-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P2zoZDMoBIZrxcwa/1w7MTS8QnVuUEqhEKYqa4DZ9O0LNH8z1msvZgiHo56M+46h ngBSY84C1QQZjp9FYF5aSQ== 0000040730-98-000057.txt : 19980720 0000040730-98-000057.hdr.sgml : 19980720 ACCESSION NUMBER: 0000040730-98-000057 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980714 ITEM INFORMATION: FILED AS OF DATE: 19980714 SROS: CSX SROS: NASD SROS: NYSE SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL MOTORS CORP CENTRAL INDEX KEY: 0000040730 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 380572515 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-00143 FILM NUMBER: 98665929 BUSINESS ADDRESS: STREET 1: 100 RENAISSANCE CTR CITY: DETROIT STATE: MI ZIP: 48243-7301 BUSINESS PHONE: 3135565000 MAIL ADDRESS: STREET 1: 3044 W GRAND BOULEVARD CITY: DETROIT STATE: MI ZIP: 48202-3091 8-K 1 2Q98PR.TXT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) July 14, 1998 ---------------- GENERAL MOTORS CORPORATION ----------------------------------------------------- (Exact name of registrant as specified in its charter) STATE OF DELAWARE 1-143 38-0572515 - ---------------------------- ----------------------- ------------------- (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 100 Renaissance Center, Detroit, Michigan 48243-7301 3044 West Grand Boulevard, Detroit, Michigan 48202-3091 - -------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (313)-556-5000 -------------- - 1 - ITEM 5. OTHER EVENTS (a) On July 14, 1998, a news release was issued on the subject of second quarter consolidated earnings for GM. The news release did not include financial statement footnotes and certain other financial information that will be filed with the Securities and Exchange Commission at a later date. The GM news release and related news releases for second quarter earnings of Hughes Electronics Corporation (Hughes) dated July 13, 1998 and General Motors Acceptance Corporation (GMAC) dated July 14, 1998, respectively, were as follows: GM NEWS RELEASE GM REPORTS 1998-SECOND QUARTER NET INCOME OF $389 MILLION DETROIT -- General Motors Corporation (GM) today reported 1998-second-quarter consolidated net income of $389 million, or $0.54 per share of GM $1-2/3 par value common stock, including the impact of strikes at two key plants that essentially halted production in North America in the final weeks of the period (see below). This compares with $2.0 billion, or $2.62 per share, in the second quarter of 1997, adjusted to reflect the effect of the Hughes Transactions, which took place in December of 1997. All earnings-per-share amounts are basic (see Highlights for diluted earnings-per-share amounts). The second-quarter-1998 results included an unfavorable impact of $1.2 billion after taxes, or $1.79 per share, related to major production losses caused by strikes at two GM component plants in Flint, Mich. Second-quarter-1997 results included the $490 million, or $0.67 per share, unfavorable impact of strikes at two key assembly plants. Second-quarter-1998 results also included a special item that resulted in an unfavorable effect of $44 million, or $0.07 per share, while second-quarter-1997 results included two favorable items totaling $421 million, or $0.47 per share, (see Strike Related Impact and Special Items). Excluding the impact of the strike-related work stoppages and special items, second-quarter-1998 income totaled $1.6 billion, or $2.40 per share, which compares with $2.1 billion, or $2.82 per share, in the second quarter of 1997. The decline in operating results is primarily related to non-strike-related lower volumes in North America and Europe, and intense price competition worldwide. Consolidated net sales and revenues in the second quarter of 1998 totaled $38.9 billion, compared with $43.3 billion in the same period of 1997, adjusted for the effect of the Hughes Transactions. "Obviously, our financial performance in the second quarter of 1998 was severely impacted by the UAW strikes against our plants in Flint, and was certainly not representative of the positive momentum our financial performance had been building," GM Chairman and Chief Executive Officer John F. Smith, Jr., said. "In order to protect key product programs, such as our new generation of full-size pickups, we are taking a close look at our spending priorities," Smith said. "We continue to examine all opportunities to reduce cash consumption, and we are carefully reviewing future spending for marginal products and facilities." - 2 - To the extent that work stoppages continue to disrupt the production and shipment of vehicles into the third quarter of 1998, the resulting deferral or decline in revenues will have an adverse impact on GM's operating results. The estimate of the strike-related impact on the second-quarter-1998 results does not take into account the effect of possible recoveries that may occur through production increases that GM is likely to pursue at various facilities in future periods. Corporate and sector data in the remainder of this release exclude the above mentioned strike-related impact in both the 1998- and 1997-second-quarter periods, and the impact of special items. The 1997 reported amounts are adjusted to reflect changes to GM's organizational structure resulting from the conclusion of the Hughes Transactions in December of 1997. (See Strike Related Impact, Special Items, and Highlights.) Following is a summary of results from the GM business sectors in the second quarter of 1998: - GM North American Operations income totaled $694 million in the second quarter of 1998. That compares with $849 million in the second quarter of 1997. - Delphi Automotive Systems income totaled $374 million in the second quarter of 1998, compared with $522 million in the same quarter of 1997. - GM International Operations (GMIO) income totaled $181 million in the second quarter of 1998, compared with $385 million in the prior-year period. Highlights of second-quarter-1998 results reported by GM's major subsidiaries included the following: - General Motors Acceptance Corporation (GMAC) income totaled $365 million for the second quarter of 1998, compared with income of $338 million in the second quarter of 1997. - Hughes Electronics Corporation (Hughes) second-quarter-1998 income totaled $56 million, compared with income of $6 million in the prior-year period. GM CONSOLIDATED FINANCIAL DATA (with financing & insurance operations on an equity basis) Excluding the impact of the strikes and special items, consolidated income in the second quarter of 1998 totaled $1.6 billion, or $2.40 per share. That compares with $2.1 billion, or $2.82 per share, in the second quarter of 1997. The corporation's pretax income totaled $2.0 billion in the second quarter of 1998, compared with $2.7 billion in the prior-year period. The corporation's after-tax net-profit margin -- income as a percentage of net sales and revenues -- was 4.3 percent in the second quarter of 1998, compared with 5.2 percent in the second quarter of 1997. Cash and marketable securities totaled $9.1 billion at June 30, 1998, compared with $13.6 billion at March 31, 1998, and $14.9 billion at June 30, 1997. - 3 - In the second quarter of 1998, GM used $1.0 billion to acquire more than 14 million shares of GM $1-2/3 par value common stock. These purchases represent approximately 25 percent of a $4 billion repurchase program that began in March of 1998. Since January 1997, GM's stock repurchases total approximately $6.3 billion or about 14 percent of the outstanding shares of GM $1-2/3 par value common stock. Stock repurchases have been temporarily suspended as part of GM's cash-conservation initiatives. However, Smith said, "The stock-repurchase program, which is one of our key stockholder value initiatives, will be resumed following a labor settlement." Following is a summary of financial performance for GM's automotive business sectors (see Highlights for additional information.) GM NORTH AMERICAN OPERATIONS (GM-NAO) Excluding the impact of the strikes, GM North American Operations' second-quarter-1998 income totaled $694 million. That compares with $849 million in the second quarter of 1997. The unfavorable strike-related impact in both the 1998 and 1997 second quarters totaled $890 million and $375 million respectively (see Strike Related Impact). "We were making great progress in the marketplace with new products that are very well accepted," said G. Richard Wagoner, Jr., General Motors executive vice president and president of GM North American Operations. "Unfortunately, the UAW strikes against our plants in Flint are dramatically slowing our momentum." Excluding the impact of strikes: - GM-NAO's pretax income totaled $1.1 billion in the second quarter of 1998, compared with $1.3 billion in the prior-year period. GM-NAO's