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, 1999
----------------
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 48265-1000
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
On October 14, 1999, a news release was issued on the subject of third
quarter consolidated earnings for General Motors Corporation (GM). The news
release did not include certain financial statements, related footnotes and
certain other financial information that will be filed with the Securities and
Exchange Commission as part of GM's Quarterly Report on Form 10-Q. The following
are the third quarter earnings releases for Hughes Electronics Corporation
(Hughes) dated October 13, 1999 and GM dated October 14, 1999.
GM EARNS A THIRD-QUARTER RECORD $1.33 PER SHARE
RECORD THIRD QUARTER REVENUES OF $42.8 BILLION DRIVE INCOME OF $877 MILLION
DETROIT -- General Motors Corp. (NYSE: GM) today reported income from
continuing operations of $877 million in the third quarter of 1999, or a record
third quarter $1.33 diluted earnings per share of GM $1-2/3 par value common
stock. That compares with a strike-impacted net loss of $309 million, or a loss
of $0.52 per share in the third quarter of 1998.
GM North America and General Motors Acceptance Corp. (GMAC) led the
turnaround with strong year-over-year increases. "After adjusting last year's
third-quarter results to exclude the strike-related impact, GM North America
posted an 81 percent improvement in net income, in the third quarter of 1999,"
said General Motors Chairman and Chief Executive Officer John F. Smith, Jr.
"GMAC's results improved more than 25 percent, compared with the prior-year
period."
This strong performance helped offset reduced earnings and losses in the
other business sectors and automotive regions. "The overall results show the
strength of operating as one globally integrated company," Smith said. "The
regions continue to focus on growing the business, reducing structural costs,
and working as an integrated team to leverage our global strength."
Consolidated net sales and revenues in the third quarter of 1999 totaled
$42.8 billion -- the highest ever for a third-quarter period. That compares with
a strike-impacted $33.5 billion for the third quarter of 1998.
Cash, marketable securities and assets of the Voluntary Employees'
Beneficiary Association (VEBA) trust invested in fixed-income securities totaled
$16.7 billion at Sept. 30, 1999, compared with $10.3 billion at Sept. 30, 1998,
and $16.7 billion at June 30, 1999. These cash amounts exclude GM's financing
and insurance operations.
"Our strong cash position allowed us to continue funding new product
programs, invest in plant and equipment improvements and take advantage of
growth opportunities, while continuing our share-repurchase program," Smith
said.
During the third quarter of 1999 and through Oct. 13, 1999, GM repurchased
5.7 million shares of its $1-2/3 par value common stock worth $386 million.
Combined with earlier repurchases, this completes 63 percent of the
corporation's most recent $4 billion stock-repurchase program initiated in March
of 1998. Since January 1997, GM has repurchased approximately 117.7 million
shares of GM $1-2/3 par value common stock worth $7.5 billion, or about 15.6
percent of the total shares outstanding.
The corporation's 1999 third-quarter return on net assets (RONA) for
continuing operations on an annualized basis, excluding Hughes, was 10.1
percent. "We're extremely pleased that our RONA performance average over the
last four quarters was 14.2 percent," Smith said. "This beats by more than a
year our target of surpassing 12.5 percent RONA for a four-quarter rolling
average by the end of the year 2000. This is solid evidence of our continuing
momentum and a major win for the entire GM team."
- 2 -
Following is a summary of income from GM's business segments in the third
quarter of 1999, compared with the strike-impacted prior-year period (see
Highlights for additional information):
($ in Millions) Third Quarter Net Income (Loss)
1999 1998
---- ----
GM North America $671 ($595)
GM Europe $32 $50
GM Latin America/Africa/Mid-East ($36) $(64)
GM Asia Pacific ($54) $0
Other Automotive $0 $(24)
-- -----
Total Automotive $613 ($633)
GMAC $393 $313
Hughes ($30) $43
Other ($99) ($32)
----- -----
Total Income from
Continuing Operations $877 ($309)
GM Automotive's net margin was 1.7 percent in the third quarter of 1999,
compared with a net-margin loss of 2.3 percent in the same period last year. GM
North America's net margin was 2.4 percent in the third quarter of 1999,
compared with a net-margin loss of 3.1 percent in the strike-impacted third
quarter of 1998.
"Despite continuing intense competitive pressures, GM North America had by
far its best third quarter financial results of the decade," said GM President
and Chief Operating Officer G. Richard Wagoner, Jr. "The improved availability
of our popular new cars and trucks drove a two percentage-point improvement in
U.S. market share from July to September."
GM North America's third-quarter-1998 results included an unfavorable
impact of $965 million after taxes, or $1.48 per share, related to major
production losses caused by strikes at two GM component plants in Flint, Mich.
GM Europe reported net income of $32 million in the third quarter of 1999,
compared with $50 million in the prior-year period. "Although wholesale volume
declined year-over-year, market share increased to 10.0 percent in the third
quarter of 1999 versus 9.7 percent in the same period last year, and was
unchanged from the second quarter of 1999," Wagoner said.
"While the Latin America/Africa/Mid East region continues to be affected
by an economic downturn, we worked all out to minimize losses and position
ourselves for the future, which led to improved results in the third quarter"
Wagoner said. "We continued to improve operating efficiencies while boosting
market share in Latin America to 20.1 percent, a 1.1-percentage-point
improvement from the 19.0-percent share in the third quarter of 1998. However,
the continuing economic pressures in the region had a negative impact on our
overall financial results."
The Asia-Pacific region continues to be a challenge primarily due to the
impact of the depressed Japanese market on the overall region. "The combination
of the down market and the investments we made to position ourselves for the
future growth potential in the region continued to impact our financial results
in the short term," Wagoner said. "We're particularly pleased with the early
success of our operations in Shanghai, China, where Buick sedans are produced.
We're encouraged by signs of recovery in some areas of the Asia-Pacific and
continue to take a long-term view in the region."
GMAC reported consolidated net income of $393 million in the third quarter
of 1999, compared with $313 million earned in the prior-year period. "The
increase was led by the mortgage operations, which rebounded strongly from last
year when turmoil in the capital markets adversely affected results. In
addition, GMAC's operations in North America continued to improve, reflecting
growth in assets and ongoing productivity improvements," Smith said.
- 3 -
Hughes Electronics reported that revenues increased nearly 32 percent to
$2.0 billion for the third quarter of 1999, from $1.5 billion in the prior-year
period. The revenue increase was primarily driven by continued growth in the
DIRECTV business.
"Hughes had its best third quarter ever for DIRECTV subscription growth in
the United States, adding a record 423,000 net new subscribers, a 40 percent
increase compared with the third quarter of 1998, and as a result DIRECTV
revenues more than doubled" Smith said. DIRECTV had more than 7.7 million
subscribers as of Sept. 30, 1999.
Hughes' net loss in the third quarter of 1999 totaled $30 million,
compared with income of $43 million in the third quarter of 1998.
Third-quarter-1999 results were unfavorably impacted by higher depreciation and
amortization expenses related primarily to the United States Satellite
Broadcasting Company Inc. (USSB) and PRIMESTAR acquisitions, as well as
increased satellite expenditures.
In this news release, use of the words anticipate, expect, should,
believe, plan, intensify, overcome and similar words are associated with
forward-looking statements that are inherently subject to numerous risks and
uncertainties. Accordingly, there can be no assurance that the results described
in such forward-looking statements will be realized. The principal risk factors
that may cause actual results to differ materially from those expressed in
forward-looking statements contained in this news release are described in
various documents filed by GM with the U.S. Securities and Exchange Commission,
including GM's Annual Report on Form 10-K for the year ended Dec. 31, 1998, (at
page II-22).
