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) October 13, 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
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ITEM 5. OTHER EVENTS
(a) On October 13, 1998, a news release was issued on the subject of
third 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 third quarter earnings of Hughes
Electronics Corporation (Hughes) dated October 12, 19989 and General Motors
Acceptance Corporation (GMAC) dated October 13, 1998, respectively, were as
follows:
GM NEWS RELEASE
GM REPORTS STRIKE-IMPACTED THIRD-QUARTER NET LOSS OF $809 MILLION
CORPORATION EXPECTS STRONG FOURTH QUARTER PERFORMANCE
DETROIT -- General Motors Corporation (GM) reported today a
strike-impacted net loss for the third quarter of 1998 totaling $809 million, or
a loss of $1.28 per share of GM $1-2/3 par value common stock. That compares
with income of $973 million, or $1.29 per share, in the third 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 third-quarter-1998 results include the impact of production losses
resulting from strikes at two Flint, Mich., plants, which had an unfavorable
after-tax impact of $1.2 billion, or $1.89 per share, (see Strike Related
Impact). Results also include an after-tax loss of $271 million, or $0.41 per
share, related to divestitures involving the Delphi seating, coil-spring and
lighting businesses (see Delphi). Excluding the above-mentioned Delphi
transactions, the loss in the third quarter of 1998 totaled $538 million, or a
loss of $0.87 per share.
Excluding the Delphi transactions and the strike impact, GM's income in
the third quarter of 1998 would have totaled $697 million, or a favorable $1.02
per share.
Consolidated net sales and revenues in the third quarter of 1998 totaled
$34.4 billion, compared with $40.2 billion in the same period of 1997, adjusted
to reflect the effect of the Hughes Transactions.
"We're going all out to rebuild the momentum we had developed before
the strikes crippled our production during the summer," GM Chairman and Chief
Executive Officer John F. Smith, Jr., said. "We're running our North
American plants all out and we're aggressively taking on the competition."
The third-quarter was unfavorably impacted by the strikes, the Delphi
transactions, the changeover to production of GM's new family of full-size
pickup trucks, and continued economic turmoil in Latin America. Smith
emphasized, however, that, "As a result of our aggressive cost-reduction focus,
strong sales of our new models, and the recent streamlining of our global
automotive operations, we expect strong results in the fourth quarter and a
continued strengthening trend into 1999."
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Smith said, "Our outlook for continued strong sales in the key North
American and European markets gives us an opportunity to continue building
momentum during the balance of the year and into 1999." He cautioned, however,
that the effects of the economic turmoil and uncertainty in Asia and Latin
America will be a challenge to the corporation's performance globally.
Unless otherwise noted, corporate and sector data in the remainder of this
release exclude the above mentioned strike-related impact, and the Delphi
transactions. The 1997 reported amounts are adjusted to reflect changes
resulting from the completion of the Hughes Transactions in December of 1997.
(See Strike Related Impact, Delphi, and Highlights.)
Following is a summary of results from the GM business sectors in the
third quarter of 1998:
- GM Automotive Operations' income totaled $341 million in the third
quarter of 1998, compared with $560 million in the third quarter of
1997. (See regional breakout in GM Automotive Operations and
Highlights.)
- Delphi Automotive Systems' (Delphi) income totaled $56 million in the
third quarter of 1998, compared with $123 million in the third quarter
of 1997.
- General Motors Acceptance Corporation's (GMAC) income totaled $313
million in the third quarter of 1998, compared with $312 million in the
third quarter of 1997.
- Hughes Electronics Corporation's (Hughes) third-quarter-1998 income
totaled $43 million, compared with $53 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 the Delphi transactions,
consolidated income in the third quarter of 1998 totaled $697 million, or $1.02
per share. That compares with $973 million, or $1.29 per share in the third
quarter of 1997.
The corporation's pretax income was $691 million in the third quarter of
1998, compared with $899 million in the third quarter of 1997.
The corporation's after-tax net-profit margin -- income as a percentage of
net sales and revenues -- was 2.0 percent in the third quarter of 1998, compared
with 2.7 percent in the third quarter of 1997.
Cash, marketable securities and assets of the Voluntary Employees'
Beneficiary Association (VEBA) trust invested in fixed-income securities totaled
$11.5 billion at Sept. 30, 1998, compared with $14.6 billion at Sept. 30, 1997,
and $12.1 billion at June 30, 1998.
"With our operations running full out, strong cash generation will make it
possible for us to rebuild our cash position to the $13 billion level necessary
to support capital-spending programs, adequately fund pension plans, and keep us
in a good position to weather any future downturn," Smith said.
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GM AUTOMOTIVE OPERATIONS
Excluding the impact of the strikes, GM Automotive Operations'
third-quarter-1998 income totaled $341 million. That compares with $560 million
in the third quarter of 1997. The unfavorable strike-related impact in the third
quarter of 1998 totaled $965 million (see Strike Related Impact).
"We are quickly streamlining GM's automotive operations worldwide as a
result of the recent creation of a single, unified global automotive
organization that will enable us to fully leverage GM's global capabilities,"
said GM President and Chief Operating Officer G. Richard Wagoner, Jr. "We're
focused on becoming a faster, leaner organization committed to growing our
business around the world.
"The strikes severely impacted our third-quarter performance in North
America, but we were able to ramp up production and sales very quickly following
the strike, and our August and September financial performance was strong. We're
focused on keeping that going in the fourth quarter," Wagoner said.
GM Automotive Operations pretax income totaled $595 million in the third
quarter of 1998, compared with $776 million in the prior-year period.
The net-profit margin for Automotive Operations was 1.1 percent in the
third quarter of 1998, compared with 1.7 percent in the prior-year period.
Following are results from the four regions that comprise GM Automotive
Operations:
- Excluding the impact of the strikes, income for GM North America
totaled $353 million in the third quarter of 1998, compared with $423
million in the year-ago period. Pretax income totaled $645 million,
compared with $608 million in the prior-year period. The net-profit
margin was 1.5 percent, compared with 1.8 percent in the
third-quarter-1997 period.
- GM Europe's income totaled $50 million in the third quarter of 1998,
compared with a loss of $21 million in the third quarter of 1997.
Pretax income totaled $64 million, compared with $87 million in the
third quarter of 1997. The net-profit margin was 0.8 percent, compared
with a negative 0.4 percent in the prior-year period.
- GM Latin America/Africa/Mid-East had a loss of $64 million in
the third quarter of 1998, compared with income of
$165 million in the third quarter of 1997. The pretax loss
totaled $136 million, compared with pretax income of
$154 million in the prior-year period. The net-profit margin
was a negative 3.8 percent, compared with 7.3 percent in the
third-quarter-1997 period.
- GM Asia/Pacific's income totaled $2 million in the third quarter of
1998, compared with a loss of $7 million in the third quarter of 1997.
Pretax income totaled $22 million, compared with a loss of $73 million
in the third quarter of 1997. The net-profit margin was 0.3 percent,
compared with a negative 1.0 percent in the year-ago period.
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A number of factors affected performance in North America in addition to
the strike. "Direct costs associated with the successful launch of our highly
acclaimed new family of full-size pickup trucks -- the Chevrolet Silverado and
GMC Sierra models -- and lower volumes due to the model changeover affected
results along with incentive costs required to maintain a strong competitive
position in the North American market," Wagoner said.
"We're extremely pleased with the continued success of our
cost-reduction initiatives, "Wagoner said. "These efforts allowed us to more
than make up for the costs of the new product launches and higher
incentives."
GM vehicle deliveries in the United States, which were affected by the
strike-related production losses, totaled 928,000 units in the third quarter of
1998, which resulted in a 24.2-percent share of the U.S. vehicle market share,
compared with 1,253,000 units, and a 31.6-percent share in the third quarter of
1997. (See additional information in Highlights.)
Wagoner said, "Dedication and hard work by the GM Europe team resulted in
the successful introduction of the new Astra models, which have been well
received in Europe. The European region continues to be a strong market and
Opel/Vauxhall have maintained market leadership in Western Europe for passenger
cars through the first nine months of 1998."
