0000040730-95-000009.txt : 19950810
0000040730-95-000009.hdr.sgml : 19950810
ACCESSION NUMBER: 0000040730-95-000009
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950809
SROS: NASD
SROS: NYSE
SROS: PHLX
SROS: PSE
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: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-00143
FILM NUMBER: 95560180
BUSINESS ADDRESS:
STREET 1: 3044 W GRAND BLVD
CITY: DETROIT
STATE: MI
ZIP: 48202
BUSINESS PHONE: 3135565000
10-Q
1
FIRST PART OF 10-Q
l:\secfiles\10-Q\1995\2ndqtr95\part1-95.doc 24
1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549-1004
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
---
ACT OF 1934
For the quarterly period ended June 30, 1995
-------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE
---
ACT OF 1934
For the transition period from to
------------------- -------------------
Commission file number 1-143
-----
GENERAL MOTORS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
STATE OF DELAWARE 38-0572515
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
767 Fifth Avenue, New York, New York 10153-0075
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
--------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
--- ---
As of June 30, 1995, there were outstanding 747,412,563 shares of the
issuer's $1-2/3 par value common stock, 438,771,003 shares of Class E $0.10
par value common stock and 95,561,165 shares of Class H $0.10 par value common
stock.
- 1 -
2
GENERAL MOTORS CORPORATION AND SUBSIDIARIES
Index
Page No.
--------
Part I - Financial Information
Item 1. Financial Statements
Statement of Consolidated Operations 3
Consolidated Balance Sheet 5
Condensed Statement of Consolidated Cash Flows 7
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis 12
Part II - Other Information
Item 1. Legal Proceedings 29
Item 4. Submission of Matters to a Vote of Security Holders 30
Item 6. Exhibits and Reports on Form 8-K 31
Signatures 32
Exhibit 11 Computation of Earnings Per Share Attributable
to Common Stocks for the Quarters and Six Months Ended
June 30, 1995 and 1994 33
Exhibit 12 Computation of Ratios of Earnings to Fixed Charges for
the Six Months Ended June 30, 1995 and 1994 37
Exhibit 99(a) Electronic Data Systems Corporation and Subsidiaries
Consolidated Financial Statements and Management's Discussion
and Analysis 38
(b) Hughes Electronics Corporation and Subsidiaries
Consolidated Financial Statements and Management's Discussion
and Analysis 45
Exhibit 27 Financial Data Schedule (for SEC information only)
- 2 -
3
GENERAL MOTORS CORPORATION PART I
AND SUBSIDIARIES ITEM 1. FINANCIAL STATEMENTS
STATEMENT OF CONSOLIDATED OPERATIONS
Six Months Ended
Second Quarter June 30,
-------------------- --------------------
1995 1994 1995 1994
-------------------- --------------------
(Dollars in Millions)
Net Sales and Revenues
Manufactured products $38,113.2 $35,555.1 $75,590.6 $68,353.4
Financial services 2,917.6 2,304.7 5,635.0 4,467.7
Computer systems services 1,967.6 1,453.3 3,845.9 2,828.8
Other income (Note 1) 1,147.8 1,079.1 2,359.7 2,237.7
-------- -------- -------- --------
Total Net Sales and Revenues 44,146.2 40,392.2 87,431.2 77,887.6
-------- -------- -------- --------
Costs and Expenses
Cost of sales and other
operating charges, exclusive
of items listed below 32,642.7 30,218.0 64,594.6 58,222.1
Selling, general, and
administrative expenses 3,286.6 3,024.8 6,383.7 5,729.4
Interest expense 1,396.0 1,350.2 2,885.0 2,552.2
Depreciation of real estate,
plants, and equipment 2,129.2 1,651.5 4,160.2 3,347.9
Amortization of special tools 877.8 764.6 1,746.0 1,525.6
Amortization of intangible
assets 57.9 59.4 108.2 123.3
Other deductions (Note 1) 538.8 237.5 856.6 848.8
-------- -------- -------- --------
Total Costs and Expenses 40,929.0 37,306.0 80,734.3 72,349.3
-------- -------- -------- --------
Income before Income Taxes 3,217.2 3,086.2 6,696.9 5,538.3
United States, foreign, and
other income taxes 947.1 1,163.4 2,272.8 2,003.7
-------- -------- -------- --------
Income before cumulative
effect of accounting change 2,270.1 1,922.8 4,424.1 3,534.6
Cumulative effect of accounting
change (Note 3) - - - (758.1)
-------- -------- -------- --------
Net Income 2,270.1 1,922.8 4,424.1 2,776.5
Preference shares tender offer
premium (Note 9) 153.4 - 153.4 -
Dividends on preference stocks 46.1 89.7 118.1 176.5
-------- -------- -------- --------
Income on Common Stocks $2,070.6 $1,833.1 $4,152.6 $2,600.0
======== ======== ======== ========
Reference should be made to the Notes to Financial Statements.
- 3 -
4
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES STATEMENT OF CONSOLIDATED OPERATIONS - Concluded
Six Months Ended
Second Quarter June 30,
--------------- -----------------
1995 1994 1995 1994
--------------- -----------------
(Dollars in Millions
Except Per Share Amounts)
Earnings Attributable to
Common Stocks (Note 4)
$1-2/3 par value before cumulative
effect of accounting change $1,796.0 $1,665.3 $3,692.3 $3,027.4
Cumulative effect of accounting change
(Note 3) - - - (751.3)
------- ------- ------- -------
Net earnings attributable
to $1-2/3 par value $1,796.0 $1,665.3 $3,692.3 $2,276.1
======= ======= ======= =======
Net earnings attributable to Class E $205.8 $106.5 $328.2 $198.6
======= ======= ======= =======
Class H before cumulative effect
of accounting change $68.8 $61.3 $132.1 $132.1
Cumulative effect of accounting change
(Note 3) - - - (6.8)
------- ------- ------- -------
Net earnings attributable
to Class H $68.8 $61.3 $132.1 $125.3
======= ======= ======= =======
Average number of shares of common stocks
outstanding (in millions)
$1-2/3 par value 746.3 733.1 749.4 729.2
Class E 438.7 260.1 369.7 259.0
Class H 95.4 91.7 94.8 91.2
Earnings Per Share Attributable
to Common Stocks (Note 4)
$1-2/3 par value before cumulative
effect of accounting change $2.39 $2.23 $4.90 $4.07
Cumulative effect of accounting change
(Note 3) - - - (1.05)
---- ---- ---- ----
Net earnings attributable to
$1-2/3 par value $2.39 $2.23 $4.90 $3.02
==== ==== ==== ====
Net earnings attributable to Class E $0.47 $0.41 $0.89 $0.77
==== ==== ==== ====
Class H before cumulative effect of
accounting change $0.72 $0.67 $1.39 $1.45
Cumulative effect of accounting change
(Note 3) - - - (0.08)
---- ---- ---- ----
Net earnings attributable to
Class H $0.72 $0.67 $1.39 $1.37
==== ==== ==== ====
Cash Dividends Per Share of Common
Stocks (Note 4)
$1-2/3 par value $0.30 $0.20 $0.50 $0.40
Class E $0.13 $0.12 $0.26 $0.24
Class H $0.23 $0.20 $0.46 $0.40
Reference should be made to the Notes to Financial Statements.
- 4 -
5
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET
June 30, Dec. 31, June 30,
ASSETS 1995 1994 1994
-----------------------------------------------------------------------------
(Dollars in Millions)
Cash and cash equivalents $9,403.5 $10,939.0 $13,642.8
Other marketable securities 5,754.6 5,136.6 5,139.7
--------- --------- ---------
Total cash and marketable securities 15,158.1 16,075.6 18,782.5
--------- --------- ---------
Finance receivables - net 58,138.5 54,077.3 53,930.6
--------- --------- ---------
Accounts and notes receivable (less
allowances) 10,632.0 8,977.8 9,197.5
--------- --------- ---------
Inventories (less allowances) (Note 5) 11,700.4 10,127.8 10,060.7
--------- --------- ---------
Contracts in process (less advances and
progress payments) 2,687.4 2,265.4 2,693.7
--------- --------- ---------
Net equipment on operating leases (less
accumulated depreciation) 21,205.1 20,061.6 16,646.4
--------- --------- --------
Deferred income taxes 18,001.7 19,693.3 20,868.9
--------- --------- ---------
Other assets (less allowances) 21,074.8 20,625.5 19,407.7
--------- --------- ---------
Property
Real estate, plants, and equipment-at cost 72,943.1 69,807.9 68,694.1
Less accumulated depreciation 44,590.6 42,586.4 42,517.3
--------- --------- ---------
Net real estate, plants, and equipment 28,352.5 27,221.5 26,176.8
Special tools - at cost (less amortization) 7,622.4 7,559.1 7,550.7
--------- --------- ---------
Total property 35,974.9 34,780.6 33,727.5
--------- --------- ---------
Intangible assets - at cost (less
amortization) 12,001.7 11,913.8 13,114.7
--------- --------- ---------
Total Assets $206,574.6 $198,598.7 $198,430.2
========= ========= =========
Certain June 1994 amounts were reclassified to conform with 1995
classifications.
Reference should be made to the Notes to Financial Statements.
- 5 -
6
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET - Concluded
June 30, Dec. 31, June 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 1994
-----------------------------------------------------------------------------
(Dollars in Millions Except
Per Share Amounts)
Liabilities
Accounts payable $11,598.1 $11,635.0 $10,619.3
Notes and loans payable 78,299.5 73,730.2 72,403.3
United States, foreign, and other income
taxes - deferred and payable 3,647.3 2,721.0 3,491.8
Postretirement benefits other than
pensions (Note 6) 40,830.2 40,018.2 38,795.9
Pensions (Note 7) 5,080.0 14,353.2 22,801.5
Other liabilities and deferred credits 44,580.9 42,867.3 40,827.6
--------- --------- ---------
Total Liabilities 184,036.0 185,324.9 188,939.4
--------- --------- ---------
Stocks Subject to Repurchase (Note 8) - 450.0 450.0
--------- --------- ---------
Stockholders' Equity
Preference stocks (Note 9)
Series B 9-1/8% Depositary Shares, $0.5
and $1.1;
Series C Depositary Shares, $0.3;
Series D 7.92% Depositary Shares, $0.1
and $0.4; and
Series G 9.12% Depositary Shares, $0.3
and $0.6 in June 1995, and in December
and June 1994) 1.2 2.4 2.4
Common stocks
$1-2/3 par value (issued, 747,600,160,
754,345,782, and 750,098,491 shares) 1,246.0 1,257.2 1,250.2
Class E (issued, 442,684,068, 268,125,255,
and 266,503,861 shares) (Notes 7 and 12) 44.3 26.8 26.7
Class H (issued, 95,704,629, 78,720,022,
and 77,376,419 shares) 9.6 7.9 7.7
Capital surplus (principally additional
paid-in capital) 18,591.3 13,149.4 12,856.0
Net income retained for use in the
business (Note 10) 5,429.1 1,785.8 207.1
--------- --------- ---------
Subtotal 25,321.5 16,229.5 14,350.1
Minimum pension liability adjustment (3,548.4) (3,548.4) (5,311.2)
Accumulated foreign currency translation
adjustments 357.1 (100.4) (224.3)
Net unrealized gains on investments
in certain debt and equity securities 408.4 243.1 226.2
--------- --------- ---------
Total Stockholders' Equity 22,538.6 12,823.8 9,040.8
--------- --------- ---------
Total Liabilities and Stockholders' Equity $206,574.6 $198,598.7 $198,430.2
========= ========= =========
Reference should be made to the Notes to Financial Statements.
- 6 -
7
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES CONDENSED STATEMENT OF CONSOLIDATED CASH FLOWS
Six Months Ended June 30,
-------------------------
1995 1994
-------------------------
(Dollars in Millions)
Net Cash Provided by Operating Activities $7,786.4 $6,230.6
-------- --------
Cash Flows from Investing Activities
Expenditures for real estate, plants, and
equipment (2,733.9) (1,775.6)
Expenditures for special tools (1,673.3) (989.6)
Other 445.8 (84.3)
Change in other investing assets
Investments in other marketable securities -
acquisitions (10,461.5) (6,868.0)
Investments in other marketable securities -
liquidations 9,842.6 6,310.1
Finance receivables - acquisitions (85,616.7) (80,015.6)
Finance receivables - liquidations 72,027.7 71,433.0
Proceeds from sales of finance receivables 11,232.7 8,645.3
Operating leases - net (4,494.2) (4,970.1)
-------- --------
Net Cash Used in Investing Activities (11,430.8) (8,314.8)
-------- --------
Cash Flows from Financing Activities
Net increase in short-term
loans payable 1,732.4 1,125.4
Increase in long-term debt 7,921.3 8,707.7
Decrease in long-term debt (5,658.4) (8,236.4)
Repurchases of preference stocks (1,286.7) -
Repurchases of common stocks (394.0) -
Proceeds from issuing common stocks 224.0 902.2
Cash dividends paid to stockholders (627.4) (566.5)
-------- --------
Net Cash Provided by Financing Activities 1,911.2 1,932.4
-------- --------
Effect of Exchange Rate Changes on Cash and Cash
Equivalents 197.7 4.1
-------- --------
Net decrease in cash and cash equivalents (1,535.5) (147.7)
Cash and cash equivalents at beginning of
the period 10,939.0 13,790.5
-------- --------
Cash and cash equivalents at end of the period $9,403.5 $13,642.8
======== ========
Certain 1994 amounts were reclassified to conform with 1995 classifications.
Reference should be made to the Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
In the opinion of management, the interim financial statements reflect all
adjustments, consisting of only normal recurring items (with the exception of
the accounting changes in 1994 to adopt Statement of Financial Accounting
Standards (SFAS) No. 112, Employers' Accounting for Postemployment Benefits,
and SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities, as described in Note 3), which are necessary for a fair
presentation of the results for the interim periods presented. The results
for interim periods are not necessarily indicative of results which may be
expected for any other interim period or for the full year. These financial
statements should be read in conjunction with the consolidated financial
statements, the significant accounting policies, and the other notes to the
consolidated financial statements included in the Corporation's 1994 Annual
Report to the SEC on Form 10-K.
- 7 -
8
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - Continued
Note 1.
Other income and other deductions consist of:
Second Quarter Six Months
----------------- ------------------
1995 1994 1995 1994
----------------- ------------------
(Dollars in Millions)
Other Income
Insurance premiums $219.7 $220.0 $438.6 $432.8
Nonfinancing interest 415.3 386.9 875.4 706.4
Equity in earnings
of associates, net 35.0 73.8 81.8 48.2
Claims, commissions, and grants 151.3 92.8 246.6 194.3
Gain on the sale of finance receivables 18.3 19.8 38.2 19.8
Revenue from mortgage operations 91.9 40.7 143.5 99.5
Other 216.3 245.1 535.6 736.7*
------- ------- ------- -------
Total Other Income $1,147.8 $1,079.1 $2,359.7 $2,237.7
======= ======= ======= =======
Other Deductions
Insurance losses and loss adjustment
expenses $158.0 $178.0 $318.7 $341.4
Provision for financing losses 133.3 54.8 188.3 118.9
Loss on sale of NCRS net assets** 147.8 - 147.8 -
Other 99.7 4.7 201.8 388.5*
------- ------- ------- -------
Total Other Deductions $538.8 $237.5 $856.6 $848.8
======= ======= ======= =======
* Includes gains and losses on the sale of assets in the first quarter of
1994. The net impact of these sales of assets was not material.
**On June 9, 1995, GM completed the sale of National Car Rental System's
(NCRS) net assets. The second quarter results include $162.6 million net
income, or $0.22 per share of GM $1-2/3 par value common stock. The net
income reflects $310.4 million of tax benefits related to the restructuring
for NCRS in 1992. The tax benefits were not previously recorded due to the
uncertainty of ultimate realization.
Note 2.
Financial data of General Motors Acceptance Corporation (GMAC) and its
subsidiaries were as follows:
Second Quarter Six Months
----------------- ------------------
1995 1994 1995 1994
----------------- ------------------
(Dollars in Millions)
Net financing revenue and other $1,426.9 $1,158.2 $2,705.1 $2,313.4
Net income including the unfavorable
cumulative effect of accounting
change of $7.4 million in
six months 1994 $259.2 $216.1 $514.1 $433.6
Cash dividends paid to GM $200.0 $250.0 $400.0 $500.0
Note 3.
Effective January 1, 1994, the Corporation adopted SFAS No. 112, Employers'
Accounting for Postemployment Benefits. The Standard requires accrual of the
costs of benefits provided to former or inactive employees after employment,
but before retirement. The unfavorable cumulative effect of adopting this
Standard, determined on a discounted basis, was $1,220.1 million ($758.1
million after tax), or $751.3 million ($1.05 per share) attributable to $1-2/3
par value common stock and $6.8 million ($0.08 per share) attributable to GM
Class H common stock. The non-cash charge is primarily related to GM's
extended-disability benefit program in the U.S. which, under the accounting
Standard, will be accrued on a service-driven basis.
