-----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, Cg5VcuBZ3xGOJ9aywiogugmk8WNPhJYvzvqatlYMmdM1I7iK+ngREt4cVL+E55CQ DOA1kOYfCr1/Necjh/WFTA== 0000040730-99-000092.txt : 19991018 0000040730-99-000092.hdr.sgml : 19991018 ACCESSION NUMBER: 0000040730-99-000092 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991013 ITEM INFORMATION: FILED AS OF DATE: 19991014 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: 99728200 BUSINESS ADDRESS: STREET 1: 100 RENAISSANCE CTR CITY: DETROIT STATE: MI ZIP: 48265-1000 BUSINESS PHONE: 3135565000 MAIL ADDRESS: STREET 1: 3044 W GRAND BOULEVARD CITY: DETROIT STATE: MI ZIP: 48202-3091 8-K 1 THIRD QUARTER EARNINGS RELEASE 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, 1999 ---------------- 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 48265-1000 3044 West Grand Boulevard, Detroit, Michigan 48202-3091 - -------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (313)-556-5000 -------------- - 1 - ITEM 5. OTHER EVENTS On October 14, 1999, a news release was issued on the subject of third quarter consolidated earnings for General Motors Corporation (GM). The news release did not include certain financial statements, related footnotes and certain other financial information that will be filed with the Securities and Exchange Commission as part of GM's Quarterly Report on Form 10-Q. The following are the third quarter earnings releases for Hughes Electronics Corporation (Hughes) dated October 13, 1999 and GM dated October 14, 1999. GM EARNS A THIRD-QUARTER RECORD $1.33 PER SHARE RECORD THIRD QUARTER REVENUES OF $42.8 BILLION DRIVE INCOME OF $877 MILLION DETROIT -- General Motors Corp. (NYSE: GM) today reported income from continuing operations of $877 million in the third quarter of 1999, or a record third quarter $1.33 diluted earnings per share of GM $1-2/3 par value common stock. That compares with a strike-impacted net loss of $309 million, or a loss of $0.52 per share in the third quarter of 1998. GM North America and General Motors Acceptance Corp. (GMAC) led the turnaround with strong year-over-year increases. "After adjusting last year's third-quarter results to exclude the strike-related impact, GM North America posted an 81 percent improvement in net income, in the third quarter of 1999," said General Motors Chairman and Chief Executive Officer John F. Smith, Jr. "GMAC's results improved more than 25 percent, compared with the prior-year period." This strong performance helped offset reduced earnings and losses in the other business sectors and automotive regions. "The overall results show the strength of operating as one globally integrated company," Smith said. "The regions continue to focus on growing the business, reducing structural costs, and working as an integrated team to leverage our global strength." Consolidated net sales and revenues in the third quarter of 1999 totaled $42.8 billion -- the highest ever for a third-quarter period. That compares with a strike-impacted $33.5 billion for the third quarter of 1998. Cash, marketable securities and assets of the Voluntary Employees' Beneficiary Association (VEBA) trust invested in fixed-income securities totaled $16.7 billion at Sept. 30, 1999, compared with $10.3 billion at Sept. 30, 1998, and $16.7 billion at June 30, 1999. These cash amounts exclude GM's financing and insurance operations. "Our strong cash position allowed us to continue funding new product programs, invest in plant and equipment improvements and take advantage of growth opportunities, while continuing our share-repurchase program," Smith said. During the third quarter of 1999 and through Oct. 13, 1999, GM repurchased 5.7 million shares of its $1-2/3 par value common stock worth $386 million. Combined with earlier repurchases, this completes 63 percent of the corporation's most recent $4 billion stock-repurchase program initiated in March of 1998. Since January 1997, GM has repurchased approximately 117.7 million shares of GM $1-2/3 par value common stock worth $7.5 billion, or about 15.6 percent of the total shares outstanding. The corporation's 1999 third-quarter return on net assets (RONA) for continuing operations on an annualized basis, excluding Hughes, was 10.1 percent. "We're extremely pleased that our RONA performance average over the last four quarters was 14.2 percent," Smith said. "This beats by more than a year our target of surpassing 12.5 percent RONA for a four-quarter rolling average by the end of the year 2000. This is solid evidence of our continuing momentum and a major win for the entire GM team." - 2 - Following is a summary of income from GM's business segments in the third quarter of 1999, compared with the strike-impacted prior-year period (see Highlights for additional information): ($ in Millions) Third Quarter Net Income (Loss) 1999 1998 ---- ---- GM North America $671 ($595) GM Europe $32 $50 GM Latin America/Africa/Mid-East ($36) $(64) GM Asia Pacific ($54) $0 Other Automotive $0 $(24) -- ----- Total Automotive $613 ($633) GMAC $393 $313 Hughes ($30) $43 Other ($99) ($32) ----- ----- Total Income from Continuing Operations $877 ($309) GM Automotive's net margin was 1.7 percent in the third quarter of 1999, compared with a net-margin loss of 2.3 percent in the same period last year. GM North America's net margin was 2.4 percent in the third quarter of 1999, compared with a net-margin loss of 3.1 percent in the strike-impacted third quarter of 1998. "Despite continuing intense competitive pressures, GM North America had by far its best third quarter financial results of the decade," said GM President and Chief Operating Officer G. Richard Wagoner, Jr. "The improved availability of our popular new cars and trucks drove a two percentage-point improvement in U.S. market share from July to September." GM North America's third-quarter-1998 results included an unfavorable impact of $965 million after taxes, or $1.48 per share, related to major production losses caused by strikes at two GM component plants in Flint, Mich. GM Europe reported net income of $32 million in the third quarter of 1999, compared with $50 million in the prior-year period. "Although wholesale volume declined year-over-year, market share increased to 10.0 percent in the third quarter of 1999 versus 9.7 percent in the same period last year, and was unchanged from the second quarter of 1999," Wagoner said. "While the Latin America/Africa/Mid East region continues to be affected by an economic downturn, we worked all out to minimize losses and position ourselves for the future, which led to improved results in the third quarter" Wagoner said. "We continued to improve operating efficiencies while boosting market share in Latin America to 20.1 percent, a 1.1-percentage-point improvement from the 19.0-percent share in the third quarter of 1998. However, the continuing economic pressures in the region had a negative impact on our overall financial results." The Asia-Pacific region continues to be a challenge primarily due to the impact of the depressed Japanese market on the overall region. "The combination of the down market and the investments we made to position ourselves for the future growth potential in the region continued to impact our financial results in the short term," Wagoner said. "We're particularly pleased with the early success of our operations in Shanghai, China, where Buick sedans are produced. We're encouraged by signs of recovery in some areas of the Asia-Pacific and continue to take a long-term view in the region." GMAC reported consolidated net income of $393 million in the third quarter of 1999, compared with $313 million earned in the prior-year period. "The increase was led by the mortgage operations, which rebounded strongly