SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report
(Date of earliest event reported) January 26, 1998
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GENERAL MOTORS CORPORATION
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(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 1-143 38-0572515
- ---------------------------- ----------------------- -------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
100 Renaissance Center, Detroit, Michigan 48243-7301
3044 West Grand Boulevard, Detroit, Michigan 48202-3091
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (313)-556-5000
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- 1 -
ITEM 5. OTHER EVENTS
On January 26, 1998, a news release was issued on the subject of fourth
quarter consolidated earnings for General Motors Corporation (GM). The news
release did not include financial statement footnotes and certain other
financial information that will be filed with the Securities and Exchange
Commission as part of GM's Annual Report on Form 10-K. Following are the fourth
quarter earnings releases for GM, Hughes Electronics Corporation (Hughes),
and General Motors Acceptance Corporation (GMAC), all dated January 26, 1998,
and the Principal Important Factors Relating To Forward-Looking Statements:
GM NEWS RELEASE
GM REPORTS ALL-TIME RECORD NET INCOME OF $6.7 BILLION FOR 1997 CALENDAR YEAR
. . . EARNINGS PER SHARE OF $8.70 BEST IN GM HISTORY
DETROIT -- General Motors Corp. (GM) today reported record
consolidated net income for the fourth quarter of 1997 of $1.7 billion, or a
record $2.36 per share of GM $1-2/3 par value common stock, compared with $786
million, or $0.92 per share, in the fourth quarter of 1996. Previous records
have been adjusted to exclude EDS. All earnings-per-share amounts are basic (see
Highlights for diluted earnings-per-share amounts).
Income for calendar-year-1997 was a record $6.7 billion, or $8.70 per
share, compared with $5.0 billion, or $6.07 per share, in 1996, excluding EDS.
Fully consolidated net sales and revenues totaled $48.4 billion in the
fourth quarter of 1997, and $177.7 billion for calendar-year 1997, compared with
$40.9 billion in the fourth quarter of 1996, and $164.0 billion for the 1996
calendar year.
Two significant factors impacted fourth-quarter and calendar-year-1997
financial results -- a gain of $4.3 billion, or $6.08 per share for the fourth
quarter, resulting from the December 17, 1997, completion of the strategic
restructuring of GM's Hughes Electronics subsidiary (Hughes Transactions), and
charges against income totaling $4.0 billion after taxes, or $5.75 per share for
the fourth quarter, resulting from GM's ongoing competitiveness studies. The
$4.0 billion of after-tax charges against income consisted of $2.4 billion
related to under-performing assets, $0.8 billion related to capacity reductions,
$0.3 billion related to assets held for disposal, and $0.5 billion of other
charges (see Competitiveness Studies and Highlights for more information).
The remainder of the discussion in this release of corporate and
sector results of operations excludes special items (see Highlights and
Competitiveness Studies for additional information).
Income for the fourth quarter of 1997 was $1.5 billion, or $2.03 per share
of GM $1-2/3 par value common stock, compared with $848 million, or $1.00 per
share, in the fourth quarter of 1996. Calendar-year-1997 income totaled $6.0
billion, or $7.90 per share, compared with $4.7 billion, or $5.74 per share in
1996.
"GM's strong financial performance reflects our determination to further
increase stockholder value and become more competitive in all our business
sectors," GM Chairman, Chief Executive Officer and President John F. Smith, Jr.,
said. "We've made some good progress, but we still have further to go to achieve
our financial objectives, including our target for a 5-percent net-profit
margin."
- 2 -
Following is a summary of results from the GM business sectors in 1997:
- GM North American Operations (GM-NAO) income totaled $636 million in
the fourth quarter of 1997, compared with a loss of $117 million in the
fourth quarter of 1996. Calendar-year-1997 income totaled $2.3 billion,
compared with $333 million in 1996.
- Delphi Automotive Systems (Delphi) earned $265 million in the fourth
quarter of 1997, compared with $56 million in the fourth quarter of
1996. Income totaled $860 million in calendar-year 1997, compared with
$728 million in the prior year.
- GM International Operations (GMIO) fourth-quarter-1997 income totaled
$197 million, compared with $353 million in the prior-year period.
Calendar-year-1997 income totaled $981 million, compared with $1.5
billion in 1996.
- General Motors Acceptance Corporation (GMAC) reported net income of
$279 million for the fourth quarter of 1997, compared with net income
of $274 million in the fourth quarter of 1996. Net income for
calendar-year 1997 totaled $1.3 billion, compared with $1.2 billion in
1996.
- GM completed the previously mentioned restructuring of its Hughes
Electronics subsidiary on Dec. 17, 1997. Hughes, as previously
structured, earned $251 million in the October 1 through December 17
period of 1997, compared with earnings of $285 million in the fourth
quarter of 1996. Calendar-year earnings through Dec. 17, 1997, totaled
$1.0 billion, compared with $1.1 billion in calendar-year 1996.
- Earnings for the recapitalized telecommunications and space
business of Hughes Electronics for the period of Dec. 18
through Dec. 31, 1997, totaled $8 million.
GM CONSOLIDATED FINANCIAL DATA (with financing & insurance operations
on an equity basis)
The corporation's after-tax net-profit margin -- net income as a
percentage of net sales and revenues -- was 3.8 percent in the fourth quarter of
1997, and 3.9 percent in calendar-year 1997. That compares with net-profit
margins of 2.4 percent and 3.2 percent for the 1996 fourth-quarter and
calendar-year periods.
The corporation's pretax income was $1.8 billion in the fourth quarter
of 1997, compared with pretax income of $305 million in the fourth quarter of
1996.
GM's cash position remained strong during the fourth quarter of 1997.
Cash and marketable securities totaled $14.5 billion at Dec. 31, 1997, compared
with $17.0 billion at Dec. 31, 1996, and $14.6 billion at Sept. 30, 1997.
In the fourth quarter of 1997, GM used approximately $900 million in
cash to acquire more than 14.3 million shares of GM $1-2/3 par value common
stock under the corporation's stock-repurchase program. A total of $3.8 billion
in cash was used to repurchase 63.5 million shares during 1997, completing one
$2.5 billion repurchase program, and 50 percent of a second $2.5 billion program
announced in August 1997.
- 3 -
Cash contributions to GM's U.S. pension plans during 1997 totaled $1.5
billion, keeping the plans fully funded on an economic basis. The corporation
also elected to pre-fund part of its other post-retirement-benefits liability,
which is primarily related to post-retirement health-care expenses, by creating
a Voluntary Employees' Beneficiary Association (VEBA) trust to which it
contributed $3 billion of its cash reserves in December of 1997.
"Strong cash generation from operations made it possible to continue
to support capital-spending programs, adequately fund pension plans, contribute
to a VEBA, continue to repurchase shares of GM common stock, and keep an
appropriate level of cash reserves," Smith said.
GM NORTH AMERICAN OPERATIONS (GM-NAO)
GM North American Operations' fourth-quarter-1997 income totaled $636
million, and calendar-year-1997 income totaled $2.3 billion. That compares with
a fourth-quarter-1996 loss of $117 million, and calendar-year income of $333
million.
GM-NAO's net profit margin was 2.4 percent in the fourth quarter of
1997, and 2.3 percent for calendar-year 1997.
GM-NAO's pretax income totaled $882 million in the fourth quarter of
1997, compared with a pretax loss of $420 million in the prior-year period.
Pretax income totaled $3.3 billion in calendar-year 1997, compared with a pretax
loss of $34 million in 1996.
"We're pleased by the progress of the GM-NAO team as we continue to
significantly improve our operating performance," said G. Richard Wagoner, Jr.,
General Motors executive vice president and president of GM North American
Operations. "The 1997 results primarily reflect the success of our new products
in the marketplace, and our improving cost competitiveness," Wagoner said.
"These results are particularly noteworthy given the intensely
competitive North American market, where the continued weakness of Asian and
European currencies compared with the dollar has given overseas competitors a
distinct pricing advantage in the United States, and has intensified the profit
pressure on our export programs to Asia and Europe. This all highlights the need
for us to continuously focus our efforts on significantly improving our cost
position in 1998," Wagoner said.
GM vehicle deliveries in North America for the fourth quarter of 1997
totaled 1,300,000 units, which resulted in a 30.5-percent share of the North
American vehicle market, compared with 1,209,000 units, and a 30.1-percent share
in the fourth quarter of 1996. Calendar-year-1997 deliveries totaled 5,360,000
units and a market share of 30.8 percent, compared with 5,263,000 units and a
31.0-percent market share in 1996. (See additional information in Highlights).
Although vehicle sales were unfavorably affected by strike-related
production losses in the second quarter of 1997, Wagoner said, "New products,
such as Buick's Park Avenue, the Pontiac Grand Prix, the Oldsmobile Intrigue,
and GM's new minivans are being well received in the marketplace and
significantly outselling the models they replaced. Our full-size pickups and
sport-utility vehicles continue to sell very well even though they are late in
their model cycles."
- 4-
DELPHI AUTOMOTIVE SYSTEMS (DELPHI)
Delphi Automotive Systems' income totaled $265 million in the fourth
quarter of 1997, and $860 million for calendar-year 1997. That compares with
fourth-quarter-1996 income of $56 million, and calendar-year-1996 income of $728
million.
Delphi's net-profit margin was 3.9 percent in the fourth quarter of
1997, and 3.3 percent for calendar-year 1997.
Pretax income for Delphi totaled $460 million in the fourth quarter of
1997, compared with $100 million in the prior-year period. Pretax income totaled
$1.3 billion in calendar-year 1997, compared with $936 million in 1996.
General Motors Executive Vice President and President of Delphi
Automotive Systems J.T. Battenberg III said, "Delphi faced some tough challenges
in 1997, including competitive pressures that generated price reductions, and a
high level of product turnover by original equipment manufacturers (OEMs), which
generated manufacturing start-up costs. However, we met these challenges and
continue to take the right steps for the longer term."
"Bringing Delco Electronics, GM's automotive electronics business,
into Delphi, effective Dec. 17, 1997, puts us in position to lead the
component-industry trend toward integrated automotive systems. Electronics
capability is key to that systems approach," Battenberg said.
"Growing our business continues to be a major focus for Delphi.
Delphi's 1997 sales to customers outside the GM-NAO vehicle groups continued to
increase and represented approximately 38 percent of total sales, including all
joint ventures," Battenberg said. "This improvement occurred despite the adverse
effect on Delphi's revenues caused by economic conditions in emerging markets."
