================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF - --- 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999, OR TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF - --- 1934 FOR THE TRANSITION PERIOD FROM ______________ TO _________________ Commission file number 1-3754 ------ GENERAL MOTORS ACCEPTANCE CORPORATION ---------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 38-0572512 - -------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3044 WEST GRAND BOULEVARD, DETROIT, MICHIGAN 48202 - -------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 313-556-5000 ------------ The registrant meets the conditions set forth in General Instruction H(1) (a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X . No ___. As of March 31, 1999, there were outstanding 10 shares of the issuer's common stock. Documents incorporated by reference. NONE. ================================================================================ This quarterly report, filed pursuant to Rule 13a-13 of the General Rules and Regulations under the Securities Exchange Act of 1934, consists of the following information as specified in Form 10-Q: PART 1. FINANCIAL INFORMATION The required information is given as to the registrant, General Motors Acceptance Corporation and subsidiaries (the Company or GMAC). ITEM 1. FINANCIAL STATEMENTS. In the opinion of management, the interim consolidated financial statements reflect all adjustments, consisting of only normal recurring items which are necessary for a fair presentation of the results for the interim periods presented. The results for interim periods are unaudited and are not necessarily indicative of results which may be expected for any other interim period or for the full year. These financial statements should be read in conjunction with the consolidated financial statements, the significant accounting policies, and the other notes to the consolidated financial statements included in the Company's 1998 Annual Report filed with the Securities and Exchange Commission on Form 10-K. The Financial Statements described below are submitted herein as Exhibit 20. 1. Consolidated Balance Sheet, March 31, 1999, December 31, 1998 and March 31, 1998. 2. Consolidated Statement of Income, Net Income Retained for Use in the Business and Comprehensive Income for the Three Months Ended March 31, 1999 and 1998. 3. Consolidated Statement of Cash Flows for the Three Months Ended March 31, 1999 and 1998. 4. Notes to Consolidated Financial Statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EARNINGS Consolidated net income for the quarter increased 12% when compared to the same period during 1998. Three Months Ended March 31, ------------------------------------- 1999 1998 --------------- ---------------- (in millions of dollars) Automotive financing operations $229.6 $246.6 Insurance operations* 64.9 79.7 Mortgage operations** 97.8 23.0 ================ ================ Consolidated net income $392.3 $349.3 ================ ================ * GMAC Insurance Holdings, Inc. (GMACI) ** GMAC Mortgage Group, Inc. (GMACMG) Net income from automotive financing operations declined 7% in the first quarter of 1999, compared to the same period in 1998. The reduction in earnings was primarily a result of a significantly lower effective tax rate in the first quarter of 1998. Earnings from insurance operations decreased by 19% during the first quarter of 1999, compared to the same period during 1998. Earnings were lower principally from reduced investment income and underwriting results. Investment income was reduced as a result of declining interest rates and a shift in asset mix toward equity securities. Net income from mortgage operations during the first quarter of 1999 increased to a record level, posting a $74.8 million increase over results from the comparable period in 1998. Earnings increased as a result of improved liquidity and tighter credit spreads in the capital markets and the benefits of certain asset positions carried over from the fourth quarter of 1998. The strong period-over-period comparison also reflects unusually low earnings in the first quarter of 1998, which were negatively impacted by accelerated prepayment experience on mortgage assets. UNITED STATES NEW PASSENGER CAR AND TRUCK DELIVERIES U.S. deliveries of new General Motors (GM) vehicles during the three months ended March 31, 1999 were slightly higher than comparable 1998 levels. The decline in financing penetration was primarily the result of competitive market conditions. Three Months Ended March 31, ----------------------------- 1999 1998 ---------- --------- (in millions of units) Industry 4.0 3.6 General Motors 1.2 1.1 U.S. new GM vehicle deliveries financed by GMAC Retail (installment sale contracts and operating leases) 40.2% 43.4% Fleet transactions (lease financing) 2.1% 1.9% Total 31.7% 34.5% ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) FINANCING VOLUME The number of new vehicle deliveries financed during the three months ended March 31, 1999 and 1998 are summarized below: Three Months Ended March 31, ------------------------------- 1999 1998 ------------ ------------ (in thousands of units) UNITED STATES Retail installment sale contracts 225 233 Operating leases 155 142 Leasing 8 6 ============ ============ New deliveries financed 388 381 ============ ============ OTHER COUNTRIES Retail installment sale contracts 100 108 Operating leases 61 56 Leasing 14 20 ------------ ------------ New deliveries financed 175 