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) July 14, 1998
----------------
GENERAL MOTORS CORPORATION
-----------------------------------------------------
(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
--------------
- 1 -
ITEM 5. OTHER EVENTS
(a) On July 14, 1998, a news release was issued on the subject of second
quarter consolidated earnings for 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 at a later date. The GM news release
and related news releases for second quarter earnings of Hughes Electronics
Corporation (Hughes) dated July 13, 1998 and General Motors Acceptance
Corporation (GMAC) dated July 14, 1998, respectively, were as follows:
GM NEWS RELEASE
GM REPORTS 1998-SECOND QUARTER NET INCOME OF $389 MILLION
DETROIT -- General Motors Corporation (GM) today reported 1998-second-quarter
consolidated net income of $389 million, or $0.54 per share of GM $1-2/3 par
value common stock, including the impact of strikes at two key plants that
essentially halted production in North America in the final weeks of the period
(see below). This compares with $2.0 billion, or $2.62 per share, in the second
quarter of 1997, adjusted to reflect the effect of the Hughes Transactions,
which took place in December of 1997. All earnings-per-share amounts are basic
(see Highlights for diluted earnings-per-share amounts).
The second-quarter-1998 results included an unfavorable impact of $1.2
billion after taxes, or $1.79 per share, related to major production losses
caused by strikes at two GM component plants in Flint, Mich. Second-quarter-1997
results included the $490 million, or $0.67 per share, unfavorable impact of
strikes at two key assembly plants. Second-quarter-1998 results also included a
special item that resulted in an unfavorable effect of $44 million, or $0.07 per
share, while second-quarter-1997 results included two favorable items totaling
$421 million, or $0.47 per share, (see Strike Related Impact and Special Items).
Excluding the impact of the strike-related work stoppages and special
items, second-quarter-1998 income totaled $1.6 billion, or $2.40 per share,
which compares with $2.1 billion, or $2.82 per share, in the second quarter of
1997. The decline in operating results is primarily related to
non-strike-related lower volumes in North America and Europe, and intense price
competition worldwide.
Consolidated net sales and revenues in the second quarter of 1998 totaled
$38.9 billion, compared with $43.3 billion in the same period of 1997, adjusted
for the effect of the Hughes Transactions.
"Obviously, our financial performance in the second quarter of 1998 was
severely impacted by the UAW strikes against our plants in Flint, and was
certainly not representative of the positive momentum our financial performance
had been building," GM Chairman and Chief Executive Officer John F. Smith, Jr.,
said.
"In order to protect key product programs, such as our new generation of
full-size pickups, we are taking a close look at our spending priorities," Smith
said. "We continue to examine all opportunities to reduce cash consumption, and
we are carefully reviewing future spending for marginal products and
facilities."
- 2 -
To the extent that work stoppages continue to disrupt the production and
shipment of vehicles into the third quarter of 1998, the resulting deferral or
decline in revenues will have an adverse impact on GM's operating results. The
estimate of the strike-related impact on the second-quarter-1998 results does
not take into account the effect of possible recoveries that may occur through
production increases that GM is likely to pursue at various facilities in future
periods.
Corporate and sector data in the remainder of this release exclude the
above mentioned strike-related impact in both the 1998- and 1997-second-quarter
periods, and the impact of special items. The 1997 reported amounts are adjusted
to reflect changes to GM's organizational structure resulting from the
conclusion of the Hughes Transactions in December of 1997. (See Strike Related
Impact, Special Items, and Highlights.)
Following is a summary of results from the GM business sectors in the
second quarter of 1998:
- GM North American Operations income totaled $694 million in the second
quarter of 1998. That compares with $849 million in the second quarter
of 1997.
- Delphi Automotive Systems income totaled $374 million in the second
quarter of 1998, compared with $522 million in the same quarter of
1997.
- GM International Operations (GMIO) income totaled $181 million in the
second quarter of 1998, compared with $385 million in the prior-year
period.
Highlights of second-quarter-1998 results reported by GM's major
subsidiaries included the following:
- General Motors Acceptance Corporation (GMAC) income totaled $365
million for the second quarter of 1998, compared with income of $338
million in the second quarter of 1997.
- Hughes Electronics Corporation (Hughes) second-quarter-1998 income
totaled $56 million, compared with income of $6 million in the
prior-year period.
GM CONSOLIDATED FINANCIAL DATA (with financing & insurance operations on an
equity basis)
Excluding the impact of the strikes and special items, consolidated income
in the second quarter of 1998 totaled $1.6 billion, or $2.40 per share. That
compares with $2.1 billion, or $2.82 per share, in the second quarter of 1997.
The corporation's pretax income totaled $2.0 billion in the second quarter
of 1998, compared with $2.7 billion in the prior-year period.
The corporation's after-tax net-profit margin -- income as a percentage of
net sales and revenues -- was 4.3 percent in the second quarter of 1998,
compared with 5.2 percent in the second quarter of 1997.
Cash and marketable securities totaled $9.1 billion at June 30, 1998,
compared with $13.6 billion at March 31, 1998, and $14.9 billion at June 30,
1997.
- 3 -
In the second quarter of 1998, GM used $1.0 billion to acquire more than
14 million shares of GM $1-2/3 par value common stock. These purchases represent
approximately 25 percent of a $4 billion repurchase program that began in March
of 1998. Since January 1997, GM's stock repurchases total approximately $6.3
billion or about 14 percent of the outstanding shares of GM $1-2/3 par value
common stock.
Stock repurchases have been temporarily suspended as part of GM's
cash-conservation initiatives. However, Smith said, "The stock-repurchase
program, which is one of our key stockholder value initiatives, will be resumed
following a labor settlement."
Following is a summary of financial performance for GM's automotive
business sectors (see Highlights for additional information.)
GM NORTH AMERICAN OPERATIONS (GM-NAO)
Excluding the impact of the strikes, GM North American Operations'
second-quarter-1998 income totaled $694 million. That compares with $849 million
in the second quarter of 1997. The unfavorable strike-related impact in both the
1998 and 1997 second quarters totaled $890 million and $375 million respectively
(see Strike Related Impact).
"We were making great progress in the marketplace with new products that
are very well accepted," said G. Richard Wagoner, Jr., General Motors executive
vice president and president of GM North American Operations. "Unfortunately,
the UAW strikes against our plants in Flint are dramatically slowing our
momentum."
Excluding the impact of strikes:
- GM-NAO's pretax income totaled $1.1 billion in the second quarter of
1998, compared with $1.3 billion in the prior-year period. GM-NAO's net
profit margin was 2.7 percent in the second quarter of 1998, compared
with 3.1 percent in 1997.
- The decline in the second-quarter-1998 results was more than
accounted for by lower volume. Higher sales incentive levels
were more than offset by material savings, structural-cost
improvements, and cost savings associated with new products
that are less expensive to build. This cost performance is a
continuation of the favorable trend evident in GM-NAO's record
1998 first quarter results.
"We have been making great cost strides in some parts of the business,
such as material costs and in the vehicle-development process. Unfortunately, a
huge competitive gap still exists in our manufacturing productivity -- and with
the intense price competition in today's marketplace, we simply cannot afford to
be so far off the mark. As we move forward, the age profile of our work force
and voluntary retirements present a great opportunity for us to reach more
competitive benchmark levels in a reasonable time frame without a negative
impact on our people," Wagoner said.
- 4 -
Vehicle sales in North America finished the quarter at the strongest
monthly pace since May of 1989. Truck sales in North America alone were up 45.6
percent for June, setting a fourth straight industry record.
"The strong sales experienced over the last four months are further
evidence of the outstanding consumer acceptance of GM's products," Wagoner said.
GM's new mid-size car offerings continued to fulfill their promise of
success: Sales of Buick Century and Regal, Chevrolet Malibu, Oldsmobile
Intrigue, Pontiac Grand Am and Oldsmobile Cutlass were up 34.8 percent over the
nine models they replaced in the second quarter of 1998. Combined sales of
luxury models -- Cadillac Seville and Catera and Chevrolet Corvette -- increased
27.6 percent over the comparable period a year ago.
GM vehicle deliveries in the United States in the second quarter of 1998
totaled 1,433,000 units, which resulted in a 31.5-percent share of the U.S.
vehicle market, compared with 1,252,000 units, and a 30.5-percent share in the
second quarter of 1997. (see additional information in Highlights.)
