined under the actuarial assumptions
set forth in such plan or plans, as of the most recent plan
valuation date within a 12-month period ending on the
Determination Date as if the employe voluntarily terminated
service as of such valuation date.
(3) "Determination Date" means the last day of the preceding Plan
Year.
(4) "Valuation Date" means the last day of a Plan Year as of which
date participants' accounts shall be valued at fair market value
and as of which date the present value of accrued benefits shall
be valued.
(5) "Key Employe" means any employe described in Internal Revenue
Code Section 416(i)(1) and regulations thereunder.
(6) "Top-Heavy Plan" means for any plan year beginning after 1983,
this Program is top-heavy if any of the following conditions
exists:
(a) If the top-heavy ratio for this Program exceeds 60 percent
and this Program is not part of any required aggregation
group or permissive aggregation group of plans.
(b) If this Program is a part of a required aggregation group
of plans (but which is not part of a permissive aggregation
group) and the top-heavy ratio for the group of plans
exceeds 60 percent, or
(c) If this Program is a part of a required aggregation group
of plans and part of a permissive aggregation group and the
top-heavy ratio for the permissive aggregation group
exceeds 60 percent.
140
<PAGE> 150
Gen. Pro., 19(a)(7)
(7) TOP-HEAVY RATIO:
(a) If the Corporation maintains one or more defined benefit
plans and the Corporation maintains or has maintained one
or more defined contribution plans which during the 5-year
period ending on the determination date(s) has or has had
any account balances, the top-heavy ratio for any required
or permissive aggregation group, as appropriate, is a
fraction, the numerator of which is the sum of the present
value of accrued benefits determined in accordance with (b)
below, and the sum of account balances under the aggregated
defined contribution plan or plans for all key employes as
of the determination date(s), and the denominator of which
is the sum of the present values of accrued benefits under
the aggregated defined benefit plan or plans, determined in
accordance with (b) below, for all participants and the sum
of the account balances under the aggregated defined
contribution plan or plans for all participants as of the
determination date(s), all determined in accordance with
Section 416 of the Code and the regulations thereunder.
The account balances under a defined contribution plan in
both the numerator and denominator of the top-heavy ratio
are adjusted to include any distribution of an account
balance made in the 5-year period ending on the
determination date.
(b) For purposes of (a) above, the value of account balances
and the present value of accrued benefits will be
determined as of the most recent valuation date that falls
within or ends with the 12-month period ending on the
determination date. The account
141
<PAGE> 151
Gen. Pro., 19(a)(7)(b)
balances and accrued benefits of a participant (1) who is
not a key employe but who was a key employe in a prior
year, or (2) who has not received any compensation from any
employer maintaining the plan at any time during the 5-year
period ending on the determination date will be
disregarded. The calculations of the top-heavy ratio, and
the extent to which distributions, rollovers, and transfers
are taken into account will be made in accordance with
Section 416 of the Code and the regulations thereunder.
When aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to the
determination dates that fall within the same calendar
year.
(8) "Permissive Aggregation Group" means the required aggregation
group of plans plus any other plan or plans of the Corporation
which, when considered as a group with the required aggregation
group, would continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Internal Revenue Code.
(9) "Required Aggregation Group" means: (1) each qualified plan of
the Corporation in which at least one key employe participates,
and (2) any other qualified plan of the Corporation which
enables a plan described in (1) to meet the requirements of
Sections 401(a)(4) or 410 of the Internal Revenue Code.
(10) "Present Value" means the present value of accrued benefits
which shall be determined based on actuarial factors including
an interest rate assumption of 7% and the UP 1984 mortality
table.
142
<PAGE> 152
Gen. Pro., 19(b)
(b) MINIMUM ACCRUED BENEFIT
(1) Notwithstanding any other provision in this Program except (3)
and (4) below, for any Plan Year in which this Program is
top-heavy, each participant who is not a key employe and has
completed 1,000 hours of service will accrue a benefit (to be
provided solely by employer contributions and expressed as a
life annuity commencing at normal retirement age) of not less
than two percent of the highest average compensation for the
five consecutive years for which the participant had the highest
compensation. The minimum accrual is determined without regard
to any Social Security contribution. The minimum accrual
applies even though under other Program provisions the
participant would not otherwise be entitled to receive an
accrual, or would have received a lesser accrual for the year
because (i) the non-key employe fails to make contributions
under Part B of the Program, (ii) the non-key employe's
compensation is less than a stated amount, (iii) the non-key
employe is not employed on the last day of the accrual
computation period, or (iv) the Program is integrated with
Social Security.
(2) For purposes of computing the minimum accrued benefit,
compensation will include all compensation, as that term is
defined for Section 415 purposes.
143
<PAGE> 153
Gen. Pro., 19(b)(3)
(3) No additional benefit accruals shall be provided pursuant to (1)
above to the extent that the total accruals on behalf of the
participant attributable to employer contributions will provide
a benefit expressed as a life annuity commencing at normal
retirement age that equals or exceeds 20 percent of the
participant's highest average compensation for the five
consecutive years for which the participant had the highest
compensation.
(4) All accruals of an employer derived benefit, whether or not
attributable to years for which the plan is top-heavy, may be
used in computing whether the minimum accruals requirements of
paragraph (3) above are satisfied.
(c) MAXIMUM COMPENSATION
Annual compensation of any employe shall not be taken into account
under the Program in excess of $200,000, such amount to be adjusted
annually for increases in the cost of living in accordance with
Section 416(d) of the Internal Revenue Code.
(d) MINIMUM VESTING
(1) For any plan year in which this program is top-heavy, the
following minimum vesting schedule will automatically apply:
(a) 20% vesting after 2 years of service,
144
<PAGE> 154
Gen. Pro., 19(d)(1)(b)
(b) 40% vesting after 3 years of service,
(c) 60% vesting after 4 years of service,
(d) 80% vesting after 5 years of service,
(e) 100% vesting after 6 years of service.
The minimum vesting schedule applies to all accrued benefits
within the meaning of Section 411(a)(7) of the Internal
Revenue Code except those attributable to employe contributions.
Further, no reduction in vested benefits may occur in the event
the Program's status as top-heavy changes for any plan year.
Any participant who has completed at least five years of service
when the plan ceases to be top-heavy, will remain under this
vesting schedule with respect to his accrued benefit determined
at any time following the date the plan ceases to be top-heavy.
However, this section does not apply to the accrued benefits of
any employe who does not have an hour of service after the plan
has initially become top-heavy and such employe's accrued
benefits attributable to employer contributions will be
determined without regard to this section.
(2) The minimum accrued benefit required (to the extent required to
be nonforfeitable under Section 416(b)) may not be suspended or
forfeited under Sections 411(a)(3)(B) or 411(a)(3)(D) of the
Internal Revenue Code.
145
<PAGE> 155
Gen. Pro., 19(e)
(e) DISTRIBUTIONS FOR CERTAIN KEY EMPLOYES
Notwithstanding any other provision of this Program, if a key employe
is a five percent owner (as defined in Section 416) in the plan year
in which the employe attains age 70-1/2, benefit distributions shall
commence no later than April 1 of the following plan year (whether or
not the employe has retired).
(f) DETERMINATION OF SUPER TOP HEAVINESS
The Program shall be super top-heavy if it would be a top-heavy plan
under the provisions of (a)(6), but substituting "90%" for "60%" in
such provisions.
(g) ADJUSTMENTS IN SECTION 415 LIMITS
For any plan year in which the Program is top-heavy, for purposes of
the limitations on contributions and benefits under Section 415 of
the Internal Revenue Code, the dollar limitations in the defined
benefit plan fraction and the defined contribution plan fraction
shall be multiplied by 1.0 rather than 1.25.
(h) ACCOUNT BALANCES AND ACCRUED BENEFITS
Account balances and accrued benefits shall be calculated to include
all amounts attributable to both Corporation and employe
contributions.
146
<PAGE> 156
Appendix A
APPENDIX A
For the sole purpose of Part A, Article II, Section 10 of this Program, the
following salaried positions are designated foundry jobs in each listed plant
location under the conditions specifically set forth herein. No other salaried
position is designated as a foundry job.
CENTRAL FOUNDRY PLANT, DANVILLE, ILLINOIS
<TABLE>
<CAPTION>
Position Code Position Title
------------- -------------------------------------------------------------
<S> <C>
4M10 Laboratory Tester (Excludes Spectrometer Operator, Chief
Chemist (Wet), Metalographer, Radiographer (Cobalt), Raw
Materials Inspector, Spectro-Sample Preparation)
5M24 Metallurgist (Excludes Spectrometer Operator, Chief
Chemist (Wet), Metalographer, Radiographer (Cobalt), Raw
Materials Inspector, Spectro-Sample Preparation)
6M08 Foreman - Production
6M42 Foreman - Maintenance
6M47 Supervisor - Laboratory
6R41 Foreman - Inspection
7M03 Chief Electrician
7M14 General Foreman - Production
7M19 General Foreman - Maintenance
7P02 Supervisor - Safety
7R38 General Foreman - Inspection
7R58 Supervisor - Quality Control
</TABLE>
147
<PAGE> 157
Appendix A
APPENDIX A (Cont.)
CENTRAL FOUNDRY PLANT, DEFIANCE, OHIO
<TABLE>
<CAPTION>
Position Code Position Title
------------- -----------------------------------------------------------
<S> <C>
4M10 Laboratory Tester (Excludes Molding Sand Tester, Carbon
Determinator & Spectrometer Operator, Spectrometer
Operator, Cobalt Operator, Furnace Control, Wet Chemist,
Receiving Inspection, Core Sand Tester, Cut-Up, Carbon
Analyzer, Carbon Train)
5M24 Metallurgist (Excludes Molding Sand Tester, Carbon
Determinator & Spectrometer Operator, Spectrometer Operator,
Cobalt Operator, Furnace Control, Wet Chemist, Receiving
Inspection, Core Sand Tester, Cut-up, Carbon Analyzer,
Carbon Train)
6M08 Foreman - Production
6M42 Foreman - Maintenance
6M47 Supervisor - Laboratory
6R41 Foreman - Inspection
7M03 Chief Electrician
7M14 General Foreman - Production
7M19 General Foreman - Maintenance
7M41 General Supervisor - Laboratory
7P02 Supervisor - Safety
7R38 General Foreman - Inspection
</TABLE>
148
<PAGE> 158
Appendix A
APPENDIX A (Cont.)
CENTRAL FOUNDRY MALLEABLE IRON PLANT, SAGINAW, MICHIGAN
<TABLE>
<CAPTION>
Position Code Position Title
------------- --------------------------------------------------------
<S> <C>
4M10 Laboratory Tester (Excludes Quantovac Operator, Induction
Furnace Operator, Raw Materials Handler, Radiographer
(Cobalt), Sample Preparation, Special Chemist,
Metalographer, Sample Cut-Up)
5M24 Metallurgist (Excludes Quantovac Operator, Induction
Furnace Operator, Raw Materials Handler, Radiographer
(Cobalt), Sample Preparation, Special Chemist,
Metalographer, Sample Cut-Up)
6M08 Foreman - Production
6M42 Foreman - Maintenance
6M47 Supervisor - Laboratory
6R41 Foreman - Inspection
7M14 General Foreman - Production
7M19 General Foreman - Maintenance
7M41 General Supervisor - Laboratory
7M57 Supervisor - Pattern Shop
7R38 General Foreman - Inspection
</TABLE>
149
<PAGE> 159
Appendix A
APPENDIX A (Cont.)
CENTRAL FOUNDRY GREY IRON PLANT, SAGINAW, MICHIGAN
<TABLE>
<CAPTION>
Position Code Position Title
------------- ----------------------------------------------------------
<S> <C>
5R24 Metallurgist (Excludes Metallurgist assigned to Chemistry
Laboratory duties outside plant production area)
6M08 Supervisor - Productive Department
6M42 Supervisor - Maintenance (Excludes supervisors assigned
to the Garage and Machine Shop)
6M47 Supervisor - Laboratory (Instrumentation)
6R41 Supervisor - Inspection
7M14 General Supervisor - Productive Departments
7M19 General Supervisor - Maintenance (Excludes General
Supervisors of Garage and Machine Shop)
7R38 General Supervisor - Inspection
</TABLE>
150
<PAGE> 160
Appendix B
APPENDIX B
For the sole purpose of Part A, Article II, Section 12 of this Program, the
following salaried positions are designated asbestos jobs in each listed plant
location under the conditions specifically set forth herein. No other salaried
position is designated as an asbestos job.
As of April 1, 1991, no GM unit or salaried position is involved in the
blending and processing of raw asbestos.
151
<PAGE> 161
Appendix C
APPENDIX C
In accordance with Section 1(a)(1) and Section 8 of the General Provisions, the
following sets forth certain benefit rates and a benefit formula, which are
applicable to General Motors salaried employes in Puerto Rico who retire under
this Program with benefits payable commencing on or after October 1, 1990, in
lieu of the benefit rates set forth in Section 1(b), 4(a)(ii), 7(a)(1) and
7(a)(2) of Article 1 of Part A and the formula set forth in Section 2(a)(2) of
Article 1 of Part B. Salaried employes in Puerto Rico who retired with benefits
payable commencing prior to October 1, 1990, continue to be covered under the
terms and conditions of this Program, except that the provisions of Section 9
of Article 1 of Part A and Section 7 of Article 1 of Part B shall not be
applicable to any GM salaried employe in Puerto Rico.
BASIC BENEFIT RATE
<TABLE>
<CAPTION>
Basic Benefit Rate
Per Year of Credited Service
Retirement for Months Commencing
With Benefits Benefit 10-1-90
Payable Class and
Commencing Code After
--------------------------------------------------------------
<S> <C> <C>
$
October 1, 1990 A 18.20
and After B 18.45
C 18.70
D 18.95
</TABLE>
TEMPORARY BENEFIT RATE
<TABLE>
<CAPTION>
Monthly Temporary
Retirement Benefit Amount
With Benefits Per Year of
Payable Credited
Commencing Service Maximum
---------------------------------------------------------
<S> <C> <C>
$ $
October 1, 1990
and After 15.00 450.00
</TABLE>
152
<PAGE> 162
Appendix C
APPENDIX C (Cont.)
EARLY RETIREMENT SUPPLEMENT
<TABLE>
<CAPTION>
Total Monthly Benefit Rate For Determining
Monthly Early Retirement Supplement
Prior to Age 62 and One Month
For Retirements With 30 or More Years
Retirement of Credited Service
With Benefits 10-1-90
Payable and
Commencing After
------------------------------------------------------------------------
<S> <C>
$
October 1, 1990
and After 935
</TABLE>
INTERIM SUPPLEMENT
<TABLE>
<CAPTION>
Monthly Amount of Interim Supplement
Age at Payable Prior to Age 62 and One Month
Retirement for Each Year of Credited Service
-----------------------------------------------------------------
<S> <C>
$
55 5.25
56 6.25
57 7.50
58 8.75
59 10.00
60 11.50
61 11.50
</TABLE>
SUPPLEMENTARY BENEFITS
The monthly supplementary retirement benefit shall be 1% of the employe's
average monthly base salary in excess of $1,895, times the number of years and
months of the employe's credited service. For purposes of determining average
monthly base salary, $1,895 shall be used for any month prior to termination of
employment for which the employe's full monthly base salary rate was less than
$1,895.
153
<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................................................. (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
<PAGE> 1
EXHIBIT 12
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
--------- -------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Income (Loss) before cumulative effect of accounting
changes.................................................... $ 5,658.7 $2,465.8 $(2,620.6)
United States, foreign, and other income taxes (credit)...... 2,694.6 109.5 (712.5)
Equity in (income) losses of associates...................... (21.7) 18.1 216.4
Cash dividends received from associates...................... 10.0 5.0 4.4
Amortization of capitalized interest......................... 50.0 54.7 43.3
--------- -------- ---------
Income (Loss) before income taxes, undistributed (income)
losses of associates, and amortization of capitalized
interest................................................... 8,391.6 2,653.1 (3,069.0)
--------- -------- ---------
Fixed charges included in net income (loss)
Interest and related charges on debt....................... 5,035.7 5,552.0 6,973.2
Portion of rentals deemed to be interest................... 465.1 459.4 461.3
--------- -------- ---------
Total fixed charges included in net income (loss)....... 5,500.8 6,011.4 7,434.5
--------- -------- ---------
Earnings available for fixed charges......................... $13,892.4 $8,664.5 $ 4,365.5
========= ======= =========
Fixed charges
Fixed charges included in net income (loss)................ $ 5,500.8 $6,011.4 $ 7,434.5
Interest capitalized in the period......................... 33.9 44.1 43.6
--------- -------- ---------
Total fixed charges..................................... $ 5,534.7 $6,055.5 $ 7,478.1
========= ======= =========
Ratios of earnings to fixed charges.......................... 2.51 1.43 *
========= ======= =========
</TABLE>
- -------------------------
* In 1992, earnings were inadequate to cover fixed charges by $3,112.6 million.
IV-9
<PAGE> 1
EXHIBIT 18
General Motors Corporation:
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 included in your Annual Report on Form
10-K to the Securities and Exchange Commission and have issued our report
thereon dated January 30, 1995. Note 4 to such financial statements contains a
description of your adoption during the year ended December 31, 1994 of the
change in the measurement date, as defined in Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions," for the principal U.S.
pension plans from October 1 to December 31. In our judgment, such change is to
an alternative accounting principle that is preferable under the circumstances.
/s/ DELOITTE & TOUCHE LLP
- ------------------------------------------------------
DELOITTE & TOUCHE LLP
Detroit, Michigan
January 30, 1995
IV-10
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
AS OF DECEMBER 31, 1994
Subsidiary companies of the Registrant are listed below. With respect to
the companies named, all voting securities are owned directly or indirectly by
the Registrant, except where otherwise indicated.
<TABLE>
<CAPTION>
STATE OR
SOVEREIGN POWER
NAME OF SUBSIDIARY OF INCORPORATION
- ------------------------------------------------------------------------ ---------------------
<S> <C>
Subsidiaries included in the Registrant's consolidated financial
statements
AC Battery Corporation................................................ Michigan
ACDelco Systems (M) Sdn Bhd........................................... Malaysia
ACG France (50.4% owned by General Motors Corporation and 49.6% owned
by Adam Opel Aktiengesellschaft)................................... France
ACG Italia S.r.1. (99% owned by subsidiary and 1% owned by
Opel France S.A.)............................................. Italy
ACGI S.p.A. (98% owned by subsidiary and 2% owned by
Opel France S.A.)............................................. Italy
Aura Srl (75% owned by subsidiary)............................... Italy
DRB s.a./n.v. (51% owned by subsidiary).......................... France
Diavia Aire, S.A. (75% owned by subsidiary)...................... Italy
Diavia S.r.1. (75% owned by subsidiary).......................... Italy
Opel France S.A. (99% owned by subsidiary)....................... France
Texton S.A. ..................................................... France
ENCI S.A.R.L. (99.8% owned by subsidiary)..................... France
Texton P.L.C. (97.5% owned by subsidiary)..................... United Kingdom
Adam Opel Aktiengesellschaft.......................................... Germany
ACG Deutschland GmbH (99% owned by subsidiary and 1% owned by
ACG France)...................................................... Germany
Asset Leasing GmbH (95% owned by subsidiary)....................... Germany
Carus Grundstucks-Vermietungsgesellschaft mbH & Co.
Object Kuno 65 KG (94% owned by subsidiary)...................... Germany
Carus Grundstucks-Vermietungsgesellschaft mbH & Co.