184 ============ ============ WORLDWIDE Retail installment sale contracts 325 341 Operating leases 216 198 Leasing 22 26 ============ ============ New deliveries financed 563 565 ============ ============ The number of new vehicles financed in the U.S. during the first quarter of 1999 was slightly higher than the first quarter of 1998, primarily as a result of continued operating lease incentive programs sponsored by GM and increased deliveries of units to dealers. Outside the U.S., the decline in deliveries financed was mainly attributable to lower leasing volume in Europe. GMAC also provides wholesale financing for GM and other dealers' new and used vehicle inventories. In the United States, inventory financing was provided for 868,000 and 725,000 new GM vehicles, representing 66.9% and 62.8% of all GM sales to dealers during the first quarter of 1999 and 1998, respectively. The increase in wholesale penetration levels was a result of competitive pricing strategies by the Company. INCOME AND EXPENSES Automotive financing revenue totaled $3,277.1 million in the first quarter of 1999, an increase of $170.3 million compared with the first quarter of 1998. The increase was mainly due to higher average retail and wholesale receivable balances which resulted from aggressive retail financing incentives sponsored by GM and competitive wholesale pricing by the Company. The Company's worldwide cost of borrowing, including the effects of derivatives, for the first quarter of 1999 averaged 5.52% compared to 6.11% for the same period in 1998. Total borrowing costs for U.S. operations averaged 5.44% for the first quarter of 1999, compared to 6.11% for the same period in 1998. The decrease in average borrowing costs was largely the result of lower U.S. interest rates and a greater proportion of floating rate debt compared to fixed rate debt. Insurance premiums earned, mortgage revenue and other income totaled $1,548.9 million for the three months ended March 31, 1999, a $329.7 million increase over the comparable 1998 period. GMACMG recorded higher revenues primarily as a result of significant acquisitions of mortgage servicing portfolios during 1998 that generated additional servicing fee income in 1999, and increased securitization volume during the first quarter of 1999. Insurance revenues were lower principally as a result of a decline in personal lines coverages due to competitive market conditions. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) INCOME AND EXPENSES (CONCLUDED) Consolidated salaries and other operating expenses totaled $1,016.9 million and $788.2 million for the respective quarters ended March 31, 1999 and 1998. The increase was mainly attributable to continued growth at GMACMG. Annualized net retail losses were 0.71% of total average serviced automotive receivables during the first quarter of 1999 compared to 0.98% for the same period last year. The provision for credit losses totaled $119.3 million and $107.2 million for the three months ended March 31, 1999 and 1998, respectively. Although comparable period loss rates declined, the higher loss provision reflects an increase in retail receivables in the first quarter of 1999 and favorable wholesale loss provision adjustments during the first quarter of 1998. The effective income tax rate was 38.8% and 32.1% for the three months ended March 31, 1999 and 1998, respectively. The comparative increase in the effective tax rate can be attributed to a significantly lower effective tax rate for the first quarter of 1998 due to a decrease in U.S. and foreign taxes assessed on foreign source income. INSURANCE OPERATIONS Net premiums earned by GMACI and its subsidiaries totaled $446.6 million and $471.0 million for the three months ended March 31, 1999 and 1998, respectively. Pre-tax capital gains and investment and other income at GMACI totaled $140.3 million for the quarter ended March 31, 1999, compared to $147.7 million for the quarter ended March 31, 1998. Insurance losses and loss adjustment expenses totaled $347.2 million and $353.0 million during the same comparable periods. The decrease in net premiums earned was primarily a result of a decline in personal lines coverages. Net income for the first quarter of 1999 was $64.9 million, compared to $79.7 million earned during the same period in 1998. Earnings were lower principally from reduced investment income and underwriting results. Investment income was reduced as a result of declining interest rates and a shift in asset mix toward equity securities. MORTGAGE OPERATIONS During the first quarter of 1999, GMACMG loan originations, mortgage servicing acquisitions and correspondent loan volume totaled $17.8 billion, compared to $16.8 billion for the same period in 1998. As a result of significant mortgage servicing portfolio acquisitions and continued growth, the combined GMACMG servicing portfolio, excluding GMAC term loans to dealers, totaled $245.9 billion at March 31, 1999, compared with $245.0 billion and $147.7 billion serviced at December 31 and March 31, 1998, respectively. In April 1999, GMACMG completed the acquisition of DiTech Funding Corporation, a mortgage provider specializing in direct marketing programs. For the first three months of 1999, net income was $97.8 million, compared to $23.0 million for the same period in 1998. The significant increase in income was primarily attributable to improved liquidity and tighter credit spreads in the capital markets and the benefits of certain asset positions carried over from the fourth quarter of 1998. The strong period-over-period comparison also reflects unusually low earnings in the first quarter of 1998, which were negatively impacted by accelerated prepayment experience on mortgage assets. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) FINANCIAL CONDITION AND LIQUIDITY At March 31, 1999, the Company owned assets and serviced automotive receivables totaling $140.7 billion, $2.0 billion above year-end 1998, and $15.1 billion above March 31, 1998. The higher balance compared to the first quarter of last year primarily reflects increases in on-balance sheet finance receivables as well as higher operating lease assets, partially offset by a decline in sold wholesale receivables. Earning assets totaled $124.7 billion at March 31, 1999, compared to $125.1 billion and $109.1 billion at December 31 and March 31, 1998, respectively. Finance receivables serviced by the Company, including sold receivables, totaled $85.1 billion at March 31, 1999, $5.2 billion above December 31, 1998 levels and $9.6 billion above March 31, 1998 levels. The change since December 31, 1998 can be attributed to a $3.4 billion increase in on-balance sheet wholesale receivables and a $1.8 billion increase in serviced retail receivables. The year-to-year change primarily resulted from increases of $4.7 billion, $4.3 billion and $2.4 billion in the on-balance sheet retail, wholesale and term loans receivable portfolios, respectively. Also contributing to the year-to-year increase, sold retail receivables (including the retained subordinated interest portion) increased by $0.8 billion. Offsetting these increases, sold wholesale receivables decreased $2.6 billion, primarily attributable to the scheduled wind down of a revolving wholesale trust. Consolidated operating lease assets, net of depreciation, totaled $27.7 billion at March 31, 1999, reflecting a decrease of $0.2 billion from December 31, 1998 and an increase of $1.4 billion over March 31, 1998, respectively. The year-to-year increase was primarily attributable to strong GM sponsored lease incentive programs in the U.S. and Canada. Investments in securities at March 31, 1999 totaled $8.5 billion, compared with $8.7 billion and $7.7 billion at December 31 and March 31, 1998, respectively. The year-to-year increase was principally the result of continued growth at GMACMG, partially offset by a decline in the investment portfolio at GMACI. The Company's due and deferred from receivable sales (net) was $(12.2 million) at March 31, 1999, compared with $111.5 million and $258.6 million at December 31 and March 31, 1998, respectively. The year-to-year decline was primarily due to the effects of a scheduled wind down of a revolving wholesale trust. Also contributing to the decline was an increase in the payable to the trusts due to an additional sale of retail receivables in the first quarter of 1999. As of March 31, 1999, GMAC's total borrowings were $105.3 billion, compared with $106.2 billion and $90.1 billion at December 31, 1998 and March 31, 1998, respectively. The higher borrowings, as compared to March 31, 1998, were principally used to fund increased earning asset levels. GMAC's ratio of debt to total stockholder's equity at March 31, 1999 was 10.5:1, compared to 10.8:1 at December 31, 1998 and 9.9:1 at March 31, 1998. The Company and its subsidiaries maintain substantial bank lines of credit which totaled $42.0 billion at March 31, 1999, compared to $42.9 billion at year-end 1998 and $40.0 billion at March 31, 1998. The unused portion of these credit lines totaled $32.4 billion at March 31, 1999, $0.8 billion lower and $1.3 billion higher than December 31 and March 31, 1998, respectively. Included in the unused credit lines are a committed U.S. revolving credit facility of $10.0 billion which serves primarily as back-up for GMAC's unsecured commercial paper program and a $12.0 billion U.S. asset-backed commercial paper liquidity and receivables credit facility for New Center Asset Trust (NCAT), a non-consolidated limited purpose business trust established to issue asset-backed commercial paper. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) FINANCIAL CONDITION AND LIQUIDITY (CONCLUDED) As discussed in the Company's 1998 Annual Report on Form 10-K, the Company utilizes a variety of interest rate and currency derivative instruments in managing its interest rate and foreign exchange exposures. The total notional amount of the derivatives portfolio decreased from $107.7 billion at December 31, 1998 to $82.5 billion at March 31, 1999. The change was primarily attributable to a decrease in financial instruments associated with mortgage servicing. YEAR 2000 Many computerized systems and microprocessors that are used by GMAC have the potential for operational problems if they lack the ability to handle the transition to the Year 2000. This issue has the potential to cause disruption to the business of GMAC and its customers. In its capacity as a wholly owned subsidiary of GM, GMAC is part of GM's comprehensive worldwide Year 2000 program. As part of that program, GMAC has been identifying and remediating potential Year 2000 problems in its business information systems and other equipment in its operations. GMAC has also initiated communications with its service and technology providers, landlords, dealers and other third parties in order to assess and reduce the risk that GMAC's operations could be adversely affected by the failure of these third parties to adequately address the