GM INTERNATIONAL OPERATIONS (GMIO)
GM International Operations' fourth-quarter-1997 income totaled $197
million, and calendar-year-1997 income totaled $981 million, excluding the
favorable impact of special items totaling $158 million. That compares with
fourth-quarter-1996 income of $353 million, and calendar-year-1996 income of
$1.5 billion.
GMIO's net-profit margin was 2.2 percent in the fourth quarter of
1997, and 2.8 percent for calendar-year 1997.
GMIO's pretax income totaled $215 million in the fourth quarter of
1997, compared with $309 million in the prior-year period. Pretax income totaled
$1.4 billion in calendar-year 1997, compared with $1.8 billion in 1996.
Income for GM's automotive operations in Europe totaled $31 million in
the fourth quarter of 1997, compared with income of $99 million in 1996. For the
1997 calendar year, income totaled $313 million, excluding the previously
mentioned favorable impact of $158 million, compared with income of $778 million
in 1996.
- 5 -
"The lower European earnings in 1997 were primarily due to higher
sales and marketing costs under intensely competitive market conditions, and
lower earnings from Saab as they launched the new 9-5 model. Despite these
unfavorable factors, the 1997-calendar-year results reflect strong operating
performance, which was sufficient to fund our growth expenditures in both Latin
America and Asia," said Louis R. Hughes, General Motors executive vice president
and president of GM International Operations.
For the remainder of GM International Operations, which include the
Latin American and Asia and Pacific Operations, income totaled $166 million in
the fourth quarter of 1997, and $668 million for calendar-year 1997, compared
with $254 million in the 1996-fourth-quarter period, and $754 million in the
1996 calendar year.
Results in the fourth quarter of 1997 were affected by significant
economic volatility in Brazil, and the start-up of a new plant in Rosario,
Argentina.
COMPETITIVENESS STUDIES
As previously reported by GM, the global automotive industry,
including the automotive components and systems market, has become increasingly
competitive and is presently undergoing significant restructuring and
consolidation activities. All of the major industry participants are continuing
to increase their focus on efficiency and cost improvements, while announced
capacity increases for the North American market and excess capacity in the
European market have led to continuing price pressures. As a result, GM-NAO,
Delphi, Delco Electronics, and GMIO initiated studies in 1997 concerning the
long-term competitiveness of all facets of their businesses (Competitiveness
Studies). These studies were performed in conjunction with GM's current business
planning cycle and were substantially completed in December of 1997.
Based on the results of these Competitiveness Studies, GM recorded
pretax charges against income totaling $6.4 billion ($4.0 billion after taxes).
Following are the components of the after-tax charges:
$2.4 billion: Under-performing assets, including both
vehicle and component-manufacturing ssets
$0.8 billion: Capacity reductions
$0.3 billion: Assets held for disposal, primarily related
to Delphi seating, lighting, and coil
spring operations
$0.5 billion: Other, primarily related to losses on
contracts associated with retail-lease
commitments
The amount included for under-performing assets represents charges
recorded pursuant to the accounting standard for impairment of long-lived
assets, Statement of Financial Accounting Standards No. 121. In accordance with
this standard, GM evaluated the book values of its long-lived assets as events
and circumstances of the industry changed. Long-lived assets are considered
impaired when the aggregate, anticipated, undiscounted future cash flows from
such assets are separately identifiable and less than their respective book
values. In addition, future capital spending for under-performing vehicles and
component lines will be evaluated for impairment.
- 6-
The amount included for capacity reductions represents post-employment
benefits payable to employees, pursuant to contractual agreements, and costs
associated with the disposal of assets at facilities subject to capacity
reductions. This includes the previously announced actions concerning GM-NAO's
Buick City Assembly and V-6 Powertrain plants in Flint, Mich.; Detroit Truck
Assembly, in Detroit, Mich.; Delphi's Livonia leaf-spring plant in Livonia,
Mich.; and certain GMIO facilities in Europe.
Future charges related to these competitiveness studies may result
from Delphi's fix/close/sell strategy and future cost reductions in
international operations. GM will continue to monitor the competitiveness of all
aspects of its businesses and such studies will be undertaken when and as market
conditions warrant.
STRIKE RELATED IMPACT
Reported and adjusted results for both the 1997 and 1996 calendar
years include the unfavorable impact of strike-related production losses. The
after-tax unfavorable impact was $330 million, or $0.45 per share, in 1997, and
$1.2 billion, or $1.56 per share, in 1996. The after-tax unfavorable impact for
GM-NAO was $238 million in 1997, and $920 million in 1996. The after-tax
unfavorable impact at Delphi was $70 million in 1997, and $206 million in 1996.
The after-tax unfavorable impact at Delco Electronics was $22 million in 1997,
and $75 million in 1996.
PROFIT SHARING
As a result of the profits generated in 1997 by GM's operations in the
United States, profit-sharing payments will be made in 1998 to approximately
239,000 of GM's represented employees in the United States. Each full-time
represented employee who worked the entire year should receive approximately
$750. This is a record payout, excluding the impact of EDS in prior years, and
is approximately $100 higher than the amount called for by the profit-sharing
formula. This increase in the payout amount is intended to recognize the
contribution of employees to General Motors' success in 1997. Unions
representing hourly employees agreed with the decision. This is the fourth
consecutive year that profit-sharing payments have been made to U.S. employees.
Profits generated in 1996 resulted in a profit-sharing payout of approximately
$300.
General Motors also announced today that more than 70,000 eligible
salaried employees will receive incentive payments under a salaried program
supplemented by a separate fund to recognize employees' contributions to the
overall performance of the company during 1997. The 1997 salaried cash payout is
either one percent of an employee's base salary earnings or $750, whichever is
higher.
In addition to the cash payout, for the first time in the industry,
eligible salaried employees in the United States and Canada will be granted
options to purchase General Motors stock. A total of 4.7 million options will be
awarded with individual grants of options ranging from 25 to 100 shares,
depending upon level of responsibility. The granting of these stock options to
non-executive salaried employees is aimed at further aligning the personal
financial success of salaried employees with that of the company, and
encouraging employees to think and act like owners of the business. General
Motors hopes to continue the stock-option program in future years, depending
upon business performance.
# # #
HIGHLIGHTS ATTACHED
- 7 -
HIGHLIGHTS - Q4 Adjusted for Special Items - With
Financing and Insurance Operations on an Equity Basis
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
December 31, 1997
----------------------------------
Special Items
---------------
(1) (2)
Comp. Hughes (3)
Reported Studies Trans. Adjusted
-------- ------- ------ --------
Net sales and revenues$39,458 $(459) $ - $39,917
------ ------ ------ ------
Cost and expenses:
Cost of sales 34,456 1,671 - 32,785
Selling, general,
and admin.expenses 3,923 - - 3,923
Depreciation and
amort. expenses 6,176 4,095 - 2,081
------ ------ ------ ------
Total costs and
expenses 44,555 5,766 - 38,789
------ ------ ------ ------
Operating(loss)income (5,097) (6,225) - 1,128
Other income(loss)less
income deductions 5,154 (72) 4,269 957
Interest expense 308 - - 308
------ ------ ------ ------
Income (loss) before
income taxes and
minority interests (251) (6,297) 4,269 1,777
Income tax (credit)
expense (1,773) (2,347) - 574
------ ------ ------ ------
Income (loss) after
income taxes 1,522 (3,950) 4,269 1,203
Minority interests 16 - - 16
Earnings (losses) of
noncons. affiliates 199 (89) - 288
------ ------ ------ ------
Net income (loss) $1,737 $(4,039) $4,269 $1,507
====== ====== ====== ======
$1-2/3 par value basic
EPS from continuing
operations $2.36 $(5.75) $6.08 $2.03
Gross profit margin 12.7% 17.9%
Effective income tax
(credit) rate (706.4%) 32.3%
Net profit margin 4.4% 3.8%
See footnotes beginning on page 14.
continues
- 8 -
HIGHLIGHTS - Q4 Adjusted for Special Items - With Financing and
Insurance Operations on an Equity Basis
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
December 31, 1996
--------------------
(4)
Reported Adjusted
-------- --------
Net sales and revenues $35,966 $35,966
------ ------
Costs and expenses:
Cost of sales 31,088 30,818
Selling, general, and
administrative expenses 3,574 3,574
Depreciation and amortization
expenses 1,710 1,710
Plant closing adjustment (318) -
------ ------
Total costs and expenses 36,054 36,102
------ ------
Operating loss (88) (136)
Other income less income deductions 488 636
Interest expense 195 195
------ ------
Income before income taxes and
minority interests 205 305
Income tax credit (262) (224)
------ ------
Income after income taxes 467 529
Minority interests 35 35
Earnings of nonconsolidated
affiliates 284 284
------ ------
Net income $786 $848
====== ======
$1-2/3 par value basic EPS from
continuing operations $0.92 $1.00
Gross profit margin 13.6% 14.3%
Effective income tax (credit) rate (127.8%) (73.4%)
Net profit margin 2.2% 2.4%
See footnotes beginning on page 14.
continues
- 9 -
HIGHLIGHTS - Q4 Adjusted for Special Items By Sector
(Dollars in Millions)
Three Months Ended
December 31, 1997
-----------------------------------
Special Items (3)
----------------
Reported (1) (2) Adjusted
Income Comp. Hughes Income
(Loss) Studies Trans. (Loss)
------- ------- ------- -------
GM-NAO $(1,747) $(2,383) $ - $636
Delphi (605) (870) - 265
GMIO (5) (461) (658) - 197
Hughes earnings 259 - - 259
GMAC 279 - - 279
Other 4,012 (128) 4,269 (129)
------ ------ ------ ------
Consolidated income
(loss) $1,737 $(4,039) $4,269 $1,507
====== ====== ====== ======
Three Months Ended
December 31, 1996
-----------------------------------
(4)
Reported Adjusted
Income Special Income
(Loss) Items (Loss)
------- ------- -------
GM-NAO $27 $144 $(117)
Delphi (146) (202) 56
GMIO (5) 353 - 353
Hughes earnings 281 (4) 285
GMAC 274 - 274
Other (3) - (3)
------ ------ ------
Consolidated income
(loss) $786 $(62) $848
====== ====== ======
See footnotes beginning on page 14.
