<PAGE> 1
GENERAL MOTORS CORPORATION
FORM 10-Q
QUARTERLY REPORT
FOR THE QUARTER ENDED JUNE 30, 1996
FILED PURSUANT TO SECTION 13
OF THE
SECURITIES EXCHANGE ACT OF 1934
<PAGE> 2
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
------------------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended June 30, 1996
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)
STATE OF DELAWARE 38-0572515
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
767 FIFTH AVENUE, NEW YORK, NEW YORK
3044 WEST GRAND BOULEVARD, DETROIT, MICHIGAN 10153-0075
(Address of principal executive offices) 48202-3091
Registrant's telephone number, including area code (313)-556-5000 (Zip Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days. Yes /X/. No / /.
As of June 30, 1996, there were outstanding 755,896,194 shares of the
issuer's $1 2/3 par value common stock, 98,640,998 shares of Class H $0.10 par
value common stock.
<PAGE> 3
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Part I -- Financial Information (Unaudited)
Item 1. Financial Statements
Consolidated Statement of Income................................................ 3
Consolidated Balance Sheet...................................................... 5
Condensed Consolidated Statement of Cash Flows.................................. 7
Notes to Consolidated Financial Statements...................................... 8
Item 2. Management's Discussion and Analysis....................................... 15
Part II -- Other Information
Item 1. Legal Proceedings.......................................................... 32
Item 4. Submission of Matters to a Vote of Security Holders........................ 34
Item 6. Exhibits and Reports on Form 8-K........................................... 38
Signatures........................................................................... 38
Exhibit 11 Computation of Earnings Per Share Attributable to Common Stocks for the
Three and Six Month Periods Ended June 30, 1996 and 1995........................... 39
Exhibit 12 Computation of Ratios of Earnings to Fixed Charges for the Six Month
Periods Ended June 30, 1996 and 1995............................................... 43
Exhibit 99 Hughes Electronics Corporation and Subsidiaries
Consolidated Financial Statements and Management's Discussion and Analysis......... 44
Exhibit 27 Financial Data Schedule (for SEC information only)
</TABLE>
2
<PAGE> 4
PART I
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net Sales and Revenues
Manufactured products........................... $40,168.6 $38,113.2 $74,826.1 $75,590.6
Financial services.............................. 3,125.2 2,917.6 6,304.4 5,635.0
Other income (Note 3)........................... 1,478.6 1,174.0 2,881.8 2,379.0
--------- --------- --------- ---------
Total Net Sales and Revenues............... 44,772.4 42,204.8 84,012.3 83,604.6
--------- --------- --------- ---------
Costs and Expenses
Cost of sales and other operating charges,
exclusive of items listed below.............. 33,117.5 31,456.6 63,247.3 62,237.0
Selling, general, and administrative expenses... 3,577.8 3,079.2 6,648.1 5,970.0
Interest expense................................ 1,413.7 1,368.0 2,835.2 2,836.6
Depreciation of real estate, plants, and
equipment.................................... 2,137.0 1,924.9 4,286.7 3,776.4
Amortization of special tools................... 824.8 877.8 1,585.5 1,746.0
Amortization of intangible assets............... 56.5 57.9 117.6 108.2
Other deductions (Note 3)....................... 452.1 538.8 865.7 856.6
--------- --------- --------- ---------
Total Costs and Expenses................... 41,579.4 39,303.2 79,586.1 77,530.8
--------- --------- --------- ---------
Income from Continuing Operations before
Income Taxes.................................... 3,193.0 2,901.6 4,426.2 6,073.8
Income taxes...................................... 1,097.5 819.5 1,530.0 2,034.5
--------- --------- --------- ---------
Income from Continuing Operations before
Cumulative Effect of Accounting Change.......... 2,095.5 2,082.1 2,896.2 4,039.3
Income (Loss) from discontinued operations (Note
2).............................................. (208.8) 188.0 10.0 384.8
Cumulative effect of accounting change (Note 4)... -- -- -- (51.8)
--------- --------- --------- ---------
Net Income................................. 1,886.7 2,270.1 2,906.2 4,372.3
Preference shares tender offer premium (Note 9)... -- 153.4 -- 153.4
Dividends on preference stocks.................... 20.2 46.1 40.5 118.1
--------- --------- --------- ---------
Income on Common Stocks.................... $ 1,866.5 $ 2,070.6 $ 2,865.7 $ 4,100.8
========= ========= ========= =========
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
3
<PAGE> 5
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME -- CONCLUDED
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Earnings Attributable to Common Stocks (Note 10)
$1 2/3 par value from continuing operations before
cumulative effect of accounting change........... $2,000.1 $1,813.8 $2,704.5 $3,635.7
Income (Loss) from discontinued operations (Note
2)............................................... (15.0) (17.8) (5.4) 56.6
Cumulative effect of accounting change (Note 4)..... -- -- -- (51.8)
-------- -------- -------- --------
Net earnings attributable to $1 2/3 par value....... $1,985.1 $1,796.0 $2,699.1 $3,640.5
======== ======== ======== ========
Income (Loss) from discontinued operations
attributable to Class E (Note 2)................. $ (193.8) $ 205.8 $ 15.4 $ 328.2
======== ======== ======== ========
Net earnings attributable to Class H................ $ 75.2 $ 68.8 $ 151.2 $ 132.1
======== ======== ======== ========
Average number of shares of common stocks outstanding
(in millions)
$1 2/3 par value.................................... 755.9 746.3 755.6 749.4
Class E (Note 2).................................... 479.3 438.7 470.1 369.7
Class H............................................. 98.2 95.4 97.8 94.8
Earnings Per Share Attributable to Common Stocks (Note
10)
$1 2/3 par value from continuing operations
before cumulative effect of accounting change....... $ 2.65 $ 2.41 $ 3.58 $ 4.82
Income (Loss) from discontinued operations (Note
2)............................................... (0.02) (0.02) (0.01) 0.08
Cumulative effect of accounting change (Note 4)..... -- -- -- (0.07)
-------- -------- -------- --------
Net earnings attributable to $1 2/3 par value....... $ 2.63 $ 2.39 $ 3.57 $ 4.83
======== ======== ======== ========
Income (Loss) from discontinued operations
attributable to Class E (Note 2)................. $(0.41) $ 0.47 $ 0.04 $ 0.89
======== ======== ======== ========
Net earnings attributable to Class H................ $ 0.77 $ 0.72 $ 1.55 $ 1.39
======== ======== ======== ========
Cash Dividends Per Share of Common Stocks (Note 10)
$1 2/3 par value.................................... $0.40 $0.30 $0.80 $0.50
Class E............................................. $0.15 $0.13 $0.30 $0.26
Class H............................................. $0.24 $0.23 $0.48 $0.46
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
4
<PAGE> 6
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
JUNE 30, DEC. 31, JUNE 30,
1996 1995 1995
----------- ---------- -----------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash and cash equivalents................................ $ 12,460.1 $ 10,495.4 $ 8,803.3
Other marketable securities.............................. 5,903.5 5,522.2 5,658.7
---------- ---------- ----------
Total cash and marketable securities.............. 18,363.6 16,017.6 14,462.0
Finance receivables -- net............................... 58,432.3 59,806.5 59,150.5
Accounts and notes receivable -- net..................... 7,248.5 6,979.5 8,190.4
Inventories -- net (Note 5).............................. 11,754.7 11,348.3 11,530.7
Net assets of discontinued operations (Note 2)........... -- 5,054.9 4,666.4
Contracts in process -- net.............................. 2,754.0 2,469.2 2,687.4
Net equipment on operating leases........................ 28,944.0 27,702.3 25,597.7
Deferred income taxes.................................... 20,414.3 19,720.0 18,556.0
Property
Real estate, plants, and equipment -- at cost.......... 68,386.1 67,414.8 67,104.5
Less accumulated depreciation.......................... (41,299.1) (41,017.5) (41,724.7)
---------- ---------- ----------
Net real estate, plants, and equipment.............. 27,087.0 26,397.3 25,379.8
Special tools -- net................................... 8,323.6 8,170.7 7,622.4
---------- ---------- ----------
Total property.................................... 35,410.6 34,568.0 33,002.2
Intangible assets -- net................................. 10,282.3 10,273.2 10,833.4
Other assets -- net...................................... 19,292.8 19,723.2 19,372.0
---------- ---------- ----------
Total Assets...................................... $ 212,897.1 $213,662.7 $ 208,048.7
========== ========== ==========
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
5
<PAGE> 7
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET -- CONCLUDED
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DEC. 31, JUNE 30,
1995 1995
---------- -----------
JUNE 30,
1996 (UNAUDITED)
-----------
(UNAUDITED)
(DOLLARS IN MILLIONS EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
Liabilities
Accounts payable....................................... $ 13,230.8 $ 12,685.3 $ 12,232.9
Notes and loans payable................................ 80,756.1 81,221.7 76,493.8
Income taxes -- deferred and payable................... 3,424.4 3,107.7 3,451.0
Postretirement benefits other than pensions (Note 6)... 42,392.0 41,595.1 40,830.2
Pensions............................................... 6,440.7 6,691.3 4,974.0
Other liabilities and deferred credits................. 45,793.0 45,016.1 47,580.0
----------- ---------- -----------
Total Liabilities................................. 192,037.0 190,317.2 185,561.9
Stockholders' Equity
Preference stocks
Series B 9 1/8% Depositary Shares, $0.5, $0.5, and
$0.5;
Series C Depositary Shares, $--, $0.3, and $0.3;
Series D 7.92% Depositary Shares, $0.1, $0.1, and
$0.1; and
Series G 9.12% Depositary Shares, $0.3, $0.3, and
$0.3 in June 1996, and in December and June 1995
(Note 9).......................................... 0.9 1.2 1.2
Common stocks
$1 2/3 par value (issued, 756,619,913, 753,008,273,
and 747,600,160 shares)........................... 1,261.0 1,255.0 1,246.0
Class E (issued, --, 442,812,166, and 442,684,068
shares)........................................... -- 44.3 44.3
Class H (issued, 98,853,477, 97,152,014, and
95,704,629 shares)................................ 9.9 9.7 9.6
Capital surplus (principally additional paid-in
capital)............................................ 19,080.7 18,870.9 18,591.3
Net income retained for use in the business............ 4,772.9 7,185.4 5,377.3
----------- ---------- -----------
Subtotal.......................................... 25,125.4 27,366.5 25,269.7
Minimum pension liability adjustment................... (4,742.4) (4,736.3) (3,548.4)
Accumulated foreign currency translation adjustments... 44.2 222.5 357.1
Net unrealized gains on investments in certain debt and
equity securities................................... 432.9 492.8 408.4
----------- ---------- -----------
Total Stockholders' Equity........................ 20,860.1 23,345.5 22,486.8
----------- ---------- -----------
Total Liabilities and Stockholders' Equity........ $ 212,897.1 $213,662.7 $ 208,048.7
=========== ========== ===========
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
6
<PAGE> 8
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------------
1996 1995
---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Net Cash Provided by Operating Activities......................... $ 9,631.4 $ 7,972.1
---------- ----------
Cash Flows from Investing Activities
Investment in companies, net of cash acquired................... (53.9) (154.9)
Expenditures for real estate, plants, and equipment............. (2,549.6) (2,128.3)
Expenditures for special tools.................................. (1,759.3) (1,673.3)
Proceeds from disposals of real estate, plants, and equipment... 153.2 202.3
Special Inter-Company Payment from EDS (Note 2)................. 500.0 --
Expenditures related to the sale of NCRS' net assets............ -- (197.0)
Change in other investing assets
Investments in other marketable securities -- acquisitions (10,176.8) (10,297.0)
Investments in other marketable securities -- liquidations... 9,861.7 9,598.9
Finance receivables -- acquisitions.......................... (73,875.7) (85,616.7)
Finance receivables -- liquidations.......................... 56,092.6 71,995.7
Finance receivables -- other................................. 447.4 98.3
Proceeds from sales of finance receivables................... 18,465.6 11,232.7
Operating leases -- acquisitions............................. (11,967.7) (7,693.3)
Operating leases -- liquidations............................. 7,944.1 3,199.1
Other........................................................ 150.4 397.3
---------- ----------
Net Cash Used in Investing Activities...................... (6,768.0) (11,036.2)
---------- ----------
Cash Flows from Financing Activities
Net increase (decrease) in short-term loans payable............. (3,654.8) 1,652.7
Increase in long-term debt...................................... 10,190.7 7,376.1
Decrease in long-term debt...................................... (6,849.9) (5,620.4)
Proceeds from sale of minority interest in DIRECTV(R)........... 137.5 --
Repurchases of common and preference stocks..................... -- (1,680.7)
Proceeds from issuing common stocks............................. 191.2 172.5
Cash dividends paid to stockholders............................. (837.2) (627.4)
---------- ----------
Net Cash (Used in) Provided by Financing Activities........ (822.5) 1,272.8
Effect of exchange rate changes on cash and cash equivalents...... (179.4) 197.7
---------- ----------
Net Cash Provided by (Used in) Continuing Operations....... 1,861.5 (1,593.6)
Net Cash Provided by Discontinued Operations............... 103.2 66.1
---------- ----------
Net increase (decrease) in cash and cash equivalents.............. 1,964.7 (1,527.5)
Cash and cash equivalents at beginning of the period.............. 10,495.4 10,330.8
---------- ----------
Cash and cash equivalents at end of the period............. $ 12,460.1 $ 8,803.3
========== ==========
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
7
<PAGE> 9
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all adjustments
(consisting of only normal recurring items, except as discussed in Note 4),
which are necessary for a fair presentation have been included. The results for
interim periods are not necessarily indicative of results which may be expected
for any other interim period or for the full year. For further information,
refer to the consolidated financial statements and notes thereto included in
General Motors' 1995 Annual Report on Form 10-K, as amended.
Certain amounts for 1995 were reclassified to conform with the 1996
classifications.
NOTE 2. EDS SPLIT-OFF
On June 7, 1996 General Motors split-off Electronic Data Systems
Corporation (EDS) to General Motors Class E stockholders on a tax-free basis for
U.S. federal income tax purposes. Under the terms of the split-off, each share
of General Motors Class E common stock was exchanged for one share of EDS common
stock. In addition, General Motors and EDS entered into a new 10-year agreement,
under which EDS will continue to be General Motors' principal provider of
information-technology (IT) services, and EDS made a special inter-company
payment of $500 million to General Motors.
The financial data related to EDS prior to the June 7, 1996 split-off from
General Motors are classified as discontinued operations. The financial results
of EDS, including assets and liabilities, subsequent to the split-off are not
included in General Motors consolidated financial statements.
EDS systems and other contracts revenues from outside customers included in
income (loss) from discontinued operations totaled $1,944.3 million and $4,349.0
million for the three and six month periods ended June 30, 1996 and $1,967.6
million and $3,845.9 million for the three and six month periods ended June 30,
1995. Income (loss) from discontinued operations of ($208.8) million and $10.0
million for the three and six month periods ended June 30, 1996 is reported net
of an income tax benefit of $109.0 million and income tax expense of $14.1
million, respectively. Income from discontinued operations of $188.0 million and
$384.8 million for the three and six month periods ended June 30, 1995 is
reported net of income taxes of $127.6 million and $238.3 million, respectively.
Prior to the split-off, General Motors approved certain EDS actions to
maintain and improve operating efficiencies and accelerate its move to
"user-centered" computing. As a result, income (loss) from discontinued
operations for the three and six month periods ended June 30, 1996 includes a
one-time charge of $328 million after taxes related to these actions. These
actions were not contingent upon the approval or consummation of the split-off.
Income from discontinued operations for the three and six month periods
ended June 30, 1996 also includes split-off expenses attributable to $1 2/3 par
value common stock of $15 million after taxes or $0.02 per share of $1 2/3
common stock.
Income from discontinued operations for the three and six months ended June
30, 1995 includes $38.9 million of expense associated with purchase accounting
adjustments made at the time of General Motors' purchase of EDS.
8
<PAGE> 10
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
NOTE 2. EDS SPLIT-OFF -- CONCLUDED
The net assets of EDS were as follows:
<TABLE>
<CAPTION>
DEC. 31, JUNE 30,
1995 1995
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
NET ASSETS OF DISCONTINUED OPERATIONS
Current Assets...................................................... $ 4,381.5 $ 3,708.0
Property and Equipment -- Net....................................... 3,318.8 3,119.6
Operating and Other Assets.......................................... 3,208.5 2,909.7
Current Liabilities................................................. (3,261.4) (2,911.7)
Deferred Income Taxes............................................... (739.7) (630.9)
Notes Payable....................................................... (1,852.8) (1,528.3)
--------- ---------
Net Assets of Discontinued Operations........................ $ 5,054.9 $ 4,666.4
========= =========
</TABLE>
General Motors no longer owns the outstanding shares of EDS and,
accordingly, General Motors' consolidated balance sheet reflects decreased
stockholders' equity and liabilities as well as decreased assets. The split-off
resulted in an overall reduction in General Motors' consolidated net worth of
$4.5 billion at June 7, 1996, including the effect of the $500 million special
inter-company payment from EDS.