net profit margin was 2.7 percent in the second quarter of 1998, compared with 3.1 percent in 1997. - The decline in the second-quarter-1998 results was more than accounted for by lower volume. Higher sales incentive levels were more than offset by material savings, structural-cost improvements, and cost savings associated with new products that are less expensive to build. This cost performance is a continuation of the favorable trend evident in GM-NAO's record 1998 first quarter results. "We have been making great cost strides in some parts of the business, such as material costs and in the vehicle-development process. Unfortunately, a huge competitive gap still exists in our manufacturing productivity -- and with the intense price competition in today's marketplace, we simply cannot afford to be so far off the mark. As we move forward, the age profile of our work force and voluntary retirements present a great opportunity for us to reach more competitive benchmark levels in a reasonable time frame without a negative impact on our people," Wagoner said. - 4 - Vehicle sales in North America finished the quarter at the strongest monthly pace since May of 1989. Truck sales in North America alone were up 45.6 percent for June, setting a fourth straight industry record. "The strong sales experienced over the last four months are further evidence of the outstanding consumer acceptance of GM's products," Wagoner said. GM's new mid-size car offerings continued to fulfill their promise of success: Sales of Buick Century and Regal, Chevrolet Malibu, Oldsmobile Intrigue, Pontiac Grand Am and Oldsmobile Cutlass were up 34.8 percent over the nine models they replaced in the second quarter of 1998. Combined sales of luxury models -- Cadillac Seville and Catera and Chevrolet Corvette -- increased 27.6 percent over the comparable period a year ago. GM vehicle deliveries in the United States in the second quarter of 1998 totaled 1,433,000 units, which resulted in a 31.5-percent share of the U.S. vehicle market, compared with 1,252,000 units, and a 30.5-percent share in the second quarter of 1997. (see additional information in Highlights.) "We're pleased with the improvement in our overall market-share position, especially considering how fierce the competition was during the second quarter," Wagoner said. "We're particularly encouraged by the strong performance of our new models, and the continued strong sales of our full-size pickup trucks and sport-utility vehicles." DELPHI AUTOMOTIVE SYSTEMS (DELPHI) Excluding the impact of the strikes, Delphi Automotive Systems reported income of $374 million in the second quarter of 1998, compared with $522 million in the second quarter of 1997, which includes Delco Electronics earnings previously reported by Hughes. The unfavorable strike-related impacts in both the 1998 and 1997 second quarters totaled $290 million and $115 million respectively (see Strike-Related Impact.) Delphi reported pretax income of $552 million in the second quarter of 1998, compared with pretax income of $807 million in the prior-year period. Delphi's net-profit margin was 4.6 percent in the second quarter of 1998, compared with a net-profit margin of 6.1 percent in the prior-year period. "Aside from the strike impact, the primary reasons for the decline in net income during the second quarter of 1998 were a decrease in GM's North American production volume, and competitive pressures that resulted in price reductions. The continuing economic downturns in the Latin American and Asia-Pacific regions also had an adverse effect on earnings," said J.T. Battenberg III, General Motors executive vice president and president of Delphi Automotive Systems. "These negative factors were partially offset by significant reductions in material costs and gains in manufacturing productivity." - 5 - Delphi reported second-quarter-1998 sales to customers outside the GM-NAO vehicle groups that represented approximately 35 percent of total sales, compared with approximately 33 percent in the second quarter of 1997, including joint ventures. "Our integration of Delphi Delco Electronics into our products and processes is ahead of schedule and positions Delphi to further grow our non-GM-NAO sales." Battenberg said. GM INTERNATIONAL OPERATIONS (GMIO) GM International Operations reported income of $181 million for the second quarter of 1998, compared with income of $385 million in the same period of 1997. Results in both periods exclude special items (see Special Items). GMIO reported pretax income of $339 million in the second quarter of 1998, compared with pretax income of $599 million in the second quarter of 1997. The net-profit margin for GMIO was 2.0 percent in the second quarter of 1998, compared with 4.0 percent in the prior-year period. "Second-quarter earnings reflect a continuation of the very intense competitive environment facing all of our operations as well as lingering concerns about the economic situation in Latin America and the Asia-Pacific region," said Louis R. Hughes, General Motors executive vice president and president of GM International Operations. Income from GM's automotive operations in Europe totaled $168 million in the second quarter of 1998, which reflects the normal volume loss related to the successful start-up and introduction of the new Astra. That compares with income of $209 million in the second quarter last year. The results exclude special items that resulted in an unfavorable $44 million after-tax impact in the second quarter of 1998 and a $103 million after-tax gain in the second quarter of 1997 (see Special Items). "A bright spot is the huge success of our new Astra models," Hughes said. "We have received more than 300,000 orders, and to meet this high demand, we're significantly increasing production at plants in England, Germany and Belgium." For the remainder of GM International Operations, which includes the Latin American and Asia and Pacific Operations, income totaled $13 million in the second quarter of 1998, compared with $176 million in the prior-year period. The extremely competitive markets, along with economic concerns, continue to impact both our Latin American and Asia-Pacific results. Also included in these results are the up-front costs associated with growth initiatives, which should generate improved financial results in future years. SPECIAL ITEMS The second-quarter-1998 results include the unfavorable $44 million after-tax, or $0.07 per share, effect of a special charge related to work-schedule modifications at Opel Belgium. - 6 - The second-quarter-1997 results were also affected by special items, which included: - $318 million after-tax gain, or $0.33 per share, related to the merger of the satellite service operations of Hughes and PanAmSat Corporation. - $103 million after-tax gain, or $0.14 per share, related to the sale of GM Europe's equity interest in Avis Europe. STRIKE-RELATED IMPACT The second-quarter-1998 results included an unfavorable impact of $1.2 billion after taxes, or $1.79 per share, related to strikes at two GM component plants in Flint, Mich., that resulted in the shutdown of 26 of 29 GM North American assembly plants, the loss of 227,000 units of production, and the shutdown of many automotive component plants during the quarter. The above-mentioned amount includes an estimated $890 million unfavorable impact on GM-NAO, and $290 million unfavorable impact on Delphi in the second quarter of 1998. The second-quarter-1997 results included the $490 million, or $0.67 per share, after-tax, unfavorable impact of strike-related production losses at two key assembly plants in Oklahoma City, Okla., and Pontiac, Mich. Those work stoppages resulted in an estimated loss of 96,000 units of production during the second quarter of 1997, with the following sector-specific after-tax approximate effects: GM-NAO, $375 million; and Delphi, $115 million. # # # HIGHLIGHTS ATTACHED - 7 - HIGHLIGHTS - Q2 Financial Results (Dollars in Millions Except Per Share Amounts) Three Months Ended June 30, ------------------------------------ Adjusted Adjusted 1998 1998 (1) 1997 1997 (1) -------- ------- ------- -------- Net sales and revenues Manufactured products $33,577 $33,577 $39,724 $37,866 Financial services 3,280 3,280 3,204 3,204 Other income 2,044 2,044 2,218 1,566 ------- -------- ------- ------- Total net sales and revenues $38,901 $38,901 $45,146 $42,636 ------- -------- ------- ------- Total net sales and revenues(9) $33,462 $33,462 $39,741 $37,883 Gross profit margin percentage(9) 14.5% 14.7% 17.0% 17.0% ............................................................. Income before income taxes, minority interests and non-consolidated affiliates (9) $27 $101 $2,646 $1,905 Effective income tax rate(9) 37.0% 39.6% 34.4% 