The Asia/Pacific and Latin America/Africa/Mid-East regions were both
affected by economic turmoil and uncertainties.
"Our Latin American operations were strongly impacted by the economic
problems in Brazil. GM operations there are our largest in the region and have
delivered consistently strong financial performance in recent years," Wagoner
said. "While our presence in the Asia-Pacific market is not as large, our
business there also has been hurt by the economic turmoil in that region.
However, both of these regions have significant long-term growth potential, and
we continue to be optimistic about our long-term prospects."
DELPHI AUTOMOTIVE SYSTEMS (DELPHI)
Excluding the impact of the strikes, and a loss on divestitures, Delphi
Automotive Systems' income totaled $56 million in the third quarter of 1998,
compared with $123 million in the third quarter of 1997. The unfavorable
strike-related impact in the third quarter of 1998 totaled $270 million (see
Strike Related Impact). The after-tax loss on the divestiture transactions
totaled $271 million.
Delphi's pretax income totaled $67 million in the third quarter of 1998,
compared with pretax income of $136 million in the prior-year period.
Delphi's net-profit margin was 0.8 percent in the third quarter of 1998,
compared with a net-profit margin of 1.7 percent in the prior-year period.
"Aside from the impact of the divestitures and strikes, Delphi's
third-quarter-1998 results reflect the impact of continuing economic downturns
in the Latin American and Asia-Pacific regions, and competitive pressures that
resulted in price reductions," said GM Executive Vice President and Delphi
President J.T. Battenberg III. "These factors were offset by Delphi's continued
aggressive cost-reduction efforts during the third quarter of 1998, particularly
in the areas of manufacturing and material." He also noted the
- 5 -
previously mentioned divestitures, which comprised "the successful sale of
Delphi's seating and coil-spring businesses and a definitive agreement regarding
the divestiture of the lighting business."
Battenberg said, "Delphi continues to accelerate sales to customers
outside General Motors." Delphi reported that third-quarter-1998 sales outside
GM's North American vehicle groups represented more than 37 percent of total
sales, after adjusting for the strike impact, compared with approximately 36
percent of total sales in the third quarter of 1997, including joint ventures in
both periods.
STRIKE RELATED IMPACT
Strikes by members of United Auto Workers Locals 659 and 651 in Flint,
Mich., resulted in production shutdowns at two component plants on June 5 and
June 11, 1998, respectively. Those work stoppages resulted in parts shortages
that led to the shutdown of most of GM's North American assembly plants in June
and July of 1998, and resulted in an estimated loss of 318,000 units of
production from the beginning of the third quarter of 1998 to the point in which
normal production levels were resumed. The work stoppages at both facilities
were resolved July 28, 1998, when tentative agreements were reached. Both
agreements were ratified by the rank and file July 29, 1998.
The third quarter loss of production had an estimated aggregate
unfavorable after-tax impact of $1.2 billion, or $1.89 per share, representing
the combined effects of $965 million for GM Automotive Operations and $270
million for Delphi. This takes into account the recovery of some of the lost
production units through the quick production ramp-up following the settlement
and aggressive sales and marketing efforts in August and September.
FORWARD LOOKING STATEMENTS
This release and related management discussions with securities analysts,
the media and others will contain certain forward-looking statements indicated
by our use of the terms "expects," "outlook" and "forecast" and similar words.
These forward-looking statements are made in an effort to assist the
market in understanding General Motors and its results. Forward-looking
statements are inherently predictive in nature and GM cannot assure or guarantee
that actual results will not differ materially from its predictions. Important
risk factors that could cause actual results to differ materially from those
indicated by our predictions are detailed in the corporation's Annual Report on
form 10-K for the year ended Dec. 31, 1997, in Part II, at page II-64, under the
heading "Forward-Looking Statements."
# # #
HIGHLIGHTS ATTACHED
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HIGHLIGHTS - Q3 Financial Results
(Dollars in Millions Except
Per Share Amounts)
Three Months Ended
September 30,
------------------------------------
Adjusted Adjusted
1998 1998 (1) 1997 1997 (1)
-------- ------- ------- --------
Net sales and revenues
Manufactured products $29,978 $29,978 $37,103 $35,382
Financial services 3,220 3,220 3,162 3,162
Other income 1,225 1,225 1,625 1,616
------- -------- ------- -------
Total net sales and
revenues $34,423 $34,423 $41,890 $40,160
------- -------- ------- -------
Total net sales and
revenues(6) $29,846 $29,846 $37,125 $35,404
Gross profit margin
percentage(6) 11.4% 11.4% 15.2% 15.1%
.............................................................
(Loss) Income before income
taxes, minority interests
and non-consolidated
affiliates (6) $(1,730) $(1,300) $1,042 $899
Effective income tax
rate(6) 34.0% 33.0% 27.7% 28.1%
.............................................................
Consolidated net (loss)
income $(809) $(538) $1,067 $973
Net profit margin(6) (2.7%) (1.8%) 2.9% 2.7%
.............................................................
Earnings Attributable to Common Stocks
$1-2/3 par value $(836) $964
Class H (2) $- $61
Class H (3) $11 $-
.............................................................
Basic Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $(1.28) $(0.87) $1.35 $1.29
Class H (2) $- $- $0.60
Class H (3) $0.11 $0.11 $- $0.13
.............................................................
Diluted Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $(1.28) $(0.87) $1.34 $1.27
Class H (2) $- $- $0.60
Class H (3) $0.11 $0.11 $- $0.13
.............................................................
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
Sept. 30, Dec. 31, Sept. 30,
1998 1997 1997
-------- ------- --------
$1-2/3 par value $19.49 $22.26 $30.17
Class H $11.69 $13.36 $15.09
..............................................................
See footnotes beginning on page 14.
continues
- 7 -
HIGHLIGHTS - Q3 Adjusted for Special Items -
with Financing and Insurance Operations on an
Equity Basis
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
September 30, 1998
--------------------------------
Special Adjusted
Reported Items (4) (1)
--------- --------- --------
Net sales and revenues $29,846 $- $29,846
------ ------ ------
Costs and expenses:
Cost of sales 26,457 - 26,457
Selling, general,
and admin. expenses 3,076 - 3,076
Depreciation and
amort. expenses 1,672 - 1,672
------ ------ ------
Total costs and
expenses 31,205 - 31,205
------ ------ ------
Operating (loss) income (1,359) - (1,359)
Other income less income
deductions (28) (430) 402
Interest expense 343 - 343
------ ------ ------
(Loss) income before
income taxes and
minority interests (1,730) (430) (1,300)
Income tax (benefit) expense (588) (159) (429)
------ ------ ------
(Loss) income after
income taxes (1,142) (271) (871)
Minority interests 10 - 10
Earnings of nonconsolidated
affiliates 323 - 323
------ ------ ------
Net (loss) income $(809) $(271) $(538)
====== ====== ======
$1-2/3 par value EPS
from continuing operations
Basic $(1.28) $(0.87)
Diluted $(1.28) $(0.87)
Gross profit margin 11.4% 11.4%
Effective income tax rate 34.0% 33.0%
Net profit margin (2.7%) (1.8%)
See footnotes beginning on page 14.
continues
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HIGHLIGHTS - Q3 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
September 30, 1997
----------------------------
Hughes
Trans- Adjusted
Reported actions (1)
-------- ------- -------
Net sales and revenues $37,125 $1,721 $35,404
------ ------ ------
Costs and expenses:
Cost of sales 31,484 1,429 30,055
Selling, general,
and admin.expenses 3,157 124 3,033
Depreciation and
amort. expenses 1,830 44 1,786
------ ------ ------
Total costs and
expenses 36,471 1,597 34,874
------ ------ ------
Operating income 654 124 530
Other income less
income deductions 613 9 604
Interest expense (credit) 225 (10) 235
------ ------ ------
Income before
income taxes and
minority interests 1,042 143 899
Income tax expense 289 36 253
------ ------ ------
Income after income
taxes 753 107 646
Minority interests 13 1 12
Earnings (loss) of
noncons. affiliates 301 (14) 315
------ ------ ------
Net income $1,067 $94 $973
====== ====== ======
$1-2/3 par value EPS
from continuing
operations
Basic $1.35 $1.29
Diluted $1.34 $1.27
Gross profit margin 15.2% 15.1%
Effective income tax rate 27.7% 28.1%
Net profit margin 2.9% 2.7%
See footnotes beginning on page 14.