NOTE 3. OTHER INCOME AND OTHER DEDUCTIONS
Other income and other deductions consist of:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Other Income
Nonfinancing interest............................... $ 378.7 $ 415.3 $ 779.1 $ 875.4
Insurance premiums.................................. 232.5 219.7 475.3 438.6
Gain on sale of interest in DIRECTV................. -- -- 120.3 --
Claims, commissions, and grants..................... 138.4 151.3 212.7 246.6
Equity in earnings of associates -- net............. 43.2 35.2 77.1 102.0
Gain on the sale of finance receivables............. 18.8 18.3 18.8 38.2
Other............................................... 667.0 334.2 1,198.5 678.2
-------- -------- -------- --------
Total Other Income............................. $1,478.6 $1,174.0 $2,881.8 $2,379.0
======== ======== ======== ========
Other Deductions
Provision for financing losses...................... $ 134.6 $ 133.3 $ 289.8 $ 188.3
Insurance losses and loss adjustment expenses....... 191.3 158.0 333.8 318.7
Loss on Sale of NCRS' net assets*................... -- 147.8 -- 147.8
Other............................................... 126.2 99.7 242.1 201.8
-------- -------- -------- --------
Total Other Deductions......................... $ 452.1 $ 538.8 $ 865.7 $ 856.6
======== ======== ======== ========
</TABLE>
- -------------------------
* The Corporation sold National Car Rental System's (NCRS) net assets in the
1995 second quarter, resulting in $162.6 million of net income, or $0.22 per
share of $1 2/3 par value common stock. The 1995 net income reflects $310.4
million of tax benefits related to the restructuring for NCRS in 1992. The tax
benefits had not been previously recorded due to the uncertainty of ultimate
realization.
9
<PAGE> 11
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
NOTE 4. NEW ACCOUNTING STANDARD AND ACCOUNTING CHANGE
In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" (SFAS No. 125). SFAS No.
125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996. General Motors
has not yet determined the impact that this new accounting standard will have on
its consolidated operating results or financial position. General Motors will
adopt this accounting standard on January 1, 1997, as required.
The Emerging Issues Task Force (EITF) of the Financial Accounting Standards
Board reached a consensus in November 1995 on its Issue No. 95-1 and concluded
that a manufacturer must account for the sale of equipment as an operating lease
if it guarantees the resale value of the equipment to the purchaser.
Accordingly, the Corporation modified its revenue recognition policy on sales to
daily rental car companies to conform to the consensus. Adoption of this
consensus, effective January 1, 1995, resulted in an unfavorable cumulative
effect of $51.8 million after-tax ($0.07 per share) attributable to $1 2/3 par
value common stock, and increases in net equipment on operating leases of $4.4
billion and other liabilities and deferred credits of $4.6 billion.
NOTE 5. INVENTORIES
Major classes of inventories are as follows:
<TABLE>
<CAPTION>
JUNE 30, DEC. 31, JUNE 30,
1996 1995 1995
--------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Productive material, work in process, and supplies --
net..................................................... $ 6,427.9 $ 6,570.4 $ 6,190.5
Finished product, service parts, etc. -- net.............. 5,326.8 4,777.9 5,340.2
--------- --------- ---------
Total inventories -- net........................... $11,754.7 $11,348.3 $11,530.7
========= ========= =========
</TABLE>
NOTE 6. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
General Motors has disclosed in the consolidated 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, General Motors does not
admit or otherwise acknowledge that such amounts or existing postretirement
benefit plans of General Motors (other than pensions) represent legally
enforceable liabilities of General Motors.
NOTE 7. PLANT CLOSINGS AND RESTRUCTURING RESERVES
General Motors previously recorded charges to realign GM-NAO's plant
capacity and to provide for a reduction of Hughes Electronic Corporation's
(Hughes) worldwide employment, a major facilities consolidation, and a
reevaluation of certain non-strategic businesses.
10
<PAGE> 12
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
NOTE 7. PLANT CLOSINGS AND RESTRUCTURING RESERVES -- CONCLUDED
The following table summarizes the activity in the GM-NAO plant closings
(excluding environmental) and Hughes restructuring reserves for the period from
January 1, 1994 to June 30, 1996:
<TABLE>
<S> <C>
Balance at January 1, 1994 (Dollars in Millions)............................................ $4,151.7
1994 charges against reserves............................................................. (722.6)
Discount of people related liabilities.................................................... (401.9)
Additions to the reserve by Hughes........................................................ 35.0
Reclassification from environmental clean-up liability.................................... 41.4
--------
Balance at December 31, 1994................................................................ 3,103.6
1995 charges against reserves............................................................. (706.7)
Adjustments to discount for effects of accretion and change in interest rates............. 215.4
--------
Balance at December 31, 1995................................................................ 2,612.3
1996 charges against reserves through June 30............................................. (203.2)
Adjustment to discount for effect of accretion............................................ 49.4
--------
Balance at June 30, 1996.................................................................... $2,458.5
========
</TABLE>
On August 6, 1996, General Motors announced that its Board of Directors had
approved a new generation Saturn vehicle to be assembled at a GM facility in
Wilmington, Delaware. In 1992, General Motors announced its intent to close this
facility and at that time established a plant closing reserve to reflect the
planned closure. The portion of the plant closing reserve relating to the
Wilmington facility will be reversed in the 1996 third quarter resulting in an
increase in net income in that period of approximately $250 million. Separately,
in connection with Delphi's lean manufacturing efforts and competitive market
pressures, it is developing plans to close one facility, and reviewing proposals
for the sale or partnering of four additional facilities. In addition,
evaluations are underway with respect to appropriate plans for other Delphi
facilities. The plans related to the Delphi facilities were not yet finalized at
June 30, 1996; the associated costs are expected to be recognized in the future
when firm plans are adopted and could occur as early as the third quarter of
1996.
General Motors and Hughes periodically evaluate the reserve balances and
estimated future expenditures to assess the assumptions used and the period over
which such costs are expected to be incurred.
NOTE 8. CONTINGENT MATTERS
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 June 30, 1996. 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.
As previously reported, Hughes has maintained a suit against the U.S.
Government since September 1973, regarding the Government's infringement and use
of a Hughes patent (the "Williams Patent") covering "Velocity Control and
Orientation of a Spin Stabilized Body," principally satellites. On June 17,
1994, the U.S. Court of Claims awarded Hughes damages of $114 million. Because
Hughes believed that the record supported a higher royalty rate, it appealed
that decision. The U.S. Government, contending that the award was too high, also
appealed. On June 19, 1996, the Court of Appeals for the Federal Circuit
affirmed the decision of the Court of Claims which awarded Hughes $114 million
in damages, together with interest. The time period to appeal has not yet
expired and accordingly the decision is not yet final. Hughes is unable to
estimate the duration of any such possible appeals. In the opinion of management
of Hughes, there is a reasonable possibility that this matter could be resolved
in the near term. While no amount has been recorded in the financial statements
of Hughes to reflect the $114 million award, a resolution of this matter could
result in a gain that would be material to the earnings of General Motors
attributable to Class H common stock.
11
<PAGE> 13
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
NOTE 9. PREFERENCE STOCK
During the 1996 first quarter, approximately 44.7 million shares of Class E
common stock were issued upon conversion of approximately 3.2 million shares of
Series C Preference Stock (represented by depositary shares). The remaining
6,784 shares of Series C Preference Stock were redeemed on February 22, 1996 for
$3.6 million of cash, or $524.20 per share of Series C Preference Stock ($52.42
per depositary share).
During the 1995 second quarter, the Corporation purchased certain of its
outstanding preference shares for $1.3 billion of cash pursuant to an issuer
tender offer. The repurchase had an unfavorable impact of $0.22 per share of
$1 2/3 par value common stock, including tender offer expenses of $13.5 million
after-tax, or $0.02 per share, that were charged against income and the purchase
price in excess of the carrying amount of the preference shares amounting to
$153.4 million, or $0.20 per share, that was not charged against income but
reduced earnings attributable to $1 2/3 par value common stock.
NOTE 10. EARNINGS PER SHARE ATTRIBUTABLE TO AND DIVIDENDS ON COMMON STOCKS
Earnings per share attributable to common stocks was determined based on
the relative amounts available for the payment of dividends to holders of $1 2/3
par value and Class H common stocks and the former Class E common stock. The
allocation of earnings attributable to such common stocks and the calculation of
the related amounts per share were computed by considering the weighted average
number of common shares outstanding. Beginning in 1996, common stock equivalents
were not considered as they are not material.
The Available Separate Consolidated Net Income of Hughes represents the
quarterly separate consolidated net income of Hughes, excluding the effects of
purchase accounting adjustments arising at the time of the Corporation's
acquisition of Hughes, multiplied by a fraction, the numerator of which is a
number equal to the weighted average number of shares of Class H common stock
outstanding during the period (98.2 million during the second quarter of 1996)
and the denominator of which was 399.9 million during the second quarter of
1996. The comparable numerator for the second quarter of 1995 was 95.4 million
and the comparable denominator was 399.9 million.
The denominator used in determining the Available Separate Consolidated Net
Income of Hughes may be adjusted as deemed appropriate by the Board of Directors
to reflect subdivisions or combinations of the Class H common stock and to
reflect certain transfers of capital to or from Hughes. The Board's discretion
to make such adjustments is limited by criteria set forth in the Corporation's
Restated Certificate of Incorporation. In this regard, the Board has generally
caused the denominator to decrease as shares are purchased by Hughes, and to
increase as such shares are used, at Hughes expense, for Hughes employee benefit
plans or acquisitions.
Dividends on the $1 2/3 par value common stock are declared out of the
earnings of General Motors and its subsidiaries, excluding the Available
Separate Consolidated Net Income of Hughes and the Available Separate
Consolidated Net Income of EDS, during such time that EDS was an indirect wholly
owned subsidiary of the Corporation. Dividends on the Class H common stock are
declared out of the Available Separate Consolidated Net Income of Hughes earned
since the acquisition of Hughes by the Corporation.
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 H common stock is to pay quarterly cash dividends at
an annual rate approximately equal to 35% of the Available Separate Consolidated
Net Income of Hughes for the prior year.
12
<PAGE> 14
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)
NOTE 10. EARNINGS PER SHARE ATTRIBUTABLE TO AND DIVIDENDS ON COMMON STOCKS --
CONCLUDED
The Available Separate Consolidated Net Income of EDS during the period
that EDS was an indirect wholly-owned subsidiary of the Corporation was
determined quarterly and was equal to the quarterly separate consolidated net
income of EDS, excluding the effects of purchase accounting adjustments relating
to the Corporation's acquisition of EDS, multiplied by a fraction, the numerator
of which represented the weighted average number of shares of Class E common
stock outstanding during the period (479.3 million for the second quarter of
1996) and the denominator of which was 479.3 million for the second quarter of
1996. The comparable numerator for the second quarter of 1995 was 438.7 million
and the comparable denominator was 481.7 million. The denominator of the
fraction was adjusted from time-to-time as deemed appropriate by the Board of
Directors to reflect subdivisions or combinations of the Class E common stock
and to reflect certain transfers of capital to or from EDS.
Dividends on the Class E common stock were declared only out of the
Available Separate Consolidated Net Income of EDS earned during such time that
EDS was an indirect wholly-owned subsidiary of the Corporation.
NOTE 11. GENERAL MOTORS ACCEPTANCE CORPORATION AND SUBSIDIARIES
Summary financial data of General Motors Acceptance Corporation (GMAC) and
its subsidiaries were as follows:
CONDENSED GMAC CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Financing Revenue
Retail and lease financing...................... $ 955.7 $ 772.3 $ 1,913.2 $ 1,522.7
Operating leases................................ 1,784.6 1,539.3 3,522.9 2,972.3
Wholesale and term loans........................ 384.0 606.0 867.4 1,140.0
--------- --------- --------- ---------
Total financing revenue...................... 3,124.3 2,917.6 6,303.5 5,635.0
Interest and discount............................. (1,224.6) (1,275.3) (2,464.3) (2,495.1)
Depreciation on operating leases.................. (1,122.9) (1,051.3) (2,273.6) (2,041.0)
--------- --------- --------- ---------
Net financing revenue........................ 776.8 591.0 1,565.6 1,098.9
Insurance premiums earned......................... 287.9 273.5 585.4 544.8
Other income...................................... 540.8 562.4 987.9 1,061.4
--------- --------- --------- ---------
Net financing revenue and other.............. 1,605.5 1,426.9 3,138.9 2,705.1
Expenses.......................................... 1,044.4 972.2 2,070.5 1,819.7
--------- --------- --------- ---------
Income before income taxes................... 561.1 454.7 1,068.4 885.4
Income taxes...................................... 211.1 195.5 409.3 371.3
--------- --------- --------- ---------
Net Income................................... $ 350.0 $ 259.2 $ 659.1 $ 514.1
========= ========= ========= =========
</TABLE>
Certain amounts for 1995 have been reclassified to conform with 1996
classifications.
13
<PAGE> 15
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONCLUDED
(UNAUDITED)
NOTE 11. GENERAL MOTORS ACCEPTANCE CORPORATION AND SUBSIDIARIES -- CONCLUDED
CONDENSED GMAC CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, DEC. 31, JUNE 30,
1996 1995 1995
--------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 960.4 $ 1,448.6 $ 1,476.1
Investments in securities................................... 4,365.7 4,328.2 4,336.8
Finance receivables -- net.................................. 59,331.9 60,404.9 59,801.4
Net investment in operating leases.......................... 24,112.6 22,134.9 20,026.7
Other assets................................................ 7,306.5 7,330.9 6,742.7
--------- --------- ---------
Total Assets........................................... $96,077.1 $95,647.5 $92,383.7
========= ========= =========
Short-term debt............................................. $43,165.9 $43,871.8 $36,974.6
Accounts payable and other liabilities...................... 13,359.1 12,455.8 13,521.0
Long-term debt.............................................. 31,210.1 31,050.6 33,626.3
Stockholder's equity........................................ 8,342.0 8,269.3 8,261.8
--------- --------- ---------
Total Liabilities and Stockholder's Equity............. $96,077.1 $95,647.5 $92,383.7
========= ========= =========
</TABLE>
CONDENSED GMAC CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1996 1995
---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Net Cash Provided by Operating Activities............................ $ 3,940.8 $ 3,706.2
---------- ----------
Cash Flows from Investing Activities
Finance receivables-acquisitions..................................... (73,916.3) (85,616.7)
Finance receivables-liquidations..................................... 56,094.8 70,472.1
Notes receivable from General Motors................................. (45.7) 1,080.5
Operating leases -- acquisitions..................................... (9,894.8) (6,795.0)
Operating leases -- liquidations..................................... 5,508.1 2,834.0
Investments in securities -- acquisitions............................ (5,057.2) (6,821.8)
Investments in securities -- liquidations............................ 5,045.7 6,590.8
Proceeds from sales of receivables -- wholesale...................... 17,466.3 7,854.6
Proceeds from sales of receivables -- retail......................... 999.3 3,378.1
Due and deferred from receivable sales............................... 162.8 (4.9)
Other................................................................ 79.4 466.9
---------- ----------
Net Cash Used in Investing Activities........................... (3,557.6) (6,561.4)
---------- ----------
Cash Flows from Financing Activities
Debt with original maturities 90 days and over
-- proceeds........................................................ 26,180.5 29,039.1
-- liquidations.................................................... (25,264.4) (25,048.9)
Debt with original maturities less than 90 days -- net change........ (1,290.2) (593.4)
Cash dividends paid to General Motors................................ (500.0) (400.0)
---------- ----------
Net Cash (Used in) Provided by Financing Activities............. (874.1) 2,996.8
---------- ----------
Effect of exchange rate changes on cash and cash equivalents......... 2.7 (5.0)
---------- ----------
Net (decrease) increase in cash and cash equivalents................. (488.2) 136.6
Cash and cash equivalents at beginning of the period................. 1,448.6 1,339.5
---------- ----------
Cash and cash equivalents at end of the period....................... $ 960.4 $ 1,476.1
========== ==========
</TABLE>
Certain amounts for 1995 have been reclassified to conform with 1996
classifications.
* * * * * *
14
<PAGE> 16
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The following management's discussion and analysis should be read in
conjunction with the management's discussion and analysis included in the
Corporation's 1995 Annual Report to the SEC on Form 10-K, as amended, (the 1995
Form 10-K) and management's discussion and analysis relating to Electronic Data
Systems Corporation (EDS) and Hughes Electronics Corporation (Hughes) included
in Exhibits 99(a) and 99(b), respectively, to the 1995 Form 10-K. The
competitive position and environmental matters discussions included in Part I,
Item 1 of the 1995 Form 10-K are specifically incorporated by reference herein.
GM-NAO/DELPHI FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net Sales............................................... $28,949.1 $27,261.5 $52,514.2 $54,711.1
--------- --------- --------- ---------
Pre-tax Income.......................................... 1,581.3 1,286.1 1,193.9 2,875.4
Income Taxes............................................ (565.0) (409.9) (392.7) (973.0)
Earnings of Nonconsolidated Affiliates.................. 33.6 4.1 53.4 35.9
Cumulative effect of accounting change(1)............... -- -- -- (51.8)
--------- --------- --------- ---------
Net Income.......................................... $ 1,049.9 $ 880.3 $ 854.6 $ 1,886.5
========= ========= ========= =========
Net Profit Margin(2)................................ 3.6% 3.2% 1.6% 3.4%
</TABLE>
- -------------------------
(1) In November 1995, the provisions of Issue No. 95-1 of the Emerging Issues
Task Force (EITF) of the Financial Accounting Standards Board were
retroactively adopted to January 1, 1995, which had an unfavorable impact of
$51.8 million.
(2) Net profit margin represents net income as a percent of net sales.