"We're pleased with the improvement in our overall market-share position,
especially considering how fierce the competition was during the second
quarter," Wagoner said. "We're particularly encouraged by the strong performance
of our new models, and the continued strong sales of our full-size pickup trucks
and sport-utility vehicles."
DELPHI AUTOMOTIVE SYSTEMS (DELPHI)
Excluding the impact of the strikes, Delphi Automotive Systems reported
income of $374 million in the second quarter of 1998, compared with $522 million
in the second quarter of 1997, which includes Delco Electronics earnings
previously reported by Hughes.
The unfavorable strike-related impacts in both the 1998 and 1997 second
quarters totaled $290 million and $115 million respectively (see Strike-Related
Impact.)
Delphi reported pretax income of $552 million in the second quarter of
1998, compared with pretax income of $807 million in the prior-year period.
Delphi's net-profit margin was 4.6 percent in the second quarter of 1998,
compared with a net-profit margin of 6.1 percent in the prior-year period.
"Aside from the strike impact, the primary reasons for the decline in net
income during the second quarter of 1998 were a decrease in GM's North American
production volume, and competitive pressures that resulted in price reductions.
The continuing economic downturns in the Latin American and Asia-Pacific regions
also had an adverse effect on earnings," said J.T. Battenberg III, General
Motors executive vice president and president of Delphi Automotive Systems.
"These negative factors were partially offset by significant reductions in
material costs and gains in manufacturing productivity."
- 5 -
Delphi reported second-quarter-1998 sales to customers outside the GM-NAO
vehicle groups that represented approximately 35 percent of total sales,
compared with approximately 33 percent in the second quarter of 1997, including
joint ventures.
"Our integration of Delphi Delco Electronics into our products and
processes is ahead of schedule and positions Delphi to further grow our
non-GM-NAO sales." Battenberg said.
GM INTERNATIONAL OPERATIONS (GMIO)
GM International Operations reported income of $181 million for the second
quarter of 1998, compared with income of $385 million in the same period of
1997. Results in both periods exclude special items (see Special Items).
GMIO reported pretax income of $339 million in the second quarter of 1998,
compared with pretax income of $599 million in the second quarter of 1997.
The net-profit margin for GMIO was 2.0 percent in the second quarter of
1998, compared with 4.0 percent in the prior-year period.
"Second-quarter earnings reflect a continuation of the very intense
competitive environment facing all of our operations as well as lingering
concerns about the economic situation in Latin America and the Asia-Pacific
region," said Louis R. Hughes, General Motors executive vice president and
president of GM International Operations.
Income from GM's automotive operations in Europe totaled $168 million in
the second quarter of 1998, which reflects the normal volume loss related to the
successful start-up and introduction of the new Astra. That compares with income
of $209 million in the second quarter last year. The results exclude special
items that resulted in an unfavorable $44 million after-tax impact in the second
quarter of 1998 and a $103 million after-tax gain in the second quarter of 1997
(see Special Items).
"A bright spot is the huge success of our new Astra models," Hughes said.
"We have received more than 300,000 orders, and to meet this high demand, we're
significantly increasing production at plants in England, Germany and Belgium."
For the remainder of GM International Operations, which includes the Latin
American and Asia and Pacific Operations, income totaled $13 million in the
second quarter of 1998, compared with $176 million in the prior-year period. The
extremely competitive markets, along with economic concerns, continue to impact
both our Latin American and Asia-Pacific results. Also included in these results
are the up-front costs associated with growth initiatives, which should generate
improved financial results in future years.
SPECIAL ITEMS
The second-quarter-1998 results include the unfavorable $44 million
after-tax, or $0.07 per share, effect of a special charge related to
work-schedule modifications at Opel Belgium.
- 6 -
The second-quarter-1997 results were also affected by special items, which
included:
- $318 million after-tax gain, or $0.33 per share, related to the merger
of the satellite service operations of Hughes and PanAmSat Corporation.
- $103 million after-tax gain, or $0.14 per share, related to the sale of
GM Europe's equity interest in Avis Europe.
STRIKE-RELATED IMPACT
The second-quarter-1998 results included an unfavorable impact of $1.2
billion after taxes, or $1.79 per share, related to strikes at two GM component
plants in Flint, Mich., that resulted in the shutdown of 26 of 29 GM North
American assembly plants, the loss of 227,000 units of production, and the
shutdown of many automotive component plants during the quarter. The
above-mentioned amount includes an estimated $890 million unfavorable impact on
GM-NAO, and $290 million unfavorable impact on Delphi in the second quarter of
1998.
The second-quarter-1997 results included the $490 million, or $0.67 per
share, after-tax, unfavorable impact of strike-related production losses at two
key assembly plants in Oklahoma City, Okla., and Pontiac, Mich. Those work
stoppages resulted in an estimated loss of 96,000 units of production during the
second quarter of 1997, with the following sector-specific after-tax approximate
effects: GM-NAO, $375 million; and Delphi, $115 million.
# # #
HIGHLIGHTS ATTACHED
- 7 -
HIGHLIGHTS - Q2 Financial Results
(Dollars in Millions Except
Per Share Amounts)
Three Months Ended
June 30,
------------------------------------
Adjusted Adjusted
1998 1998 (1) 1997 1997 (1)
-------- ------- ------- --------
Net sales and revenues
Manufactured products $33,577 $33,577 $39,724 $37,866
Financial services 3,280 3,280 3,204 3,204
Other income 2,044 2,044 2,218 1,566
------- -------- ------- -------
Total net sales and
revenues $38,901 $38,901 $45,146 $42,636
------- -------- ------- -------
Total net sales and
revenues(9) $33,462 $33,462 $39,741 $37,883
Gross profit margin
percentage(9) 14.5% 14.7% 17.0% 17.0%
.............................................................
Income before income taxes,
minority interests
and non-consolidated
affiliates (9) $27 $101 $2,646 $1,905
Effective income tax
rate(9) 37.0% 39.6% 34.4% 37.1%
.............................................................
Consolidated net income $389 $433 $2,098 $1,581
Net profit margin(9) 1.2% 1.3% 5.3% 4.2%
.............................................................
Earnings Attributable to Common Stocks
$1-2/3 par value $359 $1,941
Class H (2) $- $137
Class H (3) $15 $-
.............................................................
Basic Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $0.54 $0.61 $2.68 $2.15
Class H (2) $- $- $1.35
Class H (3) $0.14 $0.14 $- $0.01
.............................................................
Diluted Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $0.52 $0.59 $2.67 $2.14
Class H (2) $- $- $1.35
Class H (3) $0.14 $0.14 $- $0.01
.............................................................
Cash Dividends Per Share of Common Stocks
$1-2/3 par value $0.50 $0.50
Class H (2) $- $0.25
Class H (3) $- $-
.............................................................
Book Value Per Share of Common Stocks
June 30, Dec. 31, June 30,
1998 1997 1997
-------- ------- --------
$1-2/3 par value $20.90 $22.26 $29.99
Class H $12.54 $13.36 $14.99
..............................................................
See footnotes beginning on page 15.
continues
- 8 -
HIGHLIGHTS - Q2 Adjusted for Special Items -
with Financing and Insurance Operations on an
Equity Basis
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
June 30, 1998
--------------------------------
Special Adjusted
Reported Items (4) (1)
--------- --------- --------
Net sales and revenues $33,462 $- $33,462
------ ------ ------
Costs and expenses:
Cost of sales 28,619 74 28,545
Selling, general,
and admin. expenses 3,421 - 3,421
Depreciation and
amort. expenses 1,727 - 1,727
------ ------ ------
Total costs and
expenses 33,767 74 33,693
------ ------ ------
Operating income (loss) (305) (74) (231)
Other income less
income deductions 654 - 654
Interest expense 322 - 322
------ ------ ------
Income (loss) before
income taxes and
minority interests 27 (74) 101
Income tax expense (credit) 10 (30) 40
------ ------ ------
Income (loss) after
income taxes 17 (44) 61
Minority interests 7 - 7
Earnings of nonconsolidated
affiliates 365 - 365
------ ------ ------
Net income (loss) $389 $(44) $433
====== ====== ======
$1-2/3 par value EPS
from continuing operations
Basic $0.54 $0.61
Diluted $0.52 $0.59
Gross profit margin 14.5% 14.7%
Effective income tax rate 37.0% 39.6%
Net profit margin 1.2% 1.3%
See footnotes beginning on page 15.