continues
- 10 -
HIGHLIGHTS - Q4 Automotive Sectors
Special Item Analysis
(Dollars in Millions)
Three Months Ended
December 31, 1997
-------------------------------
(5)
GM-NAO Delphi GMIO
------- ------- -------
Reported
--------
Net sales and revenues $25,527 $6,830 $9,024
------ ------ ------
Pre-tax loss (2,826) (902) (807)
Income tax credit (1,132) (319) (308)
Equity income (loss) and
minority interests (53) (22) 38
------ ------ ------
Net loss $(1,747) $(605) $(461)
====== ====== ======
Net loss margin (6.8%) (8.9%) (5.1%)
Effective income tax
(credit) rate (40.1%) (35.4%) (38.2%)
Competitiveness Studies(1)
-----------------------
Net sales and revenues $(450) $ - $(9)
------ ------ ------
Pre-tax loss (3,708) (1,362) (1,022)
Income tax credit (1,396) (502) (373)
Equity income (loss) and
minority interests (71) (10) (9)
------ ------ ------
Net loss $(2,383) $(870) $(658)
====== ====== ======
Adjusted(3)
--------
Net sales and revenues $25,977 $6,830 $9,033
------ ------ ------
Pre-tax income 882 460 215
Income tax expense 264 183 65
Equity income (loss) and
minority interests 18 (12) 47
------ ------ ------
Net income $636 $265 $197
====== ====== ======
Net profit margin 2.4% 3.9% 2.2%
Effective income tax rate 29.9% 39.8% 30.2%
See footnotes beginning on page 14.
continues
- 11 -
HIGHLIGHTS - Q4 Automotive Sectors
Special Items Analysis
(Dollars in Millions)
Three Months Ended
December 31, 1996
------------------------------
(5)
GM-NAO Delphi GMIO
------- ------- -------
Reported
--------
Net sales and revenues $22,503 $6,137 $8,893
------ ------ ------
Pre-tax (loss) income (187) (226) 309
Income tax credit (215) (62) (37)
Equity income (loss) and
minority interests (1) 18 7
------ ------ ------
Net income (loss) $27 $(146) $353
====== ====== ======
Net profit (loss) margin 0.1% (2.4%) 4.0%
Effective income tax
(credit) rate (115.0%) (27.4%) (12.0%)
Special Items
-------------
Net sales and revenues $- $- $ -
------ ------ ------
Pre-tax income (loss) 233 (326) -
Income tax expense
(credit) 89 (124) -
Equity income and
minority interests - - -
------ ------ ------
Net income (loss) $144 $(202) $ -
====== ====== ======
Adjusted(4)
--------
Net sales and revenues $22,503 $6,137 $8,893
------ ------ ------
Pre-tax (loss) income (420) 100 309
Income tax (credit)
expense (304) 62 (37)
Equity income (loss) and
minority interests (1) 18 7
------ ------ ------
Net (loss) income $(117) $56 $353
====== ====== ======
Net (loss) profit margin (0.5%) 0.9% 4.0%
Effective income tax
(credit) rate (72.4%) 62.0% (12.0%)
See footnotes beginning on page 14.
continues
- 12 -
HIGHLIGHTS - Q4 Operating Information
Three Months Ended
December 31,
----------------------
1997 1996
--------- ----------
Worldwide Wholesale Sales (units in 000s)
United States: Cars 699 581
Trucks 599 504
------ ------
Total United States 1,298 1,085
Canada and Mexico 152 122
------ ------
Total North America 1,450 1,207
International 763 779
------ ------
Total Worldwide 2,213 1,986
====== ======
....................................................
Vehicle Unit Deliveries (units in 000s)
United States
Chevrolet - Cars 216 188
- Trucks 382 370
Pontiac 132 129
GMC 117 118
Buick 113 93
Oldsmobile 77 75
Saturn 52 62
Cadillac 44 45
Other 5 5
------ ------
Total United States 1,138 1,085
Canada and Mexico 162 124
------ ------
Total North America 1,300 1,209
------ ------
International
Europe 424 386
Latin America, Africa and
the Middle East 192 180
Asia and Pacific 130 151
------ ------
Total International 746 717
------ ------
Total Worldwide 2,046 1,926
====== ======
....................................................
Market share
United States
Cars 32.2% 31.2%
Trucks 28.9% 29.1%
Total 30.6% 30.2%
Total North America 30.5% 30.1%
Western Europe 11.1% 11.2%
Latin America 18.9% 18.2%
Asia and Pacific 4.1% 4.3%
Total Worldwide 15.8% 15.4%
.....................................................
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 27.0% 22.3%
% Fleet Sales - Trucks 12.4% 11.3%
Total vehicles 20.2% 17.2%
.....................................................
Days Supply of Inventory - U.S.
Gross Landed Stock
Cars 92 93
Trucks 97 97
....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated) 100.5% 79.9%
.....................................................
Retail Incentives ($ per unit)
GM-NAO $1,148 $739
....................................................
See footnotes beginning on page 14.
continues
- 13 -
HIGHLIGHTS - Q4 Other Financial Information
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
December 31,
----------------------
1997 1996
--------- ----------
Earnings Attributable to Common Stocks
$1-2/3 par value $1,654 $696
Class H (6) $65 $70
Class H (7) $2 $-
....................................................
Basic Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $2.36 $0.92
Class H (6) $0.63 $0.70
Class H (7) $0.02 $-
....................................................
Diluted Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $2.33 $0.91
Class H (6) $0.63 $0.70
Class H (7) $0.02 $-
....................................................
Cash Dividends Per Share of Common Stocks
$1-2/3 par value $0.50 $0.40
Class H (6) $0.25 $0.24
Class H (7) $- $-
....................................................
Depreciation and Amortization(8)
Depreciation $2,693 $1,084
Amortization of special tools 3,407 579
Amortization of intangible
assets 76 47
------ ------
Total $6,176 $1,710
====== ======
....................................................
Worldwide Employment at December 31 (in 000s)
GM-NAO 237 245
Delphi 210 179
GMIO 116 111
GMAC 21 17
Hughes 15 86
Other 9 9
------ ------
Total 608 647
====== ======
....................................................
Worldwide Payrolls $7,617 $7,345
....................................................
Book Value Per Share of Common Stocks
December 31,
----------------------
1997 1996
--------- ---------
$1-2/3 par value $23.44 $27.95
Class H $11.72 $13.97
....................................................
(1) During December 1997, GM-NAO, Delphi, Delco Electronics, and GMIO
substantially completed studies concerning the long-term
competitiveness of all facets of their businesses (Competitiveness
Studies). These studies were performed in conjunction with GM's current
business planning cycle. Based on the results of these Competitiveness
Studies, GM recorded pre-tax charges against income totaling $6.4
billion ($4.0 billion after-tax or $5.75 per share of $1-2/3 par value
common stock) in the fourth-quarter of 1997.
continues
- 14 -
HIGHLIGHTS - Q4 Other Financial Information
(Dollars in Millions Except Per Share Amounts)
(2) On December 17, 1997, GM completed the restructuring of its Hughes
Electronics subsidiary (Hughes Transactions), which resulted in a gain
of $4.3 billion or $6.08 per share of $1-2/3 par value common stock in
the fourth quarter of 1997.
(3) Adjusted amounts represent the reported amounts less the effects of
special items.
(4) Adjusted amounts represent the reported amounts less the effects of
special items. The adjusted amounts include the unfavorable effects of
strike-related work stoppages which occurred during the fourth quarter
of 1996. The unfavorable after-tax impact of the work stoppages was
$700 million, or $0.91 per share of $1-2/3 par value common stock,
including the unfavorable after-tax effects for GM-NAO and Delphi of
$544 million and $111 million, respectively.
(5) GMIO includes: Three Months Ended
December 31,
----------------------
1997 1996
--------- ---------
GM Europe $(457) $99
Other GMIO (4) 254
--------- ---------
Reported net(loss)income $(461) $353
========= =========
GM Europe $31 $99
Other GMIO 166 254
--------- ---------
Adjusted net income -
excluding special items $197 $353
========= =========
(6) Data relates to the period ending December 17, 1997, the date on which
GM recapitalized the Class H common stock ("GM's Recapitalization
Date").
(7) Data relates to the period beginning December 18, 1997, through
December 31, 1997, which is subsequent to GM's Recapitalization Date.
(8) Calculated with financing and insurance operations on an
equity basis.
- 15 -
HIGHLIGHTS - Year Ended Adjusted for Special Items -
With Financing and Insurance Operations on an Equity Basis
(Dollars in Millions Except Per Share Amounts)
Year Ended
December 31, 1997
-----------------------------------
Special Items
---------------
(1) (2)
Comp. Hughes Sub-
Reported Studies Trans. Total
-------- ------- ------ -------
Net sales and revenues$153,781 $(459) $ - $154,240
------- ------ ------ -------
Cost and expenses:
Cost of sales 129,962 1,671 - 128,291
Selling, general,
and admin.expenses 13,254 - - 13,254
Depreciation and
amort. expenses 11,803 4,095 - 7,708
Plant closing expense 80 - - 80
------- ------ ------ -------
Total costs and
expenses 155,099 5,766 - 149,333
------- ------ ------ -------
Operating (loss)income (1,318) (6,225) - 4,907
Other income (loss)
less income
deductions 7,836 (72) 4,269 3,639
Interest expense 971 - - 971
------ ------ ------ ------
Income (loss) before
income taxes and
minority interests 5,547 (6,297) 4,269 7,575
Income tax expense
(credit) 155 (2,347) - 2,502
------ ------ ------ ------
Income (loss) after
income taxes 5,392 (3,950) 4,269 5,073
Minority interests 66 - - 66
Earnings (losses) of
noncons. affiliates 1,240 (89) - 1,329
------ ------ ------ ------
Net income (loss) $6,698 $(4,039) $4,269 $6,468
====== ====== ====== ======
$1-2/3 par value basic
EPS from continuing
operations $8.70 $(5.59) $5.91 $8.38
Gross profit margin 15.5%
Effective income
tax rate 2.8%
Net profit margin 4.4%
See footnotes beginning on page 23.