# # #
- 4 -
HIGHLIGHTS - Q3 Financial Results
(Dollars in Millions Except
Per Share Amounts)
Three Months Ended
September 30,
---------------------
1999 1998
--------- ---------
Net sales and revenues
Manufactured products $36,748 $28,464 (1)
Financial services 3,725 3,360
Other income 2,321 1,701
------ ------
Total net sales and revenues $42,794 $33,525
------ ------
Income (loss) from continuing
operations $877(4) $(309)(1)
Income (loss) from discontinued
operations - (500)
------ ------
Consolidated net income (loss) $877 $(809)
Net profit (loss) margin from
continuing operations 2.0% (0.9%)
.............................................................
Earnings Attributable to Common Stocks
$1-2/3 par value
Continuing operations $866(4) $(336)(1)
Discontinued operations - (500)
------ ------
$1-2/3 par value $866 $(836)
Class H $(17) $11
.............................................................
Basic Earnings Per Share Attributable to Common Stocks
$1-2/3 par value
Continuing operations $1.35 (4)$(0.52)(1)
Discontinued operations - (0.76)
------ ------
$1-2/3 par value $1.35 $(1.28)
Class H $(0.13) $0.11
.............................................................
Diluted Earnings Per Share Attributable to Common Stocks
$1-2/3 par value
Continuing operations $1.33 (4)$(0.52)(1)
Discontinued operations - (0.76)
------ ------
$1-2/3 par value $1.33 $(1.28)
Class H $(0.13) $0.11
.............................................................
Cash Dividends Per Share of Common Stocks
$1-2/3 par value $0.50 $0.50
Class H $- $-
.............................................................
Book Value Per Share of Common Stocks
Sept. 30, Dec. 31, Sept. 30,
1999 1998 1998
-------- ------- --------
$1-2/3 par value $20.59 $20.00 $19.54
Class H $12.36 $12.00 $11.72
.............................................................
See footnotes beginning on page 8
continues
- 5 -
HIGHLIGHTS - Q3 Consolidated Net Income
(Dollars in Millions)
Income/(Loss)
Three Months Ended
September 30,
----------------------
1999 1998
-------- --------
GM North America (GMNA) $671 $(595)(1)
GM Europe (GME) 32 50
GM Latin America/Africa/Mid-East (GMLAAM) (36) (64)
GM Asia/Pacific (GMAP) (54) -
Other Automotive - (24)
----- ----
Total GM Automotive (GMA) $613 $(633)
Hughes (5) (30) 43
Other (96) (64)
----- ----
Total Automotive, Electronics
and Other Operations $487 $(654)
GMAC $393 $313
Other (3) 32
----- ----
Total Financing and Insurance
Operations $390 $345
----- ----
Income (loss) from continuing
operations $877 (4) $(309)(1)
Income (loss) from discontinued
operations - (500)
----- ----
Consolidated Net Income (Loss) $877 $(809)
===== ====
Three Months Ended
September 30, 1999
--------------------------------
GMNA GME GMLAAM GMAP
----- ------ ------ ------
Reported
--------
Total net sales and revenues $27,630 $6,391 $1,200 $884
------ ----- ----- ---
Pre-tax income (loss) $1,009 $52 $(79) $12
Income tax expense (benefit) 336 19 (37) 11
Equity income/(loss) and
minority interests (2) (1) 6 (55)
----- ----- ----- ---
Net income (loss) $671 $32 $(36) $(54)
===== ===== ===== ===
Net profit (loss) margin 2.4% 0.5% (3.0%) (6.1%)
Effective income tax rate 33.3% 36.5% 46.8% 91.7%
Three Months Ended
September 30, 1998
--------------------------------
GMNA(1) GME GMLAAM GMAP
----- ------ ------ ------
Reported
--------
Total net sales and revenues $18,931 $6,390 $1,773 $681
------ ----- ----- ---
Pre-tax (loss) income $(883) $64 $(138) $19
Income tax (benefit) expense (288) 18 (45) 2
Equity income/(loss) and
minority interests - 4 29 (17)
---- ---- --- ---
Net (loss) income $(595) $50 $(64) $-
==== ==== === ===
Net (loss) profit margin (3.1%) 0.8% (3.6%) 0.0%
Effective income tax rate 32.6% 28.1% 32.6% 10.5%
See footnotes beginning on page 8.
continues
- 6 -
HIGHLIGHTS - Q3 Operating Information
Three Months Ended
September 30,
---------------------
1999 1998
------- -------
Worldwide Wholesale Sales (units in 000s)
United States: Cars 581 527
Trucks 618 367
------ ------
Total United States 1,199 894
Canada and Mexico 142 116
------ ------
Total GM North America 1,341 1,010
------ ------
GME 446 534
GMLAAM 141 163
GMAP 121 114
------ ------
Total International 708 811
------ ------
Total Worldwide 2,049 1,821
====== ======
....................................................
Vehicle Unit Deliveries (units in 000s)
United States
Chevrolet - Cars 231 174
- Trucks 447 296
Pontiac 153 113
GMC 138 91
Buick 122 81
Oldsmobile 87 63
Saturn 61 62
Cadillac 46 39
Other 13 9
------ ------
Total United States 1,298 928
Canada and Mexico 170 160
------ ------
Total GM North America 1,468 1,088
------ ------
GME 489 463
GMLAAM 145 160
GMAP 128 127
------ ------
Total International 762 750
------ ------
Total Worldwide 2,230 1,838
====== ======
....................................................
Market share
United States
Cars 29.4% 25.7%
Trucks 28.4% 22.4%
Total 28.9% 24.1%
Total North America 28.6% 24.5%
Total Europe 10.0% 9.7%
Latin America 20.1% 19.0%
Asia and Pacific 4.6% 4.7%
Total Worldwide 16.3% 14.2%
.....................................................
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 21.8% 24.3%
% Fleet Sales - Trucks 9.5% 9.7%
Total vehicles 15.9% 17.8%
....................................................
Days Supply of Inventory - U.S.
Cars 65 59
Trucks 82 67
.....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated)(2)90.4% N/A
.....................................................
GMNA
Net Price (%) 0.4% (2.3%)
.....................................................
See footnotes beginning on page 8.
continues
-7 -
HIGHLIGHTS - Q3 Other Financial Information
(Dollars in Millions Except Per Share Amounts)
Three Months Ended
September 30,
----------------------
1999 1998
--------- ----------
Depreciation and Amortization (3)
Depreciation $1,004 $944
Amortization of special tools 635 501
Amortization of intangible
assets 78 27
------ -----
Total $1,717 $1,472
====== =====
....................................................
Worldwide Employment at September 30 (in 000s)
GMNA 219 229
GME 82 81
GMLAAM 23 25
GMAP 10 10
Hughes 18 15
GMAC 27 23
Other 12 12
------ ------
Total 391 395
====== ======
....................................................
Worldwide Payrolls $5,469 $4,977
....................................................
(1) GM North America's third-quarter-1998 results included an unfavorable
impact of $965 million after taxes, or $1.48 per share, related to
major production losses caused by strikes at two GM component plants
in Flint, Michigan.
(2) GM changed its method of calculating capacity utilization from mass
relief to tag relief in 1999. Quarterly 1998 figures are not
available, however capacity utilization for Calendar Year 1998 was
77.2% using the new methodology.
(3) Amounts exclude depreciation and amortization charges incurred by the
financing and insurance operations.
(4) Records for income and EPS are based upon reported amounts adjusted
to exclude the effects of significant dispositions not classified as
discontinued operations.
(5) Excludes the effects of purchase accounting adjustments related to
General Motors' acquisition of Hughes in 1985, and in 1999 excludes
Hughes Series A Preferred Stock dividends
payable to General Motors.