Object Leo 40 KG (94% owned by subsidiary)....................... Germany
General Motors GmbH & Co. OHG (99% owned by subsidiary)............ Germany
GM Europe GmbH (99% owned by subsidiary and 1% owned by
GM Service GmbH)................................................. Germany
GM Service GmbH.................................................... Germany
Opel-Automobilwerk Eisenach-PKW GmbH (80% owned by subsidiary)..... Germany
Opel Eisenach GmbH................................................. Germany
Opel Hungary Automobile Production Ltd. ........................... Hungary
Opel Service GmbH.................................................. Germany
Opel Turkiye Limited Sirketi (99.5% owned by subsidiary and 0.5%
owned by General Motors Overseas Corporation)..................... Turkey
Saginaw Deutschland GmbH........................................... Germany
Arabian Battery Holding Company....................................... Delaware
Automotive Battery Manufacturing, Inc. ............................... Delaware
Automotive Components Group Worldwide, Inc. .......................... Delaware
Automotive Components Group Worldwide Singapore PTE Ltd. ............. Singapore
Battery Technology Services, Inc. .................................... Delaware
Controladora General Motors, S.A. de C.V. ............................ Mexico
Centro Tecnico Herramental, S.A. de C.V. (80% owned by
subsidiary)....................................................... Mexico
</TABLE>
IV-11
<PAGE> 2
<TABLE>
<CAPTION>
STATE OR
SOVEREIGN POWER
NAME OF SUBSIDIARY OF INCORPORATION
- ------------------------------------------------------------------------ ---------------------
<S> <C>
Componentes Para Automotores, S.A. de C.V. ........................ Mexico
Alambrados Automotrices, S.A. de C.V. ........................... Mexico
Cableados, S.A. de C.V. ......................................... Mexico
Componentes Mecanicos de Matamoros, S.A. de C.V. ................ Mexico
Ensamble de Cables y Componentes, S.A. de C.V. .................. Mexico
Productos Delco de Chihuahua, S.A. de C.V. ...................... Mexico
Sistemas Electricos y Conmutadores, S.A. de C.V. ................ Mexico
General Motors de Mexico, S.A. de C.V. ............................ Mexico
Sistemas Para Automotores de Mexico, S.A. de C.V. ................. Mexico
Alambrados y Circuitos Electricos, S.A. de C.V. ................. Mexico
Conductores y Componentes Electricos de Juarez, S.A. de C.V. .... Mexico
Dr De Chihuahua, S.A. de C.V. ................................... Mexico
Ensamble de Cubiertas Automotrices, S.A. de C.V. ................ Mexico
Rio Bravo Electricos, S.A. de C.V. .............................. Mexico
Vestiduras Fronterizas, S.A. de C.V. ............................ Mexico
Electro-Motive Maintenance Operations Pty Ltd. ......................... Australia
Empresas Ca-Le de Tlaxcala, S.A. de C.V. (57% owned by General Motors
Corporation and 43% owned by Controladora General Motors, S.A. de
C.V.)................................................................. Mexico
Exhaust Systems Corporation............................................. Delaware
General Motors Acceptance Corporation................................... New York
Banque Opel (98% owned by subsidiary)................................. France
Capital Auto Receivables, Inc. ....................................... Delaware
GMAC, Australia (Finance) Limited..................................... Australia
GMAC Auto Receivables Corporation..................................... Delaware
GMAC Capital Corporation.............................................. Utah
GMAC Comercial Automotriz Chile S.A. ................................. Chile
GMAC Commercial Corporation........................................... Delaware
GMAC Holding S.A. de C.V. (99.95% owned by subsidiary and .05% owned
by various GMAC subsidiaries)...................................... Mexico
GMAC Arrendadora S.A. de C.V. ..................................... Mexico
General Motors Acceptance Corporation, S.A. de C.V. ............... Mexico
Servicios GMAC S.A. de C.V. ....................................... Mexico
GMAC International Finance, B.V. ..................................... Netherlands
GMAC Italia Leasing S.p.A. ........................................... Italy
GMAC Leasing Corporation.............................................. Delaware
Patlan Corporation................................................. Delaware
Patlan Marina, Inc. ............................................... Michigan
Patlan Restaurants, Inc. .......................................... Michigan
GMAC Mortgage Corporation............................................. Michigan
Colonial Mortgage Service Company Associates, Inc. ................ Pennsylvania
GMAC Commercial Mortgage Corporation............................... California
GMAC Mortgage Corporation of PA.................................... Pennsylvania
GMAC Mortgage Holdings, Inc. ...................................... Delaware
GMAC Mortgage Securities II, Inc. ................................. Michigan
GMAC RF, Inc. ..................................................... Michigan
RMC Acquisition Corporation........................................ Delaware
GMAC Overseas Finance Corporation N.V. ............................... Netherlands Antilles
GMAC Sverige AB....................................................... Sweden
General Motors Acceptance Corporation, Australia...................... Delaware
General Motors Acceptance Corporation of Canada, Limited.............. Canada
Canadian Securitized Auto Receivables Corporation.................. Canada
</TABLE>
IV-12
<PAGE> 3
<TABLE>
<CAPTION>
STATE OR
SOVEREIGN POWER
NAME OF SUBSIDIARY OF INCORPORATION
- ------------------------------------------------------------------------ ---------------------
<S> <C>
GMAC Leaseco Limited............................................... Canada
General Motors Acceptance Corporation, Colombia S.A. ................. Delaware
General Motors Acceptance Corporation, Continental.................... Delaware
General Motors Acceptance Corporation Hungary Financial Services
Limited Liability Company.......................................... Hungary
General Motors Acceptance Corporation International................... Delaware
General Motors Acceptance Corporation Italia S.p.A. .................. Italy
General Motors Acceptance Corporation Nederland N.V. ................. Netherlands
GMAC Espana, S.A. de Financiacion.................................. Spain
General Motors Acceptance Corporation, North America.................. Delaware
General Motors Acceptance Corporation (N.Z.) Limited.................. New Zealand
General Motors Acceptance Corporation de Portugal -- Servicos
Financeiros, S.A. (99% owned by subsidiary and 1% owned by General
Motors Acceptance Corporation International)....................... Portugal
General Motors Acceptance Corporation, South America.................. Delaware
General Motors Acceptance Corporation de Venezuela, C.A. .......... Venezuela
General Motors Acceptance Corporation Suisse S.A. .................... Switzerland
General Motors Austria Beteiligungsgesellschaft m.b.H................. Austria
OPEL Leasinggesellschaft mbH (74% owned by subsidiary)............. Austria
Motors Insurance Corporation.......................................... New York
Cadmic Agency Corporation.......................................... Delaware
Car Care Plan (Holdings) Limited (99.9% owned by subsidiary and .1%
owned by GMOC Administrative Corporation)......................... England
Car Care Plan (Securities Division) Limited (99.9% owned by Car
Care Plan (Holdings) Limited and .1% owned by GMOC Administrative
Corporation)...................................................... England
CIM Insurance Corporation.......................................... New York
MIC General Insurance Corporation.................................. Indiana
MIC Life Insurance Corporation..................................... Delaware
MIC Property and Casualty Insurance Corporation.................... Michigan
MIC Re Corp. ...................................................... Delaware
MIC Services Corporation........................................... Delaware
Motors Insurance Company Limited................................... England
Motors Insurance Purchasing Group, Inc. ........................... Michigan
Motors Mechanical Reinsurance Company, Limited..................... Barbados
NAVCO Corp. ....................................................... Missouri
Trinity General Agency, Inc. ...................................... Texas
Opel Bank GmbH........................................................ Germany
Opel Leasing GmbH & Co. OHG........................................... Germany
Opel Leasing Verwaltungs GmbH (60% owned by Opel Bank GmbH,
20% owned by General Motors Acceptance Corporation, and 20% owned
by Adam Opel Aktiengesellschaft)................................. Germany
Wholesale Auto Receivables Corporation................................ Delaware
General Motors de Argentina S.A. (80% owned by General Motors
Corporation).......................................................... Argentina
General Motors Asia, Inc. .............................................. Delaware
General Motors (Thailand) Ltd. ....................................... Thailand
General Motors Asian and Pacific Operations............................. Singapore
General Motors do Brasil Ltda. ......................................... Brazil
Brazauto Trading (Cayman) Limited..................................... Cayman Island
Cruz Alta -- Comercio e Participacoes Ltda. .......................... Brazil
GM Factoring Sociedade de Fomento Comercial Ltda. .................... Brazil
General Motors of Canada Limited........................................ Canada
</TABLE>
IV-13
<PAGE> 4
<TABLE>
<CAPTION>
STATE OR
SOVEREIGN POWER
NAME OF SUBSIDIARY OF INCORPORATION
- ------------------------------------------------------------------------ ---------------------
<S> <C>
General Motors Chile S.A., Industria Automotriz......................... Chile
General Motors China (Components), Inc. ................................ Delaware
Beijing WY-GM Automotive Electronic Control Co., Limited
(51% owned by subsidiary).......................................... People's Republic
of China
General Motors China, Inc. ............................................. Delaware
General Motors Colmotores, S.A. (82.6% owned by General Motors
Corporation).......................................................... Colombia
General Motors Commercial Corporation................................... Delaware
General Motors Development Corporation.................................. Delaware
General Motors del Ecuador S.A. (98% owned by General Motors
Corporation).......................................................... Ecuador
General Motors (Europe) AG.............................................. Switzerland
General Motors Export Corporation....................................... Delaware
General Motors Foreign Sales Corporation................................ U.S. Virgin Islands
General Motors Holdings (U.K.).......................................... England
General International (UK) Limited (50% owned by subsidiary and 50%
owned by GMOC Administrative Services Corporation)................. England
General Motors Acceptance Corporation (U.K.) Public Limited Company... England
General Motors Acceptance Corporation (U.K.) Finance plc........... England
GMAC Leasing (U.K.) Limited........................................ England
GMAC Leasing (U.K.) (No. 1) Limited................................ England
GMAC Leasing (U.K.) (No. 2) Limited................................ England
GMAC Leasing (U.K.) (No. 3) Limited................................ England
Group Lotus, plc (84.6% owned by subsidiary and 15.4% owned by GMLG
Ltd.).............................................................. United Kingdom
MLS UK Ltd. ..................................................... England
IBC Vehicles Limited (60% owned by subsidiary)..................... United Kingdom
Millbrook Land and Co. Ltd. ....................................... England
Millbrook Pension Management Ltd. (99% owned by subsidiary)........ England
Millbrook Proving Ground Ltd. ..................................... England
VHC Sub-Holdings (UK) Ltd. ........................................ England
Vauxhall Motors (Finance) Plc. .................................... England
Vauxhall Motors Limited............................................ England
General Motors Indonesia, Inc. ......................................... Delaware
General Motors Interamerica Corporation................................. Delaware
General Motors International Operations, Inc. .......................... Delaware
General Motors Investment Management Corporation........................ Delaware
General Motors Japan Ltd. .............................................. Japan
General Motors Korea, Inc. ............................................. Delaware
General Motors Market Development of Canada Limited..................... Canada
General Motors Nederland B.V. .......................................... Netherlands
Allison Transmission Europe B.V. ..................................... Netherlands
General Motors Poland Spolka, zo.o.................................... Poland
General Motors Yugoslavia, d.o.o. .................................... Yugoslavia
Opel C&S spol. s.r.o. ................................................ Czechoslovakia
Opel Nederland B.V. .................................................. Netherlands
General Motors Overseas Corporation..................................... Delaware
AC Delco Systems Australia Ltd. ...................................... Australia
AC Delco Systems Overseas Corporation................................. Delaware
Delco Chassis Overseas Corporation.................................... Delaware
Automotive Components Group Espana, S.A. .......................... Spain
Delco Limited...................................................... England
</TABLE>
IV-14
<PAGE> 5
<TABLE>
<CAPTION>
STATE OR
SOVEREIGN POWER
NAME OF SUBSIDIARY OF INCORPORATION
- ------------------------------------------------------------------------ ---------------------
<S> <C>
Saginaw Limited.................................................... England
G.M. Holding (Portugal) SGPS, Lda. (50% owned by subsidiary and 50%
owned by General Motors Corporation)............................... Portugal
CABLESA-Industria de Componentes Electricos Sociedade Anonima.... Portugal
INLAN -- Industria de Componentes Mecanicos, S.A. ................. Portugal
Opel Portugal, Lda. ............................................... Portugal
GMOC Administrative Services Corporation.............................. Delaware
Fisher Body Limited (50% owned by subsidiary and 50% owned by GM
(UK) Pension Trustees Limited)................................... Ireland
GM (UK) Pension Trustees Limited (50% owned by subsidiary and 50%
owned by Vauxhall Motors Limited)................................. United Kingdom
GMOC Australia Pty. Ltd. ............................................. Australia
General Motors-Holden's Automotive Limited (49% owned by subsidiary
and 51% owned by United Australian Automotive Industries
Limited)........................................................... Australia
General Motors Overseas Commercial Vehicle Corporation................ Delaware
Holden's Motor Overseas Corporation Limited........................... Delaware
Lidlington Engineering Company, Ltd. ................................. Delaware
Truck and Bus Engineering U.K., Limited............................... Delaware
Venezolana de Industrias Automotrices, C.A. .......................... Venezuela
General Motors Venezolana, C.A. ................................... Venezuela
General Motors de Venezuela, C.A. ................................. Venezuela
General Motors Overseas Distribution Corporation........................ Delaware
General Motors Import & Distribution GmbH............................. Germany
General Motors Investment Services Company N.V. ...................... Belgium
General Motors Luxembourg Operations S.A. ............................ Luxembourg
GMODC Finance N.V. ................................................... Netherlands Antilles
Packard Elektrik Sistemleri Limited Sirketi (97.6% owned by subsidiary
and 2.4% owned by General Motors Overseas Corporation)............. Turkey
General Motors Peru S.A................................................. Peru
General Motors Receivables Corporation.................................. Delaware
General Motors Uruguay, S.A............................................. Uruguay
GM Allison Japan Limited................................................ Japan
GM Auto Receivables Co. ................................................ Delaware
GMC Truck Motors Development Corporation................................ Delaware
GM-DI Leasing Corporation............................................... Delaware
GM Hughes Electronics Corporation....................................... Delaware
Delco Electronics Corporation......................................... Delaware
Delco Electronics Asia/Pacific Pte Ltd. ........................... Singapore
Delco Electronics Europe GmbH...................................... Germany
Delco Electronics Overseas Corporation............................. Delaware
Delco Electronics Service Corporation.............................. Delaware
Delnosa, S.A. de C.V. ............................................. Mexico
Deltronicos de Matamoros, S.A. de C.V. ............................ Mexico
GM Singapore Pte. Ltd. ............................................ Singapore
Mecel AB........................................................... Sweden
H E Microwave Corporation............................................. Delaware
Hughes Aircraft Company............................................... Delaware
Advanced Electronics Systems International......................... California
AMI Instruments, Inc. ............................................. Oklahoma
DIRECTV Enterprises, Inc. ......................................... Delaware
HUSINT S.A. ....................................................... Switzerland
</TABLE>
IV-15
<PAGE> 6
<TABLE>
<CAPTION>
STATE OR
SOVEREIGN POWER
NAME OF SUBSIDIARY OF INCORPORATION
- ------------------------------------------------------------------------ ---------------------
<S> <C>
Hughes Aircraft of Canada Limited.................................. Canada
Hughes Aircraft Holdings Canada Ltd. .............................. Canada
Hughes Aircraft Mississippi, Inc. ................................. California
Hughes Aircraft -- South Carolina.................................. California
Hughes Aircraft Systems International.............................. California
Hughes Asia Pacific Hong Kong Limited.............................. Hong Kong
Hughes Australia International PTY Ltd. ........................... Australia
Hughes-Avicom International, Inc. ................................. California
Hughes Communications, Inc. ....................................... California
Hughes Danbury Optical Systems, Inc. .............................. Delaware
Hughes Data Systems................................................ California
Hughes Document Production Services, Inc. ......................... Delaware
Hughes Electronic Technologies, Inc. .............................. Delaware
Hughes Electronics Manufacturing Service Company................... Delaware
Hughes Environmental Systems, Inc. ................................ California
Hughes Espana S.A. ................................................ Spain
Hughes Europe N.V. ................................................ Belgium
Hughes Foreign Sales Corporation................................... U.S. Virgin Islands
Hughes Georgia, Inc. .............................................. Delaware
Hughes Identification Devices, Inc. ............................... Delaware
Hughes Information Technology Corporation.......................... Delaware
Hughes International Corporation................................... Delaware
Hughes International de Mexico, S.A. de C.V. ...................... Mexico
Hughes International Sales Corporation............................. California
Hughes International Sales Corporation No. 2....................... California
Hughes Investment Management Company............................... California
Hughes-JVC Technology Corporation (60% owned by subsidiary......... Delaware
Hughes LAN Systems, Inc. .......................................... California
Hughes Lexington, Inc. ............................................ Delaware
Hughes Microelectronics Limited.................................... United Kingdom
Hughes Missiles Electronics, Inc. ................................. California
Hughes Missile Systems Company..................................... Delaware
Hughes Nadge Corporation........................................... Delaware
Hughes Network Systems, Inc. ...................................... Delaware
Hughes Network Systems Limited..................................... United Kingdom
Hughes Power Products, Inc. (60% owned by subsidiary and 40% owned
by General Motors Corporation).................................... Delaware
Hughes Power Supplies Corporation.................................. Delaware
Hughes Research Analytics, Inc. ................................... Delaware
Hughes STX Corporation............................................. Delaware
Hughes Saudi Arabia Limited........................................ Delaware
Hughes Space and Communications International, Inc. ............... Delaware
Hughes Systems Management International............................ California
Hughes Technical Services Company.................................. California
Hughes Training, Inc. ............................................. Delaware
Hughes Transportation Control Systems, Inc. ....................... Delaware
Hughes (U.K.) Limited.............................................. England
International Electronics Systems, Inc. ........................... California
L-T Ranches, Inc. ................................................. California
MDP, Ltd. ......................................................... California
Santa Barbara Research Center...................................... California
</TABLE>
IV-16
<PAGE> 7
<TABLE>
<CAPTION>
STATE OR
SOVEREIGN POWER
NAME OF SUBSIDIARY OF INCORPORATION
- ------------------------------------------------------------------------ ---------------------
<S> <C>
Spectrolab, Inc. .................................................. California
Systems Building Corp. ............................................ Arizona
GMLG Ltd. .............................................................. Delaware
MLS USA, Inc. ........................................................ Delaware
GM Ovonic L.L.C. (60% owned by General Motors Corporation).............. Michigan
Holden New Zealand Limited.............................................. New Zealand
IBC Vehicles (Distribution) Limited (60% owned by General Motors
Corporation).......................................................... United Kingdom
Kabelwerke Reinshagen GmbH (97.9% owned by General Motors
Corporation).......................................................... Germany
F&G Megamos Sicherheitselektronik GmbH............................. Germany
Kabelwerke Reinshagen Werk Berlin GmbH (75.5% owned by subsidiary
and 18.5% by General Motors Corporation).......................... West Berlin
Kabelwerke Reinshagen Werk Neumarkt GmbH (75.5% owned by subsidiary
and 18.5% by General Motors Corporation).......................... Germany
Reinshagen GmbH.................................................... Germany
Motors Trading Corporation.............................................. Michigan
National Car Rental System Inc. ........................................ Delaware
New Center Neighborhood Services Corporation............................ Michigan
Opel Austria GmbH....................................................... Austria
AC Delco Systems Austria GmbH......................................... Austria
Opel Hungary Automotive Distribution Ltd.............................. Hungary
Opel Hungary Automotive Manufacturing Ltd. ........................... Hungary
Opel Belgium N.V. ...................................................... Belgium
Opel Espana, S.A. (73.5% owned by General Motors Corporation and 26.5%
owned by Adam Opel Aktiengesellschaft)................................ Spain
ACG Componentes, S.A. ............................................. Spain
General Motors ACG, S.A. .......................................... Spain
Opel Ireland Limited.................................................... Ireland
Opel Italia S.p.A. (99.9% owned by General Motors Corporation and 0.1%
owned by General Motors Overseas Distribution Corporation)............ Italy
Opel Norge AS........................................................... Norway
Opel Oy................................................................. Finland
Opel Suisse S.A. ....................................................... Switzerland
GM-Saab Communication GmbH (55% owned by subsidiary).................. Switzerland
Packard CTA Pty. Ltd. (60% owned by General Motors Corporation)......... Australia
Packard Electric China, Inc. ........................................... Delaware
Packard Electric Europa Ges.m.b.H. ..................................... Austria
Packard Electric Burgenland GmbH...................................... Austria
Packard Electric Vas kft (60% owned by subsidiary).................... Hungary
Reinshagen Tournai S.A. (99% owned by subsidiary and 1% owned by
Packard Electric Burgenland GmbH).................................. Belgium
Packard Electric Ireland Limited........................................ Ireland
Packard Electric Poland Sp. zo.o. ...................................... Poland
Packard Hughes Interconnect Company..................................... Delaware
Packard Hughes Interconnect Connection Systems........................ California
Packard Hughes Interconnect Engineering Services...................... Delaware
Packard Hughes Interconnect Wiring Systems............................ California
PT General Motors Buana Indonesia (60% owned by General
Motors Corporation)................................................... Indonesia
RGR Holdings, Inc. ..................................................... Delaware
Electronic Data Systems Corporation................................... Texas
Alpha Joshua, Inc. .............................................. California
</TABLE>
IV-17
<PAGE> 8
<TABLE>
<CAPTION>
STATE OR
SOVEREIGN POWER
NAME OF SUBSIDIARY OF INCORPORATION
- ------------------------------------------------------------------------ ---------------------
<S> <C>
Alpha Mariah, Inc. .............................................. California
American Network Leasing Corporation............................. Nevada
Appex, Inc. ..................................................... Delaware
Beta Mariah, Inc. ............................................... California
Beta Willow, Inc. ............................................... California
Deep Star, Inc. ................................................. California
EDS Acquisition Corporation #4................................... Delaware
EDS Antares, Inc. ............................................... Nevada
E.D.S. of Canada, Ltd. .......................................... Canada
EDS Crisis Response Foundation................................... Texas
E.D.S. De Mexico, S.A. De C.V. .................................. Mexico
EDS Electronic Financial Services, Inc. ......................... Delaware
EDS Export Corporation........................................... U.S. Virgin Islands
EDS Fleet Services, Inc. ........................................ Texas
EDS Global Services, Inc. ....................................... Delaware
E.D.S. International Corporation................................. Texas
EDS Personal Communications Corporation (87% owned by subsidiary
and 13% by Appex, Inc.)......................................... Delaware
EDS-Scicon, US Software Products Group Incorporated.............. Delaware
E.D.S. Spectrum Corporation...................................... Nevada
EDS Technical Products Corporation............................... Delaware
EDS VLT Holdings, Inc. .......................................... Nevada
EDS Vermogensverwaltungs GmbH.................................... Germany
E.D.S. World Corporation (Far East).............................. Nevada
E.D.S. World Corporation (Netherlands)........................... Texas
Federal Computer Services Corporation (66.7% owned by
subsidiary)..................................................... Delaware
Japan Systems Company Limited (51% owned by subsidiary).......... Japan
M&SD Network Services, Inc. ..................................... Delaware
OAN Services, Inc. .............................................. Texas
Oy EDS Electronic Data Systems Ab................................ Finland
Power Investment Corporation..................................... Nevada
PREMISYS Corporation............................................. Texas
Scicon Energy, Inc. ............................................. Delaware
Scicon International Systems Company Incorporated................ Delaware
Subarban Limited Liability Company (74.2% owned by subsidiary and
1.1% owned by EDS Technical Products Corporation)............. Nevada
Telecommunications International, Inc. .......................... California
Ward FSC, Ltd. .................................................. Bermuda
Rimir, S.A. de C.V. .................................................... Mexico
Saab Opel Sverige AB.................................................... Sweden
Saturn Corporation...................................................... Delaware
Saturn Distribution Corporation....................................... Delaware
Saturn County Bond Corporation.......................................... Delaware
Unicables, S.A. ........................................................ Spain
Asientos IFG, S.A. ................................................... Spain
Cableados Integrados S.A. ............................................ Spain
Conexionados Electricos Tarazona S.A. ................................ Spain
</TABLE>
IV-18
<PAGE> 9
236 directly or indirectly owned subsidiaries
Companies not included in the Registrant's consolidated financial
statements, for which no financial statements are submitted:
18 other directly or indirectly owned domestic and foreign subsidiaries
13 active subsidiaries
5 inactive subsidiaries
35 fifty-percent owned companies and 79 less than fifty-percent owned
companies the investments in which are accounted for by the equity
method.
In addition, the Registrant owns 100% of the voting control of the
following companies:
397 dealerships operating under dealership assistance plans and engaged
in retail distribution of General Motors products
267 dealerships operating in the United States
130 dealerships operating in foreign countries
Companies not shown by name, if considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary.
During 1994, there were changes in the number of subsidiaries and companies
of the Registrant, as follows:
11 directly and 27 indirectly owned domestic subsidiaries, and 9
directly and 78 indirectly owned foreign subsidiaries were organized or
acquired. 5 indirectly owned domestic subsidiaries, and 2 directly and
16 indirectly owned foreign subsidiaries were dissolved or sold. A
fifty-percent interest and less than fifty-percent interests were
acquired in 7 companies and 15 companies, while interests in 3
fifty-percent owned and 5 less than fifty-percent owned companies were
terminated. 1 directly owned active nonconsolidated domestic subsidiary
was reclassified to inactive nonconsolidated subsidiary. 1 indirectly
owned foreign subsidiary was reclassified to fifty-percent owned
associate. 1 directly owned domestic subsidiary acquired in 1994
decreased in ownership to less than twenty-percent owned and was removed
from the list. 1 indirectly owned domestic subsidiary changed ownership
to less than 20% owned and was removed from list. 2 directly owned
foreign subsidiaries changed to directly less than fifty-percent owned
foreign associates. 1 fifty-percent owned foreign associate and 5 less
than fifty-percent owned foreign associates increased in ownership to
greater than fifty-percent and moved to indirectly owned foreign
subsidiaries. 1 less than fifty-percent owned foreign associate
decreased in ownership to less than twenty-percent owned and removed
from list. 1 directly owned foreign affiliate increased ownership and
changed to indirectly less than fifty-percent owned foreign associate. 1
indirectly less than fifty-percent owned foreign associate increased
ownership and changed to indirectly owned foreign subsidiary.
The number of dealerships operating under dealership assistance plans
decreased by a net of 25.
* * * * * * *
IV-19
<PAGE> 1
EXHIBIT 23
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSENT OF INDEPENDENT AUDITORS
General Motors Corporation:
We consent to the incorporation by reference of our reports dated January
30, 1995 appearing in this Annual Report on Form 10-K of General Motors
Corporation for the year ended December 31, 1994 in the following Registration
Statements:
<TABLE>
<CAPTION>
REGISTRATION
FORM STATEMENT NO. DESCRIPTION
- ----- ------------------ -----------------------------------------------------------------
<S> <C> <C>
S-3 33-41557 General Motors Corporation Debt Securities
S-3 33-47343 General Motors Corporation $1 2/3 Par Value Common Stock
(Post-Effective
Amendment No. 1)
S-3 33-49035 General Motors Corporation $1 2/3 Par Value Common Stock
(Amendment No. 1)
S-3 33-56671 General Motors Corporation $1 2/3 Par Value Common Stock
(Amendment No. 1)
S-3 33-49309 General Motors Corporation Dividend Reinvestment Plan
S-8 33-56753 The General Motors Personal Savings Plan for Hourly-Rate
Employees in the United States
S-8 33-54841 General Motors Amended 1987 Stock Incentive Plan
S-8 33-49245 General Motors Savings-Stock Purchase Program for Salaried
Employees in the United States
S-8 2-94690 1984 Electronic Data Systems Corporation Stock Purchase Plan
(Post-Effective
Amendment No. 1)
S-8 2-94691 1984 Electronic Data Systems Corporation Stock Incentive Plan
(Post-Effective
Amendment No. 1)
S-8 33-36443 EDS Deferred Compensation Plan
S-8 33-54833 EDS Puerto Rico Savings Plan
S-8 33-32322 Hughes Aircraft Company Salaried Employees' Thrift and Savings
Plan
Hughes Aircraft Company Tucson Bargaining Employees' Thrift and
Savings Plan
Hughes Aircraft Company California Hourly Employees' Thrift and
Savings Plan
Hughes Thrift and Savings Plan
S-8 33-54835 The GMAC Mortgage Corporation Savings Incentive Plan
S-8 33-40423 GM Hughes Electronics Corporation Incentive Plan
S-8 33-43746 Saturn Individual Savings Plan for Union-Represented Employees
S-8 33-49243 Saturn Personal Choices Savings Plan for Non-Represented
Employees
S-8 33-28714 Marketing & Systems Development Corporation 1985 Incentive Stock
Option Plan
</TABLE>
/s/ DELOITTE & TOUCHE LLP
- ------------------------------------------------------
DELOITTE & TOUCHE LLP
Detroit, Michigan
March 13, 1995
IV-20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from General
Motors Corporation December 31, 1994 Consolidated Financial Statements and is
qualified in its entirety by reference to 1994 Form 10-K.
</LEGEND>
<CIK> 0000040730
<NAME> GENERAL MOTORS CORPORATION
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1.0
<CASH> 10,939
<SECURITIES> 5,137
<RECEIVABLES> 63,055
<ALLOWANCES> 0
<INVENTORY> 10,128
<CURRENT-ASSETS> 0
<PP&E> 77,367
<DEPRECIATION> 42,586
<TOTAL-ASSETS> 198,599
<CURRENT-LIABILITIES> 0
<BONDS> 73,730
<COMMON> 1,292
0
2
<OTHER-SE> 11,530
<TOTAL-LIABILITY-AND-EQUITY> 198,599
<SALES> 134,760
<TOTAL-REVENUES> 154,951
<CGS> 117,221
<TOTAL-COSTS> 127,246
<OTHER-EXPENSES> 226
<LOSS-PROVISION> 177
<INTEREST-EXPENSE> 5,432
<INCOME-PRETAX> 8,353
<INCOME-TAX> 2,695
<INCOME-CONTINUING> 5,659
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (758)
<NET-INCOME> 4,901
<EPS-PRIMARY> 5.15
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99(A)
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
RESPONSIBILITIES FOR CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of EDS 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 this Exhibit 99(a) 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 Company and that its established
policies and procedures are carefully followed. 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.
