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þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2005 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
STATE OF DELAWARE | 38-0572515 | |
(State or other jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
300 Renaissance Center, Detroit, Michigan | 48265-3000 | |
(Address of Principal Executive Offices) | (Zip Code) |
Name of Each Exchange on | ||
Title of Each Class | Which Registered | |
Common, $12/3 par value | New York Stock Exchange, Inc. |
Chicago Stock Exchange, Inc. | Chicago, Illinois | |||
Pacific Exchange, Inc. | San Francisco, California | |||
Philadelphia Stock Exchange, Inc. | Philadelphia, Pennsylvania | |||
Frankfurter Wertpapierborse | Frankfurt am Main, Germany | |||
Borse Düsseldorf | Düsseldorf, Germany | |||
Bourse de Bruxelles | Brussels, Belgium | |||
Euronext Paris | Paris, France | |||
The London Stock Exchange | London, England |
Part and Item Number of Form 10-K | ||
Document | into Which Incorporated | |
General Motors Notice of Annual Meeting of Stockholders and Proxy Statement for the Annual Meeting of Stockholders to be held June 6, 2006 | Part III, Items 10 through 14 | |
General Motors Acceptance Corporation Annual Report on Form 10-K for the year ended December 31, 2005 | Part I, Item 1; Part II, Items 6, 7, and 8 |
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Item 1. | Business |
Item | Page(s) | |
Production Volumes | II-12 through II-17 | |
Employment and Payrolls | II-39 | |
Note 26 to the GM Consolidated Financial Statements (Segment Reporting) | II-120 through II-123 |
• | Automotive and Other Operations (Auto & Other); and | |
• | Financing and Insurance Operations (FIO). |
• | GM’s four automotive regions: GM North America (GMNA), GM Europe (GME), GM Latin America/ Africa/ Mid-East (GMLAAM), and GM Asia Pacific (GMAP), which constitute GM Automotive (GMA); and | |
• | Other, which includes the elimination of intersegment transactions, certain non-segment specific revenues and expenditures, including legacy costs related to postretirement benefits for certain Delphi Corporation (Delphi) and other retirees, and certain corporate activities. |
GM Automotive and Other Operations |
• Chevrolet | • Buick | • Saab | ||
• Pontiac | • Cadillac | • Hummer | ||
• GMC | • Saturn |
• Opel | • Saab | • GMC | ||
• Vauxhall | • Buick | • Cadillac | ||
• Holden | • Chevrolet | • Daewoo |
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• Pontiac | • Wuling | • Saab | ||
• Suzuki | • Daewoo | • Chevrolet | ||
• Isuzu | • Holden | |||
• Buick | • Cadillac |
GM Financing and Insurance Operations |
Hughes Split-Off |
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Vehicle Unit Sales(1) | ||||||||||||||||||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||||
GM as | GM as | GM as | ||||||||||||||||||||||||||||||||||||
a % of | a % of | a % of | ||||||||||||||||||||||||||||||||||||
Industry | GM | Industry | Industry | GM | Industry | Industry | GM | Industry | ||||||||||||||||||||||||||||||
(Units in thousands) | ||||||||||||||||||||||||||||||||||||||
United States | ||||||||||||||||||||||||||||||||||||||
Cars | ||||||||||||||||||||||||||||||||||||||
Small | 2,370 | 490 | 20.7% | 2,256 | 456 | 20.2% | 2,339 | 487 | 20.8% | |||||||||||||||||||||||||||||
Mid-size | 3,740 | 1,007 | 26.9% | 3,714 | 1,190 | 32.0% | 3,681 | 1,240 | 33.7% | |||||||||||||||||||||||||||||
Sport | 424 | 58 | 13.6% | 403 | 59 | 14.6% | 420 | 32 | 7.5% | |||||||||||||||||||||||||||||
Luxury | 1,208 | 197 | 16.3% | 1,190 | 180 | 15.2% | 1,197 | 202 | 16.9% | |||||||||||||||||||||||||||||
Total cars | 7,742 | 1,752 | 22.6% | 7,563 | 1,885 | 24.9% | 7,637 | 1,961 | 25.7% | |||||||||||||||||||||||||||||
Trucks | ||||||||||||||||||||||||||||||||||||||
Pickups | 3,201 | 1,163 | 36.3% | 3,198 | 1,133 | 35.4% | 3,115 | 1,151 | 37.0% | |||||||||||||||||||||||||||||
Vans | 1,468 | 328 | 22.4% | 1,456 | 313 | 21.5% | 1,398 | 339 | 24.3% | |||||||||||||||||||||||||||||
Utilities | 4,585 | 1,212 | 26.4% | 4,693 | 1,324 | 28.2% | 4,523 | 1,264 | 27.9% | |||||||||||||||||||||||||||||
Medium Duty | 459 | 63 | 13.8% | 392 | 52 | 13.2% | 297 | 42 | 14.0% | |||||||||||||||||||||||||||||
Total trucks | 9,713 | 2,766 | 28.5% | 9,739 | 2,822 | 29.0% | 9,333 | 2,796 | 30.0% | |||||||||||||||||||||||||||||
Total United States | 17,455 | 4,518 | 25.9% | 17,302 | 4,707 | 27.2% | 16,970 | 4,757 | 28.0% | |||||||||||||||||||||||||||||
Canada, Mexico, and Other | 3,087 | 728 | 23.6% | 2,980 | 705 | 23.6% | 2,872 | 683 | 23.8% | |||||||||||||||||||||||||||||
Total GMNA | 20,542 | 5,246 | 25.5% | 20,282 | 5,412 | 26.7% | 19,842 | 5,440 | 27.4% | |||||||||||||||||||||||||||||
GME | 20,970 | 1,982 | 9.5% | 20,763 | 1,956 | 9.4% | 19,588 | 1,819 | 9.3% | |||||||||||||||||||||||||||||
GMLAAM | 4,980 | 881 | 17.7% | 4,225 | 738 | 17.5% | 3,626 | 584 | 16.1% | |||||||||||||||||||||||||||||
GMAP | 18,240 | 1,064 | 5.8% | 17,156 | 887 | 5.2% | 15,919 | 773 | 4.9% | |||||||||||||||||||||||||||||
Total Worldwide | 64,732 | 9,173 | 14.2% | 62,426 | 8,993 | 14.4% | 58,975 | 8,616 | 14.6% |
(1) | GM vehicle unit sales primarily represent vehicles manufactured by GM or manufactured by GM’s investees and sold either under a GM nameplate or through a GM-owned distribution network. Consistent with industry practice, vehicle unit sales information includes estimates of sales in certain countries where public reporting is not legally required or otherwise available on a consistent basis. |
Fleet Sales and Deliveries |
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GM U.S. Fleet Sales | ||||||||||||||
Years Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
(Units in thousands) | ||||||||||||||
Daily rental units | 780 | 801 | 713 | |||||||||||
Other fleet units | 388 | 353 | 288 | |||||||||||
Total fleet units | 1,168 | 1,154 | 1,001 | |||||||||||
U.S. retail/ fleet mix | ||||||||||||||
U.S. fleet sales as % of total sales | ||||||||||||||
Cars | 36.8 | % | 36.7 | % | 31.7 | % | ||||||||
Trucks | 19.0 | % | 16.4 | % | 13.6 | % | ||||||||
Total | 25.9 | % | 24.5 | % | 21.0 | % |
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As of December 31, | ||||||||
2005 | 2004 | |||||||
GMNA | 8,440 | 8,661 | ||||||
GME | 10,200 | 9,522 | ||||||
GMLAAM | 2,053 | 1,679 | ||||||
GMAP | 3,329 | 2,788 | ||||||
Total Worldwide | 24,022 | 22,650 | ||||||
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U.S Market Share | ||||
GM | 25.9 | % | ||
Ford Motor Company | 18.2 | % | ||
DaimlerChrysler AG | 15.3 | % | ||
Toyota Corporation | 13.0 | % | ||
Honda Motor Company, Ltd. | 8.4 | % | ||
Nissan Motor Corporation, Ltd. | 6.2 | % |
Automotive Emissions Control |
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Industrial Environmental Control |
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• | GM has been identified as a potentially responsible party at sites identified by the EPA and state regulatory agencies for investigation and remediation of soil and/or groundwater contamination under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and similar state statutes. GM voluntarily and actively participates in cleanup activity where such involvement has been verified. The total liability for sites involving GM was $66 million at December 31, 2005. This compares with $79 million at December 31, 2004. | |
• | For closed plants owned by the Corporation, the estimated liability for environmental investigation and remediation was $29 million at December 31, 2005, based on an environmental assessment of the plant property. This compares with $17 million at December 31, 2004. The increase in 2005 was primarily due to additionalclean-up responsibilities at two idled facilities. | |
• | GM is involved in investigation and remediation activities at additional locations worldwide with an estimated liability of $160 million at December 31, 2005. This compares with an estimated liability of $118 million at December 31, 2004. The increase in 2005 was primarily due to additionalclean-up responsibilities at an active facility. |
Vehicular Noise Control |
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Automotive Fuel Economy |
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Non U.S. Regulation |
Safety |
Pension Legislation |
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Export Control |
2005 | 2004 | |||||||
GMNA | 173 | 181 | ||||||
GME(1) | 63 | 61 | ||||||
GMLAAM | 31 | 29 | ||||||
GMAP(2) | 31 | 15 | ||||||
GMAC | 34 | 34 | ||||||
Other | 3 | 4 | ||||||
Total | 335 | 324 | ||||||
(1) | 2005 includes approximately 7,000 employees added from a former powertrain joint venture with Fiat. |
(2) | 2005 includes approximately 13,000 employees added as the result of the consolidation of GM Daewoo. |
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• | Risks related to GM and its automotive business; and | |
• | Risks related to GM’s finance, mortgage and insurance businesses. |
Our ability to achieve structural and material cost reductions and to realize production efficiencies for our automotive operations is critical to our ability to achieve our turnaround plan and return to profitability. |
Financial difficulties, labor stoppages or work slowdowns at key suppliers, including Delphi, could result in a disruption in our operations and have a material adverse effect on our business. |
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Delphi may seek to reject or compromise its obligations to us through its Chapter 11 bankruptcy proceedings. |
We have guaranteed a significant amount of Delphi’s financial obligations to its unionized workers. If Delphi fails to satisfy these obligations, we would be obligated to pay some of these obligations. |
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Our health-care cost burden is one of our biggest competitive challenges, and if we do not make progress on structurally fixing this issue, it will continue to be a long-term threat to GM. |
Our extensive pension and OPEB obligations to retirees are a competitive disadvantage for us. |
We have recently experienced a series of credit rating actions that have downgraded our credit ratings to historically low levels. Further reduction of our credit ratings, or failure to restore our credit ratings to higher levels, could have a material adverse effect on our business. |
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Our liquidity position could be negatively affected by a variety of factors, which in turn could have a material adverse effect on our business. |
GM’s recent restatement of its prior financial statements could negatively impact its rights and obligations under certain contracts to which it is a party, including its $5.6 billion standby credit facility, which could under certain circumstances materially adversely affect GM’s future liquidity. |
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Continued failure to achieve profitability may cause some or all of our deferred tax assets to expire. |
Restrictions in our labor agreements, including the JOBS bank provisions in the UAW agreement, could limit our ability to pursue or achieve cost savings through restructuring initiatives, and labor strikes, work stoppages or similar difficulties could significantly disrupt our operations. |
The government is currently investigating certain of our accounting practices. The final outcome of these investigations could require us to restate prior financial results. |
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We operate in a highly competitive industry that has excess manufacturing capacity. |
The bankruptcy or insolvency of a major competitor could result in further competitive disadvantages for us in relation to that competitor. |
Shortages and increases in the price of fuel can result in diminished profitability due to shifts in consumer vehicle demand. |
A decline in consumer demand for our higher margin vehicles could result in diminished profitability. |
Our indebtedness and other obligations of our automotive operations are significant and could materially adversely affect our business. |
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• | Require us to dedicate a significant portion of our cash flow from operations to the payment of principal of, and interest on, our indebtedness, which will reduce the funds available for other purposes; and | |
• | Make us more vulnerable to adverse economic and industry conditions, limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing business and economic conditions. |
Our pension and OPEB expenses are affected by factors outside our control, including the performance of plan assets, interest rates, actuarial data and experience, and changes in laws and regulations. |
The pace of introduction and market acceptance of new vehicles is important to our success. |
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Economic and industry conditions constantly change and could have a material adverse effect on our business and results of operations. |
Changes in existing, or the adoption of new, laws, regulations or policies of governmental organizations may have a significant negative impact on how we do business. |
Our businesses outside the United States expose us to additional risks that may cause our revenues and profitability to decline. |
• | Multiple foreign regulatory requirements that are subject to change, including foreign regulations restricting our ability to sell our products in those countries; |
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• | Differing local product preferences and product requirements; | |
• | Fluctuations in foreign currency exchange rates and interest rates; | |
• | Difficulty in establishing, staffing and managing foreign operations; | |
• | Differing labor regulations; | |
• | Consequences from changes in tax laws; | |
• | Foreign state takeovers of our manufacturing facilities in those countries; and | |
• | Political and economic instability, natural calamities, war and terrorism. |
A failure of or interruption in the communications and information systems on which we rely to conduct our operations could adversely affect our business. |
We could be materially adversely affected by changes in currency exchange rates, commodity prices, equity prices and interest rates. |
We are subject to significant risks of litigation. |
We are considering the sale of a controlling interest in GMAC as well as exploring strategic and structural alternatives for ResCap. There is a risk that these initiatives may not occur, or if they do occur, they may not delink GMAC’s credit rating from GM’s credit rating or maintain ResCap’s investment grade credit rating. In addition, any such initiative, if completed, would reduce our interest in their earnings going forward. |
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• | GMAC’s access to capital may be seriously constrained, as most unsecured funding sources may decline, including bank funding; | |
• | The cost of funds related to borrowings that are secured by assets may increase, leading to a reduction in liquidity for certain asset classes; | |
• | It may be increasingly difficult to securitize assets, resulting in reduced capacity to support overall automotive originations; | |
• | Uncompetitive funding costs may result in a lower return on capital and significantly lower earnings and dividends; and | |
• | GMAC may need to consider divesting certain businesses in order to maintain adequate liquidity to fund new originations or otherwise preserve the value of its businesses. |
Our finance, mortgage and insurance businesses require substantial capital, and if we are unable to maintain adequate financing sources, our business, results of operations and financial condition will suffer and jeopardize our ability to continue operations. |
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We are exposed to credit risk which could affect the business, results of operations and financial condition of our finance, mortgage and insurance operations. |
Our earnings may decrease because of increases or decreases in interest rates. |
• | Rising interest rates will increase our cost of funds. | |
• | Rising interest rates may reduce our consumer automotive financing volume by influencing consumers to pay cash for, as opposed to financing, vehicle purchases. | |
• | Rising interest rates generally reduce our residential mortgage loan production as borrowers become less likely to refinance and the costs associated with acquiring a new home become more expensive. | |
• | Rising interest rates will generally reduce the value of mortgage and automotive financing loans and contracts, retained interests and fixed income securities held in our investment portfolio. |
Our hedging strategies may not be successful in mitigating our risks associated with changes in interest rates. |
ResCap’s ability to pay dividends and to prepay subordinated debt obligations to GMAC is restricted by contractual arrangements. |
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We use estimates and assumptions in determining the fair value of certain of our assets, in determining our allowance for credit losses, in determining lease residual values and in determining our reserves for insurance losses and loss adjustment expenses. If our estimates or assumptions prove to be incorrect, the business, results of operations and financial condition of our finance, mortgage and insurance operations could be materially adversely affected. |
General business and economic conditions of the industries and geographic areas in which we operate affect the business, results of operations and financial condition of our finance, mortgage and insurance operations. |
• | A significant and sustained increase in gasoline prices could decrease new and used vehicle purchases, thereby reducing the demand for automotive retail financing and automotive wholesale financing. | |
• | A general decline in residential home prices in the United States could negatively affect the value of our mortgage loans held for investment and our retained interests in securitized mortgage loans. Such a decrease could also restrict our ability to originate, sell or securitize mortgage loans and impact the repayment of advances under our warehouse loans. |
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• | An increase in automotive labor rates or parts prices could negatively affect the value of our automotive extended service contracts. |
Our business, results of operations and financial condition may be materially adversely affected by decreases in the residual value of off-lease vehicles. |
Fluctuations in valuation of investment securities or significant fluctuations in investment market prices could negatively affect revenues. |
Changes in existing U.S. government-sponsored mortgage programs, or disruptions in the secondary markets in the United States or in other countries in which our mortgage subsidiaries operate, could materially adversely affect the business, results of operations and financial condition of our mortgage business. |
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GMAC may be required to repurchase contracts and provide indemnification if GMAC breaches representations and warranties from its securitization and whole loan transactions, which could harm our business, results of operations and financial condition. |
Significant indemnification payments or contract, lease or loan repurchase activity of retail contracts or leases or mortgage loans could harm our business, results of operations and financial condition. |
A loss of contractual servicing rights could have a material adverse effect on our operations. |
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The regulatory environment in which GMAC operates could have a material adverse effect on its business. |
The worldwide financial services industry is highly competitive. If we are unable to compete successfully or if there is increased competition in the automotive financing, mortgage and/or insurance markets or generally in the markets for securitizations or asset sales, our margins could be materially adversely affected. |
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Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
• Germany | • Australia | • China | • Poland | |||
• United Kingdom | • Sweden | • Thailand | • South Korea | |||
• Brazil | • Belgium | • Argentina | • South Africa | |||
• Mexico | • Spain | • Portugal |
Item 3. | Legal Proceedings |
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Item 4. | Submission of Matters to a Vote of Security Holders |
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Item 4A. | Executive Officers of the Registrant |
Name and (Age) | Positions and Offices | |
G. Richard Wagoner, Jr. (53) | Chairman and Chief Executive Officer | |
John M. Devine (61) | Vice Chairman | |
Frederick A. Henderson (47) | Vice Chairman and Chief Financial Officer | |
Robert A. Lutz (74) | Vice Chairman Global Product Development | |
Thomas A. Gottschalk (63) | Executive Vice President — Law and Public Policy, and General Counsel |
Name and (Age) | Positions and Offices | |
Troy A. Clarke (50) | Group Vice President and President, GM Asia Pacific | |
Gary L. Cowger (58) | Group Vice President, Global Manufacturing and Labor Relations | |
Eric A. Feldstein (46) | Group Vice President and Chairman, General Motors Acceptance Corporation | |
Carl-Peter Forster (51) | Group Vice President and President, GM Europe | |
Maureen Kempston Darkes (57) | Group Vice President and President, GM Latin America, Africa and Middle East | |
Thomas G. Stephens (57) | Group Vice President, GM Powertrain | |
Ralph J. Szygenda (57) | Group Vice President and Chief Information Officer | |
Bo I. Andersson (50) | Vice President, Global Purchasing and Supply Chain | |
Kathleen S. Barclay (50) | Vice President, Global Human Resources | |
Lawrence D. Burns (54) | Vice President, Research & Development and Strategic Planning | |
Steven J. Harris (60) | Vice President, Global Communications | |
Peter R. Bible (47) | Chief Accounting Officer | |
Walter G. Borst (44) | Treasurer | |
Paul W. Schmidt (61) | Controller |
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Item 5. | Market for the Registrant’s Common Equity and Related Stockholder Matters |
2005 Quarters | |||||||||||||||||
1st | 2nd | 3rd | 4th | ||||||||||||||
Cash dividends per share of common stock $12/3 par value | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 | |||||||||
Price range of common stock $12/3 par value(1): High | $ | 40.80 | $ | 36.65 | $ | 37.70 | $ | 31.50 | |||||||||
Low | $ | 27.98 | $ | 24.67 | $ | 30.21 | $ | 18.33 |
2004 Quarters | |||||||||||||||||
1st | 2nd | 3rd | 4th | ||||||||||||||
Cash dividends per share of common stock $12/3 par value | $ | 0.50 | $ | 0.50 | $ | 0.50 | $ | 0.50 | |||||||||
Price range of common stock $12/3 par value(1): High | $ | 55.55 | $ | 50.04 | $ | 46.93 | $ | 43.29 | |||||||||
Low | $ | 44.72 | $ | 42.88 | $ | 40.53 | $ | 36.90 |
(1) | New York Stock Exchange composite interday prices as listed in the price history database available at www.NYSEnet.com. |
Number of Securities | Number of Securities | ||||||||||||
to be Issued upon | Weighted Average | Remaining Available for | |||||||||||
Exercise of | Exercise Price of | Future Issuance under | |||||||||||
Outstanding Options, | Outstanding Options, | Equity Compensation | |||||||||||
Plan Category | Warrants and Rights | Warrants and Rights | Plans(1) | ||||||||||
Equity compensation plans approved by security holders: | |||||||||||||
General Motors Amended Stock Incentive Plan (GMSIP) | 84,130,586 | $ | 53.11 | 4,901,267 | |||||||||
Equity compensation plans not approved by security holders(2): | |||||||||||||
General Motors 1998 Salaried Stock Option Plan (GMSSOP) | 27,213,635 | $ | 55.19 | 771,326 | |||||||||
Total | 111,344,221 | $ | 53.62 | 5,672,593 | |||||||||
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(1) | Excludes securities reflected in the first column, “Number of securities to be issued upon exercise of outstanding options, warrants and rights.” |
(2) | All equity compensation plans except the GMSSOP were approved by the stockholders. The GMSSOP was adopted by the Board of Directors in 1998 and expires December 31, 2007. The purpose of the plans is to recognize the importance and contribution of GM employees in the creation of stockholder value, to further align compensation with business success and to provide employees with the opportunity for long-term capital accumulation through the grant of options to acquire shares of General Motors common stock. |
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Item 6. | Selected Financial Data |
Years Ended December 31 | |||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||
(Dollars in millions except per share amounts) | |||||||||||||||||||||
Total net sales and revenues | $ | 192,604 | $ | 193,517 | $ | 185,837 | $ | 177,867 | $ | 169,051 | |||||||||||
Income (loss) from continuing operations | $ | (10,458 | ) | $ | 2,804 | $ | 2,899 | $ | 1,813 | $ | 1,041 | ||||||||||