from last year when turmoil in the capital markets adversely affected results. In addition, GMAC's operations in North America continued to improve, reflecting growth in assets and ongoing productivity improvements," Smith said. - 3 - Hughes Electronics reported that revenues increased nearly 32 percent to $2.0 billion for the third quarter of 1999, from $1.5 billion in the prior-year period. The revenue increase was primarily driven by continued growth in the DIRECTV business. "Hughes had its best third quarter ever for DIRECTV subscription growth in the United States, adding a record 423,000 net new subscribers, a 40 percent increase compared with the third quarter of 1998, and as a result DIRECTV revenues more than doubled" Smith said. DIRECTV had more than 7.7 million subscribers as of Sept. 30, 1999. Hughes' net loss in the third quarter of 1999 totaled $30 million, compared with income of $43 million in the third quarter of 1998. Third-quarter-1999 results were unfavorably impacted by higher depreciation and amortization expenses related primarily to the United States Satellite Broadcasting Company Inc. (USSB) and PRIMESTAR acquisitions, as well as increased satellite expenditures. In this news release, use of the words anticipate, expect, should, believe, plan, intensify, overcome and similar words are associated with forward-looking statements that are inherently subject to numerous risks and uncertainties. Accordingly, there can be no assurance that the results described in such forward-looking statements will be realized. The principal risk factors that may cause actual results to differ materially from those expressed in forward-looking statements contained in this news release are described in various documents filed by GM with the U.S. Securities and Exchange Commission, including GM's Annual Report on Form 10-K for the year ended Dec. 31, 1998, (at page II-22). # # # - 4 - HIGHLIGHTS - Q3 Financial Results (Dollars in Millions Except Per Share Amounts) Three Months Ended September 30, --------------------- 1999 1998 --------- --------- Net sales and revenues Manufactured products $36,748 $28,464 (1) Financial services 3,725 3,360 Other income 2,321 1,701 ------ ------ Total net sales and revenues $42,794 $33,525 ------ ------ Income (loss) from continuing operations $877(4) $(309)(1) Income (loss) from discontinued operations - (500) ------ ------ Consolidated net income (loss) $877 $(809) Net profit (loss) margin from continuing operations 2.0% (0.9%) ............................................................. Earnings Attributable to Common Stocks $1-2/3 par value Continuing operations $866(4) $(336)(1) Discontinued operations - (500) ------ ------ $1-2/3 par value $866 $(836) Class H $(17) $11 ............................................................. Basic Earnings Per Share Attributable to Common Stocks $1-2/3 par value Continuing operations $1.35 (4)$(0.52)(1) Discontinued operations - (0.76) ------ ------ $1-2/3 par value $1.35 $(1.28) Class H $(0.13) $0.11 ............................................................. Diluted Earnings Per Share Attributable to Common Stocks $1-2/3 par value Continuing operations $1.33 (4)$(0.52)(1) Discontinued operations - (0.76) ------ ------ $1-2/3 par value $1.33 $(1.28) Class H $(0.13) $0.11 ............................................................. Cash Dividends Per Share of Common Stocks $1-2/3 par value $0.50 $0.50 Class H $- $- ............................................................. Book Value Per Share of Common Stocks Sept. 30, Dec. 31, Sept. 30, 1999 1998 1998 -------- ------- -------- $1-2/3 par value $20.59 $20.00 $19.54 Class H $12.36 $12.00 $11.72 ............................................................. See footnotes beginning on page 8 continues - 5 - HIGHLIGHTS - Q3 Consolidated Net Income (Dollars in Millions) Income/(Loss) Three Months Ended September 30, ---------------------- 1999 1998 -------- -------- GM North America (GMNA) $671 $(595)(1) GM Europe (GME) 32 50 GM Latin America/Africa/Mid-East (GMLAAM) (36) (64) GM Asia/Pacific (GMAP) (54) - Other Automotive - (24) ----- ---- Total GM Automotive (GMA) $613 $(633) Hughes (5) (30) 43 Other (96) (64) ----- ---- Total Automotive, Electronics and Other Operations $487 $(654) GMAC $393 $313 Other (3) 32 ----- ---- Total Financing and Insurance Operations $390 $345 ----- ---- Income (loss) from continuing operations $877 (4) $(309)(1) Income (loss) from discontinued operations - (500) ----- ---- Consolidated Net Income (Loss) $877 $(809) ===== ==== Three Months Ended September 30, 1999 -------------------------------- GMNA GME GMLAAM GMAP ----- ------ ------ ------ Reported -------- Total net sales and revenues $27,630 $6,391 $1,200 $884 ------ ----- ----- --- Pre-tax income (loss) $1,009 $52 $(79) $12 Income tax expense (benefit) 336 19 (37) 11 Equity income/(loss) and minority interests (2) (1) 6 (55) ----- ----- ----- --- Net income (loss) $671 $32 $(36) $(54) ===== ===== ===== === Net profit (loss) margin 2.4% 0.5% (3.0%) (6.1%) Effective income tax rate 33.3% 36.5% 46.8% 91.7% Three Months Ended September 30, 1998 -------------------------------- GMNA(1) GME GMLAAM GMAP ----- ------ ------ ------ Reported -------- Total net sales and revenues $18,931 $6,390 $1,773 $681 ------ ----- ----- --- Pre-tax (loss) income $(883) $64 $(138) $19 Income tax (benefit) expense (288) 18 (45) 2 Equity income/(loss) and minority interests - 4 29 (17) ---- ---- --- --- Net (loss) income $(595) $50 $(64) $- ==== ==== === === Net (loss) profit margin (3.1%) 0.8% (3.6%) 0.0% Effective income tax rate 32.6% 28.1% 32.6% 10.5% See footnotes beginning on page 8. continues - 6 - HIGHLIGHTS - Q3 Operating Information Three Months Ended September 30, --------------------- 1999 1998 ------- ------- Worldwide Wholesale Sales (units in 000s) United States: Cars 581 527 Trucks 618 367 ------ ------ Total United States 1,199 894 Canada and Mexico 142 116 ------ ------ Total GM North America 1,341 1,010 ------ ------ GME 446 534 GMLAAM 141 163 GMAP 121 114 ------ ------ Total International 708 811 ------ ------ Total Worldwide 2,049 1,821 ====== ====== .................................................... Vehicle Unit Deliveries (units in 000s) United States Chevrolet - Cars 231 174 - Trucks 447 296 Pontiac 153 113 GMC 138 91 Buick 122 81 Oldsmobile 87 63 Saturn 61 62 Cadillac 46 39 Other 13 9 ------ ------ Total United States 1,298 928 Canada and Mexico 170 160 ------ ------ Total GM North America 1,468 1,088 ------ ------ GME 489 463 GMLAAM 145 160 GMAP 128 127 ------ ------ Total International 762 750 ------ ------ Total Worldwide 2,230 1,838 ====== ====== .................................................... Market share United States Cars 29.4% 25.7% Trucks 28.4% 22.4% Total 28.9% 24.1% Total North America 28.6% 24.5% Total Europe 10.0% 9.7% Latin America 20.1% 19.0% Asia and Pacific 4.6% 4.7% Total Worldwide 16.3% 14.2% ..................................................... U.S. Retail/Fleet Mix % Fleet Sales - Cars 21.8% 24.3% % Fleet Sales - Trucks 9.5% 9.7% Total vehicles 15.9% 17.8% .................................................... Days Supply of Inventory - U.S. Cars 65 59 Trucks 82 67 ..................................................... Capacity Utilization % U.S. and Canada (2-shift rated)(2)90.4% N/A ..................................................... GMNA Net Price (%) 0.4% (2.3%) ..................................................... See footnotes beginning on page 8. continues -7 - HIGHLIGHTS - Q3 Other Financial Information (Dollars in Millions Except Per Share Amounts) Three Months Ended September 30, ---------------------- 1999 1998 --------- ---------- Depreciation and Amortization (3) Depreciation $1,004 $944 Amortization of special tools 635 501 Amortization of intangible assets 78 27 ------ ----- Total $1,717 $1,472 ====== ===== .................................................... Worldwide Employment at September 30 (in 000s) GMNA 219 229 GME 82 81 GMLAAM 23 25 GMAP 10 10 Hughes 18 15 GMAC 27 23 Other 12 12 ------ ------ Total 391 395 ====== ====== .................................................... Worldwide Payrolls $5,469 $4,977 .................................................... (1) GM North America's third-quarter-1998 results included an unfavorable impact of $965 million after taxes, or $1.48 per share, related to major production losses caused by strikes at two GM component plants in Flint, Michigan. (2) GM changed its method of calculating capacity utilization from mass relief to tag relief in 1999. Quarterly 1998 figures are not available, however capacity utilization for Calendar Year 1998 was 77.2% using the new methodology. (3) Amounts exclude depreciation and amortization charges incurred by the financing and insurance operations. (4) Records for income and EPS are based upon reported amounts adjusted to exclude the effects of significant dispositions not classified as discontinued operations. (5) Excludes the effects of purchase accounting adjustments related to General Motors' acquisition of Hughes in 1985, and in 1999 excludes Hughes Series A Preferred Stock dividends payable to General Motors. NOTE: Total cash of $16.7 billion referenced to in the press release includes $13.7 billion of cash and marketable securities as well as $3.0 billion invested in fixed income securities of the Corporation's $4.7 billion Voluntary Employees' Beneficiary Association Trust. - 8 - HIGHLIGHTS - Q3 Financial Results (Dollars in Millions Except Per Share Amounts) Nine Months Ended September 30, --------------------- 1999 1998 --------- --------- Net sales and revenues Manufactured products $112,629 $95,202 Financial services 10,805 10,090 Other income 6,862 5,529 ------- ------- Total net sales and revenues $130,296 $110,821 ------- ------- Income from continuing operations $4,431 (5)$1,365 Income (loss) from discontinued operations 426 (181) ------ ------ Consolidated net income $4,857 $1,184 Net profit margin from continuing operations 3.4% 1.2% ............................................................. Earnings Attributable to Common Stocks $1-2/3 par value Continuing operations $4,400 (5)$1,277 Discontinued operations 426 (181) ------ ------ $1-2/3 par value $4,826 $1,096 Class H $(20) $40 (2) ............................................................. Basic Earnings Per Share Attributable to Common Stocks $1-2/3 par value Continuing operations $6.79 (5) $1.92 Discontinued operations 0.66 (0.27) ------ ------ $1-2/3 par value $7.45 $1.65 Class H $(0.17) $0.38 (2) ............................................................. Diluted Earnings Per Share Attributable to Common Stocks $1-2/3 par value Continuing operations $6.67 (5) $1.87 Discontinued operations 0.65 (0.27) ------ ------ $1-2/3 par value $7.32 $1.60 Class H $(0.17) $0.38 (2) ............................................................. Cash Dividends Per Share of Common Stocks $1-2/3 par value $1.50 $1.50 Class H $- $- ............................................................. See footnotes beginning on page 12. continues - 9 - HIGHLIGHTS - Q3 Consolidated Net Income (Dollars in Millions) Income/(Loss) Nine Months Ended September 30, ------------------------ 1999 1998 -------- -------- GM North America (GMNA) $3,552 $52 GM Europe (GME) 393 273 GM Latin America/Africa/Mid-East (GMLAAM) (99) 37 GM Asia/Pacific (GMAP) (195) (30) Other Automotive 23 3 ----- ----- Total GM Automotive (GMA) $3,674 $335 Hughes (6) (44) 153 (2) Other (387) (226) ----- ----- Total Automotive, Electronics and Other Operations $3,243 $262 GMAC $1,176 $1,027 Other 12 76 ----- ----- Total Financing and Insurance Operations $1,188 $1,103 ----- ----- Income from continuing operations $4,431 (5) $1,365 Income (loss)from discontinued operations 426 (181) ----- ----- Consolidated Net Income $4,857 $1,184 ===== ===== Nine Months Ended September 30, 1999 -------------------------------- GMNA GME GMLAAM GMAP ----- ------ ------ ------ Reported -------- Total net sales and revenues $85,184 $19,669 $3,448 $2,246 ------ ------ ----- ----- Pre-tax income (loss) $5,228 $605 $(224) $(49) Income tax expense (benefit) 1,671 208 (106) (8) Equity income/(loss) and minority interests (5) (4) 19 (154) ----- ----- ----- --- Net income (loss) $3,552 $393 $(99) $(195) ===== ===== ===== === Net profit (loss) margin 4.2% 2.0% (2.9%) (8.7%) Effective income tax rate 32.0% 34.4% 47.3% 16.3% Nine Months Ended September 30, 1998 -------------------------------- GMNA GME(1) GMLAAM GMAP ----- ------ ------ ------ Reported -------- Total net sales and revenues $67,919 $18,347 $6,116 $2,194 ------ ------ ----- ----- Pre-tax income (loss) $6 $511 $(105) $15 Income tax (benefit) expense (26) 238 (74) 6 Equity income/(loss) and minority interests 20 - 68 (39) ----- ----- ----- --- Net income (loss) $52 $273 $37 $(30) ===== ===== ===== === Net profit (loss) margin 0.1% 1.5% 0.6% (1.4%) Effective income tax rate (433.3%) 46.6% 70.5% 40.0% See footnotes beginning on page 12. continues - 10 - HIGHLIGHTS - Q3 Operating Information Nine Months Ended September 30, ---------------------- 1999 1998 --------- ---------- Worldwide Wholesale Sales (units in 000s) United States: Cars 1,916 1,650 Trucks 1,954 1,435 ------ ------ Total United States 3,870 3,085 Canada and Mexico 510 464 ------ ------ Total GM North America 4,380 3,549 ------ ------ GME 1,471 1,540 GMLAAM 399 521 GMAP 312 328 ------ ------ Total International 2,182 2,389 ------ ------ Total Worldwide 6,562 5,938 ====== ====== .................................................... Vehicle Unit Deliveries (units in 000s) United States Chevrolet - Cars 683 668 - Trucks 1,299 1,168 Pontiac 485 403 GMC 408 355 Buick 357 296 Oldsmobile 282 232 Saturn 178 179 Cadillac 133 131 Other 31 22 ------ ------ Total United States 3,856 3,454 Canada and Mexico 516 491 ------ ------ Total GM North America 4,372 3,945 ------ ------ GME 1,537 1,406 GMLAAM 399 511 GMAP 338 379 ------ ------ Total International 2,274 2,296 ------ ------ Total Worldwide 6,646 6,241 ====== ====== .................................................... Market share United States Cars 30.2% 29.6% Trucks 28.0% 27.9% Total 29.1% 28.8% Total North America 28.9% 28.6% Total Europe 9.9% 9.5% Latin America 19.7% 19.7% Asia and Pacific 3.9% 4.6% Total Worldwide 15.9% 15.6% ..................................................... U.S. Retail/Fleet Mix % Fleet Sales - Cars 25.9% 24.0% % Fleet Sales - Trucks 13.3% 13.7% Total vehicles 20.0% 19.2% ..................................................... Capacity Utilization % U.S. and Canada (2-shift rated)(3)89.0% N/A ..................................................... See footnotes beginning on page 12. continues - 11 - HIGHLIGHTS - Q3 Other Financial Information (Dollars in Millions Except Per Share Amounts) Nine Months Ended September 30, ---------------------- 1999 1998 --------- ---------- Depreciation and Amortization (4) Depreciation $3,075 $2,740 Amortization of special tools 1,889 1,583 Amortization of intangible assets 157 76 ----- ----- Total $5,121 $4,399 ===== ===== .................................................... Worldwide Payrolls $16,450 $15,296 .................................................... (1) 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. (2) 1998 results exclude the cumulative effect of accounting change of $9 million due to Hughes' adoption of SOP 98-5. GM had reported the $9 million change in fourth quarter 1998 results and