The Company's independent auditors, KPMG Peat Marwick LLP, have audited the
financial statements. Their audits were conducted in accordance with generally
accepted auditing standards, which include the consideration of the Company's
internal controls to the extent necessary to form an independent opinion on the
financial statements prepared by management.
The Board of Directors, through the EDS Audit Committee, is responsible for
assuring that management fulfills its responsibilities in the preparation of the
consolidated financial statements and for engaging the independent auditors. 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 discuss 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
Company and that the Company complies with established policies and procedures.
To ensure complete independence, KPMG Peat Marwick LLP have full and free access
to meet with the Committee, without management representatives present, to
discuss the results of their audits and the quality of the financial reporting.
/s/ Lester M. Alberthal, Jr.
- ------------------------------------------------------
Lester M. Alberthal, Jr.
Chairman of the Board
President and Chief Executive Officer
/s/ Joseph M. Grant
- ------------------------------------------------------
Joseph M. Grant
Senior Vice President
Chief Financial Officer
IV-21
<PAGE> 2
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT AND CONSENT
The Board of Directors
Electronic Data Systems Corporation:
We have audited the accompanying consolidated balance sheets of Electronic
Data Systems Corporation and subsidiaries as of December 31, 1994 and 1993, and
the related consolidated statements of income and cash flows for each of the
years in the three-year period ended December 31, 1994. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Electronic
Data Systems Corporation and subsidiaries at December 31, 1994 and 1993, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1994, in conformity with generally accepted
accounting principles.
We hereby consent to the incorporation by reference of our report stated
above in the following Registration Statements:
<TABLE>
<CAPTION>
REGISTRATION
FORM STATEMENT NO. DESCRIPTION
- ----- ------------------ -----------------------------------------------------------------
<S> <C> <C>
S-3 33-41557 General Motors Corporation Debt Securities
S-3 33-47343 General Motors Corporation $1 2/3 Par Value Common Stock
(Post-Effective
Amendment No. 1)
S-3 33-49035 General Motors Corporation $1 2/3 Par Value Common Stock
(Amendment No. 1)
S-3 33-56671 General Motors Corporation $1 2/3 Par Value Common Stock
(Amendment No. 1)
S-3 33-49309 General Motors Corporation Dividend Reinvestment Plan
S-8 33-56753 The General Motors Personal Savings Plan for Hourly-Rate
Employees in the United States
S-8 33-54841 General Motors Amended 1987 Stock Incentive Plan
S-8 33-49245 General Motors Savings-Stock Purchase Program for Salaried
Employees in the United States
S-8 2-94690 1984 Electronic Data Systems Corporation Stock Purchase Plan
(Post-Effective
Amendment No. 1)
S-8 2-94691 1984 Electronic Data Systems Corporation Stock Incentive Plan
(Post-Effective
Amendment No. 1)
S-8 33-36443 EDS Deferred Compensation Plan
S-8 33-54833 EDS Puerto Rico Savings Plan
</TABLE>
IV-22
<PAGE> 3
<TABLE>
<CAPTION>
REGISTRATION
FORM STATEMENT NO. DESCRIPTION
- ----- ------------------ -----------------------------------------------------------------
<S> <C> <C>
S-8 33-32322 Hughes Aircraft Company Salaried Employees' Thrift and Savings
Plan
Hughes Aircraft Company Tucson Bargaining Employees' Thrift and
Savings Plan
Hughes Aircraft Company California Hourly Employees' Thrift and
Savings Plan
Hughes Thrift and Savings Plan
S-8 33-54835 The GMAC Mortgage Corporation Savings Incentive Plan
S-8 33-40423 GM Hughes Electronics Corporation Incentive Plan
S-8 33-43746 Saturn Individual Savings Plan for Union-Represented Employees
S-8 33-49243 Saturn Personal Choices Savings Plan for Non-Represented
Employees
S-8 33-28714 Marketing & Systems Development Corporation 1985 Incentive Stock
Option Plan
</TABLE>
/s/ KPMG PEAT MARWICK LLP
- ------------------------------------------------------
KPMG PEAT MARWICK LLP
Dallas, Texas
January 25, 1995 (March 13, 1995
as to the consent in the last
paragraph on the preceding page)
IV-23
<PAGE> 4
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1994 1993 1992
--------- -------- --------
<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
Cost of revenues............................................ 7,529.4 6,390.6 6,205.8
Selling, general, and administrative........................ 1,187.1 1,005.4 969.3
Interest (Note 9)........................................... 51.7 34.5 43.0
--------- -------- --------
Total costs and expenses............................... 8,768.2 7,430.5 7,218.1
--------- -------- --------
Income before income taxes.................................... 1,284.2 1,131.3 1,000.8
Provision for income taxes (Note 11).......................... 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 GM Class E common stock
outstanding (in millions) (Note 1) (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 GM Class E Common Stock on a Per
Share Basis (Note 1)........................................ $ 1.71 $ 1.51 $ 1.33
========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
IV-24
<PAGE> 5
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1993 1994
-------- --------
(IN MILLIONS)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents.............................................. $ 608.2 $ 383.4
Marketable securities (Note 3)......................................... 149.6 224.1
Accounts receivable.................................................... 2,082.1 1,412.5
Accounts receivable from GM and affiliates............................. 65.4 112.6
Inventories............................................................ 137.8 130.7
Prepaids and other..................................................... 311.0 243.5
-------- --------
Total current assets................................................ 3,354.1 2,506.8
-------- --------
Property and equipment, at cost less accumulated depreciation (Note 4)
Land................................................................... 125.3 121.6
Buildings and facilities............................................... 559.2 532.0
Computer equipment..................................................... 1,871.0 1,275.5
Other equipment and furniture.......................................... 201.1 185.6
-------- --------
Total property and equipment, net................................... 2,756.6 2,114.7
-------- --------
Operating and other assets
Land held for development, at cost (Note 5)............................ 97.4 94.4
Investment in leases and other (Note 6)................................ 1,308.8 1,159.9
Software, goodwill, and other intangibles, net (Notes 7 and 19)........ 1,269.6 1,066.3
-------- --------
Total operating and other assets.................................... 2,675.8 2,320.6
-------- --------
Total Assets............................................................. $8,786.5 $6,942.1
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable....................................................... $ 571.1 $ 359.8
Accrued liabilities (Note 8)........................................... 1,451.0 996.0
Deferred revenue....................................................... 536.7 429.7
Income taxes (Note 11)................................................. 111.0 202.2
Notes payable (Note 9)................................................. 203.4 172.7
-------- --------
Total current liabilities........................................... 2,873.2 2,160.4
-------- --------
Deferred income taxes (Note 11).......................................... 659.8 641.5
-------- --------
Notes payable (Note 9)................................................... 1,021.0 522.8
-------- --------
Commitments and contingent liabilities (Notes 17 and 18)
Stockholder's equity (Notes 10 and 12)
Common stock, without par value; authorized 1,000.0 shares. Issued and
outstanding 481.7 and 480.9 shares at December 31, 1994 and 1993,
respectively. ...................................................... 455.1 421.2
Retained earnings...................................................... 3,777.4 3,196.2
-------- --------
Total stockholder's equity.......................................... 4,232.5 3,617.4
-------- --------
Total Liabilities and Stockholder's Equity............................... $8,786.5 $6,942.1
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
IV-25
<PAGE> 6
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
--------- --------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income................................................. $ 821.9 $ 724.0 $ 635.5
--------- --------- --------
Adjustments to reconcile net income to net cash provided by
operating activities (net of effects of acquired
companies)
Depreciation and amortization........................... 741.3 607.9 603.2
Accretion of discount related to commercial paper....... 30.9 13.4 8.3
(Increase) decrease in accounts receivable.............. (585.0) (199.8) 18.6
(Increase) decrease in accounts receivable from GM and
affiliates............................................ 51.1 (56.0) 2.3
Increase in inventories................................. (1.9) (15.5) (22.3)
Increase in prepaids and other.......................... (57.0) (26.8) (29.8)
Increase (decrease) in accounts payable and accrued
liabilities........................................... 482.9 22.0 (181.4)
Increase in deferred revenue............................ 79.1 137.1 1.6
Increase (decrease) in income taxes..................... (94.4) 138.9 (98.2)
Increase in deferred income taxes....................... 21.9 49.8 198.0
--------- --------- --------
Total adjustments 668.9 671.0 500.3
--------- --------- --------
Net cash provided by operating activities.................. 1,490.8 1,395.0 1,135.8
--------- --------- --------
Cash Flows from Investing Activities
Payments for purchase of available-for-sale securities..... (248.9) (305.7) (291.2)
Proceeds from sale of available-for-sale securities........ 370.0 247.4 277.9
Payments related to land held for development.............. (3.0) (6.2) (16.6)
Payments for investment in leases and certain other
assets.................................................. (518.0) (293.5) (456.7)
Proceeds from investment in leases and certain other
assets.................................................. 318.5 348.8 406.7
Payments for purchase of software and certain other
intangibles............................................. (96.7) (119.0) (64.5)
Payments for purchase of property and equipment............ (1,120.9) (799.4) (639.0)
Payments related to acquisitions, net of cash acquired..... (186.6) (122.1) (30.2)
--------- --------- --------
Net cash used in investing activities...................... (1,485.6) (1,049.7) (813.6)
--------- --------- --------
Cash Flows from Financing Activities
Net decrease in current notes payable with maturities less
than 90 days............................................ (102.9) (99.0) (239.4)
Payments on notes payable.................................. (197.2) (220.5) (800.2)
Proceeds from notes payable................................ 690.3 91.5 1,032.5
Proceeds from (payments on) advances from GM............... 1.1 (5.4) (16.0)
Proceeds from issuance of common stock..................... 33.9 55.3 42.5
Cash dividends paid to GM.................................. (231.1) (192.1) (172.4)
--------- --------- --------
Net cash provided by (used in) financing activities........ 194.1 (370.2) (153.0)
--------- --------- --------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents................................................ 25.5 (13.6) (7.9)
--------- --------- --------
Net Increase (Decrease) in Cash and Cash Equivalents......... 224.8 (38.5) 161.3
Cash and Cash Equivalents at Beginning of Year............... 383.4 421.9 260.6
--------- --------- --------
Cash and Cash Equivalents at End of Year..................... $ 608.2 $ 383.4 $ 421.9
========= ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
IV-26
<PAGE> 7
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Electronic
Data Systems Corporation and all majority-owned subsidiaries. As used herein,
the terms "EDS" and "the Company" refer to Electronic Data Systems Corporation
and its consolidated subsidiaries. EDS is a wholly owned subsidiary of General
Motors Corporation (GM). The Company's investments in companies in which it has
the ability to exercise significant influence over operating and financial
policies are accounted for under the equity method, with the remaining
investments carried at cost.
Earnings Attributable to GM Class E Common Stock on a Per Share Basis have
been determined based on the relative amounts available for the payment of
dividends to holders of GM Class E common stock. Holders of GM Class E common
stock have no direct rights in the equity or assets of EDS, but rather have
rights in the equity and assets of GM (which includes 100% of the stock of EDS).
Dividends on the GM Class E common stock are declared out of the Available
Separate Consolidated Net Income of EDS earned since the acquisition of EDS by
GM. The Available Separate Consolidated Net Income of EDS is determined
quarterly and is equal to the separate consolidated net income of EDS, excluding
the effects of purchase accounting adjustments arising from the acquisition of
EDS, multiplied by a fraction, the numerator of which is a number equal to the
weighted average number of shares of GM Class E common stock outstanding during
the period and the denominator of which was 481.7 million 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.
GM Series C depositary shares represent ownership of one-tenth of a share
of GM Series C convertible preference stock. GM Series C depositary shares and
GM Series C preference stocks are convertible into GM Class E common stock and
are common stock equivalents for purposes of computing Earnings Attributable to
GM Class E Common Stock on a Per Share Basis. On November 2, 1992, GM Series
E-II and E-III preference stocks, previously held by the GM pension plans, were
converted to GM Class E common stock. In 1993 and 1992, GM Series E-1 preference
stock was converted to GM Class E common stock, or redeemed by GM. The issuances
and conversions of such preference stocks have no dilutive effect on the GM
Class E common stock, because to the extent that shares of GM Class E common
stock deemed to be outstanding would increase, such increased shares would
increase the numerator of the fraction used to determine Available Separate
Consolidated Net Income, but would have no effect on the denominator.
The denominator used in determining the Available Separate Consolidated Net
Income of EDS is adjusted as deemed appropriate by the GM Board of Directors to
reflect subdivisions or combinations of the GM Class E common stock and to
reflect certain transfers of capital to or from EDS. The Board's discretion to
make such adjustments is limited by criteria set forth in GM's Certificate of
Incorporation. In 1994 and 1988, EDS initiated programs to repurchase 9.5
million and 11.0 million shares, respectively, of GM Class E common stock in
order to meet certain future requirements of the Company's employee benefit
plans. The GM Board has generally caused the denominator used in calculating the
Available Separate Consolidated Net Income of EDS to decrease as shares are
purchased and to increase as shares are used for the employee benefit plans.
The current GM Board policy is that the cash dividends on the GM Class E
common stock, when, as, and if declared by the GM Board in its sole discretion,
will equal approximately 30% of the Available Separate Consolidated Net Income
of EDS for the prior year.
Consistent with Delaware law, which governs the amount legally available
for the payment of dividends on GM's common stock, the GM Board of Directors has
determined that such amount is materially higher than GM's capital surplus plus
net income retained for use in the business (less accumulated deficit).
IV-27
<PAGE> 8
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
CASH AND CASH EQUIVALENTS
The carrying amount approximates fair value because of the short maturity
of these instruments.
DEBT AND MARKETABLE EQUITY SECURITIES
Marketable securities at December 31, 1994 consist of securities issued by
the U.S. Treasury, states, and political subdivisions, as well as
mortgage-backed debt, corporate debt and corporate equity securities. The
Company adopted the provisions of Statement of Financial Accounting Standards
(SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities, effective January 1, 1994. Pursuant to SFAS No. 115, the provisions
of the Statement were not applied retroactively. The change had no material
cumulative effect on the Company's financial position or results of operations.
Prior to the adoption of SFAS No. 115, equity and debt securities were carried
at the lower of aggregate cost or market and on an amortized cost basis,
respectively. Under SFAS No. 115, the Company classifies all of its debt and
marketable equity securities as available-for-sale. Management determines the
appropriate classification of all securities at the time of purchase and
re-evaluates such designation as of each balance sheet date. Noncurrent
available-for-sale securities are reported within the balance sheet
classification Investment in Leases and Other. The Company's available-for-sale
securities are recorded at fair value. Unrealized holding gains and losses, net
of the related tax effect, are excluded from earnings and are reported as a
separate component of stockholder's equity until realized. A decline in the
market value of any available-for-sale security below cost that is deemed other
than temporary is charged to earnings, resulting in the establishment of a new
cost basis for the security.
INVENTORY VALUATION
Inventories are stated principally at the lower of cost or market using the
first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation of property and
equipment is calculated using the straight-line method over the lesser of the
asset's estimated useful life, the life of the related customer contract, or the
term of the lease in the case of leasehold improvements. The ranges of estimated
useful lives are as follows:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings..................................... 20-40
Facilities.................................... 5-20
Computer equipment............................ 3-7
Other equipment and furniture................. 3-15
</TABLE>
SOFTWARE, GOODWILL, AND OTHER INTANGIBLES
Software purchased by the Company and utilized in designing, installing,
and operating business information and communications systems is capitalized and
amortized on a straight-line basis over a five- to eight-year period. Costs of
developing and maintaining software systems are incurred primarily in connection
with customer contracts and are generally expensed as incurred. Software
development costs that meet the capitalization and recoverability requirements
of SFAS No. 86, Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed, are capitalized and generally amortized on a
straight-line basis over three years. Such amounts were not significant.
Goodwill, which represents the excess of the purchase price over the fair
value of identifiable net assets acquired, is amortized on a straight-line basis
over the expected period of benefit, five to 40 years. The Company assesses the
recoverability of this intangible asset by determining whether its balance can
be
IV-28
<PAGE> 9
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
recovered over its remaining life. The amount of goodwill impairment, if any, is
measured based on the expected undiscounted cash flows of the acquired
operation.
Other intangibles are amortized on a straight-line basis over the
anticipated period of benefit, which is generally five to 10 years.
REVENUE RECOGNITION
The Company provides services under level-of-effort and fixed-price
contracts, with the length of the Company's contracts ranging up to ten years.
For level-of-effort types of contracts, revenue is earned based on the
agreed-upon billing amounts as services are provided to the customer. For
certain fixed-price contracts, revenue is recognized on the
percentage-of-completion method. Revenue earned is based on the percentage that
incurred costs to date bear to total estimated costs after giving effect to the
most recent estimates of total cost. Deferred revenue of $536.7 million and
$429.7 million at December 31, 1994 and 1993, respectively, represents billings
in excess of costs and related profits on certain contracts. Included in
accounts receivable are unbilled receivables of $448.5 million and $314.9
million at December 31, 1994 and 1993, respectively. Such unbilled receivables
for certain contracts in progress represent costs and related profits in excess
of billings, and such amounts were not billable at the balance sheet date. These
billings on fixed-price contracts will be made in the future in accordance with
contractual agreements. Of the unbilled receivables at December 31, 1994,
billings to such customers amounting to $194.6 million are expected to be
collected in 1996 and thereafter.
CURRENCY TRANSLATION
Assets and liabilities of non-U.S. subsidiaries whose functional currency
is not the U.S. dollar are translated at current exchange rates. Revenue and
expense accounts are translated using an average rate for the period.
Translation gains and losses are not included in determining net income but are
reflected as a separate component of stockholder's equity. Nonfunctional
currency transaction gains (losses) are included in determining net income and
were $4.5 million, ($3.7) million, and ($1.5) million, net of income taxes, for
the years ended December 31, 1994, 1993, and 1992, respectively.
INCOME TAXES
The Company provides for deferred taxes under the asset and liability
method of SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered. The Company is included in the consolidated Federal tax returns filed
by GM. Current Federal income taxes are calculated on a separate return basis
and remitted to GM. The deferral method is used to account for investment tax
credits.
STATEMENT OF CASH FLOWS
The Company uses the indirect method to present cash flows from operating
activities and considers certificates of deposit, as well as the following items
with original maturities of three months or less, to be cash equivalents:
commercial paper, repurchase agreements, and money market funds. (See Note 20.)
FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, Disclosures about the Fair Value of Financial Instruments,
defines the fair value of a financial instrument as the amount at which the
instrument could be exchanged in a current transaction
IV-29
<PAGE> 10
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
between willing parties. All of the Company's financial instruments, including
foreign exchange-forward contracts disclosed at Note 15, are presented in the
Consolidated Balance Sheets at their fair values at December 31, 1994, with the
exception of the following (in millions):
<TABLE>
<CAPTION>
DECEMBER 31, 1994
--------------------
CARRYING FAIR
AMOUNT VALUE
-------- --------
<S> <C> <C>
Financial Assets (Note 6)
Investments in joint ventures and partnerships......................... $ 149.6 $ 172.0
Long-term securities................................................... 201.2 192.6
Noncurrent notes receivable............................................ 158.1 154.4
Financial liabilities
Notes payable (Note 9)................................................. 1,224.4 1,230.3
</TABLE>
Concentrations of credit risk with respect to accounts receivable are
limited due to the large number of customers comprising the Company's customer
base and their dispersion across different industry and geographic areas.
DERIVATIVES
Derivative financial instruments are used by the Company in the management
of its interest rate and foreign currency exposures. Net payments or receipts
under the Company's interest rate swap agreements are recorded as adjustments to
interest expense. Foreign exchange-forward contracts are recorded in the
Company's Consolidated Balance Sheets at fair value as of the reporting date.
Realized and unrealized changes in fair value are recognized in income, as other
income, in the period in which the changes occur.
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) has issued SFAS No. 118,
Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosures, which will become effective for fiscal years beginning in 1995. The
effect of this Statement, if implemented currently, would not be material.
NOTE 2. NATIONAL HERITAGE INSURANCE COMPANY
National Heritage Insurance Company (NHIC), a wholly owned subsidiary of
EDS, acts as underwriter for claims benefit payments for the Medicaid welfare
program contract for the state of Texas. The state of Indiana awarded EDS a
fiscal agent contract for the Medicaid welfare program effective July 1, 1994,
which was previously underwritten by NHIC.
The contracts provide that payments from the states be deposited in trust
accounts that are not included in the consolidated financial statements. Of such
payments received for the years ended December 31, 1994, 1993, and 1992,
$4,188.7 million, $4,453.4 million, and $3,664.1 million, respectively, were
designated for the payment of benefit claims or to be returned to the states. At
December 31, 1994 and 1993, $983.5 million and $1,316.3 million, respectively,
of such designated funds at amortized cost remained in the trust accounts.
Approximate market values of these invested funds at December 31, 1994 and 1993
were $975.2 million and $1,315.3 million, respectively. These investments
primarily consist of corporate and government bonds. NHIC intends to hold these
investments until their full face value can be realized. Gains and losses from
the sale of these investments held in trust accounts are combined with gains and
losses from the Company's other investments.
IV-30
<PAGE> 11
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 3. DEBT AND MARKETABLE EQUITY SECURITIES
Following is a summary of available-for-sale securities as of December 31,
1994 (in millions):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
Current:
U.S. government and agency obligations............... $ 31.9 $ -- $0.6 $ 31.3
Other debt securities................................ 94.9 0.2 4.7 90.4
-------- ---- ---- ------
Total debt securities............................. 126.8 0.2 5.3 121.7
Equity Securities.................................... 29.2 -- 1.3 27.9
-------- ---- ---- ------
Total current available-for-sale securities............ $ 156.0 $0.2 $6.6 $149.6
======= ==== ==== ======
Non-Current (Note 6)
Other debt securities................................ $ 0.6 $ -- $ -- $ 0.6
Equity securities.................................... 60.5 -- 2.4 58.1
-------- ---- ---- ------
Total noncurrent available-for-sale securities.... $ 61.1 $ -- $2.4 $ 58.7
======= ==== ===== ======
</TABLE>
The amortized cost and estimated fair value of debt and marketable equity
securities at December 31, 1994, by contractual maturity, are shown below (in
millions). Expected maturities will differ from contractual maturities because
the issuers of the securities may have the right to repay obligations without
prepayment penalties.
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-------------------
AMORTIZED FAIR
COST VALUE
--------- ------
<S> <C> <C>
Debt securities
Due in one year or less................................... $ 41.6 $ 41.1
Due after one year through five years..................... 51.8 50.8
Due after five years through 10 years..................... 7.1 7.0
Due after 10 years........................................ 13.5 13.3
Mortgage-backed securities................................ 13.4 10.1
------- ------
Total debt securities.................................. 127.4 122.3
Equity securities........................................... 89.7 86.0
------- ------
Total available-for-sale securities.................... $ 217.1 $208.3
======= ======
</TABLE>
Proceeds from sales of available-for-sale securities (excluding gains,
losses, amortization of related discount or premium, effects of foreign currency
translation, and acquisitions) were $370.0 million. Without these adjustments,
proceeds from sales of available-for-sale securities during 1994 were $387.6
million. Gross gains of $17.4 million and gross losses of ($4.1) million were
realized during 1994 on sales of available-for-sale securities. Realized gains
and losses in 1993 and 1992 were not significant. Specific identification was
used to determine cost in computing realized gain or loss.
IV-31
<PAGE> 12
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
ACCUMULATED
COST DEPRECIATION NET
-------- ------------ --------
(IN MILLIONS)
<S> <C> <C> <C>
DECEMBER 31, 1994
Land.......................................................... $ 125.3 $ -- $ 125.3
Buildings and facilities...................................... 878.7 319.5 559.2
Computer equipment............................................ 3,967.6 2,096.6 1,871.0
Other equipment and furniture................................. 465.9 264.8 201.1
-------- --------- --------
Total.................................................... $5,437.5 $2,680.9 $2,756.6
======== ======== ========
DECEMBER 31, 1993
Land.......................................................... $ 121.6 $ -- $ 121.6
Buildings and facilities...................................... 815.1 283.1 532.0
Computer equipment............................................ 3,158.6 1,883.1 1,275.5
Other equipment and furniture................................. 425.1 239.5 185.6
-------- -------- --------
Total.................................................... $4,520.4 $2,405.7 $2,114.7
======== ======== ========
</TABLE>
NOTE 5. LAND HELD FOR DEVELOPMENT
Land held for development at December 31, 1994 consists of approximately
2,222 acres located throughout the Dallas metropolitan area. Approximately 1,590
acres of land, site of a commercial real estate development, are located in
Plano, Texas.