continues
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HIGHLIGHTS - Q3 Adjusted for Hughes Transactions
and Special Items By Sector
(Dollars in Millions)
Three Months Ended
September 30, 1998
--------------------------------
Special Adjusted
Reported Items (4) (1)
--------- --------- --------
GM North America (GMNA) $(612) $- $(612)
GM Europe (GME) 50 - 50
GM Latin America/Africa/
Mid-East (GMLAAM) (64) - (64)
GM Asia/Pacific (GMAP) 2 - 2
--- --- ---
Total automotive (624) - (624)
Delphi (485) 271 (214)
Hughes 43 - 43
GMAC 313 - 313
Other(5) (56) - (56)
--- --- ---
Consolidated net income $(809) $271 $(538)
=== === ===
Three Months Ended
September 30, 1997
--------------------------------
Hughes
Trans- Adjusted
Reported actions (1)
-------- ------- --------
GMNA $423 $- $423
GME (21) - (21)
GMLAAM 165 - 165
GMAP (7) - (7)
--- --- ---
Total automotive 560 - 560
Delphi 55 68 123
Hughes 240 (187) 53
GMAC 312 - 312
Other(5) (100) 25 (75)
--- --- ---
Consolidated net income $1,067 $(94) $973
===== == ===
See footnotes beginning on page 14.
continues
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HIGHLIGHTS - Q3 Automotive Operations and Delphi
Adjusted for Special Items
(Dollars in Millions)
Three Months Ended
September 30, 1998
----------------------------------------
GMNA GME GMLAAM GMAP Delphi
------ ----- ------ ------ ------
Reported
--------
Net sales and
revenues $18,496 $6,227 $1,701 $671 $6,015
------ ----- ----- --- -----
Pre-tax (loss) income (911) 64 (136) 22 (798)
Income tax (benefit)
expense (299) 18 (45) 3 (297)
Equity income (loss) and
minority interests - 4 27 (17) 16
--- -- -- -- ---
Net (loss) income $(612) $50 $(64) $2 $(485)
=== == == == ===
Net (loss) profit
margin (3.3%) 0.8% (3.8%) 0.3% (8.1%)
Effective income
tax rate 32.8% 28.1% 33.1% 13.6% 37.2%
Special Items (4)
-------------
Net sales and
revenues $- $- $- $- $-
------ ----- ----- ----- -----
Pre-tax income - - - - 430
Income tax expense - - - - 159
Equity income and
minority interests - - - - -
------ ----- ----- ----- -----
Net income $- $- $- $- $271
====== ===== ===== ===== =====
Adjusted (1)
--------
Net sales and
revenues $18,496 $6,227 $1,701 $671 $6,015
------ ----- ----- --- -----
Pre-tax (loss) income (911) 64 (136) 22 (368)
Income tax (benefit)
expense (299) 18 (45) 3 (138)
Equity income and
minority interests - 4 27 (17) 16
------ ----- ----- ----- -----
Net (loss) income $(612) $50 $(64) $2 $(214)
====== ===== ===== ===== =====
Net (loss) profit
margin (3.3%) 0.8% (3.8%) 0.3% (3.6%)
Effective income
tax rate 32.8% 28.1% 33.1% 13.6% 37.5%
See footnotes beginning on page 14.
continues
- 11 -
HIGHLIGHTS - Q3 Automotive Sectors and Delphi
Adjusted for Hughes Transactions
(Dollars in Millions)
Three Months Ended
September 30, 1997
----------------------------------------
GMNA GME GMLAAM GMAP Delphi
------ ----- ------ ------ ------
Reported
--------
Net sales and revenues $24,047 $5,686 $2,273 $682 $6,044
------ ----- ----- --- -----
Pre-tax income (loss) 608 87 154 (73) 30
Income tax expense
(benefit) 172 48 14 (15) (6)
Equity (loss) income and
minority interests (13) (60) 25 51 19
--- --- --- --- ---
Net income $423 $(21) $165 $(7) $55
=== === === === ===
Net profit margin 1.8% (0.4%) 7.3% (1.0%) 0.9%
Effective income tax
rate 28.3% 55.2% 9.1% 20.5% (20.0%)
Hughes Transactions
-------------------
Net sales and revenues $- $- $- $- $1,139
------ ----- ----- --- -----
Pre-tax income - - - - 106
Income tax expense - - - - 41
Equity income and
minority interests - - - - 3
------ ----- ----- --- -----
Net income $- $- $- $- $68
====== ===== ===== === =====
Adjusted (1)
--------
Net sales and revenues $24,047 $5,686 $2,273 $682 $7,183
------ ------ ----- --- -----
Pre-tax income (loss) 608 87 154 (73) 136
Income tax expense
(benefit) 172 48 14 (15) 35
Equity (loss) income and
minority interests (13) (60) 25 51 22
------ ------ ----- --- -----
Net income $423 $(21) $165 $(7) $123
====== ====== ===== === =====
Net profit margin 1.8% (0.4%) 7.3% (1.0%) 1.7%
Effective income tax
rate 28.3% 55.2% 9.1% 20.5% 25.7%
See footnotes beginning on page 14.
continues
- 12 -
HIGHLIGHTS - Q3 Operating Information
Three Months Ended
September 30,
----------------------
1998 1997
--------- ----------
Worldwide Wholesale Sales (Units in 000s)
United States: Cars 527 651
Trucks 367 489
------- -------
Total United States 894 1,140
Canada, Mexico and Other 116 142
------- -------
Total GM North America 1,010 1,282
------ ------
GME 534 448
GMLAAM 163 229
GMAP 114 167
------- -------
Total International 811 844
------ ------
Total Worldwide 1,821 2,126
======= =======
....................................................
Vehicle Unit Deliveries (Units in 000s)
United States
Chevrolet - Cars 174 260
- Trucks 296 380
Pontiac 113 163
GMC 91 118
Buick 81 120
Oldsmobile 63 82
Saturn 62 70
Cadillac 39 52
Other 9 8
------ ------
Total United States 928 1,253
Canada, Mexico and Other 160 158
------ ------
Total GM North America 1,088 1,411
------ ------
GME 466 456
GMLAAM 162 215
GMAP 119 149
------ ------
Total International 747 820
------ ------
Total Worldwide 1,835 2,231
====== ======
....................................................
Market Share
United States
Cars 25.7% 33.7%
Trucks 22.4% 29.1%
Total 24.2% 31.6%
Western Europe 10.6% 11.0%
Latin America 19.8% 20.3%
Asia and Pacific 4.4% 4.5%
Total Worldwide 14.2% 16.6%
....................................................
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 24.3% 22.5%
% Fleet Sales - Trucks 9.7% 10.0%
Total Vehicles 17.8% 17.3%
....................................................
Days Supply of Inventory -- U.S.
Gross Landed Stock
Cars 59 69
Trucks 67 90
....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated) 67.3% 89.9%
....................................................
Retail Incentives($ per unit)
GMNA $1,732 $992
....................................................
See footnotes beginning on page 14.
continues
- 13 -
HIGHLIGHTS - Q3 Operating Information
(Dollars in Millions Except
Per Share Amounts)
Three Months Ended
September 30,
----------------------
1998 1997
--------- ----------
Depreciation and amortization (6)
Depreciation $1,053 $1,081
Amortization of special tools 589 690
Amortization of intangible
assets 30 59
----- -----
$1,672 $1,830
===== =====
....................................................