- 8 -
9
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - Continued
Also effective January 1, 1994, the Corporation adopted SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities, which
resulted in a $241.0 million after-tax increase in Stockholders' Equity. This
Standard requires the recording at fair value of debt securities which are not
expected to be held to maturity and equity securities which have a readily
determinable fair value. Unrealized gains and losses resulting from changes
in fair value are included as a separate component of Stockholders' Equity.
The primary effect of this Standard for the Corporation relates to debt
securities held by Motors Insurance Corporation and certain equity securities.
Marketable securities, other than certain securities held by GMAC and its
subsidiaries, are considered available for sale.
Note 4.
Earnings per share attributable to common stocks have been determined based
on the relative amounts available for the payment of dividends to holders of
$1-2/3 par value, Class E, and Class H common stocks. The allocation of
earnings attributable to such common stocks and the calculation of the related
amounts per share are computed by considering the weighted average number of
common shares outstanding and common stock equivalents, to the extent the
effect of such equivalents is not antidilutive. Operations of the incentive
plans and the assumed exercise of stock options do not have a material
dilutive effect on earnings per share at this time.
Dividends on the $1-2/3 par value common stock are declared out of the
earnings of GM and its subsidiaries, excluding the Available Separate
Consolidated Net Income of Electronic Data Systems Corporation (EDS) and
Hughes Electronics Corporation (Hughes), previously known as GM Hughes
Electronics Corporation. Dividends on the Class E and Class H common stocks
are declared out of the Available Separate Consolidated Net Income of EDS and
Hughes, respectively, earned since the acquisition by GM.
The Available Separate Consolidated Net Income of EDS and Hughes is
determined quarterly and is equal to the separate consolidated net income of
EDS and Hughes, respectively, excluding the effects of purchase accounting
adjustments arising at the time of acquisition, multiplied by a fraction, the
numerator of which is a number equal to the weighted average number of shares
of Class E (438.7 million for the second quarter of 1995) or Class H (95.4
million for the second quarter of 1995) common stock outstanding during the
period and the denominator of which was 483.7 million for Class E stock and
399.9 million for Class H stock during the second quarter of 1995. Comparable
numerators for the second quarter of 1994 were 260.1 million for Class E stock
and 91.7 million for Class H stock. Comparable denominators for the second
quarter of 1994 were 481.7 million for Class E stock and 399.9 million for
Class H stock. The weighted average number of shares of Class E common stock
outstanding (numerator) during the second quarter of 1995 and 1995 six months
reflects the impact of the March 13, 1995 Class E common stock pension
contribution which is described in Note 7.
The denominators used in determining the Available Separate Consolidated Net
Income of EDS and Hughes are adjusted as deemed appropriate by the Board of
Directors to reflect subdivisions or combinations of the Class E and Class H
common stocks and to reflect certain transfers of capital to or from
EDS and Hughes. The Board's discretion to make such adjustments is limited by
criteria set forth in GM's Certificate of Incorporation. In this regard, the
Board has generally caused the denominators to decrease as shares are
purchased by EDS or Hughes, and to increase as such shares are used, at EDS or
Hughes expense, for EDS or Hughes employee benefit plans or acquisitions.
Dividends may be paid on common stocks only when, as, and if declared by the
Board of Directors in its sole discretion. The Board's policy with respect to
$1-2/3 par value common stock is to distribute dividends based on the outlook
and the indicated capital needs of the business. The current policy of the
Board with respect to the Class E and Class H common stocks is to pay cash
- 9 -
10
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - Continued
dividends approximately equal to 30% and 35% of the Available Separate
Consolidated Net Income of EDS and Hughes, respectively, for the prior year.
Notwithstanding the current dividend policy, the Board of Directors declared a
dividend on the Class H common stock for each of the quarters of 1994 which
was based on an annual rate higher than 35% of the Available Separate
Consolidated Net Income of Hughes for the preceding year. In February 1995,
the Board increased the quarterly dividend from $0.20 per share to $0.23 per
share (which is based on an annual rate of approximately 35% of the Available
Separate Consolidated Net Income of Hughes for 1994).
Note 5.
Major classes of inventories are as follows:
June 30, Dec. 31, June 30,
1995 1994 1994
-----------------------------------
(Dollars in Millions)
Productive material, work in process,
and supplies $6,190.5 $5,478.3 $5,409.2
Finished product, service parts, etc. 5,509.9 4,649.5 4,651.5
-------- -------- --------
Total inventories (less allowances) $11,700.4 $10,127.8 $10,060.7
======== ======== ========
Note 6.
The Corporation has disclosed in the financial statements certain amounts
associated with estimated future postretirement benefits other than pensions
and characterized such amounts as "accumulated postretirement benefit
obligations", "liabilities", or "obligations". Notwithstanding the recording
of such amounts and the use of these terms, the Corporation does not admit or
otherwise acknowledge that such amounts or existing postretirement benefit
plans of the Corporation (other than pensions) represent legally enforceable
liabilities of the Corporation.
Note 7.
On March 13, 1995, GM contributed to the General Motors Hourly-Rate
Employees Pension Plan (Hourly Plan) 173,163,187 shares of Class E common
stock, having an aggregate fair market value on such date of approximately
$6.3 billion (determined by an independent valuation expert retained by the
Trustee). The contribution was made under the terms of an agreement between
GM and the Pension Benefit Guaranty Corporation (the PBGC). Subject to the
terms of the agreement, GM will defer the use of the funding credits that
would otherwise result from such cash and stock contributions. Consequently,
GM will continue to make regular cash contributions to the Hourly Plan over
the next several years. The agreement with the PBGC also provides flexibility
to GM by granting a release of EDS from liability, if any, under Title IV of
ERISA for GM's U.S. pension plans, in the event EDS were to leave the GM
control group under certain circumstances. In addition, in connection with
the contribution of the shares of Class E common stock, the U.S. Department of
Labor granted an exemption with respect to, among other things, limits
otherwise applicable under ERISA on the amount of Class E common stock that
could legally be held by the Hourly Plan.
Note 8.
Stocks Subject to Repurchase at December 31, 1994 and June 30, 1994
consisted of 15 million shares of Class H common stock subject to put options
issued to the Howard Hughes Medical Institute (HHMI) and exercisable at $30
per share on March 1, 1995. The Corporation held an option to call the
Institute's shares until February 28, 1995 at $37.50 per share. The put and
call rights expired unexercised. As a result, $1.5 million was transferred to
Class H common stock and $448.5 million was transferred to capital surplus.
In 1995, GM and HHMI entered into an agreement under which GM assisted the
Institute in selling 15 million shares at $38.50 per share.
- 10 -
11
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - Continued
Note 9.
On May 23, 1995, General Motors concluded a tender offer, which began on
April 25, 1995, under which it purchased for $1.3 billion of cash (i)
24.3 million depositary shares, each representing one-fourth of a share of its
Series B 9-1/8% Preference Stock, at a purchase price of $27.50 per depositary
share, (ii) 9.6 million depositary shares, each representing one-fourth of a
share of its Series D 7.92% Preference Stock, at a purchase price of $26.375
per depositary share, and (iii) 12.9 million depositary shares, each
representing one-fourth of a share of its Series G 9.12% Preference Stock, at
a purchase price of $28.25 per depositary share. The repurchase had an
unfavorable impact of $0.22 per share of GM $1-2/3 par value common stock.
This was comprised of tender offer expenses of $13.5 million after-tax, $0.02
per share, that were charged to income and the purchase price in excess of the
carrying amount of the preference shares amounting to $153.4 million, $0.20
per share, that was not charged to income but was charged to earnings
attributable to $1-2/3 par value common stock. The number of shares remaining
outstanding is 20.0 million depositary shares of Series B Preference Stock,
6.1 million depositary shares of Series D Preference Stock, and 10.1 million
depositary shares of Series G Preference Stock.
Note 10.
At June 30, 1995, December 31, 1994, and June 30, 1994, consolidated net
income retained for use in the business (accumulated deficit) attributable to
the common stocks was as follows:
June 30, Dec. 31, June 30,
1995 1994 1994
-----------------------------------
(Dollars in Millions)
$1-2/3 par value $2,539.1 ($778.8) ($2,095.3)
Class E 1,900.8 1,663.9 1,480.7
Class H 989.2 900.7 821.7
------- ------- -------
Total $5,429.1 $1,785.8 $207.1
======= ======= =======
The Corporation's capital surplus plus net income retained for use in the
business at June 30, 1995, December 31, 1994, and June 30, 1994, as allocated
pursuant to GM's Certificate of Incorporation, was as follows:
June 30, Dec. 31, June 30,
1995 1994 1994
-----------------------------------
(Dollars in Millions)
$1-2/3 par value $10,932.1 $9,013.8 $7,502.7
Class E 10,317.5 3,752.1 3,516.6
Class H 2,770.8 2,169.3 2,043.8
-------- -------- --------
Total $24,020.4 $14,935.2 $13,063.1
======== ======== ========
Note 11.
The Corporation and its subsidiaries are subject to potential liability
under government regulations and various claims and legal actions which are
pending or may be asserted against them. Some of the pending actions purport
to be class actions. The aggregate ultimate liability of the Corporation and
its subsidiaries under these government regulations, and under these claims
and actions, was not determinable at June 30, 1995. In the opinion of
management, such liability is not expected to have a material adverse effect
on the Corporation's consolidated operations or financial position.
Note 12.
On August 7, 1995, the Corporation announced that it intends to pursue a
split-off of its wholly owned subsidiary, EDS, to its GM Class E shareholders
in a tax-free exchange of stock.
- 11 -
12
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - Concluded
To achieve a split-off, GM would exchange EDS capital stock for outstanding
GM Class E common stock. GM would not recognize a gain on the transaction.
There are currently 438.7 million shares of GM Class E common stock
outstanding, and 44.9 million shares currently reserved for issuance upon
conversion of Series C Preference Stock. The process of establishing
definitive terms for a split-off transaction which will be fair to all holders
of GM common stock will, among other things, consider differences between the
values of GM Class E and EDS common stocks in order to establish any
adjustment deemed appropriate by the GM Board of Directors.
A split-off would be subject to the appropriate stockholder approvals, and a
favorable Internal Revenue Service ruling that the transaction would be tax-
free. The specific terms of a transaction, which are yet to be developed,
must also be approved by the GM Board of Directors. Subject to these and
other approvals and conditions, GM and EDS expect that a split-off could occur
in the first half of 1996. However, it should be noted that due to the
numerous uncertainties involved in these matters, there can be no assurance
that any split-off of EDS will be proposed or completed.
A split-off would be proposed only in a manner that would not result in the
recapitalization of GM Class E common stock into GM $1-2/3 par value common
stock at a 120 percent exchange ratio, as currently provided for under certain
circumstances in the GM Certificate of Incorporation.
In the event of a split-off, GM and EDS would enter into a long-term
agreement under which EDS would provide substantially the same information
technology services for GM that it does today.
* * * * *
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
The following management's discussion and analysis should be read in
conjunction with the management's discussion and analysis included in the
Corporation's 1994 Annual Report to the SEC on Form 10-K and Management's
Discussion and Analysis relating to Electronic Data Systems Corporation (EDS)
and Hughes Electronics Corporation (Hughes) included in Exhibits 99(a) and
99(b) to such Form 10-K and each Form 10-Q on file with the SEC. The
competitive position and environmental matters discussions included in Part I,
Item 1 of the 1994 Form 10-K are specifically incorporated by reference
herein.
General Motors Corporation's consolidated net income for the second quarter
of 1995 totaled $2,270.1 million, or $2.39 per share of GM $1-2/3 par value
common stock. That represents an improvement of $347.3 million, or 18.1%,
compared with the year-ago period. Excluding the special items detailed
below, net income for the period was $2,121.0 million, but earnings per share
remained the same, $2.39. That represents an improvement in net income of
$198.2 million, or 10.3%, over the second quarter of 1994 when net income
totaled $1,922.8 million, or $2.23 per share.
The second-quarter-1995 results included two nonrecurring items. The
previously announced sale of National Car Rental System's (NCRS) net assets
and the repurchase of preference stock. Second-quarter-1995 results include
$162.6 million of net income, or $0.22 per share, from the sale of the net
assets of NCRS. The sale resulted in a pretax loss of $147.8 million, which
was more than offset by $310.4 million of tax benefits. The results in the
second quarter of 1995 also reflect a reduction of $0.22 per share of GM
$1-2/3 par value common stock related to the previously discussed repurchase
from stockholders of more than half of the outstanding shares of series B, D
and G preference stock for a total of $1.3 billion. Expenses associated with
the repurchase reduced net income by $13.5 million, or $0.02 per share. The
- 12 -
13
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
remaining $0.20 per share reduction reflects the $153.4 million premium paid
over book value for repurchasing the preference stock. The premium does not
impact consolidated net income but does constitute an allocation of net income
to the preference stockholders.
Sales and revenues in the second quarter of 1995 totaled $44,146.2 million -
an increase of 9.3% compared with the same period last year. GM's gross-
profit margin for the second quarter of 1995, with GMAC on an equity basis,
was 18.8%, compared with 18.5% in 1994's second-quarter period. Selling,
general, and administrative expenses, with GMAC on an equity basis, in the
second quarter and first six months of 1995 were $248.3 million and $514.9
million, respectively, above the second quarter and six-month 1994 amounts due
primarily to higher administrative expenses. On a percent of sales basis,
selling, general, and administrative expenses were 6.9% in the second quarter
and 6.8% in the first six months of 1995, up from the 6.8% in the second
quarter and down from the 6.9% in the six-month period of 1994. The
Corporation's pretax income (with GMAC on an equity basis) was $2,727.4
million. Excluding the nonrecurring items, pretax income was $2,896.9
million, compared with $2,668.3 million in the second quarter of 1994. The
second-quarter-1995 effective income-tax rate (with GMAC on an equity basis)
was 27.6%. The tax rate in the second quarter of 1995 was favorably affected
by the nonrecurring items. Excluding the effect of those items, the tax rate
was 36.9%, compared with 38.8% in the second quarter of 1994.
The Corporation's net-profit margin, with GMAC on an equity basis, increased
to 5.7% in the second quarter of 1995. Excluding the nonrecurring items, the
net-profit margin was 5.3%, slightly above the 5.2% in the second quarter of
1994. While this is the second consecutive quarter that GM has achieved a net-
profit margin above 5%, management has stated that margins should be higher at
this stage of the business cycle. The goal continues to be the achievement of
at least a 5-percent-average annual net-profit margin over the entire
automotive-business cycle.
Results for the first six months of 1995 show consolidated net income of
$4,424.1 million, or $4.90 per share of GM $1-2/3 par value common stock,
compared to $2,776.5 million, or $3.02 per share, including the $758.1 million
unfavorable effect of the SFAS No. 112 accounting change in the 1994 first
quarter. Excluding the impact of the accounting change, income for the 1994
six-month period was $3,534.6 million, or $4.07 per share of GM $1-2/3 par
value common stock. Sales and revenues totaled $87,431.2 million in the 1995
period, an increase of 12.3%, or $9,543.6 million, over 1994 sales and
revenues of $77,887.6 million.
Including the premium paid on the repurchase of preference stocks,
preference stock dividend payments, and the apportionment of earnings
attributable to GM Class E and Class H common stock, the income attributable
to $1-2/3 par value common stock in the 1995 second quarter amounted to
$1,796.0 million or $2.39 per share, compared with second quarter 1994 income
of $1,665.3 million or $2.23 per share. In the first six months of 1995, such
income was $3,692.3 million or $4.90 per $1-2/3 par value share, compared with
$2,276.1 million or $3.02 per share in the 1994 period. Excluding the 1994
first quarter accounting change, six-month 1994 earnings amounted to $3,027.4
million, or $4.07 per $1-2/3 par value share.
All of GM's major business sectors showed year-over-year improvements in the
second quarter of 1995. The bulk of the overall gain was accounted for by
North American Automotive Operations (NAO), despite lower volume. Highlights
of 1995 second-quarter and six-month financial performance by GM's major
business sectors are shown on the next page:
- 13 -
14
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Six Months Ended
Second Quarter June 30,
------------------ --------------------
Major Business Sector Results 1995 1994 1995 1994
------------------------------ ------------------ --------------------
(Dollars in Millions)
NAO
Income Before
Accounting Change $880 $641 $1,938 $1,147
Cumulative Effect of
Accounting Change - - - (705)
----- ----- ----- -----
NAO Income 880 641 1,938 442
----- ----- ----- -----
International Automotive
Operations (IO) Income 513 504 1,035 889
----- ----- ----- -----
GMAC
Income Before Accounting Change 259 216 514 440
Cumulative Effect of
Accounting Change - - - (7)
----- ----- ----- -----
GMAC Income 259 216 514 433
----- ----- ----- -----
EDS Earnings 227 197 424 369
----- ----- ----- -----
Hughes
Earnings Before Accounting
Change 288 267 557 579
Cumulative Effect of
Accounting Change - - - (30)
----- ----- ----- -----
Hughes Earnings 288 267 557 549
----- ----- ----- -----
Other*
Income (Loss) Before Accounting
Change 103 98 (44) 111
Cumulative Effect of
Accounting Change - - - (16)
----- ----- ----- -----
Other Income (Loss) 103 98 (44) 95
----- ----- ----- -----
Consolidated Net Income $2,270 $1,923 $4,424 $2,777
===== ===== ===== =====
Income Before Cumulative Effect
of Accounting Change $2,270 $1,923 $4,424 $3,535
===== ===== ===== =====
Certain amounts for 1994 were reclassified to conform with 1995
classifications.
