-----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, KDuU0CcuJPTpaYdg38WjzjyKPD/rI6N6SMvJ7IJal8PsomyFULgGOkOw+bOiPeh0 SOoYl1zNcHJ9/OLIeGXtrQ== 0000040730-03-000019.txt : 20030116 0000040730-03-000019.hdr.sgml : 20030116 20030116132703 ACCESSION NUMBER: 0000040730-03-000019 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20031015 ITEM INFORMATION: Other events FILED AS OF DATE: 20030116 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: 1934 Act SEC FILE NUMBER: 001-00143 FILM NUMBER: 03516062 BUSINESS ADDRESS: STREET 1: 300 RENAISSANCE CTR STREET 2: MAIL CODE: 482-C34-D71 CITY: DETROIT STATE: MI ZIP: 48265-3000 BUSINESS PHONE: 3135565000 MAIL ADDRESS: STREET 1: 300 RENAISSANCE CTR STREET 2: MAIL CODE: 482-C34-D71 CITY: DETROIT STATE: MI ZIP: 48265-3000 8-K 1 gm4q02er011603.txt GENERAL MOTORS CORPORATION'S 4Q 2002 EARNINGS 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 15, 2003 ---------------- 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 - -------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (313)-556-5000 -------------- - 1 - ITEM 5. OTHER EVENTS On January 16, 2003, 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. The following is the fourth quarter earnings release for GM, and their subsidiary Hughes Electronics Corporation's (Hughes) earnings release dated January 15, 2003. - For 2002, GM earned $1.7 billion, or $3.35 per share Excluding Hughes and special items, $3.9 billion, or $6.98 per share - In the fourth quarter, GM earned $1.0 billion, or $1.71 per share Excluding Hughes, $934 million, or $1.67 per share - Record revenue, market share gains in three automotive regions, strong cash generation, and improved cost performance were key highlights in 2002 - GMAC posts eighth straight year of earnings growth Detroit - General Motors Corp. (NYSE: GM, GMH) today reported record revenues and significantly improved earnings in both the calendar year and fourth quarter of 2002. CALENDAR YEAR 2002 GM earned $1.7 billion on record revenue of $186.8 billion, or $3.35 diluted earnings per share of GM $1-2/3 par value common stock, compared with $601 million, or $1.77 per share, in 2001. Excluding special items (see "Highlights") and Hughes, 2002 earnings totaled $3.9 billion, or $6.98 per share, nearly double the results in 2001 when GM earned $2.0 billion, or $3.60 per share. FOURTH QUARTER 2002 Earnings totaled $1.0 billion on record quarterly revenue of $48.7 billion, or $1.71 per share. That compares with $255 million, or $0.60 per share, in the prior-year period. There were no special items other than those at Hughes in the fourth quarter of 2002. Excluding Hughes and its special items, earnings in the fourth quarter of 2002 totaled $934 million, or $1.67 per share, more than double the $386 million, or $0.69 per share, earned in the prior-year period. YEAR IN REVIEW "Our strategy to leverage GM's size, and fundamentally improve its operating efficiency continues to pay off," said GM Chairman Jack Smith. "We're a far leaner, more flexible company, offering cars and trucks that are winners in the marketplace, which continues to drive our improved earnings." "GM delivered strong results despite challenging global economic and market conditions," said GM President and Chief Executive Officer Rick Wagoner. "Strong launches of well-received products, aggressive marketing, improved quality and productivity, and continued cost reductions were the primary drivers of our improved performance. Our performance in 2002 gives us confidence in the strength of our fundamental operating systems, and is an excellent foundation on which we can build. "General Motors Acceptance Corp. (GMAC) achieved its eighth consecutive year of earnings growth and fourth straight year of record earnings -- truly an outstanding performance, which was achieved despite considerable challenges in the capital markets," Wagoner said. - 2 - GM's automotive operations generated approximately $8 billion in cash flow, as total cash generation was about $12 billion in 2002, exceeding the target of $10 billion. "We generated significantly more cash than expected," Wagoner said. "This was achieved despite the fact that the Hughes transaction, which had been a major element of our cash-generation plan, could not be completed. And, we still have a significant store of value in Hughes that we can capitalize on going forward." The strong cash performance allowed GM to contribute a total of $4.8 billion to its U.S. pension plans during the year, including a $2.6 billion cash contribution in the fourth quarter. In addition, GM made a $1 billion cash contribution to the long-term Voluntary Employees' Beneficiary Association (VEBA) Trust in June of 2002. Even with these contributions, net liquidity of $2.3 billion at year-end 2002 was up $1.3 billion from year-end 2001. Cash, marketable securities, and assets of the VEBA trust invested in short-term fixed-income securities totaled $17.3 billion at Dec. 31, 2002, excluding GMAC and Hughes, up almost $6 billion from the end of 2001. GM financial results described throughout the remainder of this release exclude special items unless otherwise noted (see "Highlights"). GM AUTOMOTIVE OPERATIONS GM's global automotive operations earned $563 million in the fourth quarter of 2002, compared with $66 million in the prior-year period. The increase was fueled by income growth at GM North America (GMNA) and Asia Pacific, and moderating losses in Europe and Latin America. For 2002, GMNA earned $3.0 billion, double its 2001 performance. "For the second year in a row, we increased our market share in three of the four automotive regions, and we improved the quality of our share with stronger sales of higher-profit models," Wagoner said. GM's U.S. market share increased to 28.3 percent for the year, up 0.2 percentage points from 2001. "We've grown market share in the United States for the second consecutive year, thanks to strong core products like our full-size pickups, and mid-size and large SUVs," Wagoner said. "GM set all-time industry records for truck and SUV sales in 2002, becoming the first manufacturer ever to top 1.2 million SUV sales in a calendar year. We're making these gains because we're offering cars and trucks that customers really want to buy, and we're targeting market share gains again in 2003 as we introduce 12 new vehicles in the United States alone this year." The pricing environment continued to be challenging, with vehicle prices continuing to decline in North America. Net price retention was negative 3.2 percent in the fourth quarter of 2002, and negative 2.1 percent for the year. Higher production volume and significant improvements in structural and material costs more than offset the continued pricing pressures, leading to more than a 50 percent improvement in GMNA's fourth-quarter net income compared with the same period in 2001. Year-end dealer inventories were well positioned at slightly more than a million units. GM Europe (GME) reported a loss of $129 million in the fourth quarter of 2002, an improvement from the $240 million loss in the year-ago period. Significant progress in reducing material and structural costs and increased volume were partially offset by higher losses at Saab. For 2002, GME had a loss of $549 million, compared with a loss of $767 million in 2001. "We've made very good progress on the cost side in Europe, and we continue to focus on revenue growth," Wagoner said. "We've mounted a major product offensive and expect the new Opel/Vauxhall and Saab models, along with expanded diesel engine availability, to drive increased sales. We're pleased with the progress we're making in turning around our Opel/Vauxhall operations, and we are intensifying our efforts to cut costs and improve sales at Saab." - 3 - GM Asia-Pacific (GMAP) reported a profit of $66 million in the fourth quarter of 2002 compared with earnings of $25 million a year ago, led by continued strong performance at GM's Australia-based Holden and Shanghai GM in China. The earnings also reflect better-than-expected results from GM's equity alliances. The fourth-quarter-2002 results included GM's share of start-up related losses at GM Daewoo Auto & Technology Co., which totaled approximately $50 million. For 2002, GMAP earned $188 million, compared with $77 million in 2001. "We are very pleased with our steady sales and earnings progress in Asia," Wagoner said. "Holden continues to perform very well, and Shanghai GM is aggressively and profitably expanding its capacity and model lineup in China." GM Latin America/Africa/Mid-East (GMLAAM) reported a loss of $7 million in the fourth quarter of 2002, a significant improvement versus its loss of $111 million in the year-ago quarter. Results there were negatively affected by the general economic downturn in the region and turmoil in Venezuela and Argentina. For 2002, GMLAAM had a loss of $181 million, compared with a loss of $80 million in 2001. "Responding to the challenging economic conditions, we continued to reduce our costs and grew market share by nearly one percentage point on the strength of new products, such as the new