Hughes reported the change as a restatement of first quarter 1998 results. (3) GM changed its method of calculating capacity utilization from mass relief to tag relief in 1999. Quarterly 1998 figures are not available, however capacity utilization for Calendar Year 1998 was 77.2% using the new methodology. (4) Amounts exclude depreciation and amortization charges incurred by the financing and insurance operations. (5) Records for income and EPS are based upon reported amounts adjusted to exclude the effects of significant dispositions not classified as discontinued operations. (6) Excludes the effects of purchase accounting adjustments related to General Motors' acquisition of Hughes in 1985, and in 1999 excludes Hughes Series A Preferred Stock dividends payable to General Motors. - 12 - CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 1999 1998 1999 1998 ---- ---- ---- ---- (Dollars in Millions Except Per Share Amounts) GENERAL MOTORS CORPORATION AND SUBSIDIARIES Manufactured products sales and revenues $36,748 $28,464 $112,629 $95,202 Financing revenues 3,725 3,360 10,805 10,090 Other income 2,321 1,701 6,862 5,529 ------- ------- -------- --------- Total net sales and revenues 42,794 33,525 130,296 110,821 ------ ------ ------- ------- Cost of sales and other operating expenses, exclusive of items listed below 31,061 25,278 94,011 82,607 Selling, general and administrative expenses 4,703 3,816 13,027 11,457 Depreciation and amortization expense 3,088 2,674 9,039 8,029 Interest expense 1,985 1,690 5,624 4,951 Other expenses 439 486 1,353 1,602 ------- -------- -------- -------- Total costs and expenses 41,276 33,944 123,054 108,646 Income (loss) from continuing operations before income taxes and minority interests 1,518 (419) 7,242 2,175 Income tax expense (benefit) 553 (144) 2,538 710 Minority interests (7) (1) (28) (11) Losses of nonconsolidated associates (81) (33) (245) (89) ---- ---- ------ ------- Income (loss) from continuing operations 877 (309) 4,431 1,365 (Loss) income from discontinued operations - (500) 426 (181) ------ --- ------ ------ Net income (loss) 877 (809) 4,857 1,184 Dividends on preference stocks (28) (16) (51) (48) ---- ---- ------- ------- Earnings on common stocks $849 $(825) $4,806 $1,136 === === ===== ===== Basic earnings (losses) per share attributable to common stocks $1-2/3 par value common stock Continuing operations $1.35 $(0.52) $6.79 $1.92 Discontinued operations - (0.76) 0.66 (0.27) ----- ---- ---- ---- Earnings per share attributable to $1-2/3 par value $1.35 $(1.28) $7.45 $1.65 ==== ==== ==== ==== Earnings per share attributable to Class H $(0.13) $0.11 $(0.17) $0.38 ==== ==== ==== ==== Diluted earnings (losses) per share attributable to common stocks $1-2/3 par value common stock Continuing operations $1.33 $(0.52) $6.67 $1.87 Discontinued operations - (0.76) 0.65 (0.27) ----- ---- ---- ---- Earnings per share attributable to $1-2/3 par value $1.33 $(1.28) $7.32 $1.60 ==== ==== ==== ==== Earnings per share attributable to Class H $(0.13) $0.11 $(0.17) $0.38 ==== ==== ==== ==== - 13 - CONSOLIDATED STATEMENTS OF INCOME - Concluded (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, -------------- ------------- 1999 1998 1999 1998 ---- ---- ---- ---- (Dollars in Millions) AUTOMOTIVE, ELECTRONICS AND OTHER OPERATIONS Manufactured products sales and revenues $36,748 $28,464 $112,629 $95,202 Other income 798 547 2,557 2,050 Total net sales and revenues 37,546 29,011 115,186 97,252 ------ ------ ------- ------ Cost of sales and other operating expenses, exclusive of items listed below 31,061 25,278 94,011 82,607 Selling, general and administrative expenses 3,487 2,794 9,598 8,449 Depreciation and amortization expense 1,717 1,472 5,121 4,399 ----- ----- ----- ----- Total operating costs and expenses 36,265 29,544 108,730 95,455 ------ ------ ------- ------ Interest expense 223 195 597 586 Other expenses 115 131 322 507 Net expense from transactions with Financing and Insurance Operations 85 48 245 117 -- -- --- --- Income (loss) from continuing operations before income taxes and minority interests 858 (907) 5,292 587 Income tax expense (benefit) 291 (281) 1,799 241 Minority interests 1 5 (5) 5 Losses of nonconsolidated associates (81) (33) (245) (89) ---- ---- ------ ---- Income (loss) from continuing operations 487 (654) 3,243 262 (Loss) income from discontinued operations - (500) 426 (181) --- ---- ----- --- Net income (loss) - Automotive, Electronics and Other Operations $487 $(1,154) $3,669 $81 === ===== ===== == Three Months Ended Nine Months Ended September 30, September 30, -------------- --------------- 1999 1998 1999 1998 ---- ---- ---- ---- (Dollars in Millions) FINANCING AND INSURANCE OPERATIONS Financing revenues $3,725 $3,360 $10,805 $10,090 Insurance, mortgage and other income 1,523 1,154 4,305 3,479 ----- ----- ------- ------- Total revenues and other income 5,248 4,514 15,110 13,569 ----- ----- ------ ------ Interest expense 1,762 1,495 5,027 4,365 Depreciation and amortization expense 1,371 1,202 3,918 3,630 Operating and other expenses 1,216 1,022 3,429 3,008 Provisions for financing losses 98 94 328 323 Insurance losses and loss adjustment expenses 226 261 703 772 ----- ----- ------ ------ Total costs and expenses 4,673 4,074 13,405 12,098 ----- ----- ------ ------ Net income from transactions with Automotive, Electronics and Other Operations 85 48 245 117 ---- --- ------ ------ Income before income taxes 660 488 1,950 1,588 Income tax expense 262 137 739 469 Minority interests (8) (6) (23) (16) --- --- ----- ----- Net income - Financing and Insurance Operations $390 $345 $1,188 $1,103 === === ===== ===== - 14 - CONSOLIDATED BALANCE SHEETS Sept. 30, Sept. 30, 1999 Dec. 31, 1998 GENERAL MOTORS CORPORATION AND SUBSIDIARIES (Unaudited) 1998 (Unaudited) --------- -------- --------- ASSETS (Dollars in Millions) Automotive, Electronics and Other Operations Cash and cash equivalents $12,056 $9,728 $6,888 Marketable securities 1,666 402 420 ------- ------- ------ Total cash and marketable securities 13,722 10,130 7,308 Accounts and notes receivable (less allowances) 5,480 4,750 5,258 Inventories (less allowances) 10,603 10,437 11,062 Net assets of discontinued operations - 77 - Equipment on operating leases (less accumulated depreciation) 6,244 4,954 4,797 Deferred income taxes and other current assets 7,494 10,051 5,994 ------- ------ ------- Total current assets 43,543 40,399 34,419 Equity in net assets of nonconsolidated associates 1,642 950 1,100 Property - net 31,761 32,222 31,652 Intangible assets - net 12,338 9,994 11,342 Deferred income taxes 17,139 14,967 18,124 Other assets 13,894 16,062 14,912 -------- -------- -------- Total Automotive, Electronics and Other Operations assets 120,317 114,594 111,549 Financing and Insurance Operations Cash and cash equivalents 328 146 93 Investments in securities 8,937 8,748 8,248 Finance receivables - net 76,449 70,436 62,460 Investment in leases and other receivables 35,837 32,798 33,220 Other assets 19,705 18,807 13,868 Net receivable from Automotive, Electronics and Other Operations 369 816 186 -------- -------- -------- Total Financing and Insurance Operations assets 141,625 131,751 118,075 -------- -------- -------- Total assets $261,942 $246,345 $229,624 ======== ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Automotive, Electronics and Other Operations Accounts payable (principally trade) $16,323 $13,542 $12,437 Loans payable 695 1,204 1,950 Accrued expenses 32,803 30,548 29,599 Net payable to Financing and Insurance Operations 369 816 186 -------- -------- -------- Total current liabilities 50,190 46,110 44,172 Long-term debt 7,880 7,118 6,817 Postretirement benefits other than pensions 34,455 33,503 33,479 Pensions 