-----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, BOa2GoPAV+mL0WC0sbM5Um+6x3wDhKxLvQhvmnymwQQAGffIO3iEoYwxFQq47ztN eu6jE96WQCKym83+dwzwKQ== 0000040730-98-000071.txt : 19981014 0000040730-98-000071.hdr.sgml : 19981014 ACCESSION NUMBER: 0000040730-98-000071 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981013 ITEM INFORMATION: FILED AS OF DATE: 19981013 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: 98724740 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 PRESS RELEASES FOR 3RD QUARTER SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) October 13, 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 October 13, 1998, a news release was issued on the subject of third 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 third quarter earnings of Hughes Electronics Corporation (Hughes) dated October 12, 19989 and General Motors Acceptance Corporation (GMAC) dated October 13, 1998, respectively, were as follows: GM NEWS RELEASE GM REPORTS STRIKE-IMPACTED THIRD-QUARTER NET LOSS OF $809 MILLION CORPORATION EXPECTS STRONG FOURTH QUARTER PERFORMANCE DETROIT -- General Motors Corporation (GM) reported today a strike-impacted net loss for the third quarter of 1998 totaling $809 million, or a loss of $1.28 per share of GM $1-2/3 par value common stock. That compares with income of $973 million, or $1.29 per share, in the third 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 third-quarter-1998 results include the impact of production losses resulting from strikes at two Flint, Mich., plants, which had an unfavorable after-tax impact of $1.2 billion, or $1.89 per share, (see Strike Related Impact). Results also include an after-tax loss of $271 million, or $0.41 per share, related to divestitures involving the Delphi seating, coil-spring and lighting businesses (see Delphi). Excluding the above-mentioned Delphi transactions, the loss in the third quarter of 1998 totaled $538 million, or a loss of $0.87 per share. Excluding the Delphi transactions and the strike impact, GM's income in the third quarter of 1998 would have totaled $697 million, or a favorable $1.02 per share. Consolidated net sales and revenues in the third quarter of 1998 totaled $34.4 billion, compared with $40.2 billion in the same period of 1997, adjusted to reflect the effect of the Hughes Transactions. "We're going all out to rebuild the momentum we had developed before the strikes crippled our production during the summer," GM Chairman and Chief Executive Officer John F. Smith, Jr., said. "We're running our North American plants all out and we're aggressively taking on the competition." The third-quarter was unfavorably impacted by the strikes, the Delphi transactions, the changeover to production of GM's new family of full-size pickup trucks, and continued economic turmoil in Latin America. Smith emphasized, however, that, "As a result of our aggressive cost-reduction focus, strong sales of our new models, and the recent streamlining of our global automotive operations, we expect strong results in the fourth quarter and a continued strengthening trend into 1999." - 2- Smith said, "Our outlook for continued strong sales in the key North American and European markets gives us an opportunity to continue building momentum during the balance of the year and into 1999." He cautioned, however, that the effects of the economic turmoil and uncertainty in Asia and Latin America will be a challenge to the corporation's performance globally. Unless otherwise noted, corporate and sector data in the remainder of this release exclude the above mentioned strike-related impact, and the Delphi transactions. The 1997 reported amounts are adjusted to reflect changes resulting from the completion of the Hughes Transactions in December of 1997. (See Strike Related Impact, Delphi, and Highlights.) Following is a summary of results from the GM business sectors in the third quarter of 1998: - GM Automotive Operations' income totaled $341 million in the third quarter of 1998, compared with $560 million in the third quarter of 1997. (See regional breakout in GM Automotive Operations and Highlights.) - Delphi Automotive Systems' (Delphi) income totaled $56 million in the third quarter of 1998, compared with $123 million in the third quarter of 1997. - General Motors Acceptance Corporation's (GMAC) income totaled $313 million in the third quarter of 1998, compared with $312 million in the third quarter of 1997. - Hughes Electronics Corporation's (Hughes) third-quarter-1998 income totaled $43 million, compared with $53 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 the Delphi transactions, consolidated income in the third quarter of 1998 totaled $697 million, or $1.02 per share. That compares with $973 million, or $1.29 per share in the third quarter of 1997. The corporation's pretax income was $691 million in the third quarter of 1998, compared with $899 million in the third quarter of 1997. The corporation's after-tax net-profit margin -- income as a percentage of net sales and revenues -- was 2.0 percent in the third quarter of 1998, compared with 2.7 percent in the third quarter of 1997. Cash, marketable securities and assets of the Voluntary Employees' Beneficiary Association (VEBA) trust invested in fixed-income securities totaled $11.5 billion at Sept. 30, 1998, compared with $14.6 billion at Sept. 30, 1997, and $12.1 billion at June 30, 1998. "With our operations running full out, strong cash generation will make it possible for us to rebuild our cash position to the $13 billion level necessary to support capital-spending programs, adequately fund pension plans, and keep us in a good position to weather any future downturn," Smith said. - 3 - GM AUTOMOTIVE OPERATIONS Excluding the impact of the strikes, GM Automotive Operations' third-quarter-1998 income totaled $341 million. That compares with $560 million in the third quarter of 1997. The unfavorable strike-related impact in the third quarter of 1998 totaled $965 million (see Strike Related Impact). "We are quickly streamlining GM's automotive operations worldwide as a result of the recent creation of a single, unified global automotive organization that will enable us to fully leverage GM's global capabilities," said GM President and Chief Operating Officer G. Richard Wagoner, Jr. "We're focused on becoming a faster, leaner organization committed to growing our business around the world. "The strikes severely impacted our third-quarter performance in North America, but we were able to ramp up production and sales very quickly following the strike, and our August and September financial performance was strong. We're focused on keeping that going in the fourth quarter," Wagoner said. GM Automotive Operations pretax income totaled $595 million in the third quarter of 1998, compared with $776 million in the prior-year period. The net-profit margin for Automotive Operations was 1.1 percent in the third quarter of 1998, compared with 1.7 percent in the prior-year period. Following are results from the four regions that comprise GM Automotive Operations: - Excluding the impact of the strikes, income for GM North America totaled $353 million in the third quarter of 1998, compared with $423 million in the year-ago period. Pretax income totaled $645 million, compared with $608 million in the prior-year period. The net-profit margin was 1.5 percent, compared with 1.8 percent in the third-quarter-1997 period. - GM Europe's income totaled $50 million in the third quarter of 1998, compared with a loss of $21 million in the third quarter of 1997. Pretax income totaled $64 million, compared with $87 million in the third quarter of 1997. The net-profit margin was 0.8 percent, compared with a negative 0.4 percent in the prior-year period. - GM Latin America/Africa/Mid-East had a loss of $64 million in the third quarter of 1998, compared with income of $165 million in the third quarter of 1997. The pretax loss totaled $136 million, compared with pretax income of $154 million in the prior-year period. The net-profit margin was a