* Includes NCRS, Allison Transmission Division, GM Locomotive Group, and
purchase accounting adjustments.
Worldwide Wholesale Sales
-------------------------
In the second quarter of 1995, worldwide wholesale vehicle sales totaled
2,286,000 units, up slightly from the second quarter 1994 level of 2,274,000
units, as shown in the table below. Worldwide wholesale vehicle sales of
4,582,000 units during the first six months of 1995 were up 228,000 units, or
5.2%, over the year ago period.
Second Quarter Six Months
-------------- --------------
1995 1994 1995 1994
-------------- --------------
(Units in Thousands)
United States
Cars 850 877 1,700 1,666
Trucks 529 512 1,069 1,008
----- ----- ----- -----
Total United States 1,379 1,389 2,769 2,674
Other North America 121 147 261 300
----- ----- ----- -----
Total North America 1,500 1,536 3,030 2,974
Overseas 786 738 1,552 1,380
----- ----- ----- -----
Total All Sources 2,286 2,274 4,582 4,354
===== ===== ===== =====
- 14 -
15
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Vehicle Unit Deliveries of Cars and Trucks Worldwide
----------------------------------------------------
During the second quarter of 1995, GM dealer vehicle deliveries of cars and
trucks worldwide were 2,242,000 units resulting in a 17.6% worldwide market
share, compared with 2,274,000 units in the same period last year, with a
17.9% market share. Worldwide GM vehicle deliveries of cars and trucks during
the first six months of 1995 were 4,231,000 units, or 16.8% of the market,
versus 4,347,000 units and 17.4% in the comparable 1994 period.
Employment and Payrolls
-----------------------
As detailed in the table below, second quarter 1995 worldwide employment
averaged 721,000 men and women, a 2.9% increase from the 701,000 in the second
quarter of 1994. Worldwide payrolls were $8,534.8 million, compared with
$8,004.9 million in the comparable 1994 period. Six month average worldwide
employment increased by 17,000 men and women from the 1994 six-month period,
while first half 1995 worldwide payrolls totaled $16,952.3 million, a 7.1%
increase from 1994 first half payrolls of $15,831.4 million.
Second Quarter Six Months
-------------- -------------
1995 1994 1995 1994
-------------- -------------
(In Thousands)
Average Worldwide Employment
GM (excluding units listed below) 531 527 525 522
GMAC 17 18 17 18
EDS 87 73 85 71
Hughes 82 77 79 77
NCRS* 4 6 5 6
--- --- --- ---
Average Number of Employees 721 701 711 694
=== === === ===
* Sold as of June 9, 1995. Headcount and payroll reflect six-month average.
NAO
---
NAO continued to build momentum in the implementation of its strategic plan
to improve business in the highly competitive North American market. While
volume was down slightly due to a weaker passenger-car market and lower fleet
sales, the second-quarter results are strong, reflecting continued success in
reducing costs. The Delphi business sector is moving fast to strengthen its
position as a profitable supplier to the global auto industry as well as a
strategic partner to GM's vehicle operations. Delphi's non-NAO business
increased 12% in the second quarter of 1995, compared with the same period
last year. Delphi's non-NAO business accounted for 30% of its revenues in the
second quarter, up from 27.5% for the same period last year.
NAO, including GM's Delphi Automotive Systems, earned net income totaling
$880.2 million in the second quarter of 1995, an improvement of $238.7
million, compared with earnings in the second quarter of 1994 totaling $641.5
million. The improvement is attributable to progress in certain cost
containment initiatives, partially offset by the decrease in volume.
NAO's net-profit margin was 3.2% in the second quarter of 1995, compared
with 2.4% in the prior-year period. Management has stated that NAO still has
a way to go to achieve its 5% average annual net-profit-margin objective.
GM vehicle deliveries in the United States in the second quarter of 1995
totaled 1,317,000 units, compared to 1,390,000 units in the 1994 period. GM
passenger-car deliveries totaled 795,000 units, and truck deliveries totaled
522,000 units during the period, down 6.8% and 2.8%, respectively, from the
1994 quarter. GM's share of the total U.S. vehicle market in the second
quarter of 1995 was 32.0%, compared with 33.1% in the second quarter of 1994.
GM's share of total U.S. car deliveries was 33.6% in the second quarter,
compared with 34.5% in the previous year's second quarter. The Corporation's
share of truck deliveries was 29.7% compared with a 31.0% share in the same
period last year.
- 15 -
16
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Six-month 1995 NAO earnings were $1,938.2 million, an improvement of
$1,495.5 million over the 1994 first half which included the unfavorable
effect of the $704.6 million accounting change in the 1994 first quarter.
NAO's net profit margin improved from 0.9% (2.3% excluding the accounting
change) in the first half of 1994 to 3.5% in the 1995 period. GM U.S. vehicle
deliveries in the 1995 period were 6.5% below comparable 1994 deliveries,
including a 9.8% car decline and a 1.3% decrease in truck deliveries. Total 6-
month 1995 market share dropped to 32.0% from 33.3% in 1994, with cars down
1.6 percentage points and trucks off 0.8 percentage points.
IO
--
GM International Operations' net income for the second quarter of 1995
totaled $513.3 million, compared with $504.1 million in the same period of
1994, once again delivering strong net-income performance. The net-profit
margin for IO was 5.9% in the second quarter of 1995, compared with 6.9% in
the prior-year period. This reduction is primarily attributable to European
foreign-exchange-rate movements, increasingly competitive market pressures and
a weaker sales mix, as well as cost pressures in Latin America. These factors
were partly offset by volume gains, and a reduction in other costs.
GM's automotive operations in Europe reported net income totaling $318
million in the second quarter of 1995, compared with $283 million in the same
period of 1994. For the remainder of GM's International Operations, including
Latin American Operations and Asia-Pacific Operations, net income totaled $195
million in the second quarter of 1995, compared with $221 million in the prior-
year period.
In Western Europe, the Opel/Vauxhall model lineup continued to be the
leading passenger-car brand. GM vehicle deliveries in Western Europe totaled
465,000 units in the second quarter of 1995 - an increase of 6.2% from the
same period last year. The Opel/Vauxhall lineup also established a record
market penetration of 13% in the Western Europe passenger-car market during
the second quarter of 1995, as well as a record 12.8% market share during the
first six months of the year. Total GM vehicle deliveries in Latin America
were 133,000 units in the second quarter of 1995, a 28.1% increase from the
prior-year period. Overall deliveries of GM vehicles in the Asia-Pacific
region totaled 153,000 units during the second quarter of 1995, up 8.4%
compared with the second quarter of 1994. Worldwide deliveries of the Saab
lineup totaled 25,200 units in the second quarter of 1995, up 10.3% compared
with the prior-year period.
Six month 1995 IO income was $1,035.4 million compared to $889.1 million in
the first half of 1994, with net margins decreasing from 6.6% in the 1994
period to 6.1% in the 1995 six-month period. GM's European automotive
operations reported six-month 1995 net income of $646 million compared to
$529 million in the 1994 first half. For the remainder of GM's IO, including
Latin American Operations and Asia-Pacific Operations, net income totaled
$389 million, up 8.1% over the 1994 period.
General Motors Acceptance Corporation
-------------------------------------
GMAC serves the financing and insurance needs of GM customers. The
Corporation hereby encourages reference to the GMAC Second Quarter 1995
Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission.
GMAC reported second-quarter-1995 net income of $259.2 million, compared
with $216.1 million in the second quarter of 1994. The second-quarter-1995
increase primarily resulted from a 24% increase in net income from financing
operations, and was driven by more favorable funding margins and increased
earning asset levels, principally wholesale receivables and operating leases.
- 16 -
17
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
For the first six months of 1995, GMAC's consolidated net income totaled
$514.1 million, $80.5 million above the same period last year, which included
the effect of the SFAS No. 112 accounting change. The 20% increase in the six
month net income from financing operations resulted from more favorable
funding margins and increased earning asset levels, principally wholesale
receivables and operating leases. Higher capital gains contributed to the 10%
growth in income from insurance operations for the first six months ended
June 30, 1995.
GMAC financed 23% of new General Motors vehicles delivered in the U.S.
during the second quarter of 1995, a one percentage point decrease compared to
the first quarter of 1995 but unchanged compared to the second quarter of
1994, while penetration for the first six months of 1995 decreased to 23% of
new GM deliveries, three percentage points lower than the comparable 1994
period. Penetration of retail delivery financing during the second quarter of
1995 is one percentage point below the first quarter of 1995, reflecting
continued intense competitive pressures.
GMAC also provides wholesale financing for GM and other dealers' new and
used vehicle inventories. In the United States, inventory financing was
provided for 977,000 and 1,982,000 new GM vehicles in the second quarter and
first six months of 1995, compared with 996,000 and 1,965,000 new GM vehicles
during the same periods in 1994. GMAC's wholesale financing represented 72.0%
of all GM sales to dealers during the first six months of 1995, a slight
decrease from 73.7% for the comparable period a year ago.
Consolidated net pretax margin after interest and discount and depreciation
expense totaled $591.0 million and $1,098.9 million in the second quarter and
first six months of 1995, an increase of $97.0 million and $140.6 million from
the comparable 1994 periods. The quarter-to-quarter improvement primarily
reflects increased revenue from the continued popularity of retail leasing as
well as increased wholesale finance outstandings, partially offset by
increased interest and discount expense. Interest and discount expense
increased to $1,275.3 million and $2,495.1 million for the second quarter and
first six months of 1995 compared with $1,045.3 million and $2,055.3 million
for the second quarter and first six months of 1994. The $230.0 million and
$439.8 million increase from the comparable periods in 1994 is primarily due
to increased funding levels and higher interest rates. The increase in the
effective income tax rate in 1995 (41.9%) from 1994 (37.4%) is due primarily
to increased taxes at foreign locations where tax rates exceed U.S. statutory
tax rates.
The Company's worldwide cost of funds for the second quarter averaged 7.25%,
an increase of 72 basis points from a year ago. The worldwide cost of funds
averaged 7.20% for the first six months of 1995, an increase of 67 basis
points from the comparable 1994 period. The higher funding costs are
primarily attributable to a significant increase in interest rates, especially
in the United States where the bank prime lending rate climbed from 7.25% to
9.00% during the past twelve months. Total borrowing costs for United States
operations averaged 6.98% for the second quarter and 7.02% for the first six
months of 1995, compared with 6.31% and 6.28%, respectively, for the same 1994
periods. The adverse effects of these interest rate increases were minimized
by an increased use of lower cost floating rate funding as a percentage of
GMAC's total outstanding funding as well as a continued positive perception of
GMAC's financial position by the capital markets.
Earning assets were $87.8 billion at June 30, 1995 compared to $82.1 billion
and $79.1 billion at December 31, 1994 and June 30, 1994, respectively. The
higher asset levels are primarily attributable to increased operating lease
assets and wholesale finance receivables.
- 17 -
18
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
As of June 30, 1995, GMAC's total borrowings were $70.6 billion compared
with $66.7 billion at December 31, 1994 and $64.4 billion at June 30, 1994.
GMAC's ratio of borrowings to equity capital was 8.5:1 at June 30, 1995,
slightly above 8.4:1 and 8.2:1 at December 31, 1994 and June 30, 1994,
respectively.
Summary Financial Data - GMAC
Condensed GMAC Consolidated Six Months Ended
Statement of Income Second Quarter June 30,
---------------- -----------------
1995 1994 1995 1994
---------------- -----------------
(Dollars in Millions)
Financing Revenue
Retail and lease financing $772.3 $769.2 $1,522.7 $1,506.5
Leasing 1,539.3 1,133.3 2,972.3 2,185.6
Wholesale and term loans 606.0 402.2 1,140.0 775.6
------- ------- ------- -------
Total financing revenue 2,917.6 2,304.7 5,635.0 4,467.7
Interest and discount 1,275.3 1,045.3 2,495.1 2,055.3
Depreciation on operating leases 1,051.3 765.4 2,041.0 1,454.1
------- ------- ------- -------
Net financing revenue 591.0 494.0 1,098.9 958.3
Insurance premiums earned 273.5 286.2 544.8 565.6
Other income 562.4 378.0 1,061.4 789.5
------- ------- ------- -------
Net Financing Revenue and Other 1,426.9 1,158.2 2,705.1 2,313.4
Expenses 972.2 814.1 1,819.7 1,608.9
------- ------- ------- -------
Income before income taxes 454.7 344.1 885.4 704.5
Income taxes 195.5 128.0 371.3 263.5
------- ------- ------- -------
Income before cumulative effect of
accounting change 259.2 216.1 514.1 441.0
Cumulative effect of accounting change* - - - (7.4)
------- ------- ------- -------
Net Income $259.2 $216.1 $514.1 $433.6
======= ======= ======= =======
*Effective January 1, 1994, GMAC adopted
SFAS No. 112.
Financing Operations $228.3 $184.6 $444.6 $370.6
Insurance Operations 30.9 31.5 69.5 63.0
------- ------- ------- -------
Consolidated Net Income $259.2 $216.1 $514.1 $433.6
======= ======= ======= =======
Consolidated Return on Average Equity 12.6% 11.5% 12.6% 11.2%
======= ======= ======= =======
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19
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Condensed GMAC Consolidated
Balance Sheet June 30, Dec. 31, June 30,
1995 1994 1994
------------------------------------
(Dollars in Millions)
Cash and cash equivalents $1,476.1 $1,339.5 $2,345.7
Investments in securities 4,336.8 3,891.7 3,899.2
Finance receivables - net 58,789.4 54,625.1 54,282.1
Net investment in operating leases 20,026.7 17,809.2 14,658.9
Receivables from General Motors
Corporation - 1,080.5 1,390.1
Other assets 6,742.7 6,791.4 6,871.6
-------- -------- --------
Total Assets $91,371.7 $85,537.4 $83,447.6
======== ======== ========
Short-term debt $36,974.6 $35,114.8 $33,758.5
Accounts payable and other
liabilities (including
GM and affiliates - $2,925.7
$1,867.3 and $2,902.0) 12,509.0 10,989.3 11,235.0
Long-term debt 33,626.3 31,539.6 30,652.5
Stockholder's equity 8,261.8 7,893.7 7,801.6
-------- -------- --------
Total Liabilities and
Stockholder's Equity $91,371.7 $85,537.4 $83,447.6
======== ======== ========
Certain amounts for June 1994 have been reclassified to conform with 1995
classifications.
Condensed GMAC Consolidated Six Months Ended
Statement of Cash Flows June 30,
--------------------
1995 1994
--------------------
(Dollars in Millions)
Net Cash Provided by Operating Activities $3,409.3 $2,586.9
-------- --------
Cash Flows from Investing Activities
Finance receivables-acquisitions (85,616.7) (80,015.6)
-liquidations 70,504.1 71,433.0
Notes receivable from General Motors Corporation 1,080.5 (34.6)
Operating leases-acquisitions (6,795.0) (6,252.2)
-liquidations 2,834.0 1,633.6
Investments in securities-acquisitions (6,938.6) (5,633.6)
-liquidations 6,746.4 5,542.4
Proceeds from sales of receivables - wholesale 7,854.6 6,191.9
- retail 3,378.1 2,453.4
Due and deferred from receivable sales (4.9) (712.5)
Other 693.0 329.6
-------- --------
Net Cash Used in Investing Activities (6,264.5) (5,064.6)
-------- --------
Cash Flows from Financing Activities
Debt with original maturities 90 days and over
-proceeds 29,039.1 26,293.9
-liquidations (25,048.9) (26,574.0)
Debt with original maturities less than 90 days
-net change (593.4) 1,579.3
Cash dividends paid to GM (400.0) (500.0)
-------- --------
Net Cash Provided by Financing Activities 2,996.8 799.2
-------- --------
Effect of exchange rate changes on cash
and cash equivalents (5.0) (3.9)
-------- --------
Net increase (decrease) in cash and cash equivalents 136.6 (1,682.4)
Cash and cash equivalents at beginning of the period 1,339.5 4,028.1
-------- --------
Cash and cash equivalents at end of the period $1,476.1 $2,345.7
======== ========
Certain amounts for 1994 have been reclassified to conform with 1995
classifications.
- 19 -
20
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Electronic Data Systems Corporation
-----------------------------------
Electronic Data Systems Corporation (EDS) reported second quarter earnings
totaling $226.9 million for the 1995 second quarter period, or $0.47 per share
of GM Class E common stock. That compares with $197.3 million earned in the
second quarter of 1994, or $0.41 per share. Second quarter 1995 revenues
increased to $2,962.1 million from $2,334.0 million in the second quarter of
1994. EDS continued to seize new business opportunities by entering new
markets and expanding into new industries and geographic areas, contributing
to the strong revenue growth in the second quarter of 1995. Business from
sources outside of GM increased more than 35% in the second quarter of 1995.
Non-GM business accounted for 67% of EDS' total revenues during the period.