Year 2000 issue. GMAC's Year 2000 program teams are responsible for remediating all of GMAC's information technology. Information technology principally consists of business information systems (such as mainframe and other shared computers and associated business application software) and infrastructure (such as personal computers, operating systems, networks and devices like switches and routers). GMAC's Year 2000 program includes assessment and remediation services provided by Electronic Data Systems Corporation (EDS) pursuant to a Master Service Agreement with GM. The Year 2000 program is being implemented in seven phases, some of which are being conducted concurrently: INVENTORY - identification and validation of an inventory of all systems and infrastructure components that could be affected by the Year 2000 issue. The inventory phase commenced in earnest in 1996 and is substantially complete. It has identified approximately 2,000 business information systems/applications. ASSESSMENT - initial testing, code scanning, and technology provider contacts to determine whether remediation is needed and to develop a remediation plan, if applicable. The assessment of business information systems is substantially complete and included a determination that approximately one half of such systems should be regarded as critical based on criteria such as the potential for business disruption. The assessment of infrastructure is also substantially complete. REMEDIATION - design and execution of a remediation plan, followed by testing for adherence to the design. GMAC has substantially completed the remediation of its critical systems. Unimportant systems have been, and will continue to be, removed from our Year 2000 inventory and will not be remediated. This phase is also substantially complete. In the normal course of its business plans, GMAC is also incrementally implementing enterprise software and other common applications that will replace and thereby eliminate the need to remediate certain existing systems. Implementation of this software continued throughout 1998 and the first quarter of 1999, with a few sites not scheduled to be complete until the second quarter of 1999. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) YEAR 2000 (CONTINUED) SYSTEM TESTING - testing of remediated items to ensure that they function normally after being placed back in their original operating environment. This phase is closely related to the remediation phase and follows essentially the same schedule. IMPLEMENTATION - return of items to normal operation after satisfactory performance in system testing. This phase follows essentially the same schedule as remediation and system testing. READINESS TESTING - planning for and testing of integrated systems in a Year 2000 ready environment, including ongoing auditing and follow-up. Readiness testing is largely completed, with a few exceptions. CONTINGENCY PLANNING - development and execution of plans that focus on specific areas of significant concern and concentrate resources to address them. GMAC currently believes that the most reasonably likely worst case scenario is that there will be some localized disruptions of systems that will affect individual business processes, facilities or service and technology providers for a short time rather than systematic or long-term problems affecting our business operations as a whole. GMAC contingency planning continues to identify systems or other aspects of its business that it believes would be most likely to experience Year 2000 problems. GMAC contingency planning is also addressing those business operations in which a localized disruption could have the potential for causing a wider problem by interrupting the flow of data or services to other operations. Because there is an uncertainty as to which activities may be affected, and the exact nature of the problems which may arise, contingency planning focuses on minimizing the scope and duration of any disruption by having sufficient personnel and other resources in place to permit a flexible, real-time response to specific problems as they may arise at individual locations around the world. Some of the actions that are being planned include the establishment of Year 2000 Command Centers and development of detailed manual procedures. GMAC is leveraging off its existing Disaster Recovery and Business Resumption Plans and Processes, while expanding its scope to encompass Year 2000 concerns. The target for completion of these plans is the first half of 1999, with subsequent testing and refinement. GMAC's communication with its service and technology providers is a focused element of the assessment phase described above. GMAC is a leading participant in the Financial Services Sub-Group of the Automotive Industry Action Group (AIAG), an automotive industry trade association, which has distributed Year 2000 compliance questionnaires to many critical financial service providers that supply GMAC with services throughout the world. Responses to these questionnaires have been received from approximately ninety percent of the North American providers and approximately three-quarters of the international providers to which they were sent. In addition, GMAC has initiated its own contact and review of these providers and other non-financial service providers considered to be critical to GMAC's operations, including follow-up to the AIAG questionnaire. GMAC has also initiated contact with the landlords or property managers of its facilities throughout the world, to assess the ongoing functionality of the space it rents from others. Responses have been received from more than 90% of the contacts. GMAC also has a program to work with some of its largest customers, primarily automotive dealers and lease/rental companies, on their Year 2000 readiness. This program, developed in conjunction with GM, includes distributing materials that assist them in designing and executing their own assessment and remediation efforts. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) YEAR 2000 (CONCLUDED) The cost of GMAC's Year 2000 program is being expensed as incurred with the exception of capitalizable replacement hardware. Total incremental spending by GMAC is not expected to be material to the Company's operations, liquidity or capital resources. GMAC incurred approximately $35 million of Year 2000 expense through 1998 and an additional $5 million during the first quarter of 1999. GMAC expects its total Year 2000 expense to be approximately $75 million, with peak spending occurring in late 1998 and the first half of 1999. This total spending also includes an additional payment to EDS of approximately $12 million (part of GM's overall additional payment to EDS of approximately $75 million) at the end of the first quarter of 2000 if systems remediated by EDS under its Master Service Agreement with GM are capable of continued operation before, on and after January 1, 2000 without causing a significant business disruption that results in a material financial loss to GM due to the millennium change. The estimated value of the services EDS is required to provide to GMAC under the Master Service Agreement with GM that are included in normal fixed price services and other ongoing payments to EDS that are attributable to work being performed in connection with GMAC's Year 2000 program is approximately $13 million, (net of the aforementioned potential $12 million payment at the end of the first quarter of 2000). This $13 million does not represent incremental spending to GMAC. GMAC's Year 2000 program costs do not include information technology projects that have been delayed due to Year 2000, which are estimated to be $15-20 million, or information technology projects that have been accelerated due to Year 2000, which are estimated to be less than $5 million. In view of the foregoing, GMAC does not currently anticipate that it will experience a significant disruption of its business as a result of the Year 2000 issue. However, there is still uncertainty about the broader scope of the Year 2000 issue as it may affect GMAC and third parties that are critical to GMAC's operations. For example, lack of readiness by electrical and water utilities, financial institutions, governmental agencies or other providers of general infrastructure could, in some geographic areas, pose significant impediments to GMAC's ability to carry on its normal operations in the area or areas so affected. In the event that GMAC is unable to complete its remedial actions as described above and is unable to implement adequate contingency plans in the event that problems are encountered, there could be a material adverse effect on GMAC's business, results of operations or financial condition. Statements made herein regarding the implementation of various phases of GMAC's Year 2000 program, the costs expected to be associated with that program and the results that GMAC expects to achieve constitute forward-looking information. As noted above, there are many uncertainties involved in the Year 2000 issue, including the extent to which GMAC will be able to successfully remediate systems and adequately provide for contingencies that may arise as well as the broader scope of the Year 2000 issue as it may affect third parties that are not controlled by GMAC. Accordingly, the costs and results of GMAC's Year 2000 program and the extent of any impact on GMAC's operations could vary materially from those stated herein. EURO CONVERSION On January 1, 1999, eleven of fifteen member countries of the European Monetary Union established fixed conversion rates between their existing currencies and adopted the euro as their new common currency. The euro trades on currency exchanges and the legacy currencies remain legal tender in the participating countries for a transition period until January 1, 2002. Beginning on January 1, 2002, euro denominated bills and coins will be issued and legacy currencies will be withdrawn from circulation. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONCLUDED) EURO CONVERSION (CONCLUDED) The Company has established plans to assess and address the potential impact to GMAC that may result from the euro conversion. These issues include, but are not limited to: 1) the technical challenges to adapt information systems to accommodate euro transactions; 2) the competitive impact of cross-border price transparency; 3) the impact on currency exchange rate risks; 4) the impact on existing contracts; and 5) tax and accounting implications. The Company expects that the euro conversion will not have a material adverse impact on its financial condition or results of operations. In those countries that have adopted the euro currency and in which GMAC has a presence, the Company offers financial services to dealers and consumers in both the local currency and the euro. ACCOUNTING STANDARDS In October 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 134, Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise, effective for the first fiscal quarter beginning after December 15, 1998. The new standard requires that after the securitization of mortgage loans held for sale, an entity engaged in mortgage banking activities classify the resulting mortgage-backed security or other retained interests based on its ability and intent to sell or hold those investments. The Company adopted this accounting standard in the first quarter of 1999, as required. The effect of adopting this new accounting standard did not have a material impact on the Company's consolidated financial statements. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, effective for fiscal years beginning after June 15, 1999. The new standard requires that all companies record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. Management is currently assessing the impact of SFAS No. 133 on the consolidated financial statements of the Company. The Company will adopt this accounting standard on January 1, 2000, as required. In the first quarter of 1998, the American Institute of Certified Public Accountants' Accounting Standards Executive Committee issued Statement of Position (SOP) 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. SOP 98-1 provides guidance on the capitalization of software for internal use. GMAC adopted SOP 98-1 on January 1, 1999, as required. The effect of adopting this SOP was not material to the Company's consolidated financial statements. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company did not become a party to any material pending legal proceedings during the first quarter ended March 31, 1999, or prior to the filing of this report. ITEM 5. OTHER INFORMATION RATIO OF EARNINGS TO FIXED CHARGES Three Months Ended March 31, ---------------------------- 1999 1998 ---- ---- 1.42 1.37 The ratio of earnings to fixed charges has been computed by dividing earnings before income taxes and fixed charges by the fixed charges. This ratio includes the earnings and fixed charges of the Company and its consolidated subsidiaries. Fixed charges consist of interest, debt discount and expense and the portion of rentals for real and personal properties in an amount deemed to be representative of the interest factor. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS 20 General Motors Acceptance Corporation and Subsidiaries Consolidated Financial Statements for the Three Months Ended March 31, 1999. (b) REPORTS ON FORM 8-K. The Company filed two reports on Form 8-K, dated January 21, 1999 and April 22, 1999, reporting matters under Item 5, Other Events. The Company also filed a report on Form 8-K dated April 15, 1999 reporting the following information: GMAC announced on April 12, 1999 that John D. Finnegan was elected chairman of GMAC while continuing as its president. He reports to John F. Smith, Jr., GM chairman and chief executive officer. J. Michael Losh remains a director of GMAC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GENERAL MOTORS ACCEPTANCE CORPORATION ------------------------------------- (Registrant) S/ WILLIAM F. MUIR Dated: MAY 6, 1999 William F. Muir, Executive Vice ----------- President and Principal Financial Officer S/ GERALD E. GROSS Dated: MAY 6, 1999 Gerald E. Gross, Comptroller and ----------- Principal Accounting Officer Exhibit 20 Page 1 of 7 GENERAL MOTORS ACCEPTANCE CORPORATION CONSOLIDATED BALANCE SHEET March 31, Dec. 31, March 31, 1999 1998 1998 -------------- -------------- -------------- ASSETS Cash and cash equivalents $ 850.2 $ 618.1 $ 845.8 -------------- -------------- -------------- EARNING ASSETS Investments in securities 8,520.3 8,681.9 7,701.9 Finance receivables, net (Note 1) 74,518.4 71,101.2 63,170.4 Investment in operating leases, net 27,716.4 27,925.8 26,307.9 Notes receivable from General Motors Corporation 2,589.9 2,270.5 2,077.1 Real estate mortgages - held for sale 4,996.0 7,969.7 4,903.2 - held for investment 1,399.9 1,296.7 675.6 - lending receivables 1,423.1 2,063.6 2,196.1 Due and deferred from receivable sales, net (12.2) 111.5 258.6 Other 3,546.6 3,683.7 1,803.3 -------------- -------------- -------------- Total earning assets 124,698.4 125,104.6 109,094.1 -------------- -------------- -------------- Nonearning assets 6,099.3 5,694.8 4,760.2 ============== ============== ============== TOTAL ASSETS $131,647.9 $131,417.5 $114,700.1 ============== ============== ============== LIABILITIES AND STOCKHOLDER'S EQUITY Notes, loans and debentures payable within one year (Note 2) $ 56,986.4 $ 60,816.7 $ 52,092.7 -------------- -------------- -------------- ACCOUNTS PAYABLE AND OTHER LIABILITIES General Motors Corporation and affiliated companies 1,243.7 929.6 2,017.9 Interest 1,497.2 1,264.2 1,358.4 Insurance losses and loss expenses 2,037.1 2,062.7 2,085.2 Unearned insurance premiums 1,903.1 1,855.6 1,836.3 Deferred income taxes 3,019.4 2,842.9 2,597.7 United States and foreign income and other taxes payable 480.8 570.7 377.8 Other postretirement benefits 693.1 685.3 669.3 Other 5,433.8 5,241.7 4,620.7 -------------- -------------- -------------- Total accounts payable and other liabilities 16,308.2 15,452.7 15,563.3 -------------- -------------- -------------- Notes, loans and debentures payable after one year (Note 3) 48,339.4 45,356.5 37,981.2 -------------- -------------- -------------- Common stock, $.10 par value (authorized 10,000 shares, outstanding 10 shares) and paid-in capital 2,200.0 2,200.0 2,200.0 Net income retained for use in the business 7,668.9 7,351.6 6,600.6 Net unrealized gains on securities 