negative 3.8 percent, compared with 7.3 percent in the third-quarter-1997 period. - GM Asia/Pacific's income totaled $2 million in the third quarter of 1998, compared with a loss of $7 million in the third quarter of 1997. Pretax income totaled $22 million, compared with a loss of $73 million in the third quarter of 1997. The net-profit margin was 0.3 percent, compared with a negative 1.0 percent in the year-ago period. - 4 - A number of factors affected performance in North America in addition to the strike. "Direct costs associated with the successful launch of our highly acclaimed new family of full-size pickup trucks -- the Chevrolet Silverado and GMC Sierra models -- and lower volumes due to the model changeover affected results along with incentive costs required to maintain a strong competitive position in the North American market," Wagoner said. "We're extremely pleased with the continued success of our cost-reduction initiatives, "Wagoner said. "These efforts allowed us to more than make up for the costs of the new product launches and higher incentives." GM vehicle deliveries in the United States, which were affected by the strike-related production losses, totaled 928,000 units in the third quarter of 1998, which resulted in a 24.2-percent share of the U.S. vehicle market share, compared with 1,253,000 units, and a 31.6-percent share in the third quarter of 1997. (See additional information in Highlights.) Wagoner said, "Dedication and hard work by the GM Europe team resulted in the successful introduction of the new Astra models, which have been well received in Europe. The European region continues to be a strong market and Opel/Vauxhall have maintained market leadership in Western Europe for passenger cars through the first nine months of 1998." The Asia/Pacific and Latin America/Africa/Mid-East regions were both affected by economic turmoil and uncertainties. "Our Latin American operations were strongly impacted by the economic problems in Brazil. GM operations there are our largest in the region and have delivered consistently strong financial performance in recent years," Wagoner said. "While our presence in the Asia-Pacific market is not as large, our business there also has been hurt by the economic turmoil in that region. However, both of these regions have significant long-term growth potential, and we continue to be optimistic about our long-term prospects." DELPHI AUTOMOTIVE SYSTEMS (DELPHI) Excluding the impact of the strikes, and a loss on divestitures, Delphi Automotive Systems' income totaled $56 million in the third quarter of 1998, compared with $123 million in the third quarter of 1997. The unfavorable strike-related impact in the third quarter of 1998 totaled $270 million (see Strike Related Impact). The after-tax loss on the divestiture transactions totaled $271 million. Delphi's pretax income totaled $67 million in the third quarter of 1998, compared with pretax income of $136 million in the prior-year period. Delphi's net-profit margin was 0.8 percent in the third quarter of 1998, compared with a net-profit margin of 1.7 percent in the prior-year period. "Aside from the impact of the divestitures and strikes, Delphi's third-quarter-1998 results reflect the impact of continuing economic downturns in the Latin American and Asia-Pacific regions, and competitive pressures that resulted in price reductions," said GM Executive Vice President and Delphi President J.T. Battenberg III. "These factors were offset by Delphi's continued aggressive cost-reduction efforts during the third quarter of 1998, particularly in the areas of manufacturing and material." He also noted the - 5 - previously mentioned divestitures, which comprised "the successful sale of Delphi's seating and coil-spring businesses and a definitive agreement regarding the divestiture of the lighting business." Battenberg said, "Delphi continues to accelerate sales to customers outside General Motors." Delphi reported that third-quarter-1998 sales outside GM's North American vehicle groups represented more than 37 percent of total sales, after adjusting for the strike impact, compared with approximately 36 percent of total sales in the third quarter of 1997, including joint ventures in both periods. STRIKE RELATED IMPACT Strikes by members of United Auto Workers Locals 659 and 651 in Flint, Mich., resulted in production shutdowns at two component plants on June 5 and June 11, 1998, respectively. Those work stoppages resulted in parts shortages that led to the shutdown of most of GM's North American assembly plants in June and July of 1998, and resulted in an estimated loss of 318,000 units of production from the beginning of the third quarter of 1998 to the point in which normal production levels were resumed. The work stoppages at both facilities were resolved July 28, 1998, when tentative agreements were reached. Both agreements were ratified by the rank and file July 29, 1998. The third quarter loss of production had an estimated aggregate unfavorable after-tax impact of $1.2 billion, or $1.89 per share, representing the combined effects of $965 million for GM Automotive Operations and $270 million for Delphi. This takes into account the recovery of some of the lost production units through the quick production ramp-up following the settlement and aggressive sales and marketing efforts in August and September. FORWARD LOOKING STATEMENTS This release and related management discussions with securities analysts, the media and others will contain certain forward-looking statements indicated by our use of the terms "expects," "outlook" and "forecast" and similar words. These forward-looking statements are made in an effort to assist the market in understanding General Motors and its results. Forward-looking statements are inherently predictive in nature and GM cannot assure or guarantee that actual results will not differ materially from its predictions. Important risk factors that could cause actual results to differ materially from those indicated by our predictions are detailed in the corporation's Annual Report on form 10-K for the year ended Dec. 31, 1997, in Part II, at page II-64, under the heading "Forward-Looking Statements." # # # HIGHLIGHTS ATTACHED - 6 - HIGHLIGHTS - Q3 Financial Results (Dollars in Millions Except Per Share Amounts) Three Months Ended September 30, ------------------------------------ Adjusted Adjusted 1998 1998 (1) 1997 1997 (1) -------- ------- ------- -------- Net sales and revenues Manufactured products $29,978 $29,978 $37,103 $35,382 Financial services 3,220 3,220 3,162 3,162 Other income 1,225 1,225 1,625 1,616 ------- -------- ------- ------- Total net sales and revenues $34,423 $34,423 $41,890 $40,160 ------- -------- ------- ------- Total net sales and revenues(6) $29,846 $29,846 $37,125 $35,404 Gross profit margin percentage(6) 11.4% 11.4% 15.2% 15.1% ............................................................. (Loss) Income before income taxes, minority interests and non-consolidated affiliates (6) $(1,730) $(1,300) $1,042 $899 Effective income tax rate(6) 34.0% 33.0% 27.7% 28.1% ............................................................. Consolidated net (loss) income $(809) $(538) $1,067 $973 Net profit margin(6) (2.7%) (1.8%) 2.9% 2.7% ............................................................. Earnings Attributable to Common Stocks $1-2/3 par value $(836) $964 Class H (2) $- $61 Class H (3) $11 $- ............................................................. Basic Earnings Per Share Attributable to Common Stocks $1-2/3 par value $(1.28) $(0.87) $1.35 $1.29 Class H (2) $- $- $0.60 Class H (3) $0.11 $0.11 $- $0.13 ............................................................. Diluted Earnings Per Share Attributable to Common Stocks $1-2/3 par value $(1.28) $(0.87) $1.34 $1.27 Class H (2) $- $- $0.60 Class H (3) $0.11 $0.11 $- $0.13 ............................................................. 