NOTE 6. INVESTMENT IN LEASES AND OTHER
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
-------- --------
(IN MILLIONS)
<S> <C> <C>
Lease contracts receivable (net of principal and interest on nonrecourse
debt).................................................................. $ 384.5 $ 396.8
Estimated residual values of leased assets (not guaranteed).............. 339.0 337.7
Unearned income, including deferred investment tax credits............... (260.6) (271.3)
-------- --------
Investment in leveraged leases (excluding deferred taxes of $284.7 and
$307.4 at December 31, 1994 and 1993, respectively)................. 462.9 463.2
Investment in securities, joint ventures, and partnerships............... 357.2 249.9
Investment in direct financing leases, net of unearned income............ 153.8 158.6
Noncurrent notes receivable.............................................. 158.1 118.1
GM Class E common stock held for benefit plans........................... 54.7 62.4
Investment in tax benefit transfers...................................... 38.6 40.9
Other.................................................................... 83.5 66.8
-------- --------
Total............................................................... $1,308.8 $1,159.9
======== ========
</TABLE>
The fair values of certain long-term investments are estimated based on
quoted market prices for these or similar investments. For other investments, a
variety of methods are used to estimate fair value, including external
valuations and discounted cash flows. At December 31, 1994, the fair values of
investments in joint ventures and partnerships (accounted for using the cost
method), long-term securities, and noncurrent notes receivable were estimated to
be $172.0 million, $192.6 million, and $154.4 million, respectively, with
carrying amounts of $149.6 million, $201.2 million, and $158.1 million,
respectively. At December 31, 1993, the fair
IV-32
<PAGE> 13
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
values of investments in joint ventures and partnerships (accounted for using
the cost method), long-term securities, and noncurrent notes receivable were
estimated to be $275.0 million, $152.8 million, and $114.9 million,
respectively, with carrying amounts of $241.1 million, $128.5 million, and
$118.1 million, respectively. Long-term securities include GM Class E common
stock and other securities. The carrying value of the GM Class E common stock,
which was less than the market value, was utilized to estimate the investment's
fair value shown above because the stock will be used to satisfy future benefit
plan obligations.
Financing leases that are financed with nonrecourse borrowings at lease
inception are accounted for as leveraged leases. Such borrowings are secured by
substantially all of the lessor's rights under the lease plus the residual value
of the asset. For Federal income tax purposes, the Company receives the
investment tax credit (if available) at lease inception and has the benefit of
tax deductions for depreciation on the leased asset and for interest on the
nonrecourse debt. A portion of the Company's leveraged lease portfolio is
concentrated within the airline industry. The Company historically has not
experienced credit losses from these transactions, and the portfolio is
diversified among unrelated lessees.
NOTE 7. SOFTWARE, GOODWILL, AND OTHER INTANGIBLES
<TABLE>
<CAPTION>
ACCUMULATED
COST AMORTIZATION NET
-------- ------------ --------
(IN MILLIONS)
<S> <C> <C> <C>
DECEMBER 31, 1994
Software...................................................... $ 876.0 $462.1 $ 413.9
Goodwill...................................................... 833.9 80.4 753.5
Other intangibles............................................. 312.8 210.6 102.2
-------- ------ --------
Total.................................................... $2,022.7 $753.1 $1,269.6
======== ====== ========
DECEMBER 31, 1993
Software...................................................... $ 791.5 $374.2 $ 417.3
Goodwill...................................................... 595.8 58.4 537.4
Other intangibles............................................. 235.2 123.6 111.6
-------- ------ --------
Total.................................................... $1,622.5 $556.2 $1,066.3
======== ====== ========
</TABLE>
NOTE 8. ACCRUED LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
-------- ------
(IN MILLIONS)
<S> <C> <C>
Contract related........................................................ $ 880.9 $368.6
Payroll related......................................................... 196.4 286.8
Operating expenses...................................................... 196.1 205.2
Property, sales, and franchise taxes.................................... 100.1 82.5
Claims settlement (Note 2).............................................. 21.3 30.1
Other................................................................... 56.2 22.8
-------- ------
Total.............................................................. $1,451.0 $996.0
======== ======
</TABLE>
IV-33
<PAGE> 14
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 9. NOTES PAYABLE
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
-------- ------
(IN MILLIONS)
<S> <C> <C>
Commercial paper, 5.5% to 6.3%.......................................... $ 933.0 $398.6
Lines of credit, variable rate 6.5% to 10.3%, due 1995.................. 48.7 135.7
Notes, variable rate 5.7% to 12.5%, due 1995 to 2006.................... 91.2 85.1
Notes, fixed rate 2.8% to 12.95%, due 1995 to 2003...................... 151.5 76.1
-------- ------
Total.............................................................. 1,224.4 695.5
Less current maturities classified as notes payable................ 203.4 172.7
-------- ------
Noncurrent notes payable........................................... $1,021.0 $522.8
======== ======
</TABLE>
Commercial paper is classified as noncurrent debt as it is intended to be
maintained on a long-term basis with ongoing credit availability provided by the
Company's revolving, committed lines of credit. During 1994, the Company revised
its agreement with a syndicate of banks, which increased to $1,800.0 million its
committed lines of credit, of which $900.0 million expires in 1995 with the
option to convert any outstanding amounts under these lines into term loans that
mature in 1997. The remaining $900.0 million expires in 1999. Upon expiration of
the commitment periods, the lenders and EDS have the option to extend the
commitment. In addition, as of December 31, 1994, the Company had available
another $15.5 million in committed lines of credit, of which $2.2 million
remained unused. The Company also had available $529.9 million in uncommitted
short-term lines of credit, of which $494.5 million remained unused at December
31, 1994. These lines of credit do not require material commitment fees,
compensating balances, or collateral. Under the terms of the $1,800.0 million
agreement, the Company is required to maintain a consolidated net worth of
$2,631.8 million, increasing quarterly by 50 percent of the Company's
consolidated net income after June 30, 1994.
Notes payable relate to land held for development, property and equipment,
acquisitions, and other items. These notes are generally unsecured, with certain
notes secured by assets of a majority-owned subsidiary.
At December 31, 1994, the Company had no interest rate swap agreements
outstanding. At December 31, 1993, the Company had interest rate swap agreements
outstanding that effectively converted the variable interest rates on an
aggregate notional amount of $54.4 million to fixed interest rates ranging from
5.3% to 8.1%. At December 31, 1993, the estimated fair value of such contracts
was ($0.8) million.
Maturities of notes payable for years subsequent to December 31, 1994 are
as follows (in millions):
<TABLE>
<S> <C>
1995......................................... $203.4
1996......................................... 43.3
1997......................................... 940.4
1998......................................... 5.4
1999......................................... 13.3
Thereafter................................... 18.6
</TABLE>
For the years ended December 31, 1994, 1993, and 1992, interest costs of
$1.2 million, $5.4 million, and $18.1 million, respectively, were capitalized,
which, if charged to expense, would have resulted in reductions in net income of
$0.7 million, $3.5 million, and $11.9 million, respectively.
The fair value of notes payable is estimated based on the current rates
offered to the Company for the same remaining maturities. At December 31, 1994
and 1993, the estimated fair value was $1,230.3 million and $703.5 million,
respectively.
IV-34
<PAGE> 15
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 10. STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
COMMON STOCK CURRENCY MARKET
---------------- TRANS. VALUE RETAINED STOCKHOLDER'S
(IN MILLIONS EXCEPT PER SHARE AMOUNTS) SHARES AMOUNT ADJUST. ADJUST. EARNINGS EQUITY
- ------------------------------------------------- ------ ------ -------- ------ -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991..................... 478.0 $323.4 $ (0.2) $ -- $2,287.1 $ 2,610.3
Separate consolidated net income............... -- -- -- -- 635.5 635.5
Cash dividends declared -- $0.36 per share -- -- -- -- (172.4) (172.4)
Stock option and award transactions............ 1.3 42.5 -- -- -- 42.5
Currency translation adjustment................ -- -- (52.5) -- -- (52.5)
------ ------ -------- ------ -------- -------------
Balance at December 31, 1992..................... 479.3 365.9 (52.7) -- 2,750.2 3,063.4
Separate consolidated net income............... -- -- -- -- 724.0 724.0
Cash dividends declared -- $0.40 per share..... -- -- -- -- (192.1) (192.1)
Stock option and award transactions............ 1.6 55.3 -- -- -- 55.3
Currency translation adjustment................ -- -- (33.2) -- -- (33.2)
------ ------ -------- ------ -------- -------------
Balance at December 31, 1993..................... 480.9 421.2 (85.9) -- 3,282.1 3,617.4
Separate consolidated net income............... -- -- -- -- 821.9 821.9
Cash dividends declared -- $0.48 per share..... -- -- -- -- (231.1) (231.1)
Stock option and award transactions............ 0.8 33.9 -- -- -- 33.9
Currency translation adjustment................ -- -- (3.0) -- -- (3.0)
Unrealized loss on securities, net (Note 3).... -- -- -- (6.6 ) -- (6.6)
------ ------ ------ ------ -------- ---------
Balance at December 31, 1994..................... 481.7 $455.1 $(88.9) $(6.6 ) $3,872.9 $ 4,232.5
====== ====== ====== ====== ======== =========
</TABLE>
As the sole stockholder of EDS, GM is able to cause EDS to pay cash
dividends and make advances to or otherwise enter into transactions with GM as
GM deems desirable and appropriate. GM reserves the right to cause EDS to pay
cash dividends to GM in such amounts as GM determines are desirable under the
then prevailing facts and circumstances. Such amounts may be the same as,
greater than, or less than the cash dividends paid by GM on its Class E common
stock. There is no fixed relationship, on a per share or aggregate basis,
between the cash dividends that may be paid by GM to holders of its Class E
common stock and the cash dividends or other amounts that may be paid by EDS to
GM.
NOTE 11. INCOME TAXES
The current and deferred income tax liabilities (assets) are summarized as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1993
------ ------
(IN MILLIONS)
<S> <C> <C>
Current payable.............................................. $ 49.3 $ 66.3
Current deferred............................................. 61.7 135.9
------ ------
Total income taxes -- current........................... 111.0 202.2
Noncurrent deferred.......................................... 659.8 641.5
------ ------
Total current and noncurrent income taxes............... $770.8 $843.7
====== ======
</TABLE>
IV-35
<PAGE> 16
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The provision for income tax expense is summarized as follows:
<TABLE>
<CAPTION>
U.S. U.S.
YEAR ENDED FEDERAL NON-U.S. STATE TOTAL
- ------------------------------------------------------------ ------- -------- ----- ------
(IN MILLIONS)
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
Current..................................................... $ 279.0 $167.9 $32.6 $479.5
Deferred.................................................... 15.8 (33.0) -- (17.2)
------- ------ ----- ------
Total.................................................. $ 294.8 $134.9 $32.6 $462.3
======= ====== ===== ======
DECEMBER 31, 1993
Current..................................................... $ 130.1 $ 77.8 $17.0 $224.9
Deferred.................................................... 161.0 21.4 -- 182.4
------- ------ ----- ------
Total.................................................. $ 291.1 $ 99.2 $17.0 $407.3
======= ====== ===== ======
DECEMBER 31, 1992
Current..................................................... $ 113.9 $ 97.3 $21.0 $232.2
Deferred.................................................... 145.0 (11.9) -- 133.1
------- ------ ----- ------
Total.................................................. $ 258.9 $ 85.4 $21.0 $365.3
======= ====== ===== ======
</TABLE>
Income before income taxes included the following components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
U.S. income...................................... $ 963.5 $ 886.1 $ 781.9
Non-U.S. income.................................. 320.7 245.2 218.9
-------- -------- --------
Total....................................... $1,284.2 $1,131.3 $1,000.8
======== ======== ========
</TABLE>
A reconciliation of income tax expense using the statutory Federal income
tax rate of 35.0% for 1994 and 1993 and 34.0% for 1992 to the actual income tax
expense follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1994 1993 1992
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Income before income taxes..................................... $1,284.2 $1,131.3 $1,000.8
======== ======== ========
Statutory Federal income tax................................... $ 449.5 $ 395.9 $ 340.3
Non-U.S. taxes, net of credit.................................. 18.9 13.4 10.3
U.S. State income tax, net..................................... 21.2 11.1 13.8
Investment tax credit -- leveraged leases...................... (3.1) (4.4) (2.8)
Research and experimentation credits........................... (11.3) (8.8) (5.2)
Other.......................................................... (12.9) 0.1 8.9
-------- -------- --------
Total..................................................... $ 462.3 $ 407.3 $ 365.3
======== ======== ========
Effective income tax rate...................................... 36.0% 36.0% 36.5%
==== ==== ====
</TABLE>
IV-36
<PAGE> 17
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The tax effects of temporary differences and carryforwards, which result in
a significant portion of the deferred tax assets and liabilities, are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
---------------------- ---------------------
ASSETS LIABILITIES ASSETS LIABILITIES
------- ----------- ------ -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Basis differences attributable to leasing activities.... $ 2.5 $ 504.8 $ 6.4 $ 515.3
Adjustments necessary to convert accruals to a tax
basis................................................. 111.9 215.1 76.8 200.1
Employee benefit plans.................................. 32.0 25.9 17.5 27.0
Accumulated tax depreciation/amortization versus
accumulated financial statement
depreciation/amortization............................. 18.7 211.2 26.1 186.0
Effect on deferred taxes of carryforwards............... 102.9 -- 110.0 --
Other................................................... 232.1 153.5 126.0 119.5
------- ---------- ------ ----------
Subtotal........................................... 500.1 1,110.5 362.8 1,047.9
Less valuation allowance........................... (111.1) -- (92.3) --
------- ---------- ------ ----------
Total deferred taxes............................... $ 389.0 $ 1,110.5 $270.5 $ 1,047.9
======= ========= ====== ==========
</TABLE>
The net changes in the total valuation allowance for the years ended
December 31, 1994 and 1993 were increases of $18.8 million and $43.7 million,
respectively. Certain of the Company's foreign subsidiaries have net operating
loss carryforwards which expire over an indefinite period. A majority of such
carryforwards are included in the valuation allowance.
NOTE 12. STOCK PURCHASE AND INCENTIVE PLANS
The 1984 Electronic Data Systems Corporation Employee Stock Purchase Plan
(Purchase Plan) enables EDS employees to purchase up to 80.0 million shares of
GM Class E common stock at 85% of the quoted market price through payroll
deductions of up to 10% of their compensation. Shares of GM Class E common stock
purchased under the Purchase Plan may not be sold or transferred within two
years of the date of purchase unless they are first offered to GM or EDS at the
lesser of the original purchase price or the fair market value on the date of
sale. The number of shares available for future sale under the Purchase Plan was
59.5 million shares at December 31, 1994.
The 1984 Electronic Data Systems Corporation Stock Incentive Plan (1984
Plan) covers up to 160.0 million shares of GM Class E common stock. The 1984
Plan, which was scheduled to expire on October 17, 1994, was amended to change
the expiration date to October 17, 2004, thus extending the term for an
additional 10 years. During the 20-year life of the 1984 Plan, shares and rights
or options to acquire shares, which may be subject to restrictions, may be
granted or sold. The maximum number of shares for which additional shares,
rights, or options may be granted or sold under the provisions of the 1984 Plan
was 99.6 million shares at December 31, 1994.
The EDS Incentive and Compensation Committee (the Committee) has granted
the right to purchase a total of 27.6 million shares of GM Class E common stock,
at prices of $0.0125 and $0.025 per share, to key employees under the provisions
of the 1984 Plan. These shares will vest over various periods up to 10 years
from the date of grant. The difference between the quoted market price as of the
date of grant and the purchase price of shares granted is charged to operations
over the vesting period. Expense for these awards amounted to $13.3 million,
$16.3 million, and $14.9 million for the years ended December 31, 1994, 1993,
and 1992, respectively.
As of December 31, 1989, the Company had purchased 11.0 million shares of
GM Class E common stock to be distributed to key employees under the provisions
of the 1984 Plan. In 1994, 1991, and 1988, the
IV-37
<PAGE> 18
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Committee approved restricted stock unit grants. The 1994 grant, totaling 9.5
million shares of GM Class E common stock, will be distributed to key employees
under the provisions of the 1984 Plan. The right to receive shares is a
restricted stock unit. All units granted are generally scheduled to vest over a
period of 10 years. The 1994 units are scheduled to vest beginning March 1995.
The 1991 grant began vesting in March 1992, while the 1988 grant began vesting
in March 1989. The quoted market price as of the date of grant is charged to
operations over the vesting period.
The Company has a bonus plan under which awards are granted to key
executives and employees. Bonus expense amounted to $86.6 million, $49.8
million, and $44.6 million for the years ended December 31, 1994, 1993, and
1992, respectively. Included in bonus expense is $48.7 million, $17.5 million,
and $15.5 million relating to the restricted stock unit grants for the years
ended December 31, 1994, 1993, and 1992, respectively.
NOTE 13. DEFERRED COMPENSATION PLAN
The EDS Deferred Compensation Plan (Plan) provides a long-term savings
program for participants. The Plan allows eligible employees to contribute a
percentage of their compensation to a savings program and to defer income taxes
until the time of distribution.
NOTE 14. SEGMENT INFORMATION
INDUSTRY SEGMENTS
The Company's business involves operations in principally one industry
segment: designing, installing, and operating business information and
communications systems. Revenues from GM contributed approximately 36%, 39%, and
41% of gross revenues for the years ended December 31, 1994, 1993, and 1992,
respectively.
GEOGRAPHIC SEGMENTS
The following presents information about the Company's operations in
different geographic areas:
As of and for the Year Ended December 31, 1994
<TABLE>
<CAPTION>
U.S. EUROPE OTHER TOTAL
-------- -------- ------ --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Systems and other contracts revenue
GM and affiliates..................................... $2,764.4 $ 523.4 $259.4 $3,547.2
Outside customers..................................... 4,611.2 1,308.1 493.6 6,412.9
-------- -------- ------ --------
Total systems and other contracts revenue............... $7,375.6 $1,831.5 $753.0 $9,960.1
======== ======== ====== ========
Operating income........................................ $1,008.6 $ 168.3 $ 66.7 $1,243.6
======== ======== ====== ========
Identifiable assets..................................... $6,618.0 $1,573.8 $594.7 $8,786.5
======== ======== ====== ========
</TABLE>
IV-38
<PAGE> 19
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
As of and for the Year Ended December 31, 1993
<TABLE>
<CAPTION>
U.S. EUROPE OTHER TOTAL
-------- -------- ------ --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Systems and other contracts revenue
GM and affiliates..................................... $2,574.5 $ 511.2 $238.0 $3,323.7
Outside customers..................................... 4,004.5 911.6 267.5 5,183.6
-------- -------- ------ --------
Total systems and other contracts revenue............... $6,579.0 $1,422.8 $505.5 $8,507.3
======== ======== ====== ========
Operating income........................................ $ 906.5 $ 148.7 $ 56.1 $1,111.3
======== ======== ====== ========
Identifiable assets..................................... $5,350.6 $1,185.9 $405.6 $6,942.1
======== ======== ====== ========
</TABLE>
As of and for the Year Ended December 31, 1992
<TABLE>
<CAPTION>
U.S. EUROPE OTHER TOTAL
-------- -------- ------ --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Systems and other contracts revenue
GM and affiliates..................................... $2,562.9 $ 546.5 $239.1 $3,348.5
Outside customers..................................... 3,693.6 828.3 284.8 4,806.7
-------- -------- ------ --------
Total systems and other contracts revenue............... $6,256.5 $1,374.8 $523.9 $8,155.2
======== ======== ====== ========
Operating income........................................ $ 773.3 $ 131.3 $ 75.5 $ 980.1
======== ======== ====== ========
Identifiable assets..................................... $4,750.3 $1,008.7 $364.5 $6,123.5
======== ======== ====== ========
</TABLE>
NOTE 15. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company operates on a global basis, receiving revenues and incurring
expenses in many different countries. As a result of these activities, the
Company has exposure to market risks arising from changes in interest rates and
foreign exchange rates. Derivative financial instruments are used by the Company
for the purpose of hedging against these risks, to which the Company is exposed
in the normal course of business, by creating offsetting market exposures. The
Company's use of such instruments in relation to such risks is explained below.
The Company does not hold or issue financial instruments for trading purposes.
The notional amounts of derivatives contracts are summarized below as part
of the description of the instruments utilized. The notional amounts do not
represent the amounts exchanged by the parties, and thus are not a measure of
the exposure of the Company through its use of derivatives. The amounts
exchanged by the parties are normally based upon the notional amounts and the
other terms of the derivatives. The Company is not a party to leveraged
derivatives.
INTEREST RISK MANAGEMENT
The Company has historically entered into interest rate swap agreements in
order to reduce the impact of changes in interest rates upon its floating-rate
debt. As of December 31, 1994, all such contracts had matured and the Company
had no outstanding interest rate swap agreements.
FOREIGN EXCHANGE RISK MANAGEMENT
The Company uses derivative financial instruments, particularly foreign
exchange-forward contracts, to hedge transactions denominated in different
currencies on a continuing basis. The purpose of the Company's hedging
activities is to reduce the levels of risk to which it is exposed resulting from
exchange-rate movements. At December 31, 1994 and 1993, the Company had forward
exchange contracts maturing in the following year to purchase various foreign
currencies in the amount of $289.0 million and $276.9 million,
IV-39
<PAGE> 20
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
respectively, and to sell $766.5 million and $286.0 million, respectively. The
estimated fair value of forward exchange contracts is based on quoted market
prices. At December 31, 1994, the estimated fair value of outstanding contracts
in a gain position was $3.3 million and the estimated fair value of outstanding
contracts in a loss position was ($4.2) million. At December 31, 1993, the
estimated fair value of outstanding contracts in a gain position was $2.7
million and the estimated fair value of outstanding contracts in a loss position
was ($3.3) million. The Company recognizes realized and unrealized gains and
losses on foreign exchange contracts by marking to market all outstanding
forward exchange contracts.
The Company is exposed to credit risk in the event of nonperformance by
counterparties to foreign exchange contracts, but because the Company deals only
with major commercial banks with high quality credit, the Company does not
anticipate nonperformance by any of these counterparties.
NOTE 16. RETIREMENT PLANS
The Company has pension plans (the Plans) covering substantially all of its
employees, the majority of which are noncontributory. In general, employees
become fully vested upon attaining five years of service, and benefits are based
on years of service and earnings. The actuarial cost method currently used is
the projected unit credit cost method. The Company's U.S. funding policy is to
contribute amounts that fall within the range of deductible contributions for
Federal income tax purposes.
The weighted average assumptions used for the Plans are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Discount rate........................................................ 8.9% 7.7% 9.1%
Rate of increase in compensation levels.............................. 5.7% 5.9% 5.3%
Long-term rate of return on assets................................... 10.0% 9.8% 9.7%
</TABLE>
Net pension cost consisted of the following components:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------
1994 1993 1992
------ ------- ------
(IN MILLIONS)
<S> <C> <C> <C>
Service cost of the current period................................. $ 96.1 $ 72.6 $ 67.8
Interest cost on projected benefit obligation...................... 82.3 69.8 62.0
Actual return on assets............................................ (22.3) (121.3) (19.3)
Net amortization and deferral...................................... (37.9) 75.2 (24.1)
------ ------- ------
Net pension cost................................................... $118.2 $ 96.3 $ 86.4
====== ======= ======
</TABLE>
At December 31, 1994 and 1993, the Plans' assets consisted principally of
marketable securities. Accrued and/or prepaid pension cost is included in
Accrued Liabilities and Prepaids and Other in the Company's Consolidated Balance
Sheets.
IV-40
<PAGE> 21
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The following is a reconciliation of the funded status of the Plans (in
millions):
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
-------------------- --------------------
ASSETS ACCUM. ASSETS ACCUM.