Worldwide Employment at September 30 (in 000s)(7)
GMNA 229 240
GME 81 79
GMLAAM 25 27
GMAP 10 10
Delphi 199 205
Hughes 15 16
GMAC 23 18
Other 12 11
--- ---
Total 594 606
--- ---
....................................................
Worldwide Payrolls (7) $6,099 $6,885
....................................................
(1) Adjusted amounts represent the reported amounts less the
effects of special items and Hughes Transactions. The adjusted amounts
for 1998 include the unfavorable effects of strike-related work
stoppages. The unfavorable after-tax impact of the work stoppages was
$1.2 billion, or $1.89 basic per share of $1-2/3 par value common
stock, in 1998. The unfavorable after-tax impacts for GMNA and Delphi
were $965 million and $270 million, respectively, in 1998.
(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 third quarter 1998 results included a pre-tax loss of $430 ($271
after-tax, or $0.41 basic per share of $1-2/3 par value common stock)
related to the sale of the Delphi seating, coil-spring and lighting
businesses.
(5) 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.
(6) Calculated with financing and insurance operations on an equity basis.
(7) 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.
- 14 -
HIGHLIGHTS - 9 Months Financial Results
(Dollars in Millions Except
Per Share Amounts)
Nine Months Ended
September 30,
------------------------------------
Adjusted Adjusted
1998 1998 (1) 1997 1997 (1)
-------- ------- ------- --------
Net sales and revenues
Manufactured products $100,115 $100,115 $114,267 $109,071
Financial services 9,661 9,661 9,563 9,563
Other income 5,119 5,119 5,447 4,693
------- ------- ------- -------
Total net sales and
revenues $114,895 $114,895 $129,277 $123,327
------- -------- ------- -------
Total net sales and
revenues(8) $99,735 $99,735 $114,323 $109,127
Gross profit margin
percentage(8) 14.4% 14.4% 16.4% 16.4%
.............................................................
Income before income taxes,
minority interests
and non-consolidated
affiliates (8) $185 $689 $5,798 $4,742
Effective income tax
rate (8) 34.1% 36.6% 33.3% 34.3%
.............................................................
Consolidated net income $1,184 $1,499 $4,961 $4,243
Net profit margin(8) 1.2% 1.5% 4.3% 3.9%
.............................................................
Earnings Attributable to Common Stocks
$1-2/3 par value $1,096 $4,622
Class H (2) $- $257
Class H (3) $40 $-
.............................................................
Basic Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $1.65 $2.13 $6.35 $5.67
Class H (2) $- $- $2.54
Class H (3) $0.38 $0.38 $- $0.20
.............................................................
Diluted Earnings Per Share Attributable to Common Stocks
$1-2/3 par value $1.60 $2.08 $6.28 $5.60
Class H (2) $- $- $2.54
Class H (3) $0.38 $0.38 $- $0.20
.............................................................
Cash Dividends Per Share of Common Stocks
$1-2/3 par value $1.50 $1.50
Class H (2) $- $0.75
Class H (3) $- $-
..............................................................
See footnotes beginning on page 22.
continues
- 15 -
HIGHLIGHTS - 9 Months Adjusted for Special Items -
with Financing and Insurance Operations on an
Equity Basis
(Dollars in Millions Except Per Share Amounts)
Nine Months Ended
September 30, 1998
--------------------------------
Special Adjusted
Reported Items (4) (1)
--------- --------- --------
Net sales and revenues $99,735 $- $99,735
------ ------ ------
Costs and expenses:
Cost of sales 85,399 74 85,325
Selling, general,
and admin. expenses 9,357 - 9,357
Depreciation and
amort. expenses 5,082 - 5,082
------ ------ ------
Total costs and
expenses 99,838 74 99,764
------ ------ ------
Operating (loss) income (103) (74) (29)
Other income less
income deductions 1,208 (430) 1,638
Interest expense 920 - 920
------ ------ ------
Income (loss) before
income taxes and
minority interests 185 (504) 689
Income tax expense (benefit) 63 (189) 252
------ ------ ------
Income (loss) after
income taxes 122 (315) 437
Minority interests 13 - 13
Earnings of nonconsolidated
affiliates 1,049 - 1,049
------ ------ ------
Net income (loss) $1,184 $(315) $1,499
====== ====== ======
$1-2/3 par value EPS
from continuing operations
Basic $1.65 $2.13
Diluted $1.60 $2.08
Gross profit margin 14.4% 14.4%
Effective income tax rate 34.1% 36.6%
Net profit margin 1.2% 1.5%
See footnotes beginning on page 22.
continues
- 16 -
HIGHLIGHTS - 9 Months Adjusted for Hughes Transactions
and Special Items - with Financing and Insurance
Operations on an Equity Basis
(Dollars in Millions Except Per Share Amounts)
Nine Months Ended
September 30, 1997
------------------------------------
Hughes Special
Trans- Items Adjusted
Reported actions (5)(6) (1)
-------- ------- ------- --------
Net sales and revenues $114,323 $5,196 $- $109,127
------- ------ ------ -------
Costs and expenses:
Cost of sales 95,586 4,271 80 91,235
Selling, general,
and admin.expenses 9,331 430 - 8,901
Depreciation and
amort. expenses 5,627 127 - 5,500
------ ------ ------ ------
Total costs and
expenses 110,544 4,828 80 105,636
------- ------ ------ -------
Operating income (loss) 3,779 368 (80) 3,491
Other income less
income deductions 2,682 48 706 1,928
Interest expense (credit) 663 (14) - 677
------ ------ ------ ------
Income before
income taxes and
minority interests 5,798 430 626 4,742
Income tax expense 1,928 103 200 1,625
------ ------ ------ ------
Income after income
taxes 3,870 327 426 3,117
Minority interests 50 - - 50
Earnings (loss) of
noncons. affiliates 1,041 (35) - 1,076
------ ------ ------ ------
Net income $4,961 $292 $426 $4,243
====== ====== ====== ======
$1-2/3 par value EPS
from continuing
operations
Basic $6.35 $5.67
Diluted $6.28 $5.60
Gross profit margin 16.4% 16.4%
Effective income tax rate 33.3% 34.3%
Net profit margin 4.3% 3.9%
See footnotes beginning on page 22.
continues
- 17 -
HIGHLIGHTS - 9 Months Adjusted for Hughes Transactions
and Special Items By Sector
(Dollars in Millions)
Nine Months Ended
September 30, 1998
--------------------------------
Special Adjusted
Reported Items (4) (1)
--------- --------- --------
GMNA $18 $- $18
GME 273 44 317
GMLAAM 38 - 38
GMAP (26) - (26)
--- --- ---
Total automotive 303 44 347
Delphi (138) 271 133
Hughes 153 - 153
GMAC 1,027 - 1,027
Other(8) (161) - (161)
----- --- -----
Consolidated net income $1,184 $315 $1,499
===== === =====
Nine Months Ended
September 30, 1997
----------------------------------------
Hughes Special
Trans- Items Adjusted
Reported actions (5)(6) (1)
-------- ------- ------- -------
GMNA $1,661 $- $- $1,661
GME 440 - (158) 282
GMLAAM 475 - - 475
GMAP 27 - - 27
----- --- --- -----
Total automotive 2,603 - (158) 2,445
Delphi 545 249 50 844
Hughes 1,017 (616) (318) 83
GMAC 1,022 - - 1,022
Other(8) (226) 75 - (151)
--- --- --- ---
Consolidated net income $4,961 $(292) $(426) $4,243
===== === === =====
See footnotes beginning on page 22.