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 Sept. 30, Dec. 31, Sept. 30, 1998 1997 1997 -------- ------- -------- $1-2/3 par value $19.49 $22.26 $30.17 Class H $11.69 $13.36 $15.09 .............................................................. See footnotes beginning on page 14. continues - 7 - HIGHLIGHTS - Q3 Adjusted for Special Items - with Financing and Insurance Operations on an Equity Basis (Dollars in Millions Except Per Share Amounts) Three Months Ended September 30, 1998 -------------------------------- Special Adjusted Reported Items (4) (1) --------- --------- -------- Net sales and revenues $29,846 $- $29,846 ------ ------ ------ Costs and expenses: Cost of sales 26,457 - 26,457 Selling, general, and admin. expenses 3,076 - 3,076 Depreciation and amort. expenses 1,672 - 1,672 ------ ------ ------ Total costs and expenses 31,205 - 31,205 ------ ------ ------ Operating (loss) income (1,359) - (1,359) Other income less income deductions (28) (430) 402 Interest expense 343 - 343 ------ ------ ------ (Loss) income before income taxes and minority interests (1,730) (430) (1,300) Income tax (benefit) expense (588) (159) (429) ------ ------ ------ (Loss) income after income taxes (1,142) (271) (871) Minority interests 10 - 10 Earnings of nonconsolidated affiliates 323 - 323 ------ ------ ------ Net (loss) income $(809) $(271) $(538) ====== ====== ====== $1-2/3 par value EPS from continuing operations Basic $(1.28) $(0.87) Diluted $(1.28) $(0.87) Gross profit margin 11.4% 11.4% Effective income tax rate 34.0% 33.0% Net profit margin (2.7%) (1.8%) See footnotes beginning on page 14. continues - 8 - HIGHLIGHTS - Q3 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 September 30, 1997 ---------------------------- Hughes Trans- Adjusted Reported actions (1) -------- ------- ------- Net sales and revenues $37,125 $1,721 $35,404 ------ ------ ------ Costs and expenses: Cost of sales 31,484 1,429 30,055 Selling, general, and admin.expenses 3,157 124 3,033 Depreciation and amort. expenses 1,830 44 1,786 ------ ------ ------ Total costs and expenses 36,471 1,597 34,874 ------ ------ ------ Operating income 654 124 530 Other income less income deductions 613 9 604 Interest expense (credit) 225 (10) 235 ------ ------ ------ Income before income taxes and minority interests 1,042 143 899 Income tax expense 289 36 253 ------ ------ ------ Income after income taxes 753 107 646 Minority interests 13 1 12 Earnings (loss) of noncons. affiliates 301 (14) 315 ------ ------ ------ Net income $1,067 $94 $973 ====== ====== ====== $1-2/3 par value EPS from continuing operations Basic $1.35 $1.29 Diluted $1.34 $1.27 Gross profit margin 15.2% 15.1% Effective income tax rate 27.7% 28.1% Net profit margin 2.9% 2.7% See footnotes beginning on page 14. continues - 9 - HIGHLIGHTS - Q3 Adjusted for Hughes Transactions and Special Items By Sector (Dollars in Millions) Three Months Ended September 30, 1998 -------------------------------- Special Adjusted Reported Items (4) (1) --------- --------- -------- GM North America (GMNA) $(612) $- $(612) GM Europe (GME) 50 - 50 GM Latin America/Africa/ Mid-East (GMLAAM) (64) - (64) GM Asia/Pacific (GMAP) 2 - 2 --- --- --- Total automotive (624) - (624) Delphi (485) 271 (214) Hughes 43 - 43 GMAC 313 - 313 Other(5) (56) - (56) --- --- --- Consolidated net income $(809) $271 $(538) === === === Three Months Ended September 30, 1997 -------------------------------- Hughes Trans- Adjusted Reported actions (1) -------- ------- -------- GMNA $423 $- $423 GME (21) - (21) GMLAAM 165 - 165 GMAP (7) - (7) --- --- --- Total automotive 560 - 560 Delphi 55 68 123 Hughes 240 (187) 53 GMAC 312 - 312 Other(5) (100) 25 (75) --- --- --- Consolidated net income $1,067 $(94) $973 ===== == === See footnotes beginning on page 14. continues - 10 - HIGHLIGHTS - Q3 Automotive Operations and Delphi Adjusted for Special Items (Dollars in Millions) Three Months Ended September 30, 1998 ---------------------------------------- GMNA GME GMLAAM GMAP Delphi ------ ----- ------ ------ ------ Reported -------- Net sales and revenues $18,496 $6,227 $1,701 $671 $6,015 ------ ----- ----- --- ----- Pre-tax (loss) income (911) 64 (136) 22 (798) Income tax (benefit) expense (299) 18 (45) 3 (297) Equity income (loss) and minority interests - 4 27 (17) 16 --- -- -- -- --- Net (loss) income $(612) $50 $(64) $2 $(485) === == == == === Net (loss) profit margin (3.3%) 0.8% (3.8%) 0.3% (8.1%) Effective income tax rate 32.8% 28.1% 33.1% 13.6% 37.2% Special Items (4) ------------- Net sales and revenues $- $- $- $- $- ------ ----- ----- ----- ----- Pre-tax income - - - - 430 Income tax expense - - - - 159 Equity income and minority interests - - - - - ------ ----- ----- ----- ----- Net income $- $- $- $- $271 ====== ===== ===== ===== ===== Adjusted (1) -------- Net sales and revenues $18,496 $6,227 $1,701 $671 $6,015 ------ ----- ----- --- ----- Pre-tax (loss) income (911) 64 (136) 22 (368) Income tax (benefit) expense (299) 18 (45) 3 (138) Equity income and minority interests - 4 27 (17) 16 ------ ----- ----- ----- ----- Net (loss) income $(612) $50 $(64) $2 $(214) ====== ===== ===== ===== ===== Net (loss) profit margin (3.3%) 0.8% (3.8%) 0.3% (3.6%) Effective income tax rate 32.8% 28.1% 33.1% 13.6% 37.5% See footnotes beginning on page 14. continues - 11 - HIGHLIGHTS - Q3 Automotive Sectors and Delphi Adjusted for Hughes Transactions (Dollars in Millions) Three Months Ended September 30, 1997 ---------------------------------------- GMNA GME GMLAAM GMAP Delphi ------ ----- ------ ------ ------ Reported -------- Net sales and revenues $24,047 $5,686 $2,273 $682 $6,044 ------ ----- ----- --- ----- Pre-tax income (loss) 608 87 154 (73) 30 Income tax expense (benefit) 172 48 14 (15) (6) Equity (loss) income and minority interests (13) (60) 25 51 19 --- --- --- --- --- Net income $423 $(21) $165 $(7) $55 === === === === === Net profit margin 1.8% (0.4%) 7.3% (1.0%) 0.9% Effective income tax rate 28.3% 55.2% 9.1% 20.5% (20.0%) Hughes Transactions ------------------- Net sales and revenues $- $- $- $- $1,139 ------ ----- ----- --- ----- Pre-tax income - - - - 106 Income tax expense - - - - 41 Equity income and minority interests - - - - 3 ------ ----- ----- --- ----- Net income $- $- $- $- $68 ====== ===== ===== === ===== Adjusted (1) -------- Net sales and revenues $24,047 $5,686 $2,273 $682 $7,183 ------ ------ ----- --- ----- Pre-tax income (loss) 608 87 154 (73) 136 Income tax expense (benefit) 172 48 14 (15) 35 Equity (loss) income and minority interests (13) (60) 25 51 22 ------ ------ ----- --- ----- Net income $423 $(21) $165 $(7) $123 ====== ====== ===== === ===== Net profit margin 1.8% (0.4%) 7.3% (1.0%) 1.7% Effective income tax rate 28.3% 55.2% 9.1% 20.5% 25.7% See footnotes beginning on page 14. continues - 12 - HIGHLIGHTS - Q3 Operating Information Three Months Ended September 30, ---------------------- 1998 1997 --------- ---------- Worldwide Wholesale Sales (Units in 000s) United States: Cars 527 651 Trucks 367 489 ------- ------- Total United States 894 1,140 Canada, Mexico and Other 116 142 ------- ------- Total GM North America 1,010 1,282 ------ ------ GME 534 448 GMLAAM 163 229 GMAP 114 167 ------- ------- Total International 811 844 ------ ------ Total Worldwide 1,821 2,126 ======= ======= .................................................... Vehicle Unit Deliveries (Units in 000s) United States Chevrolet - Cars 174 260 - Trucks 296 380 Pontiac 113 163 GMC 91 118 Buick 81 120 Oldsmobile 63 82 Saturn 62 70 Cadillac 39 52 Other 9 8 ------ ------ Total United States 928 1,253 Canada, Mexico and Other 160 158 ------ ------ Total GM North America 1,088 1,411 ------ ------ GME 466 456 GMLAAM 162 215 GMAP 119 149 ------ ------ Total International 747 820 ------ ------ Total Worldwide 1,835 2,231 ====== ====== .................................................... Market Share United States Cars 25.7% 33.7% Trucks 22.4% 29.1% Total 24.2% 31.6% Western Europe 10.6% 11.0% Latin America 19.8% 20.3% Asia and Pacific 4.4% 4.5% Total Worldwide 14.2% 16.6% .................................................... U.S. Retail/Fleet Mix % Fleet Sales - Cars 24.3% 22.5% % Fleet Sales - Trucks 9.7% 10.0% Total