37.1% ............................................................. Consolidated net income $389 $433 $2,098 $1,581 Net profit margin(9) 1.2% 1.3% 5.3% 4.2% ............................................................. Earnings Attributable to Common Stocks $1-2/3 par value $359 $1,941 Class H (2) $- $137 Class H (3) $15 $- ............................................................. Basic Earnings Per Share Attributable to Common Stocks $1-2/3 par value $0.54 $0.61 $2.68 $2.15 Class H (2) $- $- $1.35 Class H (3) $0.14 $0.14 $- $0.01 ............................................................. Diluted Earnings Per Share Attributable to Common Stocks $1-2/3 par value $0.52 $0.59 $2.67 $2.14 Class H (2) $- $- $1.35 Class H (3) $0.14 $0.14 $- $0.01 ............................................................. Cash Dividends Per Share of Common Stocks $1-2/3 par value $0.50 $0.50 Class H (2) $- $0.25 Class H (3) $- $- ............................................................. Book Value Per Share of Common Stocks June 30, Dec. 31, June 30, 1998 1997 1997 -------- ------- -------- $1-2/3 par value $20.90 $22.26 $29.99 Class H $12.54 $13.36 $14.99 .............................................................. See footnotes beginning on page 15. continues - 8 - HIGHLIGHTS - Q2 Adjusted for Special Items - with Financing and Insurance Operations on an Equity Basis (Dollars in Millions Except Per Share Amounts) Three Months Ended June 30, 1998 -------------------------------- Special Adjusted Reported Items (4) (1) --------- --------- -------- Net sales and revenues $33,462 $- $33,462 ------ ------ ------ Costs and expenses: Cost of sales 28,619 74 28,545 Selling, general, and admin. expenses 3,421 - 3,421 Depreciation and amort. expenses 1,727 - 1,727 ------ ------ ------ Total costs and expenses 33,767 74 33,693 ------ ------ ------ Operating income (loss) (305) (74) (231) Other income less income deductions 654 - 654 Interest expense 322 - 322 ------ ------ ------ Income (loss) before income taxes and minority interests 27 (74) 101 Income tax expense (credit) 10 (30) 40 ------ ------ ------ Income (loss) after income taxes 17 (44) 61 Minority interests 7 - 7 Earnings of nonconsolidated affiliates 365 - 365 ------ ------ ------ Net income (loss) $389 $(44) $433 ====== ====== ====== $1-2/3 par value EPS from continuing operations Basic $0.54 $0.61 Diluted $0.52 $0.59 Gross profit margin 14.5% 14.7% Effective income tax rate 37.0% 39.6% Net profit margin 1.2% 1.3% See footnotes beginning on page 15. continues - 9 - HIGHLIGHTS - Q2 Adjusted for Hughes Transactions and Special Items - with Financing and Insurance Operations on an Equity Basis (Dollars in Millions Except Per Share Amounts) Three Months Ended June 30, 1997 ------------------------------------ Hughes Special Trans- Items Adjusted Reported actions (5)(6) (1) -------- ------- ------- -------- Net sales and revenues $39,741 $1,858 $- $37,883 ------ ------ ------ ------ Costs and expenses: Cost of sales 32,998 1,540 - 31,458 Selling, general, and admin.expenses 3,290 239 - 3,051 Depreciation and amort. expenses 1,918 21 - 1,897 ------ ------ ------ ------ Total costs and expenses 38,206 1,800 - 36,406 ------ ------ ------ ------ Operating income 1,535 58 - 1,477 Other income less income deductions 1,330 34 618 678 Interest expense (credit) 219 (31) - 250 ------ ------ ------ ------ Income before income taxes and minority interests 2,646 123 618 1,905 Income tax expense 909 5 197 707 ------ ------ ------ ------ Income after income taxes 1,737 118 421 1,198 Minority interests 18 (1) - 19 Earnings (loss) of noncons. affiliates 343 (21) - 364 ------ ------ ------ ------ Net income $2,098 $96 $421 $1,581 ====== ====== ====== ====== $1-2/3 par value EPS from continuing operations Basic $2.68 $2.15 Diluted $2.67 $2.14 Gross profit margin 17.0% 17.0% Effective income tax rate 34.4% 37.1% Net profit margin 5.3% 4.2% See footnotes beginning on page 15. continues - 10 - HIGHLIGHTS - Q2 Adjusted for Hughes Transactions and Special Items By Sector (Dollars in Millions) Three Months Ended June 30, 1998 -------------------------------- Special Adjusted Reported Items (4) (1) --------- --------- -------- GM-NAO $(196) $- $(196) Delphi 84 - 84 GMIO(7) 137 44 181 Hughes 56 - 56 GMAC 365 - 365 Other(8) (57) - (57) ----- ----- ----- Consolidated net income $389 $44 $433 ===== ===== ===== Three Months Ended June 30, 1997 ---------------------------------------- Hughes Special Trans- Items Adjusted Reported actions (5)(6) (1) -------- ------- ------- ------- GM-NAO $474 $- $- $474 Delphi 310 97 - 407 GMIO(7) 488 - (103) 385 Hughes 542 (218) (318) 6 GMAC 338 - - 338 Other(8) (54) 25 - (29) --- --- --- --- Consolidated net income $2,098 $(96) $(421) $1,581 ===== == === ===== See footnotes beginning on page 15. continues - 11 - HIGHLIGHTS - Q2 Automotive Sectors Adjusted for Special Items (Dollars in Millions) Three Months Ended June 30, 1998 ------------------------------ GM-NAO Delphi GMIO ------ ------ ------- Reported -------- Net sales and revenues $21,904 $7,041 $8,903 ------ ----- ----- Pre-tax (loss) income (341) 84 265 Income tax (credit) expense (128) 20 123 Equity income and minority interests 17 20 (5) ------ ----- ----- Net (loss) income $(196) $84 $137 ====== ===== ===== Net (loss) profit margin (0.9%) 1.2% 1.5% Effective income tax rate 37.5% 23.8% 46.4% Special Items (4) ------------- Net sales and revenues $- $- $- ------ ----- ----- Pre-tax income - - 74 Income tax expense - - 30 Equity income and minority interests - - - ------ ----- ----- Net income $- $- $44 ====== ===== ===== Adjusted (1) -------- Net sales and revenues $21,904 $7,041 $8,903 ------ ----- ----- Pre-tax (loss) income (341) 84 339 Income tax (credit) expense (128) 20 153 Equity income and minority interests 17 20 (5) ------ ----- ----- Net (loss) income $(196) $84 $181 ====== ===== ===== Net (loss) profit margin (0.9%) 1.2% 2.0% Effective income tax rate 37.5% 23.8% 45.1% See footnotes beginning on page 15. continues - 12 - HIGHLIGHTS - Q2 Automotive Sectors Adjusted for Hughes Transactions and Special Items (Dollars in Millions) Three Months Ended June 30, 1997 ------------------------------- GM-NAO Delphi GMIO ------- ------- ------- Reported -------- Net sales and revenues $25,823 $6,778 $9,711 ------ ------ ------ Pre-tax income 683 468 727 Income tax expense 225 170 233 Equity income and minority interests 16 12 (6) ------ ------ ------ Net income $474 $310 $488 ====== ====== ====== Net profit margin 1.8% 4.6% 5.0% Effective income tax rate 32.9% 36.3% 32.0% Hughes Transactions ------------------- Net sales and revenues $- $1,412 $- ------ ------ ------ Pre-tax income - 152 - Income tax expense - 58 - Equity income and minority interests - 3 - ------ ------ ------ Net income $- $97 $- ====== ====== ====== Special Items (5)(6) ------------- Net sales and revenues $- $- $- ------ ------ ------ Pre-tax income - - (128) Income tax expense - - (25) Equity income and minority interests - - - ------ ------ ------ Net income $- $- $(103) ====== ====== ====== Adjusted (1) -------- Net sales and revenues $25,823 $8,190 $9,711 ------ ------ ------ Pre-tax income 683 620 599 Income tax expense 225 228 208 Equity income and minority interests 16 15 (6) ------ ------ ------ Net income $474 $407 $385 ====== ====== ====== Net profit margin 1.8% 5.0% 4.0% Effective income tax rate 32.9% 36.8% 34.7% See footnotes beginning on page 15. continues - 13 - HIGHLIGHTS - Q2 Operating Information Three Months Ended June 30, ---------------------- 1998 1997 --------- ---------- Worldwide Wholesale Sales (Units in 000s) United States: Cars 549 705 Trucks 476 536 ------- ------- Total United States 1,025 1,241 Canada and Mexico 158 174 ------- ------- Total North America 1,183 1,415 International 875 836 ------- ------- Total Worldwide 2,058 2,251 ======= ======= .................................................... Vehicle Unit Deliveries (Units in 000s) United States Chevrolet - Cars 287 254 - Trucks 494 384 Pontiac 168 169 GMC 147 124 Buick 119 118 Oldsmobile 96 81 Saturn 66 69 Cadillac 49 45 Other 7 8 ------ ------ Total United States 1,433 1,252 Canada and Mexico 184 162 ------ ------ Total North America 1,617 1,414 ------ ------ International Europe 456 492 Latin America, Africa, and the Middle East 184 188 Asia and Pacific 110 125 Other International 10 8 ------ ------ Total International 760 813 ------ ------ Total Worldwide 2,377 2,227 ====== ====== .................................................... Market Share United States Cars 32.1% 32.2% Trucks 30.9% 28.5% Total 31.5% 30.5% Western Europe 10.1% 11.4% Latin America 20.5% 19.5% Asia and Pacific 4.3% 4.0% Total Worldwide 17.2% 16.3% .................................................... U.S. Retail/Fleet Mix % Fleet Sales - Cars 22.3% 26.4% % Fleet Sales - Trucks 14.1% 15.8% Total