continues
- 9 -
HIGHLIGHTS - Q2 Adjusted for Hughes Transactions
and Special Items - with Financing and
Insurance Operations on an Equity Basis
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
June 30, 1997
------------------------------------
Hughes Special
Trans- Items Adjusted
Reported actions (5)(6) (1)
-------- ------- ------- --------
Net sales and revenues $39,741 $1,858 $- $37,883
------ ------ ------ ------
Costs and expenses:
Cost of sales 32,998 1,540 - 31,458
Selling, general,
and admin.expenses 3,290 239 - 3,051
Depreciation and
amort. expenses 1,918 21 - 1,897
------ ------ ------ ------
Total costs and
expenses 38,206 1,800 - 36,406
------ ------ ------ ------
Operating income 1,535 58 - 1,477
Other income less
income deductions 1,330 34 618 678
Interest expense (credit) 219 (31) - 250
------ ------ ------ ------
Income before
income taxes and
minority interests 2,646 123 618 1,905
Income tax expense 909 5 197 707
------ ------ ------ ------
Income after income
taxes 1,737 118 421 1,198
Minority interests 18 (1) - 19
Earnings (loss) of
noncons. affiliates 343 (21) - 364
------ ------ ------ ------
Net income $2,098 $96 $421 $1,581
====== ====== ====== ======
$1-2/3 par value EPS
from continuing
operations
Basic $2.68 $2.15
Diluted $2.67 $2.14
Gross profit margin 17.0% 17.0%
Effective income tax rate 34.4% 37.1%
Net profit margin 5.3% 4.2%
See footnotes beginning on page 15.
continues
- 10 -
HIGHLIGHTS - Q2 Adjusted for Hughes Transactions
and Special Items By Sector
(Dollars in Millions)
Three Months Ended
June 30, 1998
--------------------------------
Special Adjusted
Reported Items (4) (1)
--------- --------- --------
GM-NAO $(196) $- $(196)
Delphi 84 - 84
GMIO(7) 137 44 181
Hughes 56 - 56
GMAC 365 - 365
Other(8) (57) - (57)
----- ----- -----
Consolidated net income $389 $44 $433
===== ===== =====
Three Months Ended
June 30, 1997
----------------------------------------
Hughes Special
Trans- Items Adjusted
Reported actions (5)(6) (1)
-------- ------- ------- -------
GM-NAO $474 $- $- $474
Delphi 310 97 - 407
GMIO(7) 488 - (103) 385
Hughes 542 (218) (318) 6
GMAC 338 - - 338
Other(8) (54) 25 - (29)
--- --- --- ---
Consolidated net income $2,098 $(96) $(421) $1,581
===== == === =====
See footnotes beginning on page 15.
continues
- 11 -
HIGHLIGHTS - Q2 Automotive Sectors
Adjusted for Special Items
(Dollars in Millions)
Three Months Ended
June 30, 1998
------------------------------
GM-NAO Delphi GMIO
------ ------ -------
Reported
--------
Net sales and revenues $21,904 $7,041 $8,903
------ ----- -----
Pre-tax (loss) income (341) 84 265
Income tax (credit) expense (128) 20 123
Equity income and
minority interests 17 20 (5)
------ ----- -----
Net (loss) income $(196) $84 $137
====== ===== =====
Net (loss) profit margin (0.9%) 1.2% 1.5%
Effective income tax rate 37.5% 23.8% 46.4%
Special Items (4)
-------------
Net sales and revenues $- $- $-
------ ----- -----
Pre-tax income - - 74
Income tax expense - - 30
Equity income and
minority interests - - -
------ ----- -----
Net income $- $- $44
====== ===== =====
Adjusted (1)
--------
Net sales and revenues $21,904 $7,041 $8,903
------ ----- -----
Pre-tax (loss) income (341) 84 339
Income tax (credit) expense (128) 20 153
Equity income and
minority interests 17 20 (5)
------ ----- -----
Net (loss) income $(196) $84 $181
====== ===== =====
Net (loss) profit margin (0.9%) 1.2% 2.0%
Effective income tax rate 37.5% 23.8% 45.1%
See footnotes beginning on page 15.
continues
- 12 -
HIGHLIGHTS - Q2 Automotive Sectors
Adjusted for Hughes Transactions and Special Items
(Dollars in Millions)
Three Months Ended
June 30, 1997
-------------------------------
GM-NAO Delphi GMIO
------- ------- -------
Reported
--------
Net sales and revenues $25,823 $6,778 $9,711
------ ------ ------
Pre-tax income 683 468 727
Income tax expense 225 170 233
Equity income and
minority interests 16 12 (6)
------ ------ ------
Net income $474 $310 $488
====== ====== ======
Net profit margin 1.8% 4.6% 5.0%
Effective income tax rate 32.9% 36.3% 32.0%
Hughes Transactions
-------------------
Net sales and revenues $- $1,412 $-
------ ------ ------
Pre-tax income - 152 -
Income tax expense - 58 -
Equity income and
minority interests - 3 -
------ ------ ------
Net income $- $97 $-
====== ====== ======
Special Items (5)(6)
-------------
Net sales and revenues $- $- $-
------ ------ ------
Pre-tax income - - (128)
Income tax expense - - (25)
Equity income and
minority interests - - -
------ ------ ------
Net income $- $- $(103)
====== ====== ======
Adjusted (1)
--------
Net sales and revenues $25,823 $8,190 $9,711
------ ------ ------
Pre-tax income 683 620 599
Income tax expense 225 228 208
Equity income and
minority interests 16 15 (6)
------ ------ ------
Net income $474 $407 $385
====== ====== ======
Net profit margin 1.8% 5.0% 4.0%
Effective income tax rate 32.9% 36.8% 34.7%
See footnotes beginning on page 15.
continues
- 13 -
<PAGE>
HIGHLIGHTS - Q2 Operating Information
Three Months Ended
June 30,
----------------------
1998 1997
--------- ----------
Worldwide Wholesale Sales (Units in 000s)
United States: Cars 549 705
Trucks 476 536
------- -------
Total United States 1,025 1,241
Canada and Mexico 158 174
------- -------
Total North America 1,183 1,415
International 875 836
------- -------
Total Worldwide 2,058 2,251
======= =======
....................................................
Vehicle Unit Deliveries (Units in 000s)
United States
Chevrolet - Cars 287 254
- Trucks 494 384
Pontiac 168 169
GMC 147 124
Buick 119 118
Oldsmobile 96 81
Saturn 66 69
Cadillac 49 45
Other 7 8
------ ------
Total United States 1,433 1,252
Canada and Mexico 184 162
------ ------
Total North America 1,617 1,414
------ ------
International
Europe 456 492
Latin America, Africa, and the
Middle East 184 188
Asia and Pacific 110 125
Other International 10 8
------ ------
Total International 760 813
------ ------
Total Worldwide 2,377 2,227
====== ======
....................................................
Market Share
United States
Cars 32.1% 32.2%
Trucks 30.9% 28.5%
Total 31.5% 30.5%
Western Europe 10.1% 11.4%
Latin America 20.5% 19.5%
Asia and Pacific 4.3% 4.0%
Total Worldwide 17.2% 16.3%
....................................................
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 22.3% 26.4%
% Fleet Sales - Trucks 14.1% 15.8%
Total Vehicles 18.4% 21.8%
....................................................
Days Supply of Inventory -- U.S.
Gross Landed Stock
Cars 51 84
Trucks 53 105
....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated) 76.6% 91.9%
....................................................
Retail Incentives($ per unit)
GM-NAO $1,703 $1,060
....................................................
See footnotes beginning on page 15.
continues
- 14 -
HIGHLIGHTS - Q2 Operating Information
(Dollars in Millions Except
Per Share Amounts)
Three Months Ended
June 30,
----------------------
1998 1997
--------- ----------
Depreciation and amortization (9)
Depreciation $1,126 $1,076
Amortization of special tools 574 790
Amortization of intangible assets 27 52
----- -----
$1,727 $1,918
===== =====
....................................................
Worldwide Employment at June 30 (in 000s)(10)
GM-NAO 231 243
Delphi 205 207
GMIO 116 114
GMAC 22 18
Hughes 15 17
Other 9 10
--- ---
Total 598 609
--- ---
....................................................
Worldwide Payrolls (10) $6,747 $7,069
....................................................