continues
- 18 -
HIGHLIGHTS - 9 Months Automotive Operations and Delphi
Adjusted for Special Items
(Dollars in Millions)
Nine Months Ended
September 30, 1998
---------------------------------------
GMNA GME GMLAAM GMAP Delphi
------ ----- ------ ------ ------
Reported
--------
Net sales and
revenues $66,289 $17,851 $5,646 $2,155 $20,679
------ ------ ----- ----- ------
Pre-tax (loss) income (50) 511 (103) 20 (338)
Income tax expense
(benefit) (48) 238 (74) 7 (157)
Equity income and
minority interests 20 - 67 (39) 43
------ ----- ----- ----- -----
Net income $18 $273 $38 $(26) $(138)
====== ===== ===== ===== =====
Net profit (loss)
margin 0.0% 1.5% 0.7% (1.2%) (0.7%)
Effective income tax
rate 96.0% 46.6% 71.8% 35.0% 46.4%
Special Items (4)
-------------
Net sales and revenues $- $- $- $- $-
------ ----- ----- ----- -----
Pre-tax income - 74 - - 430
Income tax expense - 30 - - 159
Equity income and
minority interests - - - - -
------ ----- ----- ----- -----
Net income $- $44 $- $- $271
====== ===== ===== ===== =====
Adjusted (1)
--------
Net sales and revenues $66,289 $17,851 $5,646 $2,155 $20,679
------ ------ ----- ----- ------
Pre-tax (loss)income (50) 585 (103) 20 92
Income tax (benefit)
expense (48) 268 (74) 7 2
Equity income and
minority interests 20 - 67 (39) 43
------ ----- ----- ----- -----
Net income $18 $317 $38 $(26) $133
====== ===== ===== ===== =====
Net (loss) profit
margin 0.0% 1.8% 0.7% (1.2%) 0.6%
Effective income tax
rate % 96.0% 45.8% 71.8% 35.0% 2.2%
See footnotes beginning on page 22.
continues
- 19 -
HIGHLIGHTS - 9 Months Automotive Sectors and Delphi
Adjusted for Hughes Transactions and Special Items
(Dollars in Millions)
Nine Months Ended
September 30, 1997
---------------------------------------
GMNA GME GMLAAM GMAP Delphi
------ ----- ------ ------ ------
Reported
--------
Net sales and revenues $74,729 $18,003 $6,488 $2,144 $19,486
------ ------ ----- ----- ------
Pre-tax income(loss) 2,418 951 468 (51) 735
Income tax expense
(benefit) 775 382 76 (14) 236
Equity income and
minority interests 18 (129) 83 64 46
----- ---- ----- ----- -----
Net income $1,661 $440 $475 $27 $545
===== ==== ===== ===== =====
Net profit margin 2.2% 2.4% 7.3% 1.3% 2.8%
Effective income tax
rate 32.1% 40.2% 16.2% 27.5% 32.1%
Hughes Transactions
-------------------
Net sales and revenues $- $- $- $- $3,882
------ ------ ------ ----- -----
Pre-tax income - - - - 392
Income tax expense - - - - 150
Equity income and
minority interests - - - - 7
------ ------ ------ ----- -----
Net income $- $- $- $- $249
====== ====== ====== ===== =====
Special Items
-------------
Net sales and revenues $- $- $- $- $-
------ ------ ------ ----- -----
Pre-tax income (loss) - (216) - - 80
Income tax expense
(benefit) - (58) - - 30
Equity income and
minority interests - - - - -
------ ------ ------ ----- -----
Net income (loss) $- $(158) $- $- $50
====== ====== ====== ===== =====
Adjusted (1)
--------
Net sales and revenues $74,729 $18,003 $6,488 $2,144 $23,368
------ ------ ------ ----- -----
Pre-tax income (loss) 2,418 735 469 (51) 1,207
Income tax expense
(benefit) 775 324 76 (14) 416
Equity income and
minority interests 18 (129) 83 64 53
------ ------ ------ ----- -----
Net income $1,661 $282 $475 $27 $844
====== ====== ====== ===== =====
Net profit margin 2.2% 1.6% 7.3% 1.3% 3.6%
Effective income tax
rate 32.1% 44.1% 16.2% 27.5% 34.5%
See footnotes beginning on page 22.
continues
- 20 -
HIGHLIGHTS - 9 Months Operating Information
Nine Months Ended
September 30,
----------------------
1998 1997
--------- ----------
Worldwide Wholesale Sales (Units in 000s)
United States: Cars 1,650 2,054
Trucks 1,435 1,579
------- -------
Total United States 3,085 3,633
Canada, Mexico and Other 464 467
------- -------
Total GM North America 3,549 4,100
------- -------
GME 1,540 1,379
GMLAAM 521 598
GMAP 328 485
------- -------
Total International 2,389 2,462
------ ------
Total Worldwide 5,938 6,562
======= =======
....................................................
Vehicle Unit Deliveries (Units in 000s)
United States
Chevrolet - Cars 668 765
- Trucks 1,168 1,122
Pontiac 403 477
GMC 355 351
Buick 296 325
Oldsmobile 232 228
Saturn 179 199
Cadillac 131 139
Other 22 22
------ ------
Total United States 3,454 3,628
Canada, Mexico and Other 493 457
------ ------
Total GM North America 3,947 4,085
------ ------
GME 1,414 1,414
GMLAAM 522 564
GMAP 348 455
------ ------
Total International 2,284 2,433
------ ------
Total Worldwide 6,231 6,518
====== ======
....................................................
Market Share
United States
Cars 29.6% 32.5%
Trucks 27.9% 28.8%
Total 28.8% 30.8%
Western Europe 10.5% 11.3%
Latin America 20.7% 19.1%
Asia and Pacific 4.2% 4.4%
Total Worldwide 15.7% 16.1%
....................................................
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 24.0% 25.1%
% Fleet Sales - Trucks 13.7% 13.2%
Total Vehicles 19.2% 20.0%
....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated) 77.6% 92.5%
....................................................
Retail Incentives($ per unit)
GMNA $1,558 $971
....................................................
See footnotes beginning on page 22.
continues
- 21 -
HIGHLIGHTS - 9 Months Operating Information
(Dollars in Millions Except
Per Share Amounts)
Nine Months Ended
September 30,
----------------------
1998 1997
--------- ----------
Depreciation and amortization (8)
Depreciation $3,222 $3,208
Amortization of special tools 1,776 2,267
Amortization of intangible
assets 84 152
----- -----
$5,082 $5,627
===== =====
....................................................
Worldwide Payrolls (9) $19,872 $21,031
....................................................
(1) Adjusted amounts represent the reported amounts less the effects of
special items and Hughes Transactions.
(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 third quarter 1998 results included a pre-tax loss of $430 ($271
after-tax, or $0.41 basic per share of $1-2/3 par value common stock)
related to the sale of the Delphi seating, coil spring and lighting
businesses. 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 basic per share of $1-2/3 par
value common stock),related to the sale of GM Europe's equity interest
in Avis Europe.
(7) 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.
(8) Calculated with financing and insurance operations on an equity basis.
(9) 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.