VEHICLE UNIT DELIVERIES OF CARS AND TRUCKS -- GM-NAO
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
--------------------------------------------------------------
1996 1995
----------------------------- -----------------------------
GM AS GM AS
A % OF A % OF
INDUSTRY GM INDUSTRY INDUSTRY GM INDUSTRY
-------- ----- -------- -------- ----- --------
(UNITS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
United States
Cars.............................................. 2,425 842 34.7% 2,364 795 33.7%
Trucks............................................ 1,863 531 28.5% 1,757 522 29.7%
----- ----- ----- -----
Total United States............................. 4,288 1,373 32.0% 4,121 1,317 32.0%
Other North America................................. 420 132 31.2% 388 126 32.3%
----- ----- ----- -----
Total North America............................. 4,708 1,505 32.0% 4,509 1,443 32.0%
===== ===== ===== =====
Wholesale Sales -- GM-NAO
Cars.............................................. 888 922
Trucks............................................ 638 578
----- -----
Total........................................... 1,526 1,500
===== =====
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------------
1996 1995
----------------------------- -----------------------------
GM AS GM AS
A % OF A % OF
INDUSTRY GM INDUSTRY INDUSTRY GM INDUSTRY
-------- ----- -------- -------- ----- --------
(UNITS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
United States
Cars.............................................. 4,475 1,503 33.6% 4,392 1,460 33.2%
Trucks............................................ 3,506 1,023 29.2% 3,293 996 30.3%
----- ----- ----- -----
Total United States............................. 7,981 2,526 31.6% 7,685 2,456 32.0%
Other North America................................. 751 234 31.3% 740 230 31.1%
----- ----- ----- -----
Total North America............................. 8,732 2,760 31.6% 8,425 2,686 31.9%
===== ===== ===== =====
Wholesale Sales -- GM-NAO
Cars.............................................. 1,544 1,860
Trucks............................................ 1,148 1,170
----- -----
Total........................................... 2,692 3,030
===== =====
</TABLE>
15
<PAGE> 17
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GM-NAO/DELPHI FINANCIAL REVIEW
GM-NAO/Delphi, which represents the combined results of GM-NAO and Delphi
Automotive Systems, reported net income of $1,049.9 million for the three months
ended June 30, 1996 (1996 second quarter), an improvement of $169.6 million
compared to net income of $880.3 million in the same prior year period.
GM-NAO/Delphi's net profit margin -- net income as a percent of net sales -- was
3.6% in the 1996 second quarter, compared with 3.2% in the second quarter of
1995. The year-over-year net income improvement was primarily attributable to
higher net sales and lower material costs. Net income for the six months ended
June 30, 1996 totaled $854.6 million, compared to $1,886.5 million for the first
half of 1995. The 1996 six month results included the unfavorable effects of a
17-day strike at two component plants in Dayton, Ohio that temporarily shutdown
26 of General Motors' 29 assembly plants in North America and certain automotive
component plants. Net income reported for the first six months of 1995 was
restated to reflect the impact of General Motors' adoption, retroactive to
January 1, 1995, of EITF Issue No. 95-1, which reduced previously reported net
income by $51.8 million.
Net sales for the 1996 second quarter increased $1,687.6 million, or 6.2%,
and totaled $28,949.1 million, compared to $27,261.5 million in the same 1995
period. The net sales increase resulted from a 26,000 unit increase in wholesale
sales volume, a favorable product mix and an increase in Delphi's non-GM-NAO
vehicle sales, partially offset by higher sales incentives. Net sales for the
six months ended June 30, 1996 totaled $52,514.2 million, compared to $54,711.1
million in the first half of 1995. The year-over-year decline in net sales
reflects decreased wholesale sales volume resulting from the first quarter
strike and lower pre-strike production necessary to balance U.S. inventories.
General Motors vehicle deliveries in North America were 1,505,000 units in
the 1996 second quarter, which resulted in a market share of 32.0%, up from
1,443,000 units and a 32.0% share in the second quarter of 1995. Vehicle
deliveries for the first six months of 1996 totaled 2,760,000 units, for a 31.6%
share of the market, compared with deliveries of 2,686,000 units and a 31.9%
market share in the same 1995 period.
GM-NAO/Delphi's pre-tax income increased $295.2 million and totaled
$1,581.3 million in the 1996 second quarter, compared to pre-tax income of
$1,286.1 million in the comparable 1995 period. The year-over-year increase in
pre-tax results reflected the impact of increased volume, a favorable product
mix, manufacturing and material cost savings, and lower pension expense. These
favorable items were partially offset by increased engineering costs associated
with new product introductions scheduled for the last half of 1996 and early
1997 and higher sales incentives. The manufacturing and material cost reductions
reflect the continued focus on strengthening the GM-NAO vehicle development
process, while implementing lean and flexible manufacturing and assembly
operations, and leveraging the power of General Motor's worldwide purchasing
process. The lower pension expense in the 1996 second quarter reflected the
improved funding of the U.S. pension plans.
GM-NAO/Delphi's pre-tax income for the six months ended June 30, 1996
totaled $1,193.9 million, compared to $2,875.4 million in the comparable 1995
period. The year-over-year decline resulted from lower wholesale sales volume,
higher sales incentives and increased engineering expenses, partially offset by
manufacturing and material cost reductions and lower pension expense.
16
<PAGE> 18
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GMIO FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- -----------------------
1996 1995 1996 1995
-------- -------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net Sales....................................... $9,100.2 $8,735.3 $18,097.7 $16,926.9
-------- -------- --------- ---------
Pre-tax Income.................................. 626.6 765.6 1,203.2 1,608.1
Income Taxes.................................... (208.5) (283.9) (378.9) (631.4)
Earnings of Nonconsolidated Affiliates.......... 6.3 31.6 31.7 58.7
-------- -------- --------- ---------
Net Income
GM Europe..................................... 318.9 317.9 603.8 646.3
Other International........................... 105.5 195.4 252.2 389.1
-------- -------- --------- ---------
Total Net Income......................... $ 424.4 $ 513.3 $ 856.0 $ 1,035.4
======== ======== ========= =========
Net Profit Margin........................ 4.7% 5.9% 4.7% 6.1%
</TABLE>
VEHICLE UNIT DELIVERIES OF CARS AND TRUCKS -- GMIO
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
------------------------------------------------------------
1996 1995
---------------------------- ----------------------------
GM AS GM AS
A % OF A % OF
INDUSTRY GM INDUSTRY INDUSTRY GM INDUSTRY
-------- --- -------- -------- --- --------
(UNITS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
International
Europe...................................... 4,558 492 10.8% 4,269 485 11.4%
Latin America, Africa and the Middle East
(LAAMO).................................. 983 159 16.2% 1,012 166 16.4%
Asian and Pacific........................... 3,249 153 4.7% 3,127 153 4.9%
----- --- ----- ---
Total International.................... 8,790 804 9.1% 8,408 804 9.6%
===== === ===== ===
Wholesale Sales -- GMIO
Cars........................................ 602 592
Trucks...................................... 186 194
--- ---
Total.................................. 788 786
=== ===
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------------
1996 1995
----------------------------- -----------------------------
GM AS GM AS
A % OF A % OF
INDUSTRY GM INDUSTRY INDUSTRY GM INDUSTRY
-------- ----- -------- -------- ----- --------
(UNITS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
International
Europe...................................... 8,914 980 11.0% 8,441 950 11.3%
Latin America, Africa and the Middle East
(LAAMO).................................. 1,918 322 16.8% 2,016 312 15.5%
Asian and Pacific........................... 6,798 310 4.6% 6,641 293 4.4%
------ ----- ------ -----
Total International.................... 17,630 1,612 9.1% 17,098 1,555 9.1%
====== ===== ====== =====
Wholesale Sales -- GMIO
Cars........................................ 1,190 1,183
Trucks...................................... 390 369
----- -----
Total.................................. 1,580 1,552
===== =====
</TABLE>
17
<PAGE> 19
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GMIO FINANCIAL REVIEW
General Motors International Operations (GMIO) reported net income of
$424.4 million, or 4.7% of net sales, in the second quarter of 1996 compared
with net income of $513.3 million, or 5.9% of net sales, in the second quarter
of 1995. The lower net income for the quarter was largely due to unfavorable
currency-exchange movements, as well as unfavorable product mix and continued
labor- and material-cost pressures in Latin America. GMIO's net income for the
six months ended June 30, 1996 totaled $856.0 million, or 4.7% of net sales,
compared to $1,035.4 million, or 6.1% of net sales, in the comparable 1995
period.
Total net sales for GMIO increased by $364.9 million, or 4.2%, to $9,100.2
million for the second quarter of 1996, compared to $8,735.3 million in the
prior year period. The increased net sales reflected higher wholesale sales
volume in Europe because of increased Vectra availability and continued strong
Corsa sales, partially offset by unfavorable product mix in Latin America. Net
sales for the six months ended June 30, 1996 totaled $18,097.7 million, an
increase of $1,170.8 million, or 6.9%, compared to the first six months of 1995.
The increase in net sales during the first six months of 1996 primarily resulted
from higher volume worldwide.
At the pre-tax level, GMIO recorded income of $626.6 million for the 1996
second quarter, down from the prior year period when pre-tax income was $765.6
million. GMIO's pre-tax income for the six months ended June 30, 1996 was
$1,203.2 million, compared to $1,608.1 million in the comparable 1995 period.
Looking at the regional split, GM Europe's (GME) net income for the 1996
second quarter increased slightly to $318.9 million, compared to $317.9 million
in the second quarter of 1995. The improved second quarter 1996 net income for
GME resulted from higher wholesale sales volume and material cost reductions,
partially offset by expenses relating to global expansion initiatives and
increased engineering costs associated with new product development programs.
Net income for the remainder of GMIO's operations totaled $105.5 million for the
1996 second quarter, compared to $195.4 million for the second quarter of 1995.
The decrease in net income for the remainder of GMIO resulted from unfavorable
currency-exchange, primarily due to the devaluation of the Venezuelan Bolivar,
unfavorable product mix (high availability of the Corsa) and continued
labor- and material-cost pressures in Brazil, and expenses associated with
global expansion initiatives.
GME reported net income of $603.8 million for the six months ended June 30,
1996, compared to $646.3 million in the comparable 1995 period. The lower net
income for the 1996 period primarily resulted from the first quarter impact of
unfavorable product mix (Vectra launch), partially offset by the favorable
impact of increased volume. Net income for the remainder of GMIO was $252.2
million for the six months ended June 30, 1996, compared to $389.1 million for
the first six months of 1995. The year-over-year decline reflects unfavorable
exchange and cost pressures and unfavorable product mix in Latin America,
partially offset by increased volume.
18
<PAGE> 20
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GENERAL MOTORS ACCEPTANCE CORPORATION (GMAC) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Financing revenue
Retail and lease financing...................... $ 955.7 $ 772.3 $ 1,913.2 $ 1,522.7
Operating leases................................ 1,784.6 1,539.3 3,522.9 2,972.3
Wholesale and term loans........................ 384.0 606.0 867.4 1,140.0
--------- --------- --------- ---------
Total financing revenue...................... 3,124.3 2,917.6 6,303.5 5,635.0
Interest and discount............................. (1,224.6) (1,275.3) (2,464.3) (2,495.1)
Depreciation on operating leases.................. (1,122.9) (1,051.3) (2,273.6) (2,041.0)
--------- --------- --------- ---------
Net financing revenue........................ 776.8 591.0 1,565.6 1,098.9
Other income and insurance premiums earned........ 828.7 835.9 1,573.3 1,606.2
--------- --------- --------- ---------
Net financing revenue and other.............. 1,605.5 1,426.9 3,138.9 2,705.1
Expenses.......................................... 1,044.4 972.2 2,070.5 1,819.7
--------- --------- --------- ---------
Pre-tax income.................................... 561.1 454.7 1,068.4 885.4
Income taxes...................................... 211.1 195.5 409.3 371.3
--------- --------- --------- ---------
Net Income................................... $ 350.0 $ 259.2 $ 659.1 $ 514.1
========= ========= ========= =========
Net Income from Financing Operations.............. $ 318.3 $ 228.3 $ 590.1 $ 444.6
Net Income from Insurance Operations.............. 31.7 30.9 69.0 69.5
--------- --------- --------- ---------
Net Income................................... $ 350.0 $ 259.2 $ 659.1 $ 514.1
========= ========= ========= =========
Average Earning Assets............................ $92,212.6 $89,204.8 $92,213.3 $87,350.6
Return on Average Equity.......................... 16.7% 12.6% 15.8% 12.6%
</TABLE>
19
<PAGE> 21
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
GMAC FINANCIAL REVIEW
GMAC provides a broad range of financial and insurance services to General
Motors' customers. General Motors encourages reference to the GMAC Quarterly
Report on Form 10-Q for the period ended June 30, 1996 filed separately with the
Securities and Exchange Commission.
GMAC's consolidated second quarter net income for 1996 totaled $350.0
million, a 35% increase over the second quarter of 1995. The 39% and 33%
increases in second quarter and six month net income from financing operations,
including GMAC Mortgage Group results, is primarily attributable to a
significant improvement in North American financing margins, principally in the
retail finance receivables and operating lease portfolios; and to a lesser
extent, a lower effective tax rate in 1996 for GMAC's international financing
operations.
During the three months ended June 30, 1996, GMAC financed 25.7% of new
General Motors vehicles delivered in the U.S., up from 23.0% during the same
period last year. Penetration for the first six months of 1996 was 25.9%
compared to 23.4% for the comparable 1995 period. The 1996 gains in retail
market share, principally driven by General Motors sponsored retail programs
which offered special rate financing and leasing incentives, were partially
offset by a continued decline in fleet transaction participation. This higher
volume contributed to the favorable increases in retail and lease financing and
operating lease revenues.
U.S. wholesale inventory financing was provided on 961,000 and 1,681,000
new General Motors vehicles during the respective three and six month periods
ended June 30, 1996, compared to 977,000 and 1,982,000 during the same 1995
periods. This financing represented 69.9% and 72.0% of General Motors' U.S.
sales to dealers during the first six months of 1996 and 1995, respectively.
Wholesale financing revenue during the second quarter and first six months of
1996 was down from 1995 due to lower interest rate indexes upon which floor plan
rates are based and the April 1996 additional sale of wholesale receivables
which GMAC continues to service for a fee.
GMAC's worldwide cost of borrowing for the second quarter and first six
months of 1996 averaged 6.46% and 6.60%, respectively, 79 and 60 basis points
below the comparable prior year levels. Total borrowing costs for U.S.
operations also declined to an average of 6.36% and 6.50% for the quarter and
six month periods ended June 30, 1996, down from 6.98% and 7.02% for the
respective 1995 periods. These improvements are attributable to two factors: 1)
a lower general level of short term interest rates as the U.S. prime lending
rate for the six month period averaged 62 basis points below last year; and 2)
the return to a more traditional funding mix which emphasizes a greater
proportion of floating rate short-term borrowings.
The $178.6 million quarter-to-quarter improvement in consolidated net
financing revenue and other income was partially offset by a $72.2 million
increase in total expenses which is primarily attributable to higher general
operating costs incidental to expanded business activities. These factors,
combined with the first quarter's $100.2 million increase in the provision for
financing losses (over first quarter 1995), also contributed significantly to
the $250.8 million increase in total expenses for the first six months of 1996
over the comparable prior year period.
20
<PAGE> 22
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
HUGHES FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net Sales
Outside customers............................... $2,531.2 $2,346.1 $4,970.1 $4,508.7
GM and affiliates............................... 1,501.4 1,362.4 2,676.1 2,766.6
-------- -------- -------- --------
Total Net Sales.............................. 4,032.6 3,708.5 7,646.2 7,275.3
Other Income -- net............................... 29.9 15.1 153.0 27.1
-------- -------- -------- --------
Total Revenues............................... 4,062.5 3,723.6 7,799.2 7,302.4
-------- -------- -------- --------
Pre-tax Income.................................... 448.3 436.3 920.8 839.6
Income Taxes...................................... 172.3 178.8 363.7 344.2
-------- -------- -------- --------
Net Income................................... $ 276.0 $ 257.5 $ 557.1 $ 495.4
======== ======== ======== ========
Earnings Used for
Computation of Available Separate
Consolidated Net Income (1)............. $ 306.6 $ 288.4 $ 618.3 $ 557.3
======== ======== ======== ========
Net Earnings Attributable to Class H Common Stock
on a Per Share Basis............................ $0.77 $0.72 $1.55 $1.39
Cash Dividends Per Share of Class H Common
Stock........................................... $0.24 $0.23 $0.48 $0.46
</TABLE>
- -------------------------
(1) Excludes amortization of GM purchase accounting adjustments of $30.6 million
and $30.9 million for the second quarters of 1996 and 1995, and $61.2 and
$61.9 million for the six-month periods ended June 30, 1996 and 1995,
respectively, related to GM's acquisition of Hughes Aircraft Company.
SEGMENT HIGHLIGHTS*
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Automotive Electronics
Revenues........................................ $1,554.0 $1,484.8 $2,825.8 $2,981.0
Net Sales....................................... $1,540.2 $1,462.7 $2,800.4 $2,935.4
Operating Profit(1)............................. $ 236.4 $ 248.8 $ 395.7 $ 504.2
Operating Profit Margin(2)...................... 15.3% 17.0% 14.1% 17.2%
Telecommunications and Space
Revenues........................................ $ 951.9 $ 747.4 $1,888.3 $1,394.1
Net Sales....................................... $ 950.3 $ 751.4 $1,771.3 $1,408.0
Operating Profit(1)............................. $ 57.0 $ 45.9 $ 131.5 $ 77.4
Operating Profit Margin(2)...................... 6.0% 6.1% 7.4% 5.5%
Aerospace and Defense Systems
Revenues........................................ $1,510.4 $1,432.5 $3,022.8 $2,817.5
Net Sales....................................... $1,512.0 $1,426.9 $3,014.2 $2,810.0
Operating Profit(1)............................. $ 161.4 $ 163.6 $ 319.3 $ 317.1
Operating Profit Margin(2)...................... 10.7% 11.5% 10.6% 11.3%
</TABLE>
- -------------------------
* The summary excludes purchase accounting adjustments related to GM's
acquisition of Hughes Aircraft Company.