NOTE: Total cash of $16.7 billion referenced to in the press release
includes $13.7 billion of cash and marketable securities as well as
$3.0 billion invested in fixed income securities of the
Corporation's $4.7 billion Voluntary Employees' Beneficiary
Association Trust.
- 8 -
HIGHLIGHTS - Q3 Financial Results
(Dollars in Millions Except
Per Share Amounts)
Nine Months Ended
September 30,
---------------------
1999 1998
--------- ---------
Net sales and revenues
Manufactured products $112,629 $95,202
Financial services 10,805 10,090
Other income 6,862 5,529
------- -------
Total net sales and revenues $130,296 $110,821
------- -------
Income from continuing operations $4,431 (5)$1,365
Income (loss) from discontinued
operations 426 (181)
------ ------
Consolidated net income $4,857 $1,184
Net profit margin from
continuing operations 3.4% 1.2%
.............................................................
Earnings Attributable to Common Stocks
$1-2/3 par value
Continuing operations $4,400 (5)$1,277
Discontinued operations 426 (181)
------ ------
$1-2/3 par value $4,826 $1,096
Class H $(20) $40 (2)
.............................................................
Basic Earnings Per Share Attributable to Common Stocks
$1-2/3 par value
Continuing operations $6.79 (5) $1.92
Discontinued operations 0.66 (0.27)
------ ------
$1-2/3 par value $7.45 $1.65
Class H $(0.17) $0.38 (2)
.............................................................
Diluted Earnings Per Share Attributable to Common Stocks
$1-2/3 par value
Continuing operations $6.67 (5) $1.87
Discontinued operations 0.65 (0.27)
------ ------
$1-2/3 par value $7.32 $1.60
Class H $(0.17) $0.38 (2)
.............................................................
Cash Dividends Per Share of Common Stocks
$1-2/3 par value $1.50 $1.50
Class H $- $-
.............................................................
See footnotes beginning on page 12.
continues
- 9 -
HIGHLIGHTS - Q3 Consolidated Net Income
(Dollars in Millions)
Income/(Loss)
Nine Months Ended
September 30,
------------------------
1999 1998
-------- --------
GM North America (GMNA) $3,552 $52
GM Europe (GME) 393 273
GM Latin America/Africa/Mid-East (GMLAAM) (99) 37
GM Asia/Pacific (GMAP) (195) (30)
Other Automotive 23 3
----- -----
Total GM Automotive (GMA) $3,674 $335
Hughes (6) (44) 153 (2)
Other (387) (226)
----- -----
Total Automotive, Electronics
and Other Operations $3,243 $262
GMAC $1,176 $1,027
Other 12 76
----- -----
Total Financing and Insurance Operations $1,188 $1,103
----- -----
Income from continuing operations $4,431 (5) $1,365
Income (loss)from discontinued operations 426 (181)
----- -----
Consolidated Net Income $4,857 $1,184
===== =====
Nine Months Ended
September 30, 1999
--------------------------------
GMNA GME GMLAAM GMAP
----- ------ ------ ------
Reported
--------
Total net sales and revenues $85,184 $19,669 $3,448 $2,246
------ ------ ----- -----
Pre-tax income (loss) $5,228 $605 $(224) $(49)
Income tax expense (benefit) 1,671 208 (106) (8)
Equity income/(loss) and
minority interests (5) (4) 19 (154)
----- ----- ----- ---
Net income (loss) $3,552 $393 $(99) $(195)
===== ===== ===== ===
Net profit (loss) margin 4.2% 2.0% (2.9%) (8.7%)
Effective income tax rate 32.0% 34.4% 47.3% 16.3%
Nine Months Ended
September 30, 1998
--------------------------------
GMNA GME(1) GMLAAM GMAP
----- ------ ------ ------
Reported
--------
Total net sales and revenues $67,919 $18,347 $6,116 $2,194
------ ------ ----- -----
Pre-tax income (loss) $6 $511 $(105) $15
Income tax (benefit) expense (26) 238 (74) 6
Equity income/(loss) and
minority interests 20 - 68 (39)
----- ----- ----- ---
Net income (loss) $52 $273 $37 $(30)
===== ===== ===== ===
Net profit (loss) margin 0.1% 1.5% 0.6% (1.4%)
Effective income tax rate (433.3%) 46.6% 70.5% 40.0%
See footnotes beginning on page 12.
continues
- 10 -
HIGHLIGHTS - Q3 Operating Information
Nine Months Ended
September 30,
----------------------
1999 1998
--------- ----------
Worldwide Wholesale Sales (units in 000s)
United States: Cars 1,916 1,650
Trucks 1,954 1,435
------ ------
Total United States 3,870 3,085
Canada and Mexico 510 464
------ ------
Total GM North America 4,380 3,549
------ ------
GME 1,471 1,540
GMLAAM 399 521
GMAP 312 328
------ ------
Total International 2,182 2,389
------ ------
Total Worldwide 6,562 5,938
====== ======
....................................................
Vehicle Unit Deliveries (units in 000s)
United States
Chevrolet - Cars 683 668
- Trucks 1,299 1,168
Pontiac 485 403
GMC 408 355
Buick 357 296
Oldsmobile 282 232
Saturn 178 179
Cadillac 133 131
Other 31 22
------ ------
Total United States 3,856 3,454
Canada and Mexico 516 491
------ ------
Total GM North America 4,372 3,945
------ ------
GME 1,537 1,406
GMLAAM 399 511
GMAP 338 379
------ ------
Total International 2,274 2,296
------ ------
Total Worldwide 6,646 6,241
====== ======
....................................................
Market share
United States
Cars 30.2% 29.6%
Trucks 28.0% 27.9%
Total 29.1% 28.8%
Total North America 28.9% 28.6%
Total Europe 9.9% 9.5%
Latin America 19.7% 19.7%
Asia and Pacific 3.9% 4.6%
Total Worldwide 15.9% 15.6%
.....................................................
U.S. Retail/Fleet Mix
% Fleet Sales - Cars 25.9% 24.0%
% Fleet Sales - Trucks 13.3% 13.7%
Total vehicles 20.0% 19.2%
.....................................................
Capacity Utilization %
U.S. and Canada (2-shift rated)(3)89.0% N/A
.....................................................
See footnotes beginning on page 12.
continues
- 11 -
HIGHLIGHTS - Q3 Other Financial Information
(Dollars in Millions Except Per Share Amounts)
Nine Months Ended
September 30,
----------------------
1999 1998
--------- ----------
Depreciation and Amortization (4)
Depreciation $3,075 $2,740
Amortization of special tools 1,889 1,583
Amortization of intangible
assets 157 76
----- -----
Total $5,121 $4,399
===== =====
....................................................
Worldwide Payrolls $16,450 $15,296
....................................................
(1) 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.
(2) 1998 results exclude the cumulative effect of accounting change of
$9 million due to Hughes' adoption of SOP 98-5. GM had reported the
$9 million change in fourth quarter 1998 results and Hughes reported
the change as a restatement of first quarter 1998 results.
(3) GM changed its method of calculating capacity utilization from mass
relief to tag relief in 1999. Quarterly 1998 figures are not
available, however capacity utilization for Calendar Year 1998 was
77.2% using the new methodology.
(4) Amounts exclude depreciation and amortization charges incurred by
the financing and insurance operations.
(5) Records for income and EPS are based upon reported amounts adjusted
to exclude the effects of significant dispositions not classified as
discontinued operations.
(6) Excludes the effects of purchase accounting adjustments related to
General Motors' acquisition of Hughes in 1985, and in 1999 excludes
Hughes Series A Preferred Stock dividends
payable to General Motors.