(Loss) from discontinued operations | — | — | (219 | ) | (239 | ) | (621 | ) | |||||||||||||
Gain from sale of discontinued operations | — | — | 1,179 | — | — | ||||||||||||||||
Cumulative effect of accounting change | (109 | ) | — | — | — | — | |||||||||||||||
Net income (loss)(1) | $ | (10,567 | ) | $ | 2,804 | $ | 3,859 | $ | 1,574 | $ | 420 | ||||||||||
$12/3 par value common stock | |||||||||||||||||||||
Basic earnings (losses) per share from continuing operations before cumulative effect of accounting change | $ | (18.50 | ) | $ | 4.97 | $ | 5.17 | $ | 3.24 | $ | 1.89 | ||||||||||
Basic earnings (losses) per share from discontinued operations | — | — | $ | 2.14 | $ | (0.16 | ) | $ | (0.42 | ) | |||||||||||
Basic (losses) per share from cumulative effect of accounting change | $ | (0.19 | ) | — | — | — | — | ||||||||||||||
Diluted earnings (losses) per share from continuing operations before cumulative effect of accounting change | $ | (18.50 | ) | $ | 4.94 | $ | 5.09 | $ | 3.23 | $ | 1.87 | ||||||||||
Diluted earnings (losses) per share from discontinued operations | — | — | $ | 2.11 | $ | (0.16 | ) | $ | (0.43 | ) | |||||||||||
Diluted (loss) per share from cumulative effect of accounting change | $ | (0.19 | ) | — | — | — | — | ||||||||||||||
Cash dividends declared per share | $ | 2.00 | $ | 2.00 | $ | 2.00 | $ | 2.00 | $ | 2.00 | |||||||||||
GM’s Class H common stock(2) | |||||||||||||||||||||
Basic earnings (losses) per share from discontinued operations | $ | — | $ | — | $ | (0.22 | ) | $ | (0.21 | ) | $ | (0.55 | ) | ||||||||
Diluted earnings (losses) per share from discontinued operations | $ | — | $ | — | $ | (0.22 | ) | $ | (0.21 | ) | $ | (0.55 | ) | ||||||||
Cash dividends declared per share | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Total assets | $ | 476,078 | $ | 479,921 | $ | 448,819 | $ | 369,346 | $ | 322,637 | |||||||||||
Notes and loans payable | $ | 285,750 | $ | 300,279 | $ | 271,756 | $ | 200,168 | $ | 165,361 | |||||||||||
Stockholders’ equity | $ | 14,597 | $ | 27,360 | $ | 24,903 | $ | 6,412 | $ | 19,467 |
(1) | On January 1, 2002, the Corporation implemented Statement of Financial Accounting Standards (SFAS) No. 142 “Goodwill and Other Intangible Assets,” which ceased the amortization method of accounting for goodwill and changed to an impairment only approach. Accordingly, goodwill is no longer amortized and is tested for impairment at least annually. Effective January 1, 2003, the Corporation |
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began expensing the fair market value of newly granted stock options and other stock-based compensation awards issued to employees to conform to SFAS No. 123, “Accounting for Stock-Based Compensation.” Effective July 1, 2003, the Corporation began consolidating certain variable interest entities to conform to FASB Interpretation No. (FIN) 46, “Consolidation of Variable Interest Entities.” As of December 31, 2005, the Corporation recorded a pre-tax asset retirement obligation of $181 million in accordance with the requirements of FIN 47 “Accounting for Conditional Asset Retirement Obligations.” The cumulative effect on net loss, net of related income tax effects, of recording the asset retirement obligations was $109 million or $0.19 per share. | |
(2) | Effective December 22, 2003, GM split off Hughes by distributing Hughes common stock to the holders of GM Class H common stock in exchange for all outstanding shares of GM Class H common stock. Simultaneously, GM sold its 19.8% retained economic interest in Hughes to News Corporation in exchange for cash and News Corporation Preferred ADSs. All shares of GM Class H common stock were then cancelled. See Note 2 to the Consolidated Financial Statements. |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Automotive Industry |
Financial Results |
GMNA Market Share and Product Mix |
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Financial Results — (concluded) |
Delphi Chapter 11 Proceedings |
GMNA Restructuring and Global Asset Impairments |
Health-Care Cost Escalation |
Strategy |
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• | Product Excellence — continue to raise the bar in the execution of great cars and trucks | |
• | Revitalize Sales and Marketing Strategy — offer customers the best value in the industry | |
• | Accelerate Cost Reductions and Quality Improvements — improve GM’s cost position and reduce our breakeven point in response to an intensely competitive environment | |
• | Address Health Care Burden — reduce legacy cost disadvantages |
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• | The bankruptcy of our largest supplier, Delphi. This situation presents significant risks to GM, including disruption in the supply of automotive systems, components, and parts, GM receiving only a portion of amounts owed by Delphi to GM, and obligations in excess of amounts recognized by GM in 2005 in connection with benefit guarantees. This situation also presents opportunities for GM, including reducing, over the long term, the significant cost penalty GM incurs in obtaining parts from Delphi, as well as improving the quality of systems, components and parts GM procures from Delphi as a result of the restructuring of Delphi through the Chapter 11 process. | |
• | The pursuit of a possible sale of a controlling interest in GMAC with the goal of delinking GMAC’s credit rating from GM’s credit rating and renewing GMAC’s access to low cost financing, and the exploration of strategic and structural alternatives for ResCap. | |
• | Negotiations with the UAW in connection with the expiration of our collective bargaining agreement in September 2007. | |
• | Restructuring initiatives in other areas, including Brazil, Europe, and Australia. |
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Business Environment |
• | Continued demand for GM’s most profitable products and the maintenance of a strong product mix; | |
• | The introduction of innovative new products on a timely cadence, through the integration of global architectures, engineering, and procurement efforts; | |
• | The implementation of measures for reducing structural costs, offsetting legacy and health-care burdens; | |
• | Maintenance of sufficient balance sheet strength and liquidity; and | |
• | Other factors affecting GM’s Financing and Insurance Operations (FIO) reportable operating segment results, including interest rates, credit ratings, and demand for mortgage financing. |
• | GM’s four automotive regions: GM North America (GMNA), GM Europe (GME), GM LatinAmerica/Africa/Mid-East (GMLAAM), and GM Asia Pacific (GMAP), which constitute GM Automotive (GMA); and | |
• | Other, which includes the elimination of intersegment transactions, certain non-segment specific revenues and expenditures, including legacy costs related to postretirement benefits for certain Delphi and other retirees, and certain corporate activities. |
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Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in millions) | |||||||||||||
Consolidated: | |||||||||||||
Total net sales and revenues | $ | 192,604 | $ | 193,517 | $ | 185,837 | |||||||
Income (loss) from continuing operations before cumulative effect of accounting change | $ | (10,458 | ) | $ | 2,804 | $ | 2,899 | ||||||
Net income | $ | (10,567 | ) | $ | 2,804 | $ | 3,859 | ||||||
Net margin from continuing operations | (5.4 | )% | 1.4 | % | 1.6 | % | |||||||
Automotive and Other Operations: | |||||||||||||
Total net sales and revenues | $ | 158,221 | $ | 161,545 | $ | 155,831 | |||||||
Income (loss) from continuing operations before cumulative effect of accounting change | $ | (12,816 | ) | $ | (145 | ) | $ | 137 | |||||
Net income (loss) | $ | (12,925 | ) | $ | (145 | ) | $ | 1,097 | |||||
Financing and Insurance Operations: | |||||||||||||
Total revenues | $ | 34,383 | $ | 31,972 | $ | 30,006 | |||||||
Net income | $ | 2,358 | $ | 2,949 | $ | 2,762 |
• | Consolidated net loss of $10.6 billion, or $18.69 per share; | |
• | Losses at all automotive regions; | |
• | Charge recognized for announced GMNA restructuring plan; | |
• | Charge recognized for contingent exposures relating to Delphi’s Chapter 11 filing, including under the benefit guarantees; | |
• | Strong performance at GMAC despite challenging environment; | |
• | Strong year-end cash position; and |
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• | Favorable returns on pension assets, resulting in U.S. Hourly and Salaried plans being overfunded on a Statement of Financial Accounting Standards No. 87 basis by approximately $6 billion. |
Years Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
(Dollars in millions) | ||||||||||||||
Auto & Other: | ||||||||||||||
Total net sales and revenues | $ | 158,221 | $ | 161,545 | $ | 155,831 | ||||||||
Income (loss) from continuing operations before cumulative effect of accounting change | $ | (12,816 | ) | $ | (145 | ) | $ | 137 | ||||||
(Loss) from discontinued operations | — | — | (219 | ) | ||||||||||
Gain on sale of discontinued operations | — | — | 1,179 | |||||||||||
Cumulative effect of accounting change | (109 | ) | — | — | ||||||||||
Net income (loss) | $ | (12,925 | ) | $ | (145 | ) | $ | 1,097 | ||||||
GMA net income (loss) by region: | ||||||||||||||
GMNA | $ | (8,239 | ) | $ | 1,409 | $ | 879 | |||||||
GME | (1,198 | ) | (925 | ) | (466 | ) | ||||||||
GMLAAM | (571 | ) | 60 | (329 | ) | |||||||||
GMAP | (220 | ) | 730 | 576 | ||||||||||
Net income (loss) | $ | (10,228 | ) | $ | 1,274 | $ | 660 | |||||||
Net margin | (6.4 | )% | 0.8 | % | 0.4 | % | ||||||||
GM global automotive market share | 14.2 | % | 14.4 | % | 14.6 | % | ||||||||
Other: | ||||||||||||||
Income (loss) from continuing operations | $ | (2,697 | ) | $ | (1,419 | ) | $ | (523 | ) | |||||
(Loss) from discontinued operations | — | — | (219 | ) | ||||||||||
Gain on sale of discontinued operations | — | — | 1,179 | |||||||||||
Net income (loss) | $ | (2,697 | ) | $ | (1,419 | ) | $ | 437 | ||||||
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GM North America |
Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in millions) | |||||||||||||
GMNA: | |||||||||||||
Total net sales and revenues | $ | 104,755 | $ | 114,545 | $ | 116,310 | |||||||
Net income (loss) | $ | (8,239 | ) | $ | 1,409 | $ | 879 | ||||||
Net margin | (7.9 | )% | 1.2 | % | 0.8 | % |
(Volume in thousands) | ||||||||||||||
Production volume | ||||||||||||||
Cars | 1,834 | 1,997 | 2,184 | |||||||||||
Trucks | 3,022 | 3,223 | 3,277 | |||||||||||
Total GMNA | 4,856 | 5,220 | 5,461 | |||||||||||
Vehicle unit sales | ||||||||||||||
Industry — North America | 20,542 | 20,282 | 19,842 | |||||||||||
GM as a percentage of industry | 25.5 | % | 26.7 | % | 27.4 | % | ||||||||
Industry — U.S. | 17,455 | 17,302 | 16,970 | |||||||||||
GM as a percentage of industry | 25.9 | % | 27.2 | % | 28.0 | % | ||||||||
GM cars | 22.6 | % | 24.9 | % | 25.7 | % | ||||||||
GM trucks | 28.5 | % | 29.0 | % | 30.0 | % |
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• | Unfavorable product mix, which adversely affected net income by approximately $2.2 billion due primarily to reduced demand for GMNA’s large utility vehicles which were reaching the end of their product life cycle, as well as declines in sales of higher margin large cars; | |
• | Production volume decreases of 7% attributable to GMNA market share decline and a significant reduction in dealer inventories, accounted for a decrease in net income of approximately $2.1 billion; | |
• | Unfavorable material costs after factoring in the cost of government mandated product improvements accounted for a decrease in net income of approximately $700 million; | |
• | Increased health-care expenses primarily due to the recognition of OPEB net actuarial losses, which are caused by escalating health care cost trends, and falling discount rates in the U.S., accounted for a decrease in net income of approximately $600 million. These 2005 health care cost increases do not reflect new health care initiatives with the UAW and salaried employees and retirees, which will benefit subsequent years; and | |
• | Advertising and sales promotion cost increases, accounting for a decrease in net income of $500 million due to further efforts to increase product awareness. |
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GM Europe |
Years Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Dollars in millions) | ||||||||||||
GME total net sales and revenues | $ | 31,719 | $ | 30,820 | $ | 27,478 | ||||||
GME net (loss) | $ | (1,198 | ) | $ | (925 | ) | $ | (466 | ) | |||
GME net margin | (3.8 | )% | (3.0 | )% | (1.7 | )% |
(Volume in thousands) | |||||||||||||
Production volume(1) | 1,858 | 1,829 | 1,818 | ||||||||||
Vehicle unit sales | |||||||||||||
Industry | 20,970 | 20,763 | 19,588 | ||||||||||
GM as a percentage of industry | 9.5 | % | 9.4 | % | 9.3 | % | |||||||
GM market share — Germany | 10.8 | % | 10.6 | % | 10.4 | % | |||||||
GM market share — United Kingdom | 14.7 | % | 13.9 | % | 13.7 | % |
(1) | 2004 and 2005 calendar years include GM-Avtovaz joint venture production |
• | Restructuring charges totaling $673 million in connection with the restructuring plan announced in the fourth quarter of 2004, as well as costs related to the dissolution of GM’s powertrain and purchasing joint ventures with Fiat. The restructuring plan involves a reduction in workforce of up to 12,000 through 2007, largely in manufacturing operations in Germany. In December 2004, GM reached agreement with various labor unions in Europe on a framework for the restructuring plan. The charges in 2005 related to the separation of approximately 7,500 people. No charge was recognized in 2004 because the agreements were not yet finalized. | |
• | Favorable material cost, structural costs, and product mix, which more than offset pricing and volume declines, resulting in an almost $370 million improvement in year over year performance. |
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GM Latin America/ Africa/ Mid-East |
Years Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Dollars in millions) | ||||||||||||
GMLAAM total net sales and revenues | $ | 11,745 | $ | 8,792 | $ | 5,387 | ||||||
GMLAAM net income (loss) | $ | (571 | ) | $ | 60 | $ | (329 | ) | ||||
GMLAAM net margin | (4.9 | )% | 0.7 | % | (6.1 | )% |
(Volume in thousands) | |||||||||||||
Production volume | 775 | 716 | 547 | ||||||||||
Vehicle unit sales | |||||||||||||
Industry | 4,980 | 4,225 | 3,626 | ||||||||||
GM as a percentage of industry | 17.7 | % | 17.5 | % | 16.1 | % | |||||||
GM market share — Brazil | 21.3 | % | 23.1 | % | 23.3 | % |
• | A full valuation allowance charge of $617 million taken against GM do Brasil’s deferred tax assets as it was determined that it is more likely than not that deferred taxes in GM’s Brazilian operations would not be realized; and | |
• | Volume, product mix, and pricing improvements which exceeded losses from unfavorable exchange rate changes, primarily with respect to the Brazilian real, by approximately $40 million from 2004 to 2005. |
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GM Asia Pacific |
Years Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(Dollars in millions) | ||||||||||||
GMAP total net sales and revenues | $ | 10,893 | $ | 6,978 | $ | 5,338 | ||||||
GMAP net income (loss) | $ | (220 | ) | $ | 730 | $ | 576 | |||||
GMAP net margin | (2.0 | )% | 10.5 | % | 10.8 | % |
(Volume in thousands) | |||||||||||||
Production volume(1) | 1,562 | 1,333 | 420 | ||||||||||
Vehicle unit sales | |||||||||||||
Industry | 18,240 | 17,156 | 15,919 | ||||||||||
GM as a percentage of industry | 5.8 | % | 5.2 | % | 4.9 | % | |||||||
GM market share — Australia | 17.8 | % | 19.4 | % | 20.4 | % | |||||||
GM market share — China | 11.2 | % | 9.4 | % | 8.5 | % |
(1) | 2004 and 2005 calendar years include GM Daewoo and Wuling joint venture production |
• | Write-down of GM’s investment in FHI in the second quarter for $788 million, after-tax, as a result of FHI’s declining financial performance and the downward adjustments in their business plan in May |
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2005. This writedown was partially offset in the fourth quarter, when GM completed the sale of its investment in the common stock of FHI and recorded a gain of $71 million (after tax) due to the appreciation of the fair value of such stock after June 30, 2005, the date of the FHI impairment charge; and | ||
• | Volume and product mix at GM Holden in Australia, as well as reduced equity income from higher costs associated with GM’s growth initiatives in China, were partially offset by favorable results from GM Daewoo, resulting in a decrease in net income of approximately $200 million from 2004 to 2005. |
Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in millions) | |||||||||||||
Other: | |||||||||||||
Total net sales, revenues, and eliminations | $ | (891 | ) | $ | 410 | $ | 1,318 | ||||||
Income (loss) from continuing operations | $ | (2,697 | ) | $ | (1,419 | ) | $ | (523 | ) | ||||
(Loss) from discontinued operations | — | — | (219 | ) | |||||||||
Gain from sale of discontinued operations | — | — | 1,179 | ||||||||||
Net income (loss) | $ | (2,697 | ) | $ | (1,419 | ) | $ | 437 | |||||
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Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in millions) | |||||||||||||
Financing operations | $ | 627 | $ | 1,430 | $ | 1,391 | |||||||
Mortgage operations | 1,345 | 1,186 | 1,175 | ||||||||||
Insurance operations | 411 | 352 | 162 | ||||||||||
Net income | $ | 2,383 | $ | 2,968 | $ | 2,728 | |||||||
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GM North America Restructuring Plan |
Product Excellence |
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GM North America Restructuring Plan — (continued) |
Revitalize Sales and Marketing Strategy |
Accelerate Cost Reductions and Quality Improvements |
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GM North America Restructuring Plan — (continued) |
Address Health-Care Burden |
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GM North America Restructuring Plan — (concluded) |
Expected Cost Reduction in North America |
• | Approximately $3 billion related to the UAW health-care agreement. The $3 billion is comprised of approximately $1 billion principally related to OPEB service and interest costs expected to be realized each year during the six-year term of the agreement and approximately $2 billion which results from the amortization of a $15 billion gain related to the agreement over approximately a seven-year period, which coincides with the remaining service life of active employees. The annual savings will be allocated approximately 80% to GMNA and 20% to the corporate sector. | |
• | Approximately $2 billion based on the capacity utilization and other manufacturing initiatives; and | |
• | Approximately $2 billion based on additional productivity and cost efficiencies in other areas of the business, including engineering, advertising and salaried employment levels and benefits. |
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GM North America Restructuring Plan — (concluded) |
Delphi Bankruptcy |
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GMAC Strategic Alternatives |
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Investigations |
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Restatements |
Automotive and Other Operations |
Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in billions) | |||||||||||||
Cash and cash equivalents | $ | 15.2 | $ | 13.1 | $ | 14.4 | |||||||
Other marketable securities | 1.4 | 6.7 | 9.1 | ||||||||||
Readily-available assets of VEBA trusts | 3.8 | 3.5 | 3.5 | ||||||||||
Available Liquidity | $ | 20.4 | $ | 23.3 | $ | 27.0 | |||||||
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Cash Flow |
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Debt |
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Net Liquidity |
Senior Debt | Commercial Paper | ||||||||||||
Rating Agency | GM | GMAC | ResCap | GM | GMAC | ResCap | |||||||
DBRS | B (High) | BBB (Low) | BBB | R-3 (Mid) | R-2 (Low) | R-2 (Mid) | |||||||
Fitch | B | BB | BBB- | Withdrawn | B | F3 | |||||||
Moody’s | B2 | Ba1 | Baa3 | Not Prime | Not Prime | P3 | |||||||
S&P | B | BB | BBB- | B-3 | B-1 | A-3 | |||||||
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Outlook | ||||||
Rating Agency | GM | GMAC | ResCap | |||
DBRS | Negative | Developing | Developing | |||
Fitch | Rating Watch Negative | Evolving | Evolving | |||
Moody’s | Review for Possible Downgrade | Review for Possible Downgrade | Review for Possible Downgrade | |||
S&P | Negative | Developing | Developing | |||
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2005 | 2004 | 2003 | ||||||||||
U.S. hourly and salaried | $ | — | $ | — | $ | 18,504 | ||||||
Other U.S. | 125 | 117 | 117 | |||||||||
Non-U.S. | 708 | 802 | 442 |
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Other Benefits | Non-U.S. Other Benefits | |||||||||||||||||||||||
Pension Benefits | Gross | Gross | ||||||||||||||||||||||
Medicare | Medicare | |||||||||||||||||||||||
Primary | Gross Benefit | Part D | Gross Benefit | Part D | ||||||||||||||||||||
U.S. Plans | Non-U.S. Plans | Payments | Receipts | Payments | Receipts | |||||||||||||||||||
2006 | 6,794 | 834 | 4,337 | 181 | 128 | — | ||||||||||||||||||
2007 | 6,693 | 865 | 4,637 | 271 | 137 | — | ||||||||||||||||||
2008 | 6,728 | 905 | 4,916 | 301 | 147 | — | ||||||||||||||||||
2009 | 6,744 | 940 | 5,163 | 328 | 157 | — | ||||||||||||||||||
2010 | 6,754 | 979 | 5,383 | 353 | 167 | — | ||||||||||||||||||
2011-2015 | $ | 33,517 | $ | 5,443 | $ | 29,187 | $ | 2,116 | $ | 993 | $ | — |
December 31 | |||||||||
Automotive and Other Operations | 2005 | 2004 | |||||||
Assets leased under operating leases | $ | 2,430 | $ | 2,553 | |||||
Trade receivables sold(1) | 708 | 1,210 | |||||||
Total | $ | 3,138 | $ | 3,763 | |||||
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Financing and Insurance Operations | ||||||||||
Receivables sold or securitized: | ||||||||||
— Mortgage loans | $ | 99,084 | $ | 79,043 | ||||||
— Retail finance receivables | 6,014 | 5,615 | ||||||||
— Wholesale finance receivables | 21,421 | 21,291 | ||||||||
Total | $ | 126,519 | $ | 105,949 | ||||||
(1) | In addition, trade receivables sold to GMAC were $525 million as of December 31, 2005 and $549 million as of December 31, 2004. |
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Payments due by period | ||||||||||||||||||||||
2006 | 2007-2008 | 2009-2010 | 2011 and after | Total | ||||||||||||||||||
(dollars in millions) | ||||||||||||||||||||||
Debt | $ | 1,519 | $ | 2,847 | $ | 589 | $ | 27,648 | $ | 32,603 | ||||||||||||
Capital lease obligations | 174 | 597 | 251 | 573 | 1,595 | |||||||||||||||||
Operating lease obligations | 630 | 1,472 | 895 | 1,323 | 4,320 | |||||||||||||||||
Contractual commitments for capital expenditures | 745 | 15 | — | — | 760 | |||||||||||||||||
Other contractual commitments: | ||||||||||||||||||||||
Postretirement benefits(1) | 3,517 | 3,827 | — | — | 7,344 | |||||||||||||||||
Less: VEBA assets(2) | (3,517 | ) | (3,827 | ) | — | — | (7,344 | ) | ||||||||||||||
Net | — | — | — | — | — | |||||||||||||||||
Material | 1,079 | 1,676 | 1,262 | 332 | 4,349 | |||||||||||||||||
Information technology(3) | 333 | 179 | 4 | 1 | 517 | |||||||||||||||||
Marketing | 1,647 | 634 | 429 | 115 | 2,825 | |||||||||||||||||
Facilities | 201 | 227 | 178 | 445 | 1,051 | |||||||||||||||||
Rental car repurchases | 8,347 | — | — | — | 8,347 | |||||||||||||||||
Policy, product warranty and recall campaigns liability | 4,480 | 4,123 | 482 | 43 | 9,128 | |||||||||||||||||
Total contractual commitments | $ | 19,155 | $ | 11,770 | $ | 4,090 | $ | 30,480 | $ | 65,495 | ||||||||||||
Remaining balance postretirement benefits | $ | 767 | $ | 5,438 | $ | 10,189 | $ | 61,203 | $ | 77,597 | ||||||||||||
Less: VEBA assets(2) | (767 | ) | (5,438 | ) | (5,557 | ) | — | (11,762 | ) | |||||||||||||
Net | $ | — | $ | — | $ | 4,632 | $ | 61,203 | $ | 65,835 | ||||||||||||
(1) | Amounts include postretirement benefits under the current contractual labor agreements in North America. The remainder of the estimated liability, for benefits beyond the current labor agreement and for essentially all salaried employees, is classified under remaining balance of postretirement benefits. |
(2) | Total VEBA assets were allocated based on projected spending requirements. Amount includes $1.0 billion VEBA withdrawal and $0.2 billion VEBA withdrawal in the fourth quarter of 2005. |
(3) | Does not reflect the effect of the January 2006 agreements with information technology providers. |
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Payments due by period | |||||||||||||||||||||
2011 and | |||||||||||||||||||||
2006 | 2007-2008 | 2009-2010 | after | Total | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Debt | $ | 82,054 | $ | 59,512 | $ | 18,801 | $ | 93,386 | $ | 253,753 | |||||||||||
Operating lease obligations | 201 | 304 | 161 | 158 | 824 | ||||||||||||||||
Mortgage purchase and sale commitments | 24,619 | 3,463 | — | 70 | 28,152 | ||||||||||||||||