New contract awards reached more than $2.8 billion in the second quarter of
1995. Six month EDS earnings were $423.7 million, or $0.89 per Class E share,
compared with $369.0 million or $0.77 per share a year earlier.
Earnings per share attributable to GM Class E common stock are based on
the Available Separate Consolidated Net Income of EDS as described in Note 4
to the Financial Statements. Reference should be made to EDS' Management's
Discussion and Analysis in Exhibit 99(a) which is incorporated herein by
reference.
EDS financial statements do not include the amortization of the $2,179.5
million initial cost to GM of EDS customer contracts, computer software
programs, and other intangible assets, including goodwill, arising from the
acquisition of EDS by GM in 1984. This cost, plus the $343.2 million cost of
contingent notes purchased in 1986, less certain income tax benefits, was
assigned principally to intangible assets, including goodwill, and is being
amortized by GM over the estimated useful lives of the assets acquired. The
costs assigned to customer contracts and computer software programs were fully
amortized prior to 1992. Such amortization is charged against Other Sector
Income and amounted to $38.8 million and $14.4 million, respectively, in the
1995 and 1994 six-month periods.
Condensed EDS Consolidated Statement
of Income and Available Separate Six Months Ended
Consolidated Net Income Second Quarter June 30,
---------------- -----------------
1995 1994 1995 1994
---------------- -----------------
(Dollars in Millions
Except Per Share Amounts)
Revenues
Systems and other contracts
GM and affiliates $982.5 $856.2 $1,880.5 $1,697.9
Outside customers 1,967.6 1,453.3 3,845.9 2,828.8
Interest and other income 12.0 24.5 20.7 46.6
------- ------- ------- -------
Total Revenues 2,962.1 2,334.0 5,747.1 4,573.3
Costs and Expenses 2,607.6 2,025.8 5,085.1 3,996.8
Income Taxes 127.6 110.9 238.3 207.5
------- ------- ------- -------
Separate Consolidated Net Income $226.9 $197.3 $423.7 $369.0
======= ======= ======= =======
Available Separate Consolidated Net Income*
Average number of shares of Class
E common stock outstanding
(in millions) (Numerator) 438.7 260.1 369.7 259.0
Class E dividend base (in millions)
(Denominator) 483.7 481.7 483.0 481.5
Available Separate Consolidated
Net Income $205.8 $106.5 $328.2 $198.6
===== ===== ===== =====
Earnings Attributable to Class E
Common Stock on a Per Share Basis $0.47 $0.41 $0.89 $0.77
==== ==== ==== ====
Cash dividends per share of Class E
common stock $0.13 $0.12 $0.26 $0.24
==== ==== ==== ====
* Available Separate Consolidated Net Income is determined quarterly.
- 20 -
21
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Hughes Electronics Corporation
------------------------------
Hughes Electronics Corporation (Hughes) earned $288.4 million during the
second quarter of 1995, or $0.72 per share of GM Class H common stock. That
compares with 1994 second quarter earnings of $267.3 million, or $0.67 per
share. The earnings improvement at Hughes is primarily attributed to the
Galaxy(R) satellite transponder sales and aggressive cost-reduction efforts in
Automotive Electronics. These were partially offset by planned increased
operating expenses associated with the continued growth of DIRECTV(R), and
lower production rates in Aerospace and Defense Systems. Revenues for the
1995 period were $3,723.6 million, a 5.3% increase over the $3,535.9 million
in the 1994 quarter. Six-month 1995 Hughes earnings were $557.3 million, or
$1.39 per share of GM Class H common stock, on revenues of $7,302.4 million.
For the first six months of 1994, Hughes earnings were $549.4 million,
including the $30.4 million unfavorable effect of SFAS No. 112, or $1.37 per
share of GM Class H common stock, on revenues of $7,123.2 million.
Earnings per share attributable to GM Class H common stock are based on
the Available Separate Consolidated Net Income of Hughes as described in
Note 4 to the Financial Statements. Reference should be made to Hughes'
Management's Discussion and Analysis in Exhibit 99(b) which is incorporated
herein by reference.
Condensed Hughes Statement of
Consolidated Operations and Available Six Months Ended
Separate Consolidated Net Income Second Quarter June 30,
------------------ ------------------
1995 1994 1995 1994
------------------ ------------------
(Dollars in Millions
Except Per Share Amounts)
Revenues
Net sales
Outside customers $2,346.1 $2,195.5 $4,508.7 $4,496.4
GM and affiliates 1,362.4 1,322.3 2,766.6 2,582.2
Other income-net 15.1 18.1 27.1 44.6
------- ------- ------- -------
Total Revenues 3,723.6 3,535.9 7,302.4 7,123.2
Costs and Expenses 3,287.3 3,135.3 6,462.8 6,245.3
Income Taxes 178.8 164.2 344.2 360.0
------- ------- ------- -------
Income before cumulative
effect of accounting change 257.5 236.4 495.4 517.9
Cumulative effect of accounting
change - - - (30.4)(1)
------- ------- ------- -------
Net Income 257.5 236.4 495.4 487.5
Adjustments to exclude the effect
of GM purchase accounting
adjustments related to Hughes
Aircraft Company (2) 30.9 30.9 61.9 61.9
------- ------- ------- -------
Earnings Used for
Computation of Available Separate
Consolidated Net Income $288.4 $267.3 $557.3 $549.4
======= ======= ======= =======
(1) Effective January 1, 1994, Hughes adopted SFAS No. 112 ($30.4 million or
$0.08 per share).
(2) Amortization of intangible assets arising from GM's acquisition of Hughes
Aircraft Company.
- 21 -
22
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Condensed Hughes Statement of
Consolidated Operations and Available Six Months Ended
Separate Consolidated Net Income Second Quarter June 30,
------------------ ------------------
1995 1994 1995 1994
------------------ ------------------
(Dollars in Millions
Except Per Share Amounts)
Available Separate Consolidated
Net Income (3)
Average number of shares of Class H
common stock outstanding
(in millions) (Numerator) 95.4 91.7 94.8 91.2
Class H dividend base (in millions)
(Denominator) 399.9 399.9 399.9 399.9
Available Separate Consolidated
Net Income $68.8 $61.3 $132.1 $125.3
==== ==== ===== =====
Earnings Attributable to Class H
Common Stock on a Per Share Basis
Before cumulative effect of
accounting change $0.72 $0.67 $1.39 $1.45
Cumulative effect of accounting
change - - - (0.08)(1)
---- ---- ---- ----
Net earnings attributable
to Class H common stock on a
per share basis $0.72 $0.67 $1.39 $1.37
==== ==== ==== ====
Cash dividends per share of Class H
common stock $0.23 $0.20 $0.46 $0.40
==== ==== ==== ====
(3) Available Separate Consolidated Net Income is determined quarterly.
Liquidity and Capital Resources
The Corporation's liquidity position remained strong in the second quarter
of 1995. Cash and marketable securities, with GMAC on an equity basis,
totaled $9,345.2 million at June 30, 1995, compared with $10,270.5 million at
March 31, 1995, $10,976.4 million at December 31, 1994, and $12,643.4 million
at June 30, 1994. The decline in liquidity in the second quarter of 1995
versus the first quarter of 1995 resulted from the $1.3 billion repurchase of
preference stock, and $1.5 billion of contributions to GM's U.S. pension
plans. GM's cash flow generated from operations remained significantly
positive in the second quarter.
Cash and cash equivalents, including GMAC, at June 30, 1995 amounted to
$9,403.5 million compared with $10,939.0 million at December 31, 1994 and
$13,642.8 million at June 30, 1994. The decrease in 1995 was due to an excess
of net cash used in investing activities over the net cash provided by
operating and financing activities. Net cash provided by operating activities
was $7,786.4 million in the first six months of 1995, compared to $6,230.6
million in the 1994 period, reflecting the net effects of higher net income, a
smaller increase in accounts receivable, increases in income taxes payable and
other liabilities, and higher pension contributions.
Net cash used in investing activities in the 1995 period amounted to
$11,430.8 million, consisting primarily of capital expenditures and the
increases in finance receivables and equipment on operating leases. Net cash
used in investing activities amounted to $8,314.8 million in 1994 primarily
due to the increase in finance receivables, capital expenditures and the
increase in equipment on operating leases. Total capital expenditures were
$4,407.2 million in the first six months of 1995 compared with $2,765.2
million in the 1994 period. Net cash provided by financing activities of
$1,911.2 million in the 1995 six-month period primarily reflected the net
increase in long-term debt and the increase in short-term loans payable,
- 22 -
23
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
partially offset by the repurchase of preference stocks and cash dividends
paid to stockholders. Net cash provided by financing activities of $1,932.4
million in the 1994 period primarily reflected the net increase in short-term
loans payable and proceeds from issuing common stocks.
During the first six months of 1995, notes and loans payable increased
$4,569.3 million to $78,299.5 million at June 30, 1995 from a balance of
$73,730.2 million at December 31, 1994 reflecting primarily a net increase in
long-term debt. GM's fully consolidated ratio of debt to stockholders' equity
(excluding stocks subject to repurchase) was 3.47 to 1 at June 30, 1995
compared to 5.75 to 1 at December 31, 1994 and 8.01 to 1 at June 30, 1994,
reflecting higher stockholders' equity due to the Class E common stock
contribution to the U.S. hourly pension plan and improved profitability.
On May 30, 1995, Moody's Investors Service (Moody's) raised the long-term
credit ratings of General Motors Corporation, GMAC, Hughes and certain related
affiliates. In this action, the credit rating of GMAC's commercial paper was
also raised. The ratings for commercial paper and term debt of EDS and the
rating for the commercial paper of Hughes were not affected by the action
announced by Moody's. The rating of senior debt issued by GM, GMAC and
certain of their affiliates was raised to A3 from Baa1. Moody's defines A3
bonds as having "upper-medium grade" quality, whereas the Baa1 rating
signifies "medium grade" quality. The rating for GM preference stock was
upgraded two levels, to baa1 from baa3 (baa3 is the lowest investment grade
category). The rating of commercial paper issued by GMAC was raised to P-1
from P-2. Moody's employs its P-1 rating to indicate that an issuer's ability
to repay is superior relative to other issuers, while the P-2 rating indicates
that the issuer has a strong ability for repayment relative to other issuers.
On April 4, 1995, Standard & Poor's Corporation (S&P) affirmed its positive
outlook and its rating of General Motors Corporation and related entities. It
raised its commercial paper rating of EDS to A-1 from A-2, second highest
within the four investment grade ratings available from S&P for commercial
paper, indicating a strong degree of safety regarding timely payments, and
removed the rating from CreditWatch, where it was placed on February 6, 1995.
A security rating is not a recommendation to buy, sell, or hold securities
and may be subject to revision or withdrawal at any time by the assigning
rating organization. Each rating should be evaluated independently of any
other rating.
A second quarter cash dividend on $1-2/3 par value common stock of $0.30
per share was paid on June 10, 1995. On August 7, 1995, the Board of
Directors declared a cash dividend of $0.30 per share on $1-2/3 par value
common stock for the third quarter of 1995 payable September 9, 1995. This
dividend declaration continues the level established in the second quarter of
1995, and raises cash dividends in the nine months of 1995 to $0.80 per share,
compared with $0.60 per share in the comparable 1994 period.
A second quarter cash dividend on Class E common stock of $0.13 per share
was paid on June 10, 1995. On August 7, 1995, the Board of Directors also
declared a cash dividend of $0.13 per share on Class E common stock payable
September 9, 1995. This continues the level established in the first quarter
of 1995 and raises cash dividends in the nine months of 1995 to $0.39 per
share compared with $0.36 per share in 1994.
- 23 -
24
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
A second quarter cash dividend on Class H common stock of $0.23 per share
was paid on June 10, 1995. On August 7, 1995, the Board of Directors also
declared a cash dividend of $0.23 per share on Class H common stock payable
September 9, 1995. This continues the level in effect since the first quarter
of 1995 and raises cash dividends in the nine months of 1995 to $0.69 per
share, compared with $0.60 per share in 1994.
Book value per share of $1-2/3 par value common stock increased to $23.59
at the end of the 1995 second quarter from $11.18 at the end of 1994. Book
value per share of Class E common stock increased to $3.01 from $1.43 at the
end of 1994 and book value per share of Class H common stock increased to
$11.81 from $5.59 at the end of 1994.
At year-end 1994, GM's total unfunded pension position decreased to
$12.6 billion ($9.4 billion U.S. and $3.2 billion non-U.S.) from $22.3 billion
a year ago. In the first half of 1995, the Corporation made further cash
contributions of $3.3 billion to its U.S. pension plans and contributed
approximately 173 million shares of Class E common stock, valued at
$6.3 billion, to its U.S. hourly pension plan (see Note 7 to the Financial
Statements).
The March 13, 1995 Class E common stock contribution to the U.S. hourly
pension plan increases the weighted average number of Class E shares
outstanding which increases the allocation of EDS earnings to Class E common
stock and decreases the allocation of EDS earnings to $1-2/3 par value common
stock. The reduction in EDS earnings allocated to $1-2/3 par value common
stock was more than offset by reduced pension expense as a result of the stock
contribution. The relationship between the reduction in EDS earnings
allocated to $1-2/3 par value common stock and reduced pension expense will
vary from period to period. The stock contribution has no impact on Class E
earnings per share since the increased allocation of EDS earnings to Class E
common stock is offset by the higher weighted average number of Class E shares
outstanding.
Under SFAS No. 87, Employers' Accounting for Pensions, any year-to-year
movement in the rate of interest on long-term, high quality corporate bonds
necessitates a change in the discount rate used to calculate the actuarial
present value of the plans' obligations. The decrease in long-term interest
rates which has occurred in the U.S. between December 31, 1994 (the latest
measurement date of GM's pension plans) and June 30, 1995 would, if there were
no further changes in long-term interest rates during 1995, require the
Corporation to calculate its December 31, 1995 pension obligation using a
discount rate approximately 100 basis points below that used at the last
measurement date. GM's reported unfunded pension position would be adversely
affected by such a change in interest rates. The unfunded pension position
would also be affected by contributions during the year, the actual return on
pension investments and various other factors. A change in the unfunded
pension position will also affect the minimum pension liability adjustment to
stockholders' equity.
The change in long-term interest rates described above similarly impacts
the calculation of the Corporation's postretirement health care obligations
under SFAS No. 106, Employers' Accounting for Postretirement Benefits Other
Than Pensions. There has been a 125 basis point decrease in long-term
interest rates between October 1, 1994 (the most recent valuation date) and
June 30, 1995. However, a change to the accumulated postretirement benefit
obligation would have no impact on GM's stockholders' equity in 1995 and no
cash impact.
- 24 -
25
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Neither the estimated increase in the Corporation's unfunded pension
obligations under SFAS No. 87 nor the estimated increase in the Corporation's
postretirement obligations under SFAS No. 106 would have an impact on the
earnings to be reported by the Corporation for 1995. However, in accordance
with applicable accounting standards, any change in these obligations would
impact the Corporation's 1996 and subsequent years' earnings as non-cash
increases/decreases in pension and other postretirement benefit expense.
In March 1995, the FASB issued SFAS No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, effective
January 1, 1996. The Statement establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed of. The Corporation has
not yet determined the effect of this Standard.
On August 7, 1995, the Corporation announced that it intends to pursue a
split-off of its wholly owned subsidiary, EDS, to its GM Class E shareholders
in a tax-free exchange of stock.
To achieve a split-off, GM would exchange EDS capital stock for outstanding
GM Class E common stock. GM would not recognize a gain on the transaction.
There are currently 438.7 million shares of GM Class E common stock
outstanding, and 44.9 million shares currently reserved for issuance upon
conversion of Series C Preference Stock. The process of establishing
definitive terms for a split-off transaction which will be fair to all holders
of GM common stock will, among other things, consider differences between the
values of GM Class E and EDS common stocks in order to establish any
adjustment deemed appropriate by the GM Board of Directors.
A split-off would be subject to the appropriate stockholder approvals, and a
favorable Internal Revenue Service ruling that the transaction would be tax-
free. The specific terms of a transaction, which are yet to be developed,
must also be approved by the GM Board of Directors. Subject to these and
other approvals and conditions, GM and EDS expect that a split-off could occur
in the first half of 1996. However, it should be noted that due to the
numerous uncertainties involved in these matters, there can be no assurance
that any split-off of EDS will be proposed or completed.
A split-off would be proposed only in a manner that would not result in the
recapitalization of GM Class E common stock into GM $1-2/3 par value common
stock at a 120 percent exchange ratio, as currently provided for under certain
circumstances in the GM Certificate of Incorporation.
In the event of a split-off, GM and EDS would enter into a long-term
agreement under which EDS would provide substantially the same information
technology services for GM that it does today.
- 25 -
26
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
GENERAL MOTORS OPERATIONS WITH GMAC ON AN EQUITY BASIS
In order to facilitate analysis, the following financial statements
present financial data for the Corporation's manufacturing, wholesale
marketing, defense, electronics, and computer service operations with the
financing and insurance operations reflected on an equity basis. This is the
same basis and format used in years prior to GM's adoption of SFAS No. 94,
Consolidation of All Majority-owned Subsidiaries.