(1) Adjusted amounts represent the reported amounts less the
effects of special items and Hughes Transactions. The adjusted amounts
for 1998 and 1997 include the unfavorable effects of strike-related
work stoppages. The unfavorable after-tax impacts of the work stoppages
were $1.2 billion, or $1.79 per share of $1-2/3 par value common stock,
in 1998 and $490 million, or $0.67 per share of $1-2/3 par value common
stock, in 1997. The unfavorable after-tax impacts for GM-NAO were $890
million and $375 million in 1998 and 1997, respectively. The
unfavorable after-tax impacts for Delphi were $290 million and $115
million in 1998 and 1997, respectively.
(2) Data relates to a period prior to the date on which GM recapitalized
the Class H common stock ("GM's Recapitalization Date").
(3) Data relates to a period which is subsequent to GM's Recapitalization
Date.
(4) The second-quarter 1998 results included a pre-tax charge of $74
million ($44 million after-tax, or $0.07 basic per share of $1-2/3 par
value common stock), related to work schedule modifications at Opel
Belgium.
(5) The second-quarter 1997 results included a pre-tax gain of $490
million($318 million after-taxes, or $0.33 basic per share of $1-2/3
par value common stock), that resulted from the merger of the satellite
service operations of Hughes and PanAmSat Corporation.
(6) The second-quarter 1997 results included a pre-tax gain of $128 million
($103 million after-tax, or $0.14 per share of $1-2/3 par value common
stock), related to the sale of GM Europe's equity interest in Avis
Europe.
(7) GMIO Includes: Three Months Ended
June 30,
------------------
1998 1997
---- ----
GM Europe $168 $209
Other GMIO $13 $176
(8) Includes Allison Transmission Division, GM Locomotive Group, and
purchase accounting adjustments, as well as certain tax and foreign
exchange items not allocated to any one business sector.
- 15 -
HIGHLIGHTS - Q2 Operating Information
(Dollars in Millions Except
Per Share Amounts)
(9) Calculated with financing and insurance operations on an equity basis.
(10)Employment and payroll amounts reported for 1997 have been adjusted to
reflect the changes to GM's organizational structure resulting from the
Hughes Transactions. As such, Delphi reported amounts include Delco and
Hughes reported amounts exclude Delco and Hughes Defense.
- 16 -
HIGHLIGHTS - 6 Months Financial Results
(Dollars in Millions Except
Per Share Amounts)
Six Months Ended
June 30,
------------------------------------
Adjusted Adjusted
1998 1998 (1) 1997 1997 (1)
-------- ------- ------- --------
Net sales and revenues
Manufactured products $70,137 $70,137 $77,164 $73,689
Financial services 6,441 6,441 6,401 6,401
Other income 3,894 3,894 3,822 3,077
------- -------- ------- -------
Total net sales and
revenues $80,472 $80,472 $87,387 $83,167
------- -------- ------- -------
Total net sales and
revenues(9) $69,889 $69,889 $77,198 $73,723
Gross profit margin
percentage(9) 15.7% 15.8% 17.0% 17.0%
.............................................................
Income before income taxes,
minority interests
and non-consolidated
affiliates (9) $1,915 $1,989 $4,756 $3,843
Effective income tax
rate (9) 34.0% 34.2% 34.5% 35.7%
.............................................................
Consolidated net income $1,993 $2,037 $3,894 $3,270
Net profit margin(9) 2.9% 2.9% 5.0% 4.4%
.............................................................
Earnings Attributable to Common Stocks
$1-2/3 par value $1,933 $3,658
Class H (2) $- $196
Class H (3) $29 $-
.............................................................
Basic Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $2.88 $2.95 $4.98 $4.38
Class H (2) $- $- $1.94
Class H (3) $0.27 $0.27 $- $0.07
.............................................................
Diluted Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $2.82 $2.89 $4.93 $4.33
Class H (2) $- $- $1.94
Class H (3) $0.27 $0.27 $- $0.07
.............................................................
Cash Dividends Per Share of Common Stocks
$1-2/3 par value $1.00 $1.00
Class H (2) $- $0.50
Class H (3) $- $-
..............................................................
See footnotes beginning on page 24.
continues
- 17 -
HIGHLIGHTS - 6 Months Adjusted for Special Items -
with Financing and Insurance Operations on an
Equity Basis
(Dollars in Millions Except Per Share Amounts)
Six Months Ended
June 30, 1998
--------------------------------
Special Adjusted
Reported Items (4) (1)
--------- --------- --------
Net sales and revenues $69,889 $- $69,889
------ ------ ------
Costs and expenses:
Cost of sales 58,942 74 58,868
Selling, general,
and admin. expenses 6,281 - 6,281
Depreciation and
amort. expenses 3,410 - 3,410
------ ------ ------
Total costs and
expenses 68,633 74 68,559
------ ------ ------
Operating income (loss) 1,256 (74) 1,330
Other income less
income deductions 1,236 - 1,236
Interest expense 577 - 577
------ ------ ------
Income (loss) before
income taxes and
minority interests 1,915 (74) 1,989
Income tax expense (credit) 651 (30) 681
------ ------ ------
Income (loss) after
income taxes 1,264 (44) 1,308
Minority interests 3 - 3
Earnings of nonconsolidated
affiliates 726 - 726
------ ------ ------
Net income (loss) $1,993 $(44) $2,037
====== ====== ======
$1-2/3 par value EPS
from continuing operations
Basic $2.88 $2.95
Diluted $2.82 $2.89
Gross profit margin 15.7% 15.8%
Effective income tax rate 34.0% 34.2%
Net profit margin 2.9% 2.9%
See footnotes beginning on page 24.
continues
- 18 -
HIGHLIGHTS - 6 Months Adjusted for Hughes Transactions
and Special Items - with Financing and Insurance
Operations on an Equity Basis
(Dollars in Millions Except Per Share Amounts)
Six Months Ended
June 30, 1997
------------------------------------
Hughes Special
Trans- Items Adjusted
Reported actions (5)(6) (1)
-------- ------- ------- --------
Net sales and revenues $77,198 $3,475 $- $73,723
------ ------ ------ ------
Costs and expenses:
Cost of sales 64,102 2,845 80 61,177
Selling, general,
and admin.expenses 6,174 305 - 5,869
Depreciation and
amort. expenses 3,797 82 - 3,715
------ ------ ------ ------
Total costs and
expenses 74,073 3,232 80 70,761
------ ------ ------ ------
Operating income (loss) 3,125 243 (80) 2,962
Other income less
income deductions 2,069 39 706 1,324
Interest expense (credit) 438 (5) - 443
------ ------ ------ ------
Income before
income taxes and
minority interests 4,756 287 626 3,843
Income tax expense 1,639 67 200 1,372
------ ------ ------ ------
Income after income
taxes 3,117 220 426 2,471
Minority interests 37 (1) - 38
Earnings (loss) of
noncons. affiliates 740 (21) - 761
------ ------ ------ ------
Net income $3,894 $198 $426 $3,270
====== ====== ====== ======
$1-2/3 par value EPS
from continuing
operations
Basic $4.98 $4.38
Diluted $4.93 $4.33
Gross profit margin 17.0% 17.0%
Effective income tax rate 34.5% 35.7%
Net profit margin 5.0% 4.4%
See footnotes beginning on page 24.
continues
- 19 -
HIGHLIGHTS - 6 Months Adjusted for Hughes Transactions
and Special Items By Sector
(Dollars in Millions)
Six Months Ended
June 30, 1998
--------------------------------
Special Adjusted
Reported Items (4) (1)
--------- --------- --------
GM-NAO $630 $- $630
Delphi 347 - 347
GMIO(7) 297 44 341
Hughes 110 - 110
GMAC 714 - 714
Other(8) (105) - (105)
----- ----- -----
Consolidated net income $1,993 $44 $2,037
===== ===== =====
Six Months Ended
June 30, 1997
----------------------------------------
Hughes Special
Trans- Items Adjusted
Reported actions (5)(6) (1)
-------- ------- ------- -------
GM-NAO $1,238 $- $- $1,238
Delphi 490 181 50 721
GMIO(7) 805 - (158) 647
Hughes 777 (429) (318) 30
GMAC 710 - - 710
Other(8) (126) 50 - (76)
--- --- --- ---
Consolidated net income $3,894 $(198) $(426) $3,270
===== === === =====
See footnotes beginning on page 24.