continues
- 16 -
HIGHLIGHTS - Year Ended Adjusted for Special Items - With
Financing and Insurance Operations on an Equity Basis
(Dollars in Millions Except Per Share Amounts)
Year Ended
December 31, 1997
------------------------------
Other
Sub- Special (3)
Total Items Adjusted
------- ------- --------
Net sales and revenues $154,240 $- $154,240
------- ------ -------
Cost and expenses:
Cost of sales 128,291 - 128,291
Selling, general,
and admin. expenses 13,254 - 13,254
Depreciation and
amortization expenses 7,708 - 7,708
Plant closing expense 80 80 -
------- ------ -------
Total costs and expenses 149,333 80 149,253
------- ------ -------
Operating income (loss) 4,907 (80) 4,987
Other income less
income deductions 3,639 706 2,933
Interest expense 971 - 971
------ ------ ------
Income before income taxes
and minority interests 7,575 626 6,949
Income tax expense 2,502 200 2,302
------ ------ ------
Income after income taxes 5,073 426 4,647
Minority interests 66 - 66
Earnings of nonconsolidated
affiliates 1,329 - 1,329
------ ------ ------
Net income $6,468 $426 $6,042
====== ====== ======
$1-2/3 par value basic EPS
from continuing operations $8.38 $0.48 $7.90
Gross profit margin 16.8%
Effective income tax rate 33.1%
Net profit margin 3.9%
See footnotes beginning on page 23.
continues
- 17 -
HIGHLIGHTS - Year Ended Adjusted for Special Items -
With Financing and Insurance Operations on an Equity Basis
(Dollars in Millions Except Per Share Amounts)
Year Ended
December 31, 1996
---------------------
(3)
Reported Adjusted
-------- --------
Net sales and revenues $145,427 $145,427
------- -------
Costs and expenses:
Cost of sales 123,966 123,696
Selling, general and
administrative expenses 11,827 11,827
Depreciation and amortization
expenses 7,145 7,145
Plant closing adjustments (727) -
------- -------
Total costs and expenses 142,211 142,668
------- -------
Operating income 3,216 2,759
Other income less income deductions 2,056 2,084
Interest expense 859 859
------ ------
Income before income taxes and
minority interests 4,413 3,984
Income tax expense 885 719
------ ------
Income after income taxes 3,528 3,265
Minority interests 56 56
Earnings of nonconsolidated
affiliates 1,369 1,369
------ ------
Income from continuing operations 4,953 4,690
Income from discontinued operations 10 10
------ ------
Net income $4,963 $4,700
====== ======
$1-2/3 par value basic EPS from
continuing operations $6.07 $5.74
Gross profit margin 14.8% 14.9%
Effective income tax rate 20.1% 18.0%
Net profit margin 3.4% 3.2%
See footnotes beginning on page 23.
continues
- 18 -
HIGHLIGHTS - Year Ended Adjusted for Special Items
By Sector
(Dollars in Millions)
Year Ended
December 31, 1997
----------------------------------
Special Items
----------------
Reported (1) (2)
Income Comp. Hughes Sub-
(Loss) Studies Trans. Total
------ ------- ------ ------
GM-NAO $(86) $(2,383) $ - $2,297
Delphi (60) (870) - 810
GMIO (4) 481 (658) - 1,139
Hughes earnings 1,276 - - 1,276
GMAC 1,301 - - 1,301
Other 3,786 (128) 4,269 (355)
------ ------ ------ ------
Consolidated income
(loss) from continuing
operations $6,698 $(4,039) $4,269 $6,468
====== ====== ====== ======
Year Ended
December 31, 1997
-------------------------------
(3)
Other Adjusted
Sub- Special Income
Total Items (Loss)
------ ------- ------
GM-NAO $2,297 $- $2,297
Delphi 810 (50) 860
GMIO (4) 1,139 158 981
Hughes earnings 1,276 318 958
GMAC 1,301 - 1,301
Other (355) - (355)
------ ------ ------
Consolidated income
from continuing
operations $6,468 $426 $6,042
====== ====== ======
Year Ended
December 31, 1996
-------------------------------
(3)
Reported Adjusted
Income Special Income
(Loss) Items (Loss)
------ ------- ------
GM-NAO $730 $397 $333
Delphi 526 (202) 728
GMIO (4) 1,532 - 1,532
Hughes earnings 1,151 68 1,083
GMAC 1,240 - 1,240
Other (226) - (226)
------ ------ ------
Consolidated income
from continuing
operations $4,953 $263 $4,690
====== ====== ======
See footnotes beginning on page 23.
continues
- 19 -
HIGHLIGHTS - Year Ended Automotive Sectors
Special Items Analysis
(Dollars in Millions)
Year Ended
December 31, 1997
-------------------------------
(4)
GM-NAO Delphi GMIO
------- ------- -------
Reported
--------
Net sales and revenues $100,256 $26,316 $35,659
------- ------- -------
Pre-tax (loss) income (408) (167) 561
Income tax (credit)
expense (357) (83) 136
Equity income (loss) and
minority interests (35) 24 56
------- ------- -------
Net (loss) income $(86) $(60) $481
======= ======= =======
Net (loss) profit margin (0.1%) (0.2%) 1.3%
Effective income tax
(credit) rate (87.5%) (49.7%) 24.2%
Competitiveness Studies(1)
-----------------------
Net sales and revenues $(450) $ - $(9)
------ ------ ------
Pre-tax loss (3,708) (1,362) (1,022)
Income tax credit (1,396) (502) (373)
Equity income (loss) and
minority interests (71) (10) (9)
------ ------ ------
Net loss $(2,383) $(870) $(658)
====== ====== ======
Other Special Items
-------------------
Net sales and revenues $- $- $ -
------ ------ ------
Pre-tax (loss) income - (80) 216
Income tax (credit)
expense - (30) 58
Equity income (loss) and
minority interests - - -
------ ------ ------
Net (loss) income $- $(50) $158
====== ====== ======
Adjusted(3)
--------
Net sales and revenues $100,706 $26,316 $35,668
------- ------- -------
Pre-tax income 3,300 1,275 1,367
Income tax expense 1,039 449 451
Equity income (loss) and
minority interests 36 34 65
------- ------- -------
Net income $2,297 $860 $981
======= ======= =======
Net profit margin 2.3% 3.3% 2.8%
Effective income tax rate 31.5% 35.2% 33.0%
See footnotes beginning on page 23.
continues
- 20 -
HIGHLIGHTS - Year Ended Automotive Sectors
Special Items Analysis
(Dollars in Millions)
Year Ended
December 31, 1996
-------------------------------
(4)
GM-NAO Delphi GMIO
------- ------- -------
Reported
--------
Net sales and revenues $93,382 $26,002 $35,251
------ ------ ------
Pre-tax income 608 610 1,786
Income tax (credit)
expense (85) 134 307
Equity income (loss) and
minority interests 37 50 53
------ ------ ------
Net income $730 $526 $1,532
====== ====== ======
Net profit margin 0.8% 2.0% 4.3%
Effective income tax
(credit) rate (14.0%) 22.0% 17.2%
Other Special Items
-------------------
Net sales and revenues $- $- $ -
------ ------ ------
Pre-tax income (loss) 642 (326) -
Income tax expense
(credit) 245 (124) -
Equity income (loss) and
minority interests - - -
------ ------ ------
Net income (loss) $397 $(202) $ -
====== ====== ======
Adjusted(3)
--------
Net sales and revenues $93,382 $26,002 $35,251
------ ------ ------
Pre-tax (loss) income (34) 936 1,786
Income tax (credit)
expense (330) 258 307
Equity income and
minority interests 37 50 53
------ ------ ------
Net income $333 $728 $1,532
====== ====== ======
Net profit margin 0.4% 2.8% 4.3%
Effective income tax
(credit) rate (970.6%) 27.6% 17.2%
See footnotes beginning on page 23.
continues
- 21 -
HIGHLIGHTS - Years Ended Operating Information
Years Ended
December 31,
----------------------
1997 1996
--------- ----------
Worldwide Wholesale Sales (units in 000s)
United States: Cars 2,754 2,647
Trucks 2,177 2,026
------ ------
Total United States 4,931 4,673
Canada and Mexico(5) 618 479
------ ------
Total North America 5,549 5,152
International 3,227 3,111
------ ------
Total Worldwide 8,776 8,263
====== ======
....................................................
Vehicle Unit Deliveries (units in 000s)
United States
Chevrolet - Cars 981 1,046
- Trucks 1,504 1,497
Pontiac 609 551
GMC 468 464
Buick 438 427
Oldsmobile 305 331
Saturn 251 279
Cadillac 183 170
Other 27 28
------ ------
Total United States 4,766 4,793
Canada and Mexico(5) 594 470
------ ------
Total North America 5,360 5,263
------ ------
International
Europe 1,845 1,789
Latin America, Africa and
the Middle East 776 691
Asia and Pacific 584 625
------ ------
Total International 3,205 3,105
------ ------
Total Worldwide 8,565 8,368
====== ======
....................................................
Market Share
United States
Cars 32.4% 32.7%
Trucks 28.8% 29.0%
Total 30.8% 31.0%
Total North America 30.8% 31.0%
Western Europe 11.3% 11.7%
Latin America 19.0% 19.2%
Asia and Pacific 4.4% 4.6%
Total Worldwide 16.0% 16.2%
.....................................................
U.S. Retail/Fleet Mix
% Fleet sales - Cars 25.5% 25.0%
% Fleet sales - Trucks 13.0% 10.9%
Total vehicles 20.0% 19.1%
.....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated) 94.4% 82.4%
.....................................................
Retail Incentives ($ per unit)
GM-NAO $1,027 $700
....................................................
See footnotes beginning on page 23.
continues
- 22 -
HIGHLIGHTS - Years Ended Other Financial Information
(Dollars in Millions Except Per Share Amounts)
Years Ended
December 31,
----------------------
1997 1996
---------- ----------
....................................................
Earnings Attributable to Common Stocks
$1-2/3 par value $6,276 $4,584
Class E $- $15
Class H(6) $322 $283
Class H(7) $2 $-
....................................................
Basic Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $8.70 $6.06
Class E $- $0.04
Class H(6) $3.17 $2.88
Class H(7) $0.02 $-
....................................................
Diluted Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $8.62 $6.02
Class E $- $0.04
Class H(6) $3.17 $2.88
Class H(7) $0.02 $-
....................................................
Cash Dividends Per Share of Common Stocks
$1-2/3 par value $2.00 $1.60
Class E $- $0.30
Class H(6) $1.00 $0.96
Class H(7) $- $-
..................................................
Depreciation and Amortization(8)
Depreciation $5,901 $4,139
Amortization of special tools 5,674 2,856
Amortization of intangible
assets 228 150
------ ------
$11,803 $7,145
====== ======
....................................................