Corsa and the Chevrolet Meriva. We strengthened our lead as the number-one manufacturer in the region, and we're well positioned to generate solid earnings when the economy recovers," Wagoner said. GMAC GMAC earned $524 million in the fourth quarter of 2002 -- an all-time fourth-quarter record. These results represent an increase of more than 20 percent from fourth-quarter earnings of $435 million a year ago, with the improvement driven by strong results from automotive finance and mortgage operations. For 2002, GMAC earned an all-time record $1.9 billion, compared with $1.8 billion in 2001. "GMAC continues to be a key contributor to GM's profitability," Wagoner said. "Eight consecutive years of annual income growth demonstrates we have a solid operating strategy and an effective approach to meet the challenges of the difficult capital-funding environment." HUGHES Hughes had a loss of $84 million in the fourth quarter of 2002, compared with a loss of $131 million in the prior-year period. The results primarily reflect continued improvement in the operating performance of DIRECTV U.S. Revenue, led by the growing subscriber base of DIRECTV, totaled $2.5 billion in the fourth quarter of 2002, up from $2.3 billion in the same quarter last year. Total DIRECTV subscriptions in the United States increased approximately 256,000 from the third quarter of 2002 to 11.2 million. For 2002, Hughes had a loss of $467 million, compared with a loss of $525 million in 2001. Including special items disclosed by Hughes yesterday, earnings totaled $86 million in the fourth quarter of 2002. The net effect of the fourth-quarter special items totaled a favorable $170 million after taxes (see "Highlights"). PROFIT SHARING General Motors also announced that approximately 130,000 hourly employees in the United States will qualify for profit-sharing payments in 2003. A typical U.S. hourly employee, eligible under the profit-sharing program, will qualify for a payment of approximately $940. - 4- LOOKING AHEAD GM expects moderate economic growth in 2003 in the United States, resulting in total U.S. industry vehicle sales of approximately 16.5 million units. In Europe, total industry vehicle sales are expected to be about 19 million units. GM's 2003 first-quarter production forecast for North America is now estimated at 1.43 million units, up nearly 6 percent from the first quarter of 2002. GM estimates that earnings in the first quarter of 2003 will be approximately $1.50 per share, and the calendar-year earnings target is approximately $5.00 per share, excluding Hughes and any special items. In the fourth quarter of 2002, GM's effective income-tax rate, excluding financing and insurance operations, was 26 percent, the level expected for GM in each of the next several years. General Motors, the world's largest vehicle manufacturer, designs, builds and markets cars and trucks worldwide, and has been the global automotive sales leader since 1931. More information on GM can be found at www.gm.com. # # # In this press release and related comments by General Motors management, our use of the words "expect," "anticipate," "estimate," "forecast," "objective," "plan," "goal" and similar expressions is intended to identify forward looking statements. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, actual results may differ materially due to numerous important factors that are described in GM's most recent report on SEC Form 10-K (at page II-15, 16) which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among others, the following: changes in economic conditions, currency exchange rates or political stability; shortages of fuel, labor strikes or work stoppages; market acceptance of the corporation's new products; significant changes in the competitive environment; changes in laws, regulations and tax rates; and, the ability of the corporation to achieve reductions in cost and employment levels to realize production efficiencies and implement capital expenditures at levels and times planned by management. - 5 - General Motors Corporation List of Special Items - After Tax (dollars in millions) Fourth Quarter 2002 --------------------------------- GM $1-2/3 Par Value Common Stock Total Diluted Hughes GM EPS ------ ------ ------------ Reported Net Income $86 $1,020 $1.71 Hughes EchoStar Termination Payment (A) (372) (372) (0.20) Hughes Write-down of Crown Media Investment (B) 27 27 0.02 Hughes Write-down of XM Radio Investment (C) 63 63 0.03 Hughes Costs Related to Shut-down of DIRECTV DSL(TM) Service (D) 97 97 0.05 Hughes Loss on HTIL Transaction (E) 15 15 0.01 -- --- ---- Adjusted Income (Loss) $(84) $850 $1.62 == === ==== (A) The Hughes EchoStar Termination Payment reflects the $600 million EchoStar paid to Hughes in connection with the termination of the October 28, 2001 merger agreement between Hughes and EchoStar. (B) The Hughes Write-down of Crown Media Investment relates to the recognition of an other than temporary decline in the market value of Hughes' investment in Crown Media. (C) The Hughes Write-down of XM Radio Investment relates to the recognition of an other than temporary decline in the market value of Hughes' investment in XM Radio. (D) The Hughes Costs Related to Shut-down of DIRECTV DSL(TM) Service relates to the costs to close the business including contract termination payments, write-offs of equipment, and severance payments. (E) The Hughes Loss on HTIL Transaction relates to the exchange of Hughes' ownership in Hughes Tele.com (India) Limited for an equity interest in and long term receivables from Tata Teleservices Limited. NOTE: There were no special items presented in the fourth quarter of 2001. - 6 - General Motors Corporation List of Special Items - After Tax (dollars in millions) Year to Date 2002 ------------------------------------------------- GM $1-2/3 Par Value Common Stock Other Total Diluted GMNA GME Hughes ACO GM EPS ---- --- ------ ----- ----- ---------- Reported Net Income (Loss) $2,900 $(1,011) $(239) $(1,803) $1,736 $3.35 Hughes EchoStar Termination Payment (A) - - (372) - (372) (0.21) Hughes Write-down of Crown Media Investment (B) - - 27 - 27 0.02 Hughes Write-down of XM Radio Investment (C) - - 63 - 63 0.04 Hughes Costs Related to Shut-down of DIRECTV DSL(TM) Service (D) - - 97 - 97 0.05 Hughes Loss on HTIL Transaction (E) - - 15 - 15 0.01 Write-down of Fiat Auto Investment (F) - - - 1,371 1,371 2.44 GMNA Production Footprint (G) 116 - - - 116 0.21 Hughes Sale of Equity Interests (H) - - (68) - (68) (0.04) GME End of Life Vehicle Charge (I) - 55 - - 55 0.10 GME Restructuring Charge (J) - 407 - - 407 0.72 Hughes Space Shuttle Settlement (K) - - (59) - (59) (0.04) Hughes GECC Contractual Dispute (L) - - 51 - 51 0.03 Hughes Loan Guarantee Charge (M) - - 18 - 18 0.01 ----- --- --- --- ----- ---- Adjusted Income (Loss) $3,016 $(549) $(467) $(432) $3,457 $6.69 ===== === === === ===== ==== See notes on following page. - 7 - General Motors Corporation List of Special Items - After Tax See page 6 for footnotes (A) - (E) (A) The Write-down of Fiat Auto Investment relates to GM's investment in Fiat Auto Holdings, B.V. ("Fiat Auto") and reflects completion of an impairment study relating to the carrying value of that investment, which was reduced from $2.4 billion to $220 million. (B) The GMNA Production Footprint charge primarily relates to costs associated with the transfer of commercial truck production from Janesville, Wisconsin, to Flint, Michigan. (C) The Hughes Sale of Equity Interests relates primarily to the investment in the multimedia company Thomson. (D) The GME End of Life Vehicle Charge relates to the European Union's directive requiring member states to enact legislation regarding end-of-life vehicles to be the responsibility of manufacturers for dismantling and recycling vehicles they have sold. (E) The GME Restructuring Charge relates to the initiative implemented in the first quarter of 2002 to improve the competitiveness of GM's automotive operations in Europe. (F) The Hughes Space Shuttle Settlement relates to the favorable resolution of a lawsuit that was filed against the U.S. government on March 22, 1991, based upon the National Aeronautics and Space Administration's (NASA) breach of contract to launch ten satellites on the Space Shuttle. (G) The Hughes GECC Contractual Dispute relates to an expected loss associated with a contractual dispute with General Electric Capital Corporation. (H) The Hughes Loan Guarantee Charge relates to a loan guarantee for a Hughes Network Systems' affiliate in India. - 8 - General Motors Corporation List of Special Items - After Tax (dollars in millions) Year to Date 2001 ---------------------------------------- Other GMNA GME GMLAAM GMAP Hughes ACO ---- --- ------ ---- ------ ----- Reported Net Income (Loss) $1,270 $(765) $(81) $(57) $(618) $(916) Ste. Therese Charge (A) 194 - - - - - Raytheon Settlement (B) - - - - - 474 Gain on Sale of Thomson (C) - - - - (67) - SkyPerfecTV! Writedown (D) - - - - 133 - Severance Charge (E) - - - - 40 - DirecTV Japan Adjustment (F) - - - - (21) - Isuzu Restructuring (G) - - - 133 - - SFAS 133 (H) 14 (2) 1 1 8 - ----- --- -- -- --- --- Adjusted Income (Loss) $1,478 $(767) $(80) $77 $(525) $(442) ===== === == == === === GM $1-2/3 Par Value Common Stock Total Other Total Diluted ACO GMAC FIO GM EPS ----- ------ ----- ----- ------------ Reported Net Income (Loss)$(1,167) $1,786 $(18) $601 $1.77 Ste. Therese Charge (A) 194 - - 194 0.35 Raytheon Settlement (B) 474 - - 474 0.85 Gain on Sale of Thomson (C) (67) - - (67) (0.04) SkyPerfecTV! Writedown (D) 133 - - 133 0.08 Severance Charge (E) 40 - - 40 0.02 DirecTV Japan Adjustment (F) (21) - - (21) (0.01) Isuzu Restructuring (G) 133 - - 133 0.24 SFAS 133 (H) 22 (34) - (12) (0.03) --- ----- -- ----- ---- Adjusted Income (Loss) $(259) $1,752 $(18) $1,475 $3.23 === ===== == ===== ==== See notes on next page. - 9 - General Motors Corporation List of Special Items - After Tax A) The Ste. Therese Charge relates to the closing of the Ste. Therese, Quebec assembly plant. B) The Raytheon Settlement relates to Hughes' settlement with the Raytheon Company on a purchase price adjustment related to Raytheon's 1997 merger with Hughes Defense. C) The Gain on Sale of Thomson relates to Hughes' sale of 4.1 million shares of Thomson Multimedia common stock. D) The SkyPerfecTV! Writedown relates to Hughes' non-cash charge from the revaluation of its investment. E) The Severance Charge relates to Hughes' 10% company-wide workforce reduction in the U.S. F) The DirecTV Japan Adjustment relates to a favorable adjustment to the expected costs associated with the shutdown of Hughes' DirecTV Japan business. G) The Isuzu Restructuring charges include General Motors' portion of severance payments and asset impairments that were part of the second quarter restructuring of its affiliate Isuzu Motors Ltd. H) The SFAS 133 Adjustment represents the net impact during the first quarter 2001 from initially adopting SFAS No. 133, Accounting for Derivatives and Hedging Activities. - 10 - General Motors Corporation Adjusted Corporate Financial Results Fourth Quarter Year to Date -------------- -------------- 2002(1) 2001(1) 2002(1) 2001(1) ---- ---- ---- ---- Total net sales and revenues ($Mil's) $48,108 $45,950 $186,244 $177,268 Excluding Hughes $45,600 $43,665 $177,276 $168,950 Memo: Reported $48,656 $45,950 $186,763 $177,260 Consolidated adjusted income ($Mil's) $850 $255 $3,457 $1,475 Excluding Hughes $934 $386 $3,924 $2,000 Net margin from adjusted income 1.8% 0.6% 1.9% 0.8% Excluding Hughes 2.0% 0.9% 2.2% 1.2% GM $1-2/3 par value earnings per share Basic EPS $1.62 $0.61 $6.72 $3.26 Diluted EPS $1.62 $0.60 $6.69 $3.23 Diluted EPS excluding Hughes $1.67 $0.69 $6.98 $3.60 GM Class H earnings per share Basic EPS $(0.06) $(0.12) $(0.38) $(0.48) Diluted EPS $(0.06) $(0.12) $(0.38) $(0.48) Earnings attributable to GM $1-2/3 par value ($Mil's) Adjusted income $850 $255 $3,457 $1,475 Preferred dividends - (23) (47) (99) Losses attributable to GM Class H 59 105 352 419 --- --- ----- ----- Total earnings attributable to GM $1-2/3 par value $909 $337 $3,762 $1,795 === === ===== ===== GM $1-2/3 par value average shares outstanding (Mil's) Basic shares 560 556 560 551 Diluted shares 561 559 562 556 Cash dividends per share of common stocks GM $1-2/3 par value $0.50 $0.50 $2.00 $2.00 GM Class H - - - - Book value per share of common stocks at Dec. 31 GM $1-2/3 par value $9.06 $24.79 GM Class H $1.81 $4.96 Total cash at Dec. 31, Excluding Hughes($Bil's) (2) $17.3 $11.5 Automotive, Communications Services, and Other Operations ($Mil's) Depreciation $1,282 $1,095 $4,723 $4,354 Amortization of special tools 751 613 2,647 2,360 Amortization of intangible assets 21 67 27 285 ----- ----- ----- ----- Total $2,054 $1,775 $7,397 $6,999 ===== ===== ===== ===== See footnotes on page 15. - 11 - General Motors Corporation Adjusted Segment Financial Results Fourth Quarter Year to Date -------------- -------------- 2002(1) 2001(1) 2002(1) 2001(1) ---- ---- ---- ---- (dollars in millions) Total net sales and revenues GMNA $28,864 $27,446 $114,444 $106,938 GME 6,763 6,084 23,912 23,700 GMLAAM 1,342 1,392 5,110 5,864 GMAP 1,180 1,063 4,524 4,201 ------ ------ ------- ------- Total GMA 38,149 35,985 147,990 140,703 Hughes 2,508 2,285 8,968 8,318 Other 384 1,029 2,260 2,470 ------ ------ ------- ------- Total ACO 41,041 39,299 159,218 151,491 GMAC 7,066 6,565 26,793 25,480 Other Financing 1 86 233 297 ------ ------ ------- ------- Total FIO 7,067 6,651 27,026 25,777 ------ ------ ------- ------- Consolidated net sales and revenues $48,108 $45,950 $186,244 $177,268 ====== ====== ======= ======= Pre-tax income (loss) GMNA $838 $528 $4,198 $2,051 GME (233) (345) (797) (1,092) GMLAAM (6) (150) (240) (79) GMAP 45 (17) 10 27 --- --- ----- ----- Total GMA 644 16 3,171 907 Hughes (3) (92) (213) (640) (786) Other (274) (135) (681) (537) --- --- ----- ----- Total ACO 278 (332) 1,850 (416) GMAC 778 730 3,001 2,872 Other Financing 4 (24) (30) (58) --- --- ----- ----- Total FIO 782 706 2,971 2,814 ----- --- ----- ----- Consolidated pre-tax income $1,060 $374 $4,821 $2,398 ===== === ===== ===== Net income (loss) GMNA $633 $392 $3,016 $1,478 GME (129) (240) (549) (767) GMLAAM (7) (111) (181) (80) GMAP 66 25 188 77 --- --- ----- ----- Total GMA 563 66 2,474 708 Hughes (3)(4) (84) (131) (467) (525) Other (199) (120) (432) (442) --- --- ----- ----- Total ACO 280 (185) 1,575 (259) GMAC 524 435 1,870 1,752 Other Financing 46 5 12 (18) --- --- ----- ----- Total FIO 570 440 1,882 1,734 --- --- ----- ----- Consolidated adjusted income $850 $255 $3,457 $1,475 === === ===== ===== See footnotes on page 15. - 12 - General Motors Corporation Supplementary Adjusted Segment Financial Results Fourth Quarter Year to Date -------------- -------------- 2002(1) 2001(1) 2002(1) 2001(1) ---- ---- ---- ---- (dollars in millions) Income tax expense (benefit) GMNA $240 $150 $1,227 $537 GME (62) (72) (172) (284) GMLAAM 3 (38) (76) (17) GMAP 43 17 55 24 --- --- ----- --- Total GMA $224 $57 $1,034 $260 === === ===== === Equity income (loss) and minority interests GMNA $35 $14 $45 $(36) GME 42 33 76 41 GMLAAM 2 1 (17) (18) GMAP 64 59 233 74 --- --- --- -- Total GMA $143 $107 $337 $61 === === === == Effective income tax rate GMNA 28.6% 28.4% 29.2% 26.2% GME 26.6% 20.9% 21.6% 26.0% GMLAAM (50.0%) 25.3% 31.7% 21.5% GMAP 95.6% (100.0%) - 88.9% Total ACO 26.0% 31.0% 28.7% 31.0% Net margins GMNA 2.2% 1.4% 2.6% 1.4% GME (1.9%) (3.9%) (2.3%) (3.2%) GMLAAM (0.5%) (8.0%) (3.5%) (1.4%) GMAP 5.6% 2.4% 4.2% 1.8% Total GMA 1.5% 0.2% 1.7% 0.5% Hughes (3)(4) (3.3%) (5.7%) (5.2%) (6.3%) Total ACO 0.7% (0.5%) 1.0% (0.2%) GMAC 7.4% 6.6% 7.0% 6.9% Consolidated net income 1.8% 0.6% 1.9% 0.8% See footnotes on page 15. - 13 - General Motors Corporation Operating Statistics Fourth Quarter Year to Date -------------- -------------- 2002 2001 2002 2001 ---- ---- ---- ---- (units in thousands) Worldwide Wholesale Sales United States - Cars 535 503 2,090 2,075 United States - Trucks 754 648 2,810 2,463 ----- ----- ----- ----- Total United States 1,289 1,151 4,900 4,538 Canada, Mexico, and Other 205 166 786 649 ----- ----- ----- ----- Total GMNA 1,494 1,317 5,686 5,187 GME 420 401 1,645 1,760 GMLAAM 164 166 640 666 GMAP 92 100 405 460 ----- ----- ----- ----- Total Worldwide 2,170 1,984 8,376 8,073 ===== ===== ===== ===== Vehicle Unit Deliveries Chevrolet - Cars 161 193 747 830 Chevrolet - Trucks 466 539 1,896 1,860 Pontiac 115 115 517 533 GMC 146 163 561 555 Buick 108 105 432 406 Oldsmobile 32 44 155 234 Saturn 69 61 280 261 Cadillac 54 47 200 172 Other 23 14 71 54 ----- ----- ----- ----- Total United States 1,174 1,281 4,859 4,905 Canada, Mexico, and Other 192 172 764 686 ----- ----- ----- ----- Total GMNA 1,366 1,453 5,623 5,591 GME 392 382 1,662 1,800 GMLAAM 164 167 647 665 GMAP 156 136 605 524 ----- ----- ----- ----- Total Worldwide 2,078 2,138 8,537 8,580 ===== ===== ===== ===== Market Share United States - Cars 25.5% 25.8% 25.4% 26.9% United States - Trucks 32.1% 31.4% 31.0% 29.2% Total United States 29.2% 28.9% 28.3% 28.1% Total North America 28.6% 28.1% 28.0% 27.6% Total Europe 8.8% 8.5% 8.7% 9.1% Latin America (5) 23.9% 23.4% 23.8% 22.4% Asia and Pacific 4.4% 4.3% 4.2% 4.0% Total Worldwide 15.2% 15.5% 14.9% 15.0% U.S. Retail/Fleet Mix % Fleet Sales - Cars 29.7% 14.8% 28.9% 25.7% % Fleet Sales - Trucks 10.3% 7.4% 11.3% 12.1% Total Vehicles 17.9% 10.4% 18.8% 18.4% Retail Lease as % of Retail Sales Total Smartlease and Smartbuy 7.2% 4.3% 10.3% 11.9% Days Supply of Inventory at December 31 United States - Cars 77 93 United States - Trucks 62 75 GMNA Capacity Utilization (2 shift rated) 94.3% 83.7% 88.4% 79.7% GMNA Net Price (3.2%) (1.5%) (2.1%) (1.3%) See footnotes on page 15. - 14 - General Motors Corporation Operating Statistics Fourth Quarter Year to Date -------------- -------------- 2002 2001 2002 2001 ---- ---- ---- ---- GMAC's U.S. Cost of Borrowing 4.28% 4.76% 4.33% 5.51% Current Debt Spreads Over U.S. Treasuries 2 Year 330 bp 195 bp 5 Year 335 bp 215 bp 10 Year 335 bp 225 bp Worldwide Employment at Dec. 31 (in 000's) United States Hourly 121 126 United States Salary 40 42 --- --- Total United States 161 168 Canada, Mexico, and Other 32 34 --- --- GMNA 193 202 GME 66 73 GMLAAM 24 23 GMAP 11 11 Hughes 12 12 GMAC 