continues
- 20 -
HIGHLIGHTS - 6 Months Automotive Sectors
Adjusted for Special Items
(Dollars in Millions)
Six Months Ended
June 30, 1998
------------------------------
GM-NAO Delphi GMIO
------ ------ -------
Reported
--------
Net sales and revenues $47,793 $14,664 $17,053
------ ------ ------
Pre-tax income 861 460 478
Income tax expense 251 140 195
Equity income and
minority interests 20 27 14
------ ------ ------
Net income $630 $347 $297
====== ====== ======
Net profit margin 1.3% 2.4% 1.7%
Effective income tax rate 29.2% 30.4% 40.8%
Special Items
-------------
Net sales and revenues $- $- $-
------ ----- -----
Pre-tax income - - 74
Income tax expense - - 30
Equity income and
minority interests - - -
------ ----- -----
Net income $- $- $44
====== ===== =====
Adjusted (1)
--------
Net sales and revenues $47,793 $14,664 $17,053
------ ------ ------
Pre-tax income 861 460 552
Income tax expense 251 140 225
Equity income and
minority interests 20 27 14
------ ------ ------
Net income $630 $347 $341
====== ====== ======
Net profit margin 1.3% 2.4% 2.0%
Effective income tax rate 29.2% 30.4% 40.8%
See footnotes beginning on page 24.
continues
- 21 -
HIGHLIGHTS - 6 Months Automotive Sectors
Adjusted for Hughes Transactions and Special Items
(Dollars in Millions)
Six Months Ended
June 30, 1997
-------------------------------
GM-NAO Delphi GMIO
------- ------- -------
Reported
--------
Net sales and revenues $50,682 $13,442 $17,994
------ ------ ------
Pre-tax income 1,810 705 1,200
Income tax expense 603 242 397
Equity income and
minority interests 31 27 2
------ ------ ------
Net income $1,238 $490 $805
====== ====== ======
Net profit margin 2.4% 3.6% 4.5%
Effective income tax rate 33.3% 34.3% 33.1%
Hughes Transactions
-------------------
Net sales and revenues $- $2,743 $-
------ ------ ------
Pre-tax income - 286 -
Income tax expense - 109 -
Equity income and
minority interests - 4 -
------ ------ ------
Net income $- $181 $-
====== ====== ======
Special Items
-------------
Net sales and revenues $- $- $-
------ ------ ------
Pre-tax income - 80 (216)
Income tax expense - 30 (58)
Equity income and
minority interests - - -
------ ------ ------
Net income $- $50 $(158)
====== ====== ======
Adjusted (1)
--------
Net sales and revenues $50,682 $16,185 $17,994
------ ------ ------
Pre-tax income 1,810 1,071 984
Income tax expense 603 381 339
Equity income and
minority interests 31 31 2
------ ------ ------
Net income $1,238 $721 $647
====== ====== ======
Net profit margin 2.4% 4.5% 3.6%
Effective income tax rate 33.3% 35.6% 34.5%
See footnotes beginning on page 24.
continues
- 22 -
<PAGE>
HIGHLIGHTS - 6 Months Operating Information
Six Months Ended
June 30,
----------------------
1998 1997
--------- ----------
Worldwide Wholesale Sales (Units in 000s)
United States: Cars 1,123 1,403
Trucks 1,068 1,090
------- -------
Total United States 2,191 2,493
Canada and Mexico 329 324
------- -------
Total North America 2,520 2,817
International 1,597 1,619
------- -------
Total Worldwide 4,117 4,436
======= =======
....................................................
Vehicle Unit Deliveries (Units in 000s)
United States
Chevrolet - Cars 494 505
- Trucks 872 742
Pontiac 290 314
GMC 264 233
Buick 215 205
Oldsmobile 169 146
Saturn 117 129
Cadillac 92 87
Other 13 14
------ ------
Total United States 2,526 2,375
Canada and Mexico 313 283
------ ------
Total North America 2,839 2,658
------ ------
International
Europe 948 957
Latin America, Africa, and the
Middle East 360 350
Asia and Pacific 230 306
Other International 19 16
------ ------
Total International 1,557 1,629
------ ------
Total Worldwide 4,396 4,287
====== ======
....................................................
Market Share
United States
Cars 31.4% 31.9%
Trucks 30.5% 28.6%
Total 30.9% 30.4%
Western Europe 10.4% 11.4%
Latin America 21.1% 19.2%
Asia and Pacific 4.1% 4.4%
Total Worldwide 16.4% 15.8%
....................................................
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 23.9% 26.4%
% Fleet Sales - Trucks 15.0% 14.8%
Total Vehicles 19.7% 21.4%
....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated) 82.8% 93.6%
....................................................
Retail Incentives($ per unit)
GM-NAO $1,490 $962
....................................................
See footnotes beginning on page 24.
continues
- 23 -
HIGHLIGHTS - 6 Months Operating Information
(Dollars in Millions Except
Per Share Amounts)
Six Months Ended
June 30,
----------------------
1998 1997
--------- ----------
Depreciation and amortization (8)
Depreciation $2,169 $2,127
Amortization of special tools 1,187 1,577
Amortization of intangible assets 54 93
----- -----
$3,410 $3,797
===== =====
....................................................
Worldwide Payrolls (10) $13,773 $14,146
....................................................
(1) Adjusted amounts represent the reported amounts less the
effects of special items and Hughes Transactions. The adjusted amounts
for 1998 and 1997 include the unfavorable effects of strike-related
work stoppages. The unfavorable after-tax impacts of the work stoppages
were $1.2 billion, or $1.79 per share of $1-2/3 par value common stock,
in 1998 and $490 million, or $0.67 per share of $1-2/3 par value common
stock, in 1997. The unfavorable after-tax impacts for GM-NAO were $890
million and $375 million in 1998 and 1997, respectively. The
unfavorable after-tax impacts for Delphi were $290 million and $115
million in 1998 and 1997, respectively.
(2) Data relates to a period prior to the date on which GM recapitalized
the Class H common stock ("GM's Recapitalization Date").
(3) Data relates to a period which is subsequent to GM's Recapitalization
Date.
(4) The second-quarter 1998 results included a pre-tax charge of $74
million ($44 million after-tax, or $0.07 basic per share of $1-2/3 par
value common stock), related to work schedule modifications at Opel
Belgium.
(5) The first-quarter 1997 results included a pre-tax gain of $88
million,($55 million after-taxes, or $0.07 basic per share of $1-2/3
par value common stock), that resulted from an agreement with
Volkswagen A.G. (VW) settling a civil lawsuit which GM brought against
VW. The first-quarter 1997 results were negatively impacted by a
pre-tax plant closing charge of $80 million,($50 million after-taxes,
or $0.07 basic per share of $1-2/3 par value common stock), related to
the announcement that Delphi Interior and Lighting Systems would cease
production at its Trenton, N.J., plant during the 1998 calendar year.
(6) The second-quarter 1997 results included a pre-tax gain of $490
million($318 million after-taxes, or $0.33 basic per share of $1-2/3
par value common stock), that resulted from the merger of the satellite
service operations of Hughes and PanAmSat Corporation. The
second-quarter 1997 results also included a pre-tax gain of $128
million ($103 million after-tax, or $0.14 per share of $1-2/3 par value
common stock),related to the sale of GM Europe's equity interest in
Avis Europe.
(7) GMIO Includes: Six Months Ended
June 30,
------------------
1998 1997
---- ----
GM Europe $267 $303
Other GMIO $74 $344
(8) Includes Allison Transmission Division, GM Locomotive Group, and
purchase accounting adjustments, as well as certain tax and foreign
exchange items not allocated to any one business sector.
- 24 -
HIGHLIGHTS - 6 Months Operating Information
(Dollars in Millions Except
Per Share Amounts)
(9) Calculated with financing and insurance operations on an equity basis.
(10)Payroll amounts reported for 1997 have been adjusted to reflect the
changes to GM's organizational structure resulting from the Hughes
Transactions. As such, 1997 reported amounts exclude Hughes Defense.