Vehicles 18.4% 21.8% .................................................... Days Supply of Inventory -- U.S. Gross Landed Stock Cars 51 84 Trucks 53 105 .................................................... Capacity Utilization % U.S. and Canada (2-shift rated) 76.6% 91.9% .................................................... Retail Incentives($ per unit) GM-NAO $1,703 $1,060 .................................................... See footnotes beginning on page 15. continues - 14 - HIGHLIGHTS - Q2 Operating Information (Dollars in Millions Except Per Share Amounts) Three Months Ended June 30, ---------------------- 1998 1997 --------- ---------- Depreciation and amortization (9) Depreciation $1,126 $1,076 Amortization of special tools 574 790 Amortization of intangible assets 27 52 ----- ----- $1,727 $1,918 ===== ===== .................................................... Worldwide Employment at June 30 (in 000s)(10) GM-NAO 231 243 Delphi 205 207 GMIO 116 114 GMAC 22 18 Hughes 15 17 Other 9 10 --- --- Total 598 609 --- --- .................................................... Worldwide Payrolls (10) $6,747 $7,069 .................................................... (1) Adjusted amounts represent the reported amounts less the effects of special items and Hughes Transactions. The adjusted amounts for 1998 and 1997 include the unfavorable effects of strike-related work stoppages. The unfavorable after-tax impacts of the work stoppages were $1.2 billion, or $1.79 per share of $1-2/3 par value common stock, in 1998 and $490 million, or $0.67 per share of $1-2/3 par value common stock, in 1997. The unfavorable after-tax impacts for GM-NAO were $890 million and $375 million in 1998 and 1997, respectively. The unfavorable after-tax impacts for Delphi were $290 million and $115 million in 1998 and 1997, respectively. (2) Data relates to a period prior to the date on which GM recapitalized the Class H common stock ("GM's Recapitalization Date"). (3) Data relates to a period which is subsequent to GM's Recapitalization Date. (4) The second-quarter 1998 results included a pre-tax charge of $74 million ($44 million after-tax, or $0.07 basic per share of $1-2/3 par value common stock), related to work schedule modifications at Opel Belgium. (5) The second-quarter 1997 results included a pre-tax gain of $490 million($318 million after-taxes, or $0.33 basic per share of $1-2/3 par value common stock), that resulted from the merger of the satellite service operations of Hughes and PanAmSat Corporation. (6) The second-quarter 1997 results included a pre-tax gain of $128 million ($103 million after-tax, or $0.14 per share of $1-2/3 par value common stock), related to the sale of GM Europe's equity interest in Avis Europe. (7) GMIO Includes: Three Months Ended June 30, ------------------ 1998 1997 ---- ---- GM Europe $168 $209 Other GMIO $13 $176 (8) Includes Allison Transmission Division, GM Locomotive Group, and purchase accounting adjustments, as well as certain tax and foreign exchange items not allocated to any one business sector. - 15 - HIGHLIGHTS - Q2 Operating Information (Dollars in Millions Except Per Share Amounts) (9) Calculated with financing and insurance operations on an equity basis. (10)Employment and payroll amounts reported for 1997 have been adjusted to reflect the changes to GM's organizational structure resulting from the Hughes Transactions. As such, Delphi reported amounts include Delco and Hughes reported amounts exclude Delco and Hughes Defense. - 16 - HIGHLIGHTS - 6 Months Financial Results (Dollars in Millions Except Per Share Amounts) Six Months Ended June 30, ------------------------------------ Adjusted Adjusted 1998 1998 (1) 1997 1997 (1) -------- ------- ------- -------- Net sales and revenues Manufactured products $70,137 $70,137 $77,164 $73,689 Financial services 6,441 6,441 6,401 6,401 Other income 3,894 3,894 3,822 3,077 ------- -------- ------- ------- Total net sales and revenues $80,472 $80,472 $87,387 $83,167 ------- -------- ------- ------- Total net sales and revenues(9) $69,889 $69,889 $77,198 $73,723 Gross profit margin percentage(9) 15.7% 15.8% 17.0% 17.0% ............................................................. Income before income taxes, minority interests and non-consolidated affiliates (9) $1,915 $1,989 $4,756 $3,843 Effective income tax rate (9) 34.0% 34.2% 34.5% 35.7% ............................................................. Consolidated net income $1,993 $2,037 $3,894 $3,270 Net profit margin(9) 2.9% 2.9% 5.0% 4.4% ............................................................. Earnings Attributable to Common Stocks $1-2/3 par value $1,933 $3,658 Class H (2) $- $196 Class H (3) $29 $- ............................................................. Basic Earnings Per Share Attributable to Common Stocks $1-2/3 par value $2.88 $2.95 $4.98 $4.38 Class H (2) $- $- $1.94 Class H (3) $0.27 $0.27 $- $0.07 ............................................................. Diluted Earnings Per Share Attributable to Common Stocks $1-2/3 par value $2.82 $2.89 $4.93 $4.33 Class H (2) $- $- $1.94 Class H (3) $0.27 $0.27 $- $0.07 ............................................................. Cash Dividends Per Share of Common Stocks $1-2/3 par value $1.00 $1.00 Class H (2) $- $0.50 Class H (3) $- $- .............................................................. See footnotes beginning on page 24. continues - 17 - HIGHLIGHTS - 6 Months Adjusted for Special Items - with Financing and Insurance Operations on an Equity Basis (Dollars in Millions Except Per Share Amounts) Six Months Ended June 30, 1998 -------------------------------- Special Adjusted Reported Items (4) (1) --------- --------- -------- Net sales and revenues $69,889 $- $69,889 ------ ------ ------ Costs and expenses: Cost of sales 58,942 74 58,868 Selling, general, and admin. expenses 6,281 - 6,281 Depreciation and amort. expenses 3,410 - 3,410 ------ ------ ------ Total costs and expenses 68,633 74 68,559 ------ ------ ------ Operating income (loss) 1,256 (74) 1,330 Other income less income deductions 1,236 - 1,236 Interest expense 577 - 577 ------ ------ ------ Income (loss) before income taxes and minority interests 1,915 (74) 1,989 Income tax expense (credit) 651 (30) 681 ------ ------ ------ Income (loss) after income taxes 1,264 (44) 1,308 Minority interests 3 - 3 Earnings of nonconsolidated affiliates 726 - 726 ------ ------ ------ Net income (loss) $1,993 $(44) $2,037 ====== ====== ====== $1-2/3 par value EPS from continuing operations Basic $2.88 $2.95 Diluted $2.82 $2.89 Gross profit margin 15.7% 15.8% Effective income tax rate 34.0% 34.2% Net profit margin 2.9% 2.9% See footnotes beginning on page 24. continues - 18 - HIGHLIGHTS - 6 Months Adjusted for Hughes Transactions and Special Items - with Financing and Insurance Operations on an Equity Basis (Dollars in Millions Except Per Share Amounts) Six Months Ended June 30, 1997 ------------------------------------ Hughes Special Trans- Items Adjusted Reported actions (5)(6) (1) -------- ------- ------- -------- Net sales and revenues $77,198 $3,475 $- $73,723 ------ ------ ------ ------ Costs and expenses: Cost of sales 64,102 2,845 80 61,177 Selling, general, and admin.expenses 6,174 305 - 5,869 Depreciation and amort. expenses 3,797 82 - 3,715 ------ ------ ------ ------ Total costs and expenses 74,073 3,232 80 70,761 ------ ------ ------ ------ Operating income (loss) 3,125 243 (80) 2,962 Other income less income deductions 2,069 39 706 1,324 Interest expense (credit) 438 (5) - 443 ------ ------ ------ ------ Income before income taxes and minority interests 4,756 287 626 3,843 Income tax expense 1,639 67 200 1,372 ------ ------ ------ ------ Income after income taxes 3,117 220 426 2,471 Minority interests 37 (1) - 38 Earnings (loss) of noncons. affiliates 740 (21) - 761 ------ ------ ------ ------ Net income $3,894 $198 $426 $3,270 ====== ====== ====== ====== $1-2/3 par value EPS from continuing operations Basic $4.98 $4.38 Diluted $4.93 $4.33 Gross profit margin 17.0% 17.0% Effective income tax rate 34.5% 35.7% Net profit margin 5.0% 4.4% See footnotes beginning on page 24. continues - 19 - HIGHLIGHTS - 6 Months Adjusted for Hughes Transactions and Special Items By Sector (Dollars in Millions) Six Months Ended June 30, 1998 -------------------------------- Special Adjusted Reported Items (4) (1) --------- --------- -------- GM-NAO $630 $- $630 Delphi 347 - 347 GMIO(7) 297 44 341 Hughes 110 - 110 GMAC 714 - 714 Other(8) (105) - (105) ----- ----- ----- Consolidated net income $1,993 $44 $2,037 ===== ===== ===== Six Months Ended June 30, 1997 ---------------------------------------- Hughes Special Trans- Items Adjusted Reported actions (5)(6) (1) -------- ------- ------- ------- GM-NAO $1,238 $- $- $1,238 Delphi 490 181 50 721 GMIO(7) 805 - (158) 647 Hughes 777 (429) (318) 30 GMAC 710 - - 710 Other(8) (126) 50 - (76) --- --- --- --- Consolidated net income $3,894 $(198) $(426) $3,270 ===== === === ===== See footnotes beginning on page 24. continues - 20 - HIGHLIGHTS - 6 Months Automotive Sectors Adjusted for Special Items (Dollars in Millions) Six Months Ended June 30, 1998 ------------------------------ GM-NAO Delphi GMIO ------ ------ ------- Reported -------- Net sales and revenues $47,793 $14,664 $17,053 ------ ------ ------ Pre-tax income 861 460 478 Income tax expense 251 140 195 Equity income and minority interests 20 27 14 ------ ------ ------ Net income $630 $347 $297 ====== ====== ====== Net profit margin 1.3% 2.4% 1.7% Effective income tax rate 29.2% 30.4% 40.8% Special Items ------------- Net sales and revenues $- $- $- ------ ----- ----- Pre-tax income - - 74 Income tax expense - - 30 Equity income and minority interests - - - ------ ----- ----- Net income $- $- $44 ====== ===== ===== Adjusted (1) -------- Net sales and revenues $47,793 $14,664 $17,053 ------ ------ ------ Pre-tax income 861 460 552 Income tax expense 251 140 225 Equity income and minority interests 20 27 14 ------ ------ ------ Net income $630 $347 $341 ====== ====== ====== Net profit margin 1.3% 2.4% 2.0% Effective income tax rate 29.2% 30.4% 40.8% See footnotes beginning on page 24. continues - 21 - HIGHLIGHTS - 6 Months Automotive Sectors Adjusted for Hughes Transactions and Special Items (Dollars in Millions) Six Months Ended June 30, 1997 ------------------------------- GM-NAO Delphi GMIO ------- ------- ------- Reported -------- Net sales and revenues $50,682 $13,442 $17,994 ------ ------ ------ Pre-tax income 1,810 705 1,200 Income tax expense 603 242 397 Equity income and minority interests 31 27 2 ------ ------ ------ Net income $1,238 $490 $805 ====== ====== ====== Net profit margin 2.4% 3.6% 4.5% Effective income tax rate 33.3% 34.3% 33.1% Hughes Transactions ------------------- Net sales and revenues $- $2,743 $- ------ ------ ------ Pre-tax income - 286 - Income tax expense - 109 - Equity income and minority interests - 4 - ------ ------ ------ Net income $- $181 $- ====== ====== ====== Special Items ------------- Net sales and revenues $- $- $- ------ ------ ------ Pre-tax income - 80 (216) Income tax expense - 30 (58) Equity income and minority interests - - - ------ ------ ------ Net income $- $50 $(158) ====== ====== ====== Adjusted (1) -------- Net sales and revenues $50,682 $16,185 $17,994 ------ ------ ------ Pre-tax income 1,810 1,071 984 Income tax expense 603 381 339 Equity income and minority interests 31 31 2 ------ ------ ------ Net income $1,238 $721 $647 ====== ====== ====== Net profit margin 2.4% 4.5% 3.6% Effective income tax rate 33.3% 35.6% 34.5% See footnotes beginning on page 24. continues - 22 - HIGHLIGHTS - 6 Months Operating Information Six Months Ended June 30, ---------------------- 1998 1997 --------- ---------- Worldwide Wholesale Sales (Units in 000s) United States: Cars 1,123 1,403 Trucks 1,068 1,090 ------- ------- Total United States 2,191 2,493 Canada and Mexico 329 324 ------- ------- Total North America 2,520 2,817 International 1,597 1,619 ------- ------- Total Worldwide 4,117 4,436 ======= ======= .................................................... Vehicle Unit Deliveries (Units in 000s) United States Chevrolet - Cars 494 505 - Trucks 872 742 Pontiac 290 314 GMC 264 233 Buick 215 205 Oldsmobile 169 146 Saturn 117 129 Cadillac 92 87 Other 13 14 ------ ------ Total United States 2,526 2,375 Canada and Mexico 313 283 ------ ------ Total North America 2,839 2,658 ------ ------ International Europe 948 957 Latin America, Africa, and the Middle East 360 350 Asia and Pacific 230 306 Other International 19 16 ------ ------ Total International 1,557 1,629 ------ ------ Total Worldwide 4,396 4,287 ====== ====== .................................................... Market Share United States Cars 31.4% 31.9% Trucks 30.5% 28.6% Total 30.9% 30.4% Western Europe 10.4% 11.4% Latin America 21.1% 19.2% Asia and Pacific 4.1% 4.4% Total Worldwide 16.4% 15.8% .................................................... U.S. Retail/Fleet Mix % Fleet Sales - Cars 23.9% 26.4% % Fleet Sales - Trucks 15.0% 14.8% Total Vehicles 19.7% 21.4% .................................................... Capacity Utilization % U.S. and Canada (2-shift rated) 82.8% 93.6% .................................................... Retail Incentives($ per unit) GM-NAO $1,490 $962 .................................................... See footnotes beginning on page 24. continues - 23 - HIGHLIGHTS - 6 Months Operating Information (Dollars in Millions Except Per Share Amounts) Six Months Ended June 30, ---------------------- 1998 1997 --------- ---------- Depreciation and amortization (8) Depreciation $2,169 $2,127 Amortization of special tools 1,187 1,577 Amortization of intangible assets 54 93 ----- ----- $3,410 $3,797 ===== ===== .................................................... Worldwide Payrolls (10) $13,773 $14,146 .................................................... (1) Adjusted amounts represent the reported amounts less the effects of special items and Hughes Transactions. The adjusted amounts for 1998 and 1997 include the unfavorable effects of strike-related work stoppages. The unfavorable after-tax impacts of the work stoppages were $1.2 billion, or $1.79 per share of $1-2/3 par value common stock, in 1998 and $490 million, or $0.67 per share of $1-2/3 par value common stock, in 1997. The unfavorable after-tax impacts for GM-NAO were $890 million and $375 million in 1998 and 1997, respectively. The unfavorable after-tax impacts for Delphi were $290 million and $115 million in 1998 and 1997, respectively. (2) Data relates to a period prior to the date on which GM recapitalized the Class H common stock ("GM's Recapitalization Date"). (3) Data relates to a period which is subsequent to GM's Recapitalization Date. (4) The second-quarter 1998 results included a pre-tax charge of $74 million ($44 million after-tax, or $0.07 basic per share of $1-2/3 par value common stock), related to work schedule modifications at Opel Belgium. (5) The first-quarter 1997 results included a pre-tax gain of $88 million,($55 million after-taxes, or $0.07 basic per share of $1-2/3 par value common stock), that resulted from an agreement with Volkswagen A.G. (VW) settling a civil lawsuit which GM brought against VW. The first-quarter 1997 results were negatively impacted by a pre-tax plant closing charge of $80 million,($50 million after-taxes, or $0.07 basic per share of $1-2/3 par value common stock), related to the announcement that Delphi Interior and Lighting Systems would cease production at its Trenton, N.J., plant during the 1998 calendar year. (6) The second-quarter 1997 results included a pre-tax gain of $490 million($318 million after-taxes, or $0.33 basic per share of $1-2/3 par value common stock), that resulted from the merger of the satellite service operations of Hughes and PanAmSat Corporation. The second-quarter 1997 results also included a pre-tax gain of $128 million ($103 million after-tax, or $0.14 per share of $1-2/3 par value common stock),related to the sale of GM Europe's equity interest in Avis Europe. (7) GMIO Includes: Six Months Ended June 30, ------------------ 1998 1997 ---- ---- GM Europe $267 $303 Other GMIO $74 $344 (8) Includes Allison Transmission Division, GM Locomotive Group, and purchase accounting adjustments, as well as certain tax and foreign exchange items not allocated to any one business sector. - 24 - HIGHLIGHTS - 6 Months Operating Information (Dollars in Millions Except Per Share Amounts) (9) Calculated with financing and insurance operations on an equity basis. (10)Payroll amounts reported for 1997 have been adjusted to reflect the changes to GM's organizational structure resulting from the Hughes Transactions. As such, 1997 reported amounts exclude Hughes Defense. - 25 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 ---- ---- ---- ---- (Dollars in Millions Except Per Share Amounts) Net sales and revenues Manufactured products $33,577 $39,724 $70,137 $77,164 Financial services 3,280 3,204 6,441 6,401 Other income 2,044 2,218 3,894 3,822 ------- ------- ------- ------- Total net sales and revenues 38,901 45,146 80,472 87,387 ------ ------ ------ ------ Costs and expenses Cost of sales and other operating charges, exclusive of items listed below 28,623 33,008 58,980 64,118 Selling, general, and administrative expenses 4,401 3,984 8,143 7,575 Depreciation and amortization expenses 2,931 3,101 5,838 6,166 Interest expense 1,753 1,500 3,383 2,961 Other deductions 632 320 1,145 568 -------- -------- ------- -------- Total costs and expenses 38,340 41,913 77,489 81,388 ------ ------ ------ ------ Income before income taxes and minority interests 