(1) Net Sales less Total Costs and Expenses other than Interest Expense.
(2) Operating Profit as a percentage of Net Sales.
21
<PAGE> 23
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
HUGHES FINANCIAL REVIEW
Hughes Electronics reported net income of $276.0 million for the second
quarter of 1996 compared with $257.5 million in the second quarter of 1995.
Excluding amortization of purchase accounting adjustments related to GM's
acquisition of Hughes Aircraft Company, Hughes' Earnings Used for Computation of
Available Separate Consolidated Net Income was $306.6 million for the second
quarter of 1996 compared to $288.4 million for the same period in 1995. The
increase in quarterly earnings primarily reflects improved performance in the
Telecommunications and Space segment and a lower effective tax rate resulting
from the favorable resolution of certain tax contingencies. Earnings Used for
Computation of Available Separate Consolidated Net Income was $618.3 million for
the six months ended June 30, 1996 compared to $557.3 million in the comparable
1995 period. The 1996 six-month results included the gain recognized from the
sale of a 2.5% interest in DIRECTV(R) to AT&T and the unfavorable impact on the
Automotive Electronics segment of lower first quarter GM production volumes
related to a 17-day strike at two GM component plants in the first quarter of
1996.
Second quarter revenues increased 9.1% between 1995 and 1996 due to revenue
increases in each of the segments, particularly Telecommunications and Space.
The 27.4% Telecommunications and Space segment revenue increase was due to
increased commercial satellite manufacturing and cellular communications
equipment sales as well as continued DIRECTV subscriber growth, partially offset
by a reduction in Galaxy(R) satellite transponder sales. The 1995 acquisition of
Magnavox Electronic Systems Company (Magnavox) in the Aerospace and Defense
Systems segment and international and domestic sales growth in the Automotive
Electronics segment also contributed to the increase in revenues.
For the six-month period ended June 30, 1996, revenues increased 6.8% over
the same period in 1995. This revenue growth was primarily the result of a 35.4%
increase in the Telecommunications and Space segment driven by DIRECTV
subscriber growth, increased sales of Galaxy transponders and commercial
satellites, and the gain from the sale of the equity interest in DIRECTV to
AT&T. The 5.4% revenue increase in the Aerospace and Defense Systems segment was
principally due to additional revenues resulting from the 1995 acquisitions of
CAE-Link and Magnavox. The 5.2% decline in Automotive Electronics segment six-
month revenues was principally attributable to the aforementioned strike.
Second quarter 1996 operating profit, excluding amortization of purchase
accounting adjustments related to GM's acquisition of Hughes Aircraft Company,
remained essentially unchanged from the year-earlier period. The operating
profit margin was 11.2% for the second quarter compared with 12.2% for the same
period in 1995. The decrease in operating profit margin was primarily a result
of the decline in margins in the Automotive Electronics and Aerospace and
Defense Systems segments. The lower operating profit margin in the Automotive
Electronics segment was primarily due to price reductions resulting from
competitive pricing in connection with GM's global sourcing initiative and
continued investment in international expansion. The lower margin in the
Aerospace and Defense Systems segment was attributable to a continued shift from
production programs to engineering and development programs, and growth in
information systems and services revenues.
Operating profit for the six months ended June 30, 1996 declined 4.9% when
compared with the same six-month period in 1995. The operating profit margin was
10.9% for the first six months of 1996 compared with 12.1% in the comparable
1995 period. The majority of the decline in operating profit and operating
profit margin was attributable to the Automotive Electronics segment primarily
due to the strike discussed above and continued price reductions.
22
<PAGE> 24
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS WITH FINANCING AND INSURANCE OPERATIONS
ON AN EQUITY BASIS
To facilitate analysis, the following financial statements present
financial data for the Corporation's manufacturing, wholesale marketing, defense
and electronics operations with the financing and insurance operations
(primarily GMAC) reflected on an equity basis. This is the same basis and format
used in years prior to the Corporation's adoption of SFAS No. 94, Consolidation
of All Majority-owned Subsidiaries.
CONSOLIDATED STATEMENT OF INCOME WITH FINANCING AND INSURANCE OPERATIONS ON AN
EQUITY BASIS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Net Sales and Revenues(1)..................... $40,182.7 $38,124.5 $74,854.3 $75,621.1
--------- --------- --------- ---------
Costs and Expenses
Cost of sales and other operating charges,
exclusive of items listed below.......... 33,125.4 31,449.8 63,249.1 62,230.0
Selling, general, and administrative
expenses................................. 2,955.9 2,500.7 5,403.4 4,851.2
Depreciation of real estate, plants, and
equipment................................ 1,000.4 863.1 1,989.5 1,718.3
Amortization of special tools............... 824.8 877.8 1,585.5 1,746.0
Amortization of intangible assets........... 24.6 38.3 62.8 75.3
--------- --------- --------- ---------
Total Costs and Expenses............... 37,931.1 35,729.7 72,290.3 70,620.8
--------- --------- --------- ---------
Operating Income.............................. 2,251.6 2,394.8 2,564.0 5,000.3
Other income less income deductions -- net.... 574.2 144.7 1,141.4 491.6
Interest expense.............................. (229.4) (127.9) (425.2) (405.5)
--------- --------- --------- ---------
Income from Continuing Operations before
Income Taxes................................ 2,596.4 2,411.6 3,280.2 5,086.4
Income taxes.................................. 885.8 623.9 1,120.1 1,663.2
--------- --------- --------- ---------
Income from Continuing Operations before
Earnings of Nonconsolidated Affiliates and
Cumulative Effect of Accounting Change...... 1,710.6 1,787.7 2,160.1 3,423.2
Earnings of nonconsolidated affiliates........ 384.9 294.4 736.1 616.1
--------- --------- --------- ---------
Income from Continuing Operations before
Cumulative Effective of Accounting Change... 2,095.5 2,082.1 2,896.2 4,039.3
Income (Loss) from discontinued operations.... (208.8) 188.0 10.0 384.8
Cumulative effect of accounting change(2)..... -- -- -- (51.8)
--------- --------- --------- ---------
Net Income............................. $ 1,886.7 $ 2,270.1 $ 2,906.2 $ 4,372.3
========= ========= ========= =========
Net Profit Margin(3)................... 5.2% 5.5% 3.9% 5.3%
</TABLE>
- -------------------------
(1) Includes sales to nonconsolidated affiliates of $221.6 million and $199.7
million for the second quarter of 1996 and 1995 and $497.7 million and
$403.1 million for the six month periods ended June 30, 1996 and 1995,
respectively.
(2) Effective January 1, 1995, the Corporation adopted EITF Issue No. 95-1,
resulting in an unfavorable cumulative effect of $51.8 million.
(3) Net profit margin represents income from continuing operations before
cumulative effect of accounting change, as a percent of net sales and
revenues.
23
<PAGE> 25
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS WITH FINANCING AND INSURANCE OPERATIONS
ON AN EQUITY BASIS -- CONTINUED
General Motors' 1996 second quarter consolidated income from continuing
operations totaled $2,095.5 million, or $2.65 per share of GM $1 2/3 par value
common stock, compared to $2,082.1 million, or $2.41 per share of GM $1 2/3 par
value common stock, for the comparable 1995 period. Income from continuing
operations for the six months ended June 30, 1996 was $2,896.2 million, or $3.58
per share of GM $1 2/3 par value common stock, compared to $4,039.3 million, or
$4.82 per share of GM $1 2/3 par value common stock, for the first six months of
1995 (excluding the cumulative effect of an accounting change).
General Motors completed the split-off of Electronic Data Systems
Corporation (EDS) on June 7, 1996, and accordingly, the financial results
related to EDS through the split-off date have been reported as discontinued
operations. General Motors' 1996 second quarter consolidated net income,
including the loss from discontinued operations through the June 7, 1996
split-off, totaled $1,886.7 million or $2.63 per share of GM $1 2/3 par value
common stock, compared to $2,270.1 million, or $2.39 per share of GM $1 2/3 par
value common stock, for the comparable 1995 period. Consolidated net income for
the six months ended June 30, 1996 was $2,906.2 million, or $3.57 per share of
GM $1 2/3 par value common stock, compared to $4,372.3 million, or $4.83 per
share of GM $1 2/3 par value common stock, for the first six months of 1995.
Highlights of financial performance by GM's major business sectors for the
quarter and six months ended June 30 are shown below.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------- -----------------
1996 1995 1996 1995
------ ------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
MAJOR BUSINESS SECTOR RESULTS
GM-NAO/Delphi.......................................... $1,050 $ 880 $ 855 $1,886
GMIO................................................... 424 513 856 1,035
GMAC................................................... 350 259 659 514
Hughes................................................. 307 288 618 557
Other *................................................ (35) 142 (92) (5)
------ ------ ------ ------
Income before discontinued operations................ 2,096 2,082 2,896 3,987
Discontinued operations (EDS).......................... (209) 188 10 385
------ ------ ------ ------
Consolidated Net Income.............................. $1,887 $2,270 $2,906 $4,372
====== ====== ====== ======
</TABLE>
- -------------------------
* Includes Allison Transmission Division, GM Locomotive Group, and purchase
accounting adjustments.
Second quarter 1996 net sales and revenues increased $2,058.2 million, or
5.4%, and totaled $40,182.7 million, compared to $38,124.5 million for the same
period in the prior year. The increase in net sales and revenues resulted from
increased wholesale sales volume in North America and Europe, partially offset
by higher sales incentives, as well as continued growth in net sales and
revenues for Hughes, and an increase in Delphi's non-GM-NAO vehicle sales. Net
sales and revenues for the six months ended June 30, 1996 were $74,854.3
million, compared to $75,621.1 million for the first half of 1995, and reflected
decreased wholesale sales volume from the 1996 first quarter strike and lower
pre-strike production necessary to balance U.S. inventories.
The gross margin percentage for the 1996 second quarter was 17.6% compared
to 17.5% in the comparable prior year period. The gross margin percentage for
the six months ended June 30, 1996 was 15.5%, compared to 17.7% for the first
six months of 1995. The change in the gross margin for the first half of 1996
resulted from decreased volume and higher sales incentives in North America and
unfavorable currency-exchange, cost pressures, and product mix in Latin America.
24
<PAGE> 26
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS WITH FINANCING AND INSURANCE OPERATIONS
ON AN EQUITY BASIS -- CONTINUED
Other operating expenses for the second quarter of 1996 totaled $4,805.7
million, compared to $4,279.9 million in the comparable 1995 period. Other
operating expenses for the six months ended June 30, 1996 were $9,041.2 million,
compared to $8,390.8 million for the first six months of 1995. The increases for
the three and six month periods were primarily attributable to expansion efforts
of Hughes and GMIO, as well as higher depreciation expense.
Other income less income deductions amounted to $574.2 million and $1,141.4
million for the three and six months ended June 30, 1996, compared to $144.7
million and $491.6 million in the comparable 1995 periods. The amounts reported
for the 1995 three and six month periods include a pre-tax loss of $147.8
million associated with the sale of the net assets of National Car Rental System
(NCRS). The amount reported for the first half of 1996 includes a pre-tax gain
of $120.3 million associated with the sale of a 2.5% equity interest in DIRECTV
to AT&T.
Interest expense totaled $229.4 million and $425.2 million for the three
and six months ended June 30, 1996, compared to $127.9 million and $405.5
million in the comparable 1995 periods, reflecting an overall net increase in
outstanding debt.
The effective income tax rate for the three and six month periods ended
June 30, 1996 was 34.1%, compared to 25.9% for the three months ended June 30,
1995 and 32.7% for the first half of 1995. The 1995 second quarter and six month
effective income tax rate reflects tax benefits associated with the sale of
NCRS' net assets.
Adoption of EITF Issue No. 95-1, "Revenue Recognition on Sales with a
Guaranteed Minimum Resale Value", resulted in an unfavorable cumulative effect
at January 1, 1995 of $51.8 million after-tax ($0.07 per share) attributable to
$1 2/3 par value common stock.
Excluding EDS, General Motors net profit margin -- income from continuing
operations as a percent of net sales and revenues -- was 5.2% for the second
quarter of 1996 compared to 5.5% for the second quarter of 1995. The second
quarter net profit margin exceeded General Motors' 5% target, however, General
Motors believes further improvements are necessary to sustain its net profit
margin at the 5% level over the course of the economic cycle.
EDS SPLIT-OFF
On June 7, 1996 General Motors split-off EDS to General Motors Class E
stockholders on a tax-free basis for U.S. federal income tax purposes. Under the
terms of the split-off, each share of General Motors Class E common stock was
exchanged for one share of EDS common stock. In addition, General Motors and EDS
entered into a new 10-year agreement, under which EDS will continue to be
General Motors' principal provider of information-technology (IT) services, and
EDS made a special inter-company payment of $500 million to General Motors.
General Motors' Board of Directors determined that the ownership of EDS was
not necessary for it to execute its information technology strategy or to ensure
the security of its computer data and other information. Furthermore, General
Motors' Board of Directors determined that there were certain actual and
potential conflicts between the business of EDS and the other businesses of
General Motors. The split-off was completed to address such conflicts in a
manner that was beneficial from the standpoint of all stockholders of General
Motors and to allow the boards and managements of General Motors and EDS to
increase their focus on their respective business operations.
25
<PAGE> 27
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS WITH FINANCING AND INSURANCE OPERATIONS
ON AN EQUITY BASIS -- CONCLUDED
EDS systems and other contracts revenues from outside customers included in
income (loss) from discontinued operations totaled $1,944.3 million and $4,349.0
million for the three and six month periods ended June 30, 1996 and $1,967.6
million and $3,845.9 million for the three and six month periods ended June 30,
1995. Income (loss) from discontinued operations of ($208.8) million and $10.0
million for the three and six month periods ended June 30, 1996 is reported net
of an income tax benefit of $109.0 million and income tax expense of $14.1
million, respectively. Income from discontinued operations of $188.0 million and
$384.8 million for the three and six month periods ended June 30, 1995 is
reported net of income taxes of $127.6 million and $238.3 million, respectively.
Prior to the split-off, General Motors approved certain EDS actions to
maintain and improve operating efficiencies and accelerate its move to
"user-centered" computing. As a result, income (loss) from discontinued
operations for the three and six month periods ended June 30, 1996 includes a
one-time charge of $328 million after taxes related to these actions. These
actions were not contingent upon the approval or consummation of the split-off.
Income from discontinued operations for the three and six month periods
ended June 30, 1996 also includes split-off expenses attributable to $1 2/3 par
value common stock of $15 million after taxes or $0.02 per share of $1 2/3 par
value common stock.
Income from discontinued operations for the three and six months ended June
30, 1995 includes $38.9 million of expense associated with purchase accounting
adjustments made at the time of General Motors' purchase of EDS.
The net assets of EDS were as follows:
<TABLE>
<CAPTION>
DEC. 31, JUNE 30,
1995 1995
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
NET ASSETS OF DISCONTINUED OPERATIONS
Current Assets...................................................... $ 4,381.5 $ 3,708.0
Property and Equipment -- Net....................................... 3,318.8 3,119.6
Operating and Other Assets.......................................... 3,208.5 2,909.7
Current Liabilities................................................. (3,261.4) (2,911.7)
Deferred Income Taxes............................................... (739.7) (630.9)
Notes Payable....................................................... (1,852.8) (1,528.3)
--------- ---------
Net Assets of Discontinued Operations............................. $ 5,054.9 $ 4,666.4
========= =========
</TABLE>
General Motors no longer owns the outstanding shares of EDS and,
accordingly, General Motors' consolidated balance sheet reflects decreased
stockholders' equity and liabilities as well as decreased assets. The split-off
resulted in an overall reduction in General Motors' consolidated net worth of
$4.5 billion at June 7, 1996, including the effect of the $500 million special
inter-company payment from EDS.
NEW ACCOUNTING STANDARD
In June 1996, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" (SFAS No. 125). SFAS No.
125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996. General Motors
has not yet determined the impact that this new accounting standard will have on
its consolidated operating results or financial position. General Motors will
adopt this accounting standard on January 1, 1997, as required.