- 22 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------- ------- ------ -------
(Dollars in Millions Except Per Share Amounts)
Net sales and revenues
Manufactured products $29,978 $37,103 $100,115 $114,267
Financial services 3,220 3,162 9,661 9,563
Other income 1,225 1,625 5,119 5,447
------- ------- -------- --------
Total net sales and revenues 34,423 41,890 114,895 129,277
------ ------ ------- -------
Costs and expenses
Cost of sales and other operating
charges, exclusive of items listed
below 26,484 31,484 85,464 95,602
Selling, general, and administrative
expenses 4,076 3,884 12,219 11,459
Depreciation and amortization expenses 2,874 3,030 8,712 9,196
Interest expense 1,754 1,508 5,137 4,469
Other deductions 499 388 1,644 956
------ ------ ------- -------
Total costs and expenses 35,687 40,294 113,176 121,682
------ ------ ------- -------
(Loss) Income before income taxes and
minority interests (1,264) 1,596 1,719 7,595
Income tax (benefit) expense (451) 533 532 2,675
Minority interests 4 4 (3) 41
------- ------- ------- -------
Net (loss) income (809) 1,067 1,184 4,961
Premium on exchange of preference stocks - 26 - 26
Dividends on preference stocks 16 16 48 56
----- ------ ------ ------
(Loss) Earnings on common stocks $(825) $1,025 1,136 $4,879
=== ===== ===== =====
Basic earnings per share attributable
to common stocks
(Loss) Earnings per share
attributable to
$1-2/3 par value $(1.28) $1.35 $1.65 $6.35
Earnings per share attributable to
Class H (prior to its
recapitalization on
December 17, 1997) $0.60 $2.54
Earnings per share attributable to
Class H (subsequent to its
recapitalization on
December 17, 1997) $0.11 $0.38
Diluted earnings per share attributable
to common stocks
(Loss) Earnings per share attributable
to $1-2/3 par value $(1.28) $1.34 $1.60 $6.28
Earnings per share attributable to
Class H (prior to its
recapitalization on
December 17, 1997) $0.60 $2.54
Earnings per share attributable
to Class H (subsequent to its
recapitalization on
December 17, 1997) $0.11 $0.38
- 23 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
Sept. 30, Sept. 30,
1998 Dec. 31, 1997
(Unaudited) 1997 (Unaudited)
----------- -------- ----------
(Dollars in Millions)
ASSETS
Cash and cash equivalents $7,961 $11,262 $10,406
Other marketable securities 8,688 11,722 10,823
------ ------ ------
Total cash and marketable securities 16,649 22,984 21,229
Finance receivables - net 63,091 58,870 58,966
Accounts and notes receivable (less allowances) 10,419 7,493 7,223
Inventories (less allowances) 12,869 12,102 12,820
Deferred income taxes 22,306 22,478 19,588
Equipment on operating leases (less accumulated
depreciation) 36,179 33,302 32,964
Property - net 37,329 34,567 38,520
Intangible assets - net 12,309 11,469 14,979
Other assets - net 26,494 25,623 26,846
-------- -------- --------
Total assets $237,645 $228,888 $233,135
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable (principally trade) $18,142 $15,782 $15,021
Notes and loans payable 102,460 93,027 90,914
Deferred income taxes 3,156 2,923 4,269
Postretirement benefits other than pensions 40,806 41,168 44,427
Pensions 7,219 7,043 7,100
Accrued expenses and other liabilities 50,340 50,490 46,869
-------- -------- --------
Total liabilities 222,123 210,433 208,600
------- ------- -------
Minority interests 621 727 735
General Motors - obligated mandatorily
redeemable preferred securities of
subsidiary trusts holding solely
junior subordinated debentures of
General Motors
Series D 79 79 79
Series G 142 143 143
Redeemable preferred stock of subsidiary
Stockholders' equity
Preference stocks 1 1 1
Common stocks
$1-2/3 par value (issued, 655,036,035;
693,456,394; and 707,772,699 shares) 1,092 1,156 1,180
Class H (issued, 102,648,686 shares) - - 10
Class H (issued, 105,959,765, and
103,885,803 shares) 11 10 -
Capital surplus (principally additional
paid-in capital) 12,769 15,369 16,211
Retained earnings 5,554 5,416 9,846
------ ------- -------
Subtotal 19,427 21,952 27,248
Minimum pension liability adjustment (4,062) (4,062) (3,490)
Accumulated foreign currency translation
adjustments (1,097) (888) (727)
Net unrealized gains on securities 412 504 547
------ ------ ------
Accumulated other comprehensive loss (4,747) (4,446) (3,670)
Total stockholders' equity 14,680 17,506 23,578
-------- -------- --------
Total liabilities and stockholders'
equity $237,645 $228,888 $233,135
======= ======= =======
- 24 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended Sept.30,
--------------------------
1998 1997
------ -------
(Dollars in Millions)
Net cash provided by operating activities $7,497 $13,123
----- ------
Cash flows from investing activities
Expenditures for property (7,043) (6,958)
Investments in companies, net of cash acquired (569) (1,788)
Investments in other marketable securities
- acquisitions (23,248 (24,790)
Investments in other marketable securities
- liquidations 26,912 23,547
Finance receivables - acquisitions (112,962) (128,300)
Finance receivables - liquidations 86,659 105,401
Proceeds from sales of finance receivables 21,922 20,512
Operating leases - acquisitions (18,281) (16,206)
Operating leases - liquidations 11,961 10,138
Other (712) 721
------ ------
Net cash used in investing activities (15,361) (17,723)
------ ------
Cash flows from financing activities
Net increase (decrease) in loans payable 2,240 3,162
Increase in long-term debt 16,620 11,658
Decrease in long-term debt (10,795) (9,340)
Proceeds from issuing common stocks 344 471
Repurchases of common stocks (3,071) (3,353)
Cash dividends paid to stockholders (1,046) (1,252)
----- -----
Net cash provided by (used in) financing activities 4,292 1,346
----- -----
Effect of exchange rate changes on cash and
cash equivalents 271 (403)
------ ------
Net (decrease) increase in cash and cash equivalents (3,301) (3,657)
----- -----
Cash and cash equivalents at beginning of the period 11,262 14,063
------ ------
Cash and cash equivalents at end of the period $7,961 $10,406
===== ======
- 25 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income With Financing and Insurance Operations on
an Equity Basis (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in Millions)
Net sales and revenues $29,846 $37,125 $99,735 $114,323
------ ------ ------ -------
Costs and expenses
Cost of sales and other operating
charges, exclusive of items
listed below 26,457 31,484 85,399 95,586
Selling, general, and administrative
expenses 3,076 3,157 9,357 9,331
Depreciation and amortization expenses 1,672 1,830 5,082 5,627
------- ------- ------- --------
Total costs and expenses 31,205 36,471 99,838 110,544
------ ------ ------ -------
Operating (loss) income (1,359) 654 (103) 3,779
Other income less income deductions (28) 613 1,208 2,682
Interest expense 343 225 920 663
------ ------ ------ ------
(Loss) Income before income taxes,
minority interests, and earnings
of nonconsolidated affiliates (1,730) 1,042 185 5,798
Income tax (benefit) expense (588) 289 63 1,928
------ ------ ------- -----
(Loss) Income before minority interests
and earnings of nonconsolidated
affiliates (1,142) 753 122 3,870
Minority interests 10 13 13 50
Earnings of nonconsolidated affiliates 323 301 1,049 1,041
----- ------ ----- -----
Net (loss) income $(809) $1,067 $1,184 $4,961
=== ===== ===== =====
Net profit margin (1) (2.7%) 2.9% 1.2% 4.3%
- ------------------
(1) Net profit margin represents net income as a percentage of net sales and
revenues
- 26 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets With Financing and Insurance Operations on an
Equity Basis
(Unaudited)
Sept. 30, Dec. 31, Sept. 30,
1998 1997 1997
---------- -------- ---------
(Dollars in Millions)
ASSETS
Cash and cash equivalents $7,885 $10,685 $9,930
Other marketable securities 601 3,826 4,669
------ ------ ------
Total cash and marketable securities 8,486 14,511 14,599
Accounts and notes receivable
(less allowances)
Trade 6,076 5,164 5,627
Nonconsolidated affiliates 1,725 836 1,722
Inventories (less allowances) 11,751 12,102 12,820
Equipment on operating leases
(less accumulated depreciation) 4,797 4,677 3,854
Deferred income taxes and other 6,300 6,278 4,989
------- ------- -------
Total current assets 39,135 43,568 43,611
Equity in net assets of nonconsolidated
affiliates 11,308 10,164 10,313
Deferred income taxes 20,676 20,721 20,341
Other investments and miscellaneous assets 13,646 13,564 13,926
Property - net 36,529 33,914 38,010
Intangible assets -net 11,525 10,752 14,803
-------- -------- --------
Total assets $132,819 $132,683 $141,004
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $12,760 $12,474 $11,871
Loans payable 1,854 656 1,766
Accrued liabilities and customer deposits 31,707 33,459 32,440
------ ------ ------
Total current liabilities 46,321 46,589 46,077
Long-term debt 7,016 5,491 6,002
Capitalized leases 181 185 184
Postretirement benefits other than
pensions 38,002 38,388 41,820
Pensions 5,679 4,271 4,275
Other liabilities and deferred income
taxes 20,144 19,336 18,141
-------- -------- --------
Total liabilities 117,343 114,260 116,499
------- ------- -------
Minority interests 575 695 705
General Motors - obligated mandatorily
redeemable preferred securities of
subsidiary trusts holding solely
junior subordinated debentures of
General Motors
Series D 79 79 79
Series G 142 143 143
Stockholders' equity 14,680 17,506 23,578
-------- -------- --------
Total liabilities and stockholders'
equity $132,819 $132,683 $141,004
======= ======= =======
- 27 -
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows With Financing and Insurance
Operations on an Equity Basis (Unaudited)
Nine Months Ended
September 30,
-----------------
1998 1997
------ ------
(Dollars in Millions)
Net cash provided by operating activities $2,616 $11,254
----- ------
Cash flows from investing activities
Expenditures for property (6,688) (6,648)
Investments in companies, net of cash acquired (569) (1,788)
Investments in other marketable securities
- acquisitions (8,553) (11,083)
Investments in other marketable securities
- liquidations 11,777 10,056
Operating leases - acquisitions (4,382) (3,963)
Operating leases - liquidations 4,092 2,981
Other (287) -
------ ------
Net cash used in investing activities (4,610) (10,445)
----- ------
Cash flows from financing activities
Net increase (decrease) in loans payable 1,178 552
Increase in long-term debt 2,695 358
Decrease in long-term debt (1,178) (568)
Proceeds from issuing common stocks 344 471
Repurchases of common stocks (3,071) (3,353)
Cash dividends paid to stockholders (1,046) (1,252)
----- -----
Net cash used in financing activities (1,078) (3,792)
----- -----
Effect of exchange rate changes on cash and
cash equivalents 272 (407)
----- -----
Net (decrease) increase in cash and cash equivalents (2,800) (3,390)
----- -----
Cash and cash equivalents at beginning of the period 10,685 13,320
------ ------
Cash and cash equivalents at end of the period $7,885 $9,930
===== =====
- 28 -
HUGHES ELECTRONICS CORPORATION NEWS RELEASE
El Segundo, Calif., October 12, 1998 - Hughes Electronics Corporation
(Hughes) today reported that third quarter 1998 revenues increased 20.3% to
$1,513.3 million compared with $1,258.3 million in the third quarter of 1997.