EXCEED BENEFITS EXCEED BENEFITS
ACCUM. EXCEED ACCUM. EXCEED
BENEFITS ASSETS BENEFITS ASSETS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Plans' assets at fair value.............................. $ 918.3 $ -- $ 671.0 $ 6.1
======= ======== ======== ========
Actuarial present value of benefit obligation
Vested benefits........................................ $ 485.9 $ 56.1 $ 472.6 $ 50.8
Nonvested benefits..................................... 57.6 11.2 69.1 17.9
------- -------- -------- --------
Accumulated benefit obligation........................... 543.5 67.3 541.7 68.7
Effect of projected future salary increases.............. 326.4 25.5 368.6 44.1
------- -------- -------- --------
Projected benefit obligation (PBO)....................... $ 869.9 $ 92.8 $ 910.3 $ 112.8
======= ======== ======== ========
Excess (deficiency) of Plans' assets over PBO............ $ 48.4 $ (92.8) $ (239.3) $ (106.7)
Unrecognized net (gain) loss............................. (28.3) (35.3) 150.9 (5.8)
Unrecognized net (asset) obligation at date of
adoption............................................... (9.6) 23.4 (6.8) 26.5
Unrecognized prior service cost.......................... 12.8 (1.0) 32.8 0.9
Additional minimum liability............................. -- -- -- (3.7)
------- -------- -------- --------
Net prepaid (accrued) pension cost....................... $ 23.3 $ (105.7) $ (62.4) $ (88.8)
======= ======== ======== ========
</TABLE>
NOTE 17. COMMITMENTS AND RENTAL EXPENSE
Commitments for rental payments under noncancellable operating leases for
each of the next five years ending December 31 and thereafter for computer
equipment, software, and facilities are as follows (in millions):
<TABLE>
<S> <C>
1995................................................... $339.1
1996................................................... 233.5
1997................................................... 175.7
1998................................................... 131.1
1999................................................... 114.7
Thereafter............................................. 720.1
</TABLE>
Total rentals under cancellable and noncancellable leases, principally
computer equipment and software, included in costs and charged to expenses were
$524.3 million, $564.9 million, and $614.6 million for the years ended December
31, 1994, 1993, and 1992, respectively.
NOTE 18. CONTINGENT LIABILITIES
There are various claims and pending actions against the Company arising in
the ordinary course of the conduct of its business. Certain of these actions
seek damages in significant amounts. The amount of liability on these claims and
actions at December 31, 1994 was not determinable, but in the opinion of
management, the ultimate liability, if any, will not have a material adverse
effect on the Company's consolidated operations or financial position.
IV-41
<PAGE> 22
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 19. ACQUISITIONS
The Company made various acquisitions during the years ended December 31,
1994 and 1993, none of which had a material effect on the Company's financial
position or results of operations. In conjunction with those acquisitions,
assets were acquired and liabilities were assumed as follows:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------
1994 1993
------ ------
(IN MILLIONS)
<S> <C> <C>
Fair value of assets acquired.............................. $427.8 $319.8
Less: Cash paid for stock and assets, net of cash
acquired................................................. 186.6 122.1
Debt issued for stocks and assets.......................... 94.9 91.2
------ ------
Liabilities assumed...................................... $146.3 $106.5
====== ======
</TABLE>
NOTE 20. SUPPLEMENTARY FINANCIAL INFORMATION
The following summarizes certain costs charged to expense for the years
indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Depreciation of property and equipment................ $577.5 $465.6 $457.9
====== ====== ======
Amortization.......................................... $163.8 $142.3 $145.3
====== ====== ======
</TABLE>
Supplemental cash flow information is presented below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Cash paid for
Income taxes, net of refunds........................ $465.6 $183.8 $252.6
====== ====== ======
Interest, net of amount capitalized................. $ 49.7 $ 40.2 $ 46.8
====== ====== ======
</TABLE>
IV-42
<PAGE> 23
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONCLUDED
NOTE 21. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Revenues.............................................. $2,239.3 $2,334.0 $2,564.9 $2,914.2
Gross profit from operations.......................... 506.6 584.1 602.1 737.9
Income before income taxes............................ 268.3 308.2 338.1 369.6
Separate Consolidated Net Income...................... 171.7 197.3 216.4 236.5
Available Separate Consolidated Net Income............ $ 92.1 $ 106.5 $ 117.3 $ 128.5
Earnings Attributable to GM Class E Common Stock on a
Per Share Basis..................................... $ 0.36 $ 0.41 $ 0.45 $ 0.49
Stock price range of GM Class E common
High $ 36.88 $ 38.00 $ 38.50 $ 39.50
Low................................................. $ 27.50 $ 32.88 $ 33.00 $ 34.75
YEAR ENDED DECEMBER 31, 1993
Revenues.............................................. $2,073.2 $2,090.5 $2,084.3 $2,313.8
Gross profit from operations.......................... 490.1 501.3 525.0 600.3
Income before income taxes............................ 236.6 278.2 299.4 317.1
Separate Consolidated Net Income...................... 151.4 178.1 191.6 202.9
Available Separate Consolidated Net Income............ $ 74.1 $ 87.7 $ 98.4 $ 107.0
Earnings Attributable to GM Class E Common Stock on a
Per Share Basis..................................... $ 0.32 $ 0.37 $ 0.40 $ 0.42
Stock price range of GM Class E common
High................................................ $ 35.88 $ 33.38 $ 32.50 $ 31.13
Low................................................. $ 27.63 $ 28.25 $ 26.00 $ 26.50
</TABLE>
IV-43
<PAGE> 24
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
AS OF AND FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1994 1993 1992 1991 1990
--------- -------- -------- -------- --------
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues.................................... $10,052.4 $8,561.8 $8,218.9 $7,099.0 $6,108.8
Separate Consolidated Net Income Before
Cumulative Effect of Accounting Change.... 821.9 724.0 635.5 563.0 496.9
Separate Consolidated Net Income After
Cumulative Effect of Accounting Change.... $ 821.9 $ 724.0 $ 635.5 $ 547.5 $ 496.9
Average number of shares of GM Class E
common stock outstanding (in millions).... 260.3 243.0 209.1 195.3 187.1
Class E dividend base (in millions)......... 481.7 480.6 479.3 478.1 478.6
Available Separate Consolidated Net
Income.................................... $ 444.4 $ 367.2 $ 278.4 $ 223.6 $ 194.4
Earnings Attributable to GM Class E Common
Stock on a Per Share Basis Before
Cumulative Effect of Accounting Change.... $ 1.71 $ 1.51 $ 1.33 $ 1.17 $ 1.04
Earnings Attributable to GM Class E Common
Stock on a Per Share Basis After
Cumulative Effect of Accounting Change.... $ 1.71 $ 1.51 $ 1.33 $ 1.14 $ 1.04
Expenditures for property and equipment..... $ 1,120.9 $ 799.4 $ 639.0 $ 673.2 $ 514.8
Cash and marketable securities.............. $ 757.8 $ 607.5 $ 587.9 $ 415.8 $ 715.4
Current assets.............................. $ 3,354.1 $2,506.8 $2,157.0 $1,945.6 $1,716.4
Current liabilities......................... $ 2,873.2 $2,160.4 $1,903.1 $2,396.7 $1,653.9
Total assets................................ $ 8,786.5 $6,942.1 $6,123.5 $5,703.2 $4,565.3
Long-term debt.............................. $ 1,021.0 $ 522.8 $ 561.1 $ 281.9 $ 285.1
</TABLE>
IV-44
<PAGE> 25
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS -- CONCLUDED
EDS had the best year on record in 1994, signing the largest base business
(non-GM) global outsourcing contract in the Company's history, and achieving
more than $10 billion in total revenue. The total value of contracts sold during
the year also surpassed EDS' previous record year, 1993, continuing the trend of
global business expansion.
RESULTS OF OPERATIONS
1994 was the first year in which more than a quarter of total systems
revenue was generated outside of the U.S. The total revenue of $10,052.4 million
represented an increase of 17 percent over 1993's total revenue. The comparable
amounts for 1993 and 1992 were 4 percent and 16 percent, respectively. The base
portion of 1994 revenue grew 24 percent over 1993 to $6,505.2 million, while GM
revenue grew 7 percent over the same period to $3,547.2 million. The growth in
base business compares with 8 percent in 1993 and 30 percent in 1992. GM revenue
was relatively stable in 1993 and 1992.
Total U.S. base systems revenue for 1994 increased 15 percent, or $606.7
million, over 1993 to $4,611.2 million. This compares with U.S. growth of 8
percent in 1993 and 23 percent in 1992. Base systems revenue from outside the
United States was $1,801.7 million, or 28 percent of base systems revenue in
1994, compared with $1,179.1 million, or 23 percent in 1993. The increase in
non-U.S. base revenue of $622.6 million was largely attributable to growth in
European business. European base revenue increased $396.5 million, or 43
percent, in 1994 to $1,308.1 million, compared with $911.6 million in 1993 and
$828.3 million in 1992. This increase was related to business in the United
Kingdom and Germany. Other non-U.S. base revenue was up 85 percent over 1993 to
$493.6 million, compared with $267.5 million in 1993 and $284.8 million in 1992.
This growth was primarily due to business in Japan and New Zealand.
Systems and other contracts revenue for the year ended December 31, 1994
included $3,547.2 million of revenue related to GM contracts, compared with
$3,323.7 million and $3,348.5 million in 1993 and 1992, respectively. It is
anticipated that GM will continue to contribute a significant portion of systems
revenue. However, as base revenue has continued to increase, the percentage of
revenue coming from GM and its subsidiaries continues to decline. In 1994, 35
percent of total revenue came from GM and its subsidiaries; last year, GM
revenue was 39 percent of the total, and in 1992 it was 41 percent. EDS expects
this trend to continue as base revenue grows.
Net interest and other income increased to $40.6 million in 1994, compared
with $20.0 million in 1993 and $20.7 million in 1992. The increase occurred as
EDS realized higher earnings and gains created by a strong market for certain
investments, partially offset by increased costs of debt.
Cost of revenues as a percentage of systems and other contracts revenue was
76 percent in 1994, compared with 75 and 76 percent in 1993 and 1992,
respectively. Selling, general, and administrative expenses remained constant at
12 percent of systems and other contracts revenue in 1994, 1993, and 1992. EDS
achieved strong revenue growth of 17 percent in 1994 and the second highest
pretax margin in recent history, 12.8 percent, surpassed only by the margin of
13.2 percent in 1993, which was coupled with 4 percent revenue growth in that
year. The 1992 pretax figure was 12.2 percent. The effective income tax rate was
36.0 percent in 1994 and 1993, down from 36.5 percent in 1992.
EDS' separate consolidated net income increased 14 percent to $821.9
million for 1994, compared with $724.0 million in 1993 and $635.5 million in
1992. Return on stockholder's equity was 21 percent in 1994, compared with 22
percent in 1993 and 1992. Return on assets remained constant at 11 percent for
1994, 1993, and 1992.
LIQUIDITY AND CAPITAL RESOURCES
EDS' liquidity and capital structure changed during 1994 to reflect the
steady growth in significant customer relationships established in recent years.
Working capital increased to support revenue growth by $134.5 million, or 39
percent over the prior year, to $480.9 million. This compares with a working
capital increase of 36 percent, or $92.5 million, in 1993. The 1994 increase was
primarily in the areas of cash and accounts receivable, offset by increases in
accounts payable and accrued liabilities.
The current ratio remained constant at 1.2-to-1 at December 31, 1994 and
December 31, 1993. The ratio of noncurrent debt-to-capital was 19 percent at
December 31, 1994, indicating EDS meets most of its capital
IV-45
<PAGE> 26
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS -- CONCLUDED
needs internally. The comparable figure for 1993 was 13 percent. The increased
debt in 1994 was primarily due to the financing of non-U.S. acquisitions and the
purchase of assets to support significant long-term contracts. EDS' capital at
December 31, 1994 consists of $1,021.0 million in noncurrent notes payable and
$4,232.5 million in stockholder's equity. Total debt was $1,224.4 million at
December 31, 1994, which consisted entirely of notes payable. This compares to
total debt of $695.5 million at December 31, 1993. The long-term debt in 1993
also consisted entirely of notes payable. At year-end 1994, EDS has unused,
uncommitted short-term lines of credit totaling $494.5 million and unused,
committed lines of credit of $1,800.0 million. The total debt-to-capital ratio
(which includes current debt as a component of capital) was 22 percent at
December 31, 1994, compared with 16 percent at December 31, 1993. (For
additional information on EDS' debt see Note 9, Notes Payable.)
Debt ratings by the various rating agencies reflect each agency's opinion
of the ability of the issuer to repay the debt obligation 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. In November 1992, Moody's
Investors Service, Inc. lowered its rating of senior debt of GM and its
subsidiaries (excluding EDS) and affirmed the rating of commercial paper of EDS
at Prime-1, the highest of three investment grade ratings available from Moody's
for commercial paper. In February 1993, Standard & Poors Corporation lowered the
long-term debt, commercial paper, and preference stock ratings of GM and its
subsidiaries, which include EDS. EDS' ratings were lowered 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. EDS anticipates no
liquidity problems if access to the commercial paper market is reduced as a
result of any lower rating because the commercial paper is 100 percent backed by
long-term bank lines of credit. The impact of any incremental increased interest
cost would have no material effect upon future operations. (For additional
information on EDS' commercial paper see Note 9, Notes Payable.)
EDS continues to maintain a strong cash position. Cash flows from
operations were $1,490.8 million, up $95.8 million from 1993. Net cash used in
investing activities increased $435.9 million to $1,485.6 million in 1994 from
$1,049.7 million in 1993. This was primarily due to purchases of property and
equipment of $1,120.9 million, as well as increased participation in business
combinations and other investments to support business growth. EDS made cash
payments in connection with 1994 acquisitions of $186.6 million, acquiring
assets with a fair value of $427.8 million, issuing debt of $94.9 million, and
assuming liabilities of $146.3 million. EDS made net additions to software and
certain other intangibles of $96.7 million in 1994 and net additions to land
held for development of $3 million. Net cash provided by financing activities
was $194.1 million in 1994, compared with cash used in financing activities of
$370.2 million in 1993. EDS made dividend payments totaling $231.1 million in
1994 and has consistently paid dividends since 1974.
EDS' capital expenditures for calendar year 1995 are projected at
approximately $1.2 billion to $1.5 billion. Future capital expenditures may
consist of purchases of computer and telecommunications equipment, buildings and
facilities, land, and software, as well as acquisitions of outside companies.
EDS will finances these investments through a combination of internally
generated funds and outside sources.
RELATIONSHIP BETWEEN EDS AND GM
The pricing policy between EDS and GM contemplates three alternative
pricing methods. First, GM and EDS operating units use fixed-price contracts
where the scope of the work can be precisely defined. The second alternative
permits GM operating units to use a cost-based incentive method of pricing for
EDS' services. This method of pricing, within specified limits, provides for
equal sharing by the companies of cost savings and overruns. Also under this
method, some EDS units may earn a before-tax markup based, within limits, on
performance. Under the third alternative, commercially available products and
services are provided to GM at uniform, competitive rates. The majority of the
services EDS provides to GM is covered by fixed-price, multiyear agreements.
* * * *
IV-46
<PAGE> 1
EXHIBIT 99(B)
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
RESPONSIBILITIES FOR CONSOLIDATED FINANCIAL STATEMENTS
The following consolidated financial statements of GM Hughes Electronics
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.
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. 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 GM Hughes Electronics 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 its Audit Committee, is responsible for
assuring that management fulfills its responsibilities in the preparation of the
consolidated financial statements and engaging the independent auditors. 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.
/s/ C. Michael Armstrong
- ------------------------------------------------------
C. Michael Armstrong
Chairman of the Board and
Chief Executive Officer
/s/ Charles H. Noski
- ------------------------------------------------------
Charles H. Noski
Senior Vice President and
Chief Financial Officer
IV-47
<PAGE> 2
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT
To the Stockholder and Board of Directors of
GM Hughes Electronics Corporation:
We have audited the Consolidated Balance Sheet of GM Hughes Electronics
Corporation and subsidiaries as of December 31, 1994 and 1993 and the related
Statements of Consolidated Operations and Available Separate Consolidated Net
Income (Loss) and Consolidated Cash Flows for each of the three years in the
period ended December 31, 1994. These financial statements are the
responsibility of GM Hughes Electronics Corporation's management. Our
responsibility is to express an opinion on these financial statements 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 GM Hughes Electronics 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.
As discussed in Note 1 to the financial statements, effective January 1,
1994 GM Hughes Electronics Corporation changed its method of accounting for
postemployment benefits. Also, as discussed in Notes 1 and 5 to the financial
statements, effective January 1, 1992 GM Hughes Electronics Corporation changed
its revenue recognition policy for certain commercial businesses and its method
of accounting for postretirement benefits other than pensions.
/s/ DELOITTE & TOUCHE LLP
- ------------------------------------------------------
DELOITTE & TOUCHE LLP
Los Angeles, California
January 30, 1995
IV-48
<PAGE> 3
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED OPERATIONS AND
AVAILABLE SEPARATE CONSOLIDATED NET INCOME (LOSS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
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
General Motors and affiliates (Note 2).................... 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
Cost of sales and other operating charges, exclusive of
items listed below (Note 2)............................... 10,943.4 10,557.5 9,602.9
Selling, general, and administrative expenses............... 1,018.3 929.1 1,036.2
Depreciation and amortization............................... 470.2 503.5 487.1
Amortization of GM purchase accounting adjustments related
to Hughes (Note 1)........................................ 123.8 123.8 123.8
Interest expense -- net..................................... 15.1 33.2 60.6
Special provision for restructuring (Note 12)............... -- -- 1,237.0
--------- --------- ---------
Total Costs and Expenses.................................... 12,570.8 12,147.1 12,547.6
--------- --------- ---------
Income (Loss) before Income Taxes........................... 1,528.6 1,370.4 (250.5)
Income taxes (credit) (Note 6).............................. 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 (Notes 1 and 5)..... (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 (Note 7).................... 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)
========= ========= =========
Available Separate Consolidated Net Income (Loss) (Note 7)
Average number of shares of General Motors 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 General Motors Class H
Common Stock on a Per Share Basis (Note 7)
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 General Motors
Class H Common Stock................................. $ 2.62 $ 2.30 $ (2.29)
========= ========= =========
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
IV-49
<PAGE> 4
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1994 1993
--------- ---------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNT)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents (Note 1)......................................... $ 1,501.8 $ 1,008.7
Accounts and notes receivable
Trade receivables (less allowances)...................................... 1,039.5 736.7
General Motors and affiliates (Note 2)................................... 153.9 404.1
Contracts in process, less advances and progress payments of $2,311.2 and
$2,739.2................................................................. 2,265.4 2,376.8
Inventories (less allowances) (Note 1)..................................... 1,087.9 1,060.4
Prepaid expenses, including deferred income taxes of $89.0 and $36.7....... 195.1 127.6
--------- ---------
Total Current Assets....................................................... 6,243.6 5,714.3
--------- ---------
Property-Net (Notes 8 and 9)............................................... 2,611.8 2,634.4
--------- ---------
Telecommunications and Other Equipment, net of accumulated depreciation
of $198.0 and $150.2..................................................... 1,071.7 767.6
--------- ---------
Intangible Assets, net of amortization of $1,276.7 and $1,144.6 (Note 1)... 3,271.3 3,374.4
--------- ---------
Investments and Other Assets, including deferred income taxes of $214.0 and
$203.7 -- principally at cost (less allowances).......................... 1,652.1 1,626.4
--------- ---------
Total Assets........................................................... $14,850.5 $14,117.1
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable
Outside.................................................................. $ 779.9 $ 717.1
General Motors and affiliates (Note 2)................................... 80.5 117.5
Advances on contracts...................................................... 645.1 660.6
Notes and loans payable (Note 9)........................................... 125.7 77.8
Income taxes payable (Note 6).............................................. 31.4 102.1
Accrued liabilities (Note 10).............................................. 1,885.5 1,874.0
--------- ---------
Total Current Liabilities.............................................. 3,548.1 3,549.1
--------- ---------
Long-Term Debt and Capitalized Leases (Note 9)............................. 353.5 416.8
--------- ---------
Postretirement Benefits Other Than Pensions (Note 5)....................... 1,541.4 1,446.3
--------- ---------
Other Liabilities, Deferred Income Taxes, and Deferred Credits............. 1,431.7 1,376.8
--------- ---------
Stockholder's Equity (Note 11)
Capital stock (outstanding, 1,000 shares, $0.10 par value) and additional
paid-in capital.......................................................... 6,326.5 6,323.1
Net income retained for use in the business.............................. 1,743.6 1,138.2
--------- ---------
Subtotal............................................................... 8,070.1 7,461.3
Minimum pension liability adjustment..................................... (76.1) (120.4)
Accumulated foreign currency translation adjustments..................... (18.2) (12.8)
--------- ---------
Total Stockholder's Equity............................................... 7,975.8 7,328.1
--------- ---------
Total Liabilities and Stockholder's Equity................................. $14,850.5 $14,117.1
========= =========
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
IV-50
<PAGE> 5
GM HUGHES ELECTRONICS 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...................... $ 955.8 $ 797.8 $ (173.3)
Adjustments to reconcile income (loss) before cumulative effect
of accounting changes to net cash provided by operating
activities
Depreciation and amortization............................. 470.2 503.5 487.1
Amortization of GM purchase accounting adjustments related
to Hughes............................................... 123.8 123.8 123.8
Special provision for restructuring....................... -- -- 1,237.0
Pension expense (credit), net of cash contributions....... 20.3 (25.6) (137.7)
Provision for postretirement benefits other than pensions,
net of cash payments.................................... 78.4 91.0 78.7
Net (gain) loss on sale of property....................... 14.3 36.1 (18.0)
Net gain on sale of investments and businesses............ (3.6) (50.3) --
Change in deferred income taxes and other*................ (60.1) 207.1 (350.2)
Change in other operating assets and liabilities
Accounts receivable..................................... (238.1) (153.7) 161.9
Contracts in process*................................... 111.4 70.9 46.6
Inventories*............................................ (27.5) 104.6 26.8
Prepaid expenses........................................ (15.2) 3.4 (10.0)
Accounts payable........................................ 25.8 81.5 63.2
Income taxes*........................................... (70.7) 30.1 (54.5)
Accrued and other liabilities*.......................... (28.2) (143.5) (49.2)
Other*.................................................. 20.2 (183.2) (232.8)
-------- -------- --------
Net Cash Provided by Operating Activities...................... 1,376.8 1,493.5 1,199.4
-------- -------- --------
Cash Flows from Investing Activities
Investment in companies, net of cash acquired................ (7.0) (149.3) (69.9)
Expenditures for property and special tools.................. (490.5) (448.9) (456.9)
Increase in telecommunications and other equipment........... (351.9) (230.3) (71.6)
Proceeds from disposal of property........................... 90.6 115.0 108.4
Proceeds from sale of investments and businesses............. 3.6 281.6 --
Proceeds from sale and leaseback of satellite transponders... -- -- 314.8
Decrease (increase) in notes receivable...................... 206.9 7.6 (45.2)
-------- -------- --------
Net Cash Used in Investing Activities.......................... (548.3) (424.3) (220.4)
-------- -------- --------
Cash Flows from Financing Activities
Net decrease in notes and loans payable........................ (2.1) (189.4) (525.8)
Increase in long-term debt................................... 7.5 84.0 236.0
Decrease in long-term debt................................... (20.8) (369.8) (46.8)
Cash dividends paid to General Motors........................ (320.0) (288.0) (288.0)
-------- -------- --------
Net Cash Used in Financing Activities.......................... (335.4) (763.2) (624.6)
-------- -------- --------
Net increase in cash and cash equivalents...................... 493.1 306.0 354.4
Cash and cash equivalents at beginning of the year............. 1,008.7 702.7 348.3
-------- -------- --------
Cash and cash equivalents at end of the year................... $1,501.8 $1,008.7 $ 702.7
======== ======== ========
</TABLE>
- -------------------------
* 1994 and 1992 amounts exclude the effects of accounting changes.
Reference should be made to the Notes to Consolidated Financial Statements.
IV-51
<PAGE> 6
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND CONSOLIDATION
The consolidated financial statements include the accounts of GM Hughes
Electronics Corporation (GMHE) and its domestic and foreign subsidiaries that
are more than 50% owned, principally Hughes Aircraft Company (Hughes) and Delco
Electronics Corporation (Delco Electronics). Investments in associated companies
in which at least 20% of the voting securities is owned are accounted for under
the equity method of accounting.
Effective December 31, 1985, General Motors Corporation (General Motors or
GM) acquired Hughes and its subsidiaries for $2.7 billion in cash and cash
equivalents and 100 million shares of GM Class H common stock having an
estimated value of $2,561.9 million, which carried certain guarantees.
On February 28, 1989, GM and the Howard Hughes Medical Institute
(Institute) reached an agreement to terminate GM's then-existing guarantee
obligations with respect to the Institute's holding of GM Class H common stock.
Under terms of the agreement as amended, the Institute received put options
exercisable under most circumstances at $30 per share on March 1, 1991, 1992,
1993, and 1995 for 20 million, 10 million, 10.5 million, and 15 million shares,
respectively. The Institute exercised these put options at $30 per share on
March 1, 1991, March 2, 1992, and March 1, 1993. GM has the option to call the
Institute's remaining 15 million shares until February 28, 1995, at a call price
of $37.50 per share.