3,179 4,410 3,782 Net liabilities of discontinued operations - - 2 Other liabilities and deferred income taxes 18,170 17,807 17,729 -------- -------- -------- Total Automotive, Electronics and Other Operations liabilities 113,874 108,948 105,981 Financing and Insurance Operations Accounts payable 4,587 4,148 3,784 Debt 115,329 107,753 94,991 Deferred income taxes and other liabilities 10,723 9,661 9,399 -------- --------- --------- Total Financing and Insurance Operations liabilities 130,639 121,562 108,174 Minority interests 635 563 531 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 140 141 142 Stockholders' equity Preference stocks - 1 1 $1-2/3 par value common stock (issued, 642,050,210; 655,008,344 and 655,036,035 shares) 1,071 1,092 1,092 Class H common stock (issued, 135,195,966; 106,159,776, and 105,959,765 shares) 14 11 11 Capital surplus (principally additional paid-in capital) 15,282 12,661 12,769 Retained earnings 5,573 6,984 5,554 ------- ------- ------- Subtotal 21,940 20,749 19,427 Accumulated foreign currency translation adjustments (1,969) (1,089) (1,060) Net unrealized gains on securities 631 481 412 Minimum pension liability adjustment (4,027) (5,089) (4,062) -------- -------- -------- Accumulated other comprehensive loss (5,365) (5,697) (4,710) -------- -------- -------- Total stockholders' equity 16,575 15,052 14,717 -------- -------- -------- Total liabilities and stockholders' equity $261,942 $246,345 $229,624 ======= ======= ======= - 15 - CONSOLIDATED BALANCE SHEETS - Concluded Sept. 30, Sept. 30, 1999 Dec. 31, 1998 AUTOMOTIVE, ELECTRONICS AND OTHER OPERATIONS(Unaudited) 1998 (Unaudited) --------- -------- --------- (Dollars in Millions) ASSETS Cash and cash equivalents $12,056 $9,728 $6,888 Marketable securities 1,666 402 420 ------ ------ ------ Total cash and marketable securities 13,722 10,130 7,308 Accounts and notes receivable (less allowances) 5,480 4,750 5,258 Inventories (less allowances) 10,603 10,437 11,062 Net assets of discontinued operations - 77 - Equipment on operating leases (less accumulated depreciation) 6,244 4,954 4,797 Deferred income taxes and other current assets 7,494 10,051 5,994 ------ ------ ------- Total current assets 43,543 40,399 34,419 Equity in net assets of nonconsolidated associates 1,642 950 1,100 Property - net 31,761 32,222 31,652 Intangible assets - net 12,338 9,994 11,342 Deferred income taxes 17,139 14,967 18,124 Other assets 13,894 16,062 14,912 ------ ------ ------ Total Automotive, Electronics and Other Operations assets $120,317 $114,594 $111,549 ======= ======= ======= LIABILITIES AND GM INVESTMENT Accounts payable (principally trade) $16,323 $13,542 $12,437 Loans payable 695 1,204 1,950 Accrued expenses 32,803 30,548 29,599 Net payable to Financing and Insurance Operations 369 816 186 ------ ------ ------ Total current liabilities 50,190 46,110 44,172 Long-term debt 7,880 7,118 6,817 Postretirement benefits other than pensions 34,455 33,503 33,479 Pensions 3,179 4,410 3,782 Net liabilities of discontinued operations - - 2 Other liabilities and deferred income taxes 18,170 17,807 17,729 ------- ------- ------- Total Automotive, Electronics and Other Operations liabilities 113,874 108,948 105,981 Minority interests 558 511 484 GM investment in Automotive, Electronics and Other Operations 5,885 5,135 5,084 ------- ------- ------- Total Automotive, Electronics and Other Operations liabilities and GM investment $120,317 $114,594 $111,549 ======== ======== ======== Sept. 30, Sept. 30, 1999 Dec. 31, 1998 FINANCING AND INSURANCE OPERATIONS (Unaudited) 1998 (Unaudited) ----------- ---- ----------- (Dollars in Millions) ASSETS Cash and cash equivalents $328 $146 $93 Investments in securities 8,937 8,748 8,248 Finance receivables - net 76,449 70,436 62,460 Investment in leases and other receivables 35,837 32,798 33,220 Other assets 19,705 18,807 13,868 Net receivable from Automotive, Electronics and Other Operations 369 816 186 ------- ------- ------- Total Financing and Insurance Operations assets $141,625 $131,751 $118,075 ======== ======== ======== LIABILITIES AND GM INVESTMENT Accounts payable $4,587 $4,148 $3,784 Debt 115,329 107,753 94,991 Deferred income taxes and other liabilities 10,723 9,661 9,399 -------- --------- --------- Total Financing and Insurance Operations liabilities 130,639 121,562 108,174 Minority interests 77 52 47 GM investment in Financing and Insurance Operations 10,909 10,137 9,854 -------- --------- --------- Total Financing and Insurance Operations liabilities and GM investment $141,625 $131,751 $118,075 ======== ======== ======== - 16 - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, ------------------------------- 1999 1998 ---- ---- (Dollars in Millions) GENERAL MOTORS CORPORATION AND SUBSIDIARIES Net cash provided by operating activities $25,054 $6,566 Cash flows from investing activities Expenditures for property (4,925) (5,921) Investments in marketable securities - acquisitions (19,570) (22,717) Investments in marketable securities - liquidations 17,706 26,501 Mortgage servicing rights - acquisitions (1,199) (897) Mortgage servicing rights - liquidations 34 67 Finance receivables - acquisitions (139,165) (112,962) Finance receivables - liquidations 100,692 86,709 Proceeds from sales of finance receivables 35,120 21,922 Operating leases - acquisitions (20,123) (18,281) Operating leases - liquidations 11,383 11,717 Investments in companies, net of cash acquired (4,767) (475) Other (154) (431) ------- ------- Net cash used in investing activities (24,968) (14,768) ------ ------ Cash flows from financing activities Net (decrease) increase in loans payable (8,152) 3,402 Increase in long-term debt 27,086 16,620 Decrease in long-term debt (15,168) (10,860) Repurchases of common and preference stocks (2,149) (3,071) Proceeds from issuing common and preference stocks 1,868 343 Cash dividends paid to stockholders (1,023) (1,045) ----- ----- Net cash provided by financing activities 2,462 5,389 ----- ----- Effect of exchange rate changes on cash and cash equivalents (166) 271 ------ ------ Net cash provided by (used in) continuing operations 2,382 (2,542) Net cash provided by (used in) discontinued operations 128 (750) ------ ------ Net increase (decrease) in cash and cash equivalents 2,510 (3,292) Cash and cash equivalents at beginning of the period 9,874 10,273 ------ ------ Cash and cash equivalents at end of the period $12,384 $6,981 ====== ===== - 17 - CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Concluded (Unaudited)
Nine Months Ended September 30, ------------------------------- 1999 1998 ---- ---- Automotive, Financing Automotive, Financing Electronics and Electronics and and Other Insurance and Other Insurance --------- --------- --------- --------- (Dollars in Millions) Net cash provided by operating activities $15,171 $9,883 $2,778 $3,788 Cash flows from investing activities Expenditures for property (4,721) (204) (5,813) (108) Investments in marketable securities - acquisitions (3,481) (16,089) (8,022) (14,695) Investments in marketable securities - liquidations 2,217 15,489 11,255 15,246 Mortgage servicing rights - acquisitions - (1,199) - (897) Mortgage servicing rights - liquidations - 34 - 67 Finance receivables - acquisitions - (139,165) - (112,962) Finance receivables - liquidations - 100,692 - 86,709 Proceeds from sales of finance receivables - 35,120 - 21,922 Operating leases - acquisitions (6,175) (13,948) (4,382) (13,899) Operating leases - liquidations 4,279 7,104 4,092 7,625 Investments in companies, net of cash acquired (2,647) (2,120) (417) (58) Net investing activity with Financing and Insurance Operations 75 - 238 - Other (831) 677 (1,198) 767 ------ ------- ----- ------- Net cash used in investing