- 12 -
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
(Dollars in Millions Except Per Share Amounts)
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Manufactured products sales
and revenues $36,748 $28,464 $112,629 $95,202
Financing revenues 3,725 3,360 10,805 10,090
Other income 2,321 1,701 6,862 5,529
------- ------- -------- ---------
Total net sales and revenues 42,794 33,525 130,296 110,821
------ ------ ------- -------
Cost of sales and other operating
expenses, exclusive of items
listed below 31,061 25,278 94,011 82,607
Selling, general and
administrative expenses 4,703 3,816 13,027 11,457
Depreciation and amortization
expense 3,088 2,674 9,039 8,029
Interest expense 1,985 1,690 5,624 4,951
Other expenses 439 486 1,353 1,602
------- -------- -------- --------
Total costs and expenses 41,276 33,944 123,054 108,646
Income (loss) from continuing
operations before income taxes
and minority interests 1,518 (419) 7,242 2,175
Income tax expense (benefit) 553 (144) 2,538 710
Minority interests (7) (1) (28) (11)
Losses of nonconsolidated associates (81) (33) (245) (89)
---- ---- ------ -------
Income (loss) from continuing
operations 877 (309) 4,431 1,365
(Loss) income from discontinued
operations - (500) 426 (181)
------ --- ------ ------
Net income (loss) 877 (809) 4,857 1,184
Dividends on preference stocks (28) (16) (51) (48)
---- ---- ------- -------
Earnings on common stocks $849 $(825) $4,806 $1,136
=== === ===== =====
Basic earnings (losses) per share
attributable to common stocks
$1-2/3 par value common stock
Continuing operations $1.35 $(0.52) $6.79 $1.92
Discontinued operations - (0.76) 0.66 (0.27)
----- ---- ---- ----
Earnings per share
attributable to $1-2/3
par value $1.35 $(1.28) $7.45 $1.65
==== ==== ==== ====
Earnings per share attributable
to Class H $(0.13) $0.11 $(0.17) $0.38
==== ==== ==== ====
Diluted earnings (losses) per
share attributable to common stocks
$1-2/3 par value common stock
Continuing operations $1.33 $(0.52) $6.67 $1.87
Discontinued operations - (0.76) 0.65 (0.27)
----- ---- ---- ----
Earnings per share attributable
to $1-2/3 par value $1.33 $(1.28) $7.32 $1.60
==== ==== ==== ====
Earnings per share attributable
to Class H $(0.13) $0.11 $(0.17) $0.38
==== ==== ==== ====
- 13 -
CONSOLIDATED STATEMENTS OF INCOME - Concluded
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
(Dollars in Millions)
AUTOMOTIVE, ELECTRONICS AND OTHER OPERATIONS
Manufactured products sales
and revenues $36,748 $28,464 $112,629 $95,202
Other income 798 547 2,557 2,050
Total net sales and revenues 37,546 29,011 115,186 97,252
------ ------ ------- ------
Cost of sales and other operating
expenses, exclusive of items
listed below 31,061 25,278 94,011 82,607
Selling, general and
administrative expenses 3,487 2,794 9,598 8,449
Depreciation and amortization
expense 1,717 1,472 5,121 4,399
----- ----- ----- -----
Total operating costs and
expenses 36,265 29,544 108,730 95,455
------ ------ ------- ------
Interest expense 223 195 597 586
Other expenses 115 131 322 507
Net expense from transactions
with Financing and
Insurance Operations 85 48 245 117
-- -- --- ---
Income (loss) from continuing
operations before income taxes
and minority interests 858 (907) 5,292 587
Income tax expense (benefit) 291 (281) 1,799 241
Minority interests 1 5 (5) 5
Losses of nonconsolidated associates (81) (33) (245) (89)
---- ---- ------ ----
Income (loss) from continuing
operations 487 (654) 3,243 262
(Loss) income from discontinued
operations - (500) 426 (181)
--- ---- ----- ---
Net income (loss) - Automotive,
Electronics and
Other Operations $487 $(1,154) $3,669 $81
=== ===== ===== ==
Three Months Ended Nine Months Ended
September 30, September 30,
-------------- ---------------
1999 1998 1999 1998
---- ---- ---- ----
(Dollars in Millions)
FINANCING AND INSURANCE OPERATIONS
Financing revenues $3,725 $3,360 $10,805 $10,090
Insurance, mortgage and other
income 1,523 1,154 4,305 3,479
----- ----- ------- -------
Total revenues and other income 5,248 4,514 15,110 13,569
----- ----- ------ ------
Interest expense 1,762 1,495 5,027 4,365
Depreciation and amortization
expense 1,371 1,202 3,918 3,630
Operating and other expenses 1,216 1,022 3,429 3,008
Provisions for financing losses 98 94 328 323
Insurance losses and loss
adjustment expenses 226 261 703 772
----- ----- ------ ------
Total costs and expenses 4,673 4,074 13,405 12,098
----- ----- ------ ------
Net income from transactions
with Automotive, Electronics
and Other Operations 85 48 245 117
---- --- ------ ------
Income before income taxes 660 488 1,950 1,588
Income tax expense 262 137 739 469
Minority interests (8) (6) (23) (16)
--- --- ----- -----
Net income - Financing and
Insurance Operations $390 $345 $1,188 $1,103
=== === ===== =====
- 14 -
<PAGE>
CONSOLIDATED BALANCE SHEETS
Sept. 30, Sept. 30,
1999 Dec. 31, 1998
GENERAL MOTORS CORPORATION AND SUBSIDIARIES (Unaudited) 1998 (Unaudited)
--------- -------- ---------
ASSETS (Dollars in Millions)
Automotive, Electronics and Other Operations
Cash and cash equivalents $12,056 $9,728 $6,888
Marketable securities 1,666 402 420
------- ------- ------
Total cash and marketable securities 13,722 10,130 7,308
Accounts and notes receivable (less allowances) 5,480 4,750 5,258
Inventories (less allowances) 10,603 10,437 11,062
Net assets of discontinued operations - 77 -
Equipment on operating leases
(less accumulated depreciation) 6,244 4,954 4,797
Deferred income taxes and other current assets 7,494 10,051 5,994
------- ------ -------
Total current assets 43,543 40,399 34,419
Equity in net assets of nonconsolidated
associates 1,642 950 1,100
Property - net 31,761 32,222 31,652
Intangible assets - net 12,338 9,994 11,342
Deferred income taxes 17,139 14,967 18,124
Other assets 13,894 16,062 14,912
-------- -------- --------
Total Automotive, Electronics
and Other Operations assets 120,317 114,594 111,549
Financing and Insurance Operations
Cash and cash equivalents 328 146 93
Investments in securities 8,937 8,748 8,248
Finance receivables - net 76,449 70,436 62,460
Investment in leases and other receivables 35,837 32,798 33,220
Other assets 19,705 18,807 13,868
Net receivable from Automotive,
Electronics and Other Operations 369 816 186
-------- -------- --------
Total Financing and Insurance
Operations assets 141,625 131,751 118,075
-------- -------- --------
Total assets $261,942 $246,345 $229,624
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Automotive, Electronics and Other Operations
Accounts payable (principally trade) $16,323 $13,542 $12,437
Loans payable 695 1,204 1,950
Accrued expenses 32,803 30,548 29,599
Net payable to Financing and
Insurance Operations 369 816 186
-------- -------- --------
Total current liabilities 50,190 46,110 44,172
Long-term debt 7,880 7,118 6,817
Postretirement benefits other than pensions 34,455 33,503 33,479
Pensions 3,179 4,410 3,782
Net liabilities of discontinued operations - - 2
Other liabilities and deferred income taxes 18,170 17,807 17,729
-------- -------- --------
Total Automotive, Electronics and
Other Operations liabilities 113,874 108,948 105,981
Financing and Insurance Operations
Accounts payable 4,587 4,148 3,784
Debt 115,329 107,753 94,991
Deferred income taxes and other liabilities 10,723 9,661 9,399
-------- --------- ---------
Total Financing and Insurance
Operations liabilities 130,639 121,562 108,174
Minority interests 635 563 531