328.6 381.5 421.9 Unrealized accumulated foreign currency translation adjustment (183.6) (141.5) (159.6) -------------- -------------- -------------- Accumulated other comprehensive income 145.0 240.0 262.3 -------------- -------------- -------------- Total stockholder's equity 10,013.9 9,791.6 9,062.9 -------------- -------------- -------------- TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $131,647.9 $131,417.5 $114,700.1 ============== ============== ============== Certain amounts for 1998 have been reclassified to conform with 1999 classifications. Reference should be made to the Notes to Consolidated Financial Statements. Exhibit 20 Page 2 of 7 GENERAL MOTORS ACCEPTANCE CORPORATION CONSOLIDATED STATEMENT OF INCOME, NET INCOME RETAINED FOR USE IN THE BUSINESS AND COMPREHENSIVE INCOME Three Months Ended March 31, ----------------------------------- 1999 1998 ---------------- ---------------- (in millions of dollars) FINANCING REVENUE Retail and lease financing $ 1,005.9 $ 902.0 Operating leases 1,795.5 1,784.7 Wholesale and term loans 475.7 420.1 ---------------- ---------------- Total automotive financing revenue 3,277.1 3,106.8 Interest and discount 1,512.9 1,384.5 Depreciation on operating leases 1,188.5 1,178.3 ---------------- ---------------- Net automotive financing revenue 575.7 544.0 Insurance premiums earned 446.6 471.0 Mortgage revenue 728.2 417.4 Other income 374.1 330.8 ---------------- ---------------- Net financing revenue and other 2,124.6 1,763.2 ---------------- ---------------- EXPENSES Salaries and benefits 395.7 289.9 Other operating expenses 621.2 498.3 Insurance losses and loss adjustment expenses 347.2 353.0 Provision for credit losses 119.3 107.2 ---------------- ---------------- Total expenses 1,483.4 1,248.4 ---------------- ---------------- Income before income taxes 641.2 514.8 United States, foreign and other income taxes 248.9 165.5 ---------------- ---------------- NET INCOME 392.3 349.3 Net income retained for use in the business at beginning of the period 7,351.6 6,326.3 ---------------- ---------------- Total 7,743.9 6,675.6 Cash dividends 75.0 75.0 ---------------- ---------------- NET INCOME RETAINED FOR USE IN THE BUSINESS AT END OF THE PERIOD $ 7,668.9 $ 6,600.6 ================ ================ TOTAL COMPREHENSIVE INCOME $ 297.3 $ 381.8 ================ ================ Certain amounts for 1998 have been reclassified to conform with 1999 classifications. Reference should be made to the Notes to Consolidated Financial Statements. Exhibit 20 Page 3 of 7 GENERAL MOTORS ACCEPTANCE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS Three Months Ended March 31, -------------------------------- 1999 1998 --------------- --------------- (in millions of dollars) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 392.3 $ 349.3 Depreciation 1,215.3 1,195.7 Provision for credit losses 119.3 107.2 Gains on sales of finance receivables (54.9) - Gains on sales of available for sale investment securities (49.9) (49.9) Mortgage loans - originations/purchases (13,718.3) (11,542.2) - proceeds on sale 16,692.0 11,758.5 Mortgage related securities held for trading - acquisitions (448.5) (529.9) - liquidations 808.8 342.0 Changes in the following items: Due to General Motors Corporation and affiliated companies 345.1 798.4 Taxes payable and deferred 123.9 107.6 Interest payable 234.2 256.3 Other assets (224.7) (233.6) Other liabilities 27.3 171.8 Other 132.7 55.0 --------------- --------------- Net cash provided by operating activities 5,594.6 2,786.2 --------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES Finance receivables - acquisitions $ (42,869.5) $ (41,799.5) - liquidations 31,818.6 32,555.6 Notes receivable from General Motors Corporation (305.7) (1,525.4) Operating leases - acquisitions (3,433.0) (3,713.0) - liquidations 2,279.2 2,096.6 Investments in available for sale securities: - acquisitions (5,317.4) (3,200.2) - maturities 4,431.0 3,138.4 - proceeds from sales 769.8 517.7 Investments in held to maturity securities: - acquisitions (93.8) - - maturities - - Mortgage servicing rights - acquisitions (326.8) (153.4) - liquidations - 28.5 Proceeds from sales of receivables - wholesale 4,887.3 5,143.4 - retail 2,487.7 - Due and deferred from receivable sales 111.4 431.9 Other 591.9 131.1 --------------- --------------- Net cash used in investing activities (4,969.3) (6,348.3) --------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of long-term debt 7,559.0 5,515.2 Principal payments on long-term debt (3,659.7) (3,507.9) Change in short-term debt, net (4,217.9) 1,188.9 Notes payable to General Motors Corporation - 525.0 Dividends paid (75.0) (75.0) --------------- --------------- Net cash (used)/provided by financing activities (393.6) 3,646.2 --------------- --------------- Effect of exchange rate changes on cash and cash equivalents 0.4 2.5 --------------- --------------- Net increase in cash and cash equivalents 232.1 86.6 Cash and cash equivalents at the beginning of the period 618.1 759.2 =============== =============== Cash and cash equivalents at the end of the period $ 850.2 $ 845.8 =============== =============== SUPPLEMENTARY CASH FLOWS INFORMATION Interest paid $ 1,241.6 $ 1,106.4 Income taxes paid 38.7 105.4 Certain amounts for 1998 have been reclassified to conform with 1999 classifications. Reference should be made to the Notes to Consolidated Financial Statements. Exhibit 20 Page 4 of 7 GENERAL MOTORS ACCEPTANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. FINANCE