Vehicles 17.8% 17.3% .................................................... Days Supply of Inventory -- U.S. Gross Landed Stock Cars 59 69 Trucks 67 90 .................................................... Capacity Utilization % U.S. and Canada (2-shift rated) 67.3% 89.9% .................................................... Retail Incentives($ per unit) GMNA $1,732 $992 .................................................... See footnotes beginning on page 14. continues - 13 - HIGHLIGHTS - Q3 Operating Information (Dollars in Millions Except Per Share Amounts) Three Months Ended September 30, ---------------------- 1998 1997 --------- ---------- Depreciation and amortization (6) Depreciation $1,053 $1,081 Amortization of special tools 589 690 Amortization of intangible assets 30 59 ----- ----- $1,672 $1,830 ===== ===== .................................................... Worldwide Employment at September 30 (in 000s)(7) GMNA 229 240 GME 81 79 GMLAAM 25 27 GMAP 10 10 Delphi 199 205 Hughes 15 16 GMAC 23 18 Other 12 11 --- --- Total 594 606 --- --- .................................................... Worldwide Payrolls (7) $6,099 $6,885 .................................................... (1) Adjusted amounts represent the reported amounts less the effects of special items and Hughes Transactions. The adjusted amounts for 1998 include the unfavorable effects of strike-related work stoppages. The unfavorable after-tax impact of the work stoppages was $1.2 billion, or $1.89 basic per share of $1-2/3 par value common stock, in 1998. The unfavorable after-tax impacts for GMNA and Delphi were $965 million and $270 million, respectively, in 1998. (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 third quarter 1998 results included a pre-tax loss of $430 ($271 after-tax, or $0.41 basic per share of $1-2/3 par value common stock) related to the sale of the Delphi seating, coil-spring and lighting businesses. (5) 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. (6) Calculated with financing and insurance operations on an equity basis. (7) 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. - 14 - HIGHLIGHTS - 9 Months Financial Results (Dollars in Millions Except Per Share Amounts) Nine Months Ended September 30, ------------------------------------ Adjusted Adjusted 1998 1998 (1) 1997 1997 (1) -------- ------- ------- -------- Net sales and revenues Manufactured products $100,115 $100,115 $114,267 $109,071 Financial services 9,661 9,661 9,563 9,563 Other income 5,119 5,119 5,447 4,693 ------- ------- ------- ------- Total net sales and revenues $114,895 $114,895 $129,277 $123,327 ------- -------- ------- ------- Total net sales and revenues(8) $99,735 $99,735 $114,323 $109,127 Gross profit margin percentage(8) 14.4% 14.4% 16.4% 16.4% ............................................................. Income before income taxes, minority interests and non-consolidated affiliates (8) $185 $689 $5,798 $4,742 Effective income tax rate (8) 34.1% 36.6% 33.3% 34.3% ............................................................. Consolidated net income $1,184 $1,499 $4,961 $4,243 Net profit margin(8) 1.2% 1.5% 4.3% 3.9% ............................................................. Earnings Attributable to Common Stocks $1-2/3 par value $1,096 $4,622 Class H (2) $- $257 Class H (3) $40 $- ............................................................. Basic Earnings Per Share Attributable to Common Stocks $1-2/3 par value $1.65 $2.13 $6.35 $5.67 Class H (2) $- $- $2.54 Class H (3) $0.38 $0.38 $- $0.20 ............................................................. Diluted Earnings Per Share Attributable to Common Stocks $1-2/3 par value $1.60 $2.08 $6.28 $5.60 Class H (2) $- $- $2.54 Class H (3) $0.38 $0.38 $- $0.20 ............................................................. Cash Dividends Per Share of Common Stocks $1-2/3 par value $1.50 $1.50 Class H (2) $- $0.75 Class H (3) $- $- .............................................................. See footnotes beginning on page 22. continues - 15 - HIGHLIGHTS - 9 Months Adjusted for Special Items - with Financing and Insurance Operations on an Equity Basis (Dollars in Millions Except Per Share Amounts) Nine Months Ended September 30, 1998 -------------------------------- Special Adjusted Reported Items (4) (1) --------- --------- -------- Net sales and revenues $99,735 $- $99,735 ------ ------ ------ Costs and expenses: Cost of sales 85,399 74 85,325 Selling, general, and admin. expenses 9,357 - 9,357 Depreciation and amort. expenses 5,082 - 5,082 ------ ------ ------ Total costs and expenses 99,838 74 99,764 ------ ------ ------ Operating (loss) income (103) (74) (29) Other income less income deductions 1,208 (430) 1,638 Interest expense 920 - 920 ------ ------ ------ Income (loss) before income taxes and minority interests 185 (504) 689 Income tax expense (benefit) 63 (189) 252 ------ ------ ------ Income (loss) after income taxes 122 (315) 437 Minority interests 13 - 13 Earnings of nonconsolidated affiliates 1,049 - 1,049 ------ ------ ------ Net income (loss) $1,184 $(315) $1,499 ====== ====== ====== $1-2/3 par value EPS from continuing operations Basic $1.65 $2.13 Diluted $1.60 $2.08 Gross profit margin 14.4% 14.4% Effective income tax rate 34.1% 36.6% Net profit margin 1.2% 1.5% See footnotes beginning on page 22. continues - 16 - HIGHLIGHTS - 9 Months Adjusted for Hughes Transactions and Special Items - with Financing and Insurance Operations on an Equity Basis (Dollars in Millions Except Per Share Amounts) Nine Months Ended September 30, 1997 ------------------------------------ Hughes Special Trans- Items Adjusted Reported actions (5)(6) (1) -------- ------- ------- -------- Net sales and revenues $114,323 $5,196 $- $109,127 ------- ------ ------ ------- Costs and expenses: Cost of sales 95,586 4,271 80 91,235 Selling, general, and admin.expenses 9,331 430 - 8,901 Depreciation and amort. expenses 5,627 127 - 5,500 ------ ------ ------ ------ Total costs and expenses 110,544 4,828 80 105,636 ------- ------ ------ ------- Operating income (loss) 3,779 368 (80) 3,491 Other income less income deductions 2,682 48 706 1,928 Interest expense (credit) 663 (14) - 677 ------ ------ ------ ------ Income before income taxes and minority interests 5,798 430 626 4,742 Income tax expense 1,928 103 200 1,625 ------ ------ ------ ------ Income after income taxes 3,870 327 426 3,117 Minority interests 50 - - 50 Earnings (loss) of noncons. affiliates 1,041 (35) - 1,076 ------ ------ ------ ------ Net income $4,961 $292 $426 $4,243 ====== ====== ====== ====== $1-2/3 par value EPS from continuing operations Basic $6.35 $5.67 Diluted $6.28 $5.60 Gross profit margin 16.4% 16.4% Effective income tax rate 33.3% 34.3% Net profit margin 4.3% 3.9% See footnotes beginning on page 22. continues - 17 - HIGHLIGHTS - 9 Months Adjusted for Hughes Transactions and Special Items By Sector (Dollars in Millions) Nine Months Ended September 30, 1998 -------------------------------- Special Adjusted Reported Items (4) (1) --------- --------- -------- GMNA $18 $- $18 GME 273 44 317 GMLAAM 38 - 38 GMAP (26) - (26) --- --- --- Total automotive 303 44 347 Delphi (138) 271 133 Hughes 153 - 153 GMAC 1,027 - 1,027 Other(8) (161) - (161) ----- --- ----- Consolidated net income $1,184 $315 $1,499 ===== === ===== Nine Months Ended September 30, 1997 ---------------------------------------- Hughes Special Trans- Items Adjusted Reported actions (5)(6) (1) -------- ------- ------- ------- GMNA $1,661 $- $- $1,661 GME 440 - (158) 282 GMLAAM 475 - - 475 GMAP 27 - - 27 ----- --- --- ----- Total automotive 2,603 - (158) 2,445 Delphi 545 249 50 844 Hughes 1,017 (616) (318) 83 GMAC 1,022 - - 1,022 Other(8) (226) 75 - (151) --- --- --- --- Consolidated net income $4,961 $(292) $(426) $4,243 ===== === === ===== See footnotes beginning on page 22. continues - 18 - HIGHLIGHTS - 9 Months Automotive Operations and Delphi Adjusted for Special Items (Dollars in Millions) Nine Months Ended September 30, 1998 --------------------------------------- GMNA GME GMLAAM GMAP Delphi ------ ----- ------ ------ ------ Reported -------- Net sales and revenues $66,289 $17,851 $5,646 $2,155 $20,679 ------ ------ ----- ----- ------ Pre-tax (loss) income (50) 511 (103) 20 (338) Income tax expense (benefit) (48) 238 (74) 7 (157) Equity income and minority interests 20 - 67 (39) 43 ------ ----- ----- ----- ----- Net income $18 $273 $38 $(26) $(138) ====== ===== ===== ===== ===== Net profit (loss) margin 0.0% 1.5% 0.7% (1.2%) (0.7%) Effective income tax rate 96.0% 46.6% 71.8% 35.0% 46.4% Special Items (4) ------------- Net sales and revenues $- $- $- $- $- ------ ----- ----- ----- ----- Pre-tax income - 74 - - 430 Income tax expense - 30 - - 159 Equity income and minority interests - - - - - ------ ----- ----- ----- ----- Net income $- $44 $- $- $271 ====== ===== ===== ===== ===== Adjusted (1) -------- Net sales and revenues $66,289 $17,851 $5,646 $2,155 $20,679 ------ ------ ----- ----- ------ Pre-tax (loss)income (50) 585 (103) 20 92 Income tax (benefit) expense (48) 268 (74) 7 2 Equity income and minority interests 20 - 67 (39) 43 ------ ----- ----- ----- ----- Net income $18 $317 $38 $(26) $133 ====== ===== ===== ===== ===== Net (loss) profit margin 0.0% 1.8% 0.7% (1.2%) 0.6% Effective income tax rate % 96.0% 45.8% 71.8% 35.0% 2.2% See footnotes beginning on page 22. continues - 19 - HIGHLIGHTS - 9 Months Automotive Sectors and Delphi Adjusted for Hughes Transactions and Special Items (Dollars in Millions) Nine Months Ended September 30, 1997 --------------------------------------- GMNA GME GMLAAM GMAP Delphi ------ ----- ------ ------ ------ Reported -------- Net sales and revenues $74,729 $18,003 $6,488 $2,144 $19,486 ------ ------ ----- ----- ------ Pre-tax income(loss) 2,418 951 468 (51) 735 Income tax expense (benefit) 775 382 76 (14) 236 Equity income and minority interests 18 (129) 83 64 46 ----- ---- ----- ----- ----- Net income $1,661 $440 $475 $27 $545 ===== ==== ===== ===== ===== Net profit margin 2.2% 2.4% 7.3% 1.3% 2.8% Effective income tax rate 32.1% 40.2% 16.2% 27.5% 32.1% Hughes Transactions ------------------- Net sales and revenues $- $- $- $- $3,882 ------ ------ ------ ----- ----- Pre-tax income - - - - 392 Income tax expense - - - - 150 Equity income and minority interests - - - - 7 ------ ------ ------ ----- ----- Net income $- $- $- $- $249 ====== ====== ====== ===== ===== Special Items ------------- Net sales and revenues $- $- $- $- $- ------ ------ ------ ----- ----- Pre-tax income (loss) - (216) - - 80 Income tax expense (benefit) - (58) - - 30 Equity income and minority interests - - - - - ------ ------ ------ ----- ----- Net income (loss) $- $(158) $- $- $50 ====== ====== ====== ===== ===== Adjusted (1) -------- Net sales and revenues $74,729 $18,003 $6,488 $2,144 $23,368 ------ ------ ------ ----- ----- Pre-tax income (loss) 2,418 735 469 (51) 1,207 Income tax expense (benefit) 775 324 76 (14) 416 Equity income and minority interests 18 (129) 83 64 53 ------ ------ ------ ----- ----- Net income $1,661 $282 $475 $27 $844 ====== ====== ====== ===== ===== Net profit margin 2.2% 1.6% 7.3% 1.3% 3.6% Effective income tax rate 32.1% 44.1% 16.2% 27.5% 34.5% See footnotes beginning on page 22. continues - 20 - HIGHLIGHTS - 9 Months Operating Information Nine Months Ended September 30, ---------------------- 1998 1997 --------- ---------- Worldwide Wholesale Sales (Units in 000s) United States: Cars 1,650 2,054 Trucks 1,435 1,579 ------- ------- Total United States 3,085 3,633 Canada, Mexico and Other 464 467 ------- ------- Total GM North America 3,549 4,100 ------- ------- GME 1,540 1,379 GMLAAM 521 598 GMAP 328 485 ------- ------- Total International 2,389 2,462 ------ ------ Total Worldwide 5,938 6,562 ======= ======= .................................................... Vehicle Unit Deliveries (Units in 000s) United States Chevrolet - Cars 668 765 - Trucks 1,168 1,122 Pontiac 403 477 GMC 355 351 Buick 296 325 Oldsmobile 232 228 Saturn 179 199 Cadillac 131 139 Other 22 22 ------ ------ Total United States 3,454 3,628 Canada, Mexico and Other 493 457 ------ ------ Total GM North America 3,947 4,085 ------ ------ GME 1,414 1,414 GMLAAM 522 564 GMAP 348 455 ------ ------ Total International 2,284 2,433 ------ ------ Total Worldwide 6,231 6,518 ====== ====== .................................................... Market Share United States Cars 29.6% 32.5% Trucks 27.9% 28.8% Total 28.8% 30.8% Western Europe 10.5% 11.3% Latin America 20.7% 19.1% Asia and Pacific 4.2% 4.4% Total Worldwide 15.7% 16.1% .................................................... U.S. Retail/Fleet Mix % Fleet Sales - Cars 24.0% 25.1% % Fleet Sales - Trucks 13.7% 13.2% Total Vehicles 19.2% 20.0% .................................................... Capacity Utilization % U.S. and Canada (2-shift rated) 77.6% 92.5% .................................................... Retail Incentives($ per unit) GMNA $1,558 $971 .................................................... See footnotes beginning on page 22. continues - 21 - HIGHLIGHTS - 9 Months Operating Information (Dollars in Millions Except Per Share Amounts) Nine Months Ended September 30, ---------------------- 1998 1997 --------- ---------- Depreciation and amortization (8) Depreciation $3,222 $3,208 Amortization of special tools 1,776 2,267 Amortization of intangible assets 84 152 ----- ----- $5,082 $5,627 ===== ===== .................................................... Worldwide Payrolls (9) $19,872 $21,031 .................................................... (1) Adjusted amounts represent the reported amounts less the effects of special items and Hughes Transactions. (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 third quarter 1998 results included a pre-tax loss of $430 ($271 after-tax, or $0.41 basic per share of $1-2/3 par value common stock) related to the sale of the Delphi seating, coil spring and lighting businesses. 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 basic per share of $1-2/3 par value common stock),related to the sale of GM Europe's equity interest in Avis Europe. (7) 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. (8) Calculated with financing and insurance operations on an equity basis. (9) 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. - 22 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 1998 1997 1998 1997 ------- ------- ------ ------- (Dollars in Millions Except Per Share Amounts) Net sales and revenues Manufactured products $29,978 $37,103 $100,115 $114,267 Financial services 3,220 3,162 9,661 9,563 Other income 1,225 1,625 5,119 5,447 ------- ------- -------- -------- Total net sales and revenues 34,423 41,890 114,895 129,277 ------ ------ ------- ------- Costs and expenses Cost of sales and other operating charges, exclusive of items listed below 26,484 31,484 85,464 95,602 Selling, general, and administrative expenses 4,076 3,884 12,219 11,459 Depreciation and amortization expenses 2,874 3,030 8,712 9,196 Interest expense 1,754 1,508 5,137 4,469 Other deductions 499 388 1,644 956 ------ ------ ------- ------- Total costs and expenses 35,687 40,294 113,176 121,682 ------ ------ ------- ------- (Loss) Income before income taxes and minority interests (1,264) 1,596 1,719 7,595 Income tax (benefit) expense (451) 533 532 2,675 Minority interests 4 4 (3) 41 ------- ------- ------- ------- Net (loss) income (809) 1,067 1,184 4,961 Premium on exchange of preference stocks - 26 - 26 Dividends on preference stocks 16 16 48 56 ----- ------ ------ ------ (Loss) Earnings on common stocks $(825) $1,025 1,136 $4,879 === ===== ===== ===== Basic earnings per share attributable to common stocks (Loss) Earnings per share attributable to $1-2/3 par value $(1.28) $1.35 $1.65 $6.35 Earnings per share attributable to Class H (prior to its recapitalization on December 17, 1997) $0.60 $2.54 Earnings per share attributable to Class H (subsequent to its recapitalization on December 17, 1997) $0.11 $0.38 Diluted earnings per share attributable to common stocks (Loss) Earnings per share attributable to $1-2/3 par value $(1.28) $1.34 $1.60 $6.28 Earnings per share