Worldwide Payrolls - Continuing
Operations $30,445 $29,807
....................................................
(1) During December 1997, GM-NAO, Delphi, Delco Electronics,
and GMIO substantially completed studies concerning the long-term
competitiveness of all facets of their businesses (Competitiveness
Studies). These studies were performed in conjunction with GM's current
business planning cycle. Based on the results of these Competitiveness
Studies, GM recorded pre-tax charges against income totaling $6.4
billion ($4.0 billion after-tax or $5.59 per share of $1-2/3 par value
common stock) in 1997.
(2) On December 17, 1997, GM completed the restructuring of its Hughes
Electronics subsidiary (Hughes Transactions), which resulted in a gain
of $4.3 billion or $5.91 per share of $1-2/3 par value common stock.
(3) Adjusted amounts represent the reported amounts less the effects of
special items. The adjusted amounts for 1997 and 1996 include the
unfavorable effects of strike-related work stoppages. The unfavorable
after-tax impacts of the work stoppages were $330 million, or $0.45 per
share of $1-2/3 par value common stock, in 1997 and $1.2 billion, or
$1.56 per share of $1-2/3 par value common stock, in 1996. The
unfavorable after-tax impacts for GM-NAO were $238 million and $920
million in 1997 and 1996, respectively. The unfavorable after-tax
impacts for Delphi were $70 million and $206 million in 1997 and 1996,
respectively.
continues
- 23 -
HIGHLIGHTS - Years Ended Other Financial Information
(Dollars in Millions)
(4) GMIO includes: Years Ended
December 31,
----------------------
1997 1996
--------- ---------
GM Europe $(17) $778
Other GMIO 498 754
--------- ---------
Reported net income $481 $1,532
========= =========
GM Europe $313 $778
Other GMIO 668 754
--------- ---------
Adjusted net income -
excluding special items $981 $1,532
========= =========
(5) Total unit sales for GM Canada, which includes factory and import
sales, were 1,310,590 units and 1,075,233 units for the years ended
December 31, 1997 and 1996, respectively. Net sales and revenues for GM
Canada were $24.3 billion ($Cdn 33.6 billion) and $20.0 billion ($Cdn
27.3 billion) for the years ended December 31, 1997 and 1996,
respectively.
(6) Data relates to the period ending December 17, 1997, the date on which
GM recapitalized the Class H common stock ("GM's Recapitalization
Date").
(7) Data relates to the period beginning December 18, 1997, through
December 31, 1997, which is subsequent to GM's Recapitalization Date.
(8) Calculated with financing and insurance operations on an
equity basis.
- 24 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
1997 1996 1995
---- ---- ----
(Dollars in Millions Except Per Share Amounts)
Net sales and revenues
Manufactured products $153,683 $145,341 $143,666
Financial services 12,762 12,674 11,664
Other income 11,239 5,998 4,924
-------- -------- --------
Total net sales and revenues 177,684 164,013 160,254
------- ------- -------
Costs and expenses
Cost of sales and other operating charges,
exclusive of items listed below 129,948 123,922 121,300
Selling, general and administrative
expenses 16,192 14,580 12,550
Depreciation and amortization expenses 16,616 11,840 11,213
Interest expense 6,113 5,695 5,182
Plant closing expense (adjustments) 80 (727) -
Other deductions 1,021 2,083 1,678
-------- -------- --------
Total costs and expenses 169,970 157,393 151,923
------- ------- -------
Income from continuing operations before
income taxes and minority interests 7,714 6,620 8,331
Income taxes 1,069 1,723 2,316
Minority interests 53 56 18
------- ------ -------
Income from continuing operations before
cumulative effect of accounting change 6,698 4,953 6,033
Income from discontinued operations - 10 900
Cumulative effect of accounting change - - (52)
--------- --------- --------
Net income 6,698 4,963 6,881
Premium on exchange of/tender offer for
preference stocks 26 - 153
Dividends on preference stocks 72 81 211
-------- -------- -------
Earnings on common stocks $6,600 $4,882 $6,517
===== ===== =====
Basic earnings per share attributable to common stocks
$1-2/3 par value common stock
Continuing operations $8.70 $6.07 $7.14
Discontinued operations - (0.01) 0.14
Cumulative effect of accounting change - - (0.07)
------ ------- ----
Earnings per share attributable to
$1-2/3 par value $8.70 $6.06 $7.21
==== ==== ====
Income from discontinued operations
attributable to Class E $ - $0.04 $1.96
------ ---- ----
Earnings per share attributable to Class H
(prior to its recapitalization on
December 17, 1997) $3.17 $2.88 $2.77
Earnings per share attributable to Class H
(subsequent to its recapitalization on
December 17, 1997) $0.02 $ - $ -
---- ---- ----
Diluted earnings per share attributable to common stocks
$1-2/3 par value common stock
Continuing operations $8.62 $6.03 $7.14
Discontinued operations - (0.01) 0.14
Cumulative effect of accounting change - - (0.07)
---- ---- ----
Earnings per share attributable to
$1-2/3 par value $8.62 $6.02 $7.21
==== ==== ====
Income from discontinued operations
attributable to Class E $ - $0.04 $1.96
---- ---- ----
Earnings per share attributable to Class H
(prior to its recapitalization on
December 17, 1997) $3.17 $2.88 $2.77
Earnings per share attributable to Class H
(subsequent to its recapitalization on
December 17, 1997) $0.02 $ - $ -
---- ----- -----
- 25 -
<PAGE>
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
ASSETS 1997 1996
---- ----
(Dollars in Millions)
Cash and cash equivalents $11,262 $14,063
Other marketable securities 11,722 8,199
------ --------
Total cash and marketable securities 22,984 22,262
Finance receivables - net 58,870 57,550
Accounts and notes receivable (less allowances) 7,493 6,557
Inventories (less allowances) 12,102 11,898
Deferred income taxes 22,478 19,510
Equipment on operating leases (less accumulated
depreciation) 33,302 30,112
Property - net 34,567 37,504
Intangible assets - net 11,469 12,691
Other assets 25,623 24,058
-------- --------
Total assets $228,888 $222,142
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable (principally trade) $15,782 $14,221
Notes and loans payable 93,027 85,300
Deferred income taxes 4,267 3,207
Postretirement benefits other than pensions 41,168 43,190
Pensions 6,691
7,599
Other liabilities 49,498 45,115
-------- --------
Total liabilities 210,433 198,632
------- -------
Minority interests 727 92
General Motors - obligated mandatorily redeemable
preferred securities of subsidiary trusts holding solely
junior subordinated debentures of General Motors
Series D 79 -
Series G 143 -
Stockholders' equity
Preference stocks 1 1
Common stocks
$1-2/3 par value (issued, 693,456,394 and
756,619,625 shares) 1,156 1,261
Class H (issued, 100,075,000 shares in 1996) - 10
Class H (issued, 103,885,803 shares in 1997) 10 -
Capital surplus (principally additional paid-in capital) 15,369 19,189
Retained earnings 5,416 6,137
Subtotal 21,952 26,598
Accumulated foreign currency translation adjustments (888) (113)
Net unrealized gains on securities 504 423
Minimum pension liability adjustment (4,062) (3,490)
----- -----
Total stockholders' equity 17,506 23,418
Total liabilities and stockholders' equity $228,888 $222,142
- 26 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
1997 1996 1995
(Dollars in Millions)
Cash flows from operating activities
Income from continuing operations before
cumulative effect of accounting change $6,698 $4,953 $6,033
Adjustments to reconcile income from
continuing operations before cumulative
effect of accounting change to net cash
provided by operating activities
Depreciation and amortization expenses 16,616 11,840 11,213
Gain on Hughes Defense spin-off (4,269) - -
Net (payments and VEBA contribution)
expense - postretirement benefits
other than pensions (1,425) 1,575 1,684
Net expense (contributions) - pensions 240 801 (2,932)
Originations and purchases of mortgage
loans (30,878) (19,455) (12,086)
Proceeds on sales of mortgage loans 28,543 18,157 11,613
Originations and purchases of mortgage
securities (2,516) (970) (515)
Proceeds on sales of mortgage securities 1,449 758 533
Change in other investments, misc.
assets, etc. (1,837) (713) (510)
Change in other operating assets and
liabilities 2,237 184 751
Other (607) 1,379 765
------- ------ -------
Net cash provided by operating activities 14,251 18,509 16,549
------ ------ ------
Cash flows from investing activities
Expenditures for property (10,320) (9,949) (8,786)
Investments in other marketable securities
- acquisitions (30,897) (27,431) (17,794)
Investments in other marketable securities
- liquidations 29,279 24,966 17,254
Finance receivables - acquisitions (163,614) (155,477) (163,033)
Finance receivables - liquidations 129,577 120,253 134,265
Finance receivables - other 1,354 312 244
Proceeds from sales of finance receivables 31,191 36,657 25,389
Operating leases - acquisitions (19,879) (18,494) (15,125)
Operating leases - liquidations 12,467 10,507 6,268
Proceeds from borrowings of Hughes Defense
prior to the Hughes Defense spin-off 4,006 - -
Investments in companies, net of cash
acquired (2,296) (167) (381)
Special inter-company payment from EDS - 500 -
Other 378 980 (358)
-------- -------- --------
Net cash used in investing activities (18,754) (17,343) (22,057)
------ ------ ------
Cash flows from financing activities
Net increase in loans payable 5,069 662 6,227
Increase in long-term debt 14,971 15,933 11,242
Decrease in long-term debt (12,429) (12,810) (9,580)
Repurchases of common and preference stocks (4,365) (251) (1,681)
Proceeds from issuing common stocks 614 480 453
Cash dividends paid to stockholders (1,645) (1,530) (1,328)
----- ----- -----
Net cash provided by financing activities 2,215 2,484 5,333
------ ------ ------
Effect of exchange rate changes on cash and
cash equivalents (513) (185) 146
------ ------ -----
Net cash (used in) provided by continuing
operations (2,801) 3,465 (29)
Net cash provided by discontinued operations - 103 193
Net (decrease) increase in cash and cash
equivalents (2,801) 3,568 164
Cash and cash equivalents at beginning of
the year 14,063 10,495 10,331
Cash and cash equivalents at end of
the year $11,262 $14,063 $10,495
- 27 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income With Financing and Insurance Operations on
an Equity Basis
Years Ended December 31,
1997 1996 1995
---- ---- ----
(Dollars in Millions)
Net sales and revenues $153,781 $145,427 $143,754
------- ------- -------
Costs and expenses
Cost of sales and other operating charges,
exclusive of items listed below 129,962 123,966 121,312
Selling, general, and administrative
expenses 13,254 11,827 10,195
Depreciation and amortization expenses 11,803 7,145 6,787
Plant closing expense (adjustments) 80 (727) -
------- ------- -------
Total costs and expenses 155,099 142,211 138,294
------- ------- -------
Operating (loss) income (1,318) 3,216 5,460
Other income less income deductions 7,836 2,056 1,150
Interest expense 971 859 344
------ ------- -------
Income from continuing operations before income
taxes, minority interests, and earnings of
nonconsolidated affiliates 5,547 4,413 6,266
Income taxes 155 885 1,563
------ ------- -----
Income from continuing operations before minority
interests, earnings of nonconsolidated affiliates,
and cumulative effect of accounting change 5,392 3,528 4,703
Minority interests 66 56 18
Earnings of nonconsolidated affiliates 1,240 1,369 1,312
----- ----- -----
Income from continuing operations before
cumulative effective of accounting change 6,698 4,953 6,033
Income from discontinued operations - 10 900
Cumulative effect of accounting change (1) - - (52)
------ ------ -----
Net income $6,698 $4,963 $6,881
===== ===== =====
Net profit margin (2) 4.4% 3.4% 4.8%
(1) Effective January 1, 1995, GM adopted EITF Issue No. 95-1.