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 140 141 142
Stockholders' equity
Preference stocks - 1 1
$1-2/3 par value common stock
(issued, 642,050,210; 655,008,344
and 655,036,035 shares) 1,071 1,092 1,092
Class H common stock
(issued, 135,195,966; 106,159,776,
and 105,959,765 shares) 14 11 11
Capital surplus (principally additional
paid-in capital) 15,282 12,661 12,769
Retained earnings 5,573 6,984 5,554
------- ------- -------
Subtotal 21,940 20,749 19,427
Accumulated foreign currency
translation adjustments (1,969) (1,089) (1,060)
Net unrealized gains on securities 631 481 412
Minimum pension liability adjustment (4,027) (5,089) (4,062)
-------- -------- --------
Accumulated other comprehensive loss (5,365) (5,697) (4,710)
-------- -------- --------
Total stockholders' equity 16,575 15,052 14,717
-------- -------- --------
Total liabilities and stockholders' equity $261,942 $246,345 $229,624
======= ======= =======
- 15 -
CONSOLIDATED BALANCE SHEETS - Concluded
Sept. 30, Sept. 30,
1999 Dec. 31, 1998
AUTOMOTIVE, ELECTRONICS AND OTHER OPERATIONS(Unaudited) 1998 (Unaudited)
--------- -------- ---------
(Dollars in Millions)
ASSETS
Cash and cash equivalents $12,056 $9,728 $6,888
Marketable securities 1,666 402 420
------ ------ ------
Total cash and marketable securities 13,722 10,130 7,308
Accounts and notes receivable (less allowances) 5,480 4,750 5,258
Inventories (less allowances) 10,603 10,437 11,062
Net assets of discontinued operations - 77 -
Equipment on operating leases
(less accumulated depreciation) 6,244 4,954 4,797
Deferred income taxes and other current assets 7,494 10,051 5,994
------ ------ -------
Total current assets 43,543 40,399 34,419
Equity in net assets of nonconsolidated
associates 1,642 950 1,100
Property - net 31,761 32,222 31,652
Intangible assets - net 12,338 9,994 11,342
Deferred income taxes 17,139 14,967 18,124
Other assets 13,894 16,062 14,912
------ ------ ------
Total Automotive, Electronics and
Other Operations assets $120,317 $114,594 $111,549
======= ======= =======
LIABILITIES AND GM INVESTMENT
Accounts payable (principally trade) $16,323 $13,542 $12,437
Loans payable 695 1,204 1,950
Accrued expenses 32,803 30,548 29,599
Net payable to Financing and Insurance
Operations 369 816 186
------ ------ ------
Total current liabilities 50,190 46,110 44,172
Long-term debt 7,880 7,118 6,817
Postretirement benefits other than pensions 34,455 33,503 33,479
Pensions 3,179 4,410 3,782
Net liabilities of discontinued operations - - 2
Other liabilities and deferred income taxes 18,170 17,807 17,729
------- ------- -------
Total Automotive, Electronics and
Other Operations liabilities 113,874 108,948 105,981
Minority interests 558 511 484
GM investment in Automotive,
Electronics and Other Operations 5,885 5,135 5,084
------- ------- -------
Total Automotive, Electronics and
Other Operations liabilities
and GM investment $120,317 $114,594 $111,549
======== ======== ========
Sept. 30, Sept. 30,
1999 Dec. 31, 1998
FINANCING AND INSURANCE OPERATIONS (Unaudited) 1998 (Unaudited)
----------- ---- -----------
(Dollars in Millions)
ASSETS
Cash and cash equivalents $328 $146 $93
Investments in securities 8,937 8,748 8,248
Finance receivables - net 76,449 70,436 62,460
Investment in leases and other receivables 35,837 32,798 33,220
Other assets 19,705 18,807 13,868
Net receivable from Automotive,
Electronics and Other Operations 369 816 186
------- ------- -------
Total Financing and Insurance
Operations assets $141,625 $131,751 $118,075
======== ======== ========
LIABILITIES AND GM INVESTMENT
Accounts payable $4,587 $4,148 $3,784
Debt 115,329 107,753 94,991
Deferred income taxes and other liabilities 10,723 9,661 9,399
-------- --------- ---------
Total Financing and Insurance
Operations liabilities 130,639 121,562 108,174
Minority interests 77 52 47
GM investment in Financing and
Insurance Operations 10,909 10,137 9,854
-------- --------- ---------
Total Financing and Insurance Operations
liabilities and GM investment $141,625 $131,751 $118,075
======== ======== ========
- 16 -
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
-------------------------------
1999 1998
---- ----
(Dollars in Millions)
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Net cash provided by operating activities $25,054 $6,566
Cash flows from investing activities
Expenditures for property (4,925) (5,921)
Investments in marketable securities
- acquisitions (19,570) (22,717)
Investments in marketable securities
- liquidations 17,706 26,501
Mortgage servicing rights - acquisitions (1,199) (897)
Mortgage servicing rights - liquidations 34 67
Finance receivables - acquisitions (139,165) (112,962)
Finance receivables - liquidations 100,692 86,709
Proceeds from sales of finance receivables 35,120 21,922
Operating leases - acquisitions (20,123) (18,281)
Operating leases - liquidations 11,383 11,717
Investments in companies, net of cash acquired (4,767) (475)
Other (154) (431)
------- -------
Net cash used in investing activities (24,968) (14,768)
------ ------
Cash flows from financing activities
Net (decrease) increase in loans payable (8,152) 3,402
Increase in long-term debt 27,086 16,620
Decrease in long-term debt (15,168) (10,860)
Repurchases of common and preference stocks (2,149) (3,071)
Proceeds from issuing common and
preference stocks 1,868 343
Cash dividends paid to stockholders (1,023) (1,045)
----- -----
Net cash provided by financing activities 2,462 5,389
----- -----
Effect of exchange rate changes on cash and
cash equivalents (166) 271
------ ------
Net cash provided by (used in)
continuing operations 2,382 (2,542)
Net cash provided by (used in)
discontinued operations 128 (750)
------ ------
Net increase (decrease) in cash and
cash equivalents 2,510 (3,292)
Cash and cash equivalents at beginning
of the period 9,874 10,273
------ ------
Cash and cash equivalents at end
of the period $12,384 $6,981
====== =====
- 17 -
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Concluded
(Unaudited)
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1999 1998
---- ----
Automotive, Financing Automotive, Financing
Electronics and Electronics and
and Other Insurance and Other Insurance
--------- --------- --------- ---------
(Dollars in Millions)
<S> <C> <C> <C> <C>
Net cash provided by operating activities $15,171 $9,883 $2,778 $3,788
Cash flows from investing activities
Expenditures for property (4,721) (204) (5,813) (108)
Investments in marketable securities
- acquisitions (3,481) (16,089) (8,022) (14,695)
Investments in marketable securities
- liquidations 2,217 15,489 11,255 15,246
Mortgage servicing rights - acquisitions - (1,199) - (897)
Mortgage servicing rights - liquidations - 34 - 67
Finance receivables - acquisitions - (139,165) - (112,962)
Finance receivables - liquidations - 100,692 - 86,709
Proceeds from sales of finance receivables - 35,120 - 21,922
Operating leases - acquisitions (6,175) (13,948) (4,382) (13,899)
Operating leases - liquidations 4,279 7,104 4,092 7,625
Investments in companies, net of
cash acquired (2,647) (2,120) (417) (58)
Net investing activity with Financing and
Insurance Operations 75 - 238 -
Other (831) 677 (1,198) 767
------ ------- ----- -------
Net cash used in investing activities (11,284) (13,609) (4,247) (10,283)
------ ------ ----- ------
Cash flows from financing activities