26
<PAGE> 28
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET WITH FINANCING AND INSURANCE OPERATIONS ON
AN EQUITY BASIS (UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DEC. 31, JUNE 30,
1996 1995 1995
---------- ---------- ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents................................ $ 11,501.0 $ 9,046.8 $ 7,327.2
Other marketable securities.............................. 1,537.8 1,194.0 1,321.9
---------- ---------- ----------
Total cash and marketable securities................... 13,038.8 10,240.8 8,649.1
Accounts and notes receivable -- net
Trade.................................................. 5,845.9 5,594.7 7,162.7
Nonconsolidated affiliates............................. 2,412.7 2,103.0 3,170.3
Inventories -- net....................................... 11,754.7 11,348.3 11,530.7
Net assets of discontinued operations.................... -- 5,054.9 4,666.4
Contracts in process -- net.............................. 2,754.0 2,469.2 2,687.4
Net equipment on operating leases........................ 3,746.8 4,392.6 4,392.6
Deferred income taxes and other.......................... 5,412.6 5,527.7 6,483.5
---------- ---------- ----------
Total Current Assets................................ 44,965.5 46,731.2 48,742.7
Equity in Net Assets of Nonconsolidated Affiliates....... 9,761.2 9,983.0 9,788.3
Deferred Income Taxes.................................... 17,980.9 17,374.8 15,314.6
Other Investments and Miscellaneous Assets............... 11,912.1 12,010.9 12,023.9
Property -- Net.......................................... 35,199.6 34,437.8 32,900.4
Intangible Assets -- Net................................. 10,115.8 10,106.4 10,661.6
---------- ---------- ----------
Total Assets........................................ $129,935.1 $130,644.1 $129,431.5
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable......................................... $ 10,558.9 $ 10,623.6 $ 10,155.1
Loans payable............................................ 1,154.6 2,187.0 1,251.0
Income taxes payable..................................... 375.2 101.2 652.3
Accrued liabilities and customer deposits................ 28,636.6 28,093.1 29,610.1
---------- ---------- ----------
Total Current Liabilities........................... 40,725.3 41,004.9 41,668.5
Long-Term Debt........................................... 5,263.7 4,115.0 4,643.7
Capitalized Leases....................................... 174.9 166.2 134.7
Postretirement Benefits Other Than Pensions.............. 39,791.3 39,001.0 38,245.4
Pensions................................................. 5,348.9 5,593.9 3,675.9
Other Liabilities and Deferred Income Taxes.............. 16,121.9 15,907.2 17,016.3
Deferred Credits......................................... 1,649.0 1,510.4 1,560.2
Stockholders' Equity..................................... 20,860.1 23,345.5 22,486.8
---------- ---------- ----------
Total Liabilities and Stockholders' Equity.......... $129,935.1 $130,644.1 $129,431.5
========== ========== ==========
</TABLE>
27
<PAGE> 29
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
LIQUIDITY AND CAPITAL RESOURCES WITH FINANCING AND INSURANCE OPERATIONS ON AN
EQUITY BASIS
General Motors' cash position, excluding EDS, improved by $5,413.6 million
for the second quarter of 1996, with cash and marketable securities totaling
$13,038.8 million, compared to $8,649.1 million and $7,625.2 million at June 30,
1995 and March 31, 1996, respectively. General Motors reached its goal of
accumulating $13 billion of cash and marketable securities well ahead of its
year-end goal.
During the first six months of 1996, loans payable and long-term debt
increased $116.3 million to $6,418.3 million at June 30, 1996 from a balance of
$6,302.0 million at December 31, 1995. The increase in loans payable and
long-term debt reflected General Motors' overall liability management program,
which comprehends prefunding future debt maturities when interest rates are low.
Net liquidity, calculated as cash and marketable securities less the total
of loans payable, long-term debt and capitalized leases, was $6,445.6 million,
an improvement of $2,673.0 million compared to December 31, 1995 and $3,825.9
million compared to June 30, 1995.
Book value per share of $1 2/3 par value common stock increased to $24.79
at the end of the 1996 second quarter from $24.37 at the end of 1995. Book value
per share of Class H common stock increased to $12.40 at June 30, 1996 from
$12.20 at the end of 1995.
LIQUIDITY AND CAPITAL RESOURCES FOR GMAC
At June 30, 1996, GMAC owned assets and serviced automotive receivables
totaling $106.9 billion, $0.3 billion above year-end 1995, and $2.6 billion
above June 30, 1995. The increase is principally attributable to continued
growth of operating leases, partially offset by a decline in the total finance
receivables servicing portfolio. Earning assets totaled $93.1 billion at June
30, 1996, compared to $92.0 billion and $89.1 billion at December 31 and June
30, 1995, respectively.
As of June 30, 1996, GMAC's total borrowings were $74.4 billion, a slight
decrease from $74.9 billion at December 31, 1995, but an increase from $70.6
billion at June 30, 1995. The higher year-to-year borrowings outstanding were
used to fund increased earning asset levels. GMAC's ratio of debt to total
stockholder's equity at June 30, 1996 was 8.9:1, compared to 9.1:1 at December
31, 1995 and 8.5:1 at June 30, 1995. Continuing to utilize its asset
securitization program, GMAC sold additional retail and wholesale finance
receivables totaling $3.0 billion (net) during the second quarter and first six
months of 1996.
GMAC and its subsidiaries maintain substantial bank lines of credit which
totaled $40.4 billion at June 30, 1996, compared to $40.0 billion at year-end
1995 and $38.1 billion at June 30, 1995. The unused portion of these credit
lines totaled $31.5 billion at June 30, 1996, $1.0 billion and $1.5 billion
higher than December 31 and June 30, 1995, respectively.
Reference should be made to the GMAC condensed consolidated financial
statements included in Note 11 to the General Motors consolidated financial
statements.
28
<PAGE> 30
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS WITH FINANCING AND INSURANCE
OPERATIONS ON AN EQUITY BASIS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1996 1995
--------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Net Cash Provided by Operating Activities............................. $ 6,059.8 $ 4,497.1
--------- ---------
Cash Flows from Investing Activities
Investment in companies, net of cash acquired....................... (53.9) (154.9)
Expenditures for real estate, plants, and equipment................. (2,415.0) (2,079.0)
Expenditures for special tools...................................... (1,759.3) (1,673.3)
Proceeds from disposals of real estate, plants, and equipment....... 119.7 152.8
Special Inter-Company Payment from EDS.............................. 500.0 --
Expenditures related to the sale of NCRS' net assets................ -- (197.0)
Change in other investing assets
Investments in other marketable securities -- acquisitions....... (5,260.9) (3,470.7)
Investments in other marketable securities -- liquidations....... 4,917.1 3,257.5
Notes receivable................................................. 71.1 (69.6)
Operating leases -- acquisitions................................. (2,065.4) (898.2)
Operating leases -- liquidations................................. 2,825.8 364.9
--------- ---------
Net Cash Used In Investing Activities................................. (3,120.8) (4,767.5)
--------- ---------
Cash Flows from Financing Activities
Net increase (decrease) in loans payable............................ (1,035.4) 459.0
Increase in long-term debt.......................................... 1,898.2 168.9
Decrease in long-term debt.......................................... (760.2) (597.8)
Net increase in payable to GMAC..................................... -- 311.1
Proceeds from sale of minority interest in DIRECTV.................. 137.5 --
Repurchases of common and preference stocks......................... -- (1,680.7)
Proceeds from issuing common stocks................................. 191.2 172.5
Cash dividends paid to stockholders................................. (837.2) (627.4)
--------- ---------
Net Cash Used in Financing Activities................................. (405.9) (1,794.4)
--------- ---------
Effect of Exchange Rate Changes on Cash and Cash Equivalents.......... (182.1) 202.7
--------- ---------
Net Cash Provided by (Used in) Continuing Operations.................. 2,351.0 (1,862.1)
Net Cash Provided by Discontinued Operations.......................... 103.2 66.1
--------- ---------
Net increase (decrease) in cash and cash equivalents.................. 2,454.2 (1,796.0)
Cash and cash equivalents at beginning of the period.................. 9,046.8 9,123.2
--------- ---------
Cash and cash equivalents at end of the period........................ $11,501.0 $ 7,327.2
========= =========
</TABLE>
29
<PAGE> 31
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CASH FLOW WITH FINANCING AND INSURANCE OPERATIONS ON AN EQUITY BASIS
Net cash provided by operating activities was $6,059.8 million for the six
months ended June 30, 1996, compared to net cash provided by operating
activities of $4,497.1 million in the 1995 period. The improvement compared to
the first half of 1995 reflected lower pension contributions, because of the
improved funding of General Motors' U.S. pension plans, and favorable changes in
operating assets and liabilities on a comparative year-over-year basis.
Net cash used in investing activities totaled $3,120.8 million for the
first six months of 1996, compared to $4,767.5 million for the comparable 1995
period. The reduction in net cash used in investing activities during the 1996
period was primarily attributable to cash provided by operating lease
liquidations, net of operating lease acquisitions, and receipt of the $500
million special inter-company payment from EDS, partially offset by increased
capital expenditures. The increase in operating lease liquidations resulted from
more vehicles being taken out of service and sold at auction than were placed
into service. Expenditures for real estate, plants, and equipment and special
tools totaled $4,174.3 million in the first six months of 1996 compared to
$3,752.3 million in the first six months of 1995.
Net cash used in financing activities amounted to $405.9 million for the
first six months of 1996, compared to $1,794.4 million for the comparable 1995
period. During the 1996 period, the net increase in long-term debt and notes
payable, proceeds from the sale of a minority interest in DIRECTV and proceeds
from issuing common stocks for benefit plan purposes were more than offset by
cash dividends paid to stockholders. The net cash used in financing activities
in the six month period ended June 30, 1995 reflected cash used to repurchase
preference stocks and pay dividends to stockholders.
During the 1996 first quarter, approximately 44.7 million shares of Class E
common stock were issued upon conversion of approximately 3.2 million shares of
Series C Preference Stock (represented by depositary shares). The remaining
6,784 shares of Series C Preference Stock were redeemed on February 22, 1996 for
$3.6 million of cash, or $524.20 per share of Series C Preference Stock ($52.42
per depositary share).
During the 1995 second quarter the Corporation purchased certain of its
outstanding preference shares pursuant to an issuer tender offer. The repurchase
had an unfavorable impact of $0.22 per share of $1 2/3 par value common stock,
including tender offer expenses of $13.5 million after-tax, or $0.02 per share,
that were charged against income and the purchase price in excess of the
carrying amount of the preference shares amounting to $153.4 million, or $0.20
per share, that was not charged against income but reduced earnings attributable
to $1 2/3 par value common stock.
On August 6, 1996, General Motors announced that its Board of Directors had
approved a new generation Saturn vehicle to be assembled at a GM facility in
Wilmington, Delaware. This new product program is the result of a need to expand
the success of the Saturn brand. In 1992, General Motors announced its intent to
close this facility and at that time established a plant closing reserve to
reflect the planned closure. The portion of the plant closing reserve relating
to the Wilmington facility will be reversed in the 1996 third quarter resulting
in an increase in net income in that period of approximately $250 million. In
connection with the production of the new generation Saturn vehicle to be
assembled in Wilmington, GM-NAO will incur certain engineering and development
expenses related to the Saturn product program. Separately, in connection with
Delphi's lean manufacturing efforts and competitive market pressures, it is
developing plans to close one facility, and reviewing proposals for the sale or
partnering of four additional facilities. In addition, evaluations are underway
with respect to appropriate plans for other Delphi facilities. The plans related
to the Delphi facilities were not yet finalized at June 30, 1996; the associated
costs are expected to be recognized in the future when firm plans are adopted
and could occur as early as the third quarter of 1996.
30
<PAGE> 32
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CASH FLOW FOR GMAC
Cash provided by operating activities during the six months ended June 30,
1996 totaled $3.9 billion, a slight increase over the $3.7 billion provided
during the comparable 1995 period.
Cash used for investing activities during the first six months of 1996
totaled $3.6 billion, compared to $6.6 billion during the same period in 1995
with the period-to-period decline primarily resulting from lower year-to-date
acquisitions of wholesale finance receivables.
During the first six months of 1996, cash used for financing activities
totaled $0.9 billion, reflecting $0.5 billion in dividends paid to General
Motors and a slight reduction in net debt outstanding from year-end 1995. Cash
provided by financing activities during the first six months of 1995 totaled
$3.0 billion as net debt was increased to fund GMAC's earning asset growth
during that period.
Reference should be made to the GMAC condensed consolidated financial
statements included in Note 11 to the General Motors consolidated financial
statements.
PENSIONS AND POST RETIREMENT BENEFITS OTHER THAN PENSIONS
At year-end 1995, GM's total worldwide net unfunded pension position
decreased to $6.6 billion ($3.0 billion U.S. and $3.6 billion non-U.S.) from
$12.6 billion at the end of 1994. In the first quarter of 1996, General Motors
made cash contributions of $800 million to its U.S. pension plans.
Under SFAS No. 87, Employers' Accounting for Pensions, any year-to-year
movement in the rate of interest on long-term, high quality corporate bonds
necessitates a change in the discount rate used to calculate the actuarial
present value of pension plan obligations. General Motors' reported unfunded
pension position would be affected by such a change in interest rates, as well
as by contributions during the year, the actual return on pension investments
and various other factors. A change in the unfunded pension position would also
affect the minimum pension liability adjustment to stockholders' equity.
A change in long-term interest rates similarly impacts the calculation of
General Motors' postretirement health care obligations under SFAS No. 106,
Employers' Accounting for Postretirement Benefits Other Than Pensions. However,
a change to the accumulated postretirement benefit obligation would not impact
General Motors' stockholders' equity in 1996.
Changes in General Motors' unfunded pension obligations under SFAS No. 87
and postretirement obligations under SFAS No. 106 resulting from changes in
interest rates during 1996 would not have an impact on the earnings to be
reported by General Motors for 1996. However, in accordance with applicable
accounting standards, any change in these obligations would impact General
Motors' 1997 and subsequent years' earnings as non-cash increases/decreases in
pension and other postretirement benefit expense.
EMPLOYMENT AND PAYROLLS
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Worldwide Employment at June 30 (In Thousands)
GM-NAO/Delphi................................................................. 435 439
GMIO.......................................................................... 109 104
GMAC.......................................................................... 17 17
Hughes........................................................................ 84 83
Other......................................................................... 11 12
--- ---
Employees associated with continuing operations............................... 656 655
Discontinued operations (EDS)................................................. -- 88
--- ---
Total...................................................................... 656 743
=== ===
</TABLE>
Worldwide payrolls excluding EDS totaled $7,431.7 million and $14,972.1
million for the three and six months ended June 30, 1996 compared with $7,591.8
million and $15,115.6 million for the three and six months ended June 30, 1995.
* * * * * *
31
<PAGE> 33
PART II
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS
(a) Material pending legal proceedings, other than ordinary routine
litigation incidental to the business, to which the Corporation became, or was,
a party during the quarter ended June 30, 1996, or subsequent thereto, but
before the filing of this report are summarized below:
ENVIRONMENTAL MATTERS
On June 28, 1996, an EPA Administrative Law Judge (ALJ) made a
determination that General Motors is liable for stormwater discharges from the
closed Fiero assembly plant in Pontiac, Michigan which exceeded the 1988 permit
limits for copper, lead, and zinc. The ALJ rejected General Motors' arguments
that the permit (a) was void by Act of Congress, (b) had expired in 1990, and
(c) in any event, did not apply because the source of the metals is not
industrial operations but rather from (1) ambient rainfall and (2) dissolving by
acid rain of copper gutters, lead solder and flashing, and galvanized roof
decking. Ruling that copper, lead, and zinc are pollutants for which dischargers
are strictly responsible regardless of their source, the ALJ found General
Motors liable for 92 permit exceedances. General Motors came into compliance in
1992 by coating the metal of the roof. The EPA is seeking the $125,000 maximum
administrative penalty; the ALJ will now supervise negotiations between the EPA
and General Motors regarding the amount of the penalty. General Motors is
considering an appeal.
* * *
OTHER MATTERS
As previously reported, three suits challenging the split-off of EDS,
Stephen A. Solomon v. General Motors Corporation, et al, TRV Holding Company v.
General Motors Corporation, et al, and Melvin Ward, et al v. General Motors
Corporation, et al, were consolidated. On May 23, 1996, plaintiffs withdrew
their application for expedited proceedings and preliminary injunctive relief,
and, on June 7, 1996, the split-off of EDS was consummated. Since then,
plaintiffs have advised that they intend to move to file a third amended
consolidated complaint. General Motors believes that the suits are without merit
and intends to defend them vigorously.
* * *
As previously reported, Hughes has maintained a suit against the U.S.
Government since September 1973, regarding the Government's infringement and use
of a Hughes patent (the "Williams Patent") covering "Velocity Control and
Orientation of a Spin Stabilized Body," principally satellites. On June 17,
1994, the U.S. Court of Claims awarded Hughes damages of $114 million. Because
Hughes believed that the record supported a higher royalty rate, it appealed
that decision. The U.S. Government contending that the award was too high, also
appealed. On June 19, 1996, the Court of Appeals for the Federal Circuit
affirmed the decision of the Court of Claims which awarded Hughes $114 million
in damages, together with interest. The time period to appeal has not yet
expired and accordingly the decision is not yet final. Hughes is unable to
estimate the duration of any such possible appeals. In the opinion of management
of Hughes, there is a reasonable possibility that this matter could be resolved
in the near term. While no amount has been recorded in the financial statements
of Hughes to reflect the $114 million award, a resolution of this matter could
result in a gain that would be material to the earnings of General Motors
attributable to Class H Common Stock.
* * *
With regard to the previously reported class action lawsuits involving 1973
to 1987 General Motors full-size pickup trucks with outside the frame fuel
tanks, an agreement for a nation-wide settlement of the class
32
<PAGE> 34
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
actions pending in federal and state courts was preliminarily approved on July
3, 1996 by a state court in Louisiana.
The settlement, which is not expected to have a material effect on the
consolidated financial statements of General Motors, provides for owners of such
trucks, as of July 3, 1996, to receive certificates for $1,000 toward the
purchase of any new General Motors passenger car or light truck, except Saturns.
The certificates can be used for the first 15 months at $1,000, or transferred
one time whereupon the transferee would be able to use the certificate for $500
toward the purchase of an eligible vehicle ($250 if used with a General Motors
rebate) until expiration of the 15 month period. After the first 15 months,
original recipients of the certificates may use them for an additional 18 months
at $500, or transfer them whereupon the transferee would be able to use the
certificates for $250 towards the purchase of an eligible vehicle. For fleets
and governmental entities, after the first 15 months, the certificates are
reduced to $250 for an additional 35 months, but are not transferable, except to
other departments or agencies of the same governmental entity.