(2) Net profit margin represents net income as a percentage of net sales and
revenues.
- 28 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets With Financing and Insurance Operations on an
Equity Basis
December 31,
1997 1996
ASSETS (Dollars in Millions)
Cash and cash equivalents $10,685 $13,320
Other marketable securities 3,826 3,642
------- -------
Total cash and marketable securities 14,511 16,962
Accounts and notes receivable (less allowances)
Trade 5,164 4,909
Nonconsolidated affiliates 836 927
Inventories (less allowances) 12,102 11,898
Equipment on operating leases (less accumulated
depreciation) 4,677 3,918
Deferred income taxes and other 6,278 5,327
Total current assets 43,568 43,941
Equity in net assets of nonconsolidated affiliates 10,164 9,855
Deferred income taxes 20,721 20,075
Other investments and miscellaneous assets 13,564 11,712
Property - net 33,914 37,156
Intangible assets - net 10,752 12,523
-------- --------
Total assets $132,683 $135,262
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $12,474 $11,527
Loans payable 656 1,214
Accrued liabilities and customer deposits 33,459 29,822
------ ------
Total current liabilities 46,589 42,563
Long-term debt 5,491 5,192
Capitalized leases 185 198
Postretirement benefits other than pensions 38,388 40,578
Pensions 3,929
5,966
Other liabilities and deferred income taxes 19,678 17,255
-------- --------
Total liabilities 114,260 111,752
------- -------
Minority interests 695 92
General Motors - obligated mandatorily redeemable preferred
securities of subsidiary trusts holding solely junior
subordinated debentures of General Motors
Series D 79 -
Series G 143 -
Stockholders' equity 17,506 23,418
-------- --------
Total liabilities and stockholders' equity $132,683 $135,262
======= =======
- 29 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows With Financing and Insurance Operations on
an Equity Basis
Years Ended December 31,
1997 1996 1995
---- ---- ----
Cash flows from operating activities (Dollars in Millions)
Income from continuing operations before
cumulative effect of accounting change $6,698 $4,953 $6,033
Adjustments to reconcile income from
continuing operations before cumulative
effect of accounting change to net cash
provided by operating activities
Depreciation and amortization expenses 11,803 7,145 6,787
Gain on Hughes Defense spin-off (4,269) - -
Net (payments and VEBA contribution)
expense - postretirement benefits
other than pensions (1,448) 1,549 1,659
Net expense (contributions) - pensions 240 801 (2,932)
Change in other operating assets and liabilities
Accounts receivable (1,067) 1,196 (137)
Prepaid expenses and other
deferred charges 604 (426) 11
Inventories (716) (757) (1,214)
Accounts payable 1,163 898 (288)
Deferred taxes and income taxes
payable (2,651) (303) 1,077
Other liabilities 4,292 517 576
Other (751) 1,133 (470)
------- ------- -------
Net cash provided by operating activities 13,898 16,706 11,102
------ ------ ------
Cash flows from investing activities
Expenditures for property (9,801) (9,606) (8,653)
Investments in other marketable securities
- acquisitions (13,167) (14,340) (5,581)
Investments in other marketable securities
- liquidations 12,984 11,891 5,496
Operating leases - acquisitions (5,680) (4,090) (1,090)
Operating leases - liquidations 3,711 3,819 506
Proceeds from borrowings of Hughes Defense
prior to the Hughes Defense spin-off 4,006 - -
Investments in companies, net of cash
acquired (1,875) (166) (381)
Special inter-company payment from EDS - 500 -
Other 476 847 310
------ -------- -------
Net cash used in investing activities (9,346) (11,145) (9,393)
----- ------ -----
Cash flows from financing activities
Net (decrease) increase in loans payable (558) (971) 1,383
Increase in long-term debt 398 1,937 646
Decrease in long-term debt (1,118) (871) (1,597)
Repurchases of common and preference stocks (4,365) (251) (1,681)
Proceeds from issuing common stocks 614 480 453
Cash dividends paid to stockholders (1,645) (1,530) (1,328)
----- ----- -----
Net cash used in financing activities (6,674) (1,206) (2,124)
----- ----- -----
Effect of exchange rate changes on cash and
cash equivalents (513) (185) 146
------- ------ -----
Net cash (used in) provided by continuing
operations (2,635) 4,170 (269)
Net cash provided by discontinued operations - 103 193
Net (decrease) increase in cash and cash
equivalents (2,635) 4,273 (76)
Cash and cash equivalents at beginning of
the year 13,320 9,047 9,123
Cash and cash equivalents at end of the year $10,685 $13,320 $9,047
- 30 -
HUGHES ELECTRONICS NEWS RELEASE
Los Angeles, January 26, 1998 - In its first earnings release as a satellite and
wireless communications company, the "new" Hughes Electronics Corporation
(Hughes) today reported that full-year 1997 revenues increased 27.9% to $5,128.3
million compared with $4,008.7 million in 1996.
Operating profit, before the effects of purchase accounting adjustments
related to General Motors' (GM) acquisition of Hughes Aircraft Company in 1985,
increased 45.8% in 1997 to $306.4 million compared with $210.1 million in 1996.
Full-year operating profit margin on the same basis rose to 6.0% from 5.2% in
1996.
"The solid financial performance reported in our first earnings release
demonstrates the tremendous growth opportunities we have in our satellite and
wireless communications businesses" said Michael T. Smith, Hughes chairman and
chief executive officer. "The full-year revenue and operating profit increases
were propelled by strong DIRECTV subscriber growth, including a record-setting
fourth quarter for new subscribers. In addition, higher sales of commercial
satellites and completion of the PanAmSat merger in May 1997 contributed to the
strong financial showing by Hughes."
"Now that the Hughes Defense and Delco Electronics transactions are behind
us, it is exciting to focus all of our resources on our dynamic
telecommunications and space businesses," Mr. Smith further noted. "We will use
our strong balance sheet, experienced management team and exceptional employee
base to build on our market leadership, creating significant growth and value
opportunities."
Full year 1997 earnings, adjusted to exclude GM purchase accounting
adjustments, were $470.7 million compared with $183.5 million in 1996. Earnings
per share on the same basis for the full year were $1.18 per share versus $0.46
per share in 1996. Included in 1997 results were a $318.3 million after-tax gain
($0.80 per share) related to the PanAmSat merger, a $62.8 million after-tax gain
($0.16 per share) related to the sale of Hughes-Avicom International and a $20.6
million after-tax extraordinary charge ($0.05 per share) associated with
PanAmSat's tender offer to retire its high-yield debt securities. Earnings in
1996 included a $71.6 million after-tax gain ($0.18 per share) recognized from
the sale of 2.5% of DIRECTV to AT&T. Excluding these one-time items, full-year
earnings were $110.2 million compared with $111.9 million in 1996 and earnings
per share were $0.28 in both years. When comparing the years, the strong
operating profit improvement in 1997 was offset by nonoperating items such as
increased interest expense and losses related to investments in affiliated
companies.
Fourth Quarter Financial Review
Revenues for the fourth quarter increased 38.8% to $1,694.6 million
compared with revenues of $1,221.2 million for the same period in 1996. The
increase was principally due to record DIRECTV subscriber growth, higher sales
of commercial satellites, and the PanAmSat merger.
Fourth quarter operating profit (excluding GM purchase accounting
adjustments) increased 40.6% to $91.8 million from $65.3 million in last year's
fourth quarter. The increase was mostly related to higher commercial satellite
sales and the PanAmSat merger, partially offset by higher DIRECTV operating
losses. Operating profit margin on the same basis was 5.4% compared with 5.3% in
last year's fourth quarter.
Earnings, adjusted to exclude GM purchasing accounting adjustments, were
$70.0 million in the period compared with $33.1 million last year. Earnings per
share on the same basis in the fourth quarter were $0.18 per share versus $0.08
per share last year. Excluding the one-time items, earnings were $27.8 million
versus $33.1 million in last year's fourth quarter. Earnings per share on the
same basis were $0.07 in the quarter compared with $0.08 in 1996. When comparing
the quarters, the strong operating profit improvement in the fourth quarter of
1997 was more than offset by nonoperating items such as increased interest
expense and losses related to investments in affiliated companies.
- 31 -
Segment Financial Review: Calendar Year and Fourth Quarter
Direct-To-Home Broadcast
For the full year, revenues more than doubled to $1,276.9 million from
$621.0 million in 1996. The increase was a result of strong subscriber growth,
solid average monthly revenue per subscriber, and continued low subscriber churn
rates in the United States and Latin America. Domestic DIRECTV fueled this
growth with revenues of $1,103 million, a 78% increase over last year's revenue
of $618 million. The Company's Latin American DIRECTV subsidiary, Galaxy Latin
America (GLA), had revenues of $70 million compared with $3 million in 1996.
Total DIRECTV subscribers as of December 31, 1997 were 3,301,000 in the United
States and 300,000 in Latin America. In addition, DIRECTV Japan initiated its
service in December 1997.