Statement of Six Months Ended
Consolidated Operations Second Quarter June 30,
-------------------- --------------------
With GMAC on an Equity Basis 1995 1994 1995 1994
-------------------- --------------------
(Dollars in Millions)
Net Sales and Revenues (1)
Manufactured products $38,124.5 $35,588.7 $75,621.1 $68,424.8
Computer systems services 2,045.8 1,519.5 3,999.3 2,964.1
-------- -------- -------- --------
Total Net Sales and Revenues 40,170.3 37,108.2 79,620.4 71,388.9
-------- -------- -------- --------
Costs and Expenses
Cost of sales and other operating
charges, exclusive of items
listed below 32,635.9 30,242.4 64,587.5 58,281.9
Selling, general, and
administrative expenses 2,786.3 2,538.0 5,418.3 4,903.4
Depreciation of real estate,
plants, and equipment 1,067.3 947.7 2,102.1 1,884.0
Amortization of special tools 877.8 764.6 1,746.0 1,525.6
Amortization of intangible assets 38.3 45.3 75.3 90.5
-------- -------- -------- --------
Total Costs and Expenses 37,405.6 34,538.0 73,929.2 66,685.4
-------- -------- -------- --------
Operating Income 2,764.7 2,570.2 5,691.2 4,703.5
Other income less income
deductions - net 118.6 428.1 492.4 627.2
Interest expense (155.9) (330.0) (453.9) (545.1)
-------- -------- -------- --------
Income before Income Taxes 2,727.4 2,668.3 5,729.7 4,785.6
Income taxes 751.5 1,035.4 1,901.5 1,740.2
-------- -------- -------- --------
Income after Income Taxes 1,975.9 1,632.9 3,828.2 3,045.4
Earnings of nonconsolidated
affiliates 294.2 289.9 595.9 481.8
-------- -------- -------- --------
Income before cumulative
effect of accounting change 2,270.1 1,922.8 4,424.1 3,527.2
Cumulative effect of accounting
change (2) - - - (750.7)
-------- -------- -------- --------
Net Income $2,270.1 $1,922.8 $4,424.1 $2,776.5
======== ======== ======== ========
(1) Includes sales to nonconsolidated affiliates of $277.9 million and $289.6
million in the second quarter and $556.5 million and $579.4 million in the
six months of 1995 and 1994, respectively, including $78.2 million and
$66.2 million in computer systems services revenues for the second quarter
and $153.4 million and $135.3 million for the six months.
(2) Effective January 1, 1994, the Corporation adopted SFAS No. 112,
Employers' Accounting for Postemployment Benefits. Not included is the
unfavorable cumulative effect on GMAC earnings of $7.4 million of adopting
SFAS No. 112 because the cumulative effect is included in earnings of
nonconsolidated affiliates.
- 26 -
27
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheet June 30, Dec. 31, June 30,
With GMAC on an Equity Basis ASSETS 1995 1994 1994
-----------------------------------
(Dollars in Millions)
Current Assets
Cash and cash equivalents $7,927.4 $9,731.4 $11,402.9
Other marketable securities 1,417.8 1,245.0 1,240.5
--------- --------- ---------
Total cash and marketable securities 9,345.2 10,976.4 12,643.4
Accounts and notes receivable
Trade 9,512.9 7,873.1 7,794.0
Nonconsolidated affiliates 3,296.7 2,080.4 3,512.6
Inventories 11,700.4 10,127.8 10,060.7
Contracts in process 2,687.4 2,265.4 2,693.7
Prepaid expenses and deferred
income taxes 6,672.8 6,455.6 8,496.6
--------- --------- ---------
Total Current Assets 43,215.4 39,778.7 45,201.0
Equity in Net Assets of
Nonconsolidated Affiliates 9,788.3 9,204.3 8,730.6
Deferred Income Taxes 14,805.6 16,318.6 15,053.0
Other Investments and Miscellaneous
Assets 13,740.2 14,835.5 13,481.2
Property - Net 35,873.1 34,661.4 33,622.1
Intangible Assets 11,581.8 11,536.4 12,753.2
--------- --------- ---------
Total Assets $129,004.4 $126,334.9 $128,841.1
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $10,567.3 $10,905.0 $9,854.6
Loans payable 1,532.4 993.7 1,150.4
Income taxes payable 746.2 144.7 1,021.8
Accrued liabilities and deferred
income taxes (including current
portion of postretirement benefits
other than pensions) 26,589.9 26,584.4 23,925.9
Stocks subject to repurchase - 450.0 450.0
--------- --------- ---------
Total Current Liabilities 39,435.8 39,077.8 36,402.7
Long-Term Debt 6,166.3 6,082.3 6,841.7
Payable to GMAC - 1,212.5 1,495.9
Capitalized Leases 134.7 136.4 160.2
Postretirement Benefits Other Than
Pensions 38,245.4 37,348.0 36,278.6
Pensions 3,781.9 11,223.1 20,784.4
Other Liabilities and Deferred
Income Taxes 17,141.5 16,752.2 16,596.0
Deferred Credits 1,560.2 1,678.8 1,240.8
Stockholders' Equity 22,538.6 12,823.8 9,040.8
--------- --------- ---------
Total Liabilities and
Stockholders' Equity $129,004.4 $126,334.9 $128,841.1
========= ========= =========
- 27 -
28
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
Condensed Statement of Consolidated Cash Flows Six Months Ended
With GMAC on an Equity Basis June 30,
-------------------
1995 1994
-------------------
(Dollars in Millions)
Net Cash Provided by Operating Activities $4,608.4 $3,898.0
-------- -------
Cash Flows from Investing Activities
Expenditures for real estate, plants,
and equipment (2,684.6) (1,718.6)
Expenditures for special tools (1,673.3) (989.6)
Change in other investing assets
Investments in other marketable
securities - acquisitions (3,518.4) (1,233.4)
Investments in other marketable
securities - liquidations 3,345.6 715.4
Other (928.4) 166.1
-------- -------
Net Cash Used in Investing Activities (5,459.1) (3,060.1)
-------- -------
Cash Flows from Financing Activities
Increase in long-term debt 714.1 684.1
Decrease in long-term debt (630.1) (60.8)
Repurchases of preference stocks (1,286.7) -
Repurchases of common stocks (394.0) -
Proceeds from issuing common stocks 224.0 902.2
Cash dividends paid to stockholders (627.4) (566.5)
Other 844.1 (164.5)
-------- -------
Net Cash Provided by (Used in)
Financing Activities (1,156.0) 794.5
-------- -------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents 202.7 8.0
-------- -------
Net increase (decrease) in cash and
cash equivalents (1,804.0) 1,640.4
Cash and cash equivalents at beginning of
the period 9,731.4 9,762.5
-------- -------
Cash and cash equivalents at end of the period $7,927.4 $11,402.9
======== ========
Certain 1994 amounts were reclassified to conform with 1995 classifications.
* * * * * * * *
- 28 -
29
GENERAL MOTORS CORPORATION PART II
AND SUBSIDIARIES
ITEM 1. LEGAL PROCEEDINGS
Material pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Corporation became, or was, a party
during the quarter ended June 30, 1995 are summarized below.
As previously reported, in April 1995 two purported class actions were filed
against General Motors in New York state courts alleging defective rear disc
brake caliper pins in the GM W-Body cars. These actions have been
consolidated in the Supreme Court of the State of New York, County of Bronx,
and are brought on behalf of all New York residents who currently or
previously owned or leased a 1988-1993 Chevrolet Lumina, Buick Regal,
Oldsmobile Cutlass Supreme or Pontiac Grand Prix. Three new purported
nationwide class actions, brought on behalf of current and previous owners of
the same vehicles, have been filed in Federal courts in New Jersey, GARCIA v.
GENERAL MOTORS, and Pennsylvania, NEFF v. GENERAL MOTORS and MARCEL v. GENERAL
MOTORS. Together, the complaints in the five actions allege violation of
state consumer protection laws, fraud, negligent misrepresentation, negligent
design and breach of express and implied warranties. Plaintiffs seek
unspecified amounts of economic damages, punitive damages not less than $20
million, attorneys' fees and costs, and injunctive relief. The courts have
not made a determination as to whether the cases may proceed as class actions.
***
As previously reported, on March 24, 1995 a purported nationwide class
action was filed against General Motors in the Civil District Court for the
Parish of Orleans, State of Louisiana alleging that the paint or paint
application process used by GM on vehicles produced at several GM
manufacturing plants in North America was defective due to the conscious
omission of the surface layer primer, causing the paint to delaminate when
exposed to ultraviolet sunlight and to prematurely deteriorate, peel and chip.
On May 3, 1995, another purported class action, BARNEY KIZZIRE v. GENERAL
MOTORS CORPORATION and BYNUN OLDS-PONTIAC-CADILLAC-GMC, INC., was filed in the
Circuit Court for Fayette County, Alabama on behalf of a class of Alabama
residents who purchased 1989 GMC pickup trucks from authorized Alabama
dealers. The complaint alleges that the paint and/or paint primer used in the
manufacture of those vehicles was defective and resulted in chipping, peeling
and discoloration. Both cases seek compensatory and punitive damages and
injunctive relief. No determination has been made in either case as to
whether they may proceed as a class action.
***
It was previously reported that certain objectors to the nationwide C/K
pickup truck class action settlement had appealed the Pennsylvania Federal
court approval to the U.S. Third Circuit. On April 17, 1995, the U.S. Third
Circuit reversed the approval. GM has filed a petition for writ of certiorari
seeking review by the U.S. Supreme Court.
***
With respect to the previously reported matter wherein it was stated that
the U.S. Environmental Protection Agency ("EPA") has requested that the U.S.
Department of Justice ("DOJ") commence a civil action against GM in connection
with alleged violations of vehicle emission standards and certification
procedures under the Clean Air Act with respect to GM's North American
Automotive Operations, DOJ/EPA and GM continue to agree to extensions of their
agreement to toll the running of any deadlines for filing claims and are
engaged in settlement discussions. GM believes that the subject vehicles and
engines were produced in compliance with the Clean Air Act. DOJ/EPA have
asserted claims for fines and penalties and for a recall of certain vehicles.
They have also requested GM's implementation of a program to mitigate the
alleged harm to the environment, all of which matters are the subject of
valuation and settlement discussions between the parties.
***
- 29 -
30
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
With respect to the previously reported matter wherein the Corporation
reported that on June 1, 1994 the Corporation had been informed by the U.S.
Department of Justice ("DOJ") that Delco Electronics Corporation, a wholly-
owned subsidiary of Hughes Electronics Corporation, was a target for criminal
prosecution and subject to civil suit in connection with the alleged
transportation of hazardous wastes from its Maquiladora plant in Reynosa,
Mexico, the Corporation was recently informed by DOJ that it did not intend to
seek criminal charges in that matter and that the criminal investigation is
closed subject to reopening if the DOJ receives new evidence to support such
action. The DOJ advised the Corporation that the matter has been referred to
the United States Environmental Protection Agency for such civil action as it
may deem appropriate.
* * *
Other Pending Legal Proceedings Reported
in Previous 1995 Current Report and Quarterly Report
Reference is made to the Registrant's Current Report dated March 24, 1995
(Item 5(a)) and Quarterly Report on Form 10-Q for the quarter ended March 31,
1995.
* * *
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of the Registrant was held on May 26,
1995.
Proxies for the meeting were solicited pursuant to Regulation 14A under the
Securities Exchange Act of 1934, there was no solicitation in opposition to
the management's nominees as listed in Item No. 1 in the proxy statement, and
all of such nominees were elected.
The results of the voting by the stockholders for directors is presented
below.
Percent
Number of Total
Director of Votes Voting
-------- ----------- --------
Anne L. Armstrong For 640,195,077 98.9%
Withheld 7,385,222 1.1%
John H. Bryan For 640,850,464 99.0%
Withheld 6,729,835 1.0%
Thomas E. Everhart For 640,607,726 98.9%
Withheld 6,972,573 1.1%
Charles T. Fisher, III For 640,735,441 98.9%
Withheld 6,844,858 1.1%
J. Willard Marriott, Jr. For 640,651,036 98.9%
Withheld 6,929,263 1.1%
Ann D. McLaughlin For 640,181,490 98.9%
Withheld 7,398,809 1.1%
Paul H. O'Neill For 640,753,784 98.9%
Withheld 6,826,515 1.1%
Edmund T. Pratt, Jr. For 640,059,378 98.8%
Withheld 7,520,921 1.2%
John G. Smale For 640,415,244 98.9%
Withheld 7,165,055 1.1%
John F. Smith, Jr. For 640,761,350 98.9%
Withheld 6,818,949 1.1%
Louis W. Sullivan For 639,835,089 98.8%
Withheld 7,745,210 1.2%
Dennis Weatherstone For 640,835,274 99.0%
Withheld 6,745,025 1.0%
Thomas H. Wyman For 640,496,842 98.9%
Withheld 7,083,457 1.1%
- 30 -
31
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
One proposal (designated Item No. 2) was submitted by the Board of
Directors and four proposals (designated Item Nos. 3 through 6) were submitted
by stockholders. The proposals and the results of the voting by the
stockholders are presented below.
Percent
Number of Total
of Votes Voting
----------- --------
Item submitted by Board of Directors:
------------------------------------
2. To ratify the selection of Deloitte For 641,551,800 99.1%
& Touche LLP as independent public Against 3,274,383 0.5%
accountants for the year 1995. Abstain 2,754,103 0.4%
Items submitted by stockholders
-------------------------------
3. Regarding disclosure of information For 20,068,047 3.6%
concerning political contributions. Against 517,742,936 91.8%
Abstain 26,004,973 4.6%
4. To provide for cumulative voting. For 118,625,646 21.0%
Against 397,620,450 70.5%
Abstain 47,570,459 8.5%
5. Regarding foreign military sales. For 48,362,578 8.6%
Against 474,517,983 84.2%
Abstain 40,935,395 7.2%
6. Regarding GM's operations in For 30,674,275 5.4%
Mexico. Against 493,254,603 87.5%
Abstain 39,887,075 7.1%
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
Exhibit Number Exhibit Name Page No.
-------------- ------------------------------------------- --------
11 Computation of Earnings Per Share
Attributable to Common Stocks for the
Quarters and Six Months Ended June 30,
1995 and 1994. 33
12 Computation of Ratios of Earnings to Fixed
Charges for the Six Months Ended June 30,
1995 and 1994. 37
99(a) Electronic Data Systems Corporation and
Subsidiaries Consolidated Financial
Statements and Management's Discussion
and Analysis. 38
(b) Hughes Electronics Corporation and
Subsidiaries Consolidated Financial
Statements and Management's Discussion
and Analysis. 45
27 Financial Data Schedule (for SEC information only)
(b) REPORTS ON FORM 8-K.
Two reports on Form 8-K dated March 24, 1995 (filed April 24, 1995) and
May 30, 1995 were filed during the quarter ended June 30, 1995 reporting
matters under Item 5, Other Events.
* * * * * *
- 31 -
32
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES
SIGNATURES
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)
By
s/Leon J. Krain
--------------------------------
Date August 9, 1995 (Leon J. Krain, Vice President
--------------------- and Group Executive)
By
s/Wallace W. Creek
--------------------------------
Date August 9, 1995 (Wallace W. Creek, Comptroller)
---------------------
- 32 -
EX-11
2
EXHIBIT 11
l:\secfiles\10-Q\2ndqtr95\exhib11.doc 4
1
GENERAL MOTORS CORPORATION EXHIBIT 11
AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS
Quarter Ended
June 30, 1995
-----------------------------
$1-2/3
Par Value Class E Class H
Common Common Common
Stock Stock Stock
-----------------------------
(Dollars in Millions Except
Per Share Amounts)
Net income attributable to stocks $1,995.5 $205.8 $68.8
Premium on repurchase of preference stocks 153.4 - -
Dividends on preference stocks 46.1 - -
------- ----- ----
Earnings attributable to common stocks 1,796.0 205.8 68.8
Dividends on common stocks 223.7 57.1 22.0
------- ----- ----
Undistributed earnings 1,572.3 148.7 46.8
Adjustments
Change in earnings attributable to each
class of common stock related to the
assumed exercise of stock options * (1.5) - 1.5
Dividends on assumed common stock
transactions (1.1) - (0.4)
------- ----- ----
Adjusted earnings attributable to
common stocks $1,569.7 $148.7 $47.9
======= ===== ====
Weighted average shares outstanding
(in millions) 746.3 438.7 95.4
Adjustment
Assumed exercise of dilutive stock options * 3.8 0.1 2.1
----- ----- ----
Adjusted weighted average shares outstanding 750.1 438.8 97.5
===== ===== ====
Per Share Data
Earnings per share attributable to
undistributed earnings on common stocks $2.09 $0.34 $0.49
Dividends 0.30 0.13 0.23
---- ---- ----
Earnings per share attributable to common stocks $2.39 $0.47 $0.72
==== ==== ====
Note: The difference between fully diluted and primary earnings per share is
immaterial.
* The assumed exercise of stock options reflected by these adjustments has
no effect on Class E or Class H common stock earnings per share, because to
the extent that shares of Class E or Class H common stock deemed to be
outstanding would increase, such increased shares would also increase the
numerator of the fraction used to determine Available Separate Consolidated
Net Income.