Lending commitments | 18,500 | 2,213 | 669 | 4,493 | 25,875 | ||||||||||||||||
Commitments to remit excess cash flows on certain loan portfolios | — | — | — | 4,305 | 4,305 | ||||||||||||||||
Commitments to sell retail automotive receivables | 9,000 | 12,000 | 12,000 | — | 33,000 | ||||||||||||||||
Commitments to provide capital to equity method investees | 553 | 90 | 107 | 287 | 1,037 | ||||||||||||||||
Purchase obligations | 150 | 77 | 13 | — | 240 | ||||||||||||||||
Total contractual commitments | $ | 135,077 | $ | 77,659 | $ | 31,751 | $ | 102,699 | $ | 347,186 | |||||||||||
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Worldwide employment at December 31, (in thousands) | 2005 | 2004 | 2003 | ||||||||||
GMNA | 173 | 181 | 190 | ||||||||||
GME(1) | 63 | 61 | 62 | ||||||||||
GMLAAM | 31 | 29 | 23 | ||||||||||
GMAP(2) | 31 | 15 | 14 | ||||||||||
GMAC | 34 | 34 | 32 | ||||||||||
Other | 3 | 4 | 5 | ||||||||||
Total employees | 335 | 324 | 326 | ||||||||||
Worldwide payrolls excluding benefits (in billions) | $ | 21.5 | $ | 21.5 | $ | 20.9 | |||||||
U.S. hourly payrolls excluding benefits (in billions)(3) | $ | 8.0 | $ | 8.7 | $ | 8.9 | |||||||
Average labor cost per active hour worked U.S. hourly(4) | $ | 81.18 | $ | 73.73 | $ | 78.39 |
(1) | 2005 includes approximately 7,000 employees added from a former powertrain joint venture with Fiat. |
(2) | 2005 includes approximately 13,000 employees added as the result of the consolidation of GM Daewoo. |
(3) | Includes employees “at work” (excludes laid-off employees receiving benefits). |
(4) | Includes U.S. hourly wages and benefits divided by the number of hours worked. |
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Pension and Other Postretirement Employee Benefits (OPEB) |
• | Discount rates. For 2005, our discount rates are based on creating a hypothetical portfolio of high quality bonds (rated AA by a recognized rating agency) for which the timing and amount of cash inflows approximates the estimated outflows of the defined benefit plan. | |
• | Health care cost trend rate. Our health-care cost trend rate is based on historical retiree cost data, near term health care outlook, including appropriate cost control measures implemented by GM, and industry benchmarks and surveys. | |
• | Expected return on plan assets. Our expected return on plan assets is derived from detailed periodic studies, which include a review of asset allocation strategies, anticipated future long-term performance of individual asset classes, risk and correlations for each of the asset classes that comprise the fund’s asset mix, and recent and long-term historical performance. | |
• | Mortality rates. Mortality rates are based on actual and projected plan experience. | |
• | Retirement rates. Retirement rates are based on actual and projected plan experience. | |
• | Rate of compensation increase. The rate of compensation increase for final pay plans reflects our long-term actual experience and our outlook, including contractually agreed upon wage rate increases for represented hourly employees. |
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Effect on | ||||||||
Effect on 2006 | December 31, 2005 | |||||||
Change in Assumption | Pre-Tax Pension Expense | PBO | ||||||
25 basis point decrease in discount rate | +$ | 150 million | +$ | 2.3 billion | ||||
25 basis point increase in discount rate | -$ | 160 million | -$ | 2.2 billion | ||||
25 basis point decrease in expected return on assets | +$ | 220 million | — | |||||
25 basis point increase in expected return on assets | -$ | 220 million | — |
Effect on 2006 | Effect on | |||||||
Pre-Tax OPEB | December 31, 2005 | |||||||
Change in Assumption | Expense | APBO | ||||||
25 basis point decrease in discount rate | +$ | 220 million | +$ | 2.6 billion | ||||
25 basis point increase in discount rate | -$ | 230 million | -$ | 2.4 billion |
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• | GM computes the spread between the yield curve and the swap curve (a market-based curve), | |
• | To extrapolate the yield curve for the period beginning after the last year where substantial bonds are available in the bond universe and ending in year 50, GM adds the spread to the swap curve, which is observable over 50 years, and | |
• | To extrapolate the yield curve beyond the 50th year, GM assumes that the last one-year forward rate on the yield curve (at the 49th year) remains constant for the remaining years. |
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Sales Allowances |
Policy and Warranty |
Impairment of Long-Lived Assets |
Postemployment Benefits |
Allowance for Credit Losses |
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Investments in Operating Leases |
Mortgage Servicing Rights |
Accounting for Derivatives and Other Fair Value Measurements |
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• | The ability of GM to realize production efficiencies, to achieve reductions in costs as a result of the turnaround restructuring and health care cost reductions and to implement capital expenditures at levels and times planned by management; | |
• | The pace of product introductions; | |
• | Market acceptance of the Corporation’s new products; | |
• | Significant changes in the competitive environment and the effect of competition in the Corporation’s markets, including on the Corporation’s pricing policies; | |
• | Our ability to maintain adequate liquidity and financing sources and an appropriate level of debt; |
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• | Restrictions on GMAC’s and ResCap’s ability to pay dividends and prepay subordinated debt obligations to us; | |
• | Changes in the existing, or the adoption of new, laws, regulations, policies or other activities of governments, agencies and similar organizations where such actions may affect the production, licensing, distribution or sale of our products, the cost thereof or applicable tax rates; | |
• | Costs and risks associated with litigation; | |
• | The final results of investigations and inquiries by the SEC; | |
• | Changes in our accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, including the range of estimates for the Delphi pension benefit guarantees, which could result in an impact on earnings; | |
• | Changes in relations with unions and employees/retirees and the legal interpretations of the agreements with those unions with regard to employees/retirees; | |
• | Negotiations and bankruptcy court actions with respect to Delphi’s obligations to GM, negotiations with respect to GM’s obligations under the pension benefit guarantees to Delphi employees, and GM’s ability to recover any indemnity claims against Delphi; | |
• | Labor strikes or work stoppages at GM or its key suppliers such as Delphi or financial difficulties at GM’s key suppliers such as Delphi; | |
• | Additional credit rating downgrades and the effects thereof; | |
• | The effect of a potential sale or other extraordinary transaction involving GMAC on the results of GM’s and GMAC’s operations and liquidity; | |
• | Other factors affecting financing and insurance operating segments’ results of operations and financial condition such as credit ratings, adequate access to the market, changes in the residual value of off-lease vehicles, changes in U.S. government-sponsored mortgage programs or disruptions in the markets in which our mortgage subsidiaries operate, and changes in our contractual servicing rights; | |
• | Shortages of and price increases for fuel; and | |
• | Changes in economic conditions, commodity prices, currency exchange rates or political stability in the markets in which we operate. |
• | The ability of GM to complete a transaction regarding a controlling interest in GMAC while maintaining a significant stake in GMAC, securing separate credit ratings and low cost funding to sustain growth for GMAC and ResCap, and maintaining the mutually beneficial relationship between GMAC and GM; | |
• | Significant changes in the competitive environment and the effect of competition in the Corporation’s markets, including on the Corporation’s pricing policies; | |
• | Our ability to maintain adequate financing sources; | |
• | Our ability to maintain an appropriate level of debt; |
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• | The profitability and financial condition of GM, including changes in production or sales of GM vehicles, risks based on GM’s contingent benefit guarantees and the possibility of labor strikes or work stoppages at GM or at key suppliers such as Delphi; | |
• | Funding obligations under GM and its subsidiaries’ qualified U.S. defined benefits pension plans; | |
• | Restrictions on ResCap’s ability to pay dividends and prepay subordinated debt obligations to us; | |
• | Changes in the residual value of off-lease vehicles; | |
• | Changes in U.S. government-sponsored mortgage programs or disruptions in the markets in which our mortgage subsidiaries operate; | |
• | Changes in our contractual servicing rights; | |
• | Costs and risks associated with litigation; | |
• | Changes in our accounting assumptions that may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; | |
• | Changes in the credit ratings of GMAC or GM; | |
• | The threat of natural calamities; | |
• | Changes in economic conditions, currency exchange rates or political stability in the markets in which we operate; and | |
• | Changes in the existing, or the adoption of new, laws, regulations, policies or other activities of governments, agencies and similar organizations. |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
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Foreign Exchange Rate Risk |
Interest Rate Risk |
Commodity Price Risk |
Equity Price Risk |
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(A) | A material weakness was identified related to our design and maintenance of adequate controls over the preparation, review, presentation and disclosure of amounts included in our consolidated statements of cash flows, which resulted in misstatements therein. Cash outflows related to certain mortgage loan originations and purchases were not appropriately classified as either operating cash flows or investing cash flows consistent with our original description as loans held for sale or loans held for investment. In addition, proceeds from sales and repayments related to certain mortgage loans, which initially were classified as mortgage loans held for investment and subsequently transferred to mortgage loans held for sale, were reported as operating cash flows instead of investing cash flows in our consolidated statements of cash flows, as required by Statement of Financial Accounting Standards No. 102Statement of Cash Flows — Exemption of Certain Enterprises and Classification of Cash Flows from Certain Securities Acquired for Resale. Finally, certain non-cash proceeds and transfers were not appropriately presented in the Statements of Cash Flows. |
(B) | A material weakness was identified related to the fact that GM’s management did not adequately design the control procedures to account for GM’s portfolio of vehicles on operating lease with daily rental car entities, which was impaired at lease inception, and prematurely revalued to reflect increased anticipated proceeds upon disposal. This material weakness was identified in January, 2006, and remediated by discontinuing the premature revaluation of previously recognized impairments. |
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/s/ G. RICHARD WAGONER, JR. | /s/ FREDERICK A. HENDERSON | |
G. Richard Wagoner, Jr. Chairman and Chief Executive Officer March 28, 2006 | Frederick A. Henderson Chief Financial Officer March 28, 2006 |
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Item 8. | Financial Statements and Supplementary Data |
Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in millions except per share | |||||||||||||
amounts) | |||||||||||||
GENERAL MOTORS CORPORATION AND SUBSIDIARIES | |||||||||||||
Total net sales and revenues (Notes 1 and 25) | $ | 192,604 | $ | 193,517 | $ | 185,837 | |||||||
Cost of sales and other expenses | 171,033 | 159,957 | 152,419 | ||||||||||
Selling, general, and administrative expenses | 22,734 | 20,394 | 20,957 | ||||||||||
Interest expense | 15,768 | 11,980 | 9,464 | ||||||||||
Total costs and expenses | 209,535 | 192,331 | 182,840 | ||||||||||
Income (loss) from continuing operations before income taxes, equity income and minority interests | (16,931 | ) | 1,186 | 2,997 | |||||||||
Income tax (benefit) expense (Note 12) | (5,878 | ) | (916 | ) | 710 | ||||||||
Equity income and minority interests | 595 | 702 | 612 | ||||||||||
Income (loss) from continuing operations before cumulative effect of accounting change | (10,458 | ) | 2,804 | 2,899 | |||||||||
(Loss) from discontinued operations (Note 3) | — | — | (219 | ) | |||||||||
Gain on sale of discontinued operations (Note 3) | — | — | 1,179 | ||||||||||
Cumulative effect of accounting change (Note 1) | (109 | ) | — | — | |||||||||
Net income (loss) | $ | (10,567 | ) | $ | 2,804 | $ | 3,859 | ||||||
Basic earnings (loss) per share attributable to common stocks | |||||||||||||
$12/3 par value | |||||||||||||
Continuing operations before cumulative effect of accounting change | $ | (18.50 | ) | $ | 4.97 | $ | 5.17 | ||||||
Discontinued operations | — | — | 2.14 | ||||||||||
Cumulative effect of accounting change (Note 1) | (0.19 | ) | — | — | |||||||||
Earnings (loss) per share attributable to $12/3 par value | $ | (18.69 | ) | $ | 4.97 | $ | 7.31 | ||||||
(Loss) per share from discontinued operations attributable to | |||||||||||||
Class H | $ | — | $ | — | $ | (0.22 | ) | ||||||
Earnings (loss) per share attributable to common stocks assuming dilution | |||||||||||||
$12/3 par value | |||||||||||||
Continuing operations before cumulative effect of accounting change | $ | (18.50 | ) | $ | 4.94 | $ | 5.09 | ||||||
Discontinued operations | — | — | 2.11 | ||||||||||
Cumulative effect of accounting change (Note 1) | (0.19 | ) | — | — | |||||||||
Earnings (loss) per share attributable to $12/3 par value | $ | (18.69 | ) | $ | 4.94 | $ | 7.20 | ||||||
(Loss) per share from discontinued operations attributable to | |||||||||||||
Class H | $ | — | $ | — | $ | (0.22 | ) | ||||||
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Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in millions) | |||||||||||||
AUTOMOTIVE AND OTHER OPERATIONS | |||||||||||||
Total net sales and revenues (Notes 1 and 25) | $ | 158,221 | $ | 161,545 | $ | 155,831 | |||||||
Cost of sales and other expenses | 162,173 | 150,224 | 143,408 | ||||||||||
Selling, general, and administrative expenses | 13,222 | 11,863 | 11,737 | ||||||||||
Total costs and expenses | 175,395 | 162,087 | 155,145 | ||||||||||
Interest expense | 2,873 | 2,480 | 1,780 | ||||||||||
Net expense from transactions with Financing and Insurance Operations (Note 1) | 497 | 273 | 297 | ||||||||||
(Loss) from continuing operations before income taxes, equity income, and minority interests | (20,544 | ) | (3,295 | ) | (1,391 | ) | |||||||
Income tax (benefit) (Note 12) | (7,184 | ) | (2,440 | ) | (854 | ) | |||||||
Equity income (loss) and minority interests | 544 | 710 | 674 | ||||||||||
Income (loss) from continuing operations before cumulative effect of accounting change | (12,816 | ) | (145 | ) | 137 | ||||||||
(Loss) from discontinued operations (Note 3) | — | — | (219 | ) | |||||||||
Gain on sale of discontinued operations (Note 3) | — | — | 1,179 | ||||||||||
Cumulative effect of accounting change (Note 1) | (109 | ) | — | — | |||||||||
Net income (loss) — Automotive and Other Operations | $ | (12,925 | ) | $ | (145 | ) | $ | 1,097 | |||||
FINANCING AND INSURANCE OPERATIONS | |||||||||||||
Total revenues | $ | 34,383 | $ | 31,972 | $ | 30,006 | |||||||
Interest expense | 12,895 | 9,500 | 7,684 | ||||||||||
Depreciation and amortization expense (Note 13) | 5,696 | 5,523 | 5,567 | ||||||||||
Operating and other expenses | 9,236 | 8,426 | 8,705 | ||||||||||
Provisions for financing and insurance losses | 3,440 | 4,315 | 3,959 | ||||||||||
Total costs and expenses | 31,267 | 27,764 | 25,915 | ||||||||||
Net income from transactions with Automotive and Other Operations (Note 1) | (497 | ) | (273 | ) | (297 | ) | |||||||
Income before income taxes, equity income and minority interests | 3,613 | 4,481 | 4,388 | ||||||||||
Income tax expense (Note 12) | 1,306 | 1,524 | 1,564 | ||||||||||
Equity income (loss) and minority interests | 51 | (8 | ) | (62 | ) | ||||||||
Net income — Financing and Insurance Operations | $ | 2,358 | $ | 2,949 | $ | 2,762 | |||||||
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December 31, | |||||||||||
2005 | 2004 | ||||||||||
(Dollars in millions) | |||||||||||
ASSETS | |||||||||||
Cash and cash equivalents (Note 1) | $ | 30,726 | $ | 35,993 | |||||||
Other marketable securities (Note 7) | 19,726 | 21,737 | |||||||||
Total cash and marketable securities | 50,452 | 57,730 | |||||||||
Finance receivables — net (Note 9) | 180,793 | 199,600 | |||||||||
Loans held for sale | 21,865 | 19,934 | |||||||||
Accounts and notes receivable (less allowances) | 15,578 | 21,236 | |||||||||
Inventories (less allowances) (Note 10) | 14,354 | 12,247 | |||||||||
Assets held for sale (Note 1) | 19,030 | — | |||||||||
Deferred income taxes (Note 12) | 29,889 | 26,559 | |||||||||
Net equipment on operating leases (less accumulated depreciation) (Note 11) | 38,187 | 34,214 | |||||||||
Equity in net assets of nonconsolidated affiliates | 3,291 | 6,776 | |||||||||
Property — net (Note 13) | 40,214 | 39,020 | |||||||||
Intangible assets — net (Notes 1 and 14) | 4,339 | 4,925 | |||||||||
Other assets (Note 15) | 58,086 | 57,680 | |||||||||
Total assets | $ | 476,078 | $ | 479,921 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Accounts payable (principally trade) | $ | 29,913 | $ | 28,830 | |||||||
Notes and loans payable (Note 17) | 285,750 | 300,279 | |||||||||
Liabilities related to assets held for sale (Note 1) | 10,941 | — | |||||||||
Postretirement benefits other than pensions (Note 18) | 33,997 | 28,182 | |||||||||
Pensions (Note 18) | 11,304 | 9,455 | |||||||||
Deferred income taxes (Notes 12 and 16) | 4,477 | 7,078 | |||||||||
Accrued expenses and other liabilities (Note 16) | 84,060 | 78,340 | |||||||||
Total liabilities | 460,442 | 452,164 | |||||||||
Minority interests | 1,039 | 397 | |||||||||
Stockholders’ equity(Note 20) | |||||||||||
$12/3 par value common stock (outstanding, 565,518,106 and 565,132,021 shares) | 943 | 942 | |||||||||
Capital surplus (principally additional paid-in capital) | 15,285 | 15,241 | |||||||||
Retained earnings | 2,361 | 14,062 | |||||||||
Subtotal | 18,589 | 30,245 | |||||||||
Accumulated foreign currency translation adjustments | (1,722 | ) | (1,194 | ) | |||||||
Net unrealized gains on derivatives | 733 | 589 | |||||||||
Net unrealized gains on securities | 786 | 751 | |||||||||
Minimum pension liability adjustment | (3,789 | ) | (3,031 | ) | |||||||
Accumulated other comprehensive loss | (3,992 | ) | (2,885 | ) | |||||||
Total stockholders’ equity | 14,597 | 27,360 | |||||||||
Total liabilities, minority interests and stockholders’ equity | $ | 476,078 | $ | 479,921 | |||||||
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December 31, | ||||||||||
2005 | 2004 | |||||||||
(Dollars in millions) | ||||||||||
ASSETS | ||||||||||
Automotive and Other Operations | ||||||||||
Cash and cash equivalents (Note 1) | $ | 15,187 | $ | 13,148 | ||||||
Marketable securities (Note 7) | 1,416 | 6,655 | ||||||||
Total cash and marketable securities | 16,603 | 19,803 | ||||||||
Accounts and notes receivable (less allowances) | 7,758 | 6,713 | ||||||||
Inventories (less allowances) (Note 10) | 13,851 | 11,717 | ||||||||
Net equipment on operating leases (less accumulated depreciation) (Note 11) | 6,993 | 6,488 | ||||||||
Deferred income taxes and other current assets (Note 12) | 8,877 | 10,794 | ||||||||
Total current assets | 54,082 | 55,515 | ||||||||
Equity in net assets of nonconsolidated affiliates | 3,291 | 6,776 | ||||||||
Property — net (Note 13) | 38,466 | 37,170 | ||||||||
Intangible assets — net (Notes 1 and 14) | 1,862 | 1,599 | ||||||||
Deferred income taxes (Note 12) | 22,849 | 17,639 | ||||||||
Other assets (Note 15) | 41,103 | 40,844 | ||||||||
Total Automotive and Other Operations assets | 161,653 | 159,543 | ||||||||
Financing and Insurance Operations | ||||||||||
Cash and cash equivalents (Note 1) | 15,539 | 22,845 | ||||||||
Investments in securities (Note 7) | 18,310 | 15,082 | ||||||||
Finance receivables — net (Note 9) | 180,793 | 199,600 | ||||||||
Loans held for sale | 21,865 | 19,934 | ||||||||
Assets held for sale | 19,030 | — | ||||||||
Net equipment on operating leases (less accumulated depreciation) (Note 11) | 31,194 | 27,726 | ||||||||
Other assets (Note 15) | 27,694 | 35,191 | ||||||||
Net receivable from Automotive and Other Operations (Note 1) | 4,452 | 2,426 | ||||||||
Total Financing and Insurance Operations assets | 318,877 | 322,804 | ||||||||
Total assets | $ | 480,530 | $ | 482,347 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Automotive and Other Operations | ||||||||||
Accounts payable (principally trade) | $ | 26,182 | $ | 24,257 | ||||||
Loans payable (Note 17) | 1,519 | 2,062 | ||||||||
Accrued expenses (Note 16) | 42,665 | 46,202 | ||||||||
Net payable to Financing and Insurance Operations (Note 1) | 4,452 | 2,426 | ||||||||
Total current liabilities | 74,818 | 74,947 | ||||||||
Long-term debt (Note 17) | 31,014 | 30,460 | ||||||||
Postretirement benefits other than pensions (Note 18) | 28,990 | 23,477 | ||||||||
Pensions (Note 18) | 11,214 | 9,371 | ||||||||
Other liabilities and deferred income taxes (Notes 12 and 16) | 22,023 | 16,206 | ||||||||
Total Automotive and Other Operations liabilities | 168,059 | 154,461 | ||||||||
Financing and Insurance Operations | ||||||||||
Accounts payable | 3,731 | 4,573 | ||||||||
Liabilities related to assets held for sale | 10,941 | — | ||||||||
Debt (Note 17) | 253,217 | 267,757 | ||||||||
Other liabilities and deferred income taxes (Notes 12 and 16) | 28,946 | 27,799 | ||||||||
Total Financing and Insurance Operations liabilities | 296,835 | 300,129 | ||||||||
Total liabilities | 464,894 | 454,590 | ||||||||
Minority interests | 1,039 | 397 | ||||||||
Total stockholders’ equity | 14,597 | 27,360 | ||||||||
Total liabilities, minority interests and stockholders’ equity | $ | 480,530 | $ | 482,347 | ||||||
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For the Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in millions) | |||||||||||||
Cash flows from continuing operating activities | |||||||||||||
Income (Loss) from continuing operations | $ | (10,458 | ) | $ | 2,804 | $ | 2,899 | ||||||
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities | |||||||||||||
Depreciation and amortization expenses | 15,769 | 14,152 | 13,513 | ||||||||||
Mortgages: servicing rights and premium amortization | 1,142 | 1,675 | 1,797 | ||||||||||
Goodwill impairment | 712 | — | — | ||||||||||
Provision for financing losses | 1,085 | 1,944 | 1,721 | ||||||||||
Net gains on sale of finance receivables | (1,695 | ) | (1,312 | ) | (2,462 | ) | |||||||
Other postretirement employee benefit (OPEB) expense | 5,671 | 4,558 | 4,650 | ||||||||||
OPEB payments | (4,084 | ) | (3,974 | ) | (3,536 | ) | |||||||
VEBA/ 401(h) (contributions)/ withdrawals | 3,168 | (8,618 | ) | (3,000 | ) | ||||||||
Pension expense | 2,496 | 2,456 | 3,412 | ||||||||||
Pension contributions | (833 | ) | (919 | ) | (18,168 | ) | |||||||
Retiree lump sum and vehicle voucher expense, net of payments | (264 | ) | (329 | ) | 923 | ||||||||
Net change in mortgage loans | (29,119 | ) | (2,312 | ) | (4,124 | ) | |||||||
Net change in mortgage securities | (1,155 | ) | 614 | 233 | |||||||||
Change in other investments and miscellaneous assets | (653 | ) | 83 | 409 | |||||||||
Change in other operating assets and liabilities | (1,183 | ) | (1,644 | ) | (2,358 | ) | |||||||
Other | 2,545 | 178 | 915 | ||||||||||
Net cash provided by (used in) continuing operating activities | $ | (16,856 | ) | $ | 9,356 | $ | (3,176 | ) | |||||
Cash flows from continuing investing activities | |||||||||||||
Expenditures for property | (8,179 | ) | (7,753 | ) | (7,091 | ) | |||||||
Investments in marketable securities — acquisitions | (21,800 | ) | (15,278 | ) | (28,660 | ) | |||||||
Investments in marketable securities — liquidations | 22,537 | 15,911 | 24,253 | ||||||||||
Net change in mortgage servicing rights | (267 | ) | (326 | ) | (513 | ) | |||||||
Increase in finance receivables | (6,582 | ) | (38,673 | ) | (56,119 | ) | |||||||
Proceeds from sale of finance receivables | 31,652 | 23,385 | 22,182 | ||||||||||
Proceeds from sale of business units/equity investments | 846 | — | 4,148 | ||||||||||
Dividends received from discontinued operations | — | — | 275 | ||||||||||
Operating leases — acquisitions | (15,496 | ) | (14,324 | ) | (11,032 | ) | |||||||
Operating leases — liquidations | 5,362 | 7,696 | 9,604 | ||||||||||
Investments in companies, net of cash acquired | 1,355 | (60 | ) | (201 | ) | ||||||||