The operating loss in 1997 was $254.6 million compared with an operating
loss of $319.8 million in 1996. The lower operating loss in 1997 was principally
due to increased subscriber revenues which more than offset higher marketing
expenditures. The full-year 1997 operating loss for domestic DIRECTV was $137
million compared with $192 million in 1996. GLA's operating loss was $116
million in 1997 versus $131 million in 1996.
Revenues for the quarter were $415.9 million, an increase of 79.7% over
revenues of $231.4 million for the same period in 1996. The increase was a
result of record subscriber growth, continued strong average monthly revenue per
subscriber, and low subscriber churn rates in both the United States and Latin
America. In the fourth quarter, domestic DIRECTV revenues increased 46.7% to
$330 million from $225 million and GLA's revenues increased to $28 million from
$3 million in 1996. Domestic DIRECTV attained its best-ever quarterly subscriber
growth with the addition of 409,000 net subscribers in the United States and GLA
added 67,000 net subscribers in Latin America.
The operating loss in the quarter was $95.9 million compared with a loss of
$90.9 million in 1996. The higher loss was primarily due to increased marketing
expenses in the United States related to new promotions and increased
advertising expenditures which more than offset a lower operating loss in GLA.
The operating loss in the domestic DIRECTV business was $62 million compared
with $24 million in last year's fourth quarter and GLA's operating loss was $27
million compared with $60 million last year.
Satellite Services
Revenues in 1997 increased 30.5% to $630.0 million from $482.7 million in
1996. Full-year operating profit was $296.2 million, an increase of 22.2% over
last year's operating profit of $242.4 million. The revenue and operating profit
growth were primarily due to the May 1997 PanAmSat merger and increased
operating lease revenues for both video distribution and business communications
services. Operating profit margin in the period declined to 47.0% from 50.2%
last year principally due to goodwill amortization associated with the PanAmSat
merger.
Fourth quarter 1997 revenues were up 74.5% to $197.9 million compared with
$113.4 million in the prior year's comparable period. Operating profit in the
quarter rose 71.7% to $91.7 million from $53.4 million in 1996. The revenue and
operating profit growth were primarily due to the May 1997 PanAmSat merger and
increased operating leases revenues for both video distribution and business
communications services. Operating profit margin in the period declined to 46.3%
from 47.1% last year primarily due to goodwill amortization associated with the
PanAmSat merger.
Satellite Manufacturing
For the full year, revenues increased 21.2% to $2,491.9 million from
$2,056.4 million last year primarily due to higher commercial satellite sales to
customers including ICO Global Communications, Orion Asia Pacific Corporation,
Japan Satellite Systems, Inc., PanAmSat Corporation, Telenor,
Telecommunicaciones de Mexico and Thuraya Satellite Telecommunications Company.
Operating profit in 1997 was $226.3 million, an increase of 23.5% over
$183.3 million in 1996. The increase was primarily due to higher commercial
program sales. Operating profit margin for the year was 9.1% compared with 8.9%
last year.
- 32 -
Fourth quarter 1997 revenues increased 30.5% to $743.8 million from
revenues of $570.0 million in the same period in 1996 principally due to
increased commercial satellite sales. Operating profit in the fourth quarter
increased 80.5% to $66.6 million from $36.9 million in the prior year's fourth
quarter. The increase is principally due to reduced development costs related to
the geostationary satellite mobile telephony product line and higher commercial
program sales. Consequently, fourth quarter operating profit margin increased to
9.0% compared with 6.5% last year.
Network Systems
Full-year revenues for Hughes Network Systems (HNS) were $1,011.3 million
compared with $1,070.0 million in 1996. The decline was primarily due to lower
domestic mobile cellular telephone equipment sales which were partially offset
by higher satellite-based mobile telephony equipment sales.
HNS operating profit in 1997 was $74.1 million versus $107.7 million in
1996 and operating profit margin declined to 7.3% from 10.1% last year. These
decreases were primarily the result of lower domestic mobile cellular telephone
equipment sales and higher marketing expenditures associated with the launch of
the DirecPC/DirecDuo products.
HNS revenues in the fourth quarter were $402.4 million compared with $412.4
million in the same period last year. Operating profit in the quarter increased
9.4% to $68.5 million from $62.6 million in 1996. The operating profit increase
was principally a result of improved margins associated with the sale of
international wireless local loop telephone systems which more than offset the
higher marketing expenses related to the introduction of the DirecPC/DirecDuo
products. As a result, operating profit margin in the quarter increased to 17.0%
from 15.2% last year.
Balance Sheet
The 1997 year-end cash balance of $2,783.8 million reflects the $4.0
billion cash injection received at the completion of the Hughes Defense and
Delco Electronics transactions, repayment of a $1,725 million loan from GM used
to facilitate the 1997 PanAmSat merger, and existing Hughes Electronics cash of
approximately $500 million.
Year-end 1997 long-term debt was $637.6 million consisting primarily of
PanAmSat's revolving bank debt used to finance a tender offer for high-yield
debt securities completed on December 24, 1997. The tender offer and refinancing
substantially reduced the restrictive liens and covenants contained in the
high-yield debt securities, thereby increasing PanAmSat's financial flexibility
and reducing annual interest expense. On January 16, 1998, PanAmSat issued $750
million of privately-placed debt securities with maturities between five and 30
years at interest rates ranging between six and seven percent. The net proceeds
from the offering were used to repay bank loans incurred to finance the tender
offer and for general corporate purposes.
Basis of Financial Statements - the financial information herein pertains only
to those telecommunications and space businesses of the new Hughes and does not
include financial information related to Hughes Defense and Delco Electronics.
As described above, the Hughes Transactions, which include the spin-off and
merger of Hughes Defense with Raytheon Company and the transfer of Delco
Electronics to GM's Delphi Automotive Systems, had a significant impact on the
balance sheet. At December 31, 1996, the balance sheet reflects the
telecommunications and space businesses as subsidiaries or divisions of the
parent company, Hughes Electronics, which provided necessary funding. As a
result, cash and debt balances were minimal. At December 31, 1997, however, the
balance sheet includes the effects of the Hughes Transactions, including a cash
injection, the repayment of certain debt, and the contribution of certain
other assets and liabilities from the parent company.
- 33 -
STATEMENT OF INCOME AND PRO FORMA
AVAILABLE SEPARATE CONSOLIDATED NET INCOME
(Dollars in Millions Except Per Share Amounts)
Year Ended
Fourth Quarter December 31,
1997 1996 1997 1996
---- ---- ---- ------
Revenues
Product sales $1,079.2 $1,040.8 $3,143.6 $3,009.0
Direct broadcast, leasing and other
services 615.4 180.4 1,984.7 999.7
- ---------------------------------- ------- ----- ----- -------
Total Revenues 1,694.6 1,221.2 5,128.3 4,008.7
-------------- ------- ------- ------- --------
Operating Costs and Expenses
Cost of products sold 807.0 728.0 2,493.3 2,183.7
Broadcast programming and other costs 288.8 138.2 912.3 631.8
Selling, general, and administrative
expenses 405.9 236.8 1,119.9 788.5
Depreciation and amortization 101.1 52.9 296.4 194.6
Amortization of GM purchase accounting
adjustments related to Hughes
Aircraft Company 5.1 5.1 21.0 21.0
Total Operating Costs and Expenses 1,607.9 1,161.0 4,842.9 3,819.6
Operating Profit 86.7 60.2 285.4 189.1
Interest income 15.0 1.8 33.1 6.8
Interest expense (32.9) (12.8) (91.0) (42.9)
Other, net (61.9) (20.9) 390.7 69.1
- ---------- ------ ------ ----- -----
Income from Continuing Operations
Before Income Taxes, Minority
Interests and Extraordinary Item 6.9 28.3 618.2 222.1
Income taxes (credit) (7.8) 22.8 236.7 104.8
Minority interests in net losses
of subsidiaries 8.0 23.2 24.8 52.6
- --------------------------------- --- ---- ---- ----
Income from continuing operations before
extraordinary item 22.7 28.7 406.3 169.9
Income (Loss) from discontinued operations,
net of taxes 0.0 (0.7) 1.2 (7.4)
Gain on sale of discontinued operations,
net of taxes 62.8 62.8
- -------------------------------- ---- ----
Income before extraordinary item 85.5 28.0 470.3 162.5
Extraordinary item, net of taxes (20.6) (20.6)
- -------------------------------- ------ ----- ------ ------
Net Income $64.9 $28.0 $449.7 $162.5
========== ===== ===== ====== ======
Pro Forma Net Earnings Attributable to
General Motors Class H Common Stock:
Net income $64.9 $28.0 $449.7 $162.5
Adjustments to exclude the effect
of GM purchase accounting
adjustments related to Hughes
Aircraft Company 5.1 5.1 21.0 21.0
- ---------------------------------- --- --- ---- ----
Net Earnings Used for Pro Forma
Computation of Available Separate
Consolidated Net Income $70.0 $33.1 $470.7 $183.5
==================================== ==== ==== ===== =====
Pro Forma Available Separate
Consolidated Net Income $18.0 $8.2 $119.4 $45.2
========================== ===== ==== ====== =====
Pro Forma Net Earnings Attributable to
General Motors Class H Common Stock
on a Per Share Basis $0.18 $0.08 $1.18 $0.46
==================================== ===== ===== ===== =====
Certain 1996 amounts have been reclassified to conform with the 1997
presentation.
- 34 -
BALANCE SHEET
(Dollars in Millions)
Years Ended December 31,
ASSETS 1997 1996
- ------ ---------- ---------
Current Assets
Cash and cash equivalents $2,783.8 $6.7
Accounts and notes receivable 662.8 423.0
Contracts in process 575.6 401.4
Inventories 486.4 423.1
Net assets of discontinued operations - 35.0
Deferred subscriber acquisition costs 26.4 97.5
Prepaid expenses, including deferred income taxes 270.9 110.4
- ------------------------------------------------- ----- ------
Total Current Assets 4,805.9 1,497.1
Satellites - Net 2,643.4 1,056.6
Property - Net 889.7 690.8
Net Investment in Sales-type Leases 337.6 320.6
Intangible Assets - Net 2,954.8 468.0
Investments and Other Assets 1,132.4 383.3
- ---------------------------- -------- ------
Total Assets $12,763.8 $4,416.4
- ------------ ---------- ---------
LIABILITIES AND OWNER'S EQUITY
Current Liabilities
Accounts payable $472.8 $359.0
Advances on contracts 209.8 287.8
Deferred revenues 110.6 142.8
Accrued liabilities 689.4 430.0
Total Current Liabilities 1,482.6 1,219.6
Long-Term Debt and Capitalized Leases 637.6 -
Deferred Gains on Sales and Leasebacks 191.9 234.8
Accrued Operating Leaseback Expense 100.2 107.8
Postretirement Benefits Other Than Pensions 154.8 -
Other Liabilities and Deferred Credits 706.4 136.9
Deferred Income Taxes 570.8 204.1
Minority Interests 607.8 21.6
Owner's Equity 8,311.7 2,491.6
- -------------- -------- --------
Total Liabilities and Owner's Equity $12,763.8 $4,416.4
==================================== ======== =======
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 General Motors
(which includes 100% of the stock of Hughes).