activities (11,284) (13,609) (4,247) (10,283) ------ ------ ----- ------ Cash flows from financing activities Net (decrease) increase in loans payable (551) (7,601) 961 2,441 Increase in long-term debt 5,414 21,672 2,689 13,931 Decrease in long-term debt (4,632) (10,536) (1,243) (9,617) Net financing activity with Automotive, Electronics and Other Operations - (75) - (238) Repurchases of common and preference stocks (2,149) - (3,071) - Proceeds from issuing common and preference stocks 1,868 - 343 - Cash dividends paid to stockholders (1,023) - (1,045) - ----- ------ ----- ------ Net cash (used in) provided by financing activities (1,073) 3,460 (1,366) 6,517 ----- ----- ----- ----- Effect of exchange rate changes on cash and cash equivalents (167) 1 272 (1) Net transactions with Automotive/ Financing Operations (447) 447 505 (505) ----- --- ----- --- Net cash provided by (used in) continuing operations 2,200 182 (2,058) (484) Net cash provided by (used in) discontinued operations 128 - (750) - ----- --- ----- --- Net increase (decrease) in cash and cash equivalents 2,328 182 (2,808) (484) Cash and cash equivalents at beginning of the period 9,728 146 9,696 577 ------ --- ----- --- Cash and cash equivalents at end of the period $12,056 $328 $6,888 $93 ====== === ===== ==
- 18 - Hughes Reports 32% Revenue Growth and Solid EBITDA Growth In Third Quarter Results Driven by Record Sales of DIRECTV(R) Service El Segundo, Calif., October 13, 1999 -- Hughes Electronics Corporation (Hughes), the world's leading provider of digital television entertainment, and satellite and wireless systems and services, today reported third quarter 1999 revenues increased 31.5% to $1,990.5 million, compared with $1,513.3 million in the third quarter of 1998. EBITDA(1) for the quarter increased 18.3% to $211.6 million and EBITDA margin(1) was 10.6%, compared to EBITDA of $178.8 million and EBITDA margin of 11.8% in the third quarter of 1998. "The primary driver of our revenue growth continues to be our DIRECTV businesses," explained Michael T. Smith, Hughes chairman and chief executive officer. "We had our best third quarter ever for new DIRECTV subscriber additions in the United States, Hughes Network Systems (HNS) achieved its best quarter ever for sales of DIRECTV receiving equipment, and Galaxy Latin America nearly doubled its net new subscriber additions compared to the third quarter of 1998. In fact, total revenues from our services operations more than doubled compared to the third quarter of last year. "Our U.S. DIRECTV business also drove our EBITDA growth in the quarter," Smith continued. "We have reached the point where the EBITDA generated by our large subscriber base is outpacing the marketing costs associated with our record subscriber growth. We expect our U.S. DIRECTV business to continue to deliver positive EBITDA that accelerates yearly on a going-forward basis." Hughes had a third quarter 1999 loss(2) of $29.6 million, compared to earnings(2) of $42.9 million in the same period for 1998. The change in earnings was primarily attributable to higher depreciation and amortization expenses related principally to the United States Satellite Broadcasting Company, Inc. (USSB) and PRIMESTAR transactions and increased PanAmSat satellite expenditures, and an increase in net interest expense. These variances more than offset the increase in EBITDA. This resulted in a loss per share, including the effect of preferred stock dividends, of $0.13 in the third quarter of 1999 compared to earnings per share (EPS) of $0.11 in the third quarter of 1998. NINE-MONTH FINANCIAL REVIEW For the first nine months of 1999, revenues increased 25.0% to $5,218.3 million compared with $4,173.3 million in 1998. This growth was primarily the result of record subscriber growth in the Company's U.S. DIRECTV business, as well as additional revenues resulting from the USSB and PRIMESTAR transactions. HNS also contributed to the revenue growth, primarily through its record sales of DIRECTV receiving equipment. - 19 - EBITDA for the first nine months of 1999 was $361.0 million and EBITDA margin was 6.9%, compared to EBITDA of $538.5 million and EBITDA margin of 12.9% in the same period of 1998. The declines were principally due to two one-time charges: a second quarter 1999 pre-tax charge of $125.0 million related to increased development costs and schedule delays related to several new product lines at Hughes Space and Communications Company (HSC), and a first quarter 1999 pre-tax charge of $92.0 million resulting from the termination of the contract for the Asia-Pacific Mobile Telecommunications (APMT) satellite system due to export licenses not being issued. These declines were partially offset by increased EBITDA at the Company's U.S. DIRECTV business, HNS and PanAmSat. In the first nine months of 1999, Hughes incurred a loss of $43.6 million and a loss per share, including the effect of preferred stock dividends, of $0.17, compared to earnings of $143.5 million and EPS of $0.36 for the same period in 1998. The decline was mostly due to the reduced EBITDA, higher depreciation and amortization expenses related principally to the USSB and PRIMESTAR transactions and increased PanAmSat satellite expenditures, and an increase in net interest expense. These declines were partially offset by an after-tax gain of $94.3 million ($154.6 million pre-tax) related to the settlement of the Williams patent infringement case(3). SEGMENT FINANCIAL REVIEW: THIRD QUARTER 1999 Direct-To-Home Broadcast Third quarter revenues for the segment more than doubled to $1,144.6 million from $459.1 million in the third quarter of 1998. The segment had EBITDA of $47.7 million and EBITDA margin of 4.2% compared with negative EBITDA of $30.6 million in the third quarter of 1998. United States: DIRECTV reported quarterly revenues of $1,052 million, more than twice last year's third quarter revenues of $408 million. The increase was due to strong subscriber growth, as well as additional revenues resulting from the USSB and PRIMESTAR transactions. DIRECTV added a record 423,000 net new subscribers to its high-power DIRECTV service in the quarter, a 40% increase over the 303,000 net new subscribers added in the third quarter of 1998. In addition, 204,000 customers were transitioned from the PRIMESTAR By DIRECTV medium-power service to the high-power service in the quarter. As of September 30, 1999, DIRECTV had more than 7.7 million subscribers, which includes approximately 1.8 million customers subscribing to PRIMESTAR By DIRECTV. EBITDA for the third quarter of 1999 was $86 million compared to negative EBITDA of $5 million in the preceding year's third quarter. This increase was principally due to EBITDA contributions from the USSB and PRIMESTAR transactions, as well as improved EBITDA resulting from the larger high-power subscriber base. Latin America and Japan: The DIRECTV business in Latin America generated $76 million in revenues for the quarter compared with $37 million in the third quarter of 1998. This increase was due to continued subscriber growth and additional revenues resulting from the consolidation of Galaxy Brazil, Ltda. (GLB)(4), Grupo Galaxy Mexicana , S.A. de C.V (GGM)(4), and SurFin, Ltd.