Other | (863 | ) | 1,359 | (1,287 | ) | ||||||||
Net cash provided by (used in) continuing investing activities | 8,565 | (28,063 | ) | (44,441 | ) | ||||||||
Cash flows from continuing financing activities | |||||||||||||
Net increase (decrease) in loans payable | (10,126 | ) | 2,192 | 235 | |||||||||
Long-term debt — borrowings | 78,276 | 73,511 | 97,391 | ||||||||||
Long-term debt — repayments | (69,566 | ) | (57,822 | ) | (38,962 | ) | |||||||
Proceeds from sales of treasury stocks | — | — | 60 | ||||||||||
Cash dividends paid to stockholders | (1,134 | ) | (1,129 | ) | (1,121 | ) | |||||||
Other | 6,030 | 4,723 | 1,319 | ||||||||||
Net cash provided by continuing financing activities | 3,480 | 21,475 | 58,922 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (85 | ) | 671 | 929 | |||||||||
Net increase (decrease) in cash and cash equivalents | (4,896 | ) | 3,439 | 12,234 | |||||||||
Cash and cash equivalents reclassified to Assets Held for Sale | (371 | ) | — | — | |||||||||
Cash and cash equivalents at beginning of the year | 35,993 | 32,554 | 20,320 | ||||||||||
Cash and cash equivalents at end of the year | $ | 30,726 | $ | 35,993 | $ | 32,554 | |||||||
Net cash provided by operating activities of discontinued operations | — | — | 846 | ||||||||||
Net cash used in investing activities of discontinued operations | — | — | (629 | ) | |||||||||
Net cash provided by financing activities of discontinued operations | — | — | 918 | ||||||||||
Net increase in cash and cash equivalents of discontinued operations | — | — | 1,135 | ||||||||||
Cash retained by discontinued operations upon disposal | (2,216 | ) | |||||||||||
Cash reclassified as Assets of Discontinued Operations at beginning of year | — | — | 1,081 | ||||||||||
Cash included in Assets of Discontinued Operations at end of year | $ | — | $ | — | $ | — |
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For the Years Ended December 31, | |||||||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||
Automotive | Financing | Automotive | Financing | Automotive | Financing | ||||||||||||||||||||
and Other | and | and Other | and | and Other | and | ||||||||||||||||||||
Operations | Insurance(a) | Operations | Insurance | Operations | Insurance | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Cash flows from continuing operating activities | |||||||||||||||||||||||||
Income (loss) from continuing operations before cumulative effect of accounting change | $ | (12,816 | ) | $ | 2,358 | $ | (145 | ) | $ | 2,949 | $ | 137 | $ | 2,762 | |||||||||||
Adjustments to reconcile income (loss) from continuing operations before cumulative effect of accounting change to net cash provided by operating activities Depreciation and amortization expenses | 10,073 | 5,696 | 8,629 | 5,523 | 7,946 | 5,567 | |||||||||||||||||||
Mortgages: servicing rights and premium amortization | — | 1,142 | — | 1,675 | — | 1,797 | |||||||||||||||||||
Goodwill impairment | — | 712 | — | — | — | — | |||||||||||||||||||
Provision for financing losses | — | 1,085 | — | 1,944 | — | 1,721 | |||||||||||||||||||
Net gains on sale of finance receivables | — | (1,695 | ) | — | (1,312 | ) | — | (2,462 | ) | ||||||||||||||||
Postretirement benefits other than pensions, net of payments and VEBA contributions/withdrawals | 4,717 | 38 | (8,048 | ) | 14 | (1,906 | ) | 20 | |||||||||||||||||
Pension expense, net of contributions | 1,385 | 14 | 1,174 | 34 | (13,869 | ) | 36 | ||||||||||||||||||
Net change in mortgage loans | — | (29,119 | ) | — | (2,312 | ) | — | (4,124 | ) | ||||||||||||||||
Net change in mortgage securities | — | (1,155 | ) | — | 614 | — | 233 | ||||||||||||||||||
Change in other investments and miscellaneous assets | 173 | (826 | ) | (22 | ) | 105 | (207 | ) | 616 | ||||||||||||||||
Change in other operating assets and liabilities | (5,466 | ) | 4,283 | (268 | ) | (1,376 | ) | 2,921 | (5,279 | ) | |||||||||||||||
Other | 1,970 | 575 | (102 | ) | 280 | (348 | ) | 1,263 | |||||||||||||||||
Net cash provided by (used in) continuing operating activities | $ | 36 | $ | (16,892 | ) | $ | 1,218 | $ | 8,138 | $ | (5,326 | ) | $ | 2,150 | |||||||||||
Cash flows from continuing investing activities | |||||||||||||||||||||||||
Expenditures for property | (7,896 | ) | (283 | ) | (7,284 | ) | (469 | ) | (6,616 | ) | (475 | ) | |||||||||||||
Investments in marketable securities — acquisitions | (2,616 | ) | (19,184 | ) | (2,209 | ) | (13,069 | ) | (13,138 | ) | (15,522 | ) | |||||||||||||
Investments in marketable securities — liquidations | 7,663 | 14,874 | 4,609 | 11,302 | 7,109 | 17,144 | |||||||||||||||||||
Net change in mortgage servicing rights | — | (267 | ) | — | (326 | ) | — | (513 | ) | ||||||||||||||||
Increase in finance receivables | — | (6,582 | ) | — | (38,673 | ) | — | (56,119 | ) | ||||||||||||||||
Proceeds from sales of finance receivables | — | 31,652 | — | 23,385 | — | 22,182 | |||||||||||||||||||
Proceeds from sale of business units/ equity investments | 846 | — | — | — | 4,148 | — | |||||||||||||||||||
Dividends received from discontinued operations | — | — | — | — | 275 | — | |||||||||||||||||||
Operating leases — acquisitions | — | (15,496 | ) | — | (14,324 | ) | — | (11,032 | ) | ||||||||||||||||
Operating leases — liquidations | — | 5,362 | — | 7,696 | — | 9,604 | |||||||||||||||||||
Investments in companies, net of cash acquired | 1,357 | (2 | ) | (48 | ) | (12 | ) | (57 | ) | (144 | ) | ||||||||||||||
Net investing activity with FIO | 2,500 | — | 1,500 | — | 1,000 | — | |||||||||||||||||||
Other | 640 | (1,503 | ) | 882 | 477 | 332 | (1,619 | ) | |||||||||||||||||
Net cash provided by (used in) continuing investing activities | 2,494 | 8,571 | (2,550 | ) | (24,013 | ) | (6,947 | ) | (36,494 | ) | |||||||||||||||
Cash flows from continuing financing activities | |||||||||||||||||||||||||
Net increase (decrease) in loans payable | (177 | ) | (9,949 | ) | (803 | ) | 2,995 | (234 | ) | 469 | |||||||||||||||
Long-term debt — borrowings | 386 | 77,890 | 758 | 72,753 | 14,785 | 82,606 | |||||||||||||||||||
Long-term debt — repayments | (46 | ) | (69,520 | ) | (79 | ) | (57,743 | ) | (19 | ) | (38,943 | ) | |||||||||||||
Net financing activity with Auto and Other | — | (2,500 | ) | — | (1,500 | ) | — | (1,000 | ) | ||||||||||||||||
Proceeds from sales of treasury stocks | — | — | — | — | 60 | — | |||||||||||||||||||
Cash dividends paid to stockholders | (1,134 | ) | — | (1,129 | ) | — | (1,121 | ) | — | ||||||||||||||||
Other | — | 6,030 | — | 4,723 | — | 1,319 | |||||||||||||||||||
Net cash provided by (used in) continuing financing activities | (971 | ) | 1,951 | (1,253 | ) | 21,228 | 13,471 | 44,451 | |||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (40 | ) | (45 | ) | 375 | 296 | 661 | 268 | |||||||||||||||||
Net transactions with Automotive/ Financing Operations | 520 | (520 | ) | 934 | (934 | ) | 403 | (403 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 2,039 | (6,935 | ) | (1,276 | ) | 4,715 | 2,262 | 9,972 | |||||||||||||||||
Cash and cash equivalents reclassified to Assets Held for Sale | — | (371 | ) | — | — | — | — | ||||||||||||||||||
Cash and cash equivalents at beginning of the year | 13,148 | 22,845 | 14,424 | 18,130 | 12,162 | 8,158 | |||||||||||||||||||
Cash and cash equivalents at end of the year | $ | 15,187 | $ | 15,539 | $ | 13,148 | $ | 22,845 | $ | 14,424 | $ | 18,130 | |||||||||||||
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Accumulated | ||||||||||||||||||||||||||||
Total | Other | Total | ||||||||||||||||||||||||||
Capital | Capital | Comprehensive | Retained | Comprehensive | Stockholders’ | |||||||||||||||||||||||
Stock | Surplus | Income (Loss) | Earnings | Income (Loss) | Equity | |||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Balance at January 1, 2003 | $ | 1,032 | $ | 21,583 | $ | 9,629 | $ | (25,832 | ) | $ | 6,412 | |||||||||||||||||
Shares issued | 16 | 1,324 | — | — | 1,340 | |||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | — | — | $ | 3,859 | 3,859 | — | 3,859 | |||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | 969 | — | — | — | ||||||||||||||||||||||
Unrealized gains on derivatives | — | — | 256 | — | — | — | ||||||||||||||||||||||
Unrealized gains on securities | — | — | 246 | — | — | — | ||||||||||||||||||||||
Minimum pension liability adjustment | — | — | 20,755 | — | — | — | ||||||||||||||||||||||
Other comprehensive income | — | — | 22,226 | — | 22,226 | 22,226 | ||||||||||||||||||||||
Comprehensive income | — | — | $ | 26,085 | — | — | — | |||||||||||||||||||||
Effect of Hughes transactions (Note 3) | (111 | ) | (8,056 | ) | (8,167 | ) | ||||||||||||||||||||||
Stock Options | 334 | 334 | ||||||||||||||||||||||||||
Delphi spin-off adjustment(a) | — | — | 20 | — | 20 | |||||||||||||||||||||||
Cash dividends | — | — | (1,121 | ) | — | (1,121 | ) | |||||||||||||||||||||
Balance at December 31, 2003 | $ | 937 | $ | 15,185 | $ | 12,387 | $ | (3,606 | ) | $ | 24,903 | |||||||||||||||||
Shares issued | 5 | 138 | — | — | 143 | |||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | — | — | $ | 2,804 | 2,804 | — | 2,804 | |||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | 621 | — | — | — | ||||||||||||||||||||||
Unrealized gains on derivatives | — | — | 538 | — | — | — | ||||||||||||||||||||||
Unrealized gains on securities | — | — | 133 | — | — | — | ||||||||||||||||||||||
Minimum pension liability adjustment | — | — | (571 | ) | — | — | — | |||||||||||||||||||||
Other comprehensive income | — | — | 721 | — | 721 | 721 | ||||||||||||||||||||||
Comprehensive income | — | — | $ | 3,525 | — | — | — | |||||||||||||||||||||
Stock Options | (82 | ) | (82 | ) | ||||||||||||||||||||||||
Cash dividends | — | — | (1,129 | ) | — | (1,129 | ) | |||||||||||||||||||||
Balance at December 31, 2004 | $ | 942 | $ | 15,241 | $ | 14,062 | $ | (2,885 | ) | $ | 27,360 | |||||||||||||||||
Shares issued | 1 | 102 | — | — | 103 | |||||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net (loss) income | — | — | $ | (10,567 | ) | (10,567 | ) | — | (10,567 | ) | ||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | (528 | ) | — | — | — | |||||||||||||||||||||
Unrealized gains on derivatives | — | — | 144 | — | — | — | ||||||||||||||||||||||
Unrealized gains on securities | — | — | 35 | — | — | — | ||||||||||||||||||||||
Minimum pension liability adjustment | — | — | (758 | ) | — | — | — | |||||||||||||||||||||
Other comprehensive income | — | — | (1,107 | ) | — | (1,107 | ) | (1,107 | ) | |||||||||||||||||||
Comprehensive income | — | — | $ | (11,674 | ) | — | — | — | ||||||||||||||||||||
Stock Options | (58 | ) | (58 | ) | ||||||||||||||||||||||||
Cash dividends | — | — | (1,134 | ) | — | (1,134 | ) | |||||||||||||||||||||
Balance at December 31, 2005 | $ | 943 | $ | 15,285 | $ | 2,361 | $ | (3,992 | ) | $ | 14,597 | |||||||||||||||||
(a) | Write off of deferred taxes related to the 1999 spin-off of Delphi Automotive Systems. |
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Note 1. | Significant Accounting Policies |
Principles of Consolidation |
Nature of Operations, Financial Statement Presentation, and Supplemental Information |
• | GM’s four automotive regions: GM North America (GMNA), GM Europe (GME), GM Latin America/ Africa/ Mid-East (GMLAAM), and GM Asia Pacific (GMAP), which constitute GM Automotive (GMA); and | |
• | Other, which includes the elimination of intersegment transactions, certain non-segment specific revenues and expenditures, including legacy costs related to postretirement benefits for certain Delphi and other retirees, and certain corporate activities. |
Use of Estimates in the Preparation of the Financial Statements |
Revenue Recognition |
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Note 1. | Significant Accounting Policies — (continued) |
Advertising and Research and Development |
Depreciation and Amortization |
Goodwill and Other Intangibles |
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Note 1. | Significant Accounting Policies — (continued) |
Valuation of Long-Lived Assets |
Foreign Currency Transactions and Translation |
Policy and Warranty |
Exit or Disposal Activities |
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Note 1. | Significant Accounting Policies — (continued) |
Cash and Cash Equivalents |
Statements of Cash Flows Supplementary Information |
Years Ended December 31, | ||||||||||||||
Automotive and Other Operations | 2005 | 2004 | 2003 | |||||||||||
(Dollars in millions) | ||||||||||||||
Increase (decrease) in cash due to changes in other operating assets and liabilities was as follows: | ||||||||||||||
Accounts receivable | $ | 59 | $ | (284 | ) | $ | (575 | ) | ||||||
Prepaid expenses and other deferred charges | (83 | ) | 42 | (578 | ) | |||||||||
Inventories | (1,484 | ) | (156 | ) | (518 | ) | ||||||||
Accounts payable | 249 | 1,723 | 2,400 | |||||||||||
Deferred taxes and income taxes payable | (6,069 | ) | (444 | ) | 2,235 | |||||||||
Accrued expenses and other liabilities | 3,935 | 11 | 2,887 | |||||||||||
Fleet rental — acquisitions | (9,452 | ) | (7,846 | ) | (7,761 | ) | ||||||||
Fleet rental — liquidations | 7,379 | 6,686 | 4,831 | |||||||||||
Total | $ | (5,466 | ) | $ | (268 | ) | $ | 2,921 | ||||||
Cash paid for interest | $ | 2,790 | $ | 2,508 | $ | 1,398 |
Years Ended December 31, | ||||||||||||||
Financing and Insurance Operations | 2005 | 2004 | 2003 | |||||||||||
(Dollars in millions) | ||||||||||||||
Increase (decrease) in cash due to changes in other operating assets and liabilities was as follows: | ||||||||||||||
Other receivables | $ | 4,092 | $ | 419 | $ | (5,236 | ) | |||||||
Other assets | 48 | (111 | ) | 186 | ||||||||||
Accounts payable and other liabilities | 332 | (1,173 | ) | 1,765 | ||||||||||
Deferred taxes and income taxes payable | (189 | ) | (511 | ) | (1,994 | ) | ||||||||
Total | $ | 4,283 | $ | (1,376 | ) | $ | (5,279 | ) | ||||||
Cash paid for interest | $ | 13,025 | $ | 8,887 | $ | 6,965 |
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Note 1. | Significant Accounting Policies — (continued) |
Derivative Instruments |
Assets and Liabilities Classified as Held for Sale |
Cash and cash equivalents | $ | 371 | ||||
Marketable securities | 2,295 | |||||
Total cash and marketable securities | 2,666 | |||||
Finance receivables — net | 2,990 | |||||
Loans held for sale | 9,019 | |||||
Other assets | 4,355 | |||||
Total assets held for sale | $ | 19,030 | ||||
Accounts payable | $ | 794 | ||||
Debt | 3,519 | |||||
Deferred income taxes and other liabilities | 6,628 | |||||
Total liabilities related to assets held for sale | $ | 10,941 | ||||
Labor Force |
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Note 1. | Significant Accounting Policies — (continued) |
Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Net income (loss) as reported | $ | (10,567 | ) | $ | 2,804 | $ | 3,859 | ||||||
Add: FIN 47 cumulative effect, net of tax | 109 | — | — | ||||||||||
Less: FIN 47 depreciation and accretion expense, net of tax | (16 | ) | (14 | ) | (13 | ) | |||||||
Pro forma net income (loss) | $ | (10,474 | ) | $ | 2,790 | $ | 3,846 | ||||||
Earnings (loss) per share | |||||||||||||
Basic: As reported | $ | (18.69 | ) | $ | 4.97 | $ | 7.31 | ||||||
Pro forma | $ | (18.52 | ) | $ | 4.94 | $ | 7.29 | ||||||
Diluted: As reported | $ | (18.69 | ) | $ | 4.94 | $ | 7.20 | ||||||
Pro forma | $ | (18.52 | ) | $ | 4.92 | $ | 7.18 | ||||||
Pro forma asset retirement obligation — net, as of year-end | $ | 181 | $ | 159 | $ | 140 | |||||||
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Note 1. | Significant Accounting Policies — (continued) |
Years Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
Income (loss) from continuing operations before cumulative effect of accounting change | $ | (10,458 | ) | $ | 2,804 | $ | 2,899 | |||||||
Add: stock-based compensation expense, included in reported net income, net of related tax effects | 58 | 38 | 142 | |||||||||||
Deduct: total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects | (58 | ) | (52 | ) | (195 | ) | ||||||||
Pro forma net income from continuing operations | $ | (10,458 | ) | $ | 2,790 | $ | 2,846 | |||||||
Basic earnings per share from continuing operations attributable to GM $12/3 par value | ||||||||||||||
- as reported | $ | (18.50 | ) | $ | 4.97 | $ | 5.17 | |||||||
- pro forma | $ | (18.50 | ) | $ | 4.94 | $ | 5.08 | |||||||
Diluted earnings per share from continuing operations attributable to GM $12/3 par value | ||||||||||||||
- as reported | $ | (18.50 | ) | $ | 4.94 | $ | 5.09 | |||||||
- pro forma | $ | (18.50 | ) | $ | 4.92 | $ | 5.00 |
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Note 1. | Significant Accounting Policies — (concluded) |
Note 2. | Acquisition and Disposal of Businesses |
Year Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Total net sales and revenues | $ | 5,738 | $ | 4,338 | $ | 3,161 |
• | The Fiat-GM Powertrain (FGP) joint venture company would be dissolved and GM would regain complete ownership of all GM assets originally contributed. During a transition period, FGP would continue to supply both companies so that their respective operations would not be disrupted. | |
• | GM will retain co-ownership with Fiat of the key powertrain intellectual property, including SDE and JTD diesel engines and theM20-32 six-speed manual transmission; | |
• | GM will hold a 50% interest in a joint venture limited to operating the powertrain manufacturing plant in Bielsko-Biala, Poland, that currently produces the 1.3 liter SDE diesel engine; | |
• | The companies will continue to supply each other with powertrains under long-term contracts which provide considerable ongoing savings; | |
• | GM and Fiat will also continue to work together to develop certain car programs; | |
• | Fiat will participate in GM’s purchasing alliance program; | |
• | GM and Fiat have exchanged broad releases of all claims and liabilities. |
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Note 2. | Acquisition and Disposal of Businesses — (concluded) |
Note 3. | Discontinued Operations |
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Note 4. | Asset Impairments |
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Note 4. | Asset Impairments — (concluded) |
Note 5. | Postemployment Benefit Costs (Plant Idling Reserve) |
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Note 5. | Postemployment Benefit Costs (Plant Idling Reserve) — (concluded) |
Balance at December 31, 2003 | $ | 384 | |||
Spending | (151 | ) | |||
Interest accretion | 19 | ||||
Additions | — | ||||
Adjustments | (15 | ) | |||
Balance at December 31, 2004 | $ | 237 | |||
Spending | (91 | ) | |||
Interest accretion | 12 | ||||
Additions | 1,891 | ||||
Adjustments | (37 | ) | |||
Balance at December 31, 2005 | $ | 2,012 | |||
Note 6. | Investment in Nonconsolidated Affiliates |
South | ||||||||||||||||
2005 | Italy | Japan | China | Korea | ||||||||||||
Book value of GM’s investments in affiliates | NA | $ | 1,576 | $ | 1,020 | NA | ||||||||||
GM’s share of affiliates’ net income (loss) | $ | 32 | $ | 183 | $ | 327 | $ | 17 | ||||||||
Total assets of significant affiliates | NA | $ | 15,507 | $ | 4,363 | NA | ||||||||||
Total liabilities of significant affiliates | NA | $ | 7,467 | $ | 2,425 | NA |
2004 | ||||||||||||||||
Book value of GM’s investments in affiliates | $ | 1,293 | $ | 3,174 | $ | 1,173 | $ | 193 | ||||||||
GM’s share of affiliates’ net income (loss) | $ | 87 | $ | 255 | $ | 417 | $ | (53 | ) | |||||||
Total assets of significant affiliates | $ | 8,616 | $ | 30,582 | $ | 3,429 | $ | 5,288 | ||||||||
Total liabilities of significant affiliates | $ | 5,539 | $ | 17,417 | $ | 1,630 | $ | 4,447 |
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Note 6. | Investment in Nonconsolidated Affiliates — (concluded) |
South | ||||||||||||||||
2003 | Italy | Japan | China | Korea | ||||||||||||
Book value of GM’s investments in affiliates | $ | 946 | $ | 2,781 | $ | 964 | $ | 200 | ||||||||
GM’s share of affiliates’ net income (loss) | $ | 95 | $ | 196 | $ | 414 | $ | (74 | ) | |||||||
Total assets of significant affiliates | $ | 7,933 | $ | 29,622 | $ | 3,103 | $ | 3,263 | ||||||||
Total liabilities of significant affiliates | $ | 5,304 | $ | 17,764 | $ | 1,460 | $ | 2,892 |
Note 7. | Marketable Securities |
Automotive and Other Operations |
Book/Fair | Unrealized | Unrealized | ||||||||||||||
Cost | Value | Gains | Losses | |||||||||||||
December 31, 2005 | ||||||||||||||||
Type of security Corporate debt securities and other | $ | 741 | $ | 728 | $ | — | $ | 13 | ||||||||
U.S. government and agencies | 455 | 450 | — | 5 | ||||||||||||
Mortgage-backed securities | 243 | 238 | — | 5 | ||||||||||||
Total marketable securities | $ | 1,439 | $ | 1,416 | $ | — | $ | 23 | ||||||||
Book/Fair | Unrealized | Unrealized | ||||||||||||||
Cost | Value | Gains | Losses | |||||||||||||
December 31, 2004 | ||||||||||||||||
Type of security Corporate debt securities and other | $ | 3,697 | $ | 3,691 | $ | 12 | $ | 18 | ||||||||
U.S. government and agencies | 2,146 | 2,141 | 6 | 11 | ||||||||||||
Mortgage-backed securities | 826 | 823 | 3 | 6 | ||||||||||||
Total marketable securities | $ | 6,669 | $ | 6,655 | $ | 21 | $ | 35 | ||||||||
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Note 7. | Marketable Securities — (continued) |
Financing and Insurance Operations |
Book/Fair | Unrealized | Unrealized | |||||||||||||||
Cost | Value | Gains | Losses | ||||||||||||||
December 31, 2005 | |||||||||||||||||
Type of security | |||||||||||||||||
Bonds, notes, and other securities | |||||||||||||||||
United States government and agencies | $ | 2,945 | $ | 2,904 | $ | 5 | $ | 46 | |||||||||
States and municipalities | 863 | 889 | 27 | 1 | |||||||||||||
Foreign government securities | 844 | 853 | 11 | 2 | |||||||||||||
Mortgage and asset-backed securities | 1,216 | 1,240 | 29 | 5 | |||||||||||||
Corporate debt securities and other | 6,136 | 6,144 | 43 | 35 | |||||||||||||
Total debt securities available-for-sale | 12,004 | 12,030 | 115 | 89 | |||||||||||||
Mortgage-backed securities held-to-maturity | 16 | 16 | — | — | |||||||||||||
Mortgage-backed securities held for Trading purposes | 3,766 | 3,897 | 131 | — | |||||||||||||
Total debt securities | 15,786 | 15,943 | 246 | 89 | |||||||||||||
Equity securities | 1,510 | 2,367 | 874 | 17 | |||||||||||||
Total investment in marketable securities | $ | 17,296 | $ | 18,310 | $ | 1,120 | $ | 106 | |||||||||
Total consolidated other marketable securities | $ | 18,735 | $ | 19,726 | $ | 1,120 | $ | 129 | |||||||||
Book/Fair | Unrealized | Unrealized | |||||||||||||||
Cost | Value | Gains | Losses | ||||||||||||||
December 31, 2004 | |||||||||||||||||
Type of security | |||||||||||||||||
Bonds, notes, and other securities | |||||||||||||||||
United States government and agencies | $ | 2,198 | $ | 2,208 | $ | 18 | $ | 8 | |||||||||
States and municipalities | 556 | 596 | 40 | — | |||||||||||||
Foreign government securities | 792 | 805 | 14 | 1 | |||||||||||||
Mortgage and asset-backed securities | 1,988 | 2,074 | 97 | 11 | |||||||||||||
Corporate debt securities and other | 3,399 | 3,489 | 97 | 7 | |||||||||||||
Total debt securities available-for-sale | 8,933 | 9,172 | 266 | 27 | |||||||||||||
Mortgage-backed securities held-to-maturity | 135 | 135 | — | — | |||||||||||||
Mortgage-backed securities held for trading purposes | 3,510 | 3,545 | 35 | — | |||||||||||||
Total debt securities | 12,578 | 12,852 | 301 | 27 | |||||||||||||
Equity securities | 1,505 | 2,230 | 731 | 6 | |||||||||||||
Total investment in marketable securities | $ | 14,083 | $ | 15,082 | $ | 1,032 | $ | 33 | |||||||||
Total consolidated other marketable securities | $ | 20,752 | $ | 21,737 | $ | 1,053 | $ | 68 | |||||||||
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Note 7. | Marketable Securities — (continued) |
December 31, 2005 | |||||||||||||||||
Less than 12 Months | 12 months or longer | ||||||||||||||||
Fair value | Unrealized losses | Fair value | Unrealized losses | ||||||||||||||
(Dollars in millions) | |||||||||||||||||
Automotive and Other Operations | |||||||||||||||||
Available for sale securities | |||||||||||||||||
Corporate debt securities and Other | $ | 201 | $ | 3 | $ | 370 | $ | 10 | |||||||||
U.S. government and agencies | 289 | 2 | 84 | 3 | |||||||||||||
Mortgage backed securities | 153 | 3 | 65 | 2 | |||||||||||||
Total marketable securities | $ | 643 | $ | 8 | $ | 519 | $ | 15 | |||||||||
Financing and Insurance Operations | |||||||||||||||||
Available for sale securities | |||||||||||||||||
Debt securities | |||||||||||||||||
U.S. Treasury and federal agencies | $ | 1,590 | $ | 32 | $ | 520 | $ | 15 | |||||||||
States and political subdivisions | 79 | 1 | — | — | |||||||||||||
Foreign government securities | 179 | 1 | — | — | |||||||||||||
Residential mortgage-backed securities | 36 | 1 | 76 | 2 | |||||||||||||
Interest-only strips | 81 | 3 | — | — | |||||||||||||
Corporate debt securities | 1,865 | 20 | 331 | 10 | |||||||||||||
Other | 175 | 3 | 21 | 1 | |||||||||||||
Total debt securities | 4,005 | 61 | 948 | 28 | |||||||||||||
Equity securities | 137 | 15 | 19 | 2 | |||||||||||||
Total available for sale securities | $ | 4,142 | $ | 76 | $ | 967 | $ | 30 | |||||||||