Certain 1996 amounts have been reclassified to conform with the 1997
presentation.
- 35 -
STATEMENT OF CASH FLOWS
(Dollars in Millions)
Years Ended December 31,
1997 1996
Cash Flows from Operating Activities
Net income $449.7 $162.5
Adjustments to reconcile net income to net cash provided by
continuing operations
(Income) loss from discontinued operations (1.2) 7.4
Gain on sale of discontinued operations (62.8) -
Extraordinary item, net of taxes 20.6 -
Depreciation and amortization 296.4 194.6
Amortization of GM purchase accounting adjustments
related to Hughes Aircraft Company 21.0 21.0
Net gain on sale of investments and businesses
sold (489.7) (120.3)
Gross profit on sales-type leases (33.6) (51.8)
Deferred income taxes and other 285.5 91.9
Change in other operating assets and liabilities
Accounts receivable (228.0) (120.1)
Contracts in process (174.2) 54.1
Inventories (60.7) (121.5)
Deferred subscriber acquisition costs 71.1 (97.5)
Collections of principal on net investment
in sales-type leases 26.9 31.2
Accounts payable (184.1) 116.8
Advances on contracts (95.6) 97.6
Accrued liabilities 217.8 22.4
Deferred revenues (32.2) 113.7
Deferred gains on sales and leasebacks (42.9) (57.2)
Other (144.3) (9.6)
----- ------- -----
Net Cash Provided by (Used in)
Continuing Operations (160.3) 335.2
Net Cash Used by Discontinued Operations (15.9) (8.0)
Net Cash Provided by (Used in)
Operating Activities (176.2) 327.2
Cash Flows from Investing Activities
Investment in companies, net of cash acquired (1,466.2) -
Expenditures for property (251.3) (261.5)
Increase in satellites (633.5) (191.6)
Proceeds from sale of long-term investments 242.0 -
Proceeds from sale and leaseback of satellite
transponders with General Motors Acceptance
Corporation - 252.0
Proceeds from sale of minority interest in subsidiary - 137.5
Repurchase of minority interest in subsidiary (161.8) -
Proceeds from sale of discontinued operations 155.0 -
Proceeds from disposal of property 55.1 15.3
Net Cash Used in Investing Activities (2,060.7) (48.3)
------------------------------------- --------- ------
Cash Flows from Financing Activities
Long-term debt borrowings 2,383.3 -
Repayment of long-term debt (2,851.9) -
Premium paid to retire debt (34.4) -
Contributions from (distributions to) Parent
Company 1,124.2 (279.8)
Capital infusion resulting from Hughes transactions 4,392.8 -
- --------------------------------------------------- ------- -
Net Cash Provided by (Used in) Financing
Activities 5,014.0 (279.8)
Net increase (decrease) in cash and cash
equivalents 2,777.1 (0.9)
Cash and cash equivalents at beginning of the year 6.7 7.6
- -------------------------------------------------- --- ----
Cash and cash equivalents at end of the year $2,783.8 $6.7
============================================ ======== =====
Certain 1996 amounts have been reclassified to conform with the 1997
presentation.
- 36 -
PRO FORMA SELECTED SEGMENT DATA*
(Dollars in Millions)
Years Ended
Fourth Quarter December 31,
1997 1996 1997 1996
---- ---- ---- ------
DIRECT-TO-HOME BROADCAST
Total Revenues $415.9 $231.4 $1,276.9 $621.0
Operating Loss $(95.9) $(90.9) $(254.6) $(319.8)
Depreciation and Amortization $23.6 $19.7 $86.1 $67.3
Capital Expenditures $51.4 $33.6 $105.6 $63.5
- -------------------- ------ ------ ------- ------
SATELLITE SERVICES
Total Revenues $197.9 $113.4 $630.0 $482.7
Operating Profit $91.7 $53.4 $296.2 $242.4
Operating Profit Margin 46.3% 47.1% 47.0% 50.2%
Depreciation and Amortization (1) $53.0 $6.3 $141.9 $55.2
Capital Expenditures (2) $199.1 $144.5 $625.7 $308.7
- ------------------------ ------- ------- ------- -------
SATELLITE MANUFACTURING
Total Revenues $743.8 $570.0 $2,491.9 $2,056.4
Operating Profit $66.6 $36.9 $226.3 $183.3
Operating Profit Margin 9.0% 6.5% 9.1% 8.9%
Depreciation and Amortization (1) $11.7 $8.9 $39.4 $34.4
Capital Expenditures $45.7 $40.8 $113.9 $87.8
- -------------------- ------ ------ ------- ------
NETWORK SYSTEMS
Total Revenues $402.4 $412.4 $1,011.3 $1,070.0
Operating Profit $68.5 $62.6 $74.1 $107.7
Operating Profit Margin 17.0% 15.2% 7.3% 10.1%
Depreciation and Amortization $10.3 $8.8 $32.0 $28.3
Capital Expenditures $10.1 $7.3 $43.1 $45.4
==================== ====== ===== ====== ======
Certain 1996 amounts have been reclassified to conform with the 1997
presentation.
* The Consolidated Financial Statements reflect the application of purchase
accounting adjustments related to GM's acquisition of Hughes Aircraft
Company. However, as provided in the General Motors 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 exclude such adjustments. In order to
provide additional analytical data, the above unaudited pro forma selected
segment data, which exclude the purchase accounting adjustments related to
GM's acquisition of Hughes Aircraft Company, are presented.
(1)Excludes amortization arising from purchase accounting adjustments related
to GM's acquisition of Hughes Aircraft Company amounting to $0.8 million in
each of the fourth quarters and $3.3 million in each of the years ended for
the Satellite Services segment and $4.3 million in each of the fourth
quarters and $17.7 million in each of the years ended for the Satellite
Manufacturing segment.
(2)Includes expenditures related to satellites amounting to $165.1 million,
$45.3 million, $575.3 million, and $259.2 million, respectively.
- 37 -
GMAC NEWS RELEASE
GMAC ANNOUNCES HIGHEST EARNINGS IN SIX YEARS
DETROIT -- General Motors Acceptance Corporation (GMAC) reported 1997
consolidated net income of $1,301 million, up 5% from the $1,240 million earned
in 1996, GMAC President John D. Finnegan announced today. These earnings were
the highest recorded by GMAC since 1991.
In 1997, net income from auto financing operations totaled $910 million, down
4% from the $946 million earned in 1996. Earnings were lower due to reduced net
financing margins partially offset by lower losses and loss provisions and
operating expenses.
GMAC's insurance operations earned a record $224 million in 1997, up 17%
from the $192 million earned in 1996. The increase is principally due to
favorable underwriting experience and higher capital gains.
GMAC's mortgage operations also generated a record net income of $167 million
in 1997, up 64% from the $102 million earned in 1996, driven by a significant
increase in commercial mortgage assets and a shift to higher margin products.
Overall origination levels increased to $31 billion, and the mortgage servicing
portfolio grew by 31% to $144 billion.
Fourth quarter 1997 consolidated results totaled $279 million, up 2% from the
$274 million earned in the final quarter of 1996. For the quarter, net income
from auto financing operations totaled $186 million, up from $175 million earned
a year ago. Net income from GMAC's insurance operations for the fourth quarter
of 1997 totaled $54 million, compared to $68 million earned a year ago. Net
income from GMAC's mortgage operations was $39 million for the fourth quarter of
1997, up from the $31 million for the fourth quarter of 1996.
* * *
Principal Important Factors Relating To Forward-Looking Statements
Following are the principal important factors which may cause actual
results to differ materially from those expressed in forward-looking statements
made by management of General Motors Corporation and Hughes Electronics
Corporation during telephonic presentations to and discussions with securities
analysts and the media following the Corporation's release of fourth quarter and
calendar year earnings for 1997:
1. Changes in economic conditions, currency exchange rates or
political stability in the major markets where the Corporation
procures material, components and supplies for the production of
its principal products or where its products are produced,
distributed or sold (i.e., North America, Europe, Latin America
and Asia-Pacific), including the effects of current economic
problems in Asia and political problems in the Near East.
2. Shortages of fuel or interruptions in transportation systems,
labor strikes, work stoppages or other interruptions to or
difficulties in the employment of labor in the major markets where
the Corporation purchases material, components and supplies for
the production of its products or where its products are produced,
distributed or sold.
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3. Significant changes in the competitive environment in the major
markets where the Corporation purchases material, components and
supplies for the production of its products or where its products
are produced, distributed or sold.
4. Changes in the laws, regulations, policies or other activities of
governments, agencies and similar organizations where such actions
may affect the production, distribution or sale of the
Corporation's products, the cost thereof or applicable tax rates.
5. The ability of the Corporation to achieve reductions in cost and
employment levels, to realize production efficiencies and to
implement capital expenditures, all at the levels and times
planned by management.
6. The ability of the Corporation to achieve the sale of assets held
for disposal by its Delphi Automotive Systems Group within the
timing and revenue levels and upon the terms contemplated by
management.
7. With respect to the Corporation's Hughes Electronics subsidiary,
additional risk factors include: the ability to achieve
subscriber growth in its Direct-to-Home businesses, ability to
sustain technological competitiveness, failure of planned
satellite launches, and access to capital and financial
flexibility in order to take advantages of new market
opportunities, respond to competitive pressures and react quickly
to other major changes in the marketplace.
* * * * * *
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL MOTORS CORPORATION
--------------------------
(Registrant)
Date January 27, 1998
-----------------
By
s/Peter R. Bible
-------------------------------
(Peter R. Bible,
Chief Accounting Officer)
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