Net (decrease) increase in loans payable (551) (7,601) 961 2,441
Increase in long-term debt 5,414 21,672 2,689 13,931
Decrease in long-term debt (4,632) (10,536) (1,243) (9,617)
Net financing activity with Automotive,
Electronics and Other Operations - (75) - (238)
Repurchases of common and preference stocks (2,149) - (3,071) -
Proceeds from issuing common and
preference stocks 1,868 - 343 -
Cash dividends paid to stockholders (1,023) - (1,045) -
----- ------ ----- ------
Net cash (used in) provided by
financing activities (1,073) 3,460 (1,366) 6,517
----- ----- ----- -----
Effect of exchange rate changes on cash and
cash equivalents (167) 1 272 (1)
Net transactions with Automotive/
Financing Operations (447) 447 505 (505)
----- --- ----- ---
Net cash provided by (used in)
continuing operations 2,200 182 (2,058) (484)
Net cash provided by (used in)
discontinued operations 128 - (750) -
----- --- ----- ---
Net increase (decrease) in cash and
cash equivalents 2,328 182 (2,808) (484)
Cash and cash equivalents at beginning
of the period 9,728 146 9,696 577
------ --- ----- ---
Cash and cash equivalents at end
of the period $12,056 $328 $6,888 $93
====== === ===== ==
</TABLE>
- 18 -
Hughes Reports 32% Revenue Growth and
Solid EBITDA Growth In Third Quarter
Results Driven by Record Sales of DIRECTV(R) Service
El Segundo, Calif., October 13, 1999 -- Hughes Electronics Corporation
(Hughes), the world's leading provider of digital television entertainment, and
satellite and wireless systems and services, today reported third quarter 1999
revenues increased 31.5% to $1,990.5 million, compared with $1,513.3 million in
the third quarter of 1998. EBITDA(1) for the quarter increased 18.3% to $211.6
million and EBITDA margin(1) was 10.6%, compared to EBITDA of $178.8 million and
EBITDA margin of 11.8% in the third quarter of 1998.
"The primary driver of our revenue growth continues to be our DIRECTV
businesses," explained Michael T. Smith, Hughes chairman and chief executive
officer. "We had our best third quarter ever for new DIRECTV subscriber
additions in the United States, Hughes Network Systems (HNS) achieved its best
quarter ever for sales of DIRECTV receiving equipment, and Galaxy Latin America
nearly doubled its net new subscriber additions compared to the third quarter of
1998. In fact, total revenues from our services operations more than doubled
compared to the third quarter of last year.
"Our U.S. DIRECTV business also drove our EBITDA growth in the quarter,"
Smith continued. "We have reached the point where the EBITDA generated by our
large subscriber base is outpacing the marketing costs associated with our
record subscriber growth. We expect our U.S. DIRECTV business to continue to
deliver positive EBITDA that accelerates yearly on a going-forward basis."
Hughes had a third quarter 1999 loss(2) of $29.6 million, compared to
earnings(2) of $42.9 million in the same period for 1998. The change in earnings
was primarily attributable to higher depreciation and amortization expenses
related principally to the United States Satellite Broadcasting Company, Inc.
(USSB) and PRIMESTAR transactions and increased PanAmSat satellite expenditures,
and an increase in net interest expense. These variances more than offset the
increase in EBITDA. This resulted in a loss per share, including the effect of
preferred stock dividends, of $0.13 in the third quarter of 1999 compared to
earnings per share (EPS) of $0.11 in the third quarter of 1998.
NINE-MONTH FINANCIAL REVIEW
For the first nine months of 1999, revenues increased 25.0% to $5,218.3
million compared with $4,173.3 million in 1998. This growth was primarily the
result of record subscriber growth in the Company's U.S. DIRECTV business, as
well as additional revenues resulting from the USSB and PRIMESTAR transactions.
HNS also contributed to the revenue growth, primarily through its record sales
of DIRECTV receiving equipment.
- 19 -
EBITDA for the first nine months of 1999 was $361.0 million and EBITDA
margin was 6.9%, compared to EBITDA of $538.5 million and EBITDA margin of 12.9%
in the same period of 1998. The declines were principally due to two one-time
charges: a second quarter 1999 pre-tax charge of $125.0 million related to
increased development costs and schedule delays related to several new product
lines at Hughes Space and Communications Company (HSC), and a first quarter 1999
pre-tax charge of $92.0 million resulting from the termination of the contract
for the Asia-Pacific Mobile Telecommunications (APMT) satellite system due to
export licenses not being issued. These declines were partially offset by
increased EBITDA at the Company's U.S. DIRECTV business, HNS and PanAmSat.
In the first nine months of 1999, Hughes incurred a loss of $43.6 million
and a loss per share, including the effect of preferred stock dividends, of
$0.17, compared to earnings of $143.5 million and EPS of $0.36 for the same
period in 1998. The decline was mostly due to the reduced EBITDA, higher
depreciation and amortization expenses related principally to the USSB and
PRIMESTAR transactions and increased PanAmSat satellite expenditures, and an
increase in net interest expense. These declines were partially offset by an
after-tax gain of $94.3 million ($154.6 million pre-tax) related to the
settlement of the Williams patent infringement case(3).
SEGMENT FINANCIAL REVIEW: THIRD QUARTER 1999
Direct-To-Home Broadcast
Third quarter revenues for the segment more than doubled to $1,144.6
million from $459.1 million in the third quarter of 1998. The segment had EBITDA
of $47.7 million and EBITDA margin of 4.2% compared with negative EBITDA of
$30.6 million in the third quarter of 1998.
United States: DIRECTV reported quarterly revenues of $1,052 million, more
than twice last year's third quarter revenues of $408 million. The increase was
due to strong subscriber growth, as well as additional revenues resulting from
the USSB and PRIMESTAR transactions.
DIRECTV added a record 423,000 net new subscribers to its high-power
DIRECTV service in the quarter, a 40% increase over the 303,000 net new
subscribers added in the third quarter of 1998. In addition, 204,000 customers
were transitioned from the PRIMESTAR By DIRECTV medium-power service to the
high-power service in the quarter. As of September 30, 1999, DIRECTV had more
than 7.7 million subscribers, which includes approximately 1.8 million customers
subscribing to PRIMESTAR By DIRECTV.
EBITDA for the third quarter of 1999 was $86 million compared to negative
EBITDA of $5 million in the preceding year's third quarter. This increase was
principally due to EBITDA contributions from the USSB and PRIMESTAR
transactions, as well as improved EBITDA resulting from the larger high-power
subscriber base.
Latin America and Japan: The DIRECTV business in Latin America generated
$76 million in revenues for the quarter compared with $37 million in the third
quarter of 1998. This increase was due to continued subscriber growth and
additional revenues resulting from the consolidation of Galaxy Brazil, Ltda.
(GLB)(4), Grupo Galaxy Mexicana , S.A. de C.V (GGM)(4), and SurFin, Ltd.(4)
- 20 -
The DIRECTV service in Latin America added 67,000 net new subscribers in
the third quarter of 1999, an 86% increase over the 36,000 acquired in the same
period last year. The total number of DIRECTV subscribers in Latin America as of
September 30, 1999 was 668,000.