- 25 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in Millions Except Per Share Amounts)
Net sales and revenues
Manufactured products $33,577 $39,724 $70,137 $77,164
Financial services 3,280 3,204 6,441 6,401
Other income 2,044 2,218 3,894 3,822
------- ------- ------- -------
Total net sales and revenues 38,901 45,146 80,472 87,387
------ ------ ------ ------
Costs and expenses
Cost of sales and other operating
charges, exclusive of items
listed below 28,623 33,008 58,980 64,118
Selling, general, and
administrative expenses 4,401 3,984 8,143 7,575
Depreciation and amortization
expenses 2,931 3,101 5,838 6,166
Interest expense 1,753 1,500 3,383 2,961
Other deductions 632 320 1,145 568
-------- -------- ------- --------
Total costs and expenses 38,340 41,913 77,489 81,388
------ ------ ------ ------
Income before income taxes and
minority interests 561 3,233 2,983 5,999
Income taxes 175 1,153 983 2,142
Minority interests 3 18 (7) 37
----- ------- ------- -------
Net income 389 2,098 1,993 3,894
Dividends on preference stocks 15 20 31 40
---- ------- ------ -------
Earnings on common stocks $374 $2,078 $1,962 $3,854
=== ===== ===== =====
Basic earnings per share attributable to
common stocks
Earnings per share attributable to
$1-2/3 par value $0.54 $2.68 $2.88 $4.98
Earnings per share attributable to
Class H (prior to its
recapitalization on
December 17, 1997) $1.35 $1.94
Earnings per share attributable to
Class H (subsequent to its
recapitalization on
December 17, 1997) $0.14 $0.27
Diluted earnings per share attributable
to common stocks
Earnings per share attributable to
$1-2/3 par value $0.52 $2.67 $2.82 $4.93
Earnings per share attributable to
Class H (prior to its
recapitalization on
December 17, 1997) $1.35 $1.94
Earnings per share attributable to
Class H (subsequent to its
recapitalization on
December 17, 1997) $0.14 $0.27
- 26 -
<PAGE>
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, June 30,
1998 Dec. 31, 1997
(Unaudited) 1997 (Unaudited)
(Dollars in Millions)
ASSETS
Cash and cash equivalents $8,721 $11,262 $11,674
Other marketable securities 8,407 11,722 9,605
------- ------ -------
Total cash and marketable securities 17,128 22,984 21,279
Finance receivables - net 60,766 58,870 60,357
Accounts and notes receivable (less allowances) 8,771 7,493 7,461
Inventories (less allowances) 13,253 12,102 13,528
Deferred income taxes 22,179 22,478 19,291
Equipment on operating leases (less accumulated
depreciation) 35,335 33,302 32,300
Property - net 36,050 34,567 37,653
Intangible assets - net 12,159 11,469 15,029
Other assets - net 24,938 25,623 25,007
-------- -------- --------
Total assets $230,579 $228,888 $231,905
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable (principally trade) $15,395 $15,782 $14,197
Notes and loans payable 98,957 93,027 89,918
Deferred income taxes 3,188 2,923 3,530
Postretirement benefits other than pensions 40,338 41,168 44,007
Pensions 5,537 7,043 7,774
Accrued expenses and other liabilities 50,728 50,490 47,330
-------- -------- --------
Total liabilities 214,143 210,433 206,756
------- ------- -------
Minority interests 518 727 716
General Motors - obligated mandatorily
redeemable preferred securities of
subsidiary trusts holding solely
junior subordinated debentures of
General Motors
Series D 79 79 -
Series G 143 143 -
Redeemable preferred stock of subsidiary - - 402
Stockholders' equity
Preference stocks 1 1 1
Common stocks
$1-2/3 par value (issued, 655,007,825;
693,456,394; and 721,480,932 shares) 1,092 1,156 1,202
Class H (issued, 101,641,092 shares) - - 10
Class H (issued, 105,731,028, and
103,885,803 shares) 11 10 -
Capital surplus (principally additional
paid-in capital) 12,773 15,369 17,250
Retained earnings 6,706 5,416 9,201
------- ------- -------
Subtotal 20,583 21,952 27,664
Minimum pension liability adjustment (4,062) (4,062) (3,490)
Accumulated foreign currency translation
adjustments (1,332) (888) (642)
Net unrealized gains on securities 507 504 499
------ ------- --------
Accumulated other comprehensive loss (4,887) (4,446) (3,633)
Total stockholders' equity 15,696 17,506 24,031
-------- -------- --------
Total liabilities and stockholders'
equity $230,579 $228,888 $231,905
======= ======= =======
- 27 -
<PAGE>
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
1998 1997
(Dollars in Millions)
Net cash provided by operating activities $4,837 $9,773
----- ------
Cash flows from investing activities
Expenditures for property (4,614) (4,268)
Investments in other marketable securities
- acquisitions (13,487) (18,147)
Investments in other marketable securities
- liquidations 17,197 17,595
Investments in companies, net of cash acquired (1,322) (1,652)
Finance receivables - acquisitions (78,491) (79,997)
Finance receivables - liquidations 58,951 63,304
Proceeds from sales of finance receivables 17,356 12,930
Operating leases - acquisitions (12,331) (10,649)
Operating leases - liquidations 7,684 6,227
Other 26 954
Net cash used in investing activities (9,031) (13,703)
----- ------
Cash flows from financing activities
Net increase in loans payable 1,709 3,269
Increase in long-term debt 11,019 8,485
Decrease in long-term debt (7,564) (7,061)
Proceeds from issuing common stocks 344 281
Repurchases of common stocks (3,071) (2,292)
Cash dividends paid to stockholders (703) (829)
------ ------
Net cash provided by financing activities 1,734 1,853
----- -----
Effect of exchange rate changes on cash and
cash equivalents (81) (312)
----- -----
Net decrease in cash and cash equivalents (2,541) (2,389)
Cash and cash equivalents at beginning of the period 11,262 14,063
------ ------
Cash and cash equivalents at end of the period $8,721 $11,674
===== ======
- 28 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income With Financing and Insurance Operations on
an Equity Basis (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in Millions)
Net sales and revenues $33,462 $39,741 $69,889 $77,198
------ ------ ------ ------
Costs and expenses
Cost of sales and other operating
charges, exclusive of items listed
below 28,619 32,998 58,942 64,102
Selling, general, and administrative
expenses 3,421 3,290 6,281 6,174
Depreciation and amortization expenses 1,727 1,918 3,410 3,797
------- ------- ------ -------
Total costs and expenses 33,767 38,206 68,633 74,073
------ ------ ------ ------
Operating (loss) income (305) 1,535 1,256 3,125
Other income less income deductions 654 1,330 1,236 2,069
Interest expense 322 219 577 438
----- ------ ------ ------
Income from continuing operations before
income taxes, minority interests, and
earnings of nonconsolidated affiliates 27 2,646 1,915 4,756
Income taxes 10 909 651 1,639
-- ------ ------ -----
Income from continuing operations before
minority interests and earnings of
nonconsolidated affiliates 17 1,737 1,264 3,117
Minority interests 7 18 3 37
Earnings of nonconsolidated affiliates 365 343 726 740
--- ------ ------ ------
Net income $389 $2,098 $1,993 $3,894
=== ===== ===== =====
Net profit margin (1) 1.2% 5.3% 2.9% 5.0%
(1) Net profit margin represents net income as a percentage of net sales and
revenues.
