-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A7e/Ve9Yv3sa7AQe0RfCP47SzL0WbzUd7RlDD7EgLbstO8ddMfNy1DzO2tTn371S YaRA01q2iLu1MHO+VwcELQ== 0000040730-00-000008.txt : 20000202 0000040730-00-000008.hdr.sgml : 20000202 ACCESSION NUMBER: 0000040730-00-000008 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000120 ITEM INFORMATION: FILED AS OF DATE: 20000120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL MOTORS CORP CENTRAL INDEX KEY: 0000040730 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 380572515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-00143 FILM NUMBER: 510291 BUSINESS ADDRESS: STREET 1: 100 RENAISSANCE CTR CITY: DETROIT STATE: MI ZIP: 48265-1000 BUSINESS PHONE: 3135565000 MAIL ADDRESS: STREET 1: 3044 W GRAND BOULEVARD CITY: DETROIT STATE: MI ZIP: 48202-3091 8-K 1 GM 4TH QTR PRESS RELEASE 99 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) January 20, 2000 ---------------- 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.) 300 Renaissance Center, Detroit, Michigan 48265-3000 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 January 20, 2000, a news release was issued on the subject of fourth 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 Annual Report on Form 10-K. Following is the fourth quarter earnings release for GM, and their subsidiary Hughes Electronics Corporation's (Hughes) earnings release dated January 19, 2000. GM REPORTS RECORD ANNUAL REVENUES OF $176.6 BILLION FOR 1999 REVENUE GROWTH DRIVES RECORD ANNUAL EARNINGS OF $8.53 PER SHARE DETROIT -- Record calendar-year revenues and earnings were reported today by General Motors Corp. (NYSE: GM) on continued strong performance by its automotive operations and record earnings at General Motors Acceptance Corp. (GMAC). - GM's consolidated net sales and revenues totaled a record $176.6 billion in calendar-year 1999, an increase of 13.6 percent compared with the prior year when revenues were $155.4 billion. - The revenue growth in 1999 helped drive a record $8.53 diluted earnings per share of GM $1-2/3 par value common stock for the calendar year, compared with $4.32 per share in 1998. - Income during 1999 totaled $5.6 billion, compared with $3.0 billion in the prior year. - Excluding special items (see "Highlights" for details), 1999 income totaled a record $5.7 billion, or $8.62 per share. - GM's global automotive operations generated record income of $5.0 billion in 1999, driven by GM North America's record income of $4.8 billion. - GMAC had record income totaling $1.5 billion in 1999. - GM's fourth-quarter-1999 revenues totaled $46.3 billion, compared with $44.6 billion in 1998. - Income for the fourth quarter of 1999 totaled $1.1 billion, or $1.86 per share, compared with $1.7 billion, or $2.48 per share, in the prior-year period. "We're pleased that our financial performance remained on track even as we faced unceasing competitive pressures," said GM Chairman and Chief Executive Officer John F. Smith, Jr. "Record market demand in North America and Europe fueled increased sales of GM vehicles in these intensely competitive markets, while we continued to be affected by economic pressures in Latin America and the Asia-Pacific region. We're particularly gratified by the record performance of our automotive operations in North America, and GMAC," he said. "As we close the books on the decade of the 90s, we feel we've taken a number of important steps to secure the future of General Motors," Smith said. "Very significant among these were our strong financial turnaround; the restructuring of the corporation with the separation of Delphi Automotive Systems, Hughes Defense, and Electronic Data Systems; the global integration of our automotive operations and expansion of our strategic global alliances; and our aggressive move into e-commerce, including the establishment of e-GM and GM TradeXchange. - 2 - "We enter the 21st century with a strong foundation," Smith said, "and we'll need to be even stronger as we face the tough challenges and boundless opportunities ahead of us. We are implementing our plans to make General Motors a faster, leaner, more innovative and customer-focused enterprise." Cash, marketable securities, and assets of the Voluntary Employees' Beneficiary Association (VEBA) trust invested in short-term fixed-income securities totaled $14.4 billion at Dec. 31, 1999, compared with $13.1 billion at Dec. 31, 1998, and $16.7 billion at Sept. 30, 1999. These cash amounts exclude GM's financing and insurance operations. "The strength of our cash position allowed us to complete our latest $4 billion stock-repurchase program, and take advantage of growth opportunities by expanding and strengthening our global automotive partnerships, along with funding our strong commitment to new products," Smith said. During the fourth quarter of 1999, GM repurchased 23.3 million shares of its $1-2/3 par value common stock worth $1.6 billion. Since January 1997, GM has repurchased approximately 140 million shares of GM $1-2/3 par value common stock worth $9.0 billion, or more than 18 percent of the total shares outstanding. The corporation's 1999-calendar-year return on net assets (RONA), excluding Hughes, was 14.0 percent. "RONA performance in 1999 was well above our 12.5-percent target," Smith said. "We are focused on further improving this performance to maintain our financial strength and provide a superior return to our shareholders." Unless otherwise noted, corporate and sector data in the remainder of this release exclude special items (see "Highlights" for fourth-quarter and calendar-year data). GM's 1999-calendar-year results were driven by strong year-over-year increases at GM North America (GMNA) and GMAC. After adjusting both years for the above-mentioned special items, and excluding the $1.5 billion strike-related unfavorable impact in 1998, GM North America posted a 42-percent improvement in income in 1999 over the prior year. In establishing its new calendar-year-record results, GMAC generated over 16 percent more income in 1999 than during the prior year. "These strong GMNA and GMAC results and improvements in Latin America reflect our emphasis on reducing structural costs and growing the business. This performance offset reduced earnings and losses in other areas of our business, again demonstrating the advantages of operating as a globally integrated enterprise," Smith said. GM's fourth-quarter-1999 results primarily reflected lower production and unfavorable mix due to the full-size utility truck startups in North America and lower production in Europe. In addition, all the automotive regions face continuing competitive pressures, while Hughes has incurred further costs associated with the rapid acceleration of its DIRECTV operations. Following is a summary of income from GM's business segments in the 1999 fourth quarter and calendar year, compared with the prior-year period. These results are adjusted to exclude special items. Calendar-year-1998 results include the previously mentioned unfavorable strike impact. (see "Highlights" for additional information): - 3 - Adjusted Fourth Quarter and Calendar Year Income (Loss) ($ in Millions) Fourth Quarter Calendar Year 1999 1998 1999 1998 ---------------------------------------- GM North America $1,013 $1,663 $4,565 $1,715 GM Europe $30 $146 $423 $463 GM Latin America/Africa /Mid-East $18 ($161) ($81) ($124) GM Asia Pacific ($23) ($116) ($218) ($146) Other Automotive $12 ($5) $35 ($2) --- ---- --- ---- Total Automotive $1,050 $1,527 $4,724 $1,906 GMAC $367 $298 $1,543 $1,325 Hughes ($61) $119 ($105) $272 Other ($101) ($32) ($476) ($182) ------ ----- ------ ------ Total Income from Continuing Operations $1,255 $1,912 $5,686 $3,321 GM Automotive's net margin was 2.8 percent in the fourth quarter of 1999, and 3.2 percent for the calendar year, compared with a net margin of 4.1 percent in the fourth quarter of 1998, and 1.5 percent for calendar-year 1998. GM North America's net margin was 3.4 percent in the fourth quarter of 1999, and 4.0 percent for the calendar year, compared with 5.8 percent in the fourth quarter of 1998 and 1.8 percent for the 1998 calendar year. "Taking advantage of a record market, GM North America had a strong year," said GM President and Chief Operating Officer G. Richard Wagoner, Jr. "We're extremely pleased with the reaction of customers to our 14 new products, especially our new full-size pickups. In fact, these models contributed heavily to our all-time-high truck sales in 1999." GM's global automotive operations were strengthened during 1999 with the enhancement and expansion of major partnerships and alliances. "We strengthened our alliances with Isuzu and Suzuki, forged a new partnership with Fuji Heavy Industries, and we recently announced that we will take full ownership of Saab. We also strengthened our collaboration with Toyota, and in December announced joint activities with Honda," Wagoner said. "Our alliance strategy is an innovative way to achieve growth that takes advantage of unique opportunities in geographic regions, product segments, and technology. It's a big departure from the industry's historic 'go-it-alone' approach, but we think it's right for today's world," Wagoner said. "While industry sales in Europe were at record levels once again, the competitive environment continued to heat up," Wagoner said. "GM Europe (GME) had record vehicle deliveries of 1,979,000 units in 1999, resulting in a market share of 9.8 percent, an improvement of 0.2 percentage points over 1998. And importantly, GME was profitable in all four quarters of 1999. For 2000, we're accelerating our focus on improving financial performance and growing sales with a strong array of new products," he said. "Although the Latin America/Africa/Mid-East region continued to be affected by poor economic conditions, we were pleased that we moved into a profitable position in the fourth quarter of 1999, a notable turnaround from the prior-year period," Wagoner said. "Operating efficiencies continued to improve, and we strengthened our position in the region, growing our market share in 1999 by 0.9 percentage points to 16.6 