The acquisition of Hughes was accounted for as a purchase. The purchase
price exceeded the net book value of Hughes by $4,244.7 million, which was
assigned as follows: $500.0 million to patents and related technology, $125.0
million to the future economic benefits to GM of the Hughes Long-Term Incentive
Plan (LTIP), and $3,619.7 million to other intangible assets, including
goodwill. The amounts assigned to patents and related technology are being
amortized on a straight-line basis over 15 years and other intangible assets,
including goodwill, over 40 years. The amount assigned to the future economic
benefits of the Hughes LTIP was fully amortized in 1990.
For the purpose of determining earnings per share and amounts available for
dividends on the common stocks of General Motors, the amortization of these
intangible assets is charged against earnings attributable to GM $1 2/3 par
value common stock.
The earnings of GMHE and its subsidiaries since the acquisition of Hughes
form the base from which any dividends on the GM Class H common stock are
declared. These earnings include income earned from sales to GM and its
affiliates, but exclude purchase accounting adjustments (see Notes 2 and 7).
REVENUE RECOGNITION
Outside sales are attributable principally to long-term contracts,
primarily recorded using the percentage-of-completion (cost-to-cost) method of
accounting. Under this method, sales are recorded equivalent to costs incurred
plus a portion of the profit expected to be realized, determined based on the
ratio of costs incurred to estimated total costs at completion.
Profits expected to be realized on contracts are based on 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.
Certain contracts contain cost or performance incentives which provide for
increases in profits for surpassing stated objectives and decreases in profits
for failure to achieve such objectives. Amounts associated with incentives are
included in estimates of total sales values when there is sufficient information
to relate actual performance to the objectives.
IV-52
<PAGE> 7
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Effective January 1, 1992, Hughes changed its revenue recognition policy
for certain commercial long-term contracts from the percentage-of-completion
(cost-to-cost) method to the units-of-delivery method. GMHE believes this method
more appropriately aligns the accounting methods of Hughes' commercial
businesses with other commercial enterprises. The unfavorable effect of this
change was $40.0 million after-tax ($0.10 per share of GM Class H common stock).
Sales under United States Government contracts were 37.6%, 44.2%, and 46.1%
of total sales in 1994, 1993, and 1992, respectively.
CASH FLOWS
For purposes of preparing the statement of consolidated cash flows, all
highly liquid investments purchased with original maturities of 90 days or less
are considered to be cash equivalents.
Net cash provided by operating activities reflects cash payments for
interest and income taxes as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Interest.............................................. $ 40.7 $ 72.5 $ 75.2
------ ------ ------
Income taxes.......................................... $686.2 $245.0 $333.0
------ ------ ------
</TABLE>
With respect to material noncash transactions, as described more fully in
Note 13, in 1992 GMHE purchased 21,508,563 shares of GM Class H common stock in
exchange for $425.0 million of notes payable to GM and cash of $25.0 million in
connection with the acquisition of General Dynamics' missile business.
ACCOUNTS RECEIVABLE AND CONTRACTS IN PROCESS
Trade receivables are principally related to long-term contracts and
programs. Amounts billed under retainage provisions of contracts are not
significant, and substantially all amounts are collectible within one year.
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. Contracts in process include amounts relating
to contracts with long production cycles, and $371.7 million of the 1994 amount
is expected to be billed after one year. Contracts in process in 1994 also
include approximately $96.2 million relating to claims, requests for equitable
adjustments, and amounts withheld pending negotiation or settlement with
customers. 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.
INVENTORIES
Inventories are stated at the lower of cost or market principally using the
first-in, first-out (FIFO) or average cost methods.
<TABLE>
<CAPTION>
MAJOR CLASSES OF INVENTORIES 1994 1993
---------------------------------------------------------- -------- --------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Productive material, work in process, and supplies........ $ 968.0 $ 957.1
Finished product.......................................... 119.9 103.3
-------- --------
Total................................................ $1,087.9 $1,060.4
======== ========
</TABLE>
IV-53
<PAGE> 8
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
PROPERTY AND DEPRECIATION
Property is carried at cost. Depreciation of property is provided for based
on estimated useful lives (3 to 45 years) generally using accelerated methods.
TELECOMMUNICATIONS AND OTHER EQUIPMENT
Telecommunications and other equipment includes satellite transponders and
other equipment subject to operating leases or service agreements. Such
equipment is carried at GMHE's direct and indirect manufacturing cost and is
amortized over the estimated useful lives (7 to 23 years) using the
straight-line method. The net book value of equipment subject to operating
leases was $572.9 million and $523.8 million at December 31, 1994 and 1993,
respectively.
INTANGIBLE ASSETS
Intangible assets, principally the excess of cost over the fair value of
identifiable net assets of purchased businesses, are being amortized using the
straight-line method over periods not exceeding 40 years.
INCOME TAXES
The provision (credit) for income taxes is based on reported income (loss)
before income taxes. Deferred income tax assets and liabilities reflect the
impact of temporary differences between the amounts of assets and liabilities
recognized for financial reporting purposes and such amounts recognized for tax
purposes, as measured by applying currently enacted tax laws. Provision has been
made for U.S. Federal income taxes to be paid on that portion of the
undistributed earnings of foreign subsidiaries that has not been deemed
permanently reinvested.
GMHE and its domestic subsidiaries join with General Motors in filing a
consolidated U.S. Federal income tax return. The portion of the consolidated
income tax liability recorded by GMHE is generally equivalent to the liability
it would have incurred on a separate return basis.
RESEARCH AND DEVELOPMENT
Expenditures for research and development are charged to costs and expenses
as incurred and amounted to $699.3 million in 1994, $612.1 million in 1993, and
$680.5 million in 1992.
FINANCIAL INSTRUMENTS
GMHE enters into foreign exchange-forward contracts and interest rate swap
agreements in connection with 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. The cash flows from
interest rate swaps are accounted for as interest expense, and gains and losses
from terminated contracts are deferred and amortized over the remaining life of
the underlying debt. Open swap positions are reviewed regularly to ensure that
they remain effective.
FOREIGN CURRENCY TRANSACTIONS
Foreign currency transaction net gains (losses) included in consolidated
operating results amounted to ($4.2) million in 1994, $2.4 million in 1993, and
$11.7 million in 1992.
IV-54
<PAGE> 9
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
POSTEMPLOYMENT BENEFITS
Effective January 1, 1994, GMHE adopted SFAS No. 112, Employers' Accounting
for Postemployment Benefits. The Statement requires accrual of the costs of
benefits provided to former or inactive employees after employment, but before
retirement. The unfavorable cumulative effect of adopting this Standard was
$30.4 million, net of income taxes of $19.2 million, or $0.08 per share of GM
Class H common stock. The charge is primarily related to extended-disability
benefits which, under the new accounting Standard, are accrued on a
service-driven basis.
NOTE 2. RELATED-PARTY TRANSACTIONS
SALES, PURCHASES, AND ADMINISTRATIVE EXPENSES
The amounts due from and to GM and affiliates result from sales of products
to and purchases of materials and services from units controlled by GM.
Purchases from GM and affiliates, including computer systems services provided
by Electronic Data Systems Corporation and common administrative expenses
allocated by GM, amounted to approximately $257.1 million, $285.9 million, and
$447.0 million in 1994, 1993, and 1992, respectively.
INCENTIVE PLANS
Certain eligible employees of GMHE participate in various incentive plans
of GM and its subsidiaries.
OTHER
Delco Electronics employees participate in GM's pension and other
postretirement benefit programs.
NOTE 3. INCENTIVE PLAN
Under the GMHE Incentive Plan (the Plan) as approved by the GM Board of
Directors in 1987 and 1992, shares, rights, or options to acquire up to 20
million shares of GM Class H common stock may be granted through May 31, 1997
(extended an additional two years in 1995).
The GM Executive Compensation Committee may grant options and other rights
to acquire shares of GM Class H common stock under the provisions of the Plan.
The option price is equal to 100% of the fair market value of GM Class H common
stock on the date the options were granted. These nonqualified options generally
expire 10 years from the dates of grant and are subject to earlier termination
under certain conditions.
Changes in the status of outstanding options were as follows:
<TABLE>
<CAPTION>
OPTION SHARES UNDER
GM CLASS H COMMON STOCK PRICES OPTION
- ------------------------------------------------------------------ ------------- ------------
<S> <C> <C>
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
==========
</TABLE>
IV-55
<PAGE> 10
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Options for 4,739,664 shares of GM Class H common stock were exercisable at
December 31, 1994, and the maximum number of shares for which additional options
and other rights may be granted under the Plan was 5,472,562 shares.
NOTE 4. PENSION PROGRAMS
GMHE's total pension expense (credit) amounted to $54.9 million in 1994,
($8.1) million in 1993, and ($54.0) million in 1992.
Substantially all of the employees of Delco Electronics participate in the
defined benefit pension plans of General Motors. Plans covering 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 salaried employees are generally based on years of service
and the employee's salary history. Certain nonqualified pension plans covering
executives are based on targeted wage replacement percentages and are unfunded.
The accumulated plan benefit obligation and plan net assets for the employees of
Delco Electronics are not determinable separately; however, GM charged Delco
Electronics $93.3 million, $69.8 million, and $30.6 million for benefits
provided to these employees in 1994, 1993, and 1992, respectively.
Hughes maintains contributory and non-contributory defined benefit
retirement plans covering substantially all of its employees. Benefits are based
on years of service and compensation earned during a specified period of time
before retirement. Hughes also has an unfunded, nonqualified pension plan
covering certain executives. The net pension credit of Hughes included the
components as shown below.
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Benefits earned during the year.................................. $ 146.7 $ 121.1 $ 99.9
Interest accrued on benefits earned in prior years............... 377.0 369.1 357.9
Actual return on assets.......................................... (104.7) (953.7) (647.5)
Net amortization and deferral.................................... (457.4) 385.6 105.1
------- ------- -------
Net retirement plan credit..................................... $ (38.4) $ (77.9) $ (84.6)
======= ======= =======
</TABLE>
Costs are actuarially determined using the projected unit credit method and
are funded in accordance with U.S. Government cost accounting standards to the
extent such costs are tax-deductible. SFAS No. 87, Employers' Accounting for
Pensions, requires the recognition of an additional liability to increase the
amounts recorded up to the unfunded accumulated benefit obligation. The
adjustment required to recognize the minimum liability required by SFAS No. 87
is recorded as an intangible asset to the extent of unrecognized prior service
cost and the remainder, net of applicable deferred income taxes, is recorded as
a reduction of Stockholder's Equity. At December 31, 1994 and 1993, the
additional minimum liability recorded was $152.4 million and $208.1 million,
respectively, of which $76.1 million and $120.4 million, respectively, was
recorded as a reduction of Stockholder's Equity.
Plan assets are invested primarily in listed common stock, cash and
short-term investment funds, U.S. Government securities, and other investments.
The weighted average discount rates used in determining the actuarial
present values of the projected benefit obligation shown in the table below were
8.75% and 7.5% at December 31, 1994 and 1993, respectively. The rate of increase
in future compensation levels was 5.0% in 1994 and 1993. The expected long-term
rate of return on assets used in determining pension cost was 9.75% for 1994 and
10.5% for 1993.
IV-56
<PAGE> 11
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The following table sets forth the funded status of the Hughes plans and
the amounts included in the 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
-------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Actuarial present value of benefits based on service to
date and present pay levels
Vested............................................... $3,572.5 $ 195.9 $3,936.3 $ 246.4
Nonvested............................................ 337.9 0.9 313.6 3.9
-------- -------- -------- --------
Accumulated benefit obligation......................... 3,910.4 196.8 4,249.9 250.3
Additional amounts related to projected pay
increases............................................ 438.1 22.4 431.5 8.5
-------- -------- -------- --------
Total projected benefit obligation based on service to
date................................................. 4,348.5 219.2 4,681.4 258.8
Plan assets at fair value.............................. 5,717.4 -- 6,001.4 --
-------- -------- -------- --------
Plan assets in excess of (less than) projected
benefit obligation................................... 1,368.9 (219.2) 1,320.0 (258.8)
Unamortized net amount resulting from changes in plan
experience and actuarial assumptions................. (152.4) 150.2 (135.8) 209.2
Unamortized net asset at date of adoption.............. (217.3) -- (280.0) --
Unamortized net amount resulting from changes in plan
provisions........................................... (14.2) 24.6 4.5 7.4
Adjustment for unfunded pension liabilities............ -- (152.4) -- (208.1)
-------- -------- -------- --------
Net prepaid pension cost (accrued liability)........... $ 985.0 $ (196.8) $ 908.7 $ (250.3)
======== ======== ======== ========
</TABLE>
NOTE 5. OTHER POSTRETIREMENT BENEFITS
Effective January 1, 1992, GMHE 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 GMHE. GMHE's previous practice was to
recognize the cost of such postretirement benefits when incurred
(pay-as-you-go). The cumulative effect of this accounting change as of January
1, 1992 was $1,366.6 million, or $832.1 million after-tax ($2.08 per share of GM
Class H common stock). The incremental ongoing effect increased costs and
expenses by $96.8 million, $91.0 million, and $78.7 million in 1994, 1993, and
1992, respectively.
GMHE has disclosed in the financial statements certain amounts associated
with estimated future postretirement benefits other than pensions and
characterized such amounts as "accumulated postretirement benefit obligations,"
"liabilities," or "obligations." Notwithstanding the recording of such amounts
and the use of these terms, GMHE does not admit or otherwise acknowledge that
such amounts or existing postretirement benefit plans of GMHE (other than
pensions) represent legally enforceable liabilities of GMHE.
Substantially all of the employees of Delco Electronics participate in
various postretirement medical, dental, vision, and life insurance plans of
General Motors. Hughes maintains a program for eligible retirees to participate
in health care and life insurance benefits generally until they reach age 65.
Qualified employees who elected to participate in the Hughes' contributory
defined benefit pension plans may become eligible for these benefits if they
retire from Hughes between the ages of 55 and 65.
IV-57
<PAGE> 12
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The total non-pension postretirement benefit cost of GMHE and its
subsidiaries, excluding the cumulative effect of adopting SFAS No. 106 in 1992,
included the components set forth as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Benefits earned during the year..................................... $ 50.1 $ 49.2 $ 42.9
Interest accrued on benefits earned in prior years.................. 130.3 127.2 116.8
Net amortization.................................................... 7.6 -- --
------ ------ ------
Total non-pension postretirement benefit cost..................... $188.0 $176.4 $159.7
====== ====== ======
</TABLE>
The following table displays the components of GMHE's obligation recognized
for postretirement benefit plans included in the Consolidated Balance Sheet at
December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
-------- --------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Accumulated postretirement benefit obligation attributable to
Current retirees....................................................... $ 816.6 $ 906.8
Fully eligible active plan participants................................ 191.9 193.1
Other active plan participants......................................... 576.6 844.9
-------- --------
Accumulated postretirement benefit obligation............................ 1,585.1 1,944.8
Unrecognized net amount resulting from changes in plan experience and
actuarial assumptions.................................................. 44.7 (392.7)
-------- --------
Net postretirement benefit obligation.................................... 1,629.8 1,552.1
Less current portion..................................................... 88.4 105.8
-------- --------
Net long-term postretirement benefit obligation.......................... $1,541.4 $1,446.3
======== ========
</TABLE>
The assumed weighted average discount rates used in determining the
actuarial present value of the accumulated postretirement benefit obligation
were 8.57% and 6.99% at December 31, 1994 and 1993, respectively. The assumed
weighted average rate of increase in future compensation levels related to pay-
related life insurance benefits was 4.6% at December 31, 1994 and 5.3% at
December 31, 1993.
The assumed weighted average health care cost trend rate was 7.39% in 1994,
increasing to 9.70% in 1995 and decreasing linearly each successive year until
it reaches 5.68% in 2006, after which it remains constant. A one percentage
point increase in each year of this annual trend rate would increase the
accumulated postretirement benefit obligation at December 31, 1994 by
approximately $165 million, and increase the service and interest cost
components of the 1994 postretirement benefit expense by approximately $21
million.
IV-58
<PAGE> 13
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 6. INCOME TAXES
The income tax provision (credit) consists of the following:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Taxes currently payable
U.S. Federal................................................... $532.2 $222.0 $ 319.7
Foreign........................................................ 10.3 10.7 4.2
U.S. State and local........................................... 100.5 94.3 39.8
------ ------ -------
Total..................................................... 643.0 327.0 363.7
------ ------ -------
Deferred tax (assets) liabilities -- net
U.S. Federal................................................... (62.2) 229.7 (368.0)
Foreign........................................................ 1.3 -- 0.1
U.S. State and local........................................... (9.3) 15.9 (73.0)
------ ------ -------
Total..................................................... (70.2) 245.6 (440.9)
------ ------ -------
Total income tax provision (credit).................... $572.8* $572.6 $ (77.2)*
====== ====== =======
</TABLE>
- -------------------------
* Excluding effect of accounting changes.
The deferred income tax benefit in 1994 includes a $63.0 million credit
that resulted from an adjustment to the beginning of the year valuation
allowance because of a change in circumstances with respect to GMHE's ability to
realize the benefit from a capital loss carryforward.
Income (Loss) before income taxes includes the following components:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
U.S. income (loss).............................................. $1,448.1 $1,286.7 $(225.1)
Foreign income (loss)........................................... 80.5 83.7 (25.4)
-------- -------- -------
Total......................................................... $1,528.6 $1,370.4 $(250.5)
======== ======== =======
</TABLE>
The consolidated income tax expense (credit) was different than the amount
computed using the U.S. statutory income tax rate for the reasons set forth in
the following table:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Expected tax (credit) at U.S. statutory income tax rate............. $535.0 $479.5 $(85.2)
U.S. state and local income taxes................................... 59.3 70.1 (19.8)
Purchase accounting adjustments..................................... 43.3 43.3 42.1
Foreign tax rate differential....................................... (17.7) (6.9) (13.1)
Change in valuation allowance....................................... (63.0) -- --
Deferred tax impact of U.S. Federal income tax rate change.......... -- (10.0) --
Other............................................................... 15.9 (3.4) (1.2)
------ ------ ------
Consolidated income tax expense (credit).......................... $572.8* $572.6 $(77.2)*
====== ====== ======
</TABLE>
- -------------------------
* Excluding effect of accounting changes.
Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities at December 31, 1994 and 1993 are as follows:
IV-59
<PAGE> 14
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
1994 1993
----------------------- -----------------------
DEFERRED DEFERRED DEFERRED DEFERRED
TAX TAX TAX TAX
ASSETS LIABILITIES ASSETS LIABILITIES
-------- ----------- -------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Postretirement benefits other than pensions........... $ 695.3 $ -- $ 663.7 $ --
Profits on long-term contracts........................ 259.3 417.3 229.3 437.0
Leveraged leases...................................... 86.7 -- 99.9 --
Employee benefit programs............................. 121.4 372.9 104.0 353.0
Depreciation.......................................... -- 399.4 -- 403.0
Special provision for restructuring................... 151.8 -- 255.0 --
Other................................................. 408.0 215.6 445.5 287.6
-------- ---------- -------- ----------
Subtotal............................................ 1,722.5 1,405.2 1,797.4 1,480.6
Valuation allowance................................... (16.1) -- (76.4) --
-------- ---------- -------- ----------
Total deferred taxes.................................. $1,706.4 $ 1,405.2 $1,721.0 $ 1,480.6
======== ========== ======== ==========
</TABLE>
Provision has been made for U.S. Federal income taxes to be paid on that
portion of the undistributed earnings of foreign subsidiaries that has not been
deemed permanently reinvested. At December 31, 1994 and 1993, undistributed
earnings of foreign subsidiaries amounted to approximately $311.4 million and
$446.3 million, respectively. Repatriation of all accumulated foreign earnings
would have resulted in tax liabilities of $90.3 million and $113.8 million,
respectively, for which GMHE has provided deferred tax liabilities of $66.2
million and $75.0 million, respectively.
At December 31, 1994, GMHE had $36.5 million of foreign operating loss
carryforwards which expire in varying amounts between 1995 and 1999. A valuation
allowance has been provided for all of the foreign operating loss carryforwards.
NOTE 7. EARNINGS (LOSS) ATTRIBUTABLE TO GENERAL MOTORS CLASS H COMMON STOCK ON A
PER SHARE BASIS AND AVAILABLE SEPARATE CONSOLIDATED NET INCOME (LOSS)
Earnings (Loss) attributable to General Motors Class H common stock on a
per share basis have been determined based on the relative amounts available for
the payment of dividends to holders of the GM Class H common stock. Holders of
GM Class H common stock have no direct rights in the equity or assets of GMHE,
but rather have rights in the equity and assets of GM (which includes 100% of
the stock of GMHE).
Dividends on the GM Class H common stock are declared by GM's Board of
Directors out of the Available Separate Consolidated Net Income (Loss) of GMHE
earned since the acquisition of Hughes by GM. The Available Separate
Consolidated Net Income (Loss) of GMHE is determined quarterly and is equal to
the separate consolidated net income (loss) of GMHE, excluding the effects of GM
purchase accounting adjustments arising from the acquisition of Hughes (Earnings
(Loss) Used for Computation of Available Separate Consolidated Net Income
(Loss)), multiplied by a fraction, the numerator of which is a number equal to
the weighted average number of shares of GM Class H common stock outstanding
during the period and the denominator of which was 399.9 million during the
fourth quarters of 1994, 1993, and 1992.
The denominator used in determining the Available Separate Consolidated Net
Income (Loss) of GMHE is adjusted as deemed appropriate by the GM Board of
Directors to reflect subdivisions or combinations of the GM Class H common stock
and to reflect certain transfers of capital to or from GMHE. The Board's
discretion to make such adjustments is limited by criteria set forth in GM's
Certificate of Incorporation. In this regard, the GM Board has generally caused
the denominator to decrease as shares are purchased by GMHE, and to increase as
such shares are used, at GMHE expense, for GMHE employee benefit plans or
acquisitions.
IV-60
<PAGE> 15
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
Dividends may be paid on GM Class H common stock only when, as, and if
declared by the GM Board of Directors in its sole discretion. The current policy
of the GM Board with respect to GM Class H common stock is to pay cash dividends
approximately equal to 35% of the Available Separate Consolidated Net Income of
GMHE for the prior year. Notwithstanding the current dividend policy, the
dividends paid on the GM Class H Common Stock during 1994, 1993, and 1992
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).
Consistent with Delaware law, which governs the amount legally available
for the payment of dividends on GM's common stock, the GM Board of Directors has
determined that such amount is materially higher than GM's capital surplus plus
net income retained for use in the business (less accumulated deficit).
NOTE 8. PROPERTY -- NET
<TABLE>
<CAPTION>
1994 1993
-------- --------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Land and improvements.................................................... $ 196.5 $ 208.4
Buildings and unamortized leasehold improvements......................... 1,291.2 1,277.9
Machinery and equipment.................................................. 2,623.8 2,902.5
Furniture, fixtures, and office machines................................. 81.9 102.3
Construction in progress................................................. 448.9 310.6
-------- --------
Total............................................................. 4,642.3 4,801.7
Less accumulated depreciation............................................ 2,047.5 2,200.7
-------- --------
Net real estate, plants, and equipment................................... 2,594.8 2,601.0
Special tools -- less amortization....................................... 17.0 33.4
-------- --------
Property -- net................................................... $2,611.8 $2,634.4
======== ========
</TABLE>
NOTE 9. NOTES AND LOANS PAYABLE AND LONG-TERM DEBT AND CAPITALIZED LEASES
<TABLE>
<CAPTION>
1994 1993
------ ------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Loans payable to banks.................................................. $ 17.6 $ 8.6
Current portion of long-term debt....................................... 55.4 5.7
Other................................................................... 52.7 63.5
------ ------
Total notes and loans payable.................................... $125.7 $ 77.8
====== ======
Foreign bank debt....................................................... $ 59.8 $ 72.2
Term loans
GM.................................................................... 143.8 143.8
Other................................................................. 200.0 200.0
Other debt.............................................................. 3.9 4.8
------ ------
Total............................................................ 407.5 420.8
Less current portion.................................................... 55.4 5.7
------ ------
Long-term debt.......................................................... 352.1 415.1
Capitalized leases...................................................... 1.4 1.7
------ ------
Total long-term debt and capitalized leases...................... $353.5 $416.8
====== ======
</TABLE>
At December 31, 1994, GMHE had unused credit available of $450.0 million
and $650.0 million under short-term lines of credit and an unsecured revolving
credit loan agreement, respectively.
IV-61
<PAGE> 16
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
The unsecured revolving credit loan agreement provides for a commitment of
$250.0 million through January 1995, subject to a facility fee of 0.09% per
annum, and a commitment of $400.0 million through January 1998, subject to a
facility fee of 0.125% per annum. Borrowings under the agreement bear interest
at a rate which approximates the London Interbank Offered Rate plus 0.25%. No
amounts were outstanding under the agreement at December 31, 1994.