Total held to maturity securities | $ | — | $ | — | $ | — | $ | — | |||||||||
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Note 7. | Marketable Securities — (concluded) |
December 31, 2004 | ||||||||||||||||||
Less than 12 Months | 12 months or longer | |||||||||||||||||
Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||
(Dollars in millions) | ||||||||||||||||||
Automotive and Other Operations | ||||||||||||||||||
Available for sale securities | ||||||||||||||||||
Corporate debt securities and other | $ | 1,698 | $ | 16 | $ | 81 | $ | 3 | ||||||||||
U.S. government and agencies | 1,293 | 11 | — | — | ||||||||||||||
Mortgage backed securities | 418 | 4 | 33 | 1 | ||||||||||||||
Total marketable securities | $ | 3,409 | $ | 31 | $ | 114 | $ | 4 | ||||||||||
Financing and Insurance Operations | ||||||||||||||||||
Available for sale securities | ||||||||||||||||||
Debt securities | ||||||||||||||||||
U.S. Treasury and federal agencies | $ | 971 | $ | 8 | $ | — | $ | — | ||||||||||
Foreign government securities | 208 | 1 | — | — | ||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||
Residential | 67 | 5 | — | — | ||||||||||||||
Commercial | 343 | 2 | 14 | 1 | ||||||||||||||
Interest-only strips | 27 | 3 | — | — | ||||||||||||||
Corporate debt securities | 547 | 5 | — | — | ||||||||||||||
Other | 35 | 2 | — | — | ||||||||||||||
Total debt securities | 2,198 | 26 | 14 | 1 | ||||||||||||||
Equity securities | 88 | 6 | — | — | ||||||||||||||
Total available for sale securities | $ | 2,286 | $ | 32 | $ | 14 | $ | 1 | ||||||||||
Total held to maturity securities | $ | 15 | $ | 1 | $ | — | $ | — | ||||||||||
Note 8. | Variable Interest Entities |
Automotive and Other Operations |
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Financing and Insurance Operations |
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Note 9. | Finance Receivables and Securitizations |
Finance Receivables — Net |
December 31, | ||||||||||
2005 | 2004 | |||||||||
Consumer: | ||||||||||
Retail automotive | $ | 71,452 | $ | 92,225 | ||||||
Residential mortgages | 68,959 | 57,709 | ||||||||
Total consumer | 140,411 | 149,934 | ||||||||
Commercial: | ||||||||||
Automotive: | ||||||||||
Wholesale | 19,641 | 27,796 | ||||||||
Leasing and lease financing | 1,228 | 1,466 | ||||||||
Term loans to dealers and others | 2,973 | 3,662 | ||||||||
Commercial and industrial | 16,936 | 14,203 | ||||||||
Commercial real estate: | ||||||||||
Commercial mortgage(1) | 43 | 3,148 | ||||||||
Real estate construction | 2,677 | 2,810 | ||||||||
Total commercial | 43,498 | 53,085 | ||||||||
Total finance receivables and loans | 183,909 | 203,019 | ||||||||
Allowance for financing losses | (3,116 | ) | (3,419 | ) | ||||||
Total consolidated finance receivables — net(2) | $ | 180,793 | $ | 199,600 | ||||||
(1) | At December 31, 2005, $3.0 billion ($2.1 billion domestic and $949 million foreign) in GMAC Commercial Mortgage’s finance receivables and loans were transferred to the reporting segment held for sale on the Corporation’s Consolidated Balance Sheet (refer to Note 1 for further details). |
(2) | Net of unearned income of $5.9 billion and $7.6 billion at December 31, 2005 and 2004, respectively. |
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Securitizations of Finance Receivables and Mortgage Loans |
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Year Ended December 31, 2005 | ||||||||||||||||||||
Retail | Mortgage Loans | Commercial | ||||||||||||||||||
Finance | Wholesale | Mortgage | ||||||||||||||||||
Receivables | Loans | Residential | Commercial | Securities | ||||||||||||||||
Pre-tax gains on securitizations | $ | (2 | ) | $ | 543 | $ | 513 | $ | 68 | $ | 8 | |||||||||
Cash flow information: | ||||||||||||||||||||
Proceeds from new securitizations | 4,874 | 7,705 | 41,987 | 3,990 | 741 | |||||||||||||||
Servicing fees received | 65 | 179 | 245 | 21 | — | |||||||||||||||
Other cash flows received on retained interests | 249 | 503 | 583 | 262 | 42 | |||||||||||||||
Proceeds from collections reinvested in revolving securitizations | — | 102,306 | — | — | — | |||||||||||||||
Repayments of servicing advances | 43 | — | 1,115 | 198 | — | |||||||||||||||
Cash outflow information: | ||||||||||||||||||||
Servicing advances | (46 | ) | — | (1,163 | ) | (188 | ) | — | ||||||||||||
Purchase obligations and options: | ||||||||||||||||||||
Representations and warranties obligations | — | — | (29 | ) | — | — | ||||||||||||||
Administrator or servicer actions | (76 | ) | — | — | — | — | ||||||||||||||
Asset performance conditional calls | — | — | (99 | ) | — | — | ||||||||||||||
Clean-up calls | (715 | ) | — | (2,202 | ) | — | — |
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Year Ended December 31, 2004 | ||||||||||||||||||||
Retail | Mortgage loans | Commercial | ||||||||||||||||||
Finance | Wholesale | Mortgage | ||||||||||||||||||
Receivables | Loans | Residential | Commercial | Securities | ||||||||||||||||
Pre-tax gains on securitizations | $ | 9 | $ | 497 | $ | 602 | $ | 54 | $ | 11 | ||||||||||
Cash flow information: | ||||||||||||||||||||
Proceeds from new securitizations | 1,824 | 9,188 | 29,412 | 2,108 | 935 | |||||||||||||||
Servicing fees received | 105 | 174 | 208 | 20 | — | |||||||||||||||
Other cash flows received on retained interests | 340 | 808 | 729 | 216 | 68 | |||||||||||||||
Proceeds from collections reinvested in revolving securitizations | — | 91,360 | — | — | — | |||||||||||||||
Repayments of servicing advances | 75 | — | 947 | 147 | — | |||||||||||||||
Cash outflow information: | — | |||||||||||||||||||
Servicing advances | (64 | ) | — | (1,035 | ) | (169 | ) | — | ||||||||||||
Purchase obligations and options: | ||||||||||||||||||||
Representations and warranties obligations | (1 | ) | — | (66 | ) | — | — | |||||||||||||
Administrator or servicer actions | (75 | ) | — | — | — | — | ||||||||||||||
Asset performance conditional calls | — | — | (137 | ) | — | — | ||||||||||||||
Clean-up calls | (269 | ) | — | (3,797 | ) | — | — |
Year Ended December 31, 2003 | ||||||||||||||||||||
Retail | Mortgage Loans | Commercial | ||||||||||||||||||
Finance | Wholesale | Mortgage | ||||||||||||||||||
Receivables | Loans | Residential | Commercial | Securities | ||||||||||||||||
Pre-tax gains on securitizations | $ | 37 | $ | 488 | $ | 522 | $ | 75 | $ | 14 | ||||||||||
Cash flow information: | ||||||||||||||||||||
Proceeds from new securitizations | 1,604 | 3,625 | 29,566 | 3,342 | 1,870 | |||||||||||||||
228 | 164 | 250 | 20 | — | ||||||||||||||||
Other cash flows received on retained interests | 753 | 174 | 955 | 317 | 69 | |||||||||||||||
Proceeds from collections reinvested in revolving securitizations | 862 | 97,829 | — | 5 | — | |||||||||||||||
Repayments of servicing advances | 114 | — | 1,208 | 116 | — | |||||||||||||||
Cash outflow information: | ||||||||||||||||||||
Servicing advances | (118 | ) | — | (1,242 | ) | (117 | ) | — | ||||||||||||
Purchase obligations and options:(a) | ||||||||||||||||||||
Representations and warranties obligations | (25 | ) | — | (154 | ) | — | — | |||||||||||||
Administrator or servicer actions | (146 | ) | — | — | — | — | ||||||||||||||
Asset performance conditional calls | — | — | (122 | ) | — | — | ||||||||||||||
Clean-up calls | (885 | ) | — | (1,919 | ) | — | — |
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Year Ended December 31, 2005 | Year Ended December 31, 2004 | |||||||||||||||||||||||||||||||
Retail | Mortgage loans | Retail | Mortgage loans | |||||||||||||||||||||||||||||
finance | Commercial | finance | Commercial | |||||||||||||||||||||||||||||
receivables | Residential | mortgage | receivables | Residential | mortgage | |||||||||||||||||||||||||||
(a) | (b) | Commercial | securities | (a) | (b) | Commercial | securities | |||||||||||||||||||||||||
Key assumptions(c) (rates per annum): | ||||||||||||||||||||||||||||||||
Annual prepayment rate(d) | 0.9-1.2 | % | 0.0-60.0 | % | 0.0-50.0 | % | 0.0 | % | 0.9-1.0 | % | 0.0- 51.3 | % | 0.0-50.0 | % | 0.0-19.9 | % | ||||||||||||||||
Weighted average life (in years) | 1.6-1.7 | 1.1-8.5 | 0.3-8.6 | 5.9-9.9 | 1.6-1.8 | 1.1-5.5 | 0.4-8.8 | 2.5-17.4 | ||||||||||||||||||||||||
Expected credit losses | 0.4-1.6 | % | 0.0-4.9 | % | 0.0 | % | 0.0 | % | 0.4 | % | 0.0-10.9 | % | 0.0 | % | 0.0-3.1 | % | ||||||||||||||||
Discount rate | 9.5-15.0 | % | 6.5- 21.4 | % | 4.2-10.7 | % | 10.0- 12.0 | % | 9.5 | % | 6.5- 24.8 | % | 4.3-15.0 | % | 8.2-11.7 | % |
(a) | The fair value of retained interests in wholesale securitizations approximates cost because of the short-term and floating rate nature of wholesale loans. |
(b) | Included within residential mortgage loans are home equity loans and lines, highloan-to-value loans and residential first and second mortgage loans. | |
(c) | The assumptions used to measure the expected yield on variable rate retained interests are based on a benchmark interest rate yield curve, plus a contractual spread, as appropriate. The actual yield curve utilized varies depending on the specific retained interests. | |
(d) | Based on the weighted average maturity (WAM) for finance receivables and constant prepayment rate (CPR) for mortgage loans and commercial mortgage securities. |
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Mortgage loans | |||||||||||||||||
Retail finance | Commercial mortgage | ||||||||||||||||
receivables (a) | Residential | Commercial | securities | ||||||||||||||
Carrying value/fair value of retained interests | $ | 314 | $ | 1,057 | $ | 250 | $ | 182 | |||||||||
Weighted average life (in years) | 0.1-1.2 | 1.0-6.2 | 0.0-17.7 | 2.4-16.1 | |||||||||||||
Annual prepayment rate | 0.7-1.2% WAM | 0.0-60.0% CPR | 0.0-50.0% CPR | 1.2-16.0% CPR | |||||||||||||
Impact of 10% adverse change | $(1 | ) | $(46 | ) | $(1 | ) | $— | ||||||||||
Impact of 20% adverse change | (2 | ) | (82 | ) | (1 | ) | — | ||||||||||
Loss assumption | 0.4%(b | ) | 0.0-16.9% | 0.0-3.4% | 0.0-6.7% | ||||||||||||
Impact of 10% adverse change | $(2 | ) | $(43 | ) | $(6 | ) | $(3 | ) | |||||||||
Impact of 20% adverse change | (4 | ) | (81 | ) | (10 | ) | (6 | ) | |||||||||
Discount rate | 9.5-12.0% | 6.5-40.0% | 0.1-33.5% | 5.3-21.1% | |||||||||||||
Impact of 10% adverse change | $(2 | ) | $(34 | ) | $(5 | ) | $(9 | ) | |||||||||
Impact of 20% adverse change | (5 | ) | (65 | ) | (10 | ) | (17 | ) | |||||||||
Market rate(d) | 3.9-5.1% | (c | ) | (c | ) | (c | ) | ||||||||||
Impact of 10% adverse change | $(7 | ) | $(11 | ) | $— | $— | |||||||||||
Impact of 20% adverse change | (15 | ) | (26 | ) | — | — |
(a) | Fair value of retained interests in wholesale securitizations approximates cost of $690 million because of the short-term and floating rate nature of wholesale receivables. |
(b) | Net of a reserve for expected credit losses totaling $14 million at December 31, 2005. Such amounts are included in the fair value of the retained interests, which are classified as investment securities. | |
(c) | Forward benchmark interest rate yield curve plus contractual spread. | |
(d) | Represents the rate of return paid to the investors. |
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Loans securitized in years ended | ||||||||||||
December 31, (a) | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Retail automotive | 0.4 | % | 0.4 | % | 0.4 | % | ||||||
Residential mortgage | 0.0- 16.9 | % | 0.0- 26.1 | % | 0.0- 26.1 | % | ||||||
Commercial mortgage | 0.0-3.4 | % | 0.0- 4.2 | % | 0.0- 6.6 | % | ||||||
Commercial investment securities | 0.0-6.7 | % | 0.0- 39.5 | % | 0.9- 33.7 | % |
(a) | Static pool losses not applicable to wholesale finance receivable securitizations because of their short-term nature. |
Total finance receivables | Amount 60 days or | ||||||||||||||||||||||||
and loans | more past due | Net credit losses | |||||||||||||||||||||||
December 31, (dollars in millions) | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||||||||
Retail automotive | $ | 77,197 | $ | 97,631 | $ | 892 | $ | 806 | $ | 867 | $ | 1,044 | |||||||||||||
Residential mortgage | 167,584 | 129,550 | 8,682 | 6,686 | 885 | 944 | |||||||||||||||||||
Total consumer | 244,781 | 227,181 | 9,574 | 7,492 | 1,752 | 1,988 | |||||||||||||||||||
Wholesale | 41,062 | 49,197 | 73 | 51 | 4 | 2 | |||||||||||||||||||
Commercial mortgage | 43 | 21,353 | — | 410 | 4 | 130 | |||||||||||||||||||
Other automotive and commercial | 23,852 | 22,155 | 575 | 544 | 33 | 71 | |||||||||||||||||||
Total commercial(a) | 64,957 | 92,705 | 648 | 1,005 | 41 | 203 | |||||||||||||||||||
Total managed portfolio(b) | 309,738 | 319,886 | $ | 10,222 | $ | 8,497 | $ | 1,793 | $ | 2,191 | |||||||||||||||
Securitized finance receivables | |||||||||||||||||||||||||
and loans | (103,947 | ) | (96,801 | ) | |||||||||||||||||||||
Loans held for sale (unpaid principal) | (21,882 | ) | (19,941 | ) | |||||||||||||||||||||
Total finance receivables and loans | $ | 183,909 | $ | 203,144 | |||||||||||||||||||||
(a) | Excludes $26,320 million in GMAC commercial mortgage’s managed assets. At December 31, 2005, commercial mortgage had $281 million in accounts past due and net credit losses of $228 million. |
(b) | Managed portfolio represents finance receivables and loans on the balance sheet or that have been securitized, excluding securitized finance receivables and loans that GMAC continues to service but has no other continuing involvement (i.e., in which GMAC retains an interest or risk of loss in the underlying receivables). |
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Automotive and Other Operations |
December 31, | |||||||||||
2005 | 2004 | ||||||||||
Productive material, work in process, and supplies | $ | 5,471 | $ | 4,838 | |||||||
Finished product, service parts, etc. | 9,871 | 8,321 | |||||||||
Total inventories at FIFO | 15,342 | 13,159 | |||||||||
Less LIFO allowance | (1,491 | ) | (1,442 | ) | |||||||
Total inventories (less allowances) | $ | 13,851 | $ | 11,717 |
Financing and Insurance Operations |
December 31, | ||||||||
2005 | 2004 | |||||||
Off-lease vehicles | $ | 503 | $ | 530 | ||||
Total consolidated inventories (less allowances) | $ | 14,354 | $ | 12,247 | ||||
Automotive and Other Operations |
December 31, | |||||||||
2005 | 2004 | ||||||||
Equipment on operating leases | $ | 7,629 | $ | 7,475 | |||||
Less accumulated depreciation | (636 | ) | (987 | ) | |||||
Net book value | $ | 6,993 | $ | 6,488 |
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Financing and Insurance Operations |
December 31, | |||||||||
2005 | 2004 | ||||||||
Equipment on operating leases | $ | 39,675 | $ | 36,002 | |||||
Less accumulated depreciation | (8,481 | ) | (8,276 | ) | |||||
Net book value | $ | 31,194 | $ | 27,726 | |||||
Total consolidated net book value | $ | 38,187 | $ | 34,214 | |||||
Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
U.S. income (loss) | $ | (16,171 | ) | $ | 242 | $ | 1,802 | ||||||
Foreign income (loss) | (760 | ) | 944 | 1,195 | |||||||||
Total | $ | (16,931 | ) | $ | 1,186 | $ | 2,997 | ||||||
Years Ended December 31, | |||||||||||||||
2005 | 2004 | 2003 | |||||||||||||
Income taxes estimated to be payable currently | |||||||||||||||
U.S. federal | $ | (147 | ) | $ | (282 | ) | $ | 167 | |||||||
Foreign | 841 | 1,018 | 1,159 | ||||||||||||
U.S. state and local | (2 | ) | 36 | 414 | |||||||||||
Total payable currently | 692 | 772 | 1,740 | ||||||||||||
Deferred income tax expense (credit) — net | |||||||||||||||
U.S. federal | (6,878 | ) | (427 | ) | 134 | ||||||||||
Foreign | (668 | ) | (1,239 | ) | (1,136 | ) | |||||||||
U.S. state and local | 976 | (22 | ) | (28 | ) | ||||||||||
Total deferred | (6,570 | ) | (1,688 | ) | (1,030 | ) | |||||||||
Total income taxes | $ | (5,878 | ) | $ | (916 | ) | $ | 710 | |||||||
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Years Ended December 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Tax at U.S. federal statutory income tax rate | $ | (5,926 | ) | $ | 415 | $ | 1,049 | ||||||
State and local tax expense | (589 | ) | (949 | ) | 21 | ||||||||
Foreign rates other than 35% | (174 | ) | (510 | ) | (269 | ) | |||||||
Taxes on unremitted earnings of subsidiaries | (276 | ) | (366 | ) | (125 | ) | |||||||
Other tax credits | (69 | ) | (41 | ) | (52 | ) | |||||||
Settlement of prior year tax matters | (515 | ) | (191 | ) | (194 | ) | |||||||
Change in valuation allowance | 2,178 | 1,432 | 566 | ||||||||||
ESOP dividend deduction(1) | (52 | ) | (53 | ) | (53 | ) | |||||||
Realization of basis differences due to foreign reorganizations | (84 | ) | (483 | ) | — | ||||||||
Medicare prescription drug benefit | (325 | ) | (211 | ) | — | ||||||||
Loss carryforward related to investment write-down | — | (168 | ) | — | |||||||||
Stock contribution to pension plans(2) | — | — | (87 | ) | |||||||||
Other adjustments | (46 | ) | 209 | (146 | ) | ||||||||
Total income tax (benefit) expense | $ | (5,878 | ) | $ | (916 | ) | $ | 710 | |||||
(1) | Deduction for dividends paid on GM $12/3 par value common stock held under the employee stock ownership portion of the GM Savings Plans, pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001. |
(2) | Additional tax benefit related to the GM Class H Common Stock contribution to the pension and VEBA plans. |
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December 31, | |||||||||||||||||
2005 | 2004 | ||||||||||||||||
Deferred Tax | Deferred Tax | ||||||||||||||||
Assets | Liabilities | Assets | Liabilities | ||||||||||||||
Postretirement benefits other than pensions | $ | 12,757 | $ | — | $ | 9,377 | $ | — | |||||||||
Pension and other employee benefit plans | 3,807 | 12,985 | 3,787 | 13,408 | |||||||||||||
Warranties, dealer and customer allowances, claims, and discounts | 6,739 | 52 | 6,907 | 42 | |||||||||||||
Depreciation and amortization | 5,713 | 2,584 | 5,043 | 3,118 | |||||||||||||
Tax carryforwards | 11,155 | — | 10,422 | — | |||||||||||||
Lease transactions | — | 4,351 | 19 | 3,801 | |||||||||||||
Miscellaneous foreign | 4,510 | 371 | 4,401 | 2,300 | |||||||||||||
Other | 9,981 | 3,677 | 9,050 | 3,804 | |||||||||||||
Subtotal | 54,662 | 24,020 | 49,006 | 26,473 | |||||||||||||
Valuation allowances | (5,230 | ) | — | (3,052 | ) | — | |||||||||||
Total deferred taxes | $ | 49,432 | $ | 24,020 | $ | 45,954 | $ | 26,473 | |||||||||
Net deferred tax assets | $ | 25,412 | $ | 19,481 | |||||||||||||
2005 | 2004 | ||||||||
Current deferred tax assets | $ | 7,073 | $ | 8,883 | |||||
Current deferred tax liabilities | (3,759 | ) | (5,226 | ) | |||||
Non-current deferred tax assets | 22,816 | 17,676 | |||||||
Non-current deferred tax liabilities | (718 | ) | (1,852 | ) | |||||
Total | $ | 25,412 | $ | 19,481 | |||||
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Statutory | ||||||||||||
Operating Loss | ||||||||||||
Jurisdiction | 2005 | 2004 | Carryforward Period | |||||||||
United States | $ | 21,633 | $ | 15,719 | 20 years/ Unlimited | |||||||
Germany | 2,034 | 1,427 | Unlimited | |||||||||
Brazil | 0 | 453 | Unlimited | |||||||||
United Kingdom | 299 | 363 | Unlimited | |||||||||
Spain | 230 | 186 | 15 years | |||||||||
Total | $ | 24,196 | $ | 18,148 | ||||||||
Balance December 31, 2004 | $ | 3,052 | |||
Additions: | |||||
US State & Local | 1,424 | ||||
Brazil | 617 | ||||
Other | 137 | ||||
Balance December 31, 2005 | $ | 5,230 | |||
• | The launch of new sport utility vehicles and full sizepick-up trucks primarily in 2006, which are expected to produce substantially higher revenues and profits than the predecessor models in these segments in 2005; | |
• | The amendment of the GM Health Care Program for Hourly Employees and the establishment of a defined contribution health care plan, which will result in a substantial reduction in health care costs in |
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Note 12. | Income Taxes — (concluded) |
the U.S. beginning in 2006. The amendment has been ratified by the UAW and granted preliminary approval by the U.S. District Court for the Eastern District of Michigan; | ||
• | Reductions of GMNA’s cost structure as a result of the implementation of its restructuring plan; and | |
• | Continued strength of GMAC earnings in the U.S. |
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Note 13. | Property — Net |
Estimated | December 31, | |||||||||||||||
Useful Lives | ||||||||||||||||
(Years) | 2005 | 2004 | ||||||||||||||
Automotive and Other Operations | ||||||||||||||||
Land | — | $ | 1,139 | $ | 967 | |||||||||||
Buildings and land improvements | 2-40 | 16,179 | 15,636 | |||||||||||||
Machinery and equipment | 3-30 | 48,351 | 45,796 | |||||||||||||
Construction in progress | — | 4,099 | 3,807 | |||||||||||||
Real estate, plants, and equipment | 69,768 | 66,206 | ||||||||||||||
Less accumulated depreciation | (41,554 | ) | (39,405 | ) | ||||||||||||
Real estate, plants, and equipment — net | 28,214 | 26,801 | ||||||||||||||
Special tools — net | 10,252 | 10,369 | ||||||||||||||
Total property — net | $ | 38,466 | $ | 37,170 | ||||||||||||
Financing and Insurance Operations | ||||||||||||||||
Equipment and other | 2-10 | $ | 2,902 | $ | 3,086 | |||||||||||
Less accumulated depreciation | (1,154 | ) | (1,236 | ) | ||||||||||||
Total property — net (Note 15) | $ | 1,748 | $ | 1,850 | ||||||||||||
Total consolidated property — net | $ | 40,214 | $ | 39,020 | ||||||||||||
Years Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
Automotive and Other Operations | ||||||||||||||
Depreciation | $ | 5,502 | $ | 5,028 | $ | 4,526 | ||||||||
Amortization and impairment of special tools | 4,495 | 3,563 | 3,391 | |||||||||||
Amortization of intangible assets | 76 | 38 | 29 | |||||||||||
Total | $ | 10,073 | $ | 8,629 | $ | 7,946 | ||||||||
Financing and Insurance Operations | ||||||||||||||
Depreciation | $ | 5,679 | $ | 5,512 | $ | 5,556 | ||||||||
Amortization of intangible assets | 17 | 11 | 11 | |||||||||||
Total | $ | 5,696 | $ | 5,523 | $ | 5,567 | ||||||||
Total consolidated depreciation and amortization | $ | 15,769 | $ | 14,152 | $ | 13,513 | ||||||||
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Note 14. | Goodwill and Intangible Assets |
Gross Carrying | Accumulated | Net Carrying | ||||||||||||
December 31, 2005 | Amount | Amortization | Amount | |||||||||||
Automotive and Other Operations | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Patents and intellectual property rights | $ | 510 | $ | 148 | $ | 362 | ||||||||
Non-amortizing intangible assets: | ||||||||||||||
Goodwill | 757 | |||||||||||||
Prepaid pension asset (Note 18) | 743 | |||||||||||||
Total goodwill and intangible assets | $ | 1,862 | ||||||||||||
Financing and Insurance Operations | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer lists and contracts | $ | 57 | $ | 41 | $ | 16 | ||||||||
Trademarks and other | 35 | 20 | 15 | |||||||||||
Total | $ | 92 | $ | 61 | $ | 31 | ||||||||
Non-amortizing intangible assets: | ||||||||||||||
Goodwill | 2,446 | |||||||||||||
Total goodwill and intangible assets (Note 15) | 2,477 | |||||||||||||
Total consolidated goodwill and intangible assets | $ | 4,339 | ||||||||||||
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Note 14. | Goodwill and Intangible Assets — (concluded) |
Gross Carrying | Accumulated | Net Carrying | ||||||||||||
December 31, 2004 | Amount | Amortization | Amount | |||||||||||
Automotive and Other Operations | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Patents and intellectual property rights | $ | 303 | $ | 69 | $ | 234 | ||||||||
Non-amortizing intangible assets: | ||||||||||||||
Goodwill | 600 | |||||||||||||
Prepaid pension asset (Note 18) | 765 | |||||||||||||
Total goodwill and intangible assets | $ | 1,599 | ||||||||||||
Financing and Insurance Operations | ||||||||||||||
Amortizing intangible assets: | ||||||||||||||
Customer lists and contracts | $ | 73 | $ | 41 | $ | 32 | ||||||||
Trademarks and other | 40 | 20 | 20 | |||||||||||
Total | $ | 113 | $ | 61 | $ | 52 | ||||||||
Non-amortizing intangible assets: | ||||||||||||||
Goodwill | 3,274 | |||||||||||||
Total goodwill and intangible assets (Note 15) | 3,326 | |||||||||||||
Total consolidated goodwill and intangible assets | $ | 4,925 | ||||||||||||
Total | ||||||||||||||||||||
Auto & | ||||||||||||||||||||
GMNA | GME | Other | GMAC | Total GM | ||||||||||||||||
Balance as of December 31, 2003 | $ | 154 | $ | 413 | $ | 567 | $ | 3,223 | $ | 3,790 | ||||||||||
Goodwill acquired during the period | — | — | — | 16 | 16 | |||||||||||||||
Effect of foreign currency translation | 5 | 33 | 38 | 35 | 73 | |||||||||||||||
Other | (5 | ) | — | (5 | ) | — | (5 | ) | ||||||||||||
Balance as of December 31, 2004 | 154 | 446 | 600 | 3,274 | 3,874 | |||||||||||||||
Goodwill acquired during the period | 238 | — | 238 | 22 | 260 | |||||||||||||||
Impairment losses/other(1) | (734 | ) | (734 | ) | ||||||||||||||||
Effect of foreign currency translation | (9 | ) | (72 | ) | (81 | ) | (57 | ) | (138 | ) | ||||||||||
Transfers to reporting segment held for sale(2) | — | — | — | (59 | ) | (59 | ) | |||||||||||||
Balance as of December 31, 2005 | $ | 383 | $ | 374 | $ | 757 | $ | 2,446 | $ | 3,203 | ||||||||||