percent." - 4 - The Asia-Pacific region significantly reduced its fourth-quarter losses compared with the prior-year period. "This was largely due to the strong startup of our Shanghai GM joint venture in China, and Holden's excellent sales and financial performance in Australia," Wagoner said. "We continue to better position ourselves for future growth in the region through expanded and enhanced strategic partnerships and alliances." GMAC's improved financial performance in both the fourth quarter of 1999 and the calendar year was led by strong improvements at its core North American automotive-financing operations. For the calendar year, earnings from mortgage operations more than doubled from the previous year. "GMAC's earnings for 1999 were a record and represented the fifth straight year of increasing earnings. While our North American auto finance and mortgage operations posted the biggest improvements, continued investments in insurance and international operations plus our recent expansion in commercial finance have paved the way for continued growth in overall financial-services income," Smith said. Hughes Electronics' net sales and revenues increased 25 percent to $7.6 billion in 1999, from $6.1 billion in 1998. "The revenue increase was primarily driven by continued growth in the DIRECTV business, which added a record 1.6 million net new subscribers in 1999," Smith said. "DIRECTV continues to be the world's largest direct-to-home provider of digital entertainment programming with more than 9 million subscribers worldwide." Hughes' net loss in 1999's fourth quarter and calendar year was primarily related to investments in growth opportunities, which are expected to result in increased revenues and profits in the future. Hughes last week announced major changes in its corporate structure and business mix that are designed to sharply focus the company's resources and management attention on its high-growth entertainment, information, and business communications services. Actions included the sale of Hughes' satellite systems operations, and a strategy to discontinue certain wireless manufacturing activities and focus on wireless broadband opportunities. 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 Current Reports on Form 8-K dated April 12, 1999, and filed on April 15, 1999, and April 21, 1999. # # # - 5 - HIGHLIGHTS - Q4 Financial Results (Dollars in Millions Except Per Share Amounts) Three Months Ended December 31, ------------------------------------ Adjusted Adjusted 1999 1999(1) 1998 1998(1) -------- ------- ------- -------- Net sales and revenues Manufactured products $40,006 $40,006 $39,074 $39,074 Financial services 3,929 3,929 3,495 3,495 Other income 2,327 2,327 2,055 2,055 ------ ------ ------ ------ Total net sales and revenues $46,262 $46,262 $44,624 $44,624 ------ ------ ------ ------ Income from continuing operations $1,145 $1,255 $1,684 $1,912 Income from discontinued operations - - 88 N/A ------ ------ ------ ------ Consolidated net income $1,145 $1,255 $1,772 N/A Net profit margin from continuing operations 2.5% 2.7% 3.8% 4.3% ............................................................. Earnings Attributable to Common Stocks $1-2/3 par value Continuing operations $1,196 $1,253 $1,637 $1,865 Discontinued operations - - 88 N/A ------ ------ ------ ------ $1-2/3 par value $1,196 $1,253 $1,725 N/A Class H (4) $(80) $(27) $32 $32 ............................................................. Basic Earnings Per Share Attributable to Common Stocks $1-2/3 par value Continuing operations $1.90 $1.99 $2.51 $2.86 Discontinued operations - - 0.13 N/A ------ ------ ------ ------ $1-2/3 par value $1.90 $1.99 $2.64 N/A Class H (4) $(0.58) $(0.20) $0.30 $0.30 ............................................................. Diluted Earnings Per Share Attributable to Common Stocks $1-2/3 par value Continuing operations $1.86 $1.95 $2.48 $2.82 Discontinued operations - - 0.13 N/A ------ ------ ------ ------ $1-2/3 par value $1.86 $1.95 $2.61 N/A Class H (4) $(0.58) $(0.20) $0.30 $0.30 ............................................................. 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 December 31, ---------------------- 1999 1998 --------- --------- $1-2/3 par value $26.19 $20.00 Class H $15.71 $12.00 ............................................................. See footnotes beginning on page 12. Continues - 6 - HIGHLIGHTS - Q4 Adjusted for Special Items by Segment (Dollars in Millions) Three Months Ended December 31, 1999 ---------------------------- (1) Reported (7) Adjusted Income Special Income (Loss) Items (Loss) ------- ------- -------- GM North America (GMNA) $1,270 $257 $1,013 GM Europe (GME) 30 - 30 GM Latin America/ Africa/Mid-East (GMLAAM) 18 - 18 GM Asia/Pacific (GMAP) (23) - (23) Other Automotive 12 - 12 ----- ---- ----- Total GM Automotive (GMA) $1,307 $257 $1,050 Hughes (6) (226) (165) (61) Other (282) (186) (96) ----- ---- ----- Total Automotive, Electronics and Other Operations $799 $(94) $893 GMAC $351 $(16) $367 Other (5) - (5) ----- ---- ----- Total Financing and Insurance Operations $346 $(16) $362 ----- ---- ----- Income (loss) from continuing operations $1,145 $(110) $1,255 Income (loss) from discontinued operations - - - ----- ---- ----- Consolidated Net Income (Loss) $1,145 $(110) $1,255 ===== ==== ===== See footnotes beginning on page 12. Continues - 7 - HIGHLIGHTS - Q4 Adjusted for Special Items by Segment (Dollars in Millions) Three Months Ended December 31, 1998 ---------------------------- (1) Reported (2) Adjusted Income Special Income (Loss) Items (Loss) ------- ------- -------- GM North America (GMNA) $1,583 $(80) $1,663 GM Europe (GME) 146 - 146 GM Latin America/ Africa/Mid-East (GMLAAM) (212) (51) (161) GM Asia/Pacific (GMAP) (213) (97) (116) Other Automotive (5) - (5) ----- ---- ----- Total GM Automotive (GMA) $1,299 $(228) $1,527 Hughes (4)(6) 119 - 119 Other (53) - (53) ----- ---- ----- Total Automotive, Electronics and Other Operations $1,365 $(228) $1,593 GMAC $298 $- $298 Other 21 - 21 ----- ---- ----- Total Financing and Insurance Operations $319 $- $319 ----- ---- ----- Income (loss) from continuing operations $1,684 $(228) $1,912 Income from discontinued operations 88 N/A N/A ----- ---- ----- Consolidated Net Income $1,772 N/A N/A ===== ==== ===== See footnotes beginning on page 12. Continues - 8 - HIGHLIGHTS - Q4 Adjusted for Special Items by Region (Dollars in Millions) Three Months Ended December 31, 1999 ------------------------------- GMNA GME GMLAAM GMAP ----- ------ ------ ------ Reported -------- Total net sales and revenues $29,948 $6,556 $ 1,261 $ 941 ------ ----- ----- --- Pre-tax income (loss) $1,964 $37 $(42) $(27) Income tax expense (benefit) 668 12 (50) 1 Equity income/(loss) and minority interests (26) 5 10 5 ----- ----- ----- --- Net income (loss) $1,270 $30 $18 $(23) ===== ===== ===== === Net profit (loss) margin 4.2% 0.5% 1.4% (2.4%) Effective income tax rate 34.0% 32.4% 119.0% (3.7%) LESS: Special Items (7) ------------------- Total net sales and revenues $- $ - $ - $ - ----- ----- ----- --- Pre-tax income $415 $- $- $- Income tax expense 158 - - - Equity income/(loss) and minority interests - - - - ----- ----- ----- --- Net income $257 $- $- $- ===== ===== ===== === Adjusted (1) -------- Total net sales and revenues $29,948 $6,556 $1,261 $941 ------ ----- ----- --- Pre-tax income (loss) $1,549 $37 $(42) $(27) Income tax expense (benefit) 510 12 (50) 1 Equity income/(loss) and minority interests (26) 5 10 5 ----- ----- ----- --- Net income (loss) $1,013 $30 $18 $(23) ===== ===== ===== === Net profit (loss) margin 3.4% 0.5% 1.4% (2.4%) Effective income tax rate 32.9% 32.4% 119.0% (3.7%) See footnotes beginning on page 12. Continues - 9 - HIGHLIGHTS - Q4 Adjusted for Special Items by Region (Dollars in Millions) Three Months Ended December 31, 1998 ------------------------------- GMNA GME GMLAAM GMAP ----- ------ ------ ------ Reported -------- Total net sales and revenues $28,578 $7,493 $1,437 $850 ------ ----- ----- --- Pre-tax income (loss) $2,403 $229 $(366) $(97) Income tax expense (benefit) 813 81 (139) 3 Equity income/(loss) and minority interests (7) (2) 15 (113) ----- ----- ----- --- Net income (loss) $1,583 $146 $(212) $(213) ===== ===== ===== === Net profit (loss) margin 5.5% 1.9% (14.8%) (25.1%) Effective income tax rate 33.8% 35.4% 38.0% (3.1%) LESS: Special Items (2) ------------------- Total net sales and revenues $ - $ - $ - $ - ----- ----- ----- --- Pre-tax loss $(105) $ - $(82) $(37) Income tax benefit (40) - (31) - Equity income/(loss) and minority interests (15) - - (60) ----- ----- ----- --- Net (loss) income $(80) $ - $(51) $(97) ===== ===== ===== === Adjusted (1) -------- Total net sales and revenues $28,578 $7,493 $1,437 $850 ------ ----- ----- --- Pre-tax income (loss) $2,508 $229 $(284) $(60) Income tax expense (benefit) 853 81 (108) 3 Equity income/(loss) and minority interests 8 (2) 15 (53) ----- ----- ----- --- Net income (loss) $1,663 $146 $(161) $(116) ===== ===== ===== === Net profit (loss) margin 5.8% 1.9% (11.2%) (13.6%) Effective income tax rate 34.0% 35.4% 38.0% (5.0%) See footnotes beginning on page 12. Continues - 10 - HIGHLIGHTS - Q4 Operating Information Three Months Ended December 31, --------------------- 1999 1998 ------- ------- Worldwide Wholesale Sales (units in 000s) United States: Cars 704 739 Trucks 633 616 ------ ------ Total United States 1,337 1,355 Canada and Mexico 157 169 ------ ------ Total GM North America 1,494 1,524 ------ ------ GME 497 525 GMLAAM 124 131 GMAP 109 91 ------ ------ Total International 730 747 ------ ------ Total Worldwide 2,224 2,271 ====== ====== .................................................... Vehicle Unit Deliveries (units in 000s) United States Chevrolet - Cars 202 209 - Trucks 427 382 Pontiac 132 134 GMC 134 112 Buick 89 102 Oldsmobile 70 98 Saturn 54 52 Cadillac 45 52 Other 8 9 ------ ------ Total United States 1,161 1,150 Canada and Mexico 172 148 ------ ------ Total GM North America 1,333 1,298 ------ ------ GME 445 443 GMLAAM 136 144 GMAP 119 107 ------ ------ Total International 700 694 ------ ------ Total Worldwide 