561 3,233 2,983 5,999 Income taxes 175 1,153 983 2,142 Minority interests 3 18 (7) 37 ----- ------- ------- ------- Net income 389 2,098 1,993 3,894 Dividends on preference stocks 15 20 31 40 ---- ------- ------ ------- Earnings on common stocks $374 $2,078 $1,962 $3,854 === ===== ===== ===== Basic earnings per share attributable to common stocks Earnings per share attributable to $1-2/3 par value $0.54 $2.68 $2.88 $4.98 Earnings per share attributable to Class H (prior to its recapitalization on December 17, 1997) $1.35 $1.94 Earnings per share attributable to Class H (subsequent to its recapitalization on December 17, 1997) $0.14 $0.27 Diluted earnings per share attributable to common stocks Earnings per share attributable to $1-2/3 par value $0.52 $2.67 $2.82 $4.93 Earnings per share attributable to Class H (prior to its recapitalization on December 17, 1997) $1.35 $1.94 Earnings per share attributable to Class H (subsequent to its recapitalization on December 17, 1997) $0.14 $0.27 - 26 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, June 30, 1998 Dec. 31, 1997 (Unaudited) 1997 (Unaudited) (Dollars in Millions) ASSETS Cash and cash equivalents $8,721 $11,262 $11,674 Other marketable securities 8,407 11,722 9,605 ------- ------ ------- Total cash and marketable securities 17,128 22,984 21,279 Finance receivables - net 60,766 58,870 60,357 Accounts and notes receivable (less allowances) 8,771 7,493 7,461 Inventories (less allowances) 13,253 12,102 13,528 Deferred income taxes 22,179 22,478 19,291 Equipment on operating leases (less accumulated depreciation) 35,335 33,302 32,300 Property - net 36,050 34,567 37,653 Intangible assets - net 12,159 11,469 15,029 Other assets - net 24,938 25,623 25,007 -------- -------- -------- Total assets $230,579 $228,888 $231,905 ======= ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable (principally trade) $15,395 $15,782 $14,197 Notes and loans payable 98,957 93,027 89,918 Deferred income taxes 3,188 2,923 3,530 Postretirement benefits other than pensions 40,338 41,168 44,007 Pensions 5,537 7,043 7,774 Accrued expenses and other liabilities 50,728 50,490 47,330 -------- -------- -------- Total liabilities 214,143 210,433 206,756 ------- ------- ------- Minority interests 518 727 716 General Motors - obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of General Motors Series D 79 79 - Series G 143 143 - Redeemable preferred stock of subsidiary - - 402 Stockholders' equity Preference stocks 1 1 1 Common stocks $1-2/3 par value (issued, 655,007,825; 693,456,394; and 721,480,932 shares) 1,092 1,156 1,202 Class H (issued, 101,641,092 shares) - - 10 Class H (issued, 105,731,028, and 103,885,803 shares) 11 10 - Capital surplus (principally additional paid-in capital) 12,773 15,369 17,250 Retained earnings 6,706 5,416 9,201 ------- ------- ------- Subtotal 20,583 21,952 27,664 Minimum pension liability adjustment (4,062) (4,062) (3,490) Accumulated foreign currency translation adjustments (1,332) (888) (642) Net unrealized gains on securities 507 504 499 ------ ------- -------- Accumulated other comprehensive loss (4,887) (4,446) (3,633) Total stockholders' equity 15,696 17,506 24,031 -------- -------- -------- Total liabilities and stockholders' equity $230,579 $228,888 $231,905 ======= ======= ======= - 27 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 1998 1997 (Dollars in Millions) Net cash provided by operating activities $4,837 $9,773 ----- ------ Cash flows from investing activities Expenditures for property (4,614) (4,268) Investments in other marketable securities - acquisitions (13,487) (18,147) Investments in other marketable securities - liquidations 17,197 17,595 Investments in companies, net of cash acquired (1,322) (1,652) Finance receivables - acquisitions (78,491) (79,997) Finance receivables - liquidations 58,951 63,304 Proceeds from sales of finance receivables 17,356 12,930 Operating leases - acquisitions (12,331) (10,649) Operating leases - liquidations 7,684 6,227 Other 26 954 Net cash used in investing activities (9,031) (13,703) ----- ------ Cash flows from financing activities Net increase in loans payable 1,709 3,269 Increase in long-term debt 11,019 8,485 Decrease in long-term debt (7,564) (7,061) Proceeds from issuing common stocks 344 281 Repurchases of common stocks (3,071) (2,292) Cash dividends paid to stockholders (703) (829) ------ ------ Net cash provided by financing activities 1,734 1,853 ----- ----- Effect of exchange rate changes on cash and cash equivalents (81) (312) ----- ----- Net decrease in cash and cash equivalents (2,541) (2,389) Cash and cash equivalents at beginning of the period 11,262 14,063 ------ ------ Cash and cash equivalents at end of the period $8,721 $11,674 ===== ====== - 28 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES Consolidated Statements of Income With Financing and Insurance Operations on an Equity Basis (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 ---- ---- ---- ---- (Dollars in Millions) Net sales and revenues $33,462 $39,741 $69,889 $77,198 ------ ------ ------ ------ Costs and expenses Cost of sales and other operating charges, exclusive of items listed below 28,619 32,998 58,942 64,102 Selling, general, and administrative expenses 3,421 3,290 6,281 6,174 Depreciation and amortization expenses 1,727 1,918 3,410 3,797 ------- ------- ------ ------- Total costs and expenses 33,767 38,206 68,633 74,073 ------ ------ ------ ------ Operating (loss) income (305) 1,535 1,256 3,125 Other income less income deductions 654 1,330 1,236 2,069 Interest expense 322 219 577 438 ----- ------ ------ ------ Income from continuing operations before income taxes, minority interests, and earnings of nonconsolidated affiliates 27 2,646 1,915 4,756 Income taxes 10 909 651 1,639 -- ------ ------ ----- Income from continuing operations before minority interests and earnings of nonconsolidated affiliates 17 1,737 1,264 3,117 Minority interests 7 18 3 37 Earnings of nonconsolidated affiliates 365 343 726 740 --- ------ ------ ------ Net income $389 $2,098 $1,993 $3,894 === ===== ===== ===== Net profit margin (1) 1.2% 5.3% 2.9% 5.0% (1) Net profit margin represents net income as a percentage of net sales and revenues. - 29 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets With Financing and Insurance Operations on an Equity Basis (Unaudited) June 30, Dec. 31, June 30, 1998 1997 1997 -------- -------- -------- (Dollars in Millions) ASSETS Cash and cash equivalents $8,637 $10,685 $10,855 Other marketable securities 477 3,826 4,062 ------ ------- ------- Total cash and marketable securities 9,114 14,511 14,917 Accounts and notes receivable (less allowances) Trade 4,617 5,164 5,887 Nonconsolidated affiliates 1,721 836 1,478 Inventories (less allowances) 11,942 12,102 13,528 Equipment on operating leases (less accumulated depreciation) 4,754 4,677 4,047 Deferred income taxes and other 6,069 6,278 5,425 ------- ------- ------- Total current assets 38,217 43,568 45,282 Equity in net assets of nonconsolidated affiliates 11,091 10,164 10,061 Deferred income taxes 20,399 20,721 19,692 Other investments and miscellaneous assets 13,803 13,564 13,586 Property - net 35,293 33,914 37,211 Intangible assets - net 11,426 10,752 14,864 -------- -------- -------- Total assets $130,229 $132,683 $140,696 ======= ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $10,230 $12,474 $11,235 Loans payable 1,850 656 1,281 Accrued expenses and customer deposits 31,974 33,459 31,431 ------ ------ ------ Total current liabilities 44,054 46,589 43,947 Long-term debt 7,097 5,491 5,967 Capitalized leases 178 185 188 Postretirement benefits other than pensions 37,535 38,388 41,393 Pensions 4,780 4,271 5,822 Other liabilities and deferred income taxes 20,192 19,336 18,230 -------- -------- -------- Total liabilities 113,836 114,260 115,547 ------- ------- ------- Minority interests 475 695 716 General Motors - obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of General Motors Series D 79 79 - Series G 143 143 - Redeemable preferred stock of subsidiary - - 402 Stockholders' equity 15,696 17,506 24,031 -------- -------- -------- Total liabilities and stockholders' equity $130,229 $132,683 $140,696 ======= ======= ======= - 30 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows With Financing and Insurance Operations on an Equity Basis (Unaudited) Six Months Ended June 30, 1998 1997 (Dollars in Millions) Net cash provided by operating activities $1,166 $7,582 ----- ----- Cash flows from investing activities Expenditures for property (4,369) (4,070) Investments in companies, net of cash acquired (1,322) (1,652) Investments in other marketable securities - acquisitions (4,984) (7,963) Investments in other marketable securities - liquidations 8,332 7,543 Operating leases - acquisitions (2,994) (2,610) Operating