Operating profit(1) in the quarter was $67.5 million compared with $124.2
million in the third quarter of 1997. Third quarter operating profit margin on
the same basis was 4.5% in 1998 versus 9.9% in 1997.
Third quarter earnings(1) were $42.9 million compared with last year's
$52.4 million. Earnings per share on the same basis was $0.11 per share versus
pro forma earnings per share(2) of $0.13 in 1997.
Michael T. Smith, Hughes chairman and chief executive officer, said that
"each of Hughes' four primary business segments contributed to the strong
revenue growth. DIRECTV(R) accounted for most of the increase primarily due to
continued record subscriber growth in the United States." In addition, he stated
that increased sales of commercial satellites by Hughes Space and Communications
and higher DIRECTV receiver equipment sales by Hughes Network Systems also
contributed to the revenue growth.
Mr. Smith attributed the decline in operating profit and net income
primarily to the expected increase in DIRECTV operating losses resulting from
higher sales and marketing expenditures to support the record subscriber growth.
Also contributing to the earnings decline were DIRECTV Japan(TM) start-up losses
and other increased expenses, including pension expense. The reduction in
earnings was partially offset by lower interest expense and higher interest
income.
Nine-Month Financial Review
For the first nine months of 1998, revenues increased 21.5% to $4,173.3
million compared with $3,433.7 million in 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 nine
months of 1998 increased 6.8% to $229.3 million versus $214.6 million in 1997.
Operating profit margin on the same basis was 5.5% compared with 6.2% in the
first nine months of 1997. The decline in operating profit margin was
principally due to a provision for estimated losses related to the bankruptcy
filing by a Hughes Network Systems customer, goodwill amortization associated
with the 1997 PanAmSat merger and subsequent additional investment by Hughes in
1998, and other increased expenses, including pension expense.
Earnings(1) and earnings per share in the first nine months of 1998 were
$152.7 million and $0.38, respectively. Excluding the one-time gain associated
with the PanAmSat merger in May 1997, earnings and pro forma earnings per
share(2) in the first nine months of 1997 were $82.4 million and $0.20 per
share, respectively. The increases in earnings and earnings per share were
principally a result of the aforementioned operating profit growth, increased
interest income and lower interest expense, which more than offset the losses
related to the start of service for DIRECTV Japan, a 32% Hughes-owned affiliate.
- 29 -
SEGMENT FINANCIAL REVIEW: THIRD QUARTER 1998
Direct-To-Home Broadcast
For the quarter, revenues increased 33.6% to $459.1 million from $343.7
million in the third 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 $408 million, a 37% increase over last year's third
quarter revenues of $298 million. With 303,000 net new subscribers in the third
quarter, total DIRECTV subscribers grew to 4,058,000 in the United States as of
September 30, 1998. The Company's Latin American DIRECTV subsidiary, Galaxy
Latin America (GLA), had third quarter revenues of $37 million compared with $22
million in 1997. With the addition of 36,000 net new subscribers in the third
quarter, total DIRECTV subscribers in Latin America were 423,000 as of September
30, 1998. In addition, DIRECTV Japan had a total of 181,900 subscribers by the
end of the third quarter.
The segment operating loss in the quarter was $61.8 million compared with
an operating loss of $43.3 million in the third quarter of 1997. The larger
operating loss in 1998 was principally due to higher sales and marketing
expenditures that more than offset increased subscriber revenues. The third
quarter 1998 operating loss for the domestic DIRECTV business was $31 million
compared with $15 million last year, and GLA's third quarter operating loss was
$30 million compared with $26 million last year.
Satellite Services
PanAmSat's third quarter 1998 revenues were up 9.5% to $186.5 million
compared with $170.3 million in the prior year. Overall revenue from video
services increased by 4 percent to $135.8 million, primarily due to the
commencement of service agreements for full-time, as well as short-term, special
events video distribution. Telecommunications services revenue increased by 16
percent to $40.7 million in the third quarter, in large part due to the growth
in data and Internet-related service agreements.
As a result of this revenue growth, PanAmSat's operating profit in the
quarter rose 10.3% to $79.1 million from $71.7 million in 1997. Operating profit
margin in the third quarter increased slightly to 42.4% compared with 42.1% one
year ago.
Satellite Systems
For the third quarter of 1998, revenues increased 14.0% to $688.9 million
from revenues of $604.3 million for the same period in 1997. The increase was
principally due to higher commercial satellite sales to customers such as
Thuraya Satellite Telecommunications Company, ICO Global Communications and
American Mobile Radio Corporation.
Driven primarily by the revenue growth, operating profit in the quarter
increased 20.2% to $63.8 million from $53.1 million in the prior year. Operating
profit margin in the quarter increased to 9.3% versus 8.8% last year.
- 30 -
Network Systems
Third quarter revenues for Hughes Network Systems (HNS) increased 23.9% to
$267.7 million compared with $216.0 million in the same period last year. The
growth was primarily due to increased sales of DIRECTV receiver equipment, which
more than offset lower international sales of private business networks.
HNS operating profit in the quarter was $16.9 million compared with $22.4
million in the third quarter of 1997. Third quarter operating profit margin
declined to 6.3% compared with 10.4% last year. The decline in operating profit
and margin was principally a result of lower international sales of private
business networks.
BALANCE SHEET
The cash balance of $1,509.7 million at September 30, 1998 declined
$1,274.1 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 subsequent 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.