2,033 1,992 ====== ====== .................................................... Market share United States Cars 27.9% 31.7% Trucks 27.9% 26.5% Total 27.9% 29.1% Total North America 27.5% 28.5% Total Europe 9.8% 10.0% Total Latin America 20.7% 19.7% Total Asia and Pacific 4.0% 4.0% Total Worldwide 15.4% 15.7% ..................................................... U.S. Retail/Fleet Mix % Fleet Sales - Cars 28.1% 32.8% % Fleet Sales - Trucks 12.8% 13.4% Total vehicles 20.2% 23.8% .................................................... Days Supply of Inventory - U.S. Cars 93 83 Trucks 85 76 ..................................................... Capacity Utilization % U.S. and Canada (2-shift rated)(5)96.6% N/A ..................................................... GMNA Net Price (%) (0.3%) 1.3% ..................................................... See footnotes beginning on page 12. Continues - 11 - HIGHLIGHTS - Q4 Other Financial Information (Dollars in Millions Except Per Share Amounts) Three Months Ended December 31, ---------------------- 1999 1998 --------- ---------- Depreciation and Amortization (3) Depreciation $1,080 $1,032 Amortization of special tools 603 767 Amortization of intangible assets 69 29 ------ ----- Total $1,752 $1,828 ====== ===== .................................................... Worldwide Employment at December 31 (in 000s) GMNA 217 226 GME 81 84 GMLAAM 23 24 GMAP 10 10 Hughes 18 15 GMAC 28 24 Other 11 13 ------ ------ Total 388 396 ====== ====== .................................................... Worldwide Payrolls $5,546 $5,065 .................................................... (1) Adjusted amounts represent the reported amounts less the effects of special items (see page 24 for a breakout of the special items for each respective year). Reported amounts for discontinued operations have not been adjusted for special items. (2) As a result of GM's Competitiveness Studies, fourth quarter 1998 continuing operations were impacted by charges totaling $224 million ($228 million after-tax or $0.34 diluted earnings per share of $1-2/3 par value common stock). These studies were performed in conjunction with GM's business planning cycle. (3) Amounts exclude depreciation and amortization charges incurred by the financing and insurance operations. (4) 1998 results include the cumulative effect of accounting change of $9 million due to Hughes' adoption of SOP 98-5. Hughes has reported the $9 million change as a restatement of first quarter 1998 results. (5) 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. (6) Excludes the effects of purchase accounting adjustments related to General Motors' acquisition of Hughes in 1985, and in 1999 also excludes Hughes Series A Preferred Stock dividends payable to General Motors. (7) Special items for fourth quarter 1999 are as follows (all earnings per share amounts are reported as diluted): A favorable adjustment of $892 million ($553 million after-tax or $0.86 per share of $1-2/3 par value common stock) related to the reversal of a liability for benefits payable to excess U.S. hourly employees. For a number of reasons, including a stronger than expected market, higher attrition caused by the separation of Delphi and provisions of the 1999 agreement with the UAW, a substantial number of excess U.S. hourly workers have been placed into the active workforce. The culmination of these events in the fourth quarter of 1999 made it clear that this liability required adjustment; continues - 12 - HIGHLIGHTS - Q4 Other Financial Information (7) continued A charge of $658 million ($408 million after-tax or $0.63 per share of $1-2/3 par value common stock) related to the benefit increase granted to hourly retirees in connection with the 1999 UAW agreement. Consistent with past practice, GM expenses this benefit in the period that the contract with the UAW is ratified; A charge of $147 million ($90 million after-tax or $0.14 per share of $1-2/3 par value common stock) related to a U.S. salaried early retirement program. Approximately 1,700 (100 executives) people elected participation in this program; and A charge of $272 million ($165 million after-tax or $0.18 per share of $1-2/3 par value common stock and $0.38 per share of GM Class H common stock) related to Hughes' decision to discontinue certain of its wireless manufacturing operations at Hughes Network Systems. - 13 - HIGHLIGHTS - Year Ended Financial Results (Dollars in Millions Except Per Share Amounts) Year Ended December 31, ---------------------------------------- Adjusted Adjusted 1999 1999(1) 1998 1998(1) -------- ------- ------- -------- Net sales and revenues Manufactured products $152,635 $152,635 $134,276 $134,276 Financial services 14,734 14,734 13,585 13,585 Other income 9,189 9,189 7,584 7,584 ------- ------- ------- ------- Total net sales and revenues $176,558 $176,558 $155,445 $155,445 ------- ------- ------- ------- Income from continuing operations $5,576 $5,686 $3,049 $3,321 Income (loss) from discontinued operations 426 426 (93) N/A ------ ------ ------ ------ Consolidated net income $6,002 $6,112 $2,956 N/A Net profit margin from continuing operations 3.2% 3.2% 2.0% 2.1% ............................................................... Earnings Attributable to Common Stocks $1-2/3 par value Continuing operations $5,592 $5,653 $2,914 $3,186 Discontinued operations 426 426 (93) N/A ------ ------ ------ ------ $1-2/3 par value $6,018 $6,079 $2,821 N/A Class H (4) $(96) $(47) $72 $72 ............................................................... Basic Earnings Per Share Attributable to Common Stocks $1-2/3 par value Continuing operations $8.70 $8.79 $4.40 $4.82 Discontinued operations 0.66 0.66 (0.14) N/A ------ ------ ------ ------ $1-2/3 par value $9.36 $9.45 $4.26 N/A Class H (4) $(0.77) $(0.38) $0.68 $0.68 ............................................................... Diluted Earnings Per Share Attributable to Common Stocks $1-2/3 par value Continuing operations $8.53 $8.62 $4.32 $4.72 Discontinued operations 0.65 0.65 (0.14) N/A ------ ------ ------ ------ $1-2/3 par value $9.18 $9.27 $4.18 N/A Class H (4) $(0.77) $(0.38) $0.68 $0.68 ............................................................... Cash Dividends Per Share of Common Stocks $1-2/3 par value $2.00 $2.00 Class H $- $- .............................................................. See footnotes beginning on page 20. Continues - 14 - HIGHLIGHTS - Year Ended Adjusted for Special Items by Segment (Dollars in Millions) Year Ended December 31, 1999 ---------------------------- (1) Reported (3) Adjusted Income Special Income (Loss) Items (Loss) ------- ------- -------- GM North America (GMNA) $4,822 $257 $4,565 GM Europe (GME) 423 - 423 GM Latin America/ Africa/Mid-East (GMLAAM) (81) - (81) GM Asia/Pacific (GMAP) (218) - (218) Other Automotive 35 - 35 ----- ---- ----- Total GM Automotive (GMA) $4,981 $257 $4,724 Hughes (6) (270) (165) (105) Other (669) (186) (483) ----- ---- ----- Total Automotive, Electronics and Other Operations $4,042 $(94) $4,136 GMAC $1,527 $(16) $1,543 Other 7 - 7 ----- ---- ----- Total Financing and Insurance Operations $1,534 $(16) $1,550 ----- ---- ----- Income (loss) from continuing operations $5,576 $(110) $5,686 Income from discontinued operations 426 - 426 ----- ---- ----- Consolidated Net Income (Loss) $6,002 $(110) $6,112 ===== ==== ===== See footnotes beginning on page 20. Continues - 15 - HIGHLIGHTS - Year Ended Adjusted for Special Items by Segment (Dollars in Millions) Year Ended December 31, 1998 ------------------------------ (1) Reported (2) Adjusted Income Special Income (Loss) Items (Loss) ------- ------- -------- GMNA $1,635 $(80) $1,715 GME 419 (44) 463 GMLAAM (175) (51) (124) GMAP (243) (97) (146) Other Automotive (2) - (2) ----- ----- ----- Total GM Automotive (GMA) $1,634 $(272) $1,906 Hughes (4)(6) 272 - 272 Other (279) - (279) ----- ----- ----- Total Automotive, Electronics and Other Operations $1,627 $(272) $1,899 GMAC $1,325 $- $1,325 Other 97 - 97 ----- ----- ----- Total Financing and Insurance Operations $1,422 $- $1,422 ----- ----- ----- Income (loss) from continuing operations $3,049 $(272) $3,321 (Loss) income from discontinued operations (93) N/A N/A ----- ----- ----- Consolidated Net Income (Loss) $2,956 N/A N/A ===== ===== ===== See footnotes beginning on page 20. Continues - 16 - HIGHLIGHTS - Year Ended Adjusted for Special Items by Region (Dollars in Millions) Year Ended December 31, 1999 ------------------------------- GMNA GME GMLAAM GMAP ----- ------ ------ ------ Reported -------- Total net sales and revenues $115,132 $26,225 $4,709 $3,187 ------- ------ ----- ----- Pre-tax income (loss) $7,192 $642 $(266) $(76) Income tax expense (benefit) 2,339 220 (156) (7) Equity income/(loss) and minority interests (31) 1 29 (149) ----- ----- ----- --- Net income (loss) $4,822 $423 $(81) $(218) ===== ===== ===== === Net profit (loss) margin 4.2% 1.6% (1.7%) (6.8%) Effective income tax rate 32.5% 34.3% 58.6% 9.2% LESS: Special Items (3) ------------------- Total net sales and revenues $ - $ - $ - $ - ----- ----- ----- --- Pre-tax income $415 $- $- $- Income tax expense 158 - - - Equity income/(loss) and minority interests - - - - ----- ----- ----- --- Net income $257 $- $- $- ===== ===== ===== === Adjusted (1) -------- Total net sales and revenues $115,132 $26,225 $4,709 $3,187 ------- ------ ----- ----- Pre-tax income (loss) $6,777 $642 $(266) $(76) Income tax expense (benefit) 2,181 220 (156) (7) Equity income/(loss) and minority interests (31) 1 29 (149) ----- ----- ----- --- Net income (loss) $4,565 $423 $(81) $(218) ===== ===== ===== === Net profit (loss) margin 4.0% 1.6% (1.7%) (6.8%) Effective income tax rate 32.2% 34.3% 58.6% 9.2% See footnotes beginning on page 20. Continues - 17 - HIGHLIGHTS - Year Ended Adjusted for Special Items by Region (Dollars in Millions) Year Ended December 31, 1998 ------------------------------- GMNA GME GMLAAM GMAP ----- ------ ------ ------ Reported -------- Total net sales and revenues $96,497 $25,840 $7,553 $3,044 ------ ----- ----- ----- Pre-tax income (loss) $2,409 $740 $(471) $(82) Income tax expense (benefit) 787 319 (213) 9 