31 28 Other 12 13 --- --- Total 349 362 === === Worldwide Payrolls ($Bil's) $5.4 $4.8 $21.0 $19.8 Footnotes: --------- (1) Adjusted amounts for all periods represent the reported amounts excluding the effects of special items as detailed on pages 8 and 9. (2) Represents total cash for Automotive, Communications Services, and Other Operations, excluding Hughes, which includes cash and marketable securities, as well as $3.0 billion invested in short-term fixed income securities of the Corporation's Voluntary Employees' Beneficiary Association Trust. (3) The Q4 2001 and Year-to-Date 2001 amounts exclude the effects of purchase accounting adjustments related to General Motors' acquisition of Hughes in 1985. This purchase accounting adjustment is not recorded in 2002 because the related goodwill is no longer being amortized effective January 1, 2002 in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. (4) Excludes Hughes Series A Preferred Stock dividends paid to General Motors. (5) Latin America excludes the Middle East and Africa. - 15 - CONSOLIDATED STATEMENTS OF INCOME Three Months Ended December 31, ------------------------------- 2002 2001 ---- ---- (dollars in millions except per share amounts) GENERAL MOTORS CORPORATION AND SUBSIDIARIES Total net sales and revenues $48,656 $45,950 ------ ------ Cost of sales and other expenses 39,827 37,336 Selling, general, and administrative expenses 5,680 6,131 Interest expense 1,799 2,109 ------ ------ Total costs and expenses 47,306 45,576 ------ ------ Income before income taxes and minority interests 1,350 374 Income tax expense 396 180 Equity income and minority interests 66 61 ----- --- Net income 1,020 255 Dividends on preference stocks - (23) ----- --- Earnings attributable to common stocks $1,020 $232 ===== === Basic earnings (losses) per share attributable to common stocks Earnings per share attributable to $1-2/3 par value $1.71 $0.61 ==== ==== Earnings per share attributable to Class H $0.06 $(0.12) ==== ==== Earnings (losses) per share attributable to common stocks assuming dilution Earnings per share attributable to $1-2/3 par value $1.71 $0.60 ==== ==== Earnings per share attributable to Class H $0.06 $(0.12) ==== ==== - 16 - CONSOLIDATED STATEMENTS OF INCOME - continued Three Months Ended December 31, ------------ 2002 2001 ---- ---- (dollars in millions) AUTOMOTIVE, COMMUNICATIONS SERVICES, AND OTHER OPERATIONS Total net sales and revenues $41,589 $39,299 ------ ------ Cost of sales and other expenses 37,010 35,083 Selling, general, and administrative expenses 3,840 4,206 ------ ------ Total costs and expenses 40,850 39,289 ------ ------ Interest expense 83 222 Net expense from transactions with Financing and Insurance Operations 88 120 ---- --- Income (loss) before income taxes and minority interests 568 (332) Income tax expense (benefit) 195 (76) Equity income and minority interests 77 71 --- --- Net income (loss) - Automotive, Communications Services and Other Operations $450 $(185) === === FINANCING AND INSURANCE OPERATIONS Total revenues $7,067 $6,651 ----- ----- Interest expense 1,716 1,887 Depreciation and amortization expense 1,432 1,428 Operating and other expenses 2,125 1,928 Provisions for financing and insurance losses 1,100 822 ----- ----- Total costs and expenses 6,373 6,065 ----- ----- Net income from transactions with Automotive, Communications Services, and Other Operations (88) (120) --- --- Income before income taxes and minority interests 782 706 Income tax expense 201 256 Equity loss and minority interests (11) (10) --- --- Net income - Financing and Insurance Operations $570 $440 === === - 17 - CONSOLIDATED STATEMENTS OF INCOME - continued Years Ended December 31, -------------------------------- 2002 2001 2000 ---- ---- ---- (dollars in millions except per share amounts) GENERAL MOTORS CORPORATION AND SUBSIDIARIES Total net sales and revenues $186,763 $177,260 $184,632 ------- ------- ------- Cost of sales and other expenses 153,344 144,093 145,664 Selling, general, and administrative expenses 23,624 23,302 22,252 Interest expense 7,715 8,347 9,552 ------- ------- ------- Total costs and expenses 184,683 175,742 177,468 ------- ------- ------- Income before income taxes and minority interests 2,080 1,518 7,164 Income tax expense 533 768 2,393 Equity income (loss) and minority interests 189 (149) (319) ----- --- ----- Net income 1,736 601 4,452 Dividends on preference stocks (47) ( 99) (110) ----- --- ----- Earnings attributable to common stocks $1,689 $502 $4,342 ===== === ===== Basic earnings (losses) per share attributable to common stocks Earnings per share attributable to $1-2/3 par value $3.37 $1.78 $6.80 ==== ==== ==== Earnings per share attributable to Class H $(0.21) $(0.55) $0.56 ==== ==== ==== Earnings (losses) per share attributable to common stocks assuming dilution Earnings per share attributable to $1-2/3 par value $3.35 $1.77 $6.68 ==== ==== ==== Earnings per share attributable to Class H $(0.21) $(0.55) $0.55 ==== ==== ==== - 18 - CONSOLIDATED STATEMENTS OF INCOME - concluded Years Ended December 31, ------------------------ 2002 2001 2000 ---- ---- ---- (dollars in millions) AUTOMOTIVE, COMMUNICATIONS SERVICES, AND OTHER OPERATIONS Total net sales and revenues $159,737 $151,491 $160,627 ------- ------- ------- Cost of sales and other expenses 144,550 135,620 138,303 Selling, general, and administrative expenses 14,993 16,043 16,246 ------- ------- ------- Total costs and expenses 159,543 151,663 154,549 ------- ------- ------- Interest expense 789 751 815 Net expense from transactions with Financing and Insurance Operations 296 435 682 --- ----- ----- Income (loss) from continuing operations before income taxes and minority interests (891) (1,358) 4,581 Income tax (benefit) expense (489) (270) 1,443 Equity income (loss) and minority interests 256 (79) (299) --- ----- ----- Net income (loss) - Automotive, Communications Services, and Other Operations $(146) $(1,167) $2,839 === ===== ===== FINANCING AND INSURANCE OPERATIONS Total revenues $27,026 $25,769 $24,005 ------ ------ ------ Interest expense 6,926 7,596 8,737 Depreciation and amortization expense 5,541 5,857 5,982 Operating and other expenses 8,356 7,348 5,805 Provisions for financing and insurance losses 3,528 2,527 1,580 ------ ------ ------ Total costs and expenses 24,351 23,328 22,104 ------ ------ ------ Net income from transactions with Automotive, Communications Services, and Other Operations (296) (435) (682) ----- ----- ----- Income before income taxes and minority interests 2,971 2,876 2,583 Income tax expense 1,022 1,038 950 Equity loss and minority interests (67) (70) (20) ----- ----- ----- Net income - Financing and Insurance Operations $1,882 $1,768 $1,613 ===== ===== ===== - 19 - CONSOLIDATED BALANCE SHEETS December 31, GENERAL MOTORS CORPORATION AND SUBSIDIARIES 2002 2001 ---- ---- ASSETS (dollars in millions) Automotive, Communications Services, and Other Operations Cash and cash equivalents $13,291 $8,432 Marketable securities 2,174 790 ------ ----- Total cash and marketable securities 15,465 9,222 Accounts and notes receivable (less allowances) 5,861 5,406 Inventories (less allowances) 10,302 10,034 Equipment on operating leases (less accumulated depreciation) 5,305 4,524 Deferred income taxes and other current assets 10,938 7,877 ------ ------ Total current assets 47,871 37,063 Equity in net assets of nonconsolidated associates 5,044 4,950 Property - net 36,152 34,908 Intangible assets - net 14,611 13,721 Deferred income taxes 32,759 22,294 Other assets 7,323 17,274 ------- ------- Total Automotive, Communications Services, and Other Operations assets 143,760 130,210 Financing and Insurance Operations Cash and cash equivalents 8,158 10,123 Investments in securities 14,651 11,279 Finance receivables - net 134,647 109,211 Investment in leases and other receivables 35,466 34,618 Other assets 33,798 26,971 Net receivable from Automotive, Communications Services, and Other Operations 1,089 1,557 ------- ------- Total Financing and Insurance Operations assets 227,809 193,759 ------- ------- Total assets $371,569 $323,969 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Automotive, Communications Services, and Other Operations Accounts payable (principally trade) $20,169 $18,297 Loans payable 1,516 2,402 Accrued expenses 42,304 34,090 Net payable to Financing and Insurance Operations 1,089 1,557 ------ ------ Total current liabilities 65,078 56,346 Long-term debt 16,651 10,726 Postretirement benefits other than pensions 34,275 34,515 Pensions 22,709 10,790 Other liabilities and deferred income taxes 15,461 13,794 ------- ------- Total Automotive, Communications Services, and Other Operations liabilities 154,174 126,171 Financing and Insurance Operations Accounts payable 6,982 7,900 Debt 183,773 153,186 Other liabilities and deferred income taxes 18,992 16,259 ------- ------- Total Financing and Insurance Operations liabilities 209,747 177,345 ------- ------- Total liabilities 363,921 303,516 Minority interests 834 746 Stockholders' equity $1-2/3 par value common stock (outstanding, 560,447,797. and 559,044,427 shares) 936 932 Class H common stock (outstanding, 958,284,272 and 877,505,382 shares) 96 88 Capital surplus (principally additional paid-in capital) 21,583 21,519 Retained earnings 10,031 9,463 ------ ------ Subtotal 32,646 32,002 Accumulated foreign currency translation adjustments (2,784) (2,919) Net unrealized loss on derivatives (205) (307) Net unrealized gains on securities 372 512 Minimum pension liability adjustment (23,215) (9,581) ------- ------- Accumulated other comprehensive loss (25,832) (12,295) ------- ------- Total stockholders' equity 6,814 19,707 ------- ------- Total liabilities and stockholders' equity $371,569 $323,969 ======= ======= - 20 - CONSOLIDATED STATEMENTS OF CASH FLOWS For The Years Ended December 31, --------------------------------