- 33 -
2
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS - Continued
Quarter Ended
June 30, 1994
-----------------------------
$1-2/3
Par Value Class E Class H
Common Common Common
Stock Stock Stock
-----------------------------
(Dollars in Millions Except
Per Share Amounts)
Net income attributable to stocks $1,755.0 $106.5 $61.3
Dividends on preference stocks 89.7 - -
------- ----- ----
Earnings attributable to common stocks 1,665.3 106.5 61.3
Dividends on common stocks 146.2 31.2 18.3
------- ----- ----
Undistributed earnings 1,519.1 75.3 43.0
Adjustments
Add-back dividends on assumed conversion
of preference stock 17.7 - -
Change in earnings attributable to each
class of common stock related to the
assumed exercise of stock options * (1.3) - 1.3
Dividends on assumed common stock
transactions (4.2) - (0.4)
------- ----- ----
Adjusted earnings attributable to
common stocks $1,531.3 $75.3 $43.9
======= ===== ====
Weighted average shares outstanding
(in millions) 733.1 260.1 91.7
Adjustments
Shares issued on assumed conversion of
preference stock * 15.3 - -
Assumed exercise of dilutive stock options * 5.6 - 2.0
----- ----- ----
Adjusted weighted average shares outstanding 754.0 260.1 93.7
===== ===== ====
Per Share Data
Earnings per share attributable to
undistributed earnings on common stocks $2.03 $0.29 $0.47
Dividends 0.20 0.12 0.20
---- ---- ----
Earnings per share attributable
to common stocks $2.23 $0.41 $0.67
==== ==== ====
Note: The difference between fully diluted and primary earnings per share is
immaterial.
* The assumed conversion of preference stock and exercise of stock options
reflected by these adjustments has no effect on Class E or Class H common
stock earnings per share, because to the extent that shares of Class E or
Class H common stock deemed to be outstanding would increase, such increased
shares would also increase the numerator of the fraction used to determine
Available Separate Consolidated Net Income.
- 34 -
3
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS - Continued
Six Months Ended
June 30, 1995
-----------------------------
$1-2/3
Par Value Class E Class H
Common Common Common
Stock Stock Stock
-----------------------------
(Dollars in Millions Except
Per Share Amounts)
Net income attributable to stocks $3,963.8 $328.2 $132.1
Premium on repurchase of preference stocks 153.4 - -
Dividends on preference stocks 118.1 - -
------- ----- ----
Earnings attributable to common stocks 3,692.3 328.2 132.1
Dividends on common stocks 374.5 91.3 43.6
------- ----- ----
Undistributed earnings 3,317.8 236.9 88.5
Adjustments
Change in earnings attributable to each
class of common stock related to the
assumed exercise of stock options * (3.0) - 3.0
Dividends on assumed common stock transactions (1.9) - (1.0)
------- ----- ----
Adjusted earnings attributable to
common stocks $3,312.9 $236.9 $90.5
======= ===== ====
Weighted average shares outstanding
(in millions) 749.4 369.7 94.8
Adjustments
Assumed exercise of dilutive stock options * 3.8 0.1 2.1
----- ----- ----
Adjusted weighted average shares outstanding 753.2 369.8 96.9
===== ===== ====
Per Share Data
Earnings per share attributable to
undistributed earnings on common stocks $4.40 $0.64 $0.93
Adjustment - (0.01)** -
Dividends 0.50 0.26 0.46
---- ---- ----
Earnings per share attributable to common stocks $4.90 $0.89 $1.39
==== ==== ====
Note: The difference between fully diluted and primary earnings per share is
immaterial.
* The assumed exercise of stock options reflected by these adjustments has
no effect on Class E or Class H common stock earnings per share, because to
the extent that shares of Class E or Class H common stock deemed to be
outstanding would increase, such increased shares would also increase the
numerator of the fraction used to determine Available Separate Consolidated
Net Income.
** The per-share reported earnings attributable to Class E common stock of
$0.89 equals the sum of the separate computations of each of the first two
quarters, consistent with the requirements for calculating earnings per share
based on EDS earnings and the Class E denominator. The six month calculation
shown above (based on 1995 weighted average outstanding Class E shares for the
period) requires an adjustment of ($0.01) due to the significant differences
in the average number of shares outstanding in each quarter resulting from the
Class E stock contribution to the U.S. hourly pension plan.
- 35 -
4
GENERAL MOTORS CORPORATION
AND SUBSIDIARIES COMPUTATION OF EARNINGS PER SHARE
ATTRIBUTABLE TO COMMON STOCKS - Concluded
Six Months Ended
June 30, 1994
----------------------------
$1-2/3
Par Value Class E Class H
Common Common Common
Stock Stock Stock
----------------------------
(Dollars in Millions Except
Per Share Amounts)
Net income attributable to stocks (before
cumulative effect of accounting change) $3,203.9 $198.6 $132.1
Dividends on preference stocks 176.5 - -
------- ----- -----
Earnings attributable to common stocks 3,027.4 198.6 132.1
Dividends on common stocks 291.4 62.1 36.5
------- ----- -----
Undistributed earnings 2,736.0 136.5 95.6
Adjustments
Add-back dividends on assumed conversion
of preference stock 32.4 - -
Change in earnings attributable to each
class of common stock related to the
assumed exercise of stock options * (2.9) - 2.9
Dividends on assumed common stock transactions (9.2) - (0.8)
------- ----- -----
Adjusted earnings attributable to
common stocks $2,756.3 $136.5 $97.7
======= ===== =====
Weighted average shares outstanding
(in millions) 729.2 259.0 91.2
Adjustments
Shares issued on assumed conversion
of preference stock * 16.5 - -
Assumed exercise of dilutive stock options * 6.4 - 2.0
----- ----- ----
Adjusted weighted average shares outstanding 752.1 259.0 93.2
===== ===== ====
Per Share Data
Earnings per share attributable to
undistributed earnings on common
stocks (before cumulative effect of
accounting change) 3.67 0.53 1.05
Cumulative effect of accounting change at
January 1, 1994 (1.05) - (0.08)
Dividends 0.40 0.24 0.40
----- ---- -----
Earnings per share attributable
to common stocks $3.02 $0.77 $1.37
===== ==== =====
Note: The difference between fully diluted and primary earnings per share is
immaterial.
* The assumed conversion of preference stock and exercise of stock options
reflected by these adjustments has no effect on Class E or Class H common
stock earnings per share, because to the extent that shares of Class E or
Class H common stock deemed to be outstanding would increase, such
increased shares would also increase the numerator of the fraction used to
determine Available Separate Consolidated Net Income.
- 36 -
EX-12
3
EXHIBIT 12
l:\secfiles\10-Q\2ndqtr95\exhib12.doc 1
1
GENERAL MOTORS CORPORATION EXHIBIT 12
AND SUBSIDIARIES COMPUTATION OF RATIOS OF EARNINGS
TO FIXED CHARGES
Six Months Ended
June 30,
---------------------
1995 1994
---------------------
(Dollars in Millions)
Income before cumulative effect of
accounting change $4,424.1 $3,534.6
United States, foreign, and other income taxes 2,272.8 2,003.7
Equity in (income) losses of associates (35.7) 5.3
Cash dividends received from associates 5.0 3.2
Amortization of capitalized interest 25.6 25.3
------- -------
Income before income taxes, undistributed (income)
losses of associates, and amortization of
capitalized interest 6,691.8 5,572.1
------- -------
Fixed charges included in net income
Interest and related charges on debt 2,834.9 2,427.2
Portion of rentals deemed to be interest 285.9 218.5
------- -------
Total fixed charges included in net income 3,120.8 2,645.7
------- -------
Earnings available for fixed charges $9,812.6 $8,217.8
======= =======
Fixed charges
Fixed charges included in net income $3,120.8 $2,645.7
Interest capitalized in the period 23.9 16.7
-------- -------
Total fixed charges $3,144.7 $2,662.4
======= =======
Ratios of earnings to fixed charges 3.12 3.09
==== ====
- 37 -
EX-99
4
EXHIBIT 99A
l:\secfiles\10-Q\2ndqtr95\exhib99a.doc 7
1
EXHIBIT 99(a)
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION AND ANALYSIS
----------------------------------------------------------------------------
Consolidated Statements of Income
(in millions except per share amounts)
Six Months Ended
Second Quarter June 30,
----------------- ------------------
1995 1994 1995 1994
----------------- ------------------
Revenues
Systems and other contracts
GM and affiliates $982.5 $856.2 $1,880.5 $1,697.9
Outside customers 1,967.6 1,453.3 3,845.9 2,828.8
Interest and other income 12.0 24.5 20.7 46.6
------- ------- ------- -------
Total revenues 2,962.1 2,334.0 5,747.1 4,573.3
------- ------- ------- -------
Costs and expenses
Cost of revenues 2,295.2 1,725.4 4,471.3 3,436.0
Selling, general, and administrative 284.4 289.5 565.4 540.3
Interest 28.0 10.9 48.4 20.5
------- ------- ------- -------
Total costs and expenses 2,607.6 2,025.8 5,085.1 3,996.8
------- ------- ------- -------
Income before income taxes 354.5 308.2 662.0 576.5
Provision for income taxes 127.6 110.9 238.3 207.5
------- ------- ------- -------
Separate Consolidated Net Income $226.9 $197.3 $423.7 $369.0
======= ======= ======= =======
Available Separate Consolidated Net
Income (Note 1)
Average number of shares of GM
Class E common stock outstanding
(Numerator) 438.7 260.1 369.7 259.0
Class E dividend base
(Denominator) 483.7 481.7 483.0 481.5
Available Separate Consolidated
Net Income $205.8 $106.5 $328.2 $198.6
===== ===== ===== =====
Earnings Attributable to GM Class E
Common Stock on a Per Share Basis
(Note 1) $0.47 $0.41 $0.89 $0.77
==== ==== ==== ====
See accompanying note to consolidated financial statements.
- 38 -
2
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions)
June 30, December 31,
1995 1994
------------------------
ASSETS
Current assets
Cash and cash equivalents $600.2 $608.2
Marketable securities 109.3 149.6
Accounts receivable 2,273.0 2,082.1
Accounts receivable from GM and affiliates 200.6 65.4
Inventories 169.7 137.8
Prepaids and other 355.2 311.0
------- -------
Total current assets 3,708.0 3,354.1
------- -------
Property and equipment, at cost less accumulated
depreciation of $2,987.1 at June 30, 1995
and $2,680.9 at December 31, 1994
Land 128.1 125.3
Buildings and facilities 539.2 559.2
Computer equipment 2,133.1 1,871.0
Other equipment and furniture 242.9 201.1
------- -------
Total property and equipment, net 3,043.3 2,756.6
------- -------
Operating and other assets
Land held for development, at cost 98.3 97.4
Investment in leases and other 1,483.7 1,308.8
Software, goodwill, and other intangibles, net 1,327.7 1,269.6
------- -------
Total operating and other assets 2,909.7 2,675.8
------- -------
Total Assets $9,661.0 $8,786.5
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable $553.5 $571.1
Accrued liabilities 1,338.0 1,451.0
Deferred revenue 617.4 536.7
Income taxes 119.7 111.0
Notes payable 283.1 203.4
------- -------
Total current liabilities 2,911.7 2,873.2
------- -------
Deferred income taxes 630.9 659.8
------- -------
Notes payable 1,528.3 1,021.0
------- -------
Stockholder's equity
Common stock, without par value; authorized
1,000.0 shares. Issued and outstanding 483.7
shares at June 30, 1995 and 481.7 shares
at December 31, 1994 511.2 455.1
Retained earnings 4,078.9 3,777.4
------- -------
Total stockholder's equity 4,590.1 4,232.5
------- -------
Total Liabilities and Stockholder's Equity $9,661.0 $8,786.5
======= =======
See accompanying note to consolidated financial statements.
- 39 -
3
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in millions)
Six Months Ended
Second Quarter June 30,
--------------- ----------------
1995 1994 1995 1994
--------------- ---------------
Cash Flows from Operating Activities
Net income $226.9 $197.3 $423.7 $369.0
----- ----- ----- -----
Adjustments to reconcile net income
to net cash provided by operating
activities (net of effects of
acquired companies)
Depreciation and amortization 297.2 176.3 528.2 333.2
Accretion of discount related to
commercial paper 16.0 6.1 30.6 9.9
Increase in accounts receivable (119.6) (84.9) (164.7) (63.0)
(Increase) decrease in accounts
receivable from GM and affiliates (8.1) 65.2 (131.2) 90.7
Increase in inventories (28.9) (21.8) (28.7) (40.3)
(Increase) decrease in prepaids
and other 24.1 (25.5) (41.2) (58.7)
Increase (decrease) in accounts
payable and accrued liabilities (45.3) 11.4 (275.9) 17.0
Increase (decrease) in
deferred revenue (2.8) 13.9 65.2 2.4
Increase (decrease) in income taxes 18.1 (125.7) 8.6 (115.2)
Increase (decrease) in deferred
income taxes (82.5) 44.0 (26.4) 79.6
----- ----- ----- -----
Total adjustments 68.2 59.0 (35.5) 255.6
----- ----- ----- -----
Net cash provided by operating activities 295.1 256.3 388.2 624.6
----- ----- ----- -----
Cash Flows from Investing Activities
Payments for purchase of available-
for-sale securities (37.0) (83.4) (47.8) (122.0)
Proceeds from sale of available-for-sale
securities 47.2 44.1 111.2 114.4
Payments related to land held for
development - - (0.9) (1.4)
Payments for investment in leases
and certain other assets (117.0) (52.9) (261.1) (310.1)
Proceeds from investment in leases
and certain other assets 123.4 49.5 151.0 146.3
Payments for purchase of software
and certain other intangibles (69.2) (35.1) (74.2) (39.9)
Payments for purchase of property and
equipment (351.3) (271.0) (615.1) (427.3)
Payments related to acquisitions,
net of cash acquired (86.2) (47.9) (127.1) (48.6)
----- ----- ----- -----
Net cash used in investing activities ($490.1) ($396.7) ($864.0) ($688.6)
----- ----- ----- -----
See accompanying note to consolidated financial statements.
- 40 -
4
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
(in millions)
Six Months Ended
Second Quarter June 30,
--------------- ----------------
1995 1994 1995 1994
--------------- ---------------
Cash Flows from Financing Activities
Net increase (decrease) in current
notes payable with maturities less
than 90 days ($7.3) ($57.4) $41.5 ($101.0)
Payments on notes payable (368.8) (22.0) (431.4) (54.1)
Proceeds from notes payable 707.5 274.5 923.8 480.2
Proceeds from issuance of common stock 4.8 7.9 56.1 33.0
Cash dividends paid to GM (62.9) (57.8) (125.5) (115.5)
----- ----- ----- -----
Net cash provided by
financing activities 273.3 145.2 464.5 242.6
----- ----- ----- -----
Effect of Exchange Rate Changes on Cash and
Cash Equivalents 0.2 9.9 3.3 12.4
----- ----- ----- -----
Net Increase (Decrease) in Cash and Cash
Equivalents 78.5 14.7 (8.0) 191.0
Cash and Cash Equivalents at Beginning
of Period 521.7 559.7 608.2 383.4
----- ----- ----- -----
Cash and Cash Equivalents at End of Period $600.2 $574.4 $600.2 $574.4
===== ===== ===== =====
See accompanying note to consolidated financial statements.
Note to Consolidated Financial Statements
In the opinion of management, the interim consolidated financial statements
reflect all adjustments, consisting of only normal recurring items (with the
exception of the accounting change in 1994 to adopt Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in
Debt and Equity Securities), which are necessary for a fair presentation of
the results for the interim periods presented. The results for interim
periods are not necessarily indicative of results which may be expected for
any other interim period or for the full year. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements, the summary of significant accounting policies, and the other
notes to the consolidated financial statements included in General Motors'
1994 Annual Report to the SEC on Form 10-K.
Note 1.
The consolidated financial statements of EDS do not reflect the purchase
accounting adjustments arising as a result of the acquisition of EDS by GM.
Earnings Attributable to GM Class E Common Stock on a Per Share Basis have
been determined based on the relative amounts available for the payment of
dividends to holders of GM Class E common stock. Holders of GM Class E common
stock have no direct rights in the equity or assets of EDS, but rather have
rights in the equity and assets of GM (which includes 100% of the stock of
EDS). Dividends on the GM Class E common stock are declared out of the
Available Separate Consolidated Net Income of EDS earned since the acquisition
of EDS by GM. The Available Separate Consolidated Net Income of EDS is
determined quarterly and is equal to the separate consolidated net
- 41 -
5
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
income of EDS, excluding the effects of purchase accounting adjustments
arising from the acquisition of EDS, multiplied by a fraction, the numerator
of which is a number equal to the weighted average number of shares of GM
Class E common stock outstanding during the period and the denominator of
which was 483.7 million during the second quarter of 1995. The comparable
denominator for the second quarter of 1994 was 481.7 million.