- 31 -
STATEMENT OF INCOME AND
AVAILABLE SEPARATE CONSOLIDATED NET INCOME
(Dollars in Millions Except Per Share Amounts)
Nine Months Ended
Third Quarter September 30,
---------------- -----------------
1998 1997 1998 1997
- ---------------------------------------------------------------------------
Revenues
Product sales $872.8 $703.3 $2,327.5 $2,125.9
Direct broadcast, leasing and
other services 640.5 555.0 1,845.8 1,307.8
- ----------------------------------------------------------------------------
Total Revenues 1,513.3 1,258.3 4,173.3 3,433.7
- ----------------------------------------------------------------------------
Operating Costs and Expenses
Cost of products sold 659.5 550.3 1,782.4 1,711.4
Broadcast programming and other
cost 284.6 243.9 800.2 598.4
Selling, general, and
administrative expenses 390.4 261.9 1,052.2 714.0
Depreciation and amortization 111.3 78.0 309.2 195.3
Amortization of GM purchase
accounting adjustments (1) 5.3 5.3 15.9 15.9
- ----------------------------------------------------------------------------
Total Operating Costs and
Expenses 1,451.1 1,139.4 3,959.9 3,235.0
- ----------------------------------------------------------------------------
Operating Profit 62.2 118.9 213.4 198.7
Interest income 20.5 10.4 88.6 18.1
Interest expense (3.6) (24.4) (9.5) (58.1)
Other, net (33.4) (17.8) (102.8) 452.6
- ----------------------------------------------------------------------------
Income from Continuing Operations
Before Income Taxes and
Minority Interests 45.7 87.1 189.7 611.3
Income taxes 17.4 34.8 72.1 244.5
Minority interests in net losses
of subsidiaries 9.3 (5.1) 19.2 16.8
- ----------------------------------------------------------------------------
Income from continuing operations 37.6 47.2 136.8 383.6
(Loss) income from discontinued
operations, net of taxes - (0.1) - 1.2
- ----------------------------------------------------------------------------
Net Income 37.6 47.1 136.8 384.8
Adjustments to exclude the effect
of GM purchase accounting
adjustments (1) 5.3 5.3 15.9 15.9
- ----------------------------------------------------------------------------
Net Earnings Used for Computation
of Available Separate
Consolidated Net Income $42.9 $52.4 $152.7 $400.7
============================================================================
Available Separate Consolidated Net
Income (2) $11.4 $13.4 $40.1 $101.4
============================================================================
Net Earnings Attributable to
General Motors Class H Common
Stock on a Per Share
Basis (2) $0.11 $0.13 $0.38 $1.00
============================================================================
(1)Relates to General Motors' purchase of Hughes in 1985.
(2)1997 amounts are presented on a pro forma basis. Historically, such amount
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.
- 32 -
BALANCE SHEET
(Dollars in Millions)
September 30, December 31,
ASSETS 1998 1998
- -------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $1,509.7 $2,783.8
Accounts and notes receivable 1,067.2 662.8
Contracts in process 611.8 575.6
Inventories 570.7 486.4
Prepaid expenses, deferred income taxes and other 399.1 297.3
- ----------------------------------------------------------------------------
Total Current Assets 4,158.5 4,805.9
Satellites - Net 2,843.1 2,643.4
Property - Net 965.9 889.7
Net Investment in Sales-type Leases 181.9 337.6
Intangible Assets - Net 3,587.8 2,954.8
Investments and Other Assets 1,155.9 1,132.4
- ----------------------------------------------------------------------------
Total Assets $12,893.1 $12,763.8
============================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable $720.0 $472.8
Advances on contracts 245.6 209.8
Deferred revenues 150.3 110.6
Notes payable 60.2 -
Accrued liabilities 564.1 689.4
- ----------------------------------------------------------------------------
Total Current Liabilities 1,740.2 1,482.6
Long-Term Debt 778.7 637.6
Deferred Gains on Sales and Leasebacks 130.1 191.9
Accrued Operating Leaseback Expense 38.8 100.2
Postretirement Benefits Other Than Pensions 156.2 154.8
Other Liabilities and Deferred Credits 702.8 706.4
Deferred Income Taxes 618.7 570.8
Minority Interests 469.0 607.8
Stockholder's Equity 8,258.6 8,311.7
- ----------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity $12,893.1 $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).
- 33 -
PRO FORMA SELECTED SEGMENT DATA*
(Dollars in Millions)
Nine Months Ended
Third Quarter September 30,
---------------- -----------------
1998 1997 1998 1997
- -------------------------------------------------------------------------
DIRECT-TO-HOME BROADCAST
Total Revenues $459.1 $343.7 $1,248.5 $861.0
Operating Loss $(61.8) $(43.3) $(133.6) $(158.7)
Depreciation and Amortization $31.2 $21.2 $77.2 $62.5
Capital Expenditures (1) $82.0 $24.0 $130.1 $54.2
- --------------------------------------------------------------------------
SATELLITE SERVICES
Total Revenues $186.5 $170.3 $570.6 $432.0
Operating Profit $79.1 $71.7 $239.2 $202.9
Operating Profit Margin 42.4% 42.1% 41.9% 47.0%
Depreciation and Amortization $56.6 $48.0 $169.8 $91.9
Capital Expenditures (2) $190.7 $191.0 $605.0 $543.7
- --------------------------------------------------------------------------
SATELLITE SYSTEMS
Total Revenues $688.9 $604.3 $1,988.0 $1,748.1
Operating Profit $63.8 $53.1 $178.9 $159.7
Operating Profit Margin 9.3% 8.8% 9.0% 9.1%
Depreciation and Amortization $12.9 $9.9 $35.1 $27.7
Capital Expenditures $18.2 $28.1 $50.5 $68.2
- --------------------------------------------------------------------------
NETWORK SYSTEMS
Total Revenues $267.7 $216.0 $674.1 $609.4
Operating Profit (Loss) $16.9 $22.4 $(20.2) $6.1
Operating Profit Margin 6.3% 10.4% - 1.0%
Depreciation and Amortization $11.4 $5.6 $29.4 $21.7
Capital Expenditures $10.7 $15.3 $26.4 $33.0
- --------------------------------------------------------------------------
ELIMINATIONS and OTHER
Total Revenues $(88.9) $(76.0) $(307.9) $(216.8)
Operating Profit (Loss) $(30.5) $20.3 $(35.0) $4.6
Depreciation and Amortization $(0.8) $(6.7) $(2.7) $(8.5)
Capital Expenditures $(21.4) $74.1 $114.5 $(147.6)
===========================================================================
* 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 $38.0 million in
the third and nine-month periods of 1998.
(2)Includes expenditures related to satellites amounting to $182.2 million,
$180.2 million, $422.2 million and $527.3 million, respectively. Also
included in the 1998 nine-month period is $155.5 million related to the early
buy-out of satellite sale-leasebacks.
- 34 -
GMAC NEWS RELEASE
GMAC ANNOUNCES 1998 THIRD QUARTER EARNINGS
------------------------------------------
DETROIT -- General Motors Acceptance Corporation (GMAC) reported third quarter
1998 consolidated net income of $313 million, up from $312 million earned in the
third quarter of 1997, GMAC President John D. Finnegan announced today. Net
income for the first nine months of 1998 was $1,027 million, up from $1,022
million reported in the same period a year ago.
For the quarter, net income from automotive financing operations totaled
$250 million, up 12% from $222 million earned in the third quarter of 1997.
Earnings were higher due to increased retail volume, reduced credit losses and a
lower effective income tax rate, partially offset by lower net interest margins
and lower wholesale volume (due to the recent General Motors strike).
GMAC Insurance Holdings Inc. generated net income of $54 million in the
third quarter of 1998, up 8% from $50 million earned in the same period last
year. Earnings were higher due to the inclusion of Integon Corporation and
increased capital gains.
GMAC Mortgage Group Inc. generated net income of $9 million in the third
quarter of 1998 compared to $40 million earned in the same period last year.
Earnings were lower primarily due to widening credit spreads and increasing
prepayments, which have reduced the value of its mortgage inventory and
investment positions.
* * *
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 October 13, 1998
-----------------
By
s/Peter R. Bible
-------------------------------
(Peter R. Bible,
Chief Accounting Officer)
- 35 -