2002 2001 2000 ---- ---- ---- Automotive, Financing Automotive, Financing Automotive, Financing Comm.Serv., and Comm.Serv., and Comm.Serv., and and Other Insurance and Other Insurance and Other Insurance --------- --------- --------- --------- --------- --------- Cash flows from operating activities (dollars in millions) Income (loss) from continuing operations (146) 1,882 (1,167) 1,768 $2,839 $1,613 Adjustments to reconcile income (loss)from continuing operations to net cash provided by operating activities Depreciation and amortization expenses 7,397 5,541 7,051 5,857 7,429 5,982 Postretirement benefits other than pensions, net of payments and VEBA contributions (223) 15 1,861 20 772 27 Pension expense, net of contributions (3,380) - 148 - 128 - Net change in mortgage loans - (4,377) - (4,241) - 242 Net change in mortgage securities - (656) - (777) - (577) Operating leases - acquisitions (5,595) - (4,997) - (6,000) - Operating leases - liquidations 4,774 - 6,116 - 6,008 - Change in other investments and miscellaneous assets 3,024 3,757 959 (958) 1,154 (1,692) Change in other operating assets and liabilities 4,314 (300) (2,056) 719 724 2,505 Other (1,695) 2,776 (357) 3,039 (1,966) 2,257 ----- ----- ---- ----- ----- ----- Net cash provided by operating activities $8,470 $8,638 $7,558 $5,427 $11,088 $10,357 ----- ----- ----- ----- ------ ------ Cash flows from investing activities Expenditures for property (6,986) (457) (8,611) (20) (9,200) (522) Investments in marketable securities - acquisitions (2,228) (37,158) (857) (34,273) (2,520) (24,599) Investments in marketable securities - liquidations 873 34,815 1,228 33,124 3,057 24,114 Net change in mortgage servicing rights - (1,711) - (2,075) - (1,084) Increase in finance receivables - (141,567) - (107,440) - (73,754) Proceeds from sales of finance receivables - 115,678 - 95,949 - 59,221 Operating leases - acquisitions - (16,624) - (12,938) - (15,415) Operating leases - liquidations - 13,994 - 11,892 - 10,085 Investments in companies, net of cash acquired (690) (182) (743) (542) (4,302) (2,077) Net investing activity with Financing and Insurance Operations 400 - (500) - (1,069) - Other 1,700 (834) (768) (416) 2,504 93 ----- --- --- --- ----- -- Net cash used in investing activities (6,931) (34,046) (10,251) (16,739) (11,530) (23,938) ----- ------ ------ ------ ------ ------ Cash flows from financing activities Net increase (decrease) in loans payable (1,482) 523 194 (20,238) 142 7,723 Long-term debt - borrowings 6,295 47,404 5,849 58,522 5,279 22,481 Long-term debt - repayments (328) (24,561) (2,602) (18,906) (6,196) (16,263) Net financing activity with Automotive, Communications Services, and Other Operations - (400) - 500 - 1,069 Repurchases of common and preference stocks (97) - (264) - (1,613) - Proceeds from issuing common stocks 62 - 100 - 2,792 - Proceeds from sales of treasury stocks 19 - 418 - - - Cash dividends paid to stockholders (1,167) - (1,201) - (1,294) - ----- ------ ----- ------ ----- ------ Net cash provided by (used in) financing activities 3,302 22,966 2,494 19,878 (890) 15,010 ----- ------ ----- ------ --- ------ Effect of exchange rate changes on cash and cash equivalents 485 10 (74) (22) (249) (6) Net transactions with Automotive/ Financing Operations (467) 467 (414) 414 970 (970) --- ----- --- ----- --- --- Net (decrease) increase in cash and cash equivalents 4,859 (1,965) (687) 8,958 (611) 453 Cash and cash equivalents at beginning of the year 8,432 10,123 9,119 1,165 9,730 712 ------ ------ ----- ------ ----- ----- Cash and cash equivalents at end of the year $13,291 $8,158 $8,432 $10,123 $9,119 $1,165 ====== ===== ===== ====== ===== =====
- 21 - HUGHES FOURTH QUARTER 2002 RESULTS DRIVEN BY CONTINUED STRONG DIRECTV U.S. FINANCIAL PERFORMANCE DIRECTV U.S. Revenues Increase Over 19% to $1.8 Billion; DIRECTV U.S. EBITDA1 More Than Triples to $191 Million El Segundo, Calif., January 15, 2003 -- Hughes Electronics Corporation, a world-leading provider of digital television entertainment, satellite-based private business networks, and global video and data broadcasting, today reported fourth quarter 2002 revenues increased 8.3% to $2,471.7 million, compared with $2,281.6 million in the fourth quarter of 2001. EBITDA(1) for the quarter increased to $171.6 million compared with $118.2 million in the fourth quarter of last year. EBITDA margin(1) was 6.9% in the quarter compared with an EBITDA margin of 5.2% last year. Included in the 2002 fourth quarter results was a one-time charge of $111.4 million related to the previously announced shutdown of the DIRECTV Broadband business. Excluding this charge, EBITDA was $283.0 million and EBITDA margin was 11.4%. The operating loss for the fourth quarter of 2002 was $105.4 million compared with an operating loss of $178.6 million in the fourth quarter of 2001. "The continued improvement in the operating performance of DIRECTV U.S. drove the strong revenue and EBITDA performance of HUGHES in the quarter," said Jack A. Shaw, HUGHES' president and chief executive officer. "The actions we've taken over the last 18 months to lower churn, reduce subscriber acquisition costs and increase monthly revenue per subscriber have resulted in a higher quality subscriber base and have increased the financial returns on our subscriber investment. As a result, DIRECTV U.S. fourth quarter revenues increased by over 19% to about $1.8 billion and EBITDA more than tripled to $191 million as compared to the same period in 2001." Shaw continued, "We also moved quickly to address the issues facing our DIRECTV Broadband and DIRECTV Latin America businesses as soon as the proposed merger with EchoStar was terminated. As a result of our recent announcements to shutdown DIRECTV Broadband and restructure DIRECTV Latin America, we expect to reduce our cash requirements by several hundred million dollars over the next few years." In the fourth quarter of 2002, HUGHES reported an operating loss of $105.4 million compared with an operating loss of $178.6 million in 2001. This lower operating loss was due primarily to the higher EBITDA and the elimination of approximately $45 million of amortization expense for goodwill and intangible assets in 2002 that resulted from the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142") on January 1, 2002. These changes were partially offset by higher depreciation expense, mostly at DIRECTV U.S. due to the launch of two new satellites and additional infrastructure expenditures made during the last year. - 22 - HUGHES had fourth quarter 2002 net income of $115.3 million compared to a net loss of $132.6 million in the same period of 2001. The primary reasons for the improved net income were the lower operating loss and a pre-tax gain of $600 million related to the settlement with EchoStar Communications Corporation ("EchoStar") in connection with the termination of the proposed merger agreement with HUGHES. These improvements were partially offset by pre-tax charges related to the write-down to market value of equity investments in XM Satellite Radio and Crown Media Holdings of $103 million and $44 million, respectively, and a $52 million pre-tax loss related to the exchange of HUGHES' ownership in HUGHES Tele.com (India) Limited for an equity interest in and long term receivables from Tata Teleservices Limited. In January of 2002, HUGHES adopted SFAS No. 142, "Goodwill and Other Intangible Assets." In the fourth quarter, step two of the transitional impairment test was completed for DIRECTV Latin America, DIRECTV Broadband and a Hughes Network Systems ("HNS") equity investment. As a result of this analysis, HUGHES wrote-down $557 million of goodwill related to DIRECTV Latin America, $108 million of goodwill related to DIRECTV Broadband and $16 million of goodwill associated with the HNS equity investment. In accordance with SFAS No. 142, these charges are reflected in the first quarter of 2002 results and are recorded in "Cumulative effect of accounting changes, net of taxes." FULL-YEAR FINANCIAL REVIEW For the full-year 2002, revenues increased 8.1% to $8,934.9 million compared to $8,264.0 million in 2001. This increase was primarily due to continued subscriber growth at DIRECTV U.S. partially offset by lower sales in the Carrier businesses of HNS, the devaluation of several foreign currencies in the DIRECTV Latin America businesses and the absence of new