On March 13, 1995, GM contributed 173,163,187 shares of GM Class E common
stock to its hourly pension plan. This contribution increased the weighted
average shares outstanding during the second quarter and six months ended
June 30, 1995.
The denominator used in determining the Available Separate Consolidated Net
Income of EDS is adjusted as deemed appropriate by the GM Board of Directors
to reflect subdivisions or combinations of the GM Class E common stock and to
reflect certain transfers of capital to or from EDS. The Board's discretion
to make such adjustments is limited by criteria set forth in GM's Certificate
of Incorporation. In 1994 and 1988, EDS initiated programs to repurchase
9.5 million and 11.0 million shares, respectively, of GM Class E common stock
in order to meet certain future requirements of EDS' employee benefit plans.
The GM Board has generally caused the denominator used in calculating the
Available Separate Consolidated Net Income of EDS to decrease as shares are
purchased and to increase as shares are used for the employee benefit plans.
* * * * *
Management's Discussion and Analysis
Result of Operations
---------------------
EDS signed $2.8 billion in new business during the quarter ended June 30,
1995, bringing the total of new business signed for the year to $5.5 billion.
This compares to $6.0 billion signed during the first half of 1994.
Total revenues for the quarter and six months ended June 30, 1995 rose
$628.1 million and $1,173.8 million, respectively, over the comparable quarter
and six-month period in the prior year to $2,962.1 million and $5,747.1
million, respectively. Revenues related to GM and affiliates amounted to
$982.5 million and $856.2 million for the second quarter ended June 30, 1995
and 1994, respectively, and $1,880.5 million and $1,697.9 million for the six
months ended June 30, 1995 and 1994, respectively.
The growth of non-GM revenue during the second quarter and six-month period
ending June 30, 1995, when compared to the corresponding periods in 1994, was
34.0% and 34.5%, respectively. This growth results from several new contracts
and improved performance of existing contracts.
GM revenue increased 14.8% and 10.8% during the second quarter and six-month
period ending June 30, 1995, respectively, when compared with the same periods
in 1994. While it is anticipated that GM will continue to contribute a
significant portion of systems and other contracts revenues, the company
believes that the percentage of revenue from GM and affiliates will continue
to decline as non-GM revenues continue to increase at a greater rate.
Total costs and expenses as a percentage of systems and other contracts
revenue remained relatively flat at 88.4% and 88.8%, respectively, for the
quarter and six months ended June 30, 1995, when compared to the corresponding
periods in 1994.
- 42 -
6
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
For the quarter and six-month periods ended June 30, 1995, EDS' separate
consolidated net income increased 15.0% to $226.9 million and 14.8% to $423.7
million, respectively, when compared to net income of $197.3 million and
$369.0 million for the same respective periods of last year. Earnings per
share of GM Class E common stock rose from $0.41 to $0.47, or 14.6%, for the
second quarter of 1995 when compared to the second quarter of 1994. Year-to-
date earnings per share increased from $0.77 to $0.89, or 15.6%, over 1994.
EDS' effective tax rate remained at 36% for the quarter.
Liquidity and Capital Resources
-------------------------------
EDS maintained a strong liquidity and capital structure during the second
quarter. The current ratio improved to 1.27-to-1 at June 30, 1995 from
1.17-to-1 at December 31, 1994. Return on assets was 10.1% for the first six
months of 1995 compared to 11.0% for the same period of 1994. Return on
equity was 20.6% for the first six months of 1995 compared to 21.1% for the
same period of 1994. The noncurrent debt-to-capital ratio was 25% at June 30,
1995 and 19% at December 31, 1994. At June 30, 1995, EDS' capital consisted
of $1,528.3 million in noncurrent notes payable and $4,590.1 million in
stockholder's equity.
Total debt was $1,811.4 million at June 30, 1995 and represented a 48%
increase from total debt of $1,224.4 million at December 31, 1994. Debt
increased primarily due to the private placement of $650 million of noncurrent
notes in the second quarter. In May 1995, EDS issued $350 million of five-
year notes and $300 million of ten-year notes in a private placement to
investment banks for resale only to qualified institutional buyers pursuant to
Rule 144A under the Securities Act of 1933, as amended (the Securities Act).
The proceeds of the offering are being used for general corporate purposes,
including repayment of outstanding commercial paper borrowings and funding of
acquisitions. Such notes have not been and will not be registered under the
Securities Act or any other applicable securities laws and may not be offered,
sold or otherwise transferred unless registered pursuant to, or exempt from
registration under, the Securities Act and other applicable securities laws.
The total debt-to-capital ratio (includes current debt as a component of
capital) was 28.3% at June 30, 1995 and 22.4% at December 31, 1994.
On April 4, 1995, Standard & Poor's Corporation ("S&P") raised its
commercial paper rating of EDS to A-1 from A-2, second highest within the four
investment grade ratings available from S&P for commercial paper, indicating a
strong degree of safety regarding timely payments, and removed the rating from
CreditWatch, where it was placed on February 6, 1995. A security rating is
not a recommendation to buy, sell, or hold securities and may be subject to
revision or withdrawal at any time by the assigning rating organization. Each
rating should be evaluated independently of any other rating.
EDS' strong cash position reflects additional borrowings during the quarter.
Overall cash and cash equivalents decreased $8.0 million to $600.2 million
from the end of 1994 to the end of the second quarter. Cash flows from
operations decreased from $624.6 million during the first six months of 1994
to $388.2 million during the same period of 1995. Cash flows from operations
increased $38.8 million during the second quarter of 1995 when compared to the
second quarter of 1994. The changes in cash flows from operations principally
reflect the timing of receipts and disbursements. Cash used in investing
activities was $490.1 million and $864.0 million for the quarter and first six
months of 1995, respectively, compared with $396.7 million and $688.6 million,
respectively, for the corresponding periods in 1994. The increased use of
cash during the first six months of 1995 is due to expenditures supporting the
growth of business. Net cash provided by financing activities was $273.3
million and $464.5 million for the quarter and first six months of 1995,
- 43 -
7
ELECTRONIC DATA SYSTEMS CORPORATION AND SUBSIDIARIES
respectively, compared to $145.2 million and $242.6 million, respectively, for
the same periods last year. The changes in cash flows from financing
activities is principally due to the issuance of long-term debt.
During the quarter, EDS made net additions to property and equipment of
$351.3 million and net additions to software, goodwill, and other intangibles
of $69.2 million. EDS paid cash dividends to GM totaling $62.9 million in the
second quarter and has consistently paid cash dividends since 1974.
EDS and A. T. Kearney announced they had entered into a letter of intent
under which EDS would acquire the Chicago-based firm and merge EDS' management
consulting unit with A. T. Kearney. The transaction, if completed, would
create a new EDS-owned management consulting subsidiary under the A. T.
Kearney name.
The competitive environment and changing market forces are increasing the
capital intensity of EDS' business. Increasing amounts of capital will be
required by EDS in order to make investments in acquisitions, joint ventures
and strategic alliances in other parts of the information industry and in new
product development. In addition, information technology customer contracts
frequently now require front-end investments in computers and
telecommunications equipment, software, and other property, plant and
equipment. For these reasons, EDS' ability to continue to access the capital
markets on an efficient basis will become increasingly important to EDS'
ability to compete effectively.
On August 7, 1995, GM announced that it intends to pursue a split-off of its
wholly owned subsidiary, EDS, to its GM Class E shareholders in a tax-free
exchange of stock.
To achieve a split-off, GM would exchange EDS capital stock for outstanding
GM Class E common stock. GM would not recognize a gain on the transaction.
There are currently 438.7 million shares of GM Class E common stock
outstanding, and 44.9 million shares currently reserved for issuance upon
conversion of Series C Preference Stock. The process of establishing
definitive terms for a split-off transaction which will be fair to all holders
of GM common stock will, among other things, consider differences between the
values of GM Class E and EDS common stocks in order to establish any
adjustment deemed appropriate by the GM Board of Directors.
A split-off would be subject to the appropriate stockholder approvals, and a
favorable Internal Revenue Service ruling that the transaction would be tax-
free. The specific terms of a transaction, which are yet to be developed,
must also be approved by the GM Board of Directors. Subject to these and
other approvals and conditions, GM and EDS expect that a split-off could occur
in the first half of 1996. However, it should be noted that due to the
numerous uncertainties involved in these matters, there can be no assurance
that any split-off of EDS will be proposed or completed.
A split-off would be proposed only in a manner that would not result in the
recapitalization of GM Class E common stock into GM $1-2/3 par value common
stock at a 120 percent exchange ratio, as currently provided for under certain
circumstances in the GM Certificate of Incorporation.
In the event of a split-off, GM and EDS would enter into a long-term
agreement under which EDS would provide substantially the same information
technology services for GM that it does today.
* * * * *
- 44 -
EX-99
5
EXHIBIT 99B
l:\secfiles\10-Q\2ndqtr95\exhib99b.doc 6
1
EXHIBIT 99(b)
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS AND
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------------------------------------------------
Statement of Consolidated Operations and
Available Separate Consolidated Net Income
Six Months Ended
Second Quarter June 30,
------------------ ------------------
1995 1994 1995 1994
------------------ ------------------
(Dollars in Millions
Except per Share Amounts)
Revenues
Net sales
Outside customers $2,346.1 $2,195.5 $4,508.7 $4,496.4
General Motors and affiliates 1,362.4 1,322.3 2,766.6 2,582.2
Other income - net 15.1 18.1 27.1 44.6
------- ------- ------- -------
Total Revenues 3,723.6 3,535.9 7,302.4 7,123.2
------- ------- ------- -------
Costs and Expenses
Cost of sales and other operating charges,
exclusive of items listed below 2,829.8 2,735.9 5,606.8 5,504.5
Selling, general, and administrative
expenses 300.2 246.9 548.7 440.5
Depreciation and amortization 125.3 116.1 241.0 228.9
Amortization of GM purchase accounting
adjustments related to Hughes
Aircraft Company 30.9 30.9 61.9 61.9
Interest expense - net 1.1 5.5 4.4 9.5
------- ------- ------- -------
Total Costs and Expenses 3,287.3 3,135.3 6,462.8 6,245.3
------- ------- ------- -------
Income before Income Taxes 436.3 400.6 839.6 877.9
Income taxes 178.8 164.2 344.2 360.0
------- ------- ------- -------
Income before cumulative effect
of accounting change 257.5 236.4 495.4 517.9
Cumulative effect of accounting
change (Note 1) - - - (30.4)
------- ------- ------- -------
Net Income 257.5 236.4 495.4 487.5
Adjustments to exclude the effect of
GM purchase accounting adjustments
related to Hughes Aircraft Company
(Note 2) 30.9 30.9 61.9 61.9
------- ------- ------- -------
Earnings Used for Computation of Available
Separate Consolidated Net Income $288.4 $267.3 $557.3 $549.4
======= ======= ======= ========
Available Separate Consolidated Net Income (Note 2)
Average number of shares of GM
Class H Common Stock outstanding
(in millions) (Numerator) 95.4 91.7 94.8 91.2
Class H dividend base (in millions)
(Denominator) 399.9 399.9 399.9 399.9
Available Separate Consolidated
Net Income $68.8 $61.3 $132.1 $125.3
======= ======= ======= =======
Earnings Attributable to General Motors
Class H Common Stock on a
Per Share Basis (Note 2)
Before cumulative effect of
accounting change $0.72 $0.67 $1.39 $1.45
Cumulative effect of accounting
change (Note 1) - - - (0.08)
---- ---- ---- ----
Net earnings attributable to General
Motors Class H Common Stock on a
per share basis $0.72 $0.67 $1.39 $1.37
==== ==== ==== ====
Reference should be made to the Notes to Consolidated Financial Statements.
- 45 -
2
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
June 30, December 31,
ASSETS 1995 1994
-------------------------
(Dollars in Millions
Except Per Share Amount)
Current Assets
Cash and cash equivalents $1,321.1 $1,501.8
Accounts and notes receivable
Trade receivables (less allowances) 1,000.8 1,039.5
General Motors and affiliates 160.3 153.9
Contracts in process, less advances and
progress payments 2,687.4 2,265.4
Inventories (less allowances)
Productive material, work in process,
and supplies 1,266.5 968.0
Finished product 131.4 119.9
Prepaid expenses, including deferred income taxes 254.3 195.1
-------- --------
Total Current Assets 6,821.8 6,243.6
Property-Net 2,613.7 2,611.8
Telecommunications and Other Equipment - Net 1,075.3 1,071.7
Intangible Assets, net of amortization 3,260.2 3,271.3
Investments and Other Assets, including deferred
income taxes - principally at cost
(less allowances) 1,703.5 1,652.1
-------- --------
Total Assets $15,474.5 $14,850.5
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable
Outside $846.5 $779.9
General Motors and affiliates 48.5 80.5
Advances on contracts 691.7 645.1
Notes and loans payable 60.0 125.7
Income taxes payable 212.6 31.4
Accrued liabilities 2,040.7 1,885.5
-------- --------
Total Current Liabilities 3,900.0 3,548.1
-------- --------
Long-Term Debt and Capitalized Leases 354.4 353.5
-------- --------
Postretirement Benefits Other Than Pensions (Note 3) 1,577.1 1,541.4
-------- --------
Other Liabilities, Deferred Income Taxes,
and Deferred Credits 1,351.5 1,431.7
-------- --------
Stockholder's Equity
Capital stock (outstanding, 1,000 shares, $0.10
par value) and additional paid-in capital 6,332.0 6,326.5
Net income retained for use in the business 2,055.0 1,743.6
-------- --------
Subtotal 8,387.0 8,070.1
Minimum pension liability adjustment (76.1) (76.1)
Accumulated foreign currency translation
adjustments (19.4) (18.2)
-------- --------
Total Stockholder's Equity 8,291.5 7,975.8
-------- --------
Total Liabilities and Stockholder's Equity $15,474.5 $14,850.5
======== ========
Reference should be made to the Notes to Consolidated Financial Statements.
- 46 -
3
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Condensed Statement of Consolidated Cash Flows
Six Months Ended
June 30,
------------------
1995 1994
------------------
(Dollars in Millions)
Net Cash Provided by Operating Activities $461.3 $482.3
------- -------
Cash Flows from Investing Activities
Investment in companies, net of cash acquired (154.6) -
Expenditures for property and special tools (225.6) (175.8)
Increase in telecommunications
and other equipment (43.4) (134.7)
Proceeds from disposal of property 37.6 15.1
Proceeds from sale of investments and busineses 17.5 3.6
(Increase) Decrease in notes receivable (24.7) 201.4
------- -------
Net Cash Used in Investing Activities (393.2) (90.4)
------- -------
Cash Flows from Financing Activities
Net decrease in notes and loans payable (65.7) (5.9)
Increase in long-term debt and capitalized leases 11.1 14.4
Decrease in long-term debt and capitalized leases (10.2) (6.6)
Cash dividends paid to General Motors (184.0) (160.0)
------- -------
Net Cash Used in Financing Activities (248.8) (158.1)
------- -------
Net increase (decrease) in cash and cash equivalents (180.7) 233.8
Cash and cash equivalents at beginning
of the period 1,501.8 1,008.7
------- -------
Cash and cash equivalents at end of the period $1,321.1 $1,242.5
======= =======
Certain amounts for 1994 have been reclassified to conform with 1995
classifications.
Reference should be made to the Notes to Consolidated Financial Statements.
Notes To Consolidated Financial Statements
In the opinion of management, the interim consolidated financial statements
reflect all adjustments, consisting of only normal recurring items (with the
exception of the accounting change in 1994 to adopt Statement of Financial
Accounting Standards (SFAS) No. 112, Employers' Accounting for Postemployment
Benefits, as described in Note 1), which are necessary for a fair presentation
of the results for the interim periods presented. The results for interim
periods are not necessarily indicative of results which may be expected for
any other interim period or for the full year. These consolidated financial
statements should be read in conjunction with the consolidated financial
statements, the summary of significant accounting policies, and the other
notes to the consolidated financial statements included in General Motors'
1994 Annual Report to the SEC on Form 10-K.
Note 1.
Effective January 1, 1994, Hughes Electronics Corporation (Hughes), formerly
GM Hughes Electronics Corporation, adopted SFAS No. 112. The Standard
requires accrual of the costs of benefits provided to former or inactive
employees after employment, but before retirement. The unfavorable cumulative
effect of adopting this Standard was $30.4 million, net of income taxes of
$19.2 million, or $0.08 per share of GM Class H common stock. The charge is
primarily related to extended-disability benefits which, under the accounting
Standard, are accrued on a service-driven basis.
- 47 -
4
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Notes To Consolidated Financial Statements - Concluded
Note 2.
Earnings attributable to General Motors Class H common stock on a per share
basis have been determined based on the relative amounts available for the
payment of dividends to holders of the GM Class H common stock. 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 GM (which includes 100% of
the stock of Hughes). Dividends on the GM Class H common stock are declared
by GM's Board of Directors out of the Available Separate Consolidated Net
Income of Hughes earned since the acquisition of Hughes Aircraft Company by
GM. The Available Separate Consolidated Net Income of Hughes is determined
quarterly and is equal to the separate consolidated net income of Hughes,
excluding the effects of GM purchase accounting adjustments arising from the
acquisition of Hughes Aircraft Company (Earnings Used for Computation of
Available Separate Consolidated Net Income), multiplied by a fraction, the
numerator of which is a number equal to the weighted average number of shares
of GM Class H common stock outstanding during the period and the denominator
of which was 399.9 million during the second quarters of 1995 and 1994.