Equity income/(loss) and minority interests 13 (2) 83 (152) ----- ---- ----- ----- Net income (loss) $1,635 $419 $(175) $(243) ===== ==== ===== ===== Net profit (loss) margin 1.7% 1.6% (2.3%) (8.0%) Effective income tax rate 32.7% 43.1% 45.2% (11.0%) LESS: Special Items (2) ------------------- Total net sales and revenues $- $ - $ - $ - ------ ----- ----- --- Pre-tax loss $(105) $(74) $(82) $(37) Income tax benefit (40) (30) (31) - Equity income/(loss) and minority interests (15) - - (60) ----- ----- ----- --- Net loss $(80) $(44) $(51) $(97) ===== ===== ===== === Adjusted (1) -------- Total net sales and revenues $96,497 $25,840 $7,553 $3,044 ------- ------ ----- ----- Pre-tax income (loss) $2,514 $814 $(389) $(45) Income tax expense (benefit) 827 349 (182) 9 Equity income/(loss) and minority interests 28 (2) 83 (92) ----- ----- ----- ----- Net income (loss) $1,715 $463 $(124) $(146) ===== ===== ===== ===== Net profit (loss) margin 1.8% 1.8% (1.6%) (4.8%) Effective income tax rate 32.9% 42.9% 46.8% (20.0%) See footnotes beginning on page 20. Continues - 18 - HIGHLIGHTS - Year Ended Operating Information Year Ended December 31, ---------------------- 1999 1998 --------- ---------- Worldwide Wholesale Sales (units in 000s) United States: Cars 2,620 2,389 Trucks 2,587 2,051 ------ ------ Total United States 5,207 4,440 Canada and Mexico 667 631 ------ ------ Total GM North America 5,874 5,071 ------ ------ GME 1,968 1,882 GMLAAM 523 652 GMAP 421 419 ------ ------ Total International 2,912 2,953 ------ ------ Total Worldwide 8,786 8,024 ====== ====== .................................................... Vehicle Unit Deliveries (units in 000s) United States Chevrolet - Cars 885 876 - Trucks 1,725 1,550 Pontiac 616 536 GMC 542 468 Buick 446 398 Oldsmobile 352 330 Saturn 233 232 Cadillac 179 183 Other 39 31 ------ ------ Total United States 5,017 4,604 Canada and Mexico 689 639 ------ ------ Total GM North America 5,706 5,243 ------ ------ GME 1,979 1,849 GMLAAM 536 654 GMAP 457 452 ------ ------ Total International 2,972 2,955 ------ ------ Total Worldwide 8,678 8,198 ====== ====== .................................................... Market share United States Cars 29.8% 30.2% Trucks 27.8% 27.4% Total 28.8% 28.8% Total North America 28.6% 28.5% Total Europe 9.8% 9.6% Total Latin America 20.0% 19.7% Total Asia and Pacific 3.9% 4.1% Total Worldwide 15.8% 15.6% ..................................................... U.S. Retail/Fleet Mix % Fleet Sales - Cars 26.4% 26.2% % Fleet Sales - Trucks 13.2% 13.6% Total vehicles 20.0% 20.3% ..................................................... Capacity Utilization % U.S. and Canada (2-shift rated)(5)91.9% 77.2% ..................................................... See footnotes beginning on page 20. Continues - 19 - HIGHLIGHTS - Year Ended Other Financial Information (Dollars in Millions Except Per Share Amounts) Year Ended December 31, ---------------------- 1999 1998 --------- ---------- Depreciation and Amortization (7) Depreciation $4,155 $3,772 Amortization of special tools 2,492 2,350 Amortization of intangible assets 226 105 ----- ----- Total $6,873 $6,227 ===== ===== .................................................... Worldwide Payrolls $21,997 $20,360 .................................................... (1) Adjusted amounts represent the reported amounts less the effects of special items (see page 24 for a breakout of the special items for each respective year). Adjusted amounts for 1998 include the unfavorable effects of strike-related work stoppages. The unfavorable after-tax impacts of the work stoppages were $1.5 billion or $2.22 per share of $1-2/3 par value common stock. Reported amounts for discontinued operations have not been adjusted for special items. (2) Special items for 1998 are as follows (all earnings per share amounts are reported as diluted): The second-quarter 1998 results included a pre-tax charge of $74 million ($44 million after-tax, or $0.06 per share of $1-2/3 par value common stock), related to work schedule modifications at Opel Belgium. As a result of GM's Competitiveness Studies, fourth quarter 1998 continuing operations were impacted by charges totaling $224 million ($228 million after-tax or $0.34 per share of $1-2/3 par value common stock). These studies were performed in conjunction with GM's business planning cycle. (3) Special items for 1999 are as follows (all earnings per share amounts are reported as diluted): A favorable adjustment of $892 million ($553 million after-tax or $0.84 per share of $1-2/3 par value common stock) related to the reversal of a liability for benefits payable to excess U.S. hourly employees. For a number of reasons, including a stronger than expected market, higher attrition caused by the separation of Delphi and provisions of the 1999 agreement with the UAW, a substantial number of excess U.S. hourly workers have been placed into the active workforce. The culmination of these events in the fourth quarter of 1999 made it clear that this liability required adjustment; A charge of $658 million ($408 million after-tax or $0.62 per share of $1-2/3 par value common stock) related to the benefit increase granted to hourly retirees in connection with the 1999 UAW agreement. Consistent with past practice, GM expenses this benefit in the period that the contract with the UAW is ratified; Continues - 20 - HIGHLIGHTS - Year Ended Other Financial Information (3) continued A charge of $147 million ($90 million after-tax or $0.14 per share of $1-2/3 par value common stock) related to a U.S. salaried early retirement program. Approximately 1,700 (100 executives) people elected participation in this program; and A charge of $272 million ($165 million after-tax or $0.17 per share of $1-2/3 par value common stock and $0.39 per share of GM Class H common stock) related to Hughes' decision to discontinue certain of its wireless manufacturing operations at Hughes Network Systems. (4) 1998 results include the cumulative effect of accounting change of $9 million due to Hughes' adoption of SOP 98-5. Hughes has reported the $9 million change as a restatement of first quarter 1998 results and GM had reported the $9 million change in fourth quarter 1998 results. (5) GM changed its method of calculating capacity utilization from mass relief to tag relief in 1999. Capacity utilization for Calendar Year 1998 was calculated using the new methodology. (6) Excludes the effects of purchase accounting adjustments related to General Motors' acquisition of Hughes in 1985, and in 1999 also excludes Hughes Series A Preferred Stock dividends payable to General Motors. (7) Amounts exclude depreciation and amortization charges incurred by the financing and insurance operations. Note: Total cash of $14.4 billion referenced to in the press release includes $11.4 billion of cash and marketable securities as well as $3.0 billion invested in fixed income securities of the Corporation's $6.3 billion Voluntary Employees' Beneficiary Association Trust. - 21 - HIGHLIGHTS - List of Special Items by Quarter Impact on Net Income (Dollars in Millions) Quarter List of special items Ended Fav/(Unfav) ----------------------- ------- ---------- Continuing Operations: Postemployment Benefits 12/31/99 $553 Hourly Retiree Benefits 12/31/99 (408) Termination Benefits 12/31/99 (90) Hughes Wireless Business 12/31/99 (165) ----- Total special items for 1999 continuing operations $(110) ===== Quarter List of special items Ended Fav/(Unfav) ----------------------- ------- ---------- Continuing Operations: Competitiveness studies 12/31/98 (228) Opel Belgium work schedule modifications 6/30/98 (44) ----- Total special items for 1998 continuing operations $(272) ===== - 22 - CONSOLIDATED STATEMENTS OF INCOME Three Months Ended December 31, ------------ 1999 1998 ---- ---- (Dollars in Millions Except Per Share Amounts) GENERAL MOTORS CORPORATION AND SUBSIDIARIES Manufactured products sales and revenues $40,006 $39,074 Financing revenues 3,929 3,495 Other income 2,327 2,055 ------- ------- Total net sales and revenues 46,262 44,624 ------ ------ Cost of sales and other operating expenses, exclusive of items listed below 32,798 31,935 Selling, general and administrative expenses 5,818 4,458 Depreciation and amortization expense 3,279 3,118 Interest expense 2,126 1,678 Other expenses 436 666 ------ ------- Total costs and expenses 44,457 41,855 ------ ------ Income from continuing operations before income taxes and minority interests 1,805 2,769 Income tax expense 580 926 Minority interests - (9) Losses of nonconsolidated associates (80) (150) ------- ------ Income from continuing operations $1,145 $1,684 Income from discontinued operations - 88 ------- ------ Net income $1,145 $1,772 Dividends on preference stocks 29 15 ------- ------- Earnings attributable to common stocks $1,116 $1,757 ===== ===== Basic earnings (losses) per share attributable to common stocks $1-2/3 par value common stock Continuing operations $1.90 $2.51 Discontinued operations - 0.13 ------ ---- Earnings per share attributable to $1-2/3 par value $1.90 $2.64 ==== ==== Earnings per share attributable to Class H $(0.58) $0.30 ==== ==== Diluted earnings (losses) per share attributable to common stocks $1-2/3 par value common stock Continuing operations $1.86 $2.48 Discontinued operations - 0.13 ------ ---- Earnings per share attributable to $1-2/3 par value $1.86 $2.61 ==== ==== Earnings per share attributable to Class H $(0.58) $0.30 ==== ==== - 23 - CONSOLIDATED STATEMENTS OF INCOME - Continued Three Months Ended December 31, ------------ 1999 1998 ---- ---- (Dollars in Millions) AUTOMOTIVE, ELECTRONICS AND OTHER OPERATIONS Manufactured products sales and revenues $40,006 $39,074 Other income 915 835 -------- -------- Total net sales and revenues 40,921 39,909 ------ ------ Cost of sales and other operating expenses, exclusive of items listed below 32,798 31,935 Selling, general and administrative expenses 4,652 3,399 Depreciation and amortization expense 1,752 1,828 ------- ------- Total operating costs and expenses 39,202 37,162 Interest expense 231 200 Other expenses 181 285 Net expense (income) from transactions with Financing and Insurance Operations 63 (35) -- --- Income from continuing operations before income taxes and minority interests 1,244 2,297 Income tax expense 368 777 Minority interests 3 (5) Losses of nonconsolidated associates (80) (150) ---- ------ Income from continuing operations $799 $1,365 Income from discontinued operations - 88 ------ ------ Net income - Automotive, Electronics and Other Operations $799 $1,453 === ===== Three Months Ended December 31, ------------ 1999 1998 ---- ---- (Dollars in Millions) FINANCING AND INSURANCE OPERATIONS Financing revenues $3,929 $3,495 Insurance, mortgage and other income 1,412 1,220 ----- ----- Total revenues and other income 5,341 4,715 ----- ----- Interest expense 1,895 1,478 Depreciation and amortization expense 1,527 1,290 Operating and other expenses 1,166 1,059 Provisions for financing losses 76 140 Insurance losses and loss adjustment expenses 179 241 ------ ------ Total costs and expenses 4,843 4,208 ----- ----- Net (income) expense from transactions with Automotive, Electronics and Other Operations (63) 35 ---- ---- Income before income taxes 561 472 Income tax expense 212 149 Minority interests (3) (4) ----- ----- Net income - Financing and Insurance Operations $346 $319 === === - 24 - CONSOLIDATED STATEMENTS OF INCOME - Continued Years Ended December 31, ------------------------ 1999 1998 1997 ---- ---- ---- (Dollars in Millions Except Per Share Amounts) GENERAL MOTORS CORPORATION AND SUBSIDIARIES Manufactured products sales and revenues $152,635 $134,276 $148,143 Financing revenues 14,734 13,585 12,762 Other income 9,189 7,584 11,675 --------- --------- -------- Total net sales and revenues 176,558 155,445 172,580 Cost of sales and other operating expenses, exclusive of items listed below 126,809 114,542 128,225 Selling, general and administrative expenses 18,845 15,915 14,777 Depreciation and amortization expense 12,318 11,147 14,646 Interest expense 7,750 6,629 5,883 Other expenses 1,789 2,268 1,480 ------- -------- ------- Total costs and expenses 167,511 150,501 165,011 ------- ------- ------- Income from continuing operations before income taxes and minority interests 9,047 4,944 7,569 Income tax expense 3,118 1,636 1,025 Minority interests (28) (20) 44 Losses of nonconsolidated associates (325) (239) (105) ------ ------ ------ Income from continuing operations $5,576 $3,049 $6,483 Income (loss) from discontinued operations 426 (93) 215 ------ ------- ------ Net income $6,002 $2,956 $6,698 ----- ----- ----- Premium on exchange of preference stocks - - 26 Dividends on preference stocks 80 63 72 ------- ------- ------- Earnings attributable to common stocks $5,922 $2,893 $6,600 ===== ===== ===== Basic earnings (losses) per share attributable to common stocks $1-2/3 par value common stock Continuing operations $8.70 $4.40 $8.52 Discontinued operations 0.66 (0.14) 0.18 ---- ---- ---- Earnings per share attributable to $1-2/3 par value $9.36 $4.26 $8.70 ==== ==== ==== Class H (prior to its recapitalization on December 17, 1997) Continuing operations $ - $ - $2.30 Discontinued operations - - 0.87 ----- ------ ---- Earnings per share attributable to Class H (prior to its recapitalization on December 17, 1997) $ - $ - $3.17 ===== ===== ==== Earnings per share attributable to Class H (subsequent to its recapitalization on December 17, 1997) $(0.77) $0.68 $0.02 ==== ==== ==== Diluted earnings (losses) per share attributable to common stocks $1-2/3 par value common stock Continuing operations $8.53 $4.32 $8.45 Discontinued operations 0.65 (0.14) 0.17 ---- ---- ---- Earnings per share attributable to $1-2/3 par value $9.18 $4.18 $8.62 ==== ==== ==== Class H (prior to its recapitalization on December 17, 1997) Continuing operations $ - $ - $2.30 Discontinued operations - - 0.87 ------ ------ ---- Earnings per share attributable to Class H (prior to its recapitalization on December 17, 1997) $ - $ - $3.17 ====== ====== ==== Earnings per share attributable to Class H (subsequent to its recapitalization on December 17, 1997) $(0.77) $0.68 $0.02 ==== ==== ==== - 25 - CONSOLIDATED STATEMENTS OF INCOME - Concluded Years Ended December 31, ------------------------ 1999 1998 1997 ---- ---- ---- (Dollars in Millions) AUTOMOTIVE, ELECTRONICS AND OTHER OPERATIONS Manufactured products sales and revenues $152,635 $134,276 $148,143 Other income 3,472 2,885 7,952 --------- --------- --------- Total net sales and revenues 156,107 137,161 156,095 ------- ------- ------- Cost of sales and other operating expenses, exclusive of items listed below 126,809 114,542 128,225 Selling, general and administrative expenses 14,250 11,848 11,971 Depreciation and amortization expense 6,873 6,227 9,833 --------- -------- -------- Total operating costs and expenses 147,932 132,617 150,029 ------- ------- ------- Interest expense 828 786 633 Other expenses 503 792 210 Net expense (income) from transactions with Financing and Insurance Operations 308 82 (101) ------ ------- ------ Income from continuing operations before income taxes and minority interests 6,536 2,884 5,324 Income tax expense 2,167 1,018 111 Minority interests (2) - 57 Losses of nonconsolidated associates (325) (239) (105) ----- ----- ----- Income from continuing operations 4,042 1,627 5,165 Income (loss) from discontinued operations 426 (93) 215 ----- ------ ----- Net income - Automotive, Electronics and Other Operations $4,468 $1,534 $5,380 ===== ===== ===== Years Ended December 31, ------------------------ 1999 1998 1997 ---- ---- ---- (Dollars in Millions) FINANCING AND INSURANCE OPERATIONS Financing revenues $14,734 $13,585 $12,762 Insurance, mortgage and other income 5,717 4,699 3,723 ------- ------- ------- Total revenues and other income 20,451 18,284 16,485 ------ ------ ------ Interest expense 6,922 5,843 5,250 Depreciation and amortization expense 5,445 4,920 4,813 Operating and other expenses 4,595 4,067 2,806 Provisions for financing losses 404 463 523 Insurance losses and loss adjustment expenses 882 1,013 747 -------- ------- -------- Total costs and expenses 18,248 16,306 14,139 ------ ------ ------ Net (income) expense from transactions with Automotive, Electronics and Other Operations (308) (82) 101 ------- -------- -------- Income before income taxes 2,511 2,060 2,245 Income tax expense 951 618 914 Minority interests (26) (20) (13) ------ ------ ------ Net income - Financing and Insurance Operations $1,534 $1,422 $1,318 ===== ===== ===== - 26 - CONSOLIDATED BALANCE SHEETS December 31, ------------ GENERAL MOTORS CORPORATION AND SUBSIDIARIES 1999 1998 ---- ---- ASSETS (Dollars in Millions) Automotive, Electronics and Other Operations Cash and cash equivalents $9,730 $9,728 Marketable securities 1,698 402 ------- ------- Total cash and marketable securities 11,428 10,130 Accounts and notes receivable (less allowances) 5,093 4,750 Inventories (less allowances) 10,638 10,437 Net assets of discontinued operations - 77 Equipment on operating leases (less accumulated depreciation) 5,744 4,954 Deferred income taxes and other current assets 9,006 10,051 ----- ------ Total current assets 41,909 40,399 Equity in net assets of nonconsolidated associates 1,711 950 Property - net 32,779 32,222 Intangible assets - net 8,527 9,994 Deferred income taxes 14,692 14,967 Other assets 25,134 16,062 -------- -------- Total Automotive , Electronics and Other Operations assets 124,752 114,594 Financing and Insurance Operations Cash and cash equivalents 712 146 Investments in securities 9,110 8,748 Finance receivables - net 80,627 70,436 Investment in leases and other receivables 36,407 32,798 Other assets 21,312 19,150 Net receivable from Automotive, Electronics and Other Operations 1,001 816 ------- -------- Total Financing and Insurance Operations assets 149,169 132,094 ------- ------- Total assets $273,921 $246,688 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Automotive, Electronics and Other Operations Accounts payable (principally trade) $17,254 $13,542 Loans payable 1,991 1,204 Accrued expenses 32,854 30,548 Net payable to Financing and Insurance Operations 1,001 816 ------- -------- Total current liabilities 53,100 46,110 Long-term debt 7,415 7,118 Postretirement benefits other than pensions 34,166 33,503 Pensions 3,115 4,410 Other liabilities and deferred income taxes 17,426 17,807 -------- -------- Total Automotive, Electronics and Other Operations liabilities 115,222 108,948 Financing and Insurance Operations Accounts payable 4,262 4,148 Debt 122,282 107,753 Deferred income taxes and other liabilities 11,282 10,004 -------- -------- Total Financing and Insurance Operations liabilities 137,826 121,905 Minority interests 596 563 General Motors - obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of General Motors Series D 79 79 Series G 139 141 Stockholders' equity Preference stocks - 1 $1-2/3 par value common stock (issued, 619,412,233 and 655,008,344 shares) 1,033 1,092 Class H common stock (issued, 137,115,187 and 106,159,776 shares) 14 11 Capital surplus (principally additional paid-in capital) 13,794 12,661 Retained earnings 6,376 6,984 ----- ----- Subtotal 21,217 20,749 Accumulated foreign currency translation adjustments (2,033) (1,089) Net unrealized gains on securities 996 481 Minimum pension liability adjustment (121) (5,089) -------- -------- Accumulated other comprehensive loss (1,158) (5,697) -------- -------- Total stockholders' equity 20,059 15,052 -------- -------- Total liabilities and stockholders' equity $273,921 $246,688 ======= ======= - 27 - CONSOLIDATED BALANCE SHEETS - Concluded December 31, ------------ AUTOMOTIVE, ELECTRONICS AND OTHER OPERATIONS 1999 1998 ---- ---- (Dollars in Millions) ASSETS Cash and cash equivalents $9,730 $9,728 Marketable securities 1,698 402 ------- -------- Total cash and marketable securities 11,428 10,130 Accounts and notes receivable (less allowances) 5,093 4,750 Inventories (less allowances) 10,638 10,437 Net assets of discontinued operations - 77 Equipment on operating leases (less accumulated depreciation) 5,744 4,954 Deferred income taxes and other current assets 9,006 10,051 ----- ------ Total current assets 