sales-type lease contracts at PanAmSat. EBITDA in 2002 was $672.4 million and EBITDA margin was 7.5%, compared to EBITDA of $389.9 million and EBITDA margin of 4.7% in 2001. The 72.5% increase in EBITDA and the increase in EBITDA margin were primarily attributable to additional profit gained from the DIRECTV U.S. revenue growth and lower subscriber acquisition costs, a $95 million one-time gain from the favorable resolution of litigation with the National Aeronautics and Space Administration ("NASA"), and an $88 million charge primarily related to severance recorded in 2001. These improvements were partially offset by the devaluation of several foreign currencies and the costs associated with the 2002 World Cup in the DIRECTV Latin America businesses, the $111 million charge for the shutdown of the DIRECTV Broadband business and a charge of $48 million related to losses associated with the final settlement of a contractual dispute with General Electric Capital Corporation ("GECC"). HUGHES' operating loss for 2002 was $394.7 million compared with an operating loss of $757.8 million in 2001. The improved operating loss was primarily due to the higher EBITDA and the elimination of approximately $249 million of amortization expense for goodwill and intangible assets in 2002 that resulted from the adoption of SFAS No. 142. These changes were partially offset by higher depreciation expense, particularly at DIRECTV U.S. due to the recent launch of two new satellites and additional infrastructure expenditures made during the last year. In 2002, net losses totaled $891.1 million compared to net losses of $621.6 million in 2001. The higher net loss was primarily due to the goodwill charges, increased net interest expense including a charge of $74 million related to the GECC settlement in 2002, the write-downs of equity investments to market value and the discontinuation of the minority interest adjustment related to DIRECTV Latin America. Partially offsetting these results were the gain recorded on the EchoStar settlement, the lower operating loss, the write-down of HUGHES' Sky Perfect Communications, Inc. ("Sky Perfect") investment in 2001, and the larger pre-tax gain on the sale of HUGHES' Thomson Multimedia common stock in 2002 compared to 2001. - 23 - SEGMENT FINANCIAL REVIEW: FOURTH QUARTER 2002 Direct-To-Home Broadcast Fourth quarter 2002 revenues for the segment increased 15.1% to $1,973.7 million from $1,715.2 million in the fourth quarter of 2001. The segment had EBITDA of $44.8 million compared with negative EBITDA of $5.3 million in the fourth quarter of 2001. Operating loss was $142.3 million in the fourth quarter of 2002 compared with an operating loss of $176.1 million in the same period last year. United States: Excluding subscribers in the National Rural Telecommunications Cooperative ("NRTC") territories, DIRECTV's owned and operated gross subscriber additions in the quarter were 711,000 and after accounting for churn, DIRECTV added 292,000 net subscribers. DIRECTV owned and operated subscribers totaled 9.49 million as of December 31, 2002, 12% more than the 8.44 million cumulative subscribers attained as of December 31, 2001. For the fourth quarter of 2002, the total number of subscribers in NRTC territories fell by 36,000, reducing the total number of NRTC subscribers as of December 31, 2002, to 1.69 million. As a result, the DIRECTV platform ended the year with 11.18 million total subscribers. DIRECTV reported quarterly revenues of $1,814 million, an increase of over 19% from last year's fourth quarter revenues of $1,519 million. The increase was due to continued subscriber growth and higher monthly revenue per subscriber. EBITDA for the fourth quarter of 2002 was $191 million compared with EBITDA in the same period of 2001 of $63 million. The increased EBITDA was primarily due to the additional profit gained from DIRECTV's increased revenue and lower marketing costs related to lower gross subscriber additions. Operating profit in the current quarter increased to $68 million compared with an operating loss of $46 million in 2001 principally due to the improved EBITDA and reduced amortization expense in accordance with SFAS No. 142. These were partially offset by higher depreciation expense, mostly related to the launch of the DIRECTV 4S satellite in December 2001 and DIRECTV 5 in May 2002, as well as additional infrastructure expenditures made during the last year. Please refer to the "Selected DIRECTV U.S. Performance Highlights" attachment for additional information on DIRECTV's subscribers and other important financial metrics. DIRECTV DSL: On December 13, 2002, HUGHES announced that it was shutting down the DIRECTV DSLTM service. DIRECTV Broadband will be transitioning subscribers to alternative service providers during the first quarter of 2003. In the fourth quarter of 2002, the DIRECTV DSL service added approximately 600 net customers. As of December 31, 2002, DIRECTV DSL had about 151,600 residential broadband customers in the United States compared with about 91,000 customers as of December 31, 2001. - 24 - The DIRECTV DSL service had fourth quarter 2002 revenues of $21 million compared with $11 million reported in the fourth quarter of 2001. The increase was driven by the larger subscriber base and an increase in monthly revenue per subscriber. Including a $111 million charge recorded for the expected costs associated with the planned shutdown of the service, DIRECTV DSL had negative EBITDA of $134 million in the quarter compared with negative EBITDA of $32 million in the same period last year. The charge will cover the expected costs to close the business including contract termination payments, write-off of customer premise equipment and severance payments. DIRECTV DSL's operating loss in the fourth quarter of 2002 increased to $147 million compared with an operating loss of $41 million in 2001 primarily due to the shutdown charge. Latin America: On January 8, 2003, DIRECTV Latin America announced that it had initiated discussions with certain programmers, suppliers, lenders and business associates to resolve issues that have affected its financial performance, including excessive fixed costs and a substantial debt burden. DIRECTV Latin America's goal is to implement a plan that is consistent with its overall objectives of enhanced competitiveness and profitable growth. The DIRECTV service in Latin America lost 22,000 net subscribers in the fourth quarter of 2002. As a result, the total number of subscribers in Latin America as of the end of the quarter was approximately 1,582,000 compared with about 1,610,000 as of December 31, 2001. Revenues for DIRECTV Latin America were $141 million for the quarter compared with $186 million in the fourth quarter of 2001. This decline was primarily due to the devaluation of several foreign currencies, the most significant of which was in Argentina, as well as the lower number of subscribers. DIRECTV Latin America had negative EBITDA of $13 million in the quarter compared with negative EBITDA of $36 million in the fourth quarter of 2001. The improvement in EBITDA was primarily due to a $29 million charge in 2001 related to the Argentinean devaluation as well as reduced operating costs in 2002 due to aggressive cost cutting. These improvements were partially offset by the decline in revenues. DIRECTV Latin America's operating loss decreased to $64 million in the quarter from an operating loss of $89 million last year primarily due to the improved EBITDA and reduced amortization expense in accordance with SFAS No. 142, partially offset by higher depreciation expense associated with additional infrastructure expenditures. Satellite Services PanAmSat Corporation ("PanAmSat"), which is 81%-owned by HUGHES, generated fourth quarter 2002 revenues of $196.8 million compared with $203.7 million in the same period of the prior year. The decrease in revenues was primarily due to reduced occasional video services revenues as compared to fourth quarter 2001, which reflected increased activity due to the events of September 11, 2001. EBITDA for the quarter was $144.4 million and EBITDA margin was 73.4%. EBITDA in the fourth quarter of 2001 was $139.3 million and EBITDA margin was 68.4%. The increase in EBITDA and EBITDA margin was primarily due to the company's continued focus on reducing its operating costs. Operating profit for the quarter was $71.4 million compared with operating profit of $29.3 million in the fourth quarter of 2001. The increase was primarily due to the improved EBITDA as well as lower amortization expense in accordance with SFAS No. 142 and lower satellite depreciation expense. As of December 31, 2002, PanAmSat had contracts for satellite services representing future payments (backlog) of approximately $5.55 billion compared to approximately $5.50 billion at the end of the third quarter of 2002. - 25 - Network Systems HNS generated fourth quarter 2002 revenues of $372.5 million compared with $435.7 million in the fourth quarter of 2001. The decline was principally due to lower sales in the Carrier businesses primarily related to the substantial