attributable to Class H (prior to its recapitalization on December 17, 1997) $0.60 $2.54 Earnings per share attributable to Class H (subsequent to its recapitalization on December 17, 1997) $0.11 $0.38 - 23 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Sept. 30, Sept. 30, 1998 Dec. 31, 1997 (Unaudited) 1997 (Unaudited) ----------- -------- ---------- (Dollars in Millions) ASSETS Cash and cash equivalents $7,961 $11,262 $10,406 Other marketable securities 8,688 11,722 10,823 ------ ------ ------ Total cash and marketable securities 16,649 22,984 21,229 Finance receivables - net 63,091 58,870 58,966 Accounts and notes receivable (less allowances) 10,419 7,493 7,223 Inventories (less allowances) 12,869 12,102 12,820 Deferred income taxes 22,306 22,478 19,588 Equipment on operating leases (less accumulated depreciation) 36,179 33,302 32,964 Property - net 37,329 34,567 38,520 Intangible assets - net 12,309 11,469 14,979 Other assets - net 26,494 25,623 26,846 -------- -------- -------- Total assets $237,645 $228,888 $233,135 ======= ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accounts payable (principally trade) $18,142 $15,782 $15,021 Notes and loans payable 102,460 93,027 90,914 Deferred income taxes 3,156 2,923 4,269 Postretirement benefits other than pensions 40,806 41,168 44,427 Pensions 7,219 7,043 7,100 Accrued expenses and other liabilities 50,340 50,490 46,869 -------- -------- -------- Total liabilities 222,123 210,433 208,600 ------- ------- ------- Minority interests 621 727 735 General Motors - obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of General Motors Series D 79 79 79 Series G 142 143 143 Redeemable preferred stock of subsidiary Stockholders' equity Preference stocks 1 1 1 Common stocks $1-2/3 par value (issued, 655,036,035; 693,456,394; and 707,772,699 shares) 1,092 1,156 1,180 Class H (issued, 102,648,686 shares) - - 10 Class H (issued, 105,959,765, and 103,885,803 shares) 11 10 - Capital surplus (principally additional paid-in capital) 12,769 15,369 16,211 Retained earnings 5,554 5,416 9,846 ------ ------- ------- Subtotal 19,427 21,952 27,248 Minimum pension liability adjustment (4,062) (4,062) (3,490) Accumulated foreign currency translation adjustments (1,097) (888) (727) Net unrealized gains on securities 412 504 547 ------ ------ ------ Accumulated other comprehensive loss (4,747) (4,446) (3,670) Total stockholders' equity 14,680 17,506 23,578 -------- -------- -------- Total liabilities and stockholders' equity $237,645 $228,888 $233,135 ======= ======= ======= - 24 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended Sept.30, -------------------------- 1998 1997 ------ ------- (Dollars in Millions) Net cash provided by operating activities $7,497 $13,123 ----- ------ Cash flows from investing activities Expenditures for property (7,043) (6,958) Investments in companies, net of cash acquired (569) (1,788) Investments in other marketable securities - acquisitions (23,248 (24,790) Investments in other marketable securities - liquidations 26,912 23,547 Finance receivables - acquisitions (112,962) (128,300) Finance receivables - liquidations 86,659 105,401 Proceeds from sales of finance receivables 21,922 20,512 Operating leases - acquisitions (18,281) (16,206) Operating leases - liquidations 11,961 10,138 Other (712) 721 ------ ------ Net cash used in investing activities (15,361) (17,723) ------ ------ Cash flows from financing activities Net increase (decrease) in loans payable 2,240 3,162 Increase in long-term debt 16,620 11,658 Decrease in long-term debt (10,795) (9,340) Proceeds from issuing common stocks 344 471 Repurchases of common stocks (3,071) (3,353) Cash dividends paid to stockholders (1,046) (1,252) ----- ----- Net cash provided by (used in) financing activities 4,292 1,346 ----- ----- Effect of exchange rate changes on cash and cash equivalents 271 (403) ------ ------ Net (decrease) increase in cash and cash equivalents (3,301) (3,657) ----- ----- Cash and cash equivalents at beginning of the period 11,262 14,063 ------ ------ Cash and cash equivalents at end of the period $7,961 $10,406 ===== ====== - 25 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES Consolidated Statements of Income With Financing and Insurance Operations on an Equity Basis (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ----------------- 1998 1997 1998 1997 ---- ---- ---- ---- (Dollars in Millions) Net sales and revenues $29,846 $37,125 $99,735 $114,323 ------ ------ ------ ------- Costs and expenses Cost of sales and other operating charges, exclusive of items listed below 26,457 31,484 85,399 95,586 Selling, general, and administrative expenses 3,076 3,157 9,357 9,331 Depreciation and amortization expenses 1,672 1,830 5,082 5,627 ------- ------- ------- -------- Total costs and expenses 31,205 36,471 99,838 110,544 ------ ------ ------ ------- Operating (loss) income (1,359) 654 (103) 3,779 Other income less income deductions (28) 613 1,208 2,682 Interest expense 343 225 920 663 ------ ------ ------ ------ (Loss) Income before income taxes, minority interests, and earnings of nonconsolidated affiliates (1,730) 1,042 185 5,798 Income tax (benefit) expense (588) 289 63 1,928 ------ ------ ------- ----- (Loss) Income before minority interests and earnings of nonconsolidated affiliates (1,142) 753 122 3,870 Minority interests 10 13 13 50 Earnings of nonconsolidated affiliates 323 301 1,049 1,041 ----- ------ ----- ----- Net (loss) income $(809) $1,067 $1,184 $4,961 === ===== ===== ===== Net profit margin (1) (2.7%) 2.9% 1.2% 4.3% - ------------------ (1) Net profit margin represents net income as a percentage of net sales and revenues - 26 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets With Financing and Insurance Operations on an Equity Basis (Unaudited) Sept. 30, Dec. 31, Sept. 30, 1998 1997 1997 ---------- -------- --------- (Dollars in Millions) ASSETS Cash and cash equivalents $7,885 $10,685 $9,930 Other marketable securities 601 3,826 4,669 ------ ------ ------ Total cash and marketable securities 8,486 14,511 14,599 Accounts and notes receivable (less allowances) Trade 6,076 5,164 5,627 Nonconsolidated affiliates 1,725 836 1,722 Inventories (less allowances) 11,751 12,102 12,820 Equipment on operating leases (less accumulated depreciation) 4,797 4,677 3,854 Deferred income taxes and other 6,300 6,278 4,989 ------- ------- ------- Total current assets 39,135 43,568 43,611 Equity in net assets of nonconsolidated affiliates 11,308 10,164 10,313 Deferred income taxes 20,676 20,721 20,341 Other investments and miscellaneous assets 13,646 13,564 13,926 Property - net 36,529 33,914 38,010 Intangible assets -net 11,525 10,752 14,803 -------- -------- -------- Total assets $132,819 $132,683 $141,004 ======= ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $12,760 $12,474 $11,871 Loans payable 1,854 656 1,766 Accrued liabilities and customer deposits 31,707 33,459 32,440 ------ ------ ------ Total current liabilities 46,321 46,589 46,077 Long-term debt 7,016 5,491 6,002 Capitalized leases 181 185 184 Postretirement benefits other than pensions 38,002 38,388 41,820 Pensions 5,679 4,271 4,275 Other liabilities and deferred income taxes 20,144 19,336 18,141 -------- -------- -------- Total liabilities 117,343 114,260 116,499 ------- ------- ------- Minority interests 575 695 705 General Motors - obligated mandatorily redeemable preferred securities of subsidiary trusts holding solely junior subordinated debentures of General Motors Series D 79 79 79 Series G 142 143 143 Stockholders' equity 14,680 17,506 23,578 -------- -------- -------- Total liabilities and stockholders' equity $132,819 $132,683 $141,004 ======= ======= ======= - 27 - GENERAL MOTORS CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows With Financing and Insurance Operations on an Equity Basis (Unaudited) Nine Months Ended September 30, ----------------- 1998 1997 ------ ------ (Dollars in Millions) Net cash provided by operating activities $2,616 $11,254 ----- ------ Cash flows from investing activities Expenditures