Galaxy Latin America had negative EBITDA of $30 million compared to
negative EBITDA of $24 million for the same period in 1998. The change was
primarily due to the impact of the consolidation of GLB and higher marketing
expenses in the region.
In addition, DIRECTV Japan, of which Hughes currently owns 42 percent,
reported a total of 313,900 subscribers at the end of the third quarter of 1999.
Hughes' minority share of DIRECTV Japan's losses was $20 million for the
quarter, compared with $17 million in the third quarter of 1998. These losses
are reported in "Other, net" in the Statement of Income (Loss) and Available
Separate Consolidated Net Income (Loss).
Satellite Services
PanAmSat, which is 81% owned by Hughes, reported third quarter 1999
revenues of $210.7 million compared with $186.5 million in the prior year's
period. The 13.0% increase includes a one-time customer payment associated with
the termination of a direct-to-home video services agreement in India and the
commencement of new service agreements on additional satellites placed in
service. During the third quarter of 1999, total video services revenues
increased 3% to $139.8 million while telecommunications services revenues
increased 13% to $46.1 million, compared to the prior year's third quarter.
EBITDA for the quarter was $169.0 million, a 24.5% increase over third
quarter 1998 EBITDA of $135.7 million. EBITDA margin in the third quarter of
1999 was 80.2%, compared to 72.8% in the same period of 1998. The increases in
EBITDA and EBITDA margin were principally due to the one-time termination
payment described above, lower leaseback expense resulting from the exercise of
certain early buy-out options under sale-leaseback agreements, and increased
operating lease revenues.
Satellite Systems
Third quarter 1999 revenues for the segment declined to $510.8 million
from $688.9 million for the same period in 1998. EBITDA for the third quarter of
1999 was $56.3 million compared to EBITDA of $76.7 million in the third quarter
of 1998. These variances were principally due to reduced activity associated
with the ICO Global Communications program. EBITDA margin in the quarter was
11.0%, compared to 11.1% in the third quarter of 1998.
Network Systems
HNS grew third quarter 1999 revenues 59.2% to $426.2 million, versus
$267.7 million in the third quarter of 1998. This growth was due primarily to
higher sales of DIRECTV receiving systems, satellite-based mobile telephone
systems, and U.S. private business network systems. HNS shipped 730,000 DIRECTV
receiving systems in the third quarter of 1999, compared to 232,000 in the same
year-ago period.
- 21 -
HNS increased EBITDA 56.5% to $44.3 million in the quarter, compared to
$28.3 million in the third quarter of 1998. The increase in EBITDA is primarily
attributable to the increased revenues resulting from higher sales of DIRECTV
receiving equipment, satellite-based mobile telephone systems, and U.S. private
business network systems. EBITDA margin in the third quarter of 1999 was 10.4%,
compared to 10.6% in the same year-ago period.
BALANCE SHEET
From December 31, 1998 to September 30, 1999, the Company's consolidated
cash balance declined $1,183.8 million to $158.3 million and long-term debt
increased $1,150.5 million to $1,929.2 million. The principal cash requirements
for the first nine months were related to the acquisitions of United States
Satellite Broadcasting Company and PRIMESTAR's medium-power satellite business,
purchase of the Tempo high-power satellite assets, early buy-out of certain
PanAmSat satellite sale-leaseback agreements, increased investment in the
DIRECTV businesses in Latin America and Japan, capital expenditures and general
working capital requirements.
These requirements were partially offset by a $1.5 billion investment by
America Online, Inc. (AOL) and proceeds from the settlement of the Williams
patent infringement case.(3)
Hughes Electronics Corporation is a unit of General Motors Corporation.
The earnings of Hughes Electronics are used to calculate the earnings per share
attributable to General Motors (NYSE:GMH) Class H common stock.
NOTE: Hughes Electronics Corporation believes that certain statements in
this press release may constitute forward-looking statements within the meaning
of The Private Securities Litigation Reform Act of 1995. When used in this press
release, the words "estimate," "plan," "project," "anticipate," "expect,"
"intend," "outlook," "believe," and other similar expressions are intended to
identify forward-looking statements and information. Actual results of Hughes
may differ materially from anticipated results as a result of certain risks and
uncertainties, which include but are not limited to those associated with:
economic conditions; demand for products and services, and market acceptance;
government action; local political or economic developments in or affecting
countries where we have international operations; our ability to obtain export
licenses; competition; our ability to achieve cost reductions; technological
risks; our ability to address the year 2000 issue; interruptions to production
attributable to causes outside our control; limitations on access to
distribution channels; the success and timelines of satellite launches; the
in-orbit performance of satellites; the ability of our customers to obtain
financing; and our ability to access capital to maintain our financial
flexibility. Hughes cautions that these important factors are not exclusive.
- ----------------------
1 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the
sum of operating profit (loss) and depreciation and amortization. EBITDA margin
is calculated by dividing EBITDA by total revenues.
2 Excludes the effects of purchase accounting adjustments related to General
Motors' acquisition of Hughes in 1985.
3 Hughes was awarded a final judgement arising from its long-running Williams
patent infringement case, which was originally filed by Hughes in 1973. The
award resulted from the repeated infringement by the U.S. Government over a span
of two decades of a patent that revolutionized communications satellite attitude
control and made the geosynchronous satellite practical. A payment of $154.6
million was received in the first quarter of 1999 and was recorded in "Other,
net."
4 Galaxy Brazil, Ltda. (GLB) is the local operating company providing DIRECTV
service in Brazil. Grupo Galaxy Mexicana, S.A. de C.V. (GGM) is the local
operating company providing DIRECTV service in Mexico. SurFin Ltd., provides
financing for DIRECTV receiving equipment in Latin America. As a result of
transactions that were completed in July 1999 (GLB), February 1999 (GGM) and
November 1998 (SurFin), Hughes owns a majority position in each company.
######
- 22 -
STATEMENT OF INCOME (LOSS) AND
AVAILABLE SEPARATE CONSOLIDATED NET INCOME (LOSS)
(Dollars in Millions Except Per Share Amounts)
Nine Months Ended
Third Quarter September 30,
------------- -------------
1999 1998 1999 1998
- ----------------------------------------------------------------------------
Revenues
Direct broadcast, leasing and
other services $1,294.4 $640.5 $3,095.2 $1,845.8
Product sales 696.1 872.8 2,123.1 2,327.5
- ----------------------------------------------------------------------------
Total Revenues 1,990.5 1,513.3 5,218.3 4,173.3
- ----------------------------------------------------------------------------
Operating Costs and Expenses
Cost of products sold 606.7 659.5 1,961.6 1,782.4
Broadcast programming and other
costs 573.9 284.6 1,344.1 800.2
Selling, general and
administrative expenses 598.3 390.4 1,551.6 1,052.2
Depreciation and amortization 216.5 111.3 499.3 309.2
Amortization of GM purchase
accounting adjustments (1) 5.3 5.3 15.9 15.9
- ----------------------------------------------------------------------------
Total Operating Costs
and Expenses 2,000.7 1,451.1 5,372.5 3,959.9
- ----------------------------------------------------------------------------
Operating Profit (Loss) (10.2) 62.2 (154.2) 213.4
Interest income 2.4 20.5 20.9 88.6
Interest expense (51.7) (3.6) (71.0) (9.5)
Other, net (22.4) (33.4) 77.8 (102.8)
- ----------------------------------------------------------------------------
Income (Loss) Before Income Taxes,
Minority Interests and Cumulative
Effect of Accounting Change (81.9) 45.7 (126.5) 189.7
Income tax provision (benefit) (38.2) 17.4 (44.9) 72.1
Minority interests in net losses
of subsidiaries 8.8 9.3 22.1 19.2
- ----------------------------------------------------------------------------
Income (Loss) before cumulative
effect of accounting change (34.9) 37.6 (59.5) 136.8
Cumulative effect of accounting
change, net of taxes - - - (9.2)
- ----------------------------------------------------------------------------
Net Income (Loss) (34.9) 37.6 (59.5) 127.6
Adjustments to exclude the effect
of GM purchase accounting
adjustments (1) 5.3 5.3 15.9 15.9
- ----------------------------------------------------------------------------
Earnings (Loss) excluding GM purchase
Accounting adjustments (29.6) 42.9 (43.6) 143.5
Preferred stock dividends (24.7) - (26.3) -
- ----------------------------------------------------------------------------
Earnings (Loss) Used for Computation of
Available Separate Consolidated
Net Income (Loss) $(54.3) $42.9 $(69.9) $143.5
============================================================================
Available Separate Consolidated Net
Income (Loss)
Average number of shares of
General Motors Class H
Common Stock outstanding
(in millions) (Numerator) 135.1 105.7 120.8 105.0
Average Class H dividend base
(in millions) (Denominator) 428.9 399.9 414.7 399.9
Available Separate Consolidated Net
Income (Loss) $(17.1) $11.4 $(20.4) $37.6
============================================================================
Earnings (Loss) Attributable to
General Motors Class H Common
Stock on a Per Share
Basis - Basic and Diluted $(0.13) $0.11 $(0.17) $0.36
============================================================================
(1)Relates to General Motors' purchase of Hughes in 1985.