(1) | In the fourth quarter of 2005, GMAC recorded a goodwill impairment pre-tax charge of $734 million, relating primarily to the goodwill recognized in conjunction with the 1999 acquisition of The Bank of New York’s commercial finance business. |
(2) | At December 31, 2005, $59 million in GMAC Commercial Mortgage goodwill was reclassified to assets held for sale. |
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Note 15. | Other Assets |
Automotive and Other Operations |
December 31, | |||||||||
2005 | 2004 | ||||||||
Investments in equity securities | $ | 435 | $ | 350 | |||||
Prepaid pension benefit cost (Note 18) | 37,576 | 38,919 | |||||||
Other | 3,092 | 1,575 | |||||||
Total other assets | $ | 41,103 | $ | 40,844 | |||||
Financing and Insurance Operations |
December 31, | |||||||||
2005 | 2004 | ||||||||
Mortgage servicing rights | $ | 4,015 | $ | 3,890 | |||||
Premiums and other insurance receivables | 1,873 | 1,763 | |||||||
Deferred policy acquisition costs | 1,696 | 1,444 | |||||||
Derivative assets | 3,000 | 9,489 | |||||||
Repossessed and foreclosed assets, net | 689 | 615 | |||||||
Equity investments | 535 | 1,751 | |||||||
Intangible assets (Note 14) | 2,477 | 3,326 | |||||||
Property (Note 13) | 1,748 | 1,850 | |||||||
Cash deposits held for securitization trusts | 2,907 | 1,836 | |||||||
Restricted cash collections for securitization trusts | 1,871 | 2,217 | |||||||
Accrued interest and rent receivable | 1,163 | 1,178 | |||||||
Real estate investments | 1,320 | 1,473 | |||||||
Debt issuance costs | 726 | 753 | |||||||
Servicer advances | 499 | 769 | |||||||
Inventory (Note 10) | 503 | 530 | |||||||
Other | 2,672 | 2,307 | |||||||
Total other assets | $ | 27,694 | $ | 35,191 | |||||
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Note 15. | Other Assets — (concluded) |
Reclassification for Consolidated Balance Sheet Presentation |
December 31, | |||||||||
2005 | 2004 | ||||||||
Auto & Other — other assets, as detailed above | $ | 41,103 | $ | 40,844 | |||||
FIO — other assets, as detailed above | 27,694 | 35,191 | |||||||
Subtotal | 68,797 | 76,035 | |||||||
Prepaid assets and other | 1,837 | 1,874 | |||||||
Inventory (Note 10) | (503 | ) | (530 | ) | |||||
Accounts receivable | (7,820 | ) | (14,523 | ) | |||||
Intangible assets (Note 14) | (2,477 | ) | (3,326 | ) | |||||
Property (Note 13) | (1,748 | ) | (1,850 | ) | |||||
Total consolidated other assets | $ | 58,086 | $ | 57,680 | |||||
Note 16. | Accrued Expenses, Other Liabilities, and Deferred Income Taxes |
Automotive and Other Operations |
December 31, | |||||||||
2005 | 2004 | ||||||||
Dealer and customer allowances, claims, and discounts | $ | 11,605 | $ | 11,492 | |||||
Deferred revenue and deposits from rental car companies | 13,611 | 13,239 | |||||||
Policy, product warranty, and recall campaigns | 9,128 | 9,315 | |||||||
Delphi contingent exposure | 5,500 | 0 | |||||||
Payrolls and employee benefits (excludes postemployment) | 3,970 | 4,642 | |||||||
Unpaid losses under self-insurance programs | 1,827 | 1,784 | |||||||
Taxes | 2,485 | 2,993 | |||||||
Interest | 1,011 | 922 | |||||||
Postemployment benefits — Plant idling (Note 5) | 2,012 | 237 | |||||||
Postemployment benefits — Extended disability benefits | 1,135 | 1,163 | |||||||
Fiat settlement (Note 2) | — | 1,364 | |||||||
Other | 7,418 | 8,211 | |||||||
Total accrued expenses and other liabilities | $ | 59,702 | $ | 55,362 | |||||
Pensions | 90 | 84 | |||||||
Postretirement benefits | 4,154 | 3,890 | |||||||
Deferred income taxes | 742 | 3,072 | |||||||
Total accrued expenses, other liabilities, and deferred income taxes | $ | 64,688 | $ | 62,408 | |||||
Current | $ | 42,665 | $ | 46,202 | |||||
Non-current | 22,023 | 16,206 | |||||||
Total accrued expenses, other liabilities, and deferred income taxes | $ | 64,688 | $ | 62,408 | |||||
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December 31, | ||||||||
2005 | 2004 | |||||||
Beginning balance | $ | 9,315 | $ | 8,832 | ||||
Payments | (4,696 | ) | (4,669 | ) | ||||
Increase in liability (warranties issued during period) | 5,159 | 5,065 | ||||||
Adjustments to liability (pre-existing warranties) | (381 | ) | (85 | ) | ||||
Effect of foreign currency translation | (269 | ) | 172 | |||||
Ending balance | $ | 9,128 | $ | 9,315 | ||||
Financing and Insurance Operations |
December 31, | |||||||||
2005 | 2004 | ||||||||
Unpaid insurance losses, loss adjustment expenses, and unearned insurance premiums | $ | 7,588 | $ | 7,232 | |||||
Interest | 3,057 | 3,413 | |||||||
Deposits | 8,367 | 7,477 | |||||||
Interest rate derivatives | 2,224 | 934 | |||||||
Other | 3,122 | 3,922 | |||||||
Total other liabilities | $ | 24,358 | $ | 22,978 | |||||
Postretirement benefits | 853 | 815 | |||||||
Deferred income taxes | 3,735 | 4,006 | |||||||
Total other liabilities and deferred income taxes | $ | 28,946 | $ | 27,799 | |||||
Total consolidated accrued expenses and other liabilities | $ | 84,060 | $ | 78,340 | |||||
Total consolidated deferred income tax liability (Note 12) | $ | 4,477 | $ | 7,078 | |||||
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Note 17. | Long-Term Debt and Loans Payable |
Automotive and Other Operations |
Weighted-Average | ||||||||||||||||||||
Interest Rate | December 31, | |||||||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||||||
Long-term debt and loans payable | ||||||||||||||||||||
Payable within one year | ||||||||||||||||||||
Current portion of long-term debt(1) | 5.8% | 5.7% | $ | 564 | $ | 584 | ||||||||||||||
All other | 7.4% | 3.0% | 955 | 1,478 | ||||||||||||||||
Total loans payable | 1,519 | 2,062 | ||||||||||||||||||
Payable beyond one year(1) | 6.9% | 6.8% | 31,084 | 30,425 | ||||||||||||||||
Unamortized discount | (97 | ) | (103 | ) | ||||||||||||||||
Mark-to-market adjustment(2) | 27 | 138 | ||||||||||||||||||
Total long-term debt | 31,014 | 30,460 | ||||||||||||||||||
Total long-term debt and loans payable | $ | 32,533 | $ | 32,522 | ||||||||||||||||
(1) | The weighted-average interest rates include the impact of interest rate swap agreements. |
(2) | Effective January 1, 2001 the Corporation has been recording its hedged debt at fair market value on its balance sheet due to the adoption of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” |
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Financing and Insurance Operations |
Weighted-Average | ||||||||||||||||||
Interest Rate | December 31, | |||||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||||
Payable within one year | ||||||||||||||||||
Current portion of long-term debt(1) | 4.9% | 3.9% | $ | 41,733 | $ | 37,300 | ||||||||||||
Commercial paper(1) | 5.5% | 2.5% | 528 | 8,416 | ||||||||||||||
All other | 4.6% | 2.8% | 39,793 | 45,327 | ||||||||||||||
Total loans payable | 82,054 | 91,043 | ||||||||||||||||
Payable beyond one year(1) | 5.2% | 4.9% | 171,699 | 176,090 | ||||||||||||||
Unamortized discount | (538 | ) | (650 | ) | ||||||||||||||
Mark to market adjustment | 2 | 1,274 | ||||||||||||||||
Total long-term debt and loans payable | 171,163 | 176,714 | ||||||||||||||||
Total debt | $ | 253,217 | $ | 267,757 | ||||||||||||||
Total consolidated notes and loans payable | $ | 285,750 | $ | 300,279 | ||||||||||||||
(1) | The weighted-average interest rates include the effect of interest rate swap agreements. |
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Note 17. | Long-Term Debt and Loans Payable — (concluded) |
Note 18. | Pensions and Other Postretirement Benefits |
2005 | 2004 | 2003 | ||||||||||
U.S. hourly and salaried | $ | — | $ | — | $ | 18,504 | ||||||
Other U.S. | 125 | 117 | 117 | |||||||||
Non-U.S. | 708 | 802 | 442 |
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Note 18. | Pensions and Other Postretirement Benefits — (continued) |
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Note 18. | Pensions and Other Postretirement Benefits — (continued) |
U.S. Plans | Non-U.S. Plans | Non-U.S. | |||||||||||||||||||||||||||||||||
Pension Benefits | Pension Benefits | U.S. Other Benefits | Other Benefits | ||||||||||||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | ||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||||||||
Change in benefit obligations | |||||||||||||||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 90,760 | $ | 87,285 | $ | 18,056 | $ | 15,088 | $ | 73,772 | $ | 64,547 | $ | 3,702 | $ | 2,995 | |||||||||||||||||||
Service cost | 1,117 | 1,097 | 322 | 247 | 702 | 566 | 50 | 39 | |||||||||||||||||||||||||||
Interest cost | 4,883 | 5,050 | 965 | 892 | 4,107 | 3,726 | 218 | 201 | |||||||||||||||||||||||||||
Plan participants’ contributions | 22 | 22 | 27 | 26 | 88 | 85 | 1 | 2 | |||||||||||||||||||||||||||
Amendments | (65 | ) | 54 | 113 | 163 | — | 10 | — | — | ||||||||||||||||||||||||||
Actuarial losses | (975 | ) | 3,683 | 2,233 | 1,040 | 6,720 | 8,527 | (200 | ) | 288 | |||||||||||||||||||||||||
Benefits paid | (6,695 | ) | (6,605 | ) | (911 | ) | (806 | ) | (4,208 | ) | (3,690 | ) | (118 | ) | (114 | ) | |||||||||||||||||||
Exchange rate movements | — | — | (942 | ) | 1,201 | — | — | — | — | ||||||||||||||||||||||||||
Curtailments, settlements, and other | 86 | 174 | 778 | 205 | — | 1 | 107 | 291 | |||||||||||||||||||||||||||
Benefit obligation at end of year | 89,133 | 90,760 | 20,641 | 18,056 | 81,181 | 73,772 | 3,760 | 3,702 | |||||||||||||||||||||||||||
Change in plan assets | |||||||||||||||||||||||||||||||||||
Fair value of plan assets at beginning of year | 90,886 | 86,169 | 9,023 | 7,560 | 16,016 | 9,998 | — | — | |||||||||||||||||||||||||||
Actual return on plan assets | 10,924 | 11,046 | 1,382 | 814 | 2,258 | 981 | — | — | |||||||||||||||||||||||||||
Employer contributions | 125 | 117 | 505 | 802 | 2,008 | 5,037 | — | — | |||||||||||||||||||||||||||
Plan participants’ contributions | 22 | 22 | 27 | 26 | — | — | — | — | |||||||||||||||||||||||||||
Benefits paid | (6,695 | ) | (6,605 | ) | (911 | ) | (806 | ) | — | — | — | — | |||||||||||||||||||||||
Exchange rate movements | — | — | (119 | ) | 627 | — | — | — | — | ||||||||||||||||||||||||||
Curtailments, settlements, and other | (12 | ) | 137 | 18 | — | — | — | — | — | ||||||||||||||||||||||||||
Fair value of plan assets at end of year | 95,250 | 90,886 | 9,925 | 9,023 | 20,282 | 16,016 | — | — | |||||||||||||||||||||||||||
Funded status(1) | 6,117 | 126 | (10,716 | ) | (9,033 | ) | (60,899 | ) | (57,756 | ) | (3,760 | ) | (3,702 | ) | |||||||||||||||||||||
Unrecognized actuarial loss | 25,538 | 31,604 | 6,554 | 5,411 | 30,592 | 27,345 | 1,698 | 1,326 | |||||||||||||||||||||||||||
Unrecognized prior service cost | 4,616 | 5,862 | 770 | 808 | (714 | ) | (445 | ) | (584 | ) | 51 | ||||||||||||||||||||||||
Unrecognized transition obligation | — | — | 28 | 39 | — | — | — | — | |||||||||||||||||||||||||||
Employer contributions/withdrawals in fourth quarter | — | — | 203 | — | (1,176 | ) | 4,000 | — | — | ||||||||||||||||||||||||||
Benefits paid in fourth quarter | — | — | — | — | 846 | 999 | — | — | |||||||||||||||||||||||||||
Business Combination after Measurement Date | — | — | (187 | ) | — | — | __ — | — | — | ||||||||||||||||||||||||||
Net amount recognized | $ | 36,271 | $ | 37,592 | $ | (3,348 | ) | $ | (2,775 | ) | $ | (31,351 | ) | $ | (25,857 | ) | $ | (2,646 | ) | $ | (2,325 | ) | |||||||||||||
Amounts recognized in the consolidated balance sheets consist of: | |||||||||||||||||||||||||||||||||||
Prepaid benefit cost | $ | 37,280 | $ | 38,570 | $ | 296 | $ | 349 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||
Accrued benefit liability | (1,177 | ) | (1,152 | ) | (10,127 | ) | (8,303 | ) | (31,351 | ) | (25,857 | ) | (2,646 | ) | $ | (2,325 | ) | ||||||||||||||||||
Intangible asset | — | — | 743 | 765 | — | — | — | — | |||||||||||||||||||||||||||
Accumulated other comprehensive income | 168 | 174 | 5,740 | 4,414 | — | — | — | — | |||||||||||||||||||||||||||
Net amount recognized | $ | 36,271 | $ | 37,592 | $ | (3,348 | ) | $ | (2,775 | ) | $ | (31,351 | ) | $ | (25,857 | ) | $ | (2,646 | ) | $ | (2,325 | ) | |||||||||||||
(1) | Includes overfunded status of the combined U.S. hourly and salaried pension plans of $7.5 billion as of December 31, 2005, and $1.6 billion as of December 31, 2004. |
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Note 18. | Pensions and Other Postretirement Benefits — (continued) |
U.S. Plans | Non-U.S. Plans | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Accumulated Benefit Obligation | $ | 86,885 | $ | 88,053 | $ | 19,714 | $ | 17,097 | |||||||||
Plans with ABO in excess of plan assets | |||||||||||||||||
ABO | $ | 1,207 | $ | 1,224 | $ | 19,232 | $ | 16,631 | |||||||||
Fair value of plan assets | 30 | 85 | 9,249 | 8,388 | |||||||||||||
Plans with PBO in excess of plan assets | |||||||||||||||||
PBO | $ | 1,703 | $ | 31,176 | $ | 20,515 | $ | 17,907 | |||||||||
Fair value of plan assets | 295 | 29,548 | 9,622 | 8,708 |
Non-U.S. Plans | Non-U.S. | |||||||||||||||||||||||||||||||||||||||||||||||
U.S. Plans Pension Benefits | Pension Benefits | U.S. Other Benefits | Other Benefits | |||||||||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||||||||||||||||||||
Components of expense | ||||||||||||||||||||||||||||||||||||||||||||||||
Service cost | $ | 1,117 | $ | 1,097 | $ | 919 | $ | 322 | $ | 247 | $ | 228 | $ | 702 | $ | 566 | $ | 503 | $ | 50 | $ | 39 | $ | 34 | ||||||||||||||||||||||||
Interest cost | 4,883 | 5,050 | 5,162 | 965 | 892 | 803 | 4,107 | 3,726 | 3,630 | 218 | 201 | 168 | ||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (7,898 | ) | (7,823 | ) | (6,374 | ) | (740 | ) | (669 | ) | (573 | ) | (1,684 | ) | (1,095 | ) | (444 | ) | — | — | — | |||||||||||||||||||||||||||
Amortization of prior service cost | 1,164 | 1,279 | 1,148 | 102 | 93 | 101 | (70 | ) | (87 | ) | (19 | ) | 8 | 8 | 7 | |||||||||||||||||||||||||||||||||
Amortization of transition obligation/(asset) | — | — | — | 6 | 7 | 11 | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Recognized net actuarial loss | 2,065 | 1,857 | 1,744 | 281 | 188 | 167 | 2,250 | 1,138 | 722 | 88 | 62 | 46 | ||||||||||||||||||||||||||||||||||||
Curtailments, settlements, and other | 115 | 34 | 27 | 114 | 204 | 49 | — | — | — | 2 | — | 3 | ||||||||||||||||||||||||||||||||||||
Net expense | $ | 1,446 | $ | 1,494 | $ | 2,626 | $ | 1,050 | $ | 962 | $ | 786 | $ | 5,305 | $ | 4,248 | $ | 4,392 | $ | 366 | $ | 310 | $ | 258 | ||||||||||||||||||||||||
Weighted-average assumptions used to determine benefit obligations at December 31(1) | ||||||||||||||||||||||||||||||||||||||||||||||||
Discount rate | 5.70 | % | 5.60 | % | 6.00 | % | 4.72 | % | 5.61 | % | 6.12 | % | 5.45 | % | 5.75 | % | 6.25 | % | 5.00 | % | 6.00 | % | 6.75 | % | ||||||||||||||||||||||||
Rate of compensation increase | 4.9 | % | 5.0 | % | 5.0 | % | 3.1 | % | 3.2 | % | 3.4 | % | 4.2 | % | 3.9 | % | 4.2 | % | 4.0 | % | 4.0 | % | 4.0 | % | ||||||||||||||||||||||||
Weighted-average assumptions used to determine net expense for years ended December 31(2) | ||||||||||||||||||||||||||||||||||||||||||||||||
Discount rate | 5.60 | % | 6.00 | % | 6.75 | % | 5.61 | % | 6.12 | % | 6.23 | % | 5.75 | % | 6.25 | % | 6.75 | % | 6.00 | % | 6.75 | % | 7.00 | % | ||||||||||||||||||||||||
Expected return on plan assets | 9.0 | % | 9.0 | % | 9.0 | % | 8.5 | % | 8.4 | % | 8.5 | % | 8.8 | % | 8.0 | % | 7.0 | % | — | — | — | |||||||||||||||||||||||||||
Rate of compensation increase | 5.0 | % | 5.0 | % | 5.0 | % | 3.2 | % | 3.4 | % | 3.4 | % | 3.9 | % | 4.2 | % | 4.4 | % | 4.0 | % | 4.0 | % | 4.0 | % |
(1) | Determined as of end of year |
(2) | Determined as of beginning of year |
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Note 18. | Pensions and Other Postretirement Benefits — (continued) |
• | GM computes the spread between the yield curve and the swap curve (a market-based curve), | |
• | To extrapolate the yield curve for the period beginning after the last year where substantial bonds are available in the bond universe and ending in year 50, GM adds the spread to the swap curve, which is observable over 50 years, and | |
• | To extrapolate the yield curve beyond the 50th year, GM assumes that the last one-year forward rate on the yield curve (at the 49th year) remains constant for the remaining years. |
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Note 18. | Pensions and Other Postretirement Benefits — (continued) |
Assumed Health-care Trend Rates at December 31 | 2005 | 2004 | ||||||
Initial Health-care Cost Trend Rate | 10.0 | % | 10.5 | % | ||||
Ultimate Health-care Cost Trend Rate | 5.0 | % | 5.0 | % | ||||
Number of Years to Ultimate Trend Rate | 6 | 6 |
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Note 18. | Pensions and Other Postretirement Benefits — (concluded) |
Plan Assets | |||||||||||||||||||||||||
Plan Assets | Primary | Plan Assets | |||||||||||||||||||||||
U.S. Pension | Non-U.S. Pension | OPEB | |||||||||||||||||||||||
Plans Actual | Plans Actual | Actual | |||||||||||||||||||||||
Percentage of | Percentage of | Percentage of | |||||||||||||||||||||||
Plan Assets | Plan Assets | Plan Assets | |||||||||||||||||||||||
Asset Category | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||||||||
Equity Securities | 47 | % | 47 | % | 61 | % | 61 | % | 52 | % | 41 | % | |||||||||||||
Debt Securities | 32 | % | 35 | % | 31 | % | 31 | % | 31 | % | 48 | % | |||||||||||||
Real Estate | 7 | % | 8 | % | 8 | % | 8 | % | 3 | % | 2 | % | |||||||||||||
Other | 14 | % | 10 | % | 0 | % | 0 | % | 14 | % | 9 | % | |||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | |||||||||||||
Pension Benefits | Other Benefits | Non-U.S. Other Benefits | ||||||||||||||||||||||
Primary Non- | Gross Benefit | Gross Medicare | Gross Benefit | Gross Medicare | ||||||||||||||||||||
U.S. Plans | U.S. Plans | Payments | Part D Receipts | Payments | Part D Receipts | |||||||||||||||||||
2006 | 6,794 | 834 | 4,337 | 181 | 128 | — | ||||||||||||||||||
2007 | 6,693 | 865 | 4,637 | 271 | 137 | — | ||||||||||||||||||
2008 | 6,728 | 905 | 4,916 | 301 | 147 | — | ||||||||||||||||||
2009 | 6,744 | 940 | 5,163 | 328 | 157 | — | ||||||||||||||||||
2010 | 6,754 | 979 | 5,383 | 353 | 167 | — | ||||||||||||||||||
2011-2015 | $ | 33,517 | $ | 5,443 | $ | 29,187 | $ | 2,116 | $ | 993 | $ | — |
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Note 19. | Commitments and Contingent Matters |
Commitments |
2011 | ||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | and after | |||||||||||||||||||
Minimum commitments | $ | 194 | $ | 190 | $ | 446 | $ | 148 | $ | 141 | $ | 874 | ||||||||||||
Sublease income | (19 | ) | (19 | ) | (19 | ) | (19 | ) | (19 | ) | (301 | ) | ||||||||||||
Net minimum commitments | $ | 175 | $ | 171 | $ | 427 | $ | 129 | $ | 122 | $ | 573 | ||||||||||||
2011 | ||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | and after | |||||||||||||||||||
Minimum commitments | $ | 1,076 | $ | 895 | $ | 1,368 | $ | 749 | $ | 770 | $ | 4,073 | ||||||||||||
Sublease Income | (246 | ) | (247 | ) | (241 | ) | (236 | ) | (227 | ) | (2,592 | ) | ||||||||||||
Net minimum commitments | $ | 830 | $ | 648 | $ | 1,127 | $ | 513 | $ | 543 | $ | 1,481 | ||||||||||||
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Note 19. | Commitments and Contingent Matters — (continued) |
Contingent Matters |
Delphi Bankruptcy |
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Note 19. | Commitments and Contingent Matters — (continued) |
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Note 19. | Commitments and Contingent Matters — (concluded) |
Note 20. | Stockholders’ Equity |
Common Stocks | |||||||||||||
Total | |||||||||||||
$12/3 | Capital | ||||||||||||
Par Value | Class H | Stock | |||||||||||
Balance at January 1, 2003 | $ | 936 | $ | 96 | $ | 1,032 | |||||||
Shares issued | 1 | 15 | 16 | ||||||||||
Hughes split-off | — | (111 | ) | (111 | ) | ||||||||
Balance at December 31, 2003 | 937 | — | 937 | ||||||||||
Shares issued | 5 | — | 5 | ||||||||||
Balance at December 31, 2004 | 942 | — | 942 | ||||||||||
Shares issued | 1 | — | 1 | ||||||||||
Balance at December 31, 2005 | $ | 943 | $ | — | $ | 943 | |||||||
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Note 20. | Stockholders’ Equity — (concluded) |
GM Class H Stock |
Common Stock |
Other Comprehensive Income |
Years Ended December 31, | |||||||||||||||||||||||||||||||||||||||
2005 | 2004 | 2003 | |||||||||||||||||||||||||||||||||||||
Pre-tax | Tax Exp. | Net | Pre-tax | Tax Exp. | Net | Pre-tax | Tax Exp. | Net | |||||||||||||||||||||||||||||||
Amount | (Credit) | Amount | Amount | (Credit) | Amount | Amount | (Credit) | Amount | |||||||||||||||||||||||||||||||
Foreign currency translation adjustments | $ | (962 | ) | $ | (434 | ) | $ | (528 | ) | $ | 1,237 | $ | 616 | $ | 621 | $ | 1,642 | $ | 673 | $ | 969 | ||||||||||||||||||
Unrealized (loss) gain on securities: | |||||||||||||||||||||||||||||||||||||||
Unrealized holding gain gain | 216 | 76 | 140 | 299 | 114 | 185 | 465 | 166 | 299 | ||||||||||||||||||||||||||||||
Reclassification adjustment | (165 | ) | (60 | ) | (105 | ) | (80 | ) | (28 | ) | (52 | ) | (84 | ) | (31 | ) | (53 | ) | |||||||||||||||||||||
Net unrealized gain | 51 | 16 | 35 | 219 | 86 | 133 | 381 | 135 | 246 | ||||||||||||||||||||||||||||||
Minimum pension liability adjustment | (1,320 | ) | (562 | ) | (758 | ) | (874 | ) | (303 | ) | (571 | ) | 33,378 | 12,623 | 20,755 | ||||||||||||||||||||||||
Net unrealized gain on derivatives | 219 | 75 | 144 | 701 | 163 | 538 | 329 | 73 | 256 | ||||||||||||||||||||||||||||||
Other comprehensive income (loss) | $ | (2,012 | ) | $ | (905 | ) | $ | (1,107 | ) | $ | 1,283 | $ | 562 | $ | 721 | $ | 35,730 | $ | 13,504 | $ | 22,226 | ||||||||||||||||||
Note 21. | Earnings (Loss) Per Share Attributable to Common Stock |
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Years Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
Earnings (loss)attributable to common stocks | ||||||||||||||
$12/3 par value | ||||||||||||||
Continuing operations | $ | (10,458 | ) | $ | 2,804 | $ | 2,899 | |||||||
Discontinued operations | — | — | (48 | ) | ||||||||||
Gain on sale of discontinued operations | — | — | 1,249 | |||||||||||
Cumulative effect of accounting change | (109 | ) | — | — | ||||||||||
Earnings (loss) attributable to $12/3 par value | $ | (10,567 | ) | $ | 2,804 | $ | 4,100 | |||||||
Earnings (loss) from discontinued operations attributable to Class��H | $ | — | $ | — | $ | (241 | ) | |||||||
Total earnings (loss) attributable to common stocks | $ | (10,567 | ) | $ | 2,804 | $ | 3,859 | |||||||
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$12/3 Par Value Common Stock | |||||||||||||
Per Share | |||||||||||||
Income | Shares | Amount | |||||||||||
Year ended December 31, 2005 | |||||||||||||
Basic EPS | |||||||||||||
Income (loss) from continuing operations attributable to common stocks | $ | (10,458 | ) | 565 | $ | (18.50 | ) | ||||||
Effect of Dilutive Securities | |||||||||||||
Assumed exercise of dilutive stock options | — | — | — | ||||||||||
Diluted EPS | |||||||||||||
Adjusted income (loss) attributable to common stocks | $ | (10,458 | ) | 565 | $ | (18.50 | ) | ||||||
Year ended December 31, 2004 | |||||||||||||
Basic EPS | |||||||||||||
Income from continuing operations attributable to common stocks | $ | 2,804 | 565 | $ | 4.97 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Assumed exercise of dilutive stock options | — | 2 | (0.03 | ) | |||||||||
Diluted EPS | |||||||||||||
Adjusted income attributable to common stocks | $ | 2,804 | 567 | $ | 4.94 | ||||||||
Year ended December 31, 2003 | |||||||||||||
Basic EPS | |||||||||||||
Income from continuing operations attributable to common stocks | $ | 2,899 | 561 | $ | 5.17 | ||||||||
Effect of Dilutive Securities | |||||||||||||
Assumed exercise of dilutive stock options | — | 8 | (0.08 | ) | |||||||||
Diluted EPS | |||||||||||||
Adjusted income attributable to common stocks | $ | 2,899 | 569 | $ | 5.09 | ||||||||
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Note 21. | Earnings (Loss) Per Share Attributable to Common Stocks — (concluded) |
1) | If the closing sale price of GM’s $12/3 par value common stock exceeds 120% of the conversion price of that security (which closing prices are $70.20 for the Series A securities, $64.90 for the Series B securities, and $47.62 for the Series C securities) for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter; or | |
2) | During the five business day period after any nine consecutive trading day period in which the trading price of the debentures for each day of such period was less than 95% of the product of the closing sale price of GM’s $12/3 par value common stock multiplied by the number of shares issuable upon conversion of $25.00 principal amount of the debentures; or | |
3) | If the debentures have been called for redemption (Series A on March 6, 2007, Series B on March 6, 2009 and Series C on July 20, 2010); or | |
4) | Upon the occurrence of specified corporate events; or | |
5) | If the investor requires GM to repurchase the debentures on the specified repurchase dates for each security (Series A: March 6 of 2007, 2012, 2017, 2022, and 2027, or, if any of those days is not a business day, the next succeeding business day; Series B: March 6 of 2014, 2019, 2024, and 2029, or, if any of those days is not a business day, the next succeeding business day; Series C: July 15 of 2018, 2023 and 2028 or, if any of those days is not a business day, the next succeeding business day). |