41,909 40,399 Equity in net assets of nonconsolidated associates 1,711 950 Property - net 32,779 32,222 Intangible assets - net 8,527 9,994 Deferred income taxes 14,692 14,967 Other assets 25,134 16,062 -------- -------- Total Automotive, Electronics and Other Operations assets $124,752 $114,594 LIABILITIES AND GM INVESTMENT Accounts payable (principally trade) $17,254 $13,542 Loans payable 1,991 1,204 Accrued expenses 32,854 30,548 Net payable to Financing and Insurance Operations 1,001 816 -------- -------- Total current liabilities 53,100 46,110 Long-term debt 7,415 7,118 Postretirement benefits other than pensions 34,166 33,503 Pensions 3,115 4,410 Other liabilities and deferred income taxes 17,426 17,807 -------- -------- Total Automotive, Electronics and Other Operations liabilities 115,222 108,948 Minority interests 574 511 GM investment in Automotive, Electronics and Other Operations 8,956 5,135 ----- ----- Total Automotive, Electronics and Other Operations liabilities and GM investment $124,752 $114,594 ======== ======== December 31, ------------ FINANCING AND INSURANCE OPERATIONS 1999 1998 ---- ---- (Dollars in Millions) ASSETS Cash and cash equivalents $712 $146 Investments in securities 9,110 8,748 Finance receivables - net 80,627 70,436 Investment in leases and other receivables 36,407 32,798 Other assets 21,312 19,150 Net receivable from Automotive, Electronics and Other Operations 1,001 816 ------- ------- Total Financing and Insurance Operations assets $149,169 $132,094 ======= ======= LIABILITIES AND GM INVESTMENT Accounts payable $4,262 $4,148 Debt 122,282 107,753 Deferred income taxes and other liabilities 11,282 10,004 -------- -------- Total Financing and Insurance Operations liabilities 137,826 121,905 Minority interests 22 52 GM investment in Financing and Insurance Operations 11,321 10,137 ------ ------ Total Financing and Insurance Operations liabilities and GM investment $149,169 $132,094 ======= ======= - 28 - CONSOLIDATED STATEMENTS OF CASH FLOWS For The Years Ended December 31, -------------------------------- 1999 1998 1997 ---- ---- ---- (Dollars in Millions) GENERAL MOTORS CORPORATION AND SUBSIDIARIES Cash flows from operating activities Income from continuing operations $5,576 $3,049 $6,483 Adjustments to reconcile income from continuing operations to net cash provided by operating activities Depreciation and amortization expense 12,318 11,147 14,646 Gain on Hughes Defense spin-off - - (4,269) Postretirement benefits other than pensions, net of payments and VEBA contributions (1,036) 188 (874) Pension expense, net of contributions (808) 223 269 Originations and purchases of mortgage loans (52,874) 54,433) (30,878) Proceeds on sales of mortgage loans 55,777 51,582 28,543 Originations and purchases of mortgage securities (1,309) (2,237) (2,516) Proceeds on sales of mortgage securities 1,545 849 1,449 Change in other investments and miscellaneous assets 263 770 1,457 Change in other operating assets and liabilities 7,500 1,558 (1,552) Other 78 1,647 826 ------ ------ ------ Net cash provided by operating activities 27,030 14,343 13,584 ------ ------ ------ Cash flows from investing activities Expenditures for property (7,384) (8,231) (8,647) Investments in marketable securities - acquisitions (25,406) (34,162) (30,594) Investments in marketable securities - liquidations 23,479 37,960 28,958 Mortgage servicing rights - acquisitions (1,424) (1,862) (479) Mortgage servicing rights - liquidations 35 80 23 Finance receivables - acquisitions (186,379) (155,613) (163,614) Finance receivables - liquidations 130,293 114,662 129,615 Proceeds from sales of finance receivables 48,178 27,681 31,191 Operating leases - acquisitions (23,165) (23,525) (21,073) Operating leases - liquidations 12,079 15,386 12,187 Proceeds from borrowings of Hughes Defense prior to the Hughes Defense spin-off - - 4,006 Investments in companies, net of cash acquired (5,108) (1,144) (2,272) Other (192) (1,131) 765 ---- ------ --- Net cash used in investing activitie (34,994) (29,899) (19,934) ------ ------ ------ Cash flows from financing activities Net increase in loans payable (2,360) 8,186 5,346 Long-term debt - borrowing 35,561 24,035 14,971 Long-term debt - repayments (21,359) (12,869) (12,500) Repurchases of common and preference stocks (3,870) (3,089) (4,365) Proceeds from issuing common and preference stocks 2,005 343 614 Cash dividends paid to stockholders (1,367) (1,388) (1,620) ----- ----- ----- Net cash provided by financing activities 8,610 15,218 2,446 ----- ------ ----- Effect of exchange rate changes on cash and cash equivalents (206) 317 (482) --- --- ------ Net cash provided by (used in) continuing operations 440 (21) (4,386) Net cash provided by (used in) discontinued operations 128 (378) 1,567 --- ---- ----- Net increase (decrease) in cash and cash equivalents 568 (399) (2,819) Cash and cash equivalents at beginning of the year 9,874 10,273 13,092 ----- ------ ------ Cash and cash equivalents at end of the year $10,442 $9,874 $10,273 ======= ====== ======= - 29 - CONSOLIDATED STATEMENTS OF CASH FLOWS - Concluded
For The Years Ended December 31, -------------------------------- 1999 1998 1997 ---- ---- ---- Automotive, Financing Automotive, Financing Automotive, Financing Electronics and Electronics and Electronics and and Other Insurance and Other Insurance and Other Insurance --------- --------- --------- --------- --------- --------- Cash flows from operating activities (Dollars in Millions) Income from continuing operations $4,042 $1,534 $1,627 $1,422 $5,165 $1,318 Adjustments to reconcile income from continuing operations to net cash provided by operating activities Depreciation and amortization expenses 6,873 5,445 6,227 4,920 9,833 4,813 Gain on Hughes Defense spin-off - - - - (4,269) - Postretirement benefits other than pensions, net of payments and VEBA contributions (1,057) 21 157 31 (900) 26 Pension expense, net of contributions (808) - 223 - 269 - Originations and purchases of mortgage loans - (52,874) - (54,433) - (30,878) Proceeds on sales of mortgage loans - 55,777 - 51,582 - 28,543 Originations and purchases of mortgage securities - (1,309) - (2,237) - (2,516) Proceeds on sales of mortgages securities - 1,545 - 849 - 1,449 Change in other investments and miscellaneous assets 522 (259) (162) 932 (51) 1,508 Change in other operating assets and liabilities 7,523 (23) 90 1,468 (993) (559) Other (866) 944 581 1,066 563 263 ---- --- --- ----- --- --- Net cash provided by operating activities 16,229 10,801 8,743 5,600 9,617 3,967 ------ ------ ----- ----- ----- ----- Cash flows from investing activities Expenditures for property (7,061) (323) (7,952) (279) (8,409) (238) Investments in marketable securities - acquisitions (4,149) (21,257) (13,010) (21,152) (12,864) (17,730) Investments in marketable securities - liquidations 2,886 20,593 16,272 21,688 12,663 16,295 Mortgage servicing rights - acquisitions - (1,424) - (1,862) - (479) Mortgage servicing rights - liquidations - 35 - 80 - 23 Finance receivables - acquisitions - (186,379) - (155,613) - (163,614) Finance receivables - liquidations - 130,293 - 114,662 - 129,615 Proceeds from sales of finance receivables - 48,178 - 27,681 - 31,191 Operating leases - acquisitions (6,415) (16,750) (6,397) (17,128) (5,680) (15,393) Operating leases - liquidations 4,243 7,836 5,609 9,777 3,711 8,476 Proceeds from borrowings of Hughes Defense prior to the Hughes Defense spin-off - - - - 4,006 - Investments in companies, net of cash acquired (2,706) (2,402) (971) (173) (1,850) (422) Net investing activity with Financing and Insurance Operations 75 - 338 - 750 - Other (924) 732 (889) (242) 554 211 ---- --- ---- ---- --- --- Net cash used in investing activities (14,051) (20,868 (7,000) (22,561) (7,119) (12,065) ------- ------- ------ ------- ------ ------- Cash flows from financing activities Net increase (decrease) in loans payable 140 (2,500) (94) 8,280 (398) 5,744 Long-term debt - borrowings 9,090 26,471 2,937 21,098 384 14,587 Long-term debt - repayments (8,281) (13,078) (1,492) (11,377) (1,189) (11,311) Net financing activity with Automotive, Electronics and Other Operations - (75) - (338) - (750) Repurchases of common and preference stocks (3,870) - (3,089) - (4,365) - Proceeds from issuing common and preference stocks 2,005 - 343 - 614 - Cash dividends paid to stockholders (1,367) - (1,388) - (1,620) - ------ ----- ------ ----- ------ ----- Net cash (used in) provided by financing activities (2,283) 10,818 (2,783) 17,663 (6,574) 8,270 ------ ------ ------ ------ ------ ----- Effect of exchange rate changes on cash and cash equivalents (206) - 315 2 (482) - Net transactions with Automotive/Financing Operations 185 (185) 1,135 (1,135) 338 (338) --- ---- ----- ------ --- ---- Net cash (used in) provided by continuing operations (126) 566 410 (431) (4,220) (166) Net cash provided by (used in) discontinued operations 128 - (378) - 1,567 - --- ---- --- ----- ----- ---- Net increase (decrease) in cash and cash equivalents 2 566 32 (431) (2,653) (166) Cash and cash equivalents at beginning of the year 9,728 146 9,696 577 12,349 743 ----- --- ----- --- ------ --- Cash and cash equivalents at end of the year $9,730 $712 $9,728 $146 $9,696 $577 ====== ==== ====== ==== ====== ====