RECEIVABLES The composition of finance receivables outstanding is summarized as follows: March 31, Dec. 31, March 31, 1999 1998 1998 ------------------ ------------------ ------------------ (in millions of dollars) United States Retail $ 32,563.5 $ 33,320.9 $ 28,440.7 Wholesale 20,561.6 17,721.7 17,054.5 Leasing and lease financing 646.8 631.8 658.4 Other 5,841.2 4,990.4 3,451.6 ------------------ ------------------ ------------------ Total United States 59,613.1 56,664.8 49,605.2 ------------------ ------------------ ------------------ Europe Retail 5,073.2 5,282.0 4,967.9 Wholesale 4,253.5 4,422.5 3,130.4 Leasing and lease financing 448.9 483.3 456.9 Other 443.8 473.6 318.3 ------------------ ------------------ ------------------ Total Europe 10,219.4 10,661.4 8,873.5 ------------------ ------------------ ------------------ Canada Retail 1,862.5 1,747.2 1,462.8 Wholesale 2,725.4 1,935.7 2,965.1 Leasing and lease financing 795.9 806.0 944.8 Other 100.0 119.1 65.1 ------------------ ------------------ ------------------ Total Canada 5,483.8 4,608.0 5,437.8 ------------------ ------------------ ------------------ Other Countries Retail 2,409.1 2,308.2 2,138.5 Wholesale 927.9 1,017.7 1,063.9 Leasing and lease financing 629.3 583.3 535.6 Other 205.6 258.2 129.6 ------------------ ------------------ ------------------ Total Other Countries 4,171.9 4,167.4 3,867.6 ------------------ ------------------ ------------------ Total finance receivables 79,488.2 76,101.6 67,784.1 Deductions Unearned income 3,940.3 3,979.8 3,689.2 Allowance for credit losses 1,029.5 1,020.6 924.5 ------------------ ------------------ ------------------ Total deductions 4,969.8 5,000.4 4,613.7 ------------------ ------------------ ------------------ Finance receivables, net $ 74,518.4 $ 71,101.2 $ 63,170.4 ================== ================== ================== Exhibit 20 Page 5 of 7 GENERAL MOTORS ACCEPTANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2. NOTES, LOANS AND DEBENTURES PAYABLE WITHIN ONE YEAR March 31, Dec. 31, March 31, 1999 1998 1998 ------------------ ------------------ ----------------- (in millions of dollars) Short-term notes Commercial paper $ 27,300.4 $ 32,138.8 $ 28,703.5 Master notes 557.3 652.2 256.6 Demand notes 6,688.5 6,445.5 4,854.2 Other 1,266.6 1,437.2 780.3 ------------------ ------------------ ----------------- Total principal amount 35,812.8 40,673.7 34,594.6 Unamortized discount (117.1) (127.5) (167.3) ------------------ ------------------ ----------------- Total 35,695.7 40,546.2 34,427.3 ------------------ ------------------ ----------------- Bank loans and overdrafts United States 2,070.1 1,669.9 1,747.7 Other countries 6,448.4 6,543.1 6,010.7 ------------------ ------------------ ----------------- Total 8,518.5 8,213.0 7,758.4 ------------------ ------------------ ----------------- Other notes, loans and debentures payable within one year United States 11,216.4 10,518.6 8,626.9 Other countries 1,555.8 1,538.9 1,280.1 ------------------ ------------------ ----------------- Total 12,772.2 12,057.5 9,907.0 ------------------ ------------------ ----------------- Total payable within one year $ 56,986.4 $ 60,816.7 $ 52,092.7 ================== ================== ================= Exhibit 20 Page 6 of 7 GENERAL MOTORS ACCEPTANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3. NOTES, LOANS AND DEBENTURES PAYABLE AFTER ONE YEAR Weighted average interest rates at March 31, Dec. 31, March 31, March 31, 1999 1999 1998 1998 ------------------------- ---------------- ---------------- ---------------- (in millions of dollars) United States 1999 $ - $ - $ 5,656.3 2000 6.1% 7,000.7 10,195.4 5,630.4 2001 6.0% 9,297.3 7,795.8 5,262.4 2002 5.9% 8,491.7 7,039.2 6,620.9 2003 5.6% 7,281.3 6,929.3 3,884.6 2004 5.6% 1,023.6 997.2 413.8 2005 - 2009 5.8% 4,784.0 2,673.9 2,497.3 2010 - 2014 8.9% 1,945.0 1,600.0 1,203.5 2015 - 2019 10.3% 373.8 373.8 373.8 2020 - 2049 4.6% 75.0 75.0 75.0 ---------------- ---------------- ---------------- Total United States 40,272.4 37,679.6 31,618.0 Other countries 1999 - 2008 5.7% 8,726.6 8,347.6 7,058.3 ---------------- ---------------- ---------------- Total notes, loans and debentures 48,999.0 46,027.2 38,676.3 Unamortized discount (659.6) (670.7) (695.1) ---------------- ---------------- ---------------- Total notes, loans and debentures payable after one year $ 48,339.4 $ 45,356.5 $ 37,981.2 ================ ================ ================ Exhibit 20 Page 7 of 7 GENERAL MOTORS ACCEPTANCE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4. SEGMENT INFORMATION GMAC's reportable operating segments include GMAC North American Financing Operations (GMAC-NAO), GMAC International Financing Operations (GMAC-IO), Insurance Operations (GMACI) and Mortgage Operations (GMACMG). GMAC-NAO consists of the United States and Canada, and GMAC-IO consists of all other countries and Puerto Rico. Financial results for GMAC's operating segments for the three months ended March 31, 1999 and 1998 are summarized below: Eliminations/ GMAC-NAO GMAC-IO GMACI GMACMG Reclassifications Total -------------- -------------- ------------ ------------- ------------------ --------------- MARCH 31, 1999 Net automotive financing revenue $ 336.4 $ 220.6 $ 0.0 $ 0.0 $ 18.7 $ 575.7 Other revenue 419.5 11.2 583.2 558.0 (23.0) 1,548.9 Net income 180.4 49.2 64.9 97.8 0.0 392.3 MARCH 31, 1998 Net automotive financing revenue $ 359.8 $ 203.0 $ 0.0 $ 0.0 $ (18.8) $ 544.0 Other revenue 329.5 6.9 613.7 253.1 16.0 1,219.2 Net income 190.2 56.4 79.7 23.0 0.0 349.3