Note 22. | Derivative Financial Instruments and Risk Management |
Cash Flow Hedges |
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Note 22. | Derivative Financial Instruments and Risk Management — (concluded) |
Fair Value Hedges |
Net Investment Hedges |
Undesignated Derivative Instruments |
Note 23. | Fair Value of Financial Instruments |
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Note 23. | Fair Value of Financial Instruments — (concluded) |
December 31, | |||||||||||||||||
2005 | 2004 | ||||||||||||||||
Book Value | Fair Value | Book Value | Fair Value | ||||||||||||||
AUTOMOTIVE AND OTHER OPERATIONS | |||||||||||||||||
ASSETS | |||||||||||||||||
Other assets(1) | $ | 1,830 | $ | 1,310 | $ | 841 | $ | 520 | |||||||||
Derivative assets | $ | 1,767 | $ | 1,767 | $ | 2,089 | $ | 2,089 | |||||||||
LIABILITIES | |||||||||||||||||
Long-term debt(2) | $ | 31,014 | $ | 20,837 | $ | 30,460 | $ | 31,276 | |||||||||
Other liabilities(1) | $ | 535 | $ | 447 | $ | 537 | $ | 591 | |||||||||
Derivative liabilities | $ | 859 | $ | 859 | $ | 724 | $ | 724 |
FINANCING AND INSURANCE OPERATIONS | |||||||||||||||||
ASSETS | |||||||||||||||||
Finance receivables — net(3) | $ | 180,793 | $ | 181,090 | $ | 199,600 | $ | 199,827 | |||||||||
Derivative assets | $ | 3,000 | $ | 3,000 | $ | 9,489 | $ | 9,489 | |||||||||
LIABILITIES | |||||||||||||||||
Debt(2) | $ | 253,217 | $ | 244,956 | $ | 267,757 | $ | 268,813 | |||||||||
Derivative liabilities | $ | 2,444 | $ | 2,444 | $ | 953 | $ | 953 | |||||||||
Other liabilities | $ | 5,930 | $ | 5,830 | $ | 4,230 | $ | 4,106 |
(1) | Other assets include various financial instruments (e.g., long-term receivables and certain investments) that have fair values based on discounted cash flows, market quotations, and other appropriate valuation techniques. The fair values of retained subordinated interests in trusts and excess servicing assets (net of deferred costs) were derived by discounting expected cash flows using current market rates. Estimated values of Industrial Development Bonds, included in other liabilities, were based on quoted market prices for the same or similar issues. |
(2) | Long-term debt has an estimated fair value based on quoted market prices for the same or similar issues or based on the current rates offered to GM for debt of similar remaining maturities. |
(3) | The fair value was estimated by discounting the future cash flows using applicable spreads to approximate current rates applicable to each category of finance receivables. |
Note 24. | Stock Incentive Plans |
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Note 24. | Stock Incentive Plans — (continued) |
2005 | 2004 | 2003 | ||||||||||||||||||||||
GM | GM | GM | GM | GM | GM | |||||||||||||||||||
SIP | SSOP | SIP | SSOP | SIP | SSOP | |||||||||||||||||||
Interest rate | 3.8 | % | — | % | 3.1 | % | 3.1 | % | 2.9 | % | 2.9 | % | ||||||||||||
Expected life (years) | 6.0 | — | 5.0 | 5.0 | 5.0 | 5.0 | ||||||||||||||||||
Expected volatility | 32.5 | % | — | % | 33.9 | % | 33.9 | % | 35.4 | % | 35.4 | % | ||||||||||||
Dividend yield | 5.5 | % | — | % | 3.7 | % | 3.7 | % | 5.0 | % | 5.0 | % |
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Note 24. | Stock Incentive Plans — (continued) |
GMSIP | GMSSOP | ||||||||||||||||
$12/3 Par Value Common | $12/3 Par Value Common | ||||||||||||||||
Weighted- | Weighted- | ||||||||||||||||
Shares | Average | Shares | Average | ||||||||||||||
under | Exercise | under | Exercise | ||||||||||||||
Option | Price | Option | Price | ||||||||||||||
Options outstanding at | |||||||||||||||||
January 1, 2003 | 65,822,160 | $ | 56.45 | 18,957,199 | $ | 59.91 | |||||||||||
Granted | 11,148,605 | $ | 40.06 | 5,666,127 | $ | 40.05 | |||||||||||
Exercised | 1,489,170 | $ | 42.28 | — | — | ||||||||||||
Terminated | 996,029 | $ | 55.06 | 233,270 | $ | 56.92 | |||||||||||
Options outstanding at December 31, 2003 | 74,485,566 | $ | 54.38 | 24,390,056 | $ | 55.33 | |||||||||||
Granted | 8,055,460 | $ | 53.83 | 3,315,479 | $ | 53.92 | |||||||||||
Exercised | 1,346,996 | $ | 40.77 | 31,320 | $ | 47.92 | |||||||||||
Terminated | 1,738,737 | $ | 55.26 | 83,589 | $ | 54.02 | |||||||||||
Options outstanding at December 31, 2004 | 79,455,293 | $ | 54.53 | 27,590,626 | $ | 55.17 | |||||||||||
Granted | 8,024,090 | $ | 36.33 | — | $ | — | |||||||||||
Exercised | 337,324 | $ | 33.14 | — | $ | — | |||||||||||
Terminated | 3,011,473 | $ | 48.20 | 376,991 | $ | 53.51 | |||||||||||
Options outstanding at December 31, 2005 | 84,130,586 | $ | 53.11 | 27,213,635 | $ | 55.19 | |||||||||||
Options exercisable at December 31, 2003 | 48,932,216 | $ | 58.56 | 13,825,058 | $ | 63.29 | |||||||||||
December 31, 2004 | 59,445,049 | $ | 56.69 | 18,667,303 | $ | 59.94 | |||||||||||
December 31, 2005 | 68,207,480 | $ | 55.55 | 23,953,781 | $ | 55.37 | |||||||||||
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Note 24. | Stock Incentive Plans — (concluded) |
Weighted- | |||||||||||||||||||||
Average | Weighted- | Weighted- | |||||||||||||||||||
Remaining | Average | Average | |||||||||||||||||||
Range of | Options | Contractual | Exercise | Options | Exercise | ||||||||||||||||
Exercise Prices | Outstanding | Life (yrs.) | Price | Exercisable | Price | ||||||||||||||||
GMSIP $12/3 Par Value Common | |||||||||||||||||||||
$20.00 to $39.99 | 7,608,141 | 9.1 | $ | 36.34 | 100,334 | $ | 36.58 | ||||||||||||||
40.00 to 49.99 | 22,255,719 | 4.0 | $ | 42.66 | 18,812,269 | $ | 43.13 | ||||||||||||||
50.00 to 59.99 | 34,561,835 | 6.1 | $ | 51.96 | 29,589,986 | $ | 51.63 | ||||||||||||||
60.00 to 83.50 | 19,704,891 | 3.5 | $ | 73.40 | 19,704,891 | $ | 73.40 | ||||||||||||||
$20.00 to $83.50 | 84,130,586 | 5.2 | $ | 53.11 | 68,207,480 | $ | 55.55 | ||||||||||||||
GMSSOP $12/3 Par Value Common | |||||||||||||||||||||
$40.05 | 5,513,298 | 7.1 | $ | 40.05 | 5,513,298 | $ | 40.05 | ||||||||||||||
46.59 | 2,218,613 | 2.0 | $ | 46.59 | 2,218,613 | $ | 46.59 | ||||||||||||||
50.46 | 4,828,683 | 6.0 | $ | 50.46 | 4,828,683 | $ | 50.46 | ||||||||||||||
52.35 | 3,763,918 | 5.0 | $ | 52.35 | 3,763,918 | $ | 52.35 | ||||||||||||||
53.92 | 3,259,854 | 8.1 | $ | 53.92 | — | $ | — | ||||||||||||||
71.53 | 3,689,049 | 3.0 | $ | 71.53 | 3,689,049 | $ | 71.53 | ||||||||||||||
75.50 | 3,940,220 | 4.0 | $ | 75.50 | 3,940,220 | $ | 75.50 | ||||||||||||||
$40.05 to $75.50 | 27,213,635 | 5.3 | $ | 55.19 | 23,953,781 | $ | 55.37 | ||||||||||||||
Years Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
Automotive and Other Operations | ||||||||||||||
Interest income | $ | 883 | $ | 816 | $ | 1,389 | ||||||||
Rental car lease revenue | 1,483 | 2,112 | 1,460 | |||||||||||
Claims, commissions, and grants | 968 | 1,097 | 916 | |||||||||||
Gain on sale of GM Defense | — | — | 814 | |||||||||||
Other | 538 | 792 | 400 | |||||||||||
Total other income | $ | 3,872 | $ | 4,817 | $ | 4,979 | ||||||||
Years Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
Financing and Insurance Operations | ||||||||||||||
Interest income | $ | 1,671 | $ | 807 | $ | 684 | ||||||||
Insurance premiums | 3,762 | 3,528 | 3,178 | |||||||||||
Mortgage banking revenue | 3,268 | 2,969 | 4,204 | |||||||||||
Automotive securitization income | 752 | 753 | 760 | |||||||||||
Other | 3,435 | 3,280 | 2,303 | |||||||||||
Total other income | $ | 12,888 | $ | 11,337 | $ | 11,129 | ||||||||
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Note 26: | Segment Reporting |
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Note 26: | Segment Reporting — (continued) |
Auto & | Other | Total | ||||||||||||||||||||||||||||||||||||||||
GMNA | GME | GMLAAM | GMAP | GMA | Other | Other | GMAC | Financing | Financing | |||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||
2005 | ||||||||||||||||||||||||||||||||||||||||||
Manufactured products sales and revenues: | ||||||||||||||||||||||||||||||||||||||||||
External customers | $ | 105,452 | $ | 29,607 | $ | 10,896 | $ | 8,446 | $ | 154,401 | $ | (52 | ) | $ | 154,349 | $ | — | $ | — | $ | — | |||||||||||||||||||||
Intersegment | (4,261 | ) | 1,499 | 715 | 2,050 | 3 | (3 | ) | — | — | — | — | ||||||||||||||||||||||||||||||
Total manufactured products | 101,191 | 31,106 | 11,611 | 10,496 | 154,404 | (55 | ) | 154,349 | — | — | — | |||||||||||||||||||||||||||||||
Financing revenue | — | — | — | — | — | — | — | 21,299 | 196 | 21,495 | ||||||||||||||||||||||||||||||||
Other income | 3,564 | 613 | 134 | 397 | 4,708 | (836 | ) | 3,872 | 12,738 | 150 | 12,888 | |||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 104,755 | $ | 31,719 | $ | 11,745 | $ | 10,893 | $ | 159,112 | $ | (891 | ) | $ | 158,221 | $ | 34,037 | $ | 346 | $ | 34,383 | |||||||||||||||||||||
Depreciation and amortization | $ | 7,605 | $ | 1,743 | $ | 329 | $ | 379 | $ | 10,056 | $ | 17 | $ | 10,073 | $ | 5,548 | $ | 148 | $ | 5,696 | ||||||||||||||||||||||
Interest income(a) | $ | 1,347 | $ | 406 | $ | 57 | $ | 47 | $ | 1,857 | $ | (974 | ) | $ | 883 | $ | 2,185 | $ | (514 | ) | $ | 1,671 | ||||||||||||||||||||
Interest expense | $ | 3,166 | $ | 543 | $ | 197 | $ | 107 | $ | 4,013 | $ | (1,140 | ) | $ | 2,873 | $ | 12,930 | $ | (35 | ) | $ | 12,895 | ||||||||||||||||||||
Income tax expense (benefit) | $ | (2,540 | ) | $ | (709 | ) | $ | 622 | $ | (165 | ) | $ | (2,792 | ) | $ | (4,392 | ) | $ | (7,184 | ) | $ | 1,311 | $ | (5 | ) | $ | 1,306 | |||||||||||||||
Earnings (losses) of nonconsolidated associates | $ | (30 | ) | $ | 102 | $ | 15 | $ | 534 | $ | 621 | $ | 19 | $ | 640 | $ | (6 | ) | $ | — | $ | (6 | ) | |||||||||||||||||||
Net income (loss) from continuing operations | $ | (8,156 | ) | $ | (1,177 | ) | $ | (569 | ) | $ | (217 | ) | $ | (10,119 | ) | $ | (2,697 | ) | $ | (12,816 | ) | $ | 2,383 | $ | (25 | ) | $ | 2,358 | ||||||||||||||
Investments in nonconsolidated affiliates | $ | 60 | $ | 359 | $ | 155 | $ | 2,597 | $ | 3,171 | $ | 120 | $ | 3,291 | $ | 308 | $ | (308 | ) | $ | — | |||||||||||||||||||||
Segment assets | $ | 126,876 | $ | 20,954 | $ | 4,722 | $ | 10,141 | $ | 162,693 | $ | (1,040 | ) | $ | 161,653 | $ | 320,487 | $ | (1,610 | ) | $ | 318,877 | ||||||||||||||||||||
Expenditures for property | $ | 5,555 | $ | 1,259 | $ | 229 | $ | 839 | $ | 7,882 | $ | 14 | $ | 7,896 | $ | 279 | $ | 4 | $ | 283 | ||||||||||||||||||||||
2004 | ||||||||||||||||||||||||||||||||||||||||||
Manufactured products sales and revenues: | ||||||||||||||||||||||||||||||||||||||||||
External customers | $ | 112,881 | $ | 29,126 | $ | 8,045 | $ | 5,775 | $ | 155,827 | $ | 901 | $ | 156,728 | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Intersegment | (2,602 | ) | 1,030 | 673 | 903 | 4 | (4 | ) | — | — | — | — | ||||||||||||||||||||||||||||||
Total manufactured products | 110,279 | 30,156 | 8,718 | 6,678 | 155,831 | 897 | 156,728 | — | — | — | ||||||||||||||||||||||||||||||||
Financing revenue | — | — | — | — | — | — | — | 20,331 | 304 | 20,635 | ||||||||||||||||||||||||||||||||
Other income | 4,266 | 664 | 74 | 300 | 5,304 | (487 | ) | 4,817 | 10,857 | 480 | 11,337 | |||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 114,545 | $ | 30,820 | $ | 8,792 | $ | 6,978 | $ | 161,135 | $ | 410 | $ | 161,545 | $ | 31,188 | $ | 784 | $ | 31,972 | ||||||||||||||||||||||
Depreciation and amortization | $ | 6,381 | $ | 1,779 | $ | 195 | $ | 235 | $ | 8,590 | $ | 39 | $ | 8,629 | $ | 5,299 | $ | 224 | $ | 5,523 | ||||||||||||||||||||||
Interest income(a) | $ | 1,026 | $ | 392 | $ | 20 | $ | 13 | $ | 1,451 | $ | (635 | ) | $ | 816 | $ | 1,117 | $ | (310 | ) | $ | 807 | ||||||||||||||||||||
Interest expense | $ | 2,729 | $ | 403 | $ | 74 | $ | 21 | $ | 3,227 | $ | (747 | ) | $ | 2,480 | $ | 9,535 | $ | (35 | ) | $ | 9,500 | ||||||||||||||||||||
Income tax expense (benefit) | $ | (599 | ) | $ | (640 | ) | $ | 31 | $ | (11 | ) | $ | (1,219 | ) | $ | (1,221 | ) | $ | (2,440 | ) | $ | 1,544 | $ | (20 | ) | $ | 1,524 | |||||||||||||||
Earnings (losses) of nonconsolidated associates | $ | 40 | $ | 102 | $ | (3 | ) | $ | 666 | $ | 805 | $ | (16 | ) | $ | 789 | $ | (6 | ) | $ | — | $ | (6 | ) | ||||||||||||||||||
Net income (loss) from continuing operations | $ | 1,409 | $ | (925 | ) | $ | 60 | $ | 730 | $ | 1,274 | $ | (1,419 | ) | $ | (145 | ) | $ | 2,968 | $ | (19 | ) | $ | 2,949 | ||||||||||||||||||
Investments in nonconsolidated affiliates | $ | 482 | $ | 1,476 | $ | 276 | $ | 4,541 | $ | 6,775 | $ | 1 | $ | 6,776 | $ | 179 | $ | (179 | ) | $ | — | |||||||||||||||||||||
Segment assets | $ | 126,982 | $ | 26,586 | $ | 4,192 | $ | 4,923 | $ | 162,683 | $ | (3,140 | ) | $ | 159,543 | $ | 324,217 | $ | (1,413 | ) | $ | 322,804 | ||||||||||||||||||||
Expenditures for property | $ | 5,163 | $ | 1,331 | $ | 158 | $ | 496 | $ | 7,148 | $ | 136 | $ | 7,284 | $ | 470 | $ | (1 | ) | $ | 469 |
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Note 26: | Segment Reporting — (continued) |
Auto & | Other | Total | ||||||||||||||||||||||||||||||||||||||||
GMNA | GME | GMLAAM | GMAP | GMA | Other | Other | GMAC | Financing | Financing | |||||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||||
2003 | ||||||||||||||||||||||||||||||||||||||||||
Manufactured products sales and revenues: | ||||||||||||||||||||||||||||||||||||||||||
External customers | $ | 114,756 | $ | 25,960 | $ | 4,755 | $ | 4,578 | $ | 150,049 | $ | 803 | $ | 150,852 | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Intersegment | (2,044 | ) | 946 | 555 | 543 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Total manufactured products | 112,712 | 26,906 | 5,310 | 5,121 | 150,049 | 803 | 150,852 | — | — | — | ||||||||||||||||||||||||||||||||
Financing revenue | — | — | — | — | — | — | — | 18,247 | 630 | 18,877 | ||||||||||||||||||||||||||||||||
Other income | 3,598 | 572 | 77 | 217 | 4,464 | 515 | 4,979 | 11,101 | 28 | 11,129 | ||||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 116,310 | $ | 27,478 | $ | 5,387 | $ | 5,338 | $ | 154,513 | $ | 1,318 | $ | 155,831 | $ | 29,348 | $ | 658 | $ | 30,006 | ||||||||||||||||||||||
Depreciation and amortization | $ | 6,199 | $ | 1,211 | $ | 248 | $ | 233 | $ | 7,891 | $ | 55 | $ | 7,946 | $ | 5,279 | $ | 288 | $ | 5,567 | ||||||||||||||||||||||
Interest income(a) | $ | 1,445 | $ | 375 | $ | 36 | $ | 4 | $ | 1,860 | $ | (471 | ) | $ | 1,389 | $ | 937 | $ | (253 | ) | $ | 684 | ||||||||||||||||||||
Interest expense | $ | 1,762 | $ | 343 | $ | 119 | $ | 11 | $ | 2,235 | $ | (455 | ) | $ | 1,780 | $ | 7,564 | $ | 120 | $ | 7,684 | |||||||||||||||||||||
Income tax expense (benefit) | $ | 224 | $ | (378 | ) | $ | (149 | ) | $ | 44 | $ | (259 | ) | $ | (595 | ) | $ | (854 | ) | $ | 1,555 | $ | 9 | $ | 1,564 | |||||||||||||||||
Earnings (losses) of nonconsolidated associates | $ | 113 | $ | 102 | $ | 7 | $ | 560 | $ | 782 | $ | (48 | ) | $ | 734 | $ | (3 | ) | $ | (4 | ) | $ | (7 | ) | ||||||||||||||||||
Net income (loss) from continuing operations | $ | 879 | $ | (466 | ) | $ | (329 | ) | $ | 576 | $ | 660 | $ | (523 | ) | $ | 137 | $ | 2,728 | $ | 34 | $ | 2,762 | |||||||||||||||||||
Investments in nonconsolidated affiliates | $ | 462 | $ | 1,139 | $ | 431 | $ | 3,944 | $ | 5,976 | $ | 56 | $ | 6,032 | $ | 50 | $ | (50 | ) | $ | — | |||||||||||||||||||||
Segment assets | $ | 130,372 | $ | 23,951 | $ | 3,038 | $ | 3,302 | $ | 160,663 | $ | 1,247 | $ | 161,910 | $ | 288,350 | $ | 51 | $ | 288,401 | ||||||||||||||||||||||
Expenditures for property | $ | 4,650 | $ | 1,202 | $ | 110 | $ | 576 | $ | 6,538 | $ | 78 | $ | 6,616 | $ | 473 | $ | 2 | $ | 475 |
(a) | Interest income is included in net sales and revenues from external customers. |
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Note 26: | Segment Reporting — (concluded) |
2005 | 2004 | 2003 | ||||||||||||||||||||||||
Net | Long | Net | Long | Net | Long | |||||||||||||||||||||
Sales & | Lived | Sales & | Lived | Sales & | Lived | |||||||||||||||||||||
Revenues | Assets(1) | Revenues | Assets(1) | Revenues | Assets(1) | |||||||||||||||||||||
North America | ||||||||||||||||||||||||||
United States | $ | 127,316 | $ | 49,540 | $ | 134,380 | $ | 46,712 | $ | 133,955 | $ | 47,354 | ||||||||||||||
Canada and Mexico | 16,769 | 12,739 | 15,484 | 10,443 | 14,667 | 8,530 | ||||||||||||||||||||
Total North America | 144,085 | 62,279 | 149,864 | 57,155 | 148,622 | 55,884 | ||||||||||||||||||||
Europe | ||||||||||||||||||||||||||
France | 2,612 | 333 | 2,669 | 262 | 2,429 | 216 | ||||||||||||||||||||
Germany | 7,384 | 4,090 | 6,710 | 4,479 | 5,945 | 3,996 | ||||||||||||||||||||
Spain | 2,847 | 1,182 | 2,661 | 1,181 | 2,143 | 1,256 | ||||||||||||||||||||
United Kingdom | 7,859 | 1,958 | 7,563 | 2,273 | 6,480 | 2,244 | ||||||||||||||||||||
Other | 12,944 | 3,798 | 13,622 | 3,805 | 12,356 | 3,537 | ||||||||||||||||||||
Total Europe | 33,646 | 11,361 | 33,225 | 12,000 | 29,353 | 11,249 | ||||||||||||||||||||
Latin America | ||||||||||||||||||||||||||
Brazil | 3,813 | 784 | 2,987 | 609 | 2,328 | 584 | ||||||||||||||||||||
Other Latin America | 3,729 | 158 | 2,611 | 180 | 1,685 | 186 | ||||||||||||||||||||
Total Latin America | 7,542 | 942 | 5,598 | 789 | 4,013 | 770 | ||||||||||||||||||||
All Other | 7,331 | 3,819 | 4,830 | 3,290 | 3,849 | 2,820 | ||||||||||||||||||||
Total | $ | 192,604 | $ | 78,401 | $ | 193,517 | $ | 73,234 | $ | 185,837 | $ | 70,723 | ||||||||||||||
(1) | Consists of property (Note 13), equipment on operating leases (Note 11), net of accumulated depreciation. |
Note 27. | Subsequent Events |
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Note 27. | Subsequent Events — (concluded) |
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2005 Quarters(1) | |||||||||||||||||||||||||||||||||
1st(3) | 2nd(4) | 3rd(5) | 4th(6) | ||||||||||||||||||||||||||||||
As Previously | As Previously | As Previously | As Previously | ||||||||||||||||||||||||||||||
Reported | Restated | Reported | Restated | Reported | Restated | Announced | Revised | ||||||||||||||||||||||||||
(Dollars in millions except per share amounts) | |||||||||||||||||||||||||||||||||
Total net sales and revenues | $ | 45,773 | $ | 45,773 | $ | 48,469 | $ | 48,469 | $ | 47,182 | $ | 47,182 | $ | 51,180 | $ | 51,180 | |||||||||||||||||
Income (losses) from continuing operations before income taxes and minority interests | $ | (2,108 | ) | $ | (2,294 | ) | $ | (1,577 | ) | $ | (1,405 | ) | $ | (2,722 | ) | $ | (2,871 | ) | $ | (7,293 | ) | $ | (10,361 | ) | |||||||||
Income tax expense (benefit) | (935 | ) | (972 | ) | (330 | ) | (245 | ) | (989 | ) | (1,107 | ) | (2,372 | ) | (3,554 | ) | |||||||||||||||||
Minority interests | (16 | ) | (16 | ) | (18 | ) | (18 | ) | (37 | ) | (37 | ) | 32 | 32 | |||||||||||||||||||
Earnings of nonconsolidated associates | 85 | 85 | 191 | 191 | 137 | 137 | 221 | 221 | |||||||||||||||||||||||||
Cumulative effect of accounting change | — | — | — | — | — | — | (109 | ) | (109 | ) | |||||||||||||||||||||||
Net income | $ | (1,104 | ) | $ | (1,253 | ) | $ | (1,074 | ) | $ | (987 | ) | $ | (1,633 | ) | $ | (1,664 | ) | $ | (4,777 | ) | $ | (6,663 | ) | |||||||||
Basic earnings (losses) per share attributable to $12/3 par value | $ | (1.95 | ) | $ | (2.22 | ) | $ | (1.90 | ) | $ | (1.75 | ) | $ | (2.89 | ) | $ | (2.94 | ) | $ | (8.45 | ) | $ | (11.78 | ) | |||||||||
Average number of shares of common stock outstanding — basic (in millions) $12/3 par value | 565 | 565 | 565 | 565 | 566 | 566 | 566 | 566 | |||||||||||||||||||||||||
Earnings (loss) per share attributable to common stock assuming dilution $12/3 par value | $ | (1.95 | ) | $ | (2.22 | ) | $ | (1.90 | ) | $ | (1.75 | ) | $ | (2.89 | ) | $ | (2.94 | ) | $ | (8.45 | ) | $ | (11.78 | ) | |||||||||
Average number of shares of common stock outstanding — diluted (in millions) $12/3 par value | 565 | 565 | 565 | 565 | 566 | 566 | 566 | 566 | |||||||||||||||||||||||||
Net income by reportable operating segment/ region Automotive and Other Operations | |||||||||||||||||||||||||||||||||
GMNA | $ | (1,560 | ) | $ | (1,704 | ) | $ | (1,194 | ) | $ | (1,121 | ) | $ | (2,095 | ) | $ | (2,165 | ) | $ | (2,832 | ) | $ | (3,249 | ) | |||||||||
GME | (525 | ) | (547 | ) | (89 | ) | (112 | ) | (382 | ) | (363 | ) | (220 | ) | (176 | ) | |||||||||||||||||
GMLAAM | 46 | 31 | 33 | 25 | (74 | ) | (68 | ) | (599 | ) | (559 | ) | |||||||||||||||||||||
GMAP | 60 | 70 | (612 | ) | (605 | ) | 114 | 126 | 159 | 189 | |||||||||||||||||||||||
Other Operations | 146 | 168 | (20 | ) | 18 | 122 | 145 | (1,874 | ) | (3,028 | ) | ||||||||||||||||||||||
Net income (loss) — Automotive and Other Operations | (1,833 | ) | (1,982 | ) | (1,882 | ) | (1,795 | ) | (2,315 | ) | (2,325 | ) | (5,366 | ) | (6,823 | ) | |||||||||||||||||
Financing and Insurance Operations | |||||||||||||||||||||||||||||||||
Net income — Financing and Insurance Operations | 729 | 729 | 808 | 808 | 682 | 661 | 589 | 160 | |||||||||||||||||||||||||
Net income | $ | (1,104 | ) | $ | (1,253 | ) | $ | (1,074 | ) | $ | (987 | ) | $ | (1,633 | ) | $ | (1,664 | ) | $ | (4,777 | ) | $ | (6,663 | ) | |||||||||
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2005 Year-to-Date(2) | ||||||||||||||||||||||||
3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||||||||||||||||
March 31, 2005 | June 30, 2005 | September 30, 2005 | ||||||||||||||||||||||
As Previously | As Previously | As Previously | ||||||||||||||||||||||
Reported | Restated | Reported | Restated | Reported | Restated | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||||
Net cash provided by (used in) continuing operating activities | $ | (4,137 | ) | (6,148 | ) | $ | 2,489 | (1,781 | ) | $ | 3,676 | (7,256 | ) | |||||||||||
Net cash provided by (used in) continuing investing activities | (2,016 | ) | (5 | ) | 1,257 | 5,527 | (179 | ) | 10,753 | |||||||||||||||
Net cash provided by (used in) continuing financing activities | $ | (3,007 | ) | (3,007 | ) | (7,066 | ) | (7,066 | ) | (3,772 | ) | (3,772 | ) | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | (444 | ) | (444 | ) | (412 | ) | (412 | ) | (120 | ) | (120 | ) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | (9,604 | ) | $ | (9,604 | ) | $ | (3,732 | ) | $ | (3,732 | ) | $ | (395 | ) | $ | (395 | ) | ||||||
Automotive and Other Operations | ||||||||||||||||||||||||
Net cash provided by (used in) continuing operating activities | $ | (2,555 | ) | $ | (2,555 | ) | $ | (2,138 | ) | $ | (2,138 | ) | $ | (2,482 | ) | $ | (1,715 | ) | ||||||
Net cash provided by (used in) continuing investing activities | 154 | 154 | 1,817 | 1,817 | 2,871 | 2,871 | ||||||||||||||||||
Net cash provided by (used in) continuing financing activities | (47 | ) | (47 | ) | (519 | ) | (519 | ) | (779 | ) | (779 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (369 | ) | (369 | ) | (283 | ) | (283 | ) | (36 | ) | (36 | ) | ||||||||||||
Net transactions with Financing and Insurance | (126 | ) | (126 | ) | 420 | 420 | 973 | 206 | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | (2,943 | ) | $ | (2,943 | ) | $ | (703 | ) | $ | (703 | ) | $ | 547 | $ | 547 | ||||||||
Financing and Insurance Operations | ||||||||||||||||||||||||
Net cash provided by (used in) continuing operating activities | $ | (1,582 | ) | (3,593 | ) | $ | 4,627 | 357 | $ | 6,158 | (5,541 | ) | ||||||||||||
Net cash provided by (used in) continuing investing activities | (1,670 | ) | 341 | 440 | 4,710 | (1,550 | ) | 9,382 | ||||||||||||||||
Net cash provided by (used in) continuing financing activities | (3,460 | ) | (3,460 | ) | (7,547 | ) | (7,547 | ) | (4,493 | ) | (4,493 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (75 | ) | (75 | ) | (129 | ) | (129 | ) | (84 | ) | (84 | ) | ||||||||||||
Net transactions with Automotive and Other | 126 | 126 | (420 | ) | (420 | ) | (973 | ) | (206 | ) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | (6,661 | ) | $ | (6,661 | ) | $ | (3,029 | ) | $ | (3,029 | ) | $ | (942 | ) | $ | (942 | ) |
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2005 Quarters | 2005 | |||||||||||||||||||||
Calendar | ||||||||||||||||||||||
1st | 2nd | 3rd | 4th | Year | ||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||
Net (loss) | ||||||||||||||||||||||
As originally reported/announced:(a) Quarterly results | $ | (1,104 | ) | $ | (1,074 | ) | $ | (1,633 | ) | $ | (4,777 | ) | ||||||||||
Calendar year results | $ | (8,554 | ) | |||||||||||||||||||
Adjustments, net of tax, for: | ||||||||||||||||||||||
Supplier credits: quarterly basis(b) | 4 | 11 | 11 | 10 | ||||||||||||||||||
annual basis(b) | 2 | |||||||||||||||||||||
Disposal loss adjustment(c) | (107 | ) | 49 | 17 | 31 | (10 | ) | |||||||||||||||
Benefit plans economic assumptions(d) | (16 | ) | (16 | ) | (16 | ) | (16 | ) | (64 | ) | ||||||||||||
Other, net-of-tax(e) | (30 | ) | 43 | (43 | ) | 137 | 107 | |||||||||||||||
Total of above adjustments | (149 | ) | 87 | (31 | ) | 162 | 35 | |||||||||||||||
Delphi contingent exposures(f) | — | — | — | (1,248 | ) | (1,248 | ) | |||||||||||||||
GMNA restructuring(g) | — | — | — | (361 | ) | (361 | ) | |||||||||||||||
Goodwill impairment(h) | — | — | — | (439 | ) | (439 | ) | |||||||||||||||
As restated | $ | (1,253 | ) | $ | (987 | ) | $ | (1,664 | ) | $ | (6,663 | ) | $ | (10,567 | ) | |||||||