* * * * * * * * * * - 30 - Hughes' Release New Services-Focused Hughes Reports 54-Percent Revenue Growth In Fourth Quarter 1999 Record Subscriber Growth Attained in Both U.S. and Latin American DIRECTV(R) Services El Segundo, Calif., January 19, 2000 -- Hughes Electronics Corporation, reflecting last week's announcement of major changes in its corporate focus, today reported that fourth quarter 1999 revenues increased 53.6% to $1,698.0 million compared with $1,105.2 million in the fourth quarter of 1998. These are the company's first financial results following the announcement that it would sell its satellite manufacturing businesses to The Boeing Company in an all-cash transaction valued at $3.75 billion, refocus its wireless businesses, and realign Hughes into two market-driven sectors. "We've begun the new century as a company that is sharply focused on our high-value, high-growth entertainment and business communications services," said Michael T. Smith, Hughes chairman and chief executive officer. "This quarter's results reflect the bright future of our new company." As required by applicable accounting standards, the financial results of Hughes' satellite manufacturing businesses are treated as discontinued operations to reflect the impact of the announced transaction with Boeing. Consequently, revenues, EBITDA(1) and other operating results for Hughes' satellite manufacturing businesses are excluded from Hughes' operating results for all periods presented(2). "Once again, revenue growth in the quarter was driven by our DIRECTV(R) businesses," explained Smith. "The momentum in the United States just keeps building. DIRECTV U.S. had yet another quarter of record subscriber growth while more than doubling its revenues. And as we expand the availability of local programming and introduce new interactive services, we expect 2000 to be our best year ever." Smith added that the DIRECTV business in Latin America also achieved its best quarter ever, gaining more than twice as many net new subscribers as were added during its previous best quarter. "With the completion of our recent strategic initiatives in Latin America, we feel that DIRECTV is now in a position to reach its full potential in that region," Smith said. EBITDA for the fourth quarter of 1999 was negative $174.4 million compared to EBITDA of $69.2 million in the same period of 1998. The decline was primarily due to a previously announced fourth quarter 1999 pre-tax charge of $272 million related to the discontinuation of certain wireless businesses at Hughes Network Systems (HNS). Excluding the charge, EBITDA increased 41.0% to $97.6 million, primarily due to improved EBITDA at DIRECTV U.S. related to the United States Satellite Broadcasting Company, Inc. (USSB) and PRIMESTAR transactions, and the larger subscriber base. PanAmSat also contributed a solid EBITDA performance, principally due to its lower leaseback expense resulting from the exercise of certain early buy-out options under satellite sale-leaseback agreements. - 31 - In the fourth quarter of 1999, Hughes incurred a loss(3) of $226.7 million and a loss per share, including the effect of preferred stock dividends, of $0.58, compared to earnings(3) of $128.2 million and earnings per share (EPS) of $0.32 for the same period in 1998. The declines were primarily due to the wireless charge, higher depreciation and amortization expenses related principally to the USSB and PRIMESTAR transactions and increased PanAmSat satellite expenditures, an increase in net interest expense, and a $115 million fourth quarter 1998 favorable adjustment to the income tax provision resulting from a tax settlement with the Internal Revenue Service (IRS). FULL-YEAR 1999 FINANCIAL REVIEW Year-end 1999 revenues increased 59.8% to $5,560.3 million, compared with $3,480.6 million in 1998. This was primarily due to record subscriber growth in the Company's U.S. and Latin American DIRECTV businesses, 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. EBITDA for the year was $222.7 million and EBITDA margin was 4.0%, compared to EBITDA of $341.7 million and EBITDA margin of 9.8% in 1998. The declines were principally due to the fourth quarter 1999 charge related to the discontinuation of certain HNS wireless businesses, which more than offset EBITDA gains at DIRECTV U.S. and PanAmSat. Excluding the charge, 1999 EBITDA increased 44.8% to $494.7 million due to EBITDA gains at DIRECTV, PanAmSat and HNS. In 1999, Hughes incurred a loss of $270.3 million and a loss per share, including the effect of preferred stock dividends, of $0.77, compared to earnings of $271.7 million and EPS of $0.68 in 1998. The declines were primarily attributable to the reduced EBITDA, a second quarter 1999 pre-tax charge of $125.0 million related to increased development costs and schedule delays associated with several new product lines at Hughes Space and Communications, 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, higher depreciation and amortization expenses related principally to the USSB and PRIMESTAR transactions and increased PanAmSat satellite expenditures, an increase in net interest expense, and the 1998 favorable adjustment to the tax provision. These declines were partially offset by a first quarter 1999 after-tax gain of $94.3 million ($154.6 million pre-tax) related to the settlement of the Williams patent infringement case(4). SEGMENT FINANCIAL REVIEW FOURTH QUARTER 1999 Direct-To-Home Broadcast Fourth quarter revenues for the segment more than doubled to $1,213.6 million from $567.6 million in the fourth quarter of 1998. The segment had negative EBITDA of $24.9 million compared with negative EBITDA of $69.4 million in the fourth quarter of 1998. United States: DIRECTV reported quarterly revenues of $1,100 million, more than twice last year's fourth quarter revenues of $476 million. The increase was due to strong subscriber growth, as well as additional revenues resulting from the USSB and PRIMESTAR transactions. - 32 - In December 1999, DIRECTV became the first U.S. direct broadcast satellite service to add more than 200,000 net new subscribers in a single month, contributing to its all-time high quarter of 515,000 new subscribers. This represented a 29% increase over the 400,000 new subscribers added in the fourth quarter of 1998. In addition, 241,000 customers were transitioned from the PRIMESTAR By DIRECTV medium-power service to the high-power service in the quarter. For the full-year 1999, DIRECTV added 1,606,000 net new high-power subscribers, a 39% increase over the 1,157,000 new subscribers added in 1998. In addition, DIRECTV converted 470,000 customers from PRIMESTAR By DIRECTV in 1999. As of December 31, 1999, DIRECTV served more than 8 million U.S. customers, including approximately 1.4 million customers subscribing to PRIMESTAR By DIRECTV. EBITDA for the fourth quarter of 1999 was $27 million compared to negative EBITDA of $32 million in the preceding year's fourth quarter. This improvement was principally due to 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 $102 million in revenues for the quarter compared with $73 million in the fourth quarter of 1998. This increase was due to the record subscriber growth and additional revenues resulting from the consolidation of Galaxy Brasil, Ltda. (GLB)(5), Grupo Galaxy Mexicana , S.A. de C.V. (GGM)(5), and SurFin, Ltd.(5). In the fourth quarter, the DIRECTV service in Latin America had three consecutive months of record subscriber growth, adding 136,000 net new subscribers, which is more than twice as many as the 61,000 acquired in the same period last year. The total number of DIRECTV subscribers in Latin America as of December 31, 1999 was 804,000. The DIRECTV business in Latin America had negative EBITDA of $42 million compared to negative EBITDA of $30 million for the same period in 1998. The change was primarily due to the impact of the consolidation of GLB and GGM, and higher marketing expenses in the region. In addition, DIRECTV Japan, of which Hughes currently owns 42%, reported a total of 386,000 subscribers at the end of the fourth quarter of 1999. Hughes' share of DIRECTV Japan's losses was $74 million for the quarter, compared with $36 million in the fourth quarter of 1998. The higher loss was primarily due to increased marketing expenses in the region, as well as the recording of a higher portion of equity losses resulting from an increase in Hughes' investment in DIRECTV Japan. 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, generated revenues of $206.0 million in the fourth quarter of 1999, compared with $196.7 million in the prior year's period. The increase was primarily due to new service agreements on satellites placed in service in 1999 as well as continued growth in special events service revenues. During the fourth quarter of 1999, telecommunications services revenues increased 19% to $49 million while total video services revenues increased 2% to $146 million compared to the prior year's fourth quarter. - 33 - EBITDA for the quarter was $152.9 million compared to fourth quarter 1998 EBITDA of $144.3 million. EBITDA margin in the fourth quarter of 1999 was 74.2%, compared to 73.4% in the same period of 1998. The increases in EBITDA and EBITDA margin resulted primarily from lower leaseback expense due to the exercise of certain early buy-out options under satellite sale-leaseback agreements, and increased operating lease revenues. Network Systems HNS revenues in the fourth quarter of 1999 were $386.5 million, compared to $402.6 million in the fourth quarter of 1998. This decline was principally due to reduced sales of its wireless telecommunications systems and international private business network systems. These declines more than offset higher sales of DIRECTV receiving equipment. HNS shipped 715,000 DIRECTV receiving systems in the fourth quarter of 1999 compared to 300,000 in the same year-ago period. HNS recorded negative EBITDA of $241.5 million in the quarter compared to EBITDA of $43.0 million in the fourth quarter of 1998. This reduction was primarily due to the previously announced pre-tax charge of $272 million related to the discontinuation of certain wireless businesses, and reduced sales of international private business network systems. HNS' wireless business will now focus on its leading broadband wireless access (point-to-multipoint) product line and will discontinue its mobile cellular and narrowband local loop product lines. HNS will fulfill its outstanding contractual obligations for these discontinued product lines. BALANCE SHEET From December 31, 1998 to December 31, 1999, the Company's cash balance declined $1,103.8 million to $238.2 million and total debt increased $1,206.6 million to $2,141.4 million. The principal cash requirements for the year were the USSB and PRIMESTAR transactions, 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). Hughes is the world's leading provider of digital television entertainment, satellite services, and satellite-based private business networks. The earnings of Hughes, a unit of General Motors Corporation, are used to calculate the earnings per share attributable to the General Motors Class H common stock (NYSE:GMH). 