- 29 -
<PAGE>
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets With Financing and Insurance Operations on an
Equity Basis
(Unaudited)
June 30, Dec. 31, June 30,
1998 1997 1997
-------- -------- --------
(Dollars in Millions)
ASSETS
Cash and cash equivalents $8,637 $10,685 $10,855
Other marketable securities 477 3,826 4,062
------ ------- -------
Total cash and marketable securities 9,114 14,511 14,917
Accounts and notes receivable
(less allowances)
Trade 4,617 5,164 5,887
Nonconsolidated affiliates 1,721 836 1,478
Inventories (less allowances) 11,942 12,102 13,528
Equipment on operating leases
(less accumulated depreciation) 4,754 4,677 4,047
Deferred income taxes and other 6,069 6,278 5,425
------- ------- -------
Total current assets 38,217 43,568 45,282
Equity in net assets of nonconsolidated
affiliates 11,091 10,164 10,061
Deferred income taxes 20,399 20,721 19,692
Other investments and miscellaneous assets 13,803 13,564 13,586
Property - net 35,293 33,914 37,211
Intangible assets - net 11,426 10,752 14,864
-------- -------- --------
Total assets $130,229 $132,683 $140,696
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $10,230 $12,474 $11,235
Loans payable 1,850 656 1,281
Accrued expenses and customer deposits 31,974 33,459 31,431
------ ------ ------
Total current liabilities 44,054 46,589 43,947
Long-term debt 7,097 5,491 5,967
Capitalized leases 178 185 188
Postretirement benefits other than
pensions 37,535 38,388 41,393
Pensions 4,780 4,271 5,822
Other liabilities and deferred income
taxes 20,192 19,336 18,230
-------- -------- --------
Total liabilities 113,836 114,260 115,547
------- ------- -------
Minority interests 475 695 716
General Motors - obligated mandatorily
redeemable preferred securities of
subsidiary trusts holding solely
junior subordinated debentures of
General Motors
Series D 79 79 -
Series G 143 143 -
Redeemable preferred stock of subsidiary - - 402
Stockholders' equity 15,696 17,506 24,031
-------- -------- --------
Total liabilities and
stockholders' equity $130,229 $132,683 $140,696
======= ======= =======
- 30 -
<PAGE>
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows With Financing and Insurance
Operations on an Equity Basis (Unaudited)
Six Months Ended
June 30,
1998 1997
(Dollars in Millions)
Net cash provided by operating activities $1,166 $7,582
----- -----
Cash flows from investing activities
Expenditures for property (4,369) (4,070)
Investments in companies, net of cash acquired (1,322) (1,652)
Investments in other marketable securities
- acquisitions (4,984) (7,963)
Investments in other marketable securities
- liquidations 8,332 7,543
Operating leases - acquisitions (2,994) (2,610)
Operating leases - liquidations 2,767 1,667
Other 72 (29)
------- -------
Net cash used in investing activities (2,498) (7,114)
----- -----
Cash flows from financing activities
Net increase in loans payable 1,194 66
Increase in long-term debt 2,652 195
Decrease in long-term debt (1,052) (37)
Proceeds from issuing common stocks 344 281
Repurchases of common stocks (3,071) (2,292)
Cash dividends paid to stockholders (703) (829)
------ ------
Net cash used in financing activities (636) (2,616)
------ -----
Effect of exchange rate changes on cash and
cash equivalents (80) (317)
----- -----
Net decrease in cash and cash equivalents (2,048) (2,465)
Cash and cash equivalents at beginning of the period 10,685 13,320
------ ------
Cash and cash equivalents at end of the period $8,637 $10,855
===== ======
Cash Flows With Financing and Insurance Operations on an Equity Basis
- 31 -
HUGHES ELECTRONICS CORPORATION NEWS RELEASE
El Segundo, Calif., July 13, 1998 - Hughes Electronics Corporation
(Hughes) today reported that second quarter 1998 revenues increased 18.9% to
$1,369.0 million compared with $1,151.4 million in the second quarter of 1997.
Operating profit(1) in the quarter increased 36.5% to $78.2 million
compared with $57.3 million in the second quarter of 1997. Second quarter
operating profit margin on the same basis increased to 5.7% in 1998 from 5.0% in
1997.
Second quarter earnings(1) increased to $56.1 million compared with last
year's $6.1 million, which excludes the $318.3 million after-tax gain ($0.80 per
share) recognized in connection with the May 1997 PanAmSat merger. Earnings per
share on the same basis increased to $0.14 per share versus pro forma earnings
per share(2) of $0.01 in 1997. Including the gain associated with the PanAmSat
merger, second quarter 1997 earnings and pro forma earnings per share were
$324.4 million and $0.81 per share, respectively.
"The solid financial performance reported in the second quarter is
consistent with Hughes' growth expectations as a satellite and wireless
communications company," said Michael T. Smith, Hughes chairman and chief
executive officer. "The increases in revenues and operating profit were driven
by record DIRECTV(R) subscriber growth through June, continued strong
performance in our satellite services segment resulting from the PanAmSat
merger, and higher commercial satellite sales."
Six-Month Financial Review
For the first six months of 1998, revenues increased 22.3% to $2,660.0
million compared with $2,175.4 million in the first half of 1997. This growth
was primarily the result of record DIRECTV subscriber growth, the May 1997
PanAmSat merger and higher commercial satellite sales.
Driven by the revenue growth, operating profit(1) for the first six months
rose sharply to $161.8 million versus $90.4 million in 1997. Operating profit
margin on the same basis increased to 6.1% compared with 4.2% in the first half
of 1997.
Earnings(1)and earnings per share in the first half of 1998 were $109.8
million and $0.27, respectively. Excluding the gain associated with the PanAmSat
merger, earnings and pro forma earnings per share(2) in the first six months of
1997 were $30.0 million and $0.07 per share, respectively. The increases in
earnings and earnings per share were principally a result of the aforementioned
revenue and operating profit growth.
SEGMENT FINANCIAL REVIEW: SECOND QUARTER 1998
Direct-To-Home Broadcast
For the quarter, revenues increased 42.5% to $401.5 million from $281.7
million in the second quarter of 1997. The increase resulted from continued
strong subscriber growth and average monthly revenue per subscriber, as well as
low subscriber churn rates. Domestic DIRECTV propelled this growth with
quarterly revenues of $368 million, a 49% increase over last year's second
quarter revenues of $247 million. With 227,000 net new subscribers in the
- 32 -
second quarter, total DIRECTV subscribers grew to 3,755,000 in the United States
as of June 30, 1998. The Company's Latin American DIRECTV subsidiary, Galaxy
Latin America (GLA), had second quarter revenues of $32 million compared with
$13 million in 1997. With the addition of 49,000 net new subscribers in the
second quarter, total DIRECTV subscribers in Latin America were 387,000 as of
June 30, 1998. In addition, DIRECTV Japan(TM), a 32% owned equity affiliate, had
a total of 140,000 subscribers by the end of the second quarter.
The segment operating loss in the quarter was $40.2 million compared with
an operating loss of $47.9 million in the second quarter of 1997. The lower
operating loss in 1998 was principally due to increased subscriber revenues that
more than offset higher sales and marketing expenditures. The second quarter
1998 operating loss for the domestic DIRECTV business was $7 million compared
with $21 million last year, and GLA's second quarter operating loss was $32
million compared with $33 million last year.
Satellite Services
Second quarter 1998 revenues were up 42.5% to $191.1 million compared with
$134.1 million in the prior year. The increase was primarily due to the May 1997
PanAmSat merger and increased operating lease revenues for video, data and
Internet-related services.
As a result of this revenue growth, operating profit in the quarter rose
18.3% to $74.4 million from $62.9 million in 1997. Operating profit margin in
the period declined to 38.9% from 46.9% in the same period last year primarily
from goodwill amortization associated with the PanAmSat merger and a provision
for the loss relating to the May 1998 failure of PanAmSat's Galaxy IV satellite.
Satellite Manufacturing
For the second quarter of 1998, revenues increased 15.4% to $674.8 million
from revenues of $584.5 million for the same period in 1997. Operating profit in
the quarter increased 11.5% to $60.0 million from $53.8 million in the prior
year. The increases in revenue and operating profit were principally due to
higher commercial satellite sales to customers such as Thuraya Satellite
Telecommunications Company, ICO Global Communications and PanAmSat Corporation.
Operating profit margin in the quarter declined slightly to 8.9% versus 9.2%
last year.
Network Systems
Second quarter revenues for Hughes Network Systems (HNS) were $221.7
million compared with $210.9 million in the same period last year. Increased
sales of satellite-based mobile telephony equipment were mostly offset by lower
sales of international wireless local loop telephone systems.
The operating loss in the quarter was $25.2 million compared with an
operating loss of $1.0 million in the second quarter of 1997. The increased
operating loss in the second quarter of 1998 was primarily due to a $26 million
provision for estimated losses associated with the bankruptcy filing by a
customer.
- 33 -
BALANCE SHEET
The cash balance of $1,592.8 million at June 30, 1998 declined $1,191.0
million from December 31, 1997 primarily due to the $851.4 million additional
investment in PanAmSat to increase Hughes' ownership from 71.5% to 81.0% and a
$204.7 million cash payment to GM in connection with the finalization of the
purchase price adjustment amount related to the transfer of Delco Electronics to
GM in December 1997 as part of the Hughes Transactions. The Hughes Transactions
also included the spin-off and merger of Hughes Defense with Raytheon Company.
- -------------------------
(1)Excludes the effects of purchase accounting adjustments related to General
Motors' (GM) acquisition of Hughes in 1985.
(2)1997 earnings per share are
presented on a pro forma basis. Historically, such earnings per share amounts
were calculated based on the financial performance of former Hughes, which
consisted of the defense electronics, automotive electronics, and
telecommunications and space businesses. Since these financial statements relate
only to the telecommunications and space businesses of former Hughes, the pro
forma presentation is used to present the earnings per share that would have
been achieved relative to the GM Class H common stock had it been calculated
based upon only such telecommunications and space businesses.