- 23 -
BALANCE SHEET
(Dollars in Millions)
September 30,
1999 December 31,
ASSETS (Unaudited) 1998
- ----------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $158.3 $1,342.1
Accounts and notes receivable 1,289.8 922.4
Contracts in process 846.1 783.5
Inventories 639.1 471.5
Prepaid expenses, deferred income taxes and other 705.9 326.9
- ----------------------------------------------------------------------------
Total Current Assets 3,639.2 3,846.4
Satellites - Net 3,690.6 3,197.5
Property - Net 1,303.0 1,059.2
Net Investment in Sales-type Leases 155.9 173.4
Intangible Assets, net 7,781.5 3,552.2
Investments and Other Assets 2,236.1 1,606.3
- ----------------------------------------------------------------------------
Total Assets $18,806.3 $13,435.0
============================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
- ----------------------------------------------------------------------------
Current Liabilities
Accounts payable $1,005.7 $764.1
Advances on contracts 164.5 291.8
Deferred revenues 194.9 43.8
Current portion of long-term debt 298.1 156.1
Accrued liabilities 933.1 753.7
- ----------------------------------------------------------------------------
Total Current Liabilities 2,596.3 2,009.5
Long-Term Debt 1,929.2 778.7
Postretirement Benefits Other Than Pensions 155.5 150.7
Other Liabilities and Deferred Credits 1,686.1 988.6
Deferred Income Taxes 425.0 643.9
Commitments and Contingencies
Minority Interests 530.0 481.7
Stockholder's Equity 11,484.2 8,381.9
- ----------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity $18,806.3 $13,435.0
============================================================================
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).
- 24 -
PRO FORMA SELECTED SEGMENT DATA*
(Dollars in Millions)
Nine Months Ended
Third Quarter September 30,
------------- -------------
1999 1998 1999 1998
- --------------------------------------------------------------------------
DIRECT-TO-HOME BROADCAST
Total Revenues $1,144.6 $459.1 $2,571.4 $1,248.5
EBITDA (1) $47.7 $(30.6) $44.8 $(56.4)
EBITDA Margin (1) 4.2% N/A 1.7% N/A
Operating Loss $(67.6) $(61.8) $(159.4) $(133.6)
Depreciation and Amortization $115.3 $31.2 $204.2 $77.2
Capital Expenditures (2) $97.6 $82.0 $253.4 $130.1
- --------------------------------------------------------------------------
SATELLITE SERVICES
Total Revenues $210.7 $186.5 $604.6 $570.6
EBITDA (1) $169.0 $135.7 $465.9 $409.0
EBITDA Margin (1) 80.2% 72.8% 77.1% 71.7%
Operating Profit $99.1 $79.1 $261.4 $239.2
Operating Profit Margin 47.0% 42.4% 43.2% 41.9%
Depreciation and Amortization $69.9 $56.6 $204.5 $169.8
Capital Expenditures (3) $382.7 $190.7 $857.9 $605.0
- --------------------------------------------------------------------------
SATELLITE SYSTEMS
Total Revenues $510.8 $688.9 $1,694.9 $1,988.0
EBITDA (1)(4) $56.3 $76.7 $(64.7) $214.0
EBITDA Margin (1) 11.0% 11.1% N/A 10.8%
Operating Profit (Loss) (4) $41.3 $63.8 $(106.1) $178.9
Operating Profit Margin 8.1% 9.3% N/A 9.0%
Depreciation and Amortization $15.0 $12.9 $41.4 $35.1
Capital Expenditures $17.0 $18.2 $52.1 $50.5
- --------------------------------------------------------------------------
NETWORK SYSTEMS
Total Revenues $426.2 $267.7 $998.2 $674.1
EBITDA (1)(4) $44.3 $28.3 $63.4 $9.6
EBITDA Margin (1) 10.4% 10.6% 6.4% 1.4%
Operating Profit (Loss) (4) $32.2 $16.9 $25.7 $(20.2)
Operating Profit Margin 7.6% 6.3% 2.6% N/A
Depreciation and Amortization $12.1 $11.4 $37.7 $29.8
Capital Expenditures $5.4 $10.7 $23.1 $26.4
- --------------------------------------------------------------------------
ELIMINATIONS and OTHER
Total Revenues $(301.8) $(88.9) $(650.8) $(307.9)
EBITDA (1) $(105.7) $(31.3) $(148.4) $(37.7)
Operating Loss $(109.9) $(30.5) $(159.9) $(35.0)
Depreciation and Amortization $4.2 $(0.8) $11.5 $(2.7)
Capital Expenditures $41.4 $(21.4) $45.9 $114.5
- --------------------------------------------------------------------------
TOTAL
Total Revenues $1,990.5 $1,513.3 $5,218.3 $4,173.3
EBITDA (1)(4) $211.6 $178.8 $361.0 $538.5
EBITDA Margin (1) 10.6% 11.8% 6.9% 12.9%
Operating Profit (Loss) (4) $(4.9) $67.5 $(138.3) $229.3
Operating Profit Margin N/A 4.5% N/A 5.5%
Depreciation and Amortization $216.5 $111.3 $499.3 $309.2
Capital Expenditures $544.1 $280.2 $1,232.4 $926.5
==========================================================================
* 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)EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is
the sum of operating profit (loss) and depreciation and amortization. EBITDA
margin is calculated by dividing EBITDA by total revenues.
(2)Includes satellite expenditures amounting to $13.6 million, $38.0 million,
$89.1 million and $38.0 million, respectively.
(3)Includes satellite expenditures amounting to $93.2 million, $182.2 million,
$408.8 million and $422.2 million, respectively. Also included are
expenditures related to the early buy-out of satellite sale-leasebacks
totaling $263.2 million for the third quarter of 1999 and $404.5 million and
$155.5 million for the first nine months of 1999 and 1998, respectively.
(4)Amounts for the nine months ended September 30, 1999 include charges of
$81.0 million and $11.0 million for the Satellite Systems and Network Systems
segments, respectively, relating to the termination of the Asia-Pacific
Mobile Telecommunications satellite systems contract due to export licenses
not being issued.
- 25 -
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 14, 1999
-----------------
By
s/Peter R. Bible
----------------------------
(Peter R. Bible,
Chief Accounting Officer)
- 26 -