The settlement also provides $4.1 million to fund motor vehicle fire safety
research. Research funds will be used to benefit motor vehicle safety generally
and research will not be done on the pickup trucks. General Motors will pay
plaintiffs' reasonable attorneys' fees and costs which will be determined by the
Court within negotiated limits.
A hearing to consider final approval of the settlement is scheduled for
November 6, 1996. All other pending class actions involving the pickup trucks
should be dismissed after final approval of the settlement. Certificates will
not be issued for several months after approval of the settlement is final.
* * * * *
(b) Previously reported legal proceedings which have been terminated,
either during the quarter ended June 30, 1996, or subsequent thereto, but before
the filing of this report are summarized below.
With respect to the previously reported November 30, 1995 consent signed by
the U.S. Environmental Protection Agency ("EPA"), the U.S. Department of Justice
("DOJ") and General Motors to resolve allegations that General Motors violated
the Clean Air Act and EPA emissions regulations with regard to 470,000 1991-1995
model Cadillacs having 4.9 liter engines, the U.S. District Court for the
District of Columbia approved the decree on April 30, 1996.
* * * * *
With respect to the previously reported matter in which General Motors was
notified by the DOJ and EPA that the EPA was seeking civil penalties for alleged
violations of the Clean Air Act at General Motors' Powertrain Division Foundry
in Danville, Illinois, General Motors, the DOJ and EPA have agreed to a
settlement in which General Motors will pay a civil penalty of $180,000.
* * * * *
With respect to the previously reported matter in which a complaint was
filed in the Superior Court of Connecticut by the Connecticut Commissioner of
Environmental Protection on February 19, 1991, alleging that the plant in
Bristol, Connecticut operated by General Motors' Delco Moraine NDH Division (now
part of the Delphi Chassis Division) had violated Connecticut's hazardous waste
regulations in connection with its inspection, recordkeeping, and remediation of
a release of chromic acid at the plant site, a settlement was agreed to on May
31, 1996 pursuant to which General Motors had paid a civil penalty of $250,000,
contributed $30,000 to a local environmental organization, and agreed to
complete clean up of the chrome release.
* * * * *
OTHER PENDING LEGAL PROCEEDINGS REPORTED IN PREVIOUS 1995 CURRENT REPORT AND
QUARTERLY REPORT
Reference is made to the Registrant's Current Report dated May 29, 1996
(Item 5) and Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
* * * * *
33
<PAGE> 35
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) The annual meeting of stockholders of the Registrant was held on May 24,
1996.
At that meeting, the following matters were submitted to a vote of the
stockholders of General Motors Corporation:
1996 GENERAL MOTORS ANNUAL MEETING
FINAL VOTING RESULTS
(ALL CLASSES OF COMMON STOCK)
<TABLE>
<CAPTION>
VOTING RESULTS
------------------------
PROPOSAL VOTES* PERCENT**
- -------- ----------- ---------
Item No. 1
Election of Directors
The Judges subscribed and delivered a certificate reporting that the following nominees for
directors had received the number of votes* set opposite their respective names.
<S> <C> <C> <C>
Anne L. Armstrong.................................... For 721,223,367 99.1%
Withheld 6,399,260 0.9
John H. Bryan........................................ For 721,881,645 99.2
Withheld 5,740,983 0.8
Thomas E. Everhart................................... For 721,623,116 99.2
Withheld 5,999,512 0.8
Charles T. Fisher, III............................... For 721,639,583 99.2
Withheld 5,983,045 0.8
J. Willard Marriott, Jr.............................. For 721,703,087 99.2
Withheld 5,919,541 0.8
Ann D. McLaughlin.................................... For 721,189,346 99.1
Withheld 6,433,282 0.9
Harry J. Pearce...................................... For 721,878,672 99.2
Withheld 5,743,955 0.8
Eckhard Pfeiffer..................................... For 721,718,604 99.2
Withheld 5,904,024 0.8
Edmund T. Pratt, Jr.................................. For 721,057,237 99.1
Withheld 6,565,391 0.9
John G. Smale........................................ For 721,635,083 99.2
Withheld 5,987,545 0.8
John F. Smith, Jr.................................... For 721,760,650 99.2
Withheld 5,861,978 0.8
Louis W. Sullivan.................................... For 721,022,661 99.1
Withheld 6,599,967 0.9
Dennis Weatherstone.................................. For 721,755,412 99.2
Withheld 5,867,215 0.8
Thomas H. Wyman...................................... For 721,469,242 99.1
Withheld 6,153,385 0.9
Item No. 2
A proposal of the Board of Directors that the For 722,248,807 99.3%
stockholders
ratify the selection of Deloitte & Touche LLP as Against 2,793,451 0.4
independent
public accountants for the year 1996. Abstain 2,579,482 0.3
</TABLE>
34
<PAGE> 36
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -- CONTINUED
1996 GENERAL MOTORS ANNUAL MEETING
FINAL VOTING RESULTS -- CONCLUDED
(ALL CLASSES OF COMMON STOCK)
<TABLE>
<CAPTION>
VOTING RESULTS
------------------------
PROPOSAL VOTES* PERCENT**
- -------- ----------- ---------
<S> <C> <C> <C>
Item No. 3
A proposal by stockholders to provide for cumulative For 124,661,412 19.2%
voting
in the election of directors. Against 448,374,097 69.2
Abstain 75,178,801 11.6
Item No. 4
A stockholder proposal to discontinue the use of For 32,071,644 4.9%
stock options
and rights after termination of existing agreements Against 607,170,400 93.7
with
management and directors. Abstain 8,972,463 1.4
Item No. 5
A stockholder proposal to establish a requirement For 93,060,334 14.3%
that an
Independent Director serve as Chairman of the Board Against 540,381,734 83.4
of
Directors. Abstain 14,772,733 2.3
Item No. 6
A proposal by stockholders that the Board of For 22,350,924 3.5%
Directors
provide a comprehensive report describing General Against 600,357,782 92.6
Motors' involvement in the nuclear defense system. Abstain 25,506,275 3.9
</TABLE>
- -------------------------
* Numbers represent the aggregate voting power of all votes cast, with holders
of $1 2/3 par value common stock casting one vote per share, holders of Class
E common stock casting one-eighth of a vote per share and holders of Class H
common stock casting one-half of a vote per share.
** Percentages represent the aggregate voting power of all classes of GM common
stock cast for each item.
35
<PAGE> 37
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -- CONTINUED
b) Action by written consent of General Motors Stockholders
SPLIT-OFF OF EDS
TABULATION OF CONSENTS
A joint Solicitation Statement/Prospectus of General Motors and EDS, dated
April 23, 1996 was distributed to all General Motors stockholders in order to
obtain their written consent to the split-off of EDS and related transactions
and to the 1996 Incentive Plan of EDS. General Motors stockholders gave their
consent to both items. Action in respect of both proposals was taken by General
Motors on June 7, 1996. General Motors continued to tabulate stockholder
responses after the corporate action was taken. The responses of General Motors
stockholders to the consent solicitation are tabulated below.
PROPOSAL NO. 1 FOR THE SPLIT-OFF OF EDS AND RELATED TRANSACTIONS
<TABLE>
<CAPTION>
CLASS OF STOCK CONSENT WITHHOLD ABSTAIN TOTAL
- --------------------------------------------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Combined $1 2/3, Class E and Class H voting
together as a single class.
As of June 7, 1996
Votes................................... 548,048,453 6,041,941 3,126,223 557,216,617
Percent of Outstanding.................. 63.3% 0.7% 0.4% 64.4%
Percent of Voting....................... 98.4% 1.1% 0.5% 100%
Final Tabulation -- As of July 3, 1996
Votes................................... 601,282,701 6,371,977 3,665,210 611,319,888
Percent of Outstanding.................. 69.5% 0.7% 0.4% 70.6%
Percent of Voting....................... 98.4% 1.0% 0.6% 100%
$1 2/3 par value common stock, voting as a
separate class
As of June 7, 1996
Votes................................... 477,398,580 5,490,300 2,883,759 485,772,639
Percent of Outstanding.................. 63.2% 0.7% 0.4% 64.3%
Percent of Voting....................... 98.3% 1.1% 0.6% 100%
Final Tabulation -- As of July 3, 1996
Votes................................... 520,767,287 5,792,089 3,380,250 529,939,626
Percent of Outstanding.................. 68.8% 0.8% 0.5% 70.1%
Percent of Voting....................... 98.3% 1.1% 0.6% 100%
Class E common stock, voting as a separate
class
As of June 7, 1996
Votes................................... 349,518,456 2,414,582 936,959 352,869,997
Percent of Outstanding.................. 72.0% 0.5% 0.2% 72.7%
Percent of Voting....................... 99.0% 0.7% 0.3% 100%
Final Tabulation -- As of July 3, 1996
Votes................................... 379,358,265 2,534,188 1,228,820 383,121,273
Percent of Outstanding.................. 78.1% 0.5% 0.3% 78.9%
Percent of Voting....................... 99.0% 0.7% 0.3% 100%
</TABLE>
36
<PAGE> 38
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -- CONCLUDED
PROPOSAL NO. 2 FOR APPROVAL OF THE 1996 INCENTIVE PLAN OF EDS
<TABLE>
<CAPTION>
CLASS OF STOCK CONSENT WITHHOLD ABSTAIN TOTAL
- --------------------------------------------- ----------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Combined $1 2/3, Class E and Class H voting
together as a single class.
As of June 7, 1996
Votes................................... 531,366,271 20,961,222 4,889,122 557,216,615
Percent of Outstanding.................. 61.4% 2.4% 0.6% 64.4%
Percent of Voting....................... 95.3% 3.8% 0.9% 100%
Final Tabulation -- As of July 3, 1996
Votes................................... 582,878,870 22,883,417 5,557,602 611,319,889
Percent of Outstanding.................. 67.3% 2.7% 0.6% 70.6%
Percent of Voting....................... 95.3% 3.8% 0.9% 100%
$1 2/3 par value common stock, voting as a
separate class
As of June 7, 1996
Votes................................... 463,456,608 17,846,896 4,469,135 485,772,639
Percent of Outstanding.................. 61.3% 2.4% 0.6% 64.3%
Percent of Voting....................... 95.4% 3.7% 0.9% 100%
Final Tabulation -- As of July 3, 1996
Votes................................... 505,379,659 19,479,636 5,080,331 529,939,626
Percent of Outstanding.................. 66.9% 2.6% 0.6% 70.1%
Percent of Voting....................... 95.4% 3.7% 0.9% 100%
Class E common stock, voting as a separate
class
As of June 7, 1996
Votes................................... 341,417,439 9,831,634 1,620,923 352,869,996
Percent of Outstanding.................. 70.3% 2.0% 0.4% 72.7%
Percent of Voting....................... 96.8% 2.8% 0.4% 100%
Final Tabulation -- As of July 3, 1996
Votes................................... 370,508,624 10,621,366 1,991,288 383,121,278
Percent of Outstanding.................. 76.3% 2.2% 0.4% 78.9%
Percent of Voting....................... 96.7% 2.8% 0.5% 100%
</TABLE>
37
<PAGE> 39
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (Including Those Incorporated by Reference).
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT NAME PAGE NO.
- -------------- --------------------------------------------------------------------- --------
<S> <C> <C>
4(e) Form of Indenture relating to the $377,377,000 7.75% Debentures Due
March 15, 2036 dated as of December 7, 1995 between General Motors
Corporation and Citibank, N.A., Trustee, filed as Exhibit 4(a) to
Amendment No. 1 to Form S-3 Registration Statement No. 33-64229.... N/A
11 Computation of Earnings Per Share Attributable to Common Stocks for
the Three and Six Month Periods Ended June 30, 1996 and 1995....... 39
12 Computation of Ratios of Earnings to Fixed Charges for the Six Month
Periods Ended June 30, 1996 and 1995............................... 43
99 Hughes Electronics Corporation and Subsidiaries Consolidated
Financial Statements and Management's Discussion and Analysis...... 44
27 Financial Data Schedule (for SEC information only)
</TABLE>
(b) Reports on Form 8-K.
Three reports on Form 8-K, dated April 19, 1996, May 29, 1996, and June 7,
1996, were filed during the quarter ended June 30, 1996 reporting matters under
Item 5, Other Events, and reporting amendments to the Certificate of
Incorporation and By-Laws under Item 7, Exhibits.
* * * * * *
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MOTORS CORPORATION
--------------------------------------
(Registrant)
By /s/ LEON J. KRAIN
--------------------------------------
(Leon J. Krain, Vice President
Date August 14, 1996 and Group Executive)
- -----------------------
By /s/ WALLACE W. CREEK
--------------------------------------
Date August 14, 1996 (Wallace W. Creek, Comptroller)
- -----------------------
38
<PAGE> 1
EXHIBIT 11
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 1996
------------------------------------
$1 2/3 PAR CLASS
VALUE CLASS E H
COMMON COMMON COMMON
STOCK STOCK STOCK
------------- ------- ------
(DOLLARS IN MILLIONS EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
Income from continuing operations attributable to common
stocks................................................... $ 2,020.3 $ -- $75.2
Income (Loss) from discontinued operations attributable to
common stocks............................................ (15.0) (193.8) --
-------- ------- -----
Net income (loss) attributable to common stocks............ 2,005.3 (193.8) 75.2
Dividends on preference stocks............................. 20.2 -- --
-------- ------- -----
Earnings (Loss) attributable to common stocks.............. 1,985.1 (193.8) 75.2
Dividends on common stocks................................. 297.4 73.1 23.6
-------- ------- -----
Undistributed earnings (loss) attributable to common
stocks................................................... $ 1,687.7 $(266.9) $51.6
======== ======= =====
Memo:
Undistributed earnings from continuing operations
attributable to common stocks............................ $ 1,702.7 $ -- $51.6
======== ======= =====
Undistributed earnings (loss) from discontinued operations
attributable to common stocks............................ $ (15.0) $(266.9) $ --
======== ======= =====
Weighted average shares outstanding (in millions).......... 755.9 479.3 98.2
======== ======= =====
Per Share Data
Earnings per share attributable to undistributed earnings
from continuing operations............................... $ 2.25 $ -- $0.53
Earnings (Loss) per share attributable to undistributed
earnings from discontinued operations.................... (0.02) (0.56) --
Dividends.................................................. 0.40 0.15 0.24
-------- ------- -----
Earnings (Loss) per share attributable to common stocks.... $ 2.63 $(0.41) $0.77
======== ======= =====
</TABLE>
Note: The difference between fully diluted and primary earnings per share is
immaterial.
39
<PAGE> 2
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS -- CONTINUED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30, 1995
---------------------------------
$1 2/3 PAR CLASS CLASS
VALUE E H
COMMON COMMON COMMON
STOCK STOCK STOCK
------------- ------ ------
(DOLLARS IN MILLIONS EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
Income from continuing operations attributable to common
stocks...................................................... $ 2,013.3 $ -- $68.8
Income (Loss) from discontinued operations attributable to
common stocks............................................... (17.8) 205.8 --
-------- ------ -----
Net income attributable to common stocks...................... 1,995.5 205.8 68.8
Premium on repurchase of preference stocks.................... (153.4) -- --
Dividends on preference stocks................................ (46.1) -- --
-------- ------ -----
Earnings attributable to common stocks........................ 1,796.0 205.8 68.8
Dividends on common stocks.................................... 223.7 57.1 22.0
-------- ------ -----
Undistributed earnings........................................ 1,572.3 148.7 46.8
Adjustments
Change in earnings attributable to each class of common
stock related to the assumed exercise of stock
options*................................................. (1.5) -- 1.5
Dividends on assumed common stock transactions.............. (1.1) -- (0.4)
-------- ------ -----
Adjusted earnings attributable to common stocks............... $ 1,569.7 $148.7 $47.9
======== ====== =====
Memo:
Adjusted earnings from continuing operations attributable to
common stocks............................................ $ 1,587.5 $ -- $47.9
======== ====== =====
Adjusted earnings from discontinued operations attributable
to common stocks......................................... $ (17.8) $148.7 $ --
======== ====== =====
Weighted average shares outstanding (in millions)............. 746.3 438.7 95.4
Adjustment
Assumed exercise of dilutive stock options*................. 3.8 0.1 2.1
-------- ------ -----
Adjusted weighted average shares outstanding.................. 750.1 438.8 97.5
======== ====== =====
Per Share Data
Earnings per share attributable to undistributed earnings from
continuing operations....................................... $ 2.11 $ -- $0.49
Earnings (Loss) per share attributable to undistributed
earnings from discontinued operations....................... (0.02) 0.34 --
Dividends..................................................... 0.30 0.13 0.23
-------- ------ -----
Earnings per share attributable to common stocks.............. $ 2.39 $0.47 $0.72
======== ====== =====
</TABLE>
Note: The difference between fully diluted and primary earnings per share is
immaterial.
* The assumed exercise of stock options reflected by these adjustments has no
effect on Class E or Class H common stock earnings per share, because to the
extent that shares of Class E or Class H common stock deemed to be outstanding
would increase, such increased shares would also increase the numerator of the
fraction used to determine Available Separate Consolidated Net Income.