At December 31, 1994, foreign bank debt includes $59.8 million denominated
in British pounds sterling, bearing interest at rates ranging from 3.5% to
10.3%, with maturity dates from 1995 to 2005.
The GM term loans bear interest at rates ranging from 5.7% to 6.1% with
maturity dates in 1996 and 1997. The other term loans consist of notes payable
to an insurance company bearing interest at rates ranging from 7.1% to 8.0%,
with maturity dates in 1995 and 1997.
Annual maturities of long-term debt and capitalized leases are $55.9
million in 1995, $92.0 million in 1996, $213.7 million in 1997, $4.2 million in
1998, $4.5 million in 1999, and $38.6 million thereafter.
Property with a net book value of $38.3 million at December 31, 1994 is
pledged as collateral under such debt.
NOTE 10. ACCRUED LIABILITIES
<TABLE>
<CAPTION>
1994 1993
-------- --------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Payrolls and other compensation.......................................... $ 540.2 $ 504.4
Provision for losses on contracts........................................ 277.0 204.2
Accrual for restructuring................................................ 143.3 222.8
Other.................................................................... 925.0 942.6
-------- --------
Total............................................................. $1,885.5 $1,874.0
======== ========
</TABLE>
NOTE 11. STOCKHOLDER'S EQUITY
The authorized capital stock of GMHE consists of 1,000 shares of $0.10 par
value common stock. At December 31, 1994 and 1993, 1,000 shares having an
aggregate par value of $100 were issued and outstanding. All of the outstanding
capital stock of GMHE is held by General Motors.
IV-62
<PAGE> 17
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Capital stock and additional paid-in capital
Balance at beginning of the year............................. $6,323.1 $6,314.7 $6,365.9
Tax benefit from exercise of GM Class H common stock
options................................................... 3.4 8.4 --
GM Class H common stock price guarantee in connection with
the acquisition of General Dynamics' missile business..... -- -- (51.2)
-------- -------- --------
Balance at end of the year.............................. $6,326.5 $6,323.1 $6,314.7
======== ======== ========
Net income retained for use in the business
Balance at beginning of the year............................. $1,138.2 $ 628.4 $1,961.8
Net income (loss)............................................ 925.4 797.8 (1,045.4)
Cash dividends paid to General Motors........................ (320.0) (288.0) (288.0)
-------- -------- --------
Balance at end of the year.............................. $1,743.6 $1,138.2 $ 628.4
======== ======== ========
Minimum pension liability adjustment
Balance at beginning of the year............................. $ (120.4) $ (104.3) $ (101.8)
Change during the year....................................... 44.3 (16.1) (2.5)
-------- -------- --------
Balance at end of the year.............................. $ (76.1) $ (120.4) $ (104.3)
======== ======== ========
Accumulated foreign currency translation adjustments
Balance at beginning of the year............................. $ (12.8) $ (23.8) $ (7.7)
Change during the year....................................... (5.4) 11.0 (16.1)
-------- -------- --------
Balance at end of the year.............................. $ (18.2) $ (12.8) $ (23.8)
======== ======== ========
</TABLE>
As the sole stockholder of GMHE, GM is able to cause GMHE to pay cash
dividends and make advances to or otherwise enter into transactions with GM as
GM deems desirable and appropriate. GM reserves the right to cause GMHE to pay
cash dividends to GM in such amounts as GM determines are desirable under the
then prevailing facts and circumstances. Such amounts may be the same as,
greater than, or less than the cash dividends paid by GM on its Class H common
stock. There is no fixed relationship, on a per share or aggregate basis,
between the cash dividends that may be paid by GM to holders of its Class H
common stock and the cash dividends or other amounts that may be paid by GMHE to
GM.
NOTE 12. SPECIAL PROVISION FOR RESTRUCTURING
The 1992 operating results include a special restructuring charge of
$1,237.0 million ($749.4 million after-tax, or $1.87 per share of GM Class H
common stock) primarily attributable to redundant facilities and related
employment costs at Hughes. The special charge comprehended a reduction of
Hughes' worldwide employment, a major facilities consolidation, and a
re-evaluation of certain business lines that no longer met Hughes' strategic
objectives. Restructuring costs of $228.3 million, $527.6 million, and $250.9
million were charged against the reserve during 1994, 1993, and 1992,
respectively. In addition, in 1994 and 1993 the restructuring reserve was
increased by $35.0 million and $78.0 million, respectively, primarily due to
changes in estimated loss on disposition of two subsidiaries. The remaining
liability of $343.2 million relates primarily to reserves for excess leased
facilities and other site consolidation costs. Approximately $288.2 million of
this total will require future cash outflows. It is expected that these costs
will be expended predominantly over the next three years.
IV-63
<PAGE> 18
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
NOTE 13. ACQUISITIONS
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 is expected to close during the
first quarter of 1995.
In August 1992, GMHE acquired the missile business of General Dynamics
Corporation (GD) in exchange for 21,508,563 shares of GM Class H common stock
and cash with an aggregate value of $450.0 million. GMHE had purchased the GM
Class H shares from GM in August 1992 principally in exchange for a series of
notes. The acquisition was accounted for as a purchase, and accordingly, the
operating results have been consolidated since the acquisition date. The pro
forma effect on 1992 operating results was not material.
GMHE has acquired several other enterprises with operations that complement
existing technological capabilities at aggregate purchase prices, paid in cash,
of $10.4 million and $9.7 million in 1993 and 1992, respectively. These
acquisitions were accounted for using the purchase method of accounting. The
operating results of the entities acquired, which were not material, were
consolidated with those of GMHE from their respective acquisition dates.
The purchase prices of these acquisitions were allocated to the net assets
acquired, including intangible assets, based upon their estimated fair values at
the dates of acquisition.
NOTE 14. DERIVATIVE FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
GMHE is a party to financial instruments with off-balance sheet risk in the
normal course of business to reduce its exposure to fluctuations in interest and
foreign exchange rates. The primary classes of derivatives used by GMHE are
foreign exchange-forward contracts and interest rate swap agreements. These
instruments involve, to varying degrees, elements of credit risk in the event a
counterparty should default and market risk as the instruments are subject to
rate and price fluctuations. Credit risk is managed through the periodic
monitoring and approval of financially sound counterparties. Market risk is
mitigated because the derivatives are used to hedge underlying transactions.
Cash receipts or payments on these contracts normally occur at maturity, or for
interest rate swap agreements, at periodic contractually defined intervals. GMHE
holds derivatives only for purposes other than trading.
FOREIGN EXCHANGE-FORWARD CONTRACTS
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. GMHE uses these agreements to
hedge risk of changes in foreign currency exchange rates associated with certain
firm commitments denominated in foreign currency.
The total notional amount of foreign exchange-forward contracts GMHE held
at December 31, 1994 and 1993, was approximately $144 million and $111 million,
respectively. GMHE's open contracts extend for periods averaging nine months.
INTEREST RATE SWAP AGREEMENTS
Interest rate swap agreements are contractual agreements between GMHE 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. These instruments are used by GMHE with the objective of minimizing
interest expense while maintaining the desired level of exposure to the risk of
interest rate fluctuations. There were no outstanding interest rate swap
agreements at December 31, 1994. At
IV-64
<PAGE> 19
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
December 31, 1993, the total notional amount of outstanding contracts was
approximately $200 million. Interest rate swap agreements used to hedge an
underlying debt obligation are not marked to market, but are recognized as an
adjustment to interest expense over the life of the underlying debt agreement.
Gains and losses on terminated swap contracts are deferred and recognized as a
yield adjustment on the underlying debt; such unamortized gains totaled
approximately $10.8 million and $14.9 million at December 31, 1994 and 1993,
respectively.
NOTE 15. 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 following
fair value estimates and information about valuation methodologies are
presented. For all financial instruments not described below, fair value
approximates book value.
For notes and loans payable and long-term debt, the estimated fair value
(which approximates book value) was $479.9 million and $506.5 million at
December 31, 1994 and 1993, respectively. Such fair value is based on the quoted
market prices for similar issues or on the current rates offered to GMHE for
debt of similar remaining maturities. The carrying value of debt with an
original term of less than 90 days is assumed to approximate fair value.
The fair values of derivative financial instruments reflect the estimated
amounts GMHE would receive or pay to terminate the contracts at the reporting
date, which takes into account the current unrealized gains or losses on open
contracts. The fair value of foreign exchange-forward contracts is estimated
based on foreign exchange rate quotes at the reporting date. At December 31,
1994 and 1993, the estimated fair value of open contracts in a loss position was
($0.1) million and ($0.3) million, respectively, which was approximately equal
to book value.
The fair value of interest rate swap agreements is estimated using pricing
models based upon current interest rates. There were no open interest rate swap
agreements at December 31, 1994. At December 31, 1993, the fair value of open
contracts in a gain position was $12.6 million.
NOTE 16. SEGMENT REPORTING
GMHE operates principally within the field of modern high-technology
electronics for use in Automotive Electronics, Telecommunications and Space,
Defense Electronics, and Commercial Technologies business segments. Radios,
controls for engines and transmissions, monitors and sensors for airbags,
controllers for anti-lock brakes, climate control, dashboard instrumentation,
and other automotive electronic products are included in the Automotive
Electronics segment. The Telecommunications and Space segment includes satellite
construction, ownership and operation, communication services, ground equipment,
and direct-to-home satellite television entertainment services. The Defense
Electronics segment includes missile systems, command and control systems,
electro-optical systems, airborne radar systems, military training and
simulation systems, and guidance and control systems. The Commercial
Technologies segment includes commercial electronics products and services such
as commercial training, air traffic control, aircraft passenger communications
and entertainment, inertial navigation, information systems, space sensors for
IV-65
<PAGE> 20
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
environmental and scientific applications, and entertainment and leisure
products. Intercompany transfers between segments are not material. Information
concerning operations by segment is shown below.
<TABLE>
<CAPTION>
AUTOMOTIVE TELECOM. DEFENSE COMMERCIAL
ELECTRONICS & SPACE ELECTRONICS TECH. CORPORATE TOTAL
----------- -------- ----------- ---------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Revenues
1994.......................... $5,267.5 $2,528.7 $5,590.7 $ 712.5 $ -- $14,099.4
1993.......................... 4,491.6 2,178.0 6,112.1 735.8 -- 13,517.5
1992.......................... 3,985.8 1,927.9 5,547.0 836.4 -- 12,297.1
Operating Profit (Loss)(1)(2)
1994.......................... $ 793.6 $ 266.6 $ 583.6 $ (124.5) $(12.7) $ 1,506.6
1993.......................... 626.1 195.9 538.0 (0.4) (23.3) 1,336.3
1992.......................... 462.4 33.4 (596.6) (195.1) (22.1) (318.0)
Identifiable Assets at Year
End(3)
1994.......................... $3,466.4 $3,473.2 $6,808.8 $ 970.6 $131.5 $14,850.5
1993.......................... 2,840.5 2,797.1 7,385.4 957.7 136.4 14,117.1
1992.......................... 2,471.8 2,843.6 7,281.7 1,505.0 107.1 14,209.2
Depreciation and Amortization(1)
1994.......................... $ 143.4 $ 144.4 $ 260.9 $ 45.3 $ -- $ 594.0
1993.......................... 153.2 118.8 298.1 57.2 -- 627.3
1992.......................... 124.1 128.8 307.3 50.7 -- 610.9
Capital Expenditures(4)
1994.......................... $ 171.9 $ 395.0 $ 152.5 $ 26.9 $ -- $ 746.3
1993.......................... 149.2 264.9 132.9 33.0 -- 580.0
1992.......................... 266.1 174.4 99.4 18.6 -- 558.5
</TABLE>
- -------------------------
(1) 1994 includes $123.8 million ($10.7 million, $102.8 million, and $10.3
million related to Telecommunications and Space, Defense Electronics, and
Commercial Technologies, respectively) and 1993 and 1992 include $123.8
million ($10.8 million, $102.7 million, and $10.3 million related to
Telecommunications and Space, Defense Electronics, and Commercial
Technologies, respectively) of purchase accounting adjustments associated
with GM's purchase of Hughes.
(2) 1992 includes $1,237.0 million ($195.3 million, $911.8 million, and $129.9
million related to Telecommunications and Space, Defense Electronics, and
Commercial Technologies, respectively) for the special provision for
restructuring.
(3) Identifiable assets include the unamortized purchase accounting adjustments
associated with the purchase of Hughes as detailed below:
<TABLE>
<CAPTION>
TELECOM. DEFENSE COMMERCIAL
& SPACE ELECTRONICS TECH. TOTAL
-------- ----------- ----------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
1994................................. $261.0 $2,494.5 $249.8 $3,005.3
1993................................. 271.7 2,597.3 260.1 3,129.1
1992................................. 282.5 2,700.0 270.4 3,252.9
</TABLE>
(4) Telecommunications and Space includes expenditures related to
telecommunications and other equipment amounting to $255.8 million, $131.1
million, and $101.6 million in 1994, 1993, and 1992, respectively.
IV-66
<PAGE> 21
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONCLUDED
A reconciliation of operating profit (loss) shown on the previous page to
Income (Loss) before Income Taxes shown in the Statement of Consolidated
Operations and Available Separate Consolidated Net Income (Loss) follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Operating Profit (Loss).......................... $1,506.6 $1,336.3 $(318.0)
Other Income -- net.............................. 37.1 67.3 128.1
Interest Expense................................. (15.1) (33.2) (60.6)
-------- -------- --------
Income (Loss) before Income Taxes.............. $1,528.6 $1,370.4 $(250.5)
======== ======== =======
</TABLE>
Export sales from the U.S. were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Africa........................................... $ 25.8 $ 28.2 $ 39.5
Asia............................................. 758.2 593.4 424.5
Canada........................................... 876.3 820.7 642.9
Europe........................................... 678.6 503.1 524.6
Mexico........................................... 96.9 122.9 199.0
Other Latin America.............................. 90.3 68.3 108.7
Middle East...................................... 370.1 404.4 274.3
-------- -------- --------
Total.......................................... $2,896.2 $2,541.0 $2,213.5
======== ======== ========
</TABLE>
Certain amounts for 1993 have been reclassified to conform with 1994
classifications.
NOTE 17. COMMITMENTS AND CONTINGENT LIABILITIES
In December 1994, Hughes entered into an agreement with Computer Sciences
Corporation (CSC) whereby CSC will provide substantially all of the data
processing services required by Hughes. Baseline service payments to CSC are
expected to aggregate approximately $1.5 billion over the term of the eight-year
agreement. The contract is cancelable by Hughes with substantial early
termination penalties.
Minimum future commitments under operating leases having noncancelable
lease terms in excess of one year, primarily for real property and satellite
transponders, aggregating $2,142.4 million, are payable as follows: $233.5
million in 1995, $200.0 million in 1996, $169.5 million in 1997, $157.5 million
in 1998, $158.8 million in 1999, and $1,223.1 million thereafter. Certain of
these leases contain escalation clauses and renewal or purchase options. Rental
expenses under operating leases were $306.2 million in 1994, $296.3 million in
1993, and $277.9 million in 1992.
GMHE 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. The aggregate ultimate liability of GMHE 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
of GMHE, such liability is not expected to have a material adverse effect on
GMHE's consolidated operations or financial position.
* * *
IV-67
<PAGE> 22
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INFORMATION
SELECTED QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
-------- -------- -------- --------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
1994 QUARTERS
Revenues.............................................. $3,587.3 $3,535.9 $3,354.5 $3,621.7
======== ======== ======== ========
Income before income taxes............................ $ 477.3 $ 400.6 $ 361.4 $ 289.3
Income taxes.......................................... 195.8 164.2 148.2 64.6
-------- -------- -------- --------
Income before cumulative effect of accounting
change.............................................. 281.5 236.4 213.2 224.7
Cumulative effect of accounting change................ (30.4)* -- -- --
-------- -------- -------- --------
Net income............................................ $ 251.1 $ 236.4 $ 213.2 $ 224.7
======== ======== ======== ========
Earnings used for computation of available separate
consolidated net income............................. $ 282.1 $ 267.3 $ 244.2 $ 255.6
Average number of shares of General Motors Class H
common stock outstanding (in millions).............. 90.6 91.7 92.7 93.3
Class H dividend base (in millions)................... 399.9 399.9 399.9 399.9
Available separate consolidated net income............ $ 64.0 $ 61.3 $ 56.6 $ 59.7
Earnings attributable to General Motors Class H common
stock on a per share basis
Before cumulative effect of accounting change.... $ 0.78 $ 0.67 $ 0.61 $ 0.64
Cumulative effect of accounting change........... (0.08)* -- -- --
-------- -------- -------- --------
Net earnings attributable to General Motors Class
H common stock................................. $ 0.70 $ 0.67 $ 0.61 $ 0.64
======== ======== ======== ========
Stock price range of General Motors Class H common
High................................................ $ 40.38 $ 38.75 $ 38.00 $ 37.75
Low................................................. $ 32.63 $ 31.75 $ 34.63 $ 31.00
1993 QUARTERS
Revenues.............................................. $3,181.2 $3,315.4 $3,319.9 $3,701.0
======== ======== ======== ========
Income before income taxes............................ $ 279.4 $ 348.4 $ 334.7 $ 407.9
Income taxes.......................................... 121.1 147.3 141.6 162.6
-------- -------- -------- --------
Net income............................................ $ 158.3 $ 201.1 $ 193.1 $ 245.3
======== ======== ======== ========
Earnings used for computation of available separate
consolidated net income............................. $ 189.3 $ 232.0 $ 224.0 $ 276.3
Average number of shares of General Motors Class H
common stock outstanding (in millions).............. 93.9 86.0 87.4 88.7
Class H dividend base (in millions)................... 399.9 399.9 399.9 399.9
Available separate consolidated net income............ $ 44.4 $ 50.0 $ 48.9 $ 61.2
Net earnings attributable to General Motors Class H
common stock........................................ $ 0.47 $ 0.58 $ 0.56 $ 0.69
======== ======== ======== ========
Stock price range of General Motors Class H common
High................................................ $ 27.50 $ 33.00 $ 38.00 $ 42.38
Low................................................. $ 22.88 $ 23.38 $ 30.50 $ 34.50
</TABLE>
- -------------------------
* Effective January 1, 1994, GMHE adopted SFAS No. 112. The unfavorable
cumulative effect of adopting SFAS No. 112 was $30.4 million, or $6.8 million
attributable to GM Class H common stock.
IV-68
<PAGE> 23
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues............................. $14,099.4 $13,517.5 $12,297.1 $11,540.6 $11,723.1
Earnings (Loss) used for computation
of available separate consolidated
net income (loss).................. $ 1,049.2 $ 921.6 $ (921.6) $ 559.4 $ 726.0
Average number of shares of General
Motors Class H common stock
outstanding (in millions).......... 92.1 88.6 75.3 73.7 88.1
Class H dividend base (in
millions).......................... 399.9 399.9 399.9 399.9 399.7
Available separate consolidated net
income (loss)...................... $ 241.6 $ 204.5 $ (142.3) $ 104.6 $ 160.0
GM Class H cash dividends............ $ 73.8 $ 64.1 $ 53.3 $ 54.3 $ 63.4
Dividend payout ratio(1)............. 36.0% N/A 51.0% 33.9% 33.7%
Earnings (Loss) attributable to
General Motors Class H common stock
on a per share basis before
cumulative effect of accounting
changes............................ $ 2.70 $ 2.30 $ (0.11) $ 1.26 $ 1.82
Earnings (Loss) attributable to
General Motors Class H common stock
on a per share basis after
cumulative effect of accounting
changes............................ $ 2.62 $ 2.30 $ (2.29) $ 1.39 $ 1.82
Expenditures for property and special
tools(2)........................... $ 746.3 $ 580.0 $ 558.5 $ 681.3 $ 884.3
Cash and marketable securities....... $ 1,501.8 $ 1,008.7 $ 702.7 $ 348.3 $ 459.3
Working capital...................... $ 2,695.5 $ 2,165.2 $ 1,692.4 $ 1,548.8 $ 1,373.9
Total assets......................... $14,850.5 $14,117.1 $14,209.2 $12,930.8 $12,727.5
Long-term debt and capitalized
leases............................. $ 353.5 $ 416.8 $ 711.0 $ 147.1 $ 271.9
Return on equity*(3)................. 12.1% 11.3% (13.9)% 5.3% 7.2%
Income (Loss) before interest and
taxes as a percent of
capitalization(4).................. 19.0% 18.0% (2.3)% 8.1% 12.4%
Pre-tax return on total assets(5).... 10.6% 9.7% (1.8)% 5.2% 8.3%
</TABLE>
- -------------------------
* Includes favorable (unfavorable) cumulative effect of accounting changes of
($30.4) million in 1994, ($872.1) million in 1992, and $54.4 million in
1991.
(1) GM Class H cash dividends divided by available separate consolidated net
income for the prior year.
(2) Includes expenditures related to telecommunications and other equipment
amounting to $255.8 million, $131.1 million, $101.6 million, $88.3 million,
and $182.6 million in 1994, 1993, 1992, 1991, and 1990, respectively.
(3) Net income (loss) divided by average stockholder's equity (General Motors'
equity in its wholly-owned subsidiary, GMHE). Holders of GM Class H common
stock have no direct rights in the equity or assets of GMHE, but rather have
rights in the equity and assets of GM (which includes 100% of the stock of
GMHE).
(4) Income (Loss) before interest and taxes divided by average stockholder's
equity plus average debt.
(5) Income (Loss) before income taxes divided by average total assets.
IV-69
<PAGE> 24
GM HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OPERATING AND FINANCIAL REVIEW
The following discussion excludes the purchase accounting adjustments
related to General Motors' acquisition of Hughes (see Supplemental Data on page
IV-75).
RESULTS OF OPERATIONS
Revenues. GMHE reported revenues of $14,099.4 million in 1994, an increase
of 4.3% over 1993, and $13,517.5 million in 1993, an increase of 9.9% compared
with 1992 revenues of $12,297.1 million. The increase in revenues over the last
three years is largely the result of continued growth in the Automotive
Electronics segment, the ongoing success in the telecommunications and space
businesses, and defense electronics revenues generated by the missile business
acquired in August 1992. However, lower production rates and planned
terminations on several defense programs resulted in a decline of Defense
Electronics segment revenues in 1994. (Pro forma segment information is
presented on page IV-77).
Automotive Electronics. Revenues in the Automotive Electronics segment
continued to increase in 1994 to $5,267.5 million from $4,491.6 million in 1993,
a 17.3% increase, and from $3,985.8 million in 1992, a 12.7% increase in 1993.
The growth is primarily attributable to three factors: (1) an increase in GMHE-
supplied electronic content per GM North American-produced vehicle to $857 in
1994 from $782 and $760 in 1993 and 1992, respectively; (2) an increase in GM
North American vehicle production of 8% between 1994 and 1993 and 9% between
1993 and 1992; and (3) an increase in sales to international and non-GM
customers to $672 million in 1994 from $603 million and $484 million in 1993 and
1992, respectively.
Telecommunications and Space. Revenues in the Telecommunications and Space
segment were $2,528.7 million in 1994, a 16.1% increase over 1993 revenues of
$2,178.0 million. The increase resulted from higher cellular communications
equipment and private business network sales at Hughes Network Systems, Inc.
(HNS), additional Galaxy satellite transponder sales, increased satellite
construction sales, and the commencement of service by DIRECTV(R), GMHE's new
direct-to-home television service. Revenues for 1993 were 13.0% higher than 1992
revenues of $1,927.9 million. The 1993 increase in revenues reflects additional
sales of satellites to commercial customers and increased sales of fixed
wireless and cellular communications equipment and services internationally.
Defense Electronics. Defense Electronics segment revenues were $5,590.7
million in 1994, an 8.5% decrease from 1993 revenues of $6,112.1 million. The
decline was principally due to the full year impact of lower production rates
and planned terminations on several defense programs. Revenues increased $565.1
million, or 10.2%, between 1993 and 1992. The increase is due largely to
revenues from a full year of operations of the missile business acquired in
1992, as well as increased effort on the Peace Shield air defense system for
Saudi Arabia.
Commercial Technologies. Revenues in the Commercial Technologies segment
were $712.5 million in 1994, a 3.2% decrease from 1993 revenues of $735.8
million. Revenues for 1993 were 12.0% lower than 1992 revenues of $836.4
million. The decreases are primarily a result of the divestiture of several
non-strategic business units partially offset by increased effort in the air
traffic control and information systems businesses.
Other Income. Included in revenues is other income of $37.1 million, $67.3
million, and $128.1 million for 1994, 1993, and 1992, respectively. The 1994
amount includes a $35.0 million pre-tax charge for the expected loss on
disposition of a subsidiary. The 1993 amount includes a gain of $89.7 million on
the sale of GMHE's 30% interest in Japan Communications Satellite Company, Inc.