completion of the XM Satellite Radio and Thuraya Satellite Telecommunications Company contracts. HNS shipped 939,000 DIRECTV(R) receiver systems in the fourth quarter of 2002 compared to 814,000 units in the same period last year. Additionally, HNS added approximately 20,000 net DIRECWAY residential and small office/home office (SOHO) broadband customers in the quarter. As of December 31, 2002, DIRECWAY had approximately 158,000 residential and SOHO subscribers in North America compared to 101,000 as of December 31, 2001, a 56% increase. HNS reported EBITDA of $1.1 million in the quarter compared to negative EBITDA of $14.1 million in the fourth quarter of 2001. Improved margins in the Satellite Broadband and Set-Top Box businesses were partially offset by the lower EBITDA associated with the decline in sales in the Carrier businesses. Operating loss was $18.0 million compared with the prior year's operating loss of $27.6 million. The decrease in operating loss was attributable to the improved EBITDA partially offset by increased depreciation and amortization expense associated with additional infrastructure expenditures. BALANCE SHEET From December 31, 2001 to December 31, 2002, HUGHES' consolidated cash balance increased $428.5 million to $1,128.6 million and total debt increased $470.5 million to $3,117.8 million. The major uses of cash were $1,298.1 million for satellite and capital expenditures, the payment of $180 million to GECC and the final purchase price adjustment payment of $134 million to the Raytheon Company. Also included in 2002 were cash receipts of $600 million for the settlement on the terminated merger with EchoStar, $215 million from an insurance claim on the PAS-7 satellite, $211 million for the sale of Thomson Multimedia common stock, $105 million for the sale of Sky Perfect common stock and $95 million from the resolution of the breach of contract lawsuit with NASA. Additionally, on December 4, 2002, HUGHES announced that it had refinanced and extended $1.9 billion of senior credit facilities. The amended facilities mature on August 31, 2003, and include a $1.28 billion revolving credit facility and a $650 million term loan. Hughes Electronics Corporation is a unit of General Motors Corporation. The earnings of Hughes Electronics are used to calculate the earnings attributable to the General Motors Class H common stock (NYSE:GMH). A live webcast of HUGHES' fourth quarter 2002 earnings call will be available on the company's website at www.hughes.com. The call will begin at 2:00 p.m. ET, today. The dial in number for the call is (913) 981-5517. The webcast will be archived on the Investor Relations portion of the HUGHES website and a replay will be available (dial in number: 719-457-0820, code: 797276) beginning today at 7:00 p.m. ET. (1) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is defined as operating profit (loss) plus depreciation and amortization. EBITDA margin is calculated by dividing EBITDA by total revenues. EBITDA is not presented as an alternative measure of operating results or cash flow from operations, as determined in accordance with accounting principles generally accepted in the United States of America. HUGHES management uses EBITDA to evaluate the operating performance of HUGHES and its business segments, to allocate resources and capital to its business segments, and as a measure of performance for incentive compensation purposes. HUGHES believes EBITDA is a measure of performance used by some investors, equity analysts and others to make informed investment decisions. EBITDA is used as an analytical indicator of income generated to service debt and fund capital expenditures. In addition, multiples of current or projected EBITDA are used to estimate current or prospective enterprise value. HUGHES management believes that EBITDA is a common measure used to compare HUGHES' operating performance and enterprise value to other communications, entertainment and media service providers. EBITDA does not reflect funds available for investment in the business of HUGHES, dividends or other discretionary uses. EBITDA and EBITDA margin as presented herein may not be comparable to similarly titled measures reported by other companies. - 26 - Hughes Financial Guidance - ------------------------------------------------------------------------------- 2002 Full Year First Quarter Full Year Actuals 2003 2003 - ------------------------------------------------------------------------------- HUGHES - ------------------------------------------------------------------------------- Revenues $8,935M ~$2.1B $9.3 - 9.5B - ------------------------------------------------------------------------------- EBITDA $672M $175 - 225M ~$1.1B - ------------------------------------------------------------------------------- Cash Supplied/(Required) $138M(1) N/A $(200) - (300)M(2) - ------------------------------------------------------------------------------- DIRECTV U.S. - ------------------------------------------------------------------------------- Revenues $6,445M ~$1.625B ~$7.1B - ------------------------------------------------------------------------------- EBITDA $620M(3) ~$160M $800 - 850M - ------------------------------------------------------------------------------- Net Subscriber Adds 1,050K N/A 750 - 800K - ------------------------------------------------------------------------------- DIRECTV DSL - ------------------------------------------------------------------------------- Revenues $72M - ------------------------------------------ EBITDA $(220)M DIRECTV DSL Discontinued - ------------------------------------------ Net Subscriber Adds 61K - ------------------------------------------------------------------------------- DIRECTV Latin America - ------------------------------------------------------------------------------- Revenues $680M $125 - 150M $550 - 600M - ------------------------------------------------------------------------------- EBITDA $(202)M $(30) - (50)M $(50) - (75)M - ------------------------------------------------------------------------------- Hughes Network Systems - ------------------------------------------------------------------------------- Revenues $1,170M $215 - 230M $1.1 - 1.2B - ------------------------------------------------------------------------------- EBITDA $(87)M(4) $(20) - (30)M Breakeven - ------------------------------------------------------------------------------- PanAmSat - ------------------------------------------------------------------------------- Revenues $812M $190 - 200M $790 - 820M - ------------------------------------------------------------------------------- New Outright Sales None None None and Sales-Type Leases - ------------------------------------------------------------------------------- EBITDA $592M $140 - 150M $580 - 600M - ------------------------------------------------------------------------------- (1) Excludes financing fees of and purchases of short term investments. (2) Excludes one-time non-operating cash requirements. (3) Excludes $56M EBITDA charge for GECC settlement and includes $45M of allocated HUGHES corporate G&A which will not be allocated in 2003. (4) Includes $10M of allocated HUGHES corporate G&A which will not be allocated in 2003. NOTE: Hughes Electronics Corporation believes that some of the foregoing statements may constitute forward-looking statements. When used in this report, the words "estimate," "plan," "project," "anticipate," "expect," "intend," "outlook," "believe," and other similar expressions are intended to identify such forward-looking statements and information. Important factors that may cause actual results of HUGHES to differ materially from the forward-looking statements in this report are set forth in the Form 10-Ks filed with the SEC by General Motors and HUGHES. ### - 27 - Selected DIRECTV U.S. Performance Highlights - -------------------------------------------------------------------------------- Quarters Ended ------------------------------------------------- 12/31/01 3/31/02 6/30/02 9/30/02 12/31/02 DIRECTV U.S. Key Performance Metrics - -------------------------------------------------------------------------------- Average Revenue per User (ARPU),$ (1) $61.35 $56.70 $58.10 $59.20 $64.70 - -------------------------------------------------------------------------------- Subscriber Acquisition Cost (SAC),$ (2) $565 $525 $530 $535 $570 - -------------------------------------------------------------------------------- Churn, % (3) 1.7% 1.6% 1.7% 1.7% 1.5% - -------------------------------------------------------------------------------- Pre-Marketing Cash Flow (PMCF), % 38% 39% 40% 41% 38% - -------------------------------------------------------------------------------- Subscriber Summary (in millions) - -------------------------------- DIRECTV - Owned & Operated - -------------------------------------------------------------------------------- Residential 7.88 8.27 8.46 8.68 8.93 - -------------------------------------------------------------------------------- Commercial 0.33 0.34 0.37 0.38 0.40 - -------------------------------------------------------------------------------- Suspended 