40
<PAGE> 3
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS -- CONTINUED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996
-----------------------------------
$1 2/3 PAR CLASS
VALUE CLASS E H
COMMON COMMON COMMON
STOCK STOCK STOCK
-------------- ------- ------
(DOLLARS IN MILLIONS EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
Income from continuing operations attributable to common
stocks..................................................... $2,745.0 $ -- $151.2
Income (Loss) from discontinued operations attributable to
common stocks.............................................. (5.4) 15.4 --
-------- ------- ------
Net income attributable to common stocks..................... 2,739.6 15.4 151.2
Dividends on preference stocks............................... 40.5 -- --
-------- ------- ------
Earnings attributable to common stocks....................... 2,699.1 15.4 151.2
Dividends on common stocks................................... 604.7 145.1 46.9
-------- ------- ------
Undistributed earnings (loss) attributable to common
stocks..................................................... $2,094.4 $(129.7) $104.3
======== ======= ======
Memo:
Undistributed earnings from continuing operations
attributable to common stocks.............................. $2,099.8 $ -- $104.3
======== ======= ======
Undistributed earnings (loss) from discontinued operations
attributable to common stocks.............................. $ (5.4) $(129.7) $ --
======== ======= ======
Weighted average shares outstanding (in millions)............ 755.6 470.1 97.8
======== ======= ======
Per Share Data
Earnings per share attributable to undistributed earnings
from continuing operations................................. $ 2.78 $ -- $1.07
Earnings (Loss) per share attributable to undistributed
earnings from discontinued operations...................... (0.01) (0.26) --
Dividends.................................................... 0.80 0.30 0.48
-------- ------- ------
Earnings per share attributable to common stocks............. $ 3.57 $ 0.04 $1.55
======== ======= ======
</TABLE>
Note: The difference between fully diluted and primary earnings per share is
immaterial.
41
<PAGE> 4
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS -- CONCLUDED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1995
------------------------------------
$1 2/3 PAR CLASS
VALUE CLASS E H
COMMON COMMON COMMON
STOCK STOCK STOCK
------------- ------- ------
(DOLLARS IN MILLIONS EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C> <C>
Income from continuing operations before cumulative effect
of accounting change attributable to common stocks....... $ 3,907.2 $ -- $132.1
Income from discontinued operations attributable to common
stocks................................................... 56.6 328.2 --
Cumulative effect of accounting change..................... (51.8) -- --
--------- ------- ------
Net income attributable to stocks.......................... 3,912.0 328.2 132.1
Premium on repurchase of preference stocks................. (153.4) -- --
Dividends on preference stocks............................. (118.1) -- --
--------- ------- ------
Earnings attributable to common stocks..................... 3,640.5 328.2 132.1
Dividends on common stocks................................. 374.5 91.3 43.6
--------- ------- ------
Undistributed earnings..................................... 3,266.0 236.9 88.5
Adjustments
Change in earnings attributable to each class of common
stock related to the assumed exercise of stock
options*.............................................. (3.0) -- 3.0
Dividends on assumed common stock transactions........... (1.9) -- (1.0)
--------- ------- ------
Adjusted earnings attributable to common stocks............ $ 3,261.1 $ 236.9 $90.5
========= ======= ======
Memo:
Adjusted earnings from continuing operations attributable
to common stocks......................................... $ 3,204.5 $ -- $90.5
========= ======= ======
Adjusted earnings from discontinued operations attributable
to common stocks......................................... $ 56.6 $ 236.9 $ --
========= ======= ======
Weighted average shares outstanding (in millions).......... 749.4 369.7 94.8
Adjustment
Assumed exercise of dilutive stock options*.............. 3.8 0.1 2.1
--------- ------- ------
Adjusted weighted average shares outstanding............... 753.2 369.8 96.9
========= ======= ======
Per Share Data
Earnings per share attributable to undistributed earnings
from continuing operations before cumulative effect of
accounting change........................................ $ 4.32 $ -- $0.93
Earnings per share attributable to undistributed earnings
from discontinued operations............................. 0.08 0.64 --
Cumulative effect of accounting change..................... (0.07) -- --
Adjustment................................................. -- (0.01)** --
Dividends.................................................. 0.50 0.26 0.46
--------- ------- ------
Earnings per share attributable to common stocks........... $ 4.83 $ 0.89 $1.39
========= ======= ======
</TABLE>
Note: The difference between fully diluted and primary earnings per share is
immaterial.
* The assumed exercise of stock options reflected by these adjustments has no
effect on Class E or Class H common stock earnings per share, because to the
extent that shares of Class E or Class H common stock deemed to be
outstanding would increase, such increased shares would also increase the
numerator of the fraction used to determine Available Separate Consolidated
Net Income.
** The per-share reported earnings attributable to Class E common stock of $0.89
equals the sum of the separate computations of each of the first two
quarters, consistent with the requirements for calculating earnings per share
based on EDS earnings and the Class E denominator. The six month calculation
shown above (based on 1995 weighted average outstanding Class E shares for
the period) requires an adjustment of ($0.01) due to the significant
differences in the average number of shares outstanding in each quarter
resulting from the Class E stock contribution to the U.S. hourly pension
plan.
42
<PAGE> 1
EXHIBIT 12
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------
1996 1995
-------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Income from continuing operations before cumulative effect of
accounting change..................................................... $2,896.2 $4,039.3
United States, foreign, and other income taxes.......................... 1,530.0 2,034.5
Equity in income of associates.......................................... (63.9) (55.9)
Cash dividends received from associates................................. 24.5 5.0
Amortization of capitalized interest.................................... 13.6 25.5
-------- --------
Income from continuing operations before cumulative effect of accounting
change, income taxes, undistributed income of associates, and
amortization of capitalized interest.................................. 4,400.4 6,048.4
-------- --------
Fixed charges included in income from continuing operations
Interest and related charges on debt.................................. 2,835.2 2,786.6
Portion of rentals deemed to be interest.............................. 132.1 119.8
-------- --------
Total fixed charges included in income from continuing
operations........................................................ 2,967.3 2,906.4
-------- --------
Earnings from continuing operations available for fixed charges......... $7,367.7 $8,954.8
======== ========
Fixed charges
Fixed charges included in income from continuing operations........... $2,967.3 $2,906.4
Interest capitalized in the period.................................... 26.4 23.9
-------- --------
Total fixed charges................................................ $2,993.7 $2,930.3
======== ========
Ratios of earnings from continuing operations to fixed charges.......... 2.46 3.06
======== ========
</TABLE>
43
<PAGE> 1
EXHIBIT 99
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME AND
AVAILABLE SEPARATE CONSOLIDATED NET INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SECOND QUARTER JUNE 30,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C> <C>
Revenues
Net sales
Outside customers................................ $2,531.2 $2,346.1 $4,970.1 $4,508.7
General Motors and affiliates.................... 1,501.4 1,362.4 2,676.1 2,766.6
Other income -- net (Note 2)........................ 29.9 15.1 153.0 27.1
-------- -------- -------- --------
Total Revenues................................. 4,062.5 3,723.6 7,799.2 7,302.4
-------- -------- -------- --------
Costs and Expenses
Cost of sales and other operating charges, exclusive
of items listed below............................ 3,094.6 2,829.8 5,891.1 5,606.8
Selling, general, and administrative expenses....... 358.0 300.2 658.3 548.7
Depreciation and amortization....................... 129.6 125.3 261.2 241.0
Amortization of GM purchase accounting adjustments
related to Hughes Aircraft Company (Note 3)...... 30.6 30.9 61.2 61.9
Interest expense -- net............................. 1.4 1.1 6.6 4.4
-------- -------- -------- --------
Total Costs and Expenses......................... 3,614.2 3,287.3 6,878.4 6,462.8
-------- -------- -------- --------
Income before Income Taxes............................ 448.3 436.3 920.8 839.6
Income taxes.......................................... 172.3 178.8 363.7 344.2
-------- -------- -------- --------
Net Income............................................ 276.0 257.5 557.1 495.4
Adjustments to exclude the effect of GM purchase
accounting adjustments related to Hughes Aircraft
Company
(Note 3)............................................ 30.6 30.9 61.2 61.9
-------- -------- -------- --------
Earnings Used for Computation of Available Separate
Consolidated Net Income............................. $ 306.6 $ 288.4 $ 618.3 $ 557.3
======== ======== ======== ========
Available Separate Consolidated Net Income (Note 3)
Average number of shares of GM Class H Common Stock
outstanding (in millions) (Numerator)............ 98.2 95.4 97.8 94.8
Class H dividend base (in millions) (Denominator)... 399.9 399.9 399.9 399.9
Available Separate Consolidated Net Income.......... $ 75.2 $ 68.8 $ 151.2 $ 132.1
======== ======== ======== ========
Net earnings attributable to General Motors Class
H Common Stock on a per share basis (Note 3)... $0.77 $0.72 $1.55 $1.39
======== ======== ======== ========
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
44
<PAGE> 2
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNT)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents....................................... $ 1,000.1 $ 1,139.5
Accounts and notes receivable
Trade receivables (less allowances).......................... 1,259.7 1,235.6
General Motors and affiliates................................ 129.5 146.7
Contracts in process, less advances and progress payments....... 2,754.0 2,469.2
Inventories (less allowances)
Productive material, work in process, and supplies........... 1,327.6 1,060.4
Finished product............................................. 155.6 165.1
Prepaid expenses, including deferred income taxes............... 592.7 594.3
--------- ----------
Total Current Assets....................................... 7,219.2 6,810.8
Property-Net...................................................... 2,813.6 2,739.2
Telecommunications and Other Equipment-Net........................ 1,078.1 1,175.1
Intangible Assets, net of amortization............................ 3,532.3 3,573.7
Investments and Other Assets, including deferred income taxes --
principally at cost (less allowances)........................... 1,638.8 1,675.6
--------- ----------
Total Assets...................................................... $16,282.0 $ 15,974.4
========= ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable
Outside...................................................... $ 872.0 $ 748.7
General Motors and affiliates................................ 39.3 52.2
Advances on contracts........................................... 925.9 893.7
Notes and loans payable......................................... 270.9 432.5
Income taxes payable............................................ 128.0 190.8
Accrued liabilities............................................. 1,987.4 1,990.9
--------- ----------
Total Current Liabilities.................................. 4,223.5 4,308.8
--------- ----------
Long-Term Debt and Capitalized Leases............................. 107.6 258.8
--------- ----------
Postretirement Benefits Other Than Pensions (Note 4).............. 1,638.3 1,610.6
--------- ----------
Other Liabilities, Deferred Income Taxes, and Deferred Credits.... 1,417.9 1,270.5
--------- ----------
Stockholder's Equity
Capital stock (outstanding, 1,000 shares, $0.10 par value) and
additional paid-in capital................................... 6,344.8 6,338.1
Net income retained for use in the business..................... 2,689.0 2,323.9
--------- ----------
Subtotal................................................... 9,033.8 8,662.0
Minimum pension liability adjustment............................ (108.6) (108.6)
Accumulated foreign currency translation adjustments............ (30.5) (27.7)
--------- ----------
Total Stockholder's Equity................................. 8,894.7 8,525.7
--------- ----------
Total Liabilities and Stockholder's Equity........................ $16,282.0 $ 15,974.4
========= ==========
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
45
<PAGE> 3
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1996 1995
-------- --------
(DOLLARS IN
MILLIONS)
<S> <C> <C>
Net Cash Provided by Operating Activities................................ $ 357.6 $ 461.3
-------- --------
Cash Flows from Investing Activities
Investment in companies, net of cash acquired.......................... (28.7) (154.6)
Expenditures for property and special tools............................ (293.9) (225.6)
Increase in telecommunications and other equipment..................... (91.2) (43.4)
Proceeds from sale and leaseback of satellite transponders with General
Motors Acceptance Corporation....................................... 252.0 --
Proceeds from disposal of property..................................... 31.4 37.6
Proceeds from sale of investments and businesses....................... -- 17.5
Decrease (increase) in notes receivable................................ 0.7 (24.7)
-------- --------
Net Cash Used in Investing Activities.................................. (129.7) (393.2)
-------- --------
Cash Flows from Financing Activities
Net decrease in notes and loans payable................................ (311.6) (65.7)
Increase in long-term debt............................................. 15.3 11.1
Decrease in long-term debt............................................. (16.5) (10.2)
Proceeds from sale of minority interest in subsidiary.................. 137.5 --
Cash dividends paid to General Motors.................................. (192.0) (184.0)
-------- --------
Net Cash Used in Financing Activities.................................. (367.3) (248.8)
-------- --------
Net decrease in cash and cash equivalents................................ (139.4) (180.7)
Cash and cash equivalents at beginning of the period..................... 1,139.5 1,501.8
-------- --------
Cash and cash equivalents at end of the period........................... $1,000.1 $1,321.1
======== ========
</TABLE>
Reference should be made to the Notes to Consolidated Financial Statements.
46
<PAGE> 4
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information. In the opinion of management, all adjustments
(consisting of only normal recurring items) which are necessary for a fair
presentation have been included. The results for interim periods are not
necessarily indicative of results which may be expected for any other interim
period or for the full year. For further information, refer to the consolidated
financial statements and notes thereto included in General Motors' 1995 Annual
Report on Form 10-K, as amended.
NOTE 2.
Other income -- net for the six months ended June 30, 1996 includes a
$120.3 million pre-tax gain from the sale of a 2.5% equity interest in
DIRECTV(R) to AT&T.
NOTE 3.
Earnings attributable to General Motors Class H common stock on a per share
basis have been determined based on the relative amounts available for the
payment of dividends to holders of the GM Class H common stock. Holders of GM
Class H common stock have no direct rights in the equity or assets of Hughes,
but rather have rights in the equity and assets of GM (which includes 100% of
the stock of Hughes). Dividends on the GM Class H common stock are declared by
GM's Board of Directors out of the Available Separate Consolidated Net Income of
Hughes earned since the acquisition of Hughes Aircraft Company by GM. The
Available Separate Consolidated Net Income of Hughes is determined quarterly and
is equal to the separate consolidated net income of Hughes, excluding the
effects of GM purchase accounting adjustments arising from the acquisition of
Hughes Aircraft Company (Earnings Used for Computation of Available Separate
Consolidated Net Income), 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 second quarters of 1996 and 1995.
The denominator used to determine the Available Separate Consolidated Net
Income of Hughes 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 Hughes. The GM Board's
discretion to make such adjustments is limited by criteria set forth in GM's
Restated Certificate of Incorporation. In this regard, the GM Board has
generally caused the denominator to decrease as shares are purchased by Hughes,
and to increase as such shares are used, at Hughes expense, for Hughes employee
benefit plans or acquisitions.
Dividends may be paid on GM Class H common stock only when, as, and if
declared by the GM Board of Directors in its sole discretion. The current policy
of the GM Board with respect to GM Class H common stock is to pay quarterly cash
dividends at an annual rate approximately equal to 35% of the Available Separate
Consolidated Net Income of Hughes for the prior year.
NOTE 4.
Hughes 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, Hughes does not admit or otherwise acknowledge that
such amounts or existing postretirement benefit plans of Hughes (other than
pensions) represent legally enforceable liabilities of Hughes.
47
<PAGE> 5
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONCLUDED
(UNAUDITED)
NOTE 5.
As previously reported, Hughes has maintained a suit against the U.S.
Government since September 1973, regarding the Government's infringement and use
of a Hughes patent (the "Williams Patent") covering "Velocity Control and
Orientation of a Spin Stabilized Body," principally satellites. On June 17,
1994, the U.S. Court of Claims awarded Hughes damages of $114 million. Because
Hughes believed that the record supported a higher royalty rate, it appealed
that decision. The U.S. Government, contending that the award was too high, also
appealed. On June 19, 1996, the Court of Appeals for the Federal Circuit
affirmed the decision of the Court of Claims which awarded Hughes $114 million
in damages, together with interest. The time period to appeal has not yet
expired and accordingly the decision is not yet final. Hughes is unable to
estimate the duration of any such possible appeals. In the opinion of management
of Hughes, there is a reasonable possibility that this matter could be resolved
in the near term. While no amount has been recorded in the financial statements
of Hughes to reflect the $114 million award, a resolution of this matter could
result in a gain that would be material to the earnings of General Motors
attributable to Class H common stock.
* * * * * *
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion excludes the purchase accounting adjustments
related to General Motors' acquisition of Hughes Aircraft Company (see
Supplemental Data beginning on page 51).
RESULTS OF OPERATIONS
Hughes reported 1996 second quarter earnings, before the effects of
purchase accounting adjustments related to General Motors' acquisition of Hughes
Aircraft Company, of $306.6 million, a 6.3% increase from the $288.4 million
reported in the second quarter of 1995. Earnings per share of GM Class H common
stock increased 6.9% to $0.77 per share from $0.72 per share in the second
quarter of 1995.
For the first six months of 1996, net income increased 10.9% to $618.3
million compared with $557.3 million reported in the same period in 1995.
Earnings per share increased 11.5% to $1.55 from $1.39 per share in the first
six months of 1995.
Revenues for the second quarter of 1996 were $4,062.5 million, a 9.1%
increase from the $3,723.6 million reported in the second quarter of 1995.
Revenues for the first six months of 1996 increased to $7,799.2 million, a 6.8%
increase from the $7,302.4 million reported in the first half of 1995. Costs and
expenses as a percentage of revenues increased slightly to 88.2% from 87.5% in
the second quarter of 1995. For the six months ended June 30, 1996, costs and
expenses as a percentage of revenues decreased slightly to 87.4% from 87.7% in
the comparable 1995 period. Income taxes were $172.3 million, or 36.0% of income
before income taxes, for the quarter compared with $178.8 million, or 38.3% of
income before income taxes, in the comparable quarter of 1995. For the first six
months of 1996, income taxes were $363.7 million, or 37.0% of income before
income taxes, compared with $344.2 million, or 38.2% of income before income
taxes, in the comparable 1995 period.