- 34 -
STATEMENT OF INCOME AND
AVAILABLE SEPARATE CONSOLIDATED NET INCOME
(Dollars in Millions Except Per Share Amounts)
Six Months Ended
Second Quarter June 30,
---------------- ----------------
1998 1997 1998 1997
- ---------------------------------------------------------------------------
Revenues
Product sales $762.6 $739.4 $1,454.7 $1,422.6
Direct broadcast, leasing and
other services 606.4 412.0 1,205.3 752.8
- ----------------------------------------------------------------------------
Total Revenues 1,369.0 1,151.4 2,660.0 2,175.4
- ----------------------------------------------------------------------------
Operating Costs and Expenses
Cost of products sold 580.6 606.3 1,122.9 1,161.1
Broadcast programming and other
cost 250.8 190.7 515.6 354.5
Selling, general, and
administrative expenses 359.2 230.1 661.8 452.1
Depreciation and amortization 100.2 67.0 197.9 117.3
Amortization of GM purchase
accounting adjustments (1) 5.3 5.3 10.6 10.6
- ----------------------------------------------------------------------------
Total Operating Costs
and Expenses 1,296.1 1,099.4 2,508.8 2,095.6
- ----------------------------------------------------------------------------
Operating Profit 72.9 52.0 151.2 79.8
Interest income 30.6 5.7 68.1 7.7
Interest expense (2.9) (18.6) (5.9) (33.7)
Other, net (35.1) 479.5 (69.4) 470.4
- ----------------------------------------------------------------------------
Income from Continuing Operations
Before Income Taxes and
Minority Interests 65.5 518.6 144.0 524.2
Income taxes 23.3 207.5 54.7 209.7
Minority interests in net losses
of subsidiaries 8.6 7.7 9.9 21.9
- ----------------------------------------------------------------------------
Income from continuing operations 50.8 318.8 99.2 336.4
Income from discontinued operations,
net of taxes - 0.3 - 1.3
- ----------------------------------------------------------------------------
Net Income 50.8 319.1 99.2 337.7
Adjustments to exclude the effect
of GM purchase accounting
adjustments (1) 5.3 5.3 10.6 10.6
- ----------------------------------------------------------------------------
Net Earnings Used for Computation
of Available Separate
Consolidated Net Income $56.1 $324.4 $109.8 $348.3
============================================================================
Available Separate Consolidated
Net Income (2) $14.7 $82.0 $28.7 $88.0
============================================================================
Net Earnings Attributable to General Motors
Class H Common Stock on a Per Share
Basis (2) $0.14 $0.81 $0.27 $0.87
============================================================================
(1)Relates to General Motors' purchase of Hughes in 1985.
(2)1997 amounts are presented on a pro forma basis. Historically, such amounts
were calculated based on the financial performance of former Hughes, which
consisted of the defense electronics, automotive electronics and
telecommunications and space businesses. Since these financial statements
relate only to the telecommunications and space businesses of former
Hughes, the pro forma presentation is used to present the results that
would have been achieved relative to the GM Class H common stock had the
results been calculated based only upon such telecommunications and space
businesses.
- 35 -
BALANCE SHEET
(Dollars in Millions)
June 30, December 31,
ASSETS 1998 1997
- -----------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $1,592.8 $2,783.8
Accounts and notes receivable 892.6 662.8
Contracts in process 564.0 575.6
Inventories 581.8 486.4
Prepaid expenses, deferred income taxes and other 376.8 297.3
- ----------------------------------------------------------------------------
Total Current Assets 4,008.0 4,805.9
Satellites - Net 2,897.5 2,643.4
Property - Net 927.6 889.7
Net Investment in Sales-type Leases 231.1 337.6
Intangible Assets - Net 3,514.3 2,954.8
Investments and Other Assets 1,160.4 1,132.4
- ----------------------------------------------------------------------------
Total Assets $12,738.9 $12,763.8
============================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
- ----------------------------------------------------------------------------
Current Liabilities
Accounts payable $655.4 $472.8
Advances on contracts 244.1 209.8
Deferred revenues 121.8 110.6
Notes payable 100.0 -
Accrued liabilities 581.0 689.4
- ----------------------------------------------------------------------------
Total Current Liabilities 1,702.3 1,482.6
Long-Term Debt 787.9 637.6
Deferred Gains on Sales and Leasebacks 138.6 191.9
Accrued Operating Leaseback Expense 54.1 100.2
Postretirement Benefits Other Than Pensions 155.7 154.8
Other Liabilities and Deferred Credits 670.1 706.4
Deferred Income Taxes 636.5 570.8
Minority Interests 373.7 607.8
Stockholder's Equity 8,220.0 8,311.7
- ----------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity $12,738.9 $12,763.8
============================================================================
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).
- 36 -
PRO FORMA SELECTED SEGMENT DATA*
(Dollars in Millions)
Six Months Ended
Second Quarter June 30,
---------------- ----------------
1998 1997 1998 1997
- -------------------------------------------------------------------------
DIRECT-TO-HOME BROADCAST
Total Revenues $401.5 $281.7 $789.4 $517.3
Operating Loss $(40.2) $(47.9) $(71.8) $(115.4)
Depreciation and Amortization $23.5 $23.0 $46.0 $41.3
Capital Expenditures $34.4 $18.8 $48.1 $30.2
- --------------------------------------------------------------------------
SATELLITE SERVICES
Total Revenues $191.1 $134.1 $384.1 $261.7
Operating Profit $74.4 $62.9 $160.1 $131.2
Operating Profit Margin 38.9% 46.9% 41.7% 50.1%
Depreciation and Amortization $58.7 $30.1 $113.2 $43.9
Capital Expenditures (1) $116.9 $18.1 $366.5 $352.7
- --------------------------------------------------------------------------
SATELLITE MANUFACTURING
Total Revenues $674.8 $584.5 $1,299.1 $1,143.8
Operating Profit $60.0 $53.8 $115.1 $106.6
Operating Profit Margin 8.9% 9.2% 8.9% 9.3%
Depreciation and Amortization $11.5 $9.1 $22.2 $17.8
Capital Expenditures $21.6 $24.5 $32.3 $40.1
- --------------------------------------------------------------------------
NETWORK SYSTEMS
Total Revenues $221.7 $210.9 $406.4 $393.4
Operating Loss $(25.2) $(1.0) $(37.1) $(16.3)
Depreciation and Amortization $9.9 $8.9 $18.4 $16.1
Capital Expenditures $10.9 $10.8 $15.7 $17.7
- --------------------------------------------------------------------------
ELIMINATIONS and OTHER
Total Revenues $(120.1) $(59.8) $(219.0) $(140.8)
Operating Profit (Loss) $9.2 $(10.5) $(4.5) $(15.7)
Depreciation and Amortization $(3.4) $(4.1) $(1.9) $(1.8)
Capital Expenditures $10.0 $52.8 $135.9 $(221.7)
===========================================================================
* The Financial Statements reflect the application of purchase accounting
adjustments related to GM's acquisition of Hughes. However, as provided
in the General Motors' Restated 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. 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, are presented.
(1)Includes expenditures related to satellites amounting to $46.6 million,
$15.0 million, $192.2 million and $347.1 million, respectively. Also included
in 1998 is $59.0 million for the second quarter and $155.6 million for the
six months related to the early buy-out of satellite sale-leasebacks.
- 37 -
GMAC NEWS RELEASE
GMAC ANNOUNCES 1998 SECOND QUARTER EARNINGS
DETROIT -- General Motors Acceptance Corporation (GMAC) reported second quarter
1998 consolidated net income of $365 million, up 8% from $338 million earned in
the second quarter of 1997, GMAC President John D. Finnegan announced today. Net
income for the first six months of 1998 was $714 million, up from $710 million
reported in the same period a year ago.
For the quarter, net income from automotive financing operations totaled
$288 million, up 18% from $245 million earned in the second quarter of 1997.
Earnings were higher due to an increase in financing volumes and a lower
effective income tax rate, partially offset by lower net financing margins.
GMAC Insurance Holdings, Inc. generated net income of $54 million in the
second quarter of 1998, up 28% from $42 million earned in the same period last
year. Earnings were higher due to increased capital gains, partially offset by
higher weather-related losses on dealership inventory coverages.
GMAC Mortgage Group, Inc. generated net income of $23 million in the
second quarter of 1998 compared to $51 million earned in the same period last
year. Mortgage Group earnings were lower due to higher than anticipated
prepayment speeds primarily on interest-only products.
* * *
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 July 14, 1998
-----------------
By
s/Peter R. Bible
-------------------------------
(Peter R. Bible,
Chief Accounting Officer)
- 38 -