for property (6,688) (6,648) Investments in companies, net of cash acquired (569) (1,788) Investments in other marketable securities - acquisitions (8,553) (11,083) Investments in other marketable securities - liquidations 11,777 10,056 Operating leases - acquisitions (4,382) (3,963) Operating leases - liquidations 4,092 2,981 Other (287) - ------ ------ Net cash used in investing activities (4,610) (10,445) ----- ------ Cash flows from financing activities Net increase (decrease) in loans payable 1,178 552 Increase in long-term debt 2,695 358 Decrease in long-term debt (1,178) (568) Proceeds from issuing common stocks 344 471 Repurchases of common stocks (3,071) (3,353) Cash dividends paid to stockholders (1,046) (1,252) ----- ----- Net cash used in financing activities (1,078) (3,792) ----- ----- Effect of exchange rate changes on cash and cash equivalents 272 (407) ----- ----- Net (decrease) increase in cash and cash equivalents (2,800) (3,390) ----- ----- Cash and cash equivalents at beginning of the period 10,685 13,320 ------ ------ Cash and cash equivalents at end of the period $7,885 $9,930 ===== ===== - 28 - HUGHES ELECTRONICS CORPORATION NEWS RELEASE El Segundo, Calif., October 12, 1998 - Hughes Electronics Corporation (Hughes) today reported that third quarter 1998 revenues increased 20.3% to $1,513.3 million compared with $1,258.3 million in the third quarter of 1997. Operating profit(1) in the quarter was $67.5 million compared with $124.2 million in the third quarter of 1997. Third quarter operating profit margin on the same basis was 4.5% in 1998 versus 9.9% in 1997. Third quarter earnings(1) were $42.9 million compared with last year's $52.4 million. Earnings per share on the same basis was $0.11 per share versus pro forma earnings per share(2) of $0.13 in 1997. Michael T. Smith, Hughes chairman and chief executive officer, said that "each of Hughes' four primary business segments contributed to the strong revenue growth. DIRECTV(R) accounted for most of the increase primarily due to continued record subscriber growth in the United States." In addition, he stated that increased sales of commercial satellites by Hughes Space and Communications and higher DIRECTV receiver equipment sales by Hughes Network Systems also contributed to the revenue growth. Mr. Smith attributed the decline in operating profit and net income primarily to the expected increase in DIRECTV operating losses resulting from higher sales and marketing expenditures to support the record subscriber growth. Also contributing to the earnings decline were DIRECTV Japan(TM) start-up losses and other increased expenses, including pension expense. The reduction in earnings was partially offset by lower interest expense and higher interest income. Nine-Month Financial Review For the first nine months of 1998, revenues increased 21.5% to $4,173.3 million compared with $3,433.7 million in 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 nine months of 1998 increased 6.8% to $229.3 million versus $214.6 million in 1997. Operating profit margin on the same basis was 5.5% compared with 6.2% in the first nine months of 1997. The decline in operating profit margin was principally due to a provision for estimated losses related to the bankruptcy filing by a Hughes Network Systems customer, goodwill amortization associated with the 1997 PanAmSat merger and subsequent additional investment by Hughes in 1998, and other increased expenses, including pension expense. Earnings(1) and earnings per share in the first nine months of 1998 were $152.7 million and $0.38, respectively. Excluding the one-time gain associated with the PanAmSat merger in May 1997, earnings and pro forma earnings per share(2) in the first nine months of 1997 were $82.4 million and $0.20 per share, respectively. The increases in earnings and earnings per share were principally a result of the aforementioned operating profit growth, increased interest income and lower interest expense, which more than offset the losses related to the start of service for DIRECTV Japan, a 32% Hughes-owned affiliate. - 29 - SEGMENT FINANCIAL REVIEW: THIRD QUARTER 1998 Direct-To-Home Broadcast For the quarter, revenues increased 33.6% to $459.1 million from $343.7 million in the third 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 $408 million, a 37% increase over last year's third quarter revenues of $298 million. With 303,000 net new subscribers in the third quarter, total DIRECTV subscribers grew to 4,058,000 in the United States as of September 30, 1998. The Company's Latin American DIRECTV subsidiary, Galaxy Latin America (GLA), had third quarter revenues of $37 million compared with $22 million in 1997. With the addition of 36,000 net new subscribers in the third quarter, total DIRECTV subscribers in Latin America were 423,000 as of September 30, 1998. In addition, DIRECTV Japan had a total of 181,900 subscribers by the end of the third quarter. The segment operating loss in the quarter was $61.8 million compared with an operating loss of $43.3 million in the third quarter of 1997. The larger operating loss in 1998 was principally due to higher sales and marketing expenditures that more than offset increased subscriber revenues. The third quarter 1998 operating loss for the domestic DIRECTV business was $31 million compared with $15 million last year, and GLA's third quarter operating loss was $30 million compared with $26 million last year. Satellite Services PanAmSat's third quarter 1998 revenues were up 9.5% to $186.5 million compared with $170.3 million in the prior year. Overall revenue from video services increased by 4 percent to $135.8 million, primarily due to the commencement of service agreements for full-time, as well as short-term, special events video distribution. Telecommunications services revenue increased by 16 percent to $40.7 million in the third quarter, in large part due to the growth in data and Internet-related service agreements. As a result of this revenue growth, PanAmSat's operating profit in the quarter rose 10.3% to $79.1 million from $71.7 million in 1997. Operating profit margin in the third quarter increased slightly to 42.4% compared with 42.1% one year ago. Satellite Systems For the third quarter of 1998, revenues increased 14.0% to $688.9 million from revenues of $604.3 million for the same period in 1997. The increase was principally due to higher commercial satellite sales to customers such as Thuraya Satellite Telecommunications Company, ICO Global Communications and American Mobile Radio Corporation. Driven primarily by the revenue growth, operating profit in the quarter increased 20.2% to $63.8 million from $53.1 million in the prior year. Operating profit margin in the quarter increased to 9.3% versus 8.8% last year. - 30 - Network Systems Third quarter revenues for Hughes Network Systems (HNS) increased 23.9% to $267.7 million compared with $216.0 million in the same period last year. The growth was primarily due to increased sales of DIRECTV receiver equipment, which more than offset lower international sales of private business networks. HNS operating profit in the quarter was $16.9 million compared with $22.4 million in the third quarter of 1997. Third quarter operating profit margin declined to 6.3% compared with 10.4% last year. The decline in operating profit and margin was principally a result of lower international sales of private business networks. BALANCE SHEET The cash balance of $1,509.7 million at September 30, 1998 declined $1,274.1 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 subsequent 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. - 31 - STATEMENT OF INCOME AND AVAILABLE SEPARATE CONSOLIDATED NET INCOME (Dollars in Millions Except Per Share Amounts) Nine Months Ended Third Quarter September 30, ---------------- ----------------- 1998 1997 1998 1997 - --------------------------------------------------------------------------- Revenues Product sales $872.8 $703.3 $2,327.5 $2,125.9 Direct broadcast, leasing and other services 640.5 555.0 1,845.8 