(a) | Quarterly results previously reported for the first three quarters of 2005 do not include adjustments for the estimated effect of supplier credits, discussed below, that are included in announced fourth quarter and calendar year 2005 results. Accordingly, the sum of the above quarterly results does not equal the announced calendar year results. |
(b) | GM erroneously recorded as a reduction to cost of sales certain payments and credits received from suppliers prior to completion of the earnings process. GM concluded that the payments and credits received were associated with agreements for the award of future services or products or other rights and privileges and should be recognized when subsequently earned. The “quarterly basis” adjustments above reflect the totals, net of tax, to correct the original accounting for such credits for each quarter of 2005. Calendar year results for 2005, as previously announced, included an estimate of such effects; accordingly, only the final adjustment to this estimate is shown above on an annual basis. |
(c) | GM’s portfolio of vehicles on operating lease with daily rental car entities, which was impaired at lease inception, was prematurely revalued in 2005 to reflect increased anticipated proceeds upon disposal. |
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(d) | GM originally estimated its discount rate for the U.S. Hourly pension plan referencing certain indicators which, in view of evolving guidance, did not provide the best estimate to defease the pension liability. The above adjustments represent the amounts, net of tax, to correct the original accounting estimates. |
(e) | For quarters covered by this filing, GM has recorded other accounting adjustments it has identified that were not recorded in the proper period. Theseout-of-period adjustments were not material to the financial statements as originally reported; however, as part of the restatement, they are being recognized in the period in which the underlying transactions occurred. The effect of these adjustments,net-of-tax, was $(30) million, $43 million, $(43) million, and $137 million for each quarter of 2005, respectively. The significantout-of-period adjustments were related to the following matters: (1) Engineering and facility-related expenses recorded in improper periods. (2) Over-depreciation of certain fixed assets. (3) Reconciliation of prior year tax provisions to actual tax returns. Of the $(43) million adjustment in the third quarter, $96 million relates to engineering and facility-related expenses, and $(113) relates to over-depreciation of certain fixed assets. Of the $137 million adjustment in the fourth quarter, $118 million relates to tax matters. |
(f) | Delphi Contingent Exposures — Range of contingent exposures reported in preliminary results refined to reflect further developments. GM believes that the range of the contingent exposures is between $5.5 billion and $12 billion, with amounts near the low end of the range considered more possible than amounts near the high end of the range assuming an agreement is reached among GM, Delphi, and Delphi’s unions. |
(g) | GMNA Restructuring — Restructuring charges as reported in preliminary results were revised to include GM’s best estimate of costs to be incurred after the expiration of the current labor agreement in September 2007. |
(h) | Goodwill Impairment — Recognition of goodwill impairment charges relating to GMAC’s Commercial Finance operating segment. The impairment charges pertain primarily to the goodwill recognized in connection with the 1999 acquisition of The Bank of New York’s commercial finance business. |
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2005 Year-To-Date | |||||||||||||
3 Months Ended | 6 Months Ended | 9 Months Ended | |||||||||||
March 31, 2005 | June 30, 2005 | September 30, 2005 | |||||||||||
(Dollars in millions) | |||||||||||||
Financing and Insurance Operations | |||||||||||||
Net cash provided by (used in) operating activities | |||||||||||||
As originally reported | $ | (1,582 | ) | $ | 4,627 | $ | 6,158 | ||||||
Adjustments for: | |||||||||||||
Restatement — Mortgage related activity | (2,011 | ) | (4,270 | ) | (10,932 | ) | |||||||
Reclassification — Net transactions with Automotive/Financing Operations | — | — | (767 | ) | |||||||||
As restated | $ | (3,593 | ) | $ | 357 | $ | (5,541 | ) | |||||
Net cash provided by (used in) investing activities | |||||||||||||
As originally reported | $ | (1,670 | ) | $ | 440 | $ | (1,550 | ) | |||||
Adjustments for: | |||||||||||||
Restatement — Mortgage related activity | 2,011 | 4,270 | 10,932 | ||||||||||
As restated | $ | 341 | $ | 4,710 | $ | 9,382 | |||||||
• | A charge of $148 million for a salaried attrition program relating to voluntary early retirement and other separation programs in the U.S. | |
• | A charge of $84 million for plant and facility impairments relating to the write-down to fair market value of various plant assets in connection with action to discontinue production at the Lansing assembly plant. | |
• | A charge of $422 million for the GME restructuring plan, announced in the fourth quarter of 2004, targeting a reduction in annual structural costs of an estimated $600 million by 2006. A total reduction of 12,000 employees, including 10,000 in Germany, from 2005-2007 through separation programs, early retirements, and selected outsourcing initiatives is expected. The charge in the first quarter of 2005 covers approximately 5,650 people, of whom 4,900 are in Germany. |
• | A charge of $788 million related to the write-down to fair market value, as of June 30, 2005, of GM’s investment in approximately 20% of the common stock of Fuji Heavy Industries (FHI). | |
• | An additional charge of $126 million, related to the GME restructuring plan noted above and costs related to dissolving GM’s powertrain and purchasing joint ventures with Fiat. The charge covers approximately 600 additional separations, as well as charges related to previous separations that are required to be amortized over future periods. |
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• | A charge of $788 million ($468 million at GMNA, $176 million at GME, $99 million at GMLAAM, and $45 million at GMAP) for plant and facility impairments reflecting the results of third quarter reviews of the carrying value of long-lived assets held and used, other than goodwill and intangible assets with indefinite lives. The impairments consist of $672 million, after tax, related to product-specific assets that were written down and $116 million, after tax, related to office and production facilities, which were still in service at year-end 2005. There were no employee idling or separation costs and no lease contracts were terminated. | |
• | An additional charge, related to the GME restructuring plan noted above, of $56 million for approximately 500 additional separations, as well as charges related to previous separations that are required to be amortized over future periods. |
• | A charge of $1.7 billion in connection with the North American manufacturing capacity actions announced in November 2005. This charge includes $1.2 billion associated with the hourly employees at the facilities GM is idling and $455 million for the non-cash write-down of property, plants and equipment. | |
• | A charge of pre-tax $5.5 billion, $3.6 billion after tax, for GM’s contingent exposures relating to Delphi’s Chapter 11 filing, including under the benefit guarantees for certain former GM U.S. hourly employees who transferred to Delphi. GM believes that the range of the contingent exposures is between $5.5 billion and $12 billion. | |
• | A gain of $71 million, related to the sale of GM’s investment in the common stock of FHI, due to the appreciation of the fair value of such stock after June 30, 2005, the date of the FHI impairment charge. Also in the fourth quarter, GME recorded cancellation charges of $20 million (after tax) related to FHI, resulting in a net adjustment of $51 million in the fourth quarter. | |
• | Restructuring charges totaling $114 million, as follows: An additional after-tax charge, related to the GME restructuring plan noted above, of $69 million for approximately 800 additional separations, as well as charges related to previous separations that are required to be amortized over future periods; $38 million at GMAP; and $7 million at Other. | |
• | A charge of $109 million related to the adoption of FIN 47, “Accounting for Conditional Asset Retirement Obligations,” as of December 31, 2005, which was recorded as the cumulative effect of a change in accounting principle. | |
• | A benefit of $49 million related to the effect of changes in Polish tax law at a GM Powertrain joint venture. Amount is included in equity income. | |
• | The recognition of a valuation allowance of $617 million against deferred tax assets at GM do Brasil. |
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2004 Quarters | |||||||||||||||||
1st | 2nd | 3rd | 4th (1) | ||||||||||||||
(Dollars in millions except per share amounts) | |||||||||||||||||
Total net sales and revenues | $ | 47,862 | $ | 49,293 | $ | 44,934 | $ | 51,428 | |||||||||
Income (losses) from continuing operations before income taxes and minority interests | $ | 1,216 | $ | 1,449 | $ | 94 | $ | (1,573 | ) | ||||||||
Income tax expense (benefit) | 243 | 223 | (39 | ) | (1,343 | ) | |||||||||||
Minority interests | (23 | ) | (23 | ) | (12 | ) | (23 | ) | |||||||||
Earnings of nonconsolidated associates | 275 | 236 | 162 | 110 | |||||||||||||
Net income | $ | 1,225 | $ | 1,439 | $ | 283 | $ | (143 | ) | ||||||||
Basic earnings (losses) per share attributable to $12/3 par value | $ | 2.17 | $ | 2.55 | $ | 0.50 | $ | (0.25 | ) | ||||||||
Average number of shares of common stock outstanding — basic (in millions) $12/3 par value | 564 | 565 | 565 | 565 | |||||||||||||
Earnings (loss) per share attributable to common stock assuming dilution $12/3 par value | $ | 2.15 | $ | 2.53 | $ | 0.50 | $ | (0.25 | ) | ||||||||
Average number of shares of common stock outstanding — diluted (in millions) $12/3 par value | 569 | 568 | 567 | 565 | |||||||||||||
Net income (loss) by reportable operating segment/region Automotive and Other Operations | |||||||||||||||||
GMNA | $ | 344 | $ | 366 | $ | (166 | ) | $ | 865 | ||||||||
GME | (109 | ) | (62 | ) | (207 | ) | (547 | ) | |||||||||
GMLAAM | (17 | ) | 18 | 17 | 42 | ||||||||||||
GMAP | 272 | 253 | 74 | 131 | |||||||||||||
Other Operations | (22 | ) | 65 | (85 | ) | (1,377 | ) | ||||||||||
Net income (loss) — Automotive and Other Operations | 468 | 640 | (367 | ) | (886 | ) | |||||||||||
Financing and Insurance Operations Net income — Financing and Insurance Operations | 757 | 799 | 650 | 743 | |||||||||||||
Net income | $ | 1,225 | $ | 1,439 | $ | 283 | $ | (143 | ) | ||||||||
(1) | Fourth quarter 2004 results include the following: |
• | An after-tax gain of $118 million resulting from the contribution of 11 million shares of XM Satellite Radio Holdings Inc. Class A common stock valued at $432 million to GM’s Voluntary Employees’ Beneficiary Association (VEBA); | |
• | A $78 million after-tax charge related primarily to previously announced facilities rationalization actions at GM’s Baltimore, MD and Linden, NJ plants; | |
• | A $383 million after-tax charge related to the results of GM’s annual review of the carrying value of its long-lived assets held and used, other than goodwill and intangible assets with indefinite lives; | |
• | A $136 million after-tax charge related to the write-off of GM’s remaining investment balance in Fiat Auto Holdings, B.V. and reflects completion of an impairment study relating to the carrying value of that investment; |
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• | A $540 million after-tax favorable adjustment for various adjustments resulting from changes in tax laws both in the U.S. and overseas and capital loss carryforwards; and | |
• | An after-tax charge of $886 million related to the February 13, 2005 GM and Fiat agreement under which GM will pay Fiat approximately $2.0 billion and will return its 10% equity interest in FAH to settle various disputes and terminate the Master Agreement (including the Put Option) entered into in March 2000, and acquire an interest in key strategic diesel engine assets, and other important rights with respect to diesel engine technology and know-how. |
Item 9. | Changes in and disagreements with accountants on accounting and financial disclosure |
Item 9A. | Controls and Procedures |
(A) | A material weakness was identified related to our design and maintenance of adequate controls over the preparation, review, presentation and disclosure of amounts included in our consolidated statements of cash flows, which resulted in misstatements therein. Cash outflows related to certain mortgage loan originations and purchases were not appropriately classified as either operating cash flows or investing cash flows consistent with our original description as loans held for sale or loans held for investment. In addition, proceeds from sales and repayments related to certain mortgage loans, which initially were classified as mortgage loans held for investment and subsequently transferred to mortgage loans held for sale, were reported as operating cash flows instead of |
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investing cash flows in our consolidated statements of cash flows, as required by Statement of Financial Accounting Standards No. 102Statement of Cash Flows — Exemption of Certain Enterprises and Classification of Cash Flows from Certain Securities Acquired for Resale. Finally, certain non-cash proceeds and transfers were not appropriately presented in the Statements of Cash Flows. |
(B) | A material weakness was identified related to the fact that GM’s management did not adequately design the control procedures used to account for GM’s portfolio of vehicles on operating lease with daily rental car entities, which was impaired at lease inception, and prematurely revalued to reflect increased anticipated proceeds upon disposal. This material weakness was identified in January, 2006, and remediated by discontinuing the premature revaluation of previously recognized impairments. | |
(C) | In the third quarter of 2005, GM management reported a material weakness in internal controls related to the ineffective operation of the procedures to determine whether an impairment was necessary with respect to the Corporation’s foreign investments accounted for under the equity method which resulted in the failure to timely reduce the carrying value of GM’s investment in the common stock of Fuji Heavy Industries to fair value. GM fully remediated its related controls and procedures related to this matter prior to December 31, 2005. Details of the remediation actions were included in Item 4 of GM’s Amendment No. 1 on Form 10-Q/A for the second quarter of 2005. |
(D) | GM management also identified a significant deficiency in internal controls related to accounting for complex contracts. This deficiency was identified as a result of certain contracts being accounted for incorrectly and without appropriate consideration of the economic substance of the contracts. GM management is in the process of remediating this significant deficiency by implementing a delegation of authority for approval of the accounting for complex contracts that requires formal review and approval by experienced accounting personnel. |
Item 9B. | Other Information |
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Item 10. | Code of Ethics for Senior Executives |
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(a) | 1. All Financial Statements and Supplemental Information | See Part II | ||
2. Financial Statement Schedule II — Allowances for the Years Ended December 31, 2005, 2004, and 2003 | IV-3 | |||
3. Exhibits | ||||
(b) | Exhibits | |||
Exhibits listed below, which have been filed with the SEC pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and which were filed as noted below, are hereby incorporated by reference and made a part of this report with the same effect as filed herewith. |
(3)(i) | Restated Certificate of Incorporation dated March 1, 2004 incorporated herein by reference to Exhibit 3(i) to General Motors Corporation’s annual report on Form 10-K filed March 11, 2004. | |||
(3)(ii)† | Bylaws of General Motors Corporation, as amended, dated February 29, 2004 | |||
(4)(a) | Indenture, dated as of November 15, 1990, between General Motors Corporation and Citibank, N.A., Trustee, incorporated herein by reference to Exhibit Amendment No. 1(a) to Form S-3 Registration Statement No. 33-41577 filed July 3, 1991. | |||
(4)(b)(i) | Indenture, dated as of December 7, 1995, between General Motors Corporation and Citibank, N.A., Trustee, incorporated herein by reference to Exhibit 4(a) to Amendment No. 1 to Form S-3 Registration Statement No. 33-64229 filed November 14, 1995. | |||
(4)(b)(ii) | First Supplemental Indenture, dated as of March 4, 2002, between General Motors Corporation and Citibank, N.A., incorporated herein by reference to Exhibit 2 to the Current Report on Form 8-K of General Motors Corporation filed March 6, 2002. | |||
4(b)(iii) | Second Supplemental Indenture, dated as of November 5, 2004, between General Motors Corporation and Citibank, N.A., incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K of General Motors Corporation filed November 10, 2004. | |||
4(b)(iv) | Third Supplemental Indenture, dated as of November 5, 2004, between General Motors Corporation and Citibank, N.A. incorporated herein by reference to Exhibit 4.2 to the Current Report on Form 8-K of General Motors Corporation filed November 10, 2004. | |||
4(b)(v) | Fourth Supplemental Indenture, dated as of November 5, 2004, between General Motors Corporation and Citibank, N.A., incorporated herein by reference to Exhibit 4.3 to the Current Report on Form 8-K of General Motors Corporation filed November 10, 2004. | |||
(10)† | Agreement, dated as of October 22, 2001, between General Motors Corporation and General Motors Acceptance Corporation. | |||
(10)(a)* | General Motors 2002 Annual Incentive Plan, incorporated herein by reference to Exhibit A to the Proxy Statement of General Motors Corporation filed April 21, 2002. | |||
(10)(b)* | General Motors 2002 Stock Incentive Plan, incorporated herein by reference to Exhibit A to the Proxy Statement of General Motors Corporation filed April 21, 2002. | |||
(10)(c)* | General Motors 2002 Long-term Incentive Plan, incorporated herein by reference to Exhibit A to the Proxy Statement of General Motors Corporation filed April 21, 2002. |
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(10)(d)* | Compensation Plan for Nonemployee Directors, incorporated herein by reference to Exhibit A to the Proxy Statement of General Motors Corporation filed April 16, 1997. | |||
10(e)* | Employment Agreement, dated as of December 5, 2000, between General Motors Corporation and John M. Devine, incorporated herein by reference to Exhibit 10(e) to General Motors Corporations’s annual report on Form 10-K filed march 7, 2001. | |||
(10)(f)* | Extension to Employment Agreement, dated as of December 5, 2005 between General Motors Corporation and John M. Devine incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8-K of General Motors Corporation filed December 9, 2005. | |||
(10)(g)*† | General Motors Company Vehicle Operations — Senior Management Vehicle Program (SMVP) Supplement, revised December 15, 2005. | |||
(10)(h)*† | Compensation Statement for G.R. Wagoner, Jr. commencing January 1, 2003. | |||
(10)(i)*† | Compensation Statement for John M. Devine commencing January 1, 2003. | |||
(10)(j)*† | Compensation Statement for Robert A. Lutz commencing January 1, 2003. | |||
(10)(k)*† | Compensation Statement for G.L. Cowger commencing February 1, 2004. | |||
(10)(l)*† | Compensation Statement for Thomas A. Gottschalk commencing January 1, 2005 and description of retirement program. | |||
(10)(m)*† | GM Supplemental Executive Retirement Plan as amended through October 18, 2005. | |||
(10)(n)*† | General Motors Benefit Equalization Plan for Salaried Employees, amended as of October 18, 2005. | |||
(10)(o)*† | Description of Executive and Board Compensation Reductions. | |||
(12)† | Computation of Ratios of Earnings to Fixed Charges for the Years Ended December 31, 2005, 2004, and 2003. | |||
(13)† | General Motors Acceptance Corporation Annual Report on Form 10-K, File No. 001-03754, for the fiscal year ended December 31, 2005. | |||
(21)† | Subsidiaries of the Registrant as of December 31, 2005. | |||
(23)† | Consent of Independent Registered Public Accounting Firm. | |||
(31.1)† | Section 302 Certification of the Chief Executive Officer. | |||
(31.2)† | Section 302 Certification of the Chief Financial Officer. | |||
(32.1)† | Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||
(32.2)† | Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K. |
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Additions | Additions | ||||||||||||||||||||||
Balance at | Charged to | Charged to | Balance at | ||||||||||||||||||||
Beginning | Costs and | Other | End of | ||||||||||||||||||||
Description | of Year | Expenses | Accounts | Deductions | Year | ||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||
For the Year Ended December 31, 2005 | |||||||||||||||||||||||
Allowances Deducted from Assets | |||||||||||||||||||||||
Allowance for credit losses | $ | 3,419 | $ | 1,088 | $ | — | $ | 1,391 | (b) | $ | 3,116 | ||||||||||||
Accounts and notes receivable (for doubtful receivables) | 303 | 73 | — | 38 | (b) | 338 | |||||||||||||||||
Inventories (principally for obsolescence of service parts) | 338 | 70 | (c) | — | — | 408 | |||||||||||||||||
Other investments and miscellaneous assets (receivables and other) | 10 | — | 7 | — | 17 | ||||||||||||||||||
Miscellaneous allowances (mortgage and other) | 161 | 25 | 21 | 123 | 84 | ||||||||||||||||||
Total Allowances Deducted from Assets | $ | 4,231 | $ | 1,256 | $ | 28 | $ | 1,552 | $ | 3,963 | |||||||||||||
For the Year Ended December 31, 2004 | |||||||||||||||||||||||
Allowances Deducted from Assets | |||||||||||||||||||||||
Allowance for credit losses | $ | 3,042 | $ | 1,944 | $ | — | $ | 1,567 | (b) | $ | 3,419 | ||||||||||||
Accounts and notes receivable (for doubtful receivables) | 212 | 112 | 5 | (a) | 26 | (b) | 303 | ||||||||||||||||
Inventories (principally for obsolescence of service parts) | 393 | — | — | 55 | (c) | 338 | |||||||||||||||||
Other investments and miscellaneous assets (receivables and other) | 84 | — | — | 74 | 10 | ||||||||||||||||||
Miscellaneous allowances (mortgage and other) | 193 | 28 | 163 | 223 | 161 | ||||||||||||||||||
Total Allowances Deducted from Assets | $ | 3,924 | $ | 2,084 | $ | 168 | $ | 1,945 | $ | 4,231 | |||||||||||||
For the Year Ended December 31, 2003 | |||||||||||||||||||||||
Allowances Deducted from Assets | |||||||||||||||||||||||
Allowance for credit losses | $ | 2,991 | $ | 1,721 | $ | — | $ | 1,670 | (b) | $ | 3,042 | ||||||||||||
Accounts and notes receivable (for doubtful receivables) | 166 | 63 | 15 | (a) | 32 | (b) | 212 | ||||||||||||||||
Inventories (principally for obsolescence of service parts) | 255 | 138 | (c) | — | — | 393 | |||||||||||||||||
Other investments and miscellaneous assets (receivables and other) | 26 | — | 58 | — | 84 | ||||||||||||||||||
Miscellaneous allowances (mortgage and other) | 153 | 78 | 15 | 53 | 193 | ||||||||||||||||||
Total Allowances Deducted from Assets | $ | 3,591 | $ | 2,000 | $ | 88 | $ | 1,755 | $ | 3,924 | |||||||||||||
Notes: |
(a) | Primarily reflects the recovery of accounts previously written-off. | |
(b) | Accounts written off. | |
(c) | Represents net change of inventory allowances. |
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GENERAL MOTORS CORPORATION | |
(Registrant) |
By: | /s/ G. RICHARD WAGONER, JR. |
G. Richard Wagoner, Jr. | |
Chairman and Chief Executive Officer |
Signature | Title | |||||
/s/ G. RICHARD WAGONER, JR. (G. Richard Wagoner, Jr.) | Chairman and Chief Executive Officer | |||||
/s/ FREDERICK A. HENDERSON (Frederick A. Henderson) | Vice Chairman and Chief Financial Officer | |||||
/s/ WALTER G. BORST (Walter G. Borst) | Treasurer | |||||
/s/ PAUL W. SCHMIDT (Paul W. Schmidt) | Controller | |||||
/s/ PETER R. BIBLE (Peter R. Bible) | Chief Accounting Officer |
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Signature | Title | |||||
/s/ PERCY BARNEVIK (Percy Barnevik) | Director | |||||
/s/ ERSKINE BOWLES (Erskine Bowles) | Director | |||||
/s/ JOHN H. BRYAN (John H. Bryan) | Director | |||||
/s/ ARMANDO M. CODINA (Armando Codina) | Director | |||||
/s/ GEORGE M.C. FISHER (George M.C. Fisher) | Director | |||||
/s/ KAREN KATEN (Karen Katen) | Director | |||||
/s/ KENT KRESA (Kent Kresa) | Director | |||||
/s/ ELLEN J. KULLMAN (Ellen J. Kullman) | Director | |||||
/s/ PHILIP A. LASKAWY (Philip A. Laskawy) | Director | |||||
/s/ ECKHARD PFEIFFER (Eckhard Pfeiffer) | Director | |||||
/s/ JEROME B. YORK (Jerome York) | Director |
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