(JCSAT) and a $55.0 million charge related to the sale of Hughes Rediffusion
Simulation Limited (Rediffusion) and related entities in December 1993. The 1992
amount includes proceeds of $35.0 million from settlement of a patent
infringement suit and a $28.0 million gain resulting from the formation of the
Hughes-JVC Technology joint venture.
IV-70
<PAGE> 25
Operating Profit. Operating profit was $1,630.4 million in 1994, $1,460.1
million in 1993, and $1,042.8 million in 1992, excluding the special provision
for restructuring. Operating profit margins, on a comparable basis, were 11.6%,
10.9%, and 8.6% in 1994, 1993, and 1992, respectively. Beginning in the first
quarter of 1994, the operating profit margin calculation was changed to
operating profit divided by net sales rather than revenues, which include other
income. Prior year operating profit margins have been restated on a comparable
basis.
The improvement in both profitability and profit margins over this time
period was primarily the result of the continuing emphasis on cost reduction
efforts, most notably in the Automotive Electronics and Defense Electronics
segments, and the overall growth in revenues.
Automotive Electronics. Operating profit has steadily increased over the
last three years. In 1994, operating profit was $793.6 million compared with
$626.1 million in 1993 and $462.4 million in 1992. The increases are
attributable not only to the increased electronic content per vehicle and higher
vehicle volumes, but also to an aggressive cost reduction program at Delco
Electronics, which has yielded cost savings of 11% in 1994, 10% in 1993, and 9%
in 1992. The operating profit margin was 15.2%, 13.9%, and 11.6% in 1994, 1993,
and 1992, respectively. Operating profit margins beyond 1995 are not expected to
be maintained at the current level due to the potential for reduced auto
production volumes, increased pricing pressures, and GM's global sourcing
initiatives.
Telecommunications and Space. Operating profit for 1994 increased to $277.3
million, a 34.2% increase over the $206.7 million reported in 1993. The
improvement is a result of the sale of additional Galaxy satellite transponders
and increased HNS and satellite construction sales, partially offset by higher
DIRECTV operating expenses relating to the commencement of service. Excluding
the 1992 restructuring charge, 1993 operating profit declined 13.7% from 1992
operating profit of $239.5 million. The decrease was due to a reduction in
revenues from satellite transponder sales and an increase in DIRECTV related
costs, partially offset by the recognition of cost savings from satellite
construction activities in 1992. Operating profit margins were 10.8% in 1994,
10.0% in 1993, and 2.3% in 1992. The 1995 margin will be negatively impacted by
the increased operating expenses associated with the continued expansion of
DIRECTV. After 1995, the Telecommunications and Space segment's operating
margins are expected to increase as DIRECTV becomes profitable.
Defense Electronics. Operating profit increased 7.1% to $686.4 million in
1994 and 53.3% to $640.7 million in 1993, compared with $417.9 million,
excluding the restructuring charge, in 1992. The increases reflect the ongoing
efforts to reduce costs across GMHE's defense businesses and continued benefits
from the acquisition and consolidation of the missile business acquired in
August 1992. Future operating profits could be negatively impacted by further
reductions in the U.S. defense budget.
Commercial Technologies. Operating losses were $114.2 million in 1994
compared with an operating profit of $9.9 million in 1993. The operating loss is
attributable to three factors: (1) additional costs and revenue deferral at
Hughes-Avicom International, Inc. related to product development and initial
system service of in-flight entertainment systems; (2) air traffic control
contract costs for which the expected revenues are not yet recognizable for
financial reporting purposes, pending contract negotiations; and (3) development
costs on several new products. The 1993 improvement in operating profit from the
1992 operating loss of $54.9 million was primarily due to reduced operating
losses at Rediffusion, actions which began in 1992 to reduce costs, and
increased profits from the air traffic control and information systems
businesses.
Costs and Expenses. Selling, general, and administrative expenses were
$1,018.3 million in 1994, $929.1 million in 1993, and $1,036.2 million in 1992.
The $89.2 million increase in 1994 was primarily due to the commencement of
nationwide service by DIRECTV and increased international sales activities at
HNS. The decrease of $107.1 million in 1993 was primarily due to the cost
reductions resulting from restructuring activities which began in the second
half of 1992.
Interest expense decreased 54.5% in 1994 and 45.2% in 1993 primarily due to
an overall decrease in debt balances and an increase in the amount of
capitalized interest.
IV-71
<PAGE> 26
The effective income tax rate was 34.7%, 38.3%, and 37.0% in 1994, 1993,
and 1992, respectively. The lower 1994 tax rate resulted from the recognition of
capital loss carryforward benefits. The Revenue Reconciliation Act of 1993 did
not have a material adverse effect on GMHE's 1994 or 1993 earnings and is not
expected to have a significant impact in future years.
Earnings. GMHE's 1994 earnings were $1,049.2 million, or $2.62 per share of
GM Class H common stock, compared with 1993 earnings of $921.6 million, or $2.30
per share, and a loss in 1992 of $921.6 million or ($2.29) per share. 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 revenue recognition described
below. Excluding these special items, GMHE earnings in 1994 and 1992 would have
been $1,079.6 million, or $2.70 per share, and $699.9 million, or $1.76 per
share, respectively.
Backlog. The 1994 year-end backlog of $13,210 million remained relatively
unchanged from the 1993 value of $13,399 million. Year-end 1993 backlog
decreased $623 million from the $14,022 million reported in 1992 primarily due
to the sale of Rediffusion. A portion of the backlog is subject to appropriation
decisions by the U.S. Government subsequent to award. In addition, GMHE's
contracts with the U.S. Government are subject to termination by the Government
either for its convenience or for default by GMHE. Sales to the U.S. Government
may be affected by changes in acquisition policies, budget considerations,
changing concepts in national defense, spending priorities, and other factors
that are outside GMHE's control.
Special Provision for Restructuring. GMHE took a special charge in June
1992 of $749.4 million (after-tax), or $1.87 per share, for the restructuring of
Hughes' operations. The special charge comprehended a reduction of Hughes'
worldwide employment, a major facilities consolidation, and a reevaluation of
certain business lines that no longer met Hughes' strategic objectives.
Restructuring costs of $228.3 million, $527.6 million, and $250.9 million were
charged against the reserve during 1994, 1993, and 1992, respectively. In
addition, in 1994 and 1993 the restructuring reserve was increased by $35.0
million and $78.0 million, respectively, primarily due to changes in the
estimated loss on disposition of two subsidiaries. The remaining liability of
$343.2 million relates primarily to reserves for excess leased facilities and
other site consolidation costs. Approximately $288.2 million of this total will
require future cash outflows. It is expected that these costs will be expended
predominantly over the next three years.
Accounting Changes. GMHE adopted SFAS No. 112, Employers' Accounting for
Postemployment Benefits, effective January 1, 1994. This Statement requires
accrual of the costs of benefits provided to former or inactive employees after
employment, but before retirement. The cumulative effect of this accounting
change as of January 1, 1994 was $49.6 million, or $30.4 million after-tax
($0.08 per share of GM Class H common stock).
GMHE adopted SFAS No. 106 in January 1992. This Statement requires that the
cost of postretirement benefits other than pensions be recognized in the
financial statements during the period employees provide service to GMHE. GMHE's
previous practice was to recognize the cost of such postretirement benefits when
incurred (pay-as-you-go). The cumulative effect of this accounting change as of
January 1, 1992 was $1,366.6 million, or $832.1 million after-tax ($2.08 per
share of GM Class H common stock).
GMHE has disclosed in its financial statements certain amounts associated
with estimated future postretirement benefits other than pensions and
characterized such amounts as "accumulated postretirement benefit obligations,"
"liabilities," or "obligations." Notwithstanding the recording of such amounts
and the use of these terms, GMHE does not admit or otherwise acknowledge that
such amounts or existing postretirement benefit plans of GMHE (other than
pensions) represent enforceable liabilities of GMHE.
Hughes changed its revenue recognition policy for certain commercial
long-term contracts effective January 1, 1992 from the percentage-of-completion
method to the units-of-delivery method. The unfavorable effect of this change
was $40.0 million after-tax, or $0.10 per share of GM Class H common stock.
IV-72
<PAGE> 27
LIQUIDITY AND CAPITAL RESOURCES
Cash and Cash Equivalents. The Company's balance sheet strengthened further
in 1994 as cash and cash equivalent increased $493.1 million to $1,501.8 million
at December 31, 1994. Operating activities provided net cash of $1,376.8 million
in 1994 as GMHE achieved record earnings while aggressively managing working
capital. Additional cash of $200 million was generated by the collection of a
note receivable from General Motors. Cash was used to fund capital expenditures
for property and special tools and telecommunications and other equipment
(primarily related to DIRECTV) as well as to pay dividends to General Motors.
Cash and cash equivalents at December 31, 1993 amounted to $1,008.7
million, a $306.0 million increase from $702.7 million at December 31, 1992. The
increase was due to net cash provided by operating activities of $1,493.5
million, partially offset by net cash used in investing and financing
activities. Proceeds from the sale of investments and businesses, and from the
disposal of property, generated an additional $396.6 million of cash in 1993.
Cash was used primarily to fund capital expenditures, reduce outstanding debt,
and to pay dividends to General Motors.
Liquidity Measurement. As a measure of liquidity, the current ratio (ratio
of current assets to current liabilities) was 1.76 at December 31, 1994, 1.61 at
December 31, 1993, and 1.44 at December 31, 1992. These increases were due to
the build-up of cash balances described above.
Property and Equipment. Property, net of accumulated depreciation,
decreased $22.6 million in 1994 while telecommunications and other equipment,
net of accumulated depreciation, increased $304.1 million primarily due to
expenditures related to DIRECTV.
Expenditures for property and equipment were $490.5 million in 1994
compared with $448.9 million and $456.9 million in 1993 and 1992, respectively.
Management anticipates that capital expenditures in 1995 will increase
approximately $80 million over 1994 and will be financed primarily from cash
provided by operating activities.
Telecommunications and other equipment expenditures were $255.8 million in
1994 compared with $131.1 million and $101.6 million in 1993 and 1992,
respectively. Management anticipates that telecommunications and other equipment
expenditures in 1995 will increase approximately $50 million over 1994 and will
be financed primarily from cash provided by operating activities.
Automotive Electronics. Capital expenditures increased to $171.9 million in
1994, compared with $149.2 million in 1993, a decrease of $116.9 million from
1992. The increase in capital spending in 1994 reflects expenditures for
technology upgrades at certain facilities. The decrease in capital spending in
1993 reflected the completion of several projects to upgrade and expand
facilities and a decrease in expenditures related to model changes.
Telecommunications and Space. Capital expenditures, including expenditures
related to telecommunications and other equipment increased to $395.0 million
from $264.9 million in 1993 and $174.4 million in 1992, primarily reflecting
continuing investment in satellite equipment associated with DIRECTV.
Defense Electronics. Capital expenditures in the Defense Electronics
segment for 1994, 1993, and 1992 were $152.5 million, $132.9 million, and $99.4
million, respectively. The increases in 1994 and 1993 are due to expenditures
related to the consolidation of facilities in an effort to increase the
operational efficiencies of manufacturing and engineering activities.
Commercial Technologies. Capital expenditures were $26.9 million, $33.0
million, and $18.6 million in 1994, 1993, and 1992, respectively. The increase
in 1993 related to facilities and equipment for the EOSDIS program.
Long-Term Debt and Capitalized Leases. Long-term debt and capitalized
leases was $353.5 million at December 31, 1994, a decrease of $63.3 million from
$416.8 million at December 31, 1993 reflecting scheduled principal payments.
Long-term debt and capitalized leases decreased $294.2 million in 1993, from
$711.0 million at December 31, 1992 partially due to the prepayment of GM debt
arising from the missile business acquisition and repayment of certain Japanese
yen debt related to JCSAT. The ratio of long-term
IV-73
<PAGE> 28
debt and capitalized leases to the total of such debt and pro forma
stockholder's equity decreased to 6.6% in 1994 from 9.0% in 1993, and 16.6% in
1992.
Other Balance Sheet Items. In evaluating both its pension and retiree
medical liabilities, GMHE recognized the impact of the recent increase in
long-term interest rates by increasing the discount rate used in determining the
actuarial present values of the projected benefit obligations. In 1994, the
weighted average discount rate for Hughes' pension obligations increased from
7.5% to 8.75% and the weighted average discount rate for GMHE's other
postretirement benefits increased from 6.99% to 8.57%.
Acquisitions and Divestitures. 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.
On December 31, 1993, GMHE completed the sale of Rediffusion and related
entities comprising the majority of its commercial aircraft simulation and
training equipment business to Thomson-CSF. The sale resulted in a $55.0 million
pre-tax charge against earnings, and included Rediffusion's core flight
simulation businesses and its U.S. airline marketing support organization.
On August 21, 1992, GMHE acquired substantially all the assets and business
of General Dynamic's Air Defense Systems Division, the Unmanned Strike Systems
business unit, and the Convair Division (together, the GD Missile Business).
This acquisition provided GMHE with the opportunity to expand its current
military programs portfolio, its customer base, and expand its share of the
market for missiles and missile systems. The GD Missile Business was acquired in
exchange for 21,508,563 shares of GM Class H common stock and cash with an
aggregate value of $450.0 million. GMHE purchased the GM Class H common stock
from GM in August 1992, principally in exchange for a series of notes.
Dividend Policy. As discussed in Note 7 to the Consolidated Financial
Statements, it is GM's current policy to pay aggregate annual cash dividends on
the GM Class H common stock approximately equal to 35% of the Available Separate
Consolidated Net Income of GMHE for the prior year. In February 1995, the Board
of Directors of GM increased the quarterly dividend on GM Class H common stock
from $0.20 per share to $0.23 per share.
Security Ratings. GMHE's security ratings are tied to the security ratings
of General Motors.
In February 1993, Standard & Poor's Corporation (S&P) lowered GMHE's
long-term debt rating from A- to BBB+. The BBB+ rating for senior debt is eighth
highest within the 10 investment grade ratings available from S&P for long-term
debt and is based on a determination of adequate capacity to pay interest and
repay principal. At the same time, S&P lowered GMHE's commercial paper rating
from A-1 to A-2, 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.
In November 1992, Moody's Investors Service, Inc. (Moody's) lowered its
rating of GMHE senior debt to Baa1 from A-2, 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 also lowered GMHE's commercial paper rating 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.
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 organization. Each rating should be
evaluated independently of any other rating.
IV-74
<PAGE> 29
GM Class H Common Stock 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 GM Class H common stock.
The 1995 put and call rights described in Note 1 to the Consolidated 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.
SUPPLEMENTAL DATA
The Consolidated Financial Statements reflect the application of purchase
accounting adjustments as described in Note 1 to the Consolidated Financial
Statements. However, as provided in GM's Certificate of Incorporation, the
earnings attributable to GM Class H common stock for purposes of determining the
amount available for the payment of dividends on GM Class H common stock
specifically excludes such adjustments. More specifically, amortization of
purchase accounting adjustments associated with GM's purchase of Hughes was
$123.8 million in 1994, 1993, and 1992. Such amounts were excluded from the
earnings available for the payment of dividends on GM Class H common stock and
were charged against the earnings available for the payment of dividends on GM's
$1 2/3 par value stock. Unamortized purchase accounting adjustments associated
with GM's purchase of Hughes were $3,005.3 million, $3,129.1 million, and
$3,252.9 million in 1994, 1993, and 1992, respectively.
In order to provide additional analytical data to the users of GMHE's
financial information, supplemental data in the form of unaudited summary pro
forma financial data are provided. Consistent with the basis on which earnings
of GMHE available for the payment of dividends on GM Class H common stock is
determined, the pro forma data exclude the General Motors' purchase accounting
adjustments related to the acquisition of Hughes. Included in the supplemental
data are certain financial ratios which provide measures of financial returns
excluding the impact of purchase accounting adjustments. The pro forma data are
not presented as a measure of GM's total return on its investment in GMHE.
IV-75
<PAGE> 30
SUMMARY PRO FORMA FINANCIAL DATA*
PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1994 1993 1992
--------- --------- ---------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Total Revenues.............................................. $14,099.4 $13,517.5 $12,297.1
Total Costs and Expenses.................................... 12,447.0 12,023.3 12,423.8(1)
--------- --------- ---------
Income (Loss) before Income Taxes........................... 1,652.4 1,494.2 (126.7)
Income taxes (credit)....................................... 572.8 572.6 (77.2)
--------- --------- ---------
Income (Loss) before cumulative effect of accounting
changes................................................... 1,079.6 921.6 (49.5)
Cumulative effect of accounting changes..................... (30.4) -- (872.1)
--------- --------- ---------
Earnings (Loss) Used for Computation of Available Separate
Consolidated Net Income (Loss)............................ $ 1,049.2 $ 921.6 $ (921.6)
========= ========= =========
Earnings (Loss) Attributable to General Motors 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................ (0.08) -- (2.18)
--------- --------- ---------
Net earnings (loss) attributable to General Motors
Class H Common Stock................................. $ 2.62 $ 2.30 $ (2.29)
========= ========= =========
</TABLE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1994 1993
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
ASSETS
Total Current Assets................................................... $ 6,243.6 $ 5,714.3
Property -- Net........................................................ 2,611.8 2,634.4
Telecommunications and Other Equipment -- Net.......................... 1,071.7 767.6
Intangible Assets, Investments, and Other Assets....................... 1,918.1 1,871.7
--------- ---------
Total Assets........................................................... $11,845.2 $10,988.0
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Total Current Liabilities.............................................. $ 3,548.1 $ 3,549.1
Long-Term Debt and Capitalized Leases.................................. 353.5 416.8
Postretirement Benefits Other Than Pensions, Other Liabilities,
Deferred Income Taxes, and Deferred Credits.......................... 2,973.1 2,823.1
Total Stockholder's Equity(2).......................................... 4,970.5 4,199.0
--------- ---------
Total Liabilities and Stockholder's Equity(2).......................... $11,845.2 $10,988.0
========= =========
</TABLE>
- -------------------------
(1) Includes a special provision for restructuring of $1,237.0 million.
(2) General Motors' equity in its wholly-owned subsidiary, GMHE. Holders of GM
Class H common stock have no direct rights in the equity or assets of GMHE,
but rather have rights in the equity and assets of GM (which includes 100%
of the stock of GMHE).
* The summary is unaudited and excludes GM purchase accounting adjustments
related to the acquisition of Hughes.
IV-76
<PAGE> 31
SUMMARY PRO FORMA FINANCIAL DATA*
PRO FORMA SELECTED SEGMENT DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------
1994 1993 1992
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
AUTOMOTIVE ELECTRONICS
Revenues................................................ $5,267.5 $4,491.6 $3,985.8
Revenues as a percentage of GMHE Revenues............... 37.4% 33.2% 32.4%
Net Sales............................................... $5,216.5 $4,488.9 $3,977.2
Operating Profit(1)..................................... $ 793.6 $ 626.1 $ 462.4
Operating Profit Margin(2).............................. 15.2% 13.9% 11.6%
Identifiable Assets at Year End......................... $3,466.4 $2,840.5 $2,471.8
Depreciation and Amortization........................... $ 143.4 $ 153.2 $ 124.1
Capital Expenditures.................................... $ 171.9 $ 149.2 $ 266.1
TELECOMMUNICATIONS AND SPACE
Revenues................................................ $2,528.7 $2,178.0 $1,927.9
Revenues as a percentage of GMHE Revenues............... 17.9% 16.1% 15.7%
Net Sales............................................... $2,565.1 $2,075.0 $1,918.4
Restructuring Charge.................................... $ -- $ -- $ 195.3
Operating Profit(1)..................................... $ 277.3 $ 206.7 $ 44.2
Operating Profit Margin(2).............................. 10.8% 10.0% 2.3%
Identifiable Assets at Year End......................... $3,212.2 $2,525.4 $2,561.1
Depreciation and Amortization........................... $ 133.7 $ 108.0 $ 118.0
Capital Expenditures(3)................................. $ 395.0 $ 264.9 $ 174.4
DEFENSE ELECTRONICS
Revenues................................................ $5,590.7 $6,112.1 $5,547.0
Revenues as a percentage of GMHE Revenues............... 39.6% 45.2% 45.1%
Net Sales............................................... $5,569.1 $6,085.0 $5,498.0
Restructuring Charge.................................... $ -- $ -- $ 911.8
Operating Profit (Loss)(1).............................. $ 686.4 $ 640.7 $ (493.9)
Operating Profit (Loss) Margin(2)....................... 12.3% 10.5% (9.0)%
Identifiable Assets at Year End......................... $4,314.3 $4,788.1 $4,581.7
Depreciation and Amortization........................... $ 158.1 $ 195.4 $ 204.6
Capital Expenditures.................................... $ 152.5 $ 132.9 $ 99.4
COMMERCIAL TECHNOLOGIES
Revenues................................................ $ 712.5 $ 735.8 $ 836.4
Revenues as a percentage of GMHE Revenues............... 5.1% 5.5% 6.8%
Net Sales............................................... $ 711.6 $ 801.3 $ 775.4
Restructuring Charge.................................... $ -- $ -- $ 129.9
Operating Profit (Loss)(1).............................. $ (114.2) $ 9.9 $ (184.8)
Operating Profit (Loss) Margin(2)....................... (16.0)% 1.2% (23.8)%
Identifiable Assets at Year End......................... $ 720.8 $ 697.6 $1,234.6
Depreciation and Amortization........................... $ 35.0 $ 46.9 $ 40.4
Capital Expenditures.................................... $ 26.9 $ 33.0 $ 18.6
CORPORATE
Operating Loss(1)....................................... $ (12.7) $ (23.3) $ (22.1)
Identifiable Assets at Year End......................... $ 131.5 $ 136.4 $ 107.1
</TABLE>
- -------------------------
Certain amounts for 1993 and 1992 have been reclassified to conform with
1994 classifications.
* The summary is unaudited and excludes GM purchase accounting adjustments
related to the acquisition of Hughes.
(1) Net Sales less Total Costs and Expenses other than Interest Expense.
(2) Operating Profit (Loss) as a percentage of Net Sales.
(3) Includes expenditures related to telecommunications and other equipment
amounting to $255.8 million, $131.1 million, and $101.6 million,
respectively.
IV-77
<PAGE> 32
SUMMARY PRO FORMA FINANCIAL DATA*
PRO FORMA SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Operating profit (loss)....................... $1,630 $1,460 $ (194) $ 800 $1,157
Income (Loss) before income taxes and
cumulative effect of accounting changes..... $1,652 $1,494 $ (127) $ 795 $1,187
Earnings (Loss) used for computation of
available separate consolidated net income
(loss)**.................................... $1,049 $ 922 $ (922) $ 559 $ 726
Average number of GM Class H dividend base
shares(1)................................... 399.9 399.9 399.9 399.9 399.7
Stockholder's equity**........................ $4,971 $4,199 $3,562 $4,841 $4,598
Dividends per share of GM Class H common
stock....................................... $ 0.80 $ 0.72 $ 0.72 $ 0.72 $ 0.72
Working capital............................... $2,696 $2,165 $1,692 $1,549 $1,374
Operating profit (loss) as a percent of net
sales....................................... 11.6% 10.9% (1.6)% 7.0% 10.0%
Pre-tax income (loss) as a percent of
revenues.................................... 11.7% 11.1% (1.0)% 6.9% 10.1%
Net income (loss) as a percent of
revenues**.................................. 7.4% 6.8% (7.5)% 4.8% 6.2%
Return on equity**(2)......................... 22.9% 23.7% (21.9)% 11.9% 16.4%
Income (Loss) before interest and taxes as a
percent of capitalization(3)................ 32.9% 33.1% (1.3)% 15.3% 23.3%
Pre-tax return on total assets(4)............. 14.5% 13.6% (1.2)% 8.5% 13.4%
</TABLE>
- -------------------------
* The summary is unaudited and excludes GM purchase accounting adjustments
related to the acquisition of Hughes.
** Includes favorable (unfavorable) cumulative effect of accounting changes of
$(30.4) million in 1994, $(872.1) million in 1992, and $54.4 million in
1991.
(1) Class H dividend base shares is used in calculating earnings attributable to
GM Class H common stock on a per share basis. This is not the same as the
average number of GM Class H shares outstanding, which was 92.1 million for
1994.
(2) Earnings (Loss) used for computation of available separate consolidated net
income (loss) divided by average stockholder's equity (General Motors'
equity in its wholly-owned subsidiary, GMHE). Holders of GM Class H common
stock have no direct rights in the equity or assets of GMHE, but rather have
rights in the equity and assets of GM (which includes 100% of the stock of
GMHE).
(3) Income (Loss) before interest and taxes divided by average stockholder's
equity plus average total debt.
(4) Income (Loss) before income taxes divided by average total assets.
* * * * * * *
IV-78