0.23 0.18 0.16 0.14 0.16 - -------------------------------------------------------------------------------- Total DIRECTV - Owned & Operated (4) 8.44 8.79 8.99 9.20 9.49 - -------------------------------------------------------------------------------- NRTC, Total (5) 1.89 1.75 1.75 1.72 1.69 - -------------------------------------------------------------------------------- Grand Total 10.33 10.54 10.74 10.92 11.18 - ---------------------------------=============================================== (1) Total revenue divided by average period-end total DIRECTV owned & operated customers (2) Sales and marketing acquisition costs divided by DIRECTV owned & operated customer gross adds in the period; includes advanced and leased set-top boxes (3) Net customer disconnects divided by average period-end DIRECTV owned and operated customers (4) Excludes pending customers to reflect policy change effective 1/1/02 (5) Reflects DIRECTV billing system data except Q1 and Q2 2002 which also reflect Pegasus Communicatons Corp. policy change and adjustments reported in Pegasus' Form 10Q filings - -------------------------------------------------------------------------------- - 28 - CONSOLIDATED STATEMENTS OF OPERATIONS AND AVAILABLE SEPARATE CONSOLIDATED NET INCOME (LOSS) (Dollars in Millions) (Unaudited) Twelve Months Fourth Quarter Ended December 31, -------------------------------------- 2002 2001 2002 2001 - -------------------------------------------------------------------------------- Revenues Direct broadcast, leasing and other services $2,195.6 $1,935.6 $8,031.0 $7,204.3 Product sales 276.1 346.0 903.9 1,059.7 - -------------------------------------------------------------------------------- Total Revenues 2,471.7 2,281.6 8,934.9 8,264.0 - -------------------------------------------------------------------------------- Operating Costs and Expenses, Exclusive of Depreciation and Amortization Expense Shown Below Broadcast programming and other costs 1,162.3 944.3 4,187.1 3,335.3 Cost of products sold 251.4 309.8 818.6 900.2 Selling, general and administrative expenses 886.4 909.3 3,256.8 3,638.6 Depreciation and amortization 277.0 296.8 1,067.1 1,147.7 - -------------------------------------------------------------------------------- Total Operating Costs and Expenses 2,577.1 2,460.2 9,329.6 9,021.8 - -------------------------------------------------------------------------------- Operating Loss (105.4) (178.6) (394.7) (757.8) Interest income 7.4 4.5 24.5 56.7 Interest expense (61.1) (61.9) (336.2) (195.9) Other, net 379.5 (2.7) 425.5 (92.7) - -------------------------------------------------------------------------------- Income (Loss) Before Income Taxes, Minority Interests and Cumulative Effect of Accounting Change 220.4 (238.7) (280.9) (989.7) Income tax (expense) benefit (97.8) 107.8 92.7 325.6 Minority interests in net (earnings) losses of subsidiaries (7.3) (1.7) (21.6) 49.9 - -------------------------------------------------------------------------------- Income (Loss) before cumulative effect of accounting changes 115.3 (132.6) (209.8) (614.2) Cumulative effect of accounting changes, net of taxes - - (681.3) (7.4) - -------------------------------------------------------------------------------- Net Income (Loss) 115.3 (132.6) (891.1) (621.6) Adjustment to exclude the effect of GM purchase accounting - 0.8 - 3.3 - -------------------------------------------------------------------------------- Income (Loss) excluding the effect of GM purchase accounting 115.3 (131.8) (891.1) (618.3) Preferred stock dividends - (24.1) (46.9) (96.4) - -------------------------------------------------------------------------------- Income (Loss) Used for Computation of Available Separate Consolidated Net Income (Loss) $115.3 $(155.9) $(938.0) $(714.7) ================================================================================ Available Separate Consolidated Net Income (Loss) Average number of shares of General Motors Class H Common Stock outstanding (in millions) (Numerator) 958.2 877.3 919.5 876.3 Average Class H dividend base (in millions) (Denominator) 1,381.8 1,300.9 1,343.1 1,300.0 Available Separate Consolidated Net Income (Loss) $80.0 $(105.1) $(642.2) $(481.8) ================================================================================ - 29 - CONSOLIDATED BALANCE SHEETS (Dollars in Millions) December 31, 2002 December 31, ASSETS (Unaudited) 2001 - -------------------------------------------------------------------------------- Current Assets Cash and cash equivalents $1,128.6 $700.1 Accounts and notes receivable 1,133.9 1,090.5 Contracts in process 165.9 153.1 Inventories 230.3 360.1 Deferred income taxes 97.7 118.9 Prepaid expenses and other 921.3 918.4 - -------------------------------------------------------------------------------- Total Current Assets 3,677.7 3,341.1 Satellites, net 4,922.6 4,806.6 Property, net 2,017.4 2,197.8 Goodwill, net 5,775.2 6,496.6 Intangible Assets, net 644.7 660.2 Net Investment in Sales-type Leases 161.9 227.0 Investments and Other Assets 706.9 1,480.8 - -------------------------------------------------------------------------------- Total Assets $17,906.4 $19,210.1 ================================================================================ LIABILITIES AND STOCKHOLDER'S EQUITY - -------------------------------------------------------------------------------- Current Liabilities Accounts payable $1,039.0 $1,227.5 Deferred revenues 166.4 178.5 Short-term borrowings and current portion of long-term debt 727.8 1,658.5 Accrued liabilities and other 1,288.5 1,342.0 - -------------------------------------------------------------------------------- Total Current Liabilities 3,221.7 4,406.5 Long-Term Debt 2,390.0 988.8 Other Liabilities and Deferred Credits 1,178.4 1,465.1 Deferred Income Taxes 581.2 746.5 Commitments and Contingencies Minority Interests 555.3 531.3 Stockholder's Equity 9,979.8 11,071.9 - -------------------------------------------------------------------------------- Total Liabilities and Stockholder's Equity $17,906.4 $19,210.1 ================================================================================ 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). - 30 - SELECTED SEGMENT DATA (Dollars in Millions) (Unaudited) Twelve Months Fourth Quarter Ended December 31, -------------------- ------------------ 2002 2001 2002 2001 - ------------------------------------------------------------------------------ DIRECT-TO-HOME BROADCAST Total Revenues $ 1,973.7 $ 1,715.2 $7,193.3 $6,306.4 EBITDA (1) $ 44.8 $ (5.3) $ 142.2 $ (74.8) EBITDA Margin (1) 2.3% N/A 2.0% N/A Operating Loss $ (142.3) $ (176.1) $ (523.8) $ (749.9) Depreciation and Amortization $ 187.1 $ 170.8 $ 666.0 $ 675.1 Capital Expenditures $ 123.5 $ 211.8 $ 524.1 $ 734.3 - ------------------------------------------------------------------------------ SATELLITE SERVICES Total Revenues $ 196.8 $ 203.7 $ 812.3 $ 870.1 EBITDA (1) $ 144.4 $ 139.3 $ 591.6 $ 580.0 EBITDA Margin (1) 73.4% 68.4% 72.8% 66.7% Operating Profit $ 71.4 $ 29.3 $ 255.9 $ 165.3 Operating Profit Margin 36.3% 14.4% 31.5% 19.0% Depreciation and Amortization $ 73.0 $ 110.0 $ 335.7 $ 414.7 Capital Expenditures $ 34.3 $ 96.5 $ 294.3 $ 338.2 - ------------------------------------------------------------------------------ NETWORK SYSTEMS Total Revenues $ 372.5 $ 435.7 $1,169.9 $1,325.8 EBITDA (1) $ 1.1 $ (14.1) $ (87.0) $ (111.8) Operating Loss $ (18.0) $ (27.6) $ (160.7) $ (171.8) Depreciation and Amortization $ 19.1 $ 13.5 $ 73.7 $ 60.0 Capital Expenditures $ 85.0 $ 197.4 $ 400.4 $ 664.6 - ------------------------------------------------------------------------------ ELIMINATIONS and OTHER Total Revenues $ (71.3) $ (73.0) $ (240.6) $ (238.3) EBITDA (1) $ (18.7) $ (1.7) $ 25.6 $ (3.5) Operating Profit (Loss) $ (16.5) $ (4.2) $ 33.9 $ (1.4) Depreciation and Amortization $ (2.2) $ 2.5 $ (8.3) $ (2.1) Capital Expenditures $ 24.6 $ 10.4 $ 79.3 $ 6.4 - ------------------------------------------------------------------------------ TOTAL Total Revenues $ 2,471.7 $ 2,281.6 $8,934.9 $8,264.0 EBITDA (1) $ 171.6 $ 118.2 $ 672.4 $ 389.9 EBITDA Margin (1) 6.9% 5.2% 7.5% 4.7% Operating Loss $ (105.4) $ (178.6) $ (394.7) $ (757.8) Depreciation and Amortization $ 277.0 $ 296.8 $1,067.1 $1,147.7 Capital Expenditures $ 267.4 $ 516.1 $1,298.1 $1,743.5 ============================================================================== (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. EBITDA is not presented as an alternative measure of operating results or cash flow from operations, as determined in accordance with accounting principles generally accepted in the United States of America. EBITDA does not reflect the funds available for investment in the business of HUGHES, dividends or other discretionary uses. EBITDA as presented herein may not be comparable to similarly titled measures reported by other companies. - 31 - 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 16, 2003 ---------------- By /s/Peter R. Bible ------------------------------- (Peter R. Bible, Chief Accounting Officer) - 32 - -----END PRIVACY-ENHANCED MESSAGE-----