leases - liquidations 2,767 1,667 Other 72 (29) ------- ------- Net cash used in investing activities (2,498) (7,114) ----- ----- Cash flows from financing activities Net increase in loans payable 1,194 66 Increase in long-term debt 2,652 195 Decrease in long-term debt (1,052) (37) Proceeds from issuing common stocks 344 281 Repurchases of common stocks (3,071) (2,292) Cash dividends paid to stockholders (703) (829) ------ ------ Net cash used in financing activities (636) (2,616) ------ ----- Effect of exchange rate changes on cash and cash equivalents (80) (317) ----- ----- Net decrease in cash and cash equivalents (2,048) (2,465) Cash and cash equivalents at beginning of the period 10,685 13,320 ------ ------ Cash and cash equivalents at end of the period $8,637 $10,855 ===== ====== Cash Flows With Financing and Insurance Operations on an Equity Basis - 31 - HUGHES ELECTRONICS CORPORATION NEWS RELEASE El Segundo, Calif., July 13, 1998 - Hughes Electronics Corporation (Hughes) today reported that second quarter 1998 revenues increased 18.9% to $1,369.0 million compared with $1,151.4 million in the second quarter of 1997. Operating profit(1) in the quarter increased 36.5% to $78.2 million compared with $57.3 million in the second quarter of 1997. Second quarter operating profit margin on the same basis increased to 5.7% in 1998 from 5.0% in 1997. Second quarter earnings(1) increased to $56.1 million compared with last year's $6.1 million, which excludes the $318.3 million after-tax gain ($0.80 per share) recognized in connection with the May 1997 PanAmSat merger. Earnings per share on the same basis increased to $0.14 per share versus pro forma earnings per share(2) of $0.01 in 1997. Including the gain associated with the PanAmSat merger, second quarter 1997 earnings and pro forma earnings per share were $324.4 million and $0.81 per share, respectively. "The solid financial performance reported in the second quarter is consistent with Hughes' growth expectations as a satellite and wireless communications company," said Michael T. Smith, Hughes chairman and chief executive officer. "The increases in revenues and operating profit were driven by record DIRECTV(R) subscriber growth through June, continued strong performance in our satellite services segment resulting from the PanAmSat merger, and higher commercial satellite sales." Six-Month Financial Review For the first six months of 1998, revenues increased 22.3% to $2,660.0 million compared with $2,175.4 million in the first half of 1997. This growth was primarily the result of record DIRECTV subscriber growth, the May 1997 PanAmSat merger and higher commercial satellite sales. Driven by the revenue growth, operating profit(1) for the first six months rose sharply to $161.8 million versus $90.4 million in 1997. Operating profit margin on the same basis increased to 6.1% compared with 4.2% in the first half of 1997. Earnings(1)and earnings per share in the first half of 1998 were $109.8 million and $0.27, respectively. Excluding the gain associated with the PanAmSat merger, earnings and pro forma earnings per share(2) in the first six months of 1997 were $30.0 million and $0.07 per share, respectively. The increases in earnings and earnings per share were principally a result of the aforementioned revenue and operating profit growth. SEGMENT FINANCIAL REVIEW: SECOND QUARTER 1998 Direct-To-Home Broadcast For the quarter, revenues increased 42.5% to $401.5 million from $281.7 million in the second quarter of 1997. The increase resulted from continued strong subscriber growth and average monthly revenue per subscriber, as well as low subscriber churn rates. Domestic DIRECTV propelled this growth with quarterly revenues of $368 million, a 49% increase over last year's second quarter revenues of $247 million. With 227,000 net new subscribers in the - 32 - second quarter, total DIRECTV subscribers grew to 3,755,000 in the United States as of June 30, 1998. The Company's Latin American DIRECTV subsidiary, Galaxy Latin America (GLA), had second quarter revenues of $32 million compared with $13 million in 1997. With the addition of 49,000 net new subscribers in the second quarter, total DIRECTV subscribers in Latin America were 387,000 as of June 30, 1998. In addition, DIRECTV Japan(TM), a 32% owned equity affiliate, had a total of 140,000 subscribers by the end of the second quarter. The segment operating loss in the quarter was $40.2 million compared with an operating loss of $47.9 million in the second quarter of 1997. The lower operating loss in 1998 was principally due to increased subscriber revenues that more than offset higher sales and marketing expenditures. The second quarter 1998 operating loss for the domestic DIRECTV business was $7 million compared with $21 million last year, and GLA's second quarter operating loss was $32 million compared with $33 million last year. Satellite Services Second quarter 1998 revenues were up 42.5% to $191.1 million compared with $134.1 million in the prior year. The increase was primarily due to the May 1997 PanAmSat merger and increased operating lease revenues for video, data and Internet-related services. As a result of this revenue growth, operating profit in the quarter rose 18.3% to $74.4 million from $62.9 million in 1997. Operating profit margin in the period declined to 38.9% from 46.9% in the same period last year primarily from goodwill amortization associated with the PanAmSat merger and a provision for the loss relating to the May 1998 failure of PanAmSat's Galaxy IV satellite. Satellite Manufacturing For the second quarter of 1998, revenues increased 15.4% to $674.8 million from revenues of $584.5 million for the same period in 1997. Operating profit in the quarter increased 11.5% to $60.0 million from $53.8 million in the prior year. The increases in revenue and operating profit were principally due to higher commercial satellite sales to customers such as Thuraya Satellite Telecommunications Company, ICO Global Communications and PanAmSat Corporation. Operating profit margin in the quarter declined slightly to 8.9% versus 9.2% last year. Network Systems Second quarter revenues for Hughes Network Systems (HNS) were $221.7 million compared with $210.9 million in the same period last year. Increased sales of satellite-based mobile telephony equipment were mostly offset by lower sales of international wireless local loop telephone systems. The operating loss in the quarter was $25.2 million compared with an operating loss of $1.0 million in the second quarter of 1997. The increased operating loss in the second quarter of 1998 was primarily due to a $26 million provision for estimated losses associated with the bankruptcy filing by a customer. - 33 - BALANCE SHEET The cash balance of $1,592.8 million at June 30, 1998 declined $1,191.0 million from December 31, 1997 primarily due to the $851.4 million additional investment in PanAmSat to increase Hughes' ownership from 71.5% to 81.0% and a $204.7 million cash payment to GM in connection with the finalization of the purchase price adjustment amount related to the transfer of Delco Electronics to GM in December 1997 as part of the Hughes Transactions. The Hughes Transactions also included the spin-off and merger of Hughes Defense with Raytheon Company. - ------------------------- (1)Excludes the effects of purchase accounting adjustments related to General Motors' (GM) acquisition of Hughes in 1985. (2)1997 earnings per share are presented on a pro forma basis. Historically, such earnings per share amounts were calculated based on the financial performance of former Hughes, which consisted of the defense electronics, automotive electronics, and telecommunications and space businesses. Since these financial statements relate only to the telecommunications and space businesses of former Hughes, the pro forma presentation is used to present the earnings per share that would have been achieved relative to the GM Class H common stock had it been calculated based upon only such telecommunications and space businesses. - 34 - STATEMENT OF INCOME AND AVAILABLE SEPARATE CONSOLIDATED NET INCOME (Dollars in Millions Except Per Share Amounts) Six Months Ended Second Quarter June 30, ---------------- ---------------- 1998 1997 1998 1997 - --------------------------------------------------------------------------- Revenues Product sales $762.6 $739.4 $1,454.7 $1,422.6 Direct broadcast, leasing and other services 606.4 412.0 1,205.3 752.8 - ---------------------------------------------------------------------------- Total Revenues 1,369.0 1,151.4 2,660.0 2,175.4 - ---------------------------------------------------------------------------- Operating Costs and Expenses Cost of products sold 580.6 606.3 1,122.9 1,161.1 Broadcast programming and other cost 250.8 