(4) - 20 - The DIRECTV service in Latin America added 67,000 net new subscribers in the third quarter of 1999, an 86% increase over the 36,000 acquired in the same period last year. The total number of DIRECTV subscribers in Latin America as of September 30, 1999 was 668,000. Galaxy Latin America had negative EBITDA of $30 million compared to negative EBITDA of $24 million for the same period in 1998. The change was primarily due to the impact of the consolidation of GLB and higher marketing expenses in the region. In addition, DIRECTV Japan, of which Hughes currently owns 42 percent, reported a total of 313,900 subscribers at the end of the third quarter of 1999. Hughes' minority share of DIRECTV Japan's losses was $20 million for the quarter, compared with $17 million in the third quarter of 1998. These losses are reported in "Other, net" in the Statement of Income (Loss) and Available Separate Consolidated Net Income (Loss). Satellite Services PanAmSat, which is 81% owned by Hughes, reported third quarter 1999 revenues of $210.7 million compared with $186.5 million in the prior year's period. The 13.0% increase includes a one-time customer payment associated with the termination of a direct-to-home video services agreement in India and the commencement of new service agreements on additional satellites placed in service. During the third quarter of 1999, total video services revenues increased 3% to $139.8 million while telecommunications services revenues increased 13% to $46.1 million, compared to the prior year's third quarter. EBITDA for the quarter was $169.0 million, a 24.5% increase over third quarter 1998 EBITDA of $135.7 million. EBITDA margin in the third quarter of 1999 was 80.2%, compared to 72.8% in the same period of 1998. The increases in EBITDA and EBITDA margin were principally due to the one-time termination payment described above, lower leaseback expense resulting from the exercise of certain early buy-out options under sale-leaseback agreements, and increased operating lease revenues. Satellite Systems Third quarter 1999 revenues for the segment declined to $510.8 million from $688.9 million for the same period in 1998. EBITDA for the third quarter of 1999 was $56.3 million compared to EBITDA of $76.7 million in the third quarter of 1998. These variances were principally due to reduced activity associated with the ICO Global Communications program. EBITDA margin in the quarter was 11.0%, compared to 11.1% in the third quarter of 1998. Network Systems HNS grew third quarter 1999 revenues 59.2% to $426.2 million, versus $267.7 million in the third quarter of 1998. This growth was due primarily to higher sales of DIRECTV receiving systems, satellite-based mobile telephone systems, and U.S. private business network systems. HNS shipped 730,000 DIRECTV receiving systems in the third quarter of 1999, compared to 232,000 in the same year-ago period. - 21 - HNS increased EBITDA 56.5% to $44.3 million in the quarter, compared to $28.3 million in the third quarter of 1998. The increase in EBITDA is primarily attributable to the increased revenues resulting from higher sales of DIRECTV receiving equipment, satellite-based mobile telephone systems, and U.S. private business network systems. EBITDA margin in the third quarter of 1999 was 10.4%, compared to 10.6% in the same year-ago period. BALANCE SHEET From December 31, 1998 to September 30, 1999, the Company's consolidated cash balance declined $1,183.8 million to $158.3 million and long-term debt increased $1,150.5 million to $1,929.2 million. The principal cash requirements for the first nine months were related to the acquisitions of United States Satellite Broadcasting Company and PRIMESTAR's medium-power satellite business, purchase of the Tempo high-power satellite assets, early buy-out of certain PanAmSat satellite sale-leaseback agreements, increased investment in the DIRECTV businesses in Latin America and Japan, capital expenditures and general working capital requirements. These requirements were partially offset by a $1.5 billion investment by America Online, Inc. (AOL) and proceeds from the settlement of the Williams patent infringement case.(3) Hughes Electronics Corporation is a unit of General Motors Corporation. The earnings of Hughes Electronics are used to calculate the earnings per share attributable to General Motors (NYSE:GMH) Class H common stock. NOTE: Hughes Electronics Corporation believes that certain statements in this press release may constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimate," "plan," "project," "anticipate," "expect," "intend," "outlook," "believe," and other similar expressions are intended to identify forward-looking statements and information. Actual results of Hughes may differ materially from anticipated results as a result of certain risks and uncertainties, which include but are not limited to those associated with: economic conditions; demand for products and services, and market acceptance; government action; local political or economic developments in or affecting countries where we have international operations; our ability to obtain export licenses; competition; our ability to achieve cost reductions; technological risks; our ability to address the year 2000 issue; interruptions to production attributable to causes outside our control; limitations on access to distribution channels; the success and timelines of satellite launches; the in-orbit performance of satellites; the ability of our customers to obtain financing; and our ability to access capital to maintain our financial flexibility. Hughes cautions that these important factors are not exclusive. - ---------------------- 1 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the sum of operating profit (loss) and depreciation and amortization. EBITDA margin is calculated by dividing EBITDA by total revenues. 2 Excludes the effects of purchase accounting adjustments related to General Motors' acquisition of Hughes in 1985. 3 Hughes was awarded a final judgement arising from its long-running Williams patent infringement case, which was originally filed by Hughes in 1973. The award resulted from the repeated infringement by the U.S. Government over a span of two decades of a patent that revolutionized communications satellite attitude control and made the geosynchronous satellite practical. A payment of $154.6 million was received in the first quarter of 1999 and was recorded in "Other, net." 4 Galaxy Brazil, Ltda. (GLB) is the local operating company providing DIRECTV service in Brazil. Grupo Galaxy Mexicana, S.A. de C.V. (GGM) is the local operating company providing DIRECTV service in Mexico. SurFin Ltd., provides financing for DIRECTV receiving equipment in Latin America. As a result of transactions that were completed in July 1999 (GLB), February 1999 (GGM) and November 1998 (SurFin), Hughes owns a majority position in each company. ###### - 22 - STATEMENT OF INCOME (LOSS) AND AVAILABLE SEPARATE CONSOLIDATED NET INCOME (LOSS) (Dollars in Millions Except Per Share Amounts) Nine Months Ended Third Quarter September 30, ------------- ------------- 1999 1998 1999 1998 - ---------------------------------------------------------------------------- Revenues Direct broadcast, leasing and other services $1,294.4 $640.5 $3,095.2 $1,845.8 Product sales 696.1 872.8 2,123.1 2,327.5 - ---------------------------------------------------------------------------- Total Revenues 1,990.5 1,513.3 5,218.3 4,173.3 - ---------------------------------------------------------------------------- Operating Costs and Expenses Cost of products sold 606.7 659.5 1,961.6 1,782.4 Broadcast programming and other costs 573.9 284.6 1,344.1 800.2 Selling, general and administrative expenses 598.3 390.4 1,551.6 1,052.2 Depreciation and amortization 216.5 111.3 499.3 309.2 Amortization of GM purchase accounting adjustments (1) 5.3 5.3 15.9 15.9 - ---------------------------------------------------------------------------- Total Operating Costs and Expenses 2,000.7 1,451.1 5,372.5 3,959.9 - ---------------------------------------------------------------------------- Operating Profit (Loss) (10.2) 62.2 (154.2) 213.4 Interest income 2.4 20.5 20.9 88.6 Interest expense (51.7) (3.6) (71.0) (9.5) Other, net (22.4) (33.4) 77.8 (102.8) - ---------------------------------------------------------------------------- Income (Loss) Before Income Taxes, Minority Interests and Cumulative Effect of Accounting Change (81.9) 45.7 (126.5) 189.7 Income tax provision (benefit) (38.2) 17.4 (44.9) 72.1 Minority interests in net losses of subsidiaries 8.8 9.3 22.1 19.2 - ---------------------------------------------------------------------------- Income (Loss) before cumulative effect of accounting change (34.9) 37.6 (59.5) 136.8 Cumulative effect of accounting change, net of taxes - - - (9.2) - ---------------------------------------------------------------------------- Net Income (Loss) (34.9) 37.6 (59.5) 127.6 Adjustments to exclude the effect of GM purchase accounting adjustments (1) 5.3 5.3 15.9 15.9 - ---------------------------------------------------------------------------- Earnings (Loss) excluding GM purchase Accounting adjustments (29.6) 42.9 (43.6) 143.5 Preferred stock dividends (24.7) - (26.3) - - ---------------------------------------------------------------------------- Earnings (Loss) Used for Computation of Available Separate Consolidated Net Income (Loss) $(54.3) $42.9 $(69.9) $143.5 ============================================================================ Available Separate Consolidated Net Income (Loss) Average number of shares of General Motors Class H Common Stock outstanding (in millions) (Numerator) 135.1 105.7 120.8 105.0 Average Class H dividend base (in millions) (Denominator) 428.9 399.9 414.7 399.9 Available Separate Consolidated Net Income (Loss) $(17.1) $11.4 $(20.4) $37.6 ============================================================================ Earnings (Loss) Attributable to General Motors Class H Common Stock on a Per Share Basis - Basic and Diluted $(0.13) $0.11 $(0.17) $0.36 ============================================================================ (1)Relates to General Motors' purchase of Hughes in 1985. - 23 - BALANCE SHEET (Dollars in Millions) September 30, 1999 December 31, ASSETS (Unaudited) 1998 - ---------------------------------------------------------------------------- Current Assets Cash and cash equivalents $158.3 $1,342.1 Accounts and notes receivable 1,289.8 922.4 Contracts in process 846.1 783.5 Inventories 639.1 471.5 Prepaid expenses, deferred income taxes and other 705.9 326.9 - ---------------------------------------------------------------------------- Total Current Assets 3,639.2 3,846.4 Satellites - Net 3,690.6 3,197.5 Property - Net 1,303.0 1,059.2 Net Investment in Sales-type Leases 155.9 173.4 Intangible Assets, net 7,781.5 3,552.2 Investments and Other Assets 2,236.1 1,606.3 - ---------------------------------------------------------------------------- Total Assets $18,806.3 $13,435.0 ============================================================================ LIABILITIES AND STOCKHOLDER'S EQUITY - ---------------------------------------------------------------------------- Current Liabilities Accounts payable $1,005.7 $764.1 Advances on contracts 164.5 291.8 Deferred revenues 194.9 43.8 Current portion of long-term debt 298.1 156.1 Accrued liabilities 933.1 753.7 - ---------------------------------------------------------------------------- Total Current Liabilities 2,596.3 2,009.5 Long-Term Debt 1,929.2 778.7 Postretirement Benefits Other Than Pensions 155.5 150.7 Other Liabilities and Deferred Credits 1,686.1 988.6 Deferred Income Taxes 425.0 643.9 Commitments and Contingencies Minority Interests 530.0 481.7 Stockholder's Equity 11,484.2 8,381.9 - ---------------------------------------------------------------------------- Total Liabilities and Stockholder's Equity $18,806.3 $13,435.0 ============================================================================ 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). - 24 - PRO FORMA SELECTED SEGMENT DATA* (Dollars in Millions) Nine Months Ended Third Quarter September 30, ------------- ------------- 1999 1998 1999 1998 - -------------------------------------------------------------------------- DIRECT-TO-HOME BROADCAST Total Revenues $1,144.6 $459.1 $2,571.4 $1,248.5 EBITDA (1) $47.7 $(30.6) $44.8 $(56.4) EBITDA Margin (1) 4.2% N/A 1.7% N/A Operating Loss $(67.6) $(61.8) $(159.4) $(133.6) Depreciation and Amortization $115.3 $31.2 $204.2 $77.2 Capital Expenditures (2) $97.6 $82.0 $253.4 $130.1 - -------------------------------------------------------------------------- SATELLITE SERVICES Total Revenues $210.7 $186.5 $604.6 $570.6 EBITDA (1) $169.0 $135.7 $465.9 $409.0 EBITDA Margin (1) 80.2% 72.8% 77.1% 71.7% Operating Profit $99.1 $79.1 $261.4 $239.2 Operating Profit Margin 47.0% 42.4% 43.2% 41.9% Depreciation and Amortization $69.9 $56.6 $204.5 $169.8 Capital Expenditures (3) $382.7 $190.7 $857.9 $605.0 - -------------------------------------------------------------------------- SATELLITE SYSTEMS Total Revenues $510.8 $688.9 $1,694.9 $1,988.0 EBITDA (1)(4) $56.3 $76.7 $(64.7) $214.0 EBITDA Margin (1) 11.0% 11.1% N/A 10.8% Operating Profit (Loss) (4) $41.3 $63.8 $(106.1) $178.9 Operating Profit Margin 8.1% 9.3% N/A 9.0% Depreciation and Amortization $15.0 $12.9 $41.4 $35.1 Capital Expenditures $17.0 $18.2 $52.1 $50.5 - -------------------------------------------------------------------------- NETWORK SYSTEMS Total Revenues $426.2 $267.7 $998.2 $674.1 EBITDA (1)(4) $44.3 $28.3 $63.4 $9.6 EBITDA Margin (1) 10.4% 10.6% 6.4% 1.4% Operating Profit (Loss) (4) $32.2 $16.9 $25.7 $(20.2) Operating Profit Margin 7.6% 6.3% 2.6% N/A Depreciation and Amortization $12.1 $11.4 $37.7 $29.8 Capital Expenditures $5.4 $10.7 $23.1 $26.4 - -------------------------------------------------------------------------- ELIMINATIONS and OTHER Total Revenues $(301.8) $(88.9) $(650.8) $(307.9) EBITDA (1) $(105.7) $(31.3) $(148.4) $(37.7) Operating Loss $(109.9) $(30.5) $(159.9) $(35.0) Depreciation and Amortization $4.2 $(0.8) $11.5 $(2.7) Capital Expenditures $41.4 $(21.4) $45.9 $114.5 - -------------------------------------------------------------------------- TOTAL Total Revenues $1,990.5 $1,513.3 $5,218.3 $4,173.3 EBITDA (1)(4) $211.6 $178.8 $361.0 $538.5 EBITDA Margin (1) 10.6% 11.8% 6.9% 12.9% Operating Profit (Loss) (4) $(4.9) $67.5 $(138.3) $229.3 Operating Profit Margin N/A 4.5% N/A 5.5% Depreciation and Amortization $216.5 $111.3 $499.3 $309.2 Capital Expenditures $544.1 $280.2 $1,232.4 $926.5 ========================================================================== * 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)EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the sum of operating profit (loss) and depreciation and amortization. EBITDA margin is calculated by dividing EBITDA by total revenues. (2)Includes satellite expenditures amounting to $13.6 million, $38.0 million, $89.1 million and $38.0 million, respectively. (3)Includes satellite expenditures amounting to $93.2 million, $182.2 million, $408.8 million and $422.2 million, respectively. Also included are expenditures related to the early buy-out of satellite sale-leasebacks totaling $263.2 million for the third quarter of 1999 and $404.5 million and $155.5 million for the first nine months of 1999 and 1998, respectively. (4)Amounts for the nine months ended September 30, 1999 include charges of $81.0 million and $11.0 million for the Satellite Systems and Network Systems segments, respectively, relating to the termination of the Asia-Pacific Mobile Telecommunications satellite systems contract due to export licenses not being issued. - 25 - 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 14, 1999 ----------------- By s/Peter R. Bible ---------------------------- (Peter R. Bible, Chief Accounting Officer) - 26 - -----END PRIVACY-ENHANCED MESSAGE-----