1,307.8 - ---------------------------------------------------------------------------- Total Revenues 1,513.3 1,258.3 4,173.3 3,433.7 - ---------------------------------------------------------------------------- Operating Costs and Expenses Cost of products sold 659.5 550.3 1,782.4 1,711.4 Broadcast programming and other cost 284.6 243.9 800.2 598.4 Selling, general, and administrative expenses 390.4 261.9 1,052.2 714.0 Depreciation and amortization 111.3 78.0 309.2 195.3 Amortization of GM purchase accounting adjustments (1) 5.3 5.3 15.9 15.9 - ---------------------------------------------------------------------------- Total Operating Costs and Expenses 1,451.1 1,139.4 3,959.9 3,235.0 - ---------------------------------------------------------------------------- Operating Profit 62.2 118.9 213.4 198.7 Interest income 20.5 10.4 88.6 18.1 Interest expense (3.6) (24.4) (9.5) (58.1) Other, net (33.4) (17.8) (102.8) 452.6 - ---------------------------------------------------------------------------- Income from Continuing Operations Before Income Taxes and Minority Interests 45.7 87.1 189.7 611.3 Income taxes 17.4 34.8 72.1 244.5 Minority interests in net losses of subsidiaries 9.3 (5.1) 19.2 16.8 - ---------------------------------------------------------------------------- Income from continuing operations 37.6 47.2 136.8 383.6 (Loss) income from discontinued operations, net of taxes - (0.1) - 1.2 - ---------------------------------------------------------------------------- Net Income 37.6 47.1 136.8 384.8 Adjustments to exclude the effect of GM purchase accounting adjustments (1) 5.3 5.3 15.9 15.9 - ---------------------------------------------------------------------------- Net Earnings Used for Computation of Available Separate Consolidated Net Income $42.9 $52.4 $152.7 $400.7 ============================================================================ Available Separate Consolidated Net Income (2) $11.4 $13.4 $40.1 $101.4 ============================================================================ Net Earnings Attributable to General Motors Class H Common Stock on a Per Share Basis (2) $0.11 $0.13 $0.38 $1.00 ============================================================================ (1)Relates to General Motors' purchase of Hughes in 1985. (2)1997 amounts are presented on a pro forma basis. Historically, such amount 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. - 32 - BALANCE SHEET (Dollars in Millions) September 30, December 31, ASSETS 1998 1998 - ------------------------------------------------------------------------------- Current Assets Cash and cash equivalents $1,509.7 $2,783.8 Accounts and notes receivable 1,067.2 662.8 Contracts in process 611.8 575.6 Inventories 570.7 486.4 Prepaid expenses, deferred income taxes and other 399.1 297.3 - ---------------------------------------------------------------------------- Total Current Assets 4,158.5 4,805.9 Satellites - Net 2,843.1 2,643.4 Property - Net 965.9 889.7 Net Investment in Sales-type Leases 181.9 337.6 Intangible Assets - Net 3,587.8 2,954.8 Investments and Other Assets 1,155.9 1,132.4 - ---------------------------------------------------------------------------- Total Assets $12,893.1 $12,763.8 ============================================================================ LIABILITIES AND STOCKHOLDER'S EQUITY Current Liabilities Accounts payable $720.0 $472.8 Advances on contracts 245.6 209.8 Deferred revenues 150.3 110.6 Notes payable 60.2 - Accrued liabilities 564.1 689.4 - ---------------------------------------------------------------------------- Total Current Liabilities 1,740.2 1,482.6 Long-Term Debt 778.7 637.6 Deferred Gains on Sales and Leasebacks 130.1 191.9 Accrued Operating Leaseback Expense 38.8 100.2 Postretirement Benefits Other Than Pensions 156.2 154.8 Other Liabilities and Deferred Credits 702.8 706.4 Deferred Income Taxes 618.7 570.8 Minority Interests 469.0 607.8 Stockholder's Equity 8,258.6 8,311.7 - ---------------------------------------------------------------------------- Total Liabilities and Stockholder's Equity $12,893.1 $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). - 33 - PRO FORMA SELECTED SEGMENT DATA* (Dollars in Millions) Nine Months Ended Third Quarter September 30, ---------------- ----------------- 1998 1997 1998 1997 - ------------------------------------------------------------------------- DIRECT-TO-HOME BROADCAST Total Revenues $459.1 $343.7 $1,248.5 $861.0 Operating Loss $(61.8) $(43.3) $(133.6) $(158.7) Depreciation and Amortization $31.2 $21.2 $77.2 $62.5 Capital Expenditures (1) $82.0 $24.0 $130.1 $54.2 - -------------------------------------------------------------------------- SATELLITE SERVICES Total Revenues $186.5 $170.3 $570.6 $432.0 Operating Profit $79.1 $71.7 $239.2 $202.9 Operating Profit Margin 42.4% 42.1% 41.9% 47.0% Depreciation and Amortization $56.6 $48.0 $169.8 $91.9 Capital Expenditures (2) $190.7 $191.0 $605.0 $543.7 - -------------------------------------------------------------------------- SATELLITE SYSTEMS Total Revenues $688.9 $604.3 $1,988.0 $1,748.1 Operating Profit $63.8 $53.1 $178.9 $159.7 Operating Profit Margin 9.3% 8.8% 9.0% 9.1% Depreciation and Amortization $12.9 $9.9 $35.1 $27.7 Capital Expenditures $18.2 $28.1 $50.5 $68.2 - -------------------------------------------------------------------------- NETWORK SYSTEMS Total Revenues $267.7 $216.0 $674.1 $609.4 Operating Profit (Loss) $16.9 $22.4 $(20.2) $6.1 Operating Profit Margin 6.3% 10.4% - 1.0% Depreciation and Amortization $11.4 $5.6 $29.4 $21.7 Capital Expenditures $10.7 $15.3 $26.4 $33.0 - -------------------------------------------------------------------------- ELIMINATIONS and OTHER Total Revenues $(88.9) $(76.0) $(307.9) $(216.8) Operating Profit (Loss) $(30.5) $20.3 $(35.0) $4.6 Depreciation and Amortization $(0.8) $(6.7) $(2.7) $(8.5) Capital Expenditures $(21.4) $74.1 $114.5 $(147.6) =========================================================================== * 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 $38.0 million in the third and nine-month periods of 1998. (2)Includes expenditures related to satellites amounting to $182.2 million, $180.2 million, $422.2 million and $527.3 million, respectively. Also included in the 1998 nine-month period is $155.5 million related to the early buy-out of satellite sale-leasebacks. - 34 - GMAC NEWS RELEASE GMAC ANNOUNCES 1998 THIRD QUARTER EARNINGS ------------------------------------------ DETROIT -- General Motors Acceptance Corporation (GMAC) reported third quarter 1998 consolidated net income of $313 million, up from $312 million earned in the third quarter of 1997, GMAC President John D. Finnegan announced today. Net income for the first nine months of 1998 was $1,027 million, up from $1,022 million reported in the same period a year ago. For the quarter, net income from automotive financing operations totaled $250 million, up 12% from $222 million earned in the third quarter of 1997. Earnings were higher due to increased retail volume, reduced credit losses and a lower effective income tax rate, partially offset by lower net interest margins and lower wholesale volume (due to the recent General Motors strike). GMAC Insurance Holdings Inc. generated net income of $54 million in the third quarter of 1998, up 8% from $50 million earned in the same period last year. Earnings were higher due to the inclusion of Integon Corporation and increased capital gains. GMAC Mortgage Group Inc. generated net income of $9 million in the third quarter of 1998 compared to $40 million earned in the same period last year. Earnings were lower primarily due to widening credit spreads and increasing prepayments, which have reduced the value of its mortgage inventory and investment positions. * * * SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. GENERAL MOTORS CORPORATION -------------------------- (Registrant) Date October 13, 1998 ----------------- By s/Peter R. Bible ------------------------------- (Peter R. Bible, Chief Accounting Officer) - 35 - -----END PRIVACY-ENHANCED MESSAGE-----