The denominator used in determining the Available Separate Consolidated Net
Income of Hughes is adjusted as deemed appropriate by the GM Board of
Directors to reflect subdivisions or combinations of the GM Class H common
stock and to reflect certain transfers of capital to or from Hughes. The
Board's discretion to make such adjustments is limited by criteria set forth
in GM's Certificate of Incorporation. In this regard, the GM Board has
generally caused the denominator to decrease as shares are purchased by Hughes
and to increase as such shares are used for Hughes' employee benefit plans or
acquisitions.
Note 3.
Hughes has disclosed in the financial statements certain amounts associated
with estimated future postretirement benefits other than pensions and
characterized such amounts as "accumulated postretirement benefit
obligations", "liabilities", or "obligations". Notwithstanding the recording
of such amounts and the use of these terms, Hughes does not admit or otherwise
acknowledge that such amounts or existing postretirement benefit plans of
Hughes (other than pensions) represent legally enforceable liabilities of
Hughes.
Management's Discussion and Analysis
The following discussion excludes the purchase accounting adjustments
related to General Motors' acquisition of Hughes Aircraft Company (see
Supplemental Data beginning on page 51).
Results of Operations
---------------------
Hughes reported second quarter earnings, before the effects of purchase
accounting adjustments related to General Motors' acquisition of Hughes
Aircraft Company, of $288.4 million, a 7.9% increase from the $267.3 million
reported in the second quarter of 1994. Earnings per share of GM Class H
common stock increased 7.5% to $0.72 per share from $0.67 per share in the
second quarter of 1994.
For the first six months of 1995, net income increased 1.4% to $557.3
million compared with $549.4 million reported in the same period in 1994.
Earnings per share increased 1.5% to $1.39 from $1.37 per share in the first
six months of 1994. The 1994 earnings included the unfavorable effect of an
accounting change related to postemployment benefits of $30.4 million after
tax, or $0.08 per share.
Revenues for the period were $3,723.6 million, a 5.3% increase from the
$3,535.9 million reported in the second quarter of 1994. Revenues for the
first six months of 1995 increased to $7,302.4 million, a 2.5% increase from
the $7,123.2 million reported in the first half of 1994. Costs and expenses
as a percentage of revenues decreased slightly to 87.5% from 87.8% in the
second quarter of 1994. For the six months ended June 30, 1995, costs and
expenses as a percentage of revenues increased to 87.7% from 86.8% in the
comparable 1994 period. Income taxes were $178.8 million, or 38.3% of income
- 48 -
5
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
before income taxes, for the quarter compared with $164.2 million, or 38.1% of
income before income taxes, in the comparable quarter of 1994. For the first
six months of 1995, income taxes were $344.2 million, or 38.2% of income
before income taxes, compared with $360.0 million, or 38.3% of income before
income taxes, in the comparable 1994 period.
Operating profit was $453.2 million for the second quarter, an 8.2% increase
from the operating profit of $418.9 million reported during the comparable
period in 1994. The operating profit margin on the same basis improved to
12.2% for the quarter, compared with 11.9% in the second quarter of 1994.
Operating profit for the first six months of 1995 was $878.8 million, a 2.9%
decrease from the $904.7 million in the same period last year. The operating
profit margin on the same basis for the first six months of 1995 was 12.1%
compared with 12.8% in the prior year's period.
Second quarter revenue growth was primarily the result of strong performance
in the Telecommunications and Space segment driven by Galaxy(R) satellite
transponder sales and DIRECTV(R) subscriber growth. The increases in
operating profit and earnings in the second quarter of 1995 were primarily
attributable to the Galaxy transponder sales and aggressive cost reduction
efforts at Automotive Electronics, partially offset by planned increased
operating expenses associated with the continued growth of DIRECTV and lower
production rates in Aerospace and Defense Systems.
The increase in revenue for the six months ended June 30, 1995, when
compared with the comparable period in 1994, reflects strong performances in
the Automotive Electronics and Telecommunications and Space segments,
partially offset by decreased revenues in the Aerospace and Defense Systems
segment. The decrease in operating profit for the six months ended June 30,
1995 was primarily the result of increased operating expenses associated with
the continued expansion of DIRECTV and lower production rates in the Aerospace
and Defense Systems segment, partially offset by the results of aggressive
cost reduction efforts in the Automotive Electronics segment.
Hughes had historically reported its operations in four business segments:
Automotive Electronics, Defense Electronics, Telecommunications and Space, and
Commercial Technologies. In connection with organizational changes, effective
January 1, 1995, Hughes is now reporting its operations in three segments:
Automotive Electronics, Aerospace and Defense Systems, and Telecommunications
and Space. This new segment presentation better reflects Hughes' strategic
direction and the manner in which its businesses are now managed. All 1994
financial data have been restated to reflect the new segment reporting format.
The Automotive Electronics segment reported revenues for the quarter of
$1,484.8 million, an increase of 4.2% from revenues of $1,424.9 million for
the same period in 1994. The improvement reflects an 8.2% increase in Hughes-
supplied electronic content in GM vehicles produced in North America (from
$804 per vehicle to $870 per vehicle) and a 6.4% increase in international and
non-GM sales offset in part by a 2.7% decrease in GM vehicles produced in
North America. Operating profit increased 12.5% in the second quarter to
$248.8 million from $221.1 million for the same period in 1994. The increase
is attributable to continued strong cost reduction efforts and increased
electronic content. As a result, the operating profit margin improved to
17.0% from 15.7%.
The Aerospace and Defense Systems segment reported second quarter 1995
revenues of $1,432.5 million, a 3.7% decrease from revenues of $1,488.2
million reported in the same period in 1994. The decline was principally due
to lower production rates on several missile programs including Tube-launched,
Optically-tracked, Wire-guided (TOW), Advanced Cruise Missile (ACM) and
Advanced Medium-Range Air-to-Air Missle (AMRAAM). Operating profit for the
period was $163.6 million, compared with $182.7 million for the second quarter
of 1994, representing a 10.5% decrease. The decline is largely attributable
to lower production rates on various programs and minor profit rate
adjustments on several contracts. Operating profit margin for the quarter was
11.5% compared with 12.3% in 1994.
- 49 -
6
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
The Telecommunications and Space segment reported revenues for the quarter
of $747.4 million, an increase of 32.2% over revenues of $565.2 million
reported in the prior year's quarter. The increase was due primarily to
Galaxy satellite transponder sales by Hughes Communications, Inc., and DIRECTV
subscriber growth. Second quarter operating profit of $45.9 million was more
than double the $22.6 million reported in the same period in 1994. This
improvement was principally the result of Galaxy transponder sales in 1995 and
the 1994 earnings charge for the Mobile Satellite program due to subcontractor
antenna problems. These increases were partly offset by higher operating
expenses associated with the continued expansion of DIRECTV. As a result, the
second quarter operating profit margin increased to 6.1% in 1995 from 4.0% in
1994.
Liquidity and Capital Resources
-------------------------------
Cash and cash equivalents at June 30, 1995 were $1,321.1 million, a decrease
of $180.7 million from the $1,501.8 million reported at December 31, 1994.
The decrease is primarily the result of cash used for the acquisition of CAE-
Link Corporation of $155.0 million, cash dividends paid to General Motors of
$184.0 million, and capital expenditures of $308.4 million, partially offset
by net cash provided by operating activities of $461.3 million.
As a measure of liquidity, Hughes' current ratio (ratio of current assets to
current liabilities) decreased slightly to 1.75 at June 30, 1995 from 1.76 at
December 31, 1994.
Capital expenditures, including expenditures for telecommunications and
other equipment, were $308.4 million through June 30, 1995, compared with
$310.5 million for the comparable period in 1994.
Long-term debt and capitalized leases totaled $354.4 million at June 30,
1995, relatively unchanged from $353.5 million at December 31, 1994. The
ratio of long-term debt to the total of such debt and proforma stockholder's
equity improved to 6.2% at June 30, 1995 from 6.6% at December 31, 1994.
Supplemental Data
The Consolidated Financial Statements reflect the application of purchase
accounting adjustments as described in Note 2 to the Consolidated Financial
Statements. However, as provided in GM's Certificate of Incorporation, the
earnings attributable to GM Class H common stock for purposes of determining
the amount available for the payment of dividends on GM Class H common stock
specifically excludes such adjustments. More specifically, amortization of
purchase accounting adjustments associated with GM's purchase of Hughes
Aircraft Company was $30.9 million for the second quarters of 1995 and 1994.
Such amounts were excluded from the earnings available for the payment of
dividends on GM Class H common stock and were charged against the earnings
available for the payment of dividends on GM's $1-2/3 par value stock.
Unamortized purchase accounting adjustments associated with GM's purchase of
Hughes Aircraft Company were $2,943.4 million at June 30, 1995 and $3,005.3
million at December 31, 1994.
In order to provide additional analytical data to the users of Hughes'
financial information, supplemental data in the form of unaudited summary pro
forma financial data are provided. Consistent with the basis on which
earnings of Hughes available for the payment of dividends on GM Class H common
stock is determined, the pro forma data exclude the General Motors' purchase
accounting adjustments related to the acquisition of Hughes Aircraft Company.
Included in the supplemental data are certain financial ratios which provide
measures of financial returns excluding the impact of purchase accounting
adjustments. The pro forma data are not presented as a measure of GM's total
return on its investment in Hughes.
- 50 -
7
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Summary Pro Forma Financial Data*
Pro Forma Condensed Statement of Consolidated Operations
Six Months Ended
Second Quarter June 30,
------------------ ------------------
1995 1994 1995 1994
------------------ ------------------
(Dollars in Millions
Except per Share Amounts)
Total Revenues $3,723.6 $3,535.9 $7,302.4 $7,123.2
Total Costs and Expenses 3,256.4 3,104.4 6,400.9 6,183.4
------- ------- ------- -------
Income before Income Taxes 467.2 431.5 901.5 939.8
Income taxes 178.8 164.2 344.2 360.0
------- ------- ------- -------
Income before cumulative
effect of accounting change 288.4 267.3 557.3 579.8
Cumulative effect of accounting change - - - (30.4)
------- ------- ------- -------
Earnings Used for Computation of
Available Separate Consolidated
Net Income $288.4 $267.3 $557.3 $549.4
======= ======= ======= =======
Earnings Attributable to General
Motors Class H Common Stock on a
Per Share Basis
Before cumulative effect of
accounting change $0.72 $0.67 $1.39 $1.45
Cumulative effect of accounting change - - - (0.08)
---- ---- ---- ----
Net earnings attributable to
General Motors Class H Common Stock
on a per share basis $0.72 $0.67 $1.39 $1.37
==== ==== ==== ====
Pro Forma Condensed Consolidated Balance Sheet
June 30, December 31,
ASSETS 1995 1994
-------------------------
(Dollars in Millions)
Total Current Assets $6,821.8 $6,243.6
Property - Net 2,613.7 2,611.8
Telecommunications and Other Equipment - Net 1,075.3 1,071.7
Intangible Assets, Investments, and Other Assets 2,020.3 1,918.1
-------- --------
Total Assets $12,531.1 $11,845.2
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Total Current Liabilities $3,900.0 $3,548.1
Long-Term Debt and Capitalized Leases 354.4 353.5
Postretirement Benefits Other Than Pensions,
Other Liabilities, Deferred Income Taxes,
and Deferred Credits 2,928.6 2,973.1
Total Stockholder's Equity** 5,348.1 4,970.5
-------- --------
Total Liabilities and Stockholder's Equity** $12,531.1 $11,845.2
======== ========
* The summary is unaudited and excludes GM purchase accounting adjustments
related to the acquisition of Hughes Aircraft Company.
** General Motors' equity in its wholly-owned subsidiary, Hughes. 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).
- 51 -
8
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Summary Pro Forma Financial Data - Continued*
Pro Forma Selected Segment Data
Six Months Ended
Second Quarter June 30,
------------------ -------------------
1995 1994 1995 1994
------------------ -------------------
(Dollars in Millions)
AUTOMOTIVE ELECTRONICS
Revenues
Amount $1,484.8 $1,424.9 $2,981.0 $2,707.8
As a percentage of Hughes Revenues 39.9% 40.3% 40.8% 38.0%
Net Sales $1,462.7 $1,410.4 $2,935.4 $2,686.2
Operating Profit (1) $248.8 $221.1 $504.2 $444.6
Operating Profit Margin(2) 17.0% 15.7% 17.2% 16.6%
Depreciation and Amortization $43.5 $39.7 $86.3 $78.0
Capital Expenditures $57.9 $7.9 $110.8 $45.6
AEROSPACE AND DEFENSE SYSTEMS
Revenues
Amount $1,432.5 $1,488.2 $2,817.5 $3,130.2
As a percentage of Hughes Revenues 38.5% 42.1% 38.6% 43.9%
Net Sales $1,426.9 $1,484.7 $2,810.0 $3,106.2
Operating Profit (1) $163.6 $182.7 $317.1 $340.6
Operating Profit Margin(2) 11.5% 12.3% 11.3% 11.0%
Depreciation and Amortization(3) $35.0 $38.8 $64.5 $78.2
Capital Expenditures $30.1 $34.9 $50.8 $66.8
TELECOMMUNICATIONS AND SPACE
Revenues
Amount $747.4 $565.2 $1,394.1 $1,179.5
As a percentage of Hughes Revenues 20.1% 16.0% 19.1% 16.6%
Net Sales $751.4 $563.1 $1,408.0 $1,180.5
Operating Profit (1) $45.9 $22.6 $77.4 $134.7
Operating Profit Margin(2) 6.1% 4.0% 5.5% 11.4%
Depreciation and Amortization(3) $40.9 $28.6 $78.1 $57.9
Capital Expenditures(4) $104.1 $61.2 $143.4 $182.4
CORPORATE AND OTHER
Operating Loss (1) ($5.1) ($7.5) ($19.9) ($15.2)
Certain amounts for 1994, previously reported in four business segments, have
been reclassified to conform with 1995 classifications based on three
business segments.
* The summary is unaudited and excludes GM purchase accounting adjustments
related to the acquisition of Hughes Aircraft Company.
(1) Net Sales less Total Costs and Expenses other than Interest Expense.
(2) Operating Profit as a percentage of Net Sales.
(3) Excludes amortization arising from purchase accounting adjustments related
to GM's acquisition of Hughes Aircraft Company amounting to $25.2 million
in each of the second quarters and $50.4 million in each of the six month
periods for the Aerospace and Defense Systems segment; and $5.3 million in
each of the second quarters and $10.6 million in each of the six month
periods for the Telecommunications and Space segment.
(4) Includes expenditures related to telecommunications and other equipment
amounting to $73.3 million, $42.2 million, $82.8 million, and $134.7
million, respectively.
- 52 -
9
HUGHES ELECTRONICS CORPORATION AND SUBSIDIARIES
Summary Pro Forma Financial Data - Concluded*
Pro Forma Selected Financial Data
Six Months Ended
Second Quarter June 30,
------------------ ------------------
1995 1994 1995 1994
------------------ ------------------
(Dollars
in Millions
Except
per Share Amounts)
Operating profit $453.2 $418.9 $878.8 $904.7
Income before income
taxes and cumulative effect
of accounting change $467.2 $431.5 $901.5 $939.8
Earnings used for
computation of available
separate consolidated
net income $288.4 $267.3 $557.3 $549.4(1)
Average number of GM Class H
dividend base shares (2) 399.9 399.9 399.9 399.9
Stockholder's Equity $5,348.1 $4,579.7 $5,348.1 $4,579.7
Dividends per share of
GM Class H common stock $0.23 $0.20 $0.46 $0.40
Working capital $2,921.8 $2,616.1 $2,921.8 $2,616.1
Operating profit as a
percent of net sales 12.2% 11.9% 12.1% 12.8%
Pre-tax income as a
percent of net sales 12.6% 12.3% 12.4% 13.3%
Net income as a
percent of net sales 7.8% 7.6% 7.7% 7.8%
* The summary is unaudited and excludes GM purchase accounting adjustments
related to the acquisition of Hughes Aircraft Company.
(1) Includes unfavorable cumulative effect of accounting change of
$30.4 million.
(2) Class H dividend base shares is used in calculating earnings attributable
to GM Class H common stock on a per share basis. This is not the same as
the average number of GM Class H shares outstanding, which was 95.4
million for the second quarter of 1995 and 91.7 million for the second
quarter of 1994.
* * * * * * *
- 53 -
EX-27
6
FDS
5
0000040730
GENERAL MOTORS CORPORATION
1,000,000
U.S. DOLLAR
6-MOS
DEC-31-1995
JAN-01-1995
JUN-30-1995
1.0
9,404
5,755
68,771
0
11,700
0
80,566
44,591
206,575
0
78,300
1,300
0
1
21,238
206,575
75,591
87,431
64,595
70,501
108
188
2,885
6,697
2,273
4,424
0
0
0
4,424
4.90
0