190.7 515.6 354.5 Selling, general, and administrative expenses 359.2 230.1 661.8 452.1 Depreciation and amortization 100.2 67.0 197.9 117.3 Amortization of GM purchase accounting adjustments (1) 5.3 5.3 10.6 10.6 - ---------------------------------------------------------------------------- Total Operating Costs and Expenses 1,296.1 1,099.4 2,508.8 2,095.6 - ---------------------------------------------------------------------------- Operating Profit 72.9 52.0 151.2 79.8 Interest income 30.6 5.7 68.1 7.7 Interest expense (2.9) (18.6) (5.9) (33.7) Other, net (35.1) 479.5 (69.4) 470.4 - ---------------------------------------------------------------------------- Income from Continuing Operations Before Income Taxes and Minority Interests 65.5 518.6 144.0 524.2 Income taxes 23.3 207.5 54.7 209.7 Minority interests in net losses of subsidiaries 8.6 7.7 9.9 21.9 - ---------------------------------------------------------------------------- Income from continuing operations 50.8 318.8 99.2 336.4 Income from discontinued operations, net of taxes - 0.3 - 1.3 - ---------------------------------------------------------------------------- Net Income 50.8 319.1 99.2 337.7 Adjustments to exclude the effect of GM purchase accounting adjustments (1) 5.3 5.3 10.6 10.6 - ---------------------------------------------------------------------------- Net Earnings Used for Computation of Available Separate Consolidated Net Income $56.1 $324.4 $109.8 $348.3 ============================================================================ Available Separate Consolidated Net Income (2) $14.7 $82.0 $28.7 $88.0 ============================================================================ Net Earnings Attributable to General Motors Class H Common Stock on a Per Share Basis (2) $0.14 $0.81 $0.27 $0.87 ============================================================================ (1)Relates to General Motors' purchase of Hughes in 1985. (2)1997 amounts are presented on a pro forma basis. Historically, such amounts were calculated based on the financial performance of former Hughes, which consisted of the defense electronics, automotive electronics and telecommunications and space businesses. Since these financial statements relate only to the telecommunications and space businesses of former Hughes, the pro forma presentation is used to present the results that would have been achieved relative to the GM Class H common stock had the results been calculated based only upon such telecommunications and space businesses. - 35 - BALANCE SHEET (Dollars in Millions) June 30, December 31, ASSETS 1998 1997 - ----------------------------------------------------------------------------- Current Assets Cash and cash equivalents $1,592.8 $2,783.8 Accounts and notes receivable 892.6 662.8 Contracts in process 564.0 575.6 Inventories 581.8 486.4 Prepaid expenses, deferred income taxes and other 376.8 297.3 - ---------------------------------------------------------------------------- Total Current Assets 4,008.0 4,805.9 Satellites - Net 2,897.5 2,643.4 Property - Net 927.6 889.7 Net Investment in Sales-type Leases 231.1 337.6 Intangible Assets - Net 3,514.3 2,954.8 Investments and Other Assets 1,160.4 1,132.4 - ---------------------------------------------------------------------------- Total Assets $12,738.9 $12,763.8 ============================================================================ LIABILITIES AND STOCKHOLDER'S EQUITY - ---------------------------------------------------------------------------- Current Liabilities Accounts payable $655.4 $472.8 Advances on contracts 244.1 209.8 Deferred revenues 121.8 110.6 Notes payable 100.0 - Accrued liabilities 581.0 689.4 - ---------------------------------------------------------------------------- Total Current Liabilities 1,702.3 1,482.6 Long-Term Debt 787.9 637.6 Deferred Gains on Sales and Leasebacks 138.6 191.9 Accrued Operating Leaseback Expense 54.1 100.2 Postretirement Benefits Other Than Pensions 155.7 154.8 Other Liabilities and Deferred Credits 670.1 706.4 Deferred Income Taxes 636.5 570.8 Minority Interests 373.7 607.8 Stockholder's Equity 8,220.0 8,311.7 - ---------------------------------------------------------------------------- Total Liabilities and Stockholder's Equity $12,738.9 $12,763.8 ============================================================================ Holders of GM Class H common stock have no direct rights in the equity or assets of Hughes, but rather have rights in the equity and assets of General Motors (which includes 100% of the stock of Hughes). - 36 - PRO FORMA SELECTED SEGMENT DATA* (Dollars in Millions) Six Months Ended Second Quarter June 30, ---------------- ---------------- 1998 1997 1998 1997 - ------------------------------------------------------------------------- DIRECT-TO-HOME BROADCAST Total Revenues $401.5 $281.7 $789.4 $517.3 Operating Loss $(40.2) $(47.9) $(71.8) $(115.4) Depreciation and Amortization $23.5 $23.0 $46.0 $41.3 Capital Expenditures $34.4 $18.8 $48.1 $30.2 - -------------------------------------------------------------------------- SATELLITE SERVICES Total Revenues $191.1 $134.1 $384.1 $261.7 Operating Profit $74.4 $62.9 $160.1 $131.2 Operating Profit Margin 38.9% 46.9% 41.7% 50.1% Depreciation and Amortization $58.7 $30.1 $113.2 $43.9 Capital Expenditures (1) $116.9 $18.1 $366.5 $352.7 - -------------------------------------------------------------------------- SATELLITE MANUFACTURING Total Revenues $674.8 $584.5 $1,299.1 $1,143.8 Operating Profit $60.0 $53.8 $115.1 $106.6 Operating Profit Margin 8.9% 9.2% 8.9% 9.3% Depreciation and Amortization $11.5 $9.1 $22.2 $17.8 Capital Expenditures $21.6 $24.5 $32.3 $40.1 - -------------------------------------------------------------------------- NETWORK SYSTEMS Total Revenues $221.7 $210.9 $406.4 $393.4 Operating Loss $(25.2) $(1.0) $(37.1) $(16.3) Depreciation and Amortization $9.9 $8.9 $18.4 $16.1 Capital Expenditures $10.9 $10.8 $15.7 $17.7 - -------------------------------------------------------------------------- ELIMINATIONS and OTHER Total Revenues $(120.1) $(59.8) $(219.0) $(140.8) Operating Profit (Loss) $9.2 $(10.5) $(4.5) $(15.7) Depreciation and Amortization $(3.4) $(4.1) $(1.9) $(1.8) Capital Expenditures $10.0 $52.8 $135.9 $(221.7) =========================================================================== * The Financial Statements reflect the application of purchase accounting adjustments related to GM's acquisition of Hughes. However, as provided in the General Motors' Restated Certificate of Incorporation, the earnings attributable to GM Class H common stock for purposes of determining the amount available for the payment of dividends on GM Class H common stock specifically excludes such adjustments. In order to provide additional analytical data, the above unaudited pro forma selected segment data, which exclude the purchase accounting adjustments related to GM's acquisition of Hughes, are presented. (1)Includes expenditures related to satellites amounting to $46.6 million, $15.0 million, $192.2 million and $347.1 million, respectively. Also included in 1998 is $59.0 million for the second quarter and $155.6 million for the six months related to the early buy-out of satellite sale-leasebacks. - 37 - GMAC NEWS RELEASE GMAC ANNOUNCES 1998 SECOND QUARTER EARNINGS DETROIT -- General Motors Acceptance Corporation (GMAC) reported second quarter 1998 consolidated net income of $365 million, up 8% from $338 million earned in the second quarter of 1997, GMAC President John D. Finnegan announced today. Net income for the first six months of 1998 was $714 million, up from $710 million reported in the same period a year ago. For the quarter, net income from automotive financing operations totaled $288 million, up 18% from $245 million earned in the second quarter of 1997. Earnings were higher due to an increase in financing volumes and a lower effective income tax rate, partially offset by lower net financing margins. GMAC Insurance Holdings, Inc. generated net income of $54 million in the second quarter of 1998, up 28% from $42 million earned in the same period last year. Earnings were higher due to increased capital gains, partially offset by higher weather-related losses on dealership inventory coverages. GMAC Mortgage Group, Inc. generated net income of $23 million in the second quarter of 1998 compared to $51 million earned in the same period last year. Mortgage Group earnings were lower due to higher than anticipated prepayment speeds primarily on interest-only products. * * * SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GENERAL MOTORS CORPORATION -------------------------- (Registrant) Date July 14, 1998 ----------------- By s/Peter R. Bible ------------------------------- (Peter R. Bible, Chief Accounting Officer) - 38 - -----END PRIVACY-ENHANCED MESSAGE-----