Operating profit was $450.4 million for the second quarter, essentially
unchanged from the operating profit of $453.2 million reported during the
comparable period in 1995. The operating profit margin on the same basis was
11.2% for the quarter compared with 12.2% in the second quarter of 1995.
Operating profit for the first six months of 1996 was $835.6 million, a 4.9%
decrease from the $878.8 million in the same period last year. The operating
profit margin on the same basis for the first six months of 1996 was 10.9%
compared with 12.1% in the prior year's period.
48
<PAGE> 6
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Second quarter revenue growth was attributable to increases at each of
Hughes' three business segments, particularly Telecommunications and Space where
revenues were propelled by higher commercial satellite manufacturing sales,
continued DIRECTV(R) subscriber growth and increased sales of cellular
communications equipment. Additionally, the 1995 acquisition of Magnavox
Electronic Systems Company (Magnavox) in the Aerospace and Defense Systems
segment and international and domestic sales growth in the Automotive
Electronics segment contributed to the increase in revenues. The improved
earnings were primarily a result of the higher satellite manufacturing and
cellular communications equipment sales and a decrease in the effective tax rate
resulting from the favorable resolution of certain tax contingencies. These
earnings increases more than offset the impact of lower operating profit margins
in the Automotive Electronics and Aerospace and Defense Systems segments. The
lower operating profit margin in the Automotive Electronics segment was
primarily due to price reductions resulting from competitive pricing in
connection with GM's global sourcing initiative and continued investment in
international expansion. The lower operating profit margin in the Aerospace and
Defense Systems segment was attributable to a continued shift from production
programs to engineering and development programs, and growth in information
systems and services revenues.
The increase in revenues for the six months ended June 30, 1996, when
compared with the comparable period in 1995, was primarily the result of
increased Telecommunications and Space segment revenues driven by DIRECTV
subscriber growth, a gain recognized in the first quarter of 1996 from the sale
of a 2.5% equity interest in DIRECTV to AT&T, and higher sales of commercial
satellites and Galaxy satellite transponders. Aerospace and Defense Systems
segment revenues were also higher in the first six months of 1996 principally
due to the 1995 acquisitions of CAE-Link and Magnavox. These increases more than
offset the reduced revenues in the Automotive Electronics segment resulting from
lower first quarter GM production volumes related to a 17-day strike at two GM
component plants. The Automotive Electronics segment accounted for the majority
of the decline in operating profit and operating profit margin primarily due to
the aforementioned GM strike and continued price reductions. The earnings
improvement was primarily due to the gain recognized from the sale of 2.5% of
DIRECTV to AT&T and a decrease in the effective tax rate which more than offset
the reduced operating profit.
The Automotive Electronics segment reported revenues for the quarter of
$1,554.0 million, an increase of 4.7% from revenues of $1,484.8 million for the
same period in 1995. The increase reflects a 1.8% increase in GM vehicles
produced in the United States and Canada (excluding joint ventures) and a 3.0%
increase in Hughes-supplied electronic content in these vehicles(from $870 per
vehicle to $896 per vehicle). In addition, international and non-GM sales were
$259 million, a 19.9% increase from the $216 million reported in last year's
second quarter. Operating profit decreased 5.0% in the second quarter to $236.4
million from $248.8 million for the comparable period in 1995. The decline was
primarily due to price reductions resulting from competitive pricing in
connection with GM's global sourcing initiative and the impact from continued
investment in international expansion. These factors were partially offset by
increased production volumes and electronic content, and continued cost
reduction efforts. As a result, second quarter operating profit margin declined
to 15.3% from 17.0% in 1995.
As the principal supplier of automotive electronics to General Motors'
North American Operations unit, Hughes' sales of automotive electronics will
continue to be heavily dependent on General Motors production of vehicles in
North America, the level of Hughes-supplied electronic content per vehicle, and
the price of such electronics. In addition, the global market for such products
is highly competitive. In response to this competitive environment, the
segment's strategy is to continue efforts to increase non-GM NAO sales, make
strategic acquisitions and forge international alliances, reduce costs
aggressively each year, and increase electronic functionality through a focus on
safety, security, communications, and convenience. In order to achieve certain
of these strategic objectives, the segment will seek to improve its systems
capability both internally and by developing key design, manufacturing and
marketing alliances and other relationships with mechanical and electrical
automotive component suppliers.
The Telecommunications and Space segment revenues for the quarter were
$951.9 million, an increase of 27.4% over revenues of $747.4 million reported in
the prior year's second quarter. The growth was principally
49
<PAGE> 7
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
due to increased commercial satellite manufacturing and cellular communications
equipment sales as well as continued DIRECTV subscriber growth, which were
partially offset by reduced Galaxy(R) satellite transponder sales. Operating
profit in the second quarter increased 24.2% to $57.0 million compared with
$45.9 million reported in the same period in 1995. This increase was primarily
the result of the higher satellite manufacturing and cellular communications
equipment sales, in part offset by reduced Galaxy satellite transponder sales
and increased DIRECTV marketing expenses. Second quarter operating profit margin
of 6.0% was comparable to the 6.1% reported in 1995.
The global telecommunications industry is experiencing a period of rapid
growth and change providing industry participants with many opportunities for
strategic growth as well as vigorous competition. The Telecommunications and
Space segment intends to continue to expand its offerings from being primarily a
supplier of hardware to becoming a provider of hardware and video, voice, and
data services worldwide. This strategy requires significant current and future
investment in order to maintain and enhance the segment's competitive position
with respect to existing products and to take advantage of the growth
opportunities presented, as well as the formation of strategic alliances to
compete in the very competitive global marketplace.
The Aerospace and Defense Systems segment second quarter 1996 revenues were
$1,510.4 million, a 5.4% increase over revenues of $1,432.5 million reported in
the same period in 1995. The growth was principally due to additional revenues
resulting from the December 1995 acquisition of Magnavox. Operating profit for
the period declined 1.3% to $161.4 million compared with $163.6 million for the
second quarter of 1995. The operating profit margin in the period declined to
10.7% from 11.5% in the second quarter of 1995 primarily due to a continued
shift from production programs to engineering and development programs, and
growth in information systems and services revenues.
The continuing consolidation of businesses in the defense industry is
resulting in increased competitive pressures for the Aerospace and Defense
Systems segment that could impact future operating results. In response to this
environment, the Hughes strategy is to strengthen its leadership positions
through acquisitions, consolidations, realignments, and divestitures, strive to
be the low-cost provider, use technology to capture market share, expand
international sales, and broaden its customer base.
Statements made concerning the ongoing financial performance, strategies
and possible future actions which Hughes intends to pursue to achieve the
strategic objectives for each of its three principal business segments
constitute forward-looking information. The implementation of these strategies
and of such future actions and the achievement of such financial performance are
each subject to numerous conditions, uncertainties and risk factors, and,
accordingly, no assurance can be given that Hughes will be able to successfully
accomplish its strategic objectives or achieve such financial performance. The
principal important risk factors which could cause actual performance and future
actions to differ materially from the forward-looking statements made herein
include economic conditions, product demand and market acceptance, government
action, competition, technological risk and interruptions to production
attributable to causes outside Hughes' control.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at June 30, 1996 were $1,000.1 million, a
decrease of $139.4 million from the $1,139.5 million reported at December 31,
1995. Net cash provided by operating activities for the six months ended June
30, 1996 of $357.6 million was more than offset by cash used in investing and
financing activities. Net cash used in investing activities was primarily
attributable to capital expenditures of $293.9 million and an increase in
telecommunications and other equipment of $91.2 million, offset by proceeds from
the sale and leaseback of satellite transponders with General Motors Acceptance
Corporation of $252.0 million. Net cash used in financing activities included
the repayment of a $302.7 million note payable related to the 1995
50
<PAGE> 8
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
acquisition of Magnavox and cash dividends paid to General Motors of $192.0
million, partially offset by cash proceeds from the sale of a minority interest
in DIRECTV of $137.5 million.
As a measure of liquidity, Hughes' current ratio (ratio of current assets
to current liabilities) increased to 1.71 at June 30, 1996 from 1.58 at December
31, 1995. Working capital increased to $2,995.7 million at June 30, 1996 from
$2,502.0 million at December 31, 1995.
Capital expenditures, including expenditures for telecommunications and
other equipment, were $397.8 million through June 30, 1996, compared with $308.4
million for the comparable period in 1995.
Notes and loans payable decreased from $432.5 million at December 31, 1995
to $270.9 million at June 30, 1996. The decrease is primarily due to the
repayment of the $302.7 million note payable related to the 1995 acquisition of
Magnavox, offset in part by the reclassification of $150.0 million of debt from
non-current to current. This reclassification of debt also caused long-term debt
and capitalized leases to decrease from $258.8 million at December 31, 1995 to
$107.6 million at June 30, 1996. The ratio of long-term debt to the total of
such debt and proforma stockholder's equity improved to 1.7% at June 30, 1996
from 4.4% at December 31, 1995.
SUPPLEMENTAL DATA
The Consolidated Financial Statements reflect the application of purchase
accounting adjustments as described in Note 3 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 these
intangible assets associated with GM's purchase of Hughes Aircraft Company
amounted to $30.6 million and $30.9 million for the second quarters of 1996 and
1995, respectively. 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 Aircraft Company were $2,784.6 million at June 30, 1996 and $2,845.8
million at December 31, 1995.
In order to provide additional analytical data to the users of Hughes'
financial information, supplemental data in the form of unaudited summary pro
forma financial data are provided. Consistent with the basis on which earnings
of Hughes available for the payment of dividends on the GM Class H common stock
is determined, the pro forma data exclude purchase accounting adjustments
related to General Motors' acquisition of Hughes Aircraft Company. 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 Hughes.
51
<PAGE> 9
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
SUMMARY PRO FORMA FINANCIAL DATA*
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SECOND QUARTER JUNE 30,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Total Revenues........................................ $4,062.5 $3,723.6 $7,799.2 $7,302.4
Total Costs and Expenses.............................. 3,583.6 3,256.4 6,817.2 6,400.9
-------- -------- -------- --------
Income before Income Taxes............................ 478.9 467.2 982.0 901.5
Income taxes.......................................... 172.3 178.8 363.7 344.2
-------- -------- -------- --------
Earnings Used for Computation of Available Separate
Consolidated Net Income............................. $ 306.6 $ 288.4 $ 618.3 $ 557.3
======== ======== ======== ========
Earnings Attributable to General Motors Class H Common
Stock on a Per Share Basis.......................... $0.77 $0.72 $1.55 $1.39
======== ======== ======== ========
</TABLE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
--------- ------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
ASSETS
Total Current Assets................................................ $ 7,219.2 $ 6,810.8
Property -- Net..................................................... 2,813.6 2,739.2
Telecommunications and Other Equipment -- Net....................... 1,078.1 1,175.1
Intangible Assets, Investments, and Other Assets -- Net............. 2,386.5 2,403.5
--------- ----------
Total Assets........................................................ $13,497.4 $ 13,128.6
========= ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
Total Current Liabilities........................................... $ 4,223.5 $ 4,308.8
Long-Term Debt and Capitalized Leases............................... 107.6 258.8
Postretirement Benefits Other Than Pensions, Other Liabilities, and
Deferred Credits.................................................. 3,056.2 2,881.1
Total Stockholder's Equity**........................................ 6,110.1 5,679.9
--------- ----------
Total Liabilities and Stockholder's Equity**........................ $13,497.4 $ 13,128.6
========= ==========
</TABLE>
- -------------------------
* The summary excludes purchase accounting adjustments related to GM's
acquisition of Hughes Aircraft Company.
** General Motors' equity in its wholly-owned subsidiary, Hughes. Holders of GM
Class H common stock have no direct rights in the equity or assets of Hughes,
but rather have rights in the equity and assets of GM (which includes 100% of
the stock of Hughes).
52
<PAGE> 10
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
SUMMARY PRO FORMA FINANCIAL DATA* -- CONTINUED
PRO FORMA SELECTED SEGMENT DATA
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SECOND QUARTER JUNE 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
AUTOMOTIVE ELECTRONICS
Revenues
Amount.......................................... $1,554.0 $1,484.8 $2,825.8 $2,981.0
As a percentage of Hughes Revenues.............. 38.3% 39.9% 36.2% 40.8%
Net Sales......................................... $1,540.2 $1,462.7 $2,800.4 $2,935.4
Operating Profit(1)............................... $ 236.4 $ 248.8 $ 395.7 $ 504.2
Operating Profit Margin(2)........................ 15.3% 17.0% 14.1% 17.2%
Depreciation and Amortization..................... $ 50.5 $ 43.5 $ 99.3 $ 86.3
Capital Expenditures.............................. $ 52.1 $ 57.9 $ 102.4 $ 110.8
TELECOMMUNICATIONS AND SPACE
Revenues
Amount.......................................... $ 951.9 $ 747.4 $1,888.3 $1,394.1
As a percentage of Hughes Revenues.............. 23.4% 20.1% 24.2% 19.1%
Net Sales......................................... $ 950.3 $ 751.4 $1,771.3 $1,408.0
Operating Profit(1)............................... $ 57.0 $ 45.9 $ 131.5 $ 77.4
Operating Profit Margin(2)........................ 6.0% 6.1% 7.4% 5.5%
Depreciation and Amortization(3).................. $ 41.7 $ 40.9 $ 87.9 $ 78.1
Capital Expenditures(4)........................... $ 165.3 $ 104.1 $ 235.6 $ 143.4
AEROSPACE AND DEFENSE SYSTEMS
Revenues
Amount.......................................... $1,510.4 $1,432.5 $3,022.8 $2,817.5
As a percentage of Hughes Revenues.............. 37.2% 38.5% 38.8% 38.6%
Net Sales......................................... $1,512.0 $1,426.9 $3,014.2 $2,810.0
Operating Profit(1)............................... $ 161.4 $ 163.6 $ 319.3 $ 317.1
Operating Profit Margin(2)........................ 10.7% 11.5% 10.6% 11.3%
Depreciation and Amortization(3).................. $ 33.3 $ 35.0 $ 66.0 $ 64.5
Capital Expenditures.............................. $ 26.6 $ 30.1 $ 55.1 $ 50.8
CORPORATE AND OTHER
Operating Loss(1)................................. $ (4.4) $ (5.1) $ (10.9) $ (19.9)
</TABLE>
- -------------------------
* The summary excludes purchase accounting adjustments related to GM's
acquisition of Hughes Aircraft Company.
(1) Net Sales less Total Costs and Expenses other than Interest Expense.
(2) Operating Profit as a percentage of Net Sales.
(3) Excludes amortization arising from purchase accounting adjustments related
to GM's acquisition of Hughes Aircraft Company amounting to $5.3 million in
each of the second quarters and $10.6 million in each of the six-month
periods for the Telecommunications and Space segment; and $25.2 million in
each of the second quarters and $50.4 million in each of the six-month
periods for the Aerospace and Defense Systems segment.
(4) Includes expenditures related to telecommunications and other equipment
amounting to $87.9 million, $73.3 million, $103.9 million, and $82.8
million, respectively.
53
<PAGE> 11
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
SUMMARY PRO FORMA FINANCIAL DATA* -- CONCLUDED
PRO FORMA SELECTED FINANCIAL DATA
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SECOND QUARTER JUNE 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Operating profit.................................. $ 450.4 $ 453.2 $ 835.6 $ 878.8
Income before income taxes........................ $ 478.9 $ 467.2 $ 982.0 $ 901.5
Earnings used for computation of available
separate consolidated net income................ $ 306.6 $ 288.4 $ 618.3 $ 557.3
Average number of GM Class H dividend
base shares(1).................................. 399.9 399.9 399.9 399.9
Stockholder's Equity.............................. $6,110.1 $5,348.1 $6,110.1 $5,348.1
Dividends per share of GM Class H common stock.... $ 0.24 $ 0.23 $ 0.48 $ 0.46
Working capital................................... $2,995.7 $2,921.8 $2,995.7 $2,921.8
Operating profit as a percent of net sales........ 11.2% 12.2% 10.9% 12.1%
Pre-tax income as a percent of net sales.......... 11.9% 12.6% 12.8% 12.4%
Net income as a percent of net sales.............. 7.6% 7.8% 8.1% 7.7%
</TABLE>
- -------------------------
* The summary excludes purchase accounting adjustments related to GM's
acquisition of Hughes Aircraft Company.
(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 98.2 million for
the second quarter of 1996 and 95.4 million for the second quarter of 1995.
* * * * * * *
54
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GENERAL
MOTORS CORPORATION JUNE 30, 1996 CONSOLIDATED FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SECOND QUARTER 1996 FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 12,460
<SECURITIES> 5,904
<RECEIVABLES> 65,681
<ALLOWANCES> 0
<INVENTORY> 11,755
<CURRENT-ASSETS> 0
<PP&E> 76,710
<DEPRECIATION> 41,299
<TOTAL-ASSETS> 212,897
<CURRENT-LIABILITIES> 0
<BONDS> 80,756
0
1
<COMMON> 1,271
<OTHER-SE> 19,588
<TOTAL-LIABILITY-AND-EQUITY> 212,897
<SALES> 74,826
<TOTAL-REVENUES> 84,012
<CGS> 63,247
<TOTAL-COSTS> 69,120
<OTHER-EXPENSES> 118
<LOSS-PROVISION> 290
<INTEREST-EXPENSE> 2,835
<INCOME-PRETAX> 4,426
<INCOME-TAX> 1,530
<INCOME-CONTINUING> 2,896
<DISCONTINUED> 10
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,906
<EPS-PRIMARY> 3.57
<EPS-DILUTED> 0
</TABLE>