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. - 34 - - ---------------------- 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) For all periods presented, net income generated by the satellite manufacturing businesses (previously referred to as the "Satellite Systems" segment) is reported as "Income from discontinued operations, net of taxes" on the Statement of Income (Loss) and Available Separate Consolidated Net Income (Loss). Similarly, all assets and liabilities of those businesses are reported as "Net assets of discontinued operations" on the Balance Sheet. 3) Excludes the effects of purchase accounting adjustments related to General Motors' acquisition of Hughes in 1985. 4) 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 is recorded in "Income from discontinued operations, net of taxes." 5) Galaxy Brasil, 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. ### - 35 - STATEMENT OF INCOME (LOSS) AND AVAILABLE SEPARATE CONSOLIDATED NET INCOME (Dollars in Millions Except Per Share Amounts) Year Ended Fourth Quarter December 31, -------------- ------------ 1999 1998 1999 1998 - ----------------------------------------------------------------------------- Revenues Direct broadcast, leasing and other services $1,394.1 $757.8 $4,489.3 $2,603.6 Product sales 303.9 347.4 1,071.0 877.0 - ---------------------------------------------------------------------------- Total Revenues 1,698.0 1,105.2 5,560.3 3,480.6 - ---------------------------------------------------------------------------- Operating Costs and Expenses Cost of products sold 366.1 286.6 1,028.3 643.0 Broadcast programming and other costs 657.6 375.2 2,001.4 1,175.0 Selling, general, and administrative expenses 848.7 374.2 2,307.9 1,320.9 Depreciation and amortization 189.5 110.5 647.4 384.6 Amortization of GM purchase accounting adjustments (1) 0.8 0.8 3.3 3.3 - ---------------------------------------------------------------------------- Total Operating Costs and Expenses 2,062.7 1,147.3 5,988.3 3,526.8 - ---------------------------------------------------------------------------- Operating Loss (364.7) (42.1) (428.0) (46.2) Interest income 6.2 23.7 27.0 112.3 Interest expense (51.7) (8.0) (122.7) (17.5) Other, net (60.6) (50.6) (136.3) (151.8) - ---------------------------------------------------------------------------- Loss From Continuing Operations Before Income Taxes, Minority Interests and Cumulative Effect of Accounting Change (470.8) (77.0) (660.0) (103.2) Income tax benefit (177.2) (143.0) (236.9) (142.3) Minority interests in net losses of subsidiaries 9.9 5.2 32.0 24.4 - ---------------------------------------------------------------------------- Income (Loss) from continuing operations before cumulative effect of accounting change (283.7) 71.2 (391.1) 63.5 Income from discontinued operations, net of taxes 51.9 51.9 99.8 196.4 - ---------------------------------------------------------------------------- Income (Loss) before cumulative effect of accounting change (231.8) 123.1 (291.3) 259.9 Cumulative effect of accounting change, net of taxes - - - (9.2) - ---------------------------------------------------------------------------- Net Income (Loss) (231.8) 123.1 (291.3) 250.7 Adjustments to exclude the effect of GM purchase accounting adjustments (1) 5.1 5.1 21.0 21.0 - ---------------------------------------------------------------------------- Earnings (Loss) Excluding the Effect of GM Purchase Accounting Adjustments (226.7) 128.2 (270.3) 271.7 Preferred stock dividends (24.6) - (50.9) - - ---------------------------------------------------------------------------- Earnings (Loss) Used for Computation of Available Separate Consolidated Net Income (Loss) $(251.3) $128.2 $(321.2) $271.7 ============================================================================ Available Separate Consolidated Net Income (Loss) Average number of shares of General Motors Class H Common Stock outstanding (in millions) (Numerator) 136.3 105.9 124.7 105.3 Average Class H dividend base (in millions)(Denominator) 430.1 399.9 418.5 399.9 Available Separate Consolidated Net Income (Loss) $(79.6) $33.9 $(95.7) $71.5 ============================================================================ Earnings (Loss) Attributable to General Motors Class H Common Stock on a Per Share Basis Income (Loss) from continuing operations before cumulative effect of accounting change $(0.71) $0.18 $(1.05) $0.17 Income from discontinued operations, net of taxes $0.13 $0.14 $0.28 $0.53 Cumulative effect of accounting change, net of taxes - - - $(0.02) - ---------------------------------------------------------------------------- Earnings (Loss) Attributable to General Motors Class H Common Stock on a Per Share Basis - Basic and Diluted $(0.58) $0.32 $(0.77) $0.68 ============================================================================ (1)Relates to General Motors' purchase of Hughes in 1985. - 36 - BALANCE SHEET (Dollars in Millions) December 31, December 31, ASSETS 1999 1998 - ---------------------------------------------------------------------------- Current Assets Cash and cash equivalents $238.2 $1,342.0 Accounts and notes receivable 960.9 764.6 Contracts in process 155.8 179.0 Inventories 236.1 286.6 Net assets of discontinued operations 1,159.5 972.4 Prepaid expenses, deferred income taxes and other 788.2 321.1 - ---------------------------------------------------------------------------- Total Current Assets 3,538.7 3,865.7 Satellites - net 3,907.3 3,197.5 Property - net 1,223.0 683.0 Net Investment in Sales-type Leases 146.1 173.4 Intangible Assets, net 7,406.0 3,185.9 Investments and Other Assets 2,039.9 1,302.4 - ---------------------------------------------------------------------------- Total Assets $18,261.0 $12,407.9 ============================================================================ LIABILITIES AND STOCKHOLDER'S EQUITY - ---------------------------------------------------------------------------- Current Liabilities Accounts payable $1,062.2 $691.8 Advances on contracts 23.0 20.1 Deferred revenues 130.5 43.8 Current portion of long-term debt 555.4 156.1 Accrued liabilities 618.8 257.0 - ---------------------------------------------------------------------------- Total Current Liabilities 2,389.9 1,168.8 Long-Term Debt 1,586.0 778.7 Postretirement Benefits Other Than Pensions 19.7 20.4 Other Liabilities and Deferred Credits 1,433.3 935.3 Deferred Income Taxes 672.5 641.1 Commitments and Contingencies Minority Interests 544.3 481.7 Stockholder's Equity 11,615.3 8,381.9 - ---------------------------------------------------------------------------- Total Liabilities and Stockholder's Equity $18,261.0 $12,407.9 ============================================================================ 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). - 37 - PRO FORMA SELECTED SEGMENT DATA* (Dollars in Millions) Year Ended Fourth Quarter December 31, -------------- ---------------- 1999 1998 1999 1998 - -------------------------------------------------------------------------- DIRECT-TO-HOME BROADCAST Total Revenues $1,213.6 $567.6 $3,785.0 $1,816.1 EBITDA (1) $(24.9) $(69.4) $19.9 $(125.8) EBITDA Margin (1) N/A N/A 0.5% N/A Operating Loss $(132.7) $(94.5) $(292.1) $(228.1) Depreciation and Amortization $107.8 $25.1 $312.0 $102.3 Capital Expenditures (2) $263.5 $100.7 $516.9 $230.8 - -------------------------------------------------------------------------- SATELLITE SERVICES Total Revenues $206.0 $196.7 $810.6 $767.3 EBITDA (1) $152.9 $144.3 $618.8 $553.3 EBITDA Margin (1) 74.2% 73.4% 76.3% 72.1% Operating Profit $80.2 $82.4 $341.6 $321.6 Operating Profit Margin 38.9% 41.9% 42.1% 41.9% Depreciation and Amortization $72.7 $61.9 $277.2 $231.7 Capital Expenditures (3) $133.4 $316.7 $956.4 $921.7 - -------------------------------------------------------------------------- NETWORK SYSTEMS Total Revenues $386.5 $402.6 $1,384.7 $1,076.7 EBITDA (1) $(241.5) $43.0 $(178.1) $52.6 EBITDA Margin (1) N/A 10.7% N/A 4.9% Operating Profit (Loss) $(253.0) $31.1 $(227.3) $10.9 Operating Profit Margin N/A 7.7% N/A 1.0% Depreciation and Amortization $11.5 $11.9 $49.2 $41.7 Capital Expenditures $11.9 $13.6 $35.0 $40.0 - -------------------------------------------------------------------------- ELIMINATIONS and OTHER Total Revenues $(108.1) $(61.7) $(420.0) $(179.5) EBITDA (1) $(60.9) $(48.7) $(237.9) $(138.4) Operating Loss $(58.4) $(60.3) $(246.9) $(147.3) Depreciation and Amortization $(2.5) $11.6 $9.0 $8.9 Capital Expenditures $111.1 $21.8 $157.0 $136.3 - -------------------------------------------------------------------------- TOTAL Total Revenues $1,698.0 $1,105.2 $5,560.3 $3,480.6 EBITDA (1) $(174.4) $69.2 $222.7 $341.7 EBITDA Margin (1) N/A 6.3% 4.0% 9.8% Operating Loss $(363.9) $(41.3) $(424.7) $(42.9) Depreciation and Amortization $189.5 $110.5 $647.4 $384.6 Capital Expenditures $519.9 $452.8 $1,665.3 $1,328.8 * 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 exclude such adjustments. In order to provide additional analytical data, the above unaudited pro forma selected segment data, which exclude the purchase accounting adjustments related to GM's acquisition of Hughes, 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 $46.9 million, $32.2 million, $136.0 million and $70.2 million, respectively. (3)Includes satellite expenditures amounting to $124.0 million, $304.1 million, $532.8 million and $726.3 million, respectively. Also included are expenditures related to the early buy-out of satellite sale-leasebacks totaling $369.5 million and $155.5 million for the years ended December 31, 1999 and 1998, respectively. * * * * * * - 38 - SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GENERAL MOTORS CORPORATION -------------------------- (Registrant) Date January 20, 2000 ----------------- By s/Peter R. Bible ------------------------------- (Peter R. Bible, Chief Accounting Officer) - 39 - -----END PRIVACY-ENHANCED MESSAGE-----